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Speaker 1: This is Bloomberg Business Wait Inside from the reporters and

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Speaker 1: editors who bring you America's most trusted business magazine, plus

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Speaker 1: global business finance and tech news the Bloomberg Business Week

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Speaker 1: podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.

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Speaker 2: It is for Capital Markets Day Today and Dearborn and

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Speaker 2: having some fun and a I believe Coney Dog in

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Speaker 2: downtown Detroit is her own Matt Miller radio and TV anchor,

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Speaker 2: my co host at times, lever of all things, four wheels,

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Speaker 2: two wheels and more that first of all, nice to

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Speaker 2: have you here with justin myself. Where the heck are you?

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Speaker 2: You look like you fit in.

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Speaker 3: There, Coney.

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Speaker 4: Anyone who's been to Detroit knows that the local food

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Speaker 4: is a Coney Dog, right, which is basically a hot

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Speaker 4: dog with chili on it. And there are really only

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Speaker 4: two places to get those, the classic Coney's National Chili

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Speaker 4: and then there's another chain that I won't mention while

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Speaker 4: I'm in here. Nice, but yes, whenever I go to Detroit,

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Speaker 4: I stop here first get my fix of Cony's, and

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Speaker 4: then I go on and do whatever business I came

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Speaker 4: here to do.

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Speaker 2: I'm just going to tell you and get them at

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Speaker 2: my kitchen too, because that's how my husband likes his

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Speaker 2: hot dogs with chili on it. Okay, so tell us

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Speaker 2: what you were in I mean, we know why you

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Speaker 2: were in Detroit. You had some interesting conversations.

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Speaker 5: Yeah.

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Speaker 4: I had an interview with the CEO of Ford today

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Speaker 4: and the reason that you know he invited me, along

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Speaker 4: with the rest of his executive board and a ton

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Speaker 4: of Wall Street analysts, is that Ford is trying to

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Speaker 4: convince the Street that they can meet their goal of

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Speaker 4: producing two million evs in twenty twenty six, and probably

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Speaker 4: a lot more importantly, that they can actually make money

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Speaker 4: on those evs, right, because they're slated to sell about

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Speaker 4: three billion dollars worth of electric vehicles this year and

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Speaker 4: they're slated to lose about three billion dollars on their sales.

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Speaker 4: So currently their margin is like negative one hundred percent,

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Speaker 4: but they say they are going to be able to

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Speaker 4: boost it to eight percent on EV's by twenty twenty six,

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Speaker 4: and that's what they want to convince analysts.

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Speaker 3: I think I was curious about matt Is. I mean,

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Speaker 3: we didn't get forwards earnings earlier this month, and they

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Speaker 3: beat on first quarter profit, but they obviously warned on

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Speaker 3: their outlook for this year. I'm kind of wondering how

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Speaker 3: does the EV sort of fit into that dynamic and

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Speaker 3: how much growth could that potentially When you're hearing and

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Speaker 3: talking to the CEO for does he think that that

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Speaker 3: could potentially help things moving forward?

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Speaker 4: So the EV, you know, last year they only sold

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Speaker 4: sixty one thousand evs in the US, and of course

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Speaker 4: they sell millions of cars, so it's hardly anything, but

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Speaker 4: hopefully that share is going to increase. Still, it's not

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Speaker 4: the you know, the cold steel that they sell off

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Speaker 4: dealership lots that makes them money. You know, they're hoping

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Speaker 4: to get, like I said, margins back to eight percent

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Speaker 4: and their traditional ic business they're hoping to be around

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Speaker 4: ten percent, which is where they are right now. They

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Speaker 4: make a ton of money on the f one fifty

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Speaker 4: trucks that they sell with gas engines, but the real growth,

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Speaker 4: according to Farley, is going to come from software and services.

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Speaker 4: They have, for example, a business unit for pro that

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Speaker 4: works with you know, contractors, plumbers, electricians, et cetera, and

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Speaker 4: they make a ton of money, like big Fat Margins,

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Speaker 4: selling software that can tell you, you know, if your

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Speaker 4: engine has got a problem. If your door needs fixed.

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Speaker 4: They even can tell that your windshield wiper is moving

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Speaker 4: in a way that that means it's about to break.

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Speaker 4: So that's where they see the growth coming and that's

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Speaker 4: what they're hoping to see in the future.

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Speaker 2: So Zach, it's not only the year of efficiencies at Meta,

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Speaker 2: it's also at Ford Motor Company, and Matt did catch

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Speaker 2: up with Ford CEO Jim Farley to talk about the

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Speaker 2: efficiencies that it could put together, all of them in

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Speaker 2: many different forms. Listen up, everybody, We're making progress.

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Speaker 6: It needs to go faster. But a new culture setting

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Speaker 6: in in the company. We have, you know a lot

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Speaker 6: of other competitors that made a lot of personnel reductions.

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Speaker 6: We see that as kind of more of an in

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Speaker 6: our journey on cost and quality, more of an output metric.

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Speaker 6: So we want to reduce is more like the bill

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Speaker 6: material cost, the industrial cost, and the plants a lot

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Speaker 6: of extra inventory we want to get out as well

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Speaker 6: as our negotiated cost with the supplier. So our cost

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Speaker 6: we want to get out is actually in the heart

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Speaker 6: of our industrial system.

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Speaker 5: It's not like just people.

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Speaker 7: You have said in the past, you have twenty five

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Speaker 7: percent more engineers working on the same output as your competitors.

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Speaker 7: Does that mean you're going to reduce that twenty five percent?

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Speaker 7: Are you letting it happen through attrition? How's it working?

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Speaker 6: You know, we're very intentional about this, Matt. I think

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Speaker 6: you're going to see from Ford over many years, a

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Speaker 6: natural reduction, not through attrition, but skill mismatch, intentional transition

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Speaker 6: of our teams, moving some of the engineering to lower

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Speaker 6: cost labor sources. So it'll be a combination of things.

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Speaker 6: But you know, it's obvious that we have we have

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Speaker 6: to be more efficient uncompetitive advertising and marketing spend is

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Speaker 6: also something that you've called out. Actually, I would say

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Speaker 6: on our blue business we've underinvested in advertising. We want

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Speaker 6: on our E business really not to do a lot

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Speaker 6: of broadcast advertising.

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Speaker 5: We want to practice speak for itself.

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Speaker 6: And really the investment in the marketing there is really

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Speaker 6: the ownership model, so people kind of come back and

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Speaker 6: high loyalty.

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Speaker 5: Same with pro on the blue business.

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Speaker 6: You know, we are starting to see inventories grow for

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Speaker 6: the whole industry. We're in a great space. We have

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Speaker 6: a really fresh lineup of vehicles, but that merchandising capability,

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Speaker 6: I would assume We're going to have to spend more

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Speaker 6: this year and prices will come down, thankfully for the

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Speaker 6: customer after all these years of tight supply.

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Speaker 7: How much do you think prices are going to come

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Speaker 7: down and what's going to drive.

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Speaker 6: That we're assuming in our plan this year and next year,

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Speaker 6: you know, five plus percent reduction. It's kind of in

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Speaker 6: between where we were maybe in nineteen and where we've been.

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Speaker 6: I don't think we see what we'ren't going to go

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Speaker 6: back to the days a couple of years of one

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Speaker 6: hundred day supply, so most people are in the fifty

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Speaker 6: day supply range. You know, I think the natural discounting

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Speaker 6: for someone who has an older product is going to

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Speaker 6: be in the thousands. You're starting to see now low

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Speaker 6: aprs from a lot of brands who have older product.

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Speaker 5: What's unique of before.

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Speaker 6: It is we're basically we have an all new lineup,

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Speaker 6: soh you know, we're a bit of a unicorn. But

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Speaker 6: I think the background pricing will be more difficult.

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Speaker 7: You said in the past, or people have asked, you know,

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Speaker 7: how do you get from eight percent on your ev

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Speaker 7: business you want to do ten percent overall to like

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Speaker 7: the seventeen percent that Tesla has Do you get up

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Speaker 7: there or do they you think eventually see margin pressure.

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Speaker 5: It's a good question. Both both are going to happen.

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Speaker 6: We're seeing you know, look at what's happening in China

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Speaker 6: with BYD.

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Speaker 5: It looks what's happening with Tesla.

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Speaker 6: They reduce their prices on model why their main product,

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Speaker 6: you know, five seven thousand dollars. It goes up, it

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Speaker 6: goes down, but it's it's pretty far down. I think,

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Speaker 6: you know that they've had the market to themselves at

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Speaker 6: a big head star kind of like what we do

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Speaker 6: on pro and now they're seeing a lot more pressure. Obviously,

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Speaker 6: I think we're going to definitely see that, especially in

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Speaker 6: the two row crossover.

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Speaker 5: We think there'll be like fifty to one.

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Speaker 6: Hundred new models, so you know, and a lot of

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Speaker 6: people want to grow, so there's going to be it's

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Speaker 6: gonna be a great time to buy a two row

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Speaker 6: electric EV for customers like Makey where we compete really

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Speaker 6: in EV you know, pickup trucks, three row crossovers that

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Speaker 6: we're going to show people today and the commercial vehicle

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Speaker 6: EV commercial vehicles, we don't see as much price you know,

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Speaker 6: competition because there's not as many vehicles choices there all.

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Speaker 2: Right, That, of course is the Ford CEO Ji of

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Speaker 2: Farley talking there with Matt. Matt, you know, I'm trying

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Speaker 2: to understand if they're going to be cutting prices, they're

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Speaker 2: projecting what billions of dollars of losses for their EV

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Speaker 2: unit this year. I mean, how is it that they

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Speaker 2: ultimately get to that eight percent return on EV's It's

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Speaker 2: not going to be easy. I get the efficiencies, but

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Speaker 2: it's gonna be tough.

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Speaker 4: No, it's not going to be easy. But they're taking

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Speaker 4: out two and a half billion dollars of costs this year,

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Speaker 4: and they think that they have six to seven billion

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Speaker 4: dollars of structural cost disadvantages compared to competitors that they

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Speaker 4: want to take out by the middle of the decade.

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Speaker 4: So you add that to the software and services revenue

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Speaker 4: that they hope to really start generating, especially from the

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Speaker 4: ED cars. And remember they're cutting prices on just like

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Speaker 4: Tesla right on the cheaper vehicles. The more expensive vehicles

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Speaker 4: are not getting cut. In fact, those prices are rising.

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Speaker 4: So if you want you know, an F one to

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Speaker 4: fifty lightning Er, if you want a Raptor R, or

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Speaker 4: if you want a Bronco Wild Track. You're not getting

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Speaker 4: a price cut on those. You're not getting a price

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Speaker 4: cut on any of the Halo cars, just the cheaper stuff.

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Speaker 2: You know what I really want? I want a Cony dog.

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Speaker 2: Can you bring one back?

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Speaker 7: Uh?

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Speaker 4: Yeah, I'll get you a Coney to go.

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Speaker 2: That'll be pretty ugly by the time it gets here.

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Speaker 3: I'm loving that leather jacket.

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Speaker 8: Math.

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Speaker 2: He wears it, well, he wears it with you.

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Speaker 5: You know.

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Speaker 4: Mike McKee didn't like this. Apparently he doesn't like the look.

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Speaker 4: It is an authentic nineteen forty three pilot's check.

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Speaker 2: All right, we'll get Mike in and you the two

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Speaker 2: if you can kind of debate it out, all right,

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Speaker 2: My Matt safe travels back home, of course, our Matt

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Speaker 2: Miller there in Detroit.

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Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us

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Speaker 1: live weekday afternoons from three to six Eastern Listen on

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Speaker 1: Bloomberg dot com, the iHeartRadio app and the Bloomberg Business App,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: No business theres on our radar today. Nowhere to hide,

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Speaker 2: because folks, we are tracking it. Because it does feel

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Speaker 2: like from day to day there is news on the

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Speaker 2: semi space, mostly because of Micron technology, certainly in today's

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Speaker 2: trade stock under pressure after China cyberspace regulator said that

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Speaker 2: its products failed to pass a cybersecurity review in the country.

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Speaker 2: And this comes on the heels of a Bloomberg exclusive

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Speaker 2: last week of Micron said to be getting one and

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Speaker 2: a half billion from the Japanese government to make next

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Speaker 2: gen memory chips in Japan. So let's get to what

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Speaker 2: it all means, because it's certainly an important sector. I mean,

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Speaker 2: we all know chips go into so much and how

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Speaker 2: it really fits in, especially the Micron news into the

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Speaker 2: overall semi space. So let's get to it. Paula pencal

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Speaker 2: Is with US Bloomberg Intelligence Semiconductor's analyst in our Bloomberg

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Speaker 2: Interactive Brokers studio. Also with us is I and King

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Speaker 2: Bloomberg News, US semiconductor networking reporter on the phone in

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Speaker 2: San Francisco and Ian. You were part of the team

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Speaker 2: that put together that exclusive last week about the investment

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Speaker 2: in Micron. Let's start with you. A lot of news,

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Speaker 2: a lot going on with Micron. You always remind me

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Speaker 2: not every semiconductor is the same. Tell us about the

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Speaker 2: news around Micron and why it's important to follow what's

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Speaker 2: going on.

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Speaker 8: Yeah, I mean this is being seen as an escalation

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Speaker 8: of the ongoing trade dispute, trade war, call it what

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Speaker 8: you want, between the US, which is theest creator of semiconductors,

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Speaker 8: and China, which is the largest market for semiconductors. And

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Speaker 8: what's going on here really is that Micron is being

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Speaker 8: told by the Chinese government we don't like your products,

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Speaker 8: we don't think they're safe, and we're going to ban

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Speaker 8: them from critical infrastructure. A lot of lack of clarity

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Speaker 8: around what that actually means and what that impact is

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Speaker 8: going to have, but obviously as a headline, it's not

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Speaker 8: a pretty one.

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Speaker 3: And Paul I want to bring you into this conversation.

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Speaker 3: So as an analyst at Bloomberg Intelligence, what's your sort

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Speaker 3: of big takeaway in the development and all this.

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Speaker 9: Well, first of all, we don't really know what the

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Speaker 9: impact is, as Ian had pointed out. Mark Murphy, the CFO,

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Speaker 9: commented today at JP Morgan's conference, that the impact could

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Speaker 9: be anywhere from single digit percent impact to top line revenue,

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Speaker 9: or it could be low single digit up to high

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Speaker 9: single digit. But then he went on to say, we

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Speaker 9: really don't have a lot of clarity, China was light

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Speaker 9: on what exactly it meant by this security risk. The

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Speaker 9: one thing I would point out is it's clearly it

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Speaker 9: does appear to be a political posturing because typically memory

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Speaker 9: chips are not targeted by hackers just because they tend

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Speaker 9: to have storage. They don't have a lot of like

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Speaker 9: specific software that runs on it or code. So that

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Speaker 9: sort of supports the fact that this is definitely likely

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Speaker 9: a political move.

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Speaker 2: I mean, yeah, right, you know, I mean it's a

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Speaker 2: little wacky, right if you again you remind us that

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Speaker 2: not all chips are the same Paul the same thing,

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Speaker 2: But I mean it's a little weird. And I do

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Speaker 2: wonder as you follow this space, is it just a

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Speaker 2: case until this political football kind of calms down a

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Speaker 2: little bit? I mean, is that the expectation? I mean,

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Speaker 2: I feel like the rhetoric, especially when it comes to

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Speaker 2: semis and high tech, just continues to get tougher and

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Speaker 2: tough between the US and China.

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Speaker 10: No.

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Speaker 8: I think you're absolutely right. The general direction is towards escalation.

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Speaker 8: And you know, the concern that overarching is of so

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Speaker 8: called pea coupling, that these two markets will just learn

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Speaker 8: to live without each other. But in the interim now

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Speaker 8: cause an awful lot of pain. And the way to

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Speaker 8: look at the Micron action, according to what some people think,

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Speaker 8: is like China has not responded to a lot of

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Speaker 8: what the US has done over the last couple of

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Speaker 8: years because it couldn't because it didn't have anything to

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Speaker 8: really fight back with. The Micron thing is the one

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Speaker 8: thing that it could fight back with. They don't need Micron.

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Speaker 8: They can get exactly the same chips from Samsung, exactly

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Speaker 8: the same chips from Heinex, and therefore this isn't going

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Speaker 8: to hurt them. They're not shooting themselves in the foot

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Speaker 8: by taking action against Micron, and if perhaps for the

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Speaker 8: political audience back in Beijing, this looks like they are

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Speaker 8: doing something and it looks like they're being.

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Speaker 3: Strong Paula, I'm curious as far as do we have

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Speaker 3: any sort of scoop as far as how this could

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Speaker 3: end up impacting Micron's financials.

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Speaker 9: Well, again, they are unclear. The company has communicated to

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Speaker 9: investors they are unclear as to the exact impact, but

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Speaker 9: it could be anywhere from low single digits to high

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Speaker 9: single digits, but they really don't know. I would say

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Speaker 9: though that just to follow up on what you was saying.

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Speaker 9: It is a little bit of a slippery slope for

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Speaker 9: China though, because even though they don't need these memory

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Speaker 9: chips because they can source them elsewhere, you know, there

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Speaker 9: are other chips that they do need from the US.

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Speaker 9: So it really is a battle between the two and

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Speaker 9: Microns sort of stuck in the middle.

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Speaker 2: Well, there was some great reporting. I think this might

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Speaker 2: have been by Debi Wu, or maybe it was by

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Speaker 2: you Ian. You know that Micron and I'm reading from

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Speaker 2: the story Micron is still depend on the global electronic

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Speaker 2: supply chains that often run through Chinese factories. I mean,

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Speaker 2: this is the tricky stuff, right when we talk about globalization.

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Speaker 2: That train has left the station, and when you look

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Speaker 2: at some like semiconductors, right, it's a global supply chain.

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Speaker 2: So how do we how do you look at something

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Speaker 2: like that and ultimately where Micron lands, you know, with

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Speaker 2: or without China.

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Speaker 8: Yeah. No, to back up what Paula said and go

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Speaker 8: back to what the CFO himself said, He's like, we

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Speaker 8: don't know. First of all, yeah, we don't know, But

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Speaker 8: guess what as much as a quarter of Micron sales

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Speaker 8: somehow go through China, Whether it's Hong Kong headquartered companies.

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Speaker 8: Whether it's through the distribution channel, we don't know, right,

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Speaker 8: Because China the world is the world's device manufacturing center,

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Speaker 8: so you really need to be there, you need to

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Speaker 8: have those relationships. So anything that breaks up that chain

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Speaker 8: that we've seen, you know, develop over the last thirty years, this,

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Speaker 8: you know, interdependency is not good.

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Speaker 2: So and go to the story that you and a

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Speaker 2: colleague out of Asia broke last week about Micron getting

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Speaker 2: one and a half billion from the Japanese government for

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Speaker 2: next gen hip. So roll that into this story and

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Speaker 2: in the reporting.

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Speaker 8: Yeah, that's I think that's a that's a good way

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Speaker 8: to perhaps segue into that because everybody in the world,

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Speaker 8: you know, with the US, the Europeans, the Japanese, and

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Speaker 8: the Koreans are like, look, we want chip independence too, right,

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Speaker 8: we need to build our own factories. Japan's a little

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Speaker 8: bit late to the game. But guess what, hey, Micron,

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Speaker 8: come and build here. How does that look if you're China.

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Speaker 8: Some song has a chip factory in China. Heinez has

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Speaker 8: a chip factory in China. Micron doesn't, Right, How did

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Speaker 8: I look? Yeah?

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Speaker 2: Exactly? Paul come in on that Yeah, I would just say.

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Speaker 9: I mean there's an element of Yeah, Micron's sort of

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Speaker 9: like covering their bases just in case. And you know,

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Speaker 9: I think like a couple of years ago they had

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Speaker 9: planned to build in Japan and then you know, at

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Speaker 9: their Hiroshima plan extend their capability there, but they backed out.

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Speaker 9: I mean, the market went south and so on and

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Speaker 9: so forth. But here they are back to the table.

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Speaker 9: Everybody's sort of coming forth with their own equivalent to the.

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Speaker 2: US Chips Act.

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Speaker 9: Japan is you know, Singapore is even China is I'm

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Speaker 9: hearing like one hundred and forty nine billion going to

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Speaker 9: subsidize the sector. So Japan's taking advantage of this opportunity

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Speaker 9: now to sort of establish itself and hopefully emerge as

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Speaker 9: a new manufacturing hub within Asia.

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Speaker 2: I do wonder too, though, Ian like, how ultimately does

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Speaker 2: this work then if everybody's kind of developing their domestic

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Speaker 2: JIP industry, yay, great, I guess right, it's in your backyard.

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Speaker 2: But at some point, I mean, is it going to

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Speaker 2: be problematic and require almost government support at some point

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Speaker 2: because it's cyclical, right, I Mean, we always talk about this,

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Speaker 2: and I do wonder is it going to ultimately end

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Speaker 2: up in a glut of chips in a lot of markets.

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Speaker 8: Well, Sanda Jah, the CEO of Micron, told me off

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Speaker 8: saying that my thinking was too mid in the past,

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Speaker 8: but that thinking is very much that this is a

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Speaker 8: viciously cyclic industry. We've seen loads and loads of plans

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Speaker 8: in the past about building factories here, there and everywhere.

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Speaker 8: And guess what, when things get tight, those factories get

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Speaker 8: built and they never get equipment put in them. Those

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Speaker 8: factories get built and they end up doing something else.

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Speaker 8: So believe that when you see the chips rolling off

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Speaker 8: these lines would be my caution. But also, you know,

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Speaker 8: take Sanjay Jar's word for it. Apparently my thinking is

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Speaker 8: mired in the past.

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Speaker 2: Well mine's apparently mired in the past too, because it

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Speaker 2: just kind of makes sense to me. Any last final thoughts,

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Speaker 2: Paula just got about twenty thirty seconds here.

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Speaker 9: Now, I would just say that it's an ongoing process

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Speaker 9: that we have to keep close eye on, and no

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Speaker 9: one really knows what the final outcome is going to

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Speaker 9: be on this front. And in terms of the impact, we.

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Speaker 2: Can just hope that there's like the metaverse and AI

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Speaker 2: everywhere and like we just need a million chips everywhere.

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Speaker 2: I don't know, it's it's a very interesting time that

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Speaker 2: we're living in. Paula, thank you so much. Paula Pancal.

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Speaker 2: She's Semiconductor's analyst at Bloomberg Intelligence. Here in Studio Interactive

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Speaker 2: Brokers Studio. I king our thanks oas our go to

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Speaker 2: when it comes to all things global techs chips, usmconductor

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Speaker 2: and networking reporter at Bloomberg News.

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Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us

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Speaker 1: live weekday afternoons from three to six Easter on Bloomberg Radio,

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Speaker 1: the Bloomberg Business App and YouTube. You can also listen

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Speaker 1: live on Amazon Alexa from our flagship New York station

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Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.

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Speaker 2: So the aviation sector really set to thrive in twenty

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Speaker 2: twenty three. You're just back from a trash.

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Speaker 3: Just back from Maruba. Did not check bags because I'm

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Speaker 3: always afraid I'm going to lose my.

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Speaker 2: Bad You're helping setting a set up the next segment,

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Speaker 2: so let's get to it with Sherry Stein. She's Chief

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Speaker 2: Technology Officer of the America's at SITA. They are the

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Speaker 2: IT provider for global aviation. They work at airports, on

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Speaker 2: board planes at borders. They operate more than two hundred countries,

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Speaker 2: which may explain why we find her on this Monday

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Speaker 2: on zoom in Spain. Sherry, nice to have you here

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Speaker 2: on Bloomberg. Talk to us a little bit about this organization,

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Speaker 2: the history. It's been around for a long time, so

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Speaker 2: just talk a little bit about the mission if you will.

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Speaker 10: Sure, that's right, hey, Carole, just too nice to be

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Speaker 10: here with you. Yeah. So CITA was formed in nineteen

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Speaker 10: forty nine really to help bring the communications together between airlines,

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Speaker 10: aircraft and the airports, so that you know, they could

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Speaker 10: easily know when an aircraft was leaving one airport and

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Speaker 10: when it was expected to arrive at the next, and

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Speaker 10: so to help facilitate that air to ground communications. So

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Speaker 10: we were formed on that basis and have been operating

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Speaker 10: ever since.

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Speaker 2: So we serve more than Yeah, that's what I was

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Speaker 2: gonna say. Your members are like global correct nowadays?

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Speaker 10: That's right. Yeah, we're a cooperative organization with about four

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Speaker 10: hundred and fifty different members. Airlines airports around the world,

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Speaker 10: So any airport that you're go into, about ninety five

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Speaker 10: percent of the world's airports. Just look for that powered

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Speaker 10: by seat a sticker on any of the computer equipment

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Speaker 10: or kiosks or boarding gates or any of the devices

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Speaker 10: that you see there. And then of course, you know,

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Speaker 10: the network behind the scenes that you won't see is

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Speaker 10: part of what helps keep that all working.

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Speaker 3: So, Sherry, talk to us about these different innovative solutions

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Speaker 3: that y'all are trying to rule out here that are

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Speaker 3: already basically at a number of different airports that basically

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Speaker 3: try to help travelers.

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Speaker 10: Yeah, so big focus is on digitization and how to

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Speaker 10: help eliminate the manual and paper laden processes that have

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Speaker 10: plagued not only our industry but other industries. Right is

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Speaker 10: how to move to a more seamless or frictionless process.

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Speaker 10: So we done a lot of work around you know,

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Speaker 10: biometrics for document validation, and then certainly the subject that

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Speaker 10: you were talking about earlier, just with your flight to Aruba,

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Speaker 10: includes not only work with biometrics and digital identity, but

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Speaker 10: also around bag tracking and bag management and helping to

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Speaker 10: make that whole process more seamless and easier for people

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Speaker 10: to give that confidence to check their bags.

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Speaker 2: Now I have to say I'm putting a little Apple

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Speaker 2: tags in my luggage so that I can kind of

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Speaker 2: track it. But I'm also noticing that more and more

437
00:22:19,160 --> 00:22:22,080
Speaker 2: airlines are saying, hey, you check your bags, here's where

438
00:22:22,080 --> 00:22:24,640
Speaker 2: they are, and they're giving you some information. I'm assuming

439
00:22:24,680 --> 00:22:26,960
Speaker 2: you are involved in that.

440
00:22:26,960 --> 00:22:31,520
Speaker 10: That's right exactly. So our platform suite as World Tracer

441
00:22:31,760 --> 00:22:35,640
Speaker 10: is the brand name. Passengers might not know it because

442
00:22:35,680 --> 00:22:38,000
Speaker 10: we're more of a B to B We provide services

443
00:22:38,040 --> 00:22:40,920
Speaker 10: to the airlines and to the airports behind the scenes,

444
00:22:41,800 --> 00:22:44,399
Speaker 10: but anything to do with the bag messaging. When you

445
00:22:44,480 --> 00:22:47,080
Speaker 10: get the notification that your bag has been checked in,

446
00:22:47,440 --> 00:22:49,679
Speaker 10: that your bag has been put onto the plane, that

447
00:22:49,760 --> 00:22:53,560
Speaker 10: your bag is arriving at carousel three at your destination,

448
00:22:54,080 --> 00:22:57,879
Speaker 10: that's all messaging powered by our platform. So it helps

449
00:22:57,920 --> 00:23:02,679
Speaker 10: really help boost that confidence and provide the digitization for

450
00:23:02,720 --> 00:23:07,040
Speaker 10: the automation of those processes to help you keep passengers

451
00:23:07,080 --> 00:23:10,399
Speaker 10: informed and reduce some of the stress levels and anxiety,

452
00:23:10,440 --> 00:23:12,159
Speaker 10: because nobody wants that when they travel.

453
00:23:12,800 --> 00:23:14,600
Speaker 2: You want Actually, since we're being asked to do more

454
00:23:14,600 --> 00:23:16,720
Speaker 2: and more at the plate, you know, like in check

455
00:23:16,760 --> 00:23:18,440
Speaker 2: it and stuff, there's a lot that's being kind of

456
00:23:18,440 --> 00:23:20,320
Speaker 2: put on us, like conversy, did you do did you

457
00:23:20,359 --> 00:23:22,080
Speaker 2: check in yourself? Did you take the bag over?

458
00:23:22,240 --> 00:23:24,600
Speaker 3: I did everything? Yeah, I did everything. That's why I

459
00:23:24,680 --> 00:23:27,119
Speaker 3: was just I was worried. I've had lost baggage in

460
00:23:27,119 --> 00:23:29,399
Speaker 3: the past, and I just didn't want to go again.

461
00:23:30,960 --> 00:23:31,560
Speaker 10: I was curious.

462
00:23:31,880 --> 00:23:35,760
Speaker 3: I know that you did a baggage It Insights study,

463
00:23:35,800 --> 00:23:37,760
Speaker 3: and not surprisingly you had on there. The number of

464
00:23:37,760 --> 00:23:40,600
Speaker 3: mishandled baggage nearly doubled from twenty twenty one to twenty

465
00:23:40,640 --> 00:23:44,280
Speaker 3: twenty two. I mean as far as other things when

466
00:23:44,280 --> 00:23:46,840
Speaker 3: it comes to delayed baggage or other forms that you're

467
00:23:46,880 --> 00:23:49,639
Speaker 3: able to help people that are working through this. Is

468
00:23:49,640 --> 00:23:51,439
Speaker 3: it just for lost baggage or what else can you

469
00:23:51,480 --> 00:23:54,240
Speaker 3: do here as far as trying to help travelers kind

470
00:23:54,240 --> 00:23:55,880
Speaker 3: of ease their travel burdens.

471
00:23:57,000 --> 00:23:57,320
Speaker 8: Yeah.

472
00:23:57,440 --> 00:23:59,520
Speaker 10: So really, when you look at kind of the end

473
00:23:59,520 --> 00:24:02,280
Speaker 10: to end process, I suppose right there are more than

474
00:24:02,480 --> 00:24:07,520
Speaker 10: forty organizations involved in helping to fulfill a trip. So

475
00:24:07,600 --> 00:24:11,320
Speaker 10: everything that we can do to provide more information, more data,

476
00:24:11,720 --> 00:24:16,120
Speaker 10: more tools to help give the passenger more information. Feeling control,

477
00:24:16,160 --> 00:24:19,480
Speaker 10: because I think the biggest thing about travel is maybe

478
00:24:19,520 --> 00:24:23,359
Speaker 10: feeling you know that you don't have control, you don't

479
00:24:23,400 --> 00:24:27,639
Speaker 10: have access to information, you don't have always accurate information,

480
00:24:28,000 --> 00:24:30,200
Speaker 10: So everything that we can do to help make that

481
00:24:30,359 --> 00:24:35,040
Speaker 10: possible is really core to our mission. So, you know,

482
00:24:35,119 --> 00:24:39,160
Speaker 10: the bag tracking details, certainly being able to provide accurate

483
00:24:39,200 --> 00:24:43,359
Speaker 10: flight information and making sure that you get that single

484
00:24:43,400 --> 00:24:47,359
Speaker 10: source of truth so you have consistent information regardless of

485
00:24:47,640 --> 00:24:50,520
Speaker 10: you know, whether you're looking at the screen in the airport,

486
00:24:51,080 --> 00:24:54,800
Speaker 10: the app on your phone, or you know, calling the

487
00:24:54,840 --> 00:24:58,879
Speaker 10: reservation center that everybody has the same information about that

488
00:24:59,000 --> 00:25:01,520
Speaker 10: flight or about your bag. Can I send all of

489
00:25:01,520 --> 00:25:02,040
Speaker 10: those things?

490
00:25:02,040 --> 00:25:03,880
Speaker 2: Are this ability to track your bag?

491
00:25:03,880 --> 00:25:04,080
Speaker 5: Though?

492
00:25:04,160 --> 00:25:07,240
Speaker 2: If there's a delay? I mean, how is it kind

493
00:25:07,240 --> 00:25:10,320
Speaker 2: of helping to make sure that Indeed, like if you're

494
00:25:10,359 --> 00:25:12,000
Speaker 2: sitting on the plane and then you realize, okay, my

495
00:25:12,000 --> 00:25:14,160
Speaker 2: bag didn't get there, that's going to distress the hecatomy

496
00:25:14,400 --> 00:25:16,320
Speaker 2: rather than not knowing until I get to the carousel.

497
00:25:16,760 --> 00:25:18,879
Speaker 2: So I do wonder. I guess ultimately it's not just

498
00:25:18,920 --> 00:25:23,320
Speaker 2: about like telling you information but hoping that it isn't delayed,

499
00:25:23,440 --> 00:25:26,119
Speaker 2: it isn't lost. So I'm curious how it's all of

500
00:25:26,160 --> 00:25:28,399
Speaker 2: this digitization and the work that you guys are doing

501
00:25:28,720 --> 00:25:31,840
Speaker 2: with airports and airlines. How is it improving so log

502
00:25:32,000 --> 00:25:35,680
Speaker 2: bags aren't delayed, aren't lost, aren't damaged.

503
00:25:36,800 --> 00:25:39,600
Speaker 10: Yeah, so a couple of cases, I suppose, Like with

504
00:25:39,760 --> 00:25:43,960
Speaker 10: the Luftanza, we've been working on this auto reflight system

505
00:25:44,320 --> 00:25:48,480
Speaker 10: where if a bag happens to miss a connection because

506
00:25:48,520 --> 00:25:51,560
Speaker 10: maybe it's a tight timeline or you know, flight was

507
00:25:51,640 --> 00:25:56,280
Speaker 10: delayed for some reason, we have an auto reflight now,

508
00:25:56,400 --> 00:25:59,800
Speaker 10: so it puts the bag automatically onto the next flight

509
00:26:00,280 --> 00:26:03,600
Speaker 10: and then just without having to retag the bag, without

510
00:26:03,600 --> 00:26:07,879
Speaker 10: having to require manual intervention. And so that's bringing fantastic

511
00:26:08,000 --> 00:26:11,240
Speaker 10: savings for TANZA and so leading to the rollout of

512
00:26:11,280 --> 00:26:15,080
Speaker 10: that system on a wider basis beyond the proof of concept.

513
00:26:16,160 --> 00:26:20,600
Speaker 10: And then airlines like Latam are seeing like a forty

514
00:26:20,640 --> 00:26:25,280
Speaker 10: percent increase in customer satisfaction through the implementation of self

515
00:26:25,320 --> 00:26:28,760
Speaker 10: bag drop and the systems that they're doing there, because

516
00:26:28,960 --> 00:26:33,160
Speaker 10: now they reduce the burden of the manual tagging processes

517
00:26:33,359 --> 00:26:35,920
Speaker 10: and they can automate all of that as well. So

518
00:26:36,560 --> 00:26:40,119
Speaker 10: a lot of things in that type of approach that

519
00:26:40,280 --> 00:26:44,560
Speaker 10: give the passenger control again and help to make it

520
00:26:44,560 --> 00:26:45,280
Speaker 10: more automated.

521
00:26:45,400 --> 00:26:47,280
Speaker 2: We'll find to check in with you, certainly something we

522
00:26:47,280 --> 00:26:50,080
Speaker 2: can all relate to, and it's interesting to kind of

523
00:26:50,080 --> 00:26:52,760
Speaker 2: go behind the scenes and understand how it's all working.

524
00:26:52,800 --> 00:26:55,359
Speaker 2: Sherry Stein is Chief Technology Officer of the America is

525
00:26:55,359 --> 00:26:58,879
Speaker 2: at SITA, joining us on Zoom from Spain. I do

526
00:26:59,000 --> 00:27:01,880
Speaker 2: have to say that when I see the app, tell me, hey,

527
00:27:01,920 --> 00:27:04,440
Speaker 2: your bag has made it. I mean, I'll follow it. Yeah, Like.

528
00:27:05,920 --> 00:27:06,760
Speaker 3: It's such a relief.

529
00:27:07,000 --> 00:27:09,880
Speaker 2: It is totally all right, everybody you're listening to watching

530
00:27:09,880 --> 00:27:12,520
Speaker 2: Bloomberg Business Weekend. This is Bloomberg Radio.

531
00:27:16,160 --> 00:27:17,800
Speaker 8: Brother Marc.

532
00:27:19,560 --> 00:27:22,240
Speaker 7: A journal how about you let me drive?

533
00:27:22,760 --> 00:27:28,080
Speaker 2: No, no, no, no, honey, please, I'll do the riding gravels.

534
00:27:28,400 --> 00:27:32,040
Speaker 1: Let's mate, I want to try it.

535
00:27:32,040 --> 00:27:33,920
Speaker 10: It's a good question time.

536
00:27:36,720 --> 00:27:39,679
Speaker 1: This is the drive to the clothes dot Com for me.

537
00:27:39,720 --> 00:27:41,080
Speaker 5: I think we'll buy around.

538
00:27:40,800 --> 00:27:43,159
Speaker 1: You don on Bloomberg Radio.

539
00:27:43,440 --> 00:27:46,240
Speaker 2: All right, everybody just read eighteen minutes just under eighteen

540
00:27:46,240 --> 00:27:48,600
Speaker 2: minutes left in today's trading session. Carol Master Along and

541
00:27:48,640 --> 00:27:51,520
Speaker 2: Jests met in live in our Bloomberg Interactive Brokers studio

542
00:27:52,440 --> 00:27:55,080
Speaker 2: on Bloomberg YouTube, or i should say, on YouTube and

543
00:27:55,080 --> 00:27:57,920
Speaker 2: Blomberg Originals as well our streaming service. You heard Charlie

544
00:27:57,960 --> 00:28:00,920
Speaker 2: talking about the market's Jess bouncing around. I mean, I said,

545
00:28:01,160 --> 00:28:02,560
Speaker 2: I feel like over the last week or said, we've

546
00:28:02,560 --> 00:28:04,240
Speaker 2: had a lot of met trading days. It felt like

547
00:28:04,280 --> 00:28:06,600
Speaker 2: we did break out a little bit yet last week

548
00:28:07,200 --> 00:28:09,760
Speaker 2: an optimism of maybe a deal getting done out of DC.

549
00:28:10,040 --> 00:28:11,840
Speaker 2: But it just does feel like we're marking time a

550
00:28:11,880 --> 00:28:13,640
Speaker 2: little bit until this gets done.

551
00:28:13,760 --> 00:28:16,679
Speaker 3: Definitely, And obviously we've talked about the technicals there with

552
00:28:16,720 --> 00:28:18,119
Speaker 3: the S and P five hundred as well as the

553
00:28:18,240 --> 00:28:21,560
Speaker 3: NASAK one hundred. So especially after a gangbuster year, you know,

554
00:28:21,680 --> 00:28:23,480
Speaker 3: it makes sense to some of my sources that we'd see.

555
00:28:23,320 --> 00:28:24,879
Speaker 2: A little bit of a pullback from here. All right,

556
00:28:24,920 --> 00:28:27,200
Speaker 2: So let's get into it with our drive to the closed. Guest.

557
00:28:27,240 --> 00:28:29,840
Speaker 2: Max Wasserman is back with us, founder and senior portfolio

558
00:28:29,880 --> 00:28:33,560
Speaker 2: manager at the independent investment advisory for a Mira mar Capital.

559
00:28:33,880 --> 00:28:37,119
Speaker 2: He's joining us so once again on zoom from Northbrook, Illinois. Max,

560
00:28:37,240 --> 00:28:39,239
Speaker 2: nice to have you here. Top of mind for you

561
00:28:39,760 --> 00:28:41,120
Speaker 2: on this Monday.

562
00:28:41,840 --> 00:28:44,080
Speaker 11: Well, thank you for having me. I think the biggest

563
00:28:44,120 --> 00:28:46,480
Speaker 11: thing that I would focus on is disparity within the

564
00:28:46,520 --> 00:28:50,640
Speaker 11: market itself. Really, five technology companies are accounting for eighty

565
00:28:50,640 --> 00:28:56,160
Speaker 11: percent of the S and p's total return. It's Navidia's Amsen, Google, Microsoft, Apple,

566
00:28:56,520 --> 00:28:58,520
Speaker 11: and if you look at it, From that perspective, it's

567
00:28:58,560 --> 00:29:01,160
Speaker 11: really the nasdack that's carrying in the whole market. The

568
00:29:01,240 --> 00:29:03,479
Speaker 11: equal weighted part of the market's actually up only one

569
00:29:03,480 --> 00:29:06,120
Speaker 11: to two percent, So if you look at the market,

570
00:29:06,160 --> 00:29:09,600
Speaker 11: it's really a Nasdaq retracement of what they lost last year,

571
00:29:09,840 --> 00:29:12,440
Speaker 11: and it's concentrated in five stocks, which we think is

572
00:29:12,480 --> 00:29:13,880
Speaker 11: not that healthy for the market.

573
00:29:14,240 --> 00:29:16,440
Speaker 3: So if it's not that healthy for the market, how

574
00:29:16,480 --> 00:29:18,720
Speaker 3: are you positioning in the stock market at this.

575
00:29:18,680 --> 00:29:22,720
Speaker 11: Point, Well, we're staying we're diving in growth investors, so

576
00:29:22,720 --> 00:29:26,320
Speaker 11: we're looking for valuations that make reasonable sense paces good yield.

577
00:29:26,560 --> 00:29:28,720
Speaker 11: While we do have investments in some of the large

578
00:29:28,720 --> 00:29:31,800
Speaker 11: cap techts, we're looking in cyclicals. We're looking in healthcare

579
00:29:32,120 --> 00:29:35,640
Speaker 11: energy companies that we think have reasonable valuations. Right now,

580
00:29:35,680 --> 00:29:37,600
Speaker 11: if you look at the top five stocks, they have

581
00:29:37,640 --> 00:29:40,800
Speaker 11: a forward pe of thirty one times, So with the

582
00:29:41,160 --> 00:29:44,600
Speaker 11: NASAK being up twenty percent, we don't think the risk

583
00:29:44,680 --> 00:29:47,480
Speaker 11: reward is really favorable from this level in that area

584
00:29:47,480 --> 00:29:49,520
Speaker 11: of the market. But there's other area the markets and

585
00:29:49,560 --> 00:29:53,600
Speaker 11: the cyclicals, the energies, the healthcare. They're trading it, you know,

586
00:29:53,840 --> 00:29:56,280
Speaker 11: mid teams, which is less than the S and P itself.

587
00:29:56,680 --> 00:29:58,440
Speaker 2: You know, what I find interesting is that we have

588
00:29:58,520 --> 00:30:00,880
Speaker 2: had this if you go back maybe years ago or

589
00:30:00,920 --> 00:30:03,000
Speaker 2: so or I don't know, I'd have to look at

590
00:30:03,000 --> 00:30:06,400
Speaker 2: my calendar to really denote the exact timeframes. But Max,

591
00:30:06,440 --> 00:30:09,160
Speaker 2: we've had these conversations before that the overall gains of

592
00:30:09,200 --> 00:30:11,520
Speaker 2: the market are really fueled by a handful of names,

593
00:30:11,520 --> 00:30:14,000
Speaker 2: those big tech names, only for folks to say, yep,

594
00:30:14,040 --> 00:30:17,920
Speaker 2: stepping back from them don't make sense, overdone, overdone, and

595
00:30:17,960 --> 00:30:19,800
Speaker 2: then we just see more money go into it and

596
00:30:19,800 --> 00:30:21,840
Speaker 2: we see them pop to the upside. Because so much

597
00:30:21,840 --> 00:30:24,640
Speaker 2: of our economy is really a lot of what these

598
00:30:24,680 --> 00:30:27,240
Speaker 2: companies are doing. So how do you kind of factor

599
00:30:27,280 --> 00:30:29,520
Speaker 2: that in fundamentally, Well.

600
00:30:29,360 --> 00:30:31,000
Speaker 11: If we look at you take a step back. If

601
00:30:31,000 --> 00:30:33,160
Speaker 11: you look last year, for example, when the Nasdaq was

602
00:30:33,200 --> 00:30:36,240
Speaker 11: down thirty two percent, right then the SMP was down

603
00:30:36,280 --> 00:30:39,800
Speaker 11: around twenty. Equal weighted and dividend oriented stocks were down

604
00:30:39,840 --> 00:30:42,120
Speaker 11: in the high single digits. So if you look at

605
00:30:42,120 --> 00:30:44,320
Speaker 11: a company like Apple, which we have an investment in,

606
00:30:44,640 --> 00:30:47,240
Speaker 11: it's back to where it was in August of twenty two.

607
00:30:47,560 --> 00:30:49,880
Speaker 11: So the stock just made a complete retrenchment. If you

608
00:30:49,920 --> 00:30:51,800
Speaker 11: look back into Navidio and some of these texts all

609
00:30:51,840 --> 00:30:53,880
Speaker 11: these companies just made a retrenchment to where they were

610
00:30:53,920 --> 00:30:56,680
Speaker 11: trading a year ago. So it's not like these are

611
00:30:56,720 --> 00:31:00,479
Speaker 11: making ultimate new highs by tremendous amount. Making some new

612
00:31:00,560 --> 00:31:03,000
Speaker 11: highs like Microsoft, but it's not by a significant amount.

613
00:31:03,360 --> 00:31:06,040
Speaker 11: So what we're saying to people for new money, be

614
00:31:06,200 --> 00:31:09,000
Speaker 11: cautious jumping into the nas deck. The S and P

615
00:31:09,160 --> 00:31:11,680
Speaker 11: five hundred has become the ETFs if you will have

616
00:31:11,760 --> 00:31:14,640
Speaker 11: become a mini Nasdaq one hundred. If you think about it,

617
00:31:15,040 --> 00:31:17,960
Speaker 11: Apple and Microsoft account for almost fourteen percent of the

618
00:31:17,960 --> 00:31:21,800
Speaker 11: waiting in the S ANDP. So as technology goes, so

619
00:31:21,920 --> 00:31:24,200
Speaker 11: goes the general market. But there's a lot of other

620
00:31:24,320 --> 00:31:27,320
Speaker 11: areas which have a better asymmetrical return. And if we

621
00:31:27,360 --> 00:31:30,160
Speaker 11: look at somebody long term, if you bought the nas

622
00:31:30,240 --> 00:31:32,400
Speaker 11: deck a year ago, all you're doing is barely breaking

623
00:31:32,440 --> 00:31:34,840
Speaker 11: even now where it. Had you been a little bit

624
00:31:34,840 --> 00:31:37,680
Speaker 11: more conservative and not chased into these stocks at highs,

625
00:31:38,080 --> 00:31:40,720
Speaker 11: you wouldn't be hurt as much. But yeah, now you're todate.

626
00:31:40,800 --> 00:31:44,120
Speaker 11: Everybody likes tech because it's up twenty percent. But if

627
00:31:44,160 --> 00:31:46,440
Speaker 11: you take a longer perspective, they're just giving you back.

628
00:31:46,480 --> 00:31:48,120
Speaker 11: They're just coming back to where they were a year ago.

629
00:31:48,640 --> 00:31:50,880
Speaker 3: Have you made any sort of shorter term changes just

630
00:31:50,960 --> 00:31:53,640
Speaker 3: based on what's happening with the debt ceiling, because when

631
00:31:53,640 --> 00:31:55,400
Speaker 3: I've spoken with my sources, a lot of them feel

632
00:31:55,480 --> 00:31:57,440
Speaker 3: like it's more of a bond story right now rather

633
00:31:57,480 --> 00:31:59,360
Speaker 3: than a stock story.

634
00:31:59,720 --> 00:32:01,680
Speaker 11: We look at the debt failing is more of a

635
00:32:01,720 --> 00:32:05,320
Speaker 11: political issue than anything. The issues that we see is

636
00:32:05,360 --> 00:32:07,840
Speaker 11: if you get a failed they failed to ratify the

637
00:32:07,880 --> 00:32:10,560
Speaker 11: debt ceiling, you could get a five to ten percent pullback,

638
00:32:10,600 --> 00:32:12,240
Speaker 11: But we think that's political and we would use it

639
00:32:12,280 --> 00:32:15,560
Speaker 11: as a buying opportunity. We haven't changed anything based on

640
00:32:15,640 --> 00:32:18,080
Speaker 11: the debt ceiling because it's day to day and it's

641
00:32:18,080 --> 00:32:21,320
Speaker 11: not a strategy. It's just trying the whims of the politics,

642
00:32:21,600 --> 00:32:23,960
Speaker 11: which you have to look at. Though that has affected

643
00:32:23,960 --> 00:32:26,880
Speaker 11: people strategy. It's what's happening in the banking area. You know,

644
00:32:26,960 --> 00:32:30,080
Speaker 11: regional banks are having a harder time. Large money center

645
00:32:30,120 --> 00:32:32,160
Speaker 11: banks are had a hard time given the fact that

646
00:32:32,200 --> 00:32:35,040
Speaker 11: the interest rate risk they took didn't pay off. So

647
00:32:35,120 --> 00:32:39,040
Speaker 11: from that perspective, we deemphasized financials and we have been

648
00:32:39,360 --> 00:32:42,400
Speaker 11: underwinting financials for some time. But we make the regional

649
00:32:42,440 --> 00:32:44,880
Speaker 11: banks and we do have an investment in one. We

650
00:32:44,920 --> 00:32:47,440
Speaker 11: still think there's some it's going to be languishing for

651
00:32:47,440 --> 00:32:49,720
Speaker 11: a while until they fix the balance sheets a little

652
00:32:49,760 --> 00:32:50,120
Speaker 11: bit better.

653
00:32:50,560 --> 00:32:52,240
Speaker 2: How does what the Fed do and I don't want

654
00:32:52,240 --> 00:32:55,560
Speaker 2: to get into what the Fed will do because we

655
00:32:55,600 --> 00:32:57,120
Speaker 2: could go back and forth from day to day or

656
00:32:57,160 --> 00:32:59,920
Speaker 2: week to week. But how does what the Fed ALTI

657
00:33:00,120 --> 00:33:02,560
Speaker 2: mentally does and where it lands and for how long

658
00:33:03,200 --> 00:33:05,160
Speaker 2: impact your strategy right now?

659
00:33:06,400 --> 00:33:09,240
Speaker 11: Well, how it impacts is liquidity. So if the Fed,

660
00:33:09,560 --> 00:33:11,560
Speaker 11: you know, we look as the Fed maybe maybe one

661
00:33:11,640 --> 00:33:14,160
Speaker 11: or two more rises and interest rates and that's about it.

662
00:33:14,480 --> 00:33:16,440
Speaker 11: We think the Fed's gonna be tightening and the economy

663
00:33:16,560 --> 00:33:20,320
Speaker 11: is going to slow down. You think increases possibly, I do.

664
00:33:20,520 --> 00:33:21,080
Speaker 5: I do now.

665
00:33:21,080 --> 00:33:23,000
Speaker 11: They may pause it for a little bit, but inflation

666
00:33:23,080 --> 00:33:25,800
Speaker 11: is still embedded in the economy. Wagers are still going high,

667
00:33:26,160 --> 00:33:28,960
Speaker 11: Unemployment is still very low. So you could see an

668
00:33:29,000 --> 00:33:31,880
Speaker 11: area where you get something called stagflation. So they may

669
00:33:31,920 --> 00:33:34,800
Speaker 11: try to prevent that, and that's you know, that's a possibility.

670
00:33:35,000 --> 00:33:37,000
Speaker 11: But they may pause next time just to try to

671
00:33:37,040 --> 00:33:39,760
Speaker 11: digest everything that's going on. But I could still see

672
00:33:39,800 --> 00:33:42,360
Speaker 11: another twenty five to fifty basis points by year end,

673
00:33:42,480 --> 00:33:44,600
Speaker 11: which is contrary to what everybody's thinking the Fed's going

674
00:33:44,640 --> 00:33:47,000
Speaker 11: to cut. I think people are hoping the Fed's going

675
00:33:47,040 --> 00:33:50,120
Speaker 11: to cut to justify this enthusiasm in the NASDAK. And

676
00:33:50,160 --> 00:33:52,320
Speaker 11: it's also the market's trying to talk the Fed into

677
00:33:52,360 --> 00:33:55,160
Speaker 11: doing something. I mean, right now, the Fed gave so

678
00:33:55,280 --> 00:33:58,360
Speaker 11: much liquidity for so many years. To take it back,

679
00:33:58,520 --> 00:34:00,520
Speaker 11: they have to get rid of the embedded and and

680
00:34:00,560 --> 00:34:02,880
Speaker 11: that's a bigger risk. So to us, the thing that

681
00:34:02,920 --> 00:34:05,040
Speaker 11: we would change if we thought the Fed was going

682
00:34:05,120 --> 00:34:08,040
Speaker 11: to shift policy and going to cut interest rates, then

683
00:34:08,080 --> 00:34:10,560
Speaker 11: we probably moved to a little bit more higher beta

684
00:34:10,640 --> 00:34:12,880
Speaker 11: type stocks, if you will, because they'll do better and

685
00:34:12,920 --> 00:34:15,400
Speaker 11: lower interest rates. But right now we see no reason

686
00:34:15,400 --> 00:34:19,160
Speaker 11: to change, especially with valuations. Technology is not offering it

687
00:34:19,160 --> 00:34:20,880
Speaker 11: to us, and again we have investments in there. We

688
00:34:20,920 --> 00:34:23,440
Speaker 11: just don't think the risk reward. But also if they

689
00:34:23,440 --> 00:34:25,919
Speaker 11: cut interest rates or they slow it down, we think

690
00:34:25,960 --> 00:34:28,680
Speaker 11: everything's going to be a fourth quarter story reflecting twenty

691
00:34:28,760 --> 00:34:31,440
Speaker 11: twenty four, and there we see the market much stronger

692
00:34:31,560 --> 00:34:33,600
Speaker 11: and we think the market will start reflecting that. So

693
00:34:33,680 --> 00:34:35,560
Speaker 11: we think the Fed's not as big of an issue

694
00:34:35,600 --> 00:34:40,239
Speaker 11: right now. It's just really digesting everything it's done all.

695
00:34:40,200 --> 00:34:41,919
Speaker 2: Right, We're going to leave it, I think. On that note, listen,

696
00:34:42,000 --> 00:34:45,759
Speaker 2: thank you so much some really thoughtful advice for us

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00:34:45,760 --> 00:34:48,760
Speaker 2: on this Monday. Max Wasserman. He's foundering senior portfolio manager

698
00:34:48,800 --> 00:34:53,480
Speaker 2: and you're More Capital registered independent, registered investment advisory firm.

699
00:34:53,560 --> 00:34:56,160
Speaker 2: Joining us on zoom from Northbrook, Illinois.

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00:34:56,880 --> 00:35:01,520
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