Tom Hayes - Yahoo Finance Appearance - 5/26/2026

Ajouté : 2026-05-27

[00:00:00]Your investing days underway with green on the screen on hopes the Iran deal gets officially in so prices could pull back further hopefully at some point this summer. Who knows? Stocks have enjoyed eight straight weeks of gains.

[00:00:11]Mary chips like Micron and Sandis. Those stocks look unstoppable and Wall Street keeps jacking up their 2026 profit estimates. But on me to be the calm person in a frenzy room. I know calm and you know doesn't really fit with me but nonetheless I'm going to try to do it.

[00:00:24]Stocks are getting really expensive as everyone enjoys this market meltup. The Schiller cyclically adjusted price to earnings ratio for the S&P 500 has risen to 40.8.

[00:00:34]The only other time this ratio has exceeded 40 in 145 years of data was in the year surrounding the peak of the 2000 bubble when it briefly touched 44.

[00:00:46]Clearly, investors are piling to stocks at a feverish pace. But by another measure, stocks looks as unattractive as they did after the aforementioned.com burst. Uh hat tip to WSJ for pointing this one out this morning in a story.

[00:00:58]The metric is uh known as the equity risk premium. It's often defined as the gap between the S&P 500's earnings yield, the profit companies generate relative to stock valuations, expressed as a percentage, and that of the 10-year Treasury note. In recent weeks, the gap has nearly disappeared, vanished, and is hovering among its lowest levels since the start of the new millennium. Should we be terrified of this valuation levels across the board? Here in the OB round table to weigh in, Thomas Aes, Grey Hill Capital chairman and managing member alongside Yahoo Finance senior reporters bookama and his Frey. Um Tom, I mean should we care about these stock valuations?

[00:01:32]>> I think we should. I think the the key here is to be fearful when others are greedy. That doesn't mean we're bearish on the stock market at all. We are cautious on certain parts of the market that have absolutely run away. whether it's memory, whether it's semiconductors. And you'll notice that they've gone parabolic in the last four to eight weeks as inflation expectations have risen as a result of elevated oil prices, as a result of the Iran war. If we do get some resolution here in coming days or weeks, I think you're going to see a violent rotation out of these stocks and in back into the everything trade that we began the year with before the Iran war. If you remember, low volatility stocks were running, uh, defensives were running, staples were running, industrials were running, everything was running. Uh and then as in the last four to eight weeks, the only thing that worked was the AI trade and semiconductors. And look, Brian, you've been around as long as I have. Uh you know, you don't have to look further than a micron chart to see every four years for the last 30 years is the exact same story. Shortage build capacity just in time for demand to Wayne, stock goes down. So right now, people are buying the peaks. You're seeing it in retail call buying at record levels not seen since the meme days of late 2021 right before tech cooled off. Even institutional equity exposure is the highest since January 2022. That was not when you wanted to be buying equities.

[00:03:13]So, uh, a dose of caution or at least rotation. Even though we're not technically bearish and we're mostly invested, we do have some hedges on for the first time in some time.

[00:03:26]>> Tom, the the bulls will get at me on X and say, "Brian, you're you're you're a straight dumbass." You were telling me a month and a half ago that stocks were richly valued and now they've gotten even more richly valued. I guess the point I'm trying to make, Tom, is can stocks get even more expensive?

[00:03:39]>> Of course they they absolutely can. But here's the thing. when you're gambling and chasing the shiny objects, sooner or later the casino wins. So, can they go up another 20% before correcting 40 or 50% some of these stocks that have run very aggressively in the last four to week, 4 to 8 weeks, of course. And these are the same people who are sliding into your DM right now and giving you a lot of trouble who are going to absolutely disappear in the next 4 to 8 weeks when those stocks come in and you'll never hear from them again. And then they'll be back up on the next cycle when the next hot meme thing is is going and they're saying, "Brian, you know, that's why you're a journalist and we're traders." And then their their account just, you know, deactivates after 6 months when they blow up their account, you know, same as ever.

[00:04:23]>> Yeah. And as uh speaking of shiny objects, I mean, I woke this morning. It seemed like another typical day here in the markets. Everyone loves Micron, everyone loves SanDisk, and now all that love is being put on various quantum stocks. It started late last week, but it's continuing here this morning.

[00:04:38]Brooke, uh, good morning to you. Hit me with something epic.

[00:04:42]>> I mean, what we heard from Raymond James is that if this deal does happen, as sort of Tom was alluding to, we will see some rotation happening. This Raymond James note, pointing out that AI, as Tom and Anz are all talking about. It's a separate soap opera going on right now.

[00:04:56]That's the way that Raymond James phrased it this morning. And according to this note we'll see a big rotation into the cyclill sectors like industrials like financials like uh consumer discretionary and we'll they said that we will see some weakness and where we have seen investors turn to like energy and defenses uh like healthcare staples real estate and utilities and this comes at an interesting time because we have seen a lot of momentum within healthcare specifically I was talking to one uh UBS expert uh just last week and with Eli Liy booming with those GLP1 drugs I think that's definitely one to watch as well.

[00:05:29]>> Tom, I'm trying to think what what pops this this stock bubble and I just think this is a market not really grasping what new Fed chair Kevin Walsh has in the cards.

[00:05:38]>> Yeah, look, I I I wouldn't call this a stock market bubble. I would call it perhaps a trade a specific sector trade bubble, the AI trade, etc. A lot of commonality since the uh from the 2000 top. If you recall the covers of Warren Buffett, has Warren Buffett lost his touch? He was buying defensive stocks.

[00:06:00]He was buying staples when when tech got uh really accelerated on the internet hype. And over the next three years, as the NASDAQ fell 80%, he had three of his best years of performance ever. 2001, 2002, 2003, while everyone was losing 80% in their in their NASDAQ uh trades.

[00:06:17]The other thing to keep in mind, a similarity to 2000, health care and consumer stocks relative performance to the S&P 500 is at the lowest level since that 2000 peak. And uh and I think we're going to get an aggressive reversion to the mean. Managers are overweight tech.

[00:06:36]They're underweight staples. And I think the Raymond James note that uh that Brooke referenced is spoton. So I could see a scenario where these stocks take a breather. Everything else rallies.

[00:06:48]Indices are, you know, somewhat flat to down. But look, when you have a new Fed chair, the average correction in the first 3 or 4 months since 1930 is 12%.

[00:07:00]In a midterm election year, which we are in right now, the average midterm correction entry year is about 17%. I'm not calling for those. I think we've pulled forward a lot of that with 20 20 three 20% corrections in the last 6 years when it usually happens once every 3.5 years. But I do think we could see an 8 to 10% pullback led by the semi conductor AI trade while at the same time these underweight sectors uh low volatility stocks consumer uh consumer stocks healthcare uh defensives actually get bid and you don't see it in the indices. So, I think we're in for an exciting time in the next three months.

[00:07:41]If you don't have anything outside the AI trade, maybe lighten up and and get some exposure to the rest of the market.

[00:07:46]Uh, but I'm not calling for any type of bubble burst or or anything like that cuz underlying earnings, underlying economy is still pretty strong. And if they can get this Iran thing uh tied up pretty quickly, we don't run the risk of uh running it into a wall, which I think if you hold oil prices this high for another couple of uh 2 3 months, uh you could certainly uh tip into a recession that uh doesn't have to be in the cards.

[00:08:12]Brooke, speaking of a recession, it is amazing to see always had this industry has always seen major booms and busts.

[00:08:16]But at least for the next two years, looks like these companies, the Sandis, Micron, you name it, have licensed to print money. Yeah, listen, the ETF Just in Time. It's called Opinion Follows Trend. Uh like a like a true stock market geek, I spent the weekend looking at all these Momo stocks that have just gone parabolic. And I actually burdened myself with the facts looking at revenues, looking at free cash flow. And uh all I can tell you is we've had multiple expansion, but we haven't had cash generation expansion for the most part or certainly not greater than prior peaks uh right before you got to increased capacity andor workarounds as as I referenced. I'd be very very cautious in this area. The other thing that I'd keep in mind is defensives, uh, you know, healthcare, staples, utilities, etc. Waiting in the S&P 500 is the lowest it's been since the tech peak in 2000. It's dropped from 35% waiting in the S&P, those groups, uh, down to 16%. This is what we call, you know, buy opportunities like this happen once every 25 years. We are in one of those. So, while everyone's chasing the latest ETF with these momentum stocks, which capacity is going to come on and they're going to come down, whether they go up another 20% before they collapse 50 or 60%, we don't know that. Can't predict it. We can avoid it. Put it in the two hard box as Warren Buffett would say. And buy what's on sale. Buy durable, free cash flowing companies with predictability. Uh, and get your doubles and triples over a few years and avoid the boom bust shiny object chasing uh methodologies. broke at its most basic. All right, let's keep it moving here in Madison Square Garden. Sharers are scoring some points following the Knicks sweep of the Cleveland Cavaliers late Monday. The win, we'll see the Knicks headed to the NBA finals for the first time since 1999. I wanted to take a brief trip down memory lane for you all. The Knicks return to the finals has an eerie feeling from a stock market perspective to the playoff battle against the arch rival Indiana Pacers in 1999, which led to them facing the San Antonio Spurs in the finals. Right as the Knicks were dueling the Reggie Miller led Pacers in the Eastern Conference Finals in May 1999, Etoys ET Toys.com went public. In a classic sign of the Tech Bubble Times, the stock debuted at $28, skyrocketed to 76 on its first day, and instantly commanded a $7.7 billion valuation, making the loss generating website worth more than then bricks and mortar tour giant Toys R Us, which of course now is bankrupt. hype, eyeballs, and mind share were completely replacing traditional metrics like profiter cash flow late 1999. As we know, uh it all literally came crashing down months later in the dotcom boss.

[00:10:55]Today, the Knicks enter the NBA finals amidst the AI boom that has seen shares of Micron, SanDisk, and Palanteer trading at nosebleleed seat valuations similar to the do hype. Investors are readying for splashy IPOs this year of SpaceX and opening eye. Two tech beasts also not making any money anytime soon.

[00:11:13]Just want to put all this out there. My question is this. What's the best way to play the Knicks upcoming ride through the finals? Tom, coming to you here. How could you do this from a sports perspective? If you are bullish on the Knicks, everything they represent, is there a way to play this?

[00:11:28]>> Uh, you could play MSG Entertainment.

[00:11:32]Uh, look, I've been doing this for a while. By the time something is in the headlines, you're already too late. I mean, the fact that everyone wants to talk about buying the Knicks today after they already made the finals, it's like, buy the rumor or sell the news. Uh, I would I would be kind of avoiding it.

[00:11:49]Look, sports team valuations have gone uh from high to higher to highest. Uh, and there's no telling when the liquidity evaporates. What what we try to focus on here, Brian, is buying what's out of favor. And when they're when they finally do get in the headlines like the Knicks are right now, like semiconductors, like DRAM and the latest ETF, and that that's creating liquidity for us to get out from having bought it when no one else wanted it.

[00:12:15]So, uh I I would say the best way to enjoy the sports trade is to make some popcorn, sit on the couch, and watch the Knicks win. In other words, you should have bought MSGS in 2018 when everybody hated the Knicks. Brooke, I know you're watching the Poly Market odds.