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Markets, Consumer Confidence, And ETFs · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day, we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. This really knocked me
• 0:21
  Speaker 1: off my game. Here my colleague, co host Katie Greifeld,
• 0:25
  Speaker 1: and my producer Eric Mullow, neither of them have seen
• 0:28
  Speaker 1: Top Gun. No, I can't even imagine what is about.
• 0:32
  Speaker 1: So the homework for the kids today is go home,
• 0:34
  Speaker 1: get a streaming service of your choice and stream Top Gun.
• 0:38
  Speaker 1: That's the homework because we are a Top Gun two
• 0:40
  Speaker 1: coming out, and you've gotta be prepared for that. Dan,
• 0:42
  Speaker 1: I know, I know Dan Genter has seen Top Gun.
• 0:44
  Speaker 1: Dan Genter, CEO Chairman RNC Genter Capital Management, Dan, are
• 0:49
  Speaker 1: you a Top Gun fan? I am absolutely a Top
• 0:52
  Speaker 1: gust fan. I've seen it several times. I'm actually a
• 0:55
  Speaker 1: pilot myself, So it's like that explains it my theme movie,
• 0:59
  Speaker 1: and I just I align with you. I can't believe
• 1:01
  Speaker 1: they haven't seen it. But but I have faith in
• 1:03
  Speaker 1: the future that they will go home and look at
• 1:05
  Speaker 1: this and round out their education. Yes, I can't agree more.
• 1:09
  Speaker 1: All right, then let's get back to these pesky markets here.
• 1:12
  Speaker 1: We have some green on the screen today, but the
• 1:15
  Speaker 1: bricks that are in this wall of worry, there's just
• 1:18
  Speaker 1: a lot of them. How are you looking at these
• 1:20
  Speaker 1: markets today? What are you telling your clients? Well, I
• 1:24
  Speaker 1: think that what you have to do, Paul, is which
• 1:26
  Speaker 1: you always have to do in these kind of situations
• 1:27
  Speaker 1: and crisis, is that the you have to really cut
• 1:30
  Speaker 1: through the fundamentals. It's not that you can't totally ignore
• 1:34
  Speaker 1: the emotion because obviously the market is going to trade
• 1:36
  Speaker 1: it on emotion. Otherwise we just traded a constant p
• 1:39
  Speaker 1: at all times. But you still have to come back
• 1:41
  Speaker 1: or what are the fundamentals of this market? You know,
• 1:44
  Speaker 1: talking about aviation you started at thirty foot Look and
• 1:47
  Speaker 1: you basically look at the overall economics and an essence
• 1:51
  Speaker 1: are we are we going into a recession and they
• 1:53
  Speaker 1: and the fact is, you know, we're not. You know,
• 1:55
  Speaker 1: we're slowing, Earnings are slowing. Certainly growth is going to slow,
• 1:59
  Speaker 1: but but look, we're still going to be probably above
• 2:03
  Speaker 1: FED expectations at at least two and a half three
• 2:06
  Speaker 1: GDP growth, you know, going in through the mainner of
• 2:08
  Speaker 1: this year. In three we think that earnings are certainly
• 2:11
  Speaker 1: gonna slow, but we're probably going to see sp earnings
• 2:14
  Speaker 1: up five or six percent, and so therefore you don't
• 2:18
  Speaker 1: have a recession. The market is probably going to be
• 2:20
  Speaker 1: flat slightly up. We see about a eight percent market
• 2:24
  Speaker 1: over the next twelve months, and uh, mainly probably some
• 2:28
  Speaker 1: pe contraction, but earnings are going to drive the rest
• 2:31
  Speaker 1: of it. And so it's still it's it's now very
• 2:34
  Speaker 1: much of a stock pickers market, and uh, you can
• 2:37
  Speaker 1: buy into some of this weakness and certainly the volatility
• 2:39
  Speaker 1: we're seeing, and that's what we're doing. Well, let's wrap
• 2:42
  Speaker 1: some of the movements that we've seen in commodity markets
• 2:45
  Speaker 1: into that, because obviously all eyes have been on crude
• 2:47
  Speaker 1: oil for you know, several months now, and uh, I
• 2:50
  Speaker 1: mean we're looking at crude oil at close to a
• 2:53
  Speaker 1: hundred dollars a barrel, but a hundred two dollars a barrel,
• 2:56
  Speaker 1: I mean, assuming we stay around this range, mean, what
• 3:00
  Speaker 1: does that mean for you know, the fundamentals of the
• 3:03
  Speaker 1: U S economy and for companies you know, dealing with
• 3:06
  Speaker 1: those input costs. Well, Katie, I mean you're absolutely right.
• 3:10
  Speaker 1: Is that this market is driven independent of the war obviously,
• 3:14
  Speaker 1: which is a major factor, but from an economic standpoint,
• 3:17
  Speaker 1: is being driven by oil and inflation. And and even
• 3:21
  Speaker 1: the oil is only three percent of the inflationary inputs
• 3:25
  Speaker 1: now versus where it was many years ago, it's still
• 3:28
  Speaker 1: a major factor when you start to look at how
• 3:31
  Speaker 1: it affects every individual and and how it affects their
• 3:34
  Speaker 1: disposable income. I mean, the current increases that we've had
• 3:38
  Speaker 1: an oil we estimate is going to cost the average
• 3:41
  Speaker 1: family over a thousand dollars a year more. And so
• 3:45
  Speaker 1: something's going to give with that. So a stabilization and
• 3:48
  Speaker 1: oil is very key to us. We think that equal
• 3:51
  Speaker 1: liberal was somewhere around eighty dollars. But it's going to
• 3:54
  Speaker 1: affect earnings and that's part of what we're factoring in
• 3:56
  Speaker 1: that it's going to slow the economy from overall consumption
• 4:00
  Speaker 1: because we're driven by consumption. And if you take money
• 4:03
  Speaker 1: away from people, and increase in oil prices is basically
• 4:06
  Speaker 1: like a tax. Uh you basically you take it away
• 4:09
  Speaker 1: from people. Uh, It doesn't add anything to productivity. They
• 4:13
  Speaker 1: just lose the ability to spend on something else and
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  Speaker 1: therefore earnings go down. It affects consumer, uh, mainly consumer
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  Speaker 1: non durables, but also durables. So that's to us as
• 4:23
  Speaker 1: part of that slowing effect. Anytime you have you know
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  Speaker 1: that displacement, if you will inflation, it goes through the
• 4:30
  Speaker 1: whole system. But I don't think that that takes us negative.
• 4:33
  Speaker 1: It just takes us to where we're at slower growth.
• 4:36
  Speaker 1: So that's kind of where I wanted to go Dan,
• 4:38
  Speaker 1: because a lot of folks are saying, boy, this Federal Reserve,
• 4:41
  Speaker 1: it is clearly communicated that it wants to fight inflation
• 4:44
  Speaker 1: in part through rate increases. But the risk is maybe
• 4:48
  Speaker 1: they go too far, too fast and push this economy
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  Speaker 1: into a recession, and nobody wants that. How do you
• 4:54
  Speaker 1: kind of weigh those risks? Well, look, I think it's
• 4:57
  Speaker 1: baked in that one thing. You know, with regard US
• 5:00
  Speaker 1: two chairman policies being has been extraordinarily transparent. I believe
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  Speaker 1: he's also doing that now. I don't think we're going
• 5:07
  Speaker 1: to be surprised. And and the market is largely discounting
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  Speaker 1: a lot of that already. I mean we've we've had
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  Speaker 1: a hundred basis points increase, uh, not exactly a parallel shift,
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  Speaker 1: but close to it. Certainly the ten years up a
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  Speaker 1: hundred basis points, uh since November, and so a lot
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  Speaker 1: of it's baked in the cake already, and they are
• 5:25
  Speaker 1: going to slow it now. We feel that we'll see
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  Speaker 1: definitely another seventy and almost certainly another hundred basis points
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  Speaker 1: from here. You know, we've modeled that out, uh to
• 5:34
  Speaker 1: see what does that really do to us. We think
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  Speaker 1: it's largely baked. It's baked into our numbers with what
• 5:39
  Speaker 1: I've mentioned earlier for SB orange growth and also for
• 5:42
  Speaker 1: the overall economy. Uh. Certainly it's going to squeeze the
• 5:45
  Speaker 1: housing market. Uh. You know, it just makes everything once
• 5:48
  Speaker 1: again more expensive. It really adds to inflation, if you will,
• 5:51
  Speaker 1: because your cost of money is going to be higher.
• 5:54
  Speaker 1: You know. Well, now, whether they overshoot it, I mean
• 5:56
  Speaker 1: personally I think that they'll go slower. Uh, they'll continue
• 6:00
  Speaker 1: you as the as the data comes in, but it
• 6:04
  Speaker 1: wouldn't be unusual for them to do a fifty A
• 6:06
  Speaker 1: matter of fact, if you look historically, usually the first
• 6:09
  Speaker 1: time the Fed reverses course from uh, they go fifty,
• 6:13
  Speaker 1: they go fifty at the beginning, whether they're raising or lower,
• 6:16
  Speaker 1: and they go fifty and at the end they go fifty.
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  Speaker 1: The signal that they've stopped. So it would not be
• 6:20
  Speaker 1: out of normal to see that. Hey, Dan, thanks so
• 6:23
  Speaker 1: much for joining us there. Always appreciate getting your prospective.
• 6:26
  Speaker 1: Dan Genter, CEO, ce IO and chairman. It's also a
• 6:30
  Speaker 1: pilot of r n C Genter Capital Management. Here. Now,
• 6:38
  Speaker 1: let's going to Lynn Franco and break down some of
• 6:39
  Speaker 1: those UM consumer confidence number. She's the director of Economic
• 6:43
  Speaker 1: Indicators and Surveys. At the conference board, Lynn talked to
• 6:46
  Speaker 1: us about the consumer today. What did your data show you, Well,
• 6:50
  Speaker 1: we're saying that the consumer confidence is holding steady, so
• 6:54
  Speaker 1: we went from one oh five seven last month to
• 6:56
  Speaker 1: one oh seven point two. But it really is being
• 6:59
  Speaker 1: suppoored by the present conditions where consumers are telling us
• 7:03
  Speaker 1: at least the economy remains on somewhat stable footing, and
• 7:06
  Speaker 1: that's really just because we have very strong employment conditions,
• 7:09
  Speaker 1: so that's really sort of boosting consumer confidence. Looking ahead,
• 7:14
  Speaker 1: we've seen expectations that continue to deteriorate. UM within consumer
• 7:20
  Speaker 1: sighting both inflation, especially rising prices at the gas pump,
• 7:24
  Speaker 1: and the war in Ukraine as um, sort of the
• 7:28
  Speaker 1: reasons why they are a little bit more apprehensive about
• 7:31
  Speaker 1: the outlook. And you mentioned that, you know, there is
• 7:35
  Speaker 1: a lot of confidence in the labor market, and looking
• 7:38
  Speaker 1: at this morning's data, is the sheriff consumers who said
• 7:40
  Speaker 1: the jobs were plentiful increased to a record high of
• 7:43
  Speaker 1: about fifty seven point two per cent. But I mean,
• 7:47
  Speaker 1: how how much work is that confidence in the labor
• 7:50
  Speaker 1: market doing right now? Because of course, you know, we're
• 7:51
  Speaker 1: dealing with record high inflation. It seems like that hasn't
• 7:55
  Speaker 1: undermined the labor market yet, correct, And in fact, our
• 8:01
  Speaker 1: inflation question hit and all time high, so it's really
• 8:05
  Speaker 1: being offset by strong employment conditions. Um. But you know,
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  Speaker 1: we do expect inflation and you know, the war in
• 8:13
  Speaker 1: Ukraine to continue to provide hig winds both to growth,
• 8:17
  Speaker 1: spending and confidence. So it remains to be seen just
• 8:21
  Speaker 1: how you know, well confidence holds up, and in terms
• 8:25
  Speaker 1: of overall growth, we do have it somewhat weaker than
• 8:29
  Speaker 1: last month. Our outlook has maybe GDP growing at about
• 8:34
  Speaker 1: one point seven and Q one down to one point
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  Speaker 1: three and Q two and also consumer spending softening as
• 8:41
  Speaker 1: a result of higher inflation. Lynn, I mean, the labor
• 8:45
  Speaker 1: markets just fascinates me. I'm still wondering where those three
• 8:49
  Speaker 1: four or five million people are that we're in the
• 8:51
  Speaker 1: workforce pre pandemic, Where are they now? Are they going
• 8:55
  Speaker 1: to come back? What's the data you've seen, the analysis
• 8:59
  Speaker 1: you've done about those people. Well, we've seen you know,
• 9:03
  Speaker 1: in particular, you know, women have been hard hit right
• 9:06
  Speaker 1: in childcare has been an issue. So this is sort
• 9:09
  Speaker 1: of one segment of the labor market that continues to
• 9:13
  Speaker 1: uh sort of hasn't quite bounced back from you know,
• 9:17
  Speaker 1: pre COVID pandemic levels. So I think that's going to
• 9:20
  Speaker 1: continue for the next couple of months. But what we're
• 9:23
  Speaker 1: seeing here and I think what we expect to see
• 9:25
  Speaker 1: at the end of the week are pretty good employment numbers,
• 9:28
  Speaker 1: so at least that will continue to support consumer confidence
• 9:32
  Speaker 1: and growth in the short term. And then focusing on
• 9:35
  Speaker 1: the consumer, you know, a question we ask a lot is, Okay,
• 9:39
  Speaker 1: when does inflation increase the point where you know, people
• 9:42
  Speaker 1: start putting off purchases or stop spending as much money
• 9:45
  Speaker 1: as they have been. Um, I'm curious you know what
• 9:48
  Speaker 1: you see, uh. In regards to that question, well, we
• 9:52
  Speaker 1: see a little bit of you know, inflation, and also
• 9:55
  Speaker 1: I think, you know, interest rate hikes and anticipation of
• 9:59
  Speaker 1: have being a little bit of a softening effect at
• 10:01
  Speaker 1: least that we're seeing over the last few months. And
• 10:04
  Speaker 1: you know, sort of automobile purchases, home purchases. You know,
• 10:07
  Speaker 1: we've seen mortgage rates of going up, so sort of
• 10:10
  Speaker 1: these big ticket items that are interest rate sensitive, we're
• 10:13
  Speaker 1: beginning to see a little bit of softening there as well. Lynn.
• 10:16
  Speaker 1: Some economists are introducing the word recession into their talking points.
• 10:21
  Speaker 1: Is that a meaningful risk for the US economy and
• 10:23
  Speaker 1: your from your perspective, From our perspective, we don't see
• 10:26
  Speaker 1: your recession. We do see softening and growth and consumer
• 10:30
  Speaker 1: spending over the next several months, but at this point
• 10:33
  Speaker 1: so we're not forecasting recession. All right, Lynn, thank you
• 10:36
  Speaker 1: so much for joining us. As always, Lynn Franco, the
• 10:39
  Speaker 1: director of Economic Indicators and Surveys at the conference board
• 10:42
  Speaker 1: at breaking down the consumer confidence number today, which came
• 10:45
  Speaker 1: out a little bit better and expected. It is finally
• 10:50
  Speaker 1: times talk about crypto. We're going to do that with
• 10:53
  Speaker 1: Greg King. He is the CEO of Osprey Funds. Uh.
• 10:56
  Speaker 1: They offer access to cryptos such as Salana, Bitcoin, UH,
• 11:01
  Speaker 1: Polka Dot, you name it via traditional vehicles. Greg, it's
• 11:04
  Speaker 1: great to have you with us. Let's start with a
• 11:06
  Speaker 1: big rebound that we've seen in the crypto space over
• 11:08
  Speaker 1: the past week or so. I'm looking at bitcoin at
• 11:11
  Speaker 1: just a hair below forty eight thousand dollars per coin.
• 11:15
  Speaker 1: How has that translated into flows in your funds? Are
• 11:19
  Speaker 1: you seeing cash come in? So the bitcoin fund that
• 11:24
  Speaker 1: we operate is traded on the secondary market under the
• 11:27
  Speaker 1: ticular oh b tc UM. It's similar to UM, the
• 11:31
  Speaker 1: Gray Skull Trust that's been up for a long time.
• 11:33
  Speaker 1: It's just at a different price point, more more, less
• 11:37
  Speaker 1: expensive for investors. But these products trade a little bit
• 11:39
  Speaker 1: differently than actual bitcoin because there's a fixed supply, So
• 11:43
  Speaker 1: they traded premiums and discounts, and in times like this
• 11:46
  Speaker 1: when the price is rallying, you can see that discount narrow.
• 11:49
  Speaker 1: For a long time, those products traded in their premium,
• 11:52
  Speaker 1: but over the last year or so, they've been trading
• 11:54
  Speaker 1: in a discount. So it is an interesting opportunity for
• 11:57
  Speaker 1: investors to get ahold of bitcoin at basically less based value.
• 12:01
  Speaker 1: All right, Greg, So we are going into a significantly
• 12:06
  Speaker 1: rising interest rate environment. Do we have any data to
• 12:09
  Speaker 1: show how crypto performs in that type of environment. It's
• 12:14
  Speaker 1: a great question. I think the part that we're focused
• 12:16
  Speaker 1: on is real rates, right, because unfortunately real rates are
• 12:22
  Speaker 1: pretty severely negative with the inflation numbers we've seen seven
• 12:25
  Speaker 1: and a half percent and the ten years you know,
• 12:27
  Speaker 1: two and a half and so in those environments, the
• 12:31
  Speaker 1: natural comparison, of course, the bitcoin UM for those of
• 12:34
  Speaker 1: us kind of living in that world, is the old
• 12:38
  Speaker 1: world version of bitcoin gold, right, And I know a
• 12:41
  Speaker 1: lot of people out there are cringing when I say that,
• 12:43
  Speaker 1: but the reality is that bitcoin has established itself as
• 12:46
  Speaker 1: a digital substitute for gold, and so we would expect
• 12:50
  Speaker 1: it to behave similarly and negative real interest rate environments
• 12:53
  Speaker 1: are fantastic for gold historically, so you are seeing some
• 12:57
  Speaker 1: of that develop in the price a bitcoin. You've also
• 13:00
  Speaker 1: seen a few announcements with UM. I think it started
• 13:03
  Speaker 1: a few weeks ago with the White House putting out
• 13:05
  Speaker 1: the directive to UM, you know, responsibly innovate with digital assets.
• 13:11
  Speaker 1: But then more recently there were some announcements UM by
• 13:15
  Speaker 1: a group in Korea that you know, audience members are
• 13:18
  Speaker 1: not deep into the crypt of the world. They may
• 13:20
  Speaker 1: not have heard of it. It's a large stable coin
• 13:21
  Speaker 1: project UM called Terra that's buying quite a bit of
• 13:25
  Speaker 1: bitcoin for its reserves. And so you have these new,
• 13:29
  Speaker 1: uh you know, digital assets participants almost acting like miniature
• 13:34
  Speaker 1: central banks and using bitcoin as their own reserve asset.
• 13:38
  Speaker 1: And Greg, I want to circle back to a point
• 13:40
  Speaker 1: you made the fact that o b tc your inaugural product.
• 13:44
  Speaker 1: It's trading at a discount similar to the Gray Scale
• 13:46
  Speaker 1: product GBTC, and you know the way you framed it
• 13:50
  Speaker 1: as you know you can pick up bitcoin at a discount.
• 13:53
  Speaker 1: The pushback would be that long term holders of this trust,
• 13:57
  Speaker 1: you know, they they've really seen there in vestments road
• 14:01
  Speaker 1: and they're they're now they would have been better off
• 14:04
  Speaker 1: holding bitcoin itself. And I'm curious, how do you fix
• 14:08
  Speaker 1: the discount if there is a fixed supply of your trust.
• 14:12
  Speaker 1: I know that Gray Scale has been buying back shares
• 14:15
  Speaker 1: of the trust, or rather their parent company. Has have
• 14:18
  Speaker 1: you considered anything similar? We have? We have. I think
• 14:22
  Speaker 1: that what we're focused on. We keep pretty close tabs
• 14:25
  Speaker 1: on the um SEC in the regulatory environment. I think
• 14:29
  Speaker 1: that's that's one of the themes you're seeing this year.
• 14:32
  Speaker 1: That's that's constructive. UM, you did get the Bitcoin features
• 14:36
  Speaker 1: et F approved, You've got you know, the Biden White
• 14:39
  Speaker 1: House putting on the directive. UM, there seems to be
• 14:42
  Speaker 1: movement that's establishing some amount of clarity on the regulatory side,
• 14:47
  Speaker 1: which is all good for the prospects of something like
• 14:50
  Speaker 1: a bitcoin PF. And so our focus would be to
• 14:53
  Speaker 1: convert our fund to an EPF when that's possible, and
• 14:58
  Speaker 1: at that point we'd expected to trade in line with
• 15:00
  Speaker 1: fair value. By the way your comment earlier, I think,
• 15:03
  Speaker 1: I think is UM totally dependent on when investors came
• 15:08
  Speaker 1: into you know, either our product or other people's product.
• 15:11
  Speaker 1: You know, So it's it's really everybody's got their own
• 15:13
  Speaker 1: story in terms of when they came in UM and
• 15:16
  Speaker 1: when they when they came out. But you know, it's
• 15:19
  Speaker 1: an unfortunate situation in the sense that the regulatory environment
• 15:22
  Speaker 1: has just taken I mean, you had the wink of
• 15:25
  Speaker 1: us twins filing for the first bitcoin ETF in two
• 15:28
  Speaker 1: thousand thirteen, and I mean, given that we have been
• 15:32
  Speaker 1: waiting so long, we did get movement in October, we
• 15:34
  Speaker 1: got that derivatives back Bitcoin fund. That didn't seem to
• 15:38
  Speaker 1: be the holy grail that the crypto industry was waiting for. Though,
• 15:41
  Speaker 1: when do you think we could see movement and an
• 15:43
  Speaker 1: approval of a physically backed bitcoin ETF. Well, a couple
• 15:48
  Speaker 1: of your own analysts wrote an article the other day
• 15:50
  Speaker 1: about the SEC's proposal to expand the definition of the
• 15:54
  Speaker 1: word exchange and some of the regulation. Um, this could
• 15:58
  Speaker 1: open up the possibility for an ets sooner, um rather
• 16:02
  Speaker 1: than later. However, when I say sooner in SEC speak,
• 16:07
  Speaker 1: that's you know, a year ish or more. Um. I'm
• 16:11
  Speaker 1: not sure personally that Mr Gensler is very keen on
• 16:15
  Speaker 1: the idea of a spot bitcoin ETF. He seems to
• 16:18
  Speaker 1: have gotten comfortable with the idea of future is based
• 16:20
  Speaker 1: obviously um, But primarily that's because, um, you know, the
• 16:24
  Speaker 1: futures are are regulated instruments, whereas bitcoin itself is not. So,
• 16:28
  Speaker 1: you know, the definition of the word exchange being expanded
• 16:32
  Speaker 1: could uh, you know, capture like a coin base, and
• 16:36
  Speaker 1: therefore the trading of bitcoin on that exchange would by
• 16:40
  Speaker 1: definition become regulated trading um, and so on and so forth,
• 16:44
  Speaker 1: So it would be a step in that direction, but
• 16:46
  Speaker 1: I still think there are other factors. Consider the main
• 16:50
  Speaker 1: one is bitcoin trade so much offshore and that's just
• 16:54
  Speaker 1: really not um something that they can observe directly. All Right,
• 16:59
  Speaker 1: Great King, thank you so much for joining us, always
• 17:01
  Speaker 1: like chatting getting the updated all things crypto. Great King,
• 17:05
  Speaker 1: CEO and founder of Osbrey Funds. Again, they've got the
• 17:08
  Speaker 1: uh secure, cost effective access to a select group of
• 17:12
  Speaker 1: crypto via traditional vehicles. That's what the folks at Osprey do.
• 17:18
  Speaker 1: All right, let's talk to our next guy because I
• 17:20
  Speaker 1: really want to get her thoughts here because I she
• 17:23
  Speaker 1: has a really interesting view of this market that perhaps
• 17:25
  Speaker 1: investors should be on the lookout for bear market rallies,
• 17:28
  Speaker 1: which I find very interesting. Katerina semin Eddie, Senior vice president,
• 17:32
  Speaker 1: Private Wealth advisor from Morgan Stanley. So, Katerina, are you
• 17:35
  Speaker 1: buying this move higher in the markets or is this
• 17:38
  Speaker 1: a bear market rally? Well, thank you for having me
• 17:42
  Speaker 1: on um. This is a good question. Right, we had
• 17:46
  Speaker 1: a pretty big pullback followed by seemingly a big rally.
• 17:50
  Speaker 1: But the question is are we in the bear markets?
• 17:53
  Speaker 1: And we believe so, we believe that yes, this is
• 17:56
  Speaker 1: a bear market. We have been in a bear market
• 17:59
  Speaker 1: for quite some time. We came into this year concerned
• 18:03
  Speaker 1: about evaluations, fed tightening and plation growth slow down, you know,
• 18:07
  Speaker 1: all of the above, and of course the war in
• 18:10
  Speaker 1: Ukraine introduced this new component of now unpredictability and making
• 18:15
  Speaker 1: all these concerns that we have, you know significantly, you know, wars. Now.
• 18:20
  Speaker 1: This is not to say that there are no pockets
• 18:22
  Speaker 1: of opportunity in this market. There absolutely are. The investors
• 18:25
  Speaker 1: should be in position to take advantage of them. But
• 18:28
  Speaker 1: they are bear market rallies and they have to be
• 18:31
  Speaker 1: seen as such, and it is very important for the
• 18:34
  Speaker 1: outlook for the remainder of this year and in fact
• 18:37
  Speaker 1: for the next year as well. And Katerina wrap in
• 18:41
  Speaker 1: what we're seeing in some of these mega cap tech
• 18:43
  Speaker 1: names in because we're looking at Apples. At Apples eleven
• 18:46
  Speaker 1: straight days day of gains, that is the longest streak
• 18:49
  Speaker 1: since two thousand three. I don't think smartphones even existed
• 18:52
  Speaker 1: back then. But the fact that you are seeing such
• 18:55
  Speaker 1: importantly big parts of the market also contribute in this.
• 18:59
  Speaker 1: You know, maybe it's a dead cat bounce, I mean,
• 19:01
  Speaker 1: how does that change the profile of this bear market?
• 19:05
  Speaker 1: Does that shorten the time that we might be in it. Well, Katie,
• 19:10
  Speaker 1: you you raise a really good point um in the
• 19:13
  Speaker 1: market that is volatile. That also introduced the two pockets
• 19:18
  Speaker 1: of speculation. UH. Investors tend to go with some of
• 19:22
  Speaker 1: the names and sectors that they are comfortable with. And
• 19:26
  Speaker 1: if you look over the last couple of years, TEX
• 19:28
  Speaker 1: has done extremely well, So this is a known that
• 19:32
  Speaker 1: for an active investor, you know, is what they go with.
• 19:36
  Speaker 1: But in fact, even though I agree that this is
• 19:39
  Speaker 1: definitely a stock picker's market, this is not a good
• 19:42
  Speaker 1: time to buy the index. We would guide the investors
• 19:45
  Speaker 1: towards more defensive sectors financial, healthcare, real estate utilities. We
• 19:51
  Speaker 1: would like for them to actually use the dips in
• 19:54
  Speaker 1: the market between the bear market rallies to increase the
• 19:58
  Speaker 1: quality of the investment portfolio and dig in, dig in
• 20:01
  Speaker 1: for the volatility, dig in for the unknown because this word,
• 20:05
  Speaker 1: you know, we don't know how long it's going to last,
• 20:07
  Speaker 1: and the fact that it is having on global economy
• 20:10
  Speaker 1: in terms of oil and gas prices, in terms of
• 20:13
  Speaker 1: supply chain interruptions, in terms of quest of transportation, and
• 20:17
  Speaker 1: how all of this is going to translate into our
• 20:20
  Speaker 1: economy and in QUOTEA beyond the global level, you know,
• 20:23
  Speaker 1: it is still unknown, so we have to take advantage
• 20:26
  Speaker 1: of the buying opportunities. But instead of just focusing on
• 20:29
  Speaker 1: the sectors that have done well in the past, like technology,
• 20:33
  Speaker 1: we think that it's a much smarter move to go
• 20:35
  Speaker 1: into the sectors that will be positioned well going forward
• 20:39
  Speaker 1: and strategically prepare the portfolios for heightened level of volatility. Katarina,
• 20:44
  Speaker 1: how concerned are you that perhaps this Federal Reserve does
• 20:47
  Speaker 1: not get it right, does not engineer soft landing, and
• 20:50
  Speaker 1: in fact, through their rate policy, pushes this economy into
• 20:54
  Speaker 1: a recession. Is that in your forecast? Oh? Um, I
• 20:59
  Speaker 1: think that said is taking the overall global situation and
• 21:03
  Speaker 1: specifically the level of inflation that is historically unprecedented very seriously.
• 21:09
  Speaker 1: They are, um, there's no certain terms that they said
• 21:14
  Speaker 1: is going to be aggressive in their rate increases, But
• 21:18
  Speaker 1: in my opinion, economy is strong enough to accommodate these
• 21:22
  Speaker 1: rate increases. So when we're looking overall of the economy,
• 21:25
  Speaker 1: we certain they have our share of concerns, but we're
• 21:28
  Speaker 1: not seeing the recession in the books for US at
• 21:32
  Speaker 1: least for this year. Next year remains to be seen,
• 21:36
  Speaker 1: you know, but we are paying close attention to earnings
• 21:38
  Speaker 1: of course, you know the valuations and so far valuations
• 21:42
  Speaker 1: have been looking you know, better than expected. But we
• 21:44
  Speaker 1: think that the negative revisions are going to continue, UM
• 21:48
  Speaker 1: and even though we're not pulling for the recession at
• 21:51
  Speaker 1: the moment, you know, we expect higher volatility and that
• 21:55
  Speaker 1: is the message that you know, we're really conveying to
• 21:58
  Speaker 1: our is our clients in you know a number of
• 22:01
  Speaker 1: different ways. That's why quality of the investment portfolios is
• 22:04
  Speaker 1: more important than ever positive real yield sensitivity all of
• 22:09
  Speaker 1: the holdings, you know, is before we were kind of
• 22:11
  Speaker 1: looking at the dividend income or just generally income generating
• 22:14
  Speaker 1: ability of portfolios from perspective of fixed income is just
• 22:18
  Speaker 1: to kind of value at it. Now it's more important
• 22:21
  Speaker 1: than ever that at this historically you know, high levels
• 22:24
  Speaker 1: of inflation, that that portfolios will be able to weather
• 22:28
  Speaker 1: this storm. But in my opinion said is UM has
• 22:32
  Speaker 1: has very strong resolved in order to get it right
• 22:35
  Speaker 1: this time. All right, Katerina, thanks so much for joining us. Uh.
• 22:38
  Speaker 1: Yet again, we appreciate getting your views of these market
• 22:41
  Speaker 1: and be aware of bear market rallies is kind of
• 22:44
  Speaker 1: My takeaway here Katerina Seminetti, Senior vice president Private Wealth
• 22:47
  Speaker 1: Management at Morgan Stanley. UH, and they've got a huge
• 22:51
  Speaker 1: private wealth business over there, Morgan Stanley. UH. They've really
• 22:55
  Speaker 1: doubled down on that business order last decade. I would
• 22:57
  Speaker 1: say thanks for listening to the Bloomberg Markets podcast. You
• 23:03
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• 23:06
  Speaker 1: whatever podcast platform you prefer. I'm Matt Miller. I'm on
• 23:10
  Speaker 1: Twitter at Matt Miller nineteen seventy three. Put on false Sweeney.
• 23:14
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• 23:16
  Speaker 1: You can always catch us worldwide at Bloomberg Radio