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Speaker 1: This is Bloomberg Business Wait inside from the reporters and

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Speaker 1: editors who bring you America's most trusted business magazine, plus

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Speaker 1: global business finance and tech news. The Bloomberg Business Week

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Speaker 1: Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.

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Speaker 2: We've got Callie Cox. She's a US investment analyst at

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Speaker 2: each Brow and she's joining us on zoom. Callie. Always

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Speaker 2: great to have you on. Thanks so much for making

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Speaker 2: time for us this afternoon. As Jess was kind of mentioning, uh,

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Speaker 2: market optimism right now looking really good. Market is up today,

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Speaker 2: tech earnings really strong. Is that optimism out there warranted

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Speaker 2: in your view?

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Speaker 3: Yeah, I definitely think it is. And by the way,

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Speaker 3: I am so jealous of whoever's going to the Beyonce concert.

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Speaker 4: It's Maddie.

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Speaker 2: CALLI fly up and come with me to Met Life

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Speaker 2: tomorrow night.

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Speaker 3: Oh my gosh, give me, give me some give me

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Speaker 3: some time and I'll book my flight. Great, so excited

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Speaker 3: for that. But you know, I really think it does.

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Speaker 3: I think the optimism is warranted because investors, the economy,

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Speaker 3: and the FED all seem to be on the same page.

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Speaker 5: Now.

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Speaker 3: There's no fighting the FED at this moment. No, earnings

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Speaker 3: are coming out better than expected once again. Economic data

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Speaker 3: is turning back up, especially on the consumer side. It's

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Speaker 3: really hard to find a bearish narrative in this market.

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Speaker 4: So seasonality looking at seag go in the terminal, you

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Speaker 4: could pull up the heat map and look at historically

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Speaker 4: how August September typically the worst months of the year.

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Speaker 4: But we've also seen seasonality buck the trend, say like

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Speaker 4: June swoon that didn't come to fruition, but July still

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Speaker 4: was strong. But one of the big ones was just

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Speaker 4: looking at the presidential cycle, the last three quarters were

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Speaker 4: typically the strongest and that actually overlapped with what we've

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Speaker 4: seen with this rally. How do you view the stock

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Speaker 4: market heading into this weaker period seasonally wise?

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Speaker 3: Yeah, so I'm glad you brought up seasonality because if

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Speaker 3: I had to pick out two things that make me nervous,

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Speaker 3: I'd probably say seasonality and sentiment, Because you're right, we're

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Speaker 3: heading into weaker season of the year. You know, considering

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Speaker 3: that we have a lot of people on vacation, volumes

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Speaker 3: are lower. That can result in some error pockets of

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Speaker 3: selling and you know buying. Quite honestly, if there's a

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Speaker 3: headline that moves markets, and we saw that yesterday with

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Speaker 3: yield curve control. You know, arguably a headline that probably

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Speaker 3: didn't mean much for the US investor, it does for

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Speaker 3: foreign exchange markets. It has you know, certain effects on

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Speaker 3: company earnings and individual stocks, but on the whole, you know,

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Speaker 3: when you're in a low volume period, you can see

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Speaker 3: markets swing around a lot more. I'm not sure if

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Speaker 3: that'll come to fruition this year. I mean, obviously we

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Speaker 3: see a lot of momentum in the stock market right now,

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Speaker 3: but at these levels, at this point, with rates so high,

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Speaker 3: we are telling customers to, you know, consider a plan

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Speaker 3: for if stocks fall. What would you do if we

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Speaker 3: saw prices fall five or ten percent? Is it worth hedging,

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Speaker 3: you know, is it worth making it making a plan

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Speaker 3: to maybe buy some more shares? So you know, we're

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Speaker 3: aware of the fact that prices could drop, and this

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Speaker 3: is a part of the year where you know, we

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Speaker 3: do see those air pockets and storms pop up.

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Speaker 4: So then how are you advising clients to position or

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Speaker 4: do you think that would be a buying opportunity if

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Speaker 4: you do see the S and P five hundred pull

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Speaker 4: back five ten percent.

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Speaker 3: Well, I will say we've been more optimistic than the

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Speaker 3: average Wall Street firm out there. We've been saying since

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Speaker 3: November or December that you know, it's really hard to

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Speaker 3: see stocks sell off when investors are prepared for the worst.

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Speaker 3: And I don't think you can say that right now.

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Speaker 3: I think sentiment is a lot more positive than it was,

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Speaker 3: you know, seven or eight months ago. But you know,

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Speaker 3: at the same time, we're seeing a lot of positive

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Speaker 3: conditions swing in the bulls favor. So we think it's

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Speaker 3: dangerous to let go of risk entirely in the first

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Speaker 3: year of what looks like a bull market. I mean,

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Speaker 3: the S and P five hundred rises an average of

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Speaker 3: forty three percent in the first year of every bull

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Speaker 3: market that we've seen since nineteen fifty. So we're telling

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Speaker 3: our customers hold on to risk, but look at quality risk,

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Speaker 3: look at companies that you think can weather recession. And

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Speaker 3: on the bond side or outside of stocks, you really

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Speaker 3: think about what could help you if a recession were

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Speaker 3: to materialize. I mean, bonds, especially longer term treasury bonds,

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Speaker 3: have been one of those classic recession hedges, and you know,

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Speaker 3: if we see prices fall, they could at the very

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Speaker 3: least provide you a sanity hedge in terms of, you know,

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Speaker 3: managing your emotions and what could be a tough sell off.

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Speaker 2: Do you think the Bears are going to get anything

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Speaker 2: right this year?

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Speaker 3: Oh, that's such a charged question. I mean, I think

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Speaker 3: they have gotten a few things right. I mean, have

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Speaker 3: we not forgotten that in March and in April? I mean,

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Speaker 3: we had a banking scare that resulted from tighter policy,

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Speaker 3: and that's still happening in the background. Of course, lending

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Speaker 3: has picked up, but overall, we're looking at tighter conditions,

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Speaker 3: and I think I think the pessimists are right in that,

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Speaker 3: you know, we should still be aware of, you know,

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Speaker 3: the lags that we could see in tighter monetary policy.

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Speaker 3: So you know, it looks like we might be saved

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Speaker 3: for the next month or two. But I'm certainly not

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Speaker 3: one to step out there and say everything's okay. And

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Speaker 3: that's why you know, we're telling customers again to you know,

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Speaker 3: maybe look at some bonds, maybe look at diversifying your portfolio,

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Speaker 3: and you know, maybe think about one of those more

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Speaker 3: complex views where everything's going great right now, but you know,

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Speaker 3: maybe there could be some differentiation among sectors or potentially

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Speaker 3: some weakness in the overall market.

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Speaker 4: What is sentiment telling us? When you have someone like

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Speaker 4: Mike Wilson, obviously a well known bear on Wall Street,

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Speaker 4: throwing in the towel this week saying that they were

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Speaker 4: wrong but still holding a thirty nine hundred price target

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Speaker 4: at the end of this year for the S and

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Speaker 4: P five hundred, When does sentiment get a little bit

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Speaker 4: too frothy for you?

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Speaker 3: Well, the mood is getting better, and I wouldn't describe

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Speaker 3: it as frothy quite yet. I actually wrote a note

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Speaker 3: this week on the you know phrase we all know

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Speaker 3: irrational exuberance and why we might not be be seeing

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Speaker 3: irrational exuberance right now, especially after you know such a

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Speaker 3: such an encouraging FED meeting and more I mean more

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Speaker 3: importantly and encouraging FED press conference. I'd say now that

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Speaker 3: you know, sentiment of course is getting better and investors

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Speaker 3: have a right to feel better about the future. I

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Speaker 3: think when it starts to get frothy is when we

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Speaker 3: do start getting those conflicting signals. You know, data potentially weakening,

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Speaker 3: seeing a lot of weakening and leading indicators. I mean,

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Speaker 3: I'm looking at the job markets leading indicators right now,

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Speaker 3: and you know, if we saw them weaken substantially in

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Speaker 3: the weeks and months ahead, then I would probably raise

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Speaker 3: the red flag and say, hey, something's wrong here. But

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Speaker 3: right now it's it's pretty incredible to me about how

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Speaker 3: many data series are turning in the bulls favor. So

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Speaker 3: you know, stay on watch. Anything can happen. But you know,

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Speaker 3: the market's momentum is moving higher, and if you're feeling

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Speaker 3: encouraged about the future, there is a reason why you

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Speaker 3: should feel that way.

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Speaker 5: Yeah.

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Speaker 2: Well, that momentum clearly driven by the AI euphoria. And

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Speaker 2: we had that note from Michael Harten at this morning

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Speaker 2: saying that rates are still too low to pop what

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Speaker 2: he calls the AI baby bubble. I wonder, Kelley, to

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Speaker 2: what extent do you foresee the fundamentals justifying these valuations

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Speaker 2: for some of the n video like names out there

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Speaker 2: in the second half of the year, and we have

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Speaker 2: just about forty five seconds left.

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Speaker 6: Sure.

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Speaker 3: Well, first of all, you can't call a bubble until

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Speaker 3: you're past it. So that's the first thing I tell

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Speaker 3: it anybody, if everybody asked me, if anybody asked me

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Speaker 3: if AI is in a bubble. But I think we're

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Speaker 3: already seeing some of those fundamentals come out. We're seeing

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Speaker 3: companies like semiconductor companies raising their sales guidance. We're seeing

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Speaker 3: other companies invest in AI technology, you know. So I

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Speaker 3: think we're seeing it play out, But we have to

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Speaker 3: remember that AI is an emerging theme and it could

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Speaker 3: take some time to really see that show up in

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Speaker 3: the numbers. For now, I mean, it's anybody's guests, So

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Speaker 3: I'm not surprised people are excited about it, But at

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Speaker 3: the same time, I'm not ready to call it a bubble.

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Speaker 4: I feel like we have to get to a point

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Speaker 4: where there's IPOs, where AI is probably attached to the

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Speaker 4: name right, and we just aren't quite there yet. Do

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Speaker 4: you feel that way, Kelly.

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Speaker 3: I don't know if that's where I would get work,

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Speaker 3: But where I would get worried is if we didn't

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Speaker 3: see AI flow into the economy and we didn't see

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Speaker 3: it utilized by companies. We didn't see it commercialized, if

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Speaker 3: you will, and I think that's a step that any

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Speaker 3: groundbreaking technology needs to.

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Speaker 2: Make, right. That's gonna be the big question. Yeah, these

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Speaker 2: companies can keep saying AI on their earnings calls, but

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Speaker 2: how is Kroger going to monetize their AI usage there. Callie,

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Speaker 2: thank you so much for joining us on this Friday.

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Speaker 2: It's always a pleasure to get you on our coverage.

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Speaker 2: That was Callie Cox. She's a US investment analyst at

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Speaker 2: e Toro. She's also got great commentary on Twitter, so

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Speaker 2: follow her over there for more.

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Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us

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Speaker 1: live weekday afternoons from three to six Eastern Listen on

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Speaker 1: Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app,

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Speaker 1: or watch us live on YouTube.

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Speaker 4: Better to come in and chat with us more about

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Speaker 4: what's happening in the crypto space than Everett Milman, chief

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Speaker 4: market analysts at Gainesville Coins, joining us on on zoom

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Speaker 4: and to chat with us more about how this particular

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Speaker 4: asset class has been performing. Thank you so much for

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Speaker 4: joining us, and I want to get your take just

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Speaker 4: as far as sort of the wild ride. I know

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Speaker 4: there's obviously so many coins when we are talking about

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Speaker 4: the crypto space, but your view on Bitcoin right now

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Speaker 4: and while it's trading once again below that psychological level

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Speaker 4: of thirty thousand.

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Speaker 6: Right Thank you so much for having me on.

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Speaker 7: It has been interesting to see that although we know

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Speaker 7: bitcoin has experienced incredible volatility over the course of its history,

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Speaker 7: over the much of this summer, it has remained fairly steady,

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Speaker 7: kind of trading sideways around that thirty thousand level. And

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Speaker 7: it raises an interesting question about whether or not bitcoin

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Speaker 7: actually can function as money, because you have, on the

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Speaker 7: one hand, the idea of a store of value that

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Speaker 7: it needs to be steady and stable, But on the

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Speaker 7: other hand, money is supposed to be used for spending,

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Speaker 7: and in that sense, Bitcoin perhaps is better characterized as

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Speaker 7: digital gold as purely a store of value, because as

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Speaker 7: a medium of exchange it runs into this problem that

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Speaker 7: is known as Gresham's law. Basically that bad money drives

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Speaker 7: out good money. Bad money money that depreciates in value,

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Speaker 7: people are going to want to spend that as quickly

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Speaker 7: as possible, to get their hands on real things with

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Speaker 7: it before it becomes worthless.

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Speaker 6: Bitcoin.

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Speaker 7: If a price does simply keep going up, as a

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Speaker 7: lot of the advocates and evangelists certainly hope, that's not

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Speaker 7: very good as money. That is the opposite problem that

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Speaker 7: people would simply hoard the bitcoin and never use it

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Speaker 7: as money or spend it. So I think that that

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Speaker 7: brings up this interesting philosophical question about sure. I think

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Speaker 7: bitcoin has established itself as a unique asset class, perhaps

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Speaker 7: less so for other cryptocurrencies. But then the question does become, well,

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Speaker 7: what is bitcoin? Is it money or is it simply

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Speaker 7: kind of like a digital gold bar that you just

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Speaker 7: put in the vault and keep.

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Speaker 2: In a wallet, the question that regulators are going to

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Speaker 2: be tasked with answering. And having said that, we've got

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Speaker 2: some regulatory news on the terminal crossing around three pm

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Speaker 2: Eastern that Apple the Apple App Store rules face lawmaker

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Speaker 2: scrutiny over crypto and NFTs. And this comes basically after

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Speaker 2: complaints from the likes of Coinbase saying that Apple's in

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Speaker 2: app purchase system doesn't support crypto, so they weren't able

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Speaker 2: to comply with the Apple App Store rules even if

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Speaker 2: they had tried. And now those questions are going to

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Speaker 2: be dealt with by regulators. But having said that, I'm

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Speaker 2: curious what do you think about the role of big

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Speaker 2: tech companies when it comes to regulatory questions for crypto.

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Speaker 2: Does a company like Apple help you in your quest

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Speaker 2: to get crypto regulation clarity or does it hurt that effort?

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Speaker 6: That is kind of a conundrum, right.

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Speaker 7: It really brings up this question that cryptocurrency itself gets

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Speaker 7: at the heart at how much control do we want

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Speaker 7: governments to have over this three new world of the

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Speaker 7: future of digital money, Because whether it is a tech company,

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Speaker 7: a private enterprise, or indeed the government with the CBDC

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Speaker 7: issuing these digital currencies, that does inevitably seem to be

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Speaker 7: the path forward in the future, and up to now,

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Speaker 7: somewhat confusingly, we've seen the SEC and the CFTC essentially

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Speaker 7: attempt regulation purely by enforcement, and I think that what

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Speaker 7: we're going to need in terms of clarity is actual

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Speaker 7: legislation from Congress. So there are a few crypto bills

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Speaker 7: that are currently being debated, one on stable coins and

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Speaker 7: another the Loomis Jilibrand bill that is being workshopped. I

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Speaker 7: would be very interested to see what comes out on

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Speaker 7: the other end of those two laws, if indeed they

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Speaker 7: do become laws, because there has to be some level

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Speaker 7: of clarity about not just what kind of influence we're

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Speaker 7: going to allow tech companies to have in the crypto space,

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Speaker 7: but what is the government's position on these things, And

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Speaker 7: I think it's been very unclear. That's really all that

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Speaker 7: we can say at this point is that the government

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Speaker 7: has not been able to establish a clear position, and

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Speaker 7: rather than letting the executive branch and its agencies try

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Speaker 7: and kind of grasp in the dark and change direction

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Speaker 7: in midstream, it would be very helpful if Congress could

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Speaker 7: come up with some sensible rules that go beyond simply,

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Speaker 7: you know, punishing bad actors like FTX, and it actually

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Speaker 7: established some framework for how do we think of cryptocurrencies

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Speaker 7: and bitcoin relative to regular money or other forms of

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Speaker 7: payments and transactions.

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Speaker 4: And one of these biggest debates, especially in this crypto space,

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Speaker 4: is what should and shouldn't count as a security in

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Speaker 4: the eyes when it comes to US regulators. What's your

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Speaker 4: view on that right?

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Speaker 7: And as you referenced, we recently had the Ripple case

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Speaker 7: in court and I think we got sort of a

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Speaker 7: mixed or ambiguous response that Ripple seems have been vindicated

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Speaker 7: that it is not a security, but it really was

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Speaker 7: only looking the court was very narrowly looking at one

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Speaker 7: aspect of sort of the creation of the token, not

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Speaker 7: the downstream distribution of Ripple. Tooken's XRP when it gets

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Speaker 7: to the secondary market or to retail In my opinion,

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Speaker 7: I think it's fairly clear that most cryptocurrencies, as they

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Speaker 7: are currently constructed, they are securities. They function like securities,

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Speaker 7: they're traded on exchanges, but they are obviously not quite

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Speaker 7: the same as other existing financial instruments. That being said,

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Speaker 7: I think that is another one of these hot button

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Speaker 7: issues that are at the center of the future of

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Speaker 7: the crypto space that we need more clarity, we need

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Speaker 7: sensible regulation in order for things to evolve and develop

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Speaker 7: further than where they are right now, because everything is

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Speaker 7: sort of in limbo.

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Speaker 2: Well it is sort of in limbo, and that makes

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Speaker 2: me wonder whether there's kind of a credibility question, least

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Speaker 2: a pr question for crypto.

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Speaker 3: This week, the.

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Speaker 2: Terminal Tracker when it comes to word counts show that

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Speaker 2: the Barbie movie got more mentions on the terminal than

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Speaker 2: Bitcoin did, and that feels like a bad indicator for

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Speaker 2: you for the second half.

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Speaker 3: Of the year.

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Speaker 6: Ah, that's a fair point. Obviously, the public consciousness or.

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Speaker 7: Awareness of bitcoin as an investment has waxed and waned,

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Speaker 7: and I think it's interesting to take into account that

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Speaker 7: although cryptocurrency itself has inescapably become a bit of a

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Speaker 7: political issue, we have multiple presidential candidates that are openly

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Speaker 7: taking a stance. The most recent polling shows that actually

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Speaker 7: the majority of the public is somewhat indifferent right now

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Speaker 7: to what happens with cryptocurrency and where policy goes. And

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Speaker 7: obviously within the space there are still mean coins and

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Speaker 7: this curious culture of I would say unseriousness that characterizes

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Speaker 7: the broader crypto space. But as of right now, without

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Speaker 7: the clear legal framework, I think that that is simply

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Speaker 7: the cost of admission, so to speak, in order to

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Speaker 7: engage with some of the more interesting and promising ideas

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Speaker 7: that are coming out of crypto.

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Speaker 4: We only have about twenty seconds left. But what's the

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Speaker 4: top question you hear from clients.

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Speaker 7: Is what do I do with my cryptocurrency? Where do

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Speaker 7: I put it? And I think that there is sort

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Speaker 7: of a knowledge gap when it comes to using the technology.

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Speaker 7: How do you get crypto into cold storage? How do

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Speaker 7: you spend it? Those really basic questions about how do

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Speaker 7: you even use the technology. So it's a user experience.

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Speaker 4: Question definitely, and I feel like that's been going on

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Speaker 4: for a while too. When it comes to blockchain, Well,

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Speaker 4: thank you so much by going through breaking this down

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Speaker 4: with us that's Everett Millman, chief market analysts at Gainesville Coin,

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Speaker 4: speaking us about crypto all things and what's happening with bitcoin.

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Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us

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Speaker 1: live weekday afternoons from three to six Eastern on Bloomberg Radio,

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Speaker 1: the Bloomberg Business App, and YouTube. You can also listen

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Speaker 1: live on Amazon Alexa from our flagship New York station

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Speaker 1: Jo Just Say Alexa play Bloomberg eleven thirty.

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Speaker 2: Well, if you've got a great guest coming on to

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Speaker 2: talk with us about all of the deal's news out there.

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Speaker 2: Mitch Berlin is the vice chair of Strategy and Transactions

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Speaker 2: at EY and he's joining us on Zoom from New Hope, Pennsylvania. Mitch,

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Speaker 2: thanks so much for coming on with us on this Friday.

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Speaker 2: As we were talking about it's been a tough environment

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Speaker 2: to get deals done for the first half of the year,

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Speaker 2: what would you say is going to be the single

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Speaker 2: biggest catalyst to change that?

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Speaker 8: It has been a difficult year. Thanks for having me,

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Speaker 8: by the way. I think that the biggest catalyst for

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Speaker 8: improving the Difficut lemonade market is predictability. Predictability in where

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Speaker 8: the economy is going you know, you build these models

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Speaker 8: to take your business case to the board, to do

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Speaker 8: these deals based on a predictable economy, and if the

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Speaker 8: economy is unstable, it's very hard to give board's confidence

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Speaker 8: that those those predictable models that underlie your business case

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Speaker 8: are actually going to come to realization.

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Speaker 4: When you're speaking with CEOs, what are they telling you

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Speaker 4: about how they feel about the direction of the economy

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Speaker 4: right now?

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Speaker 8: I think they're cautiously optimistic. They know that they need

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Speaker 8: to actually do transactions if they want to transform, because

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Speaker 8: M and A is the fastest path to transformation versus

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Speaker 8: doing it organically. They're watching very closely. They're looking at

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Speaker 8: the valuations out there. There's still a significant mismatch between

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Speaker 8: the cost of capital evaluations, and one of those two

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Speaker 8: things have to come down in addition to a predictable

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Speaker 8: economy for M and A really to pick up again.

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Speaker 4: So what would have to be rectified between those two

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Speaker 4: what would we need to see happen?

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Speaker 8: Well, you know, we do think that sometime in early

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Speaker 8: twenty twenty four, hopefully the FED will will decrease the

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Speaker 8: FED borrowing, right, so the cost of capital may come down,

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Speaker 8: But if not, ultimately those that need to sell their

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Speaker 8: businesses will have will have to become more realistic on

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Speaker 8: what those businesses are worth, and we'll see a decrease

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Speaker 8: in evaluations. We already have seen a slight decrease in valuations,

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Speaker 8: but not enough to trigger a strong m and a

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Speaker 8: market like we had in twenty twenty one or twenty twenty.

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Speaker 4: So you mean, say the Federal Reserve does end up

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Speaker 4: officially concluding sometime at the end of this year, but

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Speaker 4: then keeps the terminal rate at a particular level. That's

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Speaker 4: going to cost some issues there because they're not obviously

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Speaker 4: cutting rates, they're still keeping them elevated, right.

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Speaker 8: But at least keeping them elevated is still predictable, right,

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Speaker 8: so then other things can adjust up and down to

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Speaker 8: accommodate that. It's when you never know where it's going

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Speaker 8: to be three months from now that creates havoc.

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Speaker 2: Well, some of that havoc is happening with the Live

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Speaker 2: Nation stock hitting it's fifty two week highs earlier today

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Speaker 2: and then dropping as much as sixteen percent today. And

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Speaker 2: I don't need you to talk about Live Nation specifically here,

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Speaker 2: but I just think it's the perfect example of the

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Speaker 2: challenge when it comes to M and A. Right now

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Speaker 2: they have all this cash on hand because of all

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Speaker 2: of this consumer spending on concert they were looking into

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Speaker 2: some M and A. Now they get hit with this

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Speaker 2: DOJ suit. So in your recommendation, how should companies be

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Speaker 2: thinking about the cost of benefit analysis of getting into

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Speaker 2: M and A when we are in such a tough

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Speaker 2: regulatory environment and it might just be more beneficial to say,

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Speaker 2: I'm just going to keep this dry powder on the

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Speaker 2: sidelines for.

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Speaker 3: A little bit.

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Speaker 5: I think we are.

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Speaker 8: But we have seen some successes against the FTC as well,

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Speaker 8: you know where you know where they have where companies

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Speaker 8: haven't gone up against FTC and actually one, so I

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Speaker 8: would you know. I do think you have to, though,

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Speaker 8: add additional time into your M and A timeline, particularly

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Speaker 8: for large deals. I do think the M and A

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Speaker 8: environment is only going to get more challenging. These new

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Speaker 8: M and A guidelines are out for the first time

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Speaker 8: in thirteen years. The FTC has revised these times. These

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Speaker 8: guidelines most likely will make M and A more difficult,

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Speaker 8: It'll make it more expensive. But if you build in

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Speaker 8: the timeline, you know, I do think you can manage it,

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Speaker 8: and we have seen successful fights against some of the

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Speaker 8: FTC lawsuits AI.

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Speaker 4: I have to get your thoughts on this because we

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Speaker 4: constantly talk about this and how it impacts particular segments

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Speaker 4: of the market. What are you seeing as far as

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Speaker 4: how it's impacting M and A and are there particular

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Speaker 4: sectors and industries that are maybe benefiting from that.

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Speaker 8: Yeah, Well, it's interesting because AAI is the number one

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Speaker 8: topic for the CEOs that we speak with. Last year

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Speaker 8: is supply chain, the circular economy. This year, it's all

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Speaker 8: about AI, and it's proven out in the numbers. About

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Speaker 8: a third of the deals in the last six months

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Speaker 8: have been tech deals, a lot of which are related

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Speaker 8: to AI. So the few sectors that are really heavy

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Speaker 8: players in the M and A markets relates to AI

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Speaker 8: or healthcare, so they're looking at AI to help with

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Speaker 8: medical research and diagnostics to make them more predictable. Financial

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Speaker 8: services is using AI to make risk assessment, you know,

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Speaker 8: to make more robust risk assessment decisions as they make

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Speaker 8: their investment decisions. And then consumer and retails also heavily

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Speaker 8: looking at AI to gauge consumer sentiment to better forecast

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Speaker 8: inventory and demand management. Overall.

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Speaker 2: Mitch final forty five seconds here, which industry. Do you

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Speaker 2: anticipate benefiting the most from M and A deals in

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Speaker 2: the second half of twenty twenty three.

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Speaker 8: I think we're going to see a lot in Life sciences,

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Speaker 8: and I think we're going to see a lot in

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Speaker 8: consumer We've already seen their decrease. They continue to decline

439
00:22:34,040 --> 00:22:37,000
Speaker 8: like every other sector a year over year, but they're

440
00:22:37,040 --> 00:22:39,640
Speaker 8: declining at a smaller rate and the value of those

441
00:22:39,640 --> 00:22:41,600
Speaker 8: deals are getting bigger. So we'll end up seeing more

442
00:22:41,640 --> 00:22:45,160
Speaker 8: deals and bigger deals from those two sectors. Particularly life sciences.

443
00:22:45,160 --> 00:22:47,639
Speaker 8: You always have the patent cliss things coming off patent

444
00:22:48,000 --> 00:22:50,160
Speaker 8: and the life sciences companies need to continue to build

445
00:22:50,160 --> 00:22:52,159
Speaker 8: the R and D pipeline, and the best way to

446
00:22:52,200 --> 00:22:53,720
Speaker 8: do that is through acquisitions.

447
00:22:53,840 --> 00:22:55,800
Speaker 2: Yeah, and we've seen a lot of movement in that

448
00:22:55,880 --> 00:22:58,520
Speaker 2: space as well in the past couple of weeks, As

449
00:22:58,560 --> 00:23:01,000
Speaker 2: Jess was mentioning, we are starting to see an uptick

450
00:23:01,119 --> 00:23:03,920
Speaker 2: in these M and A deals, So definitely good sign

451
00:23:04,359 --> 00:23:06,399
Speaker 2: for you and your colleagues there. Metch heading into the

452
00:23:06,440 --> 00:23:09,160
Speaker 2: second half of this year. I really appreciate, really appreciate

453
00:23:09,200 --> 00:23:12,399
Speaker 2: you joining us on this Friday afternoon. Thank you so much.

454
00:23:12,720 --> 00:23:15,159
Speaker 2: That was Mitch Berlin. He's the vice chair of Strategy

455
00:23:15,240 --> 00:23:18,760
Speaker 2: and Transactions for EY America's joining us on Zoom from

456
00:23:18,880 --> 00:23:21,479
Speaker 2: New Hope, Pennsylvania to talk about the M and A space.

457
00:23:22,400 --> 00:23:28,760
Speaker 3: I'm brother Marco, a journal How about you let me drive?

458
00:23:29,000 --> 00:23:34,360
Speaker 5: Oh no, no, no, no, honey, please, I'll do the driving gravel.

459
00:23:34,920 --> 00:23:38,960
Speaker 7: Let's mate, I want to try it. It's a good

460
00:23:39,040 --> 00:23:40,440
Speaker 7: question time.

461
00:23:43,240 --> 00:23:45,560
Speaker 1: This is the drive to the Globe.

462
00:23:45,400 --> 00:23:46,199
Speaker 6: Dot com for me.

463
00:23:46,359 --> 00:23:50,679
Speaker 1: Think well, Brogn on Bloomberg Radio.

464
00:23:50,720 --> 00:23:54,760
Speaker 4: I'm really enjoying this Friday music. Jess beIN Madison Mills

465
00:23:54,760 --> 00:23:57,639
Speaker 4: here the Bloomberg Interactive Brokers studio, filling in for Carol

466
00:23:57,680 --> 00:24:01,359
Speaker 4: Masser and Tim Sedovik. So keep the girl power going

467
00:24:01,400 --> 00:24:03,960
Speaker 4: with the rest of the afternoon. Matt, yeah, oh yeah.

468
00:24:04,080 --> 00:24:06,359
Speaker 4: And it's been such a huge week. Obviously we've been

469
00:24:06,359 --> 00:24:09,399
Speaker 4: talking about these wrapping up, these central bank meetings. Clearly

470
00:24:09,440 --> 00:24:14,119
Speaker 4: the Federal Reserve obviously raising interest rates once again earlier

471
00:24:14,119 --> 00:24:15,879
Speaker 4: this week. But the big thing this didn't come with

472
00:24:15,920 --> 00:24:19,080
Speaker 4: those economic projections and the dot plots. Those are quarterly,

473
00:24:19,240 --> 00:24:22,120
Speaker 4: so we will get another read on that actually two

474
00:24:22,200 --> 00:24:24,840
Speaker 4: months from now, on September twentieth. A lot of data

475
00:24:24,880 --> 00:24:27,280
Speaker 4: in between now and then, but we want to break

476
00:24:27,280 --> 00:24:30,439
Speaker 4: down just the view here as far as positioning, also

477
00:24:30,520 --> 00:24:32,560
Speaker 4: the outlook for when it comes to central banks as

478
00:24:32,600 --> 00:24:34,679
Speaker 4: well as the economy. So who better to do it

479
00:24:34,720 --> 00:24:39,200
Speaker 4: with than Greg Halter, director of research at Carnaby Investment Council,

480
00:24:39,280 --> 00:24:41,840
Speaker 4: who is joining us on zoom. Greg, thank you so

481
00:24:41,920 --> 00:24:44,920
Speaker 4: much for joining us on a Friday afternoon. I wanted

482
00:24:44,920 --> 00:24:47,280
Speaker 4: to first just kind of get your take here of

483
00:24:47,520 --> 00:24:51,480
Speaker 4: what FED Chair Jerome pal said on Wednesday, his view

484
00:24:51,560 --> 00:24:53,880
Speaker 4: and then your outlook as far as the inflation data

485
00:24:53,880 --> 00:24:55,879
Speaker 4: that we got this morning with the Employment Consts Index

486
00:24:55,960 --> 00:24:58,560
Speaker 4: as well as the Fed's preferred gauge when it comes

487
00:24:58,600 --> 00:24:59,399
Speaker 4: to the PCE.

488
00:24:59,720 --> 00:25:03,480
Speaker 5: INDI here, yes, first of all, thank you for having

489
00:25:03,520 --> 00:25:09,080
Speaker 5: me a pleasure to join you. Relative to the feeder

490
00:25:09,119 --> 00:25:13,480
Speaker 5: reserve and what was announced this week pretty much as expected,

491
00:25:13,840 --> 00:25:16,000
Speaker 5: raising the FED funds rate to five and a quarter

492
00:25:16,040 --> 00:25:18,760
Speaker 5: at to five and a half, which is by the

493
00:25:18,800 --> 00:25:24,400
Speaker 5: way highest in twenty two years. This morning we did

494
00:25:24,400 --> 00:25:28,320
Speaker 5: get the PCE, which is the FEDS preferred inflation measure

495
00:25:28,720 --> 00:25:31,440
Speaker 5: three point zero percent overall four point one ex food

496
00:25:31,440 --> 00:25:35,119
Speaker 5: and energy both down versus may in the lowest in

497
00:25:35,240 --> 00:25:39,280
Speaker 5: two years. So for the FED looking at data data data.

498
00:25:39,680 --> 00:25:43,639
Speaker 5: Those are some good data points obviously one period, but

499
00:25:44,000 --> 00:25:47,000
Speaker 5: the trend has been downward, so we think that is

500
00:25:47,040 --> 00:25:49,800
Speaker 5: a positive overall for the markets.

501
00:25:50,640 --> 00:25:53,080
Speaker 2: Well, you are just the best guest for us to

502
00:25:53,119 --> 00:25:56,560
Speaker 2: possibly have when it comes to FED moves because of

503
00:25:56,600 --> 00:26:00,000
Speaker 2: your experience with the Federal Reserve Bank of Cleveland, Greg,

504
00:26:00,080 --> 00:26:02,120
Speaker 2: So I'm hoping that you can give us some inside

505
00:26:02,280 --> 00:26:05,439
Speaker 2: intel into what the thinking of these Federal Reserve people

506
00:26:05,680 --> 00:26:08,400
Speaker 2: is because it feels like you can pick your poison

507
00:26:08,440 --> 00:26:10,880
Speaker 2: when it comes to the data and what narrative you want.

508
00:26:11,000 --> 00:26:13,480
Speaker 2: So I'm curious if you can kind of put it

509
00:26:13,520 --> 00:26:16,680
Speaker 2: into baseball terms for me here what inning are we

510
00:26:16,760 --> 00:26:19,119
Speaker 2: in when it comes to the fight against inflation? Is

511
00:26:19,119 --> 00:26:21,919
Speaker 2: the game almost over here? Or are we getting some pushback?

512
00:26:24,359 --> 00:26:28,760
Speaker 5: Interesting question and relative to my experience with the FED

513
00:26:28,920 --> 00:26:32,480
Speaker 5: the Fed of Cleveland, I was actually a commissioned bank examiner.

514
00:26:32,880 --> 00:26:36,960
Speaker 5: I did get to sit in Alan Greenspan's chair at

515
00:26:37,000 --> 00:26:40,919
Speaker 5: the FED, but in terms of policy, I was not

516
00:26:41,160 --> 00:26:44,760
Speaker 5: involved in that other than the standpoint of examining banks

517
00:26:45,160 --> 00:26:48,480
Speaker 5: and bank holly companies, which obviously became a very important

518
00:26:48,640 --> 00:26:57,240
Speaker 5: topic in March of this year. So from that standpoint,

519
00:26:57,359 --> 00:27:01,719
Speaker 5: you know, where are we probably in the eighth inning.

520
00:27:03,600 --> 00:27:05,040
Speaker 2: That's really optimistic.

521
00:27:05,160 --> 00:27:07,960
Speaker 6: Greg well, although.

522
00:27:07,600 --> 00:27:11,920
Speaker 5: I will caution that by pointing out that commodities we're

523
00:27:11,960 --> 00:27:17,080
Speaker 5: seeing some reflation currently. For instance, gasoline futures are up

524
00:27:17,160 --> 00:27:22,360
Speaker 5: thirty percent since early May, diesel is up twenty five percent.

525
00:27:22,560 --> 00:27:25,800
Speaker 5: Some metals have been rising, like lead, tin, nickel, zinc,

526
00:27:25,920 --> 00:27:29,040
Speaker 5: iron ore, things we don't normally think about, but they're

527
00:27:29,080 --> 00:27:34,320
Speaker 5: certainly used every day in manufacturing. So that's the question.

528
00:27:34,600 --> 00:27:38,240
Speaker 5: Where are we in terms of commodities which had been

529
00:27:38,960 --> 00:27:43,800
Speaker 5: tamed and coming down, And as we know, the long

530
00:27:44,080 --> 00:27:48,880
Speaker 5: tailed areas like wages and rents have continued to be sticky.

531
00:27:49,000 --> 00:27:54,640
Speaker 5: So it is intriguing and you look at what's happened

532
00:27:54,720 --> 00:27:57,520
Speaker 5: to at least the stock market, and the stock market

533
00:27:57,600 --> 00:28:01,480
Speaker 5: really has not seemed to care what's happened with inflation,

534
00:28:03,640 --> 00:28:07,560
Speaker 5: interesting divergence. One thing I'd like to point out is

535
00:28:07,600 --> 00:28:10,639
Speaker 5: that over the last three years we have seen things

536
00:28:10,680 --> 00:28:15,080
Speaker 5: that have never and never say never, but never happened before,

537
00:28:15,560 --> 00:28:19,119
Speaker 5: at least in many lifetimes. You know, the last pandemic

538
00:28:19,240 --> 00:28:23,680
Speaker 5: was nineteen eighteen or so, no computers and no global trade.

539
00:28:24,160 --> 00:28:27,480
Speaker 5: So from the standpoint of trying to make decisions on

540
00:28:27,920 --> 00:28:31,439
Speaker 5: things that have happened over the last three years, and

541
00:28:31,480 --> 00:28:38,200
Speaker 5: then applying traditional economic forecasts and base cases, a lot

542
00:28:38,240 --> 00:28:39,920
Speaker 5: of that has gone out the window, and I think

543
00:28:39,960 --> 00:28:44,440
Speaker 5: that's really cost some issues for the economists out there when.

544
00:28:44,360 --> 00:28:47,640
Speaker 4: You're putting together research for not just the stock market

545
00:28:47,640 --> 00:28:49,480
Speaker 4: but also the bond market. What do you think the

546
00:28:49,520 --> 00:28:52,600
Speaker 4: diversence between the two is telling us about the direction

547
00:28:52,680 --> 00:28:53,400
Speaker 4: of the economy.

548
00:28:56,040 --> 00:29:02,080
Speaker 5: Probably Number one is, don't discount the consumer. It's been amazing.

549
00:29:02,160 --> 00:29:05,640
Speaker 5: It's seventy percent of our economy two thirds basically, and

550
00:29:05,840 --> 00:29:12,040
Speaker 5: the consumer somehow, some way continues to amaze on the

551
00:29:12,120 --> 00:29:16,120
Speaker 5: upside in terms of being resilient. That's about all I

552
00:29:16,120 --> 00:29:19,640
Speaker 5: can say. It's it is quite amazing, especially considering that

553
00:29:19,680 --> 00:29:23,920
Speaker 5: we've had the highest pace of increases in interest rates

554
00:29:24,000 --> 00:29:28,560
Speaker 5: in forty years, and yet here we are. You know,

555
00:29:28,600 --> 00:29:32,680
Speaker 5: we hear the economic dire, the gloom, yet there's been

556
00:29:32,720 --> 00:29:37,239
Speaker 5: no recession, at least technically. And you know, where I

557
00:29:37,240 --> 00:29:41,760
Speaker 5: am in Cleveland, there's plenty of manufacturing business going on,

558
00:29:42,120 --> 00:29:46,560
Speaker 5: new buildings being constructed. Home prices and home building are

559
00:29:46,920 --> 00:29:50,400
Speaker 5: kind of through the roof, still bidding wars, so there's

560
00:29:50,480 --> 00:29:54,440
Speaker 5: lots of divergences here, so to try and apply anything

561
00:29:54,600 --> 00:29:58,880
Speaker 5: that is traditional in today's day and age is interesting

562
00:29:59,400 --> 00:29:59,840
Speaker 5: to say the.

563
00:30:00,560 --> 00:30:03,479
Speaker 2: You mentioned some of the construction and manufacturing work that

564
00:30:03,520 --> 00:30:06,880
Speaker 2: you're seeing. I'm curious when you think about Bidenomics in

565
00:30:06,920 --> 00:30:11,880
Speaker 2: the US bringing chip production stateside. Are you concerned at

566
00:30:11,880 --> 00:30:14,920
Speaker 2: all about the impact Bidenomics could have when it comes

567
00:30:14,920 --> 00:30:18,320
Speaker 2: to the inflation picture and stimulating the economy while the

568
00:30:18,360 --> 00:30:21,280
Speaker 2: FED is trying so hard to fight inflation. And we've

569
00:30:21,320 --> 00:30:23,200
Speaker 2: got about forty five seconds left for you.

570
00:30:23,400 --> 00:30:27,320
Speaker 5: Sure, another great question. I think it's a good thing

571
00:30:27,400 --> 00:30:31,200
Speaker 5: to bring manufacturing back. We've got Intel down south of

572
00:30:31,280 --> 00:30:33,760
Speaker 5: US one hundred and twenty miles in the Columbus area

573
00:30:33,800 --> 00:30:36,560
Speaker 5: putting up a big facility. You know, the question is

574
00:30:36,680 --> 00:30:41,320
Speaker 5: can they find workers? Can they find qualified workers? That

575
00:30:41,640 --> 00:30:45,080
Speaker 5: remains to be seen. But the spillover effects of these

576
00:30:45,120 --> 00:30:48,840
Speaker 5: types of things are huge, from not just the plant,

577
00:30:49,320 --> 00:30:52,240
Speaker 5: but the workers. They have to eat, they have to shop.

578
00:30:52,560 --> 00:30:54,720
Speaker 5: It's just a huge multiplier impact.

579
00:30:56,280 --> 00:30:58,880
Speaker 4: Great, well, it's been such a pleasure speaking with you

580
00:30:58,960 --> 00:31:02,160
Speaker 4: and being able to get insight on all things FED

581
00:31:02,280 --> 00:31:05,840
Speaker 4: and especially this interesting take what's been happening in particular

582
00:31:05,880 --> 00:31:09,080
Speaker 4: corners of the commodity market and what that could mean

583
00:31:09,240 --> 00:31:11,200
Speaker 4: with a tricky dynamic here for the FED, even though

584
00:31:11,240 --> 00:31:14,400
Speaker 4: obviously we're seeing some bright spots here in green shoots

585
00:31:14,400 --> 00:31:16,800
Speaker 4: when it comes to some of this latest batch of

586
00:31:16,960 --> 00:31:20,760
Speaker 4: inflation data. So that's Greg Halter, director of Research at

587
00:31:20,840 --> 00:31:22,800
Speaker 4: Carnavy Investment Council.

588
00:31:23,520 --> 00:31:28,160
Speaker 1: This is the Bloomberg Business Week podcast, available on Apple, Spotify,

589
00:31:28,320 --> 00:31:31,520
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590
00:31:31,600 --> 00:31:35,680
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591
00:31:35,720 --> 00:31:39,040
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592
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593
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