Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
Speaker 1: plus technology, politics, economics, all purtnising the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
Speaker 1: analyst in more than one twenty countries. You can download
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Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on the Bloomberg Radio or watch us
Speaker 1: on YouTube search Bloomberg Clovel News. Well. About nine months
Speaker 1: after the arrival of vaccines, dozens of countries have yet
Speaker 1: to reach ten percent of their populations. It's a milestone
Speaker 1: seen as crucial in narrowing the worldwide gap and access
Speaker 1: to him in European countries with lower vaccination rates can
Speaker 1: see a surge in COVID nineteen infections, hospitalizations and deaths
Speaker 1: over the next two months that according to the European
Speaker 1: Center for Disease Prevention at CONTROL. It's not easy, all right.
Speaker 1: Once again, for our daily COVID update, Elizabeth Stewart Professor
Speaker 1: of American Health at the Johns Hopkins Bloomberg School of
Speaker 1: Public Health. Another member of the Hopkins team that we
Speaker 1: lean on to get us through and understand everything and
Speaker 1: all things COVID night teen and she joins us on
Speaker 1: the phone in Washington, d c Um Elizabeth, good to
Speaker 1: have you here with us. Among the headlines that keep coming,
Speaker 1: what is it that you think we should be paying
Speaker 1: the most attention to. It's great to be here, Thanks
Speaker 1: for talking with me today. I think we see some
Speaker 1: good news on the horizon. Cases are plateauing or even
Speaker 1: going down in many places, and there's hopes that the
Speaker 1: vaccine is going to be available for kids under twelve
Speaker 1: in the next you know, couple of months. But I
Speaker 1: think we have to be careful not to let down
Speaker 1: our guards. As we've learned throughout the sandemic, we're not
Speaker 1: out of the woods yet, and so we need to
Speaker 1: sort of stay vigilant. Okay, what are those things that
Speaker 1: we need to do to stay vigilant, because I've known
Speaker 1: I'm definitely not acting the same way that I acted
Speaker 1: when I wasn't vaccinated. Yeah, I think the key thing
Speaker 1: is still avoiding indoor gatherings, especially without masks, and and
Speaker 1: in large groups, keeping an eye on sort of trying
Speaker 1: to maintain contact with people who are vaccinated, being careful
Speaker 1: again if it's going to be a large group that
Speaker 1: might not be vaccinated. I think people with kids under
Speaker 1: twelve also have very different considerations, and for them, again
Speaker 1: sort of the core masks, keeping distance, and any of
Speaker 1: the adults, anyone overage twelves who can be vaccinated really
Speaker 1: should get vaccinated, and that can really help keep even
Speaker 1: the younger kids safe. Well, so let's talk about that.
Speaker 1: I mean, I'm lucky enough to have a kid who's
Speaker 1: old enough that she's been able to get the vaccine.
Speaker 1: Tim has a little one who hasn't been vaccinated. So
Speaker 1: what is your thoughts advice to parents, many of which
Speaker 1: are vaccinated, but their younger kids are not, and increasingly
Speaker 1: there in daycare or they're back in school. You know,
Speaker 1: how do we manage that in the best way? Yeah,
Speaker 1: it's it's something many of us are struggling with. I
Speaker 1: think keeping an eye on reducing the risk as much
Speaker 1: as you can, but without sort of sacrificing the essential
Speaker 1: activities that these kids need. So I've been very happy
Speaker 1: to see schools really opening this fall, many of them
Speaker 1: are implementing the mitigation strategies that they should be in
Speaker 1: terms of masks and ventilation. One thing that I think
Speaker 1: I would put on people's radar screen are the role
Speaker 1: of rapid tests, and I think they've been underutilized. I
Speaker 1: think all households should have some in their cabinet to
Speaker 1: pull out when a kid has a sniffle. I think
Speaker 1: schools should be using them more to kind of track
Speaker 1: infections and sort of just keep an eye on who
Speaker 1: has symptoms and and do a really quick fifteen minute
Speaker 1: test which can be quite accurate to see who might
Speaker 1: actually be infectious. I try to go and get these,
Speaker 1: and I have several times going to drug stores in
Speaker 1: my neighborhood. They're sold out. It's a major problem everywhere.
Speaker 1: They were available more so over the summer, but after
Speaker 1: me and has increased this fall. I agree, him, shaking
Speaker 1: his head. I was actually at a drugs, a drug
Speaker 1: store in my neighborhood, and the guys said, our truck
Speaker 1: is coming in today. I will put one aside for you.
Speaker 1: And I went back later and he said the truck
Speaker 1: had none on there. I'm so sorry, Like that's what
Speaker 1: people are doing in my neighborhood in Brooklyn. Yes, I
Speaker 1: think that's happening in a lot of places. The federal government,
Speaker 1: I think is working, I hope is working on art
Speaker 1: to increase supply. Um. But I think that's really what
Speaker 1: we need to focus on, is increasing supply, increasing access,
Speaker 1: because I think that rapid tests are going to be
Speaker 1: a key tool that's really going to help us keep
Speaker 1: this under control. Right, We've talked about we had no playbook,
Speaker 1: We didn't really have a tool kit at the beginning
Speaker 1: of this, but we increasingly do. And it sounds like
Speaker 1: this those rapid tests should be part of it. If
Speaker 1: you can get them, yeah, if you can get them, yeah, exactly.
Speaker 1: All right, Elizabeth Stewart, thank you so much, Professor of
Speaker 1: American Health at Johns Hopkins Bloomberg School of Public Health,
Speaker 1: of course, supported by Michael R. Bloomberg, founder of Bloomberg
Speaker 1: LP and Bloomberg Philanthropy. She is joining us or was
Speaker 1: joining us on the phone from the Nation's capital. Look,
Speaker 1: the alternative to not having rapid tests in your home
Speaker 1: is going to an urgent care clinic and standing around
Speaker 1: a bunch of people and waiting. It's why in the beginning,
Speaker 1: if we thought we maybe wanted to get a test.
Speaker 1: My husband and I were like, before we were vaccinated,
Speaker 1: I don't want to go and stand with people who
Speaker 1: think they might have COPI, especially when it was often
Speaker 1: long lines and long waits. This is Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stinovich on
Speaker 1: Bloomberg Radio. So in its sites an initial public offering
Speaker 1: and as such, Patreon and I saying it right, Patreon
Speaker 1: Patreon or Patreon Patreon, all right, thank you, Joel Weber.
Speaker 1: They're investing in original programming in the face of growing competition.
Speaker 1: So let's get right to this story. You know, with
Speaker 1: us is Bloomberg Business Week editor Joel Webber and someone
Speaker 1: who's been following the beginning of the story now the
Speaker 1: transformation of this company is Bloomberg News Entertainment reporter Lucashaw.
Speaker 1: He's on the phone in l A. What I'm just thinking.
Speaker 1: It's like, like Lucas starts out the piece, everybody is
Speaker 1: trying to get on the bandwagon that Patreon created. Joe,
Speaker 1: they literally created it. You know, this is like the
Speaker 1: company that basically helped facilitate people to be like you
Speaker 1: can you can just straight up ask people for money online,
Speaker 1: just say, hey, would you like to donate money to
Speaker 1: my people? And people will give it to you. And
Speaker 1: and you know, when when that first happened, I was like, wait,
Speaker 1: what there's like this is like a company that's doing
Speaker 1: this like and and Business Week had covered it forever,
Speaker 1: and then the pandemic happened, and then it's like everybody
Speaker 1: realized this was a business opportunity and then you could
Speaker 1: do it in many different ways. And then I think
Speaker 1: that's um, you know, basically caused Patreon to realize, hey,
Speaker 1: we were way ahead of this and we know what
Speaker 1: we're doing. And now it's like, okay, if we're gonna
Speaker 1: go go public, you know, how do we how do
Speaker 1: we distinguish ourselves? So so, Lucas, what's the plan. The
Speaker 1: plan is to get a lot more people using Patreon
Speaker 1: uh through this enticement where they're going to you know,
Speaker 1: offer too fun uh podcast, a video series, what have you,
Speaker 1: um and hope that the more people go use it,
Speaker 1: the more the revenue grows. And then there's also a
Speaker 1: design or to make Patreon a little bit more of
Speaker 1: a destination. You know, for most of its existence, it's
Speaker 1: been this layer in between. You know, you are a
Speaker 1: YouTube or you're a Twitter streamer, you're a podcaster, but
Speaker 1: you use Patreon to kind of monetize your most art
Speaker 1: and fans. Now they want people if they're going to
Speaker 1: see that that podcast that they pay for, the video
Speaker 1: series they pay for, maybe they'll do so on Patreon.
Speaker 1: Can they compete with the biggest players out there, even
Speaker 1: if they're the original the the O g s on this?
Speaker 1: I mean, look, Twitter allows tipping, you can directly pay
Speaker 1: for creators through sub stack. You know, I think that
Speaker 1: the odds of them competing as a media destination are
Speaker 1: pretty low, and that's why you see the CEO Jack
Speaker 1: CONTI stress that they're not trying to compete head to
Speaker 1: head with YouTube because pretty much anyone who's tried to
Speaker 1: do that other than TikTok has failed. Um. I do
Speaker 1: think that they can continue to exist as this and
Speaker 1: b to be business in between, because one thing that
Speaker 1: that they offer is an ability to sort of work
Speaker 1: across all of these different sites. So if you're someone
Speaker 1: who is both a podcaster but you also upload a
Speaker 1: video of your podcast YouTube and maybe you also want
Speaker 1: aid followers on Twitter, you can centralize it in one place,
Speaker 1: and so as long as some of these other sites
Speaker 1: don't cut off Patreon, I think it can because this
Speaker 1: market is so big, it's going to keep growing. They're
Speaker 1: going to be a lot of people who do it
Speaker 1: and a lot of people who win. And you know,
Speaker 1: maybe maybe they don't just want to charge people on
Speaker 1: YouTube because you tend to charge your fans for multiple things,
Speaker 1: not just for one thing. Hey, Lucas, how do creators
Speaker 1: see Patreon? Because there's a line in your story about
Speaker 1: Conti and how he has always described the company as
Speaker 1: creator first. Do creators feel that way? Is there something
Speaker 1: special or different that they feel like they get with
Speaker 1: this versus going to some of the bigger platforms that
Speaker 1: probably have deeper pockets and can do a lot more.
Speaker 1: He has the creators that we spoke with view Patreon
Speaker 1: very sa aforably, Perhaps I'm surprising link is peop always
Speaker 1: spoke with it. Are those making money using the service
Speaker 1: and using their different tools? I think people like the
Speaker 1: average creator likes that there is an independent company that
Speaker 1: is allowing them to make money and so that they're
Speaker 1: not to beholden to one of these tech giants. But
Speaker 1: there are a number of people who don't use Patreon
Speaker 1: or don't charge fans in any way. And I think
Speaker 1: one of the keys for Patreon is getting more of
Speaker 1: those people to use it. That can be you know,
Speaker 1: there's a desire I think have some of these A
Speaker 1: list celebrities thinking about using Patreon, But some of those
Speaker 1: those celebrities are are still uncomfortable with the idea of
Speaker 1: asking fans for direct donations. You know, there's a difference
Speaker 1: between Will Smith asking people to pay him five dollars
Speaker 1: a month and some YouTuber. If the average person knows
Speaker 1: that Will Smith has a lot of money and might
Speaker 1: not like that idea. But Patreon wants more people to
Speaker 1: get over some of that concern because that's that's really
Speaker 1: a key to their business. Everybody can just be asking
Speaker 1: for money for anything. Um So, which, how does how
Speaker 1: do investors feel when Patreon asked them for money? It
Speaker 1: seems right now pretty good. I mean Patreon went from
Speaker 1: being worth one point two billion in September of last
Speaker 1: year to being worth more more than four billion just
Speaker 1: a few months ago, so they more than tripled in
Speaker 1: less than a year. That is certainly tied up in
Speaker 1: this this rush around the creator economy and what the
Speaker 1: pandemic has wrought. You know, it's hard to know how
Speaker 1: you know, if this is a case where people just
Speaker 1: got over enthusiastic or not um but there is just
Speaker 1: a ton of money flooding into this space. There third
Speaker 1: party estimates saying that the creator economy is now at
Speaker 1: twenty billion dollar business, maybe even more than that. Uh
Speaker 1: and and Jack County at least feels good enough that
Speaker 1: he says he's not selling uh and and his he's
Speaker 1: not spacking his desires to go public in a more
Speaker 1: traditional way. Okay, more fun question. In doing your research
Speaker 1: on on Patreon, what were your favorite UH causes that
Speaker 1: you that you either found and discovered or you know,
Speaker 1: old favorites. You know, the biggest category this is this,
Speaker 1: I apologize because this might not be the kind of
Speaker 1: the fund quirky answer you're looking for, But the biggest
Speaker 1: category to me that feels like it really works on
Speaker 1: Patreon is podcasting, because that's that's an industry that is
Speaker 1: almost entirely ad supported. The ad market is still is growing,
Speaker 1: but still relatively small, and you have these people who
Speaker 1: host the shows and their fans feel a strong personal
Speaker 1: connection with it, and so there is. I think there's
Speaker 1: there's a willingness to contribute and fund and so a
Speaker 1: lot of these podcasters can make as much, if not
Speaker 1: more money from Patreon than they would from the traditional
Speaker 1: podcast marketplace. And I think that's one of the keys
Speaker 1: to this is you look across the Internet and a
Speaker 1: lot of the kind of the creators are making money
Speaker 1: off relatively low CPM kind of call or just low
Speaker 1: rate advertising. YouTubers, you can only make it if you
Speaker 1: reach a lot of money, if you reach huge scale.
Speaker 1: Same podcasting, You've got this whole middle class of creator
Speaker 1: that really needs support from their fans to make it work.
Speaker 1: Um and and podcasting is one I think Patreon has
Speaker 1: just had a ton of success. Yeah, and certainly an
Speaker 1: alternative to the model that's out there when it comes
Speaker 1: to podcast. Imagine, like the key to the new middle
Speaker 1: class is just asking for money. Like it's actually kind
Speaker 1: of jeeus. Like you can see it. You know, if
Speaker 1: you could facilitate this, and all you needed to do
Speaker 1: is be able to you know, hey, subscribe and actually
Speaker 1: have like you know, a way to actually facilitate that.
Speaker 1: It's it's there's hope, there's hope. I know what we're
Speaker 1: all going to be doing later on I don't know, Carol,
Speaker 1: I gotta reminds me the fact that nobody's tipped to
Speaker 1: yet on Twitter, Carol, that hasn't happened. All Right, we
Speaker 1: gotta run. Lukashaw check it out his story and the
Speaker 1: upcoming issue Bloomberg Business Week, Entertainment reporter of Bloomberg News.
Speaker 1: This is the Big Take, the best of Bloomberg's in
Speaker 1: depth original reporting from around the globe. Well, we have
Speaker 1: to make sure we do. As the Economy covers, is
Speaker 1: what cup The data kind of broken down a bit.
Speaker 1: It's fun to becoming more and more expensive, maybe looking
Speaker 1: at for fifteen billion dollars for the entry levels. There's
Speaker 1: been ways of immigration that have faced a lot of resistance,
Speaker 1: a lot of color behind the scenes in a great
Speaker 1: untold story. How did Bezos really come out on top?
Speaker 1: As the cover says, Jeff wins, he always seems to
Speaker 1: win the Big Take on Bloomberg Radio. You are listening
Speaker 1: to Bloomberg Business Week Carl Master along with Tim Stenovik
Speaker 1: at Bloomberg Headquarters in New York City. So the Bloomberg
Speaker 1: Big Take. It's also the most read story on the
Speaker 1: Bloomberg Today it is about the Wall Street Titans warnings
Speaker 1: of the next big risks for investors. So our Bloomberg
Speaker 1: News Wall Street reporter Shinelli Boss she caught up with
Speaker 1: the founder of our investment Management, Kathy Would. She talked
Speaker 1: with the chief economic advisor of Alians at Bloomberg pinion
Speaker 1: contributor Muhammad al Aaron, and also Googenham Investments chairman Scott Minors.
Speaker 1: So let's kick things off and see what some of
Speaker 1: them had to say. Let's start with our investment CEO
Speaker 1: Cathy Wood. She says, not inflation, but deflation. That's her
Speaker 1: biggest concern. There are companies who thought the world would
Speaker 1: never change and have been catering to short term shareholders
Speaker 1: who wanted that extra penny or two in earnings and
Speaker 1: so got it by having the company's leverage up and
Speaker 1: take more debt and shrink the number of shares UH.
Speaker 1: And they've also been um focused on dividends. UH. They
Speaker 1: are probably settled with products and services that will become
Speaker 1: obsolete because of the record breaking amount of innovation taking
Speaker 1: place today, and in order to service their debt, they
Speaker 1: are going to have to cut price, says UH, and
Speaker 1: move those Uh, those goods and services that are on
Speaker 1: their way out anyway. So I am concerned about that,
Speaker 1: and I think there's going to be a lot of
Speaker 1: confusion around it as well. That's our investment CEO Cathy
Speaker 1: would on the risks she sees from deflation now onto
Speaker 1: our next risk. In the view from Guggenheim Chairman and
Speaker 1: chief Investment Officers, Scott Minored, when it comes to risks
Speaker 1: for the global financial system, his main concern is tied
Speaker 1: to hackers targeting global payments systems. Let's take the thing
Speaker 1: that bothers me about something like the global payment system
Speaker 1: is I don't think anyone's focused on it. And this
Speaker 1: really takes a high degree of international cooperation. It takes
Speaker 1: a real macro look, meaning there needs to be somebody
Speaker 1: or some group of people who who are looking at
Speaker 1: how everything interconnects and and where the potential vulnerabilities are.
Speaker 1: I think there's stage um this is in the world
Speaker 1: of the unthinkable, and so therefore, um, you know, I've
Speaker 1: used this phrase before. There's a cognitive dissidence around it,
Speaker 1: which is to talk about this idea. The consequences are
Speaker 1: so dire that immediately people just sort of moved on
Speaker 1: to say, well, that will never happen, right, and so
Speaker 1: it's uh, I think there's there's a real vulnerability that
Speaker 1: would certainly freak out the world in the markets. That
Speaker 1: of course with Koggenheim chairman and chief investment officers Scott
Speaker 1: married right, we talk about security, especially when it comes
Speaker 1: to our financial world. Yeah, all of these so diverse
Speaker 1: with what their big risks are exactly. All Right, lastly,
Speaker 1: let's see what's concerning and on the mind of Alian's
Speaker 1: economic advisor, Bloomberg opinion columnist at Muhammad al Arian. When
Speaker 1: it comes to long term risks for global markets, Arian says,
Speaker 1: rising inequality. That's really his primary concern. I think the
Speaker 1: thing that worries me to most is inequality, both within
Speaker 1: and across countries. And it's something that the financial markets
Speaker 1: puts aside as a social problem, not really an economic
Speaker 1: or financial problem, and we risk seeing the issue of
Speaker 1: inequality gather momentum. COVID has already been the great unequalizer,
Speaker 1: but rather than go back to where we've come from,
Speaker 1: we are now creating the dynamics inequality to worsen and
Speaker 1: to assume greater importance in disrupting all sorts of things
Speaker 1: in our society. But the one thing that worries me
Speaker 1: even more than that, and I'm already worried about income,
Speaker 1: and what's inequality is the inequality of opportunity. We know
Speaker 1: what COVID did to people who had no WiFi at home,
Speaker 1: who had no computers. We know that school districts, public schools, listen,
Speaker 1: lost touch with a lot of their students. And these
Speaker 1: students risk not only becoming unemployed, but unemployable, which means
Speaker 1: a lost generation of young people. And that, of course,
Speaker 1: was a Mohammad l Arian. He's Alliance's economic advisor. He's
Speaker 1: also a Bloomberg opinion columnist. And you can get more
Speaker 1: on all of this to another risks facing the market side.
Speaker 1: It's a big take. It's on the Bloomberg terminal at
Speaker 1: Bloomberg dot com, so check it out. Some really thoughtful ideas,
Speaker 1: really thoughtful, and also each one is so different. It
Speaker 1: is I thought, it's really fascinating, and we're going to
Speaker 1: talk about this through you know, throughout the when our
Speaker 1: Bloomberg TV friends join us a little after the close
Speaker 1: of trading to call it beyond the Bell. Beyond the Bell.
Speaker 1: I know, oh, I know, but the idea of what
Speaker 1: Cathy Wood is talking about, because there's so much concern
Speaker 1: about inflation right now, and she's saying, no, that is
Speaker 1: not what you have to be concerned about. Deflation is
Speaker 1: what's going to happen, and it's going to be caused
Speaker 1: by these disruptive companies, and of course disruptive companies that
Speaker 1: she's invested in. I think it's fascinating because a lot
Speaker 1: of things are changing how we do it. Think about
Speaker 1: the pandemic, and healthcare has been one of those areas
Speaker 1: that's been slow to change. We know it. We still
Speaker 1: have to fill out for you know, we all talked
Speaker 1: about this massive man database. We're concerned about privacy. I
Speaker 1: get it, But during the pandemic, things in terms of
Speaker 1: the medical world took a big step forward in terms
Speaker 1: of embracing the virtual world. Yeah, I mean I still
Speaker 1: can't get those you know, rapid COVID tests, but that
Speaker 1: supply chain problems, the inequality, inequalities though around the world,
Speaker 1: it's something we hear from global central bankers, it's something
Speaker 1: we hear from global leaders. That's a big problem because
Speaker 1: we have seen in the pandemic again exacerbated that that
Speaker 1: people are not sharing in in the wealth creation equally
Speaker 1: around the globe, and what happens if that doesn't if
Speaker 1: it continues to get worse, it turns into this cycle
Speaker 1: as l Arian was describing, where people cannot actually improve
Speaker 1: their own stations in life, and they cannot pull themselves
Speaker 1: up by their bootstraps, as you know, many had hoped
Speaker 1: would happen in developing markets. And he said, you know too,
Speaker 1: when it comes to consumption and economic growth. He writes
Speaker 1: that the rich capture more income and more wealth, they
Speaker 1: spend less of it, and that the poor tend to
Speaker 1: consume more. And so how does this all trickle down
Speaker 1: essentially in turn of momentum, if you will, in growth
Speaker 1: around the world. So I guess we'll have to see.
Speaker 1: We're gonna talk a little bit more about this. But
Speaker 1: I love when we can get these kind of big
Speaker 1: macro conversations three different people and see what's on their
Speaker 1: minds and what's got mind said to about security and hacking.
Speaker 1: It's a huge time and I think it just becomes
Speaker 1: a bigger and bigger concern going forward. Again. Check that
Speaker 1: out at Bloomberg dot com. I'm roc yeah, but you
Speaker 1: let me drive. Oh no, no, no, no, this is
Speaker 1: not a toy home, all right, please, I'll do the
Speaker 1: right gravels I want to dry. It's good question, good drive.
Speaker 1: This is the Drive to the Clothes on Bloomberg Radio.
Speaker 1: Listen to you. Just about ten minutes left in today's
Speaker 1: trading session. We are definitely off our best levels of
Speaker 1: the session. Taking another lay down in the last I
Speaker 1: would say about half an hour or so, one point
Speaker 1: four percent lower on the DAD would start from Charlie,
Speaker 1: the biggest decline on a percentage basis, and the SMP
Speaker 1: still down about nine tents of NAZAC just down about
Speaker 1: two tents of percent. So let's get to it. Drive
Speaker 1: to the Clothes with Jana. Janna Barton is equity portfolio
Speaker 1: manager and Director of Specialty Solutions at Eaton Vance, and
Speaker 1: she joins us once again on the phone from Boston. Janna,
Speaker 1: great to have you back on the show with us.
Speaker 1: Here we are end of the quarter, end of the month.
Speaker 1: This is the first mixed quarter and eight for u
Speaker 1: S stocks, the first down month on the SP five
Speaker 1: since January. Help us look backward but also look forward.
Speaker 1: Good afternoon. I seem to have quite timing with you
Speaker 1: guys every time out on the air. It's like a
Speaker 1: sea of red. But let's see if we can turn
Speaker 1: this around. Um, I think you know the most important
Speaker 1: thing is Q three is almost in the books, as
Speaker 1: you said, in volatility, and these mini rotations seem to
Speaker 1: be the only constant we've got vixed up almost this
Speaker 1: quarter you had a bit of a reversal from here.
Speaker 1: Today you've got growth leading a little bit. You had
Speaker 1: a little bit for everyone. Financials were, defensives are up
Speaker 1: um and a mix of everything else. I think the
Speaker 1: most important takeaway is one short term is murkye. You
Speaker 1: got to think long term as an investor, not a trader.
Speaker 1: And that's when it becomes apparent that equities, particularly US equities,
Speaker 1: remain the place to be. That you have to always
Speaker 1: be long term. Yes you do, that's how you make money.
Speaker 1: But I do wonder, But I do also wonder. And
Speaker 1: I know, you know, we all talk about you can't
Speaker 1: time the market and so and so forth, But there
Speaker 1: is a point do you think that it makes sense
Speaker 1: as an investor to maybe say, all right, if I
Speaker 1: look at the S and P five hundred so far
Speaker 1: this year, let me just pull it up on the
Speaker 1: Bloomberg we're up fift we were up a little bit
Speaker 1: more before the decline that we saw in September. Do
Speaker 1: I say not a bad year? Uh, and just say
Speaker 1: I can take some money off the table in case
Speaker 1: there's some pullback, just even on valuation concerns. Um, What
Speaker 1: do you say to investors who must pose that argument
Speaker 1: to you at some point? I think, Carol, you bring
Speaker 1: up a really fair point, which is the fact of
Speaker 1: the matter is nine months. Uh. Here we are nine
Speaker 1: months out of twelve, when we've already done what usually
Speaker 1: SMP does in a matter of twelve months. In fact,
Speaker 1: you're probably ahead of the long term average of ten
Speaker 1: percentage points or so. That being said, I think there's
Speaker 1: still value in the market. How do you assess value?
Speaker 1: I think you look at earnings yield, which is the
Speaker 1: inverse of what we're expecting, uh, in terms of profitability
Speaker 1: for SMP five constituents, and that's nearing five percentage points
Speaker 1: cash flow yield in excess of four percent. Why is
Speaker 1: that important? Well, all eyes are on ten year treasuries
Speaker 1: that are at one point five percent, which means you're
Speaker 1: if you're in fixed income instruments, your real rate of
Speaker 1: return is negative with inflationary pressures. UM, you know, certainly
Speaker 1: passing through two percent and higher. So you look at
Speaker 1: value and you are absolutely correct. Valuations a stretch, which
Speaker 1: is why you have to go to areas of the
Speaker 1: market that have lagged or are selling at a discount.
Speaker 1: And there's plenty of that. Okay, Well, let's talk about
Speaker 1: those areas the market. What are some areas of the
Speaker 1: market to keep an eye on those that you say
Speaker 1: have lagged UM. Healthcare continues to be an area of
Speaker 1: the market that I think is an opportunity, particularly for
Speaker 1: those looking for the next year. Again, it lagged the
Speaker 1: market by about two and forty basis points here to date,
Speaker 1: it's trading at about sixteen point eight times, which is
Speaker 1: nearly discount. You've got earnings and revenue growth, and you
Speaker 1: have a really nice hybrid exposure of defense with pharma
Speaker 1: and growthier errors of the market like healthcare equipment and supplies,
Speaker 1: which will should do well irrespective of the backdrop on
Speaker 1: the macro level. Well, it's interesting that you say that.
Speaker 1: I'm going to probably bring this up in our discussion
Speaker 1: with our TV colleagues in just a few minutes, but
Speaker 1: healthcare stocks are Bailey lipshelts putting out and say they're
Speaker 1: on pace for the worst months since the pandemic began
Speaker 1: back in February. So we have seen a pullback in
Speaker 1: these names in a big way. So healthcare, what what else?
Speaker 1: What do you say to the big tech argument? There's
Speaker 1: been concerns as rates go higher, worries about future cash
Speaker 1: flow at these peese. You know they're already trading on
Speaker 1: you know what we get from them, uh in the future.
Speaker 1: Having said that we are increasingly a big tech economy,
Speaker 1: great point. I think the fact is, well, tech is
Speaker 1: a percentage of the overall market, is now the biggest
Speaker 1: slice of the pie, and excess of thirty percentage points.
Speaker 1: The fact is it's it's heading higher. And I think
Speaker 1: when people talk about tech, they sort of do it
Speaker 1: in homogeneous form. But there's so many dimensions to tech,
Speaker 1: right even when we talk about software, security, the enablement
Speaker 1: of this digital world that we find ourselves in. I
Speaker 1: think the fact that networking, five G, cloud computing, cybersecurity, semiconductors,
Speaker 1: they will remain a key solution to the world that
Speaker 1: we will be living in five to ten years from today.
Speaker 1: So to me, I would say it remains an area
Speaker 1: of focus, particularly for long term oriented investor that has
Speaker 1: seen the sector underperform multi both have compressed, particularly within
Speaker 1: the hardware equipment area. I think it's an opportunity inflation
Speaker 1: transient in some parts, and someone will be with us
Speaker 1: for a while. Okay, expand on that, where do you
Speaker 1: think it will be with us for a while? I
Speaker 1: think wage inflation obviously is a I do. I mean,
Speaker 1: you know, once you give somebody raise, you can't really
Speaker 1: take it from them. And you've got the big guys
Speaker 1: like the Amazons that are paving the wave for I
Speaker 1: see that, But I also see you know, Apple offering
Speaker 1: thousand dollar bonuses and those are one time bonuses that
Speaker 1: don't necessarily come back, right, Yeah, good point. I think
Speaker 1: there will be pockets of sort of transitory and it
Speaker 1: depends on what your time frame is, you know. I
Speaker 1: think if it's within three or six months, then I
Speaker 1: think most of the things that we're living with will
Speaker 1: be with us for a while. If it's longer than that,
Speaker 1: I think you'll have a full cycle to kind of
Speaker 1: digest and readjust where you are. Sort of long term
Speaker 1: average has been um But I bring up the other
Speaker 1: side of the equation, which is I'm sure you guys
Speaker 1: have talked quite a bit about which are the supply
Speaker 1: chain issues right right? Um, things that unfortunately even the
Speaker 1: corporates are telling us are not just a two issue.
Speaker 1: They will be with us for three and perhaps beyond
Speaker 1: that that's a little bit longer term and not so
Speaker 1: transitory or longer transitory if you can even say that.
Speaker 1: Jana Barton, thanks so much, really uh good to get
Speaker 1: some time with you, Equity portfolio manager, director of Specialty
Speaker 1: Solutions at EAT Advance on the phone from Boston. And
Speaker 1: that's going to be I think a big issue, the
Speaker 1: supply chain issues. We saw, you know, China looking to
Speaker 1: acquire energy at at any cost, essentially to make sure
Speaker 1: that they've got what they need for their citizens and
Speaker 1: to be able to manufacture and do other things. You
Speaker 1: do wonder the fight for commodities is that what we're
Speaker 1: going to be facing for some years, fight for lots
Speaker 1: of things and how does that play out and what
Speaker 1: we see in terms of goods and services, I mean,
Speaker 1: look no further than the problems that Nike's facing back
Speaker 1: more same it in the retail stories today. Thanks for
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