Evercore ISI's Julian Emanuel predicts market roller coaster ahead

TREASURY BOND MARKET. AND IT DOES FEEL A LITTLE BIT MORE DESPERATE THAN IT SHOULD. >> YEAH. I MEAN, CLEARLY EVERYBODY'S SEEING A LOT OF RISK IN THESE RISING BOND YIELDS AND TALKING ABOUT RISK. JOINING US NOW TO TALK MUCH MORE ABOUT THE RISKS FACING THE MARKETS MORE BROADLY. LET'S BRING IN OUR JULIAN EMANUEL SENIOR MANAGING DIRECTOR AT EVERCORE ISI. I DON'T KNOW IF YOU ARE I THINK YOU'RE EVERCORE ISI. JULIAN, GREAT TO HAVE YOU ON. >> GREAT TO BE HERE. >> LET'S FINISH THIS CONVERSATION WE WERE HAVING EARLIER. I THINK IT'S SOMETHING YOU WANT TO TALK ABOUT, ABOUT NVIDIA BEING AN INFLECTION POINT FOR THE MARKET. AND YOU'RE SEEING A LOT MORE RISK POST NVIDIA EARNINGS. LOOKING AT THE VIX ONLY AT ABOUT 15. YOU'RE SAYING THAT'S A BIT LOW. >> IT IS DEFINITELY LOW. LOOK SEASONALITY ASIDE WE'VE BEEN TALKING ABOUT IT JUST THESE LAST FEW MINUTES. THIS IS ONE OF THESE TIMES WHERE THE MOST IMPORTANT RELATIONSHIP THE MOST IMPORTANT CHART IN THE WORLD IS THE TEN YEAR YIELD. IT'S NOT ALWAYS THAT WAY. BUT THIS IS ONE OF THOSE TIMES BECAUSE THE PRESSURE HAS BEEN ON THE BOND MARKET, BECAUSE IT'S GOING TO BE VERY INCUMBENT ON YIELDS TO REMAIN IN CHECK INTO SEPTEMBER, WHEN THERE'S GOING TO BE RENEWED ISSUANCE. THE CAPITAL MARKETS, YOU KNOW, WE'VE TAKEN A COUPLE OF WEEKS HERE IN THE CAPITAL MARKETS ARE GOING TO OPEN UP AGAIN, AND THERE'S JUST GOING TO BE LOTS AND LOTS OF ISSUANCE, NOT JUST FROM HYPERSCALERS, NOT JUST FROM GLOBAL SOVEREIGNS, OF COURSE, FROM THE US AS WELL. AND ALL OF THAT FEEDS INTO THIS IDEA THAT YOU ARE AT A POTENTIAL INFLECTION POINT, WHERE THE OTHER PART OF THE NARRATIVE IS THAT EARNINGS SEASON IS OVER. AND EARNINGS SEASON, AS WE ALL KNOW, HAS BEEN AN INCREDIBLE CATALYST. THIS QUARTER WAS AN EVEN MORE INCREDIBLE CATALYST IN IN APRIL AND MAY, BUT THAT'S NOW BEHIND US. AND SO WHAT YOU'RE LEFT WITH IS THE KIND OF, OF SETUP THAT WE'VE SEEN SEVERAL TIMES ALONG THIS BULL MARKET WHERE YOU'RE JUST HANGING OUT WITH MACRO RISK. >> SO, JULIAN, WHEN YOU HAVE YOUR BULL CASE OF 9000 BY YEAR END, DO YOU SPEND A LOT OF TIME ON YIELDS THERE? SO I'M GOING TO ASK YOU OUT OF THREE THINGS. OR MAYBE IT'S A ALL THREE OF THEM. IS IT EARNINGS YIELDS OR FOMO THAT GETS US TO YOUR BULL CASE. >> WELL IT'S DEFINITELY FOMO NO QUESTION ABOUT IT. AND YOU KNOW, REALISTICALLY WHEN WE SUGGESTED 9000 AT THE END OF THE YEAR, AT THE BEGINNING OF THIS YEAR, WE'RE NOT GOING TO GET THERE THIS YEAR, BUT WE DO FEEL VERY CONFIDENT THAT SOME TIME BEFORE THIS CYCLE ENDS, WE WILL GET TO A NUMBER LIKE 9000. BECAUSE IF YOU LOOK AT THESE STRUCTURAL TECH DRIVEN BULL MARKETS, WHETHER IT WAS THE WORK FROM HOME 2020 INTO 2021, OR OF COURSE, THE ONE THAT EVERYONE IS TALKING ABOUT, WHICH IS Y2K AS A COMPARATIVE, YOU ALWAYS GOT INTENSE AMOUNTS OF FOMO, SURGES IN CAPITAL MARKET ACTIVITY. AND, YOU KNOW, THERE ARE GOING TO BE BIGGER AND MORE SIGNIFICANT IPOS AHEAD OF US. >> OKAY. SO JULIAN, YOU'RE TALKING ABOUT ALL THIS FOMO, BUT AT THE SAME TIME, YOU'RE MAKING A CALL ON NEGATIVE BETA STOCKS. THAT'S NOT SEXY AT ALL. I DON'T THINK ANYBODY FEARS ON MISSING OUT ON NEGATIVE STOCKS. TALKING ABOUT NAMES LIKE MCDONALD'S, PEPSICO. WHY PUT THE MONEY THERE RIGHT NOW? >> AND FOR A SEXY GUY, BY THE WAY, TO BE GOING ON SEXY WITH YOUR PICKS. NO, I MEAN YOU WOULD. >> YOU WOULD BE SHOCKED AT THE EYEBALLS AT NEGATIVE BETA BECAUSE FRANKLY, IF YOU THINK ABOUT IT, RIGHT, PART OF WHY YOU'VE HAD THE SHARP MOVES FROM TIME TO TIME THAT YOU'VE HAD IS BECAUSE ESSENTIALLY PEOPLE THAT USE HEDGES, INDEX HEDGES LOST TONS OF MONEY OWNING PUTS AND GAVE UP ON THAT AT THE TIMES WHEN IT WAS WAS NECESSARY. BUT ACTUALLY WHAT WE FOUND IS THESE NEGATIVE BETA STOCKS, WHICH CORRELATE INVERSELY TO THE S&P DAY IN AND DAY OUT, ARE ACTUALLY A WAY TO GET INDEX LIKE RETURNS AND GET DIVERSIFICATION FROM THE FACT THAT EVERYTHING LOOKS LIKE THE AI TRADE, YOU KNOW, AND WE THINK THERE'S MORE LEGS TO GO THERE. >> BY THE WAY, ACCORDING TO YOUR RESEARCH, IT'S LIKE A QUARTER OF THE S&P IS A NEGATIVE BETA STOCK. >> IT IS IT IS INCREDIBLE. BUT YOU KNOW NO QUESTION. AND WE CAN CERTAINLY UNDERSTAND ENERGY. AND WE CAN CERTAINLY UNDERSTAND HOW THERE'S MORE SOFTWARE NAMES GIVEN HOW SOFTWARE BEHAVED AT THE BEGINNING OF THE YEAR. LESS UNDERSTANDABLE ARE PLACES LIKE UTILITIES AND INSURANCE STOCKS. BUT AS WE ALL KNOW, FINANCIALS HAVE BEEN ON FIRE THIS YEAR, BUT THEY'VE