Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanibek. We're here every day bringing
Speaker 1: you the latest news from the world of business and finance,
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Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg Global News. Carol master Long, Katie Greifeld.
Speaker 1: In our Bloomberg Interactive Broker's studio, we mentioned some of
Speaker 1: the COVID headlines. The f d A of the United
Speaker 1: States poised to authorize a pair of pills to treat
Speaker 1: COVID nineteen as soon as this week. We're watching that.
Speaker 1: We are also monitoring out of DC because President bind
Speaker 1: is expected to make some comment when it comes to
Speaker 1: coronavirus tests and really an update on the administration's policy
Speaker 1: when it comes to the pandemic, and he, like all
Speaker 1: of us, like you know, the policy continues to evolve absolutely,
Speaker 1: And you did see the Biden administration saying that it's
Speaker 1: gonna send five hundred million free tests to aid this
Speaker 1: shortage that they've found. So give me all the test.
Speaker 1: Yeah right, let's as long as people don't stop call
Speaker 1: them exactly exactly. And meantime, we did have a UK
Speaker 1: Prime Minister Boris Johnson ruling out stricter rules before Christmas,
Speaker 1: but did urge some caution saying go out the situation
Speaker 1: remains finally balanced and that officials may announce further curbs
Speaker 1: after December. We really are going day to day, maybe
Speaker 1: even hour to hour. Great to have back with us.
Speaker 1: Dr Alogic day Williams. He's Chief of Staff of Neurology
Speaker 1: over at Columbia Universities Vagelo's College of Physicians and Surgeons
Speaker 1: and NIH funded research or a leading health disparities expert
Speaker 1: with research focused on community based behavioral intervention. You might
Speaker 1: recall we've talked to him about Hip Hop Public Health.
Speaker 1: He's the founder, president and board chair of IT, and
Speaker 1: Bloomberg Philanthropies has provided a grant to Hip Hop Health
Speaker 1: as well. Great to have him back here on the
Speaker 1: phone in New York City. Dr Williams. How are you
Speaker 1: and what are you seeing when it comes to the pandemic. Well,
Speaker 1: I'm I'm doing well. Thanks for asking, and I hope
Speaker 1: you and all your families are well when it comes
Speaker 1: to the pandemic. Um, you know, with seeing uh, you know,
Speaker 1: rising numbers UM here in New York City and and
Speaker 1: and and across the country is quite frankly, um, Um,
Speaker 1: we're gonna see this over the next several weeks across
Speaker 1: the globe. And it's being really driven by the armicron bearing,
Speaker 1: which is now, as you know, become the dominant strain
Speaker 1: here in the US. And so you mentioned the fact
Speaker 1: that we have seen rising cases, and Carol and I
Speaker 1: were just talking about one of the headlines from this
Speaker 1: morning that President Biden will send five million free coronavirus
Speaker 1: tests to homes beginning next month. Should we expect to
Speaker 1: see uh in acceleration in that rise just as a
Speaker 1: natural result of more testing. Yeah, I mean I think that,
Speaker 1: you know, more more testing, you're gonna find more cases. Um.
Speaker 1: The question is, um, do the cases translate into um,
Speaker 1: you know, burdened you know, overwhelming our hospitals into higher
Speaker 1: death rates? And that is the great concern that is
Speaker 1: the great sphere that that these cases um as as
Speaker 1: they continue to surge, we will start seeing, especially among
Speaker 1: the unvaccinated, more severe cases in our hospitals. UM. And
Speaker 1: that is the concern. The data is still not fully
Speaker 1: adjudicated on this yet, but but we are concerned, especially
Speaker 1: among especially when it comes to the vulnerable among us.
Speaker 1: So I guess a couple of questions, and I think
Speaker 1: about this. I've had several individuals in the medical community.
Speaker 1: Dr Williams say, we're all going to get a macron
Speaker 1: and that's how we kind of get rid of this virus. Uh,
Speaker 1: and we just kind of knock it out. Is that
Speaker 1: how you see it playing out? Or is there another
Speaker 1: variant to come? What are your expectations, especially since I
Speaker 1: think about the communities you watch who were so deeply
Speaker 1: impacted uh last go around and some of the other
Speaker 1: are peaks that we've seen when it comes to our COVID, Well,
Speaker 1: I'm really concerned, um because um you know, these variants
Speaker 1: will continue to appear um and and and my my
Speaker 1: biggest concern is the is really the issue of global
Speaker 1: vaccine equity, because you know, COVID anywhere is COVID everywhere
Speaker 1: and and once we as we we have just for example,
Speaker 1: thirteen percent of people in Africa have receipt have received
Speaker 1: at least one dose. That is a very low number.
Speaker 1: So we will continue to see these variants emerge. And
Speaker 1: as we can see with every variant, uh, these viruses
Speaker 1: are becoming trickier, They're becoming more elusive, that is learning
Speaker 1: how to evade our vaccines. And and you know, we,
Speaker 1: you know we we might be confronted with a situation
Speaker 1: where our vaccines don't work at all against the future variant.
Speaker 1: And then that is that is the big concerns. Well,
Speaker 1: Katie wants to know if she should travel on Thursday.
Speaker 1: That's really what she wants to know. What's what's your
Speaker 1: advice to people? Let's note, I'm supposed to see a
Speaker 1: three month old infant after I get off the plane.
Speaker 1: Oh my god. Well I can say this. I think
Speaker 1: most the most important thing is to protect our vulnerable
Speaker 1: loved one. UM. I think it's really important to be
Speaker 1: you know, just exercise, just be responsible. Make sure that
Speaker 1: our networks, our closest networks are at least boosted. UM.
Speaker 1: It's important to make sure that we uh, you know,
Speaker 1: use limit the sizes of our gatherings, um and and
Speaker 1: um and as long as we take common sense safety
Speaker 1: precautions um during this period. You know, I think that
Speaker 1: we can keep our loved one's safe. You know, you do?
Speaker 1: You do? You have a follow up? I do have
Speaker 1: a really quick follow up. Just one. What Carol was
Speaker 1: saying about the sort of inevitable feeling. You know, I've
Speaker 1: heard some people say, why should I even bother getting
Speaker 1: the booster? It feels like we're all going to get
Speaker 1: this new variant anyway. What's the point I would love
Speaker 1: to hear your response to that, And we have just
Speaker 1: about thirty seconds. The point is hospitalization and death um
Speaker 1: and and and and that is a real concern. We
Speaker 1: know that the booster really does prevent you from progressing
Speaker 1: to mild to severe disease. UH. The question is people
Speaker 1: are asking is does this variant even cause severe disease?
Speaker 1: And my answer to that is that the jury is
Speaker 1: still out and you do not want to be on
Speaker 1: the wrong side of that jury, because, especially if you
Speaker 1: have vulnerable loved ones in your family. Listen, stay safe.
Speaker 1: We so appreciate your time. Dr Williams, Doctor a Larger
Speaker 1: Day Williams chief of staff of Neurology at Columbia University
Speaker 1: and founder of hip hop Public Health. You're listening to
Speaker 1: Bloomberg Business Week on Bloomberg Radio as our Bloomberg pursuits.
Speaker 1: Auto columnist Hannah Elliott recently wrote this year, it seems
Speaker 1: all anyone ever wanted to talk about in the car
Speaker 1: world where electric vehicles and Katie check this out. In
Speaker 1: the US alone, as of December one, more than fifteen
Speaker 1: U states had pledged to phase out sales of new
Speaker 1: cars with combustion engines. At least two more such moves
Speaker 1: were pending. So people are leaning in heavily when it
Speaker 1: comes to e V. Yeah, big time. And I mean
Speaker 1: I feel like it's one of the buzz words that
Speaker 1: has emerged. E V along with metaverse and whatever help
Speaker 1: you want to say. You put e V on anything,
Speaker 1: and I mean you tend to generate a lot of buzz,
Speaker 1: especially in share prices. We could have evs in metaverse,
Speaker 1: maybe in a in a fun way. UM, let's get
Speaker 1: some thoughts on trends in the auto industry. Cheryl Connolly
Speaker 1: is with US chief futurist At Ford on the phone
Speaker 1: in Dearborn, Michigan, Cheryl, good to have you here with
Speaker 1: Katie and myself. How are you. It's good to be here.
Speaker 1: Thanks for having me. It's great to have you here.
Speaker 1: We love talking about the auto industry. Or Hannah Eli,
Speaker 1: who covers it for Bloomberg pursuits all in on luxury
Speaker 1: and just all the major trends. What are you guys
Speaker 1: seeing from your perch there at Ford when it comes
Speaker 1: to trends maybe that we'll see playing out in two
Speaker 1: and maybe into What's your point that you already Lendon,
Speaker 1: is that dvs, like the e V revolution, is already
Speaker 1: here for us. We expect that our global vehicle mics
Speaker 1: will be fully electric um to a degree of four
Speaker 1: year by the year, and there are consumers that are ready.
Speaker 1: I mean six so long, so long? That's all the
Speaker 1: eight years from now right? Why so long? That's so Actually,
Speaker 1: we're well on our way. I think part of it
Speaker 1: is infrastructure, um. But we've gone all in with our
Speaker 1: Mustang Maki, which is I think a really interesting strategy
Speaker 1: for four because we took our most precious nameplates, that
Speaker 1: Mustang in the F one fifty, and we turned them
Speaker 1: into electric so that we could show consumers that you
Speaker 1: could totally reconceive what an electric vehicle is about. I
Speaker 1: think in my mind that there is this notion among
Speaker 1: consumers that there's a tradeoff, you know, you have to
Speaker 1: give up something if you want electric and by taking
Speaker 1: our most powerful vehicles, we started to show people that
Speaker 1: you could still have um muscle and my lege, you know,
Speaker 1: there was no trade off. And I think as more
Speaker 1: and more consumers seem on the road, they start to
Speaker 1: understand that in the future, you it will be the
Speaker 1: same kind of conversation do you have a V six,
Speaker 1: a V eight or do you have an electric vehicle?
Speaker 1: I think it will become almost a non issue. Mm hmm, yeah.
Speaker 1: I mean, just anecdotally in my own life, I feel
Speaker 1: like my parents are I have a hand to CRV
Speaker 1: very much, not alec but okay, so EV's clearly top
Speaker 1: of mind. What else, though, what about self driving vehicles?
Speaker 1: Because that's another conversation, having more and more this year. Yeah.
Speaker 1: So we've been watching this space for a very long
Speaker 1: time and I think people are really enchanted with the
Speaker 1: notion of it. But geographical appetite really varies. So in
Speaker 1: recent years we know that when you look at places
Speaker 1: like China and India. Over at the consumers say they're
Speaker 1: hopeful about the a V feature um or that that experience.
Speaker 1: But when you turn to the west, um the number
Speaker 1: drops down to about for the US, forty five for
Speaker 1: the UK, and forty four for Germany. So there there's
Speaker 1: really a geographical component. I think it has something to
Speaker 1: do with the landscape once you drive. Even so in
Speaker 1: China there's this notion of these mega cities twenty three
Speaker 1: billion people and in a place like Beijing alone, so
Speaker 1: when you talk about getting an autonomous driving vehicle, you're
Speaker 1: not just talking about safety, but you're talking about convenience.
Speaker 1: And in a place like that, they report an average
Speaker 1: day like community five hours a day. Um, so it's
Speaker 1: it'll be life changing. And there is a safety component
Speaker 1: too though, because I think that we know like sixty
Speaker 1: five percent of people worldwide, I've told us that they
Speaker 1: ran at their child right in a a V, than
Speaker 1: ride with a stranger raising my hand. Um, well it's
Speaker 1: interesting to shout out no really, like it's funny. I
Speaker 1: just had to do, um some big drives to pick
Speaker 1: up my daughter at college at school, and I was thinking,
Speaker 1: I'm on a highway and a lot of vehicles today
Speaker 1: have all these great safety features that basically they drive themselves,
Speaker 1: and you can test it by putting on your you know,
Speaker 1: destronic or whatever and taking your hands off the will
Speaker 1: even though you're not supposed to. But they knew how
Speaker 1: to self drive, and I can see how on highways,
Speaker 1: what a great feature it could be and probably safer. UM.
Speaker 1: I do think about tho our infrastructure, especially for cities,
Speaker 1: if it's not in place. Again, that's the thing I
Speaker 1: guess that holds us up the most. I do think
Speaker 1: that's that is a really big question for most consumers
Speaker 1: in their mind, is you know, when when will charging
Speaker 1: be readily available? And we actually in our survey ask
Speaker 1: people when they thought that there would be more UM
Speaker 1: charging stations than gas stations, and we had about people
Speaker 1: say that e V chargers will outnumber petrol stations. UM.
Speaker 1: So it's a slow ramp up, but it's again geography
Speaker 1: plays such a role. Here Germany, when they were doing
Speaker 1: their covid UH stimulus package, one of the things that
Speaker 1: I really marveled at the kind of ingenuity of it
Speaker 1: was that they said we're gonna put money in the
Speaker 1: market and we're gonna give it to um, gas stations
Speaker 1: and we're going to give them money, stimulus money so
Speaker 1: they and put our new stations in it. And so
Speaker 1: you can see this country flip it's availability, accessibility, and
Speaker 1: the whole attitude around it literally overnight. Yeah, and it
Speaker 1: does feel like some of these attitudes are shifting overnight. Hey,
Speaker 1: so we have about twenty seconds. Curious what surprised you
Speaker 1: most when you do look at this report? You know
Speaker 1: what surprised me is that with all the worry about
Speaker 1: COVID and economic volatility anyone percent, that people say when
Speaker 1: they think about the future, the planet is one of
Speaker 1: the biggest things that they still consider to be one
Speaker 1: of the most pressing issues. It's what makes us worry
Speaker 1: about our children's future. Well, it's good to know that
Speaker 1: that's on people's minds, because nothing else really matters if
Speaker 1: you don't get that right. All right, Cheryl gotta run Hey,
Speaker 1: Happy New Year, um and be well. Caryl Connolly, she's
Speaker 1: chief futurist over at Forward on the phone from Dearborn, Michigan.
Speaker 1: Like it's climate, COVID, climate COVID self driving, and that
Speaker 1: was a really interesting conversation. Good stuff. All right, you're
Speaker 1: you're listening to Bloomberg Radio. So, Katie, not sure if
Speaker 1: you saw this via transportation as a tech company focused
Speaker 1: on helping people get around cities confidentially filing with the
Speaker 1: SEC today for an IPO. Even in these last few
Speaker 1: weeks of the year, we'll continue to see the I
Speaker 1: p O market really move ahead. Yeah, that I p
Speaker 1: O market still hot in these final few weeks. Let's
Speaker 1: talk about that more with Chris Malick. He is the
Speaker 1: managing director at key Bank Capital Market. He joins us
Speaker 1: on the phone from Cleveland, Ohio. Chris, great to have
Speaker 1: you with us, Karen. I were just talking about the
Speaker 1: fact that, I mean the I p O market it
Speaker 1: was hot in super hot one too. I believe there's
Speaker 1: been close to five hundred I p O s this year.
Speaker 1: Can we sustain that pace? It is a lot? Yeah,
Speaker 1: great questions In the first off, Good afternoon, Carol and Katie.
Speaker 1: Thanks for having me on and uh, happy holidays. Uh.
Speaker 1: Certainly good to see the market up today with a
Speaker 1: lot of green on the screen. You know. To your point, Uh,
Speaker 1: it was a record here here in roughly two times
Speaker 1: the amount of issuance that we saw in which by
Speaker 1: itself was a pretty solid year. I think you've got
Speaker 1: to go back to the dot com era for a
Speaker 1: comparable year. UM. You know, but as we look out,
Speaker 1: I am cautiously optimistic that we'll see continued momentum inequities
Speaker 1: and issuance into two UM. I think December is actually
Speaker 1: a pretty good proxy for what to expect because you've
Speaker 1: had a little bit of everything. Uh. You know, Oh,
Speaker 1: Macron has been a moving target. You know, you go
Speaker 1: back to Black Friday, uh, initially putting some pressure on
Speaker 1: the market, sentiment improved, uh and now once again impacting
Speaker 1: equities in in a negative way. Uh, you know, in
Speaker 1: terms of rates and inflation. Also putting a little bit
Speaker 1: of pressure on markets with three anticipated hikes next year. Uh.
Speaker 1: And then you know, with regard to build back better,
Speaker 1: that's probably not helping the situation either. But you know,
Speaker 1: all that said, I p O s continued to price
Speaker 1: here in dece number with a handful of large tech
Speaker 1: deals getting done. You had new holdings they priced at
Speaker 1: two point six billion dollar IPO Hashy Corp uh and
Speaker 1: then most recently some Sara. So if I look at
Speaker 1: the Renaissance IPO index, it's down about ten percent so
Speaker 1: far this year, so returns not so great for many
Speaker 1: I p O s. Um, what does that tell you,
Speaker 1: you know, in a market that overall, if you look
Speaker 1: at those major equity averages, they've done fairly well, if
Speaker 1: they've done really well in fact, So what does that
Speaker 1: say that juxtaposition of how I pos generally did against
Speaker 1: the broader market? You know, that's a great question because
Speaker 1: I think if you look at that same index for
Speaker 1: it was up over over so a huge delta year
Speaker 1: over year with the renaissance IPO index. But then um
Speaker 1: to your point, when you take a look at that
Speaker 1: index versus the major indusices you know that are up
Speaker 1: about twenty you know, that's roughly three percentage points UH difference.
Speaker 1: And what it tells me is, UM that the evaluations
Speaker 1: for this year's class of I p O s arguably
Speaker 1: a little bit rich. A lot of I p O
Speaker 1: s in the high growth sectors this year of of
Speaker 1: tech and healthcare UM, and perhaps going forward some of
Speaker 1: those valuations come down a little bit. You've also got
Speaker 1: the conversation in and around rates, and I think that
Speaker 1: by itself and the discounting mechanism will will rain in uh.
Speaker 1: You know, some of those multiples. Yeah, that's what I
Speaker 1: want to talk about, the fact that you do have
Speaker 1: what two three interest rate hikes expected from the Federal
Speaker 1: Reserve next year. I mean broadly, that's expected to maybe
Speaker 1: take the shine off of some of those high growth
Speaker 1: names in the stock market. Could that affect the sort
Speaker 1: of makeup of the companies that were Seego public next year?
Speaker 1: I think it could. I think the complexion changes a
Speaker 1: little bit, um you know, a few thoughts in and
Speaker 1: around that question. I think right now, at a high level,
Speaker 1: there's a little bit of what goes up must come down. Uh.
Speaker 1: You know, with the record fiscal and monetary stimulus over
Speaker 1: the last few years, that that's bit up risk assets.
Speaker 1: And now I think the mood is shifting a little
Speaker 1: bit more towards risk off. I don't think it's binary,
Speaker 1: you know, risk on or risk off, but a little
Speaker 1: bit more Uh, risk off is we look at things
Speaker 1: like rate increases and and UH in the virus you know,
Speaker 1: I think we'll get through O Macron by the spring. Uh.
Speaker 1: And then you know, the three projected quarter point moves
Speaker 1: by the Fed um you know, arguably light you know,
Speaker 1: I think um, you know, regarding those moves you know
Speaker 1: that will take the FED funds right, you know up
Speaker 1: to what to a hundred basis points, which, uh is
Speaker 1: still an environment in which most equities are attractive. Um,
Speaker 1: you know, sort of getting over into what companies I
Speaker 1: think could go public next year and what people look at.
Speaker 1: I think these long term secular themes will continue to
Speaker 1: to win the day. So anything involving technology advances in
Speaker 1: technology software AI. I know earlier on the show, the
Speaker 1: topic of metaverse was was discussed. Uh, you know, anything
Speaker 1: in the life sciences and medtech that make dealing with
Speaker 1: the pandemic easier will be well received. I also think
Speaker 1: uh evs uh you know, the decarbonization i'll call it
Speaker 1: of the energy complex. All of those things will continue
Speaker 1: to be popular with the by side. That said, and
Speaker 1: here's the key point, I think there's going to be
Speaker 1: a little bit of a shift uh into focusing more
Speaker 1: on individual company profiles. Uh you know, so maybe this
Speaker 1: is a function of moving into the mid cycle, if
Speaker 1: you will, where I think sector focus and company focus
Speaker 1: become a little more important. So, um, companies that are
Speaker 1: positioned well in their sectors. Uh, you know, flow good
Speaker 1: balance sheets, right, um, it importantly priced, it a reasonable evaluation.
Speaker 1: Got it? Hey, Chris, we gotta run. Chris Malock, managing
Speaker 1: director at key Bank Capital Markets, joining us on the
Speaker 1: phone from Cleveland, Ohio. We didn't talk too much about SPACs,
Speaker 1: but spacks overall, Katie as a group or down about
Speaker 1: sixteen this year. Yeah, it's all those high flyers not
Speaker 1: looking too hot right now, exactly, very different from how
Speaker 1: we started the year. Well. From our Bloomberg Business Week team,
Speaker 1: a story on the efforts by realtors who want to
Speaker 1: fix years of discrimination against black Americans, specifically. The thing
Speaker 1: is they're not about to give up their six percent commission.
Speaker 1: So let's get into the story. Peter Robison, his Projects
Speaker 1: and Investigations reporter at Bloomberg News. He is with Katie
Speaker 1: and me on the phone in Seattle. Hey, Peter, um,
Speaker 1: really smart story. Tell us well, first of all, take
Speaker 1: us back to how your story starts, um, and that
Speaker 1: awkward zoom call. What happened? Hi? Yeah, it really starts
Speaker 1: in November. That was the period when big companies and
Speaker 1: institutions all around the country were wrestling with the George
Speaker 1: Floyd murder and the racial reckoning that was happening, and
Speaker 1: there was a moment where the realtors officially apologized for
Speaker 1: decades of policy that had excluded Black Americans from home ownership.
Speaker 1: And it was a zoom call between the president of
Speaker 1: the realtors named Charlie Oppler. He's a realtor from New Jersey,
Speaker 1: and he said, many Americans may not realize just how
Speaker 1: far reaching the systemic discrimination was. And then he threw
Speaker 1: the camera to Brian Green, who is the group's newly
Speaker 1: appointed at the time, was the newly appointed director of
Speaker 1: Fair Housing Policy. And Brian Green had spent decades at
Speaker 1: the Housing and Urban Development Department, and and he talked
Speaker 1: about how black Americans were excluded, how the Realtors group
Speaker 1: opposed the Fair Housing Act and uh and and that's
Speaker 1: where the call was was left. It was really an
Speaker 1: acknowledgment of the damage that had been done over the decades. So, Peter,
Speaker 1: that call was in November. We're now in December. Where
Speaker 1: are we now? What are those efforts to you know,
Speaker 1: fix those decades of discrimination? What do they look like?
Speaker 1: That's what our story tried to assess because obviously there
Speaker 1: was a lot of focus on the issue then uh
Speaker 1: and and now the question is what are you really
Speaker 1: doing what what a tonement is being made uh. And
Speaker 1: and so the realtors have started a training program to
Speaker 1: to try to teach to try to avoid instance is
Speaker 1: a potential bias by by realtors. They've supported the administration's
Speaker 1: down payment assistance program. And they've actually also supported Maxine
Speaker 1: Waters proposal, which which would go even further than the
Speaker 1: House proposal. And they've they've talked about participating in the
Speaker 1: um UH in the review of appraisals the administration is doing,
Speaker 1: which which might help reverse the discrimination that is evident
Speaker 1: in UH neighborhoods were non what Americans tend to live. UH.
Speaker 1: So that's really what has been done. Our our story
Speaker 1: looked at what is happening beyond that, looking at you know,
Speaker 1: as you mentioned the commission, the commission is is four
Speaker 1: to six percent. It has realtors chasing the larger commissions
Speaker 1: that tends to be in the higher price neighborhoods, and
Speaker 1: those neighborhoods tend to be where white Americans live. So
Speaker 1: so we found that in many cities across the country,
Speaker 1: there there are just many more realtors in predominantly white
Speaker 1: neighborhoods that neighborhoods with pronoumbly non white people don't have
Speaker 1: the same attention and haven't gotten the same opportunities. Hey, Peter,
Speaker 1: the National Association of Realtors, right, it's been around for
Speaker 1: a long time, and yet it just got its first
Speaker 1: Director of Fair Housing Policy, as you write, and you
Speaker 1: mentioned bat Brian Green, who had worked for many years
Speaker 1: at the U s Department of Housing and Urban Development.
Speaker 1: What does that say though, that they're getting their first
Speaker 1: director of fair housing policy? Fair housing, the issue that
Speaker 1: concerned this is not a new idea. We've talked about
Speaker 1: it for decades. I feel like, um, what does it
Speaker 1: say about the organization that this is only happening now?
Speaker 1: It does make a statement in and of itself. It's
Speaker 1: it also, UH is the case that within a very
Speaker 1: short time of Brian Green taking that role, a blockbuster
Speaker 1: investigation in Newsday found that racial steering was alive and
Speaker 1: well in Long Island. That a large percentage of the
Speaker 1: realtors that that Newsday approached UH steered their clients to
Speaker 1: certain neighborhoods based on their race. So what it says
Speaker 1: is that there's a long way to go. And so
Speaker 1: how has this played out? In the National Association of
Speaker 1: Realtors itself, because as you write in your story, I mean,
Speaker 1: this is a trade group that you know, largely supported
Speaker 1: the administration of Donald Trump, It hosted, it hosted him
Speaker 1: at its legislative summit. Have we seen any have we
Speaker 1: seen any fissures opened up in this group specifically? There
Speaker 1: has been a lot of ascent from from what the
Speaker 1: group is doing that at the about the same time
Speaker 1: the group issued this apology, at also UH made a
Speaker 1: formal ban of hate speech, that that realtors who um
Speaker 1: say racist things either at work or even on their
Speaker 1: own social media seeds could potentially be expelled from the group.
Speaker 1: And that led to a lot of pushback. You had
Speaker 1: people saying that's an infringement by First Amendment rights. You
Speaker 1: had people calling it cancel culture. We have heard of
Speaker 1: at least a couple of cases where realtors have talked
Speaker 1: about ending their donations to the group's political arm. So
Speaker 1: it's really mapping the divisions in American society. I always
Speaker 1: feel like for our audience, So we're talking about them,
Speaker 1: you know, banning some of their their social posting. What
Speaker 1: kinds of things were realtors posting? They were they were
Speaker 1: horrible enough that you can't say them. They there's a
Speaker 1: fellow he met the Fantas, who is a realtor from Champaign, Illinois,
Speaker 1: who had a video that was just shocking in and
Speaker 1: and he intentionally uh said what was said in order
Speaker 1: to be shocking, and uh it was just appalling racist stuff.
Speaker 1: And as he said, these are people who wear the
Speaker 1: realtor's badge. And and that was what he thought why
Speaker 1: he thought it was so necessary to create this formal policy.
Speaker 1: And so where do you think we go from here?
Speaker 1: What will be the next chapter in this story when
Speaker 1: we think about having this conversation, for example, in December, Well,
Speaker 1: the next chapter is is really this focus on the Commission.
Speaker 1: That the Commission in the US a four to six
Speaker 1: percent is unusual worldwide. Uh. In many other countries like
Speaker 1: the UK and Sweden, people pay two percent or less
Speaker 1: on on house sales, and that the Commission is under
Speaker 1: threat and to class action lawsuits in Illinois Missouri, and
Speaker 1: you also have to Justice Department investigating it as a
Speaker 1: potential antitrust violation. So uh Any in addition to that,
Speaker 1: you have discount brokers and increasingly coming into the market. Uh.
Speaker 1: So although the realtors are a powerful trade group, they're
Speaker 1: actually the largest trade group in the country, they are
Speaker 1: not They're proving not immune to competition and change in
Speaker 1: their industry. Well, it's such a relevant story because we
Speaker 1: think about we talk often about wealth creation, and it's
Speaker 1: no longer just about income creations, about wealth creation and
Speaker 1: the gaps that we've see in between, in particular black
Speaker 1: and white Americans. You include in your story, the racial
Speaker 1: wealth gap has been stubborn. In twenty nine team the
Speaker 1: typical black family had just over one tenth the net
Speaker 1: worth of the typical white family, in part because of
Speaker 1: the value of their homes. The gulf and home ownership
Speaker 1: also persists. About seventy of white families own a home
Speaker 1: among black families, it's that is a significant gap in
Speaker 1: terms of gaps. You talk about the ability of Black
Speaker 1: Americans to own homes, but you also talk about, you know,
Speaker 1: the discrimination that black realtors are also seeing themselves. It's
Speaker 1: not been easy. Yeah, Well, I spent a lot of
Speaker 1: time with a realtor named Dale Taylor in Mathison, Illinois,
Speaker 1: which is a suburb south of Chicago, and he's seen
Speaker 1: the effects over over the decades he's had white homeowners
Speaker 1: pull pull a gun on clients of his and telling
Speaker 1: you better. I think elsewhere he's seen brokerage is moved
Speaker 1: from the South suburbs to areas around Chicago that they
Speaker 1: think might have more white uh client, more of a
Speaker 1: white clienteles, as he put it, um and and what
Speaker 1: happened there. It also really illustrates just how far reaching
Speaker 1: damagees because in the eighties Mathison and another town called Frankfort. Peter,
Speaker 1: forgive us. We have to jump in because the presents
Speaker 1: about to make some comments. Peter Robison there im road. Yeah,
Speaker 1: but you let me drive. Oh no, no, no no, no,
Speaker 1: this is not a leave. I'll do the right gravels.
Speaker 1: I want to drive. It's a good question. But drive.
Speaker 1: This is the drive to the Globe Well on Bluebird Radio. Alright, folks,
Speaker 1: just got about ten minutes left in today's trading session.
Speaker 1: Here Doug Chrisner breakdown the trade. We're just coming off
Speaker 1: our highs of this session, but nonetheless definitely a risk
Speaker 1: on trade feared really too much in the markets today.
Speaker 1: Let's get to it. The Drive to the Close with
Speaker 1: Dave Gilreath. He is Managing Director, chief investment Officer and
Speaker 1: Innovative Portfolios joining us on the phone from Indianapolis. Innovative
Speaker 1: Portfolios by the Way, a money management firm for registered
Speaker 1: investment advisors. Hey, Dave, good to have you here with
Speaker 1: Katie and myself. It's been an interesting couple of days.
Speaker 1: We're bouncing back here today. How do you see the
Speaker 1: market environment fundamentally? Does it look like we are headed
Speaker 1: from more gains heading into the new year or less? Okay,
Speaker 1: thanks for having me back high, Katie and Uh. I
Speaker 1: appreciate the invite, and thanks for having me on the
Speaker 1: darkest day of Yeah, it's getting getting lighter from here on.
Speaker 1: So that's the good news, right. Um, as far as fundamentally,
Speaker 1: I mean, COVID is improving. UM, I think most of
Speaker 1: us a lot a year ago say that it had
Speaker 1: been probably in the rear view mirror. But it is improving.
Speaker 1: And you know that it was the economy was, and
Speaker 1: a lot of other things were in complete chaos on
Speaker 1: the way into the pandemic. And now we're coming out
Speaker 1: of the pandemic maybe, I think, at least slowly. Uh.
Speaker 1: And so I don't know why people are surprised that
Speaker 1: it's chaotic on the lay out, but you know there
Speaker 1: there is some chaos, but there's you know, supply chain
Speaker 1: is improving. I mean even the semiconductor people are saying
Speaker 1: that today, and most big corporations are saying that. And
Speaker 1: inflation is a problem, but um, you know, maybe it's not.
Speaker 1: It might not be here to stay. So wait, I'm sorry,
Speaker 1: are you glass half full of glass half empty? I
Speaker 1: can't tell am I what I'm sorry, glass half full
Speaker 1: or glass half empty at this point, glass half full,
Speaker 1: glass half fall. But people would tell me I've been
Speaker 1: class half full of my whole life. So um. But
Speaker 1: I mean, commodity prices will take care of themselves. They
Speaker 1: always do. And in fact, the CRB index, which is
Speaker 1: you know, it's index, are like nineteen different commodities that
Speaker 1: we use all the time. It's down from a tie
Speaker 1: in October, and it seems to be going in the
Speaker 1: right direction. Um. And labor, you know, labor is they're
Speaker 1: flexing their muscles right now, which they can, and I
Speaker 1: don't blame them, but union labor is still it's only
Speaker 1: like of all the jobs in the US, So you know,
Speaker 1: the union wage pressure isn't what it used to be.
Speaker 1: So the evaluation of the market isn't cheap um anyway
Speaker 1: it slice it. But earning should grow pretty well next year.
Speaker 1: I mean, the estimate for the SMP is like two
Speaker 1: thirty bucks, so you would think the SMP could go
Speaker 1: to without you know, some other big surprise coming and
Speaker 1: hitting across the face. And Dave, I want to talk
Speaker 1: more about inflation because you mentioned I mean, if you
Speaker 1: look at results from Micron from Nike just in the
Speaker 1: past twenty four hours, therere maybe some signs that the
Speaker 1: supply chains are un snarling themselves. But the fact that
Speaker 1: now we're dealing with a Macron that we could see
Speaker 1: more variants to come, I mean, does that introduce the
Speaker 1: possibility that supply chains come under even more pressure and
Speaker 1: maybe that feeds into inflation. UM. Well, good question, Katie.
Speaker 1: I don't know. The earlier today you had someone on
Speaker 1: that was talking about how the UM the movement that
Speaker 1: you know, I attracted People's movement and all that in
Speaker 1: Asia and how it's been going to up and up
Speaker 1: and up every month, which tells you. That kind of
Speaker 1: tells me the supply chains are probably improving and not
Speaker 1: getting worse, so and I think they will. And as
Speaker 1: far as variants go, I mean, we're going to have
Speaker 1: it seems like we're going to have more and more
Speaker 1: variants all the time. Um, But we're starting to learn
Speaker 1: to live with that. I mean, in the Midwest anyway,
Speaker 1: the malls, you know, they couldn't find a parking lot
Speaker 1: at lunch today, and or parking space and the parking
Speaker 1: lot at lunch today, and office buildings there may be
Speaker 1: not full, but there's quite a few people in them.
Speaker 1: So it seems like we're learning to live with all
Speaker 1: of this. Um. It does feel like we understand, We've
Speaker 1: seen the playbook, We've got some tools. But I'm curious, though,
Speaker 1: Dave is, all right, where are you putting money to work?
Speaker 1: From my understanding, you guys, you know, are really leaning
Speaker 1: in big time when it comes to industrials, names like
Speaker 1: snap On, like commins um talk to us a little
Speaker 1: bit about that play right, So our firm, we kind
Speaker 1: of focus on downside risk of a stock versus the
Speaker 1: upside potential UM and in one of the strategies when
Speaker 1: you're mentioning, we combine the div it into Chiever's index,
Speaker 1: which is the fifty or so stocks that have raised
Speaker 1: are diving into every year for a decade at least,
Speaker 1: and then we score them with these downside resk risk metrics,
Speaker 1: and then we buy fifty stocks and we reconstitute the
Speaker 1: list twice a year UM and right now and so
Speaker 1: the stocks kind of fall through the funnel that we
Speaker 1: don't necessarily make conscious decision to buy certain groups or anything.
Speaker 1: But right now half of the positions are industrials UM,
Speaker 1: which to me is interesting given the fact that there's
Speaker 1: been so much uncertainy of the market, so um, you know,
Speaker 1: right now. And then over and above just buying the
Speaker 1: stocks and holding them, we do an option overlay using
Speaker 1: SMP index options to UH. We use set credit spreads
Speaker 1: and add a little bit of income like three four
Speaker 1: basis points a year. So right now, the industrial I think,
Speaker 1: are very cheap. If you look at the x l
Speaker 1: I which is the spider for the industrials h that chart.
Speaker 1: If you look at it, it's been building this bay
Speaker 1: for months and months and months. Uh. And the industrials
Speaker 1: as a group have a pretty low forward pe. And
Speaker 1: the ones that I had mentioned to you, snap On
Speaker 1: Cummins a b M Industries, which is a stock not
Speaker 1: a lot of people have heard of, all have really
Speaker 1: low pees forward pees like in the you know, thirteen
Speaker 1: fourteen twelve kind of area. Um, and and if not
Speaker 1: really if, I mean, I think it's pretty evident that
Speaker 1: the global economies are starting to chug back to life
Speaker 1: in a pretty good way. Um, the industrial should continue
Speaker 1: to pick up steam. And Dave just quickly curious how
Speaker 1: you feel about tech, because I mean, I don't think
Speaker 1: anyone would accuse that sector of being inexpensive or chief,
Speaker 1: but it just seems like you can't keep that sector
Speaker 1: down for too long. Yeah, the big tech isn't all
Speaker 1: that expensive quite honestly. Some of the small to the
Speaker 1: unprofitable tech, I guess you might call it um you know,
Speaker 1: the ones that don't have really earnings those have those
Speaker 1: got really expensive and they've been falling back to earth
Speaker 1: pretty rapidly. But the big tech, you know, I mean
Speaker 1: the big ones that everybody you know, the uh, Microsoft
Speaker 1: and the Google and Facebook and those kind of things,
Speaker 1: those are not particularly expensive right now, and they're continuing
Speaker 1: to gain market share and make money. And they've got
Speaker 1: you know, bazillion dollars of cash on their balance sheets,
Speaker 1: and they're buying back stocks. I mean, that's another thing
Speaker 1: that supports the market, is is the stock buybacks at
Speaker 1: the end of the third quarter was the biggest. You know,
Speaker 1: there's an all time record. So corporate executive has got
Speaker 1: a lot of heat. And but it's it's certain it's
Speaker 1: certainly what makes stocks moves. And whenever we see it,
Speaker 1: you know they cross, whether it's on an earnings announcement
Speaker 1: or other, you definitely see a lot of action on
Speaker 1: the stock when when they talk about buybacks. Hey, listen,
Speaker 1: we've got to run. Dave, thank you so much. Happy
Speaker 1: New Year's Stay safe. Dave Gilreathi's managing director, chief investment
Speaker 1: officer over at Innovative Portfolio. Thanks for listening to Bloomberg
Speaker 1: Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg
Speaker 1: dot com, and you can also listen to our radio
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