Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
Speaker 1: plus technology, politics, economics, all purtnising the power of Business
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Speaker 1: Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com.
Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg Global News. Let's get to it. One
Speaker 1: of the voices that we've turned to a lot during
Speaker 1: the health crisis, Dr Harold Pause. He is the executive
Speaker 1: vice president for Health Sciences at Stonybrook University, former Chancellor
Speaker 1: for Health Affairs at the Ohio State University, and CEO
Speaker 1: of Worsner Medical Center. Also a former Chief medical officer
Speaker 1: at ETNA. So he really understands so many different aspects
Speaker 1: of our healthcare and medical world and has been really,
Speaker 1: like I said, a great voice to us during the pandemic.
Speaker 1: He joins us on the phone from Stony Brook, New York.
Speaker 1: First of all, congratulations you're in a new position. Yes,
Speaker 1: thank you very much, Carol, I appreciate it. Hey, we
Speaker 1: were thinking, you know, on our planning call. We're just
Speaker 1: thinking about you going from you know, your position before
Speaker 1: and being in Ohio to now being in New York.
Speaker 1: What are I don't know, the differences in terms of
Speaker 1: what you're seeing about communication, the handling, and just the
Speaker 1: processes involving the pandemic. What's the same? Looks different? Yeah? Yeah,
Speaker 1: So I'm originally from New York and it's uh, it's
Speaker 1: great to be back. UM. I would say there are
Speaker 1: a lot of similarities, many many more similarities in terms
Speaker 1: of how the pandemic has been handled by the health
Speaker 1: care workforce, both both here and UM in Ohio. Uh,
Speaker 1: in terms of the number of individuals that have been tested,
Speaker 1: the number of vaccinations that have been offered. Here at
Speaker 1: Stony Brook Medicine, we've vaccinated over half a million individuals
Speaker 1: to date, and this week we're very very busy with
Speaker 1: the boosters for Maderna and and Johnson and Johnson in
Speaker 1: addition to Fiser so UM A lot of similarities in
Speaker 1: terms of vaccination and testing and certainly in terms of treatment,
Speaker 1: stony Brook Medicine has cared for UM hundreds and thousands
Speaker 1: of patients with COVID UH. At the peak there were
Speaker 1: over four hundred patients in the hospital with COVID and
Speaker 1: thousands have been cared for across across Long Island. So
Speaker 1: a great deal of similarities. I think. The other big
Speaker 1: similarity is is that as part of this research university
Speaker 1: stony Brook University, a lot of research work has been
Speaker 1: going on testing the vaccines, including you mentioned children of
Speaker 1: the Maderna vaccine has been tested here on children ages
Speaker 1: UM five to eleven and and just a lot of
Speaker 1: research work over two hundred and thirty research studies and
Speaker 1: clinical trials across Stonybrook Medicine and stony Brook University. Hey,
Speaker 1: dr pause, We want to go back to boosters before
Speaker 1: we talk about vaccines for kids who should get boosters
Speaker 1: right now? And in which boosters should they get? Well,
Speaker 1: you know, that's that's a great question, and you know
Speaker 1: there's CDC has been very clear about about boosters, particularly
Speaker 1: those who are sixty five and older, without a doubt,
Speaker 1: those that have certain types of medical conditions. UM, the
Speaker 1: whole question of mixing and matching UM boosters with the
Speaker 1: original vaccine is you know, is an open question. And um,
Speaker 1: I can tell you that I received my booster today
Speaker 1: as a matter of fact. And my thinking is is
Speaker 1: that if if I've received a vaccine and uh it
Speaker 1: worked well for me originally the first and second shot,
Speaker 1: if it was either Maderna or Visor, you know, I
Speaker 1: made the decision to go ahead and get Maderna for
Speaker 1: the booster as well. Uh. If someone had some reaction
Speaker 1: to a vaccine, then you know, certainly it would make
Speaker 1: sense to think about a booster a different booster than
Speaker 1: they originally received. But we're a waiting for the research
Speaker 1: to indicate if there is any advantage to mixing the
Speaker 1: booster later on from what they are originally received, and
Speaker 1: we're gonna need some research studies to show if that
Speaker 1: makes any sense or not. UM, But I would just
Speaker 1: underscore one thing most importantly, get the booster if you
Speaker 1: fit one of the categories that require you or suggest
Speaker 1: that you get the booster, because frankly, that's the most
Speaker 1: important thing, and worry less about trying to tailor it
Speaker 1: to the specific situation unless you are in the circumstances
Speaker 1: I described before. So do you not if you don't
Speaker 1: meet those circumstances, because we Tim and I have talked
Speaker 1: about we know individuals where you can basically walk into
Speaker 1: a pharmacy and get a shot, and it's pretty easy
Speaker 1: to get should you hold off? You know I've and
Speaker 1: I've practiced this myself because you know, I waited until
Speaker 1: this week to get the Maderna booster, and i have
Speaker 1: advised everyone in my family, and I've been asked many
Speaker 1: many times follow the CDC recommendations that that's how I've
Speaker 1: worked all through this pandemic. It makes a lot of
Speaker 1: sense to me because there are so many people looking
Speaker 1: at the data at the FDA and the CDC in
Speaker 1: real time and are being guided by the science. And
Speaker 1: I think for all of us dealing with so much information,
Speaker 1: so many reports that they hear in the media, what
Speaker 1: they hear from from neighbors, even I think the one
Speaker 1: thing that is consistent is is that we should try
Speaker 1: to depend as much as we can on the information
Speaker 1: that's available from our physicians, from our local healthcare workers
Speaker 1: that care for us, and from organizations that have access
Speaker 1: to huge amounts of data. All Right, that's a good
Speaker 1: final thought in an important one, Hey, thank you so
Speaker 1: much and congratulations again. Dr Harold Pause. He is the
Speaker 1: executive vice president for Health Sciences at Stonybrook University. Joining
Speaker 1: us on the phone from stony Brook US some really
Speaker 1: clear thinking that is. I have to tell you I
Speaker 1: have a friend who yesterday his they're both vaccinated. His
Speaker 1: wife has a breakthrough case and she's symptomatic. He got
Speaker 1: a PCR test, he's negative, and he's not finding a
Speaker 1: lot of answers for what should he do right now?
Speaker 1: Should he where should he be? Where should she be?
Speaker 1: How does he stay negative? How long is she infected?
Speaker 1: How long does she have this for? There's still so
Speaker 1: many wearing masks, like what are they doing? He's texting
Speaker 1: me all these questions and I say to talk to
Speaker 1: your doctor. This is Bloomberg Business Week with Carol Messer
Speaker 1: and Bloomberg Quick Takes Tim Stinovich from Bloomberg Radio. Right now,
Speaker 1: we got to talk about what's going on with car
Speaker 1: We're talking about Avis budget group up and ten percent. Meantime,
Speaker 1: we're seeing Tesla under pressure, although it's still skyrocketing so
Speaker 1: far in this year. So let's get to it. What
Speaker 1: is going on? Bloomberg News West Coast correspondent Ed Ludlow
Speaker 1: is on it joining us. If you're watching on YouTube,
Speaker 1: he's in our San Francisco bureau. Smile for the cameras. No,
Speaker 1: I'm just kicking so Tesla down. Although it's been on
Speaker 1: a tear this year, Avis off the charts. You know,
Speaker 1: there's definitely uh, what is it? I feel like the
Speaker 1: trading platform is getting in play on that. On what's
Speaker 1: going on for it? Yeah, there's a lot to unpack,
Speaker 1: and it is all links. You know. For Advis's part,
Speaker 1: they had earnings strong top and bottom line performance, but
Speaker 1: at one point the stock was up, so you ask yourself,
Speaker 1: you know, no market pare's that much attention to the
Speaker 1: fundamentals that they make a bi call to send a
Speaker 1: stock up to an eighteen percent So you know, we
Speaker 1: know there's a lot going on here. We know the
Speaker 1: retail trader has come in. If you look at stock twits,
Speaker 1: if you look at Wall Street bets on Reddit, you
Speaker 1: know Avis is being mentioned with high frequency. Another factor
Speaker 1: at play here is that short interests is about twenty
Speaker 1: one of the float according to his three partners data.
Speaker 1: So there's a lot to unpack. But what it all
Speaker 1: ties to it appears is comments that executives made on
Speaker 1: the call about Avis's ev ambitions in the context, of
Speaker 1: course of that Hurts Tesla order that we we've known
Speaker 1: about for the last week. Yeah, more on that in
Speaker 1: just a minute, in the context of Tesla, of course.
Speaker 1: But AVIS didn't actually talk about any plans to add
Speaker 1: evs to its fleet though, right, No they didn't. So
Speaker 1: I'm just gonna bring up the full quote here and
Speaker 1: what I do that what I'll say is that they
Speaker 1: basically said they're committed to electrification, right and that you
Speaker 1: would see in time them add evis to their fleets.
Speaker 1: But they essentially through shade at Hurts. I mean, well,
Speaker 1: I don't want to call it shade myself. I'm just
Speaker 1: gonna read it to you, the comments from Brian Choi,
Speaker 1: CFO of AVIS. The reason you haven't heard from us
Speaker 1: publicly is because, for competitive reasons, we like to execute
Speaker 1: on our strategy before announcing it. I mean, without it
Speaker 1: with Tom Brady. Without Tom Brady, that kind of sounds
Speaker 1: like shade or or it's like, oh darn, they got
Speaker 1: out ahead of us, like you know, you do wonder
Speaker 1: and this is a very competitive world in the auto space.
Speaker 1: Right now, and it does feel like our better off.
Speaker 1: It's changing as we move from the combustion engine to
Speaker 1: write e vs and so on, and so everybody's looking
Speaker 1: to have that first mover advantage like a Tesla. Yeah,
Speaker 1: there's definitely a school of thought as well that car
Speaker 1: rental companies have a role to play with e V adoption.
Speaker 1: You know, there are lots of consumers out there who
Speaker 1: are still nervous about owning an e V, whether that's
Speaker 1: range anxiety, whether it's literally about how you pull that
Speaker 1: off if you can't install a charger in your home.
Speaker 1: So the idea that you could experience what it's like
Speaker 1: to drive and us an electric vehicle for a car
Speaker 1: rental company is important. You know, market analysts and commentators say, um,
Speaker 1: what it all links back to when it comes to
Speaker 1: testa and hurts those remember every player, Tesla being the leader,
Speaker 1: the others chasing the pack. Our supply constraint, there's you know,
Speaker 1: they can't build enough electric vehicles to quickly hand over
Speaker 1: the keys to a hundred thousand cars. It's just not
Speaker 1: going to happen tomorrow. And even Elon Musk tweeting about
Speaker 1: this last night in response to a question about why
Speaker 1: about the company's stock, He said that if any of
Speaker 1: this is based on Hurts, I'd like to emphasize that
Speaker 1: no contract has been signed yet. Tesla has far more
Speaker 1: demand than production. Therefore, we will only sell cars to
Speaker 1: Hurts for the same margin as to consumers. Hurts deal
Speaker 1: has zero effect on our economics. And in essentially saying
Speaker 1: the contract is not signed yet, and as a result,
Speaker 1: Tesla shares down close to four percent. Well, it's semantics,
Speaker 1: he says, Yet the contracts not signed yet, but you
Speaker 1: know there's clearly agreement in place. You know, Hurts has
Speaker 1: got its own troubles, it's coming out of bankruptcy. You
Speaker 1: know it made an official announcement about this. But again,
Speaker 1: this comes back to the idea Tesla is supply constrained.
Speaker 1: It cannot build enough vehicles to meet demand. If you
Speaker 1: go on this testa website right now and try to
Speaker 1: order yourself a Model three or a Model Why, it
Speaker 1: will give you an estimated date for when you'll receive it.
Speaker 1: That can be a matter of months, months and months away.
Speaker 1: And you know, Elon Musk is very close to retail trade.
Speaker 1: He communicates often with Tesla owners and if you read
Speaker 1: the quote in full as you did. Tim. You know
Speaker 1: it seems very much like LA must saying we're not
Speaker 1: prioritizing the corporate empity hurts over our existing customers. Fascinating story.
Speaker 1: Just to watch the ups and downs of all this again,
Speaker 1: uh Avis. Right now Tesla down just about four percent. Thanks.
Speaker 1: I'd love the West Coast correspondent for Bloomberg. You're listening
Speaker 1: to Bloomberg Business Week with Carol Masser and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio. This is among the
Speaker 1: most read on the Bloomberg today. It's about the one
Speaker 1: trader of that calls all the shots in the treasury
Speaker 1: bond market. It's a story in the upcoming issue of
Speaker 1: Bloomberg business Week magazine out later this week. On the
Speaker 1: Bloomberg and of course at business week dot com. Joel
Speaker 1: Weber is at her at Bloomberg business Week. He's with
Speaker 1: us in the Bloomberg Interactive Broker Studio. Liz McCormick is
Speaker 1: bond and FX reporter at Bloomberg News. Joel, take us,
Speaker 1: give us a history lesson here and take us back
Speaker 1: to who the bond vigilantes work. What's upon a time
Speaker 1: on a bount of time. H not sus that the
Speaker 1: universe controlled basically, um, you know, the pricing, and they
Speaker 1: had pricing power and could actually exert that influence on government.
Speaker 1: And uh in the in the Clinton administration especially uh
Speaker 1: kind of memorable moment that we had in the draft
Speaker 1: um uh an earlier draft was how James Carver was like,
Speaker 1: I know nothing about the bond market, but like these
Speaker 1: vigilantes and times have changed, right listen, Oh yeah, a
Speaker 1: lot of change. And that was a great comment he
Speaker 1: made because then it was like they kind of pushed
Speaker 1: Clinton around to change his his agenda and the bond market.
Speaker 1: You know, the Feds the game in town now on
Speaker 1: the bond market. Of course, there's been a lot going
Speaker 1: on which you've all been talking about through the days.
Speaker 1: But still the Fed owns five point five trillion in treasuries,
Speaker 1: so they go a long way as far as keeping
Speaker 1: a lid on rates and you know, just seeing where
Speaker 1: rates can go, and they play play a major role.
Speaker 1: I think of Edyard Jenny years ago, right and that
Speaker 1: you know, and and coining that term, I believe bond vigilante. Uh.
Speaker 1: And this is what's interesting and lets you see it
Speaker 1: in the bond market are the treasury market for years,
Speaker 1: it doesn't feel like it moves a whole heck of
Speaker 1: a lot. And you gave some you know, great perspective
Speaker 1: of younger treasury traders today versus older treasury trades when
Speaker 1: there really was volatility in the treasury market, right. Yeah.
Speaker 1: I mean John Kirshner, who talked to me from James Henderson.
Speaker 1: I thought was funny because he's like, listen, you know,
Speaker 1: with all due respect to the newer people, like people
Speaker 1: getting all jazzed about what's going on. I remember when
Speaker 1: we really had these moves, and you know, and then
Speaker 1: you kind of get so exciting and you look at him.
Speaker 1: My goodness, the tenure treasury yields only at one point
Speaker 1: five five, you know, it's just kind of amazing. So yeah,
Speaker 1: you just don't have the volatility, and that's part of
Speaker 1: what the Fed wants, you know, part of their scheme
Speaker 1: of keeping things calm is less volatility is usually good
Speaker 1: for them. I mean, we've seen some lately, but but
Speaker 1: I I know people, we have a few in here,
Speaker 1: and I know others not that I didn't mention that
Speaker 1: through the year, So I'm getting out of this. You know,
Speaker 1: it's just as you can't trade the way you used
Speaker 1: to and it's just not the same business for them.
Speaker 1: So what happens at Tin Tin every morning, Well, the
Speaker 1: said does these operations which is all public. This is
Speaker 1: no secret. They laying out on their website. This is
Speaker 1: part of their quantitative easing. But they go in they tell,
Speaker 1: you know, it's all laid out two dealers what they're
Speaker 1: going to be buying, and the said, you know, not
Speaker 1: to say that they don't use their pricing models to
Speaker 1: where to go. But it's not like they're you know
Speaker 1: in the marketplace, you know, bidding and offering and you
Speaker 1: know people are cajoling them, you know, where we want
Speaker 1: to do it. It's you know, a pretty set thing.
Speaker 1: But they you know, for a while now, especially you
Speaker 1: know since March when the pandemic unfortunately kind of struck,
Speaker 1: they've been a major role. I mean, they still had
Speaker 1: a lot of bonds going into that because they hadn't
Speaker 1: gotten them down after the Great Financial Crisis, how much
Speaker 1: death they held. But then they came in and now
Speaker 1: they've bought a couple trillions sins. So yeah, every day,
Speaker 1: most every days, you know their operations and we know
Speaker 1: we you know, as you know, we have a FED
Speaker 1: meeting tomorrow, so they might announce that they're going to
Speaker 1: scale back these purchases, but that's probably gonna take, you know,
Speaker 1: till mid next year, till they stop, and then they'll
Speaker 1: just be rolling them over, which they do in a
Speaker 1: different way, but they're just not going away as a source,
Speaker 1: you know, for a long while. I'm wondering, Lizzen, you
Speaker 1: write about this in your piece for Bloomberg Business Week,
Speaker 1: what's writing on a FED chair Powell's gamble that the
Speaker 1: surgeon inflation is just transitory, a word that I expect
Speaker 1: will hear several times tomorrow when you hear from the
Speaker 1: FED chair. Yeah, and I think they've tried to kind
Speaker 1: of what was one of the FED officials said, can
Speaker 1: we retire this word? As I think it's causing them
Speaker 1: trouble because the transitory is lasted longer. But there is
Speaker 1: a lot riding on. And you know that the market
Speaker 1: has even priced in a little bit more hawkish moves
Speaker 1: as far as tightening next year than they had a
Speaker 1: few months ago. So there is a lot riding on,
Speaker 1: you know, especially Pal six to his guns and says,
Speaker 1: you know, we do yeah, it's lingered a little longer,
Speaker 1: but we think it's a lot of the supply chain
Speaker 1: and temporary stuff and it's going to pass. And if
Speaker 1: the market doesn't think, you know, the FED will move
Speaker 1: if they need to. You know, the big, big role
Speaker 1: of any central bank is to contain inflation. Then we could,
Speaker 1: you know, see things, you know, kind of get ginned
Speaker 1: up even more. So. I think a lot is writing
Speaker 1: he's got a tough maneuver because they do want a
Speaker 1: more broad and inclusive employment mandate, you know, which makes
Speaker 1: a lot of sense. So they don't want to crimp
Speaker 1: off the economy, but they don't want to lose their
Speaker 1: credibility and fighting inflation. So you know, I wouldn't want
Speaker 1: to be him tomorrow. So Liz, you you got to
Speaker 1: speak to um. A lot of a lot of folks
Speaker 1: in this world, some of whom you know, we're from
Speaker 1: a former bund Villgilantes are still all I guess what's
Speaker 1: the what's the mood into tomorrow, Joel? In general? Yeah,
Speaker 1: in general? But yeah, yeah, well I'll talk a little
Speaker 1: bit about both. Well. I think I think into tomorrow
Speaker 1: it's um. I think people are wondering ing, you know,
Speaker 1: there's different camps. Some people feel like he's got a
Speaker 1: push back on this kind of hawker is tilt in
Speaker 1: the marketplace, some people feeling he has to kind of
Speaker 1: hold his guns that you know, we're going to keep
Speaker 1: being easy for a while. And I think in the marketplace,
Speaker 1: it's just a different marketplace, like we've been talking about, like, um,
Speaker 1: you know, I just speak to Jack valley Um during
Speaker 1: this story, who's been around for a long time, and
Speaker 1: he was talking about it's just a commoditized market. You know,
Speaker 1: the treasury market is a different marketplace. So I think
Speaker 1: some of the mood is. I mean, there's a lot
Speaker 1: of interesting trades you can do, but it's just not
Speaker 1: the same you know. Wow, you know, bon yields went
Speaker 1: a hundred basis points today, et cetera like yester year. Well,
Speaker 1: and Liz, I guess bottom line, especially the old guys
Speaker 1: the stages, do they think it's a better treasury market
Speaker 1: or not with the FED being such a significant player
Speaker 1: and for so long, Well, I think Caroline depends on
Speaker 1: what avenue of their business they're in. If they you know,
Speaker 1: are more the economic side and think, you know, you know,
Speaker 1: it has really helped, you know, engender growth and things.
Speaker 1: Because stability is good for companies who know where their
Speaker 1: interest rate levels are going to be, where they can borrow.
Speaker 1: It's the positive for those who are like floor trading
Speaker 1: and doing other things. You know, it hasn't been so
Speaker 1: so good. Even some of the sales people I've heard complain,
Speaker 1: you know, on the bond desk. You know, that's just
Speaker 1: not as much activity through the last decade. Um. So
Speaker 1: I think it depends on where you're sitting. Yeah, and
Speaker 1: with something that you can find them on. I'm sure
Speaker 1: it's real quick. Just what a wrapping up? What are
Speaker 1: we missing by not having them be such a dominant force? Well,
Speaker 1: I would say people like Edgardenny and some others would say,
Speaker 1: you know, if they're not, then that might give the
Speaker 1: Fed a little more rooms. Let's just say, who are
Speaker 1: not saying that like projecting it that the Fed like
Speaker 1: let inflation run too hot, that the risk is it
Speaker 1: runs away, right, and then they can't put tampa ound,
Speaker 1: so the bond vigilantes are slower to push back. The
Speaker 1: said has some more Leewood got it, and you end
Speaker 1: up with more inflation. Gotta run Always important reporting when
Speaker 1: Liz McCormick's on the case. I'm roa yeah, but you
Speaker 1: let me drive? Oh no, no, no, no, this is
Speaker 1: not a right. Please, I want to drive. It's good question. Drive.
Speaker 1: This is the Drive to the Clothes on Bluebird Radio.
Speaker 1: All right, everybody, let's get to it. We've just got
Speaker 1: about thirteen minutes left in today's trading session. We are
Speaker 1: so delighted to have actually in our Interactive Broker studio
Speaker 1: a friend of the show and Miletti. She's head of
Speaker 1: active equity at all Spring Global Investments. They've got some
Speaker 1: seven billion in assets under management. She's with us. As
Speaker 1: I said in studio, how are you. I'm great. It's
Speaker 1: great to be back in studios to see you here.
Speaker 1: It's just a reminder that things are continuing to reopen,
Speaker 1: and I feel like the equity markets, there's a lot
Speaker 1: of enthusiasm still that the world is, you know, continuing
Speaker 1: to kind of make its way back to normal. It
Speaker 1: does feel that way, and it's the equity markets have
Speaker 1: been predicting it far sooner than we all have, so
Speaker 1: it's amazing they still are continuing. Before we get to
Speaker 1: discussion of the equity markets, we've got to talk about
Speaker 1: the big news because Walls Fargo Asset Management, which for
Speaker 1: all intensive purposes you worked for before, has been rebranded
Speaker 1: now uh, just starting off operations right now as an
Speaker 1: independent company now owned by GTCR and Reverence Capital. What
Speaker 1: are the differences. It's just such. It's such an exciting
Speaker 1: time for us because we do get to re emerge
Speaker 1: as an independent asset manager. I think that is truly
Speaker 1: the big difference. We have scale. We have all of
Speaker 1: that scale we had over at Walls Fargo, but we
Speaker 1: get to bring it now to all spring um independent
Speaker 1: company with a sole focus on our clients and houset management.
Speaker 1: So great time, especially with all the moving pieces in
Speaker 1: her industry. Well, there is something to be said, and
Speaker 1: I was reading a descriptive phrase that said pure play
Speaker 1: independent asset management manager. There is something and right to
Speaker 1: be said that where you can just really focus on
Speaker 1: managing money and not to poo poo. Any of the
Speaker 1: big financial houses are out there, but sometimes there's moving
Speaker 1: parts in conflicting parts, and you guys are just about
Speaker 1: managing money. We are, and I think it's been a
Speaker 1: piece that has been somewhat hidden hidden in the industry.
Speaker 1: Certainly our clients know est and consultants know us, but
Speaker 1: we haven't been as well known because we're part of
Speaker 1: this big bank. Now we get the chance to really
Speaker 1: show our clients and potential new clients that, you know,
Speaker 1: what we can do for them. So it's great, very
Speaker 1: interesting time to be doing this. All right, So what
Speaker 1: a clients want to know? Because as we say, you know, Tina,
Speaker 1: you know, pick your acronym, because it just seems, like
Speaker 1: I said, it was like wicked today defined gravity when
Speaker 1: you look at the equity markets because its record after record,
Speaker 1: and I understand that we fell off a cliff and
Speaker 1: then we bounced back, but are the fundamentals there to
Speaker 1: justify the continued run up on the equity side of things?
Speaker 1: You know, I was looking at some numbers because I think,
Speaker 1: you know, we very much focus on bottom up stock selection.
Speaker 1: That's what our investment teams are great at doing. But
Speaker 1: you hear a lot about is the market expensive and eureupe.
Speaker 1: You know, I mean, this is just ending in October
Speaker 1: up in the SMP but fort higher than pre pandemic
Speaker 1: lows or in pre pandemic since the pandemic low. So
Speaker 1: you go, okay, well how does that translate? Where did
Speaker 1: that come from did that come from multiple expansion? Well,
Speaker 1: we've only gotten one point of multiple expansion. We've gone
Speaker 1: from twenty to twenty one times, which means we've had
Speaker 1: earnings growth. So it has been fundamentally really really good
Speaker 1: this you know, I always talked about we're turning on
Speaker 1: the economy. You know, we turned it off with a
Speaker 1: light switch. We felt like we were turning it on
Speaker 1: with a dimmer switch. But but consumer demand is really
Speaker 1: really much stronger than any of us anticipated. And it
Speaker 1: does seem like a big question that investors had going
Speaker 1: into earning season, which we are right now and smacked
Speaker 1: up in the middle of, is to what extent companies
Speaker 1: have been able to pass along rising costs, whether those
Speaker 1: are supply chain costs or labor costs, onto consumers. And
Speaker 1: it does seem like to a great extent companies have
Speaker 1: been able to pass on those costs. They have. I mean,
Speaker 1: you know, top line growth has been really strong, but
Speaker 1: tim Asoo, you know, as you point out, when you
Speaker 1: look at the earnings margins that have held up really
Speaker 1: well too, which means they have been able to pass
Speaker 1: on those costs. So I think the real question is
Speaker 1: can they continue to do that? While in the face
Speaker 1: of rising costs for consumers in other places like energy
Speaker 1: and you know a lot of you know, a lot
Speaker 1: of other food inflation, rent inflation, other things. How do
Speaker 1: you make sense of? Okay, so consumer led recovery, I
Speaker 1: get it right. Individual balance sheets are probably the healthiest
Speaker 1: they've been for a lot of Americans. There's been a
Speaker 1: lot of stimulus that has come out because of the pandemic.
Speaker 1: But I do wonder trying to make sense of are
Speaker 1: there a bunch of Americans that ultimately and who haven't
Speaker 1: entered the workforce again, that will have to enter the
Speaker 1: workforce again, or are we going to see as the
Speaker 1: stimulus efforts go away, that that consumer let recovery will
Speaker 1: go away. You know, that's a million dollar question. It
Speaker 1: is very interesting that it's been a little bit harder
Speaker 1: to get the workforce back. I think it has been
Speaker 1: because of the stimulus. I do know some people retired
Speaker 1: how little you know, people who was just that I'm done.
Speaker 1: But but even those people, you know, after sitting home
Speaker 1: for a little bit, if they're incentivized to come back,
Speaker 1: if there's something really interesting for them to do, they
Speaker 1: will come back. And so I do think that you'll
Speaker 1: get the workforce pick up, UM. But but we'll have
Speaker 1: to watch these pressures on consumers. Demand is really really strong,
Speaker 1: it's pent up. It doesn't look like it's going away
Speaker 1: anytime soon. Although you know, I live in the Midwest,
Speaker 1: as you know, Caroline, and I hear people talk about
Speaker 1: it all the time. What's happening with their heating bill,
Speaker 1: what's happening at the fuel pump does matter to them,
Speaker 1: and that could damper demand UM over time. So how
Speaker 1: do those rising energy costs manifest in earnings? How do
Speaker 1: they manifest in demand for products and services that companies
Speaker 1: that are reporting this week and you know, operating the
Speaker 1: most important quarter of the year, how do they get hit?
Speaker 1: You know, it's it's not just in transportation costs, which
Speaker 1: we've seen rise UM. In fact, we're seeing a little
Speaker 1: bit of a rollover of freight and m trucking prices
Speaker 1: right now. But I'm not sure that that's sustainable. Lot
Speaker 1: to see. But it also manifests itself in material you know,
Speaker 1: costs as well, and so we'll continue to see a
Speaker 1: pickup in material material costs for companies that have and
Speaker 1: energy and put to them a fuel and put to
Speaker 1: them in oil and put to them so and also
Speaker 1: just keeping the factories open costs more so, those rising
Speaker 1: costs are real. Some people say, you know, gosh, I
Speaker 1: don't have to worry about them yet. But energy is
Speaker 1: the one area, the one sector that has been somewhat
Speaker 1: starved for capital while the rest of the sectors have
Speaker 1: continued to be flush. Well, you do want to will
Speaker 1: it continue to be starved for capital as we see
Speaker 1: this you know transformation or you know dislocation as we
Speaker 1: go from you know, combustion engines to alternative energy. Like,
Speaker 1: I think this is such an important trend that's going on,
Speaker 1: and it's going to be painful, and I think that's
Speaker 1: some of it. But you're smarter than me when it
Speaker 1: comes to UH companies and what's going on in the market.
Speaker 1: Is that's what's going on. But it's gonna take ten years, fifteen,
Speaker 1: I don't know. I think it's going to take a
Speaker 1: little longer than we all hope. And the challenges how
Speaker 1: do you get the TRANSI transition to go smoothly right
Speaker 1: so that we don't suffer as consumers with really unnecessarily
Speaker 1: high costs um But it's just difficult to get there
Speaker 1: and Um, you know, there's a lot of push, a
Speaker 1: lot of things. Great technology continues to solve a lot
Speaker 1: of problems for us. But I think energy is going
Speaker 1: to be real. And I know I'm not sure how
Speaker 1: I forget how much you can drill down and in
Speaker 1: this new company, But I mean, is energy a place
Speaker 1: that you and investors come to you and say, and
Speaker 1: is that a place that I should be committing new
Speaker 1: money or how should I play it? Um? You know,
Speaker 1: I'm thinking Cup twenty six. We're watching you know, all
Speaker 1: these pledges in terms of how do we improve our environment?
Speaker 1: What should be the strategy? It's your top performing group
Speaker 1: this year, it's at as a whole. Yeah, it's incredible.
Speaker 1: And look, I think our investor base is very diverse
Speaker 1: and what their needs are. And you know, one thing
Speaker 1: I think our mission at all Spring is really to
Speaker 1: elevate investing for whatever that our clients want. Right, So
Speaker 1: some they may want exposure to energy, while others and
Speaker 1: many others don't want that exposure in their portfolio. And
Speaker 1: that's part of the reason why it's been capital starved.
Speaker 1: That's fine for us. We are just servicing the needs
Speaker 1: of our clients as investors, right so we are just
Speaker 1: caring for their money. If they don't want to be
Speaker 1: invested in the energy sector, we can do that too.
Speaker 1: By the way, it's a very small part of the index.
Speaker 1: I know it used to be right, much more significant,
Speaker 1: and it's really a changing world. He and very briefly,
Speaker 1: well we have you. I want to talk about taxes
Speaker 1: and potential implications from tax changes in Washington. President Biden
Speaker 1: looking to push through a spending package. We don't know
Speaker 1: exactly how he plans to pay for it now. Uncertainty
Speaker 1: around taxes priced in I don't think it is. And
Speaker 1: I think it's because there's so many changing dynamics to
Speaker 1: this every single day. What kind of tax increase might
Speaker 1: we get? Is it going to be individual? Is it
Speaker 1: going to be corporate? I don't think it's fully priced
Speaker 1: into the market. That is a risk. All right, we're
Speaker 1: gonna leave on that note. First of all, just so
Speaker 1: wonderful to have you in studio. Safe travels, and look
Speaker 1: forward to having you back again. And we letty she's
Speaker 1: head of let's try to get head of active equity.
Speaker 1: I can say that all Spring Global Investments five eighty
Speaker 1: seven Billy in an assets under management and as we
Speaker 1: said in our Interactive Brokers Studio, and thank you so much.
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