1 00:00:01,400 --> 00:00:04,120 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 2 00:00:04,120 --> 00:00:06,240 Speaker 1: with my co host of Bonny Quinn. Every business day 3 00:00:06,240 --> 00:00:10,360 Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts, 4 00:00:10,400 --> 00:00:13,520 Speaker 1: along with essential market moving news. Kind the Bloomberg Market 5 00:00:13,600 --> 00:00:17,000 Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts, 6 00:00:17,000 --> 00:00:21,440 Speaker 1: and on Bloomberg dot com. Our columnist today, right this, 7 00:00:21,800 --> 00:00:24,439 Speaker 1: hospitalization rates haven't yet reached the levels we saw in 8 00:00:24,480 --> 00:00:26,599 Speaker 1: the spring in the United States, but the danger of 9 00:00:26,640 --> 00:00:29,960 Speaker 1: an acute health crisis maybe even greater. He knows what 10 00:00:29,960 --> 00:00:33,120 Speaker 1: he's talking about. Some Felias, senior pharmaceuticals analyst for Bloomberg 11 00:00:33,120 --> 00:00:36,960 Speaker 1: Intelligence and director of research for e A. Some what 12 00:00:37,000 --> 00:00:41,080 Speaker 1: do you mean by an acute health crisis? Yeah, Hi, Bonny. 13 00:00:41,280 --> 00:00:44,360 Speaker 1: So Um, You know, nobody likes to write these things 14 00:00:44,400 --> 00:00:47,479 Speaker 1: because it depresses me just as well as anybody else 15 00:00:47,479 --> 00:00:49,920 Speaker 1: who reads it. But when I look at the detail 16 00:00:50,000 --> 00:00:52,199 Speaker 1: that's coming through, and when I see what's going on 17 00:00:52,240 --> 00:00:55,160 Speaker 1: here in Europe, UM, there are a few signals that 18 00:00:55,160 --> 00:00:57,920 Speaker 1: that really worry me. So clearly everybody can see that 19 00:00:58,040 --> 00:01:02,760 Speaker 1: that UM positive cases are rising rapidly. But then when 20 00:01:02,760 --> 00:01:04,840 Speaker 1: you look at the data and a lot of you know, 21 00:01:04,880 --> 00:01:07,520 Speaker 1: people to look at their hospitalizations, they go, well, that 22 00:01:07,600 --> 00:01:10,560 Speaker 1: doesn't seem to happen as much, and deaths appeared to 23 00:01:10,600 --> 00:01:14,119 Speaker 1: be a bit lower now, which are absolutely true. What 24 00:01:14,120 --> 00:01:16,840 Speaker 1: I'm worried about is that that that that there is 25 00:01:16,880 --> 00:01:19,200 Speaker 1: that that gives us a full sense of security in 26 00:01:19,240 --> 00:01:23,200 Speaker 1: that you the reason hospitalizations are lower is that there's 27 00:01:23,240 --> 00:01:25,640 Speaker 1: a lot more people who are catching it, who are younger, 28 00:01:25,760 --> 00:01:28,240 Speaker 1: who tend to get not sick, but then don't forget 29 00:01:28,280 --> 00:01:30,039 Speaker 1: they go and then pass it on to their elders, 30 00:01:30,680 --> 00:01:34,200 Speaker 1: which takes time. Then we've also got a lot more 31 00:01:34,680 --> 00:01:38,200 Speaker 1: stringent about who we hospitalize, so that means that whatever 32 00:01:38,319 --> 00:01:42,880 Speaker 1: hospitalization you see is probably pretty severe patients. So you 33 00:01:42,920 --> 00:01:45,479 Speaker 1: have to take account of that, and then of course 34 00:01:45,520 --> 00:01:48,400 Speaker 1: we can't treat them better, but but we haven't necessarily 35 00:01:48,400 --> 00:01:51,000 Speaker 1: increased the number of beds available. And then on top 36 00:01:51,040 --> 00:01:53,880 Speaker 1: of that, the virus is going into a trajectory that's 37 00:01:53,960 --> 00:01:56,600 Speaker 1: that's likely to be many times higher than it was 38 00:01:57,000 --> 00:02:01,720 Speaker 1: in the spring summer months. In this eventually is likely 39 00:02:01,760 --> 00:02:05,360 Speaker 1: to be just like other common cold, a seasonal virus. 40 00:02:05,400 --> 00:02:08,359 Speaker 1: So although the cases were that high in the summer, 41 00:02:08,560 --> 00:02:11,079 Speaker 1: they're going to be much higher now, So that's what 42 00:02:11,080 --> 00:02:14,959 Speaker 1: worries me. A combination of all this together. Sam, You're 43 00:02:15,000 --> 00:02:17,400 Speaker 1: based in France right now and you've got a lot 44 00:02:17,400 --> 00:02:21,120 Speaker 1: of experience around the continent. Um, what do you think 45 00:02:21,120 --> 00:02:25,000 Speaker 1: has been the key driver in the resurgence of the 46 00:02:25,080 --> 00:02:29,240 Speaker 1: cases in Europe? Has it simply been the seasonality or 47 00:02:29,440 --> 00:02:32,799 Speaker 1: is it just fatigue? What? What are you seeing there? 48 00:02:33,840 --> 00:02:36,760 Speaker 1: I wouldn't be surprised Paul if if it's a combination 49 00:02:36,800 --> 00:02:39,720 Speaker 1: of all that. But certainly in the colder environments we 50 00:02:39,760 --> 00:02:43,120 Speaker 1: do two things happen to us. One is, at least 51 00:02:43,160 --> 00:02:44,960 Speaker 1: two things happen. One is that we tend to be 52 00:02:45,000 --> 00:02:47,720 Speaker 1: more indoors, which is where the virus has a great 53 00:02:47,760 --> 00:02:50,560 Speaker 1: time of passing from person to person. And secondly, our 54 00:02:50,639 --> 00:02:55,639 Speaker 1: lungs reduced their ability to be able to clear stuff out. 55 00:02:56,040 --> 00:02:58,799 Speaker 1: So you'm sure you've heard of viral load. If you've 56 00:02:58,800 --> 00:03:01,000 Speaker 1: got ten viral party as ni lung and it was 57 00:03:01,160 --> 00:03:03,040 Speaker 1: very good at getting rid of it quickly in the 58 00:03:03,080 --> 00:03:06,880 Speaker 1: summer where humidity is a bit higher, that's great. But 59 00:03:06,919 --> 00:03:08,720 Speaker 1: if that think can go in and you don't get 60 00:03:08,800 --> 00:03:10,880 Speaker 1: rid of it as much, that's essentially equivalent to having 61 00:03:10,880 --> 00:03:13,720 Speaker 1: a higher viral load giving you a risk of worth disease. 62 00:03:14,320 --> 00:03:16,480 Speaker 1: So that's what the risk in the winter is. And 63 00:03:16,560 --> 00:03:18,880 Speaker 1: of course if you start off at a higher base 64 00:03:18,960 --> 00:03:22,080 Speaker 1: already in terms of the virus circulating in people who 65 00:03:22,080 --> 00:03:25,120 Speaker 1: are infected, then you're setting yourself up for a pretty 66 00:03:25,200 --> 00:03:28,880 Speaker 1: tragic exponential growth, which is what I think has surprised 67 00:03:29,360 --> 00:03:33,720 Speaker 1: the UK, the French and the German authorities. That's an 68 00:03:33,720 --> 00:03:36,640 Speaker 1: excellent explanation of what happens. I hadn't heard it really 69 00:03:36,680 --> 00:03:40,160 Speaker 1: explained that plainly before, but it definitely would cause you 70 00:03:40,200 --> 00:03:42,600 Speaker 1: to be a lot more careful having heard that, And 71 00:03:42,640 --> 00:03:44,720 Speaker 1: that's just what I was going to ask Angela Merkel 72 00:03:44,960 --> 00:03:47,640 Speaker 1: saying that in Germany they don't know where seventy five 73 00:03:47,680 --> 00:03:51,000 Speaker 1: percent of the infections are coming from. I mean, where 74 00:03:51,040 --> 00:03:54,560 Speaker 1: are they coming from? Remember the money there. A lot 75 00:03:54,600 --> 00:03:57,440 Speaker 1: of people get this disease, especially the young again who 76 00:03:57,480 --> 00:04:00,560 Speaker 1: ray symptomatic. And if you listen to some of the 77 00:04:00,600 --> 00:04:03,840 Speaker 1: topic epidemiologists in the world, you have to think about 78 00:04:03,840 --> 00:04:08,000 Speaker 1: this virus. It's most infectious in terms of it passing 79 00:04:08,040 --> 00:04:11,440 Speaker 1: on to others during the pre symptomatic and the early 80 00:04:12,600 --> 00:04:17,000 Speaker 1: infection in me whether symptomatic or not symptomatic. So that's 81 00:04:17,040 --> 00:04:19,280 Speaker 1: when it's so few days and then and then we 82 00:04:19,400 --> 00:04:21,040 Speaker 1: look at all the data that's coming out of all 83 00:04:21,040 --> 00:04:24,320 Speaker 1: these antibody trials. The viral load, the amount of viral 84 00:04:24,680 --> 00:04:26,480 Speaker 1: virus in your body back up your throats and all 85 00:04:26,480 --> 00:04:30,240 Speaker 1: that declines really quickly by day ten, ten eleven, day eleven, 86 00:04:30,680 --> 00:04:34,360 Speaker 1: we get test results four or five days after we've 87 00:04:34,400 --> 00:04:37,360 Speaker 1: been tested. What are those people doing in that time? 88 00:04:37,400 --> 00:04:41,200 Speaker 1: Are they as careful as they should be? So, Sam, 89 00:04:41,440 --> 00:04:44,159 Speaker 1: in your day job, you are one of the top 90 00:04:44,200 --> 00:04:46,839 Speaker 1: farmer analysts in the city of London. What are the 91 00:04:46,880 --> 00:04:50,760 Speaker 1: companies that you talked to, and you've talked to for decades? 92 00:04:50,839 --> 00:04:53,479 Speaker 1: What are they tell you about therapeutics, not vaccines, but 93 00:04:53,560 --> 00:04:56,560 Speaker 1: just the ability to treat this better as we go 94 00:04:56,600 --> 00:04:59,360 Speaker 1: into a second or here in the United States maybe 95 00:04:59,360 --> 00:05:03,320 Speaker 1: in a third way. Yeah, so there's a lot of 96 00:05:03,360 --> 00:05:06,919 Speaker 1: activity going on unfortunately clinical development. Drug development is a 97 00:05:06,920 --> 00:05:09,359 Speaker 1: little bit of a game of snakes and ladders. You 98 00:05:09,440 --> 00:05:11,039 Speaker 1: go up, you seem to be doing really well, and 99 00:05:11,040 --> 00:05:14,520 Speaker 1: you just fallen a ladder or a snake hunter image 100 00:05:14,520 --> 00:05:16,800 Speaker 1: wry because I think it's the snakes, and you go 101 00:05:16,880 --> 00:05:18,840 Speaker 1: all the way back to square one. So you know, 102 00:05:19,040 --> 00:05:21,080 Speaker 1: just today we had a bit of news from Regenera 103 00:05:21,160 --> 00:05:24,320 Speaker 1: on saying that their antibody didn't seem to work in 104 00:05:24,520 --> 00:05:27,800 Speaker 1: very severe patients in hospitals. So these folks are all 105 00:05:27,839 --> 00:05:30,599 Speaker 1: doing what they can with what science tells them is 106 00:05:30,640 --> 00:05:32,880 Speaker 1: likely to work, and then testing it out in a 107 00:05:32,960 --> 00:05:35,960 Speaker 1: virus and a medical condition that we're learning on the 108 00:05:36,000 --> 00:05:40,039 Speaker 1: hoof about. So we are getting progress, but it's a 109 00:05:40,040 --> 00:05:43,280 Speaker 1: little bit like two steps forward, one step back, um. 110 00:05:43,800 --> 00:05:46,320 Speaker 1: And and you know that we're getting progressed because the 111 00:05:46,839 --> 00:05:51,839 Speaker 1: the the death rates are lower, the mortality rate is lower. Unfortunately, 112 00:05:51,880 --> 00:05:54,400 Speaker 1: we're learning more about how awful the viruses and people 113 00:05:54,440 --> 00:05:57,080 Speaker 1: who catch it in terms of long COVID and and 114 00:05:57,120 --> 00:06:00,200 Speaker 1: who knows what long term issues we're cooking up with 115 00:06:00,240 --> 00:06:04,120 Speaker 1: this virus once we've been infected some you know, it's 116 00:06:04,160 --> 00:06:08,400 Speaker 1: it's a tough, tough conversation, but the companies sort of 117 00:06:08,400 --> 00:06:10,760 Speaker 1: want their employees to come back to work in the 118 00:06:10,800 --> 00:06:13,520 Speaker 1: office space. I mean not all of them, and there's 119 00:06:13,640 --> 00:06:18,200 Speaker 1: extraordinary leniency when it comes to that, but some employees 120 00:06:18,240 --> 00:06:21,640 Speaker 1: do want to go back. I mean, what's the advice 121 00:06:21,720 --> 00:06:25,800 Speaker 1: for those employees? Yeah, I mean, look in in France, 122 00:06:26,080 --> 00:06:29,000 Speaker 1: we just had our lockdown and last night or two 123 00:06:29,080 --> 00:06:32,440 Speaker 1: nights ago. Yeah, it was two nights ago. Um um 124 00:06:32,800 --> 00:06:36,200 Speaker 1: as of midnight last night. So basically, people who can 125 00:06:36,240 --> 00:06:38,520 Speaker 1: work from home have to work from home. It's not 126 00:06:38,560 --> 00:06:43,200 Speaker 1: a choice anymore. Um. They're taking their time to figure 127 00:06:43,200 --> 00:06:45,360 Speaker 1: out what to actually tell people in terms of guidance. 128 00:06:46,000 --> 00:06:49,080 Speaker 1: I if the UK trajector continues the way it is 129 00:06:49,120 --> 00:06:51,640 Speaker 1: with all the various tier one, tier two, tier three, 130 00:06:52,240 --> 00:06:54,440 Speaker 1: if they don't work out, Remember frant tried the same thing. 131 00:06:54,480 --> 00:06:59,120 Speaker 1: They tried curfews and and early closure of restaurants andthing. 132 00:06:59,200 --> 00:07:03,800 Speaker 1: It just didn't help. Um. So this is why I'm 133 00:07:03,839 --> 00:07:06,159 Speaker 1: what I'm saying and what I wrote. Maybe the only 134 00:07:06,160 --> 00:07:08,120 Speaker 1: solution a little bit like when you have a wildfire, 135 00:07:08,160 --> 00:07:10,200 Speaker 1: the only way to manage it is to cut the 136 00:07:10,240 --> 00:07:12,560 Speaker 1: whole bunch of forest out so that the fire can 137 00:07:12,680 --> 00:07:15,160 Speaker 1: jump over to the next side. And maybe that's the 138 00:07:15,200 --> 00:07:17,200 Speaker 1: only way. It's a horrible thing to say, and I 139 00:07:17,240 --> 00:07:20,280 Speaker 1: really wish I didn't feel that this could be the 140 00:07:20,320 --> 00:07:23,840 Speaker 1: only way, but it seems like that's the only way. Sam. 141 00:07:23,960 --> 00:07:26,760 Speaker 1: Just our schools open are closed. There in France, schools 142 00:07:26,760 --> 00:07:29,400 Speaker 1: are open. Schools are open, but they've become a lot 143 00:07:29,440 --> 00:07:31,960 Speaker 1: more clever about him to manage the groups of students 144 00:07:32,000 --> 00:07:34,600 Speaker 1: and all that. And also the data appears to suggest 145 00:07:34,640 --> 00:07:38,320 Speaker 1: that there's less transmission among school children and then bringing 146 00:07:38,320 --> 00:07:40,400 Speaker 1: it home than there is at universities. So the short 147 00:07:40,480 --> 00:07:42,920 Speaker 1: university is right interesting. Hey, Sam, thanks so much for 148 00:07:43,040 --> 00:07:46,280 Speaker 1: joining us. Sam Fazeli, he's a senior pharmaceutical analysts and 149 00:07:46,320 --> 00:07:49,720 Speaker 1: he also runs the European research business for Bloomberg Intelligence, 150 00:07:49,760 --> 00:07:52,640 Speaker 1: one of the leaders of that great business for Bloomberg 151 00:07:52,800 --> 00:07:55,440 Speaker 1: and UH he's also writing for Bloomberg Opinion right now 152 00:07:55,440 --> 00:07:58,920 Speaker 1: sharing some of his expertise on the healthcare business. He 153 00:07:59,000 --> 00:08:02,560 Speaker 1: joins us on the phone from UH France, where again, UH, 154 00:08:02,840 --> 00:08:06,160 Speaker 1: the lockdowns are beginning, And the question, Vonnie is you know, 155 00:08:06,160 --> 00:08:07,640 Speaker 1: I guess for the folks in the UK is that 156 00:08:07,720 --> 00:08:11,040 Speaker 1: kind of the next step for the UK is lockdowns? 157 00:08:11,040 --> 00:08:13,560 Speaker 1: And again here that doesn't seem to be much appetite 158 00:08:13,560 --> 00:08:15,760 Speaker 1: for that in the States, but we will monitor closely. 159 00:08:18,240 --> 00:08:20,320 Speaker 1: We had a bunch of the big tech and tech 160 00:08:20,440 --> 00:08:23,560 Speaker 1: media names reporting last night, let's break it all down. 161 00:08:23,640 --> 00:08:26,760 Speaker 1: There was absolutely nobody better to do that with, UH 162 00:08:26,760 --> 00:08:29,240 Speaker 1: than Lauren Martin. Lauren Martin, she's a senior media analysts 163 00:08:29,280 --> 00:08:31,480 Speaker 1: that need him in company because her research coverage it's 164 00:08:31,520 --> 00:08:34,800 Speaker 1: really a convergence of where the media and technology spaces. 165 00:08:34,800 --> 00:08:38,360 Speaker 1: She covers the big tech names like Ammal, Apple, Amazon, Google, 166 00:08:38,440 --> 00:08:42,280 Speaker 1: the traditional media names like Discovery and This and Disney 167 00:08:42,280 --> 00:08:43,640 Speaker 1: and those types of things, and even some of the 168 00:08:43,640 --> 00:08:46,960 Speaker 1: technical players, the rokus of the world, the uh and 169 00:08:47,040 --> 00:08:50,240 Speaker 1: the snaps. Brings it all together with a really good 170 00:08:50,360 --> 00:08:52,679 Speaker 1: overview look of the space. Lard, thanks so much for 171 00:08:52,760 --> 00:08:55,400 Speaker 1: joining us here. Let's start off with Apple stocks trading 172 00:08:55,400 --> 00:08:57,800 Speaker 1: off about five percent. I thought the numbers were good. 173 00:08:58,040 --> 00:09:00,439 Speaker 1: This is just a stock price to perfect giving a 174 00:09:00,480 --> 00:09:03,920 Speaker 1: little bit back, you know, maybe I think it's a 175 00:09:03,960 --> 00:09:07,320 Speaker 1: regularly over emphasis on iPhones. iPhone sales were week and 176 00:09:07,480 --> 00:09:11,320 Speaker 1: China was down yere every year in the quarter. You know, 177 00:09:11,440 --> 00:09:13,800 Speaker 1: we would say we would sort of counter that by 178 00:09:13,800 --> 00:09:16,400 Speaker 1: saying what we liked the most about Apple's earnings was 179 00:09:16,440 --> 00:09:18,800 Speaker 1: they hit an all time high installed base of active 180 00:09:18,840 --> 00:09:24,280 Speaker 1: devices with um iPad and Max sales up forty and 181 00:09:24,400 --> 00:09:28,880 Speaker 1: thirty percent, respectively, so they're installed bases growing seconds. They 182 00:09:28,920 --> 00:09:33,000 Speaker 1: added thirty five million subscribers in the last ninety days, 183 00:09:33,000 --> 00:09:36,040 Speaker 1: so they're out five hundred and eighty five UH million 184 00:09:36,040 --> 00:09:39,040 Speaker 1: paid subscribers, which is an annuity stream type of revenue, 185 00:09:39,080 --> 00:09:42,320 Speaker 1: which is fantastic. And then services hit a record almost 186 00:09:42,320 --> 00:09:45,360 Speaker 1: fifteen billion dollars at a gross margin of sixty seven percent, 187 00:09:45,520 --> 00:09:48,480 Speaker 1: So they're there. I was quickly approaching the growth mosic 188 00:09:48,559 --> 00:09:51,640 Speaker 1: contribution of the entire hardware sector of Apple, even though 189 00:09:51,679 --> 00:09:54,480 Speaker 1: hardware apples known as a hardware company. So all of 190 00:09:54,520 --> 00:09:57,360 Speaker 1: those things are really positive to us. Laura, how concern 191 00:09:57,440 --> 00:10:00,559 Speaker 1: to be about the drop of in China? Is it 192 00:10:00,640 --> 00:10:03,239 Speaker 1: a one time thing? Is it due to added competition? 193 00:10:03,320 --> 00:10:07,280 Speaker 1: And willis impact Apple going in the future. So I 194 00:10:07,320 --> 00:10:10,640 Speaker 1: think China is predominantly a new phone market and that 195 00:10:10,760 --> 00:10:14,040 Speaker 1: you might recall that they're um. They actually announced the 196 00:10:14,120 --> 00:10:17,920 Speaker 1: new iPhones UM three weeks later this year, so they're 197 00:10:17,920 --> 00:10:21,080 Speaker 1: in a different quarter than last year. So last year 198 00:10:21,160 --> 00:10:24,360 Speaker 1: you had two weeks of the new iPhones UM, and 199 00:10:24,400 --> 00:10:26,720 Speaker 1: so the Chinese are very active in that. We expect 200 00:10:26,720 --> 00:10:29,440 Speaker 1: the new iPhone twelves and there's four different models of those, 201 00:10:29,920 --> 00:10:32,640 Speaker 1: which started two weeks into the October quarter to be 202 00:10:32,679 --> 00:10:34,920 Speaker 1: a major seller in China. That we would expect China 203 00:10:34,960 --> 00:10:38,480 Speaker 1: to rebound in this quarter and going forward. Hey Loo, 204 00:10:38,559 --> 00:10:41,360 Speaker 1: how about the services business for Apple, I know speaking 205 00:10:41,400 --> 00:10:43,680 Speaker 1: to you in the past, that's really a growing part 206 00:10:43,679 --> 00:10:45,720 Speaker 1: of their business. Is a business that investors are really 207 00:10:45,960 --> 00:10:51,000 Speaker 1: focused on. How's that progressing? Um really fantastic. So one 208 00:10:51,040 --> 00:10:53,440 Speaker 1: of the things they're doing is very clever, and in fact, 209 00:10:53,440 --> 00:10:55,480 Speaker 1: I think they're getting sued by one of their competitors 210 00:10:55,480 --> 00:10:58,160 Speaker 1: for this is there bundling things. So rather than just 211 00:10:58,320 --> 00:11:02,360 Speaker 1: paying for music separately for Apple TV, separate from Apple Fitness, 212 00:11:02,440 --> 00:11:05,400 Speaker 1: Apple from Apple News, they're introducing I think on Monday, 213 00:11:05,440 --> 00:11:08,480 Speaker 1: actually a really big bundle where you're you know, you 214 00:11:08,520 --> 00:11:11,200 Speaker 1: can subscribe for twenty dollars a monthly your whole family 215 00:11:11,280 --> 00:11:13,560 Speaker 1: to like nearly every service they have, and if you 216 00:11:13,600 --> 00:11:16,480 Speaker 1: really really want everything they offer, including like Arcade the 217 00:11:16,600 --> 00:11:19,559 Speaker 1: video game streaming space, you can pay thirty dollars for 218 00:11:19,679 --> 00:11:22,240 Speaker 1: your entire family. So I don't know about you, but 219 00:11:22,280 --> 00:11:24,280 Speaker 1: I'm paying like ten dollars for Cloud, or my kids 220 00:11:24,280 --> 00:11:26,800 Speaker 1: paying ten dollars or something. You know, if we wrap 221 00:11:26,800 --> 00:11:28,480 Speaker 1: it all up, we can have like twice as many 222 00:11:28,520 --> 00:11:31,319 Speaker 1: services for half the money. I think that's really smart 223 00:11:31,320 --> 00:11:34,680 Speaker 1: because that should at drive services growth higher, which is 224 00:11:34,679 --> 00:11:38,439 Speaker 1: fantastic for margins. Yeah, I mean, I can definitely see 225 00:11:38,720 --> 00:11:44,120 Speaker 1: many many households paying that pretty genius, Laura, what should 226 00:11:44,160 --> 00:11:47,520 Speaker 1: we when we consider Amazon, what should we be concentrating 227 00:11:47,559 --> 00:11:52,840 Speaker 1: on because obviously it grew its revenue by some again though, 228 00:11:52,880 --> 00:11:56,480 Speaker 1: I mean, you can annoy people if you don't deliver, 229 00:11:57,000 --> 00:11:59,400 Speaker 1: And for example, Amazon Prime hasn't been able to be 230 00:12:00,360 --> 00:12:02,240 Speaker 1: as quick as it used to be because there's so 231 00:12:02,240 --> 00:12:05,120 Speaker 1: many people on the system. You know, there are things 232 00:12:05,160 --> 00:12:07,319 Speaker 1: that are sold out and so on. Kind of Amazon 233 00:12:07,440 --> 00:12:11,760 Speaker 1: hold onto the market share that it's gained. So um, 234 00:12:11,880 --> 00:12:15,320 Speaker 1: I really think Amazon is the best physician stock sort 235 00:12:15,320 --> 00:12:18,000 Speaker 1: of regardless of whether COVID is short or long. I 236 00:12:18,000 --> 00:12:20,319 Speaker 1: think it's the most hedged because if we're going to 237 00:12:20,400 --> 00:12:23,080 Speaker 1: go into lockdowns again, that means e commerce is going 238 00:12:23,120 --> 00:12:26,000 Speaker 1: to be you know, more in demand, especially for the 239 00:12:26,040 --> 00:12:28,360 Speaker 1: holiday season. And I think one of the things that 240 00:12:28,400 --> 00:12:30,840 Speaker 1: people are saying is that the holiday season may really 241 00:12:30,960 --> 00:12:35,120 Speaker 1: tax the logistics capabilities. Well, Amazon sort of got trial 242 00:12:35,200 --> 00:12:37,560 Speaker 1: by fire at the early days of the pandemic and 243 00:12:37,559 --> 00:12:39,520 Speaker 1: then on Prime Day when the Prime Day was up 244 00:12:39,520 --> 00:12:44,360 Speaker 1: sixty year over year, So it keeps testing it's logistics change. 245 00:12:44,400 --> 00:12:48,200 Speaker 1: So I expect it's actually ability to deliver during holidays 246 00:12:48,240 --> 00:12:51,120 Speaker 1: to be better than anybody else's about getting things to 247 00:12:51,200 --> 00:12:53,760 Speaker 1: you on time in a in a you know, um 248 00:12:53,760 --> 00:12:57,680 Speaker 1: safe manner. So I actually really like Amazon for either 249 00:12:57,760 --> 00:13:01,720 Speaker 1: the of the economy opening or COVID lockdowns going longer. 250 00:13:02,080 --> 00:13:04,760 Speaker 1: I think Amazon is the best most hedge, best positioned 251 00:13:04,840 --> 00:13:08,120 Speaker 1: in that they win either way. Hey, Lauren, how about 252 00:13:07,840 --> 00:13:11,200 Speaker 1: the cloud business for Amazon? That's been such a great 253 00:13:11,280 --> 00:13:14,079 Speaker 1: story there and really a profit story, you know, relative 254 00:13:14,160 --> 00:13:18,200 Speaker 1: to the core e commerce business. Um, it's getting more competitive, 255 00:13:18,280 --> 00:13:21,440 Speaker 1: the Microsoft's making big gains, alphabets making big big gains. 256 00:13:21,559 --> 00:13:26,240 Speaker 1: How do you view the Amazon web services business? Yeah, 257 00:13:26,360 --> 00:13:29,320 Speaker 1: really excellent. Like we just got from Google last night 258 00:13:29,360 --> 00:13:31,840 Speaker 1: that they're going to start breaking out their cloud businesses 259 00:13:31,880 --> 00:13:34,360 Speaker 1: because these are such great profitable businesses. So yeah, And 260 00:13:34,480 --> 00:13:37,760 Speaker 1: the quarter Amazon reported three and a half billion dollars 261 00:13:37,800 --> 00:13:41,360 Speaker 1: of profit on eleven billion dollars of revenue in their 262 00:13:41,400 --> 00:13:43,920 Speaker 1: cloud business. I would expect it to be equally as 263 00:13:43,920 --> 00:13:47,920 Speaker 1: profitable for Microsoft and for Google. Um. And I do 264 00:13:47,960 --> 00:13:50,280 Speaker 1: think they're making inroads. But I also think Paul that 265 00:13:50,640 --> 00:13:54,520 Speaker 1: this whole this this has been accelerated, that COVID has 266 00:13:54,559 --> 00:13:57,760 Speaker 1: accelerated the move to the cloud by all businesses. So 267 00:13:57,840 --> 00:14:00,360 Speaker 1: I think the pie just got bigger by the brought 268 00:14:00,400 --> 00:14:03,840 Speaker 1: forward for two years because of COVID. Everybody's moving to 269 00:14:03,880 --> 00:14:06,520 Speaker 1: the cloud faster businesses, So there's just sort of a 270 00:14:06,520 --> 00:14:10,760 Speaker 1: bigger pie for everybody. And Apple is the dominant provider, 271 00:14:10,840 --> 00:14:13,240 Speaker 1: but if there's room for other people now thanks to 272 00:14:13,320 --> 00:14:16,200 Speaker 1: COVID to also, like Google was talking, they do a 273 00:14:16,200 --> 00:14:18,520 Speaker 1: lot of states. They do this state of Virginia, they 274 00:14:18,559 --> 00:14:22,240 Speaker 1: do countries. They're doing more sales like government contracts for 275 00:14:22,240 --> 00:14:25,240 Speaker 1: their cloud business. And Amazon, as you know, really specializes 276 00:14:25,280 --> 00:14:28,320 Speaker 1: in small businesses moving to the cloud. Laura, we're nearly 277 00:14:28,360 --> 00:14:31,040 Speaker 1: out of time, but how do you feel the executives 278 00:14:31,080 --> 00:14:36,200 Speaker 1: did this week in front of Congress. I'm sorry, executives 279 00:14:36,200 --> 00:14:41,320 Speaker 1: are in front of talk about Google, Facebook, and Twitter. Um. 280 00:14:41,400 --> 00:14:44,120 Speaker 1: Lots of criticism about Twitter, but I'll stand aside there 281 00:14:44,120 --> 00:14:46,280 Speaker 1: because I don't cover Twitter. You know, I think there's 282 00:14:46,280 --> 00:14:48,760 Speaker 1: a because I am very worried about Facebook. I think 283 00:14:48,760 --> 00:14:52,600 Speaker 1: it has the highest regulatory risks in because I think 284 00:14:52,800 --> 00:14:56,440 Speaker 1: both sides of the aisle think that Facebook has become 285 00:14:56,480 --> 00:14:59,680 Speaker 1: a referee for news and it basically as a gate 286 00:14:59,760 --> 00:15:03,800 Speaker 1: keep information that scares conservative and more. But really even 287 00:15:03,840 --> 00:15:07,440 Speaker 1: Democrats feel that they're actually livelihood is at risk with 288 00:15:07,560 --> 00:15:10,640 Speaker 1: Facebook actually making the prioritizations of what people see in 289 00:15:10,640 --> 00:15:13,840 Speaker 1: their news feed. So I sort of feel like Facebook 290 00:15:13,920 --> 00:15:16,480 Speaker 1: is as the highest risk of getting fined or broken 291 00:15:16,560 --> 00:15:20,440 Speaker 1: up or having some kind of negative regulatory consequence in 292 00:15:21,280 --> 00:15:24,800 Speaker 1: one both by EU and by the US. So I'm 293 00:15:24,840 --> 00:15:27,560 Speaker 1: scared about that for Facebook. Let's so for Google and 294 00:15:27,600 --> 00:15:31,640 Speaker 1: Apple and Amazon. Alright, Laura, we have to leave it there, 295 00:15:31,760 --> 00:15:34,640 Speaker 1: but very much appreciate your time, so fun speaking with you. 296 00:15:34,640 --> 00:15:38,440 Speaker 1: You cover some of the really companies that we just 297 00:15:38,520 --> 00:15:41,760 Speaker 1: are talking about daily at this point. That is Laura 298 00:15:41,840 --> 00:15:45,600 Speaker 1: need him joining us there on Google and Facebook. Uh sorry, 299 00:15:45,640 --> 00:15:48,640 Speaker 1: Laura Martin from need him always say that Laura Martin 300 00:15:49,000 --> 00:15:52,440 Speaker 1: need him analysts and talking to us about Apple, Amazon, Facebook, 301 00:15:52,480 --> 00:15:55,800 Speaker 1: and Google. So Paul, we'll do it all again next week. 302 00:15:55,840 --> 00:15:57,960 Speaker 1: It should be an interesting week next week. I think 303 00:15:57,960 --> 00:16:00,360 Speaker 1: there's a little event maybe on Tuesday, but two day 304 00:16:00,400 --> 00:16:02,000 Speaker 1: and so the build up and then the days after 305 00:16:02,160 --> 00:16:06,520 Speaker 1: are gonna be very interesting. We're just going in Dominic Nolan, 306 00:16:06,560 --> 00:16:11,280 Speaker 1: Senior looking director at Pacific Assets and Management. Dominic, You've 307 00:16:11,360 --> 00:16:15,120 Speaker 1: got various scenarios laid out and what would happen to 308 00:16:15,160 --> 00:16:18,400 Speaker 1: the bond market say, for example, in the event of 309 00:16:18,400 --> 00:16:23,360 Speaker 1: a change of presidency and a vaccine success. Let's start there, 310 00:16:23,520 --> 00:16:28,600 Speaker 1: what happens to bonds if that happens, I can hear me, okay, Bunny, 311 00:16:29,160 --> 00:16:33,480 Speaker 1: Sure I can, Okay, great. I think it really depends 312 00:16:33,600 --> 00:16:37,160 Speaker 1: on which way the Senate goes. Assuming the potust goes 313 00:16:37,240 --> 00:16:40,800 Speaker 1: to Biden in that particular, and let's assume the House 314 00:16:40,840 --> 00:16:44,640 Speaker 1: stays blue, then you have in theory it would be 315 00:16:44,640 --> 00:16:47,640 Speaker 1: a blue waves that the Senate also goes blue. You 316 00:16:47,720 --> 00:16:50,680 Speaker 1: most likely have extreme stimulus in there, and that will 317 00:16:50,680 --> 00:16:53,040 Speaker 1: be some extent offset which is good for the economy, 318 00:16:53,080 --> 00:16:56,200 Speaker 1: probably offset a little bit by increase in taxes. But 319 00:16:56,840 --> 00:17:00,400 Speaker 1: as it relates to rates, I would expect rates probably 320 00:17:00,680 --> 00:17:02,880 Speaker 1: start to move up a little bit. I mean we've 321 00:17:02,880 --> 00:17:05,960 Speaker 1: been we've been had a huge pressure on rates from 322 00:17:05,960 --> 00:17:09,320 Speaker 1: a downward side. If you have a thought of massive stimulus, 323 00:17:09,760 --> 00:17:11,520 Speaker 1: then you have the inflation longer start to end of 324 00:17:11,560 --> 00:17:13,880 Speaker 1: the market, and I would expect a bit of a 325 00:17:13,880 --> 00:17:16,119 Speaker 1: a steepener on here, so the long end starts to 326 00:17:16,160 --> 00:17:20,720 Speaker 1: move up with the expectations of massive, massive fiscal spending. If, however, 327 00:17:21,520 --> 00:17:24,720 Speaker 1: the Senate stays red, they will probably be a block 328 00:17:25,359 --> 00:17:29,720 Speaker 1: two extreme stimulus. I think if Biden wins in the 329 00:17:29,920 --> 00:17:31,760 Speaker 1: Senate says red, they'll be a blocked anything he wants 330 00:17:31,760 --> 00:17:36,520 Speaker 1: to do. So I would envision a scenario where horse 331 00:17:36,560 --> 00:17:39,120 Speaker 1: training takes place, where you want stimulus to come into 332 00:17:39,119 --> 00:17:42,359 Speaker 1: the system at the same time, you know, the Senate 333 00:17:42,400 --> 00:17:44,359 Speaker 1: would be blocking, trying to block that or mute that, 334 00:17:44,680 --> 00:17:48,800 Speaker 1: or in exchange, we want lower taxes and that particularly, 335 00:17:48,840 --> 00:17:51,639 Speaker 1: that's it's much more uncertain. And that's the combo that 336 00:17:52,520 --> 00:17:55,320 Speaker 1: I think. Um, yeah, it would be uncertain. And I 337 00:17:55,320 --> 00:17:57,520 Speaker 1: would say if they couldn't get stimulus passed in a 338 00:17:57,600 --> 00:18:00,760 Speaker 1: time where the COVID space, the COVID cases are spiking 339 00:18:00,800 --> 00:18:03,360 Speaker 1: like they are, you might have a situation where rates 340 00:18:03,359 --> 00:18:05,920 Speaker 1: continue to drop with the expectation there's not enough stimulus 341 00:18:05,960 --> 00:18:09,160 Speaker 1: to support the economy. So those are the It really 342 00:18:09,240 --> 00:18:12,720 Speaker 1: depends to me on which way the Senate goes dominic. 343 00:18:12,920 --> 00:18:17,280 Speaker 1: You know, obviously we do have those electoral uncertainties, but 344 00:18:17,400 --> 00:18:20,199 Speaker 1: if you listen to central bankers around the world, um, 345 00:18:20,320 --> 00:18:22,880 Speaker 1: and it just feels like an environment where rates are 346 00:18:22,920 --> 00:18:26,399 Speaker 1: lower for longer in general. So how do you know 347 00:18:26,520 --> 00:18:30,000 Speaker 1: fixed income investors like you good folks, a specific asset management? 348 00:18:30,200 --> 00:18:32,760 Speaker 1: How do you think about, you know, the kind of 349 00:18:32,760 --> 00:18:35,240 Speaker 1: the one to two to three year pull here, where 350 00:18:35,280 --> 00:18:39,320 Speaker 1: do you make money? It's a great question. I think 351 00:18:39,359 --> 00:18:44,040 Speaker 1: from the standpoint of return, profiles are going to be duted. Honestly, 352 00:18:44,040 --> 00:18:47,359 Speaker 1: you're sitting in an environment where most most of the 353 00:18:47,359 --> 00:18:49,280 Speaker 1: short term paper is or a lot of it's yielding 354 00:18:49,280 --> 00:18:53,080 Speaker 1: below one. So if you can somehow return one two 355 00:18:53,520 --> 00:18:57,320 Speaker 1: in that range, I think that's actually pretty attractive given 356 00:18:57,720 --> 00:19:00,639 Speaker 1: the status of short term rates across the glow. And 357 00:19:00,720 --> 00:19:03,479 Speaker 1: when we look at it, the central banks are a 358 00:19:03,520 --> 00:19:06,520 Speaker 1: massive support for the system for liquidity, So we do 359 00:19:06,600 --> 00:19:10,520 Speaker 1: feel that you're downside is is backstopped to a large 360 00:19:10,520 --> 00:19:13,160 Speaker 1: extent by what people have called the FED put. And 361 00:19:13,400 --> 00:19:15,159 Speaker 1: you go in, you know, and there's there's room for 362 00:19:15,240 --> 00:19:18,520 Speaker 1: total from probably some spread products, certainly a little bit 363 00:19:18,560 --> 00:19:20,520 Speaker 1: of compression on the corporate side. You probably have some 364 00:19:20,840 --> 00:19:26,040 Speaker 1: elements in structure products. We're not mortgage folks, but I 365 00:19:26,080 --> 00:19:30,360 Speaker 1: think the global the global demand for yield will continue 366 00:19:30,400 --> 00:19:34,680 Speaker 1: to grind spreads tighter. That's our that's our medium term view, 367 00:19:35,760 --> 00:19:40,200 Speaker 1: given the central bank support. So if you can get 368 00:19:40,280 --> 00:19:45,159 Speaker 1: basis points of of spread on top of clipping a 369 00:19:45,160 --> 00:19:47,879 Speaker 1: coupon that's how you get to your one and a 370 00:19:47,920 --> 00:19:50,120 Speaker 1: half to two percent yield for short duration for one 371 00:19:50,119 --> 00:19:52,520 Speaker 1: to three part of the curve. That's what I adventure. 372 00:19:53,400 --> 00:19:57,280 Speaker 1: What happens to the higher yield elements of the market, 373 00:19:57,400 --> 00:19:59,920 Speaker 1: and even the junk bond market, I mean how tied 374 00:20:00,040 --> 00:20:05,200 Speaker 1: and those spreads go. We talked about that a lot 375 00:20:05,200 --> 00:20:08,400 Speaker 1: on the floor and US high yield sitting with a 376 00:20:08,480 --> 00:20:11,240 Speaker 1: with a five handle on it, and I feel is 377 00:20:11,280 --> 00:20:14,600 Speaker 1: that you cannot go much lower until you look across it. 378 00:20:15,359 --> 00:20:17,400 Speaker 1: You know, European high yield, which is sitting at two 379 00:20:17,440 --> 00:20:21,679 Speaker 1: and a half. So on one hand, I'd say, from 380 00:20:21,680 --> 00:20:24,760 Speaker 1: from a compensation for wrisk standpoint, I feel as though 381 00:20:25,359 --> 00:20:28,040 Speaker 1: HILD shouldn't even be at this level. But I think 382 00:20:28,080 --> 00:20:31,320 Speaker 1: I'm just living in a world that is dated, in 383 00:20:31,400 --> 00:20:36,600 Speaker 1: a new central bank monetary our quey world. It can 384 00:20:36,640 --> 00:20:41,200 Speaker 1: certainly go tighter. And you think about again, Europe European 385 00:20:41,240 --> 00:20:43,000 Speaker 1: hi yield at two and a half, that's an economy. 386 00:20:43,560 --> 00:20:46,440 Speaker 1: It's not growing as fast as the United States. Investors 387 00:20:46,440 --> 00:20:49,960 Speaker 1: are willing to take sub three on leverage finance over there, 388 00:20:50,000 --> 00:20:52,080 Speaker 1: So there is certainly an argument in the United States. 389 00:20:52,200 --> 00:20:56,240 Speaker 1: You could grind inside a thought so Dominic, just real quick, 390 00:20:56,240 --> 00:20:58,639 Speaker 1: thirty seconds, give me a sense of credit quality that 391 00:20:58,640 --> 00:21:04,040 Speaker 1: you're seeing in your portfolio right here. It's a bit bifurcated. 392 00:21:04,080 --> 00:21:08,320 Speaker 1: I think our approach we've taken more you know, tilt 393 00:21:08,359 --> 00:21:12,960 Speaker 1: to the more performing companies and being very very selective 394 00:21:13,160 --> 00:21:15,240 Speaker 1: as it relates to what we call the COVID sectors 395 00:21:15,840 --> 00:21:21,360 Speaker 1: and our COVID sectors, the class, your hospitality, your gaming, travel, entertainment. 396 00:21:22,160 --> 00:21:24,720 Speaker 1: Those are areas where if we go through another wave, 397 00:21:25,280 --> 00:21:27,399 Speaker 1: there are many of these leverage finance structures that just 398 00:21:27,720 --> 00:21:30,800 Speaker 1: won't make it and you'll see another wave of bankruptcy. 399 00:21:30,880 --> 00:21:34,160 Speaker 1: So from our side, we're tilting certainly the more liquid 400 00:21:34,200 --> 00:21:37,920 Speaker 1: side of the market, better better credits. But it's really about, 401 00:21:38,680 --> 00:21:41,119 Speaker 1: you know, it's the business model. Right now, there's so 402 00:21:41,160 --> 00:21:43,560 Speaker 1: many business models that were quote recession proof, but not 403 00:21:43,640 --> 00:21:46,320 Speaker 1: pandemic proof, and I think you've had to adjust that 404 00:21:46,880 --> 00:21:49,960 Speaker 1: right So that for us, that's our approach. All right, Donnic, 405 00:21:49,960 --> 00:21:52,119 Speaker 1: thanks very much. We really appreciate your thoughts as always, 406 00:21:52,119 --> 00:21:55,679 Speaker 1: Dominic Nolan, Senior Managing Director of Pacific Asset Management. Right now, 407 00:21:55,720 --> 00:21:58,639 Speaker 1: let's head down to Washington. Did you see our Washington 408 00:21:58,760 --> 00:22:00,560 Speaker 1: studios get World and Nash on the News. We can 409 00:22:00,560 --> 00:22:04,520 Speaker 1: do that with Nathan Hagar. Nathan Well our next guest 410 00:22:04,640 --> 00:22:07,480 Speaker 1: right this year hardly needs the ghosts and ghouls of 411 00:22:07,520 --> 00:22:10,480 Speaker 1: Halloween to make it scary for investors. Sarah Ponzac is 412 00:22:10,520 --> 00:22:12,400 Speaker 1: with us in studio. She is going as a bear 413 00:22:12,600 --> 00:22:15,479 Speaker 1: for this Halloween, right, Sarah, Well, I'll start it off 414 00:22:15,480 --> 00:22:17,640 Speaker 1: by saying, this is an annual tradition that we do 415 00:22:17,840 --> 00:22:21,800 Speaker 1: every year ahead of Halloween. We ask money managers across 416 00:22:21,880 --> 00:22:24,800 Speaker 1: Wall Street to send us the charts that scare them 417 00:22:24,800 --> 00:22:27,720 Speaker 1: the most. So it's our annual tradition out today ahead 418 00:22:27,720 --> 00:22:31,000 Speaker 1: of Halloween tomorrow, of course. Uh. And it was quite 419 00:22:31,040 --> 00:22:34,800 Speaker 1: the compilation. Sure, we could say has been haunting enough. 420 00:22:34,840 --> 00:22:38,639 Speaker 1: The amount that we have all gone through in markets, 421 00:22:38,680 --> 00:22:41,359 Speaker 1: just in life, to dealing with COVID nineteen and whatever 422 00:22:41,400 --> 00:22:45,479 Speaker 1: else might be within financial markets. There's plenty toorry about, 423 00:22:45,960 --> 00:22:48,240 Speaker 1: as these money managers did point out all highlight a 424 00:22:48,240 --> 00:22:51,119 Speaker 1: few of them. Steeve Chevrone, he's a portfolio manager and 425 00:22:51,160 --> 00:22:54,280 Speaker 1: equity strategists over at Federated Hermes. He brings it really 426 00:22:54,320 --> 00:22:56,560 Speaker 1: close to home with the election coming up in just 427 00:22:56,760 --> 00:22:59,960 Speaker 1: a couple of days. Election Night on Tuesday, he points 428 00:23:00,000 --> 00:23:03,280 Speaker 1: out the fact that mail and voting voting is obviously 429 00:23:03,640 --> 00:23:06,680 Speaker 1: very high, hitting upwards of forty of the vote this year. 430 00:23:07,160 --> 00:23:09,520 Speaker 1: Given historical patterns, that means that we could see over 431 00:23:09,600 --> 00:23:12,600 Speaker 1: one million Belts rejected in the upcoming election. He says, 432 00:23:12,640 --> 00:23:14,800 Speaker 1: So if this is the case, I know we all 433 00:23:14,840 --> 00:23:17,560 Speaker 1: hope that we will have a result on Tuesday evening, 434 00:23:17,880 --> 00:23:20,480 Speaker 1: we know that that might not be the case. And 435 00:23:20,520 --> 00:23:22,600 Speaker 1: for markets, if we do have a contested election, and 436 00:23:22,640 --> 00:23:25,600 Speaker 1: if we have this drawn out process, that would just 437 00:23:25,680 --> 00:23:28,119 Speaker 1: introduce more of volatility, more uncertainty. On top of that, 438 00:23:28,200 --> 00:23:31,080 Speaker 1: some other themes that were introduced, Jason Thomas over at 439 00:23:31,119 --> 00:23:35,119 Speaker 1: the Carlisle Group pointed out corporate debt rising. Our corporate 440 00:23:35,119 --> 00:23:39,919 Speaker 1: debt to GDP is rising above, which is full above 441 00:23:40,080 --> 00:23:43,199 Speaker 1: the prior records, so plenty of spending and companies have 442 00:23:43,240 --> 00:23:46,080 Speaker 1: been forced to spend more if they can and borrow 443 00:23:46,200 --> 00:23:49,760 Speaker 1: even more um during the COVID crisis. One that I 444 00:23:49,880 --> 00:23:53,480 Speaker 1: really enjoyed and really was just telling this week because 445 00:23:53,480 --> 00:23:56,280 Speaker 1: when we had that large sell off on Tuesday. Although 446 00:23:56,280 --> 00:23:58,280 Speaker 1: we are seeing a sell off again in markets today, 447 00:23:58,359 --> 00:24:00,480 Speaker 1: not to quite the same extent a Tuesday, it was 448 00:24:00,520 --> 00:24:03,280 Speaker 1: interesting because hedges didn't work, and one of those hedges 449 00:24:03,400 --> 00:24:08,040 Speaker 1: being gold. Gold actually fell in tandem with equity markets too. 450 00:24:08,080 --> 00:24:10,880 Speaker 1: So what Evan Brown Over at u BSS Management points 451 00:24:10,880 --> 00:24:14,000 Speaker 1: out is that the rolling sixty three day correlation between 452 00:24:14,040 --> 00:24:17,439 Speaker 1: gold and the SMP five hundred has been positive for 453 00:24:17,480 --> 00:24:19,719 Speaker 1: a majority of this year. So what that means that 454 00:24:19,840 --> 00:24:22,760 Speaker 1: gold may no longer be He calls it a reliable 455 00:24:22,760 --> 00:24:26,399 Speaker 1: ballast to portfolios during risk off period, So especially from 456 00:24:26,480 --> 00:24:30,040 Speaker 1: multi asset investors, those who are looking for protection hedges, 457 00:24:30,320 --> 00:24:33,640 Speaker 1: that's a concern. Hey, sir, what did you make of 458 00:24:33,800 --> 00:24:36,159 Speaker 1: the or what we're seeing today in terms of the 459 00:24:36,240 --> 00:24:39,720 Speaker 1: nastac the nastack one on the heels of those tech 460 00:24:39,800 --> 00:24:41,680 Speaker 1: earnings last night. I you know, I've kind of looked 461 00:24:41,680 --> 00:24:45,439 Speaker 1: at the tech earnings broadly defined as uh, pretty darn good. 462 00:24:45,760 --> 00:24:48,200 Speaker 1: Yet you know, the markets not seen it that way. 463 00:24:48,359 --> 00:24:51,040 Speaker 1: They were David Bonson over at the Bonson Group I 464 00:24:51,280 --> 00:24:53,199 Speaker 1: I received this excerpt from him this morning and I 465 00:24:53,240 --> 00:24:56,560 Speaker 1: thought it put it together very nicely. He said, none 466 00:24:56,600 --> 00:24:59,640 Speaker 1: of Thursday's tech earnings results were bad and some more 467 00:24:59,680 --> 00:25:03,160 Speaker 1: spec tacular, But the market is reacting negatively because when 468 00:25:03,200 --> 00:25:06,240 Speaker 1: something is priced for better than perfection, it becomes pretty 469 00:25:06,280 --> 00:25:08,560 Speaker 1: hard to live up to those expectations. And that's the 470 00:25:08,600 --> 00:25:10,640 Speaker 1: world that we're living in right now. Not only were 471 00:25:10,640 --> 00:25:13,359 Speaker 1: these companies priced for perfection, they are priced for better 472 00:25:13,400 --> 00:25:17,640 Speaker 1: than perfection. And you see the tiniest little flub take 473 00:25:17,840 --> 00:25:22,840 Speaker 1: Apple for example, missing iPhone estimates, not providing guidance. At 474 00:25:22,880 --> 00:25:25,800 Speaker 1: the same time, a theme that I have heard highlighted 475 00:25:25,880 --> 00:25:28,800 Speaker 1: is the fact that almost every single one of these 476 00:25:28,800 --> 00:25:32,879 Speaker 1: companies highlighted uncertainty around COVID nineteen and tech is supposed 477 00:25:32,920 --> 00:25:34,880 Speaker 1: to be the area of the market that can kind 478 00:25:34,920 --> 00:25:37,520 Speaker 1: of withstand this. We saw earlier in the week with 479 00:25:37,680 --> 00:25:40,680 Speaker 1: SAP over in Germany that they really had to pull 480 00:25:40,680 --> 00:25:43,959 Speaker 1: back on guidance because they are concerned that lockdowns over 481 00:25:44,040 --> 00:25:47,000 Speaker 1: in Europe are going to hit them headed into one. 482 00:25:47,240 --> 00:25:48,680 Speaker 1: In the beginning of the year, when we think about 483 00:25:48,680 --> 00:25:51,960 Speaker 1: the rally that we saw, investors kept saying look beyond 484 00:25:52,560 --> 00:25:56,119 Speaker 1: look into one. Well, now, if we are seeing COVID 485 00:25:56,160 --> 00:25:58,920 Speaker 1: cases rising, and if these companies that are supposed to 486 00:25:58,960 --> 00:26:01,600 Speaker 1: be the beneficiary areas or at least your safe havens 487 00:26:01,600 --> 00:26:04,600 Speaker 1: being the big tech companies are still expressing doubt or 488 00:26:04,680 --> 00:26:08,240 Speaker 1: uncertainty surrounding it, you have to wonder if one is 489 00:26:08,240 --> 00:26:10,359 Speaker 1: really going to provide the boost that is right now 490 00:26:10,440 --> 00:26:13,960 Speaker 1: built into markets. Also, though the Apple news, the China 491 00:26:14,040 --> 00:26:17,400 Speaker 1: sales were down the border, I mean that sort of 492 00:26:17,440 --> 00:26:19,760 Speaker 1: should reverberate through markets, right, I mean this was not 493 00:26:19,840 --> 00:26:22,960 Speaker 1: just an Apple story, but generally a China consumption story. Right. Well, 494 00:26:23,000 --> 00:26:25,560 Speaker 1: it's interesting because we have seen such a strong economic 495 00:26:25,560 --> 00:26:28,679 Speaker 1: balance back in China. So to see that China sales 496 00:26:29,040 --> 00:26:33,600 Speaker 1: for the iPhone we are we're very depleted down. It 497 00:26:33,680 --> 00:26:37,120 Speaker 1: causes some concern. Now that does make me wonder though, 498 00:26:37,240 --> 00:26:39,560 Speaker 1: is this more so a competition issue for Apple in 499 00:26:39,640 --> 00:26:44,439 Speaker 1: China with other phone makers smartphone makers in the area, 500 00:26:45,000 --> 00:26:48,560 Speaker 1: or is it more so a true economic macro consumption 501 00:26:48,640 --> 00:26:51,720 Speaker 1: picture and reflective of that, especially ahead of the holiday season. 502 00:26:51,920 --> 00:26:54,760 Speaker 1: But it is interesting to see that discrepancy considering that 503 00:26:54,800 --> 00:26:58,280 Speaker 1: we have seen this strong economic come down come back 504 00:26:58,320 --> 00:27:00,919 Speaker 1: over in Asia. That's what I still look at the 505 00:27:00,960 --> 00:27:03,600 Speaker 1: VIX here, uh, you know, at thirty eight, the market 506 00:27:04,440 --> 00:27:06,600 Speaker 1: is still you know, I think the investors are still 507 00:27:06,680 --> 00:27:09,680 Speaker 1: very concerned here as we look into Look, they certainly 508 00:27:09,680 --> 00:27:13,840 Speaker 1: are the VIX at Uh. If you try to extrapolate 509 00:27:13,880 --> 00:27:16,720 Speaker 1: that to mean what is the VIX predicting in terms 510 00:27:16,720 --> 00:27:19,000 Speaker 1: of percent changes a day. I mean that is that's 511 00:27:19,040 --> 00:27:20,840 Speaker 1: a gain or a loss of more than two percent 512 00:27:20,880 --> 00:27:22,480 Speaker 1: a day that it's predicting. Right now, we see the 513 00:27:22,560 --> 00:27:25,080 Speaker 1: SMP off a little bit more than one percent, but 514 00:27:25,280 --> 00:27:28,560 Speaker 1: you consider what is upcoming right now. We have an election, 515 00:27:28,680 --> 00:27:30,760 Speaker 1: we have COVID nineteen case counts on the rise. We 516 00:27:30,800 --> 00:27:33,160 Speaker 1: have restrictions over in Europe and concerns about we could 517 00:27:33,160 --> 00:27:35,840 Speaker 1: see restrictions in the US. We don't have a fiscal package. 518 00:27:36,119 --> 00:27:38,760 Speaker 1: So the amount of risks that are out there right 519 00:27:38,800 --> 00:27:41,760 Speaker 1: now are just very large, and they're also front of 520 00:27:41,800 --> 00:27:44,320 Speaker 1: mine for investors. And the reality is we're going to 521 00:27:44,359 --> 00:27:47,280 Speaker 1: be dealing with volatility. Yeah. I think you're absolutely right there, 522 00:27:47,280 --> 00:27:49,040 Speaker 1: and I think that's what the market is telling us. Sarah, 523 00:27:49,040 --> 00:27:51,199 Speaker 1: thanks so much for joining us. Sarah Ponza, cross asset 524 00:27:51,240 --> 00:27:54,479 Speaker 1: reporter for Bloomberg News, giving us her thoughts on the 525 00:27:54,520 --> 00:27:57,200 Speaker 1: markets here again, you know, we had those tech numbers 526 00:27:57,320 --> 00:27:59,960 Speaker 1: last night, generally very solid, but the market is clear 527 00:28:00,040 --> 00:28:03,119 Speaker 1: the underwhelmed with the NASTAC to tech heavy NASTAC trading 528 00:28:03,119 --> 00:28:08,440 Speaker 1: off two percent here. Thanks for listening to Bloomberg Markets podcast. 529 00:28:08,600 --> 00:28:11,959 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts 530 00:28:12,080 --> 00:28:15,640 Speaker 1: or whatever podcast platform you prefer. I'm Bonnie Quinn, I'm 531 00:28:15,640 --> 00:28:18,280 Speaker 1: on Twitter at Bonnie Quinn. And I'm Paul Sweeney. I'm 532 00:28:18,280 --> 00:28:20,920 Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can 533 00:28:20,960 --> 00:28:23,200 Speaker 1: always catch us worldwide at Bloomberg Radio