Latest / Bloomberg Intelligence / Consumer In Great Shape, Room To Spend: Michael Hans

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Consumer In Great Shape, Room To Spend: Michael Hans · 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. Well, as we've been
• 0:22
  Speaker 1: discussing really over the last several months, one of the
• 0:24
  Speaker 1: one of the driving narratives of these markets is inflation.
• 0:28
  Speaker 1: We are seeing it. The question is a transitory is
• 0:31
  Speaker 1: it's something more permanent that could really put up some
• 0:33
  Speaker 1: roadblocks for this economy. You know, I'm looking at the
• 0:36
  Speaker 1: ten years. We're talking with Ira Jersey just earlier again,
• 0:38
  Speaker 1: one point five three percent on the ten years, So
• 0:40
  Speaker 1: the bond market is not seeing Michael Hans he's the
• 0:43
  Speaker 1: chief investment officer for Clarfeld Financial Advisors. They about seventeen
• 0:47
  Speaker 1: billion dollars in assets under management. Michael joints this. Michael.
• 0:50
  Speaker 1: We appreciate you taking the time here as you look
• 0:53
  Speaker 1: at markets here, we I know you've been constructive on
• 0:56
  Speaker 1: these markets. How do you think about the inflation risk
• 1:00
  Speaker 1: to these markets, Good morning, Thanks for having me. So
• 1:04
  Speaker 1: I think the biggest risk that we discuss is we
• 1:07
  Speaker 1: sit down and try to think about setting investment policy
• 1:10
  Speaker 1: and direction for our clients is not necessarily the individual
• 1:15
  Speaker 1: asset class performance that you're going to see directly resulting
• 1:18
  Speaker 1: from moves into the inflation data. Is more so the
• 1:21
  Speaker 1: challenges that it puts on the FED, who's really guessing
• 1:26
  Speaker 1: at this point in time, with two potential outcomes. One
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  Speaker 1: is that they're right and guiding towards transitory levels of inflation,
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  Speaker 1: in which case they will have the ability of reasonable
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  Speaker 1: growth coming in these inflation dynamics moderating with what we're
• 1:43
  Speaker 1: seeing right now is a complience of issues but making
• 1:45
  Speaker 1: it really challenging and the base effects, and then they
• 1:48
  Speaker 1: have the ability to set policy and be somewhat restrictive
• 1:51
  Speaker 1: at the margin in a more gradual pace. The flip
• 1:55
  Speaker 1: side is what I think many market participants are afraid of,
• 1:58
  Speaker 1: is that they are somewhat complaced because of their desire
• 2:02
  Speaker 1: to maintain policy focusing on the labor side of their mandate,
• 2:06
  Speaker 1: and then forced to more aggressively restrict policy down the line.
• 2:11
  Speaker 1: So from our vantage point, not an issue likely, right
• 2:16
  Speaker 1: we're still talking about first thinking about some form of paper,
• 2:20
  Speaker 1: and there's a lot that's going to happen before they
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  Speaker 1: raise rates, and so the market right now. Frankly, I
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  Speaker 1: think some of your your guests point about you as well.
• 2:28
  Speaker 1: It's a little bit of back and forth here in
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  Speaker 1: a in a relatively tight range both on equities and
• 2:34
  Speaker 1: on fixed income, waiting for some directional movement that will
• 2:38
  Speaker 1: then set the tone for the pounds of the year. Yeah,
• 2:41
  Speaker 1: it's interesting. Bill Dudley wrote a piece for Bloomberg yesterday
• 2:44
  Speaker 1: and said just that, Um, well two things, one the
• 2:48
  Speaker 1: focus on UM the labor markets, and to the insistence
• 2:53
  Speaker 1: that UH inflation be allowed to run hot, therefore overheating
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  Speaker 1: the economy. He then said, you know they raise rates
• 3:00
  Speaker 1: after that, Um, they'll be forced to do it at
• 3:03
  Speaker 1: a faster pace than they previously had. And if they
• 3:06
  Speaker 1: push up unemployment by just half a percent, this is
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  Speaker 1: what I found surprising over the past seventy five years.
• 3:13
  Speaker 1: Every time the unemployment right rate rises just half a percent,
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  Speaker 1: a full blown recession occurs thereafter. UM. And this is
• 3:23
  Speaker 1: the this is the problem, right, This is the concern
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  Speaker 1: that the Fed is going to have to tighten harder
• 3:29
  Speaker 1: than it previously would have had to because it's allowing
• 3:32
  Speaker 1: the economy to overheat. If you buy into his his narrative,
• 3:37
  Speaker 1: it's a very valid question, and they think what's interesting,
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  Speaker 1: And it was a question in one of the prior
• 3:42
  Speaker 1: you know, FED press conferences that like McKay brought up,
• 3:45
  Speaker 1: was you know, we're not hearing that narrative that we
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  Speaker 1: did in the prior rate hiking cycle of we'd like
• 3:51
  Speaker 1: to reset some level of ammunition for that next downturn.
• 3:55
  Speaker 1: I think it's very it is somewhat premature, but the
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  Speaker 1: question really beg do you need to be buying billion
• 4:01
  Speaker 1: dollars of securities on a monthly basis? And I think
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  Speaker 1: we're in a different position today than we were on
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  Speaker 1: the prior cycle because we've blown out the balance sheet
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  Speaker 1: substantially more than what we did during the financial crisis.
• 4:13
  Speaker 1: So there are little pockets of areas where you know,
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  Speaker 1: the Fed last week it was wasn't heavily paid attention to,
• 4:19
  Speaker 1: but they're starting at the margins to nibble down at
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  Speaker 1: that balance sheet. They made comments related to the corporate
• 4:24
  Speaker 1: credit facility and their ets purchases. So this is going
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  Speaker 1: to be something that I think of volumes and from
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  Speaker 1: their perspective in a methodical fashion over a prolonged period
• 4:33
  Speaker 1: of time. But we are likely sitting in that in
• 4:37
  Speaker 1: the environment right now over the course of the next
• 4:40
  Speaker 1: couple of months, where there may not be a major
• 4:43
  Speaker 1: direction the news and the data flows might not matter
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  Speaker 1: all that much because we all have this heightened level
• 4:49
  Speaker 1: of expectations for a high cp I print, right And
• 4:53
  Speaker 1: so at this point, I think it's really when does
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  Speaker 1: the FED start detailing their plans, because they really do
• 5:00
  Speaker 1: want to, you know, calm the market. Hey, Michael, just
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  Speaker 1: real quickly thirty seconds. Given that FED backdrop, where what
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  Speaker 1: are you telling clients right now in terms of risk?
• 5:11
  Speaker 1: In terms of risk, and I think an important dynamic
• 5:13
  Speaker 1: is that the equity market still has you know, and
• 5:16
  Speaker 1: as you mentioned the onset, we are fairly constructive because
• 5:20
  Speaker 1: of the relatively low yield dynamic. What we're looking at
• 5:24
  Speaker 1: is just a lower duration position across our fixed income
• 5:27
  Speaker 1: portfolios because you will not get the same benefit even
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  Speaker 1: if rates start coming back in, So be more mindful
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  Speaker 1: about what you own across fixed income, but also being
• 5:37
  Speaker 1: you know, cognizant of the potential for lower rates of
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  Speaker 1: return in in the balance of this cycle because we
• 5:43
  Speaker 1: pulled a lot of that forward. Michael, thanks so much
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  Speaker 1: for your insight. Always great to get your view on
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  Speaker 1: this market. Michael Hans is the chief investment officer at
• 5:52
  Speaker 1: Clarfeld Financial Advisors, talking to us about UM, the market's
• 5:57
  Speaker 1: view on inflation, which really has been UM going through
• 6:01
  Speaker 1: a bit of a back and forth over the past days,
• 6:03
  Speaker 1: sometimes hours. This is crazy but fastly I think would
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  Speaker 1: count as a small cap stock. UM. It's only it's
• 6:14
  Speaker 1: only worth six and a quarter billion dollars in market cap.
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  Speaker 1: And this is a company that before today I didn't
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  Speaker 1: realize has the power to shut down the Internet, even
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  Speaker 1: if just momentarily. Nate Langston joins us Bloomberg Europe Tech
• 6:27
  Speaker 1: editor and consumer tech reporter UM and Nate, I get
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  Speaker 1: why these shares were up, because the first thing I
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  Speaker 1: thought when I when I heard this is, Man, this
• 6:36
  Speaker 1: is a powerful and important company. I kind of want
• 6:40
  Speaker 1: to buy shares in that. You're absolutely right, and that
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  Speaker 1: was exactly my reaction, UM when I first saw this,
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  Speaker 1: is that this is not a company that many people, UM,
• 6:53
  Speaker 1: you know, myself included. And I've been covering technology for
• 6:56
  Speaker 1: over fifty years and I hadn't really ever paid any
• 6:58
  Speaker 1: attention to this company, and when you see some of
• 7:01
  Speaker 1: the sites that it is possible for it to have,
• 7:04
  Speaker 1: you know, have a hand in taking offline, ilbeit obviously
• 7:09
  Speaker 1: accidentally you have to sort of it turned heads a
• 7:12
  Speaker 1: little bit and you think, well, maybe we should be
• 7:14
  Speaker 1: paying more attention to this company, and certainly I will
• 7:17
  Speaker 1: be doing in terms of how we cover it. Um,
• 7:20
  Speaker 1: it's it's and as you say, the the investor response
• 7:23
  Speaker 1: and that the stock price since since the opens has
• 7:27
  Speaker 1: been really quite fascinating. All right, Nate, tell us what
• 7:30
  Speaker 1: happened this morning and how did it happen? Well, as
• 7:35
  Speaker 1: far as we know, this all originated as essentially user
• 7:40
  Speaker 1: error within the company itself. There's no suggestion here that
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  Speaker 1: that it was a a hack or or the subject
• 7:47
  Speaker 1: of any kind of UM cyber attack. This is essentially
• 7:52
  Speaker 1: the equivalent to somebody pressing the wrong button on a
• 7:55
  Speaker 1: computer and then having to quickly roll it back. Certainly,
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  Speaker 1: the speed with which this both happened and was fixed,
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  Speaker 1: all of which took place within about an hour, UM
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  Speaker 1: makes me very confident that that that is the case.
• 8:10
  Speaker 1: But the short version of what happened is people started
• 8:13
  Speaker 1: noticing that they weren't able to access websites. UM for
• 8:17
  Speaker 1: a little while, Bloomberg dot com included in in that
• 8:20
  Speaker 1: and um the Amazon and read it exactly and read it,
• 8:26
  Speaker 1: and there was Spotify was reporting outages Shopify as well. Yeah,
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  Speaker 1: and it's just a lot of a lot of averages.
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  Speaker 1: And people started reporting this. The company within about I
• 8:38
  Speaker 1: think twenty five thirty minutes have posted a status update
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  Speaker 1: on its service datas page, which ironically for a little while,
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  Speaker 1: was also taken offline to say that an issue had
• 8:48
  Speaker 1: been identified and a fix is being deployed. And in
• 8:51
  Speaker 1: just under an hour total, from the first outage to
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  Speaker 1: a resolution, things started taking back online. UM, and the
• 8:59
  Speaker 1: company said, it's you know, it's further investigating. And generally
• 9:01
  Speaker 1: when something like this happens, it takes a day or
• 9:04
  Speaker 1: two for sort of full disclosure on the you know,
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  Speaker 1: the cause for that to be. Yeah. They were like,
• 9:11
  Speaker 1: our intern accidentally pressed the red button. He's been fired, Nate. Um.
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  Speaker 1: You gotta wonder whether or not this makes companies want
• 9:19
  Speaker 1: to diversify. I mean, if if I was running a
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  Speaker 1: website and this took me down, I would think, man,
• 9:25
  Speaker 1: is there can I get two people that offer the
• 9:27
  Speaker 1: same service. Yeah, I mean, that's definitely the first reaction.
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  Speaker 1: But realistically, for the kind of systems administrators that are
• 9:37
  Speaker 1: in charge of these websites, this is something that it's
• 9:40
  Speaker 1: just understood to happen from time to time. You know,
• 9:44
  Speaker 1: if if the the entirety of a year, your website
• 9:47
  Speaker 1: goes down for a few minutes here or a few
• 9:49
  Speaker 1: minutes there over the course of that year, you know,
• 9:51
  Speaker 1: you're still talking way above up time, which is what
• 9:55
  Speaker 1: a lot of these companies promise and guarantee, and there
• 9:58
  Speaker 1: is often a you know, small amount of edit and
• 10:00
  Speaker 1: compensation that are applied based on the percentage of total
• 10:04
  Speaker 1: autage with course of say a month. Um. So, I
• 10:07
  Speaker 1: can't imagine they will see a fallout in people moving uh,
• 10:11
  Speaker 1: purely because of this one incident. But if this turns
• 10:14
  Speaker 1: out to be one of many over the coming weeks, months,
• 10:17
  Speaker 1: or whatever, that's when things start to get a lot
• 10:19
  Speaker 1: more serious. Sure. All right, Nate, thanks so much for
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  Speaker 1: joining us. Really appreciate your time and getting your thoughts
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  Speaker 1: on this fascinating story. To start this uh this day,
• 10:27
  Speaker 1: Nate Lengths and Bloomberg grob Tech editor and consumer tech
• 10:31
  Speaker 1: reporter Matt, You're gonna like this. Our next guests participated
• 10:36
  Speaker 1: on a panel at the largest bitcoin conference in the world,
• 10:40
  Speaker 1: entitled Bitcoin One, which took place in Miami, Florida. What
• 10:44
  Speaker 1: I found interesting is, Uh, this conference was held two
• 10:48
  Speaker 1: years ago, attracted about two thousand people, but in one
• 10:52
  Speaker 1: they're an estimated twelve thousand people in attendance, so assign
• 10:56
  Speaker 1: that bitcoin and cryptos really are getting into the mainstream.
• 11:01
  Speaker 1: Frank Holmes he joins US today. Frank's the CEO and
• 11:04
  Speaker 1: chief investment officers US Global Investors. Frank, I love to
• 11:07
  Speaker 1: start there. There's lots to chat with you about, but
• 11:09
  Speaker 1: just give us a sense of what was the vibe
• 11:11
  Speaker 1: down a bitcoin in Miami. It was electrifying. I've spoken
• 11:18
  Speaker 1: as so many investment conferences over the past thirty years,
• 11:22
  Speaker 1: attended so many of them, uh, and never has been
• 11:26
  Speaker 1: to an event where we're twelve thousand people spent six
• 11:30
  Speaker 1: hundred dollars to get in the door and on on
• 11:33
  Speaker 1: game day. Basically the tickets were twelve hundred dollars. Uh.
• 11:39
  Speaker 1: The big retail conference for investors and ETFs and mutual funds.
• 11:43
  Speaker 1: The money shown Orlando, you know they'll get six thousand people,
• 11:46
  Speaker 1: but it's free. So I was really impressed with this.
• 11:52
  Speaker 1: That just the level and it wasn't close to anything
• 11:55
  Speaker 1: like you had to have a fifteen minute Uber drive
• 11:57
  Speaker 1: to get there. UH. Usually as a big convention right
• 12:01
  Speaker 1: beside the hotel, these other events, if you get lots
• 12:03
  Speaker 1: of people, but people who were really committed. People flew
• 12:06
  Speaker 1: in from all over the world to an end. Uh.
• 12:10
  Speaker 1: And so I thought that was fascinating and the caliber
• 12:13
  Speaker 1: of speakers was outstanding. Great event. I know Mike mcglowan
• 12:18
  Speaker 1: are Bloomer Commodities analysts, was down there as well. What
• 12:22
  Speaker 1: did you what did you take away from the event? Um?
• 12:25
  Speaker 1: What did you learn? Um? Down in Miami? Well, you know,
• 12:30
  Speaker 1: on on stage I spoke regarding the cryptal mining companies.
• 12:33
  Speaker 1: I launched the first UH cryptal mining company in the
• 12:36
  Speaker 1: world in two thousand seventeen, called High Blockchain Technology. And uh,
• 12:41
  Speaker 1: it's interesting because on that panel it was all about
• 12:44
  Speaker 1: being green and clean your coins, and uh, I got
• 12:48
  Speaker 1: booed and then I got hurrah. So you have some
• 12:51
  Speaker 1: real devotees there, bitcoin enthusiasts that are like religious fanatics,
• 12:57
  Speaker 1: and then the other hand you have lots of scientists
• 12:59
  Speaker 1: and people are for sort of the non centralized or
• 13:02
  Speaker 1: decentralized financial network. Uh. And that spectrum was was huge.
• 13:07
  Speaker 1: There was four thousand people in standing room only in
• 13:10
  Speaker 1: file marshals had to come in and tell people they
• 13:12
  Speaker 1: couldn't stand at the back. Amazing. Yes, Frankie, what's the
• 13:17
  Speaker 1: What do you think was the overriding key issue for
• 13:20
  Speaker 1: participants in this conference? Here? Is it? Is it regulation?
• 13:23
  Speaker 1: Is it a greater adoption? Um, greater you know, just
• 13:28
  Speaker 1: more technology? What are some of the key takeaways? All
• 13:31
  Speaker 1: of them? It was interesting, It was all of them.
• 13:34
  Speaker 1: Ron Paul, I hope when I'm in my eighties I
• 13:36
  Speaker 1: can uh moonwalk like he was. I mean, he was
• 13:40
  Speaker 1: unbelievable his energy up there on that on that stage.
• 13:44
  Speaker 1: So he had the sort of the the political positioning
• 13:47
  Speaker 1: of uh, financial independence, etcetera. And and then you had
• 13:51
  Speaker 1: the Michael Sailor did a phenomenal job. He had the
• 13:55
  Speaker 1: standing room ovation. Uh. So I think it was very broad,
• 14:00
  Speaker 1: uh doors he was there for Twitter, uh and he
• 14:03
  Speaker 1: was sort of a philosophical approach. We had a Heckler
• 14:07
  Speaker 1: for him. But you know, it was it was just
• 14:10
  Speaker 1: fascinating to observe what I you know, I did see
• 14:13
  Speaker 1: is is that there is a push for crypto mining
• 14:17
  Speaker 1: to be done in North America and Europe and away
• 14:19
  Speaker 1: from China. The pools for more transparency is better to
• 14:24
  Speaker 1: have than coming from China. That there was a The
• 14:27
  Speaker 1: mayor spoke very well and how he's trying to create
• 14:31
  Speaker 1: the Silicon Valley of the East Coast is going to
• 14:34
  Speaker 1: be in Miami. So you know, that was very interesting
• 14:38
  Speaker 1: to see that shift. So there's many dynamic things happening
• 14:41
  Speaker 1: at the same time in all ages. You had the
• 14:45
  Speaker 1: venture capital funds, the bigonaire players flying in from San Francisco,
• 14:50
  Speaker 1: uh to the kid and his flip flops on walking
• 14:53
  Speaker 1: around with his knapstack. That's up three million dollars on
• 14:55
  Speaker 1: his bitcoin holdings. Is that Mat Miller? Matt, were you
• 14:58
  Speaker 1: in Miami? I is not, but I would definitely be
• 15:02
  Speaker 1: wearing flip flops because I hate shoes. Everyone who knows
• 15:06
  Speaker 1: me knows how I feel about shoes. Frank I promised
• 15:09
  Speaker 1: our listeners that would get you to talk a little
• 15:11
  Speaker 1: bit about airlines, and I know that on the day
• 15:14
  Speaker 1: you left there were one point six million passengers screened. Um,
• 15:18
  Speaker 1: that's up from a year ago. We gotta get you
• 15:21
  Speaker 1: back because we've run out of time, but I do
• 15:23
  Speaker 1: want to hear from you in the future, so well,
• 15:24
  Speaker 1: hopefully you have time we can rebook you talk a
• 15:27
  Speaker 1: little bit about airlines and about the jets E T
• 15:29
  Speaker 1: F as well. Frank Holmes, c i O, Chief Investment
• 15:31
  Speaker 1: Officer US Global Investors. He was a speaker at the
• 15:34
  Speaker 1: Big Bitcoin Conference in Miami and founder of one of
• 15:38
  Speaker 1: the first big bitcoin minds. This is Bloomberg. Let's bring
• 15:48
  Speaker 1: in Dan Gantner now, he's president, chief executive officer, and
• 15:51
  Speaker 1: chief investment officer at r NC Gender Capital Management and
• 15:56
  Speaker 1: Dan Um. It's great to get somebody who has skin
• 15:59
  Speaker 1: in the game game. You've got five billion and asked
• 16:01
  Speaker 1: under management and has some stock picks for us UM.
• 16:06
  Speaker 1: Let's talk about what you want right now. Well, first
• 16:09
  Speaker 1: of all, let's talk about your inflation outlook, because I
• 16:10
  Speaker 1: guess that drives your decisions to some degree. Yeah, man,
• 16:15
  Speaker 1: I think that you know right now, certainly inflation is
• 16:17
  Speaker 1: the is the hot button, and it's the watchword and
• 16:19
  Speaker 1: the overall market and uh, it's you know, we're we're
• 16:22
  Speaker 1: waiting to see what these numbers come out with with
• 16:24
  Speaker 1: cp I and obviously for PC which is really what
• 16:27
  Speaker 1: the FED is looking at. But you know, the numbers
• 16:29
  Speaker 1: are very very hot right now, and there there's certainly
• 16:32
  Speaker 1: I think a little above the Fed's expectations. The market
• 16:35
  Speaker 1: is little concerned about it. You know, we're seeing PC
• 16:37
  Speaker 1: that just came out at three point six per uh,
• 16:40
  Speaker 1: FED once a long term target of about two uh.
• 16:44
  Speaker 1: You know, the watchword right now is transitory, though I
• 16:48
  Speaker 1: think what you're going to see is that the definition
• 16:50
  Speaker 1: of transitory is going to change over time, and I
• 16:53
  Speaker 1: think the market is really looking to see, is this
• 16:55
  Speaker 1: something that really is going to be a few months
• 16:58
  Speaker 1: that's going to open up as you have supply chain.
• 17:02
  Speaker 1: Basically reopening of supply chain is what we're dealing with,
• 17:05
  Speaker 1: and so is that going to be truly a few
• 17:07
  Speaker 1: months of transitory nature? We get back on the feds
• 17:10
  Speaker 1: more or less two percent guideline for inflation, and therefore
• 17:15
  Speaker 1: any unwinding that they're going to do is going to
• 17:17
  Speaker 1: be either insignificant or non existent. If it stays longer
• 17:21
  Speaker 1: than that and really becomes more cyclical, then the market's
• 17:26
  Speaker 1: going to adjust to that. You know. We uh we
• 17:28
  Speaker 1: think employment's a huge part of this right now, and
• 17:30
  Speaker 1: that that's the main thing we're watching. Yeah, we got
• 17:33
  Speaker 1: some very interesting jolts data out this morning about the
• 17:37
  Speaker 1: record job openings. Uh so that was very interesting for
• 17:40
  Speaker 1: this market. Then you know that that cyclical trade, if
• 17:45
  Speaker 1: you will, that started it's called it last September has
• 17:48
  Speaker 1: really worked out well for investors that have played, you know,
• 17:51
  Speaker 1: some of the more cyclical parts of the marketingbe even
• 17:54
  Speaker 1: the small caps um A, are you in on that
• 17:57
  Speaker 1: trade and be you know kind of what's your outlook. Well,
• 18:00
  Speaker 1: we're very heavy on that trade as a matter of fact,
• 18:02
  Speaker 1: and really started in the end of the third quarter
• 18:06
  Speaker 1: and pretty heavily into the fourth quarter of last year.
• 18:08
  Speaker 1: I mean the look the energy sector, you know, which
• 18:11
  Speaker 1: was beat up so badly last year, has led the
• 18:15
  Speaker 1: market this year. I mean, the energy sector is upt
• 18:18
  Speaker 1: hot on its heels, as financials at up almost tht
• 18:22
  Speaker 1: and even materials are up over so it's it's been
• 18:25
  Speaker 1: a big part of our portfolios and and even in
• 18:27
  Speaker 1: our growth and value portfolios. As we reached the second
• 18:31
  Speaker 1: half of last year, we went much heavier towards the
• 18:33
  Speaker 1: value side, and I think that that's going to continue.
• 18:36
  Speaker 1: I think what you're what you're seeing in this market,
• 18:38
  Speaker 1: despite some of the side shows that are taking headlines, uh,
• 18:42
  Speaker 1: is that this market is moving back to being very
• 18:45
  Speaker 1: earnings oriented. And whether that's reopening trade or whether or not,
• 18:49
  Speaker 1: it's just fundamentals of ongoing companies. I mean, that's where
• 18:53
  Speaker 1: we're going. And and so valuations have become very very
• 18:57
  Speaker 1: critical and and so the market is fully moving that way.
• 19:01
  Speaker 1: We think franktically, what we're early in that rotation of
• 19:04
  Speaker 1: rotation back the value. So it's it's something we definitely
• 19:07
  Speaker 1: intend to participate with. And and uh, and something that
• 19:10
  Speaker 1: you know, we think is going to pull more and
• 19:12
  Speaker 1: more investors into it as they see confirmation and you
• 19:15
  Speaker 1: like Philip sixty six here with a four percent yield. Yeah,
• 19:19
  Speaker 1: I think it's you know, I think it's one of
• 19:20
  Speaker 1: the create the very key um underlyings with regards to
• 19:25
  Speaker 1: investor sentiment right now is that people are looking for,
• 19:28
  Speaker 1: you know, not just again things that are going to
• 19:31
  Speaker 1: be extraordinarily volatile. They may play in those areas, but
• 19:34
  Speaker 1: for core portfolio assets. You know, they want to see
• 19:37
  Speaker 1: not only some stability of earnings growth, but they want
• 19:39
  Speaker 1: to see some income and some yield. And what we're
• 19:41
  Speaker 1: seeing now is also a very significant transformation and transition
• 19:45
  Speaker 1: of bond holders that are realizing if they're going to
• 19:48
  Speaker 1: have some income out there, looking at where pen your
• 19:51
  Speaker 1: treasury rates are and rates overall, they're gonna have to
• 19:54
  Speaker 1: have more risk, and they're going to start to gravitate
• 19:57
  Speaker 1: towards high dividend stocks that are in many cases three
• 20:01
  Speaker 1: or four times what they're going to get in fixed
• 20:03
  Speaker 1: income assets because they need to have some cash flow,
• 20:06
  Speaker 1: they need to have something to live on. And so
• 20:08
  Speaker 1: when you look at a Philip sixty six, which is
• 20:10
  Speaker 1: still trading at ten percent below its pre COVID values, uh,
• 20:15
  Speaker 1: then it's a it's a we think it's a very
• 20:17
  Speaker 1: strong play, especially you get four that's tax preferred. While
• 20:21
  Speaker 1: you wait, how about Christol Myers squib that's a obviously
• 20:25
  Speaker 1: the we've seen the healthcare stocks with Biogen kind of
• 20:28
  Speaker 1: in the news over the last couple of days. Is
• 20:30
  Speaker 1: Bristol Myers? Is that another one like a Philip sixties
• 20:33
  Speaker 1: six where it's just a steady eddy kind of a
• 20:36
  Speaker 1: good long term performer. Well, I think it's a combination.
• 20:39
  Speaker 1: You know, first of all, it clearly it's the cheapest
• 20:42
  Speaker 1: of the large farmer stocks right now trading at about
• 20:46
  Speaker 1: p of eight and it's got a good strong yield
• 20:49
  Speaker 1: once again three in cash flow while you wait. And
• 20:52
  Speaker 1: one of the real values we see in Bristol Myers
• 20:55
  Speaker 1: is we think that the market is just severely handicapping,
• 20:59
  Speaker 1: you know, some of the need drugs that are going
• 21:00
  Speaker 1: to come off of patent and at the at the
• 21:03
  Speaker 1: tail end of the pipeline, and what they're not taking
• 21:05
  Speaker 1: into consideration. They had four new drugs last year, They've
• 21:08
  Speaker 1: got four new launches that are coming out. They're modeling
• 21:12
  Speaker 1: about ten billion from those new releases, and we think
• 21:15
  Speaker 1: that that's uh, just significantly lower than the five billion
• 21:18
  Speaker 1: dollars that we're modeling. So when you look at you know,
• 21:21
  Speaker 1: based upon that, we think overall earnings are going to
• 21:24
  Speaker 1: be about eighties six dollars even on a multiple of
• 21:26
  Speaker 1: ten half of the overall market. You know, we're you know,
• 21:29
  Speaker 1: we think it's eighty six dollar stock right from where
• 21:32
  Speaker 1: it is now sixty that would be a good return there,
• 21:35
  Speaker 1: Dan getting their president, CEO and c i O of
• 21:38
  Speaker 1: r n C Genter Capital Management, they have about five
• 21:41
  Speaker 1: billion dollars in assets under management. Looking at some of
• 21:44
  Speaker 1: those big cap names and I guess, you know, for
• 21:46
  Speaker 1: the market. A lot of investors in the market, you know,
• 21:48
  Speaker 1: those cyclical names have really worked well in this reopening trade,
• 21:53
  Speaker 1: if you will. And the question I hear from a
• 21:54
  Speaker 1: lot of investors is, you know, what's the duration? How
• 21:57
  Speaker 1: much legs does that trade have? Can I still ride
• 22:00
  Speaker 1: the energy stocks? Can I still ride the financial stocks,
• 22:03
  Speaker 1: uh for example? Or do I need to pivot back
• 22:05
  Speaker 1: to the tried and true top line growth stories? That
• 22:07
  Speaker 1: is what markets are looking at. This is Bloomberg. Thanks
• 22:11
  Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
• 22:14
  Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast
• 22:18
  Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
• 22:22
  Speaker 1: Matt Miller three pt on Ball Sweeney I'm on Twitter
• 22:25
  Speaker 1: at pt Sweeney. Before the podcast, you can always catch
• 22:28
  Speaker 1: us worldwide at Bloomberg Radio.