00:00What should you buy this morning?
00:01What are you recommending?
00:02What are you advocating for at the moment?
00:04So let me maybe answer the question a little bit differently.
00:07If you look at the tech basket relative to the rest of the market,
00:12its earnings are on fire and its multiples are down 20% versus the rest of the market.
00:19So I think the tech basket looks incredibly attractive.
00:22If I look at if there's one group that kind of stands out,
00:25it's actually the AI semiconductor names, the Avagos and the NVIDIAs.
00:32If you look at the growth they're delivering,
00:35how much the upside revisions are in their numbers
00:37and how inexpensive they are relative to that growth,
00:42they look incredibly attractive.
00:44I think that there's also a bunch of things in the software space
00:46that are dislocated near term.
00:48But I think that those big semi names.
00:51The semis was a curious trade last week.
00:53It was really interesting to us that we had these announcements,
00:55these massive CapEx intentions.
00:57You're all familiar with the numbers, $650 billion across four names.
01:00And yet we saw semis trade softer.
01:03What do you think that was about?
01:04Yeah, I can't answer on a given day or week.
01:09But I can tell you what we do is we array the entire technology space.
01:13We say, where's the momentum in their earnings?
01:17And then where's their valuation?
01:19And what's their price action?
01:20And we try to find situations where they can't be justified.
01:23You cannot justify the valuations being so low on some of these semi names
01:27for such exceptional growth.
01:30And they do not have the same CapEx spend that you do on these hyperscalers.
01:35Would you be buying some of these private credit stocks?
01:37The companies, the KKRs, the Apollos that have gotten very beaten up?
01:42It's not in my line of focus.
01:45I will tell you, if we get outside of the whole AI conversation,
01:48I'll tell you what I think.
01:50There's more to life outside.
01:52Well, maybe not.
01:53Maybe not.
01:55He's like, I'll ask the question you should have asked.
01:57I'm sorry.
01:58No, carry on.
01:59But the focus this year, especially as we move through the year,
02:04is going to be on the midterm elections, which are going to be super important.
02:08In order for Republicans to hold both houses of Congress,
02:14they're going to need a consumer that is feeling heard.
02:19And that means that there's going to be a lot of effort to ease the burden on consumers
02:26to make housing more affordable, to make their basket of goods and services more affordable
02:30and the like.
02:31The conduit for that is the financials.
02:34You have to prop up the banking sector in order to get money in people's hands
02:39and also consumer stocks.
02:40I think those are going to be a win.
02:41And I think that the housing sector, housing stocks, homebuilders and like,
02:46are going to be a focus.
02:47You've seen the buying of mortgage paper by the GSEs.
02:52I think there's going to be more focus on that.
02:53Isn't that a point of tension in your outlook, though?
02:55A little contradiction that you start the conversation by saying the economy is really good
02:59and you finish the conversation by saying it's so bad they're going to have to do these things.
03:04No, I mean, you know, if you looked at where I started to note,
03:07labor is taking a smaller part of the overall pie.
03:11The inflation number might be down now, but we're still going out on a Saturday night
03:15and the cost of that dinner.
03:17People say, when is it going to come down?
03:18We all know it doesn't come down.
03:20It just goes up more slowly.
03:22They need to feel heard.
03:24You know, they need to know that there are things being done to address these affordability issues.
03:30And in order to do that, any policy that's going to address that is going to pump up
03:35the consumer and consumer stocks.
03:37John, it's good to see you.
03:38Thank you, sir.
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