Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast
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Speaker 1: at Bloomberg dot com slash podcast. At CPI seven point
Speaker 1: five year overy year the highest rate since How does
Speaker 1: the market perform in the face of that headwind? Let's
Speaker 1: check in with Avery Sheffield, co founder and c I
Speaker 1: O Advantage Rock that's part of Rockefeller Asset Management. Every
Speaker 1: thanks so much for joining us. What did you take
Speaker 1: away from a seven point five CPI print? Yes, well,
Speaker 1: I mean inflation is raging. I mean it was kind
Speaker 1: of added anticipated given what we've seen in companies results. UM.
Speaker 1: I think what this means is that, you know, we're
Speaker 1: going to continue to see more pressure on consumers um
Speaker 1: and consume we're spending and really what the the key
Speaker 1: for us is, you know, where is this price into
Speaker 1: the market and and and where it isn't you know
Speaker 1: from a stock perspective, do you expect uh this to
Speaker 1: cool down by year? End significantly. I mean, we've had
Speaker 1: people say it's going to come down, but you know,
Speaker 1: it's still going to be four percent. We've had the
Speaker 1: other people, um at the minority of the people we asked,
Speaker 1: say yeah, we'll get back down to too. Yes. I
Speaker 1: mean I think it's going to uh continue longer than
Speaker 1: anticipated and higher than anticipated, because you know, even just
Speaker 1: in earnings results this morning, we're hearing companies talk about
Speaker 1: price increases in the midst at least in the mid
Speaker 1: single degens, even in the food space that we haven't
Speaker 1: even seen yet in stores. Um, you know, we have
Speaker 1: a wage rate going up that are just starting to
Speaker 1: factor in. And if I would say, like, I mean,
Speaker 1: no one knows, of course what the absolute where this
Speaker 1: is going to settle out. You know, is it going
Speaker 1: to run seven percent plus forever? You know, I don't
Speaker 1: know if it will be at high UM two percent
Speaker 1: though just instinctively seems seems far too well. And I
Speaker 1: really think, what what what's changed, um that that will
Speaker 1: endure UM is that one one piece factor that has
Speaker 1: drive kept inflation so low for many years has actually
Speaker 1: been that companies have been paid um by investors to invest,
Speaker 1: to grow and to grow at any at any cost
Speaker 1: um in meaning it at low margins or negative margins.
Speaker 1: And now that many of these companies have reached a
Speaker 1: large scale and aren't able to grow UM by gaining
Speaker 1: share anymore, they're actually having to raise price UM in
Speaker 1: order to justify their business models. We've seen this in
Speaker 1: e commerce recently, We've seen this in UM home entertainment.
Speaker 1: We've seen this in that even the exercise space. Across
Speaker 1: the board, companies that have been lost generating or nearly
Speaker 1: lost generating and gaining massive share are now flowing growth
Speaker 1: dramatically and looking to raise price in order to to
Speaker 1: grow revenues. And so that dynamic I think is very
Speaker 1: underappreciated it and likely to lead to a higher level
Speaker 1: of inflation than we've seen in the past. All Right, So,
Speaker 1: given that background every where, are you and your friends
Speaker 1: advantage rock? Were you guys putting money to work these days? Yeah?
Speaker 1: Great questions. So we are, um, you know, we're long
Speaker 1: short and so on the long side of we're invested
Speaker 1: in companies that we think have underappreciated pricing power and
Speaker 1: a really position to benefit um from these inflationary dynamics.
Speaker 1: From a competitive perspective, so UM, so and and and
Speaker 1: then on the short side, we we actually your short
Speaker 1: companies that we think UM are believed to have pricing
Speaker 1: power UM and and and probably are not likely to so.
Speaker 1: Two specific areas on the long side that that we're
Speaker 1: we're excited about. One is retailers that have kind of
Speaker 1: been disintermediate or to everyone's thought, we're going to go
Speaker 1: away because of e commerce growth. And now e commerce
Speaker 1: is significantly flowing. I've been talking about like peaking e
Speaker 1: commerce UM, and now that that's blowing, that's the headwind
Speaker 1: that's gone away to gone away to are that's that's
Speaker 1: that's UM subsiding to margins. And we expect that dynamics
Speaker 1: to contain you because the costs of e commerce delivery
Speaker 1: are continuing to go up. In those companies that actually
Speaker 1: have stores and great merchandise, we're gonna to cost advantage
Speaker 1: to offer lower prices to their consumers. I think that's
Speaker 1: really under appreciated. These stocks are not are all all
Speaker 1: still priced like they're gonna have massive headwinds for a
Speaker 1: long time. UM. Another area with under appreciate pricing power
Speaker 1: is actually UM into the telecommunication space. Actually, this morning's
Speaker 1: CPI if UH tele like wireless telecommunications bill came in,
Speaker 1: actually get a little bit negative year over year, down
Speaker 1: negative points five. And we think that that's about to change.
Speaker 1: You know, if you look at cable, if you look
Speaker 1: at even landline services UM, their CPI is run and
Speaker 1: kind of mid single digits, and those companies are trade
Speaker 1: like they're they're never gonna have any pricing power. But
Speaker 1: you have consolidation in the sector UM and UH and
Speaker 1: and and you actually have a lot more stability in turn,
Speaker 1: which we think UM can lead to under appreciate pricing
Speaker 1: powers for evaluations. And then again on the short side, UM,
Speaker 1: you have e commerce players that are still very expensive
Speaker 1: even if stock prices have come down. And then you
Speaker 1: have companies in other areas UM that have been considered
Speaker 1: to be very stable businesses with with strong barriers to entry,
Speaker 1: but again growth is slowing and UH and we think
Speaker 1: that they're going to be less successful in passing on
Speaker 1: price increases than people thought. All right, all right, Avery,
Speaker 1: thank you so much for joining us. Really appreciated. Avery Sheffield,
Speaker 1: co founder and c I O Advantage Rock. It's part
Speaker 1: of the Rockefeller Asset Management Group. All right, let's talk
Speaker 1: about one of the fastest growing areas on wall streets,
Speaker 1: certainly attracting a tremendous amount of capital. That's e t
Speaker 1: F And nobody better to chat et F s than
Speaker 1: Ben Slaven, Global head of ETFs at B and Y
Speaker 1: Melan Assets Servicing. Ben, thanks so much for joining us here.
Speaker 1: You know, I look at the E t F space
Speaker 1: and it's just I'm wondering, is it just cost or
Speaker 1: lack there of in terms of fees that is really
Speaker 1: driving the I guess a reallocation of capitals maybe from
Speaker 1: mutual funds to e t s. Is it just cost?
Speaker 1: What else is the attractive or what else is the
Speaker 1: driver there? Fees are a big part of this, but
Speaker 1: there's really more going on. After a quiet January, we've
Speaker 1: seen an absolute avalanche of flows into et F the
Speaker 1: past week, um. You know of about thirty six billion
Speaker 1: that came over the past five days UM. And we're
Speaker 1: coming again off a record year. So clearly there are
Speaker 1: investors that are looking not just for fees but other
Speaker 1: ways to access investment strategies in the U t F rapper.
Speaker 1: They also provided a much needed about a liquidity recently
Speaker 1: with the volatility we've seen, and it sent e t
Speaker 1: F soaring to overt of the total market volume, up
Speaker 1: from of the total trading volume last year. And so
Speaker 1: while those broad based, cheap passive e t f s
Speaker 1: are getting their share and will continue to get their share,
Speaker 1: we are seeing investors and cretantly look at other ways
Speaker 1: to play this market, such as financial sector semiconductors, floating
Speaker 1: rate ETFs, just trying to look at other ways to
Speaker 1: tactically positioned for this market with what we're seeing with
Speaker 1: the FED potential FED hikes, UH, the inflation print this morning,
Speaker 1: and repositioning at this part of the market cycle. So
Speaker 1: quite a bit going on there. How do you I mean,
Speaker 1: on the one hand, UM, you want to make sure
Speaker 1: you're buying the right sectors, the rappers that you have
Speaker 1: are around the right companies. But on the other hand,
Speaker 1: you want to make sure that you're getting UM the
Speaker 1: right E t F structure, not paying UM fees that
Speaker 1: are too high. How do you look at the sort
Speaker 1: of more technical side UM, the kind of back office
Speaker 1: side of E t F s. Well, on one hand
Speaker 1: it's getting easier and on one hand it's getting more complicated.
Speaker 1: I think the more complicated part of this is really
Speaker 1: UM the explosion in the number of products UH that
Speaker 1: are available. We saw a record year last year in
Speaker 1: terms of new launches, but we also saw a record
Speaker 1: number of new entrants come into the e t F market.
Speaker 1: I think the statistic is around a quarter of issuers
Speaker 1: right now in the e t F market came to
Speaker 1: the market last year, and that's increasingly creating a lot
Speaker 1: of noise. The good news for investors is that the
Speaker 1: transparency that e t s offer UM provides an excellent
Speaker 1: window and tool for investors to be able to dig
Speaker 1: in and really see what those e t F s
Speaker 1: own on a daily basis. And all of that information UM,
Speaker 1: you know, is made available, whether it be on the
Speaker 1: website or other data sources, so for investors to to
Speaker 1: really understand what their exposure is and how to quickly
Speaker 1: find UM the types of either broad based index trackers
Speaker 1: or tactical, more thematic type funds that that investors are
Speaker 1: seeking these days. And then another really hot area hot
Speaker 1: topic within financial services is crypto and talk to us
Speaker 1: about the crypto et F opportunities out there. I know
Speaker 1: we've had some recently, but it's more on the futures
Speaker 1: rather than the underlying crypto give us a sense of
Speaker 1: how that market's evolving. Yeah, it's an incredibly hot space, UM.
Speaker 1: As you mentioned. UM. First, we've seen you know, the
Speaker 1: markets start to stabilize. I mean, you know, Bitcoin is
Speaker 1: broken through the downward trend resistance level here since the
Speaker 1: low in November. It's up today. It's trading around forty UM.
Speaker 1: But we've seen an incredible amount of investor interest and
Speaker 1: an expansion in the products that are available. They are
Speaker 1: now more than eighty crypto et s trading around the world. UM.
Speaker 1: But you know, the flow picture more recently has been
Speaker 1: negative in the last few months, not surprising given markets,
Speaker 1: but turned positive recently and we've seen inflow into those products.
Speaker 1: Now in the US, we just have futures as uh
Speaker 1: E t f s here available given what's currently allowable
Speaker 1: under the rules UM, and we have seen uh interest
Speaker 1: uh in those products, but no particular movement yet around
Speaker 1: the physical or spot based bitcoin ETFs from the SEC.
Speaker 1: So at this point investors have the future is based
Speaker 1: products to choose from UM that are currently active and
Speaker 1: trading in the market, but but again offer a different
Speaker 1: type of exposure compared to a spot bitcoin position. Ben,
Speaker 1: thanks so much. For joining us. Really appreciate your insight here.
Speaker 1: People are working from home, they're learning from home, they're
Speaker 1: putting more and more data in the cloud. That raises
Speaker 1: some security issues in my mind, UM, and I think
Speaker 1: in a lot of people's minds as well as again,
Speaker 1: they do more banking from home and all that type
Speaker 1: of stuff, more financial services. T J Jung, CEO and
Speaker 1: co founder of a Point that is a public trader
Speaker 1: company on nastac A VPT is the symbol there. It's
Speaker 1: got a market cap about one point two billion dollars. UM.
Speaker 1: T J, thanks so much for joining us here. I
Speaker 1: just can you step back and just give us a
Speaker 1: sense of how the average person's data is secure? How
Speaker 1: secure is it generally speaking? Good morning, It's a pleasure
Speaker 1: to be here. UM. Well, so, we actually really focused
Speaker 1: on large enterprise and B two B data usage patterns
Speaker 1: and even small businesses. We found is actually nine of
Speaker 1: the data leakage happened unintentionally done by internal actors. At
Speaker 1: the same time, though, we actually did a survey of
Speaker 1: over a thousand what we call managed service providers. These
Speaker 1: are small service outfits that helped small businesses get onto cloud.
Speaker 1: UM and over fifty of them have reported uh we
Speaker 1: and ransomware attacks. So there's a saying our industry. Uh,
Speaker 1: it's really not a matter of um, you know, whether
Speaker 1: you got attacked hacked. It's it's just a matter of
Speaker 1: when you realize it or when. So yeah, it's it's
Speaker 1: it's a scary time right now. UM. That means you know,
Speaker 1: your data, your enterprise data in cloud on prem need
Speaker 1: to be secure. And this is where Appling comes in,
Speaker 1: or a software company that build technology to help businesses
Speaker 1: to collaborate on prem in the cloud with confidence across
Speaker 1: Microsoft Space five, Google work Space and Salesforce. So, um,
Speaker 1: how can this be changed? I mean it seems to
Speaker 1: be it's just getting worse and worse the uh you know,
Speaker 1: the attacks. Um, and I can't I can't be confident
Speaker 1: that the defense can keep up. Yeah, it's definitely a
Speaker 1: multi layered approach. Obviously you have the authentication then pass word,
Speaker 1: uh you know control multi factor authentication just too. From
Speaker 1: the parameter, what we do is we also focus on,
Speaker 1: you know, internally, who's accessing what when. So we actually
Speaker 1: recently released a cloud product called confide that allow business
Speaker 1: users to control who has access uh security share that,
Speaker 1: but also mindful of the data residency requirements that you
Speaker 1: may have uh to satisfy regulatory requirements. So we actually
Speaker 1: support this over a million cloud users today, so it's
Speaker 1: truly a multi layer approach. We're also um looking at
Speaker 1: releasing solutions where we can alert business users in real
Speaker 1: time when a ransomware attack is happening, so that detection capabilities.
Speaker 1: So but it is you know, there's that technology. There's
Speaker 1: also the education because you're only astroids your weakest link.
Speaker 1: There's all kinds of social engineering happening now in real
Speaker 1: time around you know, getting somebody to like something right,
Speaker 1: so then the taper getting system. So what we focus on,
Speaker 1: you know, looking in the system and looking for weird
Speaker 1: patterns and and try to catch that. But you're right,
Speaker 1: it is a catamouse game and it's a it's also
Speaker 1: weapons race at the same time, it's it's not a
Speaker 1: easy problem to solve and t J you know, I
Speaker 1: guess I have some level of confidence that large corporations
Speaker 1: can you know, make the investments needed to secure their data,
Speaker 1: although there's lots of examples where that they get hacked
Speaker 1: as well. But small and midsized businesses and people and
Speaker 1: people what and what can small midsize businesses? In the
Speaker 1: last week, I've been fished yep, and also kind of
Speaker 1: scammed on the phone. And it sounds like I feel
Speaker 1: it's worse in the US and isn't Germany. It's never
Speaker 1: happened to me in Germany. As soon as I get
Speaker 1: back to the US, it's like I'm getting all these
Speaker 1: calls telemarketers, scammers, and then I get fished. And so
Speaker 1: thirty seconds t J. What do the small midsized businesses do?
Speaker 1: So small to mid sized businesses. One obviously education right
Speaker 1: to be aware. Uh. Secondly is deployed technology that can
Speaker 1: also recover for them in case of a attack. But
Speaker 1: will you talk about the fishing. I actually had the
Speaker 1: experience where when I landed into a country, third world
Speaker 1: country at one point, where as soon as my phone
Speaker 1: PINZA antenna, they actually sent me a SMS from City
Speaker 1: Bank right and mascurating as a logging page. So yeah,
Speaker 1: it is scary. Were here almost another week. Uh, it's
Speaker 1: a it's a you know, a combination of process with
Speaker 1: education as well as deployment technology. And this is what
Speaker 1: we actually help a lot of small businesses with the
Speaker 1: century even ransomware data recovery warranties. So yeah, it's a
Speaker 1: it's a combination, but it is someone something that we
Speaker 1: have to be very mindful of. The continue to be vigimin.
Speaker 1: All right, t J, thanks so much for joining us.
Speaker 1: Really appreciate getting your thoughts here on this big issue
Speaker 1: cybersecurity board. You can talk about it all day. T J. Jung,
Speaker 1: CEO and co founder of A Point. All right, let's
Speaker 1: bring on somebody who actually knows what's going on in
Speaker 1: this whole space. Dan Ives, Managing Director Senior Equity an
Speaker 1: also Wedbush Securities. We talked to Dan about a whole
Speaker 1: number of topics related to technology. Dan, thanks so much
Speaker 1: for joining us here. Had some good numbers out of
Speaker 1: Disney last night. The streaming business seems to be doing
Speaker 1: pretty well for them. You know, as you take a
Speaker 1: look at Peloton again, the stock bounced back Dan from
Speaker 1: those lows here. Do you think there's a natural owner
Speaker 1: for Peloton that other than it being a standalone company. Yeah,
Speaker 1: And I think the streets interpreting the Peloton's there's gonna
Speaker 1: be first sale sign on the lawn, right And and
Speaker 1: now that's why the stocks up because I think when
Speaker 1: you look at Apple, that's probably, in our opinion, the
Speaker 1: most natural buyer that would see it. It's accursor size
Speaker 1: as well as sort of next gen healthcare initiatives, and
Speaker 1: I think other bidders could be there and Amazon and Nike.
Speaker 1: You tell about Disney because it's all about content getting
Speaker 1: more into the living room, and you've got three million
Speaker 1: subscribers in a premium brand. And if you look at
Speaker 1: the history of consumer brands that then started to cut cost, Fitbit,
Speaker 1: go Pro, there's a graveyard of them, right, So I
Speaker 1: think Peloton that the rings in the law. But what
Speaker 1: about streaming fitness? Does that make sense to you as
Speaker 1: an emerging market? I mean, um, if Disney starts to
Speaker 1: pick up Peloton trainers and Tonal trainers, can it eventually, Um,
Speaker 1: you know, get a Netflix style foothold in that market. Well,
Speaker 1: And I think what you're seeing with Disney, I mean
Speaker 1: they're on the aggressive starting to close that gap with Netflix.
Speaker 1: And I think part of why the stocks were acting
Speaker 1: way did after that Netflix disaster quarter, the view has
Speaker 1: ripped a band aid off with Disney. Instead, it was
Speaker 1: the opposite on with Strong on the park side. So
Speaker 1: I think Disney is going to continue agrestaurant content. Yeah,
Speaker 1: you look at things like the Sunday Night ticket, which
Speaker 1: we believe Apple would also bid for as well. More
Speaker 1: and more, there's gonna be an arms race. It's content
Speaker 1: and that's why even when you look at Peloton, can't
Speaker 1: just about extreaming exercise. It's it's a content service that
Speaker 1: goes more and more another touch point to the consumer.
Speaker 1: It's interesting, uh, Danny, I guess it is all about content.
Speaker 1: Some of the red Stoner's right, content is king, but
Speaker 1: it's hard to kind of, you know, sync up the
Speaker 1: disappointing sub numbers from Netflix versus the better and expected
Speaker 1: for Disney. I mean, I'm a huge Ozark fan, so
Speaker 1: I'm all in on that Netflix in this quarter. But
Speaker 1: is it just about content? And uh, is it just
Speaker 1: whoever spends the most? I guess when else they're bundled
Speaker 1: with ESPN? You know, has as I think been very successful.
Speaker 1: The Beatles was another driver in terms of watch that
Speaker 1: it comes down to. They have a unique ecosystem. But Netflix,
Speaker 1: Netflix is on the top of the mountain, so from
Speaker 1: there you can only go down. Right, There's much more,
Speaker 1: especially on the international subside. But I mean we'll give
Speaker 1: you take a step back. This has been a Nathan
Speaker 1: Chin like earning season for Tech bringing it. That's see,
Speaker 1: Matt didn't get your reference. But I watched the figure
Speaker 1: skating last night. I'm all over that. I was like,
Speaker 1: who's Nathan Chen? He killed it is he does for America. Yeah,
Speaker 1: so he didn't switch his allegiance to China. You know
Speaker 1: he didn't. He's the ice skating good Yeah, he beat
Speaker 1: it all right. You know, I know Matt doesn't like
Speaker 1: to talk about autos very much, damn, but I gotta
Speaker 1: get your thought here on Tesla as just I really
Speaker 1: want to get it. From the perspective of competitive position,
Speaker 1: how do you think Tesla positions itself and what will
Speaker 1: be an increasingly competitive EV market? Why didn't they further
Speaker 1: flexed him muscles? From a supply perspective, right now, demands
Speaker 1: outstripment supply by and if you look at electric vehicles
Speaker 1: for GM VW and know others are gonna significantly go
Speaker 1: after this and there's mean many winners. But in terms
Speaker 1: of Tesla, because of the distribution and because of the
Speaker 1: factory build out, what's happened in Austin as well as
Speaker 1: the further build down in China and wee wee Berlin.
Speaker 1: In the coming months, they're going to be able to
Speaker 1: really expand supply two million units per year and that's
Speaker 1: the key. And you know, I think part of Tesla's
Speaker 1: language is because Musk talk about the supply chain. I
Speaker 1: think really, you know, sort of fan the flames there
Speaker 1: and I think now it's just about a supply issue,
Speaker 1: not a demand issue. How do you think the UH
Speaker 1: supply chain crisis and the chip shortage is sorting out?
Speaker 1: Are you getting um this earning season better visibility? Yeah,
Speaker 1: I mean we're seeing a queer moderation going into February
Speaker 1: and marks we saw not just from GM, We're seeing
Speaker 1: it across our check snesia and I think we could
Speaker 1: talk inflation and tenure all we want. The biggest overranging
Speaker 1: tech is the supply chain that starts to moderate hugely bullish.
Speaker 1: And that's why I think you coming at earning season
Speaker 1: techer earnings really across the board, from chips to software,
Speaker 1: some of the large players and cloud, Microsoft, Apple, Amazon
Speaker 1: and others robust. And that's why we've tech socks move
Speaker 1: higher here in terms of what we're seeing on the fundamentals. Hey, Dan,
Speaker 1: always good catching up with you. We just throw all
Speaker 1: things that come to our minds at you, and you've
Speaker 1: got great color. We appreciate it. Dan Ive's managing director
Speaker 1: and senior equity analysts that web Bush Securities covering off
Speaker 1: things tech. Thanks for listening to the Bloomberg Markets podcast.
Speaker 1: You can subscribe and listen to interviews with Apple Podcasts
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
Speaker 1: on Twitter at Matt Miller three. On bal Sweeney, I'm
Speaker 1: on Twitter at PTS we need before the podcast. You
Speaker 1: can always catch us worldwide at Bloomberg Radio. M