Market Debt Concerns Are a 'Good, Rational Worry,' Says Julian Emanuel

Watch Market Debt Concerns Are a 'Good, Rational Worry,' Says Julian Emanuel - Bloomberg on Dailymotion

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00:00Things have changed. Why have they changed? What's behind this recent shift, the way the market treats

00:03this story? It's actually the debt concerns, in our view. Again, because, and this is an escapable,

00:11and we've talked about this a number of times throughout the year, you cannot get away from

00:15the comparisons to the late 1990s in many respects. And when you think about the late 1990s,

00:22the problem with the bursting of the bubble, besides the fact that the Fed was hiking in 1999,

00:27was the fact that a lot of the buildout was financed by companies that were incurring debt

00:34and had no revenues on the other side. And because you've seen this accelerating debt issuance,

00:42there is the worry that that is coming back. And we would say that's actually a good rational worry.

00:49Well, and it's a worry potentially to buy. I mean, I guess that this goes to the question of why,

00:53what makes you so bullish on an ongoing basis, despite some of the rhyming features of this

00:59particular rally with respect to the debt component? Well, so a number of things. Again,

01:05the macro backdrop is favorable. OK, the Fed is going to be cutting. We're going to have more stimulus,

01:11whether we get $2,000 in our pockets at some point next year or not, we're going to have more

01:17stimulus. And from a valuation perspective, as much as angst as there is, in fact, certainly in

01:24comparison to the late 1990s, these names are, I wouldn't say cheap, but they're certainly not

01:30expensive relative to history. And they're not expensive relative to their own history. And what

01:34we've seen over the last several years in a lot of them is they just mark time going sideways.

01:40So earnings catch up to valuation. And that's an ongoing process.