RBC's Lori Calvasina and Amy Wu Silverman Talk Earnings Season

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Tom Keene** (0:07)
Paul Sweeney and Tom Keene. And what we love to do is particularly at a shop like the Royal Bank of Canada, when we get too aligned and too highly competent, to say the least, it's fun to get them both into the studio just to get a window into the day-to-day grind. I mean, Paul, I mean, you look at Lori Calvasina, you look at Amy Wu Silverman, they're talking to two different audiences.

**Lori Calvasina** (0:31)
They are.

**Paul Sweeney** (0:31)
And if I'm a salesman at RBC Capital, I'm making bank off of these two.

**Tom Keene** (0:34)
It's a gift.

**Paul Sweeney** (0:34)
I can sell these two anytime.

**Tom Keene** (0:36)
Joining us now for the first time ever, Amy Wu Silverman, Lori Calvasina of the Royal Bank of Canada. Let me just get this out of the way. Are the two of you on speaking terms?

**Amy Wu Silverman** (0:46)
Always.

**Lori Calvasina** (0:46)
We talk all the time.

**Amy Wu Silverman** (0:47)
It's my work wife.

**Tom Keene** (0:48)
When you talk about work from the quant area of Amy Wu over to your incredible PowerPoints showing the texture of the market, what's the number one talking point?

**Lori Calvasina** (0:59)
I think we've been talking a lot about tech lately. I mean, it's just the conversation you can't get away from. And by that, I mean, the hyperscalers are mostly in a different sector, to be honest, but the semis and the momentum trade, I think, is what we've been largely talking about. And what our work is showing on the semis is that you've hit the average valuation levels if you look at a five or 35 year average. We had been hearing a lot of clients saying they thought the momentum wine was late inings, close to done. It's gone on a little bit longer, frankly, than I would have thought.
But I would say that's really the genesis of a lot of the conversations of late.

**Paul Sweeney** (1:35)
Amy, for your clients, are they, it's a big week for earnings, a big tech week for earnings. How are your clients in the futures and options, are they leaning into these earnings? Are they saying, like Lori said, maybe the momentum thing is kind of coming to an end?

**Amy Wu Silverman** (1:49)
It's so interesting because ahead of this week, you know, big four reporting huge concentration and Tom's favorite word, skew, it's pretty flat, meaning people are not really deciding to hedge in front of any of these stocks. It's actually fairly sanguine. Look, part of that is we already had a big move in sympathy with Alphabet last week, so some of that's taken it off the table. But to give you an example, meta, it's implied move on earnings day is about 7%.
This thing moves plus or minus 10% the last four quarters, so the fact that it's an inexpensive move is pretty shocking.

**Tom Keene** (2:23)
The magic of you two is your worker bees. And you're out there hugely seeing clients. Do clients have a bet, Lori, on the market right now? Are they placing a bet out into 2027?

**Lori Calvasina** (2:34)
You know what's really interesting, Tom, and this has gone back a couple of months now, is I go into the meeting and I have my price target and the methodology and the five models and yada, yada, yada. And people do want to talk about the valuation earnings model because that's fairly unique in our process. But by and large, Tom, people don't want to talk about market direction. They want to talk about, let's look at all the sectors. Where's their opportunity? There's been this view, I would say, the last couple months.
I've had plenty of AI, I've had plenty of tech, I've had plenty of semis. What else should I be looking at? And frankly, a lot of the choices haven't been that interesting to people. So you get kind of stuck in those conversations.

**Tom Keene** (3:09)
Over in your world, and let's say it's more alternative, more hedge funds, more leverage bets, using mathematics, do they have the same feeling of let's go?

**Amy Wu Silverman** (3:18)
Yes and no. There's a little bit of nervousness. For instance, last week, what we talked about is this whole levered ETF sphere. There's a lot of what tail will wag the dog because we've had, my favorite term, the paddling duck on the surface, but you've had these huge multi-standard deviation drawdowns in momentum factor.
You have a lot of leverage piled on to these ETFs that are accumulating. And then if you get a burst of correlation, what does that mean to the markets? A little bit of nervousness. But when you look at the hyperscalers specifically, option sentiment's pretty sanguine.