Single Best Idea with Tom Keene: Jeff Currie & Julian Emanuel

Published May 14, 2024, 5:00 PM

Tom Keene breaks down the Single Best Idea from the latest edition of Bloomberg Surveillance Radio.

In this episode, we feature conversations with Jeff Currie & Julian Emanuel.

Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF

Bloomberg Audio Studios, podcasts, radio news.

Single best idea, what a couple of days has spend. We going to CPI tomorrow in the retail sales conbo at eight thirty. We'll have all our covers there. Michael McKee leading our coverage for all of Bloomberg Media. But just already an eventful week. I mean a market that's not doing anything. You look at the screen and the vix is like thirteen whatever, and you can first glance at the Bloomberg launch pad and you're like, I can take off the month, and then you look at some of the nuances out there. I'll give you two nuances right now. One is this dash to utilities because AI is going to need all sorts of new electricity, and the fact is utilities have done a moonshot. We'll get the copper in a moment. And the other is what's going on in the Pacific Rim And just quietly early this morning, euro yen showed weekend strong euro and I'm sorry they got to go into the Japanese evening and discuss this. We'll have all of that across our Asia coverage. Von Mann leading so much of that effort and Steve Engel with his great reporting. But look for that based on of Hong Kong, but also out of Japan as well. I'm really watching euro Yen for a third Japanese intervention. There's always a good intervention when Jeffrey Curry shows up. He taught for years at his University of Chicago. The great segment here for the longer podcast of the microeconomics of oil, the shift that we're seeing in copper. But here is Jeff Curry on copper in the new sustained rally, the higher price of copper.

AI's you know, chips and copper. You need the chips, but then you need the electrical wiring to be able to power those chips. And one of those chips, the video chips GPUs, consume as much power as the average American household. So you're going to need a lot of grid connection to be able to accommodate that type of growth. And you know what is the bottleneck for that, It's copper. So all roads lead to copper, whether if it's military, spen, AI, data centers, Green Capex, they all point to copper.

Jeff Curry, of course, iconic at Golden Sex now holding court at Carlisle groups as well. On the equity market, some spirited discussion today, just no other way to put it, a real debate about valuation, about the wall of money that's out there comfortable with five percent money market fund. Somebody on the live chat on YouTube said, hey, I got a six month CD five point three five percent. That gets your attention, But you look back at the challenges the markets had, and Julian Ommanuel, working at Evercore ISI, would make clear these are valuation dynamics. The simplicity route, the one I do not recommend, is to look at price is compared to earnings, and you get some form of valuation. When you look at price as compared to earnings, I would look much more at least drag cash flow into it, that cash after capex, and of course with the fancy stocks the Magnificent seven, there's some real capex dynamics right now, or I'd really look at return on an invested capital. But anyways, the valuation phrase always within the media comes back to pe Julian Emmanuel of Evercore ISI.

The entire down draft in twenty twenty two and really the other side in twenty twenty three, it was very valuation driven. Okay, we understand that the earnings have migrated towards for the most part, that's select seven, but at the index level, the earnings have stayed roughly the same. The thing about twenty twenty four which convinces us that even though we think you have a correction in front of you, is that the bullmarket has further legs. Is you're actually going to see earnings growth for the first time in two years. The surprises were much larger than expected because revisions went down prior to the start of the quarter. There isn't really an explanation other than perhaps the message of what was a subpart GDP first quarter. But you're basically on track five and a half maybe six percent earnings growth, and from our view, that's good. We expect roughly that rate of growth throughout the year. But the problem for the markets is the market expects that number to be upwards of ten percent.

Julian Emmanuel evercore Isi and I do want to make note Gina Martin Adams of Bloomberg Intelligence has been way out front with the earnings and revenue surprises that we've seen. I should point out home Depot showing up today with a pretty tepid, I'm sorry, seven point four percent mortgage influenced earnings report. We'll get much more on that in the coming days, I'm sure from our guests and from Bloomberg Intelligence as well. We're out on Apple car Play and Android play. This is growing out. The statistics are unreal on this revolution of putting fancy communications into cars.

Now.

Obviously they're going into new cars, new cars, new cars, and we look at Apple car Play as a three year project, five year project as we see a rollover changing within the automobile business towards these sophisticated dashboards where you can find all of what we do with Bloomberg Podcasts, all the radio interviews, even Carrol Master. It's just amazing. Carrol Master's on Apple car Play as well. Out of YouTube. Subscribe to Bloomberg podcast A lot of people have said, what's the easiest way to do this. Subscribe to Bloomberg Podcasts. Search for Bloomberg Podcasts and you'll get to our three hour show, also the replay, and of course all the other products that we have on Bloomberg podcast had mentioned Matt Miller's Hot Pursuits something to watch for and David Girl lighting up big take as well from New York City inflation tomorrow. This is single best idea

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