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Why Millions of People Have Dived Into Day Trading · Bloomberg Intelligence

0:01
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
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Speaker 1: with my co host of Bonnie Quinn. Every business day
0:06
Speaker 1: we bring you interviews from CEOs, A, market pros, and
0:09
Speaker 1: Bloomberg experts, along with essential market moving news. Find the
0:12
Speaker 1: Bloomberg Markets Podcast on Apple Podcasts or wherever you listen
0:16
Speaker 1: to podcasts, and on Bloomberg dot com. It is time
0:20
Speaker 1: for Bloomberg Opinion. We welcome Bloomberg Opinion columns. Jared Dillion.
0:25
Speaker 1: He's also an editor and publisher of the Daily Dirton
0:27
Speaker 1: app and investment strategists at Malden Economics based in Myrtle Beach,
0:32
Speaker 1: South Carolina. Jared, thanks so much for joining us here.
0:34
Speaker 1: Interesting column you had about mom and pop trading, this
0:38
Speaker 1: robin Hood app. This reminded me of kind of the
0:41
Speaker 1: late nineties when we had a lot of individual retail
0:45
Speaker 1: investors get in there really speculating at what turned out
0:48
Speaker 1: in hindsight in March of two thousand to be the
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Speaker 1: peak and the bubble, particularly the dot com boom. Give
0:54
Speaker 1: us a sense of kind of what's happening now with
0:56
Speaker 1: these mom and pop investors and all the trading apps
0:58
Speaker 1: that are out there. Yeah, I wouldn't even say it's
1:01
Speaker 1: really modern pop. I mean these are young people. I mean,
1:03
Speaker 1: these are people in their twenties and early thirties, and
1:07
Speaker 1: I think people underestimate the scale of what is happening.
1:13
Speaker 1: I mean, you saw that robin Hood had three million
1:16
Speaker 1: accounts opened in the first quarter of a loan. You're
1:19
Speaker 1: talking about You're talking about just millions of people that
1:22
Speaker 1: have dived into day trading. And the interesting thing about
1:25
Speaker 1: this is that you know, for the last ten years
1:28
Speaker 1: there were a lot of retail investors that um jumped
1:32
Speaker 1: into the market, but they did it the right way.
1:34
Speaker 1: They did it slow, they did it with index funds,
1:37
Speaker 1: they paid low fees, and just over the last six months,
1:41
Speaker 1: everything has gone out the window. Jared, before we get
1:45
Speaker 1: to why no one should blame the FED for robin
1:47
Speaker 1: Hood and it's its sins and the sins thative emanated
1:50
Speaker 1: promis users, talk to us about what you can actually
1:53
Speaker 1: do on robin hood financials up because it seems like
1:55
Speaker 1: you can do some really sophisticated financial trades. You're not
1:59
Speaker 1: talking about just buying stocks and not even just shorting stocks.
2:03
Speaker 1: There's plenty of other things that you can do, and
2:06
Speaker 1: there doesn't appear to be a limit to the amount
2:09
Speaker 1: of leverage you can take. Yeah, I mean, robin Hood
2:13
Speaker 1: is a platform that allows options trading, and you know,
2:17
Speaker 1: I used to work in the options industry, That's where
2:19
Speaker 1: I started my career. And if you look back at
2:23
Speaker 1: you know, back then, total options volume in a given
2:26
Speaker 1: day across the Fork exchanges would be about two million contracts.
2:30
Speaker 1: Now it's up to about twelve million contracts. And these
2:34
Speaker 1: people are, you know, very uneddicated when it comes to options. Uh,
2:38
Speaker 1: they don't really know anything about option pricing at all,
2:40
Speaker 1: and they're just buying upside calls in stocks just for
2:45
Speaker 1: extreme amounts of leverage, just under the idea that stocks
2:49
Speaker 1: always go up. So, um, I think this is not
2:53
Speaker 1: going to end too well. Jared. I'm trying to get
2:56
Speaker 1: a sense of kind of what's driving this move into
2:59
Speaker 1: this retail trading in the in the you know, the
3:02
Speaker 1: robin Hood apps and all of that, and a lot
3:04
Speaker 1: of these young folks coming in into the market. And
3:06
Speaker 1: I've read it might be simply the fact that we're
3:09
Speaker 1: all stuck at home, we're all quarantined. Uh, there's no
3:13
Speaker 1: sports to bet on, there's no casinos to go to
3:16
Speaker 1: and to satisfy that speculative urge. Maybe folks are turning
3:20
Speaker 1: to the stock market, particularly the options market. Does that
3:23
Speaker 1: have value in your opinion? Now, that's that's absolutely what's
3:27
Speaker 1: going on. People are at home and board you know.
3:30
Speaker 1: I actually, um, you know, for five years I taught
3:34
Speaker 1: at the local university and I checked in with one
3:37
Speaker 1: of my former students and he's, you know, living in
3:40
Speaker 1: his mom's basement, quarantined and he's trading you know. Um,
3:46
Speaker 1: So it's a it's a function of it's a function
3:49
Speaker 1: of boredom. It's a function of getting no action on
3:52
Speaker 1: sports betting. I think it's also partially a function of
3:57
Speaker 1: the stimulus and unemployment money that's been going out because
4:00
Speaker 1: people are speculating with very small amounts of money. You know,
4:04
Speaker 1: I get questions about people with you know, they have
4:07
Speaker 1: a thousand dollars to put the work, and they're asking
4:10
Speaker 1: about how to trade stocks. And this goes to the
4:14
Speaker 1: kernel of your column because you say that rather than
4:18
Speaker 1: it brings with liquidity out there and thanks to the Fed,
4:22
Speaker 1: the real villains here are the discount brokers who have
4:24
Speaker 1: caught trading commissions to zero. Explained that Jared, Yeah, I mean,
4:30
Speaker 1: you know, commissions were never a huge portion of the
4:33
Speaker 1: discount brokers revenue. They were about or less. Uh, And
4:38
Speaker 1: these were competitive forces that drove commissions lower. I mean,
4:41
Speaker 1: it wasn't anything finister, It wasn't really a marketing employ
4:45
Speaker 1: to try to get more people to trade. It was
4:47
Speaker 1: just competitive pressures that drove commissions lower. So that's really
4:52
Speaker 1: you know, it's it's just like supply and demand. You know,
4:55
Speaker 1: if you lower the price of something, there's going to
4:57
Speaker 1: be more demand for it. And you've seen trading volumes
5:01
Speaker 1: just absolutely explode since there's no commission. Now, I've always
5:05
Speaker 1: been of the view that commissions and fees are not
5:08
Speaker 1: necessarily a bad thing because they shape investor behavior and
5:13
Speaker 1: then encourage buy and hold strategy. Just briefly, Jared, how
5:17
Speaker 1: much has this to do with Dave Portnoy, whose course
5:20
Speaker 1: Barstool Sports is founder and really hyped Robin Hood Financial
5:24
Speaker 1: and his day trading. I think it has quite a
5:28
Speaker 1: bit to do with it, actually, I mean, he has
5:29
Speaker 1: a pretty large following, and I think, you know, I
5:33
Speaker 1: think people take him a bit too literally and a
5:34
Speaker 1: bit too seriously. You know, he's gone after people like
5:38
Speaker 1: Warren Buffett, and Jim Simons and stuff like that, and
5:41
Speaker 1: he says he's the greatest day trader in the world.
5:43
Speaker 1: But you know, he's given confidence to a lot of
5:45
Speaker 1: people that they can do the same thing. Yeah. Man,
5:48
Speaker 1: it's just not that easy. As of course anyone who's
5:51
Speaker 1: done it for a living it can attest to Jared Dillion,
5:53
Speaker 1: his columnist for Bloomberg Opinion. He's editor and publisher of
5:56
Speaker 1: The Daily Dirt Nap also investment Strategists Add Mold than Economics,
6:00
Speaker 1: And of course he's the author of that book that
6:01
Speaker 1: I'm sure you've all read, Street Freak, Money and man
6:03
Speaker 1: as At Lehman Brothers, and another novel, All The Evil
6:08
Speaker 1: of This World. Jar Dileona, thank you for joining Paul.
6:11
Speaker 1: Can I ask you if you have a robin Hood
6:15
Speaker 1: trading account. I do not, absolutely do not. I wouldn't
6:18
Speaker 1: be allowed to. I'm not like Tom Keene. I'm not
6:21
Speaker 1: long the triple leverage all cash fund. But I'm also
6:24
Speaker 1: not day trading. I'm also not a gamer, which doesn't help. Apparently,
6:27
Speaker 1: if you're a trainer, you've got faster fingers. Some of
6:32
Speaker 1: the stocks that has performed exceptionally well during this pandemic
6:37
Speaker 1: is Amazon dot Com. The stock is up forty five
6:39
Speaker 1: percent year to date. It sports a market cap of
6:42
Speaker 1: one point three four trillion dollars. With a t company
6:47
Speaker 1: got and the stock got a new supporter this week
6:50
Speaker 1: on Wall Street. Law Martin senior analysts that need him,
6:52
Speaker 1: a company based in Los Angeles, initiated coverage this week
6:55
Speaker 1: with a by rating a thirty price target. Stocks currently
6:59
Speaker 1: trading at HUDD eighty three. Laura, thanks so much for
7:02
Speaker 1: joining us here. Give us your thesis on Amazon right here. So,
7:08
Speaker 1: I think the most important thing we're saying that's new
7:11
Speaker 1: on this name fall is that this is really a
7:13
Speaker 1: services company and not a product company, which is to say,
7:17
Speaker 1: because consumers relationships with with Amazon is from a consumer
7:21
Speaker 1: pacing where they think of it as an e commerce company.
7:23
Speaker 1: But today of his company's revenue comes from services, and
7:28
Speaker 1: they have an eight percent profit margins compared to e
7:30
Speaker 1: commerce which is a three percent profit margin. So when
7:33
Speaker 1: you look at contributions to actually operating profits, it really
7:38
Speaker 1: comes from services like prime video, like music, like advertising
7:42
Speaker 1: a huge here. We think they do eight billion of advertising.
7:45
Speaker 1: So together we value what we call the media businesses
7:48
Speaker 1: at five billion, which is about the same size as aws,
7:51
Speaker 1: which together means it's about eight services are about eight
7:54
Speaker 1: percent of the value here at Amacle, Laura, this is
7:57
Speaker 1: something that's an Amazon's DNA. You talk about Amazon having
8:01
Speaker 1: a track record of expanding total addressable market decisions, so
8:05
Speaker 1: it's just constantly, constantly expanding the people that it reaches,
8:09
Speaker 1: and all of those decisions are driving higher profitability and
8:12
Speaker 1: lower shareholder risk. So it feels like this may never end.
8:17
Speaker 1: I think that's possible. I think one of these things
8:19
Speaker 1: I cover oppur as well, and I think both Apple
8:22
Speaker 1: and Amazon they're about the same size of company, two
8:24
Speaker 1: seventy billion dollars a year of revenue. I think they
8:28
Speaker 1: both generate sixty billion dollars a free cash flow a year.
8:31
Speaker 1: Apple turns around and buys and shares and so it
8:33
Speaker 1: drives higher earnings for share growth with that. I think
8:36
Speaker 1: what Amazon does, by contrast, it takes creean of that
8:40
Speaker 1: and invest in what you just characterize as these can
8:42
Speaker 1: expanding you know, new verticals that are non visible, and
8:46
Speaker 1: it turns them into a WUS or advertising or groceries
8:50
Speaker 1: or delivery last mile delivery innovations, and then it reports
8:54
Speaker 1: out much lower free cash flow and much lower margins
8:57
Speaker 1: to apprentices of the incometry. So I think might never
9:00
Speaker 1: end because this is how Basis is wired. They have
9:03
Speaker 1: grown in these ways that for the last twenty years
9:05
Speaker 1: under the CEO Jeff Basis. So Laura talked to us
9:08
Speaker 1: a little bit about the uh cloud business that's really
9:11
Speaker 1: been a you know, a profit driver for Amazon for
9:15
Speaker 1: years and years. Investors were, I guess used to our
9:18
Speaker 1: conditioned to little to no profitability coming out of the
9:20
Speaker 1: core e commerce business, but once they really started building
9:23
Speaker 1: out the cloud business, it's been a real profit generator
9:26
Speaker 1: for them. How do you view the growth and the
9:28
Speaker 1: profitability of that business? You know, I think that it's
9:31
Speaker 1: important they break out the cloud business is separately financially,
9:35
Speaker 1: so there's been a lot of good financial analysis. What
9:38
Speaker 1: we would say of our value added in this messaging
9:41
Speaker 1: is that we think this is a playbook that you
9:43
Speaker 1: should look at Amazon repeat they're doing it now and
9:45
Speaker 1: advertising and what happens is when Amazon gets big enough
9:48
Speaker 1: it's something they're successful at, they break it out separately
9:51
Speaker 1: so you can value it separately. So um, we think
9:55
Speaker 1: that they do about eighteen billion dollars of advertising today,
9:58
Speaker 1: which has a profit margin and that business is soon
10:02
Speaker 1: going to get big enough. We think it is. Together
10:04
Speaker 1: the services businesses are almost as large as a WS.
10:08
Speaker 1: So we think at some point in the next two
10:10
Speaker 1: years they will break out these what I would call
10:13
Speaker 1: their media businesses or their media revenue streams into a
10:15
Speaker 1: separate business, and you will be able to value it
10:17
Speaker 1: and it will be more profitable than a WS. But
10:20
Speaker 1: right now it's hidden in this massive, you know, conglomerate.
10:24
Speaker 1: So I always call that. What's important about AWS is
10:27
Speaker 1: it is a playbook for how Amazon runs businesses and
10:30
Speaker 1: then uncovers it's hidden value over time so that Wall
10:34
Speaker 1: Street can more easily value it. You know, you talk
10:37
Speaker 1: about Amazon also having media asset values about five billion dollars.
10:41
Speaker 1: What happens there where a dollars going Laura, So there's
10:46
Speaker 1: advertising in their subscription. That prime subscription product has a
10:50
Speaker 1: profit margin. Let's remember that Netflix decieted at nine times revenue,
10:54
Speaker 1: and it loses money prime which is mostly for shipping,
10:57
Speaker 1: but twenty of prime subscribers stay there. There for the media,
11:01
Speaker 1: which is Twitch, which is really important, music and video.
11:05
Speaker 1: All of those assets are bundled in that prime subscription
11:08
Speaker 1: and that makes turn lower. It breaks the average revenue
11:12
Speaker 1: for user of the lifetime values higher UM and then
11:15
Speaker 1: they have advertising as well. So all of those businesses
11:18
Speaker 1: have much higher margins than the average, even higher than
11:21
Speaker 1: clouds by a lot, a much higher margin than cloud
11:24
Speaker 1: and that's you know, three times as higher margin as
11:27
Speaker 1: the e commerce business. So these media businesses, I think
11:31
Speaker 1: not only are they growing faster, they're helping churn fall
11:34
Speaker 1: for the commerce part of the Amazon's and they have
11:38
Speaker 1: much higher profitability in which was on capital. So, Laura,
11:41
Speaker 1: what does this mean for the i'll call them traditional
11:44
Speaker 1: media companies that you and I grew up covering. There's
11:46
Speaker 1: been a lot of consolidation. Is that enough or is
11:49
Speaker 1: there really not a boolk case to be made for
11:51
Speaker 1: some of these traditional vertically integrated media companies. UM, So
11:56
Speaker 1: I think Amazon is trying to Amazon is doing something,
11:59
Speaker 1: dear prints in our traditional media companies with you and
12:01
Speaker 1: I started in the world covering, And what I would
12:05
Speaker 1: say is they have a bigger they have a bigger
12:08
Speaker 1: they're thinking globally for one thing, um and and their
12:12
Speaker 1: margin structure is different. They're very much data and technology driven. UM.
12:16
Speaker 1: As you and I have seen from the past. You know,
12:18
Speaker 1: data alone does not good content make UM, So I
12:22
Speaker 1: don't necessarily think of Amazon as a core competitor. I
12:25
Speaker 1: think it is much more likely that if they decide
12:27
Speaker 1: to really go into the media business, they buy the
12:29
Speaker 1: Walt Disney Company or they buy Fox. They can buy
12:32
Speaker 1: these traditional media companies because their margin profile is globally
12:36
Speaker 1: scale much more profitable. But I gotta tell you, Paul,
12:39
Speaker 1: I think this man, this this company really thinks that
12:43
Speaker 1: much bigger total addressable market like we think he's going
12:46
Speaker 1: after the logistics market next. That's this one point six
12:49
Speaker 1: trillion dollar total addressable market like media is too small
12:53
Speaker 1: for him. But I don't think he's going to look backwards.
12:57
Speaker 1: A go ahead, Paul, Sorry, no, no, no, that was good. Uh.
13:02
Speaker 1: I guess we should ask a really about Apple on
13:04
Speaker 1: Monday as well, because it's the first virtual w WDC
13:06
Speaker 1: conference in in ever. Is there anything that you're anticipating
13:11
Speaker 1: that will blow us away? I think the most important
13:15
Speaker 1: thing we're waiting to hear from Apple is what's going
13:17
Speaker 1: on with the five get phone, because I think the
13:20
Speaker 1: stock has been running on the hopes that we have
13:21
Speaker 1: a five get phone this year. Um, it's going to
13:24
Speaker 1: be late. All of their products. We're going to be
13:26
Speaker 1: late because of the COVID pandemic shutting down factories, um,
13:29
Speaker 1: And so we're waiting to hear what's the new five
13:32
Speaker 1: get phone going to be? And I think I think
13:35
Speaker 1: then our next step is after we know what their
13:37
Speaker 1: product mix is gonna be and when it's coming out,
13:40
Speaker 1: when it's gonna they also usually announced when things are
13:42
Speaker 1: going to be hitting the market, shelves available for purchase, um,
13:46
Speaker 1: then we're gonna all have to go do surveys about
13:48
Speaker 1: does any consumer care? Is anyone buying a new Apple
13:51
Speaker 1: phone this year? I mean, I think that's a separate question.
13:53
Speaker 1: But first we need the data on what is Apple
13:56
Speaker 1: delivering to the marketplace and when all right, Laura's thank you,
14:00
Speaker 1: We will eagerly await that on Monday. But also just
14:03
Speaker 1: a very happy to chat with you about your initiation
14:06
Speaker 1: of coverage of Amazon. The company's a hidden value multiplier
14:09
Speaker 1: and so on. Looking for Amazon to hit thirty two
14:13
Speaker 1: hundred dollars in the next twelve months and obviously has
14:16
Speaker 1: a by rating on it. That's Laura Martin there, senior
14:18
Speaker 1: media analyst at Needham and Company, and of course Paul
14:21
Speaker 1: as soon as she said Disney, I I heard you
14:24
Speaker 1: park up exactly. Yeah, you have to just really think
14:28
Speaker 1: about the future of these traditional media companies, including Disney. Exactly.
14:34
Speaker 1: Let's get back to our market coverage now. We have
14:36
Speaker 1: Dave Pudla joining us and David Couldla of course as founder,
14:40
Speaker 1: CEO and chief investment strategist of Mainstay Capital about two
14:42
Speaker 1: point seven billion dollars in assets under management and named
14:47
Speaker 1: my Baron as Barons as one of the top financial advisors,
14:51
Speaker 1: one of the top twenty five over the past six years. David,
14:55
Speaker 1: great to speak with you again. We've been asking participants
14:59
Speaker 1: here of show to tell us why exactly stocks continue
15:03
Speaker 1: to reach new highs even if we see some volatility,
15:06
Speaker 1: and even if today is quotruple witching, it's a bit
15:09
Speaker 1: of a bit of an exception. Well, we've been in
15:16
Speaker 1: Good Morning, Bonnie. The mantra that I think all investors
15:21
Speaker 1: need to heed all professionals, uh, that somehow I think
15:26
Speaker 1: have forgotten and are remembering now is that the mantra
15:31
Speaker 1: of don't fight the Fed. And we've seen some professionals,
15:35
Speaker 1: some bears that have thrown in the town recently and
15:38
Speaker 1: come back to a bullish dance. But This has been
15:40
Speaker 1: our mantra on this rally all the way back up,
15:43
Speaker 1: and I think that it continues to push stocks higher.
15:46
Speaker 1: You can't. It's just very difficult to justify these levels
15:50
Speaker 1: and even certainly continued advance on fundamentals of uh some
15:54
Speaker 1: of these companies, fundamentals of the market and the economic reality.
16:00
Speaker 1: But it's it's essentially fed stimulus and central bank stimulus.
16:04
Speaker 1: Um this continued continuing to put push asset prices higher
16:08
Speaker 1: and specifically stocks higher. So, David, you know, it's kind
16:13
Speaker 1: of my thought here and what what I read in
16:15
Speaker 1: here and talk to folks like you, that a lot
16:17
Speaker 1: of this market movement, particularly the rally off the bottom,
16:20
Speaker 1: which we're you know, roughly four off the bottom, has
16:22
Speaker 1: been driven literally by a handful of stocks, the fang
16:25
Speaker 1: plus kind of names. How broad based is this? And
16:28
Speaker 1: if to the extent it's not broad based and the
16:30
Speaker 1: depth is not there, the breath is not there, how
16:32
Speaker 1: concerning is that to you? It's not concerning At this point.
16:38
Speaker 1: We've seen, really, we've seen that kind of advance for
16:40
Speaker 1: that kind of narrow leadership for quite a while. We
16:43
Speaker 1: were seeing that in ten and early before we had
16:48
Speaker 1: the bear market decline, and I think a lot of
16:51
Speaker 1: that is a function of, you know that there was
16:53
Speaker 1: this a lot of concern about the fang stocks, a
16:55
Speaker 1: lot of concern about big cap tech that you know,
16:59
Speaker 1: and specifically the fang stocks either you know, those stocks
17:02
Speaker 1: that are big cap tech or retail stocks that are
17:06
Speaker 1: being enabled by technology, that it was a house of
17:10
Speaker 1: cards that was eminently going too far, eventually going to crumble.
17:16
Speaker 1: And you know, our our school of thought on that
17:20
Speaker 1: has been that, you know, technology is changing the world,
17:24
Speaker 1: technology is eating the world. And if you look at
17:27
Speaker 1: what happened, what's happened through the pandemic, some of these um,
17:32
Speaker 1: the cloud stocks, I T stocks, you know, those have
17:35
Speaker 1: been the enablers for uh, the different businesses that have
17:39
Speaker 1: done quite well through the pandemic. It's just another another
17:45
Speaker 1: scenario where we've seen how technology has mattered. And so
17:48
Speaker 1: we think that, uh, it's it's a secular grows story
17:51
Speaker 1: that remains and that these stocks are going to continue
17:54
Speaker 1: to trade at high multiples, are going to continue to
17:57
Speaker 1: do well, and we're continued well, we will continue to
18:00
Speaker 1: see that leadership. We saw a rotation back into value
18:03
Speaker 1: stocks here recently, and it was just another head fake,
18:07
Speaker 1: the the tech stocks I t cloud, all those came
18:11
Speaker 1: right back into leadership positions, and you know, we we
18:15
Speaker 1: have been uh overweight growth stocks. We continue to be.
18:20
Speaker 1: We don't fall for those value stock head fakes. And
18:23
Speaker 1: except for we've taken a Barbell approach in our portfolios
18:27
Speaker 1: here more recently over the past couple of months because
18:30
Speaker 1: the we call it the lockdown rebound plays. But basically
18:34
Speaker 1: some of these cyclical areas, whether it's the airlines, travel, leisure, uh, energy, construction, housing,
18:44
Speaker 1: you know, there's been some some good plays on those
18:47
Speaker 1: on the rebound, but we're staying with these secular growth stories,
18:50
Speaker 1: specifically technology. Dave, how long does this narrative play out for? Though?
18:55
Speaker 1: I mean it seems like nothing can go wrong for
18:58
Speaker 1: these companies. I mean Amazon put on a four hundred
19:01
Speaker 1: billion dollars worth of market capitalization during the pandemic. Well
19:07
Speaker 1: that's just it. I mean, we we say that nothing
19:09
Speaker 1: can go wrong, and I think it's that they're just
19:11
Speaker 1: in a place where, you know, everything is right for them. Amazon,
19:16
Speaker 1: you know, Amazons being a category killer for years and
19:21
Speaker 1: will continue to be, you know, coming back to what's
19:24
Speaker 1: happened during the pandemic, Um, there was an e t
19:28
Speaker 1: F that we invested in called Clicks that was it
19:32
Speaker 1: was just it was a slam dunk. It is an
19:35
Speaker 1: e t F along short et F that is, it
19:37
Speaker 1: was long uh, e commerce and short brick and mortar.
19:41
Speaker 1: The government was closing down brick and mortar stores. Even
19:45
Speaker 1: people that weren't accustomed to shopping online. We're being compelled
19:50
Speaker 1: or almost forced to do so. So that was a
19:53
Speaker 1: boost to Amazon and other online retailers. But in some
19:57
Speaker 1: of those habits have changed forever um and and so
20:01
Speaker 1: people are continuing to move more and more to shopping online. Uh.
20:05
Speaker 1: That trend will continue, So the Amazons of the world,
20:09
Speaker 1: and specifically Amazon will continue to do well. So, David,
20:14
Speaker 1: if I believe that the economy is going to slowly
20:16
Speaker 1: rebound in the back half of this year, then have
20:18
Speaker 1: a much stronger I want to go along some cyclicals.
20:23
Speaker 1: Do I want to go along some transportations? Something in
20:25
Speaker 1: the rails, the truckers, the you know, the cargo ships
20:28
Speaker 1: that are gonna be shipping all that cargo around the globe?
20:31
Speaker 1: Is that a play? If I believe in a stronger yeah,
20:35
Speaker 1: I think so. You know, I think you need to
20:37
Speaker 1: be careful. You know, you need to look at the charts. Uh.
20:40
Speaker 1: You know when we look at the airlines, for instance,
20:42
Speaker 1: you know there is an opportunity because they took such
20:46
Speaker 1: a plunge down as much as sixty on the downside,
20:49
Speaker 1: you know when they come back to their pre COVID levels. Um.
20:53
Speaker 1: You know, we look at the chart of the airlines
20:55
Speaker 1: and it's it's like an e KG with noise in it.
20:58
Speaker 1: And you know that's an industry that operates and razor
21:00
Speaker 1: thin margins with an airline going out of business every
21:04
Speaker 1: filing for bankruptcy every year or two. We look at
21:07
Speaker 1: construction and housing that was on a nice upward slope
21:10
Speaker 1: that got interrupted. It's had a nice rally back. All
21:14
Speaker 1: those other cyclicals you're talking about though, um, some of
21:17
Speaker 1: them have a long runway left in this in this rebound,
21:21
Speaker 1: and I think that you, you know, investors need to
21:24
Speaker 1: look at those areas to include in portfolios as we
21:27
Speaker 1: moved through this recovery in the economy, but not just
21:30
Speaker 1: here but globally. David couldla thank you so much for
21:34
Speaker 1: joining us. David's the CEO and chief investment strategist at
21:37
Speaker 1: main Stake Capital Management. About two point seven billion dollars
21:40
Speaker 1: under management. We always love speaking to David, very thoughtful
21:43
Speaker 1: analysis of the market and Vannie. You know, I love
21:45
Speaker 1: how he talked about don't fight the FED. That was
21:48
Speaker 1: literally the first lesson I learned on Wallstreet. When I
21:51
Speaker 1: was on the pain Warber block trading desk back in
21:53
Speaker 1: the mid to late eighties, managing director came up to
21:56
Speaker 1: me and said, why are you selling stocks here? Said, well,
21:58
Speaker 1: you know, and I said, he said, the rates are
21:59
Speaker 1: going down, kid, buy stocks, you know. So that's one
22:02
Speaker 1: that is stuck with me. And well, do you have
22:05
Speaker 1: a photograph of that time? No, I do not, thankfully. Yeah.
22:09
Speaker 1: It was a lot of fun, but so but it's
22:11
Speaker 1: atually interesting. I think David's right spot on here. We've
22:14
Speaker 1: had central banks around the world, UH and you know,
22:17
Speaker 1: led by the US Photo Reserve pumping liquidity into the marketplace.
22:21
Speaker 1: And some someone we had on the show coined a
22:23
Speaker 1: great phrase which I love, which is back stopping. The
22:26
Speaker 1: markets are back stopping risk assets here, and that's kind
22:29
Speaker 1: of what it feels like. You get a little bit
22:30
Speaker 1: of a pullback in the market, but investors still have
22:33
Speaker 1: confidence to come back in uh and buy that dip
22:36
Speaker 1: despite some of the economic conditions we are facing. It
22:40
Speaker 1: is Juneteenth. It is perhaps also the first time that
22:44
Speaker 1: nationally this is being recognized, and companies are actually recognizing junetee,
22:48
Speaker 1: some of them offering employees who so wish to take
22:52
Speaker 1: a day off Morgan's down, the Target and Uber among them.
22:55
Speaker 1: But whether the moves will be scrutinized as enough, or
22:59
Speaker 1: whether companies will also be forced to devote resources actually
23:04
Speaker 1: make concrete, measurable changes in areas such as hiring, vendor diversity,
23:08
Speaker 1: that's still up for grabs. Let's bring in Bloomberg Finance
23:11
Speaker 1: reporter Laana Nuyon has been looking at what companies have
23:14
Speaker 1: been doing and whether it's going to be enough to
23:16
Speaker 1: satisfy public impressions. Right now, Lana, and thanks for joining
23:22
Speaker 1: first give us an idea of just how widespread the
23:26
Speaker 1: moves have been, particularly the juneteenths recognition. Thanks Fohnnie, it's
23:31
Speaker 1: nice to speak to you. So, I think the widespread
23:35
Speaker 1: factor of this is very interesting because it's more about
23:38
Speaker 1: the major companies that have done it. So from Nike
23:42
Speaker 1: to Target, we're seeing very large household names give employees
23:47
Speaker 1: a day off in recognition of June teams. So I
23:50
Speaker 1: think there's an element of corporate leadership on top of
23:53
Speaker 1: which you have banks like JP Morgan, which is closing
23:56
Speaker 1: branches early, and other banks, Bank of America and City
24:00
Speaker 1: which basically told staff that they could take a day,
24:03
Speaker 1: a personal day, um to to commemorate junetein. So we
24:07
Speaker 1: are seeing a lot of really really big companies try
24:11
Speaker 1: to mark the moment in some way, and so that's
24:14
Speaker 1: just having a ripple effect across corporate America. York City
24:20
Speaker 1: to make Juneteenth city school holiday next year, that's according
24:24
Speaker 1: to mayor the Belasia. So just another example and had
24:26
Speaker 1: to lean on. I have to admit, I'm I always
24:29
Speaker 1: consider myself a fairly well read student of American history,
24:32
Speaker 1: but I have to admit I had never heard the
24:34
Speaker 1: term Juneteenth or its significance until a couple of days ago.
24:39
Speaker 1: What's the phenomenon behind this? Is this just a recognition
24:43
Speaker 1: of the racial inequality in this country and ways to
24:45
Speaker 1: kind of, uh, you know, kind of call it to attention. Yes, Paul,
24:51
Speaker 1: And I think that you're not alone in in being
24:54
Speaker 1: new to this. I think, um, it's lesser known outside
24:57
Speaker 1: of the black community. Um, and it has suddenly kind
24:59
Speaker 1: of jumped onto the agenda of many people, including ourselves
25:02
Speaker 1: as business reporters. UM. And so the movement is similar
25:07
Speaker 1: to Martin Luther King Day to commemorate the end of
25:10
Speaker 1: slavery UM and to recognize and fight against um, you know,
25:14
Speaker 1: racial inequality. UM. One of those sources I spoke to
25:18
Speaker 1: for the story said that she and her family and
25:20
Speaker 1: her network used the day as a day of service
25:22
Speaker 1: and reflection to be with their families or to participate
25:25
Speaker 1: in the community service events and so UM you know,
25:29
Speaker 1: there there is a push here by the corporate sector
25:32
Speaker 1: to acknowledge that people in the black community, UM, you know,
25:36
Speaker 1: take this seriously, and also people outside of that community
25:39
Speaker 1: as well, and so UM you know, the marketing consultant
25:42
Speaker 1: I spoke to said, last year, nobody did anything for Juneteenth,
25:46
Speaker 1: and now suddenly this wave of companies is doing UM
25:50
Speaker 1: events and and commemorating in some way. Yeah. I was
25:54
Speaker 1: on air when Nike announced thought it was going to
25:56
Speaker 1: take juneteenths as a vacation date for employees who wanted
26:00
Speaker 1: to observe it. And I actually thought, in some ways
26:03
Speaker 1: it was I don't want to say a joke, because
26:06
Speaker 1: it's an important thing and it's it's nice that a
26:08
Speaker 1: company would recognize that, but it also does feel very
26:11
Speaker 1: much like lip service. Lannan, I mean, when are we
26:13
Speaker 1: going to see actual you know, corporate mandates devoting resources
26:17
Speaker 1: to making measurable changes, doing things like fixing their hiring practices,
26:23
Speaker 1: making sure that there's vendor diversity. So for a recently
26:26
Speaker 1: was one of those vendors that signed up to what's
26:30
Speaker 1: been called a fifteen percent pledge. The founder of brother
26:32
Speaker 1: is talking about the fifteen percent pledge, so that at
26:34
Speaker 1: least fifteen percent of products and stores are from black
26:37
Speaker 1: owned businesses. We need more of this, No, Ronnie, that
26:44
Speaker 1: is a very important question because a lot of the
26:46
Speaker 1: sources I spoke to said this is extremely important. That
26:50
Speaker 1: people are not just going to be sort of pleased
26:52
Speaker 1: with a an announcement for one day or an observance
26:56
Speaker 1: for one day. This is supposed to be part of
26:58
Speaker 1: a lasting change, and people in the community are looking
27:01
Speaker 1: at UM, at these companies to see, first of all,
27:04
Speaker 1: what is your record in the past, what are you
27:06
Speaker 1: doing to UM, you know, fix any previous problems, and
27:10
Speaker 1: then what are you doing going forward to hire black people,
27:14
Speaker 1: elevate them in management and UM you know, enforced policies
27:18
Speaker 1: that are going to help to rectify racial inequality. Um.
27:23
Speaker 1: Another person that we suppose to in a brand consult
27:26
Speaker 1: or brand strategy firm said, if it's just this day
27:29
Speaker 1: and the company doesn't do anything else, more broadly, it's
27:32
Speaker 1: going to ring hollow, and consumers and and other business
27:36
Speaker 1: partners are going to see that. So, UM, everyone is
27:40
Speaker 1: looking to see that the Juneteenth actions are backed up
27:43
Speaker 1: with broader measures in order to correct racial inequality. Interesting.
27:48
Speaker 1: I mean, you know, employees Lennon are certainly like reflecting
27:52
Speaker 1: the broader populous, you know, more sensitive arguably just in
27:56
Speaker 1: the last couple of weeks months to racial inequality. Uh.
28:00
Speaker 1: Is this a reflection companies trying to do really the
28:03
Speaker 1: right thing, or again, as Vannie suggested, maybe it's just
28:06
Speaker 1: a little bit of lip service. I think the jury
28:09
Speaker 1: is out, Paul. I think there are some companies that
28:11
Speaker 1: are really trying to listen and do the right thing,
28:14
Speaker 1: and others that just want to make sure that they're
28:17
Speaker 1: covering themselves and having the optics of you know, commemorating
28:21
Speaker 1: the day. So the marketing firm that we spoke to
28:24
Speaker 1: said that employees in companies that they surveyed UM really
28:29
Speaker 1: do support anti racism protests. Two percent of them support
28:33
Speaker 1: their protests, and fifty five percent say that their employers
28:36
Speaker 1: should respond directly to racial issues. So there's a conversation
28:39
Speaker 1: that's taking place in worth places right now that has
28:42
Speaker 1: is much more open about race than every husband before. Hey, Len,
28:46
Speaker 1: and thank you so much for joining us and sharing
28:49
Speaker 1: this reporting that you had Lennon new and Bloomberg Financial reporter,
28:53
Speaker 1: uh talking about Juneteenth and again just coming across the
28:56
Speaker 1: Bloomberg terminal headline New York City to Juneteenth a city
29:01
Speaker 1: and school holiday next year, and that's according to Mayor
29:04
Speaker 1: Bill Deblasia. So again falling along what we've seen a
29:07
Speaker 1: lot in corporate America. Uh, as we tend to deal
29:11
Speaker 1: with this racial inequality. This is Bloomberg. Thanks for listening
29:15
Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen
29:19
Speaker 1: to interviews at Apple Podcasts or whatever a podcast platform
29:22
Speaker 1: you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonnie Quinn,
29:26
Speaker 1: and I'm Paul Sweeney. I'm on Twitter at pt Sweeney.
29:28
Speaker 1: Before the podcast, you can always catch us worldwide at
29:31
Speaker 1: Bloomberg Radio