WEBVTT - Market And Tech Outlook For 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 --> 0:00:15.600 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 --> 0:00:22.120 at Bloomberg dot com slash podcast Soil. Thanks so much 0:00:22.160 --> 0:00:24.680 for joining us here. How shall we think about these 0:00:24.720 --> 0:00:30.400 equity markets in two given the strong performance we had? Well, Paul, 0:00:30.440 --> 0:00:32.880 first of all, to you and Tailor. Happy new year. 0:00:33.000 --> 0:00:36.720 Thank you very much for having me on again. UM, 0:00:36.760 --> 0:00:39.839 so good news and bad news. Good news is that 0:00:40.080 --> 0:00:44.080 last year the stock market was up almost thirty on 0:00:44.120 --> 0:00:47.400 a total return basis. We've been up more than a 0:00:47.479 --> 0:00:51.440 hundred since the bottom of the market last March. Earnings 0:00:51.920 --> 0:00:55.720 last year probably up about fifty five zero percent year 0:00:55.760 --> 0:00:58.680 on year. UM, that's not the kind of year we're 0:00:58.720 --> 0:01:02.080 looking for In calendar to me too, earnings maybe will 0:01:02.120 --> 0:01:06.200 be up eight percent year on year. We think we've 0:01:06.240 --> 0:01:09.080 seen as much multiple expansion as we're going to get, 0:01:09.520 --> 0:01:12.200 and we do expect that. You know, the bias in 0:01:12.319 --> 0:01:15.320 terms of interest rates and the Fed is higher. Um, 0:01:15.480 --> 0:01:18.320 So I don't think we're getting a multiple expansion. We've 0:01:18.319 --> 0:01:21.520 got a fifty three hundred target on the SMP five 0:01:21.600 --> 0:01:25.720 hundred are hundred call of course for last year, so 0:01:25.760 --> 0:01:28.160 that gives us, you know, roughly a ten percent move 0:01:28.280 --> 0:01:33.080 higher now is pretty good, uh, you know, uh, in 0:01:33.160 --> 0:01:36.600 a normal year. But it's not you know, the thirty 0:01:36.640 --> 0:01:39.840 percent we saw last year, the percent we've seen over 0:01:39.880 --> 0:01:42.880 the last couple of years. So I guess what I'm 0:01:42.920 --> 0:01:46.440 saying is we need to mute our expectations a lot 0:01:46.480 --> 0:01:49.800 more volatility in our view in calendar twenty two. And 0:01:50.160 --> 0:01:53.560 that volatility, Phil, does it come from at least some 0:01:53.640 --> 0:01:56.160 of the surveys that Bloomberg has done, It is all 0:01:56.200 --> 0:02:00.240 about inflation less. So about COVID, how are you thinking 0:02:00.240 --> 0:02:04.520 about the volatility and the risks and where that stems from? Oh, Taylor, 0:02:04.640 --> 0:02:08.359 that's a great question. Um. You know, when you look 0:02:08.400 --> 0:02:11.519 at COVID, maybe we've got a somewhat out of consensus 0:02:11.600 --> 0:02:16.560 view that we're looking at the you know, the cycles 0:02:16.600 --> 0:02:20.200 in South Africa, the cycles in the European Union, in 0:02:20.240 --> 0:02:22.520 the UK, and the cycles here in the United States, 0:02:23.320 --> 0:02:26.640 and we've got a view that that am Acron is 0:02:26.639 --> 0:02:29.200 going to peak here maybe you know, by the end 0:02:29.240 --> 0:02:32.800 of this month, uh, and become much less a big 0:02:32.840 --> 0:02:36.359 deal uh than it's been over the last couple of months. Now, 0:02:36.639 --> 0:02:39.160 that's not to say that we don't know what the 0:02:39.200 --> 0:02:41.799 next variant is going to be. Is the next variant 0:02:41.840 --> 0:02:44.639 going to be more problematic than am acron? I don't know. 0:02:45.080 --> 0:02:48.480 But as we're looking at the financial markets, where we 0:02:48.520 --> 0:02:50.800 are a lot more concerned about what's going on with 0:02:50.880 --> 0:02:55.960 inflation and more precisely, what's going on with the federal reserves. 0:02:56.040 --> 0:02:59.880 Likely response now while a lot of folks are on vacation, 0:03:00.720 --> 0:03:05.400 the government reported that the Core Personal Consumption Expenditure Index, 0:03:05.639 --> 0:03:09.160 which is the Fed's preferred measure of inflation, rose four 0:03:09.240 --> 0:03:12.880 point seven year on your basis in November. That that 0:03:12.880 --> 0:03:16.480 that's huge And and remember the FEDS target is two, 0:03:17.000 --> 0:03:20.720 where we're you know, will above that. So the FED, 0:03:21.120 --> 0:03:24.119 in our view, did the right thing in accelerating its 0:03:24.160 --> 0:03:26.600 tapering program. We think the taper is going to be 0:03:26.639 --> 0:03:30.120 done by the end of March. We're expecting three quarter 0:03:30.200 --> 0:03:33.640 point rate hikes over the course of next year. But 0:03:33.639 --> 0:03:36.480 but suppose inflation is an even bigger problem than we 0:03:36.520 --> 0:03:39.040 think it is. Does that mean maybe the FED is 0:03:39.040 --> 0:03:44.040 going to shift from quantitative easing to quantitative tightening, shrinking 0:03:44.080 --> 0:03:47.400 its balance sheet, you know, aggressively. And and and maybe 0:03:47.880 --> 0:03:51.000 instead of quarter point rate hikes, maybe the FEDS thinking 0:03:51.040 --> 0:03:54.280 about fifty basis point rate hikes in order to sort 0:03:54.320 --> 0:03:56.720 of catch up from behind the curve. I don't know 0:03:56.760 --> 0:03:59.240 the answer to those questions, but but that's part of 0:03:59.240 --> 0:04:02.880 the uncertain in the volatility that that potentially is in 0:04:02.960 --> 0:04:05.120 store for us over the course of calendar twenty two. 0:04:05.720 --> 0:04:08.840 All right, So given that backdrop, phil um, do I 0:04:08.880 --> 0:04:11.200 stick with the big growth names that have worked for 0:04:11.280 --> 0:04:13.680 me for more than a decade, the Apples, the Amazons 0:04:13.720 --> 0:04:15.960 of the world order, I stick with that cyclical trade. 0:04:16.680 --> 0:04:19.240 But boy, it's been really good over the last eighteen 0:04:19.279 --> 0:04:22.000 twenty four months to whether it's energy or banks. How 0:04:22.040 --> 0:04:25.160 do I think about that? So? Uh, in our view, 0:04:25.400 --> 0:04:28.760 you stick with that cyclical trade, the value trade. And 0:04:28.760 --> 0:04:32.359 and to some degree there's a function of valuation that 0:04:32.360 --> 0:04:35.640 that forward multiples on the SMP five right now around 0:04:35.800 --> 0:04:38.159 you know, twenty times earnings, give or take, which is 0:04:38.200 --> 0:04:41.159 which is high? But I'm not losing any sleep over it. 0:04:41.400 --> 0:04:44.440 But when you look at the growthier names, technology, et cetera. 0:04:44.600 --> 0:04:47.800 Those p's are up in the mid thirties. You look 0:04:47.880 --> 0:04:55.160 at the value names UH Financials, Energy, UH discretionary, UH materials, 0:04:55.520 --> 0:05:00.839 industrials multiples in on those sectors in the mid teens. 0:05:01.480 --> 0:05:06.039 Yet the pricing power and the outsized earnings gains, in 0:05:06.200 --> 0:05:09.360 our view, are going to come from those value categories. 0:05:09.800 --> 0:05:12.440 So as we look at where to invest, where do 0:05:12.480 --> 0:05:15.600 you put new money in calendar twenty two, I think 0:05:15.600 --> 0:05:18.320 there are three places we're focused on. Number one, domestic 0:05:18.400 --> 0:05:21.040 large cap value and we just covered that. Number two 0:05:21.160 --> 0:05:25.720 small cap, particularly on a growth adjusted basis, those valuations 0:05:25.720 --> 0:05:30.000 are very cheap. And then finally, international international is extraordinarily 0:05:30.080 --> 0:05:33.360 chief versus the domestic um. If we're right that am 0:05:33.440 --> 0:05:36.080 aquana is, we're going to roll over here, you know, 0:05:36.160 --> 0:05:38.120 and let's call it the first quarter of the year. 0:05:38.680 --> 0:05:41.279 There's gonna be a cancerup training International. It's gonna start 0:05:41.320 --> 0:05:44.279 at some point during the year. Yeah, all right, Phil, 0:05:44.320 --> 0:05:46.600 thanks so much for joining us. Really appreciate getting your 0:05:46.640 --> 0:05:50.719 thoughts as usual, always giving us some cogent thoughts as 0:05:51.000 --> 0:05:53.240 we take a look at these markets. Are Phil Orlando, 0:05:53.400 --> 0:05:56.799 Chief equity market Strategists and head of client portfolio management 0:05:57.040 --> 0:05:59.320 at Federated Herme's you know what, I think? That six 0:06:00.200 --> 0:06:03.840 billion assets under management, so they know a thing or 0:06:03.880 --> 0:06:10.120 two about these markets. So I've been saying to myself 0:06:10.200 --> 0:06:12.839 at least and maybe even to the audience here, why 0:06:12.880 --> 0:06:14.880 isn't a ten year yield higher? I mean, I got 0:06:14.880 --> 0:06:18.720 the Federal Reserve talking about accelerating tapering at talking about 0:06:18.800 --> 0:06:21.480 raising rates next year, and you know, average Jersey from 0:06:21.480 --> 0:06:24.159 Bloomberg Intelligence said, just focus on the two years you 0:06:24.240 --> 0:06:26.760 are seeing that go up. The tenure will follow. Well, 0:06:26.800 --> 0:06:28.839 maybe it is following a little bit here today up 0:06:28.839 --> 0:06:31.320 about eight basis points, but let's bring in an expert 0:06:31.360 --> 0:06:34.320 who can really answer this question. Prea Misra, Managing director 0:06:34.320 --> 0:06:37.040 and global head of rate strategy at TV Securities. So 0:06:37.720 --> 0:06:40.360 we're seeing a move up in a tenure today. This 0:06:40.520 --> 0:06:43.440 feels like what I should have been seeing all along. 0:06:43.480 --> 0:06:46.200 How do you? How are you thinking about this yield curve? Here? 0:06:46.200 --> 0:06:49.600 As we enter two hi fause thanks for having me 0:06:50.080 --> 0:06:52.920 so um Yes, I think a big puzzle for us 0:06:53.040 --> 0:06:55.920 last year was why the long end rallied. I mean, 0:06:55.960 --> 0:06:58.279 I can see why the fronting should have moved the most, 0:06:58.480 --> 0:07:01.680 as hikes will getting priced in UM, but the long end, 0:07:01.680 --> 0:07:04.320 even a faster taper, it was just rock solid and 0:07:04.360 --> 0:07:06.560 actually lower rates. And so today it could be a 0:07:06.560 --> 0:07:09.320 little bit of catchup. I think also with the rise 0:07:09.360 --> 0:07:13.160 in omicron but hospitalization staying low. You know, I think 0:07:13.200 --> 0:07:16.960 there's a general hope perhaps that the pandemic is moving 0:07:17.000 --> 0:07:19.560 to an endemic state. Risk assets are doing well, so 0:07:19.600 --> 0:07:21.720 today might be more catch up. We have a lot 0:07:21.760 --> 0:07:23.720 of data this week and I'll be watching the ice 0:07:23.800 --> 0:07:26.920 and services data particularly to see if there's any impact 0:07:26.920 --> 0:07:30.000 of omicron on that UM as well as of course 0:07:30.000 --> 0:07:32.600 we have payrolls and the minutes, and that's where I 0:07:32.640 --> 0:07:35.240 think another reason why the long end might sell off, 0:07:35.240 --> 0:07:38.040 as if they talk about balance sheet run off. I 0:07:38.080 --> 0:07:40.640 think that they clearly discussed it in that December meeting, 0:07:40.640 --> 0:07:42.520 and we think the minutes will have more in terms 0:07:42.560 --> 0:07:45.720 of when do they start that. I think that's much 0:07:45.760 --> 0:07:47.480 more bearish for the long end of the curve. So 0:07:47.560 --> 0:07:49.559 we are looking for the tenure to reach two percent 0:07:49.640 --> 0:07:52.320 by your end. You know, there's no clear catalyst today. 0:07:52.320 --> 0:07:54.560 I think it's just more a catch up. Why did 0:07:54.560 --> 0:07:57.040 that started? The longer term catalyst as well as you're 0:07:57.040 --> 0:08:01.800 thinking about inflation, right you know, with the inflation, the 0:08:01.960 --> 0:08:05.080 issue is which part of the curve gets impacted depends 0:08:05.120 --> 0:08:07.920 really on the FED reaction function. So far, it's been 0:08:07.960 --> 0:08:10.800 the front end that's been responding to inflation, because you know, 0:08:10.800 --> 0:08:15.080 the FED was responding through sooner hikes um. But if 0:08:15.200 --> 0:08:17.600 it seems as if the Freed is more cautious, and 0:08:17.640 --> 0:08:19.640 that's why I would look at the growth side. If 0:08:19.640 --> 0:08:23.120 the growth momentum starts to slow down, perhaps due to 0:08:23.120 --> 0:08:26.840 omicron or phiscal drag, we're very nervous about the expiration 0:08:26.840 --> 0:08:29.520 of the Child Act credit and other impact on the consumer, 0:08:30.040 --> 0:08:32.160 then I think the long end can start to respond 0:08:32.200 --> 0:08:34.640 to inflation, because then you should get paid up more 0:08:34.679 --> 0:08:36.960 to take on inflation risk if you're buying the tenure. 0:08:37.280 --> 0:08:40.160 But in the near term, as the FED hiking cycle 0:08:40.280 --> 0:08:42.400 is very much front and center, I think the front 0:08:42.520 --> 0:08:45.439 end is more inflation driven than the very long end 0:08:49.760 --> 0:08:53.520 by background, and so I'm not very sure I'm getting 0:08:53.559 --> 0:08:55.760 all the nuances from this feder Reserve, but it seems 0:08:55.800 --> 0:08:57.959 like the Federal Reserve is doing a very good job 0:08:58.000 --> 0:09:01.280 at telegraphing and messaging what they plan to do in 0:09:01.320 --> 0:09:04.680 two is that your take as well. Are you concerned 0:09:04.679 --> 0:09:08.040 that maybe they could make a mistake here in terms 0:09:08.120 --> 0:09:10.480 of maybe the pace or the rate at which they 0:09:10.559 --> 0:09:13.840 raise rates. Right, So, I think the market is pricing 0:09:13.840 --> 0:09:16.719 in a risk of a policy mistake because even though 0:09:16.760 --> 0:09:19.760 the start of the hiking cycle is well priced, you know, 0:09:19.760 --> 0:09:22.160 to your point, the Fed is telegraphed to hike this year, 0:09:22.240 --> 0:09:24.800 and the markets now pricing in May of this year, 0:09:24.880 --> 0:09:28.240 first hike, three hikes this year. It's really the endpoint 0:09:28.679 --> 0:09:31.200 and the piece of hikes after this year that the 0:09:31.240 --> 0:09:34.600 market is really underpricing what the fret is messaging. So 0:09:34.679 --> 0:09:37.240 either the markets calling the Fed's bluff that they won't 0:09:37.240 --> 0:09:39.840 be able to raise rates that much, or it's an 0:09:39.880 --> 0:09:42.360 idea of a policy mistake that they slow the economy 0:09:42.400 --> 0:09:45.080 down and therefore they will either have to cut rates 0:09:45.280 --> 0:09:47.360 or not be able to raise rates. So, you know, 0:09:47.400 --> 0:09:49.680 I think they've been able to telegraph the near term, 0:09:50.000 --> 0:09:53.000 but it's really how much are they going to raise rates? 0:09:53.920 --> 0:09:55.880 How much are they gonna hike next year and the 0:09:55.960 --> 0:09:58.040 year after, And this is where I think there is 0:09:58.120 --> 0:10:00.600 uncertainty both from the economic out look as well as 0:10:00.600 --> 0:10:03.679 the FED reaction function. We're going to have new FED governors, 0:10:03.800 --> 0:10:06.760 three new FED governors most likely getting added to the 0:10:06.880 --> 0:10:10.040 voting members this year, and that could also shift the 0:10:10.160 --> 0:10:12.560 dynamic into next year. So that's why I think the 0:10:12.559 --> 0:10:16.080 market is has a disconnect with what the FED is communicating. 0:10:16.920 --> 0:10:19.959 When you think about some of the near term policies, 0:10:20.000 --> 0:10:23.880 how much are you thinking about a move in March 0:10:24.240 --> 0:10:27.440 if March is a live meeting or are we looking 0:10:27.480 --> 0:10:30.640 at a federal reserve with a very very clear distinction 0:10:30.760 --> 0:10:34.960 between ending the taper and then a timeline before that 0:10:35.080 --> 0:10:38.720 we get to the right height. So before the Army 0:10:38.720 --> 0:10:41.280 cron surge, I was thinking March could be a live 0:10:41.360 --> 0:10:44.520 meeting because they're already communicated the end of tapering and 0:10:44.559 --> 0:10:47.000 they could turn around and hike right away because they 0:10:47.000 --> 0:10:50.160 have very clear um, you know, conditions that have to 0:10:50.200 --> 0:10:52.720 be meant to hike. I would say, with the Army 0:10:52.720 --> 0:10:55.960 cron surge, and you know we are asking frictions in 0:10:56.000 --> 0:10:59.840 the travel industry, in leisure, I would argue service consumption 0:10:59.840 --> 0:11:01.440 is going to be a bit slow at least to 0:11:01.480 --> 0:11:04.439 start the year off. I think the FED, or or 0:11:04.480 --> 0:11:06.840 our view is that that March meeting is not really live, 0:11:06.960 --> 0:11:11.520 that the FED will want to retain optionality, flexibility, stress, 0:11:11.600 --> 0:11:14.720 on uncertainty and therefore just wait for the data after 0:11:14.840 --> 0:11:17.440 the omicron spike is behind us in the US, which 0:11:17.480 --> 0:11:19.800 is probably only by the end of the first quarter 0:11:19.880 --> 0:11:22.000 for the country, so which is why we think it's 0:11:22.000 --> 0:11:25.040 more in the second quarter that they can evaluate how 0:11:25.120 --> 0:11:29.680 much did domicron impact growth and whether their conditions to hike, 0:11:29.800 --> 0:11:32.880 which is both inflation and on the labor market, whether 0:11:32.920 --> 0:11:34.920 those are met. So that's why we're looking for the 0:11:34.960 --> 0:11:37.880 first hike only in June. Um But I would say 0:11:37.920 --> 0:11:40.520 that it's really a function on of how the economy 0:11:40.600 --> 0:11:43.600 shows down. All right, prea, thank you so much for 0:11:43.760 --> 0:11:47.680 joining us yet again, Pa Miserable, Managing director and Global 0:11:47.720 --> 0:11:50.839 head of rate Strategy at t D Securities. Otherwise on 0:11:50.960 --> 0:11:54.679 as Toronto Dominion. Did you know that I did? I 0:11:54.760 --> 0:11:57.760 did know that. Okay, there shortening up these names, trying 0:11:57.760 --> 0:11:59.920 to get a little bit cuter, I guess. But teacher 0:12:00.000 --> 0:12:05.320 Curities there premus record. Well, we've got markets at or 0:12:05.360 --> 0:12:07.120 near all time high. So when I was in my 0:12:07.200 --> 0:12:10.480 investment banking days, I would just tailor pick up the 0:12:10.480 --> 0:12:12.679 phone and call my clients and say, Hey, your stocks 0:12:12.720 --> 0:12:14.480 in an all time high. Let's go issue some stock. 0:12:14.640 --> 0:12:18.200 How how creative was that? How was that? Is that 0:12:18.280 --> 0:12:21.440 adding value or not? You know so? But the question 0:12:21.559 --> 0:12:23.040 is and a lot of those phone calls were made 0:12:23.040 --> 0:12:25.520 in one and the question is what do we do 0:12:25.559 --> 0:12:28.800 here in two? Um, let's bring in our next guess 0:12:28.800 --> 0:12:30.679 he's got some thoughts here he's going to share with us. 0:12:31.160 --> 0:12:36.520 Greg Flasnik, CEO of m Z North America. Greg, thanks 0:12:36.520 --> 0:12:40.840 so much for joining us here again. A good, great, 0:12:40.960 --> 0:12:44.920 slash really lucrative year for I p O slash spank 0:12:45.360 --> 0:12:52.920 spack bankers in twenty one, how about two? Yeah? You know, 0:12:53.200 --> 0:12:55.720 I think you know, two thousand twenty one was a 0:12:55.800 --> 0:12:58.600 record year for I p O s And I think 0:12:58.600 --> 0:13:01.320 if you look back at the beginning twenty one, you know, 0:13:01.360 --> 0:13:04.040 the start of COVID vaccines were rolling out, at global 0:13:04.120 --> 0:13:09.319 rebound of economies, We've seen a lot of liquidity accelerated 0:13:09.360 --> 0:13:12.520 by government stimulus and and all of this has resulted 0:13:12.559 --> 0:13:15.080 in quite a bit of optimism for the global IPO 0:13:15.160 --> 0:13:20.000 market um with with investor sentiment at peak UM. But 0:13:20.360 --> 0:13:23.280 I think if you look at you know, the next year, 0:13:23.400 --> 0:13:27.640 the year where now I guess two thousand twenty two, Um, 0:13:27.679 --> 0:13:31.160 you know, I feel that that momentum should continue at 0:13:31.240 --> 0:13:33.400 least into the first quarter of twenty two. I think 0:13:33.440 --> 0:13:37.840 that the spack vehicle is is um a great way 0:13:37.880 --> 0:13:40.160 of our companies to go public, and I think it's 0:13:40.200 --> 0:13:43.160 something that's here to stay. It certainly doesn't have the 0:13:43.240 --> 0:13:45.920 kind of risk that investors perceived, you know, maybe ten 0:13:46.000 --> 0:13:49.400 years ago. UM. And I think you know, if you 0:13:49.600 --> 0:13:52.480 if you look at the back market in twenty one, 0:13:52.559 --> 0:13:56.319 there was a lot of this bad of celebrities back sponsors, right, 0:13:56.360 --> 0:13:59.439 So I think you're gonna see less of this um 0:13:59.480 --> 0:14:03.200 and more from the serial spack sponsors sponsors eventually, but 0:14:03.320 --> 0:14:05.920 in the near term pullback from the serial spack sponsors, 0:14:05.960 --> 0:14:09.080 allowing what's already in the market. They're they're waiting for 0:14:09.559 --> 0:14:13.600 time to source and executed transaction UM as we are 0:14:13.600 --> 0:14:17.640 seeing a prolonged the spack process. So UM. You know 0:14:17.640 --> 0:14:19.200 what I mean by that is, you know, it could 0:14:19.200 --> 0:14:21.440 be completed in the little or three months, it's now 0:14:21.600 --> 0:14:25.720 taken closer to six months on average um UM. But 0:14:25.720 --> 0:14:27.880 but I think you know, for I p O candidates, 0:14:28.320 --> 0:14:32.280 undoubtedly they're up against some higher market volatility and and 0:14:32.440 --> 0:14:34.880 I just think it's important to remain flexible with with 0:14:35.320 --> 0:14:38.640 companies capital raising plans um in the event in I 0:14:38.760 --> 0:14:41.720 p O timeline is the way due to a shift 0:14:41.720 --> 0:14:45.600 in market conditions. But bottom line, I think high valuations 0:14:45.680 --> 0:14:47.680 and market liquidity are going to keep the I p 0:14:47.760 --> 0:14:49.960 O market hop as um we worked in the two 0:14:50.320 --> 0:14:52.720 twenty two and as Paul mentioned, you know, good for 0:14:52.800 --> 0:14:55.840 these companies taking advantage of some of these high valuations, 0:14:55.840 --> 0:14:58.400 but for investors maybe not so much. I'm taking a 0:14:58.400 --> 0:15:00.720 look at our spack index in our I p O 0:15:00.840 --> 0:15:04.080 index both ridden down. We have a speck index we 0:15:04.160 --> 0:15:06.920 do it is the I p O X Stack Index. 0:15:07.200 --> 0:15:10.000 Very cool. Spack index go on the terminal. Those were 0:15:10.040 --> 0:15:13.880 down last year ten relative to the SMP which is up. 0:15:15.840 --> 0:15:19.440 So how do investors start to perhaps maybe differentiate or 0:15:19.480 --> 0:15:22.080 start to be more discerning with what stacks or what 0:15:22.200 --> 0:15:25.760 I p O s they should be in. That's right, 0:15:25.800 --> 0:15:28.560 and I think there there was a time where, you know, 0:15:28.600 --> 0:15:32.000 we saw that again the the investor sentiment, the rise 0:15:32.040 --> 0:15:35.280 of the retail investor, where you know, in my business, 0:15:35.320 --> 0:15:38.360 I saw you know, people just basically buying anything that 0:15:38.440 --> 0:15:40.240 was an I p O or anything that was back, 0:15:40.320 --> 0:15:43.160 and certainly that is in a winning strategy. So I 0:15:43.160 --> 0:15:46.480 think just just having discipline in your investment criteria and 0:15:46.560 --> 0:15:49.720 deciding kind of what you know, really what you know, 0:15:49.800 --> 0:15:52.480 what is meaningful to you, and what you think ultimately 0:15:52.760 --> 0:15:55.160 would work. But um, you know, there is going to 0:15:55.240 --> 0:15:56.840 be a lot of annoys. There's always going to be 0:15:56.840 --> 0:15:59.760 winners and losers. And I think, just especially as it 0:15:59.800 --> 0:16:02.840 were ways to the retail investor, typically we see the 0:16:02.880 --> 0:16:05.440 sort of work best where people kind of have some 0:16:05.480 --> 0:16:10.200 sort of uh, I guess relation to the company about 0:16:10.240 --> 0:16:12.160 going public. I mean, what does it do for me? 0:16:12.280 --> 0:16:15.280 Why can I relate to this? Hey, Greg, thanks so 0:16:15.360 --> 0:16:17.680 much for joining us. I really appreciated getting your thoughts 0:16:17.680 --> 0:16:20.440 here on the new issue market. I p o S 0:16:20.440 --> 0:16:23.560 SPACs markets all time high. I'd be making a phone 0:16:23.560 --> 0:16:25.880 call to my clients saying, let's push some stock out 0:16:25.920 --> 0:16:33.160 the dork. Greg Lasnick, CEO of m Z North America 0:16:34.080 --> 0:16:37.640 looking at Tesla today to stocks up over ten it 0:16:37.720 --> 0:16:40.640 sounds like they're actually or looks like they're actually pretty 0:16:40.640 --> 0:16:43.360 good at making this, making these cars, that it's not 0:16:43.440 --> 0:16:45.160 just a tech story anymore. But let's bring in Dan 0:16:45.240 --> 0:16:48.760 Eys because he's been very bullish on Tesla and Tech 0:16:48.840 --> 0:16:51.520 and he's been very right. Dan Eyes, managing director and 0:16:51.560 --> 0:16:54.880 senior equity analysts for web Bush Securities, also a product 0:16:54.880 --> 0:16:57.640 of Happy Valley. Uh Dan, thanks so much for joining 0:16:57.720 --> 0:17:00.400 us here. So it turns out Tesla was how to 0:17:00.440 --> 0:17:04.040 make a lot of cars, don't they And they know 0:17:04.119 --> 0:17:07.040 how to make them despite the chip shortage. I think 0:17:07.080 --> 0:17:09.240 that Paul I didn't. That's the big day. I mean, 0:17:09.520 --> 0:17:13.680 the chip shortage probably took thirty thirty five cars off 0:17:13.680 --> 0:17:16.439 the quarter, So you start to add those, you're looking 0:17:16.440 --> 0:17:20.439 at something close to three and did this was it 0:17:20.480 --> 0:17:23.760 was a trophy keys quarter for Tessa in terms of 0:17:23.760 --> 0:17:25.960 what we're seeing demand and a lot of it's China. 0:17:26.000 --> 0:17:28.440 I mean, we think China loans worth about five hundred 0:17:28.480 --> 0:17:31.320 dollars per shared of the story in terms of everything 0:17:31.320 --> 0:17:35.480 we're seeing going in two thousand twenty two. Interesting when 0:17:35.520 --> 0:17:39.240 we talk about this, where is Tesla relative to some 0:17:39.320 --> 0:17:42.119 of the other competitors, Because you've talked a lot about 0:17:42.119 --> 0:17:44.600 some of the other big tech companies coming in maybe 0:17:44.600 --> 0:17:47.520 being able to compete, But who is a Tesla competitor 0:17:47.560 --> 0:17:50.840 at this point? Yeah, I mean tell it's a great 0:17:50.880 --> 0:17:55.199 question because the competition now is starting to expand, not 0:17:55.280 --> 0:17:58.040 just some auto players, but even technologies and We expect 0:17:58.119 --> 0:18:00.679 Apple to get into the e V game over the 0:18:00.720 --> 0:18:04.119 next few years. I think Amazon, Google and others because 0:18:04.119 --> 0:18:07.359 it's a five trillion dollar green tidalwing. But when you 0:18:07.359 --> 0:18:10.800 look at the core competitors or Tesla, it's really Ford 0:18:11.200 --> 0:18:14.439 GM in the US, and then of course VW and 0:18:14.480 --> 0:18:17.960 Europe and in China you've got Neo x Pinion others. 0:18:17.960 --> 0:18:21.120 But it's important because you look at the scale that 0:18:21.200 --> 0:18:24.600 they have, it's unmatched, and I think that's something that 0:18:24.720 --> 0:18:28.679 still is underappreciated by the street. Once you get Berlin 0:18:28.760 --> 0:18:31.520 in Austin and they'll have capacity of over two million 0:18:31.600 --> 0:18:35.800 units going in two thousand twenty two, Dan, how do 0:18:35.840 --> 0:18:40.159 you think Tesla wants to position itself from a marketing perspective? 0:18:40.200 --> 0:18:43.119 Once we have the vw is and the Fords and 0:18:43.119 --> 0:18:47.320 the gms, you know, with a full array of e vs, 0:18:48.040 --> 0:18:52.320 how does Tesla want to position themselves in this marketplace? Yeah, 0:18:52.320 --> 0:18:55.120 I mean they definitely were on the high end as 0:18:55.119 --> 0:18:57.919 we saw the sn X. But but but the core 0:18:58.600 --> 0:19:01.119 winchpin to Tesla growth is going to be in that 0:19:01.320 --> 0:19:05.200 forty to fifty k range with probably additional software on 0:19:05.200 --> 0:19:07.840 on top of that. It's a cachet that they've built, 0:19:07.880 --> 0:19:11.800 remember without any formal marketing, because Tessa has become synonymous 0:19:11.800 --> 0:19:14.320 with EVS and a lot of that is related to 0:19:14.440 --> 0:19:17.080 Musk and everything that him and the team have built. 0:19:18.040 --> 0:19:21.240 And no doubt competition is going to significantly increase. But 0:19:21.320 --> 0:19:23.760 what's important today, I mean E d S is still 0:19:23.800 --> 0:19:27.199 only three automobiles in the world when that goes at 0:19:27.240 --> 0:19:30.880 ten by two thousand and for test of the big 0:19:30.920 --> 0:19:35.159 opportunity now they can get card into consumer's hands. That 0:19:35.440 --> 0:19:37.919 is ultimately the key, and it's something where the average 0:19:37.960 --> 0:19:41.200 consumer when they look at EVS, they're looking why should 0:19:41.240 --> 0:19:44.600 I not buy a Tesla? And I think that's something 0:19:44.640 --> 0:19:47.160 they put themselves into the same situation as the Apple 0:19:47.200 --> 0:19:49.399 when it comes to iPhone. Are you talking about the 0:19:49.480 --> 0:19:54.600 US consumer or increasingly a Chinese consumer, Well, the China 0:19:54.720 --> 0:19:57.600 is the winchpin. That's the key to the bull thesis. 0:19:57.640 --> 0:19:59.159 I mean China, we can that would be about four 0:19:59.359 --> 0:20:03.760 percent plus deliveries for testing two thousand twenty two. And 0:20:03.800 --> 0:20:07.040 that's why China is so key because also the profitability 0:20:07.080 --> 0:20:10.679 on these vehicles. Now test is a profitable story. They 0:20:10.680 --> 0:20:14.320 can have thirty dollars earnings, how about two? Wow? That 0:20:14.400 --> 0:20:17.440 is China driven. And if it sounds familiar because that 0:20:17.560 --> 0:20:20.320 company and Cupertino, what's been a key part of their growth. 0:20:20.800 --> 0:20:23.520 It's China for Apple. So you look at what Apple 0:20:23.680 --> 0:20:26.240 and Teslam and Musk is really taking a playbook out 0:20:26.240 --> 0:20:29.720 of Apple. Dan, I'm looking at the Bloomberg Ternel right now. 0:20:29.760 --> 0:20:32.840 They a and our function an analyst recommendation. Of course, 0:20:32.840 --> 0:20:34.320 we have an apperform rating on the stock and I 0:20:34.359 --> 0:20:37.399 see a fourteen hundred price target. What's the catalyst to 0:20:37.520 --> 0:20:43.640 get us from you know, eleven sixty six here too? Well, 0:20:43.640 --> 0:20:46.960 I think the key catalyst is as we get into 0:20:47.000 --> 0:20:50.399 the earnings season over the next call at three or 0:20:50.400 --> 0:20:53.000 four weeks, it's really must talk about chip shortage because 0:20:53.000 --> 0:20:55.399 if chip short just starting to moderate, which we believe 0:20:55.440 --> 0:20:58.080 it is, then all of a Sudden's street numbers and 0:20:58.160 --> 0:21:00.679 they could go up two h thousand units, you know 0:21:00.720 --> 0:21:04.200 for the year. That means profitability could be up thirty 0:21:05.000 --> 0:21:07.960 relative to what the streets modeling. That's a cattle. The 0:21:08.000 --> 0:21:11.120 second catalyst is around battery technology. That's a big part 0:21:11.119 --> 0:21:14.199 of their mood. I think improvements they are specifically on 0:21:14.320 --> 0:21:18.199 costs side or significant to the Tesla story, and I 0:21:18.200 --> 0:21:20.159 think those are some of the catalyst. We'll have some 0:21:20.160 --> 0:21:23.240 white knuckle periods that we always do, and there's always 0:21:23.240 --> 0:21:25.720 gonna be some side circuits shows. But if you look 0:21:25.720 --> 0:21:29.400 at the fundamentals, that's really what I think stood out 0:21:29.600 --> 0:21:31.480 When you look at what Tesla din is que for. 0:21:32.200 --> 0:21:35.120