1 00:00:01,440 --> 00:00:05,320 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 2 00:00:05,400 --> 00:00:08,479 Speaker 1: weekdays at ten am Eastern on Apple Car, playing Android 3 00:00:08,480 --> 00:00:11,600 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 4 00:00:11,640 --> 00:00:14,840 Speaker 1: you get your podcasts, or watch us live on YouTube. 5 00:00:15,680 --> 00:00:18,800 Speaker 2: Joining us now in studio. Man Deep Sync senior technology 6 00:00:19,640 --> 00:00:22,119 Speaker 2: industry analyst over at Bloomberg Intelligence. So this is a 7 00:00:22,160 --> 00:00:24,079 Speaker 2: headline that Lisa talked to us about earlier in the 8 00:00:24,120 --> 00:00:26,640 Speaker 2: morning and we were both like, hint, no, that's not 9 00:00:26,720 --> 00:00:30,040 Speaker 2: for us. So apparently Uber strikes in a chord with 10 00:00:30,200 --> 00:00:34,120 Speaker 2: GM Cruise in terms of Uber's going to have self 11 00:00:34,200 --> 00:00:37,320 Speaker 2: driving cars roaming around. Do I want this in my life? 12 00:00:38,000 --> 00:00:41,560 Speaker 3: Well, I think it's just a function of how technology 13 00:00:41,560 --> 00:00:42,400 Speaker 3: gets rolled out. 14 00:00:42,560 --> 00:00:44,240 Speaker 2: So that's a yes for Man Deep. 15 00:00:45,080 --> 00:00:46,800 Speaker 4: Yes, Okay, he's a forward looking guy. 16 00:00:46,960 --> 00:00:50,520 Speaker 3: We see that already in three cities in the US. 17 00:00:50,600 --> 00:00:56,880 Speaker 3: San Francisco, Phoenix and you know La. And what Vemo 18 00:00:56,960 --> 00:01:01,080 Speaker 3: has shown is they have the technology to have the 19 00:01:01,160 --> 00:01:04,560 Speaker 3: car right on its own and even though the scale 20 00:01:04,600 --> 00:01:07,480 Speaker 3: is very small, they're doing one hundred k rides per week. 21 00:01:07,880 --> 00:01:12,480 Speaker 3: Compare that to Uber, which does ten billion rides in 22 00:01:12,520 --> 00:01:13,440 Speaker 3: a year globally. 23 00:01:13,920 --> 00:01:18,520 Speaker 4: Well, what kind of rides are we talking about. 24 00:01:18,560 --> 00:01:21,559 Speaker 3: God, so Veimo compared to that is doing one hundred 25 00:01:21,640 --> 00:01:24,640 Speaker 3: k rides of five million annually if you run rate that. 26 00:01:24,760 --> 00:01:28,240 Speaker 3: But look, what they have shown is this is the future. 27 00:01:28,760 --> 00:01:32,040 Speaker 3: And Uber is trying to figure out where they fit 28 00:01:32,120 --> 00:01:35,720 Speaker 3: in this future because they don't have their own autonomous technology, 29 00:01:35,800 --> 00:01:38,520 Speaker 3: so they have to partner with someone. It's not going 30 00:01:38,600 --> 00:01:41,760 Speaker 3: to be Tesla. Tesla has told us they want to 31 00:01:41,880 --> 00:01:45,479 Speaker 3: do right sharing via their own app. They don't want 32 00:01:45,480 --> 00:01:49,160 Speaker 3: a ride sharing intermediary. They have the fleet, they have 33 00:01:49,280 --> 00:01:53,200 Speaker 3: the software, they have the app. Why use somebody else's app. 34 00:01:53,480 --> 00:01:55,520 Speaker 3: And in the case of Weveimo, even though they have 35 00:01:55,560 --> 00:01:59,680 Speaker 3: a partnership with Uber, bulk of their rights are through 36 00:01:59,720 --> 00:02:03,400 Speaker 3: their own app. So that's where Uber doesn't have a choice. 37 00:02:03,440 --> 00:02:06,920 Speaker 3: It partners with Cruise Cruises. I mean in terms of 38 00:02:06,960 --> 00:02:10,519 Speaker 3: the technology, I would say way behind Tesla and Vemo. 39 00:02:11,680 --> 00:02:13,760 Speaker 3: But at the same time with Uber, like I said, 40 00:02:14,120 --> 00:02:18,239 Speaker 3: they divested their own autonomous R and D division back 41 00:02:18,320 --> 00:02:21,560 Speaker 3: during the pandemic, so they are not developing anything in house. 42 00:02:22,160 --> 00:02:24,320 Speaker 3: And in this case, it's just a matter of getting 43 00:02:24,320 --> 00:02:25,800 Speaker 3: what they have in the market. 44 00:02:25,919 --> 00:02:28,400 Speaker 4: You know, my first reaction is like a hard no, 45 00:02:28,520 --> 00:02:30,440 Speaker 4: I'm not getting to an autonomous vehicle. But I get 46 00:02:30,440 --> 00:02:33,480 Speaker 4: into a vehicle every morning at four p thirty morning 47 00:02:33,480 --> 00:02:34,480 Speaker 4: with some dude. I don't know. 48 00:02:34,720 --> 00:02:36,280 Speaker 2: Yeah, we're just not the early adopters. 49 00:02:36,639 --> 00:02:40,200 Speaker 4: It's all right, I mean, but what's better than the 50 00:02:40,240 --> 00:02:43,720 Speaker 4: other I don't know. So how does Uber view? 51 00:02:44,880 --> 00:02:45,080 Speaker 1: You know? 52 00:02:45,120 --> 00:02:48,320 Speaker 4: The driver list technology is a long term net positive 53 00:02:48,639 --> 00:02:49,400 Speaker 4: or I. 54 00:02:49,320 --> 00:02:53,680 Speaker 3: Mean it's definitely a negative simply because Uber operates on 55 00:02:53,760 --> 00:02:57,200 Speaker 3: an asset light model, and even then it struggled to 56 00:02:57,240 --> 00:02:59,960 Speaker 3: reach profitability. Right now, it's at a point where they 57 00:03:00,040 --> 00:03:03,840 Speaker 3: incremental margin is positive. What happens with the autonomous rights 58 00:03:04,120 --> 00:03:08,160 Speaker 3: is the incremental margin goes much lower because one, you 59 00:03:08,200 --> 00:03:11,320 Speaker 3: have to license the technology from somebody, in this case 60 00:03:11,400 --> 00:03:14,680 Speaker 3: Cruise or Vemo, so you have to pay them. And 61 00:03:14,720 --> 00:03:17,800 Speaker 3: then the take rates go down because the autonomous rides 62 00:03:17,840 --> 00:03:21,959 Speaker 3: have a much different unit economics then ride with a driver, 63 00:03:22,560 --> 00:03:26,000 Speaker 3: so instead of getting that thirty percent take rate, their 64 00:03:26,040 --> 00:03:27,160 Speaker 3: take rate goes lower. 65 00:03:27,760 --> 00:03:31,000 Speaker 2: But eventually don't the I guess that's not true. And 66 00:03:31,000 --> 00:03:33,040 Speaker 2: to say eventually the money that they'd have to pay 67 00:03:33,120 --> 00:03:35,880 Speaker 2: to say GM Cruise, does that decrease But no, it 68 00:03:35,920 --> 00:03:38,360 Speaker 2: probably increases, right because GM's gonna want to get more 69 00:03:38,400 --> 00:03:39,600 Speaker 2: for their PA exactly. 70 00:03:39,720 --> 00:03:43,200 Speaker 3: So if you don't own the technology, why would a 71 00:03:43,320 --> 00:03:47,960 Speaker 3: GM or a Wemo or Tesla want one more intermediary 72 00:03:48,480 --> 00:03:51,520 Speaker 3: when they could do their own app with the fleet. 73 00:03:51,840 --> 00:03:55,320 Speaker 3: So Uber has two choices, either they license the technology 74 00:03:55,640 --> 00:03:58,400 Speaker 3: or they start buying the cars. And if they start 75 00:03:58,400 --> 00:04:01,240 Speaker 3: buying the cars, it's not an asset model anymore. So 76 00:04:01,280 --> 00:04:03,640 Speaker 3: they have to buy the cars from Tesla, buy the 77 00:04:03,640 --> 00:04:07,200 Speaker 3: cars from Veimo and these are so yeah. 78 00:04:06,920 --> 00:04:10,839 Speaker 4: Why then did they divest their R and D back 79 00:04:10,840 --> 00:04:13,320 Speaker 4: in the pandemic? It seems like now I understand the 80 00:04:13,400 --> 00:04:15,360 Speaker 4: long term. Oh that's a problem. 81 00:04:15,560 --> 00:04:18,560 Speaker 3: Yeah it is. And back then they were under pressure. 82 00:04:18,600 --> 00:04:21,760 Speaker 3: Remember when you went into the pandemic, all these companies 83 00:04:21,839 --> 00:04:25,279 Speaker 3: had cash flow issues. They were burning cash every month. 84 00:04:25,600 --> 00:04:28,159 Speaker 3: So the best option for them was to divest this 85 00:04:28,480 --> 00:04:31,719 Speaker 3: raise cash. And you know, it was never part of 86 00:04:31,800 --> 00:04:35,040 Speaker 3: their long term plans when it comes to developing this 87 00:04:35,160 --> 00:04:37,880 Speaker 3: in house. And I think right now it's proving to 88 00:04:37,920 --> 00:04:38,839 Speaker 3: be a wrong decision. 89 00:04:39,360 --> 00:04:41,720 Speaker 2: So how then does Ruber If you're an investor and 90 00:04:41,720 --> 00:04:43,359 Speaker 2: you're looking at Uber stock, how does that have to 91 00:04:43,400 --> 00:04:44,159 Speaker 2: be re rated? 92 00:04:44,240 --> 00:04:44,400 Speaker 5: Then? 93 00:04:45,120 --> 00:04:45,880 Speaker 6: Longer term? 94 00:04:45,920 --> 00:04:46,960 Speaker 2: Like short term forget it? 95 00:04:47,560 --> 00:04:50,359 Speaker 3: So look at what we have now, Uber is still 96 00:04:50,360 --> 00:04:54,279 Speaker 3: the scale player. I mentioned ten billion rides, and right 97 00:04:54,320 --> 00:04:57,599 Speaker 3: now they are the ones who have the most supplied. Now, 98 00:04:57,880 --> 00:05:01,760 Speaker 3: if this thing scales up very quickly, which I don't 99 00:05:01,800 --> 00:05:04,600 Speaker 3: think anyone is betting on right now, that autonomous skills, 100 00:05:04,760 --> 00:05:07,599 Speaker 3: there's a lot of skepticism around taking these rides, so 101 00:05:07,640 --> 00:05:09,120 Speaker 3: this will be more graduate. 102 00:05:09,240 --> 00:05:10,960 Speaker 2: Front and center, right there in front of you. 103 00:05:11,040 --> 00:05:13,880 Speaker 3: Yeah. So in that case, I think Uber has more 104 00:05:13,920 --> 00:05:16,560 Speaker 3: time on hand. Like nobody is thinking of a next 105 00:05:16,600 --> 00:05:19,880 Speaker 3: twelve month scenario where Uber loses, you know, thirty percent 106 00:05:19,880 --> 00:05:23,680 Speaker 3: of their volume. We're talking about a gradual shift towards autonomous, 107 00:05:23,680 --> 00:05:25,800 Speaker 3: and in that case, Uber has more time to do 108 00:05:25,920 --> 00:05:28,599 Speaker 3: these kind of partnerships. I think Cruise is one. They'll 109 00:05:28,600 --> 00:05:31,880 Speaker 3: probably try to partner with Tesla, if that would be 110 00:05:31,920 --> 00:05:33,960 Speaker 3: my guess, Even if it comes at the expense of 111 00:05:34,040 --> 00:05:37,039 Speaker 3: gross margin, they'll take the hit because it's all about 112 00:05:37,080 --> 00:05:39,640 Speaker 3: existence and you know, maintaining the platform. 113 00:05:39,720 --> 00:05:42,120 Speaker 2: And yeah, all right, Mandy, we appreciate it. You here 114 00:05:42,160 --> 00:05:42,640 Speaker 2: next week. 115 00:05:43,320 --> 00:05:43,760 Speaker 5: Oh yeah. 116 00:05:43,800 --> 00:05:47,640 Speaker 2: In video intelligence, in video has changed everyone's vacation schedule, 117 00:05:48,279 --> 00:05:52,200 Speaker 2: Man deep saying joining us a senior technology analyst at Bloomberg. 118 00:05:51,760 --> 00:06:01,080 Speaker 1: Intelligence you're listening to the Bloomberg and Tell Elligence podcast. 119 00:06:01,320 --> 00:06:04,560 Speaker 1: Catch us live weekdays at ten am Eastern on applecar 120 00:06:04,680 --> 00:06:07,640 Speaker 1: Play and Android Auto with the Bloomberg Business App. You 121 00:06:07,680 --> 00:06:10,960 Speaker 1: can also listen live on Amazon Alexa from our flagship 122 00:06:11,000 --> 00:06:14,799 Speaker 1: New York station Just Say Alexa playing Bloomberg eleven thirty. 123 00:06:15,400 --> 00:06:17,280 Speaker 4: All right, Today's focus on munis is brought to you 124 00:06:17,360 --> 00:06:22,720 Speaker 4: by Bam Mutual. Bam Bam Bam Bam Bam Mutual insures 125 00:06:22,800 --> 00:06:25,760 Speaker 4: municipal bonds that financial es central infrastructure and provides guaranteed 126 00:06:25,800 --> 00:06:28,479 Speaker 4: income to provide to improve any portfolio. Be part of 127 00:06:28,480 --> 00:06:32,240 Speaker 4: building America. Invest in BAM in short bonds. Our next 128 00:06:32,240 --> 00:06:35,880 Speaker 4: guest joins us Amanda Albright, municipal financi reporter for Bloomberg News, 129 00:06:36,200 --> 00:06:39,760 Speaker 4: also formerly of the Daily tar Heel, which means she 130 00:06:39,839 --> 00:06:42,120 Speaker 4: went to the University of North Carolina, which means somehow 131 00:06:42,120 --> 00:06:44,640 Speaker 4: she got through my screen of no tar heels on 132 00:06:44,680 --> 00:06:48,680 Speaker 4: this program. But she's pretty solid there man to talk 133 00:06:48,720 --> 00:06:50,520 Speaker 4: to us about the municipal bond market. You guys have 134 00:06:50,600 --> 00:06:52,839 Speaker 4: a lot of great stories out recently. The one that 135 00:06:52,880 --> 00:06:56,440 Speaker 4: really grabbed my attention is college's need up to one 136 00:06:56,520 --> 00:07:00,200 Speaker 4: trillion dollars of campus upgrades to lure students, and I 137 00:07:00,200 --> 00:07:02,120 Speaker 4: guess they're coming to the munis will bond market for that. 138 00:07:02,800 --> 00:07:06,919 Speaker 6: Yes, So Moody's put out this estimate that colleges and 139 00:07:07,080 --> 00:07:11,280 Speaker 6: universities might need seven hundred and fifty to nine hundred 140 00:07:11,280 --> 00:07:17,040 Speaker 6: and fifty billion of spending on infrastructure, facilities, dorms, classrooms 141 00:07:17,520 --> 00:07:20,960 Speaker 6: over the next decade in order to essentially stay competitive. 142 00:07:21,640 --> 00:07:24,800 Speaker 6: The interesting thing about that number is that only encompasses 143 00:07:24,880 --> 00:07:28,360 Speaker 6: their universe of credits that they rate, so the actual 144 00:07:28,440 --> 00:07:32,800 Speaker 6: number could be even higher. It was interesting this story 145 00:07:32,840 --> 00:07:36,040 Speaker 6: came out. Basically, the argument that Moody's is laying out 146 00:07:36,160 --> 00:07:39,040 Speaker 6: is that colleges need to have really pretty campuses in 147 00:07:39,120 --> 00:07:43,320 Speaker 6: order to attract customers, their students, and their students' parents 148 00:07:43,560 --> 00:07:46,600 Speaker 6: who want their kids to go to a really pretty 149 00:07:46,680 --> 00:07:51,480 Speaker 6: looking school and have kind of that pride. But interestingly enough, 150 00:07:51,560 --> 00:07:54,040 Speaker 6: after the story came out, I got some messages from 151 00:07:54,080 --> 00:07:57,239 Speaker 6: readers that disagreed with this premise and think that schools 152 00:07:57,280 --> 00:08:00,680 Speaker 6: need to focus on teaching students and providing a good 153 00:08:00,680 --> 00:08:04,400 Speaker 6: academic experience and they don't need to think about facilities. 154 00:08:04,440 --> 00:08:07,840 Speaker 6: So it's an interesting topic within higher ed and that 155 00:08:07,960 --> 00:08:10,520 Speaker 6: kind of balancing act that colleges are facing right now, 156 00:08:10,720 --> 00:08:13,880 Speaker 6: trying to invest in facilities, trying to lure students, but 157 00:08:13,920 --> 00:08:16,840 Speaker 6: also keep cost low and focus on their core mission. 158 00:08:16,920 --> 00:08:19,000 Speaker 6: It's kind of one of those core debates in the 159 00:08:19,040 --> 00:08:20,760 Speaker 6: higher ed world at the moment. 160 00:08:20,960 --> 00:08:23,320 Speaker 2: Well, also, isn't it true that, like the tuition, even 161 00:08:23,360 --> 00:08:26,320 Speaker 2: though tuition's insane and we're talking like eighty thousand dollars 162 00:08:26,520 --> 00:08:31,160 Speaker 2: like that doesn't cover at all necessarily one person's entire education. 163 00:08:30,840 --> 00:08:35,720 Speaker 6: There too, That's true. I think the interesting thing that 164 00:08:35,960 --> 00:08:39,240 Speaker 6: I think colleges will need to grapple with, and something 165 00:08:39,280 --> 00:08:42,000 Speaker 6: I'm interested in, is how much they kind of break 166 00:08:42,040 --> 00:08:44,559 Speaker 6: down those costs for future students. You know, how much 167 00:08:44,600 --> 00:08:48,600 Speaker 6: of tuition dollars are going to facilities. I think that's 168 00:08:48,640 --> 00:08:50,280 Speaker 6: an interesting question. 169 00:08:50,720 --> 00:08:53,679 Speaker 4: All Right, more money going to universities, less money going 170 00:08:53,720 --> 00:08:58,240 Speaker 4: to municipal funded detention centers on feur inmates, what's going 171 00:08:58,280 --> 00:08:58,600 Speaker 4: on there? 172 00:08:59,240 --> 00:09:05,640 Speaker 6: Yeah, this is a classic political situation in the muni market. 173 00:09:06,240 --> 00:09:10,880 Speaker 6: We've seen with changes in political control, different approaches to 174 00:09:11,880 --> 00:09:16,200 Speaker 6: detentions and corrections policies, and so I think really that story, 175 00:09:16,240 --> 00:09:18,200 Speaker 6: which was a great story that came out I think 176 00:09:18,280 --> 00:09:23,080 Speaker 6: yesterday it highlights this growing risk that MUNI investor any 177 00:09:23,200 --> 00:09:26,000 Speaker 6: to talk to any MUNI investor right now, and politics 178 00:09:26,080 --> 00:09:30,680 Speaker 6: are at the forefront of everything, especially the presidential election. 179 00:09:31,880 --> 00:09:34,960 Speaker 6: The corporate tax rate could be in play, individual tax 180 00:09:35,040 --> 00:09:37,319 Speaker 6: rates could be in play. All of that will kind 181 00:09:37,360 --> 00:09:39,560 Speaker 6: of affect muni's and then you have all these other 182 00:09:40,080 --> 00:09:45,440 Speaker 6: kind I guess lower impacts as well, such as corrections, 183 00:09:45,480 --> 00:09:48,520 Speaker 6: projects like. All of that is very affected by politics. 184 00:09:48,520 --> 00:09:51,800 Speaker 6: So that's why MUNI investors are very focused on the 185 00:09:51,840 --> 00:09:53,880 Speaker 6: election these days, along with everyone else. 186 00:09:53,880 --> 00:09:55,880 Speaker 2: All right, Amanda, Yeah, everybody else, all right, Amanda, thanks 187 00:09:55,880 --> 00:09:58,840 Speaker 2: a lot. Amanda all Bright, Bloomberg Community finance reporter, joining 188 00:09:58,920 --> 00:09:59,880 Speaker 2: us from Kansas. 189 00:10:01,440 --> 00:10:05,319 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 190 00:10:05,400 --> 00:10:08,120 Speaker 1: weekdays at ten am Eastern on Apple car Playing and 191 00:10:08,200 --> 00:10:11,120 Speaker 1: broyd Outo with the Bloomberg Business app. Listen on demand 192 00:10:11,160 --> 00:10:15,480 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 193 00:10:16,160 --> 00:10:18,760 Speaker 4: I'm looking at the screen, lots of things moving all 194 00:10:18,760 --> 00:10:22,240 Speaker 4: over the place. Stocks up, yields down. I'm looking at 195 00:10:22,280 --> 00:10:25,160 Speaker 4: gold up one and a quarter percent, oil up one 196 00:10:25,200 --> 00:10:28,240 Speaker 4: point nine percent on wtacrude oil. Is there a correlation there? 197 00:10:28,280 --> 00:10:30,160 Speaker 4: I think our next guest has some thoughts on that. 198 00:10:30,240 --> 00:10:34,360 Speaker 4: Mike McLoone, senior commodity strategist for Bloomberg Intelligence, zooming in 199 00:10:34,440 --> 00:10:38,319 Speaker 4: from Miami, Florida. Mike, what's going on with gold and crude? 200 00:10:38,880 --> 00:10:39,480 Speaker 5: Paul, Hello. 201 00:10:39,720 --> 00:10:42,480 Speaker 7: We have the difference between an enduring bull market that's 202 00:10:42,520 --> 00:10:44,520 Speaker 7: gold right now it said if you end the week 203 00:10:44,600 --> 00:10:46,719 Speaker 7: the month now, it's at a record high, and an 204 00:10:46,800 --> 00:10:49,439 Speaker 7: enduring bear market that's Crudeill The price in the screen 205 00:10:49,480 --> 00:10:51,880 Speaker 7: you see right now WTI seventy four dollars a barrow 206 00:10:51,920 --> 00:10:54,280 Speaker 7: about there was first traded in two thousand and six. 207 00:10:54,400 --> 00:10:57,720 Speaker 7: That's almost twenty years ago. And as we tilt towards 208 00:10:57,720 --> 00:11:02,680 Speaker 7: this easing cycle, kipically that spread with gold outperforming Crudeli 209 00:11:02,920 --> 00:11:05,280 Speaker 7: widens and it looks like it's just getting started. 210 00:11:06,200 --> 00:11:08,280 Speaker 2: First of all, you bury the lead. We're not coming 211 00:11:08,320 --> 00:11:11,320 Speaker 2: to Miami, Mike, so you can you can stop looking 212 00:11:11,440 --> 00:11:14,080 Speaker 2: for fun things for us to do. You cannot worry 213 00:11:14,080 --> 00:11:17,920 Speaker 2: about your guest rooms like we're good. So the record 214 00:11:18,000 --> 00:11:20,200 Speaker 2: high though that we saw back in gold, that we 215 00:11:20,320 --> 00:11:23,280 Speaker 2: keep hitting here, I'm really struggling as to what is 216 00:11:23,320 --> 00:11:26,160 Speaker 2: actually leading it, because you know, the last ten years 217 00:11:26,200 --> 00:11:27,920 Speaker 2: and we had low rates and all that gold did 218 00:11:27,960 --> 00:11:30,320 Speaker 2: a whole lot of nothing, and it has just been 219 00:11:30,480 --> 00:11:33,400 Speaker 2: feeling like a NonStop tear in the last few years. 220 00:11:34,360 --> 00:11:35,600 Speaker 5: Yeah, let's start with two things. 221 00:11:35,840 --> 00:11:40,000 Speaker 7: The unstoppable rise in US debt to GDP, the very 222 00:11:40,000 --> 00:11:43,800 Speaker 7: expensive US stock market, the Federal Reserve tilting towards easing. 223 00:11:44,160 --> 00:11:46,240 Speaker 7: And the most significant outfit in the room is the 224 00:11:46,320 --> 00:11:50,120 Speaker 7: unlimited friendship between President Zy and President Putin that shifted 225 00:11:50,120 --> 00:11:53,000 Speaker 7: the world order in favor of gold. And it looks 226 00:11:53,040 --> 00:11:55,680 Speaker 7: like it's yourself and so the biggest deepest pockets on 227 00:11:55,679 --> 00:11:58,440 Speaker 7: that planet I starting with China, have been buying the metal. 228 00:11:58,760 --> 00:12:00,679 Speaker 7: And it looks like once we get a little bit 229 00:12:00,679 --> 00:12:02,959 Speaker 7: of a version in lower yields i e. T Bills 230 00:12:03,000 --> 00:12:05,000 Speaker 7: not at five percent anymore, and maybe just a little 231 00:12:05,040 --> 00:12:07,360 Speaker 7: back and fill in the stock market, gold will shine. 232 00:12:07,400 --> 00:12:09,120 Speaker 5: It looks like it's continuing to that now. Right now, 233 00:12:09,120 --> 00:12:09,920 Speaker 5: it's a little bit overdone. 234 00:12:10,000 --> 00:12:12,640 Speaker 7: Manage money net positions IE futures are really long for 235 00:12:12,679 --> 00:12:15,839 Speaker 7: a reason. It's a bull market. But the narrative for 236 00:12:15,880 --> 00:12:17,600 Speaker 7: gold is quite strong. And I'll just meant and with 237 00:12:17,760 --> 00:12:21,520 Speaker 7: is gold is historically very cheap versus SEP five hundred. 238 00:12:21,760 --> 00:12:24,200 Speaker 7: If you just take it divided by the ounces divided 239 00:12:24,240 --> 00:12:27,760 Speaker 7: by the index, particularly when you enter recessions. What oftentimes 240 00:12:27,880 --> 00:12:30,840 Speaker 7: happens when you enter recession and fetis is that that 241 00:12:30,960 --> 00:12:32,559 Speaker 7: spread just kind of narrows a little bit. 242 00:12:33,200 --> 00:12:36,320 Speaker 4: What would take what would change this seems to be 243 00:12:36,320 --> 00:12:40,040 Speaker 4: a structural bullish call on gold. Mike, what would need 244 00:12:40,040 --> 00:12:40,520 Speaker 4: to change that? 245 00:12:41,520 --> 00:12:43,840 Speaker 7: I think the first thing is the US stock markets 246 00:12:43,880 --> 00:12:46,120 Speaker 7: stay resilient. Well, why by golden when it's that resilient. 247 00:12:46,280 --> 00:12:48,360 Speaker 7: The most significant thing was kind of some kind of 248 00:12:48,440 --> 00:12:52,520 Speaker 7: unexpected dayton ie President Zy picking up the phone saying yeah, 249 00:12:52,520 --> 00:12:55,160 Speaker 7: we're done with this unlimited friendship. The dayton that's happening 250 00:12:55,240 --> 00:12:57,959 Speaker 7: globally is part of what's really driving gold. He's somewhat 251 00:12:58,000 --> 00:13:00,400 Speaker 7: getting away from the dollar, looking for an altern to 252 00:13:00,480 --> 00:13:04,079 Speaker 7: US treasuries, particularly with yields dropping and the death the 253 00:13:04,280 --> 00:13:07,000 Speaker 7: GDP just continuing to rise, So that to me would 254 00:13:07,000 --> 00:13:09,280 Speaker 7: be in one of the most significant things. Otherwise, it 255 00:13:09,360 --> 00:13:11,000 Speaker 7: looks to me, once you get a little bit of 256 00:13:11,040 --> 00:13:13,120 Speaker 7: a version lower in the stock market, which at some 257 00:13:13,200 --> 00:13:16,280 Speaker 7: point will happen, gold will probably shine like long bonds, 258 00:13:16,360 --> 00:13:18,680 Speaker 7: like on the month, now on the quarter. Now, gold's 259 00:13:18,720 --> 00:13:21,439 Speaker 7: up about eight percent in the US Treasury. The Bloomberg 260 00:13:21,520 --> 00:13:24,360 Speaker 7: twenty plus long bond indexes up about the same, about 261 00:13:24,360 --> 00:13:24,800 Speaker 7: eight percent. 262 00:13:25,480 --> 00:13:27,280 Speaker 2: What about positioning at this point, Like I know in 263 00:13:27,360 --> 00:13:29,760 Speaker 2: the central banks are buyers, et cetera, and that in 264 00:13:29,880 --> 00:13:31,319 Speaker 2: price spikes, you're not going to see a lot of 265 00:13:31,320 --> 00:13:34,200 Speaker 2: physical buying also, et cetera. But who's left to buy 266 00:13:34,240 --> 00:13:35,199 Speaker 2: in the futures market. 267 00:13:36,280 --> 00:13:38,080 Speaker 5: It's that's the key thing. It's a good point. 268 00:13:38,240 --> 00:13:41,760 Speaker 7: About forty four percent of total co mix futures positions 269 00:13:41,800 --> 00:13:42,960 Speaker 7: are speculative longs. 270 00:13:43,000 --> 00:13:43,920 Speaker 5: It's very high. 271 00:13:44,040 --> 00:13:46,439 Speaker 7: The high it really gets much higher than forty eight. 272 00:13:46,640 --> 00:13:49,360 Speaker 7: But what's really happening is we've had significant outflows in 273 00:13:49,400 --> 00:13:52,480 Speaker 7: gold dtfs since that peak in twenty twenty. They're just 274 00:13:52,600 --> 00:13:54,679 Speaker 7: starting turned inflows and I think that is part of 275 00:13:54,720 --> 00:13:57,480 Speaker 7: that alternative. You see people going to cash and bonds. 276 00:13:57,520 --> 00:13:59,719 Speaker 7: They're looking for alternatives to expensive stock market. So that 277 00:13:59,720 --> 00:14:01,800 Speaker 7: looks it's just rolling over. But if you got a 278 00:14:01,920 --> 00:14:04,280 Speaker 7: day like we had in August fifth, when markets go down, yeah, 279 00:14:04,280 --> 00:14:06,480 Speaker 7: you hit you sell what you can. And there's a 280 00:14:06,520 --> 00:14:08,480 Speaker 7: lot of specative lungs in goal at the moment for 281 00:14:08,559 --> 00:14:09,960 Speaker 7: a good reason. Though it's a bull market. 282 00:14:10,160 --> 00:14:12,560 Speaker 4: That's a trader's term. You sell what you can. Yeah, 283 00:14:12,640 --> 00:14:14,320 Speaker 4: you have on those days. Hey, Mike, thanks so much 284 00:14:14,360 --> 00:14:16,720 Speaker 4: for joining us. I appreciate it very much. As always, 285 00:14:17,000 --> 00:14:21,440 Speaker 4: Mike mcloone's Cedar Commodity Strategists for Bloomberg Intelligence, I'm looking 286 00:14:21,480 --> 00:14:23,560 Speaker 4: at like some of the Whenever you talk to Mike, 287 00:14:23,560 --> 00:14:27,280 Speaker 4: I put up g LCO the Global Commodity Price screen. 288 00:14:32,640 --> 00:14:36,520 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 289 00:14:36,640 --> 00:14:40,160 Speaker 1: weekdays at ten am Eastern on applecard Play and Android 290 00:14:40,160 --> 00:14:42,920 Speaker 1: Auto with the Bloomberg Business app. You can also listen 291 00:14:43,080 --> 00:14:46,120 Speaker 1: live on Amazon Alexa from our flagship New York station, 292 00:14:46,520 --> 00:14:49,280 Speaker 1: just say Alexa playing Bloomberg eleven thirty. 293 00:14:50,280 --> 00:14:52,360 Speaker 2: So let's get to the markets here. Equities rally, you 294 00:14:52,400 --> 00:14:54,400 Speaker 2: haven't been to the bond market, and the dollars lower. 295 00:14:54,480 --> 00:14:55,040 Speaker 2: It's classic. 296 00:14:55,120 --> 00:14:56,040 Speaker 5: The Fed is going to cut. 297 00:14:56,480 --> 00:14:58,320 Speaker 2: I guess the question is by how much? And then 298 00:14:58,400 --> 00:15:00,520 Speaker 2: how does that affect your positioning? And the why they're 299 00:15:00,560 --> 00:15:04,480 Speaker 2: cutting too very much important. Dana Duoria, Co, Chief Investment 300 00:15:04,560 --> 00:15:08,560 Speaker 2: Officer of Investment joins us. Now, Dana, how did you 301 00:15:08,760 --> 00:15:11,040 Speaker 2: view the jackson Hole speech by Powell? Was that twenty 302 00:15:11,120 --> 00:15:13,360 Speaker 2: five cuts for you in September or was that fifty. 303 00:15:13,800 --> 00:15:16,040 Speaker 8: I think it's twenty five. Look, I think that you 304 00:15:16,160 --> 00:15:19,720 Speaker 8: could not ask for more dubvish comments from Powell this week. 305 00:15:20,800 --> 00:15:23,080 Speaker 8: You know, I think he knew that the market needed 306 00:15:23,120 --> 00:15:25,800 Speaker 8: to hear something like that in order not to react negatively. 307 00:15:25,880 --> 00:15:30,960 Speaker 8: We've obviously been pricing in significant it decreases, and so 308 00:15:31,080 --> 00:15:32,960 Speaker 8: he delivered, right, and he gave us a speech that 309 00:15:33,040 --> 00:15:36,000 Speaker 8: said yep, I'm there, you know, I think, and even 310 00:15:36,040 --> 00:15:39,400 Speaker 8: words like ensuring that inflation is anchored. You know, it 311 00:15:39,560 --> 00:15:41,640 Speaker 8: was not only a dubbish speech. It was sort of 312 00:15:41,680 --> 00:15:44,440 Speaker 8: a victory lap, right for him to say, Hey, our 313 00:15:44,520 --> 00:15:47,960 Speaker 8: monetary policy worked out, We've tamed inflation. Now it's time 314 00:15:48,040 --> 00:15:50,440 Speaker 8: to turn to unemployment and we are going to cut. 315 00:15:50,840 --> 00:15:53,200 Speaker 8: But I don't think that means, you know, all that 316 00:15:53,280 --> 00:15:56,080 Speaker 8: excitement means that were necessarily getting fifty. I think it's 317 00:15:56,120 --> 00:15:59,760 Speaker 8: his way of saying, you know, yes we can all 318 00:16:00,160 --> 00:16:02,200 Speaker 8: the sigh of relief. I think he still gives himself 319 00:16:02,240 --> 00:16:04,560 Speaker 8: the twenty five In September. 320 00:16:04,720 --> 00:16:06,640 Speaker 4: Hey, Dana, just looking at the price action today, the 321 00:16:06,720 --> 00:16:09,600 Speaker 4: russell is up three point three percent versus a one 322 00:16:09,640 --> 00:16:12,560 Speaker 4: percent for the S and P five hundred. So I 323 00:16:12,640 --> 00:16:17,120 Speaker 4: guess that rotation trade into maybe smaller mid cap stocks 324 00:16:17,200 --> 00:16:19,920 Speaker 4: out of you know, some of the other big cap names. 325 00:16:20,600 --> 00:16:22,240 Speaker 4: Maybe that's really a thing. How do you guys think 326 00:16:22,240 --> 00:16:22,560 Speaker 4: about that? 327 00:16:23,840 --> 00:16:26,960 Speaker 8: Yeah, look, I mean, obviously small caps more interest rates sensitive, 328 00:16:27,320 --> 00:16:30,120 Speaker 8: and you know, this is great news. And certainly as 329 00:16:30,160 --> 00:16:34,360 Speaker 8: you go into an interest rate reducing cycle, you know 330 00:16:34,560 --> 00:16:37,560 Speaker 8: you're you're looking at benefits to small caps. You're looking 331 00:16:37,600 --> 00:16:41,040 Speaker 8: at benefits obviously in the real estate sector already somewhat 332 00:16:42,120 --> 00:16:45,480 Speaker 8: expecting that and pricing that in. So not surprising to 333 00:16:45,520 --> 00:16:48,360 Speaker 8: see that, you know, and then you mentioned even in 334 00:16:48,400 --> 00:16:50,160 Speaker 8: your intro, but what is the reason. 335 00:16:50,000 --> 00:16:50,960 Speaker 2: We expect the cuts? 336 00:16:51,000 --> 00:16:53,440 Speaker 8: I think if you think that cuts are happening because 337 00:16:54,520 --> 00:16:56,160 Speaker 8: you know, the feed is a little bit worried about 338 00:16:56,160 --> 00:16:58,960 Speaker 8: what's going on in the economy, that's not good news 339 00:16:59,040 --> 00:16:59,680 Speaker 8: for small caps. 340 00:16:59,720 --> 00:16:59,840 Speaker 5: Right. 341 00:17:00,160 --> 00:17:02,560 Speaker 8: It's short term good news, but it's not good news. 342 00:17:02,960 --> 00:17:05,239 Speaker 8: You know, if you think you're looking at recession, if 343 00:17:05,280 --> 00:17:08,680 Speaker 8: you think that the FED is playing this right, they're 344 00:17:08,880 --> 00:17:11,600 Speaker 8: hitting the ball right down the middle. They've tamed inflation, 345 00:17:11,800 --> 00:17:14,920 Speaker 8: and now they're going to prevent problems in the economy. 346 00:17:15,200 --> 00:17:16,440 Speaker 8: Great news for small caps. 347 00:17:17,119 --> 00:17:20,679 Speaker 2: I guess the question, though, becomes do they wind up 348 00:17:20,760 --> 00:17:22,879 Speaker 2: cutting because there is a recession. And that's kind of 349 00:17:22,880 --> 00:17:26,399 Speaker 2: the unknowable because if they're cutting for that elusive soft 350 00:17:26,520 --> 00:17:31,080 Speaker 2: landing or normalization, that shouldn't that be a different distribution 351 00:17:31,800 --> 00:17:34,640 Speaker 2: of investment than if you are cutting because things are bad. 352 00:17:35,680 --> 00:17:38,480 Speaker 8: Yes, yeah, it would be. I mean, look a high 353 00:17:38,600 --> 00:17:43,240 Speaker 8: level we advocate strategic, long term, diversified thinking. Don't try 354 00:17:43,280 --> 00:17:43,720 Speaker 8: to time this. 355 00:17:44,200 --> 00:17:44,359 Speaker 5: You know. 356 00:17:44,720 --> 00:17:48,280 Speaker 8: That said, if you're thinking about tilting in a certain 357 00:17:48,320 --> 00:17:50,880 Speaker 8: direction based on one of those outcomes to the other. 358 00:17:51,240 --> 00:17:54,040 Speaker 8: You know, if you think recession's coming, you're tilting towards quality, right, 359 00:17:54,119 --> 00:17:57,320 Speaker 8: you're tilting towards low volatility stocks stacks that sort of 360 00:17:57,359 --> 00:18:01,560 Speaker 8: act as a ballast in bad weather. If you think 361 00:18:01,800 --> 00:18:04,679 Speaker 8: that the FED is getting this right, that they are 362 00:18:04,760 --> 00:18:07,480 Speaker 8: cutting in time, that they're not late with this, that 363 00:18:07,560 --> 00:18:09,960 Speaker 8: they're pivoting at exactly the right moment, that we are 364 00:18:10,040 --> 00:18:12,200 Speaker 8: going to avert, you know, a problem with this the 365 00:18:12,280 --> 00:18:15,280 Speaker 8: AI trade. Maybe maybe your thesis is the AI trade is, 366 00:18:15,640 --> 00:18:17,359 Speaker 8: you know, full steam ahead, and we're even going to 367 00:18:17,400 --> 00:18:20,360 Speaker 8: start to see productivity increases in the rest of the economy. 368 00:18:21,119 --> 00:18:22,320 Speaker 6: Then you know, areas like. 369 00:18:22,400 --> 00:18:25,280 Speaker 8: Small in value where they've been they've been kind of 370 00:18:25,359 --> 00:18:29,680 Speaker 8: ignored from evaluation perspective, they look a lot more attractive. 371 00:18:30,520 --> 00:18:33,639 Speaker 8: You're going to be leaning more heavily there, all. 372 00:18:33,520 --> 00:18:35,959 Speaker 4: Right, Dannis, So today's price action shows us that obviously 373 00:18:36,080 --> 00:18:38,600 Speaker 4: the Fed still matters, The market cares what the Fed 374 00:18:38,680 --> 00:18:40,359 Speaker 4: is going to do. But so to earnings, and we 375 00:18:40,520 --> 00:18:43,400 Speaker 4: just kind of finished up in earnings cycle here, any 376 00:18:43,520 --> 00:18:47,320 Speaker 4: takeaways for you that maybe influence the way you're thinking 377 00:18:47,320 --> 00:18:48,240 Speaker 4: about opportunities. 378 00:18:49,240 --> 00:18:51,760 Speaker 8: Yeah, Look, earnings are cooperating, right, Earnings are in the 379 00:18:51,800 --> 00:18:55,399 Speaker 8: plus category here. We've had a nice earning season. You know, 380 00:18:55,520 --> 00:18:58,520 Speaker 8: combined S and P five hundred, earnings grew nearly eleven 381 00:18:58,560 --> 00:19:00,280 Speaker 8: percent year every year. At this point, we do having 382 00:19:00,400 --> 00:19:03,639 Speaker 8: VideA still to see obviously, the AI king, we want 383 00:19:03,640 --> 00:19:05,240 Speaker 8: to see where that's going to go. That's going to 384 00:19:05,240 --> 00:19:08,000 Speaker 8: be meaningful for the market, potentially even on the same 385 00:19:08,119 --> 00:19:10,959 Speaker 8: level as today, right to the extent that AI has 386 00:19:11,000 --> 00:19:14,080 Speaker 8: been driving a lot of the market's valuation increases, the 387 00:19:14,200 --> 00:19:16,520 Speaker 8: multiples that we're seeing in a big you know that 388 00:19:16,640 --> 00:19:20,720 Speaker 8: big tech, heavy concentrated part of the market, communications and tech, 389 00:19:21,119 --> 00:19:23,919 Speaker 8: so that that's going to be very important. But certainly 390 00:19:24,000 --> 00:19:27,239 Speaker 8: what's nice to see about you know, earnings right now 391 00:19:27,400 --> 00:19:30,240 Speaker 8: is that with nearly eighty percent of the companies beating 392 00:19:30,280 --> 00:19:34,200 Speaker 8: their expectations, and most of the sector is doing well, 393 00:19:34,359 --> 00:19:37,639 Speaker 8: you know, sectors like financials. This is good, you know, 394 00:19:37,720 --> 00:19:40,440 Speaker 8: it shows breadth, right, it's not just earnings coming from 395 00:19:40,480 --> 00:19:42,679 Speaker 8: that concentrated part of the market that's highly valued. 396 00:19:43,240 --> 00:19:44,680 Speaker 2: So I'm glad you brought that up because I feel 397 00:19:44,680 --> 00:19:46,480 Speaker 2: like I've been asking this question ad nauseum, which is 398 00:19:46,760 --> 00:19:48,639 Speaker 2: is in video going to be a market event or 399 00:19:48,760 --> 00:19:51,520 Speaker 2: is it going to be a mag seven slash chip 400 00:19:51,600 --> 00:19:53,920 Speaker 2: stock event? Where do you fall on that? 401 00:19:55,320 --> 00:19:58,080 Speaker 8: I think it's going to matter, you know, because of 402 00:19:58,160 --> 00:20:01,600 Speaker 8: course we already do have the news now from Powell, 403 00:20:02,240 --> 00:20:04,720 Speaker 8: and obviously, notwithstanding we've got a month before these cuts 404 00:20:04,720 --> 00:20:06,560 Speaker 8: actually take place, and that's a lot of time for 405 00:20:06,720 --> 00:20:09,360 Speaker 8: data to shift one way or the other. But it's 406 00:20:09,400 --> 00:20:11,280 Speaker 8: pretty well baked in that. You know, we get the 407 00:20:11,320 --> 00:20:13,520 Speaker 8: twenty five in September, so the market's pricing that in. 408 00:20:13,960 --> 00:20:16,720 Speaker 8: And now the question does become, you know, where where 409 00:20:16,800 --> 00:20:19,800 Speaker 8: goes in Vidia has gone, you know, to a certain extent, 410 00:20:20,200 --> 00:20:22,000 Speaker 8: belief in the AI trade. Of course, we know that 411 00:20:22,040 --> 00:20:25,879 Speaker 8: there's a whole you know, satellite system of companies around 412 00:20:25,920 --> 00:20:29,240 Speaker 8: there that are AI driven and you know, carry the 413 00:20:29,880 --> 00:20:33,560 Speaker 8: flag for AI. But let's face it, in Vidia is 414 00:20:33,880 --> 00:20:35,800 Speaker 8: the market sort of bell weather for that. And I 415 00:20:35,880 --> 00:20:38,159 Speaker 8: think that does matter a lot, because again, a lot 416 00:20:38,200 --> 00:20:40,960 Speaker 8: of the valuation increases we see on the large cap 417 00:20:41,080 --> 00:20:43,800 Speaker 8: side in that growth space are around. 418 00:20:43,600 --> 00:20:45,440 Speaker 3: This thesis, Dana. 419 00:20:45,520 --> 00:20:47,920 Speaker 4: On the fixed income side, where do you see opportunity? 420 00:20:49,440 --> 00:20:53,080 Speaker 8: You know, of course, obviously the expectation now with the 421 00:20:53,160 --> 00:20:56,360 Speaker 8: FED decreasing rates and you start to see some movement there, 422 00:20:57,760 --> 00:21:01,760 Speaker 8: I remain I am and remain you know, a candidate 423 00:21:01,840 --> 00:21:04,920 Speaker 8: for just diversity across the yield curve. I don't think 424 00:21:05,000 --> 00:21:07,600 Speaker 8: it's smart for the average person to be betting on 425 00:21:07,680 --> 00:21:09,960 Speaker 8: interest rate cuts. I think, you know, the market is 426 00:21:10,000 --> 00:21:12,040 Speaker 8: pricing in the interest rate cuts as quickly as they're 427 00:21:12,040 --> 00:21:14,760 Speaker 8: pricing in you know, equity changes. So if you're in 428 00:21:14,800 --> 00:21:19,080 Speaker 8: the retail advisor area where we exist, you know, tilting 429 00:21:19,200 --> 00:21:22,600 Speaker 8: one way or the other on interest rates is a 430 00:21:22,680 --> 00:21:23,879 Speaker 8: thing to is a tough thing to do. 431 00:21:24,000 --> 00:21:25,040 Speaker 3: It's not just right the FED. 432 00:21:25,200 --> 00:21:26,879 Speaker 8: When you think of something like the ten year rate, 433 00:21:26,920 --> 00:21:29,399 Speaker 8: which obviously we're all watching now, there's a lot that 434 00:21:29,520 --> 00:21:31,520 Speaker 8: goes into that rate. You know, it's not it's not 435 00:21:31,760 --> 00:21:34,760 Speaker 8: just the Fed. It's the it's the markets expectations about 436 00:21:34,760 --> 00:21:37,359 Speaker 8: where the economy is going, how much growth are we're 437 00:21:37,359 --> 00:21:40,160 Speaker 8: going to see in the mid term. So I say, 438 00:21:40,400 --> 00:21:42,920 Speaker 8: you know, make sure you're diverse fied across the field curve. 439 00:21:42,960 --> 00:21:44,920 Speaker 8: I don't even think of bar Bell. I think, you know, 440 00:21:45,040 --> 00:21:46,959 Speaker 8: trying to get across the yield curve is the right 441 00:21:47,000 --> 00:21:47,480 Speaker 8: place to be. 442 00:21:47,760 --> 00:21:49,720 Speaker 2: All right, Dan, And we really appreciate thanks for jumping 443 00:21:49,760 --> 00:21:51,800 Speaker 2: on on this Friday, and next week definitely going to 444 00:21:51,800 --> 00:21:53,760 Speaker 2: be a busy week as well. Dana Dyuoria a co 445 00:21:54,000 --> 00:21:55,800 Speaker 2: Chief investment Officer at Investment. 446 00:21:56,200 --> 00:22:00,680 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 447 00:22:00,880 --> 00:22:04,040 Speaker 1: and anywhere else you get your podcasts. 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