1 00:00:00,120 --> 00:00:04,360 Speaker 1: Bloomberg is now on your dashboard with Apple CarPlay and 2 00:00:04,360 --> 00:00:08,160 Speaker 1: Android Auto. It gives you access to every Bloomberg podcast, 3 00:00:08,280 --> 00:00:11,560 Speaker 1: live audio feeds from Bloomberg Radio, print stories from Bloomberg 4 00:00:11,640 --> 00:00:14,920 Speaker 1: News in audio form, and the latest headlines of the 5 00:00:14,920 --> 00:00:18,640 Speaker 1: click of a button with Bloomberg News. Now it's free 6 00:00:18,680 --> 00:00:21,439 Speaker 1: with the latest version of the Bloomberg Business App. That's 7 00:00:21,680 --> 00:00:24,400 Speaker 1: the Bloomberg Business App. Get it on your phone in 8 00:00:24,440 --> 00:00:27,760 Speaker 1: the Apple App Store or on Google Play. Just download 9 00:00:27,800 --> 00:00:30,560 Speaker 1: the app, connect your phone to your car and get started. 10 00:00:30,960 --> 00:00:34,400 Speaker 1: And it's all presented by our sponsor, Interactive Brokers. 11 00:00:35,400 --> 00:00:38,600 Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 12 00:00:38,640 --> 00:00:39,800 Speaker 2: my co host Matt Miller. 13 00:00:40,200 --> 00:00:44,279 Speaker 1: Every business day we bring you interviews from CEOs, market pros, 14 00:00:44,320 --> 00:00:48,160 Speaker 1: and Bloomberg experts, along with essential market moven News. 15 00:00:48,720 --> 00:00:51,839 Speaker 2: I'm the Bloomberg Markets podcast called Apple Podcasts or wherever 16 00:00:51,960 --> 00:00:55,959 Speaker 2: you listen to podcasts, and at Bloomberg dot com Slash podcast. Well, 17 00:00:56,000 --> 00:00:58,080 Speaker 2: a lot of folks, I think we're taken by surprise, Lisa, 18 00:00:58,160 --> 00:01:01,200 Speaker 2: that last kind of couple of months at twenty twenty three, 19 00:01:01,240 --> 00:01:06,680 Speaker 2: when stocks ripped, yields pulled back dramatically as a Treasury's 20 00:01:06,760 --> 00:01:08,640 Speaker 2: rallied kind of took a lot of people by surprise, 21 00:01:08,680 --> 00:01:10,080 Speaker 2: and people were saying, maybe I pulled some of the 22 00:01:10,080 --> 00:01:13,000 Speaker 2: performance from twenty twenty four into that last couple of 23 00:01:13,040 --> 00:01:15,800 Speaker 2: months of twenty three. But let's check with somebody who 24 00:01:15,840 --> 00:01:18,160 Speaker 2: does this stuff for a living. Cally Cox. She joined 25 00:01:18,200 --> 00:01:21,800 Speaker 2: and she's an investment analyst at e Turo. She joins 26 00:01:21,880 --> 00:01:23,840 Speaker 2: is via zoom. So, Kelly, what do you make of 27 00:01:23,880 --> 00:01:26,559 Speaker 2: what we saw there in the fourth quarter in twenty 28 00:01:26,560 --> 00:01:28,800 Speaker 2: three and kind of how that might have changed your 29 00:01:28,840 --> 00:01:30,240 Speaker 2: outlook for twenty four. 30 00:01:31,600 --> 00:01:34,479 Speaker 3: Well, you know, I look at the fundamentals, Paul, of course, 31 00:01:34,520 --> 00:01:35,679 Speaker 3: you say, I do this for a living. 32 00:01:35,880 --> 00:01:39,039 Speaker 4: I'm an analyst. I look at the underlying So you. 33 00:01:39,000 --> 00:01:41,840 Speaker 3: Know, the fourth order didn't really change my opinion on 34 00:01:41,880 --> 00:01:45,520 Speaker 3: the economy that much because the economic data didn't really change. 35 00:01:46,160 --> 00:01:48,440 Speaker 3: We got more indications of a Sotoft landing. Of course, 36 00:01:48,520 --> 00:01:50,880 Speaker 3: markets took that and stride. It's one of the reasons 37 00:01:50,880 --> 00:01:53,040 Speaker 3: we saw such a strong rally at the stock market. 38 00:01:53,400 --> 00:01:56,080 Speaker 3: But going into twenty twenty four, we're reminding people that 39 00:01:56,360 --> 00:01:58,600 Speaker 3: it's not unusual to see a heat check in markets. 40 00:01:58,600 --> 00:02:02,120 Speaker 3: After market's rally fifteen percent in two months, so the 41 00:02:02,160 --> 00:02:04,640 Speaker 3: price action may be different than what we're seeing in 42 00:02:04,680 --> 00:02:06,040 Speaker 3: the underlying economic data. 43 00:02:06,120 --> 00:02:07,560 Speaker 4: We're just reminding people of that. 44 00:02:08,360 --> 00:02:11,160 Speaker 5: Now, I got to talk bitcoin, bitcoin and crypto because 45 00:02:11,160 --> 00:02:13,040 Speaker 5: that's that's huge right now. I mean, you have all 46 00:02:13,040 --> 00:02:15,919 Speaker 5: these Bitcoin ETF hoples they're waiting for this green light 47 00:02:16,000 --> 00:02:19,920 Speaker 5: from the SEC. What's your take on the crypto market? 48 00:02:20,960 --> 00:02:23,320 Speaker 3: Well, right now, of course, bitcoin is around forty five 49 00:02:23,440 --> 00:02:26,120 Speaker 3: k or so. Quite honestly, I haven't checked it this morning, 50 00:02:26,720 --> 00:02:29,079 Speaker 3: but Bitcoin's rallied a lot since the grey scale decision 51 00:02:29,120 --> 00:02:31,000 Speaker 3: that we got at the end of August. Seems like 52 00:02:31,280 --> 00:02:34,000 Speaker 3: a lot of this Bitcoin ETF excitement, at least for now, 53 00:02:34,360 --> 00:02:37,120 Speaker 3: could be priced in. But I say that knowing that 54 00:02:37,120 --> 00:02:38,959 Speaker 3: there's a short term view. In a long term view, 55 00:02:39,040 --> 00:02:41,440 Speaker 3: right a lot of this excitement could be priced in. 56 00:02:41,680 --> 00:02:44,400 Speaker 3: But long term this opens the door for a new 57 00:02:44,400 --> 00:02:47,840 Speaker 3: wave of investors into bitcoin. And we we think, especially 58 00:02:47,880 --> 00:02:50,040 Speaker 3: after the details we got yesterday, we think the product 59 00:02:50,080 --> 00:02:52,960 Speaker 3: is compelling enough advantage of it so that could keep 60 00:02:53,000 --> 00:02:55,680 Speaker 3: a floor under prices, Lisa, and you know, it could 61 00:02:55,720 --> 00:02:58,799 Speaker 3: even help boost the price in the long run. 62 00:02:58,840 --> 00:02:59,640 Speaker 4: It just depends on. 63 00:02:59,560 --> 00:03:02,959 Speaker 2: What we see close so call as we think about 64 00:03:03,000 --> 00:03:06,200 Speaker 2: twenty twenty four. Here, one of the issues is I 65 00:03:06,280 --> 00:03:09,000 Speaker 2: kind of feel like earnings have to really come through, 66 00:03:09,040 --> 00:03:11,000 Speaker 2: particularly after the run we had in the last couple 67 00:03:11,080 --> 00:03:12,919 Speaker 2: months of last year. And I'm looking at the S 68 00:03:12,960 --> 00:03:14,920 Speaker 2: and P five hundred, it looks like analysts have about 69 00:03:14,960 --> 00:03:18,880 Speaker 2: a twelve percent growth rate in earnings in twenty twenty four. A. 70 00:03:19,120 --> 00:03:22,120 Speaker 2: Do you think that's a reasonable number? B? Is there 71 00:03:22,200 --> 00:03:24,079 Speaker 2: risk in that number? Does the upside to that number? 72 00:03:24,120 --> 00:03:25,080 Speaker 2: How do you think about earnings? 73 00:03:26,160 --> 00:03:28,680 Speaker 3: Yeah, Paul, if you ask me what the most confusing 74 00:03:28,720 --> 00:03:31,160 Speaker 3: part of the market landscape is right now, I'd say 75 00:03:31,160 --> 00:03:34,280 Speaker 3: earnings as well, because you're right. I mean, earnings growth 76 00:03:34,320 --> 00:03:36,960 Speaker 3: does look promising this yere but at the same time, 77 00:03:37,000 --> 00:03:39,560 Speaker 3: it's not the kind of earnings growth that you would like. 78 00:03:39,600 --> 00:03:41,760 Speaker 3: And what I mean by that is it's earnings growth 79 00:03:42,120 --> 00:03:45,360 Speaker 3: driven by cost cutting instead of sales growth, which is 80 00:03:45,400 --> 00:03:48,040 Speaker 3: inferior when you think about the fact that many people 81 00:03:48,040 --> 00:03:51,720 Speaker 3: associate higher profit and higher sales. So as an analyst, 82 00:03:51,760 --> 00:03:54,200 Speaker 3: I think about that it's not the best we can get. 83 00:03:54,240 --> 00:03:57,400 Speaker 3: But right now, in an environment where you know people 84 00:03:57,440 --> 00:04:00,560 Speaker 3: are still dealing with a lot of economic uncertainty, you 85 00:04:00,600 --> 00:04:03,040 Speaker 3: know it might be enough to keep stocks void and 86 00:04:03,160 --> 00:04:03,840 Speaker 3: right now, I. 87 00:04:03,800 --> 00:04:06,280 Speaker 4: Know everybody says, you know, watch the guidance every quarter. 88 00:04:06,520 --> 00:04:07,760 Speaker 4: Right now, I think guidance is. 89 00:04:07,800 --> 00:04:11,280 Speaker 3: Especially important because we got that sea change from the 90 00:04:11,280 --> 00:04:13,760 Speaker 3: Fed in the fourth quarter, and you know, corporate sea 91 00:04:13,760 --> 00:04:15,960 Speaker 3: suites are taking that into account when they're planning out 92 00:04:15,960 --> 00:04:16,560 Speaker 3: the next year. 93 00:04:17,600 --> 00:04:20,800 Speaker 5: Hey, we have some major financial funds releasing earnings this week. 94 00:04:20,800 --> 00:04:23,800 Speaker 5: You got JP Morgan, Bank of America, City, Wells, Fargo, b. 95 00:04:23,880 --> 00:04:24,479 Speaker 6: And y Melon. 96 00:04:24,560 --> 00:04:27,400 Speaker 5: The list goes on, what are you invite advising your 97 00:04:27,400 --> 00:04:29,400 Speaker 5: clients when it comes to bank stocks. 98 00:04:30,560 --> 00:04:34,000 Speaker 3: Well, banks, of course are the bill whethers of the economy, Lisa, 99 00:04:34,040 --> 00:04:36,479 Speaker 3: and they're down about fifteen percent from the highs right now, 100 00:04:36,600 --> 00:04:39,240 Speaker 3: so they're not when you say the stock market is. 101 00:04:39,240 --> 00:04:41,440 Speaker 4: Nearing all time hiys, they're not talking about banks. 102 00:04:41,480 --> 00:04:43,560 Speaker 3: And this matters right now because there's a lot of 103 00:04:43,640 --> 00:04:47,320 Speaker 3: dispersion between sectors, and quite frankly, the fact that you know, 104 00:04:47,360 --> 00:04:49,440 Speaker 3: banks and a lot of cyclical sectors are well below 105 00:04:49,480 --> 00:04:52,800 Speaker 3: their eyes makes them attractive if you believe the economy 106 00:04:52,800 --> 00:04:53,640 Speaker 3: can stand. 107 00:04:53,480 --> 00:04:54,360 Speaker 4: Sturdy this year. 108 00:04:54,880 --> 00:04:57,000 Speaker 3: One thing I found interesting we do the survey of 109 00:04:57,080 --> 00:04:58,920 Speaker 3: retail investors every quarter. 110 00:04:59,440 --> 00:05:01,880 Speaker 4: It's a survey global investor. I look at the US 111 00:05:01,960 --> 00:05:05,760 Speaker 4: investor cut and retail investors are getting bullish on banks. 112 00:05:06,279 --> 00:05:08,560 Speaker 4: You know, we ask a question that says, you. 113 00:05:08,480 --> 00:05:10,840 Speaker 3: Know, what sectors do you own and what sectors do 114 00:05:10,839 --> 00:05:13,240 Speaker 3: you want to add to? And financials were the most 115 00:05:13,279 --> 00:05:15,760 Speaker 3: stone sector and they were one of the top three 116 00:05:15,800 --> 00:05:17,800 Speaker 3: sectors in our last survey that an. 117 00:05:17,560 --> 00:05:19,080 Speaker 4: Investor said that they wanted to add to. 118 00:05:19,480 --> 00:05:21,960 Speaker 3: So people see value on banks right now, especially as 119 00:05:22,000 --> 00:05:24,200 Speaker 3: the economic data means encouraging, And. 120 00:05:24,480 --> 00:05:26,200 Speaker 4: You know, I don't think that's such a bad stance. 121 00:05:27,120 --> 00:05:28,320 Speaker 6: So Kelly, I. 122 00:05:28,279 --> 00:05:31,480 Speaker 2: Mean, Lisa was long all the Magnificent seven stocks, so 123 00:05:31,480 --> 00:05:32,960 Speaker 2: so she's laughing all the way to the bank. I 124 00:05:33,040 --> 00:05:36,359 Speaker 2: unfortunately was not. So should I be chasing some of 125 00:05:36,360 --> 00:05:39,680 Speaker 2: those names this year or should I maybe go to 126 00:05:39,680 --> 00:05:42,920 Speaker 2: try some find some value somewhere else maybe that did 127 00:05:42,960 --> 00:05:44,200 Speaker 2: not participate. 128 00:05:45,120 --> 00:05:47,679 Speaker 4: Well, First of all, good for you, Lisa, Like, wow, 129 00:05:47,880 --> 00:05:51,559 Speaker 4: that's awesome. You love your quality grits. You know, Heading 130 00:05:51,600 --> 00:05:52,760 Speaker 4: into this year, I. 131 00:05:52,760 --> 00:05:54,800 Speaker 3: Think it's an environment where you still have to stay nimble. 132 00:05:55,480 --> 00:05:58,800 Speaker 3: We're advising rotating into cyclicals, you know, taking small steps 133 00:05:58,839 --> 00:06:01,760 Speaker 3: into them because we still don't know if for recession 134 00:06:01,920 --> 00:06:05,560 Speaker 3: is a serious risk, right now, economic data has stayed sturdy, 135 00:06:05,560 --> 00:06:07,520 Speaker 3: but there's a lot of pressure on the economy at 136 00:06:07,520 --> 00:06:09,920 Speaker 3: the moment. So you know, as you head into twenty 137 00:06:09,960 --> 00:06:12,560 Speaker 3: twenty four, you know, dip your toes in small caps, 138 00:06:12,560 --> 00:06:16,440 Speaker 3: dip your toes and other sectors more cyclically rate sensitive sectors. 139 00:06:16,640 --> 00:06:18,680 Speaker 3: But hold on to that quality risk because we still 140 00:06:18,680 --> 00:06:19,920 Speaker 3: don't know forrab the things yet. 141 00:06:20,560 --> 00:06:23,560 Speaker 5: And how would you describe today's market environment? I mean, 142 00:06:23,600 --> 00:06:25,640 Speaker 5: what are your clients selling, what's the sentiment, what are 143 00:06:25,640 --> 00:06:26,240 Speaker 5: their feelings? 144 00:06:27,279 --> 00:06:31,600 Speaker 3: Oh well, retail investors remain optimistic, but with a hint 145 00:06:31,640 --> 00:06:34,400 Speaker 3: of skepticism. And I say that knowing that a lot 146 00:06:34,400 --> 00:06:38,479 Speaker 3: of retail investors have rotated into cash recently, and that 147 00:06:38,640 --> 00:06:41,600 Speaker 3: to me tells me that there is some you know, 148 00:06:41,640 --> 00:06:46,039 Speaker 3: positioning around economic uncertainty, positioning around a recession that could 149 00:06:46,040 --> 00:06:48,520 Speaker 3: be coming. And we all know that vibes are fraud right. 150 00:06:48,800 --> 00:06:52,159 Speaker 3: Confidence is increasing, but there's still you know, this this 151 00:06:52,279 --> 00:06:56,520 Speaker 3: palpable nervousness within markets, and you know, among investors, even 152 00:06:56,560 --> 00:06:59,360 Speaker 3: though sentiment has picked up over the last three months 153 00:06:59,440 --> 00:07:01,680 Speaker 3: or so, that's encouraging to be I mean, you want 154 00:07:01,680 --> 00:07:05,000 Speaker 3: a market that's filled with healthy skepticism instead of exuberance, 155 00:07:05,680 --> 00:07:08,320 Speaker 3: but at the same time that could limit markets in 156 00:07:08,360 --> 00:07:11,960 Speaker 3: the short term, especially as people digest this January wave 157 00:07:12,120 --> 00:07:13,520 Speaker 3: of economic data we're getting. 158 00:07:14,160 --> 00:07:16,440 Speaker 2: Hey, Kelly, for the first time in a couple of years, 159 00:07:16,440 --> 00:07:19,760 Speaker 2: fixed income investors actually made some money in twenty twenty 160 00:07:19,840 --> 00:07:21,960 Speaker 2: three thanks to that rally towards the end of the year. 161 00:07:22,000 --> 00:07:24,440 Speaker 2: What are you advising your clients to do in the 162 00:07:24,440 --> 00:07:26,480 Speaker 2: fixed income space here? Because I again, I can buy 163 00:07:26,480 --> 00:07:29,360 Speaker 2: a two year treasury with my federal government and get 164 00:07:29,400 --> 00:07:31,160 Speaker 2: four point three percent. That's not too bad. 165 00:07:32,160 --> 00:07:33,760 Speaker 3: It's not too bad, and it's you know, one of 166 00:07:33,800 --> 00:07:35,200 Speaker 3: the best fields that you've been able to get on 167 00:07:35,240 --> 00:07:37,840 Speaker 3: short term bonds or short term treasuries for that matter, 168 00:07:38,640 --> 00:07:42,160 Speaker 3: in over a decade. So you know, bonds look attractive here. 169 00:07:42,200 --> 00:07:44,960 Speaker 3: When I talk about bonds, I need more conservative treasury 170 00:07:45,320 --> 00:07:49,280 Speaker 3: allocations type of bonds. Corporate bonds are a separate discussion, 171 00:07:49,480 --> 00:07:52,000 Speaker 3: but you know, if you're worried about a recession, treasuries 172 00:07:52,000 --> 00:07:54,520 Speaker 3: are the classic sanity hedge. The FED is looking to 173 00:07:54,560 --> 00:07:57,400 Speaker 3: cut rates this year. You know, if we see more 174 00:07:57,400 --> 00:07:59,880 Speaker 3: weakness in the economy, we could see more rate cuts 175 00:08:00,200 --> 00:08:02,040 Speaker 3: priced into the market. And on the back of that, 176 00:08:02,200 --> 00:08:03,480 Speaker 3: so if you're worried about. 177 00:08:03,280 --> 00:08:05,000 Speaker 4: A recession, now is the time to edge it. 178 00:08:05,040 --> 00:08:07,440 Speaker 3: And treasuries time and time again have been a strong 179 00:08:07,520 --> 00:08:09,200 Speaker 3: recessionage And. 180 00:08:09,080 --> 00:08:10,280 Speaker 5: One of the things you said in your notes that 181 00:08:10,280 --> 00:08:12,640 Speaker 5: staid out to me was remember that even healthy markets 182 00:08:12,840 --> 00:08:16,160 Speaker 5: go up and down. Just a little reminder there. Huh. 183 00:08:16,200 --> 00:08:18,720 Speaker 3: Well, yeah, and it's surprising to me how many people 184 00:08:18,720 --> 00:08:20,320 Speaker 3: forget that. I think you really have to keep your 185 00:08:20,320 --> 00:08:23,440 Speaker 3: emotions in check in this environment too, because yes, again 186 00:08:23,920 --> 00:08:26,320 Speaker 3: the vibes are fraud and stocks are near record highs. 187 00:08:26,320 --> 00:08:28,880 Speaker 3: That doesn't make for an easy environment to be an 188 00:08:28,880 --> 00:08:32,200 Speaker 3: investor in, but you really have to first understand your goals. 189 00:08:32,240 --> 00:08:33,920 Speaker 4: Of course, you know, if you're a long. 190 00:08:33,840 --> 00:08:38,000 Speaker 3: Term investor, you know many pullbacks are buying opportunities for 191 00:08:38,080 --> 00:08:40,760 Speaker 3: you based on history. But at the same time, understand 192 00:08:40,760 --> 00:08:44,000 Speaker 3: the fact that the fundamentals matter, especially now as market's 193 00:08:44,040 --> 00:08:46,640 Speaker 3: i ASoft landing. So don't get too caught up in 194 00:08:46,679 --> 00:08:47,760 Speaker 3: the headlines unless. 195 00:08:47,480 --> 00:08:49,000 Speaker 4: You're a trader, and of course you have to pay 196 00:08:49,000 --> 00:08:49,760 Speaker 4: attention to those. 197 00:08:50,200 --> 00:08:52,320 Speaker 2: And Kelly, you know we're still, you know, just a 198 00:08:52,320 --> 00:08:54,280 Speaker 2: couple of percent away from the all time high on 199 00:08:54,440 --> 00:08:57,600 Speaker 2: s and P five hundred. Are you you have valuation 200 00:08:57,760 --> 00:09:00,840 Speaker 2: concerns here or what is your sense of valuation in 201 00:09:00,880 --> 00:09:02,040 Speaker 2: this market here? 202 00:09:03,160 --> 00:09:05,480 Speaker 3: Well, valuations, I think it's a different discussion if you're 203 00:09:05,520 --> 00:09:09,160 Speaker 3: looking at the broad market versus the sectors. So broad market, yes, 204 00:09:09,280 --> 00:09:11,240 Speaker 3: evaluations are quite high, but a lot of that is 205 00:09:11,280 --> 00:09:15,160 Speaker 3: driven by tech, consumer discretionary, and more of the growth 206 00:09:15,240 --> 00:09:18,800 Speaker 3: sectors that we saw do well last year. So heading 207 00:09:18,840 --> 00:09:21,079 Speaker 3: into twenty twenty four, I would say look at valuations 208 00:09:21,080 --> 00:09:23,080 Speaker 3: on a sector basis, don't. 209 00:09:22,840 --> 00:09:23,920 Speaker 4: Get too caught up in them. 210 00:09:24,200 --> 00:09:26,160 Speaker 3: I think it's it can be a trap to look 211 00:09:26,160 --> 00:09:30,040 Speaker 3: at valuation versus history, especially considering all the progress that 212 00:09:30,040 --> 00:09:33,320 Speaker 3: we've made in tech since the twenty tens. But right 213 00:09:33,360 --> 00:09:35,479 Speaker 3: now it's a great time to look for value. Value 214 00:09:35,760 --> 00:09:39,000 Speaker 3: last week outperform growth by the most since I believed 215 00:09:39,040 --> 00:09:42,559 Speaker 3: July in six months, so you know, look at value, 216 00:09:42,679 --> 00:09:45,679 Speaker 3: especially in the cyclical part of the market, and consider 217 00:09:45,720 --> 00:09:48,040 Speaker 3: the fact that valuations don't look the same across the board. 218 00:09:48,520 --> 00:09:50,760 Speaker 2: All right, Kelly, thanks so much for joining us. Cali 219 00:09:50,840 --> 00:09:55,960 Speaker 2: Cox Investment Analysts for e Touro, which is a platform 220 00:09:56,080 --> 00:09:59,600 Speaker 2: for retail investors. A lot of young investors are on 221 00:09:59,600 --> 00:10:01,839 Speaker 2: that platform. I'm so cool to check in with CALLI 222 00:10:01,920 --> 00:10:03,960 Speaker 2: former Bloomberg staffer. 223 00:10:04,000 --> 00:10:04,200 Speaker 4: Here. 224 00:10:05,320 --> 00:10:08,719 Speaker 7: You're listening to the team Ken's are Live program Bloomberg 225 00:10:08,760 --> 00:10:12,120 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg dot Com, 226 00:10:12,240 --> 00:10:15,360 Speaker 7: the iHeartRadio app and the Bloomberg Business App, or listen 227 00:10:15,440 --> 00:10:17,559 Speaker 7: on demand wherever you get your podcasts. 228 00:10:20,000 --> 00:10:22,679 Speaker 2: Let's talk about the consumer here. I think the consumer's 229 00:10:22,720 --> 00:10:25,679 Speaker 2: pretty solid out there. I mean unemployment rates, you know, 230 00:10:26,080 --> 00:10:28,720 Speaker 2: historical lows. Everybody's got a job, it wants them. Looks 231 00:10:28,760 --> 00:10:32,040 Speaker 2: like the stimulus money is kind of played out, drawing 232 00:10:32,120 --> 00:10:34,800 Speaker 2: down on savings now, racking up some consumer credit, but 233 00:10:34,840 --> 00:10:38,000 Speaker 2: buying large consumer seems to be in pretty good place 234 00:10:38,040 --> 00:10:40,360 Speaker 2: right here. Let's see if that's translating into retail sales. 235 00:10:40,440 --> 00:10:44,679 Speaker 2: Jill Blanchard she joins as president of Enterprise Client Solutions 236 00:10:44,679 --> 00:10:47,880 Speaker 2: at Advantage Solutions. Jill, thanks so much for joining us again. 237 00:10:48,360 --> 00:10:50,480 Speaker 2: I'd love for you to just kind of recap for 238 00:10:50,679 --> 00:10:54,560 Speaker 2: us here in mid January, how the holiday sales season 239 00:10:54,640 --> 00:10:55,439 Speaker 2: kind of wrapped. 240 00:10:55,240 --> 00:10:57,560 Speaker 8: Up for some of the bigger retailers. 241 00:10:57,160 --> 00:10:57,560 Speaker 6: You talk to. 242 00:10:58,280 --> 00:11:01,000 Speaker 9: That's great, Thanks, Paul, Lisa, glad to be back and 243 00:11:01,040 --> 00:11:03,679 Speaker 9: thanks for having me. So Holiday twenty twenty three, there 244 00:11:03,679 --> 00:11:06,600 Speaker 9: are some conflicting reports out there. One of the things 245 00:11:06,600 --> 00:11:09,840 Speaker 9: that we did see though, is a disproportionate amount of 246 00:11:09,880 --> 00:11:11,760 Speaker 9: spend in the two to three days that are leading 247 00:11:11,880 --> 00:11:14,760 Speaker 9: up to the holiday. So last month we talked about Thanksgiving, 248 00:11:14,920 --> 00:11:17,319 Speaker 9: we saw that. Then we also saw that at Christmas 249 00:11:17,360 --> 00:11:19,280 Speaker 9: this year too. So it could be that consumers are 250 00:11:19,320 --> 00:11:21,160 Speaker 9: waiting to see what sort of money they have left 251 00:11:21,200 --> 00:11:23,640 Speaker 9: to spend, or waiting for a big sale. But it 252 00:11:23,679 --> 00:11:27,840 Speaker 9: definitely has an implication on how retailers and manufacturers plan 253 00:11:27,920 --> 00:11:29,440 Speaker 9: their promotions and inventory. 254 00:11:29,640 --> 00:11:32,040 Speaker 5: So I think that we can expect this to continue in. 255 00:11:31,960 --> 00:11:32,720 Speaker 4: Twenty twenty four. 256 00:11:32,880 --> 00:11:36,640 Speaker 9: Thanks Super Bowl, Valentine's Day, Easter all coming our way. 257 00:11:37,440 --> 00:11:41,120 Speaker 5: Yesterday we saw some good news Lulu, Lemon, Abercrombie, American Eagle, 258 00:11:41,200 --> 00:11:44,240 Speaker 5: they all raise their sales outlooks. Because what you're talking 259 00:11:44,280 --> 00:11:47,199 Speaker 5: about that strong holiday season. Now, what do you think 260 00:11:47,200 --> 00:11:49,920 Speaker 5: about this fast fashion trend? We've been hearing a lot 261 00:11:49,920 --> 00:11:52,400 Speaker 5: about Chian TMU. I mean, what's that going to look 262 00:11:52,440 --> 00:11:54,240 Speaker 5: like into twenty twenty four? Are they going to start 263 00:11:54,240 --> 00:11:54,960 Speaker 5: taking over a bit? 264 00:11:56,320 --> 00:11:56,480 Speaker 2: You know? 265 00:11:56,520 --> 00:11:57,920 Speaker 9: I think one of the big trends that we can 266 00:11:58,480 --> 00:12:00,520 Speaker 9: that we can expect to see in twenty twenty four 267 00:12:00,760 --> 00:12:04,280 Speaker 9: is a bigger emphasis on value, and value means different 268 00:12:04,280 --> 00:12:07,280 Speaker 9: things to different consumers, right, So it could be buying 269 00:12:07,320 --> 00:12:09,839 Speaker 9: a used luxury car instead of a new luxury car. 270 00:12:10,080 --> 00:12:12,400 Speaker 9: It could be buying a private brand product instead of 271 00:12:12,440 --> 00:12:13,360 Speaker 9: a name brand product. 272 00:12:13,480 --> 00:12:13,920 Speaker 4: It could be. 273 00:12:13,880 --> 00:12:18,079 Speaker 9: Shopping at Costco and Sam's for a better price for 274 00:12:18,240 --> 00:12:22,040 Speaker 9: the larger size. And so really key is for retailers 275 00:12:22,080 --> 00:12:25,559 Speaker 9: to understand what sort of value their consumers are looking 276 00:12:25,600 --> 00:12:28,520 Speaker 9: for and meeting them there. I will say, specifically, as 277 00:12:28,520 --> 00:12:31,320 Speaker 9: we talk about things like a the blue Lemon, there's 278 00:12:31,400 --> 00:12:36,000 Speaker 9: also a heavier lean in too smaller and more affordable indulgences, 279 00:12:36,400 --> 00:12:39,920 Speaker 9: which could be what that trend means. So maybe not 280 00:12:39,960 --> 00:12:44,040 Speaker 9: taking vacation but indulging in more indulgent clothes. 281 00:12:44,240 --> 00:12:46,439 Speaker 2: Let's say, see on the exact opposite, I'm going to 282 00:12:46,440 --> 00:12:48,360 Speaker 2: stage in my life. I'm getting rid of stuff, and 283 00:12:48,400 --> 00:12:50,200 Speaker 2: I spent the less several years getting rid of stuff, 284 00:12:50,360 --> 00:12:52,599 Speaker 2: but I'll spend money on a vacation. But that's just me. 285 00:12:53,920 --> 00:12:57,880 Speaker 2: The consumer package goods companies, they were pretty darn good 286 00:12:57,920 --> 00:13:01,320 Speaker 2: over the last several years during those inflatationary period when 287 00:13:01,640 --> 00:13:03,880 Speaker 2: in raising prices, where are we in their ability to 288 00:13:03,920 --> 00:13:06,400 Speaker 2: do that? Now is that played out? Are they starting 289 00:13:06,440 --> 00:13:08,680 Speaker 2: to see some challenges to the margins? 290 00:13:09,840 --> 00:13:11,200 Speaker 4: Most of that has played out. 291 00:13:11,520 --> 00:13:13,960 Speaker 9: We are in the midst of doing our new survey 292 00:13:13,960 --> 00:13:15,599 Speaker 9: where we're going to get a better read as to 293 00:13:15,600 --> 00:13:17,560 Speaker 9: whether or not we're going to see any price increases 294 00:13:17,640 --> 00:13:20,520 Speaker 9: or decreases in A twenty twenty four. But most of 295 00:13:20,520 --> 00:13:24,000 Speaker 9: them have already paid out. They're really more focused on 296 00:13:24,360 --> 00:13:26,040 Speaker 9: promotions in pricing. 297 00:13:25,800 --> 00:13:26,680 Speaker 4: And getting that right. 298 00:13:26,840 --> 00:13:30,559 Speaker 9: So think about this new trend of this disproportionate spend 299 00:13:30,559 --> 00:13:33,720 Speaker 9: before the holidays. Retailers and manufacturers go to great lengths 300 00:13:33,760 --> 00:13:35,480 Speaker 9: to make sure that they have the products priced at 301 00:13:35,480 --> 00:13:37,520 Speaker 9: the right price at the right time, and so with 302 00:13:37,640 --> 00:13:40,360 Speaker 9: this surge in those two to three days, they're really 303 00:13:40,360 --> 00:13:43,080 Speaker 9: going to need to do some different thinking as to 304 00:13:43,200 --> 00:13:45,280 Speaker 9: how they want to promote products to ensure that they're 305 00:13:45,280 --> 00:13:46,960 Speaker 9: at the right price to get sold. But they're also 306 00:13:47,080 --> 00:13:51,640 Speaker 9: not subsidizing existing sales. Also, inventory, they've got to make 307 00:13:51,679 --> 00:13:53,719 Speaker 9: sure that it's available. You know, twenty seven percent of 308 00:13:53,760 --> 00:13:56,040 Speaker 9: the time that a consumer can't find the product they 309 00:13:56,040 --> 00:13:58,080 Speaker 9: want and they buy a different product, they stay with 310 00:13:58,120 --> 00:14:00,640 Speaker 9: that different product. So it's pretty key to on shelf. 311 00:14:01,280 --> 00:14:04,320 Speaker 5: And let's dig into where consumers are going to be shopping. 312 00:14:04,360 --> 00:14:04,920 Speaker 6: Are we talking? 313 00:14:04,960 --> 00:14:06,760 Speaker 5: Are they going to them all? They're going online? Are 314 00:14:06,760 --> 00:14:09,400 Speaker 5: they going on social media? TikTok is saying they're going 315 00:14:09,440 --> 00:14:11,360 Speaker 5: to put a lot of money into this. Where are 316 00:14:11,360 --> 00:14:11,880 Speaker 5: they shopping? 317 00:14:12,760 --> 00:14:14,680 Speaker 9: That really is as well. One of the big things 318 00:14:14,679 --> 00:14:16,959 Speaker 9: that we'll see in twenty twenty four are shifts, right, 319 00:14:17,000 --> 00:14:18,760 Speaker 9: So shifts in the what I talked about like the 320 00:14:18,800 --> 00:14:22,760 Speaker 9: trade down and category, the affordable indulgences. Where's another shift 321 00:14:22,800 --> 00:14:26,160 Speaker 9: and so we saw big emphasis on more discount retailers 322 00:14:26,360 --> 00:14:28,080 Speaker 9: in twenty twenty three. I think that's going to take 323 00:14:28,120 --> 00:14:29,160 Speaker 9: off in twenty twenty four. 324 00:14:29,240 --> 00:14:29,840 Speaker 5: And the how. 325 00:14:30,160 --> 00:14:33,440 Speaker 9: We did see a great success with mobile shopping during 326 00:14:33,480 --> 00:14:37,280 Speaker 9: the twenty twenty three holiday season, indicating that it's easier 327 00:14:37,360 --> 00:14:40,840 Speaker 9: for consumers to use that as a medium. So definitely 328 00:14:41,080 --> 00:14:44,360 Speaker 9: we'll see big shifts in the where and the how. Overall, 329 00:14:44,400 --> 00:14:47,240 Speaker 9: the volume at the top level might be the same, 330 00:14:47,600 --> 00:14:49,160 Speaker 9: but the shifts and the what, the where and the 331 00:14:49,200 --> 00:14:50,240 Speaker 9: how could be big. 332 00:14:51,160 --> 00:14:55,120 Speaker 2: I bet luxury here that's a big area for Lisa. 333 00:14:55,280 --> 00:14:57,280 Speaker 2: You know, I'm more just kind of the Dollar General 334 00:14:57,360 --> 00:15:01,720 Speaker 2: kind of guy than Walmart guy. Where's luxury spending these days? 335 00:15:01,760 --> 00:15:04,080 Speaker 2: Because I know, a big part of luxury has historically been, 336 00:15:04,600 --> 00:15:08,240 Speaker 2: you know, the Chinese buyer. But the Chinese economy obviously 337 00:15:08,280 --> 00:15:10,440 Speaker 2: is weaker than I think people anticipated at the beginning 338 00:15:10,480 --> 00:15:13,040 Speaker 2: of twenty three. So how's overall luxury space looking. 339 00:15:14,600 --> 00:15:16,600 Speaker 9: You know, I'll go back to one of the things 340 00:15:16,600 --> 00:15:19,080 Speaker 9: that I've been talking to our clients about, and that 341 00:15:19,160 --> 00:15:22,720 Speaker 9: is luxury means different things to different people. And so 342 00:15:22,840 --> 00:15:26,239 Speaker 9: there are products that will be luxury to certain consumers 343 00:15:26,240 --> 00:15:28,680 Speaker 9: if they're trading you know, up to you know, call 344 00:15:28,720 --> 00:15:31,880 Speaker 9: it a mainstream brand versus luxury to somebody else. They're 345 00:15:31,920 --> 00:15:34,080 Speaker 9: trading up to a brand that you can't get in 346 00:15:34,080 --> 00:15:36,120 Speaker 9: store and maybe only online, and. 347 00:15:36,080 --> 00:15:37,760 Speaker 5: Then to another level. 348 00:15:37,840 --> 00:15:42,239 Speaker 9: So luxury really plays out in different ways for different consumers. 349 00:15:42,600 --> 00:15:45,680 Speaker 9: What really is is playing out similarly though, across the 350 00:15:45,680 --> 00:15:50,000 Speaker 9: consumer groups is an opt in to more affordable luxuries, 351 00:15:50,040 --> 00:15:52,680 Speaker 9: which again could be something like a used luxury car 352 00:15:52,880 --> 00:15:54,120 Speaker 9: versus a new luxury car. 353 00:15:55,040 --> 00:15:57,160 Speaker 5: And what about buy now, pay later. I mean that 354 00:15:57,280 --> 00:15:59,200 Speaker 5: was big during the holiday season. That's the reason a 355 00:15:59,240 --> 00:16:01,680 Speaker 5: lot of people were buy so much during the holidays. 356 00:16:01,880 --> 00:16:04,640 Speaker 5: Will that continue into twenty twenty four? 357 00:16:04,880 --> 00:16:06,680 Speaker 9: Yeah, there are a lot of eyes on the first 358 00:16:06,720 --> 00:16:10,200 Speaker 9: quarter of this year for that reason, as well as 359 00:16:10,200 --> 00:16:13,240 Speaker 9: a potential pantry load. There were so many discounts and 360 00:16:13,320 --> 00:16:15,600 Speaker 9: deep discounts in the fourth quarter of last year that 361 00:16:15,600 --> 00:16:18,880 Speaker 9: there's the potential that consumers really leaned in heavily to 362 00:16:18,960 --> 00:16:21,200 Speaker 9: those deep discounts and now have to use that product 363 00:16:21,440 --> 00:16:24,240 Speaker 9: up through the first quarter. So there are a lot 364 00:16:24,240 --> 00:16:27,480 Speaker 9: of eyes on first quarter as to what the impact 365 00:16:27,560 --> 00:16:30,560 Speaker 9: could be from debt, credit card debt as well as 366 00:16:30,600 --> 00:16:31,320 Speaker 9: pantry loading. 367 00:16:32,120 --> 00:16:34,200 Speaker 2: Joe, where are we in terms of the store footprint 368 00:16:34,200 --> 00:16:35,840 Speaker 2: in this country? I know for the longest time, maybe 369 00:16:35,880 --> 00:16:39,840 Speaker 2: ten plus years, the industry's kind of been downsizing its footprint. 370 00:16:40,120 --> 00:16:41,200 Speaker 2: Is the industry right size? 371 00:16:41,280 --> 00:16:41,680 Speaker 6: Right now? 372 00:16:42,520 --> 00:16:43,680 Speaker 4: Is the industry right sized? 373 00:16:44,760 --> 00:16:49,320 Speaker 9: We definitely have seen a slow in store growth over 374 00:16:49,360 --> 00:16:53,120 Speaker 9: the past two years, largely due to the effects of 375 00:16:53,320 --> 00:16:57,280 Speaker 9: COVID and the focus having to be on supply and pricing, 376 00:16:57,360 --> 00:17:00,240 Speaker 9: and so we do see retailers now getting back to 377 00:17:01,040 --> 00:17:04,040 Speaker 9: the old focus of store growth, and so I think 378 00:17:04,080 --> 00:17:06,840 Speaker 9: that we'll see a resurgence of of store growth, but 379 00:17:06,920 --> 00:17:08,879 Speaker 9: not to the level that it used to be. 380 00:17:09,760 --> 00:17:12,360 Speaker 2: All right, Jill, thanks so much for joining us. Appreciate 381 00:17:12,359 --> 00:17:16,240 Speaker 2: it as always. Jill Blanchard, President of enterprise client solutions 382 00:17:16,280 --> 00:17:17,560 Speaker 2: at Advantage Solutions. 383 00:17:17,880 --> 00:17:21,000 Speaker 7: You're listening to the tape Ken's Are Live program Bloomberg 384 00:17:21,040 --> 00:17:24,639 Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the 385 00:17:24,720 --> 00:17:27,960 Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 386 00:17:27,960 --> 00:17:30,800 Speaker 7: You can also listen live on Amazon Alexa from our 387 00:17:30,800 --> 00:17:35,760 Speaker 7: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 388 00:17:36,600 --> 00:17:38,040 Speaker 2: We want to go across the pond. Talk to our 389 00:17:38,040 --> 00:17:40,600 Speaker 2: good friend Tim Craickett. He's a director of research over 390 00:17:40,600 --> 00:17:44,320 Speaker 2: there for Bloomberg Intelligence. He's also the senior European strategist 391 00:17:44,320 --> 00:17:48,440 Speaker 2: with Bloomberg Intelligence. He joins us via zoom from Queen 392 00:17:48,520 --> 00:17:51,520 Speaker 2: Victoria Street, which is the awesome London headquarters of a 393 00:17:51,560 --> 00:17:54,399 Speaker 2: Bloomberg LP over there. It's just an awesome buildings for 394 00:17:54,440 --> 00:17:56,840 Speaker 2: forever in the city of London. Go check it out. Hey, Tim, 395 00:17:56,840 --> 00:17:58,440 Speaker 2: thanks so much for joining us. I know you guys 396 00:17:58,440 --> 00:18:01,240 Speaker 2: at BI put out your and youll kind of fifty 397 00:18:01,320 --> 00:18:04,080 Speaker 2: stocks to watch here. I'd love to kind of get 398 00:18:04,240 --> 00:18:06,320 Speaker 2: from you kind of maybe some themes that are on 399 00:18:06,320 --> 00:18:08,680 Speaker 2: this list, or maybe a cool name or two. How 400 00:18:08,680 --> 00:18:10,160 Speaker 2: did you guys approach twenty twenty four. 401 00:18:11,359 --> 00:18:13,399 Speaker 10: So, Paul, this is this is one of our favorite 402 00:18:13,400 --> 00:18:14,800 Speaker 10: little projects we do each year. 403 00:18:14,800 --> 00:18:16,600 Speaker 6: If you think, you know, November December. 404 00:18:16,640 --> 00:18:19,200 Speaker 10: It's all about making all these big outlooks over markets 405 00:18:19,240 --> 00:18:22,640 Speaker 10: and industries and whatnot. And this is where we can 406 00:18:22,920 --> 00:18:28,159 Speaker 10: gravitate into naming names where we see interesting ideas, and 407 00:18:28,400 --> 00:18:31,600 Speaker 10: this is it's a group of fifty fifty companies that 408 00:18:31,760 --> 00:18:35,080 Speaker 10: are part of our broader list of focus ideas. And 409 00:18:35,119 --> 00:18:39,080 Speaker 10: as a reminder, this is a group of companies where 410 00:18:39,119 --> 00:18:41,760 Speaker 10: we have a really strong fundamental view that we think 411 00:18:41,840 --> 00:18:45,080 Speaker 10: is differentiated from the market, and where there's catalysts that 412 00:18:45,119 --> 00:18:48,200 Speaker 10: we think will happen to turn the market towards our view. 413 00:18:48,800 --> 00:18:50,800 Speaker 10: And all of these have catalysts coming up in twenty 414 00:18:50,880 --> 00:18:51,400 Speaker 10: twenty four. 415 00:18:51,640 --> 00:18:53,240 Speaker 6: And you know, it's pretty well split. 416 00:18:53,880 --> 00:18:57,200 Speaker 10: You've got about half that are from the Americas, You've 417 00:18:57,200 --> 00:19:02,320 Speaker 10: got thirty percent from Europe least Africa, and you've got 418 00:19:02,520 --> 00:19:03,840 Speaker 10: about twenty percent from Asia. 419 00:19:04,000 --> 00:19:05,600 Speaker 6: So that's kind of the broad scope. 420 00:19:06,200 --> 00:19:08,199 Speaker 5: And AI seems to be a really big part of 421 00:19:08,240 --> 00:19:10,920 Speaker 5: that list. Is that a sign of what's to come? 422 00:19:12,080 --> 00:19:12,320 Speaker 6: Yeah? 423 00:19:12,400 --> 00:19:14,680 Speaker 10: I tell you AI is interesting because when we were 424 00:19:14,760 --> 00:19:19,400 Speaker 10: pulling this together, my knee jerk is ge AI had 425 00:19:19,440 --> 00:19:22,720 Speaker 10: a lot of hype in twenty twenty three, you know, 426 00:19:22,840 --> 00:19:27,119 Speaker 10: is this at the peak of that classical Gartner hype cycle. 427 00:19:27,680 --> 00:19:31,200 Speaker 10: But what we're seeing is might have been hype in 428 00:19:31,240 --> 00:19:34,399 Speaker 10: twenty three, that actual execution in twenty four is the 429 00:19:34,440 --> 00:19:38,439 Speaker 10: bet And in combination, we think there were in the 430 00:19:38,480 --> 00:19:42,760 Speaker 10: midst of what will be a building it spending cycle. 431 00:19:42,880 --> 00:19:46,360 Speaker 10: And so if you bring these two together, then the 432 00:19:46,520 --> 00:19:50,879 Speaker 10: likes of an alphabet or an accenture that are at 433 00:19:50,920 --> 00:19:55,080 Speaker 10: the heart of either creating AI or implement it implementing 434 00:19:55,160 --> 00:19:57,720 Speaker 10: it are a big deal. Or then if you go 435 00:19:57,880 --> 00:20:02,480 Speaker 10: into say an SAP with their enterprise systems, they create 436 00:20:02,520 --> 00:20:05,280 Speaker 10: the data that the large language models are going to use, 437 00:20:05,640 --> 00:20:07,840 Speaker 10: and then you get into applications. I mean, I don't 438 00:20:07,840 --> 00:20:10,119 Speaker 10: know either one of you all happen to use into 439 00:20:10,200 --> 00:20:14,560 Speaker 10: it with Turbo tax, but they're implementing AI to make 440 00:20:14,720 --> 00:20:20,040 Speaker 10: tax prep easier for individuals, and match anybody for tender 441 00:20:20,160 --> 00:20:22,199 Speaker 10: or hinge they're using AI. 442 00:20:22,800 --> 00:20:27,520 Speaker 6: They're using AI to better select photos. So there's a 443 00:20:27,560 --> 00:20:28,920 Speaker 6: lot of different applications here. 444 00:20:29,160 --> 00:20:31,400 Speaker 2: Yeah, well Match is one of the names on those lists, 445 00:20:31,400 --> 00:20:34,080 Speaker 2: and it stocks up big today on the ELI Investment News. 446 00:20:34,080 --> 00:20:37,240 Speaker 2: So there's a winner there, tim Any themes kind of 447 00:20:37,320 --> 00:20:39,080 Speaker 2: jump out at you as you looked across what the 448 00:20:39,480 --> 00:20:42,960 Speaker 2: Bloomberg Intelligence analysts put up there on their list. And 449 00:20:42,960 --> 00:20:45,280 Speaker 2: again you can find this list in the Bloomberg Business Week. 450 00:20:45,320 --> 00:20:47,760 Speaker 2: It's in the addition of Bloomberg Business Week and also 451 00:20:47,800 --> 00:20:49,119 Speaker 2: find it on the terminal BI go. 452 00:20:50,560 --> 00:20:50,879 Speaker 6: Yeah. 453 00:20:50,920 --> 00:20:55,440 Speaker 10: So I think another big piece to this is what's 454 00:20:55,440 --> 00:20:58,320 Speaker 10: going on from the standpoint is central banks. This was 455 00:20:58,400 --> 00:21:01,200 Speaker 10: big last year, but it was it was big because 456 00:21:01,240 --> 00:21:03,560 Speaker 10: central banks were still tightening and it was higher for 457 00:21:03,680 --> 00:21:06,719 Speaker 10: longer and there was the sort of the financials riding 458 00:21:06,760 --> 00:21:10,199 Speaker 10: the wave of rising interest rates. This year, it's kind 459 00:21:10,240 --> 00:21:13,600 Speaker 10: of the opposite. You know, we, as is the market 460 00:21:13,600 --> 00:21:16,200 Speaker 10: are looking for a central bank pivot, whether it's here 461 00:21:16,200 --> 00:21:19,280 Speaker 10: in Europe or in the US. We think that puts 462 00:21:19,320 --> 00:21:23,320 Speaker 10: pressure on financials margins. We have a broad negative focus 463 00:21:23,400 --> 00:21:26,720 Speaker 10: idea on European banks. Barclays is a specific one that 464 00:21:26,760 --> 00:21:29,720 Speaker 10: we have on this list. AKSA, one of the big 465 00:21:29,760 --> 00:21:33,520 Speaker 10: insurance companies, is also here for similar reasons, and there's 466 00:21:33,560 --> 00:21:37,199 Speaker 10: new insurance policy regulation that's being put in place that 467 00:21:37,280 --> 00:21:40,120 Speaker 10: makes them more sensitive to interest rate changes. 468 00:21:40,560 --> 00:21:43,320 Speaker 6: You've also got though the flip side. 469 00:21:43,720 --> 00:21:46,919 Speaker 10: UK homebuilders have been under a lot of pressure with 470 00:21:47,000 --> 00:21:49,720 Speaker 10: higher interest rates, and we think that may start to turn. 471 00:21:49,760 --> 00:21:53,600 Speaker 10: And a company like Persimon is a case in point, 472 00:21:53,720 --> 00:21:56,040 Speaker 10: So both sides of the interest rate argument. 473 00:21:56,640 --> 00:21:58,320 Speaker 5: What about other factors, like, of course we have the 474 00:21:58,600 --> 00:22:01,080 Speaker 5: wards in Ukraine and gods, did you take that at 475 00:22:01,080 --> 00:22:03,000 Speaker 5: consideration too when you were making that list? 476 00:22:04,560 --> 00:22:05,280 Speaker 6: Yeah, we did. 477 00:22:06,000 --> 00:22:08,880 Speaker 10: General Dynamics is on the list, and you know, part 478 00:22:08,920 --> 00:22:12,199 Speaker 10: of this is, you know, the unfortunate element of of 479 00:22:12,440 --> 00:22:18,040 Speaker 10: rearmament across Europe and you know ongoing defense spending as 480 00:22:18,080 --> 00:22:20,720 Speaker 10: well as what's going on with with those guys from 481 00:22:20,880 --> 00:22:24,960 Speaker 10: a commercial aircraft with with Gulf streams. So you know 482 00:22:25,080 --> 00:22:30,120 Speaker 10: that's a that's definitely a point of reference. Another element 483 00:22:30,280 --> 00:22:32,920 Speaker 10: of this that I think is quite notable is there 484 00:22:32,960 --> 00:22:39,359 Speaker 10: certainly are always opportunities with UH management change and restructuring stories, 485 00:22:39,520 --> 00:22:40,840 Speaker 10: and you know there are a. 486 00:22:40,760 --> 00:22:41,680 Speaker 6: Couple of big ones. 487 00:22:41,760 --> 00:22:46,120 Speaker 10: Union Pacific has a new CEO that is coming in 488 00:22:46,520 --> 00:22:51,479 Speaker 10: who's got a history of what's called precision transports, you know, 489 00:22:51,600 --> 00:22:54,560 Speaker 10: really honing it in customer service and times and this, 490 00:22:54,600 --> 00:22:57,280 Speaker 10: that and the other really improves efficiency for railroads. And 491 00:22:57,320 --> 00:22:59,479 Speaker 10: you know, our analysts there, you know, thinks that that 492 00:22:59,840 --> 00:23:06,159 Speaker 10: is not yet fully understood. Vivindi over here is a 493 00:23:06,160 --> 00:23:09,159 Speaker 10: big restructuring story where they're looking to break the company 494 00:23:09,200 --> 00:23:12,800 Speaker 10: apart into three component pieces and potentially lists them. So 495 00:23:13,080 --> 00:23:17,359 Speaker 10: that sort of management change, restructuring corporate change is another 496 00:23:17,400 --> 00:23:19,080 Speaker 10: element across a number of the companies. 497 00:23:19,840 --> 00:23:22,240 Speaker 2: So you know, I see our good friend Herman Chan 498 00:23:22,280 --> 00:23:24,159 Speaker 2: who covers the regional banks here in the US, he 499 00:23:24,200 --> 00:23:28,119 Speaker 2: put Truest on this list, and I like that because, 500 00:23:28,160 --> 00:23:31,520 Speaker 2: you know, these regional banks really got crushed and it 501 00:23:31,560 --> 00:23:33,959 Speaker 2: felt like a lot of the quality regional banks were 502 00:23:34,000 --> 00:23:36,400 Speaker 2: kind of thrown out with you know, kind of everybody else, 503 00:23:36,440 --> 00:23:39,200 Speaker 2: and so maybe it's time to start trying to find 504 00:23:39,200 --> 00:23:40,560 Speaker 2: some of the good ones I got thrown out. 505 00:23:41,680 --> 00:23:45,680 Speaker 10: Yeah, And Paul, it's interesting because notwithstanding the prospect for 506 00:23:47,000 --> 00:23:51,000 Speaker 10: falling interest rates, which generally is a negative for the banks, 507 00:23:51,359 --> 00:23:55,040 Speaker 10: Truist is looking to take specific action. You can sort 508 00:23:55,040 --> 00:24:00,760 Speaker 10: of put this into the corporate specific category of capital 509 00:24:01,400 --> 00:24:06,680 Speaker 10: through asset sale that can bolst their their their capital 510 00:24:06,920 --> 00:24:12,040 Speaker 10: and make them all the better positioned. HSBC over here 511 00:24:12,320 --> 00:24:14,679 Speaker 10: is a is another case in point like that. You know, 512 00:24:14,840 --> 00:24:18,840 Speaker 10: massive bank, big European exposure, big China exposure, but We 513 00:24:18,960 --> 00:24:23,399 Speaker 10: think the problems are are well covered with provisions, and 514 00:24:23,480 --> 00:24:27,040 Speaker 10: what isn't fully understood is how they continue to expand 515 00:24:27,080 --> 00:24:31,280 Speaker 10: dividends and buybacks. So there's certainly some positive financials notwithstanding 516 00:24:31,280 --> 00:24:32,360 Speaker 10: the backdrop. 517 00:24:32,600 --> 00:24:35,520 Speaker 5: Tim, what about mergers and acquisitions? I mean, yesterday was 518 00:24:35,520 --> 00:24:37,800 Speaker 5: a big day for pharma mergers. We had a ton 519 00:24:37,840 --> 00:24:40,240 Speaker 5: of those. How did that play a role into what 520 00:24:40,280 --> 00:24:42,120 Speaker 5: you were considering when you thought about these companies. 521 00:24:42,960 --> 00:24:44,879 Speaker 10: Yeah, there are a couple here from an m and 522 00:24:44,960 --> 00:24:51,520 Speaker 10: A vantage point. Number one Sapic, which is one of 523 00:24:51,560 --> 00:24:56,200 Speaker 10: the largest chemical companies in the world. They're selling their 524 00:24:56,520 --> 00:25:00,040 Speaker 10: steel business and really focusing attention in on the he 525 00:25:00,040 --> 00:25:02,520 Speaker 10: actrochemical side of things, which we think plays into a 526 00:25:02,560 --> 00:25:07,320 Speaker 10: good cycle as we progress through twenty twenty four. Exon 527 00:25:07,440 --> 00:25:09,080 Speaker 10: Mobile is on the list. 528 00:25:09,160 --> 00:25:09,320 Speaker 6: Now. 529 00:25:09,359 --> 00:25:11,960 Speaker 10: You know that they made a huge acquisition in the 530 00:25:12,000 --> 00:25:16,159 Speaker 10: Permian Basin late last year, and we think that sets 531 00:25:16,200 --> 00:25:20,000 Speaker 10: the stage for improved returns where they've lagged some of 532 00:25:20,040 --> 00:25:24,000 Speaker 10: their bigger integrated to world peers. So there are a 533 00:25:24,000 --> 00:25:26,880 Speaker 10: couple of those those M and as stories that certainly 534 00:25:26,880 --> 00:25:27,600 Speaker 10: play in. 535 00:25:27,960 --> 00:25:31,480 Speaker 2: Hey, Tim, your other had an addition, putting these lists 536 00:25:31,480 --> 00:25:33,680 Speaker 2: together is kind of to strategists for the European market. 537 00:25:33,840 --> 00:25:38,320 Speaker 2: Third thirty seconds, what's the European equities call for twenty twenty. 538 00:25:38,080 --> 00:25:41,119 Speaker 6: Four tailor two halves? 539 00:25:41,160 --> 00:25:45,280 Speaker 10: Paul, I know that's a cliche in ways, but with 540 00:25:45,400 --> 00:25:47,399 Speaker 10: the rally that we had into the end of the 541 00:25:47,520 --> 00:25:51,159 Speaker 10: year and looking into what we think is going to 542 00:25:51,160 --> 00:25:54,159 Speaker 10: be a pretty challenging fourth quarter reporting period coming up 543 00:25:54,280 --> 00:25:57,520 Speaker 10: in a slowing economic backdrop, we think it's a tough 544 00:25:57,520 --> 00:26:02,000 Speaker 10: first half. I do think at some point that gets recalibrated, 545 00:26:02,040 --> 00:26:04,520 Speaker 10: maybe there is a bit of give up in the 546 00:26:04,560 --> 00:26:07,439 Speaker 10: markets from these elevated levels. That sets a stage for 547 00:26:07,480 --> 00:26:10,440 Speaker 10: the second half of looking into twenty twenty five with recovery, 548 00:26:10,520 --> 00:26:11,640 Speaker 10: that could be quite interesting. 549 00:26:12,640 --> 00:26:14,919 Speaker 2: All right, Tim, thanks so much for joining us on. 550 00:26:15,240 --> 00:26:19,320 Speaker 2: Tim Karekraighead's the strategist for Bloomberg Intelligence over in London, 551 00:26:19,480 --> 00:26:23,280 Speaker 2: and they are outbis out with their annual list of 552 00:26:23,320 --> 00:26:26,760 Speaker 2: fifty companies to watch in twenty twenty four, from Alphabet 553 00:26:26,920 --> 00:26:29,560 Speaker 2: and Bid to Eli, Lilly and Vivendi, Keeb and eye 554 00:26:29,880 --> 00:26:31,800 Speaker 2: on these global stocks this year. You can find that 555 00:26:31,920 --> 00:26:35,560 Speaker 2: in Bloomberg BusinessWeek magazine. Can go online to Bloomberg Business 556 00:26:35,560 --> 00:26:37,920 Speaker 2: Week and catch it there. Find it on the terminal 557 00:26:38,440 --> 00:26:41,520 Speaker 2: bi go some really interesting names there, and if you 558 00:26:41,560 --> 00:26:43,399 Speaker 2: want to do more work on any individual name, you 559 00:26:43,440 --> 00:26:47,119 Speaker 2: can go to Bigo and there's complete company analysis, research reports, 560 00:26:47,119 --> 00:26:49,320 Speaker 2: and all the companies and industries there. So that's kind 561 00:26:49,359 --> 00:26:51,199 Speaker 2: of how you navigate through that. If you're looking for 562 00:26:51,280 --> 00:26:53,680 Speaker 2: some good ideas this year, you're. 563 00:26:53,520 --> 00:26:56,880 Speaker 7: Listening to the tape Cat's are live program Bloomberg Markets 564 00:26:56,960 --> 00:27:00,720 Speaker 7: weekdays at ten am Eastern on Bloomberg Radio, tune in app, 565 00:27:00,760 --> 00:27:03,640 Speaker 7: Bloomberg dot com, and the Bloomberg Business App. You can 566 00:27:03,640 --> 00:27:06,879 Speaker 7: also listen live on Amazon Alexa from our flagship New 567 00:27:06,960 --> 00:27:11,240 Speaker 7: York station, Just say Alexa play Bloomberg eleven thirty. 568 00:27:12,760 --> 00:27:15,120 Speaker 2: Here's the one of the concerns entering twenty twenty four 569 00:27:15,680 --> 00:27:17,240 Speaker 2: is that huge rally we had kind of in the 570 00:27:17,320 --> 00:27:19,560 Speaker 2: last ten weeks or so just pulled forward a lot 571 00:27:19,560 --> 00:27:22,280 Speaker 2: of performance that maybe we would have looked forward to 572 00:27:22,320 --> 00:27:25,119 Speaker 2: in twenty twenty four. So maybe that's taken away a 573 00:27:25,119 --> 00:27:26,880 Speaker 2: little bit of some of the excitement for twenty twenty four. 574 00:27:26,880 --> 00:27:29,480 Speaker 2: But let's check in with somebody who does this for 575 00:27:29,760 --> 00:27:33,399 Speaker 2: a living. Looking to chat with Phil Klemart. He covers 576 00:27:33,480 --> 00:27:37,200 Speaker 2: all this stuff here. Philip, your managing partner, Global Strategist 577 00:27:37,240 --> 00:27:41,840 Speaker 2: at MRB Partners. What did you make that rally we 578 00:27:41,920 --> 00:27:43,800 Speaker 2: had really towards the end of the year. I think 579 00:27:43,800 --> 00:27:45,719 Speaker 2: it caught a lot of people, both in equity markets 580 00:27:45,720 --> 00:27:47,359 Speaker 2: and bond markets kind off guard. 581 00:27:47,840 --> 00:27:51,000 Speaker 11: Yeah, well it did, and it was breathtaking really, but 582 00:27:51,080 --> 00:27:52,120 Speaker 11: it was all on the fence. 583 00:27:51,920 --> 00:27:53,320 Speaker 8: Pivot towards an easy and policy. 584 00:27:53,400 --> 00:27:55,159 Speaker 11: Right, So we had seen through with much of the 585 00:27:55,200 --> 00:27:57,239 Speaker 11: year there was still this lingering anxieties. It slowly got 586 00:27:57,280 --> 00:28:00,560 Speaker 11: priced in terms of recession fears, and that's sort of slidified. 587 00:28:00,560 --> 00:28:03,480 Speaker 11: The pivot from the FED solidified the soft landing view, 588 00:28:03,720 --> 00:28:06,480 Speaker 11: which I think is probably a mistake. It's going towards 589 00:28:06,480 --> 00:28:09,880 Speaker 11: the noor landing, but nonetheless it's solidified that caused this rally. 590 00:28:10,520 --> 00:28:12,000 Speaker 11: That being said, as you said, coming at the end 591 00:28:12,000 --> 00:28:14,119 Speaker 11: of the year, there's a lot of chasing going on, 592 00:28:14,440 --> 00:28:17,360 Speaker 11: and we ended up with that so called Goldielock scenario 593 00:28:18,200 --> 00:28:20,920 Speaker 11: fully priced or well well discounted, let's call it, within 594 00:28:21,000 --> 00:28:23,080 Speaker 11: both the bond market and the equity market. 595 00:28:23,840 --> 00:28:25,640 Speaker 5: Now, what about tech stock, I mean, it hadn't had 596 00:28:25,640 --> 00:28:28,000 Speaker 5: the best start of twenty twenty four. Apple was dragging 597 00:28:28,000 --> 00:28:31,320 Speaker 5: a little bit, then Nvidia yesterday. They just had the 598 00:28:31,520 --> 00:28:34,040 Speaker 5: helped with the rally yesterday. So what are your thoughts 599 00:28:34,080 --> 00:28:36,480 Speaker 5: as far as tech stocks into twenty twenty four. I mean, 600 00:28:36,480 --> 00:28:38,480 Speaker 5: how much of a part will AI play into that 601 00:28:38,560 --> 00:28:38,920 Speaker 5: as well? 602 00:28:39,400 --> 00:28:39,560 Speaker 4: Well? 603 00:28:39,560 --> 00:28:41,640 Speaker 11: I think the AI theme has got legs over a 604 00:28:41,640 --> 00:28:43,040 Speaker 11: long haul. But I think there was a lot of 605 00:28:43,120 --> 00:28:46,080 Speaker 11: euphoria associated with that, and often you know that euphoria 606 00:28:46,120 --> 00:28:49,760 Speaker 11: gets priced in rapidly in a short period of time, 607 00:28:49,800 --> 00:28:51,320 Speaker 11: and then it takes a long time to digest for 608 00:28:51,400 --> 00:28:54,440 Speaker 11: those earnings to be sustained and the penetration to the 609 00:28:54,440 --> 00:28:57,320 Speaker 11: broader market. So I think the unfortunate part for tech 610 00:28:57,480 --> 00:29:00,680 Speaker 11: is as well. You can decompose that between the Magnificent 611 00:29:00,720 --> 00:29:03,360 Speaker 11: seven so to speaker or the leaders and the rest. 612 00:29:03,480 --> 00:29:06,640 Speaker 11: But in general, as the Tech index, the unfortunate parties. 613 00:29:06,720 --> 00:29:08,640 Speaker 11: We have high earnings, but we have if you look 614 00:29:08,640 --> 00:29:11,280 Speaker 11: on a five year basis of forward earnings expectations, they're 615 00:29:11,360 --> 00:29:13,720 Speaker 11: very elevated. So it's got a big earnings barret over 616 00:29:13,800 --> 00:29:16,480 Speaker 11: hurdle here. And at the same time, Kapex spending towards 617 00:29:16,480 --> 00:29:18,720 Speaker 11: tech is weakening. So I think this is a real 618 00:29:18,800 --> 00:29:20,760 Speaker 11: challenge for tech is there's a lot of optimism in 619 00:29:20,760 --> 00:29:22,920 Speaker 11: the price and the evaluation. There's a lot of optimism 620 00:29:23,040 --> 00:29:26,480 Speaker 11: in earnings expectations and that's a bigger hurdle to overcome, 621 00:29:26,520 --> 00:29:28,520 Speaker 11: Whereas I think some of the laggards in the even 622 00:29:28,560 --> 00:29:32,040 Speaker 11: the cyclical end, some select defensives have lower earnings hurdles 623 00:29:32,040 --> 00:29:35,360 Speaker 11: to overcome. They offer better valuation support. So while we've 624 00:29:35,360 --> 00:29:38,280 Speaker 11: seen that big rally coming into your end, I would say, 625 00:29:38,280 --> 00:29:39,959 Speaker 11: heading here, you still want to be positioned in sort 626 00:29:40,000 --> 00:29:41,840 Speaker 11: of that laggard catchup theme, and that kind of spreads 627 00:29:41,880 --> 00:29:45,040 Speaker 11: itself into some financials. Maybe aerospace and defense is some 628 00:29:45,080 --> 00:29:48,840 Speaker 11: of our likes. We recently pivoted back towards energy some 629 00:29:48,880 --> 00:29:50,600 Speaker 11: of after being you know, beating up a little bit 630 00:29:50,640 --> 00:29:52,440 Speaker 11: last year on a relative basis, and then on the 631 00:29:52,440 --> 00:29:55,040 Speaker 11: defensive side is more the healthcare. So looking for that 632 00:29:55,080 --> 00:29:57,120 Speaker 11: transition laggard catchup team. 633 00:29:57,240 --> 00:29:58,440 Speaker 6: So we've heard financials. 634 00:29:58,600 --> 00:30:01,000 Speaker 2: We had actually Scott Kroner, there's strategists from City on 635 00:30:01,040 --> 00:30:01,480 Speaker 2: this morning. 636 00:30:01,680 --> 00:30:02,680 Speaker 8: That was one of the sectors. 637 00:30:02,680 --> 00:30:05,600 Speaker 2: He called out here, what's the risk here? And I'm 638 00:30:05,600 --> 00:30:07,440 Speaker 2: not sure how material is for a lot of these 639 00:30:07,480 --> 00:30:09,960 Speaker 2: commercial real estate loans for these banks. Is that I'm 640 00:30:09,960 --> 00:30:12,080 Speaker 2: hearing that's not so much as a risk for some 641 00:30:12,120 --> 00:30:13,800 Speaker 2: of the bigger banks. Maybe it is for maybe some 642 00:30:13,840 --> 00:30:16,320 Speaker 2: of the regional banks. How do you think about that 643 00:30:16,400 --> 00:30:17,040 Speaker 2: for these banks? 644 00:30:17,360 --> 00:30:19,280 Speaker 8: Yeah, so I think you really should decompose them. 645 00:30:19,280 --> 00:30:22,120 Speaker 11: First of all, the aggregated of the commercial real estate 646 00:30:22,160 --> 00:30:24,240 Speaker 11: is nothing, and I know there was some scares last year, 647 00:30:24,280 --> 00:30:26,240 Speaker 11: but it's nothing in comparison to the subprime crisis and 648 00:30:26,280 --> 00:30:26,440 Speaker 11: all that. 649 00:30:26,480 --> 00:30:27,760 Speaker 8: So it's put it on that scale. 650 00:30:27,800 --> 00:30:30,600 Speaker 11: It's very small in comparison, but it's heavily concentrated within 651 00:30:30,680 --> 00:30:32,880 Speaker 11: regional banks. So when you look at the lone portfolios, 652 00:30:33,000 --> 00:30:34,720 Speaker 11: the big banks, they're not very exposed to it. 653 00:30:34,800 --> 00:30:36,920 Speaker 8: They got great capitalization ratios, all those kind of things. 654 00:30:36,960 --> 00:30:39,720 Speaker 11: So if you're our preference towards banks, even before that 655 00:30:40,200 --> 00:30:42,560 Speaker 11: Silicon Valley mishap, because of this reason, it. 656 00:30:42,600 --> 00:30:43,719 Speaker 8: Was the favor of the megacabs. 657 00:30:43,800 --> 00:30:46,240 Speaker 2: Yeah, so the make the JP Morgan's Bank of Americans exactly. 658 00:30:46,320 --> 00:30:48,240 Speaker 11: Yeah, So the bill well diversified banks, they don't have 659 00:30:48,280 --> 00:30:50,320 Speaker 11: a risk. The loan portfolios will suffer and there will 660 00:30:50,320 --> 00:30:52,479 Speaker 11: be some regional elements to that where you'll see more 661 00:30:52,480 --> 00:30:54,840 Speaker 11: blow ups along the way. So I would discriminate to 662 00:30:54,840 --> 00:30:56,560 Speaker 11: the extent that you can. Now they dominate the index. 663 00:30:56,600 --> 00:30:58,560 Speaker 11: So if you've taken the index, you're probably okay. But 664 00:30:59,080 --> 00:31:01,320 Speaker 11: if you can discriminate, definitely go towards your megacaps. 665 00:31:01,800 --> 00:31:04,120 Speaker 5: Now and you notes you talk about the recent dramatic 666 00:31:04,160 --> 00:31:07,200 Speaker 5: easing and monetary conditions, So what exactly does that mean? 667 00:31:07,280 --> 00:31:09,960 Speaker 5: Is that soft landing no landing? And what the heck 668 00:31:10,000 --> 00:31:11,520 Speaker 5: does that mean? I mean, I sound like Matt Miller 669 00:31:11,520 --> 00:31:11,760 Speaker 5: in the. 670 00:31:11,680 --> 00:31:14,200 Speaker 8: Promo, Yeah, and I think this is the key. 671 00:31:14,280 --> 00:31:16,160 Speaker 11: I mean, a lot of the market it made a 672 00:31:16,200 --> 00:31:18,760 Speaker 11: miscalculated bet last year, and we lean heavily against that. 673 00:31:18,840 --> 00:31:21,280 Speaker 11: There was a recessionary scenario, and now they've gotten kind 674 00:31:21,320 --> 00:31:23,840 Speaker 11: of solidified around the soft landing. No soft landing means 675 00:31:23,840 --> 00:31:26,040 Speaker 11: that you end up with still positive growth, but below 676 00:31:26,040 --> 00:31:29,040 Speaker 11: trend and growth and allow for disinflation, therefore allowing for 677 00:31:29,080 --> 00:31:30,560 Speaker 11: the Fed to cut rates. And I think that's a 678 00:31:30,600 --> 00:31:34,680 Speaker 11: mistake because back when in October, when bond yields were higher, 679 00:31:34,760 --> 00:31:38,520 Speaker 11: FED policy was was at expectations towards to the top. 680 00:31:38,760 --> 00:31:40,520 Speaker 11: We had a soft landing in place at that point, 681 00:31:40,560 --> 00:31:43,320 Speaker 11: and everything since in the last since October, this easing, 682 00:31:43,320 --> 00:31:45,600 Speaker 11: we've got interest rate expectations easing, We've had bond yields 683 00:31:45,680 --> 00:31:48,760 Speaker 11: drop we've had corporate bond yields, spreads come in, We've 684 00:31:48,760 --> 00:31:51,080 Speaker 11: had mortgage spreads comes in. That's a dramatic easy to 685 00:31:51,120 --> 00:31:53,240 Speaker 11: monetary conditions and that actually takes us from a soft 686 00:31:53,280 --> 00:31:55,240 Speaker 11: landing to a no landing. And what I mean no landing, 687 00:31:55,280 --> 00:31:57,120 Speaker 11: I mean we're not going below trend growth this year, 688 00:31:57,240 --> 00:31:59,280 Speaker 11: which really has some intermediate. 689 00:31:58,720 --> 00:31:59,960 Speaker 8: Term ramifications for the inflay. 690 00:32:00,160 --> 00:32:02,360 Speaker 11: Note, Look, we're going to be in some soft window here, 691 00:32:02,720 --> 00:32:05,080 Speaker 11: well let's call it transitory disinflation so to speak, where 692 00:32:05,120 --> 00:32:06,520 Speaker 11: the FED can take an advantage of it in the 693 00:32:06,560 --> 00:32:08,560 Speaker 11: near term as we get some soft prints, but a 694 00:32:08,560 --> 00:32:10,720 Speaker 11: lot of that's pretty advantageous and kind of lucky. But 695 00:32:10,720 --> 00:32:13,240 Speaker 11: if we're not going to blow trend, that supercore basket 696 00:32:13,280 --> 00:32:15,520 Speaker 11: that services X shelter is going to have a hard 697 00:32:15,520 --> 00:32:17,960 Speaker 11: time really coming down in terms of inflation. Of course, 698 00:32:17,960 --> 00:32:20,040 Speaker 11: that's a huge weight on the fed's PC basket. 699 00:32:20,240 --> 00:32:23,840 Speaker 2: So for your investment outlook, what are you guys expecting 700 00:32:23,960 --> 00:32:25,040 Speaker 2: this FED to do this year? 701 00:32:25,560 --> 00:32:28,160 Speaker 11: So we're so right now priced into the market's something 702 00:32:28,200 --> 00:32:30,000 Speaker 11: like six rate cuts one hundred and fifty bases points 703 00:32:30,000 --> 00:32:31,720 Speaker 11: through at the course of this year. I mean, I 704 00:32:31,760 --> 00:32:33,720 Speaker 11: think the FED wants to take advantage. It's been pretty 705 00:32:33,720 --> 00:32:35,440 Speaker 11: clear that it wants to take advantage of this this 706 00:32:35,560 --> 00:32:38,640 Speaker 11: window of disinflation to try to rate cut. We expect 707 00:32:38,680 --> 00:32:43,000 Speaker 11: fifty maybe seventy five. Nowhere a validation towards First. 708 00:32:42,800 --> 00:32:43,880 Speaker 8: Of all, we don't think it should. 709 00:32:43,680 --> 00:32:44,360 Speaker 6: Cut for the year. 710 00:32:44,400 --> 00:32:46,400 Speaker 8: For the year, okay, yeah, so it doesn't need to cut. 711 00:32:46,600 --> 00:32:48,840 Speaker 11: We think it will anyway, but it won't validate what's 712 00:32:48,840 --> 00:32:49,560 Speaker 11: in the bond market. 713 00:32:49,920 --> 00:32:50,040 Speaker 2: Now. 714 00:32:50,080 --> 00:32:51,480 Speaker 5: You talked about some of the things you like to 715 00:32:51,520 --> 00:32:54,000 Speaker 5: mentioned energy defense. What are you. 716 00:32:53,960 --> 00:32:57,680 Speaker 11: Avoiding, Well, honestly, we're avoiding a lot of the growth 717 00:32:57,800 --> 00:33:00,720 Speaker 11: names related stuff. So the tech is a place where 718 00:33:00,720 --> 00:33:04,000 Speaker 11: we'd be avoiding the other defensive sectors because we're we're 719 00:33:04,040 --> 00:33:06,120 Speaker 11: still constructive on pro growth. We just expect bondialds to 720 00:33:06,120 --> 00:33:08,719 Speaker 11: come up, so we're selective on our defensives. 721 00:33:08,920 --> 00:33:10,800 Speaker 8: We would be away from those bond proxies. 722 00:33:10,520 --> 00:33:13,160 Speaker 11: Because I think the downward adjustment bondialds has probably had 723 00:33:13,200 --> 00:33:16,080 Speaker 11: it here where it they'll soon stabilize and we'll see 724 00:33:16,160 --> 00:33:18,120 Speaker 11: uplift in bondialds a year goes on. So some of 725 00:33:18,160 --> 00:33:20,960 Speaker 11: those bond proxies the defensives we'd avoid. We'd favor the 726 00:33:21,200 --> 00:33:24,760 Speaker 11: less exposed area like healthcare in the cyclicles, it's those 727 00:33:24,800 --> 00:33:26,760 Speaker 11: traditional growth stocks. And actually, if you look at iterneath 728 00:33:26,800 --> 00:33:28,800 Speaker 11: the surface, if you take away, as you said, those 729 00:33:29,320 --> 00:33:32,160 Speaker 11: magnificent sevens and you start to look at small cap 730 00:33:32,200 --> 00:33:34,120 Speaker 11: growth versus small cap value. 731 00:33:34,400 --> 00:33:35,840 Speaker 8: Value has been killing it. 732 00:33:36,480 --> 00:33:38,600 Speaker 11: Really the growth stocks. It's only because of those seven 733 00:33:38,640 --> 00:33:41,040 Speaker 11: then help lift it up. So there's already a transition 734 00:33:41,120 --> 00:33:43,120 Speaker 11: going underway here. And so that gets into your tech 735 00:33:43,120 --> 00:33:45,880 Speaker 11: related names, whether that be in in the Consumer Discretionary 736 00:33:45,920 --> 00:33:48,280 Speaker 11: Index as well and as well as tech. 737 00:33:48,400 --> 00:33:50,880 Speaker 2: Do you have any view on the topic of the 738 00:33:50,960 --> 00:33:54,320 Speaker 2: day and tomorrow, which is an ETF four Bitcoin, Do 739 00:33:54,360 --> 00:33:56,440 Speaker 2: you have any view? There are just waiting. I mean, 740 00:33:56,440 --> 00:33:58,120 Speaker 2: do you guys even traffic in any of that kind 741 00:33:58,120 --> 00:33:58,520 Speaker 2: of stuff? 742 00:33:58,760 --> 00:34:02,320 Speaker 11: We get questions periodically look at it. I think bitcoin 743 00:34:02,520 --> 00:34:05,440 Speaker 11: and cryptos is a theme here to stay or it'll 744 00:34:05,440 --> 00:34:07,720 Speaker 11: come back. But often what happens, and you saw this 745 00:34:07,760 --> 00:34:11,720 Speaker 11: with the original. I've spent twenty some years doing media 746 00:34:11,760 --> 00:34:14,319 Speaker 11: profile only and booms and busts and those kind of things, 747 00:34:14,400 --> 00:34:16,239 Speaker 11: and often what happens is the theme comes in in 748 00:34:16,280 --> 00:34:18,279 Speaker 11: a woosh, sort of like the original dot com. There's 749 00:34:18,280 --> 00:34:20,000 Speaker 11: a whole bunch of names and companies and stuff that 750 00:34:20,040 --> 00:34:22,000 Speaker 11: were crapping that that you didn't want to own. But 751 00:34:22,040 --> 00:34:24,240 Speaker 11: it was a thematic it was a new technology revolution. 752 00:34:24,360 --> 00:34:26,640 Speaker 11: Then it crashed, it had to go through a digestion 753 00:34:26,800 --> 00:34:29,680 Speaker 11: or restructuring phase, and then comes out with something more legitimate. 754 00:34:29,920 --> 00:34:32,320 Speaker 8: It it morphs itself. So Bitcoin might be one of 755 00:34:32,360 --> 00:34:34,560 Speaker 8: the players. Most of those other cryptos will be gone yep. 756 00:34:35,120 --> 00:34:38,200 Speaker 11: But well we'll formulate it over the next few years 757 00:34:38,239 --> 00:34:41,480 Speaker 11: as regulations come in and structure comes to that market, 758 00:34:41,600 --> 00:34:44,080 Speaker 11: and then there will be some element of a legitimate 759 00:34:44,080 --> 00:34:45,160 Speaker 11: theme coming back out of it. 760 00:34:45,239 --> 00:34:47,000 Speaker 8: I just think we're getting that window now. 761 00:34:46,880 --> 00:34:49,200 Speaker 2: Where if black Rock calls you up Tuesday and we 762 00:34:49,239 --> 00:34:50,920 Speaker 2: got an ETF, you want to buy some of our 763 00:34:50,960 --> 00:34:52,440 Speaker 2: bitcoin ETF, what do you guys say? 764 00:34:52,520 --> 00:34:56,200 Speaker 11: No, I'm yeah, not that I followed that closely, but no, 765 00:34:56,280 --> 00:34:58,600 Speaker 11: we're we do track it, we do do some analysis 766 00:34:58,640 --> 00:34:58,840 Speaker 11: on it. 767 00:34:58,840 --> 00:35:00,640 Speaker 2: Well, how about AI, because a lot of people are, 768 00:35:02,080 --> 00:35:04,080 Speaker 2: you know, saying AI kind of feels like the Internet 769 00:35:04,120 --> 00:35:06,920 Speaker 2: maybe back in nineteen ninety five. That's Dan Eyes from 770 00:35:06,920 --> 00:35:09,279 Speaker 2: what Bush will say, this is the nineteen ninety five 771 00:35:09,360 --> 00:35:12,480 Speaker 2: moment for AI that this is really going to be 772 00:35:12,520 --> 00:35:15,360 Speaker 2: established as something across it's just gonna be that big. 773 00:35:15,960 --> 00:35:17,040 Speaker 2: Do you subscribe to that? 774 00:35:17,280 --> 00:35:17,480 Speaker 4: Yeah? 775 00:35:17,480 --> 00:35:20,480 Speaker 11: I think AI is going to have tremendous ramifications through 776 00:35:20,520 --> 00:35:22,560 Speaker 11: a lot of different businesses. I think it really will 777 00:35:22,600 --> 00:35:25,960 Speaker 11: penetrate and it'll be a long term thematic. But unfortunately, 778 00:35:25,960 --> 00:35:28,520 Speaker 11: as you remember in the nineteen nineties, the original dot com, 779 00:35:28,560 --> 00:35:30,560 Speaker 11: there was a lot of euphoria around it. There were 780 00:35:30,560 --> 00:35:33,239 Speaker 11: a lot of you know, even the winners, you know, 781 00:35:33,280 --> 00:35:36,520 Speaker 11: Cisco and some of the other technology related names that 782 00:35:36,640 --> 00:35:38,239 Speaker 11: were the top of the market back then, took a 783 00:35:38,239 --> 00:35:40,520 Speaker 11: long digestion period while they reformulated and came back in 784 00:35:40,560 --> 00:35:42,400 Speaker 11: the two thousands. So so it doesn't always make a 785 00:35:42,400 --> 00:35:45,160 Speaker 11: good investment. I do think that that structural theme is here. 786 00:35:45,320 --> 00:35:48,399 Speaker 11: I'm interested in how that penetrates other businesses rather than just. 787 00:35:48,360 --> 00:35:49,239 Speaker 8: The sellers of AI. 788 00:35:49,520 --> 00:35:52,440 Speaker 11: How are people going to maximize profit, widen margins, those 789 00:35:52,520 --> 00:35:54,200 Speaker 11: kind of things by implementing it. 790 00:35:54,320 --> 00:35:55,200 Speaker 8: And I think it may have. 791 00:35:55,160 --> 00:35:57,920 Speaker 11: A shorter rollout than the original tech wave, but it's 792 00:35:57,920 --> 00:35:58,760 Speaker 11: still going to be years. 793 00:35:58,800 --> 00:36:00,560 Speaker 8: This isn't months. Because it's interesting. 794 00:36:00,560 --> 00:36:02,960 Speaker 2: I mean, you know, Bloomberg News has done scraping of 795 00:36:03,239 --> 00:36:05,399 Speaker 2: conference calls every one of the S and P five 796 00:36:05,440 --> 00:36:08,359 Speaker 2: hundred companies last quarter of the quarter before that call 797 00:36:08,400 --> 00:36:08,799 Speaker 2: that AI. 798 00:36:09,040 --> 00:36:10,360 Speaker 8: Yeah, every proof to the stock. 799 00:36:11,400 --> 00:36:13,160 Speaker 2: Well back in the day, you know, when it was 800 00:36:13,200 --> 00:36:14,880 Speaker 2: the end of that dot com bust. I took a 801 00:36:14,960 --> 00:36:18,480 Speaker 2: radio company, public plain, old radio station company called Entercom, 802 00:36:19,239 --> 00:36:21,360 Speaker 2: and we had orders coming into our desk for the 803 00:36:21,400 --> 00:36:23,799 Speaker 2: I p O from nobody, people we didn't even talk to, 804 00:36:24,360 --> 00:36:26,080 Speaker 2: and we'd call them up and say, what are you doing? 805 00:36:26,080 --> 00:36:28,520 Speaker 2: Is We're just find this dot com thing and Intercom 806 00:36:28,680 --> 00:36:30,600 Speaker 2: and we're like, no, it's not a dot com, it's 807 00:36:30,600 --> 00:36:33,040 Speaker 2: not an internet company. It's a radio company. And I'm 808 00:36:33,120 --> 00:36:35,000 Speaker 2: not so And it feels like that right now. 809 00:36:35,120 --> 00:36:35,920 Speaker 8: Yeah, it feels like that. 810 00:36:35,960 --> 00:36:39,279 Speaker 2: So, I mean on the tech side, you like, if 811 00:36:39,280 --> 00:36:41,279 Speaker 2: you want to play AI did just kind of stick 812 00:36:41,360 --> 00:36:42,640 Speaker 2: to some of the big names Toady, a lot of 813 00:36:42,640 --> 00:36:45,120 Speaker 2: people saying just buy a Microsoft or something like that, 814 00:36:45,160 --> 00:36:47,400 Speaker 2: and as opposed to trying to find the niche players. 815 00:36:47,520 --> 00:36:49,120 Speaker 8: Yeah, I think probably at this phase. 816 00:36:49,480 --> 00:36:51,400 Speaker 11: I mean, so there will be some real winners, I'm 817 00:36:51,440 --> 00:36:52,839 Speaker 11: sure in some of the niche players, I mean, really 818 00:36:52,880 --> 00:36:55,120 Speaker 11: sort through the mask. But but I think you play 819 00:36:55,160 --> 00:36:58,360 Speaker 11: the core themes. Also, right now we're dealing with an 820 00:36:58,440 --> 00:37:01,760 Speaker 11: up cycle this year. Trade and the semi conductor cycle. 821 00:37:01,960 --> 00:37:04,919 Speaker 11: So some of the you know, semi theme is better 822 00:37:04,920 --> 00:37:07,160 Speaker 11: played outside of the US markets into places like. 823 00:37:07,120 --> 00:37:09,960 Speaker 8: Korea, Emerging Asia, tai want you guys think like that. 824 00:37:10,000 --> 00:37:12,359 Speaker 2: So we do how much your portfolio is outside the US? 825 00:37:12,440 --> 00:37:14,480 Speaker 11: Yeah, so we we do research, but and we do 826 00:37:14,600 --> 00:37:17,960 Speaker 11: global integrated financial markets, so we do all markets, and 827 00:37:18,000 --> 00:37:20,440 Speaker 11: so we do have an overweight in Emerging Asia, X China, 828 00:37:21,040 --> 00:37:23,799 Speaker 11: and we have an overweight in your area as well. 829 00:37:24,160 --> 00:37:24,319 Speaker 4: Yeah. 830 00:37:24,360 --> 00:37:26,000 Speaker 2: We used to call we talk about Asia, we'd be 831 00:37:26,600 --> 00:37:29,400 Speaker 2: Japan and non Japan Asia, and we don't do that anymore. 832 00:37:29,400 --> 00:37:31,719 Speaker 2: But people are talking about Japan coming back. I don't know, 833 00:37:31,719 --> 00:37:33,000 Speaker 2: even Warren Buffet's talking about it. 834 00:37:33,040 --> 00:37:34,720 Speaker 8: So yeah, we have a small position in Japan. 835 00:37:34,840 --> 00:37:36,040 Speaker 6: Yeah, ye, all right, all. 836 00:37:35,960 --> 00:37:37,960 Speaker 2: Right, Philip Comar, thanks so much for joining us. Philipkmar 837 00:37:38,000 --> 00:37:40,960 Speaker 2: He's a managing partner in Global Strategists that mr be 838 00:37:41,160 --> 00:37:44,200 Speaker 2: partners talking all things markets across the board. 839 00:37:44,239 --> 00:37:44,439 Speaker 6: Here. 840 00:37:44,719 --> 00:37:47,799 Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can 841 00:37:47,840 --> 00:37:51,640 Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever 842 00:37:51,719 --> 00:37:55,440 Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 843 00:37:55,640 --> 00:37:57,800 Speaker 1: at Matt Miller nineteen seventy three. 844 00:37:58,040 --> 00:38:00,480 Speaker 2: And I'm false Winnie. I'm on Twitter at pt Sweeney 845 00:38:00,520 --> 00:38:03,160 Speaker 2: before the podcast. You can always catch us worldwide at 846 00:38:03,160 --> 00:38:03,919 Speaker 2: Bloomberg Radio