Federated's Auth Is 'Overweight Stocks Overall'

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00:00Stephen Oth of Federated Hermes with a 7800 price target on the S&P 500 for next year writing,

00:05we remain pretty far out of dangerous bubble territory. We believe the market should broaden

00:10and we are overweight stocks overall. Stephen joins us now. You also have a heady target for

00:152027. Thank you so much for being here. Always great to see you. Thank you, Lisa.

00:19So why do you push back so much against this idea of a bubble, saying it's not that there

00:24won't be a bubble, it's just that it's not dangerous yet? Well, all our clients are asking

00:29about it and it's all the news. And unfortunately, I've lived through many bubbles, the Nikkei

00:35bubble, the Southeast Asia bubble, the TMT bubble, the real estate bubble in 07. And my experience

00:44with those has been, it's been a multiple of factors that kind of define a bubble. And too

00:51many people these days are launching on one or two of those. And if you look at all the

00:56great bubbles over time, it tends to be about six different things that more or less occur.

01:03And they've got to kind of conjoin together. All bulls eventually end in a bubble.

01:11It's just a factor of once everyone gets on board, then the story starts to feed on itself and it goes

01:19to excessive levels. But this one here, in our view, we've set up this bubble monitor for our clients

01:28and we've got it up on our website there. And it basically is highlighting in color, green, yellow,

01:33red, where we are on the six factors. And things like overinvestment is a big thing.

01:40You know, we've got that at yellow right now. You could make a case perhaps for that.

01:45You know, policy errors? Not really. You know, we've got a supply side driven policy on the fiscal

01:52side that is actually anti-bubble, if you will. The Fed is still, you know, at least in my, in our view,

01:59we've been saying all along the Fed's too tight. We've got Fed bringing rates down to three over the next

02:05year, whether they do it in January or March. I don't think it matters so much that we're heading

02:10to three. But for now, rates are rally too high. You know, excessive valuations usually are part of

02:18what you see in a bubble. We're nowhere near there right now.