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 --> 00:00:15,560 Speaker 1: with essential market moving news. Find a Bloomberg Markets podcast 5 00:00:15,560 --> 00:00:18,439 Speaker 1: on Apple podcast or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,520 Speaker 1: at bloemberg dot com slash podcast. Kathy End whistles with 7 00:00:22,560 --> 00:00:25,040 Speaker 1: us moment Stanley, Managing Director, Cathy, it is always a 8 00:00:25,160 --> 00:00:28,000 Speaker 1: joy to speak to you. And in these holiday thin 9 00:00:28,120 --> 00:00:31,000 Speaker 1: trading sorts of days, why are we seeing stocks under 10 00:00:31,040 --> 00:00:33,040 Speaker 1: pressure on a moment that we start to talk about 11 00:00:33,080 --> 00:00:35,839 Speaker 1: China reopening. I think that there's a lot going on, 12 00:00:36,000 --> 00:00:39,600 Speaker 1: and I think there's a lot of hangover from the inflation. 13 00:00:39,720 --> 00:00:44,000 Speaker 1: Interest rates um, you know, continue to to creep up. Uh. 14 00:00:44,000 --> 00:00:47,000 Speaker 1: And also I would also say that we're not taking 15 00:00:47,040 --> 00:00:50,159 Speaker 1: into account which is the big point, company earnings. The 16 00:00:50,200 --> 00:00:52,760 Speaker 1: earnings are going to be a real issue going into 17 00:00:52,800 --> 00:00:55,080 Speaker 1: the first quarter and that hasn't been priced in the 18 00:00:55,120 --> 00:00:57,680 Speaker 1: market yet. So we've priced in what the feed is done, 19 00:00:57,720 --> 00:00:59,320 Speaker 1: but we have in price in with the corporations have 20 00:00:59,400 --> 00:01:02,240 Speaker 1: done yet and asked China's opening, and that's you know, 21 00:01:02,320 --> 00:01:04,280 Speaker 1: somewhat of a big deal, but it's not big enough 22 00:01:04,319 --> 00:01:07,000 Speaker 1: to move the market the way everyone's hoping it would. Kathy, 23 00:01:07,000 --> 00:01:09,800 Speaker 1: I'm just reading your note this morning, boy, your Parrish, 24 00:01:10,040 --> 00:01:11,920 Speaker 1: I mean, I love your note here. Fire was the 25 00:01:11,920 --> 00:01:15,840 Speaker 1: FED and raising rates ice is a resulting downward earnings revisions, 26 00:01:15,959 --> 00:01:17,840 Speaker 1: um and that gets you too. Maybe you know the 27 00:01:17,880 --> 00:01:21,560 Speaker 1: SMP can dip down to three thousand and just just 28 00:01:21,600 --> 00:01:23,960 Speaker 1: so you know, folks, the SMPS at und right here, 29 00:01:24,000 --> 00:01:26,120 Speaker 1: So that's a big move. So, Kathy, what do you 30 00:01:26,160 --> 00:01:29,840 Speaker 1: think they're earnings risk really is in the smpis looking forward? 31 00:01:29,840 --> 00:01:32,640 Speaker 1: What is the downside in your mind? Well, the downside 32 00:01:32,680 --> 00:01:34,800 Speaker 1: is that that the companies have been kicking the can. 33 00:01:35,400 --> 00:01:37,960 Speaker 1: We were expecting them to come out with more realistic 34 00:01:38,400 --> 00:01:41,560 Speaker 1: forward earnings last quarter and they didn't. So now that 35 00:01:41,600 --> 00:01:43,680 Speaker 1: means it's going to come out this coming up quarter. 36 00:01:44,240 --> 00:01:47,360 Speaker 1: And what what that means is we've got higher interest rates, 37 00:01:47,400 --> 00:01:50,080 Speaker 1: so companies have to pay more to borrow. We have 38 00:01:50,400 --> 00:01:53,960 Speaker 1: consumers who might be a little bit more concerned about spending, 39 00:01:54,080 --> 00:01:58,320 Speaker 1: so that's also going to hit the bottom line of corporations. 40 00:01:58,720 --> 00:02:00,720 Speaker 1: And the final thing is it's the cost of good 41 00:02:00,760 --> 00:02:03,360 Speaker 1: sold it's it's going up and somebody's going to have 42 00:02:03,400 --> 00:02:06,040 Speaker 1: to take that into account. It doesn't look like the 43 00:02:06,040 --> 00:02:08,280 Speaker 1: consumers are going to be buying into it, which means 44 00:02:08,280 --> 00:02:10,920 Speaker 1: the corporations have to start to take part of the 45 00:02:11,000 --> 00:02:13,280 Speaker 1: hit along with maybe raising some of the prices. I mean, 46 00:02:13,360 --> 00:02:16,600 Speaker 1: let's talk about inflation, because the end of last week 47 00:02:16,960 --> 00:02:19,080 Speaker 1: was the readings that looked like inflation was going in 48 00:02:19,080 --> 00:02:21,000 Speaker 1: the direction of travel that people wanted to see. Yes, 49 00:02:21,040 --> 00:02:23,840 Speaker 1: we wanted to go faster, stronger, but we are starting 50 00:02:23,880 --> 00:02:26,920 Speaker 1: to see a cooling in inflation. How optimistic argue that 51 00:02:26,919 --> 00:02:30,120 Speaker 1: that remains the direction of travel from a consumer perspective. 52 00:02:31,320 --> 00:02:34,520 Speaker 1: I actually am optimistic that the inflation is going to 53 00:02:34,600 --> 00:02:37,720 Speaker 1: cool um definitely by you know, second half of the year, 54 00:02:38,320 --> 00:02:41,799 Speaker 1: and that will help somewhat. But the problem is it's 55 00:02:41,840 --> 00:02:44,880 Speaker 1: going to be hitting the consumers now and they are 56 00:02:44,919 --> 00:02:47,040 Speaker 1: running out of all of the extra money that they 57 00:02:47,040 --> 00:02:50,359 Speaker 1: had to spend. They're putting things on credit cards. It's 58 00:02:50,400 --> 00:02:53,400 Speaker 1: going to become a real problem next quarter, quarter after 59 00:02:53,919 --> 00:02:56,320 Speaker 1: and from that standpoint, even though inflation will be cooling, 60 00:02:56,360 --> 00:02:58,720 Speaker 1: it's still going to take the consumer a little bit 61 00:02:59,080 --> 00:03:01,520 Speaker 1: of a time to you know, step back in and 62 00:03:01,560 --> 00:03:05,800 Speaker 1: start buying again, Kathy, tough year four. Stocks were all 63 00:03:05,840 --> 00:03:09,040 Speaker 1: aware of that, but it was an unprecedented tough year 64 00:03:09,160 --> 00:03:11,280 Speaker 1: for bonds here. I'm looking at the two year though 65 00:03:11,680 --> 00:03:15,040 Speaker 1: four point three four point three six should be buying 66 00:03:15,040 --> 00:03:19,960 Speaker 1: some bonds here. Absolutely, we we like bonds over stocks 67 00:03:20,000 --> 00:03:23,839 Speaker 1: for for sure. And I will say when you look 68 00:03:23,880 --> 00:03:27,560 Speaker 1: at the return of bonds this past year with corporate bonds, 69 00:03:27,600 --> 00:03:31,240 Speaker 1: meaty bonds, I mean double digit losses in in bonds 70 00:03:31,360 --> 00:03:33,360 Speaker 1: is you know, It's been unheard of for quite a 71 00:03:33,360 --> 00:03:35,960 Speaker 1: long time, so it is a good buying opportunity. We 72 00:03:36,000 --> 00:03:39,960 Speaker 1: started talking about buying bonds midyear and it's been paying off. 73 00:03:40,000 --> 00:03:42,800 Speaker 1: And I think going into tree as well. Where else 74 00:03:42,840 --> 00:03:46,640 Speaker 1: can you get these nice, you know, returns and without 75 00:03:46,680 --> 00:03:49,480 Speaker 1: the volatility. I think we're past the volatility and the bonds, 76 00:03:49,480 --> 00:03:52,040 Speaker 1: so you'll get the return without the volatility and just 77 00:03:52,040 --> 00:03:55,119 Speaker 1: clip your coupons for the time being, Kathy, I want 78 00:03:55,120 --> 00:03:57,920 Speaker 1: to ask you, let's go gloss off full, what are 79 00:03:57,920 --> 00:04:00,480 Speaker 1: the upside risks toward of this as a great piece 80 00:04:00,480 --> 00:04:03,120 Speaker 1: out by Tom Onnic from an economic perspective, thinking about 81 00:04:03,200 --> 00:04:04,720 Speaker 1: where some of the upside the things that we're not 82 00:04:04,760 --> 00:04:07,720 Speaker 1: planning on on the might look more positive. I mean, 83 00:04:07,720 --> 00:04:09,560 Speaker 1: in some ways, maybe in the long term, this China 84 00:04:09,600 --> 00:04:13,000 Speaker 1: reopening will be that where are you ensuring that you 85 00:04:13,200 --> 00:04:15,320 Speaker 1: don't lose the upside as well as protecting yourself to 86 00:04:15,320 --> 00:04:18,800 Speaker 1: the downside? Um? Absolutely, I think we have to. You know, 87 00:04:18,880 --> 00:04:21,200 Speaker 1: we have short term and long term views, right so 88 00:04:21,520 --> 00:04:23,880 Speaker 1: short term it looks a little bit more negative. Long 89 00:04:24,000 --> 00:04:26,800 Speaker 1: term is always a more positive view. We want our 90 00:04:26,839 --> 00:04:29,040 Speaker 1: clients to be invested for the long term, but we 91 00:04:29,080 --> 00:04:31,200 Speaker 1: also don't want to start jumping in before we think 92 00:04:31,240 --> 00:04:33,920 Speaker 1: it's too soon. A stock market has always been a 93 00:04:34,000 --> 00:04:36,839 Speaker 1: leading indicator of where the economy is going, and it 94 00:04:36,880 --> 00:04:39,360 Speaker 1: will be one of the first things to come back 95 00:04:39,560 --> 00:04:43,560 Speaker 1: quickly and fiercely before the economy turns. So what we 96 00:04:43,680 --> 00:04:46,159 Speaker 1: don't want to happen is people to lose sight of 97 00:04:46,200 --> 00:04:49,080 Speaker 1: that and wait until everything is picture perfect before they 98 00:04:49,120 --> 00:04:51,359 Speaker 1: start investing in the market. Again. That's why we like 99 00:04:51,480 --> 00:04:53,680 Speaker 1: dollar cost averaging in these types of markets. That's why 100 00:04:53,680 --> 00:04:56,960 Speaker 1: we like also taking advantage of dips and buying the dips, 101 00:04:57,400 --> 00:04:59,200 Speaker 1: because if you're a long term investor and you've got 102 00:04:59,240 --> 00:05:01,000 Speaker 1: a long term view, then you do want to buy 103 00:05:01,000 --> 00:05:04,240 Speaker 1: at these lower prices today. How about high yield. You know, 104 00:05:04,240 --> 00:05:06,119 Speaker 1: I don't mind taking a little risk out there, Kathy, 105 00:05:06,320 --> 00:05:08,839 Speaker 1: but in the face of recession, would be unwise to 106 00:05:08,880 --> 00:05:11,760 Speaker 1: search for yield in the high yield market. Now you're 107 00:05:11,760 --> 00:05:15,400 Speaker 1: talking to a girl who worked in the corporate bonds 108 00:05:15,839 --> 00:05:18,880 Speaker 1: so um. You know, I did see quite a bit 109 00:05:18,920 --> 00:05:22,719 Speaker 1: of high yield UM companies go into default in bankruptcies, 110 00:05:23,160 --> 00:05:25,880 Speaker 1: so it is a possibility no corporates here. You always 111 00:05:25,920 --> 00:05:28,960 Speaker 1: have that issue. So for right now, I'm I'm keeping 112 00:05:28,960 --> 00:05:33,400 Speaker 1: my clients away from the riskier, higher yielding UM bonds 113 00:05:33,440 --> 00:05:37,440 Speaker 1: and sticking with the more investment grade. Alright, good stuff. 114 00:05:37,480 --> 00:05:41,159 Speaker 1: We really appreciate that getting a good outlook for these markets. 115 00:05:41,279 --> 00:05:47,479 Speaker 1: Kathy and twist On Morgan Stanley, managing director. Ready to 116 00:05:47,480 --> 00:05:49,480 Speaker 1: say on the show today is Robert Felt is the 117 00:05:49,520 --> 00:05:51,799 Speaker 1: founder and c of n Ride. Now and Ride developed 118 00:05:51,960 --> 00:05:55,159 Speaker 1: self driving and electric trucks and of course the software 119 00:05:55,160 --> 00:05:58,720 Speaker 1: systems that help them to use to monitor deliveries. And Robert, 120 00:05:58,720 --> 00:06:00,560 Speaker 1: it's fascinating to have some time with you today. We 121 00:06:00,640 --> 00:06:04,720 Speaker 1: thank you, of course founded the business in Stockholm. Talk 122 00:06:04,760 --> 00:06:06,600 Speaker 1: to us about what you've seen and the customers that 123 00:06:06,640 --> 00:06:08,600 Speaker 1: you start to talk to, the Coca colas, the Little, 124 00:06:08,720 --> 00:06:11,880 Speaker 1: the A b inbevs. The Mulla musks. How are these 125 00:06:11,880 --> 00:06:16,440 Speaker 1: companies looking at supply chain bottlenecks in the future. First 126 00:06:16,480 --> 00:06:19,000 Speaker 1: of all, thank you for having me. I think it's 127 00:06:19,000 --> 00:06:22,520 Speaker 1: a fascinating point in the overall economy right now because 128 00:06:22,600 --> 00:06:25,120 Speaker 1: what from our perspective, what we are seeing is that 129 00:06:25,320 --> 00:06:28,320 Speaker 1: we don't really see that slow down happening right now. 130 00:06:28,560 --> 00:06:31,880 Speaker 1: A few of our customers, of course are seeing taking 131 00:06:31,880 --> 00:06:35,120 Speaker 1: a longer time to make decision, But overall, for the 132 00:06:35,160 --> 00:06:37,960 Speaker 1: transition here to electric and an autonomous I think there 133 00:06:38,080 --> 00:06:42,479 Speaker 1: is a clear engagement there and I think that overall 134 00:06:42,520 --> 00:06:45,280 Speaker 1: the consumer it will a little bit of downturn of 135 00:06:45,360 --> 00:06:48,559 Speaker 1: the economy is not really starting to hit yet, and 136 00:06:48,640 --> 00:06:50,720 Speaker 1: that's what we are at least saying. So people are 137 00:06:50,720 --> 00:06:53,480 Speaker 1: still doing business, and I think that a little bit 138 00:06:53,520 --> 00:06:56,120 Speaker 1: of some sectoris we are a little bit less, But 139 00:06:56,200 --> 00:06:59,360 Speaker 1: overall I think it's uh, we're not in a recession yet. 140 00:07:00,040 --> 00:07:02,839 Speaker 1: We might be in next year, but overall it's still 141 00:07:03,160 --> 00:07:06,200 Speaker 1: a lot of people doing business. Robert, I know your 142 00:07:06,200 --> 00:07:09,559 Speaker 1: company recently raised five million dollars in equity in debt. 143 00:07:09,880 --> 00:07:13,080 Speaker 1: What do you what are the use of proceeds there now? 144 00:07:13,200 --> 00:07:16,040 Speaker 1: But for us it's about scaling and more and more 145 00:07:16,160 --> 00:07:20,360 Speaker 1: installing more capacity for doing a transport together with our customers. 146 00:07:20,760 --> 00:07:23,800 Speaker 1: So we are deploying a lot of electric and autonomous 147 00:07:23,920 --> 00:07:27,400 Speaker 1: transport vehicles as well as transport and the charging infrastructure 148 00:07:27,480 --> 00:07:32,440 Speaker 1: to support it. You are currently of course prevalent across Europe, Sweden, Germany, 149 00:07:32,480 --> 00:07:35,960 Speaker 1: the Benelucks and indeed in the United States. What all, China, 150 00:07:36,200 --> 00:07:38,240 Speaker 1: What all of that five million dollars that you now 151 00:07:38,280 --> 00:07:40,320 Speaker 1: get to put to work? Is it about global expansion? 152 00:07:40,360 --> 00:07:42,600 Speaker 1: Is it about alleviating some of those pressure points we've 153 00:07:42,760 --> 00:07:47,160 Speaker 1: grown to know and to hate. I think it's something 154 00:07:47,200 --> 00:07:50,120 Speaker 1: of a very interesting overall is that the supply chain 155 00:07:50,240 --> 00:07:53,840 Speaker 1: for electric trucks as well as chargers and the whole 156 00:07:53,880 --> 00:07:58,720 Speaker 1: infrastructure for all the constant electric and autonomous transport is 157 00:07:58,760 --> 00:08:02,520 Speaker 1: still to be actually created. So I think that China 158 00:08:02,600 --> 00:08:05,440 Speaker 1: has a key point in being the supplier there. I mean, 159 00:08:05,520 --> 00:08:08,040 Speaker 1: they come to we are in a very weird position 160 00:08:08,400 --> 00:08:11,880 Speaker 1: from historically, but China, and my view, is actually leader 161 00:08:12,040 --> 00:08:14,840 Speaker 1: in a lot of the electric both batteries as well, 162 00:08:14,880 --> 00:08:18,520 Speaker 1: it's a lot of engines and also the maturity ecosystem 163 00:08:18,560 --> 00:08:22,000 Speaker 1: when it comes to electrification. So for us it's China 164 00:08:22,080 --> 00:08:25,000 Speaker 1: is an extremely important part of that supply. I think 165 00:08:25,040 --> 00:08:28,200 Speaker 1: that the Western hemisphere needs to focus for it clearly 166 00:08:28,240 --> 00:08:31,200 Speaker 1: to sort of say, catch up to the maturity of 167 00:08:31,240 --> 00:08:35,360 Speaker 1: the Chinese ecosystem when it comes to electrification and optimization. Robert, 168 00:08:35,360 --> 00:08:37,600 Speaker 1: give us a sense of, you know, how much road 169 00:08:37,679 --> 00:08:40,880 Speaker 1: freight on a global basis contributes to uh, you know, 170 00:08:40,880 --> 00:08:43,920 Speaker 1: Global CEO two and kind of it feels like it's 171 00:08:43,960 --> 00:08:46,280 Speaker 1: a big contributor and it really is right for some 172 00:08:46,640 --> 00:08:52,120 Speaker 1: innovation one. I mean globally, it's that between seven to 173 00:08:52,200 --> 00:08:54,880 Speaker 1: eight percent of global City two emissions come for heavy 174 00:08:55,080 --> 00:08:58,320 Speaker 1: road freight transport. And we are still in the same 175 00:08:58,360 --> 00:09:01,040 Speaker 1: ecosystem that was created more than a hundred years ago 176 00:09:01,120 --> 00:09:05,439 Speaker 1: now and I think that we're digital, electric and autonomous technology. 177 00:09:05,679 --> 00:09:10,080 Speaker 1: We have the potential to actually rewrite that. And it's 178 00:09:10,080 --> 00:09:13,080 Speaker 1: not about the size of the battery. It's not about 179 00:09:13,120 --> 00:09:16,360 Speaker 1: creating a better truck. It's about creating a new infrastructure 180 00:09:16,400 --> 00:09:20,200 Speaker 1: for transport. And if you do, we see that between 181 00:09:20,240 --> 00:09:25,560 Speaker 1: four of electric should be electric driven by the business 182 00:09:25,559 --> 00:09:28,480 Speaker 1: case today, Robert, I'm gonna ask a sensitive question, but 183 00:09:28,559 --> 00:09:31,280 Speaker 1: of course you're based well, you're helping found this business 184 00:09:31,280 --> 00:09:34,560 Speaker 1: in Sweden and Germany in the Benelux countries that care 185 00:09:34,800 --> 00:09:37,920 Speaker 1: an awful lot about climate change and the like. But 186 00:09:37,960 --> 00:09:41,400 Speaker 1: the US has been known to be somewhat behind Europe 187 00:09:41,440 --> 00:09:44,680 Speaker 1: in many ways, and of late many have felt particularly 188 00:09:44,679 --> 00:09:47,760 Speaker 1: in the supply chain headaches, particularly in the energy crisis. Look, 189 00:09:48,000 --> 00:09:49,439 Speaker 1: just put that to one side. At the moment, we 190 00:09:49,480 --> 00:09:51,120 Speaker 1: need to drill, baby, drill. We need to ensure that 191 00:09:51,120 --> 00:09:54,880 Speaker 1: we've got energy security rather than this transition. How much 192 00:09:54,920 --> 00:09:56,880 Speaker 1: has that help or hindered your business as we felt 193 00:09:56,920 --> 00:10:01,400 Speaker 1: that effect at all. I I'm actually a little bit 194 00:10:01,920 --> 00:10:05,040 Speaker 1: opposite to you than what you're stating in there. I 195 00:10:05,080 --> 00:10:07,760 Speaker 1: think that this will happen first in the US due 196 00:10:07,760 --> 00:10:09,880 Speaker 1: to the fact that it is driven by the business case. 197 00:10:10,400 --> 00:10:12,800 Speaker 1: I mean, what we see from customers of the customers 198 00:10:12,800 --> 00:10:16,079 Speaker 1: in the US is that electrification is the best business case. 199 00:10:16,480 --> 00:10:19,719 Speaker 1: If there is something that I I love with the 200 00:10:19,800 --> 00:10:21,920 Speaker 1: US market, as if there is a business case, it 201 00:10:21,960 --> 00:10:25,960 Speaker 1: will happen. I think that the European market are still 202 00:10:26,080 --> 00:10:30,400 Speaker 1: struggling to change and make that change happen. But from 203 00:10:30,600 --> 00:10:35,000 Speaker 1: our perspective, we're seeing a clear engagement and back to 204 00:10:35,160 --> 00:10:39,120 Speaker 1: energy security. The electric grid is more reliable than the 205 00:10:39,160 --> 00:10:42,560 Speaker 1: prices of oil, and even if we have some fluctuations, 206 00:10:43,000 --> 00:10:46,400 Speaker 1: and especially in Europe right now, it's actually a way 207 00:10:46,440 --> 00:10:50,360 Speaker 1: of mitigating the dependencies of oil. And I think that 208 00:10:50,559 --> 00:10:54,200 Speaker 1: if you have both those, it's better solution and it's 209 00:10:54,200 --> 00:10:58,920 Speaker 1: a cheaper solution. This transition will go very quickly. So Robert, 210 00:10:58,960 --> 00:11:00,679 Speaker 1: I think I get the whole EV thing. I just 211 00:11:00,800 --> 00:11:03,400 Speaker 1: drove my first e V for Dee fifty truck. Was 212 00:11:03,520 --> 00:11:05,720 Speaker 1: very cool, but I'm not so sure about this whole 213 00:11:05,760 --> 00:11:12,280 Speaker 1: automation thing. Explain your approach now. I actually I share 214 00:11:12,280 --> 00:11:14,560 Speaker 1: your view there as well. I think that we have 215 00:11:14,720 --> 00:11:19,440 Speaker 1: been chasing literally flying goats over the last ten years 216 00:11:19,679 --> 00:11:23,880 Speaker 1: in the automotive industry, and I think that Google and 217 00:11:23,920 --> 00:11:28,080 Speaker 1: Weymoux has been pioneering the whole industry, and I think 218 00:11:28,120 --> 00:11:30,640 Speaker 1: that they've done and set the standard that's going to 219 00:11:30,679 --> 00:11:33,240 Speaker 1: be the standard, but it's going to take a long 220 00:11:33,400 --> 00:11:37,240 Speaker 1: time before it's actually bean we can actually deploy it 221 00:11:37,280 --> 00:11:40,720 Speaker 1: on rail roads. And that approach, that's our pure silicon 222 00:11:40,840 --> 00:11:44,560 Speaker 1: value approach, has been a challenge since the start because 223 00:11:44,600 --> 00:11:48,040 Speaker 1: it requires literally us to chase our own tail for 224 00:11:48,160 --> 00:11:50,959 Speaker 1: the whole industry. When we started the company, we took 225 00:11:50,960 --> 00:11:53,800 Speaker 1: a different approach, and our ambition since the start has 226 00:11:53,840 --> 00:11:57,320 Speaker 1: been to do bit by bit, find the right applications 227 00:11:57,360 --> 00:12:01,520 Speaker 1: and find the right business cases to scale autonomous because 228 00:12:01,559 --> 00:12:03,480 Speaker 1: if you look at a lot of other industries and 229 00:12:03,520 --> 00:12:07,679 Speaker 1: a lot of other applications, for instance in factories and warehouses, 230 00:12:07,760 --> 00:12:11,720 Speaker 1: we've been doing autonomous electric transport for more than thirty 231 00:12:11,800 --> 00:12:15,640 Speaker 1: years now, and that's we'd take a different approach. So 232 00:12:15,679 --> 00:12:19,319 Speaker 1: I think that the technology why the industry has been 233 00:12:19,760 --> 00:12:22,400 Speaker 1: pushing it, but I think when it comes to actually 234 00:12:22,480 --> 00:12:26,400 Speaker 1: finding use cases and real applications to it, it actually 235 00:12:26,440 --> 00:12:29,760 Speaker 1: has lacked a bit. And I think that's hopefully what 236 00:12:29,800 --> 00:12:32,800 Speaker 1: we add to the equation. All right, Robert, great stuff. 237 00:12:32,840 --> 00:12:34,880 Speaker 1: Really appreciate you taking a few minutes bring us up 238 00:12:34,920 --> 00:12:36,560 Speaker 1: to speed on what you guys are doing over at 239 00:12:36,559 --> 00:12:39,120 Speaker 1: and right Robert falk and Wright, a founder and CEO. 240 00:12:42,920 --> 00:12:44,920 Speaker 1: It used to say that Coustin brushed gears with us 241 00:12:44,960 --> 00:12:48,240 Speaker 1: Iron g chief economist. Long time since I've spoken to you, 242 00:12:48,280 --> 00:12:50,000 Speaker 1: so it is such a joy. I think you're out 243 00:12:50,000 --> 00:12:53,440 Speaker 1: there in Frankfurt in between this holiday time talk to 244 00:12:53,520 --> 00:12:55,880 Speaker 1: us about what China means for you from a global 245 00:12:55,920 --> 00:13:00,720 Speaker 1: economic perspective. This reopening story, well, it means lot. It 246 00:13:00,800 --> 00:13:04,520 Speaker 1: means supply chain frictions in the very short run, because 247 00:13:04,559 --> 00:13:06,880 Speaker 1: we have lifted restrictions right now, but it means we're 248 00:13:06,880 --> 00:13:09,920 Speaker 1: going to see many, many sick cases, many sicknesses, and 249 00:13:09,960 --> 00:13:12,560 Speaker 1: that will probably mean that people simply cannot show up 250 00:13:12,559 --> 00:13:14,959 Speaker 1: in the factories. But in the medium term, and that 251 00:13:15,040 --> 00:13:18,360 Speaker 1: we talked probably end of Q one two three, this 252 00:13:18,480 --> 00:13:22,040 Speaker 1: clearly means that supply chain friction should go away much 253 00:13:22,080 --> 00:13:25,640 Speaker 1: paster than we initially thought because China is really giving 254 00:13:25,720 --> 00:13:28,199 Speaker 1: up on on zero covit and that is good news 255 00:13:28,240 --> 00:13:30,600 Speaker 1: for the global economy. As we are, you know, we 256 00:13:30,679 --> 00:13:34,680 Speaker 1: are looking into a recession in Europe in two thousand 257 00:13:34,720 --> 00:13:37,600 Speaker 1: twenty three, we even look into a recession in the US. 258 00:13:37,920 --> 00:13:42,079 Speaker 1: If China would now really start to recover starting second 259 00:13:42,160 --> 00:13:45,679 Speaker 1: quarter two twenty three, this could help the global economy 260 00:13:45,760 --> 00:13:49,040 Speaker 1: a lot. So Carston talked to us from the European 261 00:13:49,160 --> 00:13:51,280 Speaker 1: perspective what this means, because that you know, such a 262 00:13:51,320 --> 00:13:56,240 Speaker 1: big trading partner with the European Union and China, where 263 00:13:56,240 --> 00:13:58,800 Speaker 1: where you know the first for some impacts on the 264 00:13:58,840 --> 00:14:03,840 Speaker 1: European economy. From yeah, I think in the in the 265 00:14:04,000 --> 00:14:07,120 Speaker 1: very part term, um, I think that even lifting all 266 00:14:07,160 --> 00:14:10,719 Speaker 1: the restrictions means that there will be more supply chain frictions. 267 00:14:10,760 --> 00:14:16,280 Speaker 1: So I'm really looking into European industry and probably having 268 00:14:16,559 --> 00:14:19,440 Speaker 1: more supply chain frictions over the winter. And the winter 269 00:14:19,640 --> 00:14:22,760 Speaker 1: is already going to be a tough economic one in Europe. 270 00:14:23,400 --> 00:14:25,320 Speaker 1: But then when we get out of the winter, when 271 00:14:25,720 --> 00:14:29,360 Speaker 1: when when China is then somehow settling into this new 272 00:14:29,760 --> 00:14:34,080 Speaker 1: post euro covered reality. Um, this would clearly benefit the 273 00:14:34,560 --> 00:14:38,680 Speaker 1: European industry, the European companies that are so dependent on 274 00:14:39,040 --> 00:14:42,600 Speaker 1: input goods from from China. And showing some sort of statistics, 275 00:14:43,160 --> 00:14:46,400 Speaker 1: I think in Germany more than fifty percent of the 276 00:14:46,440 --> 00:14:49,880 Speaker 1: manufacturing sectors say that they are one way or the 277 00:14:49,920 --> 00:14:54,240 Speaker 1: other depending on China. So clearly Germany but also Europe 278 00:14:54,280 --> 00:14:58,360 Speaker 1: needs a growing Chinese economy. May he live in interesting 279 00:14:58,440 --> 00:15:01,400 Speaker 1: times is the Chinese proverb actually that you quote at 280 00:15:01,400 --> 00:15:03,440 Speaker 1: the top of your note. And boy have we lived 281 00:15:03,480 --> 00:15:06,000 Speaker 1: in interesting times in the last few years, but also 282 00:15:06,040 --> 00:15:09,120 Speaker 1: in two and it's been not just a story of China, 283 00:15:09,200 --> 00:15:13,200 Speaker 1: not just a story of global disruption, but notably one 284 00:15:13,280 --> 00:15:16,360 Speaker 1: of Russia, Ukraine, of the impact on energy markets and 285 00:15:16,400 --> 00:15:19,240 Speaker 1: the impact of the devastation that's reaked upon Europe in particular, 286 00:15:19,240 --> 00:15:21,360 Speaker 1: and I'm interested at this moment as to whether you 287 00:15:21,440 --> 00:15:25,320 Speaker 1: see with the warmest snap the weather slightly more temperate 288 00:15:25,360 --> 00:15:27,360 Speaker 1: in Europe than we were expecting. There has been an 289 00:15:27,360 --> 00:15:30,120 Speaker 1: easing off of concerns around energy supply chains there, but 290 00:15:30,160 --> 00:15:32,680 Speaker 1: talk to us longer term about how will your comfort 291 00:15:32,760 --> 00:15:37,800 Speaker 1: levels look for Europe as an economy with respect to energy. 292 00:15:37,840 --> 00:15:40,240 Speaker 1: I found out that actually it is not a proverb, 293 00:15:40,280 --> 00:15:43,560 Speaker 1: but it is a curse to start with. But we're 294 00:15:43,560 --> 00:15:46,920 Speaker 1: looking at at Europe and I think the picture changes 295 00:15:47,000 --> 00:15:49,760 Speaker 1: by the week. Just one or two weeks ago we 296 00:15:49,760 --> 00:15:53,880 Speaker 1: were saying this was actually a cold winter spell hitting 297 00:15:53,920 --> 00:15:57,640 Speaker 1: the entire region, or we saw happening as well. I 298 00:15:57,680 --> 00:16:01,920 Speaker 1: think a week ago consumption gap consumption in Europe was 299 00:16:01,960 --> 00:16:05,800 Speaker 1: clearly above historical averages. Again, so now it's turning around 300 00:16:05,840 --> 00:16:08,080 Speaker 1: and we we we saw a temperature ship by almost 301 00:16:08,080 --> 00:16:11,880 Speaker 1: twenty degrees, going from minus ten sellers to plus ten sellingers. 302 00:16:12,080 --> 00:16:16,359 Speaker 1: So this would clearly help the reduction in gas consumption. 303 00:16:16,560 --> 00:16:19,280 Speaker 1: And I think in any case shows us that there 304 00:16:19,320 --> 00:16:23,160 Speaker 1: will not be an energy supply issue through this winter. 305 00:16:23,360 --> 00:16:26,800 Speaker 1: What we still have is an energy price crisis in Europe. 306 00:16:27,160 --> 00:16:30,240 Speaker 1: Um and it will. It will determine how severe this 307 00:16:30,320 --> 00:16:33,000 Speaker 1: winter recession will be. So it currently looks, I think 308 00:16:33,040 --> 00:16:35,320 Speaker 1: a bit more positive, so that this recession is going 309 00:16:35,360 --> 00:16:37,800 Speaker 1: to be a mild recession. But what is even more 310 00:16:37,840 --> 00:16:41,360 Speaker 1: important in my view, especially for Europe, is what's going 311 00:16:41,400 --> 00:16:44,080 Speaker 1: to happen in the second half of two thousand twenty three. 312 00:16:44,440 --> 00:16:47,720 Speaker 1: Here we have many forecasters saying that Europe would return 313 00:16:47,800 --> 00:16:51,160 Speaker 1: to pre growth or pre pre crisis growth levels. And 314 00:16:51,200 --> 00:16:53,680 Speaker 1: I'm a bit more cautious because I think we are 315 00:16:53,720 --> 00:16:57,600 Speaker 1: still living in a period of high energy prices, We're 316 00:16:57,600 --> 00:17:00,960 Speaker 1: still living in a period of structural change to global trade. 317 00:17:01,320 --> 00:17:03,520 Speaker 1: So I'm a bit more concerned that the year of 318 00:17:03,600 --> 00:17:08,320 Speaker 1: will really experience a more subdued recovery in the second 319 00:17:08,320 --> 00:17:10,879 Speaker 1: half of twenty three and also in two thousand twenty 320 00:17:10,880 --> 00:17:14,560 Speaker 1: four the many currently expects. Carson, we recently had the 321 00:17:14,560 --> 00:17:17,480 Speaker 1: Bank of Japan of all banks, kind of throwing the 322 00:17:17,600 --> 00:17:20,560 Speaker 1: talent signal that it was opened higher rates and to 323 00:17:20,640 --> 00:17:23,359 Speaker 1: fight inflation. So you know, along with the Bank of England, 324 00:17:23,400 --> 00:17:24,880 Speaker 1: the e c B, and of course the US feder 325 00:17:24,960 --> 00:17:27,120 Speaker 1: Reserve Bank. What do you think the next move is 326 00:17:27,320 --> 00:17:30,680 Speaker 1: for this federal Reserve Bank? Given what we know now 327 00:17:30,720 --> 00:17:33,720 Speaker 1: about economic conditions and now maybe another little data point 328 00:17:33,800 --> 00:17:38,120 Speaker 1: with China reopening. You know, you wouldn't argue that if 329 00:17:38,400 --> 00:17:41,240 Speaker 1: if the Bank of Japan, of all the central banks 330 00:17:41,280 --> 00:17:44,400 Speaker 1: start to become really concerned about inflation, I think there 331 00:17:44,440 --> 00:17:46,480 Speaker 1: has to be a serious issue. And that's standime was 332 00:17:46,520 --> 00:17:49,479 Speaker 1: the big story of two thousand twenty two. UM. I 333 00:17:49,520 --> 00:17:52,800 Speaker 1: think that the Bank of Japan is also likely to 334 00:17:53,080 --> 00:17:57,320 Speaker 1: join this UM, this group of western central banks UM 335 00:17:57,359 --> 00:18:00,320 Speaker 1: with hiking interest rates. UM. So the only quite with 336 00:18:00,440 --> 00:18:03,000 Speaker 1: the Bank of Japan now starts what we see, what 337 00:18:03,160 --> 00:18:07,000 Speaker 1: we see other central banks, particularly the FED, really making 338 00:18:07,000 --> 00:18:10,600 Speaker 1: a pause or even stopping the hiking cycle already in 339 00:18:10,480 --> 00:18:13,440 Speaker 1: the first quarter, we think they will. We think the 340 00:18:13,480 --> 00:18:17,199 Speaker 1: Fed is gone a step in Q one. We I 341 00:18:17,240 --> 00:18:19,600 Speaker 1: think it's become a bit more doubtful about the ECB 342 00:18:19,680 --> 00:18:22,159 Speaker 1: because the e c B has been talking very harkishly 343 00:18:22,640 --> 00:18:25,359 Speaker 1: UM since the last meeting. Is over the last couple 344 00:18:25,359 --> 00:18:28,159 Speaker 1: of days, it looks very likely if the ECB is 345 00:18:28,520 --> 00:18:31,400 Speaker 1: going further than the fact that we will see more 346 00:18:31,520 --> 00:18:35,320 Speaker 1: rate hikes coming in Europe even when the FEDS stops. 347 00:18:35,640 --> 00:18:37,840 Speaker 1: I think interested and the big story for the second 348 00:18:37,880 --> 00:18:41,280 Speaker 1: half two thousand twenty three will be whether central banks 349 00:18:41,320 --> 00:18:45,280 Speaker 1: will actually dare cutting rates again or whether we will 350 00:18:45,359 --> 00:18:48,520 Speaker 1: really stay at a higher level for longer. I mean, 351 00:18:48,720 --> 00:18:50,840 Speaker 1: it's worth saying that, of course the US has manages 352 00:18:51,000 --> 00:18:53,840 Speaker 1: get its rates up a little slightly greater paced higher 353 00:18:53,920 --> 00:18:56,040 Speaker 1: levels all told us as easy b already. But is 354 00:18:56,080 --> 00:18:58,720 Speaker 1: that why do the Federal Reserve have the bandwidth to 355 00:18:58,720 --> 00:19:00,959 Speaker 1: slow down in the first quarter that inflation is going 356 00:19:00,960 --> 00:19:02,919 Speaker 1: in the direction it wants to. Is it more that's 357 00:19:02,960 --> 00:19:05,679 Speaker 1: now seeing a bond market that doesn't have the bias 358 00:19:05,720 --> 00:19:07,600 Speaker 1: that it was used to. Particularly we start to see 359 00:19:07,960 --> 00:19:11,560 Speaker 1: borrowing costs in Japan actually maybe even look attractive to 360 00:19:11,560 --> 00:19:16,280 Speaker 1: the Japanese by themselves, I think. Um. In terms of 361 00:19:16,280 --> 00:19:18,480 Speaker 1: that said, what what's going to happen is that inflation 362 00:19:18,560 --> 00:19:21,280 Speaker 1: is going to come down faster than the FAT itself 363 00:19:21,320 --> 00:19:24,080 Speaker 1: probably expects um. And that has to do with the 364 00:19:24,080 --> 00:19:27,080 Speaker 1: real estate market, has to do also with the entire 365 00:19:27,119 --> 00:19:30,679 Speaker 1: inflation basket. So if the real estate market in the 366 00:19:30,760 --> 00:19:33,639 Speaker 1: US that really starts to correct, and we see first 367 00:19:33,680 --> 00:19:37,320 Speaker 1: the data points and you know suggesting that this is happening, 368 00:19:37,600 --> 00:19:40,320 Speaker 1: headline inflation will come down very quickly. And this is 369 00:19:40,359 --> 00:19:44,440 Speaker 1: then the big reason to pass. Turning back to to Japan, 370 00:19:45,119 --> 00:19:48,320 Speaker 1: here we do have an economy that that could benefit 371 00:19:48,440 --> 00:19:50,959 Speaker 1: from the opening up of China. Here we have an 372 00:19:51,000 --> 00:19:55,480 Speaker 1: economy that is not suffering, as for example, the European 373 00:19:55,560 --> 00:20:00,600 Speaker 1: economy from higher commodity and energy prices um. This is 374 00:20:00,600 --> 00:20:04,120 Speaker 1: an economy in which fiscal policy has done the tough work, 375 00:20:04,200 --> 00:20:07,160 Speaker 1: I think for for almost two decades UM. So therefore 376 00:20:07,520 --> 00:20:10,760 Speaker 1: it is likely that we will see the first policy 377 00:20:10,880 --> 00:20:14,480 Speaker 1: rate high in Japan coming up. So, Carson, I have 378 00:20:14,600 --> 00:20:17,720 Speaker 1: the Paul Sweeney Personal Inflation Index, otherwise known as a 379 00:20:17,800 --> 00:20:20,440 Speaker 1: daily national average gasoline price, and it's down the three 380 00:20:20,440 --> 00:20:23,320 Speaker 1: dollars and ten cents per gallon here, down from the 381 00:20:23,359 --> 00:20:26,720 Speaker 1: peak of five dollars UM. So here in the US 382 00:20:26,800 --> 00:20:29,840 Speaker 1: at least inflation is in fact it has peaked, it 383 00:20:29,920 --> 00:20:32,639 Speaker 1: is coming down. You can look across a several different 384 00:20:32,640 --> 00:20:34,600 Speaker 1: metrics give us a sense of how it is in Europe. 385 00:20:34,800 --> 00:20:38,960 Speaker 1: Do you expect it to be more more sticky in Europe? Yeah. 386 00:20:39,000 --> 00:20:42,000 Speaker 1: If I look at Carson Justice personal inflation in next, 387 00:20:42,000 --> 00:20:45,920 Speaker 1: which is sons partaty more than only gasoline prices UM, 388 00:20:46,240 --> 00:20:49,560 Speaker 1: I think we are somewhere close to the peak. And 389 00:20:50,160 --> 00:20:52,560 Speaker 1: in in the first quarter of twenty three, we will 390 00:20:52,600 --> 00:20:56,080 Speaker 1: see that Eurozone headline inflation will start to come down 391 00:20:56,520 --> 00:20:59,720 Speaker 1: as energy prices are somewhat lower. As it is also 392 00:21:00,080 --> 00:21:03,200 Speaker 1: you know, getting harder for companies to really pass through 393 00:21:03,680 --> 00:21:06,920 Speaker 1: the higher production costs to two consumers, so we'll see 394 00:21:06,920 --> 00:21:11,280 Speaker 1: a gradual retreatment by by inflamation. But still this means 395 00:21:11,320 --> 00:21:14,440 Speaker 1: that I think on average inflation in the Eurozone will 396 00:21:14,480 --> 00:21:17,679 Speaker 1: will come in at between six or seven percent in 397 00:21:17,760 --> 00:21:20,240 Speaker 1: two thousand twenty three. That is a lot and awesome. 398 00:21:20,320 --> 00:21:25,000 Speaker 1: Means that there is an enormous, enormous pressure on purchasing 399 00:21:25,040 --> 00:21:29,480 Speaker 1: power or the loss in purchasing power of European citizens. Alright, 400 00:21:29,480 --> 00:21:33,000 Speaker 1: good stuff. We really appreciate getting your perspective there, Carston Razinski. 401 00:21:33,320 --> 00:21:39,120 Speaker 1: He is the chief economist for I n G. Let's 402 00:21:39,119 --> 00:21:41,880 Speaker 1: talk about it over the Charles, the Buses All Society 403 00:21:41,920 --> 00:21:44,919 Speaker 1: General Equity Strategist, Charles, it is wonderful to have some 404 00:21:45,000 --> 00:21:47,840 Speaker 1: time with you. Happy holidays. Talk to us about well, 405 00:21:48,560 --> 00:21:51,840 Speaker 1: when you are looking at a potential China reopening, what 406 00:21:51,960 --> 00:21:55,320 Speaker 1: makes you think that the market is going to trade sideways? Well, look, 407 00:21:55,320 --> 00:21:57,840 Speaker 1: it's a it's a balance between the news flow with 408 00:21:57,920 --> 00:22:00,280 Speaker 1: the China reopening, which is somewhat of a posity but 409 00:22:00,320 --> 00:22:04,280 Speaker 1: also issues the valuation side, And as far as the 410 00:22:04,359 --> 00:22:08,359 Speaker 1: US is concerned, valuations being back on center stage is 411 00:22:08,400 --> 00:22:11,040 Speaker 1: not slee a good thing. Um, if you think of 412 00:22:11,080 --> 00:22:14,639 Speaker 1: it this way, you know, Europe is actually be outperforming 413 00:22:14,720 --> 00:22:18,919 Speaker 1: this year despite the US massively going down. So for me, 414 00:22:19,040 --> 00:22:21,720 Speaker 1: this is kind of an US in theory. But what 415 00:22:21,800 --> 00:22:24,960 Speaker 1: it shows that at last, and that's the good news 416 00:22:25,119 --> 00:22:31,200 Speaker 1: for three, valuations start to matter. We've ended twenty five 417 00:22:31,280 --> 00:22:34,760 Speaker 1: years of falling bond deals which went plods, people buying 418 00:22:34,960 --> 00:22:39,399 Speaker 1: growth stops. Where's growth the US not Europe? And now 419 00:22:39,480 --> 00:22:42,800 Speaker 1: that's the end of that long cyclement. Still at last, 420 00:22:43,320 --> 00:22:46,240 Speaker 1: valuations and visit again today mean that so yes and 421 00:22:46,280 --> 00:22:50,520 Speaker 1: Europe gonna have a good time. Charles. You know, some 422 00:22:50,560 --> 00:22:53,880 Speaker 1: folks are concerned, still concerned about earnings risk in this 423 00:22:54,000 --> 00:22:58,199 Speaker 1: market in how do you view earnings in SMP? How 424 00:22:58,280 --> 00:23:03,920 Speaker 1: much downside might there still be? Okay, overall flat on 425 00:23:04,080 --> 00:23:07,160 Speaker 1: the earth, But that's I think the Roses scenario most 426 00:23:07,200 --> 00:23:11,159 Speaker 1: likely down sort of just single digits. Um, So earning 427 00:23:11,320 --> 00:23:14,120 Speaker 1: is at gonna go down. There's gonna be downgrades, um, 428 00:23:14,160 --> 00:23:16,879 Speaker 1: you know across the board in many regions of the world. 429 00:23:17,200 --> 00:23:19,879 Speaker 1: I think that is expected. What we need is to 430 00:23:19,920 --> 00:23:23,440 Speaker 1: see where there are pockets where investor sentiment is too 431 00:23:23,480 --> 00:23:26,280 Speaker 1: thin devious sleep the volumes of anything today, so it's 432 00:23:26,320 --> 00:23:30,600 Speaker 1: far too thredraw many conclusions, but certainly what we are 433 00:23:30,800 --> 00:23:36,199 Speaker 1: you know, looking to um such just some places you 434 00:23:36,200 --> 00:23:38,320 Speaker 1: can think of Japanese banks on the back of the 435 00:23:38,400 --> 00:23:41,520 Speaker 1: last weeks new show, or some cycicals in Europe, we're 436 00:23:41,560 --> 00:23:44,359 Speaker 1: actually values not fine, so I thinks we'll go down. 437 00:23:44,480 --> 00:23:48,159 Speaker 1: We'll know this, yeah, price then not across the fro 438 00:23:49,800 --> 00:23:52,919 Speaker 1: talk to us about the individual you just mentioned. I 439 00:23:52,920 --> 00:23:55,600 Speaker 1: think I heard you say Japanese banks there, but financials 440 00:23:55,600 --> 00:23:59,680 Speaker 1: more broadly have been surprisingly underperforming, I mean down even 441 00:23:59,680 --> 00:24:02,800 Speaker 1: though you have pushed higher. I'm interested in can you 442 00:24:02,840 --> 00:24:05,760 Speaker 1: speak as broad brush as industry groups. Can you still 443 00:24:05,760 --> 00:24:08,480 Speaker 1: say energy is gonna outperform like it did in this year? 444 00:24:08,520 --> 00:24:10,080 Speaker 1: I mean, I think it's up to some six percent 445 00:24:10,119 --> 00:24:12,520 Speaker 1: here to day, whereas everything else is in the red? 446 00:24:12,760 --> 00:24:14,560 Speaker 1: Or do you have to be stock specific rather than 447 00:24:14,560 --> 00:24:19,440 Speaker 1: sector specific. Look, if you take the case of financials, 448 00:24:19,440 --> 00:24:22,000 Speaker 1: as you've pointed out, to find rising fields, they've had 449 00:24:22,000 --> 00:24:26,359 Speaker 1: appalling performance. What was the missing block. Missing block was 450 00:24:26,480 --> 00:24:30,919 Speaker 1: economic growth, real growth. If you don't have real growth, 451 00:24:31,040 --> 00:24:34,719 Speaker 1: rule banking sector, your insurance will not necessarily grow. And 452 00:24:34,760 --> 00:24:38,760 Speaker 1: so our expectations that at some point can start to 453 00:24:38,800 --> 00:24:42,280 Speaker 1: turn from an economic prospectivitience of real growth not none 454 00:24:42,280 --> 00:24:45,840 Speaker 1: at all. And so financials in that you know circumstances 455 00:24:45,840 --> 00:24:48,560 Speaker 1: could not perform. If you get the energy sector, what 456 00:24:48,720 --> 00:24:53,280 Speaker 1: it had for it was really totals shareholder returns diffidence 457 00:24:53,359 --> 00:24:56,000 Speaker 1: because buybacks more than tend to say yield in a 458 00:24:56,119 --> 00:24:59,280 Speaker 1: number of socks. So there has been a combination of 459 00:24:59,640 --> 00:25:03,080 Speaker 1: do you have the valuation angel, yes or no? Energy 460 00:25:03,080 --> 00:25:05,879 Speaker 1: todly have it? Banks had it? Sure has had it, 461 00:25:06,040 --> 00:25:09,320 Speaker 1: but are you missing something growth? And if it's missing, 462 00:25:09,600 --> 00:25:12,280 Speaker 1: you don't have performance. Our hope is that you start 463 00:25:12,280 --> 00:25:17,080 Speaker 1: to see turn running real growth. Some of these reflation traits, 464 00:25:17,080 --> 00:25:21,479 Speaker 1: not staculation traits, do not perform. And Charles, you mentioned energy, 465 00:25:21,520 --> 00:25:23,040 Speaker 1: I mean, I'm looking at some of these names like 466 00:25:23,080 --> 00:25:26,160 Speaker 1: excellent and a lot of these things are fifty six. 467 00:25:27,800 --> 00:25:33,640 Speaker 1: Have I missed that trade? Um the bulk of it, Yes, 468 00:25:33,880 --> 00:25:36,600 Speaker 1: we'll still long that. I felt was still think that 469 00:25:36,640 --> 00:25:40,000 Speaker 1: if you look at the cash generation that they offered 470 00:25:40,320 --> 00:25:43,040 Speaker 1: the total she all returned that they offered on both 471 00:25:43,080 --> 00:25:45,800 Speaker 1: sides of the Atlantic. Then I think, yes, that's still 472 00:25:45,880 --> 00:25:51,080 Speaker 1: centered that we're happy to to hold. Where in globally 473 00:25:51,119 --> 00:25:55,160 Speaker 1: speaking at the moment, Charles is underrated. Do you think 474 00:25:57,320 --> 00:26:01,240 Speaker 1: number one, the European consumer. What we've seen is a 475 00:26:01,320 --> 00:26:04,400 Speaker 1: massive prise in the risks, remember around anything which had 476 00:26:04,440 --> 00:26:06,600 Speaker 1: to do with Europe on the back of the war 477 00:26:06,840 --> 00:26:09,879 Speaker 1: Ukraine and so people went away from the europe differency, 478 00:26:10,400 --> 00:26:14,600 Speaker 1: from booms from European equities, and what we are seeing 479 00:26:14,640 --> 00:26:17,400 Speaker 1: currently is that we seem to be going through that 480 00:26:17,480 --> 00:26:21,320 Speaker 1: winter in a choppy way, but morale than scathed. And 481 00:26:21,359 --> 00:26:24,280 Speaker 1: certainly what we have in Europe is one trilling euros 482 00:26:24,359 --> 00:26:27,760 Speaker 1: of access savings that stopped to be spent. And if 483 00:26:27,880 --> 00:26:31,000 Speaker 1: look in terms of valuations, these guys tread at six, 484 00:26:31,760 --> 00:26:35,280 Speaker 1: not one six, but six zero percent discounts to the 485 00:26:35,359 --> 00:26:38,720 Speaker 1: stables sectors. So definitely it's a star general. People have 486 00:26:38,920 --> 00:26:42,800 Speaker 1: rushed away thinking that the European consume was dead. It's 487 00:26:42,880 --> 00:26:45,600 Speaker 1: not the case. And what we've seen is the rebound 488 00:26:46,080 --> 00:26:48,400 Speaker 1: of the past few months. We think this has further 489 00:26:48,520 --> 00:26:52,680 Speaker 1: to go. Charles. Really since a great financial crisis and 490 00:26:52,720 --> 00:26:56,840 Speaker 1: the equity markets, you know, the leading group has been technology, 491 00:26:56,880 --> 00:26:59,600 Speaker 1: whether it's the fang stocks are more broadly defined tech. 492 00:27:00,320 --> 00:27:03,280 Speaker 1: In a rising interest rate environment? Can that still be 493 00:27:03,359 --> 00:27:06,080 Speaker 1: the case? Is this market maybe it starts to move 494 00:27:06,160 --> 00:27:08,159 Speaker 1: higher at some point next year. Can techt be a 495 00:27:08,240 --> 00:27:13,359 Speaker 1: leader or not in a rising interest rate environment? The 496 00:27:13,359 --> 00:27:17,040 Speaker 1: answer is no. The reason behind it is that the 497 00:27:17,119 --> 00:27:21,520 Speaker 1: gap evaluation has to narrow because valuations, as it was 498 00:27:21,760 --> 00:27:26,080 Speaker 1: starting earler own, start to matter. What you've seen today 499 00:27:26,440 --> 00:27:29,040 Speaker 1: in the case of some of the ev names, we're 500 00:27:29,080 --> 00:27:33,080 Speaker 1: mentioning the supplying change, disruptions here and there, what happens 501 00:27:33,080 --> 00:27:35,600 Speaker 1: at the back of the COVID policy in China used 502 00:27:35,600 --> 00:27:38,480 Speaker 1: to being be easy, some of these fears. That's one 503 00:27:38,480 --> 00:27:42,320 Speaker 1: side of the equation. The issue I have a look 504 00:27:42,359 --> 00:27:45,480 Speaker 1: at the US market is that just five stops have 505 00:27:45,600 --> 00:27:47,680 Speaker 1: been accounting for the bulk of the performance of the 506 00:27:47,800 --> 00:27:52,119 Speaker 1: index because situation performance is massive in the West, and 507 00:27:52,160 --> 00:27:55,520 Speaker 1: we still have a lot of gap in evaluation there. 508 00:27:55,960 --> 00:27:58,400 Speaker 1: When you're close of the equity zero, you don't care 509 00:27:58,520 --> 00:28:01,359 Speaker 1: paying of the growth. When things start to be expensive 510 00:28:01,520 --> 00:28:04,719 Speaker 1: terms of financing this, think of stack, think of some 511 00:28:04,800 --> 00:28:08,080 Speaker 1: of the techniques. Then valuation of need that the rotation 512 00:28:08,400 --> 00:28:10,480 Speaker 1: out of the expensive names, and you're putting on the 513 00:28:10,520 --> 00:28:12,600 Speaker 1: screen here that now's that pass for them to go. 514 00:28:14,640 --> 00:28:17,919 Speaker 1: What then, as we see interest rates rise, as we 515 00:28:17,960 --> 00:28:21,320 Speaker 1: start to see the consumer maybe under pressures and waiting 516 00:28:21,320 --> 00:28:24,280 Speaker 1: for some sort of growth, is it? I mean consumer 517 00:28:24,320 --> 00:28:28,080 Speaker 1: discretionary down, consumer staples up? Are we are we in 518 00:28:28,119 --> 00:28:30,640 Speaker 1: any way betting on a US consumer in the way 519 00:28:30,640 --> 00:28:35,040 Speaker 1: that you're thinking maybe the European consumer is underrated now. 520 00:28:35,119 --> 00:28:36,680 Speaker 1: The way I look at it in the US is 521 00:28:36,760 --> 00:28:40,480 Speaker 1: that I've much law advised. Some of the industrial names 522 00:28:40,480 --> 00:28:43,800 Speaker 1: in the US supposed to consumer names. I think some 523 00:28:43,840 --> 00:28:46,760 Speaker 1: of the financing conditions in the US can be fried 524 00:28:46,840 --> 00:28:49,320 Speaker 1: Gile thinking in a ploye market. It's still a kind 525 00:28:49,360 --> 00:28:52,480 Speaker 1: of a question mark. And what really what they need 526 00:28:52,720 --> 00:28:55,320 Speaker 1: eventually in the end is the pivot from the FED 527 00:28:55,600 --> 00:28:59,840 Speaker 1: and cut in rates. What the US industrials names need 528 00:29:00,080 --> 00:29:02,800 Speaker 1: is obviously a raid cut, but they need is growth 529 00:29:03,080 --> 00:29:05,080 Speaker 1: trade to come back. And I think the news flow 530 00:29:05,320 --> 00:29:08,760 Speaker 1: from China today goes to lost this. So if you 531 00:29:08,800 --> 00:29:11,360 Speaker 1: think of it, industrials in the US is supposed to 532 00:29:11,360 --> 00:29:14,800 Speaker 1: the consumer. In Europe, more of the consumer think of 533 00:29:14,800 --> 00:29:17,480 Speaker 1: it also, not the inflation reduction acts some of the 534 00:29:17,480 --> 00:29:20,080 Speaker 1: big moves on the policy front that we've seen in 535 00:29:20,080 --> 00:29:25,400 Speaker 1: the US context really suggesting that many comp corporates will 536 00:29:25,440 --> 00:29:28,360 Speaker 1: benefit from that spending from the state um in the 537 00:29:28,400 --> 00:29:31,120 Speaker 1: West in terms of financing the green transition, and that's 538 00:29:31,160 --> 00:29:35,040 Speaker 1: one of our key convictions. Maybe surprisingly the US will 539 00:29:35,080 --> 00:29:37,960 Speaker 1: be in place of green transition in twenty twenty three. 540 00:29:38,120 --> 00:29:40,800 Speaker 1: It's not just about the European Green Deal, all right, 541 00:29:41,080 --> 00:29:43,440 Speaker 1: great stuff, Charles, Well, appreciate you taking a few minutes 542 00:29:43,480 --> 00:29:45,960 Speaker 1: of time there to check in with us. Charles day 543 00:29:46,000 --> 00:29:50,080 Speaker 1: Bus Swan Society is General equity strategist. Joining us via 544 00:29:50,440 --> 00:29:53,880 Speaker 1: zoom from Parish There. Thanks for listening to the Bloomberg 545 00:29:53,920 --> 00:29:57,320 Speaker 1: Markets podcast. You can subscribe and listen to interviews of 546 00:29:57,400 --> 00:30:02,200 Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. 547 00:30:02,480 --> 00:30:05,880 Speaker 1: I'm on Twitter at Matt Miller N seventy three and 548 00:30:06,000 --> 00:30:08,640 Speaker 1: on Fall Sweeney I'm on Twitter at pt Sweeney. Before 549 00:30:08,640 --> 00:30:11,800 Speaker 1: the podcast, you can always catch us worldwide at Bloomberg Radio.