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On this episode of On The Tape Dan Nathan, Guy Adami and Danny Moses kick off the new year with Morgan Stanley’s Chief Investment Officer Mike Wilson. Mike breaks down what led to his “tactical bullish” call last October (4:30). How do we trade the handoff between earnings and fed rate (9:30)? What does the crew make David Rosenberg’s take on recent weakness in commodity prices (17:40). How does Mike Wilson see us get to 3,000 in the S&P 500 (21:00)? Mike predicts the tech sector will suffer as cost cuts keep rolling in (21:45). How does Mike Wilson view the banking sector in 2023 (32:40)? Is Mike Wilson buying the “gold as an inflation hedge” argument for this year (34:40)? What does Mike’s next bullish call in the stock market look like (43:48)? Chinese investments have seen a bounceback, should U.S. investors get out while they can (45:40)? Finally we wrap with Danny’s picks for week 18 in the NFL (48:00).
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Show Transcript:
Guy Adami: [00:01:21] Ladies and gentlemen, welcome to 2023. This is the first On The Tape podcast of 2023. Dan Nathan and what better guest to start the year off than the great Mike Wilson of Morgan Stanley? I am excited of course, Danny Moses is along with us, the very pedestrian Danny Moses final week of the NFL. Danny, as you know. But Mike, before we get started this past weekend was some of the best college football that I’ve ever watched in my life, and I will tell you that University of Michigan, Texas Christian Horned Frog game will go up as one of the top five games I’ve ever watched. I am certain you love the outcome of that game. Am I wrong? [00:02:00][38.9]
Mike Wilson: [00:02:00] I liked the second game better. [00:02:01][0.8]
Guy Adami: [00:02:02] No doubt. By the way, Georgia, I mean, Ohio State came out of nowhere. The Big Ten acquitted itself rather well, getting two teams in the top four. Yet both teams lost. Michigan starting the day off with a bit of a roll. [00:02:13][11.3]
Mike Wilson: [00:02:14] The biggest surprise for me was how many points were scored in both games its insane. There was no defense being played and that was remarkable to me. So yeah, the two great college football games, Michigan took the short end of the first game, but you had to give it to TCU. [00:02:24][10.5]
Guy Adami: [00:02:24] Okay, so leading you down the primrose path and you clearly don’t want to go down, you are a 1989 graduate of the Great School, the University of Michigan Wolverines, the maize and blue. I think that’s what they call. Is that correct? [00:02:38][13.1]
Mike Wilson: [00:02:38] Proud to be a Michigan Wolverine. [00:02:39][1.0]
Danny Moses: [00:02:40] Hold on a second Guy that was mealtime, 89, that was a college basketball national championship. Am I correct, Mike? [00:02:45][5.2]
Mike Wilson: [00:02:46] That is correct. National basketball championships in 89. We went to the Rose Bowl, though, as well, and football was good. It was a good year to go out on, good year. [00:02:52][5.9]
Guy Adami: [00:02:52] This January, we have a Friday the 13th that’s coming up to a theater near you. Stand by for that. But in October, we had an October the 14th, which was a Friday. And on that day, Mike Wilson, you who have been correct all through the year, turned tactically bullish, said the market could rally about 18%. Lo and behold, that’s exactly what happened. You caught Danny Moses a bit off guard because he didn’t know what to do that following Monday. But speak to us about not only that call, but how difficult it is to make a call like that in the seat that you sit in. [00:03:26][33.8]
Mike Wilson: [00:03:27] Well, first of all, it’s a lot easier to go tactically bullish and tactically bearish and in my seat so that’s number one. Number two, it was a dangerous call because we definitely thought it was a bear market rally and like, why mess around with that? Even my own team caught them off guard a little bit. They said, why are we doing this? An an 18% rally, which I thought was coming, if you can catch that, you got to catch it in the fourth quarter. So what pre-scripted that call was two things. Number one, our call was becoming very, very consensus at that point, the buy side clients were becoming actually more bearish and me saying we’re definitely going to go to 3200 it’s over and it just became too consensus. That’s number one. Number two, we had that CPI report, which was actually horrible and the market open gapped down in that morning. I think it was a Thursday morning and then we made a 6% intraday rally and that was beautiful price action right at the level we were looking for the 200 week moving average. So it’s like a tactical strategist fantasy. It was like a perfect setup. So I said, if it’s ever going to be one, this is it. We took a shot at it and it worked. Got going, got some momentum. We even put the price target out of 4000 4150 and that’s exactly where we traded kind of 4150 on the upside. And the reversal though, call that was harder to make because you’re going in a year end look like we had some momentum and I think that was on your show the night before in talking about how I thought we could rally into year end, but then we got that crazy price action the other way off of a CPI that was better than expected. And I said, I got to go the other way now. [00:04:49][82.5]
Dan Nathan: [00:04:50] So, Mike, you’ve been looking at markets since the early nineties and it only seemed like bottom left upper right for a large part of the nineties. But we remember especially the back half, it wasn’t like that. We had some tremendous years of returns in the S&P 500, but there were some huge peak to trough drawdowns. And so if you were long short, it provided a tremendous amount of opportunity. So my question to you here is like the S&P in 2022, it was about as difficult as an environment if you think about it from a rate standpoint, you think about the volatility in commodities and FX almost every other major risk asset. The S&P only closed down 20% on the year. And we just talked about a tactical trading rally that you called that was 18%. We had one earlier in the year from the mid-June lows to the August highs in the middle of that month, about the same. So talk to me a little bit about where you think the S&P is right now. Let’s give it it give it a scorecard for 2022. And again, I think you’re calling for much lower lows, when you were on Fast Money a couple of weeks ago, you had a base case scenario where you get back maybe to 3200 or something in the S&P 500. But again, the whole crux of this question is not a straight line here. Right. And so how do we do it? [00:05:58][68.0]
Mike Wilson: [00:05:58] Yeah, I mean, look, the bear market is not over because we haven’t really priced the earnings degradation that we foresee or the risk of an economic recession, which is increasing seemingly every day. The other variable I want to throw into the cauldron now, which is a change for me, six weeks ago I would have thought the Fed was probably going to pause at the end of this next rate hike and then probably cut as soon as we saw the eyes of the the recession if we get one like a labor cycle. Now I’m starting to question that, meaning I don’t think the Fed is going to come to the rescue right away. Even if we get an employment cycle. Let’s say unemployment’s up 100 basis points 150 basis points, which is kind of game over at that point. [00:06:33][35.4]
Dan Nathan: [00:06:33] So that’s above 5% [00:06:34][0.5]
Mike Wilson: [00:06:35] Correct, at that point, normally I would say the Fed’s definitely cutting. I’m not sure they’re going to jump right into that pool this time. And if that happens, that’s how you get to sort of 3000. I think it’s 3000 more than 3200 now. So I think the market has done a really good job very efficiently of pricing in the Fed. The Fed pivoting quickly in January of last year with the minutes and then got pretty hawkish pretty quick and surprised everybody, including myself, in terms of how hawkish they’ve been. So I think the market has done a really efficient job of pricing in the higher cost of capital, but it still is being a bit complacent around what’s the impact of that on growth. And oh, by the way, what’s the impact of the pandemic on growth, meaning pay back in demand, all the things that the Microsoft CEO was talking about this week, as well as the effects of the Fed hikes themselves, what’s that going to do to growth next year on margins and profitability? [00:07:20][45.3]
Guy Adami: [00:07:21] Before Danny gets in here, I will mention that you are the first guest of the On The Tape podcast to use the word caldron correctly. Of course, speaking from Macbeth, the very Shakespearean Macbeth fire, fire, toil and trouble or double double toil and trouble. Danny Moses, please. [00:07:36][14.7]
Danny Moses: [00:07:37] Mike, you were on our podcast on October 6th. I remember sitting across from you and saying, You know what, Mike? I agree with you on everything. And when you go bullish, I’m going to go bullish. And so we leave there. The thing comes out October 7th and then someone hits me on October 14th. Hey, did you hear Mike Wilson went went bullish right now, not that Mike Wilson. It’s not possible. I swear I, I said I would go with you. And I looked at it. I read, your note I’m like, God damn it. I’m like it’s too cutesy for me I’m not going to do it. And so the S&P, I think, was like 3650 when you were in our studio. And then I think it dropped to like 3600. But you obviously sensed something that it was a bit oversold to your point. So I didn’t follow you into the fire there. I should have. I stayed the course. And now as we sit here and I think you and I are in total agreement, I think Dan and Guy as well with you is that earnings are what’s going to matter. So my question to you is that this handoff, it feels like the last selling opportunity will be a rally when the Fed finally does officially send the signal that they’re going to pivot, because to me, then it’s like, okay, the Fed’s a sideshow for me at this point. Earnings are what’s going to drive it. I know you just alluded to it, but can you just talk about that little time period? How are we are we going to trade that kind of handoff? [00:08:40][62.8]
Mike Wilson: [00:08:40] Yeah, I mean, this has been something that we’ve haven’t traded particularly well, quite frankly. We talked about back in September. We call it Fire and Ice part two, which is that this the markets now going to transition away from inflation and the fire and the concerns there and the Fed and to this idea that growth is going to disappoint. And quite frankly, that hasn’t really happened. Danny. I mean, yesterday a day when rates are up, the market’s down, that’s not the market worrying about growth. That’s the market still worrying about growth is too hot and the Fed’s going to kill us. So I think we’re not quite into that transition yet. I think you’re dead right that if the Fed raises rates on February 1st, by 25, maybe they do 50 one last hard kick and then they indicate they’re going to pause. We get a little bit of a rally, but then the stage is set for everything that we think is going to happen, which is that earnings are going to disappoint wildly this year and the market’s going to trade bad news as bad news no longer bad news is good news because the Fed is done. This cycle is very unique in one regard. Everything’s happened extremely fast and as a result of that, there is no window of opportunity for the Fed to kick save the cycle. They’re driving us right into the end of the cycle by design because they had to, because they were late to start their process. There’s no window. That window is going to be days or weeks at best. [00:09:54][73.7]
Danny Moses: [00:09:55] So, Mike, one of the things you talked about too, which I don’t think there’s enough investors that have traded long enough to realize not just cost of capital, but kind of the wind that’s going to be blowing in their face with quantitative tightening, which I believe will end at some point in 2023 when it becomes evident just the pressure that it’s putting on credit spreads, etc.. What are your thoughts on QTs impact? Have you been able to quantify it? How do you kind of trade that as well? [00:10:18][22.8]
Mike Wilson: [00:10:19] Yeah, that was another reason we got a little bit more constructive in October, because we had noticed that the TGA, which is the Treasuries General Account, which we talked about on the show last time, has been drawn down significantly by three or four or $500 billion this year. I don’t know if they were doing it deliberately, you know, as a way to kind of ease the stress into year end election, whatever. But that’s an offset, quite frankly, to QT. The other offset has been the repo operations, and that has been extremely active. So those two you got to combine all three. When you look at all three, it was pretty amazing the rate of change. And when you add all those three up was actually quite positive from October, basically October 13th through early December. And then the year end ended poorly because those three combined turned into a net drag again. And I think that’s going to continue. Our math suggests the TGA can’t be drawn down any further. The reverse repo now is going the other way and that says draw on capital and the Fed is going to remain doing QT of some form. So the liquidity picture is going to. Deteriorate into the spring and then eventually I agree with you, they’ll stop because they have to. [00:11:25][66.0]
Dan Nathan: [00:11:25] So back in October, mid-October, again, the S&P was 3650, made that tactical bullish call and you get a lot of pushback, you said so you got a lot of pushback from your clients were really happy for you to be articulating a bearish view all year long. You probably got a lot of them involved or got them to take some money off the table, let’s say, earlier in the year. But they pushed back really hard. We go to 4000. Here we are. We’re just about 3800 here. So where are those clients now? We’re talking about big money clients. We’re talking about mutual funds. We’re talking about pension funds. [00:11:55][29.9]
Mike Wilson: [00:11:56] Yeah so that’s another thing that changed in December, too, is that the pervasive bearishness that we felt in October, by the time we got to December, the majority of clients now were saying we’re not going to make new lows. And they were talking about a year end rally and trying to play it. So the positioning changed. Now, it didn’t change dramatically to the way that they weren’t nearly as long as they were earlier in the year. But they had definitely either been forced to take out the shorts or been forced to take on more beta risk. And they were definitely in the mindset that 3600 was good enough. Here’s where I get the most concern now is that our call, for better or worse, is consensus, right? It said we’re going to have a tough first half and then a better second half. However, when you actually talk to people, buy side and sell side people when you get into the weeds on that, they’re not that bearish. They’re not really saying it’s that painful. What they’re saying is we’re going to go back and test the lows of 3600 and then we’re going to rally back to 4000 or 4200 or whatever their number is for year end. And so people are more interested in buying that retest than they are worried about protecting or making money on a real move to something like 3000. I would say the number of people who think we’re going to trade at 3000 is a very small minority. Less than 10% of people I talked to. Okay, maybe you guys are in that camp it’s, that’s not consensus. So I think the trick here is understanding that the first half down side is going to be way worse than what people are anticipating. So there’s going to be very little appetite to want to buy that. Hopefully, that’s my hope because then you can actually make some real money there. [00:13:19][83.4]
Guy Adami: [00:13:19] Other than your intelligence. The thing that sticks out to me is your humility. And I’m going to ask you a question and I want a straight answer with this one. So we went from Shakespeare to Marv Albert when to go back to Shakespeare. But I’m going to give you now, Henry the Fourth, uneasy lies the head that wears the crown. And right now, Mike, you’re wearing the crown out there in terms of the calls that you’ve made over the last couple of years. And I know that you know that intuitively. I also know that you realize the next call you make is going to be under the frickin microscope and scrutinized to no end. So as you think about that, I know it’s not going to change your work, but do you feel that type of pressure going into it? [00:13:58][38.4]
Mike Wilson: [00:13:58] Well, that’s why I’m retiring today. [00:13:59][1.0]
Dan Nathan: [00:13:59] We’re making news right here. [00:14:01][2.0]
Mike Wilson: [00:14:02] I mean, look, it’s nice of you to say that, but. [00:14:03][1.4]
Guy Adami: [00:14:04] No, it’s. No, no, no. It’s not nice of me to say that it happens to be true. [00:14:07][3.5]
Mike Wilson: [00:14:08] It’s true to a degree. I appreciate that. And look, we wear that sort of responsibility, I would call it, as opposed to a crown, because not only are we trying to service, you know, institutional investors, professional investors, but we’re servicing a lot of individual investors who really do need our help trying to navigate what is a very challenging environment. So one thing I do pride myself on, some people might not agree with the humility part particularly my wife. But as far as that honesty, I will tell you how I feel. I’m never going to sugarcoat it. I’m never going to try and position a call so that maybe I can come out looking good in either outcome. And what I would say is that it won’t change that. It won’t change my process in terms of trying to deliver the honest truth of what our work is saying. Doesn’t mean going to be right, but we’re not going to pull punches on that. [00:14:52][44.1]
Danny Moses: [00:14:53] Hey, Mike, one thing you just mentioned, when you fight the tide, I mean, everybody’s one way you kind of want to go the other. What’s interesting to me is the majority of strategists and people out there say, yep, we’re going to have a recession. Yet, I don’t think they realize what that really means. They say it. I go ahead. We’re going to we’re going to some type of recession. How do you translate a recession kind of to the stock market when it may occur? Because it’s always backwards looking. How do you kind of jibe that? [00:15:15][22.0]
Mike Wilson: [00:15:15] Well, look, Danny, I mean, you said it perfectly. That was kind of what I was trying to say earlier. But you don’t say things like that flippantly when you’re managing risk. You don’t just say, hey, we’re going to have a recession. But that is exactly what I hear out there. It’s like people, oh, this is the most predicted recession ever, so it must be priced. Let me be clear about that’s okay. When recessions hit, bad stuff happens, like weird stuff happens. And Danny, you know this better than anybody. Balance sheet stuff happens that you don’t predict, right? The price goes to a place you never would expect. And that’s why I feel like the downside is pretty easy. 3000, because 3000 is not even really a severe price level. It’s basically 16, 15 times $200, which is, I think, a very doable number this year on earnings. [00:15:58][43.5]
Dan Nathan: [00:15:59] You’re at one 180 [00:15:59][0.5]
Mike Wilson: [00:16:01] I’m at 180 potentially that’s our bear case. But we’re we’re at 195 base. But like, okay, 15, 16 times, that’s not even cheap in a rate or in a rate environment at 375 380. [00:16:10][9.3]
Dan Nathan: [00:16:11] So we’re big fans of David Rosenberg here too. Rosie we all call him Rosie. He had in his note this morning a comment that I think is really interesting. I’d love to get all of your take on it, but first, Mike Wilson. The equity market bulls yearning for the lows to happen in the stock market in the context of a recessionary bear phase need bond yields to come down first. Thoughts on that. I thought that was kind of really interesting. [00:16:33][22.0]
Mike Wilson: [00:16:34] Yeah, and I think that’s where my view has changed the most in the last six weeks or so is that I thought we would get more rate relief already and we’re not getting it. And that’s the part of the story where I think the bond market may have it right where they’re saying, hey, don’t sugarcoat what the Fed is going to do here. Like this is existential for them. So they’re going to make sure they put out the fire and they may stay at four and a half, 5% longer once they get there, then people appreciate. And that means you’re not going to get relief at the back end, as David was suggesting. [00:17:02][28.1]
Guy Adami: [00:17:02] Yeah, it makes sense to me. And, you know, one of the things that I thought and I back into this a little bit differently, but I thought if we were to see the market sell off that obviously Mike you think is happening, I know Dan, Danny and myself believe as well you’ll see a flight to quality in the form of the bond market, which should send yields lower. So I think a sell off in the stock market Dan makes yields go lower, not yields going lower, making the stock now. And that might be somewhat nuanced, but that’s how I think we get there. [00:17:30][27.7]
Danny Moses: [00:17:31] Yeah. So the way I look at it is this we’re starting to see in various sectors the cream of the crop rise to the top. As far as equities go, right? You’re seeing the Bed Bath Beyond go by the wayside. The GameStop, all the meme stocks are just falling. People are going to gravitate there to quality. And there’s a reason for that. Obviously, the yield curve is telling us that we’re going into recession. And to the point that guy just made and Mike, you kind of alluded to and I agree with Rosie on this aspect, is that the ten year yields, I think, will continue to go down over time as people realize as long as the two year stays up and the inversions basically telling us that so is the 60 40 have any chance of working or maybe the 40 has a chance of working this year. If you’re out on the long end, Mike, what are your thoughts on that? Because I know you have to advise people on that. [00:18:13][42.2]
Mike Wilson: [00:18:13] Yeah I mean, that’s been our call for this year is that basically bonds are back, particularly as you go into the the worst part of the slowdown next year. So I don’t anticipate rates going to 5%. Right. So like either way it’s a good carry trade whether you want to play that the short end or the long end and take more duration risk and you can make that decision for yourself. But we think a barbell makes sense having some duration risk for recession because there should be some rally at the back end ultimately, if a recession arrives. [00:18:37][23.3]
Guy Adami: [00:18:38] Jurrien Timmer came on On The Tape. One of the things that he said that I never really thought all that much about and I’m sure it’s true, he said, seldom, if ever, has the multiple troughed when earnings troughed. Now, I only mention that because David Tepper was on the network a couple of weeks ago, echoing a lot of the things that we’ve talked about, but basically stating what he was about to say at some point, which wound up being the case. And he said that. And I think post-financial crisis we actually saw the multiple for the S&P trade down to somewhere between 11 and 12. So your answer before about 3000, not even being all that dramatic. There’s facts behind that, that support that exactly right. People don’t realize that the multiple can go significantly lower than we are now. [00:19:26][47.9]
Mike Wilson: [00:19:27] So the way we get to the 3000 target is not 15 times 200, because as you rightly point out, you never make the low when earnings trough. You make the low with a lower month with a trough multiple on your way to the trough in earnings. So we’ve been using the math of 13 times 200. We talked about this last time, 13 times 200 out 220, which is 40% of the way from the peak to the trough. And we think that should arrive sometime in the spring. And I don’t know what the moment of truth will be when you get to the 13 times, but it’ll be some event that basically creates a little mini panic. Obviously, the last three or four recessions are pretty obvious. It was COVID, it was Lehman, then it was 9/11. Okay. This time around, it may be and I’ve been thinking a lot about this, it may be that the Fed doesn’t come to the rescue and the equity market has the quick heart attack. [00:20:14][46.5]
Dan Nathan: [00:20:14] I almost had a heart attack yesterday listening to you on Bloomberg. He had some commentary about the tech sector. And again, for some of our listeners, Mike and I have known each other for 25 years. He was a what do you got spry back in the [00:20:25][10.8]
Guy Adami: [00:20:25] Spry is a great word I don’t know how to spell it [00:20:27][1.6]
Dan Nathan: [00:20:27] He was a tech sector specialist, so he was a guy who literally probably knew more on Morgan Stanley’s entire equity desk than anyone else about tech he was calling on a lot of fancy hedge funds. And that’s how we got to know each other. I was the least of the fancy hedge funds. So I’ve always listened to your macro commentary and really tried to take out some stuff around tech because again, we had a front row seat for the tech bubble and then the implosion and you were very helpful back then, but your comments about tech companies being really bad at cost cutting. And I think it was really interesting because that interview came on a day that Michael Burry of The Big Short fame, do we have somebody who is a bit more famous than him? [00:21:02][34.4]
Guy Adami: [00:21:02] Yeah, we do. His name is Danny Moses, and I would suggest that Danny Moses not only more famous, but more handsome [00:21:06][4.3]
Dan Nathan: [00:21:07] Yeah, but he tweeted yesterday after Salesforce announced, what was it, 10,000 job cuts or something like that. CRM should have been down 25% of those job cuts. Job cuts are not the reason to own that. And it’s interesting. So last. The Wall Street Journal broke that story about Amazon, who had originally agreed to cut maybe 10,000 jobs and now they’re going to do 18,000. But again, this is a company that had hundreds of thousands of employees. So it’s really kind of a rounding error. Talk to us a little bit about tech, because this is a week where and Guys said it on this podcast going back to June when Microsoft preannounced. Remember that quarter they said it was on affects, but really there was some other probably demand issues going on there too. Satya has got some kind of cautionary comments and then that stock was down 5% yesterday on a downgrade from a brokerage firm, no offense, from a brokerage firm. We’re way beyond that sort of stuff. And then it’s down today as we’re talking nearly another 3%. That’s a big move for one of the biggest stocks in the entire stock market. So investors are basically shooting first, asking questions later. They think this is going to get worse before it gets better for Megacap Tech. [00:22:05][57.2]
Mike Wilson: [00:22:05] Well, what’s crazy is the market was actually up yesterday and their stock had that move. So now we’re getting into the real action where there’s the confessional period is arriving. And this is why we did the tactical call, too, because we felt like companies were not going to do that in October because they could just kick the can one more quarter and see what happens. But now you’re staring down the barrel of 2023. You have to give some guidance on that. You might as well set the bar low. So this is where you clean house. You start doing that. And and I agree with the comment from Michael Burry. I mean, it’s sort of my thought process. These are growth companies. You don’t want growth companies going into cost cutting mode unless they’re a value stock. And so when it gets cheap enough, then sure, that becomes a good idea. But that’s not where we are. [00:22:47][41.8]
Dan Nathan: [00:22:47] Well, let’s talk about expectations, because again, our friend John Butters over there at FactSet in his Earnings Insight blog. He’s talking about Q4 earnings. Analysts have cut them about six and a half percent over the course of the quarter, and that’s at a far greater percentage than the five, ten, 20 year averages here. So are we going to run ourselves into a situation if the stock market continues to go down into Q4 earnings at the end of this month, that maybe the guides aren’t as bad or maybe the companies don’t have the same incentives. If Microsoft’s trading at a new two year low, they might be a bit more careful about how aggressive they are to the downside with their guidance. [00:23:23][35.6]
Mike Wilson: [00:23:23] Well, it’s such a snap. I mean, that’s the pattern we’ve seen all year, which is that the market is sold off into the quarter. And then on the earnings, there is a relief rally because every quarter has been cutting numbers into the quarter. This has been the worst of the four, but they’ve all been bad. So could we get a relief rally and sort of the market broadly into earnings start being reported? Yes, But don’t forget this idea that this is the quarter where they got to guide 23. Okay. Nobody cares about this quarter or next quarter. They care about the year. And so every quarter for the last three, there hasn’t been any revisions to speak of on 2023 numbers is incredible. Right away in 23, numbers are barely come down, even though they missed four quarters in a row because there’s been no guidance. So that that’s your risk. I think that’s different this quarter versus the prior two or three. [00:24:07][43.8]
Danny Moses: [00:24:08] And Mike, just to take it back to tech for a minute, these are, for the most part, growth stocks that are morphing back into value, and that’s a painful transition. And that completely coincides with the whole idea of what is a trough multiple on the S&P. What’s amazing to me, though, is how people use how much the stock is down from its highs as a reason to buy it versus looking at on an absolute basis. And these are elephants and that can be good and bad, meaning if things slow down on Microsoft. And I know they haven’t really said that that was a downgrade per se, but they have said things along the way that growth is obviously slowing, but Amazon job cuts, Salesforce job cuts, etc.. What is the bias obviously of the investor and how do you tell them, forget about where it was. It never should have been. Their money was free then. How do you kind of burn back to the atmosphere on that? [00:24:50][41.9]
Mike Wilson: [00:24:50] Well, I mean, some people have to just learn that the hard way. I mean, I learned it the hard way. I mean, I’ve been doing this 35 years. I mean, we’ve all had stories where, like, I knew I should have sold it. I knew I should’ve sold, before you know it down 80%, you know, it’s like, here we go. So, yeah, just get the stocks down 50 doesn’t mean they can’t go down another 50. That’s the magic of math. And we’re working off a period of time. This is how we talk to our clients about it. I mean, that’s sophisticated client, but the unsophisticated who own these stocks in size, they’ve owned it for 20 years and they’ve made a fortune and they don’t want to sell it and pay the tax. And you have to explain to them, look, these cannot be the winners in the next up cycle. That’s just not the way it ever works. A, they’re too big, B, they had their day in the sun, they’ve overturned the multiple got out of whack. Has nothing to do with the Fed, by the way. That happens in every cycle. In the seventies it was energy. In the nineties, it was tech in that time. In the 2000, it was the commodity stuff in the banks. Okay, so now it’s tech again, it’s growth. So it’s a it’s just a nature of the cycles in the way they work. The former winners can’t be the next winners. [00:25:50][59.6]
Guy Adami: [00:27:16] Since you mention Sun, I’ll go back to Shakespeare yet again, Dan Nathan. What light through yonder window breaks? It is the east and Juliet is the sun, of course, from Shakespeare’s Romeo and Juliet. So since you mentioned Sun, what are the bright spots out here? There are some sectors that work in this environment. [00:28:15][58.8]
Mike Wilson: [00:28:15] Yeah, there are. I mean, we’ve been defensively oriented all year, really, since February of March of last year. And boring is beautiful. Health care was it was a sector that did really, really well last year. The pharma stocks, utilities have done well. REITs have picked their head up again with the rate move lower. I’m not sure that’s going to survive if rates go back up. But for now they look okay. Staples have been great. Yeah, they’re expensive. But I didn’t hear anybody complaining about tech stocks being expensive when they were working. There’s always something in a market that’s working on a relative basis. Here’s where it gets a little tougher because of the finishing move in a bear market typically is more democratic. It’s going to be kind of everything because one thing that’s happened and if you if you observe this in the last three months or so right the tech sector really blew up in the third quarter, the big FAANG stocks and the market was actually not even down. Remember, that’s when we made our call because the money went into other sectors like industrials are crazy expensive. Now we’re up on a spike, actually recession, which seems kind of loony. And the reason why that’s happening is because the money is not leaving the equity market. It’s just sloshing around. But in the final move, in the final panic, the money leaves the market and that’s when it becomes more [00:29:19][63.4]
Dan Nathan: [00:29:20] Correlations go to one. I mean, listen, that was a huge story is a great market for traders last year. If you think about those rallies that we had, we had one from mid-March, we had one from mid-October, we had one going back to the summer in June. I’ll just say this, though, Dan Loeb, a third point, he tweeted this out, I think it was last week or something, is like said something about like those holding or clutching on your rosaries and hoping for the leaders of the last bull cycle to lead us out. Don’t hold your breath. I think it was kind of the message in that tweet. But it’s interesting because you just kind of echoed that a little bit. But you just also said that the rotation into industrials, into energy, because energy stocks had a huge rally off the lows in the fall, summer fall. I think if we were heading into a recession, I’d much rather go to those mega-cap tech stocks. Guys got his rosaries. I’ve known you for how long do you carry those everyday? [00:30:07][46.8]
Guy Adami: [00:30:07] Since I’ve been in middle school. [00:30:09][1.6]
Dan Nathan: [00:30:10] Oh, my goodness. You’re like, right out of like a Bronx Tale or something like that, right? [00:30:13][3.4]
Guy Adami: [00:30:13] Well, yeah. I mean, the folks can’t see. [00:30:14][1.0]
Dan Nathan: [00:30:15] Really is I mean, that’s fascinating. I mean, you surprise me every day, which is surprising. Literally almost knock me off my back to my point. So we’ve had this rotation into value, into industrials, into energy. And that’s to your point, kept the market above those October levels when we’ve seen huge names like Apple make new 52 week lows, Amazon very near them. Tesla fell out of bed. It got cut in half in the last two months of the year. So I guess at some point I would say those stocks are going to get really oversold and I’d much rather be in them than being in perceived value. Does that make some sense? [00:30:48][33.0]
Mike Wilson: [00:30:48] It does, except I would caveat it with the following. Okay. Once again, going back to what Danny said, okay, if you think we’re going into recession, you can’t be doing that now because those stocks are going to get smoked, too, because that’s where that’s what people own. Yeah. So that’s what’s going to be sold. And plus they’re part of the index. I think the more interesting takeaway from what’s happened in the last sort of three. So we had the big rally in the Dow, right? So the Dow is really what drove that rally in October, which is all the kind of cyclical industrial stocks. And what that’s telling me is that those are going to be the leaders in the next bull market. But I wouldn’t buy them here because they’re up on a flagpole, number one. And number two, they’re cyclical. [00:31:24][36.3]
Dan Nathan: [00:31:25] One last question on this topic, though. There was so much money that went into alternatives, but specifically into VC. And so a lot of these crossover funds, a lot of these growth funds, they are responsible for a lot of the marks in the private markets and we’re going to see a lot of that stuff marked lower. So I wonder and I’m just curious, because you talked to some of these very big capital pools. Do you think there’s a chance that when we start seeing marks of things that we gave an example, guy last week, a company called Databricks, Okay. And it’s a big expected IPO. I’m not asking you to comment on that. And hopefully it’ll be at 2023 and it’s a competitor to Snowflake and Snowflake’s down 77% in its valuation is still fat on almost every metric. And I think internally they had marked down their own valuation 7% or something like that in the summer. So there’s going to be big marks. The companies are going to mark them down, the VC funds are going to mark them down. And I wonder, do the VC funds or the crossover funds more specifically, do they start selling the liquid stuff like you just talked about because they have redemptions, VC firms generally don’t. It’s longer tail money. So thoughts on that? [00:32:24][59.0]
Mike Wilson: [00:32:25] That was definitely part of the June low and we saw that in the June low. Is there another round of that now? Probably some of that, but that’s not going to be the main driver or the main driver of the final low, in my view, is going to be about people giving up on the idea that there’s a soft landing for earnings. Forget about the economy, that basically they’re so far off on their forecasts and margins and profitability. That’s the real story, Dan, is that the operating leverage is going in the wrong direction now. And I think we’re all going to be surprised just how severe that negative operating leverage is, because companies got fat, they got fat during this basically, a bonanza of COVID. COVID was a bonanza for many, many companies. And they invested poorly, they invested sloppily, they oversupplied themselves, they over hired, and now they’re going to eat those costs. [00:33:14][49.0]
Danny Moses: [00:33:15] Mike, I know you can’t comment on specific banks, obviously, but we have Wall Street banks. We have consumer facing banks, the sector in general. It was a rough year last year. The IPO, the M&A, all the stuff. It doesn’t appear obviously, the scenario that we’re painting, four of us now, obviously it’s not going to be great for them. To me, it’s going to be one of the more interesting sectors. And when I say that it’s not about trading the XLF, it’s about stock picking. So if you were to give advice to people out there, which I know it’s individual stock picking, can you comment on the bank sector in general how they’re going to trade in this environment? And then just stock picking in general, why it’s such a lost art but a needed one, especially this year? [00:33:50][35.3]
Mike Wilson: [00:33:51] Yeah, totally. I mean, really, I mean, this year as Dan said earlier. I mean, there is plenty of opportunity to make money either as a trader or as even an investor. I mean, we have a long only portfolio that we don’t trade. That was up on the year. It was a very defensive portfolio and that’s one way to do it. But getting back to your question, banks is one of the areas that we’re really bullish on in the next bull market for a couple of reasons. Number one, they aren’t going to have the big default cycle. We think in a typical recession, the balance sheets are really, really healthy, more healthy than they’ve ever been. So we’re not going to see those big write downs. Number two, capital markets and things like that are going to come back with a vengeance because there’s going to be tremendous equity issuance, I believe, to recapitalize potentially corporate America where there’s too much debt. And that’s going to be a big wave of activity for them. The third one, which is a little more nuanced, which I can’t really prove out, but I think the Fed is going to be very lenient with the banks because they need the banks lending to get M2 growth back to high single digits, which is what they need to grow the economy six, seven, 8%. Nominally, they need the banks lending. So they’re going to let them over earn probably more than people think. Like I don’t think going to be onerous on regulatory change the way that perhaps people are fearing. And that’s a good thing is they can trade maybe above book value multiples, which is kind of where they’re trading now. And then the last thing is Bradham is talking about really, there’s a lot of private shadow banks that stole business or took business away from the banks post GFC because the banks couldn’t lend. And now that share shift is going to go back the other direction is they’re handcuffed in the traditional banking system is not. So I’m extremely bullish on the banks globally as well. I think there’s a huge rate cycle that’s already begun. That’s obvious and that’s their pricing mechanism. So I think it’s a space where investors can start picking away at that now, even where things that are trading close to book value, I mean, maybe go down 10% from here, 15%, that’s fine if it’s a double over the next three years. [00:35:29][98.6]
Danny Moses: [00:35:30] And just to follow up on that, just to get a little wonky, but I think it’s worth explaining the SLR, the supplementary leverage ratio the banks have, they’re not allowed. Obviously, they have to exclude Treasuries and to me Mike, that’s one area that I think we’ll see some type of relief, especially if QT proves to be as volatile as we think it might be. Right. An impact on reverse repo and all that. Thoughts on that because I think that may be the buying signal. [00:35:52][22.2]
Mike Wilson: [00:35:53] It’s a great point. It’s something we didn’t see coming in May. And I’m sure you remember when the Fed required the banks to increase the reserves and it was kind of for their own protection. As we go into this slowdown, the Fed wants the banks to be healthy so that they can do exactly what you just said. They need that lever. They need to be able to push that lever when they need to to get growth going in the other direction when they feel like inflation’s under control. So I totally agree with that. If you know when that data is, please let me know. Send me an email because I think you’re right. It could be a really important signal. [00:36:20][27.2]
Guy Adami: [00:36:20] To continue the theme. Both Danny Moses and myself believe the environment that we find ourselves in is the perfect environment for the following. I give you Shakespeare yet again. Merchant of Venice Dan Nathan. All that glitters is not gold. And I will say that over the last 6 to 9 months, we’ve seen the Bank of Japan intervene in their currency. Subsequently, the Bank of Japan intervene in their currency visa vi the bond market. That’s why they did it. You have the ECB, Bank of England, central banks around the world seemingly just pushing buttons. Gold very quietly is rallied. Is there a place for gold in this environment? Mike Wilson. [00:36:59][38.9]
Mike Wilson: [00:37:01] Yes. We’re pretty constructive on gold. I think it’s a good hedge against both deflation and inflation and has been a good inflation hedge because there’s been better inflationary hedges in the environment we’ve had so far. The one risk I think for gold in the very near term is that the Fed stays more hawkish in real rates stay a little stickier in the short term, but I think anywhere near 1700 1750 and gold is a great entry point for something to the low 2000s, maybe higher. [00:37:25][24.1]
Danny Moses: [00:37:26] Yeah, I’ll just echo it seems like anything that would make the market rally, i.e. the Fed stopping is going to be just a massive positive for gold and the risk reward, I honestly Mike I’m not to get into the weeds on this, but we can go into the physical versus the ETFs and all that. There’s going to be a run on gold, so to speak, in my opinion, because the way this market has been with manias, I mean over the last 25 years, but especially the last two, three years, people are looking for something to hold their hat on. And it might indeed a mania gold. It will probably get overbought and obviously come back down. But it does feel like a perfect storm to be long gold in this environment for sure [00:38:00][33.8]
Mike Wilson: [00:38:00] Global central banks have been buying gold, we got the data. Right. So, I mean, that’s a. [00:38:04][4.3]
Guy Adami: [00:38:04] Dan’s laughing it’s true, in record amounts. Now, it’s not manifesting itself. [00:38:08][4.2]
Dan Nathan: [00:38:10] You have no idea how much I listen to you and vice versa. So this is a comment that I’ve heard I think twice already today and four times last week. [00:38:18][8.6]
Guy Adami: [00:38:19] And when he says do it, it’s got some gravitas. When I say it, it’s a throwaway line. Anyway, please continue, Michael. [00:38:24][5.7]
Mike Wilson: [00:38:25] Well, I just read the newspaper, but I mean, in all seriousness. Okay, So we’re going to a multipolar world, right? Competing currencies, potentially. The Bank of Japan’s action, I think, are really important. They’re saying where it’s time to defend the currency to some degree. We know that China wants to separate itself from the US dollar. Obviously, Russia is a whole other story and then being kicked off the reserve platform essentially. So there’s going to be competing currencies and that means there’s not as much trust anymore in the almighty dollar. So that leaves some opportunity for gold and it doesn’t take a whole lot of money to drive the metal higher. [00:38:56][30.8]
Dan Nathan: [00:38:57] Anything out there from a geopolitical standpoint, is there some sort of detente in the situation with Ukraine and Russia’s invasion? Is there some sort of signaling from the Chinese that they are not going to be an aggressor towards Taiwan? Are there are some things that could go right, because we’ve talked about this a lot on the pod. I mean, last year was probably one of the first years we can remember in a long time where some geopolitical thing that people had on the bingo board really caused a lot of disruption. And we can all agree that COVID was a bit of a black swan. You know, that was one and Guy pointed that out in late 2021. I mean, we were talking about a lot of people don’t think it was a high likelihood that the Russians would invade Ukraine the way they did. I think on the flip side of it, I think we’re seeing that maybe some of the disruption to the energy supply chain is not as bad as we thought. I mean, if you think about where natural gas is, you think where crude oil is in gas at the pump. So I’m just curious, is there anything out there that you think could actually defuze some of the geopolitical risk that’s out there in 2023? [00:39:50][53.6]
Mike Wilson: [00:39:51] Well, look, I mean, I think we just had a diffusion. I don’t really necessarily understand why oil is trading where it’s trading natural gas I get because now there’s all this supply heading to Europe where you get a better price or they have an oversupply of LNG that’s killing natural gas price and the weather’s been warmer. But oil is a weird one. I mean, what it tells you and this is one of the things that I was talking to a lot of clients about in the last like earlier last year, everyone was like well you got to own energy I said I kind of like the materials better. And they said, Well, why? Because there’s latent supply in oil. I know there is. It’s out there and it will come to market if it can get there. And that’s exactly what’s happened. So Russia’s obviously selling oil to China. Iran is back in the picture, selling it to probably India as well. I mean, we know that oil is now coming out these latent supplies have been restricted. And that just tells me that we’re not as short oil, perhaps, as some of the oil bulls have been talking about, which is a real positive. Like if you think about where oil prices are today and where gasoline prices are today, like if they hadn’t come down, we probably would be in a recession. Like the consumer wouldn’t have been able to take $5 gasoline through Christmas. So that’s a real positive and that’s something that I didn’t see coming. And that may be more sustainable than what we think. [00:40:55][64.3]
Danny Moses: [00:40:56] Back to the banks, Mike, just as it relates to trading and holding positions, obviously there’s a lack of liquidity in the markets in general. We’ve seen crazy moves in all commodities, right? I think that’s going to continue and it just creates obviously mixed signals. I don’t see that improving at all in the course of 2023. Volatility is one thing, but not having any type of liquidity on the other side is another. What are your thoughts on that? [00:41:17][21.2]
Mike Wilson: [00:41:18] Well, that’s right. I mean, I think these low prices can happen in the market sometime earlier than people think this year because that liquidity picture is deteriorating from here. There is plenty of liquidity being provided to the system to get through year end. That’s what the reverse repo activity showed. But, you know, going forward, I don’t think that that liquidity availability is going to be as good. I mean, the Fed is committed now the TGA has been drawn down, the repo operations are kind of maxed out. So yes, I think that’s a big factor and why multiples can go easily 13 times some number on the way to 200. [00:41:49][31.3]
Guy Adami: [00:41:50] For a long time. And I’m not suggesting this is correct by the way, this is just my belief. For a long time there were business cycles, very understandable business cycles, and that’s been alchemy out. So the no longer business cycles now, they’re basically credit cycles manufactured by central banks. It changes your job. Does it make your job a little bit more difficult? [00:42:09][19.4]
Mike Wilson: [00:42:10] Yeah, because there’s other things you can’t really measure exactly or analyze. So we try to be humble to some degree and understand and appreciate. We can’t predict all those things, and that’s why we use tactical so aggressively, because the market does know. One thing I will say, throughout all this period, last 20 years, you know, we’ve been doing this for 30 years, but really the last 20 years intensively, I would say the market internals have been pure. They tell you all you really need to know the best strategist in the world is the internals of the equity market. You just follow that. It really helps you understand what’s going on. And that’s why even in the rally this fall, the defensive stocks did really well. So that was telling you that there was a garbage rally. You just okay, defenses are holding up. This isn’t going. [00:42:53][42.8]
Dan Nathan: [00:42:54] All right. So your next bullish call in the stock market. Is it likely to be tactical? And this is again, going back to what I think I asked you a little bit ago, because you’re going to have a lot of eyes on you or is it likely to be. Listen, I could be wrong on the exact moment in time on the bottom, but we’re within 10% or so. And do you give that some thought? Because if we are down back at 3490 again or something like that, the sentiment is going to feel as bad as it did. In fact, it probably feels worse, actually, if you think about it right in the retest of that, a lot of the internals that you were just talking about are going to look a lot worse because time makes them worse, but it also makes it closer to a bottom. Right. And so talk a little bit about also duration. Is there some sort of internal clock in your head? Because we know the average length of a bear market. Is this I’m just curious, like how are you going to think about when you want to be bullish, how you’re going to be bullish over your career? Have you made like bottom calls? Like that’s it? [00:43:49][55.4]
Mike Wilson: [00:43:50] Yeah, we’ve definitely made those bottom calls. One was in March of 2020 that was pretty dramatic, called the Low. And there was a definitive call. It was not tactical call that was like get long and this is this is going to be a monster. Is there going to be an opportunity created for us to do another tactical call like we did in October? Maybe. Will we be as specific and adamant as we were in October? Probably not for the reason you mentioned or the time and price. It’s getting narrower and narrower. Like if we get another bear market rally before the final low, it’ll probably be shorter and not nearly as big, which is means is even harder to trade. Like it’ll be a 5 to 7% or something like that and probably two weeks and I’m not going to be making calls like that. So we’ll see how it goes. I am optimistic. I’ll tell you this. I am optimistic that at some point in the first half of this year, we’ll be making more of a true bottom call where we can really sink our teeth into stuff that we can own for several years. [00:44:42][52.7]
Danny Moses: [00:44:43] So, Mike, you talk about sectors within the U.S. stock market, but just pulling it back there. Obviously, the IMF pay attention to them if you want. But they put out a pretty sobering global macro forecast that half of Europe will be in a recession. We’ve obviously seen China reopen. Is the U.S., though, in your opinion, on a relative basis, not on an absolute basis, still the sexiest game in town? And with that, how do you trade the dollar and what does the U.S. dollar impact on that? How do we think about that? [00:45:08][24.8]
Mike Wilson: [00:45:08] No, I mean, I think China is the easiest game in town right now from stock market standpoint globally. I mean, I think I totally bombed out this summer. People call it uninvestable that I mean, that’s a great phrase to hear. And it was kind of uninvestable. But that’s how bombs are made. And then, of course, the Zero-covid policy. And it kind of abruptly I didn’t expect it to be that quickly. And they’re pushing our last strings are even stimulating the real estate market now. So our our guys in Asia made a great call and it has nothing to do with me. But they made a great call upgrading China, some of the Asian markets as well, Taiwan and even Korea kind of at the right spot. So I think those markets look better to me. The EM markets look better because of what you said at the end, the dollar topped. It’s pretty clear to me the dollar’s top for two reasons. A The Fed is much closer to the end, but other central banks are getting more hawkish incrementally, particularly to BOJ and even the ECB. So that helps the dollar come off. But the main reason the dollar topped is because the FAANG stocks blew up. The money is leaving. All that money that chased into the U.S. went into those stocks globally and now it’s going out. And that will cause the dollar to come down on a relative basis. That drives EM. [00:46:11][62.3]
Guy Adami: [00:46:11] Yeah. And I encourage our listeners to go back. I think it was October 24th. It might have been the 21st when Alibaba traded down to 58 and change close a day at 63. I will tell you all day long all I heard about was how uninvestable China was. And I’ll tell you, because I happen to know for a fact that was the ball’s low. [00:46:31][19.7]
Dan Nathan: [00:46:31] Yeah but again it’s trading versus investing. If you think you just used multipolar world, we’re in a bipolar world from here on out. And for all those people who think that 2023 might bring a shooting war between China and Taiwan that resembled something like, you know, Russia and Ukraine, it’s much more likely to be an economic war. We’re much more likely to see a step up in the sort of sanctions and trade restrictions. And the list goes on and on. And I just think it’s interesting that headline the other night that the Chinese are stopping some of the stimulus for their own chip industry at a time when we are giving massive incentives to our chip industry. So think about that, that capitalistic incentives for companies in really strategically important industries are beating out those in the communist country. I just think that that sort of economic war really has the potential to make China uninvestable for U.S. citizens. Thoughts on that? [00:47:24][52.5]
Mike Wilson: [00:47:25] I don’t know if it’s an investable. I think you just got to take it with a little bit different grain of salt. I mean, first of all, the cooperative relationship between China and the U.S. is over. This beautiful relationship where they produce our goods. Then they buy our bonds and fund our ability to run our deficits, and we consume the stuff that they produce. I mean, that virtuous circle that’s been broken. Okay, now another cycle or circle will be created from that. I’m not in the business of predicting geopolitical events or warfare is for sure. It’s impossible for even experts to do that. I’m hopeful that that won’t happen. And I think it’s more of an economic war. I think we can be competitors without military conflict and without economic warfare that becomes destructive. I mean, that’s my hope. [00:48:04][39.1]
Guy Adami: [00:48:05] Last year, Danny Moses was the Mike Wilson of NFL Picks. I’m just putting it out there. It was unbelievable. This year, not so much. So, Mike, I’m going to ask you to stick around for this. You don’t need to participate. But, Danny, as we’ve reached the final week of the National Football League, the league where they play for pay and a league that finds you again, either side of 500, it’s fine. Give me some picks just to round out the year as we head into the playoffs. Playoffs, by the way, Danny, that the New York football Giants find themselves in. [00:48:38][32.7]
Danny Moses: [00:48:38] Congrats to you. Let me just say, while we were on this podcast, I saw news that Damar Hamlin was communicating. I mean, truly, I got the chills when I read it. So that put, you know, gambling on games, whatever, on the back burner. So let me just start with that. That being said, I’m going to ride this mojo of these two teams this week. I don’t care. They’re going to play. I don’t even care if I win. I don’t even care. I just want to be a part of these two teams that went through so much and handled it. The teams themselves, I thought incredibly well. Bills at home against the Pats, the Pats are toast. Everybody’s turning on the quarterback. They’re done. You know effectively the Bills and the Bengals had a bye week granted it was an emotional rollercoaster. I didn’t want to try to predict that. But given the bills over the Pats minus seven and then the Bengals really, who knows what the tiebreakers are going to be, but in kind of a must, not a must win, but a lot can happen if they win this over the Ravens who without Lamar Jackson continue. So both teams are laying seven. I’m just going to ride the good mojo of both teams and that’s it. And I don’t even care if I win because I’m just so happy. Damar Hamlin doing better, that’s all I got Guy. [00:49:36][57.3]
Guy Adami: [00:49:36] Amazing. I saw the same news, so thanks for bringing that up. And listen, we obviously wish him and his family nothing but the best. It sounds like he’s absolutely turned the corner, which is extraordinarily encouraging. We started this was Shakespeare, Mike Wilson. We’ll end it with Shakespeare because why not? Modest doubt is the beacon of the wise. I’m not sure what Shakespeare play or sonnet or whatever that’s from, but it happens to be true. And when you speak, there’s no certainty in what you say. But there is that modest doubt. I think you’re constantly questioning yourself, Where can I be wrong? Where can I be wrong? That comes through your work. And I think that’s why, Mike, it’s so thoughtful and that’s why Dan, Danny and myself are so fortunate to have you on with us this first episode in 2023 of On the Tape. [00:50:23][47.8]
Mike Wilson: [00:50:24] Well, I appreciate that. That’s very nice of you to say. And it’s great to be with you guys anytime [00:50:27][3.2]
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