Speaker 1: This is Bloomberg Business Week. I'm Karl Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: YouTube search Bloomberg Global News. Let's talk about the monthly
Speaker 1: Jost Report, talking about Yes exactly, U S employers hiring
Speaker 1: at a robust clip in the month of May, wage
Speaker 1: gains holding firms suggesting the economy continues to power forward
Speaker 1: as a FED raises interest rates at a steep pace
Speaker 1: to tame red hot inflation. Is Mike McKee said, good report.
Speaker 1: FED should be happy. Susan Arthur is the chief executive
Speaker 1: officer of Career Builder. Susan joins us on the phone
Speaker 1: from Philadelphia. Good to have you with us, Susan, do
Speaker 1: you agree with our own International Economics and Policy correspondent.
Speaker 1: There's almost nothing in this report that that would make
Speaker 1: the FED unhappy. Hey, thanks for having me on getting Yes,
Speaker 1: I would agree, there's not too much to be unhappy about. Um,
Speaker 1: we are pacing about eight hundred thousand jobs under pretty pandemic,
Speaker 1: so obviously the continued growth here is is restoring us
Speaker 1: to almost to pre pandemic levels. All Right, you sound
Speaker 1: kind of worn out. Is it just the flow of news?
Speaker 1: Is it that things are rough out there? Like? How
Speaker 1: how would you assess the job market kind of compared
Speaker 1: to pre pandemic compared to the I mean it's listen,
Speaker 1: to be fair, I'm exhausted, and we've got an alcohol
Speaker 1: guest at the end of the show and they're not
Speaker 1: sharing any alcoholic us. So I'm pretty pretty ticked off
Speaker 1: right now. It's almost like this is like, actually true, Carol,
Speaker 1: I mean, you're you're, you're. She's showing all our cards
Speaker 1: and being very real. Susan, I really am no, But
Speaker 1: to be fair, tell us give us an assessment because
Speaker 1: the job market is so important to what happened, especially
Speaker 1: when we have so many big banks. Uh CEO is
Speaker 1: talking about recession, not session. How do you see it, Yeah,
Speaker 1: I would say so. So under the numbers, the big
Speaker 1: movers are what we've been hearing, right, We're moving from
Speaker 1: consumer goods to services, with the biggest gainers being leisure, hospitality,
Speaker 1: professional and business services. What we see in our data
Speaker 1: and the pulling we do with job seekers UM is
Speaker 1: there's still an incredible number of employed people in an
Speaker 1: active search process. So while you know, lots of people
Speaker 1: are employed, and we like the unemployment rate level and
Speaker 1: the progress would participation rate, more fifty five year olds
Speaker 1: came back to work this month, there are still a
Speaker 1: lot of people looking to make a change. So that's
Speaker 1: a good thing, right, That's a good and and and
Speaker 1: I mean it's interesting to because your your point about
Speaker 1: being exhausted. The other thing we got our most recent
Speaker 1: pulling data is UM two thirds of people would choose
Speaker 1: money versus an additional week off. That did surprise me
Speaker 1: considering sort of some of the burnout going on, right, UM.
Speaker 1: But of the people looking for work, the younger generations
Speaker 1: or to make moves, the younger generations are looking at
Speaker 1: twice the rate of the older generations, literally twice the rate. UM.
Speaker 1: Lots of people prioritizing money first, followed by a flexible
Speaker 1: schedule and remote work. So those trends are holding and gaining. Um.
Speaker 1: So when we think about what's going to change over
Speaker 1: this period, who's going to make moves? Where are they
Speaker 1: going to go? Where? Associate with growth in sectors? I
Speaker 1: would expect a lot more movement of the younger generations,
Speaker 1: and that it isn't about culture or purpose, it is
Speaker 1: money and flexibility will help us connect to this to
Speaker 1: what it says about the economy and what happens in
Speaker 1: an economy where workers feel like they have that choice,
Speaker 1: they have that ability to move, doesn't that manifest itself
Speaker 1: in higher wages and a higher quit rate? I would
Speaker 1: expect the higher quit rate to hold, whether or not
Speaker 1: the wage growth. I mean, I think that's by point
Speaker 1: two percent um the months, uh is you know, obviously
Speaker 1: to take down a little bit from last last year,
Speaker 1: but I mean from last months. But obviously there are
Speaker 1: outliers in that. If you look at leisure and hospitality
Speaker 1: significantly about pre pandemic levels. So I think you know,
Speaker 1: people are still going to jump. It isn't always going
Speaker 1: to be for money, but there's gonna be competitive pressure
Speaker 1: on the employer employers for sure, Susan, I think what
Speaker 1: you were saying is so fascinating about this whole idea
Speaker 1: of people prioritizing money first. I had a fascinating conversation
Speaker 1: with an Uber driver yesterday and trying to buy a home,
Speaker 1: talking about mortgage rates, talking about costs um talking about
Speaker 1: what it costs to fill up his tank over a
Speaker 1: hundred dollars, and just being like this is really rough,
Speaker 1: searching for baby formula like this is real. This is
Speaker 1: America talking and saying how difficult it is, and when
Speaker 1: it comes down to it, you want to make sure
Speaker 1: you have enough money to to you know, put a home,
Speaker 1: a roof over your family and feed them agreed in Like,
Speaker 1: you know, if we went back pre pandemic, I would
Speaker 1: expect our trending in the younger generation. Job secret to
Speaker 1: lead with purpose, to lead with advancement, to a lead
Speaker 1: with alignment to company culture. Those things are moving further
Speaker 1: down and folks are focused on you know, food and
Speaker 1: water here um followed by flexibility because that is there's
Speaker 1: a lot of people doing gig work. There's a lot
Speaker 1: of people in their side hustle, so flexibility thing isn't
Speaker 1: just that people like remote work, It's that they're needing
Speaker 1: to optimize their time and the economics of their time.
Speaker 1: If you had to assess the outlook for the rest
Speaker 1: of the year, recession, no recession. You know, I hope
Speaker 1: we have solid indicators here that mean we're going to land. Okay. Um,
Speaker 1: But to be determined is that a is that a
Speaker 1: just intense seconds a cynical to be determined pessimistic? Now
Speaker 1: not pessimistic. I mean, I just think there is incredible
Speaker 1: growth out here and a lot of good work and
Speaker 1: innovation going on. So, you know, not pessimistic or syncle
Speaker 1: at all. Hopeful. I guess that I love it. You're real.
Speaker 1: I'm in a real mega get real mood uh and
Speaker 1: mode today. So Susan, thank you so much. Have a
Speaker 1: good and safe weekend. Be well. Susan Arthur, She's chief
Speaker 1: executive officer Career Builder understand sees what's going on in
Speaker 1: the job market firsthand. Hurting us on the phone from Philadelphia.
Speaker 1: This is Bloomberg. You're listening to Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Hey, Um, certainly.
Speaker 1: One of the big business stories of one was that
Speaker 1: record round of M and A deals last year, and
Speaker 1: at the end of last year, bankers were telling Bloomberg
Speaker 1: there were no signs of slowing, and then of course
Speaker 1: two happened, bringing in it with it lots of financial
Speaker 1: market volatility and different macro values and outlooks, and yet
Speaker 1: we are still seeing deals getting announced and getting done.
Speaker 1: To him, let's get into it with Chris bloom he's
Speaker 1: the head of leveraged finance at a BNP. Perrybody joins
Speaker 1: us on the phone from Massachusetts. Chris, how are you.
Speaker 1: I'm good, Thanks, how are you? We're doing well. So
Speaker 1: exactly a month ago, the three of us were at
Speaker 1: the Milk and Institute Global Conference. You've participated in the
Speaker 1: panel on global M and A about chasing records. A
Speaker 1: lot has changed in the markets just in the last month.
Speaker 1: Give us an update from an M and A perspective
Speaker 1: and what you're seeing. Yeah, No, that's a great it's
Speaker 1: a great topic. And I think that the panel that
Speaker 1: we had out there was actually, you know, very very
Speaker 1: interesting in terms of the outlook for the rest of
Speaker 1: two thousand twenty two. I think we talked about that.
Speaker 1: You know, we had quite a bit of agreement that
Speaker 1: the we thought the market might rebound as we headed
Speaker 1: into the back half of the year. We have seen
Speaker 1: transactions still getting announced, and really I think the big
Speaker 1: thing that we need to look at is volatility. You know,
Speaker 1: at the end of the day, in order to to
Speaker 1: actually agree on valuations for assets, you need to see
Speaker 1: volatility mitigate. You need to see the credit markets then
Speaker 1: stabilized so that the cost of capital you know, becomes
Speaker 1: known as as companies looked to be on assets or
Speaker 1: sponsors looked to been on assets. So I think that
Speaker 1: as we see volatility continuing to be relatively high in
Speaker 1: the equity markets and the debt markets, it makes it harder.
Speaker 1: But we are still we are seeing deals, you know,
Speaker 1: begin begin to be announced again, you know, albeit you know,
Speaker 1: definitely definitely not at the base probably thought are they
Speaker 1: different types of deals? Though? You know from the perspective
Speaker 1: that everybody says to keep an eye on, you know,
Speaker 1: our our own M and A reporters here say keep
Speaker 1: an eye on private equity right now, because that's where
Speaker 1: you're going to be seeing a lot of deals. Are
Speaker 1: you seeing a different type of deal in this environment.
Speaker 1: We are we are and again the core part of
Speaker 1: my my job is running our our financial sponsor business
Speaker 1: and our leverage finance business. So we have we have seen.
Speaker 1: You know, private equity investors love downturns in the equity
Speaker 1: markets because it creates opportunity from evaluation perspective. And while
Speaker 1: the cost of capital has gone up quite a bit
Speaker 1: when you see interest rates rising like this, you know,
Speaker 1: at the end of the day, especially if you're looking
Speaker 1: at sectors like tech or healthcare, you know, while those
Speaker 1: valuations have gone down, when you're treating at fifteen twenty times,
Speaker 1: you know, finance at six to seven, you know, maybe
Speaker 1: it's six times now versus was seven times before because
Speaker 1: of that higher pricing on the debt. That's not necessarily
Speaker 1: making that investment decision. So the downtake evaluations does create
Speaker 1: opportunities for pH shops in order to take businesses private.
Speaker 1: So I think we're seeing a little bit more of that. So, okay,
Speaker 1: are we on track for another record here or that's
Speaker 1: not likely? Definitely not gonna I don't think it's gonna
Speaker 1: be another record here. I mean, you are seeing some
Speaker 1: you know, large cap M and A being announced. You
Speaker 1: saw a broad coom announced a very large transaction recently. However,
Speaker 1: you know, the just the volatility in the markets. I
Speaker 1: would say it's continued, you know. I think we all
Speaker 1: were talking, you know, exactly a month ago, beginning of May.
Speaker 1: That's continued. We're in the in early June. You know,
Speaker 1: volumes are down in both that and equity. So I think,
Speaker 1: you know, I would say a record dear, No, you know,
Speaker 1: will the year round out, you know, with with a
Speaker 1: solid back half, that is definitely still possible. How do
Speaker 1: you watch the VIX, Chris, because you know, we have
Speaker 1: some of our reports and even the New York Stock
Speaker 1: Exchange President referring to certain levels of the VIX as
Speaker 1: a point when you'll see M and A R I
Speaker 1: p O S. Yeah, No, it's a great question. So
Speaker 1: I think when you're over thirty, it's very difficult to
Speaker 1: see any type of financing actions in the financing markets,
Speaker 1: as well as any type of settling out in in
Speaker 1: UM in M and A. When you're below twenty, I
Speaker 1: think that makes things, you know, feasible. Right now. We
Speaker 1: were over thirty for for you know, during the period
Speaker 1: we had very heavy equity market polatility a week and
Speaker 1: a half ago. You were over thirty for a few days.
Speaker 1: You know, we're now sitting at six for the last
Speaker 1: few days. If you see a dip back below twenty,
Speaker 1: I think a lot of things become more possible. We've
Speaker 1: seen the high O bond market open up just this week.
Speaker 1: You know, we had a four point seven billion dollar
Speaker 1: day on Wednesday. There was there was was just five
Speaker 1: billion printed the entire month of May. Yeah, it's very different,
Speaker 1: very different. Hey, one thing I want to ask, so,
Speaker 1: are you not busy on the weekends? Are you and
Speaker 1: your team not busy on the weekends? Can? We are
Speaker 1: definitely busy on the weekends, you know it just in
Speaker 1: terms of Look, we've all got risk portfolios that we're managing,
Speaker 1: and there are deals in the pipeline. There were there
Speaker 1: were you know, I saw an article today talking about
Speaker 1: the fact that you know, we've got roughly thirty billion
Speaker 1: of of you know, sort of death financings in the
Speaker 1: in the lb O market that needs to come in
Speaker 1: the next couple of months. So, you know, we're always
Speaker 1: looking at the positions that we have on and the
Speaker 1: commitments that we have on and if if we need
Speaker 1: uh and if we need anything else. We've got always
Speaker 1: got the elon musk to send something out that all
Speaker 1: running around there. It is um. Having said that, if
Speaker 1: you had to pick an area where you think we
Speaker 1: will see a more active area of deal flow, is
Speaker 1: it some of those beaten down sector? Is it health?
Speaker 1: Is it? What? Just quickly, I think it's Look, I
Speaker 1: think I think you're going to seek health. Healthcare and
Speaker 1: tech continue to be areas of opportunity because you can
Speaker 1: get outside returns as a private equity firm because of
Speaker 1: the growth in those sectors. You know, with by putting
Speaker 1: to work a very large amount of equity, so you know,
Speaker 1: the equity checks and those deals are usually a high
Speaker 1: percentage of the capitalization, and so you can put put
Speaker 1: a lot of money to work there. I think that
Speaker 1: you'll you'll see industrials will become more and more interesting
Speaker 1: because you know, at the end of the day, you know,
Speaker 1: businesses with good hard assets, and when you see sort
Speaker 1: of the high high sort of valued assets kind of
Speaker 1: treading down, you know, businesses with good hard assets could
Speaker 1: be attractive. Got it, We get energy, We gotta run. Chris,
Speaker 1: have a great weekend. Chris bloom over at BnB, Parry
Speaker 1: Bot joining us right here on Bloomberg Radio. You're listening
Speaker 1: to Bloomberg Business Week with Carol Messer and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio. Well in our weekly
Speaker 1: crypto segment. An investor and content creator in the space
Speaker 1: back with us has been Armstrong. He has founder a
Speaker 1: bit boy Crypto and the YouTube channel that goes by
Speaker 1: the same name. A self proclaimed crypto millionaire. I think
Speaker 1: that's how we described him last night. He joins us
Speaker 1: on the phone in Atlanta. Ben, It's good to have
Speaker 1: you back with us. How are you. I'm doing great today.
Speaker 1: Are you guys doing well? I look Bitcoin really seeming
Speaker 1: rage bound right now. It's under thirty thousand dollars according
Speaker 1: to the latest on the Bloomberg terminal. Uh. When do
Speaker 1: you think we'll see a bottom here? That is a
Speaker 1: great question. I think we're looking at one of two scenarios. Uh,
Speaker 1: there is a scenario that exists to where you know,
Speaker 1: we call it the false top theory that basically November,
Speaker 1: the top of sixty nine thousand was actually a false top.
Speaker 1: It was really kind of an over exaggerated deadcap bounce.
Speaker 1: We really look back at April is really actually being
Speaker 1: the true top. Uh, there's a lot of indicators to
Speaker 1: kind of point to that. Obviously, retail sentiment was the
Speaker 1: highest at that point. If that's the case, then we
Speaker 1: could expect to see a bottom for a bitcoin in
Speaker 1: the next month, you know, maybe maybe even over the
Speaker 1: next ten days, as things look very bad in the
Speaker 1: markets right now. Um, but most likely what we've seen
Speaker 1: traditionally in with bitcoin is a bottom in November after
Speaker 1: the mid term elections. So we're really targeting, you know,
Speaker 1: kind of the end of November beginning of December, and
Speaker 1: I think that will kind of line up with a
Speaker 1: lot of the larger kind of macroeconomic problems that we're
Speaker 1: having right now that don't really seem to be slowing down.
Speaker 1: But and here's my problem with the cryptocurrency where all
Speaker 1: this I don't know what fundamentals to measure it against,
Speaker 1: Like if you give me a hard asset or could
Speaker 1: you say fundamentals When it comes to crypto, we don't
Speaker 1: do fundamentals. Yeah, I don't know if you know this, Carol,
Speaker 1: But there there's no earnings for a bitcoin and flows.
Speaker 1: Hence my confusion and problem with So how do I,
Speaker 1: like you say, Okay, could you know midterms? We could
Speaker 1: bottom at like, how do you say that, because what
Speaker 1: are you basing it on? Well? What when I said that?
Speaker 1: So we're looking at two separate kind of issues here. Uh.
Speaker 1: Number one, we do have fundamentals for bitcoin. They're they're
Speaker 1: what we call on chained metrics. So you can kind
Speaker 1: of look at the hash rate of bitcoins. Traditionally up
Speaker 1: until about the last year, you know, generally, when the
Speaker 1: hash rate has been at the highest, the bitcoin price
Speaker 1: has been at the highest. We have seen that change
Speaker 1: a little bit recently. You can also look at you know,
Speaker 1: things we call the os the s O p R,
Speaker 1: which is like kind of how over the long term
Speaker 1: people are holding onto bitcoins. We've got a lot of
Speaker 1: different measurements that have to do with addresses and wallet
Speaker 1: and ales and transactional activity that you can kind of measure,
Speaker 1: and you can look and see connections between price and
Speaker 1: those generally, but also when are they reliable indicators? Are
Speaker 1: they going to create long term cyclical historical cycles that
Speaker 1: I can kind of analyze in ten years that are
Speaker 1: going to make sense or is it like so many
Speaker 1: people who come out of air who say, listen, this
Speaker 1: is like the Internet in the really early days. So
Speaker 1: get ready for some craziness, of course, and I mean
Speaker 1: really that's that's what we're seeing, is that the hash
Speaker 1: rate has traditionally been an indicator, but it isn't working
Speaker 1: right now. So I think we really have got to
Speaker 1: get a lot more time under our belt to be
Speaker 1: able to connect those on chain metrics to the price.
Speaker 1: But what we do have is the history of the
Speaker 1: bitcoin price and how it follows what we call the
Speaker 1: having cycle. Every four years, we've seen bitcoin do almost
Speaker 1: exactly the same thing, hit all time highs every four years,
Speaker 1: hit all time or hit new bottoms of bear markets
Speaker 1: every four years. And this is based of the having
Speaker 1: which last one occurred in next one occurred in four years.
Speaker 1: Why is it four years, Well, it's it's about three
Speaker 1: years eleven months technically, because it's two hundred and ten
Speaker 1: thousand blocks for bitcoin is actually the distance between the havings,
Speaker 1: so it's so far it's worked out to approximately every
Speaker 1: four years um. So it's coated into bitcoin to cut
Speaker 1: the production in half every four years, or every two
Speaker 1: hundred and ten thousand blocks. So but of course the
Speaker 1: average person making conceptualize, you know, two hundred and ten
Speaker 1: thousand blocks for bitcoin, so it's just easier to say
Speaker 1: every four years. It's kind of a layman's term that
Speaker 1: that we use. So Bitcoin is pretty much always followed
Speaker 1: that same path, and if it follows that same path
Speaker 1: again throughout the rest of this bear market, like it
Speaker 1: has the previous two bear markets, then that would probably
Speaker 1: indicate a bottom sometime around November. Okay, I want to
Speaker 1: move past this. Carol's still making sense of it, so
Speaker 1: am I? Are you satisfied? Carol? No, but you go ahead.
Speaker 1: I consider you the expert in until Let's not get
Speaker 1: ahead of ourselves here. And Armstrong is the expert founder
Speaker 1: of Biboy Crypto. That's why we have him on the phone. Uh, Ben,
Speaker 1: I want to talk crypto winter here because we're just
Speaker 1: getting a host of bad news we're hearing from. Uh
Speaker 1: What the latest is? Among the latest, of course, is
Speaker 1: coin based pausing hiring and then also resending some offers
Speaker 1: coming after Robin and layoffs and layoffs at coins the fundamental.
Speaker 1: I understand that there's a fundamental and the Gemini yesterday
Speaker 1: announcing layoffs. Um, are we in a crypto winter? Oh?
Speaker 1: We are certainly in a crypto winner. I mean, I
Speaker 1: don't think there's any any debate about that. Uh. And
Speaker 1: like I said before, it's predictable crypto winner. I mean
Speaker 1: last year, even we were having high prices, we were
Speaker 1: predicting this year we were going to go through this.
Speaker 1: And every four years you see the same thing where
Speaker 1: people say it's going to be different this time, it's
Speaker 1: too much adoption, there's it's two mainstream, and yet we
Speaker 1: always continue to see the same bear bear winter play out.
Speaker 1: I think when you're looking at them cutting jobs, I'm
Speaker 1: not sure this is as connected to crypto is it
Speaker 1: is just connected the overall job market and the general economy.
Speaker 1: I mean, we look at Tesla, they said they were
Speaker 1: gonna be laying off ten percent of their employees a
Speaker 1: salaried you should say salaried. We later learned say that
Speaker 1: again salaried employees, not just not contractors. So it changes
Speaker 1: the equation a little bit, just a little bit, but
Speaker 1: it's still ten percent of those contractor workers. So they
Speaker 1: are showing a pullback. So I think connecting necessarily the
Speaker 1: layoffs at Jim and I to UH in the hiring
Speaker 1: freezer coin based the crypto, it isn't as relevant and
Speaker 1: it's to the larger, you know market, I would say
Speaker 1: in general. You know, we've got the jobs report today.
Speaker 1: It looks very strong, and that's actually bad for the economy.
Speaker 1: Is you know that means uh, you know, inflation still
Speaker 1: running rampant. It's not really pulling back yet. You know,
Speaker 1: don't expect any of the tightenings to ease up anytime soon.
Speaker 1: I think it's one gonna get worse. And I think
Speaker 1: this is having effec on all businesses. We gotta run. Hey,
Speaker 1: good to check in with you. Ben now, I'm strong.
Speaker 1: He's found her a bit boy crypto on the phone
Speaker 1: from Atlanta. You're listening to Bloomberg Business Week. I still
Speaker 1: don't understand this is Bloompark Journal. Yeah, but you let
Speaker 1: me drive? Oh no, no, no no, no, all right, please,
Speaker 1: I'll do the brivels I want to drive. It's a
Speaker 1: good question. This is the drive to the clothes don
Speaker 1: on Bluebird Radio. All right, we've got just about ten
Speaker 1: and a half minutes left in today's trading session, folks.
Speaker 1: We're getting ready to wrap up what's been a shortened
Speaker 1: trading weekle though you're not already, I know, but it
Speaker 1: feels like kind of a month of trading. I don't
Speaker 1: know how you all are feeling. Um, so let's get
Speaker 1: to it. Yeah. Jonathan Waite is fund manager and senior
Speaker 1: equity analyst. He co manages the Frost Growth Equity Fund
Speaker 1: at Frost Investment Advisers. He joins us on the phone
Speaker 1: from San Antonio, Texas. Jonathan, how are you good? How
Speaker 1: are you doing? We're good, We're good. We're trying to
Speaker 1: make sense of everything that's happening. On the one hand,
Speaker 1: you got Elon Musk and Jamie Diamond and Jane Fraser
Speaker 1: in the list of sense there's a problem companies, companies
Speaker 1: warning us. Then we get this, you know, hotter than
Speaker 1: expected jobs report earlier today. That's kind of saying, wait
Speaker 1: a second, hiring, still firing on all cylinders. Help us
Speaker 1: make sense of it? Well, I think at the end
Speaker 1: of the day, when you know, everybody's thrown around the
Speaker 1: R word recession, that, um, it's important to note that
Speaker 1: it's there's a psychological, you know, element to it. That
Speaker 1: there's a thought that you know, if if somebody else
Speaker 1: has stopped hiring or freezing, you know, or laying off people,
Speaker 1: that I got to do it too, and so there
Speaker 1: can be a little bit of a group think that
Speaker 1: could be detrimental to the economy. But for the time being,
Speaker 1: you know, most of the numbers we've seen have been,
Speaker 1: you know, fairly healthy, but maybe a few yellow flags
Speaker 1: of signs of things slowing a bit. So whether or
Speaker 1: not that you know, it becomes worse or some full
Speaker 1: blown recession remains to be seen. You know what's interesting too,
Speaker 1: is when everybody starts to freak out a little bit,
Speaker 1: is is that our Gina Martin Adams Jonathan reminds us
Speaker 1: that we're not seeing an earnings recession. It's a moderation
Speaker 1: of expectations. Earning still growing, the pace of that growth
Speaker 1: is slowing, and yes, things have the tone has certainly moderated, um,
Speaker 1: but she said, margins are still rising, but analysts are
Speaker 1: reducing their expectations. That's kind of where we are. And
Speaker 1: I guess the question is do things moderate to the
Speaker 1: point where there is no growth and we're recession and
Speaker 1: it's it's a lot more painful. How do you see
Speaker 1: and how do you make investment decisions based on that outlook? Yeah? Well, okay,
Speaker 1: so let's start with the first quarter. We're going to
Speaker 1: see a negative g D. We already saw a negative
Speaker 1: GDP print. You know, the second quarter estimates keep moving down.
Speaker 1: The question though from here is what about the second
Speaker 1: half and of investors, I think that the recession hits
Speaker 1: at least by the end of next year. So it's
Speaker 1: very much consensus already that we're going to have a
Speaker 1: recession somewhere in there. So, um, you know where where
Speaker 1: where we shake out? As we look at you know,
Speaker 1: at a typical recession, you're going to see excesses, right,
Speaker 1: what are the excesses we're seeing this time. Well, it's
Speaker 1: monetary stimulus, it's fiscal stimulus, and both of those they're
Speaker 1: taking the punch bowl away at the same time just
Speaker 1: as things are starting to slow down. So you know,
Speaker 1: we're we're a little cautious there. We think there could
Speaker 1: be it will be a rough go trying to get
Speaker 1: to that soft landing. It's not impossible, but it could
Speaker 1: be a little rough time to get there. Um. You know,
Speaker 1: we're we are seeing a bit slowing down on the
Speaker 1: you know, we did see a good job number, but
Speaker 1: we are seeing the tech companies um freezing hirings and
Speaker 1: job cuts. Um, you know, seeing credit spreads move up
Speaker 1: a bit, and you know, had a very brief um
Speaker 1: yield curve and version consumer confidence going down a bit.
Speaker 1: So with some yellow flags that we're watching, I want
Speaker 1: to tomp in because you actually co manage the Frost
Speaker 1: Growth Equity Fund, which you're today's down UM. But we
Speaker 1: know everything's been are largely be eaten up here five years.
Speaker 1: You are on average annually more than a game, putting
Speaker 1: you in the seventy seven percentile according to Bloomberg Data.
Speaker 1: So you've done, you know, well, the names in your fund, though,
Speaker 1: we'd like a who's who? I feel like I've Corporate America, Microsoft, Apple, Amazon, Alphabet, MasterCard, Visa,
Speaker 1: Home depot Um. Do you regret some of those holdings?
Speaker 1: Do you hold onto them? Because how do you think
Speaker 1: about some of these names? Now, well, let's put it
Speaker 1: in the context. Right, You've had several years of those
Speaker 1: leading the crew, you know, the entire market up, and
Speaker 1: so it was inevitable that value stocks would have their
Speaker 1: day again, right, And so we've seen that shift to
Speaker 1: UM out of a lot of those growth names. This year,
Speaker 1: we've seen move towards defensive names, especially in the second quarter.
Speaker 1: And so I said, the market zigs and zags. There
Speaker 1: there will be a time that you know, Amazon will
Speaker 1: come back in favor, UM that you know Google and
Speaker 1: digit advertising will come back. So we we feel like
Speaker 1: we have good names to own through the cycle. You know,
Speaker 1: we're long term investors and we like to own these
Speaker 1: names through UM. You know, as long as we feel
Speaker 1: like that there's that they have secular growth and strength,
Speaker 1: we're fine holding it through cyclical swings. So you haven't
Speaker 1: gotten rid of any of them, paired back or anything.
Speaker 1: We will trade around some of those names, but by
Speaker 1: and large, we've we've stuck with. How are you thinking
Speaker 1: about Tesla? It's your seventeenth biggest holding, just under two
Speaker 1: percent of the portfolio. It's been all over the place lately. Yeah,
Speaker 1: we're kind of under wait versus the bench and versus
Speaker 1: some of the peers. We own it. Probably don't like
Speaker 1: it as much as some of those, but but we
Speaker 1: do like UM the E v UM, that market. We
Speaker 1: do like where the mix of new autos is moving. UM.
Speaker 1: It's he's a very controversial figure. I'm not going to
Speaker 1: argue with that. UM got that right, and he's got
Speaker 1: a lot on his plate right now. You're talking, Yeah, Okay,
Speaker 1: just making sure who else are you talking about? Who
Speaker 1: are you thinking about? No, I'm just making you know
Speaker 1: you didn't say the name. So, um, if you have
Speaker 1: new money to commit, where do you put it and
Speaker 1: how patient do you have to be for it to
Speaker 1: show some kind of significant performance? You put it in
Speaker 1: the growth stocks. Baby, Hey, wait a minute, I don't know.
Speaker 1: You can't say that growth stocks. You put it in
Speaker 1: the growth so so well, look, I think there's a
Speaker 1: there's a time in which the growth stocks will will
Speaker 1: come back. And growth has you know, through various recessions
Speaker 1: done well and sell downs where you get typical cyclical
Speaker 1: stocks will get will sell down even more in a
Speaker 1: draw down. So so there will be a scarcity of
Speaker 1: growth when you get GDP slowing down, and so you
Speaker 1: will eventually have people gravitating back to names that have
Speaker 1: a like I said, a long term secular growth story,
Speaker 1: and those are the names that we like to invest in.
Speaker 1: Ten seconds, when do you think those come back? Look
Speaker 1: back half of the back half of this year. Like
Speaker 1: I said, it's going to be the Fed holds the keys.
Speaker 1: That's gonna be path depending on what they do. We
Speaker 1: think that at some point in time they're going to
Speaker 1: have to back off. And I think that once, um,
Speaker 1: once we get a clearer picture of what they're going
Speaker 1: to do, um and frankly, once we get a little
Speaker 1: bit of bottom out of some of the frogginess and
Speaker 1: these high valuation stocks, and I think that's a great
Speaker 1: time to get back in the girl stop. All right,
Speaker 1: we gotta run, Jonathan, Thanks so much. Jonathan Waite, he
Speaker 1: senior equity analys and Frost Investment Advisors, joining us on
Speaker 1: the phone from San Antonio. Thanks for listening to Bloomberg
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