1
00:00:00,800 --> 00:00:04,040
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

2
00:00:04,040 --> 00:00:06,920
Speaker 1: my co host Matt Miller. Every business day we bring

3
00:00:06,960 --> 00:00:11,520
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

4
00:00:11,560 --> 00:00:15,600
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

5
00:00:15,640 --> 00:00:18,439
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

6
00:00:18,480 --> 00:00:22,640
Speaker 1: at Bloomberg dot com slash podcast. We don't drink coffee,

7
00:00:23,239 --> 00:00:25,360
Speaker 1: Paul and I don't drink coffee, not a not a

8
00:00:25,360 --> 00:00:27,760
Speaker 1: big coffee drinker. Um, but I know a lot of

9
00:00:27,760 --> 00:00:31,159
Speaker 1: people do. And machines here Bloomberg. You know, I like

10
00:00:31,200 --> 00:00:34,120
Speaker 1: to wake up in the morning with a big inch

11
00:00:34,360 --> 00:00:36,520
Speaker 1: V eight. Let's talk about cars for a minute. Jeff

12
00:00:36,560 --> 00:00:40,800
Speaker 1: Dyke joins us. He's a president of Sonic Automotive and UM,

13
00:00:40,840 --> 00:00:44,800
Speaker 1: they had their uh Q two results out all time

14
00:00:45,040 --> 00:00:50,199
Speaker 1: record quarterly revenue three point four billion dollars, up fifty

15
00:00:50,280 --> 00:00:52,720
Speaker 1: eight point seven percent year over year. If that doesn't

16
00:00:52,760 --> 00:00:55,520
Speaker 1: reb your engine, I don't know what does, Jeff. What's

17
00:00:55,560 --> 00:00:58,720
Speaker 1: the what's the biggest problem? Is it getting inventory in

18
00:00:58,760 --> 00:01:02,280
Speaker 1: the door? Yeah, so from a new car perspective, that's

19
00:01:02,280 --> 00:01:05,440
Speaker 1: the big issue. UM, We've got eighty four stores across

20
00:01:05,480 --> 00:01:07,520
Speaker 1: the country, and we've got about an eight to nine

21
00:01:07,600 --> 00:01:11,880
Speaker 1: days supply new car inventory pre COVID, we that number

22
00:01:11,880 --> 00:01:15,000
Speaker 1: would be in the fifty to sixty day range. So uh,

23
00:01:15,080 --> 00:01:18,280
Speaker 1: certainly inventories are tight. That's push inflation up on the

24
00:01:18,319 --> 00:01:22,160
Speaker 1: new car prices. Um. And it's also affecting used car

25
00:01:22,200 --> 00:01:26,440
Speaker 1: business because you know, new car inventory drives used car inventory,

26
00:01:26,920 --> 00:01:29,520
Speaker 1: and so you've seen this crazy and version of used

27
00:01:29,520 --> 00:01:31,920
Speaker 1: car prices being really really high wholesale prices at some

28
00:01:31,959 --> 00:01:34,240
Speaker 1: point in time during the summer, we're paying more uh

29
00:01:34,319 --> 00:01:36,040
Speaker 1: for a for a car than we could you know

30
00:01:36,280 --> 00:01:38,800
Speaker 1: that we could sell a new car for uh. So uh,

31
00:01:38,920 --> 00:01:41,520
Speaker 1: it's just created all kinds of crazy pricing. But that's

32
00:01:41,520 --> 00:01:45,040
Speaker 1: gonna alleviate. UM. The chip shortages is you know, I

33
00:01:45,080 --> 00:01:47,960
Speaker 1: wouldn't say coming to an end, but certainly getting better. Um.

34
00:01:48,000 --> 00:01:50,080
Speaker 1: And so between now and the year, inventory levels are

35
00:01:50,080 --> 00:01:53,240
Speaker 1: gonna come back on new uh and PreO pre owned

36
00:01:53,240 --> 00:01:55,160
Speaker 1: inventories will come back, and so we're looking for a

37
00:01:55,200 --> 00:01:58,000
Speaker 1: great second half of the year. All right, Jeff, Hey,

38
00:01:58,160 --> 00:02:00,920
Speaker 1: before we start, just give Bruton and Bill Brooks my

39
00:02:00,960 --> 00:02:02,920
Speaker 1: best regards. I worked with those guys when taking that

40
00:02:03,120 --> 00:02:05,880
Speaker 1: Speedway Motorsports Public Way back in the day. So some

41
00:02:05,960 --> 00:02:08,440
Speaker 1: good times with those guys. I'll be happy to do

42
00:02:08,480 --> 00:02:11,600
Speaker 1: that too. Fantastic guys. Yep, Jeff talked to us, you know,

43
00:02:11,639 --> 00:02:14,160
Speaker 1: so the automakers, it's it's just amazing you talk to

44
00:02:14,160 --> 00:02:16,160
Speaker 1: me about that inventory. And and the guy got a

45
00:02:16,160 --> 00:02:19,400
Speaker 1: buddy who's who, who also is an auto business, and

46
00:02:19,440 --> 00:02:21,960
Speaker 1: he says the exact same thing. I mean, when are

47
00:02:22,000 --> 00:02:23,960
Speaker 1: the O E M s telling you that you can

48
00:02:24,000 --> 00:02:28,320
Speaker 1: get back to a more normalized level of inventory. Yes,

49
00:02:28,440 --> 00:02:30,720
Speaker 1: so I think it's gonna happen in stages. I think

50
00:02:30,760 --> 00:02:35,320
Speaker 1: the highline bludgury vehicles come back first. So we have

51
00:02:35,360 --> 00:02:38,080
Speaker 1: an eight day supply of BMWs and our TBMW stores

52
00:02:38,080 --> 00:02:41,799
Speaker 1: across the country today, um probably October November time range.

53
00:02:41,800 --> 00:02:45,160
Speaker 1: That's gonna be to thirty. I don't expect inventories to

54
00:02:45,240 --> 00:02:48,000
Speaker 1: ever come back to the level that they were pre COVID, though,

55
00:02:48,680 --> 00:02:50,840
Speaker 1: because it's a heck of a lot easier to manage

56
00:02:50,840 --> 00:02:54,639
Speaker 1: smaller inventories. The manufacturers are not having to spend a

57
00:02:54,680 --> 00:02:58,000
Speaker 1: ton of money on incentives any longer, so they're making

58
00:02:58,040 --> 00:02:59,919
Speaker 1: more money. The business is just a lot more EFFICI

59
00:03:00,080 --> 00:03:02,239
Speaker 1: and so what may have been a sixty to seventy

60
00:03:02,320 --> 00:03:05,360
Speaker 1: days supply traditionally before COVID, I think will end up

61
00:03:05,400 --> 00:03:07,560
Speaker 1: being a forty five or fifty days supply as we

62
00:03:07,600 --> 00:03:10,120
Speaker 1: move forward, but certainly not the lows that we're seeing

63
00:03:10,120 --> 00:03:12,080
Speaker 1: here at the end of July in August, in the

64
00:03:12,160 --> 00:03:15,080
Speaker 1: eight and nine to ten day range across the country.

65
00:03:15,120 --> 00:03:17,600
Speaker 1: That that's going to get better progressively as we move

66
00:03:17,639 --> 00:03:19,200
Speaker 1: towards the end of the year. So first, I have

67
00:03:19,240 --> 00:03:23,320
Speaker 1: an observation which just dawned on me. Uh, the four

68
00:03:23,840 --> 00:03:27,639
Speaker 1: bosses that I've spoken to since I've been in New

69
00:03:27,680 --> 00:03:31,959
Speaker 1: York all drive BMW's, And then I know, and then

70
00:03:32,000 --> 00:03:35,920
Speaker 1: Paul does to Jeff and and Paul is he's facing

71
00:03:35,920 --> 00:03:38,560
Speaker 1: a conundrum here because he needs he wants to get

72
00:03:38,600 --> 00:03:41,000
Speaker 1: a new car, waants a stick with a Beamer because

73
00:03:41,000 --> 00:03:43,560
Speaker 1: he likes to drive, and he wants to stick shift.

74
00:03:43,800 --> 00:03:48,560
Speaker 1: What can he do? Called Jeff dyke Ye, but but

75
00:03:48,560 --> 00:03:51,440
Speaker 1: but manual transmissions are difficult to get these days, aren't

76
00:03:51,440 --> 00:03:54,440
Speaker 1: they They are? But we certainly can make that happen.

77
00:03:54,520 --> 00:03:57,960
Speaker 1: And and um, you know, there there's that option for

78
00:03:58,000 --> 00:04:01,120
Speaker 1: all of their model lines, um in particularly supporting or

79
00:04:01,440 --> 00:04:04,320
Speaker 1: of the luxury model lines. And so that's easy to do.

80
00:04:04,400 --> 00:04:06,280
Speaker 1: We we can certainly make that happen. And sounds like

81
00:04:06,360 --> 00:04:10,240
Speaker 1: a lot of as well. You got three M three

82
00:04:10,280 --> 00:04:11,880
Speaker 1: or an M four I'd saying, which, so you can

83
00:04:11,960 --> 00:04:14,560
Speaker 1: handle that very easily. So Jeff, it's interesting. I mean

84
00:04:14,600 --> 00:04:17,440
Speaker 1: for you at the dealer level, these are you know,

85
00:04:17,520 --> 00:04:20,839
Speaker 1: good times because you really can drive hard bargains, right.

86
00:04:20,880 --> 00:04:25,120
Speaker 1: I mean, it's definitely a seller's market, isn't it. Everything

87
00:04:25,160 --> 00:04:26,920
Speaker 1: is selling an M s r P. I don't care

88
00:04:26,920 --> 00:04:29,640
Speaker 1: if that's a twilet camera or Honda a chord which

89
00:04:29,680 --> 00:04:32,799
Speaker 1: never does that all the way up the line. Um,

90
00:04:32,839 --> 00:04:35,239
Speaker 1: everything is selling an ms RP. People have to have cars.

91
00:04:35,320 --> 00:04:37,920
Speaker 1: We don't have to discount the manufacturers aren't discounting, so

92
00:04:37,960 --> 00:04:41,080
Speaker 1: there's really no discounts out there to give. Um. And

93
00:04:41,080 --> 00:04:42,919
Speaker 1: and I think as we move forward it lightens up

94
00:04:42,960 --> 00:04:45,400
Speaker 1: a little bit. But again, um, I think we'll be

95
00:04:45,440 --> 00:04:47,720
Speaker 1: selling closer to M s RP than as far away

96
00:04:48,000 --> 00:04:50,000
Speaker 1: from M s r P as we were selling prior

97
00:04:50,080 --> 00:04:52,279
Speaker 1: to COVID had really kind of gotten a way of

98
00:04:52,360 --> 00:04:54,400
Speaker 1: the world. It's the first thing you learn in economics,

99
00:04:54,480 --> 00:04:57,680
Speaker 1: right is supply and demands. And um, they're going to

100
00:04:57,760 --> 00:05:01,560
Speaker 1: control the supply a whole lot better than manufacturers are. Um.

101
00:05:01,600 --> 00:05:04,640
Speaker 1: As we move forward, which is a huge blessing for everybody. Well,

102
00:05:04,640 --> 00:05:06,920
Speaker 1: how long does does the demand hold up? I mean,

103
00:05:06,960 --> 00:05:09,799
Speaker 1: I know a lot of you know, kids that said

104
00:05:09,800 --> 00:05:12,640
Speaker 1: they were never going to get cars, city dwellers that

105
00:05:12,720 --> 00:05:15,320
Speaker 1: maybe thought they didn't need them, and they all have

106
00:05:15,440 --> 00:05:20,880
Speaker 1: gone out and bought automobiles. But you know that can't last. Well,

107
00:05:20,880 --> 00:05:22,960
Speaker 1: I don't think it can last. But short supply does

108
00:05:23,040 --> 00:05:26,320
Speaker 1: create demand. Um, that's just how our country works, right.

109
00:05:26,360 --> 00:05:29,440
Speaker 1: And so when anything, remember toilet paper last year. Luxury

110
00:05:29,440 --> 00:05:31,800
Speaker 1: cars with the toilet paper this year, right, Um, you

111
00:05:31,800 --> 00:05:33,640
Speaker 1: couldn't you couldn't buy a roll of toilet paper last

112
00:05:33,680 --> 00:05:34,840
Speaker 1: year to save your life, and you did. It was

113
00:05:34,920 --> 00:05:38,320
Speaker 1: fifteen bucks. Um. And and that's what's going on in

114
00:05:38,360 --> 00:05:40,280
Speaker 1: the car industry this year. I think it. I mean,

115
00:05:40,279 --> 00:05:43,360
Speaker 1: it's certainly going to get better, um, you know as

116
00:05:43,400 --> 00:05:46,800
Speaker 1: we move forward, But the government's got a quit paying everybody,

117
00:05:46,960 --> 00:05:49,760
Speaker 1: um and to stay home. I mean the labor market.

118
00:05:50,120 --> 00:05:52,000
Speaker 1: You feel it. In the labor market, we certainly do.

119
00:05:52,120 --> 00:05:54,800
Speaker 1: The manufacturers certainly do. And I think as people get

120
00:05:54,800 --> 00:05:57,240
Speaker 1: back to work, the demand you know, comes down a bit.

121
00:05:57,360 --> 00:05:59,880
Speaker 1: But I don't see that happening this year and may

122
00:06:00,120 --> 00:06:01,800
Speaker 1: not even to the first six months of next year.

123
00:06:01,880 --> 00:06:04,600
Speaker 1: That the demand is just so high. We've sold all

124
00:06:04,600 --> 00:06:07,240
Speaker 1: the cars on our law everything in our pipeline and

125
00:06:07,320 --> 00:06:10,400
Speaker 1: have customers. They're still coming, and so the business is

126
00:06:10,440 --> 00:06:12,839
Speaker 1: just amazing at this point in time. I've been in

127
00:06:12,839 --> 00:06:15,440
Speaker 1: the business for twenty five years and I have never

128
00:06:15,440 --> 00:06:18,120
Speaker 1: seen it like this. Wow. Interesting, alright, really interesting, Jeff,

129
00:06:18,160 --> 00:06:20,600
Speaker 1: thanks so much for joining us. Really appreciate it. Jeff Dykes,

130
00:06:20,640 --> 00:06:24,440
Speaker 1: President Sonic Automotive UH symbol s a H. The stock

131
00:06:24,520 --> 00:06:26,880
Speaker 1: is up about three quarters of one percent today, up

132
00:06:26,920 --> 00:06:29,320
Speaker 1: thirty nine percent for the year, and they posted some

133
00:06:29,360 --> 00:06:32,640
Speaker 1: really strong results last night and the business, as Jeff said, UH,

134
00:06:32,640 --> 00:06:39,640
Speaker 1: stronger than ever under ninety four billion with a B.

135
00:06:40,360 --> 00:06:43,880
Speaker 1: That's some serious What would you do just tax problems

136
00:06:43,880 --> 00:06:46,320
Speaker 1: and who needs that issue there? What a lot of

137
00:06:46,320 --> 00:06:48,479
Speaker 1: folks are trying to do in the market places? Um,

138
00:06:48,480 --> 00:06:50,680
Speaker 1: you know, think about do I plow back into those

139
00:06:50,680 --> 00:06:52,720
Speaker 1: growth stocks which have been such good stories over the

140
00:06:52,800 --> 00:06:55,400
Speaker 1: last decade plus, or do I stick with my rotation trade,

141
00:06:55,640 --> 00:06:58,080
Speaker 1: the reopening trade. Our next guest has an opinion there,

142
00:06:58,120 --> 00:07:02,640
Speaker 1: Mike Lucas principle and CEO of True Mark Investments, Mike,

143
00:07:02,800 --> 00:07:05,360
Speaker 1: I seem to recall that you are certainly in that

144
00:07:05,440 --> 00:07:09,880
Speaker 1: growth stock camp. Give us your thoughts. Definitely in the

145
00:07:09,880 --> 00:07:12,720
Speaker 1: growth stock camp. I mean, look, the reality is we've

146
00:07:12,920 --> 00:07:16,520
Speaker 1: we've pigeonholed a couple of different trends rightly, right, the

147
00:07:16,560 --> 00:07:20,640
Speaker 1: work from home trade and the the Great rotation. I

148
00:07:20,680 --> 00:07:23,120
Speaker 1: think both are dead right, and if if we waited

149
00:07:23,120 --> 00:07:25,480
Speaker 1: ten years, so the Great rotation of value that was

150
00:07:25,640 --> 00:07:28,440
Speaker 1: purely model driven and kind of floated for a bit there,

151
00:07:28,480 --> 00:07:31,960
Speaker 1: and now we're seeing it dissipate. The work from home trade.

152
00:07:32,000 --> 00:07:35,560
Speaker 1: It's funny everyone punished some of the secular growth stocks

153
00:07:35,560 --> 00:07:40,520
Speaker 1: when the the lockdown started to end. But reality is,

154
00:07:40,520 --> 00:07:43,640
Speaker 1: when you see earnings results come through those secular growth

155
00:07:43,680 --> 00:07:47,920
Speaker 1: stocks that are part of the broader digitalization, the global

156
00:07:47,920 --> 00:07:54,040
Speaker 1: economy continued. Yeah, they're showing acceleration, and Amazon's getting beat up, right,

157
00:07:54,120 --> 00:07:56,880
Speaker 1: So maybe we're looking at the wrong trade for the

158
00:07:56,920 --> 00:07:59,320
Speaker 1: work from home trade. So it's you know, I think

159
00:07:59,360 --> 00:08:01,800
Speaker 1: there's a there's a nice pocket of secular growth out

160
00:08:01,840 --> 00:08:04,480
Speaker 1: there that's going to continue to accelerate. It it was

161
00:08:04,520 --> 00:08:08,440
Speaker 1: accelerating prior to the lockdown in the pandemic, accelerating through it,

162
00:08:08,880 --> 00:08:11,000
Speaker 1: and now it's accelerating out of it. And sometimes it

163
00:08:11,040 --> 00:08:15,800
Speaker 1: takes one too even three yearning cycles to separate the

164
00:08:16,160 --> 00:08:19,320
Speaker 1: you know, the story stocks from the real secular growth stocks.

165
00:08:19,360 --> 00:08:22,560
Speaker 1: But they're there and there, they've got tail winds, and

166
00:08:22,880 --> 00:08:26,680
Speaker 1: you know, regardless of what the macroeconomic environment is, these

167
00:08:26,680 --> 00:08:28,880
Speaker 1: are industries and companies that aren't going away. But Mike,

168
00:08:28,880 --> 00:08:31,880
Speaker 1: are you saying, you know, you don't believe in value

169
00:08:32,000 --> 00:08:34,800
Speaker 1: rising up over growth or that we're just framing it

170
00:08:34,840 --> 00:08:36,679
Speaker 1: the wrong way in terms of what these stocks, what

171
00:08:36,800 --> 00:08:39,600
Speaker 1: these companies are, Well, I think we're framing it the

172
00:08:39,600 --> 00:08:41,600
Speaker 1: wrong way. First and foremost, we're looking at it as

173
00:08:41,640 --> 00:08:44,400
Speaker 1: a binary outcome. Uh do I think value is going

174
00:08:44,480 --> 00:08:47,160
Speaker 1: to rise up over growth? No? I don't. Long term,

175
00:08:47,160 --> 00:08:49,600
Speaker 1: I don't. I think this whole thing is now geared

176
00:08:49,640 --> 00:08:51,640
Speaker 1: towards growth. You know, if we look at the last

177
00:08:51,679 --> 00:08:55,240
Speaker 1: ten years, quite frankly, most of the growth was concentrated

178
00:08:55,240 --> 00:08:56,800
Speaker 1: and saying, you know, if we take that out of

179
00:08:56,800 --> 00:09:00,160
Speaker 1: the equation, really what happened there? But if you if

180
00:09:00,160 --> 00:09:02,679
Speaker 1: you look at a holistic view of this and understand

181
00:09:02,720 --> 00:09:07,960
Speaker 1: that we've got right now, I mean essentially to really

182
00:09:08,320 --> 00:09:11,679
Speaker 1: strong wealth creators in this in this country and globally

183
00:09:11,920 --> 00:09:15,240
Speaker 1: real estate and equities. So you know, how long is

184
00:09:15,280 --> 00:09:18,280
Speaker 1: that value trading to last. I think you see great

185
00:09:19,320 --> 00:09:23,440
Speaker 1: opportunities in value and some different end producers. You see

186
00:09:23,480 --> 00:09:27,640
Speaker 1: tremendous opportunities and secular growth. It doesn't have to be binary.

187
00:09:27,679 --> 00:09:29,280
Speaker 1: So you know, when we talk about work from home,

188
00:09:29,320 --> 00:09:31,920
Speaker 1: we talked about great rotation, we're falling into that track.

189
00:09:32,200 --> 00:09:33,800
Speaker 1: You know, we're falling into the idea that it has

190
00:09:33,800 --> 00:09:36,319
Speaker 1: to be one or the other. It's not. It's it's

191
00:09:36,360 --> 00:09:38,440
Speaker 1: never been that way. It's always been sort of what's

192
00:09:38,440 --> 00:09:40,720
Speaker 1: going on in the gray area, and that will continue

193
00:09:40,800 --> 00:09:44,600
Speaker 1: because as we can see like reopening or we're not reopening,

194
00:09:44,679 --> 00:09:48,120
Speaker 1: or the masks you guys earlier mask mandates are recommendations,

195
00:09:48,160 --> 00:09:51,920
Speaker 1: you know, the nuances in the language or throwing people

196
00:09:51,960 --> 00:09:54,880
Speaker 1: into a tail spin right now and we don't know

197
00:09:54,960 --> 00:09:56,760
Speaker 1: what's going to happen in the next week, the next month.

198
00:09:56,800 --> 00:10:00,120
Speaker 1: And we saw inflation signals go off the chart. Now

199
00:10:00,160 --> 00:10:03,600
Speaker 1: their team again, volatilities down, and the market that you know,

200
00:10:03,600 --> 00:10:07,520
Speaker 1: the equity market keeps grinding higher, and uh so you know,

201
00:10:07,559 --> 00:10:10,120
Speaker 1: I wouldn't call it uncertainty but I'd call it confusion

202
00:10:10,240 --> 00:10:12,360
Speaker 1: right now. And you know, I'd think the best thing

203
00:10:12,360 --> 00:10:15,720
Speaker 1: to do is look for stocks that maybe a part

204
00:10:15,720 --> 00:10:18,880
Speaker 1: of the or beneficiaries of the new paradigm shift. Where

205
00:10:19,360 --> 00:10:23,120
Speaker 1: there are secular growth stocks, particularly intact that I've become,

206
00:10:23,679 --> 00:10:27,400
Speaker 1: we'll we'll call them defensive for lack of a better term. Uh.

207
00:10:27,480 --> 00:10:30,520
Speaker 1: When we've all been running around staring at work from

208
00:10:30,559 --> 00:10:33,480
Speaker 1: home and thinking about the great rotation, and it's time

209
00:10:33,559 --> 00:10:35,880
Speaker 1: to shift off thinking a little bit, Mike, what do

210
00:10:35,920 --> 00:10:38,560
Speaker 1: you think about inflation has certainly been a worry concern

211
00:10:38,640 --> 00:10:40,320
Speaker 1: from market participants. How do you think about it with

212
00:10:40,400 --> 00:10:47,000
Speaker 1: your UH strategies? Well, you know, inflation t here. You know,

213
00:10:47,040 --> 00:10:49,599
Speaker 1: anybody's gone to the gas pump, or or gone to

214
00:10:49,600 --> 00:10:53,160
Speaker 1: the grocery store, or I guess less six weeks tried

215
00:10:53,200 --> 00:10:57,280
Speaker 1: to get lumber, you know, as realized get inflations definitely here,

216
00:10:57,280 --> 00:10:59,800
Speaker 1: that was a transitory I guess that's that's the real question.

217
00:11:00,040 --> 00:11:04,479
Speaker 1: The FED handling it correctly, that's a whole another question. Um.

218
00:11:04,640 --> 00:11:09,760
Speaker 1: So in the end for us, I'll I'll parent poward

219
00:11:09,800 --> 00:11:12,320
Speaker 1: marks here and say that it's quite possible the best

220
00:11:12,360 --> 00:11:15,840
Speaker 1: inflation hedge out there is is a strong secular growth story.

221
00:11:16,200 --> 00:11:19,679
Speaker 1: And even if we do see yields start to creep up,

222
00:11:20,720 --> 00:11:23,520
Speaker 1: we're still in a historically low yield environment. Even if

223
00:11:23,559 --> 00:11:27,480
Speaker 1: we get back to pre pandemic levels. Uh, if inflations

224
00:11:27,520 --> 00:11:31,040
Speaker 1: doubling that up, where do you go? Right? And so

225
00:11:31,600 --> 00:11:33,920
Speaker 1: you know, I think the need for growth in in

226
00:11:33,960 --> 00:11:36,680
Speaker 1: the equity space is still going to persist. And I

227
00:11:36,720 --> 00:11:38,760
Speaker 1: think inflations here, it's just a matter of how long

228
00:11:38,760 --> 00:11:40,360
Speaker 1: it's gonna last. And what I'm not the set is

229
00:11:40,400 --> 00:11:43,800
Speaker 1: tackling it correctly well, as long as it's less than growth, right,

230
00:11:43,960 --> 00:11:47,360
Speaker 1: I mean substantially less. I heard the term growth growth

231
00:11:47,360 --> 00:11:51,480
Speaker 1: flation the other day and I thought it made perfect sense. Yeah, No,

232
00:11:51,600 --> 00:11:53,120
Speaker 1: I think that's I think it's a great way to

233
00:11:53,160 --> 00:11:57,960
Speaker 1: coin it. Um. The reality is that again, if we

234
00:11:58,040 --> 00:12:03,760
Speaker 1: can if we can absorb inflation, uh, then you know

235
00:12:04,240 --> 00:12:07,920
Speaker 1: people are going to co exist with it, right, Not

236
00:12:08,000 --> 00:12:10,640
Speaker 1: that we have a choice anyway, but I think the

237
00:12:10,720 --> 00:12:15,439
Speaker 1: ability to account for inflation with different asset classes is

238
00:12:15,480 --> 00:12:18,160
Speaker 1: really going to dictate how this is digested, you know,

239
00:12:18,200 --> 00:12:21,600
Speaker 1: in the in the markets and in particularly on main street. Mike,

240
00:12:21,600 --> 00:12:23,160
Speaker 1: thanks so much for joining us. Great to get your

241
00:12:23,160 --> 00:12:28,280
Speaker 1: insight today. Mike, Lucas is principal and CEO at Truemark Investments,

242
00:12:30,880 --> 00:12:33,719
Speaker 1: x On Mobile, Chevron. They reported earnings today and I

243
00:12:33,720 --> 00:12:35,800
Speaker 1: think about this big energy names. I think about you know,

244
00:12:36,000 --> 00:12:38,520
Speaker 1: big oil rigs in the middle of West Texas and

245
00:12:38,559 --> 00:12:41,480
Speaker 1: out in the North Sea. But folks are increasingly thinking

246
00:12:41,520 --> 00:12:45,600
Speaker 1: about sustainable investing and just across the board, not just

247
00:12:45,760 --> 00:12:48,800
Speaker 1: on these energy companies. Let's dig into that a little bit.

248
00:12:48,880 --> 00:12:52,079
Speaker 1: Carrie Dugan, advisor for Rock Creek, also a former deputy

249
00:12:52,080 --> 00:12:54,880
Speaker 1: policy director to then Vice President Biden and White House

250
00:12:54,920 --> 00:12:59,880
Speaker 1: Climate Energy advisor. Carrie, give us a sense for it's

251
00:13:00,000 --> 00:13:03,280
Speaker 1: seems like these big energy companies, at least the US ones,

252
00:13:03,720 --> 00:13:08,120
Speaker 1: are making efforts at becoming more sustainable in their operations.

253
00:13:08,160 --> 00:13:12,040
Speaker 1: Give us your view. Well, first, thanks for having me on,

254
00:13:12,280 --> 00:13:13,800
Speaker 1: Paul and Matt. It's it's a real treat to be

255
00:13:13,800 --> 00:13:16,320
Speaker 1: on with you today. I heard what you open there with,

256
00:13:16,360 --> 00:13:18,440
Speaker 1: and if you if you read a little bit closer,

257
00:13:18,440 --> 00:13:20,000
Speaker 1: you guys are going to notice that in addition to

258
00:13:20,120 --> 00:13:23,000
Speaker 1: that their earnings, they're also reporting on their investment in

259
00:13:23,040 --> 00:13:26,400
Speaker 1: the low carbon solution space. And and lately I've heard

260
00:13:26,400 --> 00:13:28,320
Speaker 1: a lot of talk one of my favorite perhaps it's

261
00:13:28,320 --> 00:13:31,080
Speaker 1: because I'm from Michigan and cold cold weather states. You

262
00:13:31,080 --> 00:13:33,880
Speaker 1: hear a lot of people talking about ice hockey, and

263
00:13:33,920 --> 00:13:36,760
Speaker 1: I was listening to both Secretary Granham as well as

264
00:13:36,760 --> 00:13:39,120
Speaker 1: they and the steer talking about skating to where the

265
00:13:39,160 --> 00:13:41,400
Speaker 1: puck is going. So I think that, you know, we

266
00:13:41,400 --> 00:13:44,320
Speaker 1: could observe that with the oil and gas companies, they

267
00:13:44,400 --> 00:13:47,200
Speaker 1: they kind of see the future. They're tracking what's happening

268
00:13:47,200 --> 00:13:49,520
Speaker 1: in Washington with a new by partisan fielding. They know

269
00:13:49,600 --> 00:13:52,040
Speaker 1: what's coming. So I think it's a really exciting time

270
00:13:52,080 --> 00:13:55,000
Speaker 1: on top of a really uh let's call it scary time.

271
00:13:55,000 --> 00:13:57,360
Speaker 1: You've got record heat and you also have record investments

272
00:13:57,400 --> 00:14:02,320
Speaker 1: in this space. Um in terms of you know, the

273
00:14:02,360 --> 00:14:06,520
Speaker 1: oil companies, can they ever be sustainable or it always

274
00:14:06,520 --> 00:14:11,120
Speaker 1: strikes me as odd when um, when you know green

275
00:14:11,200 --> 00:14:14,319
Speaker 1: investors go into big oil. But on the other hand,

276
00:14:14,559 --> 00:14:17,760
Speaker 1: we have seen them now infiltrate in terms of activists

277
00:14:17,760 --> 00:14:22,440
Speaker 1: on the board. That was another big, big moment, let's

278
00:14:22,440 --> 00:14:24,480
Speaker 1: just call it that. But let me point you guys

279
00:14:24,480 --> 00:14:26,920
Speaker 1: back to last week. I was at in Washington, my

280
00:14:27,040 --> 00:14:30,760
Speaker 1: first pandemic trip, I might add, for a summit that

281
00:14:30,800 --> 00:14:33,240
Speaker 1: we put together at Rock Creek with Asani Beschloss and

282
00:14:33,280 --> 00:14:37,280
Speaker 1: about twenty global leaders in this space, and um, you know,

283
00:14:37,320 --> 00:14:40,320
Speaker 1: maybe if you take nothing away from that h series

284
00:14:40,360 --> 00:14:43,920
Speaker 1: of really important interviews, um Asani sat down with Brett Harris,

285
00:14:44,320 --> 00:14:46,920
Speaker 1: whose president CEO of the University of Texas, Texas A

286
00:14:46,960 --> 00:14:50,800
Speaker 1: and M University investment management company, and he was talking

287
00:14:50,800 --> 00:14:53,280
Speaker 1: about how the the you know, previous era was a

288
00:14:53,320 --> 00:14:56,040
Speaker 1: hydrocarbon era and this era that we're in now is

289
00:14:56,080 --> 00:14:59,400
Speaker 1: moving away from hydrocarbons into more renewable, sustainable sources. I

290
00:14:59,400 --> 00:15:03,520
Speaker 1: don't know about you, but that message coming out of UH,

291
00:15:03,600 --> 00:15:09,360
Speaker 1: you know, a huge UH an importantly placed investment management company,

292
00:15:09,560 --> 00:15:11,320
Speaker 1: was a big signal to me. And I think that's

293
00:15:11,360 --> 00:15:15,840
Speaker 1: really um that's that was a huge takeaway. And you know,

294
00:15:15,840 --> 00:15:18,360
Speaker 1: there's all sorts of interesting other nuggets that came out

295
00:15:18,400 --> 00:15:21,200
Speaker 1: of the summit. I mean, we had Gina McCarthy, who

296
00:15:21,320 --> 00:15:23,480
Speaker 1: is in a really important role right now talking about

297
00:15:24,040 --> 00:15:27,280
Speaker 1: following these investments that you're talking about, and and you

298
00:15:27,320 --> 00:15:29,640
Speaker 1: know the role of government and buying down the risk

299
00:15:30,080 --> 00:15:33,560
Speaker 1: um and the down payment that this new biprice and

300
00:15:33,800 --> 00:15:37,600
Speaker 1: plan is going to be really means that the investment

301
00:15:37,920 --> 00:15:41,720
Speaker 1: investment community in your audience has a big huge role

302
00:15:41,720 --> 00:15:45,000
Speaker 1: to play going forward. How about the role of government.

303
00:15:45,280 --> 00:15:49,800
Speaker 1: I'm thinking about President Biden's infrastructure bill, climate commitments. Give

304
00:15:49,880 --> 00:15:54,000
Speaker 1: us your thoughts as to where this administration is going. Yeah,

305
00:15:54,040 --> 00:15:57,240
Speaker 1: I mean you you mentioned in your lovely introduction that

306
00:15:57,440 --> 00:16:00,120
Speaker 1: I've had some history here, UM, and so I do

307
00:16:00,240 --> 00:16:02,840
Speaker 1: know that because I worked very close to with the

308
00:16:03,280 --> 00:16:05,960
Speaker 1: President when who was vice president. You know, these these

309
00:16:06,000 --> 00:16:10,320
Speaker 1: issues around jobs and equity, UM and climate are near

310
00:16:10,360 --> 00:16:11,640
Speaker 1: and jured to his heart. And I think you see

311
00:16:11,640 --> 00:16:14,160
Speaker 1: that re selected in UM, both the person and in

312
00:16:14,600 --> 00:16:19,720
Speaker 1: the policy. UM. Back back then we were working on

313
00:16:19,760 --> 00:16:21,640
Speaker 1: the Recovery Act and we called that a down payment

314
00:16:21,640 --> 00:16:23,520
Speaker 1: and clean energy future. And now we're working on a

315
00:16:23,520 --> 00:16:26,400
Speaker 1: bipartisan infrastructure bill. I mean, there's just been a huge

316
00:16:26,800 --> 00:16:29,680
Speaker 1: shift in the landscape. Uh, that sort of thing. One

317
00:16:30,200 --> 00:16:32,520
Speaker 1: thing too, is definitely what's going on in real time,

318
00:16:32,560 --> 00:16:37,440
Speaker 1: the real impacts that we're all seeing with our own eyes, UM,

319
00:16:37,440 --> 00:16:40,840
Speaker 1: from Germany to China. I'm here in Detroit, guys. I mean,

320
00:16:40,880 --> 00:16:44,560
Speaker 1: we're experiencing this in real time. So I think the

321
00:16:44,600 --> 00:16:48,360
Speaker 1: policy has met the moment um and the investment community.

322
00:16:48,400 --> 00:16:51,200
Speaker 1: You know, there's there's trends now, there's more money in

323
00:16:51,240 --> 00:16:54,520
Speaker 1: this space. You're seeing new and big, huge funds in

324
00:16:54,520 --> 00:16:57,640
Speaker 1: this space and climate, which is exciting. But you know

325
00:16:57,680 --> 00:17:00,680
Speaker 1: these investments aren't limited to climate when of what needs

326
00:17:00,680 --> 00:17:04,000
Speaker 1: to happen. There's other issues, of course that I view

327
00:17:04,000 --> 00:17:06,080
Speaker 1: as quality of life issues, and so does the President.

328
00:17:06,680 --> 00:17:10,280
Speaker 1: Um when you think about food scarcity and and other

329
00:17:10,680 --> 00:17:15,639
Speaker 1: mitigation issues, air quality issues. UM. So I'm excited by

330
00:17:15,680 --> 00:17:17,919
Speaker 1: what's going on in Washington, but I also know that

331
00:17:17,960 --> 00:17:20,240
Speaker 1: it's it's just it's another down payment and there's a

332
00:17:20,280 --> 00:17:22,680
Speaker 1: real role for the investment community to come in. Yeah,

333
00:17:22,720 --> 00:17:24,920
Speaker 1: and the investment community where I want to go. Now

334
00:17:24,920 --> 00:17:27,760
Speaker 1: you're advising Rock Creek, and people want to make returns

335
00:17:27,880 --> 00:17:32,120
Speaker 1: on investments. It's not just about all truism, um are

336
00:17:32,119 --> 00:17:35,959
Speaker 1: They are investors willing to accept lower returns if they

337
00:17:35,960 --> 00:17:40,280
Speaker 1: can do good. Um. I'm not going to even go

338
00:17:40,359 --> 00:17:41,960
Speaker 1: down that road. I'm going to talk to you about

339
00:17:42,000 --> 00:17:44,920
Speaker 1: what I know from working as an advisor to Rock Creek. Gapstane.

340
00:17:45,040 --> 00:17:47,119
Speaker 1: You know she's came. You know, she's probably been on

341
00:17:47,160 --> 00:17:49,960
Speaker 1: your show and you'll have her back. Uh. You know,

342
00:17:50,040 --> 00:17:51,600
Speaker 1: this is a former Treasure of the World Banks. So

343
00:17:51,680 --> 00:17:54,480
Speaker 1: she's been doing in my view, E. S. G. And

344
00:17:54,640 --> 00:17:56,679
Speaker 1: d E. I started to use acronyms, but I know

345
00:17:56,720 --> 00:18:00,640
Speaker 1: your audience knows them well. Uh investing before in fashion

346
00:18:00,680 --> 00:18:03,320
Speaker 1: and now it's very much in fashion, and she's been

347
00:18:03,320 --> 00:18:06,560
Speaker 1: doing it with returns for our clients, including major foundations

348
00:18:06,600 --> 00:18:09,520
Speaker 1: and pensions fun So there's there is proof there, and

349
00:18:09,560 --> 00:18:12,639
Speaker 1: I think, UM, what's what's more telling right now is

350
00:18:12,760 --> 00:18:15,480
Speaker 1: you know the appetite for the data to support that.

351
00:18:15,560 --> 00:18:17,240
Speaker 1: I know that you all have talked about this on

352
00:18:17,280 --> 00:18:21,399
Speaker 1: the show. If something, we're without playing all my cards today,

353
00:18:21,480 --> 00:18:23,040
Speaker 1: Paul and Matt, I'll just tell you that we're going

354
00:18:23,080 --> 00:18:25,000
Speaker 1: to come back and talk again about the data that

355
00:18:25,600 --> 00:18:29,280
Speaker 1: UM Rock Creek is UM has at its fingertips and

356
00:18:29,280 --> 00:18:32,000
Speaker 1: in ways that we can UM make that more readily

357
00:18:32,000 --> 00:18:35,040
Speaker 1: available so that investors can actually see these returns. So

358
00:18:35,880 --> 00:18:39,119
Speaker 1: I think that UM premise that you mentioned your question

359
00:18:39,240 --> 00:18:41,920
Speaker 1: is packed tense. I think the investments are here and now.

360
00:18:42,720 --> 00:18:45,320
Speaker 1: So Sarah, give us a sense here, I mean E

361
00:18:45,440 --> 00:18:48,120
Speaker 1: s G investing. I first heard about it maybe fifteen

362
00:18:48,160 --> 00:18:51,439
Speaker 1: years ago from European institutional investors, but now more and

363
00:18:51,520 --> 00:18:54,600
Speaker 1: more here in the US. Where are we in terms

364
00:18:54,600 --> 00:18:58,200
Speaker 1: of really embracing it? Would you say, well, I think

365
00:18:58,200 --> 00:19:02,720
Speaker 1: there's there's interesting in creating of a new um opportunities.

366
00:19:02,800 --> 00:19:05,240
Speaker 1: We had on the summit last week. He had the

367
00:19:05,680 --> 00:19:09,960
Speaker 1: founder of appeal ape l, which is a company that

368
00:19:10,520 --> 00:19:13,199
Speaker 1: uses uh, you know what I was just called generally

369
00:19:13,200 --> 00:19:15,920
Speaker 1: new technology to make you know, your fruits and vegetables

370
00:19:16,000 --> 00:19:17,840
Speaker 1: last longer. And that's really important, as I mentioned in

371
00:19:17,920 --> 00:19:20,960
Speaker 1: terms of like food scarcity. But the what's interesting to

372
00:19:21,000 --> 00:19:24,320
Speaker 1: me about that as an investment is they consider nature

373
00:19:24,400 --> 00:19:26,320
Speaker 1: as the end user, not sort of a human as

374
00:19:26,320 --> 00:19:28,440
Speaker 1: the end user. And so in in my world, you know,

375
00:19:28,480 --> 00:19:31,000
Speaker 1: I come out of the sort of energy, environment, science

376
00:19:31,000 --> 00:19:33,280
Speaker 1: and tech. You know, we call that life cycle analysis,

377
00:19:33,280 --> 00:19:35,159
Speaker 1: and they think I think that's an interesting trend. I

378
00:19:35,200 --> 00:19:38,040
Speaker 1: think that's one that there's a real appetite particularly along

379
00:19:38,400 --> 00:19:43,680
Speaker 1: uh millennials, millennial age investors are looking for that type

380
00:19:43,720 --> 00:19:46,879
Speaker 1: of information and and uh you know these closed loops,

381
00:19:46,880 --> 00:19:51,520
Speaker 1: I think UM watching uh Andrew Spires ted talk the

382
00:19:51,600 --> 00:19:53,320
Speaker 1: other day and I thought it was so interesting. He

383
00:19:53,359 --> 00:19:56,879
Speaker 1: talked about going from a take make waste economy to

384
00:19:56,920 --> 00:19:59,320
Speaker 1: a circular economy, and I think that that is the

385
00:19:59,320 --> 00:20:01,879
Speaker 1: trend that in the investors need to be watching the

386
00:20:01,920 --> 00:20:05,520
Speaker 1: more right now as a more circular opportunity. Carry, Thanks

387
00:20:05,520 --> 00:20:09,719
Speaker 1: so much. Carry Dougan there, she's an adviser to Rock Creek,

388
00:20:09,800 --> 00:20:15,800
Speaker 1: former deputy policy director for then Vice President Biden. This

389
00:20:16,880 --> 00:20:24,040
Speaker 1: is Bloomberg Amazon. Notwithstanding, we're getting some really really good

390
00:20:24,080 --> 00:20:28,480
Speaker 1: earnings this quarter. Um, and that's alleviating concerns from some

391
00:20:28,520 --> 00:20:31,159
Speaker 1: investors are worried about market valuations. Let's check in with

392
00:20:31,200 --> 00:20:35,160
Speaker 1: one of those market participants, Phil Orlando, chief equity market

393
00:20:35,200 --> 00:20:39,639
Speaker 1: strategists ahead of the Client portfolio Management at Federated at Hermes. Uh.

394
00:20:39,680 --> 00:20:41,760
Speaker 1: These guys are big. I mean it's like six hundred

395
00:20:41,840 --> 00:20:45,879
Speaker 1: billion dollars assets under management worldwide. Uh, so they have

396
00:20:46,119 --> 00:20:48,520
Speaker 1: more than their toe dipped into this investment pool. Phil,

397
00:20:48,640 --> 00:20:50,800
Speaker 1: thanks so much for for joining us here. Give us

398
00:20:50,840 --> 00:20:55,120
Speaker 1: your thirty thousand foot view of this earnings cycle and

399
00:20:55,119 --> 00:20:56,920
Speaker 1: and maybe more importantly, the outlot we're getting from some

400
00:20:56,960 --> 00:21:00,000
Speaker 1: of some in corporate America. Well IT awards. The earning

401
00:21:00,080 --> 00:21:03,159
Speaker 1: season has been terrific. You know, we're roughly two thirds

402
00:21:03,160 --> 00:21:08,639
Speaker 1: of the way through SMP five. Earnings are double what

403
00:21:08,800 --> 00:21:15,240
Speaker 1: they were a year ago. Uh. The revenues are very strong.

404
00:21:15,440 --> 00:21:19,000
Speaker 1: Earnings are very strong. I think that the most important

405
00:21:19,080 --> 00:21:23,440
Speaker 1: story are the splits that the growth companies, the technology

406
00:21:23,520 --> 00:21:27,240
Speaker 1: names are doing fine. Earnings are up fifty to sixty

407
00:21:27,320 --> 00:21:31,200
Speaker 1: percent year on year, but the really outsize gains are

408
00:21:31,240 --> 00:21:36,400
Speaker 1: coming from the economically sensitive categories like financials, industrials, consumer

409
00:21:36,440 --> 00:21:41,040
Speaker 1: discretionary energy. That those numbers are cartoon like. They're up

410
00:21:41,359 --> 00:21:45,920
Speaker 1: you know, two three four percent year on year um

411
00:21:46,040 --> 00:21:49,280
Speaker 1: because remember those companies, you know, we basically shut down

412
00:21:49,280 --> 00:21:52,560
Speaker 1: and left for dad a year ago second quarter. Uh

413
00:21:52,600 --> 00:21:54,880
Speaker 1: So the numbers, you know, are strong. As we've come

414
00:21:54,880 --> 00:21:57,719
Speaker 1: back to life. We now know that the recession ended

415
00:21:58,280 --> 00:22:02,000
Speaker 1: in April of last year, based upon the National Bureau

416
00:22:02,000 --> 00:22:05,120
Speaker 1: of Economic Research making that announcement last week. So we're

417
00:22:05,359 --> 00:22:08,080
Speaker 1: getting terrific news out of earnings and the guidance I

418
00:22:08,160 --> 00:22:11,960
Speaker 1: think has been constructed. Companies are saying they've got better visibility.

419
00:22:12,800 --> 00:22:16,640
Speaker 1: Obviously there's some uncertainty in terms of fiscal and monetary

420
00:22:16,680 --> 00:22:19,879
Speaker 1: policy and where are we at the delta variant, But

421
00:22:19,880 --> 00:22:22,159
Speaker 1: but I think we're in a lot better shape today

422
00:22:22,600 --> 00:22:24,240
Speaker 1: than we were a year ago at this time. Do

423
00:22:24,320 --> 00:22:27,760
Speaker 1: you think those two things? I mean, David Couston was

424
00:22:27,800 --> 00:22:29,560
Speaker 1: on a couple of weeks ago from Goldman Sax has

425
00:22:29,600 --> 00:22:34,040
Speaker 1: had his worries are about rates and about tax policy,

426
00:22:34,119 --> 00:22:38,480
Speaker 1: but the delta variant hadn't reared its ugly head, uh,

427
00:22:38,640 --> 00:22:41,000
Speaker 1: you know, to this extent at that point, are those

428
00:22:41,040 --> 00:22:45,880
Speaker 1: the biggest headwinds? I think absolutely. Um. You know, David's

429
00:22:45,920 --> 00:22:48,679
Speaker 1: a smart guy. He was spot on with his concerns

430
00:22:48,840 --> 00:22:54,879
Speaker 1: about fiscal and monetary policy. A month later, the delta variant, um,

431
00:22:54,920 --> 00:22:57,200
Speaker 1: you know, is now accounting for something like eight or

432
00:22:57,240 --> 00:23:01,160
Speaker 1: eighty five percent of all new infections. If you're vaccinated,

433
00:23:01,400 --> 00:23:04,439
Speaker 1: you're you're in pretty good shape. But the reality is

434
00:23:04,520 --> 00:23:07,400
Speaker 1: that there are parts of the country, mostly in the Southeast,

435
00:23:08,280 --> 00:23:11,080
Speaker 1: where the vaccination rates are not where they should be.

436
00:23:11,160 --> 00:23:14,439
Speaker 1: You know, we're probably or so here in the New

437
00:23:14,520 --> 00:23:19,680
Speaker 1: York area. We're probably half that down in Mississippi, Alabama, Georgia,

438
00:23:19,720 --> 00:23:21,760
Speaker 1: et cetera. So I think we've got to do a

439
00:23:21,800 --> 00:23:25,639
Speaker 1: better job of getting those folks vaccinated. It up to speed,

440
00:23:26,320 --> 00:23:29,040
Speaker 1: because the you know, what the doctors are telling us

441
00:23:29,119 --> 00:23:31,399
Speaker 1: is that that you're vaccinated, you're you're not going to

442
00:23:31,520 --> 00:23:34,040
Speaker 1: die from the delta variant, and and that's the objective

443
00:23:34,080 --> 00:23:36,440
Speaker 1: that we're trying to achieve. Try to stay alive here,

444
00:23:37,160 --> 00:23:39,439
Speaker 1: all right, Phil, We've we've got this delta variant. It's

445
00:23:39,520 --> 00:23:43,040
Speaker 1: kind of maybe causing some folks to rethink the reopening

446
00:23:43,080 --> 00:23:46,159
Speaker 1: trade as opposed to maybe focusing on some of the

447
00:23:46,200 --> 00:23:48,680
Speaker 1: core growth stories, some of the tech names. Where are

448
00:23:48,680 --> 00:23:53,480
Speaker 1: you guys focusing on right now in terms of sectors. So, um,

449
00:23:53,520 --> 00:23:56,680
Speaker 1: there's absolutely been a resurgence in in the growth and

450
00:23:56,760 --> 00:24:00,880
Speaker 1: the technology names since let's say Memorial Day. So over

451
00:24:00,880 --> 00:24:03,240
Speaker 1: the course of the last couple of months, growth and

452
00:24:03,320 --> 00:24:07,280
Speaker 1: tech has done better. UM. But because we are producing

453
00:24:07,760 --> 00:24:11,840
Speaker 1: these these outsized earnings games in uh in the cyclicals

454
00:24:12,320 --> 00:24:15,679
Speaker 1: uh and and those stocks have underperformed the growth in

455
00:24:15,720 --> 00:24:18,240
Speaker 1: tech names over the last couple of months. That's where

456
00:24:18,240 --> 00:24:21,680
Speaker 1: we're placing our bet. Um. We believe that we will

457
00:24:21,720 --> 00:24:25,560
Speaker 1: get through this delta variant uh and and the reopening

458
00:24:25,600 --> 00:24:28,880
Speaker 1: trade is as we get into the fall, the last

459
00:24:28,920 --> 00:24:31,320
Speaker 1: you know, three months of the year or so, uh,

460
00:24:31,359 --> 00:24:34,880
Speaker 1: we're going to get that rotation back into value. UH. So,

461
00:24:35,040 --> 00:24:37,639
Speaker 1: what we'd be doing is taking a look at at

462
00:24:37,640 --> 00:24:40,199
Speaker 1: those companies that are that are doing great, that are

463
00:24:40,200 --> 00:24:42,919
Speaker 1: getting good guidance, the earnings and revenue numbers are strong,

464
00:24:43,280 --> 00:24:47,960
Speaker 1: perhaps they've underperformed from a relative valuation standpoint. That's where

465
00:24:48,040 --> 00:24:50,480
Speaker 1: we think is the outsized opportunity is going to be

466
00:24:50,520 --> 00:24:53,159
Speaker 1: to end the year. Are you concerned at all that

467
00:24:53,200 --> 00:24:56,800
Speaker 1: we may have that we may hit a fiscal cliff? Um?

468
00:24:56,880 --> 00:25:00,800
Speaker 1: You know, if we don't pass the bigger of the

469
00:25:00,880 --> 00:25:04,040
Speaker 1: legislation that the Democrats want to cram through, are we

470
00:25:04,040 --> 00:25:08,080
Speaker 1: gonna you know, fall off in terms of spending. I'm

471
00:25:08,160 --> 00:25:10,720
Speaker 1: very concerned about the fiscal cliff. If you've been reading

472
00:25:11,640 --> 00:25:14,359
Speaker 1: any of my weekly market commentaries over the last I

473
00:25:14,400 --> 00:25:19,240
Speaker 1: don't know, three or four weeks, uh that the the

474
00:25:18,200 --> 00:25:26,080
Speaker 1: the debt feeling expires tomorrow. UM. I believe Treasury Secretary

475
00:25:26,200 --> 00:25:30,480
Speaker 1: Yellen has enough money to in the couch cushions to

476
00:25:30,920 --> 00:25:34,920
Speaker 1: keep things solvent into about October and November. But we're

477
00:25:34,920 --> 00:25:37,800
Speaker 1: gonna have to address that issue. And I suspect it's

478
00:25:37,840 --> 00:25:41,080
Speaker 1: going to be an issue that that Congress will work

479
00:25:41,160 --> 00:25:45,320
Speaker 1: into either this one point two trillion dollar infrastructure plan

480
00:25:45,920 --> 00:25:49,320
Speaker 1: or this you know, three or four or five trillion

481
00:25:49,359 --> 00:25:54,159
Speaker 1: dollar UH social spending plan that that seems to be

482
00:25:54,240 --> 00:25:58,880
Speaker 1: more along party lines. But somewhere within one or both

483
00:25:58,880 --> 00:26:01,520
Speaker 1: of those packages, we're going to have to address the

484
00:26:01,840 --> 00:26:05,560
Speaker 1: deficit ceiling and and uh, you know, and and and

485
00:26:05,560 --> 00:26:09,399
Speaker 1: and lifted. Phil thanks so much for joining us. Philo Orlando,

486
00:26:09,440 --> 00:26:12,600
Speaker 1: their chief equity market strategist and head of client portfolio

487
00:26:12,640 --> 00:26:16,760
Speaker 1: management over Federated Hermon's. They've got eighty billion dollars in equity.

488
00:26:16,800 --> 00:26:21,160
Speaker 1: He's got firm wide six billion dollars of assets under management.

489
00:26:21,240 --> 00:26:26,080
Speaker 1: This is Bloomberg. Thanks for listening to the Bloomberg Markets podcast.

490
00:26:26,480 --> 00:26:29,640
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts

491
00:26:29,840 --> 00:26:33,720
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm

492
00:26:33,760 --> 00:26:37,800
Speaker 1: on Twitter at Matt Miller, three pt on Fall Sweeney.

493
00:26:37,800 --> 00:26:40,440
Speaker 1: I'm on Twitter at pt Sweeney Before the podcast. You

494
00:26:40,480 --> 00:26:42,880
Speaker 1: can always catch us worldwide at Bloomberg Radio