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Need For Independence Drives Auto Demand · 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: called Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. Now, I want to
0:21
Speaker 1: bring in Mike Jackson is the CEO of Auto Nation
0:24
Speaker 1: and one of the most respected figures in the industry,
0:28
Speaker 1: UM dealing a lot of cars even before the pandemic.
0:33
Speaker 1: Mike tell us about the your experience during the pandemic
0:36
Speaker 1: and what it's like now as we as we poke
0:38
Speaker 1: our heads out well, I think um the pandemic was
0:43
Speaker 1: a scarring events for Americans, just horrific, unimaginable, But from
0:52
Speaker 1: a business point of view, it had two significant impacts.
0:54
Speaker 1: One know in the housing industry. In the second or
0:56
Speaker 1: automotive housing, they want more space eight and they want
1:00
Speaker 1: the space to be nicer. And then when they leave
1:03
Speaker 1: their house, they want to control the environments that they're in.
1:05
Speaker 1: They want their personal vehicle and they want to control
1:08
Speaker 1: who's in it, when, where it goes. So this independence
1:12
Speaker 1: of American spirit was built out by this pandemic. So
1:18
Speaker 1: that is dramatically increased demand for individual automobiles and that
1:26
Speaker 1: led to a fourth record quarter for automation with an
1:31
Speaker 1: increase in our revenue year over year, increase UH in
1:38
Speaker 1: gross profit. We had cost measures that we also put
1:42
Speaker 1: in place. Hence our earnings per share tripled compared to
1:46
Speaker 1: a year ago. So the environment is good, no question though.
1:50
Speaker 1: Interest rates is very supportive of housing an automotive. But
1:54
Speaker 1: within that automotive UH segment, Auto Nation with its brand,
2:00
Speaker 1: it's great experience with one price on pre owned, a
2:03
Speaker 1: digital platform. Coast to coast, UH performed extraordinarily. Well, hey, Mike,
2:09
Speaker 1: talk to us about the chip shortage. We we've been
2:12
Speaker 1: hearing so much about this, and you've been in the
2:14
Speaker 1: news making some, um, you know, some clear statements about that.
2:18
Speaker 1: Give us a sense of what that really means for
2:20
Speaker 1: your business and how long the chip shortage you think
2:22
Speaker 1: is going to affect the auto industry in this country. Well,
2:26
Speaker 1: we'll have more demand than supply across the board since
2:31
Speaker 1: April May of a year ago, when you hit this
2:36
Speaker 1: inflection point where American sumer woke up and said listen,
2:39
Speaker 1: I want, I want. Personal transportation inventories were, of course
2:44
Speaker 1: for new very low then because the plants were closed
2:47
Speaker 1: for eight weeks, ten weeks, twelve weeks depending on the manufacturer.
2:52
Speaker 1: UH and you had this extraordinarily high demand. Now the
2:56
Speaker 1: chip shortage means they can't meet the demand and UM
3:01
Speaker 1: shipments are still pretty good, but um and it's much
3:06
Speaker 1: better than a year ago. There's no comparison to the
3:08
Speaker 1: shuftdown period. This chip shortage is more a disruption of
3:13
Speaker 1: a very complex global manufacturing system. So the headline remains
3:18
Speaker 1: we have more demand and supply. The way we are
3:20
Speaker 1: managing it as a company is that we've adjusted margins
3:25
Speaker 1: on the new vehicle side and we're selling incoming vehicles,
3:31
Speaker 1: preselling incoming vehicles that at a much higher rate than normal,
3:35
Speaker 1: so everything comes in and goes out. And on the
3:38
Speaker 1: volume side, we've aggressively purchased pre owned. We put very
3:42
Speaker 1: good values on the trade ins for our customers, so
3:45
Speaker 1: that's a win for them and hence we're able to
3:47
Speaker 1: increase our pre owned business by year over year. I
3:52
Speaker 1: talked to all of Colonnas, the CEO of Daimler, a
3:55
Speaker 1: couple of days ago and he told me, in terms
3:57
Speaker 1: of the chip shortage for them, they're prioritizing the higher
3:59
Speaker 1: margin vehicles. So the new e q S, for example,
4:03
Speaker 1: they're gonna prioritize that in the S class. Of course,
4:05
Speaker 1: I see that you had last year bigger growth in
4:09
Speaker 1: your premium luxury segment that you did in domestics and imports.
4:13
Speaker 1: Is that part of that equation. Premium luxury is in
4:19
Speaker 1: the high thirties as a percent of our business. Uh.
4:23
Speaker 1: And with the largest retailer of Mercedes in the US
4:27
Speaker 1: was a good friend of mine, know him a long time.
4:29
Speaker 1: He's an outstanding CEO. All is not the only one
4:34
Speaker 1: who's come to that conclusion. And we clearly say, and
4:37
Speaker 1: here's an epiphany that the manufacturers saying, let's put the
4:40
Speaker 1: chips in the highest demand vehicles, which by the way,
4:44
Speaker 1: are also the highest margin vehicles for them. I think that, Uh,
4:50
Speaker 1: the industry didn't always do that in s decades. And
4:56
Speaker 1: the consumer, just like in the home, is looking for
5:00
Speaker 1: a bigger vehicle with more content and hence more chips
5:04
Speaker 1: in that particular vehicle, and the manufacturers are prioritizing that.
5:10
Speaker 1: And let's not produce vehicles for which there's very little
5:15
Speaker 1: interest toward demand. I mean, let's give the customer what
5:20
Speaker 1: they want. Wow. Okay, that's a stroke of genius. I
5:23
Speaker 1: like it, and it's been very um. I think it's
5:28
Speaker 1: I think it may have changed the industry long term
5:33
Speaker 1: that there is much rather than being so production driven
5:39
Speaker 1: all the time and overproducing, let's really focus on what
5:44
Speaker 1: consumers want and have a good balance between demand and supply.
5:50
Speaker 1: I just want to ask you a quick question speaking
5:52
Speaker 1: of industry changes. We only got thirty seconds here, but
5:55
Speaker 1: I've heard that Amazon may come into the market. Do
5:57
Speaker 1: you think that they're a potential threat. Amazon is a
6:01
Speaker 1: great company, and they've been coming into automotive for I
6:03
Speaker 1: think thirty years. I've been hearing that, so listen. It's
6:07
Speaker 1: a big, complex business, and I like our position with
6:11
Speaker 1: our brand, our experience in our digital platform. Well Auto
6:15
Speaker 1: National do well. I have a lot of card dealer
6:18
Speaker 1: friends and they wanted me to ask if you have
6:19
Speaker 1: any stories for sale? Do you have anything out there
6:21
Speaker 1: that you're willing to give up? But I'm guessing the
6:24
Speaker 1: answer right now is no. I knew it would be
6:27
Speaker 1: Mike Jackson, the CEO of Auto Nation. The stock has
6:31
Speaker 1: soared Um, has been time today. Absolutely, this is Bloomberg.
6:41
Speaker 1: We've got an old fashioned bidding war in the railroad business.
6:44
Speaker 1: Canadian National launching a thirty billion dollar bid for Kansas
6:48
Speaker 1: City Southern. That comes on top of Canadian Pacifics offer
6:52
Speaker 1: from just last week of about twenty billion dollars. Let's
6:55
Speaker 1: break it down. We do that with Tony Hatch. Tony
6:57
Speaker 1: is a principal a b H Consulting. Tony is one
7:00
Speaker 1: of the leading and longest serving rail analysts on the street.
7:03
Speaker 1: He knows all of these companies intimately. Well, Tony, thanks
7:06
Speaker 1: for joining us here again, the two Canadian rails looking
7:09
Speaker 1: at Kansas City Southern. What's the rationale behind behind their interest? Well, Um,
7:15
Speaker 1: the rationale really is that there's terrific growth potential. These
7:18
Speaker 1: both of the offers were really contingent upon where the
7:21
Speaker 1: success was contingent upon synergies, very different from most historic
7:25
Speaker 1: mergers in the rail industry, which have been about removing
7:28
Speaker 1: duplicate efforts or economies. So I think they both see
7:31
Speaker 1: Mexico being a tremendous growth market. Whether or not we
7:34
Speaker 1: get a big increase in near shoring and other things,
7:36
Speaker 1: that's been the fastest growing market in North American freight
7:39
Speaker 1: for some time and will continue to be. And I
7:41
Speaker 1: think the both of the networks fit with the Kansa
7:45
Speaker 1: City southern pretty well. Tony. How much green space is
7:49
Speaker 1: in this industry? I mean, do you just if you
7:52
Speaker 1: want more railroads, do you have to buy other railroads?
7:55
Speaker 1: Are are they going to be building out more network? Well? Um,
7:59
Speaker 1: basic this is sort of like the whole thing about
8:01
Speaker 1: real estate. You know, they don't make any more of it.
8:04
Speaker 1: Building a railroad is prohibitively expensive, Uh, fighting etter, you
8:08
Speaker 1: have to buy them. If you want access, direct access,
8:11
Speaker 1: owned access to markets, you need to purchase it or
8:14
Speaker 1: cut some other kind of deal. You can't simply build
8:17
Speaker 1: into it. Uh you know what, the cost would be astronomical?
8:21
Speaker 1: All right, Tony, So behind this deal, I think, you know,
8:23
Speaker 1: even someone like me who hasn't looked at, you know,
8:25
Speaker 1: a rail stock in thirty years. I look at the
8:28
Speaker 1: map here and I see, you know, the Canadian routes
8:31
Speaker 1: and then I see them connecting down into Kansas City
8:34
Speaker 1: and then going all the way to Mexico, and it
8:35
Speaker 1: just seems like this is just a great play on
8:38
Speaker 1: just North America and trade kicking back in and maybe
8:42
Speaker 1: getting some better trade agreements. Um, is that kind of
8:45
Speaker 1: what these guys are thinking. That's absolutely what they're thinking.
8:48
Speaker 1: I mean this so you know, I hate to say
8:49
Speaker 1: it's a NAFTA or U s m C A play
8:51
Speaker 1: because un that's going on for a while, but this
8:54
Speaker 1: truly links the continents, links all three players in the continent, uh,
8:58
Speaker 1: in the three countries. In addition, it's a big North
9:01
Speaker 1: South play. And what is you know, heretofore been really
9:04
Speaker 1: an East west world. If you look at the big
9:06
Speaker 1: four US railroads, they really work in an East West phenomenon.
9:09
Speaker 1: So this is a way of attaining a different type
9:12
Speaker 1: of growth than we had been seeing. I mean, Kensdy
9:14
Speaker 1: Southern had been the fastest growing railroad for the last
9:17
Speaker 1: many years. The Canadians have been one and two, uh
9:21
Speaker 1: and three, all three of us. Are you really talking
9:23
Speaker 1: about the railroads here involved in this little fractus are
9:27
Speaker 1: all the ones the most focused at this point in growth?
9:29
Speaker 1: And the market se as you talked about in the
9:31
Speaker 1: trade situation, really is supportive of that. Even if it's great,
9:35
Speaker 1: a great commercial play, there's a point when the price
9:39
Speaker 1: could just be too high, right, I mean, we all
9:41
Speaker 1: agree that getting the first n f T on people
9:44
Speaker 1: art would be an incredible opportunity. But for sixty nine
9:47
Speaker 1: million dollars, that's too much. So at what point does
9:51
Speaker 1: UM does this asset get too expensive? You know, of
9:55
Speaker 1: course everything and everything has a value. I don't think
9:57
Speaker 1: there're anything near that. It doesn't mean that we'll see
10:00
Speaker 1: another bid. This wouldn't surprise me this morning. But you know,
10:03
Speaker 1: I think the idea that they're saying that they could
10:05
Speaker 1: be you know, that the synergies will be created pretty
10:06
Speaker 1: quickly makes a lot of sense, and we'll get more
10:09
Speaker 1: information as this process goes along. But we haven't reached
10:13
Speaker 1: the point of saturation here. This will make money for
10:16
Speaker 1: the buyer at both of those prices, even the higher
10:19
Speaker 1: one UM and I think potentially it didn't even hire one.
10:21
Speaker 1: But I don't see any but any of the other
10:23
Speaker 1: carriers getting involved at this point. But I think that
10:26
Speaker 1: you're right. You know, there is a point in which
10:27
Speaker 1: you pay too much for the growth. We haven't hit
10:30
Speaker 1: that level yet. Wait. I got a quick follow Okay, Uh,
10:34
Speaker 1: what was Paul like as a young employee. It's very
10:39
Speaker 1: good to hear his voice. He was kind of hate
10:42
Speaker 1: to say this publicly. But he was pretty good. You know,
10:46
Speaker 1: I wouldn't expect saying that, but but he was. And
10:50
Speaker 1: he does know this stuff better that he's letting on here. Um,
10:53
Speaker 1: this will be an interesting story that The question to
10:55
Speaker 1: me is the regulatory aspect you haven't asked about him?
10:58
Speaker 1: Happy to talk about it. I think it could hash mustard,
11:00
Speaker 1: But it's getting a little more complicated than it was
11:02
Speaker 1: just late last night when I went to bed. Fascinating.
11:06
Speaker 1: So Tony, thanks for coming on. We really appreciate it.
11:10
Speaker 1: Love getting your perspective here. Chat with you going forward.
11:13
Speaker 1: But again, a big big deal UH in the railroad
11:15
Speaker 1: business in this country as both Canadian railroads taking a big,
11:18
Speaker 1: big liking to Kansas City Southern Tony Hatch principal at
11:22
Speaker 1: A B H Consulting, that's his consulting firm. He talks
11:25
Speaker 1: all the rig railroads, talks the institutional investors. He's got
11:27
Speaker 1: his UH finger on the pulse of that industry and
11:30
Speaker 1: he was a very good guy to learn the industry from. UH.
11:33
Speaker 1: So I can say that much and I still know
11:35
Speaker 1: revenue ton Miles, Matt, that's the key metric for your
11:38
Speaker 1: earnings models. How much did you make moving a ton
11:41
Speaker 1: of freight. Well, we're all buying more and more stuff online.
11:48
Speaker 1: It seems like there are boxes in front of every
11:51
Speaker 1: door across America on a daily basis. But what about
11:53
Speaker 1: the jewelry business? Has that gone online? Has that gone digital?
11:57
Speaker 1: Let's check in with Tom Nolan. He's a newly appointed
12:00
Speaker 1: CEO of Julie firm Kendrick Scott. Tom, thanks so much
12:04
Speaker 1: for joining us here, love to get your thoughts. Just
12:06
Speaker 1: starting out, how has your business, the jewelry business been
12:11
Speaker 1: impacted by the pandemic. Yeah, thanks for having me on.
12:15
Speaker 1: I appreciated good morning. Um, you know, two thousand twenty,
12:20
Speaker 1: the year of COVID and even leading into has really been.
12:23
Speaker 1: It's been a fantastic year for us from our business perspective,
12:27
Speaker 1: challenging one for our society obviously, But um, we really
12:30
Speaker 1: weather the storm remarkably well. I would say we were
12:34
Speaker 1: for sure an outlier, and I'm really proud of the
12:35
Speaker 1: team and what a great job they did do in it.
12:39
Speaker 1: So what have you been doing to sell more stuff online?
12:44
Speaker 1: I mean, I imagine, you know, sometimes I'll go around
12:47
Speaker 1: and look at watch I'm not really a jewelry guy,
12:49
Speaker 1: but I'll look at watch websites and they have kind
12:52
Speaker 1: of developed into more interesting places I guess to spend time,
12:56
Speaker 1: but otherwise, you know, I just need to see a
12:58
Speaker 1: picture and I know if I want it. Yeah, you know.
13:03
Speaker 1: I think our our business has always been really experiential.
13:06
Speaker 1: And then it's from when Kendra started the company twenty
13:08
Speaker 1: years ago. It's been been a really experiential business and
13:11
Speaker 1: we lead that to brick and mortar and retail, and
13:13
Speaker 1: so it was a it was a challenge for us
13:16
Speaker 1: as more customers migrated to the web business to create
13:19
Speaker 1: that experience and and deliver it to folks online. I
13:22
Speaker 1: think at the end of the day, what we've really
13:23
Speaker 1: always focused on. We know that the customers are boss.
13:27
Speaker 1: I mean she she ultimately signed my paychecks and all
13:29
Speaker 1: of our companies paychecks, and and it's important that we're
13:32
Speaker 1: meeting her and him wherever they are. And I think
13:35
Speaker 1: what we saw was that everybody migrated online when brick
13:40
Speaker 1: and mortar stores were closed. We managed to have a
13:43
Speaker 1: successful retail the year last year. We're still having a
13:46
Speaker 1: successful retail year this year. And additionally, on top of it,
13:49
Speaker 1: and there's huge incre mentality and what happened in the
13:52
Speaker 1: web business um and we just tried to pivot and
13:55
Speaker 1: move very quickly to meet them where they where they
13:58
Speaker 1: wanted to buy. And as everybody is seen in the
14:01
Speaker 1: markets and the macroeconomic indicators, I mean, there was a
14:04
Speaker 1: lot more discretion your income. People weren't going on vacations,
14:06
Speaker 1: they weren't taking trips the same way. So I think
14:09
Speaker 1: folks like yourself, we're looking for things to do in
14:12
Speaker 1: a lot of ways, and I think we're fortunate to
14:14
Speaker 1: be on the receiving end of that. And our brand
14:17
Speaker 1: just means a lot to a lot of people. It's
14:19
Speaker 1: philanthropies and the core of it and the heart of it,
14:21
Speaker 1: and we always try to do good. It's it was
14:24
Speaker 1: remarkable year and it taught us a lot and it
14:26
Speaker 1: made us all better and stronger and faster. So who
14:29
Speaker 1: do you compete with? Uh, Tom? You know, now as
14:32
Speaker 1: your as your business kind of you know, becomes a
14:34
Speaker 1: little bit more digital, you know, yeah, first and foremost,
14:39
Speaker 1: I think are we our largest competitors ourselves? Right? I mean,
14:42
Speaker 1: we just we're always competing against doing better than we
14:44
Speaker 1: did the day before, the year before. But we're in
14:46
Speaker 1: the jewelry space and accessory space. Brands like Kate Spade,
14:50
Speaker 1: brands like Tiffany's and Tom and James, Bablo, bar Pandora Oriana.
14:55
Speaker 1: I'd say brands like that are the ones that we
14:57
Speaker 1: were competing against on the day to day basis. So
15:00
Speaker 1: what kind of spending do you expect from stimulus? Have
15:03
Speaker 1: you seen a big boost from the checks that went
15:05
Speaker 1: out or do you think we're going to see, you know,
15:08
Speaker 1: post pandemic, a huge spending splurge. Yeah, I think that
15:13
Speaker 1: we all saw it. I mean, if you're if you're
15:15
Speaker 1: paying attention to networks and stations like y'alls, there was
15:19
Speaker 1: definitely an increase in stimulus spending, and I think there
15:23
Speaker 1: was a lot of consumer brands around the receiving into that.
15:26
Speaker 1: You know, it's the market is you know, is so
15:30
Speaker 1: so challenging. I mean, it's really more it's harder to
15:32
Speaker 1: figure out that there never has been before us. So
15:34
Speaker 1: I think for us, we think about controlling the things
15:37
Speaker 1: that we can control. If we know that if we
15:39
Speaker 1: make a great product, if we focus on the customer,
15:41
Speaker 1: if we deliver a great experience, we make our web
15:43
Speaker 1: experience as good or better than our retail experience, we're
15:47
Speaker 1: going to continue to win. So you know, I can't
15:49
Speaker 1: control what what happens in the market, so we can
15:53
Speaker 1: control the things that we do, and I think when
15:55
Speaker 1: we when we do that, well, we're gonna continue to
15:56
Speaker 1: be successful and win, all right, tom So, it just
15:59
Speaker 1: gives a sense of how much of your business now
16:00
Speaker 1: is sold in stores, you know, the brick and mortar
16:03
Speaker 1: versus online, and how do you think that split might
16:06
Speaker 1: develop going forward? Yeah, so so two thousand nineteen is
16:10
Speaker 1: probably the best indicator is a benchmark. In that year,
16:13
Speaker 1: almost six of our business was brick and mortar and
16:15
Speaker 1: retail about it was was online. At the end of
16:20
Speaker 1: last year, it almost was. I think at the end
16:22
Speaker 1: of this year it's going to be pretty close to
16:24
Speaker 1: that as well. As it relates to our direct consumer business.
16:27
Speaker 1: We have a meaningful wholesale business as well, but I'm
16:30
Speaker 1: continue to still build pretty bullish on the retail side
16:33
Speaker 1: of things. I think it has also created some nice
16:36
Speaker 1: inventory opportunities and the right kind of places. We always
16:39
Speaker 1: focused on outdoor centers primary for us, and those those
16:43
Speaker 1: certainly got through COVID better than others. Um. But I
16:47
Speaker 1: think that there's been such a pent up demands. I
16:49
Speaker 1: was with some folktion of Cowboys last night and we're
16:52
Speaker 1: talking about this. There's been such a pent up demand
16:55
Speaker 1: for people to get out and get back to normalcy.
16:57
Speaker 1: I think the web customer has change and forever and
17:00
Speaker 1: it's always going to be dominant force. But I also
17:03
Speaker 1: think that there's this demand of people wanting to get
17:05
Speaker 1: back out and return to normalcy. They're going to a
17:07
Speaker 1: sporting event, going shopping for themselves or somebody in their lives.
17:12
Speaker 1: And I we've seen a little bit of that regionally
17:15
Speaker 1: where states that open up a little bit sooner, like
17:17
Speaker 1: Texas in the southeast, and I anticipate seeing a little
17:20
Speaker 1: bit more in the markets that we're a little bit
17:24
Speaker 1: more behind. So at the end of this year, we're
17:27
Speaker 1: gonna be real post to answer your question, but I
17:29
Speaker 1: think retail still is going to be meaningful for us
17:32
Speaker 1: and all the other retailers. Some things to think about
17:34
Speaker 1: it that way, and business too. I would just add
17:37
Speaker 1: one more thing is that we're small footprints. Um, you know,
17:41
Speaker 1: in the jewelry of business, we don't have sizes. We
17:43
Speaker 1: don't need huge, big, monster storytelling retail spaces, so it
17:48
Speaker 1: helps us economically as well. Tom grad spending some time
17:50
Speaker 1: with you, Tom Nolan, CEO of Kendra Scott. Now we're
17:57
Speaker 1: bringing Fiona Sincana Senior Mark could find a senior financial
18:01
Speaker 1: markets analysts City Index. It's a retail division of stone
18:05
Speaker 1: X and Fiona, let me start by asking you about
18:08
Speaker 1: what we're seeing in U s docks um investors selling
18:12
Speaker 1: off buying into bonds even with you know, these huge
18:15
Speaker 1: growth expectations and inflation fears. What's happening in the US
18:21
Speaker 1: equity market today. Yes, so what we're seeing is we
18:25
Speaker 1: said we we we sort of had record high struck
18:28
Speaker 1: last week with the Dow in the SMP and then
18:31
Speaker 1: today is the second day of losses that we're seeing.
18:34
Speaker 1: So we sort of set off yesterday, we're seeing another
18:36
Speaker 1: still off today, and there is that sort of there
18:38
Speaker 1: is this feeling of risk off trade going on. We've
18:42
Speaker 1: got demands for sort of riskier assets such as equity
18:46
Speaker 1: is sort of really coming off invested litten to pull
18:49
Speaker 1: risk off the table, when whilst we've got sort of
18:51
Speaker 1: the more safe haven such as the US gold just
18:54
Speaker 1: taking higher. I think the big concern here is with
18:57
Speaker 1: these rising COVID numbers again, so well, the US is
19:00
Speaker 1: doing a very good job at reopening and getting vaccines
19:03
Speaker 1: out there. The rest of the world of very much
19:06
Speaker 1: sort of India and Pakistani can talk with Asia, the
19:09
Speaker 1: situation is much more concerning, and I think there is
19:13
Speaker 1: this fear about how that's going to impact on the
19:16
Speaker 1: global growth and global economic recovery. So if you know,
19:22
Speaker 1: we're just you know, about ten the way through this
19:26
Speaker 1: first quarter earning season, we've seen some names and when
19:28
Speaker 1: you think about the banks, lest we've put up some
19:30
Speaker 1: huge numbers, yet the stocks, uh you know, are flat
19:34
Speaker 1: or down on the news. Is that suggests to you
19:36
Speaker 1: that this market is priced too close to perfection it does,
19:42
Speaker 1: or even slightly slightly overextended. It could be. I mean,
19:46
Speaker 1: we did have some really strong data at the end
19:48
Speaker 1: of last week as far as the U S data
19:51
Speaker 1: on retail PUS and inflation. With bolts so higher, we'd
19:54
Speaker 1: have some great UM numbers from the banks as well.
19:58
Speaker 1: So so really we were with those really strong numbers
20:01
Speaker 1: sitting at all time high UM, and then we've had
20:05
Speaker 1: this sort of sort of doubt to come in. There
20:07
Speaker 1: are some concerns about where we might be going forward.
20:10
Speaker 1: I think there's also a lot of high high expectations
20:14
Speaker 1: for this earning season and when expectations are so high,
20:18
Speaker 1: it does make it very difficult to please the market.
20:21
Speaker 1: So sort of you know, to have a really good
20:23
Speaker 1: upside surprise is given me much harder um. And so
20:26
Speaker 1: that does mean that sort of any slight um concerns
20:30
Speaker 1: or any niggles that the market could have to see
20:33
Speaker 1: the stocks fall off quite quickly. How important our Netflix
20:36
Speaker 1: earnings to text docs? I think these are going to
20:40
Speaker 1: be really important. They're really going to be closely watched.
20:43
Speaker 1: I mean, if we think about it, that the first
20:45
Speaker 1: three months of this year, they were still lockdown um
20:49
Speaker 1: uh sort of measured imposed and so that does support
20:53
Speaker 1: the stay at home steam really boosted Netflix across the
20:59
Speaker 1: past year. But we've also got heating up competition. There's
21:03
Speaker 1: a big focus on content. So I think there's going
21:06
Speaker 1: to be a really really close watch on how these
21:09
Speaker 1: are going to perform and also what that means for
21:12
Speaker 1: other text stops coming forward to next week when we've
21:14
Speaker 1: got the big US TEX stops coming through. So these
21:18
Speaker 1: are really going to be sort of you know, setting
21:20
Speaker 1: the trends and letting investors sort of have an idea
21:24
Speaker 1: to how that stay at home play is still in
21:29
Speaker 1: going on, or whether we are sort of on that
21:31
Speaker 1: customers rotation out of that. So if you know, kind
21:35
Speaker 1: of on the other side of the typical tech traders,
21:38
Speaker 1: you've got a cyclical trade and a trade into small
21:41
Speaker 1: cap stocks that's been working for a lot of investors.
21:45
Speaker 1: Really since September of last year. That cyclical rotation trade,
21:49
Speaker 1: if you will, has really been paying off. Is that's
21:51
Speaker 1: something you expect to continue. It could do. It's something
21:56
Speaker 1: that I think we could still seem much more room
21:59
Speaker 1: for the cyclical to to gain. But it just depends
22:03
Speaker 1: now and what happens as far as the COVID situation
22:06
Speaker 1: globally is taking place. So if we feel that, if
22:10
Speaker 1: if the dissentiment concerning COVID is really starting to to
22:15
Speaker 1: unnerve investors again, then we're just going to see a
22:18
Speaker 1: hold back on that rotation into cyculical them back into grad.
22:22
Speaker 1: But if we can get under this, this sort of
22:24
Speaker 1: draw a line under this COVID concern, which I think
22:27
Speaker 1: we're still some way off for the moment, that then
22:31
Speaker 1: that would mean that would have a much stronger move
22:33
Speaker 1: back into ciculical. So I think that the trade isn't over,
22:36
Speaker 1: but I just think the timing on it is not
22:38
Speaker 1: quite right in the moment. You just got a minute left.
22:41
Speaker 1: I want to get your thoughts on cryptol. I mean,
22:44
Speaker 1: I know it doesn't seem to be influencing financial assets
22:47
Speaker 1: that much, but the run up has been amazing and
22:48
Speaker 1: now the slump this week, oh completely. I mean it
22:53
Speaker 1: has been one wild ride. And I mean if that's
22:56
Speaker 1: something that crypto is really well known for, its sort
22:59
Speaker 1: of loose why off twings, and it's definitely not disappointing
23:03
Speaker 1: as far as that's consent, and it's been one that
23:06
Speaker 1: we've been watching extremely closely. We have those those highs
23:10
Speaker 1: as we have the the I p A from coin based,
23:13
Speaker 1: and then it's sort of the slumped down afterwards has
23:16
Speaker 1: been absolute spectacular. But that's what we expect from crypto, right,
23:20
Speaker 1: that's sort of those big moves exactly what it's all about.
23:23
Speaker 1: So just yeah, it's definitely some type for those rides. Fiana,
23:27
Speaker 1: thanks so much for journing us. We appreciate a Fiona Sinkata,
23:31
Speaker 1: senior financial markets analysts at the City Index, Thanks for
23:35
Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and
23:38
Speaker 1: listen to interviews of Apple podcasts or whatever podcast platform
23:42
Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt
23:46
Speaker 1: Miller ninety three. On bo Sweeney, I'm on Twitter at
23:49
Speaker 1: pt sweeney Before the podcast. You can always catch us
23:52
Speaker 1: worldwide at Bloomberg Radio