Market rotation makes 'fundamental sense,' says Bernstein's Dan Suzuki

Published: Aug 05, 2024 Duration: 00:04:15 Category: News & Politics

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Intro >>> LET'S BRING IN DAN SUZUKI, CHIEF INVESTMENT OFFICER AT RICHARD BERNSTEIN ADVISERS. YOU THINK IT MAKES SENSE, BECAUSE THINGS WERE LOOKING FROSTY TO YOU, OR THE PIECE THAT DEIRDRE AND I WAS DISCUSSING? >> YEAH, IT'S A LOT OF WHAT DEIRDRE WAS DISCUSSING. SHE PULLED UP THE CHART THAT SHOW IT'S CORRELATED WITH THE YEN CARRY TRADE. ALSO VERY CORRELATED WITH FINANCIAL CONDITIONS, SO YOU CAN CLEARLY SEE THAT THOSE ELEVATED VALUATIONS WERE DRIVEN BY A LOT OF SPECULATION. THAT WAS SUPPORTED ALSO BY STRONG EARNINGS, BUT I THINK THE ISSUE MORE RECENTLY IS THOSE EARNINGS ARE STARTING TO SLOW. IT'S HARDER TO SORT OF BEAT EXPECTATIONS, AND YOU SEE A LOT OF VOLATILITY ON THE BACK OF Market rotation THAT. YOU'RE SEEING A FUNDAMENTAL EARNINGS RHO TAKE. >> IT SOUNDS LIKE A HEALTHY ONE, IN OTHER WORDS. ON A DAY LOOK THIS, WHERE DO YOU JUMP TO ACTION? >> CLEARLY THERE'S A ROTATION. NOW, THE QUESTION THAT INVESTORS ARE STRUGGLING WITH IS WHAT DO YOU ROTATE INTO? I THINK THERE'S TWO OPTIONS. YOU EITHER ROTATE INTO CHEAP CYCLICALS, OR ROTATE INTO THE MORE DEFENSIVE SAFE HAVEN ASSETS. YOU CAN SEE JUST THROUGHOUT THE DAY, THERE'S BEEN A BIT OF BACK AND FORTH BETWEEN THE TWO. WE START OFF THE DAY WITH DEFENSIVE SECTORS, BUT AS THE DAY HAS MOVED ON, YOU'RE SEEING THE CYCLICAL SECTORS ARE GAINING THE LEAD. Data dependent IF WE'RE RIDE, YOU WILL CONTINUE TO SAY THE BROADENING OUT, AND IT SUPPORTS THE ROTATION. >> WE ARE SO DATA DEPENDENT, I WONDER IF PART OF THAT OF WHAT YOU'RE DESCRIBING IS THAT IT HELD UP OKAY. SO WE HAD THE DATA LAST WEEK, AND THE STRONGER SERVICES DATA, THE MARKET IS RALLYING BACK A BIT. I THINK THAT'S SOMETHING WE HAVE TO LIVE WITH. ULTIMATELY EVEN IF WE GO INTO RECESSION, WHICH I THINK IS POSSIBLE EVENTUALLY, WE HAVE TO REMEMBER IT'S LIKE DEATH BY A More granular examples THOUSAND CUTS. EVEN IF WE GO DOWN THAT ROAD, IT WILL TAKE A LONG TIME. NEISMT T. EARNINGS GROWTH IS HOLDING UP PRETTY GOOD. >> WHAT IS DEEP CYCLICALS AND EMERGING MARKETS, OTHER THAN CHINA? >> YEAH. IF YOU LOOK FROM A SECTOR PERSPECTIVE, INDUSTRIALS, ENERGY AND MATERIALS WHICH ARE OUTPERFORMING, YOU KNOW, SMALL CAPS I THINK WILL ALSO SEE SOME OF THE BIGGEST EARNINGS ACCELERATION OVER THE COURSE OF THE NEXT FEW QUARTERS. I THINK THAT'S ALSO TRUE WITH RESPECT TO BROAD EMERGING Japan MARKETS, WITH THE EXCEPTION OF CHINA RECENTLY SAW A BOTTOM IN EARNINGS GROWTH AND THAT HAS A LOT OF ROOM TO RUN AS WELL. >>> WHEN YOU LOOK AT JAPAN, TO BRING US FULL CIRCLE PETER BOOCKVAR SAYS ON A DAY LIKE TODAY, HE BUYS JAPAN. DO YOU HAVE A VIEW ON THAT? >> CLEARLY WHEN SOMETHING SELLS OFF DRAMATICALLY, SOME OF THE BIGGEST GAINS HAPPEN ON THE BIGGEST LOSS DAYS. FOR US, WE'RE HEAVILY OVERWEIGHT WITH JAPAN FOR A WHILE. WE WENT RECENTLY TO A BIG UNDERWEIGHT. WE THINK THAT THEIR EARNINGS CYCLE IS PEAKING OUT AND MORE LIKELY TO SHRINK GOING FORWARD, COMBINED WITH THE POSITIVE SENTIMENT I THINK IT'S MORE OF A RISKY TRADE. >> NOW WE HAVE ENDED WITH DISAGREEMENT. THAT'S WHAT MAKES THE MARKET, DAN. THANK YOU FO

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