Episode summary
The Sunny Side of the Late Early Cycle | Barron's Streetwise
Barron's Streetwise
· · 23 min · Hosts: Jack, Andrew Bary
Summary
The episode contrasts a cautious market mood with a more constructive view built on earnings strength, especially in semiconductors and other AI beneficiaries. The host argues that worries about higher bond yields, the deficit, and the risk of money rotating out of stocks may matter, but they are not yet overwhelming the market’s fundamentals. Andrew Slimman of Morgan Stanley Investment Management says the key issue is not a precise yield threshold, but whether rising rates take some steam out of stocks in a way that is healthy rather than destructive.
Slimman calls the current environment late cycle, not the end of the cycle, because earnings are improving sharply and the leading stocks still have real fundamental backing. He says investors are too focused on macro fears and not enough on micro data, especially the magnitude of earnings revisions. He still likes AI-related exposure, but wants it balanced with banks, financials, and some overseas opportunities where companies are beating and raising.
The discussion also highlights Take-Two Interactive and the long-awaited Grand Theft Auto VI launch, with the host noting that the stock has lagged over the past five years but could benefit if the game launches in November as expected. Later, Take-Two reported better-than-expected results and set November 19 as the launch date, which the host treated as a meaningful positive for the stock.
Key takeaways
- Slimman says higher bond yields may pull some money from stocks, but a modest reset could be healthy rather than a market collapse.
- He describes the market as late cycle, not end cycle, because earnings and earnings revisions are still moving powerfully higher.
- Slimman thinks investors are overfocused on macro risks and underfocused on micro fundamentals, especially the strength of company earnings.
- He favors having AI beneficiaries in portfolios, but says banks and financials can help balance concentrated exposure.
- For Take-Two, the upcoming Grand Theft Auto VI release and November 19 launch date could matter more than the stock’s recent valuation debate.
Notable quotes
“I have never seen the magnitude of these earnings increases that I have seen year-to date”
“I think the market will revert to some of these more macro concerns like higher rates and it could cause a little steam to come out of the market”
“I do see there's a fundamental backing to why the companies that are leading are doing so”
“what they're not focused is on the micro. And like I said before, I have never seen the magnitude of these earnings increases that I have seen year to date”
“What it does argue for, Jack, is it argues for diversification. It argues for having assets other than in US dollars”
How the episode opens
I have never seen the magnitude of these earnings increases that I have seen year-to date. And if this continues, we're going to look back and say, "Wow, the stock market wasn't expensive, it was actually cheap. Hello and welcome to the Baron Streetwise podcast.
I'm Jack How and the voice you just heard, that's Andrew Slimman. He's a senior portfolio manager at Morgan Stanley Investment Management. Last week, we heard a somewhat cautious view on the market.
This week, we'll hear from Andrew about a sunnier outlook. You can compare the two and go with one you like more, or you can take an average. You can arm wrestle yourself for it, whatever you like.
We'll hear from Andrew in just a moment. First, we'll say a few words about a big development in felonious video gaming. Let's get into it.
I cannot believe that it has been 25 years since I stole a Mr. a whoopy ice cream truck and rigged it with a bomb and parked it near the docks and then played the jingle to lure rival gang members to murderous dairybased doom. They say enjoy it while you're young.
They're not wrong. Back then I had time for occasional Grand Theft Auto as with a capital G Na as in Grand Theft Auto 3, a landmark video game from Take 2 Interactive. I bet many of you are familiar with Grand Theft Auto.
But if you're not, GTA 1 and 2 in the late 1990s, those were pretty simple, two-dimensional affairs. They had a top-down perspective. This company, Take 2, bought the studio behind those games.
And then it created something called Rockstar Games to develop edgy cinematic titles. And in 2001, it came out with GTA 3, which was a total departure. A naughty revelation, you might say.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- macro vs micro
- economic cycle
- gta vi release anticipation
Watch the episode
Watch “The Sunny Side of the Late Early Cycle | Barron's Streetwise” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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