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A Deep Dive Into Markets · 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
0:15
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. Well, we've certainly seen
0:22
Speaker 1: a move up in rates here again the ten year
0:25
Speaker 1: treasury one point five three, the thirty year two point
0:27
Speaker 1: zero nine, we did touch two point one percent, So
0:30
Speaker 1: that got people's attention this week and kind of raising
0:32
Speaker 1: the issue of an inflation and and how does the
0:34
Speaker 1: secuity market behave in the facing some uh inflation, both
0:39
Speaker 1: in the near term and longer term. Let's check in
0:41
Speaker 1: with Brett Ewing, chief market strategists at First Franklin Financial
0:44
Speaker 1: Services during us on the flow from Tallahassee. I think
0:47
Speaker 1: there's some university down there in Tallahassee. I'm not sure
0:51
Speaker 1: might play against my dukeys in the a sec Brett Ewing,
0:54
Speaker 1: thanks so much for joining us here. Um again, we
0:57
Speaker 1: inflation kind of rearing its its head here A little
1:00
Speaker 1: bit more for investors here, how do you think these
1:02
Speaker 1: equity markets perform in what is likely to be a
1:06
Speaker 1: you know, a rising inflationary environment. Yeah, a great question.
1:11
Speaker 1: I think that you know, the market is pricing in
1:14
Speaker 1: uh continuation here of the inflation numbers. Um. We saw
1:19
Speaker 1: supply chain reports coming out earlier in the week, and
1:22
Speaker 1: as we all know, the supply chain really hasn't been
1:26
Speaker 1: so transitory uh going into this fourth quarter. So we
1:30
Speaker 1: think that that the pipeline there is going to improve.
1:34
Speaker 1: I think it's dependent on COVID and I think that
1:36
Speaker 1: will help with the inflationary pressures in the spring. But
1:40
Speaker 1: it's gonna take a little longer than we're all thinking. UM.
1:43
Speaker 1: I know it's very frustrating for Chairman Powell, but you know,
1:47
Speaker 1: I think I think they're probably gonna go ahead and
1:50
Speaker 1: start the taper or announce it formally in November at
1:54
Speaker 1: the next meeting. And uh, I think it's due though,
1:58
Speaker 1: So let's talk more about those supplies and issues, because
2:00
Speaker 1: it doesn't just impact, you know, monetary policy. There's also
2:04
Speaker 1: the earnings question because when your input costs are higher,
2:08
Speaker 1: margins come into question, and especially as you know we're
2:11
Speaker 1: entering now, I believe today's two hundred and thirty days
2:14
Speaker 1: where we haven't seen a pullback of five percent in
2:16
Speaker 1: the SMP five hundred. How vulnerable are equities at these
2:19
Speaker 1: levels as we had into earning season. Yeah, I think
2:23
Speaker 1: last week we did hit an ter day five percent correction.
2:25
Speaker 1: We were hoping that we would get there. Um, these
2:29
Speaker 1: markets need to to have that correction. You know, the
2:31
Speaker 1: SMP just has gone almost twelve months without it. I
2:35
Speaker 1: think they can be vulnerable. I mean, look in two
2:38
Speaker 1: we're gonna have a lot of headwinds. We're gonna have
2:40
Speaker 1: the FED doing a taper program. We're gonna also potentially
2:44
Speaker 1: have rate hikes going into the fourth quarter of next year.
2:47
Speaker 1: You know, the dot plot is moving forward. As far
2:49
Speaker 1: as ray hikes, We're gonna have continued supply chain issues,
2:54
Speaker 1: potential hike in taxes. So I think these markets could
2:58
Speaker 1: be vulnerable. But going to the end of the year,
3:00
Speaker 1: we're still holding our price target on the SMP AT
3:04
Speaker 1: and I think we could rally into the end of
3:06
Speaker 1: the year before we get into a more volatile marketplace
3:10
Speaker 1: in Yeah, that's a nice move up. You've got their forecast.
3:13
Speaker 1: I hope you are correct. How about you know a
3:17
Speaker 1: few weeks ago. We had a big shock to the
3:18
Speaker 1: market when China reared its ugly head and ever Grand
3:24
Speaker 1: and the concern about a contagion coming out of Asia
3:28
Speaker 1: that seems to have ebbed a little bit. Are you
3:30
Speaker 1: is that on hear rate our screen. We are still
3:33
Speaker 1: monitoring that. And it's not just about ever Grand anymore.
3:36
Speaker 1: China has a lot of debt issues and that's just
3:38
Speaker 1: the first salvo um We think there could be continued
3:42
Speaker 1: problems coming out of China. They've got a housing issues,
3:45
Speaker 1: they've got major debt issues with some of their companies,
3:47
Speaker 1: and the crackdowns are doing in the technology sector and
3:50
Speaker 1: software sector and the gaming industry and recently on bitcoin.
3:54
Speaker 1: It's gonna cause even more problems in their in their economy.
3:58
Speaker 1: And that's what we're forecasting, going into something else that
4:02
Speaker 1: could happen in maybe if you know things get together
4:06
Speaker 1: on Capitol Hill. Is higher tax rates to pay for
4:09
Speaker 1: longer economic or longer term economic spending. How do you
4:13
Speaker 1: factor that in when making investment decisions, the risk of
4:16
Speaker 1: that coming down the pike. Well, look hiking corporate tax rates.
4:21
Speaker 1: These big corporations, they certainly have the horsepower with their
4:27
Speaker 1: tax attorneys on their payroll to maneuver around as much
4:30
Speaker 1: as they can. It's the small business owner that's going
4:33
Speaker 1: to get clauded, and that is the backbone of the
4:36
Speaker 1: US economy and that definitely will give some headwins to this.
4:40
Speaker 1: Uh this economic outlook. Earnings growth is already in a
4:45
Speaker 1: slower growth mode as we go into adding increasing corporate
4:50
Speaker 1: taxes is only gonna exacerbate that. Brett gotta asking the
4:56
Speaker 1: time left Florida State Seminal football team, what's going on
5:00
Speaker 1: down in Tallahassee. Wow. Uh man, it's tough. It's tough
5:05
Speaker 1: right now being a seminal. But we do have faith
5:07
Speaker 1: in coach Doorbell. He's a very solid individual, a great leader.
5:11
Speaker 1: I think I think they're gonna eventually get their act
5:15
Speaker 1: together here, um hopefully this weekend playing Syracuse. All right,
5:19
Speaker 1: Brett Youwing, thank you so much for joining us. We
5:21
Speaker 1: appreciated Brett youing Chief Market Strategists first Franklin Financial Services
5:25
Speaker 1: on the phone from Tallahassee, Florida. And yes he is
5:28
Speaker 1: a graduate of the the Florida State University in Tallahassee.
5:31
Speaker 1: You know, when you think about it, when we talked
5:34
Speaker 1: to these smart people, these pros Kaylee. There's a lot
5:38
Speaker 1: that goes into that wall will worry that is very
5:41
Speaker 1: tough to dismiss, and yet you continue to see the
5:44
Speaker 1: buying of the dip behavior, and to me that really
5:47
Speaker 1: strikes there's a contrast between institutional investors and retail investors
5:51
Speaker 1: and how much is it, you know, retail investors that
5:54
Speaker 1: just continually come in and buy the dip that is
5:56
Speaker 1: actually continuing to drive US higher despite all the concerns
5:59
Speaker 1: and risk factors out there. Yeah. Absolutely, And I think
6:02
Speaker 1: it's gonna be very interesting as we go into this
6:03
Speaker 1: earning season starting in a couple of weeks, the guidance
6:06
Speaker 1: we get from these companies, you know, it's gonna be uh.
6:09
Speaker 1: I think we're gonna hear about these uh supply chain
6:12
Speaker 1: challenges and the impacts that will have on its costs
6:14
Speaker 1: and you keep correctly bringing up the margin pressure that
6:17
Speaker 1: could eventually come into some of these companies, And so
6:20
Speaker 1: that will be really interesting, uh to see kind of
6:22
Speaker 1: the guidance they have as it relates to the supply chain,
6:25
Speaker 1: as it relates to inflation, UH, and their margins going forward.
6:28
Speaker 1: So again, earnings as it seems to be every quarter,
6:31
Speaker 1: will be very important for this market. As this market
6:34
Speaker 1: is at or near all time highs on a daily basis,
6:37
Speaker 1: we're gonna more coming up. This is Bloomberg, all right.
6:43
Speaker 1: Looking at the d X Y index's came back, you know,
6:47
Speaker 1: late Mayo's around here. We are ninety four and change.
6:51
Speaker 1: Nice move in the dollar, dollar strength. Let's get to
6:54
Speaker 1: the bottom of that. PREA misra head of global interest
6:56
Speaker 1: rate strategy for TV securities joints is is that you
7:00
Speaker 1: the flight to perceived safety over the last couple of
7:04
Speaker 1: months here, what do you make of the dollar strength?
7:07
Speaker 1: I think thanks for having me on. I think the
7:09
Speaker 1: initial move may have been, you know, just safe haven,
7:14
Speaker 1: but I do think there's an underlying theme here of
7:17
Speaker 1: US exceptionalism, of the U s out performing the rest
7:20
Speaker 1: of the world U on the growth front, and now
7:23
Speaker 1: in the last week of the FED starting the process
7:27
Speaker 1: of unwind and they've sort of taken the drama out
7:29
Speaker 1: of the taper. We know when taper starts, when it ends.
7:32
Speaker 1: And if that means that US rates and US rates
7:35
Speaker 1: have been the underperformer in in in terms of global
7:38
Speaker 1: rates over the last week or so, I think that's
7:41
Speaker 1: what's reflected in in in the in the currency. You know,
7:45
Speaker 1: the correlations between reads and currency do tend to rise
7:48
Speaker 1: when you're in these inflection points of monetary policy, and
7:51
Speaker 1: I think we're kind of there now, So let's talk
7:53
Speaker 1: about those higher rates pre Obviously, we're now north of
7:56
Speaker 1: one fifty, where it seemed for a while like we
7:59
Speaker 1: might never get back to. There is the bias for
8:01
Speaker 1: yields now firmly to the upside. I think in the
8:05
Speaker 1: long end, I would argue for somewhat time. Yes, I
8:07
Speaker 1: think tapering is not entirely priced in. The Fed chap
8:12
Speaker 1: out suggested a much sooner end to tapering than what
8:14
Speaker 1: the market was priced for. So the market, I think
8:17
Speaker 1: in the last week has been pricing in a fast
8:20
Speaker 1: end of taper or or a fast end to quee.
8:22
Speaker 1: I think there's a little bit more room and that
8:24
Speaker 1: we're looking for one seventy five on the tenure. I
8:26
Speaker 1: do think the front end is much more a function
8:28
Speaker 1: of economic data. We're gonna get payrolls next week, and
8:32
Speaker 1: our view is that that's where the economy is a
8:34
Speaker 1: bit choppy, or the recovery is not going to be
8:37
Speaker 1: a straight line up. So I think the front end,
8:40
Speaker 1: the zero to five year part of the curve. It's
8:43
Speaker 1: not clear to me that the bias is higher rates
8:45
Speaker 1: just yet. We really need to see whether the structural
8:47
Speaker 1: labor market issues, is participation rising, what's happening on the
8:52
Speaker 1: labor front. I think we need evidence of that recovery
8:55
Speaker 1: before those rates can rise a lot, because we're already
8:57
Speaker 1: pricing in the first rate hike at the end of
8:59
Speaker 1: next year, which I think is a fairly optimistic view.
9:02
Speaker 1: So I actually think front and rates and long fives,
9:05
Speaker 1: I think front and rates can decline because we're going
9:08
Speaker 1: to realize that the economy has a lot of work
9:10
Speaker 1: to do on the labor market front, and the FED
9:12
Speaker 1: is going to let it run before they hike. But
9:15
Speaker 1: the long end is a different story. I think that's
9:16
Speaker 1: where Acque actually matters a lot. And you know, you
9:19
Speaker 1: raise a good point there, because we had initial jobs
9:22
Speaker 1: claims this morning came in a little higher than expected,
9:25
Speaker 1: the highest point since early August, the third month in
9:27
Speaker 1: a row of of kind of higher initial jobs claims.
9:32
Speaker 1: Should we make up too much out of that or
9:34
Speaker 1: how do you view that? Are you putting that in
9:35
Speaker 1: the context? Is that a trend for you? Yeah, we
9:38
Speaker 1: were stretching aheads a little bit about that. You know,
9:40
Speaker 1: there's always seasonals this time of the year, just at
9:43
Speaker 1: the start of the new school year, We've often noticed
9:45
Speaker 1: seasonal quirkiness in the data. The supplementary unemployment insurance also
9:50
Speaker 1: ran off. It's also only a couple of states um
9:53
Speaker 1: that showed the rise, So we're not thinking this is
9:56
Speaker 1: the start of a trend, but it's absolutely something we
9:58
Speaker 1: want to watch for. Or I think the claims are
10:01
Speaker 1: giving you a sense of you know, firings and layoffs,
10:05
Speaker 1: while what we're trying to spend more time on is
10:07
Speaker 1: people re entering the labor force. What's the pace of
10:11
Speaker 1: hiring is if some of the supply chain disruptions that
10:13
Speaker 1: maybe keeping you know, production law are those ebbing away.
10:17
Speaker 1: So you know, our thought is that the labor recovery
10:20
Speaker 1: is still continuing and that it's not reversing, but it's
10:24
Speaker 1: a slower process than I think what the FED or
10:26
Speaker 1: the market would like to see. Obviously, the labor market
10:29
Speaker 1: recovery and the resulting FED reaction function is one thing
10:33
Speaker 1: that the market has to consider on the monetary side,
10:35
Speaker 1: on the fiscal side, I'm just wondering how you view
10:38
Speaker 1: the drama down in DC, not only the question around
10:40
Speaker 1: the dead ceiling, but also the question of what economic
10:43
Speaker 1: spending in the longer term is actually going to look
10:45
Speaker 1: like in terms of a dollar figure. Right, that's a
10:48
Speaker 1: huge deal, particularly because we know there's going to be
10:51
Speaker 1: a physical drag for next year. So the extent of
10:54
Speaker 1: the drag I think is very important for every market
10:57
Speaker 1: to consider. And that's where this artisan there. It's one
11:01
Speaker 1: or three and a half or nothing. I think it's
11:03
Speaker 1: going to have an implication for how much of a
11:05
Speaker 1: fiscal drag does the economy have to live through next
11:08
Speaker 1: year because growth is going to slow down. Are we
11:10
Speaker 1: going from four percent to two or are we going
11:12
Speaker 1: below that? I think the fiscal package actually has a
11:15
Speaker 1: lot of bearing. Um. Hard to tell our base cases
11:18
Speaker 1: that one and a half to two trillion partisans plus
11:21
Speaker 1: the one point too and bipartisan will go through. Clearly
11:24
Speaker 1: not easy, and then we've got this messy dead ceiling.
11:27
Speaker 1: At least it seems like the shutdown is going to
11:29
Speaker 1: get resolved. That's good, But the dead ceiling is a
11:32
Speaker 1: tough one, um, And I think the market is absolutely
11:34
Speaker 1: ignoring it. Other than a small part in the builders,
11:38
Speaker 1: I don't think any market is really pricing that in
11:40
Speaker 1: and it's one of those things where you hope and
11:42
Speaker 1: pray that you don't have to get to it, but
11:44
Speaker 1: if you do, these market implications economic implications are so
11:48
Speaker 1: high that I think being aware of that and hopefully
11:51
Speaker 1: we don't have to wait until October seventeenth to see
11:54
Speaker 1: what happens. But I'm not seeing a very clear consensus
11:58
Speaker 1: past of how the death ceiling you seized. Pre MIZERA,
12:01
Speaker 1: thank you so much for joining us. I really appreciate
12:03
Speaker 1: always getting your thoughts here on global interest rate. She
12:07
Speaker 1: is ahead of global interest rate strategy at TV Securities,
12:09
Speaker 1: based in New York City. We've got green on the
12:14
Speaker 1: screen here. A lot of uncertainty down in Washington, d C. Today,
12:17
Speaker 1: and a lot of things have to happen right to
12:19
Speaker 1: get some of this legislation moving. But the markets are
12:22
Speaker 1: kind of taking away and see action. Uh so will we.
12:25
Speaker 1: But let's check in with a professional on the markets,
12:27
Speaker 1: Alan Rukshoff, and financial advisor and senior portfolio manager for UBS. Alan,
12:33
Speaker 1: thanks so much for joining us here. I'm a little
12:35
Speaker 1: surprised that the markets are kind of hanging in there,
12:39
Speaker 1: given that we've got a lot of things building. This
12:42
Speaker 1: wall of worry, whether it's rising interest rates, tapering uh,
12:46
Speaker 1: legislative uncertainty down in Washington. How do you put it
12:49
Speaker 1: all together when you talk to your clients. Yeah, Paul,
12:52
Speaker 1: that's that That is the the billion dollar question. We
12:56
Speaker 1: have a lot of investor challenges, potential to higher taxation, inflation,
13:01
Speaker 1: all these ideas that are out there, and government shutdowns looming.
13:04
Speaker 1: Perhaps so all these things really are in the midst
13:08
Speaker 1: of a period of recovery after the pandemic. You know,
13:12
Speaker 1: we have a situation where we have a health crisis
13:15
Speaker 1: that's going to leave a world that's more indebted, less global,
13:19
Speaker 1: more digital. But at the end of the day, they're
13:21
Speaker 1: going to be structural changes that happen as a result
13:25
Speaker 1: of the last eighteen months that we've all lived through
13:27
Speaker 1: together that really could lead to extreme positivity, spectacular positivity.
13:33
Speaker 1: And I think that the market is aware and has
13:37
Speaker 1: to balance both of those things, the realities of the
13:39
Speaker 1: uncertainty with the fact that we have a potential for
13:43
Speaker 1: unbelievable new things to happen over the next couple of years. Well,
13:47
Speaker 1: you talk about how things have changed during the pandemic,
13:50
Speaker 1: and it's to such a degree that the word normalization
13:54
Speaker 1: is relative. You know what is normal now. But when
13:56
Speaker 1: we talk about not just monetary policy normalization but fiscal
14:00
Speaker 1: policy normalization and that being less supportive going forward, how
14:03
Speaker 1: do you think about that with the long term lens. Yeah,
14:08
Speaker 1: we have a situation on the monetary policy side, and
14:10
Speaker 1: we'll get the fiscal policy in a second. Of the
14:12
Speaker 1: monetary policy side, where we have a balance sheet that
14:17
Speaker 1: has doubled over the course of the of the of
14:20
Speaker 1: the COVID crisis. We had a quadruple over the course
14:24
Speaker 1: of the financial crisis. So there's a lot of new
14:27
Speaker 1: money out there. We have a Congress that is considering
14:29
Speaker 1: two bills right now that's going to spend more and
14:32
Speaker 1: more money, and so there is a real structural question
14:35
Speaker 1: about whether or not this can have long term impacts
14:38
Speaker 1: on inflation, and the inflation question, the transitory language, notwithstanding,
14:44
Speaker 1: has to be a question that goes beyond the academic
14:47
Speaker 1: because we have a lot more money out there and
14:50
Speaker 1: balance that with the supply chain issues and everything else
14:54
Speaker 1: that's going on, and we really have to try to
14:56
Speaker 1: understand where things are heading in the ticks of these
15:00
Speaker 1: great changes. So the fiscal policy and the monetary policy
15:03
Speaker 1: of all this new money, Really we don't know where
15:06
Speaker 1: that's going to be, and that is the wall of
15:08
Speaker 1: worry that that Paul referred to. So Alan, you know,
15:12
Speaker 1: Katie and I were just chatting off air about, you know,
15:14
Speaker 1: how consumer behaviors may change post pandemic. You know, we've
15:18
Speaker 1: been through eighteen months of this, whether it's getting back
15:20
Speaker 1: into the workforce, buying a house. When you talk to
15:23
Speaker 1: your clients, have you sense that their outlook for their investments,
15:28
Speaker 1: their goals has has anything changed? What I've seen changes
15:34
Speaker 1: this acceptance that we are in an inflationary period. I
15:37
Speaker 1: think the people feel that, notwithstanding this idea of transitory inflation,
15:41
Speaker 1: once prices go up, uh, we don't see it go
15:45
Speaker 1: down so fast. And I think that the clients have
15:48
Speaker 1: are respectful of that and trying to figure out how
15:51
Speaker 1: to keep up with inflation. Historically, the stock market has
15:53
Speaker 1: been an excellent place to do that, and that's, you know,
15:56
Speaker 1: one of the ways to stay ahead of inflation. But
15:58
Speaker 1: really doing that in the context of managing the risk
16:01
Speaker 1: of what's going on out there, it is a necessity,
16:04
Speaker 1: and it goes beyond you know, having bonds and stocks.
16:07
Speaker 1: It goes looking at alternative investments and and other potential
16:11
Speaker 1: and uh, you know, and this is by certainly not
16:13
Speaker 1: a recommendation and uh certainly not an area of that
16:17
Speaker 1: that we look at from an investment perspective, but certainly
16:19
Speaker 1: gives you some indications of people's thinking out there is
16:22
Speaker 1: the focus on the cryptocurrency market and the fact that
16:25
Speaker 1: it gets quoted, you know, by by people on TV
16:29
Speaker 1: and looked at very seriously because people are trying to
16:33
Speaker 1: figure out how do you manage the risk For us,
16:35
Speaker 1: we really try to diversify throughout um the listed security
16:40
Speaker 1: world and through alternative investments to try to do that
16:43
Speaker 1: because of this uncertainty that's out there. And I think
16:46
Speaker 1: that in answer to your question, that's what clients are
16:49
Speaker 1: focused on. How do you balance the COVID realities, the
16:54
Speaker 1: fiscal man terry policy realities, with the fact that we
16:57
Speaker 1: have to stay ahead of inflation. What do you tell
17:00
Speaker 1: a client who comes to you and says, I think
17:02
Speaker 1: it may be time for me to you know, telt
17:03
Speaker 1: more into cash. You know, having cash as part of
17:09
Speaker 1: me portfolio, especially in a period of such dynamic change,
17:12
Speaker 1: is a must. At the same time, I think that
17:14
Speaker 1: the inflation picture is something that we have to be
17:17
Speaker 1: aware of so we don't want to. It's not a
17:19
Speaker 1: matter of fear of missing out. It's beyond that. It's
17:22
Speaker 1: a matter of keeping up with the global pricing structure
17:25
Speaker 1: to being able to be able to buy the Coca
17:27
Speaker 1: Cola for the same price you know, two years from
17:30
Speaker 1: now that it is today, based on your assets that
17:34
Speaker 1: you have. So I think that people are it's they're
17:38
Speaker 1: they're they're numerous risks by by taking an action, but
17:42
Speaker 1: there it could be significantly greater risk by taking in action.
17:46
Speaker 1: All right, Alan, thank you so much for joining us.
17:48
Speaker 1: I really appreciate your perspective and your thoughts. Alan Rekschaffen,
17:51
Speaker 1: financial advisor and senior portfolio manager at UBS based in
17:55
Speaker 1: New York City. Um, and again, you know, it's it's
17:58
Speaker 1: tough to be in cash because it's not you're not
18:01
Speaker 1: getting paid here and on a you know, a real basis,
18:04
Speaker 1: you're losing money in cash. And so it's for a
18:06
Speaker 1: lot of folks it's that Tina situation kind of there's
18:10
Speaker 1: no alternative. I need to be in the market, and
18:12
Speaker 1: so that becomes a question of what do I own.
18:14
Speaker 1: You know, if we're in fact heading into rising and
18:17
Speaker 1: rate environment, inflation picking up, and it may not be transitory.
18:21
Speaker 1: What do I want to own in this market? So
18:23
Speaker 1: that tends to be the discussion for lots of folks.
18:25
Speaker 1: We're got more coming up. This is Bloomberg. Let's bring
18:31
Speaker 1: it right now. Louis Navalier, Chairman, founder and CEO of
18:34
Speaker 1: Navalier and Associates. Louie, thanks so much for joining us here.
18:37
Speaker 1: I think as we think about these markets, Kaylee and
18:40
Speaker 1: I were just discussing, this wall of worry is a
18:43
Speaker 1: real thing. There's a lot of stuff out there. How
18:46
Speaker 1: are you thinking about these markets when people might throw back, Boy,
18:51
Speaker 1: We've got inflation, we've got earnings risk, we've got uncertain
18:55
Speaker 1: Washington d C. We've got rising rates. How do you
18:57
Speaker 1: frame it all well? I think the big picture that's
19:02
Speaker 1: happening now is obviously China's intercession, and we had that
19:07
Speaker 1: with their purchasing energy index this morning, and Britain could
19:12
Speaker 1: be in a recession pretty click too if they don't
19:15
Speaker 1: get their act together, and then we have a green
19:19
Speaker 1: energy problem because anyone who's trying to comply is um
19:24
Speaker 1: it's not working out in China. It's the higher electrics
19:29
Speaker 1: drawing down. So then they're trying to. They have rolling
19:32
Speaker 1: blackouts and many provinces and obviously in Britain, I guess
19:36
Speaker 1: pycess up sixfold because the wind will stop blowing. That's
19:40
Speaker 1: also hurt Germany. And it's it's a problem, and it's just, uh,
19:47
Speaker 1: we're gonna have very high energy inflation and uh it's um.
19:51
Speaker 1: I think it's against told. But the central banks can't
19:54
Speaker 1: raise rates because the interest burden is too big. So okay,
19:58
Speaker 1: so you just desc I had a lot of things
20:00
Speaker 1: that I would think would be you know, kind of
20:02
Speaker 1: negative for a risk sentiment. But to Paul's point, we
20:06
Speaker 1: continue to climb the wall of worry by the dip
20:08
Speaker 1: works every time. Is there a point where it's going
20:11
Speaker 1: to stop working. I think it's gonna work welter in
20:15
Speaker 1: the next year, because um, when you have inflation, it's
20:19
Speaker 1: either real estate or stocks, and growth stocks are place
20:23
Speaker 1: to be. Clearly, some energy stocks are gonna wint fall earnings.
20:27
Speaker 1: But I don't have the analysis estimate cuts UM that
20:31
Speaker 1: some people are starting to complain about. But I am
20:34
Speaker 1: finding fewer stocks to buy UM, and I am profiting
20:38
Speaker 1: from all the problems out there. I mean, I'm loaded
20:41
Speaker 1: with all this shipping and container stocks, so they're going
20:44
Speaker 1: to be profiting from the glut men the ship, the
20:49
Speaker 1: shipping glut, and um It's just it's a very interesting
20:53
Speaker 1: environment we're in. But earnings do work. Um. We are
20:57
Speaker 1: going to have positively quota results and notest on so
21:00
Speaker 1: it's previous quarter and then we have season seasonal strength
21:04
Speaker 1: in a lot three months the year. October is the
21:06
Speaker 1: season strong month despite October eighty seven and Novembers even better.
21:11
Speaker 1: So I expect the strong finish to the year. UM.
21:14
Speaker 1: I was very happy. Every time the market corrects, the
21:17
Speaker 1: money seems to go to different stocks, so money is
21:19
Speaker 1: not leaving the market's just washing around. All right, Louis,
21:22
Speaker 1: you've been in this game a long time. You began
21:25
Speaker 1: publishing your research advisory newsletter in so you've seen economic cycles.
21:32
Speaker 1: The one of the areas that's really getting my attention
21:34
Speaker 1: in the last several weeks has been this global supply
21:37
Speaker 1: chain issue. We're hearing from more and more companies affecting
21:40
Speaker 1: their businesses and more and more ways. It just seems
21:44
Speaker 1: like it's setting us up for some earnings disappointments. Perhaps
21:47
Speaker 1: uh not just in the near term and maybe intermediate term,
21:50
Speaker 1: how do you think about this global supply chains. It
21:52
Speaker 1: doesn't seem to be fixing itself in the near term. Well,
21:56
Speaker 1: other than only the container stocks and a lot of
21:58
Speaker 1: shipping stocks. I don't have an issue with it because
22:01
Speaker 1: I am T s M and UMC and micro Electronics
22:04
Speaker 1: and TMC Thaiwan Semi, so they're making the chips are
22:07
Speaker 1: in high demand. But there's no doubt that the electrification
22:12
Speaker 1: has become a problem. And because the electric cars would
22:16
Speaker 1: take more chips than the other cars, and so that's
22:22
Speaker 1: it's it's a glitch. I mean, Taiwan, somebody's building a
22:24
Speaker 1: great big plant Arizon them, but it's just it's not
22:27
Speaker 1: ready yet. And uh so there's this fight for chips
22:30
Speaker 1: and it's very very sad, and but at least I
22:33
Speaker 1: can profit from that and from the shipping bottlenecks. UM
22:38
Speaker 1: food is a big problem because fertilizer is high and
22:41
Speaker 1: natural gases gets fertilizer prices up. You you're talking about
22:47
Speaker 1: things that could profit from some of the shortages out there,
22:49
Speaker 1: but that if there's a winner, there's always going to
22:51
Speaker 1: be a loser. So what would you be saying far
22:53
Speaker 1: away from in this environment, Well, uh, that's a good question.
22:58
Speaker 1: I don't like this typicals um. Uh. I like companies
23:03
Speaker 1: that dominate their business and monopolistic margin expansion is one
23:07
Speaker 1: of my big things. Uh. So I have sold all
23:11
Speaker 1: the Chinese retailers I had. I did that some time
23:14
Speaker 1: ago though. UM. And in the US, I'm very careful
23:19
Speaker 1: about retail I do have Coals and some especialty stores.
23:23
Speaker 1: I have some sporting good stores, you know, Dicks, Big five. UM.
23:28
Speaker 1: But I really do think we have to be very
23:31
Speaker 1: very careful about we have to watch the consumer. I
23:33
Speaker 1: mean that's um consumer the conference board, UM, the consumer
23:38
Speaker 1: sentiments dipped and that was not a good thing. Hey, Louis,
23:41
Speaker 1: thanks so much for joining us once again. We always
23:43
Speaker 1: appreciate your time. Louis Navalier, chairman, founder and c IO
23:47
Speaker 1: of Navalier UH and Associates here again. UM. Interesting, you know,
23:52
Speaker 1: trying to pick the sectors that are benefiting in the
23:55
Speaker 1: near terms, such as the transportation logistics companies that are
23:58
Speaker 1: able to charge extraordinarily high rates here for their goods
24:02
Speaker 1: and services to get the goods around the world moving.
24:05
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