Speaker 1: This is Bloomberg Business Week. I'm Karl Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovik. We're here every day bringing
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Speaker 1: pm Eastern Time on the Bloomberg Radio or watch us
Speaker 1: on YouTube search Bloomberg Global News. It's the Sooner than
Speaker 1: you think issue of Bloomberg Business Week magazine, showcasing technology,
Speaker 1: really actionable insight into the near future, business in the
Speaker 1: market forces and tech innovations that really are already transforming
Speaker 1: our global economy. There is a themed him amongst some
Speaker 1: of the stories about scarcity, scarcity, excuse me, and that
Speaker 1: includes the domestic cover story about the Goblin in the batteries. Yeah,
Speaker 1: scarcity of broadband, scarcity of water, and scarcity of cobal
Speaker 1: that we need for batteries. We're talking cobald now. Joe
Speaker 1: Weber is editor of Bloomberg Business Week. He's with us
Speaker 1: an the Blue Brick Interactive Broker Studio, and Drake Bennett
Speaker 1: is technology reporter at Bloomberg Business which he joins us
Speaker 1: on the phone from New York City. Joel, I, I
Speaker 1: was not thinking about cobalt when I plug my phone
Speaker 1: in yesterday, when I plugged my phone in yesterday, But
Speaker 1: I certainly and yet that phone cobalt helps make it run. UM.
Speaker 1: And you know, this is our domestic cover story for
Speaker 1: the Sooners. And you think issue and I think one
Speaker 1: of the things that we were resting with and you know,
Speaker 1: as consumers, we actually wrestle with this all the time,
Speaker 1: and we're gonna wrestle with it a whole lot more
Speaker 1: in the years to come. UM. But ultimately, like charging
Speaker 1: right in batteries, and you think about your phone and
Speaker 1: and what makes that go, it's um, you know, it's batteries. Uh.
Speaker 1: And as we look at this energy transition where we're
Speaker 1: gonna see millions more electric vehicles on the roads around
Speaker 1: the world, there's a question about how the those batteries
Speaker 1: are actually gonna gonna run uh. And cobalt is really
Speaker 1: the secret ingredient UM. And so Drake's done the story.
Speaker 1: It is sort of magical because of these two narratives
Speaker 1: that it brings together. It's really the search for a
Speaker 1: better battery. On one hand, that might come from the
Speaker 1: ground and we need more cobalt, but it also could
Speaker 1: come from the lab and might not involve any cobalt.
Speaker 1: So so Drake, why don't you break that down for us? Yeah, no, thanks,
Speaker 1: Joel Um, Yeah exactly. I mean, I think we think
Speaker 1: about batteries as technologies, and they are technologies. I mean,
Speaker 1: they're closer to being like a microchip than they are
Speaker 1: to being like the commodity like oil. So it makes
Speaker 1: sense that you see these dramatic drops in price and
Speaker 1: these increases in energy density and things like that. But
Speaker 1: they're very dependent on the particular chemical characteristics of particular elements,
Speaker 1: and UM one of those is cobalt. Cobalt is particularly
Speaker 1: good as a as a cathode materials, sort of making
Speaker 1: the sort of foundation of one of the electrodes of
Speaker 1: the battery. Uh. And there are you know, most of
Speaker 1: the world. Uh. Cobalt happens to be found under UM,
Speaker 1: the democratic called Congo, which is uh, you know, unstable country, UM,
Speaker 1: very poor working conditions in the minds. Chinese companies own
Speaker 1: a lot of the minds there, and so there's you know,
Speaker 1: incentive right there to try to diversify our supply UM.
Speaker 1: But on top of that, you know, if we are
Speaker 1: going to meaningfully make it dent and you know, if
Speaker 1: there's one point to billion internal combustion cars on the
Speaker 1: road today, if we're gonna switch some meaningful proportion of
Speaker 1: those to being electric vehicles, we're gonna need many times
Speaker 1: more cobalt than what we currently know about UM. So, right,
Speaker 1: so there's two approaches that I look at. One is
Speaker 1: finding more so. There's a tech company UM based in
Speaker 1: Silicon Valley. It's it's these physicists and data scientists who
Speaker 1: are convinced that they can use the tools of data
Speaker 1: science UM, these powerful artificial intelligence algorithms to find deposits
Speaker 1: where traditional energy companies and traditional exploration geologists have failed.
Speaker 1: I did. I spent a lot of time talking to
Speaker 1: these guys, and then as it happened, they were just
Speaker 1: beginning to go see if they're right. So they were
Speaker 1: One of their exploration claim blocks is in the art
Speaker 1: in the Canadian ARCT dick way up at this very
Speaker 1: tip of Quebec, and I went up there and spent
Speaker 1: some time flying around in a helicopter with one of
Speaker 1: the geologists as he went to these spots that this
Speaker 1: AI was saying looked promising and examine the rock yet
Speaker 1: kind of primitive actually seeing what he did. He had
Speaker 1: this sledge hammer and he just break off these rocks
Speaker 1: and then get up this kind of jeweler's loop and
Speaker 1: look at them. And you know, um, yeah, very I mean,
Speaker 1: you did have a you did have a you know,
Speaker 1: Samsung tablet that he was entering stuff into. But it
Speaker 1: is this mix of this kind of very traditional geology
Speaker 1: and this these these tools that rely on enormous amounts
Speaker 1: of computing power and advanced data science. So after after
Speaker 1: reporting out this story, Drake, are your sources optimistic that
Speaker 1: there is a solution out there? Because I think about
Speaker 1: something like this in the transition to electric vehicles, and
Speaker 1: I don't think that consumers understand that this isn't black
Speaker 1: and white, right. These batteries take serious natural resources, and
Speaker 1: even to charge at this point takes fossil fuels in
Speaker 1: many cases. Yeah, I mean, I think you know, the
Speaker 1: other sort of the other sort of side of the
Speaker 1: coin that I wrote about was was a chemist who's
Speaker 1: basically trying to design batteries that don't need cobalt at all.
Speaker 1: So then it doesn't matter that it's all under the
Speaker 1: congo and that we don't know where we're going to
Speaker 1: get it um And I think, you know, there's ways
Speaker 1: in which these two approaches are intention but in many
Speaker 1: ways they're complementary. And so I think, and there's you know,
Speaker 1: plenty of other folks who are looking at recycling or
Speaker 1: you know, improving the kind of processing of these ores
Speaker 1: so that you can use more marginal deposits. And so
Speaker 1: there's a bunch of approaches and I think you put
Speaker 1: those together and you you know, you are probably gonna
Speaker 1: make a meaningful dent in this problem. I mean, having
Speaker 1: seen both sides of maybe how this plays out, what's
Speaker 1: what's your conclusion about what ultimately will happen in terms
Speaker 1: of batteries no cobalt or well, we'll find more. I
Speaker 1: think I think we will. I think both people find more,
Speaker 1: and I think you know they're they're there. They're interesting.
Speaker 1: You know examples from history, you know, oil and gas. Right,
Speaker 1: there was this idea that we had reached peak oil
Speaker 1: forty years ago, and you know that didn't happen. But
Speaker 1: at the same time, you are already seeing the process
Speaker 1: where the amount of cobalt being used in these batteries
Speaker 1: is getting lower and lower and lower. So you know,
Speaker 1: whether or not it goes to zero, it's still gone
Speaker 1: from basically in the first with my own batteries to
Speaker 1: you know, in in some of the things being built now,
Speaker 1: and I think right to like, you know, we're talking
Speaker 1: about changes that are gonna play out over years um.
Speaker 1: Even even for you know, best case scenario, this place
Speaker 1: that Drake visited, you know that if that became an
Speaker 1: operational mind, you know, it could take a decade before
Speaker 1: anything from that ground ends up actually powering a car.
Speaker 1: You know, so massive infrastructure we're talking about that goes
Speaker 1: into some of these projects. So it's a little bit
Speaker 1: of everything. I think it's an incredible story and you really,
Speaker 1: you know, get into the nitty gritty of what's going
Speaker 1: on and something that I think we take for granted
Speaker 1: safe to say, well, and I think there's this misconception
Speaker 1: that I was alluding to earlier that it was immediately
Speaker 1: a green solution for someone to go buy an electric car.
Speaker 1: But when it comes to the production of it, when
Speaker 1: it comes to the battery, when it comes to charging,
Speaker 1: it's it's not that simple, great issue. Joll Well, there's
Speaker 1: much more in there, and I think one of the
Speaker 1: through lines is looking at resources and in this case
Speaker 1: it's a battery. But um, you know there's this water
Speaker 1: one that I think is also really interesting. And you know, look,
Speaker 1: a lot of these problems are are things that humans
Speaker 1: create and now we can try and solve them. And boy,
Speaker 1: I hope we're good at innovation. Still fingers crossed, everything's crossed.
Speaker 1: I mean, you still can't believe they are hundred twenty
Speaker 1: million Americans who don't have masters to broadband, which is
Speaker 1: another story. We talked about that one yesterday on the
Speaker 1: show All That in our weekend Bloomberg Business Week show
Speaker 1: that you can catch on Bloomberg Radio at eight a m. And,
Speaker 1: of course, check out the magazine. It is on newstands,
Speaker 1: check out Bloomberg dot com, business Week dot com, and
Speaker 1: the Bloomberg terminal. Our thanks to Drake Bennett and Business
Speaker 1: Week editor Joel Weber. This is Bloomberg. This is Bloomberg
Speaker 1: Business Week with Carol Masser and Bloomberg Quick takes Tim
Speaker 1: Stinnovy on Bloomberg Radio. Are you are listening to Bloomberg
Speaker 1: Business Week several headlines when it comes certainly to COVID
Speaker 1: and the vaccines and boosters. In fact, we are awaiting
Speaker 1: some news from the CDCs Advisory Committee on Immunization Practice
Speaker 1: making its own recommendations about who should receive additional doses.
Speaker 1: We know FISER getting a step forward, the FDA saying
Speaker 1: people over the age of sixty five and adults at
Speaker 1: high risk of severe COVID nineteen who already got that
Speaker 1: viser by in tech vaccine can get a booster shot.
Speaker 1: But there's a lot of information that still has to happen. Yeah,
Speaker 1: there is a lot of concern about Okay, are we
Speaker 1: to a point where we need to be encouraging boosters
Speaker 1: when there are so many holdouts for just getting that
Speaker 1: first shot exactly. So let's see what Dr Andy Pekosh
Speaker 1: has to say. He's Professor of Molecular microbiology and Immunology
Speaker 1: at Johns Hopkins University Bloomberg School of Public Health. Of course,
Speaker 1: that school is supported by Michael R. Bloomberg, founder, Bloomberg ELP,
Speaker 1: and Bloomberg Philanthropies. Dr Pekosh back with us on the
Speaker 1: phone from Baltimore. Dr Pekosh, how are you, Oh, I'm
Speaker 1: doing great. Thanks for having me on the show. Always
Speaker 1: good to check in with you. Where are you on boosters?
Speaker 1: At this point, It's important to note that the boosters
Speaker 1: are going to be designed just to help the very
Speaker 1: susceptible parts of the population increased our immune needing, to
Speaker 1: keep them out of the hospital or suffering from severe
Speaker 1: disease um. We heard that from the FDA last week.
Speaker 1: I've been listening in on the CDC and that's really
Speaker 1: an ongoing theme. So boosters are going to be for
Speaker 1: to keep people out of the hospital, and for a
Speaker 1: short term, they'll be focused on individuals who got the
Speaker 1: Visor vaccine initially. But don't be surprised if you hear
Speaker 1: similar things coming from Maderna and for Johnson and Johnson
Speaker 1: in the next coming weeks, because those companies are just
Speaker 1: a few weeks behind Visor in terms of submitting their
Speaker 1: paperwork to the FDA and the CDC. Dr Pekosh, where
Speaker 1: do you think we are as a country when it
Speaker 1: comes to the delta variant and the most recent wave
Speaker 1: that we've seen, Because there is some chatter, especially in
Speaker 1: recent days that that has indicated that some people who
Speaker 1: are doing modeling are saying the worst could be behind us.
Speaker 1: I think we've we've seen Delta make its first sweep
Speaker 1: through the population did in the summer, and at times
Speaker 1: when you know the virus isn't supposed to be spreading
Speaker 1: as easily. So the only caveat that I have to
Speaker 1: this is, you know, we really have to see how
Speaker 1: things are going to work out now as kids are
Speaker 1: back in school, as more people are back in the workplace,
Speaker 1: as we're moving indoors into environments that's easier for the
Speaker 1: virus to spread. My one pushback, I would have to
Speaker 1: that and correct me if I'm wrong. But didn't it
Speaker 1: spread in places that we're really warm, where people would
Speaker 1: be gathering inside anyway? Absolutely, and that's why I worry
Speaker 1: that when we get into even better conditions for the
Speaker 1: virus that the spread may kick up a little bit.
Speaker 1: I'm certainly optimistic right now. I do think the worst
Speaker 1: is behind us with Delta. I think we're seeing the
Speaker 1: vaccines are holding their own against Delta, and so I'm
Speaker 1: confident that we'll have um not as bad a fall
Speaker 1: as we have seen in the summer, so worse behind us,
Speaker 1: But it doesn't mean that it doesn't continue to remind
Speaker 1: us that we're still in a pandemic, that we still
Speaker 1: have to be careful. And this is where the boosters
Speaker 1: shouldn't distract us from the real goal of reducing cases
Speaker 1: by vaccinating the unvaccinated, because that's where we're going to
Speaker 1: really be be able to turn the corner on this pandemic.
Speaker 1: We need to get more people vaccinated because that's going
Speaker 1: to reduce virus spread, that's going to reduce case numbers.
Speaker 1: It's gonna let us get rid of some of these
Speaker 1: public health and adventures that we have to have right now,
Speaker 1: because even though we've got vaccinated people, the virus is
Speaker 1: spreading so broadly and so strongly in the population that
Speaker 1: we need more than just the vaccines to protect us.
Speaker 1: What what is the best way to get those people
Speaker 1: who even up to now, when vaccines have been available
Speaker 1: for months and the incentives have been there and now
Speaker 1: we're seeing mandates, how do you get those holdouts to
Speaker 1: get vaccinated? Yeah, I really feel that, Um, there's a
Speaker 1: good portion of the population that just here's all the
Speaker 1: rhetoric and really is just a little confused and a
Speaker 1: little bit taken aback and is not sure which way
Speaker 1: to go because, UM, the misinformation can be just as
Speaker 1: loud as the positive information. So it really comes down
Speaker 1: to communication and redoubling our efforts and the efforts of
Speaker 1: public health officials to make those more personal connections, those
Speaker 1: small group connections. UM. I've had a lot of success
Speaker 1: talking to people in groups of two or three here
Speaker 1: at Johns Hopkins University, UH, talking to small groups in
Speaker 1: webinars UM that we advertise over Twitter. UM, making those
Speaker 1: kind of conversations so that individuals can really have that
Speaker 1: one on one with you and understand the sincerity in
Speaker 1: which you're passing along this really fantastic information about how
Speaker 1: safe and efficacious these vaccines are. It's hard work and
Speaker 1: getting the right information is so crucial to getting us
Speaker 1: through this, uh in the right way. Hey, having said that,
Speaker 1: I've got a little bit of a were left arm, Tim,
Speaker 1: I think maybe had a sore arm a couple of
Speaker 1: weeks ago we got our flu shots. What do we
Speaker 1: need to keep uh in mind when it comes to,
Speaker 1: you know, the normal flu season, which kind of didn't
Speaker 1: really happen during the pandemic because we were all sheltering
Speaker 1: in place. Yeah, I think this year we're really keeping
Speaker 1: our eye on influenza UM. The public health interventions really
Speaker 1: did a great job of limiting viruses like influenza, even
Speaker 1: common cold viruses UM for kids, of virus called RSV
Speaker 1: or respiratory and cecial virus. They all those viruses were
Speaker 1: really reduced during the pandemic UM. Now we're seeing some
Speaker 1: these public health interventions relaxed, and we've already seen a
Speaker 1: really big increase in rhinovirus is the common cold virus.
Speaker 1: We're seeing a large increase in respiratories and cecial virus
Speaker 1: and kids, and those two things usually mean that we'll
Speaker 1: see influenza over the next couple of weeks. So the
Speaker 1: vaccine is important to get this year more than ever
Speaker 1: because we've gone some period of time without seeing a
Speaker 1: lot of influenzas. There's a lot of susceptibility in the
Speaker 1: population because we haven't had infections UM coming through the population.
Speaker 1: And in particular this is important for younger populations because
Speaker 1: they're the most vulnerable. They haven't seen influenza, many of
Speaker 1: them haven't gotten a lot of influenza vaccines, and it's
Speaker 1: that population that we really want to pay attention to
Speaker 1: during the next couple of weeks. Get your flu shots exactly. No, no,
Speaker 1: not at all. Dr Anye Andy Pekos, thank you so much,
Speaker 1: Professor of Molecular Microbiology and Immunology at Johns Hopkins University,
Speaker 1: Bloomberg School of Public Health. Supported by Michael R. Bloomberg,
Speaker 1: Founder of Bloomberg Alp and Bloomberg Philanthropies. This is Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes. Tim
Speaker 1: Stinovic on Bloomberg Radio. We're gonna zero in on a
Speaker 1: Walt Disney company. It's been Tim actually in the news
Speaker 1: a lot this week, the stock moving as a results,
Speaker 1: and times down sometimes up, writing about the company in
Speaker 1: a Bloomberg Opinion pieces, our own Tim O'Brien's senior columnist
Speaker 1: of Bloomberg Opinion, right next to us in our interactive brokers.
Speaker 1: So it is so good to be with you, so
Speaker 1: good to be here. So tell us about Disney, because
Speaker 1: they've been in the news a lot, bofeck talking a
Speaker 1: bunch this week. Well, Disney is wrestling with a lot
Speaker 1: of stuff at theme parks and the entertainment industry. But
Speaker 1: what I zoomed in on was it's it's increasingly close
Speaker 1: embrace with sports betting. Uh, you know Disney is the
Speaker 1: most wit what sports betting? That's right? And this is
Speaker 1: a family centric company. Um, you know, sports betting has
Speaker 1: been booming. The Supreme Court in eighteen basically broke up
Speaker 1: Nevada's monopoly on sports betting. They've knocked down federal laws
Speaker 1: that prevented other states from adopting it. And you wed
Speaker 1: that to the Internet era where everyone can gamble on
Speaker 1: their phones or through their televisions and their living rooms,
Speaker 1: and it is ubiquitous. It's growing. A lot of the
Speaker 1: pure play sports betting companies have seen their market caps
Speaker 1: explode from two billion to twenty four billion over a
Speaker 1: two year period. And younger men do it, and Disney
Speaker 1: wants to connect to those people. And what other property
Speaker 1: does Disney have that younger men and younger women too?
Speaker 1: But it's still it tilts towards mail. It's ESPN, the
Speaker 1: powerhouse sports network, and now ESPN is forming. It already
Speaker 1: has partnerships with companies that provide the odds. If you
Speaker 1: turn into any ESPN broadcast, you now see what once
Speaker 1: was a nomalous sports betting lines on your TV screen.
Speaker 1: But now Disney's pondering possibly licensing deals where there would
Speaker 1: actually be bookmaking shops that have the ESPN brand. It
Speaker 1: feels so like und right, I mean, how does the
Speaker 1: company wrestle with this? This is a called the family
Speaker 1: values focused company. We talked about casinos. These are you know,
Speaker 1: sin stocks that are in the same bucket as tobacco
Speaker 1: companies in some cases well track betting right, and the
Speaker 1: image of that conjurus right, you know, historically Bob Iger
Speaker 1: sold with this. Now, Bob Jpeck is what they have
Speaker 1: said is we would never fully bring sports gambling inside
Speaker 1: the ESPN model, meaning I guess uh that you you
Speaker 1: couldn't you know, pull, you couldn't gamble directly through any
Speaker 1: ESPN properties. But they're offering then to sort of have
Speaker 1: outside companies handle the gambling and having and the bet
Speaker 1: and they'll just take a licensing fee and both of them.
Speaker 1: You know. Bob set a version of that a couple
Speaker 1: of years ago. Bob Jpek, who succeeded him, just this
Speaker 1: week at a Goldman conference, said we would never embed
Speaker 1: gambling in our products, but our audience likes it, our
Speaker 1: users like it and frankly, you know, cable TV, it's
Speaker 1: praying around the edges. Streaming is where it's at, and
Speaker 1: and sports gambling is a hook and do a younger audience.
Speaker 1: You could so see it though, because of ESPN and
Speaker 1: all their coverage, that it would be so easy to
Speaker 1: embed it in right if you think about it. UM,
Speaker 1: tell us about Adam Schefter. Adam Scheckter, I'm sorry, Adam
Speaker 1: Schefter is an ax. You know he is. He is
Speaker 1: one of the He is the senior NFL insider on ESPN.
Speaker 1: His stock and trade is breaking all sorts of news
Speaker 1: and minutia and and gossipy news you can use about
Speaker 1: trades and injuries and starting lineups, the kind of stuff
Speaker 1: that sportsman fanatics really feast upon. He's got a massive
Speaker 1: Twitter following eight point two million followers. Um. He also
Speaker 1: is now investing alongside Bob Kraft, the owner of the
Speaker 1: New England Patriot, in a little gambling startup. And well,
Speaker 1: you know, I called up ESPN and I said, do
Speaker 1: you folks have an ethics policy or guidelines about how
Speaker 1: your employees invest outside the company? And they said, we
Speaker 1: won't comment on that. Uh as to whether they had
Speaker 1: a policy or whether Schefter violated because the issue hears
Speaker 1: if you see him speaking on screen going forward, is
Speaker 1: he talking his book so to speak, if he's got
Speaker 1: an invent spend in a gambling company. Is he offering
Speaker 1: unfiltered and objective information when he's a broadcast on ESPN.
Speaker 1: So we don't know if they're going to be putting
Speaker 1: up a disclosure, if he's going to talk about a disclosure.
Speaker 1: We don't know if he got a special exemption too.
Speaker 1: I would imagine it's you know, this is ABC we're
Speaker 1: talking about. They probably have rules in place. They ain't
Speaker 1: saying tim and saying maybe with maybe you know, million
Speaker 1: Twitter followers, then you know, you can kind of do
Speaker 1: what you want. I also sort of wonder if they
Speaker 1: were you know, maybe they didn't know he had this investment.
Speaker 1: It was just disclosed this week. Who knows what he
Speaker 1: told his bosses. But but he has an individual if
Speaker 1: you know, if his relationship to viewers is I'm giving
Speaker 1: you pure information that helps you enjoy the game more,
Speaker 1: and then there's a group of gambles are like, well,
Speaker 1: that also helps us make money more. And that's what
Speaker 1: it's ultimately about, right, I mean, Disney trying to figure
Speaker 1: out what is the Disney of the future and how
Speaker 1: do you create new revenue streams? Correct? So this coming
Speaker 1: out of time when investors are a little concerned about
Speaker 1: the growth of Disney US. We saw that play out
Speaker 1: in recent days. Would this be happening, Tim, this investment
Speaker 1: be happening? Do you think if we wouldn't see the
Speaker 1: decline of traditional pay TV, traditional cable TV just in
Speaker 1: thirty seconds, sports betting is booming. So it might have
Speaker 1: happened anyway, but they get the added two for one
Speaker 1: benefit of also addressing some of their audience concerns. Do
Speaker 1: you think it would have happened if Bob Iger were
Speaker 1: still there? Possibly? Okay, so that they were certainly considering it.
Speaker 1: Um good stuff, So great to have you come back.
Speaker 1: Love it, Love it. Tim O'Brien, senior columniste, Bloomberg Opinion.
Speaker 1: I wonder if m Adam Schefter got called to the office.
Speaker 1: Adam Schefter, could you come to the ESPN? Did you
Speaker 1: tell us about this company? Exactly? Check out Tim on
Speaker 1: Twitter at Tim O'Brien of course, Bloomberg Opinion. Seen him
Speaker 1: your columnist in our Interactor Broker Studio. I'm oh journal, Yeah,
Speaker 1: but you let me drive. Oh no, no, no, all right,
Speaker 1: please revel I want to drive. Drive by the questions,
Speaker 1: trying the drive to the globe community. Thanks, we'll drying
Speaker 1: us Dawn on Bloomberg Radio. Isn't he just about ten
Speaker 1: minutes left in today's trading session, So just a few
Speaker 1: minutes to wrap up that Thursday trade. We are hovering
Speaker 1: near our best levels of the session. So, as Charlie mentioned,
Speaker 1: really seeing some decent gains one point three percent higher
Speaker 1: on the SMP one and a half percent higher on
Speaker 1: the Dow. And I want to more than it's not
Speaker 1: decent if you're shorting the market, because you'd be like
Speaker 1: I'd love to see a little bit of selling. Well,
Speaker 1: you saw some one Monday. We did, but we've made
Speaker 1: back that ground in a big way. Tuxioca is CEO
Speaker 1: and partner at Cavar Capital Partners. One billion in assets
Speaker 1: under management back with us from Leewood, Kansas. Do how
Speaker 1: are you? I am right? How about you guys doing well?
Speaker 1: Doing well? It's been another I hate to use the
Speaker 1: word interesting, we overuse it, but you know there was
Speaker 1: fear in the markets on Monday. I was reading something
Speaker 1: about JP Morgan who was talking about fun flows. E
Speaker 1: t F flows out on Monday about eleven billion, which
Speaker 1: was I think the biggest on a down day this
Speaker 1: year outside of quality options and futures expirations. And then
Speaker 1: here we are a rally and we've bounced back significantly.
Speaker 1: How do you see the internals of the market? Is it?
Speaker 1: Is it fragile? Is it confident? Is it strong? What
Speaker 1: are you see? I think it's more confident than it
Speaker 1: is fragile. It may be a little tired, right, I
Speaker 1: think it might be calm, but not complacent. And to
Speaker 1: your point, Carol, I mean you're coming into this week
Speaker 1: off of a down week and a really bad Friday,
Speaker 1: which was a quadruple witching Friday, and you kind of
Speaker 1: this trifecta of fear that was percolating over the weekend.
Speaker 1: Obviously the evergrand news and the pros because of it
Speaker 1: having the capability to catalyze a global credit event given
Speaker 1: kind of its precarious lending position. You've had the FED meeting,
Speaker 1: right timing and intensity of whatever tapering or tightening communication
Speaker 1: they were going to provide um all the nausea is
Speaker 1: was just mentioned in that Lumber opinion piece preceding our
Speaker 1: segment of these political debates that domestically debt ceiling concerns,
Speaker 1: all the bureaucratic bundling and continuing resolutions and throwing a
Speaker 1: fourth deal. Right is is seasonality which seems to be
Speaker 1: getting a lot of time and attention and was even
Speaker 1: tipified in some of the fund flows that I read
Speaker 1: that you mentioned about JP Morgan earlier this week. So
Speaker 1: if you, if you have all of those things right,
Speaker 1: you you you go into a market that becomes incredibly
Speaker 1: oversold right after the Monday down down day, and it
Speaker 1: was down a thousand points about forty minutes to go,
Speaker 1: and massive futures buying came in, and then everyone hoped
Speaker 1: for this turnaround Tuesday, and that fell flat. But then
Speaker 1: ultimately the Fed comes out and I think threads the
Speaker 1: needle yesterday and injects more optimism back into the market
Speaker 1: that carried through yesterday afternoon and all of today. Okay,
Speaker 1: I just want to go back to Evergrand because it
Speaker 1: is the market telling us that this is not going
Speaker 1: to be a global credit event. Um. I think the
Speaker 1: market is telling us set to him, and I think
Speaker 1: a few things, right, Why why would we fear ever
Speaker 1: Grand and I think it's not so much from a
Speaker 1: Lehman like credit catastrophe, but more from a consumer demand
Speaker 1: destruction in the US and Europe and a business demand
Speaker 1: destruction Prospects and other parts of the world. Right, China's
Speaker 1: financial stunt is still in any respects closed, but as
Speaker 1: the impact of of the purchasing power of those that
Speaker 1: are most adversely impacted over in China that could ripple
Speaker 1: through the global global economy. I actually read an awesome articles.
Speaker 1: I think it's gonna be the cover story for next
Speaker 1: week's Blueberg Business Week. Um addition, it takes a really
Speaker 1: deep dive and the evolution of evergrand It's prospects for
Speaker 1: recovery cover actually this week. Okay, so it's in the
Speaker 1: best line I thought of the whole article was Chinese
Speaker 1: leaders speak of the goals of moderate prosperity and common prosperity,
Speaker 1: and household acculating more debt to buy multiple or luxurious
Speaker 1: homes doesn't sync with that vision. I thought that was fascinating. Right. Ultimately,
Speaker 1: it's hard to square communism and capitalism, and I think
Speaker 1: the market created a lot of ability volatility trying to
Speaker 1: piece those together. So dips when are dips buying opportunities
Speaker 1: and when are dips a sign of the beginning of
Speaker 1: a correction? Yeah? You know, I I think and I
Speaker 1: actually keep taped on my one of my screens at
Speaker 1: work when my main man of all time, Peter Lynch
Speaker 1: and and it said more people have lost money anticipating
Speaker 1: corrections than in the actual correction. And I think we
Speaker 1: need to adhere to that, considering time in the market,
Speaker 1: timing in the market, however, But you know what, right,
Speaker 1: I mean that that the right now is just so
Speaker 1: much cash and we've actually done a deeper die. But
Speaker 1: what does that mean? Everyone talks about ash on the sidelines,
Speaker 1: so where is this cash and where are these sidelines?
Speaker 1: But there is a lot of money that is looking
Speaker 1: to find an entry point. And you know, this is
Speaker 1: the first five percent pullback we've had an ear and
Speaker 1: maybe that speak to the seasonality impact. It was not
Speaker 1: on a closing low, but an enter day low. We
Speaker 1: saw five point two pullbacks sne sect one last one
Speaker 1: of the nine and a half percent in September. So
Speaker 1: you have low you have you have a lot of cash,
Speaker 1: you have low interest rates. And jpology said yesterday they're
Speaker 1: gonna stay low for a while, that's in a heart
Speaker 1: that's hardening for risk gassets. And then you have market
Speaker 1: multiples that are improving. Right see an S and P
Speaker 1: that's up for the year and it's selling at all
Speaker 1: lower a cheaper multiple than the first of the year.
Speaker 1: So where people that are concerned about a dip turning
Speaker 1: in a correction, you need to typically have you need
Speaker 1: typically have earnings rolling over and a FED policy mistake.
Speaker 1: And I don't know how we have a mistake because
Speaker 1: we have the most telegraphed and transparent FED move in history.
Speaker 1: The next time they fed, I mean they basically I
Speaker 1: keep saying this, but they are spoon feeding us. And
Speaker 1: to be fair, Mike McKee said, j Pal did a
Speaker 1: great job yesterday. I mean the markets kind of got it,
Speaker 1: understood it, and are off and running. I agree. I mean,
Speaker 1: I think they's done a good job for quite a while, Carol.
Speaker 1: But yeah, it seems that like ahead of every meeting,
Speaker 1: there emerges this deep seated fear that Paul is going
Speaker 1: to disclose some like alternate agenda or suggested this open
Speaker 1: Marketmitte has overtaken his influence and the market is going
Speaker 1: to left to be the left to ascertain what that
Speaker 1: all means. But he's doing everything he can, in my opinion,
Speaker 1: to spread that needle between stimulating the economy and not
Speaker 1: provoking hyperinflation. And it's a real time experiment or exercise.
Speaker 1: But again, the transparency is is I think it's a
Speaker 1: big asset for him. All right, any nervousness out there
Speaker 1: just got about Oh gosh, of course, I mean, and
Speaker 1: we talked about this a couple months ago. Are our
Speaker 1: challenge right now and in sourcing client or investing client
Speaker 1: capital is in fixed income? Yeah, I mean, he didn't
Speaker 1: know that it's impossible to predict returns in the in
Speaker 1: the credit markets over the next twenty years that we
Speaker 1: saw in the last twenty. So we're spending a lot
Speaker 1: of time there and of course that makes us nervous.
Speaker 1: Absolutely all right, we're gonna leave it. They're always good
Speaker 1: to check in with you. Be well, Doug Sioca. He
Speaker 1: is CEO and partner of our Capital Partners one billion
Speaker 1: in assets under management, joining us once again on the
Speaker 1: phone from Leewood, Kansas. Thanks for listening to Bloomberg Business Week.
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