Latest / Bloomberg Intelligence / Economic Forecasts And Fed Chair Uncertainty

Transcript

Economic Forecasts And Fed Chair Uncertainty · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
0:04
Speaker 1: my co host Matt Miller. Every business day, we bring
0:06
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
0:11
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
0:15
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. You know, we've got
0:22
Speaker 1: some red and green on the screen here. We've got
0:24
Speaker 1: through some pretty strong earnings. We've got some more retailers
0:27
Speaker 1: to hear from, but it looks like the retailers are
0:30
Speaker 1: generally in pretty good shape, the consumers in good shape.
0:32
Speaker 1: Let's get a check in with a professional on all
0:35
Speaker 1: of this stuff. Jordan's con He's the c i O
0:38
Speaker 1: of the a c M Funds and portfolio manager of
0:40
Speaker 1: the a c UM Dynamic Dividend Fund. And Jordan's Matt
0:43
Speaker 1: and I were just talking about, you know, we were
0:44
Speaker 1: looking at Visa in the news with Amazon in the
0:47
Speaker 1: UK and visas down five point four percent on this
0:51
Speaker 1: news that Amazon will stop accepting the Visa card and
0:54
Speaker 1: I guess, uh, in the UK in January, what did
0:57
Speaker 1: you now for now? And I mean master Card is
1:00
Speaker 1: down as well, and you know it could this could spread.
1:02
Speaker 1: The idea is that Amazon and other retailers could do
1:06
Speaker 1: this to all the payment payment networks. How do you
1:08
Speaker 1: think about that, Jordan's Yeah. I mean, you know, Visa
1:12
Speaker 1: is a stock that we've owned for years. It's a
1:14
Speaker 1: great company, great management. I think that to your point,
1:17
Speaker 1: that's the market's big concern, you know, with the early
1:20
Speaker 1: reaction in Visa and the stock being down as much
1:22
Speaker 1: as we're seeing today. I think the concern is does
1:25
Speaker 1: this open some sort of Pandora's box? And if Amazon
1:29
Speaker 1: is challenging them first in the UK, you know, does
1:32
Speaker 1: it kind of seep into other other markets and are
1:35
Speaker 1: there going to be other large retailers that try to
1:37
Speaker 1: puff up their chest and and and challenge them as well.
1:40
Speaker 1: But like I said, you know, Visa has excellent management.
1:44
Speaker 1: It's been a well managed company for years and years
1:46
Speaker 1: and years, and so I think, you know, at the
1:49
Speaker 1: end of the day, when the dust sellers, management will
1:51
Speaker 1: probably figure out a way to come to terms with
1:54
Speaker 1: with with Amazon. And if there are other realtailers, um,
1:57
Speaker 1: you know, and we'll see this story probably fall by
1:59
Speaker 1: the way. Well, you can still use the debit card
2:01
Speaker 1: and um, I mean, I'm sure that all of these companies,
2:06
Speaker 1: surely Visas at the forefront of looking at some kind
2:09
Speaker 1: of crypto blockchain way to make payments fast, easy and cheap. Yeah,
2:16
Speaker 1: they've always done a good job on their acquisitions and
2:19
Speaker 1: so whether it's you know, to your point something in crypto,
2:21
Speaker 1: whether they're gonna do something with a buy now, pay later,
2:24
Speaker 1: which is you know, a big, big trend recently. Um,
2:28
Speaker 1: you know, m that's just a credit card, right, I
2:30
Speaker 1: see these buy now, pay later things, And I mean
2:32
Speaker 1: that's just the same thing, isn't it. It basically is
2:36
Speaker 1: it's it's the new iteration of it, you know, somehow
2:38
Speaker 1: they figure out other ways to make money rather than
2:40
Speaker 1: just charging the interest on it. Alright, So Jordan's as
2:44
Speaker 1: a Visa shareholder, how do you think about that big
2:47
Speaker 1: just changing financial landscape, whether it's just more technology coming
2:51
Speaker 1: into the business. I know, since the pandemic, I'm doing
2:54
Speaker 1: a lot more my personal finance via apps and so
2:57
Speaker 1: on and so forth. How did the Visas the master card?
3:00
Speaker 1: How do you think about that holistically? How do they adapt? Well,
3:04
Speaker 1: I think there's two things. You know that the one
3:06
Speaker 1: thing is to your point that that if things are
3:07
Speaker 1: going you know, crypto and digitally and stuff like that,
3:10
Speaker 1: that's a new trend that they may you know, dip
3:12
Speaker 1: their toe in the water, whether it's via acquisitions or
3:15
Speaker 1: something like that. But the other big trend that's going
3:17
Speaker 1: on globally that Visa has been in the forefront of
3:20
Speaker 1: for years is the trend just away from cash and
3:23
Speaker 1: more towards digital. Right as more and more of our
3:26
Speaker 1: lives moved to digital and become online. You know, last
3:29
Speaker 1: year with the pandemic, we obviously saw a huge surge
3:32
Speaker 1: of transactions moving online. And so those big global trends
3:35
Speaker 1: are still a kail wind for companies like Visa master Card.
3:39
Speaker 1: I got this Apple watch for my birthday, and I'm
3:42
Speaker 1: not even sure it tells time, folks. I'm looking at
3:44
Speaker 1: it now and it tells me not just time, but
3:46
Speaker 1: my heart rate, blood oxygen levels. It doesn't echo cardio Graham, etcetera.
3:51
Speaker 1: I've been averaging even sitting down for too long exactly.
3:53
Speaker 1: It tells me to stand up. I've been doing like
3:55
Speaker 1: ten fifteen thousand steps to day. But the thing is
3:58
Speaker 1: the most fun thing to do with this is to
4:01
Speaker 1: make payments like I'm taking the subway more often because
4:03
Speaker 1: I just tapped my wrist on the thing and I
4:06
Speaker 1: go in, Or when I go to tar j and
4:09
Speaker 1: I pick up a twelve pack of pops, I just
4:12
Speaker 1: knock this on the payment thing and I feel like
4:16
Speaker 1: the kids, I feel like you gotta check it out.
4:18
Speaker 1: Do you like any of these fintech I mean, we
4:20
Speaker 1: talked about Visa being good at acquisitions, Jordan, what do
4:24
Speaker 1: you think about these? Um, not Apple obviously, because that's
4:28
Speaker 1: uh to an app trillion dollar behemoth that we all
4:31
Speaker 1: know about. But do you look at any of these
4:33
Speaker 1: younger growth your businesses. Yeah, for sure. You know, Visa
4:36
Speaker 1: is obviously one that I've mentioned that we've owned for years.
4:39
Speaker 1: You know. We we like PayPal. That's the stock that's
4:42
Speaker 1: come down a lot that you know, is at the
4:45
Speaker 1: forefront a lot of these trends, and I think that
4:46
Speaker 1: we will continue to do well. Um, you know, we've
4:50
Speaker 1: dipped our toe and something like a firm it's obviously
4:52
Speaker 1: had a really really big run, and I wouldn't I
4:54
Speaker 1: probably wouldn't chase it here. But but you know, to
4:56
Speaker 1: the point we were talking about the buy now, pay later,
4:58
Speaker 1: they've kind of been the poster child for moving um
5:02
Speaker 1: first mover advantage on that front. So yeah, there's a
5:05
Speaker 1: lot of interesting stuff out there, UM and we definitely,
5:08
Speaker 1: we definitely look at them all. Those are just a
5:10
Speaker 1: few that UM we like. Hey, Jordan's Goldman Sachs CEO
5:14
Speaker 1: David Solomon said this morning at a Bloomberg conference in
5:18
Speaker 1: Singapore that market greed is now outpacing fear. Do you
5:23
Speaker 1: see that, feel that sense that in the market. That's funny.
5:27
Speaker 1: You know, we've definitely sense it in pockets, But I
5:31
Speaker 1: don't think you know, people compare this back to the
5:35
Speaker 1: late nineties and stuff, and I don't think it's as
5:37
Speaker 1: pervasive as it wanted as it was back then. You know,
5:40
Speaker 1: there's certain pockets of stocks and you come in and
5:42
Speaker 1: you see these things running ten and and there's definitely
5:46
Speaker 1: an element of speculation there that you know, it's kind
5:49
Speaker 1: of running amuck that isn't sustainable. But there's also tons
5:53
Speaker 1: and tons of cash that's still on the sidelines. You know,
5:56
Speaker 1: in the late nineties, you talk to anybody and they
5:58
Speaker 1: would say, if you had three thousand dollars sitting in
6:00
Speaker 1: your checking account, you were an idiot, because it could
6:02
Speaker 1: be in the market. You know, that kind of sentiment
6:05
Speaker 1: hasn't worked its way into the market today. Um. So
6:08
Speaker 1: for the people that are in the market playing, they're
6:09
Speaker 1: definitely some elevent of speculation. But for the general public,
6:13
Speaker 1: I don't think it's one of those bubble like environment
6:16
Speaker 1: where everybody's like, I need to be all in with
6:18
Speaker 1: every penny I have. All right, Jordan, thank you so much.
6:20
Speaker 1: We appreciate that. As always during color we didn't get
6:23
Speaker 1: to talk about we didn't get talking about weed. We
6:25
Speaker 1: didn't get to talk about weed. And he went to
6:27
Speaker 1: University of Colorado Boulder, which is exactly why I'm glad.
6:31
Speaker 1: I'm glad you realized why I wanted and I just
6:33
Speaker 1: wrote my last a tuition check to the University of
6:35
Speaker 1: Colorado a Boulder. One of the things we're waiting here
6:41
Speaker 1: from FED Chairman pal Is or from President Biden is
6:45
Speaker 1: will he keep FED Chairman jpal On as a head
6:47
Speaker 1: of the FED or maybe bring in somebody new. I
6:49
Speaker 1: know he's interviewed um Brainerd as well, and I know
6:53
Speaker 1: the markets focusing on I'm just not sure how much
6:56
Speaker 1: of a big deal it is for this market. Well,
6:59
Speaker 1: everyone we talked to says they have in terms of
7:02
Speaker 1: monetary policy, there's not much of a difference. It's the
7:06
Speaker 1: regulatory aspect of that that makes UM Senator Warren so
7:11
Speaker 1: angry at Jerome Powell. Yeah, and consistency, the market certainly
7:15
Speaker 1: links consistency. But let's ask a professional, Phil Palumbo, founder
7:18
Speaker 1: CEO and c I O of Palumbo Wealth Management. He's
7:21
Speaker 1: been doing this wealth management thing for decades at ubs
7:25
Speaker 1: and Morgan Stanley and mother Meryl. Uh. Phil, You've seen
7:29
Speaker 1: FED chairman chair people come and go. How concerned are
7:34
Speaker 1: you about You know what we might hear from President
7:36
Speaker 1: by in the next next few days about FED Chairman
7:39
Speaker 1: Powell or someone new. The concern more is about inflation.
7:43
Speaker 1: So whether in my view with Powell stays in there
7:46
Speaker 1: or brainerd comes in there and the open seats that
7:48
Speaker 1: have become available over the next couple of months, either way,
7:53
Speaker 1: I believe both are dovish and a dovish FED governor
7:57
Speaker 1: as we have right now with with Powell. Even if
8:00
Speaker 1: and it comes in, it means inflation can can continue
8:03
Speaker 1: to run hot because most likely they're gonna tame rates low.
8:06
Speaker 1: And if that's the case again, you know just inflation
8:08
Speaker 1: is going to start to continue to feed on themselves.
8:10
Speaker 1: So I think either way, whether it's BRAINERD or whether
8:13
Speaker 1: it's power or progressive, tend to fill up those seats.
8:17
Speaker 1: You'll see more bank regulation, and I think you see
8:19
Speaker 1: rates lower for longer. I mean, what can they really
8:22
Speaker 1: do about inflation anyway, other than you know, if they
8:25
Speaker 1: raise raids, they kind of stunt the economy, and that's
8:28
Speaker 1: not what you want, right. I disagree with that. Right. So,
8:33
Speaker 1: in terms of FED power and many headphones out there,
8:36
Speaker 1: headphone manages out there, you know they have to act
8:38
Speaker 1: sooner than later, right, So it's like a ballberell approach.
8:40
Speaker 1: If you don't do it now, you get hurt later.
8:42
Speaker 1: If you do it now, you get hurt today. But
8:43
Speaker 1: it's almost like if you let this thing continue to
8:45
Speaker 1: run as we're seeing right now, it just feeds on itself.
8:48
Speaker 1: We've seen that in the seventies. I'm not suggesting we're
8:50
Speaker 1: going into the seventies, but inflation can really feed on itself.
8:53
Speaker 1: Look at retail sales numbers yesterday, write some consumers are
8:56
Speaker 1: starting to get concerned about inflation and cost So it's
9:00
Speaker 1: this pull forward demand that we're seeing that's raising prices
9:03
Speaker 1: and it doesn't look like it's going away. So if
9:05
Speaker 1: you keep rates where they are, if you keep continue
9:07
Speaker 1: to be a Dover's fed governor, it only exacerbates the problem.
9:11
Speaker 1: It doesn't make the problem better, because eventually inflation gets
9:14
Speaker 1: to the point where it'll cool the consumer because it's
9:17
Speaker 1: a direct tax on the consumer. We know that of
9:21
Speaker 1: spending comes from the consumers in terms of g d P.
9:24
Speaker 1: So if you start to tax them in terms of
9:26
Speaker 1: gas prices shout the cost food prices, that's not good
9:29
Speaker 1: for the economy. So it's a your damn if you do,
9:32
Speaker 1: and your damn they've done. And I totally get it,
9:34
Speaker 1: but I think they that they have to start taking
9:36
Speaker 1: the Hawkers stance. And if Brainer gets in there and
9:39
Speaker 1: Progressive fill those seats, it's just a continuation of this
9:43
Speaker 1: Doverish stance, which I believe can hurt the economy along
9:46
Speaker 1: the term. But Powell is going to be just as
9:48
Speaker 1: Dovish right, So it's not like um sticking with him
9:51
Speaker 1: is going to do much um to to to suthe
9:55
Speaker 1: your fears on inflation. What what would uh what would
9:59
Speaker 1: you like to see? I would like to see them
10:02
Speaker 1: start to paper even sooner than June number one and
10:06
Speaker 1: number two, raise rates, surprise the market, right, raise rates
10:10
Speaker 1: in in uh at least surprise market doesn't seem like
10:13
Speaker 1: something the Fed does anymore. That time, it's I think,
10:17
Speaker 1: you know, what we've heard from a lot of folks
10:20
Speaker 1: when me think about you know, rates and maybe just
10:22
Speaker 1: this market in general, is what you don't want to see,
10:26
Speaker 1: is the Fed surprise the market. That could be something
10:29
Speaker 1: given where we are evaluations, that could really be problematic
10:33
Speaker 1: for the market. But but you're not as concerned about that. No,
10:36
Speaker 1: I am, of course, right, I mean, and I get it,
10:38
Speaker 1: And I've been continuous, continuously saying that I believe we're
10:40
Speaker 1: in a bubble, especially in technology, especially with the cryptocurrency
10:44
Speaker 1: and n f t s and all the speculation. That's
10:46
Speaker 1: because there's been a misallocation of capital as a result
10:49
Speaker 1: of the Federal Reserve and what the federal fiscal policy
10:52
Speaker 1: has done. So now valuations got too extreme levels. And
10:55
Speaker 1: I get it. It's listen to the damn if you
10:57
Speaker 1: do damn if you don't scenario. But if you don't
10:59
Speaker 1: do it now, it's gonna be even worse later. And
11:01
Speaker 1: that's the big problem that I'm concerned about. The other
11:03
Speaker 1: part two is when you think about people talking about
11:05
Speaker 1: inflation being transitory and nod in that whole argument, it's
11:08
Speaker 1: more about is demand transitory? Right? I think demand maybe
11:11
Speaker 1: trans story because it's pulled forward effect. And when you
11:14
Speaker 1: have a pull forward effect and you have supplies to
11:17
Speaker 1: start trying to keep up, then you have companies creating
11:19
Speaker 1: more capacity to try to keep up with demand. But
11:23
Speaker 1: if all of a sudden demands slows down, you have
11:25
Speaker 1: all these companies with this extra capacity extra hiring extra employees,
11:29
Speaker 1: and that's like a classic recession like we saw in
11:31
Speaker 1: the seventies. That could happen. So listen. It's a very
11:35
Speaker 1: challenging situation. I think federal power fed Paler did a
11:37
Speaker 1: great job with COVID stepping in doing you had to
11:39
Speaker 1: do when I get it, Um, But now I believe
11:43
Speaker 1: it's time to move faster than he's saying. What do
11:45
Speaker 1: you deal with you with client money? Then? Um, Paul,
11:49
Speaker 1: If I Phil, if I came to you with some
11:52
Speaker 1: fresh cash, where do you put it? Gold? Golden commodities.
11:58
Speaker 1: So I've been consistently saying, you know, when you have
12:00
Speaker 1: inflation acceleration like we're seeing. So if you go back
12:03
Speaker 1: since nineteen. Any time inflation has accelerated, gold and commodities
12:07
Speaker 1: have been an outperformer. Gold this year has not been
12:10
Speaker 1: an outperformer because rates have gone up, but since inflation
12:13
Speaker 1: and CPI numbers of recent i've been north to five
12:16
Speaker 1: six percent. The real return now for bonds are negatives.
12:20
Speaker 1: And that's why you're seeing gold stought to to break
12:22
Speaker 1: out here from a technical standpoint. So I think gold
12:24
Speaker 1: could have legs and and commodities will can still have
12:27
Speaker 1: and could still have legs. So that's why I would
12:29
Speaker 1: position and rebalance into all right. When I hear that, Phil,
12:32
Speaker 1: I have to ask a question, given where we are today,
12:35
Speaker 1: when I hear commodities and or gold, how about crypto?
12:39
Speaker 1: Um is? How do you think about that in the
12:41
Speaker 1: context of some people say it's a store of value
12:43
Speaker 1: like gold, Crypto doesn't even know who they are, you know,
12:48
Speaker 1: in terms of is it an as a class? Is
12:50
Speaker 1: it a currency? And is it inflation? Areas it deefinitly
12:54
Speaker 1: in terms of investing, when to invest it's so new,
12:56
Speaker 1: it's it's complete, complete speculation. So I just don't think
12:59
Speaker 1: anybody can really answer that with complete confidence. You know,
13:02
Speaker 1: in my view, I'm concerned about that because what I
13:06
Speaker 1: tell a lot of people who invest in crypto and
13:08
Speaker 1: n f T s and they made a lot of money,
13:10
Speaker 1: and that's great, and I'm very happy for them. But
13:12
Speaker 1: the question I have for them is at what point
13:15
Speaker 1: are you going to sell all these profits you made?
13:19
Speaker 1: And they don't have an answer for that, and they say,
13:21
Speaker 1: like I was just talking to somebody this morning, said, oh,
13:22
Speaker 1: I bought something, it's at ten dollars and I was
13:24
Speaker 1: going to sell it at ten, but I think it
13:26
Speaker 1: goes to twenty. And it's just like this continuous cycle
13:29
Speaker 1: that people jump on and in the but in the end,
13:32
Speaker 1: it's going to eventually collapse, just like markets collapse, right,
13:36
Speaker 1: they don't just go straight up. But so if you
13:38
Speaker 1: never sell any collapses, you made no money. So but
13:41
Speaker 1: you think it's all about the greater greater fool theory.
13:43
Speaker 1: You don't think that there's any value there. I'm not
13:46
Speaker 1: saying there's no value there, right, I'm saying that there.
13:48
Speaker 1: I think it's for real because it's three trillion plus market.
13:51
Speaker 1: I don't know if it's going to be a bigcoin
13:52
Speaker 1: in the future or theory M or some other cryptocurrency.
13:55
Speaker 1: It's complete speculation. So I think it's for real. But
13:57
Speaker 1: I think it's time for investors to wake up and say, hey,
14:00
Speaker 1: you know everybody's hopping on this bandwagon. You don't want
14:03
Speaker 1: to follow the herd. Let's take some profits here and
14:05
Speaker 1: if it comes back down again, we could add to
14:07
Speaker 1: the position. Right. The same thing with technology. I mean,
14:09
Speaker 1: nobody can dispute that we're in a bubble in terms
14:12
Speaker 1: of valuations, but it's time to take some risk off
14:15
Speaker 1: the table, and there's nothing wrong in doing that. Phil,
14:18
Speaker 1: thanks so much for joining us. Always appreciate getting your thoughts.
14:20
Speaker 1: Phil Palumbo, founder CEO and ce IO of Plumbo Wealth Management,
14:26
Speaker 1: giving us his thoughts on the market and my takeaways, Matt,
14:29
Speaker 1: Gold and commodity is very interesting and in uh and
14:33
Speaker 1: but certainly in line with an inflationary outlook. All right,
14:39
Speaker 1: let's get over to Katie gray Felt. She is our
14:41
Speaker 1: cross asset reporter here at Bloomberg, and I guess in
14:45
Speaker 1: this case it goes across from bonds two stocks too. Crypto.
14:50
Speaker 1: We've seen a big drop in Bitcoin yesterday, dropping um
14:55
Speaker 1: I guess, the most in September, falling below sixty dollars Ether,
14:59
Speaker 1: touching its lowest level this month. What's what's behind the drops,
15:03
Speaker 1: what's driving the fall? It's a great question and sort
15:06
Speaker 1: of the beauty with cryptos that you never really know. Uh,
15:10
Speaker 1: some theories that I heard yesterday. I mean, you did
15:12
Speaker 1: see the infrastructure package signed into law on Monday, and
15:17
Speaker 1: that has tax reporting requirements for broadly to find crypto brokers.
15:23
Speaker 1: This was a big issue for the industry back in September.
15:27
Speaker 1: But that that was known, so I wouldn't put a
15:29
Speaker 1: lot of weight in that, but it was named. The
15:31
Speaker 1: other thing could be technicals, which is basically what you
15:34
Speaker 1: say when you're not really sure. But if you do
15:36
Speaker 1: look at the technicals, especially for Ether, I mean there
15:39
Speaker 1: were a lot of indicators from Fibonacci levels to candlesticks,
15:43
Speaker 1: all those fancy things that basically all told you the
15:45
Speaker 1: same thing that you know, this rally was looking particularly stretched,
15:49
Speaker 1: particularly when it came to Ether. I mean, let's not
15:52
Speaker 1: forget that Ether it's up what almost five percent this year,
15:56
Speaker 1: so it's probably not surprising to see that cool a
15:58
Speaker 1: little bit, you know, I think crypto's mainstream when Bloomberg
16:02
Speaker 1: Radio has a weekly sponsored crypto report, But I'm still
16:06
Speaker 1: surprised Katie that a lot of the veterans on Wall Street,
16:10
Speaker 1: the CEO is, whether it's a Jamie Diamond, it just
16:12
Speaker 1: doesn't feel like they have fully embraced this asset class
16:17
Speaker 1: at all. They'll say, oh, we're providing some trading facilities
16:20
Speaker 1: for our clients if they want to trade in crypto,
16:22
Speaker 1: will be there, But it doesn't feel like they've really
16:25
Speaker 1: embraced it. Is that. I mean, Diamond says it's worthless, worthless,
16:28
Speaker 1: so I guess he hasn't embraced it quite yet. No exactly,
16:31
Speaker 1: but you know, I do see stories that they're staffing
16:33
Speaker 1: up their trading operations and things across the street. But again,
16:36
Speaker 1: as Matt was saying, it doesn't feel like it's been
16:38
Speaker 1: embraced as a real asset class. Yeah, well, to your point,
16:41
Speaker 1: I mean the tone from the top, but a lot
16:44
Speaker 1: of these banks is very negative. I mean, we could
16:47
Speaker 1: run through that, but still they're kind of these banks
16:48
Speaker 1: were trying are basically have to hold their nose and
16:51
Speaker 1: offer these services because the client demand is there. I mean,
16:54
Speaker 1: you can see that down to the level of E
16:56
Speaker 1: t f s. But it was interesting that you also
16:58
Speaker 1: heard the UBS chairman basically warn about you know, the
17:03
Speaker 1: staying power of crypto. So still a lot of skepticism.
17:06
Speaker 1: But I think the clearest indication that this is, you know,
17:09
Speaker 1: turning more mainstream, is just how worried the SEC is
17:12
Speaker 1: about it. And it's not just the SEC, it's the Treasury,
17:15
Speaker 1: it's the FED as well, particularly when it comes to
17:18
Speaker 1: stable coins. So I think that's a pretty strong sign
17:21
Speaker 1: it's big enough to worry about. And we're starting to
17:24
Speaker 1: see Gary Gensler, I mean, he understands and stuff. The
17:27
Speaker 1: new chairman of the SEC taught a course I guess
17:30
Speaker 1: at M I T and yet he and yet they
17:33
Speaker 1: allowed crypto e t F a crypto future and not
17:38
Speaker 1: an underlying I still don't understand why they made that decision.
17:43
Speaker 1: Was it pressure from Wall Street because they needed to
17:48
Speaker 1: deal in some kind of product? If you're gonna allow futures,
17:51
Speaker 1: why not allow the underlying I don't understand. It all
17:55
Speaker 1: comes back to control. I mean, we know that Genzler,
17:58
Speaker 1: in particular, he doesn't or he wants more control over
18:02
Speaker 1: the crypto exchanges, and so the logic there and letting
18:05
Speaker 1: the futures e t F launches that those options they
18:09
Speaker 1: trade on the CMME. That's that's regulated, whereas you know,
18:14
Speaker 1: just physical bitcoin, they don't really have any control over that.
18:17
Speaker 1: And of course now we're doing all these gymnastics and
18:20
Speaker 1: trying to point I know, right, but I mean, now
18:24
Speaker 1: you're in this situation where these funds have to pay
18:27
Speaker 1: roll costs, they don't perfectly track the price of bitcoin UM.
18:32
Speaker 1: So we're in a situation where is this really the
18:34
Speaker 1: best for investors? A lot of people would tell you
18:37
Speaker 1: know that if you truly want bitcoin exposure, you should
18:40
Speaker 1: just buy basin exactly, if you want bitcoin exposure, why
18:43
Speaker 1: would you wait around for an e t F Who cares?
18:46
Speaker 1: I mean, if you're buy bitcoin, go on corn bait
18:48
Speaker 1: coin base and get it corn based. I would like
18:50
Speaker 1: to go to cornas oo. But if you have mandates
18:55
Speaker 1: that prevent you from buying actual physical bitcoin or trading
18:59
Speaker 1: bitcoin derivatives, this does make sense for you. But I mean,
19:03
Speaker 1: we did see huge demand for the first of these
19:05
Speaker 1: products to launch about a month ago, but it's really
19:07
Speaker 1: really trying, you know what. I caught my eye, uh
19:09
Speaker 1: and I talked about those Paul already, Katie. When we
19:12
Speaker 1: see Amazon start to kick off payment UM companies like Visa,
19:19
Speaker 1: for example, this is the beginning of that, and eventually
19:24
Speaker 1: some blockchain technology is going to replace that. Amazon is
19:27
Speaker 1: going to say from now on, eventually we're going to
19:30
Speaker 1: accept so and so crypto coin. Maybe not Bitcoin or ether,
19:34
Speaker 1: maybe not finance or doge, but it's going to be
19:38
Speaker 1: something because they don't want to pay two percent, three percent,
19:43
Speaker 1: four percent to Visa master Card m X. That is
19:46
Speaker 1: when it truly becomes mainstream, I would argue. And maybe
19:49
Speaker 1: to your point, it's not any of the existing coins.
19:51
Speaker 1: Maybe it's the digital dollar. You know, we know that
19:53
Speaker 1: the fact Amazon creates its own the Amazon coin, you know,
19:57
Speaker 1: it could it could happen and they not have done
19:58
Speaker 1: that already. Hopefully someone from Amazon is listening, but I'm
20:02
Speaker 1: sure we will see. We are seeing a tiny uptick
20:06
Speaker 1: in uh, you know, actual businesses accepting crypto is payment,
20:09
Speaker 1: but for now it does just seem to be a
20:12
Speaker 1: vehicle of speculation at this point and trading as well.
20:15
Speaker 1: Katy gray Fail, thank you so much for joining us,
20:17
Speaker 1: Katie's Cross Asset reporter and Bloomberg Quick Take co anchor,
20:21
Speaker 1: joining us here in a Bloomberg Interactive Broker studio giving
20:24
Speaker 1: us a weekly crypto report. How cool is that man,
20:26
Speaker 1: we're talking crypto. We talked about it every day. It's
20:28
Speaker 1: so funny. She goes from the Treasury auctions, which are
20:32
Speaker 1: you know, old and conservative and so easy to put
20:36
Speaker 1: your finger onto, this crypto, which is so that's cross asset.
20:42
Speaker 1: Thank you very much. All right, talking about these markets,
20:47
Speaker 1: Matt and a lot of folks will say, boy, they
20:50
Speaker 1: froth the look no further than some of these recent
20:52
Speaker 1: I p os maybe the electric vehicle I p o s, Lucid, Rivan,
20:56
Speaker 1: things like that, not to mention the daily fluctuations of
21:00
Speaker 1: Tesla as a clear example of, Man, this market is
21:04
Speaker 1: really frothy. Let's check in with somebody who's done this
21:07
Speaker 1: for a time or two. Louis Navallier, Founder, chairman, CIO
21:11
Speaker 1: and chief Compliance Officer of Navaller and Associates. Louie, thanks
21:15
Speaker 1: so much for joining us here. When you see a Lucid,
21:17
Speaker 1: when you see a Rivian and the big pops they
21:21
Speaker 1: have and the huge valuations that they demand in this marketplace,
21:24
Speaker 1: what does that tell you? Don't, by the way, Louie,
21:27
Speaker 1: don't we just do navalier? Isn't that navalier? That's great?
21:31
Speaker 1: Navalier is how we say it in America and nage
21:33
Speaker 1: is how we say in Montreal. Okay, okay, anyway, Um, yeah,
21:41
Speaker 1: we have a bubbles that have to be pricked. And um,
21:44
Speaker 1: obviously the there's a lot of Tesla people, there's a
21:47
Speaker 1: lot of E. S G investors that are all excited
21:50
Speaker 1: about Ribbean and um Lucid, as it should be because
21:53
Speaker 1: the vehicles are getting rave reviews. But um, we've had
21:58
Speaker 1: too much too fast, and obviously the venture capitalists and
22:01
Speaker 1: the insiders will be cashing out as their stock becomes unrestricted.
22:05
Speaker 1: So you know, it's it's kind of like Quantum Escape
22:09
Speaker 1: was a very exciting stock and then they unrestricted a
22:12
Speaker 1: bunch of stock and the collapse. So that's what's going
22:15
Speaker 1: to happen here. I feel you on this. Having said that,
22:19
Speaker 1: I sure wish I bought Tesla ten years ago, and
22:23
Speaker 1: there's no reason that I can still I still can't
22:26
Speaker 1: understand the valuation. I don't know why Tesla is a
22:30
Speaker 1: trillion dollar company even if they sell a million cars
22:35
Speaker 1: a year, which they don't. Um, it doesn't make any
22:38
Speaker 1: sense to me. And nonetheless that stock is a huge winner. Well,
22:45
Speaker 1: Tesla did something very unique. Okay last year, if you
22:49
Speaker 1: went onto YouTube there was all these Tesla fanatics pumping
22:53
Speaker 1: the stock, but they were also getting paid to pump
22:57
Speaker 1: the stock. They would get free power walls, free model threes,
23:01
Speaker 1: and they gave away over eighty of those quarter million
23:04
Speaker 1: dollar roadsters referral credits. Tesla's stop that at the end
23:09
Speaker 1: of last year. So now when you want to YouTube,
23:12
Speaker 1: what's happening is, uh, those Tesla fanatics are now sponsored
23:17
Speaker 1: by Voltiwagon Group like e for Electric or other um
23:21
Speaker 1: some of the Chinese e V companies. So Tesla kind
23:25
Speaker 1: of lost a lot of its cheerleaders when it stopped
23:28
Speaker 1: paying for the favorable um press. All right, look, let's
23:32
Speaker 1: keep on this the e V discussion here, because we
23:36
Speaker 1: just got finished with Cop twenty six over in Glasgow
23:39
Speaker 1: talking about phasing out fossil fuels, phasing down, phasing down.
23:43
Speaker 1: I guess pa down that's the problem, right They nobody's
23:47
Speaker 1: willing to phase it out down exactly. So how do
23:51
Speaker 1: you think about that, Louis, as you think about you're investing,
23:54
Speaker 1: is this something that's in your strategy? Well, unfortunately, I'm
23:59
Speaker 1: from Berkeley, California originally, and I can tell you that
24:03
Speaker 1: what they did is totally delusional. You know Berkeley is
24:07
Speaker 1: antinatural gas. You cannot put natural gas in a new
24:10
Speaker 1: home in California. You can't even get a natural gas
24:14
Speaker 1: generator unless you're a commercial business of some sort um,
24:18
Speaker 1: so you have to do the walls, which helps in
24:20
Speaker 1: phase energy and GENERAC. But uh, the war against natural
24:25
Speaker 1: gas is stupid. We will still need natural gas in
24:28
Speaker 1: two thousand thirty five. And the fact that the US
24:32
Speaker 1: pledged and all fossil fuels for electricity generation is just
24:36
Speaker 1: not gonna happen. It's not gonna happen. And one of
24:39
Speaker 1: the things that most annoying is when they did the
24:43
Speaker 1: Federal Drilling Band, which of course was over written by
24:45
Speaker 1: a federal judge, but they're still hostile to drilling on
24:48
Speaker 1: federal land. We're just pumping out methane and UH and
24:53
Speaker 1: in the atmosphere because the wells were abandoned. Okay, now
24:56
Speaker 1: the big energy companies cap them, but the small producers don't.
25:00
Speaker 1: And so one of the plans and build back better
25:02
Speaker 1: America's we got a cap the wells that wouldn't be
25:05
Speaker 1: leaking if we didn't ban the drilly on total land
25:08
Speaker 1: and most of that into Mexico on the premium basin.
25:11
Speaker 1: So what do you got. What do you guys do
25:14
Speaker 1: at Navalier in terms of energy? Well, we we do
25:19
Speaker 1: like a lot of the midstream folks. And uh, you know,
25:25
Speaker 1: energy is a cyclical business. Uh, it doesn't normally go
25:28
Speaker 1: up this time of year. But Europe got caught flat footed.
25:32
Speaker 1: And of course you know Germany's delay of the Russian
25:35
Speaker 1: pipeline this week it's and everything's soaring. You know, Europe's
25:39
Speaker 1: burning record coal right now. And so they're a little
25:41
Speaker 1: bit of hypocritical too. So the thing that annoys me
25:44
Speaker 1: the most, I'm sorry to be so passionate about this,
25:48
Speaker 1: is that that Russian natural gas is five times dirtier
25:51
Speaker 1: than our natural gas. You know, we clean our natural gas, Okay,
25:55
Speaker 1: So um, you know there's a lot of there are
25:58
Speaker 1: a lot of hypocrites in Scotland. I have one of
26:00
Speaker 1: my associates there and it was it was interesting to
26:04
Speaker 1: get the reports from the field. Never apologize for your passion, Louis,
26:10
Speaker 1: but I'm sure that making money is probably up there
26:13
Speaker 1: in terms of the things that you feel strongly about.
26:17
Speaker 1: So what do you do right now? As we've run
26:20
Speaker 1: up so far, so fast? And you know, David Soloman
26:23
Speaker 1: from Goldman's actually just told our Francine Lacroix that he
26:26
Speaker 1: thinks greed has overtaken fear in this market. Um, how
26:31
Speaker 1: do you feel about the SMP five? All the major
26:36
Speaker 1: industries are overbought, but we're gonna stay overbought because November
26:40
Speaker 1: is such a seasonally strong month. This is the week
26:42
Speaker 1: to consolidate. Monday and Tuesday should be up. I don't
26:45
Speaker 1: care about the holiday training next Wednesday and Friday. Um,
26:49
Speaker 1: but Novembers of the season strong month, December seasonally strong
26:52
Speaker 1: will because it is November, and then January will be
26:55
Speaker 1: great because we go SURGI of all you and new
26:57
Speaker 1: pension funny. So the most likely time for correction is
27:00
Speaker 1: going to be uh sometime in Tybulary, but we're gonna
27:04
Speaker 1: stay overbought till then. But the small caps have done
27:06
Speaker 1: this month is just nuts, you know. You know, Citadel
27:10
Speaker 1: runs the markets nowadays, and Citadel cannot handle order and balances.
27:14
Speaker 1: So you know, Redd and Robin had proved that how
27:17
Speaker 1: to squeeze squeeze algorithms. Um, you know, I'm very familiar
27:21
Speaker 1: with this because I got a lot of subscribers when
27:23
Speaker 1: I recommend think things are popping too, and even you know,
27:27
Speaker 1: twenty billion dollar sized companies. So I'm uh, the out
27:31
Speaker 1: goals cannot handle volume anymore. So as long as we
27:34
Speaker 1: have these order and balances in this euphoria, we're going
27:38
Speaker 1: to stay overbought and uh, but obviously you have to
27:41
Speaker 1: correct once a year, so February is the most likely time.
27:44
Speaker 1: It's been a while since this market has had a qurection,
27:46
Speaker 1: and it is also calls for a lot of folks saying, oh,
27:49
Speaker 1: it's time we get one soon. And Louis Navalier, founder, chairman,
27:53
Speaker 1: ce IO and chief compliance officer at Navalier and Associates
27:58
Speaker 1: joining is here, uh looking for more overbought in this
28:03
Speaker 1: equity markets, perhaps a correction coming in February. With my takeaway,
28:08
Speaker 1: there we have mixed markets today. Thanks for listening to
28:12
Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to
28:16
Speaker 1: interviews with Apple Podcasts or whatever podcast platform you prefer.
28:20
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three.
28:25
Speaker 1: Pet On Ball Sweeney I'm on Twitter at pt Sweeney.
28:27
Speaker 1: Before the podcast, you can always catch us worldwide at
28:30
Speaker 1: Bloomberg Radio