Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanobek. We're here every day bringing
Speaker 1: you the latest news from the worlds of business and finance,
Speaker 1: plus technology, politics, economics, all purtnising the power of Business
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Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg Global News. Well as we try to
Speaker 1: figure out the new way forward when it comes to
Speaker 1: the metaverse, crypto, and so much more, there's something going
Speaker 1: on in the video game industry that may already give
Speaker 1: you a clue about the future. Brian Feldman writes all
Speaker 1: about it. He's freelance reporter for Bloomberg Business Week. He
Speaker 1: joins us on the phone from Brooklyn. Check out Brian's story.
Speaker 1: It's online right now. It's called the game Industry's n
Speaker 1: FT failures hold lessons for the metaverse. We've all we've
Speaker 1: also got with us right now Joel Weber. He is
Speaker 1: the editor of Bloomberg Business Week. He's with us right
Speaker 1: now in the Bloomberg Interactive Broker's studio. Joel all fun
Speaker 1: and games until the publisher did did until the publisher
Speaker 1: of your video game. And by the way, your video
Speaker 1: game is, you know, tied its image closely to making
Speaker 1: fun of pretty much everything when it comes to the
Speaker 1: crypto universe and everything related. UH starts selling n f
Speaker 1: T s for real money. Yeah, And you know, there's
Speaker 1: been I think a lot written about how there's a
Speaker 1: lot of potential in n f T s and what
Speaker 1: I was intrigued by and what what we were intrigued
Speaker 1: by here was that UM video game. The gaming industry
Speaker 1: was got in on this really quickly, and there's a
Speaker 1: bit of tension there, which is that the gamers themselves
Speaker 1: weren't as into it UM, and so that that piqued
Speaker 1: our interest, and Brian did a great job with the story. So,
Speaker 1: so Brian tell us more, how did video gamers beat
Speaker 1: n f T s UM. I'm trying to think of
Speaker 1: the short version of it UM. Basically, gamers for about
Speaker 1: a decade and a half have had to sort of
Speaker 1: tolerate increasingly aggressive UM pricing models for games. So where
Speaker 1: you used to pay you know, one price for one
Speaker 1: game and take the entire thing home, now you sort
Speaker 1: of have to buy a piece meal UM perpetually into
Speaker 1: the future in order to participate in online games, the
Speaker 1: types of which UM the metaverse wants to be uh.
Speaker 1: And because these games are perpetual and so susceptible to
Speaker 1: public feedback, UM gamers made themselves known. UH. They immediately
Speaker 1: registered there um annoyance with the idea of pushing n
Speaker 1: F T s UM into the space uh and sort
Speaker 1: of scared a lot of people off of their initial
Speaker 1: uh curiosity. So let's spin it forward a little bit because,
Speaker 1: as as we teased a little bit, the metaverse has
Speaker 1: some interesting uh well interesting in and of itself, right,
Speaker 1: But what does it potentially hold for for games and
Speaker 1: where the metaverse could go? UM? I mean, I think
Speaker 1: in terms of what you know, people theorize the metaverse
Speaker 1: to be UM. You can look at pre existing games
Speaker 1: and sort of get an idea. Um. You know. Fortnite
Speaker 1: is referred to as a sort of metaverse game where
Speaker 1: winning is sort of less of an objective than just
Speaker 1: like hanging out with people um and doing funny dance
Speaker 1: and stuff, um minecraft similarly, And so if you look
Speaker 1: at those as a model for like sort of prototypical
Speaker 1: metavers is that already have millions of early adopters um
Speaker 1: than trying to sort of uh push h n f
Speaker 1: t S or crypto things or experiences that people don't
Speaker 1: necessarily want UM on something they're already used to, uh,
Speaker 1: is a problem that I think a lot of companies
Speaker 1: are going to experience. Well, Brian, this this was like
Speaker 1: the one place that the metaverse was supposed to succeed,
Speaker 1: That crypto was supposed to succeed, that n f t
Speaker 1: S we're supposed to succeed. Right, it was, And many
Speaker 1: people have argued that, you know, even if they do
Speaker 1: only succeed in gaming, it's such a huge industry that
Speaker 1: that's kind of enough. Um, what is it? What does
Speaker 1: this say about a company like Facebook that's trying to
Speaker 1: you know, pivot into going all in on the metaverse
Speaker 1: and get us to do our meetings in the metaverse.
Speaker 1: If if n f t S can't take off when
Speaker 1: it comes to gaming, I mean, I think I think
Speaker 1: so it has to do with messaging. Um, you know,
Speaker 1: I think for a long time, game companies have put
Speaker 1: out you know, pre rendered trailers that show you know,
Speaker 1: fantastical ideas and like what they hopefully think that finished
Speaker 1: products will look like, and have based a lot of
Speaker 1: criticism and backlash when the finished products fall short of that.
Speaker 1: UM and So I think some of it has to
Speaker 1: do with realizing that UM possible metaverse rumors are a
Speaker 1: lot more tax tex savvy UM and a lot more
Speaker 1: uh wary of marketing material than tech companies might think.
Speaker 1: UM and so it's about, you know, making sort of
Speaker 1: a clear, uh an accurate message to them rather than
Speaker 1: just saying, well, we hope it's like this one day. UM.
Speaker 1: It's about expressing, like what the tangible benefit is currently
Speaker 1: or in the near future. Okay, so you have this
Speaker 1: great line in here. Digital horse armor may be a
Speaker 1: waste of money, but it can at least be fun. So,
Speaker 1: I mean, there could be fun, but maybe maybe n
Speaker 1: f t s aren't exactly what people are looking forward.
Speaker 1: And that gets to this idea that you know, as
Speaker 1: you read the n f t s are sort of
Speaker 1: inherently vehicles for financial speculation. So I'm curious how has
Speaker 1: this gone over within the game industry. Itself, like because
Speaker 1: they were the ones that were sort of administering the
Speaker 1: kool aid in this instance. So. Um, A lot of
Speaker 1: gaming lad NFC programs that were announced towards the end
Speaker 1: of last year and at the beginning of this year
Speaker 1: never really made it off the ground because you know,
Speaker 1: they were announced before they had actually launched, and then
Speaker 1: because of so we're backlash, like quickly backed off the
Speaker 1: sort of one example that did really be it all
Speaker 1: the way through was this ubsoft program that gave people
Speaker 1: U n f T s for playing one of their games.
Speaker 1: Goes to recoun uh break points I believe, and uh
Speaker 1: you could earn them by getting a certain number of
Speaker 1: kills or spending enough time in the game even uh
Speaker 1: and because it's all on the blockchain, you can track
Speaker 1: that activity. Um. And the numbers aren't so great, are
Speaker 1: they just quickly just got about fifty seconds? Um? No,
Speaker 1: they're not. They're they're in I believe, like the four figures.
Speaker 1: And at this point, if you exchange the crypto there
Speaker 1: into real money that includes a sense right now I'm
Speaker 1: just kidding. Um. Yeah, and you can read those numbers
Speaker 1: in the story. Hey listen, Brian, thank you so much.
Speaker 1: Brian Feldman. He's freelancer porter up Bloomberg Business. We check
Speaker 1: out this story on the up Bloomberg Business Week and
Speaker 1: our thanks to Jill Webber, editor a Bloomberg Business Week magazine.
Speaker 1: You are listening and watching Bloomberg Radio. This is Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. So much going on when it
Speaker 1: comes to the big banks, and of course we had
Speaker 1: some more earnings this morning. They're all on our radar again.
Speaker 1: Be of A Shares rallying his loan revenue top to estimates.
Speaker 1: Also in an interest income up to the highest level
Speaker 1: at least a decade. You've got Goldwin also higher. They're
Speaker 1: reporting earnings tomorrow. But we've got some news that's going
Speaker 1: to combine. It's investment, banking and trading business. And then
Speaker 1: there's some stuff on credit Suez. Oh my god, I'm
Speaker 1: exhausted already. Well, Fortunately we have Trina Rajin here to
Speaker 1: help us out because he can report on all that
Speaker 1: and more. He's finance reporter for Bloomberg News. He's with
Speaker 1: us right now in the Bloomberg Interactive Broker studio. Ushure
Speaker 1: I want to start with gold the Goldman's story, Goldman
Speaker 1: shaking up its leadership ranks and yet another overhaul. What's
Speaker 1: the big headline here, what's the what's the what's the
Speaker 1: re org? Who's taking who's taken over? For these divisions?
Speaker 1: I'll start with the last three words of the headline,
Speaker 1: yet another overhaul, And I feel to some extent that's
Speaker 1: more the news than actually what they're moving around. It's
Speaker 1: not the rearranging of the deck chairs, to be clear,
Speaker 1: without any Iceberg inside, but it is not about the
Speaker 1: changes itself, but the fact that it's happening again. Because
Speaker 1: David Solomon, the CEO of Goldman Sachs, is four years
Speaker 1: into the top job at the Wall Street giant, and
Speaker 1: this is this is the third major restructuring he's undertaking.
Speaker 1: Not just that with this move he will be undoing
Speaker 1: a lot of the signature moves he put in place
Speaker 1: and changes he made just two years ago. That is
Speaker 1: not a good look and that gives a little bit
Speaker 1: of whiplash to investor. So let me actually step in
Speaker 1: and tell you what the changes are. You have a
Speaker 1: Goldman Sachs with four distinct divisions trading, investment, banking, two
Speaker 1: units where their strength is it's fair to say unparalleled.
Speaker 1: Then they had this as management business, which is the
Speaker 1: Coleman Sachs asset management business, investing in public markets and
Speaker 1: behalf of other investors, as well as this merchant bank,
Speaker 1: which was sort of their in house private equity shop.
Speaker 1: And then the fourth pillar, which was actually created in
Speaker 1: was this consumer and wealth management business. Because that catered
Speaker 1: to individual money, some very very very very rich people
Speaker 1: and some averages, but those were all people that Goldman
Speaker 1: were targeting. They wiped the slate clean. They've combined banking
Speaker 1: and trading in a way to try and showcase to
Speaker 1: the market that hey, if you see banking and trading
Speaker 1: as one combined group, similar to how JP Morgan does it,
Speaker 1: similar to how Morgan Stanley does it, you may be
Speaker 1: able to appreciate how well I can't use the word
Speaker 1: so how good it is. That's one goal with c IB.
Speaker 1: Then what they did, and we've talked about for a
Speaker 1: few months now, they've had major issues with their consumer business.
Speaker 1: They're effectively dismembering that, bringing back wealth management into their
Speaker 1: asset management business, shoving a part of their direct to
Speaker 1: consumer business which operated under the Marcus brand name into
Speaker 1: that unit. And then the third is this weirdly named
Speaker 1: business called platform Solutions has such a mckensey and ring
Speaker 1: to it, but it is taking their you know, the
Speaker 1: online loans provided that they bought last a green sky,
Speaker 1: the credit card partnerships which is the ones that they
Speaker 1: have with Apple in general motors, and the transaction banking business,
Speaker 1: bringing it under one roof having it as a standalone business.
Speaker 1: Think of it somewhat like embedded finance, which a lot
Speaker 1: of people are hot on, including mckensey. Wow, I'm actually
Speaker 1: closed on this mckensey conspiracy theory. They might have been
Speaker 1: behind this name to declare. I do not know for sure.
Speaker 1: I hear some reporting a little bit later on. But
Speaker 1: it is a stand alone business and it will be
Speaker 1: interesting to watch because that business wild report losses for
Speaker 1: the first stable future for the next quarter or two
Speaker 1: or three or four or more. Not many Wall Street
Speaker 1: banks have a stand alone division that where the p
Speaker 1: m L. It will be so visible and so painful.
Speaker 1: Goldman's got to hope that investors don't pay too much
Speaker 1: scary attention to it. Are willing to cut them some
Speaker 1: slag and actually see the new, new, new narrative that
Speaker 1: they're trying to uh spread and believe in it. What
Speaker 1: prompted this shift a number of things. First off, why
Speaker 1: this shift just in January? You did a massive change
Speaker 1: of the asset management leadership in twenty We just talked
Speaker 1: about all the other changes they made, but the mumbling
Speaker 1: and grumbling outside of Goldman Sacks had been clear for
Speaker 1: the better part of the last six months. They worried
Speaker 1: about the situation mass and management group and how the
Speaker 1: new leadership is getting along. They really worried about the
Speaker 1: consumer business, which, as we've reported at mid year, they projected,
Speaker 1: would lose while more than one point two billion dollars
Speaker 1: in a year, in a year when the bank's total
Speaker 1: earnings is expected to drop from the success, the fabulous
Speaker 1: success they had in one that was just too hard
Speaker 1: USh your spotlight on that business. So it was clear
Speaker 1: something had to be done. And it's fair to say
Speaker 1: that the problems with consumer accelerated some of the discussions
Speaker 1: they had about other orcs. If you're bringing back ASCID
Speaker 1: in wealth management and making this large one unit, you
Speaker 1: probably do the c IB aspect of it. The banking
Speaker 1: and trading combination is something people had been pushing forward
Speaker 1: the film. David Solomon and his steam had been reluctant
Speaker 1: about that because they were more interested in steering investor
Speaker 1: attention towards asset management and consumer, those recurring fee businesses
Speaker 1: that they think investors will appreciate. Now that they've actually
Speaker 1: made this Combined Banking, Global Banking and Markets Group, perhaps
Speaker 1: it's an acknowledgement that maybe it is fair to shine
Speaker 1: the spotlight on their crown jewel, and maybe it will
Speaker 1: give them a boost with investors that we don't know
Speaker 1: yet and that we'll see over the coming months and quarters.
Speaker 1: All Right, Well, an incredible story and then ahead of
Speaker 1: of course, government has its earnings tomorrow. We're gonna leave
Speaker 1: it on that note. Bloomberg News Finance reporter Street daraj
Speaker 1: And in Bloomberg Interactive Brokers Studio shares a Goldman Sacks.
Speaker 1: By the way, they are up two percent in today's session.
Speaker 1: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 1: Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Well, we've
Speaker 1: been talking about the Chinese markets. We see Chinese ad
Speaker 1: rs trading up this on news that Chinese regulators are
Speaker 1: wrapping up efforts to support the stock market. You've got
Speaker 1: a luck going on. A lot of news flow out
Speaker 1: of China generally, uh and what is one of the
Speaker 1: key economies of our time. Yeah, very busy weekend. As president,
Speaker 1: she reaffirmed policies at the center of frictions with the US.
Speaker 1: He spent two hours heading back and it was opened.
Speaker 1: In this crucial party gathering, we got Eric Shatzker with
Speaker 1: his editorial director for Bloomberg New Economy. He's with us
Speaker 1: right now in the Bloomberg Interactive Broker studio. So Eric,
Speaker 1: before we we went to we talked a little bit
Speaker 1: about what happened over the weekend in China. We also
Speaker 1: talked a little bit about um another lockdown of more
Speaker 1: than a million people in China. And I'm thinking to myself,
Speaker 1: in a in a country the size of China that
Speaker 1: has a policy for COVID's era that we already know
Speaker 1: has affected the country's economy so much, how does something
Speaker 1: like this actually end? I mean, how do we go
Speaker 1: back to a China that isn't increasingly isolating itself from
Speaker 1: the rest of the world. It's an excellent question as
Speaker 1: far as COVID goes, and you'll hear me say this
Speaker 1: word again and again and again. It's all about control, right,
Speaker 1: demonstrating that the Chinese political model is superior to the
Speaker 1: model that we practice here in the West, where we
Speaker 1: had COVID restrictions initially but eventually recognized that the economy
Speaker 1: had to reopen because we operate a democratic society where
Speaker 1: people's free will counts for something. It's consistent with what
Speaker 1: we heard from PRESIDENTI over the weekend, what he talked about.
Speaker 1: Let me say this. His commentary pointed to a China
Speaker 1: that on the one hand, is more geopolitically assertive, but
Speaker 1: on the other hand, is more economically isolated and less
Speaker 1: of a trading partner to the rest of the world.
Speaker 1: Um again, because of control. He and I'm sure you've
Speaker 1: been talking about the response. In his speech to the
Speaker 1: US ban on exports of advanced semiconductors and related equipment,
Speaker 1: he talked about winning the battle in key core technologies
Speaker 1: and moving faster and achieving technology self reliance. But the
Speaker 1: challenge for President she and for China is that he
Speaker 1: envisions this being done within a political framework that prioritizes
Speaker 1: above all ideological rectitude national security and party control. There's
Speaker 1: that control world again, This is not the China that
Speaker 1: evolved into something resembling capitalism right in the years in
Speaker 1: the you know, three decades really and plus that followed. Uh,
Speaker 1: you know, Deng Xiaoping's reform arms back in For the
Speaker 1: past at least five years, if not more. Uh, President,
Speaker 1: she has been growing suspicious of market forces and the
Speaker 1: threats that they present to political stability, and the perceived
Speaker 1: threat that he feels or felt anyway in May may
Speaker 1: no longer field because he's put them in a box
Speaker 1: from tycoons like Jackman pony mom. So how do we
Speaker 1: need to think I think about our audience, the investing audience,
Speaker 1: how do we need to think about China going forward?
Speaker 1: For so many years, right, for so long, it was
Speaker 1: all about global multinationals looking to get into China have
Speaker 1: access to that market. So what is it going forward? Well,
Speaker 1: China will be more inwardly focused, and those who were
Speaker 1: counting on Sheeta reverse course and increase access may find
Speaker 1: themselves disappointed. I will emphasize that it is awfully hard
Speaker 1: to make anything that sounds like a addiction. First of all,
Speaker 1: you know, he hasn't yet secured his third term as
Speaker 1: as president. The Communist Party Congress doesn't end until the
Speaker 1: twenty of this month, it still has a few days
Speaker 1: to run. Yes, yes, yes, it's widely baked into the cake.
Speaker 1: But if he insists that Chinese scientific advances an innovation
Speaker 1: need to fall under the umbrella of state control, which
Speaker 1: is to say, largely done by or directed by state
Speaker 1: owned enterprises, it will look very different from what we
Speaker 1: know in the West and what it China was increasingly
Speaker 1: looking like, which was a somewhat centrally planned but nevertheless
Speaker 1: still capitalist economy. And if you take that to its
Speaker 1: logical conclusion, uh to me anyway, it begins to sound
Speaker 1: a lot like the Soviet Union. And it's not to
Speaker 1: say that the Soviet Union didn't have brilliant scientists and
Speaker 1: didn't achieve great things technologically. It did. If you think
Speaker 1: about the things that the Soviets did with their space program,
Speaker 1: if you think about the things that the Soviets did militarily,
Speaker 1: like develop fighters like the Big Tent and the Big
Speaker 1: twenty nine that were every bit as competitive with what
Speaker 1: the United States and Europe could produce and in many
Speaker 1: cases better, but ultimately not sustainable. Not sustainable technologically and
Speaker 1: not sustainable politically. And I don't need to remind everybody
Speaker 1: what happened in but Eric, in the last thirty seconds
Speaker 1: that we have with you, with given that pretty much
Speaker 1: every single American company wants access to China, does that
Speaker 1: still still does that portend? Potentially a different ending? It
Speaker 1: does what they see there is one point four billion
Speaker 1: people to whom they want to sell things. You know,
Speaker 1: that's a very naked commercial instinct. But you know, if
Speaker 1: you're a shareholder of a comp let's looking to grow
Speaker 1: revenue and grow earnings. It's logical. But bit by bit
Speaker 1: by bit, you have to ask yourself, if you're the
Speaker 1: CEO or the board of that company, is this viable
Speaker 1: over the long run given what we keep hearing out
Speaker 1: of President Cheat because it does seem like they risks
Speaker 1: continue to increase. Bloomberg New Economy editorial director Eric Shatsker
Speaker 1: here in our interactive broker studio er things. I'm journal Yeah,
Speaker 1: but you let me drive? Oh no, no, no, no no, honey,
Speaker 1: Please do the riding gravels. I want to drive. It's
Speaker 1: good question. Drive this good drive to the clothes up
Speaker 1: on Bloomberg Radio. All right, folks, just under ten minutes
Speaker 1: left in today's trading session, getting ready to wrap up
Speaker 1: that Monday trade, and what a trade it is. While
Speaker 1: we have seen some movement, mostly it's game on and
Speaker 1: it's one for the bulls because we've got broad based
Speaker 1: rally under I've just heard the numbers from Charlie but
Speaker 1: Worth repeated the nastac hire by three point six, the
Speaker 1: SMP higher by two point nine, and the down higher
Speaker 1: by two percent. Right now, let's get into it with
Speaker 1: David at Damon. Isn't that Wayne's world to party on?
Speaker 1: Party on? Excellent? Sorry, I love it, Carol, uh uh.
Speaker 1: David Deets is managing Principal and senior investment strategies at
Speaker 1: Pepack of Private Wealth Management about nine point five billion
Speaker 1: dollars in assets under management. David joins us once again
Speaker 1: on the phone from Summit, New Jersey. So David is
Speaker 1: the worst behind us? Is this started turning over new
Speaker 1: leaf this week and for the remainder of the year. Well,
Speaker 1: we don't know whether we've seen the bottom in the
Speaker 1: six local downturn, but we do know that the conditions
Speaker 1: are primed for better returns going forward. I mean, we
Speaker 1: start with the fact that we're down twenty five year
Speaker 1: to date on the broad market thirty on the NASTAC
Speaker 1: That alone should with the appeta of all bargain hunters.
Speaker 1: On top of that, some of the macro factors that
Speaker 1: have really beaten down stocks, like a surging US dollar
Speaker 1: and surging interest rates reverse course today. Now the bond
Speaker 1: market has seen yields go higher for eleven weeks in
Speaker 1: a row. Well, we know that yields don't go to
Speaker 1: the sky, and so certainly the reversal today I think
Speaker 1: really help people take more confidence that there was some
Speaker 1: limit to how high yields would be. And we know
Speaker 1: that bonds compete mightily for investors attention with stocks, right,
Speaker 1: so it's always a comparison, right in terms of fixed
Speaker 1: income bonds versus what we're seeing in terms of valuations
Speaker 1: and yield on the equity side of the things. Having
Speaker 1: said that, at this point, you've got David some specific
Speaker 1: names on the equity side of things that you like,
Speaker 1: and among them is Tyson tell us about the story
Speaker 1: they're thinking behind that. Well, you know, in this part
Speaker 1: of the economic cycle, we're looking for market leaders, and
Speaker 1: when you look at the food category, we're talking chicken,
Speaker 1: we're talking beef for talking pork. Tyson is the apps leader.
Speaker 1: They have a real lock on the domestic market, pacing
Speaker 1: their competitors like Pilgrim Spride, and increasingly they're exporting to
Speaker 1: places like China, which has been battlings mind flu and
Speaker 1: so forth. But this is a stock that you know,
Speaker 1: was over about ninety dollars earlier in the year and
Speaker 1: has come back vital and now it's got a six
Speaker 1: handle um And so you know you've got a market
Speaker 1: leader that now trading at less than ten times earnings,
Speaker 1: a company that has a history of buying back stocks,
Speaker 1: buying back to stock and increasing their dividend. And this
Speaker 1: is the type of thing we think we're investors have
Speaker 1: gone to sour on the name and it's going to
Speaker 1: come back. Okay, what about Berkshire Hathaway, that's one of
Speaker 1: the companies on your list as well. Why are you
Speaker 1: bullish on Berkshire? Well, you can't look at Berkshire without
Speaker 1: thinking about Warren Buffin. Of course, you've got the most
Speaker 1: successful UH investor arguably in the world. Still on top
Speaker 1: of the helm there. You know, this is a treasure
Speaker 1: trove tim of blue chip publicly trade stocks. We're talking
Speaker 1: Coca Cola, we're talking to Apple, We're taking talking to
Speaker 1: American Stress and of course great privately traded companies, not
Speaker 1: small ones. We're talking Burlington Northern Railroad, UM, Geico Insurance, UM,
Speaker 1: some utilities in the Midwest, and they're trading just a
Speaker 1: little bit above book value. UM. A couple of things
Speaker 1: I think are the catalysts. One is, of course interest
Speaker 1: rates have moved up now they're famous for having all
Speaker 1: this insurance money float. Some of it they put to work,
Speaker 1: others that had been having challenges putting to work. And
Speaker 1: of course now they're getting a much better yield. And
Speaker 1: on the three month treasury you can get three point
Speaker 1: eight percent versus mill about a year ago. On top
Speaker 1: of that, I like the fact that the air apparent
Speaker 1: greg able most likely to take over. When Warren Buffett
Speaker 1: passes the baton just about eighty million dollars worth of stock, well,
Speaker 1: he's operating in a microscope. Everyone in the world is
Speaker 1: looking at the timing of this pick. He doesn't take
Speaker 1: throwing eighty million dollars into his stock where he's going
Speaker 1: to be moving up hopefully lightly. So I think that
Speaker 1: is a great by signal. And of course if Berkshire
Speaker 1: Hathaway continues to struggle. They have a great record of
Speaker 1: buying back share, so that gives you a bit of
Speaker 1: a floor if you're worried about further volatility ahead. What
Speaker 1: do you make of um? You know, it's funny we
Speaker 1: don't talk about the dial a lot because I think
Speaker 1: if it's you know, limited names in the index. But
Speaker 1: having said that, the Dow is just down about six
Speaker 1: this year. That compares with about downside on the S
Speaker 1: and P five hundred and more than you mentioned earlier
Speaker 1: on the NAZAC one hundred. For the Dow to see
Speaker 1: some outperformance, albeit not that much, but nonetheless outperformance, what
Speaker 1: does that say about you? Kind of the Dow industrials
Speaker 1: doing better than what we're seeing the broader market, and
Speaker 1: certainly a lot better than what we're seeing on the
Speaker 1: tech side of things. Well, so I just talked about
Speaker 1: blue chips right liking Berkshire, So I'm just wondering what
Speaker 1: the bigger theme here is. Yeah, it's a great question.
Speaker 1: I mean, frankly, the Dow has lagged over the last
Speaker 1: decade because so much attention has been focused on money
Speaker 1: chasing those Tex stocks. Of course, those have been hit
Speaker 1: really hard. The valuations got the nose bleeds levels fears
Speaker 1: of recession. On top of that, of course, with the
Speaker 1: higher interest rates, investors are discarding those stocks which have
Speaker 1: so called long dated earnings because they're marked down much
Speaker 1: lower to present value. When interest rates go up, the
Speaker 1: TAO is much less focused on those high, high valuation
Speaker 1: growth names, and so I think it's been their turn
Speaker 1: in the sun. You've got more companies your your banks
Speaker 1: um like for example, JP Morgan in American Express, your
Speaker 1: chemical comes like that, which are not only making good
Speaker 1: money now relative to stock prices, but also are paying
Speaker 1: a good dividend. And I think as interest rates move up,
Speaker 1: people have gravitated towards those lower duration equity names. Hey David,
Speaker 1: before we let you go, talk a little bit about
Speaker 1: inflation and what you're seeing, because we got some concerning
Speaker 1: comments from Mark Mobius a little earlier today. What do
Speaker 1: you what do you think is happening with inflation? You know, um,
Speaker 1: so the latest numbers are terrible. So there's two things
Speaker 1: I would say. One is, I think inflation is starting
Speaker 1: to roll over quite frankly. Why do I think that?
Speaker 1: One is? Commodities tend to be a leading indicator inflation wise.
Speaker 1: You look at the price of oil has got an
Speaker 1: eight handle versus you know, close to one thirty UM
Speaker 1: late spring. Ditto with all your other commodities as well.
Speaker 1: We also are seeing distinct signs that the economy is
Speaker 1: starting to slow and when people have less money to spend,
Speaker 1: companies are pulling in their belts. They're not going to
Speaker 1: pay those high prices, and so we're gonna see prices
Speaker 1: come back. So I think that UM inflation is going
Speaker 1: to tend to roll over. Finally, stock investors are so
Speaker 1: worried about inflation. I think your risk in the downside
Speaker 1: if inflation takes longer to perch from the system, is
Speaker 1: smaller than your upside if in fact we get some
Speaker 1: good news here on inflation. All right, well, certainly one
Speaker 1: take on inflation in where it goes. David Dits, thank
Speaker 1: you so much, managing principle and senior investment strategies at
Speaker 1: Pepack Private Wealth Management, roughly nine and a half billion
Speaker 1: in assets under management, joining us once again on the
Speaker 1: phone from Summit, New Jersey. Thanks for listening to Bloomberg
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