WEBVTT - Examining Labor, Retail, And Renewable Energy Markets 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.919 at Bloomberg dot com slash podcast. My question is where 0:00:22.920 --> 0:00:27.360 do we go with these markets in I'm gonna spend 0:00:27.360 --> 0:00:29.440 the next you know, some of the next few days 0:00:29.480 --> 0:00:31.680 of you know, getting some free time to maybe read 0:00:31.680 --> 0:00:35.239 some of those forecasts for an outlooks for Let's check 0:00:35.280 --> 0:00:37.920 in with a professional here, Marked Oubting, Chief Investment Officer, 0:00:37.960 --> 0:00:40.920 Blue Bay Asset Management. Mark, thanks so much for joining 0:00:41.000 --> 0:00:44.040 us here. Heck of a one, we've still got another 0:00:44.080 --> 0:00:46.240 month or so ago, but just looking at the equity 0:00:46.280 --> 0:00:52.319 induicries for example, another just stellar year of performance from 0:00:52.320 --> 0:00:56.480 a risk asset perspective. How are you envisioning two at 0:00:56.480 --> 0:01:01.160 this point? Yeah, so it's it's certainly been a strong 0:01:01.240 --> 0:01:04.400 use for risk assets in one, following on from a 0:01:04.480 --> 0:01:07.480 very good I guess the concern that I would have 0:01:07.520 --> 0:01:10.520 as we look forward into two is that one of 0:01:10.520 --> 0:01:12.920 the big factors that's been pushing markets up, of course, 0:01:12.959 --> 0:01:17.000 has been the liquidity coming from global central banks, and 0:01:17.040 --> 0:01:20.000 with policy now starting to turn, with the FED tapering, 0:01:20.560 --> 0:01:23.479 with the FED likely to to raise rates, we think 0:01:23.520 --> 0:01:26.240 a couple of times in two. We do think it's 0:01:26.240 --> 0:01:28.640 going to be a much more challenging landscape next year. 0:01:28.720 --> 0:01:31.920 So in terms of beta returns, a much more subdue 0:01:31.959 --> 0:01:36.520 market we think in UM and potentially one which is 0:01:36.520 --> 0:01:38.680 going to be a bit more volatile as well as 0:01:38.720 --> 0:01:41.600 central banks step back, expect to see a bit more 0:01:41.680 --> 0:01:45.320 volatility and markets. And you mentioned, of course that the 0:01:45.400 --> 0:01:47.240 risks here is that a lot of the valuations of 0:01:47.360 --> 0:01:52.600 liquidity driven and we have issues about margins and COVID perhaps, 0:01:52.680 --> 0:01:57.120 but maybe the bullish case, just to be devil's advocate, perhaps, 0:01:57.160 --> 0:01:59.320 is that saying that yeah, there might be peat growth, 0:01:59.680 --> 0:02:03.000 but that doesn't mean that it's doesn't mean low growth, 0:02:03.040 --> 0:02:07.800 does it. They're not necessarily the same things, that's correct, 0:02:08.120 --> 0:02:11.080 And look, exty markets do love to climb a wall 0:02:11.120 --> 0:02:15.280 of worry, so um, I guess many people have tried 0:02:15.320 --> 0:02:18.440 to to write stocks off before uh and I do 0:02:18.520 --> 0:02:21.160 think we live in a financial sort of landscape where 0:02:21.160 --> 0:02:24.760 there is inflation in the presence of inflation, it's it's 0:02:24.760 --> 0:02:28.480 difficult to own cash, it's difficult to own a lot 0:02:28.520 --> 0:02:31.680 of sort of high quality fixed income. So as a 0:02:31.680 --> 0:02:34.760 allocators haven't got too many places to go. And of 0:02:34.800 --> 0:02:38.079 course equities do have the protection of the fact that 0:02:38.160 --> 0:02:43.160 earnings will grow in line with prices, and so from 0:02:43.200 --> 0:02:45.480 that point of view, I still think we're looking at 0:02:45.480 --> 0:02:49.720 healthy earnings growth in a context of two. And from 0:02:49.720 --> 0:02:52.480 a growth standpoint, I think we can look forward to 0:02:52.560 --> 0:02:55.919 soon continued recovery of the global economy as we move 0:02:55.919 --> 0:02:59.639 away from the pandemic. All of these are obviously plus factors. 0:03:00.240 --> 0:03:02.280 I guess the one thing that you would say is 0:03:02.320 --> 0:03:05.080 that the wind which has been blowing on your back 0:03:05.639 --> 0:03:07.720 in terms of given you a boost in terms of 0:03:08.360 --> 0:03:12.640 liquidity and policies or is now starting to turn, and 0:03:12.720 --> 0:03:15.799 that that children starting to blow into our faces as 0:03:15.800 --> 0:03:19.200 we moved into two and Mark, you mentioned earnings, and 0:03:19.400 --> 0:03:22.200 you know you've just come through a stellar third quarter 0:03:22.360 --> 0:03:25.040 earnings period, and you know, I guess the question is 0:03:25.680 --> 0:03:29.480 was it enough? And are the profit outlooks enough to 0:03:29.600 --> 0:03:33.000 allay valuation concerns that I think a lot of investors 0:03:33.040 --> 0:03:36.800 do have. Yeah, well, it really was a very good 0:03:37.080 --> 0:03:39.600 scenes and and we we don't think we're done with 0:03:40.000 --> 0:03:42.920 good news in terms of earnings. I think the one 0:03:42.920 --> 0:03:45.040 thing that you would look at, maybe as an equity investor, 0:03:45.160 --> 0:03:47.440 is that you're you're looking at long dated bond fules 0:03:47.480 --> 0:03:53.240 as effectively equities are long duration assets. You're you're discounting 0:03:53.320 --> 0:03:56.920 cash flows over many years, given the very elevated levels 0:03:56.920 --> 0:04:00.480 of PE. And in that context, if you do see 0:04:01.200 --> 0:04:03.360 a move up in long dated bond yelds, that could 0:04:03.360 --> 0:04:06.240 be the one thing which could strain those valuations to 0:04:06.320 --> 0:04:09.600 a greater extent. Perhaps could also pumpt a bit of 0:04:09.800 --> 0:04:13.920 a rotation maybe away from growth towards value. Perhaps, So 0:04:14.000 --> 0:04:16.479 there may be some interesting thematics, but I do think 0:04:16.520 --> 0:04:19.640 that the equity markets will probably take quite a lot 0:04:19.680 --> 0:04:21.800 of their queue not just from what the FED is doing, 0:04:22.320 --> 0:04:24.520 but rather than what the long end of the bond 0:04:24.600 --> 0:04:27.080 market is doing. Yeah, and I think that's interesting because yeah, 0:04:27.160 --> 0:04:30.080 stocks are expensive when you look at them, perhaps on 0:04:30.160 --> 0:04:32.280 the PE ratios, but then when you compare them to 0:04:32.360 --> 0:04:35.000 bonds they look a little bit cheaper. So it is 0:04:35.040 --> 0:04:39.480 a confusing time for asset allocators. And in this confusing time, 0:04:39.520 --> 0:04:45.279 how do you allocate Ino, Well, I think, per my 0:04:45.279 --> 0:04:47.599 my earlier comments, I'll tell you with a degree of caution, 0:04:47.680 --> 0:04:49.480 I think there has been a time where it wanted 0:04:49.560 --> 0:04:53.120 to be uh sort of position inquired a bullish fashion 0:04:53.760 --> 0:04:56.080 over the course of the past eighteen months. I think 0:04:56.120 --> 0:04:59.760 it is a smart time now to take some risk off, 0:04:59.760 --> 0:05:02.000 to take able to to honker down a bit and 0:05:02.040 --> 0:05:05.200 actually be prepared to buy dips if you do see 0:05:05.279 --> 0:05:08.200 dips occur in the months ahead, if you buy the 0:05:08.200 --> 0:05:11.279 thesis that there's going to be volatility, I think maybe 0:05:11.279 --> 0:05:13.240 you're you're you're you're happy to try and sort of 0:05:13.800 --> 0:05:15.960 pick your moments to try and sort of add risk, 0:05:16.320 --> 0:05:19.320 but otherwise act with a degree of caution. But I 0:05:19.320 --> 0:05:21.440 guess the one thing that you say about the high 0:05:21.480 --> 0:05:24.120 quality fixed income is that once upon a time we 0:05:24.200 --> 0:05:26.240 used to talk about the risk free asset. Well, that 0:05:26.480 --> 0:05:29.560 risk free asset now looks like more of a return 0:05:29.640 --> 0:05:33.760 free risk given that rates of a nothing and obviously 0:05:33.800 --> 0:05:36.440 yields are well below what we see on inflation. So 0:05:37.000 --> 0:05:39.400 in many respects, I think it's hard to be underweight 0:05:39.440 --> 0:05:42.880 stocks and overweight fixed income. You probably want to remain 0:05:43.000 --> 0:05:46.680 overweight stocks, but I would perhaps be sort of rotating 0:05:46.680 --> 0:05:51.080 towards more cautious names, more defensives, more and more valuation players. 0:05:51.120 --> 0:05:53.880 For example, European banks I think are really cheap and 0:05:54.200 --> 0:05:56.400 could do pretty well in a rising rate environment. So 0:05:56.440 --> 0:05:59.200 there will be areas of the market that you say, yes, 0:05:59.240 --> 0:06:02.839 these are ones that we gotta like, but otherwise I 0:06:02.880 --> 0:06:05.800 think more of the cautious stance in twenty two. All right, Mark, 0:06:05.839 --> 0:06:08.520 thanks so much for joining us. Really appreciate getting your thoughts, 0:06:08.760 --> 0:06:12.159 your perspective on these markets. Marked doubting, Chief investment officer 0:06:12.240 --> 0:06:15.679 for Blue Bay Asset Management, getting a little bit cautious 0:06:15.720 --> 0:06:24.120 but still constructive and overweight on equities. Okay, you. We 0:06:24.120 --> 0:06:27.080 had some retailers this morning, Gap and North from disappointing results. 0:06:27.120 --> 0:06:29.640 They called out supply chain issues and that kind of 0:06:29.720 --> 0:06:33.520 raises an issue for holiday spending going forward. If in 0:06:33.560 --> 0:06:35.279 fact I go to a mall, and that is a 0:06:35.360 --> 0:06:38.640 huge if will there be stuff on the shelf. Let's 0:06:38.680 --> 0:06:41.719 check in with Elizabeth Ebert see I O advisory partner 0:06:41.760 --> 0:06:46.719 for CpG Retail and Logistics for Infosis Consulting Influsis is 0:06:46.760 --> 0:06:50.839 a huge company nine billion dollar market cap to stocks 0:06:50.880 --> 0:06:54.919 up year to date. So these folks kind of have 0:06:55.040 --> 0:06:56.880 their finger on the pulse here, Lizaba, thanks so much 0:06:56.880 --> 0:06:59.560 for joining us here talk to us about kind of 0:06:59.600 --> 0:07:03.200 white you're seeing from your retail clients as they try 0:07:03.400 --> 0:07:09.960 to navigate this really unprecedented disruption in the global supply chain. Absolutely, 0:07:10.000 --> 0:07:13.239 and and thank you very much for that introduction. After 0:07:13.360 --> 0:07:18.000 last year, everyone was hoping that this year's Christmas season 0:07:18.160 --> 0:07:21.000 was going to be, UM, a lot more predictable, we 0:07:21.040 --> 0:07:23.400 are going to be past covid UH. There was going 0:07:23.440 --> 0:07:26.040 to be a lot more certainty and transparency into what 0:07:26.080 --> 0:07:29.240 the season was going to look like. And unfortunately, UM, 0:07:29.280 --> 0:07:33.200 it's absolutely not that. So there's been a convergence really 0:07:33.480 --> 0:07:36.200 of of covid UH. You have to remember, and I 0:07:36.240 --> 0:07:38.240 think someone just said under the hood. Under the hood 0:07:38.240 --> 0:07:41.640 of what supply chain problems include are are very much 0:07:41.680 --> 0:07:45.000 the workforce issues, and supply chain does not have many 0:07:45.040 --> 0:07:49.520 opportunities for working from home, so those roles are being filled. 0:07:49.560 --> 0:07:53.000 Even with this morning's great employment numbers, the supply chain 0:07:53.080 --> 0:07:55.600 roles are being filled very slowly, and that's very much 0:07:55.600 --> 0:07:59.120 affecting what we see with retail and retailers are having 0:07:59.160 --> 0:08:02.960 to pay more UM and the retail experience, what customers 0:08:03.000 --> 0:08:05.560 are going to see in the stores is going to 0:08:05.600 --> 0:08:07.720 be a bit more fraught. There's going to be more 0:08:07.800 --> 0:08:11.360 challenges in and getting any associate help, There's going to 0:08:11.480 --> 0:08:16.320 be inventory gaps, so there's there's really more headaches than 0:08:16.360 --> 0:08:18.120 opposed to what we're hoping for at the end of 0:08:18.200 --> 0:08:20.680 last year. UM. The other thing I'd like to point 0:08:20.680 --> 0:08:24.600 out is that retailers stock and plan based on prior 0:08:24.680 --> 0:08:28.800 year's performance. So last year was an unusual year, and 0:08:28.920 --> 0:08:31.920 to plan over last year's performance and those trends and 0:08:31.960 --> 0:08:34.960 have this year be completely off the rails in terms 0:08:34.960 --> 0:08:39.000 of expectations. Some of those demand forecasting models are simply 0:08:39.200 --> 0:08:42.240 broken again, and so there's just a huge amount of 0:08:42.280 --> 0:08:44.520 uncertainty and that's going to be reflected really in the 0:08:44.600 --> 0:08:48.559 customer experience through the holiday season. And of course it's 0:08:48.600 --> 0:08:51.199 Black Friday coming up and blee Back intelligence saying that 0:08:51.240 --> 0:08:55.040 are expecting robust holiday sales despite a lot of these 0:08:55.040 --> 0:08:57.400 supply chain issues that we have a lot of items 0:08:57.440 --> 0:09:00.320 are on the shelves if you go and see tailers 0:09:00.320 --> 0:09:02.520 seemed to be prepared. But there are a few special 0:09:02.600 --> 0:09:06.720 discounts and office this year, uh, and those don't seem 0:09:06.720 --> 0:09:09.040 to be quite as eye catching. Is this all down 0:09:09.040 --> 0:09:13.800 to the supply chain? Absolutely? And I think what is 0:09:13.800 --> 0:09:17.439 the primary motivation with retailers and those promotions and um 0:09:17.559 --> 0:09:20.199 you may have noticed I certainly have in in my 0:09:20.320 --> 0:09:24.000 email is uh, Black Friday has seemed to be every 0:09:24.000 --> 0:09:26.520 Friday for the past couple of weeks. Cyber Monday just 0:09:26.559 --> 0:09:29.439 seems to be Monday. Um. But my sense of it 0:09:29.640 --> 0:09:31.920 is is that retailers are simply trying to lock in 0:09:31.960 --> 0:09:34.640 the sales as quickly as possible because as you think 0:09:34.679 --> 0:09:37.000 about that supply chain with all of the different links, 0:09:37.080 --> 0:09:39.200 those links are going to go right out to FedEx 0:09:39.200 --> 0:09:43.199 and ups and those deliveries. Uh. Today there's announcements about 0:09:43.840 --> 0:09:48.239 shipping deadlines on December fifteenth for normal, non expedited shipments. 0:09:48.800 --> 0:09:52.240 So I think the the strategic objective with the retailers 0:09:52.640 --> 0:09:55.640 is to move product as quickly as possible and then 0:09:55.679 --> 0:09:57.800 if things managed to work out, as we're starting to 0:09:57.840 --> 0:10:00.600 see some of the supply chain issues in the poor workout, 0:10:00.960 --> 0:10:05.520 that hopefully that help the enthusiastic US consumer just keeps 0:10:05.520 --> 0:10:08.440 on buying right through the holiday. Let's overall, what do 0:10:08.440 --> 0:10:10.280 you what are your clients telling you about what they 0:10:10.280 --> 0:10:13.520 expect here? For retail sales during this holiday period this year. 0:10:14.760 --> 0:10:18.120 You know, they're they're feeling very positive and very robust. 0:10:18.160 --> 0:10:21.040 They recognize that there's going to be some complexities with 0:10:21.120 --> 0:10:24.840 the inventory management issues. Um what they've done is adapt 0:10:24.920 --> 0:10:28.640 by maintaining more inventory and their distribution centers versus pushing 0:10:28.640 --> 0:10:30.959 it out to stores, and that's going to push more 0:10:31.120 --> 0:10:34.520 e commerce volumes or as a customer is in the 0:10:34.600 --> 0:10:37.760 store than being to order from the store and ship 0:10:37.800 --> 0:10:42.640 from from a warehouse. Um. So they're they're expecting robust sales. 0:10:42.800 --> 0:10:47.439 Certainly they're expecting, um uh, the the inflation numbers to 0:10:47.440 --> 0:10:51.160 to drive up the total sales numbers just simply because 0:10:51.200 --> 0:10:54.080 things are a bit more expensive. But they are feeling 0:10:54.120 --> 0:10:57.200 the ability to lighten up on the promotions and even 0:10:57.240 --> 0:11:00.640 raise prices and still capture those sales. Elizabeth, thank you 0:11:00.720 --> 0:11:03.440 so much for joining us. Really appreciate getting your broad 0:11:03.480 --> 0:11:06.640 perspective of retail sales as we head into this all 0:11:06.640 --> 0:11:11.040 important holiday shopping season. Elizabeth Ebert, c I, O advisory 0:11:11.080 --> 0:11:15.679 partner for CpG Retail and Logistics at Infosis Consulting. This 0:11:15.760 --> 0:11:19.520 Elizabeth was mentioning her clients expecting very strong retail sales 0:11:19.559 --> 0:11:22.200 the challenges that we're seeing from the likes of the 0:11:22.240 --> 0:11:25.280 Gap and the Nordstrom is to actually have stuff on 0:11:25.480 --> 0:11:31.400 the shelf to meet that demand. President Biden this week 0:11:31.840 --> 0:11:35.559 tapped the US oil reserves to try to bring down 0:11:35.640 --> 0:11:38.360 the cost of energy, particularly gas at the pump. What 0:11:38.440 --> 0:11:39.959 was interesting to a lot of people was, Hey, it 0:11:40.000 --> 0:11:43.679 doesn't happen very often, and b there was some coordination 0:11:43.800 --> 0:11:46.440 with some other countries out there suggesting that the this 0:11:46.480 --> 0:11:48.120 could have a little bit more bite. But it kind 0:11:48.120 --> 0:11:51.120 of goes to the whole issue of managing energy. Transitioning 0:11:51.440 --> 0:11:54.880 to renewable energy, how is that going to play out 0:11:55.120 --> 0:11:57.920 in a global economy. Let's check in with Nick blitters Wike, 0:11:58.120 --> 0:12:03.040 chief executive officer and founder of UGE International. UG distributes 0:12:03.120 --> 0:12:06.760 renewables to address the world's energy and environmental challenges. Nick, 0:12:06.760 --> 0:12:10.080 thanks so much for joining us here. Where are we? 0:12:11.080 --> 0:12:14.920 I guess in this transition to renewables, it seems like 0:12:14.960 --> 0:12:16.320 we kind of had a little bit of a hiccup 0:12:16.360 --> 0:12:20.440 here because boy, we still need the fossil fuels houses 0:12:20.480 --> 0:12:24.560 playing out. Yeah, good morning. Um, Well, I think you know, globally, 0:12:24.880 --> 0:12:27.720 the US now is number two to China in terms 0:12:27.760 --> 0:12:29.959 of solo that's being deployed. I think the stat a 0:12:30.000 --> 0:12:33.080 lot of people wouldn't fully appreciated that the last couple 0:12:33.120 --> 0:12:36.920 of years U asked about of all the energy being 0:12:37.000 --> 0:12:39.439 is told is solars. So solar is coming quick. Um, 0:12:39.440 --> 0:12:42.040 it's not gonna get pent right away, but um, but 0:12:42.120 --> 0:12:45.960 it definitely it's it's coming quick. Here. Um, we saw 0:12:46.440 --> 0:12:49.840 a COP twenty six that there's still big divisions between 0:12:49.920 --> 0:12:54.760 countries in terms of meeting targets. Uh. For instance we 0:12:54.760 --> 0:12:57.280 saw with India and China, and also you know there 0:12:57.360 --> 0:12:59.640 was no agreement on cobb impermits and what more do 0:12:59.640 --> 0:13:03.439 you think needs to be done so that everybody is 0:13:03.480 --> 0:13:07.400 more aligned? Yeah, it's a good question. You know, it's 0:13:07.400 --> 0:13:09.600 funny you mentioned China and India, which are number one 0:13:09.600 --> 0:13:11.680 and number three in terms of amount of solar being 0:13:11.679 --> 0:13:15.000 installed these days. So you know, I think, Um, politically, 0:13:15.640 --> 0:13:18.160 for whatever reason, the world's at a point where it's 0:13:18.200 --> 0:13:20.720 having a difficult time coming together on some of these 0:13:20.720 --> 0:13:22.840 big picture of policies. But you know, I think on 0:13:22.920 --> 0:13:26.000 the ground, what we're seeing as solar, it's projected to 0:13:26.000 --> 0:13:27.800 be eight percent of all new energy by the end 0:13:27.840 --> 0:13:31.160 of this decade, and so I'm hopeful as people start 0:13:31.200 --> 0:13:33.559 to realize that this decade really does belong to renewable 0:13:33.640 --> 0:13:37.080 energy UM becoming the main source of energy, Hopefully people 0:13:37.080 --> 0:13:39.880 will start to realize that UM, it's it doesn't need 0:13:39.920 --> 0:13:41.520 to be as hard as some people maybe think, and 0:13:41.679 --> 0:13:44.439 hopefully we can get together and set those set those priorities. 0:13:45.240 --> 0:13:50.679 Is the US the leader in transitioning to renewables or not? 0:13:52.920 --> 0:13:55.240 Or not? UM? Well, of course the US has always 0:13:55.280 --> 0:13:58.920 had a great technology advantage, in an entrepreneurship advantage, I 0:13:58.920 --> 0:14:01.160 would say, UM, and so on that basis, you do 0:14:01.240 --> 0:14:04.560 see a lot of innovation from American companies, UM. And 0:14:04.920 --> 0:14:06.520 I like to think of you g as as being 0:14:06.600 --> 0:14:09.240 right within that right UM. And so you know, US 0:14:09.360 --> 0:14:11.520 leads the world that I would say in a number 0:14:11.559 --> 0:14:14.319 of aspects. Within solar UM. You know, I will say 0:14:14.320 --> 0:14:17.000 though that China's installing about three times as much solar 0:14:17.040 --> 0:14:18.400 as the US right now. So we do have a 0:14:18.440 --> 0:14:21.160 long way to go. And in that transition period that 0:14:21.160 --> 0:14:24.680 we're talking about towards renewable energies, there's also that question 0:14:24.680 --> 0:14:27.680 of affordability for the likes of solar, for the likes 0:14:27.680 --> 0:14:32.160 of wind, and how we get around that given those 0:14:32.240 --> 0:14:36.280 cost issues well, you say cost issues, I would I 0:14:36.280 --> 0:14:38.680 would take offense to had to be honest. You know, 0:14:38.720 --> 0:14:40.800 at this point in time, solar has become the cheapest 0:14:40.800 --> 0:14:43.440 source of energy and more and more places. Um, you know, 0:14:43.480 --> 0:14:46.760 I think the use cases are are increasing quite quickly here. 0:14:46.840 --> 0:14:49.520 So um, you know, a number of years back now, 0:14:49.800 --> 0:14:52.600 residential solar became cost effective to a number of people, 0:14:52.680 --> 0:14:55.760 but not everyone can install solar on their rooftop. UM 0:14:55.840 --> 0:14:58.520 and so where we come in as we developed community 0:14:58.560 --> 0:15:01.760 solar projects and in essence making it as easy for 0:15:01.800 --> 0:15:05.560 anyone to get solar energy, just just like signing up 0:15:05.560 --> 0:15:07.840 for Netflix and um. And so what we do is 0:15:07.880 --> 0:15:11.400 the installed projects and then distribute that energy to subscribers 0:15:11.440 --> 0:15:14.520 within a community, which typically tends to be utility zone. 0:15:14.560 --> 0:15:17.120 And and our model is has been for years providing 0:15:17.160 --> 0:15:19.760 cheaper energy to two people that we uh we sign 0:15:19.840 --> 0:15:23.640 up Bloomberg. We actually have a partnership with Bloomberg. If 0:15:23.640 --> 0:15:26.200 we announced back in the summer, or Bloomberg employees can 0:15:26.200 --> 0:15:28.280 sign up and save ten percent on their energy bill 0:15:28.320 --> 0:15:31.360 as well. So you know, solar and of course we're 0:15:31.360 --> 0:15:33.800 we're focused and the cost here has come down so 0:15:33.880 --> 0:15:36.600 much over the last decade that it is cost effective 0:15:36.640 --> 0:15:39.360 for for many many people around the world. Now, Nick, 0:15:39.440 --> 0:15:43.360 we've had a lot of UM fiscal stimulus. UM, We've 0:15:43.400 --> 0:15:47.560 got the Build Back Better UH legislation coming through Congress 0:15:47.600 --> 0:15:49.960 here give us a sense of kind of where the U. S. 0:15:50.000 --> 0:15:54.400 Government is in terms of supporting UH, this transition to 0:15:55.040 --> 0:15:58.400 renewable energy. Yeah, well, I would say that right now, 0:15:59.280 --> 0:16:03.720 the the benefits of the fine administration winning for our 0:16:03.760 --> 0:16:06.480 sector are finally kind of coming to fruition here. So 0:16:06.840 --> 0:16:10.240 of course, we had the bipartisan Infrastructure Built signed into 0:16:10.280 --> 0:16:13.240 law last week that includes about seventy three billion for 0:16:13.320 --> 0:16:15.520 upgrades to the electric grid, which will have some knock 0:16:15.520 --> 0:16:19.760 on benefits to renewable energy. But the Build Back Betteract 0:16:19.960 --> 0:16:23.880 really is what focuses on the movement towards renewable energy. So, 0:16:24.160 --> 0:16:26.720 you know, for solar, it provides a ten year extension 0:16:26.720 --> 0:16:29.800 of the investment tax credit, something that was initially put 0:16:29.800 --> 0:16:33.640 in place by by by President Bush Um but but 0:16:33.680 --> 0:16:35.680 it's something that would give us a long term certainty 0:16:35.720 --> 0:16:38.160 and there are some other benefits there as well. And 0:16:38.200 --> 0:16:40.840 I think we've also seen a nice switch in terms 0:16:40.960 --> 0:16:44.680 of UM, the US government's approach to trade UM. You know, 0:16:44.720 --> 0:16:47.120 we've in the industry called it the solar coaster here 0:16:47.160 --> 0:16:50.280 for a number of years because it's been a bit 0:16:50.320 --> 0:16:53.160 of a target I think from different different governments in 0:16:53.200 --> 0:16:55.880 the US and elsewhere. But it is the last two 0:16:55.920 --> 0:17:00.360 weeks we've had three different trade uh things go through 0:17:00.680 --> 0:17:03.960 that have made it probably cheaper for US to import 0:17:04.040 --> 0:17:07.000 import solar panels um in the next in right year 0:17:07.040 --> 0:17:09.120 and years to come here as well. All right, Nick, 0:17:09.240 --> 0:17:13.040 very exciting, very interesting. Nick Blitterswike, chief executive officer and 0:17:13.040 --> 0:17:16.159 founder of u g E International that is a publicly 0:17:16.160 --> 0:17:19.480 traded company. U g E is the symbol trades in 0:17:19.680 --> 0:17:23.560 Canada's got a market cap about sixty million dollars uh, 0:17:23.640 --> 0:17:28.240 So very interesting there as they manage and distribute renewable 0:17:28.359 --> 0:17:32.280 energy across the communities. And again it is a trend 0:17:32.560 --> 0:17:35.399 that the folks of Nick Blitzwike have believe will be 0:17:35.480 --> 0:17:43.680 a long term trend. This, folks, is the Conversation of 0:17:43.720 --> 0:17:46.320 the morning. Mark Mahaney you know him as the senior 0:17:46.359 --> 0:17:49.760 managing director and head of Internet Research Forever Core I 0:17:50.119 --> 0:17:52.560 s I. I consider him to be one of the 0:17:52.560 --> 0:17:55.919 best most thoughtful analysts out there on Wall Street. Discover 0:17:55.960 --> 0:17:58.760 the Internet names for you know, twenty plus years since 0:17:58.800 --> 0:18:01.120 the beginning of this whole thing we call the Internet. 0:18:01.119 --> 0:18:03.280 He has also got a new book out entitled Nothing 0:18:03.520 --> 0:18:07.040 but Net ten Timeless stock picking Lessons from Front of 0:18:07.040 --> 0:18:10.120 Wall Street's top tech Analysts. Hey, Mark, thanks so much 0:18:10.119 --> 0:18:12.120 for joining us. To really appreciate you taking the time. 0:18:12.200 --> 0:18:14.000 I'm really fascinated to read this book as I was 0:18:14.040 --> 0:18:17.160 an analyst for twenty years. I managed analysts for ten years, 0:18:17.200 --> 0:18:18.640 so I can't wait to get a look at this thing. 0:18:19.240 --> 0:18:21.679 What are some of the key lessons you learned in 0:18:21.720 --> 0:18:26.040 your career picking stocks? Okay, well, thanks for the setup, 0:18:26.080 --> 0:18:29.360 and I very much appreciate the opportunity to talk about it. 0:18:29.359 --> 0:18:31.600 It's a new book, but it's also my only book. Uh, 0:18:31.760 --> 0:18:34.200 it's uh. It's kind of a culmination of twenty five 0:18:34.280 --> 0:18:36.600 years of looking at tech stocks, and one of the 0:18:36.720 --> 0:18:40.560 single simplest but most important lessons is that the fundamentals 0:18:40.560 --> 0:18:44.119 really do matter. I've seen cases where stocks and fundamentals 0:18:44.119 --> 0:18:46.200 to be divorced near term, you know, for a couple 0:18:46.280 --> 0:18:48.679 of months, but a long term there's no doubt in 0:18:48.720 --> 0:18:52.159 my mind that stocks follow fundamentals. So that's stronger the 0:18:52.240 --> 0:18:55.119 revenue growth, the larger the profit pools, the higher the 0:18:55.160 --> 0:18:58.480 stock price. You find a company that can be materially 0:18:58.480 --> 0:19:01.280 bigger three years down the road, and almost always its 0:19:01.280 --> 0:19:03.640 stock price is going to be materially higher. So that's 0:19:03.680 --> 0:19:06.520 kind of this one most important takeaway. And then in 0:19:06.600 --> 0:19:08.840 terms of the the advice, and I try to really 0:19:08.840 --> 0:19:11.920 feel through the initially of the successes and the failures 0:19:12.359 --> 0:19:15.080 in in the Internet space, both my own stockpics. It's 0:19:15.119 --> 0:19:18.520 also just the doxyconominally well, the Amazons and the Netflix 0:19:18.520 --> 0:19:22.280 and the one that didn't eBay and Yahoo and uh 0:19:22.480 --> 0:19:25.080 and grub Hub, names like that. UM. I tried to 0:19:25.160 --> 0:19:26.560 draw some lessons and at the end of it, I 0:19:26.600 --> 0:19:28.920 really had people try to focus on d h ds 0:19:29.000 --> 0:19:32.640 dislocated high quality companies. I tried to describe what high 0:19:32.680 --> 0:19:35.200 quality companies are and when to get them when they're dislocated. 0:19:35.240 --> 0:19:37.360 And that's the one thing to keep in mind from 0:19:37.359 --> 0:19:40.400 the book. It's that hunt for d h ds, well Mark, 0:19:40.440 --> 0:19:42.439 if you look at valuations right now that they were 0:19:42.560 --> 0:19:45.320 sky high, so earnings this isn't really going to need 0:19:45.400 --> 0:19:47.840 to keep up, So how does that play into your 0:19:47.880 --> 0:19:52.040 outlook as well? Well? UM One of the lessons I 0:19:52.080 --> 0:19:55.960 also learned is that they have a title called evaluation 0:19:56.080 --> 0:19:58.879 is in the eye of the tech stockholder. Valuation is, 0:19:58.920 --> 0:20:01.359 of course an important factor, but I think it actually 0:20:01.359 --> 0:20:03.639 should be one of the last factors you really want 0:20:03.680 --> 0:20:07.480 to focus on finding high quality companies WE really that 0:20:07.520 --> 0:20:10.520 really had platform potential, and then you know, when they 0:20:10.600 --> 0:20:14.320 show that they've got an excellent track record or product innovation, 0:20:14.720 --> 0:20:17.840 that they face large slams total addressable markets. I don't 0:20:17.880 --> 0:20:20.159 want to say that valuation takes care of itself, but 0:20:20.720 --> 0:20:24.480 and oftentimes can companies that can really scale, that can 0:20:24.480 --> 0:20:28.800 maintain super premium growth called plus revenue growth for multiple 0:20:28.880 --> 0:20:31.399 years from a position of scale, I think the market 0:20:31.440 --> 0:20:34.880 generally ends up undervaluing those names. I think for many 0:20:34.960 --> 0:20:39.639 years Netflix was undervalued, Amazon was undervalued because people weren't 0:20:39.680 --> 0:20:42.200 able to appreciate just how they're how large their market 0:20:42.200 --> 0:20:45.280 opportunities were, and how well they could execute against those 0:20:45.320 --> 0:20:48.880 and sustain that premium growth. So that valuation is important, 0:20:49.000 --> 0:20:50.760 but I don't think it should be the most important 0:20:50.760 --> 0:20:53.760 factor when it comes to picking text stocks. Hey, Mark, 0:20:53.800 --> 0:20:56.320 talk to us about management, Like I always thought of 0:20:56.359 --> 0:21:00.119 my career that you know, management really does matter, or 0:21:00.119 --> 0:21:03.200 even if you've got a great technology. I really need 0:21:03.240 --> 0:21:05.600 to get in there and spend time with the management. 0:21:05.600 --> 0:21:07.960 How do you think about that as you kind of 0:21:08.119 --> 0:21:13.000 look at companies that you're going to cover. Yeah, if 0:21:13.040 --> 0:21:15.879 you do, you you prefaced it perfectly. My factor is 0:21:15.880 --> 0:21:20.639 actually called management matters UM and uh so it's one 0:21:20.680 --> 0:21:22.680 of the most important criteriaon and determine what a high 0:21:22.720 --> 0:21:24.920 quality companies. I'm not sure you can get a high 0:21:24.960 --> 0:21:27.399 quality company that doesn't have an excellent management. So what 0:21:27.440 --> 0:21:29.280 are you looking for? You're looking for companies that are 0:21:29.320 --> 0:21:31.840 long term oriented management teams that are long term oriented. 0:21:32.160 --> 0:21:35.639 I've always had a bias for founder led companies. I 0:21:35.720 --> 0:21:38.879