WEBVTT - A Look At Markets, Amazon, And Facebook's New Name 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.640 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.200 at Bloomberg dot com slash podcast. All Right, one of 0:00:22.200 --> 0:00:25.239 the big big stories on the Bloomberg terminal today, Amazon 0:00:25.320 --> 0:00:30.360 discloses a steak in e v maker Rivian. Ed Ludlow 0:00:30.440 --> 0:00:35.040 joins us from uh San Francisco. Ed, big story here, 0:00:35.080 --> 0:00:38.599 big names. What's Amazon doing? Yeah, it's interesting because we've 0:00:38.640 --> 0:00:42.320 reported the influence that Amazon had over this company already. 0:00:42.360 --> 0:00:44.800 You know, just for the audience. This is a company 0:00:44.840 --> 0:00:48.240 that's made very few vehicles on talking tens of units 0:00:48.240 --> 0:00:52.080 of battery electric pickups, but is really closely followed because 0:00:52.159 --> 0:00:55.520 Amazon is also a customer of Rivian. They've ordered a 0:00:55.600 --> 0:00:58.600 hundred thousand delivery vans. You know, we we've known that 0:00:58.640 --> 0:01:01.520 they've made private investments along the way in this company. 0:01:01.560 --> 0:01:04.720 But stake in a company that's about I P O 0:01:04.880 --> 0:01:08.480 is is important right as part of market functioning. UM. 0:01:08.680 --> 0:01:11.840 But it's just you know it frankly adds evidence to 0:01:11.880 --> 0:01:14.040 the piece we put out last month that this is 0:01:14.080 --> 0:01:17.480 a company under immense pressure because it's biggest customer is 0:01:17.520 --> 0:01:19.679 also one of its biggest shareholders, and it's kind of 0:01:19.720 --> 0:01:22.080 pulling the strings of what Rivian is trying to do. 0:01:22.560 --> 0:01:26.440 Why would Amazon not just out right by this company. 0:01:26.560 --> 0:01:29.679 It's a great question because Amazon has taken that approach 0:01:29.720 --> 0:01:31.399 in the past. If you think about its efforts in 0:01:31.480 --> 0:01:35.319 autonomous driving, it bought Zooks. Now, the context there was 0:01:35.360 --> 0:01:38.840 that Zooks was struggling, it was desperate to raise money, um, 0:01:38.959 --> 0:01:42.400 and you know it was basically shopping itself around. UM. 0:01:42.440 --> 0:01:44.959 So it has taken that approach in the past. But 0:01:45.080 --> 0:01:47.680 you know, Rivian is run by this guy R. J. Scaringe, 0:01:47.840 --> 0:01:50.440 a PhD holder from m I T. He has big 0:01:50.520 --> 0:01:53.680 dreams and visions for electric vehicles. You know, they are 0:01:53.960 --> 0:01:56.960 already making their own vehicles for consumers right a battery 0:01:57.000 --> 0:02:00.040 electric pick up. They're already coming off the assembly and 0:02:00.200 --> 0:02:03.440 limited deliveries. And you know, this is a story about 0:02:03.440 --> 0:02:06.320 a founder and a guy who's built a company really quickly. 0:02:06.800 --> 0:02:08.600 But in order to get to this stage, he's had 0:02:08.639 --> 0:02:12.480 to make compromises, and the Amazon stake of seems to 0:02:12.520 --> 0:02:16.320 be the biggest compromise of all. Do we know, you know, 0:02:16.400 --> 0:02:20.399 it's interesting here. Amazon's invested more than one point three 0:02:20.400 --> 0:02:22.680 billion dollars in this automaker. They have about a hundred 0:02:22.680 --> 0:02:26.640 and fifty million shares of preferred stock, but the voting 0:02:26.680 --> 0:02:28.400 do we know what their voting power is here? Because 0:02:28.400 --> 0:02:31.399 it just feels like, as you suggested in your reporting, 0:02:31.480 --> 0:02:34.000 that they're really in control here. This is what's kind 0:02:34.000 --> 0:02:36.320 of fun about the story that when Rivian filed its 0:02:36.360 --> 0:02:38.720 S one, remember the S one's in right and it's public, 0:02:39.120 --> 0:02:41.280 they said Ford has a stake of more than five 0:02:41.280 --> 0:02:43.360 percent in Rivian. They said t ro Price has a 0:02:43.360 --> 0:02:45.520 stake of more than five percent in Rivian. You know, 0:02:45.560 --> 0:02:49.760 these big names or x UM. Other investors include Fidelity, 0:02:49.800 --> 0:02:54.720 black Rock. But the Amazon stake was redacted very high up, 0:02:54.760 --> 0:02:57.720 you know, And so now we know that the ownership 0:02:57.760 --> 0:03:01.440 interest is um you know, and you'd assume that the 0:03:01.520 --> 0:03:05.480 voting rights are proportionate based on the volume of preferred 0:03:05.520 --> 0:03:07.600 stock that's been issued. Amazon has about a hundred and 0:03:07.600 --> 0:03:11.760 fifty million shares of preferred stock. So well, I don't 0:03:11.760 --> 0:03:13.800 have to tell you this because you have the privilege 0:03:13.800 --> 0:03:16.400 of covering them all for us here at Bloomberg. But 0:03:16.720 --> 0:03:18.880 there's a lot of players in the e V space. 0:03:18.919 --> 0:03:21.560 It's a market that's getting very, very crowded, and and 0:03:21.600 --> 0:03:23.360 there's kind of this narrative out there that they're not 0:03:23.440 --> 0:03:26.520 all going to make it. Does an investment from Amazon 0:03:26.720 --> 0:03:29.240 make Rivian one of the ones that's going to have 0:03:29.560 --> 0:03:33.200 that sticking power? Yeah, I mean according to sources, as 0:03:33.200 --> 0:03:37.440 we've reported, you know, the valuation of eighty billion dollars 0:03:37.480 --> 0:03:40.120 that Rivian is seeking in its i p O is 0:03:40.200 --> 0:03:42.840 based largely on the fact that Amazon is an investor 0:03:42.880 --> 0:03:45.600 and a customer. You know, you saw the influence of 0:03:45.640 --> 0:03:48.720 the hurt steal with Tesla this past week. For example, 0:03:49.480 --> 0:03:52.800 the infancy of EVS was about selling to consumers gaining 0:03:52.840 --> 0:03:55.840 traction EVY adoption. But now you're seeing corporates come in 0:03:55.880 --> 0:03:59.000 and decide about their policy with regards to carbon reduction, 0:03:59.520 --> 0:04:01.520 and you can see the power of a big corporate 0:04:01.560 --> 0:04:04.040 placing a mass order. So Rivian kind of hit that 0:04:04.080 --> 0:04:07.520 sweet spot, right. It has three products to consumer ones 0:04:07.600 --> 0:04:10.280 and then the Amazon Van. The Amazon van gives it 0:04:10.280 --> 0:04:13.160 guaranteed revenue. It's a contract for a hundred thousand vans. 0:04:13.200 --> 0:04:14.960 We know that, we know what the deadline is and 0:04:14.960 --> 0:04:17.120 they're on track to meet it. And as we reported, 0:04:17.120 --> 0:04:19.680 according to sources, there's some great perks in the deal, 0:04:19.760 --> 0:04:23.160 like they get recurring software revenues. Amazon pays them basically 0:04:23.200 --> 0:04:25.839 for over the air updates for the duration of the contract. 0:04:25.880 --> 0:04:28.920 It's a great thing to have. But as we've also reported, 0:04:29.320 --> 0:04:31.440 Rivian have had to make some sacrifices and put those 0:04:31.440 --> 0:04:34.520 consumer products on the back burner because if Jeff Bezos 0:04:34.560 --> 0:04:36.960 is one of your biggest shareholders, right and he is 0:04:37.040 --> 0:04:40.279 expectations because he tweeted after we published the story saying, 0:04:40.480 --> 0:04:43.400 Hey r J, where's my vans? Um? You know, you 0:04:43.400 --> 0:04:46.520 can imagine the pressure on that company's management team to deliver. 0:04:47.240 --> 0:04:50.360 Just lastly, and what do we know about the product 0:04:50.400 --> 0:04:53.800 that the van itself? Yeah, so the van can do 0:04:53.880 --> 0:04:55.960 up to a hundred and fifty miles in a single charge. 0:04:56.040 --> 0:04:58.960 It's very much a product for last mile delivery. Amazon 0:04:59.000 --> 0:05:02.960 already buys delivery and right from Mercedes, from Ram, from 0:05:03.040 --> 0:05:05.600 Ford um it's going to be a direct competitor to 0:05:05.720 --> 0:05:08.520 Ford's e transit van, which is interesting given Forward is 0:05:08.560 --> 0:05:11.880 an investor in rivian Um and you know it's it's 0:05:12.440 --> 0:05:15.440 I'm hearing it's having some supply chain issues because it's 0:05:15.440 --> 0:05:17.440 a bulky products. You need a lot of metal, you 0:05:17.480 --> 0:05:20.359 need a lot of semiconductors. But you know, it's a 0:05:20.400 --> 0:05:23.560 simple design and it shares common battery and motor architecture 0:05:23.600 --> 0:05:25.719 with the consumer products. That's how Rivian's been able to 0:05:25.720 --> 0:05:27.679 put it off. That's kind of the key. The underlying 0:05:27.720 --> 0:05:31.600 technology is the same across all three products. Alright, thank 0:05:31.600 --> 0:05:34.320 you so much for bringing this story here. In this 0:05:34.400 --> 0:05:40.039 reporting again, Amazon discloses steak and EV maker Rivian, So 0:05:40.120 --> 0:05:42.800 a big, big validation I guess, if you will, of 0:05:42.839 --> 0:05:47.360 the company's technology. Edlar Low, technology reporter for US at 0:05:47.360 --> 0:05:53.359 Bloomberg News. He is based in San Francisco. All Right, 0:05:53.400 --> 0:05:58.560 everybody's got their strategies for managing this market. Again. Equity 0:05:58.600 --> 0:06:02.440 markets at or near all time highs. Interest rates uh, 0:06:03.000 --> 0:06:05.640 very much muted, but the tenure at one point five 0:06:05.680 --> 0:06:09.400 seven percent. Our next guest focuses on the three bees. 0:06:09.440 --> 0:06:11.719 We're gonna get the latest on that. John Augustine, chief 0:06:11.760 --> 0:06:14.760 investment officer for Huntington Private Bank Joints, is on the 0:06:14.800 --> 0:06:17.960 home on the phone from Columbus, Ohio, where the Penn 0:06:18.000 --> 0:06:20.400 State Knitney Lions are coming in this weekend to fight 0:06:20.960 --> 0:06:24.400 the Ohio State University. John, thanks so much for joining us. 0:06:24.520 --> 0:06:26.680 Talk to us about the three bees. How are they 0:06:26.800 --> 0:06:30.400 kind of guiding your investment outlook? Sir Paul, good morning, 0:06:30.400 --> 0:06:32.880 and it is gonna be a good game in Columbus 0:06:32.920 --> 0:06:36.320 this weekend. So the three be so number one, we 0:06:36.400 --> 0:06:41.159 want to be bond light. Real yields are still too 0:06:41.200 --> 0:06:45.080 negative for us in the bond world. We don't see recession, 0:06:45.279 --> 0:06:49.359 so to us, the sixty portfolio should be more of 0:06:49.360 --> 0:06:54.920 a se So that's number one. Number two with respect 0:06:54.960 --> 0:06:57.839 to the stock market, we've been here at a lot 0:06:57.880 --> 0:07:02.520 of rotate the value this summer and early now into 0:07:02.560 --> 0:07:06.240 the fall. But our our equity team has stayed with growth. 0:07:06.279 --> 0:07:09.960 They've barbelled between growth and value, and that's worked for us, 0:07:10.000 --> 0:07:12.920 that's worked for our customers. They've got good returns here 0:07:12.960 --> 0:07:16.160 in October. So that's the second be barbell and stocks. 0:07:17.040 --> 0:07:20.160 The third be is just broadened. And what would mean 0:07:20.160 --> 0:07:25.160 by broaden is include some commodities, include some real estate 0:07:25.360 --> 0:07:28.400 with your stocks and bonds. So make sure you're broad 0:07:28.480 --> 0:07:31.360 in your conducts next year. Is going to be more 0:07:31.360 --> 0:07:34.440 of an interest rate driven year, which could bring up volatility. 0:07:34.840 --> 0:07:36.960 So we just want to make sure we're broad and 0:07:37.000 --> 0:07:40.000 our conduct for our clients. So those are three bees. 0:07:40.280 --> 0:07:41.640 All right, Well, let's talk about a few of your 0:07:41.680 --> 0:07:44.320 specific holdings, because I see within your top equity holdings 0:07:44.320 --> 0:07:47.000 for a few of your strategies are Apple and Amazon, 0:07:47.080 --> 0:07:50.200 and those two companies you know didn't do so well 0:07:50.280 --> 0:07:52.520 when they reported after the bell yesterday. Are you a 0:07:52.560 --> 0:07:56.160 buyer of the dip here? Not yet, we have to 0:07:56.200 --> 0:07:58.160 see how it forms. So they're both that a little 0:07:58.160 --> 0:08:01.560 over three percent today. Now. One interesting thing though for 0:08:01.640 --> 0:08:05.280 our for our equity team, what we put on them 0:08:05.400 --> 0:08:09.440 is a five percent limit on positions. The reason we 0:08:09.520 --> 0:08:11.840 do that is a lot of our institutional customers have 0:08:11.920 --> 0:08:16.400 a five percent limit or feeling on individual positions, so 0:08:16.480 --> 0:08:22.960 that in many cases makes us fang light portfolios. So 0:08:22.960 --> 0:08:25.520 as an example, Amazon's a little bit about six percent. 0:08:26.760 --> 0:08:30.640 Excuse me, Microsoft and Apple reach six percent of the 0:08:30.760 --> 0:08:34.520 S and P five, so that puts us at one 0:08:34.600 --> 0:08:37.800 good point there, but Microsoft having a better month. So 0:08:37.880 --> 0:08:40.760 we are in all those stocks you have to be, 0:08:41.280 --> 0:08:45.600 but we do limit positions. So it's interesting you're just 0:08:45.720 --> 0:08:47.920 love to get your thoughts here. Were more than halfway 0:08:47.920 --> 0:08:55.040 through earnings, uh this cycle? What's your takeaway? Forward estimates 0:08:55.040 --> 0:08:59.080 are not going down? So so current quarters up? You know, 0:08:59.200 --> 0:09:02.960 the coming into the quarter it was plus percent estimate. 0:09:03.679 --> 0:09:07.880 Actual today looks like plus thirty six with a little 0:09:07.920 --> 0:09:10.959 over half reporting after the company in the SMP five. 0:09:11.800 --> 0:09:15.520 What surprises us, though, Paul, is we haven't seen forward 0:09:15.640 --> 0:09:20.320 estimates go down as much as current quarter estimates are 0:09:20.360 --> 0:09:23.760 going up. That's unusual to us. That's a healthy sign. 0:09:25.120 --> 0:09:27.200 All right, Well, let's talk about the signs we're getting 0:09:27.320 --> 0:09:29.640 from the bond market. I know you said seventy and 0:09:29.679 --> 0:09:32.960 more appropriate portfolio allocation. But when you think about prior 0:09:33.040 --> 0:09:35.520 to today, as of yesterday's close, an equity market and 0:09:35.559 --> 0:09:37.319 an all time high, and you had a yield curve 0:09:37.360 --> 0:09:39.400 that is telling you that there's some serious fear out 0:09:39.400 --> 0:09:41.680 there about economic growth. How do you kind of square 0:09:41.720 --> 0:09:46.160 those things? Well, what's really interesting to us, Keyley, is 0:09:46.720 --> 0:09:50.720 the two year and ten year moves over the past, 0:09:50.760 --> 0:09:52.560 you know, just so far this month in Europe in 0:09:52.600 --> 0:09:55.640 the US, because they're completely opposite. In the US, it's 0:09:55.679 --> 0:09:59.000 the two year that's moving up. That signals to US 0:09:59.000 --> 0:10:02.400 a more hawkish fe it in Europe. It's the ten 0:10:02.520 --> 0:10:06.199 uere that's moving up. That sink signals to us our 0:10:06.240 --> 0:10:10.600 fixed income team a more lenient ECB that wants growth 0:10:11.040 --> 0:10:13.720 and it's not going to inhibit. So there's a big 0:10:13.760 --> 0:10:19.440 difference between two and ten years yields US Europe, and 0:10:19.480 --> 0:10:22.200 the Fed is going to have to thread that needle 0:10:22.320 --> 0:10:25.520 next week. They don't want an inverted yield curve. They've 0:10:25.559 --> 0:10:29.200 already kind of done it thirties to twenty. We don't 0:10:29.240 --> 0:10:31.840 think they're gonna want to invert the yeld curve anymore. 0:10:32.400 --> 0:10:35.200 So they've got to thread that needle on tapering and 0:10:35.240 --> 0:10:40.480 potential rate increases at their statement press conference next Wednesday, 0:10:40.840 --> 0:10:42.559 John what's the give us a name or two that 0:10:42.600 --> 0:10:46.439 you've recently edited to your profoilio and why Well, the 0:10:46.840 --> 0:10:51.880 equity team has come into again under the Barbell theme. 0:10:53.000 --> 0:10:56.439 So what they're looking at more now is coming in, 0:10:56.440 --> 0:11:00.400 for instance, UM with a Parker Hannason, but the bringing 0:11:00.440 --> 0:11:04.240 in Johnson and Johnson, so cyclical name, growth name coming 0:11:04.280 --> 0:11:07.560 in with Caterpillar, but then bringing in Crown Castle into 0:11:07.600 --> 0:11:09.520 some of the portfolios which we own and all three 0:11:09.559 --> 0:11:12.920 of our equity portfolios, so they're coming in with a 0:11:12.960 --> 0:11:16.840 barbell aspect. Usually they'll bring in a cyclical and they'll 0:11:16.880 --> 0:11:19.160 bring in a growth at the same time, and we 0:11:19.240 --> 0:11:22.240 like that approach. It's worked for us this year. Hey, John, 0:11:22.240 --> 0:11:24.440 thanks so much for joining us. We always love getting 0:11:24.880 --> 0:11:27.040 your thoughts and some of the names that you and 0:11:27.080 --> 0:11:30.439 your teams are looking at. Crown Castle, it's a great name. 0:11:30.480 --> 0:11:31.960 I did a lot of work with that company back 0:11:31.960 --> 0:11:35.400 in the day in the wireless space. John Augustine, Chief 0:11:35.400 --> 0:11:38.040 Investment Officer, Huntington Private Bank, joining us on the phone 0:11:38.080 --> 0:11:42.440 from Columbus, Ohio, home of the Ohio State University, which 0:11:42.440 --> 0:11:46.319 we're welcoming in my pen lines. I know I'm putting 0:11:46.400 --> 0:11:51.280 that out to Matt, so it should be fun. I 0:11:51.320 --> 0:11:55.000 want to bring on Brenda O'Connor, Senior vice president, Financial 0:11:55.040 --> 0:11:59.120 advisor for UBS International. Brenda, thanks so much for joining 0:11:59.200 --> 0:12:02.360 us here. You know, we love to to speak to 0:12:02.400 --> 0:12:04.800 you and just get a sense of you know, what 0:12:04.920 --> 0:12:08.800 your clients, what your individual clients are asking you. Today. 0:12:08.800 --> 0:12:12.720 We've got markets you know, making backar nearar all time highs. 0:12:12.720 --> 0:12:15.560 We've had very strong third quarter earnings. What are you 0:12:15.600 --> 0:12:19.200 hearing the most from your clients? Well, thank you for 0:12:19.240 --> 0:12:22.840 having me right. You know, nervous, There risk some nervousness 0:12:22.880 --> 0:12:26.360 about Q three earnings because investors just weren't sure how 0:12:26.400 --> 0:12:28.880 bad the damage was going to be from three things 0:12:28.960 --> 0:12:33.560 really delta, supply chain issues and increasing input costs. And 0:12:33.600 --> 0:12:36.560 here we are well into Q three earnings, two percent 0:12:36.679 --> 0:12:40.839 of companies have exceeded expectations and markets are up twenty 0:12:40.840 --> 0:12:43.439 three percent year to date. So when I'm looking at 0:12:43.440 --> 0:12:46.079 my client portfolios, I can't help but think we're up 0:12:46.080 --> 0:12:48.760 eight percent last year, We're up a dred percent from 0:12:48.760 --> 0:12:51.920 the March lows. Maybe it's time to de risk a 0:12:51.960 --> 0:12:54.760 little bit, and we're looking to private assets to do that. 0:12:55.240 --> 0:12:58.160 That being said, we are so positive on equities. We 0:12:58.200 --> 0:13:00.559 think the SMP will be at around for eight hundred 0:13:00.600 --> 0:13:03.000 by next June and five thousands by the end of 0:13:03.040 --> 0:13:06.880 next December. Well, I feel like we've been having this conversation, 0:13:06.880 --> 0:13:10.160 and granted we have had this conversation many, many, many 0:13:10.200 --> 0:13:12.800 many times, but the death of the sixty forty portfolio 0:13:12.840 --> 0:13:14.960 and whether that's a strategy that still works. When you 0:13:15.000 --> 0:13:16.800 say you're looking to de risk a little bit, how 0:13:16.800 --> 0:13:19.200 do you think about kind of that ratio in your 0:13:19.240 --> 0:13:23.840 portfolio allocation. Right, So, right now, we really really like 0:13:24.040 --> 0:13:26.880 private real estate. It is a great inflation heads and 0:13:26.880 --> 0:13:29.079 we can talk about that more a bit later. It's 0:13:29.160 --> 0:13:32.240 a diverse fire to equities, and it's also great source 0:13:32.240 --> 0:13:35.160 of income and giving given more fixed income, Marcus that 0:13:35.280 --> 0:13:38.760 that's super important. We're also not too concerned about these 0:13:38.800 --> 0:13:42.160 lofty valuations or the prospect of a housing bubble. Think 0:13:42.160 --> 0:13:44.640 of this. In the US, there's a five point five 0:13:44.720 --> 0:13:49.080 million deficit of housing units because construction has dragged for 0:13:49.080 --> 0:13:50.960 the last two decades. It's going to take another ten 0:13:51.040 --> 0:13:53.160 years to make this up, which is great for the sector. 0:13:53.640 --> 0:13:56.960 And as vacancy rates are under five percent, which they 0:13:56.960 --> 0:14:00.520 are now, that's great for landlord pricing powers. We really 0:14:00.559 --> 0:14:05.080 like allocating to real estate, private real estate, given where 0:14:05.120 --> 0:14:08.520 markets are right now. So Brannan, you're in South Florida, 0:14:08.760 --> 0:14:10.839 and I love to get a sense of kind of 0:14:11.640 --> 0:14:14.640 what's that market like down there? Is it is robust 0:14:14.840 --> 0:14:17.240 is people make it out to be. We've got obviously 0:14:17.240 --> 0:14:19.000 a lot of folks here in the New York metro area, 0:14:19.480 --> 0:14:21.320 you know, making their migration down there in this time, 0:14:21.360 --> 0:14:25.280 not temporary, not seasonal, bit more permanent, right And you 0:14:25.320 --> 0:14:28.880 can see that everywhere in terms of real estate prices, 0:14:29.040 --> 0:14:30.800 you can you can see that in terms of the 0:14:30.800 --> 0:14:35.520 influx of New Yorkers and finance professionals, tech professionals. In 0:14:35.600 --> 0:14:39.400 terms of an investment perspective, I've also noticed that the 0:14:39.440 --> 0:14:42.640 appetite for international is somewhat different than we see in 0:14:42.720 --> 0:14:45.760 other parts of the country. So, for example, we're really 0:14:45.760 --> 0:14:49.360 looking to China right now. We downgraded China over the 0:14:49.400 --> 0:14:52.600 summer on the back of the regulatory crackdown and education 0:14:52.640 --> 0:14:56.200 and gaming. Chinese equities are down year to day, But 0:14:56.240 --> 0:14:58.560 we do think some of this is priced in. We 0:14:58.640 --> 0:15:01.440 also think some of the fysical titany this person investors 0:15:01.440 --> 0:15:03.800 tend to be under allocated to this region. So we 0:15:03.840 --> 0:15:06.600 think there are opportunities in terms of green tech and 0:15:06.760 --> 0:15:10.600 consumer durable, but in investment preferences for international seems to 0:15:10.600 --> 0:15:13.080 be a little bit different in self Florida, given the 0:15:13.120 --> 0:15:16.680 international dynamic of this market. While we're talking about the 0:15:16.720 --> 0:15:19.239 migration to Florida, one of the reasons it's so attractive 0:15:19.320 --> 0:15:22.440 is because of taxes. Frankly, especially compared to you know, 0:15:22.480 --> 0:15:24.920 the New York tri state area where Paul and I 0:15:24.960 --> 0:15:28.800 find ourselves. While we're talking about taxes. Given the quote 0:15:28.840 --> 0:15:31.560 unquote framework that we've gotten in terms of what the 0:15:31.560 --> 0:15:34.680 tax package is going to look like on capital Hill, 0:15:35.040 --> 0:15:38.120 how does that affect your clients and what you're telling 0:15:38.120 --> 0:15:42.480 them to do. Right, It doesn't change too much because 0:15:42.480 --> 0:15:46.440 our expectations for for next year already factor in, uh, 0:15:46.600 --> 0:15:49.600 some some tax cuts. So let me talk about this 0:15:49.720 --> 0:15:54.600 in the context of something like in growth UM. You know, 0:15:54.880 --> 0:15:57.920 Q three obviously came in at much lower than we 0:15:57.920 --> 0:15:59.960 saw in in Q two, at six point seven first 0:16:00.200 --> 0:16:03.600 lower than the consensus. There wasn't anything too surprising here, 0:16:03.680 --> 0:16:06.120 given that the this was the first quarter with no 0:16:06.200 --> 0:16:09.760 government stimulus, uh, none of the headwinds that we saw 0:16:09.760 --> 0:16:13.360 earlier like delta or supply bottlenecks. We do expect Q 0:16:13.640 --> 0:16:16.920 four to be much stronger. People are traveling again, hotel 0:16:17.040 --> 0:16:21.200 occupancies above sixty five, open table reservation numbers have recovered 0:16:21.240 --> 0:16:24.640 from their severe August September dip, and we do think 0:16:24.680 --> 0:16:27.200 that UM GDP is going to be about five point 0:16:27.240 --> 0:16:30.960 three percent for two. So all our expectations both on 0:16:31.080 --> 0:16:35.640 on GDP inflation UM outlook do factor in, uh some 0:16:35.760 --> 0:16:38.680 of those those tax sites that we're expecting to see. 0:16:39.640 --> 0:16:42.240 So Brenda, in terms of equities, um, you know, for 0:16:42.280 --> 0:16:44.120 those of your clients that have the courage to be 0:16:44.200 --> 0:16:47.920 in the stock market where the sectors that you're suggesting 0:16:47.960 --> 0:16:51.920 they focus on. When we're talking to our clients, it 0:16:52.080 --> 0:16:55.520 is all about continuing to follow this positive earning story. 0:16:56.440 --> 0:16:58.680 We do not think that the reflection trade is quite 0:16:58.680 --> 0:17:02.520 over yet. We still energy and financials. Think about financials alone, 0:17:02.560 --> 0:17:05.159 we've seen a record here in m and A for 0:17:05.240 --> 0:17:09.080 the investment bank banks. Loan moss reserve continue to be 0:17:09.200 --> 0:17:12.040 released and net interest margins will only start to look better. 0:17:12.119 --> 0:17:15.600 Is that ten uere inches towards one point eight and higher. 0:17:15.880 --> 0:17:18.080 The financials that have reported this quarter, by the way, 0:17:18.240 --> 0:17:22.520 have been expectations by a margin of so financials is 0:17:22.520 --> 0:17:26.800 scenario that we're definitely looking at right and we definitely 0:17:26.800 --> 0:17:29.439 saw some positive beats when it comes to the energy 0:17:29.480 --> 0:17:32.240 complex to day with Exxon and Chevron and those buy backs. 0:17:32.240 --> 0:17:35.640 Man and Goldman sass talking about that, Paul and how 0:17:35.680 --> 0:17:38.160 by backs could be even eight percent above the levels 0:17:38.200 --> 0:17:39.800 they are this year. There's a lot of cash out there. 0:17:39.800 --> 0:17:41.399 There's a lot of cash out there. Hey, Brenda, thank 0:17:41.400 --> 0:17:43.280 you so much for joining us. We always appreciate getting 0:17:43.320 --> 0:17:47.040 your perspective. Brenda O'Connor, Senior vice president, financial visor for 0:17:47.720 --> 0:17:55.600 UBS International, based in the Greater Miami, Florida area. Lots 0:17:55.600 --> 0:17:57.679 of news coming out of Silicon Valley this week. We've 0:17:57.680 --> 0:18:01.240 got earnings and uh fast name had earnings from Amazon 0:18:01.320 --> 0:18:04.920 and Apple, and then also Facebook making a big, big 0:18:05.160 --> 0:18:08.760 investment in what it calls the metaverse, and in fact 0:18:08.840 --> 0:18:12.000 big enough that they are changing the name of the 0:18:12.040 --> 0:18:17.360 company from Facebook two Meta Technologies, Inc. I believe. Mark Berg, 0:18:17.400 --> 0:18:19.600 and technology reporter for Bloomberg News, joins us on the 0:18:19.680 --> 0:18:25.000 phone from San Francisco. Mark, What is meta? What is 0:18:25.119 --> 0:18:29.119 the metaverse? What is Facebook doing here? Actually? I think 0:18:29.160 --> 0:18:34.280 it's meta platforms. What's kind of confusing is they're what 0:18:34.400 --> 0:18:37.080 they're not doing is they're not doing what what Alphabet 0:18:37.080 --> 0:18:40.320 Dead or Google did six years ago, which is sort 0:18:40.359 --> 0:18:43.480 of form a new parent company that that have houses 0:18:43.520 --> 0:18:46.280 a bunch of different companies. They're sort of renaming themselves 0:18:46.320 --> 0:18:49.080 but keeping the brand. And part of the idea to 0:18:49.160 --> 0:18:52.880 here is that Mark Zuckerberg, the CEO, as just sort 0:18:52.920 --> 0:18:56.960 of betting on Facebook's future being in augmented reality and 0:18:57.359 --> 0:18:59.159 what he calls the metaverse, which is sort of this 0:19:00.040 --> 0:19:02.600 a vague idea from science fiction that we will be 0:19:02.720 --> 0:19:06.520 able to like engage with with each other in mental reality, 0:19:06.520 --> 0:19:09.680 spaces and virtual reality using some sort of all to 0:19:09.760 --> 0:19:13.160 find headgear. At this point it is an oculous device. 0:19:13.320 --> 0:19:16.639 But during the presentation, Sorry, Zuckerberg also showed off service 0:19:16.680 --> 0:19:21.520 smart watch and talked about glasses as well. Well, it's 0:19:21.600 --> 0:19:24.840 one thing to decide your company's future, you know, looks 0:19:25.200 --> 0:19:27.000 like that, and you're going to push more into the 0:19:27.040 --> 0:19:29.720 meta metaverse in this augmented reality. You can still do 0:19:29.920 --> 0:19:34.760 that without rebranding entirely and without changing the name of 0:19:34.920 --> 0:19:37.119 your company, Which makes me wonder how much of this 0:19:37.400 --> 0:19:40.800 is actually because Facebook found itself in very hot water politically. 0:19:40.880 --> 0:19:43.159 There's been a lot of negative news flow over the 0:19:43.240 --> 0:19:47.280 last several months. Really is this also kind of pr related? 0:19:49.040 --> 0:19:50.359 We saw a lot of people came out with the 0:19:50.359 --> 0:19:53.120 comparison to Philip Morris from two thousan three a belief 0:19:53.160 --> 0:19:56.560 when they re branded, and certainly Facebook has been called 0:19:56.600 --> 0:20:00.000 by critics the new tobacco um. You know, they addressed 0:20:00.080 --> 0:20:03.560 us very briefly guest during the presentation, there was sort 0:20:03.560 --> 0:20:06.720 of a Interestingly enough, they had Nick Clegg, who was 0:20:06.760 --> 0:20:10.040 the BP of Government Affairs speak and talk about how 0:20:10.080 --> 0:20:13.120 they're when they're approaching the metaverse there going to bake 0:20:13.200 --> 0:20:15.879 it a lot of the privacy and data controls that 0:20:16.560 --> 0:20:19.159 arguably have not been part of Facebook from the onset. 0:20:20.280 --> 0:20:23.000 Well and Paul I couldn't help but notice what represented 0:20:23.040 --> 0:20:26.720 Alexandria Cossio curt Has tweeted after this and she talked 0:20:26.720 --> 0:20:28.600 about the rebrand and she said meta as in, we 0:20:28.680 --> 0:20:32.560 are a cancer to democracy, metastasizing into global surveillance and 0:20:32.560 --> 0:20:36.160 propaganda machine for boosting authoritarian regimes and destroying civil society 0:20:36.680 --> 0:20:40.560 for profits. So clearly the progressives are not that impressed, 0:20:40.760 --> 0:20:44.879 not that impressed. And Mark, I mean ten billion dollars 0:20:45.000 --> 0:20:47.439 next year, that's kind of a big number, but I mean, 0:20:47.480 --> 0:20:49.720 I know it's for Facebook and they can afford in everything. 0:20:50.560 --> 0:20:52.600 Is the sense that this is something that they're going 0:20:52.640 --> 0:20:56.240 to throw real money behind over the next ten years. 0:20:57.600 --> 0:20:59.200 I think. So if you look at the strategically, you know, 0:20:59.280 --> 0:21:02.040 a key thing to focus on here is that Facebook 0:21:02.200 --> 0:21:05.159 U has been sort of boxed out by Apple and 0:21:05.200 --> 0:21:08.159 Google for it's an entire existence at least on the 0:21:08.240 --> 0:21:10.800 mobile phone in the past decade. Right, So Facebook doesn't 0:21:10.800 --> 0:21:13.800 own the operating system, which is this big existential concern 0:21:13.880 --> 0:21:16.600 for them. You've heard them talk a lot about Apples fees. 0:21:17.400 --> 0:21:21.240 They've really been challenged by Apple's ad tracking changes. And 0:21:21.320 --> 0:21:23.680 this is the way for Facebook to sort of cleverly 0:21:23.880 --> 0:21:25.719 and I think strategically get ahead and say the next 0:21:25.760 --> 0:21:28.240 computing platform, we not only are going to be there, 0:21:28.240 --> 0:21:31.280 but we're going to be defining company investing the most 0:21:31.960 --> 0:21:34.480 and and um clearly like Apple has been investing a 0:21:34.520 --> 0:21:38.560 lot in augmented reality, Google has a certain extent. Ten 0:21:38.640 --> 0:21:41.360 billions seems like a lot on paper. I saw something 0:21:41.520 --> 0:21:44.520 someone to say, like, you know, Netflix invest maybe twice 0:21:44.560 --> 0:21:47.000 the amount in it's media right now. And this is 0:21:47.080 --> 0:21:50.120 a both a I think investment in media, but also 0:21:50.280 --> 0:21:53.480 in hardware, silicon and alto sort of technology that hasn't 0:21:53.520 --> 0:21:56.600 been betted yet. Well that's a great point that I 0:21:56.800 --> 0:21:59.520 understand the concept and the idea and they and kind 0:21:59.560 --> 0:22:01.639