WEBVTT - Sonic Automotive Reports 2Q Earnings 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.640 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.640 at Bloomberg dot com slash podcast. We don't drink coffee, 0:00:23.239 --> 0:00:25.360 Paul and I don't drink coffee, not a not a 0:00:25.360 --> 0:00:27.760 big coffee drinker. Um, but I know a lot of 0:00:27.760 --> 0:00:31.159 people do. And machines here Bloomberg. You know, I like 0:00:31.200 --> 0:00:34.120 to wake up in the morning with a big inch 0:00:34.360 --> 0:00:36.520 V eight. Let's talk about cars for a minute. Jeff 0:00:36.560 --> 0:00:40.800 Dyke joins us. He's a president of Sonic Automotive and UM, 0:00:40.840 --> 0:00:44.800 they had their uh Q two results out all time 0:00:45.040 --> 0:00:50.199 record quarterly revenue three point four billion dollars, up fifty 0:00:50.280 --> 0:00:52.720 eight point seven percent year over year. If that doesn't 0:00:52.760 --> 0:00:55.520 reb your engine, I don't know what does, Jeff. What's 0:00:55.560 --> 0:00:58.720 the what's the biggest problem? Is it getting inventory in 0:00:58.760 --> 0:01:02.280 the door? Yeah, so from a new car perspective, that's 0:01:02.280 --> 0:01:05.440 the big issue. UM, We've got eighty four stores across 0:01:05.480 --> 0:01:07.520 the country, and we've got about an eight to nine 0:01:07.600 --> 0:01:11.880 days supply new car inventory pre COVID, we that number 0:01:11.880 --> 0:01:15.000 would be in the fifty to sixty day range. So uh, 0:01:15.080 --> 0:01:18.280 certainly inventories are tight. That's push inflation up on the 0:01:18.319 --> 0:01:22.160 new car prices. Um. And it's also affecting used car 0:01:22.200 --> 0:01:26.440 business because you know, new car inventory drives used car inventory, 0:01:26.920 --> 0:01:29.520 and so you've seen this crazy and version of used 0:01:29.520 --> 0:01:31.920 car prices being really really high wholesale prices at some 0:01:31.959 --> 0:01:34.240 point in time during the summer, we're paying more uh 0:01:34.319 --> 0:01:36.040 for a for a car than we could you know 0:01:36.280 --> 0:01:38.800 that we could sell a new car for uh. So uh, 0:01:38.920 --> 0:01:41.520 it's just created all kinds of crazy pricing. But that's 0:01:41.520 --> 0:01:45.040 gonna alleviate. UM. The chip shortages is you know, I 0:01:45.080 --> 0:01:47.960 wouldn't say coming to an end, but certainly getting better. Um. 0:01:48.000 --> 0:01:50.080 And so between now and the year, inventory levels are 0:01:50.080 --> 0:01:53.240 gonna come back on new uh and PreO pre owned 0:01:53.240 --> 0:01:55.160 inventories will come back, and so we're looking for a 0:01:55.200 --> 0:01:58.000 great second half of the year. All right, Jeff, Hey, 0:01:58.160 --> 0:02:00.920 before we start, just give Bruton and Bill Brooks my 0:02:00.960 --> 0:02:02.920 best regards. I worked with those guys when taking that 0:02:03.120 --> 0:02:05.880 Speedway Motorsports Public Way back in the day. So some 0:02:05.960 --> 0:02:08.440 good times with those guys. I'll be happy to do 0:02:08.480 --> 0:02:11.600 that too. Fantastic guys. Yep, Jeff talked to us, you know, 0:02:11.639 --> 0:02:14.160 so the automakers, it's it's just amazing you talk to 0:02:14.160 --> 0:02:16.160 me about that inventory. And and the guy got a 0:02:16.160 --> 0:02:19.400 buddy who's who, who also is an auto business, and 0:02:19.440 --> 0:02:21.960 he says the exact same thing. I mean, when are 0:02:22.000 --> 0:02:23.960 the O E M s telling you that you can 0:02:24.000 --> 0:02:28.320 get back to a more normalized level of inventory. Yes, 0:02:28.440 --> 0:02:30.720 so I think it's gonna happen in stages. I think 0:02:30.760 --> 0:02:35.320 the highline bludgury vehicles come back first. So we have 0:02:35.360 --> 0:02:38.080 an eight day supply of BMWs and our TBMW stores 0:02:38.080 --> 0:02:41.799 across the country today, um probably October November time range. 0:02:41.800 --> 0:02:45.160 That's gonna be to thirty. I don't expect inventories to 0:02:45.240 --> 0:02:48.000 ever come back to the level that they were pre COVID, though, 0:02:48.680 --> 0:02:50.840 because it's a heck of a lot easier to manage 0:02:50.840 --> 0:02:54.639 smaller inventories. The manufacturers are not having to spend a 0:02:54.680 --> 0:02:58.000 ton of money on incentives any longer, so they're making 0:02:58.040 --> 0:02:59.919 more money. The business is just a lot more EFFICI 0:03:00.080 --> 0:03:02.239 and so what may have been a sixty to seventy 0:03:02.320 --> 0:03:05.360 days supply traditionally before COVID, I think will end up 0:03:05.400 --> 0:03:07.560 being a forty five or fifty days supply as we 0:03:07.600 --> 0:03:10.120 move forward, but certainly not the lows that we're seeing 0:03:10.120 --> 0:03:12.080 here at the end of July in August, in the 0:03:12.160 --> 0:03:15.080 eight and nine to ten day range across the country. 0:03:15.120 --> 0:03:17.600 That that's going to get better progressively as we move 0:03:17.639 --> 0:03:19.200 towards the end of the year. So first, I have 0:03:19.240 --> 0:03:23.320 an observation which just dawned on me. Uh, the four 0:03:23.840 --> 0:03:27.639 bosses that I've spoken to since I've been in New 0:03:27.680 --> 0:03:31.959 York all drive BMW's, And then I know, and then 0:03:32.000 --> 0:03:35.920 Paul does to Jeff and and Paul is he's facing 0:03:35.920 --> 0:03:38.560 a conundrum here because he needs he wants to get 0:03:38.600 --> 0:03:41.000 a new car, waants a stick with a Beamer because 0:03:41.000 --> 0:03:43.560 he likes to drive, and he wants to stick shift. 0:03:43.800 --> 0:03:48.560 What can he do? Called Jeff dyke Ye, but but 0:03:48.560 --> 0:03:51.440 but manual transmissions are difficult to get these days, aren't 0:03:51.440 --> 0:03:54.440 they They are? But we certainly can make that happen. 0:03:54.520 --> 0:03:57.960 And and um, you know, there there's that option for 0:03:58.000 --> 0:04:01.120 all of their model lines, um in particularly supporting or 0:04:01.440 --> 0:04:04.320 of the luxury model lines. And so that's easy to do. 0:04:04.400 --> 0:04:06.280 We we can certainly make that happen. And sounds like 0:04:06.360 --> 0:04:10.240 a lot of as well. You got three M three 0:04:10.280 --> 0:04:11.880 or an M four I'd saying, which, so you can 0:04:11.960 --> 0:04:14.560 handle that very easily. So Jeff, it's interesting. I mean 0:04:14.600 --> 0:04:17.440 for you at the dealer level, these are you know, 0:04:17.520 --> 0:04:20.839 good times because you really can drive hard bargains, right. 0:04:20.880 --> 0:04:25.120 I mean, it's definitely a seller's market, isn't it. Everything 0:04:25.160 --> 0:04:26.920 is selling an M s r P. I don't care 0:04:26.920 --> 0:04:29.640 if that's a twilet camera or Honda a chord which 0:04:29.680 --> 0:04:32.799 never does that all the way up the line. Um, 0:04:32.839 --> 0:04:35.239 everything is selling an ms RP. People have to have cars. 0:04:35.320 --> 0:04:37.920 We don't have to discount the manufacturers aren't discounting, so 0:04:37.960 --> 0:04:41.080 there's really no discounts out there to give. Um. And 0:04:41.080 --> 0:04:42.919 and I think as we move forward it lightens up 0:04:42.960 --> 0:04:45.400 a little bit. But again, um, I think we'll be 0:04:45.440 --> 0:04:47.720 selling closer to M s RP than as far away 0:04:48.000 --> 0:04:50.000 from M s r P as we were selling prior 0:04:50.080 --> 0:04:52.279 to COVID had really kind of gotten a way of 0:04:52.360 --> 0:04:54.400 the world. It's the first thing you learn in economics, 0:04:54.480 --> 0:04:57.680 right is supply and demands. And um, they're going to 0:04:57.760 --> 0:05:01.560 control the supply a whole lot better than manufacturers are. Um. 0:05:01.600 --> 0:05:04.640 As we move forward, which is a huge blessing for everybody. Well, 0:05:04.640 --> 0:05:06.920 how long does does the demand hold up? I mean, 0:05:06.960 --> 0:05:09.799 I know a lot of you know, kids that said 0:05:09.800 --> 0:05:12.640 they were never going to get cars, city dwellers that 0:05:12.720 --> 0:05:15.320 maybe thought they didn't need them, and they all have 0:05:15.440 --> 0:05:20.880 gone out and bought automobiles. But you know that can't last. Well, 0:05:20.880 --> 0:05:22.960 I don't think it can last. But short supply does 0:05:23.040 --> 0:05:26.320 create demand. Um, that's just how our country works, right. 0:05:26.360 --> 0:05:29.440 And so when anything, remember toilet paper last year. Luxury 0:05:29.440 --> 0:05:31.800 cars with the toilet paper this year, right, Um, you 0:05:31.800 --> 0:05:33.640 couldn't you couldn't buy a roll of toilet paper last 0:05:33.680 --> 0:05:34.840 year to save your life, and you did. It was 0:05:34.920 --> 0:05:38.320 fifteen bucks. Um. And and that's what's going on in 0:05:38.360 --> 0:05:40.280 the car industry this year. I think it. I mean, 0:05:40.279 --> 0:05:43.360 it's certainly going to get better, um, you know as 0:05:43.400 --> 0:05:46.800 we move forward, But the government's got a quit paying everybody, 0:05:46.960 --> 0:05:49.760 um and to stay home. I mean the labor market. 0:05:50.120 --> 0:05:52.000 You feel it. In the labor market, we certainly do. 0:05:52.120 --> 0:05:54.800 The manufacturers certainly do. And I think as people get 0:05:54.800 --> 0:05:57.240 back to work, the demand you know, comes down a bit. 0:05:57.360 --> 0:05:59.880 But I don't see that happening this year and may 0:06:00.120 --> 0:06:01.800 not even to the first six months of next year. 0:06:01.880 --> 0:06:04.600 That the demand is just so high. We've sold all 0:06:04.600 --> 0:06:07.240 the cars on our law everything in our pipeline and 0:06:07.320 --> 0:06:10.400 have customers. They're still coming, and so the business is 0:06:10.440 --> 0:06:12.839 just amazing at this point in time. I've been in 0:06:12.839 --> 0:06:15.440 the business for twenty five years and I have never 0:06:15.440 --> 0:06:18.120 seen it like this. Wow. Interesting, alright, really interesting, Jeff, 0:06:18.160 --> 0:06:20.600 thanks so much for joining us. Really appreciate it. Jeff Dykes, 0:06:20.640 --> 0:06:24.440 President Sonic Automotive UH symbol s a H. The stock 0:06:24.520 --> 0:06:26.880 is up about three quarters of one percent today, up 0:06:26.920 --> 0:06:29.320 thirty nine percent for the year, and they posted some 0:06:29.360 --> 0:06:32.640 really strong results last night and the business, as Jeff said, UH, 0:06:32.640 --> 0:06:39.640 stronger than ever under ninety four billion with a B. 0:06:40.360 --> 0:06:43.880 That's some serious What would you do just tax problems 0:06:43.880 --> 0:06:46.320 and who needs that issue there? What a lot of 0:06:46.320 --> 0:06:48.479 folks are trying to do in the market places? Um, 0:06:48.480 --> 0:06:50.680 you know, think about do I plow back into those 0:06:50.680 --> 0:06:52.720 growth stocks which have been such good stories over the 0:06:52.800 --> 0:06:55.400 last decade plus, or do I stick with my rotation trade, 0:06:55.640 --> 0:06:58.080 the reopening trade. Our next guest has an opinion there, 0:06:58.120 --> 0:07:02.640 Mike Lucas principle and CEO of True Mark Investments, Mike, 0:07:02.800 --> 0:07:05.360 I seem to recall that you are certainly in that 0:07:05.440 --> 0:07:09.880 growth stock camp. Give us your thoughts. Definitely in the 0:07:09.880 --> 0:07:12.720 growth stock camp. I mean, look, the reality is we've 0:07:12.920 --> 0:07:16.520 we've pigeonholed a couple of different trends rightly, right, the 0:07:16.560 --> 0:07:20.640 work from home trade and the the Great rotation. I 0:07:20.680 --> 0:07:23.120 think both are dead right, and if if we waited 0:07:23.120 --> 0:07:25.480 ten years, so the Great rotation of value that was 0:07:25.640 --> 0:07:28.440 purely model driven and kind of floated for a bit there, 0:07:28.480 --> 0:07:31.960 and now we're seeing it dissipate. The work from home trade. 0:07:32.000 --> 0:07:35.560 It's funny everyone punished some of the secular growth stocks 0:07:35.560 --> 0:07:40.520 when the the lockdown started to end. But reality is, 0:07:40.520 --> 0:07:43.640 when you see earnings results come through those secular growth 0:07:43.680 --> 0:07:47.920 stocks that are part of the broader digitalization, the global 0:07:47.920 --> 0:07:54.040 economy continued. Yeah, they're showing acceleration, and Amazon's getting beat up, right, 0:07:54.120 --> 0:07:56.880 So maybe we're looking at the wrong trade for the 0:07:56.920 --> 0:07:59.320 work from home trade. So it's you know, I think 0:07:59.360 --> 0:08:01.800 there's a there's a nice pocket of secular growth out 0:08:01.840 --> 0:08:04.480 there that's going to continue to accelerate. It it was 0:08:04.520 --> 0:08:08.440 accelerating prior to the lockdown in the pandemic, accelerating through it, 0:08:08.880 --> 0:08:11.000 and now it's accelerating out of it. And sometimes it 0:08:11.040 --> 0:08:15.800 takes one too even three yearning cycles to separate the 0:08:16.160 --> 0:08:19.320 you know, the story stocks from the real secular growth stocks. 0:08:19.360 --> 0:08:22.560 But they're there and there, they've got tail winds, and 0:08:22.880 --> 0:08:26.680 you know, regardless of what the macroeconomic environment is, these 0:08:26.680 --> 0:08:28.880 are industries and companies that aren't going away. But Mike, 0:08:28.880 --> 0:08:31.880 are you saying, you know, you don't believe in value 0:08:32.000 --> 0:08:34.800 rising up over growth or that we're just framing it 0:08:34.840 --> 0:08:36.679 the wrong way in terms of what these stocks, what 0:08:36.800 --> 0:08:39.600 these companies are, Well, I think we're framing it the 0:08:39.600 --> 0:08:41.600 wrong way. First and foremost, we're looking at it as 0:08:41.640 --> 0:08:44.400 a binary outcome. Uh do I think value is going 0:08:44.480 --> 0:08:47.160 to rise up over growth? No? I don't. Long term, 0:08:47.160 --> 0:08:49.600 I don't. I think this whole thing is now geared 0:08:49.640 --> 0:08:51.640 towards growth. You know, if we look at the last 0:08:51.679 --> 0:08:55.240 ten years, quite frankly, most of the growth was concentrated 0:08:55.240 --> 0:08:56.800 and saying, you know, if we take that out of 0:08:56.800 --> 0:09:00.160 the equation, really what happened there? But if you if 0:09:00.160 --> 0:09:02.679 you look at a holistic view of this and understand 0:09:02.720 --> 0:09:07.960 that we've got right now, I mean essentially to really 0:09:08.320 --> 0:09:11.679 strong wealth creators in this in this country and globally 0:09:11.920 --> 0:09:15.240 real estate and equities. So you know, how long is 0:09:15.280 --> 0:09:18.280 that value trading to last. I think you see great 0:09:19.320 --> 0:09:23.440 opportunities in value and some different end producers. You see 0:09:23.480 --> 0:09:27.640 tremendous opportunities and secular growth. It doesn't have to be binary. 0:09:27.679 --> 0:09:29.280 So you know, when we talk about work from home, 0:09:29.320 --> 0:09:31.920 we talked about great rotation, we're falling into that track. 0:09:32.200 --> 0:09:33.800 You know, we're falling into the idea that it has 0:09:33.800 --> 0:09:36.319 to be one or the other. It's not. It's it's 0:09:36.360 --> 0:09:38.440 never been that way. It's always been sort of what's 0:09:38.440 --> 0:09:40.720 going on in the gray area, and that will continue 0:09:40.800 --> 0:09:44.600 because as we can see like reopening or we're not reopening, 0:09:44.679 --> 0:09:48.120 or the masks you guys earlier mask mandates are recommendations, 0:09:48.160 --> 0:09:51.920 you know, the nuances in the language or throwing people 0:09:51.960 --> 0:09:54.880 into a tail spin right now and we don't know 0:09:54.960 --> 0:09:56.760 what's going to happen in the next week, the next month. 0:09:56.800 --> 0:10:00.120 And we saw inflation signals go off the chart. Now 0:10:00.160 --> 0:10:03.600 their team again, volatilities down, and the market that you know, 0:10:03.600 --> 0:10:07.520 the equity market keeps grinding higher, and uh so you know, 0:10:07.559 --> 0:10:10.120 I wouldn't call it uncertainty but I'd call it confusion 0:10:10.240 --> 0:10:12.360 right now. And you know, I'd think the best thing 0:10:12.360 --> 0:10:15.720 to do is look for stocks that maybe a part 0:10:15.720 --> 0:10:18.880 of the or beneficiaries of the new paradigm shift. Where 0:10:19.360 --> 0:10:23.120 there are secular growth stocks, particularly intact that I've become, 0:10:23.679 --> 0:10:27.400 we'll we'll call them defensive for lack of a better term. Uh. 0:10:27.480 --> 0:10:30.520 When we've all been running around staring at work from 0:10:30.559 --> 0:10:33.480 home and thinking about the great rotation, and it's time 0:10:33.559 --> 0:10:35.880 to shift off thinking a little bit, Mike, what do 0:10:35.920 --> 0:10:38.560 you think about inflation has certainly been a worry concern 0:10:38.640 --> 0:10:40.320 from market participants. How do you think about it with 0:10:40.400 --> 0:10:47.000 your UH strategies? Well, you know, inflation t here. You know, 0:10:47.040 --> 0:10:49.599 anybody's gone to the gas pump, or or gone to 0:10:49.600 --> 0:10:53.160 the grocery store, or I guess less six weeks tried 0:10:53.200 --> 0:10:57.280 to get lumber, you know, as realized get inflations definitely here, 0:10:57.280 --> 0:10:59.800 that was a transitory I guess that's that's the real question. 0:11:00.040 --> 0:11:04.479 The FED handling it correctly, that's a whole another question. Um. 0:11:04.640 --> 0:11:09.760 So in the end for us, I'll I'll parent poward 0:11:09.800 --> 0:11:12.320 marks here and say that it's quite possible the best 0:11:12.360 --> 0:11:15.840 inflation hedge out there is is a strong secular growth story. 0:11:16.200 --> 0:11:19.679 And even if we do see yields start to creep up, 0:11:20.720 --> 0:11:23.520 we're still in a historically low yield environment. Even if 0:11:23.559 --> 0:11:27.480 we get back to pre pandemic levels. Uh, if inflations 0:11:27.520 --> 0:11:31.040 doubling that up, where do you go? Right? And so 0:11:31.600 --> 0:11:33.920 you know, I think the need for growth in in 0:11:33.960 --> 0:11:36.680 the equity space is still going to persist. And I 0:11:36.720 --> 0:11:38.760 think inflations here, it's just a matter of how long 0:11:38.760 --> 0:11:40.360 it's gonna last. And what I'm not the set is 0:11:40.400 --> 0:11:43.800 tackling it correctly well, as long as it's less than growth, right, 0:11:43.960 --> 0:11:47.360 I mean substantially less. I heard the term growth growth 0:11:47.360 --> 0:11:51.480 flation the other day and I thought it made perfect sense. Yeah, No, 0:11:51.600 --> 0:11:53.120 I think that's I think it's a great way to 0:11:53.160 --> 0:11:57.960 coin it. Um. The reality is that again, if we 0:11:58.040 --> 0:12:03.760 can if we can absorb inflation, uh, then you know 0:12:04.240 --> 0:12:07.920 people are going to co exist with it, right, Not 0:12:08.000 --> 0:12:10.640 that we have a choice anyway, but I think the 0:12:10.720 --> 0:12:15.439 ability to account for inflation with different asset classes is 0:12:15.480 --> 0:12:18.160 really going to dictate how this is digested, you know, 0:12:18.200 --> 0:12:21.600 in the in the markets and in particularly on main street. Mike, 0:12:21.600 --> 0:12:23.160 thanks so much for joining us. Great to get your 0:12:23.160 --> 0:12:28.280 insight today. Mike, Lucas is principal and CEO at Truemark Investments, 0:12:30.880 --> 0:12:33.719 x On Mobile, Chevron. They reported earnings today and I 0:12:33.720 --> 0:12:35.800 think about this big energy names. I think about you know, 0:12:36.000 --> 0:12:38.520 big oil rigs in the middle of West Texas and 0:12:38.559 --> 0:12:41.480 out in the North Sea. But folks are increasingly thinking 0:12:41.520 --> 0:12:45.600 about sustainable investing and just across the board, not just 0:12:45.760 --> 0:12:48.800 on these energy companies. Let's dig into that a little bit. 0:12:48.880 --> 0:12:52.079 Carrie Dugan, advisor for Rock Creek, also a former deputy 0:12:52.080 --> 0:12:54.880 policy director to then Vice President Biden and White House 0:12:54.920 --> 0:12:59.880 Climate Energy advisor. Carrie, give us a sense for it's 0:13:00.000 --> 0:13:03.280 seems like these big energy companies, at least the US ones, 0:13:03.720 --> 0:13:08.120 are making efforts at becoming more sustainable in their operations. 0:13:08.160 --> 0:13:12.040 Give us your view. Well, first, thanks for having me on, 0:13:12.280 --> 0:13:13.800 Paul and Matt. It's it's a real treat to be 0:13:13.800 --> 0:13:16.320 on with you today. I heard what you open there with, 0:13:16.360 --> 0:13:18.440 and if you if you read a little bit closer, 0:13:18.440 --> 0:13:20.000 you guys are going to notice that in addition to 0:13:20.120 --> 0:13:23.000 that their earnings, they're also reporting on their investment in 0:13:23.040 --> 0:13:26.400 the low carbon solution space. And and lately I've heard 0:13:26.400 --> 0:13:28.320 a lot of talk one of my favorite perhaps it's 0:13:28.320 --> 0:13:31.080 because I'm from Michigan and cold cold weather states. You 0:13:31.080 --> 0:13:33.880 hear a lot of people talking about ice hockey, and 0:13:33.920 --> 0:13:36.760 I was listening to both Secretary Granham as well as 0:13:36.760 --> 0:13:39.120 they and the steer talking about skating to where the 0:13:39.160 --> 0:13:41.400 puck is going. So I think that, you know, we 0:13:41.400 --> 0:13:44.320 could observe that with the oil and gas companies, they 0:13:44.400 --> 0:13:47.200 they kind of see the future. They're tracking what's happening 0:13:47.200 --> 0:13:49.520 in Washington with a new by partisan fielding. They know 0:13:49.600 --> 0:13:52.040 what's coming. So I think it's a really exciting time 0:13:52.080 --> 0:13:55.000 on top of a really uh let's call it scary time. 0:13:55.000 --> 0:13:57.360 You've got record heat and you also have record investments 0:13:57.400 --> 0:14:02.320 in this space. Um in terms of you know, the 0:14:02.360 --> 0:14:06.520 oil companies, can they ever be sustainable or it always 0:14:06.520 --> 0:14:11.120 strikes me as odd when um, when you know green 0:14:11.200 --> 0:14:14.319 investors go into big oil. But on the other hand, 0:14:14.559 --> 0:14:17.760 we have seen them now infiltrate in terms of activists 0:14:17.760 --> 0:14:22.440 on the board. That was another big, big moment, let's 0:14:22.440 --> 0:14:24.480 just call it that. But let me point you guys 0:14:24.480 --> 0:14:26.920 back to last week. I was at in Washington, my 0:14:27.040 --> 0:14:30.760 first pandemic trip, I might add, for a summit that 0:14:30.800 --> 0:14:33.240 we put together at Rock Creek with Asani Beschloss and 0:14:33.280 --> 0:14:37.280 about twenty global leaders in this space, and um, you know, 0:14:37.320 --> 0:14:40.320 maybe if you take nothing away from that h series 0:14:40.360 --> 0:14:43.920 of really important interviews, um Asani sat down with Brett Harris, 0:14:44.320 --> 0:14:46.920 whose president CEO of the University of Texas, Texas A 0:14:46.960 --> 0:14:50.800 and M University investment management company, and he was talking 0:14:50.800 --> 0:14:53.280 about how the the you know, previous era was a 0:14:53.320 --> 0:14:56.040 hydrocarbon era and this era that we're in now is 0:14:56.080 --> 0:14:59.400 moving away from hydrocarbons into more renewable, sustainable sources. I 0:14:59.400 --> 0:15:03.520 don't know about you, but that message coming out of UH, 0:15:03.600 --> 0:15:09.360 you know, a huge UH an importantly placed investment management company, 0:15:09.560 --> 0:15:11.320 was a big signal to me. And I think that's 0:15:11.360 --> 0:15:15.840 really um that's that was a huge takeaway. And you know, 0:15:15.840 --> 0:15:18.360 there's all sorts of interesting other nuggets that came out 0:15:18.400 --> 0:15:21.200 of the summit. I mean, we had Gina McCarthy, who 0:15:21.320 --> 0:15:23.480 is in a really important role right now talking about 0:15:24.040 --> 0:15:27.280 following these investments that you're talking about, and and you 0:15:27.320 --> 0:15:29.640 know the role of government and buying down the risk 0:15:30.080 --> 0:15:33.560 um and the down payment that this new biprice and 0:15:33.800 --> 0:15:37.600 plan is going to be really means that the investment 0:15:37.920 --> 0:15:41.720 investment community in your audience has a big huge role 0:15:41.720 --> 0:15:45.000 to play going forward. How about the role of government. 0:15:45.280 --> 0:15:49.800 I'm thinking about President Biden's infrastructure bill, climate commitments. Give 0:15:49.880 --> 0:15:54.000 us your thoughts as to where this administration is going. Yeah, 0:15:54.040 --> 0:15:57.240 I mean you you mentioned in your lovely introduction that 0:15:57.440 --> 0:16:00.120 I've had some history here, UM, and so I do 0:16:00.240 --> 0:16:02.840 know that because I worked very close to with the 0:16:03.280 --> 0:16:05.960 President when who was vice president. You know, these these 0:16:06.000 --> 0:16:10.320 issues around jobs and equity, UM and climate are near 0:16:10.360 --> 0:16:11.640 and jured to his heart. And I think you see 0:16:11.640 --> 0:16:14.160 that re selected in UM, both the person and in 0:16:14.600 --> 0:16:19.720 the policy. UM. Back back then we were working on 0:16:19.760 --> 0:16:21.640 the Recovery Act and we called that a down payment 0:16:21.640 --> 0:16:23.520 and clean energy future. And now we're working on a 0:16:23.520 --> 0:16:26.400 bipartisan infrastructure bill. I mean, there's just been a huge 0:16:26.800 --> 0:16:29.680 shift in the landscape. Uh, that sort of thing. One 0:16:30.200 --> 0:16:32.520 thing too, is definitely what's going on in real time, 0:16:32.560 --> 0:16:37.440 the real impacts that we're all seeing with our own eyes, UM, 0:16:37.440 --> 0:16:40.840 from Germany to China. I'm here in Detroit, guys. I mean, 0:16:40.880 --> 0:16:44.560 we're experiencing this in real time. So I think the 0:16:44.600 --> 0:16:48.360 policy has met the moment um and the investment community. 0:16:48.400 --> 0:16:51.200 You know, there's there's trends now, there's more money in 0:16:51.240 --> 0:16:54.520 this space. You're seeing new and big, huge funds in 0:16:54.520 --> 0:16:57.640 this space and climate, which is exciting. But you know 0:16:57.680 --> 0:17:00.680 these investments aren't limited to climate when of what needs 0:17:00.680 --> 0:17:04.000 to happen. There's other issues, of course that I view 0:17:04.000 --> 0:17:06.080 as quality of life issues, and so does the President. 0:17:06.680 --> 0:17:10.280 Um when you think about food scarcity and and other 0:17:10.680 --> 0:17:15.639 mitigation issues, air quality issues. UM. So I'm excited by 0:17:15.680 --> 0:17:17.919 what's going on in Washington, but I also know that 0:17:17.960 --> 0:17:20.240 it's it's just it's another down payment and there's a 0:17:20.280 --> 0:17:22.680 real role for the investment community to come in. Yeah, 0:17:22.720 --> 0:17:24.920 and the investment community where I want to go. Now 0:17:24.920 --> 0:17:27.760 you're advising Rock Creek, and people want to make returns 0:17:27.880 --> 0:17:32.120 on investments. It's not just about all truism, um are 0:17:32.119 --> 0:17:35.959 They are investors willing to accept lower returns if they 0:17:35.960 --> 0:17:40.280 can do good. Um. I'm not going to even go 0:17:40.359 --> 0:17:41.960 down that road. I'm going to talk to you about 0:17:42.000 --> 0:17:44.920 what I know from working as an advisor to Rock Creek. Gapstane. 0:17:45.040 --> 0:17:47.119 You know she's came. You know, she's probably been on 0:17:47.160 --> 0:17:49.960 your show and you'll have her back. Uh. You know, 0:17:50.040 --> 0:17:51.600 this is a former Treasure of the World Banks. So 0:17:51.680 --> 0:17:54.480 she's been doing in my view, E. S. G. And 0:17:54.640 --> 0:17:56.679 d E. I started to use acronyms, but I know 0:17:56.720 --> 0:18:00.640 your audience knows them well. Uh investing before in fashion 0:18:00.680 --> 0:18:03.320 and now it's very much in fashion, and she's been 0:18:03.320 --> 0:18:06.560 doing it with returns for our clients, including major foundations 0:18:06.600 --> 0:18:09.520 and pensions fun So there's there is proof there, and 0:18:09.560 --> 0:18:12.639 I think, UM, what's what's more telling right now is 0:18:12.760 --> 0:18:15.480 you know the appetite for the data to support that. 0:18:15.560 --> 0:18:17.240 I know that you all have talked about this on 0:18:17.280 --> 0:18:21.399 the show. If something, we're without playing all my cards today, 0:18:21.480 --> 0:18:23.040 Paul and Matt, I'll just tell you that we're going 0:18:23.080 --> 0:18:25.000 to come back and talk again about the data that 0:18:25.600 --> 0:18:29.280 UM Rock Creek is UM has at its fingertips and 0:18:29.280 --> 0:18:32.000 in ways that we can UM make that more readily 0:18:32.000 --> 0:18:35.040 available so that investors can actually see these returns. So 0:18:35.880 --> 0:18:39.119 I think that UM premise that you mentioned your question 0:18:39.240 --> 0:18:41.920 is packed tense. I think the investments are here and now. 0:18:42.720 --> 0:18:45.320 So Sarah, give us a sense here, I mean E 0:18:45.440 --> 0:18:48.120 s G investing. I first heard about it maybe fifteen 0:18:48.160 --> 0:18:51.439 years ago from European institutional investors, but now more and 0:18:51.520 --> 0:18:54.600 more here in the US. Where are we in terms 0:18:54.600 --> 0:18:58.200 of really embracing it? Would you say, well, I think 0:18:58.200 --> 0:19:02.720 there's there's interesting in creating of a new um opportunities. 0:19:02.800 --> 0:19:05.240 We had on the summit last week. He had the 0:19:05.680 --> 0:19:09.960 founder of appeal ape l, which is a company that 0:19:10.520 --> 0:19:13.199 uses uh, you know what I was just called generally 0:19:13.200 --> 0:19:15.920 new technology to make you know, your fruits and vegetables 0:19:16.000 --> 0:19:17.840 last longer. And that's really important, as I mentioned in 0:19:17.920 --> 0:19:20.960 terms of like food scarcity. But the what's interesting to 0:19:21.000 --> 0:19:24.320 me about that as an investment is they consider nature 0:19:24.400 --> 0:19:26.320 as the end user, not sort of a human as 0:19:26.320 --> 0:19:28.440 the end user. And so in in my world, you know, 0:19:28.480 --> 0:19:31.000 I come out of the sort of energy, environment, science 0:19:31.000 --> 0:19:33.280 and tech. You know, we call that life cycle analysis, 0:19:33.280 --> 0:19:35.159 and they think I think that's an interesting trend. I 0:19:35.200 --> 0:19:38.040 think that's one that there's a real appetite particularly along 0:19:38.400 --> 0:19:43.680 uh millennials, millennial age investors are looking for that type 0:19:43.720 --> 0:19:46.879 of information and and uh you know these closed loops, 0:19:46.880 --> 0:19:51.520 I think UM watching uh Andrew Spires ted talk the 0:19:51.600 --> 0:19:53.320 other day and I thought it was so interesting. He 0:19:53.359 --> 0:19:56.879 talked about going from a take make waste economy to 0:19:56.920 --> 0:19:59.320 a circular economy, and I think that that is the 0:19:59.320 --> 0:20:01.879 trend that in the investors need to be watching the 0:20:01.920 --> 0:20:05.520 more right now as a more circular opportunity. Carry, Thanks 0:20:05.520 --> 0:20:09.719 so much. Carry Dougan there, she's an adviser to Rock Creek, 0:20:09.800 --> 0:20:15.800 former deputy policy director for then Vice President Biden. This 0:20:16.880 --> 0:20:24.040 is Bloomberg Amazon. Notwithstanding, we're getting some really really good 0:20:24.080 --> 0:20:28.480 earnings this quarter. Um, and that's alleviating concerns from some 0:20:28.520 --> 0:20:31.159 investors are worried about market valuations. Let's check in with 0:20:31.200 --> 0:20:35.160 one of those market participants, Phil Orlando, chief equity market 0:20:35.200 --> 0:20:39.639 strategists ahead of the Client portfolio Management at Federated at Hermes. Uh. 0:20:39.680 --> 0:20:41.760 These guys are big. I mean it's like six hundred 0:20:41.840 --> 0:20:45.879 billion dollars assets under management worldwide. Uh, so they have 0:20:46.119 --> 0:20:48.520 more than their toe dipped into this investment pool. Phil, 0:20:48.640 --> 0:20:50.800 thanks so much for for joining us here. Give us 0:20:50.840 --> 0:20:55.120 your thirty thousand foot view of this earnings cycle and 0:20:55.119 --> 0:20:56.920 and maybe more importantly, the outlot we're getting from some 0:20:56.960 --> 0:21:00.000 of some in corporate America. Well IT awards. The earning 0:21:00.080 --> 0:21:03.159