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This is Masters in Business with Barry Ritholts on Bloomberg Radio.

I'm Barry Ridholts on the latest Masters in Business podcast.

Another banger, I have Binki Chada.

He's chief US strategist for Deutsche Bank Securities.

Fascinating career and approach to looking at markets.

He's an economist, but essentially operates as a market strategist.

He's been fairly constructive where he's supposed to be.

Started the year twenty twenty five with the seven thousand target on the S and P five hundred brings in a lot of different factors.

That makes his work so interesting at Deutsche Bank Securities, not just economics, but FX equities, global perspective focused on US equities.

I thought this conversation was absolutely fascinating, and I think you will also with no further ado, my interview of Deutsche Bank Securities Binkie Chada, Binki Chada, Welcome to Bloomberg.

Thank you.

So.

I have been looking forward to this conversation for a long time, primarily because so many people when I asked them who their mentors are, reference you.

So you have a lot of influence throughout the street.

That's very guind.

We'll come back to that a little later.

Let's start with your career.

You get a bachelor's in mathematics and computer science from Dennison and then a PhD in philosophy focused on economics from Colombia.

Is that right?

A PhD in economics?

So what was the career plan.

The career planned was, you know, to get a PhD in economics and study development economics and alleviate poverty and help the world.

I went to graduates school and graduate school, you know that out of here exactly, and.

There's a whole lot of debt, go into go do some well somewhere.

Well, I mean I think that development economics is sort of builds on is not necessarily core.

You know, core is micro and macro.

And I ended up basically studying macro and then went to basically work at the International Monetary Fund and.

First in the first job right out of school.

You were there for a while, seventy seventeen years.

So what were the various positions you had.

I saw a division chief of the Euro Area and Global Markets.

Yeah, I was doing in chronological orders.

So I started basically in the So the IMAF has a grad program just like any investment bank.

It's called the Economist program.

And my second assignment was in research, and I stayed in research for the next few years.

It was the heyday of the IMA to Research department under Jacob Frankel and then Michael Musa, and we had all the world's leading researchers visiting the IMF.

And then the Iron Curtain came down and the IMF suddenly had thirty new member countries and we all got pulled into working on various aspects of that.

So I worked on Bulgaria pretty much full time for a year.

So you were at IMF for almost two decades.

How did that experience shape your view about the economy and markets, both domestically and internationally.

Yeah, so, you know, I started in the research department, but I went from there to the Asian Department.

And even while in the Research department, like my participation in Bulgaria, we always, oh, at least I always, you know, it was eager to participate in the IMF's bread and butter work, which is really country work.

So I remember going to Singapore in my very early days.

Singapore is, you know, obviously a small country, but because it's a small country, has issues, especially from a development strategy point of view, that are sort of key.

You remember in the nineteen seventies we used to talk about the knicks, you know, So I mean I could talk quite a while about Singapore.

But Singapore started in the early nineteen seventies with a ten to twelve percent unemployment rate, had low age, export led growth model.

By nineteen seventy nine, unemployment was two percent.

Health had been strong, and because of the peculiarities and the politics of Singapore, it's ethnic Chinese that moved out of Malaysia to have an independent country.

When you want to grow rapidly but you only have two percent unemployment, you would end up sort of violating the principle what you were formed because you would need basically lots of important labor from Malaysia and Indonesia.

And a wild success story.

Though Singapore's economy has done really well.

Has so it has because they made a very concerned push at the time to move basically towards higher value added activities.

And the first paper I ever wrote on a country was really Singapore, and it's about Singapore's high wage policy.

They announced in the increase in real labor costs or wages.

It's also sort of the retirement plan of six zero percent in nineteen seventy nine to work through the system over the next three years, and it was wildly successful in basically, you know, turning the economy into sort of a much higher value added growth part.

I mean, finance was some of it, but it was you know, the focus is more on sort of high tech manufacturing.

So today you're overseeing asset allocation primarily for US based investors for Deutsche Bank.

I know you're global.

Also, yes, that is true my focus, partly because I'm here and partly because the US is the most important and biggest driver.

I've been our equity strategist in two different stints over periods, so I actually spent most of my time basically on US equities.

I would say, so, how do the lessons from Singapore and Bulgaria or just global perspectives via the IMF, how does that translate into making better asset allocation decisions for US investors.

I think those experiences are basically, you know, things that sort of inform you about the bigger picture and forces that are ongoing that you know, one may not sort of see data day.

Certainly not day to day but week to week, but sort of you know, explains the direction in which things are going.

And I think Singapore is sort of a good example for I mean, we started talking about development economics, which was but it's about growth economics and development economics and sort of like, you know, does policy really have a rule a role or should we just let the free markets keep going?

Really really interesting, So after seventeen years at the IMF, what led you to Deutsche Bank in four.

So the IMF does not historically never really spoke about exchange rates because the market sensitive variable.

That was the thinking at the time.

But that didn't mean that the IMF didn't spend a lot of energy working on FX.

We had an internal group that you know, some people in the market knew, and basically because we used to have a dialogue with the markets, there was an opening basically in FX because a the FX strategists had been around for quite a while, he had moved on or retired basically, uh and and so they asked me because they deutsch Bank at the time.

So the strategist that I'm referring to, his name is Mike Rosenberg.

He really did FX for me top down macro point of view.

Uh and and it's hard to find people like that.

But I was at the i m F.

I was trained as an economist, uh and I had done plenty of work on FX.

So, given, given all your background in economics, currency development, how do you end up eventually as an equity strategist Because that seems like sure, it's it's adjacent to economic and economists.

So so for a few years, uh, a last few years at the IMF, I was actually part of a small group that was responsible for developing and maintaining basically a dialogue with the markets.

I used to report to Stanley Fisher, who said, I'm tired of reading in the newspaper on the way to work that another country had gone under and somebody should be having a dialogue.

And all the time where it was Fisher.

It was Stanley Fisher.

He was the first Deputy Managing Director of the IMF in the late nineties, which is so this is soon after the Asian financial crisis, and then sort of you could argue that the dominos continued for the next few years.

When you reported to Stanley Fisher, was he at IMF or he had or had he gone else He.

Was at the IMAF.

He was the first deputy Managing director, which would be the counterpart of being the CEO as opposed to being the president of the So he ran the IMF intellectually and otherwise.

And it was a small group of us that you know, basically was a financial markets dialogue with an open license to go out there and tell us about any and everything that you think that matters.

So how do you transition from head of Foreign Exchange Research to US chief US Equity Strategy.

So what I was going to say on that was simply that you know, I came to do FX strategy and research, but I really wanted to do things more sort of close to the markets.

And there was a simple practical issue, which is if you want to be here in the markets.

Yeah, the center of liquidity was really seven am to eight a m.

London time, and and so you either live in London or you know, you find a US asset class.

So I found US equity.

So yeah, it's purely opposed to covering FX and London you did actually in stay in the middle of the night.

So so since we're talking about both equity and foreign exchange.

You've said, we have favorable investor positioning, a stable dollar investor, animal spirits and robust buyback activity, lots of m and A activity going on, and high business confidence.

That sounds like a fairly bullish set of factors.

It is a very bullish set of factors.

What I would point out is that, you know, equities historically are really about the business cycle, and that's why people wrote pieces that are well known on Wall Street there from some time ago that you know, getting at what drives the cycle.

And once upon a time, the US business cycle was just really the housing cycle.

That's a very famous paper with that title.

And you know, if you fast forward from there basically to do today, we have a very very very peculiar cycle, is the way I would put it.

We've had for the last two almost three years now, essentially full employment in the labor market.

And what is that odds with the traditional cycle is that when unemployment is low, you're typically at the end of the cycle and growth tends to be low.

But for the last two to three years, what we've had is four percent approximately unemployment, but GDP growth, especially underlying GDP roads running pretty steady at three percent.

Showing some signs of going even higher basically, and what I would say is historically that is very very rare.

It's happened only six percent of the time if you do things on a quarterly basis, six percent of the time since World War Two.

And it's no secret when those two times were one was in the nineteen sixties.

I would argue, basically, that's really the takeoff.

That's really the post World War recovery with a big lag because people didn't know in the fifties would exactly do because you could only extrapolate the great you know, the Great Depression and World War Two, so it took a while.

But the sixties is really the post World War two recovery.

And the second time that happened is more recently, and everybody is reminded of that now, is the second half of the nineteen nineties.

But it goes without saying that both of those periods, like the current period, have been very good basically for equity markets.

If when unemployment, so when you have a job but growth is strong, risk appetite is going to be high.

I think that's not you know, surprising, and that's kind of almost exactly where we are.

So you mentioned the sixties, you mentioned the nineties.

I have to ask you about the twenty twenties, which, on the one hand, and we'll circle back to housing.

I'm fascinated by that.

But this feels like a little bit of a to use your word, peculiar cycle, because during the pandemic we had the biggest after fifteen years of more or less of monetary driven stimulus, we had the single biggest fiscal stimulus at least as a percentage of GDP since World War Two?

Are we seeing that boom that boom let I don't know what to call it, on a bit of a lag or has it hit the economy and is beginning to fade?

From what I look at, My reading would be that this has been going on for a while.

It's been going on basically through a variety of policies, and so I don't think it's really coming from the policies.

I might even go far enough to say that it's happening despite the policies, because we had a massive hiccop this year and it has to do so.

You know, One of the things about a cycle and how vulnerable or strong it is has to do with basically you know household and corporate balance sheets right, and so in sort of a peculiar way, we are blessed in my view, because of the global financial crisis, which created huge deleveraging on the household side, and then we had COVID, and you needed to have your balance sheets right if you were a company, and you needed to basically get used to dealing with new shocks, and arguably we got another one today.

So but what I would argue, this resilience is partly a blessing of the two large shocks that we already had, and.

Long before COVID, most of corporate America had refinanced all the long term debt very favorably.

So heading into this, both households and companies pretty well.

Situated exactly that I would agree completely, and they remain so I would say, right now, outside of a few pockets, you don't really see any signs of excess.

So there's every reason to believe that it continues.

And if you start, you know, by looking just at like sort of near term economic forecast, that's one idea.

Basically everybody has a pickup in growth next year, so.

Based on either fed cuts or we'll talk about the policy is just coming up later.

What I wanted to ask you about.

You mentioned housing is such a key factor in cycles.

Is it a leading factor or is it a benefit of a positive business cycle?

Because a lot of people kind of grew up in the two thousands, which felt very backward, right the first time we had ultrao rates and a few generations, and so all the refinance and helock home equity, loan withdrawals, all that stuff felt like it was the real estate was driving the economy as opposed to the economy benefiting real estate.

Right, So what I would point out is that the housing market today is a much smaller part of the US economy than it used to be.

So if you go back to the seventies, you know, we're talking six seven eight percent of GDP is housing.

Wow, Today it's like more like two percent.

I apologized the exact.

Decimal point, but it's a fraction of what it was.

It's a fraction of what it was, and so it's I mean, and we were just talking about three percent GDP growth for the last two two and a half years.

And housing has been in the dol drums for quite a while.

We've been underbuilding single family homes since the financial crisis, so it's not a big contributor there.

What are we doing fifty eight hundred.

But what is very peculiar about this cycle is that, you know, so there is a very important fact when you think about the three percent or three percent plus GDP growth numbers, which is you know that it actually and equities are about cyclicality and cyclical variation.

So recessions are big events, and recoveries are big events.

But what I think is easily missed is that two thirds of the US economy is actually stable growth economy.

It's like the old days of consumer staples earnings, where every company analyst in the room would get mad when I would say, you don't need an analyst.

They tell you just need a ruler to what they're earnings are going to be because I was so predictable in the same vein, two thirds of US GDP is really stable growth GDP.

Now it's not rip roaring growth, but it's too you know, two percent growth.

What the cycle comes from the cyclical arts basically, and that's a little bit over twenty percent of GDP, so it's not really that huge, But all the cyclicality really comes from there and when it gets going, it's very powerful.

And if you think about what is the cyclical parts, I can go further.

Basically it would be number one is consumer durables, number two is corporate cap X, number three is housing, and number four is structures.

And so what is extremely unusual about this recovery from my point of view, is that stable growth is doing what it's always doing.

There's mostly services.

It's really that.

You know, if you look at the cyclical part of us GDP, yes it's growing, but it's at the bottom of the channel basically, so it actually has a lot of room to move the upside.

Like the fifteen percent I'm saying.

Does that include all of the tech investments in AI and data centers that seem to be just full on booming.

Yeah, So the tech investment wouldn't be in here.

I mean, if you look at CAPAX, if you take out so AI party, it's on the soft side.

But so you can take, as I always say, you can take a various view on that, which is it's all coming from this one part, or you can take a bullish part that the other part's going to start to happen.

So and here what I would get say is that it's hard to put your finger on exactly what the issue is.

But there's a lot of overlaps in the different aspects of what's going on.

So I just gave you the list of the four parts that are not doing great, all.

Of which seems to be somewhat interest rates sensitive.

And I know you're looking for a few more cuts over the next year or so.

Sure is that what's going to light the next leg, start the next leg moving higher?

I mean, I think interest rates are important for how saying.

And durables right by how should you fill it with furniture and appliances and a car?

Sure, but what I would say is I don't think that interest rates are absolutely the key because capex.

We were just talking about that a little bit earlier about corporate balance sheets.

Since the nineteen seventies, what corporate America learned is that you don't spend beyond your means.

I would say most capacs, especially for S and P five hundred companies, is coming from internally generated cash flow.

And if you look basically at the three uses of cash flow, you know, dividends, capex, and buybacks, and you take their total spending relative to their total cash flow.

It's been this side of one hundred percent forever.

Which sounds sounds pretty.

Exactly, And so I don't think that the interest rates going to make plays such a big deal for corporates.

You could even argue you, I mean, for a long time it was like, if interest rates go up after the global financial crisis, corporates are going to get killed.

It was the reverse, and their earnings went up.

Wall Street Journal column, why why are corporate bonds on fire?

Because they seem like such a safe bet.

That is exactly right, And there's been you know, market mechanisms that have in many cases actually improved the credit quality.

So when we look at indicies, you want to be careful because they're not controlling for the historical credit quality.

I mean, S and P.

Five hundred is different because it's about earnings and your earnings power.

But in terms of credit quality, you know a lot of the indices, I mean, the current composition is better than it used to be.

Now we're at a certain stage in the cycle, so we've had to two and a half years basically of you know, a fully employed labor force and strong growth.

But there's been If you think about those two and a half years twenty twenty three is you know, everybody's waiting for a recession and this never change.

Use I call that period the rolling VS.

And we're kind of going through a similar version of the same thing right now.

Meaning rolling so decreases.

Do you think after a recessions that quickly?

So?

Actually, what I mean I call it when I say the rolling VS.

What I mean is that basically, if you look back to late twenty twenty two and you looked at, you know, the forward forecast that was in the macro consensus, it was growth is here.

Growth next quarter is going to be lower, in two quarters will be in a recession, and then of course we'll have a recovery.

And so if you look at almost or so when the recession didn't come, well, the macro Consensus did is simply rolled it forward.

They said, no, we are right, just wrong on timing, and then when that didn't happen, we went and rolled it forward.

And I mean I have this chart.

It's a little old now, but on the same chart as you see the rolling VS.

You look at the actual data when it came in and there's you know, we're like way above closer to three percent, and people are forecasting a recession.

And so those recession forecasts, we heard those in twenty one, twenty two, twenty three, like if they kept doubling down and got it.

Yeah, so it's twenty twenty three and then the early part of twenty twenty four.

So Deutsche Bank was we to single out our economists year excellent, but they were some of the earliest on the street of a recession is going to happen down the road.

They didn't give up the recession call, I believe, till the first quarter of twenty twenty four.

And so from a company point of view, if you were listening to companies and you know, analysts ask on learnings calls, why aren't you spending, They're like, no, there is a recession coming, and the recession is coming.

So all through twenty twenty three, corporate America just waited for the recession that never came.

Early early twenty four and they began to wait for the we had the election, everybody got very very optimistic, very very constructive.

We got liberation Day.

I think where we are now is those two years basically of a waiting of created pent up demand is a shortcut way of saying what I'm trying to get at.

And it's also you know, led to the approach or strategy if you want to call it that, that we just need to deal with it and get on with it.

And we're not waiting anymore.

And and so we are where we are, where we're having this strong growth.

But it's really the cycnical bods of the US, you know, are either erratic and noisy or at the bottom of the channel, so not exactly depressed and falling out of the channel or going into recession, but growing very modestly.

That is the basically the challenge that it creates for equity strategy or investment.

Really really really fascinating.

Coming up, we continue our conversation with Pinky Chata, US equity and global strategist and head of asset Allocation at Deutsche Bank's Securities, talking about his roles at Deutsche Bank.

I'm Barry Ritults.

You're listening to Masters in Business on Bloomberg Radio.

I'm Barry Ridults.

You're listening to Masters in Business on Bloomberg Radio.

My extra special guest today is Binki Chada.

He's chief US equity and global strategist as well.

As Head of Asset Allocation at Deutsche Bank.

Although he's here in the US and has a lot of US clients, he is also a globetrotter and travels around the world Europe, Asia and elsewhere advising clients of Deutsche Bank.

So before we get into what's going on today in more detail, I want to talk a little bit about your role at Deutsche Bank.

You've led US equity and global strategy for a couple of decades.

Now, how has your team, How has the team's process evolved?

What do you think of in terms of tools and quantitative analysis as well as a broad global macro overview.

What drives your decision making.

Sure, I mean, at the simplest level is to figure out, you know, where the equity market is going to go.

That's all I need to do.

Once you figure that out, your gold.

We're pretty humble about that pursuit, but I would say that is the number one objective in pursuit.

And what we do is basically we have developed over time, basically a whole set of framework.

They are not all you know, I mean, they're meant to be non overlapping frameworks.

And quantitative or qualitative.

Are they all models or is there.

Some they are quantitative frameworks.

You could call some of them models.

So I would say the most important thing for equities, and again my very humble opinion is what's happening with earnings, And so you need to have a good framework basically for earnings.

If you could get earnings right, I mean, and you need to do that well in advance of the actual delivery.

You know, you will know what the markets are going to do.

Basically, So what we did and we revisit, revise, revamp, redo, throw out whatever you want to call it.

But at the moment, basically what we have is we take a whole group of stocks and sectors, we divide it up our way.

So there's megacap growth in tech I mean, and that you know needs to include Visa and master Card because it's they're not tech companies, but they behave very very similarly in terms of their revenue streams.

So you can think about it as basically a trend and cycle framework for each of the groups.

And the question that the trend is, you know, what has basically been prevailing for quite a while, and then the question is what drives the cycle in those So if you take megacap growth in tech.

For example, you would have the US dollar and for some parts you could be looking basically for you know, very specific things that matter which you're not going to pick up.

So for example, you know, for materials, because of the way US materials are structured into two parts.

For chemicals, you need basically a chemicals later, which is not something that most people tend to look at.

So this idiosyncratic, but it's cycle and trend and what drives basically the cycle it would be, you know, ism manufacturing US dollar.

Ism manufacturing is an interesting one because that's historically the one thing that explained SMP five hundred earnings extremely well, and that's kind of like all you needed to know.

Still today, does it still happen?

So basically for the last three years it hasn't been the case.

And why it's simply because of megacap growth in tech.

If you take the s and P five hundred, you break up its earnings into megacap growth in tech and everyone else, you'll see that everyone else is still currently aligned with the ism manufacturing.

ISM manufacturing has been in a funk for three plus years now, and so we haven't had growth.

So I kind of hinted earlier.

You can look at the current you know, sort of contact in a bearish way.

That is, all the growth is coming from ninety percent of S and P five hundred earnings growth has come from megacap growth in tech.

Or you could take the view going forward that everybody else is going to recover.

That's the camp that we are in because.

That everyone else will be catching up to tech.

Events exactly unless their earnings are completely aligned with the ISM manufacturing.

In the US, ISM manufacturings basically, and that's historically the case for the entire indexes and earnings.

We've been in a funk for three plus years.

M manufacturing has been between forty six and fifty, so you know, it's something that we've never seen historically.

So if you ask why are we sitting here, well, first thing to note is that if you know things were bad, then we should have been going down.

We shouldn't be sitting in mildly contractionary.

Fifty dividing point above fifty is.

The dividing point, but I mean I think the fair or I mean conceptually it's the Intellectually it's meant to be the dividing point.

But this is still slightly positive growth even below fifty.

To get to negative growth, you have to go quite a bit lower.

And I would argue in the first instance it was basically just the hangover from the pandemic.

So remember that as we came out, you know, we had basically massive spending on goods and that in some way involves manufacturing.

And then we had basically the slowdown and the rotation.

Reminds me a little bit of what took place in the run up to Y two K in two thousand.

You had all this tech spending pulled forward and then it was soft for a year or two.

Right, right, And it's been followed basically by a whole set of things.

Number two.

So on the hangover, I would say, you know, I don't think a hangover's killed anybody.

So a hangover is holding time basically, and it would naturally basically, you know, a pass.

But then in early twenty twenty two we got the Russian invasion of Ukraine.

We had one hundred and twenty dollars oil, and if you look at oil prices today, what we've had is basically we've gone from one hundred and twenty to in round number sixty.

But it's taken three years to get there, and what the three years to get there means is that energy earnings on a year and year basis have been negative basically or contracting for three years.

Now.

The good news is that we are much closer now to basically what I would think of as fair value for oil prices.

That's actually a little bit higher.

It's not a tradable difference right now, but fair value is probably sixty four sixty five dollars, and so you know, this drag should basically stop soon, even though for the third quarter we're still looking for fifteen percent down so energy energy in energy earning, so it's just mostly oil prices and energy vertigo is important basically for various parts of manufacturing.

Then we have basically idiosyncratic issues in autos and Chinese autos in particular, and of course, last but not least, we have the tariffs this year, which impacts manufacturer.

We're going to.

Talk more about tariff shortly.

I'm kind of fascinated because I'm hearing in your laying out where we are today a lot of different voices, and at a shop like Deutsche Bank Securities, you have to have so many different perspectives, opinions from different quarters, from the economists, from the FX traders, from everybody.

How do you navigate and organize all of these different perspectives, some of which may be in conflict with others.

Sure, I wouldn't describe it as conflict.

I mean we are encouraged to have our own different views, a.

Broad dispersion of views.

Is that?

Absolutely so what I was always told by our head of research, David fogus Landau.

You know, so if I ask you at the end of the year, why did you get your s and P five hundred, call you not to tell me.

That the economist was there?

Right, that's as a work.

So you're responsible for everything that goes into your view and so we discussed in debate.

So as far as the research aspect of it is concerned, in terms of the strategists across all asset classes and economists, we have a regular meeting.

We just had one this morning actually.

So let me ask you a question you mentioned im What leading indicators do you put the most amount of weight on and what indicators do you think aren't all that important for forecasting the economic and or market cycle.

So we always start with our economists forecast, and we always ask the question of does this make sense to us?

Does this make sense to you know, the way of various you know, economic data are behaving.

So I mean, if you think about the US, so and twenty twenty three, when everybody's calling for a recession, there was this annoying fact which if you simply said, okay, I just landed here, so you know, okay, we're talking about the US potentially going into a recession.

You know, let me start by looking at GDP and you would find that near seventy percent of US GDP in real terms comes from personal consumption spending.

Everybody knows that, so why don't we just draw a chart of it?

And because I come from a relatively volatile asset class, I don't do any growth rate terms, So I just plot the level.

You have to take logs because of we all though why we should take logs, And then I draw channels around it.

And if you look at real personal you know, personal consumption spending in the US for the five years before the pandemic, we're in this tight channel, growing steadily at two and a half percent a year.

Pandemic collapse, recovery of pce back magically into exactly the same channel magic And so this is twenty one, and the same applies during twenty two, and the fat is hiking aggressively and personal spending just continues in the middle of the channel, and it was almost like there's nothing to see here, right.

Well, we had three handle on unemployment, wages were actually rising as fast, almost as as fast as inflation other than that nine percent peak.

Why wouldn't the economy and market do well?

And she says, with perfect times to.

Fast forward to this morning, where is PC.

It's right in the middle of the channel.

I would say, if you you know, there's a couple of different variations of looking at it, and the headline numbers actually at the top of the channel and moving along, and you know, we did have some slowing in the first quarter A but it was at the risk of going a way out of the channel and it just sort of moderated, it went flat and since it got back to the channel.

So it's the same thing and that's why.

And PC is important because that's a key indicator us GDP.

Yeah, absolutely, I think.

That's Jerome Pal's favorite data point.

Yeah, so he focuses more on the inflation in there.

So I'm talking about really the real volume, or than the measure that we have, which is in real terms, I'm just saying, if that's seventy percent of GDP and that's growing steadily and it's been doing, we're in the same place that we've been in for ten years, growing in you know, at what I would describe as a two and a half percent trend rate, So.

That that sounds pretty bullish.

I'm going to ask you in a little bit about cautious issues and risks will circle back to that.

But given the relative strength of the US over the past ten to fifteen years, and the fact that you've just gotten back from Asia and Europe before that, how do you look at the rest of the global economy, what's happening in Asia, what's happening in Developed X, last Europe and elsewhere.

Absolutely, So, you know, there's a chart that I'm going to draw for you, or really two charts, and what I would say I kind of already described the US chart, which is, you know, a steady trend channel growth of two and a half percent before the pandemic, steady you know, two and a half percent growth since then.

If you look at the rest of the world, the trend rates are different.

So if you use Europe as an example, but the same applies basically to various other regions were growing steadily before the pandemic at sort of a two percent rate.

Then we have the pandemic collapse and just like the US, recovering back basically to the trend line.

But that was in the first quarter of twenty twenty two.

So it is really Russia Ukraine that then basically arrested that recovery back the trend and basically activity in Europe.

You know, it's essentially gone sideways to fairy slightly up in the decimal points, I would say, and it's a very large gap basically relative to trend.

And so what I would argue is that you know, there was nothing exceptional happening in the US in absolute terms.

It was really in relative terms because the rest of the world wasn't really growing.

And I'm using Europe as an example.

You know, China, Japan is slightly different, but I think the European example is sort of key.

And so if you think about things like fax and the US dollar, I mean US dollar typically does long multi year cycles.

We were sitting at the top of the band for three years, so I think about it as a multi year trade or trend basically waiting for a catalyst, and waiting for the catalyst is just you know, is the rest of the world going to start to grow?

And in the case of Europe, you know what we had basically, so we went a long European equities on the first Monday of the year.

All the credit goes to my colleague, European equity strategist Max Uliar.

That's a great, great call.

It was just the view that everybody was short Europe.

Everybody's going to cover their shorts, or at least some people are going to cover their shorts going into the election, given the platforms which they began to do, and after they covered their shorts, it became a question of, you know, from a fundamental point of view, you know, is this going to happen?

Now in terms of policies, is going to happen?

So if you look back for the last few years, you know, as a policy maker, you want to do something about this, but maybe that shock was already gone and you're going to start growing anyway.

And so now you have that plus a whole set of additional you know, incentives to basically to spend infrastructure.

Then there's the defense issue.

So I would argue it happens.

And then is this early days in the resurrection of European equities or is this a one year one time.

It depends on whether you believe the growth will happen and sustain.

I'm in that camp, so I would argue still very early days.

And so we are actually from a positioning point of view, we overweight the US, which is what we've been talking about, but we'll also overweight Europe and overweight Europe not because I'm expecting it to match the US and performance through just.

Doing so much better than to But.

I think it's important to keep in mind that so far we have very little evidence that Europe is actually growing and if anything, over the last few weeks the data has kind of disappointed.

It doesn't negate what it's likely to come.

And then you look at the Europe I mean, you know, getting disappointment.

We moved up because Europe might grow and you know it hasn't.

But you know, we have trouble getting below one sixteen.

So the market is you know very much.

I would say, you know, concerned that the growth actually happens.

So I'm staying overweight because there you have to get in before it happens.

And giving the gap basically in the level of activity, in the level of earnings relative to trend lines, you know, you could gap up at some point, really, and so it's not just about tomorrow's earnings numbers.

So we started getting positive growth news out of Europe, well that's off exactly at that point.

It's already half of it.

It's already happened.

So let's talk a little bit about US economic growth.

We earlier discussed Asia and Europe.

You have said we have resilient corporate earnings with forecasts that are in the low double digits, robust risk appetite, and major buybacks that are likely to rise as earnings rise.

What's not to like about the US market?

Not too much, I would say, I think that, you know, going back to what I said earlier twenty twenty three, we're waiting for the recession twenty twenty four, waiting for the election.

There's a lot basically of demand pentab demand that for a variety of activities.

You're talking pre twenty twenty November twenty twenty four, so the prior year, right.

But what I'm saying is that while you know, the backdrop and the contacts has been very good, it's been very strong, it hasn't really been there hasn't really been buy into it because there's been something massive to worry about, like a recession in twenty eighty three, and so I would argue after the Liberation Day shocks, so I would say around the election last year, there was a lot of buy into a very optimistic take.

So we spend one of our frameworks that we spend a lot of energy on is our equity positioning framework.

And if you look at where we are today, and that's what I'm saying, there's limited buy in.

Is my positioning measure.

It's a Z score measure, so typically having plus minus one, it's sitting at plus point five.

But what I would point out, so market's clearly overweight.

That entire overweight characterization is coming from the positioning of systematic strategies who are not following or thinking about fundamentals.

If you think about the details.

When we say systematic, it's quantitative, its trend based, it's earning scrow.

So I have three in particular in mind so there's the VALL control, there's the ctias, and then there's risk parody.

Fund CTA is meaning mostly trend following commodities.

Exactly, So it's about trend involve UH is a good summary of each of the three basically, I mean, and if you look at systematic strategies positioning, you know, it's hard to come up with an intuitive, simple measure of what is the trend and that that that's what a lot of that exercise is about.

But the other part is very easy, which is basically VALL.

You can use any measure of VALL that you like, and and and and it explains basically their positioning.

So we had Liberation Day collapse, we had April to ninth when the cause of the volatility basically diminished or went down, and so we had the fastest recovery from a wall shock ever and and and but there's been very limited buy in, I would say from discretionary investors who are actually sitting at neutral discretionary is as opposed to systematic, but discretionary you want to think about as fundamentals based in.

Let's take that apart, because that's kind of fascinating because, on the one hand, there's been a bubble in bubble forecasts.

That's an old joke.

We've heard that, you know, for decades.

But really it seems like everybody is saying, oh, there's an AI bubble, there's a market concentration bubble, and the market seems to not care, and it just keeps powering itself higher.

Let's talk about the policy issues you just raised.

So, despite Trump won with some tariffs that were I don't know about ten percent, and I'm tariff man.

It's the most beautiful word in the dictionary.

Despite all of that, a failure of imagination or on all our parts, April second shocked everybody with one hundred percent tariffs.

I don't think anybody imagined it, and we had that very rapid sell off over the next week, then the ninety day pause and markets took off.

But at the end of the ninety day pause, markets just kind of came going going, yeah, how do you how do you put this policy into context?

And when you say there's not buying from the discretionary part of the equity markets, somebody's buying, is it just systematic or.

So it's systematic strategies?

And I would say, you know, we are sitting here in the first week of October.

So if you think about September and just the very very steady step, huge, huge games and society.

So what we got in September is basically big inflows.

Right, And I want to say Q three twenty twenty five was like the seventh best quarter going back to World War II, some crazy number like that.

So last month we had the highest inflow into bonds and equities as a group ever, billion dollars into in just one month.

Do you pay attention or care about the seven trillion dollars in money market funds.

Or is that you know?

So?

I think that's partly a red herring in the sense that basically it is a reallocation away from bank deposits.

So if you have sum of money market funds and cash deposits, the line's kind of going up, but it's going up in line with its trend because cash holdings are going up.

So the two things are just sort of a wash.

Because some people have been claiming that is the next source of fuel for equities, I'm in your camp.

I think that money mostly came from low yielding bonds or checking in savings account.

I think it's like very important to keep in mind that we're having a boom and inflows across all asset classes really and it's been going on for two years, if not longer.

And you know, as to the question of why we're having this boom, our take is basically that, so you have to start historically first, so that we're talking about, you know, how things check changed relative to history.

So the pattern was that US households would put about fifty percent of the new savings.

So you get a paycheck, you spend, something is left in the bank account, and then you allocate basically some of it.

But historically about half of all household savings it would stay in cash, half would basically go into financial assets.

And so if you think about the cash holdings of households, it's very very steady, clear trend line.

What the pandemic did, partly because people spent less, partly because they were getting checks in the mail or directly deposited in their bank accounts, their cash holdings went way way up relative to trend.

We then had a period where, because you just over allocated relative to trend, a period of cash going sideways, so that all new savings one percent of it was going into financial assets and into all financial assets is not just I mean bonds were actually the bigger beneficiary than equities.

Believe it or not.

Really people to think it's equities first, but it's across that so crypto, you know, commodity funds, you name it a but but it goes all the way back to the pandemic, and and and and it's not done yet, is the way I would put it.

Well, So you were talking about trade earlier.

One of the comments you made really I found fascinating markets often price in trade deal hopes early.

Are we over discounting the impact of tariffs or our markets being too optimistic or how do you contextualize?

You know, we've been waiting to hear about.

All these tariff deals we really haven't heard of.

I think we have one with the UK that's kind of kind of it and Japan.

Are are markets not paying enough attention to tariffs?

Or are market saying, hey, President lost at the Court of Trade, he lost at the Court of Appeals.

Maybe he's going to lose it to the Supreme Court.

How are we looking at tariffs?

So, so, first, you know, a confession, which is basically after April the second, you know, if you thought through the impact of the announced tariffs, you were to come to a very very negative conclusion, right, And that's what we did, And so we lowered our numbers.

We always built in that there would be what we call a relent on policies.

It's just like trade war one point.

Oh, when the market is up, you know, he would escalate.

When the market was down, he would de escalate.

People have hold that.

I heard a couple of options.

Traders called that the Trump collar.

The Trump calls unlike the this is the Trump.

Collar when markets are high, he's embolden when they're low.

All right, we're going to pause this and.

Let exactly that's kind of you know, where we were.

And and so the call was that we would go a lot higher, but a lot less than we had originally thought, basically a and and we have since basically raised both our earnings numbers and our target your seven so on.

On January first, it was seven thousand, and today it's again back to seven thousand, and then raised it in two steps.

But your question on you know, or the tariffs having an impact, what I would say is that there's sort of different dimensions.

So it's kind of a big question because it impacts everything.

So first is growth.

We kind of spoke about that a little bit, macro growth, and what I would say is that so far, there's i mean, the logical and intellectual case for slowing because of very high tariffs or a new tax.

You know, it's impossible to refute, and I'm not refuting it, but I'm just saying there's like no evidence of that because what other things are basically dominating?

So I talked about the consumers are doing what they've always been doing, et cetera.

But if you look at macro growth.

I also said that what we're going through is mini version of twenty twenty three because everybody took a negative view.

That negativity is extremely important part of the positivity in terms of the price action.

But climb a wall away exactly, and and and you know, our equity is going to go down if somebody raises their GDP growth numbers or their earnings numbers.

So it's so that negativity is a positive force for now are economists.

So Matt Lazetti has a two point eight percent GDP growth number for the third quarter.

That's, you know, the highest numbers I've ever seen from now, even close before before the data started to disappear.

And and and so you know a number one, no sign of it in terms of growth if you do and think about it in terms of earnings, So there should have been a big impact in the second quarter.

Earnings growth in the second quarter actually picked up from where it was in the first quarter.

So even the sign is wrong, it's going in the other direction.

A number three qualitative reado on earnings, which I would LaDue use more important than just the numbers, and companies just basically saying that, yes, this is a negative shock, Yes it's a big deal, but it's you know, it's not way out of basically the realm of in many cases even for machinery copies, within the realm of you know, our guidance range.

So yes it's negative, but it's not having such a huge impact.

And and and that the impacts are basically you know, modest and manageable, and there is a level at which you know you can think about.

So the numbers, what are the numbers?

So the effective tariff rate defined as basically tariff revenue on the Treasury's website, divided by the value of imported goods it was kind of stuck at ten to eleven percent, and maybe it's a little bit higher right now, So the market's working with something like fifteen, so we still have a ways to basically get there.

And the underlying thesis has been basically that if there's a problem, you will get relents on exemption.

So there's a lot of exemptions and that's part of the whole thing.

Really.

Dimension of course is inflation.

So let's talk about yeah, yeah, you know it.

Did it already happen or is it still to come one simple way.

I mean, there's no way to answer the question with one hundred percent certainty, But what I would say is that if I take a look at core goods prices or core CPI if you want, and what you will see is that the norm is for goods prices to be deflating.

We have the post pandemic ten percent increases a chart of the price level.

We jump up by ten to eleven percent in a relatively short period of time, and then that's done with and we start disinflating at the same historical trend rate is a very modest mild deflation, and what we've had over the last three months is a clear increase up.

So some impact of the tariffs has already happened.

Question is how much?

And I would say relative to the trend line, core goods prices are probably one one and a quarter percent higher than they would have been if we had just continued basically down that trend line.

And so how to basically, you know, handicap that one and a quarter percent.

We have in house from our rates strategist, a bottom up measure basically of the direct impact of tariffs.

So you go sic code by sic code, you add it up and then you calculate, and they calculate two two and a half percent.

So simple point I would make is it looks like half of the direct impact already happened, and if half of it, you know, it wasn't so bad, how much should we fear the second half?

Coming up, we continue our conversation with Binkie Chata, chief US equity and global strategist and head of asset Allocation at Deutsche Bank's Securities, talking about his roles at Deutsche Bank.

I'm Barry Ritolts.

You're listening to Master's of Business on Bloomberg Radio.

I'm very redults.

You're listening to Masters in Business on Bloomberg Radio.

My extra special guest today is Binkie Chada.

He's chief US equity and global strategist as well as head of asset allocation at Deutsche Bank.

You're very constructive about additional Federal Reserve rate cuts this year and next year, and the people who are a little bearish on that are saying, hey, tariffs are going to be very inflationary.

We're seeing a reacceleration.

This isn't a noisy blip, but it's a start of something worse.

We're gonna end up at four to four and a half five percent inflation, which would put the Fed on hold.

Walk us through your thinking on how many more rate cuts this year and next year.

It sounds like you've already given the game away, because no.

No, actually, you know I'm not counting on the rate cuts, and I would argue the rate cuts, you know, much more of a sideshow, basically real earnings.

We do.

We're so hyper focused on them.

At least the media sure is on it's you know, everybody is.

If we get these rate cuts, it'll unfreeze the housing market, it'll do all these great things.

No, I mean the one freeze the housing market.

You need longer hand yields to basically.

Go down, which have not happened.

Yeah, they are pretty much on the low side.

I would argue relative too, So we have a house of view for the ten year by year end that's closer to four and a half, so four forty five.

So we what does that mean for mortgage rates?

So we can see a five handle on mortgage rates.

That's a pretty wide so there is room if and spreads depend on volatility rates.

Volatility has been coming down quite a lot because you know, brokers need to hedge basically the interest rate risk.

Well that's outstanding, so so I think it's supportive.

But I'm not foreseeing any big decline in interest rates.

So maybe another cuts this year, one or two more next year.

It's also I mean, we don't have the data anymore, so it's.

Gonna be well, well, there's that it needs data.

But I wouldn't be surprised if the Fed misses one of those two meetings.

In terms of the rape Cottson pushes it out.

I mean this is sort of more a you know, fine tuning type exercise, either argue.

I mean, if the Atlanta Fed GDP is right, and it's been pretty right for several years.

Obviously not to all the decimals, but it was giving you some you know, that kind of growth.

I mean, do we really need lower interest rate?

So let me ask the Jerome pal question.

We're seeing the labor market sort of soften, even though we're fairly close to to you know, as low as unemployment gets.

At the same time, they're a shortage of workers.

Twenty twenty five maybe the first year in history where US population actually declines.

Less immigration, more deportations, a whole lot of other policy issues that are affecting that.

How do you think about the labor market here and what does that mean for corporate earnings?

What does it mean for interest rate policy?

Yeah, I think we have a relatively fully employed labor for us in our baseline view basically sees, you know, if you ignore the decimals, a little bit abounts here and they're not really you know, changing very much.

So the question becomes, you know, who's going to produce that three and four percent GDP?

So it was pretty bearish take when we got the revisions basically to the payrolls numbers, the benchmark provision.

But you know, if you're not changing the GDP numbers and base the level of productivity basically commensurately.

It's not as much of a negative as it looks at first plus exactly, right, don't I know a lot of economists who look at growth as productivity plus inflation?

Fair fair assessment.

Yeah, I would say productivity plus employment.

Then to get to the nominal part you would add inflation.

And so I mean, if you think about so we talked a little bit about, you know, the parallels between today and the nineteen sixties and the second half of the nineteen nineties.

That's the two periods since World War Two where we had basically productivity growing at three three and a half percent for sustained period of time.

Normally it grows at one point one point five percent.

What's the old line?

I forget who I'm stealing this from?

Productivity gains are seen everywhere except the productivity data.

So that's because you know it's calculated as a residual.

Right, So first you have to estimate GDP.

Then you have the first revision, second vision, third revision.

Then you have to estimate what we were just talking about, which is the labor input, which is revised then re revised benchmark, and then what's left over is productivity.

But what I would argue is that if you look at a simple chart of reported productivity in the non foreign business sector, you know you'll see this growing in a trend channel of one point four percent, and basically what we've had over the last couple of years, we went way about the.

Channel basically, and so post pandemic.

That is right, So we got a pandemic jump, then a slow down back into the channel, and so over the last two years is what I'm saying.

So officially, you know, yes, the immigration issue, but officially unemployment it's only been four percent, was even lower, so it was a tight Historically, a tight labor market has been a necessary condition for getting those productivity booms like we had in the nineteen sixties and in the second half of the nineties, and we've had a tight labor market for several years right now.

Very interesting.

One of the things I'm so fascinated about your work is that you're not just you know, a one way bull.

You start the year as one of the most bullish forecasts for the S and P five hundred, but you're constantly bringing up the various macro risks investors' face that sort of full view and not being so just mindlessly bullish is kind of fascinating.

So let's talk about some of the risks that you've been writing about and discussing.

Have to start with froth and AI and capital spending.

How do you respond to chargers that this market has become frothy A.

What I would say is basically that you know, we do see signs basically of rampant speculation, but I would say, so far, it's only in basically relatively well defined pockets.

So AI bitcoin hit one hundred and twenty five thousand over the wen.

On AI, I would say, it's you know, what some companies and some deals are doing.

You could put in that bucket, But I mean the stocks are not necessarily doing that, and so I would argue that we are still sort of in the early stages.

I would say, there's a lot of focus on the retail investor.

Now, the question I would ask about the retail investor is, you know, when you look at measures of retail participation or retail activity, you know, it's easy to sort of exaggerate relative to their own history.

This is I mean, we don't have a history of retail participation participation in US equity since the nineties, so it's been more episodic basically, And so there is a tendency to put it in that light that this is an episode.

But I mean, we were talking about Asia earlier.

It's a long history of retail involvement in all markets.

And so one of the things that is getting attention is the presence of retail investers.

But from a quantitative point of view, I don't know.

I was looking at statistics, So there's conflicting measures.

It's fairly modest, and a lot of it seems to be four oh one k.

And the whole thing about how you know, the volumes have taken off and they have skyrocketed and now they account for four percent tiny exactly.

So everything is you know, consistent and correct.

But I now you have to frame it appropriately.

Yeah, and this is a cycle, and we're talking about now, but basically, and this is you know, me speaking has equities with it's a cyclical asset, okay.

And and and so if the cycle continues the way that it's been continuing, all of this is going to grow.

But today you're not there yet.

What about market concentration that the magnificent seven or whatever you want to call the top ten?

Is that as big?

Is that real threat?

Or is that?

You know, this happens from time to time when a new technology attracts all this attention.

So I mean, I would put it slightly differently.

I would say the market concentration in megacap growth in tech reflects the concentration of S and P five hundred earnings in the megacap growth in what are they?

Something like two trillion in revenue three hundred billion in profits?

Some crazy they're responsible right now for about forty percent of S and P five hundred earnings, So.

Why shouldn't they be forty percent of the market cap?

Exactly?

So they're actually thirty percent of earnings and forty percent of the market cap.

I apologize, So why are they so overweight?

Is it just future growth expectations?

They're growing faster, so they should definitely have higher multiples.

So, you know, people frame the question as focused on the megacap growth in tech, you can ask the equivalent question, Actually, it's a bigger part than sixty percent.

Why isn't everybody else growing?

I got into this a little bit earlier.

It's very peculiar recovery where the cyclical parts basically haven't really kicked in in a big way, but it looks like they're kicking.

In what other sectors are kicking and you we I know you've written about financials, consumer cyclicals, materials, and then we could talk about em and small cap and value.

Sure what other sectors have been lagging that you find particularly interesting?

So right now you know we have what I call simple cyclical tilt to our positioning because I talked about discretionary investors sitting at neutral?

Why are they sitting at neutral because they're concerned about the cycle?

What are they going to buy?

If they get off and start participating in a bigger way?

I would argue they will buy the cyclicals because that's their concern.

They're unlikely to buy megacap growth in tech for well known reasons, all the reasons that you basically mentioned, So you know, if you phrase it form, you can phrase the question basically from who's actually going to buy this stuff?

This group stands out and their concerns suggests that they would buy the cycling goals if they started to believe that the cycle is going to be fine if you look at it from a fundamental point of view.

No, I mean, there aren't no signs of a huge uptick on the cignical side.

But if you wait for those signs, equity market will price it far before.

I mean, one of the lessons that I take away is you have to think about the S and P five recession.

You know, this brick shaded period.

Equity market falls twenty percent once the recessions you know, starts, but it robustly bottoms around the middle of the recession and before and recovers while you're still in this gray shaded area.

So if you wait till payrolls turn negative, you will have missed the entire move and you will be back to, you know, basically catching that small exactly.

So equities turn up when there's a positive probability that you're going to basically have a recovery.

Because you've been in a recession for so long.

You've identified a number of risks earlier in the year, and I'm curious if you still think they are significant.

Protectionist trade policies and immigration policies.

Are those still potential growth pressures or inflation pressures?

I think on the tariffs basically they've proved to be exactly and so I don't worry about that.

I don't think it closes the issue.

I mean, they could still be negatives that come out of that that we're just not completely aware of yet.

But in that event, you know, a big part of our thesis for this year has been that if things get bad, you know, at the end of the day, any administration cares about its approval ratings, the approved ratings about the economy, so they will relent, and especially if it's caused by one of the policies.

So that's been a big part of our thesis for staying constructive through the year.

So, you know, we talk about risks, and I am deeply aware of what most people mean when they talk about risks, but where we are sitting, I would argue that it is my duty to simply point out that right now I'm much more concerned about upside risks than downside.

And melts up potential.

A.

Yes, because we don't we stop worrying about going into a recession, We stop worrying about the politics, and we stop worrying about the tariffs because companies are dealing.

With it, and suddenly there are blue skies out there.

Exactly.

So last question before I get to my favorite questions.

Okay, what do you think investors are not paying attention to or not talking about that perhaps they should, could be a policy, could be an asset class.

What do you think is getting overlooked.

The context that we are in?

What I was talking about basically that a three percent growth with a four percent unemployment happens only five or six percent of the time, and it unleashes certain dynamics.

And you know, it started during the previous administration and has continued in this administration.

So it's not necessarily about the policies.

So we've got a lot of noise and a lot of headlines and a lot of news coverage.

Is that obscuring what is fundamentally underneath everything?

A robust economy and a healthy market, I believe, So yeah, really interesting stuff.

Let's jump to our favorite questions, starting with the question that brought me to you, which is who are your mentors who helped shape your career?

So many people, so many guests of this show have mentioned you who helped shape your career.

So I started my career at the research department at the IMF and the most important mentor, I would say was my boss is a gentleman called Michael Dooley, ex Federal Reserve, you know, at some of the highest levels, but was at the IMF then he I was just out of graduate school.

He taught me basically how to think critically, how to stand on my own feet, and most importantly, how to communicate things or the essence of things in a very simple way.

That's a great, great answer.

Let's talk about books.

What are some of your favorites?

What are you reading currently?

So, I'm definitely a fiction reader.

It gives me a good break from where I live and what I do.

I'm currently reading Isabelle Allende's books.

I'm currently on a Long Pedal by the Sea, which is a book about Chile.

Really interesting.

What about streaming outside of this show?

What are you watching listening to?

What keeps you entertained when you have a little downtime?

Given my background, I'm definitely big Bollywood fan.

Oh really.

Yeah, I'm very partial to Indian movies.

And give us a title that some of them are.

One that I really liked its own prime.

Actually it's called Tonda t A.

N d A v uh huh.

What's that about it's about politics in political career, and unfortunately they did not allow the season two to be the authorities didn't allow season two to in India.

They going off, Yeah, yeah, well, thank goodness, nothing like that.

But you still watch season one?

Yeah, all right.

Our final two questions, what sort of advice would you give a recent college grad interest in a career in either economic policy analysis, asset allocation, or just investing.

Yeah, I think that you know, a working on Wall Street or in finance.

I mean, there's a lot of different things you can do, and I think for young people starting out, the biggest challenge is to figure out where you know, how do I match basically what I'm most interested in and where my abilities are.

And my advice would be to go with where your interests are, the ability will come.

I just went through recruiting process and just hired somebody from our grad program onto my team.

Interesting.

And our final question, what do you know about the world of economics and investing today?

Would have been helpful when you were starting out back at the IMF in the nineteen nineties.

To ignore everything except the economy.

You all heard this expression right about presidential elections, it's about the economy stupid, it's still accurate, and the S and P five hundred is about earnings period positioning valuation.

It all fits in, but the underlying trend is all basically coming from earnings.

Totally, totally fascinating.

Thank you, Binkie for being so generous with your time.

We have been speaking with Binkie Chada.

He is the chief US Equity and Global Strategist and head of asset Allocation at Deutsche Banks Securities.

If you enjoy this conversation well, be sure to check out any of the five hundred and seventy seven we've done over the past eleven years.

You can find those at iTunes, Spotify, Bloomberg YouTube, or wherever you get your favorite podcasts.

Be sure and check out my new book How Not to Invest The Ideas, numbers, and behaviors that destroy wealth and how to avoid them How Not to Invest at your favorite bookseller.

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