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Virgin Galactic Reaches New Heights · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
0:04
Speaker 1: my co host Matt Miller. Every business day, we bring
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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
0:15
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. Taylor, when I was
0:22
Speaker 1: a kid, it was about space was big. We had
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Speaker 1: the Apollo program. Um, you know, we'd watch it from
0:28
Speaker 1: school in our classrooms. Launches and splashdowns in the middle
0:31
Speaker 1: of the ocean. We have people walking on the moon.
0:33
Speaker 1: It was really really cool time. Space is making a
0:37
Speaker 1: big comeback. You know, it's been kind of quiet since
0:39
Speaker 1: the Space Shuttle era, but it's making a big comeback.
0:41
Speaker 1: And now we've got billionaires going up seemingly weekly here
0:45
Speaker 1: into space or Richard Branson over the weekend. I think
0:47
Speaker 1: we've got Jeff Bezos and a matter of days and
0:49
Speaker 1: then Elon Musk is out there somewhere. I'm sure, um,
0:53
Speaker 1: let's get an over you what's going on in the
0:55
Speaker 1: world of space. Laura for Sick Space analysts and owner
0:58
Speaker 1: of Astroltical, author of rise of the space age millennial.
1:02
Speaker 1: She's also NASA subject matter expert for Planetary Science Missions. Laura,
1:08
Speaker 1: this is really a cool time for space travel and
1:11
Speaker 1: people that are really into space travel. UM, give us
1:15
Speaker 1: your sense, your takeaway on the importance of Sir Richard
1:19
Speaker 1: Branson's flight yesterday and the upcoming Jeff Bezos flight. What
1:23
Speaker 1: does it tell you about the future of space travel.
1:26
Speaker 1: This is really a great time because this is the
1:28
Speaker 1: emergence of true commercial private space flight. Where back in
1:32
Speaker 1: the two thousands we saw commercial space flight beginning with
1:35
Speaker 1: tourists going to the International Space Station, but through Russian
1:38
Speaker 1: rockets and Russian training, and now we're seeing purely commercial
1:42
Speaker 1: efforts where um, just now yesterday we saw Richard Branson
1:46
Speaker 1: and a crew flying on his own rocket through Virgin
1:49
Speaker 1: Chalactic and then, as you said, in about eight days,
1:51
Speaker 1: we're going to see Jeff Bezos and his crew fly
1:55
Speaker 1: on a Blue Origin rocket. And then later this year
1:58
Speaker 1: in September, we're gonna see a crew go to um
2:02
Speaker 1: orbital space and just orbit Earth for a few days
2:05
Speaker 1: through the inspiration formission with Space Sex. So lots of
2:08
Speaker 1: really great private spacelight going on, Laura, is it okay
2:12
Speaker 1: to ask sort of how you're thinking about the difference
2:15
Speaker 1: between the Virgin Galactic versus the Blue Origin. There's differences,
2:20
Speaker 1: I believe in one has a few pilots. One I
2:23
Speaker 1: think is more automated. Is there a difference in the
2:26
Speaker 1: way you're thinking about profitability for these companies or just frankly,
2:32
Speaker 1: the technicals of of going up there on on two
2:35
Speaker 1: or three different different ships that are operated differently. You're
2:39
Speaker 1: exactly right, there's a there's a big difference between the two.
2:42
Speaker 1: So one yesterday we saw was a carrier plane that
2:44
Speaker 1: released a space plane that launched with two pilots and
2:47
Speaker 1: four passengers. And the one that we're going to see
2:50
Speaker 1: in eight days Blue Origin is the traditional rocket with
2:52
Speaker 1: a capital on top and a capsule separates and lands
2:55
Speaker 1: with parachutes. So that is a difference in approach, and
2:58
Speaker 1: we're going to have to see how the market plays
3:00
Speaker 1: out on whether customers prefer one method or the other,
3:03
Speaker 1: or whether safety plays out one method or the other.
3:05
Speaker 1: But I think it's too early to say that one
3:07
Speaker 1: is better than the other. I think we're just gonna
3:09
Speaker 1: have to see, and I will go on both of them.
3:11
Speaker 1: I'm sure you and I would too. I'm not sure
3:13
Speaker 1: two or fifty thousand dollars a seat though, but for
3:16
Speaker 1: a lot of folks probably worth it. So, Laura, what's
3:19
Speaker 1: the what are like next steps do you think for
3:22
Speaker 1: the commercialization if you will, of space and space travel?
3:26
Speaker 1: What are there? I mean, these things are great, Uh,
3:28
Speaker 1: it's really interesting, but what are the next steps? We're
3:31
Speaker 1: seeing these two sub orbital carriers come online with paying
3:35
Speaker 1: passengers and also science. There's science has being done. There
3:39
Speaker 1: was a science experiment on the one yesterday, So there's
3:41
Speaker 1: some really great opportunities there for not just rich tourists,
3:45
Speaker 1: but also for research institutions, NASA and other governments that
3:49
Speaker 1: might be able to fly their science or do training
3:51
Speaker 1: for astronauts. There's also think I said, space X, who
3:54
Speaker 1: is going to be flying not just um, not just
3:56
Speaker 1: paying people to the International Space Station as they've been
3:59
Speaker 1: doing with the astronauts since last year, but also just
4:02
Speaker 1: in orbit around the Earth and a free flyer just
4:05
Speaker 1: doing a crew dragon fleece free flyer not even attached
4:07
Speaker 1: to the space station. But speaking of space stations, there
4:10
Speaker 1: are going to be private space stations coming on board
4:13
Speaker 1: in the next decade, so we should see companies like
4:15
Speaker 1: Axiom Space and others starting to put up space stations
4:18
Speaker 1: that will um work with the International Space Station and
4:21
Speaker 1: eventually replace the International Space Station. It's just incredible, I
4:25
Speaker 1: think when you think about how far we've come, Paul
4:27
Speaker 1: in the last even just decade in terms of commercial
4:31
Speaker 1: space flight, and and Laura, I mean it's interesting hearing
4:34
Speaker 1: some funny conversations earlier this morning that eventually we'll run
4:39
Speaker 1: out of billionaires who can afford this, and it'll want
4:42
Speaker 1: to be more mass market. How are you thinking about
4:46
Speaker 1: pricing and making it more affordable? What does that look
4:50
Speaker 1: like to you? Right so, right now, a trip to
4:53
Speaker 1: the International Space Station costs roughly fifty million dollars. There's
4:56
Speaker 1: not many people who can't afford that, but a trip
4:58
Speaker 1: to several will space is were affordable for for a
5:01
Speaker 1: larger group of people. Still not me, but as you said,
5:04
Speaker 1: roughly a quarter of a million dollars. We don't know
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Speaker 1: the price that Blue Origin is going to sell their
5:08
Speaker 1: tickets for um, and that might be affordable for people
5:10
Speaker 1: who save up enough money or for people who are sponsored.
5:13
Speaker 1: There's a group called Space for Humanity and other groups
5:16
Speaker 1: that are trying to sponsor the quote unquote normal people
5:19
Speaker 1: who can fly on suborbital space flight. Um. And then
5:22
Speaker 1: as this technology become more and more common, just as
5:25
Speaker 1: other technologies started out with the wealthy and then we're
5:28
Speaker 1: brought downs in price to make it more accessible to
5:31
Speaker 1: the common person. The theory is that will happen with
5:34
Speaker 1: spaceflight as well. So Laura just want to get a
5:37
Speaker 1: sense here what I grew up again, It was NASA,
5:39
Speaker 1: It was the U. S. Government leading the way. My
5:42
Speaker 1: question now is where is NASA in the global space
5:46
Speaker 1: competitive race visa v. China, Russia. Where we as a
5:50
Speaker 1: country now as becomes you know, maybe some of the
5:53
Speaker 1: responsibility shifts from NASA to these commercial entities. NASA is
5:58
Speaker 1: very focused on its Artemis program right now, which is
6:00
Speaker 1: going to send the next the next man, and the
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Speaker 1: first woman and the first person's color to the Moon.
6:06
Speaker 1: It is as soon as four and that's really exciting
6:09
Speaker 1: because there is a bit of a jew political competition
6:12
Speaker 1: there because the Chinese and the Russian partner to do
6:15
Speaker 1: a winner base as well. It's in a different time frame,
6:17
Speaker 1: about a decade later than NASA intends to. But NASA's
6:20
Speaker 1: partnering with countries all around the world something called the
6:23
Speaker 1: Artemis Accords where they partnered with twelve countries around the world. Um,
6:27
Speaker 1: it's gonna be a real international partnership there. It's not
6:29
Speaker 1: going to be like the Apollo program where it was
6:31
Speaker 1: mainly you focused on the United States. This is really
6:34
Speaker 1: going to be an international partnership. We even have a
6:36
Speaker 1: Canadian astronaut confirmed to fly with American astronaut on the
6:40
Speaker 1: Artemist mission around the Moon before the first woner landing
6:43
Speaker 1: in the Artemist three mission. So that's really exciting to
6:45
Speaker 1: see us finally returned back to the Moon. Laura, I'm
6:49
Speaker 1: going to get a lot of hate mail for this,
6:51
Speaker 1: but it's my job to ask, so I'm going to
6:52
Speaker 1: ask it anyways. I'm going to try to do this
6:54
Speaker 1: in the nicest way possible as a space analyst, what
6:58
Speaker 1: is the risk the headline risk around the carbon footprint.
7:03
Speaker 1: I mean, you think about all the focus on going
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Speaker 1: green and protecting our planet and then you have a
7:08
Speaker 1: bunch of billionaires who are going into space for fun.
7:11
Speaker 1: Is there a risk of any backlash on wondering what
7:15
Speaker 1: this is doing to the environment. It's no more harmful
7:20
Speaker 1: to the environment than the other types of transportation that
7:22
Speaker 1: we use is a key that's a key point right there,
7:25
Speaker 1: right that we need to be responsible and how we
7:28
Speaker 1: develop our technology and improve our technology to be responsible
7:31
Speaker 1: stewards of Earth. And one thing that I would like
7:34
Speaker 1: to personally experience I've only heard from other astronauts is
7:36
Speaker 1: something called the open view effect where people who see
7:39
Speaker 1: the Earth from above, whether that's in orbit or in
7:42
Speaker 1: SubOrbit um, they come across a different perspective where they
7:46
Speaker 1: actually feel more environmentally connected to our planet. So that
7:50
Speaker 1: might be a way that changes people's minds and makes
7:52
Speaker 1: them more environmentally conscious by seeing our Earth as one
7:55
Speaker 1: fragile planet. Hey Laura, thanks so much for joining us,
7:58
Speaker 1: or really appreciate you coming on and sharing your thoughts.
8:01
Speaker 1: Law Force like space annalys and owner of Asterioltical, also
8:05
Speaker 1: rise of the Space age millennials. This is Bloomberg. You know.
8:11
Speaker 1: As I talked to Tom Keane, as I typically do,
8:14
Speaker 1: it's always a question of when do we get Tom
8:16
Speaker 1: into this market. He's in that triple leverage all cash
8:18
Speaker 1: fund and uh, he always feels like he's missed his opportunity.
8:22
Speaker 1: But here we are at all time highs again for
8:25
Speaker 1: the equity Indusseries is it time to raise cash? What
8:28
Speaker 1: do we do here? David ko Talk, chairman and chief
8:31
Speaker 1: investment officer Kumblin Advisors, joins us. I believe he's in
8:34
Speaker 1: Colorado today. Why would you be in Florida when you
8:37
Speaker 1: can be in Colorado in uh the summer. David, thanks
8:40
Speaker 1: so much for joining us here. Again, what do we
8:42
Speaker 1: tell our good friend Tom Keane about these equity markets? Well,
8:47
Speaker 1: thank you very much, fall and I gathered Taylor as
8:50
Speaker 1: with you, and it's very nice to chat with old
8:53
Speaker 1: friends from Summit County, Colorado, where nine thousand feet nice
8:57
Speaker 1: and you just announced Webber Grill and I would say,
9:01
Speaker 1: if Taylor and you can find your way to Colorado,
9:05
Speaker 1: I will cook you a steak on the deck on
9:08
Speaker 1: that Webb grilled sole. As for Tom Kane and what
9:13
Speaker 1: he should do with cash, I can't say, but I
9:16
Speaker 1: can tell you we have built a cash reserve here recently.
9:20
Speaker 1: We are not fully invested. Um. It's been a marvelous
9:24
Speaker 1: first quarter, much beyond anyone's expectations. And my grandfather, bless
9:31
Speaker 1: his memory, taught me you never get hurt taking some profits.
9:35
Speaker 1: So we took a part of the profits of the
9:38
Speaker 1: first quarter where we had achieved in six months what
9:41
Speaker 1: we thought we would achieve in the whole year, and
9:44
Speaker 1: we banked a little and are waiting for opportunity. The
9:48
Speaker 1: rest of the portfolios in the United States et F
9:52
Speaker 1: structured portfolio, the U S. E t F portfolio is
9:58
Speaker 1: heavily overweight. The health sector almost double market wait market
10:03
Speaker 1: wait for the if you look at the sectors is
10:05
Speaker 1: approximately four or so. We're about twenty eight, very broadly
10:11
Speaker 1: diversified within healthcare, devices, parmaceutical, biotech, the gamut structured with
10:19
Speaker 1: E t F, and we believe the pandemic is not
10:23
Speaker 1: over long haul Covid is with us for a while,
10:28
Speaker 1: maybe years, and the healthcare sector has a monumental task
10:33
Speaker 1: ahead of it and will step up and deliver results
10:36
Speaker 1: as best as it care. You know, David, we love
10:39
Speaker 1: getting you on this program more than just the opportunity
10:43
Speaker 1: to have you grill us some stakes. You mentioned you're
10:45
Speaker 1: not fully invested, and I am curious, what would it take.
10:50
Speaker 1: What is the opportunity? Is it a ten pullback? What
10:54
Speaker 1: is it that you would be willing to commit more cash? Well,
10:59
Speaker 1: I think there's several major issues about which there's uncertainty.
11:05
Speaker 1: Uncertainty means you can't put probabilities on that. Taylor. We
11:09
Speaker 1: don't know where this China initiative, which is anti US,
11:14
Speaker 1: anti capital markets, pulling I p o s, putting on restrictions,
11:19
Speaker 1: dealing with two hundred and fifty securities of various types
11:23
Speaker 1: that trade in the United States, is going to lead us.
11:27
Speaker 1: We have a capital market conflict between the United States
11:30
Speaker 1: and China, the two largest economies in the world number one.
11:34
Speaker 1: We don't know where that goes, but it can't be pretty. Second,
11:37
Speaker 1: we don't have herd immunity in the United States, and
11:40
Speaker 1: we have twenty five of the population that is rejecting science.
11:47
Speaker 1: Now there's a debate about science, no question about it,
11:51
Speaker 1: but there's also evidence. And when you look around, you
11:55
Speaker 1: see that the vaccination rollout is not work being completely
12:01
Speaker 1: as expected. You then you look at the rest of
12:04
Speaker 1: the world and you say, there's six point eight billion
12:07
Speaker 1: people out of seven point eight billions that have not
12:10
Speaker 1: had a vaccination at all. They're in places where public
12:14
Speaker 1: health systems are deficient. So these are massive shocks in
12:20
Speaker 1: addition to fires and climate change as a massive shock.
12:25
Speaker 1: So what do you do when you have several black
12:28
Speaker 1: swans flying around in the flock. You pause, you put
12:34
Speaker 1: some cash on the side, you wait, you say, I
12:37
Speaker 1: don't know, and therefore I've had a great run in
12:41
Speaker 1: the stock market recovery. Now I need to pause, and
12:45
Speaker 1: that's what we're doing when we redeploy and where remains
12:49
Speaker 1: to be seen were open, but we're not committing to
12:52
Speaker 1: that now. David, about thirty seconds left. What is what
12:56
Speaker 1: do you think will be the next movement by this
12:58
Speaker 1: foot to reserve? Well, I think that FAID doesn't do
13:02
Speaker 1: anything until they get to the Jackson Whole meeting, and
13:05
Speaker 1: then they have to soft gradualistically, very baby steps, try
13:13
Speaker 1: to ease back on easing, a very difficult task or
13:17
Speaker 1: any central bank, especially ours, under these circumstances. That's how
13:21
Speaker 1: it looks to Bigful. All right, David, thank you so much.
13:24
Speaker 1: We as always appreciate your time. Enjoy the cool weather,
13:29
Speaker 1: hopefully out in ten thousand feet in Colorado. David Ko talk,
13:32
Speaker 1: chairman and chief investment officer Cumbling Advisors again. They have
13:35
Speaker 1: about three billion dollars in assets under management, and I
13:38
Speaker 1: love Taylor, David. He tells you exactly what he's doing
13:41
Speaker 1: with his cash, whether he's building cash, putting it to work.
13:44
Speaker 1: It's really an interesting perspective, and he's one of the
13:47
Speaker 1: guys that is the in the middle of all the
13:51
Speaker 1: craziness of Muni bonds and the technicals and actually manages
13:54
Speaker 1: to sit down and explain it to you and great
13:56
Speaker 1: Muni portfolio as well. So that's certainly some fun memories. Well,
14:03
Speaker 1: I'm gonna bring it. Ben Emmon's managing director of Global
14:05
Speaker 1: macro Strategy at Medley Global Advisors, because I get his
14:09
Speaker 1: research notes and the problem with his research notes is
14:12
Speaker 1: he writes just too many of them, so whenever they
14:14
Speaker 1: hit my inbox, I gotta stop. But I'm ever I'm
14:16
Speaker 1: doing and read them because there's always good stuff in there.
14:19
Speaker 1: But before we get the earnings and markets and all
14:21
Speaker 1: that kind of stuff, I'm gonna talk space with Ben. Ben.
14:24
Speaker 1: We saw sir Richard Branson go into space over the weekend.
14:28
Speaker 1: Is this a business as as an investor? Do you
14:31
Speaker 1: pay attention to that kind of stuff? Hi? Thanks for
14:35
Speaker 1: having us, Yeah, you'll pay attention. You know, it was
14:38
Speaker 1: obviously an amazing moments. I have to have this commercial
14:41
Speaker 1: flights into space. You know what I think is really
14:44
Speaker 1: good by Richard Branson is you know, he's the CEO
14:46
Speaker 1: of the company, and he takes the risk right to
14:48
Speaker 1: go up there because it's not without risk, and then
14:51
Speaker 1: comes down back to Earth safety and says, I just
14:54
Speaker 1: did the customer experience that just showed you live on
14:56
Speaker 1: Twitter in the capsule what you can experience me go
15:00
Speaker 1: up in space. Right, So you know that's a perfect
15:02
Speaker 1: marketing strategy. But it does highlight how far we've gotten
15:06
Speaker 1: with this technology. And he spoke to that this was
15:08
Speaker 1: not he was dreaming about this like two thousand and
15:11
Speaker 1: four because of seven so that they were working on
15:13
Speaker 1: these plans to get themselves up in space. So I
15:17
Speaker 1: guess what will happen in the future will go a
15:19
Speaker 1: lot faster. Now we're gonna get a lot more flights
15:21
Speaker 1: in the future. And if you look at that business,
15:23
Speaker 1: you know they estimate that the total valuation of space economy.
15:28
Speaker 1: So to speaks about how the fifty eight billion, which
15:31
Speaker 1: is a lot of different elements to it, but you know,
15:34
Speaker 1: as in space exploration and all kinds of industrial activity,
15:38
Speaker 1: but that can become significantly larger with events every so yesterday,
15:43
Speaker 1: So I think if I would put my mind into
15:46
Speaker 1: Kathy Wood's mind, I'd say, like she's probably right, like
15:48
Speaker 1: this is a a new industry and Richard Branson just
15:52
Speaker 1: took this right up lead bound with a rocket right
15:55
Speaker 1: there yesterday. You know, you want to talk about other
15:58
Speaker 1: things that the market is certainly in attention to. Ben.
16:01
Speaker 1: We love that you can go across a set for us,
16:03
Speaker 1: from space tourism to bond yields, and I feel like
16:06
Speaker 1: we're at that sweet spot where we were happy that
16:09
Speaker 1: bond yields came down because of the way that that
16:12
Speaker 1: can inflate some of the equity valuations, but it's also
16:16
Speaker 1: given us a little bit of a worrying signal about
16:18
Speaker 1: the future of economic growth. Where are you in the
16:21
Speaker 1: sweet spot of what yields are telling you at this moment?
16:26
Speaker 1: You're right, Taylor, there is you know something about the
16:29
Speaker 1: climbing yields in an environment where economic data is really strong.
16:33
Speaker 1: It doesn't coinciber one another. And it reminds me a
16:36
Speaker 1: little bit of you know, prefinential crisis and the two
16:40
Speaker 1: five beer. You know, really strong economy, strong housing market,
16:43
Speaker 1: a lot of confidence, but yields with data decline. So
16:46
Speaker 1: there is a bit of a dynamic on the one
16:48
Speaker 1: hand of positioning that's that's causing that so people were
16:51
Speaker 1: short and get wrong fooded is I think improved message
16:55
Speaker 1: by theF fect just like back then, maybe someone more
16:57
Speaker 1: predictable what we can expect it. There's a tapering, but
17:00
Speaker 1: there's also something about the economy itself and be made
17:03
Speaker 1: gotten to a point of of a form of overheating,
17:07
Speaker 1: and the bond market is said like, you're gonna start
17:09
Speaker 1: cooling off. So I come down on that debate that
17:11
Speaker 1: yields probably this low reading because we're maybe maybe somewhat
17:15
Speaker 1: of a cooling economy and that keeps you know, the
17:18
Speaker 1: balances in the markets pretty solid. Right, we have low volatility,
17:22
Speaker 1: stock market is doing fairly well. If anything, the rotation
17:26
Speaker 1: back into the tech is also supporting other sectors. Ahead
17:30
Speaker 1: of these earnings, I think low yields play into the
17:32
Speaker 1: people's mind like, yes, the economy is not in the
17:34
Speaker 1: recession of anything, it's just moderating against really strong earnings.
17:38
Speaker 1: So I think it's it's good for markets. Ben We're
17:41
Speaker 1: gonna have the large finance institutions begin to report earnings
17:44
Speaker 1: this week. What are you looking for? Yeah, I think
17:47
Speaker 1: that the banks itself have obviously a tremendous base effect
17:51
Speaker 1: and they're earning some last year. You know, your your
17:53
Speaker 1: colleague and the Martins has these great charts on that,
17:57
Speaker 1: and I looked up yesterday. The year and year growth
17:59
Speaker 1: rate is unbelievable. Will will see in the next few
18:01
Speaker 1: days it could be could these percent of some of
18:04
Speaker 1: these cases. What you, of course will look for is
18:07
Speaker 1: that what is really the loan demands look like on
18:11
Speaker 1: the ground, because now the economy is really attraction and
18:14
Speaker 1: we're open. What's really changed there is that the kind
18:17
Speaker 1: of the process and what they're planning to do with
18:19
Speaker 1: all that excess liquidity they've taken up at the reserve, Yeah,
18:23
Speaker 1: the reserves and sell the excess reserves as well as
18:25
Speaker 1: the reverse repo facility. And then obviously what they've announced
18:29
Speaker 1: after the cess test the buy back plans that do
18:32
Speaker 1: metical markets. I think there's expectations you could tell today
18:34
Speaker 1: from the price section that the banks will come out
18:37
Speaker 1: not only with good earnings, but with intentions to really
18:40
Speaker 1: further support the equity valuation. So I think banks will
18:43
Speaker 1: do quite well in this period. Are those buy backs
18:46
Speaker 1: boosting those valuations that you alluded to within the financial sector?
18:50
Speaker 1: Is that broad based as well? Are we expecting to
18:53
Speaker 1: hear in these second quarter earnings from CEO is a
18:55
Speaker 1: lot of commentary about using this excess cash to buy
18:59
Speaker 1: back shares. So the banks have a unique tail in
19:03
Speaker 1: that sense, right, because you know, they basically got relief
19:06
Speaker 1: from the Federal Reserve to start buying back shares after
19:09
Speaker 1: a year of being excluded from that. Whereas the buy
19:12
Speaker 1: back index itself, you have an SEP SMP buy back
19:16
Speaker 1: in next that's now, by the way, game quite a
19:18
Speaker 1: bit of value, but the buy back levels have been low,
19:21
Speaker 1: so yes, it could be, you know, depending upon again,
19:24
Speaker 1: this is a signal. I think maybe what people try
19:27
Speaker 1: to connect with the strong economy and low yields is
19:29
Speaker 1: this our earnings telling us that you know, a lot
19:32
Speaker 1: of companies sit on a lot of cash, are not
19:34
Speaker 1: going to deploy it then investment, but buy back shares
19:38
Speaker 1: and then in that sense would not necessary to be
19:40
Speaker 1: a good signal. So I think it's really the banks
19:43
Speaker 1: that will take the lead there. Because they've been given
19:45
Speaker 1: the lead, the other companies will see, right. I think
19:48
Speaker 1: it's a there's a lot going on in the economy,
19:50
Speaker 1: that's for sure. Hey, Ben, thanks so much for joining us.
19:52
Speaker 1: We always appreciate chatting with you as well as your
19:55
Speaker 1: research notes. Ben Emmon's Managing director Global macro Strategy at
20:00
Speaker 1: Eddy Global Advisors, giving us his thoughts on these markets,
20:03
Speaker 1: on space and on some of these bank earning's coming
20:06
Speaker 1: up this week. What we've got markets once again, equity
20:13
Speaker 1: markets setting all time highs. And that's despite the fact
20:17
Speaker 1: that the COVID nineteen UH is still very much with
20:21
Speaker 1: us on a global scale. Even within the confines of
20:24
Speaker 1: the United States, there's there's large portions of this country
20:27
Speaker 1: that are under vaccinated and again as a result, facing
20:31
Speaker 1: some challenges in the delta variant. But the markets that
20:34
Speaker 1: once was a thing for the markets, it doesn't appear
20:36
Speaker 1: like it is as much anymore. Christina Hooper joins us.
20:39
Speaker 1: This is chief global market strategist for Investco. UH. Why
20:43
Speaker 1: do we like Christina because she's a very nice person
20:45
Speaker 1: to have on She's very smart and Investco has one
20:48
Speaker 1: point three trillion in assets under management, so she knows
20:51
Speaker 1: where the money is going. Christina, thanks so much again
20:54
Speaker 1: for joining us here. Again, how do you think about
20:57
Speaker 1: I mean, you gots you just take us back you
20:59
Speaker 1: know a year plus and the markets was the narrative
21:02
Speaker 1: was completely driven by UH you know, virus trends and
21:08
Speaker 1: and hospitalization rates. That was really moving the market. And
21:11
Speaker 1: now even though we have vaccines, there's still some concerns
21:15
Speaker 1: out there there. But the market just doesn't seem to care. Well,
21:19
Speaker 1: the market, the stock market doesn't seem to care, right,
21:22
Speaker 1: but it seems as though the ten year treasury yield,
21:25
Speaker 1: the treasury market does seem to care. Now, I was
21:29
Speaker 1: raised in this industry on the notion that quite often
21:33
Speaker 1: the ten year treasury yield is a better indicator of
21:37
Speaker 1: fear than anything we can find, like the vix in
21:41
Speaker 1: the stock market. So this could be a scenario where
21:44
Speaker 1: we have stocks um seeing that there is economic growth
21:50
Speaker 1: that's quite strong, um, seeing very accommodative monetary policy and
21:54
Speaker 1: reacting one way, and then we see the ten year
21:57
Speaker 1: treasury seeing the other side of the coin. Right, Um,
22:01
Speaker 1: the parts of the world that aren't well vaccinated, even
22:03
Speaker 1: the pockets of America that aren't well vaccinated, and are
22:07
Speaker 1: suggesting there are reasons to be concerned. Um. It's it's
22:10
Speaker 1: arguably a little bit of diversification here in terms of
22:13
Speaker 1: the different reactions in different parts of market. Christine, if
22:17
Speaker 1: I could politely push back on that could you argue
22:22
Speaker 1: that spreads are also telling us about the equity markets.
22:25
Speaker 1: I'm looking at eighty five basis points on investment grade
22:28
Speaker 1: over treasuries under to seventy on high yield over treasuries.
22:32
Speaker 1: Spreads are telling me there's nothing to worry about. What
22:35
Speaker 1: do you make of that? Well, I think that that
22:38
Speaker 1: is arguably the overarching story, right that, Um, that what
22:44
Speaker 1: we are going through right now is likely to be temporary. Um.
22:48
Speaker 1: Last year, at this time, we did not have a
22:51
Speaker 1: cure for COVID nineteen. We had no vaccine vaccine available,
22:55
Speaker 1: and in fact, we were hearing from medical experts who
22:57
Speaker 1: said that it was unlikely we get an effective vaccine
23:01
Speaker 1: against a coronavirus anytime soon. Now fast forward a year
23:05
Speaker 1: and the scenario is very different. Our biggest problem is
23:07
Speaker 1: vaccine rollouts. We have effective vaccines, so we know that
23:11
Speaker 1: the challenges we're going through now are likely very temporary
23:15
Speaker 1: in nature. All right, So Christina earnings week is kicking
23:20
Speaker 1: off this week with the big bank earnings here. Um.
23:24
Speaker 1: What are you looking for, uh from earnings this quarter? Well?
23:31
Speaker 1: I think we we very much expect a strong earning
23:34
Speaker 1: season and that should come as no surprise. Um, so
23:37
Speaker 1: what we really want to hear from is the guidance
23:41
Speaker 1: and the future. UM. What can we expect because there
23:44
Speaker 1: are of course concerns that maybe this is as good
23:47
Speaker 1: as we're going to get, and so to hear that
23:49
Speaker 1: guidance from companies in all different industries is going to
23:53
Speaker 1: be very, very important in terms of giving a sense
23:56
Speaker 1: of where the stock market goes from here. UM in
24:00
Speaker 1: the back half of this year. Christina. One thing that
24:03
Speaker 1: we love getting you on the program is because you
24:05
Speaker 1: have global in your title. What is the headline risk
24:09
Speaker 1: of investing in Chinese stocks? Given the regulatory crackdown, as
24:13
Speaker 1: we spoke last week on TV, a stroke of a
24:15
Speaker 1: pen Beijing changes the rules. How do you think about
24:18
Speaker 1: that as sort of a risk to a China to
24:21
Speaker 1: an e M portfolio. Well, certainly there are regulatory risks
24:27
Speaker 1: in all corners of one's portfolio right now. There are
24:31
Speaker 1: concerns that we could see greater regulation of technology in
24:35
Speaker 1: the United States. So I think investors need to look
24:40
Speaker 1: at their portfolio with uh an eye towards where there
24:43
Speaker 1: could be potential regulatory changes, and of course that includes
24:48
Speaker 1: what is happening in China. UM, and that would argue
24:52
Speaker 1: for more diversification, more potentially UM, more exposure to other
24:57
Speaker 1: parts of emerging markets right now. UM. But but but I
25:01
Speaker 1: would say that we can't panic about this, UM. We
25:04
Speaker 1: just need to follow it closely and again recognize that
25:07
Speaker 1: there are regulatory risks in all different kinds of places,
25:10
Speaker 1: including those who have UM crypto components to their portfolio. Christina,
25:15
Speaker 1: where are you and the portfolio managers investgo right now?
25:19
Speaker 1: Where are you guys doing your most work looking for opportunities? UM? Well,
25:24
Speaker 1: certainly every every portfolio manager is looking at their investible
25:29
Speaker 1: universe for opportunities. UM. What I would say is when
25:32
Speaker 1: I take a step back and we're looking at it
25:34
Speaker 1: more from a big picture perspective. UM. There are a
25:38
Speaker 1: lot of very very interesting things going on right now, UM,
25:42
Speaker 1: in particular areas like cyber security. UH. It's not getting
25:47
Speaker 1: as much attention, I don't believe as it should. UM.
25:50
Speaker 1: But this UM, this is an area that is UM
25:54
Speaker 1: regularly cited by CEO before COVID nineteen as one of
25:59
Speaker 1: the biggest concerns right cyber security, And so I would
26:03
Speaker 1: anticipate that we're going to see more capex spending in general,
26:07
Speaker 1: more capex spending on tech um more specifically and more
26:12
Speaker 1: tech capex spending on cyber security. So that's just one
26:16
Speaker 1: theme among many, but it's one that I think deserves
26:19
Speaker 1: a lot of attention right now. It's very interesting. We
26:21
Speaker 1: always love getting your thoughts, Christina who per chief Global
26:24
Speaker 1: market strategist for Investo, getting your thoughts on markets again
26:28
Speaker 1: a big earnings week, which will give us a real
26:30
Speaker 1: view on the strength of corporate Americans. Christina was suggesting.
26:35
Speaker 1: The focus also and maybe increasingly will be on that
26:37
Speaker 1: forward looking guidance. Uh and we'll certainly have all of
26:41
Speaker 1: that for you. This is Bloomberg. Thanks for listening to
26:44
Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to
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