Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. We my coin based
Speaker 1: down twenty two today, so we need to talk a
Speaker 1: little bit about crypto. We're gonna do that in just
Speaker 1: a moment. Bloomberg Markets brought to you by Commonwealth, supporting
Speaker 1: more than two thousand independent financial advisors with the solutions
Speaker 1: they need to grow a thriving business. Commonwealth go where
Speaker 1: you grow. Visit Commonwealth dot com to learn more. Johanna,
Speaker 1: a singer, joins us here in our Bloomberg Interactive Brokers studio.
Speaker 1: She's cross asset reporter from Bloomberg News based in Singapore
Speaker 1: but in New York. This week's we said we need
Speaker 1: to get Joanna in the studio. When there's a ton
Speaker 1: going on, the perfect time for Johanna to come here.
Speaker 1: I mean, want the hell is going on. Sorry for
Speaker 1: saying hell, but you can't talk about hell if you
Speaker 1: can't say hell, right, Um, we have not only the
Speaker 1: drop in Bitcoin, which to me it's not abnormal to
Speaker 1: see this kind of I've been watching it for eleven
Speaker 1: years now and this happens, but um, the move in
Speaker 1: Tara is shocking to me. I mean, still day two,
Speaker 1: I'm stunned that this supposed stable coin can fall to
Speaker 1: this morning twenties on the dollar. It's like x ute no, no,
Speaker 1: the ticker on the Bloomberg terminal. Right, Um, got it? Okay,
Speaker 1: you got it? All right? Okay, So what happened? What?
Speaker 1: What are? What is? There's there's this uh algorithm based
Speaker 1: stable coin. It's supposed to automatically make changes to stick
Speaker 1: exactly to one dollar. It works in combination with another
Speaker 1: um uh coin called Luna, which then I guess buys
Speaker 1: bitcoin and avalanche and other stuff. There's this dude, a
Speaker 1: total bro and I don't like to use that word pejoratively,
Speaker 1: but I will right now. Who is the backer of it?
Speaker 1: He says he might have a solution what's going on? Well,
Speaker 1: this is the thing with these algorithmic stable coins is
Speaker 1: that they work until they don't. And there has been
Speaker 1: this history of these things not doing well, and you know,
Speaker 1: there are a few that have lasted a while, but
Speaker 1: they can blow up in spectacular fashion. And you know,
Speaker 1: people have talked about this where if you have volatile
Speaker 1: assets that you wrap together, sometimes they can be volatile,
Speaker 1: they won't necessarily maintain that desired peg to the dollar.
Speaker 1: So it's really just been quite dramatic. And there are
Speaker 1: a lot of people who put faith in ust doing
Speaker 1: well in having these yields if you stake to it,
Speaker 1: that or more people were counting on that stuff, and
Speaker 1: now it doesn't look like that's happening. And the thing is,
Speaker 1: how do you restore confidence once it's been lost? This
Speaker 1: question about both of you, what's the breakdown? And do
Speaker 1: you think an investor base for a lot of these
Speaker 1: crypto assets, whether it's Big Corner or anything else, institutional
Speaker 1: versus retail. Oh jeez, I don't know numbers per se,
Speaker 1: but institutions have been getting into them. But there are
Speaker 1: a lot of people who are regular investors who just
Speaker 1: looked at it and said, hey, twenty yield sounds awesome.
Speaker 1: I'm gonna put a lot of money in there. And
Speaker 1: I have been hearing just anecdotally about people who have
Speaker 1: lost some decent amount of their savings on stuff like this. Yeah, well,
Speaker 1: I know a ton of people who have to be fair,
Speaker 1: UM made a made a lot of money over the
Speaker 1: last few years, UM that have gotten into this. People
Speaker 1: like my trainer. You know, I have a cameraman who
Speaker 1: have made hundreds. Well no, I don't. Actually I hired
Speaker 1: the guy and then we started hanging out for beers
Speaker 1: and we don't really training. Now we're just buddies, different
Speaker 1: kind of training. But but so you're paying him to
Speaker 1: be your buddy. But these these guys have made a
Speaker 1: lot of a lot of money in crypto, but they're
Speaker 1: into all of these schemes right, anything where they can
Speaker 1: make a sick return or leverage, you know, get leveraged up.
Speaker 1: And also stable coins are a huge part of the
Speaker 1: way they trade. The interesting thing to me, Joanna is
Speaker 1: that while this story is so shocking, we haven't seen
Speaker 1: much of a ripple effect across um the crypto universe.
Speaker 1: We haven't too much. Although some of the other stable
Speaker 1: coins are down just a tad um like Tether. I
Speaker 1: mean it's it's very minimal, but Tether is off you know,
Speaker 1: point one cent or something. But yeah, you're right, that
Speaker 1: the other stable coins, but Tether and usd coin, for instance,
Speaker 1: do claim to be backed by dollars and other assets,
Speaker 1: so it's um, you know, you could say they're kind
Speaker 1: of a frint thing from some of these other algorithmic
Speaker 1: stable coins. But definitely Terra is the one that's getting
Speaker 1: all the attention and seems to be a lot of
Speaker 1: the focus. Of course, the whole crypto complex is down
Speaker 1: significantly in recent days anyway, so that's not helping things either.
Speaker 1: And again I started off with coin basis now off
Speaker 1: twenty three percent today, off seventy eight percent year to date,
Speaker 1: r at a fifty two week low, still a market
Speaker 1: cap of twelve and a half billion. But I'd look,
Speaker 1: the coin base is kind of the everyday person's opportunity
Speaker 1: to get exposure to crypto, and so this kind of
Speaker 1: feels like it's meaningful. It's still could be. So look,
Speaker 1: coin base is still going to be the major exchange
Speaker 1: that Americans used, or one of the major exchanges that
Speaker 1: Americans used to trade crypto. The key here takeaway in
Speaker 1: my opinion for retail or for any investor is don't
Speaker 1: hold your crypto on the exchange. When you get a
Speaker 1: wallet you can use coin bases wallet, which they make
Speaker 1: it easier for you to access, but they hold the
Speaker 1: private key, or you can hold it on an off
Speaker 1: exchange wallet where you have to remember the private key.
Speaker 1: That's the one that I forgot um with my blockchain wallet.
Speaker 1: But the problem is coin based said if they go bankrupt,
Speaker 1: all of your crypto that they hold could be lost. Yeah,
Speaker 1: that is a scary prospect. But you know, it doesn't
Speaker 1: sound like they're anywhere near that point yet, but they are.
Speaker 1: The price is just so dependent on where bitcoin is.
Speaker 1: Coin bases price peaked around at the same time Bitcoin did,
Speaker 1: so you know you've noticed that what I have in
Speaker 1: my hand, cold hard cash. That's how players roll. Johanna
Speaker 1: austing Er, thank you so much for joining us live
Speaker 1: here in the Bloomberg and actor Brooker's studio. Join Austinger,
Speaker 1: a cross asset reporter for Bloomberg News. Bring us the
Speaker 1: latest on the vault crypto space. We've got in trades.
Speaker 1: We had a hot inflation number today. Uh, just kind
Speaker 1: of markets are trying to figure out which way to
Speaker 1: play this year. We do have green on the screen here,
Speaker 1: but again a lot of uncertainty out there. That's kind
Speaker 1: of what we're seeing in the volatility. Doug Baker, He's
Speaker 1: a portfolio management had of preferred securities at Nuvene. They've
Speaker 1: got a couple of shekels under management. Doug, What are
Speaker 1: you and your team? How are you thinking about putting
Speaker 1: money to work these days? Given the inflation print we
Speaker 1: saw this morning, given what we've seen from this Federal
Speaker 1: Reserve over the past couple of months, how are you
Speaker 1: guys approaching the market? Yeah? Absolutely, um so, so thanks
Speaker 1: for having me on um. You know, our views are
Speaker 1: a little bit more sing going as as far as
Speaker 1: as rates are concerned. We we do feel a lot
Speaker 1: as priced into the curve today and and really our
Speaker 1: our outlook as far as the Fed is concerned by
Speaker 1: year end is is a slightly slightly more constructive than
Speaker 1: the market. So we we do feel that the Fed
Speaker 1: will will get to about two and a half percent
Speaker 1: by year end. UM the ten years probably gonna be
Speaker 1: slightly north of three percent by that time, but we
Speaker 1: you feel that what's important important takeaway here is that
Speaker 1: a lot is priced into the curve, and when we
Speaker 1: do look at at rates and where they are today,
Speaker 1: I think some people are are are looking a little
Speaker 1: too bearish lye and and feel that there's a lot
Speaker 1: more move to come. We're we're we're really positioned from
Speaker 1: the perspective that, um, we need to look at what's
Speaker 1: priced in and and trade accordingly. Now we want to
Speaker 1: remain relatively conservative when it comes to interest rate risk
Speaker 1: or duration risk, and you'll see that reflected across our strategies.
Speaker 1: What about investors who want to return here? Absolutely, is
Speaker 1: it a good time to get in? We think so.
Speaker 1: We think credit spreads are actually very attractive in fixed
Speaker 1: income space, whether you're talking about investment grade bonds, high
Speaker 1: heel bonds, and in my space and preferred securities, the
Speaker 1: credit spreads are actually very attractive UM. And when you
Speaker 1: look at the underlying fundamentals, they're they're pretty strong. Corporate
Speaker 1: America really from a liquidity and a leverage perspective isn't
Speaker 1: isn't too extended. And actually the consumers and really a
Speaker 1: good spot too. UM. They had elevated savings rates during
Speaker 1: COVID and are really coming into this environment UM fairly
Speaker 1: well protected to with with some ability to absorb the
Speaker 1: impact of inflation like we saw today, still kind of
Speaker 1: coming in higher than than what most people are expecting, Doug,
Speaker 1: we don't talk a lot on this show. I don't
Speaker 1: think about preferred stocks in general and the preferred market.
Speaker 1: Give us your kind of thirty second elevator pitch for
Speaker 1: preferred How are you guys thinking about that part of
Speaker 1: the market. Yeah, absolutely so. I think it's important that
Speaker 1: one of the first takeaways is that this is a
Speaker 1: high quality investment solution. Most of our issuers are banks
Speaker 1: and insurance companies, and those two categories combined account for
Speaker 1: about eight percent of our issuer base. So at the
Speaker 1: end of the day, these are highly rated, typically and
Speaker 1: highly regulated issuers, and interestingly enough, both of those sectors
Speaker 1: arguably benefit the most from a rising rate environment. So
Speaker 1: so the outlook for the fundamentals in our space are
Speaker 1: pretty strong. Now, a lot of our preferred securities are
Speaker 1: either long dated or perpetual nature, so so the thought
Speaker 1: is by most folks that this must be a long
Speaker 1: duration or high interest rate sensitivity solution, and so some
Speaker 1: people could be a little scared by that, but actually,
Speaker 1: you know, through active management and security selection, you can
Speaker 1: actually put a portfolio together with a very reasonable duration exposure.
Speaker 1: For example, our our mutual fund at at the end
Speaker 1: of the month of March this year was running a
Speaker 1: duration of just over three years. So so I think
Speaker 1: that there are possibilities and UM very attractive ones to
Speaker 1: take advantage of the preferred market and and to do
Speaker 1: so while also managing your your interest rate risk to
Speaker 1: a fairly reasonable level. What do you think about UM
Speaker 1: Europe or other regions than the US. I mean, you
Speaker 1: say preferred, I think about Volkswagen. You say preferred, I
Speaker 1: think about Porsche. Right, these are just they have famous
Speaker 1: preferred stocks. I don't know if you like them particularly.
Speaker 1: Why do they have famous preferreds? That's that's the doctor trades. Yeah,
Speaker 1: vow three at g y okay, yeah so, but but
Speaker 1: it just makes me I mean obviously not banks, although
Speaker 1: they have massive financial arms. UM. What do you think
Speaker 1: about the UH outside of the US? UM right now?
Speaker 1: Sure so, so outside the US banks are still very
Speaker 1: large issuers of preferred It's it's a slightly different categories
Speaker 1: something that we've referred to as contingent capital securities. But
Speaker 1: definitely here in the US, it seems there's a misperception
Speaker 1: about how strong these Western European banks aren't. It shocks
Speaker 1: most people when we put data in front of them,
Speaker 1: and we demonstrate that on average, UH, these banks are
Speaker 1: better capitalized and even our US banks and so so
Speaker 1: we do think that there are tremendous opportunities, especially in
Speaker 1: Western Europe. Now are there a handful of names obviously
Speaker 1: we'd like to avoid and maybe some particular regions indeed,
Speaker 1: but we've we've gone through the Western European bank space
Speaker 1: to pull out things like, hey, how much Russian Ukraine
Speaker 1: exposure is there? What if this was all written down,
Speaker 1: what would that mean for for that segment of our market?
Speaker 1: And and to be honest, with the amount of capital
Speaker 1: that's in the bank system today in Europe, um, they
Speaker 1: should be well positioned to absorb any any sort of
Speaker 1: hit or write down UH and and even the knock
Speaker 1: on effects that we expect to hit the European economy,
Speaker 1: those banks should be well positioned. A reminder for everyone
Speaker 1: US banks, European banks, they're stress tested regularly to to
Speaker 1: determine whether they can survive dire economic conditions worse than
Speaker 1: what we saw in two thousand and eight, two thousand
Speaker 1: and nine. So when people are you know, starting to
Speaker 1: raise the specter of of of a recession, that doesn't
Speaker 1: really bother us too much. In in in in the
Speaker 1: scheme of things, good stuff. Doug Baker bringing it today,
Speaker 1: Doug Baker Portfolio Management had to preferred securities at noeu Ven.
Speaker 1: Let's get over to Michael Dean right now, Bloomberg Intelligence
Speaker 1: autos analysts out of London. He covers Volkswagen has been
Speaker 1: doing a bang up job of it for years. In fact, Um, Michael,
Speaker 1: A lot of the calls that you made UM are
Speaker 1: are now coming true. At the main one of them
Speaker 1: being that UM, folks Wong is finally gonna I p
Speaker 1: O Porsche. Before we get into the Scout announcement, which
Speaker 1: I'm pumped about, UM, talk to us about the Porsche
Speaker 1: I p O and how how important this is, How
Speaker 1: big is this going to be for a company that has, like,
Speaker 1: you know, ten other brands, Hi, good morning. So yes,
Speaker 1: if you look at some you know what's happening to
Speaker 1: Tesla in terms of the market capitalization. If you look
Speaker 1: at Ferrari, you look at the very strong valuations that
Speaker 1: that luxury brand has, and then you look at Volkswagen,
Speaker 1: which is trading on near crisis multiples. It's very important
Speaker 1: for them to do something and by I poing Porsche,
Speaker 1: they can actually extract some value for shareholders and hopefully,
Speaker 1: you know, Porsche will be valued at a similar sort
Speaker 1: of level to to Ferrari Volkwagon. By the way, Volkswagen
Speaker 1: trades for about eighty eight billion euros in total right,
Speaker 1: which is like a tenth of Tesla. How much is
Speaker 1: Porscha going to be worth post ipl so we think
Speaker 1: it could be worth up to eighty billion euros, so
Speaker 1: so almost the market cap of its parent company in total.
Speaker 1: So this is huge for the company. Why is Volkswagen
Speaker 1: trade at such a discount? Dude? Imagine this means you
Speaker 1: get Bentley, Lamborghini, UH Party, CRT, Scolder, Volkswagen. I don't
Speaker 1: know what I'm missing, all for free Audi, all for
Speaker 1: Let me ask the expert, Michael Dean. Why is that? Well,
Speaker 1: you just look at any European auto company or any
Speaker 1: legacy auto company. They're trading on crisis multiples, which means
Speaker 1: that it's effectively the market saying that their their ice business,
Speaker 1: their internal combustion engine business um will take them down
Speaker 1: or or the company won't exist in the future, even
Speaker 1: though they're spending huge amounts and they're going to convert
Speaker 1: very quickly to too battery electric vehicles, so it's a
Speaker 1: very tough market valuation for them at the moment. Well,
Speaker 1: let me talk to you about Herbert DS because I'm
Speaker 1: gonna interview in this afternoon. I've been following this guy
Speaker 1: since he came from BMW. He produced one of my
Speaker 1: favorite motorcycles there, the r N and t UM among
Speaker 1: other things. But now at Volkswagen he has led up.
Speaker 1: Can I say ball to the wall, charge towards electrification,
Speaker 1: towards the future? Um is he? Do you think doing
Speaker 1: doing all the right things now? I think so? I
Speaker 1: mean partly, Um, you know they're big charge into battery
Speaker 1: electric so I think you know, Volkswagen can overtake Tesla
Speaker 1: in terms of volumes for battery electric vehicles in two
Speaker 1: thousand twenty four, but indirectly because of what happened with
Speaker 1: diesel gates, Volkswagen was kind of forced into battery electric vehicles.
Speaker 1: But Deese has sort of taken the helm and he's
Speaker 1: really pushed and you know, they're they're way forward in
Speaker 1: terms of their transition compared to other legacy bronze. He
Speaker 1: has no blood on his hands from diesel Gate. By
Speaker 1: the way. It's personally a sad, a very sad story
Speaker 1: for me because I love a diesel power train. I don't.
Speaker 1: I just adore I still have a diesel. You haven't,
Speaker 1: Isn't it great? My first car that I ever bought
Speaker 1: with my own money was Audi a four two point
Speaker 1: five t D I. I loved it. My new favorite
Speaker 1: power train is GM's Babydramax, a little in line six diesel.
Speaker 1: I think they're fantastic propulsion systems and given where pump
Speaker 1: prices are, I mean the economical as well, So I'm
Speaker 1: very happy to have a diesel at the moment. All Right,
Speaker 1: Michael talked to us just about the car industry in general. Like,
Speaker 1: one of the questions I have is just, you know,
Speaker 1: in the United States, kind of the average production with
Speaker 1: sixteen seventeen million cars a year, I'm told we're not
Speaker 1: going to see that again. How do you think about
Speaker 1: production and inventory levels at the dealers? Matt's gotta wait
Speaker 1: like eighteen months for his truck. Is that the new normal? Yeah?
Speaker 1: It's so interesting at the moment. So, you know, initially
Speaker 1: we had these production shortfalls because the semiconductor constraints. Now
Speaker 1: we've had other supply issues on the back of the
Speaker 1: Ukraine War. So so yeah, we look at the first
Speaker 1: quarter results this year, many automakers their production was down,
Speaker 1: but their margins are up. So they finally realized that
Speaker 1: they don't have to go for volume, and actually it's
Speaker 1: probably a good thing for profitability for the industry. That's
Speaker 1: they're producing fewer cars, they're producing higher marching cars, and
Speaker 1: they're producing less of you know, the smaller saloons, which
Speaker 1: aren't very popular anymore. By the way, I can't wait, um, Michael,
Speaker 1: until you come over here to the US and get
Speaker 1: to ride in my truck. Hopefully I have it by then.
Speaker 1: But let me tell you something about this truck I ordered.
Speaker 1: It just launched in February. It's a g M. Chevy
Speaker 1: Silverado z R two. They priced at sixty seven, sorry,
Speaker 1: sixty six in February. Then at the end of the month,
Speaker 1: at the beginning of March, they probably is to raise
Speaker 1: the price to six. Then at the end of March
Speaker 1: they raised the price again to sixty nine to five.
Speaker 1: So they've raised the price, um, more than three thousand
Speaker 1: dollars in the space of like two months. Is that normal? Yes,
Speaker 1: I've got another example. I was looking to buy the
Speaker 1: BMW I X so that's sort of X five equivalent
Speaker 1: battery electric vehicle. When I first looked it was eighty
Speaker 1: five thou pounds. It's gone up to a hundred and
Speaker 1: five thousand pounds. So the inflation is real. Yes, it's everywhere,
Speaker 1: and they can get these prices. People are willing to
Speaker 1: pay it. Yeah. And you've got to remember the most
Speaker 1: vehicles of finance now, so um, it's whether you extend
Speaker 1: the finance over another year, so you make the monthly
Speaker 1: payment the same, so that it's not really hitting consumers
Speaker 1: pockets at the moment. So are the days over? Michael?
Speaker 1: And we we pull into a lot and it's just
Speaker 1: dozens and dozens and maybe hundreds of cars on a
Speaker 1: dealer's lot, and we get the have a little bit
Speaker 1: of a negotiation over the race you're gonna pay. Are
Speaker 1: those days over for consumers? Yeah? I think so. I
Speaker 1: mean in Europe that was never the model, you always
Speaker 1: ordered the vehicle, and and in the US it's probably
Speaker 1: better for the manufacturers if it goes that way, because
Speaker 1: you know, you probably have more options, and options are
Speaker 1: very profitable as you know for cars, So so for
Speaker 1: long run, profitability. Um, yeah, I think it's better for
Speaker 1: the car makers, and that's the way it's going to
Speaker 1: go in the US as well. All Right, I'm keeping
Speaker 1: my two thousand fourteen BMW five thirty five I in
Speaker 1: Duke Blue with manual transmission. Dude. It's a great engine,
Speaker 1: it's a great transmission, and I don't see anything wrong
Speaker 1: with keeping that. Um, I gotta uh, just a minute
Speaker 1: left here, Michael, What do I ask Herbert D's today?
Speaker 1: What should what should my most important question for the
Speaker 1: CEO of Folkswagon be this afternoon? I just confirmed that
Speaker 1: they're going to ibi Porsche in the fourth quarter. Um,
Speaker 1: that would be the key item of my agenda. But
Speaker 1: also just about battery electric vehicles. So he's talking about
Speaker 1: the cost of batteries or the equivalent cost of of
Speaker 1: a BEV compared to Anne being pushed back maybe a
Speaker 1: year or two. So when will cost be comparable? Originally
Speaker 1: we thought it was gonna be two tho. We forgot talk.
Speaker 1: We forgot to and probably to you, it didn't you
Speaker 1: weren't you weren't um you know, slobbering over a scout
Speaker 1: as a young teen, Michael, because I never had the
Speaker 1: scout you've never had it, but it's so cool for
Speaker 1: the US. I mean, does Volkswagen as a brand really
Speaker 1: have a chance in America? Well, they suddenly do on
Speaker 1: on the Beth side of things, um, and they've got
Speaker 1: good market show at the moment, so they're catching up
Speaker 1: with Tesla. There's suddenly in with a chance on the
Speaker 1: new power trains. Yeah, the battery electric vehicles they had,
Speaker 1: the I D four is quite cool. The microbus, everybody's
Speaker 1: waiting for that. Greg Jarrett's waiting for that to come back,
Speaker 1: and then the and then the new Scout will be
Speaker 1: like a Rivian competitor. Michael Dean, Bloomberg Intelligence analyst, uh,
Speaker 1: covering autos for US at Alan and great to have
Speaker 1: you on the program. Thanks so much for joining us,
Speaker 1: and do tune in later this afternoon. I'm Inberg Television
Speaker 1: and Radio from my interview with the CEO of Folkswagen
Speaker 1: Herberts Professional here doing this stuff for living Christian Ladeau,
Speaker 1: director of investment research at cap Trust. UM Richard, I'm
Speaker 1: just kind of reading some notes here about half of
Speaker 1: the broad US market, we'll call that the Russell three thousand,
Speaker 1: About half are down over from the fifty two week highs.
Speaker 1: That's a bear market? Are are things worse out there
Speaker 1: than we think they are in terms of you know,
Speaker 1: the equity markets? Good morning guys. Yeah, there's there's a
Speaker 1: lot of I don't want to say sketchy, but let's
Speaker 1: say questionable business models in some of those companies. So
Speaker 1: we've we've really had a period of froth that had
Speaker 1: to come down, and we're seeing that in the broad
Speaker 1: swath of industries, mostly in the tech and health care areas.
Speaker 1: But you know, you talked about real economy stocks, those
Speaker 1: are the ones holding up a little bit. Are certainly
Speaker 1: the ones in inflation beneficiary areas like energy and materials.
Speaker 1: All Right, So I don't know if you kind of
Speaker 1: got this message early in your career like I did,
Speaker 1: which is don't fight the Fed, But if you did,
Speaker 1: kind of makes investing hard over the next six to
Speaker 1: twelve eighteen months because we have a federal reserve that's
Speaker 1: certainly in a hiking mode. Indeed it is. And yes,
Speaker 1: my entire career has been in periods where interest rates
Speaker 1: are going down. Uh, we don't know yet just how
Speaker 1: far the Fed will have to go. Consensus has it
Speaker 1: going to three and a quarter percent by UM at
Speaker 1: least that was the last read, and that was really
Speaker 1: predicated on inflation remaining high, and you know, it's too
Speaker 1: too early to know. I think we have to have
Speaker 1: that debate internally about whether this is a nineteen seventies
Speaker 1: type of inflationary spiral or whether it's more like World
Speaker 1: War two where the gis came home and did a
Speaker 1: lot of spending and there wasn't a lot the goods available,
Speaker 1: and sooner or later that got solved. We had John
Speaker 1: Author's on yesterday. He was comparing what we're watching in
Speaker 1: the markets right now to what we saw in which
Speaker 1: which was a little bit uh scary, to be honest.
Speaker 1: What do you think about valuations here? Um, What do
Speaker 1: you think about the possibility of a bottom? What do
Speaker 1: you think about investors kind of waiting into this and
Speaker 1: picking things up? Yes, I see a lot of similarities
Speaker 1: to those those pockets of speculative stocks, certainly do. UM.
Speaker 1: The prospects of bottoming here is really company by company
Speaker 1: and industry by industry. You have some really attractive stocks
Speaker 1: at current prices. You can get a five six percent
Speaker 1: dividend yield with cash flows cheap on earnings, good balance,
Speaker 1: sheets and you're probably going to be fine with that
Speaker 1: kind of stock, but to really get into the specul
Speaker 1: of his stuff, you really need to see inflation come
Speaker 1: off in the FED, taking the foot off the gas pedal.
Speaker 1: A T and T what you call their Christian You
Speaker 1: picked that, you picked the poster child. And what I
Speaker 1: just said that is the that is a kind of
Speaker 1: company that I feel has very little downside. Here. You've
Speaker 1: got a company that divested the media business that was
Speaker 1: a real drag on that company, and it's saying that
Speaker 1: it's going to stay straight and narrow from here. It's
Speaker 1: going to start raising prices, it's going to start cutting costs,
Speaker 1: and then it gets that evaluation boost to make it
Speaker 1: a little bit more in line with its peers Verizon
Speaker 1: and T Mobile, and you can get a thirty percent game.
Speaker 1: The stog like that, is this a whole new management
Speaker 1: team there at A T and T. Because they two
Speaker 1: of the worst acquisitions I can remember, and I covered
Speaker 1: the media industry for thirty years as analyst. Was direct TV,
Speaker 1: a business that was clearly on the downside, and then
Speaker 1: A T and T with I mean buying Time Warner
Speaker 1: in business they didn't really know with a really tough
Speaker 1: capital structure. Is the management has it turned over such
Speaker 1: that you have confidence in their ability. Well, let's just
Speaker 1: say this management team has been sufficiently chastised. I think
Speaker 1: the market has given it a clear signal. It had
Speaker 1: been a dog for five years, and I think it's
Speaker 1: known now that it's not going to be able to
Speaker 1: do that kind of transaction anymore. In the market simply
Speaker 1: won't let it. An activist investor would jump in there
Speaker 1: and tell him to stop. But now the management team
Speaker 1: hasn't turned over to a great extent yet. If they
Speaker 1: were to make missteps from here, I think you'd see that.
Speaker 1: How about the homebuilders there? A lot of folks are
Speaker 1: concerned about the homebuilders. I know you have Pulti Group
Speaker 1: on there, but because rates, yeah, rates rates, I mean
Speaker 1: prices are already high, um, and now you've got mortgage
Speaker 1: rates rising. Does it make a difference. Oh? Absolutely. This
Speaker 1: is in the industry that's likely to hit a recession
Speaker 1: pretty soon. But that's a beauty of a cycle like this.
Speaker 1: This stuck has peaked a year ago and business has
Speaker 1: still been getting good. So in other words, investors know
Speaker 1: this is coming, and now the question is what's going
Speaker 1: to happen a year from now, and I think you're
Speaker 1: going to have a pretty shallow recession. Now, that's that's
Speaker 1: where we could debate this. But if we see rates
Speaker 1: come down, because inflation has come down about six to
Speaker 1: nine months from now, and you know, we still still
Speaker 1: have a structural shortage of housing, we could see the
Speaker 1: other side of this housing recession coming real quick, shallow recession.
Speaker 1: That he's a gaucho, by the way, who Christians a gaucho? UCSB? Oh,
Speaker 1: that's right? Then is there any more beautiful place? And
Speaker 1: I was just I can't imagine going to school in
Speaker 1: a cooler place. How was it? Tell us here on
Speaker 1: the on the East coast? What was it like going
Speaker 1: to college at U C. S B. It was horrible
Speaker 1: to know how I ever got myself out of bed boy,
Speaker 1: and it stays like this in the market that I
Speaker 1: wish I was back there. Yeah, exactly, all right, Christian,
Speaker 1: good good stuff. We appreciate you coming on. Christian Lado,
Speaker 1: he's in director of investment research at cap Trust. Talking
Speaker 1: about some of the names that are looking at it again,
Speaker 1: you know some of the names A T and T, Broadcom,
Speaker 1: Poulti Group, those are some of the names that they're
Speaker 1: you know, allocating some capital too. Here and in the
Speaker 1: markets today, a little bit of a mixed SMP and
Speaker 1: NADAL up about four to six tenths of one percent
Speaker 1: of the nasdac UH that's trading off about half of
Speaker 1: one percent, So a little bit of a mixed market.
Speaker 1: Here is the market digest UH. This CPI print that
Speaker 1: we had this morning. Thanks for listening to the Bloomberg
Speaker 1: Markets podcast. You can subscribe and listen to interviews with
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Speaker 1: I'm on Twitter at Matt Miller three. Put on fall
Speaker 1: Sweeney I'm on Twitter at pt Sweeney before the podcast.
Speaker 1: You can always catch us worldwide at Bloomberg Radio.