Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: YouTube search Bloomberg Global News. Welcome to our global simulcast
Speaker 1: across Bloomberg TV, Radio and YouTube Romain, Boston, alongside Pretty
Speaker 1: Group To and Tim Stanifek. We're gonna be walking you
Speaker 1: through the markets all day long and taking a look
Speaker 1: back at one as well as a look ahead to two.
Speaker 1: Right now, Tim, we're looking at guess what a record
Speaker 1: high on SMB five, record high on the Dow Jones
Speaker 1: Industrial Average, and the NASDAC one hundred actually came within
Speaker 1: about four points of a record high on its own.
Speaker 1: It seems like a little bit of a theme happening
Speaker 1: in the Santa Claus Reraili. I got a fun little
Speaker 1: technical that I spotted on the Market's live blog courtesy
Speaker 1: of Matt Turner earlier today. The SMP five hundred hasn't
Speaker 1: dip below it's two day moving average yet this year.
Speaker 1: That failure has only happened four other time since one,
Speaker 1: and then after three of those occurrences, the SMP five
Speaker 1: hundred sign annual decline the following year. So good thing
Speaker 1: to keep in mind as we look forward to two
Speaker 1: throughout our show today. Yeah, and which a point, I mean,
Speaker 1: that's a that's a fun fact. But think when was
Speaker 1: the last time we were burned low the two day
Speaker 1: moving average pop quiz? I'm guessing it was March? Yeah, April? Oh,
Speaker 1: look at that. I'm starting to get better at these
Speaker 1: pop quizzes, rom Man, I know, I gotta make the
Speaker 1: questions a little bit harder here. All right, let's we're gonna,
Speaker 1: of course, walk you through this market. We're gonna get
Speaker 1: some great insights here from a big slate of guests
Speaker 1: we have coming up. But we want to jump right
Speaker 1: over to Abigail doo Little right now for a little
Speaker 1: bit more of a breakdown, and what's going on in
Speaker 1: the market, Abigail, Well, those technicals that you all were
Speaker 1: just talking about super interesting, And yes, it would suggest
Speaker 1: that the market is overextended right now, not having gone
Speaker 1: to that long term support. Maybe couldn't be a little
Speaker 1: b difficult. In the yesterday we were talking about apple
Speaker 1: growth is expected to slow dramatically. As for what's really
Speaker 1: happening today, that all time high for the SMP five
Speaker 1: on page for the seventy first record close of the year.
Speaker 1: The NAZAC outperforming on some China tech strength. Maybe we'll
Speaker 1: take a look at that in a moment. And then
Speaker 1: super interesting is the fact that the SMP five hundred
Speaker 1: hotel index it is slightly higher despite having some exposure
Speaker 1: to the cruise operators because of course, earlier today the
Speaker 1: CDC coming out with an advisory saying that folks shouldn't
Speaker 1: go on cruise ships, whether vaccinated or not, and we
Speaker 1: saw a big drop off for the cruise lines. The
Speaker 1: Royal Caribbean Carnival down about half a percent at this point,
Speaker 1: so not a huge huge decline, but if you consider
Speaker 1: the these stocks earlier up three percent down two percent
Speaker 1: at the lows, that's a five to six percent swing
Speaker 1: for stocks and are still down six from the pre
Speaker 1: pandemic high. The revenues, it's just incredible. I was taking
Speaker 1: a look at Carnival this year, It's expected to put
Speaker 1: up not even two billion. In twenty eighteen it was
Speaker 1: nineteen billion. So that's what investors are still worried about. Yeah, Abigail,
Speaker 1: When I think cruise lines, when I think that travel sector,
Speaker 1: I think volatility. I'm curious about the volatility not of
Speaker 1: the stock market, but of the bond market. What do
Speaker 1: you see there? You know, it's very interesting and that's
Speaker 1: a great question from the standpoint that these cruise lines,
Speaker 1: similar to airlines during the pandemic, just to make it through,
Speaker 1: really needed to raise a tremendous amount of capital through debts.
Speaker 1: So that's going to be something to watch, the credit
Speaker 1: for the cruise lines, and to some degree right now
Speaker 1: the airline is given the fact that oh, Macron is
Speaker 1: really causing so many cancelations there for um the number
Speaker 1: of the airlines. I think that Jet Blue today came
Speaker 1: out saying that they're canceling nearly flights between January tent
Speaker 1: and for cruise operators, it's gonna be interesting to see
Speaker 1: whether or not folks, people who are very committed to cruising.
Speaker 1: I not one of them, but I do have friends
Speaker 1: who loved to cruise a couple of times each year.
Speaker 1: Whether they're gonna listen to this advisory and will we
Speaker 1: see a real drop off in revenue? If so, that
Speaker 1: could really show up in that credit. All right, something
Speaker 1: we're gonna keep an eye on all day long. Here
Speaker 1: Abigail Doolittle, we'll get check in with her a little
Speaker 1: bit later here in the day. We want to get
Speaker 1: right to our next guest here, Ross Mayfield Bared Investment
Speaker 1: Strategy analyst, joining the big program right now, and Ross Um,
Speaker 1: you know, there's obviously a lot of distortions this week
Speaker 1: and last week because of the low volume here as
Speaker 1: we head towards the end of the year. But anybody
Speaker 1: who's looking ahead to two and trying to sort of
Speaker 1: divine where the SMP might end up, it's got to
Speaker 1: all be tied to where they think earnings, corporate earnings
Speaker 1: themselves are gonna go. And I'm curious as to whether
Speaker 1: you think that some of the I guess relative outperformance
Speaker 1: that we saw in twenty twenty one with regards to
Speaker 1: margins and earnings and revenue growth, whether that continues into
Speaker 1: next year. Yes, so I think a bit more of
Speaker 1: a mixed bag, right, So, we do expect earnings growth
Speaker 1: to be positive. There's a lot of tail winds. They're
Speaker 1: a really strong consumer, some operational efficiencies that companies put
Speaker 1: on during the pandemic and should continue forward. UM, and
Speaker 1: revenue should still be strong given um, you know, pretty
Speaker 1: strong nominal GDP growth that we expect. However, margins have
Speaker 1: have peaked and you know started to roll over a
Speaker 1: little bit, still at extremely high levels, still near records,
Speaker 1: but have peaked and rolled over. We we all have
Speaker 1: heard the inflation story and know about rising input cost inflation,
Speaker 1: particularly UM the stickiness of of wage inflation, which which
Speaker 1: is really one of the bigger input factors across across industry. UM.
Speaker 1: So I do think, you know, there's gonna be enough
Speaker 1: corporate earnings to to drive the market higher outside of
Speaker 1: something that really brings multiples down. Usually in the early
Speaker 1: part of a rate high cycle, multiples are you know,
Speaker 1: kind of flat historically, So if you're taking high single digit,
Speaker 1: low double digit earnings growth, I think you can probably
Speaker 1: translate that pretty well to equity performance. Or also, we've
Speaker 1: been asking a lot of our guests this week about
Speaker 1: the biggest risks in two A lot of them have
Speaker 1: agreed that it would be a misstep by the Federal Reserve.
Speaker 1: I'm wondering where you fall. Well at the same place
Speaker 1: I always following him, asked this question, and the biggest
Speaker 1: risk is the one we don't see Keman because at
Speaker 1: the beginning of nobody had global pandemic on their on
Speaker 1: their cheek sheets. So you know that's kind of a
Speaker 1: copied answer, but um no, but it was. It was
Speaker 1: poetic ross we like and we checked that one off
Speaker 1: that the pandemic is ongoing right there. There we go. Yeah,
Speaker 1: on the Fed front, though, you know you mentioned at
Speaker 1: that top, we're sitting at all. Tom has on all
Speaker 1: the major indusicries. The market is aware of the Feds, uh,
Speaker 1: you know, tapering timeline getting more aggressive. They're aware or
Speaker 1: they're basically pricing in three rate hikes for next year
Speaker 1: the Fed. I think at this point, you know, if
Speaker 1: you wanted to skew the risk one way, it would
Speaker 1: be dubbish. There's gonna be some new appointees who will
Speaker 1: probably lean dubbish. And if inflation moderates or if omicron
Speaker 1: has an effect on the labor market, I think you
Speaker 1: could actually see the FED skew dubbish given one of
Speaker 1: the two options, um, in which case it wouldn't necessarily
Speaker 1: be you know, a headline risk for the market. Um,
Speaker 1: it would it would probably be a bit more of
Speaker 1: a tail wind. Regardless. Uh, we expect monetary policy to
Speaker 1: be extremely accommodative, even if they hike at on plan Ross.
Speaker 1: We gotta talk about tech here because you can't continue
Speaker 1: that's really strong equity performers into the new year without
Speaker 1: having tech on your side. What is the bull and
Speaker 1: bear case for Big Tech? Sure? I mean the bull
Speaker 1: case is long term secular growth trends. It's you know,
Speaker 1: wide modes, low debt, high cash um. You know, really
Speaker 1: strong margins and the ability to protect those margins. They've
Speaker 1: mostly shown throughout this pandemic. UM. They've also been a
Speaker 1: bit of a covid heade right. So throughout Big Tech
Speaker 1: was the kind of sector or what you know, subsector
Speaker 1: that was leading the market higher. It's popped, you know,
Speaker 1: throughout the various waves over the last year. So so
Speaker 1: it's not super hard to make a strong bull case
Speaker 1: for these companies because they are just such high performing
Speaker 1: operators and have done so well over the last decade.
Speaker 1: As we move into this next year and kind of
Speaker 1: get into the you know, maybe mid cycle uh kind
Speaker 1: of themes high quality is a place that we're looking
Speaker 1: to take refuge, and that's that's a lot of those
Speaker 1: big tech operators. On the flip side, you look at
Speaker 1: interest rates, rising interest rates is kind of um, rising
Speaker 1: long interest rates is kind of a headwind for the
Speaker 1: growthier parts of the market. You know overall, UM, small tech,
Speaker 1: small growth is certainly taking it on the chin this year. Um,
Speaker 1: that would be a headwind for big tech if rates
Speaker 1: were really to become uncapped. And then the antitrust uh,
Speaker 1: you know, sentiment, it's kind of taken a backseat as
Speaker 1: build back better has has become the focus in Washington
Speaker 1: right now and getting that back on track. But I
Speaker 1: do think you know, with more appointees, um, you know,
Speaker 1: personnel's policies, So I think you could continue to see
Speaker 1: that sentiment throughout the year and and maybe even ramp
Speaker 1: up as a midterm election talking point any way to
Speaker 1: diversify away from equities. Anything that you look at. We
Speaker 1: only got about a minute left. That's that's the that's
Speaker 1: the number one question on the board because rising inflation,
Speaker 1: rising rates, you really don't want to be in treasuries,
Speaker 1: safe safe fixed income cash is just losing money. I
Speaker 1: do going out the credit spectrum and fixed income in
Speaker 1: shorting duration something like you know, maybe bank loans or
Speaker 1: or or shorter duration high yield could be a place
Speaker 1: to go. You know, valuation there, as with the equity market,
Speaker 1: is fairly rich. But I do think if you see
Speaker 1: even a slight uptake and rates, it's gonna be one
Speaker 1: of the few places takes solids. Um. You know, we
Speaker 1: don't ever really mind a small uh small allocation to
Speaker 1: alternatives or commodities, but we would keep it, we would
Speaker 1: keep it small. All right, Ross Mayfield, It Bair, thanks
Speaker 1: so much for joining us. This is Bloomberg Market Special
Speaker 1: coverage this week, simulcast across Bloomberg TV, radio and on YouTube.
Speaker 1: Romain Bostick alongside Tim Stanovic and Crety Gupta here helping
Speaker 1: you count down to the clothes here in equity markets
Speaker 1: right now, keep an eye on what's going on in
Speaker 1: the commodity space. Settlement right now of noim ex scrude
Speaker 1: future is gonna come in just below seventy seven bucks
Speaker 1: of barrel. We should we've been talking all day, all week,
Speaker 1: frankly about how light the volume is in the equity markets.
Speaker 1: We should point out that, uh in the w T
Speaker 1: I markets future markets were some the wrack below where
Speaker 1: we would normally be with regards to average daily volume. Here,
Speaker 1: gasoline price is going to finish the day slightly higher
Speaker 1: here as well, up about eight tenths of our percent.
Speaker 1: In the futures market at the pump, you're paying about
Speaker 1: three twenty nine on average. Here, Gold futures higher by
Speaker 1: about five tenths of our percent. And when you look
Speaker 1: at some of the soft commodities, pretty much everything is
Speaker 1: in the red today, with the exception of cotton. Cotton
Speaker 1: future stem up about one percent right now. We know
Speaker 1: restaurants around the country are continuing to struggle to pay
Speaker 1: for those higher input costs as COVID cases continue to
Speaker 1: surge as well. Restaurants are also struggling to keep their
Speaker 1: doors open. Many are trying to recoup their losses from
Speaker 1: the last twenty months or so when lockdown began. Joining
Speaker 1: us now is David Nafeld. He's the owner and executive
Speaker 1: chef of the restaurant Kfico. It's an Italian restaurant in
Speaker 1: San Francisco. David, thanks so much for joining us. You're
Speaker 1: also a member of the Independent Restaurant Coalition. It's an
Speaker 1: organization that calls itself a voice for the independent restaurant
Speaker 1: and bar community nationwide. Hey, give us an update on
Speaker 1: what's happening at KFICO right now when it comes to amicron.
Speaker 1: Are you seeing this not only affects staff right now,
Speaker 1: but uh but affect patrons dining there too. I mean
Speaker 1: cases are spiking in California, just like to our New York. Yeah,
Speaker 1: there's First of all, thank you so much for having me.
Speaker 1: And secondly, uh, you know, it's been a tremendous um
Speaker 1: hit to us. We've just made the hard decision to
Speaker 1: close both of the restaurants for the rest of the year.
Speaker 1: We've had a spike in positive cases, um you know,
Speaker 1: and the only reason we're able to detect that is
Speaker 1: because we've come out of pocket over five dollars to
Speaker 1: get these massively over inflated uh self tests right, because
Speaker 1: that's not being provided for us by our local, state
Speaker 1: or federal government. So that's something that we need to
Speaker 1: do to protect our own staff and to protect the public.
Speaker 1: Then you add to that the fact that when we
Speaker 1: get a number of positive cases, we try and do
Speaker 1: what we think is the right thing to do. By
Speaker 1: shutting down. We lose a tremendous amount of money doing that.
Speaker 1: We had to cancel all of our New Year's Eve reservations,
Speaker 1: which is supposed to be our single biggest revenue driver
Speaker 1: of the entire year. Um. You know, it is really
Speaker 1: really a tough time right now for us, our city,
Speaker 1: but also just our industry in general. Everyone is hurting. Um.
Speaker 1: I am seeing just dozens by the day restaurants locally,
Speaker 1: state and federally just say that they are going to
Speaker 1: shut down for the rest of the year because they
Speaker 1: don't know what's going on. And we all feel, honestly
Speaker 1: a bit abandoned by Congress who said that they were
Speaker 1: going to refill the restaurant Revitalization fund well over a
Speaker 1: year ago, and you have almost two thousand restaurants that
Speaker 1: applied for it that never got it. And right now
Speaker 1: we're we're all, you know, deciding on whether we're going
Speaker 1: to be able to open back up at all. Talk
Speaker 1: was a little bit about perhaps the EBBS and flows
Speaker 1: you've seen in terms of consumers that have come in
Speaker 1: while your restaurant was open as a result of say,
Speaker 1: vaccine mandates or mask mandates, which seemed to also ebb
Speaker 1: and flow in various states. Yeah, I mean evan flow
Speaker 1: is a great way to put it. There's been moments
Speaker 1: where um consumer um confidence is up and they want
Speaker 1: to come in, they want to dine inside. And you
Speaker 1: will see one news report come out within a day
Speaker 1: and you'll see reservations for the next week be impacted.
Speaker 1: You'll see a demand for outdoor seating go from all
Speaker 1: time high to almost zero in the colder months here
Speaker 1: in San Francisco and and obviously I can imagine in
Speaker 1: the colder parts of the country, it's it's completely nullified,
Speaker 1: uh to a news report will come out and then
Speaker 1: people all of a sudden are willing to dine in
Speaker 1: the rain outside, right, Um, but they don't want to
Speaker 1: eat inside. And so that is incredibly hard for a
Speaker 1: restaurant to whether the storm of It's very hard in
Speaker 1: terms of predictability and visibility as to how much we
Speaker 1: need to order, how much we need to staff, and
Speaker 1: then staffing. As you guys said in your previous segment
Speaker 1: is you know, something that is very challenging for all
Speaker 1: of us to deal with. UM. You know, we tend
Speaker 1: to pay on the higher side in terms of our
Speaker 1: restaurant group to begin with, but you know, it is
Speaker 1: something that you know, the guest is going to feel
Speaker 1: the impact because of raising prices all across the board.
Speaker 1: You know, our cost of goods have gone up through
Speaker 1: the roof, our losses have gone up through the roof,
Speaker 1: our debt has increased, UM, you know, and labor is
Speaker 1: just gonna go up and up and up to get
Speaker 1: viable candidates, David, what what brings stability here? What what
Speaker 1: would you want to see with regards to assistance and
Speaker 1: help that you think can maybe bring some normalcy and
Speaker 1: stability to this industry. Well, there's one answer, right, There's
Speaker 1: one simple, silver bullet answer, and that's the Restaurant Revitalization Fund,
Speaker 1: which we are at the Independent Restaurant Coalition were fighting
Speaker 1: for since March. We fought UM, you know, and when
Speaker 1: every other restaurant UM you know, trade group gave up
Speaker 1: on it, we fought for independent restaurants and we were
Speaker 1: able to get it for over a hundred thousand restaurants.
Speaker 1: There's a hundred and seventy seven thousand more restaurants that
Speaker 1: signed up for it that didn't get it. And now
Speaker 1: what Congress is doing is there in the business of
Speaker 1: choosing winners and losers rather than refilling it as Senator
Speaker 1: Senator Schumer promised he would. He promised this was a
Speaker 1: down payment on the rest of it. And what we
Speaker 1: need them to do is we need to kind of
Speaker 1: belly up to the bar, pay for this and help
Speaker 1: us get to the other side of this, because if
Speaker 1: they do, I promise you, they will be saving millions
Speaker 1: of jobs. And those are jobs ultimately that they're not
Speaker 1: going to have to take care of down the road. David,
Speaker 1: just very briefly, in the last minute we we have
Speaker 1: with you, you may make the case here and talk
Speaker 1: a little bit of the scarring that that could occur
Speaker 1: to the industry into cities and towns throughout the country
Speaker 1: if independent restaurants don't get this aid. Yeah. Well, this
Speaker 1: is a simple case to make, right. We um produce
Speaker 1: more to the GDP than almost any other industry. We
Speaker 1: provide more jobs than almost any other industry. We're talking
Speaker 1: about fifteen million jobs and counting that our industry in
Speaker 1: independent restaurants alone provide to our economy the amount of
Speaker 1: tax revenue to our cities. All of that is why
Speaker 1: our industry is worth saving. And most importantly, something we
Speaker 1: need to remember is you don't need a college degree,
Speaker 1: and you don't even need a high school degree to
Speaker 1: get into the restaurant industry to make it into the
Speaker 1: middle class. If you work in our industry, work your
Speaker 1: way up, you can open a small business. And small
Speaker 1: businesses the cornerstone of our economy. Yeah, well said small businesses,
Speaker 1: certainly the cornerstone, and she point out restaurants really the
Speaker 1: lifeblood of so many communities and so many of our
Speaker 1: cities out there. It's kind of what makes our cities cities.
Speaker 1: David really appreciate you take a time to be with us,
Speaker 1: and we wish you the best. David Mayfield there, he's
Speaker 1: a part of the Independent Restaurant Coalition and he's an
Speaker 1: owner and chef of KFICO out there in San Francisco.
Speaker 1: Of course, the solution to all this is getting the
Speaker 1: COVID crisis under control. We're gonna talk a little bit
Speaker 1: more about the COVID crisis and some new recommendations by
Speaker 1: the CDC. This one applying to cruise ships. We're gonna
Speaker 1: talk about that and so much more right here on Bloomberg.
Speaker 1: This is Bloomberg Market Special coverage all week long, simulcasts
Speaker 1: across Bloomberg TV, radio and YouTube. We welcome all of
Speaker 1: our audiences across all of our platforms. Remain bostic here
Speaker 1: alongside Tim Stenovik and Created Gupta, we're gonna be counting
Speaker 1: you down to the close of trading on this Thursday afternoon,
Speaker 1: just about one hour away. The SMP five hundred camped
Speaker 1: out at another record high, as is the Dow Jones
Speaker 1: Industrial Average, and NAZDAC one hundred came within just a
Speaker 1: few points of that record high. As far as the
Speaker 1: individual mover as well, it's kind of a mixed bag here.
Speaker 1: You have names like Apple not going much anywhere, basically
Speaker 1: flat on the day, Ford shares, which had been higher
Speaker 1: flat on the day. Uh, And then you got stocks
Speaker 1: like Peloton, like Zoom, A lot of these sort of
Speaker 1: memes stocks, I guess if you call them memes or
Speaker 1: pandemic blaze seemed to be back and focus, no real news.
Speaker 1: They're uh, crety with regards So what's moving those stocks
Speaker 1: and why? But I've seen a pretty significant drump Peloton
Speaker 1: shares up about nine percent right now. You know, even
Speaker 1: with the holiday trading, that quiet volume is still those
Speaker 1: names that seem to really become kind of familiar plays
Speaker 1: when it comes as hedges on the omicon variant, perhaps,
Speaker 1: or perhaps just the fact that those are the stocks
Speaker 1: that have been getting battered lately. So why not by
Speaker 1: the dip there? Yeah, Hey, does Apple hit three trillion
Speaker 1: by the end of the year. Uh, well that's tomorrow.
Speaker 1: I know you think it would happen tomorrow. We're saving
Speaker 1: it for them. It would be appropriate if it happen tomorrow.
Speaker 1: We're gonna do the show from Time Square, so the
Speaker 1: confetti we'll be ready here. Let's uh, we're gonna go
Speaker 1: get to our guests, Jason Pride in just a moment,
Speaker 1: but we want to jump over to Abigail do a
Speaker 1: little real quick, who is not in Times Square, but
Speaker 1: she's keeping a eye on the markets. I'm certainly not
Speaker 1: in Times Square right here at headquarters at lex and yes,
Speaker 1: everything that you guys have been saying, you know, steady
Speaker 1: as she goes Cruise Control rally, the SMP five hundred
Speaker 1: up three of the four days this week, interestingly, the NAZAC.
Speaker 1: This is the nazac's first update this week, climbing still
Speaker 1: not hitting a record high, nonetheless that stands out and
Speaker 1: speaking of trends, crude oil and it's best up streak
Speaker 1: going back to February now relative to that strength with
Speaker 1: the NAZAC, and I of course should say the SMP
Speaker 1: five likely to hit another record closing high seventy one
Speaker 1: of the year. Really pretty incredible and a third big
Speaker 1: up gear in a row. But the NAZACUT performance is
Speaker 1: coming from China Tech. It's a incredible the Golden Dragon
Speaker 1: NAZAC et f or index excuse me, up more than
Speaker 1: ten percent today. That is the best day going back
Speaker 1: to two thousand eight. However, into today on the year,
Speaker 1: it had been down almost fifty so talk about catchup
Speaker 1: falling night. But that's what's happening with Bai Dow and
Speaker 1: Ali Bob and a number of those other stocks really
Speaker 1: helping out again the NAZAC and the New York Fang Index.
Speaker 1: A comment on about what you just said was what
Speaker 1: is happening in the commodity space. Have we hit the
Speaker 1: peak in the commandity rally or is there room to run? Well,
Speaker 1: you know yesterday Creedy, you're asking about the dollar. It's
Speaker 1: interesting a lot of people seem to think that the
Speaker 1: dollar is going to go higher. If that dollar strength
Speaker 1: reflects a strong economy, you could probably see commodities continue
Speaker 1: to go higher. However, if the dollar goes higher and
Speaker 1: there's not quite as much of economic strength, there's more
Speaker 1: of the inflationary pressure on the dollar, it would be
Speaker 1: interesting to see whether or not oil can hang in
Speaker 1: there or not. Technically it's somewhat strong, but the commodities
Speaker 1: like box create a tremendous year. The Bloomberg Commodity Index
Speaker 1: up more than this year Oil, I think up more
Speaker 1: than Can the rally continue? I think it's really going
Speaker 1: to come down to the fundamentals there in terms of
Speaker 1: the economic growth, will it or will it not be there?
Speaker 1: And in the beginning of the year, how much we
Speaker 1: will o macron impact. Let's see if we can get
Speaker 1: some answers to that from our next guests. Our thanks
Speaker 1: there to Abigail Doolittle giving us a nice little runway
Speaker 1: here to start off with. Jason Pride, he is uh
Speaker 1: the chief investment officer over for Private Wealth, I should
Speaker 1: say over at Glenn made about forty billion dollars in
Speaker 1: assets under management at the firm. Jason, let's look ahead
Speaker 1: to two here. I'm sure all clients have to be
Speaker 1: asking you kind of what to expect given how phenomenal
Speaker 1: this year was for at least most asset classes, and
Speaker 1: how unlikely some of those gains probably were at least
Speaker 1: you know when you look at where we were at
Speaker 1: the start of the year. Yea, absolutely, and thanks for
Speaker 1: having me on Romaine. Uh. This is this is an
Speaker 1: interesting environment that we find ourselves in as we look
Speaker 1: forward to two twenty two. We think the games are
Speaker 1: probably gonna be more modest than they've been the past
Speaker 1: uh years, So basically just to the magnitude that we've
Speaker 1: seen in two thousand twenty one and the valuation point
Speaker 1: that we're starting with as we enter two twenty two.
Speaker 1: Having said that, we think there's some reason for optimism
Speaker 1: for investors. The primary reason is actually that we're just
Speaker 1: still in a recovery from the pandemic, and that recovery
Speaker 1: comes with an expansion of the economy and expansion of
Speaker 1: profits for corporations, and a good fundamental picture heading into
Speaker 1: two thousand twenty two, we expect there to be growth
Speaker 1: and earnings growth and pay for consumers, growth and revenues
Speaker 1: at the top line for businesses, and therefore an underpinning
Speaker 1: for a rising stock market, offset to some degree by
Speaker 1: the premium valuations that we enter the year at two.
Speaker 1: In two thousand twenty two, Jason, help us understand what
Speaker 1: you're factoring in from a policy perspective, What do you
Speaker 1: what are you expecting in two both when it comes
Speaker 1: to fiscal policy and monetary policy, And that's that's one
Speaker 1: of the key questions that we think that there is
Speaker 1: for two is what does the policy framework look like?
Speaker 1: And let's address two aspects of policy, one being monetary
Speaker 1: policy and two being fiscal But basically the big picture
Speaker 1: for both of them is they are going to both
Speaker 1: be a headwind for the economy and for the markets
Speaker 1: in two thousand twenty. One of the reasons for it
Speaker 1: to be to be softer. Fiscal policy is going to
Speaker 1: come in some on the ballpark about two hundred and
Speaker 1: fifty billion dollars spend next year. That's of substantially from
Speaker 1: the two trillion dollars spend in two thousand twenty one.
Speaker 1: And monetary policy, we know is going to be We're
Speaker 1: going to see the FED tapering its balance sheet or
Speaker 1: tapering its purchases, adding to its bound sheet, and also
Speaker 1: talking about raising rates in two thousand twenty, which we
Speaker 1: think will actually probably start somewhere in the middle of
Speaker 1: two thousand twenty two. You put those things together, and
Speaker 1: it's a headwind for both the economy and markets, but
Speaker 1: it's not an insurmountable headwind, which is one of the
Speaker 1: reasons that we think we'll probably still see gains, just
Speaker 1: not gains there nearly as big as what we send
Speaker 1: in two thousand one. Well, Jason, help me out here,
Speaker 1: because I'm a little bit confused about where we are
Speaker 1: kind of in the economic and the market cycle. I mean, traditionally,
Speaker 1: after you come out of recessions, you're supposed to see
Speaker 1: a little period of small caps, commodities, those riskier assets,
Speaker 1: even emerging markets really excel. And we got part of
Speaker 1: that trade, the commodities rally for example, that ab Gail
Speaker 1: Doolittle was just talking about. But then we go kind
Speaker 1: of back in that defensive trade. Does that mean that
Speaker 1: kind of early part of the expansion of the recovery
Speaker 1: of the cycle that we've just accelerated passed through it
Speaker 1: so I think there's a couple of answers to that.
Speaker 1: Number One, are we passed the early stage and into
Speaker 1: the mid stage of the economy and the expansion. We
Speaker 1: think yes at this point in time, but it's kind
Speaker 1: of a weird mid cycle stance, one that we've kind
Speaker 1: of oscillated back, as you mentioned, back and forth between things.
Speaker 1: They're typically recovery trades due to the inflation cycle, due
Speaker 1: to additional variants being being you know, coming forth from uh,
Speaker 1: the COVID crisis um. At the end of the day,
Speaker 1: what we think investors need to do is look at
Speaker 1: this as an ongoing economic expansion, look at what investments
Speaker 1: have participated in, what has not participated. Something has participated
Speaker 1: really well, when probably expect a trade off back to
Speaker 1: something that hasn't participated as well. A great example of that,
Speaker 1: we think is small kept securities. Small kept companies have
Speaker 1: not they participated early in two relatively well late two even,
Speaker 1: but they've actually backed off in the relative performance through
Speaker 1: two one. We think they're probably setting up for another
Speaker 1: run about performance due to that relative underperformance of the
Speaker 1: tail into two thousand twenty one. Another area that we
Speaker 1: think is interesting is real estate. Real estate has been
Speaker 1: kind of an unloved, relatively hated environment and and portion
Speaker 1: the market due to people's concern about people simply staying
Speaker 1: home and away from work, and therefore they're being less
Speaker 1: demand from corporate real estate. We think it's actually uh
Speaker 1: significant misperception is that how much demand for corporate real
Speaker 1: estate will back off, And even a misunderstanding is that
Speaker 1: how much of corporate real estate is actually delicated dedicated
Speaker 1: off a space. It's a fairly small minority that's office space.
Speaker 1: The rest of it's used for other things that are
Speaker 1: highly productive. A big thank you to Jason Pride, chief
Speaker 1: investment officer for Private Wealth at Glenn Meade. Happy New Year, Jason,
Speaker 1: thanks so much for for joining us. Hey, I mean
Speaker 1: the conversation continues creating about what when it comes to
Speaker 1: real estate, I mean, what it looks like on the
Speaker 1: other side of the pandemic and when we get to
Speaker 1: the other side of the pandemic. I mean, think about
Speaker 1: the conversation we had yesterday about return to the office.
Speaker 1: A company like Facebook just delaying that but still investing
Speaker 1: in in corporate real estate. Yeah, we're not even just
Speaker 1: talking my real estate here. That same psychology expands of
Speaker 1: things like I'm cultural Land, Timberland, a lot of these
Speaker 1: other just space kind of questions that you really need.
Speaker 1: And it really all depends on really just one thing,
Speaker 1: and that is, of course the COVID nineteen virus. But
Speaker 1: the conversation that has to be I guess is are
Speaker 1: we talking real estate and aggregate or are we looking
Speaker 1: at certain pockets here. I mean, there's still areas of
Speaker 1: the commercial real estate market that are just just still
Speaker 1: completely beaten down. I guess there's a rotation a little bit.
Speaker 1: I guess based on where we're living, where we're working,
Speaker 1: and what we're doing here. But it seems like you
Speaker 1: have to be a little bit choosy about where exactly
Speaker 1: you choose with your money. Look, that's a really good point.
Speaker 1: You can't say that the residential real estate by any
Speaker 1: means has been unloved over the last year throughout the pandemic.
Speaker 1: This is Bloomberg Markets, a special simulcast all week long here,
Speaker 1: broadcast across Bloomberg TV, radio and on YouTube. Romaine Bostic
Speaker 1: Tim sent off Creaty Group to counting you down to
Speaker 1: the closing bell on this Thursday afternoon, just a little
Speaker 1: more than twelve minutes to go here, the SMP five hundred,
Speaker 1: which had been higher here for a good portion of
Speaker 1: the day, turning red right now. As far as some
Speaker 1: of the industry groups here, you can take a look,
Speaker 1: or you could take a listen here and see where
Speaker 1: we are right now. You talk about some of the
Speaker 1: tech stocks, they've actually kind of weakened here as we've
Speaker 1: gotten a little bit closer to the closing bells here
Speaker 1: on this day, you're seeing a little bit of a
Speaker 1: bid uh come in late into some of those names.
Speaker 1: We should point out a lot of the travel stocks,
Speaker 1: including the cruise lines as well as some of the
Speaker 1: airlines and hotel stocks, UH, Tim and Creaty are moving
Speaker 1: lower here. That largest seems to be on the back
Speaker 1: of that announcement we had a little bit earlier today
Speaker 1: from the CDC advising against traveling on cruise ships. You
Speaker 1: know what's interesting, Romaine, is the ones that are performing better. Actually,
Speaker 1: you're actually seen some of those farmer stocks actually higher,
Speaker 1: and they like sud Visor, Johnson Johnson, some of those
Speaker 1: vaccine stocks really kind of paving the way. Uh. This
Speaker 1: comes after, of course, yesterday biotech was kind of the laggard. Yeah,
Speaker 1: and as you mentioned Romaine, Big Tech weighing down the
Speaker 1: SMP five hundred, Microsoft, Tesla, Apple, and Video A M
Speaker 1: d all leading the way to the downside on the SMP.
Speaker 1: All right, let's get some broader perspective as to what's
Speaker 1: going on now and maybe what to expect in two.
Speaker 1: Joe An Feeney joining us right now. She's partner and
Speaker 1: portfolio manager at Advisor's Capital Management. Joanne, always wonderful, Uh
Speaker 1: to have you here on the program. Um, let's start
Speaker 1: off with two. Uh, the gains we saw in is
Speaker 1: there I guess a fundamental reason to expect that those
Speaker 1: gains can continue into the next year or me, Hello
Speaker 1: everybody there, Um, yeah, I mean not certainly, not to
Speaker 1: the same extent, but to degree that earnings growth is
Speaker 1: expected to continue at a pretty decent pace next year,
Speaker 1: you know, somewhere around the order of eight nine percent.
Speaker 1: And that does give a lot of reason to be
Speaker 1: confident that equities, some equities can continue to move higher.
Speaker 1: But just like we saw last year, we shouldn't expect
Speaker 1: a lot of consistency across different kinds of stocks. And
Speaker 1: so picking your places, I think it's gonna continue to
Speaker 1: be pretty important. Okay, So speaking of picking picking your place,
Speaker 1: where should investors be thinking about putting their money. Well,
Speaker 1: there are three areas we think continue to be really
Speaker 1: important to remain exposed to. One of them certainly is
Speaker 1: secular growth. There are a lot of good multi year
Speaker 1: expansions ongoing, and the companies that are key providers in
Speaker 1: those areas are likely to see their sales and earnings
Speaker 1: growth continue at a pace well above the market average.
Speaker 1: I mean this could be companies exposed to five G
Speaker 1: two data center expansion. The housing market we think continues
Speaker 1: to grow pretty strongly given the backlog and demand that's
Speaker 1: sitting there. So names like Broad Calm or a Corvo
Speaker 1: on the smaller side, Lenar we like in the housing space,
Speaker 1: and william Sonoma because people are gonna put stuff in
Speaker 1: those houses, from furniture to two kitchen gadgets. So those
Speaker 1: are couple areas we like. But beyond that, you know,
Speaker 1: go to defensives and go to the reopening place. Joan,
Speaker 1: you caught me when you said five G there, and
Speaker 1: then you really got my attention when you said defensive
Speaker 1: and big tech. I'm curious, though, how much of the
Speaker 1: geopolitics kind of factors into all of this, especially when
Speaker 1: you're talking about the tech sector and perhaps Joe Biden's
Speaker 1: mission to bring some of that capacity back onto US soil. Yeah,
Speaker 1: that that is going to be a tricky, uh, you know,
Speaker 1: a set of waters to navigate, because politics always it
Speaker 1: is hard to predict, and it always it throws a
Speaker 1: bit of a monkey wrench into things. But if you
Speaker 1: step back and look at the equipment that has to
Speaker 1: be built, the devices that will continue to be built
Speaker 1: five G, right, we're still in some of the early
Speaker 1: innings there of those devices being rolled out, and so
Speaker 1: you know, I think that some of these companies are
Speaker 1: really beyond the politics, like a Core, for example, providing
Speaker 1: really key inputs into smartphones five G enabled smartphones, but
Speaker 1: also providing some key equipment into the defense industry UH.
Speaker 1: And Broadcom is another one with their filter technology as
Speaker 1: well as their ability to sell into data centers, which
Speaker 1: will need to expand by the way as five G
Speaker 1: growth because more streaming, you know, more data flowing across
Speaker 1: the Internet and the seller uh networks will drive up
Speaker 1: that demanded And I think those two companies, you know,
Speaker 1: for two, are are probably well out of the way
Speaker 1: of the political turmoil that might be devil some other companies. Yeah,
Speaker 1: and when you talk about some of the other sectors,
Speaker 1: particularly healthcare, which has done pretty well this year, particularly
Speaker 1: some of the pharmaceutical companies, and obviously the boosts that
Speaker 1: some of them got from the COVID crisis, and to
Speaker 1: a certain extent some of the medical device companies which
Speaker 1: had actually started to rebound later in the year. Here,
Speaker 1: what's the general thinking right now with some of those names.
Speaker 1: Do they still look attractive to you? Yeah? You know,
Speaker 1: go back to the fundamentals on healthcare, right. The demographics
Speaker 1: are really an important driver longer term, right, And the
Speaker 1: aging population, not just in the US but around the
Speaker 1: world will demand greater innovation in healthcare. And so, you know,
Speaker 1: some of the areas we like our the equipment, the
Speaker 1: analytical equipment providers, whether it's a Thermo Fisher or an
Speaker 1: adult for example. And then beyond that too, I think
Speaker 1: the question you were really asking Romaine is you know,
Speaker 1: what about these farma what about BioNTech or Advisor? Um
Speaker 1: We still like both of those um as we can
Speaker 1: see COVID uh, you know, may continue to have surprises
Speaker 1: for us with new variants. We certainly gotta wake up
Speaker 1: call with Omicron, and what we're seeing is that these
Speaker 1: mr and A technologies, particularly from BioNTech, are really good
Speaker 1: at creating the T cell response, which seems like it's
Speaker 1: helping to prevent the severe illness UH for folks that
Speaker 1: are vaccinated. And so we think that that stock has
Speaker 1: more room to run as boosters become more prevalent around
Speaker 1: the world and Israel potentially even going to a fourth shot.
Speaker 1: But be on that. We really like the pipeline of
Speaker 1: a company like bion Tech UH in their other m
Speaker 1: RNA based therapies, whether it's a flu vaccine or cancer treatment.
Speaker 1: So while it's gotten a lot of attention because of COVID,
Speaker 1: we own it and we've owned it for our clients
Speaker 1: for a while for reasons that go well beyond the
Speaker 1: current crisis. All Right, a lot of opportunities ahead for rent.
Speaker 1: Conversation right now with joe An Phoeney, partner and portfolio
Speaker 1: manager ED Advisor's Capital Management. Thanks for listening to Bloomberg
Speaker 1: Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg
Speaker 1: dot com, and you can also listen to our radio
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