Latest / Bloomberg Intelligence / Consumer Health, The Fed, 50 Companies to Watch

Transcript

Consumer Health, The Fed, 50 Companies to Watch · Bloomberg Intelligence

0:00
Speaker 1: Bloomberg is now on your dashboard with Apple CarPlay and
0:04
Speaker 1: Android Auto. It gives you access to every Bloomberg podcast,
0:08
Speaker 1: live audio feeds from Bloomberg Radio, print stories from Bloomberg
0:11
Speaker 1: News in audio form, and the latest headlines of the
0:14
Speaker 1: click of a button with Bloomberg News. Now it's free
0:18
Speaker 1: with the latest version of the Bloomberg Business App. That's
0:21
Speaker 1: the Bloomberg Business App. Get it on your phone in
0:24
Speaker 1: the Apple App Store or on Google Play. Just download
0:27
Speaker 1: the app, connect your phone to your car and get started.
0:30
Speaker 1: And it's all presented by our sponsor, Interactive Brokers.
0:35
Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
0:38
Speaker 2: my co host Matt Miller.
0:40
Speaker 1: Every business day we bring you interviews from CEOs, market pros,
0:44
Speaker 1: and Bloomberg experts, along with essential market moven News.
0:48
Speaker 2: I'm the Bloomberg Markets podcast called Apple Podcasts or wherever
0:51
Speaker 2: you listen to podcasts, and at Bloomberg dot com Slash podcast. Well,
0:56
Speaker 2: a lot of folks, I think we're taken by surprise, Lisa,
0:58
Speaker 2: that last kind of couple of months at twenty twenty three,
1:01
Speaker 2: when stocks ripped, yields pulled back dramatically as a Treasury's
1:06
Speaker 2: rallied kind of took a lot of people by surprise,
1:08
Speaker 2: and people were saying, maybe I pulled some of the
1:10
Speaker 2: performance from twenty twenty four into that last couple of
1:13
Speaker 2: months of twenty three. But let's check with somebody who
1:15
Speaker 2: does this stuff for a living. Cally Cox. She joined
1:18
Speaker 2: and she's an investment analyst at e Turo. She joins
1:21
Speaker 2: is via zoom. So, Kelly, what do you make of
1:23
Speaker 2: what we saw there in the fourth quarter in twenty
1:26
Speaker 2: three and kind of how that might have changed your
1:28
Speaker 2: outlook for twenty four.
1:31
Speaker 3: Well, you know, I look at the fundamentals, Paul, of course,
1:34
Speaker 3: you say, I do this for a living.
1:35
Speaker 4: I'm an analyst. I look at the underlying So you.
1:39
Speaker 3: Know, the fourth order didn't really change my opinion on
1:41
Speaker 3: the economy that much because the economic data didn't really change.
1:46
Speaker 3: We got more indications of a Sotoft landing. Of course,
1:48
Speaker 3: markets took that and stride. It's one of the reasons
1:50
Speaker 3: we saw such a strong rally at the stock market.
1:53
Speaker 3: But going into twenty twenty four, we're reminding people that
1:56
Speaker 3: it's not unusual to see a heat check in markets.
1:58
Speaker 3: After market's rally fifteen percent in two months, so the
2:02
Speaker 3: price action may be different than what we're seeing in
2:04
Speaker 3: the underlying economic data.
2:06
Speaker 4: We're just reminding people of that.
2:08
Speaker 5: Now, I got to talk bitcoin, bitcoin and crypto because
2:11
Speaker 5: that's that's huge right now. I mean, you have all
2:13
Speaker 5: these Bitcoin ETF hoples they're waiting for this green light
2:16
Speaker 5: from the SEC. What's your take on the crypto market?
2:20
Speaker 3: Well, right now, of course, bitcoin is around forty five
2:23
Speaker 3: k or so. Quite honestly, I haven't checked it this morning,
2:26
Speaker 3: but Bitcoin's rallied a lot since the grey scale decision
2:29
Speaker 3: that we got at the end of August. Seems like
2:31
Speaker 3: a lot of this Bitcoin ETF excitement, at least for now,
2:34
Speaker 3: could be priced in. But I say that knowing that
2:37
Speaker 3: there's a short term view. In a long term view,
2:39
Speaker 3: right a lot of this excitement could be priced in.
2:41
Speaker 3: But long term this opens the door for a new
2:44
Speaker 3: wave of investors into bitcoin. And we we think, especially
2:47
Speaker 3: after the details we got yesterday, we think the product
2:50
Speaker 3: is compelling enough advantage of it so that could keep
2:53
Speaker 3: a floor under prices, Lisa, and you know, it could
2:55
Speaker 3: even help boost the price in the long run.
2:58
Speaker 4: It just depends on.
2:59
Speaker 2: What we see close so call as we think about
3:03
Speaker 2: twenty twenty four. Here, one of the issues is I
3:06
Speaker 2: kind of feel like earnings have to really come through,
3:09
Speaker 2: particularly after the run we had in the last couple
3:11
Speaker 2: months of last year. And I'm looking at the S
3:12
Speaker 2: and P five hundred, it looks like analysts have about
3:14
Speaker 2: a twelve percent growth rate in earnings in twenty twenty four. A.
3:19
Speaker 2: Do you think that's a reasonable number? B? Is there
3:22
Speaker 2: risk in that number? Does the upside to that number?
3:24
Speaker 2: How do you think about earnings?
3:26
Speaker 3: Yeah, Paul, if you ask me what the most confusing
3:28
Speaker 3: part of the market landscape is right now, I'd say
3:31
Speaker 3: earnings as well, because you're right. I mean, earnings growth
3:34
Speaker 3: does look promising this yere but at the same time,
3:37
Speaker 3: it's not the kind of earnings growth that you would like.
3:39
Speaker 3: And what I mean by that is it's earnings growth
3:42
Speaker 3: driven by cost cutting instead of sales growth, which is
3:45
Speaker 3: inferior when you think about the fact that many people
3:48
Speaker 3: associate higher profit and higher sales. So as an analyst,
3:51
Speaker 3: I think about that it's not the best we can get.
3:54
Speaker 3: But right now, in an environment where you know people
3:57
Speaker 3: are still dealing with a lot of economic uncertainty, you
4:00
Speaker 3: know it might be enough to keep stocks void and
4:03
Speaker 3: right now, I.
4:03
Speaker 4: Know everybody says, you know, watch the guidance every quarter.
4:06
Speaker 4: Right now, I think guidance is.
4:07
Speaker 3: Especially important because we got that sea change from the
4:11
Speaker 3: Fed in the fourth quarter, and you know, corporate sea
4:13
Speaker 3: suites are taking that into account when they're planning out
4:15
Speaker 3: the next year.
4:17
Speaker 5: Hey, we have some major financial funds releasing earnings this week.
4:20
Speaker 5: You got JP Morgan, Bank of America, City, Wells, Fargo, b.
4:23
Speaker 6: And y Melon.
4:24
Speaker 5: The list goes on, what are you invite advising your
4:27
Speaker 5: clients when it comes to bank stocks.
4:30
Speaker 3: Well, banks, of course are the bill whethers of the economy, Lisa,
4:34
Speaker 3: and they're down about fifteen percent from the highs right now,
4:36
Speaker 3: so they're not when you say the stock market is.
4:39
Speaker 4: Nearing all time hiys, they're not talking about banks.
4:41
Speaker 3: And this matters right now because there's a lot of
4:43
Speaker 3: dispersion between sectors, and quite frankly, the fact that you know,
4:47
Speaker 3: banks and a lot of cyclical sectors are well below
4:49
Speaker 3: their eyes makes them attractive if you believe the economy
4:52
Speaker 3: can stand.
4:53
Speaker 4: Sturdy this year.
4:54
Speaker 3: One thing I found interesting we do the survey of
4:57
Speaker 3: retail investors every quarter.
4:59
Speaker 4: It's a survey global investor. I look at the US
5:01
Speaker 4: investor cut and retail investors are getting bullish on banks.
5:06
Speaker 4: You know, we ask a question that says, you.
5:08
Speaker 3: Know, what sectors do you own and what sectors do
5:10
Speaker 3: you want to add to? And financials were the most
5:13
Speaker 3: stone sector and they were one of the top three
5:15
Speaker 3: sectors in our last survey that an.
5:17
Speaker 4: Investor said that they wanted to add to.
5:19
Speaker 3: So people see value on banks right now, especially as
5:22
Speaker 3: the economic data means encouraging, And.
5:24
Speaker 4: You know, I don't think that's such a bad stance.
5:27
Speaker 6: So Kelly, I.
5:28
Speaker 2: Mean, Lisa was long all the Magnificent seven stocks, so
5:31
Speaker 2: so she's laughing all the way to the bank. I
5:33
Speaker 2: unfortunately was not. So should I be chasing some of
5:36
Speaker 2: those names this year or should I maybe go to
5:39
Speaker 2: try some find some value somewhere else maybe that did
5:42
Speaker 2: not participate.
5:45
Speaker 4: Well, First of all, good for you, Lisa, Like, wow,
5:47
Speaker 4: that's awesome. You love your quality grits. You know, Heading
5:51
Speaker 4: into this year, I.
5:52
Speaker 3: Think it's an environment where you still have to stay nimble.
5:55
Speaker 3: We're advising rotating into cyclicals, you know, taking small steps
5:58
Speaker 3: into them because we still don't know if for recession
6:01
Speaker 3: is a serious risk, right now, economic data has stayed sturdy,
6:05
Speaker 3: but there's a lot of pressure on the economy at
6:07
Speaker 3: the moment. So you know, as you head into twenty
6:09
Speaker 3: twenty four, you know, dip your toes in small caps,
6:12
Speaker 3: dip your toes and other sectors more cyclically rate sensitive sectors.
6:16
Speaker 3: But hold on to that quality risk because we still
6:18
Speaker 3: don't know forrab the things yet.
6:20
Speaker 5: And how would you describe today's market environment? I mean,
6:23
Speaker 5: what are your clients selling, what's the sentiment, what are
6:25
Speaker 5: their feelings?
6:27
Speaker 3: Oh well, retail investors remain optimistic, but with a hint
6:31
Speaker 3: of skepticism. And I say that knowing that a lot
6:34
Speaker 3: of retail investors have rotated into cash recently, and that
6:38
Speaker 3: to me tells me that there is some you know,
6:41
Speaker 3: positioning around economic uncertainty, positioning around a recession that could
6:46
Speaker 3: be coming. And we all know that vibes are fraud right.
6:48
Speaker 3: Confidence is increasing, but there's still you know, this this
6:52
Speaker 3: palpable nervousness within markets, and you know, among investors, even
6:56
Speaker 3: though sentiment has picked up over the last three months
6:59
Speaker 3: or so, that's encouraging to be I mean, you want
7:01
Speaker 3: a market that's filled with healthy skepticism instead of exuberance,
7:05
Speaker 3: but at the same time that could limit markets in
7:08
Speaker 3: the short term, especially as people digest this January wave
7:12
Speaker 3: of economic data we're getting.
7:14
Speaker 2: Hey, Kelly, for the first time in a couple of years,
7:16
Speaker 2: fixed income investors actually made some money in twenty twenty
7:19
Speaker 2: three thanks to that rally towards the end of the year.
7:22
Speaker 2: What are you advising your clients to do in the
7:24
Speaker 2: fixed income space here? Because I again, I can buy
7:26
Speaker 2: a two year treasury with my federal government and get
7:29
Speaker 2: four point three percent. That's not too bad.
7:32
Speaker 3: It's not too bad, and it's you know, one of
7:33
Speaker 3: the best fields that you've been able to get on
7:35
Speaker 3: short term bonds or short term treasuries for that matter,
7:38
Speaker 3: in over a decade. So you know, bonds look attractive here.
7:42
Speaker 3: When I talk about bonds, I need more conservative treasury
7:45
Speaker 3: allocations type of bonds. Corporate bonds are a separate discussion,
7:49
Speaker 3: but you know, if you're worried about a recession, treasuries
7:52
Speaker 3: are the classic sanity hedge. The FED is looking to
7:54
Speaker 3: cut rates this year. You know, if we see more
7:57
Speaker 3: weakness in the economy, we could see more rate cuts
8:00
Speaker 3: priced into the market. And on the back of that,
8:02
Speaker 3: so if you're worried about.
8:03
Speaker 4: A recession, now is the time to edge it.
8:05
Speaker 3: And treasuries time and time again have been a strong
8:07
Speaker 3: recessionage And.
8:09
Speaker 5: One of the things you said in your notes that
8:10
Speaker 5: staid out to me was remember that even healthy markets
8:12
Speaker 5: go up and down. Just a little reminder there. Huh.
8:16
Speaker 3: Well, yeah, and it's surprising to me how many people
8:18
Speaker 3: forget that. I think you really have to keep your
8:20
Speaker 3: emotions in check in this environment too, because yes, again
8:23
Speaker 3: the vibes are fraud and stocks are near record highs.
8:26
Speaker 3: That doesn't make for an easy environment to be an
8:28
Speaker 3: investor in, but you really have to first understand your goals.
8:32
Speaker 4: Of course, you know, if you're a long.
8:33
Speaker 3: Term investor, you know many pullbacks are buying opportunities for
8:38
Speaker 3: you based on history. But at the same time, understand
8:40
Speaker 3: the fact that the fundamentals matter, especially now as market's
8:44
Speaker 3: i ASoft landing. So don't get too caught up in
8:46
Speaker 3: the headlines unless.
8:47
Speaker 4: You're a trader, and of course you have to pay
8:49
Speaker 4: attention to those.
8:50
Speaker 2: And Kelly, you know we're still, you know, just a
8:52
Speaker 2: couple of percent away from the all time high on
8:54
Speaker 2: s and P five hundred. Are you you have valuation
8:57
Speaker 2: concerns here or what is your sense of valuation in
9:00
Speaker 2: this market here?
9:03
Speaker 3: Well, valuations, I think it's a different discussion if you're
9:05
Speaker 3: looking at the broad market versus the sectors. So broad market, yes,
9:09
Speaker 3: evaluations are quite high, but a lot of that is
9:11
Speaker 3: driven by tech, consumer discretionary, and more of the growth
9:15
Speaker 3: sectors that we saw do well last year. So heading
9:18
Speaker 3: into twenty twenty four, I would say look at valuations
9:21
Speaker 3: on a sector basis, don't.
9:22
Speaker 4: Get too caught up in them.
9:24
Speaker 3: I think it's it can be a trap to look
9:26
Speaker 3: at valuation versus history, especially considering all the progress that
9:30
Speaker 3: we've made in tech since the twenty tens. But right
9:33
Speaker 3: now it's a great time to look for value. Value
9:35
Speaker 3: last week outperform growth by the most since I believed
9:39
Speaker 3: July in six months, so you know, look at value,
9:42
Speaker 3: especially in the cyclical part of the market, and consider
9:45
Speaker 3: the fact that valuations don't look the same across the board.
9:48
Speaker 2: All right, Kelly, thanks so much for joining us. Cali
9:50
Speaker 2: Cox Investment Analysts for e Touro, which is a platform
9:56
Speaker 2: for retail investors. A lot of young investors are on
9:59
Speaker 2: that platform. I'm so cool to check in with CALLI
10:01
Speaker 2: former Bloomberg staffer.
10:04
Speaker 4: Here.
10:05
Speaker 7: You're listening to the team Ken's are Live program Bloomberg
10:08
Speaker 7: Markets weekdays at ten am Eastern on Bloomberg dot Com,
10:12
Speaker 7: the iHeartRadio app and the Bloomberg Business App, or listen
10:15
Speaker 7: on demand wherever you get your podcasts.
10:20
Speaker 2: Let's talk about the consumer here. I think the consumer's
10:22
Speaker 2: pretty solid out there. I mean unemployment rates, you know,
10:26
Speaker 2: historical lows. Everybody's got a job, it wants them. Looks
10:28
Speaker 2: like the stimulus money is kind of played out, drawing
10:32
Speaker 2: down on savings now, racking up some consumer credit, but
10:34
Speaker 2: buying large consumer seems to be in pretty good place
10:38
Speaker 2: right here. Let's see if that's translating into retail sales.
10:40
Speaker 2: Jill Blanchard she joins as president of Enterprise Client Solutions
10:44
Speaker 2: at Advantage Solutions. Jill, thanks so much for joining us again.
10:48
Speaker 2: I'd love for you to just kind of recap for
10:50
Speaker 2: us here in mid January, how the holiday sales season
10:54
Speaker 2: kind of wrapped.
10:55
Speaker 8: Up for some of the bigger retailers.
10:57
Speaker 6: You talk to.
10:58
Speaker 9: That's great, Thanks, Paul, Lisa, glad to be back and
11:01
Speaker 9: thanks for having me. So Holiday twenty twenty three, there
11:03
Speaker 9: are some conflicting reports out there. One of the things
11:06
Speaker 9: that we did see though, is a disproportionate amount of
11:09
Speaker 9: spend in the two to three days that are leading
11:11
Speaker 9: up to the holiday. So last month we talked about Thanksgiving,
11:14
Speaker 9: we saw that. Then we also saw that at Christmas
11:17
Speaker 9: this year too. So it could be that consumers are
11:19
Speaker 9: waiting to see what sort of money they have left
11:21
Speaker 9: to spend, or waiting for a big sale. But it
11:23
Speaker 9: definitely has an implication on how retailers and manufacturers plan
11:27
Speaker 9: their promotions and inventory.
11:29
Speaker 5: So I think that we can expect this to continue in.
11:31
Speaker 4: Twenty twenty four.
11:32
Speaker 9: Thanks Super Bowl, Valentine's Day, Easter all coming our way.
11:37
Speaker 5: Yesterday we saw some good news Lulu, Lemon, Abercrombie, American Eagle,
11:41
Speaker 5: they all raise their sales outlooks. Because what you're talking
11:44
Speaker 5: about that strong holiday season. Now, what do you think
11:47
Speaker 5: about this fast fashion trend? We've been hearing a lot
11:49
Speaker 5: about Chian TMU. I mean, what's that going to look
11:52
Speaker 5: like into twenty twenty four? Are they going to start
11:54
Speaker 5: taking over a bit?
11:56
Speaker 2: You know?
11:56
Speaker 9: I think one of the big trends that we can
11:58
Speaker 9: that we can expect to see in twenty twenty four
12:00
Speaker 9: is a bigger emphasis on value, and value means different
12:04
Speaker 9: things to different consumers, right, So it could be buying
12:07
Speaker 9: a used luxury car instead of a new luxury car.
12:10
Speaker 9: It could be buying a private brand product instead of
12:12
Speaker 9: a name brand product.
12:13
Speaker 4: It could be.
12:13
Speaker 9: Shopping at Costco and Sam's for a better price for
12:18
Speaker 9: the larger size. And so really key is for retailers
12:22
Speaker 9: to understand what sort of value their consumers are looking
12:25
Speaker 9: for and meeting them there. I will say, specifically, as
12:28
Speaker 9: we talk about things like a the blue Lemon, there's
12:31
Speaker 9: also a heavier lean in too smaller and more affordable indulgences,
12:36
Speaker 9: which could be what that trend means. So maybe not
12:39
Speaker 9: taking vacation but indulging in more indulgent clothes.
12:44
Speaker 2: Let's say, see on the exact opposite, I'm going to
12:46
Speaker 2: stage in my life. I'm getting rid of stuff, and
12:48
Speaker 2: I spent the less several years getting rid of stuff,
12:50
Speaker 2: but I'll spend money on a vacation. But that's just me.
12:53
Speaker 2: The consumer package goods companies, they were pretty darn good
12:57
Speaker 2: over the last several years during those inflatationary period when
13:01
Speaker 2: in raising prices, where are we in their ability to
13:03
Speaker 2: do that? Now is that played out? Are they starting
13:06
Speaker 2: to see some challenges to the margins?
13:09
Speaker 4: Most of that has played out.
13:11
Speaker 9: We are in the midst of doing our new survey
13:13
Speaker 9: where we're going to get a better read as to
13:15
Speaker 9: whether or not we're going to see any price increases
13:17
Speaker 9: or decreases in A twenty twenty four. But most of
13:20
Speaker 9: them have already paid out. They're really more focused on
13:24
Speaker 9: promotions in pricing.
13:25
Speaker 4: And getting that right.
13:26
Speaker 9: So think about this new trend of this disproportionate spend
13:30
Speaker 9: before the holidays. Retailers and manufacturers go to great lengths
13:33
Speaker 9: to make sure that they have the products priced at
13:35
Speaker 9: the right price at the right time, and so with
13:37
Speaker 9: this surge in those two to three days, they're really
13:40
Speaker 9: going to need to do some different thinking as to
13:43
Speaker 9: how they want to promote products to ensure that they're
13:45
Speaker 9: at the right price to get sold. But they're also
13:47
Speaker 9: not subsidizing existing sales. Also, inventory, they've got to make
13:51
Speaker 9: sure that it's available. You know, twenty seven percent of
13:53
Speaker 9: the time that a consumer can't find the product they
13:56
Speaker 9: want and they buy a different product, they stay with
13:58
Speaker 9: that different product. So it's pretty key to on shelf.
14:01
Speaker 5: And let's dig into where consumers are going to be shopping.
14:04
Speaker 6: Are we talking?
14:04
Speaker 5: Are they going to them all? They're going online? Are
14:06
Speaker 5: they going on social media? TikTok is saying they're going
14:09
Speaker 5: to put a lot of money into this. Where are
14:11
Speaker 5: they shopping?
14:12
Speaker 9: That really is as well. One of the big things
14:14
Speaker 9: that we'll see in twenty twenty four are shifts, right,
14:17
Speaker 9: So shifts in the what I talked about like the
14:18
Speaker 9: trade down and category, the affordable indulgences. Where's another shift
14:22
Speaker 9: and so we saw big emphasis on more discount retailers
14:26
Speaker 9: in twenty twenty three. I think that's going to take
14:28
Speaker 9: off in twenty twenty four.
14:29
Speaker 5: And the how.
14:30
Speaker 9: We did see a great success with mobile shopping during
14:33
Speaker 9: the twenty twenty three holiday season, indicating that it's easier
14:37
Speaker 9: for consumers to use that as a medium. So definitely
14:41
Speaker 9: we'll see big shifts in the where and the how. Overall,
14:44
Speaker 9: the volume at the top level might be the same,
14:47
Speaker 9: but the shifts and the what, the where and the
14:49
Speaker 9: how could be big.
14:51
Speaker 2: I bet luxury here that's a big area for Lisa.
14:55
Speaker 2: You know, I'm more just kind of the Dollar General
14:57
Speaker 2: kind of guy than Walmart guy. Where's luxury spending these days?
15:01
Speaker 2: Because I know, a big part of luxury has historically been,
15:04
Speaker 2: you know, the Chinese buyer. But the Chinese economy obviously
15:08
Speaker 2: is weaker than I think people anticipated at the beginning
15:10
Speaker 2: of twenty three. So how's overall luxury space looking.
15:14
Speaker 9: You know, I'll go back to one of the things
15:16
Speaker 9: that I've been talking to our clients about, and that
15:19
Speaker 9: is luxury means different things to different people. And so
15:22
Speaker 9: there are products that will be luxury to certain consumers
15:26
Speaker 9: if they're trading you know, up to you know, call
15:28
Speaker 9: it a mainstream brand versus luxury to somebody else. They're
15:31
Speaker 9: trading up to a brand that you can't get in
15:34
Speaker 9: store and maybe only online, and.
15:36
Speaker 5: Then to another level.
15:37
Speaker 9: So luxury really plays out in different ways for different consumers.
15:42
Speaker 9: What really is is playing out similarly though, across the
15:45
Speaker 9: consumer groups is an opt in to more affordable luxuries,
15:50
Speaker 9: which again could be something like a used luxury car
15:52
Speaker 9: versus a new luxury car.
15:55
Speaker 5: And what about buy now, pay later. I mean that
15:57
Speaker 5: was big during the holiday season. That's the reason a
15:59
Speaker 5: lot of people were buy so much during the holidays.
16:01
Speaker 5: Will that continue into twenty twenty four?
16:04
Speaker 9: Yeah, there are a lot of eyes on the first
16:06
Speaker 9: quarter of this year for that reason, as well as
16:10
Speaker 9: a potential pantry load. There were so many discounts and
16:13
Speaker 9: deep discounts in the fourth quarter of last year that
16:15
Speaker 9: there's the potential that consumers really leaned in heavily to
16:18
Speaker 9: those deep discounts and now have to use that product
16:21
Speaker 9: up through the first quarter. So there are a lot
16:24
Speaker 9: of eyes on first quarter as to what the impact
16:27
Speaker 9: could be from debt, credit card debt as well as
16:30
Speaker 9: pantry loading.
16:32
Speaker 2: Joe, where are we in terms of the store footprint
16:34
Speaker 2: in this country? I know for the longest time, maybe
16:35
Speaker 2: ten plus years, the industry's kind of been downsizing its footprint.
16:40
Speaker 2: Is the industry right size?
16:41
Speaker 6: Right now?
16:42
Speaker 4: Is the industry right sized?
16:44
Speaker 9: We definitely have seen a slow in store growth over
16:49
Speaker 9: the past two years, largely due to the effects of
16:53
Speaker 9: COVID and the focus having to be on supply and pricing,
16:57
Speaker 9: and so we do see retailers now getting back to
17:01
Speaker 9: the old focus of store growth, and so I think
17:04
Speaker 9: that we'll see a resurgence of of store growth, but
17:06
Speaker 9: not to the level that it used to be.
17:09
Speaker 2: All right, Jill, thanks so much for joining us. Appreciate
17:12
Speaker 2: it as always. Jill Blanchard, President of enterprise client solutions
17:16
Speaker 2: at Advantage Solutions.
17:17
Speaker 7: You're listening to the tape Ken's Are Live program Bloomberg
17:21
Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the
17:24
Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
17:27
Speaker 7: You can also listen live on Amazon Alexa from our
17:30
Speaker 7: flagship New York station. Just say Alexa play Bloomberg eleven thirty.
17:36
Speaker 2: We want to go across the pond. Talk to our
17:38
Speaker 2: good friend Tim Craickett. He's a director of research over
17:40
Speaker 2: there for Bloomberg Intelligence. He's also the senior European strategist
17:44
Speaker 2: with Bloomberg Intelligence. He joins us via zoom from Queen
17:48
Speaker 2: Victoria Street, which is the awesome London headquarters of a
17:51
Speaker 2: Bloomberg LP over there. It's just an awesome buildings for
17:54
Speaker 2: forever in the city of London. Go check it out. Hey, Tim,
17:56
Speaker 2: thanks so much for joining us. I know you guys
17:58
Speaker 2: at BI put out your and youll kind of fifty
18:01
Speaker 2: stocks to watch here. I'd love to kind of get
18:04
Speaker 2: from you kind of maybe some themes that are on
18:06
Speaker 2: this list, or maybe a cool name or two. How
18:08
Speaker 2: did you guys approach twenty twenty four.
18:11
Speaker 10: So, Paul, this is this is one of our favorite
18:13
Speaker 10: little projects we do each year.
18:14
Speaker 6: If you think, you know, November December.
18:16
Speaker 10: It's all about making all these big outlooks over markets
18:19
Speaker 10: and industries and whatnot. And this is where we can
18:22
Speaker 10: gravitate into naming names where we see interesting ideas, and
18:28
Speaker 10: this is it's a group of fifty fifty companies that
18:31
Speaker 10: are part of our broader list of focus ideas. And
18:35
Speaker 10: as a reminder, this is a group of companies where
18:39
Speaker 10: we have a really strong fundamental view that we think
18:41
Speaker 10: is differentiated from the market, and where there's catalysts that
18:45
Speaker 10: we think will happen to turn the market towards our view.
18:48
Speaker 10: And all of these have catalysts coming up in twenty
18:50
Speaker 10: twenty four.
18:51
Speaker 6: And you know, it's pretty well split.
18:53
Speaker 10: You've got about half that are from the Americas, You've
18:57
Speaker 10: got thirty percent from Europe least Africa, and you've got
19:02
Speaker 10: about twenty percent from Asia.
19:04
Speaker 6: So that's kind of the broad scope.
19:06
Speaker 5: And AI seems to be a really big part of
19:08
Speaker 5: that list. Is that a sign of what's to come?
19:12
Speaker 6: Yeah?
19:12
Speaker 10: I tell you AI is interesting because when we were
19:14
Speaker 10: pulling this together, my knee jerk is ge AI had
19:19
Speaker 10: a lot of hype in twenty twenty three, you know,
19:22
Speaker 10: is this at the peak of that classical Gartner hype cycle.
19:27
Speaker 10: But what we're seeing is might have been hype in
19:31
Speaker 10: twenty three, that actual execution in twenty four is the
19:34
Speaker 10: bet And in combination, we think there were in the
19:38
Speaker 10: midst of what will be a building it spending cycle.
19:42
Speaker 10: And so if you bring these two together, then the
19:46
Speaker 10: likes of an alphabet or an accenture that are at
19:50
Speaker 10: the heart of either creating AI or implement it implementing
19:55
Speaker 10: it are a big deal. Or then if you go
19:57
Speaker 10: into say an SAP with their enterprise systems, they create
20:02
Speaker 10: the data that the large language models are going to use,
20:05
Speaker 10: and then you get into applications. I mean, I don't
20:07
Speaker 10: know either one of you all happen to use into
20:10
Speaker 10: it with Turbo tax, but they're implementing AI to make
20:14
Speaker 10: tax prep easier for individuals, and match anybody for tender
20:20
Speaker 10: or hinge they're using AI.
20:22
Speaker 6: They're using AI to better select photos. So there's a
20:27
Speaker 6: lot of different applications here.
20:29
Speaker 2: Yeah, well Match is one of the names on those lists,
20:31
Speaker 2: and it stocks up big today on the ELI Investment News.
20:34
Speaker 2: So there's a winner there, tim Any themes kind of
20:37
Speaker 2: jump out at you as you looked across what the
20:39
Speaker 2: Bloomberg Intelligence analysts put up there on their list. And
20:42
Speaker 2: again you can find this list in the Bloomberg Business Week.
20:45
Speaker 2: It's in the addition of Bloomberg Business Week and also
20:47
Speaker 2: find it on the terminal BI go.
20:50
Speaker 6: Yeah.
20:50
Speaker 10: So I think another big piece to this is what's
20:55
Speaker 10: going on from the standpoint is central banks. This was
20:58
Speaker 10: big last year, but it was it was big because
21:01
Speaker 10: central banks were still tightening and it was higher for
21:03
Speaker 10: longer and there was the sort of the financials riding
21:06
Speaker 10: the wave of rising interest rates. This year, it's kind
21:10
Speaker 10: of the opposite. You know, we, as is the market
21:13
Speaker 10: are looking for a central bank pivot, whether it's here
21:16
Speaker 10: in Europe or in the US. We think that puts
21:19
Speaker 10: pressure on financials margins. We have a broad negative focus
21:23
Speaker 10: idea on European banks. Barclays is a specific one that
21:26
Speaker 10: we have on this list. AKSA, one of the big
21:29
Speaker 10: insurance companies, is also here for similar reasons, and there's
21:33
Speaker 10: new insurance policy regulation that's being put in place that
21:37
Speaker 10: makes them more sensitive to interest rate changes.
21:40
Speaker 6: You've also got though the flip side.
21:43
Speaker 10: UK homebuilders have been under a lot of pressure with
21:47
Speaker 10: higher interest rates, and we think that may start to turn.
21:49
Speaker 10: And a company like Persimon is a case in point,
21:53
Speaker 10: So both sides of the interest rate argument.
21:56
Speaker 5: What about other factors, like, of course we have the
21:58
Speaker 5: wards in Ukraine and gods, did you take that at
22:01
Speaker 5: consideration too when you were making that list?
22:04
Speaker 6: Yeah, we did.
22:06
Speaker 10: General Dynamics is on the list, and you know, part
22:08
Speaker 10: of this is, you know, the unfortunate element of of
22:12
Speaker 10: rearmament across Europe and you know ongoing defense spending as
22:18
Speaker 10: well as what's going on with with those guys from
22:20
Speaker 10: a commercial aircraft with with Gulf streams. So you know
22:25
Speaker 10: that's a that's definitely a point of reference. Another element
22:30
Speaker 10: of this that I think is quite notable is there
22:32
Speaker 10: certainly are always opportunities with UH management change and restructuring stories,
22:39
Speaker 10: and you know there are a.
22:40
Speaker 6: Couple of big ones.
22:41
Speaker 10: Union Pacific has a new CEO that is coming in
22:46
Speaker 10: who's got a history of what's called precision transports, you know,
22:51
Speaker 10: really honing it in customer service and times and this,
22:54
Speaker 10: that and the other really improves efficiency for railroads. And
22:57
Speaker 10: you know, our analysts there, you know, thinks that that
22:59
Speaker 10: is not yet fully understood. Vivindi over here is a
23:06
Speaker 10: big restructuring story where they're looking to break the company
23:09
Speaker 10: apart into three component pieces and potentially lists them. So
23:13
Speaker 10: that sort of management change, restructuring corporate change is another
23:17
Speaker 10: element across a number of the companies.
23:19
Speaker 2: So you know, I see our good friend Herman Chan
23:22
Speaker 2: who covers the regional banks here in the US, he
23:24
Speaker 2: put Truest on this list, and I like that because,
23:28
Speaker 2: you know, these regional banks really got crushed and it
23:31
Speaker 2: felt like a lot of the quality regional banks were
23:34
Speaker 2: kind of thrown out with you know, kind of everybody else,
23:36
Speaker 2: and so maybe it's time to start trying to find
23:39
Speaker 2: some of the good ones I got thrown out.
23:41
Speaker 10: Yeah, And Paul, it's interesting because notwithstanding the prospect for
23:47
Speaker 10: falling interest rates, which generally is a negative for the banks,
23:51
Speaker 10: Truist is looking to take specific action. You can sort
23:55
Speaker 10: of put this into the corporate specific category of capital
24:01
Speaker 10: through asset sale that can bolst their their their capital
24:06
Speaker 10: and make them all the better positioned. HSBC over here
24:12
Speaker 10: is a is another case in point like that. You know,
24:14
Speaker 10: massive bank, big European exposure, big China exposure, but We
24:18
Speaker 10: think the problems are are well covered with provisions, and
24:23
Speaker 10: what isn't fully understood is how they continue to expand
24:27
Speaker 10: dividends and buybacks. So there's certainly some positive financials notwithstanding
24:31
Speaker 10: the backdrop.
24:32
Speaker 5: Tim, what about mergers and acquisitions? I mean, yesterday was
24:35
Speaker 5: a big day for pharma mergers. We had a ton
24:37
Speaker 5: of those. How did that play a role into what
24:40
Speaker 5: you were considering when you thought about these companies.
24:42
Speaker 10: Yeah, there are a couple here from an m and
24:44
Speaker 10: A vantage point. Number one Sapic, which is one of
24:51
Speaker 10: the largest chemical companies in the world. They're selling their
24:56
Speaker 10: steel business and really focusing attention in on the he
25:00
Speaker 10: actrochemical side of things, which we think plays into a
25:02
Speaker 10: good cycle as we progress through twenty twenty four. Exon
25:07
Speaker 10: Mobile is on the list.
25:09
Speaker 6: Now.
25:09
Speaker 10: You know that they made a huge acquisition in the
25:12
Speaker 10: Permian Basin late last year, and we think that sets
25:16
Speaker 10: the stage for improved returns where they've lagged some of
25:20
Speaker 10: their bigger integrated to world peers. So there are a
25:24
Speaker 10: couple of those those M and as stories that certainly
25:26
Speaker 10: play in.
25:27
Speaker 2: Hey, Tim, your other had an addition, putting these lists
25:31
Speaker 2: together is kind of to strategists for the European market.
25:33
Speaker 2: Third thirty seconds, what's the European equities call for twenty twenty.
25:38
Speaker 6: Four tailor two halves?
25:41
Speaker 10: Paul, I know that's a cliche in ways, but with
25:45
Speaker 10: the rally that we had into the end of the
25:47
Speaker 10: year and looking into what we think is going to
25:51
Speaker 10: be a pretty challenging fourth quarter reporting period coming up
25:54
Speaker 10: in a slowing economic backdrop, we think it's a tough
25:57
Speaker 10: first half. I do think at some point that gets recalibrated,
26:02
Speaker 10: maybe there is a bit of give up in the
26:04
Speaker 10: markets from these elevated levels. That sets a stage for
26:07
Speaker 10: the second half of looking into twenty twenty five with recovery,
26:10
Speaker 10: that could be quite interesting.
26:12
Speaker 2: All right, Tim, thanks so much for joining us on.
26:15
Speaker 2: Tim Karekraighead's the strategist for Bloomberg Intelligence over in London,
26:19
Speaker 2: and they are outbis out with their annual list of
26:23
Speaker 2: fifty companies to watch in twenty twenty four, from Alphabet
26:26
Speaker 2: and Bid to Eli, Lilly and Vivendi, Keeb and eye
26:29
Speaker 2: on these global stocks this year. You can find that
26:31
Speaker 2: in Bloomberg BusinessWeek magazine. Can go online to Bloomberg Business
26:35
Speaker 2: Week and catch it there. Find it on the terminal
26:38
Speaker 2: bi go some really interesting names there, and if you
26:41
Speaker 2: want to do more work on any individual name, you
26:43
Speaker 2: can go to Bigo and there's complete company analysis, research reports,
26:47
Speaker 2: and all the companies and industries there. So that's kind
26:49
Speaker 2: of how you navigate through that. If you're looking for
26:51
Speaker 2: some good ideas this year, you're.
26:53
Speaker 7: Listening to the tape Cat's are live program Bloomberg Markets
26:56
Speaker 7: weekdays at ten am Eastern on Bloomberg Radio, tune in app,
27:00
Speaker 7: Bloomberg dot com, and the Bloomberg Business App. You can
27:03
Speaker 7: also listen live on Amazon Alexa from our flagship New
27:06
Speaker 7: York station, Just say Alexa play Bloomberg eleven thirty.
27:12
Speaker 2: Here's the one of the concerns entering twenty twenty four
27:15
Speaker 2: is that huge rally we had kind of in the
27:17
Speaker 2: last ten weeks or so just pulled forward a lot
27:19
Speaker 2: of performance that maybe we would have looked forward to
27:22
Speaker 2: in twenty twenty four. So maybe that's taken away a
27:25
Speaker 2: little bit of some of the excitement for twenty twenty four.
27:26
Speaker 2: But let's check in with somebody who does this for
27:29
Speaker 2: a living. Looking to chat with Phil Klemart. He covers
27:33
Speaker 2: all this stuff here. Philip, your managing partner, Global Strategist
27:37
Speaker 2: at MRB Partners. What did you make that rally we
27:41
Speaker 2: had really towards the end of the year. I think
27:43
Speaker 2: it caught a lot of people, both in equity markets
27:45
Speaker 2: and bond markets kind off guard.
27:47
Speaker 11: Yeah, well it did, and it was breathtaking really, but
27:51
Speaker 11: it was all on the fence.
27:51
Speaker 8: Pivot towards an easy and policy.
27:53
Speaker 11: Right, So we had seen through with much of the
27:55
Speaker 11: year there was still this lingering anxieties. It slowly got
27:57
Speaker 11: priced in terms of recession fears, and that's sort of slidified.
28:00
Speaker 11: The pivot from the FED solidified the soft landing view,
28:03
Speaker 11: which I think is probably a mistake. It's going towards
28:06
Speaker 11: the noor landing, but nonetheless it's solidified that caused this rally.
28:10
Speaker 11: That being said, as you said, coming at the end
28:12
Speaker 11: of the year, there's a lot of chasing going on,
28:14
Speaker 11: and we ended up with that so called Goldielock scenario
28:18
Speaker 11: fully priced or well well discounted, let's call it, within
28:21
Speaker 11: both the bond market and the equity market.
28:23
Speaker 5: Now, what about tech stock, I mean, it hadn't had
28:25
Speaker 5: the best start of twenty twenty four. Apple was dragging
28:28
Speaker 5: a little bit, then Nvidia yesterday. They just had the
28:31
Speaker 5: helped with the rally yesterday. So what are your thoughts
28:34
Speaker 5: as far as tech stocks into twenty twenty four. I mean,
28:36
Speaker 5: how much of a part will AI play into that
28:38
Speaker 5: as well?
28:39
Speaker 4: Well?
28:39
Speaker 11: I think the AI theme has got legs over a
28:41
Speaker 11: long haul. But I think there was a lot of
28:43
Speaker 11: euphoria associated with that, and often you know that euphoria
28:46
Speaker 11: gets priced in rapidly in a short period of time,
28:49
Speaker 11: and then it takes a long time to digest for
28:51
Speaker 11: those earnings to be sustained and the penetration to the
28:54
Speaker 11: broader market. So I think the unfortunate part for tech
28:57
Speaker 11: is as well. You can decompose that between the Magnificent
29:00
Speaker 11: seven so to speaker or the leaders and the rest.
29:03
Speaker 11: But in general, as the Tech index, the unfortunate parties.
29:06
Speaker 11: We have high earnings, but we have if you look
29:08
Speaker 11: on a five year basis of forward earnings expectations, they're
29:11
Speaker 11: very elevated. So it's got a big earnings barret over
29:13
Speaker 11: hurdle here. And at the same time, Kapex spending towards
29:16
Speaker 11: tech is weakening. So I think this is a real
29:18
Speaker 11: challenge for tech is there's a lot of optimism in
29:20
Speaker 11: the price and the evaluation. There's a lot of optimism
29:23
Speaker 11: in earnings expectations and that's a bigger hurdle to overcome,
29:26
Speaker 11: Whereas I think some of the laggards in the even
29:28
Speaker 11: the cyclical end, some select defensives have lower earnings hurdles
29:32
Speaker 11: to overcome. They offer better valuation support. So while we've
29:35
Speaker 11: seen that big rally coming into your end, I would say,
29:38
Speaker 11: heading here, you still want to be positioned in sort
29:40
Speaker 11: of that laggard catchup theme, and that kind of spreads
29:41
Speaker 11: itself into some financials. Maybe aerospace and defense is some
29:45
Speaker 11: of our likes. We recently pivoted back towards energy some
29:48
Speaker 11: of after being you know, beating up a little bit
29:50
Speaker 11: last year on a relative basis, and then on the
29:52
Speaker 11: defensive side is more the healthcare. So looking for that
29:55
Speaker 11: transition laggard catchup team.
29:57
Speaker 6: So we've heard financials.
29:58
Speaker 2: We had actually Scott Kroner, there's strategists from City on
30:01
Speaker 2: this morning.
30:01
Speaker 8: That was one of the sectors.
30:02
Speaker 2: He called out here, what's the risk here? And I'm
30:05
Speaker 2: not sure how material is for a lot of these
30:07
Speaker 2: commercial real estate loans for these banks. Is that I'm
30:09
Speaker 2: hearing that's not so much as a risk for some
30:12
Speaker 2: of the bigger banks. Maybe it is for maybe some
30:13
Speaker 2: of the regional banks. How do you think about that
30:16
Speaker 2: for these banks?
30:17
Speaker 8: Yeah, so I think you really should decompose them.
30:19
Speaker 11: First of all, the aggregated of the commercial real estate
30:22
Speaker 11: is nothing, and I know there was some scares last year,
30:24
Speaker 11: but it's nothing in comparison to the subprime crisis and
30:26
Speaker 11: all that.
30:26
Speaker 8: So it's put it on that scale.
30:27
Speaker 11: It's very small in comparison, but it's heavily concentrated within
30:30
Speaker 11: regional banks. So when you look at the lone portfolios,
30:33
Speaker 11: the big banks, they're not very exposed to it.
30:34
Speaker 8: They got great capitalization ratios, all those kind of things.
30:36
Speaker 11: So if you're our preference towards banks, even before that
30:40
Speaker 11: Silicon Valley mishap, because of this reason, it.
30:42
Speaker 8: Was the favor of the megacabs.
30:43
Speaker 2: Yeah, so the make the JP Morgan's Bank of Americans exactly.
30:46
Speaker 11: Yeah, So the bill well diversified banks, they don't have
30:48
Speaker 11: a risk. The loan portfolios will suffer and there will
30:50
Speaker 11: be some regional elements to that where you'll see more
30:52
Speaker 11: blow ups along the way. So I would discriminate to
30:54
Speaker 11: the extent that you can. Now they dominate the index.
30:56
Speaker 11: So if you've taken the index, you're probably okay. But
30:59
Speaker 11: if you can discriminate, definitely go towards your megacaps.
31:01
Speaker 5: Now and you notes you talk about the recent dramatic
31:04
Speaker 5: easing and monetary conditions, So what exactly does that mean?
31:07
Speaker 5: Is that soft landing no landing? And what the heck
31:10
Speaker 5: does that mean? I mean, I sound like Matt Miller
31:11
Speaker 5: in the.
31:11
Speaker 8: Promo, Yeah, and I think this is the key.
31:14
Speaker 11: I mean, a lot of the market it made a
31:16
Speaker 11: miscalculated bet last year, and we lean heavily against that.
31:18
Speaker 11: There was a recessionary scenario, and now they've gotten kind
31:21
Speaker 11: of solidified around the soft landing. No soft landing means
31:23
Speaker 11: that you end up with still positive growth, but below
31:26
Speaker 11: trend and growth and allow for disinflation, therefore allowing for
31:29
Speaker 11: the Fed to cut rates. And I think that's a
31:30
Speaker 11: mistake because back when in October, when bond yields were higher,
31:34
Speaker 11: FED policy was was at expectations towards to the top.
31:38
Speaker 11: We had a soft landing in place at that point,
31:40
Speaker 11: and everything since in the last since October, this easing,
31:43
Speaker 11: we've got interest rate expectations easing, We've had bond yields
31:45
Speaker 11: drop we've had corporate bond yields, spreads come in, We've
31:48
Speaker 11: had mortgage spreads comes in. That's a dramatic easy to
31:51
Speaker 11: monetary conditions and that actually takes us from a soft
31:53
Speaker 11: landing to a no landing. And what I mean no landing,
31:55
Speaker 11: I mean we're not going below trend growth this year,
31:57
Speaker 11: which really has some intermediate.
31:58
Speaker 8: Term ramifications for the inflay.
32:00
Speaker 11: Note, Look, we're going to be in some soft window here,
32:02
Speaker 11: well let's call it transitory disinflation so to speak, where
32:05
Speaker 11: the FED can take an advantage of it in the
32:06
Speaker 11: near term as we get some soft prints, but a
32:08
Speaker 11: lot of that's pretty advantageous and kind of lucky. But
32:10
Speaker 11: if we're not going to blow trend, that supercore basket
32:13
Speaker 11: that services X shelter is going to have a hard
32:15
Speaker 11: time really coming down in terms of inflation. Of course,
32:17
Speaker 11: that's a huge weight on the fed's PC basket.
32:20
Speaker 2: So for your investment outlook, what are you guys expecting
32:23
Speaker 2: this FED to do this year?
32:25
Speaker 11: So we're so right now priced into the market's something
32:28
Speaker 11: like six rate cuts one hundred and fifty bases points
32:30
Speaker 11: through at the course of this year. I mean, I
32:31
Speaker 11: think the FED wants to take advantage. It's been pretty
32:33
Speaker 11: clear that it wants to take advantage of this this
32:35
Speaker 11: window of disinflation to try to rate cut. We expect
32:38
Speaker 11: fifty maybe seventy five. Nowhere a validation towards First.
32:42
Speaker 8: Of all, we don't think it should.
32:43
Speaker 6: Cut for the year.
32:44
Speaker 8: For the year, okay, yeah, so it doesn't need to cut.
32:46
Speaker 11: We think it will anyway, but it won't validate what's
32:48
Speaker 11: in the bond market.
32:49
Speaker 2: Now.
32:50
Speaker 5: You talked about some of the things you like to
32:51
Speaker 5: mentioned energy defense. What are you.
32:53
Speaker 11: Avoiding, Well, honestly, we're avoiding a lot of the growth
32:57
Speaker 11: names related stuff. So the tech is a place where
33:00
Speaker 11: we'd be avoiding the other defensive sectors because we're we're
33:04
Speaker 11: still constructive on pro growth. We just expect bondialds to
33:06
Speaker 11: come up, so we're selective on our defensives.
33:08
Speaker 8: We would be away from those bond proxies.
33:10
Speaker 11: Because I think the downward adjustment bondialds has probably had
33:13
Speaker 11: it here where it they'll soon stabilize and we'll see
33:16
Speaker 11: uplift in bondialds a year goes on. So some of
33:18
Speaker 11: those bond proxies the defensives we'd avoid. We'd favor the
33:21
Speaker 11: less exposed area like healthcare in the cyclicles, it's those
33:24
Speaker 11: traditional growth stocks. And actually, if you look at iterneath
33:26
Speaker 11: the surface, if you take away, as you said, those
33:29
Speaker 11: magnificent sevens and you start to look at small cap
33:32
Speaker 11: growth versus small cap value.
33:34
Speaker 8: Value has been killing it.
33:36
Speaker 11: Really the growth stocks. It's only because of those seven
33:38
Speaker 11: then help lift it up. So there's already a transition
33:41
Speaker 11: going underway here. And so that gets into your tech
33:43
Speaker 11: related names, whether that be in in the Consumer Discretionary
33:45
Speaker 11: Index as well and as well as tech.
33:48
Speaker 2: Do you have any view on the topic of the
33:50
Speaker 2: day and tomorrow, which is an ETF four Bitcoin, Do
33:54
Speaker 2: you have any view? There are just waiting. I mean,
33:56
Speaker 2: do you guys even traffic in any of that kind
33:58
Speaker 2: of stuff?
33:58
Speaker 11: We get questions periodically look at it. I think bitcoin
34:02
Speaker 11: and cryptos is a theme here to stay or it'll
34:05
Speaker 11: come back. But often what happens, and you saw this
34:07
Speaker 11: with the original. I've spent twenty some years doing media
34:11
Speaker 11: profile only and booms and busts and those kind of things,
34:14
Speaker 11: and often what happens is the theme comes in in
34:16
Speaker 11: a woosh, sort of like the original dot com. There's
34:18
Speaker 11: a whole bunch of names and companies and stuff that
34:20
Speaker 11: were crapping that that you didn't want to own. But
34:22
Speaker 11: it was a thematic it was a new technology revolution.
34:24
Speaker 11: Then it crashed, it had to go through a digestion
34:26
Speaker 11: or restructuring phase, and then comes out with something more legitimate.
34:29
Speaker 8: It it morphs itself. So Bitcoin might be one of
34:32
Speaker 8: the players. Most of those other cryptos will be gone yep.
34:35
Speaker 11: But well we'll formulate it over the next few years
34:38
Speaker 11: as regulations come in and structure comes to that market,
34:41
Speaker 11: and then there will be some element of a legitimate
34:44
Speaker 11: theme coming back out of it.
34:45
Speaker 8: I just think we're getting that window now.
34:46
Speaker 2: Where if black Rock calls you up Tuesday and we
34:49
Speaker 2: got an ETF, you want to buy some of our
34:50
Speaker 2: bitcoin ETF, what do you guys say?
34:52
Speaker 11: No, I'm yeah, not that I followed that closely, but no,
34:56
Speaker 11: we're we do track it, we do do some analysis
34:58
Speaker 11: on it.
34:58
Speaker 2: Well, how about AI, because a lot of people are,
35:02
Speaker 2: you know, saying AI kind of feels like the Internet
35:04
Speaker 2: maybe back in nineteen ninety five. That's Dan Eyes from
35:06
Speaker 2: what Bush will say, this is the nineteen ninety five
35:09
Speaker 2: moment for AI that this is really going to be
35:12
Speaker 2: established as something across it's just gonna be that big.
35:15
Speaker 2: Do you subscribe to that?
35:17
Speaker 4: Yeah?
35:17
Speaker 11: I think AI is going to have tremendous ramifications through
35:20
Speaker 11: a lot of different businesses. I think it really will
35:22
Speaker 11: penetrate and it'll be a long term thematic. But unfortunately,
35:25
Speaker 11: as you remember in the nineteen nineties, the original dot com,
35:28
Speaker 11: there was a lot of euphoria around it. There were
35:30
Speaker 11: a lot of you know, even the winners, you know,
35:33
Speaker 11: Cisco and some of the other technology related names that
35:36
Speaker 11: were the top of the market back then, took a
35:38
Speaker 11: long digestion period while they reformulated and came back in
35:40
Speaker 11: the two thousands. So so it doesn't always make a
35:42
Speaker 11: good investment. I do think that that structural theme is here.
35:45
Speaker 11: I'm interested in how that penetrates other businesses rather than just.
35:48
Speaker 8: The sellers of AI.
35:49
Speaker 11: How are people going to maximize profit, widen margins, those
35:52
Speaker 11: kind of things by implementing it.
35:54
Speaker 8: And I think it may have.
35:55
Speaker 11: A shorter rollout than the original tech wave, but it's
35:57
Speaker 11: still going to be years.
35:58
Speaker 8: This isn't months. Because it's interesting.
36:00
Speaker 2: I mean, you know, Bloomberg News has done scraping of
36:03
Speaker 2: conference calls every one of the S and P five
36:05
Speaker 2: hundred companies last quarter of the quarter before that call
36:08
Speaker 2: that AI.
36:09
Speaker 8: Yeah, every proof to the stock.
36:11
Speaker 2: Well back in the day, you know, when it was
36:13
Speaker 2: the end of that dot com bust. I took a
36:14
Speaker 2: radio company, public plain, old radio station company called Entercom,
36:19
Speaker 2: and we had orders coming into our desk for the
36:21
Speaker 2: I p O from nobody, people we didn't even talk to,
36:24
Speaker 2: and we'd call them up and say, what are you doing?
36:26
Speaker 2: Is We're just find this dot com thing and Intercom
36:28
Speaker 2: and we're like, no, it's not a dot com, it's
36:30
Speaker 2: not an internet company. It's a radio company. And I'm
36:33
Speaker 2: not so And it feels like that right now.
36:35
Speaker 8: Yeah, it feels like that.
36:35
Speaker 2: So, I mean on the tech side, you like, if
36:39
Speaker 2: you want to play AI did just kind of stick
36:41
Speaker 2: to some of the big names Toady, a lot of
36:42
Speaker 2: people saying just buy a Microsoft or something like that,
36:45
Speaker 2: and as opposed to trying to find the niche players.
36:47
Speaker 8: Yeah, I think probably at this phase.
36:49
Speaker 11: I mean, so there will be some real winners, I'm
36:51
Speaker 11: sure in some of the niche players, I mean, really
36:52
Speaker 11: sort through the mask. But but I think you play
36:55
Speaker 11: the core themes. Also, right now we're dealing with an
36:58
Speaker 11: up cycle this year. Trade and the semi conductor cycle.
37:01
Speaker 11: So some of the you know, semi theme is better
37:04
Speaker 11: played outside of the US markets into places like.
37:07
Speaker 8: Korea, Emerging Asia, tai want you guys think like that.
37:10
Speaker 2: So we do how much your portfolio is outside the US?
37:12
Speaker 11: Yeah, so we we do research, but and we do
37:14
Speaker 11: global integrated financial markets, so we do all markets, and
37:18
Speaker 11: so we do have an overweight in Emerging Asia, X China,
37:21
Speaker 11: and we have an overweight in your area as well.
37:24
Speaker 4: Yeah.
37:24
Speaker 2: We used to call we talk about Asia, we'd be
37:26
Speaker 2: Japan and non Japan Asia, and we don't do that anymore.
37:29
Speaker 2: But people are talking about Japan coming back. I don't know,
37:31
Speaker 2: even Warren Buffet's talking about it.
37:33
Speaker 8: So yeah, we have a small position in Japan.
37:34
Speaker 6: Yeah, ye, all right, all.
37:35
Speaker 2: Right, Philip Comar, thanks so much for joining us. Philipkmar
37:38
Speaker 2: He's a managing partner in Global Strategists that mr be
37:41
Speaker 2: partners talking all things markets across the board.
37:44
Speaker 6: Here.
37:44
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
37:47
Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever
37:51
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
37:55
Speaker 1: at Matt Miller nineteen seventy three.
37:58
Speaker 2: And I'm false Winnie. I'm on Twitter at pt Sweeney
38:00
Speaker 2: before the podcast. You can always catch us worldwide at
38:03
Speaker 2: Bloomberg Radio