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US Retail Sales Strengthen · Bloomberg Intelligence

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Speaker 3: So let's get more in those retail sales.
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Speaker 4: Mari Shre, senior equity analyst at Columbia thread Needle Investments,
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Speaker 4: joins us now on the headline, it looked quite good,
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Speaker 4: particularly when it comes to the jump and car purchases.
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Speaker 4: What were some of your takeaways from the report this morning.
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Speaker 5: Yes, thank you again for having me.
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Speaker 6: As you said, it was a solid sales report across
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Speaker 6: the board, even when adjusting for the later start to
0:45
Speaker 6: the holiday and the unfavorable weather in the first part
0:48
Speaker 6: of the month, and we're really seeing the consumer show
0:52
Speaker 6: up and spend across category into the holiday season as
0:56
Speaker 6: we expected.
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Speaker 7: That's kind of where I want to go, Mary. What
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Speaker 7: are you hearing from the retailers just about the holiday
1:02
Speaker 7: shopping here.
1:04
Speaker 6: Yes, it's interesting because I think it was a very
1:06
Speaker 6: strong Black Friday. There was a lot of concern as
1:10
Speaker 6: we spoke about regarding the shorter holiday selling season, but
1:15
Speaker 6: I think that has in fact really motivated consumers to
1:19
Speaker 6: get out and spend, and if anything, I think the
1:22
Speaker 6: retailers have been positively surprised by the performance in the
1:27
Speaker 6: business post Black Friday, and we've even seen in some
1:31
Speaker 6: cases them pulling back slightly on promotions.
1:35
Speaker 5: So I think overall the tone.
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Speaker 6: From the retailers is optimistic and hopefully we continue to
1:43
Speaker 6: see the strength as we as we moved through this
1:46
Speaker 6: final period.
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Speaker 4: TBD on tariffs, though, so I'm wondering two things. One
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Speaker 4: what you've heard from retailers about how they prep for tariffs,
1:53
Speaker 4: and two if we get a sense if people are
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Speaker 4: buying ahead of particularly maybe when it comes to cars,
1:59
Speaker 4: for example, or like a dishwasher or something along those lines.
2:03
Speaker 5: Those are great questions.
2:05
Speaker 6: Most of the companies that I speak to have been
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Speaker 6: moving production out of China for almost ten years now,
2:12
Speaker 6: so actually a lot of the companies are suggesting that
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Speaker 6: the impact from tariffs will be pretty limited. I would
2:20
Speaker 6: say the one real exception is consumer electronics. Listening to
2:24
Speaker 6: best Buy talk, they still say fifty percent of their
2:28
Speaker 6: goods are sourced from China.
2:30
Speaker 5: So outside of consumer.
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Speaker 6: Electronics, I think the companies feel pretty good about their
2:34
Speaker 6: ability to manage through this situation, but of course they
2:39
Speaker 6: are also saying any tariffs that they do feel they
2:42
Speaker 6: will try to pass along some of that costs to
2:46
Speaker 6: the consumer in terms of bringing in goods earlier or
2:50
Speaker 6: consumers buying goods are earlier to.
2:52
Speaker 5: Get ahead of that.
2:53
Speaker 6: I don't really get the sense that companies are going
2:57
Speaker 6: to be doing that.
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Speaker 5: Aggressively because there are still a lot of questions about
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Speaker 5: what the what the tariff.
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Speaker 6: Outcome is, So I think those impacts are more minimal
3:07
Speaker 6: at this point.
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Speaker 7: How are consumers paying for this stuff that they're buying
3:12
Speaker 7: with all these goods and services here it seems like
3:14
Speaker 7: they've drawn down here reports that they've drawn down their savings.
3:18
Speaker 1: Are they putting this stuff on credit? And is that
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Speaker 1: a concern?
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Speaker 6: I think at the lower end, we're absolutely seeing that consumer,
3:25
Speaker 6: which has you know, been stretched for a couple of
3:28
Speaker 6: years now rely more on credit, as you said.
3:32
Speaker 5: But at the high.
3:33
Speaker 6: End, you know that consumer is in very good shape
3:35
Speaker 6: with the wealth effect between the.
3:37
Speaker 5: Housing market the stock market. So I think that.
3:40
Speaker 6: Consumer is you know, behaving a little differently versus at
3:45
Speaker 6: the low end, where we are seeing them rely more
3:48
Speaker 6: on credit.
3:49
Speaker 3: What are your topics right now?
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Speaker 6: So I my topics are kind of a combination of
3:56
Speaker 6: some of the quality share gainers that we've talked about
4:01
Speaker 6: on this show.
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Speaker 5: So some of the large retailers that offer.
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Speaker 6: That combination of valuing convenience that's really resonating with the
4:11
Speaker 6: consumer right now. So I would put the Walmart, Amazon, Costco,
4:16
Speaker 6: TJX in that bucket.
4:18
Speaker 5: But then on the other hand, I think there.
4:19
Speaker 6: Are some really interesting turnaround names, specifically in the apparel space,
4:24
Speaker 6: where you don't need a lot of top line growth
4:27
Speaker 6: to generate pretty meaningful margin and free cash flow improvement.
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Speaker 6: So some of the names I would highlight on that
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Speaker 6: list would be some of the specialty retailers like Gap
4:37
Speaker 6: and Victoria's Secret, and even some global brands like PDH
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Speaker 6: and Contour Brands.
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Speaker 1: All right, Mari, thank you so much for joining us.
4:45
Speaker 7: Mari Sure, she's a senior equity analyst at Columbia thread
4:48
Speaker 7: Needle Investments. I love to chat with her on these
4:50
Speaker 7: days when we get retail sales, get a sense of
4:52
Speaker 7: how the consumer's doing out there.
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5:12
Speaker 3: All right, let's get back to the markets here.
5:14
Speaker 4: Bank of America had an interesting note up that said, look, guys,
5:16
Speaker 4: cash levels are going to the point where you might
5:19
Speaker 4: actually want to start selling equities rather than buying them.
5:23
Speaker 4: Apparently fund managers have been reducing cash holding to a
5:25
Speaker 4: record low, and they're now.
5:27
Speaker 3: Below four percent. So is that a cueue for you?
5:30
Speaker 4: Well, joining us now for more as James Abade, Managing
5:32
Speaker 4: director and Chief investment Officer of ourt Center Asset Management. James,
5:36
Speaker 4: is there a cell signal within the equity market?
5:40
Speaker 8: Well, I think if you look at you know, just
5:43
Speaker 8: like at the tail end of the dot com bubble,
5:46
Speaker 8: clearly price momentum and valuations now are beginning to outpace
5:50
Speaker 8: the improvement and fundamentals. I mean, just looking at the
5:53
Speaker 8: top ten stocks, probably the biggest disconnect is in Microsoft
5:57
Speaker 8: and Broadcom. I mean, clearly what we see that's similar
6:01
Speaker 8: to the dot com environment, namely like a company of
6:05
Speaker 8: Merxisco in nineteen ninety nine. You have returns on assets
6:08
Speaker 8: or returns on investor capital trending lower, highlighting that margins
6:13
Speaker 8: and our asset efficiency is rolling over despite sales growth,
6:17
Speaker 8: heavy cap x in the case of Microsoft acquisitions in
6:20
Speaker 8: the case of Broadcom. The other MAC seven are simply overvalued,
6:24
Speaker 8: but there's no evidence yet of fundamental deterioration to the
6:28
Speaker 8: same degree that we see in those two names. But
6:30
Speaker 8: there's no margin of safety for investors. I mean, the
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Speaker 8: group as a whole is trading at thirteen times sales exactly.
6:36
Speaker 7: The valuation is just extraordinary. The only differential I call
6:39
Speaker 7: out from the late nineties is they actually have earnings
6:41
Speaker 7: in free cash flow, which is a little different from.
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Speaker 1: Some of the stuff I was selling back in the day.
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Speaker 7: James, where do we go here in twenty twenty five,
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Speaker 7: if in fact we have some valuation concerns in this market.
6:54
Speaker 8: Well, I think you know, the way we look at
6:56
Speaker 8: stocks from evaluation perspectives, we emphasize future growth reliance. That
7:00
Speaker 8: is essentially, you know, what is the metric companies need
7:04
Speaker 8: to reach to be able to justify their existing valuations.
7:08
Speaker 8: And for us on the overall SMP five hundred, the
7:11
Speaker 8: measure now hasn't been this optimistic on future economic profit
7:15
Speaker 8: creation going forward since two thousand and nine, and close
7:20
Speaker 8: to the all time high back in two thousand and two.
7:22
Speaker 8: Now those times, we're both at the bottom of a
7:26
Speaker 8: very deeper session and set for a very sharp cyclical recovery.
7:31
Speaker 8: And the S and P five hundred pe multiple back
7:33
Speaker 8: then was that are eleven and thirteen times respectively, not
7:37
Speaker 8: twenty four times like they are now. So we have
7:40
Speaker 8: to basically essentially see a rapid acceleration in economic activity
7:45
Speaker 8: just simply to justify the multiples that we're seeing today,
7:50
Speaker 8: and we have a hard time reconciling those figures with
7:53
Speaker 8: what we're seeing from bottoms up perspective.
7:55
Speaker 4: So what's your best well, not guess because you're actually
7:59
Speaker 4: putting money to work, Well, what's your best set up
8:01
Speaker 4: then into next year?
8:04
Speaker 8: Well, I think when you look at next year, you know,
8:07
Speaker 8: you have to think about two events happening, right, we have,
8:11
Speaker 8: you know, heading into the year, investors appear to be
8:14
Speaker 8: universally bullish. In fact, we saw yesterday the Conference Boards
8:18
Speaker 8: Consumer Confidence Survey showing individual investors being the most bullish
8:22
Speaker 8: they've been in forty years, and consensus seems to be
8:25
Speaker 8: the nominal and economic growth is going to be exceptionally strong.
8:27
Speaker 8: Profits going to accelerate, and additional fiscal and monetary stimus
8:31
Speaker 8: might help further, you know, in a broadening out of
8:34
Speaker 8: market performance.
8:35
Speaker 9: I mean, at the.
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Speaker 8: Same time this is happening, while manufacturing PMIS remains stuck
8:39
Speaker 8: in recessionary levels, services actually appear to be rolling over
8:43
Speaker 8: and even today US industrial production and capacity utilization fell
8:47
Speaker 8: not showing any type of inflection.
8:49
Speaker 1: So our view is to stay defensive.
8:52
Speaker 8: We think long treasuries might be the ultimate contrarian trade
8:56
Speaker 8: for twenty twenty five, and classic defensive growth stocks in
9:00
Speaker 8: healthcare and staples, although very out of favor right now,
9:04
Speaker 8: but many of you could pick up the pees of
9:06
Speaker 8: nine to ten is the place to be heading into
9:09
Speaker 8: next year.
9:10
Speaker 7: How about the fixed income here? Do I sit my
9:13
Speaker 7: two year treasury at four point twenty four percent or
9:15
Speaker 7: do I take some credit risk?
9:17
Speaker 8: I would stay away from credit risk clearly if you
9:20
Speaker 8: think that the economy is not one where the cyclical
9:24
Speaker 8: or industrial side is going to catch up to at
9:28
Speaker 8: least the buoyancy and the services, I think you want
9:32
Speaker 8: to with credit spreads being at extremely tight levels. Consistent
9:36
Speaker 8: with really a zero equity risk premium. You want to
9:39
Speaker 8: be in safe assets, and that would be treasures instead
9:41
Speaker 8: of credit.
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Speaker 7: All right, James, thanks so much for joining us. Always
9:44
Speaker 7: appreciate getting a couple of minutes of your time. James Abote.
9:47
Speaker 7: He is managing director and chief investment Officer a Center
9:50
Speaker 7: Asset Management.
9:51
Speaker 1: He is in New York City.
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10:10
Speaker 4: Something is evolving quite interestingly in the oil and gas
10:12
Speaker 4: market for next year. Yeah. Yeah, we still care about shale,
10:14
Speaker 4: and we care about Guyana, and we care about the Saudia's,
10:17
Speaker 4: but offshore drilling, particularly in the Gulf of Mexico, is
10:20
Speaker 4: becoming more and more of a topic in conversations among
10:24
Speaker 4: my oil and gas folks. And let's get to one
10:27
Speaker 4: of them now. Brian Gavari is chairman of Ineos Energy.
10:31
Speaker 4: Ineos Energy private company and it recently bought c Nook,
10:34
Speaker 4: which is a Chinese oil company, a golf of Mexico
10:38
Speaker 4: assets Brian is also the former CFO of BP, so
10:41
Speaker 4: he knows like a thing or two about how to
10:42
Speaker 4: put together assets and finance them and do stuff with them.
10:45
Speaker 3: Brian, it's good to see you. It's been a long time.
10:50
Speaker 9: Hey yeah, Hey, good to see you as well. It's
10:52
Speaker 9: been a while.
10:53
Speaker 4: So tell me what led to this acquisition, Why do
10:55
Speaker 4: you like it and why now?
10:58
Speaker 8: Yeah.
10:58
Speaker 9: Look, we create in ours Energy just literally out of
11:02
Speaker 9: COVID in twenty twenty one. We brought together a collection
11:05
Speaker 9: of all and gas assets we had, We did some
11:07
Speaker 9: major portfolio transition. We took a big us on shore
11:10
Speaker 9: position last here from Chesapeake, so that sort of built
11:15
Speaker 9: up a decent sized two thousand and six and a
11:17
Speaker 9: well positioned an LNG export option. And then the next
11:20
Speaker 9: obvious spot to go to was the offshore Gulf Mexico,
11:23
Speaker 9: which is probably one of the highest margin barrels available globally.
11:27
Speaker 9: And we've been looking around now for the best part
11:29
Speaker 9: of three years for the right deal, and this was
11:31
Speaker 9: the right It's the right group, it's a great team
11:35
Speaker 9: that we get with this. It's the next entem that's
11:38
Speaker 9: seen I could acquired. So we'll get head of the
11:40
Speaker 9: CEO and area of the CFO as part of that
11:42
Speaker 9: transaction will come across. So yeah, we're pretty happy about it.
11:45
Speaker 1: So talk to us about that part of the world.
11:47
Speaker 1: Energy in that part.
11:48
Speaker 7: Of the world, the Golf of Mexico specifically, what are
11:51
Speaker 7: it the dynamics of getting a barrel of oil out
11:54
Speaker 7: of the Golf of Mexico seems like a tough business.
11:58
Speaker 9: Now, look, it's one of the most biations in the world.
12:01
Speaker 9: I've got personal experience of it. Sort of you know,
12:04
Speaker 9: twenty thirty years ago, the early pioneering groups of effecting
12:08
Speaker 9: back then, Chevron SHELLBP, that kind of went into that zone.
12:12
Speaker 9: I think there's still a lot of legs. And I
12:16
Speaker 9: think the most important thing about that particular region is
12:19
Speaker 9: we've got a very stable fiscal regime. Its successive governments
12:24
Speaker 9: have continued to support that region in particular, and the
12:29
Speaker 9: on shore And yeah, I think back to the last
12:32
Speaker 9: conversation alex I think was when the Biden administration was
12:36
Speaker 9: coming in. It was concerned about what would happen with
12:39
Speaker 9: on shore fracking in the United States. That's got to
12:42
Speaker 9: record high. So, I mean, the US now accounts for
12:44
Speaker 9: something like twenty percent of all the world's oil production,
12:48
Speaker 9: including commentsates and natural gas liquids. So look, it just
12:51
Speaker 9: continues to be a great place to do.
12:56
Speaker 4: Yeah, exactly, which is so interesting. So you have now
13:00
Speaker 4: Gulf of Mexico, say's deep water, you have LNG export assets,
13:04
Speaker 4: and then you also have gas.
13:05
Speaker 3: How are all of them going to wind up working together?
13:08
Speaker 9: Well, look, so we will be exporting LNG probably twenty
13:11
Speaker 9: twenty six onwards. We have the new contract in place,
13:14
Speaker 9: we have effective We have the last eighty months repositioned
13:17
Speaker 9: that onshore position that we picked up from Chesapeake, the
13:21
Speaker 9: Eagle Food position, which was mostly oil. Actually it's like
13:23
Speaker 9: sort of eighty five percent oil with oil liquids. It's
13:26
Speaker 9: got a decent amount of gas. In the these two assets,
13:29
Speaker 9: they're not operated. We've got great operators in both shell
13:32
Speaker 9: in one asset hes and the other which is obviously
13:36
Speaker 9: becomes Chevron, and we'll learn a lot about that particular region.
13:40
Speaker 9: We then also have a growth oil business in Denmark
13:42
Speaker 9: and a gas business in the UK. So we'll start
13:44
Speaker 9: to bring that web, virtual web together and as you'd expect, Alex,
13:49
Speaker 9: on top of that, what we're building around that web
13:52
Speaker 9: of assets is a trading business. Both LNG gas and
13:58
Speaker 9: oil trading, so that will then start to ensure that
14:01
Speaker 9: we can pick up the incremental value that comes from
14:02
Speaker 9: moving those products around the world.
14:04
Speaker 7: What's the competitive environment for you in kind of your businesses.
14:07
Speaker 7: They're down in the golf down in the South Texas area.
14:11
Speaker 7: How do you compete against some of the bigger companies there.
14:13
Speaker 7: What's the strategy in this case?
14:17
Speaker 9: We're not operated, right, so we get carried by the
14:19
Speaker 9: two main operators, which, as I say, are sort of
14:21
Speaker 9: two the sort of top operators in the Gulf of
14:24
Speaker 9: Mexico and have got the long history of operating there,
14:26
Speaker 9: so we'll get carried as part of that, we'd like
14:28
Speaker 9: to get an operated position.
14:30
Speaker 1: I think we have big ambitions.
14:31
Speaker 9: And when we started to create this company out of Ineos,
14:34
Speaker 9: Ineos already massive footprint the United States as a petrochemical company,
14:40
Speaker 9: and as we started to build up the energy business
14:43
Speaker 9: in twenty twenty one, you know that the ambition of
14:45
Speaker 9: our owners Jim Ratcliffe and his two partners has no bounds.
14:49
Speaker 9: And therefore I could see us at some point in
14:52
Speaker 9: the future building this out into something much bigger, maybe
14:55
Speaker 9: in the same sort of size nical company.
14:59
Speaker 4: Hey, Brian, before we let you go talk about the
15:01
Speaker 4: trading part of it, because clearly BP's trading arm was it.
15:06
Speaker 3: Is the giant right of all the oil majors.
15:10
Speaker 4: Excellent has wanted to kind of build up its own
15:12
Speaker 4: trading unit, like everyone kind of wants a pizza that pie.
15:15
Speaker 3: How are you guys going to do it?
15:19
Speaker 1: Look as surely hard.
15:19
Speaker 9: You have to You have to have the DNA and
15:21
Speaker 9: your system to really be successful. We've hired a couple
15:23
Speaker 9: of people that we know well. The first thing we
15:26
Speaker 9: did over the last six months actually last eighteen months
15:29
Speaker 9: who built out a risk structure because of course if
15:32
Speaker 9: you're going to trade commodities, you need to be absolutely
15:34
Speaker 9: ensure that you have the risk framework around that. So
15:37
Speaker 9: we built out the risk capability. We've started now getting
15:40
Speaker 9: ramped up for our LNG trading operation, which should start
15:43
Speaker 9: in the next two years, and then oil trading is
15:46
Speaker 9: short steps, but it's with an experienced team that we
15:49
Speaker 9: already know, and of course three because we have this
15:52
Speaker 9: massive industrial footprint called Ineos. It's it's the third largest
15:55
Speaker 9: chemical company in the world that gives us as to
15:59
Speaker 9: flow globally, so that will be short steps. But the
16:02
Speaker 9: key is to make sure that we've got that capability
16:05
Speaker 9: that allows us to add those extra extra sense to
16:07
Speaker 9: the margin on the barrel.
16:08
Speaker 4: All right, Brian, really looking forward to get getting a
16:11
Speaker 4: more update from you. Keep in touch, let us know
16:13
Speaker 4: when the next events happen. Good to see you, Brian Gavari.
16:17
Speaker 4: He is joining us from Ineos. He's the chairman of
16:20
Speaker 4: Ineos Energy, previously the CFO of BP, which is where
16:24
Speaker 4: he and I started talking.
16:25
Speaker 3: Years and years and years ago.
16:26
Speaker 4: So you see, kind of the evolution of someone's career
16:28
Speaker 4: is really quite interesting.
16:29
Speaker 1: I want to get on one of those offshore rigs,
16:33
Speaker 1: me too.
16:34
Speaker 3: Did you know that if you do that, though, you
16:35
Speaker 3: need helicopter training.
16:37
Speaker 1: Helicopter training, yes, passenger.
16:39
Speaker 4: Yeah, So the helicopter training is you're in a pool
16:42
Speaker 4: and they put you in a helicopter and they dunk
16:44
Speaker 4: you and you have to swim out by yourself, and
16:46
Speaker 4: you don't get certified unless you're able to swim.
16:48
Speaker 3: Out by yourself. Oh and one of my biggest fears
16:51
Speaker 3: is doing that.
16:52
Speaker 7: So that's an issue. Okay, I'd still like to try it,
16:55
Speaker 7: but even all right, we'll see how it goes. I
16:57
Speaker 7: always thought that would be I can't imagine being at
16:59
Speaker 7: the the notion on one of those things.
17:01
Speaker 1: Yeah, I'm doing that dangerous hard work too.
17:04
Speaker 10: Yeah.
17:04
Speaker 4: Well, that's why the automation piece of oil and gas
17:07
Speaker 4: is so critical because if you can do that reducing
17:09
Speaker 4: the amount of people that you're putting in any sort
17:12
Speaker 4: of harm's way offshore, like, that's huge, and that's an
17:15
Speaker 4: industry and mining also, where like that automation hand is
17:18
Speaker 4: not just a cost saver, it's like a life saver.
17:21
Speaker 3: So interesting to see how they manage on with that.
17:25
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17:40
Speaker 4: All right, in the markets, SMP is down by four
17:42
Speaker 4: tens of one percent, the nest I got by three
17:44
Speaker 4: tens of one percent.
17:44
Speaker 3: What to do? Headed into the FED?
17:46
Speaker 4: Danadoria's co chief investment officer at Investment joining us. Now, okay,
17:51
Speaker 4: you have on one hand, Bank of America is saying that.
17:53
Speaker 3: Cash levels are hitting a level where you may actually.
17:56
Speaker 4: Want to sell equities to your rope price sing you
17:58
Speaker 4: could hit six percent of the ten next year, what
18:01
Speaker 4: do you do.
18:03
Speaker 5: Well?
18:04
Speaker 10: That certainly flies in the face of what we've been
18:06
Speaker 10: hearing for a long time, which is, you know, more
18:08
Speaker 10: consistent with a risk on market. You know, consumer spending
18:12
Speaker 10: obviously doing well, you know, not a not a bad
18:16
Speaker 10: nothing like.
18:17
Speaker 5: A bleak picture for employment.
18:19
Speaker 10: But I think what's happening and what you're starting to
18:21
Speaker 10: hear in reference is things are getting ahead of themselves
18:25
Speaker 10: as they as they sometimes do, right and you know,
18:28
Speaker 10: as good as it seems right now, and not a
18:31
Speaker 10: lot of reason to expect headwinds. The market is just
18:34
Speaker 10: pricing in good times at a faster rate maybe than
18:37
Speaker 10: what we think that we can actually sustain. And so
18:41
Speaker 10: you know, value matters, price matters, and as and you're
18:45
Speaker 10: seeing a little bit of that now, right, So maybe
18:46
Speaker 10: a little bit of a back pedaling there.
18:49
Speaker 5: But you know, I think the market has been and.
18:52
Speaker 10: Continues to be pricing in a very rosy scenario. And
18:55
Speaker 10: you know it's not that we're without reasons to think
18:58
Speaker 10: that that could tamp down, and one of them, of
19:00
Speaker 10: course being that notwithstanding you know, the rate cut this month,
19:05
Speaker 10: when are we going to get continued rate cuts? Are
19:07
Speaker 10: we going to or we're going to have a pause
19:08
Speaker 10: as soon as January.
19:10
Speaker 7: So from a positioning standpoint, Dana is twenty five. The
19:15
Speaker 7: beginning of twenty five look different for you guys than
19:17
Speaker 7: kind of made me where you ended twenty four.
19:21
Speaker 10: I think twenty five it's interesting because we sit at
19:23
Speaker 10: the nexus of a lot of different you know, economic
19:26
Speaker 10: input from macro analysts and asset managers, et cetera. And
19:30
Speaker 10: it's interesting just to look across what you're starting to
19:32
Speaker 10: see come in around twenty twenty five.
19:34
Speaker 5: Outlooks.
19:35
Speaker 10: Some of them are you know, we're going to see
19:37
Speaker 10: some consolidation, A lot of it is.
19:39
Speaker 5: We have a good reason to think that the.
19:41
Speaker 10: Good times keep rolling, at least at at least in
19:44
Speaker 10: the beginning. You know, I think consensus sort of at
19:47
Speaker 10: least the way I see it coalescing is around. We
19:50
Speaker 10: don't have a reason to expect some sort of you know,
19:53
Speaker 10: big market correction early into twenty twenty five. But a
19:57
Speaker 10: lot has to pan out still, right, we have to
19:59
Speaker 10: understand how the new administration's policies are really going to
20:03
Speaker 10: be implemented, you know, is it going to be all
20:05
Speaker 10: the way to where maybe some of the rhetoric is
20:07
Speaker 10: or is it going to be tamped down a lot
20:08
Speaker 10: when it's things like trade and tariffs, you know, are
20:12
Speaker 10: what are we going to see in terms.
20:13
Speaker 5: Of bills that extend tax cuts, et cetera. So there's
20:18
Speaker 5: there's just a lot that has to be that is
20:20
Speaker 5: still unknown.
20:21
Speaker 10: But I don't think as you roll into twenty twenty
20:23
Speaker 10: five you're going to get those answers that quickly.
20:25
Speaker 4: So you to choose what do you do with small
20:27
Speaker 4: caps versus megacap tech? And I know that's not necessarily
20:30
Speaker 4: a fair comparison, but I'm basically talking about growth that's
20:34
Speaker 4: working and that's been tech versus small caps are still
20:36
Speaker 4: waiting for that sustained bid.
20:39
Speaker 10: It's such a good question.
20:41
Speaker 5: You know, I am a believer in valuation.
20:44
Speaker 10: I am a believer that no matter how good the
20:47
Speaker 10: outlook for you know, the numerator right the cash flows,
20:51
Speaker 10: you really have to pay attention to the denominator and
20:53
Speaker 10: how much they're being discounted by. And you know, we're
20:56
Speaker 10: just in another phase where megacap and growth are running wild.
21:00
Speaker 10: And you know, my instinct is to say, you've got
21:03
Speaker 10: to at least diversify into other parts of the market.
21:06
Speaker 5: You got to make sure your portfolios.
21:08
Speaker 10: It has a robust keeping of you know, and small
21:10
Speaker 10: caps stand to win, right with a lot of the
21:12
Speaker 10: policies that potentially could be brought to bear are the tariffs,
21:16
Speaker 10: they're not hurt as much by that. Granted, if we
21:19
Speaker 10: have a little bit higher for longer, that's not as
21:21
Speaker 10: good for small caps.
21:22
Speaker 5: They're definitely more inter.
21:23
Speaker 10: Just rate dependent, but you know they stand to benefit
21:27
Speaker 10: if it's a risk on environment, and I lean toward
21:30
Speaker 10: at the very least have them in the portfolio, and frankly,
21:35
Speaker 10: if you can stomach short term volatility, maybe even a
21:38
Speaker 10: little bit of an overweight, because over the long haul
21:40
Speaker 10: they should outperform, especially small value stocks.
21:44
Speaker 7: So, Dana, when you see a security and I guess
21:47
Speaker 7: i'll call your security here, like bitcoin effectively double almost
21:52
Speaker 7: since the election, what does that tell you about just
21:56
Speaker 7: the market?
21:56
Speaker 5: I guess.
21:58
Speaker 10: So Bitcoin's really interesting asset, right because you know, on
22:04
Speaker 10: the one hand, there's a whole element of it being
22:07
Speaker 10: potentially a currency, and you.
22:09
Speaker 5: Know it's unfolding literally before our eyes.
22:12
Speaker 10: Whether you know it can gain traction in that respect,
22:15
Speaker 10: and what the next administration will do to to make
22:18
Speaker 10: that happen. I think for most investors, though it's really
22:21
Speaker 10: more obviously is it a return enhancer for the portfolio,
22:26
Speaker 10: and you can gain access to bitcoin from that perspective
22:29
Speaker 10: with a variety of btfs. Now we're seeing it right
22:32
Speaker 10: here on our own platform, you know, not just this
22:35
Speaker 10: is not just you know, kind of investors on their own.
22:38
Speaker 10: You're actually seeing advisory assets entering this space, institutional assets
22:43
Speaker 10: enter this space. That tells me that, you know, there's
22:47
Speaker 10: there're just more solidity underlying that. You have papers out
22:51
Speaker 10: there from big, big asset managers around utility functions.
22:55
Speaker 5: With bitcoin and the fact that.
22:57
Speaker 10: You know, for most people, because there's such an asymmetric payoff,
23:00
Speaker 10: sort of this lotto aspect to.
23:01
Speaker 5: It, for a lot of people, some.
23:03
Speaker 10: Small slug of bitcoin actually could make sense because the
23:06
Speaker 10: upside is much bigger than the downside. So I think
23:10
Speaker 10: you're seeing an institutional interest there that maybe wasn't there before,
23:14
Speaker 10: and you can get access if you want to participate.
23:17
Speaker 10: We're cautious about, you know, how much you should put
23:20
Speaker 10: to something like that.
23:21
Speaker 5: Very balatile obviously, but.
23:23
Speaker 10: If you want access, I think these ETFs that are
23:25
Speaker 10: backed up by big asset managers take the risk out
23:29
Speaker 10: of you know, the operational risk out of the position.
23:32
Speaker 5: You can do it.
23:34
Speaker 3: It was interesting.
23:35
Speaker 4: Cameron Christ writes Macroman a column every morning, and today
23:38
Speaker 4: in his column he said he really wants a reporter
23:41
Speaker 4: to ask J Powell tomorrow about the surgeon fart coin
23:45
Speaker 4: and what that might say about financial markets and risk appetite.
23:48
Speaker 4: Big Quinn aside. It's a great point when you have
23:52
Speaker 4: the megacap growth at tech stocks and then you have
23:54
Speaker 4: fart coin doing really well.
23:56
Speaker 3: All right, Dana, thanks a lot, Dana Dioria. She's joining us.
23:59
Speaker 4: There a coach Eve Investment, an officer over at Investment.
24:02
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