YouSaid · the spoken record

Peter Boockvar

lines on the record: 101
first: 2024-07-15
most recent: 2024-07-15
sittings or episodes: 1
sources: podcast

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“Got it. And also, we could call it short rates as the two year just because the Federal Reserve is cutting doesn't mean the two year has to go down. It actually could go up if the Fed doesn't cut by as much as the market currently anticipates, which is now pricing in a few cuts.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“And we're somewhat positioned for a sleeve of my portfolio of some bear steepening. And can we wake up like the Brits did when this liability-driven investment unwind created a spike in tenure guilt yields? Yeah, I think there's more hissy fits to come in long-term rates in Europe, in Japan, and the US. And that's what I think is a possibility, even though getting back to your question, maybe the 10-year yield is around fair value. But we know over fair value, we go under fair value when markets move. My point is that long rates are not going to fall. So in that short rates are going to fall, long rates are actually going to stay the same or go up. That's where the bears. Rather than long rates falling too, but not as much as short rates, which would then qualify as a bull steepener.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“We can't discount the possibility of the market waking up one day to all this treasury supply worries and the BOJ loses control of the JGB market because they've backed off from QE or inflation picks up again. And so I think that there are a lot of potential dynamics here that is going to not just keep longer-term interest rates because we know short-term interest rates will be driven by what central banks do, but long-term interest rate. In other words, a bear steepener is upon us. And I think that continues.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Right. So historically before central banks experimented with zero rates, negative rates in QE, it was around nominal GDP. Yeah, I can argue that nominal GDP. If I'm right, that GDP growth is on a real basis, call it One and a half percent and inflation is slowing to three, yeah, you can say four and a half. That would be normal. So, I don't think we're that far off. However,”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“That can then spill over to European bun yields and French oats and U.S. treasuries. There's this belief that we've gotten over this inflation hump. Rates are going to fall across the board and everything is going to be fine. And I'm just not as confident that we're just going to have this smooth landing.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“To me, the greatest financial bubble in the history of financial bubbles was when we had $18 trillion of negative yielding sovereign bonds a couple of years ago. That has now fully unwound, where we have no negative yielding bonds. But this bond bear market the last couple years has been pretty vicious. And if you look at the historic track record of bull markets, bond bear markets, they last 20, 30, and we just got off a 40-year bull market. This bond bear market is not just going to end in a couple years. So I think that is one of the other things that when you ask what keeps me up at night is that this bond bear market is not over. And let's just say the Fed starts to cut rates, but long-term interest rates actually go up. What happens if inflation accelerates because the dollar weakens and oil goes to 100 bucks? This bond bear market is not over. How's the BOJ going to manage further increase in interest rates and trimming QE? What impact is that going to have on GGB yield?”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“So you can still have great companies, but a stock that so much disconnects from what earnings are going to deliver that you've just stolen many, many years of future earnings in current stock prices. I know there's a lot of people in the investment business today that weren't around in the late 90s and 2000, but there were real companies back then and the ones that I just mentioned, GE was a real company. GE had a half a trillion dollar market cap. And Jack Welch was the greatest CEO of all time. And we know what happened to that story. So now I understand with this backdrop, markets are just excited that the Fed is going to cut interest rates. And it doesn't matter what economic downturn we may have, who cares about the lowering income consumer. The Fed's going to cut rates and everything is going to be fine. And I think that's just a dangerous crutch to lean on. And you mentioned not using the bubble word. I've reserved the B word for the sovereign bond market.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, no, they are, but I don't think we should sort of fool ourselves that that doesn't mean that it doesn't work out for them. When you look back in 2000, Microsoft, there was no more dominant company than Microsoft in terms of its market share in the computer software business. They had like 85% of all computers used Microsoft. Apple had a very tiny piece and maybe there were some others. You know, that didn't stop Microsoft stock from falling 50% and not getting back to that 2000 peak until 2013. Intel, Intel inside, was there a more dominant semiconductor company than Intel in 2000? Cisco was the backbone of the internet. And in fact, I went back and looked at Cisco's peak price to sales ratio in 2000 was twenty four times. Nvidia's price to sales ratio today on fiscal year 25, but call it mostly 24, is 26 times.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“But even that, you look at Dell. When Dell last reported earnings, their top line growth in AI related service went up a lot, but they're not making any money on them. So I do think, show me the money questions are going to start to be asked and whether it's this quarter or the next couple quarters. I think we're getting closer to that timeframe. So like I said, we're long some of these, but it's a very nervous long.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“I think that test awaits us in those names. And I don't know what quarter it's going to be, but at some point, but you can even read whether it was a Goldman Sachs report just recently questioning the value of all this AI spend. Roger McNamy, the famed tech investor, was on CNBC. I think it was either this week or the week before, questioning the return on all this investment in the use case of AI. Questions are beginning to be asked. Which I think is healthy to do. It's an important discussion to be had considering the amount of money that's going into this. And so I do think we're getting closer to a point where investors start to say, show me the money. Nvidia has shown the money, no doubt. The picks and shovels providers are showing the money.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“You can flow the money you spend through the income statement in a particular quarter, or you don't have to, you consider it a, well, that would be an operating expense Or you can call it a capitalized expense where the depreciation of that spend will be the flow through rather than all that money spent. So it's not necessarily showing up all at once the money they're spending. They're going to actually spread it out over time. But the money still being spent. If they're not going to get a revenue offset and a net income offset to all that spend, these companies are locking themselves into a higher cost structure for many years to come. So this AI buildout, I would much rather be owning NVIDIA and AMD, the beneficiaries of all that spent, rather than the spenders of that spend on hopes that AI is just going to be this very profitable product. I don't see that being the case. I see being a tool that consumers and businesses will use.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Well, the beneficiaries of that spend. Which quarter are we going to have to manage where Meta and Google and Microsoft says, you know what, we're still spending all this money? And that all of a sudden then chips into their earnings growth. Now, a lot of this money being spent is being capitalized, which means that depreciation expense is going to be very high for a long time to come. So it's amazing that those companies are getting rewarded for no revenue growth or maybe a little bit if you have your co-pilot with Microsoft, but their expense structure is going up by leaps and bounds.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“It is not the internet. I heard people say, oh, this is the greatest thing since the internet. It's actually greater than the internet. I'm no expert on technology like some others, but I think it's really cool, but it's just another sort of iteration and advancement in AI that we already had. So I question the revenue use cases. I think that yes, from a productivity standpoint, it'll save people in certain job functions a lot of time. There's no doubt about it. There's going to be a huge amount of benefit. But in terms of really generating top line revenue relative to the massive, the hundreds of billions of dollars of investment that's going into building these models. I mean, these models too, it could be a commodity. I mean, MEDA's model is open source. They're saying here is it for free”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“So AI has been around for now 75 years. The first papers were written in early 1950s, technology has been a driving force for society forever. And to me, this new form of AI is really cool, but to me it's just a tool”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Back in 2000 with Scott McNeily Son Micro, everyone watching this probably knows that he was laughing at people that paid 10 times revenue for his stock. So what we're seeing in these names is just a massive amount of pull forward in terms of stock market performance. And we're going to have to deal with years of growing into that. Now, like we're long NVIDIA for clients, but it's a valuation agnostic part of their portfolio where at some point it'll matter to the downside. I mean, we're going to wake up one day and Facebook or Meta and Google are going to say, you know what? Our current allocation of your chips, we're good. We're all set. We got the allocation that we need. What do you think is going to happen to Nvidia on that day? So that day is out there. I just don't know when, but for now it doesn't matter.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“With Nvidia. I prefer to value NVIDIA on a price to sales ratio because that gross profit margin is not sustainable. It's just not. And a lot of it has to do with their customers that want to compete with them. And the broadcoms and the AMDs that are going to compete with them, it's just going to get competed lower. That's just economic math. Right now, NVIDIA, or this year, NVIDIA's revenue growth is going to double again. It's going to go from $60 billion to about $100 in $20 billion. But then it slows down. The earnings, I'm sorry, the revenue estimates for next year on the earth, it slows down to about 33%. And then even if you said NVIDIA's revenue is going to grow 20% for the next 10 years, you're still talking about, at least on a price-to-sales ratio, something around 10. Historically, price to sales ratio of 10 was a lot.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Code FG10. Back to the episode. Right. And I think when earnings grow so much, paying a very expensive multiple for a stock can make sense. For example, I'd say all the people who were making fun of, you know, talking about how NVIDIA has a price-to-earnings ratio of 60 in, let's say, March of 2023. Well, if you actually take what they've earned over the 12 months subsequent to then, it had a PE of 12. And so the trailing PE of 50 now, if I mean, I don't think NVIDIA will grow its earnings what it has, you know, it can't maintain these growth rates.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“And even GE get to half a trillion dollar market caps. And that was just, wow, a half a trillion dollars. And now it's 25 years later almost, and it's $3 trillion. And it is unbelievable. But we're in that moment where investors are just valuation agnostic. And just tell me a sexy story and I'll pay whatever price it is. Now, we've seen this in the past. We've seen it with the Nifty 50 for sure and it goes on until it doesn't. And not to disrespect any of these companies. They've done so well. But at some point, valuations matter, but they don't matter until they do.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Where the stock price increase has been all multiple expansion. There's been no earnings growth. But everyone knows it's become a cult stock. And now you throw in this AI excitement and then you get a move like this. But when you have stocks that can single-handedly move this index, yes, everyone is pressured to own them. And that's what we've seen. Everyone's piled in. And you just, the market cap moves on a daily basis and on an absolute basis is just truly astonishing. I remember looking back. I remember being there living it in the year 2000 when you saw Cisco and Intel.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. And when you get into that situation, investors become valuation agnostic. It doesn't matter. Don't tell me what the P ratio is. I don't care if it's 20, 30, or 40 or a similar price to sales ratio. This is where I see solid economic fundamentals or earnings fundamentals, I should say. And I want to own it. And it's going up and everyone else is long it and it's a big chunk of the S&P. And I just have to own it. And to me, you have NVIDIA, which you can somewhat rationalize the move because how fast their earnings have grown. But on the other hand, the only way to sustain that is if you think that a 76% gross profit margin is sustainable, which is not just mathematically and competitively. And then on the other side, you have Apple.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“The market just generally makes me nervous when I see the multiples that we're trading at in terms of the S&P, I see just this everyone piling into these select few stocks, interest rates that are still rather high, an economy that I see rolling over. I've been doing this long enough to know that it's a moment in time where you really have to watch your back.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Five to ten years, and you have the growing middle class in India, in Indonesia, in Vietnam, in Thailand. And so we want to be long companies that are going to cater to that, like trip.com, the largest online travel agency in Asia. It hasn't worked out so far, but we're along some of the Macau casino stocks because the Chinese consumers still under stress, but the gaming numbers are still pretty good and Macau is making a big push to be the Las Vegas of all of Asia, not just for China. And we're also long some other names in like Singapore and Vietnam. So to me, that's a very exciting story.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Few holdings, which is the largest commercial landscaping company in the US with north of $2 billion of revenue. So whether it's a hospital, a university, an office park, a casino, a sporting facility, as long as the grass grows, as long as trees need to be pruned, there's an enormous consolidation story in a very fragmented industry. And then also stepping back geographically, to me the most exciting growth story in the world looking out over the next 10 years is the rising middle class in Asia. I don't see much growth in the U.S. I don't see much growth in Europe, but I do see that this rising middle class in Asia is a very exciting story. And even China is a part of that because China's middle class is going to double in the next”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Like a few secular growers of companies in very fragmented industries like Mr. Carwash, where they have 500 car washes in an industry with 10,000. So they have a tiny piece of the market with a lot of growth potential ahead. Monroe, which is suffering from that trade-down consumer. They are an auto repair shop and half their business is changing tires. So you have that lower income consumer that instead of buying a tier one tire, which is a Michelin where Firestone or Bridge Stone or a good year, they're trading down to a private label and spending $150 for a tyrant instead of $250, but they have $1,300 and there are 100,000 in the industry. So a fragmented situation that I know that there's long runway.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“So, just because of having to participate in what these big names are doing, clients are long them. But to me, the greater opportunity in the portfolio that I manage, I am focused on other things, other things being commodities, for example, and being long precious metals, energy stocks, very bullish on oil and natural gas prices, uranium, copper, recent position of ours is in agriculture with sharp decline in corn and soybean prices and conjunction with that, a drop in fertilizer prices that I find very attractive now. The Russell 2000 rally of 3.5% on that day, well, I was happy about that because we're long a bunch of small MACAP stocks that have gotten beaten up and are cheap.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Exactly, they're customers. I hear the book case for those names. Oh, well, they don't care about higher interest rates. Their balance sheets are great. Well, yeah, I agree, but they're dependent on their customers. Their customers need to prosper in order for them to buy products. So let's just get back to the labor market. Microsoft sells software and services. Their growth rate So it's like I said, it's going to be real interesting earnings season. And I think a real tell for how the back half of 2024 will be for the stock market.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Underlying fundamentals of everybody else. In other words, if Microsoft is doing so well and the stock is up a lot, that should be reflected in other companies having the money to pay for their services.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“I mean, we're long for clients. I'm just trying to use this as an example of this bifurcated economy in addition to a bifurcated stock market. And I don't see how the stock market can continue one side of the stock market, the successful part of the stock market right now can continue to separate itself from the underlying fundamentals of everybody else.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, well, like I said, if we equal weight, the SP, it's up about 4% this year. So I guess looking at half the year at four, it's not bad. If you repeat that in the second half, you got a decent year, but you can drive a truck through the difference between that index and the big one. Now, that can, of course, stay the same. I just think that fundamentally, again, there has to be You know, Apple is selling phones, or is that lower income consumer going to upgrade their phone? They may not. They may just hold on for a bit. And I think that it's going to be really interesting to hear, and I don't want to pick on Apple.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“For the audience, so breadth is an important concept if it's only one stock market in the SP 500 that's going up. That's an extremely narrow rally. If 500 of the stocks are going up, it's a very broad rally. How broad is this rally? Let's say within the S&P 500, because it's not just Navidia, right? There are very large rallies in a series of names in the S&P 500.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“So, if their top line responds to the weakness in the other parts of the market that we're seeing, if the stock market's right in the Russell 2000 and that business is tough because you have legacy inflation, you have 9, 10% funding costs, and the consumer's crapping out, well, we're going to get, you know, instead of a broadening out of the big or the small, I'm sorry, the small and mid-caps, we're going to get a drawdown on the large caps are going to catch up to the downside to the small and mid. That is certainly a possibility here as well. And I think this is, you know, we can always say this is one of the more important earnings season, but considering the market cap additions to those big names, this earning season is going to be really put up or shut up.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“The four biggest companies Microsoft, Apple, Amazon, Google. Meanwhile, all four are trying to create and design chips to compete with NVIDIA. That's a different conversation. So that is its own ecosystem that can exist and prosper irrespective of everybody else. But for NVIDIA and the infrastructure providers, the other companies, all this spend is an expense.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Versus 27% at the peak in March 2000. So that's one stock market. And then we know there's everything else. Whereas just two days before the taping of this, the Russell 2000 was down on the year. The mid-cap 400, I'm sorry, the Midcap 400 index was flattish on the year. The equal weight S&P was up 4% on the year. I'm hopeful that we get some broadening and the small cap mid caps catch up. But a lot of this has to do with this reconciliation that I'm still searching for. And how can these big tech stocks that everyone's piling into continue to do so well? Now, I understand NVIDIA and Dell and Super Micro and AMD and Broadcom where your customers are those big names. I think 40% of NVIDIA's revenues come from.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Well, just as we've had sort of this two lane economic highway, the same has been said with the stock mark. We have two different stock markets. You can't just say, what's the stock market doing? Because you have what the S&P 500 and NASDAQ is doing. Meanwhile, the top 10 stocks in the S&P make up 37% of the index.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“It could be aggressive rate cuts because that higher income consumer is benefiting from a 5% interest income or interest rate on their savings. Also, a key determinant on where the economy will go in this more stressed environment that the Fed's trying to address is where does the stock market go? You know, if the stock market craps out at some point because of recession worries and what that means for corporate earnings, that wealth effect impact can have a notable impact on that higher end. And then further any economic downturn. Now, I'm not saying that's going to happen, but that's something that is a key part of this discussion about going into recession and what type of recession we may have in terms of its severity or not.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“If the labor market continues to weaken, which it has been weakening, we can look at the upward trajectory in the unemployment rate, the reduction in job openings outside of the July 4th holiday. We've seen an uptick in the pace of firings as measured by initial claims, continuing claims is at the highest level since late 2021. If the labor market continues to weaken, that will be enough to tip you into recession. The question I always get when I make that argument is, okay, what type of recession are we going to get? And the reason why it's uncertain is because the higher income consumer we know is the strongest part of the economy. Literally, that and government spending is holding the economy on their shoulders. So what would negatively impact that higher income consumer? Ironically,”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Consumers are mostly spending on what they need and less so on what they want. But I'll confuse this even more. We also heard from Delta speaking of earnings calls. Delta stock fell because there's too much capacity out there and prices are The best travel day they've had in any summer ever. So it's a very strange macro environment, but I think overall, as I said earlier, it just feels like a one-ish type percent economy, not necessarily recession yet in the aggregate, even though, as I said, there are parts of the economy that's in a recession, but just overall sluggish growth I see.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“In February 2020, and the University of Michigan talked specifically about that lower to middle income consumer that's just a lot more stressed. And it's not just stress because you're dealing with the high cost of living in terms of your daily essentials, but it's literally the high cost of living in terms of shelter. Now, if you're in a home, you're fine with a low mortgage rate, whatever. But if you're a young person that's having to rent, even though rental prices have slowed, they're still up a lot the last couple years. If you're a first-time homebuyer, well, you're dealing with a doubling in mortgage rates and a 48% rise in the price of a home, you know, you're stressed out. And these just happen to be some of your largest consumer purchases. And, you know, you mentioned consumer discretionary spending. It's clear that”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Well, retail spending is really just gangbusters in certain areas. It's gangbusters if you're in the cruise line business. It's gangbusters if you're in the concert business or if you're in the sporting event business. I mean, I went to the Las Vegas sphere a couple weeks ago and face value, if you include all the fees, you're talking $350 to $400. And it was packed and you wouldn't know that there was any consumer sensitivity to things. But if you are going into a Starbucks or McDonald's, they're cutting prices, meal plants to $5 because they're trying to drive traffic. It's a very sort of bizarre dynamic here in how the consumer is behaving here. But look at the consumer competence number that we just got from University of Michigan. Came in, I think, at 66 was the read. It was 101.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Up with actual earnings, and their business is soft too. So there's no real lift there. So I do see legitimate reason to blame the macro if you are in retail, not catering to a higher income consumer. If you're in manufacturing, broadly speaking, because the recession of manufacturing is a global thing. It's not just in the US. So I think it's a legit excuse. And just because, and I say that because I'm hearing it everywhere. It's not just a couple of one-off businesses that are blaming it. I'm hearing it everywhere.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“It does. We know it's like a retailer blaming the weather for soft business. So you're right. If I had a dollar for every time I heard challenging macro environment in a conference call, but some of it is true. I mean, if you look, if you're in the business and manufacturing or the industrial space, yeah, it's been a real challenging environment for almost two years now because of not only the shift away from spending on goods to services, but also inventories that have been very lean that everyone in the supply chain wants to keep them lean. So you're not getting that inventory restock that you would ordinarily. And there's just a very limited visibility. Speaking of earnings calls, the day we're taping this fastener stock is up, but they talked about no green shoots that they're seeing. MSC Industrial, which is a major distributor too and that competes with Fasinol, they lowered guidance about three weeks ago following”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Connecting the dots here that the business of a lot of these big tech stocks are dependent on the health of the consumer and the health of small, medium-sized businesses. I mean, up until the huge Russell 2000 rally, which I'm glad happened because we're along a few of those stocks, the index was down on the year. Well, if small, medium-sized businesses are challenged, how much software and services are they buying from Microsoft and how much advertising needs are they going to buy from Meta and Google? Now, we'll see, of course, with earnings, but it's a really interesting mix of things going on here. And the divergences between big stocks and small stocks is not just a technician's discussion about where the market goes from here. There's a fundamental reconciliation that needs to take place too.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“And they said their customer is being so careful that when they go into the store and they specify the low to middle income, they're getting, maybe they're getting some sort of food, but they're getting fountain soda instead of getting a canner bottle out of the fridge. That tells you that even to try to save 50 cents or whatever the difference is, tells me, wow, this is a consumer that is really careful. We've had multiple quarters in a row of the CFO of Walmart referring to the US consumer as being choiceful. And this is a big chunk of the U.S. economy as we know. And you have to wonder, and let's extrapolate that to what's working in the market, and those are, of course, the big cap names. If I'm lowering consumer and I'm buying fountain soda, am I going to upgrade to the new iPhone because Siri is a little more enhanced? I mean, there's no...”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“So, what we've heard of the past week has been mostly things touching the consumer. The biggest disaster this week was Helen of Troy, whose stock fell about 28% after they reported earnings. This is a company that makes everything from water bottles to hairdryers to curlers to mirrors to brushes under brand names that we've all heard of. And they really got smacked by a more discerning consumer. Pepsi talked about a more discerning consumer. We also heard from a company called Kura Sushi. They own 64 restaurants in 17 states, including DC. They talked about a macro juven in their consumer. Conagra, owner of Slim Jim and making popcorn and frozen foods, talking about all”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Inflect right back up again. So I think this is going to be a multi-year drawn out process where I think sustainably looking out over the next three to five years, inflation is going to be three to four, not one to two. And that means that interest rates are going to stay more elevated. The Fed's not going to have the same license and sort of haul pass to just do whatever they want with interest rates in response to an economic downturn. And I don't even think J Powell is also afraid, I think, of getting too aggressive because he doesn't want to end his career, whereas tournaments in February 26 with the re-acceleration of inflation. That would be his worst nightmare.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Reasons we all know with all the Red Sea diversions and Houthi attacks and so on, but that should be a reminder that someone's going to have to eat that. Someone's going to have to eat a 4x increase in shipping costs since most everything that is produced in the world starts out on a ship before it gets to its end destination. So I think that's just a reminder that the inflation fight is not just easily won. We're getting certain deceleration in rents that will continue to show up. But after the flood and record amount of supply coming on stream, this year and into next year, there is now almost no multifamily projects getting green lit. So the back half of 26 or maybe even early part, assuming the absorption rate of the current supply, you're going to see”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“As Renz decelerate, but I still think that there is an inflation mentality out there that is not going to be easy to fight. And where's most of the deflation that has taken place or disinflation? It's on the good side. Well, all of a sudden, you have shipping costs that are going through the roof. We entered the year. Well, let's back up. February 2020, the average price of a 40-foot container shipping from Shanghai to Rotterdam was about two thousand dollars. It went to about fifteen thousand dollars in the panic in late twenty one, early twenty two. And then we entered 2024 at just under seven hundred dollars. Well, it's now $8,000.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“It's a tricky question to answer because we could see similar dynamics that reflect a bunch of those factors. I mean, look, we've had a 30-year low in the pace of existing home sales, but home price is there at record highs and up almost 50% since 2021. That's the epitome of stagflation. Home prices that are up and no activity. So you could see, and I'm not worried about high inflation again like we had in 2022. I'm more worried about after this deceleration of inflation, which will continue, we'll see two handles in CPI in the back half, PCE, which I don't really like as a metric because of its heavily weight towards healthcare, that the government pays through Medicare and Medicaid. I prefer CPI. So that'll dip to two-ish.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“Have in the past because I believe that inflation is not just coming down to 2% and magically staying there. I think inflation volatility is here to stay. Let's enjoy the deceleration we're seeing right now. But the war inflation is not one unless inflation stays down and that remains to be seen.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT
“If you look at the pace of existing home sales, it's in a recession. On the other hand, the higher income consumer is doing just fine, travel leisure, hospitality doing just fine. Anybody who's the beneficiary of all this government spending doing just fine. So it's a highly mixed economy, but I think in the aggregate, there's real growing threats here. And then we throw on the topic that the labor market, which to me is really cooling off. So I think the Fed is going to be cutting interest rates in September. They'll probably follow that up in December. But I think one distinguishing factor this time around compared to the last few decades is that any rate cutting cycle is going to be much more methodical and the Fed's just not going to have the same license to respond to an economic downturn like they have.”
2024-07-15 · Forward Guidance · Peter Boockvar on an Overheated Stock Market, China’s Green Shoots, and the Private Credit Bezzle · IDENTIFIED FROM THE TRANSCRIPT