WEBVTT - A Look At Cybersecurity, Taxes, And The Markets

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<v Speaker 1>Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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<v Speaker 1>my co host Matt Miller. Every business day we bring

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<v Speaker 1>you interviews from CEOs, market pros, and Bloomberg experts, along

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<v Speaker 1>with essential market moving news. Find the Bloomberg Markets Podcast

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<v Speaker 1>on Apple Podcasts or wherever you listen to podcasts, and

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<v Speaker 1>at Bloomberg dot com slash podcast. All right, let's talk.

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<v Speaker 1>You know, cyber security. This is an issue that never

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<v Speaker 1>goes away, and it seems like you can't spend your

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<v Speaker 1>way out of the risk. Uh, it continues to be

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<v Speaker 1>an issue, whether it's Russian hackers, UM or just other

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<v Speaker 1>state agents. Matt Hayden, he's a VP of Government Tech

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<v Speaker 1>Solutions gov Tech Solutions at Exeiger Exeter. Thank you very much.

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<v Speaker 1>Former Assistant Secretary of Homeland Security for cyber Infrastructure, Risk

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<v Speaker 1>and Resilience. Matt, give us a kind of a thirty

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<v Speaker 1>thousand foot view where let's call it corporate America, if

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<v Speaker 1>not the global economy, where are we in terms of

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<v Speaker 1>really dealing with cybercrime on a on a kind of

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<v Speaker 1>a global scale. Well, the negative side of things is

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<v Speaker 1>that it's pretty bleak out there. You have a mix

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<v Speaker 1>of criminal enterprises and nation state actors aggressively trying to

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<v Speaker 1>take out or to capture private sector and government information.

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<v Speaker 1>The good news is is that while it is a mess,

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<v Speaker 1>it's not as bleak as it could be. A majority

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<v Speaker 1>of all of these operations and campaigns against our US

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<v Speaker 1>companies are are coming through ransomware and other techniques such

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<v Speaker 1>as phishing emails. To where there are ways we can

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<v Speaker 1>get some of these protections in place to try and

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<v Speaker 1>curb some of this and not at least be sitting

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<v Speaker 1>ducks for a lot of this activity. And oh, by

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<v Speaker 1>the way, welcome to National Critical Infrastructure Month, coming right

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<v Speaker 1>off Cybersecurity Information Month. So we're trying to hammer the

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<v Speaker 1>public as best we can on all of this. They

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<v Speaker 1>have a month for everything they do. How important is

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<v Speaker 1>uh typto in UM cybersecurity or how much of a

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<v Speaker 1>problem is it in terms of, you know, crimes being committed.

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<v Speaker 1>I know that most crimes still, by far more than anything,

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<v Speaker 1>are committed for dollars, But UM cyber has gained Crypto

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<v Speaker 1>has gained a lot of attention in terms of cybercrime. Well,

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<v Speaker 1>it became the currency of of the day when it

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<v Speaker 1>with ransomware operators ransomware has been around for a very

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<v Speaker 1>long time. This is not a new approach to bugging

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<v Speaker 1>and malwearing and challenging workstations and servers and platforms of life.

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<v Speaker 1>Where crypto came in is it allowed for those transactions,

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<v Speaker 1>at least at the ten thousand foot level, to appear

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<v Speaker 1>anonymous and to allow individuals to receive payment without the

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<v Speaker 1>direct implifications of law enforcement being hot on their heels.

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<v Speaker 1>And so that has allowed for this expansion, and then

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<v Speaker 1>it also created a problem where these safe havens where

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<v Speaker 1>law enforcement can't do direct action, such as Russia and

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<v Speaker 1>other locations that are allowing this ransomware of spent up

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<v Speaker 1>further and further in these criminal enterprises. So, Matt, how

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<v Speaker 1>much in terms of defense here? How much is it

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<v Speaker 1>private versus public in terms of is it up to

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<v Speaker 1>every company entity in and know itself to do it

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<v Speaker 1>or what can the government do? So we use the

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<v Speaker 1>term collective defense. That's not to say that it's on

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<v Speaker 1>any one private sector partner to defend itself from a

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<v Speaker 1>nation state. But it's also to say that no one

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<v Speaker 1>private sector partner should just not have those core cyber

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<v Speaker 1>elements taken care of so that they become a weapon

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<v Speaker 1>in this battle as a or and a victim as

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<v Speaker 1>opposed to being a part of this collective defense where

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<v Speaker 1>everyone is starting to make sure they're not easy targets.

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<v Speaker 1>So what we have right now is hatch management. You know,

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<v Speaker 1>if you're running software that has a vulnerability and there's

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<v Speaker 1>a patch for it, put it on there. If you're

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<v Speaker 1>not doing that, you're opening your door to being not

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<v Speaker 1>just hacked, but to be used after you get hacked

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<v Speaker 1>to go after somebody else. And so those those supply

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<v Speaker 1>chain attacks and everything else on the line all stem

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<v Speaker 1>from we've got to at least have a baseline of

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<v Speaker 1>cybersecurity so that the government can do those more advanced

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<v Speaker 1>features where they have the offensive campaign to try and

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<v Speaker 1>take out some of the bad guy networks at the

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<v Speaker 1>same time looking at what they can offer as far

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<v Speaker 1>as domestic protection. All right, Matt, thanks so much for

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<v Speaker 1>joining us. Matt Hayden there is the VP of gov

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<v Speaker 1>Tech Solutions over at Exeter. It's also the former Assistant

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<v Speaker 1>Secretary of Homeland Security for cyber Infrastructure, Risk and Resilience,

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<v Speaker 1>so he knows what he's talking about, and they certainly

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<v Speaker 1>do at Exeter. Thanks so much. For joining us. This

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<v Speaker 1>is Bloomberg. Now, as Paul said, we're gonna get over

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<v Speaker 1>to Avery Sheffield right now, Senior PM of long short

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<v Speaker 1>equity hedge fund Strategy at Rockefeller Asset Management. They have

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<v Speaker 1>twelve n app billion dollars under under management. And let's

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<v Speaker 1>talk first every about your outlook for the retailers. We've

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<v Speaker 1>got a lot of earnings coming up, and the consumer

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<v Speaker 1>has been I think a really important part of UH

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<v Speaker 1>this recovery as it is. UH, the consumer is a

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<v Speaker 1>huge part of the US UM economy. But we've seen

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<v Speaker 1>consumer confidence come down lately and that was a concern.

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<v Speaker 1>It gave a lot of economist pause, are they going

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<v Speaker 1>to keep going out and spending money? Okay? Great? Great question? UH,

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<v Speaker 1>And that has certainly been on on investor's minds because

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<v Speaker 1>you know, as as we've seen a lot of UH

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<v Speaker 1>retailer's report results really starting with you know, the very

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<v Speaker 1>strong results UM to one to two earnings. Even as

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<v Speaker 1>two three has come in UM, you know, many of

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<v Speaker 1>the stocks actually are below their their peaks from the

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<v Speaker 1>spring with the and that's really due to the fact

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<v Speaker 1>that everyone's very concerned about how are you going to

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<v Speaker 1>comp the comp especially in Q one of next year

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<v Speaker 1>Q four and Q one when you know, we we

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<v Speaker 1>basically will fully laugh the stimulus. And so look, I'm

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<v Speaker 1>probably maybe I think that it's not going to be

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<v Speaker 1>a universal situation where everything's going to do well or

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<v Speaker 1>everything's not going to do well. Certainly this quarter and

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<v Speaker 1>next year, I think we're gonna continue to see, um,

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<v Speaker 1>you know what we've had at the beginnings of a

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<v Speaker 1>bifurcation of those um those companies that sell things, sell

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<v Speaker 1>items that were really under purchased in during covid um

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<v Speaker 1>with a farel accessories, shoes, etcetera. UM kind of topping

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<v Speaker 1>the list of areas that have been underserved and have

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<v Speaker 1>a real potential for upside um and those categories you

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<v Speaker 1>know that that we're really strong during covid Um may

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<v Speaker 1>be going to be more bifurcated. Right. Demand still looks

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<v Speaker 1>to be strong for home improvement, but home furnishing is

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<v Speaker 1>pulling back, and I think that, you know, next year,

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<v Speaker 1>as we move more towards UM people purchasing experiences, those

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<v Speaker 1>kind of larger ticket items are going to be more vulnerable.

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<v Speaker 1>And if you're going to own the stocks of companies

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<v Speaker 1>that sell those items, you really want to be very

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<v Speaker 1>careful and focus on the winners versus you know, in

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<v Speaker 1>the apparel cruises like Disney, Like, uh, what what are

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<v Speaker 1>you talking about? Yeah? So, I mean in terms of

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<v Speaker 1>places where we expect people to be spending more. UM,

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<v Speaker 1>I mean, the theme parks are absolutely an area that

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<v Speaker 1>we are very constructive on, both near term and longer term. UM.

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<v Speaker 1>The results we've already seen and the data points you

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<v Speaker 1>can get from just looking at UM at their their

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<v Speaker 1>reports of like their taxes to the various municipalities, very

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<v Speaker 1>strong sales pricing power. I think they'll be able to

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<v Speaker 1>more than offset labor costs. And that's the place where

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<v Speaker 1>there are some stocks that are still quite cheap. You know.

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<v Speaker 1>For us, the key is, I mean to find stocks

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<v Speaker 1>that don't haven't already priced in a very strong recovery.

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<v Speaker 1>And the theme parks are one area where we do

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<v Speaker 1>think that there's there's real potential. Disney in particular has

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<v Speaker 1>a large digital business, so it's not a pure play

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<v Speaker 1>on this dynamic. See, I'm not sure that you might.

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<v Speaker 1>I'm not sure if you're a cruiser or not. I'm

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<v Speaker 1>not what do you think of the cruise industry area

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<v Speaker 1>that's when it just vexes me. I mean, I can't

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<v Speaker 1>imagine get back on a cruise. I want to try

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<v Speaker 1>it now. I've never done the big like an ocean cruise.

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<v Speaker 1>You know, how do you think about that? Because those

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<v Speaker 1>cruisers are hardcore people. Yes, uh, you know. I actually

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<v Speaker 1>haven't been on a cruise um for many years um,

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<v Speaker 1>but really enjoyed it. And actually my husband and I

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<v Speaker 1>were just talking, I think yesterday about potentially taking a

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<v Speaker 1>cruise this summer. I think the demand for cruises is

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<v Speaker 1>going to be off the charts um next year and

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<v Speaker 1>for the next several years. You know, from a stock perspective,

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<v Speaker 1>it's a little harder because these companies have you know,

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<v Speaker 1>deluted equity taken on a lot of debt um. So

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<v Speaker 1>if you look at the stock price chart, you know,

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<v Speaker 1>you'd think, okay, everything gets better. You know that the

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<v Speaker 1>stocks have a double or a triple in them. I'm

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<v Speaker 1>not sure they have a double or a triple um

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<v Speaker 1>just because of the you know, the different capital structure.

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<v Speaker 1>But I think that what the surprise really is going

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<v Speaker 1>to be is the level of demand and the pricing

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<v Speaker 1>power these companies. And I wouldn't be surprised if their

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<v Speaker 1>net incomes over the next few years actually exceed the

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<v Speaker 1>pre COVID net income, their pre COVID net income, and

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<v Speaker 1>that would probably suggest upside from these levels. I think

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<v Speaker 1>more people have heard about and thought about cruises because

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<v Speaker 1>of the pandemic, and so many people at first like

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<v Speaker 1>I'd never go on, you know, just a floating box

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<v Speaker 1>of virus. You know. On the other hand, people probably

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<v Speaker 1>like you, have given it now more thought, and I

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<v Speaker 1>will say, it's not all about you know, Carnival in

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<v Speaker 1>the Caribbean. You could do a Lynnblad cruise up and

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<v Speaker 1>down the Nile. You could go to Antarctica, you could

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<v Speaker 1>go to the Galapago. So there's other stuff, a little

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<v Speaker 1>bit more highbrow, more down your alley, I say, alright,

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<v Speaker 1>so certainly, yeah, interesting every just real quick, e commerce,

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<v Speaker 1>the trends we saw those are here to stay, right,

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<v Speaker 1>I mean, they pulled three or four years of demand

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<v Speaker 1>for it, but there's they're they're here to stay. I'm

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<v Speaker 1>not really so sure. Actually, I know that this is

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<v Speaker 1>very controversial, UM, but I think they might have pulled

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<v Speaker 1>forward more than the natural run rate of demand. UM.

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<v Speaker 1>Then will potentially ever see in certain sectors. I mean,

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<v Speaker 1>what's really been fascinating to me about this year is

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<v Speaker 1>seeing the declines off of last year's high and everyone's

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<v Speaker 1>just focused on the two year UM. But you know,

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<v Speaker 1>if e commerce is the be all end all of shopping,

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<v Speaker 1>you know, if everyone tried it, that would ever consider

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<v Speaker 1>China and basically every category. If it's so great, um universally,

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<v Speaker 1>why aren't wise and e commerce up for most companies?

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<v Speaker 1>You know? Instead, we're absolutely seeing the opposite. I mean

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<v Speaker 1>even you know when the largest e commerce companies in

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<v Speaker 1>the world report last quarter, I mean, e commerce is

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<v Speaker 1>still up, but it was US actually only three per

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<v Speaker 1>cent for UM and that's globally for I think I'll venture,

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<v Speaker 1>I think I'll back go back to the Short Hills

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<v Speaker 1>Mall at some point we'll see, all right, Avery Sheffield,

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<v Speaker 1>Senior PM, along short equity hedge one strategy of Rockefeller

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<v Speaker 1>Asset Management. Let's get more serious now. Bill Smith joins

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<v Speaker 1>US National Director of Tax Technical Services at c BIZ

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<v Speaker 1>mhm's National tax Office. If you tell somebody your job

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<v Speaker 1>title in a bar, Bill uh that your name is

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<v Speaker 1>an easy one to remember, but your job title and

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<v Speaker 1>the name of the company, You've got to give him

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<v Speaker 1>a big card. I'm guessing, well that you're the only

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<v Speaker 1>person who's ever gotten all the way through it correctly,

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<v Speaker 1>So kudos to you. Let's get to the to the

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<v Speaker 1>tax provisions that we're watching here, and I don't know

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<v Speaker 1>how seriously we have to take them, since Joe Mansion

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<v Speaker 1>doesn't seem even playing ball. But what do you expect

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<v Speaker 1>in terms of changes to the tax code. We'll start

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<v Speaker 1>with the corporate tax code um from the US government.

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<v Speaker 1>Oh well, if if we can rely on the House

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<v Speaker 1>Ways and means right up and the m the framework

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<v Speaker 1>that was released by the White House, there's some big

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<v Speaker 1>changes and a lot of interest in what's not included

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<v Speaker 1>in the latest write up. So we've got the swing

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<v Speaker 1>back to the big alternative minimum tax for corporation. It

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<v Speaker 1>went from a hundred million dollars in the campaign to

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<v Speaker 1>two billion dollars in the prior write up down to

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<v Speaker 1>one billion dollars. And that's a really alternative minimum tax

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<v Speaker 1>for corporations with book profits. Uh where that where not

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<v Speaker 1>they are not paying any tax. Secondly, there is going

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<v Speaker 1>to be an excise tax on redemption, so corporations publicly

0:12:24.720 --> 0:12:28.240
<v Speaker 1>traded corporations who buy back their stock in order to

0:12:28.320 --> 0:12:31.560
<v Speaker 1>reduce the outstanding numbers are going to have to pay

0:12:31.600 --> 0:12:35.400
<v Speaker 1>a surcharge on that, with the intention that they want

0:12:35.840 --> 0:12:38.880
<v Speaker 1>uh the excess funds to be reinvested in what the

0:12:38.920 --> 0:12:43.040
<v Speaker 1>corporation's core businesses, not in trying to just buy their

0:12:43.120 --> 0:12:48.160
<v Speaker 1>stock back. Um. There are a lot of other provisions,

0:12:48.280 --> 0:12:54.400
<v Speaker 1>including limitations on certain interest expense deductions and losses, but

0:12:54.559 --> 0:12:58.200
<v Speaker 1>those are the two big ones and sort of a

0:12:58.280 --> 0:13:02.200
<v Speaker 1>hybrid between business and personal or the changes to the

0:13:02.240 --> 0:13:06.320
<v Speaker 1>Section twelve O two rules. That's the qualified small business

0:13:06.400 --> 0:13:09.600
<v Speaker 1>stock where depending on the time you bought it, if

0:13:09.600 --> 0:13:13.680
<v Speaker 1>you bought the original issuance from a C corporation and

0:13:13.760 --> 0:13:18.400
<v Speaker 1>it met certain parameters, you could exclude either fifty seventy

0:13:19.080 --> 0:13:22.199
<v Speaker 1>or a hundred percent of the game. That is, now,

0:13:22.360 --> 0:13:24.520
<v Speaker 1>if this goes through, that's gonna be whittled back to

0:13:24.600 --> 0:13:27.880
<v Speaker 1>remove the hundred percent and the seventy five percent, so

0:13:27.920 --> 0:13:30.920
<v Speaker 1>we'll be back to what was the original Section twelve

0:13:30.960 --> 0:13:34.360
<v Speaker 1>O two rules allowed. There's a lot of like, let's

0:13:34.400 --> 0:13:36.679
<v Speaker 1>get to the one that's near and dear to Matt's

0:13:36.920 --> 0:13:40.640
<v Speaker 1>hard because it goes no, it goes right to his wallet.

0:13:40.800 --> 0:13:44.360
<v Speaker 1>The millionaires surtax a new surtax of place a five

0:13:44.360 --> 0:13:47.520
<v Speaker 1>percent levy on incomes above ten million? Is that a

0:13:47.520 --> 0:13:49.160
<v Speaker 1>good idea? Is that gonna get done? Is that a

0:13:49.160 --> 0:13:53.880
<v Speaker 1>good idea? Because I mean, well, I thought this was

0:13:53.960 --> 0:13:56.440
<v Speaker 1>all written in stone, because I didn't think that the

0:13:56.440 --> 0:13:58.720
<v Speaker 1>president would have the press release and get the right

0:13:58.800 --> 0:14:00.600
<v Speaker 1>up out of House ways and means the same day

0:14:00.640 --> 0:14:02.800
<v Speaker 1>if he didn't have the votes. We now see that

0:14:02.920 --> 0:14:06.319
<v Speaker 1>maybe he doesn't have the votes. But there's been so

0:14:06.440 --> 0:14:11.440
<v Speaker 1>much back and forth on what will pay for the spend,

0:14:11.640 --> 0:14:13.760
<v Speaker 1>which is down to half of what it was from

0:14:14.080 --> 0:14:16.360
<v Speaker 1>three and a half trillion to one point seven five

0:14:16.520 --> 0:14:19.080
<v Speaker 1>essentially maybe one point eight five if you include the

0:14:19.080 --> 0:14:23.240
<v Speaker 1>immigration But that's in there as a big pay for

0:14:23.240 --> 0:14:27.040
<v Speaker 1>for this particular bill. So if it goes through like

0:14:27.120 --> 0:14:30.480
<v Speaker 1>we think it will, assuming they get Joe Manchin on

0:14:30.560 --> 0:14:33.920
<v Speaker 1>board and Kirsten Cinema, then that'll be in there. And

0:14:33.960 --> 0:14:38.200
<v Speaker 1>you pegged it pretty accurately. This reminds me that, um,

0:14:38.280 --> 0:14:44.200
<v Speaker 1>the Penn Wharton School looked at this uh tramework framework,

0:14:44.200 --> 0:14:46.200
<v Speaker 1>I guess of the word, we're using one point seven

0:14:46.240 --> 0:14:49.720
<v Speaker 1>five trillion, But they've gotten there by cutting the number

0:14:49.720 --> 0:14:52.520
<v Speaker 1>of years certain benefits run, like the expand Child Tax

0:14:52.520 --> 0:14:54.280
<v Speaker 1>Credit and of course, the Democrats are hoping that just

0:14:54.320 --> 0:14:57.680
<v Speaker 1>gets renewed later on. So now Penn is saying it

0:14:57.720 --> 0:15:00.600
<v Speaker 1>could be actually a four trillion dollar cost. And this

0:15:00.680 --> 0:15:02.880
<v Speaker 1>is the kind of slippery slope that people like Joe

0:15:02.880 --> 0:15:07.040
<v Speaker 1>Manchin and Christen Cinema may be worried about. Absolutely, and

0:15:07.080 --> 0:15:10.280
<v Speaker 1>that is in fact how they cut the number down. So,

0:15:11.160 --> 0:15:13.800
<v Speaker 1>as you said, the hope is sort of like the

0:15:13.840 --> 0:15:17.120
<v Speaker 1>Bush tax cuts, when we would have extender legislation at

0:15:17.120 --> 0:15:20.240
<v Speaker 1>the end of December every year. They're hoping that once

0:15:20.280 --> 0:15:22.680
<v Speaker 1>it's on the books and people are used to it,

0:15:22.760 --> 0:15:26.080
<v Speaker 1>so to speak, they'll get extended. And it's a little

0:15:26.080 --> 0:15:29.040
<v Speaker 1>bit like when you do a reconciliation bill, which this is,

0:15:29.480 --> 0:15:31.680
<v Speaker 1>and you're dealing with the ten year budget window. You

0:15:31.680 --> 0:15:34.040
<v Speaker 1>can't increase the depth sit outside the ten year window.

0:15:34.480 --> 0:15:36.400
<v Speaker 1>What they did was say we're just gonna cut it

0:15:36.440 --> 0:15:39.480
<v Speaker 1>back down to five years. Essentially, that'll cut the spin

0:15:39.640 --> 0:15:42.360
<v Speaker 1>down and we'll hope it gets re upped each time.

0:15:42.360 --> 0:15:44.680
<v Speaker 1>It's about the sunset, all right, A lot a lot

0:15:44.720 --> 0:15:47.520
<v Speaker 1>of moving parts there for this framework. Bill Smith, National

0:15:47.520 --> 0:15:50.280
<v Speaker 1>Director of Tax Technical Services for c BIZ m h

0:15:50.560 --> 0:15:56.840
<v Speaker 1>M S National Tax Office, giving us the latest just

0:15:56.880 --> 0:16:00.320
<v Speaker 1>get over now to Tom string Fellow's chief Investments IgG

0:16:00.320 --> 0:16:03.560
<v Speaker 1>just an argent trust company a thirty five billion dollars

0:16:03.560 --> 0:16:07.040
<v Speaker 1>in assets under management, And Tom, we've been talking for

0:16:07.080 --> 0:16:09.600
<v Speaker 1>a long time about inflation, the markets concerns, but they

0:16:09.640 --> 0:16:14.400
<v Speaker 1>seem to be UM continuing to to to climb, and

0:16:15.080 --> 0:16:18.760
<v Speaker 1>the idea that inflation was transit transitory UM seems to

0:16:18.800 --> 0:16:21.240
<v Speaker 1>be pushed further and further by the wayside. What do

0:16:21.280 --> 0:16:24.160
<v Speaker 1>you expect from the Fed tomorrow? Well, I think they

0:16:24.200 --> 0:16:27.640
<v Speaker 1>may kind of redefined transitory. I just kind of been

0:16:27.680 --> 0:16:32.680
<v Speaker 1>interesting as we've been talking about this and halfway expected

0:16:32.760 --> 0:16:35.320
<v Speaker 1>some nervousness to creep into the market, you know, whether

0:16:35.480 --> 0:16:40.520
<v Speaker 1>it's a oh it's so u on the basis premise

0:16:40.600 --> 0:16:43.360
<v Speaker 1>of inflation, and we've not seen that kind of set off.

0:16:43.400 --> 0:16:47.440
<v Speaker 1>And yeah, we've certainly not seen investors rushing into gold.

0:16:47.560 --> 0:16:49.920
<v Speaker 1>You know, looked that a few minutes ago. And you know,

0:16:50.040 --> 0:16:52.800
<v Speaker 1>if I just looked at two elements, inflation and gold

0:16:52.880 --> 0:16:55.680
<v Speaker 1>trying to price in you know, some of the extreme

0:16:55.920 --> 0:17:01.160
<v Speaker 1>inflation scenarios I've heard about, it just hasn't happened. Tom.

0:17:01.160 --> 0:17:05.040
<v Speaker 1>We're about six the way through earnings for the spi UM,

0:17:06.080 --> 0:17:09.000
<v Speaker 1>very strong numbers, Are they strong enough to support the

0:17:09.000 --> 0:17:14.560
<v Speaker 1>evaluation in this market? Yeah, when you look at market multiples,

0:17:14.560 --> 0:17:16.880
<v Speaker 1>I think things are still kind of stretched, and we're

0:17:16.880 --> 0:17:19.920
<v Speaker 1>still looking at a four twelve opee. It's closer to

0:17:20.119 --> 0:17:23.520
<v Speaker 1>about twenty one time, so you know, that's certainly pushing averages.

0:17:23.640 --> 0:17:27.600
<v Speaker 1>But you know, we're not out of a liquid fuel

0:17:27.720 --> 0:17:30.520
<v Speaker 1>market yet. You know, we've still got a lot of

0:17:31.600 --> 0:17:34.880
<v Speaker 1>balance sheet liquidity the Fed's put out there. Obviously tapering

0:17:34.960 --> 0:17:37.720
<v Speaker 1>is going to start changing that a little bit, but yeah,

0:17:37.720 --> 0:17:42.120
<v Speaker 1>I think the market takes over that versus needing government support.

0:17:42.800 --> 0:17:47.160
<v Speaker 1>You know, the earning sticture is certainly driving the underlying support.

0:17:47.240 --> 0:17:51.440
<v Speaker 1>Maybe it's raising the floor of support for corporate earnings

0:17:51.480 --> 0:17:54.560
<v Speaker 1>and evaluations today because you know, when I look at

0:17:54.560 --> 0:17:57.760
<v Speaker 1>other asset classes again, you know, what are our choices

0:17:57.880 --> 0:18:00.919
<v Speaker 1>versus cash and the extinct um. So you know, I

0:18:00.920 --> 0:18:04.440
<v Speaker 1>could rationalize earnings growth is fueling at the market drive

0:18:04.880 --> 0:18:07.800
<v Speaker 1>this year. Go back cope years ago when we first

0:18:07.800 --> 0:18:12.320
<v Speaker 1>had a real noticeable market run, and you know it

0:18:12.480 --> 0:18:16.040
<v Speaker 1>was all over the premise of you know, in the

0:18:16.119 --> 0:18:19.320
<v Speaker 1>actualization of tax rates moving up. So you know, now

0:18:19.359 --> 0:18:21.840
<v Speaker 1>we're in an uncertain picture of what taxes are looking

0:18:21.920 --> 0:18:26.320
<v Speaker 1>like the corporate earnings are still solid full trin down

0:18:26.320 --> 0:18:29.879
<v Speaker 1>next year, but they'll still be positive investors living We're

0:18:29.880 --> 0:18:34.240
<v Speaker 1>probably basing their decisions on earnings and visibility, which we

0:18:34.320 --> 0:18:37.959
<v Speaker 1>actually have this year. But do you expect earnings the

0:18:38.000 --> 0:18:40.679
<v Speaker 1>beats have been getting smaller, or at least the the

0:18:40.760 --> 0:18:45.120
<v Speaker 1>amount by which companies have been beating are as, earnings

0:18:45.119 --> 0:18:51.159
<v Speaker 1>growth slowing down as we get further away from you know, March. Oh, absolutely,

0:18:51.280 --> 0:18:54.560
<v Speaker 1>you know, I suspect that while they stay positive, you know,

0:18:54.800 --> 0:18:57.639
<v Speaker 1>we're not going to see uh, you know, core re

0:18:57.800 --> 0:19:01.119
<v Speaker 1>angulize earnings growth numbers that are and U plus or

0:19:01.119 --> 0:19:04.440
<v Speaker 1>minus start you know, it's I think kind of mathematically

0:19:04.440 --> 0:19:07.119
<v Speaker 1>and won't happen. And if it does, and what we

0:19:07.320 --> 0:19:10.639
<v Speaker 1>start really worrying about is is a FED starting to

0:19:10.680 --> 0:19:12.960
<v Speaker 1>push rates a lot faster than you know, what the

0:19:13.000 --> 0:19:15.639
<v Speaker 1>premises of a couple of times this next year. But

0:19:15.720 --> 0:19:19.560
<v Speaker 1>earning beats will slow down, the percentage of growth will

0:19:19.600 --> 0:19:23.320
<v Speaker 1>slow down. But we're still getting into a pretty robust

0:19:24.080 --> 0:19:26.760
<v Speaker 1>environment that you know, assuming and get rid of the

0:19:26.840 --> 0:19:29.120
<v Speaker 1>lugeam that's you know, in the ports of l A

0:19:29.119 --> 0:19:32.800
<v Speaker 1>and Long Beach, and that's not an overnight event. You know,

0:19:32.920 --> 0:19:36.640
<v Speaker 1>I think we see kind of a trickle through earning

0:19:36.880 --> 0:19:40.240
<v Speaker 1>sustainability as things come through, and you know, this is

0:19:40.280 --> 0:19:44.360
<v Speaker 1>probably three to six month time frame. You know, hopefully

0:19:44.400 --> 0:19:47.359
<v Speaker 1>you know, everybody has a great Christmas and gets the

0:19:47.440 --> 0:19:50.680
<v Speaker 1>toys under the under the tree from the truck that's

0:19:50.680 --> 0:19:54.480
<v Speaker 1>sitting on the port. But you know, I see things

0:19:54.600 --> 0:19:58.400
<v Speaker 1>rolling out through next year slowing down. Let a sustainable

0:19:58.680 --> 0:20:02.159
<v Speaker 1>rollout of goods which will support you know, the demand

0:20:02.240 --> 0:20:04.440
<v Speaker 1>that's still out there. We've not seen it. You will

0:20:04.480 --> 0:20:08.760
<v Speaker 1>slow down in in demand. What we're seeing is a

0:20:08.960 --> 0:20:12.159
<v Speaker 1>uh you know, a port fuel you know, kind of

0:20:12.240 --> 0:20:20.359
<v Speaker 1>a surplus uh rundown. That doesn't that doesn't a bad

0:20:20.400 --> 0:20:23.680
<v Speaker 1>picture for next year. It we'll see more of volatilo

0:20:23.960 --> 0:20:26.520
<v Speaker 1>and people are trying to come up with the rationale

0:20:26.720 --> 0:20:30.880
<v Speaker 1>for how long taking. But I don't think that's it's

0:20:30.880 --> 0:20:33.439
<v Speaker 1>a long term negative, right Hey, Tom, thanks so much

0:20:33.440 --> 0:20:36.200
<v Speaker 1>for joining us. Really appreciate it. Tom Stringfellow, chief investment

0:20:36.240 --> 0:20:41.720
<v Speaker 1>strategist at Argent Trust Company from San Antonio, Texas, home

0:20:41.800 --> 0:20:43.920
<v Speaker 1>of u s a A, the former home of Clear

0:20:44.000 --> 0:20:47.720
<v Speaker 1>Channel Communications, at one time the largest radio operator back

0:20:47.840 --> 0:20:49.879
<v Speaker 1>in the day, spent a lot of time in San Antonio.

0:20:49.960 --> 0:20:53.280
<v Speaker 1>Believe it's the home of Greg Jarrett. Great Jarrett's got

0:20:53.400 --> 0:20:56.120
<v Speaker 1>it's the birth home. It's the birth home of Greg Jarrett. Yeah,

0:20:56.160 --> 0:20:57.880
<v Speaker 1>I can't keep track. I need the book. I'm waiting

0:20:57.920 --> 0:20:59.280
<v Speaker 1>for the book to come out. I mean, there's just

0:20:59.320 --> 0:21:01.640
<v Speaker 1>so much going on with that guy. So we'll see here.

0:21:01.680 --> 0:21:04.800
<v Speaker 1>But again, Uh, Tom Stringfeld another one of those folks

0:21:04.800 --> 0:21:06.520
<v Speaker 1>that says, you know, we're we've got a little bit

0:21:06.600 --> 0:21:08.960
<v Speaker 1>more room left to go. Uh in this market. I

0:21:08.960 --> 0:21:12.480
<v Speaker 1>know that wall of worry out there, uh is definitely real,

0:21:12.520 --> 0:21:15.119
<v Speaker 1>and there's a lot of meaningful bricks in that wall

0:21:15.160 --> 0:21:19.080
<v Speaker 1>of worry, whether it's inflation UM or the FED or

0:21:19.080 --> 0:21:22.119
<v Speaker 1>you know, uh, some of these supply chain BOTTLENECKSUM. But

0:21:22.320 --> 0:21:24.840
<v Speaker 1>the stocks keep moving higher, and again we've got green

0:21:24.920 --> 0:21:28.800
<v Speaker 1>on the screen. Uh here today. Thanks for listening to

0:21:28.840 --> 0:21:32.399
<v Speaker 1>the Bloomberg Markets podcast. You can subscribe and listen to

0:21:32.440 --> 0:21:36.600
<v Speaker 1>interviews with Apple Podcasts or whatever podcast platform you prefer.

0:21:36.960 --> 0:21:40.920
<v Speaker 1>I'm Matt Miller. I'm on Twitter at Matt Miller three.

0:21:41.359 --> 0:21:43.840
<v Speaker 1>Pt on Ball Sweeney, I'm on Twitter at pt Sweeney.

0:21:43.880 --> 0:21:46.560
<v Speaker 1>Before the podcast, you can always catch us worldwide at

0:21:46.560 --> 0:21:47.600
<v Speaker 1>Bloomberg Radio