Bloomberg, United States, Morgan Stanley discussed on Bloomberg Markets
You so much. Greg Jarrett is gray was talking about. We do have a rally underway. Joining us to talk about it is Dave Wilson, Bloomberg stocks editor columnist and blogger mlive go on the Bloomberg joins us here in our Bloomberg interactive brokers studios in New York, David sort of interesting, how we are getting this broad based rally, and yet we're getting downgrades to expectations from another a slew of companies and thinking of in particular constellation which came out today as well as Lanar, how do you square these two realities? Well, I mean one way to do. Just to look at one or shares are up. I know one percent. I don't totally understand that it may just be that people were expecting worse in the case of Lenore. Also, you know, you had kidney w come out raises rating on DR Horton, one of Lindores competitors. And talk about how they expect sentiment in the industry to become more favorable. So that may be playing out in Linares cases. Well, and the idea that, you know, the results aren't necessarily as bad as people were looking for that not only maybe what's happening with the art. But also with skyward solutions to chipmaker one of apple suppliers for the iphone. They came out reduce their earnings and sales estimates for the current quarter in Bloomberg intelligence the analyst over there. Woo Jin hotel about how people were expecting a lot worse. So you got the stock higher even in the face of lower estimates. I mean, it was sort of a given I suppose with. Apple's challenges of selling the iphone that numbers for its suppliers. We're going to come down. And you know, what you guys situation where it's not as bad as people were looking for. And you got a whole lot of technology stocks doing relatively well. In today's trading and sky works is one of them. They tell us about the Bank stocks because I know that you've been looking at those this morning, right? I mean, you're you're seeing a bit of a turn at least for today in terms of what analysts are having to say about the banks lately. It's been cuts to ratings cuts. The earnings estimates cuts to share price projections. Bank of America. You had UBS raise its rating to buy from neutral. You had with Morgan Stanley. They were lifted the buy from hold at CitiGroup, and stocks are up, you know, on a day when you know, if you look back to yesterday, financials were sort of the weak sister of the gains that we saw van today. It's a different story financials of holding up their end Bank. America's up half a percent, Morgan Stanley's up nine tenths of a percent not much in the way, gays. It's just that they're moving more in line with the market, you know, after the series of not so great calls for man was weighing on the earlier in the week. So here's what I'm trying to understand right now. We're seeing a sort of more bullish line from Wall Street analysts straight out about risk assets. Is this a tactical recommendation or is this a longer term recommendation? In other words, is it by the dip temporarily? If you're just basically trading the market, or is this a, you know, this is a good entry point the US economy is still very strong over the next year. At least so go forth and prosper possibly more tactical than anything else. And I say that because actually our reporting on Citigroup's call him Morgan Stanley talked about how the Keith or what's wrote that it's a tactical time to buy the stock. So so that only they said it was tactical. Absolutely. So they go. And look there are a whole lot of concerns. You know, if you think about things going forward, you know, what is going to look like. And of course, those first quarter report start hitting next week. And really in the next few weeks. What will leave their Mark on companies results? What are the earnings? Look like was he look like how does the trade situation play out there? So many questions that you would think that any call you were going to make at this point would have to have a certain tactical element to it in a sense of being shorter term rather than longer term because there are so many unresolved issues at this point, you talk about unresolved issues the trade negotiations between the United States and China. They continue is Wall Street just looking for a positive outcome, or at least a not negative outcome. Just as you describe with certain earnings estimates they reduce them, but not as much as people had feared. And as a result. They bid the price of a specific stock up. Can you make that case for the whole market that everyone's just? Waiting for a US China trade something hoping it's not bad, and that's going to unleash more money. That may well the feel it's hard to get a read on exactly what the broad consensus is nonetheless. And then we have seen you issues. Pop up with a number of companies higher raw material costs is an issue, for example, because of the tariffs that have been put on things like stealing aluminum. So you know, to that extent, it may just be that some kind of relief his people looking for more than anything else. I thought it was really telling there was a story on the Bloomberg looking at how President Trump wants a trade deal with China in order to boost US equities, basically, he views the US equity market is a gauge of how well his government is doing. And I'm trying to understand the implications of borrowing costs for the United States as a result because we have seen an inverse relationship between stocks and bonds stocks rally to bonds. Typically sell off meaning higher borrowing costs. I just wonder at what point will that lead to a sort of a break in his talk rally at what point does this become a feedback loop? Yeah. And that much harder to get a handle on because you know, when you think about where does the loop kind of come into play think about things like capital spending and aimed to what extent companies are gonna be willing to do that. You look at the company like say, Chesapeake energy, and they're actually cutting back their capital spending and people like the shares are higher in response to that. And then there's the issue of stock buybacks. I mean, how often we talked about the last couple of years the extent to which companies have been able to borrow and then turn around and use the money to repurchase their shares. So share buybacks of linked to trying to get the stock price of a specific company higher. And we know that chief executives and other executives of those companies they get compensated based on what the stock price. Does. It doesn't matter. Whether they're fewer shares they get based on the actual performance of the stock. Sure, they have an incentive to do it. No question. But at the same time you have to weigh that incentive against the cost of carrying out the program. And to the extent that you're relying on borrowed money to do it higher interest costs get in the way are just saying that it's not their money. It's not the executives money. It's the company's money. Well, it's the shareholders look at it that way. That's that's certainly true. All right. Thanks very much. Dave Wilson, Bloomberg stocks commerce blogger mlive go on the Bloomberg. Remember to send Dave an Email at dwilson at Bloomberg dot net and sign up for his daily free Email newsletter. Now, let's go to our ninety one studios.