1 00:00:00,840 --> 00:00:04,000 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,080 --> 00:00:05,240 Speaker 1: my co host Matt Miller. 3 00:00:05,640 --> 00:00:09,600 Speaker 2: Every business day we bring you interviews from CEOs, market pros, 4 00:00:09,720 --> 00:00:13,600 Speaker 2: and Bloomberg experts, along with essential market moving news. 5 00:00:14,160 --> 00:00:17,279 Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever 6 00:00:17,360 --> 00:00:20,520 Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast. 7 00:00:21,079 --> 00:00:26,720 Speaker 1: Chicago Board of Trade corn prices this year down thirty 8 00:00:26,720 --> 00:00:28,880 Speaker 1: two percent. What is up with that? I'm meeting as 9 00:00:28,960 --> 00:00:30,360 Speaker 1: much corn as they ever have. I don't know what's 10 00:00:30,360 --> 00:00:32,360 Speaker 1: going on the price of corn. I guess it's more 11 00:00:32,360 --> 00:00:34,400 Speaker 1: supply than demand because it's a commodity. But let's check 12 00:00:34,400 --> 00:00:37,440 Speaker 1: out with somebody who does this stuff for a living. Literally, 13 00:00:37,760 --> 00:00:41,640 Speaker 1: Mike mcloughan, senior macro strategists for Bloomberg Intelligence. Mike, I'd 14 00:00:41,640 --> 00:00:43,479 Speaker 1: like corn as much as the next person. Why is 15 00:00:43,520 --> 00:00:45,519 Speaker 1: the price of corn down thirty two percent? 16 00:00:46,800 --> 00:00:48,960 Speaker 3: Well, hey, Paul, as a farmer, say it's the higher 17 00:00:49,000 --> 00:00:51,920 Speaker 3: price cure. That's the bottom line. Corn had a big 18 00:00:52,000 --> 00:00:55,280 Speaker 3: pump last year on the back of Russia. Russia's invasion 19 00:00:55,320 --> 00:00:58,400 Speaker 3: of Ukraine, and what does that typically do? It centifies 20 00:00:58,480 --> 00:01:02,320 Speaker 3: plenty more supply and we're it globally. The US has 21 00:01:02,400 --> 00:01:04,280 Speaker 3: ketchup a little bit. This should be a very good 22 00:01:04,280 --> 00:01:07,040 Speaker 3: crop this year. Crop this year near the highest production ever. 23 00:01:07,080 --> 00:01:09,360 Speaker 3: And most notably what had the most time they pick 24 00:01:09,400 --> 00:01:12,119 Speaker 3: up was a massive supply of corn and soybeans out 25 00:01:12,120 --> 00:01:14,480 Speaker 3: of Brazil. And they just do what they've been doing 26 00:01:14,480 --> 00:01:17,240 Speaker 3: for last almost twenty years. They just amp their production. 27 00:01:17,319 --> 00:01:19,600 Speaker 3: And when you farmers can make profits, they always create 28 00:01:19,640 --> 00:01:21,640 Speaker 3: a lot of supply. And that's the key thing to 29 00:01:21,720 --> 00:01:24,440 Speaker 3: remember about corn, soybeans and wheat is they are just 30 00:01:24,560 --> 00:01:29,080 Speaker 3: they should never stay up because farmers can make more money. 31 00:01:28,080 --> 00:01:31,000 Speaker 3: They'll plant when they can make money, like they did 32 00:01:31,120 --> 00:01:31,520 Speaker 3: last year. 33 00:01:31,520 --> 00:01:33,600 Speaker 1: You're right, because soybeans are down ten percent year to 34 00:01:33,680 --> 00:01:36,679 Speaker 1: date and wheat is down twenty eight percent year to date. 35 00:01:37,600 --> 00:01:37,800 Speaker 4: Yeah. 36 00:01:37,880 --> 00:01:42,039 Speaker 5: So America has held the top spot in terms of 37 00:01:42,120 --> 00:01:48,560 Speaker 5: corn exports for years, years and years and years, but 38 00:01:48,680 --> 00:01:52,320 Speaker 5: now Brazil may be challenging it. What's the dynamic there 39 00:01:52,360 --> 00:01:55,040 Speaker 5: and does this increase competition? Is that going to weigh 40 00:01:55,080 --> 00:01:57,880 Speaker 5: on the price of corn for the first single future. 41 00:01:58,600 --> 00:02:01,520 Speaker 3: Absolutely, it's the price of corn is heading towards four 42 00:02:01,600 --> 00:02:05,640 Speaker 3: dollars a bushel right now. It's just about just below five, 43 00:02:05,720 --> 00:02:09,239 Speaker 3: and it first traded that price in nineteen seventy four. 44 00:02:09,680 --> 00:02:12,079 Speaker 3: That was on the Great Grain Robbery when Russia imported 45 00:02:12,080 --> 00:02:14,239 Speaker 3: a whole I'm sorry this end Soviet Union imported a 46 00:02:14,240 --> 00:02:16,680 Speaker 3: whole bunch of grain. But what you pointed out simonto, 47 00:02:16,720 --> 00:02:20,440 Speaker 3: our body's in motion. Brazil's production has been increasing rapidly 48 00:02:20,840 --> 00:02:22,560 Speaker 3: for at least the last ten years. If you just 49 00:02:22,639 --> 00:02:25,760 Speaker 3: like at charts going back to beginning two thousand and 50 00:02:25,800 --> 00:02:29,000 Speaker 3: it's still handy that way. But what happened with this war, 51 00:02:29,080 --> 00:02:31,240 Speaker 3: which we pointed out right away, just created more and 52 00:02:31,240 --> 00:02:33,920 Speaker 3: more incentive to produce more corn. But also there's been 53 00:02:33,919 --> 00:02:37,120 Speaker 3: a paradigm shift in the US. The US now uses 54 00:02:37,200 --> 00:02:39,560 Speaker 3: almost forty percent of the crop for ethanol. But the 55 00:02:39,639 --> 00:02:41,440 Speaker 3: unique thing about that is, you know, that's for motor 56 00:02:41,520 --> 00:02:44,440 Speaker 3: vehicles for gasoline. The you ney thing about that is 57 00:02:44,440 --> 00:02:46,320 Speaker 3: it's just going back the way we were before. And 58 00:02:46,520 --> 00:02:51,080 Speaker 3: you know, in nineteen twenty, before the automobile became proliferated, 59 00:02:51,120 --> 00:02:53,560 Speaker 3: a lot of the grains that were grown in as 60 00:02:53,600 --> 00:02:57,639 Speaker 3: country oats, and hey, we're for feeding horses. Now it's 61 00:02:57,680 --> 00:03:00,480 Speaker 3: just some of it feeds cars. So that's a key 62 00:03:00,520 --> 00:03:04,119 Speaker 3: thing to remember about corn. In most agriculture countries. Most 63 00:03:04,120 --> 00:03:07,919 Speaker 3: countries are we all subsidized their agriculture production, and we're 64 00:03:07,919 --> 00:03:10,079 Speaker 3: getting to the point now where farmers may be able 65 00:03:10,120 --> 00:03:13,079 Speaker 3: to be subsistent without a lot of these extra programs 66 00:03:13,080 --> 00:03:15,359 Speaker 3: from the government. A lot of it's because we use 67 00:03:15,560 --> 00:03:17,200 Speaker 3: it for clean fuel for ethanol. 68 00:03:18,080 --> 00:03:22,120 Speaker 1: Might sound interesting, I know it's all intertwined. How hard 69 00:03:22,400 --> 00:03:24,799 Speaker 1: or how easy is it to grow corn? 70 00:03:26,200 --> 00:03:31,120 Speaker 3: So corn is difficult. It's the most fertilizer intensive crop. 71 00:03:32,280 --> 00:03:34,640 Speaker 3: And as we mentioned that earlier segment, a lot of 72 00:03:34,960 --> 00:03:38,240 Speaker 3: farmers will say out in Illinois where I'm from, zilk corn, 73 00:03:38,400 --> 00:03:40,800 Speaker 3: grow bean, so they can plant corn the next year. 74 00:03:40,800 --> 00:03:44,560 Speaker 3: But it's the most intensive for you need a lot 75 00:03:44,600 --> 00:03:47,040 Speaker 3: of anhydros ammonia, which is the base for that is 76 00:03:47,120 --> 00:03:50,040 Speaker 3: natural gas, which has plunged this year, which means costs 77 00:03:50,040 --> 00:03:52,720 Speaker 3: of productions going down. But it's harder to grow. Beans 78 00:03:52,760 --> 00:03:55,040 Speaker 3: are much easier. You don't really need a lot of fertilizer. 79 00:03:55,360 --> 00:03:57,240 Speaker 3: But when you work them in rotation, they all work 80 00:03:57,240 --> 00:03:58,000 Speaker 3: out better together. 81 00:03:58,960 --> 00:03:59,480 Speaker 4: Well, And it's. 82 00:03:59,440 --> 00:04:02,560 Speaker 5: Interesting you you were mentioning the impact of the Russian 83 00:04:02,600 --> 00:04:07,880 Speaker 5: invasion of Ukraine before, but fertilizer is a place also 84 00:04:08,320 --> 00:04:13,240 Speaker 5: that is so incredibly dependent on China and Russia. And 85 00:04:13,280 --> 00:04:15,280 Speaker 5: what it sounds like you're saying here is not that 86 00:04:15,640 --> 00:04:19,159 Speaker 5: our desire for corn is or the global demand is 87 00:04:19,200 --> 00:04:21,440 Speaker 5: falling anyway, and simply that the US is eating up 88 00:04:21,480 --> 00:04:25,360 Speaker 5: more of the overall share for itself for non eat 89 00:04:25,640 --> 00:04:30,000 Speaker 5: eating purposes. Does this add to the I guess do 90 00:04:30,080 --> 00:04:35,280 Speaker 5: these shifts add to some of those sustainability concerns as 91 00:04:35,320 --> 00:04:39,760 Speaker 5: the United States is increasingly dependent on corn for like 92 00:04:39,880 --> 00:04:41,839 Speaker 5: transportation issues as well. 93 00:04:42,680 --> 00:04:44,960 Speaker 3: Not at all. We can grow more. We still have 94 00:04:45,000 --> 00:04:47,400 Speaker 3: about ten percent of our higher land in what's called 95 00:04:47,400 --> 00:04:50,600 Speaker 3: the CRP, the Conservation Conservation Reserve program. I used to 96 00:04:50,600 --> 00:04:53,320 Speaker 3: have my farm in that for a little while, and 97 00:04:53,320 --> 00:04:56,680 Speaker 3: it's where the government pays you to not farm. So 98 00:04:56,720 --> 00:04:58,520 Speaker 3: obviously not going to put your best form there. But 99 00:04:58,880 --> 00:05:00,720 Speaker 3: that's the key thing about what's just come point out 100 00:05:00,760 --> 00:05:04,600 Speaker 3: the facts of deflationary forces and corn. The average acre 101 00:05:04,640 --> 00:05:06,800 Speaker 3: of corn plant and this year will probably produce about 102 00:05:06,800 --> 00:05:10,200 Speaker 3: one hundred and seventy five bushels per acre. Just four 103 00:05:10,279 --> 00:05:12,960 Speaker 3: or fifty years ago it was half that. So that's 104 00:05:13,000 --> 00:05:16,839 Speaker 3: just what's happening with rapidly advancing technology, new seed technology, 105 00:05:16,960 --> 00:05:19,919 Speaker 3: new planting, techniques is we can just create more with 106 00:05:20,120 --> 00:05:22,960 Speaker 3: less every day. That's normally what happens with commodities. And 107 00:05:23,000 --> 00:05:27,359 Speaker 3: corn is the most significant agriculture crop on the planet 108 00:05:27,920 --> 00:05:31,080 Speaker 3: and it's the US has been the epicenter. But don't 109 00:05:31,120 --> 00:05:32,839 Speaker 3: worry about us creating more. And even if we have 110 00:05:32,880 --> 00:05:35,359 Speaker 3: a severe drought, there's a lot of different time zones. 111 00:05:35,360 --> 00:05:39,120 Speaker 3: There's irrigation, and there's you know, plenty of production coming 112 00:05:39,160 --> 00:05:41,320 Speaker 3: out of from south of the border, from Brazil. So 113 00:05:42,360 --> 00:05:44,360 Speaker 3: you know, I look at it is I always like 114 00:05:44,400 --> 00:05:47,200 Speaker 3: to point out when people get bullish when markets go up, 115 00:05:47,520 --> 00:05:49,680 Speaker 3: grains are the number one commodity you never want to 116 00:05:49,680 --> 00:05:51,760 Speaker 3: buy after they go up. It's a higher price cure. 117 00:05:52,120 --> 00:05:55,640 Speaker 3: And the thing here's a new thing about ethanol is 118 00:05:55,880 --> 00:05:59,400 Speaker 3: we are now rapidly going to EVS. Total consumption of 119 00:05:59,480 --> 00:06:02,000 Speaker 3: unletted get in this country. He's still about five percent 120 00:06:02,360 --> 00:06:06,200 Speaker 3: below where it was before COVID, and now we're switching 121 00:06:06,240 --> 00:06:10,320 Speaker 3: EV so fast. Total sales of automobiles in the world 122 00:06:10,320 --> 00:06:13,600 Speaker 3: now almost fifteen percent EBS. All that was accelerated by 123 00:06:13,600 --> 00:06:15,800 Speaker 3: the war, and that means a lot of the demand 124 00:06:15,839 --> 00:06:17,400 Speaker 3: source for corn might be going away. 125 00:06:17,880 --> 00:06:21,200 Speaker 5: And I should note I'm looking at the chart of 126 00:06:21,360 --> 00:06:24,400 Speaker 5: corn prices. We're back really to levels where we were 127 00:06:25,320 --> 00:06:29,559 Speaker 5: in mid twenty twenty one. October twenty twenty one looks 128 00:06:29,640 --> 00:06:35,080 Speaker 5: like so, as you said, be cautious about getting into 129 00:06:35,120 --> 00:06:36,240 Speaker 5: commodities after so. 130 00:06:36,240 --> 00:06:40,680 Speaker 1: Mike Spike, Mike, the mclone family used to be used 131 00:06:40,760 --> 00:06:44,479 Speaker 1: on a farm in Indiana. How many farmers are there, 132 00:06:44,480 --> 00:06:46,200 Speaker 1: like the maglones out there, like give us a sense 133 00:06:46,240 --> 00:06:48,599 Speaker 1: of what's the farm economy in the US now versus 134 00:06:48,640 --> 00:06:52,080 Speaker 1: like family owned farmers versus I guess corporate. 135 00:06:51,720 --> 00:06:55,080 Speaker 3: Farms going much more corporate. So we it was always 136 00:06:55,080 --> 00:06:57,919 Speaker 3: a gentleman's farm. My grandfather bought it during the Great Depression, 137 00:06:58,240 --> 00:07:00,680 Speaker 3: and he always cash rented it. That's a term, use 138 00:07:00,760 --> 00:07:03,120 Speaker 3: your own the landing, just let other people farming. They'll 139 00:07:03,120 --> 00:07:05,359 Speaker 3: pay you a cash rent for that. Now I know 140 00:07:05,440 --> 00:07:09,880 Speaker 3: a few big of these big producers out in Champagne, Illinois, 141 00:07:09,880 --> 00:07:11,880 Speaker 3: which is some of the best ground in the planet, 142 00:07:12,360 --> 00:07:14,400 Speaker 3: and they own the land, they manage it, and they 143 00:07:14,480 --> 00:07:16,960 Speaker 3: just have farmers do it. So it's becoming much more corporate. 144 00:07:17,000 --> 00:07:20,240 Speaker 3: But it's so efficient. It's just incredibly efficient. The key 145 00:07:20,400 --> 00:07:22,080 Speaker 3: quote I get every time I get out there is 146 00:07:22,080 --> 00:07:24,680 Speaker 3: the technology is so hard to keep up with. For instance, 147 00:07:24,920 --> 00:07:27,800 Speaker 3: there's this thing called exact Shot from John Deere where 148 00:07:27,800 --> 00:07:30,320 Speaker 3: they can now when they plant that seed, give it 149 00:07:30,360 --> 00:07:33,040 Speaker 3: the exact amount of fertilizer where it needs where they 150 00:07:33,080 --> 00:07:36,880 Speaker 3: want it, and it can reduce fertilizer costs by sixty percent. 151 00:07:36,960 --> 00:07:39,640 Speaker 3: So it's just that rapidly advancing technology in the area. 152 00:07:39,680 --> 00:07:42,520 Speaker 3: It's hard to keep up. The weather is still unpredictable, 153 00:07:42,560 --> 00:07:45,360 Speaker 3: but we now have with hybrid seeds and things like 154 00:07:45,360 --> 00:07:47,800 Speaker 3: that you can do pretty well with. For instance, there's 155 00:07:47,800 --> 00:07:49,920 Speaker 3: ano example. When I was a kid, the average cornstock 156 00:07:50,640 --> 00:07:52,600 Speaker 3: had one ear, and now you have two or so 157 00:07:52,720 --> 00:07:55,280 Speaker 3: on per cornstock. My question is what stops that from 158 00:07:55,320 --> 00:07:58,280 Speaker 3: going to six ears per cornstock. It's just the trends 159 00:07:58,320 --> 00:08:01,240 Speaker 3: your friend for production, but app for prices. 160 00:08:01,560 --> 00:08:03,800 Speaker 1: Wow, all right, let's switch gears here. I could talk 161 00:08:03,800 --> 00:08:05,200 Speaker 1: to you know, and we're gonna be We'll get the 162 00:08:05,200 --> 00:08:07,440 Speaker 1: port pillows at some point. But let's turn to gold. 163 00:08:07,480 --> 00:08:09,680 Speaker 1: Here are we still just long gold and kind of 164 00:08:09,720 --> 00:08:10,520 Speaker 1: short everything else? 165 00:08:11,400 --> 00:08:13,840 Speaker 3: I look at gold as the most likely asset and 166 00:08:13,880 --> 00:08:16,600 Speaker 3: commodity to continue advancing. Now that's not so profound because 167 00:08:16,600 --> 00:08:19,600 Speaker 3: it typically outperforms most commodities over time, most knowly copper, 168 00:08:19,680 --> 00:08:22,200 Speaker 3: most noted crudilil. But the average price this year is 169 00:08:22,280 --> 00:08:24,840 Speaker 3: nineteen thirty three, one nine and thirty three. I love 170 00:08:24,920 --> 00:08:27,840 Speaker 3: saying that, Paul, because that was a significant year where 171 00:08:27,880 --> 00:08:32,920 Speaker 3: Franklin Delano Roosevelt debased the dollar versus gold, and that 172 00:08:33,080 --> 00:08:36,120 Speaker 3: bottom all the deflation. Air forces bottom the stock market 173 00:08:36,320 --> 00:08:40,559 Speaker 3: and it bottomed deflation. But I look at gold, that's 174 00:08:40,559 --> 00:08:43,679 Speaker 3: the highest averaged price ever nineteen thirty three. I see 175 00:08:43,720 --> 00:08:45,640 Speaker 3: that's a bull market that's just waiting to break out. 176 00:08:45,679 --> 00:08:47,920 Speaker 3: The key triggers would be some form of fed pivot. 177 00:08:48,120 --> 00:08:51,080 Speaker 3: As you mentioned the earlier segment, the WRP function is 178 00:08:51,200 --> 00:08:53,520 Speaker 3: tilting that way, and I think the key thing to 179 00:08:53,559 --> 00:08:56,560 Speaker 3: get that pet fed pivot is probably a stock market decline. 180 00:08:56,600 --> 00:08:58,920 Speaker 3: But to me, gold is and I just show it 181 00:08:58,920 --> 00:09:01,439 Speaker 3: on the year, it's up six percent. On a twelve 182 00:09:01,480 --> 00:09:04,160 Speaker 3: month basis is up ten percent. Virtually every other commodity 183 00:09:04,240 --> 00:09:07,440 Speaker 3: is down. Here's a question what stops that trajectory. I 184 00:09:07,480 --> 00:09:10,080 Speaker 3: suspect it's more likely accel right, And as you heard 185 00:09:10,080 --> 00:09:12,880 Speaker 3: Ona Wong in the previous segment point about recession. Here's 186 00:09:12,880 --> 00:09:15,240 Speaker 3: one thing I point out about gold is there's one 187 00:09:15,320 --> 00:09:18,520 Speaker 3: hundred percent probability when an unemployment rallies from this level, 188 00:09:18,520 --> 00:09:20,800 Speaker 3: I mean goes higher, that we'll have a recession, because 189 00:09:20,800 --> 00:09:22,200 Speaker 3: that's the way it's always worked, and that to me 190 00:09:22,320 --> 00:09:24,400 Speaker 3: is what's going to trigger gold. So my theme this month, 191 00:09:24,440 --> 00:09:27,079 Speaker 3: as I'm probably mean my commodity outlook is golds has 192 00:09:27,120 --> 00:09:30,280 Speaker 3: been outperforming all other commodities. What stops it versus I'm 193 00:09:30,280 --> 00:09:32,200 Speaker 3: a fareful it's going to accelerate, all right. 194 00:09:32,080 --> 00:09:35,959 Speaker 1: Mike, always great, great segment. Always appreciate getting your color there. 195 00:09:36,000 --> 00:09:40,080 Speaker 1: Mike mcgloan's senior macro strategist for Bloomberg Intelligence is sconced 196 00:09:40,559 --> 00:09:42,120 Speaker 1: down in Miami Beach. 197 00:09:43,640 --> 00:09:47,000 Speaker 6: You're listening to the team Ken's are Live program Bloomberg 198 00:09:47,120 --> 00:09:50,480 Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot com, 199 00:09:50,559 --> 00:09:53,720 Speaker 6: the iHeartRadio app and the Bloomberg Business app, or listen 200 00:09:53,760 --> 00:09:55,880 Speaker 6: on demand wherever you get your podcasts. 201 00:09:58,400 --> 00:10:01,439 Speaker 1: Sim Own Foxman, Paul Sweeney, You're in Bloomberg Interactive Broker Studio. 202 00:10:01,440 --> 00:10:03,640 Speaker 1: We're streaming live on YouTube, so head over to YouTube 203 00:10:03,640 --> 00:10:08,319 Speaker 1: dot com and search Bloomberg Radio. Let's look ETFs and 204 00:10:08,400 --> 00:10:11,000 Speaker 1: usually I want to talk about flows, where the money's going, 205 00:10:10,960 --> 00:10:12,120 Speaker 1: and all that kind of stuff. But I want to 206 00:10:12,120 --> 00:10:14,439 Speaker 1: do in the context. I'll start off at least by 207 00:10:14,480 --> 00:10:18,080 Speaker 1: talking about bitcoin ETFs because our next person, our next guest, 208 00:10:18,120 --> 00:10:21,920 Speaker 1: has some experience in that, Greg Taylor, CIO of Purpose 209 00:10:22,000 --> 00:10:25,320 Speaker 1: Investments up there in Canada, So Greg, I guess in 210 00:10:25,360 --> 00:10:27,800 Speaker 1: the ETF biz, at least here in the US, A 211 00:10:27,800 --> 00:10:30,160 Speaker 1: lot of talk this week has been, hey, maybe we're 212 00:10:30,160 --> 00:10:34,120 Speaker 1: going to get a bitcoin spot ETF. You guys already 213 00:10:34,120 --> 00:10:35,600 Speaker 1: have that in Canada, don't you. Can you tell us 214 00:10:35,600 --> 00:10:39,040 Speaker 1: a little bit about the bitcoin ETF. 215 00:10:40,200 --> 00:10:42,720 Speaker 7: Yeah, for sure, and thanks for having us on. Yeah, 216 00:10:42,840 --> 00:10:45,240 Speaker 7: in Canada. We like to think that we're one of 217 00:10:45,320 --> 00:10:47,600 Speaker 7: the first innovators in the ETF space. A lot of 218 00:10:47,920 --> 00:10:50,360 Speaker 7: the first and the ETFs globally have hopped in Canada, 219 00:10:50,360 --> 00:10:53,280 Speaker 7: and one of those of late has been the first spot, 220 00:10:53,320 --> 00:10:57,040 Speaker 7: the Bitcoin ETF, which we launched the Purpose in February 221 00:10:57,040 --> 00:10:59,480 Speaker 7: of twenty twenty one. And I think it's great to 222 00:10:59,679 --> 00:11:02,120 Speaker 7: hear the US is finally catching up and then to 223 00:11:02,160 --> 00:11:04,600 Speaker 7: launch one as well, because really, when you look at 224 00:11:04,880 --> 00:11:07,400 Speaker 7: any type of ETF in a commodity world, you do 225 00:11:07,480 --> 00:11:10,240 Speaker 7: want to have spot versus futures, and I think spot 226 00:11:10,280 --> 00:11:13,280 Speaker 7: ETF is something that would be welcome to the crypto space, 227 00:11:13,320 --> 00:11:15,920 Speaker 7: and the experience we've had with it has been very positive. 228 00:11:15,960 --> 00:11:18,800 Speaker 7: And since we launched our fund in February twenty one, 229 00:11:18,880 --> 00:11:21,319 Speaker 7: it's gotten over a billion of assts. It's one of 230 00:11:21,360 --> 00:11:24,199 Speaker 7: the most heavily traded in the TSX, and I think 231 00:11:24,200 --> 00:11:25,920 Speaker 7: it's been a really good experience for a lot of 232 00:11:25,920 --> 00:11:28,200 Speaker 7: investors and a good way to get access to the 233 00:11:28,200 --> 00:11:30,400 Speaker 7: crypto market in a more regulated environment. 234 00:11:30,640 --> 00:11:35,280 Speaker 1: So, based upon your experience with a spot bitcoin ETF, 235 00:11:35,320 --> 00:11:38,480 Speaker 1: are you what do you think has been or the 236 00:11:38,520 --> 00:11:41,560 Speaker 1: SEC or the US regulators have kind of missed judged 237 00:11:41,720 --> 00:11:44,760 Speaker 1: about a futures versus a spot ETF. 238 00:11:46,160 --> 00:11:47,920 Speaker 7: Well, when I think when you go between futures in 239 00:11:47,920 --> 00:11:50,920 Speaker 7: a spot, I think there's no real argument that a 240 00:11:50,920 --> 00:11:53,400 Speaker 7: spot one is way better. And when we set up 241 00:11:53,400 --> 00:11:56,680 Speaker 7: to launch our ri ETF, we weren't really inventing the wheel. 242 00:11:56,760 --> 00:11:59,080 Speaker 7: What we did is we really kind of copied or 243 00:11:59,080 --> 00:12:02,640 Speaker 7: mimicked the way other commodity ETFs have done. Basically, the 244 00:12:02,720 --> 00:12:06,520 Speaker 7: GLD is a widely traveled ETF in the US on 245 00:12:06,600 --> 00:12:09,000 Speaker 7: spot gold, and I think it's looking at when you 246 00:12:09,040 --> 00:12:11,319 Speaker 7: look at a spot versus the futures, there's always better 247 00:12:11,400 --> 00:12:14,480 Speaker 7: because the futures is always going to lose basis points 248 00:12:14,520 --> 00:12:17,079 Speaker 7: on the role, so it was curious why the SEC 249 00:12:17,200 --> 00:12:20,480 Speaker 7: would approve a futures based ETF versus a SPOT because 250 00:12:20,480 --> 00:12:21,880 Speaker 7: at the end of the day, the futures are going 251 00:12:21,960 --> 00:12:24,640 Speaker 7: to have to be backed by something, so there is 252 00:12:24,679 --> 00:12:26,600 Speaker 7: a way to get back in the system. But having 253 00:12:26,720 --> 00:12:29,600 Speaker 7: a futures based ETF isn't really good for anyone or 254 00:12:29,640 --> 00:12:30,600 Speaker 7: the system. 255 00:12:31,040 --> 00:12:33,840 Speaker 5: No, we saw a share or sorry, we saw the 256 00:12:33,880 --> 00:12:37,800 Speaker 5: price of bitcoin pop after the decision came down. 257 00:12:37,840 --> 00:12:40,920 Speaker 8: In this case, I think there was a lot of enthusiasm. 258 00:12:40,960 --> 00:12:44,520 Speaker 5: Hey all these people are going to pile into an 259 00:12:44,520 --> 00:12:49,240 Speaker 5: ETF rather than try and go out and buy bitcoin themselves. 260 00:12:49,640 --> 00:12:52,200 Speaker 5: That said, you know, there's a JP Morgan strategist talking 261 00:12:52,200 --> 00:12:55,120 Speaker 5: about how you know, if you have a launch, say 262 00:12:55,200 --> 00:12:59,640 Speaker 5: of one of these these bitcoin ETFs, it's not really 263 00:12:59,679 --> 00:13:03,160 Speaker 5: going to change the overall market enthusiasm for this. It's 264 00:13:03,200 --> 00:13:07,040 Speaker 5: just going to draw liquidity away from other products. 265 00:13:07,960 --> 00:13:09,400 Speaker 8: Is this a zero sum game to you? 266 00:13:10,960 --> 00:13:12,680 Speaker 7: I don't think it is yet, because I still think 267 00:13:12,679 --> 00:13:15,600 Speaker 7: crypto is a commodity that's still really in the early 268 00:13:15,640 --> 00:13:19,520 Speaker 7: innings of of its growth, and I think having a 269 00:13:19,559 --> 00:13:21,800 Speaker 7: spot ETF which is one of the best ways to 270 00:13:21,800 --> 00:13:23,520 Speaker 7: get access to it is only going to bring on 271 00:13:23,559 --> 00:13:26,520 Speaker 7: more investors. Currently, if you want to get exposure to 272 00:13:26,559 --> 00:13:29,680 Speaker 7: crypto the traditional way, it's really not the easiest system. 273 00:13:29,720 --> 00:13:32,640 Speaker 7: You have to open a separate account with the crypto provider. 274 00:13:32,679 --> 00:13:34,800 Speaker 7: You get figured if you're doing a cold or hot wallet, 275 00:13:35,120 --> 00:13:36,800 Speaker 7: and a lot of people just don't want to do that, 276 00:13:36,840 --> 00:13:39,120 Speaker 7: so they want to wait for an ETF that's going 277 00:13:39,160 --> 00:13:42,520 Speaker 7: to be easy and contract the index. And further to that, 278 00:13:42,800 --> 00:13:44,400 Speaker 7: I think a lot of people are looking again at 279 00:13:44,440 --> 00:13:47,080 Speaker 7: real assets. With the amount of money printing going on 280 00:13:47,080 --> 00:13:49,280 Speaker 7: in central banks, there has been a case to add 281 00:13:49,280 --> 00:13:52,320 Speaker 7: more of your portfolio towards real assets, and certainly the 282 00:13:52,320 --> 00:13:55,400 Speaker 7: commodities and gold and real estate are benefiting from this. 283 00:13:55,520 --> 00:13:57,480 Speaker 7: But I think there's also a way to get that 284 00:13:57,520 --> 00:14:00,400 Speaker 7: crypto with into that bucket of real assets. I think 285 00:14:00,440 --> 00:14:03,120 Speaker 7: there's demand for real assets or just demand for crypto, 286 00:14:03,280 --> 00:14:05,280 Speaker 7: and people want an easy way to do that, and 287 00:14:05,320 --> 00:14:07,760 Speaker 7: I think having a spot ETF is one of the 288 00:14:07,840 --> 00:14:10,280 Speaker 7: simplest ways to get access to it. So I don't 289 00:14:10,320 --> 00:14:12,400 Speaker 7: think it's a zero sum game. I think once the 290 00:14:12,520 --> 00:14:14,839 Speaker 7: US does get a spot ETF, I think that will 291 00:14:14,880 --> 00:14:17,960 Speaker 7: open up more buyers and sellers, and that's probably why 292 00:14:17,960 --> 00:14:21,280 Speaker 7: the commodity reacted so well to a hints that it 293 00:14:21,320 --> 00:14:23,440 Speaker 7: does seem like the US getting closer to approving this. 294 00:14:24,280 --> 00:14:25,680 Speaker 1: Great Let's step back and take a look at the 295 00:14:25,680 --> 00:14:28,600 Speaker 1: ETF space in general, give us just an overview. Are 296 00:14:29,080 --> 00:14:32,360 Speaker 1: is the money continuing to gush into etfses? To give 297 00:14:32,440 --> 00:14:34,040 Speaker 1: us a sense of how this year's been. 298 00:14:35,280 --> 00:14:38,200 Speaker 7: Yeah, we've had netflows and that positive flows this year. 299 00:14:38,920 --> 00:14:41,000 Speaker 7: ETFs have definitely been a way that a lot of 300 00:14:41,040 --> 00:14:43,520 Speaker 7: people are getting access to it. One of the big 301 00:14:43,560 --> 00:14:46,400 Speaker 7: box spots for us and I think for the whole 302 00:14:46,440 --> 00:14:49,440 Speaker 7: ecosystem in ETFs. In the last few months has been 303 00:14:49,960 --> 00:14:53,200 Speaker 7: really looking at the money market ETFs. Certainly money market 304 00:14:53,240 --> 00:14:56,080 Speaker 7: has become a hot topic of late, and with a 305 00:14:56,240 --> 00:14:58,520 Speaker 7: yields for cash in the five to six percent, I 306 00:14:58,520 --> 00:15:01,280 Speaker 7: think that's been an area people are trying to get 307 00:15:01,320 --> 00:15:03,200 Speaker 7: access to and I think that's where a lot of 308 00:15:03,280 --> 00:15:05,560 Speaker 7: the games with the whole sector have been. But I 309 00:15:05,560 --> 00:15:08,440 Speaker 7: think over time, people are looking for access and simple 310 00:15:08,440 --> 00:15:10,760 Speaker 7: ways to get it, and in a low fee environment, 311 00:15:10,800 --> 00:15:12,560 Speaker 7: I think ETFs are one of those ways to get 312 00:15:12,600 --> 00:15:13,200 Speaker 7: access to it. 313 00:15:14,000 --> 00:15:17,760 Speaker 5: Greg we've been hearing from some investment strategists, investment strategies 314 00:15:17,800 --> 00:15:20,840 Speaker 5: pointing to sort of defensive sectors in a way from 315 00:15:20,920 --> 00:15:24,640 Speaker 5: like the tech driven height that we've seen over the 316 00:15:24,680 --> 00:15:29,840 Speaker 5: past couple of months. Are we seeing places like healthcare 317 00:15:30,440 --> 00:15:34,280 Speaker 5: and places like energy reflected in some of the ETF 318 00:15:34,360 --> 00:15:38,400 Speaker 5: flows and will we see more of that as we 319 00:15:38,560 --> 00:15:39,640 Speaker 5: head towards the end of the year. 320 00:15:40,920 --> 00:15:44,000 Speaker 7: I think that's certainly the hope. And being a Canadian, 321 00:15:44,040 --> 00:15:46,440 Speaker 7: we're definitely what our indice is tilted more towards the 322 00:15:46,440 --> 00:15:48,480 Speaker 7: cyclicals and the resource sector. I think we'd love to 323 00:15:48,480 --> 00:15:51,920 Speaker 7: see that rotation away from technology towards the commodity sectors, 324 00:15:51,960 --> 00:15:55,520 Speaker 7: and we are starting to see that. Certainly. The last 325 00:15:55,600 --> 00:15:58,000 Speaker 7: few years has been really good for the commodity growth, 326 00:15:58,040 --> 00:16:02,040 Speaker 7: as we've seen both entered and base metals do quite well. 327 00:16:02,080 --> 00:16:05,120 Speaker 7: And I think that's really setting up quite nicely for 328 00:16:05,160 --> 00:16:07,760 Speaker 7: the second half the year. There's a lot of rumblings 329 00:16:07,800 --> 00:16:11,360 Speaker 7: about China launching other stimulus program into September, and as 330 00:16:11,360 --> 00:16:13,520 Speaker 7: the world starts to talk more about a soft landing 331 00:16:13,640 --> 00:16:16,520 Speaker 7: more stimulus from China. That's setting up for a decent 332 00:16:16,600 --> 00:16:19,080 Speaker 7: move in the commodities, and I think that could cause 333 00:16:19,120 --> 00:16:22,600 Speaker 7: more rotation away from these these textocks which have really 334 00:16:22,640 --> 00:16:25,120 Speaker 7: driven in this is higher to start the year, and 335 00:16:25,200 --> 00:16:27,600 Speaker 7: maybe some of that money flows back to the cyclicals, 336 00:16:27,640 --> 00:16:31,119 Speaker 7: which are setting up quite nicely. From a supply demand economics. 337 00:16:31,160 --> 00:16:34,120 Speaker 7: There's not a lot of supply for modern new minds 338 00:16:34,160 --> 00:16:36,840 Speaker 7: and new oil bills coming on. So I does feel 339 00:16:36,840 --> 00:16:38,760 Speaker 7: like the second half of the year could remind could 340 00:16:38,880 --> 00:16:41,320 Speaker 7: could belong to more the cyclicals than the text talks. 341 00:16:42,160 --> 00:16:44,120 Speaker 1: Hey, Greg, thanks so much for joining us. Really appreciate 342 00:16:44,160 --> 00:16:48,720 Speaker 1: getting your thoughts. Greg Taylor, CIO at Purpose Investments checking 343 00:16:48,760 --> 00:16:51,920 Speaker 1: in with us, giving us the latest on the ETF space. 344 00:16:52,080 --> 00:16:56,880 Speaker 1: Just continues to see amazing funds flow into the ETF space. 345 00:16:56,960 --> 00:16:59,960 Speaker 1: Makes you wonder about the future of the mutual fund business, 346 00:17:00,040 --> 00:17:02,320 Speaker 1: which we all grew up with, and now it's really 347 00:17:02,320 --> 00:17:05,639 Speaker 1: fair I think in large part due to the cost differential, 348 00:17:06,080 --> 00:17:07,639 Speaker 1: ETFs aer a way to go for a lot of folks. 349 00:17:07,680 --> 00:17:10,560 Speaker 5: Yeah, it's places like Betterman, etc. 350 00:17:11,080 --> 00:17:14,080 Speaker 1: Yeah, it's easy, yeah exactly, and it's interesting. I think 351 00:17:14,160 --> 00:17:17,320 Speaker 1: what I understand is from tax free accounts still a 352 00:17:17,359 --> 00:17:20,240 Speaker 1: place for mutual funds, but otherwise ets and the cost 353 00:17:20,280 --> 00:17:22,120 Speaker 1: truction and reporting and all the type of stuff seems 354 00:17:22,160 --> 00:17:23,280 Speaker 1: to be a better rapper. 355 00:17:23,640 --> 00:17:26,760 Speaker 6: You're listening to the tape Ken's are Live program Bloomberg 356 00:17:26,840 --> 00:17:30,439 Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the 357 00:17:30,480 --> 00:17:33,680 Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 358 00:17:33,760 --> 00:17:36,560 Speaker 6: You can also listen live on Amazon Alexa from our 359 00:17:36,600 --> 00:17:41,640 Speaker 6: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 360 00:17:42,359 --> 00:17:44,520 Speaker 1: All right, we get some smart research coming out of 361 00:17:44,560 --> 00:17:47,919 Speaker 1: the folks at Bloomberg Intelligence. Joe Levington one of the 362 00:17:47,920 --> 00:17:50,840 Speaker 1: smarter folks we like at BI. He's a director of 363 00:17:50,840 --> 00:17:53,480 Speaker 1: credit research, so we better be good. But he's got 364 00:17:53,480 --> 00:17:56,119 Speaker 1: a nice note out here on Tesla and it's a 365 00:17:56,160 --> 00:17:59,040 Speaker 1: little bit different twist here and Joel covers the credit 366 00:17:59,080 --> 00:18:01,920 Speaker 1: side of some of these industrial companies. He joins his 367 00:18:02,040 --> 00:18:04,879 Speaker 1: life here in our Bloomberg Interactive Broker studio. Joe, what 368 00:18:04,920 --> 00:18:07,960 Speaker 1: do you think about tests there? Because our friends, you know, 369 00:18:08,080 --> 00:18:11,760 Speaker 1: in Detroit Ford GM Stalantis. I think they've got some 370 00:18:11,960 --> 00:18:13,080 Speaker 1: labor problem, don't they. 371 00:18:13,200 --> 00:18:16,840 Speaker 9: They have a massive labor problem coming up. There's a 372 00:18:16,840 --> 00:18:19,199 Speaker 9: strike with the UAW that's going to be set for 373 00:18:19,240 --> 00:18:23,800 Speaker 9: September fourteenth, as they work through their contracts expectations are 374 00:18:23,840 --> 00:18:26,639 Speaker 9: that pricing could go up thirty to forty percent on 375 00:18:27,359 --> 00:18:30,560 Speaker 9: their labor costs, which creates an opportunity for a low 376 00:18:30,600 --> 00:18:33,240 Speaker 9: cost player like Tesla to come in and continue to 377 00:18:33,280 --> 00:18:36,760 Speaker 9: price down. You know, Paul, the average Tesla price is 378 00:18:36,760 --> 00:18:40,159 Speaker 9: down about thirty seven percent this year already. And if 379 00:18:40,200 --> 00:18:42,560 Speaker 9: you really, yeah, even if you look at consensus estimates 380 00:18:42,600 --> 00:18:44,280 Speaker 9: just on their cars at the beginning of the year, 381 00:18:44,600 --> 00:18:47,239 Speaker 9: it would have the market was expecting about fifty four 382 00:18:47,240 --> 00:18:49,960 Speaker 9: thousand dollars of cards down to forty six thousand. So 383 00:18:49,960 --> 00:18:53,520 Speaker 9: they're really applying the pressure on these other old line 384 00:18:53,680 --> 00:18:58,880 Speaker 9: ice engine manufacturers to really step up or step out. 385 00:18:58,920 --> 00:19:01,080 Speaker 9: And you're starting to see some that's stepping out already 386 00:19:01,119 --> 00:19:04,840 Speaker 9: occurring that might be exacerbated by this by a potential strike. 387 00:19:05,280 --> 00:19:05,399 Speaker 7: You know. 388 00:19:05,520 --> 00:19:08,240 Speaker 5: What's interesting with the strikes though, is if the auto 389 00:19:08,320 --> 00:19:14,440 Speaker 5: workers are pretty successful, then doesn't it create pressure on 390 00:19:14,680 --> 00:19:17,320 Speaker 5: Tesla's own workforce to. 391 00:19:17,200 --> 00:19:18,600 Speaker 8: Say, hey, they got a good deal. 392 00:19:19,000 --> 00:19:21,240 Speaker 5: Maybe maybe we'll we'll get a good deal if we, 393 00:19:21,680 --> 00:19:25,639 Speaker 5: you know, resist the anti union efforts of Tesla and 394 00:19:25,720 --> 00:19:27,000 Speaker 5: go ahead and organize. 395 00:19:27,080 --> 00:19:30,760 Speaker 9: Yeah, one hundred percent, And I would start with a 396 00:19:30,840 --> 00:19:33,440 Speaker 9: base of if you know, labor costs go up thirty 397 00:19:33,480 --> 00:19:36,760 Speaker 9: to forty percent at Ford. At a non unionized plant 398 00:19:36,880 --> 00:19:38,840 Speaker 9: like at Tesla, if it goes a fifteen percent, you're 399 00:19:38,880 --> 00:19:41,399 Speaker 9: still ahead of the game point at least on a 400 00:19:41,440 --> 00:19:43,960 Speaker 9: relative basis, and you're already very far ahead of the game. 401 00:19:44,160 --> 00:19:45,680 Speaker 9: You have double the margins that you do out of 402 00:19:45,720 --> 00:19:49,000 Speaker 9: Ford or General Motors relative to Tesla, So it just 403 00:19:49,080 --> 00:19:51,280 Speaker 9: kind of further expands that difference. 404 00:19:51,520 --> 00:19:56,280 Speaker 1: Has there been any move to unionize Tesla over the years. No, 405 00:19:56,400 --> 00:19:59,000 Speaker 1: is there any expectation that will happen to UAW saying 406 00:19:59,040 --> 00:20:00,159 Speaker 1: we're just not going to deal that. 407 00:20:01,000 --> 00:20:02,199 Speaker 9: I don't know if they're saying that we're not going 408 00:20:02,280 --> 00:20:03,720 Speaker 9: to deal with it, but maybe this isn't the right 409 00:20:04,080 --> 00:20:05,520 Speaker 9: moment for that to occur. 410 00:20:05,840 --> 00:20:09,919 Speaker 5: My impression is that Elon Musk's been quite resistant to it. 411 00:20:10,840 --> 00:20:14,240 Speaker 5: What I mean, I mean, and if you I mean 412 00:20:14,320 --> 00:20:18,360 Speaker 5: you look at the kind of the labor agitation that's 413 00:20:18,400 --> 00:20:21,800 Speaker 5: been happening across the country between ups coming in with 414 00:20:21,840 --> 00:20:25,320 Speaker 5: a fantastic deal, pilots getting good deals, all that sort 415 00:20:25,359 --> 00:20:25,800 Speaker 5: of stuff. 416 00:20:26,240 --> 00:20:28,280 Speaker 8: You know, you do wonder if there if there will 417 00:20:28,320 --> 00:20:29,280 Speaker 8: be an uptake. 418 00:20:29,560 --> 00:20:33,639 Speaker 5: But but Tesla's had it as well. Some issues with 419 00:20:33,680 --> 00:20:35,359 Speaker 5: its cyber truck. 420 00:20:36,440 --> 00:20:38,200 Speaker 1: I wonder there is no truck. I mean, how can 421 00:20:38,240 --> 00:20:41,600 Speaker 1: you be how can you be an ev how can 422 00:20:41,640 --> 00:20:44,920 Speaker 1: you be an auto manufacturer in US without a truck? Well, 423 00:20:45,320 --> 00:20:45,720 Speaker 1: I mean. 424 00:20:47,080 --> 00:20:51,159 Speaker 8: I would love a truck, you know, it's fun. It 425 00:20:51,160 --> 00:20:51,760 Speaker 8: would be great. 426 00:20:51,800 --> 00:20:53,720 Speaker 5: But you can now I don't have a parking SPI 427 00:20:54,160 --> 00:20:56,720 Speaker 5: so trying to find street parking truck. 428 00:20:57,480 --> 00:20:58,840 Speaker 8: However, it would be cool looking. 429 00:20:59,680 --> 00:21:02,160 Speaker 5: But you know, we have a story out from yesterday. 430 00:21:02,640 --> 00:21:06,240 Speaker 5: Tesla's cyber truck is long on hype and short on specifications. 431 00:21:06,480 --> 00:21:09,480 Speaker 5: And how meaningful is this to the company overall? 432 00:21:09,720 --> 00:21:10,040 Speaker 1: It's not. 433 00:21:10,200 --> 00:21:12,280 Speaker 9: I mean the cyber truck is very, very niche. I 434 00:21:12,280 --> 00:21:14,280 Speaker 9: know sometimes it gets compared to the F one fifty. 435 00:21:15,240 --> 00:21:18,640 Speaker 1: I drove the F one fifty lightning awesome. 436 00:21:18,720 --> 00:21:21,280 Speaker 9: It's a machine. Yeah, it is a very big machine. 437 00:21:21,280 --> 00:21:24,120 Speaker 9: And Fordy is dominant in that area and we'll stay dominant. 438 00:21:24,320 --> 00:21:25,960 Speaker 9: The cyber truck is a niche product. And if you 439 00:21:26,000 --> 00:21:28,160 Speaker 9: look at consensus, that's exactly how they view it. It's 440 00:21:28,160 --> 00:21:32,320 Speaker 9: not meant for the contractor. It's meant for probably a 441 00:21:32,400 --> 00:21:36,240 Speaker 9: high net worth mails want to be able to make 442 00:21:36,240 --> 00:21:36,679 Speaker 9: a statement. 443 00:21:36,760 --> 00:21:40,719 Speaker 1: Yeah, I guess how the how are the bonds of 444 00:21:40,800 --> 00:21:43,320 Speaker 1: the big automakers, How are they trading these days? How 445 00:21:43,359 --> 00:21:48,640 Speaker 1: concerned are they about I guess first just this this 446 00:21:49,119 --> 00:21:55,040 Speaker 1: transition from internal combustion engines into into electric Like if 447 00:21:55,040 --> 00:21:57,040 Speaker 1: I were stockhold I would want to want to get 448 00:21:57,040 --> 00:21:58,399 Speaker 1: anywhere near these names. 449 00:21:58,560 --> 00:22:02,520 Speaker 9: How about the bonds, Paul, As always, the stocks have 450 00:22:02,600 --> 00:22:04,840 Speaker 9: really sold off over the last month or so if 451 00:22:04,840 --> 00:22:07,200 Speaker 9: you look at Ford and General Motors, but the bonds 452 00:22:07,200 --> 00:22:10,000 Speaker 9: have really held in relatively well. Maybe the CDs is 453 00:22:10,000 --> 00:22:11,399 Speaker 9: out about twenty basis points. 454 00:22:11,720 --> 00:22:14,760 Speaker 1: CDs is credit default swaps. I learned that a great 455 00:22:14,760 --> 00:22:16,840 Speaker 1: financial crisis. I didn't know that before. 456 00:22:16,600 --> 00:22:20,800 Speaker 9: You're on point again. So they've held in pretty well 457 00:22:21,560 --> 00:22:25,000 Speaker 9: relative to you know, where the stocks are at. And 458 00:22:25,040 --> 00:22:27,479 Speaker 9: I think that's large largely because if you look at 459 00:22:27,480 --> 00:22:29,159 Speaker 9: what the raiders have said. They've said, you know, if 460 00:22:29,200 --> 00:22:32,520 Speaker 9: you go back to twenty nineteen, when the last agreement 461 00:22:32,560 --> 00:22:34,840 Speaker 9: came out and there was a six week strikeover at 462 00:22:34,840 --> 00:22:38,679 Speaker 9: General Motors, they've already said like, hey, a situation like 463 00:22:38,720 --> 00:22:41,359 Speaker 9: that would not lead us to change our ratings. And 464 00:22:41,440 --> 00:22:45,480 Speaker 9: so that's a pretty fair and long kind of expectation 465 00:22:45,600 --> 00:22:48,720 Speaker 9: to have in that case. Back in twenty nineteen, it 466 00:22:48,760 --> 00:22:50,879 Speaker 9: costs GM a little over four billion dollars, just to 467 00:22:50,960 --> 00:22:51,480 Speaker 9: kind of put. 468 00:22:51,359 --> 00:22:52,159 Speaker 1: That in perspective. 469 00:22:52,880 --> 00:22:55,800 Speaker 5: Well, Elon Musk finds himself constantly sort of embroiled in 470 00:22:55,840 --> 00:23:01,080 Speaker 5: these scandals, whether it's something he tweets or most recently, 471 00:23:01,880 --> 00:23:06,879 Speaker 5: a probe, a reported probe into a secret glass house 472 00:23:07,320 --> 00:23:11,240 Speaker 5: that he may or may not have been building. How 473 00:23:11,280 --> 00:23:14,280 Speaker 5: do you think of headlines like this when you're evaluating 474 00:23:14,440 --> 00:23:16,359 Speaker 5: credit risk, because this is something the market can just 475 00:23:16,440 --> 00:23:19,080 Speaker 5: kind of like look past and wait to see where 476 00:23:19,080 --> 00:23:19,560 Speaker 5: things go. 477 00:23:19,960 --> 00:23:22,520 Speaker 9: Yeah, well, with Tesla, there's always event risk just in 478 00:23:22,640 --> 00:23:25,399 Speaker 9: headlines that you get. At least what I've seen on 479 00:23:25,440 --> 00:23:28,720 Speaker 9: the credit side is that when he is quiet and 480 00:23:28,800 --> 00:23:33,199 Speaker 9: the company is just working, their stock or their CDs 481 00:23:33,240 --> 00:23:36,280 Speaker 9: and their bonds tend to perform better. So a lot 482 00:23:36,320 --> 00:23:38,400 Speaker 9: of cases it would just be better if things were 483 00:23:38,440 --> 00:23:40,320 Speaker 9: quiet and you can kind of just move on and 484 00:23:40,440 --> 00:23:42,960 Speaker 9: focus on your operating acumen, in which they have a lot. 485 00:23:42,760 --> 00:23:46,560 Speaker 5: Of what's the magnitude of some of these reactions to you? 486 00:23:47,200 --> 00:23:49,119 Speaker 5: I don't know if the glass house was truly like 487 00:23:49,200 --> 00:23:50,920 Speaker 5: that big of a probe, but. 488 00:23:51,080 --> 00:23:53,480 Speaker 9: Yeah, for credit, I don't think that really means very much. 489 00:23:53,520 --> 00:23:58,720 Speaker 9: But certainly, it's just unnecessary waste use of time that 490 00:23:59,000 --> 00:24:01,600 Speaker 9: could be spent better in terms of improving your products. 491 00:24:01,760 --> 00:24:03,440 Speaker 1: Which Tesla going to hit the bond market? 492 00:24:04,600 --> 00:24:06,560 Speaker 9: You know, that's a great question, Paul, and I think 493 00:24:06,640 --> 00:24:09,639 Speaker 9: really the answer is once they're done cutting prices. And 494 00:24:09,720 --> 00:24:11,399 Speaker 9: the reason for that is one of the reasons that 495 00:24:11,440 --> 00:24:13,280 Speaker 9: they can do as much as they've done this year. 496 00:24:13,359 --> 00:24:15,760 Speaker 9: You know, if you're talking about a thirty four percent 497 00:24:15,800 --> 00:24:18,920 Speaker 9: or thirty five percent cut in your prices, you've never 498 00:24:18,960 --> 00:24:20,359 Speaker 9: heard of that in autos before. 499 00:24:20,440 --> 00:24:20,600 Speaker 6: Right. 500 00:24:20,600 --> 00:24:23,840 Speaker 9: You have to kind of go back to you, Henry 501 00:24:23,880 --> 00:24:27,399 Speaker 9: Ford to get that kind of level of price cutting. 502 00:24:27,680 --> 00:24:29,359 Speaker 9: And the reason for that is because most of the 503 00:24:29,400 --> 00:24:32,440 Speaker 9: auto companies have captive finance units. Right, So when you're 504 00:24:32,640 --> 00:24:35,399 Speaker 9: taking a loan out or a lease on one of 505 00:24:35,440 --> 00:24:38,399 Speaker 9: these cars, those cars wind up coming back, or a 506 00:24:38,520 --> 00:24:40,880 Speaker 9: high percentage of them come back to the auto company. 507 00:24:41,240 --> 00:24:44,359 Speaker 9: So they've financed that residual value at a certain level. 508 00:24:44,680 --> 00:24:46,840 Speaker 9: So you can go out and cut down the pricing 509 00:24:46,840 --> 00:24:49,199 Speaker 9: by thirty or thirty five percent, Otherwise you're going to 510 00:24:49,200 --> 00:24:52,159 Speaker 9: get destroyed in your finance company. Tesla doesn't really have 511 00:24:52,280 --> 00:24:56,040 Speaker 9: that issue, and so they're able to be much more 512 00:24:56,040 --> 00:24:59,480 Speaker 9: aggressive with their pricing and not impact their overall performance, 513 00:24:59,520 --> 00:25:03,080 Speaker 9: whereas the old line companies can't do that. Once they're 514 00:25:03,160 --> 00:25:05,280 Speaker 9: done with that, I think it's really you know, if 515 00:25:05,280 --> 00:25:08,720 Speaker 9: you think about their strategy of growing production fifty percent 516 00:25:08,760 --> 00:25:11,560 Speaker 9: a year for several years, they're gonna have to have 517 00:25:12,280 --> 00:25:14,680 Speaker 9: loans and leases become a bigger part of their business, 518 00:25:14,720 --> 00:25:18,520 Speaker 9: and so that'll be the impetus for seeing much more 519 00:25:18,600 --> 00:25:20,800 Speaker 9: debt coming out of the Tesla company. 520 00:25:20,920 --> 00:25:23,520 Speaker 1: I'm sure, I'm sure the bankers are pitching it. Joel Levinton, 521 00:25:23,560 --> 00:25:26,640 Speaker 1: he's the director of credit research at Bloomberg Intelligence, joining 522 00:25:26,720 --> 00:25:28,720 Speaker 1: us live here in our Bloomberg Interactive Broker Studio. We 523 00:25:28,800 --> 00:25:30,280 Speaker 1: appreciate getting your time there, Joel. 524 00:25:31,280 --> 00:25:34,720 Speaker 6: You're listening to the team. Ken's are Live program Bloomberg 525 00:25:34,760 --> 00:25:38,119 Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot Com, 526 00:25:38,200 --> 00:25:41,359 Speaker 6: the iHeartRadio app and the Bloomberg Business App, or listen 527 00:25:41,400 --> 00:25:43,520 Speaker 6: on demand wherever you get your podcasts. 528 00:25:45,400 --> 00:25:50,200 Speaker 1: Let's talk to streaming Biz, Netflix, Clear Winner, everybody else. 529 00:25:50,359 --> 00:25:52,560 Speaker 1: I have no idea so and I used to do 530 00:25:52,600 --> 00:25:55,040 Speaker 1: this stuff for a living. Mark Douglas knows. He's a 531 00:25:55,080 --> 00:25:57,040 Speaker 1: president's CEO of Mountain. He joins us live here in 532 00:25:57,080 --> 00:26:00,360 Speaker 1: our Bloomberg Interactive Broker Studio. So Mark, I mean again, 533 00:26:00,440 --> 00:26:01,920 Speaker 1: I think one of the questions people had at the 534 00:26:01,920 --> 00:26:05,000 Speaker 1: beginning of this evolution to streaming was, Okay, I get 535 00:26:05,160 --> 00:26:08,880 Speaker 1: Netflix is gonna winyah, how about everybody else? We're now 536 00:26:09,040 --> 00:26:12,080 Speaker 1: two three four years into this thing. We've got every 537 00:26:12,119 --> 00:26:15,239 Speaker 1: media company is into the streaming business. Are we what 538 00:26:15,280 --> 00:26:16,760 Speaker 1: are we learning here? Well? 539 00:26:16,880 --> 00:26:20,520 Speaker 4: I think what we're saying the reason Netflix continues to 540 00:26:20,560 --> 00:26:25,439 Speaker 4: win is because they have all the content to watch 541 00:26:25,640 --> 00:26:29,399 Speaker 4: when there's no other major show on the watch, and 542 00:26:29,440 --> 00:26:31,840 Speaker 4: then they also have some of the major shows, so 543 00:26:32,400 --> 00:26:35,199 Speaker 4: they I think just about everyone. When you turn on 544 00:26:35,240 --> 00:26:37,400 Speaker 4: the TV, the first thing you do is go see 545 00:26:37,400 --> 00:26:40,480 Speaker 4: what's on Netflix, right, and then so that puts them 546 00:26:40,480 --> 00:26:43,520 Speaker 4: in the first spot no matter what. And then after 547 00:26:43,560 --> 00:26:46,879 Speaker 4: that the second spot is live television, which is like 548 00:26:47,000 --> 00:26:51,440 Speaker 4: Hulu YouTube TV. And then what Disney was pretty lined 549 00:26:51,520 --> 00:26:54,119 Speaker 4: up to do was to really take that third slot 550 00:26:54,600 --> 00:26:58,879 Speaker 4: family programming, sports programming. But they seem to keep Star 551 00:26:58,920 --> 00:27:04,080 Speaker 4: Wars programming, but they keep seeming to stumble and and 552 00:27:04,119 --> 00:27:05,639 Speaker 4: so that's been the big challenge for that, and it 553 00:27:05,720 --> 00:27:08,320 Speaker 4: leaves that third slot open. Max is trying to be there, 554 00:27:08,520 --> 00:27:11,560 Speaker 4: Discoveries trying to be there, but I think most consumers 555 00:27:11,600 --> 00:27:14,439 Speaker 4: are like, Okay, I'm gonna do Disney for three months, 556 00:27:14,520 --> 00:27:17,879 Speaker 4: binge on that. Then I'll switch over the Showtime and 557 00:27:17,920 --> 00:27:21,000 Speaker 4: watch the like the current season of Billions. But I'm 558 00:27:21,000 --> 00:27:24,000 Speaker 4: gonna binge that. I'm going to cancel that, And that's 559 00:27:24,040 --> 00:27:28,920 Speaker 4: not really healthy if you're Showtime or or Max or 560 00:27:28,960 --> 00:27:29,760 Speaker 4: anyone like that. 561 00:27:29,880 --> 00:27:33,080 Speaker 5: So how are those folks trying to change their behavior 562 00:27:33,080 --> 00:27:38,040 Speaker 5: that you know behavior and make their service a mainstay? 563 00:27:38,960 --> 00:27:43,199 Speaker 4: I think what what you see is them trying to 564 00:27:43,200 --> 00:27:46,680 Speaker 4: go back to sports programming, but then that costs billions 565 00:27:46,680 --> 00:27:50,640 Speaker 4: of dollars in fees, so that's kind of like Amazon strategy. 566 00:27:51,440 --> 00:27:55,440 Speaker 4: And outside of that, I think they're like on a treadmill, 567 00:27:55,640 --> 00:27:58,960 Speaker 4: and they they really, quite frankly, don't know how to 568 00:27:59,000 --> 00:28:02,040 Speaker 4: get off of that tradmill unless they're going to try 569 00:28:02,040 --> 00:28:05,680 Speaker 4: to match the library of content that Netflix has. And 570 00:28:05,800 --> 00:28:09,000 Speaker 4: but Netflix is already occupied in that spot. So what 571 00:28:09,080 --> 00:28:11,360 Speaker 4: you're probably going to see is just a lot of consolidation. 572 00:28:11,720 --> 00:28:13,920 Speaker 4: That's really where that number three player is going to 573 00:28:13,960 --> 00:28:14,560 Speaker 4: come from. 574 00:28:14,440 --> 00:28:16,600 Speaker 1: Is well, I mean, who can consolidate Disney can't buy 575 00:28:16,640 --> 00:28:20,600 Speaker 1: Warner Brothers, Discovery or Fox or I mean, I mean 576 00:28:20,600 --> 00:28:23,960 Speaker 1: it they consolidated. It seems like they already did consolidated 577 00:28:23,960 --> 00:28:25,479 Speaker 1: as much as they possibly could in terms of the 578 00:28:25,520 --> 00:28:28,440 Speaker 1: big traditional media companies. I'm not sure any more deals 579 00:28:28,440 --> 00:28:29,000 Speaker 1: can get done. 580 00:28:29,160 --> 00:28:31,679 Speaker 4: Yeah, I mean people say, of course Apple can. I 581 00:28:31,720 --> 00:28:33,879 Speaker 4: mean they have like more money on hand than the 582 00:28:33,960 --> 00:28:35,000 Speaker 4: US government. 583 00:28:34,800 --> 00:28:38,880 Speaker 1: Or Dan Eyes and Red Bush Securities made a call 584 00:28:38,920 --> 00:28:42,480 Speaker 1: a few weeks ago that he believes that Apple will 585 00:28:42,480 --> 00:28:46,200 Speaker 1: buy ESPN, which kind of made some sense to me, 586 00:28:46,560 --> 00:28:50,160 Speaker 1: because boy, that would be a I think Disney surprisingly 587 00:28:50,560 --> 00:28:52,960 Speaker 1: wouldn't mind getting rid of Summer all of that, given 588 00:28:53,040 --> 00:28:56,280 Speaker 1: the decline, and uh, you know with the cord cutting issues, 589 00:28:56,760 --> 00:28:58,040 Speaker 1: is that something you think is reasonable? 590 00:28:58,080 --> 00:29:00,280 Speaker 4: Well, so, the thing I think that's miss Senders the 591 00:29:00,280 --> 00:29:03,920 Speaker 4: bad Apple is that Apple really wants to get a bundle. 592 00:29:04,440 --> 00:29:07,760 Speaker 4: So if you watch something, you listen to something, Apple Music, 593 00:29:07,840 --> 00:29:10,840 Speaker 4: you play it, Apple Games, you read it, Apple News. 594 00:29:11,160 --> 00:29:15,080 Speaker 4: They want twenty dollars a month from every iPhone user 595 00:29:15,080 --> 00:29:19,200 Speaker 4: on the planet, and they only do TV to finish 596 00:29:19,280 --> 00:29:23,440 Speaker 4: out that bundle. And the other things like Apple Music, 597 00:29:23,440 --> 00:29:26,360 Speaker 4: they have no production costs whatsoever. They don't make the music, 598 00:29:26,400 --> 00:29:29,400 Speaker 4: they don't make the games. They don't make the news articles, 599 00:29:29,840 --> 00:29:32,600 Speaker 4: and so the economics on that is, they just give 600 00:29:32,640 --> 00:29:35,760 Speaker 4: you enough TV content so you'll pay the nineteen ninety 601 00:29:35,840 --> 00:29:38,000 Speaker 4: nine a month or whatever the current price point is. 602 00:29:38,440 --> 00:29:40,720 Speaker 4: So I don't know that they have the incentive to 603 00:29:41,040 --> 00:29:44,280 Speaker 4: expand their footprint on TV given that the real money 604 00:29:44,320 --> 00:29:47,320 Speaker 4: comes from the eras, where they have no production costs whatsoever. 605 00:29:47,440 --> 00:29:49,520 Speaker 1: And I pitched them on every media company on the 606 00:29:49,560 --> 00:29:51,200 Speaker 1: planet for twenty years and got nowhere. 607 00:29:51,280 --> 00:29:54,240 Speaker 5: Yeah met them, yeah, yeah, And notably, I mean you 608 00:29:54,520 --> 00:29:58,440 Speaker 5: point out this Danives commentary, but our davely And, an 609 00:29:58,520 --> 00:30:04,959 Speaker 5: opinion columnist for bloomber says Apple doesn't need to buy ESPN. 610 00:30:04,800 --> 00:30:05,640 Speaker 8: To win in sports. 611 00:30:05,640 --> 00:30:08,320 Speaker 5: His argument is that they'd be better striking a partnership 612 00:30:08,360 --> 00:30:13,360 Speaker 5: that would showcase the ESPN channel within the Apple TV Plus. 613 00:30:13,560 --> 00:30:17,400 Speaker 4: Yeah, I think that makes sense. Also, Disney's like, this 614 00:30:17,520 --> 00:30:20,000 Speaker 4: is the thing about Disney right now, everyone on what 615 00:30:20,280 --> 00:30:24,160 Speaker 4: if you have a restaurant, great restaurant and people don't 616 00:30:24,200 --> 00:30:26,400 Speaker 4: seem to be showing up as much, You don't call 617 00:30:26,440 --> 00:30:29,640 Speaker 4: your accountant, You call the chef right and say what 618 00:30:29,680 --> 00:30:32,040 Speaker 4: are we doing wrong in the kitchen? And so you 619 00:30:32,120 --> 00:30:36,080 Speaker 4: see Disney and people like well, the company's not doing well, 620 00:30:36,080 --> 00:30:39,239 Speaker 4: and everyone wants to call the finance department and it 621 00:30:39,280 --> 00:30:40,880 Speaker 4: makes absolutely absolutely no sense. 622 00:30:40,960 --> 00:30:43,560 Speaker 1: Get the get the dishes right. They're like, get the 623 00:30:43,600 --> 00:30:46,120 Speaker 1: food right there, consumers. What do you think Disney needs 624 00:30:46,120 --> 00:30:46,920 Speaker 1: to do then they? 625 00:30:47,240 --> 00:30:49,640 Speaker 4: I think, I think when you look at the numbers 626 00:30:49,840 --> 00:30:53,600 Speaker 4: that Disney, their revenue has grown over it they doubled 627 00:30:53,600 --> 00:30:55,800 Speaker 4: in size of the last two years. The revenue has grown, 628 00:30:56,160 --> 00:30:58,960 Speaker 4: but if you look at their profitability that is tanked. 629 00:30:59,000 --> 00:31:03,120 Speaker 4: I mean they were doing like operating income like in 630 00:31:03,120 --> 00:31:06,240 Speaker 4: twenty nineteen, I think it was like fourteen eleven to 631 00:31:06,320 --> 00:31:09,480 Speaker 4: fourteen billion, and now it's like three billion. So I 632 00:31:09,480 --> 00:31:12,960 Speaker 4: think it's a plastic story of you got everyone needs 633 00:31:12,960 --> 00:31:16,160 Speaker 4: to get ten percent better at what they do and 634 00:31:16,200 --> 00:31:19,080 Speaker 4: they while doing it for ten percent less. 635 00:31:19,440 --> 00:31:23,000 Speaker 8: Is AI the future there? Like AI generated content? 636 00:31:23,280 --> 00:31:26,760 Speaker 4: I mean, I personally think that it literally goes back 637 00:31:26,800 --> 00:31:31,240 Speaker 4: to Disney, that the Disney brands the you know that people, 638 00:31:31,760 --> 00:31:34,480 Speaker 4: especially in the United States where it got controversial the 639 00:31:34,600 --> 00:31:38,000 Speaker 4: last couple of years, that people have to relove the 640 00:31:38,040 --> 00:31:41,240 Speaker 4: Disney brand. They have to relove the Star Wars brands, 641 00:31:41,480 --> 00:31:44,920 Speaker 4: the ESPN brand for sports, and that is not about 642 00:31:45,040 --> 00:31:47,640 Speaker 4: deals on you know on Wall Street that is about 643 00:31:47,880 --> 00:31:51,720 Speaker 4: who are leading these organizations under Bob Biger and where 644 00:31:51,760 --> 00:31:55,120 Speaker 4: is Bob Biger leading them. It's a very solvable problem. 645 00:31:55,200 --> 00:31:57,800 Speaker 4: It's not going to be solved. I mean doing deals 646 00:31:57,840 --> 00:32:00,960 Speaker 4: to get more consumers watching content, right, do that deal 647 00:32:01,080 --> 00:32:04,520 Speaker 4: with Apple? But that but like financial I say in 648 00:32:04,600 --> 00:32:06,840 Speaker 4: my company, the only type of engineering we're going to 649 00:32:06,920 --> 00:32:10,400 Speaker 4: do at Mountain is software engineering. We're not doing financial 650 00:32:10,440 --> 00:32:13,480 Speaker 4: engineering yet. We're going to grow through products people love, 651 00:32:13,560 --> 00:32:16,880 Speaker 4: and I think that is ultimately back to basics what 652 00:32:17,320 --> 00:32:19,120 Speaker 4: is needed at Disney speaking. 653 00:32:18,760 --> 00:32:23,720 Speaker 5: Of controversial products, CNN naming a former New York Times 654 00:32:23,800 --> 00:32:26,320 Speaker 5: head Mark Thompson as its next CEO. 655 00:32:27,320 --> 00:32:31,760 Speaker 8: What's your take as we bring in a newcomer to 656 00:32:31,920 --> 00:32:33,280 Speaker 8: try and turn the ship around. 657 00:32:33,480 --> 00:32:36,680 Speaker 4: Yeah, well, you know, the folks at CNN kind of 658 00:32:36,760 --> 00:32:40,000 Speaker 4: there was a rebellion, right and they literally, I mean 659 00:32:40,040 --> 00:32:44,320 Speaker 4: they tied the former guy, you know, and they wrapped 660 00:32:44,400 --> 00:32:46,360 Speaker 4: him in ropes and like pushed him off the ship 661 00:32:47,560 --> 00:32:52,680 Speaker 4: so metaphorically. And so I think the new person that 662 00:32:52,680 --> 00:32:56,320 Speaker 4: we're talking about, he definitely, you know, is someone that understands, 663 00:32:57,080 --> 00:33:00,160 Speaker 4: you know, this staff, and I think is going to 664 00:33:00,200 --> 00:33:02,400 Speaker 4: fit more there. The bigger news I think is making 665 00:33:02,680 --> 00:33:06,480 Speaker 4: more part of MAX because I think people just consume 666 00:33:06,520 --> 00:33:09,840 Speaker 4: their news while they're consuming other things. Like people don't 667 00:33:09,840 --> 00:33:11,840 Speaker 4: wake up as much and go I want to watch 668 00:33:11,920 --> 00:33:15,640 Speaker 4: the news. They more say I want to be entertained, 669 00:33:15,720 --> 00:33:19,240 Speaker 4: And wow, the news is very entertaining today in terms 670 00:33:19,320 --> 00:33:22,440 Speaker 4: of new you know, kind of the CNN and MSNBC 671 00:33:23,120 --> 00:33:26,120 Speaker 4: style news. We're sitting down in front of the television. 672 00:33:26,160 --> 00:33:28,560 Speaker 4: So making that part of MAX, I think is a 673 00:33:28,600 --> 00:33:31,560 Speaker 4: big deal. Gives them an audience to promote to gets 674 00:33:31,640 --> 00:33:35,080 Speaker 4: more people just knowing this is an option when you 675 00:33:35,120 --> 00:33:37,640 Speaker 4: go looking for content to watch. And I think that's 676 00:33:37,680 --> 00:33:38,640 Speaker 4: the biggest move there. 677 00:33:38,800 --> 00:33:41,400 Speaker 1: Hey, market based down in Miami. Your company's based in Miami. 678 00:33:41,640 --> 00:33:45,000 Speaker 1: How big is this Lionel messy thing? Yeah? 679 00:33:45,000 --> 00:33:48,480 Speaker 4: So Miami loves sports. I mean like like it has 680 00:33:48,560 --> 00:33:50,880 Speaker 4: become I used to go to Miami a few years 681 00:33:50,880 --> 00:33:52,960 Speaker 4: ago and be what, what what the hell do people 682 00:33:53,000 --> 00:33:57,000 Speaker 4: do for a living here? And now it's like become 683 00:33:57,120 --> 00:34:01,440 Speaker 4: so diverse, not but in every way possible. And they 684 00:34:01,480 --> 00:34:05,960 Speaker 4: love Formula one. They're loving you know, soccer or football 685 00:34:06,000 --> 00:34:08,759 Speaker 4: as the rest of the world calls it. And you 686 00:34:08,800 --> 00:34:12,759 Speaker 4: see messy posters all over the place, so I think 687 00:34:12,800 --> 00:34:14,480 Speaker 4: it is a big deal. I think it was a 688 00:34:14,520 --> 00:34:18,439 Speaker 4: perfect city for him. You know, I'm not out that much, 689 00:34:18,440 --> 00:34:20,960 Speaker 4: but apparently you can see him out a lot, and 690 00:34:21,000 --> 00:34:25,280 Speaker 4: I think he's doing a lot for Major League Soccer. 691 00:34:25,400 --> 00:34:28,759 Speaker 4: So I think it's a huge deal and he was. 692 00:34:28,680 --> 00:34:29,520 Speaker 1: A perfect person. 693 00:34:29,560 --> 00:34:32,800 Speaker 4: I mean the World Cup, I think you can almost 694 00:34:32,840 --> 00:34:36,560 Speaker 4: think Salt Bay because Salt Bay made the end of 695 00:34:36,600 --> 00:34:40,200 Speaker 4: the World Cup about Messi, not just his play on 696 00:34:40,239 --> 00:34:41,120 Speaker 4: the field. 697 00:34:40,920 --> 00:34:41,160 Speaker 1: But. 698 00:34:43,200 --> 00:34:46,200 Speaker 4: Yeah, it was like, why are you messing around with Messi? 699 00:34:46,480 --> 00:34:48,320 Speaker 1: It kind of like he became. 700 00:34:48,080 --> 00:34:50,400 Speaker 4: A martyr at the end of the you know, in 701 00:34:50,920 --> 00:34:52,839 Speaker 4: a couple of seconds at the end of the World Cup. 702 00:34:52,880 --> 00:34:54,440 Speaker 4: I think it's been great for him and great for 703 00:34:54,520 --> 00:34:57,480 Speaker 4: the sport. Obviously he was a phenomenal player before that. 704 00:34:57,920 --> 00:35:00,440 Speaker 1: Great for great for Miami, and maybe a good Apple 705 00:35:00,480 --> 00:35:03,360 Speaker 1: who is kind of part of this whole deal there. 706 00:35:03,400 --> 00:35:05,920 Speaker 1: So Apple putting some dipping their toe again into the 707 00:35:05,920 --> 00:35:08,279 Speaker 1: sports business. So we'll see, all right, right, Mark, thanks 708 00:35:08,280 --> 00:35:10,920 Speaker 1: so much for stopping by. Mark dougas he's a president, 709 00:35:11,160 --> 00:35:14,400 Speaker 1: he's the CEO of Mountain really knows what's happening in 710 00:35:14,400 --> 00:35:18,280 Speaker 1: the confluence of the media and technology. The whole streaming business, 711 00:35:18,280 --> 00:35:19,160 Speaker 1: all that good stuff. 712 00:35:19,360 --> 00:35:23,000 Speaker 6: You're listening to the tape cansur live program Bloomberg Markets 713 00:35:23,040 --> 00:35:26,439 Speaker 6: weekdays at ten am Eastern on Bloomberg Radio, the tune 714 00:35:26,480 --> 00:35:29,439 Speaker 6: in app, Bloomberg dot Com, and the Bloomberg Business App. 715 00:35:29,480 --> 00:35:32,279 Speaker 6: You can also listen live on Amazon Alexa from our 716 00:35:32,280 --> 00:35:37,360 Speaker 6: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 717 00:35:38,400 --> 00:35:40,839 Speaker 1: Let's check out with Anna Wong. She's a chief US 718 00:35:40,880 --> 00:35:43,640 Speaker 1: economist with Bloomberg Economics. She joins us here and we 719 00:35:43,680 --> 00:35:47,239 Speaker 1: had a lot of economic data this morning. What did 720 00:35:47,280 --> 00:35:51,719 Speaker 1: you take on the inflation picture here in the United States? 721 00:35:52,160 --> 00:35:52,359 Speaker 7: Right? 722 00:35:52,440 --> 00:35:56,279 Speaker 10: And the inflation is still I think the story of 723 00:35:56,320 --> 00:36:00,880 Speaker 10: this inflation is still the dominant story. We saw the supercore, 724 00:36:00,960 --> 00:36:06,520 Speaker 10: which is core services excluding housing UH surged in July, 725 00:36:06,640 --> 00:36:12,040 Speaker 10: but that's driven by a very volatile category named financial management, 726 00:36:12,480 --> 00:36:15,680 Speaker 10: and that's related to the stock rally in July, so 727 00:36:16,160 --> 00:36:18,839 Speaker 10: I think, but all in all, for the real economy, 728 00:36:18,880 --> 00:36:22,440 Speaker 10: what matters are the other supercore categories, and those are 729 00:36:22,520 --> 00:36:26,799 Speaker 10: still showing some signs of disinflation. On the other hand, 730 00:36:27,320 --> 00:36:31,719 Speaker 10: consumption was has seen a burst in July, and we 731 00:36:32,480 --> 00:36:36,600 Speaker 10: traced that first to the Barbenheimer and Taylor Swift and 732 00:36:36,600 --> 00:36:41,200 Speaker 10: beyond effect. Yes, it's it's wait, let's come back to that. 733 00:36:41,360 --> 00:36:44,640 Speaker 1: What are we ascribing to Barbie and Oppenheimer? 734 00:36:45,800 --> 00:36:50,960 Speaker 10: Uh, this burst in consumption in July. Yeah, and and uh, 735 00:36:51,200 --> 00:36:55,680 Speaker 10: you know, the the biggest dulling concert last year in 736 00:36:55,719 --> 00:36:59,120 Speaker 10: North America is by a band called Bad Bunny. I 737 00:36:59,160 --> 00:37:01,560 Speaker 10: don't know you, but I don't know Bad Buddy, but 738 00:37:01,640 --> 00:37:05,000 Speaker 10: I do know Taylor Swift and Yonte and so together 739 00:37:05,400 --> 00:37:09,840 Speaker 10: they make for kind of like an Olympic event in July. 740 00:37:10,040 --> 00:37:13,920 Speaker 10: And that's why we see this unsustainable burst of consumption. 741 00:37:14,280 --> 00:37:18,240 Speaker 5: Yeah, that's real personal spending up zero point six percent 742 00:37:18,640 --> 00:37:22,200 Speaker 5: in July. That's the strongest advance since the start of 743 00:37:22,200 --> 00:37:23,800 Speaker 5: the year. So you're saying, and I use that, you 744 00:37:23,840 --> 00:37:29,560 Speaker 5: don't think we'll see another number on this caliber because no, Barbenheimer. 745 00:37:30,200 --> 00:37:32,000 Speaker 8: Well, Taylor Swift's continuing. 746 00:37:31,520 --> 00:37:34,760 Speaker 5: But I guess people bought tickets already, so we should 747 00:37:34,760 --> 00:37:36,440 Speaker 5: look for that number to come down from now on. 748 00:37:37,080 --> 00:37:40,880 Speaker 10: Well, so Taylor swift a tour in North America ends 749 00:37:41,280 --> 00:37:47,440 Speaker 10: after August, and so is Beyonce's tour. So in the 750 00:37:47,520 --> 00:37:50,440 Speaker 10: fourth quarter there will be you know, just think about 751 00:37:50,560 --> 00:37:53,600 Speaker 10: the fact that you don't even have a super pop 752 00:37:53,640 --> 00:37:56,879 Speaker 10: star to maintain the same level of spending. That will 753 00:37:56,920 --> 00:38:02,120 Speaker 10: be an automatic negative monthly growth go into September. And 754 00:38:02,160 --> 00:38:05,240 Speaker 10: then on top of that, you have the underlying force 755 00:38:05,320 --> 00:38:09,279 Speaker 10: of consumer balance sheets worsening as they have to pay 756 00:38:09,320 --> 00:38:12,360 Speaker 10: back student loans, and we're seeing an uptick in delinquent 757 00:38:12,440 --> 00:38:15,120 Speaker 10: these credit cards and auto loans. So yeah, I don't 758 00:38:15,120 --> 00:38:18,480 Speaker 10: think it is sustainable. We likely will be seeing some 759 00:38:18,560 --> 00:38:22,200 Speaker 10: negative prints in consumption going into a fall. 760 00:38:22,719 --> 00:38:26,759 Speaker 5: I wonder if this is a new lever of FED policy. 761 00:38:26,880 --> 00:38:30,560 Speaker 5: Have J Powell call up Taylor Swift, call up Beyonce, 762 00:38:31,239 --> 00:38:35,640 Speaker 5: tell them when to schedule their their tours to adjust 763 00:38:36,000 --> 00:38:38,840 Speaker 5: to as a new lever of monetary policy. 764 00:38:39,400 --> 00:38:41,560 Speaker 1: So I mean, and I'm guessing at the univers University 765 00:38:41,600 --> 00:38:43,960 Speaker 1: of Chicago where you got your PhD in economics, they 766 00:38:43,960 --> 00:38:46,440 Speaker 1: didn't give you. There wasn't a class on like t 767 00:38:46,680 --> 00:38:50,840 Speaker 1: Swift or the Concert impact on GDP and inflation. 768 00:38:50,840 --> 00:38:54,120 Speaker 5: Studying the Beatles and all that they do teach us 769 00:38:54,160 --> 00:38:57,359 Speaker 5: that people are rational, But the fact that consumers are 770 00:38:57,400 --> 00:38:59,080 Speaker 5: spending money that they don't. 771 00:38:58,880 --> 00:39:01,400 Speaker 10: Have seems to me that in fact, they give too 772 00:39:01,480 --> 00:39:04,640 Speaker 10: much credit to the median American consumer Bright. 773 00:39:04,840 --> 00:39:07,759 Speaker 1: All right, so can we take Anna, Can we take 774 00:39:07,920 --> 00:39:10,239 Speaker 1: recession talk off the table once and for all here? 775 00:39:11,160 --> 00:39:11,920 Speaker 10: Definitely not. 776 00:39:13,360 --> 00:39:15,000 Speaker 1: That's just your model speaking, Anna. 777 00:39:15,360 --> 00:39:15,440 Speaker 11: No. 778 00:39:15,680 --> 00:39:20,560 Speaker 10: If anything, this is this uh temporary boom in consumption 779 00:39:20,800 --> 00:39:25,520 Speaker 10: is actually increasing the possibility that in the next couple 780 00:39:25,480 --> 00:39:29,720 Speaker 10: of months we are going to see a negative PCE 781 00:39:29,960 --> 00:39:32,880 Speaker 10: in consumption and that's one of the indicators that go 782 00:39:33,000 --> 00:39:37,359 Speaker 10: into the NBR recession dating. And also on top of that, 783 00:39:37,400 --> 00:39:39,319 Speaker 10: going into the fall, we are we're going to have 784 00:39:39,440 --> 00:39:42,919 Speaker 10: a likely going to have a government shut down as 785 00:39:43,000 --> 00:39:46,600 Speaker 10: well as a ua W auto strike, and that could 786 00:39:46,680 --> 00:39:50,120 Speaker 10: both of them together could potentially turn the non farm 787 00:39:50,120 --> 00:39:53,359 Speaker 10: payroll report for October negative. So there you have it. 788 00:39:53,560 --> 00:39:57,640 Speaker 10: You know, the two remaining NBR indicators that was in 789 00:39:57,760 --> 00:40:01,720 Speaker 10: positive territory that kept a recession way, those are turning 790 00:40:01,760 --> 00:40:03,280 Speaker 10: around likely in the fall. 791 00:40:05,040 --> 00:40:09,640 Speaker 5: I want to address another somewhat cynical story that we 792 00:40:09,719 --> 00:40:13,080 Speaker 5: had out yesterday, poor Americans tap debt, buy less food 793 00:40:13,120 --> 00:40:16,960 Speaker 5: as consumer cracks widen. Essentially, this was a survey of 794 00:40:17,120 --> 00:40:21,280 Speaker 5: people on SNAP assistance programs, so people who with incomes 795 00:40:22,040 --> 00:40:25,239 Speaker 5: at or below up the poverty line, saying forty two 796 00:40:25,280 --> 00:40:28,879 Speaker 5: percent skip meals in August and fifty five percent eight 797 00:40:29,000 --> 00:40:32,120 Speaker 5: less because they couldn't afford food. That's more than double 798 00:40:32,160 --> 00:40:37,560 Speaker 5: than last year's shares. Talk to me about how the Fed, 799 00:40:37,760 --> 00:40:41,120 Speaker 5: how the federal government addresses what seems to be a 800 00:40:41,120 --> 00:40:46,600 Speaker 5: clear divide between higher income consumers and lower income consumers, 801 00:40:46,640 --> 00:40:52,440 Speaker 5: if they're trying to cool off inflation but without hurting 802 00:40:52,600 --> 00:40:53,440 Speaker 5: the bottom half. 803 00:40:54,760 --> 00:40:59,600 Speaker 10: Yeah, you're absolutely right, And it's an impossible balance to 804 00:40:59,640 --> 00:41:03,839 Speaker 10: strike because monetary policy is a very blunt instrument. It 805 00:41:03,880 --> 00:41:08,480 Speaker 10: does not differentiate between lower income and higher income. And 806 00:41:08,520 --> 00:41:12,440 Speaker 10: this is why inflation high inflation. You know, running the 807 00:41:12,520 --> 00:41:16,160 Speaker 10: economy hot in order to boost unemployment and on the 808 00:41:16,200 --> 00:41:18,840 Speaker 10: you know lower that that was the motivation for running 809 00:41:18,880 --> 00:41:23,000 Speaker 10: the economy hot, right, But ultimately inflation hurts the bottom 810 00:41:23,800 --> 00:41:27,160 Speaker 10: percentile of the household more than the upper half. So 811 00:41:27,280 --> 00:41:31,520 Speaker 10: it is, it is, it's just the impossible balance to strike. 812 00:41:32,040 --> 00:41:33,800 Speaker 1: All right. So, and I'm looking at the w I 813 00:41:34,120 --> 00:41:38,479 Speaker 1: RP function on the Bloomberg Terminal interest rate forecast. Lots 814 00:41:38,480 --> 00:41:41,560 Speaker 1: of rate cuts. Kind of is what the markets suggesting 815 00:41:41,680 --> 00:41:44,560 Speaker 1: for twenty twenty four. Yet it's I don't know, it's 816 00:41:44,600 --> 00:41:47,960 Speaker 1: been hugely wrong for a long time. Kind of what 817 00:41:47,960 --> 00:41:49,720 Speaker 1: the market's looking for. What do you think the Fed's 818 00:41:49,719 --> 00:41:51,120 Speaker 1: going to do in twenty twenty four? 819 00:41:51,920 --> 00:41:55,160 Speaker 10: Yeah, I actually thought that the the what the market 820 00:41:55,200 --> 00:41:57,960 Speaker 10: priced in so far about you know, one hundred BIPs 821 00:41:57,960 --> 00:42:05,279 Speaker 10: of rate cuts is reasonable by our model, because so 822 00:42:05,560 --> 00:42:07,359 Speaker 10: I think that that's a reasonable thing. 823 00:42:07,440 --> 00:42:11,480 Speaker 5: Toper, Yeah, I wonder you know, the FED says, well, 824 00:42:11,520 --> 00:42:13,920 Speaker 5: don't think about j PELI says, don't think about cuts. 825 00:42:13,960 --> 00:42:17,800 Speaker 5: And yet, and yet it seems like the market certainly 826 00:42:17,840 --> 00:42:22,760 Speaker 5: pricing in looks like four cuts by the December meeting 827 00:42:22,880 --> 00:42:26,879 Speaker 5: next year. Really quickly, we only have about thirty seconds here. 828 00:42:27,200 --> 00:42:29,600 Speaker 5: What are you looking for from the all important jobs 829 00:42:29,640 --> 00:42:30,680 Speaker 5: report tomorrow? 830 00:42:33,920 --> 00:42:37,400 Speaker 10: We're expecting one n eighty five K change in non 831 00:42:37,480 --> 00:42:39,839 Speaker 10: farm payroll and an unemployment rate of three. 832 00:42:41,640 --> 00:42:43,239 Speaker 1: You're not going to get a recession with three point 833 00:42:43,239 --> 00:42:47,239 Speaker 1: five percent unemployment, Anna, So I'm just telling you right now. 834 00:42:47,239 --> 00:42:49,640 Speaker 1: I know you've got a PhD in economics from the 835 00:42:49,719 --> 00:42:53,360 Speaker 1: near Chicago, undergraduate degree in economics and statistics from this 836 00:42:53,400 --> 00:42:58,040 Speaker 1: little place called Berkeley. I took two economics classes at 837 00:42:58,080 --> 00:43:00,439 Speaker 1: business School, so I think I know what I'm talking 838 00:43:00,480 --> 00:43:03,160 Speaker 1: about here despite your PhD. But we'll see how it 839 00:43:03,160 --> 00:43:05,760 Speaker 1: plays out. I'm in the no recession camp at Analog 840 00:43:05,880 --> 00:43:09,000 Speaker 1: is so much better than this than the rest of us, 841 00:43:09,000 --> 00:43:11,359 Speaker 1: and all this stuff. We appreciate getting some time there. 842 00:43:11,600 --> 00:43:14,640 Speaker 6: You're listening to the tape cans are live program Bloomberg 843 00:43:14,760 --> 00:43:18,360 Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the 844 00:43:18,400 --> 00:43:21,640 Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 845 00:43:21,680 --> 00:43:24,480 Speaker 6: You can also listen live on Amazon Alexa from our 846 00:43:24,520 --> 00:43:29,560 Speaker 6: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 847 00:43:30,040 --> 00:43:33,120 Speaker 1: I buy my securities app. I hold them. I'm not trading, 848 00:43:33,560 --> 00:43:36,359 Speaker 1: but a lot of folks do buy and sell, buy 849 00:43:36,360 --> 00:43:39,359 Speaker 1: and sell, buy and sell, and oftentimes the timing there 850 00:43:39,440 --> 00:43:43,360 Speaker 1: isn't ideal, and that in fact really impacts their returns. 851 00:43:43,880 --> 00:43:46,400 Speaker 1: Kind of what have you experienced in your career? 852 00:43:47,600 --> 00:43:50,040 Speaker 11: So so a lot of this just traces back to 853 00:43:50,200 --> 00:43:54,840 Speaker 11: the emotionality of having capital at risk. 854 00:43:55,080 --> 00:43:55,319 Speaker 6: You know. 855 00:43:55,440 --> 00:43:58,920 Speaker 11: The upside is, hey, everybody, We're all going to be wealthy, 856 00:43:58,960 --> 00:44:02,000 Speaker 11: Isn't this fantastic? And everybody is always happy when the 857 00:44:02,040 --> 00:44:05,560 Speaker 11: markets are trending up like they've been for the past week, 858 00:44:05,640 --> 00:44:09,040 Speaker 11: in fact, back to October twenty twenty two. 859 00:44:09,520 --> 00:44:11,320 Speaker 1: But when you go through a full. 860 00:44:11,160 --> 00:44:16,200 Speaker 11: Year like twenty twenty two, people get very uncomfortable. Your 861 00:44:16,200 --> 00:44:20,120 Speaker 11: emotion gets in your way. And lots of studies have 862 00:44:20,239 --> 00:44:23,840 Speaker 11: been done on this. There's the dal Bar study, there's 863 00:44:24,360 --> 00:44:28,680 Speaker 11: countless academic studies. The one that intrigue me most recently 864 00:44:29,480 --> 00:44:32,480 Speaker 11: came from Morning Stars kind of snuck out in the 865 00:44:32,520 --> 00:44:35,560 Speaker 11: middle of the summer, called Mind the Gap, and it's 866 00:44:35,600 --> 00:44:37,840 Speaker 11: really fascinating and. 867 00:44:38,280 --> 00:44:39,520 Speaker 1: What does it kind of show us? 868 00:44:40,360 --> 00:44:45,480 Speaker 11: So when you look at the traditional studies of underperformance 869 00:44:46,160 --> 00:44:51,160 Speaker 11: of investors, they tend to say, hey, your stock selection, 870 00:44:51,400 --> 00:44:54,839 Speaker 11: or your market timing, or your use of leverage has 871 00:44:54,920 --> 00:44:58,360 Speaker 11: led you to underperform the benchmark. And everybody kind of 872 00:44:58,920 --> 00:45:02,960 Speaker 11: understands that. What's really shocking, and this is what the 873 00:45:03,000 --> 00:45:07,719 Speaker 11: morning Star study called Mind the Gap showed, is not 874 00:45:07,800 --> 00:45:14,919 Speaker 11: only do investors underperform a benchmark, they actually underperform their 875 00:45:14,960 --> 00:45:19,600 Speaker 11: own holdings. Meaning if you own ETF one and mutual 876 00:45:19,640 --> 00:45:23,160 Speaker 11: fund two, you would expect that you should get as 877 00:45:23,280 --> 00:45:28,440 Speaker 11: much returns as those products create, but the average investor 878 00:45:28,840 --> 00:45:33,440 Speaker 11: underperforms those holdings by about twenty two percent. And the 879 00:45:33,560 --> 00:45:37,640 Speaker 11: reason is what you alluded to before, timing. They tend 880 00:45:37,680 --> 00:45:43,040 Speaker 11: to chase products up or panic sell on the way down, 881 00:45:43,280 --> 00:45:47,240 Speaker 11: and that always leads to not just bad performance against 882 00:45:47,280 --> 00:45:50,560 Speaker 11: the benchmark, but you literally are doing worse than the 883 00:45:50,600 --> 00:45:54,520 Speaker 11: products that you own. It's quite fascinating interesting. 884 00:45:54,719 --> 00:46:01,000 Speaker 5: Well interpret for us the confounding mix of data that 885 00:46:01,040 --> 00:46:05,479 Speaker 5: we're seeing right now. I believe ubs Jason Draho termed 886 00:46:05,520 --> 00:46:11,920 Speaker 5: it a Markettheimer effect in congruous data and differing opinions 887 00:46:11,960 --> 00:46:14,960 Speaker 5: of or different different opinions of where the FED is 888 00:46:15,040 --> 00:46:15,799 Speaker 5: going to go. 889 00:46:17,200 --> 00:46:20,839 Speaker 8: How do you play this at this moment? What are 890 00:46:20,960 --> 00:46:24,440 Speaker 8: what are the salient points that you've been following? 891 00:46:25,120 --> 00:46:28,880 Speaker 11: So first, all economists suffer physics envy. You know, you 892 00:46:28,920 --> 00:46:36,319 Speaker 11: can land you know, physicists can land a craft on 893 00:46:36,440 --> 00:46:40,920 Speaker 11: an asteroid going fifty thousand miles away, fifty thousand miles 894 00:46:40,920 --> 00:46:44,840 Speaker 11: an hour, ten million miles away. So economists are jealous 895 00:46:44,840 --> 00:46:48,279 Speaker 11: of that, mostly because they can even tell you in 896 00:46:48,320 --> 00:46:50,279 Speaker 11: real time if we're in a recession or not. 897 00:46:50,920 --> 00:46:51,120 Speaker 6: Right. 898 00:46:51,239 --> 00:46:54,040 Speaker 11: So, when you compare the two sciences, and I use 899 00:46:54,080 --> 00:46:57,160 Speaker 11: that term loosely, one is a very precise science that 900 00:46:57,200 --> 00:47:00,480 Speaker 11: does unbelievable things, and the other are a bunch of 901 00:47:00,520 --> 00:47:05,000 Speaker 11: sociologists pretending to have a math background and pretending that 902 00:47:05,080 --> 00:47:08,920 Speaker 11: they're physicists, So start with that bit of bias on 903 00:47:09,000 --> 00:47:14,000 Speaker 11: my part. And then second, remember what the statistician George 904 00:47:14,040 --> 00:47:17,880 Speaker 11: Box said. All models are wrong, but some are useful, 905 00:47:18,040 --> 00:47:23,760 Speaker 11: and all of us, investors', strategists, but especially economists, tend 906 00:47:23,800 --> 00:47:26,440 Speaker 11: to forget that when we have a model of inflation, 907 00:47:26,960 --> 00:47:31,160 Speaker 11: when we have a model of GDP, we think somehow 908 00:47:31,160 --> 00:47:34,560 Speaker 11: that these models are you know, the Delphi of oracle, 909 00:47:34,560 --> 00:47:37,080 Speaker 11: and they're telling us the truth. What they are is 910 00:47:37,160 --> 00:47:42,080 Speaker 11: taking a super complicated world with a million moving parts 911 00:47:42,120 --> 00:47:46,839 Speaker 11: and thousands and thousands of data points and saying two 912 00:47:46,840 --> 00:47:49,680 Speaker 11: point two percent. You know, the old joke is, and 913 00:47:49,719 --> 00:47:51,760 Speaker 11: I don't want to just beat up on economists because 914 00:47:52,120 --> 00:47:55,799 Speaker 11: investors and strategists, all of us engage in this foolishness. 915 00:47:55,800 --> 00:47:59,560 Speaker 11: But the old joke is, what why do economists, you know, 916 00:47:59,680 --> 00:48:02,720 Speaker 11: show data to the second decimal point? And the answer 917 00:48:02,840 --> 00:48:05,240 Speaker 11: is to demonstrate they have a sense of humor. 918 00:48:07,040 --> 00:48:09,799 Speaker 1: Interesting, hey, Barry, you know one of the one of 919 00:48:09,840 --> 00:48:13,040 Speaker 1: the drivers of their stock market performance this year has 920 00:48:13,120 --> 00:48:15,759 Speaker 1: been a I and a lot of skeptics are out 921 00:48:15,760 --> 00:48:18,360 Speaker 1: there saying, boy this, I'm not sure if this is 922 00:48:18,840 --> 00:48:22,120 Speaker 1: real or if this should be really driving the markets here, 923 00:48:22,160 --> 00:48:24,640 Speaker 1: the AI may be overplayed. Do you have an opinion 924 00:48:24,719 --> 00:48:24,960 Speaker 1: on that? 925 00:48:27,040 --> 00:48:29,200 Speaker 11: Yeah, And I think it's when you go back and 926 00:48:29,200 --> 00:48:32,920 Speaker 11: look at history. No matter what the new technology is, 927 00:48:33,440 --> 00:48:36,480 Speaker 11: the cycle is kind of similar. Some people have called 928 00:48:36,520 --> 00:48:41,000 Speaker 11: this the Gartner hype cycle. But think back to internet 929 00:48:41,040 --> 00:48:43,880 Speaker 11: stocks or biotech stocks, or if you really want to 930 00:48:44,520 --> 00:48:48,520 Speaker 11: dust off the history books, railroad and steal stocks. A 931 00:48:48,600 --> 00:48:54,440 Speaker 11: new technology comes along, it changes everything. And while that's true, 932 00:48:54,840 --> 00:48:57,560 Speaker 11: nobody knows who the winners of that are going to be, 933 00:48:58,040 --> 00:49:01,239 Speaker 11: And so you have this land rush out who's left 934 00:49:01,280 --> 00:49:04,560 Speaker 11: standing in the world of personal computers. I mean, at 935 00:49:04,560 --> 00:49:07,040 Speaker 11: this point it's Apple and Dell and not a whole 936 00:49:07,120 --> 00:49:10,400 Speaker 11: lot of other people. But at the time there was 937 00:49:10,440 --> 00:49:13,640 Speaker 11: a giant land rush, there were hundreds of companies, most 938 00:49:13,640 --> 00:49:19,120 Speaker 11: of them fall by the wayside, radio, television, automobiles, pick 939 00:49:19,160 --> 00:49:22,840 Speaker 11: it to fiber optic, pick a technology, and it's the 940 00:49:22,880 --> 00:49:27,040 Speaker 11: same thing. So AI is probably going to be a 941 00:49:27,080 --> 00:49:31,040 Speaker 11: big thing at some point in the future. Figuring out 942 00:49:31,200 --> 00:49:34,080 Speaker 11: which company is going to be the winner, I don't 943 00:49:34,080 --> 00:49:38,200 Speaker 11: know if it's Microsoft or in Vidia. History has shown 944 00:49:38,280 --> 00:49:41,480 Speaker 11: us that very often there's a surprise winner. And at 945 00:49:41,480 --> 00:49:43,480 Speaker 11: the fact that we're talking about in Vidia for a 946 00:49:43,520 --> 00:49:46,560 Speaker 11: long time. Hey, they weren't also ran in the chip world. 947 00:49:46,880 --> 00:49:49,879 Speaker 11: Maybe they have this floating GPU thing that we could 948 00:49:49,960 --> 00:49:55,040 Speaker 11: use for gaming. Think about how rapidly things shay. But 949 00:49:55,200 --> 00:49:58,000 Speaker 11: by the way, not too long ago. I love finding 950 00:49:58,040 --> 00:50:02,520 Speaker 11: these old magazine articles. There was one about the BlackBerry 951 00:50:02,600 --> 00:50:06,400 Speaker 11: versus iPhone and you know this was about twenty plus 952 00:50:06,480 --> 00:50:10,000 Speaker 11: years ago. And I'm sorry about fifteen years ago, in 953 00:50:10,080 --> 00:50:13,879 Speaker 11: the late twenty two thousand's, like nine twenty ten. 954 00:50:14,320 --> 00:50:15,040 Speaker 1: And here's why. 955 00:50:15,080 --> 00:50:17,319 Speaker 11: The BlackBerry, you know, has a lot of fighting in it. 956 00:50:17,440 --> 00:50:21,320 Speaker 11: And you know this interloper from Apple. They're a computer company, 957 00:50:21,320 --> 00:50:23,799 Speaker 11: what do they know about phones? So our ability to 958 00:50:23,880 --> 00:50:29,319 Speaker 11: forecast the future, especially with technology, it's pretty mediocre. We 959 00:50:29,360 --> 00:50:33,439 Speaker 11: don't do a great job. AI is great. Your guest 960 00:50:33,520 --> 00:50:35,359 Speaker 11: is as good as mine as to which company ends 961 00:50:35,440 --> 00:50:36,160 Speaker 11: up being the winner. 962 00:50:36,880 --> 00:50:38,800 Speaker 1: Hey, Barry, thanks so much for joining us. As always, 963 00:50:38,800 --> 00:50:42,520 Speaker 1: always appreciate getting your unique perspective. Barry Ridholts. He's the 964 00:50:42,560 --> 00:50:46,280 Speaker 1: host of Masters in Business on Bloomberg Radio. Great podcast. 965 00:50:46,320 --> 00:50:48,600 Speaker 1: I recommend checking that out. Is also the chairman and 966 00:50:48,640 --> 00:50:52,120 Speaker 1: chief investment officer Rit Holt's Wealth Management and when Matt 967 00:50:52,160 --> 00:50:53,719 Speaker 1: Miller's in the studio. They tend to go off the 968 00:50:53,760 --> 00:50:54,960 Speaker 1: rails and talk about cars. 969 00:50:56,640 --> 00:51:00,520 Speaker 2: Thanks for listening to the Bloomberg Markets podcast. Caribe and 970 00:51:00,560 --> 00:51:04,680 Speaker 2: listen to interviews on Apple Podcasts or whatever podcast platform 971 00:51:04,719 --> 00:51:08,040 Speaker 2: you prefer. I'm Matt Miller. I'm on Twitter at Matt 972 00:51:08,080 --> 00:51:09,480 Speaker 2: Miller nineteen seventy three. 973 00:51:09,960 --> 00:51:12,400 Speaker 1: And I'm Paul Sweeney. I'm on Twitter at pt Sweeney. 974 00:51:12,440 --> 00:51:15,080 Speaker 1: Before the podcast, you can always catch us worldwide at 975 00:51:15,120 --> 00:51:16,879 Speaker 1: Bloomberg Radio