WEBVTT - Pop the Champagne Corks. 2020 Is Finally Ending. 0:00:01.360 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEO, market pros and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple podcast or wherever you listen to podcasts, 0:00:17.000 --> 0:00:20.000 and on Bloomberg dot com. Lisa, you know, as we 0:00:20.120 --> 0:00:23.040 make our way towards New Year's Eve, I'm gonna make 0:00:23.040 --> 0:00:25.239 a call here. I'm gonna say that people are going 0:00:25.280 --> 0:00:28.400 to drink a little bit more champagne than they typically do. 0:00:28.440 --> 0:00:30.680 What do you think that they typically do in quarantine 0:00:30.760 --> 0:00:33.040 or just general? And I think just I think this 0:00:33.120 --> 0:00:35.240 is gonna be a big here for champagne. As we 0:00:35.280 --> 0:00:37.920 get the New Year's Eve, let's talk champagne. There's nobody 0:00:37.960 --> 0:00:41.159 better to do that with than champagne. There you go. 0:00:41.760 --> 0:00:45.680 Blaine Ashley, founder New York Champagne Week and the Fizz 0:00:45.800 --> 0:00:48.760 Is female platform and website, joining us on the phone 0:00:48.840 --> 0:00:51.920 from New York. Blaine, thanks so much for joining us. 0:00:51.960 --> 0:00:54.840 I'm looking at a beautiful bottle of champagne right here. 0:00:55.400 --> 0:00:59.920 My question is what is champagne? Are people drinking more 0:01:00.040 --> 0:01:04.400 champagne and a pandemic and a quarantine then typically, well, 0:01:04.440 --> 0:01:06.839 first off, thank you both for having me. I really 0:01:06.840 --> 0:01:09.520 appreciate it. And yes, the answer is yes, people are 0:01:09.600 --> 0:01:12.640 drinking a lot more champagne, are actually spending more money 0:01:12.720 --> 0:01:16.279 on wine in general. UM sales have been a thirty 0:01:16.400 --> 0:01:20.760 percent for champagne since June. Since mid June, so usually 0:01:20.840 --> 0:01:25.600 most of the revenue for the champagne industry comes in October, November, December. 0:01:25.640 --> 0:01:27.640 We call it O n D. But we've been doing 0:01:27.680 --> 0:01:30.920 those numbers of our sales come from that time frame. 0:01:31.120 --> 0:01:37.240 We've been doing those numbers since June. Okay, Virtual tastings, yeah, 0:01:37.840 --> 0:01:40.479 a real thing. I mean do people actually do that 0:01:40.560 --> 0:01:44.160 and feel satisfied with that? Um it is such a 0:01:44.200 --> 0:01:46.479 real thing because as you know, as I'm the founder 0:01:46.480 --> 0:01:48.440 of New York Champagne Week, which has been the live 0:01:48.440 --> 0:01:51.480 event for the last seven years, we transitioned the web 0:01:51.720 --> 0:01:55.000 this year. In one week, we did ten events. We 0:01:55.120 --> 0:01:58.320 shift the Champagne experiences to thirty nine states, and we 0:01:58.400 --> 0:02:01.920 had over two people per just tickets across the country 0:02:02.120 --> 0:02:05.480 to attend events like the Fried Chicken and Champagne Bash, 0:02:05.560 --> 0:02:08.600 which we did with Marcus Danielson of of the Red 0:02:08.680 --> 0:02:12.680 Rooster in your backyard LISTA and Harlem, I know where 0:02:12.680 --> 0:02:17.280 I live, my God, and then we we also we 0:02:17.400 --> 0:02:21.360 paired him up with a Champagne brand. Owner is also 0:02:21.360 --> 0:02:24.520 based on Harlem Rito Jam for walk Hard All Champagne. 0:02:24.800 --> 0:02:29.919 I have actually done forty three virtual peastings since May 0:02:29.960 --> 0:02:32.960 through December. And that's why I love half bottles because 0:02:32.960 --> 0:02:36.359 they're keeping the waist line and check pennies in my pocket, 0:02:37.639 --> 0:02:39.920 all of that jobs, and they're they're much healthier for 0:02:39.960 --> 0:02:42.800 you all around. Right, So that's why I'm loving half 0:02:42.840 --> 0:02:45.880 bottles of Champagne. Which that business is way up, like 0:02:47.520 --> 0:02:51.080 so Blaine, So people are drinking more. We've heard that 0:02:51.160 --> 0:02:56.000 from different parts of the spirits industry. Are you finding 0:02:56.280 --> 0:03:00.120 new champagne drinkers? Are you attracting new people to champagne? 0:03:01.960 --> 0:03:04.600 I think so. I think that people are really looking 0:03:04.639 --> 0:03:08.600 for those little affordable luxuries in life, and so through 0:03:08.880 --> 0:03:10.839 a lot of the events and the tastings we're doing, 0:03:10.840 --> 0:03:13.079 we're trying to make it very approachable. Like right now, 0:03:13.600 --> 0:03:16.280 I have my bottle of Charles hid stuck open with 0:03:16.400 --> 0:03:22.120 some popcorn. And the newest craze with caviare is instead 0:03:22.120 --> 0:03:24.480 of it's ditching the balinis but putting it on a 0:03:24.480 --> 0:03:27.200 potato chip. So it's kind of like all about like 0:03:27.240 --> 0:03:30.960 the approachable um and the diversity that champagne has to 0:03:31.000 --> 0:03:35.000 offer a diversification. But also champagne is the most food 0:03:35.040 --> 0:03:38.320 friendly wine out there. It really pairs from everything really 0:03:38.360 --> 0:03:41.840 that you can find. And then also um, champagne is 0:03:41.880 --> 0:03:45.120 lower than lower and alcohol. Uh, so it generally falls 0:03:45.120 --> 0:03:49.000 in the twelve percent category, whereas a standard still line 0:03:49.000 --> 0:03:53.760 will be around fourteen. I gotta say, I'm not sure 0:03:53.880 --> 0:03:56.680 that you want to reduce alcohol. Actually I shouldn't have 0:03:56.720 --> 0:04:00.200 a joke about that, but I'm wondering going full were 0:04:00.520 --> 0:04:04.200 this concept of virtual paired with actual how do you 0:04:04.320 --> 0:04:08.200 see this evolving in a world that isn't necessarily beset 0:04:08.360 --> 0:04:12.360 with the pandemic woes? Right, So, after Champagne Week, and 0:04:12.400 --> 0:04:14.640 this is something I never saw coming as a total 0:04:14.720 --> 0:04:18.080 small business in One Woman's show, I started having financial 0:04:18.320 --> 0:04:21.800 firms and banks, um uh companies reach out to me 0:04:21.880 --> 0:04:25.560 to do virtual tastings for their clients. So I actually 0:04:25.560 --> 0:04:30.120 there's a few Champagne and caveat experiences with Google. I've 0:04:30.120 --> 0:04:33.239 done some um from age and fays, so like cheese 0:04:33.240 --> 0:04:37.120 and champagne tastings for banks like JP Morgan. Um. I 0:04:37.160 --> 0:04:39.760 never saw that coming. I actually booked that. We booked 0:04:39.760 --> 0:04:45.479 about ten events between December eight and eighteen. Um uh 0:04:45.560 --> 0:04:47.919 four people that are are switching up there. You know, 0:04:47.960 --> 0:04:50.520 they can't do traditional client entertaining, so they're looking to 0:04:50.560 --> 0:04:56.160 do this instead. Another great uh way that we're getting 0:04:56.800 --> 0:04:59.440 these virtual tastings out there and giving back to the 0:04:59.480 --> 0:05:02.880 food and bridge industry, which is obviously hurting majorly right now, 0:05:02.960 --> 0:05:05.359 is doing a lot of chefs collaborations. A lot of 0:05:05.360 --> 0:05:08.800 these chefs are offering items on sites like gold Belly, 0:05:08.839 --> 0:05:12.000 which can ship to fifty states, and they're offering their 0:05:12.040 --> 0:05:15.720 like signature dish and delivering people's doorstep the day before 0:05:15.720 --> 0:05:17.480 so they can prepare it at home and have these 0:05:17.480 --> 0:05:20.880 great experiences. Blaine, what are some of the champagne's that 0:05:21.400 --> 0:05:24.240 you like right now that you're really suggesting people that 0:05:24.279 --> 0:05:27.919 they take some time in experiment with, right so I 0:05:28.040 --> 0:05:30.880 selected some today to chat about. Um. We have the 0:05:31.080 --> 0:05:34.200 Charles types like Group Reserve that is a great champagne 0:05:34.720 --> 0:05:38.120 to start off your festivities for the holidays with, like 0:05:38.200 --> 0:05:41.039 cheese and charcooterie boards something like that. Um. It is 0:05:41.040 --> 0:05:44.240 a blend of the three traditional grapes and champagne so 0:05:44.720 --> 0:05:50.320 Pino noir, Chardonnay, pinomnier, and it's eleven grams of dosage, 0:05:50.360 --> 0:05:52.880 which is the sugar. And that's another great thing about champagne. 0:05:52.880 --> 0:05:55.520 It actually has a lower sugar content that people realize. 0:05:55.960 --> 0:06:01.320 Most groups Champagne's fall between six and twelve grams per leader. Um. 0:06:01.680 --> 0:06:06.680 So that is an excellent um talking point about champagne, 0:06:06.800 --> 0:06:09.760 reason you should be drinking it. And then moving on, um, 0:06:09.880 --> 0:06:13.240 we have billa carsmon blanc to blanc now Blanc to 0:06:13.279 --> 0:06:16.640 blanc is a d percent chardoni and Chardonnay is great 0:06:16.680 --> 0:06:19.080 with fish. So I would pair that with a feast 0:06:19.120 --> 0:06:23.880 of seven fishes Christmas Eve dinner and down maybe also 0:06:23.920 --> 0:06:25.800 if you want to up the antie again, we love 0:06:25.880 --> 0:06:29.120 caviar and champagne. That's the great pairing. And then you 0:06:29.240 --> 0:06:34.400 have the su boi. I believe Paul correct and that 0:06:34.640 --> 0:06:39.560 is excellent with your classic Christmas dinner traditional holiday foods 0:06:39.600 --> 0:06:45.039 like you know, turkey, uh, mushrooms, stuffing. I love duck, 0:06:45.200 --> 0:06:48.000 so I love it with duck. And then I believe 0:06:48.040 --> 0:06:52.120 that Lisa has the Laurent Perier kube rouse and we 0:06:52.200 --> 0:06:57.240 love to pair rose with dessert around here, so um, 0:06:57.279 --> 0:07:01.159 that's that's a great pairing with apple pie, of pecan pie, 0:07:01.279 --> 0:07:04.160 any sort of like fruit tart. Also, if you're not 0:07:04.360 --> 0:07:06.560 into like sweets, I'm kind of a more of a 0:07:06.640 --> 0:07:10.600 cheese person, so you could do creamy cheeses, citrusly jams 0:07:10.640 --> 0:07:14.040 and figs um something like that would be perfect with 0:07:14.080 --> 0:07:18.240 that rose. And it's also it's stunning bottle, right, it's beautiful. 0:07:18.320 --> 0:07:22.640 I've actually tasting another one that you sent over currently, 0:07:24.640 --> 0:07:27.200 so that that's what I believe. Are you having the 0:07:27.280 --> 0:07:32.440 Child's type or the lacara velve I'm doing yes, so 0:07:32.560 --> 0:07:35.240 the lacr vel cub Minia and that's what I set 0:07:35.280 --> 0:07:38.600 off the top um. That has been my good I 0:07:38.640 --> 0:07:42.040 had too much of it. No, that has been my 0:07:42.160 --> 0:07:45.520 go to zoom line of this season. And because the 0:07:45.640 --> 0:07:48.200 brand owner lives in New York and it's been really 0:07:48.280 --> 0:07:51.280 great for collaboration Steak, She's able to kind of hop 0:07:51.320 --> 0:07:54.160 onto a lot of these events. So everything we're offering 0:07:54.280 --> 0:07:57.480 on our website right now for virtual any time booking, 0:07:58.200 --> 0:08:00.320 we do with Rita, the owner of Laka of All, 0:08:00.480 --> 0:08:04.520 because she's there and who better to speak to her 0:08:04.680 --> 0:08:08.720 Champagne for these zoom experiences than than the founder herself. 0:08:09.200 --> 0:08:12.120 And what's great as Rita used to own a iconic 0:08:12.200 --> 0:08:15.280 restaurant in Midtown called La Carvell. It closed in two 0:08:15.320 --> 0:08:17.840 thousand and three, but it was like Kennedy's hot Spot 0:08:17.960 --> 0:08:21.320 or the Stewart, like tons of glow, Julia Child, tons 0:08:21.320 --> 0:08:23.680 of g Literatti went there and she is like best 0:08:23.720 --> 0:08:26.160 friends to every single chef in New York. We have 0:08:26.360 --> 0:08:29.520 access to the chefs because of the founder of Lacarravel, 0:08:29.600 --> 0:08:36.120 Rita Jamai Champagne Blaine, you made my Thursday afternoon absolutely fantastic. 0:08:36.280 --> 0:08:38.120 You made it a little bit harry for Paul, who's 0:08:38.120 --> 0:08:40.520 a little concerned. I haven't drug that much. I just 0:08:40.640 --> 0:08:43.720 opened at the beginning of the segment. Champagne Blaine, thank 0:08:43.760 --> 0:08:47.240 you so much. That was fantastic and I look forward 0:08:47.280 --> 0:08:51.760 to a very, very fun evening. Champagne Blaine. Ashley, founder 0:08:51.800 --> 0:08:54.319 of the New York Champagne Week and the phizz is 0:08:54.400 --> 0:08:59.679 female platform website, joining us on the phone. Uh, it 0:08:59.800 --> 0:09:02.520 is nice way to end the week. I've got to say, Paul, 0:09:02.800 --> 0:09:05.280 absolutely and the bottles are beautiful, and you know I'm 0:09:05.360 --> 0:09:07.560 not a huge champagne person. I know a lot of 0:09:07.559 --> 0:09:13.000 folks are, but get started. I get started. Champagne Blane 0:09:13.040 --> 0:09:16.040 definitely got me fired up to open this bottle probably 0:09:16.040 --> 0:09:23.440 this evening, Yeah, opened up a bottle anything radio. What 0:09:23.600 --> 0:09:30.600 a year we're all looking forward exactly. Just unbelievable, and 0:09:30.800 --> 0:09:34.160 you know, it's amazing how these financial markets have reacted. 0:09:34.160 --> 0:09:36.920 We think, Lisa, back to uh, the depths in that 0:09:37.000 --> 0:09:40.240 march in April and just the panic in the marketplace. 0:09:40.320 --> 0:09:43.320 But then the Federal Reserve comes to the rescue, fiscal 0:09:43.320 --> 0:09:46.840 stimulus comes to the rescue, and we have this major 0:09:47.280 --> 0:09:50.240 turnaround in the markets. Now Here, we are a couple 0:09:50.280 --> 0:09:51.600 of days left in the year. The question is what 0:09:51.600 --> 0:09:54.800 do we do next year? Alan Zafyn founding partner and 0:09:54.880 --> 0:09:58.840 co CEO of I e Q Capital, based in Foster 0:09:58.920 --> 0:10:02.040 City and Los Angeles, California. He joins us now, Alan, 0:10:02.080 --> 0:10:04.160 thanks so much for joining us. We really appreciate it. 0:10:04.200 --> 0:10:07.880 On Christmas Eve, again, what a year. I'd love to 0:10:07.920 --> 0:10:13.119 get your thoughts one, how are you positioning your portfolio? 0:10:14.720 --> 0:10:18.319 Lisa and Paul happy, alidays, Thank goodness, We're going to 0:10:18.400 --> 0:10:21.520 get through this year. Absolutely, there's still a couple of 0:10:21.600 --> 0:10:26.400 days left, though, let's not take sick. Carry on all right. Uh, 0:10:26.559 --> 0:10:29.080 here's the longest short of it. If you talk to 0:10:29.120 --> 0:10:31.920 almost any analysts, they'll tell you we're going to go 0:10:32.080 --> 0:10:34.680 up in the U S stock market next year. And 0:10:34.720 --> 0:10:37.640 the reason is you're going to see US economic growth 0:10:38.200 --> 0:10:41.360 the fastest it's been since the mid eighties. And that's 0:10:41.400 --> 0:10:46.040 because when you pump literally nearly fifty worth of g 0:10:46.200 --> 0:10:49.040 d P in the form of monetary and fiscal stimulus, 0:10:49.080 --> 0:10:52.360 which is what we have done this year, you're setting 0:10:52.360 --> 0:10:54.880 yourself for a boom on the back end of that. 0:10:55.080 --> 0:10:59.199 So again, with all due respect to the horrific, horrific 0:10:59.320 --> 0:11:03.640 elements of oalth crises and literally social and economic crisis, 0:11:03.720 --> 0:11:07.040 and we clearly have problems with inequality as it relates 0:11:07.040 --> 0:11:09.680 to the stock market. The money has got to go somewhere. 0:11:09.960 --> 0:11:13.040 And when cash is giving you nothing, and when bonds 0:11:13.040 --> 0:11:16.320 give you so little, risk appetites perk up. And with 0:11:16.440 --> 0:11:20.280 that massive amount of money, equities move higher and other 0:11:20.360 --> 0:11:23.160 risk assets moved higher. All things equal, there's plenty of 0:11:23.240 --> 0:11:27.560 risks and bumps, but the base cases we keep grinding higher, 0:11:28.120 --> 0:11:30.480 largely because the money has got to go somewhere. That's 0:11:30.520 --> 0:11:34.640 your story for two. So another way of putting this 0:11:34.840 --> 0:11:37.640 perhaps is that in two it will sort of be 0:11:37.840 --> 0:11:39.480 like what we saw in the second half of two. 0:11:40.480 --> 0:11:43.560 Nothing really matters except for the money keeps keeps flowing, 0:11:43.640 --> 0:11:45.240 so you might as well buy stocks. Is that the 0:11:45.280 --> 0:11:49.760 same thing here with luck? Yes? With let me give 0:11:49.760 --> 0:11:54.800 you a little bit of nuance. So please give an example. 0:11:55.200 --> 0:11:57.800 I don't know if you know this, but Brexit finally passed. 0:11:58.480 --> 0:12:02.280 I heard about that. Nobody can't the markets that move right? 0:12:02.400 --> 0:12:06.080 How many years have we obsessed about that darn thing? Uh? Frankly, 0:12:06.080 --> 0:12:09.360 it's a modest positive. It's not a not actually that 0:12:09.480 --> 0:12:12.000 big of a deal, but it's a modest positive. But 0:12:13.120 --> 0:12:16.800 you know, one thing that is um a good and 0:12:16.840 --> 0:12:19.720 about is if the economy really improves and broadens out, 0:12:19.760 --> 0:12:24.040 you will finally see this rotation to a degree anyway 0:12:24.240 --> 0:12:26.720 where you start to see the smaller companies perform as 0:12:26.720 --> 0:12:29.360 well as the larger stocks, and you start to see 0:12:29.360 --> 0:12:33.120 the value industries do as well as the technology and 0:12:33.200 --> 0:12:36.760 growth related related stock. And so it may actually be 0:12:36.880 --> 0:12:39.760 a year where it's a little deceptive. And what I 0:12:39.800 --> 0:12:41.840 mean by that is our indexes in the US are 0:12:41.840 --> 0:12:46.000 now dominated by technology companies. It's possible we'll see a 0:12:46.080 --> 0:12:50.520 year where the average stock is doing better than that index. 0:12:50.600 --> 0:12:53.480 The index being market cap weighted, so the big technology 0:12:53.520 --> 0:12:56.400 companies comprise a big part of that index. It could 0:12:56.440 --> 0:12:59.320 be oddly enough, a year the index doesn't go up 0:12:59.360 --> 0:13:02.200 too much in actually a bunch of individual stocks do 0:13:02.360 --> 0:13:06.079 modestly better because as the economy picks up, businesses that 0:13:06.120 --> 0:13:08.840 are a lower quality and need economic growth, they're gonna 0:13:08.960 --> 0:13:11.120 get a little bit of a pickup next year. So 0:13:11.679 --> 0:13:18.120 industrial stocks, financial stocks, selective consumer oriented stocks might actually 0:13:18.160 --> 0:13:20.559 do a little better than the apples and facebooks and 0:13:20.720 --> 0:13:23.920 Microsoft's of the world. Um, that's sort of the other 0:13:24.280 --> 0:13:27.600 element of two thousand twenty one is maybe we'll get 0:13:27.640 --> 0:13:32.439 a broadening of market stock market recovery and that will 0:13:32.520 --> 0:13:35.120 kind of help everybody a little bit. Do you embrace 0:13:35.160 --> 0:13:38.600 that rotation trade there? Allan It's it's certainly been successful here, 0:13:38.640 --> 0:13:40.280 you know, over the last several months, I guess a 0:13:40.320 --> 0:13:43.439 lot of folks are just saying, how much legs does 0:13:43.559 --> 0:13:47.800 that cyclical trade, that rotation trade have in How do 0:13:47.840 --> 0:13:50.600 you think about that? Coming from a guy right here 0:13:50.600 --> 0:13:52.640 in Silicon Valley, I'm gonna be a heretic. I can 0:13:52.640 --> 0:13:54.720 tell you I think there's an element of truth, So 0:13:54.760 --> 0:13:57.720 I embrace it, but only, but you know, only to 0:13:57.800 --> 0:14:00.200 a modest degree. It's like, you know, bulls and bear 0:14:00.280 --> 0:14:02.800 make goals, and bears make money and pigs don't. Um, 0:14:02.840 --> 0:14:04.839 I think you're crazy to just think I'm going to 0:14:04.960 --> 0:14:07.520 rotate entirely out of the large cap tech names and 0:14:07.600 --> 0:14:11.320 go into small caps, low value companies. That's not the trade. 0:14:11.800 --> 0:14:14.200 You still want to be in strong balance sheet businesses 0:14:14.240 --> 0:14:19.600 that generate consistent growth, and so you can find again financials, industrials, 0:14:19.600 --> 0:14:23.840 consumer staples that meet that description without being a technology company. 0:14:23.880 --> 0:14:27.200 And I still think you've got to be balanced, um 0:14:27.320 --> 0:14:29.280 between putting all your eggs and ones ask. But it's 0:14:29.320 --> 0:14:31.640 just a reckless strategy, and it also drives a lot 0:14:31.680 --> 0:14:34.960 of transactional activity and taxes. So you know, just be 0:14:35.080 --> 0:14:37.600 prudent about it, don't You know. You don't have to 0:14:37.640 --> 0:14:40.440 find the next test one, just keep balanced. But yeah, 0:14:40.440 --> 0:14:43.400 I do embrace the fact the economy is going to strengthen, 0:14:43.800 --> 0:14:47.280 and I do think the market will broaden out the participation, 0:14:47.360 --> 0:14:49.040 and I think it will end up being a good year, 0:14:49.280 --> 0:14:51.880 not not an amazing year, but a good year, and 0:14:51.920 --> 0:14:55.880 the risks um include the outcome of the Georgia election 0:14:56.000 --> 0:14:58.440 and that the market doesn't want to see corporate tax 0:14:58.520 --> 0:15:01.520 rates higher. So if it's both seats on January fifth 0:15:01.560 --> 0:15:05.280 go to a Democrat, it's possible the market won't react 0:15:05.320 --> 0:15:07.760 well because there will be a perception corporate tax rates 0:15:07.840 --> 0:15:11.520 might ultimately hike as a result, we certainly need to 0:15:11.560 --> 0:15:16.320 see the distribution of the vaccines working. And then, lastly, ironically, 0:15:16.920 --> 0:15:19.280 even though you want great economic growth, you don't want 0:15:19.280 --> 0:15:22.320 the economic growth to be so strong as to create 0:15:22.360 --> 0:15:25.680 an inflation scare. So if you see interest rates spiking 0:15:26.560 --> 0:15:29.520 spiking up towards two percent on an tender treasure bond 0:15:29.600 --> 0:15:33.120 too quickly, we'll get some hiccup in the stock market, 0:15:33.160 --> 0:15:36.600 because this market is built on low interest rates supporting 0:15:36.720 --> 0:15:40.920 the current higher than average valuation. Once rates get high enough, 0:15:41.920 --> 0:15:44.840 it gets to the point where they compete with taking stocks. 0:15:44.880 --> 0:15:47.080 But I don't think we're going to be in a 0:15:47.160 --> 0:15:51.160 protracted inflationary environment for at least another couple of years, 0:15:51.200 --> 0:15:54.640 for all sorts of reasons, including our aging population. Older 0:15:54.680 --> 0:15:57.640 individuals tend to spend less, and we still have some 0:15:57.720 --> 0:16:01.720 elements of benefit of technology and product the UH preventing 0:16:01.760 --> 0:16:04.480 inflation from coming to play. So that's two thousand twenty one. 0:16:04.480 --> 0:16:07.360 It's a good environment, not a great environment for stocks 0:16:07.360 --> 0:16:11.600 and a broadening economic outlook. We're speaking with Alan Zaffron, 0:16:11.680 --> 0:16:14.800 founding partner and co CEO of I e Q Capital. 0:16:15.440 --> 0:16:17.920 You said a lot there. Let's unpack one aspect. We're 0:16:17.920 --> 0:16:21.320 talking about the Georgia elections and how a democratic outcome. 0:16:22.000 --> 0:16:25.320 If the Democrats ended up taking leadership in the Senate, 0:16:25.360 --> 0:16:28.520 that could be a negative for the market because of 0:16:28.560 --> 0:16:32.000 a higher regulation and taxes. This actually is a bit 0:16:32.080 --> 0:16:34.720 contrarian because some people think it's a positive for the 0:16:34.800 --> 0:16:38.320 market due to more fiscal support. Can you sort of 0:16:38.360 --> 0:16:42.600 talk about the balance between those two risk factors. Yeah, 0:16:42.640 --> 0:16:47.520 absolutely so, UM various amost the Communists have projected that 0:16:47.560 --> 0:16:50.520 if corporate tax rates, as stated initially by the Biden 0:16:50.600 --> 0:16:54.320 platform in the campaign, and of course it could all change. Um, 0:16:54.360 --> 0:16:58.600 if those corporate tax rates arose from it would reduce 0:16:58.680 --> 0:17:02.200 the earnings per share of the SMP five by anywhere 0:17:02.200 --> 0:17:05.920 from nine to fifteen percent. So in a vacuum that 0:17:06.000 --> 0:17:07.919 all we're going to do is raise corporate tax rates. 0:17:08.880 --> 0:17:11.359 I could argue that if the multiple stay the same, 0:17:11.640 --> 0:17:13.399 I could argue that the market is going to take 0:17:13.400 --> 0:17:16.080 a nine to hit. You could also give me the 0:17:16.160 --> 0:17:19.159 argument that a democratic administration, all things equal, might be 0:17:19.240 --> 0:17:23.600 slightly more regulatory on technology companies which comprise part of 0:17:23.600 --> 0:17:27.240 the index, which could even worsen stock market reactions as well. 0:17:27.320 --> 0:17:30.160 On the other hand, there is absolutely belief that such 0:17:30.160 --> 0:17:33.879 an administration will imediately increase infrastructure spending, that which has 0:17:33.920 --> 0:17:37.000 desperately needed in other forms of fiscal spending, which will 0:17:37.080 --> 0:17:42.520 clearly amplifies consumer spending in US directed corporate spending. And 0:17:42.560 --> 0:17:47.160 again now talking about analysts uh an economists of ranges 0:17:47.880 --> 0:17:52.360 arguing that that could actually increase uh earnings pretty sure 0:17:52.359 --> 0:17:55.439 on a magnitude of anywhere from seven to twelve percent. 0:17:55.520 --> 0:17:59.040 So I would argue it's a modest negative. Ultimately, I 0:17:59.040 --> 0:18:02.840 think it's got more headline risk than ultimate economic impact, 0:18:03.280 --> 0:18:05.960 and it shifts where the winners and losers are. It 0:18:06.119 --> 0:18:09.520 actually amplifies what we just talked about in a broadening economy, 0:18:09.560 --> 0:18:13.879 all things equal, those perspective target technology companies which historically 0:18:13.880 --> 0:18:16.440 have not paid high taxes. It's going to force them 0:18:16.440 --> 0:18:19.280 pay higher taxes, and they might be under greater regulation. 0:18:19.640 --> 0:18:23.080 The businesses that benefit from greater infrastructure spending tend to 0:18:23.080 --> 0:18:28.479 be more cursory, basic industry economically sensitive companies. So it's 0:18:28.520 --> 0:18:32.880 another argument towards the rotation. I'd argue you would get 0:18:33.040 --> 0:18:37.199 ahead if both seats go to Democrats in Georgia. I 0:18:37.240 --> 0:18:40.359 think you'll get a knee jerked reaction down. You know, 0:18:40.520 --> 0:18:42.640 pick your number, will take a week or two, maybe 0:18:42.640 --> 0:18:45.760 the market goes down. Kick a number five to ten percent. 0:18:45.880 --> 0:18:47.919 I think that's a knee jerk reaction, and it's the 0:18:47.960 --> 0:18:52.000 proverbial buying opportunity. In the long run, companies will do 0:18:52.080 --> 0:18:54.160 just find profits will be made, and those that are 0:18:54.200 --> 0:18:57.520 fortunate enough to have savings in an IRA or you know, 0:18:57.600 --> 0:18:59.719 in their own personal accounts, I think they will benefit 0:18:59.720 --> 0:19:02.240 by own stocks. So you get a need jerk reaction down. 0:19:02.480 --> 0:19:05.639 It's not a permanent erosion of someone's well. Alan, you 0:19:05.680 --> 0:19:08.159 mentioned that you're in Silicon Valley. One of the stories 0:19:08.200 --> 0:19:12.720 in twenty twenty, maybe starting in nineteen, was the increased 0:19:12.800 --> 0:19:17.040 regulatory oversight from US US officials, not just European officials, 0:19:17.119 --> 0:19:21.680 but UH regulators Congress. What's the feeling in the valley 0:19:21.840 --> 0:19:25.520 right now about kind of the regulatory environment as it 0:19:25.560 --> 0:19:28.359 relates to tech, it's historically been a very light touch. 0:19:28.680 --> 0:19:32.120 Are they concerned it's gonna get a little heavier, Yes, 0:19:32.800 --> 0:19:35.720 But I would tell you everyone around here is always paranoid, 0:19:36.080 --> 0:19:39.119 and so that doesn't change anything. You always hope for 0:19:39.200 --> 0:19:42.160 the best and planned for the worst. Another story we're 0:19:42.200 --> 0:19:44.280 not covering much today is take a look at Ali 0:19:44.320 --> 0:19:49.640 Baba stock Alibaba stock, and it's down from its peak. 0:19:49.760 --> 0:19:52.280 Why because the Chinese regulators have said, we don't like 0:19:52.840 --> 0:19:57.840 Ali Baba's anti um you know, it's it's monopolistic policies 0:19:57.880 --> 0:19:59.879 and we're going to go after them. And that's exactly 0:20:00.359 --> 0:20:04.280 with these large cap, largest tech companies fear by the way, 0:20:04.960 --> 0:20:08.520 lots of the small entrepreneurs, smaller companies of entrepreneurs around here, 0:20:08.680 --> 0:20:11.119 they love that because they want to be able to 0:20:11.720 --> 0:20:14.480 have a more competitive or fair marketplace. So there's two 0:20:14.480 --> 0:20:17.640 sides of that coin. There's absolutely concerned that there will 0:20:17.640 --> 0:20:22.240 be greater elements of regulation, but usually the bark is 0:20:22.280 --> 0:20:25.399 worse than the bike, so there's a belief that the 0:20:25.560 --> 0:20:28.480 regulation probably won't get to the point that it's demonstrably 0:20:28.640 --> 0:20:33.160 punitive to the business. Business models, again, modestly negative impacts 0:20:33.240 --> 0:20:36.359 and probably the headlines will actually be worse than the 0:20:36.400 --> 0:20:38.840 actual damage to the business model in the long run. 0:20:39.040 --> 0:20:41.399 It's gonna be hard for you to convince me that 0:20:41.800 --> 0:20:45.399 companies like Amazon and Microsoft and Google are going to 0:20:45.600 --> 0:20:49.760 lose permanent competitive advantages given their scale and first mover 0:20:49.880 --> 0:20:54.200 advantage and their respective businesses they've entered into before we 0:20:54.280 --> 0:20:56.760 let go, Allen, what are you doing for the new year? 0:20:56.800 --> 0:21:00.720 In the holidays, I'm going to be doing from reading 0:21:00.720 --> 0:21:04.800 a few books I think big essentialism. I'm going to 0:21:04.880 --> 0:21:08.200 take a few walks in the Redwoods and clear my 0:21:08.320 --> 0:21:11.000 mind and hope and pray for a much better two 0:21:11.040 --> 0:21:14.880 thousand twenty one for everyone at every socio economic level. 0:21:15.040 --> 0:21:17.760 This has been a really tough year, so I had 0:21:17.760 --> 0:21:20.520 a lot of gratitude and I'm counting my blessings. That's 0:21:20.560 --> 0:21:24.120 what I'm doing. A wonderful message, Thank you, Alan Saffron. 0:21:24.200 --> 0:21:28.359 I'm doing probably about half of that, maybe a quarter, 0:21:28.640 --> 0:21:32.280 maybe an eighth. Definitely less ambitious, that's for sure. No reading, 0:21:32.640 --> 0:21:35.520 Definitely not a walk in the redwoods, trying to wrangle kids. 0:21:35.560 --> 0:21:39.440 Alan's after in Central Park. That's that's that's sure. Sure. Yeah, 0:21:39.520 --> 0:21:41.960 I'll check out the mud from the snow and the rain. 0:21:42.040 --> 0:21:45.159 Alan Zaffred, founding partner and co chief executive officer at 0:21:45.240 --> 0:21:48.359 I e Q Capital, talking about the Redwoods and some 0:21:48.520 --> 0:21:50.879 lofty goals and really really wonderful market calls. Thank you 0:21:50.960 --> 0:21:53.600 for everything, Allen. I will say in all seriousness, Paul, 0:21:53.600 --> 0:21:56.080 it actually has been beautiful because after it snowed, it 0:21:56.200 --> 0:21:58.439 was great. It was going sledding, it was going out 0:21:58.480 --> 0:22:01.119 and enjoying the city. And now we're facing down with 0:22:01.200 --> 0:22:04.320 a very wet Christmas Eve, and yes, it's gonna be windy, 0:22:04.359 --> 0:22:05.720 so it's gonna be tough out there for Santa and 0:22:05.760 --> 0:22:08.080 the sled but hopefully he'll be okay. Yeah, I know 0:22:08.160 --> 0:22:11.120 that you're worried about him. He'll make it through. I promise. 0:22:14.080 --> 0:22:17.600 This is Bloomberg Markets with Lisa Rama, Weds and Paul's 0:22:17.600 --> 0:22:22.199 Wheeney on Bloomberg Radio, twelve minutes left before the end 0:22:22.359 --> 0:22:25.880 of the shortened trading day. Here ahead of Christmas, we're 0:22:25.920 --> 0:22:28.520 thinking about all of the things to come that would 0:22:28.520 --> 0:22:31.040 be nice and bubbly, just like the champagne that we 0:22:31.119 --> 0:22:33.720 were just talking about and now drinking. Joining us now 0:22:33.800 --> 0:22:37.320 to discuss the outlook for perhaps an area that needs 0:22:37.359 --> 0:22:38.879 to see brighter days if you look in some of 0:22:38.880 --> 0:22:41.439 the bigger cities, but certainly is seeing brighter days if 0:22:41.480 --> 0:22:44.280 you look at the likes of Florida. Is Bonnie Stone 0:22:44.320 --> 0:22:47.520 Sellers and Jeff Highland, co founders of Forbes Global Properties, 0:22:48.080 --> 0:22:51.000 taking a look at the Luxury Outlook, I just to 0:22:51.040 --> 0:22:52.840 give you a sense of what Forbes Global Properties is. 0:22:52.880 --> 0:22:56.000 It's a luxury portal membership only for elite real estate 0:22:56.080 --> 0:22:59.879 firms showing high end residences across the world. So, Bonnie, 0:23:00.040 --> 0:23:02.359 you could just start by giving us a sense of 0:23:02.760 --> 0:23:05.960