Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
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Speaker 1: YouTube search Bloomberg Clovel News check out shows a Peloton
Speaker 1: Charlie was talking about what's going on up up I
Speaker 1: think roughly well more than fifty at its highs over
Speaker 1: the last couple of days, and we know that there's
Speaker 1: a lot going on, a new CEO, and we're still
Speaker 1: waiting on maybe a possible sale. Well, let's talk about
Speaker 1: it with Ed Ludlow, West Coast correspondent at Bloomberg News.
Speaker 1: He joins us from our San Francisco bureau, and our
Speaker 1: our investors bullish because they think that the company is
Speaker 1: going to be bought or they bullish because this new
Speaker 1: you know, it's all about a turnaround story and Peloton
Speaker 1: is going to go out it alone. Yeah, it's a
Speaker 1: great question because you have to read each of the
Speaker 1: kind of Wall Street cell side notes in isolation for
Speaker 1: each of the actions that Peloton took. I guess the
Speaker 1: the overall takeaway is that the global Wall Streets kind
Speaker 1: of hopeful that this Lena mina more focused Peloton will
Speaker 1: be ripe to be acquired. Right. It's more attractive to
Speaker 1: be acquired because it's not so reliant on the hardware,
Speaker 1: bike in and treadmill business. And I heard you guys
Speaker 1: talking about in the last block. The talent is so
Speaker 1: key and if they're more focused on a subscription based
Speaker 1: company model, which this new CEO has a lot of
Speaker 1: experience in, then it does make it more attractive takeover target.
Speaker 1: You can't help but feel add that Peloton definitely was
Speaker 1: onto something. I feel like earlier on it wasn't just
Speaker 1: about giving somebody a bike to cycle on. It's so
Speaker 1: much about this community. And I know we all use
Speaker 1: the word community throw it around a lot, but it
Speaker 1: really did create one. And I think there's something really
Speaker 1: tangible in what they do, so I I agree with you.
Speaker 1: As you know, Carol, I'm a big Peloton user. You
Speaker 1: know people who asked me over the last twenty four hours.
Speaker 1: You know my favorite instructives and a big Alex two
Speaker 1: song guy. I'm a big Olivia guy. Do I use
Speaker 1: the Peloton as much in February of two as I
Speaker 1: did in the summer of I know they answered to that, No,
Speaker 1: that doesn't matter. Does that matter? I mean you're still
Speaker 1: paying the same amount of money, you still pay the
Speaker 1: monthly Here's the thing that is true. But we're looking
Speaker 1: at to the future here. So regardless of a takeover
Speaker 1: target or not, this new CEO wants to move to
Speaker 1: shrink the business right because they grew to a scale
Speaker 1: where they could service demand on the hardware side that
Speaker 1: just wasn't there. Do you guys remember the conversation we
Speaker 1: had in November around their fiscal first quarter earnings. I
Speaker 1: remember it. It was with you two specifically, and there
Speaker 1: was a chart in there. And the chart in the
Speaker 1: earnings deck was average monthly workouts per connected fitness sub
Speaker 1: and that that chart is what spookeed investors even back
Speaker 1: in November on that fiscal first quarter. It basically showed
Speaker 1: that the US existing consumers, existing subscribers, just weren't using
Speaker 1: our products as much as we were in the depths
Speaker 1: of the pandemic. And we have a choice as consumers
Speaker 1: to cancel and go back to the gym. And you know,
Speaker 1: it does seem like that's a concern. What is it
Speaker 1: that Peloton retains that's enough that if consumers faced with
Speaker 1: a choice, do I join my gym that I used
Speaker 1: to go to or do I stick with Peloton? And
Speaker 1: and it's the leadership that's in focus on this point.
Speaker 1: They didn't feel John Foy could do that. And what
Speaker 1: would the synergies be if they got taken over by
Speaker 1: an Amazon or a Nike? What are the merits of
Speaker 1: one versus the other? And I guess the question is
Speaker 1: too I think about my world. You know, here I've
Speaker 1: been doing I have the ability to do yoga at
Speaker 1: home virtually right, I've been you know, with an instructor
Speaker 1: that I've known for years, but I don't have to
Speaker 1: go to the studio. And it actually feels kind of okay,
Speaker 1: I kind of like it. But you do wonder write
Speaker 1: on the other side of this that part of the
Speaker 1: thing we love is going to a gym, working out
Speaker 1: with people, right, being part of a class. I do
Speaker 1: to some extent miss that as well. Yeah, and you know,
Speaker 1: without it doesn't really matter what what you and I
Speaker 1: think I think the streets kind of looking at that
Speaker 1: some of the really painful actions that Peloton took. I
Speaker 1: think BMO said these were kind of painful but prudent.
Speaker 1: But you know, two is very much like a new year.
Speaker 1: You me, I've certainly picked back up, you know, the
Speaker 1: classes that I'm doing at home. I think we we
Speaker 1: kind of agree, right, guys, the contents there, I think
Speaker 1: that they, you know, what they're looking for is some execution,
Speaker 1: that classic word execution. And the street, based on the
Speaker 1: notes I read this morning, seems really kind of confident
Speaker 1: that whether we get a takeover or not, they're the
Speaker 1: right people now in place to kind of make painful decisions,
Speaker 1: including job cuts, although as we know, those job cuts
Speaker 1: not extending to our favorite instructors. Yeah. Hey, by the way,
Speaker 1: it's good that you're it's February and you're still sticking
Speaker 1: with it, because the Strata CEO told our own Bloomberg
Speaker 1: Business Week that if you're sticking with your New Year's
Speaker 1: resolutions by January. You are going to make it. Okay,
Speaker 1: it's a very good song. Check in with me and
Speaker 1: August Well. Barry McCarthy is the company's new EO. Before Pelotonni,
Speaker 1: we know him from Spotify where he was CFO. We
Speaker 1: also know him from Netflix where so as well before that,
Speaker 1: with some other things in between. What do we know
Speaker 1: about the way that he's going to run this company.
Speaker 1: I mean, I think they're very very very interesting. It's
Speaker 1: a very interesting background. Yeah, there seems to be two
Speaker 1: main parts, and again I'm summarizing Wall Streets response. But
Speaker 1: the first is that he's a known quantity, So Folly
Speaker 1: stepping down is one thing. Folly founded this company a
Speaker 1: decade ago, right, He's a founder CEO, not just the CEO.
Speaker 1: So the person that's coming in seems like a capable
Speaker 1: and safe pair of hands. That's one Wall Street read.
Speaker 1: The other is that at his time at Spotify, Netflix,
Speaker 1: he was able to make a subscription rate, subscription revenue
Speaker 1: based business model work. And if they peloton is going
Speaker 1: to sell fewer bikes and fewer treadmills, irrespective of whether
Speaker 1: it's acquired. You know, the Street seems to think that
Speaker 1: he will be able to lead them down a path
Speaker 1: where they're not just Lena. But of course the subscription
Speaker 1: revenue is a higher margin revenue than selling hard where
Speaker 1: you know, some of the other actions they're taking include
Speaker 1: moving to third party distribution, relying on outsourcing more. They've
Speaker 1: they've scrapped their plans for an Ohio factory, Ohio factory,
Speaker 1: Lean Mean and services in subscription. Those all boost bottom
Speaker 1: line potentially in Wall Street seems to really like that.
Speaker 1: All I can say is a lot of this is
Speaker 1: happening quickly, where we're talking about a year ago right there,
Speaker 1: couldn't even meet to Manda year ago. Yeah, Yeah, It's
Speaker 1: just pretty remarkable how this story is playing out and
Speaker 1: so quickly. Hey, Ed Ludlow, thank you so much. He
Speaker 1: is West Coast correspondent Bloomberg News on camera. For those
Speaker 1: of you been watching on YouTube in our San Francisco bureau,
Speaker 1: you're listening to Bloomberg Business Week with Carol Masser and
Speaker 1: Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio, what the
Speaker 1: heck is going on at the US Canadian border, including
Speaker 1: at that land crossing that is so important, a very
Speaker 1: important link for goods moving between the U, the US
Speaker 1: and a Canta really and it's a crucial artery when
Speaker 1: it comes to the auto industry as well. To Brian Platt,
Speaker 1: is Canadian government reporter for bloom News, truns us on
Speaker 1: the phone from Ottawa. Brian, take us into what's going
Speaker 1: on here. Get everyone up to speed about what's going
Speaker 1: on right outside of Detroit. I mean, it's a it's
Speaker 1: been an utterly bizarre situation for a while now in Ottawa,
Speaker 1: where in my office right now, I'm in the middle
Speaker 1: of what's essentially become an occupied zone in this in
Speaker 1: Canada's capital city of this trucker convoy that arrived here
Speaker 1: about a week and a half ago and became just
Speaker 1: this sort of massive protest um that drew in all
Speaker 1: kinds of other people. I mean, this may have started
Speaker 1: as a trucker protest, that I can tell you, it's
Speaker 1: a lot more than just truckers here. And so you know,
Speaker 1: this trucker protest has created a crisis in Ottawa, in
Speaker 1: the actual city of Ottawa that the City of Ottawa
Speaker 1: still trying to deal with because most of downtown is
Speaker 1: completely shut down. But as as it stayed here for
Speaker 1: about a week and a half. It sparked all these
Speaker 1: offshoots in other places. Um there's been a border crossing
Speaker 1: in Alberta between Alberta and Montana that that has been
Speaker 1: occasionally shut down over the past week. But last night
Speaker 1: the Ambassador Bridge between Windsor and Detroit was shut down
Speaker 1: by a sort of parallel protest. Much much smaller than
Speaker 1: what's in Ottawa, but it's only one bridge, so it
Speaker 1: doesn't take very many people to shut it down, and
Speaker 1: it is a massively important bridge. It carries about a
Speaker 1: quarter of all trade between by land between Canada and
Speaker 1: the US. It's you can't overstate how important this this
Speaker 1: bridge is uh to um land trade between the two countries.
Speaker 1: So it's a very very big deal. And I guess
Speaker 1: we will see how quickly they can get traffic flowing again.
Speaker 1: Why is this happening? I mean, we know we're all
Speaker 1: tired of the pandemic and maybe what's being asked of us,
Speaker 1: But is this much more a political thing? What's going on?
Speaker 1: It's so trying to explain what's going on is really
Speaker 1: hard because um it's it gets called trucker protest or
Speaker 1: the trucker convoy, and it did the the spark of
Speaker 1: this was the U, first Canada and then the US
Speaker 1: in mid January, bringing in a requirement that truckers had
Speaker 1: to be vaccinated to cross the border. Until then, truckers
Speaker 1: had an exemption from the border vaccination rules, so that
Speaker 1: exemption ended in mid January, large large like made more.
Speaker 1: Now of truckers in Canada are vaccinated. So it actually
Speaker 1: wasn't I mean, it was seen as potentially disruptive, but
Speaker 1: for the most part Canadian truckers are highly vaccinated and
Speaker 1: still on the job. Um the problem, but it kicked
Speaker 1: off this convoy, this protest, that this, and so they
Speaker 1: drove out from Western Canada and picked up more people
Speaker 1: along the way, and then people also drove in from
Speaker 1: other parts of the country. They all converged on Ottawa
Speaker 1: about ten days ago, and there are semis parked all
Speaker 1: over downtown Ottawa, like the streets are totally blockaded, and
Speaker 1: on the weekends all these other protests, protesters fled into
Speaker 1: the city. And it is much more now about a
Speaker 1: backlash against all COVID nineteen restrictions, mask mandates, vaccine mandates, everything.
Speaker 1: It's not just nobody even really talks about the border
Speaker 1: issue anymore. It's now just like a total backlash movement
Speaker 1: against COVID nineteam restriction. So go ahead, we only have
Speaker 1: a minute left with you, Brian. How does it get resolved?
Speaker 1: Its police are baffled here. I mean they cannot get
Speaker 1: these trucks out there. You have to picture what it
Speaker 1: would be like having like five hundred semi trucks vockading
Speaker 1: the streets in the in a fairly major city. I mean,
Speaker 1: Ottawa's about one point five million people, so so you know,
Speaker 1: smaller than a lot of other cities might think of,
Speaker 1: but it's one of Canada's biggest city, and it's also
Speaker 1: the capital city. Of course, the parliament buildings are all
Speaker 1: around here, and so police don't know what to do.
Speaker 1: So is it okay, thirty seconds left really quick? Is
Speaker 1: it force that ends this or is there some kind
Speaker 1: of agreement conversation that ends this. I think it's very
Speaker 1: unlikely this gets solved through a negotiation. Um, you never know,
Speaker 1: maybe something will surprise me. I think if the police
Speaker 1: have already asked for federal reinforcements to basically double the
Speaker 1: size of their police force, I think ultimately this is
Speaker 1: going to get solved through arrests. And towing of the trucks.
Speaker 1: But it's very very difficult, unbelievable, just interesting. Brian, great
Speaker 1: reporting and really great clear understanding of what's going on there,
Speaker 1: which is not a very clear situation, to put it mildly.
Speaker 1: Brian Platty's Canadian government reporter at Bloomberg News on the
Speaker 1: phone from Ottawa. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes, Tim Stinovic on Bloomberg Radio
Speaker 1: and The Curnis Show of Bloomberg Business Week. We've got
Speaker 1: a story about the Chinese American born Olympic star. Uh
Speaker 1: really keeping I guess you could almost say to him
Speaker 1: a game day face and strategy being very careful, especially
Speaker 1: as her brand explodes. Yeah, we're talking about the teenage
Speaker 1: freestyle skier Eileen gu You might recognized the name now
Speaker 1: if you didn't before yesterday, because she's fresh off a
Speaker 1: gold medal win. Although she was born in San Francisco.
Speaker 1: She's representing China at the Olympic Games. It's a fantastic feature.
Speaker 1: Joe Webber is Edirett Bloomberg Business Week. He joins us
Speaker 1: on the access line from Brooklyn. Joel, I gotta tell
Speaker 1: you the crystal ball. It was working really well again
Speaker 1: last night because you guys have this issue, this story
Speaker 1: in the January twenty seven issue of Bloomberg Business Week magazine.
Speaker 1: But there are a lot of people now who are
Speaker 1: learning who Eileen you is for the first time. Well,
Speaker 1: you're you're gonna hear more about Eileen gou Um. Not
Speaker 1: only did she have one gold medal, she could win
Speaker 1: multiple gold medals, or at least multiple medals um. She's
Speaker 1: also the face of a lot of brands. Um. And
Speaker 1: especially after this win, you're going to have to think
Speaker 1: that the that even more brands are are going to
Speaker 1: line up to have her be the be part of
Speaker 1: their promotions. Okay, So what I find particularly compelling about
Speaker 1: her story story since I've learned about her twenty four
Speaker 1: hours ago, I mean and and it's it's I encourage
Speaker 1: everybody to go check out this story. I don't know how,
Speaker 1: I'll be honest with you, I missed it in that
Speaker 1: issue of Bloomberg Business Week. And uh, she was born
Speaker 1: in California, but she somehow got permission to represent China
Speaker 1: and she's become the face of winter sports in China.
Speaker 1: How did she do that? So the story is is
Speaker 1: really an amazing one because UM, you know, the as
Speaker 1: you described their American born but Chinese athlete. UH, this
Speaker 1: was a decision of hers rooted UM a couple of
Speaker 1: years ago, UM, and the moment she did that, I
Speaker 1: think it was actually very tactical on her part of
Speaker 1: looking at where the Olympics we're going to be held,
Speaker 1: realizing that UM to be the face of a country UM,
Speaker 1: and and President g in China has really made her
Speaker 1: the face of it UM that it was going to
Speaker 1: have huge commercial amplications. I mean in the US, I'm
Speaker 1: sure she would have been fine, but there she really
Speaker 1: is the star of of of the national this national
Speaker 1: symbol UM of hosting the Olympics UM. As we've talked
Speaker 1: about before on the show. Beijing obviously hosted the two
Speaker 1: thousand eight ones that had a completely different tone. So
Speaker 1: so really I think this allowed her to not only
Speaker 1: be the face of these Olympics, but also step into
Speaker 1: UM a really lucrative commercial role to right, and she's
Speaker 1: being very careful not to say some anything right about anything.
Speaker 1: That is the most amazing part about this story is
Speaker 1: the backdrop of UM and the art did a really
Speaker 1: good job with our story of showing this. You know,
Speaker 1: she's basically doing a sixteen twenty. I can't even count
Speaker 1: how many rotations that is UM as she jumps over
Speaker 1: all of the tension between um, the US and China.
Speaker 1: And you know, in the Trump world, was the trade war,
Speaker 1: and now it's weaker weak, the weakers, it's the Hong Kong,
Speaker 1: it's Taiwan. It's just endless, right, um. And you're not
Speaker 1: gonna hear talk about in any of that. If anything,
Speaker 1: somebody did ask her about paying the tennis star and
Speaker 1: sort of the weird spectacle that that was UM and
Speaker 1: and that was as close as she'd gotten. And still
Speaker 1: she managed to kind of like step in it when
Speaker 1: she did. But it there is just no incentive to
Speaker 1: talk about anything that borders on geopolitical UM. And you know,
Speaker 1: to her credit, I mean, she is an eighteen year
Speaker 1: old kid. She hasn't even started college yet. She will
Speaker 1: go to Stanford beginning in the fall. UM. So clearly
Speaker 1: like there's a lot of ways that this could go wrong,
Speaker 1: and she is staying firmly on a messaging track that
Speaker 1: that involves nothing that could be misconstrued. Well past these
Speaker 1: next couple of weeks. I wonder what the future looks
Speaker 1: like for her. You have images of her in the
Speaker 1: story appearing at the met Gala, but also at the
Speaker 1: same time um appearing as a model for a Chinese
Speaker 1: dairy brand as well. Uh. She said in the pastoral
Speaker 1: that when she's in China, she's Chinese, when she's in
Speaker 1: the US, she's American. And it was remarkable to watching
Speaker 1: the Olympics last night when she landed I think it
Speaker 1: was the second of her three runs of her gold
Speaker 1: medal three runs. She she put both to the camera
Speaker 1: in English talking about how she wasn't crying, and she
Speaker 1: sounded like an American teenager because she is, you know,
Speaker 1: she really straddles both sides of of the Pacific. And
Speaker 1: you know you mentioned Um, you know, like a Chinese
Speaker 1: dairy brand there. But like, we have not seen this
Speaker 1: campaign rollout, but she has thought so highly of by
Speaker 1: brands and an advertisers. She's going to be one of
Speaker 1: the faces of Victoria's Secret. Victoria's Secret obviously mired in
Speaker 1: this just like you know, a vestige of of everything
Speaker 1: that was wrong a couple of years ago, has completely
Speaker 1: tried to rebrand itself and Eileen Goo is one of
Speaker 1: the handful of uh young UM models UM that will
Speaker 1: be basically the face of the brand going forward. So
Speaker 1: to give you a sense of like how big Eileen
Speaker 1: who's gonna gonna become and the gold medal is just
Speaker 1: gonna burnish that. So you're gonna see her a lot.
Speaker 1: You know, she's already backed by by the Red bulls.
Speaker 1: And I just think the the sponsors like what they
Speaker 1: see because they get an athlete who can speak to
Speaker 1: a Chinese audience that everyone in China can now you know,
Speaker 1: look up to UM, and in America they basically just
Speaker 1: get a multinational. So it's a very very interesting story.
Speaker 1: There's not that you know this as um Ellen Hewitt
Speaker 1: story document. There are a couple other athletes that have
Speaker 1: done a similar um uh judo kind of positioning where
Speaker 1: they're they're born in America and also represented China. One
Speaker 1: of those other athletes is in the Games and has
Speaker 1: not nearly faired as well. So I think who's really
Speaker 1: rising above the noise? Still, yeah, modeling for the other
Speaker 1: time noise, you know, I think all of these are
Speaker 1: you know, this is like such a difficult Olympics UM
Speaker 1: and none of it is real noise, but she's managing
Speaker 1: to to walk a tight rope that, you know, I
Speaker 1: think few other athletes could probably do. Attended last year's
Speaker 1: met Gala modeling for Louisvatan Tiffany. It's so interesting at
Speaker 1: a time when brands are being asked to step up
Speaker 1: on a lot of issues, and yet you look at
Speaker 1: the success she has in really staying um about so
Speaker 1: many important issues that are out there. Joe Weber, editor
Speaker 1: Bloomberg Business Week magazine. Catch this in the January issue. Yeah,
Speaker 1: I'll bet you let me drive. Oh no, no, no, no no,
Speaker 1: oh please, I'll do the ride gravel. I want to drive.
Speaker 1: It's good question. Drive is the drive to the clothes
Speaker 1: on Bloomberg Radio. Oh my god, it's confusing day. Uh.
Speaker 1: We are just about ten minutes away from the closing bell,
Speaker 1: and we have definitely seen stocks um higher for most
Speaker 1: of the day. We did see kind of a turnover
Speaker 1: and just coming off the highs. But here we are
Speaker 1: once again and we're just kind of bouncing around. You.
Speaker 1: Our best office of the day, our performers heard from
Speaker 1: Charlie really the nastac up more than one percent. Let's
Speaker 1: let's bring in Ryan Dietrich chief market strategist at LPL
Speaker 1: Financially joins us on the phone from Charlotte, North Carolina. Ryan,
Speaker 1: I love when you join us because you have so
Speaker 1: many technicals that you're looking at here we are, uh,
Speaker 1: you know, at the beginning of February. Still give us
Speaker 1: an idea technically how you're analyzing the market right now? Yeah,
Speaker 1: Tim and Carol, thanks for having me back. But you know,
Speaker 1: the way we're putting it as this what we're telling
Speaker 1: our advisors, this is a mid term year. We all
Speaker 1: know that, right. Historically when you look at the four
Speaker 1: year presidential cycle, guys, you know, the most of volt
Speaker 1: out of the four the mid term years. You see
Speaker 1: almost a seven team percent peak to trough correction during
Speaker 1: the midterm year. Did we expect to be like you know,
Speaker 1: the temperson correction to start this year in the SMP
Speaker 1: and even more in small caps in other areas well,
Speaker 1: Probably that soon at the start of the year. But
Speaker 1: it shouldn't be shocking to people that we're having more
Speaker 1: volatility right now. Now. The truth is we you know,
Speaker 1: a couple of mondays ago, was that below right, we
Speaker 1: had the record volume all to put the call ratio
Speaker 1: spiked a lot of fear. We think we're carving out
Speaker 1: a bottom. We had about a ten percent correction in
Speaker 1: the smp here um. You know, we can maybe go
Speaker 1: back down and tested from technical point of view. But
Speaker 1: the truth again is this market just kind of seems
Speaker 1: like it's choppy and wants to kind of just bide
Speaker 1: its time here. It's not necessarily bearish, maybe not super
Speaker 1: bowlish either, but if not the end of the world
Speaker 1: after the rally we saw last year. So wait, so
Speaker 1: you're blaming mid terms historically technically, well, we wouldn't say
Speaker 1: we're blaming them. We're just pointing out, Carol, that historically
Speaker 1: midterm years are vault. Let's not forget twenty eighteen. Right,
Speaker 1: we saw a bear market in pretty much in late
Speaker 1: in the year. At the same time, other reasons expect
Speaker 1: a little more volatility to fit. It's starting to high rates.
Speaker 1: We've seen volatility. Can the technician talk fundamentals? Can the
Speaker 1: technician talk fundamentals? I'm just wondering, Yeah, you know, I
Speaker 1: use the efforts sometimes. Whoa okay, technician, it's a technician joke.
Speaker 1: I know, I know, I can tell. So we talked
Speaker 1: to a little bit more about though, how are you
Speaker 1: thinking you must look like you said you have to
Speaker 1: roll in it all? M yeah, I mean, you know,
Speaker 1: let's just look back the last time the Fed hike rates, right,
Speaker 1: we remember December we started the high rates. I should
Speaker 1: say December fifteen, had a pretty big sell off in
Speaker 1: the February of sixteen as you recalibrate kind of the
Speaker 1: expectations of those hikes. You know, everyone's sawing, oh, four hikes,
Speaker 1: five hikes, and we're not minimizing it. But the truth is,
Speaker 1: when we've looked in history, Carol, when you do that
Speaker 1: first rate hike in a new cycle, you know, sp
Speaker 1: does because thirty six more months on average and gains
Speaker 1: like sevent So just because the Fed is hiking, you're
Speaker 1: probably more mid cycle and there could be you know,
Speaker 1: a good amount of time left. Investors need to remember
Speaker 1: that as we start to see some rate hikes. So
Speaker 1: you've got mid terms increasing volatility. You've also had a correction.
Speaker 1: Stocks to well after correction, stocks do well in a
Speaker 1: rising rate environment. Having said that, Ryan, you know, I
Speaker 1: love looking at technicals and I love looking at historical patterns,
Speaker 1: but this is a pattern to we're coming out of
Speaker 1: a pandemic. Most of us have never seen this before
Speaker 1: h and have lived through it. So there's still a
Speaker 1: fair amount of questions. Absolutely, Carroll, I mean you're talking
Speaker 1: about questions. I mean, just look at those sentiment polls
Speaker 1: that we've seen, right, We've seen a lot of people
Speaker 1: are questioning what exactly is going on in that fear
Speaker 1: that comes. But again, you know what patents say when
Speaker 1: you know, if everyone's thinking, like somebody isn't thinking, we
Speaker 1: are optimistic that again we've had all these bearishness coming
Speaker 1: in because so many people have been hit hard by
Speaker 1: by this vicious, vicious correction to start the year, and
Speaker 1: there's still opportunities. I mean, you know, if all you
Speaker 1: look at we're financials and energy, and I know there's
Speaker 1: more stocks than that, but I mean energy is unwell.
Speaker 1: Financials are still strong. Look at these bank stocks. A
Speaker 1: lot of bank stocks are just now breaking out above
Speaker 1: where they were in two thousand seven, two thousand eight.
Speaker 1: It's hard for us to be bearished a global economy
Speaker 1: to see that leadership. And we've I've called you guys
Speaker 1: for a while. So we like cyclical value financials and
Speaker 1: an energy have done well this year, and we still
Speaker 1: think cyclical value this point in the cycle makes a
Speaker 1: lot of sense to a continue to outperform a little
Speaker 1: bit here. Okay, back to fundamental speach. Just because we
Speaker 1: have you, we cannot ignore the inflation print that we're
Speaker 1: getting Thursday morning. Seven point is what economist survey by
Speaker 1: Bloomberg anticipate. How should investors read a potential upside or
Speaker 1: downside surprise? Yeah, well it's gonna be a big number, tim,
Speaker 1: I mean that's obvious. I think the way the investors
Speaker 1: should look at it as a reaction, Right, what's the
Speaker 1: tenure yield do on it? What is stocks do on it?
Speaker 1: But the truth is this, the tenure yield is still
Speaker 1: not above two percent. Maybe since we started talking it is.
Speaker 1: But you know, the market was truly worried about massive inflation.
Speaker 1: I think gold would be way above eighteen hundred. I
Speaker 1: think the tenure yield be way above two percent. It's
Speaker 1: not um I think we're more optimistic that how strong
Speaker 1: this earning season has been. Let's corporate Americas say, right,
Speaker 1: what's the CEO GM just say we could go He said, hey, listen,
Speaker 1: we see full production the second half of this year
Speaker 1: and improvement in supply chain. To me, that matters more
Speaker 1: for the average investor than the scary headline we're going
Speaker 1: to see on Thursday, which the politicians are going to
Speaker 1: play up. That's how it works. But investors need to
Speaker 1: focus on earnings. Are still strong. Global earnings, my goodness, grow.
Speaker 1: Global earnings are really strong. That's a that's a positive
Speaker 1: thing for investors to rem right. Watch that bottom line. Um.
Speaker 1: But what's interesting too is we've got to watch margins
Speaker 1: and margin compression because that's certainly something that investors are
Speaker 1: keeping an eye on. Hey, I think one of the
Speaker 1: indicators as a technician that you're really leaving out is
Speaker 1: the Super Bowl indicator. Yeah, I don't invest in this, right,
Speaker 1: I've gotta bet disclaimer, But historically, guys, the winner of
Speaker 1: the Super Bowl fice from the NFC, the stock markets
Speaker 1: up for the year like seventy nine percent of the
Speaker 1: time a f C when the FC wins only two
Speaker 1: thirds of a time. Now I am, I'm from Cincinnati.
Speaker 1: I'm a Bengals fan. That's what I like to hear you.
Speaker 1: Now listen to this. Ten of the last eleven times
Speaker 1: an a f C team has won the Super Bowl,
Speaker 1: the SMP was higher. So go Bengals. And that should
Speaker 1: be good for stocks. Don't invest in that. But I
Speaker 1: hope the Bengals win. Leave it at that too. That's
Speaker 1: one thing we can all agree on. I think, Well,
Speaker 1: I think I think it just speaks to the moment
Speaker 1: in time. Right. There's so many things that we can
Speaker 1: kind of point to to maybe kind of get an
Speaker 1: idea of what comes next. But I mean, ultimately it
Speaker 1: will be down to what the Fed does, whether they
Speaker 1: kind of get it right um massaging those calls, and
Speaker 1: how earnings react ultimately and what kind of economic growth
Speaker 1: or do we ultimately fall into some kind of recession,
Speaker 1: even if it's a quick one, and what that can
Speaker 1: do certainly to the financial markets. No, you're right, let's
Speaker 1: not forget this economic cycle of growth is almost two
Speaker 1: years old, will be two years old here in a
Speaker 1: couple of months. Your average cycle of growth usually last
Speaker 1: five years. So I'm not saying this one couldn't fall
Speaker 1: into recessions soon. We just don't see it. With the
Speaker 1: consumer this strong se GDP, the consumer is still pretty
Speaker 1: healthy out there, spending out there, getting jobs. I mean
Speaker 1: they're quitting their jobs. I think it's hard to think
Speaker 1: millions of people to quit their jobs if they were
Speaker 1: comfortable about the state of the economy to go find
Speaker 1: a new job or create a new job. And likely,
Speaker 1: you know, usually small businesses and and the consumers are
Speaker 1: right about the economy more than the economists are, so
Speaker 1: we're going to trust them. And then that should still
Speaker 1: mean the cycle has probably a couple more years left,
Speaker 1: the growth left to in our opinion, we shall see.
Speaker 1: Ryan Dietrich, thank you so much, chief markets strategist at
Speaker 1: LPL Financial, on the phone from Charlotte, North Carolina, giving
Speaker 1: us certainly a lot to think about. Thanks for listening
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