Latest / Bloomberg Intelligence / Record-Breaking Black Friday Sales, Despite Pandemic

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Record-Breaking Black Friday Sales, Despite Pandemic · Bloomberg Intelligence

• 0:01
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
• 0:04
  Speaker 1: with my co host of Bonnie Quinn. Every business day
• 0:06
  Speaker 1: we bring you interviews from CEO, market pros and Bloomberg experts,
• 0:10
  Speaker 1: along with essential market moving news. Find the Bloomberg Markets
• 0:13
  Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
• 0:17
  Speaker 1: and on Bloomberg dot com. Well, I think I just
• 0:21
  Speaker 1: figured out why Tom Keene was not in today. He
• 0:23
  Speaker 1: is home with his computer online shopping, and I'm sure
• 0:27
  Speaker 1: he's got a lot of other folks they're joining him.
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  Speaker 1: It's supposed to be a record cyber Monday here is
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  Speaker 1: more and more people shop online, abandonedents stores and go online.
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  Speaker 1: John Copeland, VP of Marketing and Customer Insights at Adobe
• 0:42
  Speaker 1: UH he joins US Adobes based in San Jose, California.
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  Speaker 1: So John, give us the early early read here of
• 0:48
  Speaker 1: a Black Friday going into a cyber Monday, leading us
• 0:52
  Speaker 1: to the final weeks of holiday shopping. Yeah. So it's
• 0:57
  Speaker 1: been a record breaking Thanksgiving weekend already with over twenty
• 1:01
  Speaker 1: three and a half billion dollars in online sales. That's
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  Speaker 1: a increase over last year. Today, Cyber Monday, we are
• 1:09
  Speaker 1: expecting a day to break all previous records for US
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  Speaker 1: online sales, coming in somewhere between ten point eight and
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  Speaker 1: twelve point seven billion dollars. That will be somewhere between
• 1:21
  Speaker 1: a fifteen and increase over last year. So it's interesting, Um,
• 1:27
  Speaker 1: you know, you you think about those numbers that you
• 1:30
  Speaker 1: just mentioned, John, in terms of you know, the overall
• 1:33
  Speaker 1: numbers and in some of the growth rates and so on,
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  Speaker 1: it's just extraordinary given what's going on in the world,
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  Speaker 1: given uh, the tough times that many consumers find themselves
• 1:43
  Speaker 1: in here as a result of the pandemic and unemployment.
• 1:46
  Speaker 1: Seems like a lot of this unemployment is now chronic unemployment.
• 1:49
  Speaker 1: What do you make of it? Yeah, you know what,
• 1:52
  Speaker 1: part of what we're seeing is really people trying to
• 1:56
  Speaker 1: have as much of a kind of normal Christmas and
• 2:01
  Speaker 1: celebration as as possible, right, I mean, I've I've seen
• 2:04
  Speaker 1: a lot of stories about people setting up their Christmas
• 2:07
  Speaker 1: decorations even before Thanksgiving. In fact, we we did that
• 2:11
  Speaker 1: in our house this year, trying to have more of
• 2:14
  Speaker 1: that kind of traditional end of your holiday spirit in
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  Speaker 1: the context of this really really challenging year. And so
• 2:21
  Speaker 1: people are doing what they can to try and bring
• 2:24
  Speaker 1: as much of a normal end of your holiday home
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  Speaker 1: as they can. All Right, So, John, we already saw
• 2:30
  Speaker 1: obviously even before the pandemic, UH a year's long trend
• 2:35
  Speaker 1: of more and more share of retail sales going to online.
• 2:39
  Speaker 1: It seems to have been dramatically accelerated here during the pandemic.
• 2:44
  Speaker 1: Is there any reason to think that post pandemic it's
• 2:47
  Speaker 1: gonna kind of ebb and maybe go the other way?
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  Speaker 1: Or is or is some of these market shifts that
• 2:52
  Speaker 1: we've seen, are they more permanent? Yeah, you know, that's
• 2:55
  Speaker 1: the question everybody is really asking and interested in. We
• 2:59
  Speaker 1: expect that, you know, a good chunk of this new
• 3:01
  Speaker 1: digital behavior will probably stick around. Is consumers are finding
• 3:06
  Speaker 1: out that you know, the convenience of online ordering and
• 3:10
  Speaker 1: either having it delivered to their home or being able
• 3:12
  Speaker 1: to pick up in the store. Um, even through contactlets
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  Speaker 1: delivery is just become so convenient for them. It will
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  Speaker 1: probably bounce back, and you know, people will be doing
• 3:21
  Speaker 1: a lot offline as soon as they can and as
• 3:24
  Speaker 1: soon as they feel safe and comfortable doing that. But um,
• 3:29
  Speaker 1: you know, we we've continued to see this digital increase,
• 3:32
  Speaker 1: certainly during the holidays, for example, a good thirteen to
• 3:35
  Speaker 1: fifteen percent a year this year is really like two
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  Speaker 1: years of growth packed into a single year um and
• 3:40
  Speaker 1: that's really going to be hard for people to to
• 3:42
  Speaker 1: step away from, even when they can. So that kind
• 3:46
  Speaker 1: of goes to the question, you know, when you talk
• 3:48
  Speaker 1: about retail, when you ever you have a discussion, maybe
• 3:50
  Speaker 1: even with the last decade or so, it comes to
• 3:52
  Speaker 1: the question of to what extent is the US retail
• 3:56
  Speaker 1: footprint overstored? And then when you get you know, a
• 3:59
  Speaker 1: period that we're going through right now where we're seeing
• 4:02
  Speaker 1: um so many people going over to e commerce, it
• 4:05
  Speaker 1: kind of brings that question to the four Yet again,
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  Speaker 1: what's your thought about that as you look at the
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  Speaker 1: US retail landscape. Yeah, I think this year has really
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  Speaker 1: shown that, I don't know, it's so much about being overstored,
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  Speaker 1: but certainly maybe under digital if you want um And
• 4:20
  Speaker 1: and that's one of the things that we see a
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  Speaker 1: lot of businesses pushing into accelerating the digital transformations this year.
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  Speaker 1: Retail as well as other sectors of the economy really
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  Speaker 1: pushing hard into digital. And as that happens, we expect
• 4:34
  Speaker 1: to see even more kind of fundamental disruptions to the
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  Speaker 1: way you know, business models work, and if you're not
• 4:41
  Speaker 1: in a digital channel, it's going to be really, really difficult.
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  Speaker 1: So John, give us a sense of what's hot this
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  Speaker 1: holiday season from a product perspective, and maybe what's not. Yeah,
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  Speaker 1: so one of the well instead of the what's not,
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  Speaker 1: I can I can definitely tell you, for example, the
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  Speaker 1: electronic game platforms you know, PS five, Xbox and and
• 5:02
  Speaker 1: all of the games that go with them. So NBA
• 5:04
  Speaker 1: two K one, Madden, NFL twenty one. Just it's really
• 5:10
  Speaker 1: hot right now. Um. In terms of toys more generally,
• 5:13
  Speaker 1: Star Wars toys are really big. Nerve is really big
• 5:17
  Speaker 1: right now. Control right, Um, we expect to see a
• 5:20
  Speaker 1: lot with you know, even still continuing successes of like
• 5:24
  Speaker 1: L O L Surprise UH and hatch Amoles will continue
• 5:28
  Speaker 1: to be strong this holiday season. So John, you know,
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  Speaker 1: we saw in the beginning of the pandemic some of
• 5:33
  Speaker 1: these retailers, pair of retailers fought for bankruptcy. Ever, we
• 5:37
  Speaker 1: can see more of that. That's really tough to say.
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  Speaker 1: I think as as retailers are figuring out how to
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  Speaker 1: make digital work, and they're pushing harder to get more
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  Speaker 1: sales through their Hopefully that will tide them over while
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  Speaker 1: the economy, you know, begins to get back to normal
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  Speaker 1: as we start to see you know, light at the
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  Speaker 1: end of the tunnel and the vaccines become available and hopefully,
• 6:00
  Speaker 1: you know, things can begin to turn around in it. John,
• 6:04
  Speaker 1: thanks so much for joining us. We really appreciated. We
• 6:06
  Speaker 1: know you're busy this time of the year. John Copeland,
• 6:09
  Speaker 1: VP of Marketing and Customer Insights at Adobe, based in
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  Speaker 1: San Jose, California. You know, generally a what we're hearing
• 6:17
  Speaker 1: here is retail sales here during US a Black Friday,
• 6:20
  Speaker 1: Cyber Monday, generally pretty healthy when given everything that we
• 6:23
  Speaker 1: are dealing with. So there's that for the consumer. Let's
• 6:27
  Speaker 1: switch gears right now and talk about commodities, particularly UH
• 6:32
  Speaker 1: crude oil. And there's really no one better to do
• 6:34
  Speaker 1: that with than Ellen Walled, President of Transversal Consulting. She
• 6:38
  Speaker 1: is also Bloomberg Opinion contributor. So Ellen, love to talk
• 6:42
  Speaker 1: to you about OPEK. What do you expect for their
• 6:45
  Speaker 1: upcoming meeting? Here, I'm looking at w t I cruded
• 6:47
  Speaker 1: at forty five dollars seems kind of range bound here.
• 6:51
  Speaker 1: What are you looking for? Yeah, so thank you. We're
• 6:55
  Speaker 1: looking for at this point, we're not looking for any
• 6:58
  Speaker 1: big resolution, and today it seems like the OPEC group
• 7:02
  Speaker 1: is going to push that off until tomorrow when larger
• 7:05
  Speaker 1: OPAQ plus group including Russia meets, But the expectation is
• 7:09
  Speaker 1: that they are going to have agreed to extend their
• 7:13
  Speaker 1: current quotas for another three months, so into the first
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  Speaker 1: quarter of one, and that will be a change. Right now,
• 7:21
  Speaker 1: they're actually scheduled to increase production by two million barrels
• 7:25
  Speaker 1: per day come January one. And it's interesting because oil
• 7:28
  Speaker 1: has trended upwards uh recently, mostly on positive vaccine news,
• 7:34
  Speaker 1: but there are a lot of fears in terms of demand.
• 7:38
  Speaker 1: There's really a lot of demand weakness in Europe and
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  Speaker 1: the United States that doesn't look like it's going to
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  Speaker 1: resolve itself anytime soon, and so there's a lot of
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  Speaker 1: fears that if OPEC doesn't come through with this three
• 7:49
  Speaker 1: month extension, that um, we could be seeing an end
• 7:52
  Speaker 1: to this oil rally. Yeah, it's inter I'm glad you
• 7:55
  Speaker 1: brought up kind of kind of where the oil is
• 7:58
  Speaker 1: trading here. You take a look at the equa markets
• 8:00
  Speaker 1: for example, and there you know, as in the month
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  Speaker 1: of November all time highs, tremendous records for performance within
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  Speaker 1: a month. A lot of that based upon the expectations
• 8:10
  Speaker 1: that the vaccines in fact are coming, the economies will
• 8:12
  Speaker 1: in fact open up next year, and you need to
• 8:15
  Speaker 1: make your bets today. Are you surprised that oil hasn't
• 8:19
  Speaker 1: traded better. I'm not deprised that oil hasn't traded better.
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  Speaker 1: I'm actually surprised that that this rally has been sustained
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  Speaker 1: for as long as it has, because the fundamentals are
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  Speaker 1: really not very good when you're looking at demand and
• 8:33
  Speaker 1: also when you're looking at supply. We've got libbyan oil
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  Speaker 1: production coming back on the market, and so that's adding
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  Speaker 1: could add another million barrels a day, regardless of what
• 8:44
  Speaker 1: Opaque decides. So we've got lagging demand. These vaccines aren't
• 8:47
  Speaker 1: really going to be uh, you know, in the general
• 8:51
  Speaker 1: available to people all over the world until well into
• 8:55
  Speaker 1: so I think oil is really looking at um kind
• 8:58
  Speaker 1: of a shorter term than the markets are. But so
• 9:01
  Speaker 1: it's interesting that the rally we saw around the initial
• 9:05
  Speaker 1: vaccine news has been maintained, and it does seem like
• 9:09
  Speaker 1: it's up to opeque a bit to keep or sustain
• 9:12
  Speaker 1: or kind of put a floor on oil prices. So, Ellen,
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  Speaker 1: what do you think or what's what are you hearing
• 9:19
  Speaker 1: from the folks you talk to in the global energy space?
• 9:22
  Speaker 1: What does a Biden administration mean and what does it
• 9:26
  Speaker 1: mean for kind of global oil supply? How do you
• 9:29
  Speaker 1: think about that? Yeah, this is this is a big
• 9:32
  Speaker 1: question on everyone's mind. It definitely means more support for
• 9:35
  Speaker 1: alternative energies, But the big question is what does it
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  Speaker 1: mean for US production because that's really been a game
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  Speaker 1: changer in the oil industry over the past few years.
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  Speaker 1: Right now, the US has backed off of its production highs,
• 9:47
  Speaker 1: but that really was was expected even before the COVID
• 9:52
  Speaker 1: nineteen pandemic kind of demolished a lot of production in
• 9:56
  Speaker 1: uh the shale industry. But I think what we're looking
• 9:59
  Speaker 1: at our further consolidation in the shale oil industry. There
• 10:03
  Speaker 1: are big companies out there that are doing production, and
• 10:06
  Speaker 1: I think they will fare fairly well under a Biden
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  Speaker 1: administration because a lot of the new regulations that he's
• 10:13
  Speaker 1: looking at will actually be beneficial to them and will
• 10:16
  Speaker 1: help keep smaller producers from really getting into the game.
• 10:21
  Speaker 1: But what about shale in general. Here it seems like
• 10:23
  Speaker 1: it's been, as you mentioned, kind of real game changer
• 10:26
  Speaker 1: for global supply as the US has become an actually
• 10:30
  Speaker 1: a net exporter. Here is the expectation that the best
• 10:35
  Speaker 1: days of the U s shell patch are in the
• 10:37
  Speaker 1: rear view mirror. I do think that they the production
• 10:41
  Speaker 1: heydays are definitely in the rear view mirror. But remember
• 10:44
  Speaker 1: that it was actually under the Obama administration that the
• 10:47
  Speaker 1: us UH finally ended the oil export ban and became
• 10:51
  Speaker 1: a player in the global oil market. So I don't
• 10:55
  Speaker 1: think we're looking to see a reversal of that in
• 10:57
  Speaker 1: any case. I do think the big question, though, is
• 10:59
  Speaker 1: what's going to happen with China. Because the Trump administrations
• 11:03
  Speaker 1: to succeed in getting China to agree to purchase a
• 11:06
  Speaker 1: fairly large amount of oil and energy products from the
• 11:10
  Speaker 1: United States. They haven't quite followed through on that, but
• 11:13
  Speaker 1: they have made a very significant um mark towards that goal.
• 11:18
  Speaker 1: And so I think that everyone is going to be
• 11:20
  Speaker 1: really wondering where's the Biden administration going to go with this.
• 11:23
  Speaker 1: Are we going to to see more? Is he gonna
• 11:25
  Speaker 1: hold China to this promise or is that kind of
• 11:28
  Speaker 1: out of the window. So as it relates to China, Ellen,
• 11:32
  Speaker 1: we've seen them, you know, whether the pandemic. They are
• 11:35
  Speaker 1: on the other side of of the pandemic. We're starting
• 11:38
  Speaker 1: to see the economy put up some decent growth numbers
• 11:41
  Speaker 1: as the economy opens up. Have we seen that in
• 11:44
  Speaker 1: the global energy markets? Have the Chinese been stepping up
• 11:47
  Speaker 1: their purchases on the global crude market? Yeah? Absolutely, China
• 11:52
  Speaker 1: is really I think where a lot in China is
• 11:55
  Speaker 1: where a lot of the big um national oil producers,
• 11:58
  Speaker 1: Saudi Arabia, you are really focusing their attention because um,
• 12:02
  Speaker 1: they issued new quotas for the independent refineries, So that
• 12:06
  Speaker 1: means that those refineries are going to be drawing down
• 12:09
  Speaker 1: oil stocks, They're going to be taking in more crude oil, refining,
• 12:13
  Speaker 1: making more products and shipping that out. And um, they're
• 12:16
  Speaker 1: really looking at China to kind of be a bright
• 12:19
  Speaker 1: spot in the oil demand picture. So where where do
• 12:23
  Speaker 1: we see that, Like, do we see that in just
• 12:25
  Speaker 1: the price of oil? Do we track shipments? And if
• 12:28
  Speaker 1: we track shipments, do we track them from certain suppliers?
• 12:31
  Speaker 1: How how do you track that? Yeah, so we definitely
• 12:35
  Speaker 1: look at um at loadings that go to Asia to
• 12:39
  Speaker 1: China and how that's going, but also the number of
• 12:42
  Speaker 1: ships that are actually sitting waiting UH in ports in
• 12:45
  Speaker 1: Asia to unload their product. Sometimes that can be really
• 12:48
  Speaker 1: backed up when um, you know, when refineries aren't taking
• 12:53
  Speaker 1: are aren't taking coil in and so as we see
• 12:57
  Speaker 1: those stocks decline, that's an education and then usually oil
• 13:00
  Speaker 1: prices do respond when we get word that these uh
• 13:05
  Speaker 1: these ships are actually onloading their oil. Hey, Ellen, thanks
• 13:09
  Speaker 1: so much for joining us. We appreciate that. At interesting
• 13:11
  Speaker 1: times in the global energy space. Ellen Wild, president of
• 13:13
  Speaker 1: Transversal Consulting and a Bloomberg Opinion contributor, we appreciate her thoughts.
• 13:18
  Speaker 1: As always, we've been hearing from the good folks like
• 13:23
  Speaker 1: Dave Wilson Sarah Ponza this morning about what a record
• 13:27
  Speaker 1: setting month it was for equity markets in the month
• 13:30
  Speaker 1: of November. That's all well and good, but the cynic
• 13:33
  Speaker 1: in me says, Okay, now what do I do well?
• 13:36
  Speaker 1: Matt MAILEI chief market strategists at Miller Tebeck, and I
• 13:40
  Speaker 1: found over the mail report. Hopefully he'll have some answers
• 13:42
  Speaker 1: for me. So, Matt, We've had an extraordinary run here
• 13:45
  Speaker 1: in November, driven in large part by some really positive
• 13:48
  Speaker 1: news on the vaccine front, and we had some more
• 13:50
  Speaker 1: good news today. Um, what is your thought for the
• 13:54
  Speaker 1: remainder of the year heading into one, given that whether's
• 13:57
  Speaker 1: pandemic numbers are just getting worse and worse. Yeah, I
• 14:01
  Speaker 1: mean that's certainly something to be concerned about, no question.
• 14:04
  Speaker 1: I'm actually more a little bit more concerned about it
• 14:06
  Speaker 1: next year than I am this year. And from the
• 14:08
  Speaker 1: main the main reason, Well, first of all, today's pull
• 14:11
  Speaker 1: back is no big surprise. I mean, we've had this
• 14:13
  Speaker 1: great run and I mean especially the Russell two thousand,
• 14:15
  Speaker 1: I mean as up over UH in just a month.
• 14:19
  Speaker 1: So the fact that it's down in almost about percent
• 14:21
  Speaker 1: and a half today is not a big deal and
• 14:23
  Speaker 1: needs to digest those gains in the overall market and
• 14:25
  Speaker 1: may have to do that for a couple of days.
• 14:27
  Speaker 1: But the liquidity situation is still very strong, and it's
• 14:31
  Speaker 1: kind of weird. I mean what we went back whatever
• 14:33
  Speaker 1: is six or eight years ago and people were talking about, hey,
• 14:36
  Speaker 1: you know if the if, if the economy starts to
• 14:39
  Speaker 1: slow down, the FED will add more stimulus or do
• 14:42
  Speaker 1: more QUI so we don't have to worry if the
• 14:44
  Speaker 1: economy does better well, that's good. We don't have to
• 14:47
  Speaker 1: worry about that. So it was kind of a win win.
• 14:49
  Speaker 1: Now we're looking at that with and it's oddly as
• 14:51
  Speaker 1: it sounds, the virus UH and the lockdowns that are
• 14:55
  Speaker 1: going with it, and the concerns about the slowing growth
• 14:58
  Speaker 1: will I believe ENTI see the FED to keep their
• 15:01
  Speaker 1: liquidity spick. It's wide open through the end of the
• 15:04
  Speaker 1: year and into the early next year. Uh, much like
• 15:07
  Speaker 1: they did last year. For a very different reason. They
• 15:09
  Speaker 1: did it last year because if we had remember we
• 15:11
  Speaker 1: had the big repot problem in the fall of last year,
• 15:13
  Speaker 1: and they needed to keep the liquidity speakers open then.
• 15:16
  Speaker 1: But I think both will lead into a very similar
• 15:18
  Speaker 1: year continued here in rally. So, Matt, what we've certainly see,
• 15:21
  Speaker 1: not just in the month in November, but really since
• 15:24
  Speaker 1: you know our September ish or so, is that that
• 15:26
  Speaker 1: rotation trade people kind of lightening up a little bit,
• 15:29
  Speaker 1: some of those tried and true big tech names, whether
• 15:31
  Speaker 1: it's an Amazon or an Apple uh, and kind of
• 15:34
  Speaker 1: rotating into the names that will benefit with the rebounding
• 15:37
  Speaker 1: the economy. Presumably sometime in cyclical small caps so on
• 15:42
  Speaker 1: and so forth. So is that a trade you like.
• 15:45
  Speaker 1: If so, do you still like it here? Heading into
• 15:49
  Speaker 1: I do, but maybe not as much as I think
• 15:51
  Speaker 1: a lot of people are. And the reason for this
• 15:54
  Speaker 1: is is that I think a lot of people seem
• 15:56
  Speaker 1: to be wanting to throw the baby out with the
• 15:57
  Speaker 1: bathwater when it comes to tech. I certainly understand why. Technically,
• 16:01
  Speaker 1: some of these technology stocks that megacap names, um, you know,
• 16:05
  Speaker 1: without that kind of you know, with the vaccine and such,
• 16:07
  Speaker 1: we're not saying, well, Jesus, lockdown, stay at home is
• 16:10
  Speaker 1: gonna stay, is gonna stay with us for a long time.
• 16:12
  Speaker 1: So I'm not gonna be willing to pay the huge
• 16:14
  Speaker 1: valuations for these megacap names. But boy, the some of
• 16:18
  Speaker 1: the you know, especially the chip stocks, they act very
• 16:20
  Speaker 1: very well, making new highs. You have other stocks away
• 16:23
  Speaker 1: from a check to sorry the chip names, like a
• 16:26
  Speaker 1: Cgate Technologies, Western Digital, things like that. So my point
• 16:30
  Speaker 1: is tech is not dead by any minute, specially the imagination.
• 16:32
  Speaker 1: So do some rotating into value, but also do some
• 16:36
  Speaker 1: rotating within technology. I think that will bode well as
• 16:38
  Speaker 1: we go into into next year. Um, you know, I'll
• 16:42
  Speaker 1: bring up the dreaded E word energy. We've got w
• 16:45
  Speaker 1: t I credit forty five dollars a barrel um. One
• 16:48
  Speaker 1: could argue that if the economy is primed to open
• 16:51
  Speaker 1: up on a global scale sometime mid next year, as
• 16:54
  Speaker 1: these vaccines become more widely available, that perhaps that bodes
• 16:58
  Speaker 1: well for the energy infrastructure, and it's certainly been beaten
• 17:00
  Speaker 1: down over the last several years. Is that a sector
• 17:03
  Speaker 1: you have some courage for I do? I mean, obviously
• 17:07
  Speaker 1: it's had a huge run here over the last you
• 17:09
  Speaker 1: know to really two months now, uh, particularly in the
• 17:12
  Speaker 1: last month, but also really for two months. And the
• 17:15
  Speaker 1: x l E which is the energy E t F,
• 17:18
  Speaker 1: and of course the XOP which also includes some of
• 17:20
  Speaker 1: the uh uh sorry uh drilling names. But the point
• 17:26
  Speaker 1: is that they are overbought. They could pull back a
• 17:28
  Speaker 1: little bit over a near term, but they're also still
• 17:31
  Speaker 1: very cheap. And you think about rotation, I mean, people
• 17:34
  Speaker 1: are gonna need is if this group moves up, especially
• 17:37
  Speaker 1: institutional players, they're gonna they they are so underweight this
• 17:41
  Speaker 1: group as it rallies, especially into the new year, if
• 17:44
  Speaker 1: they're very underweighted, they're gonna have to rewait their their
• 17:47
  Speaker 1: their holdings. But more importantly, on a fundamental basis, the
• 17:50
  Speaker 1: last time oil UH, the the x l E, and
• 17:53
  Speaker 1: the x OP we're trading at these levels. Oil was
• 17:55
  Speaker 1: at thirty two dollars. Now it's at forty five, even
• 17:58
  Speaker 1: if it comes in a little bit still chief to
• 18:00
  Speaker 1: their underlying UH commodity. So I think this is a
• 18:04
  Speaker 1: group that on both a rewaiting play UH and on
• 18:09
  Speaker 1: a fundamental basis, is going to do a lot better
• 18:11
  Speaker 1: than a lot of people think. And if oil can
• 18:14
  Speaker 1: hold up in the mid forties, it doesn't have to
• 18:16
  Speaker 1: take off, but it holds up in the in the
• 18:17
  Speaker 1: mid forties, and especially if it rallies more, it's really
• 18:20
  Speaker 1: gonna move because the institutions have to pile into the group.
• 18:23
  Speaker 1: So I'm a lot more bullish on this group than
• 18:25
  Speaker 1: a lot of other people who need to be careful
• 18:27
  Speaker 1: and not saying jump in like you went to tech group.
• 18:29
  Speaker 1: But it's it's a nice play. You have just about
• 18:32
  Speaker 1: thirty seconds Banks, Big Banks here again another unloved group.
• 18:36
  Speaker 1: Is it time to take a look at them on
• 18:37
  Speaker 1: in the anticipation of a better one. Well, it's, you know,
• 18:41
  Speaker 1: again the very cheap group. So it's I think it's
• 18:43
  Speaker 1: a good play that the key is what's going to
• 18:45
  Speaker 1: happen in interest rates. To me, to be honest with you,
• 18:48
  Speaker 1: for short term traders, I think this thing can to
• 18:50
  Speaker 1: continue to rally because I think rates will hold up
• 18:52
  Speaker 1: and I think the YO curve will continue to steep in.
• 18:54
  Speaker 1: But as we move in the next year and we
• 18:56
  Speaker 1: get to some of the I think we get a
• 18:58
  Speaker 1: little bit less stimulant send a lot of people are
• 19:00
  Speaker 1: hoping for from both the Fed and the and the Congress.
• 19:04
  Speaker 1: UH that will cause those banks to take a little
• 19:06
  Speaker 1: bit of hiccup. So long term players that want to
• 19:08
  Speaker 1: be a little careful short term traders, I think you
• 19:10
  Speaker 1: can ride the way for for a couple more months.
• 19:12
  Speaker 1: Matt Manley, thank you so much for joining us. Really
• 19:14
  Speaker 1: appreciate it. Matt Mailey, chief market strategist at Miller Tabeck
• 19:17
  Speaker 1: and founder of the Mainly Report. There's time for Bloomberg Opinion.
• 19:23
  Speaker 1: We're joined today by Chris Hughes, Deals columnists for Bloomberg
• 19:26
  Speaker 1: Opinion and what deal you may ask, Well, it is
• 19:29
  Speaker 1: merger Monday, and we've got a big one. SMP Global,
• 19:32
  Speaker 1: the data company buying another data company I h S
• 19:35
  Speaker 1: Market for about thirty nine billion dollars in Chris, Thanks
• 19:38
  Speaker 1: so much for joining us here. This is a big deal.
• 19:40
  Speaker 1: Tell us about this deal. What's kind of the strategy
• 19:43
  Speaker 1: be putting these two big global data players together? And
• 19:47
  Speaker 1: I should note before you go on that Bloomberg LP
• 19:49
  Speaker 1: does compete both against SMP UH and I h S market. So, Chris,
• 19:54
  Speaker 1: what do you think is real drivers behind this this deal?
• 19:58
  Speaker 1: I think it's it's for two or three things. I mean,
• 20:00
  Speaker 1: one is that this industry is consolidating. We've already seen
• 20:05
  Speaker 1: some quite interesting combinations already, So think about the combination
• 20:10
  Speaker 1: of London Stock Exchange UH and Refinitive UH and UM.
• 20:16
  Speaker 1: So there have been deals happening already, so that the
• 20:19
  Speaker 1: trend is towards insolidation. And then if you think about
• 20:22
  Speaker 1: what this combination does, it brings together the SMP brand
• 20:27
  Speaker 1: which is very strong, with I h S is other
• 20:34
  Speaker 1: data services. So you end up with a combination which
• 20:37
  Speaker 1: has got more offer, more to offer and to more customers,
• 20:43
  Speaker 1: so you can cross fairly offering between the two customer
• 20:46
  Speaker 1: bases UM and with that scale you've become a much
• 20:50
  Speaker 1: stronger company, and then presumingly you can do more deals
• 20:53
  Speaker 1: after that. It's interesting, you know, I've when I was
• 20:56
  Speaker 1: a research channel. So I spent some time looking at
• 20:58
  Speaker 1: this industry and for a long time, uh, it was
• 21:01
  Speaker 1: a very sleepy industry. Investors didn't pay much attention to it.
• 21:04
  Speaker 1: There wasn't a lot of value assigned to it. But
• 21:07
  Speaker 1: it just seems like in the last decade, as you mentioned,
• 21:09
  Speaker 1: there's been a lot of consolidation. It's really taken off.
• 21:12
  Speaker 1: And the valuations we're seeing here just extraordinary. What are
• 21:15
  Speaker 1: some of the new businesses that these companies are generating
• 21:18
  Speaker 1: off of their UM this this data that they have
• 21:22
  Speaker 1: in the analytics that they have and Y scale might
• 21:24
  Speaker 1: be important. There's a whole plethora of new products. I
• 21:29
  Speaker 1: mean one of them, of course is in Y s
• 21:32
  Speaker 1: G environmental, social and governance research and analytics. And you know,
• 21:36
  Speaker 1: we saw a deal UM the other day in Europe
• 21:40
  Speaker 1: with Deutsche Burza and I S S. So uh, there
• 21:44
  Speaker 1: is a whole array of new data points. If you
• 21:49
  Speaker 1: think about where UH, I H S markets started off,
• 21:52
  Speaker 1: where markets started off, UM, you know, way about when
• 21:56
  Speaker 1: it was really just looking at UM. You know, TRID
• 22:00
  Speaker 1: is in the credit market and that has obviously now
• 22:03
  Speaker 1: become a much much bigger business. Now. Who say the
• 22:06
  Speaker 1: valuations put on these companies are much bigger. As it happens. Actually,
• 22:10
  Speaker 1: these two UM has seen their valuations converge, so they're
• 22:15
  Speaker 1: they're emerging from a point of parity. But the increase
• 22:18
  Speaker 1: both in the in the evaluation multiples and the and
• 22:21
  Speaker 1: the and the site of these companies has been quite
• 22:23
  Speaker 1: tremendous over the last few years. So, Chris, it seems
• 22:26
  Speaker 1: like you know you you mentioned that there's been a
• 22:28
  Speaker 1: lot of consolidation in this space, so fewer and fewer players.
• 22:31
  Speaker 1: It suggests to me that the regulatory risk here is
• 22:35
  Speaker 1: not insubstantial. UM. What's what's the view on the street. Yeah, Like,
• 22:41
  Speaker 1: I think that I think that you have to play
• 22:42
  Speaker 1: that into consideration because you know that the sheer size
• 22:46
  Speaker 1: of this combination, complexity of it does is going to
• 22:51
  Speaker 1: attract regulatory scrutiny, and that in turn, obviously will adds
• 22:57
  Speaker 1: time and uncertainty to whether it actually completes. Now the
• 23:02
  Speaker 1: market is giving a cautious welcome to the combination. With
• 23:07
  Speaker 1: the other possible risk, obviously, is of a counter bid
• 23:11
  Speaker 1: for I H S markets. So on the one hand,
• 23:14
  Speaker 1: regulators we want to have a look, but on the
• 23:17
  Speaker 1: other hand, maybe alternative transactions may emerge, especially as the
• 23:23
  Speaker 1: price being paid for I S, even though it's a
• 23:26
  Speaker 1: big number of around about four billion on a debt
• 23:32
  Speaker 1: free basis, is actually quite a low premium on where
• 23:36
  Speaker 1: I was trading last week. So that could be in
• 23:39
  Speaker 1: an invitation to somebody to come in and try and
• 23:42
  Speaker 1: break it up. So there are indeed quite a few
• 23:44
  Speaker 1: uncertainties around whether this will actually go from announcement to
• 23:49
  Speaker 1: to full completion. So, Chris, if I'm an M and
• 23:52
  Speaker 1: a banker in the space, am I just dialing for
• 23:54
  Speaker 1: dollars here today telling all my clients, Hey, this industry
• 23:58
  Speaker 1: you need to get bigger or you to get out.
• 24:01
  Speaker 1: You expect to see even more deals. Are there more
• 24:03
  Speaker 1: to be done or is this Are we coming towards
• 24:05
  Speaker 1: the kind of the later innings of consolidating the global
• 24:07
  Speaker 1: data business. I think you're probably closer to the mark
• 24:12
  Speaker 1: um with a former than the latter. Even though we
• 24:16
  Speaker 1: are now seeing the emergence of some really really large players,
• 24:20
  Speaker 1: it doesn't feel like you know this is completely done yet.
• 24:24
  Speaker 1: And as you say, if you if you pass on
• 24:28
  Speaker 1: the consolidation, the risk is that you end up being
• 24:32
  Speaker 1: or are the small local player and you don't really
• 24:35
  Speaker 1: get that scale that enables you to go truly global,
• 24:39
  Speaker 1: and I think that that might be what we're seeing
• 24:41
  Speaker 1: in Europe actually, where you know, Europe hasn't really seen
• 24:46
  Speaker 1: truly global scale operator in this in this industry emerge.
• 24:54
  Speaker 1: How far does it go? Well, if you think about
• 24:57
  Speaker 1: the naturally deals that them and going on, hey, we've
• 24:59
  Speaker 1: seen more and more diversifications, so deals that it would
• 25:02
  Speaker 1: have raised an eye you just thought, well, that's not
• 25:05
  Speaker 1: not a logical combination. Now pere logical in terms of
• 25:08
  Speaker 1: just offering more and more by specification and great variety
• 25:13
  Speaker 1: of data to a larger pool of end customers. Seems
• 25:18
  Speaker 1: to be what is driving dealmakers and CEOs in the space,
• 25:24
  Speaker 1: which means that you could easily see combinations, certainly among
• 25:28
  Speaker 1: the exchanges. I mean you think about intercomplinental exchange. It
• 25:33
  Speaker 1: will be very interesting to see how they react to
• 25:35
  Speaker 1: this combination. So I don't think we're in any way
• 25:39
  Speaker 1: done yet. Hey, Chris Hughes, thank you so much for
• 25:43
  Speaker 1: joining us here. Christie's Bloomberg Opinion Deals column is talking
• 25:45
  Speaker 1: about the S and p I h S deal again,
• 25:47
  Speaker 1: a huge deal on that data analytic space enterprise value
• 25:51
  Speaker 1: forty four billion dollars. Just an extraordinary kind of multiples
• 25:55
  Speaker 1: there that we're seeing and we should know that. Again,
• 25:58
  Speaker 1: Bloomberg LP compete. It's with both S and P as
• 26:02
  Speaker 1: well as I H S market in the global data
• 26:04
  Speaker 1: and analytics business. But again it looks like more consolidation
• 26:09
  Speaker 1: in that space. Data becoming more and more valuable going
• 26:12
  Speaker 1: forward in a digital world, and it seems to be
• 26:14
  Speaker 1: like a lot of markets, it's all about scale. Thanks
• 26:19
  Speaker 1: for listening to Boomberg Markets podcast. You can subscribe and
• 26:22
  Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform
• 26:26
  Speaker 1: you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonnie Quinn,
• 26:30
  Speaker 1: and I'm Paul Sweeney. I'm on Twitter at pt Sweeney.
• 26:32
  Speaker 1: Before the podcast, you can always catch us worldwide at
• 26:35
  Speaker 1: Bloomberg Radio