1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,560 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,640 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:21,840 Speaker 1: at Bloomberg dot com slash podcast. So, Matt, I've got 7 00:00:21,920 --> 00:00:25,480 Speaker 1: the one year chart for gold up on my Bloomberg 8 00:00:25,520 --> 00:00:27,800 Speaker 1: termo here and about a year ago a u x 9 00:00:27,840 --> 00:00:31,240 Speaker 1: AU currency x au absolutely uh, kind of started the 10 00:00:31,320 --> 00:00:34,280 Speaker 1: year around nineteen fifty announced and here we are down 11 00:00:34,360 --> 00:00:37,159 Speaker 1: just below eighteen hundred dollars announced, so you know a 12 00:00:37,159 --> 00:00:41,200 Speaker 1: little bit, you know, not really showing its performance there 13 00:00:41,440 --> 00:00:43,800 Speaker 1: and kind of wondering kind of what the sentiment is 14 00:00:43,880 --> 00:00:46,879 Speaker 1: out there for gold. Let's bring in Everett Milman, Precious 15 00:00:46,880 --> 00:00:52,800 Speaker 1: Metal Specialists for Gainesville Coins based in Gainesville, Florida. So Gainesville, 16 00:00:52,840 --> 00:00:56,080 Speaker 1: Florida is University of Florida, that's right in Florida state 17 00:00:56,120 --> 00:00:59,840 Speaker 1: is in Gallas, Tallahassee. Okay, I got it, um, Everett, 18 00:00:59,880 --> 00:01:02,840 Speaker 1: they switch for joining us here. What is the sentiment 19 00:01:02,920 --> 00:01:07,840 Speaker 1: for gold out there right now? I think we have 20 00:01:07,920 --> 00:01:10,120 Speaker 1: to admit that the sentiment in the gold market has 21 00:01:10,160 --> 00:01:13,520 Speaker 1: been fairly poor of late UM, and we've seen gold 22 00:01:13,600 --> 00:01:18,280 Speaker 1: function more as a fear and sentiment trade rather than 23 00:01:18,319 --> 00:01:22,240 Speaker 1: a truly reliable inflation hedge. As the prices are down 24 00:01:22,319 --> 00:01:24,880 Speaker 1: quite a bit ear date, and in that sense, we 25 00:01:24,920 --> 00:01:27,080 Speaker 1: can look at the gold price as a pretty good 26 00:01:27,120 --> 00:01:30,640 Speaker 1: gauge of of risk appetite UM. Gold has been sensitive 27 00:01:30,680 --> 00:01:34,760 Speaker 1: to recent economic data, so we saw a big rally 28 00:01:34,800 --> 00:01:37,480 Speaker 1: on the mists and last month's non farm payrolls, and 29 00:01:37,560 --> 00:01:40,440 Speaker 1: yet UM earlier this morning, with the surprise of the 30 00:01:40,520 --> 00:01:44,480 Speaker 1: upside and the Empire State manufacturing survey, we saw gold 31 00:01:44,560 --> 00:01:47,520 Speaker 1: pull back. So I think it's fair to say that 32 00:01:48,400 --> 00:01:50,920 Speaker 1: the gold market really has ignored some of the major 33 00:01:51,000 --> 00:01:55,360 Speaker 1: macro drivers like US China relations and the levels of 34 00:01:55,400 --> 00:01:58,520 Speaker 1: global debt that normally have an impact on price. Those 35 00:01:58,520 --> 00:02:02,080 Speaker 1: are really faded into the background during the third quarter, 36 00:02:02,240 --> 00:02:07,320 Speaker 1: and so long as risk appetite remains healthy, inequity markets UM. 37 00:02:07,360 --> 00:02:10,160 Speaker 1: I don't think big funds and retail investors will want 38 00:02:10,200 --> 00:02:14,120 Speaker 1: to incur the opportunity cost of holding a nonproductive asset 39 00:02:14,200 --> 00:02:16,720 Speaker 1: like gold. If economies are on the world do indeed 40 00:02:16,760 --> 00:02:21,760 Speaker 1: recover relatively smoothly, and that makes sense, you know. Otherwise, Ever, 41 00:02:21,880 --> 00:02:26,720 Speaker 1: if you look at UM rates this low, coupled with 42 00:02:27,000 --> 00:02:30,840 Speaker 1: trillions and trillions and trillions of dollars of spending, a 43 00:02:30,919 --> 00:02:34,440 Speaker 1: FED balance sheet doubling, and in the course of eighteen months, 44 00:02:34,480 --> 00:02:37,079 Speaker 1: you would think that gold just flies on that, right, 45 00:02:38,639 --> 00:02:41,440 Speaker 1: you would, You would um. Certainly the case of low 46 00:02:41,520 --> 00:02:45,320 Speaker 1: interest rates for longer is a positive narrative for gold um. 47 00:02:45,360 --> 00:02:47,800 Speaker 1: But it does seem that the broader markets have a 48 00:02:47,840 --> 00:02:51,520 Speaker 1: conviction that the FED will be successful and threading the 49 00:02:51,560 --> 00:02:57,360 Speaker 1: needle and nailing the goldilocks timing between UH tapering and 50 00:02:57,480 --> 00:03:00,200 Speaker 1: raising rates not too soon or not too late eights 51 00:03:00,800 --> 00:03:04,239 Speaker 1: UM and expecting the Federal Reserve to do so amid 52 00:03:04,280 --> 00:03:08,760 Speaker 1: the unprecedented economic shock of a global pandemic. That does 53 00:03:08,880 --> 00:03:12,200 Speaker 1: seem to be expecting a lot. But as we've seen 54 00:03:12,240 --> 00:03:15,200 Speaker 1: with gold not taking off and setting new highs, that 55 00:03:15,240 --> 00:03:18,520 Speaker 1: does seem to be. The expectation is that the FED 56 00:03:18,560 --> 00:03:23,239 Speaker 1: will navigate a soft landing of the situation and rates 57 00:03:23,320 --> 00:03:27,360 Speaker 1: will normalize, bond purchases will be tapered smoothly, and that 58 00:03:27,400 --> 00:03:30,000 Speaker 1: will make it out of this without a scratch. But 59 00:03:30,880 --> 00:03:34,000 Speaker 1: gold is always there, as that fear gage. As I 60 00:03:34,080 --> 00:03:37,040 Speaker 1: mentioned that if all of that doesn't go according to plan, 61 00:03:37,560 --> 00:03:41,160 Speaker 1: UM holding some gold does function as an insurance policy. 62 00:03:42,040 --> 00:03:44,560 Speaker 1: So every I'm also looking at, you know, other precious 63 00:03:44,560 --> 00:03:48,240 Speaker 1: metals like platinum and palladium, and they're down kind of 64 00:03:48,360 --> 00:03:51,880 Speaker 1: you know, thirteen fourteen, fifteen, sixteen percent year to date. 65 00:03:52,000 --> 00:03:54,920 Speaker 1: Is that is that simply a reflection of they're not 66 00:03:54,960 --> 00:03:57,960 Speaker 1: making as many cars because of all the various chip 67 00:03:57,960 --> 00:04:02,880 Speaker 1: shortages and whatnot. Yes, UM, we finally have seen prices 68 00:04:02,920 --> 00:04:06,360 Speaker 1: for used cars and rental cars cool off, and there 69 00:04:06,360 --> 00:04:10,760 Speaker 1: are some encouraging signs that micro chip manufacturers maybe on 70 00:04:10,800 --> 00:04:14,440 Speaker 1: the cusp of catching up with demand UM, but the 71 00:04:14,480 --> 00:04:18,040 Speaker 1: production stalls with the semiconductor shortage. That really was one 72 00:04:18,080 --> 00:04:21,560 Speaker 1: of the main reasons that we saw palladium and platinum 73 00:04:21,560 --> 00:04:26,240 Speaker 1: prices searched so high. UM. Now, with a potential surplus 74 00:04:26,279 --> 00:04:30,200 Speaker 1: in palladium later this year, UM, we are seeing that 75 00:04:30,680 --> 00:04:33,919 Speaker 1: swift pullback. UM. Palladium is looking to break a streak 76 00:04:34,000 --> 00:04:37,200 Speaker 1: of six consecutive trading days in the red UM, but 77 00:04:37,279 --> 00:04:42,040 Speaker 1: it's about thirty off its peak. UM really is all 78 00:04:42,080 --> 00:04:45,080 Speaker 1: dependent on automobile demand and the fact that that is 79 00:04:45,120 --> 00:04:48,960 Speaker 1: perhaps waning UM is weighing very heavily on those two metals. Well, 80 00:04:49,000 --> 00:04:51,760 Speaker 1: you know, I was just at the Munich Auto Show, Everett, 81 00:04:51,880 --> 00:04:54,440 Speaker 1: and it seemed to me when I was there as 82 00:04:54,480 --> 00:04:58,120 Speaker 1: if the CEOs various CEOs were jockeying for position when 83 00:04:58,160 --> 00:05:03,080 Speaker 1: it came to locking own supply of the materials necessary 84 00:05:03,160 --> 00:05:06,000 Speaker 1: for e vs for building electric vehicles. What what do 85 00:05:06,000 --> 00:05:08,280 Speaker 1: you think which commodities have the best are the most 86 00:05:08,360 --> 00:05:12,120 Speaker 1: room to run in terms of EV production. So it 87 00:05:12,240 --> 00:05:16,479 Speaker 1: is true that electric vehicles would perhaps uh put some 88 00:05:16,600 --> 00:05:20,679 Speaker 1: damper on demand for platinum and palladium in catalytic converters. 89 00:05:20,680 --> 00:05:24,000 Speaker 1: So really the commodities are metals that stand to benefit 90 00:05:24,120 --> 00:05:26,960 Speaker 1: the most from that trend towards e vs would be 91 00:05:27,080 --> 00:05:31,200 Speaker 1: copper and silver. UM. The average electric vehicle uses even 92 00:05:31,240 --> 00:05:36,960 Speaker 1: more copper than our combustion engine or normal UM automobiles. UM, 93 00:05:37,040 --> 00:05:40,400 Speaker 1: and silver plays an especially important role in that UM. 94 00:05:40,440 --> 00:05:44,040 Speaker 1: It's the long term uses for silver in industry UM, 95 00:05:44,080 --> 00:05:47,560 Speaker 1: particularly in the green economy, are rather bullish. UM. I 96 00:05:47,600 --> 00:05:49,479 Speaker 1: think the one thing standing in the way with that 97 00:05:49,560 --> 00:05:52,400 Speaker 1: really are trade relations between the U S and China 98 00:05:52,440 --> 00:05:55,200 Speaker 1: and whether those medals will be able to get to 99 00:05:55,279 --> 00:05:59,839 Speaker 1: market UM. To see ev production expand. But but silver 100 00:06:00,040 --> 00:06:02,359 Speaker 1: really is well positioned to benefit from that if we 101 00:06:02,440 --> 00:06:05,200 Speaker 1: do indeed see a pretty rapid rise in adoption of 102 00:06:05,240 --> 00:06:09,440 Speaker 1: electric vehicles. Alright, just sconds Everett. What's the best metal? 103 00:06:09,560 --> 00:06:12,080 Speaker 1: Long here? From your perspective over the next six twelve months, 104 00:06:13,600 --> 00:06:16,000 Speaker 1: I still think silver is the best of the bunch. 105 00:06:16,120 --> 00:06:19,839 Speaker 1: We have seen lag gold and perhaps UM the gold 106 00:06:19,839 --> 00:06:22,680 Speaker 1: market has absorbed most of its gains that we're going 107 00:06:22,720 --> 00:06:25,520 Speaker 1: to see one. I think silver still has more room 108 00:06:25,560 --> 00:06:29,200 Speaker 1: to run and figures very prominently in that UM future 109 00:06:29,240 --> 00:06:33,120 Speaker 1: of green energy usage. Everett. Always great to get your take. 110 00:06:33,160 --> 00:06:36,919 Speaker 1: Thanks so much for joining us on the program, Everett Millman, 111 00:06:37,520 --> 00:06:41,760 Speaker 1: um there he comes to us to talk about precious 112 00:06:41,760 --> 00:06:45,000 Speaker 1: metals as well as sometimes crypto. We didn't hit crypto today, 113 00:06:45,000 --> 00:06:48,760 Speaker 1: but from Gainesville Coins. Always great to get his inside. 114 00:06:48,839 --> 00:06:56,040 Speaker 1: This is Bloomberg. Let's bring in Christina Hooper. She is 115 00:06:56,120 --> 00:06:59,520 Speaker 1: chief global market strategist at Investco. They have more than 116 00:07:00,000 --> 00:07:03,560 Speaker 1: one point for trillion dollars in assets under management, and 117 00:07:03,560 --> 00:07:06,640 Speaker 1: she joins us out of Atlanta. Christine, I'd love to 118 00:07:06,640 --> 00:07:09,840 Speaker 1: get your take first off on the US economy after 119 00:07:09,880 --> 00:07:15,360 Speaker 1: we got that um more subdued inflation data yesterday. UM, 120 00:07:15,400 --> 00:07:17,600 Speaker 1: how does it look to you in terms of growth 121 00:07:17,640 --> 00:07:23,320 Speaker 1: and prices? Well, the more subdued inflation data really wasn't 122 00:07:23,360 --> 00:07:27,720 Speaker 1: that impactful in a positive sense because we had gotten 123 00:07:27,960 --> 00:07:31,000 Speaker 1: a p p I number UM that suggested we have 124 00:07:31,160 --> 00:07:35,320 Speaker 1: more inflation to come. We're seeing factory gate numbers China 125 00:07:35,360 --> 00:07:38,440 Speaker 1: factory gate numbers that are high. So UM, the big 126 00:07:38,560 --> 00:07:42,120 Speaker 1: increase in inflation is not over. But I still have 127 00:07:42,360 --> 00:07:45,680 Speaker 1: to stress that I believe it is temporary. It's just 128 00:07:45,800 --> 00:07:49,200 Speaker 1: not as temporary as some would like to have it UM. 129 00:07:49,320 --> 00:07:52,600 Speaker 1: So all in all, the US economy is and I 130 00:07:52,640 --> 00:07:56,640 Speaker 1: believe good shape UM. And I don't think that what 131 00:07:56,680 --> 00:08:01,480 Speaker 1: we're seeing in terms of of UM good initial jobless 132 00:08:01,600 --> 00:08:06,720 Speaker 1: claims UM is going to stop UM is going to 133 00:08:06,760 --> 00:08:08,640 Speaker 1: have any kind of impact on the set. I don't 134 00:08:08,640 --> 00:08:10,440 Speaker 1: think the weak jobs report is going to have an 135 00:08:10,480 --> 00:08:12,200 Speaker 1: impact on the set. I think they're going to stick 136 00:08:12,240 --> 00:08:15,160 Speaker 1: with their timeline and announce the tapering the start of 137 00:08:15,200 --> 00:08:19,600 Speaker 1: tapering UM next next week, and hopefully commence it soon 138 00:08:19,640 --> 00:08:24,440 Speaker 1: after that. All right, So Christina, given that backdrop here, UM, 139 00:08:24,520 --> 00:08:26,440 Speaker 1: you know, Matt and I were just chatting with with 140 00:08:26,480 --> 00:08:29,440 Speaker 1: a guest who was suggesting that who was actually buying 141 00:08:29,520 --> 00:08:33,160 Speaker 1: cyclical stocks here in in recent weeks. How do you 142 00:08:33,200 --> 00:08:35,920 Speaker 1: think about kind of the equity markets here given your 143 00:08:35,920 --> 00:08:39,360 Speaker 1: economic outlook, you know, kind of cyclical stocks, maybe some 144 00:08:39,400 --> 00:08:42,360 Speaker 1: small cap stocks versus uh, some of the you know, 145 00:08:42,440 --> 00:08:46,040 Speaker 1: tried and true growth names. That is the sixty four 146 00:08:46,120 --> 00:08:49,840 Speaker 1: tho dollar question. What I think we will see is 147 00:08:50,400 --> 00:08:54,360 Speaker 1: out performance by cyclicles in the next several months, but 148 00:08:54,400 --> 00:08:58,640 Speaker 1: it's going to be narrow out performance because UM, we 149 00:08:58,760 --> 00:09:03,520 Speaker 1: certainly have seen a very strong growthsburg UM. We're likely 150 00:09:03,559 --> 00:09:06,760 Speaker 1: to see more strength in the economy this fall UM, 151 00:09:06,800 --> 00:09:09,400 Speaker 1: but at a certain point that growth is going to 152 00:09:09,480 --> 00:09:13,439 Speaker 1: moderate again, and so I would suspect that in advance 153 00:09:13,480 --> 00:09:18,960 Speaker 1: of that UM markets will start to UM favor defensive 154 00:09:19,440 --> 00:09:22,840 Speaker 1: secular growth UM. So, so in the shorter term, I 155 00:09:22,880 --> 00:09:26,480 Speaker 1: think value encyclicals win not every day, UM, but but 156 00:09:26,720 --> 00:09:29,479 Speaker 1: most days. I think there will be narrow out performance. 157 00:09:29,640 --> 00:09:32,280 Speaker 1: And then at a certain point UM we're likely to 158 00:09:32,320 --> 00:09:37,040 Speaker 1: see a shift UM with with UM more inclusive performance 159 00:09:37,520 --> 00:09:40,760 Speaker 1: or in fact, at a certain point, defensive and secular 160 00:09:40,800 --> 00:09:46,760 Speaker 1: growth outperforming. What do you looking for in terms of 161 00:09:47,080 --> 00:09:49,600 Speaker 1: you know, the monetary side has been so important to 162 00:09:49,679 --> 00:09:54,120 Speaker 1: investing until recently, not that it isn't anymore. But the 163 00:09:54,120 --> 00:09:57,440 Speaker 1: fiscal side now is so key. And yet I hear 164 00:09:57,480 --> 00:10:01,360 Speaker 1: so many investors saying, you know, their strategy doesn't depend 165 00:10:01,600 --> 00:10:06,440 Speaker 1: on an infrastructure package or lack thereof. Well, I think 166 00:10:06,480 --> 00:10:10,920 Speaker 1: we have to draw a distinction. I believe fiscal policy 167 00:10:11,120 --> 00:10:14,280 Speaker 1: matters so much from main street for the economy, but 168 00:10:14,320 --> 00:10:18,600 Speaker 1: in terms of markets, monetary policy, in my view, matters 169 00:10:18,640 --> 00:10:21,959 Speaker 1: more so. The fact that we have an extremely accommodative 170 00:10:21,960 --> 00:10:24,920 Speaker 1: set that even when tapering starts, the SAID will still 171 00:10:24,960 --> 00:10:29,360 Speaker 1: be adding to its balance sheet is very positive for stocks. Yes, 172 00:10:29,440 --> 00:10:32,520 Speaker 1: of course fiscal policy plays a role, but I think 173 00:10:32,679 --> 00:10:37,520 Speaker 1: monetary policy plays an outsized role. UM. Now, of course, 174 00:10:38,040 --> 00:10:43,199 Speaker 1: if we have all kinds of fiscal stimulus UM taken away, 175 00:10:43,360 --> 00:10:47,280 Speaker 1: that can provide some hiccups. Just like UM, the lack 176 00:10:47,320 --> 00:10:51,280 Speaker 1: of an infrastructure package might cause concern among investors, but 177 00:10:51,320 --> 00:10:55,320 Speaker 1: I think it is not UM. It's it's misplaced because 178 00:10:55,800 --> 00:11:00,480 Speaker 1: UM infrastructure spending would occur over time anyway. UM tends 179 00:11:00,520 --> 00:11:03,800 Speaker 1: to be something that that happens over year over year 180 00:11:03,840 --> 00:11:07,679 Speaker 1: over year. It's not like giving a one time stimulus 181 00:11:07,720 --> 00:11:12,560 Speaker 1: payment or multiple stimulus payments that go into people's bank accounts. 182 00:11:12,600 --> 00:11:15,720 Speaker 1: So I think infrastructure spending is important for other reasons. 183 00:11:15,720 --> 00:11:18,800 Speaker 1: I think of it as government capex, UM, but it 184 00:11:18,920 --> 00:11:21,280 Speaker 1: shouldn't have I don't think we should think of it 185 00:11:21,360 --> 00:11:25,080 Speaker 1: as primarily fiscal stimulus that would have an immediate impact 186 00:11:25,160 --> 00:11:30,360 Speaker 1: like other forms of of fiscal spending would. Christina, what 187 00:11:30,440 --> 00:11:33,240 Speaker 1: are you and the portfolio managers at Investo looking at 188 00:11:33,280 --> 00:11:36,200 Speaker 1: really over the next several months and quarters in terms 189 00:11:36,240 --> 00:11:38,440 Speaker 1: of kind of where these markets are going to go? 190 00:11:38,559 --> 00:11:42,240 Speaker 1: Is is it simply the pandemic, the virus or there 191 00:11:42,240 --> 00:11:46,959 Speaker 1: other things? Well, Um, there are a few different factors 192 00:11:46,960 --> 00:11:51,520 Speaker 1: at play. I would say, um that that first and foremost, UM, 193 00:11:51,800 --> 00:11:56,400 Speaker 1: I think you know, the outlook is positive for the 194 00:11:56,440 --> 00:12:00,960 Speaker 1: economy and markets, but there are some tail risks that 195 00:12:01,080 --> 00:12:03,760 Speaker 1: we have to be aware of, even if they're low probability, 196 00:12:03,800 --> 00:12:06,959 Speaker 1: because they could have a significant impact. UM. The first, 197 00:12:06,960 --> 00:12:09,480 Speaker 1: of course is the resurgence of the pandemic. But when 198 00:12:09,520 --> 00:12:13,560 Speaker 1: I say that, I mean a COVID nineteen variant that 199 00:12:13,720 --> 00:12:17,160 Speaker 1: is not protected against by existing vaccines, and we haven't 200 00:12:17,200 --> 00:12:19,640 Speaker 1: seen that yet. UM, But that to me would be 201 00:12:20,000 --> 00:12:22,400 Speaker 1: a worth case scenario. I don't think it would plunge 202 00:12:22,440 --> 00:12:24,920 Speaker 1: us into a deep recession like it did in the 203 00:12:24,960 --> 00:12:27,200 Speaker 1: spring of because we've learned how to adapt, but it 204 00:12:27,200 --> 00:12:29,720 Speaker 1: would be a real, real problem. UM. And then, of course, 205 00:12:29,760 --> 00:12:33,079 Speaker 1: the other tail risk scenario is the FED policy error. 206 00:12:33,280 --> 00:12:36,360 Speaker 1: I'm getting too aggressive because they're concerned about inflation. I 207 00:12:36,400 --> 00:12:39,400 Speaker 1: don't see either one happening. UM. I think the Fed 208 00:12:39,559 --> 00:12:44,199 Speaker 1: is is UM has taking a very measured and thoughtful approach. Christina, 209 00:12:44,280 --> 00:12:46,240 Speaker 1: thank you so much again for joining us. We really 210 00:12:46,240 --> 00:12:50,080 Speaker 1: appreciate you taking the time. Christina Hooper, chief market strategists 211 00:12:50,160 --> 00:12:54,480 Speaker 1: globally for Investco, love getting her thoughts on the economy 212 00:12:54,640 --> 00:12:59,440 Speaker 1: and on these financial markets. All right, let's talk about 213 00:12:59,440 --> 00:13:02,520 Speaker 1: this market here. We've had some folks talking about maybe 214 00:13:03,440 --> 00:13:07,440 Speaker 1: rotating into more cyclical names, perhaps, you know, sensing perhaps 215 00:13:07,440 --> 00:13:11,280 Speaker 1: a reopening trade that's certainly worked well at times since 216 00:13:11,360 --> 00:13:17,400 Speaker 1: this pandemic began. What's happening, Yeah, exactly. Let's uh check 217 00:13:17,440 --> 00:13:19,800 Speaker 1: in with Chance Fanuka and he's chief investment officer at 218 00:13:19,840 --> 00:13:23,720 Speaker 1: Oxbow Advisors based in I guess he's in Austin, Texas today. 219 00:13:23,720 --> 00:13:25,400 Speaker 1: We're mad. I think they have a small college or 220 00:13:25,520 --> 00:13:27,839 Speaker 1: university there or something. I'm not sure. Maybe play a 221 00:13:27,840 --> 00:13:29,880 Speaker 1: little football. So Chance, thanks so much for joining us. 222 00:13:29,880 --> 00:13:33,240 Speaker 1: Here talk to us about cyclical stocks and and maybe 223 00:13:33,240 --> 00:13:36,320 Speaker 1: how they feature in what you guys are doing today 224 00:13:36,360 --> 00:13:41,040 Speaker 1: at Oxbow Advisors. Sure, thanks, Paul and Matt. So what 225 00:13:41,080 --> 00:13:44,480 Speaker 1: we've noticed is if you're looking to add defensives or 226 00:13:44,480 --> 00:13:46,960 Speaker 1: growth stocks into your portfolio this year, the time to 227 00:13:47,000 --> 00:13:49,480 Speaker 1: do that was really in the first quarter. You saw 228 00:13:49,679 --> 00:13:52,800 Speaker 1: some good valuations back in March especially, but some of 229 00:13:52,800 --> 00:13:55,440 Speaker 1: those defensive stocks have really taken off in the last 230 00:13:55,480 --> 00:13:59,319 Speaker 1: six months. For instance, American Tower and Costco both appreciated 231 00:13:59,320 --> 00:14:05,040 Speaker 1: by fifty scent. Yeah, they're there. So what we've noticed 232 00:14:05,160 --> 00:14:07,960 Speaker 1: is even though the markets making record highs here in 233 00:14:08,000 --> 00:14:12,640 Speaker 1: recent months, last month, the average stock in the SMPRED 234 00:14:12,679 --> 00:14:15,600 Speaker 1: was down si from its fifty two week highs, and 235 00:14:15,640 --> 00:14:18,480 Speaker 1: a lot of that was coming from cyclical and value sectors. 236 00:14:18,520 --> 00:14:22,040 Speaker 1: As interest rates came down and the delta variants started 237 00:14:22,040 --> 00:14:24,400 Speaker 1: to spread around the world, and we thought that would 238 00:14:24,440 --> 00:14:26,560 Speaker 1: be a good time to start moving a little bit 239 00:14:26,600 --> 00:14:30,040 Speaker 1: more of our portfolio towards cyclicals. And the three names 240 00:14:30,040 --> 00:14:31,680 Speaker 1: that we came up with that we added to our 241 00:14:31,720 --> 00:14:36,840 Speaker 1: client's equity portfolios last month where Salesforce Booking Holdings in Berkshire, 242 00:14:36,840 --> 00:14:41,760 Speaker 1: Hathaway and so these aren't necessarily the kind of cyclicals 243 00:14:41,800 --> 00:14:43,680 Speaker 1: I would think of. At least two of them are 244 00:14:43,720 --> 00:14:49,880 Speaker 1: really techy, right salesforce I would considered techy. Booking is 245 00:14:49,920 --> 00:14:52,280 Speaker 1: one that I would think as more of a pure 246 00:14:52,320 --> 00:14:58,520 Speaker 1: consumer discretionary. If you've been following the online travel agencies Booking, Expedia, 247 00:14:58,560 --> 00:15:02,160 Speaker 1: and Airbnb, along with the hotels, they've all been moving 248 00:15:02,200 --> 00:15:05,640 Speaker 1: together through this pandemic. As you talked about the re 249 00:15:05,640 --> 00:15:09,200 Speaker 1: reopening happening, and I think as there were concerns about 250 00:15:09,200 --> 00:15:11,640 Speaker 1: the delta variant picking up in recent months, you saw 251 00:15:11,760 --> 00:15:15,360 Speaker 1: those companies shares sell off and this is the one 252 00:15:15,360 --> 00:15:17,160 Speaker 1: that we think is the highest quality right now, and 253 00:15:17,200 --> 00:15:19,040 Speaker 1: felt it was a good time to add to the portfolio. 254 00:15:19,400 --> 00:15:21,840 Speaker 1: So Chance and what are the When you think about bookings, 255 00:15:21,880 --> 00:15:25,520 Speaker 1: Holdings obviously a big play on consumer travel. How much 256 00:15:25,800 --> 00:15:28,200 Speaker 1: do they depend upon business travel because that seems like 257 00:15:28,240 --> 00:15:30,960 Speaker 1: something that from what we're hearing, is going to be slower, 258 00:15:31,080 --> 00:15:34,840 Speaker 1: much slower to come back here. I don't think it's 259 00:15:34,840 --> 00:15:37,000 Speaker 1: as big of a concern for them as the global 260 00:15:37,080 --> 00:15:41,360 Speaker 1: hotels that may feature more business travelers in their network. 261 00:15:41,840 --> 00:15:43,920 Speaker 1: I think if you think about Booking, they actually are 262 00:15:43,920 --> 00:15:47,640 Speaker 1: more exposed to Europe than their peers, and they have 263 00:15:47,680 --> 00:15:50,280 Speaker 1: a lot of independent hotels in Europe that rely on 264 00:15:50,400 --> 00:15:53,440 Speaker 1: Booking dot Com in order to get guests coming in 265 00:15:53,520 --> 00:15:56,040 Speaker 1: on a daily basis. So I think that was part 266 00:15:56,040 --> 00:15:58,120 Speaker 1: of the sell off was as the delta variants spread, 267 00:15:58,200 --> 00:16:01,280 Speaker 1: especially in Europe. There are some concern in the short term, 268 00:16:01,360 --> 00:16:03,360 Speaker 1: but for us, when we take a five year outlook, 269 00:16:03,560 --> 00:16:06,120 Speaker 1: we would expect revenue for Booking to return to its 270 00:16:06,120 --> 00:16:09,040 Speaker 1: twenty nineteen levels next year and then continue to ramp 271 00:16:09,120 --> 00:16:13,680 Speaker 1: up to record high is going into When you think 272 00:16:13,720 --> 00:16:18,120 Speaker 1: about sales Force, I mean, what what drives that investment? 273 00:16:18,600 --> 00:16:22,200 Speaker 1: Are you? Are you seeing a lot of corporate um 274 00:16:22,640 --> 00:16:27,120 Speaker 1: you know, capex increases. I think for us, the way 275 00:16:27,160 --> 00:16:30,280 Speaker 1: we think about the software of the service companies is 276 00:16:30,360 --> 00:16:33,840 Speaker 1: just really wanting to play along with that secular growth trend. 277 00:16:34,280 --> 00:16:38,320 Speaker 1: The underlying uh markets that Salesforce operates in. Our growing 278 00:16:38,400 --> 00:16:41,280 Speaker 1: tend to twenty a year, which is a nice starting point. 279 00:16:41,640 --> 00:16:43,960 Speaker 1: And then you've got one of the few remaining large 280 00:16:44,000 --> 00:16:46,920 Speaker 1: tech companies is still run by its founder. If you 281 00:16:46,920 --> 00:16:49,120 Speaker 1: think about the really large tech businesses, there's only about 282 00:16:49,160 --> 00:16:53,520 Speaker 1: three left along with Facebook and Nvidia, that are really 283 00:16:53,560 --> 00:16:56,760 Speaker 1: really still run by a founder or co founder, and 284 00:16:56,800 --> 00:16:59,640 Speaker 1: so you have some of with that kind of visionary mindset, 285 00:17:00,160 --> 00:17:03,480 Speaker 1: uh in a strong history of making smart acquisitions. We 286 00:17:03,600 --> 00:17:06,359 Speaker 1: like partnering up with someone like that, especially in an 287 00:17:06,359 --> 00:17:09,840 Speaker 1: industry that's still growing at a double digit rate. Chance, 288 00:17:09,840 --> 00:17:13,280 Speaker 1: when I think about Berkshire, I'm just not sure it's 289 00:17:13,320 --> 00:17:15,400 Speaker 1: anything more than kind of a g d P play. 290 00:17:15,480 --> 00:17:17,560 Speaker 1: I'm just not sure what the catalyst is out there 291 00:17:17,840 --> 00:17:22,000 Speaker 1: for this name, barring you know, a monstrous acquisition. Um, 292 00:17:22,040 --> 00:17:25,879 Speaker 1: how do you think about that in terms of catalysts. Sure, 293 00:17:26,119 --> 00:17:28,200 Speaker 1: I think we viewed a little bit differently in terms 294 00:17:28,200 --> 00:17:31,120 Speaker 1: of how it fits into our client's portfolio. So for us, 295 00:17:31,520 --> 00:17:34,399 Speaker 1: we always a look into some counterbalances UH in the 296 00:17:34,440 --> 00:17:36,760 Speaker 1: portfolio that are going to act more defensively if we 297 00:17:36,800 --> 00:17:39,720 Speaker 1: get a bear market. But what we've noticed is we'd 298 00:17:39,800 --> 00:17:42,359 Speaker 1: rather own something like Berkshire Hathaway. They can provide that 299 00:17:42,400 --> 00:17:45,760 Speaker 1: sort of GDP growth plus share buybacks which have picked 300 00:17:45,840 --> 00:17:48,000 Speaker 1: up in the last two years, compared to owning something 301 00:17:48,080 --> 00:17:51,080 Speaker 1: like Johnson and Johnson and nest Lee that maybe a 302 00:17:51,160 --> 00:17:54,679 Speaker 1: stalwart in a defensive environment, but really are not going 303 00:17:54,720 --> 00:17:58,159 Speaker 1: to participate in an economic reopening like we might have 304 00:17:58,200 --> 00:18:03,800 Speaker 1: over the next couple of years. Are you expecting real 305 00:18:03,840 --> 00:18:06,840 Speaker 1: fiscal stimulus? Are you expecting the infrastructure, build the passes 306 00:18:06,880 --> 00:18:10,720 Speaker 1: that does that play doesn't matter not so much to us. 307 00:18:10,760 --> 00:18:15,080 Speaker 1: I don't think we're ever trying to get ahead of 308 00:18:15,119 --> 00:18:18,960 Speaker 1: any sort of political dynamics in the shorter term. If 309 00:18:18,960 --> 00:18:20,840 Speaker 1: they happen to benefit the companies that we do own, 310 00:18:20,880 --> 00:18:23,720 Speaker 1: that's terrific. But we're looking more to try and own 311 00:18:23,760 --> 00:18:27,120 Speaker 1: anything for five even ten years, and so usually we're 312 00:18:27,119 --> 00:18:29,320 Speaker 1: looking for companies that are going to benefit from more 313 00:18:29,440 --> 00:18:32,800 Speaker 1: structural growth trends and are less reliant on political outcomes, 314 00:18:32,880 --> 00:18:36,560 Speaker 1: working to their to their favor. All right, Chance, thanks 315 00:18:36,560 --> 00:18:38,880 Speaker 1: so much for joining us. Oh, it's great to get 316 00:18:38,920 --> 00:18:41,760 Speaker 1: your insight. Chance for nuke In there is a chief 317 00:18:41,760 --> 00:18:46,399 Speaker 1: investment officer at Oxbow Advisors talking about moving into three 318 00:18:46,440 --> 00:18:50,800 Speaker 1: cyclical stocks that they have um bought in August, Salesforce, 319 00:18:50,920 --> 00:18:55,879 Speaker 1: dot Com, Booking Holdings in Berkshire, Hathaway, really really interesting moves. 320 00:18:56,000 --> 00:18:59,720 Speaker 1: As we saw this, the rotation kind of peter out, 321 00:18:59,760 --> 00:19:03,639 Speaker 1: and now we're hearing from others including Marco Marko Kolanovitch. 322 00:19:03,840 --> 00:19:05,639 Speaker 1: As I said from JP Morgan that it's time for 323 00:19:05,680 --> 00:19:13,119 Speaker 1: the re reopening trade, get back into those cyclicals. All right, 324 00:19:13,160 --> 00:19:15,399 Speaker 1: So as we think about these equity markets here, we 325 00:19:15,440 --> 00:19:18,960 Speaker 1: know folks are thinking about re reopening of the economy, 326 00:19:19,000 --> 00:19:20,560 Speaker 1: if you will, and do I take on some more 327 00:19:20,960 --> 00:19:23,199 Speaker 1: cyclical risk or do I stick with the tried and 328 00:19:23,280 --> 00:19:26,760 Speaker 1: true growth stories that give me both top line and 329 00:19:26,920 --> 00:19:30,000 Speaker 1: bottom line and growth. Let's bring in Adam Kuhn's portfolio 330 00:19:30,040 --> 00:19:34,840 Speaker 1: manager and trade were Winthrop Capital. They are based in Indianapolis, Indiana. 331 00:19:34,960 --> 00:19:38,399 Speaker 1: Talk about the heartland there outstanding. So Adam, thanks so 332 00:19:38,480 --> 00:19:40,920 Speaker 1: much for joining us here. What camp do you come 333 00:19:40,960 --> 00:19:42,399 Speaker 1: down in here? There's a lot of folks that have 334 00:19:42,520 --> 00:19:45,640 Speaker 1: done really well with kind of that reopening trade. Where 335 00:19:45,640 --> 00:19:48,880 Speaker 1: where are you guys thinking right now? Yeah? For something's 336 00:19:48,920 --> 00:19:52,240 Speaker 1: having me? Yeah. Really, what we're looking at is from 337 00:19:52,240 --> 00:19:55,439 Speaker 1: a top down approach is where is the economy heading? 338 00:19:55,480 --> 00:19:58,840 Speaker 1: And we're seeing a lot of signs of the slowdown 339 00:19:59,000 --> 00:20:01,320 Speaker 1: And um, you're gonna start to hear this word throwing 340 00:20:01,320 --> 00:20:04,000 Speaker 1: around quite a bit, but it absolutely looks like we're 341 00:20:04,040 --> 00:20:08,600 Speaker 1: seeing signs of stagflation where inflation is remaining high, yet 342 00:20:08,680 --> 00:20:12,480 Speaker 1: growth is beginning to slow and in some pockets dramatically. 343 00:20:13,240 --> 00:20:16,320 Speaker 1: And because of that, we are pulling back on the 344 00:20:16,520 --> 00:20:21,440 Speaker 1: you know, reflation COVID affected industry trade and moving back 345 00:20:21,480 --> 00:20:26,000 Speaker 1: towards the more tried and true names like Apple, Microsoft, 346 00:20:26,040 --> 00:20:30,679 Speaker 1: and Alphabet that you know, just have great cash flow, 347 00:20:31,080 --> 00:20:34,240 Speaker 1: a great business model that can sustain through you know, 348 00:20:34,280 --> 00:20:38,600 Speaker 1: a lot of volatility and economic headplines. The second time 349 00:20:38,600 --> 00:20:43,240 Speaker 1: I've heard someone talk about stagflation this week. Um, even 350 00:20:43,280 --> 00:20:47,560 Speaker 1: though we got a more subdued inflation number and the 351 00:20:47,680 --> 00:20:53,280 Speaker 1: last UH data release, are you the growth slowdown is 352 00:20:53,280 --> 00:20:54,920 Speaker 1: what is? What is? What? It looks scary to me? 353 00:20:54,960 --> 00:20:57,000 Speaker 1: Are you concerned that the growth slowdown we're seeing in 354 00:20:57,000 --> 00:21:00,640 Speaker 1: the third quarter is going to continue on? Yeah? So, 355 00:21:00,760 --> 00:21:04,760 Speaker 1: you know, while we did get a slow down in inflation, 356 00:21:04,800 --> 00:21:08,840 Speaker 1: if you look at UH average hourly earnings, they're still 357 00:21:08,880 --> 00:21:12,280 Speaker 1: above four percent. So if you're paying employees more and 358 00:21:12,320 --> 00:21:15,159 Speaker 1: you're still seeing a lot of jobs that are unfilled 359 00:21:15,720 --> 00:21:18,720 Speaker 1: total job openings, is that a record high? Um? So, 360 00:21:18,760 --> 00:21:21,119 Speaker 1: I think you're gonna see employees continue to be paid 361 00:21:21,400 --> 00:21:24,240 Speaker 1: quite a bit. So you're gonna see savings rates continue 362 00:21:24,280 --> 00:21:28,760 Speaker 1: to be high, and effectively, if they can spend the money, 363 00:21:28,920 --> 00:21:32,040 Speaker 1: they will, and that's going to keep inflation higher in 364 00:21:32,080 --> 00:21:35,760 Speaker 1: the short term. Um. But the problem is that that 365 00:21:35,960 --> 00:21:38,000 Speaker 1: where can they spend their money? And we're seeing supply 366 00:21:38,080 --> 00:21:44,160 Speaker 1: chain issues continue uh to pick up, and frankly, there's 367 00:21:44,200 --> 00:21:48,040 Speaker 1: just not a lot that consumers can spend the money 368 00:21:48,080 --> 00:21:51,400 Speaker 1: on um outside of just the traditional things that they buy. 369 00:21:51,520 --> 00:21:54,639 Speaker 1: So heading into the holiday season, it might not be 370 00:21:54,680 --> 00:21:58,800 Speaker 1: a story of what can consumers buy and it's what 371 00:21:58,800 --> 00:22:01,200 Speaker 1: what is it actually a bailable So I think what 372 00:22:01,240 --> 00:22:03,280 Speaker 1: we're going to see is this kind of dislocation of 373 00:22:03,320 --> 00:22:05,879 Speaker 1: what consumers are have the ability to buy from a 374 00:22:06,480 --> 00:22:09,520 Speaker 1: from a financial standpoint, and what they can physically go 375 00:22:09,600 --> 00:22:11,879 Speaker 1: and find in the store or online. And so I 376 00:22:11,880 --> 00:22:15,040 Speaker 1: think that's gonna be a reduction to growth and I 377 00:22:15,040 --> 00:22:16,760 Speaker 1: think that's why we're going to see the fourth quarter 378 00:22:16,920 --> 00:22:20,399 Speaker 1: be quite a bit slower than what we're expecting. All Right, 379 00:22:20,440 --> 00:22:22,520 Speaker 1: So if you're focusing on some of the higher growth, 380 00:22:22,600 --> 00:22:25,359 Speaker 1: you know, perhaps to the technology sector, talk to us 381 00:22:25,359 --> 00:22:29,359 Speaker 1: about valuation here because that's always a challenge for people 382 00:22:29,480 --> 00:22:32,640 Speaker 1: in that space. But what is your view of valuation 383 00:22:32,680 --> 00:22:34,359 Speaker 1: as you take a look at some of these uh, 384 00:22:34,520 --> 00:22:38,160 Speaker 1: fast growing tech names. Yeah, so we're careful not to 385 00:22:38,200 --> 00:22:41,159 Speaker 1: throw around, uh you know, this time is different anything 386 00:22:41,200 --> 00:22:44,439 Speaker 1: like that. Evaluation since then the day absolutely matters, but 387 00:22:44,880 --> 00:22:49,600 Speaker 1: low interest rates do help the case for higher multiples. 388 00:22:50,280 --> 00:22:53,200 Speaker 1: So we generally think that a lot of these technology 389 00:22:53,240 --> 00:22:56,879 Speaker 1: stocks that I just mentioned earlier are fairly valued. We 390 00:22:56,920 --> 00:22:59,040 Speaker 1: would not call them over valued in in any way. 391 00:22:59,520 --> 00:23:02,080 Speaker 1: When you get the growth potential in the way that 392 00:23:02,080 --> 00:23:06,240 Speaker 1: they're able to monetize just different businesses, we think that 393 00:23:06,320 --> 00:23:08,880 Speaker 1: these valuations do make sense, So that's why we're still 394 00:23:08,880 --> 00:23:11,760 Speaker 1: investing in them. But what we're doing is when we're 395 00:23:11,800 --> 00:23:15,120 Speaker 1: looking for value is we've begun to add to Chinese 396 00:23:15,200 --> 00:23:20,680 Speaker 1: technology companies, So companies like Buy Do, ten Cent, Ali Baba. 397 00:23:20,760 --> 00:23:23,720 Speaker 1: You know, they've been in the headlines recently, and obviously 398 00:23:23,920 --> 00:23:26,720 Speaker 1: these are stocks that have been beaten down quite a bit, 399 00:23:27,200 --> 00:23:29,680 Speaker 1: and for good reason with increased regulation out of China. 400 00:23:29,800 --> 00:23:32,480 Speaker 1: But we think right here in this spot that that 401 00:23:32,560 --> 00:23:35,920 Speaker 1: the valuations for those companies actually look attractive. So using 402 00:23:35,960 --> 00:23:39,680 Speaker 1: those alongside the traditional US counterparts we think makes sense 403 00:23:39,680 --> 00:23:46,240 Speaker 1: going forward. What UM industry groups do you like or 404 00:23:46,240 --> 00:23:48,560 Speaker 1: where do you see the most value out there that 405 00:23:48,560 --> 00:23:56,480 Speaker 1: that maybe is underpriced. So I'll reiterate Chinese technology absolutely 406 00:23:56,480 --> 00:23:59,720 Speaker 1: the place where we think that that stocks are underpriced 407 00:24:00,280 --> 00:24:03,520 Speaker 1: outside of that not a lot. We think that the 408 00:24:03,520 --> 00:24:07,919 Speaker 1: market generally speaking is fairly valued to overvalued. When you 409 00:24:07,960 --> 00:24:11,640 Speaker 1: look at financials and energy, we would argue those are 410 00:24:11,680 --> 00:24:16,480 Speaker 1: are grossly overvalued giving the prospects for for growth going forward. UM, 411 00:24:16,680 --> 00:24:20,000 Speaker 1: So it's more of a play of moving towards defense 412 00:24:20,040 --> 00:24:22,520 Speaker 1: when there's not a lot of investment opportunities, and that's 413 00:24:22,520 --> 00:24:26,439 Speaker 1: what we're doing across our portfolios is broadly speaking, moving 414 00:24:26,480 --> 00:24:29,680 Speaker 1: up in quality, moving more defensive, just kind of weather 415 00:24:29,800 --> 00:24:34,400 Speaker 1: this growth storm. All right, great to get your take. 416 00:24:34,480 --> 00:24:38,600 Speaker 1: Thanks so much, Um for joining us talking. They're about 417 00:24:39,040 --> 00:24:43,520 Speaker 1: what's going on in these markets from the perspective of 418 00:24:43,640 --> 00:24:47,879 Speaker 1: a trader. Adam Coon's there from Winthrop Capital Management. Thanks 419 00:24:47,880 --> 00:24:51,360 Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe 420 00:24:51,359 --> 00:24:55,119 Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast 421 00:24:55,160 --> 00:24:58,720 Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at 422 00:24:58,760 --> 00:25:01,800 Speaker 1: Matt Miller nineteen seven twenty three and on false Sweeney 423 00:25:01,800 --> 00:25:04,439 Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you 424 00:25:04,440 --> 00:25:06,879 Speaker 1: can always catch us worldwide at Bloomberg Radio.