Solus' Dan Greenhaus expects markets to tread this month

With the S&P up more than 14% year to date, or are the prevailing trends the ones to keep playing? Let's ask Dan Greenhouse, chief strategist that sold this alternative asset management. Dan, good to see you here. Thank you, Sir. So you know the probabilities say you got a strong first half, you have this nice upward trend in the market seasonally, things look OK, you usually have upside follow through, but you know the complications come into detail. So how are you thinking about whether the first half pulled forward gains or really just reflect a continuing dynamic? You know, I, I think continuing is probably the right way to put it. Obviously, this is an extenuation, an extending of the rally that began late last year. And to the point of the question that that we posed at the outset, I just, I don't know why anything is going to be different now. Mind you, I came into the year arguing for a broadening out of the rally, which has not happened as we know. Obviously the market concentration, at least from a contribution standpoint has been quite narrow. Although, although there are other themes that have played out, you've seen this in the AI story, which has caught fire, so to speak, not the chips, but the data center build out and the the power side of things has really caught fire. But but it's still a largely concentrated market. But in terms of what terms it turns it, I think the one thing that I've been talking about and I think remains true is if you start to see rates come down over the next six or nine months, does is that sort of the contributing factor to a broadening out of the story? Or is the AII don't know what the right way to put it? Or is the AI story will just be simple, just too powerful for everything else? Sure. And I guess, you know, there's no kind of law of nature that says it has to be one or the other. But recently, it really has been almost one or the other on a day-to-day basis. I think we're working on the ninth straight trading session today where the SP won't move half a percent. Yeah, it's been quite a fun time. And yet you have, you know, the majority of stocks are lower today. You have this really static index. And then you have, you know, whatever the market has to do below the surface to keep it that way. I guess the other thing I've been wondering about is in in March of this year, we really did see a broadening out and at the end of the first quarter you were able to say we made a record high. Historically strong first quarters mean, you know, strong rest of the year, all the things I just said about the strong first half. And yet April, you got a lot of downside chop. You actually had to go through what qualified at a pull as a pullback this year, five and five or 6% and it was with yields going up. Yeah. So I mean, what's your sort of diagnosis of the case in terms of why after a pretty good PCE inflation number Friday and you know, a lot of downside on the economic surprise index, we're sitting here with yields high. And listen, I'm in the digestion camp in the sense that we had a a real strong rally, 15% for the headline index, four, 5% for the equal weight to start the year. I wouldn't be surprised if we tread water for much of this month into the Fed meeting where you get some clarity on how they're thinking about things. To your point about the PCE, I mean, you have had a softening of the economic data, which everyone's quite, quite well aware. The some of the jobs numbers have at least returned to normal, if not started to worsen like jobless claims, the ISM today, construction spending today, we're not booming. And so the economic data has come in at the same time that the inflation rate has moderated. And again, as we saw on Friday, the Feds preferred measure of inflation is about 2 1/2% year over year give or take. That's pretty good for government work. And so at the end of this month, they're going to provide some clarity on how they're thinking about things in that environment. And from an investor standpoint that's going to be pretty important obviously in determining when they cut rates. And if that point I alluded to earlier about a broadening outcomes to pass. I will say about rates backing up here. I mean, the proximate cause to which everyone's attributing this is the idea that apparently President Trump is now a greater probability of winning and he's going to be more fiscally irresponsible. Listen, my MY1 pushback on this is like the supply story is so onerously bad for the next couple of years and going to be worse over the next 10 years. At a baseline, you're going to accumulate somewhere around $22 trillion of additional debt. That's probably going to be closer to 27 or 28 trillion. I don't know that one man or one woman coming into the presidency is going to do much much than that. Although I guess we're going to find out. Well, no, maybe not. Although I think if the markets reacting to anything, it's on the revenue side, which is OK if the tax cuts are are going to stay in place. But you know also it's like straddling the end of 1/4 and you don't know what the dynamics were in terms of rebalancing into bonds and out. But I do think it, if nothing else, it does under score that it's been pretty easy to exacerbate those supply concerns. And for sure, you know, the market's been pretty good at talking itself into Oh no, we might not be well for sure of all the for brief periods of time. But I will say, I'm sure you'll agree over the last 40 years, how many times have we heard this can't be, this can't be, this can't be, and yet it always is. I don't know that this time is any different in that respect. I mean, there's the number of conversations I have with counterparties across the street with investors in our fund worrying about the debt. And you see this in any number of the Treasury notes that get written. I just again, you've got 22, probably 27 trillion in additional debt expected. It's just so large. It, I'm always reminded of that one, that one famous phrase, owe the bank $1,000,000. The bank, you know what I'm saying? Yeah, yeah, yeah. There's no, it's the banks problem. There's no there's no right way to rationalize $30 trillion in debt.