WEBVTT - Corporate Political Activity And Markets In 2022 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 0:00:11.560 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.479 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:24.640 at Bloomberg dot com. Slash podcast twenty gained in the SMP. 0:00:26.880 --> 0:00:29.560 What a year. So what do we do now? In 0:00:30.800 --> 0:00:34.040 we all reset and think about where the opportunities are. 0:00:34.120 --> 0:00:36.160 Let's check in with Phil Plumbo. He's a founder, CEO 0:00:36.240 --> 0:00:39.040 and ce IO of Plumbo Wealth Management. Phil, what are 0:00:39.080 --> 0:00:44.200 you telling your clients about this year where the opportunities are? 0:00:46.080 --> 0:00:48.840 So the bubble has clearly burst in the most aggressive 0:00:48.840 --> 0:00:51.600 part of the technology sector, and so I would stay 0:00:51.600 --> 0:00:56.400 away from that area in particular, and by boring quality stocks. 0:00:56.440 --> 0:00:59.000 As we think about two thousand twenty two, it's all 0:00:59.040 --> 0:01:02.840 in the backdrop the feeder reserve. How inflation is going 0:01:02.880 --> 0:01:05.520 to continue to be a problem. I don't know how 0:01:05.560 --> 0:01:07.680 they're just recognizing it now. It's going to continue your 0:01:07.680 --> 0:01:10.080 problem in two thousand twenty two, which means he's gonna 0:01:10.080 --> 0:01:13.080 have to continue to be hawkish, and that type of 0:01:13.160 --> 0:01:17.240 environment that means rates will climb higher. When rates climb higher, 0:01:17.319 --> 0:01:20.520 it put a lot of pressure on technology stock, especially 0:01:21.000 --> 0:01:23.800 the most high overvalued parts of the technology sector that 0:01:23.840 --> 0:01:26.720 we've been talking about for a while now, because their 0:01:26.720 --> 0:01:29.800 long duration assets and their cash flows that people are 0:01:29.800 --> 0:01:32.680 paying for. And in a arroging and straight environment, you 0:01:32.720 --> 0:01:37.759 see a shift towards financials outperforming energy commodities in goals. 0:01:37.840 --> 0:01:39.600 So I just want to step in here because you 0:01:39.680 --> 0:01:42.480 had a pretty interesting comment at the top where you 0:01:42.480 --> 0:01:46.080 said the tech bubble is popping. What was that happening 0:01:46.120 --> 0:01:48.800 in the last three days that you really started to 0:01:48.840 --> 0:01:51.440 see the unwind of that? Was it the FED meeting 0:01:51.480 --> 0:01:55.360 minutes yesterday that clarified in your mind we're moving faster 0:01:55.480 --> 0:01:59.160 than we thought. When did you start to see this unraveling? 0:02:00.080 --> 0:02:02.320 Remember markets are always for we're looking, So since the 0:02:02.320 --> 0:02:05.120 Sumber fifteen, when the FED started to get more hawk ish, 0:02:05.240 --> 0:02:07.120 you really started to see some of these high flyers 0:02:07.120 --> 0:02:11.760 correct from their highs anywhere from thirty So I could 0:02:11.800 --> 0:02:14.040 argue that the bubble started really last year and it's 0:02:14.040 --> 0:02:16.440 continuing right now, and that's not going to settle in 0:02:16.800 --> 0:02:19.560 until really the FED settles in in terms of where 0:02:19.560 --> 0:02:22.519 they're comfortable in terms of raising interest rates and everything 0:02:22.520 --> 0:02:25.880 that they've been talking about at some point this year, Phil, 0:02:25.880 --> 0:02:28.240 how do you think about inflation out there? It's real. 0:02:28.400 --> 0:02:30.519 Whether you you see it at the gas pump or 0:02:30.560 --> 0:02:33.280 you see it at the supermarket, it's real. How do 0:02:33.400 --> 0:02:36.720 you think about it? It's always been real. What people 0:02:36.760 --> 0:02:38.520 have to understand is that when you shut the whole 0:02:38.560 --> 0:02:40.280 world down as we did in two thousand and twenty, 0:02:40.320 --> 0:02:43.000 and you restart everything, and then you have multiple variants 0:02:43.040 --> 0:02:46.000 that are that are occurring as we're seeing, it's gonna 0:02:46.040 --> 0:02:49.440 it's gonna it's gonna create an issue with supplied constraints 0:02:49.440 --> 0:02:51.840 like we've seen, and and then with all the money 0:02:51.840 --> 0:02:53.840 that's been put into the economy, you know that's going 0:02:53.880 --> 0:02:55.760 to create inflation. We know that because if you look 0:02:55.760 --> 0:02:57.400 at the history of the amount of money that's been 0:02:57.400 --> 0:03:00.200 put into economy and measured by M two, inflation has 0:03:00.200 --> 0:03:02.760 always started as a result of that. Then you put 0:03:02.760 --> 0:03:05.720 money into consumers pockets, which created this pent up demand 0:03:05.760 --> 0:03:08.840 and endurable non durable goods in twenty one, and all 0:03:08.880 --> 0:03:11.320 of that pull forward effect is why we're seeing the 0:03:11.480 --> 0:03:13.480 inflation numbers that we're seeing today, and that's going to 0:03:13.560 --> 0:03:16.359 continue because look at omicron and the issues that's that's occurring, 0:03:17.400 --> 0:03:19.919 you know, within within consumers and people staying home now 0:03:20.000 --> 0:03:23.240 and manufacturing plants and you know, not being in full 0:03:23.320 --> 0:03:26.799 capacity and issues going on with China shutdowns, etcetera. So 0:03:26.960 --> 0:03:29.480 the pressures are going to continue to just just just 0:03:29.600 --> 0:03:32.040 doesn't go away in a year or two. We haven't 0:03:32.040 --> 0:03:33.679 seen an event like this in over a hundred years, 0:03:33.720 --> 0:03:36.520 so it's a totally different playbook. So that's why I 0:03:36.680 --> 0:03:39.400 believe inflation is going to continue to be a threat 0:03:39.480 --> 0:03:41.920 to the economy and the Fed's gonna have to act 0:03:42.000 --> 0:03:45.840 even more hawkish. And as you mentioned earlier, that means 0:03:46.000 --> 0:03:48.960 rates are rising. And I know a one seventy three 0:03:49.040 --> 0:03:53.400 on the tenure is hardly um high levels given the 0:03:53.520 --> 0:03:56.360 absolute still so low levels that we're at. But I 0:03:56.480 --> 0:03:59.440 am curious if we start to think about a two 0:03:59.520 --> 0:04:03.560 percent in the tenure, when does that become attractive when 0:04:03.560 --> 0:04:07.440 you're thinking about a rotation from equities after the big 0:04:07.560 --> 0:04:10.920 run up back into bonds, is two percent tempting at all? 0:04:13.040 --> 0:04:15.320 Timing bonds and interest rates is very difficult to do. 0:04:15.880 --> 0:04:18.760 I would argue that every portfolio. Every investor needs bonds 0:04:18.800 --> 0:04:21.080 in the portfolio to help protect when stocks really get 0:04:21.160 --> 0:04:23.720 get hit hard. Obviously the past day or two that's 0:04:23.720 --> 0:04:26.480 been moved down with both stocks and bonds, and that's happened, 0:04:26.480 --> 0:04:28.920 you know, maybe two thirteen that happened. And you do 0:04:29.040 --> 0:04:31.360 get periods like that that that do occur, but it's 0:04:31.400 --> 0:04:34.039 not normal for that to occur over long periods of time. 0:04:34.520 --> 0:04:36.360 So it's not a question of time ago when to 0:04:36.400 --> 0:04:38.600 get in bonds or out of bonds. It's more of 0:04:38.760 --> 0:04:42.400 using bonds as a way to hedge against stocks. So 0:04:42.720 --> 0:04:46.680 Phil on the equity side here, um sticking with kind 0:04:46.680 --> 0:04:49.280 of the cyclical play, here are their sectors that really 0:04:49.320 --> 0:04:53.120 kind of jump out at you two that you're talking 0:04:53.160 --> 0:04:55.960 to your clients about. What I like a lot right 0:04:56.000 --> 0:04:58.080 now is, as I said before, market's a forward looking 0:04:58.160 --> 0:04:59.880 so O macron. It seems like it's going to settle 0:04:59.880 --> 0:05:02.360 in and kind of come and go relatively quickly based 0:05:02.360 --> 0:05:04.440 on some of the data that everybody's looking at. So 0:05:04.520 --> 0:05:06.920 if that's the case, then most likely over the next 0:05:07.000 --> 0:05:09.640 two or three or four months, you can see consumers 0:05:09.720 --> 0:05:13.160 going back out there and spending money on services and 0:05:13.400 --> 0:05:16.240 travel and so forth. So I like airlines here. I 0:05:16.360 --> 0:05:20.040 like Disney here as an example. As we think about 0:05:20.279 --> 0:05:23.600 the kind of reopening trade coming back in vogue, and 0:05:23.720 --> 0:05:26.280 you have to get into that now before that starts, 0:05:26.400 --> 0:05:30.120 with which again we'll we'll probably see that the spending 0:05:30.160 --> 0:05:32.120 of that over the next three and six months. You've 0:05:32.120 --> 0:05:33.840 got to get ahead of that trade. So I like 0:05:34.000 --> 0:05:38.200 that sector specifically. I also like financials, so as rates rise, 0:05:38.279 --> 0:05:40.600 obviously financials make more money. That's the bottom line. It's 0:05:40.600 --> 0:05:42.920 the way it works, which means earnings will be greater. 0:05:43.279 --> 0:05:45.240 So I like that trade. And I also like energy 0:05:45.279 --> 0:05:48.279 a lot as well, as the global economy does reopen, 0:05:48.880 --> 0:05:51.400 assuming there is not another variant that that comes across 0:05:52.200 --> 0:05:55.920 that affects UH, that affects individuals and so forth, I like. 0:05:56.120 --> 0:05:59.280 I like the rebound and global economy and energy. So 0:05:59.480 --> 0:06:01.719 that's those do I like as well? All right, Phil, 0:06:01.800 --> 0:06:05.080 thanks so much, appreciate getting your thoughts here. As we 0:06:05.440 --> 0:06:09.680 again reset and set off for two. Philip Palumbo he's 0:06:09.720 --> 0:06:13.839 the founder, CEO and c I O of Palumbo Wealth Managements. 0:06:13.880 --> 0:06:16.520 He did stints at Ubs and Morgan Stanley and Maryland, 0:06:16.600 --> 0:06:19.560 so he's been doing uh this investment game for a 0:06:19.640 --> 0:06:22.080 long time, and that's why we appreciate speaking to him, 0:06:22.120 --> 0:06:24.520 which we get some really good ideas, and he is 0:06:24.880 --> 0:06:27.720 really focusing on that reopen trade, which once again is 0:06:27.839 --> 0:06:36.000 coming to the four we got the Fed minutes yesterday. 0:06:36.800 --> 0:06:39.400 I think the two key takeaways from the markets perspective 0:06:39.520 --> 0:06:42.880 is certainly a higher chance of earlier interest rate hikes 0:06:42.920 --> 0:06:45.520 and maybe even a balance sheet rundown, and that was 0:06:45.560 --> 0:06:48.160 reflected in the markets immediately. Let's see what that really 0:06:48.279 --> 0:06:52.039 means for the near and intermediate term for these markets. 0:06:52.120 --> 0:06:54.600 We do that with Katie Nixon. She's a c i 0:06:54.760 --> 0:06:57.520 O of wealth management at Northern Trust. Katie, thanks so 0:06:57.600 --> 0:06:59.600 much for taking a time to chat with us. Hear, 0:06:59.680 --> 0:07:05.119 what was your takeaway from those Fed minutes yesterday? Thanks Paul, 0:07:05.279 --> 0:07:07.160 nice to be here. And I think you nailed it. 0:07:07.240 --> 0:07:11.440 I mean, I think it pulled forward expectations for the 0:07:11.600 --> 0:07:15.280 pace and the sequencing, frankly of the next policy move. 0:07:15.320 --> 0:07:17.000 I mean, I think we were used to post global 0:07:17.040 --> 0:07:20.960 financial crisis having a gradual anti quantitative easing than a 0:07:21.080 --> 0:07:24.640 sort of quiet period, then lift off and then eventually 0:07:24.720 --> 0:07:29.000 quantitative tightening. And I think what we're recognizing now certainly 0:07:29.040 --> 0:07:32.600 explicitly in the fmc minutes. Is that the not just 0:07:32.760 --> 0:07:34.960 the pace, but the sequence is going to be pulled forth. 0:07:35.000 --> 0:07:37.400 So we could be in the position of seeing quantitative 0:07:37.440 --> 0:07:42.680 tightening in how much of that is also taken into 0:07:42.720 --> 0:07:45.880 account the balance sheet because it seems like the markets 0:07:45.920 --> 0:07:50.920 were also caught off guard that balance sheet runoff could 0:07:51.000 --> 0:07:53.880 happen maybe shortly after the first rate hike, where in 0:07:53.960 --> 0:07:57.560 previous years it was almost two years before the rate 0:07:57.960 --> 0:08:00.920 hiking cycle started that we even started talking about a 0:08:00.960 --> 0:08:04.240 balance sheet. Taylor, You're so right. And one of the 0:08:04.320 --> 0:08:07.720 one of our themes this year was that the the 0:08:07.920 --> 0:08:11.600 increased pace of UM of taking the foot off the 0:08:11.640 --> 0:08:15.280 gas with quantitative easing would easily be absorbed by the 0:08:15.360 --> 0:08:18.000 market um because of the reduction and the issue once 0:08:18.040 --> 0:08:19.760 of treasury, so there would be sort of a supply 0:08:19.880 --> 0:08:24.240 demand balance even with the big um source of demand 0:08:24.320 --> 0:08:28.440 being the FED sort of lightning up UM. It's pulling 0:08:28.480 --> 0:08:31.600 quantitative tightening into two really does change that because that 0:08:31.680 --> 0:08:34.520 puts a lot more supply of treasuries on the market 0:08:34.920 --> 0:08:37.679 that will have to be absorbed UM. And perhaps UH, 0:08:37.960 --> 0:08:40.280 you know, interest rates will be the mechanism through which 0:08:40.559 --> 0:08:44.480 UH investors are attempted and are are taken into into 0:08:44.559 --> 0:08:47.839 buying bonds again. So I think it does really change things. 0:08:48.080 --> 0:08:50.280 Um if if the FED. Now that's a big if, 0:08:50.720 --> 0:08:52.720 because it's certainly not our base case that we see 0:08:52.840 --> 0:08:58.319 this this sort of very aggressive quee lift off Q two. 0:08:58.320 --> 0:09:00.880 I think that's the risk case. It's not our base case, 0:09:00.960 --> 0:09:02.960 but that that is that is a risk case because 0:09:03.000 --> 0:09:04.680 it does put a lot more paper on the market. 0:09:04.720 --> 0:09:07.439 Frankly at the end of this year. Okay, what is 0:09:07.480 --> 0:09:09.680 the kind of the base case for the good folks 0:09:09.720 --> 0:09:14.160 at Northern Trust in terms of the economy in going 0:09:14.160 --> 0:09:19.400 into well, I mean, we think we're sort of seeing 0:09:20.400 --> 0:09:23.760 that we're getting past the peak. So we're certainly anticipating 0:09:23.840 --> 0:09:25.920 that sort of in April May will be past the 0:09:26.000 --> 0:09:29.320 peak inflation, and we're also anticipating we're gonna be past 0:09:29.360 --> 0:09:32.840 peak growth. So one of our longer term themes it's 0:09:32.880 --> 0:09:35.720 a sort of reversion to mediocrity. So we do anticipate 0:09:36.240 --> 0:09:40.000 this process starting in two where by this very high 0:09:40.080 --> 0:09:43.679 level of economic growth that's been clearly propelled by policy, 0:09:43.760 --> 0:09:47.240 whether it's monetary or fiscal combination, UM will come off 0:09:47.280 --> 0:09:51.360 the boil. So we're seeing sort of more four three 0:09:51.559 --> 0:09:56.559 two type GDP prints as we get through into three. 0:09:56.920 --> 0:09:59.719 But the good news for investors is that growth that 0:10:00.120 --> 0:10:04.280 is good enough to keep earnings positive, and it's also 0:10:04.800 --> 0:10:07.720 more sustainable frankly um than the high levels of growth 0:10:07.800 --> 0:10:11.360 that we saw UM certainly this this past year in one. 0:10:11.400 --> 0:10:14.080 So it's good news for investors that growth and inflation 0:10:14.080 --> 0:10:16.439 will come off the oil. It sets the stage for 0:10:17.200 --> 0:10:20.720 sort of more modest but positive returns for risk assets, 0:10:21.080 --> 0:10:23.400 and it also takes the heat off the FED from 0:10:23.480 --> 0:10:26.520 having to be even more aggressive in policy online. So 0:10:26.679 --> 0:10:30.559 equities still the place to be. Yeah, equities are still 0:10:30.600 --> 0:10:33.200 the place to be. Tailor. The fundamentals are very strong. 0:10:33.360 --> 0:10:36.720 We anticipate sort of mid to high single digit earnings 0:10:36.920 --> 0:10:40.640 UM in two. We think along I guess with the 0:10:40.679 --> 0:10:43.440 market at this point that valuations have become a bit stretched, 0:10:43.480 --> 0:10:45.720 so perhaps we see a little bit of give back 0:10:46.120 --> 0:10:48.320 UM in terms of valuation, but that still leaves mid 0:10:48.400 --> 0:10:51.959 to high single digit returns for for equities and this year, 0:10:52.000 --> 0:10:55.520 which is which is pretty good coming after several years 0:10:55.600 --> 0:10:58.920 of very very high returns. Absolutely, and Katie, I think 0:10:59.000 --> 0:11:01.599 one of the things that equity investors are trying to 0:11:01.640 --> 0:11:03.120 grapple with now is where do I want to be 0:11:03.200 --> 0:11:04.599 in this equity market. Do I want to be in 0:11:04.640 --> 0:11:06.920 those growth names that have been so good to me 0:11:07.000 --> 0:11:09.319 over the last dozen years or so, or do I 0:11:09.400 --> 0:11:13.160 stick with the cyclical trade. They're kind of a reopening trade, 0:11:13.360 --> 0:11:16.880 if you will, whether it's commodities or energy and banks 0:11:16.920 --> 0:11:18.720 and think things like that. How do you think about 0:11:18.760 --> 0:11:22.439 it over the next twelve months. Yeah, Well, one of 0:11:22.480 --> 0:11:25.880 the things we've told our clients, UM pretty consistently actually 0:11:26.000 --> 0:11:28.520 for the last couple of years, is you really you 0:11:28.559 --> 0:11:30.880 don't need to pick a team here. Um. You can 0:11:30.920 --> 0:11:32.679 have all the players on the field, and you should 0:11:33.000 --> 0:11:35.400 because you can't deny sort of sort of the secular 0:11:35.520 --> 0:11:37.880 tail ones that are behind some of these great growth stocks. 0:11:37.920 --> 0:11:41.400 We see sort of an I T spending supercycle coming 0:11:41.600 --> 0:11:44.040 um in the next couple of years, with you know, 0:11:44.320 --> 0:11:47.280 big capex in the form of I T spending UM 0:11:47.360 --> 0:11:50.400 propelling earnings from some of these big tech companies. At 0:11:50.440 --> 0:11:52.199 the same time, we do think we're going to be 0:11:52.280 --> 0:11:56.120 in a sort of re reopening trade here um with 0:11:56.200 --> 0:11:59.400 the global economic recovery continuing UM to to see momentment 0:12:00.040 --> 0:12:02.480 to so you want that cyclical exposure. The one thing 0:12:02.520 --> 0:12:04.640 I will add Paul, though, is at this stage of 0:12:04.679 --> 0:12:07.600 the economic cycle, with the best sort of GDP prints 0:12:07.679 --> 0:12:10.600 behind us, it's probably not a bad time for investors 0:12:10.679 --> 0:12:14.120 to think about putting some defensive names in their portfolio. 0:12:14.880 --> 0:12:19.040 Healthcare comes to mind, um, So we would say, put 0:12:19.080 --> 0:12:21.600 all the players on the field. You'll be there when, um, 0:12:21.679 --> 0:12:24.840 when that particular sector or style is in favor. Um. 0:12:24.960 --> 0:12:27.120 And we do have a positive outlook on equities in general, 0:12:27.200 --> 0:12:29.000 so that that will help as well. But if you 0:12:29.040 --> 0:12:31.800 don't have a sensitive sense of er portfolio, take a 0:12:32.080 --> 0:12:34.439 take a good look there. All right, Katie, thank you 0:12:34.480 --> 0:12:36.840 so much for joining us. Really appreciate getting your perspective, 0:12:36.880 --> 0:12:39.200 your thoughts. Katie Nixon c A c IO of Walt 0:12:39.280 --> 0:12:45.959 Management in Northern Trust. One year anniversary of the January 0:12:46.080 --> 0:12:50.000 six uh insurrection, I guess at the Capitol Hill and 0:12:50.200 --> 0:12:52.559 a lot of angles to cover. One of them is 0:12:53.120 --> 0:12:56.160 how has that the events of January six years ago 0:12:56.320 --> 0:13:00.320 impacted the interaction of government and big business. We all 0:13:00.400 --> 0:13:03.160 know that the a lot of money slashing around Washington, 0:13:03.280 --> 0:13:06.760 d C. From big business pushing around legislation to questions, 0:13:06.800 --> 0:13:08.560 how has that changed really over the last year, if 0:13:08.600 --> 0:13:11.520 at all? Paul Washington executive director of the E. S 0:13:11.600 --> 0:13:16.200 G Center for the Conference Board joins us. Uh, Paul, 0:13:16.360 --> 0:13:19.199 give us your thoughts here. We know how pervasive big 0:13:19.320 --> 0:13:23.800 business political action committees the money associated with them have 0:13:24.000 --> 0:13:26.959 impacted Washington really since the beginning of time. I guess 0:13:27.400 --> 0:13:30.960 how has that changed in the last year if at all? Sure, 0:13:31.120 --> 0:13:34.560 and first of all, thanks for having me. What happened 0:13:34.640 --> 0:13:38.520 is UM The majority of companies that have employee funded 0:13:38.600 --> 0:13:43.600 packed UM suspended their PACK contributions for some are all 0:13:43.760 --> 0:13:47.000 of this past year in light of the events of 0:13:47.120 --> 0:13:51.000 January six and then UM and then frankly, they they 0:13:51.120 --> 0:13:54.240 changed their policies on whom they're giving to, the criteria 0:13:54.280 --> 0:13:57.360 they use and so forth. Uh. In in the last year, 0:13:57.520 --> 0:14:00.719 it's actually become a much more challenging and ironment for 0:14:01.440 --> 0:14:04.360 companies to navigate in Washington these days, both on the 0:14:04.480 --> 0:14:08.520 contribution side and on the lobbying side. Are they being 0:14:08.880 --> 0:14:12.920 more careful given how maybe more open the pressure, given 0:14:13.000 --> 0:14:16.040 the rise in social media, how people are calling them 0:14:16.120 --> 0:14:19.640 out more. Uh? Is it really coming from pressure from 0:14:20.240 --> 0:14:23.440 you know, some of the local people on the ground. 0:14:24.800 --> 0:14:28.640 You know. It's what's really striking is that most of 0:14:28.760 --> 0:14:33.160 the pressure that companies are responding to is coming from 0:14:33.240 --> 0:14:37.880 employees and senior management. It's coming from within the company itself. 0:14:38.640 --> 0:14:41.320 That those are the main drivers for companies to suspend 0:14:41.400 --> 0:14:45.960 their contributions or packs to suspend their contributions. UM. External 0:14:46.040 --> 0:14:51.120 pressure UM less so UM. Though traditional media was important 0:14:51.200 --> 0:14:55.720 as well. So really employees, senior management, traditional media. And 0:14:55.840 --> 0:14:58.600 then one thing, one factor that wasn't a big issue 0:14:58.800 --> 0:15:03.240 for companies was invest your attention on this issue. But Paul, I, 0:15:03.280 --> 0:15:08.000 I know some companies temporarily suspended UH some of their activities, 0:15:08.040 --> 0:15:10.920 some of their fundraising. But this is Washington, d C. 0:15:11.080 --> 0:15:15.120 After all. This is this money is coming back, isn't it? Yes, 0:15:15.240 --> 0:15:18.360 it is. Although I would just say this, UM, I 0:15:18.520 --> 0:15:22.880 completely understand a lot of skepticism about corporate money in politics. 0:15:23.160 --> 0:15:27.000 I would note though, that corporations tend to be a 0:15:27.120 --> 0:15:30.760 bit more of a moderating influence UH in their contributions. 0:15:30.800 --> 0:15:34.040 They tend to give their packs, which are funded by employees, 0:15:34.080 --> 0:15:38.120 tend to give to both Democrats and Republicans, and frankly, 0:15:38.160 --> 0:15:42.600 they focus more on results than on wild rhetoric. UM. 0:15:42.760 --> 0:15:46.120 So what you really sing is that corporate money, which 0:15:46.240 --> 0:15:50.160 tends to be a bit more mainstream UM is actually 0:15:50.240 --> 0:15:53.200 being overwhelmed by other types of sort of dark money 0:15:53.400 --> 0:15:56.640 out there UM and uh so that's just something to 0:15:56.760 --> 0:15:58.880 keep in mind. I understand people can be really skeptical 0:15:58.960 --> 0:16:01.360 without corporate money poitics, but when you look at the numbers, 0:16:01.760 --> 0:16:04.200 it's it's kind of a little different story. What are 0:16:04.240 --> 0:16:06.240 some of the issues and that are at the forefront 0:16:06.320 --> 0:16:09.360 in terms of the mainstream the moderate corporate money that 0:16:09.480 --> 0:16:11.840 you're seeing. What are some of the issues that they're 0:16:11.880 --> 0:16:17.160 most interested in and seeing progressed through DC. Sure, I 0:16:17.240 --> 0:16:21.360 mean it's it's infrastructure policy, it's trade policy, it's UM. 0:16:21.720 --> 0:16:26.320 It's really industry specific often UM issues that they're focusing 0:16:26.400 --> 0:16:29.480 on UM and that's the bread and butter for companies UM, 0:16:29.600 --> 0:16:32.560 and that's what drives a lot of their contributions. What 0:16:32.720 --> 0:16:35.720 car companies off guard in the last year was how 0:16:35.840 --> 0:16:38.960 many and this isn't related to money, it's more related 0:16:39.040 --> 0:16:42.320 to their public stances and their lobbing, was how much 0:16:42.360 --> 0:16:44.800 pressure was being put on companies to take stands on 0:16:45.480 --> 0:16:50.200 social issues that aren't necessarily traditionally core to their business, 0:16:50.280 --> 0:16:53.240 things like voting rights. So companies in the last year 0:16:53.280 --> 0:16:55.120 it was really challenging for them. They were being asked 0:16:55.120 --> 0:16:58.200 away on a whole bunch of hot button issues, especially 0:16:58.280 --> 0:17:01.240 at the state level, that a just you know, and 0:17:01.480 --> 0:17:04.200 really thought of as part of their responsibility. But now 0:17:04.520 --> 0:17:07.480 now they are. Paul, this is an election year. Congressional 0:17:07.520 --> 0:17:14.080 election year has that typically impact businesses involvement in in Washington. Uh. 0:17:14.280 --> 0:17:19.639 It makes it um. Uh. It's there's heightened level obviously 0:17:19.920 --> 0:17:23.680 of of corporate giving, but it's also a time where 0:17:23.720 --> 0:17:26.440 it can be really difficult to get anything done on 0:17:26.680 --> 0:17:32.080 the lobbying side on you know, policy changes, the legislative changes, um, 0:17:32.280 --> 0:17:36.399 simply because the focus is on the election and people 0:17:36.520 --> 0:17:39.240 are you know, are playing a lot more politics. So 0:17:39.400 --> 0:17:42.600 election years tend to be even more difficult on the 0:17:42.680 --> 0:17:46.040 public advocacy side for companies. At the same time, the 0:17:46.119 --> 0:17:48.840 companies tend to give more money. All right, Paul, thanks 0:17:48.840 --> 0:17:51.600 so much for joining us. Really appreciate getting your thoughts. 0:17:51.640 --> 0:17:54.639 They're your expert opinion on what's happening. Dana Washington, d 0:17:54.760 --> 0:17:58.840 C is big business continues to navigate. Uh. One year 0:17:58.880 --> 0:18:03.119 after the January six insurrection, Paul Washington, executive director of 0:18:03.240 --> 0:18:10.280 the E s G Center at the Conference Board, Taylor, 0:18:10.320 --> 0:18:12.760 I just got a text from Amazon there are three 0:18:13.280 --> 0:18:16.080 boxes sitting outside of my door. I don't even know. 0:18:17.000 --> 0:18:19.280 I don't even know. I don't even know what. But 0:18:19.359 --> 0:18:22.800 it's like everyday Amazon is dropping stuff at my door. 0:18:22.840 --> 0:18:24.800 I don't even know how it happens. But I looked 0:18:24.800 --> 0:18:27.720 down at the stock hasn't done anything in a year, 0:18:27.880 --> 0:18:30.320 trailing twelve months of four percent. What is going on there? 0:18:30.359 --> 0:18:33.399 Barry Dhults, Bloomberg opinion columnists and host of Masters in 0:18:33.520 --> 0:18:38.160 Business on Bloomberg Radio, also runs a firm, Ridholts Wealth Management, 0:18:38.200 --> 0:18:40.000 so he's been in this money management game for a 0:18:40.080 --> 0:18:43.479 long time. Barry, what do you make Amazon? I mean, 0:18:43.520 --> 0:18:46.320 the mighty Amazon, Jeff Bezos. I mean he's out on 0:18:46.480 --> 0:18:49.680 yachts in the Caribbean over the New Year's But the 0:18:49.720 --> 0:18:55.520 stocks hasn't done anything. Really, Yeah, after a fantastic where 0:18:55.720 --> 0:18:59.800 Amazon really was was the logistical hero of the locked. 0:19:00.160 --> 0:19:04.440 Not only were they delivering supplies and food and from 0:19:04.600 --> 0:19:08.359 from Whole Foods to Amazon, but Amazon Web Services was 0:19:08.800 --> 0:19:12.399 keeping the Internet up and running. Uh. They very much 0:19:12.480 --> 0:19:14.680 stumbled last year. And if you go down the list, 0:19:15.080 --> 0:19:18.200 first Bezos, who's been with them from day one, the 0:19:18.320 --> 0:19:22.919 founder and CEO for twenty years, since the mid nineties. Uh, 0:19:23.040 --> 0:19:26.560 step down to CEO. That's a giant loss. Uh. They 0:19:26.720 --> 0:19:30.720 seem to have lost their status as the low cost option. 0:19:31.440 --> 0:19:34.840 I think when everyone's sitting at home and staring at 0:19:34.880 --> 0:19:37.160 their screens all day, when you go to buy something 0:19:37.200 --> 0:19:41.160 in Amazon and it looks a little more than cheap, 0:19:41.840 --> 0:19:44.320 it's easy enough to google around and say, oh, you 0:19:44.400 --> 0:19:48.359 know this is more expensive than elsewhere. Uh, that's not 0:19:48.440 --> 0:19:51.199 how any of us behaved a decade ago. You oh, 0:19:51.320 --> 0:19:53.879 it's on Amazon, have it delivered the next day, and 0:19:54.480 --> 0:19:56.440 you know they've made some changes. There's a ton of 0:19:56.480 --> 0:19:59.840 advertising on the site. It's much less attractive, and they 0:20:00.080 --> 0:20:02.359 is a ton of third party sellers, which if you 0:20:02.440 --> 0:20:06.600 remember eBay, Uh, third party sellers are a big headache, 0:20:06.640 --> 0:20:11.159 both regular totally and administratively. So no surprise they had 0:20:11.200 --> 0:20:15.560 a mediocre year. The stock was up to and change. 0:20:16.840 --> 0:20:20.480 When you compare that to their peers, when you look 0:20:20.560 --> 0:20:27.119 at you know, Google and Apple and Microsoft, Google was 0:20:27.280 --> 0:20:32.440 up sixty five percent, Microsoft was up fifty two I 0:20:32.600 --> 0:20:38.160 think Apple was up thirty five two percent. Is that's 0:20:38.200 --> 0:20:41.920 like losing money relatively speaking? So doctor us about not 0:20:42.080 --> 0:20:45.359 only Amazon, but big tech, because when it comes to 0:20:46.080 --> 0:20:50.040 some of the regulatory overhangs on this stock. People were saying, 0:20:50.080 --> 0:20:53.560 this is an administration who outwardly says they hate big tech, 0:20:53.680 --> 0:20:56.679 they hate monopolies. But it's been a lot of bark 0:20:56.920 --> 0:20:59.359 without a lot of bite, at least when it comes 0:20:59.400 --> 0:21:03.840 to the rhetoric about breaking up big tech. Where are 0:21:03.920 --> 0:21:07.440 we with that regulatory overhang on the stock? Yeah, I don't. 0:21:07.520 --> 0:21:11.760 I don't see big tech being broken up as much 0:21:12.040 --> 0:21:15.840 as Hey, the next time Facebook and I still can't 0:21:15.920 --> 0:21:19.360 call it meta, but but the next time that company 0:21:19.480 --> 0:21:23.960 sees an Instagram or or Google sees a YouTube and 0:21:24.040 --> 0:21:28.760 wants to acquire it. Um, we've seen that that acquisition 0:21:28.960 --> 0:21:33.199 process has led to less competition in the space. Facebook 0:21:33.240 --> 0:21:38.160 and Google have really a death grip on online advertising. 0:21:38.520 --> 0:21:40.880 Everybody else is just kind of picking up the crumbs. 0:21:41.400 --> 0:21:46.480 And so the likelihood is the likelihood is that, um, 0:21:47.600 --> 0:21:50.240 those sort of acquisitions and mergers are going to be 0:21:50.320 --> 0:21:54.600 looked at with a much greater level of scrutiny, scrutiny 0:21:54.680 --> 0:21:57.200 than we've seen in the past. But the idea that 0:21:57.280 --> 0:21:59.520 we're going to break up Apple or we're gonna break 0:21:59.640 --> 0:22:03.800 up Google, I'm kind of a hard pressed to to 0:22:04.080 --> 0:22:10.840 see that as a um any sort of likely resulted 0:22:11.040 --> 0:22:13.680 anytime soon. You know, I'm just looking at the FA 0:22:13.840 --> 0:22:16.639 function here, the financial analysis function on the Bloomberg terminal 0:22:16.760 --> 0:22:20.480 for Amazon. I got a half a trillion dollars in revenue, 0:22:20.800 --> 0:22:24.159 and the consensus forecast is it's gonna grow eighteen percent 0:22:24.280 --> 0:22:28.920 in another seventeen percent next year. This is still a 0:22:29.119 --> 0:22:32.600 really good growth company. I'm kind of surprised the stock 0:22:32.760 --> 0:22:34.760 is kind of, you know, lagged, there were just underperformed 0:22:34.800 --> 0:22:38.320 some of its its peers. Well, look at how well 0:22:38.400 --> 0:22:42.520