YouSaid · the spoken record

Sam Burns

lines on the record: 90
first: 2022-01-12
most recent: 2022-01-12
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“These analyst revisions, how forward looking are they? I should say, is that are they responding to news that has already happened? I'm going to take a guess that in March 2020, let's say on March 23rd, the bottom of the S&P 500, analysts were still downgrading their expectations when actually that was the ideal buying opportunity. So we spoke in earlier about this, how your model is better at identifying whether a trend will continue than identifying that the trend will start because analysts, can you speak to this also? Because analysts, they're not like traders who are, they get a commission essentially on how much money they make. They're salaried people and they're trying to keep their job. So if I'm an analyst and I forecast that Amazon is going to make $80 and it's way outside the norm and they only make $60, that will look bad for me, look bad for my firm. So that might not be good for me. So analysts typically have this.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“They see some kind of new development, new news. Apple announces a new product, or there's a new regulatory change or something happens that causes their view of what the company's going to earn to change, that's the piece that will move the stock price typically. So when an analyst raises their estimates or lowers their estimates for a company, and particularly when they do it as a group, stock prices respond to that. You can show statistically that stock prices respond to earnings estimate changes when they occur. Stock investors do follow what analysts say about their earnings estimates, and particularly those changes. And that's why the revisions are key, that the changes are what really move stock prices. And so when you want to see what's going on for a stock or for a group of stocks, looking at which direction those changes, those estimates are moving is really kind of the crucial bit. And that's what Mare is designed to track kind of in a structure.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, yeah, I know I think that's the key analysts around the world produce their estimates for thousands of companies and publish them. And so that's what I'm tracking here is what Wall Street and Equity Analysts are doing with their estimates for earnings for all these companies. And here we're mostly looking at what they're going to earn over the next 12 months. That's the primary kind of time frame we're looking at. What we found and what most research over the years has found is that the level of estimates are kind of where people are put they're predicting today is less relevant for forecasting stock prices than the changes in the estimates, the revisions to or the updates to the revisions, the news that impounded in them. Because what they're saying today is pretty much already priced into the stock. So the PE or whatever it is will reflect current earnings.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so stocks have earnings, or they have negative earnings, and analysts, people who work at banks and other research shops who work for investors, essentially, they put out forecasts, estimates of what a company's earnings are going to be. Oh, Apple is going to earn $1.50 per share. But they change. And they say, actually, I'm moving it from $1.50 to $1.60. Your framework mayor, monitor of analyst earnings revisions, says the fact that this analyst moved from $1.50 to $1.60, that's bullish. Why is that the case?”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Either supportive or not supportive really helps tie everything together and gives you a kind of a bottom up view of things to go along with the traditional top-down macroeconomic data that you might look at.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Sure, no, that's right. Yeah, a lot of the work is kind of driven from this bottom up kind of set of indicators that I watch. And you're right, Mare is kind of the acronym that I use. It's M-A-E-R is the acronym and it stands for the monitor of analysts' earnings revisions. That was the original name of a product that was developed many years ago and that I kept when I kind of relaunched it in 2013, I guess. And it's designed to track what analysts are doing in terms of their earnings estimates for individual companies and then aggregate it to industries, sectors, countries and regions to get a feel for where the kind of bottom-up fundamental trends are for companies and for larger aggregates as a measure of where the fundamental momentum is essentially. So everyone can look at prices and see where price momentum is, but knowing where the fundamental momentum is, where the actual earnings are.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Europe looks pretty good in terms of relative earnings revision sort of the relative fundamentals it's a more cyclical region so the the more cyclical sectors are more heavily weighted there they don't have as big a tech sector in Europe so if you're heavily dependent on you know technology to drive things that's a that's a very US you know kind of focused you know bet to make if you like tech you kind of you have to like us if you if you're a little more balanced on tech or you're more willing to take cyclical risk then Europe actually looks pretty good and they look like there probably won't be raising rates and tightening liquidity quite as quickly or as aggressively as the Fed will so you probably still have some of that policy support there as well so I'm relatively positive on Europe more the eurozone continental Europe than the UK because UK is still facing a lot of headwinds from Brexit and things like that as well as COVID but”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“To kind of look more closely at. But again, as you start to see the Fed and other central banks no longer providing as much liquidity, that tends to be sort of a headwind for emerging markets in general. And not all of them benefit from higher commodity prices. Some of them are oil importers and have to pay higher prices for oil and natural gas. And so I think you have to be much more selective now within EM rather than buying kind of the overall emerging markets asset class. So if you think that the risk appetite is starting to fade, liquidity is starting to fade, and you have the heavyweight of China still kind of putting their film on things, I think it's still risky to dive into emerging markets in general and China in particular right now. I don't think it's been full.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, exactly. So having that much weight in China and having them be such a dominant influence, the fact that they not only had the response to COVID that they did, but also the kind of policy related change going after certain companies and essentially telling them to make less money. And they did. So that's had an effect on the overall emerging markets kind of universe. Other emerging markets have struggled as well. You know, Brazil's had a hard time. Turkey, of course, has been in the news a lot lately, having a hard time. So there's definitely been pockets of other sources of weakness within emerging markets that are more idiosyncratic or specific to those particular countries. The rest of emerging markets outside of China are looking better than they were for sure. So if I had to get some exposure there, I would look for non-China EM.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Shareholders of those companies. And of course, China is, I don't know, roughly maybe a third of the overall emerging markets universe by weight. It's a huge part of that. And so when China decides to be like 40%.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“So I'm still fairly negative on China just because we haven't seen a turn in the earnings estimate trends that we watch there for China. They're still much weaker than the rest of the world. So it still looks like analysts are not through bringing down their estimates for Chinese stocks. So I would say that some of the bad news has clearly been priced in that they've underperformed a lot. But I haven't seen a turn in the fundamentals or the top-down policy that would say, okay, things have really changed and therefore there's more of an all clear to get back in. China in particular, of course, I guess starting summertime last year, had a policy change to go after some of the big popular tech companies, education companies, property companies to try to crack down on them, have more control, whatever their policy directives were, it hurt their earnings. And made things worse for.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Those things that are very sensitive to liquidity are probably not going to do well even and already aren't doing well and probably will continue to do so for a while longer. Now other forms of risk in the sense of cyclical risk or kind of beta itself being sensitivity to the market is a little bit different. That's actually been doing relatively well. So the big cap stocks, you know, Apple and things like that that are closely tied to the indexes and that attract a lot of that index money and things like that, they'll actually probably hold up relatively well because people still want to be in equities. They just don't want to be in things that are just super volatile kind of for volatility's sake. And so I think stocks that have earnings and that have growth, prospects for growth, but there are larger cap and more liquid and don't depend on that sentiment and liquidity so much are going to be the one the places to be. So not necessarily defensive, but not fully.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, and that's actually been going on for a few months now the most volatile stocks, being just volatility for volatility's sake, have been lagging. And that's one of the things that shows that risk appetite in general, that's kind of a signal that people are not so quite so willing to just take on risk for the sake of risk as they were in late 2020 and most of 2021, or at least the first half of 2021. And so that tells you that there's a little bit of a pullback in risk appetite and that volatility per se is not being rewarded anymore and probably won't be going forward because again, that's very sensitive to liquidity conditions and sentiment. And it's hard to say that sentiment's going to get a whole lot more bullish than it already is. And liquidity is probably not going to improve dramatically from where it is. It could get worse if the Fed decides to tighten a little faster or things like that.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Small caps are almost always riskier than large caps and are especially so now. They're more volatile. And so you need to be expecting a premium to be willing to own them to take on that extra risk. I don't think you'll probably get paid for that risk on average going forward. I think just kind of the best times for them have faded. There'll always be some small caps to buy, of course, but I think you're going to be better off in the larger names overall.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“I do think that large gaps are probably the place to be for this year. That model I mentioned to you earlier when we were talking, my cyclical model on small cap large cap allocation has moved from kind of early cycled kind of mid-cycle type indicators. You can't really say, if you look at most of the market or the economy economic data that we're near a trough at kind of a low point in the market or the economy, we're definitely the markets are near highs, credit spreads are very low GDP growth has recovered, all those kind of traditional indicators of growth in the economy are far from where they would be coming out of an economic low and are much closer to levels you'd see near an economic high. That doesn't mean they're going to go down that just means that that kind of early stage has now likely passed and we're kind of in the mid cycle stage where you tend not to get paid for the risk of small caps as well.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Big runs. Some of them are so big, you wonder if they can get much bigger or if they'll face government scrutiny, antitrust, things like that. So I think those are kind of the big picture things that are balancing them out to some degree. But I think there's still a lot of money around in the system that needs somewhere to go. And fixed income is very unattractive still. So it's going to rotate amongst the areas within the equity market back and forth depending on the day-to-day, week to week, economic data and kind of market sentiment. And I think as long as fiscal policy and monetary policy are”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Right, so I think value has been doing relatively well overall, and I think it will probably hold up. I think energy and financials are the two big kind of weights in that area. I think financials are probably facing a mixed set of headwinds and tailwinds. Energy's probably got some decent tailwinds for now. I think with energy, something like that, the issue is more right now things look fairly good, oil prices and natural gas prices are high, and they've got demand coming back as people kind of recover from COVID. But on the long term basis, on a five or ten year basis, a lot of people are figuring that demand for fossil fuels is just going to be on a sort of a continued downtrend. And maybe they don't want to make big long-term investments in those kinds of things on a structural basis. Whereas, you know, growth stocks, technology, communication services, some healthcare, those are probably going to have the long-term winners, but a lot of them are expensive.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Out and redemptions and some of that kind of more tactical portfolio level activity going on. And I think that's what you're seeing there is more of that kind of going on under the surface among the smaller names.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Upward revisions and energy stock earnings and things like that. But in terms of the overall kind of style rotation, it's been a very mixed between oscillating between growth and value as long as you're looking at kind of the major large cap growth and value. When you get down into the smaller cap names, like there's archetype names you mentioned, those kind of are kind of a bucket under themselves in the sense that they don't have the kind of underlying fundamentals to drive them the same way that a lot of the large companies do and rely on liquidity and sentiment primarily to drive them. And that's what's really been changing. So among the kind of large cap index drivers, I would say it's been very much kind of a back and forth rotation between growth and value and cyclicals and kind of non-cyclicals. But then among the more illiquid names, you're just starting to see some of those big holders having to get”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think there is certainly some rotation or kind of portfolio repositioning that goes on around the end of the year and the beginning of the year. And so whatever people came into the year, heavily overweight, sometimes they'll look to scale back. So the selling and technology that had done very well in October, November, December on a relative basis, they're pulling back from some of that and rotating into the areas like value, energy. And also the fact that energy prices, the crude oil prices and things like that, have held up pretty well, even though there's been signs of growing output both in the US and from OPEC. So I think energy in particular has a certain amount of tailwind to it from its underlying commodity. That's true for other commodities as well in certain areas within the material sector and things like that. So they still have a strong economy behind them and they still have the kind of supply demand imbalance that helps them for a while. So that's why we're still seeing”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Risk defensive stocks yet, and they're not getting out of high yield credit to a large degree. And so it's really just those isolated pockets that really, really just got overvalued and kind of went too far through probably March or so this year and have now had to correct that you're really seeing a lot of the weakness. The overall market, the S&P 500, most of the indexes are still at or close to their highs. And that's typical of a rotating market, not a overall weak or bear market.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Markets now have been sort of pulled back some naturally. You can't keep that up forever. And now we're following kind of the same cycle where the really speculative kind of most volatile stocks do well early on and they did. They've peaked and have now fallen back. And so more of the kind of stable growth and some of the cyclical companies that benefit from a strong economy, but can also withstand somewhat higher rates and don't depend on that kind of aggressive liquidity provision are the ones that are now kind of taking over the leadership. So I think the key is that the economy and the earnings are still there. They're still growing, just not at such an extraordinary pace. And investors are still wanting to own equities in general. They're not pulling out of stocks. They're just rotating from the riskiest stocks to kind of more moderate risk stocks. They're not really piling into really low risk.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that's right. I think we followed in some ways a typical market cycle, but compressed in a lot of ways or the amplitude has been dialed up by the fact that the COVID itself and then the policy response to it were so historically extreme. The Fed tends to cut when things get weak in the economy, but it was much more aggressive with its bond buying and even expanded its powers, as you remember in 2020, to be able to not only buy treasuries and mortgage bonds, but to buy corporate bonds and junk bonds even, which it never had before. And that, I think, kind of changed the landscape and produced a lot of that willingness to buy speculative assets, even in conditions that were very uncertain at the time. And then you had the massive fiscal stimulus, which is much bigger than anything we'd seen, at least since World War II, really. All of that combined produced this extraordinary move in both the economy and in”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Exactly, and definitely true that on a day-to-day basis, the long-term, the growth stocks do very much respond to movements and interest rates. It's a big move in bond yields, then the long-duration stocks tend to lag. And it's almost a mechanical thing that traders do in the short run. Yeah, so I'm very much talking about kind of the longer-term prospects for those companies and their valuations is probably less tied to the level of interest rates when rates are generally very low than people kind of, then you would assume if you just extrapolate from those day-to-day moves. So I think if you're holding for six months or a year, it doesn't matter as much, or certainly for five years. But day to day on a tactical basis, rate movements and those kind of rotations between growth and cyclical value.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, just a point on the discount rate and long duration stocks. I think it can be confusing because on days where long-term bonds sell off hard and yield spike, those tend to be days on which the Nasdaq 100 sells off hard as well. So I think on an intraday basis or one day basis, one day return basis, they're very correlated. But you're saying that on a longer term basis the fact that the yield is at 2% versus 1.5% doesn't affect the long-term return potential, but 1.5% going to 1.6% in one day, that affects QQQ in one day, but whether it's at 1.5 or 2% in terms of absolute level, not that big of a deal.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“That's the real risk that those stocks have really high expectations built into them, have to come back to Earth. The traditional cyclical names that have low PEs and don't have really elevated expectations, they can withstand higher rates. They aren't dependent on that. They're more dependent on the economy. The other ones are more dependent on kind of their own secular growth story, and they can't all win kind of thing. And so I think There it's more just a question of the growth expectations and how they change.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Term interest rate affects how you value stocks where their earnings are in the distant future. I think that effect in reality is probably overrated if the 10-year Treasury yields 2% instead of one and a half, a stock that's growing at 20% isn't going to matter much. It's the change in the expected growth rate that matters. So if you thought a stock was going to grow at 20% and now it's going to grow at 15 or 10, the stock's going to go down, whether interest rates move 50 basis points or not. I think that's the question is as we get to the point where people are going to be a little more demanding about whether the companies can actually make their forecasts or kind of grow into their valuations, the ones that can't are the ones that are now and maybe in the future are going to be the weakest areas. And so I think”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“I would say that a lot of the sort of cyclical companies, the industrials, consumer materials, commodities type socks, most of those can withstand rate hikes by the Fed, at least up to a point. Going from zero to 75 or 100 basis points generally won't hurt those kind of stocks if the economy isn't, I mean, if the reason the red is Fed is raising rates is that the economy is strong. If there's strong economic growth, then small moves and short-term rates won't hurt those kind of cyclical names much. What we've seen recently is people responding to the sort of long duration stocks, those stocks where their earnings are far in the future. They don't have current earnings or very little current earnings. And therefore, the kind of the trend in long-term interest rates is going to be a concern in terms of the kind of discounted cash flow type analysis that people do where a movement in the long term.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“By the way, those profitless small cap growth names, they're not almost by definition, not a huge part of the SP 500. So I can see those stocks doing very poorly on S&P 500 holding up. Sam, you mentioned the Federal Reserve raising rates. What type of stocks is the Fed hiking rates a greater threat to? Cyclical small cap value companies or cyclical or speculative small cap growth companies?”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“I don't think they're going to suddenly have a big resurgence, but I think overall equities can hold up. I think earnings will do relatively well. And so as long as there's that kind of underlying fundamental support and there's not a great alternative from fixed income or other assets, then I think that equities and risk assets will do okay. But those are the downside risks. Policy mistake, China or profit margin squeeze.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Growth and certainly supply chain issues, things like that could emanate from China. And then again, policy risk if it looks like that fiscal policy will suddenly become much more restrictive and contractionary if the Fed decides to respond to inflation much more aggressively and tightens too much, that would be a downside risk as well. Those are typically those are things that have happened in past cycles for sure. In terms of market sentiment, people are pretty optimistic and bullish here. I think there is some risk that people get more cautious. But that would need a catalyst, I think. I think there would be something that would have to change in the macro standpoint to make that happen. I don't think it was just going to happen all by itself necessarily. I wouldn't recommend going back into the really volatile small cap profitless growth companies.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“So I think the downside would be if input costs and wage costs and things like that go up enough to really dent profit margins that they can if companies can't raise their selling prices fast enough to compensate for wage and input cost growth then that could be the thing that hurts margins and therefore earnings because margins are quite high now a lot of that is concentrated in you know the tech sector but a lot of other sectors still have relatively high profit margins compared to history. That's certainly a risk China is certainly a risk you know it's been kind of weak but if it really started to see a big downtraft either because of property speculation or tightening of economic policy or whatever something got a little got weaker than expected there that could be a drag on overall”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Big new COVID wave and policy is reasonable and supportive, even with a couple of three rate hikes, I think you could get a decent economy. And therefore, there's no reason to be heavily bearish. Valuations are kind of high for equities on a historical basis, but not relative to bonds, certainly, and not on a current year earnings basis. So I think there's not much alternative to equities still. So I don't know if you sold all your stocks. What would you do with it? It's still an open question.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Will be relatively solid for those reasons that I mentioned. I think that the risks are either Fed over tightening or fiscal policy retrenchment, some kind of limitation on fiscal activity. Or obviously if there's another COVID wave that really retrenches things again. Certainly, we hope that all hope that doesn't happen. But the fact that it looks like we may, the Omicron wave may kind of move along by at least, you know, March maybe by the end of the first quarter, and that if things do improve the rest of the year, then that sort of forecast for economic activity could hold up or even improve a bit. So I think the economy and the earnings will do fairly well. I think there is some upside if the supply chain and kind of inflationary pressures get worked out a bit and there's no”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“The overall economic growth for 2022 will generally be pretty good. I think the forecast now are for 3.5% to 4% real growth. And then 3% to 4% inflation gets you to some sort of 7% to 8% nominal GDP growth. I think that could happen. And that would be in line with actually current bottom-up analyst forecasts for revenues and for earnings for the S&P 500. The kind of 7% revenue growth and 8 or 9% earnings growth is kind of what the current forecasts are. So analysts are not expecting profit margins for corporate America to expand dramatically further from where they already are. They're already quite high. So in terms of top line kind of GDP and revenue growth, I think it'll be pretty good. Some of that will be inflation, prices going up, and some of it will be real growth. But I think the real...”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Lost some of that so basically that 6% just means that we're at the sixth percentile of the historical range for that indicator. So all these indicators that I look at are kind of percentile scored so that zero is worst and 100 is best. And so having been at very high readings for a long time, a lot of Fed support, we're now kind of moved to the other side saying the Fed is withdrawing support and that's a net negative for equities.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“So that basically means that relative to the last few years, if you look at kind of what market expectations for Fed policy are. And so here we're just looking at the comparison between what the two-year treasury yield is yielding versus what Fed funds are or kind of the short-term three-month yield. That gives you a feel for where the market expects the Fed to be in a year or two. And two-year years have moved up a lot. They're up around 70 some odd basis points now. And that tells you there's multiple rate hikes that are being priced in now that were not the case a few months ago or a year ago. And so that's telling you that having been for several years having the Fed, you know, looking at either lowering rates or keeping them at zero, we're now to the phase where they're starting to raise rates. And historically, that's been something of a tailwind, or sorry, a headwind for equities and risk assets in general. necessarily causing a bear market by itself, but it tells you that you've”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Kind of early stage to sort of mid stage in the market cycle, and that's also true of the economic cycle. I think the backdrop is still favorable. Bonds and real interest rates are still very low. They don't offer a lot of competition for equities and risk assets. The economy is still growing in the US and globally. Earnings are still growing. So all that kind of fundamental backdrop is still fairly good, but the real strong tailwinds we've had are starting to kind of moderate and are now more balanced between kind of headwinds and tailwinds, I would say.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“And right now they've kind of been backing off from having been very, very bullish from kind of probably August, September of 2020 all the way through just recently. They were in their maximum bullish reading. They've now kind of pulled back to sort of a moderately bullish reading on that overall kind of composite model that I use. And that's really consistent with the fact that we're now getting close to the point where the Fed is going to be probably raising rates this year. So it's now come to that point where a lot of the monetary stimulus is starting to kind of stop being provided, maybe starting to take it away a little bit. And the price momentum and kind of the speculative enthusiasm that was so prominent in late 2020 and much of 2021 is also fading, partly because of the liquidity is being withdrawn and partly because those things just only go on for so long. So those kind of things are kind of early signs that were moving.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that's right. Yeah, we often start with a top down view before we go trying to dig into individual industries and stocks. And particularly nowadays, that's very important. The primary timing tool I use for kind of a three to six month view on equities and really risk assets in general, kind of the risk on risk off trade has been what we ought to call a global equity risk model. And it's got eight indicators like the ones you described that are based on equity returns, various forms, volatility, price momentum, things like that, and also cross-asset things like credit spreads, metals prices, Fed expectations, the Treasury market, all those things kind of go into it to describe both the backdrop and the actual market behavior that we're seeing. And those indicators I found have a good track record for helping gauge risk and reward over the next few months.”
2022-01-12 · Forward Guidance · Can Earning Season Save Growth Stocks? | Sam Burns · IDENTIFIED FROM THE TRANSCRIPT