1 00:00:12,480 --> 00:00:16,040 Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast. 2 00:00:16,160 --> 00:00:18,320 Speaker 1: My name is Mike Regan. I'm a senior editor at 3 00:00:18,320 --> 00:00:22,000 Speaker 1: Bloomberg numbled On, a higher across asset reporter with Bloomberg, 4 00:00:22,760 --> 00:00:25,880 Speaker 1: And this week on the show, well talk about spring fever. 5 00:00:26,320 --> 00:00:30,920 Speaker 1: The SMP five hundred surged eleven in eleven days, erasing 6 00:00:30,960 --> 00:00:33,800 Speaker 1: most of its loss for the year and this season, 7 00:00:33,840 --> 00:00:37,120 Speaker 1: as the bond market carried on with its anti social behavior, 8 00:00:37,240 --> 00:00:40,160 Speaker 1: with tenure rates hovering near the highest level in three 9 00:00:40,240 --> 00:00:43,080 Speaker 1: years and a crucial part of the yield curve flirting 10 00:00:43,120 --> 00:00:46,440 Speaker 1: with inversion. And obviously that's causing everyone to freak out 11 00:00:46,440 --> 00:00:49,120 Speaker 1: about whether that signals a recession is on the horizon. 12 00:00:49,800 --> 00:00:52,080 Speaker 1: So what's it all mean? Was this just a bear 13 00:00:52,200 --> 00:00:55,040 Speaker 1: market bounce or has normal service been restored to the 14 00:00:55,080 --> 00:00:57,800 Speaker 1: bull market in stocks. We'll get into it with a 15 00:00:57,920 --> 00:01:01,440 Speaker 1: veteran fund manager, but first pull down, I need to know, 16 00:01:01,760 --> 00:01:04,680 Speaker 1: speaking of spring fever, are you are you experiencing any 17 00:01:04,720 --> 00:01:08,760 Speaker 1: spring fever? I would really like the spring to arrive 18 00:01:09,040 --> 00:01:11,479 Speaker 1: in New York City, right we haven't really seen it yet. 19 00:01:11,520 --> 00:01:14,880 Speaker 1: It's been like thirty degrees for the past week. I 20 00:01:14,959 --> 00:01:17,840 Speaker 1: know it doesn't quite feel like spring. Just it. I 21 00:01:17,880 --> 00:01:20,280 Speaker 1: gotta say, there's a woman in my neighborhood, a young 22 00:01:20,319 --> 00:01:23,840 Speaker 1: woman who the minute the sun comes out, she's out 23 00:01:23,880 --> 00:01:29,840 Speaker 1: there sunbathing. Really, it's like forty degrees out and she's sunbathing. 24 00:01:30,080 --> 00:01:31,959 Speaker 1: This is New Jersey. After that, that would only I 25 00:01:32,000 --> 00:01:35,560 Speaker 1: was going to say, that would only happen in New Jersey. Yeah, Florida, 26 00:01:35,720 --> 00:01:38,959 Speaker 1: Florida possibly maybe Florida. Yeah, but they wouldn't have to 27 00:01:39,000 --> 00:01:42,039 Speaker 1: wait forty I'm just worried she's going to have the 28 00:01:42,080 --> 00:01:50,160 Speaker 1: first simultaneous case of frostbite and sunburn. Maybe she's going 29 00:01:50,240 --> 00:01:54,920 Speaker 1: for it, yeah, setting a new uh entry into the 30 00:01:55,000 --> 00:01:58,640 Speaker 1: Journal of American Medicine or something, right, the Guinness Book 31 00:01:58,640 --> 00:02:02,920 Speaker 1: of World Record. But I want to I do want 32 00:02:02,920 --> 00:02:04,840 Speaker 1: to bring in our guests this week. I want to 33 00:02:04,880 --> 00:02:07,840 Speaker 1: welcome David Bianco. He's the chief investment Officer of the 34 00:02:07,840 --> 00:02:11,440 Speaker 1: America's at DWS Group. Thanks so much for joining us, David, 35 00:02:12,040 --> 00:02:16,320 Speaker 1: Thank you, Hello, Vidalia, and Hi Mike, Hi. It's great, 36 00:02:16,360 --> 00:02:18,399 Speaker 1: it's great to have you, and I really just want 37 00:02:18,400 --> 00:02:20,960 Speaker 1: to start out broadly speaking, I was hoping you would 38 00:02:21,000 --> 00:02:23,680 Speaker 1: just lay out your strategy for us and how you're 39 00:02:23,720 --> 00:02:25,799 Speaker 1: making sense of the market, What you're preferring, what you're 40 00:02:25,800 --> 00:02:30,040 Speaker 1: not preferring right now, Well, laying out the strategy broadly, 41 00:02:30,080 --> 00:02:32,840 Speaker 1: I guess as as Mike said, I would try not 42 00:02:32,880 --> 00:02:35,160 Speaker 1: to get frost bite and sunburn at the same time. 43 00:02:35,240 --> 00:02:40,560 Speaker 1: It sounds skiing injury. UM. It's it's a difficult market 44 00:02:40,760 --> 00:02:42,480 Speaker 1: right now. You don't know if you're gonna get burned 45 00:02:42,520 --> 00:02:47,080 Speaker 1: by inflation or get frozen by a recession. Although I 46 00:02:47,080 --> 00:02:49,840 Speaker 1: don't expect a recession in the you know, this year 47 00:02:49,919 --> 00:02:54,600 Speaker 1: or so, we're quite concerned about the longevity of this cycle. UM. 48 00:02:54,639 --> 00:02:57,720 Speaker 1: I feel as if this cycle has aged quickly. UH. 49 00:02:57,840 --> 00:03:02,240 Speaker 1: It's aged mostly from very high inflation, much earlier than 50 00:03:02,280 --> 00:03:04,720 Speaker 1: you typically see in the first couple of years of 51 00:03:04,720 --> 00:03:09,119 Speaker 1: a new economic expansion. The causes, as everybody knows, it's 52 00:03:09,120 --> 00:03:13,400 Speaker 1: the pandemic, UH, the supply chain disruptions from that UH 53 00:03:13,480 --> 00:03:18,960 Speaker 1: they really strong UH monetary and fiscal response and having 54 00:03:18,960 --> 00:03:22,120 Speaker 1: to pay back some of that UM. And then and 55 00:03:22,160 --> 00:03:25,440 Speaker 1: then the war that broke out with Russia's invasion in Ukraine. 56 00:03:26,040 --> 00:03:30,000 Speaker 1: So we're worried about inflation. We're worried that the FED 57 00:03:30,400 --> 00:03:33,480 Speaker 1: might try to fight inflation too quickly or too aggressively. 58 00:03:33,960 --> 00:03:37,320 Speaker 1: That could bring a recession earlier than necessary. But I'm 59 00:03:37,360 --> 00:03:41,200 Speaker 1: just concerned in general about the way inflation is eroding 60 00:03:41,240 --> 00:03:44,560 Speaker 1: the purchasing power of consumers in the United States, and 61 00:03:44,680 --> 00:03:47,880 Speaker 1: inflation at these levels, with this type of volatility and 62 00:03:47,880 --> 00:03:53,120 Speaker 1: associated uncertainty, it begins to disrupt the effectiveness of the economy. 63 00:03:53,680 --> 00:04:00,119 Speaker 1: It disrupts price signals, and when price signals are distorted, manufacturers, consumers, 64 00:04:00,440 --> 00:04:04,440 Speaker 1: capital allocators, we all begin to make bad decisions. And 65 00:04:04,520 --> 00:04:07,520 Speaker 1: I'm concerned that this, uh this economic environment is one 66 00:04:07,600 --> 00:04:10,680 Speaker 1: where the risks are high and it's difficult to navigate it. 67 00:04:10,800 --> 00:04:12,720 Speaker 1: I don't want to get some burned, don't want to 68 00:04:12,720 --> 00:04:16,320 Speaker 1: give frost bite, So trying to pick pick some some 69 00:04:16,920 --> 00:04:20,119 Speaker 1: uh see for investments, And I'm happy to talk about 70 00:04:20,120 --> 00:04:22,920 Speaker 1: that as we continue our chat. Like the word play 71 00:04:22,960 --> 00:04:26,200 Speaker 1: a lot. Yeah, I didn't realize my crazy neighbor would 72 00:04:26,200 --> 00:04:29,400 Speaker 1: turn into an extended metaphor for the current current state 73 00:04:29,440 --> 00:04:31,960 Speaker 1: of play in the markets. This is great. Hopefully she 74 00:04:32,000 --> 00:04:34,920 Speaker 1: doesn't listen to this and come and come burn me 75 00:04:35,240 --> 00:04:37,479 Speaker 1: about something. But but David, you know I mentioned in 76 00:04:37,520 --> 00:04:40,400 Speaker 1: that intro, you know when you see a bounce like 77 00:04:40,520 --> 00:04:43,120 Speaker 1: this in the market, Um, every know it all on 78 00:04:43,160 --> 00:04:45,480 Speaker 1: Wall Street comes out of the woodwork to say, you know, 79 00:04:45,720 --> 00:04:50,120 Speaker 1: the biggest bounces often occur in bear markets, and that's 80 00:04:50,120 --> 00:04:53,039 Speaker 1: true to some extent. I mean, yes, very often, these 81 00:04:53,080 --> 00:04:55,880 Speaker 1: these really fierce rallies that we look at. You know, 82 00:04:55,920 --> 00:04:57,760 Speaker 1: when you go back to look at, well, when was 83 00:04:57,760 --> 00:05:00,240 Speaker 1: the last time we saw an eleven percent move in 84 00:05:00,240 --> 00:05:02,599 Speaker 1: eleven days? It usually is in the middle of the 85 00:05:02,600 --> 00:05:04,880 Speaker 1: bear market, but but not always. But is that thought 86 00:05:04,960 --> 00:05:07,760 Speaker 1: crossing your mind at all? Like that you know that 87 00:05:07,880 --> 00:05:09,800 Speaker 1: this could be sort of a countertrend rally that we 88 00:05:09,839 --> 00:05:13,080 Speaker 1: saw in March. Um, are you worried that will revisit 89 00:05:13,120 --> 00:05:15,880 Speaker 1: those loads or maybe even set some new loads for 90 00:05:15,880 --> 00:05:21,039 Speaker 1: the year. Volatilities elevated, So we we've expected volatility to 91 00:05:21,080 --> 00:05:24,400 Speaker 1: be high this year. It's playing out. And when you 92 00:05:24,480 --> 00:05:28,080 Speaker 1: have volatility, you tend to get it more to the downside. Um. 93 00:05:28,120 --> 00:05:30,480 Speaker 1: But when you've got big declines as we as we 94 00:05:30,560 --> 00:05:35,120 Speaker 1: had um certainly since the outbreak of the war, you 95 00:05:35,160 --> 00:05:37,120 Speaker 1: can get a big rally. And just as you're asking 96 00:05:37,120 --> 00:05:39,919 Speaker 1: the question is what from here? My view is the 97 00:05:40,040 --> 00:05:43,840 Speaker 1: SMP is more likely to return to something like four 98 00:05:43,920 --> 00:05:47,520 Speaker 1: thousand before it breaks the new highs UH such as 99 00:05:47,560 --> 00:05:50,920 Speaker 1: five thousand. Five thousand's not totally out of reach, but 100 00:05:51,480 --> 00:05:55,240 Speaker 1: to me, it's something more of a three um UH 101 00:05:55,560 --> 00:05:59,880 Speaker 1: target rather than this year at this stage. So I 102 00:06:00,080 --> 00:06:04,359 Speaker 1: don't think it's a dead cat bounce, but this cat's injured, 103 00:06:04,920 --> 00:06:07,640 Speaker 1: and I don't think this cat can bounce higher from here. 104 00:06:09,520 --> 00:06:12,320 Speaker 1: And David, I think you actually recently cut your target 105 00:06:12,400 --> 00:06:14,520 Speaker 1: on the SMP five hundreds, so I wanted to ask 106 00:06:14,560 --> 00:06:17,600 Speaker 1: you what you're thinking was behind that. We cut our 107 00:06:17,640 --> 00:06:22,520 Speaker 1: target twice uh so far this year. We went into 108 00:06:22,600 --> 00:06:24,960 Speaker 1: the year with a five thousand target for the SMP 109 00:06:25,080 --> 00:06:27,000 Speaker 1: five hundred at the end of this year, because I 110 00:06:27,080 --> 00:06:29,960 Speaker 1: just said, I'm thinking that's more appropriate for the end 111 00:06:29,960 --> 00:06:32,679 Speaker 1: of three at this stage, maybe a little bit higher 112 00:06:33,000 --> 00:06:36,200 Speaker 1: if inflation finally does come back down close toward the 113 00:06:36,200 --> 00:06:39,440 Speaker 1: FEDS two percent target. But we cut our target from 114 00:06:39,480 --> 00:06:43,120 Speaker 1: five thousand to forty eight hundred in mid February on 115 00:06:43,880 --> 00:06:48,040 Speaker 1: very high inflation and that, you know, causing us some concerns, 116 00:06:48,440 --> 00:06:51,440 Speaker 1: and then all of our fuel being added to the 117 00:06:51,440 --> 00:06:54,839 Speaker 1: inflation fire with the invasion, so then we cut again 118 00:06:55,440 --> 00:07:00,240 Speaker 1: tore on the SMP. What we've tried to explain is 119 00:07:00,279 --> 00:07:04,880 Speaker 1: that we only slightly trimmed our SMP earnings estimates. We 120 00:07:04,920 --> 00:07:08,320 Speaker 1: went into the year with a two eight dollar SMP 121 00:07:08,560 --> 00:07:13,560 Speaker 1: earnings estimate. We trimmed it to two. I do think 122 00:07:13,560 --> 00:07:15,240 Speaker 1: there's a little bit of risk to the downside of 123 00:07:16,600 --> 00:07:19,160 Speaker 1: but we try to convey that we were raising our 124 00:07:19,360 --> 00:07:23,080 Speaker 1: estimates at the energy sector by three or four dollars 125 00:07:23,120 --> 00:07:26,960 Speaker 1: but trimming it everywhere else by about six bucks. And 126 00:07:27,000 --> 00:07:30,160 Speaker 1: I think there's still remains to be seen how well 127 00:07:31,160 --> 00:07:35,119 Speaker 1: the consumer sectors, the manufacturing part of the sm people 128 00:07:35,160 --> 00:07:39,600 Speaker 1: weather this high high costs of production and high costs 129 00:07:39,640 --> 00:07:43,600 Speaker 1: now of of consumption. You know, David, I was. I 130 00:07:43,680 --> 00:07:47,560 Speaker 1: noticed you are overweight banks, which I find interesting. Uh. 131 00:07:47,880 --> 00:07:51,000 Speaker 1: Note you sent us over before the podcast. Uh, you 132 00:07:51,080 --> 00:07:53,640 Speaker 1: wrote that we set the FED fighting inflation with rate 133 00:07:53,720 --> 00:07:56,239 Speaker 1: hikes is good for banks even if the curve goes 134 00:07:56,280 --> 00:07:59,880 Speaker 1: flat or slightly inverted. I wouldn't unpack that a little bit, 135 00:08:00,000 --> 00:08:02,240 Speaker 1: I mean to me, I guess the big question is 136 00:08:02,720 --> 00:08:04,400 Speaker 1: on a lot of people's mind is that notion of 137 00:08:04,480 --> 00:08:07,680 Speaker 1: deposit beta. You know, if if the FED lifts interest rates, 138 00:08:07,760 --> 00:08:12,280 Speaker 1: the short term rates rise in response, banks won't necessarily 139 00:08:12,520 --> 00:08:16,200 Speaker 1: raise those deposit rates right away. Um, you know, and 140 00:08:16,240 --> 00:08:18,560 Speaker 1: I'm curious how you're thinking about that. It seems like 141 00:08:18,560 --> 00:08:21,040 Speaker 1: in the last rate hike cycle, we saw that that 142 00:08:21,040 --> 00:08:25,640 Speaker 1: that banks were very very reluctant to raise deposit rates. Um, 143 00:08:26,080 --> 00:08:29,040 Speaker 1: they're not exactly competing for deposits these days, they have 144 00:08:29,120 --> 00:08:30,960 Speaker 1: plenty of them. Is that is that part of your 145 00:08:30,960 --> 00:08:33,360 Speaker 1: thinking or is there something else about things banks? The 146 00:08:33,400 --> 00:08:36,720 Speaker 1: banks are flush with cash, and the evidence of that 147 00:08:36,800 --> 00:08:39,520 Speaker 1: is simply the reserves that the banks are holding at 148 00:08:39,520 --> 00:08:44,280 Speaker 1: the Federal Reserve. So first, as the Federal Reserve raises rates, 149 00:08:44,720 --> 00:08:48,679 Speaker 1: banks will earn higher interest immediately on the reserves they 150 00:08:49,120 --> 00:08:52,960 Speaker 1: have at the at the Fed. And uh, it's gone 151 00:08:53,000 --> 00:08:58,160 Speaker 1: from zero to five basis points, and the Fed seems 152 00:08:58,160 --> 00:09:01,840 Speaker 1: pretty committed to hike rates six more times this year 153 00:09:01,880 --> 00:09:05,000 Speaker 1: every remaining meeting. Remains to be seen if they slip 154 00:09:05,000 --> 00:09:08,120 Speaker 1: in a couple of fifty basis point hikes, but immediately 155 00:09:08,200 --> 00:09:11,880 Speaker 1: that boots the net interest margins at the banks, and 156 00:09:12,080 --> 00:09:15,040 Speaker 1: to the extent that they are needing to pass some 157 00:09:15,080 --> 00:09:17,959 Speaker 1: of that forward to the deposit base. As you said, 158 00:09:19,280 --> 00:09:21,560 Speaker 1: it looks to me that the biggest banks have so 159 00:09:21,640 --> 00:09:27,319 Speaker 1: much excess cash that they will unlikely be raising rates 160 00:09:27,400 --> 00:09:30,160 Speaker 1: as fast. You can think of the deposit data is 161 00:09:30,280 --> 00:09:34,440 Speaker 1: probably it's gonna below one, probably point five. I have 162 00:09:34,480 --> 00:09:37,200 Speaker 1: a feeling that it's not just there'll be a long 163 00:09:37,320 --> 00:09:40,640 Speaker 1: lag as well. So what you need to keep in 164 00:09:40,679 --> 00:09:44,640 Speaker 1: mind is that net interest margins are are not the 165 00:09:44,679 --> 00:09:47,880 Speaker 1: only part of bank profitability, but they've been the very 166 00:09:47,920 --> 00:09:52,120 Speaker 1: depressed part of bank profitability. And I see that finally 167 00:09:52,160 --> 00:09:55,440 Speaker 1: going in the right direction because the FED is raising 168 00:09:55,520 --> 00:09:57,960 Speaker 1: rates to fight inflation, and therefore we think that banks 169 00:09:57,960 --> 00:10:00,720 Speaker 1: can be a better inflation protection play than most people 170 00:10:00,760 --> 00:10:04,559 Speaker 1: give them credit for. But what's key here is that 171 00:10:04,920 --> 00:10:08,120 Speaker 1: when you look at energy and oil, people think, well, 172 00:10:08,200 --> 00:10:11,680 Speaker 1: that's maybe a more obvious inflation protection play, particularly of 173 00:10:11,679 --> 00:10:14,319 Speaker 1: geopolitical risks. But you have to ask yourself the question, 174 00:10:14,320 --> 00:10:17,600 Speaker 1: how sustainable is oil at these levels? Whereas I think 175 00:10:17,600 --> 00:10:20,640 Speaker 1: the increase in interest rates there'll be plenty more to come, 176 00:10:21,320 --> 00:10:24,360 Speaker 1: and we are finally just moving into more normal interest rates. 177 00:10:24,400 --> 00:10:27,839 Speaker 1: So it's it's a move upward in earnings, but a 178 00:10:27,920 --> 00:10:32,719 Speaker 1: move upward and also sustainable earnings at the banks. Whereas energy, yes, 179 00:10:32,760 --> 00:10:35,760 Speaker 1: they're gonna be very profitable under these conditions, let's see 180 00:10:35,760 --> 00:10:46,040 Speaker 1: how long that lasts. So speaking of the yield curve 181 00:10:46,080 --> 00:10:48,760 Speaker 1: and the inversion that was obviously one of the big 182 00:10:48,800 --> 00:10:52,120 Speaker 1: stories this week. So I have a Reagan special. I 183 00:10:52,160 --> 00:10:54,559 Speaker 1: have a two part question. So it's going to be lengthy, 184 00:10:54,679 --> 00:10:58,480 Speaker 1: but not as lengthy as Reagan's questions usually are. But 185 00:10:58,520 --> 00:11:00,800 Speaker 1: I wanted to ask you about this. You work on that, 186 00:11:01,840 --> 00:11:04,960 Speaker 1: I'll work on it, yeah, But I wanted to ask 187 00:11:04,960 --> 00:11:08,000 Speaker 1: you about the seemingly conflicting signals in the stock market 188 00:11:08,120 --> 00:11:11,239 Speaker 1: versus the bond market. And then the thing that everybody 189 00:11:11,400 --> 00:11:15,360 Speaker 1: is wondering about is is this time different in terms 190 00:11:15,400 --> 00:11:21,600 Speaker 1: of the yield curve inversion. Well, I would just jump 191 00:11:21,600 --> 00:11:24,359 Speaker 1: into saying that the yeld curve is is an important indicator. 192 00:11:24,400 --> 00:11:27,360 Speaker 1: We watch it, watch it all the time, but you 193 00:11:27,400 --> 00:11:31,160 Speaker 1: know it's effectiveness is just not as strong as as 194 00:11:31,200 --> 00:11:34,600 Speaker 1: as it's fable to be um. In fact, the YEO 195 00:11:34,720 --> 00:11:39,800 Speaker 1: curve not It has been wrong. It's been wrong each 196 00:11:39,840 --> 00:11:42,560 Speaker 1: of the long cycles UH in the United States and 197 00:11:42,640 --> 00:11:45,520 Speaker 1: nineteen sixties and the nineteen eighties and the nineteen nineties, 198 00:11:45,880 --> 00:11:50,120 Speaker 1: we had flat to inverted curves on the tenure yield 199 00:11:50,120 --> 00:11:52,319 Speaker 1: to overnight rate or even the three month bill rate, 200 00:11:52,360 --> 00:11:53,960 Speaker 1: which is a part of the curve that we watch. 201 00:11:54,440 --> 00:11:56,560 Speaker 1: Some people debate this. I think of the two to 202 00:11:56,640 --> 00:11:59,439 Speaker 1: ten year part of the curve is more about term premiums. 203 00:12:00,080 --> 00:12:02,680 Speaker 1: But when you look at the overnight rate relative to 204 00:12:02,720 --> 00:12:06,240 Speaker 1: ten years, you're getting more of an economics signal, and 205 00:12:06,280 --> 00:12:09,360 Speaker 1: you're also getting the impact of what the Fed is 206 00:12:09,440 --> 00:12:12,559 Speaker 1: doing to the economy immediately with the Fed funds rate. 207 00:12:12,960 --> 00:12:15,640 Speaker 1: So I look at the tenure yield minus the Fed 208 00:12:15,679 --> 00:12:19,360 Speaker 1: funds rate, and the curve went flat to invert it 209 00:12:19,400 --> 00:12:25,319 Speaker 1: in in nineteen sixty six, u uh and and and 210 00:12:25,320 --> 00:12:28,640 Speaker 1: and and we had an economic expansion that continued. It 211 00:12:28,679 --> 00:12:34,199 Speaker 1: also happened. And what's interesting about that is that of 212 00:12:34,240 --> 00:12:37,240 Speaker 1: the ten times that the curve has really gone flat 213 00:12:37,360 --> 00:12:40,480 Speaker 1: or clearly inverted, three of the times it was wrong, 214 00:12:40,600 --> 00:12:43,760 Speaker 1: we had economic expansion for several more years. And the 215 00:12:43,960 --> 00:12:47,040 Speaker 1: seven out of ten times it was right at the time, 216 00:12:47,280 --> 00:12:49,640 Speaker 1: it still took one or two years for a recession 217 00:12:49,640 --> 00:12:53,040 Speaker 1: to hit. So it's a useful indicator, but it's a 218 00:12:53,559 --> 00:12:57,080 Speaker 1: It's not infallible, and I think of it as being 219 00:12:57,160 --> 00:13:00,600 Speaker 1: just about as accurate as simply the length of the 220 00:13:00,640 --> 00:13:04,080 Speaker 1: economic cycle. And we always have this mental model of 221 00:13:04,440 --> 00:13:08,840 Speaker 1: how long should a US expansion be. We've I have 222 00:13:08,920 --> 00:13:11,439 Speaker 1: moved and most of us have moved from thinking economic 223 00:13:11,480 --> 00:13:14,640 Speaker 1: expansions on average or typically from five to seven years, 224 00:13:14,640 --> 00:13:17,720 Speaker 1: can be ten years or longer um. But you know, 225 00:13:17,760 --> 00:13:21,160 Speaker 1: we've shortened our expected lifespan of this cycle given the 226 00:13:21,200 --> 00:13:25,600 Speaker 1: inflation problems. So just as the cycle ages is as 227 00:13:25,720 --> 00:13:29,040 Speaker 1: much of a prediction of it's of the next procession 228 00:13:29,559 --> 00:13:32,559 Speaker 1: as is the the inversion of the curve. Processions happen. 229 00:13:32,920 --> 00:13:35,880 Speaker 1: That's why the Yel curve is right. Processions just eventually 230 00:13:36,160 --> 00:13:39,480 Speaker 1: typically happen, but they don't happen um in a short 231 00:13:39,520 --> 00:13:42,280 Speaker 1: time frame after YEO curbing versions and the curve has 232 00:13:42,320 --> 00:13:44,200 Speaker 1: been wrong. I would say thirty percent of the time. 233 00:13:45,360 --> 00:13:47,400 Speaker 1: You know, well, Dona, just because I know you're wondering. No, 234 00:13:47,559 --> 00:13:50,280 Speaker 1: I do not remember the inversion of the nineteen sixties 235 00:13:50,360 --> 00:13:53,800 Speaker 1: if if if, if you're wondering, I was wondering well, 236 00:13:53,840 --> 00:13:55,840 Speaker 1: and and and the one he mentioned before that the 237 00:13:55,960 --> 00:14:01,640 Speaker 1: nies and yeah, yeah, out that too, because you know, 238 00:14:01,880 --> 00:14:07,080 Speaker 1: in nineteen sixty six, FED chairman William M. Chase Martin 239 00:14:07,440 --> 00:14:09,800 Speaker 1: was really aggressive with inflation at the time, and he 240 00:14:09,880 --> 00:14:12,960 Speaker 1: hiked aggressively, and there was actually a brief bear market 241 00:14:13,520 --> 00:14:17,880 Speaker 1: um for the SMP five hundred, but he hiked and 242 00:14:17,920 --> 00:14:21,280 Speaker 1: then he eased off cut a little bit, and we 243 00:14:21,320 --> 00:14:24,080 Speaker 1: had economic expansion to nineteen seventies. So not only was 244 00:14:24,120 --> 00:14:28,240 Speaker 1: the curved wrong, uh during nineteen sixty six, but there 245 00:14:28,320 --> 00:14:31,840 Speaker 1: was a soft landing in nineteen sixty seven. There was 246 00:14:31,960 --> 00:14:35,440 Speaker 1: also a soft landing in ninety five after the nine 247 00:14:35,680 --> 00:14:38,200 Speaker 1: eight four hiking, which was kind of vokers, you know, 248 00:14:38,400 --> 00:14:40,920 Speaker 1: last word to markets of I don't think I'm not 249 00:14:40,960 --> 00:14:43,480 Speaker 1: going to fight inflation if it comes again. And then 250 00:14:43,600 --> 00:14:47,280 Speaker 1: nine four, which is the dreaded year to all bond 251 00:14:47,360 --> 00:14:51,440 Speaker 1: investors of of a bond bear market. Well, the FED 252 00:14:51,520 --> 00:14:55,320 Speaker 1: did stop eventually and pulled back a little bit, and uh, 253 00:14:55,520 --> 00:14:58,480 Speaker 1: the the the the economy continued to expand all the 254 00:14:58,480 --> 00:15:01,520 Speaker 1: way through the late nineteen nineties. So I hear people 255 00:15:01,520 --> 00:15:03,840 Speaker 1: say all the time the FED is never engineered or 256 00:15:03,840 --> 00:15:07,800 Speaker 1: soft landing, but it has engineered a soft landing in 257 00:15:07,880 --> 00:15:10,920 Speaker 1: each of the long cycles, just as the curve is 258 00:15:10,960 --> 00:15:14,840 Speaker 1: wrong about the fedsibility to engineer soft landing and those 259 00:15:15,160 --> 00:15:19,520 Speaker 1: long cycles. I actually wanted to ask you about that too, 260 00:15:19,520 --> 00:15:22,800 Speaker 1: because I think we heard a new phrase this week. 261 00:15:23,080 --> 00:15:25,920 Speaker 1: One of the FED members called it a safe landing. 262 00:15:26,280 --> 00:15:28,720 Speaker 1: So I wanted to ask you what what probability you 263 00:15:28,800 --> 00:15:33,680 Speaker 1: put on a soft landing or safe landing this time around? Yeah, fair, 264 00:15:33,800 --> 00:15:37,080 Speaker 1: fair question. I mean, you know, soft landing versus crash landing, 265 00:15:37,240 --> 00:15:40,880 Speaker 1: soft landing versus turbulent bouncy you know kind of you 266 00:15:40,920 --> 00:15:42,920 Speaker 1: get off the plane. Thank got to survive that flight. 267 00:15:43,240 --> 00:15:46,400 Speaker 1: We've all had many of us have had one of those. Uh, 268 00:15:46,480 --> 00:15:49,680 Speaker 1: it's gonna be bouncy. And I think the FED knows that. 269 00:15:50,160 --> 00:15:55,320 Speaker 1: I think they're concerned as the pilot here, and I 270 00:15:55,360 --> 00:15:58,720 Speaker 1: think that's one of the reasons why they're talking so hawkishly, 271 00:15:59,480 --> 00:16:03,960 Speaker 1: is that they probably figured the more hawkishly they speak, hopefully, 272 00:16:04,000 --> 00:16:07,920 Speaker 1: the less hawkish they need to act. So I know 273 00:16:07,960 --> 00:16:11,520 Speaker 1: I I and I I welcome their hawkers speak. I 274 00:16:11,600 --> 00:16:15,360 Speaker 1: welcome their UH fight against inflation, and again it's good 275 00:16:15,360 --> 00:16:17,880 Speaker 1: for the banks. I just hope they don't push too 276 00:16:17,920 --> 00:16:21,120 Speaker 1: hard because I don't know that they can bring inflation 277 00:16:21,160 --> 00:16:23,840 Speaker 1: down as fast as they would like it to given 278 00:16:24,040 --> 00:16:29,120 Speaker 1: the external factors like oil prices geo political conflict driving 279 00:16:29,160 --> 00:16:33,000 Speaker 1: inflation UM so high and above their target. It doesn't 280 00:16:33,040 --> 00:16:35,200 Speaker 1: mean inflation needs to stay at seven eight percent. It 281 00:16:35,240 --> 00:16:38,200 Speaker 1: can work its way down toward the FEDS target, but 282 00:16:38,240 --> 00:16:40,520 Speaker 1: it's gonna take time for the inflation to get back 283 00:16:40,520 --> 00:16:42,440 Speaker 1: to the two percent target. And I don't think the 284 00:16:42,480 --> 00:16:44,680 Speaker 1: feture to Russian I think the fetcher just take actions 285 00:16:44,680 --> 00:16:49,480 Speaker 1: that ensure it's trending the way they wanted to trend. David, 286 00:16:49,520 --> 00:16:52,960 Speaker 1: I wanted to jump Overseas a little bit and talk 287 00:16:53,000 --> 00:16:56,320 Speaker 1: about Asia because I know you are overweight Asia, and 288 00:16:56,520 --> 00:16:59,360 Speaker 1: we talk about a roller coaster when it comes to China. 289 00:16:59,560 --> 00:17:01,800 Speaker 1: You know, not too long ago where everyone was saying 290 00:17:01,840 --> 00:17:05,800 Speaker 1: this market is simply uninvestable. Uh, there's too much regulatory risk, 291 00:17:05,840 --> 00:17:08,680 Speaker 1: too much policy risk. And then boy that that turned 292 00:17:08,680 --> 00:17:10,520 Speaker 1: out to be sort of the wrong take. In the 293 00:17:10,520 --> 00:17:13,639 Speaker 1: short term, it must be keeping up at night watching 294 00:17:14,040 --> 00:17:16,440 Speaker 1: watching that Chinese market. But how are you thinking about 295 00:17:16,600 --> 00:17:21,480 Speaker 1: China specifically? You know now that Shanghai is locking down. Um. 296 00:17:22,240 --> 00:17:23,879 Speaker 1: In your notes you point out, you know, we're not 297 00:17:24,000 --> 00:17:26,800 Speaker 1: quite sure if if China's on our side or the 298 00:17:26,880 --> 00:17:29,320 Speaker 1: Russian side. They're trying to be Switzerland in this and 299 00:17:29,440 --> 00:17:31,760 Speaker 1: who knows where what directions that that's gonna go. But 300 00:17:32,320 --> 00:17:33,960 Speaker 1: how are you thinking about China right now? Are you? 301 00:17:33,960 --> 00:17:40,600 Speaker 1: Are you bullish? Oh? I'm well, yes, I'm overweighted. Uh, 302 00:17:41,040 --> 00:17:43,359 Speaker 1: and and it is still a small part of our 303 00:17:43,400 --> 00:17:47,880 Speaker 1: asset allocation portfolios, but we are overweighted. And I guess 304 00:17:47,920 --> 00:17:50,720 Speaker 1: I would say maybe my conviction does online with the 305 00:17:51,000 --> 00:17:56,000 Speaker 1: with the overweight, um the amount of the overweight, But 306 00:17:56,400 --> 00:17:59,399 Speaker 1: our our view has been that it's worth the weight, 307 00:18:00,040 --> 00:18:04,000 Speaker 1: it's worth the turbulence as long as China shows us 308 00:18:04,119 --> 00:18:07,680 Speaker 1: that they're you know, with the West rather than doing 309 00:18:07,760 --> 00:18:11,320 Speaker 1: something that's against the West. And it's not just a 310 00:18:11,359 --> 00:18:15,160 Speaker 1: matter of you know, will they be hum a good 311 00:18:15,200 --> 00:18:19,000 Speaker 1: player in the world, in the world community, but will 312 00:18:19,040 --> 00:18:24,560 Speaker 1: they also give you know, some freedom to their entrepreneurs 313 00:18:24,600 --> 00:18:28,360 Speaker 1: and their big leading private companies, their tech companies, and 314 00:18:28,160 --> 00:18:30,439 Speaker 1: and and I think this is an economy that needs 315 00:18:30,480 --> 00:18:36,040 Speaker 1: more innovation to address its challenges, and and and and 316 00:18:36,040 --> 00:18:38,720 Speaker 1: and usually frame markets and entrepreneurs help you figure those 317 00:18:38,760 --> 00:18:42,200 Speaker 1: things out. So when it comes to China, we went 318 00:18:42,240 --> 00:18:45,880 Speaker 1: into the year thinking that one kind of conciliatory speech 319 00:18:45,960 --> 00:18:49,440 Speaker 1: from jijimping to the world and and to investors would 320 00:18:49,440 --> 00:18:53,080 Speaker 1: get that market rallying really strongly. But you know, the 321 00:18:53,119 --> 00:18:56,080 Speaker 1: market fell more than we expected. And finally we got 322 00:18:56,080 --> 00:19:00,200 Speaker 1: a little bit of a consuliatory speech from Juli um 323 00:19:00,440 --> 00:19:05,040 Speaker 1: uh sorry lou Lee, who uh and uh and and 324 00:19:05,040 --> 00:19:07,399 Speaker 1: and and and ever since, the Chinese markets has had 325 00:19:07,400 --> 00:19:09,960 Speaker 1: a nice strong bounce off the bottom, but it's still 326 00:19:10,040 --> 00:19:12,400 Speaker 1: had a had a tough year and down a lot 327 00:19:12,440 --> 00:19:15,560 Speaker 1: from the highs. What we're doing from this point on 328 00:19:15,800 --> 00:19:20,560 Speaker 1: is is watching whether China gets distances itself more from Russia. 329 00:19:20,960 --> 00:19:23,720 Speaker 1: I think if China is scared straight by the way 330 00:19:23,720 --> 00:19:29,080 Speaker 1: the West reacts to unacceptable behavior out of Russia, China reacts, 331 00:19:29,160 --> 00:19:30,800 Speaker 1: you know, the right way to that, that should help 332 00:19:30,880 --> 00:19:35,639 Speaker 1: Chinese equities and uh. If they show that they're that 333 00:19:35,720 --> 00:19:39,080 Speaker 1: they really value their free markets and there and there 334 00:19:39,359 --> 00:19:42,879 Speaker 1: their companies, Uh, then I think those equities have a 335 00:19:42,880 --> 00:19:45,760 Speaker 1: long way to climb upward because there at such steep 336 00:19:45,800 --> 00:19:50,080 Speaker 1: discounts given the quality of the businesses that they've got um, 337 00:19:50,119 --> 00:19:54,760 Speaker 1: particularly their technology type businesses and digital consumer type businesses, 338 00:19:55,119 --> 00:19:58,840 Speaker 1: there are big, big discounts to the comparable businesses out 339 00:19:58,840 --> 00:20:02,120 Speaker 1: of the United States. And the thing about China's it's 340 00:20:02,160 --> 00:20:05,320 Speaker 1: like Texas, everything is just bigger. So if they don't 341 00:20:05,320 --> 00:20:09,359 Speaker 1: repress these businesses, they've got a world of potential and 342 00:20:09,400 --> 00:20:12,240 Speaker 1: they can really help trying to find solutions to their challenges. 343 00:20:13,600 --> 00:20:16,080 Speaker 1: What about here at home? What sorts of things do 344 00:20:16,119 --> 00:20:17,960 Speaker 1: you like at home? I think when I was reading 345 00:20:17,960 --> 00:20:21,040 Speaker 1: your note, you like tech on communications and also at 346 00:20:21,080 --> 00:20:24,720 Speaker 1: the same time, what do you not like? Well, we're 347 00:20:24,960 --> 00:20:28,640 Speaker 1: basically equal it on tech in a little overweight on communications. 348 00:20:28,640 --> 00:20:31,119 Speaker 1: And that's the big part of the SMP five. I mean, 349 00:20:31,160 --> 00:20:34,600 Speaker 1: the SMP is a growth index. The SMP is a 350 00:20:34,640 --> 00:20:38,760 Speaker 1: digital index. At this stage. When you add up to 351 00:20:38,840 --> 00:20:42,520 Speaker 1: tech the communications sector, Internet, retailing and a handful of 352 00:20:42,560 --> 00:20:46,480 Speaker 1: other things you can find other industries, um, you get 353 00:20:47,160 --> 00:20:52,320 Speaker 1: the SMP being digital. So our view is a little 354 00:20:52,359 --> 00:20:56,800 Speaker 1: tactically cautious, but long term constructive, particularly if inflation can 355 00:20:56,840 --> 00:21:00,480 Speaker 1: come down on the SMP and thus the same on technlogy. 356 00:21:01,520 --> 00:21:06,560 Speaker 1: But my preferences are healthcare banks as we talked about 357 00:21:07,200 --> 00:21:09,520 Speaker 1: UH and healthcare is just an area where I find 358 00:21:09,520 --> 00:21:13,520 Speaker 1: the valuations to be very on demanding um and and 359 00:21:13,640 --> 00:21:17,359 Speaker 1: not connected to interest rates at all. And we continuously 360 00:21:17,440 --> 00:21:21,040 Speaker 1: see good sales and earnings growth coming out of the 361 00:21:21,440 --> 00:21:24,960 Speaker 1: pharmaceutical companies and the biotech companies, particularly if you just 362 00:21:25,080 --> 00:21:28,080 Speaker 1: lump them all together, because it's hard to even distinguish 363 00:21:28,119 --> 00:21:31,600 Speaker 1: them anymore. They're all medicine makers and they all have 364 00:21:31,760 --> 00:21:36,040 Speaker 1: very enviable economies. Of scale and profitability when they have 365 00:21:36,119 --> 00:21:40,800 Speaker 1: a breakthrough and and and a winner. And I'm optimistic 366 00:21:41,080 --> 00:21:45,640 Speaker 1: on on on innovation. I'm just so encouraged by what 367 00:21:46,000 --> 00:21:48,359 Speaker 1: the medicine makers were able to do around the pandemic. 368 00:21:48,359 --> 00:21:51,120 Speaker 1: And I think they've impressed themselves that they are more 369 00:21:51,200 --> 00:21:57,480 Speaker 1: motivated to reach for um more cures. And I think 370 00:21:57,480 --> 00:22:00,240 Speaker 1: politicians need to understand that the medicine makers are part 371 00:22:00,280 --> 00:22:03,480 Speaker 1: of the solution, not the problem. Healthcare is something we 372 00:22:03,520 --> 00:22:06,000 Speaker 1: all need. It's gonna cost more, and I believe if 373 00:22:06,000 --> 00:22:09,360 Speaker 1: we let these healthcare companies thrive and do what they 374 00:22:09,400 --> 00:22:14,360 Speaker 1: do best without worrying about political interference or interferencial price caps, 375 00:22:14,359 --> 00:22:16,960 Speaker 1: that this sector can do extremely well the rest of 376 00:22:16,960 --> 00:22:21,600 Speaker 1: this decade and longer. What David, I, I know one 377 00:22:21,640 --> 00:22:25,199 Speaker 1: thing you're not super excited about is housing. UM a 378 00:22:25,240 --> 00:22:28,159 Speaker 1: little worried about housing as as rates go up. And 379 00:22:28,200 --> 00:22:31,480 Speaker 1: I wanted to ask, you know, obviously, if if you're 380 00:22:31,480 --> 00:22:33,879 Speaker 1: old enough and you hear a downturn in housing, you 381 00:22:34,200 --> 00:22:37,200 Speaker 1: think back to oh eight oh nine and how vulnerable 382 00:22:37,280 --> 00:22:41,199 Speaker 1: the financial system was to that crisis. Obviously, you know, 383 00:22:41,200 --> 00:22:44,159 Speaker 1: I think the consensus is that it's it's sort of 384 00:22:44,440 --> 00:22:47,120 Speaker 1: you know, in better shape to withstand any any type 385 00:22:47,119 --> 00:22:50,200 Speaker 1: of housing crisis this time. But still, I gotta think 386 00:22:50,280 --> 00:22:52,840 Speaker 1: that a housing slowdown is a pretty nasty drag on 387 00:22:52,880 --> 00:22:55,520 Speaker 1: the economy. You know. I remember reading somewhere that I 388 00:22:55,520 --> 00:22:58,320 Speaker 1: think it was Tom Lee at a fund strat UH 389 00:22:58,440 --> 00:23:00,760 Speaker 1: years ago said that every new how use that's built 390 00:23:00,960 --> 00:23:04,480 Speaker 1: is you know, adds three jobs to the economy something 391 00:23:04,520 --> 00:23:07,080 Speaker 1: like that. Um and who knows if that number is right, 392 00:23:07,160 --> 00:23:11,400 Speaker 1: But no, boy, I gotta wonder about a cooling off 393 00:23:11,440 --> 00:23:13,920 Speaker 1: of housing if that's a major headwin of the economy. 394 00:23:13,960 --> 00:23:15,879 Speaker 1: Is that is that sort of where you would center 395 00:23:15,920 --> 00:23:18,600 Speaker 1: your attention to look for any any sort of ability. 396 00:23:19,240 --> 00:23:21,720 Speaker 1: The thing about housing is that it's an important part 397 00:23:21,720 --> 00:23:26,119 Speaker 1: of the U. S economy and uh and and there's 398 00:23:26,160 --> 00:23:29,000 Speaker 1: also a very important relationship between housing and interest rates. 399 00:23:29,000 --> 00:23:31,240 Speaker 1: And it's not just how interest rates affect the value 400 00:23:31,240 --> 00:23:35,000 Speaker 1: of housing. It's also how housing and the increase in 401 00:23:35,000 --> 00:23:37,040 Speaker 1: the housing stock and the increase in the value of 402 00:23:37,040 --> 00:23:39,280 Speaker 1: the housing stock has a lot to do with loan growth. 403 00:23:39,600 --> 00:23:42,480 Speaker 1: So you know, housing is something that any you know, 404 00:23:42,560 --> 00:23:45,639 Speaker 1: economists thinking about g d P should think a lot about. 405 00:23:46,080 --> 00:23:48,479 Speaker 1: And it also has a lot of influence on interest 406 00:23:48,600 --> 00:23:52,199 Speaker 1: rates back and forth loan growth as well as being 407 00:23:52,240 --> 00:23:55,040 Speaker 1: a big part of the profitability loan growth and and 408 00:23:55,040 --> 00:23:58,000 Speaker 1: and interest rates of banks. So when you're thinking about 409 00:23:58,040 --> 00:24:01,760 Speaker 1: the economy and you're thinking about banks, you should think 410 00:24:01,800 --> 00:24:05,280 Speaker 1: about housing. But the SMP five has never been as 411 00:24:05,520 --> 00:24:08,600 Speaker 1: sensitive to that. The SMP is a lot more sensitive 412 00:24:08,640 --> 00:24:12,400 Speaker 1: to the digital economy, and it's also it's a big 413 00:24:12,440 --> 00:24:15,520 Speaker 1: manufacturer and commodity producer. So what I'm getting at is 414 00:24:15,520 --> 00:24:18,399 Speaker 1: our view on housing is kind of uh. Yet, we 415 00:24:18,480 --> 00:24:23,160 Speaker 1: expected to slow down, and we expected to actually slow 416 00:24:23,240 --> 00:24:26,000 Speaker 1: down quite a bit in the areas of home goods 417 00:24:26,600 --> 00:24:31,440 Speaker 1: and maybe even home improvement. Um. But I do think 418 00:24:31,560 --> 00:24:34,720 Speaker 1: that and and existing home sales have slowed down a lot, 419 00:24:34,720 --> 00:24:37,320 Speaker 1: and I expect loan growth to slow down, but banks 420 00:24:37,320 --> 00:24:38,920 Speaker 1: will still make more money on the interest rates that 421 00:24:39,000 --> 00:24:42,720 Speaker 1: we talked about. I would just point out the nuances. 422 00:24:42,760 --> 00:24:46,640 Speaker 1: I think new single family new housing starts. I think 423 00:24:46,640 --> 00:24:49,600 Speaker 1: they keep grinding higher. I think the prices of housing 424 00:24:49,760 --> 00:24:53,080 Speaker 1: is at a level where it's still quite profitable for 425 00:24:53,240 --> 00:24:56,040 Speaker 1: home builders to build homes. Uh and I think they'll 426 00:24:56,119 --> 00:24:59,919 Speaker 1: keep doing it. And uh So I expected to be 427 00:25:00,760 --> 00:25:04,040 Speaker 1: volatile as we're going through rising interest rates and a 428 00:25:04,080 --> 00:25:06,960 Speaker 1: lot of debates about where interest rates peak. So that's 429 00:25:06,960 --> 00:25:10,639 Speaker 1: not great for home builders, but within the whole housing world, 430 00:25:11,680 --> 00:25:15,679 Speaker 1: I'm comfortable with home builders and I still like banks. 431 00:25:15,720 --> 00:25:18,760 Speaker 1: I don't expect any kind of credit cycle UH downturn, 432 00:25:19,640 --> 00:25:23,440 Speaker 1: but I am cautious on on home goods and and 433 00:25:23,560 --> 00:25:29,919 Speaker 1: home and and and home improvement type retailers. Another story 434 00:25:30,000 --> 00:25:34,360 Speaker 1: that made waves this week was the CEO of Restoration Hardware, 435 00:25:34,400 --> 00:25:36,399 Speaker 1: which I think is just called r H now, but 436 00:25:36,960 --> 00:25:39,840 Speaker 1: he UH on a conference call. He was saying that 437 00:25:39,880 --> 00:25:43,840 Speaker 1: consumer spending was slowing and that there's demand destruction related 438 00:25:43,880 --> 00:25:46,720 Speaker 1: to inflation. So I wanted to ask you to to 439 00:25:46,920 --> 00:25:49,959 Speaker 1: look ahead and talk about what your expectations are for 440 00:25:50,000 --> 00:25:52,000 Speaker 1: this coming earning season and if you're going to be 441 00:25:52,080 --> 00:25:55,639 Speaker 1: looking for those types of stories in terms of, you know, 442 00:25:55,720 --> 00:25:59,720 Speaker 1: what's happening within corporate America. So we're going to go 443 00:25:59,800 --> 00:26:03,120 Speaker 1: into to earning season and in a couple of weeks 444 00:26:03,240 --> 00:26:08,080 Speaker 1: and it will almost certainly be as it always is, 445 00:26:08,160 --> 00:26:10,960 Speaker 1: that two thirds of the companies will beat on earnings 446 00:26:11,000 --> 00:26:14,239 Speaker 1: and maybe half on sales, and companies that miss will 447 00:26:14,280 --> 00:26:17,240 Speaker 1: get beat up really badly, and the companies that beat 448 00:26:17,280 --> 00:26:19,520 Speaker 1: will will go up. But not as much as the 449 00:26:19,560 --> 00:26:22,720 Speaker 1: ones that miss go down. That's just always the case. Uh. 450 00:26:22,840 --> 00:26:26,719 Speaker 1: What I always trying to focus on is the sequential growth. 451 00:26:27,520 --> 00:26:30,520 Speaker 1: And I do believe that Q one earnings, even beyond 452 00:26:30,560 --> 00:26:33,680 Speaker 1: the seasonal effects, will be will be below Q four. 453 00:26:34,040 --> 00:26:39,280 Speaker 1: Q four was about fifty five dos SMP earnings, UH one, 454 00:26:39,359 --> 00:26:43,080 Speaker 1: and I don't think we do as well in Q one, 455 00:26:43,920 --> 00:26:47,679 Speaker 1: despite you know, improving earn earnings at the energy sector, 456 00:26:47,720 --> 00:26:50,080 Speaker 1: and that's where it comes down to the mix of earnings. 457 00:26:50,280 --> 00:26:53,680 Speaker 1: But they just start seeing this shift of earnings going 458 00:26:53,720 --> 00:26:57,280 Speaker 1: into the energy sector, but coming out of the consumer sectors. 459 00:26:57,840 --> 00:27:03,040 Speaker 1: The supply chain disruptions can tinuing at so many manufacturers, industrials, auto, 460 00:27:03,840 --> 00:27:08,800 Speaker 1: um so I think it's not it's not so much 461 00:27:08,840 --> 00:27:11,080 Speaker 1: about a couple of things. It's not so much about 462 00:27:11,080 --> 00:27:13,600 Speaker 1: well the earnings, you know, beat or miss, they'll be 463 00:27:13,640 --> 00:27:17,800 Speaker 1: flattish sequentially, and I expect him to be flatish all 464 00:27:17,840 --> 00:27:21,280 Speaker 1: the way to the fourth quarter of this year. And 465 00:27:21,320 --> 00:27:23,639 Speaker 1: when I look at the earnings that I'm expecting for 466 00:27:23,920 --> 00:27:26,520 Speaker 1: the end of the year fifty eight dollars fifty nine 467 00:27:26,560 --> 00:27:31,280 Speaker 1: dollars per share of the fourth quarter, I think almost 468 00:27:31,320 --> 00:27:33,439 Speaker 1: all of that earnings growth on a year on your 469 00:27:33,480 --> 00:27:36,639 Speaker 1: basis is going to be inflation. So we're finding that 470 00:27:36,680 --> 00:27:40,760 Speaker 1: there's this shift in the earnings from you know, higher 471 00:27:40,840 --> 00:27:44,080 Speaker 1: quality businesses to dare I say lower quality businesses or 472 00:27:44,080 --> 00:27:47,119 Speaker 1: at least the sectors that investors always put lower p 473 00:27:47,440 --> 00:27:51,240 Speaker 1: s on, like energy and uh, even though the earnings 474 00:27:51,240 --> 00:27:53,840 Speaker 1: are going to grind their way higher over the course 475 00:27:53,880 --> 00:27:56,960 Speaker 1: of the year, doesn't look like they're gonna outpace inflation 476 00:27:57,320 --> 00:27:59,119 Speaker 1: over the course of the year. Now, I'll take it, 477 00:27:59,600 --> 00:28:03,320 Speaker 1: we'll take the inflation off set, but we we tend 478 00:28:03,320 --> 00:28:08,440 Speaker 1: to prefer real earnings growth and real returns on SMP investment, 479 00:28:08,920 --> 00:28:11,840 Speaker 1: and it might be a year of no better than 480 00:28:11,880 --> 00:28:17,440 Speaker 1: just inflationary returns on the SMP. Yeah. Uh, you know, David, 481 00:28:17,480 --> 00:28:20,560 Speaker 1: I know you're you're cautious about sort of a slowdown 482 00:28:20,600 --> 00:28:24,359 Speaker 1: in consumer spending, which I think makes sense given you know, 483 00:28:24,400 --> 00:28:29,760 Speaker 1: the higher prices for fuel and food and all the staples. Um, 484 00:28:29,800 --> 00:28:33,080 Speaker 1: I'm curious how you're thinking about if you're and if 485 00:28:33,119 --> 00:28:36,280 Speaker 1: you're thinking at all about sort of the retail spending 486 00:28:36,280 --> 00:28:40,120 Speaker 1: on stocks themselves, because I'm guessing for a guy like you, 487 00:28:40,200 --> 00:28:42,560 Speaker 1: it must have been kind of I don't know if 488 00:28:42,680 --> 00:28:46,320 Speaker 1: frustrating is the word, or or aggravating to to watch 489 00:28:46,400 --> 00:28:51,200 Speaker 1: this whole reddit phenomenon, uh develop and see these sort 490 00:28:51,200 --> 00:28:54,040 Speaker 1: of junk stocks just going crazy because they're they're getting 491 00:28:54,040 --> 00:28:56,800 Speaker 1: pup pupped on social media. I do think though, there 492 00:28:56,880 --> 00:28:58,760 Speaker 1: there must have been some sort of halo effect for 493 00:28:58,760 --> 00:29:01,720 Speaker 1: the entire market though, and you have this new sort 494 00:29:01,760 --> 00:29:07,200 Speaker 1: of speculative massive people just buying, you know, with both 495 00:29:07,280 --> 00:29:11,040 Speaker 1: fists whatever they can. Um Is that a head went 496 00:29:11,080 --> 00:29:13,040 Speaker 1: to the markets who just the you know, sort of 497 00:29:13,080 --> 00:29:16,240 Speaker 1: a lack of of dry powder in in your average 498 00:29:16,280 --> 00:29:20,880 Speaker 1: person's robin Hood or e trade account to just go speculated. 499 00:29:21,360 --> 00:29:23,959 Speaker 1: Is that ultimately a head went to the market? Question? 500 00:29:24,160 --> 00:29:26,840 Speaker 1: And you know, it has been frustrating, maybe for no 501 00:29:26,920 --> 00:29:30,560 Speaker 1: other reason other than it's hard to predict what those 502 00:29:30,680 --> 00:29:33,200 Speaker 1: those investors are going to do, what they're going to value, 503 00:29:33,320 --> 00:29:36,600 Speaker 1: what what what stocks, what causes they're going to support. 504 00:29:37,000 --> 00:29:40,760 Speaker 1: I mean, there are certain companies electric vehicle makers where 505 00:29:40,760 --> 00:29:44,400 Speaker 1: you think, to yourself, this ownership base is really enthusiastic 506 00:29:44,480 --> 00:29:46,959 Speaker 1: about the mission and I kind of get that, and 507 00:29:47,120 --> 00:29:50,479 Speaker 1: arguably maybe they're willing to accept a really low, you know, 508 00:29:50,800 --> 00:29:54,040 Speaker 1: cost of capital or long term return on capital. Hard 509 00:29:54,080 --> 00:29:55,760 Speaker 1: to know because they've made a lot of money so far, 510 00:29:55,800 --> 00:29:59,520 Speaker 1: if they're really comfortable with low returns and in the future. 511 00:30:00,120 --> 00:30:02,920 Speaker 1: But then you get these odd other type of causes, 512 00:30:03,000 --> 00:30:05,720 Speaker 1: like let's just get this movie company some capital to 513 00:30:05,760 --> 00:30:09,040 Speaker 1: go see if they can do something with it. So 514 00:30:09,240 --> 00:30:13,760 Speaker 1: it is frustrating as much as I welcome participation in 515 00:30:13,760 --> 00:30:16,160 Speaker 1: the equity market, because I think the more people that 516 00:30:16,240 --> 00:30:20,520 Speaker 1: participate and the more diverse views you bring to capital markets, 517 00:30:20,520 --> 00:30:23,080 Speaker 1: the more efficient they're likely to be, at least you hope. 518 00:30:23,560 --> 00:30:25,720 Speaker 1: And then the thing I like about capital markets is 519 00:30:25,760 --> 00:30:29,160 Speaker 1: that it's a dollar weighted democracy, if you will. And 520 00:30:29,280 --> 00:30:31,160 Speaker 1: often I scratched my head and I think to myself, 521 00:30:31,200 --> 00:30:33,560 Speaker 1: particularly when you look at, you know, the bigger cap companies, 522 00:30:33,880 --> 00:30:36,800 Speaker 1: how do these individuals have enough money to be swaying 523 00:30:36,880 --> 00:30:41,600 Speaker 1: stocks as much as they might be. So just sharing 524 00:30:41,640 --> 00:30:43,360 Speaker 1: some thoughts. I don't think I have any you know, 525 00:30:43,560 --> 00:30:46,640 Speaker 1: clear views on this one. If anything, I try to 526 00:30:46,720 --> 00:30:49,960 Speaker 1: stay clear of stocks that look to me as if 527 00:30:49,960 --> 00:30:54,040 Speaker 1: you're being you know, swayed by the masses. Not because 528 00:30:54,080 --> 00:30:56,320 Speaker 1: the masses are wrong, but I'm having a hard time predicting, 529 00:30:56,760 --> 00:31:00,120 Speaker 1: you know, how their views might play out or the 530 00:31:00,200 --> 00:31:03,600 Speaker 1: time right the reeks of crowded trades, and a little 531 00:31:03,600 --> 00:31:06,680 Speaker 1: bit too, I guess to somebody, you know, it's just 532 00:31:06,720 --> 00:31:09,600 Speaker 1: a little too sentiment. And while sentiment is important, it's 533 00:31:09,680 --> 00:31:26,040 Speaker 1: really difficult to predict. Well, Donna, you know what else 534 00:31:26,120 --> 00:31:30,400 Speaker 1: is important for us, at least for us that our listeners. 535 00:31:30,440 --> 00:31:35,560 Speaker 1: I believe that I've many many patiently awaiting for Dun 536 00:31:35,680 --> 00:31:38,880 Speaker 1: Dun Dune, the craziest things we saw in markets this week. 537 00:31:39,280 --> 00:31:42,880 Speaker 1: I'm gonna get us started, um for once. Usually I 538 00:31:42,920 --> 00:31:45,960 Speaker 1: saved the best for last, but this time I'm gonna 539 00:31:46,240 --> 00:31:49,120 Speaker 1: get us started. I wish everybody could see me rolling 540 00:31:49,120 --> 00:31:52,360 Speaker 1: my eyes. Oh they can see it. They can see 541 00:31:52,360 --> 00:31:55,680 Speaker 1: it right through their headphones. The Wizard of Oz. I'm 542 00:31:55,720 --> 00:31:59,480 Speaker 1: sure you've seen the Wizard of Oz, right. Do you 543 00:31:59,480 --> 00:32:03,480 Speaker 1: remember the tin Man? Uh? He carried around an oil can. 544 00:32:03,640 --> 00:32:06,560 Speaker 1: So this is timely to today's market. The tin man 545 00:32:06,640 --> 00:32:08,440 Speaker 1: had an oil can because he would rust up and 546 00:32:08,440 --> 00:32:10,400 Speaker 1: they would have to sport some wheel in them to 547 00:32:10,480 --> 00:32:15,480 Speaker 1: keep him moving. Well, CRUs gs W Auctions just auctioned 548 00:32:15,520 --> 00:32:20,080 Speaker 1: off that oil can from the movie, the actual oil can. 549 00:32:21,440 --> 00:32:24,000 Speaker 1: They do not the story and and this is courtesy 550 00:32:24,040 --> 00:32:26,280 Speaker 1: of TMZ. They don't tell us whether or not it 551 00:32:26,320 --> 00:32:28,280 Speaker 1: was actually filled with oil that might move the needle 552 00:32:28,320 --> 00:32:30,520 Speaker 1: on the price given given the current price of oil. 553 00:32:31,320 --> 00:32:35,320 Speaker 1: But it's all for auctions, so it's time to play prices, right, Uh, David, 554 00:32:35,400 --> 00:32:36,920 Speaker 1: let's go with you first? What do you think the 555 00:32:36,920 --> 00:32:40,000 Speaker 1: winning bid for the tin Man's oil can? Wash? I'd 556 00:32:40,040 --> 00:32:48,000 Speaker 1: like to see the certification of the offenic Oh gosh, 557 00:32:48,040 --> 00:32:50,840 Speaker 1: I mean I'm not gonna go I I could see 558 00:32:50,840 --> 00:32:55,960 Speaker 1: how I'm gonna go with dollars. I get a kick 559 00:32:56,000 --> 00:32:59,080 Speaker 1: out of how seriously our guests take this, uh, like 560 00:32:59,080 --> 00:33:01,280 Speaker 1: like their clients are gonna be like, he didn't get 561 00:33:01,320 --> 00:33:03,520 Speaker 1: the tin Man's oil can? Right? How can I trust 562 00:33:06,160 --> 00:33:09,520 Speaker 1: twenty dollars? What's your what's your bid for the Wizard 563 00:33:09,560 --> 00:33:13,000 Speaker 1: of Oz tin Man's oil can? And the rules are 564 00:33:13,600 --> 00:33:17,000 Speaker 1: if I'm If I'm over, then David wins, right, you 565 00:33:17,040 --> 00:33:19,040 Speaker 1: know if if you don't know the rules by now, 566 00:33:19,320 --> 00:33:24,920 Speaker 1: I'm just laying them out again. Closest to the pin, 567 00:33:25,080 --> 00:33:31,920 Speaker 1: closest to the pins. I'm gonna go with one fifty 568 00:33:32,480 --> 00:33:36,160 Speaker 1: for for the tin Men's oil can. I know I'm 569 00:33:36,200 --> 00:33:39,239 Speaker 1: with you, David? Who pays for these things? I don't know, 570 00:33:39,360 --> 00:33:41,640 Speaker 1: but I'll tell you this. Here's a better one. There 571 00:33:41,760 --> 00:33:46,040 Speaker 1: was a violin that was played, uh, that played on 572 00:33:46,080 --> 00:33:48,680 Speaker 1: the Somewhere over the Rainbow track from Wizard of Oz 573 00:33:49,920 --> 00:33:53,240 Speaker 1: eight year old Stratavari violin. They think that's gonna fetch 574 00:33:53,280 --> 00:33:56,800 Speaker 1: twenty million when it goes off up for auction this summer. 575 00:33:56,880 --> 00:33:59,520 Speaker 1: So you'd have to lever up that oil can to 576 00:33:59,520 --> 00:34:01,560 Speaker 1: get the strap to Bory. But those things I think 577 00:34:01,560 --> 00:34:03,520 Speaker 1: go for that kind of money no matter what. There's 578 00:34:03,560 --> 00:34:07,600 Speaker 1: old violence, I think, so yeah, yeah, So this one 579 00:34:07,640 --> 00:34:10,080 Speaker 1: has the added bonus of having played Somewhere over the 580 00:34:10,160 --> 00:34:13,839 Speaker 1: Rainbow on the Wizard of Oz. Anyway, Bilda, can you 581 00:34:13,880 --> 00:34:18,759 Speaker 1: top that? Maybe? Maybe not. My My story is not 582 00:34:18,840 --> 00:34:21,880 Speaker 1: a hundred markets related, but I thought you would really 583 00:34:21,920 --> 00:34:24,759 Speaker 1: like it and our listeners would really like it, so 584 00:34:25,600 --> 00:34:28,919 Speaker 1: I'll make up markets connection. But we know Jersey City 585 00:34:29,000 --> 00:34:33,120 Speaker 1: was in the news recently for basketball, But did you 586 00:34:33,200 --> 00:34:35,120 Speaker 1: know that they were also in the news because they're 587 00:34:35,160 --> 00:34:39,440 Speaker 1: the first place to install a burger vending machine. A 588 00:34:39,560 --> 00:34:43,760 Speaker 1: burger vending machine. Yes, so it's a company called robo Burger. 589 00:34:44,520 --> 00:34:48,320 Speaker 1: You order a burger, you can use Google or ap Apple, 590 00:34:48,360 --> 00:34:51,359 Speaker 1: pay to pay, you can get catch up mustard all 591 00:34:51,440 --> 00:34:54,640 Speaker 1: the akucha bats. It's ready in six minutes and it 592 00:34:54,719 --> 00:34:57,600 Speaker 1: comes out of the vending machine, and I you know, 593 00:34:57,680 --> 00:34:59,799 Speaker 1: it's the perfect place to test this new Jersey of 594 00:35:00,640 --> 00:35:03,160 Speaker 1: So they grow up the burger right there in the 595 00:35:03,200 --> 00:35:06,279 Speaker 1: machine for you. The vending machine does. Yeah. I mean, 596 00:35:06,320 --> 00:35:08,840 Speaker 1: that's kind of surprised it took this long for that. 597 00:35:09,280 --> 00:35:10,719 Speaker 1: Back in my day, I don't know, they used to 598 00:35:10,760 --> 00:35:13,480 Speaker 1: have those automat things where you go and you put 599 00:35:13,480 --> 00:35:15,440 Speaker 1: the quarters in and open thing. But that was some 600 00:35:15,560 --> 00:35:17,680 Speaker 1: ham sandwich that's sat there for like three weeks. This 601 00:35:17,760 --> 00:35:20,920 Speaker 1: is this is burger. All right, Well, I'm gonna go 602 00:35:21,000 --> 00:35:23,560 Speaker 1: try that that burger machine. Sometimes how much does burger? 603 00:35:24,000 --> 00:35:25,719 Speaker 1: We should take a we should take a field trip. 604 00:35:26,000 --> 00:35:29,200 Speaker 1: I don't remember how much it costs, but I just 605 00:35:29,320 --> 00:35:31,960 Speaker 1: imagine this is gonna. I don't know how well it's 606 00:35:32,000 --> 00:35:35,920 Speaker 1: doing in Jersey City, but it could potentially do well elsewhere, 607 00:35:35,920 --> 00:35:38,080 Speaker 1: and then soon this company will be more and more 608 00:35:38,120 --> 00:35:40,359 Speaker 1: in the news. I would just hope that by now 609 00:35:40,440 --> 00:35:43,000 Speaker 1: you would know the price discovery is important on that burger. 610 00:35:43,040 --> 00:35:48,160 Speaker 1: I need to know. I'm sorry, that's pretty good burger 611 00:35:48,200 --> 00:35:51,160 Speaker 1: vending machine. It's not at all markets related, but I 612 00:35:51,200 --> 00:35:55,080 Speaker 1: but I'll allow it. I like, once they're a public company, David, 613 00:35:55,920 --> 00:35:59,640 Speaker 1: for what are you paying for a robot burger? Say? 614 00:36:00,080 --> 00:36:03,600 Speaker 1: That thing comes out quickly and tasty. I picked ten 615 00:36:03,600 --> 00:36:06,279 Speaker 1: bucks for robo burger just to watch it. What it 616 00:36:06,400 --> 00:36:12,480 Speaker 1: happen is pretty exciting. It's seven dollars. It's seven. There 617 00:36:12,480 --> 00:36:15,200 Speaker 1: you go. There's auto activity right there. And I like 618 00:36:15,280 --> 00:36:17,840 Speaker 1: the name. Got to be some big margin on the 619 00:36:17,920 --> 00:36:19,759 Speaker 1: robo burgers. All right, keep an eye on that space. 620 00:36:19,760 --> 00:36:22,080 Speaker 1: That's pretty good. How about you, David, you see anything 621 00:36:22,120 --> 00:36:24,759 Speaker 1: crazy this week? It doesn't compare to anything like the 622 00:36:24,840 --> 00:36:32,240 Speaker 1: robo burger, can um. One of the things that that 623 00:36:32,800 --> 00:36:37,399 Speaker 1: surprised me a little bit this week was this week. 624 00:36:37,440 --> 00:36:39,040 Speaker 1: In the past few weeks, you've had such a big 625 00:36:39,160 --> 00:36:43,200 Speaker 1: upward move in long term interest rates, and yet this 626 00:36:43,239 --> 00:36:45,560 Speaker 1: is the time that utilities decided to break out to 627 00:36:45,719 --> 00:36:50,640 Speaker 1: all time highs UM. And I like utilities, uh and 628 00:36:51,080 --> 00:36:53,160 Speaker 1: natural gas prices do help them, and I think it's 629 00:36:53,200 --> 00:36:57,279 Speaker 1: a terrific bond substitute. But I wasn't expecting utilities to 630 00:36:57,920 --> 00:37:00,280 Speaker 1: break out the all time highs and deliver to refic 631 00:37:00,320 --> 00:37:04,600 Speaker 1: returns just as bonds were taking a slacking. So a 632 00:37:04,640 --> 00:37:07,279 Speaker 1: little bit of a surprise, but doesn't beat the robo 633 00:37:07,360 --> 00:37:11,000 Speaker 1: burger or the so so you know, I didn't want 634 00:37:11,000 --> 00:37:12,480 Speaker 1: to ask you about utility. So what do you think 635 00:37:12,560 --> 00:37:15,200 Speaker 1: is that play there? It's it's actually not sort of 636 00:37:15,200 --> 00:37:17,480 Speaker 1: a yield player, or is it is the dividend yield 637 00:37:17,480 --> 00:37:19,759 Speaker 1: play if if you know their yields, aren't you know? 638 00:37:19,800 --> 00:37:21,799 Speaker 1: I think it? I think it is. You have to 639 00:37:21,840 --> 00:37:25,080 Speaker 1: keep in mind it may not be a giant dividend yield, 640 00:37:25,200 --> 00:37:28,400 Speaker 1: but dividend yields and earnings yields or real yields you 641 00:37:28,400 --> 00:37:31,760 Speaker 1: should get inflation protection. So if you compare the dividend 642 00:37:31,800 --> 00:37:35,359 Speaker 1: yield um to tend your tips yields, which are still 643 00:37:35,400 --> 00:37:40,520 Speaker 1: negative UHT basis points still that is that is a 644 00:37:40,520 --> 00:37:43,640 Speaker 1: lot better than than than bonds and even and even 645 00:37:43,760 --> 00:37:48,279 Speaker 1: tips which do offer some strong inflation protection. There are. 646 00:37:48,320 --> 00:37:50,799 Speaker 1: The thing is that the government's committed to investing in 647 00:37:50,840 --> 00:37:54,080 Speaker 1: the in the grid. Uh, the utilities will benefit from that. 648 00:37:54,280 --> 00:37:57,759 Speaker 1: Natural gas prices tend to set the incremental price of electricity. 649 00:37:58,080 --> 00:38:00,680 Speaker 1: Electricity prices will be going up, and that's gonna be 650 00:38:00,719 --> 00:38:05,720 Speaker 1: tough on consumers, but good for utility companies. And uh, lastly, 651 00:38:05,800 --> 00:38:08,239 Speaker 1: I just think and this is gonna take time. But 652 00:38:08,880 --> 00:38:13,520 Speaker 1: the utility industry, they own the key distribution for for 653 00:38:13,520 --> 00:38:16,479 Speaker 1: for power. You know, we used to energy as coal 654 00:38:16,560 --> 00:38:19,719 Speaker 1: and a solid. Then you know oil and liquid and 655 00:38:19,840 --> 00:38:22,920 Speaker 1: natural gas is really important right now and energy is 656 00:38:22,960 --> 00:38:25,800 Speaker 1: a gas. But the future is energy as a current, 657 00:38:25,960 --> 00:38:28,640 Speaker 1: and the currents go through the wires, and the wires 658 00:38:28,680 --> 00:38:32,160 Speaker 1: are owned by the utility companies. That's interesting. Kind of 659 00:38:32,200 --> 00:38:35,759 Speaker 1: your low volati volatility play on Tesla and and the 660 00:38:35,920 --> 00:38:37,520 Speaker 1: v makers of the world, I guess, and in some 661 00:38:37,600 --> 00:38:43,160 Speaker 1: extent that's that's pretty good. Well, David, always a real 662 00:38:43,200 --> 00:38:45,239 Speaker 1: treat to to catch up with you and hear what 663 00:38:45,400 --> 00:38:48,680 Speaker 1: how you're thinking about things. UM, really appreciate your time 664 00:38:48,680 --> 00:38:50,640 Speaker 1: and I hope we can have you back again, so 665 00:38:51,680 --> 00:38:54,640 Speaker 1: looking forward to it. Take care of Thanks for joining us. 666 00:39:03,520 --> 00:39:06,200 Speaker 1: What goes up. We'll be back next week. Until then, 667 00:39:06,239 --> 00:39:08,719 Speaker 1: you can find us on the Bloomberg Terminal website and 668 00:39:08,840 --> 00:39:11,920 Speaker 1: app or wherever you get your podcasts. We'd love it 669 00:39:11,920 --> 00:39:13,680 Speaker 1: if you took the time to rate and review the 670 00:39:13,680 --> 00:39:16,600 Speaker 1: show on Apple Podcasts so more listeners can find us. 671 00:39:16,920 --> 00:39:20,120 Speaker 1: And you can find us on Twitter. Follow me at Reaganonymous, 672 00:39:20,600 --> 00:39:24,239 Speaker 1: Bilbonna hierrach Is at Bilbonna Hierrich. You can also follow 673 00:39:24,280 --> 00:39:28,200 Speaker 1: Bloomberg podcasts at podcasts. What Goes Up is produced by 674 00:39:28,239 --> 00:39:32,040 Speaker 1: Magnus Hendrickson. The Head of Bloomberg podcast is Francesco Levie. 675 00:39:32,800 --> 00:39:34,399 Speaker 1: Thanks for listening, See you next time.