WEBVTT - Amazon Prime Day Sales Record Expected 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.479 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.400 at Bloomberg dot com slash podcast. All right, it is 0:00:22.640 --> 0:00:26.840 Prime Day today and tomorrow for Amazon. Doesn't mean that 0:00:26.960 --> 0:00:30.840 much for me, but apparently I am one of the outliers. 0:00:30.920 --> 0:00:36.240 US shoppers will spend twelve billion dollars online in two days. Uh, 0:00:36.360 --> 0:00:39.120 let's get the skinny on that with Punam Goyle, senior 0:00:39.200 --> 0:00:42.320 US retail analyst for Bloomberg Intelligence. So, Punam, give us 0:00:42.320 --> 0:00:44.640 a sense for Prime Day. It's we're such a weird 0:00:45.120 --> 0:00:47.240 in the past fifteen months have been such a weird 0:00:47.320 --> 0:00:50.560 time for all of us. Everybody's behavior has been disrupted. 0:00:50.760 --> 0:00:52.920 Give us a sense of how important Prime Day is 0:00:52.960 --> 0:00:58.080 to an Amazon, you know, maybe versus last year. Sure, 0:00:58.280 --> 0:01:02.040 thanks Paul. So Prime Days basically very important for Amazon. 0:01:02.240 --> 0:01:04.800 It's expected in our view, to bring in about twelve 0:01:04.840 --> 0:01:08.080 billion dollars and grows merchandise sales. That's built from third 0:01:08.120 --> 0:01:11.679 party and first party. UM. Now what's interesting here and 0:01:11.720 --> 0:01:14.319 why it's important is because Amazon Prime Day is when 0:01:14.360 --> 0:01:17.520 Amazon gets to sell more of its own inventory. So 0:01:17.560 --> 0:01:20.679 if you think about the Amazon business, more than half 0:01:20.680 --> 0:01:23.840 of the business is from third party, but on Amazon 0:01:23.959 --> 0:01:28.160 Prime Day, two thirds of the business is Amazon's owned business. 0:01:28.160 --> 0:01:30.000 So that's why it's so important. It's great for them 0:01:30.000 --> 0:01:31.920 because it's UM they get to promote some of their 0:01:31.959 --> 0:01:33.760 own products. The other thing is they get to bring 0:01:33.760 --> 0:01:36.560 on more Prime members. So Prime members today we have 0:01:36.600 --> 0:01:39.760 over two hundred million Prime members, with the US having 0:01:39.800 --> 0:01:43.240 about two thirds of the U S population households each 0:01:43.280 --> 0:01:46.240 having a Prime member in there, so opportunity to grow. 0:01:46.319 --> 0:01:49.000 That is where Prime Day helps. Where deals are promoted 0:01:49.080 --> 0:01:52.200 and consumers who are not Prime members can join Prime, 0:01:52.320 --> 0:01:54.680 which then creates a more stickier customer for them in 0:01:54.720 --> 0:01:59.000 the longer term. And I wonder how much this has 0:01:59.000 --> 0:02:03.360 grown with Amazon because revenue growth at Amazon has been 0:02:03.600 --> 0:02:07.240 off the hook. We're talking about a company that made 0:02:07.680 --> 0:02:10.919 less than two hundred way less than two hundred billion 0:02:10.960 --> 0:02:15.360 in revenue in and they're gonna make about five hundred 0:02:15.360 --> 0:02:21.160 billion in revenue this year. So have we seen Prime 0:02:21.240 --> 0:02:25.160 Day revenue grow at the same pace. We've actually seen 0:02:25.200 --> 0:02:27.760 it grow much faster than that. So using the same 0:02:27.800 --> 0:02:31.880 time frame that you just use, prime day sales where 0:02:31.919 --> 0:02:35.920 two point four billion dollars and we're expecting twelve billion 0:02:36.000 --> 0:02:39.720 this year, so that's a sixfold increase almost. But I'm 0:02:39.720 --> 0:02:41.720 talking to us about the other side of the equation, 0:02:41.800 --> 0:02:46.239 the supply side, getting stuff to people's doors. We keep 0:02:46.240 --> 0:02:49.639 hearing lots of stories about supply chain disruptions, and boy, 0:02:49.680 --> 0:02:52.760 when I think about a company that really realizes upon 0:02:52.880 --> 0:02:56.880 a global supply chain, it's Amazon dot Com. What are 0:02:56.880 --> 0:02:59.239 they telling you about being able to get stuff to 0:02:59.280 --> 0:03:02.240 people's doors. You know, it hasn't been called out as 0:03:02.240 --> 0:03:04.240 a hiccup yet in order we see it. But what 0:03:04.320 --> 0:03:06.760 I have personally seen and I've heard from people is that, 0:03:07.080 --> 0:03:09.080 you know, the one day the two day delivery that 0:03:09.120 --> 0:03:11.560 you're used to expecting, maybe it doesn't come in one 0:03:11.639 --> 0:03:14.040 day anymore anymore. Some items maybe they take two or 0:03:14.080 --> 0:03:16.520 three days, but they're still getting them out there. You know, 0:03:16.520 --> 0:03:18.840 if if anyone can do it, we think it's Amazon. 0:03:18.880 --> 0:03:21.880 They're pretty diversified how they ship. They use carriers, but 0:03:21.919 --> 0:03:25.000 they also have their own trucks and performent networks to 0:03:25.120 --> 0:03:27.880 help them. So we think Amazon can still you know, 0:03:28.000 --> 0:03:32.079 go past those bottlenecks. We haven't seen, um, those constraints 0:03:32.120 --> 0:03:34.680 impact them like we have some other companies in retail. 0:03:35.120 --> 0:03:38.680 By the way, I'm not not totally related to this story, 0:03:38.720 --> 0:03:42.720 but I always wonder how to look at other no no, 0:03:42.720 --> 0:03:46.320 no cars man. Uh the weight they're is getting really 0:03:46.360 --> 0:03:49.280 long for cars and motorcycles. But you know, a lot 0:03:49.280 --> 0:03:53.480 of times I'll choose Amazon instead of many other online 0:03:53.560 --> 0:03:57.040 vendors because I want my stuff now. Um, and I'm 0:03:57.040 --> 0:03:59.720 probably just a horrible person. But I guess other people 0:04:00.000 --> 0:04:03.160 I feel the same way. Are our other vendors. Are 0:04:03.240 --> 0:04:08.760 other online sites hurrying up to try and match that? Yeah? Absolutely. 0:04:08.840 --> 0:04:11.680 So you know, Walmart and Target, I say, are are 0:04:11.880 --> 0:04:14.560 both playing in the space more aggressively than they ever 0:04:14.640 --> 0:04:17.200 have in the past. They now have programs where you 0:04:17.200 --> 0:04:19.599 can get same day delivery, whether it's through Walmart Plus 0:04:19.720 --> 0:04:21.960 or whether it's to ship through ship it at Target, 0:04:22.279 --> 0:04:25.360 so you can get things to your door the same 0:04:25.480 --> 0:04:29.719 day today in retail across many other larger retailers. But 0:04:29.800 --> 0:04:32.920 once again, the inventory there may be a little more limited, 0:04:33.440 --> 0:04:36.320 um than it is on Amazon. Because they don't necessarily 0:04:36.360 --> 0:04:38.880 have everything that they have available online for seing day 0:04:38.880 --> 0:04:43.240 delivery or even next day. All Right, it's a great 0:04:43.320 --> 0:04:45.520 topic because more and more of us well, it touches 0:04:45.600 --> 0:04:48.680 so many um and a lot more obviously than it 0:04:48.680 --> 0:04:52.599 did in two thou two thousand nine, um, and it 0:04:52.640 --> 0:04:55.520 looks like it's pretty sticky. Punham is a great person 0:04:55.560 --> 0:04:58.000 to talk to. She's our senior US retail analyst for 0:04:58.000 --> 0:05:01.640 Bloomberg Intelligence, so she knows all there is to know 0:05:01.839 --> 0:05:06.839 about this fascinating and growing story um well and hopefully 0:05:06.880 --> 0:05:10.560 continues to grow because that means the economy does as well. 0:05:10.960 --> 0:05:14.200 So that's the story on Prime Day. Get acquainted with it. 0:05:14.200 --> 0:05:18.520 It's here to stay, Paul and spreading really around the world. 0:05:18.560 --> 0:05:24.680 This is Bloomberg right now. Let's go to Omar agular 0:05:25.040 --> 0:05:28.360 ceio of Passive Equity Multi Asset Strategies for Charles Schwab 0:05:28.400 --> 0:05:31.080 Investment Management. He joins us. Omar, thanks so much for 0:05:31.160 --> 0:05:33.440 joining us. You know, when I think about Charles Schwab, 0:05:33.480 --> 0:05:35.680 I just think of, you know, just the army of 0:05:35.880 --> 0:05:40.679 individual investors out there, the retail investors, uh that trade 0:05:40.720 --> 0:05:45.800 on your platform. What are you hearing most from the average. 0:05:45.880 --> 0:05:51.120 If you have a Charles Schwab investment management client right now, Hily, 0:05:51.120 --> 0:05:53.839 good morning. Um. You know, in general, you know what 0:05:54.000 --> 0:05:58.160 we see um industry wide on in general for retail 0:05:58.200 --> 0:06:01.880 investors is you know there you know, they're concerned about inflation. 0:06:01.960 --> 0:06:04.719 Inflation seems to be what is top of mind as 0:06:05.040 --> 0:06:10.160 continued concerns about the all the work that has been 0:06:10.200 --> 0:06:14.560 done with prices going up, significant amount of imbalances between 0:06:14.800 --> 0:06:17.760 demand and supply, and in general, you know what would 0:06:17.800 --> 0:06:20.719 that do to interest rates? I think when we see 0:06:20.800 --> 0:06:25.240 the the data and the volatility around the data, you know, 0:06:25.279 --> 0:06:28.480 a lot of what comes to investor's head is, well, 0:06:28.520 --> 0:06:31.080 this is going to affect earnings for companies. Is there's 0:06:31.080 --> 0:06:33.719 going to be something that affects prices and in general? 0:06:33.880 --> 0:06:36.279 How is that going to reflect in the volatility of 0:06:36.320 --> 0:06:40.120 my portfolios? Well you can just tell them, um, you know, 0:06:40.279 --> 0:06:42.880 if we start to see real inflation and the Fed 0:06:42.960 --> 0:06:45.600 turns hawkish and the dots rise, they can expect to 0:06:45.640 --> 0:06:49.200 see the ten year yield fall. Well that seems to 0:06:49.240 --> 0:06:55.000 be what that's crazy, right, That's just insane. That seems 0:06:55.040 --> 0:06:57.360 to be exactly how the market, you know, it seems 0:06:57.360 --> 0:07:00.159 to be reacting to what what I would probably they 0:07:00.240 --> 0:07:04.680 say was something that the Federal Reserve tried to put 0:07:04.720 --> 0:07:07.960 together last week, and in an effort to try to 0:07:08.040 --> 0:07:12.640 reduce the fears of inflation, they actually created more uncertainty 0:07:12.680 --> 0:07:16.240 for investors. I think a big significant part of the tone, 0:07:16.640 --> 0:07:19.520 the hockey shtone that we all heard from jeron Power 0:07:19.640 --> 0:07:23.680 last week, you know, translated into more volatility around the 0:07:23.760 --> 0:07:27.600 timing of the tapering program. And I think the market 0:07:27.680 --> 0:07:30.920 seemed to be now more comfortable thinking that the tapering 0:07:30.960 --> 0:07:34.840 will happen earlier than later, thinking that the Fed will 0:07:34.880 --> 0:07:37.720 be aggressive in reacting to any signs of inflation. So 0:07:37.760 --> 0:07:41.080 in a way that that inflation discussion created a little 0:07:41.080 --> 0:07:43.120 more volatility in what we may see down the road. 0:07:43.840 --> 0:07:46.320 All right, So I guess one of the questions is, 0:07:46.360 --> 0:07:49.320 if we are going to be in a rising interest 0:07:49.400 --> 0:07:52.920 rate environment over the next several years, is economic growth 0:07:53.000 --> 0:07:55.960 our corporate earnings are they strong enough to offset that? 0:07:56.000 --> 0:07:58.880 How do you feel about that? Well, economic growth and 0:07:58.920 --> 0:08:01.400 earnings growth are city to be the for for us, 0:08:01.440 --> 0:08:04.200 the catalyst of what may upset a little bit of 0:08:04.240 --> 0:08:07.480 that volatility and inflation components if you actually think about, 0:08:07.920 --> 0:08:09.840 you know, the numbers that we expect. Even in the 0:08:09.840 --> 0:08:13.040 second quarter, we're gonna, you know, get to the highest 0:08:13.080 --> 0:08:15.560 possible numbers we have seen in a while. And granted 0:08:15.600 --> 0:08:18.560 that there is a base case effect, we're expecting over 0:08:18.640 --> 0:08:21.520 sixty percent year of a year EPs growth in the 0:08:21.560 --> 0:08:24.360 second quarter, which is going to be a record. Um. 0:08:24.400 --> 0:08:26.840 You know, when you put that together with a potential 0:08:26.880 --> 0:08:30.040 of you know, over seven percent of GDP growth in 0:08:30.920 --> 0:08:33.320 one you know, we're talking about something that I don't 0:08:33.320 --> 0:08:35.880 think we have seen in a long long time. Um. 0:08:35.920 --> 0:08:38.959 The big question in our minds is, you know, at 0:08:39.000 --> 0:08:42.160 what point we go through that significant moving to the 0:08:42.200 --> 0:08:45.560 mid cycle and the deceleration of economic growth and earnings 0:08:45.600 --> 0:08:48.559 growth is something that the market feels comfortable. So whether 0:08:48.640 --> 0:08:51.280 it's the third quarter of this year or whether it's 0:08:51.360 --> 0:08:53.160 you know, at the end of this year when we're 0:08:53.160 --> 0:08:56.440 starting to see that deceleration and how fast that deceleration is. 0:08:56.480 --> 0:08:59.400 This that steepness of deceleration is what I think is 0:08:59.400 --> 0:09:01.480 going to be some for us to continue to watch. 0:09:02.040 --> 0:09:03.760 If you had to put your money in one basket 0:09:03.840 --> 0:09:07.400 or another, would it be value or growth? Well, I 0:09:07.440 --> 0:09:09.840 think we we continue to tell investors that we have 0:09:09.920 --> 0:09:12.120 to be barbelled, we we this. You know, we are 0:09:12.160 --> 0:09:15.079 in unprecedented charts, you know, in the business cycle and 0:09:15.120 --> 0:09:17.679 the economic cycles. Again, you know, we have never been 0:09:18.200 --> 0:09:20.880 you know, in this situation in any you know, these 0:09:20.880 --> 0:09:23.800 cycles before. Because in a way, this is not even 0:09:24.120 --> 0:09:27.880 a mid cycle in the traditional sense, because we are reopening. 0:09:28.000 --> 0:09:31.400 We're still in that process of reopening. The global economy 0:09:31.840 --> 0:09:34.720 is not yet fully open, and as such, it is 0:09:34.920 --> 0:09:38.520 very hard to put a component of saying, well, this 0:09:38.640 --> 0:09:41.600 is now the cyclical trade is done, and therefore we're 0:09:41.600 --> 0:09:43.400 going to go to the mid cycle, you know, high 0:09:43.520 --> 0:09:47.040 quality growth. So our our approach right now until we 0:09:47.120 --> 0:09:49.480 get a little more clarity on the data is, you know, 0:09:49.520 --> 0:09:52.760 the cyclical trade still has some room, but you've got 0:09:52.760 --> 0:09:55.440 to be prepared for the next leg, which is going 0:09:55.480 --> 0:09:57.760 into the high quality growth. So, you know, again, a 0:09:57.840 --> 0:10:00.360 long way to tell you the Barbell strategies to be 0:10:00.400 --> 0:10:04.200 the most prudent at the moment. All right, thanks so 0:10:04.320 --> 0:10:08.360 much for joining us. Omar always great to get your inside. 0:10:08.360 --> 0:10:11.760 Omar Aguilar c I, O of Passive Equity and multi 0:10:11.800 --> 0:10:18.480 Asset Strategies at Charles Schwab Investment Managers. You know, when 0:10:18.480 --> 0:10:22.440 we started Bloomberg intelligence, Bloomberg's in house research investment research business. 0:10:22.480 --> 0:10:25.200 We said, we're going to really focus on the data, 0:10:25.440 --> 0:10:28.560 because that's what Bloomberg does. It has the world class 0:10:28.600 --> 0:10:30.600 best data, and we'll let the data do the talking. 0:10:30.600 --> 0:10:33.440 In our analysts make lots of great charts and graphs 0:10:33.480 --> 0:10:35.280 from that data and they tell you what's important. And 0:10:35.320 --> 0:10:37.720 nobody does that better than Mike McGlone. He's got the 0:10:37.840 --> 0:10:42.120 best charts, tells fantastic stories that really make you understand 0:10:42.160 --> 0:10:44.760 what's going on in his business. Uh. And Mike joins 0:10:44.840 --> 0:10:47.719 us here because we need to talk about bitcoin. And 0:10:47.760 --> 0:10:49.560 I'm looking at some charts here and it's not a 0:10:49.640 --> 0:10:53.520 good chart for XPT. It's off another nine percent today, Mike, 0:10:53.679 --> 0:10:56.880 So do we start looking at support levels for this 0:10:56.960 --> 0:10:58.560 type of thing like you do with all the other 0:10:58.600 --> 0:11:01.480 commodities you follow? Is that important when you look at 0:11:01.520 --> 0:11:05.079 something like bitcoin. Bitcoin is very technical because it's still 0:11:05.080 --> 0:11:06.640 a lot of people don't understand it, and there's a 0:11:06.679 --> 0:11:08.200 lot of traders, and a lot of them are young 0:11:08.240 --> 0:11:10.640 and inexperience, and there's a lot of bots trading them. 0:11:10.679 --> 0:11:13.439 I mean, it's so automated. But I look at thirty thousand, 0:11:13.480 --> 0:11:15.640 it's pretty good support. It ended last year around twenty 0:11:15.720 --> 0:11:17.920 nine thousand. Now we might get a little dip below there, 0:11:17.920 --> 0:11:19.720 just to kind of tweak out the last of the 0:11:19.760 --> 0:11:23.200 speculative accesses. But what I see here is lower prices 0:11:23.200 --> 0:11:26.160 are attracting more the longer term bine hole types. And 0:11:26.160 --> 0:11:28.760 it's last week it peaked around forty thousand, So thirty 0:11:28.800 --> 0:11:30.920 to forty thousand. I still thinking should get to the 0:11:30.960 --> 0:11:33.400 hundred thousand this year. The key thing I'm worried about 0:11:33.440 --> 0:11:36.079 is what happened last year. Bonnil is collapsing, the stock 0:11:36.080 --> 0:11:38.880 market declining. It's the macro, and if the stock market 0:11:38.960 --> 0:11:41.320 goes down and bonnels go down, bitcoin is part of 0:11:41.320 --> 0:11:43.839 that macro. But in the big picture, what the Fed said, 0:11:43.960 --> 0:11:46.360 I think, you know, kind of tweaking things a little bit. 0:11:46.440 --> 0:11:51.439 The the the Fed squawk of that, to me, is 0:11:51.480 --> 0:11:53.760 actually good and long term for bitcoin like it is 0:11:53.760 --> 0:11:57.920 for gold. So you think bitcoin is more of an 0:11:57.920 --> 0:12:02.800 inflation hedge, Well a, Matt, Well, Well, I mean here's 0:12:02.840 --> 0:12:05.520 the thing, because if the FED starts to raise rates, 0:12:06.240 --> 0:12:11.400 Bitcoin and gold don't pay any dividends or have any 0:12:11.480 --> 0:12:14.280 kind of return like that unless you use some funky 0:12:14.360 --> 0:12:18.680 yield farming strategies so why well, ultimately it will be 0:12:18.760 --> 0:12:21.000 inflation hedge. But look at gold in the last ten years, 0:12:21.040 --> 0:12:23.200 in the last twenty years, it hasn't been an inflation. 0:12:23.240 --> 0:12:25.400 Has has been a deflation. Has been working better with 0:12:25.520 --> 0:12:28.520 yields collapsing, and gold is kicking him right now finally 0:12:28.520 --> 0:12:31.000 because yields the thirty year drop alow and to one 0:12:31.000 --> 0:12:32.599 point nine four. Last night I got up and I 0:12:32.600 --> 0:12:35.040 looked at like, WHOA. So to me, what's happening is 0:12:35.440 --> 0:12:37.800 it's not inflation. Think of what it's going to take 0:12:37.840 --> 0:12:40.480 for the Fed. The raised rates. That's a dream right now, 0:12:40.960 --> 0:12:42.520 and it's started that. They're trying to warn us a 0:12:42.559 --> 0:12:44.679 litit because they remember what happened last time with the 0:12:44.679 --> 0:12:47.480 taper tantrum. It's just classic Fed. They have to do that. 0:12:47.800 --> 0:12:49.679 But they're still dreaming of raising rates. And then the 0:12:49.760 --> 0:12:52.240 key thing is if the stock market doesn't go up, 0:12:52.520 --> 0:12:54.920 deflation is the main problem. You see that most commodities, 0:12:55.000 --> 0:12:56.880 most of them peak crude oil is still a little 0:12:56.880 --> 0:12:59.839 bit higher here. Copper peaked at ten thousand dollars, But 0:12:59.880 --> 0:13:04.120 I kick in. Bitcoin is is replacing gold in portfolios 0:13:04.160 --> 0:13:07.120 in many cases, but it's not inflation yet. At some 0:13:07.200 --> 0:13:09.480 point we'll get there. I didn't know when that's what 0:13:09.600 --> 0:13:12.040 that's gonna take. But to me, until the stock market, 0:13:12.440 --> 0:13:15.000 until we get that past that pain, that that period 0:13:15.000 --> 0:13:16.679 when he had a little bit of an ebbing tide 0:13:16.679 --> 0:13:19.680 and you see, here's who's wearing clothes kind of kicked 0:13:19.679 --> 0:13:21.920 in maybe a little bit last week. Is I fully 0:13:21.920 --> 0:13:24.440 expect golden bitcoin being the two key asses wearing clothes 0:13:24.480 --> 0:13:27.000 because there's still that I feel that organic and see 0:13:27.000 --> 0:13:29.800 the organic demand below the market. All right, so we 0:13:29.880 --> 0:13:32.200 did see. I'm wondering, like for bitcoin, for those that 0:13:32.280 --> 0:13:35.880 don't fully understand it as a security, what is it 0:13:36.000 --> 0:13:38.640 most highly correlated with? Do you think? So what should 0:13:38.640 --> 0:13:41.559 people be looking at to say, gf bon yields go up? 0:13:42.240 --> 0:13:44.120 You know, bitcoins? I mean, how should I think about? So? 0:13:44.160 --> 0:13:46.160 How did you know what I'm researching right now on 0:13:46.240 --> 0:13:49.160 the bloom Bird portfolio? Potum, I'm I'm I'm working on 0:13:49.160 --> 0:13:52.080 what's called port that's our portfolio function that putting bitcoin 0:13:52.160 --> 0:13:54.959 with the bond market and just taking a US Treasury 0:13:55.040 --> 0:13:57.800 market portfolio and using bitcoin of ten percent and a 0:13:57.800 --> 0:13:59.800 lot of people here are doing that. Ray Dally as 0:14:00.080 --> 0:14:02.400 if you mentioned that he'd rather old bitcoin than bonds, 0:14:02.559 --> 0:14:05.000 it has zero correlation to most assets. Is a unique 0:14:05.000 --> 0:14:06.960 thing about it. Now when markets plunge like we did 0:14:07.040 --> 0:14:09.840 last year, everything has a high correlation to the stock mark, 0:14:09.840 --> 0:14:11.440 and that kicked in. You saw that with crude oil, 0:14:11.679 --> 0:14:13.719 saw that with bitcoin. But no, now it's coming back, 0:14:13.720 --> 0:14:15.960 and I think that's what people are doing looking forward. Okay, 0:14:16.280 --> 0:14:18.040 in a gold portfolio, now I have to have a 0:14:18.080 --> 0:14:21.400 little bitcoin because it's clearly replacing gold unless it fails. 0:14:21.400 --> 0:14:24.040 But if that trend continues, But in a in a 0:14:24.280 --> 0:14:28.080 in a in a bond portfolio, it's really a nice compliment. 0:14:28.160 --> 0:14:31.480 Say five to ten going forward, zero rates. If we 0:14:31.520 --> 0:14:33.640 do get inflation at some point, it should kick in. 0:14:34.040 --> 0:14:37.960 But if you look past performance, very low low correlation, 0:14:38.200 --> 0:14:40.520 it doesn't really add to volatively in the in the 0:14:40.560 --> 0:14:43.080 bond portfolio, but it gives you those much better returns. 0:14:43.120 --> 0:14:46.200 Now that's past performance looking forward. If it just keeps 0:14:46.240 --> 0:14:48.320 doing what it has been, which I'm too, I'm not 0:14:48.360 --> 0:14:50.320 smart at the fair to winning, it might change. It 0:14:50.400 --> 0:14:52.640 should be a good compliment. And for me that's what's happening. 0:14:52.720 --> 0:14:54.840 Every day that goes by that it doesn't fail, it 0:14:54.840 --> 0:14:59.080 becomes more legitimate. Yeah, is there a material risk that 0:14:59.240 --> 0:15:03.120 bitcoin fails. Yeah, well it lessens every day. It's some 0:15:03.240 --> 0:15:05.280 kind of you have to have I have to reconsider 0:15:05.360 --> 0:15:09.680 that because it's new technology something some kind of technological glitch, 0:15:09.760 --> 0:15:11.800 some kind of you know, the issue with energy where 0:15:11.920 --> 0:15:14.000 point out how strong it is. So every time you 0:15:14.120 --> 0:15:15.600 tryd of throw something at it, you kind of get 0:15:15.640 --> 0:15:17.680 used to them, like, okay, knocks the price down. Then 0:15:17.720 --> 0:15:20.400 you look around like, actually, that's a positive thing for bitcoin. 0:15:20.480 --> 0:15:22.760 So it's more likely to be beaten than fail, right, 0:15:22.800 --> 0:15:26.680 I mean that much more likely option is that, uh, 0:15:26.800 --> 0:15:29.960 the market chooses something else like either well that's the thing, 0:15:30.040 --> 0:15:31.960 and that's kind of like to say, okay, in a 0:15:32.000 --> 0:15:34.360 gold portfolio, you have to have bitcoin, but kind of now, 0:15:34.360 --> 0:15:35.720 don't have to have a little bit of THEORYM in that, 0:15:35.720 --> 0:15:38.880 because the THEORYM represents a whole building block of all 0:15:38.960 --> 0:15:43.280 defy and and decentralized financial and it's all risen. By 0:15:43.320 --> 0:15:47.000 the way, I'm a little confused. Well it's not that 0:15:47.040 --> 0:15:51.000 I'm confused, but there there are stories in China that 0:15:51.040 --> 0:15:54.520 are bad for bitcoin. They're shutting down miners apparently, and 0:15:54.520 --> 0:15:57.960 they're banning people from accepting it and using it, so 0:15:58.040 --> 0:16:01.120 it seems like China the government is against bitcoin. On 0:16:01.160 --> 0:16:06.280 the other hand, people in China own more bitcoin than 0:16:06.320 --> 0:16:10.640 people in most other countries, and all of these new 0:16:10.840 --> 0:16:12.920 unicorn businesses are popping up. I don't know if you 0:16:12.960 --> 0:16:15.840 read about a group of Morgan Stanley traders that started 0:16:15.880 --> 0:16:20.600 a company called Amber Group, which trades not only trades bitcoin, 0:16:20.640 --> 0:16:23.960 but authors a bunch of other fintech solutions with crypto. 0:16:24.080 --> 0:16:28.040 They have now a billion dollar valuation. Um there's a 0:16:28.160 --> 0:16:32.160 Chinese crypto lender, Babel Finance. They've raised forty million from 0:16:32.160 --> 0:16:37.520 investors like Sequoia and tiger Um. The list goes on 0:16:37.600 --> 0:16:39.960 and on of these new startups in Hong Kong and 0:16:40.000 --> 0:16:43.680 on the mainland. Does China love bitcoin? Is it the 0:16:43.720 --> 0:16:46.680 savior bitcoin? Or do they hate bitcoin? Are they terrified 0:16:46.720 --> 0:16:49.840 of matt What you described as very very short term 0:16:49.880 --> 0:16:52.560 bullish and long term very I'm sorry, short term barrass 0:16:52.720 --> 0:16:55.720 very long term bullis China pushing back and being agnostic 0:16:55.720 --> 0:16:59.040 towards the bitcoin makes a lot of sense. Authoritarian society, 0:16:59.080 --> 0:17:01.680 no free flow cap, do not allow their citizens to 0:17:01.720 --> 0:17:04.520 have free flow capital and any other currencies outside the 0:17:04.520 --> 0:17:07.000 currents of the country, and that makes a lot of sense. 0:17:07.000 --> 0:17:09.960 It's actually showing how how the strength of how good 0:17:09.960 --> 0:17:13.440 bitcoin is for countries like US and the rest Western world. 0:17:13.480 --> 0:17:16.560 We have free coal, free flow capital, and discourse where 0:17:16.600 --> 0:17:19.879 you can exchange different currencies. So it's a savior for 0:17:19.880 --> 0:17:21.800 a lot of Chinese citizens. So they're trying to hide 0:17:21.840 --> 0:17:24.600 it from the government, but it's also extolling the problem 0:17:24.720 --> 0:17:27.280 Chinese really going backwards the last few years and many 0:17:27.320 --> 0:17:30.639 people with President Zy this whole concept of trying to 0:17:30.760 --> 0:17:33.240 you know, eliminate corruption. You know what that means, he's 0:17:33.280 --> 0:17:35.600 just bringing people who agree with him. So it's to me, 0:17:35.680 --> 0:17:38.240 what's happening to China is very bullish book for bitcoin. 0:17:38.280 --> 0:17:40.520 In the short term, it's miners have to leave, they 0:17:40.560 --> 0:17:43.199 have to sell because they're getting a little discombobulated. But 0:17:43.240 --> 0:17:45.919 they're moving more to more renewable sources, a lot of 0:17:45.920 --> 0:17:49.119 it North America. Gasler in Canada is one of the 0:17:49.160 --> 0:17:52.440 top attractions right now, and it's all going renewable anyhow 0:17:52.480 --> 0:17:54.800 because of the costs. So I look at what happened 0:17:54.840 --> 0:17:58.200 in China is just that's that's the new Cold War 0:17:58.320 --> 0:18:01.680 and US has already winning organic. All right, Mike, thanks 0:18:01.680 --> 0:18:04.000 so much, always great check in with you on Bitcoin, 0:18:04.080 --> 0:18:12.480 Mike mcgloan there Bloomberg Commodities. We've been talking about inflation 0:18:12.560 --> 0:18:14.320 a lot recently in the market is trying to get 0:18:14.320 --> 0:18:17.840 a handle on is it good inflation or perhaps something 0:18:17.880 --> 0:18:21.280 more longer term and if so, how problematic is that 0:18:21.520 --> 0:18:23.680 for the market. Let's check in with Brian wash He's 0:18:23.680 --> 0:18:27.760 a financial advisor at Walsh and Nicholson Financial Group. Brian, 0:18:28.160 --> 0:18:32.800 if I'm really concerned about evaluation, I'm sorry, inflation. Should 0:18:32.800 --> 0:18:34.679 I just go out and buy gold as a hedge 0:18:36.960 --> 0:18:39.679 boarding and thanks for having me? And my answer to 0:18:39.760 --> 0:18:42.399 that is no. UM. When you actually look at gold 0:18:42.960 --> 0:18:46.560 when it was supposed to work in inflationary environment UM 0:18:46.600 --> 0:18:49.960 in more recent times, and it hasn't UM. When you 0:18:50.000 --> 0:18:54.760 look at UM, the the correlation with gold to the 0:18:54.800 --> 0:18:58.639 equity market that has increased over time. So gold is 0:18:58.680 --> 0:19:01.720 a great buffer when you have a market sell off 0:19:02.359 --> 0:19:04.920 UM like like we have back in March of last year. 0:19:04.920 --> 0:19:08.360 But we're talking about inflation and future inflation. It has 0:19:08.400 --> 0:19:12.280 not provided a great hedging strategy and in fact UM 0:19:12.440 --> 0:19:16.120 we at our firm, we are more inclined to look 0:19:16.119 --> 0:19:21.600 towards commodities such as sugar and wet UM to hedge 0:19:21.640 --> 0:19:24.680 inflation as it has proved this year to work much 0:19:24.720 --> 0:19:28.760 better than gold, so you think commodity is also better 0:19:28.800 --> 0:19:31.800 than And by the way, speaking of commodities, did you 0:19:31.840 --> 0:19:34.359 look at oils? Yeah? Thanks for you know, we've been 0:19:34.359 --> 0:19:36.040 looking at this morning, but it just spiked up here. 0:19:36.080 --> 0:19:40.639 We've got w t I crude oil two dollars an ounce. 0:19:40.840 --> 0:19:43.480 I'm a barrel that's up a dollar twenty barrel. It's 0:19:43.520 --> 0:19:46.160 up almost one percent, So big move up there. Yeah, 0:19:46.200 --> 0:19:50.399 Brent up one and a half percent to seventy fifty barrel, 0:19:50.480 --> 0:19:55.080 so big moves up in commodities. What about equities? UM? 0:19:55.119 --> 0:19:58.280 I wonder Brian, can can you make an argument for 0:19:58.359 --> 0:20:00.359 equities as good as a good inflation edge? Do you 0:20:00.359 --> 0:20:06.080 have to look at certain industry groups? Yeah? So, I 0:20:06.080 --> 0:20:09.119 mean right now, there's really nowhere else to go. I mean, 0:20:09.200 --> 0:20:10.800 you have to be in the equity market. You have 0:20:10.840 --> 0:20:15.160 a supportive you have support of UM physical and monetary policy, 0:20:15.720 --> 0:20:18.879 UM fixed income is it gonna give you really anything? 0:20:18.960 --> 0:20:20.960 Right now? So there really is no place else to 0:20:21.080 --> 0:20:23.360 go other than the equity markets. But if you're looking 0:20:23.400 --> 0:20:27.399 to hedge inflation UM very similar to hedging interest rates. 0:20:27.520 --> 0:20:29.840 You know you need to look at quality companies who 0:20:29.880 --> 0:20:33.760 have who have a history of increasing their dividends. UM. 0:20:33.800 --> 0:20:36.679 If you have that and you have higher commodity prices, 0:20:36.760 --> 0:20:40.560 higher inflation, higher interest rates, those types of companies will 0:20:40.600 --> 0:20:43.080 fare a lot better. UM. And when you have these 0:20:43.119 --> 0:20:46.880 high inflationary environments, these high interest rate environments, you need 0:20:46.960 --> 0:20:50.040 to have cash on hand. UM. Now is not the time, 0:20:50.080 --> 0:20:53.240 in our opinion, to be barreling into growth stocks. UM. 0:20:53.320 --> 0:20:56.320 We think you need to have quality on the balance sheet, UM, 0:20:56.440 --> 0:21:00.520 quality in your portfolio, and and position a wordingly for 0:21:00.840 --> 0:21:05.280 for higher interest rates and higher inflation. And you know, 0:21:05.760 --> 0:21:07.879 short term, obviously we're seeing what the fintas clung a 0:21:07.920 --> 0:21:12.400