Single Best Idea with Tom Keene: Stephen Auth & Dean Curnutt

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

In this episode, we feature our conversations with Federated’s Steve Auth & Dean Curnutt of Macro Risk Advisors. 

Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF

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Episode Transcript

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

Speaker 2 (00:12):
Single best idea and just a great set of conversations today.
One of the high points, so Stephen Kim came in
from Evercore ISI on the American housing market. It was
really really informative, just as one of the moments today,
very big equity day, if you will. We started strong
with Stephen Oth. We've federated our mess. Stephen oth is

(00:34):
just iconic decades of experience here and he does what
the adults do. Not the next month, guests, the next
year guess, but can they try to reach out to
the might of the American economy to get to a
two year view? Here off federated our mess.

Speaker 3 (00:51):
We've got a two year target of eighty six hundred.
We've got seventy eight hundred for next year, and really
driven by earnings growth. At this stage, we've got earnings
at yeah, three ninety out three years and you know,
stocks et nominal DDP growth, nominal GDP growth looks really
good to us. You've got the AI revolution driving earnings,

(01:13):
You've got enormous productivity. We've got GDP next year up
three percent. I think the consensus is too We've been
on the high side. All along, we've been more right
than wrong on that. But you know, you've got a
lot of stimulus coming next year that we think could
get you a surprise on the upside.

Speaker 2 (01:29):
A lot of different opinions out there. It's outlookd time
I make a joke about it. Sam Ro does a
great job over at TK of looking at each and
every outlook. I'm sure I'll have a summary at some point,
but I got to admit the needles tilted towards a
more optimistic assessment right now. We shall see. We spoke
with Dean Kurrent. He is definitive in the derivative space.

(01:51):
The dynamics of options and futures there leverage nature and
all those Greek letters as well. Here dean current of
macro Risk Advisors on the linkage of the standard impoores
five hundred to the VIX.

Speaker 1 (02:05):
If we look at the SMP, its relationship with the
VIX is as old as time. You know, you can
go back to the late eighties, the nineties and so forth,
and it's always stocks up vixed down. That correlation is
around negative eighty percent, but for the stocks themselves, So
when the SMP rises, the VIX falls, but for single stocks,

(02:28):
and it's not just meme stocks like GameStop. It could
be Google, it could be Broadcom. The stocks are rising
and the market is assigning a higher implied volatility. It's
a great question, and it really to me reflects a
unique component, which is the stocks are options. In other words,
when the stock rises, the potential that it rises much

(02:50):
more actually goes up as well.

Speaker 2 (02:53):
Just a window in the dynamics of derivatives and the
movements that you see and options. I have a role
of an option being four times leveraged to the underlying stock.
That's just a rough, rough role, but that's some of
the game you can play with options. Dean Kurnat talking
there about the advantages of hedging your guests instead of

(03:14):
a pure play in options. On the podcast, we're on Apple,
we're in Spotify, others as well, including YouTube podcasts. A
single best idea