Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanibek. We're here every day bringing
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Speaker 1: plus technology, politics, economics, all partnising the power of Business
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Speaker 1: You can also listen to our radio show at two
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Speaker 1: YouTube search Bloomberg Global News present Bond making some comments
Speaker 1: today about climate change and his policy plans and the
Speaker 1: absence of congressional action and in keeping with that Tim
Speaker 1: Bloomberg opinion columnist Edward Reporter making the point that if
Speaker 1: climate is a crisis, shouldn't we keep gas prices high?
Speaker 1: Edward Report. Edwardo Porter joins us now he's a Bloomberg
Speaker 1: opinion columnist with economic policy and immigration issues, joining us
Speaker 1: in the Bloomberg Interactive at Broker Studio. EDWARDO. It's good
Speaker 1: to have you with us. This is a provocative column
Speaker 1: because you're essentially saying that old move that President Biden
Speaker 1: could make is to find a way to put a
Speaker 1: five dollar a gallon floor on gasoline prices, literally the
Speaker 1: opposite of what he's trying to do in his world
Speaker 1: travels to get you know, quote unquote allies to give
Speaker 1: us more oil. Yeah. I mean the specific number is
Speaker 1: not the issue, five for fifty whatever. But what's important
Speaker 1: to note is that high energy prices, which include high
Speaker 1: gas prices, are going to be an essential component of
Speaker 1: any solution to climate change. I mean, if we want
Speaker 1: to reduce carbon emissions, we have to make carbon fuels
Speaker 1: more expensive, and this is an opportunity. Okay, what if
Speaker 1: you said, just to push back on that a little bit,
Speaker 1: what if you said, Okay, it's all well and good,
Speaker 1: but if President Biden were to do something like that,
Speaker 1: this is such a politically toxic issue that he would
Speaker 1: get just destroyed and at the polls, because this is
Speaker 1: the number one issue that Americans care about. Indeed, I
Speaker 1: feel for the guy. This is a real tough one.
Speaker 1: But any solution to climate change is going to be
Speaker 1: politically very very complicated. I mean we've been we've been
Speaker 1: debating this issue at least since the Obama administration. And
Speaker 1: remember what happened to his cap and trade program. It
Speaker 1: just died in flames, didn't even get to the Senate,
Speaker 1: um and and and and we've been trying and failing
Speaker 1: ever since. So the question, yes, there is a very
Speaker 1: big political cost to pay. Um, but at some point
Speaker 1: this argument needs to be made and needs to be
Speaker 1: turned into policy because there is no other real solution,
Speaker 1: right or I would go, you know, none of this matters,
Speaker 1: right if the climate continues to get warmer. I mean,
Speaker 1: just look at what's going on around the globe, right Like,
Speaker 1: we debate about higher rates and margins and other stuff
Speaker 1: that's you know, uh, stressing us all out. But if
Speaker 1: the climate continues to warm, and we will have nothing
Speaker 1: to worry about because we will not be able to exist.
Speaker 1: I don't mean to get so dark, but right like,
Speaker 1: this is the crux of the major problem that faces
Speaker 1: the world right now. All right, but I mean, just
Speaker 1: look at what's going on in your across Europe just now.
Speaker 1: And you've had versions of that in Australia, the United States,
Speaker 1: and certainly in places like Indian Bangladesh. I mean, the
Speaker 1: the really the intensity of the climate emergency is amazing
Speaker 1: in terms of lives lost, crops lost, agricultural yields down,
Speaker 1: longevity shortened. I mean, the cost of this are are
Speaker 1: extremely expensive, which is in fact what justifies imposing an
Speaker 1: economic cost to to mitigate you. You cover Latin America,
Speaker 1: you cover you as economic policy, immigration. But I think
Speaker 1: about what Brazil did back in the seventies, Right, they
Speaker 1: were brought to their knees because of the energy crisis,
Speaker 1: and they basically made themselves energy independent, right, going into ethanol,
Speaker 1: sugar based ethanol. Right, they had to address it because
Speaker 1: they had to to economically survive. You know, the US
Speaker 1: has the Europe has higher taxes. When it comes to guesses,
Speaker 1: what is it that the how come the Europeans did that?
Speaker 1: What is it that? The why aren't the US doing
Speaker 1: is because we've had so much fuel and and you know,
Speaker 1: fossil fuel based fuels that we don't have to you like,
Speaker 1: what is it? Yeah, that's a big question. I mean
Speaker 1: you could answer it in a variety of ways. I
Speaker 1: think for one, Europe is much more welcoming of higher
Speaker 1: taxes in the US is in any dimension, right, whether
Speaker 1: it's taxes on energy, gasoline, or income taxes or whatnot.
Speaker 1: They pay a higher tax burden, and they accept it
Speaker 1: because they get a society that they like with that money.
Speaker 1: And the United States has always been much more hostile
Speaker 1: to that. Also, the US has gotten used to very
Speaker 1: very cheap energy for a long time. I mean it's
Speaker 1: not just now that gas in Europe is more expensive.
Speaker 1: It's oh, I mean since I've been around, since I
Speaker 1: have memory, gas prices in Europe have been way higher
Speaker 1: than they are here. Yeah, look no further than Norway,
Speaker 1: where we've seen gas prices about ten dollars a gallon,
Speaker 1: despite the fact that the country produces so much energy. Edward,
Speaker 1: before we let you go, you ransom numbers here, talk
Speaker 1: about how this would spur innovation for alternatives. I mean, well, basically,
Speaker 1: what you what happens is the moment that consuming fossil
Speaker 1: fuels becomes more expensive, you'll have businesses and households looking
Speaker 1: for alternative. It's one alternative is to use less energy,
Speaker 1: but another alternative is defined technologies that use different sorts
Speaker 1: of energies. And we've seen that. I mean, we see
Speaker 1: the amount of investment in renewable energies and a new
Speaker 1: technologies for say energy storage and whatnot has gone is
Speaker 1: way higher. Uh precisely. I mean it's it's also stimulated
Speaker 1: by by government subsidies and so forth. But the prospect
Speaker 1: of much higher fossil fuel cost is driving this. I
Speaker 1: mean you even have gas companies, energy companies that are
Speaker 1: going in to invest in nuclear fusure. Right, they know,
Speaker 1: they know, well, it's interesting and if you wonder, if
Speaker 1: you think that it's like, you know, bottomless pits in
Speaker 1: terms of fossil fuels. Javier blast has a great story
Speaker 1: and the Bloomberg talking about Saudi Arabia. They're the world's
Speaker 1: biggest creed producer and they are nearing their ceiling when
Speaker 1: it comes to output, right, So it's going to run out.
Speaker 1: We know that, no doubt about it. Um, we gotta
Speaker 1: run come back. We loved it so great to check
Speaker 1: in with Bloomberg Opinion columist Edward or Porta. This is
Speaker 1: Bloomberg Business Week with Carol Masser and blue Berg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio. So the Bloomberg Big
Speaker 1: Take today. It's also storing the upcoming new issue of
Speaker 1: Bloomberg Business Week add on newstands tomorrow. Already on the
Speaker 1: Bloomberg and Bloomberg dot Com Slash business Week. It's about
Speaker 1: the wonderkin quant turned crypto billionaire and his dominance and
Speaker 1: expansion in that crypto industry. We're talking about none other
Speaker 1: than Sam Bankman Freed of ft X. The story by
Speaker 1: Hannah Miller and Olga careerf As Carol mentioned, it's in
Speaker 1: the upcoming issue of Bloomberg Business Week magazine. Check it
Speaker 1: out though at the Bloomberg Terminal and at Bloomberg dot
Speaker 1: com slash a business Week. Hannah Miller is digital currencies
Speaker 1: and venture capital reporter for Bloomberg new She joins us
Speaker 1: now on the phone from our Palo Alto bureau. Hannah,
Speaker 1: really great to have you with us. We've we've talked
Speaker 1: a little bit in recent days, in recent weeks about
Speaker 1: the buying spree that Sam Bankman Freed went on over
Speaker 1: the past couple of weeks as we've seen the crypto
Speaker 1: industry just collapse or past couple of months, I should say,
Speaker 1: what are his intentions and helping prop up some of
Speaker 1: these companies and then buying them as well. Yeah, thanks
Speaker 1: so much for having so It's been a really exciting
Speaker 1: time within the crypto industry. Despite the market downturn, um
Speaker 1: Sam Bank and Fried has really spotted a lot of
Speaker 1: opportunities here to just consolidate power over the industry. Um,
Speaker 1: whether it's striking deals with block Fire or Voyage or Digital.
Speaker 1: He's really, you know, just spreading his influence within this space.
Speaker 1: All right. Remind us for those who are like, wait,
Speaker 1: who is this dude, because he really is a standout
Speaker 1: among those who are in this space, because he's he's
Speaker 1: worth a lot of money, right, he's probably lost somebody.
Speaker 1: He's still worth a lot. Yeah, he's worth about ten
Speaker 1: billion dollars currently to our Billionaires Index UM. That's about
Speaker 1: half of where his wealth was in April. Obviously, still
Speaker 1: a lot of money. But he's thirties, thirty years old.
Speaker 1: He's taken the industry by storm. His company's ft X
Speaker 1: and Alameda Research have really asserted power within the industry. Uh.
Speaker 1: They work with a lot of top names. Um f
Speaker 1: t X is one of the most used crypto exchanges
Speaker 1: in the world. So he's doing all of this out
Speaker 1: of the goodness of his heart or right, he just
Speaker 1: want to dominate and be the industry. A lot of
Speaker 1: people within the industry see him as cryptos patron saint
Speaker 1: that he is stepping in bailing out companies out of
Speaker 1: the goodness of his own heart, but others see a
Speaker 1: business motivation here. Um, he's really buying companies on the cheap. Um,
Speaker 1: he is stepping in, he's helping out. But there's also
Speaker 1: a huge advantage in expanding his own business and gaining
Speaker 1: customers all over the world, particularly in the US. It's remarkable.
Speaker 1: There's a great infographic in here that really shows the
Speaker 1: web of companies that at this point are connected to
Speaker 1: f t X, U S f t X and then
Speaker 1: Alameda Research, all connected to Sam Bankman Freed. Yeah, I'm
Speaker 1: wondering more about what Sam is like, and we you know,
Speaker 1: we've had a lot of reporting around him and some
Speaker 1: profiles of him. But you know, I think for people
Speaker 1: who might have seen his conversation yesterday with Matt Levin
Speaker 1: at the Bloomberg Crypto Summit would see that he was
Speaker 1: wearing his signature shorts and a T shirt, really dressed
Speaker 1: on like anyone else there, which has kind of become,
Speaker 1: you know, a signature for him. Tell us more about
Speaker 1: what he's like and who he is and how he
Speaker 1: got into crypto. Yeah, I know, Um, Sam is always
Speaker 1: great to talk to. We spoke to him for this story. Um.
Speaker 1: He is described by people as kind, nerdy, shy, a
Speaker 1: little bit awkward. UM, but he really has a very
Speaker 1: calculating eye when he looks at the industry. UM. He
Speaker 1: got into crypto trading UM a few years back, really
Speaker 1: sort of climbed the ranks UM in terms of trading
Speaker 1: performance with ALAM to research, and he really has become
Speaker 1: a kind of a cult figure within and within the industry.
Speaker 1: And he's also pledged to give away most of his
Speaker 1: vast personal wealth. I just love the shorts and the
Speaker 1: T shirts. Hey. Um, One thing I found interesting is that,
Speaker 1: well he's spending and buying and looking to dominate when
Speaker 1: it comes to crypto. He's passed on some of the
Speaker 1: big flops as of late. That's true. UM, we haven't
Speaker 1: our reporting that he spoke with Terra and Celsius about
Speaker 1: potential veilouts there, but he ended up passing on both. UM.
Speaker 1: So it shows that he does have a discriminating eye here.
Speaker 1: He's not just bailing out whoever. UM. You know, he's
Speaker 1: looking for advantages. He's looking at how it can help
Speaker 1: him and his companies. What about when it comes to
Speaker 1: robin Hood and his investment in robin Hood, because this
Speaker 1: one's a little bit different than the other companies. A
Speaker 1: lot of the companies that he's investment have been interested
Speaker 1: in those have been in the private markets. But robin Hood,
Speaker 1: it's probably traded and wow it has gotten beat up. Yeah. No. Um,
Speaker 1: we reported a few weeks back that he was looking
Speaker 1: into a potential takeover at robin Hood. Uh. This shows
Speaker 1: that he has his eyes beyond the crypto industry, that
Speaker 1: he's looking at sort of more traditional finance players. Um.
Speaker 1: As one of my sources said, his ambitions no no bounds. Um.
Speaker 1: So it's really exciting to see him look at other areas,
Speaker 1: is um. I mean he's even joked about buying Goldman
Speaker 1: in the past. That is wild. Well, he wants to
Speaker 1: do bigger deals. It sounds like, you know, Honna, what
Speaker 1: is it that we need to understand about this individual?
Speaker 1: As the crypto space still many who are knowledgeable understand
Speaker 1: how it works, who are entrenched in this industry say,
Speaker 1: we're very early on in terms of the impact of
Speaker 1: the digital crypto world. So why is it that we
Speaker 1: need to keep an eye on him and what he does? Well?
Speaker 1: I think with this current crypto winter, the industry is
Speaker 1: at a crossroads. A lot of people want the centralized
Speaker 1: industry where powers in the hands the people. Um that
Speaker 1: it's based on pure to pure transactions. But Sam's influence
Speaker 1: and that of FTX shows that there are clear centralized
Speaker 1: elements here, that there are major players to watch, and
Speaker 1: that they are going to have continued influence as this
Speaker 1: space grows. Speaking of influence, you mentioned that he's been
Speaker 1: using his personal wealth and he's well, he's he's also
Speaker 1: pledged to donate the vast majority of his personal wealth.
Speaker 1: What about when it comes to where he's putting his
Speaker 1: money politically right now? And if you're reporting, showed you
Speaker 1: at all what he's thinking when it comes to influence
Speaker 1: in Washington, well in he was one of the top
Speaker 1: political donors to Joe Biden during the presidential campaign, uh,
Speaker 1: falling right behind Mike Bloomberg. UM. And he's already spoken
Speaker 1: about his commitments to donating to the Democratic Party for
Speaker 1: the upcoming election of particularly if Donald Trump runs again.
Speaker 1: Michael Bloomberg, of course, the founder of Bloomberg LP, Bloomberg Philanthropies,
Speaker 1: and of course Bloomberg ALP, the home of Bloomberg Radio
Speaker 1: and Bloomberg Business Week. Um, it is interesting, So I
Speaker 1: think this is your world. So what are you watching
Speaker 1: to see in terms of what he does next? Yeah,
Speaker 1: so we already know and we reported today that f
Speaker 1: t X and f u X f t x US
Speaker 1: are looking to raise more funding UM, which was pretty
Speaker 1: interesting during this time because I've written a lot about
Speaker 1: how funding from venture to capitalists has slow um when
Speaker 1: it comes to crypto. So he is definitely looking to expand.
Speaker 1: He has also spoken about buying assets from other distress companies,
Speaker 1: even targeting bitcoin miners. Is there some nervousness? Just got
Speaker 1: a few seconds left here, Hannah that though there might
Speaker 1: be too much consolidation of the crypto world in one
Speaker 1: person's hands, especially considering that this is an industry that
Speaker 1: is supposed to be decentralized at its core, it's kind
Speaker 1: of ironic. What a great deep dive, and it is,
Speaker 1: as we said, the Bloomberg Big Take. And of course
Speaker 1: this is a story in the issue New issue at
Speaker 1: Bloomberg Business Week, which will be out on newstands but
Speaker 1: already on the Bloomberg terminal, and you can find it
Speaker 1: at Bloomberg dot com. Slash Business Week Kindah Miller Digital
Speaker 1: Currencies and Venture Capital report at Bloomberg News. On the
Speaker 1: phone from our Palo Alto bureau. You're listening to Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes. Tim
Speaker 1: Stinovic on Bloomberg Radio. Check it out shares a Biog.
Speaker 1: They're down about six percent in today's trade following an
Speaker 1: earnings update this morning. The company dealing with generic competition,
Speaker 1: and yet tim it did boost its guidance for the
Speaker 1: year overall. Let's get into it with Mike Browne, managing
Speaker 1: director and biotech healthcare specialist at a baired Mike this afternoon,
Speaker 1: joining us on the phone from New York City. Mike,
Speaker 1: how are you? Um? Great, Carolyn Kim thanks writing me on. Yeah,
Speaker 1: thanks so much for joining us. Okay, we've got a
Speaker 1: few hours to dig into these results. Give us your
Speaker 1: takeaways from Biogen. Yeah. So, like most biotech stocks, clinical
Speaker 1: regulatory and strategic updates tend to be more important than
Speaker 1: quarterly earnings performance. And I think that's what you're seeing
Speaker 1: here with Biogen today. So bad. Biotech analyst Briant Scorning,
Speaker 1: in his preview note for Biogen last week, pointed out
Speaker 1: there's two main issues that investors are focused on with Biogen,
Speaker 1: and that's the CEO search, and that's also their Alzheimer's
Speaker 1: pivotal read out of volcanamat, which is expected in the fall.
Speaker 1: The lack of positive updates or positive commentary on any
Speaker 1: of these two seems to be trumping what otherwise was
Speaker 1: a really nice beaten raised by Biogen. So interested, m. Yeah, No,
Speaker 1: it's really interesting that those two things are not actually
Speaker 1: are outweighing a beaten raised quarter from the company. Yeah.
Speaker 1: And I'd also say, you know, if you take a look,
Speaker 1: you are seeing some general weakness in the larger commercial
Speaker 1: biotech stocks today as we're seeing kind of a shift,
Speaker 1: as you mentioned the biotech boom, you're seeing a shift
Speaker 1: from the safety relative safety of those cash flowing large
Speaker 1: biotech stocks into some of the riskier areas of the
Speaker 1: biotech Well well, so wait, so are you saying that
Speaker 1: there's some overall biotech industry trends that are weighing down
Speaker 1: Biogen today? Are saying Biogen is weighing down the overall industry, Yeah, Carol,
Speaker 1: I think it's a little bit of column an, a
Speaker 1: little bit of Columby the performance of biogin on their
Speaker 1: their earnings was strong. It's it's just really uh, you know,
Speaker 1: those two issues which which need to be resolved, and
Speaker 1: you know, there wasn't a whole lot of updates on
Speaker 1: the CEO search and uh for the pivotal Aislezheimer's read out,
Speaker 1: which is expecting the fall. You know, the company did
Speaker 1: point to a broad range of potential outcomes there, which
Speaker 1: I think, based on conversation with investors, maybe taken as
Speaker 1: a flame negative. So help us out here, what kind
Speaker 1: of CEO is needed for Biogen at this point? Like
Speaker 1: I just remember years ago starting out, you know, when
Speaker 1: you talked about biotech, it was just like the upstarts,
Speaker 1: you know, and it's a lot of times there wasn't
Speaker 1: a lot of uh there's a lot of top line
Speaker 1: growth maybe, but not a lot of bottom line growth. Uh.
Speaker 1: It was tricky. I mean, this is a thirty billion
Speaker 1: dollar market cap company. So, um, how do we think
Speaker 1: about these these companies and what kind of CEO is
Speaker 1: needed to take this company into its next phase. Yeah,
Speaker 1: I'll have to leave most of the commentary on Biogen
Speaker 1: going forward to our great biotech analyst Brian scorny, but
Speaker 1: certainly needs some strong leadership there as far as some
Speaker 1: of the stumbles over the past few years. Uh, but
Speaker 1: I guess only the rest we can touch base and
Speaker 1: Brian down the road. What about when it comes to
Speaker 1: the Alzheimer struck, which you pronounced so correctly, and Carol
Speaker 1: and I have struggled with for months. Yeah, I think
Speaker 1: you know it's it's similar mechanism to add you holm,
Speaker 1: which we know how it worked out, But it's a
Speaker 1: it's a highly powered study. Uh so you know, Uh,
Speaker 1: the fact is that if there isn't a fact, they've
Speaker 1: powered in enough to to have it have some positive
Speaker 1: read out. But again, the commentary today that they gave
Speaker 1: was some somewhat pointing to a broader range of potential outcomes.
Speaker 1: All right, So you are biotech healthcare specialists, So I'm
Speaker 1: just curious when it comes to the advice that maybe
Speaker 1: you give to your bigger, broader team. Is biotech a
Speaker 1: group that you think investors need to be considering at
Speaker 1: this point? And and we're specifically, as I mentioned, it's
Speaker 1: up about over the past month, so that's quite a
Speaker 1: bump to the upside. Uh. I know there's been some
Speaker 1: deal flow once again. And you know, when you think
Speaker 1: about biotech, always think about the big farmer companies where
Speaker 1: they are looking for growth in particular. So what's the
Speaker 1: investment play, Mike in your view at this point when
Speaker 1: it comes to biotech. Yeah, the big question a lot
Speaker 1: of investors have on this rally is this a bear
Speaker 1: market rally or is something that's more sustainable? And I'll say, uh, strateguous.
Speaker 1: A baired company did some really good macro research on
Speaker 1: historical kind of biotech bear market bounces and uh, you know,
Speaker 1: they tend to be very strong and very quick. So
Speaker 1: it's possibility that that's what we're seeing here in a
Speaker 1: cold fade over time. But I'll tell you our fundamental
Speaker 1: research team that Bared biotech research team did note uh,
Speaker 1: and the Weekly a couple of weeks ago that short covering,
Speaker 1: which drove a lot of the initial stages of the rally,
Speaker 1: can actually lead to institutional buying as people started having
Speaker 1: fear of missing out. Did I did I miss bottom?
Speaker 1: The stocks are still largely cheap. I mean, as much
Speaker 1: as we bounced off bottom, the XBI is still down
Speaker 1: roughly or a little bit over fift from its peak
Speaker 1: in February, so we have seen uh, some inbound calls
Speaker 1: from clients that suggests that there's some real work being done.
Speaker 1: It's something that's changed over the past few weeks. And
Speaker 1: you've also seen some fund flows shift. Where biotech was
Speaker 1: bleeding uh fund flows out for much of the year,
Speaker 1: and over the last month or so, we've seen some
Speaker 1: pretty positive inflows there, which means there's there's some real
Speaker 1: buying and biotech and could prove that this is more sustainable.
Speaker 1: All right, we gotta run. Thank you so much. Mike Prone,
Speaker 1: managing director and biotech health care Specialists at BAIRED, joining
Speaker 1: us on the phone in New York City, although he's
Speaker 1: typically based in Milwaukee. I'm mac journal Yeah, but you
Speaker 1: let me drive. Oh no, no, no no, no, honey, please,
Speaker 1: I'll do the dravels. I want to drive. It's a
Speaker 1: good question. This is the Drive to the Close music
Speaker 1: well don on Bluebird Radio. All right, let's get to it.
Speaker 1: We've just got about ten and a half minutes left
Speaker 1: in today's trading session, getting ready to wrap up that
Speaker 1: Wednesday trade, and we've got a new guest with us
Speaker 1: for the Drive to the Close. Kirk McDonald's portfolio manager
Speaker 1: at Argent Capital Management. They've got approximately three point three
Speaker 1: billion dollars in assets under management. Kirk joining us on
Speaker 1: the phone from St. Louis Kirk, how are you. I'm
Speaker 1: doing great and thanctually having me on the show, Curl
Speaker 1: and Tim, Yeah, it's good to have you with us,
Speaker 1: help us, help our our investing audience understand where the
Speaker 1: market is right now. There's this debate going on internally
Speaker 1: and externally about capitulation. Where do you fall? So um,
Speaker 1: thanks for the question, Tim, And as far as capitulation goes, So,
Speaker 1: the market, you know, had a horrible first half in
Speaker 1: the MidCap area where I where I work, it had
Speaker 1: its third worst first half since the inception of the
Speaker 1: Russell MidCap benchmark. So while capitulation may or may not
Speaker 1: be upon us when the market is down twenty one
Speaker 1: six like the Russell MidCap is, it's just an opportunity
Speaker 1: for investors like us. So at an Argent Capital Management,
Speaker 1: we're looking to invest in the right company with positive change,
Speaker 1: and that huge draw down in the market for us
Speaker 1: as positive change. We can pick up some companies we've
Speaker 1: been looking at for a long time at a much
Speaker 1: lower price. I love the MidCap space we don't really
Speaker 1: talk about it a lot. I feel like it gets
Speaker 1: lost certainly between the big and small caps. But if
Speaker 1: you look at it, uh, I'm just look at the
Speaker 1: SMP MidCap four hundred, it's down about this year, SMP
Speaker 1: five hundred, down almost seventeen percent, and then of course
Speaker 1: the NASTAC one hundred still uh, you know, down more
Speaker 1: than both of those industries. How do you think about it?
Speaker 1: And is a lot of it kind of a US
Speaker 1: play here? Yeah, So the mid the MidCap space where
Speaker 1: I play is really just like anything that gets stuck
Speaker 1: in the middle, It gets forgotten about and people don't
Speaker 1: talk about it, and they don't have a middle children.
Speaker 1: Ask one of my systems on the middle child. I
Speaker 1: never know who might be listening and if they might
Speaker 1: get upset. But uh, not having to live through the
Speaker 1: middle child syndrome myself, but um. But yeah, So with
Speaker 1: MidCap stocks, one of their advantages is they tend to
Speaker 1: be less exposed internationally than large cap stocks. So in
Speaker 1: the case of you know, we're in right now with
Speaker 1: the dollar strong um and the US economy in a
Speaker 1: better position, although you know it's a tenuous position, it's
Speaker 1: better than some of the international UM economies, the MidCap
Speaker 1: stocks have a good opportunity here right now to do
Speaker 1: a better job growing earnings relative for the rest of
Speaker 1: the their competitors. Where do you think we are in
Speaker 1: terms of of of recessions right now? Because I'm looking
Speaker 1: at your notes that you sent our producer, Paul Brennan
Speaker 1: and having a hard time understanding you know, where we
Speaker 1: are in this economy. We've got mortgage rate spiking and
Speaker 1: of course we've got demand falling for homes but they're
Speaker 1: remaining expensive. We've got energy prices just skyrocketing, and inflation
Speaker 1: highest it's been in forty years. Yet the job the
Speaker 1: workforce is you know, still adding jobs. Where are we Yeah,
Speaker 1: so right now? So UM, right now, where the economy is,
Speaker 1: it's still not technically in a recession whatsoever. UM. And
Speaker 1: the way we invest here at Argent Capital were really
Speaker 1: bottom up stock pickers, you know, looking for the right
Speaker 1: company with positive change. But we do take into account
Speaker 1: a little bit where we are in the market cycle
Speaker 1: and we try to be one third invested, you know,
Speaker 1: for the current market cycle, which has has been an
Speaker 1: expansion phase lately. That involves more value type of stocks UM.
Speaker 1: But the next phase, should it be a recession, would
Speaker 1: it be more of the the steady growers, the companies
Speaker 1: that can grow their earnings regardless of where we are
Speaker 1: in the economic cycle. We keep once they're the portfolio
Speaker 1: exposed and ready for that type of a change in
Speaker 1: the cycle. So that's really how we look at it.
Speaker 1: We're not going to change how we invest based on
Speaker 1: are we going to have a recession or not prepared
Speaker 1: for either scenario? Right, So, and you look like you
Speaker 1: said bottoms up. So you're looking at names specifically, and
Speaker 1: you have brought a few with us to chat about.
Speaker 1: One is the Tickers l Eng we're talking about Sneer
Speaker 1: Energy based in Houston, stocks up on us so far
Speaker 1: this year. I get it like the energy play, but
Speaker 1: they are very much involved in the infrastructure part of it, right,
Speaker 1: the pipelines. So Chanier isn't the pipeline. So really what
Speaker 1: they do is they create the liquefied natural gas. So
Speaker 1: they build these these huge expensive projects that cost a
Speaker 1: billion or two billion dollars each the terminals, right, yeah,
Speaker 1: the terminal so it is delivered by pipeline. So they're
Speaker 1: more but they are more of the infrastructure play or
Speaker 1: exactly right. Um, So they charge their customers a combination
Speaker 1: it's based on the Henry Hub price of natural gas
Speaker 1: plus a look with faction fee, so they do make
Speaker 1: more money if the price of natural gas goes higher.
Speaker 1: But they're really the play on the fact that in
Speaker 1: this case, Europe and that's the change that we were
Speaker 1: looking at, is now needs to switch their natural gas
Speaker 1: emplier from Russia to other sources, and the United States
Speaker 1: is a natural play for that. We're a very reliable supplier,
Speaker 1: one of the biggest producers of natural gas, and Engineer
Speaker 1: Energy is the world's largest producer of liquefied natural gas.
Speaker 1: All right, what about Zebra Technology z b r A.
Speaker 1: It's a mid cap stock. Um, it's not when we
Speaker 1: talk about a lot here and you argue that that's
Speaker 1: your advantage, Yeah, that is absolutely to my advantage. And
Speaker 1: Zebra is a long term holding of our So the
Speaker 1: they're the largest producer of bar code scanners and printers
Speaker 1: um in the world and also r f I detags
Speaker 1: for tracking inventories. And the positive change for Zebra has
Speaker 1: been really this move to omni channel retailing. So we
Speaker 1: like to buy things and I do it every single day.
Speaker 1: On my phone, I get it to livered in a
Speaker 1: day or two, or I sometimes drive by the store
Speaker 1: and pick it up, you know, in the parking lot.
Speaker 1: And they now produce software that enables retailers to do
Speaker 1: that omni channel retailing. And also they produce software and
Speaker 1: the tracking technology for the distribution centers that all of
Speaker 1: the online retailers and now the omni channel retailers are
Speaker 1: increasingly building as well. And Zebra, you know, really is
Speaker 1: not well known, but it's around us every single day,
Speaker 1: and I guarantee you most of us will come in
Speaker 1: contact to it with two or three times a week.
Speaker 1: But I have no idea, just as I do myself
Speaker 1: check out. But I'm curious though it Why is it
Speaker 1: down so much almost year to date? Yeah, so Zebra
Speaker 1: really it's down almost in sympathy with the rest of
Speaker 1: the tech sector, which was the worst performing sector in
Speaker 1: the Russell MidCap in the first half of the year,
Speaker 1: And it's down largely in sympathy with that sort with
Speaker 1: that sort of a down a lot more though, wouldn't
Speaker 1: you say? It is down more? And part of that
Speaker 1: is I think it had a huge run towards the
Speaker 1: end of last year and what I saw with some
Speaker 1: of this docks in my portfolio and in the market
Speaker 1: in general, the names that had a huge run up
Speaker 1: at the end of last year, we're the worst performers
Speaker 1: early this year. But at Argent Capital Management, we really
Speaker 1: look to own companies for the long term. We have
Speaker 1: very low turnover about a year, so we're not as
Speaker 1: concerned with the fact that Zebra stock prices down. What
Speaker 1: we're looking at the quality of that business right there,
Speaker 1: and that the positive change to omnichunnel retailing is going
Speaker 1: to continue. So Zeber really has a tailwind for sales
Speaker 1: growth going forward. I was just counting it's up seven
Speaker 1: from the end of through the end of last year
Speaker 1: or so. It has had quite a run so you're right,
Speaker 1: all right, we gotta run uh. So good to check
Speaker 1: in with you. Thank you so much, Kirk McDonald, Argent
Speaker 1: Capital Management. Thanks for listening to Bloomberg Business Week. Download
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