Speaker 1: This is Bloomberg Business Week. I'm Karl Masser. Every day
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Speaker 1: what do we been talking about in equity markets. We've
Speaker 1: been talking about this rotation trade, rotating into some of
Speaker 1: the more cyclical names, maybe even some smaller caps. Let's
Speaker 1: get a sense if that's really a thing. We can
Speaker 1: do that with Mike Reagan, senior editor and lead a
Speaker 1: blogger for Bloomberg Markets Live Blog. He joins us on
Speaker 1: the phone, which from what I'm just gonna say, Mike
Speaker 1: has not become the New Wall Street Power Alley, and
Speaker 1: that is New Jersey. You join us on the phone
Speaker 1: from New Jersey. Mike, thanks so much for joining us here.
Speaker 1: Talk to us about this rotation trade. How does it
Speaker 1: kind of characterize Yeah, here some respect for New Jersey. Yeah,
Speaker 1: you know fall and I have a piece of not
Speaker 1: Business week, uh this week with my colleagues, the data Hi,
Speaker 1: Rick and Claire balance in about this and we talked
Speaker 1: to a bunch of different fund managers to just kind of,
Speaker 1: you know, take their temperature about what they've witnessed over
Speaker 1: the past month. And it is that rotation. You know,
Speaker 1: a lot of us tends to look at the stock
Speaker 1: markets through the lenses of factors now, you know, whether
Speaker 1: it be growth and value or the size factors small caps.
Speaker 1: So this looks appears like it was a rotation from
Speaker 1: growth to value, where maybe from mega tap, big name Apple,
Speaker 1: Amazon type of stocks into small caps. I think what
Speaker 1: it obviously is on a sort of sort of more
Speaker 1: basic level, is a rotation away from the state at
Speaker 1: home beneficiaries to the companies that will benefit if we
Speaker 1: actually are ever allowed out of our houses again. Um.
Speaker 1: So I think it's an important distinction because that's back
Speaker 1: to rotation. Everybody has been sort of thinking that there
Speaker 1: would be this rotation from growth to the value factor
Speaker 1: at some point. People have been predicting it for years.
Speaker 1: There seems a bet a few times when it looked
Speaker 1: like it was happening, um, but then it kind of
Speaker 1: fizzled out. Um. So this is you know, the vaccine
Speaker 1: and the notion that life might get back to normal
Speaker 1: is really the catalyst for this rotation, and it very
Speaker 1: well could lead to that value out performance. Um, even
Speaker 1: though I'm not I'm not sure you could classify as
Speaker 1: sort of the value factor in and of itself coming
Speaker 1: back into fashion rather that those beaten down bank, energy
Speaker 1: and industrial stocks that were sort of left behind in
Speaker 1: this rebound. They they're all sort of heavyweights in that
Speaker 1: value factor. Um. So as people get more optimistic about
Speaker 1: the vaccine, there's a lot of speculation and and you know,
Speaker 1: who knows if it will pan out, but a lot
Speaker 1: of speculation that finally that time for value too and
Speaker 1: maybe small caps to outperform the big mega cap tech
Speaker 1: names of the stock market. Is that hand and and
Speaker 1: will last a while, won't just be a flash in
Speaker 1: the pan ball. That's kind of where I wanted to go, Mike,
Speaker 1: because you know, you think about it, just maybe just
Speaker 1: say from a financial crisis, oh nine ten. You know
Speaker 1: the story of the stock market has really been kind
Speaker 1: of the big cap to tech, the growth names that
Speaker 1: have really powered this market. I'm just wondering, typically, you know,
Speaker 1: looking at it historically on past cycles, how long does
Speaker 1: a you know, a cyclical rotation trade, how long does
Speaker 1: that typically play out? Is it something fairly quick you
Speaker 1: have to be nimble to get in and able to
Speaker 1: get out, or there's a play out over a longer
Speaker 1: period of time. Yeah, I think it depends on sort
Speaker 1: of what kind of investor and trader you are. There
Speaker 1: are certainly sort of many rotations that may only last
Speaker 1: a week or or a month, and a lot of
Speaker 1: times they're just corrected, say one one factor, one sector
Speaker 1: just got way ahead of its skis and the other
Speaker 1: one was left behind, and then there's kind of a
Speaker 1: quick meaning reversion. But there are these longer term rotations.
Speaker 1: And the one that I talked to Rob ar Not
Speaker 1: of Research Affiliates, who's very into fundamental indexes, one of
Speaker 1: the pioneers in that space. He putted out this super
Speaker 1: years long UH favoring and outperformance of value after the
Speaker 1: crash of the dot com bubble is basically from I
Speaker 1: think early two thousand to the middle or late two
Speaker 1: thousand and six, that value actually was outperforming growth pretty consistently. UM.
Speaker 1: So that is the kind of big I think see
Speaker 1: change that a lot of investors want to get in
Speaker 1: on the ground floor of UM. It's starting to look
Speaker 1: too many people like that could be the case this
Speaker 1: time again. There's so many sort of head bakes in
Speaker 1: this type of back and forth between you know what
Speaker 1: characteristics investors are really going to reward UM that it's
Speaker 1: kind of too early to say rob or not in
Speaker 1: our story says he thinks this is that it's the
Speaker 1: start of a multi year outperformance for value you because
Speaker 1: the discrepancy just got so large there, and you know,
Speaker 1: he makes that comparison of the dot com bubble. I mean,
Speaker 1: I think obviously there's a lot of differences to point
Speaker 1: out that the big mega cat tech companies in this
Speaker 1: error are in way better shape. They're not sort of
Speaker 1: type dream type of speculative stocks like we saw in
Speaker 1: the dot com eraor these are obviously legit cash rich businesses.
Speaker 1: But that doesn't mean that they can kind of, you know,
Speaker 1: don't won't necessarily take a backseat to the value to
Speaker 1: the beaten down plays for a little bit. It might
Speaker 1: not necessarily mean, you know, Paul, that these big megacap
Speaker 1: socks are in for for the clins or bad performance,
Speaker 1: but the thinking is that maybe they won't be the
Speaker 1: stars of the show for a little bit. Interesting, interesting trade.
Speaker 1: Mike Creagan, thanks so much for joining us. Mike's got
Speaker 1: at this story out in the Bloomer Business Week magazine.
Speaker 1: The bullmarket rotates away from tech drip and mega companies.
Speaker 1: You can catch that in this week's edition of Bloomberg
Speaker 1: Business Week. Can senior editor and lead a blogger for
Speaker 1: Bloomberg Markets Live. He joined us the phone from New
Speaker 1: Jersey and again, Mike's got that really cool story about
Speaker 1: that rotation trade. Uh. And some folks think that this
Speaker 1: can really have legs and it's a way to play.
Speaker 1: It's a way to get the you know, some value
Speaker 1: for your investment dollar. So we're starting to see that
Speaker 1: in the in disease as we look at it really
Speaker 1: starting in November. Looking at the shares of Boeing there
Speaker 1: up seven percent today on the back of that news
Speaker 1: that Ryanair, which is an Irish airline, gonna buy some
Speaker 1: of those seven three seven Max jets which have been
Speaker 1: on the ground for many months now. Julie Johnson, Aerospace
Speaker 1: reporter for Bloomberg News, joins us on the phone from Chicago. Julie,
Speaker 1: this seems like a big deal, an affirmation if you will,
Speaker 1: of Boeing and its seven thirty seven Max. Oh. Yeah,
Speaker 1: it's huge for Boeing. Um. They so the max is
Speaker 1: U is officially ungrounded in the US. That happened last
Speaker 1: months and Boeing has been working to you know, to
Speaker 1: cranek up through the commercial machine. UM. That is this
Speaker 1: the jetliner program. I mean, it's absolutely critical to the
Speaker 1: company's finances. UM sales really sort of dropped away, um
Speaker 1: after you know, to fatal crashes last year in this
Speaker 1: global grounding, and then COVID came in this year and
Speaker 1: just devastated the market. And so this is the largest
Speaker 1: deal for Boeing or Airbus UM since you know, since
Speaker 1: the world changed. So, Julie, it's interesting. We had the
Speaker 1: CEOs of both Boeing and Ryanair on Bloomberg Television this morning.
Speaker 1: They're interviewed Bykey Johnson and Alex Steele, and boy, the
Speaker 1: CEO of Ryanair really went out of his way, I thought,
Speaker 1: to really praise the seven seven Max and say how
Speaker 1: confident they are in the jet and how it's such
Speaker 1: a great move forward. Is Bobing gonna need more of
Speaker 1: this type of support from the aviation industry if they
Speaker 1: really want to get this thing going again. Yeah, well,
Speaker 1: I'm absolutely m of course Leary has has vested interest
Speaker 1: in Max I mean Ryan Airs in all seven thirty
Speaker 1: seven operator and so um, so you know he needs it.
Speaker 1: He needs to inspire confidence in their airplane as well. Obviously,
Speaker 1: I'm and you know we've seen some other big customers
Speaker 1: come out and and support Boeing in the plane over
Speaker 1: the last month or so. I think what's really going
Speaker 1: to be critical for this this jet to make it
Speaker 1: back into the marketplace is for when when flights resume,
Speaker 1: and it's going to happen as soon as next week
Speaker 1: in Brazil. Um Boeing needs um desperately to have a
Speaker 1: quiet few months like no, you know, no, um, no
Speaker 1: big splashy um. I don't want to say accidents, but
Speaker 1: you know, mistress, yes, what's these? You know that goes
Speaker 1: to a good point. Do you expect the airlines Boeing
Speaker 1: both uh to kind of mount some type of public
Speaker 1: relations campaign to try to reassure the flying public that
Speaker 1: this is in fact a safe aircraft. Are they just
Speaker 1: kind of again try to let it kind of spread
Speaker 1: word of mouth. Maybe. I think every airline is going
Speaker 1: to do this differently. And at one point last year,
Speaker 1: when you know, the Max was just absolutely dominating social
Speaker 1: media and the headlines, Boeing had this huge um circus planned. Um.
Speaker 1: They rented a jet and and you know, repainted it
Speaker 1: in Boeing cup Uh, you know, their livery and they
Speaker 1: were going to fly that around the world and take
Speaker 1: you know, journalists up and um. And so a couple
Speaker 1: of things happened. I mean the company really was sort
Speaker 1: of told by the f a A and the airlines
Speaker 1: to you know, to stand down and and uh and
Speaker 1: let other people take the lead around bringing the plane
Speaker 1: back and um. And then you know, since COVID and
Speaker 1: the US election, Uh, it's it's just not the headline
Speaker 1: generator it was. And why remind people, you know, of
Speaker 1: the tragedies. Alright, So just thirty seconds. Really, what's the
Speaker 1: timing here of how how Boeing believes it will get
Speaker 1: this aircraft back into the fleet. Um. Well, I mean
Speaker 1: the it's all happening in the next week the first delivery.
Speaker 1: I mean, the plane is cleared to fly in the
Speaker 1: US American is going to fly it at the end
Speaker 1: of the month, but we'll see it in Brazil next week. Interesting.
Speaker 1: All right, that's a certainly good news for Boeing. Now
Speaker 1: the question is is there going to be UH demand
Speaker 1: from the flying public are given the pandemic. Julie Johnson,
Speaker 1: aerospace reporter for Bloomberg News, joining us on the phone
Speaker 1: from Chicago, And it's really kind of a big issue
Speaker 1: for the airlines is as we kind of deal with
Speaker 1: these terrible pandemic numbers and actually the trend going the
Speaker 1: wrong way, it's very difficult to convince obviously consumers to
Speaker 1: get back on airplanes and travel and many parts of
Speaker 1: the world that's being really curtailed. So that's more headwinds,
Speaker 1: if you will, for the airlines and for the manufacturers
Speaker 1: like Boeing. When you talk to technology investors, technology analysts,
Speaker 1: probably the one big fear in the back of all
Speaker 1: their minds is regulation. UH. This industry is getting so big,
Speaker 1: so powerful, it has to attract regulatory risk. It's certainly
Speaker 1: already has UH in Europe and some other markets, but
Speaker 1: not in the U S. And there's concerned that that
Speaker 1: may be changing. Our next guest has a great story
Speaker 1: on this. Shelley Banjo, New York bureau chief Bloomberg News,
Speaker 1: joins us on the phone from Brooklyn, and Shelley, you've
Speaker 1: got a Bloomberg Business Week story here entitled going after
Speaker 1: Big Tech is one thing global leaders agree on. What
Speaker 1: did you find in your reporting? Yes, so, I don't
Speaker 1: know about you, but I was a little overwhelmed with
Speaker 1: all of the just news about anti trust and around
Speaker 1: the world. And one thing that kind of kept weighing
Speaker 1: on my mind was, you know, this thing is this
Speaker 1: thing is a global trend. You know, like China, the
Speaker 1: US don't agree on anything that EU. You know, there's
Speaker 1: there's there's very little that the rest of the world
Speaker 1: agrees on. And one thing that they do seem to
Speaker 1: agree on is that tech companies are just too big,
Speaker 1: too powerful, and too profitable, and that it's time to
Speaker 1: do something about it. So, Shelly, again, I'm old enough
Speaker 1: to remember back in some the early days of regulatory
Speaker 1: risk as relates to technology, specifically Microsoft, and this is
Speaker 1: years ago, and and the European Union really came down
Speaker 1: on them pretty hard in terms of their operating system
Speaker 1: and their software. Um. But again, the US regulatory environment apparatus,
Speaker 1: including you know, government and Congress did not generally they
Speaker 1: took it again a very light touch. And so is
Speaker 1: their concern here within in Silicon value that in the
Speaker 1: United States the regulatory risk may be becoming a significant risk. Yeah.
Speaker 1: I mean, you can make the argument that because of
Speaker 1: everything that went after Microsoft, you did kind of paved
Speaker 1: way for some of these big companies like Google and
Speaker 1: Facebook and Twitter that you know didn't exist um twenty
Speaker 1: years ago to kind of um come come out um
Speaker 1: and into their own And now the argument is, well,
Speaker 1: can they are can new companies actually take on these big,
Speaker 1: mega tech companies UM or had to become so concentrated
Speaker 1: that if you're not one of the top four UM
Speaker 1: you know companies that that you really can't. So so
Speaker 1: I think, you know, it's it's also no surprise that
Speaker 1: a lot of this is ramping up during the pandemic.
Speaker 1: You know, it really really did shine a spotlight on
Speaker 1: how important these tech companies are, how much we rely
Speaker 1: on these tech companies UM and you see, you know,
Speaker 1: if you kind of juxtapose that with the um uh
Speaker 1: fifths of U S small businesses closing down during the pandemic,
Speaker 1: and I think it really Saysted lawmakers, you know, are
Speaker 1: you going to do something about this? What can lawmakers
Speaker 1: really do? What a folks that are really proposing I
Speaker 1: guess a heavier regulatory touch on technology and on Silicon Valley.
Speaker 1: What are they proposed that seems reasonable? Yeah, you know,
Speaker 1: I think that a lot of people look at what's
Speaker 1: happened in Europe and said, you know, these folks have
Speaker 1: been a lot of makers in Europe have been focusing
Speaker 1: on the tech companies for years, and they don't seem
Speaker 1: to be making a dent. Besides, um, you know, leving
Speaker 1: signs on these companies that have so much money that
Speaker 1: it doesn't really bother them, and so UM, you know,
Speaker 1: I think it is fair to be skeptical of how
Speaker 1: much government can really rain these companies in UM. I
Speaker 1: think the things to watch are a, UM, you know,
Speaker 1: it's it's likely that Joe by UH President elect Joe
Speaker 1: Biden is going to continue this Justice Departments to against Google.
Speaker 1: I don't think that's going to go away, and it's
Speaker 1: going to really drag on for some time. UM. And
Speaker 1: B is this really large landmark report UM that Representative
Speaker 1: David Cecilian Um came out with UM that he's now
Speaker 1: preparing legislation on UM to kind of give UM the
Speaker 1: US antitrust authorities new powers, UM, you know, give them
Speaker 1: a little bit more UM heft in what they can
Speaker 1: do to go after to go after some of these companies.
Speaker 1: And Shelly, I guess you know, some folks that have
Speaker 1: even proposed I guess this might be going out on
Speaker 1: the spectrum a little bit, but actually breaking up some
Speaker 1: of these large tech companies, is that realistically on the table?
Speaker 1: Do you believe? I think everything is on the table
Speaker 1: at this point, but I do definitely think that it's
Speaker 1: a spectrum, and that's probably at the far end as
Speaker 1: the spectrum. UM. I think what would be more likely
Speaker 1: to happen is that you kind of start to pass
Speaker 1: legislation that makes it harder to keep these companies together,
Speaker 1: and so then the companies then decide, you know, maybe
Speaker 1: we should just spend something off, or maybe we should
Speaker 1: sell it. Maybe it's not worth it to be in
Speaker 1: this business anymore. So, Shelly, I guess, you know, listening
Speaker 1: to the folks on the other side of the debate here,
Speaker 1: the folks in Silicon Valley, they say the reason that
Speaker 1: Silicon val only is what it is. And the reason
Speaker 1: that the US is the technology leader in the world
Speaker 1: is because of a relatively light regulatory touch. Is that
Speaker 1: still finding an audience on Capitol Hill? Yeah? I think, um,
Speaker 1: you know that's certainly the case, um, that they are
Speaker 1: going to listen to these tech companies, UM. And they
Speaker 1: don't want innovation to go away. They want the US
Speaker 1: to be, you know, the leader in technology, especially when
Speaker 1: you have a country like China coming up and really
Speaker 1: um challenging that. UM. So I think that will you
Speaker 1: know that that will still matter. But there's a reason
Speaker 1: why all these companies are peppering in all these um,
Speaker 1: you know programs for small businesses. Every single earning is
Speaker 1: called now the CEO has talked about, oh, this is
Speaker 1: what we're doing for small business, this is what we're
Speaker 1: doing for small business because um, you know, they want
Speaker 1: to show or at least attempt to show that, you know,
Speaker 1: we're not going to eat up all these other small businesses.
Speaker 1: I mean you think about um, you know, Walmart way
Speaker 1: back then and how they work using all these um
Speaker 1: you know the pause we're upset about retailers closing down
Speaker 1: because of Walmart, and you know the same thing is
Speaker 1: kind of happening now is technology kind of um you know,
Speaker 1: expanse tentacles into everything from banking to endursing to you know,
Speaker 1: you name it. So, Shelley, about the thirty seconds here,
Speaker 1: What are the next steps that we should be looking for, um,
Speaker 1: either from the companies themselves or from Washington in terms
Speaker 1: of maybe some legislation or just some rulemakings. Yeah, I
Speaker 1: think all eyes now turned to the Justice Department and
Speaker 1: the Attorney's General around the around the country. Who are
Speaker 1: reaching these um, these losses. First its Google, you know, UM,
Speaker 1: there is there is talk about other companies like Facebook
Speaker 1: and others. You're seeing um, companies like Apples start to
Speaker 1: take action around their app store. UM. You know, I
Speaker 1: think you'll see action from these companies to try to
Speaker 1: get ahead of the problem. But then you're you're also
Speaker 1: going to see It's a Joe Biden presidency and that
Speaker 1: UM will be interesting to watch. You know who he
Speaker 1: puts in charge for those kinds of antitrust issues and um,
Speaker 1: you know how much support he gives up the Justice
Speaker 1: Department to go after these companies. I'll be fascinating to follow,
Speaker 1: certainly for investors and for consumers. Given you know how
Speaker 1: proliferate all these technologies are in our life. Shelley Banjo,
Speaker 1: New York Bureau Chief, thanks so much for joining US
Speaker 1: bure chief for Bloomberg News, joining us on the phone
Speaker 1: from Brooklyn, and again, technology investors. They've really since, you know,
Speaker 1: really from the get go. You know, over many cycles
Speaker 1: have really benefited from um, you know, the lack of
Speaker 1: US regulatory oversight terms of the big big Way. So
Speaker 1: you can read Chelly story. It's featured in the new
Speaker 1: issue of Bloomberg Business Week magazine, available on newstands and
Speaker 1: a Bloomberg dot Com. This is Bloomberg Business Week with
Speaker 1: Cairol Masser on Bloomberg Radio. You are listening to Bloomberg
Speaker 1: Business Week on Paul Sweeney sitting in for Carol Master.
Speaker 1: I guess we're to step back and think about where
Speaker 1: we are with this pandemic. On the one hand, we
Speaker 1: have just brutal, brutal metrics in terms of new cases
Speaker 1: and new hospitalizations, certainly going the wrong way. But on
Speaker 1: the other hand, we have a lot of good news
Speaker 1: on the vaccine front, with at least three vaccines now
Speaker 1: very close to coming to the market. So let's get
Speaker 1: a kind of lay of the land. We can do
Speaker 1: that with ru Pauli LeMay, Associate director for Behavioral Research
Speaker 1: for the Institute for Vaccine Safety, too. JOHNS Hopkins Bloomberg
Speaker 1: School of Public Health joining us on the phone from
Speaker 1: False Church, Virginia. And I must note that JOHNS Hopkins
Speaker 1: Bloomberg School of Public Health is supported by Michael R. Bloomberg,
Speaker 1: founder of Bloomberg LPE Bloomberg Philanthropies and this radio operation.
Speaker 1: Ru Poli, thanks so much for joining us here. Um
Speaker 1: give us a sense of kind of where you think
Speaker 1: we are really with these vaccines and how the the
Speaker 1: distribution of these vaccines I guess on a global scale
Speaker 1: really in the coming six months might look like. Thanks
Speaker 1: so much for having me. I think we have gotten
Speaker 1: some really great news in the last couple of weeks
Speaker 1: after I think months and months of maybe not so
Speaker 1: great news, and so we're really a cited that there
Speaker 1: will be at least several candidates on the market very soon.
Speaker 1: With regards to here in the United States, we will
Speaker 1: likely have access to the m RNA vaccines. UM. Globally,
Speaker 1: I think that will be a little bit of a
Speaker 1: different story, and that's because Cold Chaine requirements are quite um,
Speaker 1: are quite rigorous and will be much harder to transport
Speaker 1: vaccines in some lower and middle income countries. So it's
Speaker 1: interesting here. So in the US, um presumably over the
Speaker 1: next uh really beginning this this month for some areas,
Speaker 1: and then obviously in the first half of next year
Speaker 1: kind of rolling it out. UM. One of the concerns,
Speaker 1: and I'm not sure this is a global issue or
Speaker 1: more specific to the US, is a lot of folks
Speaker 1: in the US, you know, do not take vaccines. There
Speaker 1: are not supportive of vaccines, believe that not only are
Speaker 1: they not helpful, but they might cause other problems. How
Speaker 1: are we going to deal with that in this country,
Speaker 1: do you believe? It's a great question, and it's something
Speaker 1: that many of us have been working on. We have
Speaker 1: been very hopeful, um, you know, since the pandemic really
Speaker 1: started here in the United States in March, that we
Speaker 1: would have a vaccine product that was available. The key
Speaker 1: now is to ensure that people will will take the
Speaker 1: product with the idea that vaccines don't save lives, but
Speaker 1: vaccinations safe lives. So we have been really preparing and
Speaker 1: trying to identify barriers that people might have that would
Speaker 1: lead them to perhaps not have confidence in the vaccine.
Speaker 1: Some of the things that we have heard is people
Speaker 1: are very worried and they feel as so that the
Speaker 1: vaccines have gone through a very quick process UM and
Speaker 1: have some concerns about the safety data. So we've been
Speaker 1: trying to be very transparent and clear that although it
Speaker 1: was an expedited process, it still went through a safety
Speaker 1: a rigorous safety and efficacy overview UM and there were
Speaker 1: independent boards really reviewing the data. So I think the
Speaker 1: key will be, now, how can we communicate very clearly
Speaker 1: the benefits of the vaccines went went through the vaccine
Speaker 1: development process, to really communicate to the public that they
Speaker 1: are safe and that they will be able to protect
Speaker 1: you and your loved ones from COVID Based upon what
Speaker 1: we know now of the pending vaccines, what is the
Speaker 1: expectation within the health community about UM, the ethics And
Speaker 1: I guess how long this vaccine will ask is it's
Speaker 1: something that will be akin to a flu vaccine that
Speaker 1: will need to get on an annual basis, or it
Speaker 1: will work somewhat differently, or don't don't we know? We
Speaker 1: don't really know. I think we will learn a lot
Speaker 1: in the next few months. As these start to roll out,
Speaker 1: hopefully here in December, healthcare workers actually in the next
Speaker 1: couple of weeks will start receiving UM the dosage of
Speaker 1: these vaccines. But I think it is a question that
Speaker 1: we don't quite know, but we will definitely be able
Speaker 1: to figure out here quite rapidly as rollout starts. Essentially.
Speaker 1: One of the things I've learned just recently is as
Speaker 1: it goes to that issue of well, you guys came
Speaker 1: up with this vaccine very quickly, uh, you know, in
Speaker 1: a matter of one year or less versus a seven
Speaker 1: or eight or nine years, and that really makes me skittish.
Speaker 1: But in reality, this vaccine was built upon years and
Speaker 1: years a prior research from mers and stars and those
Speaker 1: types of things. Do you think that should be part
Speaker 1: of the promotional campaign if you will, I think that's
Speaker 1: absolutely right. You know, we have been very lucky to
Speaker 1: sort of stand on the shoulders of giants, if you will. Right,
Speaker 1: this technology has been used in other instances, we haven't
Speaker 1: been able to use it this rapidly. UM the pandemic
Speaker 1: sort of presented an option for a number of pharmaceutical
Speaker 1: companies to use this method and approach, And I think
Speaker 1: that is important to communicate. You know, this might be
Speaker 1: a newer technology, this might be a process of that
Speaker 1: people might say is expedited, but again it's built on,
Speaker 1: you know, an infrastructure I would say that has been
Speaker 1: developed over years and years. So that's you know, part
Speaker 1: of the story clearly, all right, So the vaccines, that's
Speaker 1: trending in the right direction. We look at the other
Speaker 1: side of the equation, the number of cases new infections.
Speaker 1: You're at the Johns Hopkins University, one of the finest
Speaker 1: and biggest health care facilities in the world. How do
Speaker 1: you think the U s Hospital system is prepared for
Speaker 1: this wave versus maybe some of the earlier waves. I
Speaker 1: think it's a great question, and I think that you know,
Speaker 1: we're seeing We're going to have to see what happens.
Speaker 1: You know, after Thanksgiving there's a bit of a lag,
Speaker 1: as you know, with regards to being able to detect
Speaker 1: new cases as well as more severe cases that might
Speaker 1: require a hospital stay. Um. I think I have heard
Speaker 1: from many colleagues of mine, particularly that live in the Midwest,
Speaker 1: that they are really at capacity. That you know, healthcare
Speaker 1: workers are one at their limit, but there but their hospitals,
Speaker 1: their facilities that they work at are really at capacity,
Speaker 1: and so I think the goal here is is that
Speaker 1: if we can continue to try to persuade people to
Speaker 1: to try to stay home, and we know that other
Speaker 1: holidays are coming up and people are really interested and
Speaker 1: excited to see their families. But I think that if
Speaker 1: we can we've been doing a great job for you know,
Speaker 1: nine ish months now, if we can just do it
Speaker 1: for a little while longer while we can get the
Speaker 1: vaccine now, will really be able to make an impact
Speaker 1: with regards to just being able to save a lot
Speaker 1: of lives. So I think that's really an important point.
Speaker 1: So we're probably you're right down there literally on the
Speaker 1: on the front lines here. How are your you and
Speaker 1: your colleagues, uh in the er, in the hospital, in
Speaker 1: the medical facility, how are they doing right now? I
Speaker 1: have to say I have the utmost respect and really
Speaker 1: bow down to several colleagues of mine that are working
Speaker 1: the front lines, are healthcare workers or emergency UM firefighters,
Speaker 1: everyone from that is doing the I just really am
Speaker 1: amazed that they're resilience. I think they are hopeful that
Speaker 1: this vaccine will roll out successfully and that people will
Speaker 1: take it. Um but I I have really been in
Speaker 1: awe and I think sort of the grit and determination
Speaker 1: of colleagues. Yeah, it's just been a fantastic and the
Speaker 1: for their benefit. If nobody else's I would like to
Speaker 1: see the numbers go the other way, they must just
Speaker 1: be absolutely fatigued, beyond fatigued. Were probably LeMay, thank you
Speaker 1: so much for joining us for Poli's associate director for
Speaker 1: behavior Research for the Institute for Vaccine Safety. Absolutely nobody
Speaker 1: better to talk to about this vaccine. Uh. So it's
Speaker 1: great to have her on. She's at the Johns Hopkins
Speaker 1: Bloomberg School of Public Health. Joinings on the phone from
Speaker 1: False Church, Virginia and again, uh, Bloomberg School of Public
Speaker 1: Health at Johns Hopkins is supported by Michael or Bloomberg,
Speaker 1: founder Bloomberg LP and Bloomberg Philanthropies and this radio operation.
Speaker 1: So again, pandemic numbers wrong way and hopefully we can
Speaker 1: get those under control soon. But on the flip side,
Speaker 1: it's a very very promising news on the vaccine front,
Speaker 1: So keep those fingers crossed for that as it gets deployed.
Speaker 1: Bro a journal Yeah, but you let me drive Oh no, no, no, no,
Speaker 1: he's honey. Please I'll do the right let I want
Speaker 1: to drive ball, just drive baby, good question trying. This
Speaker 1: is the drive to the globe commune. Thanks, we'll drive
Speaker 1: up Don on Bluebird Radio. Bryan Kelly joins us right now,
Speaker 1: and it's a perfect timing to chat with Ryan Kelly.
Speaker 1: He's a portfolio manager Hennessy Funds. Really manages the Hennessy
Speaker 1: Cornerstone MidCap thirty fund. We've been talking about rotation from
Speaker 1: some of the real big cap growth names since some
Speaker 1: small MidCap names into some names that maybe have lagged
Speaker 1: from evaluation perspective. So Ryan, it's great to talk to you.
Speaker 1: Give us your thoughts here on what we are seeing
Speaker 1: in terms of what neguess folks are just kind of
Speaker 1: calling this rotation trade here. What do you what do
Speaker 1: you make of it? Sure? Well, thanks for having me
Speaker 1: on Paul Um. Yes, the uh you know, throughout this year,
Speaker 1: up until really the beginning of November, um, the stock
Speaker 1: market was driven by just a few sectors and even
Speaker 1: fewer individual stocks. I mean, if you think of I
Speaker 1: could call them Mount Fang, think of Microsoft, Microsoft, testcas, Facebook, Apple, Amazon, Netflix,
Speaker 1: and and uh and videos of both of them. And
Speaker 1: for Google. Uh, it's really a mountain in those stocks.
Speaker 1: If you look at the stock charts, they just go
Speaker 1: straight up. Um and uh that's really what I think.
Speaker 1: Not a whole lot of people in their own portfolios,
Speaker 1: mine included, have experienced that same kind of that same
Speaker 1: kind of up, so um, it's really not reflective I
Speaker 1: think of what people in general have seen in their
Speaker 1: own portfolios. So um. I think what we had at
Speaker 1: the beginning November is you know, a capitulation where values
Speaker 1: there to outdo growth. Uh. Small definitely outperformed mid and
Speaker 1: outperformed large both of them. Uh. And then sector that
Speaker 1: got destroyed, like energy and financials they lead the way
Speaker 1: in in November. So uh, you know, we think that
Speaker 1: that type of theme can continue going forward as well.
Speaker 1: I mean there's a certainly a lot of tension right
Speaker 1: now between where we are in the market, how far
Speaker 1: along the vaccine is, uh you know where h and
Speaker 1: when we will get another stimulus package, and there's a
Speaker 1: lot of unknowns and it creates a lot of tension
Speaker 1: between those different forces. But I think, um that if
Speaker 1: November is any sign of what we could see next year,
Speaker 1: I think that those those trends will will continue to
Speaker 1: swap and we'll see value outperforming and small and mid
Speaker 1: outperforming as well. It's kind of where I wanted to go.
Speaker 1: I mean, you know, one of the questions I'm getting
Speaker 1: now is, and what we're trying to kind of get
Speaker 1: a handle on it, what kind of legs does this
Speaker 1: type of market have one in which you know, you
Speaker 1: do have this rotation from what has really been a
Speaker 1: ten plus year run of big tech stocks, not that
Speaker 1: they're underperforming, but just a little bit rotation on the
Speaker 1: margin into some of these cyclical names. How long do
Speaker 1: you think this trade, if you will, works Well, that's
Speaker 1: a good question. I mean, I think, you know, one
Speaker 1: of the it's not as much a rotation. You're right,
Speaker 1: it's more like an elastic band being pulled one direction
Speaker 1: and then the back end coming towards it. So you
Speaker 1: have a lot of underperforming sectors, a lot of underperforming
Speaker 1: stocks that are now catching up to where the market is. Uh.
Speaker 1: You know, one particular example is utilities haven't really come
Speaker 1: back yet. Financials were lagging quite extensively, and then they
Speaker 1: just skyrocketed and event uh and that was due to
Speaker 1: you know, their their their valu valuations looks so compelling
Speaker 1: and uh, we started to realize that, you know, fundamentally
Speaker 1: the bankings is in very good shape right now. So
Speaker 1: I think that there's still certainly more to go. I
Speaker 1: think of a lot of it has to do with
Speaker 1: uh time, And if it takes a lot longer for
Speaker 1: a vaccine to become effective, that means that you know,
Speaker 1: your your market returns are going to be more muted.
Speaker 1: So I think that's a that's a big point here. Yeah,
Speaker 1: But in the same time, you know, no good oh
Speaker 1: in the In the meantime though, I mean, we are
Speaker 1: in an environment where interest rates are completely very low.
Speaker 1: That's very good for asset prices, it's very good for
Speaker 1: um potential pe expansion, which we're seeing here in the market.
Speaker 1: Uh and until that changes, which I don't see anytime soon.
Speaker 1: The fet is telling us they're not going to do
Speaker 1: it anytime soon. I think that there's still certainly more
Speaker 1: to go here. So all right, if we do have
Speaker 1: where to go here, what are some of the names
Speaker 1: that you like here? Again banking on what appears to
Speaker 1: be a better economic outlook in sure, um, well, you know,
Speaker 1: in the Hennessy Cornerstone MidCap thirty fund, we we owned
Speaker 1: thirty names only, so it's a high concentration, high conviction funds.
Speaker 1: So uh, there's not a ton of names to pick from.
Speaker 1: But amongst those, you know, we have a lot of
Speaker 1: I think that you get some of the stocks that
Speaker 1: have done well this year that are cont going to
Speaker 1: continue to do well next year. In the home building space,
Speaker 1: we have kaby homes and maritage homes. A lot of
Speaker 1: people are investing in their homes, They're spending a lot
Speaker 1: more time at home there. There's home improvement going on,
Speaker 1: so household Goods, bed Bath and beyond, Williams Sonoma Sleep Number.
Speaker 1: Those are all companies that we own uh and think
Speaker 1: that they'll do well in the next year as well. UM.
Speaker 1: And interestingly, when it comes to that to the home building,
Speaker 1: to the home ownership space and home improvement, there is
Speaker 1: it's a really nice sizeable deal where HD s HP
Speaker 1: Supply got purchased by HD. That was the stock that
Speaker 1: we owned as well, UM, and it just shows how
Speaker 1: much value they're still is in in that sector. You know,
Speaker 1: I've really been pleasantly surprised as we think over this
Speaker 1: last you know, call it ten months or so, given
Speaker 1: the the economic disruption we've all experienced how well the
Speaker 1: housing business has been in the U S. Post new starts,
Speaker 1: existing homes just been really really robust. Is it just
Speaker 1: simply that we're at historically low rates. I think that's
Speaker 1: that's a major part of it. I mean, there's obviously
Speaker 1: some geographic movement going on. UM. I think that people
Speaker 1: are wanting to upgrade or even get out of certain
Speaker 1: areas in some instances. Uh, you know, we've we've seen
Speaker 1: certainly evidence of that. But you know, it's it's really
Speaker 1: just it's pretty simply it comes down to rates, and
Speaker 1: with mortgage rates as low as they are, increases affordability
Speaker 1: quite nicely for homeowners. UM. And I think people are
Speaker 1: taking advantage of that, especially since they're spending so much
Speaker 1: more time at home. Anything in retail, that's a space
Speaker 1: that boy, it's been really tough there if they're being
Speaker 1: saved if you know, by the e commerce, but that
Speaker 1: could be an interesting spot sure. Yeah. And this is
Speaker 1: really where the value side of our investment comes in. UM.
Speaker 1: You know, we're we have a strict valuation UM discipline
Speaker 1: where we really want something trading below one and a
Speaker 1: half times priced to sales and it's fun. So we
Speaker 1: come up with certain companies that see them a little
Speaker 1: bit counterintuitive, but um, you know b J's and Big
Speaker 1: lots for instance, retail stores. But with yep that um,
Speaker 1: those we'll keep an eye on those interesting. Hey, Ryan Kelly,
Speaker 1: thanks so much for joining us here. Ryan Kelly, Portfolio
Speaker 1: Maagine Hennessee Funds joining us on the phone from Raleigh,
Speaker 1: North Carolina. Thanks so much for listening to Bloomberth Business Week.
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