WEBVTT - Examining The Supply Chain, Markets, And ETFs 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 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.280 at Bloomberg dot com slash podcast. We have been talking 0:00:23.280 --> 0:00:29.200 about the supply chain crisis ever since the ever Green 0:00:29.400 --> 0:00:32.840 got stuck sideways in the Suez Canal, at least since then, 0:00:33.120 --> 0:00:35.320 and um, it's just gotten worse and worse and worse. 0:00:35.400 --> 0:00:38.240 We have an expert in the studio now to discuss 0:00:38.720 --> 0:00:41.160 um what they're doing about it in the shipping sector. 0:00:41.200 --> 0:00:43.720 Greg Hewitt joins US chief executive Officer of d h 0:00:43.960 --> 0:00:48.720 L Express USA. Greg, how does it look to you? Well, 0:00:48.760 --> 0:00:50.440 first of all, thank you for coming into the studio. 0:00:50.600 --> 0:00:52.760 Happy to be here. It's so great to have somebody 0:00:52.840 --> 0:00:56.560 in person in the studio rather than over zoom or 0:00:56.680 --> 0:01:00.720 over um face time, or however we over the phone 0:01:00.840 --> 0:01:03.200 often we use the phone. UM, so it's good to 0:01:03.200 --> 0:01:05.080 have you in here. Uh, We're glad you could get 0:01:05.080 --> 0:01:07.720 in here. Can you still get stuff around the world 0:01:07.800 --> 0:01:10.480 in a timely manner or does it just cost more. 0:01:10.640 --> 0:01:12.640 How does the supply chain crisis look to you right now? 0:01:12.760 --> 0:01:15.440 I think if I look at what's happened through the pandemic, 0:01:15.880 --> 0:01:20.440 you've got first the capacity crunch in the aviation sector 0:01:20.480 --> 0:01:24.119 with commercial flights coming down, which creates a shortage, which 0:01:24.120 --> 0:01:26.640 in the early days I say, the early days of 0:01:26.680 --> 0:01:30.600 this pandemic meant the goods flowed to ocean into fixed 0:01:30.640 --> 0:01:34.280 carriers like like my company. I think you mentioned the 0:01:34.319 --> 0:01:37.640 Suez challenges and what's happened in the ports, and all 0:01:37.640 --> 0:01:40.960 of a sudden capacity on the ocean this year has 0:01:41.000 --> 0:01:44.600 been constricted as business to business traffic came back, and 0:01:44.640 --> 0:01:48.560 so that's pushed an even more pressure on fixed networks 0:01:48.600 --> 0:01:52.240 like ours to handle that additional flow. I think what 0:01:52.280 --> 0:01:54.360 we've been able to do is make sure we've been 0:01:54.400 --> 0:01:59.360 consistently investing in aviation capacity than an infrastructure like hubs 0:01:59.360 --> 0:02:02.240 and gateways to handle more pieces, and then of course 0:02:02.600 --> 0:02:06.960 hiring people couriers and terminal handling staff and CS people 0:02:07.240 --> 0:02:09.440 to manage that flow that I'm feeling competent that is 0:02:09.520 --> 0:02:11.880 peak comes in this year, We're going to be able 0:02:11.919 --> 0:02:16.840 to handle our piece of the supply chain. But I think, yeah, 0:02:16.919 --> 0:02:19.240 what us Thanksgiving through till the end of the year, 0:02:19.680 --> 0:02:21.720 UH is peak season for US, and we'll see about 0:02:21.720 --> 0:02:25.560 a fifteen percent lifting volume, which isn't a crazy figure 0:02:25.600 --> 0:02:28.160 for US. We've seen years where it's been more. It's 0:02:28.240 --> 0:02:31.240 just the whole supply chain is backed up, and so 0:02:31.280 --> 0:02:34.320 I think if people could send more, they probably would. 0:02:34.360 --> 0:02:37.520 But because we've got capacity constraints in the air and 0:02:37.560 --> 0:02:40.360 through our hubs, were just what's a record for you? 0:02:40.360 --> 0:02:43.359 And I think last year we were over thirty growth. 0:02:43.400 --> 0:02:44.920 It would have been one of the biggest that we 0:02:44.960 --> 0:02:47.320 saw last year. If you think of the first year 0:02:47.320 --> 0:02:50.560 of the pandemic, you saw personal protective equipment in e 0:02:50.720 --> 0:02:53.600 commercepoon this year it's a bit of a shift. E 0:02:53.639 --> 0:02:57.000 commerce is still strong, but we're seeing business to business 0:02:57.040 --> 0:03:01.160 come back. Semiconductor market, automotive sector is really booming, so 0:03:01.200 --> 0:03:03.440 a little bit heavier for itight and bigger product. We 0:03:03.480 --> 0:03:06.360 think of porters five forces. It's all about the pricing 0:03:06.400 --> 0:03:09.839 power of companies. How is your pricing power with your 0:03:10.160 --> 0:03:12.880 clients and able to pass that onto the consumer? Are 0:03:12.919 --> 0:03:15.880 you able to do so? Our consumer is willing to 0:03:15.919 --> 0:03:18.760 absorb that well. I think that's what's been attractive. In 0:03:18.919 --> 0:03:22.040 fixed network like ours, we haven't kind of moved to 0:03:22.120 --> 0:03:24.280 market bace pricing. We're in the ocean and in the 0:03:24.320 --> 0:03:27.040 air you've heard four x, five x pricing and some 0:03:27.160 --> 0:03:30.120 even ten x. Because we've got a fixed network, we've 0:03:30.120 --> 0:03:34.200 been able to acquire either our own aircraft, our own capacity, 0:03:34.680 --> 0:03:37.280 some commercial lift in charters, and we've been able to 0:03:37.280 --> 0:03:39.560 blend that in. So I think our price point, although 0:03:39.560 --> 0:03:42.960 it's gone up, hasn't gone up astronomically, and that's why 0:03:43.000 --> 0:03:45.720 people are trying to move more with us. But you're 0:03:45.760 --> 0:03:48.880 maintaining margins. We are. Yeah, we're maintaining our margin because 0:03:48.880 --> 0:03:51.400 we've been able to get more of that air forward 0:03:51.480 --> 0:03:54.200 or traffic that probably didn't move with us before. So 0:03:54.280 --> 0:03:57.280 we take on that higher revenue shipment and that's helped 0:03:57.280 --> 0:03:59.880 balance out the higher cost and infrastructure. And in people, 0:04:00.240 --> 0:04:03.040 we are seeing the wage rates go up higher on 0:04:03.200 --> 0:04:07.080 more of an inflationary inflationary plath than it had historically, 0:04:07.080 --> 0:04:09.800 and we're having to do that battle for talent. Yeah. 0:04:09.840 --> 0:04:12.000 I we often hear about the battle for talent in 0:04:12.040 --> 0:04:16.360 trucks and I've always for me my fallback career, and 0:04:16.360 --> 0:04:19.159 it really like I've always romanticized being a long haul 0:04:19.160 --> 0:04:22.560 truck driver, but it's not easy to get your commercial license, 0:04:22.560 --> 0:04:24.480 and it's not easy to operate those big rigs. You 0:04:24.520 --> 0:04:27.559 need experience. You can't just hire somebody off the street. 0:04:27.560 --> 0:04:29.880 He doesn't know what he or she is doing. What's 0:04:29.880 --> 0:04:32.440 the trucking situation look like for you guys, Well, for us, 0:04:32.480 --> 0:04:35.320 we've got to My business is more small package. I 0:04:35.360 --> 0:04:37.840 tend to fly stuff to places and then handle line 0:04:37.880 --> 0:04:40.440 halls locally. We do have some long because you're faster, 0:04:40.600 --> 0:04:43.240 Because we're speed and we're small parcel delivery. More so, 0:04:44.080 --> 0:04:47.520 we've been able to secure the trucking network to connect 0:04:47.520 --> 0:04:50.479 our network where we need it for the larger pieces, 0:04:50.520 --> 0:04:53.479 either through our own network or through trusted vendors. I 0:04:53.480 --> 0:04:57.080 think everybody's saying the same thing. There is a we 0:04:57.120 --> 0:05:02.200 need frontline people call them couriers, suckers, uh, clerical staff 0:05:02.200 --> 0:05:05.640 and customer service and clearance. We're all looking for those people, 0:05:05.680 --> 0:05:07.240 and how do you win them over. We do it 0:05:07.480 --> 0:05:09.400 by trying to build a culture that's a great place 0:05:09.440 --> 0:05:11.720 to work and combine that with the right wage rate, 0:05:11.760 --> 0:05:14.719 which is probably the harder or more dynamic thing to 0:05:14.839 --> 0:05:17.839 move as markets change, you need to stay with them. 0:05:18.160 --> 0:05:20.680 We've been able to continue to meet those We're gonna 0:05:20.720 --> 0:05:24.719 hire about two thousand people for this period. We're about there, 0:05:24.760 --> 0:05:26.480 so we're doing a good job at getting them in. 0:05:26.720 --> 0:05:28.680 I've heard others might be struggling with that, but I'm 0:05:28.720 --> 0:05:30.760 confident we'll have the people. And that sort of leads 0:05:30.800 --> 0:05:34.280 the million dollar question of is it getting worse before 0:05:34.279 --> 0:05:36.919 it gets better or are we already on the path 0:05:37.040 --> 0:05:40.320 to getting better. I think what people have asked me 0:05:40.440 --> 0:05:44.240 is will it change dramatically soon? And I don't think so. 0:05:44.279 --> 0:05:48.200 I think where we felt that aviation capacity and ocean 0:05:48.240 --> 0:05:51.200 capacity would be back by now, we're now saying I 0:05:51.200 --> 0:05:54.280 don't think in the first half of it's going to 0:05:54.360 --> 0:05:57.839 recover and be back. So we're bracing for the continued 0:05:57.880 --> 0:06:00.120 need for some of that larger product to move on 0:06:00.120 --> 0:06:03.960 our fixed network. We're thinking more around this time next year, 0:06:04.279 --> 0:06:06.760 maybe some of the capacity is back and it blends out. 0:06:07.240 --> 0:06:09.960 And I think that's my message. We we are carefully 0:06:10.000 --> 0:06:13.200 managing with our customers how much we can take. I 0:06:13.240 --> 0:06:16.159 can take more than what you gave me, but I 0:06:16.200 --> 0:06:18.719 can't take fifty or a hundred. And I think some 0:06:18.800 --> 0:06:20.760 of what you would be hearing is the market there 0:06:20.880 --> 0:06:25.440 is more demand and so if if we could, people 0:06:25.440 --> 0:06:27.760 would want us to take more, but we can't, and 0:06:27.760 --> 0:06:31.320 that's why we're keeping our pricing I think reasonable, and 0:06:31.360 --> 0:06:34.880 we're making our service commitments allowing some growth, but not 0:06:35.680 --> 0:06:38.520 uh infinite growth that some might see it. What what 0:06:38.560 --> 0:06:40.760 about market here? I mean, I'm just visiting here. I 0:06:40.760 --> 0:06:43.680 I normally I live in Berlin, so I get almost 0:06:43.680 --> 0:06:46.240 all my packages via d h L. As you can imagine, 0:06:46.320 --> 0:06:49.320 right FedEx they do some documents and ups. They work 0:06:49.360 --> 0:06:51.359 like two or three days a week, so it's my 0:06:51.400 --> 0:06:54.640 only choice pretty much. Here. It's a much more fragmented market, right. 0:06:54.800 --> 0:06:57.719 What what's it look like in terms of competition, Well, 0:06:58.279 --> 0:06:59.719 I think all of it if you look at what 0:06:59.800 --> 0:07:02.960 comes out through the investor groups for all of us, um, 0:07:03.000 --> 0:07:05.320 I think all of us are growing, and so I 0:07:05.360 --> 0:07:08.080 think where we've taken market share is probably on the 0:07:08.080 --> 0:07:11.280 freight forward or side, the small forwarders who are struggling 0:07:11.320 --> 0:07:14.720 to get the capacity from commercial airlines. More of that 0:07:14.840 --> 0:07:17.120 product is moving to US. I tend not to know 0:07:17.160 --> 0:07:18.920 whether I'm taking it from the other guys or not. 0:07:19.040 --> 0:07:21.880 We're growing, growing faster than we had in the five 0:07:21.960 --> 0:07:24.400 years prior. Alright, Greg, thanks so much for coming and 0:07:24.400 --> 0:07:26.920 really appreciate you joining it. Did you want to know? 0:07:27.080 --> 0:07:28.760 I think just one of the big key takeaways is 0:07:28.760 --> 0:07:30.360 we've heard a lot of companies say it will get 0:07:30.360 --> 0:07:32.520 better in the first half of two, and I think 0:07:32.520 --> 0:07:37.160 really smart points of this could be longer than we thought, 0:07:37.240 --> 0:07:39.760 and everyone should just sort of brace themselves. It's not 0:07:39.800 --> 0:07:41.960 going to be resolved in the first quarter right now. 0:07:41.960 --> 0:07:44.600 I mean I talked to UM the auto maker CEOs 0:07:44.600 --> 0:07:48.880 all the time, and they Volkswagen, BMW, Daimler have all 0:07:48.960 --> 0:07:52.080 said it's gonna get better throughout two, but it's going 0:07:52.160 --> 0:07:54.120 to be incremental. It's not gonna be like all of 0:07:54.200 --> 0:07:56.200 a sudden, oh Q two is here and we have 0:07:56.320 --> 0:07:59.400 enough chips and chips and everything's cool. So it's it's 0:07:59.440 --> 0:08:02.640 gonna be along a drawn out process. Greg hugh Witt, 0:08:02.640 --> 0:08:04.640 thanks so much for coming in. Really appreciate your time. 0:08:04.680 --> 0:08:07.720 Fascinating topic in business. Greg he wod is the chief 0:08:07.760 --> 0:08:17.560 executive officer of d h L Express USA. Let's get 0:08:17.680 --> 0:08:20.560 to the chip maker. I'm just excited because Kurt Sievers 0:08:20.680 --> 0:08:24.760 is here in studio with us, and because they deliver 0:08:24.920 --> 0:08:28.560 chips to some really important products. They deliver chips to 0:08:28.600 --> 0:08:31.640 Apple for example, which I think we all UH love 0:08:31.720 --> 0:08:35.040 and use. They deliver chips to Robert Bosch, which helps 0:08:35.120 --> 0:08:37.319 make the A B S and all the sensors that 0:08:37.400 --> 0:08:40.880 I needed to run my motorcycles. UM, Kurt, talk to 0:08:41.000 --> 0:08:45.000 us about what what what the supply chain bottleneck looks 0:08:45.040 --> 0:08:47.679 like right now in terms of your industry, in terms 0:08:47.720 --> 0:08:49.640 of your company. Yeah, so, first of all, thanks for 0:08:49.720 --> 0:08:52.400 having me today. UM. I I love to speak about 0:08:52.440 --> 0:08:55.440 the supply chain because in the way we look at 0:08:55.480 --> 0:08:58.040 this from a two month perspective, which is all standing, 0:08:58.120 --> 0:09:01.439 so the supply chain is still watched that the demand 0:09:01.559 --> 0:09:04.800 is outstripping supply capability. So while we are growing this 0:09:04.960 --> 0:09:10.440 year like year over here, we are still supply limited. UH. 0:09:10.559 --> 0:09:13.120 In our earning school last week we also informed more 0:09:13.200 --> 0:09:16.400 specifically that we continue to be limited from a supply 0:09:16.520 --> 0:09:20.240 perspective in Q four UH, and I think at least 0:09:20.320 --> 0:09:22.920 in parts of the business, this is going to continue 0:09:23.040 --> 0:09:27.120 probably through the most part of next year. It's interesting. 0:09:27.200 --> 0:09:28.760 I know we want to get to some of the 0:09:28.840 --> 0:09:32.240 supply outlooks, but from a demand perspective as well, analysts 0:09:32.240 --> 0:09:35.920 are saying that You're revenue projections still look conservative just 0:09:36.080 --> 0:09:38.920 given the demand from automotive. Matt's a big fan of 0:09:38.920 --> 0:09:43.040 automotive industrial. Is that really the segments that you see 0:09:43.160 --> 0:09:46.640 carrying us through this big demand cycle? Yeah? You you 0:09:46.760 --> 0:09:48.400 got to think about n XP in the such a 0:09:48.440 --> 0:09:51.680 way that about three quarters of our overall revenue, which 0:09:51.800 --> 0:09:55.079 is eleven billion dollars this year, is going into automotive 0:09:55.120 --> 0:09:58.559 and industrial. And it is borg Warner to Bosh the 0:09:59.400 --> 0:10:02.880 exactly BMW exactly all ending up in cars, but we 0:10:02.920 --> 0:10:05.000 are shipping to Tier one suppliers like the ones you 0:10:05.320 --> 0:10:09.160 you just mentioned. That business is just booming like I've 0:10:09.280 --> 0:10:11.480 never seen it before in the past twenty five years. 0:10:11.960 --> 0:10:14.400 To give you a feel, our automotive revenue this year, 0:10:14.480 --> 0:10:17.640 which is half of n XP, we'll grow about forty 0:10:17.720 --> 0:10:20.679 five percent year over year. Now you will say, well, 0:10:20.840 --> 0:10:23.319 that's a that's a week compared because last year, because 0:10:23.320 --> 0:10:26.120 of the pandemic, everything was low anyway, but it's also 0:10:26.240 --> 0:10:29.800 thirty percent above So even if you're compared to a 0:10:29.920 --> 0:10:33.120 pre pandemic year from a car production perspective, we ship 0:10:33.320 --> 0:10:37.720 thirty more and it's still indeed not enough. As you said, Now, 0:10:37.840 --> 0:10:41.480 why is that it's just an explosion of content increase. 0:10:42.600 --> 0:10:45.360 One reason is electric cars. I mean, we all see 0:10:45.440 --> 0:10:47.839 that there's really a sharp rise of of the of 0:10:47.920 --> 0:10:50.199 the rate of electric cars. We think it's going to 0:10:50.280 --> 0:10:53.280 be almost of the car production this year globally is 0:10:53.360 --> 0:10:55.920 going to be either hybrid or fully electric, which is 0:10:55.960 --> 0:10:58.839 a big number. I mean, it's becoming material and that 0:10:59.040 --> 0:11:03.000 matters to us, as they have about twice the semiconductor 0:11:03.080 --> 0:11:05.880 content to a combustion engine car. So this is this 0:11:06.040 --> 0:11:07.600 is where the chip amount is coming from. I mean 0:11:07.640 --> 0:11:10.559 I was talking with Cloudio Dominicali recently, who's the CEO 0:11:10.559 --> 0:11:13.840 of Ducati, and he was telling me the chip content 0:11:14.000 --> 0:11:16.240 is increasing at such a rate that sometimes there are 0:11:16.280 --> 0:11:19.679 parts he's not even aware need chips. For example, the 0:11:19.760 --> 0:11:24.040 headlights in his motorcycles now need chips because they're controlling 0:11:24.080 --> 0:11:27.000 the led beams to turn in before you turn a corner. 0:11:27.120 --> 0:11:30.079 So it's amazing the amount of content that's going in. 0:11:30.640 --> 0:11:33.760 When does that stop? What? What what's the what's the 0:11:33.880 --> 0:11:36.920 terminal rate there? I I don't I don't see a 0:11:37.040 --> 0:11:40.080 stop at all. Because all the big megatrends which are 0:11:40.200 --> 0:11:45.319 driving innovation and automotive and those are electrification, autonomy. Think 0:11:45.360 --> 0:11:48.600 about the whole idea of the autonomous cars and safer cars, 0:11:48.640 --> 0:11:51.400 so all these assistance systems which are actually protecting you 0:11:51.600 --> 0:11:54.920 from from bad accidents, and the connected car, the whole 0:11:54.960 --> 0:11:58.280 idea that your car is actually getting software updates over 0:11:58.360 --> 0:12:01.400 the air, or that your car can be can get 0:12:01.480 --> 0:12:06.360 better performance through software updates. All of those innovation streams 0:12:06.720 --> 0:12:11.520 rely uniquely on semiconductors. So no, I actually don't see 0:12:11.559 --> 0:12:14.160 that ending. I would actually say a car in the 0:12:14.480 --> 0:12:17.160 in the next ten fifteen years is just becoming more 0:12:17.240 --> 0:12:20.319 and more silicon on wheels. Talk to us about the 0:12:20.520 --> 0:12:23.800 supply side of the equation. I know here in the US, 0:12:23.880 --> 0:12:27.760 the Biden administration has talked a lot about um bringing 0:12:28.080 --> 0:12:32.400 more chips to being manufactured domestically, trying to protect that 0:12:32.559 --> 0:12:36.959 supply chain. But will it ramp up fast enough? How 0:12:37.040 --> 0:12:39.800 do you see that supply and if there is any 0:12:39.960 --> 0:12:43.400 issues here in the US. I think the the entire 0:12:43.520 --> 0:12:46.360 government initiative is fantastic. So I've been part of this 0:12:46.600 --> 0:12:48.720 right from the start. I think we started in April 0:12:48.800 --> 0:12:51.839 with the White House Summit under the leadership of Joe Biden, 0:12:53.040 --> 0:12:56.319 and I really also from a global perspective, I like 0:12:56.440 --> 0:12:59.360 the fact that the US is very proactive to address 0:12:59.440 --> 0:13:01.640 this problem. I think the Chips Act with a fifty 0:13:01.720 --> 0:13:07.360 two billion dollar bill is going to make a difference. Now, 0:13:07.559 --> 0:13:10.520 is it fast enough, No, it just can't be fast enough. 0:13:10.600 --> 0:13:13.520 It takes three years to build a chip factory. Ah. 0:13:14.440 --> 0:13:17.240 Yet if you don't start today, it's not going to 0:13:17.320 --> 0:13:20.120 be there in three years. So that's why. Since this 0:13:20.280 --> 0:13:22.679 is a structural move, as we just discussed, I mean, 0:13:22.880 --> 0:13:25.720 these are not like short term spikes from a demand perspective, 0:13:25.800 --> 0:13:28.839 but it's very sustainable. For that reason, I think it 0:13:29.000 --> 0:13:32.199 does make sense. We have three large facilities here in 0:13:32.240 --> 0:13:34.400 the US, so we have two big waver FAPs, so 0:13:34.520 --> 0:13:39.679 waivers are the course in in Austin, Texas and one 0:13:39.800 --> 0:13:43.920 in Arizona. Uh. And we really think it's the right 0:13:44.000 --> 0:13:47.000 way to address the problem to look at domestic production 0:13:47.040 --> 0:13:49.560 and try to boost it as much as we can. Now, again, 0:13:49.640 --> 0:13:51.640 it's not going to be fast enough if you think 0:13:51.679 --> 0:13:54.760 about tomorrow mornings supply challenge, but it will be good 0:13:54.840 --> 0:13:57.280 for the supply challenges of the of the next five years. 0:13:57.400 --> 0:13:59.000 I think it's also interesting it has a lot about 0:13:59.040 --> 0:14:02.600 the competitiveness of those states that you put your wafer 0:14:02.679 --> 0:14:04.480 fabs there, but we don't have time to go into that. Kurt, 0:14:04.520 --> 0:14:06.720 thanks so much for joining us. Kurt Sievers, chief executive 0:14:06.720 --> 0:14:13.320 officer of n XP Semiconductors. Let's talk about what's going 0:14:13.360 --> 0:14:16.439 on in these markets. Andrews Person joins US, chief investment 0:14:16.480 --> 0:14:20.800 Officer of Global fixed Income at New Veen and UM Andres. 0:14:20.840 --> 0:14:24.040 In terms of what we see in rates today, it's 0:14:24.080 --> 0:14:26.760 been pretty uh well, not just today, over the last 0:14:27.160 --> 0:14:30.360 few days, it's been pretty interesting. Does the US tenure 0:14:30.640 --> 0:14:34.040 one fifties six one seven make sense to you given 0:14:34.600 --> 0:14:37.640 um uh cp I at six point two percent year 0:14:37.680 --> 0:14:42.600 over year? Yeah, thanks, thanks Matt um. Yeah, I would 0:14:42.640 --> 0:14:45.240 say I would say that makes a lot more sense 0:14:45.320 --> 0:14:47.760 now than at least earlier in the week or even 0:14:47.880 --> 0:14:51.880 last week. We think that the rally last week really 0:14:52.320 --> 0:14:55.600 was really overdone in online that he also kind of 0:14:55.640 --> 0:14:58.000 moving too lowly and too low and at this point 0:14:58.800 --> 0:15:00.960 kind of catching up a bit for the CPI and 0:15:01.240 --> 0:15:04.320 even the thirty year options. So so generally our view 0:15:04.440 --> 0:15:07.000 is that you also are still going to be grinding higher, 0:15:07.160 --> 0:15:11.000 and we're expecting something like one five of the ten 0:15:11.080 --> 0:15:14.400 year later this year, so we still feel like there's 0:15:14.480 --> 0:15:17.360 room for yields to continue to move higher in the tenure. 0:15:17.960 --> 0:15:20.120 But I think there's a lot of technical factors that 0:15:20.240 --> 0:15:23.200 were impacting treasures more broadly, a lot of cross currents 0:15:23.280 --> 0:15:25.960 going on. So so some of these near term moves 0:15:26.000 --> 0:15:28.680 that we've been seeing, it's just kind of the market 0:15:28.800 --> 0:15:31.520 having to digest a lot of the different data points 0:15:31.600 --> 0:15:34.960 coming through, and then the different technicals that they are 0:15:35.120 --> 0:15:38.360 playing in a factor as well. So I would expect 0:15:38.720 --> 0:15:41.680 still volatility here for for the next few months as 0:15:41.720 --> 0:15:44.920 we're kind of shifting through all these cross times. And 0:15:44.960 --> 0:15:47.040 I'm glad that you brought up the technicals because I 0:15:47.120 --> 0:15:50.360 think a lot of market participants have been confused while 0:15:50.400 --> 0:15:53.120 we're still at a one fifty roughly on the tenure 0:15:53.200 --> 0:15:56.320 and below two percent on twenties and thirties, and a 0:15:56.400 --> 0:16:00.640 lot of this has been um As you say, technical factors, 0:16:01.200 --> 0:16:05.280 When do you expect those to um fall down a 0:16:05.400 --> 0:16:09.920 little bit and yields to rise reflecting more the fundamental 0:16:10.080 --> 0:16:14.640 data that you describe. Yeah, No, I think it's going 0:16:14.680 --> 0:16:16.880 to take a little bit more time here. I think, 0:16:17.240 --> 0:16:21.800 you know, we're still very unprecedented times with central banks 0:16:21.840 --> 0:16:24.800 and obviously just that being incredibly involved in the markets 0:16:24.920 --> 0:16:28.360 and the tapering is is obviously top of mind from 0:16:28.400 --> 0:16:31.520 all investors, and that is going to be I think 0:16:31.600 --> 0:16:36.000 the key factor to start that normalization that you're kind 0:16:36.000 --> 0:16:39.320 of referring to my mind. So we're moving into the 0:16:39.440 --> 0:16:42.040 tapering kind of top pace over the next level months. 0:16:42.440 --> 0:16:45.760 Um some of that you know, unprecedented kind of TI 0:16:45.920 --> 0:16:48.640 low levels that we've been seeing should be starting to online. 0:16:48.760 --> 0:16:51.160 So it's a little bit of that supply demand aspect 0:16:51.240 --> 0:16:54.240 of it. But um, I don't think it's going to happen, 0:16:54.600 --> 0:16:57.040 you know, overnight. We saw in the thirty year option 0:16:57.280 --> 0:17:01.560 earlier this this week that it's it's still a pretty 0:17:01.680 --> 0:17:04.000 rocky environment. The Street had to take down a big 0:17:04.080 --> 0:17:06.719 portion of that and had the longest tails and two 0:17:06.800 --> 0:17:10.120 thousand and eleven, so it's really you can really still 0:17:10.320 --> 0:17:13.080 tell that there's a lot of movement parts and a 0:17:13.119 --> 0:17:15.680 lot of tactical factors that I think will take some time, 0:17:15.800 --> 0:17:18.159 probably several months before we kind of work through that. 0:17:18.600 --> 0:17:22.119 What are you expecting in terms of corporate issuance in 0:17:22.240 --> 0:17:24.960 this environment, I mean, does it do do you see 0:17:25.200 --> 0:17:29.920 them still running out to raise as much as they can. Yeah, 0:17:30.080 --> 0:17:34.240 we were expecting still a very healthy corporate issuance, both 0:17:34.240 --> 0:17:36.760 from the investment rates side and the high side, perhaps 0:17:36.840 --> 0:17:39.879 not at the levels that we've seen here today because 0:17:39.880 --> 0:17:42.240 a lot of the company has naturally been able to 0:17:42.320 --> 0:17:44.440 take advantage of the lower rates, kind of locking in 0:17:45.160 --> 0:17:48.720 some nice coupons and and kicking that maturity wall out, 0:17:49.240 --> 0:17:52.479 which we think is healthy. But as companies are now 0:17:52.600 --> 0:17:56.200 shifting towards a little bit more comfortable around expanding and 0:17:56.400 --> 0:17:59.880 spending capex and thinking through you know, the next phase, 0:18:00.240 --> 0:18:03.440 there's gonna be some some funding needs from that perspective 0:18:03.480 --> 0:18:05.440 as well. So I think we're gonna have a little 0:18:05.440 --> 0:18:08.760 bit better balance perhaps going into two thousand and twenty two, 0:18:08.920 --> 0:18:13.080 but generally we would expect still quite an active new 0:18:13.119 --> 0:18:17.000 issuance um at pace going into next year. And when 0:18:17.040 --> 0:18:19.320 you take a look at the Bloomberg terminal, I'm just 0:18:19.440 --> 0:18:22.280 hooking taking a look at investment grade spreads over treasuries. 0:18:22.280 --> 0:18:25.240 I mean, you're still a really tight eight seven basis 0:18:25.280 --> 0:18:28.280 points high yield just two d and eighty basis points 0:18:28.320 --> 0:18:36.480 and spread over treasuries. Is that sound fundamentally strong to you? 0:18:36.760 --> 0:18:39.560 Or is a lot of this fomo and yield seeking 0:18:39.720 --> 0:18:42.080 because there's nowhere else to get yield in this market, 0:18:44.440 --> 0:18:46.960 I would say there there's a little bit of both. 0:18:47.400 --> 0:18:50.879 We've kind of talked about the markets at these levels 0:18:51.000 --> 0:18:54.000 not being particularly exciting from a spread perspective, but we 0:18:54.080 --> 0:18:56.399 do think they're gonna be holding up. We talked about, 0:18:57.280 --> 0:18:59.600 you know, markets being sort of priced for a reality, 0:18:59.680 --> 0:19:02.520 not price for perfection. The reality is that we are 0:19:03.160 --> 0:19:08.439 seeing very strong fundamentals. Economic growth is healthy, the faults 0:19:08.480 --> 0:19:12.600 are expected to be record lows around one percent, perhaps 0:19:12.640 --> 0:19:16.000 even lower. So I do think that we do have 0:19:16.160 --> 0:19:19.000 a lot of factors that are playing in are justifying 0:19:19.080 --> 0:19:23.280 where we are from from current levels. Um that being sad, 0:19:23.520 --> 0:19:26.200 I think just the fact that we have low yield 0:19:26.320 --> 0:19:29.760 environment across the globe continues to be the main driver 0:19:29.920 --> 0:19:34.200 of investors reaching for yields. So our expectation is that 0:19:34.600 --> 0:19:38.359 this kind of carry trade will continue and being an 0:19:38.359 --> 0:19:42.040 attractive way to playing fixed income, and we continue to 0:19:42.119 --> 0:19:46.840 be more comfortable taking corporate credit risk over treasuries, and 0:19:46.920 --> 0:19:49.680 we're also comfortable kind of dipping down to the lower 0:19:49.800 --> 0:19:54.000 quality parts of the credit markets. Anders, thanks so much 0:19:54.040 --> 0:19:57.320 for joining us today, Honors person there, chief investment officer 0:19:57.440 --> 0:20:00.760 of Global fixed Income at Nouvene talking to US about 0:20:00.840 --> 0:20:07.920 the rates situation and his inflation outlook as well. Let's 0:20:07.960 --> 0:20:12.280 get over right now to Frank's Frank Holmes joining us. 0:20:12.440 --> 0:20:15.880 As I had said before, he is the chief Investment 0:20:15.920 --> 0:20:18.800 Officer as well as the CEO US Global Investors, and 0:20:19.280 --> 0:20:22.960 we're gonna talk about some of the E t F, 0:20:23.200 --> 0:20:25.359 some of the hot products and the jets. E t 0:20:25.560 --> 0:20:27.240 F is one that I want to start with as 0:20:27.720 --> 0:20:31.840 we reopen um and get back to normal life again. 0:20:32.480 --> 0:20:39.400 What do you think about travel and the consumer? Well, 0:20:39.440 --> 0:20:42.800 I think we're gonna have a huge surgeon and travel 0:20:43.000 --> 0:20:47.240 with November eight allowing Europeans to fly in without being 0:20:47.320 --> 0:20:50.320 stuck in Mexico City or Canada for two weeks. I 0:20:50.440 --> 0:20:54.480 recently flew to Sweden full flight, going over half empty 0:20:54.560 --> 0:20:58.240 coming back. I flew to Dubai last week and same thing, 0:20:58.440 --> 0:21:02.200 full flying over empty coming back. Now, I think it 0:21:02.400 --> 0:21:06.439 is wide open, especially coming into Thanksgiving and the Christmas season, 0:21:07.119 --> 0:21:10.640 We're gonna have a huge inbound from Europe. Interesting though 0:21:10.640 --> 0:21:13.880 about the health of the consumer as well. In many 0:21:13.960 --> 0:21:17.200 cases they've said that the consumer is at least some 0:21:17.400 --> 0:21:20.760 of them more wealthy now than they were before the pandemic, 0:21:20.880 --> 0:21:23.560 and that pent up demand and that willingness to travel 0:21:23.960 --> 0:21:26.720 is in full force. How are you thinking about that 0:21:26.840 --> 0:21:31.399 as well? When you think about the consumer. Absolutely, just 0:21:31.520 --> 0:21:33.680 take a look at hotel rates in New York City. 0:21:35.680 --> 0:21:38.760 It's just amazing to see how the price tig has 0:21:38.800 --> 0:21:41.720 gone up dramatically. And we look at Florida, we look 0:21:41.760 --> 0:21:45.679 at Southwest is flying from Phoenix to Cabo St. Lucas 0:21:46.600 --> 0:21:50.719 in Mexico for tourism. So there's no doubt tourism as 0:21:50.840 --> 0:21:55.600 robust in Las Vegas and right across the nation. So 0:21:55.840 --> 0:21:59.000 I think we're gonna see big travel everyone in the 0:21:59.080 --> 0:22:02.199