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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside

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Speaker 1: my co host Matt Miller. Every business day, we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. Now, I am excited

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Speaker 1: to welcome Jim Laurie to the program, Chief executive Officer

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Speaker 1: Stanley Black and deck Or. The stock has hit an

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Speaker 1: all time high and the company has boosted it's uh

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Speaker 1: two thousand twenty one Tools and Storage organic growth view.

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Speaker 1: I am Jim. You're probably your target retail customer looking

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Speaker 1: for an angle grinder right now. There's nothing I love, well,

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Speaker 1: there's very There are very few things I love more

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Speaker 1: than power tools. Ride motorcycles a lot, but mainly so

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Speaker 1: that I can work on them. Um. I guess it's

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Speaker 1: probably home improvement though. That's been driving your business this year,

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Speaker 1: Is that right? Well, that's certainly a big part of it.

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Speaker 1: But you know, we we do, uh, we do have

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Speaker 1: some drivers and all around the globe, and it's home improvement,

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Speaker 1: it's repurposing homes. It's home starts, housing starts, and uh

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Speaker 1: economic activity in general, you know, all drive the business, alright,

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Speaker 1: So Jim, give us a sense of how your business

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Speaker 1: kind of was impacted during the pandemic. Take us to

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Speaker 1: kind of just as you know, that quarter or two

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Speaker 1: pre pandemic, and then what it's been like since the pandemic.

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Speaker 1: How's your business changed. Yeah, we had a very interesting

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Speaker 1: pre pandemic situation where it was just kind of normal,

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Speaker 1: and then one day we woke up and UH sales

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Speaker 1: plummeted by We're down for four continuous weeks in US retail,

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Speaker 1: which is a big part of our business. So it

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Speaker 1: was a little bit scary at that point in time,

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Speaker 1: but we uh we kept producing. We remained continuously open,

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Speaker 1: and in May, what happened was the point of sale,

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Speaker 1: the cash register receipts, if you will, at the retailers

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Speaker 1: started going positive and then it went to stratospheric levels

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Speaker 1: in the middle of last year that we've really never

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Speaker 1: seen before, you know, like up e commerce was up.

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Speaker 1: It was just crazy numbers and so fortunately we had

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Speaker 1: made some that says we saw this these cash registered

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Speaker 1: receipts going up for tools, and we bought six hundred

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Speaker 1: million dollars worth of inventory and manufactured six hundred million

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Speaker 1: dollars worth the extra inventory to serve that demand, and

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Speaker 1: that that demand has just continued, you know, at different

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Speaker 1: varying rates. But let me give you a little insight

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Speaker 1: into the first quarter. Uh, you know, the total sales

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Speaker 1: and the tools business, we're up forty organically. North America

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Speaker 1: was up for US, retail was up and get this,

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Speaker 1: Europe was up, and the UK and even the emerging market,

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Speaker 1: who you wouldn't think would be doing so well, they

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Speaker 1: were up seventy in Latin America seventy seven percent. So

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Speaker 1: it's it's really really broad based market strength. And when

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Speaker 1: we cut fining you across the products. You know, power

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Speaker 1: tools were up fifty percent, hand tools up and outdoor

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Speaker 1: outdoor was up a hundred and twenty. So the headge trimmers,

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Speaker 1: the shears, the electric shears and those types of things

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Speaker 1: just bonanza really across the board. Well, your long term

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Speaker 1: growth has been strong as well, And I wonder if

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Speaker 1: I look at your next day three to five years,

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Speaker 1: do you expected to pick up from the last three

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Speaker 1: to five years. Absolutely, you know, I've been at sea

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Speaker 1: level exacting this company for twenty one years, and when

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Speaker 1: I joined, we were two billion in revenue, and we'll

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Speaker 1: finish this year, you know, somewhere in the fifteen sixteen

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Speaker 1: billion dollar range. Our market cap was two billion, and

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Speaker 1: it's over thirty now. So it's been a long term

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Speaker 1: growth story as long as I've been here, and even

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Speaker 1: dating back you know, before that, since our founding in

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Speaker 1: eighteen forty three. But in any event, we're excited about

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Speaker 1: the post pandemic economy, and we're excited about our portfolio

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Speaker 1: because not only do we have I would say, the

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Speaker 1: construction market coming back, we see very positive outlook for

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Speaker 1: the US economy and beyond that global growth. And then

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Speaker 1: specifically to Stanley Black and Ducker, we are going to

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Speaker 1: uh execute an option that we have to buy eight

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Speaker 1: of a company called mt D, which is one of

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Speaker 1: the largest gasolene powered outdoor power equipment makers of one

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Speaker 1: mowers and riding mowers and most types of things. And

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Speaker 1: we're going to that's about a three billion dollar business,

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Speaker 1: and we're going to convert that business using our technology

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Speaker 1: and our know how in battery power, We're going to

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Speaker 1: convert that and electrify that. So we're gonna add billions

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Speaker 1: of dollars of revenue, and we're gonna do great things

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Speaker 1: for the environment. A just recal Okay, thirty seconds, Jim,

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Speaker 1: I'm looking at, uh the supply chain function on the

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Speaker 1: Bloomberg Terminal SPLC. I see you've got about more than

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Speaker 1: eighty suppliers out there. Talk to us about the supply chain.

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Speaker 1: Are you getting the stuff you need? We've done really

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Speaker 1: really well in that regard. However, it's not It has

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Speaker 1: not been without its challenges. You can imagine, you know,

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Speaker 1: officially Asian and Mexican supply chain during a pandemic. It

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Speaker 1: does have challenges. And we you know, the three things

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Speaker 1: that are uh mostly most scarce, I would say would

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Speaker 1: be batteries, semiconductors, and UH in some cases resins. And

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Speaker 1: we're in good shape to continue this kind of growth,

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Speaker 1: UH and this kind of run rate sales UH with

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Speaker 1: batteries and also semi conductors. UH. And then the next

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Speaker 1: next year, in the year beyond, we're gonna have to

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Speaker 1: We're gonna have to get some more access to semiconductors.

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Speaker 1: Resins were into shape, Jim, thanks so much for joining us.

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Speaker 1: Any guys reported really strong numbers last week's stock at

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Speaker 1: an all time high. Good time to be in the

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Speaker 1: tool business. Jim Laury, chief executive officer for Stanley, Black

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Speaker 1: and Decker. We appreciate him taking some time there again

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Speaker 1: benefiting from the at home consumer doing some work around

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Speaker 1: the house. I guess now I want to bring in

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Speaker 1: Phil Orlando is the chief equity market strategist and head

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Speaker 1: of client portfolio management that Federated Hermes. They've got about

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Speaker 1: eighty billion dollars in equities under management firm wide, about

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Speaker 1: six billion dollars in assets under management as of a

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Speaker 1: kind of the end of last year. Phil um. You know,

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Speaker 1: lots changed since the end of last year, so I'm

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Speaker 1: expecting that number is probably a lot higher now. But

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Speaker 1: how much higher can it get? I mean, have we

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Speaker 1: reached a point when you know, uh, the market expectations

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Speaker 1: are um are now high enough for or the valuations

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Speaker 1: are high enough to meet market expectations. Well, the market

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Speaker 1: is going to reflect corporate earnings and you know the

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Speaker 1: S and P five from the bottom of the market

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Speaker 1: March a year ago to where we are now. You know,

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Speaker 1: we hit a record high within the last couple of days,

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Speaker 1: and there have been a lot of folks that have

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Speaker 1: been scratching their heads saying, how can the market be

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Speaker 1: doing this? Well, um, we had, you know, the deepest

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Speaker 1: recession in history, and the reason is that the equity

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Speaker 1: market is a forward looking discount mechanism which attempts to

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Speaker 1: price in what they think is going to happen six

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Speaker 1: or nine months later. So here we are now in

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Speaker 1: the first quarter earning season. We're about two thirds of

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Speaker 1: the way through. Earnings were expected to be up about

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Speaker 1: year on year according to facts set, They're up. Yeah, well,

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Speaker 1: I mean tail this is the interesting thing. I mean,

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Speaker 1: I have never seen companies knocked the cover um so

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Speaker 1: far off the ball as they had this earning season.

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Speaker 1: In fact, um, the last looked SMP companies are beating

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Speaker 1: expectations by nine percent. You know, almost all of the

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Speaker 1: companies out are beating the street's estimates. And yet, um,

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Speaker 1: we haven't seen stocks move a lot in the past

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Speaker 1: few days. Analysts are saying, thank you very much. We

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Speaker 1: are our investors are saying, thank you very much. We

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Speaker 1: expected that. You know, what what can you do for me? Now?

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Speaker 1: Well that that's exactly the point. There's maybe one percent.

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Speaker 1: Rally has priced in some of this gain. The second quarter.

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Speaker 1: The quarter that just started that we're going to report

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Speaker 1: in July. We think the earnings are going to be

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Speaker 1: up another sixty Now that could represent the peak of

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Speaker 1: the cycle in terms of rate of growth. So we

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Speaker 1: may continue to grind earnings up second half of this

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Speaker 1: year all of next year, but the corner on quarter

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Speaker 1: year on year pace of that increase may start to decline. UM.

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Speaker 1: So so that's the the interesting inflection point that we're

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Speaker 1: gonna be watching right now. We still think the market's

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Speaker 1: going to forty five hundred, but we may get to

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Speaker 1: by August as opposed to December, based upon the strength

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Speaker 1: of the earnings recovery that corporate America right now is enjoying.

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Speaker 1: Phil give us a sense of your concern about inflation,

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Speaker 1: because we certainly are seeing inflation, uh coming into this market,

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Speaker 1: whether you look at the soft commodities, hard commodities, oil,

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Speaker 1: you know rallying here um the Fed and Chairman Pal saying, hey,

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Speaker 1: it's just transitory, don't worry about it. But I think

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Speaker 1: there's a growing chatter about the concerns for inflation. What

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Speaker 1: that night mean for the FED going forward? What are

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Speaker 1: your thoughts we think the Fed is being there whistling

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Speaker 1: past the graveyard here. On inflation. We just saw the

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Speaker 1: core PC on Friday go from one point four year

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Speaker 1: on year core in February one eight percent in March.

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Speaker 1: That number is going to keep going up based upon

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Speaker 1: this procedural base effect. As we drop off the low

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Speaker 1: inflation readings from a year ago, that number is going

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Speaker 1: to be somewhere between let's call it two and a

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Speaker 1: half and three over the next couple of months. Now,

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Speaker 1: the FED at that point is saying, don't worry about it,

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Speaker 1: it'll plateau, it will roll over. Given the spike in

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Speaker 1: commodity prices and the significant increase in labor costs that

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Speaker 1: the companies are gonna have to pay in order to

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Speaker 1: get workers off the sidelines to take their jobs back,

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Speaker 1: and then the price increases, they're going to pass those

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Speaker 1: labor costs on us in the form of higher consumer praises.

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Speaker 1: All of that, in our view, is going to start

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Speaker 1: to filter into core inflation. So so and and the

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Speaker 1: FED is locked in that they're not going to make

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Speaker 1: a policy change until you know, the end of calendar

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Speaker 1: twenty three at the earliest. So I think we're at

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Speaker 1: an inflection point on the FED here as well. At

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Speaker 1: what point does the Fed blink and recognize that maybe

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Speaker 1: inflation is a little bit of a problem here, and

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Speaker 1: that they're gonna have to change policy, either tapering or

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Speaker 1: moving interest rates higher earlier than the beginning of into Phil,

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Speaker 1: what asset class do you like if inflation is not transitory?

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Speaker 1: Where do you put your money? Heard a fixed income

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Speaker 1: strategies morning? Tell me junk bonds. But that's a little

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Speaker 1: too risky for my blood. Well, and I'm not the

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Speaker 1: bond guy. I'm the equity guy. And and and basically

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Speaker 1: what you want or companies that have pricing power that

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Speaker 1: are leveraged to this improvement of the economy. So we

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Speaker 1: think that the value stocks, which we've been playing since

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Speaker 1: last August, financials, energy industrials, UH, consumer discretionary, UH materials,

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Speaker 1: that these are the companies that are that are producing

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Speaker 1: the outsize games because the economy is growing so strongly

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Speaker 1: and the valuation gap between growth and value is still

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Speaker 1: significant enough. But I think that the value trade ought

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Speaker 1: to continue to work. Love it, Phil, great to get

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Speaker 1: your input. Really appreciate you stopping by for a bit.

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Speaker 1: Phil Orlando. There is that chief equity market strategist also

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Speaker 1: head of Client port folio Management over Federated Hermes and

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Speaker 1: Paul as you were you were telling me this morning.

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Speaker 1: Phil has been bullish and he's been right. He has

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Speaker 1: been and uh, you know it's interesting. He's got that

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Speaker 1: that rotation trade very much uh in play here, and

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Speaker 1: he's gonna ride that out. So it's been a good trade. Um,

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Speaker 1: And I think a lot of investors are feeling, you know,

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Speaker 1: this has got some more room to run here. As

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Speaker 1: long as the Fed stays on the sidelines and this

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Speaker 1: economy continues to reopen, we can see more legs there.

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Speaker 1: Time for Bloomberg Opinion today, we're joined by Tara la Chapelle.

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Speaker 1: She covers entertainment, telecommunications and deals for Bloomberg Opinion. And

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Speaker 1: I'll tell you, if you have an interest in media

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Speaker 1: like I do, in the convergence of media and technology

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Speaker 1: and cord cutting and streaming and all that cool stuff,

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Speaker 1: Terra's work is an absolute must read. And she's out

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Speaker 1: with another fantastic column today talking about Netflix and Terry,

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Speaker 1: you're suggesting that Netflix, you know, they haven't really bought anything.

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Speaker 1: They've just kind of built their company up from scratch,

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Speaker 1: investing in their in their business, investing in their programming,

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Speaker 1: but you're suggesting maybe they should take a look at

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Speaker 1: buying an existing media company, which one and whine right,

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Speaker 1: So I think that they should look at Discovery and

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Speaker 1: not just Netflix the other streaming giants you know, Apple, Um,

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Speaker 1: maybe not so much. Disney doesn't really fit their family

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Speaker 1: friendly programming, but you know, Amazon Prime, any of them.

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Speaker 1: Because I think what's missing now from the streaming universe

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Speaker 1: is reality TV programming, which you know, maybe Discoveries content

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Speaker 1: on you know, TLC, things like that are considered kind

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Speaker 1: of like the lowest rung of television art, but at

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Speaker 1: the same time, a lot of people enjoy it. And

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Speaker 1: I think it also is that type of content that

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Speaker 1: you can just turn on the TV and it's background

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Speaker 1: noise while you're maybe scrolling your phone or making dinner.

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Speaker 1: And I think that's really missing from streaming, and there's

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Speaker 1: value and being able to provide that. So I think

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Speaker 1: if Netflix is smart and if the other companies are smart,

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Speaker 1: they start to see that there's a hole there and

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Speaker 1: it would make an awful lot of sense to fill

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Speaker 1: because this kind of programming is not expensive to me

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Speaker 1: and it really you know, pays dividends. Yeah, I mean

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Speaker 1: if if Tiger King isn't the lowest rung of creating art,

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Speaker 1: I feel like they've already gone there. Um, and that

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Speaker 1: program was extraordinarily successful. Right. Meanwhile, Discovery has for me,

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Speaker 1: at least, they've got the top Gear America, which is

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Speaker 1: reality programming that I absolutely love. What else is Discovery

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Speaker 1: got on offer they have? They have really a wide

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Speaker 1: um offering of of programming. Top Gear comes from Motor Trend,

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Speaker 1: but Discovery owns that. Yeah, they have a ton um

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Speaker 1: you know. Aside from Motor Trend. There's TLC with Nintie

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Speaker 1: Day Fiance is their big show right now, and David Zaslav,

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Speaker 1: the CEO of Discovery, is kind of mused before that

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Speaker 1: it's like their Sunday Night Football. It airs on Sunday

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Speaker 1: nights and it just gets tons of viewers. And I

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Speaker 1: think what's interesting about Nintie Day Fiance and some of

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Speaker 1: their other programs. They have Chopped on the Food Network,

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Speaker 1: there's Naked and Afraid on the Discovery Channel. Obviously HDTV

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Speaker 1: has a ton of hit programming. Um. I think what's

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Speaker 1: different about them is that these are franchises. Do you

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Speaker 1: look at something like Tiger King and some of the

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Speaker 1: other uh paise Netflix has made into reality shows. None

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Speaker 1: of them have been franchises, and Discovery just kind of

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Speaker 1: keeps building on these brands. And it's funny because they

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Speaker 1: don't really have stars behind them. They're just mostly regular

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Speaker 1: people that they're filming in these cases and you know,

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Speaker 1: ninety Day Fiance, they're just following around Americans who are

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Speaker 1: trying to bring over their fiance's from abroad on K

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Speaker 1: one visas. And you know, it's it's really like, you know,

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Speaker 1: low budget programming, but it's wildly entertaining to a lot

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Speaker 1: of people, and it appears to spin offs and extras

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Speaker 1: and reunion shows basically gifts that keep on giving for Discovery.

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Speaker 1: All right, So Tara, I, you know, I know Discovery

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Speaker 1: Communications very well. And one of the key things about

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Speaker 1: that company is that it's control shareholder is John Malone.

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Speaker 1: What do we know about Dr Malone's feelings about Discovery

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Speaker 1: and perhaps selling this company should should have bona Flied

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Speaker 1: offer come along. You know, it's funny. I think John

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Speaker 1: Malone and David Zaslov are the two executives that are

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Speaker 1: always willing to kind of pitch their own companies for

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Speaker 1: sale anytime they go out to the media or their conferences.

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Speaker 1: They seem to always be like open to that idea,

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Speaker 1: and they're almost kind of asking for offers, and I

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Speaker 1: wouldn't I think that if they got one, they definitely

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Speaker 1: would consider it. I think that, you know, John Malone

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Speaker 1: is a dealmaker at heart, and I think that he's

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Speaker 1: you know, always been kind of open to selling at

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Speaker 1: the right price, and especially now given his age and

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Speaker 1: trying to kind of tidy up his portfolio, I imagine

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Speaker 1: that they would be willing sellers. Um. I think it's

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Speaker 1: just a matter of when these other media companies feel

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Speaker 1: ready to make a big bet like this and see

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Speaker 1: the value in it. And I think more and more

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Speaker 1: discoveries proving its value. In the case of Netflix, it

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Speaker 1: really wasn't financially in the position to do major acquisitions,

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Speaker 1: and it's just starting to get to the point where

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Speaker 1: they're saying they're going to be cash flow positive starting

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Speaker 1: next year. So maybe they now have the wherewithal to

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Speaker 1: be able to think about making acquisitions, especially as they

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Speaker 1: see their own subscriber growth really start to slow. When

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Speaker 1: I was a kid, we used to call John Malone

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Speaker 1: the Darth Vader of cable. I can't remember why. But

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Speaker 1: as you point out Tara's he's getting older and maybe

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Speaker 1: looking to wrap up his legacy. Here, what if Netflix

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Speaker 1: doesn't take Discovery, is there another buyer out there who

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Speaker 1: would want them? I think it would make sense for

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Speaker 1: any of the streaming companies that are really lacking in

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Speaker 1: the kind of content that we did enjoy about cable.

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Speaker 1: So I think of Apple TV plus, it's very focused

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Speaker 1: around you know, specific shows and movies with big actors

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Speaker 1: in it, and it's kind of you know, you watch

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Speaker 1: it and then that's that you forget about it. I

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Speaker 1: think they need something that keeps people coming back these

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Speaker 1: kinds of programs do that. Amazon Prime doesn't really have

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Speaker 1: a whole lot there. Um. But also, you know a

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Speaker 1: company that always comes up when you talk about Discovery

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Speaker 1: is Viacom CBS. UM. I don't see the logic as

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Speaker 1: much there, but I think it's it's a case where

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Speaker 1: because they're kind of the also ransom this industry, people

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Speaker 1: see them, you know, they should get together and they'll

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Speaker 1: be stronger together. So there's there's that argument. Um. But

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Speaker 1: I think you know, Netflix, if they want to stay

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Speaker 1: on top, this is something that's really missing and it

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Speaker 1: fits really well because Discovery is also a very international

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Speaker 1: company and that's something that's important to Netflix. So I

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Speaker 1: think it probably makes the most sense for them. But

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Speaker 1: any of these companies should be looking at them. UM.

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Speaker 1: You know, so much of the takeover speculation and the

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Speaker 1: industry is focused on Hollywood movie houses. I think, you know,

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Speaker 1: that doesn't really help them that much. I think something

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Speaker 1: like this would would pay off a little bit better

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Speaker 1: in the long run. Have you heard anything from Repastings,

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Speaker 1: the CEO of Netflix, about their willingness or appetite for

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Speaker 1: any type of acquisitions. Not a whole lot on that front.

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Speaker 1: And again I think maybe that has to do with

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Speaker 1: them just trying to get to the point where they

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Speaker 1: could prove to investors and the naysayers that they are

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Speaker 1: a financially viable company and now they've gotten there. Um.

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Speaker 1: But also, you know, they get asked a lot about

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Speaker 1: whether they would expand into other things like gaming. UM.

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Speaker 1: I've brought up the idea of them getting into consumer products, licensing, UM.

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Speaker 1: But they haven't really been specific about what's next, which

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Speaker 1: kind of makes you wonder what they could be thinking about.

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Speaker 1: But UM, acquisitions come up whenever a company's growth is

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Speaker 1: starting to slow and Netflix is now kind of a

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Speaker 1: mature company in that sense, and so you could imagine

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Speaker 1: that they're starting to have those conversations that companies like

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Speaker 1: Disney have had, you know, for years. Tara your article

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Speaker 1: and Matt, this is funny. When I first read TERA's

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Speaker 1: article this morning, said, oh, investment bankers are hitting the

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Speaker 1: phones today because I think Terri's kind of raises a

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Speaker 1: lot of questions here. Yeah. Interesting, uh interesting. Al Bloomberg

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Speaker 1: opinion columns can sometimes spark deals, but I mean her

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Speaker 1: her logic isn't flawed and it's probably something, hopefully something

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Speaker 1: that investment bankers thought of as well. Otherwise, I think

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Speaker 1: Tara could be in for a pretty big pay day

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Speaker 1: if she were to switch over to the dark side.

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Speaker 1: Tara la Chappelle there from Bloomberg Opinion. Check out her

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Speaker 1: work by typing O, P I N go on the

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Speaker 1: Bloomberg or look at Bloomberg dot com slash opinion. This

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Speaker 1: is Bloomberg. We're about halfway through this earning season. Another

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Speaker 1: big week. Uh. This week and another are just coming

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Speaker 1: in very strong, and that's what this market needed. Let's

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Speaker 1: see how some strategists are thinking about that. Scott Wren.

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Speaker 1: He's a senior global market strategist for Wells Fargo Investment Institute. Scott,

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Speaker 1: thanks so much for joining us here. You know, there

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Speaker 1: was a strong argument to be made that this first

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Speaker 1: quarter earning earning season really have to come in strong

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Speaker 1: to justify the valuation in this marketplace. Do you think

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Speaker 1: corporate Americas has come through so far? Well, I really do, Paul,

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Speaker 1: But I tell you I think really the way I

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Speaker 1: look at most earning season and even this one is,

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Speaker 1: you know, this is more of a confirmation process. I mean,

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Speaker 1: it's the last thing that happens in the entire earnings processes.

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Speaker 1: It's it's reported to the streets. So the street expected

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Speaker 1: good earning strowth. We've certainly had that. We know we're

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Speaker 1: going to get some really good UH economic growth here.

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Speaker 1: So this is more of a of a confirmation step

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Speaker 1: in my mind. But certainly this has been a really

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Speaker 1: good earning season. I always look at this from two

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Speaker 1: different angles. On the one hand, it Scott, you know,

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Speaker 1: companies are doing great, they're bouncing back from to be fair,

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Speaker 1: you know, pretty low base effects. On the other hand,

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Speaker 1: analysts got it wrong. Um they undervalued or underbid these

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Speaker 1: companies earnings reports, Nearly ninety percent of SMP firms beat estimates.

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Speaker 1: What are the analysts doing something wrong? Are they not

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Speaker 1: updating their expectations? Are they, you know, working from home?

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Speaker 1: What's the story? Well, I'll tell you, Matt, this is

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Speaker 1: my bias I think is a strategist is a lot

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Speaker 1: of times individual company analysts, you know there they are

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Speaker 1: really glued to company guidance. And if you think back

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Speaker 1: what's happened over the last year, uh and and really

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Speaker 1: in a lot of earning seasons, you know, these these

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Speaker 1: companies are are very cautious. They don't want to give

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Speaker 1: a very aggressive outlook. You know, that's why six in

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Speaker 1: any earning season season beat. But that that's the situation

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Speaker 1: that guidance is very conservative. We know from economists and

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Speaker 1: certainly our economists that we that we talked to with

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Speaker 1: our group um are expecting big things. But these companies

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Speaker 1: aren't going to go out on a limb too far.

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Speaker 1: And then the analysts become really glued to that guidance

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Speaker 1: and therefore you know, their way under what the actual

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Speaker 1: results would be too. So it's kind of an odd

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Speaker 1: sort of a circle, but it happens with such regularity

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Speaker 1: that when you have something like this pandemic, it gets

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Speaker 1: even worse. All right, Scott, So we've seen, um, you know,

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Speaker 1: the rotation trade into cyclical stocks, even into smaller cap

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Speaker 1: stocks as well, really perform well amost almost for a year. Now,

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Speaker 1: what's your take on that allocation or or that move

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Speaker 1: in that side of the market versus maybe the more

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Speaker 1: traditional growth areas. Where are you kind of focused right now? Well,

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Speaker 1: I will say that in this particular cycle, our viue

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Speaker 1: is that growth is going to not fade relative to

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Speaker 1: value as as much as maybe a normal cycle. Now

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Speaker 1: saying that, you know, we're in a cycle, we're in

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Speaker 1: a new cycle that at least we believe we are

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Speaker 1: where the stock markets likely to see some some some

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Speaker 1: multi year gains here. Um, you know, small caps as

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Speaker 1: people are more willing to take on risk, you know,

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Speaker 1: they're going to buy value, they're going to buy small caps.

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Speaker 1: That's certainly what's happened. So we're you know, we're leaning

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Speaker 1: into small caps. We we like you know, industrials, materials, um, financials,

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Speaker 1: those kinds of things. So so while all these cycles

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Speaker 1: are different, and this one you know is odd, as

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Speaker 1: was the last one, you know, some of these recurring

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Speaker 1: themes that you see value does well, small caps do well,

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Speaker 1: things like that, cyclicals do well as the economy comes

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Speaker 1: out of the whole. You know, these things hold true

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Speaker 1: even in this cycle. So we're leaning towards we want

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Speaker 1: our clients to be assertive. We want them to be

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Speaker 1: leaning towards a continuation of this recovery, not just here

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Speaker 1: but also abroad. We think EUROP catch up after they

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Speaker 1: get their act together with this vaccine, and you know,

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Speaker 1: we like those areas. And I think at least, um,

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Speaker 1: you know, for the intermediate term, it's going to remain

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Speaker 1: like that. I got my appointment by the way you

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Speaker 1: do big announcement because I'll tell you why. Because Germany

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Speaker 1: counts I live in Berlin, because Germany counts journalists among um,

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Speaker 1: the third group that it gets priorities prioritized. Um, we're

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Speaker 1: now kicking off so I can go to press conference.

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Speaker 1: Thank thank you, Matt. You are you are essential man

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Speaker 1: that thank thank thank you. So yeah, I think I

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Speaker 1: I feel pretty essential in any case. UM. I was

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Speaker 1: just thinking, you know, Scott, you've been saying this for

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Speaker 1: a while, that the U. S economy is going to

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Speaker 1: bounce back strong everyone knows it's red hot, as Warren

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Speaker 1: Buffett said, but you don't. You don't know if we're

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Speaker 1: gonna get a strong bounce back necessarily in Europe. Um,

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Speaker 1: is it is it a good time to go bargain hunting,

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Speaker 1: to go look for um, you know, the bounce back

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Speaker 1: that is going to come. Well. I think as far

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Speaker 1: as the globe goes well, you know, we were also

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Speaker 1: overweight favorable on emerging markets. You know, China, China, Taiwan,

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Speaker 1: South Korea, they've done well. Um. I think you know,

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Speaker 1: they appear to have you know, their vaccine act together,

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Speaker 1: so to speak. Certainly, global trades pretty good, but we

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Speaker 1: have not been favorable on a developed international, which would

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Speaker 1: include include you know, obviously the Eurozone, the EU, Japan,

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Speaker 1: those types of countries. So we don't think it's time yet,

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Speaker 1: but um, but certainly it's something that we talked about

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Speaker 1: every week in the Investment Strategy Committee. But as far

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Speaker 1: as international goes right now, we want to lean more

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Speaker 1: towards UH towards emerging markets. Scott, thanks so much for

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Speaker 1: joining US. Senior global market strategists are in the fourth group,

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Speaker 1: by the way, so you'll be able to get your

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Speaker 1: vaccine if you come here. Scott in in June, Scott

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Speaker 1: ran there from Wells Fargo, Wells Fargo Investment Institute talking

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Speaker 1: to us about how they want to play this market,

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Speaker 1: and soon, Paul just going to be consensus that um,

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Speaker 1: the strength in the US economic bounce back is not

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Speaker 1: to be denied. This is Bloomberg. Thanks for listening to

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Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to

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00:26:38,880 --> 00:26:43,040
Speaker 1: interviews with Apple Podcasts or whatever podcast platform you prefer.

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Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller. Yet

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00:26:48,040 --> 00:26:50,639
Speaker 1: on Fall Sweeney I'm on Twitter at pt Sweeney. Before

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Speaker 1: the podcast, you can always catch us worldwide at Bloomberg

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Speaker 1: Radio