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Streaming Trends, Market Forecast, Ford Mach-E Price Cut · Bloomberg Intelligence

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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
0:18
Speaker 1: at Bloomberg dot com slash podcast. Let's bring in Mark Douglas.
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Speaker 1: He is the CEO of Mountain m n T n UH,
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Speaker 1: and we bring him in to talk about all things
0:27
Speaker 1: tech really on the on the com side, on the
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Speaker 1: streaming side, and Adam all lined up to talk about
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Speaker 1: Netflix and what I feel like is a turnaround and
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Speaker 1: sentiment there as well as Google. They're getting sued by
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Speaker 1: the Department of Justice and it's going to be a
0:39
Speaker 1: jury trial. Holy Comoley could be the first breakup since
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Speaker 1: mob El. Remember that that can't happen. I don't think
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Speaker 1: so either. But um, let's talk to Mark first about
0:49
Speaker 1: the tech sector in general. Mark, we have these big
0:52
Speaker 1: earnings coming out this week, Amazon, Alphabet and Apple, UM
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Speaker 1: and everyone is expecting this earning sea to be horrendous,
1:01
Speaker 1: So executives might even take advantage. We thought of this
1:04
Speaker 1: earning season to throw in the kitchen sink and get
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Speaker 1: everything out of the way. You know, are all their
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Speaker 1: dirty laundry. It hasn't been that bad, has it. It hasn't.
1:13
Speaker 1: I think, um, this is an interesting place win right
1:17
Speaker 1: now because normally, if you look back at all the
1:20
Speaker 1: previous downturns, it's like this is herd mentality where everyone
1:24
Speaker 1: like when rushes to the next thing, Like when if
1:27
Speaker 1: you go back to two thousand when the tech sector crash,
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Speaker 1: then everyone ran that by houses and then you know,
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Speaker 1: it's like this herd. But right now the herd is
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Speaker 1: just kind of grazing, just all kind of standing around,
1:41
Speaker 1: not knowing where to go or what to do. So
1:44
Speaker 1: things are neither like going up nor they like crashing
1:49
Speaker 1: that hard. Everyone's waiting for you know, what am I
1:51
Speaker 1: supposed to do now? And nobody seems to know. I
1:54
Speaker 1: think what I'm hearing from some tech analysts is tech
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Speaker 1: spending is still gonna go row intercessionary environment. It's just
2:02
Speaker 1: gonna grow at a lower rate than we've been used to.
2:05
Speaker 1: Is that kind of how you see? It was on
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Speaker 1: fire over the last It's very hard to forecast revenue
2:12
Speaker 1: in a tech company right now, because your customers don't
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Speaker 1: even know what they want, what they're going to spend.
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Speaker 1: So I know from my company, like our customers normally
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Speaker 1: tell us that by in December what their plans are
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Speaker 1: for Q one. Most of them didn't even know until
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Speaker 1: like third week of January. That is still trying to
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Speaker 1: figure it out. So it's really hard to forecast. So
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Speaker 1: I think you're gonna see forecasts be pretty soft, but
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Speaker 1: it's an opportunity for overachievement. Everyone's going to be kind
2:40
Speaker 1: of kind of the other um, you know, the other
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Speaker 1: thread that we can pull from tech has been labor.
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Speaker 1: They've been firing all the excess workers that they rushed
2:50
Speaker 1: higher over the last year and a half two years.
2:53
Speaker 1: Where do you think we are there? I mean, the
2:55
Speaker 1: question is a lot of people think they're gonna fire
2:58
Speaker 1: too many people. UM obviously hired too many people. But
3:01
Speaker 1: can't they run with a surplus of employees? Well, I
3:04
Speaker 1: think some people would say Ellen, Elon Musk obviously, if
3:08
Speaker 1: you say Elon Musk, other Elons, Yeah, whoever that is.
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Speaker 1: I think a lot of people would say Ellen proved
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Speaker 1: that maybe a lot of tech companies have over hired
3:18
Speaker 1: since you know, but nothing has changed since he essentially
3:22
Speaker 1: cut eighty percent of the staff or our parts of
3:25
Speaker 1: eighty percent of staff. I talked to people, and some
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Speaker 1: of these big Twitter you mean yea Twitter. I talked
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Speaker 1: to some people, you know, people at some of the
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Speaker 1: big companies I do, big tech companies do wonder what
3:35
Speaker 1: do you do for a living at this time at
3:38
Speaker 1: this company? So there's there's definitely fat. If you guys
3:41
Speaker 1: see some of the videos that post away, people say
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Speaker 1: the day in the life of working at Google and
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Speaker 1: and I saw one the other day and the person
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Speaker 1: got laid off a weekly. So there's there's fat to
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Speaker 1: cut on in allge So there's still more pink slift
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Speaker 1: to come. I don't know. And we haven't seen that
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Speaker 1: kind of firing. No, no, this is definitely I mean
4:02
Speaker 1: what you know, everyone knows we're kind of in a
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Speaker 1: in a downward you know, the market crash. Everything's going down,
4:10
Speaker 1: but um, it's going to go back up. Also, I
4:13
Speaker 1: I talked to some like people who manage um trillions
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Speaker 1: of dollars, like some of the biggest equity firms in
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Speaker 1: the world, and they seem like they're really anxious to
4:24
Speaker 1: put money back in the stock market, and and if
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Speaker 1: they do, the market is going to go up. So
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Speaker 1: I think they're people are ready to get back in.
4:32
Speaker 1: They just want stability before they mark. What are you
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Speaker 1: hearing from some of the digital advertising players out there?
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Speaker 1: You know, we're gonna hear from Facebook and Google and
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Speaker 1: uh and some of the other's Amazon of course this week.
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Speaker 1: How tough is it out there in the digital ad
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Speaker 1: space if if you're not in the growth sectors? Pretty tough. So, um,
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Speaker 1: my company were in performance television with returning TV into
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Speaker 1: this direct response at channel and so if we look
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Speaker 1: at our customer as we already have, they're they're covering,
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Speaker 1: you know, they're not really increasing or decreasing. So but
5:06
Speaker 1: we have all this growth from new customers coming into
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Speaker 1: the market. If you don't have that trend of a
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Speaker 1: lot of new customers, it's it's are you guys playing
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Speaker 1: in the in the streaming the ad supported streaming business? Exactly? Yeah,
5:18
Speaker 1: we're turning streaming television into essentially add words for for
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Speaker 1: TV and that's where the incremental AD dollars are going.
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Speaker 1: Are they going to Peacock versus NBC? Are they're going
5:27
Speaker 1: to Paramount Plus versus the cps, Well, they're just going
5:30
Speaker 1: into I think streaming in general. I think I think
5:34
Speaker 1: it's television after you know, it's kind of almost one
5:38
Speaker 1: of the first like traditional ad channels. And now for
5:43
Speaker 1: the first time in what is it seven eight decades,
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Speaker 1: it's now like this full digital marketing channels. So it's
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Speaker 1: become a growth set. It's it's become a growth sector again.
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Speaker 1: And I think all the TV networks, but especially like
5:57
Speaker 1: NBC at Comcast, um Disney Plus and Hulu. You know
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Speaker 1: those companies that are really obviously Netflix now with their
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Speaker 1: ad business, they're you know, they're those companies that really
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Speaker 1: have the dollars to investment. They are going to benefit
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Speaker 1: the most. Does Google own the marketplace for ads, for
6:14
Speaker 1: digital ads, no matter where you're going to advertise, no
6:17
Speaker 1: matter who's buying the ads. Do they own that? Is
6:20
Speaker 1: that the problem with the well they own? They own search.
6:23
Speaker 1: I think I'm glad you brought that up. But just
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Speaker 1: in general, a little known fact is that for the
6:28
Speaker 1: first time, Google and Meta like don't have less than
6:33
Speaker 1: half the march, so the rest of the market is
6:36
Speaker 1: actually growing. I mean, on the whole Google lawsuit thing,
6:40
Speaker 1: I think that it's UM not directed with the real
6:43
Speaker 1: action is the analogy I would use is what they're
6:47
Speaker 1: suing them over the tools, like the software that serves
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Speaker 1: an AD. So that's like going after a company because
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Speaker 1: they have a dominant position in hammers where the real
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Speaker 1: action is, well, they have all the data and where
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Speaker 1: people are going to move to. That's where the real access.
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Speaker 1: Google has just a massive amount of data. Know, Google
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Speaker 1: knows I'm here right now, right because I have Google
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Speaker 1: Maps in my pocket. But we're gonna sue him over
7:13
Speaker 1: the hammers, like it makes no sense. And I think
7:16
Speaker 1: this one after al Capone for Taxia, Yeah, exactly, that works.
7:20
Speaker 1: So I think this um the government going after them
7:23
Speaker 1: is not actually going to have much of an impact
7:26
Speaker 1: because where the real action is is the data privacy
7:29
Speaker 1: legislation around the data. All privacy legislation makes Google, Meta,
7:35
Speaker 1: Apple and Amazon essentially even stronger because it goes after
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Speaker 1: anonymous data while they have like your personal identity, and
7:45
Speaker 1: so they get to continue to use the personal data
7:48
Speaker 1: while everyone else's market. That's a big player on TikTok,
7:52
Speaker 1: he's all over that platform. Talks about TikTok, What do
7:56
Speaker 1: you tell us what's the future of TikTok. Uh, Well,
8:01
Speaker 1: it's i there's so many people using it, it's not
8:03
Speaker 1: going to be banned in the United States that I
8:06
Speaker 1: was thinking, Yeah, that ships sail. I mean Trump years
8:08
Speaker 1: ago tried to bring up this issue and everyone was like,
8:12
Speaker 1: well if Donald Trump spring it up, we're not gonna
8:14
Speaker 1: listen that. You know, they have all of the status
8:18
Speaker 1: an open mic in every living room. But um TikTok
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Speaker 1: is doing extremely well. I don't see it diminishing in
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Speaker 1: any way in the near future. So they are crushing it.
8:27
Speaker 1: And what about Netflix. I mean, this was last year
8:30
Speaker 1: the market beat it down like a redheaded step child.
8:33
Speaker 1: And I nothing against Gingers. I am a step child myself.
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Speaker 1: So but now it seems like sentiment is really shifted,
8:40
Speaker 1: especially after the last Earns report they added seven and
8:42
Speaker 1: a half million subscribers. Yeah, I mean the market is
8:44
Speaker 1: just up and down on in general, but on Netflix
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Speaker 1: in particular. Thing about Netflix, just through the math. Let's
8:50
Speaker 1: say they're average subscriptions like twelve dollars. They have two
8:54
Speaker 1: hundred and forty million subscribes. It's like three billion dollars
8:57
Speaker 1: a month coming in and people like, yeah, but they
9:00
Speaker 1: missed you know, subscriber numbers by hundred thousands. Yeah, but
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Speaker 1: they got three a billion dollars in three billion dollars
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Speaker 1: a month. It's just overreactions, possibly in both directions. Overreacted
9:13
Speaker 1: in terms of downward sentiment and possibly a little bit
9:15
Speaker 1: and upward sentiment. And we got some new management there,
9:17
Speaker 1: so we'll see how that plays out. YEA, so good stuff.
9:20
Speaker 1: Mark Douglas, President and CEO of Mountain, joining us in
9:23
Speaker 1: our Bloomberg Interactive Broker Studio giving us the latest on
9:27
Speaker 1: all things tech and all things digital advertising. Quincy Crosby
9:32
Speaker 1: joints us here. She's a chief Global strategist for lp
9:36
Speaker 1: L Financial. That's a nastact treated firm lp L. A
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Speaker 1: is it took her load into your Bloomberg terminal, Quincy,
9:43
Speaker 1: A lot to digest here this week. What's most important
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Speaker 1: to you? What's your gonna what's gonna be your focus
9:48
Speaker 1: this week? Simply because we had a strong rally. Volume
9:54
Speaker 1: was good on the rally, and the rally was cyclically
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Speaker 1: oriented for the most are. Now granted you we can
10:02
Speaker 1: dismiss the rally. We can say it was you know,
10:05
Speaker 1: short covering UH traders going in and taking advantage of
10:08
Speaker 1: the tax claws only in in you know. Uh. But
10:13
Speaker 1: nonetheless you started to see volume pickup in rally, and
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Speaker 1: it was a rally that suggested that the market is
10:23
Speaker 1: looking ahead of everything. You know, we always would say
10:26
Speaker 1: the market gets news worked. Anyway, February tends to be
10:29
Speaker 1: a month where the market is tends to actually say,
10:34
Speaker 1: have these rallies, um dissipate. It's probably the worst month
10:38
Speaker 1: for the market next to September. So we're gonna watch
10:42
Speaker 1: very closely how these big tech names do because the
10:45
Speaker 1: waiting in the indextions, it's just them that these are
10:49
Speaker 1: the big tech guys. We're gonna see if they can
10:51
Speaker 1: if they can garner any interest from traders at least
10:54
Speaker 1: and certainly investors. All Right, so, um, what are you
10:58
Speaker 1: looking forward to see to prove that this rally really
11:02
Speaker 1: has legs? Quincy? I mean, what are some signs? I
11:04
Speaker 1: was just looking at the break down of um, the
11:08
Speaker 1: industrial groups that have won and lost this year, and
11:11
Speaker 1: you've got all the you know, consumer discretionary and tech
11:14
Speaker 1: companies that have done well. Meanwhile, consumer staples and um,
11:19
Speaker 1: you know, utilities have done poorly. So it looks like
11:22
Speaker 1: the defensive are getting sold off. And the um You know,
11:26
Speaker 1: the growth companies are are putting up some gains, but
11:29
Speaker 1: I guess that could be explained by the short covering narrative.
11:32
Speaker 1: So what do we need to see UM two ensure
11:36
Speaker 1: us that this rally is solid. Well, what one thing
11:39
Speaker 1: would be I look at the semiconductors. They are the
11:43
Speaker 1: they are the consummate dull weather for global growth, and
11:47
Speaker 1: they've been they've actually the days that they've been outperforming
11:50
Speaker 1: even the the growth growth nas the gross the growth residence,
11:55
Speaker 1: so to speak. We'll say if they can hold, obviously
11:58
Speaker 1: then they sell off, but we'll see if they can hold.
12:01
Speaker 1: It's very important that they participate, uh in a rally
12:06
Speaker 1: and stay strong. You know. The other thing that we're
12:09
Speaker 1: going to look at is on a technical basis, is
12:12
Speaker 1: whether or not going through the obstacle course of this
12:15
Speaker 1: week their earnings obstacle course the said statement his press conference,
12:20
Speaker 1: then you know Friday's payroll report and see where wages are,
12:25
Speaker 1: how they're moving. Is whether or not this market an
12:28
Speaker 1: a rally. If it does rally, can actually cross forty
12:34
Speaker 1: that is, you know, one of the most important levels
12:37
Speaker 1: for the market, and it's been difficult obviously for this
12:41
Speaker 1: market to launch an absolute attack on quincy. Tough, tough
12:49
Speaker 1: for everybody out there and the equity biz in the
12:51
Speaker 1: fixed income markets as you start oute, what are you
12:54
Speaker 1: telling your clients in terms of positioning here after such
12:58
Speaker 1: a tough year. Well, you know, we're trying to figure
13:02
Speaker 1: out obviously, whether or not the market has discounted a recession.
13:06
Speaker 1: Is it an earnings recession? Is that a rolling recession
13:09
Speaker 1: is going to be a shallow recession. Our view at
13:11
Speaker 1: LPL researches that will be fairly shallow. That's with all
13:15
Speaker 1: the information we have now. However, one thing that we
13:19
Speaker 1: have now it's not just about equities. We've got the
13:22
Speaker 1: sixth income market and we're looking at it and investing
13:25
Speaker 1: in it. The treasury market is offering very attractive return,
13:31
Speaker 1: guaranteed return, and investment grade corporates as well. We also
13:35
Speaker 1: sawt we're not advocating this, but we've seen money going
13:38
Speaker 1: into high yield. Who whatever thought, you know, if all
13:41
Speaker 1: of these dire headlines, money would go into high yield.
13:44
Speaker 1: But those are the ones who think we're not going
13:46
Speaker 1: to have a recession, will be a soft or soft
13:49
Speaker 1: just landing. But the point is that companies when out
13:53
Speaker 1: and borrowed during the period when money was so easy
13:57
Speaker 1: and rates were so low, so that their balances, their
14:01
Speaker 1: cash balances are strong. And right now these companies are
14:06
Speaker 1: still you know, making certain that they cut costs when
14:10
Speaker 1: they have to and that you know, they're going to
14:12
Speaker 1: manage costs going into three, especially if there is a recession.
14:18
Speaker 1: So we're saying investment grade corporate, we're saying the treasury
14:22
Speaker 1: that can help the portfolio. And also on the equity side,
14:26
Speaker 1: we're looking at dividends. This is crucial, we think for
14:30
Speaker 1: this market. And you know, some of the sectors are
14:32
Speaker 1: doing well. Take a look at the industrials today, they're up. Granted,
14:37
Speaker 1: the the defense names are helping to underpin the the
14:43
Speaker 1: industrials along with machinery. So there are pockets in the
14:47
Speaker 1: market that are still attractive, attractively valued, especially after sell
14:52
Speaker 1: off such as we had in the defense names, but
14:55
Speaker 1: they're coming back today. So again, until there is more
14:59
Speaker 1: certain in terms of where we are headed and whether
15:03
Speaker 1: or not the market is actually discounted even a percentage
15:07
Speaker 1: of a possibility of that you know, final final deep
15:11
Speaker 1: sell off, we want the clients to be uh certain, careful,
15:15
Speaker 1: conservative Quincy. Just want to ask before you came to
15:19
Speaker 1: Wall Street, you spent a lot of time at diplomatic
15:21
Speaker 1: postings around the world. Uh. You served as Assistant Secretary
15:26
Speaker 1: of Commerce and also UM as Energy attached at the
15:30
Speaker 1: US Embassy in London. UM, what do you think about
15:33
Speaker 1: the reopening of China and the kind of I guess,
15:36
Speaker 1: the the spat that seems to be, you know, mellowing
15:41
Speaker 1: out between the US and China right now. How is
15:44
Speaker 1: that going to drive the market this year? You know
15:47
Speaker 1: obviously that this is you know, a major event. Is
15:50
Speaker 1: the world's second largest economy. And it was interesting that
15:53
Speaker 1: when they announced the final lift of the zero COVID policy,
15:59
Speaker 1: we the countries that country indexes that've got a booth
16:04
Speaker 1: were none other than Germany, France, Italy. These are that
16:08
Speaker 1: these are the strongest trading partners in the West with China,
16:12
Speaker 1: not necessarily the US. So the question becomes whether or
16:16
Speaker 1: not this um, you know, multilateral approach that let received
16:21
Speaker 1: from China around the world trying to shore up uh,
16:25
Speaker 1: you know, positive on the bilateral front, good feelings and
16:29
Speaker 1: so on, even with the United States, But whether or
16:33
Speaker 1: not it masks UM. You know, the issue on Taiwan.
16:37
Speaker 1: And the other issue is regarding selling of any kind
16:41
Speaker 1: of technology that helps the military. Their military has grown,
16:46
Speaker 1: is grown faster than our military. Take a look at
16:50
Speaker 1: the naval components. It's it's larger than than the the
16:55
Speaker 1: US and even today, I mean speaking of you know, Europe,
16:59
Speaker 1: the US is been pushing the Netherlands with a SML
17:02
Speaker 1: but you know it's it is a chip mak, right,
17:07
Speaker 1: it's a manufacturer ships. Uh. Finally they have come out
17:11
Speaker 1: and said they're going to be more cheerful with their
17:13
Speaker 1: sales to China. They're going to you know, trying to
17:17
Speaker 1: break off some of the parts that would go right
17:20
Speaker 1: into laws. Um. Yeah, so that is not going away.
17:25
Speaker 1: And you know, and by the way, it is in
17:28
Speaker 1: the US across the aisles, Democrats and Republicans, this is
17:35
Speaker 1: an area where they agree they do to be sot
17:38
Speaker 1: on China. One of the very few. Quincy, thanks so
17:41
Speaker 1: much for joining us. Quincy Crosby there. She is chief
17:43
Speaker 1: global strategist at LPL Financial. Joining us to talk about
17:48
Speaker 1: what to expect in the markets after this rally that
17:50
Speaker 1: we've seen and throughout the rest of the year. Let's
17:55
Speaker 1: talk stocks right now. Ted Oakley founder managing partner of
17:57
Speaker 1: ox Bow Advisors, joins us Ted. I mean brutal year
18:02
Speaker 1: for equities, also for fixed income as well. What do
18:07
Speaker 1: you what's the message you went out to your clients
18:09
Speaker 1: with when you were kind of saying, all right, let's
18:11
Speaker 1: get ready for well, I think you know what we
18:14
Speaker 1: did in twenty two was we were extremely defensive. You know,
18:17
Speaker 1: we were fifty uh cash or short term treasuries primarily.
18:23
Speaker 1: So while but your your clients don't your clients don't
18:28
Speaker 1: mind you being in that much cash. Well, we were
18:31
Speaker 1: getting you gotta remember now, it's not that it's not
18:33
Speaker 1: Tina anymore. You can get you can get four and
18:36
Speaker 1: a half percent or four sixty five right now and
18:39
Speaker 1: even a three months and so we do a lot
18:42
Speaker 1: with the floating right treasuries, but that's just a holding
18:44
Speaker 1: spot for us UM. And then this year coming into it,
18:48
Speaker 1: we just don't have I mean, we have a lot
18:49
Speaker 1: of stocks on the two D probably a two hundred
18:52
Speaker 1: stock screen we have, but none of those are they're
18:56
Speaker 1: just not in evaluation areas where we want to come
18:59
Speaker 1: by can we own stocks? But the stocks we've alreadyo owned,
19:02
Speaker 1: but we're not buying too many things. You know, right
19:05
Speaker 1: at this point other than some income oinants, we are
19:07
Speaker 1: buying another portfolio. What are the levels that you're watching for,
19:11
Speaker 1: and um, what do you think it's gonna take for
19:14
Speaker 1: us to get down back down there again? Because we've
19:16
Speaker 1: had pretty a pretty enthusiastic rally we have and I
19:19
Speaker 1: will tell you it reminds me of the January of
19:23
Speaker 1: oh one, two thousand one, you know, in the matter
19:26
Speaker 1: markets seld Off hard nasdac uh you know, during two
19:30
Speaker 1: thousand and came back at the end of the year,
19:32
Speaker 1: had a good month in January, and then the rest
19:34
Speaker 1: of the year of NAZAC getting a lower by far
19:37
Speaker 1: of a lot of that. And so we're sort of
19:40
Speaker 1: and people they talked about, you know, two thousand nine eleven,
19:44
Speaker 1: but acts of the market was lower before and ended
19:46
Speaker 1: up the year like that. So anyway, go to back
19:48
Speaker 1: to your question what we're looking for. If you say
19:51
Speaker 1: we're gonna do two hundred dollars on the SMP, I
19:54
Speaker 1: know everybody's at two twenty five and all that, but
19:56
Speaker 1: we think two hundred would be the best might be.
20:01
Speaker 1: And so if you put yeah, put you know, if
20:05
Speaker 1: you look at two hundred, it's only twelve or cent
20:08
Speaker 1: below estimates. It's not that far. So if you do
20:11
Speaker 1: two hundred and you take you know, you're take an
20:14
Speaker 1: SMP at calling four thousand sixty, you're almost at twenty
20:18
Speaker 1: multiple right now. And that's not where you get your
20:21
Speaker 1: best buys ever, And so that's kind of where we're
20:24
Speaker 1: looking at it. I think that's I think that's yet
20:27
Speaker 1: to come. And and I said, well, we'll see. I
20:30
Speaker 1: guess that's that's what makes a horse race. But that's
20:33
Speaker 1: where we are right now. So you know, this is
20:35
Speaker 1: gonna be a busy week TED four earnings. We've got
20:37
Speaker 1: a hundred nine SPI companies reporting here. Um, do you
20:41
Speaker 1: think we're gonna start seeing some big revisions downward in
20:43
Speaker 1: earnings guidance from a lot of these companies. Well, you should.
20:47
Speaker 1: But one of the things that we've noticed so much
20:49
Speaker 1: the last five years really is they've been allowed to
20:52
Speaker 1: get away with so much in the way of accruals
20:55
Speaker 1: and all these adjustments to gap earnings that you have
20:57
Speaker 1: to look through a lot of it. But I think
21:00
Speaker 1: if you looked at an acremement the real cash earnings, yes,
21:02
Speaker 1: I think those are some of those are gonna have
21:04
Speaker 1: to be revised down for sure. So what are some
21:08
Speaker 1: of the sectors here? I mean, I mean, as you
21:10
Speaker 1: sit here with the high levels of cash, when you
21:13
Speaker 1: do get ready to deploy, where do you think you'll
21:15
Speaker 1: you'll put it? Will it be in some of the
21:17
Speaker 1: defensive names where you try to get back into growth.
21:20
Speaker 1: Where do you think the play is going to be? Well,
21:22
Speaker 1: we have a mix. We have a mixed now. But
21:24
Speaker 1: if you look at our favorite companies, you know they're
21:26
Speaker 1: gonna be companies that can go through a tough procession period.
21:30
Speaker 1: If you take Visa and MasterCard, you know they have
21:33
Speaker 1: enough cash in a quarter almost to pay off all
21:35
Speaker 1: the debt um and and if you inflate people use cards,
21:39
Speaker 1: you know, the prices go up, people use cards more.
21:41
Speaker 1: We think two other things like that. You know, obviously
21:46
Speaker 1: you know we like uh, some defensive names O'Riley, you know,
21:50
Speaker 1: a health And then we you know, we on the
21:52
Speaker 1: we on the oils, we on gas pipelines, um. And
21:55
Speaker 1: we particularly like the oil wyalties because you don't have
21:58
Speaker 1: the capital investment. And so we think we mix all
22:02
Speaker 1: those together and come up with a pretty good, you know,
22:05
Speaker 1: pretty good mix overall. So we get some cash for
22:07
Speaker 1: at the same time. And I'm getting on the treasury yep. Absolutely,
22:11
Speaker 1: And I know you're based in Texas there. I'm just
22:14
Speaker 1: envisioning you sitting around with your buddies talking oil NonStop. Um,
22:19
Speaker 1: what is kind of the feeling down there about energy
22:23
Speaker 1: because it's had such a really two great years for investors. Yeah, well,
22:28
Speaker 1: you know I mentioned this to you before. A lot
22:30
Speaker 1: of the oil people are not uh they're not great
22:33
Speaker 1: for a sentiment here. You know, they get really excited
22:36
Speaker 1: about when the prices up. For us, we felt we've
22:39
Speaker 1: actually cut back on the majors and added to the
22:42
Speaker 1: royalties because the royalties pay a lot more cash and
22:45
Speaker 1: if we missing the oil goes higher, we'll participate in
22:48
Speaker 1: the way. But I think what they forget is that, uh,
22:52
Speaker 1: you know, you've had a big run and if you
22:53
Speaker 1: do slow the economy down, it's not a guarantee. But
22:56
Speaker 1: if you do slow it down, no matter what happened, Um,
23:01
Speaker 1: you know, the price of oil will dri up a
23:02
Speaker 1: little bit. And I know they never look at this,
23:04
Speaker 1: but if you look at miles driven by people in
23:07
Speaker 1: the last year, it's down. And so I think, you know, gasling,
23:11
Speaker 1: which is a big piece of that will probably be
23:14
Speaker 1: a news. Consumption will go lower, but there, you know,
23:17
Speaker 1: but that's what they think. What we think is it
23:19
Speaker 1: will drift with the economy and then you know, if
23:21
Speaker 1: you want to pick it up the lower level, you
23:23
Speaker 1: probably can. So you don't think we're gonna see Remember
23:26
Speaker 1: in um two thousand and eight, when we knew that
23:30
Speaker 1: the whole world was going to hell in a handbasket.
23:32
Speaker 1: But yeah, um, the Chinese were still driving more and
23:36
Speaker 1: more and more cars, and things weren't quite as bad
23:39
Speaker 1: in Europe as they were here. Yet the housing crisis
23:41
Speaker 1: hadn't rolled around the world and oil went to a
23:44
Speaker 1: hundred forty six dollars a barrel. They don't think that's
23:47
Speaker 1: gonna happen again. Oh yeah, eventually, Yeah, I do. I
23:53
Speaker 1: think I think this is just a short term swoon. Uh.
23:56
Speaker 1: But long term, if you look at if you look
23:59
Speaker 1: at the numbers and supply the men, it's almost impossible
24:02
Speaker 1: not to go back up. I mean, it's just once
24:06
Speaker 1: you come out of it into a newer, a better economy.
24:09
Speaker 1: And you gotta remember, China's just coming out to now.
24:12
Speaker 1: So once you come out and that's and everybody else,
24:15
Speaker 1: then you're going to be in a situation where the
24:17
Speaker 1: price the price will go, It'll go it had almost
24:19
Speaker 1: has to go up right now. Not not short term,
24:22
Speaker 1: but I'm talking about it in the long term and
24:24
Speaker 1: has to go up because there's not enough of it. Ted,
24:28
Speaker 1: how to folks down in Texas really think about uh
24:31
Speaker 1: kind of this move towards a more greener energy, uh
24:36
Speaker 1: infrastructure if if you will, maybe in terms of time
24:39
Speaker 1: or just kind of has an investment opportunity. I mean,
24:41
Speaker 1: are you taking advantage of it even though you're surrounded
24:43
Speaker 1: by wildcatters? Oh? Yeah? If you look across Texas and
24:47
Speaker 1: we have a tremendous amount of wind power now and
24:52
Speaker 1: a tremendous amount of solar power, all of those are
24:56
Speaker 1: you know there? If you you go out in the
24:58
Speaker 1: ranches and uh in Sexes and look around it, they
25:01
Speaker 1: have a lot of them have windmills now, I mean
25:04
Speaker 1: a lot and you know, so they're using wind, they're
25:07
Speaker 1: using solar. It's not they're not um not using it.
25:11
Speaker 1: They just they blended in with the other things they
25:13
Speaker 1: had all right, Ted, good stuff appreciated. Always checking in
25:17
Speaker 1: with you. Ted Oakley. He's a founder and managing partner
25:19
Speaker 1: Oxbow Advisors. Let's check out what some of the pros
25:25
Speaker 1: are doing in the marketplace here, because again a busy
25:27
Speaker 1: busy week, lots of earnings, lots of eco data. Lyle
25:30
Speaker 1: Himbau Uh joins us. He's a partner Granted Group Advisors. Lyle,
25:36
Speaker 1: thanks for joining us here at Brutal two. We've got
25:39
Speaker 1: a busy, busy week here. The markets have rebounded off
25:42
Speaker 1: of those October lows. What are you telling your clients?
25:47
Speaker 1: Great question right now? You know, you know if everything
25:50
Speaker 1: for us is really about you know, valuation, valuation, valuation, right,
25:54
Speaker 1: So when you look at the market today, and this
25:57
Speaker 1: is part of the things that we put in our
25:58
Speaker 1: quarly commentary to our clients, UH, is that we're treating
26:02
Speaker 1: at eighteen point two times this year's earnings. In itself,
26:06
Speaker 1: that's not so bad, but when you look at historical
26:08
Speaker 1: norms of being between fifteen and sixteen, um, it's a
26:12
Speaker 1: little high, right, So we could have a little bit
26:15
Speaker 1: of retrenchment here coming down, but it's not so bad
26:19
Speaker 1: if we have the growth. But if we don't have
26:21
Speaker 1: the growth, there would be really no reason to really
26:25
Speaker 1: go chase the market up here at this particular moment,
26:29
Speaker 1: and by the way, that's across all companies, even those
26:31
Speaker 1: that don't have an E. Right, if you look at
26:34
Speaker 1: all the companies, only the ones that have an E,
26:36
Speaker 1: we're trading at almost twenty times. Yeah, the ones that
26:39
Speaker 1: have an E are like really really the small cap guys.
26:43
Speaker 1: There are a bunch of small companies that I tell
26:47
Speaker 1: the v C guys that call us a cold cause
26:49
Speaker 1: he said, there's no reason for me to place money
26:51
Speaker 1: with your privately when I can get public valuation of
26:54
Speaker 1: private value equity valuations in the public market at this point, right,
26:58
Speaker 1: So some of them are you know, the E is
27:00
Speaker 1: essential going forward here in a sort of a flat market.
27:03
Speaker 1: How much, by the way, um, how much of this
27:07
Speaker 1: could change? We we've been talking about earnings performance on
27:11
Speaker 1: the SMP on the nasdack, but we're only into it, right.
27:15
Speaker 1: What kind of swings do you see in an earning
27:17
Speaker 1: season like this, um, when there seems to be so
27:21
Speaker 1: much uncertainty in the markets. Is there uncertainty in the
27:24
Speaker 1: the remaining of the company's coming out earnings or do
27:27
Speaker 1: we have a pretty good indicator? Might be the indications
27:30
Speaker 1: are pretty good for those of people that put out
27:33
Speaker 1: the earnings in advance. But you know right now, you know,
27:35
Speaker 1: I think earn the cost of good soul is increasing.
27:37
Speaker 1: So like we don't think there's gonna be a really
27:40
Speaker 1: hard landing or economic recession, but in the short term here,
27:43
Speaker 1: I think there's going to be a margin recession. Right,
27:46
Speaker 1: So Poplin is okay, but the bottom line might be
27:51
Speaker 1: affected because it's just so much costs so much more
27:55
Speaker 1: to you know, you know, to establish that output for
27:58
Speaker 1: you know, to deliver our product, how much of it? Also,
28:01
Speaker 1: you know, it's being measured against an unfair, unfair time.
28:06
Speaker 1: I mean, um, you know, because Paul is so focused
28:09
Speaker 1: on the media and streaming and everything. Um, they've gone
28:12
Speaker 1: through an exceptional and extraordinary period, the likes of which
28:18
Speaker 1: is unlikely to be repeated for decades, right, I mean
28:20
Speaker 1: once the next time, we're all gonna be locked in
28:22
Speaker 1: our homes forced to watch every single program on Netflix. Yeah,
28:27
Speaker 1: well I'm guilty of that. I went through. Uh, I
28:31
Speaker 1: did some binge watching for a while, so the but
28:34
Speaker 1: the I can't foresee, you know, you can't predict the unpredictable,
28:39
Speaker 1: right when stuff like that happens, uh, is it is
28:43
Speaker 1: really it's it's a once in a lifetime of that,
28:45
Speaker 1: and that's why the valuations in tech got so crazy
28:48
Speaker 1: back in twenty one. Right at the end of twenty one,
28:51
Speaker 1: we were really three standard deviations over valid back in November. Uh,
28:56
Speaker 1: in December of twenty one, it was really expensive. And
28:59
Speaker 1: now then that's why seeing this, you know, you know
29:01
Speaker 1: uh pullback in Nastac. The Naszak is still over I
29:05
Speaker 1: would say that the Nazak is still slightly overvalued. I
29:08
Speaker 1: still think we're we have some downside, really interested in general,
29:11
Speaker 1: the SMP and the NAZAC. But I think there's going
29:13
Speaker 1: to be um another I think a milder leg down
29:18
Speaker 1: won't be as uh big as twenty two. But three's
29:25
Speaker 1: so far is uh based on what I see in
29:28
Speaker 1: the earnings, we should have some short term volatility going
29:31
Speaker 1: on to the downside. Lie on. One of the concerns
29:34
Speaker 1: that I think some some strategists call out, some fund
29:37
Speaker 1: managers call out, is earnings risk. And if I look
29:39
Speaker 1: at the SMP five hundred on the Bloomberg terminal, looking
29:41
Speaker 1: like about dollars per share earnings this year, some folks
29:44
Speaker 1: are even suggesting the downside to be two hundred two earnings.
29:48
Speaker 1: Here are you in that camp? Do you think earnings
29:50
Speaker 1: risk is is material in this market? It? You know,
29:53
Speaker 1: from when you look at it, that's a great question.
29:54
Speaker 1: When you look at it from a historical perspective, you know,
29:57
Speaker 1: there's I don't want scary audience. But if you look
29:59
Speaker 1: at off Ford p s, you get a much lower
30:02
Speaker 1: SMP number. But let's assume we're not going to have
30:05
Speaker 1: this hard landing. And then when you look at the
30:07
Speaker 1: valuations here, you know, assume it's sixteen you know multiple,
30:11
Speaker 1: you know, at least for the short term, if we
30:14
Speaker 1: don't have you know, a fall off in the economy.
30:17
Speaker 1: But at the end of the day, if if the
30:20
Speaker 1: guys are right there, some people are looking at hundred.
30:24
Speaker 1: Uh my friends over at Cratt Swifts they're saying, uh
30:28
Speaker 1: to fifteen as the best case scenario, and imply a
30:30
Speaker 1: sixteen multiple, you're getting thirty four hundred, right at least
30:35
Speaker 1: on the short term. Right, So but you have to
30:38
Speaker 1: I think, you know, for long term investors, I think
30:40
Speaker 1: you really got to look out to twenty four right now.
30:43
Speaker 1: You see earnings coming down. I saw in Bloomberg. I think, um,
30:46
Speaker 1: I think earnings for this year down to two twenty
30:48
Speaker 1: four to twenty three. But for next year, the earnings
30:52
Speaker 1: are starting to come down for four and they were
30:55
Speaker 1: at two fifty five. I think that down to two
30:58
Speaker 1: seven and that's just starting. UM. So when you look
31:01
Speaker 1: at normal metrics, you know, you know you and since
31:05
Speaker 1: the market looks forward not backwards, uh, you've really got
31:09
Speaker 1: to look at you know, sixteen multiple I think would
31:11
Speaker 1: be normal and based it on around two forty or so.
31:14
Speaker 1: And you're gonna get around, Lyle, what do you expect
31:19
Speaker 1: to hear from j Powell and co On or really
31:22
Speaker 1: just from UM Chairman Powell on Wednesday? Can you deliver
31:27
Speaker 1: a very hawkish basis points? Is that what we're looking
31:30
Speaker 1: for now? Yeah? I think I think, I think you
31:32
Speaker 1: know the market is predicting basis points. That's that's that's
31:35
Speaker 1: a done deal. Uh. If he goes fifty basis points,
31:38
Speaker 1: which I'm sort of hoping he will, just to rip
31:41
Speaker 1: the band aid off and get this over with because
31:43
Speaker 1: you remember, his mandate is to really control inflation, and
31:47
Speaker 1: inflation is controlled by wage inflation. Uh. Core inflation is
31:51
Speaker 1: controlled by wage inflation. And uh, he's really got to
31:55
Speaker 1: get that on control. If he does fifty, Uh, this
31:58
Speaker 1: market will go down all right, good stuff appreciated as
32:01
Speaker 1: always Lyle Himball. He is a partner at granted A
32:04
Speaker 1: Group Advisors. It's interesting Ford hits back at Tesla's price
32:10
Speaker 1: cut by lopping nearly six dollars off the Mustang. Mocke
32:15
Speaker 1: I want to see what's going on there. What are
32:16
Speaker 1: the folks in Detroit really think about this stuff? Keith not,
32:19
Speaker 1: and he covers the autos industry for Bloomberg. He is
32:23
Speaker 1: based in our Detroit bureau. Keith, You know Ford here,
32:27
Speaker 1: what do you think they're doing? Are they following Tesla?
32:30
Speaker 1: Are they trying to be a price leader? Is there
32:32
Speaker 1: a demand part problem out there? What's going on with
32:34
Speaker 1: this price cut? They're absolutely following Tesla. That's what they
32:38
Speaker 1: told me when I asked him that direct question. Is
32:40
Speaker 1: this a response to Tesla? The answer was yes. So
32:44
Speaker 1: they're trying to, you know, build a beach head in
32:47
Speaker 1: the electric vehicle market. Tesla controls two thirds of the
32:50
Speaker 1: US market and Ford is the number two seller of
32:54
Speaker 1: electric vehicles thanks to the Mustang MAKEE. So they're cutting
32:58
Speaker 1: prices by an average of forty five hundred dollars a car.
33:02
Speaker 1: That's as much as a nine cut um. But Tesla's cuts,
33:06
Speaker 1: you might recall, were as much as so Tesla has
33:10
Speaker 1: a much wider profit margin that it can mind as
33:15
Speaker 1: it cuts places. Ford already has admitted that it's losing
33:19
Speaker 1: money on the Mackie. But the Machi looks way cooler
33:22
Speaker 1: than a Tesla. I mean, the Tesla design hasn't changed
33:26
Speaker 1: since I first drove one in two thousand ten, you know. Um,
33:30
Speaker 1: and for some cars that works, like the Dodge Challenger
33:33
Speaker 1: I think has been around in its current form since
33:36
Speaker 1: before that. But the Mackie is like the new new thing,
33:39
Speaker 1: right or um to my eye at least, it's certainly
33:43
Speaker 1: more interesting and more pleasing. Yeah, I mean, the Mackie
33:48
Speaker 1: came out a couple of years ago. It is newer.
33:52
Speaker 1: But obviously, you know, American buyers vote with their pocketbooks, right,
33:57
Speaker 1: and Tesla controls two thirds of the elect vehicle market
34:00
Speaker 1: in the United States. So what do the sales look
34:04
Speaker 1: like for the Maki then, Keith, I mean, um, I'm
34:07
Speaker 1: seeing more and more than my test drop one last year. Uh,
34:11
Speaker 1: and maybe that's what sort of opened my eyes to it. Um.
34:16
Speaker 1: Is it is it selling? Well? Oh yeah, man, it's
34:20
Speaker 1: selling fantastic for GV sales more than double last year.
34:24
Speaker 1: And part of what's going on here in a way
34:26
Speaker 1: that Sport is hoping to improve the margin picture on
34:30
Speaker 1: this vehicle is they are boosting capacity at their Mexican
34:35
Speaker 1: plant by sixty so they planned to build a hundred
34:39
Speaker 1: and thirty thousand makis this year, up from sixty seven
34:43
Speaker 1: thousand last year. The exciting thing to me is that
34:45
Speaker 1: you can get into such a cool looking vehicle, um
34:48
Speaker 1: with you know, the obvious torque benefits of an e
34:51
Speaker 1: V for so cheap. I mean, every other vehicle I
34:55
Speaker 1: look at is costing eye popping amounts, and this one
34:59
Speaker 1: still hovers around you know, forty grand even with options. Yep. Yeah,
35:06
Speaker 1: the lowest price Mackie. Uh. They cut the price on
35:09
Speaker 1: that one by nine hundred dollars, so that now starts
35:11
Speaker 1: at that's the real old drive one. Uh. The high
35:18
Speaker 1: end Markie, which is the the GT Uh. They cut
35:21
Speaker 1: that price byred so that now starts at six. There's
35:27
Speaker 1: another California Route one Extended Range edition that starts around
35:31
Speaker 1: fifty seven nine, So you know, it's right starting below
35:35
Speaker 1: fifty grand and then climbing well. But Keith, when I
35:38
Speaker 1: do the math as a consumer, who looks to save
35:42
Speaker 1: UH taxes in any way I can. I'm adding the
35:44
Speaker 1: credit back in. Is that is that right for me
35:46
Speaker 1: to add theredit back in? Is that a lock with
35:50
Speaker 1: the Ford Mustang Maki or are we still not sure
35:53
Speaker 1: exactly who's going to get these credits? Um, you can
35:57
Speaker 1: get the credit um currently if you're below fifty K
36:01
Speaker 1: on this type of vehicle. So some of the makis
36:05
Speaker 1: will call it qualify certainly the the base model at
36:10
Speaker 1: but there's also an all wheel drive model that also
36:13
Speaker 1: is below the bogey. So um you can qualify it
36:18
Speaker 1: for it on some of the make models. But so
36:20
Speaker 1: that's the cutoff, not no e V, you know, totally
36:25
Speaker 1: b EV if it costs more than fifty five thousand
36:29
Speaker 1: gets tax credit anymore for this particular model configuration. There's
36:36
Speaker 1: different levels. It's a very complex formula, so you know
36:40
Speaker 1: math and and it's a formula that's still in flux
36:44
Speaker 1: and will change more in the coming months. Hey, Keith,
36:48
Speaker 1: you know Kevin Tynan at Bloomberg Intelligence has been really
36:51
Speaker 1: consistent on his EV analysis over the last several years.
36:54
Speaker 1: Were basically saying when Detroit can make money on evs,
36:57
Speaker 1: they'll make evs but if they're getting the price here,
37:01
Speaker 1: what's Ford saying about the profitability the unprofitability of these things.
37:06
Speaker 1: Ford has said since June that the profits have been
37:09
Speaker 1: wiped out on the make because of rising commodity costs.
37:13
Speaker 1: They are working continually to try and cut costs out
37:16
Speaker 1: of this thing. They feel like boosting production as much
37:18
Speaker 1: as they're doing is going to help the profit picture.
37:21
Speaker 1: You know, they're trying to make up for in volume,
37:23
Speaker 1: if you will, but they are not making money on
37:25
Speaker 1: this car. The choice they're making right now is trying
37:29
Speaker 1: to gain market share. Established that beach head. They liked
37:33
Speaker 1: being the number two seller of electric vehicles, way ahead
37:36
Speaker 1: of general motors. So they want to stay in that
37:39
Speaker 1: position and grow from there. And sometimes you have to
37:42
Speaker 1: take some short term pain to make the long term gain. Keith,
37:46
Speaker 1: you're in Detroit. What are the real car people in Detroit?
37:50
Speaker 1: What are they saying about the e V business? Are
37:52
Speaker 1: they grudgingly moving towards evs? Are rushing get ahead? I
38:01
Speaker 1: see these everywhere. There's Tesla's in my neighborhood. There's ribbans
38:04
Speaker 1: in my neighborhood. They are not knuckle drivers here in Detroit.
38:08
Speaker 1: They are driving evs so and everybody likes the instant torque,
38:13
Speaker 1: Like Matt, I've driven the Marquee several times. It's a
38:16
Speaker 1: it's a blast as our all the evs out there
38:20
Speaker 1: because of that instant torque. I've drove the F one
38:24
Speaker 1: fifty Lightning. You know. You you touch the accelerator pedal
38:28
Speaker 1: on that thing and it's like warp speed. So how
38:31
Speaker 1: can you not enjoy this? So? Yeah, this car town
38:34
Speaker 1: loves electric vehicles? Do we do we know whether there's
38:38
Speaker 1: going to be more needed more laborers to build these
38:41
Speaker 1: things are less fewer, right, it takes fewer to fewer
38:44
Speaker 1: people put together. Yep. There are fewer moving parts in
38:48
Speaker 1: an electric vehicle and it'll take I think the estimates
38:51
Speaker 1: have been about one third fewer workers to assemble them.
38:55
Speaker 1: You know, you have an electric motor um or multiple
38:58
Speaker 1: electric motors, there's there's it's not a lot. It's not
39:01
Speaker 1: as much as you get from an internal combustion engine.
39:04
Speaker 1: That's what I thought. That's what I thought. All right,
39:05
Speaker 1: good stuff. Keith Notton, he's our autist reporter based in Detroit,
39:09
Speaker 1: which is a good thing. That's where you want him
39:11
Speaker 1: to be. Uh, talking about the V business, Forward cutting
39:13
Speaker 1: the price on their mocke pretty significant, and I mean
39:17
Speaker 1: they're pretty clear. I mean, as Keith was reporting in
39:20
Speaker 1: response to Tesla, they want to take market share, and um,
39:23
Speaker 1: it's a cool little vehicle to do so. I just
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Speaker 1: think they need more. Thanks for listening to the Bloomberg
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Speaker 1: Markets podcast. You can subscribe and listen to interviews with
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Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.
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Speaker 1: I'm on Twitter at Matt Miller V three. Pet On
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Speaker 1: Ball Sweeney I'm on Twitter at pt Sweeney. Before the podcast,
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