let me pick up on the valuation talk.t seems that everyone agrees things look a little pricey when you look at the broad indexes but some disagreement over what that means. should we be worried about it? >> i still think there is dispersion and valuation. the point that it's been a long rally that's been pretty strong equity returns for the course of 2023 and in the first quarter. a lot of 2023 was really fueled by the ai narrative and the magnificent seven enthusiasm. we've seen some breakup of the magnificent seven and some broadening out but i'm not sure that means valuations everywhere within the u.s. equity market really stretched. among the big tech upset and the subset for ai, there are stresses but when you look at the value leading areas of the market like consumer staples, that's an area that went nowhere. also utilities. value and small caps and those kind of errors and they're still valuation left to capture. i think investors have room to move into those areas. katie: looking through your notes, let's talk ab

but it is not just hig valuations it is high valuations with upward pressures on the te year so rising rates. you are starting to see that >> but the bears have been wrong. >> yes the bulls, simple thesis rising earnings and declinin interest rates that how you end up in the middle >> you didn't mention anything about solid economic growth. it is good earnings, growt remains solid and there is n reason to believe the fed is not going to cut as its next move, correct? >> i think there is some doubt starting to surface on that. >> only in the timing. >> yeah, i think so. i think the longer ter direction of rates is down but it could take longer i think the upward pressure on inflation is real. that makes investors nervous look, the bullish thesis i still in tact. it is just high valuations you have had quite a few guest talking about adding a pullbac to become more aggressive. >> if you say the bullis narrative is still in tact, don't get the feeling from our conversations that you are i any way bullish. >> no, we are neutral. if you think about the pressur on rates and how it is makin t

so stock prices have come down, means valuations are in line.ike microsoft and nvidia and apple where valuations are still elevated. so to us it depends on how the reactions are more so than what the valuations are at this point. >> if you think microsoft,apple and nvidia al evavaluations are elevated, what does that mean for how you think about your portfolio? >> we have in the last few weeks trimmed some of our tech exposure because of the fact that sizes have gone so large. we're still bullish. near term i think there's more choppiness, lower term i think the irnings growth is there. long runways for the a.i. industry. i think the earnings growth is going to keep up. although i do recognize that comps are going to get a little harder. from that perspective, i think near term you'll see more choppiness, longer term the businesses are still intact. >> i get portfolio management i hear that a lot. but how much had to do with the fact that you think that some of the stocks, if not all of them, just simply went from up and to the right, some of wh

is at about valuation? >> primarily about valuation, it is the big quality high-tech names that you might have heard of that my compliance people insist i don't talk about what people can imagine -- so yes, it is the large cap chinese technology companies. we think they are great businesses. they suffered terrible sentiment that is still ongoing in many cases but we have seen good valuations. thinking about investment, it's always about the quality of the business first and then the value at which you can buy it today. >> kind of like a stock pickers market. >> it really is. >> what else looks attractive in china apart from tech? >> some good names around the consumer space as well. that reflects valuations primarily. when thinking about real estate, around the whole region, it looks very cheap but there are structural challenges there. it will take a brave investor to jump into that right now but we have seen good valuations. there are plenty of opportunities. but as you say, when thinking about not just c

thank you for exolaining — valuation elsewhere. thank you for explaining all— valuation elsewhere.re. thank you for explaining all of that. - for explaining all of that. have a good weekend we will see you again soon. to ireland now, where the latest figures for economic output — gdp — are due out this morning. now, ireland has managed to attract many of the tech giants, the likes of apple, google and facebook parent meta to base their regional headquarters there, drawn in by low taxes and some of the most productive workers on the planet, all helping bolster ireland's finances and the government coffers. but critics warn of a twin—track economy — overreliant on a small number of companies as the country struggles with a housing shortage and lack of investment in infrastructure. plus, a very recently appointed prime minister simon harris following the abrupt resignation of leo varadkar. elections there soon. there is a lot going on. in the last ten minutes we were talking about the migrant prices, impact on island. —— ireland. for more on this, live now to dublin with the independe

valuations have been expanding. year over year, valuations up 25% and earnings estimates have actually about flat. then even over the past several months you have valuation expansion going from the expectation of rate cuts to nearly 6, to under 2. something needs to give, and, you know, i think it's the markets that are giving. then you add on that increased geopolitical risks and it's a tougher environment. >> okay. britai brin, want to tell me what the takeaway is for a turbulent week? >> i think as the week started we're ending, it's going to be risk off. we don't want to see iran and israel get into any type of skirmish. i think that's also -- gold is down today but gold has had a huge run. people are putting their hedges on. in addition, we started the year, scott, with six rate cuts and an ai euphoria. i think ai is getting tired, consolidating, and we're dg going to have one cut in december. i think the market is reprising. i think today specifically is more geopolitical as well as yields going higher. >> the

valuations are very low. single-digit. where we see opportunities in china would be the infrastructure space. the government is going to boost infrastructure spending. they want to develop the economy. also boost domestic consumption and reduce reliance on the outside world, on exports. especially companies in the asian market. it could be quite positive for the long-term. paul: all right. thanks for joining us. i want to get you across an alert on the bloomberg at the moment. we are getting word of an earthquake near taiwan. it's quite a big one. magnitude 7.4. we don't have any more detail on its location or its depth at the moment. there's an earthquake and tsunami warning. japan warning that the earthquake jet -- depth was very shallow. the magnitude of the quake, 7.4. haidi: coming up, more analysis when it comes to tesla's first order deliveries. we will be getting some commentary, hearing why they are calling those results in unmitigated disaster. first, they did discuss -- this is bloomberg. ♪ billy's not just runn

there are loans available but it new world valuations.about how the commercial backed security market has opened up at lower valuations. let's see if our next guest agrees. martin nussbaum is cofounder of slate property group and scale lending. we are also joined by bloomberg's abigail doolittle. do you see evidence that the commercial mortgage-backed security market is opening up? martin: i agree it is opening up and it is based off a new valuation and pricing metrics. it will take another 12-18 months to sort through all of that and see how all the existing loans are able to be refinanced. abigail: thank you so much for joining us. you founded your business more than a decade ago. it was 90% equity, 5% debt but now it is 50-50. you have seen a boom from the private lending. talk to us about that side of your business and does not reflect the market not being what it used to be? martin: i think the crux of our business is related to the lack of liquidity in the commercial banking world. the construction of residential multifamily housing

we've got to watch the valuations there, earnings revision trends are starting to improve. think you just stay focused on things like earnings momentum, valuations, and stop worrying so much about exactly where we are in the cycle, because i think this is a strange one. >> yeah, there's no doubt about it it hasn't followed a lot of the easy rules and i guess something like banks, victoria, i mean, you know, you could talk about where we are cyclically. had a lot of, you know, okay numbers coming through, but it seems like an abandoned group. the action today seems to be, whatever's crowded, which is mega cap and expensive growth, is getting sold in favor of stuff that was underowned. >> yeah, i mean, people are looking for that opportunity to go into something that has pulled back pretty significantly, but where you have some opportunity to see the growth, and look, low momentum is outperforming high momentum right now. >> over what period? like, since march or so? >> just recently and -- but you look, and momentum has actually been tied very closery ly with quality, ad it'

one is valuation. back to fundamentals, it matters what you pay for things when rates are higher and ablation is higher. it is cheap as a sector. the benefit of that is, as well, if something were to happen and growth starts to slow, if economy does turn over as the sector broadly, it tends to be more defensive. but then it has been exciting component of biotech. if you're looking for innovation and sexiness, absolute you get that with a.i. the amount of innovation happening with and biotech and robotic surgery, there is a ton of growth opportunities. >> i agree with that. i think a.i. can be transformative in healthcare. it can be transformative in health insurance. right now, there is not much, frankly, intelligence that i can perceive. the intelligence seems to me to be directed at ossification. perhaps it can be used to improve customer service, you have got a wheel -- real breakthrough. >> one of the biggest macro -- long-term driving beings is demographic shifts. one in six in which are over the

i'm not going to rush into the name right now at this valuation, i think it's fairly valued. look at that valuation difference between google, roughly 20 times earnings, and it's just not the name i want to put more money to work in. google i already mentioned is my largest position, so i will not add there. folks i said a moment ago that nvidia in the mid-30s, i'm comfortable with that. i'm not taking anything away from microsoft i'm not saying it's going down from here. i'm just saying it is the not the name i want to add incremental volume to. >> it is all about the cloud for you for microsoft? >> yeah, it is about the cloud it's about them being the market leader they will be -- look, everybody that's astute and has the balance sheet will make money in this, right? think about what they have there. a huge installed base, a huge return revenue that deserves a premium. i understand where jim is coming from i don't disagree that it's full value here as a holder, i'm not selling any because they will grow into the valuation and then some. the recurring revenue, that's a whole

rational case in terms of valuation. i think it's 25th this month, but it's not like they were all of a sudden in the a.i. game, right? they just did such a terrible launch. we talked about that ad nauseam. but it's -- it should be much higher, actually, i think. it's been at this pe, 23, if you back out the cash, it's 22, 21, it should be a much higher premium to the market, when you consider what an extraordinary company this is. and i think also, not only was the launch not handled well, but i also think the fears of what would happen to the search business, which, obviously, the engine of earnings here, have not come to pass of yet. they could. but -- so, this is sort of the sweet spot at the beginning of their launch. i think we can see a lot more upside. if gemini takes off, gifts anything like co-pilot-y kind of excitement around it, i think there's good upside here. >> i agree. i think the company is so well-positioned. not only do they have the ability to create these chips and know there's just this race to be

yes valuations are high. we should expect a pullback in the equity market that fuels disappointment. that means we look for a relative valuation. thinking about cyclical parts, industrials, the energy sector, or keeping a watchful eye when it comes to europe. again waiting for confidence the economy will turn and we are seeing rate cuts from the ecb. it is a range of opportunities globally and seeing the broadening of the rally in the u.s. gives us confidence the market will continue on this more bullish outcome than thinking of a bear market or significant correction in the near term. haidi: do you think that rally is at risk from the november election and other geopolitical factors risks might arise from? kerry: is a year of heavy elections in 2020 four. the u.s. election is front and center. there is a degree of not necessarily confidence but familiarity given the two parties running and presidential candidates that will come through, having relived this in 2016, the market may have familiarity which is ke

the valuation suggests -- they've become defensive, because as money pours in, that valuation grows. it is a defensive play and we'll talk about rates later in the show, without question. that is going to be a huge component going forward. i don't think the market is paying enough attention to it. >> for more on microsoft and alphabet, let's bring in gene munster. gene, what's your initial take on -- you pick, microsoft or alphabet >> we'll do google, and one piece, usually, when you're listening to the calls, i just got off the call, you can pick up some context and look at the stock and see why it's moving, and their cfo said a minute ago they expect to continue to invest in a.i. infrastructure and a.i. talent, and expand margins throughout 2024. now, well, that may have been part of the street expectation of that, in my mind, was a positive, given, obviously, what we've seen and heard over the last 24 hours. and so, i was surprised to not see the stock higher on that they are doing it both, google is not only aggressively investing, and it was aggressive they spent 21% more in cap

on a valuation basis, it doesn't look great relative to growth. we've been talking about that. they haven't had any new products. but if they were to miss and guide lower because of china, because of iphone, people not really that interested in some of their new products, and you have to think out a year or so, let's say they do a deal to license gemini with google, they do a deal with openai, maybe there's something out there, you get into worldwide developers forum, you get people excited, what they're able to build on that 2 billion ios install base, that sort of thing. the next phase, the next things people get excited about is a.i. on the device, right? if you think about a device maker that is really good at doing this stuff, it's them. a move lower, because of disappointment, because of china, would set up really well into early june and then you want to own it, because i do think the sentiment and expectations there again are low. >> we've said so many times, in terms of apple, if they just said, we have an a.i. product and all you have to do is pay $5 a month and multi

>> the headline valuation for the s&p 500 is 21 times forward earnings. if you strip out the big tech names that have done so well, it gets you back to around 18. there are areas in commodities that are much more attractive at this stage. i think it would be a mistake to ignore some of these emerging markets, if you have the patience to look out into next year, but it will be a challenge for them between now and then. haidi: emerging markets are little constrained, especially if they do cut ahead of the fed. are there any specific emerging markets you like in particular? >> india is a story that has done extremely well so far. once they get through the election and some of the bumping is that comes with that, it is an economy that is growing extremely well. it looks like the current prime minister will continue to push through some of his structural reforms. that makes it a good longer-term story as well. it's also one of those countries because it is not caught in the crosshairs of the rising u.s.-china tensions, is less likely to fall victim to any sanc

of a valuation discount in your mind to accept this kind of a stock decline from a company like this> this is a great question, frank, and, actually, unite health group is a leading discount they're trading in almost a decade, about 7% cash-free yield. it's showing actually 17% compound earnings growth over the past decade, which is far, far in excess of your average company. if you think about the scale of barriers entry and finding the name simply because it's out of favor at the moment, there's a bit of political noise going on, combined with the valuation and the earnings potential of this company, indeed, it's done exceptionally well long term we think it's pro e providing a very good entry point into this name. >> all right hannah gooch-peters. we've got to leave the conversation. >>> coming up on "worldwide exchange," oracle setting up ofed in one area previously pril motivating the company to relocate when "worldwide exchange" returns. returns. stay with us at enterprise mobility, we guide companies to unique solutions, fr of mobility experts. because we believe the more ways

we have reported a lot on the valuation disparities. how much do you worry about the credit quality? fabio: we have seen for insurance and pension, insurance company linked to private equity, the share of linked asset is larger three times then those that are not linked to private equity. you go from seven to 20%. it is a large difference. that is the concern. we are focusing on the link between the private equity and the insurance company. that can be another issue. in terms of valuation, the issue is there is no visibility. there are some instances you can use but they only represent a subset of the market. we have no idea how this pricing would work in a prolonged recession. sonali: what is the recommendation? when you speak to authorities, what now? fabio: you need to close the data gap. there are too many data gaps. what is missing is a systemwide view. ability to assess the interconnectedness. banks, insurance company, private equity, there is no data. another is a more intrusive supervisory approach. there is also the retail i me

the valuation is different.ng, it's a valuation difference. >> we will talk to mike santoli next for his midday word. dy see? oh wait, there it is! -back into play and... aw no, it's in the water. wait a minute... -alligator. are you kidding me? you got to be kidding me. rolling towards the cup, and it's in the hole! what an impossible shot brought to you by comcast business. (grandpa vo) i'm the richest guy in the world. hi baby! (woman 1 vo) i have inherited the best traditions. (woman 2 vo) i have a great boss... it's me. (man 1 vo) i have people, people i can count on. (man 2 vo) i have time to give (grandma vo) and a million stories to share. (grandpa vo) if that's not rich, i don't know what is. (vo) the key to being rich is knowing what counts. >>> we're back. our senior markets commentator mike santoli is here with his midday word. so i'm looking at your writing today. >> yeah. >> you made the point, too, as we assess where we are that bull markets don't typically end when an economy is good like this. >

it's just their valuation, right? when you're thinking about 60 times forward earning and toyota is a 10, it's really hard for me to understand why there's that much software that is worth six times that i think that's really the primary headwind is they have to be able to demonstrate a level of profitability that is very tough when you're building cars. especially low priced cars. >> right, and you are in toyota. >> i'm in toyota i agree with julie, i don't think the valuation happening in tesla for a long time. the issue now for people that are just talking about valuations also is the company is effectively and the events around the company have reset near-term expectations for long-term growth, so you've got a dynamic here where they tried to change the conversation in that earnings call about product developments being fast forwarded. not second half of '25 that's the dynamic the shares rallied 24% off the bottom let's be clear, bad news was priced in. bad news going into those numbers was largely priced in, and

valuations are relatively reasonable. know in 2023, 1 of the largest customers was the chinese company holdings. i do not know if you go on to instagram at all, but i noticed that my temu ads are dropping. they had been looking to diversify their ad revenue base. many analysts love the stock, so i'm just cautious because i think, things that drive markets and stock prices are interest rate. earnings expectations and whether they can be beat. sometimes that is not actually helpful. katie: one of the reasons they have been so good is this year of efficiency. almost up to hundred percent last year. it has carried over into this year. if there is such a focus on headcount, are they still growing? >> it is certainly possible. if they can grow their ad revenue, absolutely. the thing that passed over the weekend with tiktok might help them, if they end up grabbing some market share. i think expectations are really high. it can get too high for the near term. katie: it is a good point. however it -- i think they need to focus on

i don't think in terms of valuation it's defensive at all.ow in the fact that margins have been flat lining the last year, year and a half. this is probably expensive we get seduced by the fact that it's apple any other company, we would look at valuation, say, this is expensive. and this stock has not performed since july of last year, on a broader market that's done rather well. and i admire tony, as well, but if the stock trades lower, they will defend that call and they will reiterate that call as they should the question is, you know, can stomach 12 to $15 of downside, or is it something you say, you know what, i want to be in it, i don't care if the stock goes lower, because this is one of those stocks that you need to be in -- i still think there's some room to the downside >> i keep thinking about a.i., and how apple plays into this. we've all sort of danced around this, and obviously they've had siri for a long time what else could they possibly say about generative a.i., or a.i. of any kind that would really jazz up investors maybe

but, absolutely, if it yields back up, it will provide a headwind to stocks because of the valuationomponent. >> do you think it's possible we'll see the 10-year testing 5% again this year? >> well, i think that -- i think more of the damage is at the shorter end rather than the longer end, so the longer end in a way will depend on what happens to inflation as well. so if inflation stabilizes at, say, 3%, that's not great. but, you know, yields do really go up to what you're saying. you have to see inflation back up. so that's really going to be the key driver of the long end. if inflation stabilizes, long yields are going to roughly stay where they are. if it goes up, you're going to see this backup in long yields, anding of course, that would not be good for stocks either. >> how likely is it we might see inflation creep back up because you've got oil prices at multi-month highs and the food index is the highest since 2022. if i was jay powell, i would say, come on, what a head jake this is, this is just making my job harder. >> the key to what's happening with wage inflation becau

valuations of these teams. where do they go? to linear television. i know you can't talk about individual stocks. talking earlier some of your companies, pns including bought fox. >> yeah. >> what do you think happens to the media landscape, if you will? sort of an investment question. >> yeah. >> as it relates to whatever happens to that, impacting the valuation of sports teams like your own? >> well, you would think that valuations are tied into profitability. right? or some measure. and right now because of what's going on in the cable industry and media in general, you know, revenues for teams are probably going to go down over the short term as we figure out what the new model is. it's clearly going to be streaming but the question is, is it going to be a bundle? bundled with other -- baseball, all sports are trying to figure it out, and, you know, some sports are better off than others. nfl, a national package. right? most of the revenues come from that. in baseball, some revenues for teams, are local revenues. so that's a

that's why the valuation is so high. lies. that's why the valuation is so hi h, ~ ., , , lies. high. massive market in which to do that. it's interesting, _ high. massive market in which to do that. it's interesting, you _ high. massive market in which to do that. it's interesting, you talk- that. it's interesting, you talk about cars meeting active driver supervision because there is another issue at home and that is the safety of the technology at least eight lawsuits now heading to trial in the coming year, which involve fatal or serious crashes was up tesla would say that it's not liable for the crotches because it is the driver ultimately in control. does that risk putting a damper on things for elon humza yousaf? musk? tt did risk putting a damper on things for elon humza yousaf? musk? it did seem like investor confidence _ elon humza yousaf? musk? it did seem like investor confidence had _ elon humza yousaf? musk? it did seem like investor confidence had been - like investor confidence had been dampened because of so many lawsuits ongoing with nhtsa and several states in

what i fear is priced into the valuations we see at the moment are expectations around generative ai delivery measurable monetized contributions to the bottom line. i don't think a lot of the big tech can point to hard numbers justifying the ai euphoria we have seen in the last 45 months. that is my concern, not the earnings trajectory but the expectations being set far too high relative to where trading and deliverables can be right now. sonali: because you like the ai sector and you said so much about amazon, is there anything you like where valuations have run? ann: alphabet has its work cut out for it. it needs to show progress on generative ai, really pushing in and delivering. understanding how they can follow the footsteps of microsoft that has been pretty savvy and expressive it all they will price their ai offering to their consumers. another piece buried in this a little bit and where i would be looking for this in the earnings calls, not necessarily the headlines our players are trying to move and partner with the likes of disney and others to try to figure out a way to mo

it seems very lolgts cal the valuation is lower than it was.ot really expecting much fundamentally out of it it feels like it's fine, and tesla bouncing today, the other ones are backing off today so it makes some kind of sense i don't know if it really makes too much of a thing about an earnings later in part of the week it's not that much of a business bellwether, you know it's its own thing >>> tesla best day in more than three years. >> he does you'll hear from him shortly explaining what it -- and it's all about the potential for future revenue growth, especially as it does offer full self-driving technology in china. this deal expands the driver technology ability within china. , remember, it's not fully autonomous, just full self-driving sources also tell us that baidu will provide the mapping data. regardless, it's unclear when tesla might be able to tap into -- and morgan stanley likes this he write -- whether he's sleeping on a floor or the plane, a message is clear. he's back. because he's back, you have another pop in tesla shares t

charles: yeah. >> valuation tools are not good market timing tools.harles: yeah. >> so i wouldn't lean on them too much. think about macro flows and rates. charles: i want to say october 19th, we'll see, you have to check me on that. i wrote a big piece on greenspan over the weekend. volatility, the big volatility. here is what is interesting. listen the vix, i don't know. it has been down for a long time. we haven't had this volatility. when it got above 20 and went above 21 okay everyone is saying now volatility is back. we didn't close there. in fact now we're below 18. how concerned should we be it will become more of a volatile ride? >> i think it will be a bit of volatility but it is a short-term story. the macro in a good macro environments you tend to get typically lower volatility. the spikes are not as high, they're not as enduring, et cetera, et cetera. charles: right. >> yes, i don't think this correction is done yet, completely finished. we're bouncing but volatility will not do what it did in 2022 i think. the macro doesn't support that.

down compared to competitors, the delta between your valuations and their valuations is sometimes 5,, 7% how do you justify that in. >> so we're incredibly proud of -- we started raising discount rates and cap rates basically, the lowering valuation multiples pretty significantly well before others and that's definitely been reflected in our values last year we had slightly negative performance. i think the key differential has been the growth in cash flows in our portfolio. where we chose to invest we have very little to almost no office exposure, no regional malls. the fastest growing data center business we believe in the world. we own a fast-growing student housing business a much stronger sector and i think when you think about how do we justify valuations, most important thing is, we sold $18 billion of properties over the last two years at premiums to our marks. we feel incredibly good about our valuation process and what they own and how we position that portfolio. >> should ins have ves tors be concerned, unless you believe your portfolio is different than everybody else's,

valuations are still extended.t's really a good opportunity and the market is telling us this, too, to look at other parts of the market in order to balance out our portfolios. >> at the same time, david, what's interesting in tech, they obviously have sort of the ai, the generative ai wins at its back, but you're seen valuations actually come down. you have an amazon with better profitability. you have an nvidia with blow-out sales. are they overvalued? do you have to be more discerning not just buy the mag seven or fab four? >> we're seeing stocks actually trade on earnings growth, projected earnings growth and not just on monetary policy. what's the fed going to do. so, yes, i still think you want to own technology. microsoft is a great play to own for ai. and you need to own those types of companies because they still do have some of the best earnings growth in the market. but at the same time, it's important, particularly if we get into what should be one of a recovery rally to own these other sectors as well,

i think that when you look at valuation, the valuations of these stocks haven't moved over the last two or three years because they're growing into their earnings. >> lauren, erin makes the case like goldman is now, keep your eye on the ball. stay large, go big or go home and stay with those types of stocks, mega caps, for all of the reasons that erin articulated. >> i think that it's very clear that, though, the market performance has been broadening lately, quality is still the trend among the leaders. so that yes points to large cap and points to free cash flow and points to, you know, good fundamentals and if we were expecting to see a really broader equity market performance, you would expect to see the junkier more cyclical things really expand which is not what we expect. i want to just re-emphasize something that erin is pointing to around structural trends, bringing it back to what you were asking around geopolitics, because the u.s. has become the biggest energy producer in the world and because structural trends around ai and digitalization and the energy transition, supply c

valuations are stretched here.er over quarter drop in earnings, 8% decline in revenue. they are going through some challenging times. what people are also missing, under this heading of big themes and changes, massive change inside of tech over the last 6 to 12 months, which is everybody now, and we think investors should be chasing, hardware. there has been this big shift from capital light software intensive, cloud, to now it is all about ai data centers, hardware. even the big googles and microsoft's are investing hundreds of billions of dollars in that type of thing. that is a durable trend for the long term. within tech, if you're going to get exposure, i think people are still missing the inflection point we have hit from the last 10 to 15 years of software and capital light basically being all the rage. the about google. google started with $100 million and 1000 employees and has probably become one of the greatest rooms on the planet. now it will be all about who can invest the most money in hardware and in

valuations are very elevated.f we do not see this come through from an earnings perspective, i think there is more downside and more of a correction. caroline: what i love about your analysis is how deep you go on how powerful and encompassing those magnificent seven players have been. five of the seven have expected to be the top five contributors to year-on-year earnings growth for the s&p. if they do not give us what we need, earnings more broadly will fall across the s&p. >> it will definitely be weaker than the anticipation right now. the anticipation is only for about .5% earnings growth. there's a lot riding on the magnificent seven. i think that is why the markets are up a little bit today but moving sideways. they are waiting for earnings. there also waiting on the pce later this week in the first read on gdp for the first quarter -- and the first read on gdp for the first quarter. ed: there is a ubs note this morning doing the rounds. a lot of people are talking about it. they have cut on the big six to

>> valuations is one main reason why you want to be in china. know all of us got it wrong two years ago when we said, china will come back. but the fact is that it has not really been falling in terms of valuations. it's really rough today. we are not going to add exposure until we see some really strong physical response. as it stands today, you have to hold onto the best in class companies and hold onto that. haslinda: we are seeing continued weakness in the chinese on. some suggesting you will see 7.3. what are you looking at that -- what are you looking at? we are getting mixed signals. >> is not a china currency in isolation. it's really dollar strength. the dollar is strong against the euro, the asian block in particularly. so that's really -- all the other currencies in asia were also weakening on the back of this. not necessarily a china specific issue. haslinda: even as we are speaking right now, the offshore yuan rising to the highest since 2019. what do you make of these movements in the market? >> 5% is still subdued. i don't think w

haslinda: it's really about if valuations can be maintained for the big seven.likes of nvidia maintain the numbers we have seen so far? >> i don't really know, but certainly if you look at some of the projections for those mag seven, they are extremely high. when we look at some of the concentration risk in the u.s. market and how investors are positioned, the upside risk to a beat versus a downside risk of a miss, i think for my portfolio allocations, i would be going not to overweight on some of those stocks into this earnings season, but they continue to beat. until that shifts, investors are going to continue to play those names. haslinda: taking a look at where we are now, it does feel like financial conditions need to tighten even more for the fed to rein in inflation eventually. what will that mean for stocks? surely they will be under pressure. >> it depends obviously on how far they go with regards to if there's no rate cuts or there's one or two, whatever it is. i think the misconception is that if the fed are more hawkish than was previously anticipat

where i have greater hesitation is if you look from 2022 through the present, valuations have expanded, price to revenue, price to sales. it has gone up more than 60% for the magnificent seven. it has not been matched one for one with the profitability measuring on return on equity. that is where i think pockets of the magnificent seven could have issues, as we are seeing this morning. that is why i think you need to broaden the base of your portfolio, because the rubber band is pretty tight on a valuation basis. katie: let's venture outside the magnificent seven. where are you finding those pockets of opportunity when you think about maybe where cash flow generation is maybe outpacing the growth in valuations? david: to borrow from bloomberg, the bloomberg spinoff index. 26% this year. it has rallied quite well since the lows of october 2023. aramark, the food service company -- they spun off their uniform business. tonight in detroit is day one of the nfl draft. aramark does a significant amount of their food service business at sports venues. that is a spinoff stock. travel and leis

and it all boils down to, what is the valuation of companies, what is the valuation multiple of the indexre expecting 10% earnings growth, it ends up being even higher, well that's, that's a very important compensating factor. charles: so where do we go from here? i started the show off showing sort of a change in buying, right? investors are buying in the last couple weeks buying cyclical names, to your point looking at the economy getting stronger, ditching defensive names which they never really bought any way but ditching them more, but the wild card is the hot megacap names, hot growth names which may be overpriced here? >> i mean that's the interesting thing and that's why it's all but unsexy stuff. it is the rolling the sleeves, sort of what your previous guest was talking about, ditch the story, look at the facts. let's look at the s&p. let's look at the index, now looking at the index you would say gosh, all-time highs, market breadth is still an issue. if you look at the equal weighted index and the look at the multiple off the index, ex, the top five or six companies 18 times e

obviously jpmorgan's current valuation is cheaper than goldman sachs. goldman sachs is the premier franchise to own. if capital markets get better i am 100% confident the structure is in place and the intellectual capital is there, and look what they did in structured lending and mortgages. that's where the opportunity was in the quarter and they crushed it. >> the commentary of other's matches your, and oppenheimer, mike says the beat is the best in breed, and we will expand on which stocks to avoid or enhance. >> it has always been the same old goldman. >> but the stocks sometimes left. >> yeah, and that was going after solomon, and people inside were planting the stories -- >> it took a little turn to the retail, right? >> yeah. but, but -- >> in fairness, they had at least one significant stumble in there trajectory of the business. >> yeah, and they addressed it almost immediately and said this was a mistake. that's risk management in businesses, right? then we hear all the headlines about so-and-so is leaving to go here and so-and-so is leaving--

let me start with valuations.feels like after several months of stocks going straight up, when you want to worry about something, you worry about valuations. goldman had a note today saying that if you put together your worry list, that's probably not something that should be on it. what you think about how expensive this market is? >> thanks for having me on this first day of the quarter. if you look at the market unless use the nasdaq is an example because everyone loves to hate tech at the moment. the nasdaq is actually down a couple of percentage points and earnings didn't do much either, up about 10%. if you look forward, we know that these other companies, the technology companies that are able to deliver reliable earnings growth if you are worried about a slowing economy. the ism numbers are pretty compelling. if i look at these companies on a valuation basis and compare them to the 1990's. it's the right analogy for this market, we are not in stressed valuation land. we are in fully valued areas but expect

where valuations are already looking very full. do think there's a bit more risk there than is currently being priced in. >> if that's the case, we've been speaking so much about this idea that the mega cap technology, oriented names have been the driving force behind the market for the last several years at this point. they seem to become a little more vulnerable with this latest mini pullback if you want to even call it that. is mega cap technology still the place that you see some of that leadership developing either to the upside or the downside? >> yes, i do, but i don't think that these stocks are created equal, so i think really when we look at the likes of microsoft, for example, when you look at what's underneath the hood there and the fundamentals that are at play as well as the potential moonshots when you look at ai, really quite compelling, but we are seeing divergence, the likes of apple. tesla can't participate in the excitement the same way because being a lot more consumer-led, they're in a more difficult spot. i c

valuations are elevated, but nowhere near the '90s levels. higher rates of the earnings growth and strong balance sheets show we are not in a bubble here. >> there is no doubt, robert, this is not like yet what we saw during the precursor to the great financial crisis or dot-com. there are pockets of the market that act in that way and that is why some feel it could be in a bubble. those places in technology, are they worrisome for you? >> not worrisome. to more of the companies, they're growing at a very fast clip in terms of earnings. they tend to have strong balance she sh sheets. we have seen it with the meme stocks with valuations get out of control and you have the selective bubbles rolling around. broadly speaking with technology, those companies are earning their way into the valuations with strong earnings and strong balance sheets. >> do you feel there are places with relative value outside of technology if you look to the broadening of the market rally? can it continue? >> i think so. that is a trend that could continue. we may be

in terms, though, of the historic valuation of the s&p 500, some could argue, though, that historic valuations are not applicable to where we are now, because the composition of the s&p 500 is so different. >> i make the argument, though, if you think about where we've been getting earnings growth over the last year, why we bought this kind of earnings malaise that you've seen across lots of other sectors is because of the names that make up 30% of the s&p 500, they make up 50% of the nasdaq 100. if you didn't have the outperformance from an nvidia, it's become the third-largest market cap company in the s&p 500. if you don't have microsoft doing what it's doing, by the way, trading at 35 times, many turns over its historical average. so, right now, we've had the earnings growth, but you've had multiple expansion in a big, big way, around a fundamental narrative. if that doesn't start to play out the way -- or, if we pulled forward, a lot of this performance, at some point, you will have a correction in multiples, especially with yields where they are. >> why are we so -- we should be happy --

and valuations have to reconcile. to me 21 times did not make sense and that's what we're doing. we're coming back to what are we at now 19ish times. that's a more reasonable thing to work off of. in terms of your question is there more down side, sure, everything always overshoots, we could get back to flat on the year. i wouldn't be surprised if we end the year in the up high single digits, 10% range, but to get there it can't be a straight line. >> it remains to be seen if the overall markets valuation was too stretched, earnings season is just about to get going. we got a third of the s&p companies reporting. if you want to take be issue with mega cap valuations, we can have that debate if you look at where we are versus the ten yer historical average in some cases we are well ahead of places we've been in the past, in some cases we are not. alphabet today is below 22 times, ten year average is just below 23 times. meta today just below 23, historical average is near 26. amazon is much lower. i mean, it's not like apple is so egregious. it's not like nvidia is, either, and we

it is 60% of my valuation. robotaxis, autonomies, fsd to some extent. >> self driving. >> assisted driving. robotaxi is level four. drives you completely. >> the idea that it is coming in august. does that hinge on the valuation? is this something that you could be a little flexible? that has been the knock before with the timeline is laid out and not met. do you think the same thing with the valuation call? >> my valuation is based on a new target and discount that back and apply a multiple similar to fsd. if it is august 8th or next year -- robotaxis will not be mainstream for a long while. i do see why he's doing it. he's trying to highlight the value this could bring. it's huge. >> when do you think it could rollout on the streets? >> we have a robotaxi service in san francisco with waymo. i don't think it is in scale any time soon. >> the difference and i'm curious. there is a view among the community that the reason why the waymo and cruise products work is because they use live right now. you roll your e

valuations are looking a little stretched.o you see opportunities in this space in asia maybe going a little bit unappreciated at the moment? nicholas: yeah, if you look generally at valuations across most of asia, they look attractive, certainly relative to the u.s. and within that, of course, there are a number of tech segments that look very attractive. i would also jump in with we are looking at the most recent p.m.i. out of china we mentioned earlier and indications, not just indications, actually, the authorities in china have been easing, not as quickly as they might have in the old days, but we are seeing monetary easing coming through in china. and you know, stocks in china are pretty beaten down. i think there are probably a lot of interesting investments in the chinese stock market and tech would certainly stand out. paul: all right. nicholas brooks, head of investment research at i.c.g. we'll have to leave it there. thanks for joining us. still to come, we're going to be speaking with assistant governor christopher

particularly robust or valuations are really stretched. so, in that case, we favor relatively undervalued companies with strong balance sheets. so, that was really our approach last year, continues to be our approach this year, and if you look at the space there are lots of interesting spots to be had. katie: where are you finding those undervalued names? sector year-to-date, we have energy at the top with financials and industrials punching above the recent weight. what sort of sectors and industries are you finding those opportunities? que: certainly, last year was a lot different. we had a lot of opportunity technology but this year i think we are seeing more from financials like wells fargo, a great name with a solid balance sheet. great business. they are doing particularly well . also, i think one of the things we are looking at is industrials . 3m is a very interesting company. very inexpensive. they still have a business mode with a lot of expenditures on research and a new ceo, which is particularly exciting. katie: and of course

you have two independent investment banks that make a valuation and i think they meet in the middle, and it's a process. i don't know why it's taking so long, but i don't think there's any hair there. >> you supported peltz, too. >> i would sell the stock if he doesn't get a board seat. >> would you? >> yeah, i would. he could make a lot of change. you want him on your team. he has a proven track record, and i don't think it makes sense, so i would sell it if he doesn't get involved. >> you don't own it, so it doesn't matter? >> i sold it at a lot higher. >>> let's get to the news with pe pippa stevens. >> the judge ordered murdaugh for restitution to the victims. google plans to destroy data on the web browsing histories of millions of users to settle its lawsuit related to the privacy settings. the lawsuit accused google of misleading users of how it tracked people when they were in that mode. in addition to destroeugying th data, it will limit the information it collects. and then putin calls up for mandatory service, according to the document on the kremlin's website and it comes

if you asked me the valuation of one point 5 billion.think it is at least market ready in that sense. haslinda: the plan is to ipo. the question is, when and where? >> this is the fourth year of the rating. in that sense, spending enough money over the last four years. so it's very clear that from a posturing standpoint we are interested in the american stock exchange. of course we are not going to put that dual listing in the markets home. we never say never. all doors are open. as long as it makes financial sense our investors, our customers, any company from that standpoint. haslinda: is it important because these markets will be more attractive if you talk to institutional investors eventually. exits partially because of that. there's a lot of investor interest in hong kong. and more recently in japan. the main reason is really because we looked at both markets and there is an extensive lift over the last year, year and a half. those two markets are great markets. they are big. cross profit margins are actually very attractive. compe

haidi: lisa, how widespread is this valuation gap for japanese companies?real estate on their books, and by one analyst was the estimate, there are 700 listed companies in japan that have real estate, so it is very widespread. but to give you an idea of kind of the scope of the gap, you are looking at some very prime tokyo skyscrapers. with a are value for on the books, probably five times less then if they were sold on the market. annabelle: so we know that there has been a bit of pressure from activist investors, but how are they going about that? lisa: like i said earlier, the property values, that comes to unrealized gains of the values of real estate can really only be seen if the owners selloff the property. so several of these activist campaigns at the companies are basically asking them, pushing them to sell off the buildings, to use the income and the capital from the sale to invest in kind of more value-generating business lines or in more core businesses. several notable recent examples are elliott, which has a big stake, they are arguing to affo

>> i think it is both valuation and future growth. both apple and tesla are suffering from the issues that you talked about and that is dampening their overall growth going forward. valuation for that lower growth is a little bit higher than everybody would like to pay. ed: if the mega caps don't meet, what happens? >> i think there could be a little bit of another sort of selloff in the market. we saw it last week and a half, ever since the inflation print. i think we do need to see a lot of these larger names, microsoft, amazon, google, meta. they need to come out and show us they continue to grow at the pace they can grow and show that free cash flow growth so people can continue to rely on them for that quality growth. ed: do you get the sense, ok, this is the quarter where we look past the ai hype and start again to look at fundamentals? did you have earnings growth? how is your free cash flow? traditional boring things like that? >> i think it will be a combination of both. in terms of you have to produce those numbers come this