Golub Capital CEO explains how to profit from the second half of earnings season

Golub Capital CEO explains how to profit from the second half of earnings season



or in the earnings trends our next guest is from gullible capital a leader in middle market lending with more than 30 billion dollars in capital under management the gallop capital Altman index has shown a high correlation with the S&P 500 as well as GDP joining us now to discuss how to profit from the second half of earnings season Laurens column the CEO of gallop capital Lauren's always great to speak with you nice to be here Melissa we usually get to talk to you prior turning season to get a preview and here we are speaking to you bright in this Mack middle you know the heart of earnings season the busiest week of earnings so far in the season have you seen any surprises so far not really things tracking very closely to the data we had in advance if you're a business selling to US customers you're doing great and if you're not you're not so basically you are seeing what what Bob sort of alluded to and that is that the companies with more exposure to sales overseas for instance they're they're seeing a less robust earning season less robust revenue growth than the more domestically oriented companies so in our index revenues up more than 10 percent for the quarter over last year EBIT up 12.5% these are among the strongest numbers in the history of the index there is strong in terms of growth as last year we expected GDP to be GDP did beat it didn't beat by as much as our data would have would have said on its own because of just the effect you described that whether it's the farming sector or trade or sales overseas those those sectors are little weaker it's a much better time to be a franchisor of carwashes in the US than it is to be Dane ler why is business investment down or not up yeah it it I think there's a factor that has been under recognized or underreported so far sure trade uncertainties foreign policy uncertainties any kind of uncertainty creates a drag but I think we're hearing from the Democratic Party presidential primary nominees such anti-business rhetoric such advocacy of increased regulation and increased taxes that that's got to be a factor that's got to play into businesses decisions about investment decisions are going to make day that are only gonna earn profits after the next presidential election very interesting that that's a very your and you're right not many people have pointed to that but but the rhetoric not to mention the the breakup talk and the and the sorry sometimes not-so-veiled discussion of socialism has got to be playing in the background somewhere look what you can have whatever political point of view you want but if you're a business decision maker you gotta take into account that if some of these policies are implemented profits are going to be materially lower than the otherwise would be if profit is going to be lower you're going to invest less I mean we're talking a lot about the Fed and what the Fed should or should not do what the Fed will do tomorrow Lauren so if the Fed does cut by 25 basis points as the market expects do you think that will spur lending at all will that make businesses even more inclined errs it's just sort of a you know what we might as well just cut I I don't think it'll have any impact on investment or spending I I think the Fed is risking repeating the mistake it made in December of 1966 when based on stock market weakness it cut rates in the face of rising inflation we we see a little bit of strength in the inflation right now you know the only good reason to cut rates right now is just because the differential between us rates and foreign rates are so big but the Fed the Fed can't pull up global economic growth the Fed can only help the United States of the America khana me is doing really really well and remind us what happened in 1967 following that mistake lawrence i you had a big big pickup in inflation that lasted for years triggering a lot of sadness in the US economy all right doesn't come to that that's for sure lawrence thank you great to see you you you

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