Market Turned Up Roses In 2024 with David Rosenberg
39:02 Share

On the Tape.

iConnections is the world's largest capital introduction platform in the alternative investment industry. They bring the asset management community together through a membership platform that lets allocators and managers meet and connect both physically and virtually. Over 3,000 allocators and 600 managers are part of the iConnections community, overseeing nearly $48 trillion and $16 trillion in assets, respectively.

They are also the people behind the alternative investment industry's largest and most exciting in-person events. To find out more about iConnections events and members-only platform, visit iConnections.io.

Welcome to one of the final On The Tape podcasts of 2024, and what a better way to sort of end the year and put a ribbon on it than to be joined by David Rosenberg, the founder and president of Rosenberg Research. David, how are you doing? Hanging in, my friend, hanging in. By the way, the last time David appeared with us, Dan, was in March of this year, March 29th, if memory serves. We named that I'd Rather Be A

bull. And I got to tell you something, David, you're really hard on yourself. And most people that have reached the stature that you are, are. But you wound up being right about a lot of things. But what I find fascinating is, and I'd love for you to talk about this, on December 6th, you put out basically an apology for your stock market pessimism. Again, being very difficult on yourself because you're right more than you're wrong. But let's start there with that note that you put out.

I wrote a report called Lament of a Bear, and the very next day I put out a sequel to it. I made sure to say in that report that no, it was not an apology or a mea culpa or even a throwing in of the towel. And despite the fact that I mentioned that, I think right at the get-go, I had a client

sent me an email asking if I was thinking about S&P 7 or 8000. So what I did was you can call it a stream of consciousness. It was really an end of year attempt to play devil's advocate with myself. I don't hide from my mistakes. What I like to do, especially now, is go through where I got the call on the S&P 500 wrong. Now, I will say in my own defense that I wasn't alone.

because this time last year, the consensus on the S&P 500 for the end of 2024 was 4900. And today we sit just south of 6100. And of course, a lot of strategists now are mark to marking their targets to 6500, 6700, 7000. So everyone's playing catch up. This was basically a cleansing, really providing not an apology, although

I don't like being wrong. I don't do it deliberately. But as far as the US stock market was concerned, and I was bullish on a lot of other things that actually worked out well, but I find in this industry, unless you're just basically just a bond guy, that you're going to be graded just on one call, which is S&P 500. That's pretty unfortunate because I cover said classes and sectors and do it globally. Everybody bows down to the holy grail of the S&P 500. So I wrote a report saying,

Was it that market is telling you, what's the message from Mr. Market? So the report is, what did I miss at the consensus of equity investors, large cap US equity space? What did I miss that they didn't miss? That's sort of the question is basically I had underestimated

AI trade, which wasn't just a 2024 story, it really got going in the spring of 2023. Those blowout Nvidia numbers and its guidance, just as we would probably date the onset of the internet bull market to the summer of 1995 when Netscape went public, I guess we can date the

boom in general of AI to May of 2023. And then all the spinoffs that have happened in other parts of the market because there's been spillover effects. I missed the power of that trade. That was, I think, the major faux pas, if you want to call it that,

because when people say that this was an earnings-driven market, well, earnings are up 8% over the past year. And the market's up almost 30% in the past year. So it's been principally, but not exclusively, a multiple-driven market.

Not an earnings driven market, at least not just yet. Most of this rally has been expansion of the market multiple and the market multiple is synonymous with animal spirits. Confidence, ebullience, you can call it complacency, but there's tremendous confidence. I did not think that this year would be dominated by a five point multiple expansion in the forward PE multiple.

That's a two standard deviation event. And it's not like we went from 13 to 18, went from 17 to 22 plus. That's a big move. I didn't anticipate that. And so I missed out on the extent of the animal spirits triggered by the ongoing and cascading AI trade.

I know we can talk about the Trump win. I wouldn't say it's insignificant, but I was writing about that before and after the election, that a Trump win versus a Harris win would be good for the stock market. And there's no doubt that you can layer that Trump trade on top of the AI trade.

Not much is true. And I was on the Trump trade. I just wasn't as much on the AI trade. Yeah. Well, David, let's talk about that because we hear a lot about that multiple expansion story. Guy and I have been talking about it over the last, call it 18 months. And when you're talking about that Nvidia quarter, it goes back to May 2023.

But for a good part of that period into July, it really was a lot about NVIDIA. It was kind of the picks and shovels. People came around to the hyperscalers, right, that this was going to be one of the early beneficiaries. And now when you talk about what's gone on, let's call it over the last six months, you can throw the Trump trade in there. I think what's been very clear is starting in September after that low that we made, the markets start anticipating a bit of a Trump victory, right? We saw that in the prediction markets. But when you

think about the Mag 7, they are $20 trillion in market cap right now, right? And if you think about the fact that they have all basically doubled off the lows at some point over the last year and change while Nvidia is up, what, 400% or something like that over that same time period. So when you talk about multiple expansion,

You talk about earnings growth that is basically below what a lot of folks has expected, let's say, a year and a half ago. There's a lot of things that have to go right with this Trump trade and with the AI trade as we head into 2025 to justify the multiple where it's trading on a forward basis. I think we could kind of all agree on that. Help us square that circle a little bit because...

because that to me is what the big disconnect is on that multiple and what we are expecting for future growth, which is still EPS growth in 2025. I think consensus is about 12 and a half, 13% or so. - What I wrote about in the Lament of the Bear, which was that this could be one of these rare periods. And once again, I said,

In my report that this is not new era or new paradigm thinking, although one can read into it that way, that investors seem to me to have lengthened their time horizons. And this, of course, is what happened during the internet mania back in the mid to late 1990s, where back then, if you were

an economist, a market economist, strategist like me, and we focus on when you're forward, when you're trailing. We don't have a big sample size of this. However, we know that when we've had a major technological innovation, what happens is that it causes investors to start to value the market with a longer timeframe. So investors are seeing a future of

tremendous productivity growth. Productivity growth means that you have a much lower corporate cost curve, and that is very bullish for the earnings outlook. But the question is, what's the time horizon? What is the explanation when we talk about the one year multiple, which is what I've been talking about, going into the top 5% valued stock markets of all time? And I laid this out as a premise,

that what likely is happening, and we saw this back in the mid to late 90s, in a forgiving market like we have today, is those earnings estimates in the future go well beyond one year. And that's what happens after you get a major technological shift in that technology curve, that inflection point, assuming that that's what this is. I was positing that what's happened is that investors are ignoring the classic valuation metrics. They're not looking.

are scared away from a 22 to 23 forward multiple based on one year because they are pricing in the next five years. Now, I wrote the sequel to say, well, so what is the S&P 500 telling you about the next five years? What are investors in aggregate telling you about their expectations, about what AI is going to be delivering? And you could say AI and Donald Trump will be delivering on average

at an annual rate in terms of earnings growth for the next half decade, and it's 20% per year. When we actually were at that point of the Nvidia blowout in May of 2023, that number was closer to 10%. It's now 20. That's what's embedded in equity market valuation. So even if you have this view that we're going to get this wonderful long-term

productivity and profit outlook, a lot of that is priced in. Now, I am not going to say that there's a 0% chance that we go through a full five-year period and not see 20% average annual earnings growth. What I will say, looking at 100 years worth of data, is that that is a 1 in 20 event. You are betting on a horse with 1 in 20 odds. And could it happen? I mean, we had five years

on average of 20% plus growth back in the mid to late 1990s. Of course, silicon crashing down. At some point, you do overprice what's going to happen. And I don't think that AI, to me, I call it internet light. The internet was like electricity. Cinema report is that'll keep an open mind. I guess the comments I've gotten back, I must have just been viewed as the stubborn mule to think that when you mentioned that you're going to keep an open mind, that people think that you've all of a sudden become bullish. I frankly do not believe that we're going to see 20%.

plus earnings growth for the next five years on an average annual basis. I don't think that's going to happen. I don't think anybody really knows what the total size, the total available market is going to be of AI. We don't know how it's going to be regulated. There's lots of unknowns. But the markets have laid down their bets like they usually do. The markets shoot first, answer the questions later. And that's what we have in our hands. That's how I explain what happened this year.

Investors have lengthened their time horizons, which you could say is rational given the circumstances. But is 20% earnings growth per year for the next half decade? Is that likely going to happen? I have doubts about that. And then I come down to something else, which is what does it mean? What does it mean? I see I did not anticipate that the equity risk premium would be this close to zero. I believe the ERP would be this close to zero. That was my fault. I just didn't think that was going to happen.

What does it mean when the ERP is zero? What does it mean when investors are treating a risky asset class called the equity market the same as it does a treasury bill, a riskless asset? What does that mean? When investors are so confident, so ebullient, they believe that a risky asset, capital risk, now has the same risk attribute as a riskless asset.

I think that's rather astounding. So you see in my report, I was trying to explain what is the message from the market. Now, if you believe that the equity market has become a riskless asset, whether your earnings yield is trading on par with the risk-free rate, the market's telling you that the equity market is no longer a risky asset class. And if you believe that, then this market is for you. If you're buying this market with an ERP,

where it is right now, you have to believe that nobody will ever sell their stocks again. Everybody is in it for the long run. And if you believe that nobody will sell their stocks, this market is for you. And it's not just the equity market. I mean, right now you can pick up about a 5.5% yield

in a Genie Mae mortgage bond, which is the same yield you can get in a BAA corporate. So a Genie Mae has this implicit guarantee. The default risk is basically zero. But in the corporate bond market, the default rate

risk is close to two percent so even on the fixed income market a riskless asset has been priced the same way as a risky asset or vice versa that's the environment we're in that's called animal spirits that's called a tremendous tremendous degree of confidence that basically

The corporate bond market is pricing in no default risk. And the equity market is being priced as though it's a treasury bill. And if you believe that that is rational and makes sense, then all I can say is this market is for you. Not for me, but for you. Fair enough.

And your work is extraordinary. I've said that so many times over the years. And I find myself in the same camp that you're in. So much of this, David, as you know, is on the back of passive investing. Money flows come in regardless of news, regardless of anything. There's just a money flow. So let's just put that on the side for a second. But there are a couple of things that should give people, if not concern, at least pause. And they come in the form of two different metrics, understanding that these are not timing metrics. I want to be

clear, they're clearly flashing red. One of them is the Buffett indicator, which is now at 208% levels I don't think we've ever seen before. But almost as important, if not more important, is the Robert Shiller CAPE index. Of course, that's Signally Adjusted Price to Earnings, which is now at levels that we last saw in 1929. So to your point, you can whistle past all these things and say they don't matter anymore given the duration of the investor.

With that said, they're walking themselves into a corner that I think it's going to be difficult to get out of. So speak to that. Well, look, I've written about the CAPE and about the Buffett indicator in that, if you want to call it a mea culpa, what I'd mentioned was that, you know, if we're in an environment where investors are pricing in the next five years or maybe the next 10 years, then coincident valuation metrics like the Buffett indicator and the multiples that you and I look at all the time, they're just going to shrug that off. Right now, they don't matter.

At some point, they will matter. The market is extended. The typical investor has lengthened his or her investment horizons. And so that was really the trying to keep an open mind that focusing on all these things for me this year caused me to miss this rally. Do I regret missing near a 30% total return in the S&P 500? Of course I do, but I'm just trying to come to grips with an understanding as to

what it is that the market is telling me that I missed. And then right now, going forward, whether or not I agree with that message from Mr. Market. So I think that's part of it. You know, if I could ascertain that 10% earnings growth is priced in for the next five years, I'd say, okay, well, that is certainly doable. But

But it's 20%. So I'm taking a look at what the valuations are at this point for the next five years. I'm saying, okay, Mr. Market, if you're looking next five years, I've got news for you. 20% earnings growth is about triple in a five-year period what we have incurred in the past century over five-year cycles.

That's a triple. I'm not going to say it's not going to happen. It's not 0%. Chance, historically, it's more like 5%, but it's not 0%. That's the bet that's been laid down. And you mentioned about the passive index investing. Absolutely. Powerful source of fund flow. And that, again, is something that I missed. Did I think for a second that we would reach a point? I didn't think we'd reach a point in my life. I've been doing this almost 40 years. I didn't think we'd reach a point where almost 60%

of the market cap today is dominated by passive index investing. You know, when John Bogle unveiled the Vanguard Equity ETF back in 1976, he said, this market will never get more than 20% of the total capitalization. It's now starting at 60%. So this is a bull market in blind investing. People don't even know what it is they're buying. Of course, why would you go to an active manager today? Three quarters of them have lagged

the index, just go and buy the index. And plus it's cheaper. But you see active fund managers do their best, their CFAs, their professional investors to actually look at balance sheets and income statements and valuations. But who needs that today?

just pin the tail on the donkey and that's going to work for you. I think that's very dangerous thought, but that's what's happened here. Most people in the 401ks have no bloody idea what the hell it is that they own. And so you're 100% right. So the index fund has to buy the market. And this is where it becomes a self-fulfilling prophecy. And then you get this view that, well, no one's ever going to sell. These flows are going to be coming in. And we've reached a point where

70% of the household financial asset mix in the United States is now concentrated in the equity market. There's 12% in bonds. People don't know that, but bonds are for losers. And then the rest is in cash. And everybody thinks that, well, you know, that cash is going to come to the market. But I mean, if it hasn't already, why will it now, especially with the ERP at zero, that to me would be a pretty silly decision to make. I am concerned about one thing, which is

When we get to the other side of Bob Farrell's rule number four, remember rule number four. Rule number four is that exponentially rising and falling markets typically go further than you think, which is where we are right now or where we have been. An exponentially rising market has gone further than I thought. But there's a second half of the rule, which is that they do not correct by going sideways. And

We all know the cycle. Donald Trump is not bigger than the cycle. Maybe the cycle gets lengthened. But the cycle is a cycle. The cycle is Mother Nature. And there's the market cycle. There's the industry cycle. There's the economic or business cycle. This will end, as Herb Stein famously said,

Anything that can't last forever by definition won't. I just don't know when it's going to end. It could end in three months. It could end in three years. I don't know. Chuck Prince told everybody in the summer of 2007 to keep dancing until the music stopped. But I don't think anybody knew the music was going to stop on October 9th of that year.

So I'm pretty nervous because everybody is all in. We've never had, not even in the internet mania, did we have this degree of concentration of risk on healthful balance sheets. Not just that, but look at folks my age, baby boomers. Baby boomers should have 30 to 40% of their mix in equities. They are over 60%. Everybody is all in. You look at the ICI mutual fund date,

The equity fund portfolio manager in the United States has a cash ratio today, barely more than 1%. It has never been that low. What happens, God forbid, if you ever get the redemptions? But you see, the thing is that nobody believes there will be redemptions. Then I say, which I said in my report, which everybody thought, well, there goes Rosenberg. He's basically throwing in the towel. Really? So then why did I say, what is Warren Buffett saying?

that everybody else is saying, forget, you know, I'm not a billionaire. You know, I guess if you put me and Warren Buffett in the same room together, I took the average, I'd be a billionaire. Outside of that, we both have something in common. We're both from 30% cash. I'm probably even higher than that. Why is he at 30% cash? What is he seeing? And the problem I see it as this, and I can't time it.

But I do respect all of Bob Farrell's 10 marker rules to remember. Rule number four, this will not correct by going sideways. But what happens when you start to get people trying to get out? Everybody thinks they can get out at the top, whenever the top is, and there'll be a cascade. People will try to get out at the top.

But the thing is that there's so much concentration risk and everybody is all in. It will be a stampede to the exit, but there will be no bid at the other end. There'll be me and Warren Buffett with liquidity. Warren Buffett might be able to help. That's what actually has me most nervous is what happens on the other side of the mountain. What happens when this reverses course? I think it's going to be really ugly. And I'm actually very, very nervous about it.

And I wonder what the policy response is going to be. I don't mind being there to pick up the pieces. I missed 2023 and 2024. I don't intend to miss the next bull market. But right now, I'm going to pause it. I'm going to try and be thoughtful, try and explain what's happening out there, and also explain why I am not following the herd mentality. I'll explain why, despite everything I said, I have not changed my asset mix.

but not one iota. But I will under more appropriate circumstances. But I am very concerned about my friends, family members that I have, colleagues, people that I know that are all in. I really worry about the day when people think, OK, this is over. They try to get out and there's no buyer on the other side.

Right.

Buffett's not going to be buying those. You know, go back to 2022, right? And you think about the fact that some of the most loved tech stocks, Nvidia, Tesla, Netflix, Meta, they all sold off 75% in what was otherwise a very orderly bear market that we had.

right, in 2022. And then, you know, a lot of folks are going back and you just made some comparisons to the internet bubble that was emerging for the better part of five years from the mid-90s to 99. If you look at the NASDAQ, it on average gained 42% a year. That last 1999, the blow off up 80% or so was the thing that was kind of mind blowing to most market participants.

participants. And then you look at the S&P that averaged 28% returns from 95. You just mentioned the EPS growth that we saw in the late 90s. There wasn't anything larger than I think 15% a year. And some of them were single digits, right? So I guess the point here is that could this thing go longer? Like you said, of course it could go longer. And you know what happened in the late 90s, I don't think we'll ever see that sort of egregious sort of returns, especially in the NASDAQ. But I

I guess the question is, and we haven't even mentioned this to some degree, and this is an area that you were on it for 18 months about the course that inflation was going to see. And I know you've been talking about that and you've been dead right on that factor, but it never really kind of like

inflation coming down and rates staying pat, help us make some sense of that. Because going back to that September cut, 50 basis points, the 10-year ran ahead of it. It went down to 3.6. And then within a month or so, it was back up near 4.5. Well, here we are at like 4.25. Talk to us about interest rates. Talk to us about inflation. What are you expecting at the Fed next week? And how do you expect the course of interest rates to affect the stock market throughout 2025?

You know, we went down to 360 around the September meeting and the market had quite a lot of Fed rate cuts priced in. The Fed turned more cautious. We backed up to four and a half, went down to 415, now we're at 430. So we're just backing and filling and range trading. I'd have to say that, you know, the yield curve is either fractionally inverted or it's flat. And, you know, this is coming from a longtime bond bull. But the reality is that if the Fed doesn't cut rate,

rates, say in the next year, you're just better off being in T-bills than being in long bonds or the 10-year. Because once again, another market where if you're long treasuries, you're taking on duration risk with the same coupon that you get at the front end of the curve. So I take on that risk unless you believe that the Fed is going to be forced to cut interest rates more aggressively than what's priced in. I think that's going to happen. So the Fed's going to go

December meeting. When March comes around, and I think that they had four rate cuts for next year, the last dot plus, they'll probably go to two. And then by March, they'll go back to four rate cuts again. And I'll tell you why. I think that people have been lulled into this false sense of complacency, even over the economy. And we bow down to the holy grail of non-farm payrolls. But the household survey has shown a net decline in employment of more than 300,000 each of the past two months. And

One thing we do know from the QCW data up to June is that non-firm payrolls, because of the birth-death model, has been overstating employment by 1.2 million. You know, that's not a small number, 1.2 million over a year. And so we're going to get the benchmark revisions in time for the March meeting next year.

And I think that'll come as a big surprise. Now we're sort of in the middle of the range. I'm probably tactically right now neutral on the treasury market. But if you're going to ask me where the next big move, let's talk about the big move. Let's talk about where's the next 100 basis point move in the 10-year treasury as opposed to...

putting on our trading hats for the next couple of months so i can draw the the bell curve for you i think the next 100 basis point move in the 10-year and this is directly against the consensus i think it's going to be down not up it's going to be down not up whether or not we actually get the recession i've been anticipating that's like waiting for godot however

I am noticing some things taking place. I'm noticing that the unemployment rate is going up, not down. It's trending higher. And actually, without the decline in the participation rate in the past two months, the unemployment rate would already be at four and a half percent. The cap you rate in industry is going down at the same time that the unemployment rate is going up. So I'm getting a sense that we are building up disinflationary slack in the economy without necessarily having to go to recession. I think that's going to be intensely disinflationary.

I think we're getting a big break in the rental series, right? And we saw that in the CPI data, that the rental numbers are finally starting to cool off because the deflation in the new tenants is starting to repopulate the index and the old high leases are falling out of the data. That is going to be a primary...

source of disinflation. I actually think that the convergence of the rentals, remember that's 35% of the index, so we are in rents. We'd get a convergence trade in rents. And this time next year, I think that both core and headline inflation are going to be well below 2%.

So what does the Fed do? They're telling us that their neutral, their estimate of neutral, whatever that is, it's not observable, is around 3%. I still think that they will be cutting rates below neutral. I think the market right now thinks that the funds rate is going to bottom at 3.7% next year. And I think actually no. Whether they pause for a meeting here,

change their cadence there. I think we'll finish next year below 3% of the funds rate. Ergo, I think that the 10-year notes got potential to get down to 3.5%, which is about 75 basis points lower. So that's my view for the next 12 months. It'll be choppy, but that I think is the next big move.

Introducing event contracts from CME Group for individual investors who want a new, less complex way to trade some of the world's most recognized futures markets. They're smaller, lower cost with predefined risk. Event contracts that you trade your views on daily up or down price moves in equities, gold, oil, and more. The markets you know and use every day.

Take a position by choosing a side with event contracts from CME Group. Learn more at cmegroup.com slash eventcontracts.

iConnections is the world's largest capital introduction platform in the alternative investment industry. They bring the asset management community together through a membership platform that lets allocators and managers meet and connect both physically and virtually. Over 3,000 allocators and 600 managers are part of the iConnections community, overseeing nearly $48 trillion and $16 trillion in assets, respectively.

They are also the people behind the alternative investment industry's largest and most exciting in-person events. To find out more about iConnections events and members-only platform, visit iConnections.io. With Robinhood Gold, you don't need a silver spoon to eat up the financial favors of the 1%. Robinhood Gold allows others to get the rates and perks usually reserved for the high society. Now the resourceful individual with Robinhood Gold can earn the very liberal rate of 4.25% APY

on uninvested cash and be rewarded with a handsome 3% retirement boost on qualifying IRA contributions. Robinhood Gold provides the privileges of a high net worth for any net worth. These generous benefits are now available for only $5 per month. The new gold standard is here with Robinhood Gold. Sign up at Robinhood.com.

Gold membership is offered by Robinhood Gold, LLC.

I mean, if I'm being honest, which I try to be, you know, I thought we would see the unemployment rate significantly higher at the end of this year than we're currently at. But I think it's just off on my timing. I don't think my premise is wrong. I do think that's going to surprise people. And I think you're in that camp where I differ, though, in terms of tenure yields. And as I say, David, that's what makes markets. The amount of issuances that are coming due early next year is staggering. And again, I'm not suggesting we're going to have failed auctions, but

My sense is given the backdrop of where we are with our debt problems and stuff, the market's going to demand a higher rate of interest to buy said debt. And that's one of the reasons I've thought yields are going to go higher for a while. And that view was shared by Paul Tudor Jones and Stan Druckenmiller amongst other people. So under that scenario, assuming that that happens, you know, what's the backdrop for equities there? Well, firstly, forecasting bond yields is a very complex process.

And fiscal policy and bond issuance goes into whatever equation you're going to run. You can't sit there and say to me, well, this is all I'm going to look at is the flood of new supply of treasuries. Because between the time that treasury yields peaked in October of 2023 at 5%, all the way down to 3.6% last September, there was over a trillion dollars of deficit finance that came into play.

And if I told you that story in October 2023, you would have said we're going from 5% to 5.5%. But no, we went to 360. It went down to 360 for other reasons over and beyond the fact that we still did over a trillion dollars of deficit finance through 140 basis point rally in the 10-year note. And the big part of it and the most important determinant of rates is Fed policy. Inflation expectations also matter, of course. Investors' views on inflation.

The cycle, the economy, that matters for the real interest rate. But the most important determinant of rates out the curve is what the Fed's going to do. So when we went down to 360 with all that bond issuance that you're talking about, the view was building that the Fed was going to be very aggressive in cutting rates. Why do we bottom at 360 had nothing to do with the Fed that people think, oh, the Fed made a big mistake cutting 50 basis points. No, that wasn't the story. It's because the statement was actually not dovish at all. They went 50. It's like what happened in Canada this week.

The Bank of Canada went 50, gave guidance that was less than dovish, and the Canadian bond market got smoked on a 50 basis point rate cut because the market reduces expectations of what the bank's going to do going forward. Well, that's what happened with that sell-off in the bond market. It happened because the Fed caused the market to reduce its expectations of what the Fed was going to do in the next year.

So that's what's most important for me. I'm not going to belittle fiscal and new issuance. What you're talking about, Guy, has a 20% correlation with 10-year yields. What I'm talking about has a 90% correlation. So the key is going to be, what is the Fed going to be doing? Nothing matters more.

So this is Thursday right around noon. There's an IPO. We haven't seen a tech IPO in a very long time, at least one of any size. There's a company called Service Titan. It's going public. The indication was 71. At least that's where it was priced. And at that point, it would be a $6.5 billion market cap. I'm looking at my FactSet screen right here. It's being indicated at 140.

Okay, so this is going to be up 100%. I just want to read to you guys what Service Titan does. This is a company that was founded in 2012. They are not yet profitable. Okay, I think they're expected to trade at this valuation, 10 times sales. You can do the math if it opens at 140. They provide software solutions. The company develops a trade platform that offers collection of field service activities required to install, maintain, and service the infrastructure and systems of

residences and commercial buildings, tradespeople like local plumbers, roofers, landscapers, HVAC technicians, and so on. Okay. And when we remember some of the goofiness that was going public in the late to mid 90s and the valuations they were commanding and the idea that you will have an opening print up 100% for a company that's been around for a very long time and is not yet profitable.

So the last question I have for you, David, is you're talking about expectations for what the Fed does. You're basically saying that that has a lot tied to your outlook, right, for equities and the like. What are some of the things that will speak to an all out, you know, blow off top in risk assets? And really, we're talking about equities and maybe also crypto. What are some of the things that you will be looking for to suggest that maybe the jig is up pretty soon? I think that in my opinion, we probably hit that point already.

I think that what brings this to an end will be either, if I'm wrong, an inflation resurrects itself, the Fed holds the line in interest rates, if we get into a global tariff trade war. I mean, there's all sorts of things out there, but I'll say, when does this end? When does the exuberance end? When you start to see the sort of stuff we saw

had ended the bull market in the internet mania. That internet started as a bull market into a raging bull market, into a mania, and then into a bubble. I think that when you get to 20% earnings growth priced in over five years, even if you have a long-term horizon, I mean,

We're there. And I don't invest in bubbles. And I do believe this is still a bubble, even if you are willing to say, I'm going to end the analysis beyond one year for multiples. So if we start to see orders being canceled, we start to see reduced guidance. We start to see these bellwether ad giants begin to

missed their numbers. And look, when that score, we're not there yet. However, just remember that TechRec started about a year before the recession, which started in March of 01. It started when, God forbid, and it wasn't about Pets.com. It was about when companies like Cisco started to miss, God forbid, by a penny. That is what will cause the second guessing about there being too much priced in.

And all those great companies, and they weren't dot-coms. They were caught up in that wave. And it was Cisco and Microsoft and Dell and Intel and IBM. The companies are still around today. Those stocks got hammered for years. And you can't try and time it. Whoever thought, if you remember back in the Super Bowl at the beginning of 2000, the Super Bowl commercials were all about the internet. And who knew that two months later, the gig was up. But the gig was up when you started to see...

the actual corporate news and guidance start to come down to reality. The problem like then as now when everybody is all in is the cascading effect and the reversal of those fun flows when there's no buyer on the other side. And I do think we're going to replay that. I just don't know when. And whether it's one year or two years away, I'll just have to sit here and wait. There's

There's other stock markets, at least other stock markets. Like I've been bullish on the Japanese stock market. It's done fine. At least there you get paid to take on the risk in Japanese equities. There's other places in the world where you get paid at least to take on the equity risk. I still like bonds for the next year. I'm not jumping in right now, but it feels back up further than I will be. And you know, people tend to forget, I didn't put this in my note, is gold. Gold. And gold is done every bit as well as the S&P 500 is done this year.

And hardly anybody talks about gold. Gold is done as well as the stock market. And it's behaving in a very interesting manner. And I think that the forces at play behind gold, that will persist. That's something I can understand, how gold is trading not as a commodity, but as a currency that's no government's liability.

more than one way to skin a cat, but that's what I would say. You know, read Bob Farrell's Rules to Remember, Rule Number Four, and then read one of these books behind me for over the break, the Charles McKay 1841 classic, Extraordinarily Popular Delusions and the Madness of Crowds. That's what I think people should read at

And I would say read it with a double of single malt and you'll get through it without much pain. David, we love having you on this format because it allows us to have deeper conversations that different media verticals do not allow. And it's great to hear your thoughts. It's an honor for us to have you join us. Your time is precious. Hopefully we'll have you back a lot sooner rather than later. David Rosenberg, you're a legend and you are in the Hall of Fame. Thanks a lot, guys. Best of luck. We can all use luck. Yeah.

for 2025. Thanks for having me on. Before luck, I hope you and your family have a great holiday. So thanks a lot. I echo what Guy has to say. There's a ton of nuance in the report. I read Mornings with Dave every morning. It's one of my first reads. And it's just not about an S&P target. It's not just about which direction you think it's going. There's a lot of sector stuff in there. There's a lot of geographic stuff. There's a lot of risk asset stuff away from equities, which you kind of highlighted here. So we really, really appreciate you being here. Hope to talk to you very soon, David.