WEBVTT - CarMax, CPI Secrecy, Ukraine, and Scott Minerd (Podcast) 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 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.479 at Bloomberg dot com slash podcast. All right, let's talk cars, Matt, 0:00:22.720 --> 0:00:26.360 how about that? Okay? CarMax And when we talk cars, 0:00:26.360 --> 0:00:28.280 we talked to Kevin Tyne and he's the car dude 0:00:28.280 --> 0:00:32.320 at Bloomberg Intelligence. He's been covering the auto industry, uh forever. 0:00:33.360 --> 0:00:35.199 All right, So Kevin talked to us about the used 0:00:35.240 --> 0:00:38.440 car business. I understand, during the pandemic, the values of 0:00:38.680 --> 0:00:42.320 used cars shot through the roof because Detroit wasn't making 0:00:42.400 --> 0:00:44.960 any cars because they were shut down. Now it's coming down. 0:00:45.600 --> 0:00:49.279 Is that what we're seeing at CarMax. Yeah, So what 0:00:49.360 --> 0:00:55.760 you had was uh, retailers, especially the used only is 0:00:55.880 --> 0:01:01.880 like CarMax or Carbon Room Shift companies like that, overpaying 0:01:01.920 --> 0:01:07.200 for their inventory. Prices fall and now you're stuck basically underwater. 0:01:07.240 --> 0:01:10.520 And that's what's being worked through right now, and it's 0:01:10.520 --> 0:01:16.120 gonna impact all the all the new and used vehicle retailers. 0:01:16.160 --> 0:01:17.920 And when I say new and used, I mean the 0:01:18.040 --> 0:01:21.200 full line dealerships you know, your automations and pen skis 0:01:21.200 --> 0:01:24.320 that also do used cars UM are going to feel 0:01:24.360 --> 0:01:26.400 this pain. They won't feel it as bad as they 0:01:26.480 --> 0:01:28.760 used only guys because they had nowhere else to go 0:01:29.800 --> 0:01:35.920 but to acquire off lease vehicles expensively, and then as 0:01:35.959 --> 0:01:38.640 the bottom sell out of pricing a little bit. We're 0:01:38.640 --> 0:01:41.640 certainly not back to where we were pre pandemic. But 0:01:41.720 --> 0:01:44.280 now you're selling things that you overpaid for, and that's 0:01:44.319 --> 0:01:47.199 the window we're in right now. Well, you can't sell 0:01:47.240 --> 0:01:51.440 the things you overpaid for is the problem because the 0:01:51.480 --> 0:01:55.200 way I read the CarMax release, because rates are so 0:01:55.320 --> 0:01:57.880 high and you know, people who typically would be in 0:01:57.920 --> 0:02:02.400 the market can't afford the payment, that has to play 0:02:02.440 --> 0:02:04.920 into that has to play through to the new car 0:02:05.600 --> 0:02:08.720 UM sales as well, doesn't it because rates aren't any lower, Well, 0:02:08.720 --> 0:02:11.200 they are, they are lower. Sorry, for a new car, 0:02:11.240 --> 0:02:12.520 you get a lower rate than you do for a 0:02:12.600 --> 0:02:14.960 used car, but they're not they're not as low as 0:02:15.000 --> 0:02:18.600 they were. Right, We're not looking at zero percent, We're 0:02:18.639 --> 0:02:20.840 not looking at one point nine percent. We're not looking 0:02:20.880 --> 0:02:23.560 at two point nine percent that we previously had been seeing. 0:02:23.639 --> 0:02:27.200 Now we're looking at more like six for most people, 0:02:27.400 --> 0:02:31.000 seven eight percent. So isn't aren't new cars going to 0:02:31.040 --> 0:02:34.080 get hit as well with these higher rates? Sure? Yeah, 0:02:34.120 --> 0:02:37.600 but but supply is much more constrained on the new 0:02:37.680 --> 0:02:40.120 vehicle side. But really that was that's exactly it, right. 0:02:40.160 --> 0:02:43.480 You had this this confluence of events where you had 0:02:45.040 --> 0:02:48.639 retailer is overpaying for inventory. You had money was cheap 0:02:48.680 --> 0:02:51.200 and easy at the time, and then it's not right. 0:02:51.240 --> 0:02:53.600 So prices were high and then they're not, and rates 0:02:53.600 --> 0:02:55.880 were low and then they're not, and and that's what 0:02:56.000 --> 0:02:58.240 this window is. But it's not you know, and I 0:02:58.280 --> 0:03:02.080 think you know, on as far as pricing goes, and 0:03:02.240 --> 0:03:06.720 especially in the used vehicle market, I think this works 0:03:06.760 --> 0:03:10.360 its way through the system because we're not doing leasing 0:03:10.440 --> 0:03:12.359 like we used to. You know, a lot of these 0:03:13.000 --> 0:03:16.040 vehicles that are coming back or came back from lease 0:03:16.400 --> 0:03:21.160 in two we're twenty nineteen leases, which were pre pandemic. 0:03:21.800 --> 0:03:25.040 So what you had was, you know, we're looking back 0:03:25.120 --> 0:03:28.960 at nineteen now three years ago, you had seventeen million 0:03:29.080 --> 0:03:32.800 units being sold. Thirty to some odd percent were leased, 0:03:33.440 --> 0:03:36.960 So in two, are used vehicle market was supplied by 0:03:36.960 --> 0:03:41.800 like five point three million off lease vehicles. Now, as 0:03:41.840 --> 0:03:44.760 we move out and we look at what happened in 0:03:44.840 --> 0:03:50.320 two projecting forward to because most leases are three years, 0:03:50.880 --> 0:03:52.880 you know, we're not even going to do a fourteen 0:03:52.920 --> 0:03:57.320 million this year and lease penetration is about eight So 0:03:57.680 --> 0:04:02.560 that supply that feeds they used vehicle market in two 0:04:02.680 --> 0:04:06.040 goes from five point three million to about two point 0:04:06.120 --> 0:04:10.200 five million. So as we go out further, I think 0:04:10.320 --> 0:04:13.640 used car prices stay very firm because we're just not 0:04:13.680 --> 0:04:15.440 going to have the supply like we used to from 0:04:15.480 --> 0:04:18.599 the off lease market. Are there manufacturers? Are the Gems 0:04:18.640 --> 0:04:20.360 and the Fords of the world in the Volkswagens, Are 0:04:20.400 --> 0:04:23.520 they producing as many as they want right now? Are 0:04:23.520 --> 0:04:26.960 they still constrained? Well? As many as they want? But 0:04:27.000 --> 0:04:29.680 they don't want to produce that many right So inventory 0:04:29.720 --> 0:04:34.600 now is about one point seven million to start December. 0:04:34.640 --> 0:04:37.119 To put that in context, historically it would be about 0:04:37.200 --> 0:04:40.920 four millions. So it's not the nine hundred thousand that 0:04:41.000 --> 0:04:44.360 we saw at at the bottom, you know, about a 0:04:44.440 --> 0:04:46.839 year ago, but it's certainly not what it used to be. 0:04:47.000 --> 0:04:50.240 So I think that window for the new vehicle market 0:04:50.279 --> 0:04:53.039 is exactly where manufacturers are trying to figure out where 0:04:53.040 --> 0:04:55.520 do we want to be so that we're not we're 0:04:55.520 --> 0:05:00.400 not sacrificing margin and pricing, but we're not leaving sales 0:05:00.720 --> 0:05:05.479 on the table either. Alright, So in terms of the 0:05:05.520 --> 0:05:09.240 new car deliveries, production and deliveries, how close are we 0:05:09.400 --> 0:05:13.600 to normal? Well, our normal? I think next year is 0:05:13.600 --> 0:05:15.839 going to be about fifteen million units, and I think 0:05:15.880 --> 0:05:20.360 that's a healthy normal. I think the seven still constrained 0:05:20.839 --> 0:05:25.560 or not? No, I don't think so, because look, Matt, 0:05:25.680 --> 0:05:27.800 if you look at it this way, if you think 0:05:27.839 --> 0:05:30.279 about a volume number as the end all be all 0:05:30.760 --> 0:05:35.120 seventeen point five million units in sixteen, average price was 0:05:35.240 --> 0:05:38.719 thirty five thousand dollars, that pool of revenue is actually 0:05:38.760 --> 0:05:41.480 smaller than it would be in a fifteen million unit 0:05:41.520 --> 0:05:45.840 market in three at forty seven thousand dollars per unit. 0:05:46.279 --> 0:05:48.560 So if you want to look at volume, you can say, well, 0:05:48.600 --> 0:05:50.080 it's not as great as it used to be, But 0:05:50.120 --> 0:05:52.360 if you're looking at the revenue pool, it's actually better. 0:05:52.560 --> 0:05:57.240 Are people buying cars at dollars or unit that's the average, 0:05:57.640 --> 0:06:00.560 that's the average. And now, by the way, and now, 0:06:00.640 --> 0:06:02.360 by the way, with a six or seven or eight 0:06:02.400 --> 0:06:04.920 percent loan, right because most people don't buy cars all 0:06:04.960 --> 0:06:09.040 cash and it's in kevinet, Does the industry believe that's sustainable? Yeah, 0:06:09.080 --> 0:06:14.000 it is, Yeah, because because right that, the automakers are 0:06:14.000 --> 0:06:16.760 saying that, hey, look if you and look, here's the 0:06:16.839 --> 0:06:21.200 risk if if you want to look, Ford and GM 0:06:21.240 --> 0:06:26.719 are in the fifty two thousand range. Mercedes BMW, which 0:06:26.760 --> 0:06:28.320 used to be in that range are now up in 0:06:28.320 --> 0:06:31.640 the sixties and seventies. So automakers are saying, like, hey, 0:06:31.680 --> 0:06:35.240 the stuff we can't make money on, uh, we don't 0:06:35.240 --> 0:06:37.919 want to be in it. And that's why inventory is 0:06:37.960 --> 0:06:40.360 half of what it used to be, why transaction prices 0:06:40.360 --> 0:06:43.320 are so much higher, because not every sale was a 0:06:43.320 --> 0:06:46.440 good sale, and they've gotten out of the bad sale business. Well, 0:06:46.480 --> 0:06:48.360 I'm hoping that one of those auto guys is going 0:06:48.400 --> 0:06:50.960 to blink in cave and start ramping up production and 0:06:51.440 --> 0:06:55.000 screw up the entire market but making horrible models for 0:06:55.080 --> 0:06:58.279 rental fleets and just pushing them out there. No, that's 0:06:58.279 --> 0:07:01.279 not okay, it's not it for the industry, right, Kevin Tynon, 0:07:01.960 --> 0:07:04.320 Everything I know about the auto industry, the economically the 0:07:04.320 --> 0:07:06.359 auto industry. I learned from Kevin Tynan. He's our Bloomberg 0:07:06.400 --> 0:07:10.920 Intelligence auto analyst breaking it down here. Carmack's tough numbers. 0:07:10.960 --> 0:07:17.040 Stock down seven. Let's scan for stocks here. Let's do 0:07:17.040 --> 0:07:18.880 it on a down day. Maybe we can find some 0:07:18.880 --> 0:07:21.880 some bargains out there. We're gonna roundtable this thing like 0:07:21.960 --> 0:07:24.960 we like to do. Phil Palumbo, CEO and founder of 0:07:24.960 --> 0:07:28.280 Plumbo Wealth Management, joins us as well as David Kat's 0:07:28.600 --> 0:07:32.680 Matrix Asset Advisors, UH joins us as well. So Phil, 0:07:32.760 --> 0:07:35.920 let's start with you here. I mean, you know, I've 0:07:35.960 --> 0:07:39.760 got twenty two in my rear view. Let's forget about it. Equities, 0:07:39.800 --> 0:07:42.880 fixed income, it was a disaster. What do I do 0:07:42.960 --> 0:07:47.400 for three? What are you telling your clients? Okay, So 0:07:47.440 --> 0:07:49.400 I've been very vocal that I have been selling on 0:07:49.440 --> 0:07:51.320 any type of rips all year this year because the 0:07:51.320 --> 0:07:53.240 bear market was going to be persistent. Now I'm a 0:07:53.280 --> 0:07:56.080 buyer in the pain that we're gonna feel coming intree. 0:07:56.480 --> 0:07:59.240 So yes, why I use buying pain together? Right? So 0:07:59.320 --> 0:08:01.320 the pain part is the Feds are going to continue 0:08:01.360 --> 0:08:03.840 to step on the gas until he gets what he wants. 0:08:03.880 --> 0:08:05.720 And he's going to get what he wants right in 0:08:05.800 --> 0:08:10.000 terms of bring inflation down. And also the so the 0:08:10.000 --> 0:08:12.000 bi side of the equation is the strength of the 0:08:12.000 --> 0:08:15.800 consumer job markets. Height Jold numbers over ten million, and 0:08:15.880 --> 0:08:18.880 they have their flushwood cash right through the COVID. That 0:08:18.920 --> 0:08:21.960 stimulus money is still there. So with that, how do 0:08:22.000 --> 0:08:25.400 you measure that phil Because we've we've been hearing um 0:08:25.560 --> 0:08:29.440 bankers tell us that those savings are being depleted. There's 0:08:29.560 --> 0:08:32.040 there's so many different types of articles out there that 0:08:32.080 --> 0:08:34.200 are saying six hundred billion or a trillion. It's aggregate 0:08:34.240 --> 0:08:36.200 savings that that we look at from the FED, and 0:08:36.240 --> 0:08:38.600 based on those numbers, there's a trillion dollars that's still 0:08:38.679 --> 0:08:40.440 left started with two trillion beginning a year or at 0:08:40.440 --> 0:08:43.240 the trillion can others are saying six hundred billion or more. 0:08:43.520 --> 0:08:46.679 Just remember about that number though, right the low income household, 0:08:46.760 --> 0:08:50.000 middle income household, they already spent that money. It's the 0:08:50.120 --> 0:08:53.600 upper tier, higher income earners where they still have that money. 0:08:53.640 --> 0:08:55.400 They don't have that much of a present propensity to 0:08:55.440 --> 0:08:58.240 spend money, but they do have that money and it's available, 0:08:58.280 --> 0:09:01.040 and it's gonna provide a cushion under what I believe. 0:09:01.240 --> 0:09:04.000 I think we get a mild recession in three. And 0:09:04.040 --> 0:09:08.599 that's the whole by the Paine trade that I'm talking about. Sorry, David, Yeah, no, 0:09:08.800 --> 0:09:11.719 So David, you know what do you think about that? Um? 0:09:11.760 --> 0:09:15.800 I get the premise, but it just seems like the 0:09:15.800 --> 0:09:18.600 markets have trouble believing the Fed, and every time the 0:09:18.679 --> 0:09:22.600 Fed reminds markets the path it's on, we come crashing 0:09:22.640 --> 0:09:27.280 back down again. Right, But we do believe that the 0:09:27.280 --> 0:09:31.000 Fed is getting its job done. Inflation is definitely breaking. 0:09:31.080 --> 0:09:33.200 So there will be a meeting, whether it's the next 0:09:33.200 --> 0:09:36.120 meeting or the meeting thereafter, where the Fed says, Okay, 0:09:36.200 --> 0:09:38.560 we've raised rights enough. Now we're just gonna watch. And 0:09:38.600 --> 0:09:40.280 at that point, we think the market is going to 0:09:40.400 --> 0:09:43.360 look beyond the Fed, look at the economy, and look 0:09:43.360 --> 0:09:47.719 at beyond the possible recession towards six to twelve months out. Generally, 0:09:48.080 --> 0:09:51.840 stocks will rally as you enter or as you're in 0:09:51.880 --> 0:09:55.000 a recession. So we think with the markets sell off 0:09:55.000 --> 0:09:58.400 in two, that we've discounted a lot of the negatives, 0:09:58.600 --> 0:10:00.960 and we think if you look to tw the twenty three, 0:10:01.240 --> 0:10:05.040 that the market's going to start to discount the negative's lesson, 0:10:05.080 --> 0:10:07.280 start to discount some of the positives and stocks have 0:10:07.440 --> 0:10:11.079 very meaningful upside for here, so we'd be buying, um, 0:10:11.200 --> 0:10:13.640 you know, into this current sell off, you want to 0:10:13.679 --> 0:10:16.320 turn the volume down. We think six to twelve months 0:10:16.320 --> 0:10:18.320 out of stocks are going to be meaningfully higher, and 0:10:18.360 --> 0:10:20.600 there are a lot of great stock prices, really good 0:10:20.640 --> 0:10:24.040 businesses at low valuations that we would just buy and 0:10:24.120 --> 0:10:29.560 turn down the news. So so, Amazon is a company 0:10:29.600 --> 0:10:32.640 that's a great business, but it's always been really richly priced. 0:10:32.679 --> 0:10:34.120 If you look at it now on a price to 0:10:34.160 --> 0:10:36.400 sales or price to ebita basis, it's at a five 0:10:36.480 --> 0:10:39.800 year low, So we like that. Google on technology also 0:10:39.880 --> 0:10:44.079 sixteen times next year's earnings. PayPal is a really good company, 0:10:44.120 --> 0:10:47.440 good growth prospects at sixteen times next year's earnings. And 0:10:47.480 --> 0:10:50.599 then on a more traditional value type of stocks, we 0:10:50.720 --> 0:10:55.920 like Bank of New York, truest Te, Connectivity, Metronic. So 0:10:55.960 --> 0:10:58.440 they're really good businesses out there. Those businesses are all 0:10:58.640 --> 0:11:01.000 like ten eleven times things. When you can do that, 0:11:01.280 --> 0:11:03.800 you're gonna do very well if you have a twelve 0:11:03.840 --> 0:11:07.760 month time frame. They phil you know, we talked to 0:11:07.800 --> 0:11:11.640 fixed income investors. They say two was the worst year 0:11:11.880 --> 0:11:15.080 on record. Is it time to buy bonds here in 0:11:15.080 --> 0:11:17.800 twenty three, yeah, I think is gonna be bit the 0:11:17.880 --> 0:11:19.960 best year on record for fixed income. I think what 0:11:19.960 --> 0:11:23.880 you're gonna see in three is peak inflations. In peak 0:11:23.960 --> 0:11:28.160 rates are in peake dollars in dollar declines, and with 0:11:28.200 --> 0:11:31.920 that you're gonna see bonds rally and rip. You know again, 0:11:31.960 --> 0:11:34.120 I think one of the biggest rips we're gonna see 0:11:34.120 --> 0:11:37.640 in history coming into three. So so I would be 0:11:37.880 --> 0:11:41.280 a buyer even on long duration treasuries which we own 0:11:42.120 --> 0:11:45.920 um within our portfolios, and intermediate term duration treasuries. I 0:11:45.920 --> 0:11:48.679 think those investments going at thee I think you can 0:11:48.720 --> 0:11:50.920 perform really well. So where do you see rates? Then? 0:11:53.000 --> 0:11:55.160 I always say you could overshoot the upside, and I 0:11:55.200 --> 0:11:56.920 feel like we already did that. So I think that 0:11:57.000 --> 0:11:59.400 the peak number is is already in. I don't see 0:11:59.480 --> 0:12:01.520 us going to a five handle on the ten year. 0:12:01.559 --> 0:12:03.760 I think you're at four and a quarter right around 0:12:03.760 --> 0:12:05.920 there peak. Yeah, exactly, So I think that I think 0:12:05.920 --> 0:12:08.360 that peak numbers in going back to what what what 0:12:08.440 --> 0:12:10.760 David just said in terms of the FED, I do 0:12:10.840 --> 0:12:12.679 think the Fed is going to press along more than 0:12:12.800 --> 0:12:16.400 market dispen stink um. So for that reason, it's possible 0:12:16.440 --> 0:12:19.120 we can break the recent peak. I think the odds 0:12:19.120 --> 0:12:21.600 are very low because I think the job as you see, 0:12:21.640 --> 0:12:25.080 as we start to see things go through, as we're 0:12:25.080 --> 0:12:26.640 gonna see inflation come down, I think the FED is 0:12:26.679 --> 0:12:29.120 going to be satisfied and then eventually, just like David said, 0:12:29.120 --> 0:12:33.560 will stop. So, David, one of the sectors that you 0:12:33.600 --> 0:12:35.800 know defined the logic here, or not define logic, but 0:12:35.840 --> 0:12:38.880 certainly defined the weak market in two has been energy. 0:12:39.160 --> 0:12:41.719 Is that played out in your perspective, awards are more 0:12:41.800 --> 0:12:44.400 room to go on the energy trade here. I'm looking 0:12:44.400 --> 0:12:46.679 at w T a crude oil here about seven eight 0:12:46.679 --> 0:12:50.800 bucks a barrel. So we think oil prices can drift 0:12:50.840 --> 0:12:52.960 a little bit higher. But we think oil stocks have 0:12:53.080 --> 0:12:54.920 discounted a lot of the good things. If you look 0:12:54.960 --> 0:12:58.960 at the last seven years, oil stocks have lagged behind 0:12:59.080 --> 0:13:03.160 the oil price on an annual basis. This year oil 0:13:03.280 --> 0:13:05.880 prices are basically flat to maybe up five or ten 0:13:05.960 --> 0:13:11.000 percent UM where is the oil stocks are up fifty 0:13:11.520 --> 0:13:13.520 So we're not looking for a repeat next year. We'd 0:13:13.520 --> 0:13:16.480 be taking some profits in oil stocks. We also would 0:13:16.480 --> 0:13:18.959 be taking profits in consumer stables, which also had a 0:13:19.040 --> 0:13:21.439 great year this year. Um, you know they're at the 0:13:21.480 --> 0:13:24.720 higher end of their valuation ranges, and we'd be redeploying 0:13:24.760 --> 0:13:30.160 into technology, communications services, UM, some medical technology, and the 0:13:30.200 --> 0:13:36.960 banking group. Interesting. So consumer staples taking profits now is 0:13:36.960 --> 0:13:39.240 is a fascinating move because if we do go into 0:13:39.840 --> 0:13:42.080 a recession. I know a lot of people are saying 0:13:42.080 --> 0:13:44.840 we already are in a recession, but consumers seem very confident. 0:13:44.880 --> 0:13:47.959 If we do go into a recession, those consumers are 0:13:48.000 --> 0:13:52.520 likely to buckle down and only buy what they need. Right. Well, 0:13:52.720 --> 0:13:54.480 it's not a question that people are going to buy 0:13:54.559 --> 0:13:58.000 less Kelly cereals or General Mill cereals, or or or 0:13:58.040 --> 0:14:01.040 Pepsi snacks. It's a question that the stock box would 0:14:01.120 --> 0:14:03.960 generally sell at about sixteen times earnings are now at 0:14:03.960 --> 0:14:07.600 about twenty two times earnings. So we think that they 0:14:07.640 --> 0:14:10.120 discounted the recession, you know, whether we're in one now 0:14:10.200 --> 0:14:12.240 or we're going to be in one in a few months. 0:14:12.520 --> 0:14:15.080 And as the market starts to look beyond the recession, 0:14:15.080 --> 0:14:17.880 they're going to say, Okay, the consumer staples did their job. 0:14:17.920 --> 0:14:20.520 They got us through the difficult stock market. Now let's 0:14:20.600 --> 0:14:22.680 use them as a source of funds. We just think 0:14:22.720 --> 0:14:25.560 the businesses are gonna slow, not that they're going to crash, 0:14:25.600 --> 0:14:27.840 but rather the valuations are at the higher end of 0:14:27.880 --> 0:14:29.800 the range. We think they're going to regress to the mean, 0:14:30.080 --> 0:14:31.840 and there are lots of things that are the lower 0:14:31.920 --> 0:14:33.760 end of the range, and we think that's where the 0:14:33.760 --> 0:14:35.560 money is going to go. It's a it's a good point. 0:14:35.680 --> 0:14:37.800 And Phil, I wonder if I could get your take 0:14:37.840 --> 0:14:43.359 on valuations because it's such a fascinating piece of the equation. 0:14:43.800 --> 0:14:47.160 Um where do you see evaluations next year? Investors have 0:14:47.240 --> 0:14:50.680 to recognize that anytime you go into a recession, typically 0:14:50.720 --> 0:14:52.560 in the middle of the recession on averages, where the 0:14:52.600 --> 0:14:54.600 market will bottom and what leads the market out of 0:14:54.640 --> 0:14:57.840 the bottom is technology. So, like David said, I agree 0:14:57.840 --> 0:14:59.520 that I think I think when investors, you know, staples 0:14:59.600 --> 0:15:02.160 right now are rich because the anticipation of a recession, 0:15:02.280 --> 0:15:06.520 so valuations got really high. So rebalance that into the 0:15:06.560 --> 0:15:08.880 technology sector, which he has gotten crushed and there could 0:15:08.920 --> 0:15:10.720 be more pain to to be had in that sector. 0:15:11.240 --> 0:15:14.080 But as you start the dollar course average into that sector. 0:15:14.080 --> 0:15:17.000 There's some great businesses right now that are trading at 0:15:17.040 --> 0:15:20.280 really great multiples and a great example that and David mentioned, 0:15:20.280 --> 0:15:23.120 it's something that is on our list to buy is Google. Right, 0:15:23.120 --> 0:15:24.840 I've always want to be a big ownering Google, and 0:15:24.880 --> 0:15:26.840 I think you know now is a great opportunity to 0:15:26.880 --> 0:15:30.680 forward multiple is extremely attractive, free cash flow is one 0:15:30.720 --> 0:15:32.240 of the best I've ever seen within the business. To 0:15:32.280 --> 0:15:36.040 return on investment capital is and it's a and it's 0:15:36.040 --> 0:15:38.400 a growing business. And it's down right now because the 0:15:38.440 --> 0:15:41.239 ads spend. Right eight percent of the business is advertising, 0:15:41.560 --> 0:15:43.880 so it's trading down because of that. But again, once 0:15:43.920 --> 0:15:47.640 we rebound a trough out with the economy and get 0:15:47.640 --> 0:15:49.320 on the get out on the other side of this, 0:15:49.640 --> 0:15:51.800 Google is going to be a winner and other type 0:15:51.840 --> 0:15:54.760 of technology stocks. You gotta be forward thinking as an investor. 0:15:54.800 --> 0:15:56.600 You can't just say, Okay, recession is coming, let me 0:15:56.640 --> 0:15:58.880 just load up in staple stocks. You know that trade 0:15:58.920 --> 0:16:00.720 is done already. It's it's want to move on and 0:16:00.880 --> 0:16:03.440 get ready for the recovery. I think the news today 0:16:03.480 --> 0:16:07.640 on Google is uh YouTube, which Google owns, agrees on 0:16:07.680 --> 0:16:11.200 a deal for the NFL Sunday ticket two billion dollars, 0:16:11.520 --> 0:16:14.480 so taking away from direct TV. So that's huge, But wait, 0:16:14.600 --> 0:16:16.640 does that mean you get all the games? All the games? 0:16:17.120 --> 0:16:19.720 So it's only two billion dollars for that, Yeah, for 0:16:19.840 --> 0:16:22.640 a year, So it's pretty good. All right, guys, thanks 0:16:22.640 --> 0:16:24.800 so much for joining us. That was the big news 0:16:24.840 --> 0:16:27.320 I thought this morning. You know, Sunday Ticket, which was 0:16:27.360 --> 0:16:30.200 on Direct TV for years and years, is now on Google. 0:16:30.240 --> 0:16:32.960 So we're going tech. Philip Palumbo, CEO and founder of 0:16:32.960 --> 0:16:34.880 Plumbo Wealth Management, thanks so much for joining us. In 0:16:34.960 --> 0:16:38.600 David Kat's with Matrix Asset Advisors. Those guys agree too often. 0:16:38.920 --> 0:16:41.120 They're pretty good, yeah, but they agree with each other. 0:16:41.200 --> 0:16:44.480 We need to get get we can find that because 0:16:44.480 --> 0:16:47.120 I mean we got There's a lot of bears out there, um, 0:16:47.240 --> 0:16:48.920 folks that are just saying, hey, how can I buy 0:16:48.920 --> 0:16:51.880 stocks in front of a recession? But uh, both Phil 0:16:51.920 --> 0:16:54.480 and David saying, hey, that's kind of priced into the 0:16:54.520 --> 0:17:00.240 market here, um, and we've got room to go. Thread 0:17:00.280 --> 0:17:04.480 headline crossing the Blueberg terminal. Uh. Matt Guggenheim's Scott Miner 0:17:04.640 --> 0:17:09.200 has died. Person familiar says uh, and we see it. 0:17:09.480 --> 0:17:15.639 We have a report from the company that he died yesterday, Wednesday, 0:17:15.920 --> 0:17:19.200 December one, from a heart attack during his regular workout. 0:17:19.240 --> 0:17:21.639 He was sixty three years old. Scott Minored was a 0:17:21.680 --> 0:17:26.480 founding partner global Chief Investment Officer and chairman of Guggenheim Partners. 0:17:26.480 --> 0:17:29.040 So one of the leaders, one of the leading voices 0:17:29.160 --> 0:17:32.840 on Wall Street passed away unexpected. Yeah, absolutely, one of 0:17:33.359 --> 0:17:37.679 um early the oracles that we talked to, well, we 0:17:37.720 --> 0:17:40.960 try to talk to on a regular basis, and who 0:17:41.560 --> 0:17:46.119 has so much depth in terms of his knowledge on 0:17:46.240 --> 0:17:53.359 everything from fixed income UM to equities to crypto. And 0:17:55.320 --> 0:17:58.280 it's just far too he's far too young, sixty three 0:17:58.359 --> 0:18:02.639 years old, and he shaped UM Googgenheim together with Mark Walter. 0:18:02.720 --> 0:18:05.440 Let's bring in Tom Keene right now, who interviewed got 0:18:05.480 --> 0:18:11.719 minored countless times. And um, Tom, what are your immediate thoughts? 0:18:11.760 --> 0:18:15.000 I mean, really a fixed income guru in a way. Yeah, 0:18:15.200 --> 0:18:18.199 I would go further than that. And that what we 0:18:18.400 --> 0:18:21.200 loved about I can't believe I'm talking in the past tense. 0:18:21.240 --> 0:18:25.120 What we loved about Mr Minord was he approached this 0:18:25.600 --> 0:18:29.679 differently than most strategists, differently than most traders, and that 0:18:29.800 --> 0:18:35.879 this guy was at heart a certified public accountant and 0:18:35.960 --> 0:18:39.720 that made him hugely unique And the one I would 0:18:39.760 --> 0:18:45.200 really lean on on this at this terrific shock and 0:18:45.200 --> 0:18:48.160 and just sadness. If you will love Scott Minor dying 0:18:49.119 --> 0:18:54.520 is the era of Bob Diamond, of the era of trading, 0:18:55.040 --> 0:18:58.720 and it was back in the nineties with lots of volatility, 0:18:58.840 --> 0:19:01.639 particularly Scott's were I believe at the time it was 0:19:01.680 --> 0:19:05.800 at Morgan Stanley on European Credit, and he just approached 0:19:05.840 --> 0:19:09.359 it totally differently as he does on our FED show 0:19:09.680 --> 0:19:13.080 every FED meeting. He approaches it totally differently, and that 0:19:13.160 --> 0:19:16.280 was the value that we saw. We have to remind 0:19:16.320 --> 0:19:19.399 ourselves this is a guy who walked away from Wall 0:19:19.440 --> 0:19:23.000 Street like you did. Uh, Paul Sweeney at thirty seven 0:19:23.080 --> 0:19:26.600 years old. Yeah, it's you know, he he made it. 0:19:27.040 --> 0:19:28.960 He made it interesting. I'm just as you mentioned Tom 0:19:29.280 --> 0:19:32.480 starting on as an accountant Price Waterhouse, then what the 0:19:32.520 --> 0:19:35.879 Continental Bank, Assault Lake and Meryll Lynch, Morgan Stanley, Credit 0:19:35.960 --> 0:19:40.320 Swiss before going to Googgenheim Capital and becoming their chief 0:19:40.359 --> 0:19:44.360 investment officer than chairman and managing partner. He could retire. 0:19:44.520 --> 0:19:49.760 I mean, he's so smart and again so different and 0:19:49.880 --> 0:19:52.600 his his brain works. So I have to talk in 0:19:52.600 --> 0:19:55.600 the present tense. I can't get to the past tense 0:19:55.600 --> 0:19:59.840 with Mr Miner that that there's such an acute and 0:20:00.200 --> 0:20:04.040 different analysis. That's what made him valuable. Not only do 0:20:04.119 --> 0:20:07.720 all those firms, but you know they understood he didn't 0:20:07.760 --> 0:20:11.639 have to work. I mean, he was independently wealthy in 0:20:11.640 --> 0:20:16.439 his late thirties into his forties, and uh kept wandering 0:20:16.520 --> 0:20:18.600 back to Wall Street as he did when they set 0:20:18.640 --> 0:20:22.840 up a wonderfully successful because it wasn't about work for him. 0:20:23.240 --> 0:20:27.679 He thought of the markets, finance, economics the way normal 0:20:27.680 --> 0:20:29.600 people think about sports. And by the way, he thought 0:20:29.600 --> 0:20:31.840 about sports a lot as well. So this was just 0:20:31.960 --> 0:20:35.040 part of his life, which is why he was such 0:20:35.040 --> 0:20:39.520 a pleasure to talk to about, you know, these issues. 0:20:40.240 --> 0:20:45.200 And he was so thoughtful because he lived um Wall 0:20:45.280 --> 0:20:50.000 Street and uh, you know the rates story and his 0:20:50.080 --> 0:20:56.080 takes were always um so fascinating because they weren't consensus. Tom. Uh, 0:20:56.359 --> 0:20:58.439 what's it been like having him on the Fed? The 0:20:58.440 --> 0:21:02.280 Fed decides it's a you and Bramo and Pharaoh. Every 0:21:02.720 --> 0:21:06.159 FED meeting, stay late into the afternoon and talked to 0:21:06.160 --> 0:21:09.159 Scott and we usually spend the next day playing you know, 0:21:09.240 --> 0:21:11.760 sound bites of what he told you. Well, it was 0:21:11.800 --> 0:21:14.520 great because it mixed up so well with the other thinking, 0:21:14.560 --> 0:21:17.520 you know, where the surveillance is completely focused on critical 0:21:17.560 --> 0:21:21.640 thinking skills and they can be different. And Mohammad Hilarion 0:21:21.720 --> 0:21:25.600 has a certain framework from his legitimate PhD work in 0:21:25.680 --> 0:21:31.000 game theory. And Diane Swunk has that classic economic analysis 0:21:31.000 --> 0:21:34.480 of the University of Michigan. And again what Scott Minor 0:21:34.600 --> 0:21:41.240 brought was this almost it appeared slow motion analysis of 0:21:41.280 --> 0:21:44.639 looking at the transactions, whether it was economic policy like 0:21:44.680 --> 0:21:47.600 the FED or the bond market. Here the statement now 0:21:47.640 --> 0:21:53.040 out from Guggenheim Mark Walter Matt Miller, as you mentioned quote, 0:21:53.040 --> 0:21:55.240 I have known Scott for over thirty years. We were 0:21:55.280 --> 0:21:57.879 partners much of that time. Scott was a key innovator 0:21:58.600 --> 0:22:01.520 and thought leader who was in trumental in building Guggenheim 0:22:01.560 --> 0:22:05.200 Investments into the global business it is today. He will 0:22:05.240 --> 0:22:09.600 be greatly missed by all condolences or with his husband, 0:22:09.640 --> 0:22:13.560