Single Best Idea with Tom Keene: Troy Gayeski & Neil Dutta
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Single best idea on the quarter-ending Monday. I don't care. I ended it today. And we had a wonderful set of conversations, just the overview. Not 60,000 feet, but 20,000 feet. Lots of really good overviews. James Steele on gold at HSBC was wonderful. Freya Beamish in studio from TS Lombard in London. Just wonderful on the Pacific Rim and what we're going to see from China. Quickly here, though, on a Friday afternoon,

Troy Gajewski was in with FS Investments, and we looked at the optimism of the market, and he did as I do when I think of someone like Michael Darda.

At Roth Capital, the same thing. The idea of looking not at real GDP or real wages, but the top line, the animal spirit, nominal GDP. It's nominal GDP that drives revenue. And even last quarter, when you had real GDP contract, nominal GDP expanded over a 3% annualized rate. And clearly, we're going to get much better real growth this year. However, remember, the biggest struggle from the trade conflict

is not how much it reduces revenue, it's how much it impinges corporate margins. And corporate margin expectations for growth coming into the year were already overly optimistic, primarily because the most important systemic tech companies already told you their margins weren't gonna expand, they were gonna contract because of all the investments they're doing in AI. So we see it revenue positive, earnings estimates have come down rightfully.

But I think at the end of the day, the technical strength of markets continues to be underestimated, as well as the continued strength of the consumer. Troy, can I ask you there on the non-recession that we've enjoyed the first half?

The market is absolutely remarkable. What's great about Renaissance Macro is not only the quality of Neil Dutta, but he's working with Jeff DeGraff, who was literally a must-read out of Lehman years ago. Jeff DeGraff and Neil Dutta synthesizing in economics.

with technical analysis and fundamental views of the stock market. On the stock market, the economist Neil Dutta. Clearly, Tom, the pain trade is stocks go higher. I mean, you have the market at basically new highs, and, you know, it looks like bears outnumber bulls. So that's, you know, I mean, a pretty good sign. The pain trade is higher. You know, look, I mean...

uh you know the i think you know the stock market is a very useful discounting mechanism so it's always important to keep an eye on it especially when you have a cautious economic view like i do but

you know, it's also worth pointing out that it's not a perfect discounting mechanism, right? So when I think about why stocks have gone up, you know, it's earnings, rates and risk premium and earnings estimates keep going higher. Risk premium has been coming down. You know, you're getting soothing words on trade and interest rates have been coming down as the markets bet

you know, I guess more in the direction of our Fed view. So that's what's powering the stock market higher, which kind of raises the stakes for what earnings looks like going forward.

On July 15th, I believe it is, J.P. Morgan begins the major earnings season. Absolutely fascinating, folks. I'm speechless over what we've seen in economics, finance, investment, and yes, international relations just deep into this June. It has been just extraordinary, to say the least. On our podcast, yes, on Apple, on Spotify, on YouTube podcasts, this is Single Best Idea.

For enterprise organizations, managing all your food needs is a tall order. But with EasyCater, you get a single workplace food vendor with the tools and resources to make it easy, giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform. All while consolidating your corporate food spend so you can control costs, streamlining billing and payment and simplifying reporting.

Thank you.

Thrivent, where money means more.

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