TOM, Chris Harvey, Paul Karen discussed on Bloomberg Surveillance

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Tom and Paul Karen thanks so much Paul Sweeney and Tom Keane with you on a Friday we're reading into the weekend to start another eventful week Paul We're really getting ready to go to Davos Oh no wait we're not You're not going to Davos but when stop was going to happen they postponed that Tom They shoved it forward a week Are you okay to go So it's middle January not late January now It's canceled Because of the pandemic Switzerland and Austria hit very hard and I think it's out like they're talking summer but excuse me folks I have the plague Michael Regan does not He joins us right now Mike Reagan good to have you Here in the equity market Mike if you were publishing for Friday I know you're only working a three hour day But what part of the retail equity market would you focus on now What's a conundrum for you right now in equities Well Tom I think I talked to Chris Harvey of Wells Fargo this week and he brought up an old notion that I think is going to come more and more in appliance The notion of the or the fed put In other words we've heard some very hawkish things obviously from the Federal Reserve in the last month or so At what point does a sort of market correction or sort of disorderly move in rates actually cause them to pause cause them to rethink this aggressive tone that they've taken And I think that's going to become more and more the type of thing that people are thinking about Well how much do the markets have to push the fed to sort of rethink this type of stance they're taking on Harvey's expecting a 10% correction in the S&P sometime in the first half is kind of a test of that Which is a pretty shocking prediction I think the risky one too But that's the sort of thing I think Tom and Paul that people are thinking about I mean I love your grand banks both folks Michael named his boat market drawdown which I thought was just great How is market drawdown changed Our investments get the headlines down a 1 million % Forget about that Our listeners portfolios What's the character of the recent market drawdown Well it's obviously like you said it's those arc those sort of long duration high expected growth in the future type of trades that have really gotten hit the hardest And I'll point out that crypto kind of falls into that bucket as well Really just a bloodbath in the crypto markets recently And I think it's everyone sort of going to the other the other side of the boat of the USS market drawdown Tom and saying okay well what can we sort of weather out this shift in fed tone with So what's leading today in this year financials energy those sort of early cyclicals that people think part of that trade from last year might have gotten postponed into this year because of the the Omni Tron and the flare up of the virus So and quality again I go back to this long podcast interview we did with Chris Harvey He's a bullish on quality Where do you sort of write out this monetary policy tightening So looking for stocks with good balance sheets good dividend yields the prospects of buybacks that sort of thing And steering clear of the risky long duration Kathy wood types of bets At least for now you know I think we're seeing a rebound in the NASDAQ today So certainly and tech turning green just a few minutes ago in the S&P 500 So certainly I think there will always be an instinct among some investors to buy that dip in tech Until they're proven otherwise that it's a bad idea So we're seeing a little bit of that today I think ultimately everyone's got one eye on the bond market seeing where those yields go one 75 basis points in the ten year really interesting spot sort of getting back up to almost a two year high if we close in that range So I think it's kind of in a way letting the bond market take the lead and tell us where they think rates are going and sort of equities falling in line behind that Yes it's interesting Michael like that the big tech names that have been the stalwarts of this market really since the great financial crisis of 2008 they've underperformed over the past 12 months on balance here and you've got to think in a rising interest rate environment which appears we are in that could be a challenge here but boy there's some of these names that just kind of scream out at you It's tough to look past an Amazon that's underperformed and say why do I not buy it here Yeah and I think again it's people sifting through those names looking for qualities rather than sort of speculative growth stories So obviously Apple seems to be weathering it fine Those type of stocks So I think that's what it is And Tom I am still waiting for my invitation to Davos Maybe as your bodyguard Next time I just can see you there I mean Paul I mean we're going to closing the piano bar Sure Closes down at ten 30 I can see it My career thank you so much greatly appreciate the brief here Paul we've got to speak about the pressures upon the secretary of labor It is a fully employed America under 4% But every politician frankly I'm going to say it's bipartisan They have to speak Paul to an America that's not participating in this technology economy Yeah exactly right And it kind of brings back some of the discussions.

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