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 00:00:11,520 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,320 Speaker 1: at Bloomberg dot com slash podcast. Let's round table what's 7 00:00:22,360 --> 00:00:24,840 Speaker 1: going on because there's always an ongoing story with Tesla, 8 00:00:25,160 --> 00:00:27,880 Speaker 1: twitter elon Musk, We're gonna do that with man Deep 9 00:00:27,920 --> 00:00:32,040 Speaker 1: singh Uh. He covers technology. Kevin, he's in our studio. 10 00:00:32,120 --> 00:00:34,040 Speaker 1: Kevin Tynan joins us on the phone. He covers the 11 00:00:34,080 --> 00:00:37,760 Speaker 1: auto sector for both of them for Bloomberg Intelligence. So 12 00:00:37,800 --> 00:00:40,640 Speaker 1: we're getting our money out of Bloomberg Intelligence this morning, 13 00:00:40,920 --> 00:00:45,680 Speaker 1: which is the research department for Bloomberg customers. Be I 14 00:00:45,800 --> 00:00:49,520 Speaker 1: go on the terminal. Kevin, let's start with you here. Um, 15 00:00:49,600 --> 00:00:53,000 Speaker 1: is there a demand problem for Tesla vehicles out there? 16 00:00:54,600 --> 00:00:58,840 Speaker 1: There is, there's probably a demand problem for everybody, all 17 00:00:58,880 --> 00:01:01,760 Speaker 1: auto makers. But I think, wait, wait, wait, wait, let 18 00:01:01,880 --> 00:01:04,760 Speaker 1: before we get started, Kevin, let's set the scene here. 19 00:01:05,000 --> 00:01:09,120 Speaker 1: You're in Vegas. Yeah, Now, the CS is a consumer 20 00:01:09,120 --> 00:01:11,360 Speaker 1: electronic show for those who don't know. But it's really not. 21 00:01:11,520 --> 00:01:15,520 Speaker 1: It's really the auto show, which has some electronic stuff 22 00:01:15,520 --> 00:01:18,440 Speaker 1: around it. It has become that it is unbelievable decade, 23 00:01:18,440 --> 00:01:21,039 Speaker 1: which is now why Kevin might not even go to 24 00:01:21,080 --> 00:01:22,959 Speaker 1: the Detroit Auto Show, which used to be like the 25 00:01:23,040 --> 00:01:25,959 Speaker 1: super Bowl and automakers. So Kevin, just before we get 26 00:01:25,959 --> 00:01:28,320 Speaker 1: to Tesla, gives set the set the stage here. What's 27 00:01:28,360 --> 00:01:30,440 Speaker 1: going on at CES? What do you expect to hear? 28 00:01:30,440 --> 00:01:32,759 Speaker 1: What do you expect to hear from the auto companies? Uh? 29 00:01:32,800 --> 00:01:34,880 Speaker 1: This year? Well, most importantly, where are you staying? Do 30 00:01:34,880 --> 00:01:38,320 Speaker 1: you have a suite at the Bellagio? Uh? Mike Dean? 31 00:01:38,400 --> 00:01:42,160 Speaker 1: Are European guys at the Bellagio? I actually have time share? 32 00:01:42,200 --> 00:01:44,160 Speaker 1: So I just come and stay in my league. You've 33 00:01:44,200 --> 00:01:48,600 Speaker 1: gotten share in Vegas. My man, pots and pans, as 34 00:01:48,600 --> 00:01:51,200 Speaker 1: they say, all right, Michael Dean, he's the class act. 35 00:01:51,200 --> 00:01:52,920 Speaker 1: He's got the bags, all right, Kevin, So talk to 36 00:01:53,000 --> 00:01:56,000 Speaker 1: us about CS. What are you looking for? Yeah, there's 37 00:01:56,040 --> 00:01:59,240 Speaker 1: a hopefully it's a big bounce back from last year. 38 00:01:59,320 --> 00:02:02,200 Speaker 1: Last year as a ghost town, c e S was 39 00:02:02,440 --> 00:02:07,040 Speaker 1: absolutely dead. Um, just from the people reaching out and 40 00:02:07,080 --> 00:02:09,320 Speaker 1: companies reaching out this year. It seems like it should 41 00:02:09,320 --> 00:02:13,880 Speaker 1: be much better this year. A lot of still a 42 00:02:13,919 --> 00:02:18,840 Speaker 1: lot of autonomous you know light our self driving software companies. 43 00:02:19,000 --> 00:02:21,200 Speaker 1: It doesn't seem like it's going to be as much 44 00:02:21,639 --> 00:02:24,000 Speaker 1: you know from the O E M s this year 45 00:02:24,080 --> 00:02:27,360 Speaker 1: about you know, EV products or I think it's going 46 00:02:27,400 --> 00:02:33,920 Speaker 1: to be a lot of that ancillary businesses, infrastructure, um, 47 00:02:34,000 --> 00:02:37,200 Speaker 1: you know, autonomous driving. It's gonna be a lot of 48 00:02:37,240 --> 00:02:41,000 Speaker 1: things like that this year. Nobody with the final solution 49 00:02:41,120 --> 00:02:44,440 Speaker 1: per se, but a lot of the moving parts up 50 00:02:44,440 --> 00:02:49,400 Speaker 1: to that. All right, so uh man, deep, where do 51 00:02:49,480 --> 00:02:52,040 Speaker 1: your world's collide here? Why are you not in Vegas? 52 00:02:52,040 --> 00:02:55,880 Speaker 1: By the way, well, I think the AD companies don't 53 00:02:55,919 --> 00:02:58,200 Speaker 1: like to showcase a lot of their stuff when you 54 00:02:58,240 --> 00:03:00,440 Speaker 1: look at you know, what alphabet is to wing even 55 00:03:00,480 --> 00:03:03,640 Speaker 1: though they have a Waymo unit which is also an 56 00:03:03,680 --> 00:03:07,400 Speaker 1: autonomous driving a lot of their AI. When you think 57 00:03:07,440 --> 00:03:11,520 Speaker 1: about their capabilities, whether it's on the third side or 58 00:03:11,880 --> 00:03:14,679 Speaker 1: add side that they don't talk about it as much 59 00:03:14,720 --> 00:03:17,120 Speaker 1: in terms of you know, these kind of shows, and 60 00:03:17,160 --> 00:03:20,320 Speaker 1: they are more device driven at the end of the day, 61 00:03:20,600 --> 00:03:25,800 Speaker 1: you know, it is um more focused towards devices and 62 00:03:25,880 --> 00:03:28,640 Speaker 1: that's why, yeah, not something but there's a lot of 63 00:03:28,639 --> 00:03:32,519 Speaker 1: the stuff running on Azure. The cloud. Companies have their 64 00:03:32,560 --> 00:03:37,000 Speaker 1: own kind of events. You know, both Microsoft and AWS 65 00:03:37,080 --> 00:03:39,800 Speaker 1: have their annual conferences, and they don't. I would just 66 00:03:39,880 --> 00:03:44,040 Speaker 1: imagine more and more of uh technology is I mean, 67 00:03:44,280 --> 00:03:47,280 Speaker 1: we know more technologies in the cloud. Cars are becoming 68 00:03:47,280 --> 00:03:51,720 Speaker 1: technological little you know, driving cell phones. So I imagine 69 00:03:51,840 --> 00:03:54,040 Speaker 1: you know, a lot of the stuff that I type 70 00:03:54,040 --> 00:03:57,200 Speaker 1: into the like Google Pad in my Chevy Silverado is 71 00:03:57,240 --> 00:04:00,880 Speaker 1: stored in the cloud. Well so us because it's stored 72 00:04:00,920 --> 00:04:03,080 Speaker 1: in the cloud doesn't mean you know, it's at the 73 00:04:03,120 --> 00:04:05,840 Speaker 1: cutting edge that that ship has selled. You know. Now 74 00:04:05,960 --> 00:04:08,600 Speaker 1: we're talking about what can you do next? In terms 75 00:04:08,640 --> 00:04:12,440 Speaker 1: of open chat, GPTs the new craze. Now, the reason 76 00:04:12,520 --> 00:04:16,040 Speaker 1: why people are excited about it is because it kind 77 00:04:16,040 --> 00:04:19,640 Speaker 1: of disrupts the Google search dominance around showing links and 78 00:04:19,720 --> 00:04:24,080 Speaker 1: clicking you are else. This is more about generative AI 79 00:04:24,400 --> 00:04:28,080 Speaker 1: using large language models, and a lot of that was 80 00:04:28,120 --> 00:04:31,719 Speaker 1: in the academia for all the longest time, but now 81 00:04:31,839 --> 00:04:35,600 Speaker 1: suddenly it's hitting mainstream because of cloud. Cloud gives you 82 00:04:35,640 --> 00:04:38,160 Speaker 1: the processing power to do a lot of these things, 83 00:04:38,760 --> 00:04:41,680 Speaker 1: and I think that's why we are talking about it. 84 00:04:42,160 --> 00:04:45,479 Speaker 1: All right, Kevin, So we just in terms of maybe 85 00:04:45,480 --> 00:04:47,600 Speaker 1: not just Tesla, but give us your sense of how 86 00:04:47,640 --> 00:04:50,479 Speaker 1: this demand for electric vehicles is going to roll out, 87 00:04:50,720 --> 00:04:52,080 Speaker 1: you know, over the next couple of years. Again a 88 00:04:52,120 --> 00:04:55,680 Speaker 1: little bit of a disappointment there for Tesla. Uh, most recently, 89 00:04:55,720 --> 00:04:58,919 Speaker 1: how do you think about that bigger picture? Yeah, you know, 90 00:04:59,000 --> 00:05:01,719 Speaker 1: and I'm and I'm starting to lay out, you know, 91 00:05:01,760 --> 00:05:05,560 Speaker 1: the mindset for the next at least year plus. And 92 00:05:05,760 --> 00:05:08,320 Speaker 1: you know, the thing I keep coming back to is that, 93 00:05:08,600 --> 00:05:12,520 Speaker 1: arguably you know where we are now in terms of 94 00:05:12,920 --> 00:05:17,479 Speaker 1: ev discussion, hype, whatever you want to call it. You know, 95 00:05:17,720 --> 00:05:20,000 Speaker 1: I feel like it was the germ of the idea 96 00:05:20,240 --> 00:05:26,280 Speaker 1: was was from one person, right, and media and markets 97 00:05:26,360 --> 00:05:31,840 Speaker 1: and investors and governments and other automakers eventually brudging lee, 98 00:05:32,000 --> 00:05:34,880 Speaker 1: kicking and screaming got on board with that. You know. 99 00:05:34,920 --> 00:05:40,160 Speaker 1: But I wonder if the you know, the real science 100 00:05:40,320 --> 00:05:48,440 Speaker 1: behind the transition completely away from internal combustion completely to electrification. Uh, 101 00:05:48,520 --> 00:05:51,080 Speaker 1: if we're not getting the full story right that when 102 00:05:51,080 --> 00:05:55,520 Speaker 1: you go from minding of materials for the batteries, who 103 00:05:55,560 --> 00:05:59,360 Speaker 1: controls those materials, what those materials cost, all the way 104 00:05:59,360 --> 00:06:02,760 Speaker 1: through the process of how we're going to consistently charge 105 00:06:02,880 --> 00:06:07,359 Speaker 1: that many vehicles UM to the disposal of the battery 106 00:06:07,640 --> 00:06:10,279 Speaker 1: is something that I don't think anybody's really wanted to 107 00:06:10,320 --> 00:06:14,080 Speaker 1: talk about. I think the markets and the media is 108 00:06:14,120 --> 00:06:17,320 Speaker 1: focused on tailpipe versus no tail pipe, and I think 109 00:06:17,360 --> 00:06:20,479 Speaker 1: there's a lot going on in the process that is 110 00:06:20,560 --> 00:06:24,279 Speaker 1: just sort of glossed over. And I think in this 111 00:06:24,360 --> 00:06:28,240 Speaker 1: market and in this economy, UH, that due diligence and 112 00:06:28,240 --> 00:06:31,839 Speaker 1: those questions are gonna be asked more seriously, UM, And 113 00:06:31,880 --> 00:06:33,800 Speaker 1: I'm not sure people are gonna like those answers no. 114 00:06:34,000 --> 00:06:36,600 Speaker 1: And you know, ironically, well, I never know if I'm 115 00:06:36,640 --> 00:06:41,000 Speaker 1: using the the word ironic correctly because I grew up 116 00:06:41,000 --> 00:06:42,520 Speaker 1: with a lot it's more a set. But it seems 117 00:06:42,520 --> 00:06:47,120 Speaker 1: ironic to me, UM that the Biden Administration's I r 118 00:06:47,200 --> 00:06:52,320 Speaker 1: a UH legislation is what kind of pulled the curtain aside, 119 00:06:52,520 --> 00:06:55,800 Speaker 1: right all of a sudden, after the Biden administration put 120 00:06:55,839 --> 00:06:58,920 Speaker 1: this ira A legislation out that's supposed to give um 121 00:06:59,040 --> 00:07:04,080 Speaker 1: tax rebates or attacks incentives to companies that produce in 122 00:07:04,120 --> 00:07:08,839 Speaker 1: the US, you know, batteries with components and ingredients that 123 00:07:08,920 --> 00:07:11,760 Speaker 1: come from the US. No one really knows what what 124 00:07:11,800 --> 00:07:14,800 Speaker 1: that was where they where those things came from, or 125 00:07:14,880 --> 00:07:16,880 Speaker 1: didn't ever really give it a lot of thought. And 126 00:07:16,920 --> 00:07:19,320 Speaker 1: now the Treasury Department is sitting on this legislation, like 127 00:07:19,400 --> 00:07:21,920 Speaker 1: what in the heck are we gonna do? Because nobody's 128 00:07:21,960 --> 00:07:25,760 Speaker 1: going to get this tax credit unless we let you know, 129 00:07:26,400 --> 00:07:30,480 Speaker 1: all these American producers use Chinese chemicals in their batteries, 130 00:07:30,560 --> 00:07:34,040 Speaker 1: right yeah, And I and I think you know that 131 00:07:34,280 --> 00:07:37,280 Speaker 1: my concern in terms of ev adoption is that, like 132 00:07:37,320 --> 00:07:39,400 Speaker 1: you said, when you pull back this curtain, or when 133 00:07:39,440 --> 00:07:42,760 Speaker 1: you start asking real questions, which nobody has had to 134 00:07:42,800 --> 00:07:45,760 Speaker 1: do because the stocks just went up, right, and that 135 00:07:46,600 --> 00:07:50,560 Speaker 1: you know that that the end justified those means. Is 136 00:07:50,600 --> 00:07:53,640 Speaker 1: that now if we start asking real questions or difficult questions, 137 00:07:53,680 --> 00:07:57,360 Speaker 1: I'm not sure you know that those answers are what 138 00:07:57,520 --> 00:08:00,920 Speaker 1: necessarily we want to hear. I mean, Tesla does its 139 00:08:00,960 --> 00:08:04,600 Speaker 1: semi launch. It's a megawatt of power to charge that thing. 140 00:08:05,080 --> 00:08:07,640 Speaker 1: Think of a truck stop along the highway. I just 141 00:08:07,760 --> 00:08:12,800 Speaker 1: drove sixteen hours straight from Florida over the holiday. You know, 142 00:08:12,920 --> 00:08:15,880 Speaker 1: I think I think my longest stop was seven minutes, right, 143 00:08:16,040 --> 00:08:19,200 Speaker 1: And but think about those truck stops that I pulled 144 00:08:19,200 --> 00:08:23,160 Speaker 1: into that if those are if those are charging electric center, 145 00:08:23,320 --> 00:08:26,080 Speaker 1: Like that's a small city in terms of of a 146 00:08:26,160 --> 00:08:32,640 Speaker 1: power draw. Um, you know to do yeah, just to 147 00:08:32,679 --> 00:08:36,240 Speaker 1: do what we already do now. Alright, alright, good stuff, alright, 148 00:08:36,240 --> 00:08:38,960 Speaker 1: good stuff on the auto front, real quick? Uh man deep. 149 00:08:39,440 --> 00:08:42,200 Speaker 1: What's the theme for coming out of tech? Thirty seconds? 150 00:08:42,559 --> 00:08:46,559 Speaker 1: Free cash flow. Everyone is fixated on free cash freelove. 151 00:08:46,800 --> 00:08:50,200 Speaker 1: And that's why you keep hearing about layoffs because investors 152 00:08:50,559 --> 00:08:53,000 Speaker 1: want to make sure that these companies are making money, 153 00:08:53,000 --> 00:09:00,240 Speaker 1: whether it's a marketplace company, think like AI or VR Juicy, 154 00:09:00,360 --> 00:09:04,840 Speaker 1: I think of those big juicy margins. Mandy Sing, senior 155 00:09:04,880 --> 00:09:07,320 Speaker 1: tech analysts Bloomberg Intelligence, joining us here in a Bloomberg 156 00:09:07,320 --> 00:09:10,360 Speaker 1: interactor broker studio. And Kevin Tyne and senior auto analysts 157 00:09:10,360 --> 00:09:14,360 Speaker 1: Bloomberg Intelligence. He's at Vegas. He's at the Consumer Electronics Show, 158 00:09:14,440 --> 00:09:18,000 Speaker 1: which is hundreds of thousands of tech geeks get together 159 00:09:18,240 --> 00:09:20,120 Speaker 1: in the desert and see what the new toys are 160 00:09:20,160 --> 00:09:27,520 Speaker 1: that's coming up. This is Bloomberg. We want to get 161 00:09:27,520 --> 00:09:31,920 Speaker 1: a preview here. Three outlook on the big banks, the 162 00:09:31,960 --> 00:09:36,200 Speaker 1: investment banks, the asset managers. There's nobody better to do 163 00:09:36,280 --> 00:09:38,960 Speaker 1: that with. And Alison Williams. She's a senior global analysts 164 00:09:38,960 --> 00:09:42,280 Speaker 1: covering all the financial services companies for Bloomberg Intelligence. She 165 00:09:42,400 --> 00:09:46,480 Speaker 1: joins us from Bloomberg's sprawling Princeton, New Jersey campus. Man, 166 00:09:46,559 --> 00:09:50,400 Speaker 1: if you've been to the Princeton office, it's great. And 167 00:09:50,400 --> 00:09:52,400 Speaker 1: they just and they just redid it, right, Allison, just 168 00:09:52,440 --> 00:09:56,319 Speaker 1: did a big renovation. They did all right good stuff. 169 00:09:56,320 --> 00:09:59,760 Speaker 1: I mean the little bit of Princeton one time. Really, Yes, 170 00:10:00,000 --> 00:10:04,520 Speaker 1: need to get out a little more. There is a 171 00:10:04,600 --> 00:10:08,440 Speaker 1: university there right. My buddy Brian Sullivan from a network 172 00:10:08,800 --> 00:10:11,560 Speaker 1: that I will not name, lives there. So best hoagies 173 00:10:11,600 --> 00:10:13,800 Speaker 1: in the world, Hoghaven. Just a little plug there, Allison. 174 00:10:13,840 --> 00:10:17,280 Speaker 1: What's the key theme that you're looking for here in 175 00:10:18,400 --> 00:10:19,840 Speaker 1: I mean, I know we're gonna have some bank earnings 176 00:10:19,880 --> 00:10:21,320 Speaker 1: coming up in a few weeks, but what are some 177 00:10:21,320 --> 00:10:23,680 Speaker 1: of the bigger themes that you and and and big 178 00:10:23,679 --> 00:10:27,240 Speaker 1: bank investors are looking at. So so, obviously the big 179 00:10:27,320 --> 00:10:30,520 Speaker 1: question is going to continue to be recession, right, so 180 00:10:30,640 --> 00:10:34,360 Speaker 1: that the depth of the recession, the length of the recession, um. 181 00:10:34,400 --> 00:10:37,359 Speaker 1: But I think what we're focused on is the overall 182 00:10:37,520 --> 00:10:42,800 Speaker 1: level of profitability at these banks and just um, you know, 183 00:10:42,960 --> 00:10:48,120 Speaker 1: the incredible power that they have to withstand UM even 184 00:10:48,160 --> 00:10:50,800 Speaker 1: a deep recession. Keep in mind that the last two 185 00:10:50,840 --> 00:10:53,440 Speaker 1: cycles we had were crises, right, So we had the 186 00:10:53,480 --> 00:10:58,160 Speaker 1: pandemic UM and before that it was the global financial crisis. UM. 187 00:10:58,240 --> 00:11:01,240 Speaker 1: So as we go think about session UM, you know, 188 00:11:01,320 --> 00:11:04,360 Speaker 1: that might be sort of in the back of investors minds, 189 00:11:04,360 --> 00:11:06,839 Speaker 1: but we think that the cycle looks a lot more 190 00:11:06,960 --> 00:11:10,520 Speaker 1: like you know, that of two thousand UM, and we 191 00:11:10,600 --> 00:11:13,920 Speaker 1: think that regardless of the provisions, regardless of the change 192 00:11:13,920 --> 00:11:18,200 Speaker 1: in accounting that's going to make those provisions very front loaded. UM, 193 00:11:18,240 --> 00:11:21,359 Speaker 1: the banks are in a great position to weather the storm. 194 00:11:21,400 --> 00:11:25,360 Speaker 1: And then specifically to the investment banking unit. You know, UM, 195 00:11:25,480 --> 00:11:27,360 Speaker 1: we're going to hear more and more stories over the 196 00:11:27,400 --> 00:11:29,480 Speaker 1: next couple of weeks about some of the head COUMP 197 00:11:29,520 --> 00:11:32,319 Speaker 1: cuts and some of the COMP cuts. But I think 198 00:11:32,360 --> 00:11:36,320 Speaker 1: that you know, again looking back to the global financial crisis, 199 00:11:36,640 --> 00:11:40,360 Speaker 1: you know, we will see some reductions, but nowhere near 200 00:11:40,400 --> 00:11:45,520 Speaker 1: what we saw back then. Yet revenue is within that range. 201 00:11:45,520 --> 00:11:49,240 Speaker 1: So the profitability UM of these banks is really strong, 202 00:11:49,360 --> 00:11:52,080 Speaker 1: and we think that that's what investors should be focusing on. 203 00:11:52,600 --> 00:11:57,280 Speaker 1: So UM, basically, the net interest margin works out too 204 00:11:58,160 --> 00:12:02,200 Speaker 1: offset the higher loan lost provisions. What if we do 205 00:12:02,280 --> 00:12:06,440 Speaker 1: see though a ton of defaults coming up in UM, 206 00:12:08,160 --> 00:12:10,920 Speaker 1: what if we see that those loan lost provisions aren't 207 00:12:10,920 --> 00:12:15,000 Speaker 1: just provisions but actually you know, necessary. So I think 208 00:12:15,120 --> 00:12:17,280 Speaker 1: you know the best way to frame that or think 209 00:12:17,320 --> 00:12:21,240 Speaker 1: about that is UM. You know, Jamie dimond Um gave 210 00:12:21,280 --> 00:12:26,320 Speaker 1: a great scenary analysis for JP Morgan, the bank that 211 00:12:26,360 --> 00:12:30,720 Speaker 1: he runs, on the last earnings called you know, if 212 00:12:30,720 --> 00:12:34,960 Speaker 1: we see six unemployment, we could see six billion of 213 00:12:35,440 --> 00:12:40,319 Speaker 1: added provisions over a couple of quarters. That number for 214 00:12:40,720 --> 00:12:44,079 Speaker 1: UM in the pandemic was closer to fifteen billion over 215 00:12:44,120 --> 00:12:46,720 Speaker 1: a couple of quarters. UM. So I think that gives 216 00:12:46,720 --> 00:12:49,560 Speaker 1: you a sense of um, you know, sort of the 217 00:12:49,600 --> 00:12:53,960 Speaker 1: magnitude there and so UM you know, net interest income, 218 00:12:54,440 --> 00:12:57,199 Speaker 1: you know, the growth that we have last year was tremendous. 219 00:12:57,240 --> 00:13:00,120 Speaker 1: We're not expecting UM similar growth this year, but it 220 00:13:00,160 --> 00:13:03,120 Speaker 1: but again we're at sort of a high level. And 221 00:13:03,160 --> 00:13:06,960 Speaker 1: then again, as far as trading goes, we think that 222 00:13:07,000 --> 00:13:09,680 Speaker 1: there's still more volatility and fixed income. Could we see 223 00:13:09,720 --> 00:13:13,960 Speaker 1: some moderation um, you know, from the extraordinary levels of 224 00:13:13,960 --> 00:13:16,720 Speaker 1: this past year, Yes, but we think we remain in 225 00:13:16,760 --> 00:13:20,520 Speaker 1: a historically high range The same is true for equity trading. 226 00:13:20,559 --> 00:13:23,360 Speaker 1: Equity trading was down over the past year. But but 227 00:13:23,440 --> 00:13:26,880 Speaker 1: again historically, high fees are going to be the big question. 228 00:13:26,960 --> 00:13:28,440 Speaker 1: And I think that's the one thing that we're going 229 00:13:28,520 --> 00:13:31,400 Speaker 1: to be looking at this quarter in terms of setting 230 00:13:31,440 --> 00:13:33,360 Speaker 1: a run rate for the year. You know, I p 231 00:13:33,480 --> 00:13:36,680 Speaker 1: O s um. We're far in few between last year 232 00:13:36,840 --> 00:13:41,320 Speaker 1: after a record We have pipelines that remained sort of 233 00:13:41,320 --> 00:13:43,840 Speaker 1: full over the past year, though getting a bit stale. 234 00:13:44,400 --> 00:13:47,840 Speaker 1: Can those be executed? We're entering the year. You know, 235 00:13:47,880 --> 00:13:50,600 Speaker 1: granted things were choppy in the last fourth quarter, but 236 00:13:50,640 --> 00:13:53,640 Speaker 1: we we did. Stocks did end the year higher versus 237 00:13:53,679 --> 00:13:57,880 Speaker 1: three Q And will there be companies taking advantage of 238 00:13:57,880 --> 00:14:01,079 Speaker 1: that um to do public You know, there's still a 239 00:14:01,160 --> 00:14:06,720 Speaker 1: question around UM, you know, pricing expectations. Obviously those have 240 00:14:06,800 --> 00:14:11,040 Speaker 1: had to reset compared with a year ago. But that's 241 00:14:11,080 --> 00:14:13,160 Speaker 1: what we're looking for in one queue. How much of 242 00:14:13,200 --> 00:14:15,600 Speaker 1: that can come to market? Hey, Alice, when I think 243 00:14:15,600 --> 00:14:18,680 Speaker 1: about you know, um, the Wells, Fargoes of the world, 244 00:14:18,720 --> 00:14:21,160 Speaker 1: the city banks, the Bank of America's I think of 245 00:14:21,640 --> 00:14:26,000 Speaker 1: corporate lending, consumer lending and loan growth was something that 246 00:14:26,120 --> 00:14:28,280 Speaker 1: has talked about a lot. How is it out there? 247 00:14:28,120 --> 00:14:32,880 Speaker 1: Are companies borrowing? Are are people borrowing to grow to 248 00:14:33,040 --> 00:14:35,560 Speaker 1: start businesses and things like that. I think, you know 249 00:14:35,600 --> 00:14:38,840 Speaker 1: what we'll see in the most recent quarter, um. You know, 250 00:14:38,840 --> 00:14:43,360 Speaker 1: a couple of things that so commercial balances um, you know, 251 00:14:43,440 --> 00:14:46,320 Speaker 1: really slowed last quarter. But a lot of that UM 252 00:14:46,640 --> 00:14:49,680 Speaker 1: was you know, attributed to some of the banks talking 253 00:14:49,720 --> 00:14:52,520 Speaker 1: about trying to restrain their bounty because they had to 254 00:14:53,760 --> 00:14:56,080 Speaker 1: move up their capital ratios, right, and so the way 255 00:14:56,080 --> 00:14:59,479 Speaker 1: that they moved those up is by reducing the denominator 256 00:14:59,600 --> 00:15:03,360 Speaker 1: to to look a bit healthier. UM. So they said that, 257 00:15:03,520 --> 00:15:06,000 Speaker 1: you know, they expect this quarter that might normalize a 258 00:15:06,080 --> 00:15:10,440 Speaker 1: little bit um. So, so we will see the capital markets. 259 00:15:10,480 --> 00:15:12,240 Speaker 1: The bond market did open up a little bit in 260 00:15:12,280 --> 00:15:15,240 Speaker 1: the fourth quarter, UM, so perhaps some might have gone 261 00:15:15,240 --> 00:15:17,280 Speaker 1: a little bit more might have gone to the capital markets, 262 00:15:17,280 --> 00:15:19,440 Speaker 1: but we expect to see some growth. I think the 263 00:15:19,440 --> 00:15:22,680 Speaker 1: real question is on the consumer side, and especially on 264 00:15:22,720 --> 00:15:26,000 Speaker 1: the credit card side in general. Fourth quarter is the 265 00:15:26,040 --> 00:15:31,280 Speaker 1: strongest quarter, obviously due to holiday spending. And we'll see 266 00:15:31,360 --> 00:15:35,200 Speaker 1: if consumers are borrowing um and then we're gonna be 267 00:15:35,520 --> 00:15:37,920 Speaker 1: you know, the one side. Are they borrowing? Is it 268 00:15:38,000 --> 00:15:41,640 Speaker 1: healthy borrowing or is it constrained borrowing? And what's happening 269 00:15:41,640 --> 00:15:44,200 Speaker 1: on the credit side of things as we head into 270 00:15:45,280 --> 00:15:47,080 Speaker 1: alson just real quickly. I know you also follow the 271 00:15:47,080 --> 00:15:49,760 Speaker 1: asset managers, the black rocks of the world that hero prices. 272 00:15:50,320 --> 00:15:52,840 Speaker 1: What what's the call there for twenty three for those companies. 273 00:15:53,840 --> 00:15:56,640 Speaker 1: I mean, I think things still look healthy. You know, 274 00:15:56,680 --> 00:15:58,680 Speaker 1: we sort of face our forecast there. You know, it's 275 00:15:58,720 --> 00:16:01,880 Speaker 1: all about the It's all about the markets in terms 276 00:16:01,960 --> 00:16:05,560 Speaker 1: of the current earnings and our equity strategy team, UM. 277 00:16:05,640 --> 00:16:09,080 Speaker 1: You know, things were about flat farish value, so not 278 00:16:09,120 --> 00:16:14,640 Speaker 1: expecting much either way um over the next year or so. UM. 279 00:16:14,720 --> 00:16:18,800 Speaker 1: But you know, in general, investors want to see flows 280 00:16:18,960 --> 00:16:21,880 Speaker 1: and so while their earnings relate to the markets, flows 281 00:16:21,920 --> 00:16:27,120 Speaker 1: really can drive evaluations. UM. You know, again, relying on 282 00:16:27,160 --> 00:16:31,440 Speaker 1: our strategy team's forecast, value looks like um, it has 283 00:16:31,480 --> 00:16:34,400 Speaker 1: the edge. So we expect managers such as t ROW 284 00:16:34,520 --> 00:16:37,800 Speaker 1: may continue to see pressure in some of their growth 285 00:16:37,840 --> 00:16:41,520 Speaker 1: funds UM, hopefully offsetting that with hopefully for them off 286 00:16:41,520 --> 00:16:44,760 Speaker 1: setting that with some of the retirement money. UM. But 287 00:16:44,920 --> 00:16:47,880 Speaker 1: in general that the I guess the one exciting thing 288 00:16:47,880 --> 00:16:50,800 Speaker 1: will be active versus passive. This is an environment that 289 00:16:51,320 --> 00:16:55,840 Speaker 1: favors active uh, you know, higher rates, lots of volatility, 290 00:16:56,000 --> 00:16:59,560 Speaker 1: low correlations. Um. So we'll see if that can give 291 00:16:59,600 --> 00:17:02,520 Speaker 1: active last All right, good stuff, Allison Williams, thanks so 292 00:17:02,600 --> 00:17:04,960 Speaker 1: much for joining us. We always appreciate getting the overview 293 00:17:05,560 --> 00:17:10,199 Speaker 1: of the big banks, investment banks, asset managers, jillions of 294 00:17:10,240 --> 00:17:14,760 Speaker 1: dollars under management. Allison has been covering those companies for decades. Uh. 295 00:17:14,800 --> 00:17:18,480 Speaker 1: And she's the senior global banks and asset Managers analysts 296 00:17:18,480 --> 00:17:22,520 Speaker 1: for Bloomberg Intelligence. She's based in our Princeton, New Jersey office. 297 00:17:22,840 --> 00:17:25,000 Speaker 1: Lots of good folks down there doing good work. Really 298 00:17:25,040 --> 00:17:27,480 Speaker 1: the backbone of some of the global data that we 299 00:17:27,520 --> 00:17:31,400 Speaker 1: all depend upon for the Bloomberg terminal. This Chris Bloomberg. 300 00:17:34,800 --> 00:17:38,480 Speaker 1: I s M data came in, uh, you know, kind 301 00:17:38,480 --> 00:17:41,320 Speaker 1: of mixed data. But the new orders came in lower 302 00:17:41,359 --> 00:17:42,920 Speaker 1: than last quarter. We want to get our last month. 303 00:17:42,920 --> 00:17:44,280 Speaker 1: We want to get the bottom of all this. We 304 00:17:44,280 --> 00:17:47,199 Speaker 1: welcome Tim Fiuri. He's the chairman of the Institute for 305 00:17:47,320 --> 00:17:50,960 Speaker 1: Supply Management otherwise known as I s M. So Tim 306 00:17:51,000 --> 00:17:53,440 Speaker 1: on the numbers you guys reported this morning, Matt and 307 00:17:53,480 --> 00:17:55,320 Speaker 1: I want to start with with the new orders at 308 00:17:55,320 --> 00:17:58,760 Speaker 1: forty five point too, was that a big concern for you. Yeah, 309 00:17:58,800 --> 00:18:01,359 Speaker 1: I got it. Well, it's a bit surprising. I'm waiting 310 00:18:01,400 --> 00:18:03,879 Speaker 1: for for sellers to come back in and negotiate with 311 00:18:03,880 --> 00:18:06,800 Speaker 1: buyers to get the new orders flowing again. You know, 312 00:18:06,920 --> 00:18:09,040 Speaker 1: I look at I look at demand, new orders, new 313 00:18:09,080 --> 00:18:12,280 Speaker 1: export orders back while I was in customer inventories, and 314 00:18:12,640 --> 00:18:14,840 Speaker 1: the new orders had the single biggest impact on the 315 00:18:14,880 --> 00:18:17,480 Speaker 1: p m I declining month over a month at a 316 00:18:17,520 --> 00:18:19,879 Speaker 1: two point loss. So, you know, a bit of a 317 00:18:19,880 --> 00:18:22,439 Speaker 1: surprise here at forty five point two. I think you know, 318 00:18:22,480 --> 00:18:24,960 Speaker 1: back to your common Paul earlier on the show, that 319 00:18:25,080 --> 00:18:26,760 Speaker 1: when things get down to forty five, they get a 320 00:18:26,760 --> 00:18:29,320 Speaker 1: little concerning that. That's been my experience on the p 321 00:18:29,440 --> 00:18:32,000 Speaker 1: m I overall number. So we're still at forty eight 322 00:18:32,040 --> 00:18:35,040 Speaker 1: point four. I've been saying now for several months. Forty 323 00:18:35,040 --> 00:18:36,800 Speaker 1: eight to fifty two is probably the range that we're 324 00:18:36,840 --> 00:18:39,359 Speaker 1: gonna be running in for quite some time. It feels 325 00:18:39,359 --> 00:18:41,720 Speaker 1: like that's exactly where we were in December. I'm makes 326 00:18:41,800 --> 00:18:44,440 Speaker 1: us to move into January because December was a really 327 00:18:44,440 --> 00:18:47,280 Speaker 1: weird month. We had a lot of seasonal factors. Take 328 00:18:47,760 --> 00:18:50,440 Speaker 1: take the numbers up. I think the non seasonal number 329 00:18:50,440 --> 00:18:54,719 Speaker 1: would have been about not unusual, but then a lot 330 00:18:54,760 --> 00:18:56,400 Speaker 1: of people went home early, A lot of people took 331 00:18:56,440 --> 00:18:59,480 Speaker 1: all the vacation. I think people re up for earlier 332 00:18:59,480 --> 00:19:01,760 Speaker 1: than they normally do. So yeah, I'm a little concerned 333 00:19:01,760 --> 00:19:04,400 Speaker 1: about the new order number. Our prices have come down 334 00:19:04,640 --> 00:19:07,600 Speaker 1: a month over month. Here seven percent of the respondents 335 00:19:07,640 --> 00:19:11,480 Speaker 1: indicated same of lower prices, same as in November. Uh, 336 00:19:11,800 --> 00:19:13,800 Speaker 1: I think there's there's probably a more fundamental here. So 337 00:19:14,080 --> 00:19:17,560 Speaker 1: percent of manufacturing GDP is now in contraction. That means 338 00:19:17,600 --> 00:19:23,879 Speaker 1: it's nine or less. The alarming numbers that it's contracting, 339 00:19:23,880 --> 00:19:26,600 Speaker 1: it's forty five or less. So that's up from six 340 00:19:27,560 --> 00:19:32,320 Speaker 1: total in November at less. So we're not on a 341 00:19:32,320 --> 00:19:35,359 Speaker 1: good trend here. But we just finished our forecast. You 342 00:19:35,400 --> 00:19:37,480 Speaker 1: guys have you know, we believe to each other on 343 00:19:37,560 --> 00:19:41,000 Speaker 1: the Business Panel believes is gonna be a lot like 344 00:19:41,040 --> 00:19:43,919 Speaker 1: two that the second half of twenty three is going 345 00:19:44,000 --> 00:19:47,240 Speaker 1: to be quite a lot of uncertainty here in the 346 00:19:47,240 --> 00:19:50,119 Speaker 1: first half. I wondered, Tim, I mean, aside from the 347 00:19:51,440 --> 00:19:57,520 Speaker 1: you know, concerning amount of contractions that you're seeing, Um, 348 00:19:57,720 --> 00:20:00,520 Speaker 1: is the data less noisy now me than it was 349 00:20:00,640 --> 00:20:03,080 Speaker 1: last year? I mean, are we getting back to normal, 350 00:20:03,160 --> 00:20:08,800 Speaker 1: even if we're talking about, you know, a normal recession. Yeah, definitely. 351 00:20:08,840 --> 00:20:10,760 Speaker 1: I we this is like three or four months, it's 352 00:20:10,760 --> 00:20:14,520 Speaker 1: a normality. I think back in September October I pretty 353 00:20:14,560 --> 00:20:16,359 Speaker 1: much said, hey, the numbers that we have now, so 354 00:20:16,800 --> 00:20:20,480 Speaker 1: it's not a supply constraint expansion that that the suppliers 355 00:20:20,520 --> 00:20:23,840 Speaker 1: delivered much better. Prices started to come down, so I 356 00:20:24,200 --> 00:20:26,760 Speaker 1: think they're much more normal, but it's gonna take probably 357 00:20:26,760 --> 00:20:28,480 Speaker 1: a little time to get there. At this point, I 358 00:20:28,520 --> 00:20:32,440 Speaker 1: would say we're in normal economic contract and expansion, meaning 359 00:20:32,480 --> 00:20:35,359 Speaker 1: we're waiting for demand to come back. If demand doesn't 360 00:20:35,359 --> 00:20:37,480 Speaker 1: come back in the next two or three months, then 361 00:20:37,520 --> 00:20:39,800 Speaker 1: you're gonna see a lot of suppliers having to release people. 362 00:20:40,240 --> 00:20:42,480 Speaker 1: And nobody really wants to see that. And I think 363 00:20:42,480 --> 00:20:45,480 Speaker 1: the reason why the new order level isn't accelerating is 364 00:20:45,520 --> 00:20:47,840 Speaker 1: because we still have very long lead times. There's still 365 00:20:47,880 --> 00:20:50,640 Speaker 1: thirty five percent above troth Ley times. If we got 366 00:20:50,760 --> 00:20:53,320 Speaker 1: fifteen points of those back, I think bars would be 367 00:20:53,400 --> 00:20:56,160 Speaker 1: much more inclined to go ahead and negotiate deals because 368 00:20:56,160 --> 00:20:58,600 Speaker 1: the pricing has been coming down, has to come down 369 00:20:58,600 --> 00:21:01,159 Speaker 1: to the right level, and probably not, but you know, 370 00:21:01,200 --> 00:21:04,920 Speaker 1: you got delivering Cronser prices coming down, lead times just 371 00:21:04,960 --> 00:21:07,800 Speaker 1: still stopping lee strong. So buyers are saying, hey, I 372 00:21:07,800 --> 00:21:09,879 Speaker 1: don't believe these lead times, so I'm not gonna opt in. 373 00:21:10,280 --> 00:21:12,680 Speaker 1: Intellers are saying, well, you're gonna need to. This is 374 00:21:12,720 --> 00:21:14,560 Speaker 1: all going to get itself resolved in the last couple 375 00:21:14,560 --> 00:21:16,720 Speaker 1: of months for sure. All right, Tim, great stuff. I 376 00:21:16,720 --> 00:21:19,680 Speaker 1: really appreciate you checking in there on this I s 377 00:21:19,800 --> 00:21:22,320 Speaker 1: M data that was released this morning. Tim Fury, he's 378 00:21:22,359 --> 00:21:28,199 Speaker 1: the chairman of the Institute for Supply Management. All right, 379 00:21:28,280 --> 00:21:30,920 Speaker 1: let's pivot here and talk tech. And we talk tech 380 00:21:31,280 --> 00:21:33,479 Speaker 1: for a lot of people. That means you gotta start 381 00:21:33,680 --> 00:21:36,560 Speaker 1: with Apple. And I'm looking at the stock here. You know, 382 00:21:36,600 --> 00:21:39,560 Speaker 1: it was all twenty nine percent last year. That's up 383 00:21:39,600 --> 00:21:42,280 Speaker 1: about one today. But we had you know, people are 384 00:21:42,280 --> 00:21:45,720 Speaker 1: definitely calling the question the ability of Apple to continue 385 00:21:45,760 --> 00:21:49,320 Speaker 1: to grow through what might be a recession looking likely 386 00:21:49,359 --> 00:21:51,640 Speaker 1: in So let's bring in on a rock Ronic. He's 387 00:21:51,640 --> 00:21:57,919 Speaker 1: a senior technology technology analyst with Bloomberg Intelligence. You know, 388 00:21:57,960 --> 00:22:02,560 Speaker 1: the stock down kind of last year, ish, um, that's 389 00:22:02,560 --> 00:22:05,240 Speaker 1: another performance for you know, the Apple shareholders that they're 390 00:22:05,280 --> 00:22:07,880 Speaker 1: not used to that. What's your call on the Apple story? 391 00:22:07,880 --> 00:22:11,920 Speaker 1: These days. So I think, Paul, I think everybody is 392 00:22:11,960 --> 00:22:15,320 Speaker 1: getting to a realization that Apple cannot grow in double 393 00:22:15,320 --> 00:22:17,720 Speaker 1: digits forever. And I think this is something we've been 394 00:22:17,720 --> 00:22:20,040 Speaker 1: hopping on for a while, that this is a company 395 00:22:20,080 --> 00:22:22,280 Speaker 1: at best on the top line will grow you know, 396 00:22:22,359 --> 00:22:25,840 Speaker 1: somewhere around five and on the bottom line with buy 397 00:22:25,880 --> 00:22:28,400 Speaker 1: bags and uh, you know, I would say a little 398 00:22:28,400 --> 00:22:31,960 Speaker 1: bit of expansion, you know, EPs somewhere around n I 399 00:22:31,960 --> 00:22:34,359 Speaker 1: think I think the world is coming to your realization 400 00:22:34,480 --> 00:22:38,200 Speaker 1: this is not a double digits growth growth story anymore. 401 00:22:38,320 --> 00:22:40,920 Speaker 1: And I think that the valuation is reflecting that now. 402 00:22:41,760 --> 00:22:44,760 Speaker 1: So can I get back to that story? I mean, 403 00:22:44,800 --> 00:22:48,359 Speaker 1: what's the great big hope for Apple? Is it a car? 404 00:22:48,560 --> 00:22:52,239 Speaker 1: Is it some sort of virtual reality glasses? Can they 405 00:22:52,280 --> 00:22:54,600 Speaker 1: sell more of the watch? I mean, what, what's where's 406 00:22:54,840 --> 00:22:58,840 Speaker 1: the growth for them? So? I mean, in all, honestly, 407 00:22:58,880 --> 00:23:01,160 Speaker 1: if the global GDP somewhere around two and a half 408 00:23:01,320 --> 00:23:03,760 Speaker 1: three percent, you know, growing at you know, six to 409 00:23:03,840 --> 00:23:05,720 Speaker 1: eight percent is not a bad idea, I mean, in 410 00:23:05,760 --> 00:23:08,040 Speaker 1: my in my view, but um, this year is going 411 00:23:08,080 --> 00:23:10,679 Speaker 1: to be slow growth because of global consumer spending soda. 412 00:23:11,119 --> 00:23:12,800 Speaker 1: Next year there's going to be a rebound on that 413 00:23:13,200 --> 00:23:14,920 Speaker 1: but I would say in the long run, this is 414 00:23:14,960 --> 00:23:17,399 Speaker 1: still a story that is more of a high single 415 00:23:17,400 --> 00:23:21,680 Speaker 1: digit growth story. Now when you talk about specific products, UM, 416 00:23:21,720 --> 00:23:24,600 Speaker 1: you know you would see the iPhone installed based growth 417 00:23:24,640 --> 00:23:28,160 Speaker 1: steadily over time. UM, air pods is a very big 418 00:23:28,359 --> 00:23:31,320 Speaker 1: growth story also. But again you know remember air pods, 419 00:23:31,359 --> 00:23:34,600 Speaker 1: air watches and all these things they are they may 420 00:23:34,640 --> 00:23:37,560 Speaker 1: grow in double digits, but from a overall you know, 421 00:23:37,680 --> 00:23:40,239 Speaker 1: Apple's revenue point of view, they really don't contribute much 422 00:23:40,280 --> 00:23:43,560 Speaker 1: because they're very small portion of the overall time. All right, 423 00:23:44,040 --> 00:23:46,040 Speaker 1: if if, if this is the stock I'm thinking about, 424 00:23:46,080 --> 00:23:49,240 Speaker 1: as you know, an analysts, portfolio manager and investor, and 425 00:23:49,280 --> 00:23:52,400 Speaker 1: I'm penciling and high single digit earnings growth And look 426 00:23:52,440 --> 00:23:55,320 Speaker 1: at the pe today, looking at it's twenty times earnings, 427 00:23:55,480 --> 00:23:57,440 Speaker 1: I mean, I'm paying twice the growth rate here. Is 428 00:23:57,440 --> 00:24:01,239 Speaker 1: is that a fair multiple? I think? You know, this 429 00:24:01,320 --> 00:24:03,840 Speaker 1: is where this is a marquee name for you know, 430 00:24:04,000 --> 00:24:06,400 Speaker 1: other reasons. If you were to put a DC evaluation 431 00:24:06,440 --> 00:24:08,520 Speaker 1: on it, I mean, I I think the number you're 432 00:24:08,520 --> 00:24:11,359 Speaker 1: going to get is slightly different because, um, this is 433 00:24:11,400 --> 00:24:14,720 Speaker 1: a stock that can you know, that should in all 434 00:24:14,800 --> 00:24:18,000 Speaker 1: logic continue to grow for many years to come. So 435 00:24:18,040 --> 00:24:20,359 Speaker 1: you could argue that over the next seven eight years, 436 00:24:20,440 --> 00:24:24,040 Speaker 1: this would you know, be a substantial portion of the 437 00:24:24,160 --> 00:24:27,359 Speaker 1: overall you know, take framework when it comes to anything 438 00:24:27,359 --> 00:24:30,880 Speaker 1: consumer devices. You you know, we expect a fair fair 439 00:24:30,960 --> 00:24:33,400 Speaker 1: larger number of iPhones down the road. So I think 440 00:24:33,400 --> 00:24:36,240 Speaker 1: this is more of a value at a reasonable price 441 00:24:36,359 --> 00:24:38,760 Speaker 1: rather than growth name. I think the is was treated 442 00:24:38,760 --> 00:24:40,880 Speaker 1: as a growth name for the last few years. Um. 443 00:24:40,920 --> 00:24:42,600 Speaker 1: I think this is going to be very very much 444 00:24:42,680 --> 00:24:44,800 Speaker 1: like a Coca Cola or a Costco, And I would 445 00:24:44,880 --> 00:24:47,720 Speaker 1: argue both of them are trade way more than twenty 446 00:24:47,720 --> 00:24:51,879 Speaker 1: times earnings Baul, Do they have a Does Apple have 447 00:24:51,920 --> 00:24:54,440 Speaker 1: a deep en up bench that you have no concern 448 00:24:54,640 --> 00:24:58,000 Speaker 1: about Tim Cook? I mean, he seems very healthy and 449 00:24:58,560 --> 00:25:04,320 Speaker 1: he's young, but you know who fills his place if 450 00:25:04,320 --> 00:25:08,520 Speaker 1: he needs to go in terms, and has done an 451 00:25:08,560 --> 00:25:10,960 Speaker 1: amazing job over the last several years. But I would 452 00:25:11,240 --> 00:25:13,440 Speaker 1: I would argue that Apple is one of those companies 453 00:25:13,680 --> 00:25:17,000 Speaker 1: that does not need a revolutionary, needed or that big 454 00:25:17,000 --> 00:25:19,520 Speaker 1: of a visionary At this point, the installed base on 455 00:25:19,560 --> 00:25:22,399 Speaker 1: its products is so wide right now that you know 456 00:25:22,480 --> 00:25:24,320 Speaker 1: it needs to figure out how it's going to sell 457 00:25:24,359 --> 00:25:27,840 Speaker 1: into that installed base. Most services, more content, more video 458 00:25:28,200 --> 00:25:31,280 Speaker 1: and more accessories. So I I really don't think that 459 00:25:31,320 --> 00:25:34,040 Speaker 1: we need that level of Steve Jobs kind of a 460 00:25:34,040 --> 00:25:36,560 Speaker 1: person at this point for this company. I'll tell you 461 00:25:36,560 --> 00:25:38,080 Speaker 1: what they need on or wrong. They need to listen 462 00:25:38,119 --> 00:25:41,040 Speaker 1: to my advice here, and my advice is they need 463 00:25:41,080 --> 00:25:43,199 Speaker 1: to raise their dividends. I mean, they got a dividend 464 00:25:43,280 --> 00:25:45,919 Speaker 1: yield less than one percent. I mean, are you kidding me? 465 00:25:46,160 --> 00:25:50,639 Speaker 1: I wanted to They can do both. I want a 466 00:25:50,720 --> 00:25:52,639 Speaker 1: two or three four percent of it then yield? Can 467 00:25:52,680 --> 00:25:55,679 Speaker 1: you make that happen? Fair? Fair? Fair point, Paul. But 468 00:25:55,720 --> 00:25:57,760 Speaker 1: I would argue that they're going to use close to 469 00:25:57,800 --> 00:26:00,560 Speaker 1: a hundred billion and buying back their shares. If if 470 00:26:00,600 --> 00:26:03,520 Speaker 1: you are a long term Apple chairholders, you know they 471 00:26:03,560 --> 00:26:05,920 Speaker 1: would buy close to a hundred billion dollars. I mean, 472 00:26:05,920 --> 00:26:08,520 Speaker 1: that's there's no company out there that generates that amount 473 00:26:08,520 --> 00:26:11,159 Speaker 1: of free count. They can do both, They can do both. 474 00:26:11,680 --> 00:26:13,560 Speaker 1: I don't know why they. I don't know why they. 475 00:26:14,240 --> 00:26:16,840 Speaker 1: If you're gonna pay a dividend, now, I guess they're 476 00:26:16,840 --> 00:26:19,520 Speaker 1: paying it. If you're gonna be a value stock, well 477 00:26:19,560 --> 00:26:21,359 Speaker 1: that's the thing they don't want even be paying with 478 00:26:21,359 --> 00:26:23,800 Speaker 1: that brush. But I mean, I guess they pay this 479 00:26:23,840 --> 00:26:28,080 Speaker 1: token dividends, So dividend funds presumably can buy and own Apple, 480 00:26:28,480 --> 00:26:30,479 Speaker 1: and I guess that's kind of their strategy. But I'm like, 481 00:26:30,880 --> 00:26:32,760 Speaker 1: you can afford to do both and put out a 482 00:26:33,160 --> 00:26:35,560 Speaker 1: nice dividend out there. I think that would be a 483 00:26:35,560 --> 00:26:39,439 Speaker 1: whole new set of investors. But my advice has been 484 00:26:39,440 --> 00:26:43,600 Speaker 1: falling on deafit. I'm going to say that Costco pays 485 00:26:43,680 --> 00:26:46,760 Speaker 1: less than one percent dividends. Okay, So I'm I'm you know, 486 00:26:46,760 --> 00:26:49,240 Speaker 1: I want you to think about Apple not so much 487 00:26:49,320 --> 00:26:52,040 Speaker 1: as a technology stock that somebody can come out and 488 00:26:52,080 --> 00:26:54,679 Speaker 1: take their business away tomorrow. This is very much like 489 00:26:54,720 --> 00:26:58,560 Speaker 1: a consumer um, you know, discriptionary stock where you know something, 490 00:26:58,560 --> 00:27:01,320 Speaker 1: You're right, Costco same dividend and yield, same dividend yield. 491 00:27:01,800 --> 00:27:05,600 Speaker 1: So you've you're you're you're prepared for that question, I know. 492 00:27:05,680 --> 00:27:08,000 Speaker 1: But that's how I think about this company. I don't 493 00:27:08,000 --> 00:27:10,880 Speaker 1: think about this company as a Microsoft or something else. 494 00:27:10,960 --> 00:27:13,240 Speaker 1: This is something This is a brand that will remain 495 00:27:13,280 --> 00:27:15,400 Speaker 1: with us twenty years from now. It is not going 496 00:27:15,400 --> 00:27:17,679 Speaker 1: to be a tech company that somebody can come and 497 00:27:17,720 --> 00:27:19,679 Speaker 1: take their market share away from them. That's not going 498 00:27:19,760 --> 00:27:22,560 Speaker 1: to happen. So the real way to think about this 499 00:27:22,600 --> 00:27:25,359 Speaker 1: company is something that is going to be able to 500 00:27:25,400 --> 00:27:28,000 Speaker 1: sell into that install base. And I never understood and 501 00:27:28,040 --> 00:27:29,919 Speaker 1: when people ask me all the time, why is Costco 502 00:27:29,960 --> 00:27:32,280 Speaker 1: trading get such a high marketple And the reason for 503 00:27:32,320 --> 00:27:34,720 Speaker 1: that is because somebody like a Costco or a Coca 504 00:27:34,720 --> 00:27:37,399 Speaker 1: Cola will be around twenty years from now and and 505 00:27:37,440 --> 00:27:40,240 Speaker 1: Costco is at thirty one times elearnings. So you you 506 00:27:40,280 --> 00:27:42,320 Speaker 1: want to look at this not so much from a 507 00:27:42,359 --> 00:27:45,720 Speaker 1: traditional tech point of view, Paul, but more so into 508 00:27:45,920 --> 00:27:48,160 Speaker 1: these brands that will remain with us for a very 509 00:27:48,200 --> 00:27:50,640 Speaker 1: long So is that how the market has a market 510 00:27:50,800 --> 00:27:54,040 Speaker 1: transitioned from you know, looking at this as a tech 511 00:27:54,080 --> 00:27:57,760 Speaker 1: s doctor just a big, big consumer name. No, that's 512 00:27:57,760 --> 00:27:59,760 Speaker 1: what that's That is my argument that you have to 513 00:27:59,800 --> 00:28:02,719 Speaker 1: think of this in a very different way because a 514 00:28:02,760 --> 00:28:05,439 Speaker 1: lot of investors get into this with the idea that 515 00:28:05,800 --> 00:28:07,680 Speaker 1: you know, this is a technique. A car is going 516 00:28:07,720 --> 00:28:10,080 Speaker 1: to come and completely change the nature of this business, 517 00:28:10,160 --> 00:28:12,240 Speaker 1: and they're going, this is not how you want to 518 00:28:12,240 --> 00:28:14,919 Speaker 1: think about this. This is a brand that is, you know, 519 00:28:15,000 --> 00:28:17,080 Speaker 1: a central to our life as what we do on 520 00:28:17,119 --> 00:28:19,399 Speaker 1: a daily basis, and this is going to do you 521 00:28:19,640 --> 00:28:22,600 Speaker 1: logically remained with us for a very long period of time. 522 00:28:22,920 --> 00:28:25,720 Speaker 1: You cannot say that about any software company. Frankly buying 523 00:28:25,760 --> 00:28:28,639 Speaker 1: Microsoft perhaps that it is going to be remained with 524 00:28:28,720 --> 00:28:31,200 Speaker 1: you ten years from now. Well, each of them can 525 00:28:31,240 --> 00:28:34,679 Speaker 1: be unseated tomorrow by somebody you know, new coming in. 526 00:28:34,920 --> 00:28:39,000 Speaker 1: Both Apple and Microsoft are a part of your life. Um, 527 00:28:39,640 --> 00:28:44,680 Speaker 1: the differences you enjoy Apple, right? No? I like Microsoft 528 00:28:44,720 --> 00:28:50,400 Speaker 1: as well? Like what dude, not Windows? Surely? No? I 529 00:28:50,400 --> 00:28:54,400 Speaker 1: mean I'm talking about enterprise application almost almost you know, 530 00:28:54,600 --> 00:28:56,880 Speaker 1: they're the heart and lung of every enterprise that's out. 531 00:28:58,200 --> 00:29:00,720 Speaker 1: And so I saw Ubs down. It did it today, 532 00:29:00,760 --> 00:29:03,760 Speaker 1: and I think in part due to some concerns about Azure. 533 00:29:04,000 --> 00:29:06,640 Speaker 1: What's your view of Microsoft here? These days? It will 534 00:29:06,680 --> 00:29:08,760 Speaker 1: slow down? I mean once again, I mean I'm not 535 00:29:08,800 --> 00:29:11,560 Speaker 1: sure why the stocks start focus on what wouldn't slow 536 00:29:11,600 --> 00:29:14,240 Speaker 1: down this year? Give me one metric for any in 537 00:29:14,320 --> 00:29:17,320 Speaker 1: the enterprise business that's not going to slow down this year. 538 00:29:17,600 --> 00:29:21,200 Speaker 1: So I'm I'm sometimes surprised about the stock reaction because 539 00:29:22,040 --> 00:29:24,840 Speaker 1: you know, all companies have said aws said they're going 540 00:29:24,880 --> 00:29:27,520 Speaker 1: to slow down, So why why are people so surprised 541 00:29:27,560 --> 00:29:30,360 Speaker 1: about it? So, I mean, I I my my two 542 00:29:30,440 --> 00:29:33,400 Speaker 1: cents on this entire thing is people, it seems, want 543 00:29:33,440 --> 00:29:36,360 Speaker 1: to be short thing, you know, tech going into this year, 544 00:29:36,800 --> 00:29:39,000 Speaker 1: and how do they do it. They find Apple, they 545 00:29:39,000 --> 00:29:40,920 Speaker 1: find Microsoft. There is no other real way to do 546 00:29:40,960 --> 00:29:43,760 Speaker 1: it given the large market gap of it. So if 547 00:29:43,920 --> 00:29:46,240 Speaker 1: if there is a multiple compression on this thing, so 548 00:29:46,320 --> 00:29:49,480 Speaker 1: be it. And the long run, and I said this recently, 549 00:29:50,320 --> 00:29:52,960 Speaker 1: you know, look what happened with Southwest. Do you think 550 00:29:53,040 --> 00:29:56,040 Speaker 1: the whole world is done with enterprise spending on technology? 551 00:29:56,480 --> 00:30:00,080 Speaker 1: The world is full of legacy applications that are so 552 00:30:00,200 --> 00:30:03,120 Speaker 1: old and so behind that they need to upgrade. So 553 00:30:03,200 --> 00:30:04,360 Speaker 1: you think there are a lot of I think there 554 00:30:04,360 --> 00:30:06,440 Speaker 1: are a lot of Southwest airlines out there that are 555 00:30:06,480 --> 00:30:11,680 Speaker 1: big companies that maybe have underinvested in technology that for 556 00:30:12,280 --> 00:30:15,240 Speaker 1: whatever reason, they're gonna have to step it up. Yeah, 557 00:30:15,360 --> 00:30:17,320 Speaker 1: I can give you Like you you could pick any 558 00:30:17,320 --> 00:30:20,520 Speaker 1: industry out there that is so far behind what you're 559 00:30:20,640 --> 00:30:23,520 Speaker 1: used to on your iPhone, Audio, Amazon app that is 560 00:30:23,560 --> 00:30:25,440 Speaker 1: not the benchmark. If you look at those as the 561 00:30:25,440 --> 00:30:28,760 Speaker 1: benchmarks for any enterprises, enterprises would get a grade of 562 00:30:28,760 --> 00:30:31,400 Speaker 1: two to three on a scale of one to ten, 563 00:30:31,680 --> 00:30:34,240 Speaker 1: whereas your iPhone would get somewhere around our nine or 564 00:30:34,280 --> 00:30:36,480 Speaker 1: a ten. You have to invest. There is no way 565 00:30:36,520 --> 00:30:39,080 Speaker 1: out of it before We only have a minute left. 566 00:30:39,120 --> 00:30:41,560 Speaker 1: But I have to ask you about the Apple car. 567 00:30:42,000 --> 00:30:45,800 Speaker 1: It's due out in six which seems increasingly um you know, 568 00:30:46,080 --> 00:30:49,160 Speaker 1: around the corner. But you don't seem that pumped about it, 569 00:30:49,280 --> 00:30:50,720 Speaker 1: are you? Don't you think this is going to be 570 00:30:50,760 --> 00:30:53,560 Speaker 1: a revolution. It's not gonna be a game changer. It 571 00:30:53,640 --> 00:30:55,760 Speaker 1: would love to It will increase the market cap quite 572 00:30:55,760 --> 00:30:57,480 Speaker 1: a bit. It will be a beautiful car, I'm sure. 573 00:30:57,600 --> 00:30:59,680 Speaker 1: But tell me, in honesty and all honesty, if the 574 00:30:59,720 --> 00:31:03,480 Speaker 1: price point of this car is fifty how many units 575 00:31:03,480 --> 00:31:07,080 Speaker 1: will be sold ever year? Well? Think about math point. Yeah, 576 00:31:07,120 --> 00:31:12,320 Speaker 1: but but that's like that's like Rivan Tesla, the Ford Lightning, Uh, 577 00:31:12,360 --> 00:31:14,920 Speaker 1: you know, the electric Selverado. These are all gonna be 578 00:31:15,080 --> 00:31:17,200 Speaker 1: around there as well. I mean, you can't get into 579 00:31:17,240 --> 00:31:20,280 Speaker 1: a night eleven for less than one oh six. Yeah, 580 00:31:20,320 --> 00:31:22,479 Speaker 1: but but how many nine elevens do you do you 581 00:31:22,520 --> 00:31:24,800 Speaker 1: sell each year? The Tesla to the Model three can 582 00:31:24,840 --> 00:31:27,040 Speaker 1: be sold many many models. It's not a problem. But 583 00:31:27,120 --> 00:31:29,040 Speaker 1: Apple is not going to make a car forty thousand dollars. 584 00:31:29,080 --> 00:31:31,640 Speaker 1: Apple's not going to get into that business. Lamborghini. Apple 585 00:31:31,680 --> 00:31:34,040 Speaker 1: gets into a business but has a forty percent margins 586 00:31:34,080 --> 00:31:36,680 Speaker 1: forty percent margin. Is only one company out there, Lamborghini. 587 00:31:36,760 --> 00:31:39,880 Speaker 1: How many units do you think they ten thousand or 588 00:31:39,920 --> 00:31:42,320 Speaker 1: they try, I mean Lamborghini Ferrari, they sell less than 589 00:31:42,320 --> 00:31:45,080 Speaker 1: ten thousand. Eleven is about that. Let the answer to 590 00:31:45,120 --> 00:31:47,080 Speaker 1: every question, the auto question, he comes right back to 591 00:31:47,160 --> 00:31:50,520 Speaker 1: the Lamborghini example. I mean, you've done this once or twice. 592 00:31:50,560 --> 00:31:53,080 Speaker 1: They're capped pretty much at a ten thousand. All right, 593 00:31:53,400 --> 00:31:55,360 Speaker 1: we're gonna let you go. We're gonna gonna let you 594 00:31:55,360 --> 00:31:57,200 Speaker 1: go here. But we'll come back to this. I guess 595 00:31:57,440 --> 00:31:59,200 Speaker 1: let's get him back on tomorrow. Let's get him back 596 00:31:59,200 --> 00:32:00,959 Speaker 1: onto when when he's in New York. We'll get him 597 00:32:00,960 --> 00:32:02,720 Speaker 1: in studio. So that's how we do it, because he's 598 00:32:02,760 --> 00:32:06,120 Speaker 1: he's just you know, he's somewhere else, some undisclosed location. 599 00:32:06,160 --> 00:32:07,640 Speaker 1: So we'll get back to him. But on a rock Ronda, 600 00:32:07,760 --> 00:32:10,640 Speaker 1: he covers all things technology for Bloomberg Intelligence, giving us 601 00:32:10,680 --> 00:32:13,920 Speaker 1: his call on Apple. You had a little discussion there 602 00:32:14,000 --> 00:32:17,200 Speaker 1: on Microsoft, but I mean, I think he still remains 603 00:32:17,280 --> 00:32:19,840 Speaker 1: a bowl on Apple. But I'm sticking with my argument 604 00:32:19,840 --> 00:32:23,000 Speaker 1: that they should they don't need to, but they should 605 00:32:23,120 --> 00:32:26,040 Speaker 1: raise their dividend give shareholders that maybe a two or 606 00:32:26,040 --> 00:32:29,200 Speaker 1: three percent yield as opposed to the zero point eight 607 00:32:29,400 --> 00:32:37,040 Speaker 1: percent yield right now. O r f nan Oh yeah, 608 00:32:37,080 --> 00:32:40,240 Speaker 1: I think that's like an et F for orphan stocks 609 00:32:40,280 --> 00:32:41,480 Speaker 1: or something like that. I don't know, but we got 610 00:32:41,520 --> 00:32:43,120 Speaker 1: the guy who's in charge of this stuff, and he's 611 00:32:43,160 --> 00:32:45,160 Speaker 1: gonna be ringing the bell the New York Stock Exchange, 612 00:32:45,280 --> 00:32:48,960 Speaker 1: which is still a thing. By the way, Um, it's 613 00:32:48,960 --> 00:32:50,800 Speaker 1: a good market. Have you ever shot during the bell 614 00:32:50,840 --> 00:32:52,360 Speaker 1: the New York Stock Exchange? And I worked on New 615 00:32:52,440 --> 00:32:54,280 Speaker 1: York Stock Exchange, but I made money on the New 616 00:32:54,360 --> 00:32:57,400 Speaker 1: York Stock Exchange floor. Mark Newman, c io at Constrained 617 00:32:57,520 --> 00:33:01,000 Speaker 1: Capital joins us here. Mark Tuck to us about you're 618 00:33:01,000 --> 00:33:02,760 Speaker 1: in our Bloomberg and ar actor Brooker studio, so it 619 00:33:02,760 --> 00:33:04,680 Speaker 1: gets the gold star. He's usually based in Atlanta, but 620 00:33:04,680 --> 00:33:08,160 Speaker 1: he's here in New York today. Mark. What is constraint capit? 621 00:33:08,160 --> 00:33:09,880 Speaker 1: What do you guys do? What is O r f 622 00:33:10,160 --> 00:33:13,080 Speaker 1: N because I'm putting into my terminal. Yeah, thanks a lot. 623 00:33:13,160 --> 00:33:16,840 Speaker 1: So O RFN is the E s G Orphans Index 624 00:33:16,920 --> 00:33:21,440 Speaker 1: E t F okay, so E s G Orphans Index. 625 00:33:21,680 --> 00:33:23,960 Speaker 1: So this is companies that don't go into E s 626 00:33:24,000 --> 00:33:28,360 Speaker 1: G funds. So these sectors, the six sectors that I 627 00:33:28,640 --> 00:33:32,560 Speaker 1: quantitatively selected, have been routinely excluded from the e s G. 628 00:33:32,760 --> 00:33:35,720 Speaker 1: So this is like a sin so it's like tobacco. 629 00:33:36,600 --> 00:33:38,600 Speaker 1: So it is a combination of what I call the 630 00:33:38,640 --> 00:33:44,320 Speaker 1: sin stocks, which we would say tobacco, alcohol, and gambling. Firearms, yes, firearms. 631 00:33:44,360 --> 00:33:46,440 Speaker 1: But there's a bit of a nuance there in terms 632 00:33:46,440 --> 00:33:48,840 Speaker 1: of the size of the company because it's a market 633 00:33:48,880 --> 00:33:51,280 Speaker 1: cap weighted index, so the biggest companies make it, so 634 00:33:51,360 --> 00:33:54,480 Speaker 1: a Smith and Wesson wouldn't make it because it's so small. Um. 635 00:33:54,520 --> 00:33:56,320 Speaker 1: And then on the other side is the woke sort 636 00:33:56,360 --> 00:33:58,480 Speaker 1: of I call them the woke shame stocks if you will. 637 00:33:58,560 --> 00:34:02,520 Speaker 1: Fossil fuel, nuclear or energy and weapons and these again 638 00:34:02,720 --> 00:34:07,959 Speaker 1: all just happing big weapons. So the Lockeed Martins and so, 639 00:34:08,040 --> 00:34:10,000 Speaker 1: you know, interesting in the weapons area is like the 640 00:34:10,120 --> 00:34:13,440 Speaker 1: Ukraine story. We just gave them forty seven billion, we 641 00:34:13,440 --> 00:34:15,759 Speaker 1: gave them fifty billion earlier in the year, and they 642 00:34:15,800 --> 00:34:20,120 Speaker 1: turn around and buy you know, battery systems from lockeed 643 00:34:20,120 --> 00:34:23,080 Speaker 1: Martin and raytheon. And the ironic thing is that E 644 00:34:23,200 --> 00:34:27,359 Speaker 1: s G investors have been excluded from the weapons manufacturers 645 00:34:27,400 --> 00:34:29,040 Speaker 1: as part of E s G. They're not E s 646 00:34:29,080 --> 00:34:33,640 Speaker 1: G friendly now right now we're defending democracy, right so 647 00:34:33,680 --> 00:34:36,200 Speaker 1: it gets very nuanced, and that's you know, a tricky 648 00:34:36,239 --> 00:34:38,560 Speaker 1: part of e SG. And for the last year, my 649 00:34:38,600 --> 00:34:43,520 Speaker 1: Bloomberg terminal up seventeen. You guys have had good performance. Yes, 650 00:34:43,640 --> 00:34:47,080 Speaker 1: thankfully we have. UM. The E s G Orphans Index, 651 00:34:47,160 --> 00:34:48,960 Speaker 1: which is what the E t F is based office, 652 00:34:49,120 --> 00:34:53,400 Speaker 1: returned about twenty two last year, UM, which you know, 653 00:34:53,400 --> 00:34:56,640 Speaker 1: obviously the SMP was down about nineteen and the NASDAG 654 00:34:56,640 --> 00:34:58,799 Speaker 1: was down over thirty. So I'm pretty happy with that. 655 00:34:58,880 --> 00:35:01,799 Speaker 1: And then the orphans or FN launched in mid May 656 00:35:01,880 --> 00:35:04,040 Speaker 1: and has done really well. So I mean, you've got 657 00:35:04,040 --> 00:35:08,319 Speaker 1: like x on Mobile, Philip mars raytheon Chevron, Boeing and 658 00:35:08,440 --> 00:35:11,480 Speaker 1: has a Bush Diagio. Those are names, yes, those are 659 00:35:11,600 --> 00:35:14,359 Speaker 1: and you know these there's a lot of recent talk 660 00:35:14,400 --> 00:35:16,839 Speaker 1: about the anti E s G if you will, and 661 00:35:16,840 --> 00:35:19,480 Speaker 1: there are sector based stocks and e t F s 662 00:35:19,560 --> 00:35:23,440 Speaker 1: that do that, but this one actually separated the whole 663 00:35:23,480 --> 00:35:25,880 Speaker 1: E s G factor and sort of it's the isolated 664 00:35:25,960 --> 00:35:28,480 Speaker 1: E s G factor anti E s G E t 665 00:35:28,640 --> 00:35:31,520 Speaker 1: F hence the name constrained Capital. I love the name 666 00:35:31,560 --> 00:35:34,719 Speaker 1: of the firm. Is this Your main focus is the 667 00:35:34,800 --> 00:35:36,919 Speaker 1: orphan E T F your main focus there, You're looking 668 00:35:36,920 --> 00:35:39,640 Speaker 1: to put together other products. What's the story? So thank you? Yeah, 669 00:35:39,680 --> 00:35:41,680 Speaker 1: it is the first one out of the gate. And 670 00:35:41,800 --> 00:35:45,880 Speaker 1: the idea behind constraint capital a hedge fund legend. Cliff 671 00:35:45,920 --> 00:35:48,120 Speaker 1: as Nous of a q R. He wrote a really 672 00:35:48,160 --> 00:35:51,040 Speaker 1: interesting white paper back in May of two thousand seventeen 673 00:35:51,200 --> 00:35:55,000 Speaker 1: and discussed constraints on capital and how they create, they 674 00:35:55,040 --> 00:35:58,960 Speaker 1: cause malinvestment and misallocation of capital, and then opportunities and 675 00:35:59,040 --> 00:36:02,400 Speaker 1: these were secure eties that have been excluded under constraints 676 00:36:02,480 --> 00:36:06,120 Speaker 1: avoided if you will become high expected return securities. And 677 00:36:06,120 --> 00:36:09,200 Speaker 1: it has to attract investors by lower prices over time. 678 00:36:09,200 --> 00:36:11,359 Speaker 1: And now it's starting to do that thing because it's 679 00:36:11,400 --> 00:36:15,120 Speaker 1: a very uncrowded space and versus And we had Matt 680 00:36:15,160 --> 00:36:18,919 Speaker 1: who's the guy we had in with r L. V Ramaswamy, Yeah, 681 00:36:19,000 --> 00:36:22,160 Speaker 1: Viva Rama Swanny is another guy dri drive and d 682 00:36:22,360 --> 00:36:24,720 Speaker 1: R L L His is his thing. And he's saying, basically, 683 00:36:25,600 --> 00:36:28,040 Speaker 1: you know, by the energy companies, you know, drill, drill, drill, 684 00:36:28,400 --> 00:36:30,720 Speaker 1: you know, and let don't I don't want my companies 685 00:36:30,760 --> 00:36:34,640 Speaker 1: making social decisions from me. I want to maximizing shareholder values. Well, 686 00:36:34,719 --> 00:36:37,200 Speaker 1: let's other parts of society deal with those exactly. So 687 00:36:37,320 --> 00:36:39,680 Speaker 1: his thing isn't really anti E s G per se, 688 00:36:40,000 --> 00:36:42,960 Speaker 1: and I don't think yours is really either. It's just 689 00:36:43,480 --> 00:36:47,319 Speaker 1: the maximization of profits. He's also looking to find those 690 00:36:47,400 --> 00:36:50,239 Speaker 1: opportunities that have been kind of discarded by the E 691 00:36:50,480 --> 00:36:52,359 Speaker 1: s G world. Yeah, So I spoke to the VAC 692 00:36:52,400 --> 00:36:54,880 Speaker 1: a few times, and I really like their approach and 693 00:36:54,960 --> 00:36:57,200 Speaker 1: their thoughts and the one I call us cousins as 694 00:36:57,239 --> 00:36:59,680 Speaker 1: opposed to siblings, if you will. And I find that 695 00:37:00,160 --> 00:37:03,240 Speaker 1: they're approaching things from a corporate level. They're gonna approach 696 00:37:03,280 --> 00:37:05,839 Speaker 1: the c suite and say, hey, Google, your your ads 697 00:37:05,840 --> 00:37:08,960 Speaker 1: are biased or your your searches are biased. I've approached 698 00:37:09,040 --> 00:37:14,200 Speaker 1: it from isolating the company's most excluded and really focused 699 00:37:14,239 --> 00:37:17,680 Speaker 1: at the investor level and saying here, this diversifies your 700 00:37:17,719 --> 00:37:22,520 Speaker 1: portfolio against what's not crowded. And yes, they've been isolated 701 00:37:22,600 --> 00:37:24,680 Speaker 1: by the E s G community. And now that there's 702 00:37:24,719 --> 00:37:27,440 Speaker 1: that pushback and that has shined a light in the neighborhood, 703 00:37:27,440 --> 00:37:30,200 Speaker 1: if you will, UH, taking on black Rock and those 704 00:37:30,280 --> 00:37:34,640 Speaker 1: kinds of things, I expect flows to revert and come back, 705 00:37:34,719 --> 00:37:37,320 Speaker 1: and and the the the nuance of E s G 706 00:37:37,600 --> 00:37:40,880 Speaker 1: become wider, and these malign securities to find more inflows 707 00:37:40,960 --> 00:37:42,400 Speaker 1: over time. Where do you think we are in that 708 00:37:42,760 --> 00:37:45,919 Speaker 1: whole E s G movement? It feels like it's lost 709 00:37:46,040 --> 00:37:48,680 Speaker 1: some momentum, But some of the folks tell me no, 710 00:37:49,160 --> 00:37:51,440 Speaker 1: I mean, how do you think about it? So this 711 00:37:51,640 --> 00:37:54,680 Speaker 1: is the first year while two thousand two where returns 712 00:37:54,719 --> 00:38:00,799 Speaker 1: really suffered, and I think that you have certain sales points, 713 00:38:00,880 --> 00:38:03,080 Speaker 1: if you will, calling things E s G sort of 714 00:38:03,160 --> 00:38:04,880 Speaker 1: all things E s G. And when I look at 715 00:38:04,880 --> 00:38:07,879 Speaker 1: a name like Amazon, for example, that has a huge 716 00:38:07,960 --> 00:38:11,040 Speaker 1: carbon footprint, biggest outside the energy space, and it was 717 00:38:11,120 --> 00:38:13,560 Speaker 1: down almost what I think, forty five or fifty this 718 00:38:13,719 --> 00:38:16,759 Speaker 1: past year. And everyone is in Amazon, even a lot 719 00:38:16,840 --> 00:38:19,239 Speaker 1: of big E s G funds own Amazon is like 720 00:38:19,280 --> 00:38:21,280 Speaker 1: a top three holding at black Rock and at Vanguard. 721 00:38:21,520 --> 00:38:23,359 Speaker 1: And I think that people are starting to realize weight 722 00:38:23,760 --> 00:38:25,520 Speaker 1: what do I own and why do I own it? 723 00:38:25,600 --> 00:38:27,080 Speaker 1: And is this really E s G? Or is it 724 00:38:27,120 --> 00:38:29,520 Speaker 1: a failed objective within E s G. And I think 725 00:38:29,600 --> 00:38:32,759 Speaker 1: that we're in the early innings of people realizing that 726 00:38:32,920 --> 00:38:35,839 Speaker 1: they've sort of been misled they've paid higher fees, they've 727 00:38:35,880 --> 00:38:38,400 Speaker 1: had lower returns, and worst of all is the failed objectives. 728 00:38:38,640 --> 00:38:41,920 Speaker 1: And I think as returns people see their returns and say, 729 00:38:41,960 --> 00:38:44,319 Speaker 1: wait a second, what just happened here? That's when they 730 00:38:44,360 --> 00:38:46,040 Speaker 1: sort of wake up. So I think it's early ends. 731 00:38:46,080 --> 00:38:47,920 Speaker 1: But again, if I made for one more second, the 732 00:38:49,000 --> 00:38:51,000 Speaker 1: the evolution of E. S G from here will be 733 00:38:51,680 --> 00:38:54,160 Speaker 1: three dimensional, not two dimensional. It's not going to turn 734 00:38:54,200 --> 00:38:55,600 Speaker 1: off and turn on. The new word is going to 735 00:38:55,640 --> 00:38:57,799 Speaker 1: be sustainability. We've seen a lot of that this year 736 00:38:57,840 --> 00:39:00,359 Speaker 1: already or in the past few weeks. In a month 737 00:39:00,440 --> 00:39:02,680 Speaker 1: or two, I think that's how it evolves, and they'll 738 00:39:02,719 --> 00:39:04,600 Speaker 1: be sort of chasing, if you will. I call it 739 00:39:04,680 --> 00:39:07,399 Speaker 1: like the greyhound chasing the hair around the track, right though, 740 00:39:07,520 --> 00:39:09,480 Speaker 1: he's sort of chasing that thing to find out what 741 00:39:09,800 --> 00:39:12,480 Speaker 1: what's the next new thing? So to speak. One of 742 00:39:12,520 --> 00:39:15,279 Speaker 1: the big drivers I see big holdings is energy, and 743 00:39:15,400 --> 00:39:17,960 Speaker 1: that's had a phenomenal year in two one of the 744 00:39:18,040 --> 00:39:20,239 Speaker 1: very few sectors that have really put up some performance. 745 00:39:21,000 --> 00:39:23,480 Speaker 1: What's your energy called? Here? Because if energy goes the 746 00:39:23,560 --> 00:39:25,920 Speaker 1: other way, obviously you guys are exposed, right And I 747 00:39:26,040 --> 00:39:29,560 Speaker 1: think that we have a twenty allocation fossil fuel and 748 00:39:30,520 --> 00:39:34,719 Speaker 1: nuclear energy. So that's basket. I think I've always said 749 00:39:35,040 --> 00:39:38,880 Speaker 1: you can't get to the future of energy without present energy, right. 750 00:39:38,920 --> 00:39:41,920 Speaker 1: We can't do this quantum leap into batteries, into solar 751 00:39:42,040 --> 00:39:45,400 Speaker 1: in the wind without using what we have currently. So 752 00:39:45,520 --> 00:39:47,120 Speaker 1: I do think in the near term there is some 753 00:39:47,280 --> 00:39:49,600 Speaker 1: concern on energy prices. You know, the recession is a 754 00:39:49,640 --> 00:39:52,360 Speaker 1: bit of a talk um, but going forward, and I 755 00:39:52,440 --> 00:39:56,200 Speaker 1: interviewed an expert, a Nasa Haji, an energy expert, and 756 00:39:56,280 --> 00:39:59,239 Speaker 1: he basically said, if you think we're at peak or 757 00:39:59,440 --> 00:40:03,719 Speaker 1: you know, basically the oil situation is we we still 758 00:40:03,840 --> 00:40:07,040 Speaker 1: need oil to do a lot of things heat our homes, 759 00:40:07,080 --> 00:40:10,600 Speaker 1: cool our homes, and over time demand is still going 760 00:40:10,680 --> 00:40:13,840 Speaker 1: to be there from developed world along with developing world 761 00:40:14,080 --> 00:40:16,120 Speaker 1: in fossil fuel. So I don't think it's going anywhere 762 00:40:16,239 --> 00:40:19,440 Speaker 1: in the short term. In the short term, it might 763 00:40:19,600 --> 00:40:21,840 Speaker 1: have a little struggle if if the recession comes to 764 00:40:21,920 --> 00:40:24,279 Speaker 1: play and demand does shrink. What's the nuclear I mean, 765 00:40:24,360 --> 00:40:26,520 Speaker 1: I look at your top holdings. I see Excen, Philip 766 00:40:26,560 --> 00:40:32,160 Speaker 1: Morris raytheon Chevron. Where's the nuclear play there? So next 767 00:40:32,320 --> 00:40:38,000 Speaker 1: Terra Duke Dominion s O Southern Company, American ap So 768 00:40:38,400 --> 00:40:41,080 Speaker 1: these are that that looks like the energy area excuse me, 769 00:40:41,840 --> 00:40:45,760 Speaker 1: where I think we really could see some revolutionary change 770 00:40:45,840 --> 00:40:48,279 Speaker 1: in the next few decades. Because you know, we tried 771 00:40:48,360 --> 00:40:50,640 Speaker 1: it once, we went big into it. Globally, we kind 772 00:40:50,680 --> 00:40:52,759 Speaker 1: of backed away from it, some people running scared, some 773 00:40:52,840 --> 00:40:54,880 Speaker 1: people still thinking it's cheap if we already built it, 774 00:40:54,960 --> 00:40:58,040 Speaker 1: but it's too expensive to build again. Now we're seeing 775 00:40:58,160 --> 00:41:01,680 Speaker 1: real technological advances that like, you know, this could be 776 00:41:02,080 --> 00:41:04,520 Speaker 1: you know, free power, that's right. And you know, the 777 00:41:04,600 --> 00:41:07,320 Speaker 1: interesting thing is over the past year, part of the 778 00:41:07,840 --> 00:41:11,080 Speaker 1: constraints on capitol we saw in the EU was Germany 779 00:41:11,120 --> 00:41:13,960 Speaker 1: shutting down their nuclear plants and then all of a sudden, 780 00:41:14,360 --> 00:41:16,880 Speaker 1: Russia had sort of an advantage and they took advantage 781 00:41:16,920 --> 00:41:19,480 Speaker 1: of it. Now we've seen a lot of coal burning 782 00:41:19,600 --> 00:41:22,080 Speaker 1: recently in the last few months, last half of the year, 783 00:41:22,440 --> 00:41:25,040 Speaker 1: because of the energy situation, the energy crisis, if you will. 784 00:41:25,280 --> 00:41:28,839 Speaker 1: And in the end, a ton of coal is more 785 00:41:29,560 --> 00:41:33,360 Speaker 1: damaging and pollutant than a marble size piece of uranium. 786 00:41:33,760 --> 00:41:37,319 Speaker 1: So that's the whole nuclear nuclear tradeoff, if you will. 787 00:41:37,440 --> 00:41:41,040 Speaker 1: And it's um you know, it's a sustainable carbon free 788 00:41:41,680 --> 00:41:44,960 Speaker 1: you know, energy source. So I think that, uh, it's 789 00:41:45,000 --> 00:41:47,480 Speaker 1: going to be a very big thing going forward. As 790 00:41:47,520 --> 00:41:50,440 Speaker 1: you say, Matt, I mean it seems like a you know, 791 00:41:51,120 --> 00:41:54,600 Speaker 1: an amazing opportunity for for I wouldn't say limitless energy, 792 00:41:54,760 --> 00:41:59,920 Speaker 1: but cleaner and cleaner and and and and sustainable. Well 793 00:42:00,000 --> 00:42:01,600 Speaker 1: that's the key, right, the fact that it's going to 794 00:42:01,680 --> 00:42:05,800 Speaker 1: be sustainable now that they can power reactors with spent 795 00:42:06,000 --> 00:42:08,560 Speaker 1: fuel um and that they don't create the kind of 796 00:42:08,640 --> 00:42:10,719 Speaker 1: waste that they did before where we need to find 797 00:42:10,719 --> 00:42:13,240 Speaker 1: like a mountain in Utah to stores to all that stuff. 798 00:42:13,280 --> 00:42:15,840 Speaker 1: And I think that the part of the image that 799 00:42:16,000 --> 00:42:19,080 Speaker 1: nuclear has in a bit of the in a bit 800 00:42:19,120 --> 00:42:21,880 Speaker 1: of the media areas is needs a little bit of reworking. 801 00:42:21,920 --> 00:42:23,680 Speaker 1: If you have three mile Island was a long time ago, 802 00:42:23,800 --> 00:42:25,840 Speaker 1: Yeah it was. I was. I remember Mark Newman, ce 803 00:42:25,920 --> 00:42:28,880 Speaker 1: io Constraint Capital, joining us here in the Bloomberg and 804 00:42:28,920 --> 00:42:30,960 Speaker 1: Actor Broker Studio. Who'll be ringing in the New York 805 00:42:31,000 --> 00:42:36,480 Speaker 1: so Exchange tomorrow. So you'm the lookout for that. Thanks 806 00:42:36,480 --> 00:42:39,920 Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe 807 00:42:39,960 --> 00:42:43,680 Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast 808 00:42:43,760 --> 00:42:47,239 Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at 809 00:42:47,320 --> 00:42:50,920 Speaker 1: Matt Miller three. Put on bal Sweeney. I'm on Twitter 810 00:42:51,000 --> 00:42:53,839 Speaker 1: at pt Sweeney. Before the podcast. You can always catch 811 00:42:53,920 --> 00:42:55,439 Speaker 1: us worldwide at Bloomberg Radio