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Examining The Supply Chain, Markets, And ETFs · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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Speaker 1: my co host Matt Miller. Every business day, we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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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. We have been talking
0:23
Speaker 1: about the supply chain crisis ever since the ever Green
0:29
Speaker 1: got stuck sideways in the Suez Canal, at least since then,
0:33
Speaker 1: and um, it's just gotten worse and worse and worse.
0:35
Speaker 1: We have an expert in the studio now to discuss
0:38
Speaker 1: um what they're doing about it in the shipping sector.
0:41
Speaker 1: Greg Hewitt joins US chief executive Officer of d h
0:43
Speaker 1: L Express USA. Greg, how does it look to you? Well,
0:48
Speaker 1: first of all, thank you for coming into the studio.
0:50
Speaker 1: Happy to be here. It's so great to have somebody
0:52
Speaker 1: in person in the studio rather than over zoom or
0:56
Speaker 1: over um face time, or however we over the phone
1:00
Speaker 1: often we use the phone. UM, so it's good to
1:03
Speaker 1: have you in here. Uh, We're glad you could get
1:05
Speaker 1: in here. Can you still get stuff around the world
1:07
Speaker 1: in a timely manner or does it just cost more.
1:10
Speaker 1: How does the supply chain crisis look to you right now?
1:12
Speaker 1: I think if I look at what's happened through the pandemic,
1:15
Speaker 1: you've got first the capacity crunch in the aviation sector
1:20
Speaker 1: with commercial flights coming down, which creates a shortage, which
1:24
Speaker 1: in the early days I say, the early days of
1:26
Speaker 1: this pandemic meant the goods flowed to ocean into fixed
1:30
Speaker 1: carriers like like my company. I think you mentioned the
1:34
Speaker 1: Suez challenges and what's happened in the ports, and all
1:37
Speaker 1: of a sudden capacity on the ocean this year has
1:41
Speaker 1: been constricted as business to business traffic came back, and
1:44
Speaker 1: so that's pushed an even more pressure on fixed networks
1:48
Speaker 1: like ours to handle that additional flow. I think what
1:52
Speaker 1: we've been able to do is make sure we've been
1:54
Speaker 1: consistently investing in aviation capacity than an infrastructure like hubs
1:59
Speaker 1: and gateways to handle more pieces, and then of course
2:02
Speaker 1: hiring people couriers and terminal handling staff and CS people
2:07
Speaker 1: to manage that flow that I'm feeling competent that is
2:09
Speaker 1: peak comes in this year, We're going to be able
2:11
Speaker 1: to handle our piece of the supply chain. But I think, yeah,
2:16
Speaker 1: what us Thanksgiving through till the end of the year,
2:19
Speaker 1: UH is peak season for US, and we'll see about
2:21
Speaker 1: a fifteen percent lifting volume, which isn't a crazy figure
2:25
Speaker 1: for US. We've seen years where it's been more. It's
2:28
Speaker 1: just the whole supply chain is backed up, and so
2:31
Speaker 1: I think if people could send more, they probably would.
2:34
Speaker 1: But because we've got capacity constraints in the air and
2:37
Speaker 1: through our hubs, were just what's a record for you?
2:40
Speaker 1: And I think last year we were over thirty growth.
2:43
Speaker 1: It would have been one of the biggest that we
2:44
Speaker 1: saw last year. If you think of the first year
2:47
Speaker 1: of the pandemic, you saw personal protective equipment in e
2:50
Speaker 1: commercepoon this year it's a bit of a shift. E
2:53
Speaker 1: commerce is still strong, but we're seeing business to business
2:57
Speaker 1: come back. Semiconductor market, automotive sector is really booming, so
3:01
Speaker 1: a little bit heavier for itight and bigger product. We
3:03
Speaker 1: think of porters five forces. It's all about the pricing
3:06
Speaker 1: power of companies. How is your pricing power with your
3:10
Speaker 1: clients and able to pass that onto the consumer? Are
3:12
Speaker 1: you able to do so? Our consumer is willing to
3:15
Speaker 1: absorb that well. I think that's what's been attractive. In
3:18
Speaker 1: fixed network like ours, we haven't kind of moved to
3:22
Speaker 1: market bace pricing. We're in the ocean and in the
3:24
Speaker 1: air you've heard four x, five x pricing and some
3:27
Speaker 1: even ten x. Because we've got a fixed network, we've
3:30
Speaker 1: been able to acquire either our own aircraft, our own capacity,
3:34
Speaker 1: some commercial lift in charters, and we've been able to
3:37
Speaker 1: blend that in. So I think our price point, although
3:39
Speaker 1: it's gone up, hasn't gone up astronomically, and that's why
3:43
Speaker 1: people are trying to move more with us. But you're
3:45
Speaker 1: maintaining margins. We are. Yeah, we're maintaining our margin because
3:48
Speaker 1: we've been able to get more of that air forward
3:51
Speaker 1: or traffic that probably didn't move with us before. So
3:54
Speaker 1: we take on that higher revenue shipment and that's helped
3:57
Speaker 1: balance out the higher cost and infrastructure. And in people,
4:00
Speaker 1: we are seeing the wage rates go up higher on
4:03
Speaker 1: more of an inflationary inflationary plath than it had historically,
4:07
Speaker 1: and we're having to do that battle for talent. Yeah.
4:09
Speaker 1: I we often hear about the battle for talent in
4:12
Speaker 1: trucks and I've always for me my fallback career, and
4:16
Speaker 1: it really like I've always romanticized being a long haul
4:19
Speaker 1: truck driver, but it's not easy to get your commercial license,
4:22
Speaker 1: and it's not easy to operate those big rigs. You
4:24
Speaker 1: need experience. You can't just hire somebody off the street.
4:27
Speaker 1: He doesn't know what he or she is doing. What's
4:29
Speaker 1: the trucking situation look like for you guys, Well, for us,
4:32
Speaker 1: we've got to My business is more small package. I
4:35
Speaker 1: tend to fly stuff to places and then handle line
4:37
Speaker 1: halls locally. We do have some long because you're faster,
4:40
Speaker 1: Because we're speed and we're small parcel delivery. More so,
4:44
Speaker 1: we've been able to secure the trucking network to connect
4:47
Speaker 1: our network where we need it for the larger pieces,
4:50
Speaker 1: either through our own network or through trusted vendors. I
4:53
Speaker 1: think everybody's saying the same thing. There is a we
4:57
Speaker 1: need frontline people call them couriers, suckers, uh, clerical staff
5:02
Speaker 1: and customer service and clearance. We're all looking for those people,
5:05
Speaker 1: and how do you win them over. We do it
5:07
Speaker 1: by trying to build a culture that's a great place
5:09
Speaker 1: to work and combine that with the right wage rate,
5:11
Speaker 1: which is probably the harder or more dynamic thing to
5:14
Speaker 1: move as markets change, you need to stay with them.
5:18
Speaker 1: We've been able to continue to meet those We're gonna
5:20
Speaker 1: hire about two thousand people for this period. We're about there,
5:24
Speaker 1: so we're doing a good job at getting them in.
5:26
Speaker 1: I've heard others might be struggling with that, but I'm
5:28
Speaker 1: confident we'll have the people. And that sort of leads
5:30
Speaker 1: the million dollar question of is it getting worse before
5:34
Speaker 1: it gets better or are we already on the path
5:37
Speaker 1: to getting better. I think what people have asked me
5:40
Speaker 1: is will it change dramatically soon? And I don't think so.
5:44
Speaker 1: I think where we felt that aviation capacity and ocean
5:48
Speaker 1: capacity would be back by now, we're now saying I
5:51
Speaker 1: don't think in the first half of it's going to
5:54
Speaker 1: recover and be back. So we're bracing for the continued
5:57
Speaker 1: need for some of that larger product to move on
6:00
Speaker 1: our fixed network. We're thinking more around this time next year,
6:04
Speaker 1: maybe some of the capacity is back and it blends out.
6:07
Speaker 1: And I think that's my message. We we are carefully
6:10
Speaker 1: managing with our customers how much we can take. I
6:13
Speaker 1: can take more than what you gave me, but I
6:16
Speaker 1: can't take fifty or a hundred. And I think some
6:18
Speaker 1: of what you would be hearing is the market there
6:20
Speaker 1: is more demand and so if if we could, people
6:25
Speaker 1: would want us to take more, but we can't, and
6:27
Speaker 1: that's why we're keeping our pricing I think reasonable, and
6:31
Speaker 1: we're making our service commitments allowing some growth, but not
6:35
Speaker 1: uh infinite growth that some might see it. What what
6:38
Speaker 1: about market here? I mean, I'm just visiting here. I
6:40
Speaker 1: I normally I live in Berlin, so I get almost
6:43
Speaker 1: all my packages via d h L. As you can imagine,
6:46
Speaker 1: right FedEx they do some documents and ups. They work
6:49
Speaker 1: like two or three days a week, so it's my
6:51
Speaker 1: only choice pretty much. Here. It's a much more fragmented market, right.
6:54
Speaker 1: What what's it look like in terms of competition, Well,
6:58
Speaker 1: I think all of it if you look at what
6:59
Speaker 1: comes out through the investor groups for all of us, um,
7:03
Speaker 1: I think all of us are growing, and so I
7:05
Speaker 1: think where we've taken market share is probably on the
7:08
Speaker 1: freight forward or side, the small forwarders who are struggling
7:11
Speaker 1: to get the capacity from commercial airlines. More of that
7:14
Speaker 1: product is moving to US. I tend not to know
7:17
Speaker 1: whether I'm taking it from the other guys or not.
7:19
Speaker 1: We're growing, growing faster than we had in the five
7:21
Speaker 1: years prior. Alright, Greg, thanks so much for coming and
7:24
Speaker 1: really appreciate you joining it. Did you want to know?
7:27
Speaker 1: I think just one of the big key takeaways is
7:28
Speaker 1: we've heard a lot of companies say it will get
7:30
Speaker 1: better in the first half of two, and I think
7:32
Speaker 1: really smart points of this could be longer than we thought,
7:37
Speaker 1: and everyone should just sort of brace themselves. It's not
7:39
Speaker 1: going to be resolved in the first quarter right now.
7:41
Speaker 1: I mean I talked to UM the auto maker CEOs
7:44
Speaker 1: all the time, and they Volkswagen, BMW, Daimler have all
7:48
Speaker 1: said it's gonna get better throughout two, but it's going
7:52
Speaker 1: to be incremental. It's not gonna be like all of
7:54
Speaker 1: a sudden, oh Q two is here and we have
7:56
Speaker 1: enough chips and chips and everything's cool. So it's it's
7:59
Speaker 1: gonna be along a drawn out process. Greg hugh Witt,
8:02
Speaker 1: thanks so much for coming in. Really appreciate your time.
8:04
Speaker 1: Fascinating topic in business. Greg he wod is the chief
8:07
Speaker 1: executive officer of d h L Express USA. Let's get
8:17
Speaker 1: to the chip maker. I'm just excited because Kurt Sievers
8:20
Speaker 1: is here in studio with us, and because they deliver
8:24
Speaker 1: chips to some really important products. They deliver chips to
8:28
Speaker 1: Apple for example, which I think we all UH love
8:31
Speaker 1: and use. They deliver chips to Robert Bosch, which helps
8:35
Speaker 1: make the A B S and all the sensors that
8:37
Speaker 1: I needed to run my motorcycles. UM, Kurt, talk to
8:41
Speaker 1: us about what what what the supply chain bottleneck looks
8:45
Speaker 1: like right now in terms of your industry, in terms
8:47
Speaker 1: of your company. Yeah, so, first of all, thanks for
8:49
Speaker 1: having me today. UM. I I love to speak about
8:52
Speaker 1: the supply chain because in the way we look at
8:55
Speaker 1: this from a two month perspective, which is all standing,
8:58
Speaker 1: so the supply chain is still watched that the demand
9:01
Speaker 1: is outstripping supply capability. So while we are growing this
9:04
Speaker 1: year like year over here, we are still supply limited. UH.
9:10
Speaker 1: In our earning school last week we also informed more
9:13
Speaker 1: specifically that we continue to be limited from a supply
9:16
Speaker 1: perspective in Q four UH, and I think at least
9:20
Speaker 1: in parts of the business, this is going to continue
9:23
Speaker 1: probably through the most part of next year. It's interesting.
9:27
Speaker 1: I know we want to get to some of the
9:28
Speaker 1: supply outlooks, but from a demand perspective as well, analysts
9:32
Speaker 1: are saying that You're revenue projections still look conservative just
9:36
Speaker 1: given the demand from automotive. Matt's a big fan of
9:38
Speaker 1: automotive industrial. Is that really the segments that you see
9:43
Speaker 1: carrying us through this big demand cycle? Yeah? You you
9:46
Speaker 1: got to think about n XP in the such a
9:48
Speaker 1: way that about three quarters of our overall revenue, which
9:51
Speaker 1: is eleven billion dollars this year, is going into automotive
9:55
Speaker 1: and industrial. And it is borg Warner to Bosh the
9:59
Speaker 1: exactly BMW exactly all ending up in cars, but we
10:02
Speaker 1: are shipping to Tier one suppliers like the ones you
10:05
Speaker 1: you just mentioned. That business is just booming like I've
10:09
Speaker 1: never seen it before in the past twenty five years.
10:11
Speaker 1: To give you a feel, our automotive revenue this year,
10:14
Speaker 1: which is half of n XP, we'll grow about forty
10:17
Speaker 1: five percent year over year. Now you will say, well,
10:20
Speaker 1: that's a that's a week compared because last year, because
10:23
Speaker 1: of the pandemic, everything was low anyway, but it's also
10:26
Speaker 1: thirty percent above So even if you're compared to a
10:29
Speaker 1: pre pandemic year from a car production perspective, we ship
10:33
Speaker 1: thirty more and it's still indeed not enough. As you said, Now,
10:37
Speaker 1: why is that it's just an explosion of content increase.
10:42
Speaker 1: One reason is electric cars. I mean, we all see
10:45
Speaker 1: that there's really a sharp rise of of the of
10:47
Speaker 1: the rate of electric cars. We think it's going to
10:50
Speaker 1: be almost of the car production this year globally is
10:53
Speaker 1: going to be either hybrid or fully electric, which is
10:55
Speaker 1: a big number. I mean, it's becoming material and that
10:59
Speaker 1: matters to us, as they have about twice the semiconductor
11:03
Speaker 1: content to a combustion engine car. So this is this
11:06
Speaker 1: is where the chip amount is coming from. I mean
11:07
Speaker 1: I was talking with Cloudio Dominicali recently, who's the CEO
11:10
Speaker 1: of Ducati, and he was telling me the chip content
11:14
Speaker 1: is increasing at such a rate that sometimes there are
11:16
Speaker 1: parts he's not even aware need chips. For example, the
11:19
Speaker 1: headlights in his motorcycles now need chips because they're controlling
11:24
Speaker 1: the led beams to turn in before you turn a corner.
11:27
Speaker 1: So it's amazing the amount of content that's going in.
11:30
Speaker 1: When does that stop? What? What what's the what's the
11:33
Speaker 1: terminal rate there? I I don't I don't see a
11:37
Speaker 1: stop at all. Because all the big megatrends which are
11:40
Speaker 1: driving innovation and automotive and those are electrification, autonomy. Think
11:45
Speaker 1: about the whole idea of the autonomous cars and safer cars,
11:48
Speaker 1: so all these assistance systems which are actually protecting you
11:51
Speaker 1: from from bad accidents, and the connected car, the whole
11:54
Speaker 1: idea that your car is actually getting software updates over
11:58
Speaker 1: the air, or that your car can be can get
12:01
Speaker 1: better performance through software updates. All of those innovation streams
12:06
Speaker 1: rely uniquely on semiconductors. So no, I actually don't see
12:11
Speaker 1: that ending. I would actually say a car in the
12:14
Speaker 1: in the next ten fifteen years is just becoming more
12:17
Speaker 1: and more silicon on wheels. Talk to us about the
12:20
Speaker 1: supply side of the equation. I know here in the US,
12:23
Speaker 1: the Biden administration has talked a lot about um bringing
12:28
Speaker 1: more chips to being manufactured domestically, trying to protect that
12:32
Speaker 1: supply chain. But will it ramp up fast enough? How
12:37
Speaker 1: do you see that supply and if there is any
12:39
Speaker 1: issues here in the US. I think the the entire
12:43
Speaker 1: government initiative is fantastic. So I've been part of this
12:46
Speaker 1: right from the start. I think we started in April
12:48
Speaker 1: with the White House Summit under the leadership of Joe Biden,
12:53
Speaker 1: and I really also from a global perspective, I like
12:56
Speaker 1: the fact that the US is very proactive to address
12:59
Speaker 1: this problem. I think the Chips Act with a fifty
13:01
Speaker 1: two billion dollar bill is going to make a difference. Now,
13:07
Speaker 1: is it fast enough, No, it just can't be fast enough.
13:10
Speaker 1: It takes three years to build a chip factory. Ah.
13:14
Speaker 1: Yet if you don't start today, it's not going to
13:17
Speaker 1: be there in three years. So that's why. Since this
13:20
Speaker 1: is a structural move, as we just discussed, I mean,
13:22
Speaker 1: these are not like short term spikes from a demand perspective,
13:25
Speaker 1: but it's very sustainable. For that reason, I think it
13:29
Speaker 1: does make sense. We have three large facilities here in
13:32
Speaker 1: the US, so we have two big waver FAPs, so
13:34
Speaker 1: waivers are the course in in Austin, Texas and one
13:39
Speaker 1: in Arizona. Uh. And we really think it's the right
13:44
Speaker 1: way to address the problem to look at domestic production
13:47
Speaker 1: and try to boost it as much as we can. Now, again,
13:49
Speaker 1: it's not going to be fast enough if you think
13:51
Speaker 1: about tomorrow mornings supply challenge, but it will be good
13:54
Speaker 1: for the supply challenges of the of the next five years.
13:57
Speaker 1: I think it's also interesting it has a lot about
13:59
Speaker 1: the competitiveness of those states that you put your wafer
14:02
Speaker 1: fabs there, but we don't have time to go into that. Kurt,
14:04
Speaker 1: thanks so much for joining us. Kurt Sievers, chief executive
14:06
Speaker 1: officer of n XP Semiconductors. Let's talk about what's going
14:13
Speaker 1: on in these markets. Andrews Person joins US, chief investment
14:16
Speaker 1: Officer of Global fixed Income at New Veen and UM Andres.
14:20
Speaker 1: In terms of what we see in rates today, it's
14:24
Speaker 1: been pretty uh well, not just today, over the last
14:27
Speaker 1: few days, it's been pretty interesting. Does the US tenure
14:30
Speaker 1: one fifties six one seven make sense to you given
14:34
Speaker 1: um uh cp I at six point two percent year
14:37
Speaker 1: over year? Yeah, thanks, thanks Matt um. Yeah, I would
14:42
Speaker 1: say I would say that makes a lot more sense
14:45
Speaker 1: now than at least earlier in the week or even
14:47
Speaker 1: last week. We think that the rally last week really
14:52
Speaker 1: was really overdone in online that he also kind of
14:55
Speaker 1: moving too lowly and too low and at this point
14:58
Speaker 1: kind of catching up a bit for the CPI and
15:01
Speaker 1: even the thirty year options. So so generally our view
15:04
Speaker 1: is that you also are still going to be grinding higher,
15:07
Speaker 1: and we're expecting something like one five of the ten
15:11
Speaker 1: year later this year, so we still feel like there's
15:14
Speaker 1: room for yields to continue to move higher in the tenure.
15:17
Speaker 1: But I think there's a lot of technical factors that
15:20
Speaker 1: were impacting treasures more broadly, a lot of cross currents
15:23
Speaker 1: going on. So so some of these near term moves
15:26
Speaker 1: that we've been seeing, it's just kind of the market
15:28
Speaker 1: having to digest a lot of the different data points
15:31
Speaker 1: coming through, and then the different technicals that they are
15:35
Speaker 1: playing in a factor as well. So I would expect
15:38
Speaker 1: still volatility here for for the next few months as
15:41
Speaker 1: we're kind of shifting through all these cross times. And
15:44
Speaker 1: I'm glad that you brought up the technicals because I
15:47
Speaker 1: think a lot of market participants have been confused while
15:50
Speaker 1: we're still at a one fifty roughly on the tenure
15:53
Speaker 1: and below two percent on twenties and thirties, and a
15:56
Speaker 1: lot of this has been um As you say, technical factors,
16:01
Speaker 1: When do you expect those to um fall down a
16:05
Speaker 1: little bit and yields to rise reflecting more the fundamental
16:10
Speaker 1: data that you describe. Yeah, No, I think it's going
16:14
Speaker 1: to take a little bit more time here. I think,
16:17
Speaker 1: you know, we're still very unprecedented times with central banks
16:21
Speaker 1: and obviously just that being incredibly involved in the markets
16:24
Speaker 1: and the tapering is is obviously top of mind from
16:28
Speaker 1: all investors, and that is going to be I think
16:31
Speaker 1: the key factor to start that normalization that you're kind
16:36
Speaker 1: of referring to my mind. So we're moving into the
16:39
Speaker 1: tapering kind of top pace over the next level months.
16:42
Speaker 1: Um some of that you know, unprecedented kind of TI
16:45
Speaker 1: low levels that we've been seeing should be starting to online.
16:48
Speaker 1: So it's a little bit of that supply demand aspect
16:51
Speaker 1: of it. But um, I don't think it's going to happen,
16:54
Speaker 1: you know, overnight. We saw in the thirty year option
16:57
Speaker 1: earlier this this week that it's it's still a pretty
17:01
Speaker 1: rocky environment. The Street had to take down a big
17:04
Speaker 1: portion of that and had the longest tails and two
17:06
Speaker 1: thousand and eleven, so it's really you can really still
17:10
Speaker 1: tell that there's a lot of movement parts and a
17:13
Speaker 1: lot of tactical factors that I think will take some time,
17:15
Speaker 1: probably several months before we kind of work through that.
17:18
Speaker 1: What are you expecting in terms of corporate issuance in
17:22
Speaker 1: this environment, I mean, does it do do you see
17:25
Speaker 1: them still running out to raise as much as they can. Yeah,
17:30
Speaker 1: we were expecting still a very healthy corporate issuance, both
17:34
Speaker 1: from the investment rates side and the high side, perhaps
17:36
Speaker 1: not at the levels that we've seen here today because
17:39
Speaker 1: a lot of the company has naturally been able to
17:42
Speaker 1: take advantage of the lower rates, kind of locking in
17:45
Speaker 1: some nice coupons and and kicking that maturity wall out,
17:49
Speaker 1: which we think is healthy. But as companies are now
17:52
Speaker 1: shifting towards a little bit more comfortable around expanding and
17:56
Speaker 1: spending capex and thinking through you know, the next phase,
18:00
Speaker 1: there's gonna be some some funding needs from that perspective
18:03
Speaker 1: as well. So I think we're gonna have a little
18:05
Speaker 1: bit better balance perhaps going into two thousand and twenty two,
18:08
Speaker 1: but generally we would expect still quite an active new
18:13
Speaker 1: issuance um at pace going into next year. And when
18:17
Speaker 1: you take a look at the Bloomberg terminal, I'm just
18:19
Speaker 1: hooking taking a look at investment grade spreads over treasuries.
18:22
Speaker 1: I mean, you're still a really tight eight seven basis
18:25
Speaker 1: points high yield just two d and eighty basis points
18:28
Speaker 1: and spread over treasuries. Is that sound fundamentally strong to you?
18:36
Speaker 1: Or is a lot of this fomo and yield seeking
18:39
Speaker 1: because there's nowhere else to get yield in this market,
18:44
Speaker 1: I would say there there's a little bit of both.
18:47
Speaker 1: We've kind of talked about the markets at these levels
18:51
Speaker 1: not being particularly exciting from a spread perspective, but we
18:54
Speaker 1: do think they're gonna be holding up. We talked about,
18:57
Speaker 1: you know, markets being sort of priced for a reality,
18:59
Speaker 1: not price for perfection. The reality is that we are
19:03
Speaker 1: seeing very strong fundamentals. Economic growth is healthy, the faults
19:08
Speaker 1: are expected to be record lows around one percent, perhaps
19:12
Speaker 1: even lower. So I do think that we do have
19:16
Speaker 1: a lot of factors that are playing in are justifying
19:19
Speaker 1: where we are from from current levels. Um that being sad,
19:23
Speaker 1: I think just the fact that we have low yield
19:26
Speaker 1: environment across the globe continues to be the main driver
19:29
Speaker 1: of investors reaching for yields. So our expectation is that
19:34
Speaker 1: this kind of carry trade will continue and being an
19:38
Speaker 1: attractive way to playing fixed income, and we continue to
19:42
Speaker 1: be more comfortable taking corporate credit risk over treasuries, and
19:46
Speaker 1: we're also comfortable kind of dipping down to the lower
19:49
Speaker 1: quality parts of the credit markets. Anders, thanks so much
19:54
Speaker 1: for joining us today, Honors person there, chief investment officer
19:57
Speaker 1: of Global fixed Income at Nouvene talking to US about
20:00
Speaker 1: the rates situation and his inflation outlook as well. Let's
20:07
Speaker 1: get over right now to Frank's Frank Holmes joining us.
20:12
Speaker 1: As I had said before, he is the chief Investment
20:15
Speaker 1: Officer as well as the CEO US Global Investors, and
20:19
Speaker 1: we're gonna talk about some of the E t F,
20:23
Speaker 1: some of the hot products and the jets. E t
20:25
Speaker 1: F is one that I want to start with as
20:27
Speaker 1: we reopen um and get back to normal life again.
20:32
Speaker 1: What do you think about travel and the consumer? Well,
20:39
Speaker 1: I think we're gonna have a huge surgeon and travel
20:43
Speaker 1: with November eight allowing Europeans to fly in without being
20:47
Speaker 1: stuck in Mexico City or Canada for two weeks. I
20:50
Speaker 1: recently flew to Sweden full flight, going over half empty
20:54
Speaker 1: coming back. I flew to Dubai last week and same thing,
20:58
Speaker 1: full flying over empty coming back. Now, I think it
21:02
Speaker 1: is wide open, especially coming into Thanksgiving and the Christmas season,
21:07
Speaker 1: We're gonna have a huge inbound from Europe. Interesting though
21:10
Speaker 1: about the health of the consumer as well. In many
21:13
Speaker 1: cases they've said that the consumer is at least some
21:17
Speaker 1: of them more wealthy now than they were before the pandemic,
21:20
Speaker 1: and that pent up demand and that willingness to travel
21:23
Speaker 1: is in full force. How are you thinking about that
21:26
Speaker 1: as well? When you think about the consumer. Absolutely, just
21:31
Speaker 1: take a look at hotel rates in New York City.
21:35
Speaker 1: It's just amazing to see how the price tig has
21:38
Speaker 1: gone up dramatically. And we look at Florida, we look
21:41
Speaker 1: at Southwest is flying from Phoenix to Cabo St. Lucas
21:46
Speaker 1: in Mexico for tourism. So there's no doubt tourism as
21:50
Speaker 1: robust in Las Vegas and right across the nation. So
21:55
Speaker 1: I think we're gonna see big travel everyone in the
21:59
Speaker 1: Northern States, particular the US being able to find new
22:02
Speaker 1: locations in the self, and the same thing I'm told
22:05
Speaker 1: is hopping. In Europe. There's a couple of new airlines
22:07
Speaker 1: have been created like Breeze this year, and that's predominantly
22:11
Speaker 1: for the tourists and for the person wants to get
22:13
Speaker 1: out of cold weather imp myself. In fact, don't you. Telecom,
22:16
Speaker 1: the German incumbent, today said it expects a better full
22:20
Speaker 1: year profit than previously because European tourists are moving around
22:25
Speaker 1: country to country, roaming rates are going up and it's
22:27
Speaker 1: making bigger margins. There is still though a supply and
22:31
Speaker 1: demand mismatch. I mean, on the good side, you see that.
22:34
Speaker 1: But Frank, you brought it up in terms of the
22:36
Speaker 1: flights coming back are empty and I know, Um, I
22:39
Speaker 1: just flew in here from Berlin on a on a
22:41
Speaker 1: half empty flight and um, the products that I need
22:45
Speaker 1: aren't quite there yet, the legs that I need, Um,
22:49
Speaker 1: how long do you think that's going to take to
22:51
Speaker 1: work out? Because we're almost at Thanksgiving. Yes, I think that,
22:56
Speaker 1: I think totally. It was a target the other day
22:58
Speaker 1: and they said buying Christmas lights or anything you want
23:01
Speaker 1: to buy him. Now we have nothing to replace until
23:03
Speaker 1: the new year, so inventory is very tight. So it's
23:06
Speaker 1: interesting in all the for jets, we've had huge inflows
23:09
Speaker 1: this past week with this November eighth dight on the
23:12
Speaker 1: expectations of bigger travel. Uh. And when I created the jets,
23:16
Speaker 1: it was because I noticed back six years ago that
23:19
Speaker 1: there was a huge pricing power of the airlines were
23:23
Speaker 1: raising their prices and they had all these inciliatory fees
23:25
Speaker 1: and they did take off before COVID. Well, what I'm
23:29
Speaker 1: noticing now is the cargo cargo were the best performing
23:33
Speaker 1: airlines during the crisis and they've come out of it
23:35
Speaker 1: making huge increases in their fees for high blockchain, with
23:40
Speaker 1: some chair off getting equipment from Japan and as such
23:43
Speaker 1: as in China and South Korea flying over to Europe.
23:48
Speaker 1: It's it costs up tenfold. The CEO of d h
23:53
Speaker 1: L USA, he was telling us there forwarding margins are
23:57
Speaker 1: making his business this year. Absolutely, So we're launching a
24:01
Speaker 1: new et F called c and see this guy and
24:05
Speaker 1: it's dry ships and airlines, just cargo. Because I believe
24:13
Speaker 1: we're going to live with this inflation for the next
24:16
Speaker 1: three years. It's just not going to quickly resolve itself,
24:19
Speaker 1: all right. So I'm going to steal the classic Matt
24:22
Speaker 1: Miller question. When we hear higher inflation, the recent narrative
24:26
Speaker 1: is said, oh, maybe bitcoin or cryptocurrencies or the new
24:30
Speaker 1: inflationary hedge. Maybe they're replacing gold is the store of value.
24:34
Speaker 1: And then you see crypto and bitcoin fall a little
24:37
Speaker 1: bit today despite some of the higher inflationary figures that
24:41
Speaker 1: we've gotten. How are you thinking about crypto as a
24:44
Speaker 1: store of value as an inflationary hedge? Did you did
24:47
Speaker 1: you hear Frank just say blockchain? I thought I heard
24:50
Speaker 1: why I just cut up my next question. Well, yeah,
24:55
Speaker 1: I you know yours ago four years ago, I couldn't
24:58
Speaker 1: create an et F and it's still not been down.
25:00
Speaker 1: It could buy bitcoin, etherorium. So I launched high Blockchain Technology,
25:04
Speaker 1: which is the first cryptal mining company. And what I
25:06
Speaker 1: did see and for the reason for that is because
25:08
Speaker 1: it's all over the world. Like Bloomberg television, Bloomberg radio
25:12
Speaker 1: is everywhere, well, investing in crypto is everywhere. Investing in
25:18
Speaker 1: stocks is not everywhere, sold out conferences in Miami, in Berlin, uh,
25:24
Speaker 1: in Paris, in London, England and Singapore. UM. So, I
25:28
Speaker 1: think that the crypto concept and bitcoin is a store value,
25:33
Speaker 1: no doubt, has huge legs to it. Uh And it
25:36
Speaker 1: also has a huge demographic shift. In the next twenty
25:40
Speaker 1: five years, Baby boomers like myself will be transferring ten
25:45
Speaker 1: three in dollars to Generation X Y and millennials, and
25:50
Speaker 1: they're all used to digital digital money. I grew up
25:52
Speaker 1: with monopoly money. They grew up with digital money from gaming.
25:55
Speaker 1: So I do think there's a big shift, and I
25:58
Speaker 1: do think that bitcoin is becoming a store of value.
26:01
Speaker 1: But you really can't wear it unless it looks like gold.
26:04
Speaker 1: So gold is an important part of a gold is
26:07
Speaker 1: gold jewelry and all demand for gold is for love
26:12
Speaker 1: and it's highly correlated to rising g D peper capital
26:15
Speaker 1: in India and China in the Middle East. So I
26:18
Speaker 1: think the gold is the big lagging trade here in
26:20
Speaker 1: the next couple of months. It's way undervalued on a
26:23
Speaker 1: relative basis, quite well over the last week. I mean,
26:26
Speaker 1: I think it came down a little bit today. Let
26:28
Speaker 1: me just pull up X A U here. And the
26:32
Speaker 1: thing is gold is also you can have an e
26:35
Speaker 1: T f UM powered by the underlying with gold, and
26:38
Speaker 1: you can't have that yet with bitcoin, at least not
26:39
Speaker 1: in the US. You need electricity for your bitcoin to
26:43
Speaker 1: be functioning. Uh. For gold, Uh like when Dubai right
26:47
Speaker 1: at the airport, you can get care of gold jewelry
26:50
Speaker 1: and you pay by the graham, by the different designers, uh,
26:55
Speaker 1: and you can convert it to cash. So I think
26:58
Speaker 1: that you know a big part of the world of
27:00
Speaker 1: the US gold has treated both as jewelry and love
27:04
Speaker 1: and money. Frank, great talking to you as always, UM,
27:09
Speaker 1: real pleasure getting your insight and also to talk about
27:13
Speaker 1: these products that you've created in the business that that
27:15
Speaker 1: you've created pretty impressive. Frank Home, CEO and ce IO
27:19
Speaker 1: at US Global Investors, talking to us about his et
27:22
Speaker 1: F products, as well as his take on the market
27:26
Speaker 1: and inflation hedges. Thanks for listening to the Bloomberg Markets podcast.
27:32
Speaker 1: You can subscribe and listen to interviews with Apple Podcasts
27:35
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
27:39
Speaker 1: on Twitter at Matt Miller, three pt on Fall Sweeney
27:43
Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast. You
27:46
Speaker 1: can always catch us worldwide at Bloomberg Radio.