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 00:00:11,520 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,680 Speaker 1: at Bloomberg dot com slash podcast. It was fed chair 7 00:00:22,720 --> 00:00:26,360 Speaker 1: at Jerome Powell. He's delivering his semi annual Monetary Policy 8 00:00:26,400 --> 00:00:29,160 Speaker 1: report to the Senate Banking Committee, and Matt I think 9 00:00:29,160 --> 00:00:31,280 Speaker 1: that the one takeaway I had here from some of 10 00:00:31,320 --> 00:00:35,120 Speaker 1: his comments to date is that he's cautiously optimistic about 11 00:00:35,159 --> 00:00:38,760 Speaker 1: the economic recovery and feels comfortable with where the FED 12 00:00:38,880 --> 00:00:40,960 Speaker 1: is in terms of rates and in terms of uh 13 00:00:41,000 --> 00:00:45,000 Speaker 1: continued bond buying, and in terms of how well they 14 00:00:45,040 --> 00:00:47,920 Speaker 1: can control inflation as well. He doesn't think it's going 15 00:00:47,960 --> 00:00:49,400 Speaker 1: to be the kind of problem that they won't be 16 00:00:49,440 --> 00:00:53,160 Speaker 1: able to get their hands around. Um. The other's interesting thing, 17 00:00:53,320 --> 00:00:57,160 Speaker 1: I think, and from j Powell, I guess this is characteristic. 18 00:00:57,600 --> 00:01:01,120 Speaker 1: He's staying out of President Biden's way. He tried to 19 00:01:01,160 --> 00:01:04,720 Speaker 1: avoid clashes with President Trump as well, but um, the 20 00:01:04,760 --> 00:01:08,679 Speaker 1: opposite wasn't true. Uh, And maybe I guess I've gotten 21 00:01:08,760 --> 00:01:11,800 Speaker 1: used to the President making comments about the FED chair, 22 00:01:11,840 --> 00:01:14,880 Speaker 1: but I thought it was interesting today in John Pharaoh's 23 00:01:14,920 --> 00:01:17,679 Speaker 1: interview with the new Director of the Council of Economic 24 00:01:17,720 --> 00:01:22,760 Speaker 1: Advisors Brian Deese, Dee wouldn't answer Pharaoh's question as to 25 00:01:22,800 --> 00:01:26,119 Speaker 1: whether Biden had met with Powell yet. He just wasn't 26 00:01:26,120 --> 00:01:29,160 Speaker 1: gonna give any ground. And you know, Pharaoh falled up 27 00:01:29,200 --> 00:01:33,240 Speaker 1: like three times. Um, des wouldn't say. I don't know 28 00:01:33,280 --> 00:01:36,600 Speaker 1: if that's because Biden hasn't met with Chair Powell and 29 00:01:36,920 --> 00:01:39,680 Speaker 1: he feels like that would be an irresponsible message to send, 30 00:01:39,800 --> 00:01:43,720 Speaker 1: or whether um, this is just a new a new 31 00:01:43,800 --> 00:01:47,520 Speaker 1: relationship between a president and a federal chair and a 32 00:01:47,560 --> 00:01:51,000 Speaker 1: big change obviously since the last administration. Or let's get 33 00:01:51,000 --> 00:01:52,880 Speaker 1: a recap of what we did here this morning from 34 00:01:52,920 --> 00:01:55,360 Speaker 1: FED Chairman Chow. We're fortunate to be able to do 35 00:01:55,400 --> 00:01:57,720 Speaker 1: that today, Matt. We've got Carl Ricka Dona, Chief US 36 00:01:57,760 --> 00:02:02,360 Speaker 1: Economists for Bloomberg Economics, and then Emmons, Managing director Global 37 00:02:02,400 --> 00:02:05,400 Speaker 1: macro Strategy at Medley Investors. And let's start with you. 38 00:02:05,560 --> 00:02:08,840 Speaker 1: Carl here, what did you take away from FED Chairman's comments? 39 00:02:08,880 --> 00:02:12,160 Speaker 1: Today any changes in the near intermediate term do you believe. 40 00:02:13,400 --> 00:02:17,000 Speaker 1: Good morning, Paul. Really, the story here is that no 41 00:02:17,200 --> 00:02:19,880 Speaker 1: news is news and in of itself here because it 42 00:02:19,960 --> 00:02:23,400 Speaker 1: shows the FED that is unwavering and its policy stance 43 00:02:23,960 --> 00:02:27,840 Speaker 1: despite the ongoing rise and treasury yields and the improvement 44 00:02:28,120 --> 00:02:31,160 Speaker 1: improving tonally seen in the economic data. So the FED 45 00:02:31,320 --> 00:02:36,040 Speaker 1: is very resolute in its commitment to provide policy accommodation, 46 00:02:36,120 --> 00:02:41,440 Speaker 1: and they're showing no signs of starting to waiver as 47 00:02:41,480 --> 00:02:45,600 Speaker 1: they're being tested with potential signs of an economy that 48 00:02:45,760 --> 00:02:49,760 Speaker 1: really is surging forward with the pretty robust growth. The 49 00:02:49,840 --> 00:02:52,160 Speaker 1: least one I want to make uh you to your 50 00:02:52,240 --> 00:02:56,720 Speaker 1: question is that fast growth does not have to be inflationary. 51 00:02:56,760 --> 00:02:59,640 Speaker 1: And so we can look back to the probably the 52 00:02:59,680 --> 00:03:04,480 Speaker 1: best parallel episode, and that was the hard stop procession 53 00:03:04,520 --> 00:03:08,399 Speaker 1: of two. At that time, it was a FED chair 54 00:03:08,480 --> 00:03:11,080 Speaker 1: Paul Bulker slamming on the brakes of the economy and 55 00:03:11,120 --> 00:03:14,320 Speaker 1: then releasing it. Uh. This time that hard stop is 56 00:03:14,320 --> 00:03:17,760 Speaker 1: not caused by the FED. It's caused by lockdowns related 57 00:03:17,800 --> 00:03:21,079 Speaker 1: to coronavirus, and we can unlock the brake, the economy 58 00:03:21,120 --> 00:03:24,839 Speaker 1: can surge forward. And if nineteen eight three eighty four 59 00:03:24,840 --> 00:03:27,680 Speaker 1: eighty five is a piece of precedent, and I think 60 00:03:27,720 --> 00:03:29,920 Speaker 1: it may be Uh, we did not see a lot 61 00:03:29,960 --> 00:03:33,200 Speaker 1: of inflation during that period. I want to ask Ben 62 00:03:33,200 --> 00:03:36,240 Speaker 1: the question, but before I do, I gotta say hello 63 00:03:36,280 --> 00:03:39,839 Speaker 1: to Carl. It has been so long, man, I've it's 64 00:03:39,880 --> 00:03:43,440 Speaker 1: been since like Bloomberg rewind since I've seen you. And uh, 65 00:03:43,480 --> 00:03:45,760 Speaker 1: it's great to hear your voice. Um, and have you 66 00:03:45,800 --> 00:03:49,240 Speaker 1: on the program. Ben. With that. Ben and I are 67 00:03:49,320 --> 00:03:53,120 Speaker 1: old old friends now we speak on daily basis. Um. 68 00:03:53,680 --> 00:03:57,080 Speaker 1: What Ben? The other thing that that the Fed chair said, 69 00:03:57,120 --> 00:04:00,560 Speaker 1: which you know Carl says, fast growth doesn't have to 70 00:04:00,600 --> 00:04:06,160 Speaker 1: mean inflation. Um, the chair said, look, uh, serious deficits 71 00:04:06,200 --> 00:04:09,360 Speaker 1: don't have to meet I mean inflation anymore. Do you 72 00:04:09,400 --> 00:04:13,120 Speaker 1: think it's a concern at all that we're building up 73 00:04:13,160 --> 00:04:16,720 Speaker 1: such a huge debt to GDP level and that he 74 00:04:17,000 --> 00:04:19,279 Speaker 1: is sitting on such a gigantic balance sheet. Does that 75 00:04:19,440 --> 00:04:23,720 Speaker 1: bother him? Should it? I met a good talk to 76 00:04:23,800 --> 00:04:26,599 Speaker 1: you again. Yeah. I think what he was saying is 77 00:04:26,680 --> 00:04:30,880 Speaker 1: that the link between inflation and deficits has weakened over 78 00:04:30,880 --> 00:04:33,920 Speaker 1: the years, and he did say that it could change, right, 79 00:04:33,960 --> 00:04:36,719 Speaker 1: But I think what he's saying too is that because 80 00:04:36,800 --> 00:04:40,760 Speaker 1: of the twenty five years of disciflationary pressure, therefore the 81 00:04:40,760 --> 00:04:42,839 Speaker 1: link between deficits and inflation is low. And if you 82 00:04:42,839 --> 00:04:45,080 Speaker 1: didn't take that to your question of the debt though, 83 00:04:45,240 --> 00:04:48,360 Speaker 1: and that matters to the economy clearly, I think him 84 00:04:48,400 --> 00:04:53,000 Speaker 1: too probably understands that over time large large debt and 85 00:04:53,040 --> 00:04:56,279 Speaker 1: deficits will drag down the economy again again adding to 86 00:04:56,400 --> 00:05:00,400 Speaker 1: more disciflationary impression rather than inflation impression. And think that's 87 00:05:00,400 --> 00:05:02,640 Speaker 1: just what he, I think, is trying to say with 88 00:05:02,760 --> 00:05:05,720 Speaker 1: that that question. And I think additionally to that that 89 00:05:06,040 --> 00:05:08,840 Speaker 1: the message seems to be overalled. Is the same today 90 00:05:09,200 --> 00:05:12,120 Speaker 1: he didn't respond to a question about the linkage between 91 00:05:12,160 --> 00:05:15,880 Speaker 1: multipolicy and and the asset valuation. So I do think 92 00:05:15,880 --> 00:05:19,200 Speaker 1: that he sees inflation in the ASCID markets not so much, 93 00:05:19,200 --> 00:05:21,760 Speaker 1: you really call me, I just think, you know, I 94 00:05:21,839 --> 00:05:24,159 Speaker 1: never got past econ one oh one, so I'm probably 95 00:05:24,160 --> 00:05:27,839 Speaker 1: the least qualified here. But I have always understood that 96 00:05:27,920 --> 00:05:32,200 Speaker 1: when countries build up huge debts, what they really like 97 00:05:32,360 --> 00:05:35,840 Speaker 1: to do is massively devalue the currency so that they 98 00:05:35,839 --> 00:05:38,440 Speaker 1: don't actually have to pay That. Isn't that, Carl, Do 99 00:05:38,440 --> 00:05:43,720 Speaker 1: you think that's always the plan? Well, Matt, I know 100 00:05:43,880 --> 00:05:45,960 Speaker 1: that you're a rule breaker and you like to be 101 00:05:46,240 --> 00:05:52,159 Speaker 1: the bad boy. So the rules are a little different 102 00:05:52,200 --> 00:05:54,240 Speaker 1: for the U. S. Economy. So in what we would 103 00:05:54,279 --> 00:05:58,840 Speaker 1: call an in country, an average sized economy or country, 104 00:05:59,240 --> 00:06:03,480 Speaker 1: you run into the problems where deficits can be inflationary 105 00:06:03,680 --> 00:06:08,039 Speaker 1: and cause currency devaluation and whatnot. In the U. S economy, 106 00:06:08,080 --> 00:06:10,760 Speaker 1: that's a very unique role. It's the largest economy in 107 00:06:10,800 --> 00:06:14,360 Speaker 1: the world, is the most powerful military in the world, 108 00:06:14,520 --> 00:06:17,360 Speaker 1: and it's also a reserved currency. And so that means 109 00:06:17,400 --> 00:06:20,360 Speaker 1: that in fact, looking back to the last recession, when 110 00:06:20,360 --> 00:06:23,520 Speaker 1: we had the US credit rating downgrade, that actually proved 111 00:06:23,520 --> 00:06:26,920 Speaker 1: a positive for treasury guilds UH and the currency actually 112 00:06:26,960 --> 00:06:32,200 Speaker 1: appreciated because there was a flight of capital into the US. So, well, 113 00:06:32,279 --> 00:06:36,280 Speaker 1: we certainly can't just run willy milly indefinitely higher deficits 114 00:06:36,279 --> 00:06:39,480 Speaker 1: and whatnot. What's happening at the moment is said the 115 00:06:39,520 --> 00:06:43,840 Speaker 1: deficit spending is reducing slack in the economy. In the 116 00:06:43,920 --> 00:06:45,960 Speaker 1: best way for the US economy to be able to 117 00:06:46,000 --> 00:06:49,400 Speaker 1: pay down those debts at some future date is to 118 00:06:49,440 --> 00:06:52,800 Speaker 1: get back to full employment and full capacity as quickly 119 00:06:52,839 --> 00:06:57,360 Speaker 1: as possible. UH. If it's a weak, uh, starved recovery 120 00:06:57,400 --> 00:07:00,839 Speaker 1: like we saw after the O nine recession. Uh, then 121 00:07:01,120 --> 00:07:04,000 Speaker 1: that that puts the economy a much weaker footing to 122 00:07:04,080 --> 00:07:06,280 Speaker 1: make those debt payments. So get back to full employment, 123 00:07:06,320 --> 00:07:08,840 Speaker 1: the tax revenue will come with it, and at that 124 00:07:08,960 --> 00:07:12,200 Speaker 1: point then you can start to look at addressing these 125 00:07:12,400 --> 00:07:17,160 Speaker 1: fiscal imbalances. So so Ben, you know, we're hearing again 126 00:07:17,200 --> 00:07:20,800 Speaker 1: from chairman Palace, as Carl suggested, no surprise, but lower 127 00:07:20,960 --> 00:07:23,280 Speaker 1: for longer. Is there a risk here that the market 128 00:07:23,360 --> 00:07:25,760 Speaker 1: kind of moves past the Fed? Here we've seen a 129 00:07:25,760 --> 00:07:28,440 Speaker 1: little lifting rates, We've seen uh, some steeping in the 130 00:07:28,520 --> 00:07:31,160 Speaker 1: Yeel curve. Does the market kind of moved past where 131 00:07:31,160 --> 00:07:35,920 Speaker 1: the Fed is and is comfortable? Yeah, it is somewhat happening, 132 00:07:36,600 --> 00:07:38,720 Speaker 1: Ball because you know, you look at those rate high 133 00:07:38,760 --> 00:07:41,480 Speaker 1: probabilities in FETs in the futures, right, they have moved 134 00:07:41,480 --> 00:07:44,880 Speaker 1: off And it does show that the market is pricing 135 00:07:44,880 --> 00:07:49,200 Speaker 1: in the recovery aided by the vaccination rollouts as at 136 00:07:49,240 --> 00:07:51,880 Speaker 1: some point that the economy one is fully reopened and 137 00:07:51,920 --> 00:07:54,800 Speaker 1: then it's a closer to full capacity, by which means 138 00:07:54,840 --> 00:07:58,200 Speaker 1: inflation will be in the temporary above targets. And yeah, 139 00:07:58,240 --> 00:08:00,560 Speaker 1: then it pulls forward, as we call it rate hike. 140 00:08:00,720 --> 00:08:02,520 Speaker 1: That's the function of the steeping of the yield curve 141 00:08:02,600 --> 00:08:06,160 Speaker 1: and the rise in nominal and real interest rates, and 142 00:08:06,200 --> 00:08:08,400 Speaker 1: so that could indeed be somewhat ahead of what what 143 00:08:08,560 --> 00:08:11,440 Speaker 1: ultimately the FAT will will do. I will say though, 144 00:08:11,480 --> 00:08:14,600 Speaker 1: that so far it's been viewed as that they're not 145 00:08:14,760 --> 00:08:16,960 Speaker 1: leaning against what the market is doing, and there was 146 00:08:17,000 --> 00:08:20,120 Speaker 1: a question about that in the testimony earlier. Right, How 147 00:08:20,120 --> 00:08:23,840 Speaker 1: the link is between multi policy and asset values. Yeah, 148 00:08:23,880 --> 00:08:26,440 Speaker 1: that's a clear link. But there's also recognition that there's 149 00:08:26,440 --> 00:08:28,600 Speaker 1: a lot of different elements going on at the same 150 00:08:28,680 --> 00:08:32,160 Speaker 1: time in terms of how the recoverage price into the 151 00:08:32,200 --> 00:08:34,160 Speaker 1: inter the financial markets. Right, how we're getting out of 152 00:08:34,200 --> 00:08:37,480 Speaker 1: the pandemic to a full open economy, and it does 153 00:08:37,559 --> 00:08:40,880 Speaker 1: lead to cep Ye curve and some expectation of feature rates. Ben, 154 00:08:40,920 --> 00:08:42,640 Speaker 1: I'm looking at a just thirty seconds here, but I'm 155 00:08:42,640 --> 00:08:45,800 Speaker 1: looking at a couple of charts that you emailed me yesterday. Um, 156 00:08:45,840 --> 00:08:49,800 Speaker 1: if the herd immunity and you know, UM continues to rise, 157 00:08:49,880 --> 00:08:55,319 Speaker 1: infections continue to drop, is the rate hike probability for UM, 158 00:08:55,360 --> 00:09:00,480 Speaker 1: you know, December going to climb substantially? Yeah, that good math. 159 00:09:00,559 --> 00:09:03,200 Speaker 1: It's it's it's definitely there that that's a correlation that 160 00:09:03,280 --> 00:09:05,600 Speaker 1: I think we should take note of that the market 161 00:09:05,679 --> 00:09:08,800 Speaker 1: is implying that it is really the stay at home trade. 162 00:09:08,840 --> 00:09:11,319 Speaker 1: So that speakers we will talk about as being deflated 163 00:09:11,520 --> 00:09:13,760 Speaker 1: today right that rotation is happening out of tech stay 164 00:09:13,760 --> 00:09:16,280 Speaker 1: at home into the opening and I think that's the 165 00:09:16,400 --> 00:09:19,840 Speaker 1: link with that rate high probability. The market is prishing 166 00:09:19,880 --> 00:09:23,440 Speaker 1: in the economies out of the pandemic fully reopens and 167 00:09:23,480 --> 00:09:26,240 Speaker 1: that's steep you curve dam reflects that, and that's where 168 00:09:26,240 --> 00:09:29,880 Speaker 1: the rate type of probability rise comes from. So yes, 169 00:09:29,920 --> 00:09:32,920 Speaker 1: there's a clear link between the reopening trade and the 170 00:09:33,000 --> 00:09:35,960 Speaker 1: rate type probability. Ben, thanks so much for joining us. 171 00:09:35,960 --> 00:09:37,960 Speaker 1: Pleasure to speak to you again. Ben Emmons there from 172 00:09:38,000 --> 00:09:42,600 Speaker 1: Medley Global Advisors and Carl Ruka don are chief US economists. 173 00:09:42,640 --> 00:09:46,440 Speaker 1: Wrapping up the comments from FED chairman Pal of course, 174 00:09:46,480 --> 00:09:48,400 Speaker 1: will continue to bring your headlines from that event which 175 00:09:48,440 --> 00:09:54,880 Speaker 1: is ongoing. Me and Greg we know a lot about 176 00:09:54,960 --> 00:09:58,560 Speaker 1: cars when it comes to drive, trains and design, but 177 00:09:59,280 --> 00:10:02,680 Speaker 1: when it comes to business of producing them. If I 178 00:10:02,760 --> 00:10:05,320 Speaker 1: have a question, I usually call up Ed Ludlow, a 179 00:10:05,360 --> 00:10:08,960 Speaker 1: reporter out in San Francisco. He knows what he's talking about, 180 00:10:09,000 --> 00:10:13,760 Speaker 1: and he got a killer story. Um. Today he got 181 00:10:13,800 --> 00:10:17,040 Speaker 1: the interview with the Lucid CEO, one of the hardest 182 00:10:17,040 --> 00:10:20,199 Speaker 1: properties I gotta say on TV today, ed what did 183 00:10:20,200 --> 00:10:22,760 Speaker 1: you learn? I actually learned quite a lot. You know, 184 00:10:22,760 --> 00:10:26,360 Speaker 1: I followed the company closely for about two years. And 185 00:10:26,400 --> 00:10:28,640 Speaker 1: the thing is, no one's really been interested in Lucid 186 00:10:29,120 --> 00:10:33,400 Speaker 1: until all the spack rumors started right in recent weeks 187 00:10:33,400 --> 00:10:36,400 Speaker 1: and months. But you know, Lucid is a company that 188 00:10:36,559 --> 00:10:40,040 Speaker 1: is run by this guy, Peter Rawlinson, formerly chief engineer 189 00:10:40,440 --> 00:10:42,600 Speaker 1: on Tesla's Model Esque, and for the entirety of the 190 00:10:42,640 --> 00:10:44,920 Speaker 1: time I've known him, which is about three years now, 191 00:10:45,360 --> 00:10:49,160 Speaker 1: he has preached prudence and discipline and patience in bringing 192 00:10:49,160 --> 00:10:52,199 Speaker 1: the car to market. And what we learned is the 193 00:10:52,280 --> 00:10:54,199 Speaker 1: kind of main takeaway from the interview is that during 194 00:10:54,200 --> 00:10:57,559 Speaker 1: the due diligence process with the Churchill Capital spack Michael 195 00:10:57,640 --> 00:11:00,760 Speaker 1: Klein Spack, that it was actually the guy at the spack, 196 00:11:00,880 --> 00:11:05,160 Speaker 1: Michael Cline Klein and Alan Moulally, the former Ford CEO, 197 00:11:05,200 --> 00:11:09,240 Speaker 1: who pushed Lucid to delay production because what they saw 198 00:11:09,440 --> 00:11:12,000 Speaker 1: was a good product, you know, a luxury TV that 199 00:11:12,040 --> 00:11:15,320 Speaker 1: has significant range about five dred and fifteen miles on 200 00:11:15,360 --> 00:11:18,280 Speaker 1: a single charge, but they were worried that Lucid would 201 00:11:18,280 --> 00:11:21,720 Speaker 1: experience the same quality control issues that Tesla went through. 202 00:11:22,200 --> 00:11:24,720 Speaker 1: So that was kind of the biggest and most surprising 203 00:11:24,760 --> 00:11:27,320 Speaker 1: takeaway from the interview. Today, it should be pointed out 204 00:11:27,400 --> 00:11:32,200 Speaker 1: that Malali is I mean, he's the man when it 205 00:11:32,240 --> 00:11:36,439 Speaker 1: comes to this stuff. He built the seven seven seven, 206 00:11:36,520 --> 00:11:39,320 Speaker 1: notwithstanding the recent engine problems, which didn't have anything to 207 00:11:39,320 --> 00:11:42,600 Speaker 1: do with Boeing, and he's the guy who turned around Ford. 208 00:11:42,679 --> 00:11:45,800 Speaker 1: So when Bill Ford's company was, you know, breathing its 209 00:11:45,880 --> 00:11:49,080 Speaker 1: last breath, he called up Alan and he flew in 210 00:11:49,160 --> 00:11:53,760 Speaker 1: and fixed it for him. Right. So it's interesting because 211 00:11:55,280 --> 00:11:57,720 Speaker 1: broadly speaking, if you look at the SPACs that have 212 00:11:57,760 --> 00:12:00,760 Speaker 1: done deals with e vs, what is the one thing 213 00:12:00,800 --> 00:12:04,559 Speaker 1: that they have in common. They have a former automotive 214 00:12:04,600 --> 00:12:08,439 Speaker 1: executive somewhere near the top I'm thinking of course, like 215 00:12:08,520 --> 00:12:13,079 Speaker 1: for example, nikola Um and the spack that took them public, 216 00:12:13,200 --> 00:12:17,840 Speaker 1: they had Steve Gerski, former GM executive. In my conversation 217 00:12:17,920 --> 00:12:21,400 Speaker 1: with Lucid CEO Peter Rolinson's day, he basically said that 218 00:12:21,440 --> 00:12:24,240 Speaker 1: what happened was he took Ala mulally for a test 219 00:12:24,360 --> 00:12:27,400 Speaker 1: drive in the car, and that it was like that 220 00:12:27,480 --> 00:12:31,400 Speaker 1: conversation at the wheel in a pre production prototype that 221 00:12:31,760 --> 00:12:34,199 Speaker 1: kind of brought about this idea that they should take 222 00:12:34,240 --> 00:12:37,880 Speaker 1: their time now. Peter Rawlinson is an experienced was motive 223 00:12:37,920 --> 00:12:40,600 Speaker 1: executive in his own right, you know, prior to Tesla 224 00:12:40,679 --> 00:12:43,640 Speaker 1: he had jobs at Jaguar, Land Rover and other automakers. 225 00:12:44,120 --> 00:12:47,080 Speaker 1: But it's interesting that that he rather than sort of 226 00:12:47,120 --> 00:12:51,040 Speaker 1: going with the new age technology ev approach, there's some 227 00:12:51,160 --> 00:12:54,960 Speaker 1: deference right to the old automotive head about what the 228 00:12:55,040 --> 00:12:57,720 Speaker 1: right course of action, and it kind of echoes this. 229 00:12:57,920 --> 00:12:59,680 Speaker 1: How I've known Peter in the time that I've interviewed 230 00:12:59,720 --> 00:13:02,280 Speaker 1: him the last few years, it is patients and prudence. 231 00:13:02,679 --> 00:13:04,839 Speaker 1: And when we started reporting on the back a lot, 232 00:13:04,880 --> 00:13:06,760 Speaker 1: there's a lot of height from retail investors, a lot 233 00:13:06,760 --> 00:13:10,559 Speaker 1: of excitement from within Lucid and sources about the need 234 00:13:10,600 --> 00:13:13,560 Speaker 1: to get a car to market quickly. It's astonishing how 235 00:13:13,640 --> 00:13:16,760 Speaker 1: quickly that narrative has changed overnight, and we're starting to 236 00:13:16,760 --> 00:13:21,000 Speaker 1: see the red headlines crossing the Bloomberg terminal Regarding this interview, 237 00:13:21,040 --> 00:13:22,560 Speaker 1: and one of the interesting things that came out is 238 00:13:22,600 --> 00:13:26,920 Speaker 1: that the um you know it's the delay was called. 239 00:13:26,920 --> 00:13:30,200 Speaker 1: But as you mentioned by the Churchill spack itself, but 240 00:13:30,200 --> 00:13:32,840 Speaker 1: they're also getting some bridge financing from Saudi Arabia. Tops 241 00:13:32,920 --> 00:13:36,160 Speaker 1: about that. Yes, So the transaction with Churchill won't close 242 00:13:36,240 --> 00:13:39,480 Speaker 1: until sometime in the second quarter, right, And in the meantime, 243 00:13:39,679 --> 00:13:42,319 Speaker 1: Lucid is hiring like crazy and it's trying to get 244 00:13:42,480 --> 00:13:45,439 Speaker 1: its production lines fired up. They need cash. So what 245 00:13:45,480 --> 00:13:48,040 Speaker 1: I'm told is that that's going to simply come from 246 00:13:48,120 --> 00:13:53,240 Speaker 1: saudiast Public Investment Fund six million dollars bridge financing, however 247 00:13:53,280 --> 00:13:55,720 Speaker 1: you want to put it. You know what's really interesting. 248 00:13:56,000 --> 00:13:57,840 Speaker 1: In the run up to this deal, a lot of 249 00:13:57,880 --> 00:14:02,600 Speaker 1: retail traders basically aid this back on speculation. But last 250 00:14:02,679 --> 00:14:04,679 Speaker 1: night in the investor deck, we actually looked under the 251 00:14:04,720 --> 00:14:08,040 Speaker 1: hood and saw what Lucid's plan is, and they're expecting 252 00:14:08,120 --> 00:14:11,600 Speaker 1: negative free cash flow or cash burn of ten billion 253 00:14:11,720 --> 00:14:15,880 Speaker 1: dollars between now and you guys talk about Uber right, 254 00:14:16,800 --> 00:14:19,280 Speaker 1: not not pyem but spread out over that time, Babe, 255 00:14:19,360 --> 00:14:22,240 Speaker 1: you guys, you you guys cover Uber right. You've talked 256 00:14:22,280 --> 00:14:25,880 Speaker 1: about how cash burn with such a significant story around them, 257 00:14:25,920 --> 00:14:28,160 Speaker 1: when would they be profitable and stop kind of growing 258 00:14:28,520 --> 00:14:31,600 Speaker 1: and and think about profitability. Well, if there's one thing 259 00:14:31,640 --> 00:14:33,960 Speaker 1: you learn on this beat, it's the prototypes are easy. 260 00:14:34,160 --> 00:14:37,080 Speaker 1: Production is hard, and it all takes cash. It all 261 00:14:37,080 --> 00:14:40,160 Speaker 1: takes capital, and you know they will have to go 262 00:14:40,240 --> 00:14:43,680 Speaker 1: to the public markets again, um, the capital markets again. 263 00:14:43,720 --> 00:14:46,360 Speaker 1: The Lucid CEO confirmed that during the interview. But but 264 00:14:46,400 --> 00:14:49,040 Speaker 1: what's astonishing is that you know they are some way 265 00:14:49,280 --> 00:14:52,560 Speaker 1: from profits, some way from meaningful revenue as well. And 266 00:14:52,640 --> 00:14:54,440 Speaker 1: it kind of brings it back home that this is 267 00:14:54,480 --> 00:14:58,120 Speaker 1: a pre revenue startup, right despite the eyewatering evaluation. If 268 00:14:58,120 --> 00:15:01,120 Speaker 1: they keep it to ten billion, I'll be shut you know, 269 00:15:01,240 --> 00:15:04,520 Speaker 1: because that's the kind of number that you overrun. I mean, 270 00:15:04,520 --> 00:15:07,560 Speaker 1: it takes a billion dollars to develop a car from scratch. 271 00:15:07,800 --> 00:15:11,080 Speaker 1: And that's if you're already GM or Ford, Right, that's 272 00:15:11,160 --> 00:15:13,880 Speaker 1: if you already know exactly what you're doing, have your 273 00:15:13,880 --> 00:15:17,920 Speaker 1: factories built, etcetera, etcetera. Let me ask you about Rivian, 274 00:15:18,000 --> 00:15:21,960 Speaker 1: because this is the other kind of viable um competitor 275 00:15:21,960 --> 00:15:24,760 Speaker 1: to Tesla. Lucid and Rivian really the only two that 276 00:15:24,800 --> 00:15:26,560 Speaker 1: are likely to bring out a car in the next 277 00:15:26,920 --> 00:15:31,680 Speaker 1: twelve months for sale. And you and Katie Roof and 278 00:15:32,640 --> 00:15:35,960 Speaker 1: a guy with a really cool name. Keel Porter from 279 00:15:36,000 --> 00:15:38,760 Speaker 1: the story about their I I P. Keel Porter is 280 00:15:38,800 --> 00:15:40,680 Speaker 1: such a cool name. It sounds like he should be 281 00:15:40,720 --> 00:15:46,360 Speaker 1: in a movie with Tom Keane and White. Yeah, in anyone. 282 00:15:46,440 --> 00:15:49,520 Speaker 1: In any case, their IPO could come as soon as September. 283 00:15:49,680 --> 00:15:52,320 Speaker 1: It's not a spack, it's legit I P O. Tell 284 00:15:52,360 --> 00:15:54,680 Speaker 1: us about it. Yes, according to sources, that's what we're 285 00:15:54,680 --> 00:15:57,640 Speaker 1: hearing that the Rivian is looking at an I P O. 286 00:15:57,720 --> 00:16:00,000 Speaker 1: It's speaking to bank is they hide and you see 287 00:16:00,200 --> 00:16:05,720 Speaker 1: fo whose former JP Morgan executive in the new year, Um, 288 00:16:05,840 --> 00:16:08,680 Speaker 1: don't forget. Rivan is raised eight billion dollars to date 289 00:16:08,760 --> 00:16:12,040 Speaker 1: from private rounds right with some very big name investors. 290 00:16:12,280 --> 00:16:15,400 Speaker 1: More of ideality t rowe price a lot more. And 291 00:16:15,880 --> 00:16:18,560 Speaker 1: they have been in stealth mode in the truest sense 292 00:16:18,640 --> 00:16:21,400 Speaker 1: of the expression. You know, they really spent several years 293 00:16:21,440 --> 00:16:23,920 Speaker 1: under the radar before going public with their design. Even 294 00:16:24,400 --> 00:16:27,200 Speaker 1: what I'm hearing in Rivian is it's a really similar story. 295 00:16:27,480 --> 00:16:31,040 Speaker 1: Lots of prudence and patients. They have a very big 296 00:16:31,040 --> 00:16:33,920 Speaker 1: workforce of around three and a half thousand. They have 297 00:16:34,000 --> 00:16:38,760 Speaker 1: retrofitted and Mitsubishi factory in Normal, Illinois rather than build 298 00:16:38,760 --> 00:16:41,400 Speaker 1: a factory from scratch like Lucid's done. They have a 299 00:16:41,440 --> 00:16:43,880 Speaker 1: lot and I cannot stress this enough, a lot of 300 00:16:43,960 --> 00:16:47,640 Speaker 1: former Tesla engineers at the very senior level for engineering 301 00:16:47,680 --> 00:16:51,480 Speaker 1: and manufacturing, and on paper they will be the first 302 00:16:51,520 --> 00:16:53,520 Speaker 1: to bring a new EV product to market here in 303 00:16:53,560 --> 00:16:56,160 Speaker 1: the US, a battery electric pickup in June. And I 304 00:16:56,160 --> 00:16:58,720 Speaker 1: think you and I've talked about this map, but Americans 305 00:16:58,880 --> 00:17:02,880 Speaker 1: by light trucks. They don't buy sedans, they don't buy hatchbags. 306 00:17:03,160 --> 00:17:05,160 Speaker 1: People when I talks people about hatchbacks said they didn't 307 00:17:05,160 --> 00:17:08,320 Speaker 1: even know what that is. So you know the anticipation 308 00:17:08,640 --> 00:17:13,119 Speaker 1: right exactly. The anticipation here very top year, and the 309 00:17:13,160 --> 00:17:15,480 Speaker 1: anticipation with Rivan is like, well, here we go a 310 00:17:15,480 --> 00:17:18,040 Speaker 1: battery electric car that is actually in line with what 311 00:17:18,119 --> 00:17:22,320 Speaker 1: Americans like to drive. And Jon ed that drove on 312 00:17:22,400 --> 00:17:25,840 Speaker 1: the long way up with you and McGregor and Charlie Warman. Uh, 313 00:17:26,000 --> 00:17:28,720 Speaker 1: you actually saw that Rivan truck and action. So that's 314 00:17:28,720 --> 00:17:32,560 Speaker 1: a great advertisement advertisement, as you would say, Hey, thanks 315 00:17:32,600 --> 00:17:34,680 Speaker 1: so much for joining us. We appreciate Ed Ludlow, reporter 316 00:17:34,720 --> 00:17:37,440 Speaker 1: for Bloomberg News, joining us from San Francisco from red Headlines. 317 00:17:37,680 --> 00:17:41,480 Speaker 1: Come here across matt Us ready sanctions to punish Russia 318 00:17:41,520 --> 00:17:44,679 Speaker 1: over mal Valley. So it's very interesting in there. So 319 00:17:44,680 --> 00:17:47,440 Speaker 1: we'll have to follow up with that story going forward. 320 00:17:49,280 --> 00:17:51,480 Speaker 1: One of them, I thought the most interesting stories on 321 00:17:51,520 --> 00:17:54,720 Speaker 1: the Bloomberg UM so far this week has been one 322 00:17:54,920 --> 00:18:00,679 Speaker 1: about how Joe Biden will spend more money after this 323 00:18:00,720 --> 00:18:04,840 Speaker 1: one point nine trillion dollar stimulus package on infrastructure, And 324 00:18:04,840 --> 00:18:07,120 Speaker 1: we're gonna bring in Josh Deets to talk a little 325 00:18:07,119 --> 00:18:11,640 Speaker 1: bit about that, his senior portfolio manager at Aberdeen Standard Investments. Typically, 326 00:18:11,640 --> 00:18:14,600 Speaker 1: when I talked to somebody Josh at Aberdeen, UM, there 327 00:18:14,640 --> 00:18:19,359 Speaker 1: in Edinburgh, but you are in New York City, UM, 328 00:18:19,440 --> 00:18:22,000 Speaker 1: which is a place that probably needs a heck of 329 00:18:22,040 --> 00:18:25,240 Speaker 1: a lot more spending than Edinburgh. Where do you think project? 330 00:18:25,640 --> 00:18:28,359 Speaker 1: Where do you? Where do you think Biden? I guess 331 00:18:28,359 --> 00:18:33,120 Speaker 1: Biden famously doesn't like LaGuardia, right, well, who does? Where 332 00:18:33,119 --> 00:18:37,360 Speaker 1: do you think Biden's gonna start? So I think it's 333 00:18:37,359 --> 00:18:41,240 Speaker 1: a combination. Right. When people talk about infrastructure, historically it's 334 00:18:41,240 --> 00:18:44,560 Speaker 1: always been roads and bridges, but we actually think that's 335 00:18:44,640 --> 00:18:48,160 Speaker 1: part of an infrastructure plan. But it's also about modernizing 336 00:18:48,200 --> 00:18:52,520 Speaker 1: the economy, tackling climate change, and address some racial and 337 00:18:52,640 --> 00:18:57,920 Speaker 1: social economic inequalities and part of broadband. Broadband right exactly 338 00:18:57,960 --> 00:19:00,520 Speaker 1: as we're all working from home and our kids are 339 00:19:00,520 --> 00:19:03,040 Speaker 1: in zoom school from home. It shows what an essential 340 00:19:03,080 --> 00:19:06,040 Speaker 1: asset that broadband is currently. So I think it's going 341 00:19:06,080 --> 00:19:08,040 Speaker 1: to be a combination of all of those. It's just 342 00:19:08,160 --> 00:19:11,960 Speaker 1: not gonna be fixing Guardia Airport or the airports in general, 343 00:19:12,040 --> 00:19:14,280 Speaker 1: but that will be part of it. All Right, Well, 344 00:19:14,359 --> 00:19:16,520 Speaker 1: we have a little tunnel connecting New Jersey and New 345 00:19:16,600 --> 00:19:19,160 Speaker 1: York that goes under the Hudson River. We need to 346 00:19:19,320 --> 00:19:22,160 Speaker 1: fix that, uh, Josh, So see what you can do there. 347 00:19:22,560 --> 00:19:25,439 Speaker 1: So talk to us a little bit about you know 348 00:19:25,520 --> 00:19:29,520 Speaker 1: again this uh, this infrastructure bill. It seems like there's 349 00:19:29,520 --> 00:19:33,960 Speaker 1: a little fatigue here on the you know, getting more 350 00:19:34,000 --> 00:19:37,399 Speaker 1: money from Congress in terms of fiscal stimulus. Is there 351 00:19:37,400 --> 00:19:40,760 Speaker 1: a bipartisan support for h kind of a more of 352 00:19:40,760 --> 00:19:45,720 Speaker 1: an infrastructure type of playing Josh. Both Democrats and Republicans 353 00:19:45,760 --> 00:19:48,200 Speaker 1: have talked about it for years, probably the only issue 354 00:19:48,240 --> 00:19:50,920 Speaker 1: they agree on. And I would actually say what we've 355 00:19:50,920 --> 00:19:54,320 Speaker 1: seen now in this one point nine billion ballots stimulus package, 356 00:19:54,359 --> 00:19:57,600 Speaker 1: to me, it's more of a stabilization package. The infrastructure 357 00:19:57,600 --> 00:20:00,480 Speaker 1: plan would actually be a stimulus for the economy because 358 00:20:00,480 --> 00:20:03,520 Speaker 1: there's a multiplier effect and will have growth from that 359 00:20:03,880 --> 00:20:06,280 Speaker 1: rather than just stabilized in the company. And that's why 360 00:20:06,280 --> 00:20:08,399 Speaker 1: I think it's so important. He didn't meet with the 361 00:20:08,400 --> 00:20:11,159 Speaker 1: Republicans a couple of weeks ago to discuss it, and 362 00:20:11,200 --> 00:20:14,040 Speaker 1: I think this was part of his campaign pledged, and 363 00:20:14,080 --> 00:20:16,000 Speaker 1: I think he really wants to get this done sooner 364 00:20:16,080 --> 00:20:18,520 Speaker 1: then later, so we could have possibly have it by 365 00:20:18,560 --> 00:20:21,280 Speaker 1: the stub or possibly the fourth quarter. Don't forget the 366 00:20:21,280 --> 00:20:24,560 Speaker 1: other thing they agree on. AOC and Ted Cruz both 367 00:20:25,040 --> 00:20:28,280 Speaker 1: thought it was stupid for Robin Hood to shut down 368 00:20:28,320 --> 00:20:31,920 Speaker 1: Game Stop buyers UM. In terms of the money, I mean, 369 00:20:32,200 --> 00:20:35,600 Speaker 1: two to three trillion is what you expect, right, So 370 00:20:36,200 --> 00:20:39,000 Speaker 1: if you add that to the one point nine trillion 371 00:20:39,119 --> 00:20:44,200 Speaker 1: support program and the other four and a half trillion 372 00:20:44,320 --> 00:20:48,399 Speaker 1: we've spent, you're already getting towards ten trillion dollars of 373 00:20:48,480 --> 00:20:51,800 Speaker 1: spending in like a four or five year period UM. 374 00:20:52,119 --> 00:20:55,320 Speaker 1: That's got to be some kind of record. It is. 375 00:20:55,359 --> 00:20:58,040 Speaker 1: It's tremendous how much our debt has grown, and it 376 00:20:58,240 --> 00:21:01,040 Speaker 1: is worrisome. I will say the one part about an 377 00:21:01,040 --> 00:21:04,840 Speaker 1: infrastructure package ten and should lead to growth, and it 378 00:21:04,880 --> 00:21:08,200 Speaker 1: wouldn't be all up front like these other packages. This 379 00:21:08,240 --> 00:21:10,560 Speaker 1: would be spent over an eight or ten year period. 380 00:21:10,800 --> 00:21:13,040 Speaker 1: So hopefully we'll have growth and that will help the 381 00:21:13,160 --> 00:21:15,680 Speaker 1: economy and hopefully pay down some of the debt we've 382 00:21:15,720 --> 00:21:19,320 Speaker 1: accumulated over the past few months. All right, Josh, given 383 00:21:20,080 --> 00:21:23,680 Speaker 1: the potential for more fiscal studius, again on the infrastructure side, 384 00:21:23,920 --> 00:21:28,359 Speaker 1: how are you positioning your portfolio? So it's a combination. 385 00:21:28,400 --> 00:21:31,439 Speaker 1: First of all, we view this as a free call option, 386 00:21:31,480 --> 00:21:34,199 Speaker 1: so we were positioning or portfolio currently for what we 387 00:21:34,240 --> 00:21:37,399 Speaker 1: still have expected spending, not from the government, from the 388 00:21:37,440 --> 00:21:39,840 Speaker 1: private side, and a lot has to do with climate 389 00:21:39,920 --> 00:21:43,000 Speaker 1: change and we see growth there. You know, we expect 390 00:21:43,080 --> 00:21:45,200 Speaker 1: ten to twelve per cent or I should say low 391 00:21:45,240 --> 00:21:49,680 Speaker 1: double digit growth and renewables over the next decade um 392 00:21:49,720 --> 00:21:52,520 Speaker 1: to come. Right now, about the three quarters of the 393 00:21:52,560 --> 00:21:56,680 Speaker 1: world judge by g d P has committed to net 394 00:21:56,760 --> 00:22:00,440 Speaker 1: zero emissions, So we think renewables are be a way 395 00:22:00,480 --> 00:22:04,280 Speaker 1: to play the infrastructure and the growth. And another part 396 00:22:04,320 --> 00:22:08,159 Speaker 1: of it is um prepared for five G and we 397 00:22:08,200 --> 00:22:11,880 Speaker 1: believe that macro towers are the most cost effective way 398 00:22:11,920 --> 00:22:14,399 Speaker 1: to deploy wireless spectrum. So I would say in the 399 00:22:14,400 --> 00:22:16,560 Speaker 1: renewable side you like quite a bit. And then from 400 00:22:16,560 --> 00:22:19,160 Speaker 1: the five G and the towers just one other part 401 00:22:19,240 --> 00:22:21,600 Speaker 1: as the economy is reopened, and we started to see 402 00:22:21,640 --> 00:22:25,240 Speaker 1: that with Israel right now and their economy started reopen 403 00:22:25,320 --> 00:22:27,919 Speaker 1: being they've been able to distribute the vaccines. We do 404 00:22:28,000 --> 00:22:31,320 Speaker 1: think there's also an opportunity in transportation right now as 405 00:22:31,359 --> 00:22:34,000 Speaker 1: we start airline stocks move over the past couple of days, 406 00:22:34,160 --> 00:22:36,800 Speaker 1: we think airports and roads are also a good place 407 00:22:36,880 --> 00:22:40,680 Speaker 1: to invest for infrastructure. So if I translate a little bit, 408 00:22:40,720 --> 00:22:43,520 Speaker 1: and this doesn't have to be the exact pick, but 409 00:22:43,640 --> 00:22:48,080 Speaker 1: so you like Siemens and and Ge, you like Ericsson 410 00:22:48,520 --> 00:22:54,800 Speaker 1: and Noki? Are you like American Tower? Crowncastle? What about Caterpillar? 411 00:22:55,400 --> 00:22:59,639 Speaker 1: What about So? What about what about um? You know, 412 00:23:00,119 --> 00:23:04,680 Speaker 1: the big industrial earth moving equipment maker. I mean, isn't 413 00:23:04,760 --> 00:23:09,280 Speaker 1: that the kind of typical infrastructure winner. So it's interesting 414 00:23:09,320 --> 00:23:11,680 Speaker 1: because that's the way people look at it. And those 415 00:23:11,760 --> 00:23:14,360 Speaker 1: companies that cats and DearS, they might be great companies, 416 00:23:14,400 --> 00:23:17,399 Speaker 1: but they're much more cicklical, right, And that's really betting 417 00:23:17,520 --> 00:23:20,520 Speaker 1: on some type of stimulus package. When I'm talking about 418 00:23:20,680 --> 00:23:23,520 Speaker 1: are really we want to own the owners of infrastructure 419 00:23:23,520 --> 00:23:26,119 Speaker 1: who are going to grow as it commonly comes back, 420 00:23:26,400 --> 00:23:30,360 Speaker 1: and also have the ability to grow from um countries 421 00:23:30,560 --> 00:23:35,040 Speaker 1: pledge for zero costs admissions going forward. So that's where 422 00:23:34,600 --> 00:23:36,800 Speaker 1: we really want to play. We want to own the 423 00:23:36,800 --> 00:23:41,000 Speaker 1: owners of infrastructure rather than the construction companies or rather 424 00:23:41,080 --> 00:23:43,600 Speaker 1: than the suppliers to that. So it's a little bit 425 00:23:43,600 --> 00:23:46,200 Speaker 1: different than what people wouldn't generally say this is a 426 00:23:46,320 --> 00:23:48,720 Speaker 1: type of infrastructure place, so we wouldn't have the ricks 427 00:23:48,720 --> 00:23:52,560 Speaker 1: and manokias in the are fun, but we much more 428 00:23:52,640 --> 00:23:55,800 Speaker 1: prefer the wireless powers. All right, Joy Jeff forgot to 429 00:23:55,880 --> 00:23:57,359 Speaker 1: leave it there here just because of the time, but 430 00:23:57,560 --> 00:24:00,000 Speaker 1: I'm definitely down with that tower called Josh D's, portfolio 431 00:24:00,080 --> 00:24:03,240 Speaker 1: manager of the Aberdeen Standard Global Infrastructure Income Fund. We 432 00:24:03,280 --> 00:24:08,200 Speaker 1: appreciate it. Only we've heard so far from Chairman Pal 433 00:24:09,160 --> 00:24:12,080 Speaker 1: is probably what most market participants were expecting to hear. 434 00:24:12,119 --> 00:24:16,080 Speaker 1: That is generally lower for longer as it relates to 435 00:24:16,600 --> 00:24:19,800 Speaker 1: rates and status quo as it relates to asset purchases 436 00:24:19,880 --> 00:24:22,240 Speaker 1: in the market. Let's see how that translates in for 437 00:24:22,359 --> 00:24:26,400 Speaker 1: a professional investor. We do that with David Harden, CEO 438 00:24:26,600 --> 00:24:29,359 Speaker 1: and Chief Investment Officer of Summit Global Investments, they have 439 00:24:29,440 --> 00:24:32,959 Speaker 1: one point two billion dollars in assets under management. We 440 00:24:32,960 --> 00:24:35,840 Speaker 1: appreciate him taking the time, David, So again, it's kind 441 00:24:35,840 --> 00:24:38,399 Speaker 1: of seems steady as she goes from the Fed. Is 442 00:24:38,440 --> 00:24:41,560 Speaker 1: that consistent with what you're looking for and how you've 443 00:24:41,560 --> 00:24:46,560 Speaker 1: structured your portfolio? Absolutely, Paul Matt, thanks for having me. 444 00:24:46,600 --> 00:24:49,680 Speaker 1: Appreciate being here. I think from an investor, stand for 445 00:24:49,840 --> 00:24:52,960 Speaker 1: it prudently and properly ahead, and that's where the Fed 446 00:24:53,040 --> 00:24:56,760 Speaker 1: seems to be steadily going forward lower longer they had 447 00:24:56,800 --> 00:24:58,480 Speaker 1: they said they have the tools that it is not 448 00:24:58,520 --> 00:25:01,280 Speaker 1: going to turn on the dime. If they're plation out there, well, 449 00:25:01,359 --> 00:25:03,880 Speaker 1: all of us are saying yes, but obviously the Fed 450 00:25:03,960 --> 00:25:07,280 Speaker 1: is saying no. So what does that mean? You know, 451 00:25:07,640 --> 00:25:10,399 Speaker 1: it looks like the market is worried that inflation is 452 00:25:10,440 --> 00:25:13,240 Speaker 1: coming back, and that's going to push the Fed to 453 00:25:13,359 --> 00:25:16,760 Speaker 1: raise rates, and so the market raising rates itself and 454 00:25:16,840 --> 00:25:20,680 Speaker 1: that's pushing down stock prices. Does this give you maybe 455 00:25:20,880 --> 00:25:23,560 Speaker 1: an entry point? Is that a buying opportunity this dip, 456 00:25:25,160 --> 00:25:28,680 Speaker 1: especially if you're a trader or investor either one? Absolutely, 457 00:25:28,760 --> 00:25:31,560 Speaker 1: because right now, let's face it, we know this this 458 00:25:32,400 --> 00:25:35,440 Speaker 1: one trillion plus dollar packages coming as well, and about 459 00:25:36,280 --> 00:25:38,760 Speaker 1: that it is going to come right into savings in 460 00:25:38,800 --> 00:25:41,600 Speaker 1: the market, So another four five billion is going to 461 00:25:41,680 --> 00:25:43,720 Speaker 1: be coming into the market. You want to be in 462 00:25:43,760 --> 00:25:47,479 Speaker 1: front of that, all right, David, I know that you 463 00:25:47,520 --> 00:25:52,159 Speaker 1: guys at summit really utilize E s G environmental, social 464 00:25:52,160 --> 00:25:55,600 Speaker 1: and governance. It's a big part of your analytical framework. 465 00:25:55,880 --> 00:25:58,240 Speaker 1: Tell us kind of what your E s G analysis 466 00:25:58,240 --> 00:26:01,720 Speaker 1: is kind of suggested to your right now. Well, one 467 00:26:01,720 --> 00:26:04,880 Speaker 1: of the things that we've noticed clearly is the companies 468 00:26:04,960 --> 00:26:10,320 Speaker 1: that have good environmental environmental social governance standards and abide 469 00:26:10,320 --> 00:26:14,320 Speaker 1: by those standards have lower volatility, have smoother paths, and 470 00:26:14,440 --> 00:26:18,800 Speaker 1: companies that violate those standards have much more volatility and 471 00:26:18,920 --> 00:26:22,200 Speaker 1: downside risk. And so we want to avoid these companies 472 00:26:22,240 --> 00:26:25,520 Speaker 1: that you know that they're not very high quality, that 473 00:26:25,680 --> 00:26:28,520 Speaker 1: have a lot of potential for unwanted surprises through a 474 00:26:28,760 --> 00:26:31,920 Speaker 1: s G and that's our focus. Obviously, with the size 475 00:26:31,920 --> 00:26:33,520 Speaker 1: of about two billion dollars, we're not going to go 476 00:26:33,600 --> 00:26:36,280 Speaker 1: out and make the huge change that everybody would would 477 00:26:36,320 --> 00:26:38,720 Speaker 1: desire in the world, but we feel like we have 478 00:26:39,280 --> 00:26:43,720 Speaker 1: really a great method to avoid the violators, and that's 479 00:26:43,760 --> 00:26:47,760 Speaker 1: the key. You you point out that risk has been 480 00:26:47,880 --> 00:26:51,800 Speaker 1: risk management has been thrown to the wayside, and with 481 00:26:52,359 --> 00:26:54,840 Speaker 1: you know, the four and a half trillion in stimulus 482 00:26:54,880 --> 00:26:58,280 Speaker 1: that we've had another two trillion at least to come, 483 00:26:58,520 --> 00:27:01,200 Speaker 1: you can understand why. Um it kind of reminds me 484 00:27:01,280 --> 00:27:05,119 Speaker 1: John Author's said timing a market bubble is tough, But 485 00:27:05,160 --> 00:27:07,679 Speaker 1: when you're in one, what do you do? How do 486 00:27:07,720 --> 00:27:11,560 Speaker 1: you deal with that pressure? You know, it's very true. 487 00:27:11,720 --> 00:27:15,000 Speaker 1: Let's face it, a flash mob of retail investors has 488 00:27:15,080 --> 00:27:17,960 Speaker 1: no idea and does not care about risk, and there 489 00:27:18,080 --> 00:27:20,760 Speaker 1: is little risk management going on today. But I think 490 00:27:20,800 --> 00:27:24,199 Speaker 1: that what you're looking for is regardless if we have 491 00:27:24,280 --> 00:27:27,080 Speaker 1: a correction, you know, in in eight months, or the 492 00:27:27,080 --> 00:27:30,520 Speaker 1: FED makes a communication mistake, which it did not this morning, 493 00:27:31,040 --> 00:27:35,000 Speaker 1: you know, or disreplation, trade continues and then falls off. 494 00:27:35,200 --> 00:27:38,919 Speaker 1: Liquidity wins growth momentum. The point here is that you 495 00:27:38,960 --> 00:27:41,320 Speaker 1: want to be in companies that will do well in 496 00:27:41,440 --> 00:27:44,520 Speaker 1: all of these trades. You know, companies like best buy 497 00:27:44,720 --> 00:27:46,960 Speaker 1: or companies that you know that we own Best buy 498 00:27:48,000 --> 00:27:53,920 Speaker 1: up and its online growth executing really well. It's value, 499 00:27:53,960 --> 00:27:57,520 Speaker 1: it's not really expensive, so it plays well in the value, 500 00:27:57,600 --> 00:28:00,320 Speaker 1: it plays well in the growth. It has liquidity, so 501 00:28:00,520 --> 00:28:02,040 Speaker 1: that you know you want to be in these companies 502 00:28:02,960 --> 00:28:08,199 Speaker 1: that's a tough one today. Well yeah, it sure was 503 00:28:08,640 --> 00:28:10,840 Speaker 1: um and we go on a little bit of home depot. 504 00:28:10,920 --> 00:28:13,080 Speaker 1: But you know, that's what that that I think that's 505 00:28:13,080 --> 00:28:15,239 Speaker 1: what you want to be into is companies that do 506 00:28:15,320 --> 00:28:19,480 Speaker 1: well regardless of the trade. Alright, So, Dave, I mean 507 00:28:19,520 --> 00:28:22,080 Speaker 1: a lot of folks kind of see this big, big 508 00:28:22,119 --> 00:28:24,520 Speaker 1: move in the market, you know, off the bottom over 509 00:28:24,520 --> 00:28:28,360 Speaker 1: the last twelve months and say, okay, that that's due 510 00:28:28,359 --> 00:28:30,160 Speaker 1: in large parts of the fed flooding of the market, 511 00:28:30,160 --> 00:28:33,000 Speaker 1: which we got more confirmation today it's due to fiscal stimulus, 512 00:28:33,000 --> 00:28:35,960 Speaker 1: and now it's due to thank goodness, the vaccines coming 513 00:28:35,960 --> 00:28:37,880 Speaker 1: into the market, you know, kind of bringing the reopening 514 00:28:37,920 --> 00:28:43,040 Speaker 1: trade back to the foe. Is there evaluation concerned here? David? 515 00:28:43,080 --> 00:28:46,720 Speaker 1: How do you think about valuation in this market? Well, yes, 516 00:28:46,800 --> 00:28:49,920 Speaker 1: there is valuation concerns, but the risk speaking behavior is 517 00:28:49,920 --> 00:28:53,200 Speaker 1: going to continue. And if you look back at all 518 00:28:53,240 --> 00:28:57,200 Speaker 1: these other corrections, valuation wasn't the thing that sparked the 519 00:28:57,280 --> 00:29:01,280 Speaker 1: big down draft, right, so valueation does not seem to 520 00:29:01,400 --> 00:29:05,400 Speaker 1: create a market correction in and of itself. And so 521 00:29:05,560 --> 00:29:08,200 Speaker 1: I don't think in this time period, right at the moment, 522 00:29:08,480 --> 00:29:11,680 Speaker 1: you need to be so focused, laser focused on valuation. 523 00:29:11,760 --> 00:29:15,120 Speaker 1: Take for example, Apple, which we own Apple right now 524 00:29:15,200 --> 00:29:18,040 Speaker 1: is trading about thirty times multiple, right, but it's five 525 00:29:18,120 --> 00:29:21,880 Speaker 1: year average multiples only seventeen. So someone would say, gosh, 526 00:29:21,920 --> 00:29:24,840 Speaker 1: this is really expensive. But look at their innovation, look 527 00:29:24,840 --> 00:29:27,120 Speaker 1: at their growth. They just had a hundred plus quarter 528 00:29:27,200 --> 00:29:29,960 Speaker 1: like Amazon, So I think there's a lot of innovation there. 529 00:29:29,960 --> 00:29:32,440 Speaker 1: People are looking them for the next dance. They've done 530 00:29:32,520 --> 00:29:35,920 Speaker 1: great on E S G as well. So from our standpoint, 531 00:29:36,240 --> 00:29:39,320 Speaker 1: I think you need to let the evaluation maybe hold up, 532 00:29:39,680 --> 00:29:42,560 Speaker 1: you know, not make as much weight in your decision 533 00:29:42,800 --> 00:29:45,000 Speaker 1: as it would in a normal trade. If they can 534 00:29:45,040 --> 00:29:48,720 Speaker 1: make an e V, they could shoot for a thousand valuation, right, 535 00:29:48,760 --> 00:29:51,960 Speaker 1: I mean thirty that's a that's peanuts. If they could 536 00:29:52,000 --> 00:29:54,280 Speaker 1: make a thousand dollar phone that doesn't break when you 537 00:29:54,360 --> 00:29:57,560 Speaker 1: drop it, that would also be another reason to to 538 00:29:57,560 --> 00:29:59,640 Speaker 1: boost the valuation. David, it's been a pleasure having you 539 00:30:00,160 --> 00:30:03,240 Speaker 1: on the program today. Great talking to Dave Harden. He's 540 00:30:03,280 --> 00:30:08,000 Speaker 1: the CEO and chief investment officer at Summit Global Investments. 541 00:30:08,320 --> 00:30:10,640 Speaker 1: They manage a couple of billion dollars there. Said they're 542 00:30:10,640 --> 00:30:13,080 Speaker 1: not going to change the world, but he definitely loves 543 00:30:13,080 --> 00:30:16,000 Speaker 1: what he does and his employees. So I think that's 544 00:30:16,040 --> 00:30:21,960 Speaker 1: pretty good. Pretty good, Lake City, It's actually bountiful you 545 00:30:22,000 --> 00:30:25,440 Speaker 1: talk to check out the website even better, very cool. 546 00:30:25,680 --> 00:30:31,720 Speaker 1: This is Bloomberg. Thanks for listening to the Bloomberg Markets podcast. 547 00:30:32,080 --> 00:30:35,320 Speaker 1: You can subscribe and listen to interviews with Apple Podcasts 548 00:30:35,440 --> 00:30:39,360 Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm 549 00:30:39,360 --> 00:30:43,560 Speaker 1: on Twitter at Matt Miller three. Pet Ball Sweeney I'm 550 00:30:43,560 --> 00:30:46,240 Speaker 1: on Twitter at pt Sweeney. Before the podcast. You can 551 00:30:46,240 --> 00:30:48,480 Speaker 1: always catch us worldwide at Bloomberg Radio