Single Best Idea with Tom Keene: Michael Darda & Cam Dawson

Tom Keene breaks down the Single Best Idea from the latest edition of Bloomberg Surveillance Radio.

In this episode, we feature conversations with Michael Darda & Cam Dawson.

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news, single.

Speaker 2 (00:14):
Best idea and just a little vignette into how we
do the show. The dirty secret is we do the
show because our guests really liked come on. That is
the foundational thing we learned over two decades ago was
if you make it fun and smart, Jim Bianco will
get up at six am in California when he's on

(00:37):
vacation to do the show. And we really appreciate effort
from mister Bianco like that and from so many others.
Michael Darta not so strenuous this morning with Roth Capitol.
Michael Darta on where we are now looking at the past,
the good news of double digit in a new world.

Speaker 3 (00:57):
I think it's going to be really hard to maintain
that double digit growth. I mean, if you just do
a super basic Tom Keen scatterplot regression on forward pees
in ten year future returns, you know, coming into the
year with the forward pe twenty two x, you know,
typically that's a level where you see very weak, potentially

(01:19):
even negative ten year forward returns. So the higher the valuations,
the lower the longer term forward returns are. And you
know that's a little bit of a different game than
the chase that's been on with momentum, and then more broadly,
I do think that these disruptions to the supply side

(01:40):
eat away at the earnings expectations.

Speaker 2 (01:42):
Michael Dartera. There is just brilliant throughout the entire conversation
of talking about the geopolitical shocks, the international shocks, is
supply side shocks, which just put a damp or put
a weight on everything. And of course that mystery of
where is forward GDP growth right now? Is it sub
two percent? Atlanta GDP a negative statistic right now? That's

(02:03):
at least right now that could subject change as we
stagger out to March thirty one, which is next Monday.
Cam Dawson knows that she too is trying to consider
the uncertainties that are out there. Cam Dawson a new
edge on her double digit take.

Speaker 4 (02:19):
Yeah, I think that that's very very likely. Is that
we've been in this world of very strong double digit
returns the last two years. Investors got conditioned to expecting that,
which is why you saw these estimates for seven thousand
plus in the S and P five hundred. That's very
hard to do when you start the year at twenty
two point six times forward earnings. You start the year

(02:39):
at the ninetieth percent tile of positioning. So our best
case scenario for twenty twenty five is that you get
growth upside that's equivalent to earnings growth. But that assumes
that multiple stay constant. And we're not sure if you
get multiple stay in constant in a world where you're
cutting earning sestaments and there's some risk off flavor review.

Speaker 2 (03:00):
That again, Kim Dawson. A new edge when multiples stay constant.
I think I talked about this yesterday or the day before.
I forget, but let's do it again. A multiple is
a ratio, a numerator and down below a denominator, and
they both move. They move somewhat correlated, but also move separately.

(03:22):
So there's four outcomes. The numerator goes up, the numerator
goes down, the denominator, the numerator goes up, the denominator
goes down. So there can be movement or dynamics in
your study of any given ratio that you look at.
I'll be honest. They spend less time on PE and

(03:42):
much more on a study a free cash flow. What
we know is we've studied the impact of the show
digitally in America, in Canada, in Mexico, around the world,
and we're just humbled by it. Subscribe to us out
at Bloomberg Podcasts and on YouTube podcasts. This is a

(04:02):
single best idea m