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
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. I want to get
Speaker 1: right over to Dave Major's. He is chief executive officer
Speaker 1: Mikam Auctions, and they've got uh uh, the Micham Montgomery
Speaker 1: Auction coming up August twelve through in what is now
Speaker 1: a record setting collector car market. Dave, thanks so much
Speaker 1: for joining us. Greg Jarrett had a nineteen fifty seven
Speaker 1: MG a hardtop racing coupe and blew out the freeze
Speaker 1: plugs one morning doing a hundred forty miles per hour
Speaker 1: when he saw a cop suddenly let off changing compression
Speaker 1: blow them all out. Can we find him another one?
Speaker 1: I'm sure that we probably can do that. We don't
Speaker 1: I don't think we have one in the Monterey lineup.
Speaker 1: We certainly have a lot of interesting replacements if he,
Speaker 1: if he so chooses, So let's let's talk about some
Speaker 1: of that lineup. What do you think is the hottest
Speaker 1: car that's going to be auctioned off in a couple
Speaker 1: of days here. Well, you know, Monterey is always a
Speaker 1: pretty unique event for us, and it's uh, this will
Speaker 1: be our seventeenth events since we went back to auction
Speaker 1: in in June. We've seen a lot of beautiful cars,
Speaker 1: but I don't think I've seen a collection like I
Speaker 1: have coming up Monterrey for the next three days Thursday,
Speaker 1: Friday Saturday next week. And there's it's such an eclectic mix.
Speaker 1: It's kind of one of those that whatever you're looking for,
Speaker 1: there's you know, just in my mind the cars that
Speaker 1: I look at that will be there. There's a nineteen
Speaker 1: twenty nine Dusenberg Model J which is and it's a convertible,
Speaker 1: which makes it very unique. And those you know, everybody
Speaker 1: knows dus and Birds were spectacular vehicles to begin with.
Speaker 1: They were in their day back in the nineteen twenties
Speaker 1: and thirties, and and they still are today. But then
Speaker 1: there's a couple of other, um, what I think are
Speaker 1: going to be very interesting cars. In the eighteen fifty
Speaker 1: two Ferrari three forty that raced a Lama too. Yeah,
Speaker 1: the blue Car race to a fifth place finish. Um,
Speaker 1: you know again, kind of a one of one car.
Speaker 1: That's I think it's going to attract a lot of attention.
Speaker 1: And my personal favorite, if you've seen any of the
Speaker 1: pictures online at at mecom dot com, is the thirty
Speaker 1: six Delahy Type one thirty five tier drop. If you're
Speaker 1: familiar with Dela Hayes, uh, they Delahayes to me are
Speaker 1: the epitome of art beauty. That's like the Ralph Lauren car, right,
Speaker 1: Ralph Laurens exactly. There's just absolutely every one of them,
Speaker 1: regardless of what model or yeared is. Every one of
Speaker 1: the Dela Hayes is absolutely beautiful. And I think this
Speaker 1: is this is probably the best one I've seen in
Speaker 1: my career. So I'm I'm just excited to get to
Speaker 1: Monterey and get out on Delmonte Golf Course and see
Speaker 1: six hundred beautiful cars and and get get things underway.
Speaker 1: I love the Ferraris. The three forty is amazing. You've
Speaker 1: got a seventy two UM three sixty five Daytona that
Speaker 1: looks quite cool at sixty five super fast UM which
Speaker 1: which Kayley and I both love, but we're more into muscle.
Speaker 1: You know. Kaylee's dad has a G t O. Yeah,
Speaker 1: and oh yeah, God blas him. I'm looking at, you know,
Speaker 1: the riviera. I like, big Al has a riviera. He's
Speaker 1: got a sixty eight in polya convertible. Um that that
Speaker 1: looks really nice. Who is big Al? I'm looking at
Speaker 1: big Al's collection. He's got a lot of cars for sale. Yeah.
Speaker 1: Actually I can't disclose that. I can tell you he
Speaker 1: is from the Northwest, I see, and that's about us.
Speaker 1: That's about as far as I can say. That's that's
Speaker 1: why it's listed as the big Al collection. Well he's
Speaker 1: got even though that's a pretty eclectic group of cars too,
Speaker 1: because I think it, you know, as you mentioned, like
Speaker 1: a riviera, but there's a law ferrari. Yes, so it's
Speaker 1: you know, that's that's kind of one extreme to the other.
Speaker 1: But well, for me, a riviera means you've got taste,
Speaker 1: and a law ferrari means you have money. So we
Speaker 1: just we just came from from our auction in Orlando,
Speaker 1: Florida last weekend, and there was a collection of I
Speaker 1: believe thirteen rivieras in that in that auction from one
Speaker 1: collector and all of them meticulously restored, beautiful cars. So
Speaker 1: how much are these going for him? I remember um
Speaker 1: watching mikam auctions one morning, probably a decade ago, and
Speaker 1: UM seeing a Barracuda go for like three point four
Speaker 1: million bucks, and I was like, oh my god, unbelievable.
Speaker 1: So so so what are we talking about for American
Speaker 1: muscle It just seems amazing to me to see them
Speaker 1: going for ferrari prices. Yeah, you know, it really depends
Speaker 1: um and and certain models are hot at certain periods
Speaker 1: of time. Corvettes are particularly hot right now. Depends on
Speaker 1: the model, depends on the make, depends on the restoration.
Speaker 1: But American muscle cars, you know, there are those that
Speaker 1: you know, I might call beginner cars that from the
Speaker 1: sixties and seventies that you know, you I be able
Speaker 1: to get into for twenty dollars or less. And then
Speaker 1: there are some that are in the millions of dollars
Speaker 1: depending on what they are. And you know, the Hemi Kudas,
Speaker 1: the Daytona coups Um, the super Birds. Those cars attract
Speaker 1: a lot of attention and obviously attract a lot of
Speaker 1: dollars as well. You know, here in New York the
Speaker 1: Auto Show they just canceled yesterday because of concerns around
Speaker 1: the delta variant. Do you expect any disruptions not just
Speaker 1: at Monterey but in your events and auctions throughout the fall, Well,
Speaker 1: that just means more bitters online. Well, we, as I said,
Speaker 1: we came back to live auctions in June with a
Speaker 1: revised eleven page safety protocol and a completely different business
Speaker 1: model for for live auction events for live attended events,
Speaker 1: and we we've become very good at executing on that model.
Speaker 1: So we're prepared as Mikam Auctions, as we have been
Speaker 1: for the last sixteen months, to to take whatever comes
Speaker 1: our way. But we do see because of the delta
Speaker 1: variant um going back, for instance, to the Orlando auction
Speaker 1: last weekend, in the middle of that auction, the Mayor
Speaker 1: of Orlando issued an indoor mass order, so we were
Speaker 1: ready to comply with that. I don't think since Monterey
Speaker 1: is an outdoor auction on the golf course, I'm not
Speaker 1: really expecting much to change between now and then, But
Speaker 1: certainly as we look forward to the rest of our
Speaker 1: schedule and even into two with places like Dallas and
Speaker 1: Chicago and Las Vegas. I think we're probably going to
Speaker 1: see a little tightening of the of the restrictions. All right, Dave,
Speaker 1: thanks so much for joining us. Always a pleasure to
Speaker 1: talk to. Dave Major, chief executive at Mikam Auctions on Monterey.
Speaker 1: Coming up, let's get over to Nick Freeling Highs and
Speaker 1: right now bring it back to markets. He's managing director
Speaker 1: at Shelton Trust. He's a portfolio manager of equities there
Speaker 1: and Nick, you know, we we were talking with Brent
Speaker 1: Shooty a little bit earlier, and he was pretty bullish
Speaker 1: on UM, on the cyclical and also on you know,
Speaker 1: smaller cap stocks as well as European equities, saying that
Speaker 1: he thinks some of the money is going to come
Speaker 1: back in from the bond market and from these super
Speaker 1: growthy mega tech megacap tech stocks. What do you think
Speaker 1: about that? Yeah, I mean I think that's first of all,
Speaker 1: it's nice to be with you guys today, and thanks
Speaker 1: for having me on UM. You know, I think that
Speaker 1: that's perfectly possible if in fact we get a sharp
Speaker 1: move higher and raps um, because I think that sort
Speaker 1: of growth quarter to date has basically been dominating value
Speaker 1: right by about three fifty basis points because I think
Speaker 1: the concern more recently is sort of peak Garnians growth,
Speaker 1: peak GDP growth peak, you know, easy bet, easy money policies,
Speaker 1: and I think there has been sort of a return
Speaker 1: to a focus on quality and sort of durable growth,
Speaker 1: which is actually as a sort of a investment philosophy
Speaker 1: is where children trust sort of focuses. But I think
Speaker 1: that's perfectly possible. I mean, look, we're we're reasonably constructive
Speaker 1: broadly in stocks, and you know, we have a lot
Speaker 1: of clients asked as constantly sort are we in an
Speaker 1: equity bubble? And um, I just think that, you know,
Speaker 1: the liquidity backdrop here is it's really pretty extraordinary. It's
Speaker 1: it's unlike you know, anything we've seen in a long time.
Speaker 1: You've got corporate balance sheet sitting on over to trillion,
Speaker 1: you've got consumer sitting on three trillion and nextss savings.
Speaker 1: And then this morning the Journal found it interesting to
Speaker 1: note that both JP Morgan and Bank America are talking
Speaker 1: about sitting on one trillion and unused corporate credit. So,
Speaker 1: I mean, I think that all bodes quite well for
Speaker 1: people buying pullbacks in this market, but also for a
Speaker 1: sort of an imminent capex cycle that could be coming.
Speaker 1: So obviously there's a lot of money splashing around in
Speaker 1: the system. Where do you think that money is going
Speaker 1: to be going Not just obviously equities broadly is what
Speaker 1: you think. But but where in the equity market do
Speaker 1: you think is going to see the like the highest
Speaker 1: returns going forward? Yeah, I mean, our focus really is
Speaker 1: on durable growth and we like to owned businesses where
Speaker 1: we don't feel like we need to rely upon sick lotality. UM.
Speaker 1: So you know, I think that, um, it'll really sort
Speaker 1: of depend on sort of the inflationary picture going into
Speaker 1: next year. We sort of have a view that what
Speaker 1: we're seeing currently in in inflation isn't sort of something
Speaker 1: that's structural and going to be persistent. We actually think
Speaker 1: a lot of the inflation is concentrated in sort of
Speaker 1: a select group of goods. And I think if if
Speaker 1: growth slows into two thousand twenty two, I think people
Speaker 1: are actually going to return to a focus on quality
Speaker 1: and growth. Um. And that's really sort of where our
Speaker 1: bread and butter is and where we focus our investments
Speaker 1: as a firm. What are you expecting in terms of
Speaker 1: the jobs number on Friday and and really in terms
Speaker 1: of jobs coming back throughout the rest of the year.
Speaker 1: I mean, I think the print is sort of the
Speaker 1: expectation as anything short of a million would be a disappointment. UM,
Speaker 1: but you know, I think the return of labor is
Speaker 1: a critical component, uh, to sort of putting some of
Speaker 1: the inflation fears to rest, because I feel like UM
Speaker 1: as a firm, we're sort of focused on this issue
Speaker 1: that you know, consumers really never went through a recession
Speaker 1: in two thousand and twenty. The sort of extraordinary thing
Speaker 1: about it was, you know, disposable personal income was actually
Speaker 1: up six percent, but then on the other side you
Speaker 1: had sort of massive supply chain bottlenecks that were a
Speaker 1: result of manufacturing and production really ramping down. Thinking that
Speaker 1: it would be several years before we got back to
Speaker 1: two thousand nineteen levels. Really, you know, the hope is
Speaker 1: that we're going to see a lot of job growth,
Speaker 1: you know, particularly in things like manufacturing and logistics, UM,
Speaker 1: but as well in things like food service and what
Speaker 1: hospitality and leisure, because I think that's a critical component
Speaker 1: of sort of quieting this issue that we have with
Speaker 1: sort of you know, inflation and availability of labor. Yeah,
Speaker 1: so we know, the FED is watching the labor market
Speaker 1: story and the inflation side of the story. And even
Speaker 1: if inflation is transitory, a lot of companies are raising
Speaker 1: prices is their face with higher input costs and they're
Speaker 1: passing that right onto the consumer. Do you expect that
Speaker 1: to remain the case in margins to hold in. Yeah,
Speaker 1: So that's the big concern in the second quarter. I mean, look,
Speaker 1: the second quarter earnings, corporate earnings have been fantastic. If
Speaker 1: we are assigning classroom grades, I think it would be
Speaker 1: a straight a. The concern is the ability to pass
Speaker 1: on input costs inflation. So you know you're seeing sort
Speaker 1: of in a in a case like floor rox this week,
Speaker 1: you're seeing sort of that becoming a very big issue.
Speaker 1: I would sort of contract that with you know, one
Speaker 1: of our largest holdings of Sherwin Williams, where of their
Speaker 1: of their costs of good sould is impacted by the
Speaker 1: moodity inflation. Well they passed about seven ten to eleven
Speaker 1: of that on in price because they can without an
Speaker 1: impact on demand. So I think if you're investing, it's
Speaker 1: critical to sort of be focused on on businesses that
Speaker 1: have pricing power that can raise prices without a big
Speaker 1: impact in terms of elasticity of demand. UM. But I
Speaker 1: think look in the sex in half of this year,
Speaker 1: comparisons are going to become more challenging. And I think
Speaker 1: for the next three to four months the CPI readings
Speaker 1: are going to be hot. So this is an issue
Speaker 1: that will continue to be with us, and I think
Speaker 1: the bestor is going to be focused on it. Nick.
Speaker 1: Great to get some time with you. Really appreciate your insights.
Speaker 1: Nick frielinghis in there is a managing director at Child
Speaker 1: and Trust, where he's also a portfolio manager of equities.
Speaker 1: Now we've been getting increasing headlines about the delay to
Speaker 1: the return to work. Janet Elkin joins us right now, President,
Speaker 1: chief executive officer Icon Medical Network out of Dallas, Texas.
Speaker 1: And Janet, is this getting worse? You know? As we speak,
Speaker 1: it seemed like, for example, for vaccinated people, UM, this
Speaker 1: pandemic was kind of over. But now a lot more
Speaker 1: breakthrough cases are scaring employers. There are, and of course
Speaker 1: although in most cases breakthrough cases are not are not
Speaker 1: here if they're not going to send anyone to the hospital. Still, overall,
Speaker 1: we've got a lot more people that are getting sick
Speaker 1: that are unvaccinated and the hesitancy is obviously causing issues.
Speaker 1: And then people are also concerned I think about going
Speaker 1: back to the office if they have younger children at
Speaker 1: home as well. So let's talk about what the environment
Speaker 1: is like in hospitals. I saw a story earlier this
Speaker 1: week about the rising number of hospitals in Florida where
Speaker 1: they're having serious staffing shortages. Something like thirteen percent of
Speaker 1: facilities say they are short on vital personnel. Um is
Speaker 1: this a situation that's going to get worse in terms
Speaker 1: of the people who are caring for those who are sick.
Speaker 1: I am concerned about it. You've got, as we also
Speaker 1: burn out, right, so many different kinds of healthcare workers
Speaker 1: that either took early retirement or just left because the
Speaker 1: burden was too difficult for them, I think emotionally as
Speaker 1: well as physically. But also realize that you've got so
Speaker 1: many more patients. They're coming back in for things like
Speaker 1: collective surgeries, so it would have been a busy time anyway,
Speaker 1: people that postpone things, and then also the long callers,
Speaker 1: So you've got all that going on along with the
Speaker 1: rose the delta variant, and it's sadly a perfect dorm.
Speaker 1: How much do we know about long haul covid um
Speaker 1: It seems like one of those real concerns like chronic
Speaker 1: lime disease that's just so hard to put your finger on. Well,
Speaker 1: you're right, and and actually we don't there's a lot
Speaker 1: we don't know, right. But I will tell you this
Speaker 1: that the rise in demand that we've had for say,
Speaker 1: pulmonary physicians or cardiology because of what we're seeing in
Speaker 1: some patients with heart and lung is really causing that
Speaker 1: kind of increase in demand um for us to be
Speaker 1: able to provide physicians. Can we talk about we don't
Speaker 1: know yet. Yeah, there's the return to office on on
Speaker 1: one hand, and then there's what people have to do
Speaker 1: in order to return the office. And a lot of
Speaker 1: companies are mandating that their employees must be vaccinated in
Speaker 1: order to do so. And we've seen mandates like that
Speaker 1: put in for health care workers as well here in
Speaker 1: New York State, where Matt and I are frontline medical
Speaker 1: workers that work for state hospitals have to do that.
Speaker 1: Is that the right policy? Well, I think it's a
Speaker 1: question of do you want people to be safe and
Speaker 1: what can we do to mitigate this? And so if
Speaker 1: you've got the idea of healthcare workers, the people that
Speaker 1: are there to protect and take care of patients, if
Speaker 1: they have it, then it's a situation that you think,
Speaker 1: how are we ever going to get out of this?
Speaker 1: And I think that I think in most cases, the
Speaker 1: majority of the healthcare workers that we deal with they
Speaker 1: understand that. But you're right, it's accelerating across the country.
Speaker 1: Literally every day, I'm getting more emails from clients to say,
Speaker 1: all right now we're making a mandatory. Your physicians cannot
Speaker 1: your nurses cannot come back to work unless they're vaccinated.
Speaker 1: By the way, Janet, is I uh notice a resident
Speaker 1: of uh sorry, a native of New York City, Right,
Speaker 1: you're an Orange Man, and but you live in Dallas.
Speaker 1: So I wonder if you're struck by you know, here
Speaker 1: in New York everyone is vaccinated and no one's really
Speaker 1: fighting back against it or or hesitant. And I would
Speaker 1: gather that in states like Florida and Texas, um, you
Speaker 1: have a lot more hesitancy. It's really incredible. On a
Speaker 1: personal note, my dad, who was a New York resident,
Speaker 1: died of the virus, and he would have been the
Speaker 1: first in line had they had the vaccine um that
Speaker 1: early on. But yes, In fact, it's interesting because two
Speaker 1: of the three largest healthcare systems in the Dallas for
Speaker 1: Warth area have put in mandatory vaccine requirements. The other one,
Speaker 1: you too, Southwestern can't. Why can't they because the governor
Speaker 1: of Overset state has said you cannot mandate it, and
Speaker 1: they are a public entity. So it's interesting times here
Speaker 1: on the governor of Florida has refused to declare a
Speaker 1: state of emergency, and as a result, they're having difficulty
Speaker 1: getting oxygen to the right places. There is enough oxygen there,
Speaker 1: they just don't have the licensed drivers who are equipped
Speaker 1: to carry oxygen. And uh, do you think that we
Speaker 1: need more federal action here, Janet? I think we're going
Speaker 1: to have to. I think that it's the only way
Speaker 1: because think about when heartbreaking when you talk about oxygen, right,
Speaker 1: but imagine in especially in rural areas where hospitals have
Speaker 1: closed to begin with, it could take someone forty minutes
Speaker 1: to drive to a hospital. You've got to be able
Speaker 1: to have access for people. And I don't know if
Speaker 1: we don't have more action, what's going to be able
Speaker 1: to have. We can also hope that at the end
Speaker 1: of the month, I believe that the FDA will finally
Speaker 1: make this not emergency authorization anymore for the vaccine that
Speaker 1: may help us as well with vaccine hasidency quick. We
Speaker 1: just got twenty seconds here. Our healthcare workers paid enough
Speaker 1: in the US. I'm normally in Germany and they are
Speaker 1: definitely not there. I think in some cases, I think
Speaker 1: that we are for physicians, for nurses. Overall, in we're
Speaker 1: definitely in better shape than in some countries, but in
Speaker 1: some very high demand areas like medical assistance to still
Speaker 1: paying them not much more than minimum wage. That's going
Speaker 1: to change, has to I guess if you want to
Speaker 1: get them in in the door. Janet, thanks so much,
Speaker 1: UM for your time. Really sorry for your loss, and Um,
Speaker 1: I think we all appreciate what you're doing to help
Speaker 1: the rest of us in this pandemic. Jan Elkin is
Speaker 1: chief executive officer of Icon Medical Network. Let's get over
Speaker 1: to Brent Shooty right now. Brent overseas more than two
Speaker 1: billion dollars in retail assets, joins us on the phone
Speaker 1: from Milwaukee. And you know, before we get to the
Speaker 1: finer points of finance, you know the FED policy issues
Speaker 1: rates inflation. Et cetera. I just gotta ask about, you know,
Speaker 1: Robin Hood and Meme stocks. What's your take on all
Speaker 1: this because we saw that um, you know, disappointing I
Speaker 1: p O and then it doubled in the last two days. Yeah,
Speaker 1: I think people focus too much on it. So it's
Speaker 1: kind of interesting that it occurs. And certainly there's some
Speaker 1: retail investors who are probably piling into these things and
Speaker 1: pushing them back and forth. But hopefully from majority of
Speaker 1: people listening to this call or on your radio station,
Speaker 1: they'll focus on those finer points of finance that you
Speaker 1: mentioned before, which I think are going to drive their
Speaker 1: perfectly a longer term. So I do think at some
Speaker 1: point some of these stocks are going to come back
Speaker 1: to earth. Uh. And the question is when, probably not if,
Speaker 1: And to me, if you have too much in those
Speaker 1: you're going to probably not enjoy having that much of
Speaker 1: them at some point in the future. We probably could
Speaker 1: say a lot of that retail treading action is a
Speaker 1: bit disconnected from the fundamentals. So let's talk about some
Speaker 1: of those fundamentals when it comes to the FED. Obviously,
Speaker 1: we have the jobs report tomorrow, and I'm wondering if
Speaker 1: a strong jobs report is actually a bad thing for
Speaker 1: this market. In that may that may mean a more
Speaker 1: hawkish FED possibly, but I think, you know, maybe that'll
Speaker 1: be the reaction tomorrow initially, but I think people will
Speaker 1: get their heads and see that it actually means that
Speaker 1: stronger economic growth on the way and more wages are occurring,
Speaker 1: and the economy is pushing forward, and so that will
Speaker 1: be certainly a reaction post FED. And I suppose that
Speaker 1: if it's really strong, it could be that reaction, because
Speaker 1: it could be the more hawky FED. But in general
Speaker 1: I wouldn't trade that too much. I would think more
Speaker 1: about what that means for the intermediate term, which is
Speaker 1: stronger economic growth. Uh. And I do believe that inflation
Speaker 1: will fall back, which I think clear is one of
Speaker 1: the fears about the FED. Nonetheless, we still see rates
Speaker 1: at well the tenure at one nineteen right now. If
Speaker 1: I take a look at the real yield, as I've
Speaker 1: been doing a lot more lately, I'm looking at negative
Speaker 1: hundred and thirteen, but we worked out at negative one
Speaker 1: two yesterday. Why, um, with your degrees in finance and
Speaker 1: business and your cf A, why why do we see
Speaker 1: rates this low? Well, I mean, I think you still
Speaker 1: have central banks around the world still buying a lot
Speaker 1: of bonds, which obviously puts downward pressure on yields in
Speaker 1: many cases. I think you also have a lot of
Speaker 1: fears in the market. And so if you think about
Speaker 1: it in the way we've thought about it over the
Speaker 1: past few months, is that we got to June and
Speaker 1: we know where we're we thought we might be, and
Speaker 1: everything was pushing that direction. So COVID cases were coming down,
Speaker 1: economic growth was finally here, and then we got there
Speaker 1: and people said what's next. And so you have a
Speaker 1: cross current of fears that I think are out there.
Speaker 1: You have too much crowd who's worried about inflation and
Speaker 1: thinks that may cause the Fed to do something. You
Speaker 1: have the two little crowd who's worried about the delta
Speaker 1: Iron was worried about China rolling over, was worried about
Speaker 1: peak economic growth. And last, but not least, you have
Speaker 1: the too expensive crowd, who thinks that stocks are too
Speaker 1: expensive and therefore there are for a fall. And I
Speaker 1: think the meeting place of all those three cross currents
Speaker 1: was in the ten year Treasure, because that is still
Speaker 1: the safety place for markets. And when you combine that
Speaker 1: with what the bet is doing. I think that put
Speaker 1: the downward pressure on. I do think that will alleviate
Speaker 1: as you move towards the end of the year, and
Speaker 1: some of those fears prove out to be um not
Speaker 1: so scary as what people imagine they may be. Eventually,
Speaker 1: I think we push higher in the stock market, which
Speaker 1: probably takes some money back out of the bond market
Speaker 1: towards the stock market. But within the stock market, I
Speaker 1: feel like you're seeing those growth fears show up as
Speaker 1: well in that Now the NASDAC one hundred is up
Speaker 1: on the year to date basis, and the small caps
Speaker 1: are lagging. They're only up twelve percent. And I know
Speaker 1: you like the small caps. Why do you think that
Speaker 1: play is going to come back into favor. Yeah, I mean,
Speaker 1: I think that's also what's interesting is it used to
Speaker 1: be when the when people will worry about growth, it
Speaker 1: was stocks versus bonds in some way, shape or form
Speaker 1: more aggressively. Think about last year. Now I just think
Speaker 1: we're at it's it's reopening trade versus not reopening trade,
Speaker 1: or peak growth trade versus more growth trade. To me,
Speaker 1: I think economic growth remains strong. I don't think we're
Speaker 1: at a peak, I think we're at a plateau. If
Speaker 1: I take you back to the I s M this week,
Speaker 1: think about this. You have a ton of new orders
Speaker 1: coming in, you have huge backlocks of order. You have
Speaker 1: to chew through those before growth slows, and even then
Speaker 1: you still have an inventory rebuilt because customer inventories are
Speaker 1: at all time lows. Do you think about the one
Speaker 1: point six trillion the next US savings upon consumer balance sheets?
Speaker 1: I don't think that peak growth yet. And so if
Speaker 1: you're not a peak growth, if real inter negative as
Speaker 1: was mentioned earlier by Matt, if valuations are cheaper, and
Speaker 1: if people are over invested in tech stocks and memestock,
Speaker 1: I think there's a transition that has to go back
Speaker 1: to cychnicals, value and small caps, which typically are beneficial
Speaker 1: in that type of environment that I just laid out.
Speaker 1: And I think that's going to be the trade towards
Speaker 1: the end of the year of some of these years.
Speaker 1: Uh kind of Ebb, it's very bullish, brent Um. You
Speaker 1: know the the major index, right, what do you think
Speaker 1: for the SMP year end? Well, I think the SMP
Speaker 1: probably does the least of all the U S Indussies,
Speaker 1: and I think there's actually an opportunity in the Eurozone,
Speaker 1: and so you know, I think we're past the easiest
Speaker 1: stage of a lot of the trades that we talked
Speaker 1: talked about. Um, certainly those were trades that we've put
Speaker 1: on for over a year. And just for reference, we
Speaker 1: did take our equity ratio down a bit in June
Speaker 1: to reflect the fact that a lot of the games
Speaker 1: have made. But we're still overweight equities and we still
Speaker 1: think there's opportunities, but I think returns more moved towards
Speaker 1: the you know, the eight to ten return range, or
Speaker 1: maybe even a bit lower on the larger indices. Was
Speaker 1: still some opportunities in value small cap and even probably
Speaker 1: more so in the Eurozone, whether they're just emerging from
Speaker 1: delta um where their earnings are growing rapidly. In fact,
Speaker 1: this may surprise some. Well, they're finally gonna overtake their
Speaker 1: two thousand and seven pre h GFC high, so let's
Speaker 1: take them that long. Um, that was a cheap market
Speaker 1: that you did, the catalyst, and I think it has
Speaker 1: it right now, all right, Brent, great to get some
Speaker 1: time with you. Thanks very much for your insight. Brent
Speaker 1: Shooty there, Chief investment Strategist, at Northwestern Mutual Wealth Management.
Speaker 1: Brent overseas two and twenty billion dollars in assets, and
Speaker 1: he is bullish stocks, but as he said, more the
Speaker 1: small caps, cyclicals and what's going on in Europe. Thanks
Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
Speaker 1: and listen to interviews at Apple Podcasts or whatever podcast
Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
Speaker 1: Matt Miller three. On Fall Sweeney, I'm on Twitter at
Speaker 1: pt Sweeney Before the podcast. You can always catch us
Speaker 1: worldwide at Bloomberg Radiat