WEBVTT - Examining Chinese Auto Sales

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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<v Speaker 1>Daybreak Asia podcast. I'm Doug Krisner. You can join Brian

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<v Speaker 2>Well, we've mentioned that it was a pretty strong quarter

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<v Speaker 2>for BYD, one of our featured stories this morning, and

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<v Speaker 2>joining us in our studios right here in Hong Kong

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<v Speaker 2>is Danny Lee, Bloomberg Asia Transport Reporter. So the numbers

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<v Speaker 2>are fairly impressive from the standpoint of gains year on

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<v Speaker 2>year if you look at June alone, more than three

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<v Speaker 2>hundred and forty thousand units versus two hundred and fifty

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<v Speaker 2>three thousand a year ago. And I think, as you

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<v Speaker 2>put in your story, almost a million over the second quarter.

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<v Speaker 2>But Danny, a lot of this, it seems, comes down

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<v Speaker 2>to price.

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<v Speaker 3>Yeah, price cutting is the name of the game here

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<v Speaker 3>if you want to retain market share and if you

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<v Speaker 3>want to keep your volume highing and for someone like BYD,

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<v Speaker 3>who has set itself up for selling at these kinds

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<v Speaker 3>of levels, the more it cannot afford to slip back

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<v Speaker 3>on production where it's got all the workers in the

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<v Speaker 3>factory's helping pump out all these vehicles, and so therefore,

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<v Speaker 3>you know, pricing is always a key strategy. And when

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<v Speaker 3>for someone like BYD who has managed to to you know,

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<v Speaker 3>earn so much money over the last several quarters, it's

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<v Speaker 3>got a big war chest in order to fight on

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<v Speaker 3>price and to make sure it can defend its volumes

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<v Speaker 3>over margins.

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<v Speaker 1>And I'm wondering whether or not part of the intention

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<v Speaker 1>is to drive rivals out of business, right isn't there

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<v Speaker 1>a race to the bottom here.

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<v Speaker 3>I don't necessarily think they're trying to drive away local competition,

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<v Speaker 3>and I'm sure the Chinese authorities will take a dim

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<v Speaker 3>view of that. But the reality is they need the competition.

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<v Speaker 3>They need the competition to stay on their toes, to

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<v Speaker 3>be able to be just as good. To think of

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<v Speaker 3>all the other ideas that are coming off onto the market,

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<v Speaker 3>and to see what they can do to stay just

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<v Speaker 3>near the head of the pack in order to stay competitive.

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<v Speaker 3>So I think they wouldn't want to see others for

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<v Speaker 3>by the wayside, that will happen naturally, as some just

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<v Speaker 3>run out of money because they just can't sell enough vehicles.

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<v Speaker 2>You know, the big names that we talk about a lot,

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<v Speaker 2>in addition to bid with Leotto and Neo and x Punk,

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<v Speaker 2>they all actually did pretty well in June two. Now

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<v Speaker 2>there are in different sectors of the market, and Neo

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<v Speaker 2>for instance, at the higher end. I'm curious, you know,

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<v Speaker 2>I guess there's just so many EV makers in China

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<v Speaker 2>and many of them are struggling, but the ones at

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<v Speaker 2>the top are are faring very well.

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<v Speaker 3>Yeah, I think across the broad market we have seen

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<v Speaker 3>a big uptick in sales in the last couple of months, yes,

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<v Speaker 3>driven by pricing, and so when there was maybe some

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<v Speaker 3>concern about the start of the year, when sales did

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<v Speaker 3>to slip backwards compared to where they were over a

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<v Speaker 3>year ago, there is that momentum building up again. And

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<v Speaker 3>you can see in China in particular, sales do have

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<v Speaker 3>a good forward momentum. But when you see someone like

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<v Speaker 3>some markets like in Europe or in the United States

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<v Speaker 3>where automakers are who are transitioning into this EV strategy

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<v Speaker 3>are struggling. They're cutting back, they're pulling back on their

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<v Speaker 3>investments or ambitions in China, that's not so much the case,

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<v Speaker 3>and it's only making those EV players stronger.

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<v Speaker 1>Yeah, I'm glad you brought up that point, because the

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<v Speaker 1>issue of excess capacity, particularly when it comes to evs,

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<v Speaker 1>is been a dominant theme, and you listen to the

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<v Speaker 1>conversations that developed markets like the US, like Europe have

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<v Speaker 1>been having around excess capacity and the degree to which

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<v Speaker 1>Chinese manufacturers may be dumping excess inventory into those foreign markets.

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<v Speaker 1>Does the Chinese EV industry need them desperately in order

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<v Speaker 1>to continue to sustain these growth levels or will there

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<v Speaker 1>be at some point enough domestic demand to kind of

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<v Speaker 1>keep certain big players afloat.

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<v Speaker 3>It's fascinating when we talk about over capacity because when

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<v Speaker 3>you really crunch the numbers, what we are seeing when

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<v Speaker 3>we look at the data is there is production growth

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<v Speaker 3>naturally to accommodate for all the future anticipated selves. So

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<v Speaker 3>that's one component, but it's where we do see the

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<v Speaker 3>excess capacities coming from these traditional legacy internal combustion engine

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<v Speaker 3>joint ventures, which between these Chinese partners and these European

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<v Speaker 3>or US players or the Japanese for example, they have

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<v Speaker 3>a lot of excess capacity because internal combustion engine cells

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<v Speaker 3>are falling. And the problem is if their sales are falling,

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<v Speaker 3>they've got a lot of empty or quiet production lines.

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<v Speaker 3>And what is happening in reality is that they are

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<v Speaker 3>selling and this is where we are seeing excess capacity

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<v Speaker 3>being removed and all that potential demand and the capacity

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<v Speaker 3>that is coming on is the ev players from China

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<v Speaker 3>who don't have an issue right now in finding that demand.

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<v Speaker 2>In looking at those numbers that we quoted, those who

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<v Speaker 2>were total vehicles for a BYD, if you strip it

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<v Speaker 2>out and just look at electric vehicles, I think the

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<v Speaker 2>numbers suggest that BID is now within around fifteen thousand

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<v Speaker 2>of equal in Tesla. Is that a sort of monumental

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<v Speaker 2>moment in this or just a sort of one step

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<v Speaker 2>in the road for BYD?

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<v Speaker 3>This is you know they can overtake again. That's obviously

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<v Speaker 3>a good sign, I think for for Tesla, clearly they're

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<v Speaker 3>having a bigger struggle right now. They have more downward

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<v Speaker 3>momentum as they transition and evolve their product lineup, and

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<v Speaker 3>it's not going to be this year where they're going

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<v Speaker 3>to see an upturn and fortune. Deil Musk even said

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<v Speaker 3>that in one of the previous earning schools. So I

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<v Speaker 3>think for now for Tesla, they have this kind of

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<v Speaker 3>downward momentum where they are seeing falling sales in China,

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<v Speaker 3>in Europe and other key markets. For BYD they are

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<v Speaker 3>you know, they have some momentum. Can they do better? Sure,

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<v Speaker 3>and they are setting themselves up for that. But the

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<v Speaker 3>question is for beyond China in these markets where they

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<v Speaker 3>do want to sell internationally. In Europe, you are seeing

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<v Speaker 3>the barriers being put up where they are going to

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<v Speaker 3>have to pay more to sell their vehicles. But you

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<v Speaker 3>know there is a get out of jail free card

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<v Speaker 3>here if they look at their product lineup where the

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<v Speaker 3>tariffs that are being put on or the additional tariffs

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<v Speaker 3>being put on are for battery electric vehicles. Byd' does

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<v Speaker 3>sell a lot of hybrids, and they also set themselves

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<v Speaker 3>up for pretty strong third quarter with near record sales

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<v Speaker 3>basically on the hybrid sales this year in this quarter.

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<v Speaker 2>All right, Danny, thanks for coming into the studios and

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<v Speaker 2>sharing your insights with the Stanny leeb Lumberg Asian Transport Report.

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<v Speaker 2>Let's get to our guest, ELFREDA. Jonker, client portfolio manager

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<v Speaker 2>and investment specialists at I'll Finny Investment Management, Alfred. So

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<v Speaker 2>we understand that companies are facing the highest earnings bar

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<v Speaker 2>in about three years. That's according to Goldman Sachs. We

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<v Speaker 2>have worried about growth, We have the debate to consider

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<v Speaker 2>from last week, and a number of geopolitical concerns. So

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<v Speaker 2>why the heck are stocks at just about all time highes.

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<v Speaker 4>Yes, good morning, And I think if if you take

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<v Speaker 4>a step back and you just sort of reflect on

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<v Speaker 4>where we have come from, I think it's important to

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<v Speaker 4>note that case. It's been a fantastic year for global

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<v Speaker 4>equities and specifically for the US equity market, but sixty

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<v Speaker 4>percent of those sort of returns have come from the

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<v Speaker 4>top five six stocks, and thirty percent just from Nvidia itself.

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<v Speaker 4>So we haven't really seen a massive broadening out, which

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<v Speaker 4>we were sort of hoping for this year. And if

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<v Speaker 4>you look at why those companies continue to rally, it's

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<v Speaker 4>not just because that become a bit more expense, so

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<v Speaker 4>it's also because they've delivered incredible earnings. So, yes, it

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<v Speaker 4>is high. Expectations are high, setting out around nine percent,

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<v Speaker 4>but if you strip out that sort of top six,

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<v Speaker 4>the rest of the market's only expected to grow revenues

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<v Speaker 4>in the order of around five percent, so there's not

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<v Speaker 4>huge expectations for the rest of the market. It's all

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<v Speaker 4>sort of centered in that top five, top six.

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<v Speaker 1>I would say, so, Alfred, I'm curious you make the

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<v Speaker 1>point that we have yet to see you broadening in

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<v Speaker 1>the market, and I'm wondering from your perspective whether that

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<v Speaker 1>suggests a level of risk that we should be concerned

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<v Speaker 1>about as we move into the third quarter here and

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<v Speaker 1>adjust portfolios accordingly. Is does that not make sense?

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<v Speaker 4>Yes, it definitely makes sense. I think that's sort of

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<v Speaker 4>what we have been doing at Affinity for our two

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<v Speaker 4>global funds is over the last twelve months, we definitely

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<v Speaker 4>have sort of reduced a bit of the defense of

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<v Speaker 4>exposure and added quite a bit of psychical exposure your

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<v Speaker 4>variety of different names on the back of some emerging

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<v Speaker 4>trends that we've noted, so something like an Eska Heinez

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<v Speaker 4>that's what's cyclical and also linked to the whole AI trade,

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<v Speaker 4>high bankwidth memory. We've also added a Bank of America

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<v Speaker 4>with capital markets opening up, so there's a whole range

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<v Speaker 4>of sort of cyclicals that we have added and diversified into.

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<v Speaker 4>But getting to the point now where I think there's

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<v Speaker 4>a lot of concern around growth as you've earlier, As

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<v Speaker 4>you mentioned earlier, and even though inflation is coming down

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<v Speaker 4>and the expectation of interest rate cuts continue to come through,

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<v Speaker 4>there's a lot of uncertainty with the elections, and particularly

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<v Speaker 4>with potential Trump when you could definitely see inflation sort

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<v Speaker 4>of going in the other way, other direction if he's

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<v Speaker 4>sort of been able to push through tariffs and things

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<v Speaker 4>like that. So, yes, diversified diversification is definitely required and

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<v Speaker 4>keeping those megatic positions intact in your portfolios.

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<v Speaker 2>You talk a little bit about luxury seeing a lot

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<v Speaker 2>of earnings downgrades, and you mentioned that Gucci and LVMH.

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<v Speaker 2>I'm wondering though that even if we see a slightly

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<v Speaker 2>weaker consumer, that the more well off consumer is probably uh,

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<v Speaker 2>you know, sort of enjoying the gains in the stock

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<v Speaker 2>market and such and and may may be a buyer

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<v Speaker 2>of of luxury if you have to be stock specific.

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<v Speaker 2>What do you like there?

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<v Speaker 4>Yeah, so we currently really only have a position in

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<v Speaker 4>in Race Rory. I would say it's obviously not a

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<v Speaker 4>pure luxury stock, but it definitely does trade and deliver

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<v Speaker 4>earnings like luxury stock. I think for US AID autentity,

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<v Speaker 4>what we specifically look for those earnings upgrades and the

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<v Speaker 4>potential to surprise on the earnings upgrades, and that is

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<v Speaker 4>a company that can manage that very well given the

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<v Speaker 4>pipeline and the demand that's laid out two years in advanced.

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<v Speaker 4>I think some of the other stocks like an LVMH,

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<v Speaker 4>for example, has historically been one of our favorite plays

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<v Speaker 4>just because it is so diversified across its product range,

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<v Speaker 4>and it is a stock that we will continue to

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<v Speaker 4>watch at the moment that are still seeing earnings downgrades,

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<v Speaker 4>and it is interesting. I think there's obviously a bit

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<v Speaker 4>of a high neck with consumers stepping back a bit,

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<v Speaker 4>probably spending a bit more on luxury trips. If you

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<v Speaker 4>look at what's happening to cruise liners, and you know,

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<v Speaker 4>some of the other areas within the vacationing section of

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<v Speaker 4>the market is still doing pretty well. So it's probably

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<v Speaker 4>a little bit of let's wait and see what will

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<v Speaker 4>happen to prices going forward, because the expectation is that

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<v Speaker 4>inflation will come down. So it's definitely not broken. But

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<v Speaker 4>I do think you need to be pretty stock specific

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<v Speaker 4>because some of these names like a Gucci for example,

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<v Speaker 4>also have product issues with new designer stepping in, So

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<v Speaker 4>for us something like an LDMAH is differentely one that

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<v Speaker 4>we will continue to watch.

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<v Speaker 1>Alfreda that we were talking a moment ago about some

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<v Speaker 1>of the sales figures for the EV makers. Really a

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<v Speaker 1>number of the car makers in China by D selling

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<v Speaker 1>a record number of not only EV's but hybrids and

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<v Speaker 1>Q two. I think the number was nearly a million models.

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<v Speaker 1>Talk to me a little bit about the degree to

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<v Speaker 1>which Chinese evs are showing up in Australia. Is that

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<v Speaker 1>going to be a developing market for them?

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<v Speaker 4>I definitely think they would want it to be. I

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<v Speaker 4>think what we have seen in Australia to date is

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<v Speaker 4>definitely not a massive uptake in EV sales just yet.

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<v Speaker 4>I think some of it has got to do with

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<v Speaker 4>just availability of product, but also just the infrastructure, the

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<v Speaker 4>availability of charging stations. So I do think that is

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<v Speaker 4>definitely something that they will try and do, particularly because

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<v Speaker 4>I think a lot of people are waiting for hybrids

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<v Speaker 4>and potentially a cheaper entpoint into the electric vehicle space

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<v Speaker 4>relative to a tesla, So there's definitely an opportunity there.

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<v Speaker 4>There's always of course tariffs and the risk around that

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<v Speaker 4>that you need to bear in mind as well. I

0:13:14.360 --> 0:13:17.679
<v Speaker 4>think overall, if you look at the overall space in

0:13:17.800 --> 0:13:21.080
<v Speaker 4>evs globally, it's not been a happy space. There's a

0:13:21.160 --> 0:13:25.640
<v Speaker 4>huge amount of stock sitting all across these vehicle makers,

0:13:26.120 --> 0:13:29.640
<v Speaker 4>and Tesline particular has had to drop prices, has had

0:13:29.640 --> 0:13:33.360
<v Speaker 4>to reduce their volume forecasts. So it's not a space

0:13:33.400 --> 0:13:37.120
<v Speaker 4>that we are particularly excited about. But even someone like

0:13:37.240 --> 0:13:40.680
<v Speaker 4>a Ferrari for example, is also planning to do a

0:13:40.720 --> 0:13:46.200
<v Speaker 4>lot of sort of hybrids going forward, so we do

0:13:46.280 --> 0:13:49.000
<v Speaker 4>have some exposure there, but we are not rushing into

0:13:49.160 --> 0:13:50.920
<v Speaker 4>buying any of the others just yet.

0:13:51.640 --> 0:13:54.400
<v Speaker 2>Alfreda, thank you very much for joining us. Freda Jonker,

0:13:54.840 --> 0:14:06.800
<v Speaker 2>client portfolio manager and investment specialist at Alfinity Investment Management. Well,

0:14:06.880 --> 0:14:10.160
<v Speaker 2>joining us now is Chuck Camello, President and chief executive

0:14:10.200 --> 0:14:14.360
<v Speaker 2>officer at Essex Financial. To take a closer look at markets, Chuck,

0:14:15.000 --> 0:14:18.679
<v Speaker 2>it's tempting to think that at the moment the FED

0:14:19.120 --> 0:14:22.560
<v Speaker 2>and perhaps inflation is taking a back seat to earnings.

0:14:23.000 --> 0:14:25.960
<v Speaker 2>But I would note that in the last earnings period

0:14:26.360 --> 0:14:29.760
<v Speaker 2>the numbers were actually great, but the equal weight S

0:14:29.840 --> 0:14:32.400
<v Speaker 2>and P was actually down for the quarter. It had

0:14:32.400 --> 0:14:34.920
<v Speaker 2>a good first quarter, but it was actually down when

0:14:34.920 --> 0:14:37.440
<v Speaker 2>those strong earnings were coming out. In the second quarter,

0:14:37.800 --> 0:14:40.600
<v Speaker 2>it was about inflation and higher rates. So what are

0:14:40.600 --> 0:14:42.840
<v Speaker 2>you most focused on here at the moment?

0:14:44.400 --> 0:14:46.800
<v Speaker 5>Yeah, well, thank you so much for having me tonight. Anson.

0:14:46.840 --> 0:14:49.800
<v Speaker 5>I think when you look at the markets, it always

0:14:49.800 --> 0:14:53.080
<v Speaker 5>comes down to the two big things, earnings and interest rates.

0:14:53.080 --> 0:14:55.880
<v Speaker 5>As you just said, you know, we continued to look

0:14:56.160 --> 0:14:59.560
<v Speaker 5>quite candidly at both. Earnings has been very, very strong.

0:14:59.600 --> 0:15:02.480
<v Speaker 5>As you said, the Fed seems to be in a

0:15:02.520 --> 0:15:05.800
<v Speaker 5>pretty good position the city where they hope to have inflation,

0:15:05.880 --> 0:15:08.760
<v Speaker 5>especially with these numbers that just came out in June

0:15:08.760 --> 0:15:12.160
<v Speaker 5>reflecting what happened in May. So we're looking at it all.

0:15:12.200 --> 0:15:15.040
<v Speaker 5>But I think you're also seeing a reflection of all

0:15:15.120 --> 0:15:16.800
<v Speaker 5>the other stocks that make up the S and B

0:15:16.880 --> 0:15:19.800
<v Speaker 5>five hundred. So forget, you know, the magnificent seven. So

0:15:19.880 --> 0:15:22.000
<v Speaker 5>of those four hundred and ninety three other stocks, there

0:15:22.040 --> 0:15:24.000
<v Speaker 5>are a lot of good ones out there, but those

0:15:24.080 --> 0:15:27.680
<v Speaker 5>top seven, you know, and you know testl lately has

0:15:27.760 --> 0:15:30.320
<v Speaker 5>joined the party after sitting out for quite some time.

0:15:30.760 --> 0:15:33.360
<v Speaker 5>But there's a tremendous amount of demand and a tremendous

0:15:33.400 --> 0:15:35.920
<v Speaker 5>amount of momentum in those names, and it literally sucks

0:15:35.920 --> 0:15:38.640
<v Speaker 5>the air and sucks the money out of the market

0:15:39.000 --> 0:15:41.280
<v Speaker 5>to those top stocks.

0:15:41.320 --> 0:15:45.520
<v Speaker 1>The challenge is really separating signal to noise, and I'm

0:15:45.640 --> 0:15:48.480
<v Speaker 1>trying to understand whether the market is really having some

0:15:49.440 --> 0:15:53.720
<v Speaker 1>a challenge right now. It's struggling with the political implications

0:15:53.760 --> 0:15:56.120
<v Speaker 1>of what played out here in the US last Thursday

0:15:56.120 --> 0:16:00.000
<v Speaker 1>with a presidential debate. I was reading some commentary early

0:16:00.480 --> 0:16:03.960
<v Speaker 1>talking about a possible Trump presidency that would bring a

0:16:03.960 --> 0:16:07.080
<v Speaker 1>combination of higher spending, tax cuts and faster inflation, and

0:16:07.120 --> 0:16:10.600
<v Speaker 1>obviously that would be problematic for the bond market. I

0:16:10.640 --> 0:16:12.920
<v Speaker 1>don't know that any of that was being discounted today.

0:16:12.920 --> 0:16:17.200
<v Speaker 1>But at what point do politics become a factor in this?

0:16:17.280 --> 0:16:17.520
<v Speaker 2>Chuck?

0:16:18.440 --> 0:16:20.640
<v Speaker 5>Yeah, Well, I think you saw, you know, the with

0:16:20.720 --> 0:16:24.840
<v Speaker 5>the bond market actions today a reflection of, you know,

0:16:24.920 --> 0:16:28.840
<v Speaker 5>an inflationary environment under Trump if he gets re elected

0:16:28.840 --> 0:16:32.960
<v Speaker 5>at i e. Tax cuts, tariffs which were both inflationary

0:16:33.000 --> 0:16:37.320
<v Speaker 5>which certainly and again more government spending, which again makes

0:16:37.320 --> 0:16:39.960
<v Speaker 5>the Fed's job that much harder. And we started this

0:16:40.080 --> 0:16:43.720
<v Speaker 5>year with the Fed expectation of six rate cuts, which

0:16:44.000 --> 0:16:46.200
<v Speaker 5>you know, I'm not exurectly. Sure who actually believed that,

0:16:46.280 --> 0:16:48.400
<v Speaker 5>but that was the number in a networre down to two,

0:16:48.440 --> 0:16:52.360
<v Speaker 5>maybe maybe one, But you know that. I think for

0:16:52.720 --> 0:16:55.160
<v Speaker 5>the markets and where we are with the political side

0:16:55.160 --> 0:16:58.880
<v Speaker 5>of things, I mean the debate last week, there was

0:16:58.920 --> 0:17:02.320
<v Speaker 5>a vast chunk of the country that thought Biden was

0:17:02.480 --> 0:17:05.280
<v Speaker 5>too old and was showing signs of not being up

0:17:05.280 --> 0:17:08.119
<v Speaker 5>to another four years. And for those folks, and for

0:17:08.160 --> 0:17:10.520
<v Speaker 5>a lot of folks, Thursday night sort of hammered that

0:17:10.520 --> 0:17:12.439
<v Speaker 5>point home and it just sort of reinforced it. I

0:17:12.440 --> 0:17:14.920
<v Speaker 5>think the big difference was you saw the other side

0:17:14.920 --> 0:17:16.520
<v Speaker 5>of the aisle i e. Democrats, a lot of the

0:17:16.560 --> 0:17:20.480
<v Speaker 5>Democrats coming around to saying geez, that was very surprising.

0:17:20.520 --> 0:17:23.800
<v Speaker 5>And I think the market was already pricing in the

0:17:23.800 --> 0:17:26.920
<v Speaker 5>fact that Trump had it, you know, depending upon the poll,

0:17:27.280 --> 0:17:28.840
<v Speaker 5>looked like we was in a pretty good position to

0:17:28.880 --> 0:17:30.920
<v Speaker 5>beat Biden. So I think the market's already looking ahead

0:17:30.960 --> 0:17:32.240
<v Speaker 5>to that. But I think you saw it today in

0:17:32.280 --> 0:17:34.920
<v Speaker 5>the bond market, a reflection of, hey, if Trump does win,

0:17:35.440 --> 0:17:36.879
<v Speaker 5>you know, even under Biden, it's still going to be

0:17:36.880 --> 0:17:39.440
<v Speaker 5>a tough inflationary environment. With Trump, it might even be worse.

0:17:40.240 --> 0:17:42.600
<v Speaker 2>Do you think that the market will start taking these

0:17:42.680 --> 0:17:45.720
<v Speaker 2>higher rates that might be attributed to a Trump presidency

0:17:46.680 --> 0:17:49.960
<v Speaker 2>and sales stocks as a result, because they've been the

0:17:50.000 --> 0:17:52.439
<v Speaker 2>market has been a little testy about rates rising.

0:17:53.560 --> 0:17:56.080
<v Speaker 5>It has, but today was really interesting. Market didn't budge.

0:17:56.440 --> 0:17:58.159
<v Speaker 5>I think that's because as long as the ten year

0:17:58.200 --> 0:18:00.919
<v Speaker 5>stays within that certain range, right, don't start getting up

0:18:00.960 --> 0:18:03.720
<v Speaker 5>to four eight, four nine, things like that, where then

0:18:03.760 --> 0:18:05.439
<v Speaker 5>I think the market would have a big problem with it.

0:18:05.560 --> 0:18:07.879
<v Speaker 5>Think if it stays in this range and it bounces around,

0:18:08.200 --> 0:18:10.760
<v Speaker 5>I think the market can deal with it. But you know,

0:18:11.320 --> 0:18:13.919
<v Speaker 5>the you know, if we start seeing a sustained increase

0:18:13.960 --> 0:18:15.960
<v Speaker 5>in rates, oh, I think the market will feel that,

0:18:16.040 --> 0:18:18.000
<v Speaker 5>and you will you will start to see a big pullback.

0:18:18.320 --> 0:18:20.640
<v Speaker 1>So we had the PMI data which was a little

0:18:20.720 --> 0:18:23.280
<v Speaker 1>lackluster today. The big news will happen at the end

0:18:23.320 --> 0:18:25.080
<v Speaker 1>of the week with the employment data. What are your

0:18:25.119 --> 0:18:28.520
<v Speaker 1>expectations check on jobs for the month of June.

0:18:29.560 --> 0:18:33.159
<v Speaker 5>Yeah, I mean, listen, jobs have been extremely, extremely strong.

0:18:33.240 --> 0:18:34.960
<v Speaker 5>I mean you go back look back to May and

0:18:35.440 --> 0:18:37.760
<v Speaker 5>I've obviously stating the obvious there, but you know, back

0:18:37.800 --> 0:18:39.600
<v Speaker 5>with May you had one hundred and eighty thousand was

0:18:39.640 --> 0:18:42.919
<v Speaker 5>the expected number. It came into two seventy two. You know,

0:18:43.160 --> 0:18:46.080
<v Speaker 5>I think you're going to probably see another strong jobs month.

0:18:46.720 --> 0:18:48.560
<v Speaker 5>Now the flip side of that is if you don't

0:18:48.720 --> 0:18:50.119
<v Speaker 5>and all of a sudden you get a weaker than

0:18:50.160 --> 0:18:52.280
<v Speaker 5>expected number, well, now maybe you're going to start to

0:18:52.280 --> 0:18:54.679
<v Speaker 5>see the FED, you know, start to pick up that

0:18:55.000 --> 0:18:57.320
<v Speaker 5>the language around maybe a rate that give if employment

0:18:57.359 --> 0:18:59.600
<v Speaker 5>starts to fall off. But you know, I mean, I

0:18:59.640 --> 0:19:01.520
<v Speaker 5>don't know, but you guys but out and about and

0:19:01.640 --> 0:19:04.800
<v Speaker 5>you know, the normal course of a day or normal

0:19:04.840 --> 0:19:07.119
<v Speaker 5>course of the weekend, there are still awful lot of

0:19:07.200 --> 0:19:10.440
<v Speaker 5>help wanted signs up. And you know, every place still

0:19:10.480 --> 0:19:12.239
<v Speaker 5>seems to be looking for workers. I can tell you

0:19:12.320 --> 0:19:15.919
<v Speaker 5>first hand, hiring for our company is still a major

0:19:16.000 --> 0:19:17.640
<v Speaker 5>challenge of finding the right candidate.

0:19:18.400 --> 0:19:21.280
<v Speaker 2>So growth has been an issue. So it might be

0:19:21.320 --> 0:19:24.760
<v Speaker 2>good to get a reasonably strong number because you've seen

0:19:25.119 --> 0:19:28.280
<v Speaker 2>consumers struggle a little bit. So you talk about growth

0:19:28.280 --> 0:19:31.600
<v Speaker 2>as an issue. Politics has an issue, perhaps inflation has

0:19:31.640 --> 0:19:35.920
<v Speaker 2>an issue. And to earnings, back to earnings Goldman Sachs

0:19:35.920 --> 0:19:39.919
<v Speaker 2>saying that companies face the highest earnings bar in about

0:19:39.960 --> 0:19:43.840
<v Speaker 2>three years. Is that possibly a catalyst for the next

0:19:44.119 --> 0:19:44.640
<v Speaker 2>cell down?

0:19:46.359 --> 0:19:49.959
<v Speaker 5>Most certainly look and you've seen look at look at Walgreens,

0:19:50.000 --> 0:19:52.480
<v Speaker 5>and look at Nike right when when they miss and

0:19:52.840 --> 0:19:56.520
<v Speaker 5>just the carnage that ensues. But you know, I think,

0:19:56.920 --> 0:19:58.919
<v Speaker 5>you know, the challenge we have going forward is the

0:19:58.920 --> 0:20:01.439
<v Speaker 5>consumer has really held in there, but the consumer is

0:20:01.480 --> 0:20:03.919
<v Speaker 5>starting to feel it, right And yes, even though we

0:20:04.000 --> 0:20:07.520
<v Speaker 5>have these lower or more moderate inflation readings, they are

0:20:07.560 --> 0:20:10.360
<v Speaker 5>still off of a much much higher base than they

0:20:10.359 --> 0:20:12.960
<v Speaker 5>were years ago. I think the average person and even

0:20:13.040 --> 0:20:15.600
<v Speaker 5>the the you know, above average person in terms of

0:20:15.600 --> 0:20:17.800
<v Speaker 5>income or net worth, starts to feel it as they

0:20:17.840 --> 0:20:19.120
<v Speaker 5>see it in their every day life. And I think

0:20:19.160 --> 0:20:21.080
<v Speaker 5>you're at the point where like people are pushing back

0:20:21.119 --> 0:20:23.679
<v Speaker 5>on any more price increases and things of that nature. So,

0:20:23.720 --> 0:20:25.320
<v Speaker 5>without a doubt, it's going to be a challenge. But

0:20:25.359 --> 0:20:27.600
<v Speaker 5>I also think with earnings it's all about the industry

0:20:27.600 --> 0:20:30.400
<v Speaker 5>and the company. And so you know, if you've got

0:20:30.400 --> 0:20:33.440
<v Speaker 5>a Nike and you you know, you miss, that's a big,

0:20:33.440 --> 0:20:36.000
<v Speaker 5>big story, where as opposed to maybe a different type

0:20:36.000 --> 0:20:38.520
<v Speaker 5>of company and a different industry where you know, maybe

0:20:38.560 --> 0:20:40.480
<v Speaker 5>they get a little bit more, a little bit of

0:20:40.480 --> 0:20:43.239
<v Speaker 5>give from the market. But without any question, earnings are

0:20:43.280 --> 0:20:45.560
<v Speaker 5>going to be and have always been tremendously important. They

0:20:45.600 --> 0:20:48.400
<v Speaker 5>certainly will be with this next season. But you know companies,

0:20:48.760 --> 0:20:51.640
<v Speaker 5>you know the American economy, American companies are so dynamic,

0:20:51.960 --> 0:20:53.920
<v Speaker 5>they can they can pretty much adapt on a dime.

0:20:54.280 --> 0:20:56.960
<v Speaker 5>And they've weathered some really really bad storms. And there's

0:20:57.000 --> 0:20:59.280
<v Speaker 5>nothing to think, given the environment that we're in today

0:20:59.480 --> 0:21:01.560
<v Speaker 5>and looking forward, that they can't continue to do that

0:21:01.760 --> 0:21:05.880
<v Speaker 5>and listen, geopolitical risk whole different story. God only knows

0:21:05.880 --> 0:21:09.640
<v Speaker 5>what happens with this election where it all couns up, all.

0:21:09.600 --> 0:21:13.000
<v Speaker 2>Right, Chuck, Thanks so much, Chuck Camello, President, Chief executive

0:21:13.040 --> 0:21:14.440
<v Speaker 2>Officer at Essex Financially.

0:21:15.040 --> 0:21:17.960
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