ProShares CIO：贬值交易真实存在，美股盈利支撑逢低买入

THE COUNTDOWN IS ON. EVERYTHING THAT YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS "THE CLOSE." ROMAINE: WOBBLY WEEK COMING TO A LOPSIDED END. LIVE FROM STUDIO TWO, I'M ROMAINE BOSTICK. SALLY BAKEWELL: AND I'M SALLY BAKEWELL. LET'S GET A CHECK ON THE MARKETS ON THIS LAST DAY OF YOUR TRADING WEEK. THE S&P WITH A RELIEF RALLY AMID ROBUST ECONOMIC DATA WITH A CONTRACT TO AND THAT THREE WEEK WINNING STREAK.

THE NASDAQ ALSO UP, BREAKING FIVE DAYS OF DROPS. BRENT CRUDE IS HIRING -- HOVERING AROUND $90 AS MARKETS WAIT FOR THE D-DAY THREAT ON TRADING PARTNERS. LEVELS SPOOKED INVESTORS EARLIER THIS WEEK. ROMAINE: GOING BACK TO THE TOP OF THAT SCREEN, GREEN ON THE SCREEN FOR EQUITIES. WE SHOULD POINT OUT THAT FOR THE WEEK, MOST OF THE S&P STOCKS OUT THERE, WHAT HAPPENED IS THEY WILL END THE WEEK IN THE RED AND HALF OF THAT HALF ARE GOING TO BE DOWN BY 3% OR MORE AND HALF OF THAT HALF OF THAT HALF ARE GOING TO CLOSE BELOW THAT 50 DAY MOVING AVERAGE, STALLING THE S&P THAT LOOKED LIKE IT HAD BROKEN FREE A WEEK AGO.

CONSEQUENTIAL QUESTIONS OUT THERE, STARING US DOWN AS SALLY MENTIONED, IN THE FED JACKSON HOLE MEETING. THE WEEK THAT WAS, MY BEST BE REMEMBERED FOR THE BIG SWINGS IN TREASURY SPARKED BY A BIG SWING FROM SCOTT BESSENT TRYING TO CAP THOSE YIELDS THAT POKED UP PAST ON MONDAY, HIGHEST SINCE 2007, ALL ABOUT THE TOOLS HE MIGHT REACH FOR NEXT AND IF THOSE TOOLS WORK FOR HIS COMPADRES AT THE FED IF THEY WOULD OR COULD BACK HIM UP.

WHAT BESSENT IS DOING IS GOING TO HELP VERY MUCH AT THE MARGIN, BUT REDUCING THE AMOUNT OF LONG-TERM TREASURY DEBT OUTSTANDING, YOU KNOW, IT'S WORTH BASIS POINTS, IN TERMS OF THE LEVEL OF INTEREST RATES, SO IT'S REALLY TACTICAL RATHER THAN STRATEGIC AND YOU HAVE TO FUNDAMENTALLY ATTACK THE BUDGET FISCAL PROBLEM. THAT REQUIRES A LOT OF HEAVY LIFTING. ROMAINE: THAT FISCAL PROBLEM THAT BILL DUDLEY WAS REFERRING TO IS CORE TO THE MARKET SKEPTICISM AND IT'S ONE TRADERS ARE TALKING ONCE AGAIN ABOUT THE SO-CALLED DEBASEMENT TRADE THAT SHUNS CURRENCIES VULNERABLE TO INFLATIONARY FISCAL ACCESS IN THE DOLLAR WEAKENING AGAINST EVERY MAJOR CURRENCY THIS WEEK.

SPOT GOLD RALLYING FOR A THIRD STRAIGHT WEEK WITH BITCOIN PUTTING TOGETHER ITS STRONGEST FIVE DAY STRETCH OF GAINS SINCE MARCH OF 2023. THAT IS HOW WE CLOSE OUT THE WEEK AND GIVING US A SET UP FOR NEXT WEEK AS WE HEAD TO THE JACKSON HOLE MEETING. LET'S BRING IN THE HEAD OF RESEARCH AND CIO OF ACTIVE INVESTMENTS OVER AT PROSHARES. GREAT TO HAVE YOU BACK ON THE PROGRAM. I DON'T KNOW HOW MUCH YOU WERE ABLE TO SQUINT AND SEE THE CHART ON YOUR SCREEN.

NO ONE SANG THE TRADES IN FULL SWING BUT NOW THAT WE ARE CHATTERING ABOUT IT SIMILAR TO WE WERE A YEAR AGO OR SO WHEN EVERYONE THOUGHT IT WAS THE DIRECTION, IS THIS SORT OF REAL? IS THIS SOMETHING THAT CAN BE REVERSED?

IT IS REAL. THE DEBASEMENT TRADE IS THE THEME OF THE WEEKEND IT'S A WEEK OF MARKET TENSION. THERE IS STILL SO MUCH FOCUS ON THE SPECTACULAR EARNINGS SEASON THAT WE'VE SEEN ECONOMY WIDE WITH TECH CONTINUING TO LEAD AND EVALUATIONS COMING DOWN BECAUSE EARNINGS HAVE BEEN SO STRONG. NOBODY IS PAYING ATTENTION TO WHAT IS ACTUALLY HAPPENING IN THE OTHER ASSET CLASSES AND YOU ARE ABSOLUTELY RIGHT. IT'S A LACK OF CLARITY IN TERMS OF GUIDANCE FROM THE FED.

INDICATIONS FROM THE TREASURY DON'T HELP WITH THE STABILITY OF BOND YIELDS AND WHAT WE ARE SEEING IS THAT TOXIC COMBINATION OF RISING BOND YIELDS, GOLD UP, DOLLAR DOWN. WE THINK THAT THIS IS LIKELY TO CONTINUE, BUT WE WOULD CLARIFY THAT YES, UNDERWHELMING FIXED INCOME MAKES SENSE BECAUSE TO BEGIN WITH THIS IS AN ENVIRONMENT WHERE YOU WANT TO CONTINUE TO BE OVERWEIGHT EQUITIES WHERE EARNINGS ARE RUNNING 30% TO 40% YEAR ON YEAR.

EXPLAIN THE OVERWEIGHT EQUITIES PART OF THAT. UNDERWEIGHT FIXED INCOME, THAT I UNDERSTAND, WHY UNDERWEIGHT EQUITIES?

EARNINGS ARE RUNNING AT 35% YEAR ON YEAR. WE ARE NOT SEEING THE END OF THAT EARNINGS CYCLE, NOT AT ALL. YOU ARE IN AN ENVIRONMENT, HOWEVER, WHERE CREDIT SPREADS ARE AT NEARLY ALL-TIME LOWS ACROSS ALL CREDIT SECTORS. FROM THAT PERSPECTIVE THINK ABOUT THE STANDARD 6040 REFERENCE BEING UNDERWEIGHT CREDIT AND OVERWEIGHT EQUITIES. MAYBE EXTENDING A LITTLE BIT OF THAT DURATION IN THE FIXED INCOME PORTFOLIO WOULD HAVE BEEN A NATURAL TRADE.

WITH THE CURRENT MARKET DYNAMICS AROUND THE BASEMENT AND A BOND IS RISING, THERE IS A CASE TO ALLOCATE AWAY FROM FIXED INCOME ADDITIONALLY INTO ALTERNATIVES LIKE GOLD. SALLY: ON THE EARNINGS GROWTH, IS THAT ENOUGH TO SHIELD US FROM THE VOLATILITY WE HAVE SEEN IN TREASURIES?

CERTAINLY. THAT EARNINGS GROWTH, I BELIEVE, JUSTIFIES BUYING THE DIPS AND EQUITIES. THE TYPICAL MECHANICS THAT YOU SEE ARE WHEN BOND YIELDS SPIKE WITH BAYER STEEPENERS AND THE CURVE. EQUITIES TEND TO SELL OFF IN THE IMMEDIATE RUN BECAUSE OF THE DISCOUNT FACTOR GOING UP. BUT THEN EQUITIES ARE AN INFLATION HEDGE. EQUITIES EVENTUALLY PROVE ON A MEDIUM TO LONG-TERM BASIS TO HAVE THOSE INFLATION PROPERTIES BECAUSE MOST COMPANIES HAVE THE PRICING POWER TO MAINTAIN THOSE PROFIT MARGINS.

THAT IS WHY WE BELIEVE EQUITIES ARE STILL THEY BUY THE DIP APPROACH. SALLY: ARE YOU A BIT SURPRISED THAT THE HIGH YIELDS WE'VE SEEN ARE NOT WEIGHING ON EQUITIES A BIT MORE?

THE HIGHER YIELDS? IT'S INTERESTING TO SEE THAT THERE IS SO MUCH FOCUS ON INFLATION, BUT BREAKEVEN INFLATION IS VERY STABLE. REAL YIELDS, REAL TREASURY YIELDS ON THE 30 YEAR ARE AT 12% . THAT IS TYPICALLY A NEGATIVE, BECAUSE IT FLAGS A HIGH COSTS OF CAPITAL. BUT DOES IT TELL US THAT PRODUCTIVITY IS REALLY STRONG? I TEND TO LEAN ON THE LATTER WHEN I SEE THAT EARNINGS GROWTH IS RUNNING AT 35%. SO, YIELDS HERE ARE MORE OF A SYMPTOM OF STRONG PRODUCTIVITY THEN LOTS OF CONFIDENCE IN THE TREASURY MARKET.

I'M CURIOUS THAT WHEN WE TALK ABOUT EQUITIES, IT'S KIND OF INTERESTING TO SEE THE FADE IN THE CHIP STOCKS AND THOSE LONG-DURATION HIGH VALUATION NAMES. WE HAVE SEEN OUTPERFORMANCE THIS WEEK IN THE EQUAL WEIGHTED S&P 500. THE RUSSELL KEEPS PACE WITH THE BROADER MARKET. IS THAT A SIGN OF WHERE INVESTOR HEADS ARE AT HEADING INTO THE NEXT COUPLE OF EARNINGS SEASONS AND WHETHER THAT IS AT THE EXPENSE OF THE BIG CAP NAMES?

I THINK THAT THE OUTPERFORMANCE OF SMALL, MID, VALUE CYCLICALS IS REALLY SOMETHING THAT REFLECTS THE PAST YEAR, WHERE THOSE WERE THE EARLY CYCLES. WE HAD EARNINGS GROWTH BASICALLY JUMP IN THE MATTER OF A YEAR FROM LOW SINGLE DIGITS TO 35%. I THINK THAT IS STARTING TO GO IN THE REARVIEW MIRROR AND MY INCLINATION HERE WOULD BE THAT WE PREFER BEING OVERWEIGHT THE QUALITY STOCKS WITH HIGH PROFIT MARGINS AND HIGH PROFITABILITY.

IN TECH, COMMUNICATIONS SERVICES, PAIRING IT WITH CONSUMER STAPLES, UTILITIES, DEFENSIVE NAMES. IT'S AN ENVIRONMENT WHERE BOND YIELDS HAVE SOMEWHAT PEAKED. IF YIELDS HAVE PEAKED, WHICH I THINK IS A CASE, A ROTATION INTO TECH, INTO QUALITY NAMES SEEMS APPROPRIATE TO ME.

HOW DO YOU THINK ABOUT EXPOSURE OUTSIDE THE U.S.? EUROPE IS A BIT VULNERABLE TO WHAT'S HAPPENING, BUT WHAT DO YOU SEE AS INTERESTING THERE?

TWO THINGS ARE STRIKING TO ME. ONE, WE ARE ALMOST UNNOTICED. WE HAVE HAD A SECOND CONSECUTIVE YEAR OF INTERNATIONAL MARKETS IN OUTPERFORMING U.S. EQUITIES DESPITE THE PHENOMENAL AI TRADE, SO TO SPEAK. THAT NEEDS TO BE TAKEN INTO ACCOUNT. DOLLAR DEPRECIATION WILL CONTINUE TO PROVIDE TAILWINDS TO INTERNATIONAL EQUITY MARKETS. AT THIS STAGE? NOT SO CONVINCED ABOUT THE TACTICAL PERSPECTIVE, BUT I BELIEVE THAT THE TREND OF DOMINANCE OF U.S.

EQUITIES IS COMING CLOSE TO AN END. ROMAINE: ALWAYS SMART, GREAT TO HAVE YOU. HELPING US KICK YOU OFF TO THE CLOSE HERE ON THE FINAL TRADING DAY OF THE WEEK. WHEN WE COME BACK, A CLOSER LOOK AT COMMODITIES REELING ON TREASURY MARKETS AND RISING U.S. IRAN TENSIONS. WE WILL BE LOOKING AHEAD WITH THE GLOBAL HEAD OF COMMODITIES RESEARCH AT GOLDMAN SACHS. FROM CRUDE OIL TO WATER, LIQUID DEATH TO BE SPECIFIC, WE ASK THE CEO HOW THE CANNED WATER BRAND IS PUSHING ITS WAY INTO THE CONVERSATION ABOUT AI DATA CENTERS.

AND NOT ONE, BUT TWO HEAVYWEIGHT LEGENDS WILL BE JOINING US LATER. LEIGH STEINBERG W