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Airlines, Markets, European Economies, and ETFs (Podcast) · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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Speaker 1: my co host Matt Miller. Every business day we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
0:11
Speaker 1: with essential market moving news on 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. Let's talk to somebody
0:22
Speaker 1: who really knows what they're talking about as opposed to us.
0:24
Speaker 1: Liz Anne Saunders, chief investment strategists at Charles Schwab and
0:28
Speaker 1: the Proud University of Delaware, Blue Hen joins us. Liz,
0:32
Speaker 1: you know again, I was just quoting. I saw some
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Speaker 1: green on the screen. We got the SNP year to
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Speaker 1: date for just a few days here, up two points
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Speaker 1: six percent for the year. I'm wondering, if I just
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Speaker 1: take that and call it a year, what do you
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Speaker 1: think these markets are gonna do for us this year? UM? Obviously,
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Speaker 1: very much changes on the FED. I think right now
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Speaker 1: it's not so much that the stock market is fighting
0:53
Speaker 1: the FED. They may be fighting the Feds rhetoric, but
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Speaker 1: the bond market is probably fighting the SAID a bit
0:59
Speaker 1: more than the stock market. And I think it's a
1:01
Speaker 1: function of at what point can the Fed not pivot
1:04
Speaker 1: to to rate cuts. I think that would be an
1:06
Speaker 1: ugly scenario, but go into pause mode. The bond market
1:09
Speaker 1: is telling them that should be sooner rather than later.
1:12
Speaker 1: But um, that that is sort of sticking with their
1:15
Speaker 1: terminal rate above five percent, and then we're staying there,
1:18
Speaker 1: and that is not what the market has built into expectations.
1:22
Speaker 1: So I think a little more economic pain near term
1:25
Speaker 1: would actually be a better scenario for the stock market
1:27
Speaker 1: because it would provide that backdrop for the Fed to
1:31
Speaker 1: pause sooner than what they're suggesting. Having said that, Liz Anne, um,
1:36
Speaker 1: what do you expect for earnings? Because a couple of
1:39
Speaker 1: months ago everyone was saying, Okay, this looks so bad
1:42
Speaker 1: that executives are going to go ahead and throw everything
1:45
Speaker 1: at the fourth quarter. Um, you know, any kind anything
1:49
Speaker 1: you need to write off, any losses, you need to
1:51
Speaker 1: mark to market. That's going to happen now? Um is
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Speaker 1: it a free pass? Well, we're in a we're in
1:57
Speaker 1: sort of a pause period now for additional adjustments to
2:01
Speaker 1: fourth quarte earnings. And that's that's normal, given that we're
2:04
Speaker 1: only a couple of days away from the start of
2:06
Speaker 1: earning season, you did see pretty decent haircuts, and you
2:09
Speaker 1: continue to see haircuts. Two earnings for three. I think
2:13
Speaker 1: that you know at the end of the day or
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Speaker 1: at the end of this calendar year of two once
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Speaker 1: we get fourth quarter results. Right now, the consensus is
2:22
Speaker 1: somewhere around two eighteen dollars and UH earnings for the
2:25
Speaker 1: SMP UH has a risk of that number being lower
2:30
Speaker 1: than that, such that you get in calendar year terms
2:32
Speaker 1: year over year decline, which suggested estimates for three haven't
2:36
Speaker 1: come down enough, but they've come down significantly enough for
2:41
Speaker 1: the fourth quarter that for some segments of the market,
2:45
Speaker 1: only industrials, by the way, have had positive earnings revisions.
2:49
Speaker 1: Every other sector is either flat to negative. Financials in
2:52
Speaker 1: particular have seen a lot of estimate cuts that in
2:56
Speaker 1: theory sets up a lower bar and the possibility for
3:00
Speaker 1: better than expected earnings UH. And I think that is
3:03
Speaker 1: really key because their first out of the blocks to
3:06
Speaker 1: just a more broad assessment of whether UM cuts have
3:10
Speaker 1: been sufficient. At this point, Lisienne Charles Schwab tens and
3:14
Speaker 1: tens of millions of clients account holders. How did you
3:19
Speaker 1: put into context for them, and how are you are
3:23
Speaker 1: you positioning given what happened last year and both equities
3:27
Speaker 1: and fixed income right exactly. So obviously it was a
3:30
Speaker 1: very difficult year for blended portfolios of stocks and bonds,
3:34
Speaker 1: in many ways the worst in history, and that was
3:38
Speaker 1: unsettling for clients. But as we put in the collection
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Speaker 1: of our three outlooks, not just hours on the equity side,
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Speaker 1: but you know my colleague Cathy Jones, so I know
3:48
Speaker 1: you guys know over there on the sixth income side,
3:51
Speaker 1: we really were reinforcing the better environment for the bond market,
3:56
Speaker 1: and I think that's a better set up for investors.
4:00
Speaker 1: Were extrapolating that the negative returns in both asset classes
4:04
Speaker 1: we're going to persist in and we were really emphasizing
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Speaker 1: that that was not likely the case in terms of
4:10
Speaker 1: within the equity market. What our recommendations were in two
4:14
Speaker 1: have continued into at least the first part of three,
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Speaker 1: which is take more of a factor based approach than
4:20
Speaker 1: a sector based approach. Stay up in quality, look for
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Speaker 1: factors that represent what's dear from a macro perspective, so
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Speaker 1: positive earning to revision, strong free cash flow, shorter duration equities,
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Speaker 1: dividend growers, and at least for the early part of three.
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Speaker 1: We continue to suggest that that's the best way on
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Speaker 1: the equity side of portfolios to navigate through this. And
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Speaker 1: then lastly, consider stepping up the pace of rebalancing. If
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Speaker 1: you're more of a calendar based rebalancing, maybe consider volatility
4:50
Speaker 1: based rebalancing, so taking advantage of volatility across asset classes
4:56
Speaker 1: to make some adjustments and do what we all know
5:00
Speaker 1: we're supposed to, which is, you know, by low cell
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Speaker 1: high or add low trim high. We've heard more and
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Speaker 1: more strategies come out and say they like Europe in
5:08
Speaker 1: three and I know it's only been you know, handful
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Speaker 1: of trading days so far, but European equity index is
5:14
Speaker 1: on the continent are up six and the US is
5:19
Speaker 1: only up one or two or three percent. Thing where
5:21
Speaker 1: you look, is that a rally that has legs? Do
5:26
Speaker 1: you think europe continuous er market's also up quite a
5:29
Speaker 1: bit year to date that you know, we're very early
5:31
Speaker 1: in the year to state the extreme obvious, but we've
5:35
Speaker 1: been saying that in the past. When you go through
5:38
Speaker 1: what I generally call these dual cycles, where you you
5:41
Speaker 1: have an expansion that turns into a recession or a
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Speaker 1: severe slowdown. I've been calling it a rolling recession in
5:48
Speaker 1: conjunction with a bear market. When you come out of
5:51
Speaker 1: those dual cycles and you start a new cycle, both
5:53
Speaker 1: in the economy and in the market, you tend to
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Speaker 1: see pretty significant shifts in leaders ship at the broad
6:01
Speaker 1: asset class level. And one of those that we've been
6:03
Speaker 1: emphasizing is pretty likely is maybe a shift back to
6:07
Speaker 1: some international outperformance or at least an environment that's supportive
6:13
Speaker 1: of staying diversified with international that that we're probably past
6:17
Speaker 1: the days where you can easily say, you know what,
6:19
Speaker 1: it's everything is US, Why should I have my money
6:23
Speaker 1: invested anywhere other than the US. We think that is
6:26
Speaker 1: largely transitioning, and that may be partly reflected in what
6:31
Speaker 1: we're seeing with the out performance of both IFA and
6:33
Speaker 1: e M. So it's not a sell your US by international.
6:37
Speaker 1: Let's just make sure you haven't, particularly via lack of rebalancing,
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Speaker 1: let the diversification wane via your international exposure going to
6:46
Speaker 1: a significantly lower percentage of port forward. And let me
6:48
Speaker 1: ask you about the retail investor cultural is in because
6:53
Speaker 1: it really exploded, uh, you know, on the fringes you
6:56
Speaker 1: had the Wall Street bets and the meme stocks. But
6:59
Speaker 1: I think a lot more people started to pay attention
7:01
Speaker 1: to the market, if only because they had more time
7:05
Speaker 1: and nowhere else to spend money through the throughout the pandemic.
7:09
Speaker 1: Is that going to hold to some extent do you think?
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Speaker 1: Or was that a flash in the pan? Well, it
7:13
Speaker 1: wasn't really a flash in the pan. It really represented
7:15
Speaker 1: a new cohort, kind of newly minted day traders that
7:19
Speaker 1: the younger cohort, and it did fuel speculative pockets of
7:22
Speaker 1: the market like heavily shorted stocks and nonprofitable tech um
7:28
Speaker 1: even some trading in the zombie companies. Obviously the meme stocks.
7:31
Speaker 1: I think that morphed over into the spack space and
7:34
Speaker 1: the crypto space, and that's where you saw these kind
7:36
Speaker 1: of microbubbles driven by that cohort pop in spectacular fashion.
7:42
Speaker 1: And I think some valuable lessons were learned by that cohort.
7:46
Speaker 1: But then there are some of the big ones, even
7:47
Speaker 1: some of the fangs, right, I mean teslast that was
7:52
Speaker 1: less spect driven, but driven by the surgeon inflation and
7:56
Speaker 1: in turn and aggressive stance by the set raising the
8:00
Speaker 1: discount rate. And when you're looking at companies that don't
8:03
Speaker 1: have near term cash flows or earnings. That makes those
8:06
Speaker 1: very far in the future earnings much less valuable. So
8:09
Speaker 1: I think that that was more of a fundamental thing
8:12
Speaker 1: that occurred in conjunction with maybe some of the speculations
8:15
Speaker 1: sitting behind it. So I think there's been lots of
8:17
Speaker 1: explanations depending on what asset class you're talking about or
8:20
Speaker 1: what cohort you're talking about. All right, Lizianne, thank you
8:23
Speaker 1: so much for joining us. We always appreciate getting a
8:25
Speaker 1: few minutes of your time, Lizianne Saunders. She's the chief
8:28
Speaker 1: investment strategist of course. Over there at Charles Schwab the
8:35
Speaker 1: latest aunt what's happening in Europe. There's an interestingt story
8:39
Speaker 1: on the Bloomberg terminal here headline Europe's inflation anxiety is
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Speaker 1: fading quicker than prices. To get the latest on here,
8:47
Speaker 1: we always turned to Maria today, so she's we don't
8:50
Speaker 1: turn to Maria today or no, that's right, are more
8:53
Speaker 1: often I'm today our European corresponding for Bloomberg News. She's
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Speaker 1: based in our Brussels bureau. That's where she is today.
9:00
Speaker 1: It's the capital of the European Union. Of course, that's
9:03
Speaker 1: where you gotta be if you're Maria today. Maria, I
9:06
Speaker 1: know you had a conversation recently the Belgium's Prime Minister,
9:09
Speaker 1: Alexander de Crue. What did you guys talk about? What
9:12
Speaker 1: were your takeaways? Look, this was a conversation we had yesterday.
9:17
Speaker 1: Of course is January tenth, eleventh, that's what we did
9:21
Speaker 1: the interview yesterday. This is a happy new Year. I
9:24
Speaker 1: talked about this with Matt. In continental Europe, you still
9:27
Speaker 1: say happy new year. The years only just getting started now,
9:31
Speaker 1: and if your Spanish, you can take it out for
9:33
Speaker 1: like maybe two or three more weeks and it's actually yeah,
9:36
Speaker 1: And that's how it is. Especially this is about Senity agenda,
9:40
Speaker 1: and I guess perhaps you both will agree with this
9:43
Speaker 1: idea that there has been this shift, this huge turnaround
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Speaker 1: in the European story. I remember before I went to
9:50
Speaker 1: my Christmas break, this is all about the winter from Hell,
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Speaker 1: this emminent recession in Europe, the energy crisis, the gas
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Speaker 1: prices and all this rocketing. And then we're now back
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Speaker 1: and Goldman Sacks has just dropped the recession called They
10:03
Speaker 1: now see growth of zero point six percent for this year.
10:07
Speaker 1: It's not great, but it's not the contraction they expected.
10:10
Speaker 1: You have Deutsche banks say, actually, the Europe and the
10:13
Speaker 1: European Union, the meeting Europe could be a winner of
10:16
Speaker 1: the China reopening. It has been chaotic, but it could
10:19
Speaker 1: be good for sectors like luxury and tourism. And yesterday
10:22
Speaker 1: when I spoke with the Belgium Prime minister, he actually
10:25
Speaker 1: told me from his perspective, and of course he sees
10:28
Speaker 1: this as a politician, he also got this impression that okay,
10:33
Speaker 1: we can breathe. The crisis is not over, but the
10:36
Speaker 1: worst case scenario has not manifested. So I think that's
10:40
Speaker 1: pretty amazing news. The Goldman Sachs upgrade the idea that
10:44
Speaker 1: this inflation um in Europe is coming down more rapidly
10:48
Speaker 1: than had been anticipated, and I wonder what it means
10:52
Speaker 1: for the e c B. I'm sure they still want
10:54
Speaker 1: to tighten because you know, if you look around the world,
10:58
Speaker 1: you can use your f CEO and go function and
11:00
Speaker 1: too to look at fiscal financial conditions in Europe as well.
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Speaker 1: They are still easing, but you know, if they have
11:07
Speaker 1: strong UH or if they have a rapid decline inflation
11:10
Speaker 1: and decent growth, you know, zero point six percent for Europe.
11:14
Speaker 1: That's pretty good. Um, they really don't have to raise
11:17
Speaker 1: too much more, do they? Absolutely? I think you can
11:20
Speaker 1: look at it two ways. You know, if you have inflation,
11:23
Speaker 1: and I guess they'll say, yes, it's headline inflation that's dropping.
11:27
Speaker 1: And there's respect to the energy and of course the
11:29
Speaker 1: energy bills have gone down because the wholesale price have
11:32
Speaker 1: gone down, but the core elements of inflation continue to
11:35
Speaker 1: be on acceptably high. And remember the European Central Bank,
11:38
Speaker 1: and you covered this for years, Matt. This is a
11:40
Speaker 1: single mandate central bank. It's a two percent and they
11:43
Speaker 1: have really missed the boat now for for almost a year.
11:46
Speaker 1: And beyond that, with the criticism of the central bank
11:49
Speaker 1: is that the entire diagnosis of inflation, they also got
11:52
Speaker 1: it wrong. Remember for many months they said to just
11:55
Speaker 1: all a one off and then it would cold down,
11:57
Speaker 1: and then it was in transic and then it would
11:59
Speaker 1: stay on. So I see there is a lot of
12:00
Speaker 1: scrutiny and the European Central Bank on getting things right.
12:03
Speaker 1: Uh this year. Now you could argue, as I say,
12:05
Speaker 1: it's both ways. If you don't have this recession, then
12:08
Speaker 1: you don't have this argument that, oh you can't hike
12:11
Speaker 1: so aggressively because you hike into recession. But if you
12:15
Speaker 1: do see this price pressure actually go down and really
12:18
Speaker 1: reflect on a more sustainable basis, but maybe you don't
12:21
Speaker 1: have to be as aggressive. The problem is, and this
12:24
Speaker 1: is the issue for Christian le guard. If you remember
12:26
Speaker 1: that December meeting, she repeated so many times I lost
12:29
Speaker 1: track of this. We're not going to pivot, We're going
12:32
Speaker 1: to continue to hike. There is essentially no limits to
12:35
Speaker 1: the actions that we can take to bring that inflation
12:37
Speaker 1: back to target. And she really put herself in this box.
12:41
Speaker 1: Next high gets fifty basis points, and she wouldn't rule
12:43
Speaker 1: out there would be more fifty basis points to come.
12:46
Speaker 1: So she cornered herself in a way that now it
12:48
Speaker 1: is tricky in this changing environment. Maria, give us the
12:51
Speaker 1: latest on the energy environment in Europe these days, going
12:55
Speaker 1: into the winter. Obviously there's grave concerns because of the
12:58
Speaker 1: supply issues from resulting from the Russian Ukraine War. Where
13:03
Speaker 1: are we today and kind of what's the outlook for
13:06
Speaker 1: energy in Europe? Well, look, I think today we heard
13:11
Speaker 1: from the Nature Secretary General. Of course we're talking about
13:14
Speaker 1: this idea that perhaps things are better for Europe now
13:18
Speaker 1: and and this terrible winter, you know, the winter from
13:20
Speaker 1: Hell did not manifest for continental Europe, but in in
13:24
Speaker 1: in Ukraine. And of course it's to be very serious
13:26
Speaker 1: about this. The war still going on, and we know
13:29
Speaker 1: it is costing the lives of Ukrainians and and the
13:32
Speaker 1: soldiers d RMY. Just a damage that has been done
13:35
Speaker 1: to this country for a year's very traumatic experience. We
13:38
Speaker 1: did hear from the Nature Secretary General today say there
13:41
Speaker 1: is fierce fighting going on in Solidor and back that
13:44
Speaker 1: would be significant, a symbolic victory for Russia if they
13:47
Speaker 1: managed to take the two towns, that's fat for Ukraini
13:50
Speaker 1: and we're out. But again insisting we have to give
13:53
Speaker 1: Ukrainians everything that they asked for. And this goes back
13:56
Speaker 1: to the perennial debate if shoot Germany sent the banks,
14:00
Speaker 1: and this is something that Matt knows very well. The
14:03
Speaker 1: Germans do not like to be the first in doing
14:06
Speaker 1: something that is perceived as aggressive. They do not like
14:10
Speaker 1: to be the pioneer in that sense, and and they
14:12
Speaker 1: like to stay in the consensus when it comes to
14:14
Speaker 1: the military in the army, and again there's a lot
14:17
Speaker 1: of inertia to the feet from the Mercal years. So
14:20
Speaker 1: the elephant in the room is are we going to
14:21
Speaker 1: see the tanks delivered to Ukraine or not. I can't
14:24
Speaker 1: even imagine that they have any tanks. I mean, this
14:26
Speaker 1: is a country where soldiers had to exercise with broomsticks
14:30
Speaker 1: since they didn't have enough rifles. You know, I think
14:33
Speaker 1: they had one sub and it wasn't working. They had
14:36
Speaker 1: a couple of a four hundreds and one of them
14:38
Speaker 1: was down. Remember even angel A Miracle couldn't get on
14:41
Speaker 1: a military flight because they didn't have the crew. So
14:44
Speaker 1: Germany is woefully underprepared for any kind of military conflict.
14:48
Speaker 1: I want to quickly search the subject because we started
14:50
Speaker 1: out talking about Brussels, the capital of European Union. You
14:53
Speaker 1: lived there and have for many years. Do you like it?
14:56
Speaker 1: Would you rather live in Paris or Madrid? What do
14:59
Speaker 1: you think? What's your what's your pick? If you had,
15:02
Speaker 1: if you had, if you could choose, where would you go? Listen?
15:05
Speaker 1: I bought a house in the south of Spain. This
15:08
Speaker 1: is a real scoop. That's where I see myself. I am.
15:12
Speaker 1: The older I get, the more Spanish I feel. But
15:15
Speaker 1: at times I also, you know, I have this very
15:17
Speaker 1: bipolar mind in which I've always worked my entire life
15:20
Speaker 1: for Bloomberg, a very U S company, a very international
15:24
Speaker 1: So at times I feel like my brain goes in
15:27
Speaker 1: short circuit. I have an impulse it's very Spanish, and
15:31
Speaker 1: then this kind of Anglo thing kicks in, and then
15:34
Speaker 1: I try to like bring myself in. But going back
15:36
Speaker 1: to your question, and I'm very happy in Brussels. I
15:38
Speaker 1: do not see myself retiring here. I know I will
15:41
Speaker 1: go back retiring. She's barely turned thirty and she's talking
15:45
Speaker 1: about retiring. I think about my famish a lot. You know,
15:49
Speaker 1: I wasn't staying over the Christmas holidays, and I would
15:52
Speaker 1: see the pensioners and I'll be like, it's a very
15:54
Speaker 1: nice life. It's good, and I'm glad that a young kid,
15:58
Speaker 1: uh your age, is thinking about retirement. That's a smart
16:02
Speaker 1: and prudent. But I have to say, I worked a
16:05
Speaker 1: lot and I saved a lot. Well, that's good, that's good.
16:08
Speaker 1: That's what the young folks, that's what they should do.
16:10
Speaker 1: That more people should be like Maria exactly. I don't
16:13
Speaker 1: do a lot of brunch. My life is very I mean,
16:16
Speaker 1: all I do is work. Eventually, she doesn't do a
16:19
Speaker 1: lot of brunch. Not enough avocado toast for Maria Today O. Exactly,
16:23
Speaker 1: she's a saver. All right, let us know the next
16:25
Speaker 1: time you're in New York. Well, we'll change that. We'll
16:27
Speaker 1: get you out the brunch. Maria Today O. She covers
16:29
Speaker 1: all the all of Europe for Bloomberg News television radio.
16:33
Speaker 1: She kind of does it all. She's based it is
16:35
Speaker 1: a newshound. By the way, she's one of those people
16:37
Speaker 1: who's working seven. She'll wake up in the middle of
16:40
Speaker 1: the night, check her Twitter feed, you know, check the markets. Um,
16:44
Speaker 1: she's a star. I mean's she's a star star. And
16:47
Speaker 1: she's based in Brussels, which is where you need to
16:49
Speaker 1: be if you're covering Europe. That whole European Union thing
16:52
Speaker 1: is still thinking. That's based in Brussels. So it's good
16:54
Speaker 1: to have Maria checking in with us. Nathan Hagar, passing
17:01
Speaker 1: along the Bloomberg red headline, Delta Airline says will issue
17:04
Speaker 1: fair waiver for January eleven flights. So they got that
17:08
Speaker 1: going for them, is Nathan air waiver. So wait, you
17:11
Speaker 1: don't want to pay for flights today? I don't know.
17:13
Speaker 1: Maybe maybe it's like if you're changing your I don't
17:15
Speaker 1: know what. We've got more reporting on. Yeah, we can
17:19
Speaker 1: talk to George Ferguson. You know why, because he covers airlines, aerospace,
17:24
Speaker 1: all that kind of stuff. Should we dial him up? Yeah,
17:27
Speaker 1: we got him here. I got him right here on
17:28
Speaker 1: on the line. That's that's how he works. He's always
17:30
Speaker 1: on air. George, thanks for joining us here. From your perspective,
17:35
Speaker 1: kind of what happened today, and it's I don't remember
17:38
Speaker 1: it happening before, but just the nuts and bolts kind
17:41
Speaker 1: of what happened today to the f a A A. I mean,
17:44
Speaker 1: it looks like that there are no tam system. Noticed
17:47
Speaker 1: the Airman system which advises you know, pilots and other
17:50
Speaker 1: other people in the industry on problems. I went down.
17:55
Speaker 1: It's a it's a safety system, right, and so I
17:57
Speaker 1: think in order to keep people as safe as possib well,
18:00
Speaker 1: they initiated a stop on on traffic, which is the
18:03
Speaker 1: right thing to do, and now it appears that they're
18:07
Speaker 1: in the middle of resolving it and starting to move
18:10
Speaker 1: move the traffic. So, George, does this indicate that our
18:14
Speaker 1: Federal Aviation whatever the A is UM Association administration? Thank you?
18:20
Speaker 1: I got two out of the three. Um f A A.
18:23
Speaker 1: Do they need to come into the twenty one century
18:26
Speaker 1: from a technology perspective that they need some investment here?
18:29
Speaker 1: But hang on, the no tam system doesn't go down
18:31
Speaker 1: every few weeks. I've never heard of this. I've never
18:32
Speaker 1: heard of it either. I'm just I'm just kind of wondered.
18:34
Speaker 1: Does this is this the tip of an iceberg or
18:36
Speaker 1: anything like that? Well, I mean, I don't think it's
18:38
Speaker 1: a tip of an iceberg, but for sure there's there
18:40
Speaker 1: could be money spent to bring them, uh further up
18:43
Speaker 1: the curve and technology, right, and so the government agency,
18:47
Speaker 1: you know, they're um, every everything is a function of budgets.
18:50
Speaker 1: There's lots of different priorities in the federal budget. Uh
18:54
Speaker 1: and probably when we you know, we're busy deciding in
18:57
Speaker 1: Congress what we're gonna spend our money on the no
18:59
Speaker 1: tamps system probably near the bottom of this, right. So,
19:02
Speaker 1: I don't know, Well, it works perfectly every other day, exactly.
19:05
Speaker 1: I've never heard of that before. You I hadn't either. Um.
19:08
Speaker 1: In any case, I'm glad that they h you know,
19:12
Speaker 1: paused while they were fixing it. Or I guess we
19:15
Speaker 1: don't really know what's happened to it yet I just
19:17
Speaker 1: saw that Pete Buddha Judge tweeted they're gonna basically do
19:21
Speaker 1: an autopsy and recommend a fix if they find a problem. Um, nonetheless,
19:27
Speaker 1: I would expect this kind of thing to back up
19:30
Speaker 1: flights for the rest of the day, if not a
19:33
Speaker 1: few days. Is that? Is that? Am I on or
19:36
Speaker 1: or or can they get back to normal in a
19:38
Speaker 1: few hours? No, I think you're right. I think I
19:41
Speaker 1: think this will impact operations for I think I think
19:45
Speaker 1: you're going to see even in tomorrow and you could see,
19:49
Speaker 1: you know, little remaining problems throughout the week. But look,
19:52
Speaker 1: if you're gonna have this problem, probably after the holidays
19:57
Speaker 1: in mid January, probably your time, not a It's not
20:01
Speaker 1: an intense time for travel, although we do have the
20:03
Speaker 1: three day weekend coming up. It's not an intense time
20:06
Speaker 1: for travels. With the recovery ought to be easier than
20:08
Speaker 1: it would be had we had this problem. All right,
20:11
Speaker 1: I'm flying on Sunday, George. You just get it all
20:13
Speaker 1: cleared up by then. I expect that. So, all right,
20:16
Speaker 1: so let's pull back and look at your airline industry, George,
20:19
Speaker 1: one of the questions, is just capacity. Where are we
20:22
Speaker 1: today in terms of capacity, number of planes, number of routes,
20:26
Speaker 1: Where are we today versus pre pandemic? So we keep
20:29
Speaker 1: creeping up one levels of capacity, which is kind of
20:33
Speaker 1: the benchmark we keep using. Uh, we haven't exceeded it.
20:37
Speaker 1: I think it's going to take us until this summer
20:40
Speaker 1: to to sort of exceed that high water mark. Um,
20:43
Speaker 1: Domestic closer to that twenty nineteen level of capacities than
20:48
Speaker 1: international Asia well behind you know, um that twenty nineteen
20:54
Speaker 1: level still where there's still sort of reawakening in Asia, uh,
20:58
Speaker 1: you know, reopening things. So, um, they're considerably below levels,
21:04
Speaker 1: but we're still sub in all markets. What about pricing?
21:08
Speaker 1: I mean, my wife always complains about how expensive flights are,
21:11
Speaker 1: but then I remind her that, um, it seems to
21:14
Speaker 1: me that the prices have been the same since I
21:16
Speaker 1: was a kid. You know, I fly back and forth
21:18
Speaker 1: to Columbus, Ohio from New York City all the time,
21:20
Speaker 1: and I can I could get tickets back then for
21:23
Speaker 1: two hundred bucks, and I can get tickets now for
21:25
Speaker 1: two hundred bucks. So does that change? I? Well, I
21:29
Speaker 1: I agree with you. I think that there's always a
21:30
Speaker 1: lot of sensitivity around airline pricing, and lately it's been higher, um, right,
21:35
Speaker 1: and it's above levels of of prices to which is
21:40
Speaker 1: what we watch. Again, we sure of benchmarking a lot
21:42
Speaker 1: of stuff against twenty nineteen. But fuel prices are are
21:45
Speaker 1: much higher than they were in twenty nineteen. They're settling
21:47
Speaker 1: back down, and I would expect the airlines to give
21:50
Speaker 1: that back to the consumer because it's a very competitive marketplace. Um.
21:55
Speaker 1: But I mean, I personally don't think you know, it's
21:58
Speaker 1: definitely haven't you know, risen faster than inflation. In fact,
22:03
Speaker 1: I think Airlines for America showed some numbers that showed
22:06
Speaker 1: pricing did sort of decline over that period. But again,
22:09
Speaker 1: fuel has a lot weighs into that a lot, and
22:11
Speaker 1: fuel has been pretty relaxed since the middle of last decades. So,
22:16
Speaker 1: and labor I gather is still a problem. I heard
22:18
Speaker 1: you talking with Tom and Paul about it earlier. Um.
22:21
Speaker 1: Some airlines are starting academies to train pilots, and they've
22:26
Speaker 1: got to convince people that flying planes is fun again?
22:29
Speaker 1: Is flying planes fun? These big airliners? George, do you
22:33
Speaker 1: think you know pilots that are um at the helm
22:38
Speaker 1: of a you know Boeing Dreamliner are having a good
22:41
Speaker 1: time or is it? Um all automated and they're like
22:45
Speaker 1: board and napping like flying a computer right, Um, I
22:49
Speaker 1: don't know. I mean I gotta think that doing like
22:51
Speaker 1: a Cat three approach to Newark Airport in the middle
22:54
Speaker 1: of a rainstorm, no visibility outside, with a heads up
22:57
Speaker 1: display telling you how far you got to go to
22:59
Speaker 1: the threat world, that sounds like a lot more fun.
23:02
Speaker 1: Thank the guys I know, Um I talked to. They'll
23:08
Speaker 1: list all the problems in their business, right, and then
23:11
Speaker 1: when they're all done, they always say, but you know,
23:14
Speaker 1: I love what I do, right, And so I think
23:16
Speaker 1: that I think it is fun. Matt, you're still younger.
23:19
Speaker 1: If you could go a retrain man, become a you know,
23:21
Speaker 1: I have friends kids, uh, friends who are kids and
23:25
Speaker 1: they live on these simulators. And a buddy of mine
23:29
Speaker 1: in Berlin, um, Fritzie Burger. He desperately wants to fly
23:34
Speaker 1: big airliners. And I always say, why aren't you flying
23:37
Speaker 1: fighter planes on these stems. He's like, Nah, I'd rather
23:39
Speaker 1: fly like an eight retrain right school is George just
23:41
Speaker 1: told us in the past this industry needs pilots, Uh, desperately.
23:46
Speaker 1: So again, a younger person, go retrain, Go do it.
23:49
Speaker 1: George Ferguson, Uh, he is too old to retrain, let's
23:52
Speaker 1: be honest. He but he is a very sounds young
23:55
Speaker 1: and healthy he is, and he's a former Army captain
23:58
Speaker 1: in intelligence. We thank him for service always. George Ferguson
24:01
Speaker 1: covers the airlines, the aerospace, all that kind of fun
24:04
Speaker 1: stuff for Bloomberg Intelligence. He's based in our Princeton, New
24:08
Speaker 1: Jersey office. Well, we have Will Ryan to the studio.
24:13
Speaker 1: He's in studio. This is I think the first time
24:15
Speaker 1: he's been in studio. We talked to Will all the
24:16
Speaker 1: time about E T F and stuff like that, but
24:19
Speaker 1: I think this might be the first time in studio,
24:21
Speaker 1: certainly since the pandemic. Will Ryany's the chief executive officer
24:23
Speaker 1: granted chairs Advisors. Well, we asked you what we want
24:27
Speaker 1: to talk about, and then Matt blurted out, let's talk gold.
24:29
Speaker 1: So I'll definitely talk. We'll look at the chart, dude,
24:31
Speaker 1: I mean, you're right. Try in x a U currency,
24:35
Speaker 1: and you know, we hit a low of about sixteen
24:38
Speaker 1: thirty back in November, the very beginning of November, and
24:42
Speaker 1: it's shot up since then right now trading at eighteen
24:45
Speaker 1: sixty eight, but it's been a little bit higher. Well
24:48
Speaker 1: why why is that? Is that people kind of hedging
24:51
Speaker 1: for a recession or our investors getting ahead of a
24:56
Speaker 1: fed pivot um Because I would think an rising rate
24:59
Speaker 1: enviro a mint gold which yields you know, a donut
25:04
Speaker 1: isn't very attractive. Yeah, I mean, the the story of
25:07
Speaker 1: last year was really all about the dollar. So because
25:10
Speaker 1: you had rising rates and aggressive rising rates, you know,
25:14
Speaker 1: we saw the dollar going to a high, and it's
25:16
Speaker 1: a high, but you know, a multi decade high when
25:19
Speaker 1: you compared the dollar with other currencies around the world.
25:23
Speaker 1: So the gold really struggled in that environment. But what
25:26
Speaker 1: you've seen from the chart is the moment that the
25:28
Speaker 1: dollars started to back off, you know, gold started to
25:31
Speaker 1: rock it. And that is you know, that's some of
25:33
Speaker 1: the expectations of the terminal rate being softer than people expect.
25:38
Speaker 1: But it's really more of a dollar story for me.
25:40
Speaker 1: And is it. Are you seeing inflows into the gold
25:43
Speaker 1: eat ETFs people trying to jump onto this trade? Yeah,
25:45
Speaker 1: we we we are. I mean it's not as not
25:48
Speaker 1: as kind of big as you might think. I think
25:50
Speaker 1: that because of last year and because of still the
25:54
Speaker 1: dollar strength and still a bit of uncertainty around where
25:57
Speaker 1: we end up on the interest rate side. Um, we're
25:59
Speaker 1: not seeing that right now as much as perhaps you
26:02
Speaker 1: might see from the chart, but you know, certainly it's
26:05
Speaker 1: going to be renewed interests and of course if we
26:07
Speaker 1: do go into a slowdown, UM, I think it could
26:10
Speaker 1: be a little bit more like we saw in two
26:11
Speaker 1: thousand and eight, where you know, gold backed off pretty
26:14
Speaker 1: sharply initially when everybody was selling assets and discriminately, but
26:19
Speaker 1: then bounce back very quickly and end of the year positive.
26:22
Speaker 1: You know, when people start to think about a hedge
26:24
Speaker 1: against the market collapse. So BAR is, I guess, your
26:30
Speaker 1: big gold etf, right, Um, how do you differentiate that
26:33
Speaker 1: from other gold ETFs. There's a good question. I mean,
26:37
Speaker 1: at the high level, there are things like we have custody,
26:40
Speaker 1: so where we actually store the goals a different location
26:43
Speaker 1: to some of the other ETFs. You know, the fee
26:46
Speaker 1: is probably the main thing that people will point out.
26:48
Speaker 1: So you know, Bar is significantly less expensive than say
26:51
Speaker 1: the largest gold et F and the market the g
26:54
Speaker 1: l D or I even I a U UM, we
26:57
Speaker 1: have some other governance things in terms of the amount
26:59
Speaker 1: of order that we have in terms of independent inspectors
27:02
Speaker 1: coming in and looking at the gold and publishing that online.
27:06
Speaker 1: But I think a lot of people just look at
27:08
Speaker 1: the fee and say it's cheaper. You told us, we
27:10
Speaker 1: he before we started here that we need to pay
27:12
Speaker 1: attention to platinum. Why platinum p LTM is your platinum TM. Yeah,
27:17
Speaker 1: so so p LTM is is the platinum metf for
27:19
Speaker 1: platinum was the best performing precious metal last year. So
27:22
Speaker 1: who ended the year eleven percent up in a market
27:25
Speaker 1: where obviously most of things were down. The reason why
27:29
Speaker 1: it is kind of interesting. So platinum is used in
27:31
Speaker 1: catalytic converters, mainly for diesel engine vehicles, and despite all
27:37
Speaker 1: of the negative news that you hear about the economy
27:40
Speaker 1: slowing down, autos is actually still one of the bright spots.
27:43
Speaker 1: So auto sales are expected to increase this year and
27:48
Speaker 1: even next year, which is good obviously four sales of
27:51
Speaker 1: catalytic converters. But the main thing I think with platinum
27:55
Speaker 1: is that the markets going into a deficit, or is
27:58
Speaker 1: in a deficit, i should say, which means that there's
28:01
Speaker 1: more demand than there is supply. Where do you get platinum.
28:04
Speaker 1: We get platinum from South Africa is the main country, Russia.
28:09
Speaker 1: Russia is the secondary country, but the main, the main
28:12
Speaker 1: depository is in South Africa. And that's a contrast. It's
28:15
Speaker 1: a palladium which is also used in catalytic converters, where
28:17
Speaker 1: the majority comes from Russia. Which is why you're telling
28:21
Speaker 1: is the industry is trying to switch towards platinum. For
28:25
Speaker 1: even gasoline engines, typically they use palladium, but I guess
28:29
Speaker 1: some of them want to stay away from Russia for now. Yes,
28:31
Speaker 1: so it's a big, big potential demand source for platinum
28:34
Speaker 1: because they can be used interchangeably in catalytic converters. And
28:37
Speaker 1: typically we've seen palladium being used over platinum because it
28:41
Speaker 1: was a lower cost. But the price of palladium skyrocket
28:44
Speaker 1: and is now trading a lot higher than the price
28:47
Speaker 1: of platinum. And then you had the situation last year
28:50
Speaker 1: which no one could have foreseen, which was the Ukraine War.
28:54
Speaker 1: And one thing that I think is something that auto
28:57
Speaker 1: manufacturers starting to think of, in addition to just the
29:00
Speaker 1: lower cost of platinum for substitute, is the ethical considerations
29:03
Speaker 1: around sourcing metal from Russia. So if it's a case of, well,
29:08
Speaker 1: we can get a cheaper metal, which is platinum, and
29:10
Speaker 1: we don't have to source it from Russia. Sounds like
29:12
Speaker 1: a win win, and I think that will increase the
29:14
Speaker 1: demand for platinum. So you've got the gold e t
29:17
Speaker 1: F bar, you've got platinum, you've got the Combined Bloomberg
29:21
Speaker 1: Commodities Index et F as well. Um, but you're some
29:24
Speaker 1: of your other products are really interesting to me before
29:27
Speaker 1: we get to like short Tesla and long Baba which
29:32
Speaker 1: has gone crazy this year. What is hips? That is
29:35
Speaker 1: a high income e t F and I see some
29:39
Speaker 1: interesting holdings here to to talk us through this e
29:41
Speaker 1: t F. So, so hips, actually the acronym stands for
29:43
Speaker 1: high income pass through securities. So that's an interesting part
29:47
Speaker 1: of the market where you have they're all non corporate taxpayers.
29:52
Speaker 1: So example of a pastory security could be a REAT,
29:55
Speaker 1: it could be an MLP, massive Limited partnership b DC,
30:00
Speaker 1: your business development company, or a closed and fund. But
30:04
Speaker 1: the thing they have in common is they don't pay
30:06
Speaker 1: corporation taxes, so you automatically start with a higher level
30:09
Speaker 1: of yield. So HIPS is like a ten percent yielding
30:13
Speaker 1: product right now. The underlying is not fixed income UM,
30:17
Speaker 1: so they're equity like securities. But they're just an interesting
30:20
Speaker 1: segment of the market where they're not dividend paying stocks
30:23
Speaker 1: and they're not bonds, but they have a high yield
30:26
Speaker 1: and that's a a monthly cash low products. But how
30:29
Speaker 1: does that work in an e t F? I get
30:31
Speaker 1: if Paul, you know, he sits at home on the
30:33
Speaker 1: weekends and clips coupons when he's not flying to a Ruba.
30:35
Speaker 1: But how does a high yield work in an e
30:38
Speaker 1: t F product? So it pays a fixed cash distribution
30:41
Speaker 1: every month to the holder. To the holders, you get
30:44
Speaker 1: ten point seven five cents per share per month, which
30:47
Speaker 1: on the current stock price, like I says about ten
30:50
Speaker 1: percent perannum. And so literally whatever amount you invest, you
30:54
Speaker 1: lock in that yield at that time that you buy
30:57
Speaker 1: um and then you just sit home and if your Paul,
30:59
Speaker 1: you can clip the coupon. M M. That sounds good
31:01
Speaker 1: to me, all right. So Matt was mentioning the single
31:04
Speaker 1: stock E t F s you have, which I think
31:06
Speaker 1: he has launched in December. That might look at it's
31:09
Speaker 1: up fifty this year, and I think it might have
31:12
Speaker 1: been the last time we we checked in with you
31:13
Speaker 1: will talk to us about what you're doing here with
31:15
Speaker 1: some of these single stocky kiss. So this is really
31:18
Speaker 1: just an evolution of the t F industry and that
31:21
Speaker 1: on the one hand of the industry think of e
31:23
Speaker 1: t F as being traditional buy and hold products of SMP,
31:26
Speaker 1: five D, etcetera. On the other side, E t F
31:29
Speaker 1: s can also be used to cater for short term
31:32
Speaker 1: investors or traders, you know, who are looking to speculate
31:35
Speaker 1: on different assets, different parts of the market. So single
31:39
Speaker 1: stocks are something that we've been doing in Europe. We
31:41
Speaker 1: have leveraged single stock platform in all major European markets
31:44
Speaker 1: and we bought that here to the US at the
31:47
Speaker 1: end of August, rolled out some new products towards the
31:49
Speaker 1: end of the year, including barber. You know, we've got
31:52
Speaker 1: mata Um and we have in Vidio as well. Those
31:57
Speaker 1: are all long. They're all long with exception Tesla to
32:00
Speaker 1: so that we have a short tesla which t cl
32:03
Speaker 1: I exactly very good performer people might expect, you know.
32:07
Speaker 1: It really just allows people to take a leverage exposure
32:10
Speaker 1: on the single stops. So coin base is another one
32:12
Speaker 1: that's been going crazy over the last few weeks as
32:15
Speaker 1: crypto is kind of rebounded. It's up thirty two percent
32:18
Speaker 1: year to date exactly. UM, so people, these are these
32:21
Speaker 1: are again products for active traders, people looking to take
32:24
Speaker 1: a short term exposure. They love some of these underlying
32:27
Speaker 1: names and it just gives leveraged exposure or inverse exposure
32:30
Speaker 1: to them. I'll tell you what to do, Paul. You
32:31
Speaker 1: type E t F go on your Bloomberg and then
32:34
Speaker 1: in the yellow search box, UM, you might as well
32:37
Speaker 1: ex out the equity funds only uh portion there and
32:41
Speaker 1: just typing granite shares and then you can click on
32:43
Speaker 1: to see all of Will's UM products. The E t
32:47
Speaker 1: F industry has been incredible, the growth um you know
32:51
Speaker 1: in Europe, and then here the introductions or the new
32:55
Speaker 1: funds that we saw the launches last year. We're still strong,
32:58
Speaker 1: even though there were no I p O s, even
33:00
Speaker 1: though M and A was dead. Does that continue? You think?
33:03
Speaker 1: In three? Is this just a new way of investing
33:06
Speaker 1: that Paul has to get used to you? It is?
33:08
Speaker 1: And I think the other thing that perhaps gets talked
33:11
Speaker 1: about less, which sounds counterintuitive at first, but you know,
33:14
Speaker 1: when people are making money in otherwids, when the market's
33:17
Speaker 1: going up, you care less about what you're paying for things,
33:20
Speaker 1: in other words, what you're paying for your funds, what
33:22
Speaker 1: you're paying for your advisor. If you're up, you know,
33:25
Speaker 1: people can be sort of generally happy about that situation
33:29
Speaker 1: the moment you start losing money, and obviously last year
33:32
Speaker 1: was the first year that portfolio lost money, that most
33:35
Speaker 1: people lost money for a long time. And so in
33:38
Speaker 1: that environment, you start looking at what you're investing, what's
33:41
Speaker 1: in your portfolio, how much you're paying your advisor. You know,
33:44
Speaker 1: these things become a lot more important. And that's why
33:47
Speaker 1: we saw record growth in ETF industry last year, because
33:51
Speaker 1: a lot of that provides the money and motions of
33:53
Speaker 1: people fire their advisor, they look for lower costs, more management,
33:57
Speaker 1: manage more money than themselves. They go to a cost options,
34:01
Speaker 1: and that is something I think that that is happening
34:03
Speaker 1: doesn't get talked about enough. Um that when times are tough,
34:08
Speaker 1: you look at your costs a lot more. How big
34:10
Speaker 1: is Granite Shairs. I don't know how you even measured
34:12
Speaker 1: employees assets and the management and how big are you guys?
34:15
Speaker 1: We're one and half billion in terms of assets. We've
34:19
Speaker 1: got a lot. It has been Obviously last year it declined.
34:24
Speaker 1: So we're two billion at the start of last year,
34:27
Speaker 1: end of the year one and a half billion, but
34:29
Speaker 1: majority of that was just market move So clearly we're
34:32
Speaker 1: an assets under management business where you know, geared to
34:36
Speaker 1: the market in that case, so the market goes down,
34:38
Speaker 1: you know, all things being equal to go down as well.
34:40
Speaker 1: Good story. I mean, it's great stuff. I'm glad you're
34:43
Speaker 1: close by your downtown where all the hip kids are,
34:45
Speaker 1: but you can come up at Midtown every once in
34:47
Speaker 1: a while and hang with us Wall Street types. But
34:49
Speaker 1: we appreciate it. Will Ryan, chief executive officer of Granite
34:52
Speaker 1: Chairs Advisors, joining us here in our studio. Last week
34:58
Speaker 1: was a consumer electronics show. A couple hundred thousand tech
35:02
Speaker 1: geeks descend upon the desert of Las Vegas and talk
35:05
Speaker 1: about all the new gadgets. But let's be honest, I
35:07
Speaker 1: think for the last five, six, seven, eight years, it's
35:09
Speaker 1: really been the Global Auto Show. Was some electronic gadgets
35:13
Speaker 1: kind of thrown in because these cars these days, they are,
35:17
Speaker 1: you know, just software platforms, technology platforms. Michael Dean was
35:20
Speaker 1: out there. He's an automotive equity research annalys for Bloomberg Intelligence.
35:24
Speaker 1: He's based in London. It's so important that he made
35:27
Speaker 1: the trip over from London to Vegas to join Kevin
35:29
Speaker 1: Tyne and a bunch of other miscreants and kind of
35:31
Speaker 1: look at all the latest new technology. Michael. Again, the
35:36
Speaker 1: auto industry has taken over the CES, the Consumer Electronic Show.
35:39
Speaker 1: What we're what were your takeaways here? Yeah, it was
35:41
Speaker 1: a good show. It was good to see as busy
35:43
Speaker 1: as it was pre COVID and as you say, it
35:46
Speaker 1: is a car show now. On the west wing. It
35:48
Speaker 1: was well represented by the European automakers, particularly BMW and
35:52
Speaker 1: Stalentes UM. They showed their concept cars UM. BMW showed
35:56
Speaker 1: their d car, which is digital Emotional Experiences, showing the
36:01
Speaker 1: key features really for the next gen digital platforms, and
36:05
Speaker 1: in particular like they're using the actual windscreen now to
36:08
Speaker 1: show all the display for the car, so they won't
36:11
Speaker 1: have a dashboard or have heads up display, and then
36:14
Speaker 1: eventually changes colors as well, right exactly, and eventually when
36:17
Speaker 1: we have autonomous driving, you'll be able to watch movies
36:20
Speaker 1: and stuff on the windscreen. So so it's pretty cool.
36:22
Speaker 1: It changes the outside of the car, changes colors, like
36:26
Speaker 1: depending what color you want that day, it's insane and
36:30
Speaker 1: what it's Stilantis show. I mean, I know they have
36:33
Speaker 1: what Chrysler Fiat, right Stilantis owns, yeah, Fiat, as well
36:38
Speaker 1: as Chrysler, Dodge and Ram, but also what pe Um.
36:43
Speaker 1: I only care about the Dodge Challenger, you know, and
36:47
Speaker 1: but that's dead. This is the last year for the Challenger. Well,
36:49
Speaker 1: they had their electric version. It looks pretty cool and
36:52
Speaker 1: they have an electric truck also the Ram truck is
36:55
Speaker 1: So the main feature was really the round revolutions, so
36:58
Speaker 1: that's their pickup which comes out in two THO. They
37:02
Speaker 1: didn't feature too much on the powertrain, but what they
37:03
Speaker 1: did show was utility aspects. So the back end pushes
37:07
Speaker 1: out if you've got an extended load. Um, you can
37:10
Speaker 1: just have more utility within the vehicle itself and take
37:13
Speaker 1: the the seats out. It was pretty impressive, but it's
37:17
Speaker 1: two years behind the likes of the F one fifty
37:20
Speaker 1: and the Silver. Arms actually drove the F one oh yeah,
37:25
Speaker 1: he had a loner on it. And I actually drove
37:28
Speaker 1: the electric Silverado out in Milford at the GM proving grounds. Um,
37:34
Speaker 1: you know, they're good, but for me, electric just doesn't
37:39
Speaker 1: quite do it yet. Well, Mercedes had a very good
37:42
Speaker 1: stand at the show, so they weren't really showing the tech,
37:45
Speaker 1: but they're showing their new beds, and in particular they've
37:47
Speaker 1: got the which are electric vehicles, so the e q
37:51
Speaker 1: E SUV battery electric vehicles. So this is a really
37:54
Speaker 1: good looking car unlike some of the other beds, and
37:57
Speaker 1: in particularly it drives well. It's got good off road apability,
38:00
Speaker 1: and it's going to give the gl E, which to
38:02
Speaker 1: the complection and engine equivalent, a real run for its money.
38:05
Speaker 1: But you know, Paul's point is always, you know, we
38:07
Speaker 1: can sit around and talk about motors all day long.
38:10
Speaker 1: Engines that is, gasoline engines. And for someone like me,
38:14
Speaker 1: I don't really care as much about the design of
38:18
Speaker 1: the car or the infotainment as I do about you know,
38:21
Speaker 1: the lump under the hood. What's going to happen in
38:25
Speaker 1: like ten or twenty years, Um, Is it only going
38:29
Speaker 1: to be about the design and the software. Well, you'll
38:32
Speaker 1: have nothing to talk about by then, unfortunately. But some
38:35
Speaker 1: you know, some of these cars do drive extremely well,
38:38
Speaker 1: so like the Porsche Taken which is getting fully electric,
38:40
Speaker 1: awesome handling, very good acceleration. It will be more about
38:45
Speaker 1: the interior will be more about the software and the connectivity,
38:49
Speaker 1: but there's still be good constantly drive. I think Porsche
38:52
Speaker 1: seems to be still behind the curve in terms of
38:55
Speaker 1: why isn't there an electric Macan, Why isn't there an
38:57
Speaker 1: electric Cayenne? Whether it would be electric mccohan if it
39:00
Speaker 1: wasn't for the software issues that Volkswagen is having. So
39:03
Speaker 1: that's been delayed by twelve months. It comes at the
39:05
Speaker 1: end of this year. The electric Cayenne comes in two
39:08
Speaker 1: thousand twenty five, so by the middle of this decade
39:11
Speaker 1: Porsche will have forty five maybe the cars being fully electric.
39:15
Speaker 1: So they're probably the leading legacy automaker that committed no
39:19
Speaker 1: sign of test. Interesting, I guess did they? Were they
39:22
Speaker 1: here in a year's past or never? Interesting? Um Sticking
39:27
Speaker 1: with Porsche, so I had I lived in Germany, it's
39:30
Speaker 1: the best place to own a nine eleven, and I
39:31
Speaker 1: had the previous generation with a three point eight leader
39:36
Speaker 1: naturally aspirated flat six, which I loved, and I thought,
39:39
Speaker 1: there's no way to improve on this car. I mean
39:41
Speaker 1: everything about it was perfect. Now I just got the
39:45
Speaker 1: new GTS Targa. It's a loner. I didn't buy it.
39:48
Speaker 1: I'm just testing it. It is much better, and it's
39:52
Speaker 1: got a twin turbo. It's almost sacrilegious for me to
39:55
Speaker 1: like a turbocharged engine. But there's no lag and I'm
39:59
Speaker 1: kind of a acted to the wine. Um. The transmission
40:03
Speaker 1: works better than the one I had, and I can
40:06
Speaker 1: literally feel the feedback is so good. I can feel
40:09
Speaker 1: that there's a wider front track. It's amazing. Yeah, it's
40:12
Speaker 1: a bit of disingenious to actually have a nine eleven
40:15
Speaker 1: turbo because the all turbos now for a few officient,
40:17
Speaker 1: but they're just so good. It's the handling that looks um.
40:21
Speaker 1: That's why Porsche is doing so well. That's why Porsche
40:23
Speaker 1: is worth a hundred billion euros. Now, that's why why
40:25
Speaker 1: it's worth more than Volkswagen, which owns seventy five percent
40:28
Speaker 1: of it, because of the portion nine eleven and the
40:30
Speaker 1: other new products that are coming. So Porsche just refreshment memory.
40:34
Speaker 1: What has Volkswagen spun out and what are we expecting
40:37
Speaker 1: the left? So Volkswagen sold twelve and a half percent
40:42
Speaker 1: of its holding in Porsche a G and that company
40:46
Speaker 1: is now worth a hundred billion the nine eleven and
40:49
Speaker 1: then you've got to put g R or g y
40:51
Speaker 1: so penn and eleven g R Volkswagen even though it
40:54
Speaker 1: still owns you know, if UM is only worth seventy
40:58
Speaker 1: three billion and his lamb begine need so Lamborghini we
41:01
Speaker 1: think is valued at fifteen billion, that's interest. Volkswagen as
41:05
Speaker 1: a whole is worth seventy three billion, even though they
41:08
Speaker 1: own seventy a poor show which is trading for over
41:11
Speaker 1: a hundred billion, And in addition to that they own Lamborghini, Bentley, Audi, Scota, Ducati, UM.
41:19
Speaker 1: You know, Volkswagen obviously, it's just unbelievable that they don't
41:23
Speaker 1: get any credit for all the other businesses they own.
41:26
Speaker 1: Why is that the market just doesn't think they're gonna
41:30
Speaker 1: materialize that value. So until they say they're gonna start
41:34
Speaker 1: to maybe sell down some of the other Porsche shares,
41:37
Speaker 1: or maybe they're going to spin off Lamborghini, they're just
41:40
Speaker 1: not getting Recognition't Lamborghini have to prove itself an electric
41:43
Speaker 1: car before investors are willing to pay up? I don't
41:45
Speaker 1: think so. I think, you know the same with Ferrari.
41:47
Speaker 1: I think they've got many more years of combustion engines, UM, Bentley,
41:51
Speaker 1: They're going to be purely electric by the end of
41:52
Speaker 1: this century. Um by um. They're worth twenty billion euros.
42:00
Speaker 1: So some of the parts that you have Ferrari. Yeah,
42:02
Speaker 1: the ticker is Race and they actually sold shares in
42:05
Speaker 1: the US, so I'm not sure if it's euros or dollars.
42:09
Speaker 1: Forty billion market cap um, you know stock, you know,
42:13
Speaker 1: trolling twelve months is kind of flatish, up eight percent
42:15
Speaker 1: this year. But it's just you're right, this is an
42:18
Speaker 1: investment bankers dream. Let's let's spin out this one. Let's
42:21
Speaker 1: spin out this one, you know. I mean, you can
42:23
Speaker 1: just make money off these guys all day long. You
42:24
Speaker 1: can remember, Ferrari is up two from when I a
42:28
Speaker 1: six years ago. It's just launched the pure sang Way,
42:31
Speaker 1: which is their first SUV cost three euros six v
42:36
Speaker 1: a so V twelve engine. They're gonna save eleven thousand
42:39
Speaker 1: of those. They're gonna from the summit. Mom. I'm glad
42:43
Speaker 1: it has the twelve, because there was for a while
42:45
Speaker 1: the rumors that would come with a with a V eight.
42:47
Speaker 1: N Alright, Michael Dean's great stuff. We talked to him
42:50
Speaker 1: all the time on autos. We could go down this
42:52
Speaker 1: rabbit hole forever, but it's not enough. We don't talk
42:54
Speaker 1: to enough on autos. We can do it more, and
42:57
Speaker 1: we know a guy who can make that happen. Michael
42:58
Speaker 1: Dean automotive to research channels for Bloomberg Intelligence. He's based
43:02
Speaker 1: in London, but he's coming through New York on his
43:04
Speaker 1: way back to Vegas at the Consumer Electronics Show. Thanks
43:09
Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
43:13
Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast
43:17
Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
43:20
Speaker 1: Matt Miller three. On Fall Sweeney, I'm on Twitter at
43:24
Speaker 1: pt Sweeney before the podcast. You can always catch us
43:27
Speaker 1: worldwide at Bloomberg Radio