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Binky Chadha

lines on the record: 89
first: 2025-11-14
most recent: 2025-11-14
sittings or episodes: 1
sources: podcast

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“So we always start with our economists' forecast, and we always ask the question of, does this make sense to us? Does this make sense to the way various economic data are behaving? So, I mean, if you think about the US and 2023, when everybody's calling for a recession, there was this annoying fact, which was that if you simply said, okay, I just landed here. So, you know, okay, we're talking about the US potentially going into a recession, you know, let me start by looking at GDP and you would find that near 70% of US GDP in real terms comes from personal consumption spending. Everybody knows that. So why don't we just draw a chart of it? And because I come from a relatively volatile asset class, I don't do any growth rate terms. I just plot.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“That a fat bidder? Absolutely. So, what I was always told by our head of research, David Foger's Landau, so if I ask you at the end of the year, why did you get your S&P 500 call wrong? You're not to tell me that the economist was bearish, right? That doesn't work. So you are responsible for everything that goes into your view. And so we discuss and debate. So as far as the research aspect of it is concerned in terms of the strategists across all asset classes and economists, we have a regular meeting. We just had one this morning, actually.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Now, the good news is that we are much closer now to basically what I would think of as fair value for oil prices. That's actually a little bit higher. It's not a tradable difference right now, but fair value is probably $64, $65. And so this drag should basically stop soon, even though for the third quarter we are still looking for 15% down. In energy. In energy earning. So it's just mostly oil prices. And energy vertical is important basically for various parts of manufacturing. Then we have basically idiosyncratic issues in autos and Chinese autos in particular. And of course, last but not least, we have the tariffs this year, which impacts manufacturing. We're going to talk more about...”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, right, and it's been followed basically by a whole set of things. Number two on the hangover, I would say, you know, I don't think a hangover has killed anybody, so a hangover is holding time basically, and it would naturally basically pass. But then in early 2022, we got the Russian invasion of Ukraine. We had $120 oil. And if you look at oil prices today, what we've had is basically we've gone from $120 in round numbers 60, but it's taken three years to get there. And what the three years to get there means is that energy earnings on a year-on-year basis have been negative, basically, or contracting for three years.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“So remember that as we came out, you know, we had basically massive spending on goods and that in some way involves manufacturing. And then we had basically this slowdown and the rotation.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. Their earnings are completely aligned with the ISM manufacturing in the US. ISM manufacturing is basically, and that's historically the case for the entire index, is earnings. We've been in a funk for three plus years. ISM manufacturing has been between 46 and 50. It's something that we've never seen historically. So if you ask, why are we sitting here? Well, first thing to note is that if things were bad, then we should have been going down. We shouldn't be sitting in mildly contractionary. 50 is the dividing point. But, I mean, I think the fair or, I mean, conceptually, it's the intellectually, it's meant to be the dividing point, but this is still slightly positive growth even below 50 to get to negative growth, you have to go quite a bit lower. And I would argue in the first instance, it was basically just the hangover from the pandemic.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“So basically, for the last three years, it hasn't been the case. And why? It's simply because of MegaCap growth in tech. If you take the S&P 500, you break up its earnings into MegaCap growth in tech and everyone else. You'll see that everyone else is still currently aligned with the ISM manufacturing. ISM manufacturing's been in a funk for three plus years now. And so we haven't had growth. I kind of hinted earlier you can look at the current sort of context in a bearish way that is all the growth is coming from 90% of S&P 500 earnings growth has come from mega gap growth in tech. Or you could take the view going forward that everybody else is going to recover. That's the camp that we are in.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“ISM manufacturing is an interesting one because that's historically the one thing that explained S&P 500 earnings extremely well and that's kind of like all you needed to know still today.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“So, you can think about it as basically a trend and cycle framework for each of the groups. And the question, the trend is what has basically been prevailing for quite a while. And then the question is what drives the cycle in those. So if we take megac growth in tech, for example, you would have the US dollar. And for some parts, you could be looking basically for a very specific things that matter which you're not going to pick up. So for example, for materials because of the way US materials is structured into two parts for chemicals, you need basically a chemicals deflater, which is not something that most people tend to look at. So this idiosyncratic, but it's cycle and trend in what drives basically the cycle. It would be ISM manufacturing, the US dollar.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Their quantitative frameworks you could call some of them models. So I would say the most important thing for equities, and again, my very humble opinion is what's happening with earnings. And so you need to have a good framework, basically, for earnings. If you could get earnings right, I mean, and you need to do that well in advance of the actual delivery, you know, you will know what the markets are going to do, basically. So what we did, and we revisit, revise, revamp, redo, throw out whatever you want to call it. But at the moment, basically what we have is we take a whole group of stocks and sectors. We divide it up our way. So there's megacab growth in tech. I mean, that needs to include visa and MasterCard because they're not tech companies, but they behave very, very similarly in terms of their revenue streams.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure, I mean, at the simplest level, it's to figure out where the equity market is going to go. That's all I need to do. Once you figure that out, you're golden. We're pretty humble about that pursuit, but I would say that is the number one objective and pursuit. And what we do is basically we...”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Never came really quite fascinating. Early 24, and they began to wait for the election. We had the election. Everybody got very, very optimistic, very, very constructive. We got liberation day. I think where we are now is those two years basically of waiting. I've created pent-up demand is a shortcut way of saying what I'm trying to get at. And has also led to the approach or strategy, if you want to call it that, that we just need to deal with it and get on with it. And we're not waiting anymore. And so we are where we are. We're having this strong growth, but it's really the cyclical parts of the US are either erratic and noisy or at the bottom of the channel. So not exactly depressed and falling out of the channel or going into recession, but growing very much.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“They kept doubling down and got it wrong. Yeah. So it's 2023. And then the early part of 2024, so Deutsche Bank was, and I don't mean to single out our economists here excellent. They were some of the earliest on the street for a recession is going to happen down the road. They didn't give up their recession call, I believe, until the first quarter of 2024. And so from a company point of view, if you were listening to companies and analysts ask on earnings calls, why aren't you spending? They're like, no, there is a recession coming and the recession is coming. So all through 2023, corporate America just waited for the recession.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Decreases sectoral recessions that quickly. So actually what I mean, I call it when I say the rolling Vs, what I mean is that basically if you look back to late 2022 and you looked at the forward forecast that was in the macro consensus, it was growth is here, growth next quarter is going to be lower in two quarters, we'll be in a recession. And then, of course, we'll have a recovery. And so if you look at when the recession didn't come, what the macro consensus did is simply roll it forward. They said, no, we are right, just wrong on timing. And then when that didn't happen, we rolled it forward. And, I mean, I have this chart. It's a little old now, but on the same chart, as you see the rolling Vs, you look at the actual data when it came in. And there is, you know, we're like way above, closer to three.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“That is exactly right, and there has been market mechanisms that have in many cases actually improved the credit quality. So when we look at indices, you want to be careful because they're not controlled.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“After the global financial crisis, corporates are going to get killed, it was the reverse, and their earnings went up. Just the Wall Street Journal column.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“You buy Sure. But what I would say is I don't think that interest rates are absolutely the key because CapEx, we were just talking about that a little bit earlier about corporate balance sheets. Since the 1970s, what corporate America learnt is that you don't spend beyond your means, I would say most CapEx, especially for S&P 500 companies, is coming from internally generated cash flow. And if you look basically at the three uses of cash flow, you know, dividends, CapEx, and buybacks, and you take their total spending relative to their total cash flow, it's been this side of 100% forever. Which sounds pretty reasonable, exactly. And so I don't think that the interest rates are going to make play such a big deal for corporates. You could even argue, I mean, for a long time it was like if interest rates go up.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so the tech investment wouldn't be in here. I mean, if you look at CapEx, if you take out AI party, it's on the soft side. So you can take, as I always say, you can take a bearish view on that, which is it's all coming from this one part, or you can take a bullish part that the other part's going to start to happen. And here what I would say is that it's hard to put your finger on exactly what the issue is, but there's a lot of overlaps in the different aspects of what's going on. So I just gave you the list of the four parts that are not doing great.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“The cycle comes from the cyclical parts, basically, and that's a little bit over 20% of GDP. So it's not really that huge, but all the cyclicality really comes from there. And when it gets going, it's very powerful. And if you think about what is the cyclical parts, like it can go further, basically, it would be number one is consumer durables. Number two is corporate CapEx. Number three is housing. And number four is structures. And so what is extremely unusual about this recovery from my point of view is that stable growth is doing what it's always doing. It's mostly services. It's really that if you look at the cyclical part of US GDP, yes, it's growing, but it's at the bottom of the channel, basically. So it actually has a lot of room to move after the up. Side like 10 15%”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“But what is very peculiar about this cycle is that there's this very important fact when you think about the 3% or 3% plus GDP growth numbers, which is that actually, and equity is about cyclicality and cyclical variation. So recessions are big events and recoveries are big events. But what I think is easily missed is that two-thirds of the US economy is actually stable growth economy. It's like the old days of consumer staples earnings where every company analyst in the room would get mad when I would say you don't need an analyst to tell you, you just need a ruler as to what their earnings are going to be because I was so predictable in the same vein, two-thirds of US GDP is really stable growth GDP. Now it's not roaring growth, but it's to 2% growth.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Is she coming up later Awkward Right. So I would point out is that the housing market today is a much smaller part of the US economy than it used to be. So if you go back to the 70s, you know, we're talking six, seven, eight percent of GDP is housing. Today it's like more like 2%. I apologize that they don't know the exact decimal point. But it's a fraction of what it was. It's a fraction of what it was. And so we were just talking about 3% GDP growth for the last two, two and a half years and housing has been in the doldrums for quite a while.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. I would agree completely. And they remain so. I would say right now outside of a few pockets, you don't really see any signs of excess. So there's every reason to believe that it continues. And if you start by looking just at like sort of near-term economic forecasts as one idea, basically, everybody has a pickup in growth next year. Based on either...”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“From what I look at my reading would be that this has been going on for a while, it's been going on basically through a variety of policies. And so I don't think it's really coming from the policies. I might even go far enough to say that.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Because you could only extrapolate the great depression and World War II. So it took a while, but the 60s is really the post-World War II recovery. And the second time that happened more recently, and everybody is reminded of that now, is the second half of the 1990s. But it goes without saying that both of those periods, like the current period, have been very good basically for equity markets. When unemployment, so when you have a job, but growth is strong, risk appetite is going to be high. I think that's not surprising. And that's kind of almost exactly where we are.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“And what is at odds with the traditional cycle is that when unemployment is low, you're typically at the end of the cycle and growth tends to be low. But for the last two to three years, what we've had is 4% approximately unemployment, but GDP growth, especially underlying GDP growth, rank pretty steady at 3%, showing some signs of going even higher, basically. And what I would say is historically that is very, very rare. It's happened only 6% of the time if you do things on a quarterly basis, 6% of the time since World War II. And it's no secret when those two times were. One was in the 1960s, where I would argue basically that's really the takeoff. That's really the post-world war recovery with a big lag because people didn't know in the 50s what exactly.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“It is a very bullish set of factors. What I would point out is that equities historically are really about the business cycle, and that's why people wrote pieces that are well known on Wall Street. They are from some time ago that getting at what drives the cycle. And once upon a time, the US business cycle was just really the housing cycle. There's a very famous paper with that title. And if you fast forward from there basically to today, we have a very, very, very peculiar cycle is the way I would put it. We've had for the last two, almost three years now. Essentially full employment in the labor market.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so what I was going to say on that was simply that I came to do FX strategy and research, but I really wanted to do things more sort of close to the markets. And there was a simple practical issue, which is if you want to be near the markets, the center of liquidity was really 7 a.m. to 8 a.m. London time. And so you either live in London or you find a US asset class. So I found US equity. Gotcha. You're opposed to covering FX in London. You did equity in the state. Yeah, in the middle of the night.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“He was at the IMF. He was the first deputy managing director, which would be the counterpart of being the CEO as opposed to being the president of the IMF. So he ran the IMF intellectually and otherwise. And it was a small group of us that basically was a financial markets dialogue with an open license to go out there. Tell us about any and everything that you think matters.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“It was Stanley Fisher. He was the first deputy managing director of the IMF in the late 90s, which is so, this is soon after the Asian financial crisis. And then sort of, you could argue that the dominoes continued for the next few years.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“So for a few years, a last few years at the IMF, I was actually part of a small group that was responsible for developing and maintaining basically a dialogue with the markets. I used to report to Stanley Fisher, who said he was tired of reading in the newspaper on the way to work that another country had gone under and somebody should be having a dialogue. At the time”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“So the IMF does not historically never really spoke about exchange rates because the market sensitive variable, that was the thinking at the time. But that didn't mean that the IMF didn't spend a lot of energy working on FX. We had an internal group that some people in the market knew and basically because we used to have a dialogue with the markets, there was an opening basically in FX because the FX strategist who had been around for quite a while had moved on or retired basically. And so they asked me because they, Deutsche Bank at the time, so the strategist that I'm referring to, his name is Mike Rosenberg. He really did FX form a top-down macro point of view. And it's hard to find people like that. But I was at the IMF. I was trained as an economist. And I had done plenty of work on FX.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“I think those experiences are basically things that sort of inform you about the bigger picture and forces that are ongoing that one may not sort of see day to day, certainly not day to day, but week to week, but sort of explains the direction in which things are going. And I think Singapore is sort of a good example for, I mean, we started talking about development economics, which was, but it's about growth economics and development economics and sort of like, you know, does policy really have a role or should we just let the free market?”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“I Yes, that is true. My focus, and partly because I'm here and partly because the US is the most important and biggest driver. I've been our equity strategist. In two different stints over periods, so I actually spent most of my time basically on US equities, I would say.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“So it has because they made a very concerted push at the time to move basically towards higher value added activities. And the first paper I ever wrote on a country was really Singapore, and it's about Singapore's high wage policy. They announced an increase in real labor costs or wages. It's also sort of the retirement plan of 60% in 1979 to work through the system over the next three years. And it was wildly successful in basically Turning the economy into sort of much higher value added growth part. I mean, the finance was some of it, but it was, you know, the focus was more on sort of high-tech manufacturing too.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Unemployment was 2%. Both had been strong. And because of the peculiarities and the politics of Singapore, it's ethnic Chinese that moved out of Malaysia to have an independent country when you want to grow rapidly, but you only have 2% unemployment, you would end up sort of violating the principle of what you reform because you would need basically lots of imported labor from Malaysia and Indonesia.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I started in the research department, but I went from there to the Asian department. And even while in the research department, like my participation in Bulgaria, we always, oh, at least I always, you know, was eager to participate in the IMF's bread and butter work, which is really country work. So I remember going to Singapore in my very early days. Singapore is obviously a small country, but because it's a small country has issues, especially from a development strategy point of view, that are sort of key. You remember in the 1970s we used to talk about the NICs, you know, so, I mean, I could talk quite a while about Singapore, but Singapore started in the early 1970s with a 10, 12% unemployment rate, had low wage export-led. Growth model by 1979.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I do it in chronological order. So I started basically in the IMF has a grad program, just like any investment bank. It's called the Economist program. And my second assignment was in research. And I stayed in research for the next few years. It was the heyday of the IMAPS research department under Jacob Frankel and then Michael Moussa. And we had all the world's leading researchers visiting the IMF. And then the Iron Curtain came down and the IMF suddenly had 30 new member countries. And we all got pulled into working on various aspects of that. So I worked on Bulgaria pretty much full-time for a year.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I mean, I think that development economics is sort of builds on, is not necessarily core. You know, core is micro and macro. And I ended up basically studying macro. Then went to basically work at the International Monetary Fund in Washington, D.C.”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source
“The career plan was to get a PhD in economics and study development economics and alleviate poverty and help the world. I went to graduate school and graduate school. Kind of rings that out of you. Exactly. Here's a whole lot of debt. Go”
2025-11-14 · Masters in Business · Getting Earnings Right with Deutsche Bank's Binky Chadha · IDENTIFIED FROM THE TRANSCRIPT · source