Speaker 1: This is Bloomberg Business Week. I'm Charle Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanibek. We're here every day bringing
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Speaker 1: YouTube search Bloomberg Global News. I want to go back
Speaker 1: to Qualcom, one of the big players, a hundred and
Speaker 1: fifty six billion dollar market cap in the semi space,
Speaker 1: and as I mentioned, that stock is up more than
Speaker 1: four percent after ours. Let's get to it because a
Speaker 1: lot of it's got to have to do with that
Speaker 1: first quarter outlook, which is ten billion to ten point
Speaker 1: eight billion, which beats the estimate of nine point seventy billion.
Speaker 1: Talk about optimism. Mandy Sing he's the one who really
Speaker 1: gets this. He's senior tech industry analysts for us here
Speaker 1: at Bloomberg Intelligence. Here in our interactive broker's studio feels
Speaker 1: like an upbeat report. Yes, it is a great print
Speaker 1: and it just goes through show that some of the
Speaker 1: secular trends that we've been witnessing, the digital transformation, connectivity overall,
Speaker 1: five G rollouts, it's kind of playing into Qualcom strength
Speaker 1: and that's what we're seeing in the numbers. How are
Speaker 1: they managing it? We spend so much time talking about
Speaker 1: supply jain problems, supply gain problems. We just did it
Speaker 1: with ch Chief J. Powell. Are they managing it well?
Speaker 1: Is there some reason why it doesn't necessarily seem to
Speaker 1: be hurting them too much or that much? So clearly
Speaker 1: they are managing it well. And some of it has
Speaker 1: to do with the type of chips these cells. So
Speaker 1: they also use t SMC, but they use other foundries
Speaker 1: as well. And what we have seen companies do see
Speaker 1: being time and conductors. So companies that have kind of
Speaker 1: diversified their foundry exposure have done well because they could
Speaker 1: source their chips from all these different foundry makers. So
Speaker 1: that is what has helped them on the supply side
Speaker 1: in terms of demand side. Really, uh, they seem to
Speaker 1: be doing well in all the kind of segments I
Speaker 1: mentioned except for autos. So autos is one of the
Speaker 1: high growth segments where Nvidia has done particularly well, and
Speaker 1: that is one area where investors may want to see
Speaker 1: Quelcom really up their game. What do we know about
Speaker 1: pricing power? What is what Qualcom tell us about their
Speaker 1: ability to raise prices in an environment where demand is
Speaker 1: high and supplies low. Yeah, so clearly their gross margins
Speaker 1: have improved and that is a function of pricing, and
Speaker 1: they have been able to command you know, the higher prices,
Speaker 1: especially on the you know, the latest chips when it
Speaker 1: comes to the five G rollouts. So whether it's uh,
Speaker 1: the data center build out or the tablets that they
Speaker 1: are selling, it's really the latest chips that are that
Speaker 1: they're selling our commanding premium pricing. You know. I do
Speaker 1: think about like the differences, and we have to remember
Speaker 1: that because we are seeing this with companies and certainly
Speaker 1: big players in the chip sector that some manage better
Speaker 1: than others. And that's just a case like it goes
Speaker 1: to really understanding this industry, right, And you said you
Speaker 1: mentioned the founderies, like who are they playing into or
Speaker 1: what's sector that they sell into? Correct? Yes, And look,
Speaker 1: I mean we know industrial IoT has become a big
Speaker 1: trend after the pandemic because from an enterprise perspective, you
Speaker 1: want everything connected going forward, and that's what everyone realized
Speaker 1: during the pandemic, that if you're connected, you can get
Speaker 1: your work done. So connectivity as an overall trend is
Speaker 1: really a tailwind for all the semiconductor guys, not just Welcome,
Speaker 1: but Qualcom is exposed more to mobility and five D
Speaker 1: rollouts and that is why they're doing well right now. Okay,
Speaker 1: help us understand the relationship between Qualcom and who they
Speaker 1: supply to Apple, for example, how has that relationship changed
Speaker 1: and what should investors now? Yes, so with Apple, their
Speaker 1: exposure to Apple has gone down because Apple has been
Speaker 1: basically doing a lot of things in house and they
Speaker 1: have this system on a chip that has got everything
Speaker 1: except they still have to pay a toll to Qualcom
Speaker 1: on the modem side. So when it comes to five
Speaker 1: D rollout, Apple will have another chip from Qualcom, but
Speaker 1: for the most part they have replaced the core mobile
Speaker 1: chip that they used to use from Qualcom with their
Speaker 1: own internal chips, So revenue exposure to Apple has gone down.
Speaker 1: Where Qualcom has benefited is from huawei' So because of
Speaker 1: that Huawei band, what has happened is Qualcom has been
Speaker 1: the main beneficiary of all the Android phones they're selling.
Speaker 1: To show me, all the Chinese handset makers because Huawei
Speaker 1: is banned they can't sell those like Qualcom can't even
Speaker 1: sell any chips to Huawei because of the band right now.
Speaker 1: So clearly Qualcom has been the beneficiary of that band.
Speaker 1: But that whole China exposure, it's I mean, when you
Speaker 1: think about it, something could happen at the geo political
Speaker 1: level and that has a big impact on Calcom. So
Speaker 1: that's something that investors have an eye on. Manti, thank you.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. One of the
Speaker 1: other things that we've been tracking big time this year,
Speaker 1: thinking all right, yolo trading, it's done, all right, put
Speaker 1: it to bed, we're all coming back to work. We're
Speaker 1: not happening. And then you have as some others, well,
Speaker 1: I want to talk about this with any Massa. She's
Speaker 1: investing reporter at Bloomberg News. She joins us live here
Speaker 1: from New York City, and I got the first question
Speaker 1: I gotta ask you is can you see the future,
Speaker 1: because I would imagine that you wrote this story before
Speaker 1: we saw what happened with Avis and bed Bath and
Speaker 1: beyond today. Yeah, I mean, it's actually pretty funny. When
Speaker 1: I first was thinking about writing this story, uh, several
Speaker 1: weeks ago, I was thinking, Hey, maybe it's time to
Speaker 1: write a story about how Yolo trading has tapered off.
Speaker 1: And literally that day the Trump's Back happened, and so
Speaker 1: I had to rethink it, and I was like, you
Speaker 1: know what, Yolo trading hasn't tapered off at all. What
Speaker 1: am I talking about? Like, sure, game Stop and AMC
Speaker 1: have you know fallen. AMC is still trading, you know,
Speaker 1: fall or above where I was at the beginning of
Speaker 1: the year. Um, But like we've had these cycles almost
Speaker 1: like different vintages of meme stocks so and crypto. So
Speaker 1: you had the first wave of game Stopping a m C,
Speaker 1: then it was doge Coin, then it was sheepa a
Speaker 1: new coin than the Trump's Back. Now we have Evis.
Speaker 1: It's just an never ending cycle. It seems, well, we
Speaker 1: love how you do did this, and we talked with
Speaker 1: Bloomberg Business Week editor Joe Weber about your take and
Speaker 1: how you guys likened it to vintages of wine. Right,
Speaker 1: we're kind of moving through some different vintages. Yeah, and
Speaker 1: each different meme episode has its own ter war nicely
Speaker 1: done but them bum um. What's interesting too is, uh,
Speaker 1: it is kind of fascinating this week. You talked about
Speaker 1: the you know, Trump in the last couple of weeks, uh,
Speaker 1: and Digital World acquisition, but the Avis beyond even um
Speaker 1: bed Bath and beyond, Like, should we can we call
Speaker 1: that a meme stock? Yeah? I mean that's a really
Speaker 1: good question. What qualifies exactly as a meme stock? Now,
Speaker 1: we had a whole group of them at the beginning
Speaker 1: of the year that became popular at the same time
Speaker 1: very obviously got hot on message boards, but it seems
Speaker 1: like an expanding definition in some ways. And something that
Speaker 1: we address in the story is it's reflective of how
Speaker 1: investing has really changed in the past about six years.
Speaker 1: It didn't used to. Even even when social media and uh,
Speaker 1: you know, more accessible online investing became widespread, it wasn't
Speaker 1: quite as easy as it is today to see something
Speaker 1: on Reddit or Twitter or anywhere else and just quickly
Speaker 1: click into an app on your phone um and and
Speaker 1: buy a share or a fractional share of a company
Speaker 1: or a new cryptocurrency. So the information cycle and the
Speaker 1: ease of trading have both changed remarkably in just the
Speaker 1: past couple of years. Well, any A big part of
Speaker 1: the narrative that has emerged around meme stocks such as
Speaker 1: the one we've been talking about have been the role
Speaker 1: of retail traders and retail investors that they have in
Speaker 1: these meme stocks. But I wonder about Wall Street's role
Speaker 1: and to what extent you have hedge funds getting involved
Speaker 1: in the bigger companies actually tracking these meme stocks and
Speaker 1: trying to get in. Well, we definitely saw that the
Speaker 1: hedge funds had a wake up call in the game
Speaker 1: Stop era, and that in particular was, um, you know,
Speaker 1: the things that help happened with Melvin Capital, for example,
Speaker 1: just show how there needs to be a new awareness
Speaker 1: around the force with which a wave of retail traders
Speaker 1: can come into the market. And I think that hedge
Speaker 1: funds did take note of that, and um you know,
Speaker 1: now you hear from some traders and from some firms
Speaker 1: that they have made some tweaks around how they monitor um,
Speaker 1: you know, social media phenomena. So wait a minute, So
Speaker 1: just how I understand this. I mean, these people that
Speaker 1: we all thought were going to go back to work
Speaker 1: and not be able to trade because of the ease
Speaker 1: of doing it on these platforms can still be back
Speaker 1: at work, right, and trading is and how we see
Speaker 1: this well, I mean it differs from person to person,
Speaker 1: I guess, but it's definitely easier to do just quickly
Speaker 1: on the side on your phone, maybe while you're walking
Speaker 1: out to get lunch or something, than you know, opening
Speaker 1: a whole desktop application like you might have had to
Speaker 1: do several years ago. Um. So it's just getting more
Speaker 1: discreet and easier as time goes on. The conversations online
Speaker 1: changed around meme stocks. UM. Well, I guess one prominent
Speaker 1: aspect of the game Stop run up was trying to
Speaker 1: execute a short squeeze. So I wouldn't say that that's uh,
Speaker 1: that's not the case across the boards. Some of the
Speaker 1: popularity of certain meme names, especially in crypto, um are
Speaker 1: just you know, bidding up the price of something that
Speaker 1: almost in the quite case of Shiba a new coin,
Speaker 1: or in the case of doge coin, really had almost
Speaker 1: no value whatsoever. And uh, it's just riding a wave
Speaker 1: of popularity basically. Alright, so all right, too early to
Speaker 1: say fad this point. I mean no, really, Like it's
Speaker 1: just fascinating how you set out to do one story
Speaker 1: and then it was like, uh yeah, no, Annie, it's
Speaker 1: not gonna be the case. Talk about a wake up
Speaker 1: call right now. I'm going to be very cautious to
Speaker 1: call it a fad. Well, I have to say, well,
Speaker 1: what do you watch for then? Like, how do we
Speaker 1: kind of figure that? Wait a minute, this is now
Speaker 1: just like algorithms, right, we're at one point kind of
Speaker 1: newer to the market. There now a part of the
Speaker 1: normal way we trade when do we do we is
Speaker 1: there is some point that you look at and say, okay,
Speaker 1: this is just a part of how trading is. It's
Speaker 1: part of our trading environment. Yeah, I mean we have
Speaker 1: seen the retail part participation in the market taper off
Speaker 1: a little bit, but not not not by too much.
Speaker 1: It's still above the levels it was at at least
Speaker 1: in the equity market before UM, before the pandemic hit.
Speaker 1: So this whole year and a half or so, the
Speaker 1: crazy UM waves that we've gone through have ray is
Speaker 1: some awareness among retail investors. I guess one open question
Speaker 1: is if there were some huge market wide sell off
Speaker 1: or another big occurrence like that, or you had some
Speaker 1: retail traders really get burned on one of these meme
Speaker 1: names to a huge extent, that could limit the popularity
Speaker 1: going forward. But at least this year we haven't really
Speaker 1: seen at a bait. It's kind of one by one,
Speaker 1: these these meme names will taper off in popularity, but
Speaker 1: someone something else will come up in its place, just
Speaker 1: like a game of whack a mole or okay, anny,
Speaker 1: So what's it going to be? What's the next meme? Stock?
Speaker 1: Black Away stock? Wow? I guess we're gonna have to
Speaker 1: check Reddit to figure that out. Alright, Like a good reporter,
Speaker 1: no speculation there goes to the grindstone when you find
Speaker 1: out let us know. Alright, any massa, thank you so much.
Speaker 1: Check out that story. It is in the upcoming edition
Speaker 1: of Bloomberg Business magazine. She is, of course Bloomberg News
Speaker 1: investing reporter. Yeah, but you let me drive Oh no, no, no,
Speaker 1: this is not a toy on the drugs. I want
Speaker 1: to dry. Good question. This is the drive to the
Speaker 1: clothes on Bluebird Radio. All Right, the Fed the FED
Speaker 1: chief has come and spoken, and markets seem to be
Speaker 1: okay with it. In fact, we're seeing records on those
Speaker 1: major equity averages here, Charlie, we are at our highs
Speaker 1: of the session. When it comes to the SMP down
Speaker 1: and the NASDAC yields moved down, then they moved up. Uh,
Speaker 1: it seems like stocks up, Treasury is down, yields up.
Speaker 1: We're okay. Everything is awesome, right, My My big takeaway
Speaker 1: is that J. Powell and the Federal Reserve have done
Speaker 1: any really good job communicating because look at the way
Speaker 1: markets are reacting. Well, there's one thing he said specifically
Speaker 1: when it comes to pace, and he says, we will
Speaker 1: not surprise the markets on a change in pace. If
Speaker 1: anything we have learned about this FED in particular J
Speaker 1: Pal of course at the helm of that Fed, is
Speaker 1: that are going to feed information to the markets. There's
Speaker 1: nothing that he necessarily wants to surprise, but he stands
Speaker 1: ready to act and change policy direction if needed and
Speaker 1: as warranted by the economy. All right, let's see what
Speaker 1: our guest has to say as we count you down
Speaker 1: to the closing bell on this FED Wednesday. Hillary Kramer
Speaker 1: is back with us President and Chief investment Officer at
Speaker 1: A and G Capital Research. She joins us once again
Speaker 1: on the phone in New York City. Hillary, he does
Speaker 1: seem to be among the great communicators when it comes
Speaker 1: to FED policy. What is it about what we heard
Speaker 1: from FED Chief J Powell and that FED decision? We
Speaker 1: only have one more left in this year of one?
Speaker 1: What stands out for you that it's a dangerous policy
Speaker 1: we're in. Why dangerous? It's it's dangerous because Powell wants
Speaker 1: to wait for full full employment before he starts raising rates.
Speaker 1: So in the meantime, Carol, we have how the housing
Speaker 1: market it's like a casino with so much speculation. And
Speaker 1: a few people say, hey, Hillary, why is gold not
Speaker 1: going up? And I kind of I think of crypto.
Speaker 1: Of course, it's the opposite of gold, but but an
Speaker 1: alternative for those that are fearful that prices are going
Speaker 1: you know, through the roof. And although Powell did exactly
Speaker 1: what we expect, right, we're going to sustain. Look, we're
Speaker 1: going to sustain rally, there's no question about that. Because
Speaker 1: we're getting ready to close the books and a year
Speaker 1: and uh and look we're tapering way too slowly. That's
Speaker 1: another takeaway for me, like, you know, there's no need
Speaker 1: to keep buying a billion a month. I mean now
Speaker 1: we're going to hundred and five billion months ninety and
Speaker 1: then in June will start, we'll be we'll be completely done,
Speaker 1: and the in the FED will be done buying bonds
Speaker 1: and keep rate slow. Hillary, I just we don't have
Speaker 1: a ton of time, so I want to make sure
Speaker 1: we we drill into what you're saying here, what specifically
Speaker 1: about the Fed's policy dangerous to you right now? It's
Speaker 1: causing a speculation. Money is free, money is free, it's
Speaker 1: phony money. Look at the supplaine supply chain disruptions, right,
Speaker 1: just look at those. All of that has to do
Speaker 1: with you know, phony interest rates and a FED policy
Speaker 1: that has everybody buying and buying, you know, for their home,
Speaker 1: for their life. But wait, wait, wait, wait, you're saying
Speaker 1: interest rate low rate is what's causing supply disruptions. Isn't
Speaker 1: it a case of just this The supply chains just
Speaker 1: aren't actually working, whether it's not enough people in the ports,
Speaker 1: not enough people at work to make it all happen.
Speaker 1: We also do have incredible demand because we do have
Speaker 1: we talked about this constantly about consumption. It is at
Speaker 1: their big time and whether people are whether it's corporate buying,
Speaker 1: individual buying, kind of buying it advanced concerned about running
Speaker 1: at a supply It's kind of this weird little cycle.
Speaker 1: But isn't it because of that and not necessarily cheap money.
Speaker 1: But that's what you just said in my opinion, Carol,
Speaker 1: is that it actually is from cheap money. It's it's
Speaker 1: all of this demand. This demand has created this supply
Speaker 1: chain disruption. Why is there so much demand out there
Speaker 1: because rates are so low, because money is so incredibly cheap.
Speaker 1: You know, this policy has people buying just buying homes,
Speaker 1: look at the real estatement. But if you try to
Speaker 1: go buy a car right now, you can't actually buy
Speaker 1: a car. That's so much money and money so cheap.
Speaker 1: They're they're they're all buying now. Of course, we also
Speaker 1: know part of the problem has to do with labor shortages,
Speaker 1: and that's why there's a supply chain disruption. Why do
Speaker 1: we have a labor shortage because people want to be
Speaker 1: paid more because everything costs more, and they're looking for
Speaker 1: their wages to go up, which they're starting to. And
Speaker 1: eventually we're going to as I go love wage inflation.
Speaker 1: Now I'm all for someone who works at Walmart getting
Speaker 1: twenty hour and so seventeen. But uh, but still it
Speaker 1: makes a question what's going on here? People are saying,
Speaker 1: I'm not going to bother work. It doesn't make sense.
Speaker 1: Plus the entitlements, uh, they have gone, you know, they
Speaker 1: pretty much have tapered off to nothing. But so then
Speaker 1: why aren't people back at work? I mean, that's the
Speaker 1: thing we have to kind of figure out. And there's
Speaker 1: been some really smart conversations to me, and I've talked
Speaker 1: about this even off air. It's just you maybe have
Speaker 1: couples making decisions that can afford to say, maybe you're
Speaker 1: not going to go back to work because we don't
Speaker 1: want to go back to the way life was, or
Speaker 1: we can afford to do without some things, or kind
Speaker 1: of figuring out different ways of doing things. Maybe there
Speaker 1: is something And it sounds like the Fed and J.
Speaker 1: Powell in particular. You know, one of the things that
Speaker 1: really stuck out for me is he said we have
Speaker 1: to be humble about what we know about this economy.
Speaker 1: I also read into that what we don't know about
Speaker 1: this economy. He said, it's still delta dependent, and that
Speaker 1: puts us on a new path. We really don't know
Speaker 1: what our economy will truly be, especially when it comes
Speaker 1: to the labor market on the other side of this pandemic. Uh,
Speaker 1: we don't know what the labor market will look like,
Speaker 1: but we do know one aspect of it, which is
Speaker 1: that people who are working are going to demand a
Speaker 1: lot more money. I mean they have to. Let's go
Speaker 1: back to let's say October one. That isn't a great
Speaker 1: example Chipotle's earnings fact that said it would be up
Speaker 1: sixty eight percent, right, you know, there are hudd fifty
Speaker 1: five percent. That's beside the point. What's really important. Labor
Speaker 1: costs spiked twenty four percent. Food and beverage rows there
Speaker 1: are those expenses rose four percent. So at the end
Speaker 1: of the day, Chipotle, which to me was going to
Speaker 1: be like off the charts and it was um, really
Speaker 1: got muted because of all of this inflation. Uh. People
Speaker 1: aren't going to go back to work all that faff.
Speaker 1: They got used to being home. They got used to
Speaker 1: that gig economy of up work and UH and small
Speaker 1: projects and getting paid on venmo. There's no reason to
Speaker 1: have to have to you know, march to the train
Speaker 1: and get on and think to the subway and go
Speaker 1: into your office building. It doesn't make sense. Everyone has
Speaker 1: found a new way to make, to make and meet.
Speaker 1: So for so hillary for investors who aren't listening to this,
Speaker 1: how do you trade this very carefully? I'm looking at
Speaker 1: potential bullishness with the biotechs. You know, if anyone wants
Speaker 1: to be speculative, many of these biotechs haven't even started
Speaker 1: to partake in in inflation and in the speculation. So
Speaker 1: there are a number of them which we can do
Speaker 1: another point in time. There's about seven or eight that
Speaker 1: are billion dollar, you know backed biotex. The other way
Speaker 1: to do it is to be really safe because just
Speaker 1: because we're strong right now again we're getting ready to
Speaker 1: close those books. Next year is going to be weak.
Speaker 1: Next year is going to be a problem. So that's
Speaker 1: why I still like stocks like Ingredient, even though their
Speaker 1: earnings are a little bit shaky. We went below ninety,
Speaker 1: but now it's at You have a three percent of
Speaker 1: in yield Hormel h r L. All the hedge funds
Speaker 1: get nervous when the market goes down, they start buying.
Speaker 1: It goes up, you know they have Skippy and applegate
Speaker 1: and spam of course. Um, so that's also a good one.
Speaker 1: And um with Lockheed Martin having had uh you know,
Speaker 1: earning miss so to speak, and the stock they're having
Speaker 1: gone down, um, I think Lockheed Martin l MT. We
Speaker 1: have a good entry point now for for Lockheed Martin
Speaker 1: because it's uh, it's there. They're also the technology cyber
Speaker 1: security driven that and they have a great client. Their
Speaker 1: biggest client is one that has lots of money and
Speaker 1: you always printed this thing before. Yeah, we know him well,
Speaker 1: the U. S. Government. Hey, Hillary, thank you so much.
Speaker 1: A good spirited conversation and thoughtful on this fed Wednesday.
Speaker 1: Hillary Kramer, President and chief investment Officer for at a
Speaker 1: G Capital Research, on the phone from New York City.
Speaker 1: Thanks for listening to Bloomberg Business Week. Download the podcast
Speaker 1: on iTunes, SoundCloud, or Bloomberg dot com, and you can
Speaker 1: also listen to our radio show at two pm Eastern
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