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Apple, Infrastructure, and Amer Sports IPO · 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.
• 0:05
  Speaker 2: Every business day we bring you interviews from CEOs, market pros,
• 0:09
  Speaker 2: and Bloomberg experts, along with essential market moven news.
• 0:14
  Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever
• 0:17
  Speaker 1: you listen to podcasts, and at Bloomberg dot com Slash podcast.
• 0:20
  Speaker 1: Let's go right through our next guest, because we want
• 0:22
  Speaker 1: to talk Apple. The stock is up about just about
• 0:25
  Speaker 1: one percent today. It had tumbled over the last couple
• 0:27
  Speaker 1: of days, costing a couple hundred billion dollars in lost
• 0:30
  Speaker 1: market caps. Since there are some concerns over iPhones and
• 0:34
  Speaker 1: China and all that kind of stuff, so we're going
• 0:35
  Speaker 1: to dig right into it with Dan Ives. He's a
• 0:37
  Speaker 1: managing director senior equity analyst at Wedbush Securities, joining us
• 0:41
  Speaker 1: via the Zoom thing. Hey, Dan, you know there is
• 0:44
  Speaker 1: some concern here about Apple and the use of Apple
• 0:47
  Speaker 1: products apple phones in China. Can you summarize kind of
• 0:50
  Speaker 1: what the issue is and how material of risk is
• 0:52
  Speaker 1: it at all to you?
• 0:55
  Speaker 3: I mean, Paul, in my opinion, Bar's lot worse than bite.
• 0:57
  Speaker 3: I mean, there's essentially been a pseudo ban of government
• 1:01
  Speaker 3: employees for Apple in terms of iPhones the last two years. Now,
• 1:05
  Speaker 3: maybe there was a little more restrictions here, but we're
• 1:07
  Speaker 3: still talking about what we believe five hundred thousand iPhones max.
• 1:11
  Speaker 3: Relative to what we believe is gonna be forty five
• 1:13
  Speaker 3: million sold in China in the next year. So look,
• 1:18
  Speaker 3: I mean, these black Swan types of fears of Apple
• 1:21
  Speaker 3: and China just continue to be the issue year of
• 1:25
  Speaker 3: the year. But I just believe here, especially when you're
• 1:28
  Speaker 3: in Huawei Phone two generations behind, there's no Chinese consumer
• 1:33
  Speaker 3: that in my opinion, that unless they're forced, are buying
• 1:37
  Speaker 3: that over an iPhone.
• 1:39
  Speaker 2: Still, you know, we saw a huge drop in Apple
• 1:42
  Speaker 2: shares at the beginning of August on iPhone sales slow
• 1:47
  Speaker 2: down concerns. We kind of ticked back up there, but
• 1:50
  Speaker 2: we're back down near the near the near the lows
• 1:53
  Speaker 2: of the year.
• 1:54
  Speaker 4: Not quite there yet.
• 1:56
  Speaker 2: They have a chance to rectify that next week when
• 1:59
  Speaker 2: they come out with new product. Is it gonna knock
• 2:01
  Speaker 2: our socks off? Is Paul Sweeney gonna go out and
• 2:03
  Speaker 2: buy a new iPhone?
• 2:05
  Speaker 3: I think Paul Sweeney does by buyers new iPhone. In
• 2:09
  Speaker 3: my opinion, because look, it keeps coming down to if
• 2:13
  Speaker 3: you look at the chip, you look at the camera
• 2:15
  Speaker 3: technology combined with the types of promotions we're going to
• 2:19
  Speaker 3: see from carriers, especially in the US, and then you
• 2:22
  Speaker 3: look at twenty five percent of the install bases not
• 2:25
  Speaker 3: upgrade their iPhone of four plus years. I believe it
• 2:27
  Speaker 3: relates into something where you're going to see actually an
• 2:30
  Speaker 3: uptick in units over iPhone fourteen. And that's why we're
• 2:35
  Speaker 3: buyers at the stock here despite haters continuing to heat pricing.
• 2:41
  Speaker 1: I mean, I'm probably like a lot of other folks
• 2:44
  Speaker 1: and I haven't bought an iPhone or upgrade my iPhone
• 2:46
  Speaker 1: in you know, several years.
• 2:49
  Speaker 5: Talk about the.
• 2:49
  Speaker 2: Price of the eleven, right, Yeah, I have the eleven,
• 2:51
  Speaker 2: so that's they're coming out with the fifteen.
• 2:53
  Speaker 5: So that kind of kind of tells you where it's at.
• 2:55
  Speaker 1: So what kind of pricing power does Apple have in
• 2:57
  Speaker 1: this market, which, at least here in the US, is
• 2:59
  Speaker 1: I guess to fully penetrate it.
• 3:02
  Speaker 3: Yeah, I mean, look, we expect for the first time
• 3:04
  Speaker 3: in years, the base prices will be up about one
• 3:06
  Speaker 3: hundred dollars. When you look at iPhone pro as well
• 3:10
  Speaker 3: as on the Promax, and this is something where we
• 3:14
  Speaker 3: expect minimal churn because it just keeps coming down to
• 3:18
  Speaker 3: it is the gold standard phone across the world, which
• 3:22
  Speaker 3: is why I believe, I know you talk about Luberg
• 3:24
  Speaker 3: that I believe at the end of this year, the
• 3:27
  Speaker 3: smartphone leader globally will be Apple. I think they continue
• 3:31
  Speaker 3: to gain more and more share in China, and despite
• 3:34
  Speaker 3: a lot of the noise with Huawei and obviously Cotton's
• 3:37
  Speaker 3: cold tech war, it also comes down to it's just
• 3:41
  Speaker 3: the best phone out there, and I think they're years ahead.
• 3:44
  Speaker 2: It annoys me when somebody in my group chat has
• 3:47
  Speaker 2: an Android phone. Oh I know, it's the worst, Yeah,
• 3:50
  Speaker 2: green bubble, and then if they like a comment, it
• 3:53
  Speaker 2: ends like a new text.
• 3:54
  Speaker 1: And Yeah, my son, my oldest son is one of
• 3:56
  Speaker 1: those people, and he won't go to iPhone, so of
• 3:58
  Speaker 1: course he's excluded from all one of our little.
• 4:00
  Speaker 5: Existing my dad.
• 4:02
  Speaker 2: My dad won't go to iPhone, so we knock him
• 4:04
  Speaker 2: out of the family chest.
• 4:05
  Speaker 5: Yeah exactly, all right.
• 4:07
  Speaker 2: So, Dan, Apple, I guess you're you think is a
• 4:10
  Speaker 2: streaming buy at this level.
• 4:13
  Speaker 3: I think it's a table pounder, especially what's happened over
• 4:16
  Speaker 3: the last week and I get it. You know, bears
• 4:19
  Speaker 3: come out of hibernation mood. You know, obviously missed a
• 4:21
  Speaker 3: huge run here. This could be at the quote unquote
• 4:24
  Speaker 3: black Swan moment. We just don't see it. I mean,
• 4:27
  Speaker 3: coming from what we see from a unit perspective in
• 4:30
  Speaker 3: terms of our trips to Asia over the last called
• 4:33
  Speaker 3: six to nine months. So we're buyers here and I
• 4:36
  Speaker 3: continue to things. You know, as we've talked about, the
• 4:38
  Speaker 3: new tech bull market is here and I think tech
• 4:42
  Speaker 3: rips into your end.
• 4:43
  Speaker 5: Hey, Dan, what is you know?
• 4:46
  Speaker 1: I know Tim Cook was recently over in trying to
• 4:49
  Speaker 1: trying to work his diplomatic magic here.
• 4:52
  Speaker 5: What is I mean? China?
• 4:54
  Speaker 1: Apple can't escape China both as a supply chain provider
• 4:57
  Speaker 1: as well as a huge end market. What do you
• 5:00
  Speaker 1: hear from Cupertino as to kind of their longer term
• 5:02
  Speaker 1: strategy about China here? How concerned are they?
• 5:05
  Speaker 6: Yeah?
• 5:06
  Speaker 3: It's twenty percent politician, eighty percent CEO right in terms
• 5:10
  Speaker 3: of Cook, and he's been able to navigate China basically
• 5:13
  Speaker 3: as well as anyone out the obvious along with Musk
• 5:15
  Speaker 3: in terms of US star warts. Look there, when you
• 5:19
  Speaker 3: look at fox Con the supply chain, I mean They're
• 5:21
  Speaker 3: essentially the number one employer in China from a private
• 5:25
  Speaker 3: perspective in all of the country, right, so they are
• 5:29
  Speaker 3: so important from a production perspective, but it is it's
• 5:32
  Speaker 3: a game of high stakes poker. They know that they
• 5:35
  Speaker 3: can move things to Vietnamin and India. Obviously that will
• 5:37
  Speaker 3: be painful to do. China obviously is trying to play
• 5:41
  Speaker 3: a poker game as well. But it comes down to
• 5:43
  Speaker 3: the hearts and lungs of the growth story in Cup
• 5:46
  Speaker 3: Patino are in China. That's where the sharegions have been.
• 5:49
  Speaker 3: And that's why there's so much nervousness over the last
• 5:52
  Speaker 3: week because this kind of dusts off what's always been
• 5:57
  Speaker 3: that sort of ghost that you're battling when it comes
• 5:59
  Speaker 3: to Apple in China.
• 6:00
  Speaker 2: I mean, navigating China's pretty easy. You go over there,
• 6:05
  Speaker 2: you kiss the ring, you never say anything bad about China,
• 6:09
  Speaker 2: and you put factories there and employee tens of thousands
• 6:12
  Speaker 2: of people.
• 6:13
  Speaker 5: That's the strategy.
• 6:14
  Speaker 4: I could do it too.
• 6:17
  Speaker 2: The problem is you have to kind of cowtow to
• 6:20
  Speaker 2: she does that bite them in the butt at all.
• 6:24
  Speaker 2: I mean, it doesn't seem to have hurt their image
• 6:26
  Speaker 2: in the US.
• 6:29
  Speaker 3: Because it comes down to you're talking about the biggest
• 6:33
  Speaker 3: technology and consumer brand in the world, and if you
• 6:37
  Speaker 3: like three thousand dollar iPhones, then we should start producing
• 6:41
  Speaker 3: them in New Jersey. Yeah, But if you like thousand
• 6:44
  Speaker 3: dollar iPhones, they're going to continue being China and look,
• 6:47
  Speaker 3: and it just comes down to like that, right now,
• 6:50
  Speaker 3: that web in terms of the supply chain, that's been
• 6:53
  Speaker 3: a huge part of Apple success. But it goes back to,
• 6:56
  Speaker 3: like from the trillion to three trillion, many of just
• 7:00
  Speaker 3: that China was going to continue to be the risk
• 7:03
  Speaker 3: for Apple, but ultimately it's actually been the trophy case,
• 7:06
  Speaker 3: both from a demand perspective as well as it comes
• 7:09
  Speaker 3: to production. And that's why, like Cooper Tino continues to
• 7:13
  Speaker 3: play Chush, others play checkers, and this is no different.
• 7:15
  Speaker 3: They see these chess moves and I think we'll navigate
• 7:19
  Speaker 3: it very contained. Despite many yell fire in a crowd theater.
• 7:23
  Speaker 1: Hey Dan, thirty seconds left. What's your other than Apple?
• 7:26
  Speaker 1: What's your top pick?
• 7:29
  Speaker 3: I mean to me, it's Microsoft here because of what
• 7:31
  Speaker 3: I've used, just the overall cloud and AI opportunity. I
• 7:35
  Speaker 3: think we are now starting to actually see numbers over
• 7:38
  Speaker 3: the next six to nine months this AI tidal wave
• 7:40
  Speaker 3: of playing out and of course tasslo on evs that
• 7:43
  Speaker 3: continues to be the play there. And so I look,
• 7:46
  Speaker 3: this is, in my opinion, suppourth industrial revolution playing out
• 7:49
  Speaker 3: in the weft lane of technology innovation.
• 7:52
  Speaker 5: All right, Dan, thanks so much for joining us. Appreciate it.
• 7:55
  Speaker 1: Good luck to this Penn state Nili Lances. They played
• 7:57
  Speaker 1: the mighty Blue Hens of Delaware.
• 8:00
  Speaker 5: So it's going to be tough.
• 8:01
  Speaker 6: Dan.
• 8:01
  Speaker 1: I's managing director, senior equity analysts for Webush Securities.
• 8:05
  Speaker 6: There you're listening to the team Ken's are live program
• 8:09
  Speaker 6: Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot com,
• 8:13
  Speaker 6: the iHeartRadio app and the Bloomberg Business app, or listen
• 8:17
  Speaker 6: on demand wherever you get your podcasts.
• 8:21
  Speaker 5: Will Ryan, he's a chief executive officer.
• 8:22
  Speaker 1: He's also talking about Aston Martins too, so I'm kind
• 8:25
  Speaker 1: of stuck in the middle between these two knuckleheads.
• 8:27
  Speaker 5: He's a chief executive officer. Granted chairs advisors.
• 8:30
  Speaker 1: We like to talk to Will about ETFs and kind
• 8:32
  Speaker 1: of where is he seeing demand for ETFs? And Will
• 8:36
  Speaker 1: thanks for joining us here. Appreciate you coming into our
• 8:38
  Speaker 1: Bloomberg Interactive Broker studio Single stock ETFs. What are you
• 8:42
  Speaker 1: guys doing with single stock ETFs?
• 8:45
  Speaker 7: Yeah, this has really been the big growth area for
• 8:47
  Speaker 7: US as a business, but I think a new category
• 8:50
  Speaker 7: for the market over the last year. So we've just
• 8:52
  Speaker 7: gone through a year of the first single stock ETFs
• 8:57
  Speaker 7: and very simply they provide leverage tip although if you're
• 9:01
  Speaker 7: an inverse one it's not necessarily leveraged. But they provide
• 9:05
  Speaker 7: exposure to single companies, so very popular companies such as
• 9:08
  Speaker 7: Tesla or Nvidia, and provide people prepackaged leverage to those companies.
• 9:14
  Speaker 1: So an example would be granted shares one point five
• 9:18
  Speaker 1: x short TSL daily ETF.
• 9:21
  Speaker 5: What does that do?
• 9:22
  Speaker 7: Yeah, so that provides one and a half times short exposure,
• 9:26
  Speaker 7: so leverage short exposure to the daily price of Tesla
• 9:29
  Speaker 7: and then TSLR, which is the sort of corresponding one.
• 9:33
  Speaker 7: That's the highest leveraged ETF you can get on Tesla.
• 9:37
  Speaker 7: So one point seventy five times levered to Tesla.
• 9:41
  Speaker 8: Wow.
• 9:41
  Speaker 5: I mean that that's a way to play it. So
• 9:43
  Speaker 5: what's the risk to you guys to offering that leverage.
• 9:46
  Speaker 7: It's not so much a risk to us. I mean
• 9:48
  Speaker 7: the risk in terms of managing it is really that
• 9:53
  Speaker 7: you get outsize moves clearly because you have leverage. So
• 9:56
  Speaker 7: if the if the stock price falls, our assets under
• 9:59
  Speaker 7: management and full and clearly were levered to the market.
• 10:03
  Speaker 7: So all things been equal, you know we lose, we
• 10:05
  Speaker 7: lose more money. But the idea is that, you know,
• 10:09
  Speaker 7: these are very popular trading vehicles. We have nv d L,
• 10:12
  Speaker 7: which has been probably the star of the show this year,
• 10:14
  Speaker 7: which is the one point five times leverage in VideA,
• 10:17
  Speaker 7: and so you can imagine since the beginning of the year,
• 10:20
  Speaker 7: people have gone crazy for anything AI, anything in video,
• 10:25
  Speaker 7: and the nvd L ETF has just been a rock
• 10:29
  Speaker 7: star for us this year. So I think it's it's
• 10:32
  Speaker 7: really just a category that's growing and there's a lot
• 10:34
  Speaker 7: of demand for both the long and the short side
• 10:36
  Speaker 7: with some of these popular names.
• 10:38
  Speaker 4: How do you so, I that's up only three and
• 10:43
  Speaker 4: ninety two exactly.
• 10:44
  Speaker 2: I on Mondays, I have an et ETF show, so
• 10:49
  Speaker 2: I'm looking at ETFs all the time, and.
• 10:51
  Speaker 5: She gets to leave this show early to go prepare for.
• 10:53
  Speaker 2: Yeah, I have to, so, but you know, expens ytios
• 10:56
  Speaker 2: are something I look at quite often and typically one
• 10:59
  Speaker 2: point one percent, which is what you charge on the
• 11:03
  Speaker 2: short short amd.
• 11:07
  Speaker 4: ETF or the NVDL is.
• 11:10
  Speaker 2: Typically that's a relatively high expense ratio, but if you're
• 11:13
  Speaker 2: going short, it seems low. How can you afford to
• 11:17
  Speaker 2: charge that? When you do, you need to get the
• 11:19
  Speaker 2: borrow or how do you get how do you structure
• 11:21
  Speaker 2: the trades?
• 11:22
  Speaker 7: Yeah, so that's that's in the price. But these are
• 11:25
  Speaker 7: designed to be held for short periods of time, so
• 11:28
  Speaker 7: they're actually super cheap when you think about it. We
• 11:31
  Speaker 7: have to display an expense ratio just like everybody else
• 11:34
  Speaker 7: on an annual basis. So the actual fee we charge
• 11:37
  Speaker 7: is ninety nine basis points typically, but that's for if
• 11:40
  Speaker 7: you held it for three hundred and sixty five days. Now,
• 11:42
  Speaker 7: the average person is probably held holding these for just
• 11:45
  Speaker 7: a couple of days or at least, you know, a
• 11:48
  Speaker 7: short period of time, so the fee on a pro
• 11:51
  Speaker 7: rated basis that they pay is minuscule. And indeed, if
• 11:55
  Speaker 7: people are trading, which you get a lot of these
• 11:56
  Speaker 7: algorithmic traders quant shops, you know on this they are
• 12:00
  Speaker 7: probably intra day they pay nothing, just the spread. So
• 12:04
  Speaker 7: it's an incredibly efficient vehicle if you want to trade.
• 12:07
  Speaker 7: And to your point, Matt I mean when you look
• 12:10
  Speaker 7: at the shorts, I mean, this is incredibly attractive for
• 12:12
  Speaker 7: people because one of the biggest things is majority of
• 12:15
  Speaker 7: people can't go short number one, but number two they
• 12:18
  Speaker 7: can't find the borrow, and they do find the borrow.
• 12:21
  Speaker 7: The borow fees for some of these stops got to
• 12:23
  Speaker 7: be incredibly high, exactly.
• 12:24
  Speaker 2: I'd imagine for Tesla, it's not cheap because highly a
• 12:27
  Speaker 2: popular stock.
• 12:28
  Speaker 7: To short exactly, so they can be huge expensive.
• 12:32
  Speaker 1: I mean you seem to like the thing I like
• 12:34
  Speaker 1: about it? Where you guys, do you seem to find
• 12:36
  Speaker 1: the hot story like nvidio slash ai. How quickly can
• 12:40
  Speaker 1: you get an ETF from inception to in the market.
• 12:45
  Speaker 7: It very much depends so providing it's following the kind
• 12:49
  Speaker 7: of basic rule set which is set by the SEC.
• 12:54
  Speaker 7: It's seventy five days from when you file the registration
• 12:57
  Speaker 7: statement to getting it out. That's the the latest, if
• 13:01
  Speaker 7: you will, I guess they could have, you know, technically
• 13:04
  Speaker 7: grant you effectiveness sooner than that. Where you have an
• 13:07
  Speaker 7: issue is when you step outside of that standardized rule set.
• 13:10
  Speaker 7: So for example, the crypto ETFs or the bitcoin ETFs
• 13:13
  Speaker 7: that everybody talks about, you know, when you're outside of
• 13:17
  Speaker 7: that standardized rule set, then you could be looking at
• 13:20
  Speaker 7: years to get approval.
• 13:21
  Speaker 2: Well, do they make it more difficult for leveraged dtfs
• 13:23
  Speaker 2: for single stock ETF, for short ETF because those are
• 13:26
  Speaker 2: also you know that some people might criticize them, especially
• 13:31
  Speaker 2: regulatory watchdogs.
• 13:32
  Speaker 7: Yeah, no, it's not more difficult because they're in the
• 13:35
  Speaker 7: standardized rule set. And remember, leverage dtfs have been around
• 13:38
  Speaker 7: for well over a decade and so you get leverage
• 13:41
  Speaker 7: dtfs on broad equity indices, on broad fixed inco indices,
• 13:45
  Speaker 7: on commodity indices, and individual commodities. So single stocks is
• 13:50
  Speaker 7: really just a continuation of an already big and successful category.
• 13:54
  Speaker 5: What's next for you guys in terms of new ETFs coming.
• 13:57
  Speaker 7: Yeah, for us, I think more single stock products is
• 14:01
  Speaker 7: where we're seeing the growth. We're seeing the action in
• 14:04
  Speaker 7: the market. You know, this is this is almost like
• 14:06
  Speaker 7: a perfect market environment for these products because it's very volatile.
• 14:10
  Speaker 7: People really don't know how to trade this market. In
• 14:15
  Speaker 7: other words, don't have high conviction that the market's going
• 14:18
  Speaker 7: massively up in one direction or massively down in the direction.
• 14:21
  Speaker 7: So you see a lot of volatility in these names,
• 14:23
  Speaker 7: and that's what you know, traders active investors really like
• 14:27
  Speaker 7: and that's why they love these leverage single stocks.
• 14:30
  Speaker 2: Does the rising rate environment affect your day to day
• 14:36
  Speaker 2: work at all.
• 14:38
  Speaker 7: For these products, I would have to say it's almost
• 14:41
  Speaker 7: a benefit because people want to try and make more
• 14:45
  Speaker 7: money in a world where the returns by definition you know,
• 14:50
  Speaker 7: are less because of the high rates. So it works well.
• 14:53
  Speaker 7: But for some of our other products, you know, we
• 14:54
  Speaker 7: have income products clear that were even though our product hips,
• 14:59
  Speaker 7: for example, about ten percent per annum. That was awesome
• 15:02
  Speaker 7: when yields were zero, but now yields are a lot higher.
• 15:06
  Speaker 7: It's sort of cutting half. It's still attractive product. It's
• 15:09
  Speaker 7: just you know, that's harder environment for those income products.
• 15:13
  Speaker 2: But it doesn't change like the data day mechanics of
• 15:15
  Speaker 2: creation and redemption.
• 15:17
  Speaker 8: No, No. Interesting.
• 15:19
  Speaker 2: I always find that kind of that kind of detail
• 15:22
  Speaker 2: really fascinating because it's something that you don't have to
• 15:25
  Speaker 2: understand to trade ETFs, and most people don't.
• 15:28
  Speaker 7: Well what it does do Matt, I mean, this is
• 15:29
  Speaker 7: probably a bit of inside baseball, but I do think
• 15:32
  Speaker 7: that the environment for getting seed capital for bringing ETFs
• 15:35
  Speaker 7: to launch has gotten harder because seed capital is typically
• 15:38
  Speaker 7: given to you by a third party firm, typically a
• 15:41
  Speaker 7: market maker or a broker, so their financing costs have
• 15:44
  Speaker 7: gone up for the cost of them providing that seed
• 15:47
  Speaker 7: capital that you has gone up, so that makes it
• 15:49
  Speaker 7: more challenging.
• 15:50
  Speaker 2: How long will you I mean, if you bring a
• 15:52
  Speaker 2: new product to market, it takes a while to get
• 15:56
  Speaker 2: inflows assets under management. Well, how long will you go
• 16:01
  Speaker 2: before you say, Okay, this is a hit or this
• 16:03
  Speaker 2: is a miss, and we're going to shut it down.
• 16:05
  Speaker 7: I think nowadays we're much more ruthless about that than
• 16:08
  Speaker 7: perhaps we were a few years ago, and I think
• 16:10
  Speaker 7: the taboo around shutting products has really gone.
• 16:13
  Speaker 4: Away, and so that large totally no one cares so exactly.
• 16:16
  Speaker 7: So I think a year maximum will probably go before
• 16:19
  Speaker 7: making a call if something's taken or not. And this market,
• 16:22
  Speaker 7: I think is a good market to do that, because
• 16:25
  Speaker 7: people have gotten so used to ETFs that I think
• 16:28
  Speaker 7: you can tell fairly quickly if something's going to take
• 16:30
  Speaker 7: or not.
• 16:31
  Speaker 5: Yep, hey, well thanks so much for joining us.
• 16:33
  Speaker 8: Again.
• 16:33
  Speaker 1: Has always loved check it in with you, will Ryan.
• 16:36
  Speaker 1: He's the chief executive officer at Granted Chairs Advisors, LLC.
• 16:39
  Speaker 5: Talking ETF, you're listening to the tape.
• 16:42
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• 16:46
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• 16:50
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• 17:00
  Speaker 5: Have some M and A news.
• 17:00
  Speaker 1: Today, Kroger and Albertson's agreed to sell four hundred and
• 17:04
  Speaker 1: thirteen stores to CNS wholesale Grocers in a divestiture designed
• 17:09
  Speaker 1: to help win antitrust approval for their twenty four point
• 17:13
  Speaker 1: six billion dollar merger. Let's break that down with a
• 17:15
  Speaker 1: couple real pros here, Jenri and Jen bartashis to both
• 17:19
  Speaker 1: the Bloomberg Intelligence Generally, she covers all the antitrust stuff.
• 17:22
  Speaker 1: For Bloomberg Intelligence generally is our retail anels covering the supermarkets.
• 17:26
  Speaker 1: And they join us here, Jenri, Let's start with you
• 17:29
  Speaker 1: here in our Bloomberg Interactive Broker studio. Is this enough
• 17:32
  Speaker 1: for the regulators?
• 17:34
  Speaker 9: You know, I'm not so sure. I'll say, I think this.
• 17:36
  Speaker 5: Will exactly take a tough views I.
• 17:38
  Speaker 9: Do, you know, I'm just skeptical. Look at what the
• 17:40
  Speaker 9: ftc has been doing for the last couple of years.
• 17:42
  Speaker 9: And the line they drew in the sand. You know,
• 17:44
  Speaker 9: when this administration came in, they said, you know what,
• 17:46
  Speaker 9: we're not going to settle deals that have problems anymore
• 17:49
  Speaker 9: because we've been doing that for forty years and it
• 17:51
  Speaker 9: hasn't worked. It's left us with markets that are too concentrated.
• 17:54
  Speaker 9: So we have to take a different approach. And they've
• 17:56
  Speaker 9: done that. They've taken a different approach even where companies
• 17:59
  Speaker 9: offer up what I think is a pretty fulsome agreement
• 18:03
  Speaker 9: to settle this matter. But here's the thing, they've been
• 18:06
  Speaker 9: losing in court because the judges look at these divestiture
• 18:09
  Speaker 9: agreements and the commitments that the companies are willing to make,
• 18:12
  Speaker 9: and they say, look, FDC, this is good enough to
• 18:15
  Speaker 9: fix these problems that you've outlined. And I think that's
• 18:18
  Speaker 9: what's going to happen here. I think even if the
• 18:20
  Speaker 9: FTC doesn't like this matter, they think theyre groceries. It's
• 18:24
  Speaker 9: food prices, it's sensitive to consumers. We have a problem
• 18:27
  Speaker 9: with this. The chair Lenacon has written extensively about having
• 18:31
  Speaker 9: issues with grocery mergers and thinking they're problematic. But I
• 18:34
  Speaker 9: think when these two companies exactly get that and go
• 18:37
  Speaker 9: into court with this agreement, they have a really good
• 18:40
  Speaker 9: shot at winning in court.
• 18:41
  Speaker 2: Jen Bartasha's jump in here and tell us what investors
• 18:45
  Speaker 2: view of this deal is.
• 18:48
  Speaker 10: Well, you know, obviously tailing off of what Jen just said,
• 18:52
  Speaker 10: you know, I think ultimately this deal will go through.
• 18:55
  Speaker 10: You know, there are a lot of things that can happen,
• 18:58
  Speaker 10: you know, with a combined Kroger and Albertson's entity that
• 19:02
  Speaker 10: that ultimately could be good for the industry. But one
• 19:05
  Speaker 10: of the things I think is interesting about CNS as
• 19:08
  Speaker 10: a as a buyer in the situation is that their
• 19:10
  Speaker 10: primary businesses as a wholesaler. It's not as a retailer.
• 19:14
  Speaker 10: They do own Grand a couple of Grand Union stores,
• 19:17
  Speaker 10: and they own Pigley Wiggly Midwest, but those are larger,
• 19:22
  Speaker 10: but those are largely franchised operations. And when you look
• 19:26
  Speaker 10: at the track record of wholesalers that also operate retail
• 19:31
  Speaker 10: operate retail stores, there's not the greatest track record there.
• 19:34
  Speaker 10: So to me, that could be one area where the
• 19:36
  Speaker 10: FTC might push back on CNS as a as a buyer,
• 19:40
  Speaker 10: only in that you know, Super Value was a was
• 19:42
  Speaker 10: a distributor. They sold off the Shoppers chain that they
• 19:45
  Speaker 10: had acquired. United Natural Has you know, had tried to
• 19:48
  Speaker 10: sell off the residual part of the cub Foods chain
• 19:51
  Speaker 10: in Chicago and Spartan Nash only operates a handful of
• 19:56
  Speaker 10: of retail stores as well. And so that to me
• 19:59
  Speaker 10: is is one potential area of risk. You know, as
• 20:01
  Speaker 10: the FTC evaluates this. Granted, CNS has the balance sheet,
• 20:05
  Speaker 10: they have the strength there to finance such a deal,
• 20:10
  Speaker 10: but they're not actually known as an operator.
• 20:13
  Speaker 1: Interesting, so Jenry, is that would the FTC do? They
• 20:16
  Speaker 1: typically look at who the buyer is and whether that's
• 20:18
  Speaker 1: a good buyer.
• 20:20
  Speaker 9: Absolutely, that's half of the evaluation. First, the assets to
• 20:23
  Speaker 9: be divested in the buyer. So here's what I have
• 20:25
  Speaker 9: to say about CNS. It does sound like an odd buyer.
• 20:28
  Speaker 9: But this FTC in twenty twenty one approved the merger
• 20:32
  Speaker 9: of Price Chopper in Tops and they had to divest
• 20:35
  Speaker 9: a number of stores and the buyer was CNS, and
• 20:38
  Speaker 9: the FTC approved that buyer. Now, right now, we have
• 20:40
  Speaker 9: three commissioners. Two of the three voted yes on that
• 20:43
  Speaker 9: deal back in twenty twenty one, So it seems at
• 20:46
  Speaker 9: least at that time, they evaluated CNS for that specific
• 20:49
  Speaker 9: deal in those specific stores and found it to be sufficient.
• 20:53
  Speaker 9: I think this is much larger scale, and it also
• 20:56
  Speaker 9: remains to be seen how did CNS do with those
• 20:58
  Speaker 9: stores that they acquired. The FDC will be looking at
• 21:01
  Speaker 9: that and they're going to have to show that they
• 21:03
  Speaker 9: were able to be viable competitors.
• 21:05
  Speaker 1: Hey, Jem bartashis from the talk to us about the
• 21:09
  Speaker 1: supermarket business in general. I mean, again, I'm just amazed
• 21:12
  Speaker 1: that Walmart. I'm sorry, you know, Walmart's just the biggest
• 21:17
  Speaker 1: grocery store chain in the US.
• 21:18
  Speaker 5: That just kind of blows me away every time you
• 21:20
  Speaker 5: mentioned that to us.
• 21:21
  Speaker 1: Talk to us about this merger in the context of
• 21:24
  Speaker 1: the industry overall, is that going to make a big,
• 21:26
  Speaker 1: big change.
• 21:28
  Speaker 10: Well, what it does is it takes the number two
• 21:30
  Speaker 10: and the number three sized retailers and combines them into
• 21:33
  Speaker 10: an entity, A combined Kroger Albertson's. Gives them a lot
• 21:37
  Speaker 10: more in terms of purchasing power and theoretically, you know, well,
• 21:41
  Speaker 10: I mean, Walmart does dominate the US grocery landscape by
• 21:44
  Speaker 10: far in terms of market share and in terms of
• 21:47
  Speaker 10: being the largest retailer So if a combined entity between
• 21:50
  Speaker 10: Albertson's and Kroger compete, can compete more effectively against Walmart,
• 21:55
  Speaker 10: that's actually not a bad thing for the industry as
• 21:58
  Speaker 10: a whole. They're you know, they're it's been pushedback about
• 22:01
  Speaker 10: the overall consolidation of the industry, but you know, it
• 22:05
  Speaker 10: could actually, you know, enable these companies to be even
• 22:08
  Speaker 10: more competitive against the largest, the largest player out there.
• 22:12
  Speaker 4: Paul, have you seen Dope Sick No or Painkiller No?
• 22:17
  Speaker 4: These are two series.
• 22:19
  Speaker 2: I think Netflix and HBO. I can't remember who, but anyway,
• 22:22
  Speaker 2: they are touching, touching in an extraordinary way. You know,
• 22:30
  Speaker 2: I knew that opioid addiction was a problem, and I've
• 22:33
  Speaker 2: been reading the stories and headlines just like everybody else,
• 22:35
  Speaker 2: but this like really hits home when you watch these
• 22:38
  Speaker 2: shows because it's so hardcore. Kroger has agreed to one
• 22:42
  Speaker 2: point two billion dollar settlement for its role in distributing
• 22:49
  Speaker 2: these extremely damaging drugs. Okay, Jenry, I was listening to
• 22:56
  Speaker 2: the news this morning and they said this does not
• 23:00
  Speaker 2: mean that they admit any wrongdoing.
• 23:04
  Speaker 4: Have you ever thought to pay one.
• 23:06
  Speaker 2: Point two billion dollars without admitting any wrongdoing? Isn't the
• 23:10
  Speaker 2: payment itself and admission of extreme wrongdoing.
• 23:15
  Speaker 9: Well, you know, people with common sense and look at
• 23:17
  Speaker 9: these things logically would exactly think that yes. But technically,
• 23:20
  Speaker 9: with settlements you never have to admit to the wrongdoing.
• 23:23
  Speaker 9: You're saying, hey, it's worth it for us to pay
• 23:25
  Speaker 9: this money just to get this off our back, to
• 23:27
  Speaker 9: move on, to move forward, get rid of litigation, put
• 23:30
  Speaker 9: it behind us. We're putting resources in to defend it,
• 23:33
  Speaker 9: and that's why we've agreed to pay this amount of money.
• 23:35
  Speaker 4: They're not alone.
• 23:36
  Speaker 2: It's to me it's a little shocking because I grew
• 23:38
  Speaker 2: up going Krogering for the best of everything, including the price.
• 23:44
  Speaker 2: I didn't think they were killing everybody in my community.
• 23:47
  Speaker 2: But you know what, others have also settled. CVS, Walgreens,
• 23:51
  Speaker 2: Walmarts have also entered global settlements of about thirteen billion dollars.
• 23:55
  Speaker 4: Jen Bartasha say, is this behind us?
• 23:58
  Speaker 10: I think for the we've we've not seen settlements from
• 24:01
  Speaker 10: the biggest players out there. I think that you're still
• 24:04
  Speaker 10: going to see settlements from some of the smaller, you know,
• 24:07
  Speaker 10: smaller players that may still filter through. But it does
• 24:10
  Speaker 10: appear at this point that we may have kind of
• 24:12
  Speaker 10: reached that tipping point.
• 24:15
  Speaker 8: All right.
• 24:16
  Speaker 1: The gens, the two gens, Jen bartash is Jenerary, thanks
• 24:18
  Speaker 1: so much for joining us here, talking about a lot
• 24:21
  Speaker 1: of things in the supermarket business.
• 24:23
  Speaker 10: M and A.
• 24:23
  Speaker 1: Kroger's Albertson trying to get this deal over the finish line,
• 24:27
  Speaker 1: announcing divestit. You're there to do it as well, so
• 24:29
  Speaker 1: we appreciate both of them joining us.
• 24:33
  Speaker 6: You're listening to the team Ken's are Live program Bloomberg
• 24:36
  Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot Com,
• 24:40
  Speaker 6: the iHeartRadio app and the Bloomberg Business app, or listen
• 24:43
  Speaker 6: on demand wherever you get your podcasts.
• 24:47
  Speaker 1: Thinking about these markets. You know, in the early summer,
• 24:50
  Speaker 1: I think you felt pretty good. Economic growth picking up again,
• 24:53
  Speaker 1: stocks were working, even crypto was working. August it kind
• 24:57
  Speaker 1: of petered out a little bit. The question is where
• 24:59
  Speaker 1: do we go from here? Not that everybody's back in
• 25:01
  Speaker 1: the office, well maybe not today, but Cali Cox joins us.
• 25:05
  Speaker 1: He's a US interest investment analyst at E Touro. And
• 25:08
  Speaker 1: of course she is a proud graduate of the University
• 25:12
  Speaker 1: of North Carolina at Chapel Hill. But we talked to
• 25:15
  Speaker 1: her nonetheless, Cali. Thanks so much for joining us via
• 25:17
  Speaker 1: zoom here. I mean it kind of felt like August
• 25:19
  Speaker 1: kind of petered out a little bit for some of
• 25:22
  Speaker 1: these risk assets here.
• 25:24
  Speaker 5: What are you telling your clients these days?
• 25:27
  Speaker 11: Yeah, so, first of all, Paul, great football win this
• 25:30
  Speaker 11: past week. You know, cheering for Duke always totally risk
• 25:34
  Speaker 11: BacT the school unless they're playing US, of course, But
• 25:38
  Speaker 11: of course attorney to August, I mean August being look
• 25:41
  Speaker 11: across the board, there was a lot of red, and
• 25:43
  Speaker 11: I think it was a case of things got a
• 25:46
  Speaker 11: little too good. I mean, yield started spiking. Everybody thought
• 25:49
  Speaker 11: the economy was coming back. It was coming back, but
• 25:52
  Speaker 11: suddenly inflation worries popped back up again. You know, we
• 25:55
  Speaker 11: are telling customers that there's a lot of pressure on
• 25:57
  Speaker 11: the economy, and really what we're seeing in the inflation
• 26:01
  Speaker 11: picture is higher gas prices, and of course that's something
• 26:04
  Speaker 11: to pay attention to that can strain consumer's wallets. But
• 26:07
  Speaker 11: is this an inflation crisis like we ran into in
• 26:10
  Speaker 11: twenty twenty two. We don't think so.
• 26:13
  Speaker 2: It is we are seeing much higher gas prices. I
• 26:16
  Speaker 2: went to fill up this morning, and you know, I
• 26:20
  Speaker 2: think we quote the cash price yeah, you know, gas
• 26:24
  Speaker 2: stations will charge you like you're a credit guy, ten
• 26:26
  Speaker 2: well who pays cash for gasoline?
• 26:29
  Speaker 4: Like why you even have a cash price?
• 26:31
  Speaker 2: Nobody's running around with Franklin's, you know, paying for gas
• 26:35
  Speaker 2: and cash. Three eighty nine was the regular price I
• 26:40
  Speaker 2: saw today at the pump. But I obviously don't tank
• 26:43
  Speaker 2: the Aston Martin with regular grade.
• 26:46
  Speaker 5: Gasoline, no way premium stuff.
• 26:48
  Speaker 2: It was like five to nineteen the credit price for
• 26:50
  Speaker 2: the premium at a BP.
• 26:52
  Speaker 5: Yeah, it's nuts.
• 26:54
  Speaker 4: So you do see.
• 26:55
  Speaker 2: Pressure on the economy, Cali, Do you see it coming
• 26:57
  Speaker 2: through in the labor market at all, because it still
• 26:59
  Speaker 2: looks pretty damn good.
• 27:02
  Speaker 11: It does look pretty damn good, but at the same time,
• 27:04
  Speaker 11: it's weakening, Matt. I mean, it's hard to find things
• 27:08
  Speaker 11: to complain about in the job market.
• 27:09
  Speaker 5: Let's be real.
• 27:10
  Speaker 11: I mean, I'm watching jobless claims and they are a
• 27:12
  Speaker 11: little bit higher their husband a bit of a move
• 27:15
  Speaker 11: in the wrong direction or the right direction when you
• 27:17
  Speaker 11: consider the FEDS objectives here, but it's still nowhere near
• 27:21
  Speaker 11: you know, the amount of jobless claims that we saw
• 27:24
  Speaker 11: at the beginning or you know, right before recessions in
• 27:27
  Speaker 11: the past. And I mean job data follows that as well.
• 27:30
  Speaker 11: I mean, hiring in the you know, high one hundreds
• 27:33
  Speaker 11: was about average in the twenty tens. And you have
• 27:36
  Speaker 11: to remember, too, we're dealing with a bigger labor force here.
• 27:39
  Speaker 11: I mean, it's tough to look at absolute numbers, but
• 27:42
  Speaker 11: you know, I'm pretty happy with what we're seeing in
• 27:44
  Speaker 11: the job market, even though there is a lot of
• 27:46
  Speaker 11: pressure and we're seeing wage growth come down as well.
• 27:48
  Speaker 4: What do we need to see? What do we need
• 27:51
  Speaker 4: to see? What does the FED need to see to
• 27:54
  Speaker 4: cut rates? Kelly, So this is a.
• 27:59
  Speaker 11: Big, big question and right now. And Jay actually told
• 28:02
  Speaker 11: us in July that the FEB would be open to
• 28:04
  Speaker 11: cutting rates if they saw enough progress on inflation. That
• 28:07
  Speaker 11: surprised me because before that the FED had alluded. The
• 28:10
  Speaker 11: FED had tried not to allude to rate cuts, first
• 28:13
  Speaker 11: of all, but it also, you know, talked about rate
• 28:16
  Speaker 11: cuts in a recessionary manner. Now, were forced to cut
• 28:19
  Speaker 11: rates because the economy falls off a cliff, then you know,
• 28:22
  Speaker 11: we'll do it, but don't expect that anytime soon. Powell's
• 28:26
  Speaker 11: stone tone changed a lot in July. Powell again hinted
• 28:29
  Speaker 11: to you know, cutting rates if inflation made enough progress. Obviously,
• 28:33
  Speaker 11: inflation is moving in the wrong direction right now. Rate
• 28:36
  Speaker 11: cuts still seem far off. You know, one more hike
• 28:39
  Speaker 11: could be on the table, but you know, I think
• 28:43
  Speaker 11: with inflation where it's at right now, that that is
• 28:45
  Speaker 11: something we should consider the fact that, you know, the
• 28:48
  Speaker 11: Powell is kind of seeing this risk reward balance even
• 28:52
  Speaker 11: out a little bit.
• 28:53
  Speaker 1: Kelly, how do you guys think about valuation in the
• 28:56
  Speaker 1: stock market here? A lot of folks are telling me
• 28:58
  Speaker 1: if you pull out the you know, the magnific since seven,
• 29:01
  Speaker 1: this market's not that expensive here, and you should be
• 29:04
  Speaker 1: looking for some names, maybe some names that have not participated.
• 29:08
  Speaker 5: How do you guys think about valuation?
• 29:10
  Speaker 11: Yeah, so we actually agree.
• 29:12
  Speaker 3: We don't.
• 29:12
  Speaker 11: We don't think valuation is a big risk right now.
• 29:15
  Speaker 11: But you have to dig down to a sector level.
• 29:17
  Speaker 11: If you look at a sector bisector painting, you can
• 29:20
  Speaker 11: see that text valuation is quite high compared to where
• 29:24
  Speaker 11: it was in the past, and also the S and
• 29:27
  Speaker 11: P five hundreds valuation. I like looking at the value,
• 29:31
  Speaker 11: the valuation of value versus growth said value a lot
• 29:34
  Speaker 11: there the pees that we're seeing in value versus growth
• 29:38
  Speaker 11: because value stocks are heavily discounted on a historic perspective
• 29:42
  Speaker 11: relative to growth, and we're pointing that out to customers, saying,
• 29:46
  Speaker 11: if interest rates stay high, we could see some opportunities there.
• 29:50
  Speaker 2: And growth is also already too expensive, right or do
• 29:54
  Speaker 2: you see any growth stocks that look attractive?
• 29:58
  Speaker 11: You know, growth, I think again, and you have to
• 30:00
  Speaker 11: dig below the surface. I mean I said tech. You know,
• 30:03
  Speaker 11: tech looks quite expensive. You know, there are different flavors
• 30:07
  Speaker 11: of tech that you have to look at. But you
• 30:10
  Speaker 11: know there are other growth and rate sensitive sectors that
• 30:12
  Speaker 11: do look a little bit cheaper. Of course they don't
• 30:14
  Speaker 11: have the profile of tech. But we don't hate going
• 30:18
  Speaker 11: long duration here, and you know, preparing yourself for rates
• 30:22
  Speaker 11: eventually coming down because again there's a lot of pressure
• 30:25
  Speaker 11: on the economy. I mean, we know what the FED
• 30:27
  Speaker 11: is trying to do. So you know, when we're in
• 30:30
  Speaker 11: this position, when people are worried about rates moving higher,
• 30:32
  Speaker 11: it may make sense to take the contrarian view.
• 30:36
  Speaker 1: How about energy, because we've been paying a lot of
• 30:38
  Speaker 1: attention to this move up in oil, got WT crude
• 30:41
  Speaker 1: oil up another one percent today, that just under eighty.
• 30:43
  Speaker 5: Eight dollars per barrel. How do you guys think about
• 30:47
  Speaker 5: the energy space.
• 30:49
  Speaker 11: Well, you know, if you think inflation is coming back
• 30:51
  Speaker 11: in force, then you know it's probably smart to look
• 30:54
  Speaker 11: at energy and those tangible assets and the companies that
• 30:57
  Speaker 11: benefit from the rise in tangible assets. You know, we
• 31:01
  Speaker 11: think this rise in gas prices and oil prices isn't sustainable.
• 31:04
  Speaker 11: We think it's a technical move. We think it's supply driven.
• 31:07
  Speaker 11: So based on that, we wouldn't expect energy stocks to
• 31:12
  Speaker 11: you know, maintain this rally.
• 31:14
  Speaker 10: Uh.
• 31:14
  Speaker 11: The question is for how long?
• 31:16
  Speaker 10: Though?
• 31:16
  Speaker 11: We think that that's a short term view. But how
• 31:18
  Speaker 11: long is short term? We're not sure. We can't predict
• 31:21
  Speaker 11: the day to day, but long term thinking you know, months,
• 31:24
  Speaker 11: several months down the road. I mean, we don't expect
• 31:27
  Speaker 11: oil prices to.
• 31:27
  Speaker 2: Keep this up.
• 31:29
  Speaker 4: You like, any risk assets outside of the US?
• 31:32
  Speaker 2: Cali, do you look outside of the US?
• 31:35
  Speaker 11: I mean, we have US focused customers, but e Toro
• 31:38
  Speaker 11: is a global platform, so of course we look outside
• 31:40
  Speaker 11: the US. You know, globally, I think the rise of
• 31:43
  Speaker 11: the dollar is going to be a huge pressure, especially
• 31:46
  Speaker 11: on emerging markets. And then you have what you see
• 31:48
  Speaker 11: what's happening in China overseas, and you know, I'll sum
• 31:51
  Speaker 11: it all up with you know, there's a reason why
• 31:53
  Speaker 11: global stocks are trading at a lower pe than the
• 31:55
  Speaker 11: US right now. Is there value there? I think you
• 31:58
  Speaker 11: have to evaluate it on a country but country basis.
• 32:01
  Speaker 11: But you know, there again, there's a reason why global
• 32:05
  Speaker 11: markets are cheap, and it's smart to diversify, but you
• 32:07
  Speaker 11: have to also reckon with you know, the different situations
• 32:10
  Speaker 11: you're running into.
• 32:11
  Speaker 5: So within the US, are there sectors cali that you
• 32:14
  Speaker 5: like right here?
• 32:18
  Speaker 11: Yeah? So I think this again depends on timeframes. You know,
• 32:21
  Speaker 11: as long as the economy is chugging along, especially given
• 32:24
  Speaker 11: the you know pop and growth that we could see
• 32:27
  Speaker 11: this quarter and that we have seen for the past
• 32:29
  Speaker 11: few months, I think some cheaper cyclicals could be an
• 32:31
  Speaker 11: interesting short term play. However, again, a lot of pressure
• 32:35
  Speaker 11: on the economy, and you know, if you think that
• 32:38
  Speaker 11: the economy is going into recession, then you know, certain
• 32:42
  Speaker 11: sectors like bonds and real estate for example, could look
• 32:46
  Speaker 11: cheap as well. I mean, right now, we're telling customers
• 32:48
  Speaker 11: that portfolio positioning isn't black and white, and there's a
• 32:52
  Speaker 11: big difference between a month from now and a year
• 32:54
  Speaker 11: from now.
• 32:55
  Speaker 5: So you know, we like.
• 32:56
  Speaker 11: Long duration here, We like you know, piling into the
• 33:00
  Speaker 11: rate sensitive sectors, but at the same time, you know,
• 33:02
  Speaker 11: cheaper cyclicals could perform well if we continue to see
• 33:07
  Speaker 11: economic data do well.
• 33:08
  Speaker 1: Hey, Kelly, thanks so much for joining us. Always appreciate
• 33:11
  Speaker 1: getting your thoughts there. Kelly Cox, us investment analyst at
• 33:14
  Speaker 1: e Touro.
• 33:16
  Speaker 6: You're listening to the tape Cat's are live program Bloomberg
• 33:19
  Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 33:23
  Speaker 6: tune in app, Bloomberg dot Com, and.
• 33:25
  Speaker 8: The Bloomberg Business App.
• 33:26
  Speaker 6: You can also listen live on Amazon Alexa from our
• 33:29
  Speaker 6: flagship New York station. Just say Alexa play Bloomberg eleven thirty.
• 33:34
  Speaker 1: Let's talk about a new IPO potentially coming that's going
• 33:37
  Speaker 1: to be very interesting. Amber Sports, the maker of Wilson
• 33:41
  Speaker 1: tennis rackets and Solomon ski boots. That got my attention, Dubert,
• 33:44
  Speaker 1: I have to say, also my favorite boots and my
• 33:47
  Speaker 1: favorite skis typically Yeah, so they're just like a go to,
• 33:50
  Speaker 1: I know, they do good stuff. And tennis rackets who
• 33:52
  Speaker 1: I've had a Wilson tennis record forever. Bloomberg Intelligence analysts
• 33:56
  Speaker 1: Katherine Limb. She covers all the consumer and technology for Sumergantology.
• 34:00
  Speaker 1: She's based in Singapore. I have no idea where she
• 34:03
  Speaker 1: is today, but I see her on the zoom. I
• 34:05
  Speaker 1: hope she's in Singapore.
• 34:08
  Speaker 2: Is it a mayor sports? By the way, is it Catherine?
• 34:11
  Speaker 2: Is it like a mayor Rica? Are they trying to
• 34:13
  Speaker 2: pull a fast one on us or how do you
• 34:15
  Speaker 2: pronounce it?
• 34:16
  Speaker 3: Well?
• 34:17
  Speaker 12: Well, do you know what?
• 34:18
  Speaker 13: This is?
• 34:18
  Speaker 12: A Finnish company which Anta Sport had actually acquired sometime
• 34:24
  Speaker 12: back in twenty nineteen, that's when the deal was concluded.
• 34:29
  Speaker 12: You know, they started initiating the plans to actually acquire
• 34:34
  Speaker 12: this again Finnish company that you know you've actually mentioned.
• 34:38
  Speaker 12: They've got very well known brands. Wilson just one, Solomon
• 34:43
  Speaker 12: is one, and actually our t Rex is the one
• 34:47
  Speaker 12: that has actually done exceptionally well in China. And notwithstanding,
• 34:52
  Speaker 12: of course, you know, they actually do have atomic which
• 34:56
  Speaker 12: I believe. You know, it is a complete.
• 34:57
  Speaker 4: Year, so great year.
• 35:00
  Speaker 2: It makes my favorite scuba gear actually really incredible regulators,
• 35:05
  Speaker 2: high high end, high end equipment.
• 35:08
  Speaker 12: Yes, so it's a it's a midst of them, you know,
• 35:10
  Speaker 12: very well established brands, and it is interesting to see
• 35:15
  Speaker 12: that they're actually seeking a us IPO IPO and obviously
• 35:20
  Speaker 12: looking to raise funds, which I do believe it is
• 35:23
  Speaker 12: for their expansion, both in China as well as over.
• 35:28
  Speaker 1: So, I mean, they've got some competition out there. I
• 35:31
  Speaker 1: just think about the consumer brands Nike, Audi, Dos, VF Corp.
• 35:35
  Speaker 1: How are they doing in terms of market share?
• 35:37
  Speaker 2: Did they buy Solomon from Audi Dos because Audio doc
• 35:40
  Speaker 2: used to own Solomon?
• 35:42
  Speaker 8: Right?
• 35:42
  Speaker 12: Do you know what? That is a very interesting point
• 35:45
  Speaker 12: that you actually raised, because as you may be aware,
• 35:47
  Speaker 12: there's actually an increasing shift towards niche labels out there,
• 35:53
  Speaker 12: particularly by the sports fanatic, you know, who's looking for
• 35:57
  Speaker 12: outdoor year out your brands itself that goes beyond the
• 36:02
  Speaker 12: North Facet or Columbia that you know we're familiar with
• 36:06
  Speaker 12: with beer. And then of course, you know, notwithstanding are
• 36:10
  Speaker 12: t Rex that's actually I would consider a higher end
• 36:15
  Speaker 12: brand and particularly doing actually very well here in Asia,
• 36:21
  Speaker 12: and because of the price points and for the fact
• 36:24
  Speaker 12: that you know, it is a niche brand. What Anta
• 36:27
  Speaker 12: Sport has actually been doing over the last four years
• 36:31
  Speaker 12: since they've actually acquired the company was to slowly but
• 36:35
  Speaker 12: surely expand the merchandise offerings. So we're looking at you know,
• 36:41
  Speaker 12: more apparels going into the shoes as well. So expanding
• 36:48
  Speaker 12: the merchandise offerings is definitely a key to actually growing
• 36:52
  Speaker 12: this business, Catherine.
• 36:53
  Speaker 1: So is the company's pitch here in coming private that hey,
• 36:57
  Speaker 1: we have some market share gains in China, that's where
• 37:00
  Speaker 1: our growth is. Is that kind of their pitch.
• 37:04
  Speaker 12: I believe they have their eyes beyond China and this
• 37:07
  Speaker 12: is really key to establishing, you know, your international brands.
• 37:13
  Speaker 12: So this is going beyond you know, the Chinese brands
• 37:16
  Speaker 12: that the company had actually made a bit splashed at
• 37:20
  Speaker 12: home with that's the Anti Sports brand. And let's take
• 37:23
  Speaker 12: a step back. Anti Sports. They made a name for themselves.
• 37:27
  Speaker 12: They've established themselves being now I believe it is you know,
• 37:32
  Speaker 12: the seventh of the eighth year to which they are
• 37:34
  Speaker 12: the official sponsors for the Chinese Olympic Committee, so you know,
• 37:40
  Speaker 12: they are now very well associated among the Chinese. But
• 37:44
  Speaker 12: the company has obviously biggest goals to which they are
• 37:48
  Speaker 12: looking to actually have a portfolio of established labels that
• 37:53
  Speaker 12: go beyond you know, your homegrown brands. But the higher
• 37:57
  Speaker 12: price Yer brands are t Rex Parloment. You know, even
• 38:00
  Speaker 12: Wilson and I do believe that, you know, they will
• 38:04
  Speaker 12: be rolling out plans for Wilson to be beyond basketball,
• 38:09
  Speaker 12: you know, racket that we have seen. They've actually talked
• 38:12
  Speaker 12: about it back in twenty nineteen when they first acquired
• 38:16
  Speaker 12: the company, that they will be looking into apparels for Wilson.
• 38:21
  Speaker 12: Let's see what happens. You know, when the when Irma
• 38:25
  Speaker 12: makes a successful IPO.
• 38:27
  Speaker 4: Wilson makes pick aball rackets as well. Now that's a
• 38:30
  Speaker 4: growth business, you know.
• 38:32
  Speaker 5: Yeah, yeah, to play, so for sure you have to play.
• 38:34
  Speaker 4: I was playing yesterday.
• 38:35
  Speaker 5: Nice Hey, Catherine.
• 38:36
  Speaker 1: I'm looking at the you know, some of the comps
• 38:38
  Speaker 1: and how the stocks have done. I mean it's kind
• 38:40
  Speaker 1: of all over the board. Adidas is up thirty seven
• 38:42
  Speaker 1: percent year to date, but you know Nike and under
• 38:45
  Speaker 1: Armour they're down fifteen to thirty percent. How do the
• 38:48
  Speaker 1: comps look here? How do you ho's evaluation here? How
• 38:52
  Speaker 1: do you think this company should be positioned within the group?
• 38:55
  Speaker 12: Well, I think general sentiment wise, obviously, you know, we
• 38:59
  Speaker 12: see growing concerns about global demand, you know, the sentiment
• 39:04
  Speaker 12: wise towards the discretionary goods, and that's what you've probably
• 39:08
  Speaker 12: been seeing, you know, reflecting in the prices of Nike
• 39:13
  Speaker 12: and BF. Now our data is a bit of a
• 39:15
  Speaker 12: different thing because you know, again the company has actually
• 39:18
  Speaker 12: gone through major changes, including a new CEO, and they
• 39:23
  Speaker 12: are actually picking themselves up from what I would say
• 39:26
  Speaker 12: the load to which, you know, take a step back.
• 39:30
  Speaker 12: Remember last year they lost eas the partnership and then
• 39:35
  Speaker 12: or rather they terminated the Easy partnership. You know, they
• 39:38
  Speaker 12: re looked at their inventory situations and they've actually realigned
• 39:43
  Speaker 12: it along with what they've set themselves going forward. So
• 39:46
  Speaker 12: it's a bit of a different story. It's like a
• 39:48
  Speaker 12: you know, a turnaround, if you actually call it. So,
• 39:52
  Speaker 12: I think it's very mixed right now. Really there are
• 39:55
  Speaker 12: eyes and I would say that what we've actually touched
• 39:58
  Speaker 12: on one of the growth list virtually be coming from China,
• 40:03
  Speaker 12: And do you know when the sentiment actually turns for
• 40:06
  Speaker 12: China fingers crossed on that one, you know, you might
• 40:09
  Speaker 12: actually see a more enticing story for.
• 40:13
  Speaker 4: Interesting stuff.
• 40:14
  Speaker 5: Yep, great stuff.
• 40:15
  Speaker 1: I mean, hey, we got an IPO that's exciting in
• 40:17
  Speaker 1: and of itself, and then we talk about some of
• 40:19
  Speaker 1: the cool products they have, it makes even more interesting.
• 40:22
  Speaker 1: Katherine Limb, thanks so much for joining us. Katherine Limb
• 40:24
  Speaker 1: is a senior analyst. She covers the consumer in tech space,
• 40:26
  Speaker 1: and she's head of Asian Equities for Bloomberg Intelligence, so
• 40:30
  Speaker 1: we appreciate getting some of her time. She's formerly at
• 40:32
  Speaker 1: Credit Swiss and City, so we appreciate that she's now
• 40:35
  Speaker 1: at Bloomberg Intelligence.
• 40:37
  Speaker 6: You're listening to the tape Cat's are live program Bloomberg
• 40:40
  Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 40:44
  Speaker 6: tune in app, Bloomberg dot Com.
• 40:45
  Speaker 8: And the Bloomberg Business app.
• 40:47
  Speaker 6: You can also listen live on Amazon Alexa from our
• 40:50
  Speaker 6: flagship New York station. Just say Alexa play Bloomberg eleven thirty.
• 40:56
  Speaker 5: It is riting.
• 40:57
  Speaker 1: It is the time to ask what is Matt Miller driving.
• 41:02
  Speaker 1: I really don't know, and quite frankly, I'm not really
• 41:04
  Speaker 1: super car guy. But our next guest is Michael Dean.
• 41:08
  Speaker 1: He says, senior analys are covering the European automotives for
• 41:11
  Speaker 1: Bloomberg Intelligence. I can't believe we actually pay this guy
• 41:13
  Speaker 1: to do this, because we can get it done for free.
• 41:16
  Speaker 6: He would do it.
• 41:16
  Speaker 2: That's so glad we pay it is because I think
• 41:18
  Speaker 2: he takes all of his paycheck and buys new cars
• 41:21
  Speaker 2: and buys new car A lot of people who cover cars.
• 41:24
  Speaker 2: Don't really care about cars, but Michael Dean does, which
• 41:26
  Speaker 2: is why we love having him on. Michael, I want
• 41:29
  Speaker 2: to get first your thoughts on this beast of a car.
• 41:31
  Speaker 2: I've been talking about it for most of the show already.
• 41:34
  Speaker 2: It's the Aston Martin DBX seven oh seven that I'm
• 41:36
  Speaker 2: lucky enough to test out this week. Six hundred and
• 41:39
  Speaker 2: ninety seven horsepower, zero to sixty and three point one seconds,
• 41:43
  Speaker 2: even though it weighs five pounds.
• 41:46
  Speaker 4: What's your take?
• 41:48
  Speaker 14: Yeah, it's a great car, it sounds good, it's got
• 41:51
  Speaker 14: the performance, so it's the fastest luxury suv out there.
• 41:55
  Speaker 14: It's even quicker than the Ferrari pure same way, which
• 41:58
  Speaker 14: is done with the price and it makes up seventy
• 42:01
  Speaker 14: percent of the mix of DBXLF so it's a better
• 42:04
  Speaker 14: price point. It's a better car, and it's setting well
• 42:07
  Speaker 14: for Aston Martin.
• 42:08
  Speaker 2: So I haven't driven the new Ferrari yet. Well, I
• 42:13
  Speaker 2: don't know if I will. That's kind of like a
• 42:16
  Speaker 2: different level and they're very difficult to get.
• 42:19
  Speaker 5: Michael Dean can help you out.
• 42:20
  Speaker 2: Hannah Elliott, has Michael, have you used driven the new Ferrari.
• 42:23
  Speaker 2: I don't get sidetracked, but no, I've been in it.
• 42:25
  Speaker 5: I haven't driven it.
• 42:26
  Speaker 14: But Hannah Elliotts has so well. I have to ask her.
• 42:29
  Speaker 4: She has like better access than anybody.
• 42:32
  Speaker 2: But but and she's driven this asked in a few times,
• 42:34
  Speaker 2: I have to say, I absolutely love driving it.
• 42:39
  Speaker 4: Okay, Now it has different modes.
• 42:41
  Speaker 2: You can put it in an all terrain mode has
• 42:45
  Speaker 2: a GT Grand Touring mode has Sport and Sport Plus.
• 42:48
  Speaker 2: I think they're useless. You only need sport plus. Everything
• 42:51
  Speaker 2: else sucks, and Sport Plus is the greatest experience you
• 42:55
  Speaker 2: could possibly have in an suv, at least in my
• 42:58
  Speaker 2: uh in my experience, but it's frustrating in a number
• 43:04
  Speaker 2: of other ways.
• 43:05
  Speaker 4: Michael.
• 43:05
  Speaker 2: There's no wireless car play, which means I can't use
• 43:10
  Speaker 2: Google Maps. I have to use their extremely dated navigation technology,
• 43:14
  Speaker 2: which just doesn't work that well. If I do want
• 43:16
  Speaker 2: to plug in my iPhone to the Aston Martin, it
• 43:19
  Speaker 2: still has the old clunky USB ports, it doesn't have
• 43:23
  Speaker 2: the new USB C ports, so I can't. I don't
• 43:26
  Speaker 2: have that those old plugs anymore. At my health house.
• 43:29
  Speaker 2: There's no touch screen right now. I know these are
• 43:32
  Speaker 2: for most people. It doesn't matter if you buy a
• 43:34
  Speaker 2: car for the engine and to drive it. But honestly,
• 43:37
  Speaker 2: on a day to day basis, if I'm spending three
• 43:39
  Speaker 2: hundred thousand dollars, I want the best tech, why can't
• 43:42
  Speaker 2: they deliver it.
• 43:44
  Speaker 14: Yeah, maybe you're just being fussy, but that it's true
• 43:46
  Speaker 14: when the competition has the high tech. So if you
• 43:49
  Speaker 14: look at the LAMB beginning yours, it has a touch screen,
• 43:52
  Speaker 14: it has all the correct interface, it has the connectivity,
• 43:56
  Speaker 14: and what happens is that Aston Martin uses Mercedes technology.
• 44:00
  Speaker 14: But this is the old technology. So you'll have an
• 44:02
  Speaker 14: updated version, probably about twelve to eighteen months, which will
• 44:05
  Speaker 14: have a flat screen, which will have the compactivity, and
• 44:09
  Speaker 14: also you'll probably have a plug in hybrid option, so
• 44:12
  Speaker 14: that is coming. But hopefully that doesn't take away the
• 44:15
  Speaker 14: experience of driving the vehicle.
• 44:17
  Speaker 2: It doesn't at all, but there's certain So it has
• 44:20
  Speaker 2: these hydraulic struts in the doors. I've never seen anything
• 44:23
  Speaker 2: like this. You can actually look at them when you
• 44:25
  Speaker 2: open and close the door.
• 44:26
  Speaker 4: We probably have.
• 44:27
  Speaker 5: Video of it.
• 44:29
  Speaker 2: That's supposed to make the doors, I guess, more comfortable
• 44:32
  Speaker 2: and easy to use, but in fact they're the hardest
• 44:34
  Speaker 2: doors to open and close that I've experienced in almost
• 44:37
  Speaker 2: any car in the.
• 44:39
  Speaker 4: Last decade, which is weird.
• 44:41
  Speaker 2: I do like it better than the Lamborghini Orus on
• 44:45
  Speaker 2: almost every level, which says a lot because I'm a Lamborghini,
• 44:50
  Speaker 2: a huge Lamborghini fanboy. But I think it looks better.
• 44:53
  Speaker 2: I think, well, it's definitely faster. I think it's more
• 44:56
  Speaker 2: fun to drive. The transmission I like a lot better,
• 44:59
  Speaker 2: which I guess is a Mercedes transmission as well. Right,
• 45:01
  Speaker 2: so in terms of the driving experience, I don't know
• 45:04
  Speaker 2: if it can be beat. There's a new challenger the
• 45:08
  Speaker 2: in the class, actually a little bit lower, the Porsche
• 45:11
  Speaker 2: Cayenne Turbo Hybrid, which is just coming out that seems
• 45:15
  Speaker 2: to be at least on paper as fast and like
• 45:18
  Speaker 2: half the price.
• 45:19
  Speaker 4: What do you think about that?
• 45:22
  Speaker 8: Yes, I'm with you.
• 45:23
  Speaker 14: I think Aston Martin's my favorite brand as well, and
• 45:26
  Speaker 14: the driveability is there. But also Porsche ranks pretty high
• 45:31
  Speaker 14: on my best list. But I think the new Porsche
• 45:35
  Speaker 14: Cayenne is an excellent vehicle, has all the high tech,
• 45:39
  Speaker 14: the engine is fantastic, and it will sell extremely well
• 45:42
  Speaker 14: because it's.
• 45:43
  Speaker 5: At a better price point.
• 45:45
  Speaker 14: So yeah, they're doing well with the new Kyen. There's
• 45:48
  Speaker 14: no doubt about that.
• 45:49
  Speaker 5: Aston Martin stock is up one hundred and seventeen percent
• 45:52
  Speaker 5: year to date. What's going on there.
• 45:54
  Speaker 14: Yeah, you've got to take into account that it's almost
• 45:57
  Speaker 14: ninety percent from when IPOs in two thousand and eight. Team,
• 46:00
  Speaker 14: so it's had a really tough time since it's come
• 46:03
  Speaker 14: to the stock market. It's got a new set of managers,
• 46:06
  Speaker 14: it's got some new investors, so Lawrence Stroll, he's the
• 46:09
  Speaker 14: main owner. You've had Dale tak a ten percent steak.
• 46:13
  Speaker 14: You've got the Saudi PIF taking a steak. So they're
• 46:17
  Speaker 14: finally getting it right. They've got new products just being launched.
• 46:21
  Speaker 14: So the new dB twelve was launched this month. This
• 46:24
  Speaker 14: is hopefully going to turn around the cashload to be positive.
• 46:27
  Speaker 14: It hasn't been positive in you know, the years that
• 46:31
  Speaker 14: it's been a listed company. And they had two other
• 46:34
  Speaker 14: vehicles coming fairly soon, so they're on the right path.
• 46:39
  Speaker 14: They've got enough cash to manage certainly for the next
• 46:43
  Speaker 14: six to twelve months, and it's getting this free cashblow
• 46:47
  Speaker 14: into positive territory that will be key to them in
• 46:50
  Speaker 14: terms of their performance in the next twelve months or so.
• 46:53
  Speaker 4: We're showing the video of the car.
• 46:55
  Speaker 2: Now we work for a moment, and if you go
• 46:57
  Speaker 2: to YouTube dot com and search Bloomberg Radio, you can
• 46:59
  Speaker 2: walk us streaming live.
• 47:01
  Speaker 4: And guys, let's keep showing the video. It's about the car, right,
• 47:04
  Speaker 4: Let's keep showing the car.
• 47:07
  Speaker 2: One of the things that I thought was, that's a
• 47:09
  Speaker 2: little bit disappointing for a car that you know, blows
• 47:12
  Speaker 2: me away in almost every aspect from the driving perspective,
• 47:14
  Speaker 2: is the boringness of the engine layout. The Lamborghini URIs,
• 47:20
  Speaker 2: the Mercedes AMGS, the Portie Cayenne Turbo, the Aston Martin DBX,
• 47:27
  Speaker 2: they all have a twin turbo like four liter V eight.
• 47:32
  Speaker 2: What gives you know? Why not have this raging V
• 47:35
  Speaker 2: twelve in this In this sense, I think Ferrari tops
• 47:42
  Speaker 2: everybody else, although obviously it's more expensive as well.
• 47:45
  Speaker 14: Yeah, the V twelve six point five litsa that's in
• 47:49
  Speaker 14: the pure same way is a special engine indeed. But
• 47:54
  Speaker 14: the thing is, because Ferrari only makes less than twenty
• 47:57
  Speaker 14: thousand cars, it doesn't have to adhere to this my
• 48:00
  Speaker 14: mission regulation. The likes of Porsche and even Lamborghinni because
• 48:04
  Speaker 14: it's part of fogs far and has to so they
• 48:07
  Speaker 14: have the twin surbos to make them more fuel efficients,
• 48:10
  Speaker 14: but hopefully that doesn't take away too much from the
• 48:13
  Speaker 14: enjoyment at least listening to the edge. And I quite
• 48:15
  Speaker 14: like the d eights in those vehicles.
• 48:17
  Speaker 1: No, it sounds delicious in fact, but we're not going
• 48:20
  Speaker 1: to be able to say that for many more years,
• 48:22
  Speaker 1: are we?
• 48:22
  Speaker 8: No?
• 48:23
  Speaker 4: We won't.
• 48:24
  Speaker 5: I don't know how you guys, your car guys deal
• 48:27
  Speaker 5: with that.
• 48:27
  Speaker 4: And accept it.
• 48:28
  Speaker 2: This is something that I asked. I was asking Michael
• 48:30
  Speaker 2: Andretti yesterday. I've asked Laurence.
• 48:33
  Speaker 4: Stroll as well.
• 48:35
  Speaker 2: Laren Stroll is like the owner of Aston Martin, or
• 48:39
  Speaker 2: at least a huge chunk of it, and he runs
• 48:41
  Speaker 2: their F one team as well. What do you think, Michael,
• 48:43
  Speaker 2: how do how does racing and how do luxury cars
• 48:46
  Speaker 2: make this transition? I was test driving the BMW x
• 48:49
  Speaker 2: M a couple of weeks ago and the sound was
• 48:54
  Speaker 2: really disappointing that that has a V eight but you
• 48:57
  Speaker 2: know it's a hybrid.
• 48:59
  Speaker 5: Yeah, we're going to disappoint you.
• 49:01
  Speaker 14: And also my colleague Kevin Tynan in that I've actually
• 49:03
  Speaker 14: bought a full electric vehicle, so I've got the pmw
• 49:06
  Speaker 14: IX fifty and I've got to say it's awesome performance,
• 49:10
  Speaker 14: but the one thing that is lacking is the engine noise,
• 49:14
  Speaker 14: and it does make a difference and it will put
• 49:16
  Speaker 14: people off the good thing for the luxury car maker
• 49:19
  Speaker 14: is they've got an extended period of grace into which
• 49:23
  Speaker 14: they can phase out their V twelve, so the details
• 49:27
  Speaker 14: will become V eights V eights. We've come V six is,
• 49:30
  Speaker 14: so we'll still have a ic so internal commossioner engine
• 49:34
  Speaker 14: in the luxury brand for many years to come, but
• 49:37
  Speaker 14: they will be electrified in some way. And that's certainly
• 49:41
  Speaker 14: going to happen with the Asta Martin TVX, It's going
• 49:43
  Speaker 14: to happen with Eurous, It's always already happened with the
• 49:46
  Speaker 14: Ben Saga, and as you mentioned, it's on the co En.
• 49:49
  Speaker 14: So yeah, we're going to have ice engines for many
• 49:53
  Speaker 14: more years yet for the luxury car makers.
• 49:55
  Speaker 8: I think.
• 49:55
  Speaker 1: All right, Michael, thanks so much for indulging my partner
• 49:58
  Speaker 1: here in discussion of all things automobiles. Michael Dean, he's
• 50:02
  Speaker 1: the senior ANAMS covering the European automotives. You mentioned Kevin Tynan.
• 50:05
  Speaker 1: He covers the US companies. They're both super duper car guys, and.
• 50:09
  Speaker 2: You mentioned the bmwix Ah, yes again, is on my list?
• 50:12
  Speaker 5: Is on your list? All right?
• 50:13
  Speaker 1: Michael Dean from Bloomberg Intelligence, We've got and we've got
• 50:16
  Speaker 1: somebody in Asia that covers the Asian companies as well,
• 50:19
  Speaker 1: so we've got the global auto business absolutely covered from
• 50:21
  Speaker 1: Bloomberg Intelligence perspective.
• 50:23
  Speaker 6: You're listening to the tape Cat's are live program Bloomberg
• 50:27
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• 50:30
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• 50:32
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• 50:36
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• 50:42
  Speaker 5: All right, I realtreat here. We're talking serious trading here.
• 50:45
  Speaker 8: Now.
• 50:46
  Speaker 1: We booked this guest to talk about the markets, but
• 50:47
  Speaker 1: quite frankly, we've got a lot of markets guests on
• 50:49
  Speaker 1: the week, so let's talk about some real trading in
• 50:53
  Speaker 1: the pits. JJ Kinahan joins us. He's the CEO of
• 50:56
  Speaker 1: IG Group North America. Joins us live here on our
• 50:59
  Speaker 1: Bloomberg Inner to Brooker Studios. He is from Chicago and
• 51:02
  Speaker 1: that that kind of goes to the story here. JJ,
• 51:04
  Speaker 1: thanks for coming into the studio here Chicago Board of
• 51:08
  Speaker 1: Options Exchange.
• 51:09
  Speaker 5: See boat, what is it? And what did you do there?
• 51:12
  Speaker 13: So I traded there from nineteen eighty five to two
• 51:16
  Speaker 13: thousand and six, and I traded in what At the time,
• 51:19
  Speaker 13: everything was open outcry, people jumping up and down and
• 51:21
  Speaker 13: yelling at that's what this whole hand signals, all the
• 51:23
  Speaker 13: hand signals, you know, so you'd be someone way across,
• 51:27
  Speaker 13: you'd be checking, you know, check a trade. I BT
• 51:29
  Speaker 13: twenty paid thirty for it, whatever it may be, And
• 51:33
  Speaker 13: it was a wonderful way to make a living. It
• 51:35
  Speaker 13: was very at the time, incredibly efficient. You know, obviously
• 51:40
  Speaker 13: electronic trading is much more efficient. And it's been the
• 51:43
  Speaker 13: greatest scene it's ever happen in retail traders. Yea, but
• 51:46
  Speaker 13: you know there were five hundred and fifty people in there,
• 51:49
  Speaker 13: leaning on each other, spitting on each other, yelling and screaming.
• 51:52
  Speaker 8: You know.
• 51:52
  Speaker 13: It was kind of funny. Even if you didn't know anything,
• 51:55
  Speaker 13: if you didn't like the person you stood next to,
• 51:58
  Speaker 13: you knew everything about him because you dood next to
• 52:00
  Speaker 13: you did it for six and a half hours, all day,
• 52:02
  Speaker 13: every day, and I feel very fortunate. Pauly that was
• 52:06
  Speaker 13: part of my background. I met some of the greatest
• 52:07
  Speaker 13: people in the world. And the one thing I will
• 52:11
  Speaker 13: say was the greatest trade there is your world was
• 52:12
  Speaker 13: your bond. You said by them, you bought them. If
• 52:14
  Speaker 13: you said sold, you sold them. And if you didn't
• 52:17
  Speaker 13: do that, you were quickly found out an outcast. And
• 52:20
  Speaker 13: so you know, you think of the millions, hundreds of
• 52:24
  Speaker 13: millions of dollars that went through there every single day,
• 52:26
  Speaker 13: and it went through on people's words, and that was
• 52:28
  Speaker 13: really special.
• 52:28
  Speaker 1: And so I mean in Chicago, and I think of
• 52:30
  Speaker 1: some of those you know, screaming in the pits, I
• 52:33
  Speaker 1: think Chicago. So there was a there's a community there, right,
• 52:37
  Speaker 1: I mean, you know, kind of everybody and that kind
• 52:40
  Speaker 1: of thing.
• 52:40
  Speaker 13: Yeah, what's ended up happening is a lot of us
• 52:42
  Speaker 13: have ended up on the retail side and brokerage, and
• 52:44
  Speaker 13: many have ended up still on the trading side with
• 52:46
  Speaker 13: some of the bigger firms. And so it's really helped
• 52:50
  Speaker 13: in terms of the relationships we have. And you know,
• 52:53
  Speaker 13: as we were building I went on to think or swim.
• 52:56
  Speaker 13: At the time we built that platform, we kind of
• 52:58
  Speaker 13: built it for ourselves and then you know, ended up
• 53:01
  Speaker 13: selling it to TD. Merriatade then started with Tasty Trade,
• 53:04
  Speaker 13: saying people who built think as something to begin with.
• 53:07
  Speaker 13: And so I've been fortunate. I've worked with my friends
• 53:09
  Speaker 13: my whole life. Right, I've worked in an industry I
• 53:11
  Speaker 13: absolutely love, and I went from the part of the
• 53:13
  Speaker 13: business where it was all about me to now a
• 53:15
  Speaker 13: Tasty Trade. It's all about helping other people understand the
• 53:19
  Speaker 13: markets and what we did, and it feels really good
• 53:22
  Speaker 13: to do that everything.
• 53:23
  Speaker 5: So how do you all right?
• 53:24
  Speaker 1: So you go from trading in the pits back in
• 53:26
  Speaker 1: the eighties and nineties, how are options and other securities
• 53:29
  Speaker 1: that you deal with, how are they traded these days?
• 53:30
  Speaker 13: Well, everything's done electronically. So if you put in to
• 53:33
  Speaker 13: buy something, if you went in to buy Apple right now,
• 53:36
  Speaker 13: and he had the money calling Apple, you know in
• 53:39
  Speaker 13: the front month, you would get filled and you know,
• 53:41
  Speaker 13: before we could blink our eyes.
• 53:43
  Speaker 6: Yep.
• 53:43
  Speaker 13: It's really amazing how quick the electronics work. Whereas back
• 53:46
  Speaker 13: when I was in the pit, you might not know
• 53:47
  Speaker 13: what you did for ten minutes, okay, And that's why
• 53:49
  Speaker 13: there were something called runners. They literally ran back and
• 53:52
  Speaker 13: forth from the pit to the you know, that's where
• 53:54
  Speaker 13: everyone started. You just ran back and forth all day long.
• 53:57
  Speaker 13: You were in great shape. It was a young man's case. Yeah,
• 54:00
  Speaker 13: but you know, so, I just think that everything that's
• 54:03
  Speaker 13: happened in our business since I started in eighty five
• 54:06
  Speaker 13: has been to the benefit of a retail trader, that
• 54:10
  Speaker 13: everything about it has even the playing field so that
• 54:13
  Speaker 13: you know, the platforms that we produce today are so
• 54:17
  Speaker 13: much better than anything I ever had in a pit.
• 54:19
  Speaker 13: And the information flow now is better for you sitting
• 54:23
  Speaker 13: at home in front of your screen than it is
• 54:24
  Speaker 13: for now that there are still a few pits left.
• 54:26
  Speaker 13: They don't have the information flow you have at home, all.
• 54:29
  Speaker 5: Right, So I mean, so is that lower the cost
• 54:32
  Speaker 5: for the average.
• 54:32
  Speaker 13: Invest You know, we think about this. Most equity trades
• 54:34
  Speaker 13: are zero now, right, Yeah, So you know, think about
• 54:37
  Speaker 13: from that point of view again, platforms, the education we
• 54:41
  Speaker 13: spend you know, almost ten hours every single day on
• 54:43
  Speaker 13: our tasty live side broadcasting live about you know, you
• 54:48
  Speaker 13: guys are doing a lot of news, et cetera. Yeah,
• 54:50
  Speaker 13: we're doing some of that, but we're doing more is
• 54:52
  Speaker 13: talking about strategies about how to learn about how to
• 54:55
  Speaker 13: think about risk. Because the biggest thing that the average
• 54:57
  Speaker 13: person at home doesn't truly understand yet. I shouldn't say
• 55:00
  Speaker 13: it doesn't understand yet newer people particularly and as you
• 55:03
  Speaker 13: go up, what I love about the market the most?
• 55:05
  Speaker 13: That humble says you know from your background, yep, you
• 55:08
  Speaker 13: know we started in the business almost the same time.
• 55:10
  Speaker 13: Is it humbles you every single day and you can
• 55:13
  Speaker 13: take losing days, you just can't get blown out. And
• 55:16
  Speaker 13: understanding how risk works is the biggest thing the average
• 55:19
  Speaker 13: person has to do if they're going to have success
• 55:22
  Speaker 13: long term in the markets.
• 55:23
  Speaker 5: So what is your platform now, IG Group North North America.
• 55:25
  Speaker 5: What do you so?
• 55:26
  Speaker 13: IG is the parent company out of London. We're listed
• 55:28
  Speaker 13: on the London Stock Exchange and our IgG and Tasty
• 55:31
  Speaker 13: Trade is our brokerage firm in the US, and so
• 55:35
  Speaker 13: you know a tasty trade dot com and anything I
• 55:39
  Speaker 13: can help anybody with JJ at tasty trade dot com.
• 55:41
  Speaker 13: But you know all that we want to provide. We're
• 55:46
  Speaker 13: kind of a fintech company where you consider ourselves. We
• 55:48
  Speaker 13: build great platforms that incorporate anything a retail trader would
• 55:52
  Speaker 13: need so that they can interact with the markets in
• 55:55
  Speaker 13: a way that hopefully is simple for them to understand.
• 55:58
  Speaker 13: And also if they want to just trade equities. Wonderful
• 56:01
  Speaker 13: if they want to be somebody who trades futures with options,
• 56:04
  Speaker 13: et cetera. We have the tools for that.
• 56:05
  Speaker 5: Your audience retail. Our audience is one retail. Okay, So
• 56:10
  Speaker 5: but for the institutions, how did they trade?
• 56:12
  Speaker 1: I mean did they Like in my day, you just
• 56:15
  Speaker 1: if I had to buy three hundred thousand of pan am,
• 56:17
  Speaker 1: I'd go see who on PanAm? I start bidding them
• 56:19
  Speaker 1: for Now it's you go to citadel or to sell.
• 56:23
  Speaker 13: So you know, it's the citadels.
• 56:25
  Speaker 8: The virtues of the world are.
• 56:27
  Speaker 13: They have a market making business, so they'll take the
• 56:29
  Speaker 13: other side of anything anybody wants to do, and they
• 56:32
  Speaker 13: operate on volume, and they operate on speed. They they
• 56:34
  Speaker 13: provide a very important function for the markets. And I
• 56:37
  Speaker 13: think it's sometimes underrated what the market makers do. Maybe
• 56:40
  Speaker 13: I'm a little buias because I started my career as
• 56:42
  Speaker 13: a marketmaker, But you know, if somebody wants to come
• 56:46
  Speaker 13: in and sell, you'll buy them. Somebody wants to come
• 56:47
  Speaker 13: in and buy, you'll sell them. And you do that
• 56:48
  Speaker 13: all day every day. You take advantage of a little
• 56:51
  Speaker 13: bit of a small, small spread which is very small,
• 56:53
  Speaker 13: but outside that you're putting on positions all day which
• 56:57
  Speaker 13: help you make money. Also, now when somebody comes with
• 57:01
  Speaker 13: a big block to buy, they may call around still
• 57:05
  Speaker 13: that that market still exists, because think about it on
• 57:09
  Speaker 13: if you're on an electronic screen and the market, you know,
• 57:13
  Speaker 13: many people see it like ten by ten, which usually
• 57:16
  Speaker 13: means a thousand by a thousand thousand to buy, a
• 57:17
  Speaker 13: thousand of sell, and all of a sudden you see
• 57:19
  Speaker 13: like a three thousand number up there. Somebody's got three
• 57:22
  Speaker 13: hundred thousand chairs to buy. Obviously, is going to tilt
• 57:25
  Speaker 13: the market. So that's why when people hear about all
• 57:28
  Speaker 13: the algorithms and stuff, they may say, oh my god,
• 57:30
  Speaker 13: that's terrible they're using them. They actually serve a function,
• 57:33
  Speaker 13: and that is so that firms don't have to necessarily
• 57:36
  Speaker 13: tip their hand when they do have big blocks to buy.
• 57:38
  Speaker 13: They can buy them in smaller amounts without actually making
• 57:41
  Speaker 13: the market go crazy one way or the other.
• 57:43
  Speaker 1: All right, So if I walked onto a you know,
• 57:45
  Speaker 1: gome sas trading desk, it wouldn't look anything like back
• 57:47
  Speaker 1: in the day.
• 57:48
  Speaker 13: Right now, it still would look like it did. There
• 57:50
  Speaker 13: certainly be a lot less people, okay, absolutely, and the electron.
• 57:53
  Speaker 13: You know, the amount of technology they're using is absolutely
• 57:58
  Speaker 13: amazing overall, and back when you were on the desk,
• 58:02
  Speaker 13: you know you might have had somebody Paul might have
• 58:04
  Speaker 13: been responsible. I believe you used pan Am as an
• 58:06
  Speaker 13: example for pan Am right for the airlines. Right now,
• 58:10
  Speaker 13: you may have one person in charge of one hundred
• 58:14
  Speaker 13: different stocks etcare keeping track of everything on there. So
• 58:17
  Speaker 13: we've used technology to the advantage of everyone.
• 58:19
  Speaker 5: JJ, thanks for coming in.
• 58:20
  Speaker 4: Fascinating, it's a lot of fun.
• 58:22
  Speaker 1: JJ Kinahan, he's the CEO of IG Group North America.
• 58:26
  Speaker 1: Talking a little bit of trading down in the pits.
• 58:29
  Speaker 5: This is Bloomberg.
• 58:30
  Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can
• 58:33
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• 58:37
  Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
• 58:41
  Speaker 2: at Matt Miller nineteen seventy three.
• 58:43
  Speaker 5: And I'm Paul Sweeney. I'm on Twitter at pt Sweeney.
• 58:46
  Speaker 1: Before the podcast, you can always catch us worldwide at
• 58:48
  Speaker 1: Bloomberg Radio.