WEBVTT - Bloomberg Intelligence: Bitcoin Surges Past $60,000 0:00:02.960 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.880 --> 0:00:15.040 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:15.080 --> 0:00:18.079 Eastern on Apple card playing Android Auto with the Bloomberg 0:00:18.120 --> 0:00:21.440 Business App. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.040 or watch us live on YouTube. 0:00:24.680 --> 0:00:26.920 Say the action here is not in a stock market today. 0:00:26.960 --> 0:00:31.200 It's in bitcoin up seven point eight four hundred, almost 0:00:31.200 --> 0:00:35.080 forty five hundred dollars higher. For now it's sixty one 0:00:34.040 --> 0:00:37.680 thousand and ninety. What is going on there? I have 0:00:37.800 --> 0:00:40.000 no idea, but I know somebody who does. That's Mike mcloan. 0:00:40.360 --> 0:00:43.400 He's a senior commodity strategist for Bloomberg Intelligence. He joins 0:00:43.520 --> 0:00:48.000 is on Zoom from our Miami BI outpost down there 0:00:48.000 --> 0:00:50.840 in South Beach. Mike, you've been on this thing since 0:00:51.040 --> 0:00:55.240 day one, consistent from day one. You know, fixed supply, 0:00:56.000 --> 0:01:00.240 presumably ever increasing use cases which will drive demand and 0:01:00.280 --> 0:01:03.160 that's all you need. So is that still the case here? 0:01:04.080 --> 0:01:06.360 It's certainly the case. So I appreciate you saying consistent, 0:01:06.360 --> 0:01:08.560 because I haven't been that consistent. I was quite concerned 0:01:08.600 --> 0:01:12.000 that it was getting a little too speculatively excessive around 0:01:12.000 --> 0:01:13.800 the launch all of the ETFs in the beginning of 0:01:13.800 --> 0:01:16.920 the year, but it's still the case. In April, we'll 0:01:16.920 --> 0:01:19.360 have The having is when you cut the supply right 0:01:19.400 --> 0:01:21.880 now you can only mind nine hundred bit coins a day, 0:01:22.160 --> 0:01:25.000 it'll drop to four hundred and fifty. That's every four years, 0:01:25.040 --> 0:01:27.680 so it'll cut the supply. And we have obviously from 0:01:27.680 --> 0:01:30.720 ETF flows just in the last week this week a 0:01:30.760 --> 0:01:34.080 loan one billion of in flows since ETF's have been launched, 0:01:34.240 --> 0:01:37.240 a total of about seven billion. Yeah, Eric Belchun has 0:01:37.319 --> 0:01:39.080 been all but that's it, and I'm glad you mentioned 0:01:39.080 --> 0:01:42.119 so there's a key. But the thing that really struck 0:01:42.160 --> 0:01:44.319 me is that the ETF conference, the big one they 0:01:44.360 --> 0:01:45.840 have in Miami every year. 0:01:45.959 --> 0:01:48.360 So that wasn't the one in Cleveland in February. This 0:01:48.400 --> 0:01:50.680 is one in Miami. If okay, right, no hurry to 0:01:50.720 --> 0:01:51.680 go to Cleveland February. 0:01:52.080 --> 0:01:54.880 But so Eric was moderated, a panel in the room 0:01:55.200 --> 0:01:59.080 was packed, So I went to another presentation room at 0:01:59.080 --> 0:02:01.400 the same time where actually bigger and no one was 0:02:01.440 --> 0:02:03.680 no one really cared what they were presenting on. So everybody, 0:02:03.680 --> 0:02:07.280 all these professional money managers were really looking at watching 0:02:07.320 --> 0:02:08.920 bitcoin and want to learn about bitcoin. 0:02:08.960 --> 0:02:09.560 ETFs. 0:02:09.919 --> 0:02:12.480 Wait, can you just break down this whole having thing. 0:02:12.600 --> 0:02:14.760 I don't understand how that's okay to do that. 0:02:16.080 --> 0:02:19.600 You got, Hello, it's it's in the code. I have 0:02:19.600 --> 0:02:21.679 a son who's a programmer, I asked. Thembuddy says, no, 0:02:21.720 --> 0:02:25.160 it's the code dead. It's just by by by code. 0:02:25.200 --> 0:02:28.000 Every four years the supply gets cut in half. So 0:02:28.160 --> 0:02:30.240 right now all the miners in the world will only 0:02:30.240 --> 0:02:32.880 be going to creating nine hundred coins a day, and 0:02:32.919 --> 0:02:35.360 then as of having it cut the four fifties, so 0:02:35.639 --> 0:02:38.880 it doesn't have that high price cure that you really 0:02:38.919 --> 0:02:41.720 see effect most commodities and why most commodities are in 0:02:41.800 --> 0:02:44.959 bear markets with exception of goal, but also on the 0:02:45.000 --> 0:02:47.079 supply side, it's just the way it set up. And 0:02:47.120 --> 0:02:50.320 as our colleague Zeke false roade out wrote, number go up. Well, 0:02:50.360 --> 0:02:53.280 that's bitcoin is designed to go up. But now it's 0:02:53.320 --> 0:02:56.320 becoming an alternative currency on a global basis, and the 0:02:56.440 --> 0:02:58.519 US is jumping in that frame. We also a key 0:02:58.520 --> 0:03:00.919 thing you have to look at it from a macroeconomic 0:03:01.000 --> 0:03:05.040 standpoint is China's kind of pushing back. Remember China's going 0:03:05.080 --> 0:03:07.200 for gold, the largest gold buyer in the world, and 0:03:07.240 --> 0:03:10.600 they were associated with this war and the US is 0:03:10.639 --> 0:03:12.639 just to prove ETFs and bitcoins. So you see where 0:03:12.639 --> 0:03:15.600 the world's going towards intangible assets and bitcoins the most 0:03:15.639 --> 0:03:16.840 significant in cryptos. 0:03:17.360 --> 0:03:20.360 So how do we let me go back to something 0:03:20.360 --> 0:03:22.960 really fundamental, How do we value this thing? How do 0:03:23.040 --> 0:03:25.919 we decide whether it's expensive or not? Is there any 0:03:25.960 --> 0:03:28.440 fundamental analysis here or is it just the it's a 0:03:28.480 --> 0:03:31.160 commodity and supplying demand, it'll go up and then you. 0:03:31.160 --> 0:03:33.720 Should buy it at some point. Yes, well I do. 0:03:33.840 --> 0:03:36.560 I do appreciate that pole Typically coming from an equity 0:03:36.640 --> 0:03:39.200 kind of person, that's a question often getting commodities. The 0:03:39.240 --> 0:03:41.120 one way you can value it is by watching the 0:03:41.280 --> 0:03:45.880 hash rate. That's just the amount of transactions and and 0:03:47.040 --> 0:03:49.960 and I guess you could say computer power in the 0:03:50.000 --> 0:03:53.920 space kind of looking at the voltage and things, and 0:03:53.960 --> 0:03:57.320 it's it's exponential, still rising rapidly. But one thing also 0:03:57.400 --> 0:03:59.320 like the tilt over to when people push back on 0:03:59.800 --> 0:04:03.520 this particular crypto, I mean, rememb there's thirty thousand wannabes. 0:04:03.840 --> 0:04:05.160 Is I like to say, when you go on any 0:04:05.200 --> 0:04:08.680 of the major crypto sites and you click on volume, 0:04:08.760 --> 0:04:12.240 the number one traded crypto is the dollar via tokens 0:04:12.240 --> 0:04:15.040 and then one and that is Tether basically trades double 0:04:15.080 --> 0:04:17.440 the volume of bitcoins, So I'd say bitcoin's the leading 0:04:17.480 --> 0:04:19.559 one is like gold in the space. But when people 0:04:19.600 --> 0:04:21.800 push back to the technology, I'm saying, it's really the 0:04:21.839 --> 0:04:23.960 whole world's gone for the space, and the base layer 0:04:24.000 --> 0:04:26.320 they've gone for is the dollar, not any other currency. 0:04:27.120 --> 0:04:31.520 That's actually quite interesting. What about ether though, for example, 0:04:31.560 --> 0:04:34.040 Like you mentioned tether, but ether I've read like ethere 0:04:34.040 --> 0:04:37.200 ETFs maybe coming too, and I'm wondering what the effect 0:04:37.240 --> 0:04:39.080 of that would be on the thesis that you have. 0:04:39.960 --> 0:04:41.800 Well, to answer your question, Alex, to me, it's a 0:04:41.800 --> 0:04:44.320 matter of time get ETFs to track a broad index 0:04:44.360 --> 0:04:47.680 in the space. So Bloomberg Intaligence first proposed the Bloomberg 0:04:47.680 --> 0:04:50.520 Galaxy Crypto index in twenty seventeen and we launched that 0:04:50.560 --> 0:04:54.120 in twenty eighteen, so that's what almost six years now. 0:04:54.160 --> 0:04:58.040 It's just a matter of time. But ethereum ether ETFs 0:04:58.080 --> 0:05:00.279 will come. It's a question of when the key that 0:05:00.240 --> 0:05:04.320 theorem has it, do you do have a yield in ethereum? 0:05:04.920 --> 0:05:07.480 And that's where most equity people come in and say, oh, well, 0:05:07.520 --> 0:05:09.240 I can do that and then cost. So it's part 0:05:09.279 --> 0:05:11.880 of it's the technology e theorem is really kind of 0:05:11.920 --> 0:05:15.080 making possible. What's happening in the space is NFTs might 0:05:15.120 --> 0:05:19.640 be speculative, but also coaching token's tokenization of most assets. 0:05:19.680 --> 0:05:22.279 As I mentioned, the dollar is the most widely traded crypto. 0:05:22.839 --> 0:05:24.560 All right, so let's let's back away. We got to 0:05:24.600 --> 0:05:27.279 let cryptos going higher. I get it in the commodity 0:05:27.279 --> 0:05:29.400 space that you look at, Mike, you look at everything, 0:05:29.680 --> 0:05:31.560 and we'll get the pork bellies later. That's that's my 0:05:31.600 --> 0:05:34.159 air of expertise. What do you like right now? What 0:05:34.160 --> 0:05:36.320 are you talking to clients about these days? 0:05:36.800 --> 0:05:37.120 Gold? 0:05:37.680 --> 0:05:39.960 I have to say, because that's what that's what really 0:05:40.000 --> 0:05:42.480 brought me into cryptos in the first place. And gold 0:05:42.560 --> 0:05:46.640 is the most enduring, outperforming commodity over time, particularly in 0:05:46.760 --> 0:05:50.760 times when you have maybe i'd say, in the back 0:05:50.920 --> 0:05:53.839 end of FED rate hikes, which we're heading towards easing 0:05:54.080 --> 0:05:57.560 and with China potentially declining. So right now gold is 0:05:57.640 --> 0:05:59.800 up about ten percent on a one year basis, and 0:06:00.040 --> 0:06:02.279 broad commodity and this they're down about ten percent. I 0:06:02.279 --> 0:06:04.120 think that's going to accelerate. The key thing I think 0:06:04.160 --> 0:06:07.239 that's been saying about gold forever now is you can't 0:06:07.240 --> 0:06:10.000 really hold gold anymore without some bitcoin in space and 0:06:10.000 --> 0:06:12.240 the mess you're willing to take a risk that the 0:06:12.279 --> 0:06:15.120 world is not going to continue advancing towards a digitalization. 0:06:15.600 --> 0:06:17.320 So I see gold going higher. And here's a key 0:06:17.400 --> 0:06:20.040 take is I think crude oil at seventy eight dollars 0:06:20.040 --> 0:06:22.280 a barrel WTI is more likely head towards fifty. And 0:06:22.320 --> 0:06:24.479 there's a good indication for that, and that's natural gas. 0:06:24.600 --> 0:06:27.719 US natural gas, the number one measure for heat, electricity 0:06:27.720 --> 0:06:30.480 and fertilizer, has dropped at least a monthly a couple 0:06:30.440 --> 0:06:32.120 of weeks ago. It dropped to the lowest price when 0:06:32.160 --> 0:06:34.599 it was first traded in futures in nineteen ninety. 0:06:34.760 --> 0:06:34.920 Wow. 0:06:34.960 --> 0:06:38.039 Yeah, it's pretty bad. But I mean there's reasons for 0:06:38.080 --> 0:06:40.280 that in terms of demand here in the US, which 0:06:40.400 --> 0:06:42.440 is different than say the broader look for oil. So 0:06:42.480 --> 0:06:43.920 why do you think we're going to go to fifty? 0:06:44.000 --> 0:06:46.120 I mean, there's no way that OPEC plus will be. 0:06:46.040 --> 0:06:46.440 Down with that. 0:06:47.600 --> 0:06:50.200 That's the problem. They don't control oil anymore, which just 0:06:50.200 --> 0:06:54.000 look at the facts. The excess of US and Canadian fuel, 0:06:54.040 --> 0:06:56.920 liquid fuel and crude oil supply over demand now is 0:06:56.960 --> 0:06:59.080 about six million barrels a day. And guess what OPEC's 0:06:59.080 --> 0:07:01.839 spare capacity is about six million barrels a day. So 0:07:01.839 --> 0:07:04.960 they're fighting a losing battle. But the key fact is 0:07:05.279 --> 0:07:08.240 if Crudell catches up to industrial metals, it kept us 0:07:08.279 --> 0:07:11.600 up to grains and corn and virtually all the other commodities, 0:07:11.960 --> 0:07:13.640 it will go to fifty dollars a barrel. So I 0:07:13.680 --> 0:07:16.240 look at the premium, the geopolitical premium. Right now, Crudell 0:07:16.320 --> 0:07:17.360 is about twenty bucks. 0:07:18.400 --> 0:07:22.720 Twenty buck really yeah, that's really interesting because the thesis 0:07:22.760 --> 0:07:24.320 out there, like the common thought on the street, is 0:07:24.320 --> 0:07:26.360 that there is no geopotical growth premium, or it's there, 0:07:26.360 --> 0:07:29.000 it's like a couple bucks. Because you've had the backsup 0:07:29.000 --> 0:07:31.480 of US supply that's kind of helped offset that. And 0:07:31.480 --> 0:07:33.960 because Russia is still doing their thing despite sanctions. 0:07:34.960 --> 0:07:37.040 Yes, I do appreciate that. And then it's oftentimes they 0:07:37.080 --> 0:07:39.720 ignore the other commodities. So number one natural gas, number 0:07:39.720 --> 0:07:42.440 two corn, number three copper, You look at all of them, 0:07:42.440 --> 0:07:45.840 they're all in pretty severe beer markets. And the laggard 0:07:45.920 --> 0:07:49.440 in this commodity bear market is crude oil at the moment. 0:07:49.480 --> 0:07:51.160 So I look at it to me, I just published. 0:07:51.200 --> 0:07:53.440 I think it's on a cliff's edge. And obviously I've 0:07:53.440 --> 0:07:55.000 been a bit early. If I was a trader, I 0:07:55.000 --> 0:07:56.800 would have been stopped out. But now the trend is 0:07:56.840 --> 0:07:59.640 clearly lower and you have to ask yourself what keeps 0:07:59.680 --> 0:08:02.600 it elevated? And I say, you have to have sustained 0:08:02.600 --> 0:08:04.880 deal political risk. But every day we turn around that 0:08:05.240 --> 0:08:08.600 these prices right are above the US average cost of production, 0:08:08.640 --> 0:08:11.240 which is around fifty five dollars a barrel. You just 0:08:11.240 --> 0:08:14.160 see more supplying coming on and demand is not really 0:08:14.200 --> 0:08:16.040 picking up. And here's a key fact that I can 0:08:16.120 --> 0:08:19.320 mentioned is diesel demand in this country is stagnated to 0:08:19.360 --> 0:08:21.880 about the same level as it was in twenty seventeen. 0:08:22.000 --> 0:08:25.320 That's virtually never happened without a recession, unlet a gas 0:08:25.320 --> 0:08:29.160 to manage declining paperboard demand is declining. So certainly from 0:08:29.200 --> 0:08:31.640 the largest economy standpoint, we have a problem. And then 0:08:31.680 --> 0:08:33.720 you look over at China, the number one importer. They 0:08:33.720 --> 0:08:37.640 are completely dependent on fiscal monetary stimulus for economic buoyancy 0:08:37.720 --> 0:08:40.640 at the moment. So the outlook for me for crude oils, 0:08:40.840 --> 0:08:42.720 I'll put phil kill on it. This year. Initially I 0:08:42.720 --> 0:08:44.360 said forty about two years ago, and I'm going to 0:08:44.360 --> 0:08:46.200 at least give it this year if it's going to 0:08:46.200 --> 0:08:46.440 make it. 0:08:46.480 --> 0:08:48.280 There, Phil and killing nice. 0:08:48.679 --> 0:08:48.880 Yeah. 0:08:49.400 --> 0:08:50.880 So when you get stopped out of a trade, did 0:08:50.920 --> 0:08:53.480 you put it right back on Mike back in the day. 0:08:53.679 --> 0:08:56.360 Well, I used to have hair and you can see 0:08:57.200 --> 0:09:00.920 on the YouTube, but no, it's it all depends a 0:09:00.920 --> 0:09:03.199 lot of times it was with my own money, with clients, 0:09:03.280 --> 0:09:04.680 or with institutional money. 0:09:04.960 --> 0:09:06.720 But that was the key thing that really struck me 0:09:06.800 --> 0:09:08.800 is I was way early. But now that's the advantage 0:09:08.800 --> 0:09:10.400 I have is being an X trader. I can see 0:09:10.400 --> 0:09:12.559 where I would have been stopped out, and as an analyst, 0:09:12.640 --> 0:09:14.160 I can point out the macro. But I think the 0:09:14.240 --> 0:09:17.320 key thing that people really missed last two years was 0:09:17.360 --> 0:09:22.520 the significant macro economic stimulus of this unlimited friendship between 0:09:22.559 --> 0:09:25.480 President Z and President Putin. It's tilted the whole world 0:09:25.520 --> 0:09:28.360 backwards versus against China, and China was an emoral source 0:09:28.400 --> 0:09:30.679 at demand poll for comminities. And then you also had 0:09:30.679 --> 0:09:33.320 this incentive of high prices because of a war which 0:09:33.360 --> 0:09:36.000 really kicked in that elasticee. A supplying demand which has 0:09:36.040 --> 0:09:38.640 been US has been leading that way in almost all 0:09:38.679 --> 0:09:42.640 commodities I mean yeah, so I think it just accelerated 0:09:42.679 --> 0:09:43.240 those forces. 0:09:43.400 --> 0:09:44.560 Hey, Mike, we gotta leave it there. 0:09:44.480 --> 0:09:46.199 And we're gonna do port bellies next time. Don't worry 0:09:46.200 --> 0:09:46.560 about it. 0:09:46.720 --> 0:09:49.280 I'm all up for pork bellies, man. We can definitely 0:09:49.360 --> 0:09:53.880 hit that for sure. Cattle chicken anyway. Mikelgon on Boomberg Intelligence, 0:09:53.880 --> 0:09:57.800 Senior Commodity Strategists, you're listening. 0:09:57.440 --> 0:10:01.559 To the Bloomberg Intelligence Podcast just live weekdays at ten 0:10:01.600 --> 0:10:04.720 am Eastern on Apple car Play and Android Otto with 0:10:04.760 --> 0:10:08.160 the Bloomberg Business. You can also listen live on Amazon 0:10:08.200 --> 0:10:11.520 Alexa from our flagship New York station, Just say Alexa 0:10:11.720 --> 0:10:13.400 play Bloomberg eleven thirty. 0:10:15.120 --> 0:10:16.800 The S and P is just down one tenth and 0:10:16.880 --> 0:10:19.360 one percent. I mean, we can say that investors are conscious, 0:10:19.400 --> 0:10:21.720 we can say the stocks are lower, but volume is light. 0:10:22.160 --> 0:10:24.200 It's hard to get excited about any kind of quote 0:10:24.240 --> 0:10:26.560 unquote selloup. And my real question is like, what's it 0:10:26.600 --> 0:10:30.800 going to take for the markets to actually consistently go down? 0:10:31.000 --> 0:10:34.120 An Barry is founder and managing partner over at thread Needle. 0:10:34.600 --> 0:10:36.640 She joins us, right now, what's it going to take 0:10:36.679 --> 0:10:38.840 in for markets to really go down? Here? 0:10:39.960 --> 0:10:41.600 Alex, I think it's going to take one of two things. 0:10:41.600 --> 0:10:42.560 At the macro levels. 0:10:42.559 --> 0:10:45.240 Why they're going to take really strong inflation and then 0:10:45.320 --> 0:10:48.240 for even more resetting by the market of what they 0:10:48.240 --> 0:10:50.120 think the FED is going to do in terms of 0:10:50.160 --> 0:10:53.160 continuing to push out rate cuts or is that the 0:10:53.160 --> 0:10:55.640 macro level or when it comes looking at fundamentals, we 0:10:55.720 --> 0:10:59.079 need to see a flew of earnings. So we sort 0:10:59.120 --> 0:11:01.040 of through the season now, but looking ahead for another 0:11:01.080 --> 0:11:04.520 three months that basically continues to sort of reset expectations 0:11:04.520 --> 0:11:07.120 to be a bit more realistic around some of these 0:11:07.160 --> 0:11:09.920 big productivity boosts and AI boosts that people have been sitting. 0:11:09.920 --> 0:11:10.480 We've seen that. 0:11:10.400 --> 0:11:14.679 Break a little bit already in places like Palowel to networks, 0:11:14.679 --> 0:11:17.400 for example. But I think we need some more expectation 0:11:17.559 --> 0:11:19.559 resetting and it just hasn't happened as any season I 0:11:19.600 --> 0:11:20.679 think some people thought it might. 0:11:21.520 --> 0:11:24.679 So that kind of brings me to valuation here and 0:11:25.000 --> 0:11:27.320 should we have some valuation concerns in this market because 0:11:27.320 --> 0:11:29.520 we've seen a big move off of the October lows, 0:11:30.640 --> 0:11:33.760 yet I'm not sure we saw a commentsar horizon earnings 0:11:33.800 --> 0:11:36.000 per share of this market. How do you think about valuation? 0:11:37.160 --> 0:11:39.440 I think I've long been saying and Alex I've had 0:11:39.480 --> 0:11:42.120 this conversation that this market feels extremely overvalued on a 0:11:42.120 --> 0:11:44.480 couple of different dimensions. If you take a look at 0:11:44.520 --> 0:11:48.120 the equity of RESC premium, it's absolutly low relative to 0:11:48.160 --> 0:11:50.199 some of the macro risk factors out there, and if 0:11:50.200 --> 0:11:53.559 you look back historically, so that's number one. Number two, 0:11:53.720 --> 0:11:57.160 we're looking at p ratios p to growth ratios that 0:11:57.200 --> 0:12:01.040 are completely unprecedented across the entire industry and then within sectors, 0:12:01.040 --> 0:12:04.000 particularly within tech. So I've long been of the view 0:12:04.000 --> 0:12:07.280 that we were in over valued territory. I think the 0:12:07.360 --> 0:12:09.240 question is what is that capitalist going to be to 0:12:09.240 --> 0:12:10.319 get people to focus on. 0:12:10.320 --> 0:12:12.760 That again, rather than the sort of vague euphoria. 0:12:13.559 --> 0:12:17.959 HSBC had the most reluctant call change I'm beginning I've 0:12:17.960 --> 0:12:21.120 ever seen. They've had a tactical underweight stands for a while, 0:12:22.000 --> 0:12:25.080 and they finally said that sentiment and positioning have been 0:12:25.080 --> 0:12:27.920 stretched and remain elevated, but it isn't enough to prompt 0:12:27.960 --> 0:12:31.120 a significant correction and risk assets at the same time, 0:12:31.200 --> 0:12:34.000 and we have I don't I mean Goldman, I'm trying 0:12:34.000 --> 0:12:36.920 to think Barclays that ubs all kind of chasing the 0:12:37.040 --> 0:12:40.080 rally and upgrading their price forecasts for the S and 0:12:40.120 --> 0:12:43.520 P for this year. I mean, what does that tell you? 0:12:44.520 --> 0:12:46.560 I mean there's a little bit of function alex of 0:12:46.880 --> 0:12:49.920 upgrading of certain of the really big stocks that take 0:12:49.960 --> 0:12:51.360 up such a big chunk of the S and P 0:12:51.480 --> 0:12:54.000 and of the NASDAC. So when you're getting big companies 0:12:54.040 --> 0:12:56.360 like Nvidio getting rerated upwards, when you're getting a lot 0:12:56.400 --> 0:12:58.360 of the big tech companies rerated up with that sort 0:12:58.360 --> 0:13:01.720 of lifting the entire And that's where I get really nervous. 0:13:01.800 --> 0:13:03.559 Back to this point, I think tech has been such 0:13:03.600 --> 0:13:06.200 a massive driver of uplift. I do think the sector 0:13:06.240 --> 0:13:09.840 is over valued and that's spilling over into much broader 0:13:10.320 --> 0:13:14.160 market sort of bubble charity, and so I'm nervous about it. 0:13:14.960 --> 0:13:17.760 So what does that mean for kind of when you 0:13:17.760 --> 0:13:20.000 talk to your clients here, is it kind of get 0:13:20.040 --> 0:13:22.400 out of tech those names are lightening up on some 0:13:22.440 --> 0:13:24.679 of those tech names, try to sign find some value 0:13:24.720 --> 0:13:26.320 in other parts of the market, or like hold. 0:13:29.920 --> 0:13:31.400 Well, it's a little bit of a hybrid. 0:13:31.480 --> 0:13:33.679 So it's really trying to look the secular tailwinds I 0:13:33.679 --> 0:13:35.079 think are going to be there in the long term. 0:13:35.080 --> 0:13:37.120 And I'll give you an example cybersecurities that they. 0:13:37.080 --> 0:13:40.680 Throw out their pallele outer networks I have invested, for example, 0:13:40.760 --> 0:13:42.480 this is on the private side of as you clients 0:13:42.480 --> 0:13:45.320 in a private company that is in the of deep 0:13:45.320 --> 0:13:47.800 fake detection. So if you think about whether it's Taylor 0:13:47.840 --> 0:13:51.400 Swift Images or whether it's President Biden's voice being deep faked, 0:13:51.679 --> 0:13:54.200 this is an area in cybersecurity that's really picking up 0:13:54.200 --> 0:13:56.760 in terms of public attention. That's the kind of space 0:13:56.760 --> 0:13:59.640 that is going to be I think why for consolidation, 0:14:00.040 --> 0:14:02.559 and players like the Palo Alto Networks and others I 0:14:02.559 --> 0:14:05.079 think are going to be the acquirers of these companies. 0:14:05.440 --> 0:14:07.280 So this is one where I say, look, you've got 0:14:07.360 --> 0:14:10.200 to look for industries of sexuler tael Insider being one 0:14:10.240 --> 0:14:10.520 of them. 0:14:10.880 --> 0:14:13.679 Look for breakpoints. In this case, I did buy that stop. 0:14:13.480 --> 0:14:16.040 When I saw it go down with a ninety billion 0:14:16.080 --> 0:14:19.200 dollars set off, just because the CEO had dared to say, 0:14:19.240 --> 0:14:21.680 we need a real strategy around pricing, and it's going 0:14:21.720 --> 0:14:25.680 to be a little bit less, a little bit more aggressive, 0:14:25.680 --> 0:14:27.840 a little bit less casually positive than someone you thought. 0:14:28.000 --> 0:14:30.040 So those are the breakpoints I like CEOs that are 0:14:30.080 --> 0:14:32.760 coming out in these kinds of sectors saying, look, here's reality. 0:14:32.760 --> 0:14:35.120 It's really tough to execute, but here's a plan. This 0:14:35.200 --> 0:14:36.720 is how we're going to do it. And when we 0:14:36.760 --> 0:14:38.600 see cell offs in those names, that's why I'm looking 0:14:38.600 --> 0:14:39.120 to go back in. 0:14:40.040 --> 0:14:41.400 What about what do you do with the big guys 0:14:41.400 --> 0:14:44.600 like say Google that's gotten hit hard and also Apple, 0:14:44.720 --> 0:14:46.240 which were making a bit a lot of hay about 0:14:46.280 --> 0:14:49.280 technical levels. The chart doesn't look that great when you're 0:14:49.280 --> 0:14:51.560 looking at maybe a breakdown of some of the big 0:14:51.600 --> 0:14:54.760 tech names. Do you go on and buy I do. 0:14:54.800 --> 0:14:57.520 Alex And it really depends on why the breakdown has happened. 0:14:57.560 --> 0:14:59.720 I thought that I think a bit more forgiveness when 0:14:59.760 --> 0:15:02.760 it to big companies that at the end of the day, 0:15:02.800 --> 0:15:07.120 our cash flow machines have real market share and big 0:15:07.160 --> 0:15:09.640 growing markets. When those companies come out and say, look, 0:15:10.080 --> 0:15:12.440 we've made a mistake or we're going to shut your 0:15:12.480 --> 0:15:14.640 product line, as Apple has done when it comes to 0:15:14.720 --> 0:15:17.600 ev for example, or when we see GEM and I 0:15:17.720 --> 0:15:19.840 get rolled out too quickly and we see therefore a 0:15:19.880 --> 0:15:23.120 missteff put Google and therefore Alphabet now saying look, we're 0:15:23.160 --> 0:15:25.400 really going to have to invest behind slowing this down 0:15:25.440 --> 0:15:27.800 and fixing it. I've got patience for that, Alex because 0:15:27.800 --> 0:15:30.600 I think those are still fundamentally good businesses. Where again, 0:15:30.680 --> 0:15:32.640 we're seeing these companies experiments. 0:15:32.800 --> 0:15:33.960 Sometimes they'll get it wrong. 0:15:34.000 --> 0:15:35.840 I'd like to make sure they're not shredding too much 0:15:35.880 --> 0:15:38.400 capital in the process, and they're being disciplined in their allocation. 0:15:38.960 --> 0:15:40.240 But at the end of the day, you can't take 0:15:40.240 --> 0:15:42.680 away the fact these companies aren't going anywhere. They will 0:15:42.720 --> 0:15:46.720 redirect resources to more profitable outlets, and I've got patients 0:15:46.720 --> 0:15:49.080 for that. I see those are buying opportunities of them. 0:15:49.280 --> 0:15:50.800 The rest of the market's running in those. 0:15:50.680 --> 0:15:54.120 Moments talking about making a pivot or having some patients 0:15:54.120 --> 0:15:56.680 for a business line. How about Apple kind of saying 0:15:56.800 --> 0:16:01.160 back and away from the electric vehicle business, autonomous vehicle business. 0:16:02.000 --> 0:16:03.920 That's a pretty big move, would it? Would you make 0:16:03.960 --> 0:16:04.280 of that? 0:16:05.480 --> 0:16:06.280 It is a big move. 0:16:06.280 --> 0:16:09.320 But here's what I say about Apple again, to compare 0:16:09.320 --> 0:16:12.520 it specifically and deliberately to another tech names, and that's Amazon. 0:16:12.800 --> 0:16:14.560 If you take a look at Amazon, the amount of. 0:16:14.560 --> 0:16:17.400 Forgiveness that there has been over the over the decade 0:16:17.600 --> 0:16:20.200 for that company to experiment throw a bunch of money 0:16:20.200 --> 0:16:23.400 into big new ideas, whether it's in grocery or whether 0:16:23.520 --> 0:16:27.480 it's in healthcare, and if it fails, Amazon shuts down 0:16:27.640 --> 0:16:31.160 relatively quickly those experiments. The market thinks that's great, and 0:16:31.200 --> 0:16:32.880 they say this is called to its culture and this 0:16:32.960 --> 0:16:34.680 is why it's such an agile. 0:16:34.320 --> 0:16:36.320 Nimble company and will continue to win in the long run. 0:16:36.640 --> 0:16:39.640 For some reason, that attitude has faded when it comes 0:16:39.680 --> 0:16:43.160 to the Apples of the world. I have forgiveness for 0:16:43.240 --> 0:16:46.400 that because Apple tried. It's still got a huge cash 0:16:46.400 --> 0:16:48.960 flow machine in its core iPhone eye. 0:16:48.880 --> 0:16:51.440 Products, and if easy it's not going to generate return. 0:16:51.480 --> 0:16:52.400 I'd much rather they. 0:16:52.280 --> 0:16:54.720 Shut up, shut up shop in that front, and go 0:16:54.840 --> 0:16:59.160 refocus and reinvest behind more profitable lines. So I think 0:16:59.200 --> 0:17:01.320 it's a good thing when companies come out and say 0:17:01.520 --> 0:17:02.600 didn't work, to move. 0:17:02.520 --> 0:17:05.160 On right and thanks lot really appreciate it. Always fun 0:17:05.160 --> 0:17:07.480 to get your perspective. And Barry founder and managing partner 0:17:07.520 --> 0:17:10.000 at Thread Needle, I kind of say when I interviewed CEOs, 0:17:10.000 --> 0:17:12.280 I feel the same way, like when you deliver information 0:17:12.320 --> 0:17:13.920 to the CEO and they're like, no, no, it's great, 0:17:14.080 --> 0:17:16.160 Like this is a great buying opportunity for our stock. 0:17:16.200 --> 0:17:19.680 Everything's amazing. You're like, okay, yea, we know, we know 0:17:19.800 --> 0:17:21.560 what you're doing. Guys, we can see through that. 0:17:21.680 --> 0:17:24.720 And I saw, yeah, Apple just kind of coming right out. Well, 0:17:24.720 --> 0:17:27.320 I guess they didn't say it's Mark Drman re reporting. Yeah, 0:17:27.400 --> 0:17:29.119 they haven't had a statement that I was correct on 0:17:29.160 --> 0:17:31.960 that earlier today, But basically Mark German Bloomberg News reporting 0:17:31.960 --> 0:17:33.760 that you know, we're going to back away from electric 0:17:33.840 --> 0:17:36.280 vehicle business. A lot of employees assigned to it, some 0:17:36.320 --> 0:17:39.640 of them will be re allocated to their AI efforts, 0:17:40.400 --> 0:17:42.440 some probably losing the jobs. But again it's a big, 0:17:42.600 --> 0:17:43.400 big pivot there. 0:17:43.520 --> 0:17:45.680 I mean, it also makes sense like if you want 0:17:45.680 --> 0:17:47.280 to be a services business at the end of the day, 0:17:47.320 --> 0:17:49.640 how does a car kind of fit into that. 0:17:51.640 --> 0:17:55.520 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:17:55.600 --> 0:17:58.240 weekdays at ten am Eastern on Apple car Play and 0:17:58.240 --> 0:18:00.840 then Broud Otto with the Bloomberg Pistons. What listen on 0:18:00.960 --> 0:18:04.240 demand wherever you get your podcasts, or watch us live 0:18:04.320 --> 0:18:05.720 on YouTube. 0:18:06.359 --> 0:18:09.520