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Market And Tech Outlook For 2022 · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside
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Speaker 1: my co host Matt Miller. Every business day we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
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Speaker 1: at Bloomberg dot com slash podcast Soil. Thanks so much
0:22
Speaker 1: for joining us here. How shall we think about these
0:24
Speaker 1: equity markets in two given the strong performance we had? Well, Paul,
0:30
Speaker 1: first of all, to you and Tailor. Happy new year.
0:33
Speaker 1: Thank you very much for having me on again. UM,
0:36
Speaker 1: so good news and bad news. Good news is that
0:40
Speaker 1: last year the stock market was up almost thirty on
0:44
Speaker 1: a total return basis. We've been up more than a
0:47
Speaker 1: hundred since the bottom of the market last March. Earnings
0:51
Speaker 1: last year probably up about fifty five zero percent year
0:55
Speaker 1: on year. UM, that's not the kind of year we're
0:58
Speaker 1: looking for In calendar to me too, earnings maybe will
1:02
Speaker 1: be up eight percent year on year. We think we've
1:06
Speaker 1: seen as much multiple expansion as we're going to get,
1:09
Speaker 1: and we do expect that. You know, the bias in
1:12
Speaker 1: terms of interest rates and the Fed is higher. Um,
1:15
Speaker 1: So I don't think we're getting a multiple expansion. We've
1:18
Speaker 1: got a fifty three hundred target on the SMP five
1:21
Speaker 1: hundred are hundred call of course for last year, so
1:25
Speaker 1: that gives us, you know, roughly a ten percent move
1:28
Speaker 1: higher now is pretty good, uh, you know, uh, in
1:33
Speaker 1: a normal year. But it's not you know, the thirty
1:36
Speaker 1: percent we saw last year, the percent we've seen over
1:39
Speaker 1: the last couple of years. So I guess what I'm
1:42
Speaker 1: saying is we need to mute our expectations a lot
1:46
Speaker 1: more volatility in our view in calendar twenty two. And
1:50
Speaker 1: that volatility, Phil, does it come from at least some
1:53
Speaker 1: of the surveys that Bloomberg has done, It is all
1:56
Speaker 1: about inflation less. So about COVID, how are you thinking
2:00
Speaker 1: about the volatility and the risks and where that stems from? Oh, Taylor,
2:04
Speaker 1: that's a great question. Um. You know, when you look
2:08
Speaker 1: at COVID, maybe we've got a somewhat out of consensus
2:11
Speaker 1: view that we're looking at the you know, the cycles
2:16
Speaker 1: in South Africa, the cycles in the European Union, in
2:20
Speaker 1: the UK, and the cycles here in the United States,
2:23
Speaker 1: and we've got a view that that am Acron is
2:26
Speaker 1: going to peak here maybe you know, by the end
2:29
Speaker 1: of this month, uh, and become much less a big
2:32
Speaker 1: deal uh than it's been over the last couple of months. Now,
2:36
Speaker 1: that's not to say that we don't know what the
2:39
Speaker 1: next variant is going to be. Is the next variant
2:41
Speaker 1: going to be more problematic than am acron? I don't know.
2:45
Speaker 1: But as we're looking at the financial markets, where we
2:48
Speaker 1: are a lot more concerned about what's going on with
2:50
Speaker 1: inflation and more precisely, what's going on with the federal reserves.
2:56
Speaker 1: Likely response now while a lot of folks are on vacation,
3:00
Speaker 1: the government reported that the Core Personal Consumption Expenditure Index,
3:05
Speaker 1: which is the Fed's preferred measure of inflation, rose four
3:09
Speaker 1: point seven year on your basis in November. That that
3:12
Speaker 1: that's huge And and remember the FEDS target is two,
3:17
Speaker 1: where we're you know, will above that. So the FED,
3:21
Speaker 1: in our view, did the right thing in accelerating its
3:24
Speaker 1: tapering program. We think the taper is going to be
3:26
Speaker 1: done by the end of March. We're expecting three quarter
3:30
Speaker 1: point rate hikes over the course of next year. But
3:33
Speaker 1: but suppose inflation is an even bigger problem than we
3:36
Speaker 1: think it is. Does that mean maybe the FED is
3:39
Speaker 1: going to shift from quantitative easing to quantitative tightening, shrinking
3:44
Speaker 1: its balance sheet, you know, aggressively. And and and maybe
3:47
Speaker 1: instead of quarter point rate hikes, maybe the FEDS thinking
3:51
Speaker 1: about fifty basis point rate hikes in order to sort
3:54
Speaker 1: of catch up from behind the curve. I don't know
3:56
Speaker 1: the answer to those questions, but but that's part of
3:59
Speaker 1: the uncertain in the volatility that that potentially is in
4:02
Speaker 1: store for us over the course of calendar twenty two.
4:05
Speaker 1: All right, So given that backdrop, phil um, do I
4:08
Speaker 1: stick with the big growth names that have worked for
4:11
Speaker 1: me for more than a decade, the Apples, the Amazons
4:13
Speaker 1: of the world order, I stick with that cyclical trade.
4:16
Speaker 1: But boy, it's been really good over the last eighteen
4:19
Speaker 1: twenty four months to whether it's energy or banks. How
4:22
Speaker 1: do I think about that? So? Uh, in our view,
4:25
Speaker 1: you stick with that cyclical trade, the value trade. And
4:28
Speaker 1: and to some degree there's a function of valuation that
4:32
Speaker 1: that forward multiples on the SMP five right now around
4:35
Speaker 1: you know, twenty times earnings, give or take, which is
4:38
Speaker 1: which is high? But I'm not losing any sleep over it.
4:41
Speaker 1: But when you look at the growthier names, technology, et cetera.
4:44
Speaker 1: Those p's are up in the mid thirties. You look
4:47
Speaker 1: at the value names UH Financials, Energy, UH discretionary, UH materials,
4:55
Speaker 1: industrials multiples in on those sectors in the mid teens.
5:01
Speaker 1: Yet the pricing power and the outsized earnings gains, in
5:06
Speaker 1: our view, are going to come from those value categories.
5:09
Speaker 1: So as we look at where to invest, where do
5:12
Speaker 1: you put new money in calendar twenty two, I think
5:15
Speaker 1: there are three places we're focused on. Number one, domestic
5:18
Speaker 1: large cap value and we just covered that. Number two
5:21
Speaker 1: small cap, particularly on a growth adjusted basis, those valuations
5:25
Speaker 1: are very cheap. And then finally, international international is extraordinarily
5:30
Speaker 1: chief versus the domestic um. If we're right that am
5:33
Speaker 1: aquana is, we're going to roll over here, you know,
5:36
Speaker 1: and let's call it the first quarter of the year.
5:38
Speaker 1: There's gonna be a cancerup training International. It's gonna start
5:41
Speaker 1: at some point during the year. Yeah, all right, Phil,
5:44
Speaker 1: thanks so much for joining us. Really appreciate getting your
5:46
Speaker 1: thoughts as usual, always giving us some cogent thoughts as
5:51
Speaker 1: we take a look at these markets. Are Phil Orlando,
5:53
Speaker 1: Chief equity market Strategists and head of client portfolio management
5:57
Speaker 1: at Federated Herme's you know what, I think? That six
6:00
Speaker 1: billion assets under management, so they know a thing or
6:03
Speaker 1: two about these markets. So I've been saying to myself
6:10
Speaker 1: at least and maybe even to the audience here, why
6:12
Speaker 1: isn't a ten year yield higher? I mean, I got
6:14
Speaker 1: the Federal Reserve talking about accelerating tapering at talking about
6:18
Speaker 1: raising rates next year, and you know, average Jersey from
6:21
Speaker 1: Bloomberg Intelligence said, just focus on the two years you
6:24
Speaker 1: are seeing that go up. The tenure will follow. Well,
6:26
Speaker 1: maybe it is following a little bit here today up
6:28
Speaker 1: about eight basis points, but let's bring in an expert
6:31
Speaker 1: who can really answer this question. Prea Misra, Managing director
6:34
Speaker 1: and global head of rate strategy at TV Securities. So
6:37
Speaker 1: we're seeing a move up in a tenure today. This
6:40
Speaker 1: feels like what I should have been seeing all along.
6:43
Speaker 1: How do you? How are you thinking about this yield curve? Here?
6:46
Speaker 1: As we enter two hi fause thanks for having me
6:50
Speaker 1: so um Yes, I think a big puzzle for us
6:53
Speaker 1: last year was why the long end rallied. I mean,
6:55
Speaker 1: I can see why the fronting should have moved the most,
6:58
Speaker 1: as hikes will getting priced in UM, but the long end,
7:01
Speaker 1: even a faster taper, it was just rock solid and
7:04
Speaker 1: actually lower rates. And so today it could be a
7:06
Speaker 1: little bit of catchup. I think also with the rise
7:09
Speaker 1: in omicron but hospitalization staying low. You know, I think
7:13
Speaker 1: there's a general hope perhaps that the pandemic is moving
7:17
Speaker 1: to an endemic state. Risk assets are doing well, so
7:19
Speaker 1: today might be more catch up. We have a lot
7:21
Speaker 1: of data this week and I'll be watching the ice
7:23
Speaker 1: and services data particularly to see if there's any impact
7:26
Speaker 1: of omicron on that UM as well as of course
7:30
Speaker 1: we have payrolls and the minutes, and that's where I
7:32
Speaker 1: think another reason why the long end might sell off,
7:35
Speaker 1: as if they talk about balance sheet run off. I
7:38
Speaker 1: think that they clearly discussed it in that December meeting,
7:40
Speaker 1: and we think the minutes will have more in terms
7:42
Speaker 1: of when do they start that. I think that's much
7:45
Speaker 1: more bearish for the long end of the curve. So
7:47
Speaker 1: we are looking for the tenure to reach two percent
7:49
Speaker 1: by your end. You know, there's no clear catalyst today.
7:52
Speaker 1: I think it's just more a catch up. Why did
7:54
Speaker 1: that started? The longer term catalyst as well as you're
7:57
Speaker 1: thinking about inflation, right you know, with the inflation, the
8:01
Speaker 1: issue is which part of the curve gets impacted depends
8:05
Speaker 1: really on the FED reaction function. So far, it's been
8:07
Speaker 1: the front end that's been responding to inflation, because you know,
8:10
Speaker 1: the FED was responding through sooner hikes um. But if
8:15
Speaker 1: it seems as if the Freed is more cautious, and
8:17
Speaker 1: that's why I would look at the growth side. If
8:19
Speaker 1: the growth momentum starts to slow down, perhaps due to
8:23
Speaker 1: omicron or phiscal drag, we're very nervous about the expiration
8:26
Speaker 1: of the Child Act credit and other impact on the consumer,
8:30
Speaker 1: then I think the long end can start to respond
8:32
Speaker 1: to inflation, because then you should get paid up more
8:34
Speaker 1: to take on inflation risk if you're buying the tenure.
8:37
Speaker 1: But in the near term, as the FED hiking cycle
8:40
Speaker 1: is very much front and center, I think the front
8:42
Speaker 1: end is more inflation driven than the very long end
8:49
Speaker 1: by background, and so I'm not very sure I'm getting
8:53
Speaker 1: all the nuances from this feder Reserve, but it seems
8:55
Speaker 1: like the Federal Reserve is doing a very good job
8:58
Speaker 1: at telegraphing and messaging what they plan to do in
9:01
Speaker 1: two is that your take as well. Are you concerned
9:04
Speaker 1: that maybe they could make a mistake here in terms
9:08
Speaker 1: of maybe the pace or the rate at which they
9:10
Speaker 1: raise rates. Right, So, I think the market is pricing
9:13
Speaker 1: in a risk of a policy mistake because even though
9:16
Speaker 1: the start of the hiking cycle is well priced, you know,
9:19
Speaker 1: to your point, the Fed is telegraphed to hike this year,
9:22
Speaker 1: and the markets now pricing in May of this year,
9:24
Speaker 1: first hike, three hikes this year. It's really the endpoint
9:28
Speaker 1: and the piece of hikes after this year that the
9:31
Speaker 1: market is really underpricing what the fret is messaging. So
9:34
Speaker 1: either the markets calling the Fed's bluff that they won't
9:37
Speaker 1: be able to raise rates that much, or it's an
9:39
Speaker 1: idea of a policy mistake that they slow the economy
9:42
Speaker 1: down and therefore they will either have to cut rates
9:45
Speaker 1: or not be able to raise rates. So, you know,
9:47
Speaker 1: I think they've been able to telegraph the near term,
9:50
Speaker 1: but it's really how much are they going to raise rates?
9:53
Speaker 1: How much are they gonna hike next year and the
9:55
Speaker 1: year after, And this is where I think there is
9:58
Speaker 1: uncertainty both from the economic out look as well as
10:00
Speaker 1: the FED reaction function. We're going to have new FED governors,
10:03
Speaker 1: three new FED governors most likely getting added to the
10:06
Speaker 1: voting members this year, and that could also shift the
10:10
Speaker 1: dynamic into next year. So that's why I think the
10:12
Speaker 1: market is has a disconnect with what the FED is communicating.
10:16
Speaker 1: When you think about some of the near term policies,
10:20
Speaker 1: how much are you thinking about a move in March
10:24
Speaker 1: if March is a live meeting or are we looking
10:27
Speaker 1: at a federal reserve with a very very clear distinction
10:30
Speaker 1: between ending the taper and then a timeline before that
10:35
Speaker 1: we get to the right height. So before the Army
10:38
Speaker 1: cron surge, I was thinking March could be a live
10:41
Speaker 1: meeting because they're already communicated the end of tapering and
10:44
Speaker 1: they could turn around and hike right away because they
10:47
Speaker 1: have very clear um, you know, conditions that have to
10:50
Speaker 1: be meant to hike. I would say, with the Army
10:52
Speaker 1: cron surge, and you know we are asking frictions in
10:56
Speaker 1: the travel industry, in leisure, I would argue service consumption
10:59
Speaker 1: is going to be a bit slow at least to
11:01
Speaker 1: start the year off. I think the FED, or or
11:04
Speaker 1: our view is that that March meeting is not really live,
11:06
Speaker 1: that the FED will want to retain optionality, flexibility, stress,
11:11
Speaker 1: on uncertainty and therefore just wait for the data after
11:14
Speaker 1: the omicron spike is behind us in the US, which
11:17
Speaker 1: is probably only by the end of the first quarter
11:19
Speaker 1: for the country, so which is why we think it's
11:22
Speaker 1: more in the second quarter that they can evaluate how
11:25
Speaker 1: much did domicron impact growth and whether their conditions to hike,
11:29
Speaker 1: which is both inflation and on the labor market, whether
11:32
Speaker 1: those are met. So that's why we're looking for the
11:34
Speaker 1: first hike only in June. Um But I would say
11:37
Speaker 1: that it's really a function on of how the economy
11:40
Speaker 1: shows down. All right, prea, thank you so much for
11:43
Speaker 1: joining us yet again, Pa Miserable, Managing director and Global
11:47
Speaker 1: head of rate Strategy at t D Securities. Otherwise on
11:50
Speaker 1: as Toronto Dominion. Did you know that I did? I
11:54
Speaker 1: did know that. Okay, there shortening up these names, trying
11:57
Speaker 1: to get a little bit cuter, I guess. But teacher
12:00
Speaker 1: Curities there premus record. Well, we've got markets at or
12:05
Speaker 1: near all time high. So when I was in my
12:07
Speaker 1: investment banking days, I would just tailor pick up the
12:10
Speaker 1: phone and call my clients and say, Hey, your stocks
12:12
Speaker 1: in an all time high. Let's go issue some stock.
12:14
Speaker 1: How how creative was that? How was that? Is that
12:18
Speaker 1: adding value or not? You know so? But the question
12:21
Speaker 1: is and a lot of those phone calls were made
12:23
Speaker 1: in one and the question is what do we do
12:25
Speaker 1: here in two? Um, let's bring in our next guess
12:28
Speaker 1: he's got some thoughts here he's going to share with us.
12:31
Speaker 1: Greg Flasnik, CEO of m Z North America. Greg, thanks
12:36
Speaker 1: so much for joining us here again. A good, great,
12:40
Speaker 1: slash really lucrative year for I p O slash spank
12:45
Speaker 1: spack bankers in twenty one, how about two? Yeah? You know,
12:53
Speaker 1: I think you know, two thousand twenty one was a
12:55
Speaker 1: record year for I p O s And I think
12:58
Speaker 1: if you look back at the beginning twenty one, you know,
13:01
Speaker 1: the start of COVID vaccines were rolling out, at global
13:04
Speaker 1: rebound of economies, We've seen a lot of liquidity accelerated
13:09
Speaker 1: by government stimulus and and all of this has resulted
13:12
Speaker 1: in quite a bit of optimism for the global IPO
13:15
Speaker 1: market um with with investor sentiment at peak UM. But
13:20
Speaker 1: I think if you look at you know, the next year,
13:23
Speaker 1: the year where now I guess two thousand twenty two, Um,
13:27
Speaker 1: you know, I feel that that momentum should continue at
13:31
Speaker 1: least into the first quarter of twenty two. I think
13:33
Speaker 1: that the spack vehicle is is um a great way
13:37
Speaker 1: of our companies to go public, and I think it's
13:40
Speaker 1: something that's here to stay. It certainly doesn't have the
13:43
Speaker 1: kind of risk that investors perceived, you know, maybe ten
13:46
Speaker 1: years ago. UM. And I think you know, if you
13:49
Speaker 1: if you look at the back market in twenty one,
13:52
Speaker 1: there was a lot of this bad of celebrities back sponsors, right,
13:56
Speaker 1: So I think you're gonna see less of this um
13:59
Speaker 1: and more from the serial spack sponsors sponsors eventually, but
14:03
Speaker 1: in the near term pullback from the serial spack sponsors,
14:05
Speaker 1: allowing what's already in the market. They're they're waiting for
14:09
Speaker 1: time to source and executed transaction UM as we are
14:13
Speaker 1: seeing a prolonged the spack process. So UM. You know
14:17
Speaker 1: what I mean by that is, you know, it could
14:19
Speaker 1: be completed in the little or three months, it's now
14:21
Speaker 1: taken closer to six months on average um UM. But
14:25
Speaker 1: but I think you know, for I p O candidates,
14:28
Speaker 1: undoubtedly they're up against some higher market volatility and and
14:32
Speaker 1: I just think it's important to remain flexible with with
14:35
Speaker 1: companies capital raising plans um in the event in I
14:38
Speaker 1: p O timeline is the way due to a shift
14:41
Speaker 1: in market conditions. But bottom line, I think high valuations
14:45
Speaker 1: and market liquidity are going to keep the I p
14:47
Speaker 1: O market hop as um we worked in the two
14:50
Speaker 1: twenty two and as Paul mentioned, you know, good for
14:52
Speaker 1: these companies taking advantage of some of these high valuations,
14:55
Speaker 1: but for investors maybe not so much. I'm taking a
14:58
Speaker 1: look at our spack index in our I p O
15:00
Speaker 1: index both ridden down. We have a speck index we
15:04
Speaker 1: do it is the I p O X Stack Index.
15:07
Speaker 1: Very cool. Spack index go on the terminal. Those were
15:10
Speaker 1: down last year ten relative to the SMP which is up.
15:15
Speaker 1: So how do investors start to perhaps maybe differentiate or
15:19
Speaker 1: start to be more discerning with what stacks or what
15:22
Speaker 1: I p O s they should be in. That's right,
15:25
Speaker 1: and I think there there was a time where, you know,
15:28
Speaker 1: we saw that again the the investor sentiment, the rise
15:32
Speaker 1: of the retail investor, where you know, in my business,
15:35
Speaker 1: I saw you know, people just basically buying anything that
15:38
Speaker 1: was an I p O or anything that was back,
15:40
Speaker 1: and certainly that is in a winning strategy. So I
15:43
Speaker 1: think just just having discipline in your investment criteria and
15:46
Speaker 1: deciding kind of what you know, really what you know,
15:49
Speaker 1: what is meaningful to you, and what you think ultimately
15:52
Speaker 1: would work. But um, you know, there is going to
15:55
Speaker 1: be a lot of annoys. There's always going to be
15:56
Speaker 1: winners and losers. And I think, just especially as it
15:59
Speaker 1: were ways to the retail investor, typically we see the
16:02
Speaker 1: sort of work best where people kind of have some
16:05
Speaker 1: sort of uh, I guess relation to the company about
16:10
Speaker 1: going public. I mean, what does it do for me?
16:12
Speaker 1: Why can I relate to this? Hey, Greg, thanks so
16:15
Speaker 1: much for joining us. I really appreciated getting your thoughts
16:17
Speaker 1: here on the new issue market. I p o S
16:20
Speaker 1: SPACs markets all time high. I'd be making a phone
16:23
Speaker 1: call to my clients saying, let's push some stock out
16:25
Speaker 1: the dork. Greg Lasnick, CEO of m Z North America
16:34
Speaker 1: looking at Tesla today to stocks up over ten it
16:37
Speaker 1: sounds like they're actually or looks like they're actually pretty
16:40
Speaker 1: good at making this, making these cars, that it's not
16:43
Speaker 1: just a tech story anymore. But let's bring in Dan
16:45
Speaker 1: Eys because he's been very bullish on Tesla and Tech
16:48
Speaker 1: and he's been very right. Dan Eyes, managing director and
16:51
Speaker 1: senior equity analysts for web Bush Securities, also a product
16:54
Speaker 1: of Happy Valley. Uh Dan, thanks so much for joining
16:57
Speaker 1: us here. So it turns out Tesla was how to
17:00
Speaker 1: make a lot of cars, don't they And they know
17:04
Speaker 1: how to make them despite the chip shortage. I think
17:07
Speaker 1: that Paul I didn't. That's the big day. I mean,
17:09
Speaker 1: the chip shortage probably took thirty thirty five cars off
17:13
Speaker 1: the quarter, So you start to add those, you're looking
17:16
Speaker 1: at something close to three and did this was it
17:20
Speaker 1: was a trophy keys quarter for Tessa in terms of
17:23
Speaker 1: what we're seeing demand and a lot of it's China.
17:26
Speaker 1: I mean, we think China loans worth about five hundred
17:28
Speaker 1: dollars per shared of the story in terms of everything
17:31
Speaker 1: we're seeing going in two thousand twenty two. Interesting when
17:35
Speaker 1: we talk about this, where is Tesla relative to some
17:39
Speaker 1: of the other competitors, Because you've talked a lot about
17:42
Speaker 1: some of the other big tech companies coming in maybe
17:44
Speaker 1: being able to compete, But who is a Tesla competitor
17:47
Speaker 1: at this point? Yeah, I mean tell it's a great
17:50
Speaker 1: question because the competition now is starting to expand, not
17:55
Speaker 1: just some auto players, but even technologies and We expect
17:58
Speaker 1: Apple to get into the e V game over the
18:00
Speaker 1: next few years. I think Amazon, Google and others because
18:04
Speaker 1: it's a five trillion dollar green tidalwing. But when you
18:07
Speaker 1: look at the core competitors or Tesla, it's really Ford
18:11
Speaker 1: GM in the US, and then of course VW and
18:14
Speaker 1: Europe and in China you've got Neo x Pinion others.
18:17
Speaker 1: But it's important because you look at the scale that
18:21
Speaker 1: they have, it's unmatched, and I think that's something that
18:24
Speaker 1: still is underappreciated by the street. Once you get Berlin
18:28
Speaker 1: in Austin and they'll have capacity of over two million
18:31
Speaker 1: units going in two thousand twenty two, Dan, how do
18:35
Speaker 1: you think Tesla wants to position itself from a marketing perspective?
18:40
Speaker 1: Once we have the vw is and the Fords and
18:43
Speaker 1: the gms, you know, with a full array of e vs,
18:48
Speaker 1: how does Tesla want to position themselves in this marketplace? Yeah,
18:52
Speaker 1: I mean they definitely were on the high end as
18:55
Speaker 1: we saw the sn X. But but but the core
18:58
Speaker 1: winchpin to Tesla growth is going to be in that
19:01
Speaker 1: forty to fifty k range with probably additional software on
19:05
Speaker 1: on top of that. It's a cachet that they've built,
19:07
Speaker 1: remember without any formal marketing, because Tessa has become synonymous
19:11
Speaker 1: with EVS and a lot of that is related to
19:14
Speaker 1: Musk and everything that him and the team have built.
19:18
Speaker 1: And no doubt competition is going to significantly increase. But
19:21
Speaker 1: what's important today, I mean E d S is still
19:23
Speaker 1: only three automobiles in the world when that goes at
19:27
Speaker 1: ten by two thousand and for test of the big
19:30
Speaker 1: opportunity now they can get card into consumer's hands. That
19:35
Speaker 1: is ultimately the key, and it's something where the average
19:37
Speaker 1: consumer when they look at EVS, they're looking why should
19:41
Speaker 1: I not buy a Tesla? And I think that's something
19:44
Speaker 1: they put themselves into the same situation as the Apple
19:47
Speaker 1: when it comes to iPhone. Are you talking about the
19:49
Speaker 1: US consumer or increasingly a Chinese consumer, Well, the China
19:54
Speaker 1: is the winchpin. That's the key to the bull thesis.
19:57
Speaker 1: I mean China, we can that would be about four
19:59
Speaker 1: percent plus deliveries for testing two thousand twenty two. And
20:03
Speaker 1: that's why China is so key because also the profitability
20:07
Speaker 1: on these vehicles. Now test is a profitable story. They
20:10
Speaker 1: can have thirty dollars earnings, how about two? Wow? That
20:14
Speaker 1: is China driven. And if it sounds familiar because that
20:17
Speaker 1: company and Cupertino, what's been a key part of their growth.
20:20
Speaker 1: It's China for Apple. So you look at what Apple
20:23
Speaker 1: and Teslam and Musk is really taking a playbook out
20:26
Speaker 1: of Apple. Dan, I'm looking at the Bloomberg Ternel right now.
20:29
Speaker 1: They a and our function an analyst recommendation. Of course,
20:32
Speaker 1: we have an apperform rating on the stock and I
20:34
Speaker 1: see a fourteen hundred price target. What's the catalyst to
20:37
Speaker 1: get us from you know, eleven sixty six here too? Well,
20:43
Speaker 1: I think the key catalyst is as we get into
20:47
Speaker 1: the earnings season over the next call at three or
20:50
Speaker 1: four weeks, it's really must talk about chip shortage because
20:53
Speaker 1: if chip short just starting to moderate, which we believe
20:55
Speaker 1: it is, then all of a Sudden's street numbers and
20:58
Speaker 1: they could go up two h thousand units, you know
21:00
Speaker 1: for the year. That means profitability could be up thirty
21:05
Speaker 1: relative to what the streets modeling. That's a cattle. The
21:08
Speaker 1: second catalyst is around battery technology. That's a big part
21:11
Speaker 1: of their mood. I think improvements they are specifically on
21:14
Speaker 1: costs side or significant to the Tesla story, and I
21:18
Speaker 1: think those are some of the catalyst. We'll have some
21:20
Speaker 1: white knuckle periods that we always do, and there's always
21:23
Speaker 1: gonna be some side circuits shows. But if you look
21:25
Speaker 1: at the fundamentals, that's really what I think stood out
21:29
Speaker 1: When you look at what Tesla din is que for.
21:32
Speaker 1: Take us outside Tesla as well other big tech because
21:35
Speaker 1: you cover it all. What are you looking for to
21:38
Speaker 1: be one of the best performers or a better stock
21:42
Speaker 1: from a fundamental basis as we head into this year. Yeah,
21:46
Speaker 1: I mean, we could talk about fed raising rates, risk
21:48
Speaker 1: off valuation until it blue in the face, but it
21:51
Speaker 1: comes down to the dynamic streets, underestimating his growth. And
21:55
Speaker 1: know why that growth I think is in software and
21:57
Speaker 1: cyber security. You look at names of software besides just Microsoft,
22:01
Speaker 1: which you know, I think will be a three trillion
22:03
Speaker 1: dollar mark AP two thousand twenty two. You know, I
22:05
Speaker 1: look at some of these names in terms of cyber
22:08
Speaker 1: secure names like g Scale or Tenable, pow Out though
22:11
Speaker 1: among others. I think you also gonna have a lot
22:14
Speaker 1: more m n A with the cloud cyber security, and
22:17
Speaker 1: that's why you can't lump them all into the same bucket.
22:22
Speaker 1: Work from home e commerce, you'll start to see some
22:24
Speaker 1: of the frost come on. When you look at Cloud,
22:27
Speaker 1: cyber Security five and some of the core names like Apple,
22:31
Speaker 1: the spending is actually accelerating, not decelert And that's the
22:34
Speaker 1: important Dan. You mentioned Coupertino, So I gotta ask you
22:38
Speaker 1: for your call for Apple. Look, I mean for Apple,
22:45
Speaker 1: it's right now we're about twelve million demand outstrip and
22:49
Speaker 1: supply and units. Because of the shortage that that holds
22:52
Speaker 1: me alongates the March in June growth that will see
22:55
Speaker 1: for Apple. I still think this is an iPhone cycle.
22:59
Speaker 1: Underest my aby the street it would be too forty
23:02
Speaker 1: million units for the year. And then I think they
23:05
Speaker 1: finally released Apple Glass by the summer that could add
23:08
Speaker 1: twenty hours per share the air of your headset. And
23:11
Speaker 1: I think Apples one where it's all about monetization, and
23:14
Speaker 1: we think the services business saloon is worth one point
23:18
Speaker 1: five trillion. That continues to be the rerating. Like we've said, Paul,
23:23
Speaker 1: they hate, They hated a trillion, despised two trillions, and
23:27
Speaker 1: they're just screaming at three trillion. What caters will hate
23:31
Speaker 1: it is what it is, all right, Dan, What we
23:34
Speaker 1: love about you, consistent and with great conviction on your calls.
23:39
Speaker 1: We appreciate that and appreciate getting your time. Dan ives
23:41
Speaker 1: he's a managing director senior equity analysts at Wedbush Security,
23:45
Speaker 1: is proud alumnus of the Penn State University. I wrote
23:49
Speaker 1: a lot of tuition checks the pen Penn State University,
23:51
Speaker 1: so I have a particular affinity, uh for there. But
23:54
Speaker 1: Dan has been not just really good here on this
23:56
Speaker 1: Tesla story. Uh, and it's really been amazing to watch it.
23:59
Speaker 1: Just the tech analysts get it. The auto analysts by
24:03
Speaker 1: and large have not historically but really shown that they
24:07
Speaker 1: can make a lot of cars there. Thanks for listening
24:10
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