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SPUR DEMAND TO THE UP SIDE >>> LET'S GET MORE ON BITCOIN'S MILESTONE IN THE STATE OF THE RECORD STOCKS. TOM LEE JOINS US ON SET TODAY. HI, TOM.
>> HELLO.
>> BASED ON WHAT TANIA WAS DESCRIBING WITH REGARD TO BITCOIN, WHAT DO YOU THINK THIS MOST RECENT RALLY SAYS ABOUT THE OVERALL RISK APPETITE IN THE MARKET RIGHT NOW?
>> WELL, IT'S -- IT'S REALLY TELLING US INVESTORS ARE PRO RISK. I THINK IT ALSO JUST SIGNALS HOW MUCH CAPITAL HAS BEEN IDLE FOR THE LAST COUPLE OF YEARS, EITHER PARKED IN MONEY MARKET CASH OR WAITING TO SEE IF THE ECONOMY SURVIVED. SO I THINK BITCOIN RISING IS, TO ME, BREAKING OUT OF A HOLDING PATTERN AND IS A PRECURSOR TO WHAT THE S&P IS GOING TO DO.
>> SPEAKING OF THE MOVES IN THE BROADER MARKETS, YOU SAY THE ROAD TO THE 6300 MARKET IS PAVED WITH BUMPS. WHAT DO YOU EXPECT INVESTORS TO SEE AHEAD THAT MAY SLOW THEM DOWN? WHAT ARE SOME OF THE KEY MARKERS THAT YOU'RE LOOKING FOR?
>> I THINK THERE'S A LOT OF MACROS TO DIGEST. TOMORROW IS THE JOBS REPORT. I THINK INVESTORS ARE FEARFUL IT'S GOING TO BE TOO STRONG BECAUSE OF THE HURRICANE AND SEASONAL ADJUSTMENTS, SO IT'S GOING TO BE A BIG NUMBER. NEXT WEEK IS CPI, WHICH HAS BEEN RUNNING A LITTLE HOT, AND FED CHAIR POWELL SPOKE ABOUT THAT EARLIER THIS WEEK. THEN, OF COURSE, ON THE 18TH IS THE FMOC RATE DECISION. I THINK ONCE WE'RE THROUGH THESE EVENTS, INVESTORS CAN ACTUALLY THEN INVEST INTO SORT OF THAT CHRISTMAS SANTA CLAUS RALLY. SO I THINK 6300 IS STILL VERY DOABLE.
>> YOU'RE BASICALLY SAYING DON'T GO AWAY AFTER THE 18TH BECAUSE THERE MAY BE SOME ADDITIONAL UPSIDE TOWARDS THE END OF THE YEAR?
>> YES, OR BUY THE DIPS.
>> YOU SUGGEST THERE THAT WE'RE IN A GOOD NEWS IS BAD NEWS FOR STOCKS ENVIRONMENT. WHY SHOULD THE MARKET BE CONCERNED IF THE FED IS GOING TO BE LESS AGGRESSIVE IN TERMS OF CUTTING RATES?
>> I THINK THERE'S A CONCEPTUAL CHANGE THAT THE MARKET HAS TO GET USED TO, WHICH IS LET'S SAY EARLIER THIS YEAR WHEN THE FED STARTED CUTTING, PEOPLE THOUGHT FIVE CUTS IS GOOD FOR STOCKS IN 2025. SO THE NUMBER GETS REDUCED; IT'S BEARISH. I THINK AS WE GET INTO 2025, THE MARKET'S GOING TO SHIFT TO THINKING THE FEWEST CUTS POSSIBLE NEXT YEAR IS THE BEST CASE BECAUSE IT ELONGATES THE DOVISH CYCLE. I THINK WE HAVE TO FLIP THE SCRIPT, BUT IT'S GOING TO TAKE SOME TIME.
>> HASN'T THAT BEEN THE CASE ALL YEAR? IN JANUARY, THE MARKET WAS IMPLYING SIX OR SEVEN CUTS. WE'RE ONLY GETTING A FEW; WE'VE SLOWED THE PACE. THE TWO-YEAR YIELD IS NOT FAR BELOW FED FUNDS. THE MARKET'S ALREADY REGISTERED SLOWER IS BETTER.
>> THAT'S RIGHT. I THINK IT'S -- I WOULD SAY IT'S NOT A CONSENSUS ACCEPTED VIEW BECAUSE, FOR INSTANCE, WHEN FED CHAIR POWELL SPOKE ABOUT TAKING THINGS A LITTLE SLOWER, THE MARKET GOT WEAK AND THEN MAYBE HAD A RETHINK. I THINK IT'S GOING TO TAKE A WHILE UNTIL MARKETS REALIZE ONE CUT IS ACTUALLY QUITE BULLISH.
>> ARE YOU SURPRISED EQUITIES HAVEN'T REACTED TO SOME OF THE POLITICAL TURMOIL ABROAD, SOUTH KOREA, FRANCE, ELSEWHERE?
>> IN SOME WAYS, I THINK THE STOCK MARKET HAD BEEN ALREADY PRICING THIS IN. AS YOU KNOW, THIS YEAR HAS BEEN A PRETTY SIGNIFICANT DIVERGENCE BETWEEN U.S. VERSUS EUROPE AND U.S. VERSUS EMERGING MARKETS AND CHINA'S FAILED RALLY. I THINK IN SOME WAYS, THE MARKET IS NOT SURPRISED; MAYBE IT WAS EVEN PRICING IN THROUGH CURRENCIES AND EQUITY PRICES.
>> TOM, I'M GOING BACK A LONG WAYS TO OUR LONG RELATIONSHIP. DO YOU STILL EVEN TRACK ACTIVE MANAGERS AND HOW MUCH, YOU KNOW, THEY'RE TRAILING THEIR BENCHMARKS AT ALL?
>> YES.
>> WHETHER THAT'S A FACTOR IN ANY WAY?
>> YEAH. IN FACT, WE'VE BEEN CLEANING UP THAT DATA. AS YOU KNOW, IN THE LAST TEN YEARS, THERE'S BEEN A BIG CHANGE IN THE NUMBER OF MANAGERS. IT'S GOOD -- IT'S KIND OF A GOOD AND BAD YEAR BECAUSE ACTIVE MANAGERS THAT TACTICALLY WENT CYCLICAL, MORE OFFENSIVE, OR TECH HAVE BEEN HAVING BANNER YEARS. WE HAVE SO MANY CLIENTS THAT ARE BEATING THEIR BENCHMARK BY SIX, SEVEN, EIGHT -- THESE ARE UNHEARD.