Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com Slash podcast. Well, a lot of
Speaker 1: folks in this market, you know, they've been waiting for,
Speaker 1: you know, of a pullback of five, seven, ten percent
Speaker 1: pullback is part of a healthy part of this market,
Speaker 1: maybe saying you know, I'll get in at that point.
Speaker 1: Our next guest says, don't worry about time in the market.
Speaker 1: If you have the time horizons, stay long. David Kat's,
Speaker 1: chief investment officer from Matrix Asset Advisors, joins us. So, David,
Speaker 1: I know, you guys did a survey, you know, taking
Speaker 1: a look at um buying the dips if if, if
Speaker 1: you will, what did your survey kind of show you, guys? So, basically,
Speaker 1: we looked at the period of nree to this summer
Speaker 1: and over that twenty eight and a half year period,
Speaker 1: stocks work about ten point four percent. Within that you
Speaker 1: had thirty four corrections of five percent or more. So
Speaker 1: the moral of the story is the stock market is
Speaker 1: going to correct. Uh. You basically want to ride the
Speaker 1: ups and downs and that's the best way to make money.
Speaker 1: The other thing that's pretty interesting is the recoveries occur
Speaker 1: much faster than anybody imagines or beliefs is possible or likely.
Speaker 1: So thirty one of those thirty four corrections were between
Speaker 1: five and twenty and the average recovery time was two
Speaker 1: point two months. So that means the market sells off
Speaker 1: pretty quickly and then bounces back pretty quickly. And our
Speaker 1: best advices, by the dip, we've already had a five
Speaker 1: percent correction. We think it's a good time to be
Speaker 1: putting money to work. We think the market recovery is
Speaker 1: going to be much quicker than anybody thinks possible. I'm
Speaker 1: wondering what you think the role of the retail trader
Speaker 1: is in all of this, because the narrative for so
Speaker 1: long has been that it is the small time individual
Speaker 1: investor that's really super bullish that has been coming in
Speaker 1: and buying these dips with such big here and there
Speaker 1: are signs that that kind of activity is starting to wane.
Speaker 1: Does that mean by the dip is also going to
Speaker 1: We don't think so. Again, this study goes back to
Speaker 1: three So this is a long time and they're always
Speaker 1: different forces at different points in time. We think one
Speaker 1: of the biggest drivers of the stock recovery this time
Speaker 1: is there's a tremendous amount of liquidity out there. Interest
Speaker 1: rates are still very low. People are looking places to
Speaker 1: put their money, which means that on a dip, money
Speaker 1: is going to likely come into the market. All right,
Speaker 1: So where are you at, Matrix Advisors kind of allocating
Speaker 1: your capital these days? There's a lot of economic concern
Speaker 1: growing out there. Um, you know what the base of
Speaker 1: supply chain challenges, margin pressures, inflation challenges. We've got some
Speaker 1: uncertainty in Washington, d C. Where do you guys see
Speaker 1: the opportunities? So we think if you look at the
Speaker 1: market on a longer term basis, you can look through
Speaker 1: a lot of these uncertainties. Washington is dysfunctional and unfortunately
Speaker 1: has been dysfunctional for the last twenty or thirty years,
Speaker 1: if not longer. Ultimately, they're going to get their act together,
Speaker 1: but it's just going to be at the last minute,
Speaker 1: and it's gonna be a lot of noise along the way.
Speaker 1: In terms of the supply disruptions, we think that's going
Speaker 1: to hit a lot of companies in this quarter's earnings.
Speaker 1: Right now, the market is penalizing those companies pretty fiercely.
Speaker 1: We think that one or two things, you want to
Speaker 1: try to buy companies that are not going to be
Speaker 1: impacted by that, or you want to buy companies in
Speaker 1: the aftermath of having a problem. So stock that we
Speaker 1: think is a great opportunity right here is Federal Express.
Speaker 1: They are a good long term secular growth story is
Speaker 1: more people are shopping online, they're shipping more packages. Global
Speaker 1: economies picking up very good for them. They had a
Speaker 1: modestly disappointing quarter and it was driven by logistics UH,
Speaker 1: not being able to get enough employees and inflation. As
Speaker 1: a result, the stock is sold off from three twenty
Speaker 1: to twenty five. We think it's a great entry point
Speaker 1: right here if you can look beyond the short term uncertainty.
Speaker 1: But what happens if some of those uncertainties and or
Speaker 1: supply side pressures proved to be more persistent, how long
Speaker 1: can they last? While you still think that those are
Speaker 1: a quote unquote short term well in terms of Federal
Speaker 1: Express the stocks at eleven times earning, so you know,
Speaker 1: if it takes six months to turn around their nine months,
Speaker 1: we are less concerned because we know the stocks is
Speaker 1: gonna be thirty or higher. In terms of corporate America,
Speaker 1: we think that inflation is picked up. You're gonna see
Speaker 1: it more this quarter. We think it's starting to team
Speaker 1: in certain areas that had at first, like the consumer
Speaker 1: product companies. We're talking about inflation six nine months ago.
Speaker 1: Now that seems to be having peaked and coming down slowly.
Speaker 1: We think they're gonna be supplied disruptions. We think they're
Speaker 1: gonna be chip shortages, but the economy is very strong,
Speaker 1: demand is robust. We think we're gonna get through this.
Speaker 1: And the key is find good businesses that are going
Speaker 1: to do well, you know, through the cycle. So Cisco,
Speaker 1: which is a technology company, they're having supplied disruptions, are
Speaker 1: having to pay more for their chips, but they have
Speaker 1: great to man and they're still learning a lot of money.
Speaker 1: It's at a great price and it's paying you a
Speaker 1: good yield while you wait. So we think as long
Speaker 1: as you're not looking for really healthy, sharp momentum right now,
Speaker 1: you're able to buy good businesses that are going to
Speaker 1: get through this, and the time to buy them is
Speaker 1: when the stock has been discounted, assuming that the problem
Speaker 1: last forever and it's not going to David Facebook, regulatory risk,
Speaker 1: what's your concerned if any we think Facebook is a
Speaker 1: bad corporate citizen. There is regulatory risk. However, Uh, at
Speaker 1: three thirty dollars, we think the stock is a very
Speaker 1: good buying opportunity if you don't mind holding a company
Speaker 1: where you're a little bit less enamored with management. Uh.
Speaker 1: They have an addictive product. That's part of the problem.
Speaker 1: The good part is it's an addictive product and as
Speaker 1: a result, their advertising is going to grow for years
Speaker 1: to come. So we think it's a good long term investment,
Speaker 1: but you have to understand you're not buying Uh, the
Speaker 1: best management team in terms of ethics out there, David Cat's,
Speaker 1: chief investment Officer, Matrix Asset Advisors. Interesting call, they're on Facebook.
Speaker 1: Just go where the money is and uh, that's certainly
Speaker 1: where the money is going from an advertising perspective. David Katz,
Speaker 1: Matrix as Advisors. We're got more coming up. This is Bloomberg,
Speaker 1: all right. Tom Keene's not here. So we can talk
Speaker 1: about bitcoin fifty thousand dollars per coin volatility. Okay, the
Speaker 1: question is where does this thing go? And it is big,
Speaker 1: big news here at Bloomberg News Crypto because we're just
Speaker 1: recently Hardy Managing editor for Crypto. That tells me. I
Speaker 1: was like, oh boy, we're all in following this asset
Speaker 1: class as we should be. Station Marie Ishmael, Managing Managing
Speaker 1: editor for Crypto for Bloomberg News, joining us on the
Speaker 1: phone here, Station Marie, again, bitcoin at fifty. It's a
Speaker 1: nice round number, it's a level. What do you take
Speaker 1: away from it, Well, it certainly is a nice round
Speaker 1: number on but you know, one of the things that's
Speaker 1: been interesting about the moves, you know, we were really
Speaker 1: paying attention to kind of the trend over the past
Speaker 1: two months, right, so we're looking at UM says that
Speaker 1: have gone up more than sixty since hitting lows in July,
Speaker 1: and of course the high in April in the sixties
Speaker 1: of thousands. One of the pieces of news that came
Speaker 1: out in the past couple of days, which you know,
Speaker 1: folks in the markets say, has been really driving some
Speaker 1: of this enthusiasm UM is a report from Bank of America,
Speaker 1: they've initiated coverage their hiring crypto team, and the you know,
Speaker 1: the phrase that they used in the in the research
Speaker 1: note was if the bitcoin is too large to ignore,
Speaker 1: And various market participants, who are enthusiastic at the best
Speaker 1: of times, have really taken this as a sign that
Speaker 1: this is a currency and asset class that is really
Speaker 1: around to stay. And the hope of a lot of
Speaker 1: these market participants is that it's going to continue to
Speaker 1: go up for sure. Well, how do technicals maybe help
Speaker 1: us figure out if indeed the trajectory from here is higher.
Speaker 1: I feel like that's all you really can rely on
Speaker 1: when it comes to crypto, because you know, there's not
Speaker 1: that many fundamentals. Well, I think there are are a
Speaker 1: few technical conditions that folks are looking at. One is
Speaker 1: UM fifty hundred, which is a minor resistance number that
Speaker 1: some folks are paying attention to, and the suspicion is
Speaker 1: that if there is you know, if we hit above
Speaker 1: that number, then we're looking to potentially have a breakout,
Speaker 1: which might see us hit those sixty five prices again.
Speaker 1: So Station Maria, a lot of folks and even some
Speaker 1: folks I think that the big New York banks are
Speaker 1: still not buying into this crypto thing. Majig um. You know,
Speaker 1: what do you think is the next event that needs
Speaker 1: to happen for legitimacy for those folks that are kind
Speaker 1: of naysayers. Is it something like a G twenty country
Speaker 1: adopting bitcoin in some way? What do you think are
Speaker 1: the next big milestones for this space? Well, I think
Speaker 1: one of the things that I've really been listening to,
Speaker 1: you know, we you know, here at Bloomberg, we've had
Speaker 1: a lot of folks on TV and at our events
Speaker 1: and on radio of course, talking about what it would
Speaker 1: take for them to either be personally or professionally invested
Speaker 1: in crypto. And we had Ken Griffin say just yesterday
Speaker 1: that whatever his initial crypto skepticisms and his long standing
Speaker 1: cryptoscopticism is, actually he would be more interested from a
Speaker 1: citadel perspective if there was more clarity around regulation. And
Speaker 1: that's certainly been something I've heard echoed by other market participants.
Speaker 1: You mentioned having kind of a G twenty country. Take
Speaker 1: this seriously, obviously, folks are looking at the experiments in
Speaker 1: a Salvador with making bitcoin acceptable as legal tender. As
Speaker 1: you know, perhaps something that other countries might follow. Um,
Speaker 1: I think there's a tremendous amount of potential institutional interest
Speaker 1: in what would happen if bitcoin ets. Actually it was
Speaker 1: just about to say, do we think it's I mean,
Speaker 1: the Gary Gensler sec I feel like remains a mystery
Speaker 1: on its crypto policy. It seems like it's not as
Speaker 1: friendly as people maybe thought initially. Do we have any
Speaker 1: kind of idea when and if we will actually get
Speaker 1: some kind of bitcoin ets approved? Well, I think far
Speaker 1: be it from me to speculate, but I would say
Speaker 1: that market participants are optimistic that E t F at
Speaker 1: least one, and you know, per your point about Gensler,
Speaker 1: that it would likely be a futures back to E
Speaker 1: t F. UM, I think there is a you know,
Speaker 1: folks are predicting that there will be at least one
Speaker 1: in the market by the end of the year. It's
Speaker 1: interesting I see one of the top top analysts on
Speaker 1: all of Wall Street, Jessica reef Erlik, who has been
Speaker 1: a number top rated media analys for probably thirty years
Speaker 1: on Wall Street at Mary Lynch and now Bank of
Speaker 1: American Marylynch. She is now a strategist focusing on crypto
Speaker 1: so there's another example of a big, big bank saying
Speaker 1: we're putting some research, We're putting some assets, some resources
Speaker 1: behind this asset class. Um, are we starting to see
Speaker 1: that more and more, Stacy, Marie, As you as you
Speaker 1: think about the the by side, the cell side, the
Speaker 1: whole kind of Wall Street support of crypto, are you're
Speaker 1: seeing what's what's the level of engagement and resources that
Speaker 1: you think are being allocated to this asset class. Well,
Speaker 1: to your point, there are a couple of ways that
Speaker 1: we are trying to keep an eye on this right.
Speaker 1: One is just the sheer volume of CRYP dimensions and
Speaker 1: existing research notes from different teams. Crypto is something that
Speaker 1: such as lots of different asset classes, and so you
Speaker 1: have you know, our own UM analysts and strategist that
Speaker 1: b I for example, will regularly contextualize this in terms
Speaker 1: of like what's happening with gold and how is that
Speaker 1: affecting bitcoin? So we are really paying attention to how
Speaker 1: folked with that macro perspective are considering or mentioning crypto
Speaker 1: or even in some cases, um, you know, other coins.
Speaker 1: That's one. The second is hiring, so both at the
Speaker 1: Wall Street level and on the buy side on the
Speaker 1: south side. But also you know, we're looking at like
Speaker 1: pension funds who are saying we might be interesting and
Speaker 1: understanding how bitcoin would make sense in our portfolio. Um
Speaker 1: Us Bank came out with a statement today saying that
Speaker 1: they are going to start offering custodial services for cryptocurrencies
Speaker 1: and so like, that's kind of the level of institutional
Speaker 1: normalization that we're paying attention to, in addition to just
Speaker 1: you know, pure fund flows. Yeah, just it extraorderateds. It
Speaker 1: kind of watch, uh and study the growth of this market.
Speaker 1: It's really fascinating. Stationary Ishmael. She's a managing editor cover
Speaker 1: all things crypto for Bloomberg. Let's call her our crypto czar.
Speaker 1: If you um this is radio. We're trying to make
Speaker 1: the feet of the mind, all right, so she joins
Speaker 1: from Bloomberg News. Thanks so much, Stacy, We really appreciate it. Well.
Speaker 1: Big tech has increasingly come under I think the attention
Speaker 1: of Washington lawmakers, regulators, and no company it seems more
Speaker 1: so than Facebook, and Facebook recently had a whistleblower speak
Speaker 1: out against the some of the harms that the company perpetuates.
Speaker 1: The former employee Francis Hoggan went on sixty minutes this
Speaker 1: past weekend speaking today testifying at a Senate hearing on
Speaker 1: kids safety. So some big issues for Facebook. And then
Speaker 1: I looked down the stock. It's up year to date,
Speaker 1: a little bit off of its all time high, So
Speaker 1: it doesn't seem to be that big of an issue,
Speaker 1: at least for the stock price. Naomi Nick's corporate influence
Speaker 1: reporter for Bloomberg News, joins us on the phone from Washington. So,
Speaker 1: Naomi by, it just seems like there's a lot lots
Speaker 1: of fundamental problems overhanging Facebook. How do you think this
Speaker 1: plays out? Is this a big problem for the company?
Speaker 1: It could be now. Look, on the one hand, Facebook
Speaker 1: has weathered a number of politic crises in the past.
Speaker 1: It was just you know, three years ago when it
Speaker 1: was UM handling Cabridge Analytica, uh, and there was a
Speaker 1: lot of blowback for the company. But ultimately it's still
Speaker 1: built this very powerful, very profitable um advertising behemoth UM.
Speaker 1: And it actually, you know, Washington never passed a national
Speaker 1: privacy law to address that breach. Where again, in one
Speaker 1: of those kinds of major crisy moments where Facebook is
Speaker 1: grappling with criticism, for wimmakers and advocates that it's been
Speaker 1: hiding its internal research showing some of the negative effects
Speaker 1: of its platform. And so the question is, well, Washington act, Uh,
Speaker 1: will Facebook be forced to change its ways? I think
Speaker 1: that's still an open question. Well, on the whole kind
Speaker 1: of basis of this testimony from the whistleblower centers around
Speaker 1: the idea that the company prioritize profits over people. How
Speaker 1: much can regulators really fault a company for prioritizing profit?
Speaker 1: Isn't that what companies do? And that's exactly right, UM,
Speaker 1: But remember that that refrain from the whistleblower, she was
Speaker 1: really talking about specific areas and specific types of practices
Speaker 1: that the company was engaging in in which she saw
Speaker 1: that that to be the case. So, for instance, UM,
Speaker 1: one of the revelations that came from the documents was
Speaker 1: that Facebook U had essentially been UM making some very
Speaker 1: powerful celebrities and politicians and journalists essentially immune from their
Speaker 1: content enforcement decisions. And they had previously said, oh, that
Speaker 1: just affects a small number of users, when in fact
Speaker 1: that group that receives a form of immunity or difference
Speaker 1: in treatment numbers in the millions. UM. You know, there
Speaker 1: were revelations about kind of you know. Facebook often deflected
Speaker 1: to conflicting mix of outside studies about the mental health
Speaker 1: impact of Instagram on its youngest users, when in fact
Speaker 1: it actually knew far more that, particularly for some vulnerable
Speaker 1: teams who are already feeling bad about their bodies, that
Speaker 1: Instagram has a very negative role in their lives. UM
Speaker 1: and so like those are specific kind of issues that
Speaker 1: regulators could try to get at. There's been some proposals
Speaker 1: in this today's hearing around UM, you know, enhancing privacy
Speaker 1: protections or women in targeted advertising, or pairing back UM
Speaker 1: a legal shield known as Section to thirty that protects
Speaker 1: tech companies here. We've heard that one floated a few
Speaker 1: times before. So, Naomi, I've even heard lawmakers equate Facebook
Speaker 1: with big tobacco, I e. They had internal information knowing
Speaker 1: that their product at negative effects, yet they withheld it
Speaker 1: and kept promoting their product. Is that taking it too far?
Speaker 1: Do you think? I'm not sure for this taking it
Speaker 1: too far? There's certainly some parallels um so for decades, right,
Speaker 1: big tobacco companies essentially argued that wow, the research linking
Speaker 1: UM cigarettes to UH to having CANCERUS effects or to
Speaker 1: being addictive is a little bit mixed and more research
Speaker 1: is needed. Facebook when it came to UM, when it
Speaker 1: was facing questions around what you know, is social media
Speaker 1: good for young kids often also deflected to outside research,
Speaker 1: which was conflicting. But in fact, Facebook is the organization
Speaker 1: that's the best position to conduct the most thorough research
Speaker 1: on this topic, and they had a lot more concrete
Speaker 1: evidence that for some kids it is actually uh not,
Speaker 1: doesn't play a good role in their lives. And so,
Speaker 1: you know, the question is, will will Congress bring Facebook
Speaker 1: to account in the same way that UM the government
Speaker 1: brought big tobacco company's to account. I don't know well,
Speaker 1: And the question is how difficult bringing them to account
Speaker 1: really is, because I mean, obviously it's not just the
Speaker 1: whistleblower that has given Facebook a headache. Over the last
Speaker 1: couple of days. They had a huge outage yesterday and
Speaker 1: me and everybody I know basically cease to function because
Speaker 1: Instagram wasn't working, WhatsApp wasn't working. So that just goes
Speaker 1: to show you how massive the influence of this company
Speaker 1: is in the amount of people that reaches. How do
Speaker 1: you even go about reining in a company that large. Well,
Speaker 1: it's a good question, right, because any laws that Congress
Speaker 1: would try to pass um would likely not just affect Facebook, right,
Speaker 1: it would affect other tech platforms who um, maybe you're
Speaker 1: doing similar things but don't have some more problems um.
Speaker 1: And so getting that regislation right in a way that's
Speaker 1: precise would be tricky. I think one area of vulnerability
Speaker 1: that Facebook is facing is on the antitrust front. Um.
Speaker 1: It's obviously at least seeing some critiques um from the
Speaker 1: Federal Trade Commission and states on that level. UM. You know,
Speaker 1: going as far as seeking to unwind Facebook from its
Speaker 1: Instagram and WhatsApp acquisitions. That would have a very sort
Speaker 1: of catastrophic effect on the company's future. UM. But I
Speaker 1: think regulating these areas get really tricky, and that's part
Speaker 1: of the reason why we haven't seen some progress. Uh Naomi,
Speaker 1: How well do you think or how is Facebook performing
Speaker 1: in terms of defending itself? I mean it, Mark Zuckerberg,
Speaker 1: the face of Facebook. Is that a good thing? How
Speaker 1: do you think the company is doing and dealing with
Speaker 1: all these issues? Facebook has has really launched an aggressive
Speaker 1: defense campaign against some of the allegations. It went as
Speaker 1: far as to release a point by point rebuttal to
Speaker 1: the Wall Street Journal It's reporting and characterization of its
Speaker 1: own research. It said the used paper was downplaying some
Speaker 1: of the evidence that shows that social media, and particularly
Speaker 1: its own social networks, play a positive role in teenagers lives.
Speaker 1: Um it has you know, we've seen Nick clegg Um,
Speaker 1: you know, participated interview with Mike Allen. We've seen um.
Speaker 1: The company had went as far as to release additional
Speaker 1: slides to show context to the Wall Street journalists reporting.
Speaker 1: The Wall Street Journal then responded and released Stephen Moore slides. UM,
Speaker 1: And so they're they're definitely aggressive, and there's a good
Speaker 1: reason for that. They need to be able to attract
Speaker 1: young users to remain competitive. All Right, Naomi, thank you
Speaker 1: so much for joining us. Really really good to get
Speaker 1: your perspective. And you're reporting. Naomi Nick's corporate influence reporter
Speaker 1: for Bloomberg News on the phone from Washington, d C.
Speaker 1: Looking at my become Bloomberg Commodities index chart for the
Speaker 1: trailing twelve months. Boy, it is up and to the
Speaker 1: right in a big way, uh, showing the commodity inflation
Speaker 1: out there. Let's check in with Will Ryant he's founder
Speaker 1: and sea of Granted Chairs. They have about one point
Speaker 1: five billion dollars in assets under management. So Bill, as
Speaker 1: we step back and take a thirty foot view of
Speaker 1: what a lot of folks are concerned about, which is
Speaker 1: inflation in this economy sparked in part by rising commodity prices.
Speaker 1: How are you viewing the commodity uh asset class, if
Speaker 1: you will, what's really driving it here? Yeah, that's a
Speaker 1: great question. Um, I think that now we live in
Speaker 1: a complicated world where the the interconnectedness of you know,
Speaker 1: not just the commodity markets, but global markets more broadly
Speaker 1: means that, you know, there's not one sort of simple
Speaker 1: answer to what we're experiencing at the moment. You know,
Speaker 1: part of it is the COVID recovery. Part of it
Speaker 1: is the fact that we have a huge amount of
Speaker 1: demand right now, but we don't have the supplies to
Speaker 1: meet that demand. Part of it at also due to COVID,
Speaker 1: is the fact that, you know, in terms of the
Speaker 1: supply chain, we have still a lot of restrictions in
Speaker 1: place around moving goods, et cetera around the world due
Speaker 1: to COVID. And then we have also factors such as
Speaker 1: you know, the transition to renewable energy, that decarbonization efforts
Speaker 1: that major economies are taking, and you know, some of that,
Speaker 1: particularly relevant to Europe at the moment, has meant that
Speaker 1: we've perhaps jumped a little bit too quickly to a
Speaker 1: scenario whereby we don't now have enough energy to meet
Speaker 1: these immediate needs and hence the prices of skyrocketing. You
Speaker 1: have the China effect as well in terms of what's
Speaker 1: going on in the Chinese economy. Is very important always
Speaker 1: the global commodity prices, but I think that we're looking
Speaker 1: a situation now where rising commodity prices across the board
Speaker 1: it's largely due to the fact that you know, we
Speaker 1: have more demand than we have supply at the moment. Yeah,
Speaker 1: the whole renewable energy green energy transition is really interesting
Speaker 1: when we think about the current power crisis, because you
Speaker 1: have a lot of investment in new renewable energy sources wind, solar,
Speaker 1: and you're seeing a pullback and investment of those more
Speaker 1: legacy energy sources like coal and oil, and that leaves you,
Speaker 1: obviously with this huge gap we're seeing in storage. Of course,
Speaker 1: is a big problem when you're thinking about the impact
Speaker 1: of the green energy transition and the materials that are
Speaker 1: required for it. How does that kind of affect your
Speaker 1: outlook for commodities if oil and gas is continuing to
Speaker 1: be under invested in and utilized less versus clean energy. Well, again,
Speaker 1: that's a great, great point, because there's been woeful under
Speaker 1: investment in the commodity sector for many, many years. I
Speaker 1: mean certainly since two thousand and fourteen, you can argue,
Speaker 1: so at the bottom of the last kind of bear market. UM,
Speaker 1: the capital expenditure or capex just more broadly has been
Speaker 1: really laughable in the sector. And so that's now kind
Speaker 1: of comp hounding these issues where on the one hand,
Speaker 1: we're saying we want to try and we want to
Speaker 1: decarbonize as a global economy, we want to transition to
Speaker 1: M to green energy or renewable energy. But I think
Speaker 1: what's perhaps underappreciated is the amount of commodities that we need,
Speaker 1: the amount of materials we need to do that now.
Speaker 1: Albeit they're different to the hydrocarbons that are making the
Speaker 1: headlines today, I oil, natural gas, etcetera. But certainly the
Speaker 1: amount of materials we need, particularly metals, you know, copper, aluminum, etcetera. Um,
Speaker 1: those are all metals that we greatly need, and we
Speaker 1: just don't have um those resources at the moment. We're
Speaker 1: going to need a huge amount of investment to to
Speaker 1: get that production up, all right. So I guess the
Speaker 1: question for many people is timing here is this about
Speaker 1: of commodity inflation transitory as a fatal reserve, continues to believe,
Speaker 1: or is it something maybe a little bit more pronounced,
Speaker 1: give all of the variables, whether it's supply chain and
Speaker 1: others that we have to deal with. I mean, my
Speaker 1: my view is that I think that this is I mean,
Speaker 1: I guess it goes back to what's the definition of transitory.
Speaker 1: The longer that we have five plus inflation, more difficult
Speaker 1: it is to say that it's transitory, or indeed the
Speaker 1: transitory becomes longer and longer um And so I think
Speaker 1: that we're going to see inflation higher or an elevated
Speaker 1: levels for quite some time. My concern, I guess at
Speaker 1: the moment is that this all feels a little bit
Speaker 1: like the nineties seventies where those will remember that were
Speaker 1: around then we had an oil crisis, which is, you know,
Speaker 1: in some respects analogous to what's going on at the moment,
Speaker 1: an energy crisis followed by a recession, but inflation that
Speaker 1: ended up at the end of that deck decade with
Speaker 1: you know, certainly the goal price among other things that
Speaker 1: an all time high. So I think that there's some
Speaker 1: lessons potentially in that period to what's potentially going on today.
Speaker 1: But you know, some of these issues would be the
Speaker 1: COVID situation around commodities at the moment when you can
Speaker 1: make an argument that those can start to ease and
Speaker 1: those will get better. But my concern is more the
Speaker 1: structural imbalances that we have due to the woeful lack
Speaker 1: of capex in the sector. And those are just some
Speaker 1: things that you just can't fix overnight. That these are
Speaker 1: not going to happen. They're not short turnarounds, and so
Speaker 1: I think we could be an environment where, um, you know,
Speaker 1: these commodity prices remain elevated for some time. Hey, well,
Speaker 1: thanks so much for joining us. We really appreciate getting
Speaker 1: your thoughts here. Again, commodities really in focus, the impact
Speaker 1: on inflationary pressures on the economy really coming into focus
Speaker 1: on like I go, see more evidence of that as
Speaker 1: we come into earning season. Will Ryan, he's a founder
Speaker 1: and CEO of Granted Chairs about one point five billion
Speaker 1: dollars in assets under management located in New York City.
Speaker 1: And again as we come up with earning starting UH
Speaker 1: in earnest next week, we'll be interesting to see how
Speaker 1: companies frame this inflation and its impact on their operations
Speaker 1: UH and on their guidance. More importantly, will that be
Speaker 1: an issue into what extent? So we'll certainly be on
Speaker 1: the lookout for that. Thanks for listening to the Bloomberg
Speaker 1: Markets podcast. You can subscribe and listen to interviews with
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.
Speaker 1: I'm on Twitter at Matt Miller. Ye put on fall Sweeney.
Speaker 1: I'm on Twitter at pt Sweeney Before the podcast. You
Speaker 1: can always catch us worldwide at Bloomberg Radio