Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: on Bloomberg Radio or stream us live on YouTube and
Speaker 1: Bloomberg dot com. Well, it is the most read story
Speaker 1: on the Bloomberg terminal over the last eight hours. It's
Speaker 1: a Bloomberg exclusive. Goldman Sachs embarking on one of its
Speaker 1: biggest rounds of job cuts ever, as it locks in
Speaker 1: on a plan to eliminate about thirty two hundred positions
Speaker 1: just this week, the bank's leadership going deeper than rivals
Speaker 1: to shed jobs. It's expected to start the process midweek.
Speaker 1: The total number will not exceed thirty two d according
Speaker 1: to people with knowledge of the matter. With us now,
Speaker 1: we've got Bloomberg News Finance Team leader Sally Bakewell, she's
Speaker 1: in the Bloomberg Interactive broke his studio with us. Sally,
Speaker 1: good to have you with us this afternoon. What does
Speaker 1: our investing audience need to understand about these job cuts
Speaker 1: that are going to happen at Goldman Sachs. I think
Speaker 1: there are two things. So. First of all, Goldman has
Speaker 1: not been immune to these forces that are impacting all
Speaker 1: Wall Street banks. They're all trying to contain this slump
Speaker 1: in profit and revenue um owing to tightening monetary conditions,
Speaker 1: which is slowing down deal activity UM. And you know
Speaker 1: it's really causing some key Wall Street profit engines to
Speaker 1: splutter um. And we've seen other banks let go of
Speaker 1: staff Morgan Stanley, Credit, sweez Barcleys, They've all either fired
Speaker 1: staff or announced that they plan to do so. But
Speaker 1: with Goldman, they have some more specific things here, and
Speaker 1: indeed they have gone deeper than their rivals in this pullback,
Speaker 1: at least for now. UM. They're contending with some other things.
Speaker 1: For example, they made this very costly expansion into consumer
Speaker 1: bank banking, which left that unit with deep losses. This
Speaker 1: is the Marcus unit, Alan Sacks exactly UM. And ultimately
Speaker 1: in October that unit was apped into a new business
Speaker 1: which they have called platform Solutions, and UM Shreda reported
Speaker 1: this unit is poised to report that it's it's recorded
Speaker 1: more than two billion in pretext losses. So Goldman is
Speaker 1: facing forces in the market that all Wall Street banks
Speaker 1: are forcing facing, but it's contending with a few other things.
Speaker 1: And it also had um surging head count since twenty eighteen,
Speaker 1: and no doubt these cuts have kind of walked back
Speaker 1: some of some of that. Well, that's that's what I
Speaker 1: was about to ask about, how much of this is
Speaker 1: really something that we should be worried about as kind
Speaker 1: of a canary in the coal mine for some sort
Speaker 1: of broader macroeconomic outlook when they have that kind of
Speaker 1: bloated head count to begin with, I think we're looking
Speaker 1: at a number here of head counts down thirty four
Speaker 1: percent of the end of eighteen, about four fifty people
Speaker 1: as of September. So that's that's a lot of people,
Speaker 1: it is. And those years included the pandemic, of course,
Speaker 1: where banks tried not to UM let go of any
Speaker 1: staff during that incredibly difficult time, and so we started
Speaker 1: to see that when that period ended, UM and those
Speaker 1: kind of moratoriums ended that they have started to let
Speaker 1: go of people. Um. When we speak to the banks,
Speaker 1: the message we often get is that this is more
Speaker 1: normal trimming around the edges, and it's kind of a
Speaker 1: return to those annual culls um that they used to
Speaker 1: do of underperformers. But I think with Goldman Sacks owing
Speaker 1: to these more idiosyncratic things, UM, it's a little bit
Speaker 1: you know, that's why they have had to go a
Speaker 1: little bit further than some of their rivals. Yeah. So,
Speaker 1: so talk about the consumer banking element of this because
Speaker 1: and you know you mentioned this story that's exclusit by Shrinadarajan.
Speaker 1: We've talked to him at length about it in the past,
Speaker 1: but we can't look past the weakness there. And I
Speaker 1: mean what some analysts would say is, I don't want
Speaker 1: to call it a mistake, but it certainly didn't work
Speaker 1: out the way that Goldman Sachs wanted it to. That's right, UM.
Speaker 1: And Solomon, you know, he's said that they have been
Speaker 1: dialing back their ambitions for the consumer banking UM unit
Speaker 1: and signaled that they're reviewing other business lines to manage
Speaker 1: headcount and limit costs. UM. How much we can pinpoint
Speaker 1: UM that episode UM as a result as resulting in
Speaker 1: these cuts is a bit unclear, and maybe it's stepping
Speaker 1: too far to to do so. And you know, the
Speaker 1: bank still continues plans to continue hiring UM. A Street
Speaker 1: reports it it will hire, including for the regular analyst
Speaker 1: class later this year. UM. But I think, yeah, Goldman's
Speaker 1: consumer banking for a UM, just the difficulty UM, the
Speaker 1: in getting something like that, something so ambitious and huge
Speaker 1: up and running UM and the kind of regulatory perspective
Speaker 1: for doing that, the need to the sort of things
Speaker 1: that come with consumer banking that it needed to have
Speaker 1: in place were just perhaps a bridge too far. And
Speaker 1: what about at the very top when we're talking about
Speaker 1: David Solomon, James Warman. The is kind of folks, what
Speaker 1: kind of consequences or are there any hits that they take, oh,
Speaker 1: hits that they take from this? No doubt they're getting
Speaker 1: a lot of questions, and no doubt a lot of
Speaker 1: senior leadership are pretty unhappy. Because of course, UM Investment,
Speaker 1: the investment bankers are not expecting to get particularly good
Speaker 1: bonuses this year, and those compensation discussions will happen about
Speaker 1: a week from now and again, that is something that
Speaker 1: is the same across Wall Street. Um. But the consumer
Speaker 1: banking issue fed into and bled into a lot of um,
Speaker 1: the other sort of business lines at banks, and they've
Speaker 1: ended up kind of having to take a bit of
Speaker 1: a hit for it. UM. So I'm sure questions are
Speaker 1: pretty rife right now. All right, Sally bag Well, we
Speaker 1: love it when you join us. Thank you so much
Speaker 1: for taking the time. Check out Sharinadar Rajin's story Goldman
Speaker 1: to cut about thirty jobs this week after a cost review. Again,
Speaker 1: it's a Bloomberg exclusive. It's among the most read on
Speaker 1: the Bloomberg terminal. These sees Bloomberg Business Week with Carol
Speaker 1: Messer and Tim Stanovic on Bloomberg Radio. Well, the forthcoming
Speaker 1: issue of Bloomberg Business Week, it's the year Ahead issue.
Speaker 1: It's on news stands later this week. But right now
Speaker 1: you can read one of my favorite features that the
Speaker 1: magazine does each year. It's on the Bloomberg terminal and
Speaker 1: at Bloomberg dot com slash business Week. The features based
Speaker 1: on tapping into the excellent team of analysts that we
Speaker 1: have over at Bloomberg Intelligence. That team tracking some two
Speaker 1: thousand companies and sectors that range from communications to commodities
Speaker 1: to finance and food. Now, of those, b I has
Speaker 1: identified fifty that weren't a closer look this year based
Speaker 1: on a list of focus ideas. The companies they run
Speaker 1: the gamut Adidas to vinci eBay to Portscha and more.
Speaker 1: It's also today's big take. We've got with us Bloomberg
Speaker 1: Business Week Editor Joel Webber and Business Week Solutions and
Speaker 1: Strategy Senior editor Rebecca Penty. Joel with us in the
Speaker 1: Bloomberg Interactive Broker's studio, Rebecca joining us on the phone
Speaker 1: from the UK. Joel, I want to start with you
Speaker 1: and just get an understanding from from you how this
Speaker 1: list comes together because a sub Bloomberg intelligence they follow
Speaker 1: a couple of thousand companies. Yeah, it's uh, it's a
Speaker 1: it's a feat what they do on in an given day.
Speaker 1: And one of the things that we've long done with
Speaker 1: them is this project which culminates, uh it's it's actually
Speaker 1: like months in the making and then culminates with the
Speaker 1: publication of the list UM today. We've also gone on
Speaker 1: and done quarterly installments UM that we now do. So
Speaker 1: this is uh fifty companies to watch for the year,
Speaker 1: but you'll hear us come back and ahead of every quarter,
Speaker 1: will will tell you U companies to watch this quarter. Um.
Speaker 1: But the fifty is the real deal. And what what basically, um,
Speaker 1: the team of of analysts at Bloomberg Intelligence Intelligence does
Speaker 1: is take that two thousand plus companies and push it
Speaker 1: through Excel sheets and it spits out, uh, just a
Speaker 1: couple of dozen companies that we really want to kind
Speaker 1: of talk about. And we can't tell you these are
Speaker 1: bison cells that we're not gonna do anything. Um, that
Speaker 1: foolish that much conviction. But we can look at hindsight
Speaker 1: is as a measure of that. Yeah, exactly, that's what
Speaker 1: hindsights for, right. Um, we we look we call this
Speaker 1: watch because some of them we expect will outperform and
Speaker 1: others might lack. And so it's a great little mix
Speaker 1: of companies that we just think are going to have
Speaker 1: interesting years. Um. Rebecca was one of the Business Week
Speaker 1: editors who worked closely with the I to come up
Speaker 1: with that list and refine it and turn it into
Speaker 1: the magic that it is. Rebecca, I'm curious, what was
Speaker 1: the company that m was your was the one that
Speaker 1: you liked the most on the list? Well, I think
Speaker 1: Disney and Um, it was interesting. You know, b I
Speaker 1: has these focus ideas and they you know, basically they're
Speaker 1: they're high conviction ideas of companies where they think the
Speaker 1: market is not recognizing something about the company and so
Speaker 1: either the market's undervaluing overvaluing. And Disney was one of
Speaker 1: them that was really beat up during the pandemic and
Speaker 1: and you know, continues to be beat up once recession
Speaker 1: risks started looming because of all their theme parks. And
Speaker 1: the thing that was so interesting for me is that
Speaker 1: b I had this conviction that, you know, Disney is
Speaker 1: really poised for a rebound um due to you know,
Speaker 1: restructuring and accelerating streaming strategy. And we'd already landed on
Speaker 1: Disney as a company, and then the announcement of Bob
Speaker 1: Biker's return as CEO and and so that just reinforced
Speaker 1: the view from b I that this is a company
Speaker 1: to watch. And I think, you know, the bi's view
Speaker 1: that it could be a tale of two halves for
Speaker 1: for Disney, where you know, the second half is the
Speaker 1: stronger of the two. Okay, well, if you're gonna talk
Speaker 1: about Disney, we should talk about Netflix. Um, because Netflix
Speaker 1: also on the list. Why why did Netflix make it? Uh?
Speaker 1: In that same conversation, since obviously it's been the dominant
Speaker 1: streaming video provider. Yeah, that's true, And I think this
Speaker 1: is an interesting one where um B I Z going
Speaker 1: in on net Netflix is ads supported pricing tier. For
Speaker 1: the longest time, it's been a company that's dependent on
Speaker 1: um subscriptions but not advertising, and so Ba's view is
Speaker 1: that the market isn't fully recognizing the additional revenue and
Speaker 1: sales growth that could come from that advertising, which which
Speaker 1: they see as supporting higher average revenue per user and
Speaker 1: offsetting cannabalization of subscription revenue from customers downgrading to cheaper plans. Okay,
Speaker 1: so worth mentioning that to US companies perhaps you've heard
Speaker 1: of them? Right. The other thing I love about this project, though, Rebecca,
Speaker 1: is how global it is. Right, So, in addition to
Speaker 1: some marquee American names, tell us about ones that people
Speaker 1: outside of the US might not even heard of. Yeah, well,
Speaker 1: this one was an interesting one for me. I think,
Speaker 1: you know, we often hear about China being, you know,
Speaker 1: the world's manufacturing center, but we don't often know the
Speaker 1: names of the companies that make the stuff that we use,
Speaker 1: and one of the ones featured here is t s
Speaker 1: m C. It is the world's largest semiconductor foundry. And
Speaker 1: you know, with with the recession looming, with with um
Speaker 1: the economy taking a beating, worldwide, chip making is slowing down.
Speaker 1: But blub intelligence view is that t s MC is
Speaker 1: placed to better weather the cyclical market downturn than it's
Speaker 1: piers because of its dominant industry position. Yeah, I mean
Speaker 1: it is a juggernaut, right yeah, joel Um, what about
Speaker 1: your favorite on this list? Okay, well, I'll stick with
Speaker 1: tech Um and I'm gonna I'm gonna say sons Um,
Speaker 1: the little speaker company that could. Yeah, it's truly, as
Speaker 1: we say in the blurb, it is a David versus
Speaker 1: Goliath moment. There's a patent case. It's been wrestling with
Speaker 1: Google for a really long time. As we write b
Speaker 1: I is optimistic. Optimistic sons succeed in the dispute, which
Speaker 1: goes to a jury trial in May. Uh. This has
Speaker 1: been a long time coming. Uh, this showdown has been
Speaker 1: it's years in the making. Um so nos UH has
Speaker 1: has has had its share of some challenges. If your
Speaker 1: son's user, like I am, there's some software decisions that
Speaker 1: will make you pull your hair out, like that Apple
Speaker 1: bit of which app because there's multiple apps actually in
Speaker 1: order to use different devices that don't talk to each
Speaker 1: other always. You know, is there more to talk about here? Yes?
Speaker 1: There is? But so I like this so nos one, Um,
Speaker 1: but you know that's another American company. We've done tech
Speaker 1: a little bit. Now, Rebecca, what's another international company that
Speaker 1: that jumped out to you? Okay, I'm just looking down
Speaker 1: the list I've got, which was Porch. Let's talk about
Speaker 1: Porsche exactly, which I thought. So this company went public
Speaker 1: this year. VW spent out, which is just also just
Speaker 1: an incredible I p O. But now they actually have to, like,
Speaker 1: you know, make some evs and autos I think are
Speaker 1: just a really interesting kind of your head story. We're
Speaker 1: seeing obviously the pressure on Tesla, and we're gonna have
Speaker 1: more automakers sort of show up and an attempt to
Speaker 1: hit velocity like Tesla has proven. Um, what what what
Speaker 1: a successful company can look like? And now they have
Speaker 1: to like wade through some challenges. Yeah, it's a fantastic list.
Speaker 1: Go ahead, go ahead, reaty seconds. If I could just
Speaker 1: throw one quick one back in there. We talked a
Speaker 1: lot about companies that are poised to do well on
Speaker 1: the e V game. One of them that is maybe
Speaker 1: poised to fair worse off is Allison Transmission UM, another
Speaker 1: US company. Uh, it's a truck transmission supplier. And what
Speaker 1: you may have heard about EVS is that you know,
Speaker 1: it's not just regular cars, it's also trucks. So there's
Speaker 1: heightened competition in that truck space, which is going to
Speaker 1: be at some pressure to Alison Transmission. Well, I think
Speaker 1: we only talked about ten percent of the companies that
Speaker 1: are on this list. Check it out. It's at Bloomberg
Speaker 1: dot com Slash business Week. It's also available on the
Speaker 1: Bloomberg terminal. Big thank you to Rebecca Pentty. She's Solutions
Speaker 1: and Strategy Senior editor for Bloomberg Business Week, joining us
Speaker 1: on the phone from the UK this evening for her.
Speaker 1: Also to Joel Webber, the editor of Bloomberg Business Week.
Speaker 1: He's with us right now in the Bloomberg Interactive at
Speaker 1: Broker's studio. Check out Joel on Twitter at Joel Weber Show.
Speaker 1: Rebecca's there are penty on Twitter. You're listening to Bloomberg
Speaker 1: business Week. This is Bloomberg. You're listening to Bloomberg Business
Speaker 1: Week with Carol Messier and Tim Stenevic on Bloomberg Radio.
Speaker 1: Brazil's capital of Brazilia recovering today from an insurrection by
Speaker 1: thousands of supporters of ex president Jayra Bilsonaro, who stormed
Speaker 1: the country top government institutions, leaving a trail of destruction
Speaker 1: and testing the leadership of Louise and Nascio Lula da
Speaker 1: Silva just a week after he took office. Rioters ransacked Congress,
Speaker 1: the presidential palace and the top court in Brazilia on Sunday,
Speaker 1: hoping to trigger a military intervention. It took hours for
Speaker 1: security forces to regain control of the main government buildings.
Speaker 1: Hundred were arrested throughout the night, thousands that of bolson
Speaker 1: Our supporters remained in the area. For more. We turned
Speaker 1: out to Julia Lachi, Brazil country chief for Bloomberg News.
Speaker 1: She joined us on the phone from South Holo, Brazil. Julia,
Speaker 1: good to have you with us this afternoon. Just want
Speaker 1: to get from you the latest on on what we
Speaker 1: understand about this, uh, these insurrectionists yesterday. Hi, thanks for
Speaker 1: having me. So Brasita is in really recovery. Mode Um
Speaker 1: police are gathering evidence and really um booking thousands of
Speaker 1: protesters who came back to a militant like they have
Speaker 1: been camping in front of a military facility about eight
Speaker 1: kilometers from where the protests took place, UM, and they
Speaker 1: walked back there. Thousands of them walked back there after
Speaker 1: the protests, and today they were removed and taken to
Speaker 1: police for questioning and booking. And really it's a it's
Speaker 1: a swath of evidence that police East and the and
Speaker 1: the ministries now have to go through. Lula meanwhile, is
Speaker 1: reasserting his power. He met with the chiefs of Congress,
Speaker 1: the chiefs of the Supreme Court UM today really putting
Speaker 1: up united front against these protests and Luters really and
Speaker 1: Julia this is coming of course, as Billsonarow is I
Speaker 1: believe hospitalized as well. Can he gives a little more
Speaker 1: contact with us, right? Yeah? Here in the States, Yeah,
Speaker 1: that is right. UM. Bolsonado flu to Florida right before
Speaker 1: at the end of December, right before Blula was inaugurated,
Speaker 1: which was last Sunday, UM, and he has been really
Speaker 1: just taking pictures with supporters. There's been videos of him
Speaker 1: in supermarkets at KFC. UM so really just on vacation
Speaker 1: in Florida, and today we heard that he has been hospitalized,
Speaker 1: which has been confirmed by his wife. And really Billsonado
Speaker 1: has been hospitalized many times since he was stabbed UM
Speaker 1: in eighteen on the campaign trail. It's usually UM abdominal
Speaker 1: problems that he has. SILVER were monitoring that situation and
Speaker 1: what does that mean in terms of his response. Has
Speaker 1: he responded to the protests that he's seen or has
Speaker 1: he been kind of out of commission here? He has,
Speaker 1: although he has been mostly silent since losing the election
Speaker 1: on October both UM skipping public events and on social media,
Speaker 1: which is where he always had a huge presence with
Speaker 1: him and his family. He did tweet last night UM
Speaker 1: saying these kinds of riots, these sort of demonstrations are
Speaker 1: not within the rules of the democracy, and very quickly
Speaker 1: trying to distance himself from protests because there were immediately
Speaker 1: allegations UM that he was UM you know, he helped
Speaker 1: stoke protesters and and was behind the E section. So
Speaker 1: he was very quick to deny that. UM. So we
Speaker 1: shall see what happens next with that. UM. The Justice
Speaker 1: ministers said that for at the moment he cannot be
Speaker 1: um legally responsible for what happened yesterday, but he did
Speaker 1: say politically unequivocally responsible for some of what happened yesterday.
Speaker 1: I think a lot of people when they first saw
Speaker 1: images of this, they thought of January six here in
Speaker 1: the United States, And you know, some similarities between between
Speaker 1: the two Julia UM. A different part of the conversation though,
Speaker 1: has to do with the demands of these insurrectionists. What
Speaker 1: was the commonality that tied them together, sort of apart
Speaker 1: from the idea that that Bilsonaro was the one who
Speaker 1: won the election. Yeah, I think that's the main threat
Speaker 1: they wanted to UM. You know, they refused to accept
Speaker 1: the result of the election, and they were asking for
Speaker 1: the military to intervene and keep you know, and take
Speaker 1: Lula out of office. UM. And and that was when
Speaker 1: you're right. The images were very similar to what we
Speaker 1: saw in the Capitol two years ago, almost to the date. UM.
Speaker 1: One difference that UM we saw was police initially did
Speaker 1: not really resist the protesters, unlike in the US. So
Speaker 1: they ran rampant for about two hours before reinforcements arrived
Speaker 1: and really started taking people out of the buildings. But
Speaker 1: by then, you know, the damage to work of art
Speaker 1: and really to the building structure was just countless. Another
Speaker 1: difference that that I noticed was the fact that so
Speaker 1: many protesters insurrectionists were actually arrested immediately. This is not
Speaker 1: something that happened here in the US. What do we
Speaker 1: know about the people who have been arrested and the
Speaker 1: consequences that they could face if they do if they
Speaker 1: if they are indeed found guilty. Yeah, that's right. A
Speaker 1: lot of people were arrested kind of on the act um.
Speaker 1: I think a couple of hundred. The numbers varied depending
Speaker 1: on on the the government agency that is commenting on it.
Speaker 1: But you know, it was all over social media. People
Speaker 1: were posting selfies and videos while they weren't booting the buildings.
Speaker 1: So it is a trove of evidence that police now
Speaker 1: has to go through and just keep um, you know,
Speaker 1: finding these people and arresting them. Although a lot of
Speaker 1: videos have been erased, even social media accounts have been wiped,
Speaker 1: but the Supreme Court last night ordered um that these
Speaker 1: the evidence be preserved and really started going after these
Speaker 1: people and not just the people who were there, but
Speaker 1: people who financed the act. That's been a very key
Speaker 1: point um from all authorities commenting about the aftermath of
Speaker 1: this is that they really want to go after the
Speaker 1: people who bust thousands of Boston NATO supporters over the
Speaker 1: past two days. Too busy there for these protests. So
Speaker 1: Julie talked to us a little bit about the market
Speaker 1: reaction here. Demian sasaur Our, Bloomberg Intelligence Chief Emerging Market strategist,
Speaker 1: um kind of said the look, these are emerging markets.
Speaker 1: A lot of the stupolue whole risk is actually priced in.
Speaker 1: Bloomer Economics on the other hand, saying like there could
Speaker 1: still be a lot of pain. It could shave off
Speaker 1: seven tenths of one percent when it comes to economic
Speaker 1: activity in the month of January. Is that something the
Speaker 1: markets are responding to. So when markets opened, it was
Speaker 1: really looking like a horrible day, especially considering it was
Speaker 1: such a risk one day abroad, So both stocks and
Speaker 1: the currency were underperforming massively. As the day we're on
Speaker 1: things that improved. Both the mood here improved and the
Speaker 1: risk on sentiment that we were seeing abroad kind of
Speaker 1: fade at a little bit. So in the end it
Speaker 1: wasn't as bad as it could have been. But you know,
Speaker 1: Brazilian assets have been under performing since Lola Um won
Speaker 1: the election, really because investors have begun to worry that
Speaker 1: his comments on how much he's going to spend and
Speaker 1: comments from cabinet members that he just appointed about revoking,
Speaker 1: you know, the labor reform and the pension reform, both
Speaker 1: of which investors really see a key keeping government accounts
Speaker 1: and check are really weighing on us. It's so it's
Speaker 1: a bit longer than just today, Julia, what are you
Speaker 1: watching for now? What's the smart question that our investing
Speaker 1: audience needed needs to be asking as Brazilia continues to
Speaker 1: recover from US. I think there are a few things. UM.
Speaker 1: One is will that will this happen again? Right? Um,
Speaker 1: authorities say this will never happen again, but there are
Speaker 1: still thousands of people in Brazilia. UM, so it really
Speaker 1: needs to We really need to be on the watch
Speaker 1: for a resurgence of violence and then whatever comes out
Speaker 1: of these Supreme Court requests and inquiries. There are several
Speaker 1: arrest warrants that have already been issued. We don't have
Speaker 1: names yet, but it really could shake things up in
Speaker 1: politics and in the system, depending on what they find
Speaker 1: in terms of who financed and who stoked protesters. So
Speaker 1: I think those are the main things that we're watching for,
Speaker 1: all right. Julia late Chi, Brazil country chief for Bloomberg News,
Speaker 1: joining us this afternoon on the phone from sal Pallo, Brazil.
Speaker 1: Just to update our audience. If you're just now joining us.
Speaker 1: We were speaking to Julia about Brazilia, the capital of Brazil,
Speaker 1: reeling after anti Lula rioters stormed Congress over the weekend.
Speaker 1: A big thank you to Julia for taking a time
Speaker 1: and joining us to bring us the latest from there.
Speaker 1: I'm roam a journal but you let me drive. Oh no, no, no, no,
Speaker 1: who's going to drive home? Honey? Please? I'll do the
Speaker 1: ride gravels. I want to drive. It's the question. This
Speaker 1: is the drive to the globe to music well down
Speaker 1: on Bloomberg Radio. It is the drive to the close.
Speaker 1: Tim Stanebec and Creedy Gupta in for Carol Master this afternoon.
Speaker 1: We're just about seventeen minutes away from the close of
Speaker 1: equity trading here on this January three, and we're seeing
Speaker 1: markets roll over quite a bit. The SP five hundred
Speaker 1: since high as hired by as much as one point
Speaker 1: four two percent earlier. Now it's just up just for
Speaker 1: actionately less than one tenth of one percent. Really eager
Speaker 1: to hear what our next guest has to think of,
Speaker 1: not just today's trade, but of the outlook for the year.
Speaker 1: We've got Gina Bolvan with us, president of Bolven Wealth
Speaker 1: Management Group. She joins us this afternoon on the phone
Speaker 1: from Boston. Gina, how are you hi? How are you?
Speaker 1: Thank you for having me and Happy New Year. Happy
Speaker 1: New Year to you too, Thanks so much for joining us. Well,
Speaker 1: let's talk a little bit about the trade moving forward,
Speaker 1: because if the theme of last week and the year
Speaker 1: has been and it continues, uh, how high will inflation go?
Speaker 1: Is it? Has it indeed peaked? And how high will
Speaker 1: the federal funds rate have to go in order to
Speaker 1: tamp down inflation? What's top of mind for you at
Speaker 1: Boven Well Management Grow? Oh well, you know, yes, last
Speaker 1: week was such a good week for the market. Um.
Speaker 1: You know what kicked it off as a job's report
Speaker 1: and there was something for everyone there and it was
Speaker 1: it was surprising to the upside um when we still
Speaker 1: have that boken record of oh of um, bad news
Speaker 1: is good news, good news is bad news. A slower
Speaker 1: wage growth which helps bring inflation down was good for
Speaker 1: investors because it gave investors hope finally that the stead
Speaker 1: may may not have to raise rates as much and
Speaker 1: as long, and maybe they might even have to cut
Speaker 1: rate and there's a glimmer of hope of a soft landing.
Speaker 1: So that's what happened last week. And we also saw
Speaker 1: the I s M survey um was surprising with the
Speaker 1: service industry contracted for the first time in two and
Speaker 1: a half years. So we're starting to see that the
Speaker 1: interest rate plakes are making their way into the economy
Speaker 1: and most of the work the state had to do
Speaker 1: to slow the economy maybe behind us. Well, Gina. One
Speaker 1: of the historical trends that has really kind of thrown
Speaker 1: me for a loop here is that after midterm elections,
Speaker 1: people tend to buy in for Lago remarket for a
Speaker 1: lot of the bulls waiting on the sidelines. I think
Speaker 1: they were waiting for some sort of gridlock in Washington
Speaker 1: to come to fruition before hopping back into the market,
Speaker 1: and we haven't really seen that with the same conviction
Speaker 1: we've seen it in the past years. Any idea why, well,
Speaker 1: I think that one of the reasons is because we've
Speaker 1: had seven interest rate hikes and we've had forty year
Speaker 1: inflation high high, so UM, but I do think that
Speaker 1: we are going to see it. When you know, when
Speaker 1: you look at history, UM, that is one of the
Speaker 1: trends that we see is that UM after the mid terms,
Speaker 1: no matter who wins, there has an average game gain
Speaker 1: of about fourteen percent in the market. So that is
Speaker 1: one of the reasons why we think the market this
Speaker 1: year will be up double digits, twelve to fifteen percent.
Speaker 1: But it's just going to take all year to get there.
Speaker 1: What's more important to you technicals like that, the sort
Speaker 1: of farmer's almanac statistics that you you know, look back
Speaker 1: on over the last what years or so, or what
Speaker 1: you're actually seeing. When it comes to fundamentals, well, I
Speaker 1: think you can. You can't ignore either, right, I mean,
Speaker 1: the only thing we have to go by is history.
Speaker 1: But UM in history is very strong. But when you
Speaker 1: look at fundamentals, that's strong as well. We've seen this
Speaker 1: is the most UM expected recession we've ever seen or
Speaker 1: talked about. And because of that, you know, it just
Speaker 1: may not be as bad as everyone thinks. Because we're
Speaker 1: why though, because we're preparing for it, because we're so
Speaker 1: prepared for it, like one of the like when you
Speaker 1: look at the financial services sector, when you look at banks, um,
Speaker 1: they've they've been preparing for a recession. Think of all
Speaker 1: the stress tests they've had to think of what happened
Speaker 1: in the Great Recession of two thousand and nine. So
Speaker 1: the banks are very much prepared for recession. And you know,
Speaker 1: everybody's been talking about this recession that's going to happen.
Speaker 1: So consumers and businesses, I would say, you're somewhat compared,
Speaker 1: and they may they are prepared, and they may be
Speaker 1: more resilient than you think. Well more resilient, But I
Speaker 1: wonder what that then means for perhaps some of the consumptions,
Speaker 1: some spending patterns not necessarily intoe. But when that's I
Speaker 1: feel like what the markets are now pricing in it's
Speaker 1: no longer this year kind of story. Well, I think, um,
Speaker 1: when we talked about what's being priced into the market,
Speaker 1: I think that's what happened Friday is you know, the
Speaker 1: worst case scenario has already been faced in So if
Speaker 1: we get any type of good news, you know, like
Speaker 1: earning season is starting taking off Friday with the big banks,
Speaker 1: If we get any type of good news. The market
Speaker 1: takes it in once with it. Yeah, look at what
Speaker 1: we saw on Friday, I think that is a perfect
Speaker 1: way to describe it. With that kind of perfect jobs
Speaker 1: report that many people saw as being a goldilocks report.
Speaker 1: We saw the rally, it's given up a little bit
Speaker 1: of steam today is the S and P five hundred
Speaker 1: just continues to move lower, down about eight one hundreds
Speaker 1: of one per cent. So, Gina, does that mean that
Speaker 1: you think markets have bottomed at least in this cycle? Well,
Speaker 1: I think it's really hard to um call a bottom.
Speaker 1: You don't. You don't always know where the bottom is
Speaker 1: until it's over, until it's in hindsight. But I think
Speaker 1: we have more of an upside than a downside at
Speaker 1: these levels, more downside on these levels. You know, it's
Speaker 1: interesting to me that a lot of people are expecting
Speaker 1: this turnaround story to happen at the halfway point, the
Speaker 1: back half of the years, when you're going to see
Speaker 1: a lot more green on the screen. Gina, why not earlier? Well,
Speaker 1: I think we need to get a signal from the Fed. Right,
Speaker 1: the Fed still very hawkish, um and I think that's
Speaker 1: part of their campaign. It's not what they're doing it,
Speaker 1: talks of what they say, and so you you know,
Speaker 1: the FED is on one side, the markets on the
Speaker 1: other side, and we need to see a little bit
Speaker 1: of the FED coming to the middle to meet the
Speaker 1: market or acknowledging because they really haven't yet, and they
Speaker 1: need to acknowledge that inflation is coming down and they
Speaker 1: are closer to the end of the right hyps. And
Speaker 1: we don't hear a lot of that from FED speakers,
Speaker 1: including the that's right, and they're all in Unison, all
Speaker 1: in Unison, and they're all talking the same talk, walking
Speaker 1: the same walk, and um, you know that's why we
Speaker 1: think it's going to take longer. Hey, Gina, just in
Speaker 1: the last twenty seconds that we have with you, give
Speaker 1: us a couple of areas that you're investing in. Just
Speaker 1: got twenty seconds left. We like financials. We like financials
Speaker 1: because of you know, good good it ends and um,
Speaker 1: you know, if there's no recession, they'll do well because
Speaker 1: of economic activity. If there is a recession, as I mentioned,
Speaker 1: they have in really good shape. They have valuations and
Speaker 1: we like healthy if the dividends and they have a
Speaker 1: good tip demographic. Kale wind all right, Gina Bolvin, President
Speaker 1: of boldn Wealth Management Group, liking for three healthcare and financials.
Speaker 1: Gina joining us this afternoon from Boston. Follow her on
Speaker 1: Twitter at Gina Bolvin. You're listening to Bloomberg Business Week
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