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Speaker 1: There's an article about five years on Amazon is still
Speaker 1: digesting that thirteen point seven billion dollar Whole Foods takeover.
Speaker 1: The article written by Matt Day. It's edited by Joshua Brustein.
Speaker 1: He is with us on the phone right now. Also
Speaker 1: with us is Joel Webber. He is the editor of
Speaker 1: Bloomberg Business Week. He's with us in the Bloomberg Interactive
Speaker 1: Broker studio Katie that we're talking about this a few
Speaker 1: minutes ago, Joel. It was sort of like the where
Speaker 1: were you when you heard moment? There were so many
Speaker 1: jokes about getting avocado toasts by drone. Yeah, so waiting
Speaker 1: for that still. By the way, that's another good Bloomberg
Speaker 1: Business Week story is about that the drones com materializing.
Speaker 1: But but what's going on with John Mackie, the guy
Speaker 1: who he's gone all he's gone exactly? So what is that?
Speaker 1: Mere Whole Foods co founder of Whole Foods um five
Speaker 1: years ago Amazon uh went shopping for some produce and
Speaker 1: ended up with Whole Foods UM. And you know, I
Speaker 1: think the point of the story is five years on,
Speaker 1: what was it all about? And that was sort of
Speaker 1: I think, what what interested Matt and uh, you know what,
Speaker 1: Josh to just put it to you, what was it
Speaker 1: all about? What does Amazon really had to show for it? Now?
Speaker 1: Thirteen point seven billion for groceries is more than I
Speaker 1: usually spent exactly. Um. Yeah, I think both five years ago,
Speaker 1: both Whole Foods and Amazon needed something. Whole Foods had
Speaker 1: built itself off been to this really big player in
Speaker 1: the organic grocery market, and then everyone else kind of
Speaker 1: figured out that they could do the same thing, and
Speaker 1: so Whole Foods was UM really struggling to figure out
Speaker 1: what its second act would be. UM investors were calling
Speaker 1: for a shake up, and it was just having a
Speaker 1: lot of trouble in the public markets. Meanwhile, Amazon had
Speaker 1: really been trying to get into groceries and grocery delivery,
Speaker 1: and it thought, you know, by this five hundred store
Speaker 1: chain of grocery stores and really just really power up
Speaker 1: our own entry into the grocery market. UM. And five
Speaker 1: years later, it doesn't seem like Whole foods problems have
Speaker 1: been solved. Its problems are still mostly the same. Amazon
Speaker 1: also has not taken over groceries UM, despite the fears
Speaker 1: that it would at that time. And it seems like
Speaker 1: we're largely kind of where we were and not as
Speaker 1: much as happened as we would thought. Well, that's what
Speaker 1: I want to talk about. Five years later, what does
Speaker 1: it Amazon have to show with this purchase. What is
Speaker 1: Whole Foods actually added or subtracted from its bottom line?
Speaker 1: So in terms of its bottom line, the answer is
Speaker 1: that this is not This is one of the slower
Speaker 1: growing parts of Amazon's business. If you look at other
Speaker 1: other aspects of Amazon's business like cloud, cloud computing and
Speaker 1: sort of other real revenue drivers, those have been growing
Speaker 1: faster than the grocery business. Um, and that business is
Speaker 1: also being uh it's not just that groceries are going slower,
Speaker 1: it's like they're not even growing as fast as competitors.
Speaker 1: So that just really hasn't taken off. They haven't figured
Speaker 1: out how to combine these two companies in a way
Speaker 1: that helps them compete in the specific market. Okay, So
Speaker 1: one thing though that it has done is, you know,
Speaker 1: if you need to return Amazon products or you know,
Speaker 1: get grocery pickups, there have been some some noteworthy enhancements
Speaker 1: that either you know, either the mergers helped facilitate or
Speaker 1: that maybe Amazon shoppers have gotten out of it. So,
Speaker 1: so what has been on the on the good side here? Yeah,
Speaker 1: So I think the good side is that you know,
Speaker 1: Amazon uh does have a large uh, this large network
Speaker 1: of physical stores um as I said, there's about five
Speaker 1: um and it has started to lean on Whole Foods
Speaker 1: the expertise in there to help with Amazon Fresh, which
Speaker 1: is its other chain of grocery outlets UM, and we
Speaker 1: haven't really seen the fruits of that yet so speak,
Speaker 1: but that could come in the future that you could
Speaker 1: see if if Amazon Fresh really does mature um and
Speaker 1: turn into something really substantial for the company, that a
Speaker 1: lot of Whole Foods wisdom will have gone into the
Speaker 1: building of that product. It's just not quite um there yet.
Speaker 1: So we mentioned John Mackie. He was the co founder
Speaker 1: of Whole Foods. UM he's moved on retired as of
Speaker 1: September one. Who's in charge of Whole Foods within Amazon now? Yeah,
Speaker 1: so uh he is being taken over by his former CEO,
Speaker 1: former management consultant UM very kind of uh. Mackew was
Speaker 1: known as an as an over as as sort of
Speaker 1: a really big personality um, whereas his successor is less.
Speaker 1: So Jason is his name? Yea, yeah, I mean, I'm
Speaker 1: I'm sorry Jason. Jason Buchelle mentioned that m and his
Speaker 1: plan is kind of to take Whole Foods back to
Speaker 1: its roots, as he says, to try to get back
Speaker 1: to some of like the local produce offerings and doing
Speaker 1: things that makes Whole Foods kind of not feel like
Speaker 1: an Amazon honestly, to feel like not you get the
Speaker 1: same experience everywhere, but you go and you know that
Speaker 1: your local Whole Foods has whatever the produces um you
Speaker 1: know in your region. Well, Joshua, that's been a big
Speaker 1: complaint for people who were sort of the die hard
Speaker 1: Whole Foods people before Amazon purchased the company. If you
Speaker 1: go back to you know, the roots of this company.
Speaker 1: It started in Austin, and it was kind of the
Speaker 1: it's like weird alternative grocery store, right, And even when
Speaker 1: it was a publicly traded company, it and it made
Speaker 1: a ton of acquisitions around the country, it still was
Speaker 1: unique because it had that local produce and it had
Speaker 1: that kind of heart to get stuff. And and I'm wondering,
Speaker 1: It's funny, you know, when this article came out, I
Speaker 1: saw people tweeting about it who didn't work at Bloomberg,
Speaker 1: and they were saying, the Whole Foods the experience of
Speaker 1: going to Whole Foods has changed too much since Amazon
Speaker 1: took it on, So you know, I don't go there anymore.
Speaker 1: Is one of the tweets that that I saw that
Speaker 1: tweeted out this story. How is Whole Foods physically different
Speaker 1: because of Amazon? Like, what's the experience like now, Yeah,
Speaker 1: I think there's two things in there that The first
Speaker 1: that you mentioned about, you know, the whole foods really
Speaker 1: feeling different and sort of losing that local feel is
Speaker 1: is that was a complaint before the acquisition and one
Speaker 1: that I think one of the problems that Hold Food
Speaker 1: had and it certainly hasn't been solved. UM hasn't been
Speaker 1: solved by Amazon, nor would it really like that's not
Speaker 1: Amazon's strength. UM. But to your question about what's physically different,
Speaker 1: you know, Amazon has has helped re re engineer Whole
Speaker 1: Foods UH stores a little bit to be um, you know,
Speaker 1: more focused on delivery. There's a lot of delivery pickers
Speaker 1: in the store people mentioned, which I think some people
Speaker 1: really don't like. You know, you're you're trying to shop
Speaker 1: and there's someone you know, they're like clearly like filling
Speaker 1: up carts to move along. And they've had to dedicate
Speaker 1: some some space that used to be cafes and somewhat
Speaker 1: for the physical infrastructure around the delivery business. So that
Speaker 1: I think is really changed in some of the stores
Speaker 1: and ways that um, you know, long standing customers don't
Speaker 1: necessarily like. UM. One other thing that's interesting is in
Speaker 1: terms of the actual technology. That's the biggest and most
Speaker 1: visible technology change since the Amazon acquisition. You think it
Speaker 1: would be drones or something like super high tech, it's
Speaker 1: actually just the self checkout. Um. Whole Foods had resisted
Speaker 1: doing that for a long time, despite the fact that
Speaker 1: their grocery change had gone along with it. They thought
Speaker 1: it would feel impersonal right. Eventually it just kind of
Speaker 1: became the standard than though self checkout always always takes
Speaker 1: longer than waiting in mind for me at least. Joshua
Speaker 1: Breustin is editor at Bloomberg Business. Joe Weber is the
Speaker 1: editor of Bloomberg Business Week. With us in the Bloomberg
Speaker 1: Interactive Broker Studio. Check out this story. It's in the
Speaker 1: current issue of Bloomberg Business Week magazine. You're listening to
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes
Speaker 1: Tim Stinovic on Bloomberg Radio. Joining us now to talk
Speaker 1: about s back e t f S is Emily Graffeo.
Speaker 1: She is a cross asset reporter for Bloomberg News. She's
Speaker 1: with us in studio sitting to my left, which is
Speaker 1: thrilling because this is how we sit when we're actually
Speaker 1: at our desks um. Let's talk about these back e
Speaker 1: t F So we're talking about the Defiance next Gen
Speaker 1: SPAC derived e t F and the Morgen Creek Exos
Speaker 1: Spack originated e t F both shut last month. Why
Speaker 1: did it take so long? I feel like we've been
Speaker 1: talking about this back downturn for a while now. Yeah,
Speaker 1: well we have. And there's actually still a lot of
Speaker 1: spack e t F s that are still trading, like
Speaker 1: a lot of E t F s um in the
Speaker 1: market right now that are following these speculative areas of
Speaker 1: the market crypto psychedelics, cannabis, and they're still on the market.
Speaker 1: But all the fun stuff, yeah, all the fun stuff,
Speaker 1: and it's been doing pretty poorly. But these two Spack
Speaker 1: e t F s. I think it's an interesting story
Speaker 1: of the FED tightening of monetary policy kind of giving
Speaker 1: a double whammy two spack e t f s, because
Speaker 1: on the one hand, you have this tightening that's not
Speaker 1: very good for speculative risk assets like an e t
Speaker 1: F that tracks a new industry, and then on the
Speaker 1: other hand, the tightening is drying up the liquidity that
Speaker 1: made the back market thrive in the first place. And
Speaker 1: so before they shut It felt like they never really
Speaker 1: gained a lot of traction if you look at the assets,
Speaker 1: if you look at the performance for example, exactly you're
Speaker 1: an E t F reporter, You're an expert E t
Speaker 1: F reporter, so you know, I mean, even at the
Speaker 1: peak a defiance, et F was only about a hundred
Speaker 1: twelve million in assets, which isn't that large, and then
Speaker 1: it moved down to about twelve million when actually liquidated
Speaker 1: in August. Even though I'm not an E t F reporter,
Speaker 1: Can I still be part of this conversation? You can try, Okay,
Speaker 1: I'll try. What does it say about SPACs though? I mean,
Speaker 1: we had Michael Burry talked about this a little earlier
Speaker 1: on Twitter. Katie and I talked about it in referencing
Speaker 1: Emily's story. That was pretty that's pretty cool. Hey, that's
Speaker 1: really cool. Congratulations. I mean, and Katie mentioned that it
Speaker 1: kind of you know, symbolizes excess and frothiness in the market,
Speaker 1: whether we're talking about crypto, but specs are a little
Speaker 1: different because they're kind of cyclical. Right, we've seen SPACs before.
Speaker 1: That wasn't the first rodeo for SPACs, right, but it
Speaker 1: was probably the biggest rodeo force backs that we had seen,
Speaker 1: and it was all again about that fed liquidity. So
Speaker 1: not only are we seeing these funds close up given
Speaker 1: the fact that the liquidity is drawing, but we also
Speaker 1: have regulators um warning about scrutiny over SPACs. And so
Speaker 1: I was talking to a strategist who was saying, maybe
Speaker 1: these et f issuers are just thinking this is not
Speaker 1: worth it anymore. We don't want to be involved in
Speaker 1: this space with the perhaps oncoming regulation for this back space.
Speaker 1: But then again, there's so many crypto et f s
Speaker 1: like we were saying, that are still on the market,
Speaker 1: and of course that they're all doing terribly. Yeah, and
Speaker 1: there's regulation you know, in that space as well. I
Speaker 1: actually have a fun fact, you guys want to hear it.
Speaker 1: So I was looking at the worst performing non leveraged
Speaker 1: e t s so far this year. The first one,
Speaker 1: the top worst performer, is a dry bull shipping e TF.
Speaker 1: The next nine are all crypto related. I thought they
Speaker 1: were like psilocybin. One of them was still Yeah, No,
Speaker 1: that's also doing really poorly, not as poorly, it's still
Speaker 1: super bad. Wow. Yeah, I didn't know the crypto ones.
Speaker 1: I mean it makes sense, and we're gonna talk about
Speaker 1: the crypto winter a little later. Yeah, so you didn't
Speaker 1: read the story that I put out last week. I
Speaker 1: have no excuse. I was going to say I had
Speaker 1: COVID but was recovering. Yeah, excuse long, Let's go back
Speaker 1: to the U t F world, the six trillion, six
Speaker 1: point eight trillion U S E t F arena. You
Speaker 1: write that this what we're seeing with these spack e
Speaker 1: t F closures. It's actually, uh, mirroring a broader pattern
Speaker 1: that we're seeing in the industry overall, in terms of
Speaker 1: how young these firms were. Yeah. So both of these
Speaker 1: e t f s that closed were less than two
Speaker 1: years old. And we've been tracking on the Bloomberg Cross
Speaker 1: Asset Team the fact, Yes, in the e t F
Speaker 1: industry this year, almost half of the e t F
Speaker 1: s that have closed in two were launched in So
Speaker 1: we're seeing the trend of these newer funds um launching
Speaker 1: and trading and then closing pretty soon after. Did you guys,
Speaker 1: I'm sorry, I was like fixing my computer here in
Speaker 1: my microphone. Did you guys talk about the anti spack
Speaker 1: e t F s. Yeah, so, actually we're talking about
Speaker 1: the ranking of different funds, and I was looking at
Speaker 1: the best performing active equity e t F s in
Speaker 1: the US. I love the nuances, you know, you have
Speaker 1: to really streamline it down. But one of them is
Speaker 1: a e t F that shorts um SPACs. This is
Speaker 1: the a excess short despect daily e t that one's
Speaker 1: doing really well. How well, want to give it a number?
Speaker 1: I think it's more than It feels like anecdotally a
Speaker 1: lot and we could put numbers to this, but it
Speaker 1: feels like a lot of the short e t f
Speaker 1: s are doing well because you think of the short
Speaker 1: Cathy would et F, the short innovation e t F
Speaker 1: that's also one of the blockbuster hits of this year. Yeah,
Speaker 1: and they're both from Access, which is pretty impressive for
Speaker 1: a newer, more indie e t F issuer. And we're
Speaker 1: talking about fund closures here, but we know that fund
Speaker 1: e t F launches have actually been really, really robust
Speaker 1: this year. Yeah, So that's another the fund closures and
Speaker 1: these new funds. It might not be all that bad
Speaker 1: that we're seeing so many new funds close because in
Speaker 1: the last two years we've seen so many new e
Speaker 1: t F s launched. So just this year, like volume
Speaker 1: of products out on the market means that there's more
Speaker 1: funds that are bound to close up as well. Yeah,
Speaker 1: it almost feels as if maybe we are actually nearing
Speaker 1: the point where there is an e t F for everything. Yeah,
Speaker 1: I think there is. I'm still tracking that breakfast one
Speaker 1: that I wrote about in Tanuary. What was that one?
Speaker 1: It was breakfast commodities. It was like so much battle.
Speaker 1: It was poor cogs hogs. I mean, with inflation, it's
Speaker 1: probably gone up quite a bit, although you have seemed
Speaker 1: some disinflation in that space as well. Yeah, but it's
Speaker 1: certainly is not to it's sound like seventy something per cent.
Speaker 1: I wonder if people jumped in there after it was
Speaker 1: one of the best performing et okay, exactly when shipping
Speaker 1: rates were just off the chart. Sign of the times,
Speaker 1: all right. Emily Graffeo cross asset reporter for Bloomberg News
Speaker 1: with us in the Bloomberg Interactive Broker Studio. Check out
Speaker 1: her late Well it's actually not even her latest story.
Speaker 1: She's got another one in there. She's very busy. Two
Speaker 1: spack ETFs wiped out in one month. Signal to Boom
Speaker 1: is truly over. Check it out on the Bloomberg Terminal,
Speaker 1: and of course more of her work at Bloomberg dot com.
Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. We're here with
Speaker 1: Stacy Marie Ishmael. She's managing editor for Crypto here at
Speaker 1: Bloomberg News. She's with us in the Bloomberg Interactive Broker studios.
Speaker 1: And I gotta say we're doing a little reminiscing. Katie
Speaker 1: brought it to our attention Stacy that today is your
Speaker 1: one year anniversary of being here at Bloomberg. And typically,
Speaker 1: you know, you walk by people's desks here and they
Speaker 1: have these kind of cool little blocks that they put
Speaker 1: up if they've been here for like ten thirty years. Um,
Speaker 1: one year not huge, however, in the context of Crypto
Speaker 1: A huge anniversary. And I should say not huge in
Speaker 1: the context of like, um, you know, Katie thinks every
Speaker 1: anniversary is a big deal. It's worth celebrating. It is.
Speaker 1: We're celebrating, happy anniversary, Thank you, thank you. What is
Speaker 1: the last year though? How is I mean, like, how
Speaker 1: do we describe the last year in crypto? I'm great,
Speaker 1: I worry about other people who have had their you know,
Speaker 1: companies off of bankruptcy or lose access to all of
Speaker 1: their savings. Um. The way that I have remembered the
Speaker 1: fact that September seven is a big date is because
Speaker 1: it's also the one year anniversary of El Salvador starting
Speaker 1: to accept bitcoin is legal tender. And I feel like
Speaker 1: I measured out most of my weeks, months, weekends in
Speaker 1: terms of what chaotic thing happened in the crypto market.
Speaker 1: So there was the weekend in which China was like,
Speaker 1: we think crypto transactions are illegal. There was the weekend
Speaker 1: in which you know, Celsia said that it was halting withdrawals,
Speaker 1: and just kind of on and on and on. And
Speaker 1: I think the the highs and the lows of this
Speaker 1: market have been very interesting and perhaps more pronounced and
Speaker 1: more profound than people were expected going into September last year.
Speaker 1: And if we think about September last year, we were
Speaker 1: on our way to what would be an all time
Speaker 1: high for bitcoin in November that was around the launch
Speaker 1: of the first bitcoin futures e t F. For you
Speaker 1: and I really got to know each other so much time.
Speaker 1: It was fun bringing it or to today, though the
Speaker 1: big headline out is that the crypto market cap has
Speaker 1: dropped a one trillion dollars sort of tell us how
Speaker 1: we got here and where we're going. Sure, so if
Speaker 1: we were having this conversation last November would have been like, wow,
Speaker 1: crypto market values above three trillion dollars, we're flirting with
Speaker 1: sixty five. People were making prognostications about like nine hundred
Speaker 1: ks in sight. And now you know, there's a meme
Speaker 1: that I saw on Twitter today that like, you know,
Speaker 1: the nineteen thousand um range and Twitter is looking like
Speaker 1: somebody's holding it together with duc dapen string. And that
Speaker 1: shift in sentiment seems to me to really do a
Speaker 1: good job of telling the story, which is that folks
Speaker 1: were very much betting on all things going up, which
Speaker 1: was also the problem with Three Arrows Capital. They blew
Speaker 1: themselves up because they were like prices could never go down.
Speaker 1: And now we're at a point where prices have been
Speaker 1: hovering in this fairly tight range between you know, sort
Speaker 1: of seventeen five and twenty one, which is a frankly
Speaker 1: unusual lack of all utility for something like bitcoin. And
Speaker 1: so I think the fact that we are we seem
Speaker 1: to be stuck. Here is again testimony to the fact
Speaker 1: that there isn't really anything pushing it significantly up, but
Speaker 1: also not anything pushing it significantly down. So if the
Speaker 1: last year was characterized by a huge hedge fund that
Speaker 1: managed ten billion dollars blowing up big layoffs at companies
Speaker 1: f t X coming in and being the hero, the
Speaker 1: same hero, yeah, the savior, the White Knight, if you will,
Speaker 1: what does what does the next year look like? One
Speaker 1: of the things that we've really been trying to look
Speaker 1: at is, you know, I grew up in a in
Speaker 1: an euro financial reporting in which people cared about counter
Speaker 1: party risk, and I feel like counterparty risk super back.
Speaker 1: And the big question or the series of questions that
Speaker 1: we're asking in crypto right now is like, Okay, we
Speaker 1: know about the celsius is, the voyages, the volts who
Speaker 1: are all of their counter parties. We know about these
Speaker 1: minas that are saying, you know, they're dealing with liquidity
Speaker 1: challenges or other forms of financial distress, and they have
Speaker 1: different pools of energy that they might be writing who
Speaker 1: are their customers and trying to sort of work down
Speaker 1: the chain of where do we expect different kinds of
Speaker 1: full out simultaneous. So that is we fully expect executive shakeups,
Speaker 1: and we've already started to see that happening, like CEO departures,
Speaker 1: web voluntary or otherwise CFOs deciding you know what, I'm
Speaker 1: going to piece back out to JP Morgan, where my
Speaker 1: life was a lot more chill um that kind of
Speaker 1: This is a time of distress, and in a time
Speaker 1: of distress, senior executive and senior management teams are going
Speaker 1: to reorg in ways big and small. Yeah, it feels
Speaker 1: like the crypto sphere is learning a lot of trad
Speaker 1: five less super trad five when it comes to founter,
Speaker 1: party risk, collaterized lending. Well, that's a good idea. But
Speaker 1: I want to go back to the market cap uh
Speaker 1: question here, because obviously Bitcoin has gone down a lot,
Speaker 1: but Ether there's actually a lot of optimism there. The
Speaker 1: Ether market cap has kind of been growing over the
Speaker 1: past few months. Of course, as we lead up to
Speaker 1: the merge. Do you have any sense of whether this
Speaker 1: is going to turn into a sell the news sort
Speaker 1: of event. Well, our colleague Vildana has Her of course,
Speaker 1: has written a series of very smart stories about the
Speaker 1: fact that options activity does suggest that there is a
Speaker 1: dent going to be a sell the news event where
Speaker 1: we have folks positioning themselves for a great, great run.
Speaker 1: Congratulates everybody on the on the merge, We're out there,
Speaker 1: quarter guys. Well done. At the same time, though, you
Speaker 1: do have this, if there's any optimism in crypto right now,
Speaker 1: it is it seems to be concentrating around ether and
Speaker 1: ethereum and the merge and the idea of to use
Speaker 1: the jargon the flippening, right like this, this idea that
Speaker 1: there could be a moment in which the market value
Speaker 1: of ether overtakes that of bitcoin. We are so far
Speaker 1: away from that being a practical reality, but that is
Speaker 1: at least something that folks have some degree of conviction.
Speaker 1: And perfect segue for me to tease your podcast, because
Speaker 1: in recent weeks the flippening has been at the subject
Speaker 1: of one of the episodes. Correct, make sure to check
Speaker 1: out Bloomberg Crypto. It's actually a daily podcast, so you're
Speaker 1: managing at her for Crypto and you also have a
Speaker 1: daily podcast. She does it all and still here some home,
Speaker 1: still here have the anniversary here at Bloomberg. Stacey mriya Ishmael,
Speaker 1: Managing editor for Crypto, the host of the Bloomberg Crypto podcast.
Speaker 1: You can catch that on iTunes. I don't call it
Speaker 1: iTunes anymore, the Apple podcast app or wherever you get
Speaker 1: your podcasts. Tim Coke not happy with me right now.
Speaker 1: I'm sure I really appreciate you joining us this afternoon,
Speaker 1: Stacy Pleasure. I'm rom a journal. Yeah, but you let
Speaker 1: me drive? Oh no, no, no no, no, who's leave. I'll
Speaker 1: do the ride grivels. I want to drive. It's good question.
Speaker 1: This is the Drive to the clothes down on Bloomberg Radio. Wow,
Speaker 1: it is already that time for the drive to the close.
Speaker 1: We got less than ten minutes ago in trading on
Speaker 1: this September seven, and we got ourselves a rally. We
Speaker 1: just heard it from Doug Krisner. The S and P
Speaker 1: five fund at Hire by one point nine percent, to
Speaker 1: dal Hire by one point five in the NASDAC Hire
Speaker 1: by two two percent. Let's get into the technicals of
Speaker 1: this with Quincy Crosby, chief equity strategist at l LPL Financial.
Speaker 1: Quincy joining us this afternoon on the phone from Charlottesville, Virginia. Quincy,
Speaker 1: good to have you back with us. How are you fine?
Speaker 1: Thank you? Well, it's it's really good to have you
Speaker 1: with us, UM, especially on a day where we're seeing
Speaker 1: a rally like this, because I want to know from
Speaker 1: a you know, technical analyst perspective, what you're keeping an
Speaker 1: eye on. Because a few weeks ago, when we were
Speaker 1: talking about the rally that we saw, you know, coming
Speaker 1: off of June UH, a lot of technical analysts were like, Okay,
Speaker 1: this is you know, retraced more than fifty of its lows,
Speaker 1: so this rally is good to go. But here we
Speaker 1: are Wednesday, September seven, and we are still down sixteen
Speaker 1: point five percent for the year. Well exactly. I mean,
Speaker 1: you know, technical analysis is very helpful, but you also
Speaker 1: have other factors for the market, and needless to say, UH,
Speaker 1: this market is one that has attributes that are that
Speaker 1: are a little bit different than for example, when the
Speaker 1: market just moved off of its lows UH in January
Speaker 1: fourth nineteen, when the said basically had a major pivot.
Speaker 1: So that this market right now, today's market, what's what's
Speaker 1: nice to see because we're not seeing selling into it.
Speaker 1: We've had a couple of other days where the markets
Speaker 1: started off in the green. There were catalysts for that UH,
Speaker 1: and yet the selling into it the selling pressure was immense.
Speaker 1: You know, this is still a trader's market, and if
Speaker 1: traders are losing money, they're going to find a pocket
Speaker 1: of strength in order to sell into it. And here
Speaker 1: we are just about at the clothes and um, the
Speaker 1: market I think is holding very very nicely. Doesn't mean
Speaker 1: this is the uh, this is the beginning of of
Speaker 1: of of a new trend upward. But certainly uh, lower
Speaker 1: gasoline prices, lower oil prices in total, and absolutely a
Speaker 1: weaker US dollar is extremely how full to underpinn the market? Well,
Speaker 1: let's talk about the US dollar because you are seeing
Speaker 1: a bit of a reprieve today. But I mean it
Speaker 1: feels like the dollar I can't keep it down. We
Speaker 1: do have the European Central Bank decision expected tomorrow could
Speaker 1: be seventy five basis points. When you think about the
Speaker 1: dynamic between the interest rate differentials, would have seventy five
Speaker 1: basis point hike from the ECB be enough to sort
Speaker 1: of stop the dollar strength that we've seen. It would
Speaker 1: initially absolutely, because you know even the last or the
Speaker 1: should I say the first hike they had was fifty
Speaker 1: basis points. The market had been expecting twenty five basis points.
Speaker 1: They surprised the market. And at the Jackson Whole meeting,
Speaker 1: a number of the officials from the e c B echoed, uh,
Speaker 1: you know the comments that Chairman Powell mentioned. They even
Speaker 1: talked about front loading, they talked about being aggressive. So
Speaker 1: I think that the market, the the currency market kind
Speaker 1: of sniffing out that they may actually come in with
Speaker 1: seventy five basis points. The rhetoric matters, um, you know
Speaker 1: when they have the um the press conference. But again
Speaker 1: it may not be lasting if then they start pausing
Speaker 1: and if they then go back to fifty or twenty
Speaker 1: five basis points. So, but it's enough. It just shows
Speaker 1: you how how the US dollar is underpinned by other
Speaker 1: central banks. Granted, it's a refuge um safety currency, there's
Speaker 1: no doubt about that. But in this period it is
Speaker 1: about the interest rate differential. A hawk ish FED and
Speaker 1: the FED that is acting on its aggressive rhetoric, and
Speaker 1: part of the Fed's aggressive rhetoric and action. Uh. The
Speaker 1: net effect of that has been higher interest rates, of
Speaker 1: course on all bonds, but especially on cash, which is
Speaker 1: really interesting to me. I cover E t F s
Speaker 1: and if you look at the cash like E t
Speaker 1: F they cover treasury bills. They've just seen billions and
Speaker 1: billions of dollars come in in the past couple of weeks. Quincy,
Speaker 1: I'd love to hear your view on cash whether in
Speaker 1: this sort of equity market we are seeing some strength today,
Speaker 1: but it's been very choppy. Is cash a good place
Speaker 1: to be well, it is, if you know, if we
Speaker 1: look at it in terms of the market through the
Speaker 1: market's eyes. So for example, if you look at the
Speaker 1: cash that portfolio managers have under management, it's immense. And
Speaker 1: when that cash starts moving into the market, they pay
Speaker 1: very close attention. Usually when they followed technicals, it's the
Speaker 1: two hundred day moving average. But once that cash starts
Speaker 1: coming into the equity market, it's going to be powerful.
Speaker 1: It's going to be a a tsunami of money coming in.
Speaker 1: So in that sense, it's very important. And then you know,
Speaker 1: there are others who just want to hold on to
Speaker 1: it um retail retail traders and you know, start going
Speaker 1: into the market when they feel that it's not a
Speaker 1: one day blip. You know, we don't know where we're
Speaker 1: going to be tomorrow. I mean, the mentality in this
Speaker 1: market is such that you don't know what tomorrow has
Speaker 1: to offer. So once there's stability in the market, I
Speaker 1: think you're going to see more cash coming in. Others
Speaker 1: just want to hang honk to cash. You can argue
Speaker 1: with them that you know, inflation is going to eat
Speaker 1: and up. People love cash. They feel safe, they feel secure,
Speaker 1: and that's why money is going into the banks, is
Speaker 1: going into money market funds even with low rate. I'm
Speaker 1: already wondering what's gonna happen tomorrow. If we see, you know,
Speaker 1: a gain of one today in the sp you know
Speaker 1: what ends up happening in tomorrow's trade. But only time
Speaker 1: will tell. Hey, Quincy, we gotta half half a minute
Speaker 1: left right here. Um, I want to get your thoughts
Speaker 1: on when we're gonna know if we're out of the woods,
Speaker 1: at what point, Like, what are the signs that you
Speaker 1: have to look for to say, okay, the bottom is
Speaker 1: in what one is? Clearly? Uh? You know, Look, the
Speaker 1: market gets the news first. We always like to say that.
Speaker 1: And when the market feels that the Fed really is
Speaker 1: on its way to finishing up, I think the market
Speaker 1: is going to move very very quickly. But in terms
Speaker 1: of sectors moving, we saw consumer discretionary today along with
Speaker 1: consumer staples doing well. But when consumer staples give way
Speaker 1: to consumer discretionary, that's the signal. And I always look
Speaker 1: at the semi conductors when they can have a stable bit,
Speaker 1: a viable bit telling you that the market sees gross ahead.
Speaker 1: Quincy Crosby, chief equity strategist at LPL Financial, joining us
Speaker 1: this afternoon on the phone from Charlotte'sville, Virginia. Thanks for
Speaker 1: listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
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