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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along

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Speaker 1: with my co host of Bonnie Quinn. Every business day

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Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,

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Speaker 1: along with essential market moving news. Find the Bloomberg Markets

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Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,

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Speaker 1: and on Bloomberg dot com. Well, it's clear that the

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Speaker 1: pandemic has changed consumer behaviors. It's changed how businesses conduct

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Speaker 1: their business. Uh, that's very much the case in the

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Speaker 1: residential real estate market. So to get some more color

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Speaker 1: on that, we welcome Cheryl Palmer, chairman and chief executive

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Speaker 1: officer of Tayla Marlin Marrison. Taylor Marson is the fifth

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Speaker 1: largest home builder and developer in the United States. Joints

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Speaker 1: us on the phone from Scottsdale. Cheryl, thanks so much

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Speaker 1: for joining us here. I know your company has been

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Speaker 1: moving more towards virtual sales of residential real estate. So

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Speaker 1: this pandemic, I'm guessing as accelerated that process. Talk to

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Speaker 1: us about kind of how your business is changing. Good morning.

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Speaker 1: Thank you for having me. Of course. You know, um,

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Speaker 1: I call it the silver lining of COVID that you know,

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Speaker 1: our industry has really had to make some adjustments on

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Speaker 1: how we communicate. We've we've you know, always been known

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Speaker 1: for being a little kind of archaic and the way

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Speaker 1: we build houses. But I think the first step was

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Speaker 1: really how we market and interact with consumers the way

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Speaker 1: they want to be interacted with. So you're absolutely right.

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Speaker 1: When the pandemic started and everybody went home and we

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Speaker 1: had to generally lock our sales office doors and put

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Speaker 1: safety protocols in, we had to, you know, communicate with

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Speaker 1: our buyers differently. And we had introduced a new website

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Speaker 1: late last year that had an infrastructure with the intentions

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Speaker 1: of really creating a virtual environment. And so what we've

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Speaker 1: seen is the consumer really just loved this virtual environment.

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Speaker 1: In fact, we introduced I think it was early April,

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Speaker 1: we introduced this online of apointment system, and our customers

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Speaker 1: could schedule an appointment to either come in and meet

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Speaker 1: with someone privately and get a private tour, or they

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Speaker 1: could schedule an appointment to be walked through a virtual

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Speaker 1: three D tour of our homes or maybe just to talk.

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Speaker 1: We found about eight percent of the customers still wanted

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Speaker 1: to come in for that private tour, but many did not,

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Speaker 1: and UM since then, we've introduced self guided tours so

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Speaker 1: they could you walk into one of our inventory homes.

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Speaker 1: We've introduced an online reservation system where they can just

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Speaker 1: hold a house and then you know, go directly to contract.

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Speaker 1: It's been tremendous. We've had probably in the last eight

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Speaker 1: ten weeks UM, something like two fifty sales without a

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Speaker 1: customer ever walking in the sales office. And your months

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Speaker 1: of June was your best months ever. You sold sev

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Speaker 1: hundred and fifteen homes, So congratulations on that. I'm looking

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Speaker 1: at your website and there really is a huge variety,

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Speaker 1: starting in the two thirties range and going right up

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Speaker 1: to you know, even past half a million dollars in

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Speaker 1: some areas of Arizona. What about prices though, in general?

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Speaker 1: Have they been dropping during the pandemic. I would tell

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Speaker 1: you that if you were to go back to late

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Speaker 1: March early April, everybody was speaking to understand what was

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Speaker 1: going to happen with the consumers, you know, kind of mindset,

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Speaker 1: what was going to happen with jobs, and I would

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Speaker 1: tell you there was a freeze on prices. I don't

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Speaker 1: think because the inventory has always been so tight coming

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Speaker 1: into the pandemic and even tighter today. I don't think

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Speaker 1: you saw this tremendous dropping prices at all. I mean,

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Speaker 1: you had situations, you could have had a close out,

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Speaker 1: things that have been very typical to the industry. But

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Speaker 1: in total, I'd say no prices have held, and if anything,

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Speaker 1: over the last many weeks, I would tell you that

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Speaker 1: there's been very thoughtful price increases going on across the industry.

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Speaker 1: But once again, you have to remember that we are

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Speaker 1: sitting at very very low inventories in both the resell

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Speaker 1: and the new home market, and I think as you

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Speaker 1: look at kind of the way the consumers thinking about

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Speaker 1: the relationship with the home, we've really started to see

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Speaker 1: a bias to new We've seen that. You know, there's

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Speaker 1: a lot of reasons why people are moving today, right

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Speaker 1: It could be because they need more rooms, they need

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Speaker 1: more office space, really around wellness features, um and so

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Speaker 1: it's it has helped, it has kept prices pretty healthy.

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Speaker 1: Sure are you seeing you know, the phenomena we've seen

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Speaker 1: or heard about a right about since the pandemic is

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Speaker 1: a kind of a de urbanization move, and you know,

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Speaker 1: as people try to get to a less dense living environment.

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Speaker 1: Do you think that it's a longer term trend or

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Speaker 1: maybe just a short term effect from the pandemic. It's

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Speaker 1: such an important question, and it's some that's gotten a

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Speaker 1: question that's gotten a lot of kind of i'd say

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Speaker 1: chatter over the last um, you know, ten twelve weeks.

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Speaker 1: Interestingly enough, I would tell you at the beginning it

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Speaker 1: was just that it was a lot of talk. Um.

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Speaker 1: We UM do a lot of research and talking to

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Speaker 1: our buyers are shoppers that are walking in the door,

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Speaker 1: the folks that are coming on through our website, and

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Speaker 1: we've been doing that every week since this started. And

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Speaker 1: for the first time, I would tell you that we

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Speaker 1: are seeing in our buyer data, UM this I don't

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Speaker 1: want to call it a flight to rural or suburban,

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Speaker 1: but we're absolutely seeing those numbers rise. And I think

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Speaker 1: what you're really seeing is that people are thinking about

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Speaker 1: being able to work home and not having to do

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Speaker 1: those commutes. I'm being able to buy and you know,

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Speaker 1: look at the difference in what happens to prices as

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Speaker 1: you move out into kind of the suburban market. Um,

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Speaker 1: we are seeing a lot more interest and a lot

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Speaker 1: of interest as people are in that shopping mode as well.

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Speaker 1: It's not just for single family I think that, um,

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Speaker 1: that's probably going to be the beneficiary. But we're seeing

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Speaker 1: a lot of interest around town homes as well. UM,

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Speaker 1: but yeah, not not kind of in the central core, Cheryl,

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Speaker 1: we have to leave it there, but a pleasure to

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Speaker 1: speak with you. Cheryl Homer is chairman and CEO of

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Speaker 1: Taylor Morrison based in Scottsdale, Arizona, but with a presence

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Speaker 1: in many many states, primarily Arizona and California and Colorado, Florida,

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Speaker 1: but also in sort of the more north states like Oregon,

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Speaker 1: and then some of the southeastern states as well. We

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Speaker 1: have Washington in there and some really beautiful homes on

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Speaker 1: this website. Poll you could get someft in very easily.

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Speaker 1: I got plenty of real estate right now, the fifth

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Speaker 1: largest home builder in the United States. So what exactly

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Speaker 1: is going on in bond markets here in the United States?

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Speaker 1: If you give your money away to the US government

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Speaker 1: for ten years, you get sixty basis points right now,

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Speaker 1: which doesn't seem like a whole lot. Let's bring in

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Speaker 1: someone who's been working in the field for a long time,

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Speaker 1: Tim Vogel and Financial Couple Markets, and he joins us

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Speaker 1: from Memphis, Tennessee. Of course, f h N is a

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Speaker 1: national fixed income dealer, as we all know, Jim, are

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Speaker 1: you board right now? Let's just let's just be blunt

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Speaker 1: about it. Are there interesting moves in the bond markets

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Speaker 1: right now? Are you just waiting for the Fed to

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Speaker 1: start getting out of the way so that you know,

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Speaker 1: other buyers have influence again, Well, this week has been

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Speaker 1: interesting because as we came into the third quarter, people

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Speaker 1: were concerned that we may not see demanded treasury auctions

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Speaker 1: to finance all the stimulus spending. Instead, we have seen

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Speaker 1: an excellent response to the treasury supply, even as it

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Speaker 1: grows every single month, and that's translated into lower interest

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Speaker 1: rates because the fear of supply is diminished. So, Jim,

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Speaker 1: let's talk about the FED here. Um, you know the

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Speaker 1: phrase I'd like to use in people listening kind of know,

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Speaker 1: this is the FEDS kind of back stopping the market here.

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Speaker 1: How long do you think they can continue to do that?

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Speaker 1: Two to three years? Well? Yes, Um, they've got a

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Speaker 1: proven track record of managing expectations that long. And there's

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Speaker 1: going to be a long period of time before people

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Speaker 1: are convinced that the economic we can recover to the

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Speaker 1: point that inflation is going to return and send rates

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Speaker 1: up from obviously low levels. Yeah. I mean it's interesting

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Speaker 1: the Fed literally, with its with its forecast, has you know,

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Speaker 1: sort of hinted it to to three years, if not

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Speaker 1: explicitly outright said it. But it will only take for

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Speaker 1: the market to get a whiff of inflation at some point,

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Speaker 1: if you get you know, a few more gang blusters,

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Speaker 1: jobs numbers or what have you, for the curve to

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Speaker 1: steep in quite sharply again, right, Jim, have you seen

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Speaker 1: this before? Is it an actual risk? Absolutely? Uh? Curve

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Speaker 1: steeping in? Is the question really for the next at

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Speaker 1: least the next six months, if not for uh, an

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Speaker 1: extended period in which is why it's so interesting that

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Speaker 1: this week we absorbed the long part of the treasury supply.

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Speaker 1: Their treasuries were sort of left um by the side

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Speaker 1: of the road during the stock market um excitement during

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Speaker 1: the second quarter, and now treasuries aren't necessarily rebounding, but

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Speaker 1: they're certainly getting a lot more attention than they did

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Speaker 1: over the previous two months. Such where you know, right now,

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Speaker 1: given where we stand, given kind of the economic outlook,

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Speaker 1: given some of the uncertainties about some of these states

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Speaker 1: that are seeing a surge in cases. Where do you

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Speaker 1: see value or opportunity in the fixing come markets today? Uh,

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Speaker 1: you have to pay very careful attention and try to

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Speaker 1: find the best corporate bonds that you can. If you

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Speaker 1: are trying to produce a little bit extra yield, you've

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Speaker 1: got to consider lower cupon mortgage backed securities. But then

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Speaker 1: in terms of the all important yield curve strategy, all

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Speaker 1: of our work this week that tested different scenarios suggested

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Speaker 1: that concentrating around the seven year, it's a great place

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Speaker 1: for an awful lot of intermediate bond portfolios to concentrate

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Speaker 1: around the seven year. That's interesting, Well, who who would

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Speaker 1: they be hoped us about flows? Brian Shapata had a

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Speaker 1: nice column today about pension funds, and you know how

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Speaker 1: it's conceivable that they could actually sort of do to

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Speaker 1: debt markets what they used to be able to do

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Speaker 1: or are able to do to equity markets, and that

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Speaker 1: has moved the market. Did you see it? What do

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Speaker 1: you make of that idea or what do you make

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Speaker 1: of that idea? Jim? Pension funds are critical, particularly at

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Speaker 1: the long end of the market. They are critical to

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Speaker 1: the credit um markets in terms of their demand there,

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Speaker 1: but in terms of current flows, the massive size away

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Speaker 1: from the FED is from households UH that have basically

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Speaker 1: put their their spare cash to the extent it's not

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Speaker 1: in stocks, into mutual real funds and into bank deposits.

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Speaker 1: The bank deposit growth, even taking out some of the

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Speaker 1: stimulus payments, et cetera, has been extraordinary this year, Jim.

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Speaker 1: You know, it's we're several months into this pandemic and

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Speaker 1: several months into the economic fallout from it. What's your

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Speaker 1: thought about credit quality? Are we're seeing We're going to

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Speaker 1: see the bank's report next week. You're gonna set aside

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Speaker 1: some more big reserves. But as you look across your portfolio,

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Speaker 1: are you starting to see some concerns as it relates

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Speaker 1: to credit quality? Not yet, because the big worry about

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Speaker 1: credit quality inter recession is that the taps get turned

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Speaker 1: off too quickly and so that it's really not a

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Speaker 1: credit problem, it's a liquidity problem, and that's certainly what

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Speaker 1: aggravated the financial crisis twelve years ago. Here we've got

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Speaker 1: plenty of liquidity thanks to the FED into those flows

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Speaker 1: that we've already talked about and so we will not

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Speaker 1: see the um the real credit problems outside specific industries

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Speaker 1: developed probably until early part of next year. So we'll

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Speaker 1: be looking for signs that credit might deteriorate. But right

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Speaker 1: now people have have banked, in effect, so much debt

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Speaker 1: on their balance sheet that they won't need to come

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Speaker 1: to market uh to to raise new funds unless they

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Speaker 1: unless the economy improves and they start spending those dollars again. Jim,

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Speaker 1: what coronavirus data do you watch to give you any

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Speaker 1: hint about what might happen in the treasury market. We

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Speaker 1: look very carefully at transmission rates by state. We look

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Speaker 1: very carefully at what we call real time mortality rates

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Speaker 1: and how they are shifting as Sun Belt states undergo

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Speaker 1: a tremendous increase in their cases. And the bond market

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Speaker 1: has been watching, in fact, a slower pace of COVID

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Speaker 1: nineteen statistics compared with the stock market that reacts every

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Speaker 1: single day to daily data. Unfortunately, from an economic perspect if,

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Speaker 1: daily data are just too erratic and have too many

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Speaker 1: reporting lags and errors to really be a dependable source

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Speaker 1: for what's happening in the bond market. So right here,

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Speaker 1: what are some sectors Jim May on the corporate side.

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Speaker 1: You're mentioned might as they go to the corporate side

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Speaker 1: to get some yield. There's some sectors that you find

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Speaker 1: attractive here. You've got to keep looking at the pharmaceuticals,

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Speaker 1: the obviously the tech sector never really needs cash, but

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Speaker 1: there's an awful lot of attractive paper out there. And

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Speaker 1: then you have to selectively look at lower rated industrials

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Speaker 1: when they get out of line with stock market performance.

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Speaker 1: So in particular, you want to try to take advantage

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Speaker 1: of wider credit spreads down the curve or down the

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Speaker 1: credit curve when stock market volatility rises. Well, it's always

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Speaker 1: a tutorial to speak with Jim Fola. I have to say, Jim,

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Speaker 1: thank you. How are things in Memphis? Very briefly, Uh,

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Speaker 1: quite well. Uh we had a spike, as many places

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Speaker 1: did in the South, um in recent weeks and that

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Speaker 1: appears to have leveled off. Thanks, We'll stay safe. Jim

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Speaker 1: Vogel is with f h N Financial Markets, and obviously

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Speaker 1: it's a primary dealer. Jim has been steeped in treasury

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Speaker 1: market activity for a little while now. Yeah, it's actually

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Speaker 1: it's great to speak speak to Jim and kind of

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Speaker 1: looking at he's saying, if you need yield here, you

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Speaker 1: might have to look on the corporate credit side, given

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Speaker 1: where treasury rates are. So we'll certainly pay attention to

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Speaker 1: that coming up. Balance of power with David Weston for

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Speaker 1: Vannie Quinn and Paul Sweeney, and this is Bloomberg. Well,

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Speaker 1: I guess the narrative about the pandemic right now is

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Speaker 1: one of trying to balance the medical risk of reopening

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Speaker 1: the economy with the economic risk of not reopening the economy,

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Speaker 1: and that's being played out across the country with varying effects.

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Speaker 1: Laurence Sour, Assistant Professor of Emergency Medicine that JOHNS Hopkins

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Speaker 1: uh School of Medicine, joins us on the phone. I

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Speaker 1: should note that the Bloomberg School of Public Health is

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Speaker 1: supported by Michael Bloomberg, founder Bloomberg LP and Bloomberg Philanthropies. Lauren,

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Speaker 1: thanks so much for joining us here. I think the conversation.

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Speaker 1: One of the more recent aspects of this conversation is

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Speaker 1: schools reopening schools in the fall. What do you think

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Speaker 1: as the most prudent um path there? Yeah, so there's

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Speaker 1: been a lot of conversation about schools and what it

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Speaker 1: means and the pros and cons of reopening. I think

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Speaker 1: everybody wants to see schools reopening, and we understand that

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Speaker 1: not being in school and and missing as much classroom

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Speaker 1: time as they have is going to be detrimental to

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Speaker 1: varying degrees to students and kids across the country and

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Speaker 1: truly across the world. The thing is, we have to

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Speaker 1: do it safely or else we'll just be back in

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Speaker 1: this situation and it'll be even more disruptive in a

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Speaker 1: few months or next years. So we have to take

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Speaker 1: the time of the summer to plan how to do

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Speaker 1: it safely. Our schools don't have a ton of resources already.

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Speaker 1: Um so the idea that they could bring in additional

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Speaker 1: resources to do all the things that are being asked

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Speaker 1: to them to bring kids back safely is really hard. Yeah.

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Speaker 1: I mean it strikes me that, I mean, one child

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Speaker 1: gets it and that's that's schooled one for for you know,

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Speaker 1: for a long time, right, Lauren. Yeah, I think we're

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Speaker 1: still trying to understand how it, how virus transmission happens

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Speaker 1: and kids and what it looks like. We know that

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Speaker 1: in general kids seem to have less severe disease um,

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Speaker 1: but we are still doing a lot of work on

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Speaker 1: how transmissibile it is and kids and how they spread

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Speaker 1: the virus. And we also have to think about the parents, UM,

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Speaker 1: and the teachers and the administrators in these schools and

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Speaker 1: how it could impact them if they have a sick

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Speaker 1: kid who maybe is in symptomatic asymptomatic and brings the

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Speaker 1: virus to school and then all of a sudden, all

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Speaker 1: your teachers are sick and several of your kids are sick,

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Speaker 1: and then their parents and their families get sick too. So, Lauren,

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Speaker 1: what's the latest thinking on second way? I mean, here

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Speaker 1: in the New York metropolitan area, I think we've generally

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Speaker 1: done a quite a good job, as well as the

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Speaker 1: Massachusetts even in Maryland and you're where where you are,

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Speaker 1: UM is there it is it still fair to think

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Speaker 1: about a second wave because I look what's happening in

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Speaker 1: California and Florida and Texas, and to me that is

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Speaker 1: not so much as a second wave but almost their

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Speaker 1: first wave quite frankly, So, how how did you think

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Speaker 1: about that? Yeah? I completely agree with you. I think

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Speaker 1: most places we're not feeling like we're out of the

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Speaker 1: first wave. I think there's been a lot of talk

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Speaker 1: about second wave. Um, But when we're seeing six cases

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Speaker 1: or more across the country, UM, you know, and having

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Speaker 1: our our repeatedly having our our largest days of increased cases, UM,

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Speaker 1: it's hard to think about that as a second wave. Uh.

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Speaker 1: I think there will be a second wave, but I

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Speaker 1: think we have to get to the end of the

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Speaker 1: first wave first, and I don't think we're there yet. Lauren,

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Speaker 1: what do you make of the idea that airborne particles

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Speaker 1: now should we looked at the w H O been

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Speaker 1: you know, refusing or at least not really taking it

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Speaker 1: up seriously, And there's a growing consensus now that perhaps

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Speaker 1: it should. Yeah. Several hundred scientists wrote a letter, I believe,

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Speaker 1: to the New York Times UM, indicating that they wanted

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Speaker 1: the WHO to take the role of airborne particles more

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Speaker 1: seriously in the spread of COVID nineteen. And I think

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Speaker 1: the guidance has changed a bit, and the w H

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Speaker 1: two is thinking has changed a bit. Um. We are

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Speaker 1: continually learning about the virus and how it spreads. I

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Speaker 1: still do believe that droplet transmission, so those bigger droplets

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Speaker 1: are what's driving the bulk of transmission. And I think

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Speaker 1: there is a role for aerosol transmission or airborne transmission.

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Speaker 1: But it's in specific circumstances like inside close quarters things

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Speaker 1: like singing or loud talking or yelling, UM, places where

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Speaker 1: the ventilation is not great. So there are specific circumstances

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Speaker 1: where those are going to be the drivers. Those are

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Speaker 1: that that airsol transmission is going to be the driver.

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Speaker 1: But it's those very specific circumstances. Lauren, you're just mentioning

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Speaker 1: the World Health organizations. How important is it that the

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Speaker 1: US is pulling out of the w h O. UM.

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Speaker 1: I hope that that it doesn't happen. I think it's

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Speaker 1: incredibly important to put resources towards making sure that it

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Speaker 1: doesn't happen and that we truly evaluate the impact of

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Speaker 1: a decision like that. UM. We will lose a lot

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Speaker 1: of access to a lot of international expertise, a lot

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Speaker 1: of international information, UM, global collaboration around the exact things

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Speaker 1: that we are having such a hard time handling here

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Speaker 1: in the US right now. UM. So it will impact

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Speaker 1: our ability to UH manage and understand the seasonal flu vaccines, UM,

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Speaker 1: the potential for COVID vaccines, UH, global therapeutic trials, all

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Speaker 1: of those things. UM. The w h O has a

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Speaker 1: very large role in and we support the w h O,

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Speaker 1: and we participate through our relationship with the WHO and

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Speaker 1: our role in the w h O. And so the

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Speaker 1: idea that we would pull out simply because of a

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Speaker 1: a disagreement on how this COVID nineteen response has been

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Speaker 1: managed by them is truly unbelievable and very very shortsighted. Basically, Lauren,

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Speaker 1: do you stop getting updates on not on the latest

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Speaker 1: science if you pull out of the w h O.

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Speaker 1: Or are they not obliged to sort of share it

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Speaker 1: with the world anyway, They are bliged to share it

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Speaker 1: with the world. But but, and we would receive that

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Speaker 1: information purely as a recipient, just like any UM anyone else.

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Speaker 1: But we currently have a role at the table in

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Speaker 1: decision making, in in primary information sharing and information gathering,

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Speaker 1: and supporting policy development, supporting operational response decisions and all

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Speaker 1: of those things. We would simply be on the receiving

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Speaker 1: end of the actions, not UM as an active and

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Speaker 1: willing participant and not as a you know, a global

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Speaker 1: public health authority. UM. So when you're not in the

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Speaker 1: beginning edge of that conversation, you have no say in

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Speaker 1: how the conversation plays out until you're at the end

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Speaker 1: of it. Wow, all right, Lauren, Thank you always learned

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Speaker 1: something new from our conversations. Lawrence Hower is Assistant Professor

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Speaker 1: of Emergency Medicine at Johns Hopkins School of Medicine, and

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Speaker 1: of course, the Bloomberg School of Public Health is supported

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Speaker 1: by Michaelaurd Bloomberg, founder of Bloomberg LP, Bloomberg Philanthropies, and

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Speaker 1: Bloomberg News. So, as Dave Wilson was telling us earlier,

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Speaker 1: Michael Batnik at ridholes Well Management talks about comparisons between

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Speaker 1: US tex stocks gains and the bubble twenty years ago.

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Speaker 1: I particularly want to bring this up with our next guest,

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Speaker 1: now is David Kat's, chief investment officer at Matrix Asset

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Speaker 1: Advisors with more than eight hundred million dollars in assets

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Speaker 1: under management. David, it is great to speak with you.

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Speaker 1: I know that one of your sort of areas of

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Speaker 1: expertise is the tech sector. You've obviously, you know, been

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Speaker 1: following that area in the melt up for for many years,

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Speaker 1: decades even, and and you did like some of those docks.

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Speaker 1: What do you make of the idea that we might

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Speaker 1: have a lot further to go. If you look at

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Speaker 1: comparisons between how the NASDAC one hundred sword in the

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Speaker 1: five years leading up to the March two thousand peak

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Speaker 1: and how it's it's been quote unquote soaring up to now. Yeah,

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Speaker 1: we would not look at that and say, oh, good,

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Speaker 1: you have five years and take comfort in the current

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Speaker 1: melt up because it ended hideously and it took ten

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Speaker 1: years for the Nattic to get back to break even.

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Speaker 1: Uh So, we think the market is going to be

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Speaker 1: higher over the next nine to twelve months, but we're

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Speaker 1: getting increasingly wary about the tech melt up right now,

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Speaker 1: and we would not be using the higher stock prices

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Speaker 1: every day as a signal to jump aboard. We think

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Speaker 1: best case, a lot of returns have already been made

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Speaker 1: in that area. We think that there are a lot

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Speaker 1: more risky in terms of the downside, and we do

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Speaker 1: think there are lots of the areas of the market

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Speaker 1: that have been left behind entirely by the recovery and

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Speaker 1: are selling a pretty attractive valuation. So you've got parts

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Speaker 1: of the market at thirty and forty times earnings and

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Speaker 1: then a lot of stock at ten and fifteen times

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Speaker 1: earnings that are paying three and four percent yields, So

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Speaker 1: we think investors should really focus on the the better businesses.

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Speaker 1: But at lower evaluations you went through the bond numbers

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Speaker 1: before interest rates or zero bonds are paying less than

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Speaker 1: a half percent. At some point getting three or four

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Speaker 1: percent dividends is going to be a really good thing,

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Speaker 1: all right. So David, what are some of those sectors

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Speaker 1: that you think have been left behind that might offer

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Speaker 1: some attractive return. So in terms of sectors, um, you know,

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Speaker 1: we have not like utilities for a very long time.

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Speaker 1: They've been an outlier, bad performer this year, so we've

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Speaker 1: really warmed up to them and we've been buying in

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Speaker 1: that group. We think you can buy select healthcare companies

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Speaker 1: like a CVS or Murk UH pretty attractive, select consumer staples.

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Speaker 1: We think that telecom companies like Verizon UH and A

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Speaker 1: T and T are very attractive. Also some media companies

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Speaker 1: like a Comcast or Viacom. So there are lots of

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Speaker 1: really good businesses out there. If you have a six

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Speaker 1: or twelve month time arizing, and all the businesses that

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Speaker 1: I mentioned are going to be able to get through

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Speaker 1: the COVID recession and very good form, have very good

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Speaker 1: balance sheets, and our survivors. You say that, David me

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Speaker 1: convert you with something a little devil's advocating if you like.

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Speaker 1: So those telecoms, for example, we all know that there

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Speaker 1: are problems right now and making content and in sort

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Speaker 1: of fighting with all of these other streaming services to

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Speaker 1: gain eyeballs. If covid hasn't sort of made that go

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Speaker 1: faster than I don't know what will. What are you

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Speaker 1: seeing across media and across telecom that makes you believe that, Yeah,

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00:24:25,640 --> 00:24:28,480
Speaker 1: the particular companies you mentioned are in a better spot

433
00:24:29,880 --> 00:24:34,159
Speaker 1: well in terms of Comcast. You know, while they have NBC,

434
00:24:34,400 --> 00:24:36,920
Speaker 1: they also provide the pipes into the house, so that

435
00:24:36,960 --> 00:24:40,200
Speaker 1: business is doing very very well. So they're very well

436
00:24:40,200 --> 00:24:45,040
Speaker 1: diversified their global h and as more people need the internet, uh,

437
00:24:45,080 --> 00:24:47,239
Speaker 1: and as more people are sitting at home looking for

438
00:24:47,280 --> 00:24:49,680
Speaker 1: something to watch on whether it's a TV or a

439
00:24:49,720 --> 00:24:53,639
Speaker 1: computer or your iPad. Uh, they're a net beneficiary. So

440
00:24:53,720 --> 00:24:57,160
Speaker 1: they've gone through this in very good form, have consistently

441
00:24:57,240 --> 00:25:01,400
Speaker 1: raised the dividend. We really like management there. Viacom is

442
00:25:01,400 --> 00:25:05,120
Speaker 1: is a little bit different insofar as uh, they are

443
00:25:05,200 --> 00:25:09,080
Speaker 1: a content producer and they've got a massive library in powamount. Uh.

444
00:25:09,119 --> 00:25:11,199
Speaker 1: You know, if you look at Netflix at sixty or

445
00:25:11,240 --> 00:25:13,800
Speaker 1: seventy or a hundred times earnings and at a two

446
00:25:14,760 --> 00:25:17,040
Speaker 1: billion market cap, and then you look at Viacom with

447
00:25:17,080 --> 00:25:21,080
Speaker 1: his massive content at a thirteen billion dollar market cap,

448
00:25:21,320 --> 00:25:23,760
Speaker 1: at some point something's going to be better for them.

449
00:25:24,119 --> 00:25:26,600
Speaker 1: They are doing quite well in terms of their earnings

450
00:25:26,600 --> 00:25:30,679
Speaker 1: and running the business. Uh. CBS is a very strong franchise. End.

451
00:25:31,000 --> 00:25:34,320
Speaker 1: You know, people are looking at content, whether it's over

452
00:25:34,359 --> 00:25:38,440
Speaker 1: the top, whether it's you know, linear or watching on television. Uh,

453
00:25:38,480 --> 00:25:41,200
Speaker 1: they are looking for content, and and six and a

454
00:25:41,200 --> 00:25:43,760
Speaker 1: half times earnings, you're not paying a lot for that.

455
00:25:44,760 --> 00:25:47,359
Speaker 1: So David, let's just switch gears real quickly to another

456
00:25:47,359 --> 00:25:50,080
Speaker 1: sector that has really been out of favor. Uh. And

457
00:25:50,240 --> 00:25:52,080
Speaker 1: that is kind of some of that energy patch. I'm

458
00:25:52,080 --> 00:25:53,720
Speaker 1: looking at w T I crude here. It's just about

459
00:25:53,760 --> 00:25:57,160
Speaker 1: forty dollars a barrel. Anything there that gets your attention.

460
00:25:58,560 --> 00:26:01,720
Speaker 1: So we have owned the energy and have been beaten

461
00:26:01,800 --> 00:26:04,520
Speaker 1: up pretty badly. We think from here, if you have

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00:26:04,640 --> 00:26:07,080
Speaker 1: a six to twelve month time horizon, that there's a

463
00:26:07,119 --> 00:26:10,479
Speaker 1: pretty good likelihood that when the economy recovers, oil prices

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00:26:10,480 --> 00:26:14,000
Speaker 1: will recover into those energy stocks will come back. Um.

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00:26:14,160 --> 00:26:17,159
Speaker 1: We try to stick to the highest quality energy company,

466
00:26:17,320 --> 00:26:21,600
Speaker 1: so CVX is absolutely committed to a very very healthy yield.

467
00:26:21,720 --> 00:26:26,399
Speaker 1: We think that stock could be higher. Schlumberge, which is

468
00:26:26,520 --> 00:26:31,399
Speaker 1: you know, the top quality driller out there, is going

469
00:26:31,480 --> 00:26:34,360
Speaker 1: to have pretty slow business, but they have revamped themselves.

470
00:26:34,440 --> 00:26:36,840
Speaker 1: They are going to be positive cash flow. They definitely

471
00:26:36,880 --> 00:26:39,600
Speaker 1: will be a survivor. And the stocks at seventeen and

472
00:26:39,680 --> 00:26:42,720
Speaker 1: a half, we think it ultimately goes to thirty or forty.

473
00:26:43,000 --> 00:26:46,600
Speaker 1: So it's a very out of favor group, but we

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00:26:46,640 --> 00:26:48,400
Speaker 1: think you're gonna make money if you can hold your

475
00:26:48,400 --> 00:26:50,040
Speaker 1: nose with it. There are other places that you can

476
00:26:50,080 --> 00:26:52,560
Speaker 1: get in the market with out that type of risk.

477
00:26:52,880 --> 00:26:55,040
Speaker 1: But we do think if you are looking at energy

478
00:26:55,080 --> 00:26:57,160
Speaker 1: and don't mind the risk, you'll do okay there as well.

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00:26:57,840 --> 00:27:00,119
Speaker 1: David Cats, thanks so much for joining us. David at

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00:27:00,200 --> 00:27:04,359
Speaker 1: the chief investment officer at Matrix Asset Advisors about eight

481
00:27:04,400 --> 00:27:08,000
Speaker 1: hundred million dollars in assets under management, getting his thoughts

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Speaker 1: on the market. Thanks for listening to the Bloomberg Markets podcast.

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00:27:12,400 --> 00:27:15,760
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts

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00:27:15,880 --> 00:27:19,440
Speaker 1: or whatever podcast platform you prefer. I'm Bonnie Quinn, I'm

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00:27:19,440 --> 00:27:22,080
Speaker 1: on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm

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00:27:22,080 --> 00:27:24,720
Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can

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00:27:24,760 --> 00:27:27,000
Speaker 1: always catch us worldwide at Bloomberg Radio