Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanebeck. We're here every day bringing
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Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Clomber News. We want to get right
Speaker 1: onto our first guest here, Michelle Schneider. She's managing director
Speaker 1: of the Market Gauge Group. She's also the author of
Speaker 1: the best selling book Plant Your Money Tree, A Guide
Speaker 1: to Growing your Wealth. Uh, Michelle, Tim keeps reminding me
Speaker 1: that we're sitting on like twenty plus percent gains percentage
Speaker 1: gains here in the markets here. How do you grow
Speaker 1: that going into next year? Do you have confidence here
Speaker 1: that some of the gains that we saw this year
Speaker 1: that that's going to persist in Well, what's so interesting
Speaker 1: about this coming year is that we have a lot
Speaker 1: more question and essence about what's going to happen versus
Speaker 1: when we were going from one, we knew we were
Speaker 1: having a change of administration, but we knew that the
Speaker 1: federal Reserve, for example, was going to stay accommodative. And now,
Speaker 1: of course going into two, we know that's changing a bit.
Speaker 1: And so we also know that we have an infrastructure
Speaker 1: program coming up and the possibility of more government spending,
Speaker 1: and there's also still the unknown of haw far inflation
Speaker 1: will continue. So when you put that all together, really
Speaker 1: it looks like what the market is playing out here
Speaker 1: is a scenario where as we see big tech can
Speaker 1: continue to lead, although it's come off today, but we
Speaker 1: have a situation where small caps, which are the Russell
Speaker 1: to thousand literally have gone sideways. From February one to date,
Speaker 1: they have traded between If we look at our WM
Speaker 1: two oh seven and two thirty four, there was one
Speaker 1: brief flip above two thirty four in November. And what's
Speaker 1: that saying is that even though transportation is now out
Speaker 1: pacing it, we're still looking at the potential of not
Speaker 1: much growth in the industrial manufacturing sector, which we desperately
Speaker 1: need to continue to grow g d P. Okay, So Michelle,
Speaker 1: let's take this one step further and talk a little
Speaker 1: bit about what our audience wants to know in terms
Speaker 1: of where they should allocate their portfolio in give us
Speaker 1: some of your picks for the year. Well, for one thing,
Speaker 1: it was really very bullish right now in oil, and
Speaker 1: I think if oil goes up, as it seems like
Speaker 1: it will, we also then can look at alternative energy.
Speaker 1: There is definitely a correlation between electric vehicles, which have
Speaker 1: been strong, but if you look at the whole old
Speaker 1: energy space compared to oil, it's still relatively weak. If
Speaker 1: oil goes up, then there will be more interest I
Speaker 1: think in ets like tan or p BW. We also
Speaker 1: are looking at Mountain Pass just in terms of rare
Speaker 1: earth minerals as something that could potentially double in So
Speaker 1: that's one big area for us. Another is obviously at
Speaker 1: some point this whole pandemic thing has to at least
Speaker 1: be absorbed where normalcy comes back, and that leaves a
Speaker 1: lot of opportunity in travel and leisure, some chain restaurants,
Speaker 1: and then if inflation takes whole, we're looking at consumer
Speaker 1: staples which have already gone up and made a new
Speaker 1: all time high, but particularly companies that have pricing power,
Speaker 1: things like medical devices, some of the high tech that
Speaker 1: Cathy Wood looks at that have gotten beat up that
Speaker 1: could also be somewhat immune to inflation. And then, uh, finally,
Speaker 1: you know, we're still very interested here in the whole
Speaker 1: medical space, but instead of the the whole healthcare the
Speaker 1: way it was with XLV, we're looking more at medical
Speaker 1: supplies like an intuitive surgical or I h I, which
Speaker 1: is an E t F because those two are inflation.
Speaker 1: And the last thing I'll say about it is precious
Speaker 1: metals have been stagnant as well, and if inflation kicks in,
Speaker 1: which it still can, we could be a good year
Speaker 1: for gold and silver. Michelle, you took the thought right
Speaker 1: out of my head. I want to really point out
Speaker 1: to our viewers here you were one of the first
Speaker 1: female traders on the New York Commodities Exchange, which makes
Speaker 1: me really want to draw on your commandity's experience. You
Speaker 1: already discussed oil, but talked to us about gold in particular,
Speaker 1: because since it hit that two thousand level in July,
Speaker 1: it's kind of been hovering a really in kind of
Speaker 1: a trading range a little bit of sideways. What helps
Speaker 1: gold break out in the face of this very, very
Speaker 1: long list of worries. Well, we know that gold is
Speaker 1: definitely going to be reactive to any geopolitical concern and
Speaker 1: at this point we don't really have anything strong happening,
Speaker 1: but we do have the underpinnings of Russian Ukraine that
Speaker 1: could always erupt. But besides that, we know it's an
Speaker 1: inflationary factor, and that's where you have seen so many
Speaker 1: people looking at inflation through cryptocurrency initially in the year,
Speaker 1: or through food commodities or industrial medals. But gold could
Speaker 1: actually erupt if inflation gets to the point where people
Speaker 1: think that it is much more out of control than
Speaker 1: where a lot of people are saying now it has peaked.
Speaker 1: So those two areas are eighteen hundred has been this
Speaker 1: sort of transitional type of number to look at. We're
Speaker 1: sitting right around eighteen hundreds. So if we can get
Speaker 1: back up through eighteen forty, it's very possible that a
Speaker 1: lot of people that have ignored it could come in
Speaker 1: and really start buying. Well that's the hedge though, But
Speaker 1: that's the hedge if, of course, the FED doesn't do anything.
Speaker 1: If the Fed actually does start to raise rates, normalize policy,
Speaker 1: and do so aggressively. Does that take some of the
Speaker 1: bloom off of the rose of gold Well? Yes, but
Speaker 1: I don't think that's going to happen. First of all,
Speaker 1: they have to finish the taper, so we're looking at
Speaker 1: about March, right, And then in terms of aggressive action
Speaker 1: by the Fed, they have a big price to pay
Speaker 1: if they get too aggressive. They really still think that
Speaker 1: the whole inflation narrative is transitory. Maybe we're looking at
Speaker 1: max a year out. So I don't think that they're
Speaker 1: going to do anything too aggressive until they wake up
Speaker 1: one day and realize that things have gotten out of control.
Speaker 1: And then of course they're going to put the kabash
Speaker 1: on any economic growth that we've had, which is still
Speaker 1: also limping along. We really haven't had major growth, alright, Michelle,
Speaker 1: A great stuff, Michelle Schneider. They're managing director of the
Speaker 1: market Gage Group, helping us kick off the our simulcast here.
Speaker 1: This is a special Bloomberg Markets coverage simulcast across our
Speaker 1: Bloomberg TV, radio and YouTube platforms. Remain Bossi here alongside
Speaker 1: Tim Stanovic and Krety Gupta taking a look right now
Speaker 1: in the commodity space, watching settlement right now of nim
Speaker 1: Ex scrude futures. We are going to settle higher year
Speaker 1: for a fifth strade day, a pretty phenomenal run here,
Speaker 1: about eleven h higher here over that five day stretcher
Speaker 1: official settlement right now at SI SO five. That's the
Speaker 1: start of the new session for those folks watching this
Speaker 1: on your screen. Natural gas futures over in Europe down
Speaker 1: for a fifth strade day, down about three tents of
Speaker 1: a percent. That's the smallest decline over that five day stretch.
Speaker 1: Your gold futures pulling back slightly, basically called it unchanged.
Speaker 1: And you guys remember when used to talk about lumber
Speaker 1: all the time. I remember you had that phenomenal run
Speaker 1: up in lumber. Future is back in where it doubled,
Speaker 1: and then we started off this year. The first four
Speaker 1: months you had a doubling of that doubling, and then
Speaker 1: of course it's kind of cratered. But look at this
Speaker 1: back above eleven hundred bucks upper a thousand uh board
Speaker 1: feet here, up four percent here on the day, now
Speaker 1: up for a fourth straight day, creaty well off the high.
Speaker 1: As of course, we were up around seventeen earlier this year.
Speaker 1: But I think back, you know, a year and a
Speaker 1: half or so ago, we were something like three hundred
Speaker 1: bucks UH per board feet remain. It's interesting that you
Speaker 1: bring in lumber because that's exactly where I want to
Speaker 1: go with our next conversation. Timberland our cultural land. There
Speaker 1: is no shortage of land. It is in demand upon
Speaker 1: not intended and thanks to that commodities and inflation really
Speaker 1: driving it. I want to bring in our next US
Speaker 1: Jason Walter, National Land Realty CEO and founder. Jason, thank
Speaker 1: you so much for joining us. Let's really talk about
Speaker 1: that lumber picture. Timberland in particular is really important when
Speaker 1: it comes to just the commodity rises that you've seen,
Speaker 1: not only this year. What does that look like, Well,
Speaker 1: we just see we see it continue to go up.
Speaker 1: The stuff in prices is finally caught up for the
Speaker 1: lumber prices to an extent, and we see that continuing
Speaker 1: especially for the first half of how much of when
Speaker 1: we talk about the distortions that we saw earlier this year,
Speaker 1: particularly that variants that we saw in stompage prices UH
Speaker 1: and in the futures market here, how much of that
Speaker 1: was specifically driven by the housing market, and how much
Speaker 1: of that was driven maybe just by speculators, Well, a
Speaker 1: lot of it was driven just by control and supply.
Speaker 1: You know, a lot of the a lot of the
Speaker 1: sawmills and timber companies controlled the supply of starting four
Speaker 1: or five years ago, and so that that's really what
Speaker 1: drove it up. The housing market just put fuel on fired.
Speaker 1: But things are starting to settle out a little bit
Speaker 1: more than even out across the markets. Okay, when you
Speaker 1: say things are starting to settle out and even out
Speaker 1: across the markets, what's the time frame that you're giving.
Speaker 1: The timeline line that you're giving here for perhaps a
Speaker 1: cycle top, we're looking at it topping out in second quarter. Um.
Speaker 1: You know, part of the issue you have is just
Speaker 1: supply across the board. I mean, it's it's getting harder
Speaker 1: and harder to find land. Um, and so it's that
Speaker 1: that's going to become an issue. The latter part of Jason,
Speaker 1: how does this viewed, say abroad, for someone who's looking
Speaker 1: at making perhaps a hedge against inflation, is land somewhere
Speaker 1: where they could possibly look to that to do that
Speaker 1: in the long term, Yeah, I mean, it's historically outperformed
Speaker 1: everything even even twice as much as gold. So I mean,
Speaker 1: there isn't a better place to put your money in
Speaker 1: inflationary period, especially in the commodity driven timberland, agg land,
Speaker 1: recreational land. So we've we've just seen incredible numbers. I
Speaker 1: do think in two you know, I get asked every day,
Speaker 1: when is this market going to slow down? I don't
Speaker 1: think demand will slow down, but supply is going to
Speaker 1: become a real issue. Um, it's already becoming an issue.
Speaker 1: There's just there's only so much land to sell, and
Speaker 1: and it's becoming the prices they're just getting outrageous, and
Speaker 1: there's so much competition there. I mean, we've talked to
Speaker 1: a lot of wealth managers who talk about this idea
Speaker 1: of looking at real estate, whether it's as a hedge,
Speaker 1: but more importantly just as an alternative form of earning
Speaker 1: a little bit of interest in capital? Here? How do
Speaker 1: you make the assessments? So, and I'm looking at it
Speaker 1: more from the perspective of just kind of the rank
Speaker 1: and file investors, maybe those who aren't experienced in real estate.
Speaker 1: I mean, what are they looking at? What do they
Speaker 1: use to sort of make an assessment of not just
Speaker 1: what's available, but what could potentially be profitable. Well, a
Speaker 1: lot of a lot of our clients are driven by use.
Speaker 1: I mean there that's what we call recreational and they're
Speaker 1: they're looking to build a house on one day, but
Speaker 1: they're hunting on it, they're fishing on it, they're using
Speaker 1: it for recreational lotions probably of our clientele. UM as
Speaker 1: far as the pure timber and egg investors, Uh, there's
Speaker 1: not a lot of middle ground there. You're either a
Speaker 1: sophisticated investor or or you're not. UM. There's there's not
Speaker 1: a lot of It's not like the stock market where
Speaker 1: you can just kind of puddle in it. It's a
Speaker 1: big part of the narrative that emerged over the last
Speaker 1: let's say, twenty twenty two months as we've been in
Speaker 1: this pandemic has been the idea of families searching for
Speaker 1: more land, more space so they can do stuff outside
Speaker 1: rather than be together inside. Do you see this as
Speaker 1: a permanent shift or or something that when we do
Speaker 1: finally get to the other side of this pandemic, we'll
Speaker 1: see prices kind of go down a little bit and
Speaker 1: demand go down a little bit. I do think, I
Speaker 1: mean it's settled out in the beginning, you know, April May,
Speaker 1: and you had people kind of going to one extreme.
Speaker 1: They want to move from a neighborhood to earning a
Speaker 1: hundred acres of alien, you know, sixty miles out of town.
Speaker 1: And we've seen that kind of uh settle out into
Speaker 1: Instead of moving from a neighborhood in an urban area
Speaker 1: to sixty miles out, they might buy ten or fifteen
Speaker 1: acres um and we've seen a lot of that. So
Speaker 1: it's like it's anything else. You have extremes in the
Speaker 1: early stages and then things settled down. But I do
Speaker 1: believe you'll see people have just gotten used to isolation
Speaker 1: a little bit and and some people really enjoyed it.
Speaker 1: Jason Walter, National Land Realty CEO and founder, We're gonna
Speaker 1: have to leave it there. Thanks so much for joining us.
Speaker 1: Really appreciate you taking the time. This is Special Markets
Speaker 1: coverage simulcast on Bloomberg TV Radio and on YouTube. I'm
Speaker 1: Tim Stanevik along with Creedy Gupta and Romaine Bostick. The
Speaker 1: other big headline out there right now is Apple apparently
Speaker 1: paying out bonuses of a hundred eighty thousand dollars to
Speaker 1: retain engineering talent. The man who broke that story, Mark German,
Speaker 1: joining us right now. Mark. This isn't just a hundred
Speaker 1: eighty thousand dollars in cash, is it? No? Not in cash.
Speaker 1: These are in r s U so restricted stock units.
Speaker 1: So the way it works is they'll give these grants
Speaker 1: out in January, so about a month from now, and
Speaker 1: they will vest every year annually for four years. So
Speaker 1: that eight divided by four. There's some people reporting under
Speaker 1: fifty thousand, some people in the sixties, eighties, and nineties.
Speaker 1: It's really a long range between that, about fifte eighty.
Speaker 1: And these are going out to individual contributors, so people
Speaker 1: without direct reports. In many cases, these are individual engineers
Speaker 1: working on products like Apple's upcoming mixed reality headset, working
Speaker 1: on silicon engineering the chips that now power the Mac,
Speaker 1: the iPhone, iPad and all of Apple's devices. A small
Speaker 1: stepset is also going to software engineering. Uh, individual contributors
Speaker 1: as well as people in the operations department. Uh. You know,
Speaker 1: these bonuses are out of cycle. These are are random
Speaker 1: and unusual. In many cases, people receive them and we're
Speaker 1: taking a back surprise. These are not part of the
Speaker 1: normal compensation packages. This is not something that I believe
Speaker 1: Apple has done before. And this is really an effort
Speaker 1: to retain key talent. Apple is, you know, losing talent
Speaker 1: right now. There are people more than the usual number
Speaker 1: of people leaving. People don't want to eventually return to
Speaker 1: the office. There's other companies like Meta, Google who are
Speaker 1: going to be more lax about their office return you know,
Speaker 1: policies in the middle of next year. Uh. Meta is
Speaker 1: paying out base salaries that in many cases are much
Speaker 1: higher than the base salaries that Apple and others are
Speaker 1: paying out, and they have been aggressively recruiting Apple engineers
Speaker 1: given their shift to hardware in the so called metaverse.
Speaker 1: So this is an effort to sort of stop that
Speaker 1: and retain the key people that push out these products
Speaker 1: and are really court developing the Apple devices on an
Speaker 1: annual basis. Yeah, Mark, you've reported on defections from Apple
Speaker 1: self driving car team in recent months as well as
Speaker 1: this most recent news. Of course, I'm wondering if this
Speaker 1: is gonna be enough to get people to stay at
Speaker 1: the company, because you did say that there are higher salaries,
Speaker 1: higher base salaries that companies like Meta for example. Yeah,
Speaker 1: So the hope for for Apple at least the management
Speaker 1: giving out these RSU stock bonuses that that that this
Speaker 1: will offset some of the recruiting being done at least
Speaker 1: for a period of time from Meta and other companies.
Speaker 1: I mean, a hundred thousand, two hundred eighty thousand, fifty
Speaker 1: thousand is even a lot of money, and in many
Speaker 1: cases that could help, you know, match or or offset
Speaker 1: the higher base salaries that Meta is offering. And if
Speaker 1: you look at Apple stock, obviously they're nearing that three
Speaker 1: trillion dollar threshold. These RSU bonuses are only going to
Speaker 1: become more valuable as Apple's stock continues to rise. Obviously,
Speaker 1: some of the price targets we're seeing is that there
Speaker 1: will be a rise in Apple stock price. These hundred k,
Speaker 1: hundred eight k, fifty k, you know, r s U
Speaker 1: s could you know eventually at some point be worth
Speaker 1: double than they are today. Mark talked to us about
Speaker 1: the other ways that Apple can actually pay its employees.
Speaker 1: We're talking about time off, We're talking about perhaps working
Speaker 1: from home, will more flex schedule. Where does that kind
Speaker 1: of fit into all this in a market that is
Speaker 1: very hot when it comes to finding a job right now,
Speaker 1: and a market where a lot of other big tech names.
Speaker 1: I'm thinking Amazon are dealing with unionization for example. Yeah,
Speaker 1: for decades. You know, the perks that Apple has offered
Speaker 1: employees in many cases, uh, you know, are not as
Speaker 1: substantial as you might see from Meta, from Meta or Google.
Speaker 1: Steve Jobs liked to to frequently say, obviously ten plus
Speaker 1: years ago that you have to buy your own lunch
Speaker 1: at Apple, right, whereas Google and Meta are companies that
Speaker 1: you know, provide free lunch. I know that's a simple thing,
Speaker 1: but you know that's important to you know, a lot
Speaker 1: of the engineering talent um. But in terms of the
Speaker 1: normal parks that you're going to expect from a company
Speaker 1: for on K, vacation, health benefits, obviously, these RSU bonuses
Speaker 1: are you know, higher in many cases that these other
Speaker 1: companies are. So Apple in terms of employee benefits is
Speaker 1: is extremely a generous even down to their retail employees.
Speaker 1: If you recall during the height of the COVID nineteen pandemic,
Speaker 1: when all of the Apple retail sorts globally were shut
Speaker 1: for several months, those employees were still being paid and
Speaker 1: they were able to work from home as customer service
Speaker 1: agents and for online sales. So they have been fairly
Speaker 1: good to their employees. But employees are also, you know,
Speaker 1: at the same time, not happy with the company, not
Speaker 1: happy with some leadership or the management. They have been
Speaker 1: feeling underpaid on base salaries compared to META when they're
Speaker 1: seeing some of their coworkers get offered these gigantic pay packages.
Speaker 1: You're also seeing uh employee concerned about return to office
Speaker 1: plans and having to work in the office us if
Speaker 1: you're a hardware engineer during this variant, right, they're expecting
Speaker 1: hardware engineers to be back in the office either four
Speaker 1: days per week or full time with the headline sometime
Speaker 1: mid next year, they're saying it today, not yet to
Speaker 1: be determined, but they're aiming for bidden next year. You're
Speaker 1: seeing all employees needed to be in the office at
Speaker 1: least three days per week, whereas you see other companies
Speaker 1: that are going to be going fully remote for many
Speaker 1: of those roles. So what we're seeing is a sea
Speaker 1: change or Apple may need to up some of its
Speaker 1: benefits in addition to this money to retain their top engineers.
Speaker 1: A great scoop today really give us some insight and
Speaker 1: to the talent war out there in California and beyond.
Speaker 1: I guess across the tech sector here, Mark German as
Speaker 1: always all over it. We'll catch up with him soon,
Speaker 1: I'm sure. Of course he talks about those R s
Speaker 1: U s and what it can mean if the stock
Speaker 1: goes up. It's down today. We're still on that. Of course,
Speaker 1: we'll watch for that three chillion dollar market cap. And
Speaker 1: as he pointed out to him and creaty uh, you're
Speaker 1: basically every analyst in the street thinks this stock is
Speaker 1: going higher next year. This is Bloomberg Markets especial Sill
Speaker 1: Markets coverage, our global simulcast today, joined right now by
Speaker 1: Tim Stenovic and pretty goodime Romaine Bostick here counting you
Speaker 1: down to the close, just about eleven and a half
Speaker 1: minutes left to go out here in the trading day,
Speaker 1: SMP five hundred flat on the day. The Philadelphia Semiconductor Index,
Speaker 1: which of course yesterday closed at a record high, down
Speaker 1: a little bit today by about seven tents of her percent.
Speaker 1: Airlines rebounding pretty nicely from yesterday's so off of about
Speaker 1: one point seven percent. Retail stocks also higher, and keep
Speaker 1: an eye on the Arc Innovation et F Cathy Woods,
Speaker 1: a flagship fund here down about one percent here on
Speaker 1: the day down for a second straight day. But you
Speaker 1: go back to the beginning of the year, guys, this
Speaker 1: outperformed the market. I mean it was up something like
Speaker 1: twenty percent, outperforming the SMP by like twenty percentage points.
Speaker 1: As of right now, it's heading into the end of
Speaker 1: the year trailing the SMP five hundred by something like
Speaker 1: fifty percentage points. If you can believe that, it's remarkable
Speaker 1: and it raises the question, you know, and Cathy Wood
Speaker 1: will defend this over and over again her five year
Speaker 1: time horizon. She was out just a couple of weeks
Speaker 1: ago talking about how well the fund is gonna do
Speaker 1: two and she got some heat for it, but was
Speaker 1: and a nonomally for the fund. I think that you
Speaker 1: have people. I think it's a fair question to ask.
Speaker 1: I mean, it's a high beta tech play. At the
Speaker 1: end of the day, right this isn't something that is
Speaker 1: really going to be specific to alone. It's something that
Speaker 1: you're going to start to see more funds drop into,
Speaker 1: not just here in the States, but around the world
Speaker 1: as people really see that defensive bid, whether that's now
Speaker 1: or where that's in five years in the face of
Speaker 1: decelerating growth and in fairness to Kathy would I mean,
Speaker 1: she has made it clear that you know, she is
Speaker 1: I guess, for lack of a better we're kind of
Speaker 1: a moonshot type of person, that this is more than
Speaker 1: just about short term gains here, that she's making bets
Speaker 1: on some big structural changes in our society and more
Speaker 1: importantly in technology. All right, let's talk about the broader
Speaker 1: market here and bring in uh a friend of the
Speaker 1: show here, Katie Nixon, chief investment officer over at Northern
Speaker 1: Trust Wealth Management, joining the program now as we count
Speaker 1: you down to the close here on this Tuesday afternoon,
Speaker 1: just about ten minutes ago. And Katie, you know, we're
Speaker 1: pretty much wrapping up the year here. Whatever gains we
Speaker 1: we lock in over the last few days here a
Speaker 1: sort of immaterial to I guess the narrative that we've
Speaker 1: seen leading up to this. I think what everyone really
Speaker 1: us to know is how confident, how optimistic are you
Speaker 1: heading into we remain? Thank you for having me on today,
Speaker 1: and I would say we're pretty constructive going into two.
Speaker 1: I mean, you can't deny the strength of fundamentals right now, um,
Speaker 1: in corporate America in particular, and even in the economy
Speaker 1: that we're having fits and starts related to this omicron
Speaker 1: variant of course, um, but we expect, as we've said before,
Speaker 1: that this will create maybe demand delayed, but not destroyed.
Speaker 1: So we actually expect above trend growth in two Um.
Speaker 1: What about inflation and potentially you know you mentioned omicron
Speaker 1: being fits and starts, does it does it turn into
Speaker 1: something that's beyond fits and starts that causes more supply
Speaker 1: chain scenarils is perhaps people once again shift spending. Look,
Speaker 1: we've seen this story play out before, shifts spending from
Speaker 1: from services to goods. We really have seen this story
Speaker 1: play out before. It's been a year of deja vu
Speaker 1: after deja wo um, And I guess the interesting thing
Speaker 1: right now is the way that we have really modified
Speaker 1: and and and and figured out ways to live with
Speaker 1: with covid um. The recent CDC guideline change I think
Speaker 1: is really interesting and so far as it will probably
Speaker 1: mitigate some of the supply chain constraints that we worried
Speaker 1: about as we saw ami crom sort of ramp up
Speaker 1: as the as the dominant variant in the US, So
Speaker 1: we do think we'll see the supply constraint issues prolong,
Speaker 1: but not for as long as we had feared when
Speaker 1: this when this latest version of the virus came and
Speaker 1: came into interview. So, yes, supply constraints will continue, but
Speaker 1: we still think that we'll get past them sort of
Speaker 1: in mid Hey, let's talk about where we are in
Speaker 1: the market psycho in particular, we just came out of
Speaker 1: with this massive rebound really kind of thriving in value
Speaker 1: and then a switch into a lot of those defensive
Speaker 1: growth plays, those yielding sectors in the back half of
Speaker 1: going into do we get closer to that scary R word,
Speaker 1: which is recession really kind of perhaps eclipsing these kind
Speaker 1: of ten years, seven year long recessions that we've had
Speaker 1: and going back to perhaps the historical norm of recession. Ever,
Speaker 1: you say five years, So we don't have a recession
Speaker 1: in our in our five year forecast. Actually, um, we
Speaker 1: think our point of view is that the FED is
Speaker 1: going to be uh, very much on hold. Maybe we'll
Speaker 1: get one, maybe two rate hikes off next year, but
Speaker 1: the cycle will be really short in terms of FED policy,
Speaker 1: So we're constructive on growth going forward. Now, what I
Speaker 1: would say is this whole growth value debate is it's
Speaker 1: so interesting because It's been a year of both and UM,
Speaker 1: and I think investors who have tried to pivot between
Speaker 1: growth and value have probably gotten burned because the cycles
Speaker 1: have been really short and at the end of the day,
Speaker 1: you've been fined being being in each. But what I
Speaker 1: would say is now is a great time for investors
Speaker 1: to think about quality. And you mentioned quality dividends, and
Speaker 1: I think the intersection between those two is really going
Speaker 1: to be interesting for investors going forward. You get the
Speaker 1: defensive nature of Equality stocks, they have a sustainable profit margins,
Speaker 1: the ability to pass on price increases amid these supply
Speaker 1: chain constraints that we talked about, and then you've got
Speaker 1: that dividend that burden the hand to provide some current income. Katie.
Speaker 1: Of course, we are focused right now on the countdown
Speaker 1: to the close of US markets, but I do want
Speaker 1: to get your thoughts on some of the markets outside
Speaker 1: the US, particularly in the developed world, particularly in Europe,
Speaker 1: and whether you see anything attractive over there heading into
Speaker 1: next year. So remain. We actually are favorable to Europe
Speaker 1: for a couple of reasons. First of all, we think
Speaker 1: UM monetary policy is going to continue to be very accommulative,
Speaker 1: and we have some fiscal policy adding to the to
Speaker 1: the mix um in two as well. Then you also
Speaker 1: have this interesting dynamic in the European equity markets where
Speaker 1: the markets themselves, the benchmarks are pretty highly levered to
Speaker 1: value into cyclical stock. So if you're a believer in
Speaker 1: the baroque global growth momentum, and we certainly are, you
Speaker 1: really want to be in those areas that are going
Speaker 1: to take advantage of that. And I would just add also, um,
Speaker 1: we have some fiscal stimulus finally now in Japan as well,
Speaker 1: so we expect to see some economic growth there that
Speaker 1: can can be pulled through to some corporate profitability. So
Speaker 1: we're favorable and developed x US markets UM in general.
Speaker 1: Right now, Katy, let's say that somebody's watching the simulcaster
Speaker 1: listening to us on Bloomberg Radio right now, and they've
Speaker 1: been hesitant to put money in the market, waiting for
Speaker 1: some sort of pullback. Look, I know professionals always advised
Speaker 1: against timing the market, but is it fair to say,
Speaker 1: in your opinion that you think there will be some
Speaker 1: sort of pullback or opportunity to get in when it's
Speaker 1: not hitting a record high. You know what I would
Speaker 1: say if there's always the up. The opportunity for a
Speaker 1: pullback of five or tem percent correction are normal normal
Speaker 1: features of a right the tem percent five percent pullback
Speaker 1: behind the two percent pullback. So yeah, we haven't had
Speaker 1: a lot of volatility, so I think your point is
Speaker 1: a good one. We we anticipate that will have volatility
Speaker 1: next year because we're in a year of transition, right.
Speaker 1: We've had a sort of one way bets for a
Speaker 1: couple of years now, strong fiscal, strong monetary, tons of liquidity.
Speaker 1: Those things are going to slowly be be put in reverse,
Speaker 1: so you can anticipate that will have some volatility. I
Speaker 1: just think market timing is so difficult because when you
Speaker 1: you have those strong, strong pullbacks, those tend to be
Speaker 1: very difficult time for times for the individual investor to
Speaker 1: put money to the market. So our advice always is
Speaker 1: set your strategic plan, align your your assets with your goals,
Speaker 1: and then get invested as soon as you can. And
Speaker 1: I think this year has been a real cautionary tale
Speaker 1: against people who have tried to time the market. Katie,
Speaker 1: you just mentioned that you are in the camp of
Speaker 1: global growth momentum. Let's really broaden this out and talk
Speaker 1: about the international playbook here, especially when it comes to
Speaker 1: tackling not only COVID nineteen. You have China with their
Speaker 1: zero tests, zero COVID policy, the United States dealing with
Speaker 1: vaccinations and boosters and testing as well. But then you
Speaker 1: also have different rate paths when he comes to emerging
Speaker 1: market central banking, for say the FED or the BOE.
Speaker 1: How does this all come together? Well, I'm glad you
Speaker 1: raised the emerging markets, and I think the big question
Speaker 1: mark and the big source of uncertainty there is China
Speaker 1: and the implications of not just the zero COVID policy
Speaker 1: on Chinese economic growth, but also on supply chains, the
Speaker 1: regulatory crackdowns that they've had on some of the high
Speaker 1: growth sectors, and then clearly the the trying to tap
Speaker 1: down the speculation on the property markets. Those are really
Speaker 1: strong headwinds to economic growth. Now we have started to
Speaker 1: see Chinese authorities, the PBOC start to provide some stimulus,
Speaker 1: um it's been slower than we anticipated actually, so we
Speaker 1: we think that in two were gonna have to see
Speaker 1: much more, much stronger policy action from China as a
Speaker 1: way to sort of reignite interest in emerging market equities.
Speaker 1: But until that happens. I think emerging markets remains sort
Speaker 1: of the big area of uncertainty from an investor's perspective
Speaker 1: right now. Katie Nixon over at a Northern trustt Thanks
Speaker 1: for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
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