WEBVTT - Markets, Snap, Credit, And Motorcycle Sharing (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.400 at Bloomberg dot com slash podcast. All right, let's check 0:00:22.400 --> 0:00:24.560 in with Jim Lowell. He's a chief investment officer at 0:00:24.600 --> 0:00:28.080 Advisor Investments. Maybe we'll get his communing anecdote of the day. 0:00:28.120 --> 0:00:30.280 But Jim, what are you doing with this market? Here? 0:00:30.320 --> 0:00:33.400 We've got nowhere to hide. Bond market, I got crushed, 0:00:33.640 --> 0:00:37.280 equity markets. I'm near bear market territory. What are you 0:00:37.320 --> 0:00:43.000 doing well? We're taking a discipline diversified course. We know 0:00:43.159 --> 0:00:46.519 that bear markets are are not unusual, even though this 0:00:46.560 --> 0:00:50.400 one feels unusual given the lack of volatility that we 0:00:50.440 --> 0:00:53.560 saw in the market over the past several years. Um, 0:00:53.600 --> 0:00:57.840 we know that every downturn feels as if the current 0:00:57.880 --> 0:01:01.680 conditions an inevitable outcome will be different. We don't think 0:01:01.720 --> 0:01:04.200 they will be, but we do think we're in for 0:01:04.280 --> 0:01:08.319 a protracted period of time where investors nerves will be tested, 0:01:08.920 --> 0:01:11.440 and they will need to stay focused on their long 0:01:11.560 --> 0:01:16.319 term investment goals rather than the near term price disruptions, 0:01:16.319 --> 0:01:20.679 which of course are are alarming, made excessively so, not 0:01:20.800 --> 0:01:24.319 just due to the return of volatility, but of course 0:01:24.440 --> 0:01:27.959 due to the general geopolitical state of the world, which 0:01:28.000 --> 0:01:31.679 feels as the things that become more unhinged than usual. 0:01:32.080 --> 0:01:35.520 You know, I'm looking up at uh Bloomberg surveillance on 0:01:35.520 --> 0:01:38.280 on television right now, Jim. We have Bob Prince on. 0:01:38.480 --> 0:01:43.720 He's the co chief investment officer at Bridgewater UM, one 0:01:43.800 --> 0:01:46.319 of the biggest hedge funds and not the biggest hedge 0:01:46.360 --> 0:01:50.320 fund in the country. He says that this inflation is 0:01:50.360 --> 0:01:53.360 like the seventies. Again, he says, the US has headed 0:01:53.360 --> 0:01:56.920 towards a stagflation the likes of which we haven't seen 0:01:56.960 --> 0:01:59.400 since the nineteen seventies. And there was there was a 0:01:59.440 --> 0:02:04.880 while when, UM, you know, big investors, UM, super rich guys, 0:02:04.920 --> 0:02:07.400 we're saying this is nothing like the seventies. But now 0:02:07.440 --> 0:02:14.640 it seems to be the common the consensus. Do you agree, No, 0:02:15.520 --> 0:02:19.240 I don't agree, and I certainly hope that that he 0:02:19.400 --> 0:02:23.280 isn't right, because that grinding bear market of nineteen seventy 0:02:23.280 --> 0:02:27.760 four through night three was profoundly difficult for anyone who 0:02:27.880 --> 0:02:30.760 was who anyone who is an investor, are they a 0:02:30.800 --> 0:02:33.880 professional or individual? I would say that I take some 0:02:33.960 --> 0:02:36.240 measure of comfort in the fact that the vast majority 0:02:36.240 --> 0:02:39.079 of hedge funds don't seem to deliver on what their 0:02:39.120 --> 0:02:41.440 mandate is. Maybe this time will be different for them. 0:02:41.680 --> 0:02:44.880 It's the perfect environment for those who have skill sets 0:02:44.919 --> 0:02:48.040 that enable them to short the market UM, but those 0:02:48.040 --> 0:02:50.880 skill sets usually are found wanting in terms of the 0:02:50.960 --> 0:02:54.320 return that they deliver. I do think that we're in 0:02:54.360 --> 0:02:59.919 for a protracted period of inflationary pressure UM, you know, ironic, 0:03:00.040 --> 0:03:04.400 We of course set against the potential for some kind 0:03:04.440 --> 0:03:07.440 of recession, whether it's a technical recession of two negative 0:03:07.480 --> 0:03:12.080 quarters of GDP or just an existential recession where businesses 0:03:12.080 --> 0:03:16.600 and consumers stop spending enough to trigger UM, to trigger 0:03:16.680 --> 0:03:20.880 the kind of recessionary environment where it becomes even more 0:03:20.960 --> 0:03:24.920 difficult to maneuver. I take some measure of comfort in 0:03:24.919 --> 0:03:27.760 the fact that while the first quarter obviously was the 0:03:27.800 --> 0:03:31.799 worst quarter for bonds in fifty years of bond buffers 0:03:31.800 --> 0:03:37.160 did not hold ever since then, they've been behaving relatively 0:03:37.200 --> 0:03:40.720 reasonably in terms of on down days, giving us that 0:03:40.800 --> 0:03:44.200 defensiveness that we we aim to achieve from them in 0:03:44.280 --> 0:03:49.000 our portfolios, and on updates, letting the market run where 0:03:49.040 --> 0:03:51.839 it runs on the equity side. So I think we're 0:03:51.880 --> 0:03:55.880 getting to a more defensible position in terms of asset allocation, 0:03:56.480 --> 0:03:59.240 but we're not out of the woods yet. I think 0:03:59.280 --> 0:04:02.600 we've got considerable downward pressure to have to be able 0:04:02.640 --> 0:04:05.520 to manage through it all right, Jim, thanks so much 0:04:05.800 --> 0:04:08.200 for checking in with us. We appreciate that. Jim Lowell, 0:04:08.240 --> 0:04:15.240 chief investment officer for Advisor Investments. Again, a sell off 0:04:15.240 --> 0:04:18.600 in the marketplace today, uh and the equities led by 0:04:18.680 --> 0:04:21.120 nastac off three and a half percent. Again some tough 0:04:21.160 --> 0:04:24.600 economic data, as Greg was pointing out, also snapped down 0:04:25.480 --> 0:04:29.440 on some cautious outlook, bringing all the other social media 0:04:29.560 --> 0:04:31.880 names down with I'm looking at Alphabet here down eight 0:04:31.920 --> 0:04:34.640 percent as well. So we want to talk tech. I 0:04:34.720 --> 0:04:36.000 want to kind of bring it out a little bit 0:04:36.040 --> 0:04:38.280 and and not just focus on Snap but really on 0:04:38.320 --> 0:04:40.560 the whole tech space here and what we're seeing out there. 0:04:41.080 --> 0:04:43.559 A lot of carnage. Dan i'ves Managing director and senior 0:04:43.600 --> 0:04:46.680 equity analyst, and web Bush Securities has had a very 0:04:46.680 --> 0:04:49.560 constructive view on a tech space for a long time, 0:04:49.880 --> 0:04:52.680 has been right. Then as we step back here, let's 0:04:52.680 --> 0:04:54.760 step back a little bit just from Snap and we 0:04:54.920 --> 0:04:57.920 we can talk about Snap and what the um Mr 0:04:57.960 --> 0:05:00.520 Spiegel's comments mean for the space, But how are you 0:05:00.560 --> 0:05:02.159 looking at tech here and what we're seeing in the 0:05:02.400 --> 0:05:05.680 in the pullback in these names. Look, I think it's 0:05:05.720 --> 0:05:10.800 just indiscriminate selling regardless of where the companies play enterprise, 0:05:10.960 --> 0:05:15.760 cyber cloud, consumer, ad tech, And I think what we're 0:05:15.800 --> 0:05:19.160 just seeing is just a massive risk off regardless of prise. 0:05:19.360 --> 0:05:23.120 And it looks when when tech sells off on a 0:05:23.279 --> 0:05:26.080 Snap warning that's been one of the more little quality 0:05:26.160 --> 0:05:29.800 tech companies last decade, it just shows just how white 0:05:29.880 --> 0:05:34.680 knuckle this is. But of course it makes sense if 0:05:35.680 --> 0:05:38.240 you're in the business that relies on advertising revenue and 0:05:38.279 --> 0:05:42.520 advertisers no longer paying for UM your services. Is this 0:05:43.800 --> 0:05:46.120 are the broader implications clear to you? Or do you 0:05:46.160 --> 0:05:51.720 does it still feel like a Snap um specific problem? Look, 0:05:51.720 --> 0:05:55.800 I mean Snap they bleamed everything except the wind, you know, 0:05:55.839 --> 0:05:58.400 in terms of their their warning, and I think it 0:05:58.520 --> 0:06:01.599 just comes down to one d The point clearly we're 0:06:01.600 --> 0:06:04.480 seeing softness and then that's and that's something that's already 0:06:04.480 --> 0:06:07.400 beaten too. These stocks, I mean a lot of these 0:06:07.600 --> 0:06:10.880 names right now are baking in a mild to modest 0:06:10.960 --> 0:06:14.520 recession already. You know, our point is you want to 0:06:14.560 --> 0:06:18.960 stay away from the consumer ad plays, but you want 0:06:18.960 --> 0:06:21.960 to be more focused on enterprise because enterprise is what 0:06:22.080 --> 0:06:24.120 we believe is holding up strong, and that's going to 0:06:24.200 --> 0:06:27.400 be a popular strength, you know, during this market storm. 0:06:27.400 --> 0:06:31.920 But overall, I believe tech is way oversold relative to 0:06:32.279 --> 0:06:35.240 what I believe would be a mild recession, where in 0:06:35.400 --> 0:06:38.480 streets baking. And much worse all right now is that 0:06:38.920 --> 0:06:44.479 as you know, is off from it's high. So I mean, 0:06:44.480 --> 0:06:46.920 how do let's start with maybe just the biggest name 0:06:47.000 --> 0:06:49.280 that I know you cover Dan and a lot of 0:06:49.320 --> 0:06:51.840 folks own in their portfolio, which is Apple. How do 0:06:51.880 --> 0:06:54.720 you think about that kind of a name. Look, I mean, 0:06:54.760 --> 0:06:56.880 we just did checks last week, and if you look 0:06:56.880 --> 0:07:00.240 in the supply chain in China, you know, Regard, we 0:07:00.279 --> 0:07:04.640 won't see a zero COVID in China. It's tracking slightly 0:07:04.680 --> 0:07:08.080 better than expectations so far, and I think it just 0:07:08.120 --> 0:07:12.720 shows that pockets of demand across the boarder are holding 0:07:12.800 --> 0:07:15.360 up better than expected. And I think Apple is a 0:07:15.400 --> 0:07:19.360 good example one where the valuation here is basically discounting 0:07:19.480 --> 0:07:24.360 thirty You know of of demand that goes away, which 0:07:24.400 --> 0:07:26.720 we disagree with, and that's why I think you have 0:07:26.800 --> 0:07:29.600 to separate. You can't treat every company equally. I think 0:07:29.640 --> 0:07:33.119 you look at names like Apple, Microsoft, the cloud theme 0:07:33.200 --> 0:07:35.280 in terms of ways to play Google as well as 0:07:35.320 --> 0:07:39.600 Amazon cybersecurity, and I think that's we are going to 0:07:39.680 --> 0:07:41.960 see just more of a have and have not in 0:07:42.040 --> 0:07:44.600 tech And I think this is just a perfect example. 0:07:44.600 --> 0:07:47.400 It's playing out. But again, good news is going to 0:07:47.480 --> 0:07:50.000 be perceived as bad news. Bad news is gonna be 0:07:50.160 --> 0:07:52.920 perceived as worse news. That's just a cycle that we're 0:07:52.920 --> 0:07:56.400 in right now. If we look at your universe of coverage, Dan, 0:07:57.080 --> 0:08:00.360 you know, not just Tesla and Apple, but also I 0:08:00.360 --> 0:08:05.840 guess Um, Palo Alto, Ziff Davis, rivan Um, some of 0:08:05.840 --> 0:08:09.280 the names seemed like they would be very poorly affected 0:08:09.360 --> 0:08:13.760 by worsening relationships with China. Others wouldn't be affected. How 0:08:13.800 --> 0:08:18.280 do you see, um, your universe of stocks. If US 0:08:18.400 --> 0:08:22.520 China relationships get worse, look, I think that's the black Swan. 0:08:22.680 --> 0:08:25.680 Then right, and and of course even we've seen this 0:08:25.720 --> 0:08:28.760 week there's just worries about tensions there as well as 0:08:28.760 --> 0:08:32.960 Taiwan and look at China. That continues to right now 0:08:33.120 --> 0:08:36.000 be the dark cloud over attack, especially when it comes 0:08:36.000 --> 0:08:39.720 to Apple, when it comes to Tessa, the supply chain, 0:08:39.800 --> 0:08:42.720 which is really key across the board in terms of chips. 0:08:43.080 --> 0:08:46.120 But that's also why believe when it comes to software, 0:08:46.240 --> 0:08:50.240 whether it's cloud, whether it's cyber security, those are much 0:08:50.280 --> 0:08:52.560 more insulated. And I think more and more we're gonna 0:08:52.600 --> 0:08:56.480 see these enterprise names that are going to continue to outperform. 0:08:56.520 --> 0:08:58.720 You know is right now, there's just worries about what's 0:08:58.760 --> 0:09:03.000 going on. I think snapped send flamers because of also 0:09:03.120 --> 0:09:06.520 the niature of just missing four weeks after they give 0:09:06.640 --> 0:09:10.840 guidance to basically just takeaway guidance, say it's the disaster 0:09:10.960 --> 0:09:14.880 and give minimal reasoning around that. I mean that, I 0:09:14.920 --> 0:09:18.520 think that's really what scared investments here. You know that 0:09:18.679 --> 0:09:22.720 you mentioned you know cybersecurity clouds too. Of the areas 0:09:22.720 --> 0:09:27.640 the stronger areas within the whole text substack. Uh Dan, 0:09:28.160 --> 0:09:33.079 what are those companies saying about maybe customer demand? Is 0:09:33.120 --> 0:09:37.560 there anything that a recession fears are coming through and 0:09:37.559 --> 0:09:41.440 maybe their order books at all looks so far we 0:09:41.480 --> 0:09:43.920 haven't seen it. I mean, you've seen some cracks in 0:09:44.040 --> 0:09:46.600 terms of slower hiring, and I think you'll see sales 0:09:46.640 --> 0:09:50.839 for US next week. Talk about strength overall Europe. Weakness 0:09:50.840 --> 0:09:52.839 has been spotty in terms of what we've seen, and 0:09:52.880 --> 0:09:55.480 that's why I Apoloy just keeps coming down to right 0:09:55.520 --> 0:09:59.640 now beat into these stocks. Are street numbers coming down 0:09:59.640 --> 0:10:04.679 by in two three. So if it's anything between a 0:10:04.800 --> 0:10:09.439 soft landing, even just a slight to modest recession, then 0:10:09.920 --> 0:10:13.160 than stocks today Texas especially a way over sold here. 0:10:13.640 --> 0:10:16.400 And that's why we're just right now in this scenario 0:10:16.600 --> 0:10:20.079 spray char analysis just given what we've called, you know, 0:10:20.240 --> 0:10:23.920 Rubric's Q macro and any bad news is just going 0:10:23.960 --> 0:10:28.200 to get new exacerbated. That's what we're seeing today. Any 0:10:28.240 --> 0:10:32.000 concern about the housing market, Dannemy, We've seen really bad 0:10:32.080 --> 0:10:36.040 numbers today in new home sales, and I'm starting to 0:10:36.040 --> 0:10:39.040 hear more and more people say this this could turn 0:10:39.160 --> 0:10:44.000 quickly and be maybe the gray Swan that people had 0:10:44.040 --> 0:10:48.000 had difficulty spotting. Well, I I view it. I mean 0:10:48.000 --> 0:10:49.439 there's differently in a view, but I view it that 0:10:49.559 --> 0:10:53.160 that also takes some of the said's job. It already 0:10:53.160 --> 0:10:55.600 takes care of it, right, That would ultimately be less 0:10:55.640 --> 0:10:57.880 interest rate hikes that you'll see down the road. After 0:10:57.960 --> 0:11:00.360 fifty and fifty you're gonna see a fro off come 0:11:00.400 --> 0:11:03.720 at the market whoeverages come out of the system. But 0:11:03.800 --> 0:11:05.800 that's why I do not view this as a dot 0:11:05.840 --> 0:11:08.840 com bubble burst Todd Oh. I don't look at OH 0:11:08.920 --> 0:11:11.520 eight or nine see any comparisons. I just view as 0:11:11.520 --> 0:11:14.440 a massive overcraction risk who's coming out of the system. 0:11:14.440 --> 0:11:16.760 But again, in the news cycle that we're in with 0:11:16.800 --> 0:11:19.160 what we're seeing horrific in Ukraine as well as zero 0:11:19.200 --> 0:11:23.320 COVID in China, you're just seeing investadors, regardless of price, 0:11:23.400 --> 0:11:26.640 get out of risk assets. All right, Dan, Good, good 0:11:26.720 --> 0:11:29.520 overview there from your perspective. We always appreciate getting the 0:11:29.600 --> 0:11:32.839 big tech call there, Dan, i'ves managing director and senior 0:11:32.840 --> 0:11:36.640 equity analysts at web Bush Securities and again calling out 0:11:37.360 --> 0:11:39.760 some of the stronger areas from Dan's perspective in the 0:11:39.800 --> 0:11:42.720 tech stack, call it the cloud, which is certainly a 0:11:42.720 --> 0:11:44.720 big growth there we've heard about for many years, as 0:11:44.760 --> 0:11:48.480 well as cybersecurity as two of maybe the stronger areas 0:11:48.920 --> 0:11:52.480 within the tech spend that he thinks will fare better, 0:11:52.480 --> 0:11:54.040 and they certainly are on the way down here in 0:11:54.120 --> 0:11:57.600 terms of relative underperformance, but also on the turn as well. 0:12:01.800 --> 0:12:07.280 I get about literally two pitches from PR like flax 0:12:07.320 --> 0:12:10.800 every day. Mostly don't ever open even open the emails. 0:12:11.320 --> 0:12:15.640 I got one though, um from Lisa Peterson saying like, hey, dude, 0:12:15.720 --> 0:12:18.280 I hear you're into bikes. If you want to go 0:12:18.320 --> 0:12:20.840 to any city and rent a bike, that's a difficult 0:12:20.840 --> 0:12:23.840 thing to do. Easy with cars part of motorcycles, She says, 0:12:23.880 --> 0:12:26.400 I have a solution for you. It's called Rider's Share, 0:12:26.840 --> 0:12:28.840 And so she pitched me them one of the co 0:12:28.920 --> 0:12:33.440 founders and the ceomore, Guillermo Cornejo, to come on and 0:12:33.480 --> 0:12:36.480 talk about his business, which I just think is absolutely fascinating. 0:12:36.480 --> 0:12:38.520 We got him now on the line. Guiermo, thanks so 0:12:38.600 --> 0:12:43.120 much for joining us. Um, I'm dreaming big for this company, 0:12:43.160 --> 0:12:45.360 but you guys are just getting started. Tell us about 0:12:45.760 --> 0:12:48.120 how you got the idea and how you're executing on it. 0:12:49.320 --> 0:12:53.920 Thank you. Right there, Share right there's share dot Com 0:12:54.440 --> 0:12:57.880 started four years ago because I could not afford to 0:12:57.920 --> 0:13:01.280 buy a motorcycle, and I really wanted to write one, 0:13:01.920 --> 0:13:05.880 but renting was even more expensive than owning. So I 0:13:05.920 --> 0:13:08.800 was like, it's time to you know, bring a peer 0:13:08.840 --> 0:13:12.600 to peer into motorcycle rentals. And so how has that 0:13:12.600 --> 0:13:14.840 worked out? I noticed that I just did a quick 0:13:14.840 --> 0:13:19.040 search around, um where I live in Westchester, and I 0:13:19.080 --> 0:13:22.240 can get everything from a Vespa for like thirty dollars 0:13:22.280 --> 0:13:27.440 a day to yeah, Harley like Street Clyde for a 0:13:27.520 --> 0:13:30.640 hundred and fifty which or actually I think I saw 0:13:31.080 --> 0:13:33.040 Harley Fat Boy for like ninety bucks, which is a 0:13:33.040 --> 0:13:35.600 great price. There's a big differentiation in price, but there's 0:13:35.640 --> 0:13:39.800 a lot of supply out there just going peer to peer. UM, 0:13:39.840 --> 0:13:42.120 I feel like there's more growth though, Guillermo, you could 0:13:42.200 --> 0:13:47.280 get rental uh companies, dealerships involved, you could go international, 0:13:47.440 --> 0:13:49.160 get out of the US. I mean, what what what 0:13:49.200 --> 0:13:53.880 are your plans for the company right now? Our main 0:13:53.920 --> 0:13:57.120 focus is to continue to grow that supply. UM, we 0:13:57.200 --> 0:14:00.160 have thousands of motorcycles, but we have an appen men 0:14:00.200 --> 0:14:04.040 to support dozens of thousands of motorcycles and just and 0:14:04.280 --> 0:14:07.680 for the people that don't know, UM, we don't own 0:14:07.679 --> 0:14:10.800 any of the motorcycles. We use the airbnb model basically, 0:14:11.440 --> 0:14:14.800 but You've got insurance set up right, correct. We provide 0:14:14.800 --> 0:14:17.680 insurance and road and assistance. We've met the writers, you know. 0:14:17.720 --> 0:14:22.680 We we basically the risk the transaction as much as possible. Gamma. 0:14:22.760 --> 0:14:25.480 I'm a big fan of the company Harley Davidson. Ever 0:14:25.480 --> 0:14:27.200 since it kind of came public. I always followed the 0:14:27.320 --> 0:14:29.160 quarterly results, and I know one of the challenges for 0:14:29.200 --> 0:14:34.479 them is getting younger people into the motorcycle. UM Activity 0:14:34.560 --> 0:14:37.200 talk to us how you view that side of the business, 0:14:37.280 --> 0:14:41.120 the demand side, the total market size. When I work 0:14:41.200 --> 0:14:44.240 in the auto industry, we saw that millennials actually love 0:14:44.360 --> 0:14:48.040 buying cars when they kind of afford it. So that's 0:14:48.120 --> 0:14:49.880 kind of what riders shared asked. We make writing a 0:14:49.920 --> 0:14:53.440 motorcycle more accessible, so the media and age of our 0:14:53.520 --> 0:14:58.080 user is in the midferities. We're looking to partner with 0:14:58.080 --> 0:15:00.520 O E. M S to get more you know, more 0:15:00.560 --> 0:15:04.760 butts on seats. Yes, UM, you should definitely hook up 0:15:04.840 --> 0:15:07.920 with Harley Davidson. One of the cool things about that company, 0:15:07.920 --> 0:15:10.920 and I'm obviously a huge Ducati fan myself as well. Course, 0:15:11.360 --> 0:15:15.880 UM both of them are going electric. Harley is already there. 0:15:16.000 --> 0:15:19.200 Ducatti is building the electric bikes for UM Moto g 0:15:19.360 --> 0:15:23.240 P does this? Do you think this is a big 0:15:23.280 --> 0:15:26.040 game changer because there's a lot of kids out there 0:15:26.040 --> 0:15:30.120 who don't like extremely loud uh you know, fat bobs 0:15:30.160 --> 0:15:34.040 with straight pipes. I happen to love that that sound, Harley, 0:15:34.360 --> 0:15:37.480 you know the classic potato potato potato. It's so loud 0:15:37.560 --> 0:15:40.600 and offensive, which is why I like it. But the kids, 0:15:40.800 --> 0:15:43.520 you know, are different. Um, do you think switching to 0:15:43.600 --> 0:15:45.560 electric is going to be a big difference for the 0:15:45.600 --> 0:15:49.880 whole motorcycle industry? Gammo? They're easier to ride because young 0:15:49.960 --> 0:15:53.960 kids don't know how to ship gears. Oh true, you 0:15:53.960 --> 0:15:55.680 don't have to worry about you don't have to worry 0:15:55.680 --> 0:16:01.160 on maintenance as much. But electric motorcycles aren't there yet. 0:16:01.240 --> 0:16:04.360 None of them has the ranch that at Tesla has, 0:16:04.400 --> 0:16:07.680 so I think we're still I mean, the technology is there, 0:16:07.840 --> 0:16:09.680 somebody has needs to come up with a design that 0:16:09.720 --> 0:16:12.000 has very low drag and very long range. Well, and 0:16:12.040 --> 0:16:13.880 they're expensive, right, I mean one of the things you 0:16:13.960 --> 0:16:16.720 enable people to do is to dip a toe in 0:16:16.720 --> 0:16:20.520 the water and see if they like it. Absolutely. And 0:16:20.680 --> 0:16:23.760 because like the motorcycles have very low maintenance cost, we 0:16:23.760 --> 0:16:25.800 we can make their rental sit even more affordable by 0:16:25.880 --> 0:16:28.600 using three bags. You know, I'm very interested. I've told 0:16:28.600 --> 0:16:31.800 you Matt and getting a vespa in my middle age, 0:16:31.800 --> 0:16:33.800 and maybe I can try it out through this thing 0:16:34.080 --> 0:16:36.680 you can't. In fact, there's a bunch of vespers I 0:16:36.680 --> 0:16:40.080 saw in New Jersey near you. Um, it looks like 0:16:40.440 --> 0:16:44.840 one guy who has just a whole garage full of scooters. Garmo, great, 0:16:44.840 --> 0:16:47.040 great talking to you, UM, and we wish you the best, 0:16:47.120 --> 0:16:50.320 Lucky Armore Cornejo there co founder and CEO of riders 0:16:50.360 --> 0:16:53.440 Share UM. And if you are interested in checking out 0:16:53.600 --> 0:16:56.240 a motorcycle or a scooter or anywhere around the country, 0:16:56.360 --> 0:16:58.920 UM America that is, you can go ahead and check 0:16:58.960 --> 0:17:01.880 it out. And Paul I recommend to you to try 0:17:01.960 --> 0:17:06.000 because for me, UM, my first ride on a Vestpo 0:17:06.160 --> 0:17:09.440 was a life changing event and I think it's still 0:17:09.480 --> 0:17:12.200 the most fun way to get around cities is riding 0:17:12.240 --> 0:17:14.320 a Vestpo or any kind of scooter. So I think 0:17:14.320 --> 0:17:17.560 I might have to do scooting around the summit, New Jersey. 0:17:17.880 --> 0:17:25.679 That was good stuff. Jason Greenblatt, he's a senior portfolio 0:17:25.720 --> 0:17:29.280 manager at American Century Investments, And I want to talk 0:17:29.320 --> 0:17:34.439 fixed income, obviously with with you Jason, Um, but I 0:17:34.480 --> 0:17:37.320 want to start it out from the perspective of the consumer, 0:17:37.400 --> 0:17:41.280 because we just heard Brian moynihan on Bloomberg Surveillance saying 0:17:41.320 --> 0:17:45.560 that the idea that UM Americans have spent their stimmies 0:17:45.560 --> 0:17:48.240 already is the wrong idea. The idea that the consumer 0:17:48.280 --> 0:17:50.480 is in a difficult place right now, at least from 0:17:50.480 --> 0:17:52.480 his vantage point as running one of the biggest credit 0:17:52.520 --> 0:17:55.879 card operations in the country, is just wrong. Um, what 0:17:55.960 --> 0:18:00.000 do you think about the consumer, especially given the inflation 0:18:00.240 --> 0:18:02.960 that we're seeing in concerns, little cracks that we're seeing 0:18:03.000 --> 0:18:07.320 in markets like housing. Good morning, Thanks for having me on. Yeah, 0:18:07.359 --> 0:18:11.879 I think the consumer topic is is certainly uh topical today. 0:18:11.920 --> 0:18:15.919 Whether you mentioned Brian moynihan with Bank of America today, 0:18:15.920 --> 0:18:19.240 for Jamie Diamond and JP Morgan yesterday talking about the 0:18:19.240 --> 0:18:22.680 strength of the consumer. We we agree. We think that 0:18:22.760 --> 0:18:25.960 you know, consumers in great shape today. However, what's the 0:18:26.040 --> 0:18:28.960 question for tomorrow? And we think that we're starting to 0:18:29.000 --> 0:18:32.760 see cracks. You know, we mentioned Abercrombie and Fitch, we 0:18:32.800 --> 0:18:36.480 had Target and Walmart, and the shift in consumer spending, 0:18:36.680 --> 0:18:41.159 this change from goods two services is certainly having an 0:18:41.160 --> 0:18:45.600 impact and inflation is front and center. Rising rates, higher 0:18:45.640 --> 0:18:48.439 costs passed through of costs that we saw in the 0:18:48.480 --> 0:18:52.560 first quarter is starting away on consumer demand, and we 0:18:52.600 --> 0:18:55.639 think that the consumer may be in trouble in the 0:18:55.680 --> 0:18:57.760 second half of this year. And where does that hit 0:18:58.080 --> 0:19:01.720 In fixed income we were just talking about out UM, 0:19:01.760 --> 0:19:06.560 you know, high yield problems crack starting to show, so 0:19:07.440 --> 0:19:11.520 does it make its way down to investment grade? Investment 0:19:11.560 --> 0:19:15.680 grade is is certainly taking a licking year to date, 0:19:15.840 --> 0:19:21.800 right between rising treasury prices, rising treasury yields, I'm sorry, 0:19:22.040 --> 0:19:24.960 and also credit spreads widening, But we could also say 0:19:25.000 --> 0:19:29.200 that yields are more normalized at this point at four 0:19:29.200 --> 0:19:32.639 and a half percent. Where it starts to to impact 0:19:33.359 --> 0:19:37.600 UM credit particularly is is valuations on the equity side 0:19:37.600 --> 0:19:41.560 become cheaper, so do M and A potentials and leveraging 0:19:41.560 --> 0:19:45.480 A balance sheets. So we're very worried about what could 0:19:45.480 --> 0:19:48.919 be coming down the pipe in terms of new supply 0:19:49.000 --> 0:19:52.560 of debt to to either buy back shares and or 0:19:52.720 --> 0:19:56.119 buy companies from from company A to company B, whether 0:19:56.160 --> 0:20:00.720 that's private equity or from financial buyers. You know in 0:20:00.800 --> 0:20:04.639 the UM, you know space of company A buying up 0:20:04.760 --> 0:20:08.960 here you know, Uh, Jason, I just punched an I 0:20:09.240 --> 0:20:11.720 N go to get the Bloomberg Index browser, and I 0:20:11.760 --> 0:20:16.000 see the total return for US corporate bonds off negative 0:20:16.520 --> 0:20:20.080 thirteen point three six percent year to date. So you are, 0:20:20.240 --> 0:20:22.720 at American Century, a member of the Global Fixed Income 0:20:22.760 --> 0:20:26.400 Investment Committee, which sets investment outlooks for the global fixed 0:20:26.440 --> 0:20:30.199 income group. Holy cow, what do you tell your teams? 0:20:30.320 --> 0:20:33.680 What do your teams tell you after a minus first 0:20:33.760 --> 0:20:36.960 four and a half months of the year. Yeah, it's 0:20:37.000 --> 0:20:42.000 just a fair point there. Um. Certainly growth is slowing. Um, 0:20:42.880 --> 0:20:46.919 the FED is trying to combat inflation, and you know, 0:20:47.240 --> 0:20:49.800 as early as two plus weeks ago we had Chairman 0:20:49.840 --> 0:20:52.760 Powell saying they will do what it takes to bring 0:20:52.840 --> 0:20:57.400 inflation down to two. Now we're starting to hear some 0:20:57.400 --> 0:21:01.800 some rumblings of perhaps will will pause in September. We 0:21:01.840 --> 0:21:05.720 had Bostick out yesterday talking about September is is maybe 0:21:05.840 --> 0:21:08.080 a point where we'll wait and see on the data 0:21:08.560 --> 0:21:11.199 as far as the outlook goes. You know, I know 0:21:11.320 --> 0:21:13.960 recession is certainly on a lot of people's minds. It's 0:21:14.000 --> 0:21:18.119 certainly a discussion point for US internally. Um, that's not 0:21:18.240 --> 0:21:20.400 our base case at the moment, I would say we're 0:21:20.400 --> 0:21:23.640 more in the stagflation camp, where we think inflation will 0:21:23.680 --> 0:21:26.639 remain stubbornly high. It may come off of eight and 0:21:26.640 --> 0:21:29.840 a half percent, but it will remain high. And then 0:21:29.880 --> 0:21:33.879 you have a consumer having this negative wealth effect, and 0:21:33.960 --> 0:21:36.680 so we think growth is slowing. It's gonna it's gonna 0:21:36.680 --> 0:21:38.919 slow dramatically in our minds in the second half of 0:21:38.920 --> 0:21:44.960 this year. So UM, I wonder what what you're telling then, investors? 0:21:44.960 --> 0:21:50.800 I mean, you have what two billion in assets under management. UM. 0:21:51.520 --> 0:21:54.520 You've seen obviously market pullbacks of the past, but they're 0:21:54.560 --> 0:21:58.720 different from this, right, this is UH fiscal a monetary 0:21:58.760 --> 0:22:03.639 stimulus driven UM issue. How to investors in fixed income 0:22:03.680 --> 0:22:08.800 deal with that? Sure? UM, you know, for sure taking 0:22:08.840 --> 0:22:12.800 on higher quality, more liquid risk to us makes sense, 0:22:12.840 --> 0:22:16.199 particularly in the front end. We think that credit spreads 0:22:16.200 --> 0:22:19.320 and rates have repriced enough where you can start to 0:22:19.359 --> 0:22:22.480 dip your toes in and and earn carry to help 0:22:22.560 --> 0:22:27.119 protect you in the event that rates do rise further. UM. 0:22:27.200 --> 0:22:29.520 The other area where we've really been focused on our 0:22:29.560 --> 0:22:33.200 story bonds bonds that have a catalyst, for example, rising 0:22:33.240 --> 0:22:37.320 stars UM bonds that perhaps you know are a bit 0:22:37.359 --> 0:22:42.480 more UM immune to this rising rate environment. Um, you 0:22:42.480 --> 0:22:46.080 know that would be non cyclical sectors, So we think 0:22:46.119 --> 0:22:49.240 there's reason for the point defense here. But there are 0:22:49.320 --> 0:22:53.760 opportunities and dislocations that we see that can benefit our 0:22:53.800 --> 0:22:58.600 client's portfolios. So in the corporate sector, are there sectors 0:22:58.640 --> 0:23:00.879 that you guys like at the moment um? You know, 0:23:00.920 --> 0:23:04.919 some people suggested, you know, healthcare or you know some 0:23:05.000 --> 0:23:07.760 of the real tried and true areas of technology, whether 0:23:07.960 --> 0:23:11.080 maybe some exposures to the cloud or cybersecurity, and think 0:23:11.119 --> 0:23:13.480 things like that. How do you guys think about the 0:23:13.480 --> 0:23:18.679 corporate space? Shut high quality, single A and and better 0:23:19.240 --> 0:23:22.520 offers what's perceived to be safe spread. The challenge with 0:23:22.600 --> 0:23:25.000 that though is M and A and we think that 0:23:25.640 --> 0:23:29.200 you know, as valuations, asn't mentioned before, become cheaper, particularly 0:23:29.240 --> 0:23:33.399 in equities, companies will be more prone to to level 0:23:33.480 --> 0:23:37.480 up and perhaps um issue additional debt at concessions and 0:23:37.800 --> 0:23:40.399 hurt us as bond holders. We prefer to be buying 0:23:40.440 --> 0:23:43.720