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In the last forty eight hours the Great Bullmarket Pinata Edward, you heard Denny joines of your Denny research. Have the last forty eight hours been? Would I believe you just shifted probabilities absolutely of your roaring thesis?
Well?
It been.
I got to be a bit of a realist given what is going on. Yeah, I'm still sticking with sixty percent for what I call the Roaring twenty twenties. However, I had given twenty percent to a melt up because things kind of had that potential. Still, it's not a high probability, and twenty percent to melt down or a ssshon kind of a bucket for everything that could go wrong. Well, now I'm just five percent for a melt up that's very unlikely, and thirty five percent for things going wrong, which they are.
Amazon does thirty seven to forty two billion dollar bond offering. Damien tells me it's going to be six phone calls. Heath Terry brilliant Overt City Group publishes and reaffirms AI viability in revenue, in profit, in getting things done. With all that, I agree with it. Kep x synthesize in as you mentioned, spreads have an a move, the bond market screaming stability. These other news items screen fold them into your roaring twenties theme.
Well, I mean, we've we've done pretty well with a thesis so far. We've got a few more years here left in the decade. I think this will pass.
You're short selling yourself, folks. It's the Denny and Kampoor low of October a few years ago and in Ralph and Comport, thank you nailed it. Continue, thank you very much.
So look, I think in the short term we clearly have an issue with the strait of our moves. It's hard to get optimistic here unless we see some tankers actually going through there without any incident. I know the President sounds like he wants to declare victory here pretty shortly, but you know, I think Iran lost the war. They just don't really know it and they're not acting like it.
The problem with this country is that it's a terrorist state with a terrorist organization that basically spreads terrorism around the world, and they're professional terrorists, and so it's very hard to kind of beat them just by blessing them with the bombs.
And back in December you correctly, I'm going to give it at a softball here. He correctly called for an underway position in the Max seven and the baskets now down six point three percent year to date. I'm curious, do you see further weakness in US tech stocs right here right now? Or is this a buying opportunity.
Well, I think it's becoming very bifurcated. The companies that still have moats, the companies that you know are basically competing in still fairly stable marketplaces, I think are fine. The problem for the magnificence of it is that they used to be kind of like the Game of Thrones. You know, it's like seven independent kingdoms that had motes and didn't really bother each other. But ever since AI, they're competing like mad and it's you know, it's a AI arms race.
Already continue with that. Your Deney doctor, your Denny of your Denny research, can't say enough about his research. It's exceptionally value your Denny report that you get from him, literally on a daily basis. Damian Sas are in time king with your Denny. We'll move forward here in a bit too further discussion of what we saw in the Secretary of Defense's press conference here a bit ago, but it is about the markets. Here's the summary for those of you across this nation waking up the VICS was
thirty five. That is painful. We've come in dramatically to a twenty four point five seven with redd and green on the screen. But it decided lead better take today than what we witnessed in the last forty eight hours. With the market opening, Alexis Christophers.
All right, thanks very much, Tom, and investors continuing to try to assess how long this war with Iran will go on and what its global impact will be, especially on the oil market. So we have a mixed start here to the morning. The S and P five hundred down three points at sixty seven to ninety three, Dow Jones Industrial Average down about twenty five points, but the Nasdaq and the Green right now by about forty two points.
So Russell two thousand is down just fractionally. We've got Brent crude at ninety one forty four, the barrel down seven and a half percent, WTI crewed down about to seven percent now to eighty eighth four the barrel and the Bloomberg dollars Spot Index at eleven ninety seven eighty four spot Gold by the way bouncing back up one and a half percent at fifty two to fifteen the ounce, and Amazon returning to the bond market, selling the debt and as many as eleven tranches ranging from two to
fifty years. It's the latest in a series of jumbo bond sales by hyperscalers as they gear up to invest in what else but AI. That's your Bloomberg opening bell report, Tom and Damien.
Alexis, thank you so much again, ready green in the screen Nasdaq with a little bit of the bid twenty four point twenty five in the thanks Ed. You're Denny with us always associated with Professor Tobin at Yale, but before that high above Cayuga's Waters at Cornell University as our prosad is one of the great optimists of international economics. His new book out of Cornell is The Doom Loop on the Economic Order. He even gets Game of Thrones
into the first chapters. Scott Serse, doing an economics you more than anyone I know ed, pushes against the concept of a doom loop. What do you say to the people that feel the gloom, feel the doom.
Well, you know, there are a fair amount of bears out there, and a lot of people listen to the perma bears, and that perma bears very often sound very logical. The problem is they don't provide a balance. And perma bears will get you out at the top of the stock market, they'll get you out in the middle, they'll get you at the bottom at the bottom. You'll never be in the stock market if you'd have a pessimistic attitude. Also, politics sometimes gets in the way of clear and clear
headed investing. The market tends to go up as long as earnings are going up, as long as the economy is doing well, and that's been the case for a long long time. So I have this view that corrections and bear markets are buying opportunities rather than reasons to panic.
Well, and you talk about the economy doing well in all seriousness, does economic deity even matter at this point? I mean, look at last week's payrolls. I mean the markets look straight through that for like three seconds, and then tomorrow we're going to get a CPI print that, by definition, after the last week's events, is already stale. So you know, talk to us little bit about the economic touch points that you're going to be most focused on here.
Well, look, I think that the economy still matters, because earning still matters. One of the I used to be just an economist and also a strategist, and being a strategist is a lot easier. All you got to do is forecast pe time Z, and that's very easy to do. Getting it right, of course, is the challenge, but it's still it's still those two variables, and the earnings outlook I think remains quite strong because I think the economy
will remain resilient. I mean, in twenty twenty two we had an oil price shock and the economy made through it just fine. I think the data that the stock market is looking at is not just the employment numbers, but they're looking at the productivity numbers. And that's really the bullish story, is that the productivity is making a huge comeback.
Well, and we began our conversation Tom mentioning that you had upped your probability from market meltdown from twenty to thirty five percent for the balance of this year. You know, my question is this, you know, when I think meltdown, I think of something on the order of a systemic liquidity shock. And this is a different sort of shock than we witnessed, you know, in two thousand and another. You know, kind of pre what funding and financing metrics
are you most focused on here? Like, what kind of a liquidity shock do you think can happen?
Well, clearly, when you look at history, you find that more often than that it's a shock in the credit system that causes problems for the stock market and get a financial crisis because of FED tight and something blows up and that becomes a credit crunch. It's credit crunch is the cause of recessions this time around. I think we have to recognize remember that the Fed's are awfully good at playing whack a mole in the credit markets. You know, as soon as something blows up, they move
in pretty quickly. March twenty twenty three, we had a banking crisis. There's only three banks that it was solved over the weekend.
Yeah, I get fifteen ways to go here, But let me just go to the experience I mentioned earlier, this modest drawdown we had in nineteen eighty seven. In my memory, I don't have in front of me, folks is what a rebound from October twenty seventh to the end of the year December of nineteen eighty seven. I remember the sweat in August of nineteen ninety eight, and off we went to the race to the range of nine. What's different now in tech versus the collapse of March of two thousand and one earnings.
We had a lot of dot coms back then that weren't making any money. We had a lot of telecom companies that were solar financing, so they're kind of creating their own magic. Until these companies, these mag seven started to kind of finance each other, we didn't really have that issue. But they're huge cast generators. I think their expenditures are going to prove to be very profitable, so I'm not particularly worried about the earning side of the text story.
It's part of the show this morning commercial Free the conversation too Important at your Donna das FENDERI coming on here in a moment Damian Sasar and Tom Kane with Alexis Christopherus and Michael Barr across this nation on YouTube. What a couple of days on YouTube. Thank you so much for this new digital distribution I can't say enough about it. Subscribe at Bloomberg Podcasts for all that we do here in the New York Morning, Damien Sasaur with Ed your Denny so Ed.
We talk about the Roaring twenties theme. We talk about, you know, the potential for market mail down and market melt up. Talk to me about your stagflationary nineteen seventies reduce theme, redo, reducts, redux, reducs.
If you're an em it's reduced. We call that redus.
I mean, I mean the stagflationary. You know, you know that that word's coming back. So talk to us a little bit about what you're seeing there.
Yeah, there is a certain amount of deja voo all over again. You know, every time we've had oil shocks in the past, we've typically gotten a recessions and bear markets. The one near term exception was what happened in twenty twenty two. We got a bear market, but we didn't get a recession. I don't think we're going to get
a recession this time. The recessionary expectations have gone up, but the US is much less energy intensive and oh, by the way, we're an exporter, yeah, of oil and gas, which is a huge difference for what happened in the nineteen seventies. On the other hands, shutting the Strait of Hermus is a radically different historical development just hasn't happened before, and so my short term caution bearishness is totally predicated
in this geopolitical development. I want to see some tankers get through the strait without getting shot at.
Well.
I mean you just mentioned that, and that's where I was going to go. I mean, golf traffic is basically all for not right. I mean, there's nothing going through. And you know, we just saw last week US Treasury Secretary and a Scott Best and basically slamming you know, GP Morgan for putting out research about maritime insurance and things of that nature. You know, how focused are you on some of those alternative data sets, you know, kind of trying to gauge out, you know, whether or not shipping.
You know, companies even want to you know, pass through the street of removes now and back.
I mean, who knows, it's funny you asked that. One of the reasons I'm I'm very positive on AI is because we're using it all the time and we've become real fans of Claude, and so Claude is uh is in our staff now and that we're we're toying around. We're just asking Claude to follow the shipping lanes in the Strait and there there's actually data. So but we only started doing it yesterday. So the other thing is there's there. I also want to see the data on drones.
I mean, it's it's it's fine for the president, you know, to declare that we're almost there, almost mission accomplished, but uh, that's not that's not going to be the case unless the drones stopped flying into uh the neighbor, into the Straits, into you know, aiming at our ships.
In Andy March thirty one, I believe it's another end of the quarter if we can get there, and then into April and JP Morgan reporting and off we go to the Q one earning season. What does end your Denny see with a broader sense of use of cash?
Well, you know, right now, the earning story has been phenomenally strong, and that's really what's been driving the market. The evaluation multiple you know, got up to about twenty two. It's come down because of this pullback so far, which is it's not a correction yet, but I think it has that.
Why I got this is too important? Since when are we hysterical about your Denny pullback that, as you state, is not a correction as we learned it in school.
Well, you know, a pullback is a drop that isn't a correction. A correction is ten to twenty percent decline. A bear market is more than twenty percent. I happen to think that there is a thirty five percent the probability of things going badly, and that would lead to a correction of ten to fifteen percent. I'm actually amazed by the resilience of the of the not just the economy, but the stock market. The stock market wants to believe
that all will be well, very very shortly. We saw this amazing reversal also in the price of oil, as though you know, what, were we thinking there's plenty of oil out there. Well, there's plenty of oil out there. We just got to get get to.
It quick, one quick one.
Well, I mean ed what you sound It sounds like you're talking about just cleaner positions, right, And I mean, if this is really what this amounts to, where you basically are giving a lot of you know, risky investors the opportunity to kind of you know, pair back to positions and clean them, so to speak. Does that mean we might look for another leg higher into the you know, second half of this year. And can we really even see that?
Well, I haven't given up on seventy seven hundred by the end of the year. I can so yeah, I'm I'm arguing that it's not necessarily going to be a few more days of the war, but it could be a few more weeks, and that again, I have this tendency to look at soopica's buying opportunities rather than reasons to panic.
Thank you for coming in.
My pleasure always.
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