Speaker 1: This is Bloomberg Business Week. I'm Carrol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: Search Bloomberg Global News to all Highland Park, Virginia Tech,
Speaker 1: Sandy Hook Elementary and Elementary School in Valdi, Texas. I mean,
Speaker 1: we could go on and on. The rate of gun
Speaker 1: deaths has increased thirty three from or excuse me, in
Speaker 1: the United States that we're talking about nine years. This
Speaker 1: is according to every stat every Town for Gun Safety.
Speaker 1: With more on gun violence awareness and prevention, we bring
Speaker 1: in Cassandra Kofossi. She's Associate professor in the Department of
Speaker 1: Health Policy and Management, Deputy director of the Center for
Speaker 1: Gun vi Ulent Solutions at the Johns Hopkins Bloomberg School
Speaker 1: of Public Health, of course, supported by Michael R. Bloomberg
Speaker 1: founder and Bloomberg LP and Bloomberg Philanthropies. Mike also a
Speaker 1: co founded supporter of every Town for Gun Safety. And
Speaker 1: Cassandra joining us on the phone in Annapolis, Maryland. Cassandra,
Speaker 1: good to have you with us. How are you? I'm good?
Speaker 1: Thanks thanks for having me. When Carol was going through
Speaker 1: the names that we associate with acts of terror and
Speaker 1: gun violence in this country, it got me thinking that
Speaker 1: after there is an incident like Highland Park, like Vivaldi,
Speaker 1: we talk about gun safety for you know, a few days,
Speaker 1: but then it seems to shift to the back burner.
Speaker 1: How do we keep the conversation going without you know,
Speaker 1: these big profile events being in the news. Yeah, it's
Speaker 1: a really excellent question, and I think the first thing
Speaker 1: to keep in mind we have been seeing these really
Speaker 1: horrendous high profile shootings, UM, but we also have exceptionally
Speaker 1: high rates of every day gun violent suicide, an intimate
Speaker 1: partner violence. We need level violence, and we need to
Speaker 1: be thinking about those factors, um, those types of violence.
Speaker 1: In addition to these mass shootings and so the things
Speaker 1: that we've really been seeing change in the last few years,
Speaker 1: largely driven by the youth voices. Youth advocates have been
Speaker 1: more attention on drawing parallels, so not just focusing on
Speaker 1: a mass shooting as an isolated event, but understanding how
Speaker 1: there are features or characteristics of a mass shooting that
Speaker 1: are similar to other kinds of violence and looking there
Speaker 1: for solutions. I want to talk a little bit about
Speaker 1: access to firearms, because this is something that comes up
Speaker 1: each and every day with instances like this State's very
Speaker 1: in terms of gun restrictions and what people are able
Speaker 1: to buy. How do you prevent a gun from uh,
Speaker 1: you know, a different state going to a state like Illinois,
Speaker 1: for example. It's such a challenging feature of our country.
Speaker 1: Our borders are fourth for a reason, right, people and
Speaker 1: products move across them. But what that means is states
Speaker 1: with strong gunlass like California, Illinois, Maryland, New York, they're
Speaker 1: at the mercy of U states with weaker gun law.
Speaker 1: And here is an opportunity to take our regional approach
Speaker 1: to look at where sounds that are recovered in crime
Speaker 1: or used to harm others, look at where they're coming from,
Speaker 1: and sharing that data across jurisdictions across partners to understand
Speaker 1: are their targets of opportunity in terms of bad apple
Speaker 1: gun dealers are their individuals who are buying a lot
Speaker 1: of guns and bringing them across state lines. I think
Speaker 1: one of the most important factors to keep in mind
Speaker 1: when we're thinking about addressing gun violence. No one thing
Speaker 1: is going to help us address this problem. We need
Speaker 1: to be thinking about it from a multifaceted approach and
Speaker 1: thinking about policies and thinking about gun dealers and access
Speaker 1: and supply, but also we need to be thinking about
Speaker 1: why people want access to firearms, what is driving this demand,
Speaker 1: addressing some of the fear trauma, all of these things
Speaker 1: that are associated not just with COVID, but longstanding UH
Speaker 1: systematic racism and other issues that we've had in this country. Cassandrew,
Speaker 1: where does social media fit into all of this? That's
Speaker 1: such a great question. Um. Social media can be a
Speaker 1: tool to help spread messages public safety, public health messages,
Speaker 1: for example, but it can also be used as a
Speaker 1: tool to stoke sphere or to spread misinformation. One of
Speaker 1: the things that we try very hard to do it
Speaker 1: hence our name for center from Gundivalent Solutions is to
Speaker 1: really lift up the things that we know work to
Speaker 1: try to counteract the feeling of despair or inevitability anytime
Speaker 1: high profile mass shooting occurs, so we try to counter
Speaker 1: some of those pieces that it can be, unfortunately a
Speaker 1: tool to help spread misinformation and here that can drive
Speaker 1: gun purchasing. Do you think we get to a point
Speaker 1: just in the last minute that we have with you, Cassandra,
Speaker 1: where we start to see public funding going to research
Speaker 1: against gun research when it comes to gun violence. We
Speaker 1: all know about the dicy Amendment and what that did.
Speaker 1: We have seen over the last several years more federal
Speaker 1: funding coming from the Centers for Disease Control Prevention as
Speaker 1: well as an h dedicated to specifically funding gun violence prevention.
Speaker 1: And I think that's really going to help us to
Speaker 1: do a couple of things, to grow the field so
Speaker 1: that we have more researchers trained to understand and study
Speaker 1: this problem, and it's also going to help us answer
Speaker 1: some basic questions. We are way behind where we should
Speaker 1: be in our understanding of gun violence prevention and policy
Speaker 1: because of the restrictions on federal funding. But as that's
Speaker 1: loosening up, as we have more funding coming into the field.
Speaker 1: We're going to see that change, all right. We're gonna
Speaker 1: leave it on that now. Hey, Cassandra, thank you so
Speaker 1: much for your time today. Cassandra Krafoss, She's Deputy director
Speaker 1: of the Center for Gun Violent Solutions at the Johns
Speaker 1: Hopkins Bloomberg School of Public Health. As we mentioned earlier,
Speaker 1: supported by Michael R. Bloomberg, founder, BLOOMBERGIL and Bloomberg Philanthropies.
Speaker 1: Mike also a co founder and supporter of every Town
Speaker 1: for Gun Safety. You're listening to Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: Let's get to the domestic cover story Bloomberg Business Week.
Speaker 1: This issue, new issue out on newstands of Bloomberg and
Speaker 1: Bloomberg dot Com Slash business Week. All about the AMC
Speaker 1: Entertainment CEO Adam Arrant him and I've talked with him,
Speaker 1: who has cultivated an army of followers, who sent the
Speaker 1: stock storing in a retail trading frenzy last year. Who
Speaker 1: could forget that? Yeah, the story by Felix Gillette and
Speaker 1: Eliza Ronald's hand and Felix Gilette his media entertainment and
Speaker 1: telecom editor for Bloomberg Business Week. He joins us this
Speaker 1: afternoon on the phone from New Jersey. Also with us
Speaker 1: is Joel Weber, the editor of Bloomberg Business Week. He
Speaker 1: joins us this afternoon on the access line from Massachusetts.
Speaker 1: So people have been following out of air and Jold.
Speaker 1: They perhaps know him from his time at Veil Resorts
Speaker 1: or with the cruise lines at the airline industry early
Speaker 1: in his career. Now he's been at AMC for a
Speaker 1: few years. What is he up to? Oh, that is
Speaker 1: a great question. Um. Well, in the time that um,
Speaker 1: we were sort of initially talking about this idea for
Speaker 1: the story. Uh, you know, we're in the middle of
Speaker 1: the pandemic. People were like, hey, movie, movie theaters, that's
Speaker 1: not gonna work out. And then lo and behold, AMC
Speaker 1: became this meme stock and you know, I don't think
Speaker 1: many people recognized that um Adam Aaron was the CEO
Speaker 1: of the company, and it sort of was like, you
Speaker 1: couldn't have imagined a more theatrical CEO to be in
Speaker 1: charge of a publicly traded company happened to be the
Speaker 1: world's biggest theater chain, and he kind of met the
Speaker 1: moment in this amazing way where AMC became a meme
Speaker 1: stock and he was very flamboyant, very amazing on social media,
Speaker 1: and it really kind of made him endearing to all
Speaker 1: these UM retail traders UM, and that set up this little,
Speaker 1: nice little tension between the retail traders and the institutional ones,
Speaker 1: which were all kind of familiar with now. But in
Speaker 1: the middle of all that, we realized that who who
Speaker 1: is this guy? We did we had no idea, We
Speaker 1: had no idea what his backstory is. And he ends
Speaker 1: this amazing backstory because he came up through like loyalty programs.
Speaker 1: So so Felix um Analyza did this amazing job reporting
Speaker 1: this story. I feel like it's like just a perfect
Speaker 1: Business Week cover story. UM Felix, you know you guys,
Speaker 1: you guys dug into his back story so much like,
Speaker 1: how did he Why was he the right person for
Speaker 1: for this company at this moment? Well, I think to
Speaker 1: an incredible degree, his entire career was really building up
Speaker 1: to this. UM. I mean the whole thing hinges on.
Speaker 1: I mean, meme stocks to come and go, so you
Speaker 1: have to like keep these four million retail investors somehow
Speaker 1: engage and you have to keep them, you know, involved,
Speaker 1: you have to keep them on your side, you have
Speaker 1: to keep them loyal basically, right. And the thing about
Speaker 1: Adams fascinated that he spent his entire career basically engineering
Speaker 1: these loyalty reward programs. And if you go back to
Speaker 1: the nineteen nine his first job is at Panama. He
Speaker 1: did World Pass, the airline's first loyalty rewards program. Back then,
Speaker 1: the whole thing was like, Okay, if we want to
Speaker 1: talk to our customers, we're either going to have to
Speaker 1: die a really expensive ad on one of the three
Speaker 1: broadcast TV networks or in the national magazine is going
Speaker 1: to cost a lot. And suddenly there was this new way.
Speaker 1: Computers are getting more expensi less expensive, more powerful. We
Speaker 1: can keep track of our customers. We can talk to
Speaker 1: them directly. You know you kind of like take that. Adams,
Speaker 1: you know, did their first program. Then he went to
Speaker 1: Western Airlines to the loyalty program for them, then Hyatt
Speaker 1: Hotel vl uh, you know, Norwegian Cruise Line, the seventies
Speaker 1: six ers, everywhere he's gone, he's kept working on these programs.
Speaker 1: Suddenly you get to the present day and using social media,
Speaker 1: suddenly you know, he can talk directly to his customers.
Speaker 1: The fact that's amazing to me is that he managed
Speaker 1: to somehow extend this whole tradition to investors, like if you,
Speaker 1: you know, invest in US, you have AMC stock, you
Speaker 1: buy stock, you hold on the stock, We're going to
Speaker 1: give your rewards. You know, we're going to give you
Speaker 1: a free tub of popcorn. Which sounds insane, right, it
Speaker 1: just sounds completely made up, But actually that's kind of
Speaker 1: what he's done, and to remarkable degree, through some combination
Speaker 1: of his own charisma on Twitter and his own ability
Speaker 1: to kind of, you know, give this sense of exclusivity
Speaker 1: to this large group of retail investors. That's a part
Speaker 1: of something special he's managed so far to hold onto them.
Speaker 1: What I love about this piece, among the many parts
Speaker 1: about it, is that you include some of the memes
Speaker 1: the art department just fantastic and being able to include
Speaker 1: days and if you're watching us on YouTube you can
Speaker 1: see some of these means of course, they call in
Speaker 1: the silver backs. They're lot of sort of guerrilla themed
Speaker 1: memes that have proliferated on social media. Felix, let's talk
Speaker 1: about gold mining, because your piece has some incredible color
Speaker 1: as to how this deal went down. Yeah, because we
Speaker 1: all kind of heard it when they announced it and
Speaker 1: they said, you know, AMC's you know, just acquiring of
Speaker 1: this gold mine in the body. Everyone was like, what, like,
Speaker 1: what are you talking about? Literally is no, it's a metaphor, right,
Speaker 1: there's a crypto mining operation. Like, no, it's actually a
Speaker 1: gold and silver mine out there in the Black Rock desert.
Speaker 1: So for months we were like just we're dying to know,
Speaker 1: like how did this whole thing go down? And one
Speaker 1: of the fun parts of the article, of the fun
Speaker 1: parts of reporting that was kind of doing the TikTok
Speaker 1: of like these guys, you know, showing how this deal
Speaker 1: came together. Um, Jason Mudrick, Mudrick Capital really brought it
Speaker 1: to AMC Um you know, Adam talking about why he
Speaker 1: wanted in on it. Then jumping on an airplane, you know,
Speaker 1: flying you know, picking and everybody up going out to
Speaker 1: this tiny little airport and win a Muka nevada um.
Speaker 1: And then you know, driving out to this gold mine
Speaker 1: at dawn. I mean, the whole thing is just incredible, Um,
Speaker 1: the way it went down and hilarious on many different levels. Um.
Speaker 1: And then just like the thought of like what it's
Speaker 1: like they get the kind of like pile into this
Speaker 1: trailer at this gold mine in the middle of nowhere
Speaker 1: it's the only place has WiFi for like hundreds of miles,
Speaker 1: and then have to like jump on the phone and
Speaker 1: sell this to all the AMC board members like this
Speaker 1: is why you know it makes sense for a you know,
Speaker 1: the world's largest movie theater chain in two thousand twenty
Speaker 1: two to be invested in the gold mine. Felix I said, godman,
Speaker 1: you really made me scratch my head. I remember when
Speaker 1: that crossed the Bloomberg reading your story. What made me
Speaker 1: scratch my head? Is Nicole Kidman, the first lady of AMC. Like,
Speaker 1: like every aspect of the story, you just kind of like, what, yeah, well,
Speaker 1: I mean that's part of you know, part of the branding. Um.
Speaker 1: I think, you know, there's only so many ways you
Speaker 1: can brand the movie theater chain. And I think typically
Speaker 1: people choose what movie they're going to go to based
Speaker 1: on the product and the proximity it is to their house, right,
Speaker 1: they don't care usually if they're going to go to
Speaker 1: like an AMC or Regal whatever, and especially with the multiplexes,
Speaker 1: but there are theater chains out there have done incredible
Speaker 1: job of branding themselves. I always point to Alamo, which
Speaker 1: Alamo Drafthouse. I think they do a great job. And
Speaker 1: one of the ways they've done a great job of
Speaker 1: brandon selves is those pre movie attractions they show you.
Speaker 1: It's always like very instinctive and cool feeling. And you know,
Speaker 1: I think this is kind of like the AMC version
Speaker 1: of that, which is like, we have an opportunity before
Speaker 1: the movies come on, um to do something that makes
Speaker 1: it feel like special somehow. In this case, you know,
Speaker 1: they went out in the cool kidman did these promotions,
Speaker 1: talked about oh you know there's a coming back. It's
Speaker 1: American institution, as we want to know, in like a
Speaker 1: Another aspect of this story is like how when she
Speaker 1: got paid Jill quick thoughts as we wrap up here,
Speaker 1: you know, just as we wrap it, you know, it's
Speaker 1: the meme stock moment. It's like, you know, we have
Speaker 1: these ebbs and flows to it. I'm just gonna be
Speaker 1: really curious to watch how AMC fairs. Uh, you know,
Speaker 1: we're obviously watching bed Bath and Beyond Dowid's Thing. Am
Speaker 1: wanted another one to watch, no doubt about it. AMC
Speaker 1: by the way down eight percent today, Joel Weber, Felix Gillette,
Speaker 1: thank you so much. This is Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well,
Speaker 1: the most read story on the Bloomberg is what about
Speaker 1: the individual who put an end to the crazy six
Speaker 1: day run of meme stock bed Bath and Beyond, a
Speaker 1: run that added something like a D to the share price?
Speaker 1: The individual activist geralda Ryan Cohen, who apparently Tim now
Speaker 1: kind of wants to say bye bye to Bed Bath
Speaker 1: and Beyond. Let's get all the details. B B not
Speaker 1: be confused with Best Guys ticker, which is quite a bit.
Speaker 1: Give you a. Balg is Equity America's team leader for
Speaker 1: Bloomberg Near. She joins us via zoom from our bureau
Speaker 1: in Toronto, Canada. Did you help us understand what's going
Speaker 1: on here with Bed Bath and Beyond? So Ryan Cohen,
Speaker 1: people know him from Chewy fame with his now activist
Speaker 1: and activist investor fund Our Ventures bought a steak in
Speaker 1: Bed Bath and Beyond back in March. So he is
Speaker 1: he fully filing to get out of it because he
Speaker 1: may sell up to this many shares, right, I mean,
Speaker 1: it sure looks like it at this point. You know,
Speaker 1: he has put in a filing saying that he would
Speaker 1: like to sell all of his shares and some call
Speaker 1: options as well on bed Bath and beyond. I mean,
Speaker 1: there's rumors going around that he's already sold his stake.
Speaker 1: There are other people who think that he might sell
Speaker 1: it in batches. You know. Right now we're just sort
Speaker 1: of waiting to see what he has to say about
Speaker 1: this whole thing at this point. But you know, you
Speaker 1: guys are right, it's just been such a wild ride
Speaker 1: for this dock at this point. What I love about
Speaker 1: this is it reminds me we talk so much about
Speaker 1: retail traders, right this is their game and they're playing
Speaker 1: with all of these meme stocks. It says to me, though,
Speaker 1: this is a reminder though, that are there are some
Speaker 1: big time investors in this name as well, and other
Speaker 1: Memes stocks potentially. And that's exactly it. You know, they
Speaker 1: have this whole notion of Yolo you only live once
Speaker 1: that they're getting into the stock, and they for some reason,
Speaker 1: I cannot understand this why they love Ryan Cohen so much?
Speaker 1: And you know when they get into it. They are
Speaker 1: pumping up their own investment and their own shares, right,
Speaker 1: They're getting excited about it, and they're doing this. And
Speaker 1: now when you get like proper news that's coming out
Speaker 1: on the stock and a potential super large shareholder trying
Speaker 1: to get out of this company, that's where they're really
Speaker 1: taking a hit at this point. And I'm not sure
Speaker 1: a lot of them actually fully understand what's at stake
Speaker 1: at this point. Yeah, who is Ryan Cohen? Just to
Speaker 1: give our audience if they're not familiar with him, like,
Speaker 1: who is this guy? So he is an activist in
Speaker 1: the world of finance at this point. You know, his
Speaker 1: claim to fame, or at least what we tend to
Speaker 1: think of as his claim to fame, is when he
Speaker 1: got into Chewy Um the pet company, and he made
Speaker 1: you know, massive restructuring with the company and since then
Speaker 1: it's done really well. And I think that's what retail
Speaker 1: traders really got into in this case. When he got
Speaker 1: into game Stop, they were really hoping for a similar
Speaker 1: turnaround that they saw with Chewy. They did the same
Speaker 1: thing with Bed Bath and Beyond, and frankly, I just
Speaker 1: have not seen that with Ryan Cohen and both of
Speaker 1: these companies at this point. With game Stop he brought
Speaker 1: in a bunch of new executives, mainly from Amazon. And
Speaker 1: with bid Bath and Beyond, you know, he outstead the
Speaker 1: CEO and brought in a new CEO and he also
Speaker 1: got three independent directors at the company. But fundamentals wise,
Speaker 1: both these companies are still struggling at this point. We
Speaker 1: have not seen a corporate growth turn turnaround for game
Speaker 1: Stop and bed Bath and Beyond. Most recent earnings results
Speaker 1: were still pretty dismal. Um for investors out there, is
Speaker 1: this meme stock rally different than the memestock rally we
Speaker 1: saw in the winter? You yeah, it is. It's definitely
Speaker 1: on a smaller scale at this point. I mean when
Speaker 1: we saw it with game Stop and even a m C,
Speaker 1: you know, more than a year ago, you were seeing
Speaker 1: a hundred percent move, a hundred and fifty percent rallies
Speaker 1: on any given day and swift reversals as well. Trading
Speaker 1: volumes were a lot bigger than we're seeing right now
Speaker 1: with Bed Bath and Beyond. Um, and it really spread
Speaker 1: out to a lot more stocks than what we're seeing
Speaker 1: right now with these companies. So it's different and yet
Speaker 1: the same in the sense that you are seeing big moves,
Speaker 1: they're just not as massive as what we saw um
Speaker 1: a year and a half ago or even almost two
Speaker 1: years ago. I gotta say caveat to m tour, you know,
Speaker 1: buyer bware like I feel like when you look at bed,
Speaker 1: bath and beyond. I mean you've got fort of the
Speaker 1: float shorted. I mean investors have to understand that there
Speaker 1: could be a big swing either way. Correct and just
Speaker 1: got about thirty seconds. Absolutely, and that's really it. You
Speaker 1: know there will be big swings. You have to be careful.
Speaker 1: Analysts are saying, pay attention to the fundamentals more sold
Speaker 1: than anything else that's going on on the retail side
Speaker 1: of things. Look at the sale side of thing in
Speaker 1: terms of analyst you've got one by four hold and
Speaker 1: twelve cells on this name. Just say that doesn't match
Speaker 1: with what we've seen in the performance of the stuff.
Speaker 1: I'm gonna do some shopping there ahead of my daughter
Speaker 1: going back to college. So you got off coupons. You
Speaker 1: gotta love those coupons. Yeah, they send them to you
Speaker 1: electronically too. Those things are great. Oh yeah, of course
Speaker 1: I'm bro journal. Yeah, but you let me drive. Oh no, no, no, no,
Speaker 1: who's going home? Right? Please, I'll do the dravel. I
Speaker 1: want to drive. It's a good question drive. This is
Speaker 1: the Drive to the Clothes on Bluebird Radio. All Right,
Speaker 1: we have about ten and a half minutes left in
Speaker 1: today's trading session and we've been bouncing around in today's trade.
Speaker 1: Right now, just turning off our highs of the day.
Speaker 1: We're in the green age. You heard from Charlie Pellett
Speaker 1: on all those major averages. But just up a tad, Tim, Well,
Speaker 1: we're very pleased with to have with us this afternoon.
Speaker 1: Alan Zafronia little wacky to Alan, but that's okay. I mean, Alan,
Speaker 1: don't forget that Alan zafron Um. One time when he
Speaker 1: was on air with us there was an earthquake and right,
Speaker 1: oh my good, good memory. M Alan. It's good to
Speaker 1: have you with us. How are you. I'm doing great
Speaker 1: and it looks like the markets are shake it too,
Speaker 1: but straight up recently right yeah, like I even you know,
Speaker 1: you even got some big laughs from the control room
Speaker 1: there on that one. I like that. Um. Alan Scotting
Speaker 1: partner and co Cy at i e Q Capital joins
Speaker 1: us on the phone from Foster City, California. So it's
Speaker 1: puzzling to me. Alan. We have FED officials coming out
Speaker 1: and you know, saying over and over again, day in
Speaker 1: and day out, we gotta raise rates to combat inflation.
Speaker 1: We're nowhere close to being done with that, you know,
Speaker 1: in similar phrasing. But yet the market marches higher. What
Speaker 1: gives well, what gives tims A s that the technicals
Speaker 1: are once again ahead of the fundamentals. We see the
Speaker 1: time and again. So if you believe the stock market
Speaker 1: with this incredible technical uh flush upward we're having, the
Speaker 1: Fed's gonna get it right. We're gonna thread the needle.
Speaker 1: We're going to avoid a recession, is what the stock
Speaker 1: market is signaling, or at a minimum, the recession will
Speaker 1: be so shallow that you won't actually see it. Earnings
Speaker 1: recession companies will can you grow earnings like eight percent
Speaker 1: a year and we'll mitigate all these concerns. We'll get
Speaker 1: through this scare and we'll be back to a more
Speaker 1: normalized world. That's what the stock market is telling you.
Speaker 1: Do you buy it? I buy that the likelihood of
Speaker 1: the Feds thread and threading the needle is much greater
Speaker 1: than it was a month ago. And the reason I
Speaker 1: buy that is you're finally getting inflation readings that are
Speaker 1: heading down. You're getting consumer surveys indicating that their belief
Speaker 1: inflation is heading down. Is also the case, you're getting
Speaker 1: confirmation from independent sources conveying that the set seems to
Speaker 1: be attacking this problem. Well, also get it from the
Speaker 1: standpoint that it's been an interesting time. It turns out
Speaker 1: and in this earnings estimates, overall earnings expectations heading into
Speaker 1: the end year have only been cut by about two percent.
Speaker 1: Heading into this earning season, the market was pricing in
Speaker 1: about fifteen percent cuts and earnings expectations, and so what's
Speaker 1: going on is earnings or visions are far less bad
Speaker 1: than what everyone believes. Of course, you get target target,
Speaker 1: or you get selected companies and sectors that are disproportionately
Speaker 1: hit and revised downward, but an aggregate, you're still at
Speaker 1: a point where you're getting a significant number of companies beating.
Speaker 1: In fact, turns out companies have actually beat estimates and
Speaker 1: not average, by about four percent this quarter um. And
Speaker 1: so that's what's going on. Earnings aren't as bad as
Speaker 1: people fear. Inflation is starting to come down. You have
Speaker 1: a remarkably over sold short term and technical condition, and
Speaker 1: if you do read chartists and technical analysts are out there,
Speaker 1: they'll tell you that the set up right now is
Speaker 1: for a continuation of this rally. As one example of
Speaker 1: Bank of America does surveys, the fund managers survey. Right, Yeah,
Speaker 1: it's still still reading a zero, which is historically been
Speaker 1: incredibly bullish. So too many investors caught too barish and
Speaker 1: too quick a time frame and technical indicators or that
Speaker 1: this market is likely in the short run to move higher.
Speaker 1: We've talked a lot about the retracement right from peak
Speaker 1: to trough retracement you know of that, and how that
Speaker 1: that is a positive indicator from more upside to continue
Speaker 1: alan and yet that's a pretty significant retracement. So it
Speaker 1: does make me wonder, you know, when do we when
Speaker 1: do we think that maybe things are getting a bit
Speaker 1: ahead of itself, especially when you have somebody like Neil
Speaker 1: kosh Kari, who was one of the more devish members
Speaker 1: of the FED, saying okay, we need to high grates. Yeah,
Speaker 1: he came out today and still seems pretty unclear. And
Speaker 1: Ballard came out today and said, you know, maybe we
Speaker 1: should still be raising by basis points in September. There
Speaker 1: is a bullish argument to that, and that bullish argument is,
Speaker 1: as much as we don't like grate hikes, let's take
Speaker 1: the medicine now rather than take it later. If we
Speaker 1: do larger rate hikes up front, there will be fewer
Speaker 1: total basis points up in rate hikes we need to go.
Speaker 1: And maybe that's the best thing to take the tough medicine.
Speaker 1: You mentioned, Carol uh something about fifty percent retracements. We
Speaker 1: went back and looked here. If we have this right,
Speaker 1: if you go back to World War Two, there have
Speaker 1: been nineteen different occasions where you had the market the
Speaker 1: sp specifically fell more than percent or more basically down.
Speaker 1: If the market breaks back up above that fifty retracement test,
Speaker 1: it signaled the end of the bull market all but
Speaker 1: one time, meaning there was some durability to the rally.
Speaker 1: End of the bull market. I'm sorry to send the
Speaker 1: end of the bear market and into the beginning of
Speaker 1: a new bull market. So the bull markets, the indications
Speaker 1: are that one you once you recover more than fifty
Speaker 1: from that bottom, it's probably gonna sustain alright. So any
Speaker 1: any anything barish out there that you're seeing right now, well, sir,
Speaker 1: this there's plenty of the barish about. We still think
Speaker 1: in particular, China's economy is slowing. Europe is actually in
Speaker 1: a recession at this point. Their gas prices are way
Speaker 1: higher than what when you are experiencing here in the US.
Speaker 1: That means you're going to have less ability to export
Speaker 1: goods and services abroad. You have a slowing economy, you
Speaker 1: still have tremendous geopolitical and certainty both from respect to
Speaker 1: China as well as with what's going on in Eastern
Speaker 1: Europe currently. And we still are in an environment we're
Speaker 1: earnings growth rates, albeit they're not getting cut as much
Speaker 1: as feared, there's still being cut a bit, and so
Speaker 1: the prospective rate of growth of earnings next year is
Speaker 1: lower than what you would typically see it this point
Speaker 1: in the calendar year. So we're looking at growth, but
Speaker 1: slower growth than what you would normally expect looking one
Speaker 1: year forward. So fundamentally still challenges. Um Alan just got
Speaker 1: a few seconds left here. What really struck me Earlier
Speaker 1: in the week when we talked with our Juna Martin Adams,
Speaker 1: head of our equities team here at Bloomberg Intelligence, but
Speaker 1: reminded us that she kind of thought. You know, technically
Speaker 1: we're in a recession, but maybe we're already through it,
Speaker 1: but that you know, economists are talking about a deeper
Speaker 1: recession again in isn't that going to be potentially problematic?
Speaker 1: And do we as investors need to be kind of
Speaker 1: thinking about that? And just got about thirty seconds. Yeah,
Speaker 1: that's saying we're in the eye of the storm and
Speaker 1: we're halfway through and another on the other side. Yeah, yeah, yeah, Well,
Speaker 1: unfortunately you and I can't answer that because it's going
Speaker 1: to come down to how many times the set has
Speaker 1: to raise the set funds, right, because the effect of
Speaker 1: that rate high takes a full year to really work
Speaker 1: through the economy. So we just don't know yet. It's
Speaker 1: going to be dependent on for factors that the argument
Speaker 1: stay diversified, you know, don't put all your eggs in
Speaker 1: one basket, right, which means that potentially when are depending
Speaker 1: on when the FED ends, we could still be working
Speaker 1: through the impact of that well into late next year.
Speaker 1: I'm always smart. Ellen Zafron, thank you so much, founding
Speaker 1: partner co CEO at I e Q Capital on the
Speaker 1: phone from Foster City, California. Thanks for listening to Bloomberg
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