Latest / Bloomberg Intelligence / The Markets, The Cloud, The Merge, And A Rail Strike

Transcript

The Markets, The Cloud, The Merge, And A Rail Strike · 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. A little bit of
• 0:22
  Speaker 1: a calm feel to some of this early morning and
• 0:25
  Speaker 1: trading after yesterday's rampant sell off, and I want to
• 0:28
  Speaker 1: get some perspective here from someone who actually has been
• 0:30
  Speaker 1: trading markets for decades. We can do that with Vince Signarella,
• 0:33
  Speaker 1: Global Macro Strategies for Bloomberg News. Vince, what's your takeaway
• 0:37
  Speaker 1: from yesterday? They weren't playing around yesterday, were they? No? No,
• 0:41
  Speaker 1: not at all? That was that was quite a round. Um.
• 0:43
  Speaker 1: I think it was some. I think what we saw
• 0:46
  Speaker 1: yesterday was some really weak long positions which have been
• 0:50
  Speaker 1: built up for about a week and a half after
• 0:53
  Speaker 1: some week short positions. And I think that's what we're
• 0:55
  Speaker 1: seeing a lot of going on, a lot of day trading,
• 0:58
  Speaker 1: a lot of algo trading. We went through four thousand
• 1:01
  Speaker 1: on the SMP yesterday was major capitulation, uh with with
• 1:06
  Speaker 1: the sell off, al goes, driving stops lower, and we're
• 1:12
  Speaker 1: seeing some of this going on today in this morning.
• 1:15
  Speaker 1: It almost feels like the day is over and we
• 1:17
  Speaker 1: should go home. Already of the trading is very very quiet.
• 1:20
  Speaker 1: It's very modest. As I'm looking over at the tape
• 1:23
  Speaker 1: right now, the average is giving back all of the
• 1:26
  Speaker 1: morning games just about with the SMP cash up just
• 1:29
  Speaker 1: about six. So Vince, you know you've been out there.
• 1:34
  Speaker 1: I think with a call that says, you know, the
• 1:36
  Speaker 1: Fed can really pause if at once to I mean,
• 1:39
  Speaker 1: inflation in a lot of parts of the economy is
• 1:42
  Speaker 1: has peaked, is rolling over. They don't need to be
• 1:45
  Speaker 1: over the aggressive the market yesterday kind of said maybe
• 1:49
  Speaker 1: that CPI print changes that a little bit. How do
• 1:51
  Speaker 1: you how do you think you know the federal view
• 1:54
  Speaker 1: all this stuff. I think the Fed is going to
• 1:56
  Speaker 1: look past that one number, um and I would caution
• 1:59
  Speaker 1: people to look past that one number as well. I
• 2:01
  Speaker 1: know what. It obviously took a lot out of the
• 2:03
  Speaker 1: street yesterday and wiped a lot of the market out,
• 2:07
  Speaker 1: but it's potentially actually a good opportunity. I mean, the
• 2:10
  Speaker 1: consumer inflation expectations, and you know, just as a reminder,
• 2:14
  Speaker 1: inflation is an expect ation phenomenon. It's it's it's what
• 2:18
  Speaker 1: people think is going to happen, and that kind of
• 2:20
  Speaker 1: manifests itself into reality in the future. Inflation expectations on
• 2:24
  Speaker 1: a euro of the year basis of continuing to drop,
• 2:27
  Speaker 1: and we've basically been seeing producer prices drop as well.
• 2:31
  Speaker 1: And you know, the trend in CPI on a month
• 2:33
  Speaker 1: over month basis is lower also with the exception obviously
• 2:36
  Speaker 1: off Tuesday's number. So I think what we really need
• 2:40
  Speaker 1: to do is, like you know, as CPI, CPI which
• 2:44
  Speaker 1: was Tuesday's trash, could be Thursday's fortune if retail sales
• 2:50
  Speaker 1: comes in lower than expected, because what I expect to
• 2:52
  Speaker 1: see as we go into the end of the year
• 2:55
  Speaker 1: is slower growth. The set is definitely I think going
• 2:58
  Speaker 1: to push us close to if not into whatever session
• 3:01
  Speaker 1: um and prices and consumer expectations will fall. How about
• 3:06
  Speaker 1: I mean again, just thinking about yesterday's action, was it
• 3:10
  Speaker 1: a sense of the market overreacted yesterday, or as you
• 3:14
  Speaker 1: may be suggested, there were just some week longs out there.
• 3:17
  Speaker 1: I think it's actually a little boatful. I think there
• 3:20
  Speaker 1: was something of an overreaction. UM. I mean, let's face it,
• 3:23
  Speaker 1: it really is just one number of all things being equal. Um.
• 3:26
  Speaker 1: But at the same time, there's not a lot of confidence.
• 3:30
  Speaker 1: I think either side of this market, you have a
• 3:32
  Speaker 1: lot of people still in cash, not feeling good about equities.
• 3:36
  Speaker 1: We got a little bit jammed up over the last
• 3:38
  Speaker 1: week and a half after a major sell off, and
• 3:42
  Speaker 1: I think those positions were wiped out. Remember going into
• 3:45
  Speaker 1: the CPI number that that was up almost two fifty
• 3:48
  Speaker 1: And I was talking to traders shows before the data
• 3:50
  Speaker 1: and we were kind of like, what the heck are
• 3:52
  Speaker 1: these people thinking that's pretty optimal, that's pretty optimistic going
• 3:55
  Speaker 1: into a data print like this, And and I think
• 3:59
  Speaker 1: that was a big part of it. To people would
• 4:01
  Speaker 1: just so like worked up going into that number, and
• 4:05
  Speaker 1: they absolutely got crushed. Vince, the traders you talked to,
• 4:08
  Speaker 1: do they believe a soft landing is possible or are
• 4:12
  Speaker 1: they just saying, you know what, it's either we're in
• 4:15
  Speaker 1: or we're going into recession. It's just a question how
• 4:17
  Speaker 1: deep where do you think the trader sentiment is these days?
• 4:20
  Speaker 1: I don't I don't think there's a good feel about
• 4:23
  Speaker 1: a soft landing, and I commented about a month ago
• 4:27
  Speaker 1: the only soft landing we've seen the list twenty five
• 4:29
  Speaker 1: years was slowly on the Hudson Um. Most most of
• 4:33
  Speaker 1: the traders, most of the traders, if not all, of
• 4:35
  Speaker 1: the traders I talked to, think that we're going to
• 4:37
  Speaker 1: hit a wall, that the FED is going to push
• 4:39
  Speaker 1: us into a recession. Of sorts, they buy and large
• 4:44
  Speaker 1: sea equity is lower at the end of the year.
• 4:45
  Speaker 1: I disagree with that notion, but I think I'm a
• 4:48
  Speaker 1: little bit in a min already there. But by and
• 4:50
  Speaker 1: large they see us going into a recession. They see
• 4:54
  Speaker 1: the FED overreacting, if you will, um and pushing a
• 4:58
  Speaker 1: little bit too hard on at and and things are
• 5:01
  Speaker 1: going to be softer as we head into next year.
• 5:04
  Speaker 1: So when we hear from the Fed next week, Vince,
• 5:07
  Speaker 1: I mean, do you think we'll get any kind of
• 5:08
  Speaker 1: body language as to we're gonna wait and see how
• 5:13
  Speaker 1: We're gonna wait here and see how the past you know,
• 5:16
  Speaker 1: rate hikes impact this economy, or do you think we
• 5:18
  Speaker 1: might get some body language about Nope, we're still focused
• 5:21
  Speaker 1: on inflation and we're signaling some more rate ikes. I
• 5:25
  Speaker 1: think the latter it would be very surprising for me,
• 5:28
  Speaker 1: uh to see them to see Powell shift from the
• 5:33
  Speaker 1: jackson Hole speech just just a few weeks ago to
• 5:36
  Speaker 1: a more modest, sort of neutral lean, if you will.
• 5:40
  Speaker 1: I think he's going to stay where he was quite hawkish,
• 5:44
  Speaker 1: which is what the market expects. UH. If he should
• 5:47
  Speaker 1: lean to like we're waiting and seeing, we're probably see
• 5:50
  Speaker 1: a massive rally, because that would be very very dubbish
• 5:52
  Speaker 1: of him. But more likely than that, he's going to
• 5:55
  Speaker 1: stay on the theme that he painted for jackson Hole.
• 5:58
  Speaker 1: I would hope that the next set of months for
• 6:01
  Speaker 1: soul of Data UH will be some moderation because let's
• 6:06
  Speaker 1: face it, it does take six to twelve months for
• 6:08
  Speaker 1: the monetary policy to get through the economy, and they're
• 6:11
  Speaker 1: not really giving any they're not giving anything they've done
• 6:14
  Speaker 1: any time. Yet there seems to be a panic on
• 6:18
  Speaker 1: the part of the FLMC, and I think it has
• 6:20
  Speaker 1: a lot to do with them totally missing the boat
• 6:23
  Speaker 1: with their transient philosophy, and and now they're worried they're
• 6:27
  Speaker 1: gonna lose credibility once again by not moving too quickly.
• 6:30
  Speaker 1: And it's very possible they'll lose credibility by moving too quickly. Yeah,
• 6:34
  Speaker 1: interesting to see. It feels like they're kind of playing
• 6:36
  Speaker 1: catch up here and that might impact their decision making
• 6:39
  Speaker 1: going forward. We shall see Vincenerella, Global macro Strategists for
• 6:43
  Speaker 1: Bloomberg News giving us his thoughts. And it's just kind
• 6:45
  Speaker 1: of had the call here that he thought that maybe
• 6:48
  Speaker 1: we would get a pause here in the rates after
• 6:50
  Speaker 1: this rate increase coming up next week, and that would
• 6:53
  Speaker 1: be enough for risk assets. We'll have to see how
• 6:55
  Speaker 1: that plays out. The consensus seems to be, you know,
• 6:58
  Speaker 1: on the other side of that trade. Let's switch gears
• 7:05
  Speaker 1: of technology again. We welcome to the Bloomberg Interactive Broker Studio.
• 7:09
  Speaker 1: Amit Walia. He's the CEO of Informatica. Informatical is a
• 7:12
  Speaker 1: public traded company on the New York Stock Exchange. I
• 7:15
  Speaker 1: n f A is a ticker to put into your
• 7:17
  Speaker 1: Bloomberg terminal. It's got a market cap of six billion dollars.
• 7:20
  Speaker 1: Went public just last October. I p O a bunch
• 7:24
  Speaker 1: of underraters there at twenty nine stock to twenty one
• 7:27
  Speaker 1: and change. I mean, thanks so much for joining us
• 7:29
  Speaker 1: here in our Bloomberg Interactive Broker Studio. Give us the story.
• 7:33
  Speaker 1: The informatica story. Give us the thirty seconds what we
• 7:35
  Speaker 1: need to know about your company and what you guys
• 7:38
  Speaker 1: are doing in that big technology stack. First of all,
• 7:40
  Speaker 1: thanks great to be here. Uh, you know, lots happening
• 7:43
  Speaker 1: right now. If you think about us, you know we're
• 7:46
  Speaker 1: in this next game years of digital transformation that will happen.
• 7:49
  Speaker 1: By the way, last Dame it was all about digital modernization.
• 7:51
  Speaker 1: So it's all going to be about transforming a business
• 7:53
  Speaker 1: with the help of tech, and it's all about cloud
• 7:55
  Speaker 1: data any I. What we do is we sit in
• 7:57
  Speaker 1: the middle called data management, this whole fragmentation of data,
• 8:01
  Speaker 1: many types of data. How do you basically help companies
• 8:04
  Speaker 1: understand the data, figuring out customer child supply chain, figuring
• 8:07
  Speaker 1: out the data governance and privacy problems, figuring out what
• 8:09
  Speaker 1: if analysis to run their businesses with analytics. That's what
• 8:12
  Speaker 1: we do in the middle. Were the only platform company
• 8:14
  Speaker 1: at scale running with a billion dollars subscription there are
• 8:17
  Speaker 1: and a cloud platform. That's what we do. How do
• 8:19
  Speaker 1: you say it too? I mean Paul gets this because
• 8:21
  Speaker 1: he ran basically a data business um when he put
• 8:25
  Speaker 1: together Bloomberg Intelligence. Right, you're bringing in all the data
• 8:28
  Speaker 1: feeds to your analysts at a Princeton and spreading around
• 8:31
  Speaker 1: the world. Somebody at a dinner party maybe says, I,
• 8:35
  Speaker 1: you know, I don't understand the word you just said.
• 8:37
  Speaker 1: I heard data, and I get what data is. I
• 8:39
  Speaker 1: know what the cloud is kind of platform. You're sort
• 8:42
  Speaker 1: of losing me. What what do you do? They take
• 8:44
  Speaker 1: two examples. Take take something uniliver ninety six countries running
• 8:47
  Speaker 1: the supply chain. They want to understand they make Hellman's mayonnaise.
• 8:52
  Speaker 1: But how do I bring the suppliers to bring the
• 8:54
  Speaker 1: products to my customers as fast as I can? That's
• 8:57
  Speaker 1: a data problem. That's what we help. On the other side, rover,
• 9:00
  Speaker 1: how do I bring the right products on the right
• 9:01
  Speaker 1: shelf at the right time so I can save costs
• 9:03
  Speaker 1: by not losing money by wasted product, as well as
• 9:06
  Speaker 1: good customers side by getting the right project. That's the
• 9:08
  Speaker 1: kind of data problems we solve on a daily basis.
• 9:11
  Speaker 1: Or Twitch a gaming company, how do I make sure
• 9:13
  Speaker 1: the gamers get real time understanding of what the games
• 9:15
  Speaker 1: are doing. That's the kind of problems we solve. So
• 9:18
  Speaker 1: how are you making money then out of that? Or uh,
• 9:22
  Speaker 1: you know, do you plan to be making money out
• 9:25
  Speaker 1: of that soon. Oh well, So the thing is that
• 9:27
  Speaker 1: we have a profitable company running twenty plus points of
• 9:30
  Speaker 1: operating margin and cash flow. And so that's We've been
• 9:33
  Speaker 1: a profitable company throughout. We went private, we came out
• 9:36
  Speaker 1: of the privatization, we run eighty points of gross margin.
• 9:38
  Speaker 1: We never lost sight of we run a profitable company,
• 9:42
  Speaker 1: and you've never I'm just looking for I was looking
• 9:45
  Speaker 1: for a pe ratio, right, and I don't see that
• 9:48
  Speaker 1: because the E is still minus if you look forward.
• 9:50
  Speaker 1: I'm looking at the f A function. We've got the
• 9:52
  Speaker 1: twentys forecast for this year, um, and ninety cents next yeah,
• 9:57
  Speaker 1: and ninety cents next year. So we've seen that whole
• 10:00
  Speaker 1: text space. Really this year get hammered. Your stock is
• 10:03
  Speaker 1: not immune to that. Tell us about your business today.
• 10:08
  Speaker 1: What are your customers telling you. We've got rising interest rates,
• 10:11
  Speaker 1: we've got the threat of a recession. What are your
• 10:13
  Speaker 1: customers telling you? I think, look, no doubt there's uncertainty
• 10:15
  Speaker 1: out there, but customers are also figuring out that if
• 10:18
  Speaker 1: they don't focus on the long term mission critical transformasion,
• 10:20
  Speaker 1: they won't get out of this. A great example, by
• 10:22
  Speaker 1: the ways in the COVID times in April, American airlines
• 10:25
  Speaker 1: bet on our platform and I spoke to them like
• 10:27
  Speaker 1: airlines were grounded, why are not? And the goal was
• 10:30
  Speaker 1: if I don't understand my customers churned during this time,
• 10:32
  Speaker 1: when I come out on the other side, I'll be
• 10:34
  Speaker 1: left holding the bag. They won the innovation awarded a
• 10:36
  Speaker 1: customer conference, so large customers are thinking like that. Yes,
• 10:39
  Speaker 1: there's absolute you know, elongated sales cycles across the board,
• 10:43
  Speaker 1: but transformation of that scale is not going to slow down.
• 10:46
  Speaker 1: So what happened? I mean, your stock was fine high
• 10:50
  Speaker 1: after the I p O. You got up to almost
• 10:52
  Speaker 1: forty share and with everyone else at the beginning of
• 10:55
  Speaker 1: this year, UM investors started to sell and now your
• 10:59
  Speaker 1: train eating for half that? So what what happened? Do
• 11:02
  Speaker 1: you think, not just to you, but to the entire market.
• 11:05
  Speaker 1: But look, there is needless to say, a huge amount
• 11:07
  Speaker 1: of multiple correction you guys were talking about right, there
• 11:09
  Speaker 1: was obviously an all time high for across the board tech.
• 11:11
  Speaker 1: I think we got caught up from our side in
• 11:13
  Speaker 1: the growth at all stock kind of story. We're not
• 11:15
  Speaker 1: a growth at all or growth at all cost kind
• 11:18
  Speaker 1: of company. I do think that there is an element
• 11:20
  Speaker 1: of that going on. But as long as you keep
• 11:22
  Speaker 1: growing at our scale a billion dollars of subscriptions in
• 11:25
  Speaker 1: our mid thirties, and you keep printing cash flow and
• 11:27
  Speaker 1: operating margin, you will get to that. Now. Of course,
• 11:29
  Speaker 1: we're all sitting in this middle seeing markets change. You've
• 11:32
  Speaker 1: got to keep your eye on solving customer problems. We're
• 11:35
  Speaker 1: all going to come out on the other side with
• 11:37
  Speaker 1: things correct itself. For sure. I'm looking at my PGeo
• 11:41
  Speaker 1: functional Bloomer Traumil just shows from geography where you get
• 11:44
  Speaker 1: your revenue most of its outside the the U s
• 11:47
  Speaker 1: for you guys. Is that right? No, that's not true.
• 11:48
  Speaker 1: That's not true about US US. Okay, So how is
• 11:52
  Speaker 1: your non US business doing? Because I think about Europe,
• 11:54
  Speaker 1: I think about Asia with the lockdowns and all companies
• 11:58
  Speaker 1: that have to deal with those types of markets. What
• 12:00
  Speaker 1: are you saying there? Actually, Europe in Asia did pretty
• 12:02
  Speaker 1: fine for US so far. I think barrying FX that's
• 12:05
  Speaker 1: obviously surprising all of us. You can't control how strong
• 12:07
  Speaker 1: the dollar is right now in terms of road demand.
• 12:10
  Speaker 1: Europe actually helped pretty well for US even last quarter.
• 12:13
  Speaker 1: And even so, I mean, actually, I'm flying up to
• 12:14
  Speaker 1: London as we speak over at the by the end
• 12:16
  Speaker 1: of this week, we haven't seen demand for the funeral.
• 12:20
  Speaker 1: I'm going to figure out if I can drive into
• 12:22
  Speaker 1: the city of London. But it's gonna be it's gonna
• 12:24
  Speaker 1: be busy. It's gonna be busy. So demand hasn't slowed
• 12:26
  Speaker 1: down there. FX definitely a big headwind for all of us.
• 12:29
  Speaker 1: F X has been amazing to watch and we thought
• 12:34
  Speaker 1: it was going to turn around a little bit on Monday,
• 12:35
  Speaker 1: but now the king dollar is back with a vengeance.
• 12:39
  Speaker 1: Does that make it easier for you or more difficult,
• 12:43
  Speaker 1: because the volatility actually makes up both top line obviously harder,
• 12:47
  Speaker 1: no doubt. But we are also a very well heaped company.
• 12:49
  Speaker 1: We have our presence across the globe. We have a
• 12:51
  Speaker 1: lot of opics sitting outside the U s U S
• 12:53
  Speaker 1: as well. We have a big development center in India
• 12:55
  Speaker 1: as an example. So the strong dollar helps us there.
• 12:57
  Speaker 1: So what we have, the headwind on the top in
• 13:00
  Speaker 1: on effex becomes actually a dab on the glass side
• 13:03
  Speaker 1: for us. All right, I mean, thank you so much,
• 13:05
  Speaker 1: we appreciate it. I met Walia, CEO of Informatica, joining
• 13:08
  Speaker 1: us here on a Bloomberg interactor broker student getting the
• 13:11
  Speaker 1: update on his company. Informatica Again, I n F A
• 13:15
  Speaker 1: H is the symbol into that software space, which has been, uh,
• 13:19
  Speaker 1: you know, such a source of growth for investors for
• 13:22
  Speaker 1: such a long time. A lot of these stocks, these
• 13:24
  Speaker 1: technology stocks, in addition to the market in general taking
• 13:27
  Speaker 1: on the on the gin, but certainly the technology socks
• 13:30
  Speaker 1: are really bearing the brunt here on this rising interest
• 13:32
  Speaker 1: rate environment. But what you've got to think about the
• 13:34
  Speaker 1: long term growth trends associated with tech spending a lot there.
• 13:41
  Speaker 1: It's gotta Robert Teter, he's head of Investment Policy and
• 13:43
  Speaker 1: Strategy group at Silvercrest Asset Management. Boy, Robert, yesterday, if
• 13:49
  Speaker 1: you're an head of investment policy and strategy group, everybody's
• 13:52
  Speaker 1: looking to you at the four oh one yesterday, what
• 13:55
  Speaker 1: would you tell your team? Yeah, it's a great question,
• 13:58
  Speaker 1: and it was a you know, did one of the
• 14:00
  Speaker 1: wildest days to the downside in a long time. I
• 14:03
  Speaker 1: think one of the themes that we've focused on has
• 14:04
  Speaker 1: been something we've focused on really from the beginning of
• 14:07
  Speaker 1: this pandemic era, which is patients and taking some context
• 14:10
  Speaker 1: and I think, as many others have noted, yesterday's move
• 14:13
  Speaker 1: was really only a reversal of about one week's worth
• 14:15
  Speaker 1: of gains in the prior week, and so that's something
• 14:18
  Speaker 1: that we really focused in on of saying, yes, there's
• 14:20
  Speaker 1: been a change here. Yes, the inflation number was worse
• 14:22
  Speaker 1: than expected. Our work shows that inflation versus expectations is
• 14:26
  Speaker 1: a really critical reading for forward returns in that month
• 14:29
  Speaker 1: window between uh CPI readings. But overall, it really took
• 14:33
  Speaker 1: us back just about a week in terms of where
• 14:35
  Speaker 1: the S and P had been, And so that says
• 14:36
  Speaker 1: that there was a lot of optimism built into that
• 14:38
  Speaker 1: report didn't come through quite as planned, But I think
• 14:41
  Speaker 1: the CPI print wasn't quite as bad as yesterday's numbers
• 14:44
  Speaker 1: in isolation would have made it out to be really
• 14:46
  Speaker 1: more reversal of the prior week. So again this concept
• 14:48
  Speaker 1: of patients and sort of looking through the numbers a
• 14:50
  Speaker 1: little bit, things are going to take some time to
• 14:52
  Speaker 1: settle down. Do you think there was do you think
• 14:55
  Speaker 1: there were opportunities created yesterday? Or do we still need
• 14:59
  Speaker 1: to Harry Shilling, who normally is very conservative, He's very reserved. Um,
• 15:05
  Speaker 1: he's a he's a very polite man. I've known him
• 15:07
  Speaker 1: for forty eight years now. Yeah, I grew up with him.
• 15:11
  Speaker 1: But yesterday or no, on Monday, he said, we haven't
• 15:14
  Speaker 1: seen the market puke yet. And until that kind of
• 15:19
  Speaker 1: regurgitation happens, until um, your average investor sells his last
• 15:24
  Speaker 1: stock and says I'm never gonna buy one again. Um,
• 15:28
  Speaker 1: then you then you're not gonna see this. Um these
• 15:32
  Speaker 1: drops can um stop? What do you think? I think
• 15:36
  Speaker 1: yesterday was a pretty good indication of that. You certainly
• 15:38
  Speaker 1: had very high readings in terms of stocks trading down
• 15:41
  Speaker 1: versus up near you know, near record levels in my view,
• 15:44
  Speaker 1: to really firmly get into that campus feeling that we're
• 15:47
  Speaker 1: out of the woods. Um, it will take another two
• 15:49
  Speaker 1: to three solid prints on cp I. Again, I don't
• 15:51
  Speaker 1: think yesterday was quite as bad as it seemed, but
• 15:54
  Speaker 1: it sort of resets the clock a little bit in
• 15:56
  Speaker 1: terms of expectations. And I think CPI inflation really is
• 15:59
  Speaker 1: the mos critical indicator on the on the short term outlook. UM.
• 16:02
  Speaker 1: I think as we think ahead to two next year
• 16:04
  Speaker 1: and things like that, earnings are a bit more important.
• 16:06
  Speaker 1: But in the short term it's all about inflation here
• 16:08
  Speaker 1: and all about that process of forward rates. We think
• 16:11
  Speaker 1: there's a really strong relationship between the forward rate curve
• 16:15
  Speaker 1: and expectations on the terminal rate versus how the market
• 16:18
  Speaker 1: has been trading in the short term, and that's something
• 16:20
  Speaker 1: that we've got a very close eye on as as
• 16:21
  Speaker 1: we look at these these interim periods in between CPI readings,
• 16:25
  Speaker 1: which really have become the most important metric in the
• 16:27
  Speaker 1: markets in the short term. How about valuation, I'm an
• 16:30
  Speaker 1: old equities analyst. How do you guys think about valuation
• 16:33
  Speaker 1: in this market right here, particularly after yesterday's sell off.
• 16:36
  Speaker 1: I know a lot of people still have earnings concerns, uh,
• 16:40
  Speaker 1: you know, the back half of this year going into
• 16:42
  Speaker 1: early next year. What's the valuation call for you guys?
• 16:45
  Speaker 1: And do you do you care more about price book
• 16:49
  Speaker 1: or price sales than price earnings? What are the metrics
• 16:51
  Speaker 1: that you care about? Yes, so I focus mostly on
• 16:54
  Speaker 1: price earnings and thinking about forward earnings at this point.
• 16:57
  Speaker 1: Starting to think about earnings for next year, I think
• 16:59
  Speaker 1: consensus is a round plus seven or eight percent or so.
• 17:02
  Speaker 1: We're probably more in the camp of about five percent
• 17:04
  Speaker 1: up on earnings, just thinking that there's still some lingering
• 17:06
  Speaker 1: problems here that the markets are fighting through and there's
• 17:09
  Speaker 1: still certainly some downward pressure to come on the economy
• 17:11
  Speaker 1: because of the rate cycle, but purely in terms of
• 17:14
  Speaker 1: of pees, peas have come down quite a bit, so uh,
• 17:16
  Speaker 1: in terms of next year's earnings on consensus forecast s andps,
• 17:20
  Speaker 1: it's just a little bit over sixteen times, which is
• 17:22
  Speaker 1: pretty compelling, even with rates headed a bit higher. So
• 17:26
  Speaker 1: you know, we and others have done a lot of
• 17:27
  Speaker 1: work on historical rates versus p s, and if you
• 17:30
  Speaker 1: take the FED at their words, take the forward curve,
• 17:33
  Speaker 1: it it's in its word, and say that the terminal
• 17:35
  Speaker 1: rate will settle in somewhere maybe four in a quarter
• 17:38
  Speaker 1: or something like that. Um that implies a PE of
• 17:40
  Speaker 1: around eighteen. So we think a little bit of progress
• 17:42
  Speaker 1: on earnings in the next year, a little bit of
• 17:44
  Speaker 1: recovery evaluation as you get some stabilization, and c p
• 17:47
  Speaker 1: I sort of sets the backdrop for again this patient,
• 17:49
  Speaker 1: longer term outlook of some decent returns to be had
• 17:52
  Speaker 1: over the next year or two. All right, Robert, thank
• 17:55
  Speaker 1: you so much. We appreciate it as always. Robert Teeter,
• 17:58
  Speaker 1: head of Investment Policy and Strategy about Silver Crest Asset Management,
• 18:01
  Speaker 1: got his undergraduate economic Stree from Bucknell. Do you know
• 18:04
  Speaker 1: the mascot for Bucknell. M this is a bear. It
• 18:09
  Speaker 1: is Bucky the Bison. Oh it's a bison. Yes, well
• 18:12
  Speaker 1: that's pretty pretty close. Pretty close. Yes, so it's not
• 18:15
  Speaker 1: the University of Richmond spiders, but the bison is pretty cool.
• 18:19
  Speaker 1: Spiders are unique. My favorite has to be the banana slug,
• 18:22
  Speaker 1: which I think Santa Barbara or Santa Cruz, Santa Cruz,
• 18:24
  Speaker 1: Santa Santa CRUs. Banana slugs just awesome. Apparently there is
• 18:28
  Speaker 1: a thing bananas. Sure, sure, I guess you can't find
• 18:31
  Speaker 1: it and they can live through a lot. Just don't
• 18:34
  Speaker 1: put any salt on them. No, okay, good stuff. That
• 18:40
  Speaker 1: would so emerge. Thing the kids were talking about the
• 18:43
  Speaker 1: merge emerged for me is doing a deal and acquisitions.
• 18:47
  Speaker 1: But that's what I'm talking about, is it? Well, it
• 18:49
  Speaker 1: is a deal if you're wealthy crypto person who's going
• 18:52
  Speaker 1: to be staking and taking this network. So basically Ethereum,
• 18:58
  Speaker 1: which is kind of the all so ran cryptocurrency after
• 19:02
  Speaker 1: Bitcoin obviously, which is the o G, is going to
• 19:05
  Speaker 1: move from proof of work mining, which the kids are
• 19:10
  Speaker 1: very unhappy about how much energy it uses to proof
• 19:12
  Speaker 1: of steak mining, and then the energy uses just going
• 19:15
  Speaker 1: to drop point nine percent. I've been told UM to
• 19:20
  Speaker 1: verify a transaction so that means each transaction, instead of
• 19:23
  Speaker 1: taking instead of using the energy it takes to run
• 19:27
  Speaker 1: a house for a week, it will use the energy
• 19:30
  Speaker 1: it takes to boil a kettle of tea. Katie Gretfeld
• 19:33
  Speaker 1: joins us in our Bloomberg Interactive Broker studio. She's a
• 19:36
  Speaker 1: cross asset reporter. Is what Matt said remotely accurate? No,
• 19:40
  Speaker 1: he got it right that he got all the headlines
• 19:43
  Speaker 1: in there. Moving from proof of work to proof of
• 19:46
  Speaker 1: steak miners kind of become obsolete and the big number
• 19:50
  Speaker 1: there drop in energy usage. That's what people are very
• 19:55
  Speaker 1: excited about. Of course, Bitcoin has come under so much
• 19:57
  Speaker 1: scrutiny from lawmakers and regulator to about how much energy
• 20:02
  Speaker 1: mining takes up those very powerful computers. So the merge
• 20:06
  Speaker 1: has been in work, in the works. It's been talked
• 20:08
  Speaker 1: about for seven years, and Uh, it could actually been
• 20:12
  Speaker 1: happy be happening tonight. Uh it's been deleted several times
• 20:17
  Speaker 1: because I thought it happened a couple of days ago. No,
• 20:18
  Speaker 1: we have an actual time, right, it's gonna be it's
• 20:20
  Speaker 1: like ten hours from now or something. Countdown clock. We
• 20:24
  Speaker 1: needed emerge countdown below the countdown to the clothes. Okay, exactly.
• 20:30
  Speaker 1: So I mean does that make Ethereum in theory the
• 20:33
  Speaker 1: preferred cryptocurrency over Bitcoin. Well, they have different uses, is
• 20:40
  Speaker 1: what people would say, people who aren't Bitcoin maximalists, of
• 20:45
  Speaker 1: which there are a few, So bitcoin like mat just
• 20:47
  Speaker 1: look at the market. The market. You know, money talks, right, Oh,
• 20:50
  Speaker 1: I heard that? Okay, bitcoine, follow the money there. There
• 20:53
  Speaker 1: is something like four billion dollars worth of bitcoin out there,
• 20:57
  Speaker 1: but the hope is at least half that. And if
• 21:00
  Speaker 1: you're in ether, boll the flippening is going to come
• 21:02
  Speaker 1: and Ether will replace the flippening. What the flippening? You've
• 21:06
  Speaker 1: got to add that to your don't you read coins
• 21:08
  Speaker 1: and cat cats, cats and coins. That's my secret weekend
• 21:12
  Speaker 1: distribution list I can addue to. But so, but if
• 21:16
  Speaker 1: you also follow the money and look at where money
• 21:18
  Speaker 1: has been moving since mid June, Ether is up about
• 21:24
  Speaker 1: bitcoin is remember when it was going to four thousand
• 21:28
  Speaker 1: the actual price per coin. But Ether has been rallying
• 21:32
  Speaker 1: much more than put bitcoin in anticipation of this merge,
• 21:36
  Speaker 1: thinking that developer. Developers will flock here. It's going to
• 21:39
  Speaker 1: be a faster, cheaper network than Bitcoin, which, as Matt
• 21:44
  Speaker 1: Riley points out, is the biggest cryptocurrency out there right now. So,
• 21:47
  Speaker 1: I mean, I've just been watching over the last few
• 21:50
  Speaker 1: so the merge is something, Paul that keeps happening, or
• 21:54
  Speaker 1: it's gonna happen and it's delayed, it's gonna happen, and
• 21:56
  Speaker 1: it's now we're there, it's act really going to happen,
• 22:01
  Speaker 1: and so I've been watching the price of Ether like, oh,
• 22:05
  Speaker 1: if it's really going to happen, now, it's going to
• 22:07
  Speaker 1: take off because you want to get in before, right theoretically,
• 22:10
  Speaker 1: So the price of Ether just keeps going down. Well,
• 22:14
  Speaker 1: my friend in colleague, Vildonna Hirik, had a great story.
• 22:17
  Speaker 1: I think it was last week or earlier this week,
• 22:19
  Speaker 1: or at least this month. So if you look at
• 22:21
  Speaker 1: what the derivatives market is pricing, most crypto traders are
• 22:25
  Speaker 1: actually shorting Ether right now the derivative So it could
• 22:28
  Speaker 1: turn into a sell the news event to your point,
• 22:31
  Speaker 1: because markets ever forward looking, and this has been anticipated
• 22:36
  Speaker 1: for a long time. Sure it's been delayed over and
• 22:38
  Speaker 1: over again, but now that we're finally now you say
• 22:40
  Speaker 1: traders have been shorting either, Are these just lonely guys
• 22:44
  Speaker 1: in their mother's basements. It's not the trading desk of
• 22:47
  Speaker 1: JP Morgan shorting. It's not Petch funds. It's that kk R.
• 22:52
  Speaker 1: I mean, you know point seventy two shorting it? Well,
• 22:55
  Speaker 1: it's it's it's almost at that level. About the brilliant
• 22:58
  Speaker 1: traders that worked Jane Street and now are billionaires in
• 23:03
  Speaker 1: f t X, right, I mean Sam Bankman Freed started
• 23:06
  Speaker 1: out that way, and there's a great story on the
• 23:09
  Speaker 1: terminal about his other operation as well. I think it's
• 23:12
  Speaker 1: called Alan Meta. Is how you pronounce this his market
• 23:15
  Speaker 1: making firm? True? That this is just this is how
• 23:18
  Speaker 1: they make money. So there are a lot of I mean,
• 23:21
  Speaker 1: he may, honestly, Sam Bankman Freed maybe in his parents basement,
• 23:27
  Speaker 1: but he's a genius who has billions of dollars worth
• 23:31
  Speaker 1: of wealth. So all right, that talks to me. In
• 23:34
  Speaker 1: any case, It'll be interesting to see how ETHER reacts
• 23:38
  Speaker 1: to this. It will be interesting to see how there
• 23:40
  Speaker 1: are a number of UH spinoffs or original ether you
• 23:44
  Speaker 1: know that that are gonna continue on proof of work.
• 23:47
  Speaker 1: There um people who don't buy into They think proof
• 23:51
  Speaker 1: of stake is a POS. And it'll be interesting to
• 23:55
  Speaker 1: see if those make more money than ether now and
• 23:58
  Speaker 1: to see what happens to the o G to bitcoin.
• 24:00
  Speaker 1: I know it will be interesting and something I need
• 24:02
  Speaker 1: to look into, Matt is there's a bunch of ether
• 24:05
  Speaker 1: extiane treated products in Europe that actually hold ether. I
• 24:09
  Speaker 1: need to look into how they're handling the merge because
• 24:12
  Speaker 1: we do also have an ef We have an e
• 24:13
  Speaker 1: t Can you do an e t F on ether?
• 24:16
  Speaker 1: You can't in the US. Many would like to, but
• 24:19
  Speaker 1: the sec that allowed physically back right, And the e
• 24:22
  Speaker 1: t F on bitcoin is only the futures of bitcoin,
• 24:25
  Speaker 1: only on future, not on the underlying in America, and
• 24:28
  Speaker 1: there are bitcoin e t fs in Canada and uh yeah,
• 24:33
  Speaker 1: perspective as we do as we do at Bloomberg. Yes,
• 24:36
  Speaker 1: I just saw a hundred and sixty four offices and
• 24:39
  Speaker 1: seventy four countries. I was just walking on a floor
• 24:41
  Speaker 1: that had that up on the terminal. You're a widespread everywhere,
• 24:44
  Speaker 1: I mean, just out of control there. I was telling
• 24:47
  Speaker 1: some kids from Duke this morning. There's no more global
• 24:50
  Speaker 1: company that I've ever worked for. And that's including JP
• 24:52
  Speaker 1: Morgan and City more global than Bloomberg Just incredible. Craty
• 24:56
  Speaker 1: Greifeld talking about global cross asset reporter for Bloomberg News,
• 25:00
  Speaker 1: joining us here in our Bloomberg Interactive Broker studio. We
• 25:05
  Speaker 1: have a looming railroad strike. Um, and I think it's
• 25:10
  Speaker 1: a big issue because it affects so much of the
• 25:14
  Speaker 1: economy in the US. I mean, you think about it.
• 25:16
  Speaker 1: I mean we're just kind of seeing some light at
• 25:18
  Speaker 1: the end of the tunnel from the supply chain issues
• 25:20
  Speaker 1: associated with the pandemic and now potentially have a rail
• 25:26
  Speaker 1: strike on the freight and that could be a big
• 25:28
  Speaker 1: issue across a number of verticals there. So let's bring
• 25:31
  Speaker 1: Kim Chipment. She's reporter. She covers agricultural, food, water and
• 25:34
  Speaker 1: fuel for Bloomberg News. Can just give us the update
• 25:38
  Speaker 1: on kind of where we are with this potential strike
• 25:40
  Speaker 1: and and what are the insiders saying how it might
• 25:43
  Speaker 1: play out? Um? Sure, well we know, um, you know
• 25:50
  Speaker 1: at this point President Biden's gotten personally involved. There was
• 25:55
  Speaker 1: uh meeting this morning try you know that. Of course,
• 26:02
  Speaker 1: you know, everyone's point out all the stubs, you know,
• 26:04
  Speaker 1: trying to make sure that it doesn't happen. Uh. But
• 26:08
  Speaker 1: but right now, we really don't have an indication of
• 26:11
  Speaker 1: which way it's it's likely to go. Um. You already
• 26:14
  Speaker 1: have the railroads. Uh you know it's now it's been
• 26:19
  Speaker 1: a couple of days since we've heard that long distance
• 26:22
  Speaker 1: distance passenger route UM in some cases are being cut
• 26:27
  Speaker 1: and rail railroads. UM. Starting today, we'll stop picking up
• 26:32
  Speaker 1: UM items like brain. This is a big I mean, Kim,
• 26:38
  Speaker 1: this is the big issue. I mean, I think you know.
• 26:40
  Speaker 1: One of the issues agriculture. I was I wasn't really
• 26:43
  Speaker 1: aware of how much agricultural stuff actually travels by rail.
• 26:48
  Speaker 1: So what's the farmers to do? This is harvesting. Also,
• 26:51
  Speaker 1: let's just back up a second, because my understanding is
• 26:55
  Speaker 1: that there are many different railroads, many different kinds of
• 26:59
  Speaker 1: train system ums, with many different purposes. Um. You've got Amtrak,
• 27:04
  Speaker 1: for example, which people take to go back and forth
• 27:07
  Speaker 1: from Boston to Washington, d C. And maybe stop in
• 27:10
  Speaker 1: New York, right, and then you've got um, you know,
• 27:14
  Speaker 1: grain shipments out of the Midwest. You've got freight moving
• 27:17
  Speaker 1: trucks around for GM and Toyota. Are these are all
• 27:22
  Speaker 1: of these railroads using workers from one union or what's
• 27:26
  Speaker 1: the deal can can one strike derail so to speak,
• 27:30
  Speaker 1: all of these businesses, well for what you brought up
• 27:34
  Speaker 1: Amtrak and the and the issue for passenger rail and
• 27:37
  Speaker 1: also and then for some commuter rail um like out
• 27:42
  Speaker 1: of like like the Metro North or Long Island Railroad. Right,
• 27:45
  Speaker 1: although it is important to say that there's no indication
• 27:49
  Speaker 1: that those would be affected those particular ones, although outside
• 27:52
  Speaker 1: of Washington, d C. In Virginia and Maryland there are
• 27:55
  Speaker 1: two that definitely would be affected. Los Angeles Chicago commuter
• 27:59
  Speaker 1: line definitely would be affected. And the reason for that,
• 28:02
  Speaker 1: and also in the reason for some of these Amtrak
• 28:04
  Speaker 1: passenger rail cuts is uh, for the long distance throughout
• 28:09
  Speaker 1: I will probably see more announcements on that today. Um.
• 28:12
  Speaker 1: That's because they either share a line with the freight
• 28:15
  Speaker 1: um say, their share lines with with the freight railroads
• 28:19
  Speaker 1: or there or there's some kind of other overlaps where
• 28:23
  Speaker 1: they wouldn't have access anymore. So it's not that that's
• 28:26
  Speaker 1: not really a worker issue, that's a that's a real
• 28:29
  Speaker 1: line issue. Is there is there an indication that this
• 28:33
  Speaker 1: is going to go down to the wire to Friday
• 28:35
  Speaker 1: in terms of negotiating this or is there sense that
• 28:37
  Speaker 1: maybe you know, the president will step in. We've seen
• 28:40
  Speaker 1: it in the past with other whether it's the airlines
• 28:43
  Speaker 1: and kind of really pushed the two parties together. I mean,
• 28:47
  Speaker 1: it's Wednesday here, So what's the inside thinking there? Well,
• 28:52
  Speaker 1: I do think, uh, there's a decent chance it's going
• 28:56
  Speaker 1: to go right down to the wire. I mean some
• 28:58
  Speaker 1: people think, you know, we could even have you know,
• 29:01
  Speaker 1: a strike uh that lasts you know, half a day,
• 29:05
  Speaker 1: a couple of days. Uh. At this point, it's you know,
• 29:09
  Speaker 1: most people with the mid term elections coming up and uh,
• 29:14
  Speaker 1: and just the hit that it would take to the
• 29:15
  Speaker 1: to the US economy. I mean that the estimate is
• 29:19
  Speaker 1: over two billion a day. Uh. You know, the likelihood
• 29:26
  Speaker 1: of the prospect of a prolonged strike is hard hard
• 29:31
  Speaker 1: to imagine. But it's we are you know it could
• 29:35
  Speaker 1: happen because we don't really know. I mean I'll say,
• 29:37
  Speaker 1: you know, like, um, you know you brought up agriculture,
• 29:40
  Speaker 1: uh wheat farmers for example, Um, and you have spring wheat.
• 29:44
  Speaker 1: That's just you know, finishing up harvest. Um. You know
• 29:48
  Speaker 1: that that'sn't that's they have very few options other than rails,
• 29:53
  Speaker 1: and that's the that's the case where most of that
• 29:56
  Speaker 1: the bulk of that UM for the biggest market is Mexico.
• 29:59
  Speaker 1: Most of goes um by rail, So that's where you
• 30:04
  Speaker 1: can't get all right, you just can't get the grains there,
• 30:08
  Speaker 1: all right, Kim, we'll stay on top of this story.
• 30:10
  Speaker 1: We appreciate your reporting. Kim Chipman reporters Whip Covers, agg Food, water, Fuel,
• 30:15
  Speaker 1: based out of the Chicago office for Bloomberg News. Thanks
• 30:20
  Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
• 30:23
  Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast
• 30:27
  Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
• 30:31
  Speaker 1: Matt Miller. Put on false Sweeney I'm on Twitter at
• 30:34
  Speaker 1: pt Sweeney. Before the podcast. You can always catch us
• 30:37
  Speaker 1: worldwide at Bloomberg Radio.