저자: CathieWood시청자분석:Kevin · 외국인
요약 보기
캐시 우드는 노동시장 약세가 롤링 리세션의 마지막 단계이며 이후 롤링 리커버리와 AI 주도 생산성 붐(1990년대 유사)이 온다고 주장. 인플레이션은 낮고 M2 증가율도 낮아 금리 인하 여지가 있다고 봄. 자율주행·감가상각 세제 혜택(100% 즉시 비용처리)이 소비·투자 여력을 높인다고 봄. 주택은 금리에 민감한 신규주택이 약하지만 금리 하락 시 회복 가능. 진행자 Kevin은 단기 밸류에이션 조정 가능성을 더 높게 보며 장기 낙관에는 동의. 정크 채권 스프레드 과열 경고도 언급.
다듬은 글
Kathy Wood thinks GDP is going to 7% and no that is a real number that she is using which means it's inflation adjusted. So if inflation's 2% she thinks GDP is going to grow at 9%. In this I'm going to break down exactly why she says that. First, she thinks we're coming to an end of an era of rolling recessions.
That this leftover lingering weakness in the job market that we're seeing underneath the hood in some of the labor reports is just a lingering indicator that hey, we're completing rolling recessions. And once we're out, once we're done with this, whether that actually means we actually go into a real recession or not, she doesn't speculate on.
But once we get through this period, whether that's the next 6 months or a few years, she suggests we're going to launch from these rolling recessions into a quote rolling recovery. Although many already suggest the stock market is pricing in a rolling recovery. We don't talk about that either in this Kathy Wood breakdown because she doesn't bring it up.
So Kathy says that we're likely going into a market of higher growth because of higher productivity, because of the innovations. is much the same that we saw in the 1990s. See, a lot of people credit Bill Clinton for getting us back to a budget surplus rather than a budget deficit where basically we were bringing in more money every year than we're spending.
A lot of people credit politicians for this. Kathy Wood actually credits the internet age for this. She says, "The internet is what enabled our economy to outgrow our debt, leading to more revenues, which could be taxed due to higher productivity, meaning we were actually bringing in more money than we were spending in the '90s because of the internet boom, which also ushered in the 1995 soft landing and low inflation." Kathy Wood believes that today we are in the next 1990s boom.
That no, artificial intelligence is not a bubble. That instead we are just now starting to harness the power of artificial intelligence to determine productivity uh and see productivity enhances that will ultimately lead to higher GDP and lower inflation. Now, she briefly mentions that Elon Musk believes that government spending is taxation and that's why he's aligning so much anti-Donald Trump, especially with this American party and talk about really trying to fight this continued deficit spending, but she just doesn't see inflation.
And so her belief is that not only is innovation going to keep inflation down, but that M2 money growth, the growth rate is very low. Yes, it's positive, but it's relatively low. and that really we could exceed all of these concerns with frankly lower rates and higher productivity over time. So far she acknowledges no real inflation in the May June statistics and that again there's some cracks underneath the hood in the jobs market and the jobs market does take time for example you know to show damage for example the average work week is down although it's really only down back to 2019 levels which we looked at some charts and we're like okay yeah this isn't that big of a deal uh and the biggest warning she gives isn't about the labor market it's actually about software services businesses she talks about how they're doing a lot of work inhouse now because of SAS and frankly or because of AI and frankly a lot of SAS businesses that were previously utilized to help make workers more productive are just being replaced by sort of in-house machine learning or in-house you know neural nets essentially that can help companies do their own business.
We were just talking about how Amazon is kicking butt uh in the way of integrating artificial intelligence with fulfillment and robotics to actually lower their shipment costs and lower their product costs while at the same time increasing their revenues. Now, I personally look at that and it's still unclear if that's just because prices have been rising uh as opposed to just unit volume growth, but the numbers are pretty strong to indicate that Amazon's doing pretty well at making their business more efficient.
That's what they talk about in their earnings call as well. So Kathy thinks that even though we're starting to see kind of a turn in consumption to the downside, you're seeing an environment where people are going to have more money to consume in the future. One of the reasons she gives for that is she thinks that autonomous vehicles are actually going to make it way less likely for you to have to spend money on a car in the future.
And gas prices are coming down as well because we keep producing more and more barrels of oil despite the fact that the international blend for oil is sitting around $70 per barrel. And this is true. By the way, we were actually just looking at uh Saudi um Saudi the Saudis basically introducing as many as 548,000 barrels more per day in August between OPEC plus.
And uh while they're increasing their prices for China, broadly the market believes this is because oil producers are actually bullish that consumers are going to have more money to spend the economy globally is going to grow and so they want to flood markets with oil and they are making the bet that they're not going to crash oil prices like JP Morgan and Goldman Sachs believe.
Kind of an interesting point, but think about this. If oil prices are down or stable and you don't have to buy a new car because in the future you could use a robo taxi or some form of autonomous vehicle, then maybe you have more money to spend on other things like promoting efficiency in your business or uh you know making capital investments.
Kathy Wood makes it pretty clear that she's excited about uh this 179 deduction from the big beautiful bill where we now have 100% expensing for capital equipment once again which is kind of exciting. Now you know robo taxis uh might still be a little bit niche at the moment. So it might be a little optimistic potentially even overly optimistic to say that's going to reduce spending for people for now.
But it's a good argument for the longer term. And this is where things get a little more weak, I think, on the Kathy Woodian argument because first of all, I agree with almost everything she says. I do think there's a higher likelihood that we get a substantial valuation correction first, like some kind of oopsy dupsy because people panic and go, "Oh my gosh, like this like pain of the jobs market is is hitting a lot harder." We have no idea when that's going to be.
Uh, you know, will it be before October or Halloween? Will it be next year? No, nobody really knows. Remember, Morgan Stanley is forecasting 1% GDP growth between Q4 uh of 2025 and Q4 of 2026, which is pretty dismal. At some point though, I highly agree that our economy is going to boom again. And this is one of the reasons why when people ask me like, Kevin, aren't you worried about the national debt?
I usually respond and say no. Even if our national debt kept expanding at the pace where it is now, our uh GDP to debt ratio, which which I I kind of think this is very useful when we look at this sort of chart, it's it's high. Uh but when we look at our interest outlays, you know, so we can see GDP to debt ratio, it's pretty high.
It's not as bad as it was during COVID when we were spending like, you know, pretty crazies. But if we look at our interest payments as a percentage of GDP, um we go to that St. Louis Fred website, we find that interest payments have been higher in the past than where they are now and they're already starting to roll over despite the fact that rates are still pretty high.
So by this, I personally argue that we have the capacity as a country to pay a lot more in interest than we currently do. Not that we want to, but we basically we can kick the can down the road. And obviously if we we can kick the can down the road, we're going to kick the can down the road because that's just what we do in America.
So assuming we kick the can down the road, it means that we're not really worried about a deficit crisis in the very near term. And in the longer term, I personally am an optimist about the very long term that whenever we get through whatever it is we get through over the next year or two or 6 months, whatever it ends up being, I agree with Kathy that we we could be in for a productivity boom.
Now, who wins in that productivity boom? Well, I don't know. That's the hard part because everybody's wondering like, okay, is is AI a bubble? Is the Donald Trump AI spending of infrastructure or these trillions of dollars actually going to happen? Who knows? Uh, so I guess it remains to be seen, but where at least at this point, I agree with Kathy Wood.
Up to this point, I agree with a lot of what Kathy says. I do think she should give us a little bit more color on her thoughts that we could potentially V-shaped down first in some form of uh recessionary dynamic based on the labor market, but I have a feeling she didn't bring that up because the labor market data isn't so bad yet that we really need to be freaking out about it.
But again, it's a lagging indicator, which she does acknowledge. That said, take a look at this. She says here that housing will have big strength going forward into GDP as rates fall. I could see this because usually the new construction homes are most sensitive to interest rates. And in fact, Kathy Wood brings up this chart right here.
This chart shows you new home prices versus existing home prices. And what you'll find is that new home prices have actually been declining on a percentage basis, the 3-month moving average for the last about year and a half, whereas existing home prices are still positive. Now, Kathy didn't acknowledge the spread between this and accidentally said that existing home prices were falling on average.
They are not. They are simply growing positively at a smaller rate. And this is her chart. And I could forgive this as a little oopsie-doopsy, which is fine because we could look at the chart and see the data that she's actually pointing out. But what I actually am most surprised about that she didn't mention is the volatility between the two and the spreads.
So you'll find here is that the purple line is significantly more volatile than the the uh bluish greenish line here. Why is that? Well, it's usually because when you have a new construction neighborhood, you're selling substantially more volumes of homes. It's not like that neighborhood that everybody wants to be in where there are three homes that come up for sale out of a 100 homes.
It's usually a 3% ratio every single year. And so if you want to get into that home in that neighborhood, you got to pounce on that home. That lack of supply actually helps boost home values because people want to be in established neighborhoods, especially neighborhoods that already have kids or families or whatever that they can kind of drive around and like make their little judgments on.
Do we want to live in this neighborhood? Right? That's what makes some neighborhoods more desirable than others. With new construction home neighborhoods, you're kind of making a gamble because you kind of have a hundred homes that come up for sale essentially at the same time. You know, call it 50 year 1, 50 year two, right?
So, you have a lot more interest rate price sensitivity because you have less established valuation in the neighborhood. And the people coming into the new construction homes are usually stretching themselves because you're selling these new construction homes at the peak price you possibly can by throwing in as many builder upgrades as you can which are way overpriced.
And so you get a whole lot more interest rate volatility. In fact, you could see exactly that here in 2018 where you actually saw new construction home prices go negative in 2018, partly because of Donald Trump's trade war and then the bond market disaster that we had at the end of 2018. You actually saw prices here get hit and you saw that growth rate in existing home prices dip a little bit as well, though nowhere near as volatile or go negative or, you know, didn't go negative as we saw here.
So, these are just little things that that we know about real estate, but then again, we work real estate every single day, right? So, so we know real estate really really well and it's it's worth kind of looking at some of these differences. I also take issue with this idea that, you know, counting crypto and agency supported mortgages and qualifying could open the housing market.
I don't really think so. Usually, when you get a 30-year fixed rate loan, the amount of money you need in reserves, if you have a uh you know, if you have a job, it's like two months. It's really not that big of a deal. So, you need your two months PITI in reserves. Uh, usually if you're self-employed, you need as much as 6 months in reserves.
That gets a little pricey for people because now if your payments, you know, 5 grand, you need 30 grand in reserves. So, using crypto potentially for those self-employment scenarios might be more useful. But I see it as less of a big deal for your normal home buyer. And I really don't see it as sort of opening up a a very large swath of the market to suddenly buying homes that previously weren't.
So I don't really see that as a needle mover, but everybody's got a different opinion on that. But it is worth again looking at this chart and then even looking back to 2006 where again we saw this sort of boom in home construction and that's when you saw this boom. That's when you saw new these new homes kind of fall under the value of existing minus obviously once we went into the recessionary environment here which is sort of kind of like a bizarre phenomenon that when you were in a recession new construction homes actually sold for more than existing homes.
And that seems like that happens during these recessionary environments. Uh at least this this you know 2008 housing crisis over here. Kind of fascinating. Part of that could be because of migration. We've regularly talked about that as well where, you know, in the 2008 housing crisis versus what we're seeing kind of today, you have a lot of similarities in where you're building homes.
Uh, you know, you had a housing boom in Florida uh in in 2008, much like you do today. So some people say, hey, that actually creates some hope for this chart that maybe if there is some form of recessionary environment, existing home prices could catch up in a recession and fall down and the new construction will sit on top.
Who knows? The point is usually they converge pretty decently. And when you see these gaps, in my opinion, it's often because of interest rate gaps. And one of the reasons why again you could going right back to interest rates, you potentially saw those higher new home prices over here is because interest rates plummeted.
The remember the first thing the Federal Reserve does is dunk interest rates. I think new construction is most responsive to lower interest rates versus existing homes uh supply. And uh and the money printing usually doesn't start until the end of the recessionary cycle. So, a lot of ways to slice it, but my opinion broadly uh is that new construction is your most sensitive uh asset for interest rates, which does also set up the idea that if for whatever reason we cut rates dramatically under a new Fed chair next year, hey, maybe there's an argument to look into those home builders or lenders as potentially investment opportunities.
Kind of interesting. Uh so then what else do we get? We get this talk that CPI inflation could be lower because of housing costs coming down. Kathy talked a little bit about housing prices potentially coming down leading to CPI being lower. But usually what we use are owner equivalent rent reads. So basically the idea here is that if new homes are falling in value, rents might be lower because the cap rates you demand as an investor lower.
Therefore we get less of an inflationary impetus. It makes sense. It's skipping a few steps there. But I actually agree here with Kathy that yes, if we have more supply, rents come down. Uh, and it's a benefit to those overbuild markets. It was actually I I can't remember where I said it, but it was just about, you know, 20 30 minutes ago or so.
We were talking about this. We said the best thing for you to do if you want deflation in housing is just build more homes. So, if you're a real estate investor, you need to know this as an investor. If you're a real estate investor, you want prices to go up and so you want to buy homes where they're not building as many, where you have dumb politicians blocking your ability to, you know, to have a lot of new construction.
Uh, if you want more affordable housing, you should be demanding more free market construction, not affordable housing, because you still need investors to help you drive demand. uh and and the more demand you have, the more builders you have come in and then you get sort of the Austin, Texas where prices actually come down.
But as soon as you put housing restrictions in place, like quote unquote affordable housing, which usually have these layered rules for how they're built, the quality material they're built with or whatever, which often is worse. Typically, you find quote unquote affordable housing is just lower quality uh and and uh ends up increasing pricing because you create this lack of supply because people aren't building as much as they should.
It distorts the entire real estate market. What you really want is a free market if you want housing to be actually affordable. And that's what you get in a place like Austin, Texas, where yes, prices have come down from some of their bubble peaks because of the overbuilding. So that said, uh then Kathy gets into this idea that longer term she believes the Treasury market will come down once people realize there's a lack of inflation.
She thinks China is still suffering because they're still going through a housing bubble burst. uh and she says that uh junk yields relative to 10-year spreads are at lows in her opinion setting up for a potential bubble there as maybe too much capital is going into sort of private credit and she suggests that could end badly.
That said, she also thinks that this market recovery that we're seeing is actually healthier than what we saw in 2023 because this is a very broad bull market recovery. So overall, Kathy very bullish uh on uh on basically the market and the economy over the next few years and she thinks this is just the beginning of the recovery. What do you thin.
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