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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller. Every business day we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news on the Bloomberg Markets Podcast,

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. Let's talk to somebody

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Speaker 1: who really knows what they're talking about as opposed to us.

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Speaker 1: Liz Anne Saunders, chief investment strategists at Charles Schwab and

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Speaker 1: the Proud University of Delaware, Blue Hen joins us. Liz,

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Speaker 1: you know again, I was just quoting. I saw some

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Speaker 1: green on the screen. We got the SNP year to

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Speaker 1: date for just a few days here, up two points

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Speaker 1: six percent for the year. I'm wondering, if I just

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Speaker 1: take that and call it a year, what do you

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Speaker 1: think these markets are gonna do for us this year? UM? Obviously,

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Speaker 1: very much changes on the FED. I think right now

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Speaker 1: it's not so much that the stock market is fighting

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Speaker 1: the FED. They may be fighting the Feds rhetoric, but

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Speaker 1: the bond market is probably fighting the SAID a bit

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Speaker 1: more than the stock market. And I think it's a

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Speaker 1: function of at what point can the Fed not pivot

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Speaker 1: to to rate cuts. I think that would be an

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Speaker 1: ugly scenario, but go into pause mode. The bond market

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Speaker 1: is telling them that should be sooner rather than later.

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Speaker 1: But um, that that is sort of sticking with their

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Speaker 1: terminal rate above five percent, and then we're staying there,

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Speaker 1: and that is not what the market has built into expectations.

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Speaker 1: So I think a little more economic pain near term

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Speaker 1: would actually be a better scenario for the stock market

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Speaker 1: because it would provide that backdrop for the Fed to

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Speaker 1: pause sooner than what they're suggesting. Having said that, Liz Anne, um,

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Speaker 1: what do you expect for earnings? Because a couple of

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Speaker 1: months ago everyone was saying, Okay, this looks so bad

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Speaker 1: that executives are going to go ahead and throw everything

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Speaker 1: at the fourth quarter. Um, you know, any kind anything

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Speaker 1: you need to write off, any losses, you need to

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Speaker 1: mark to market. That's going to happen now? Um is

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Speaker 1: it a free pass? Well, we're in a we're in

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Speaker 1: sort of a pause period now for additional adjustments to

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Speaker 1: fourth quarte earnings. And that's that's normal, given that we're

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Speaker 1: only a couple of days away from the start of

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Speaker 1: earning season, you did see pretty decent haircuts, and you

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Speaker 1: continue to see haircuts. Two earnings for three. I think

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Speaker 1: that you know at the end of the day or

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Speaker 1: at the end of this calendar year of two once

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Speaker 1: we get fourth quarter results. Right now, the consensus is

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Speaker 1: somewhere around two eighteen dollars and UH earnings for the

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Speaker 1: SMP UH has a risk of that number being lower

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Speaker 1: than that, such that you get in calendar year terms

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Speaker 1: year over year decline, which suggested estimates for three haven't

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Speaker 1: come down enough, but they've come down significantly enough for

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Speaker 1: the fourth quarter that for some segments of the market,

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Speaker 1: only industrials, by the way, have had positive earnings revisions.

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Speaker 1: Every other sector is either flat to negative. Financials in

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Speaker 1: particular have seen a lot of estimate cuts that in

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Speaker 1: theory sets up a lower bar and the possibility for

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Speaker 1: better than expected earnings UH. And I think that is

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Speaker 1: really key because their first out of the blocks to

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Speaker 1: just a more broad assessment of whether UM cuts have

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Speaker 1: been sufficient. At this point, Lisienne Charles Schwab tens and

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Speaker 1: tens of millions of clients account holders. How did you

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Speaker 1: put into context for them, and how are you are

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Speaker 1: you positioning given what happened last year and both equities

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Speaker 1: and fixed income right exactly. So obviously it was a

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Speaker 1: very difficult year for blended portfolios of stocks and bonds,

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Speaker 1: in many ways the worst in history, and that was

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Speaker 1: unsettling for clients. But as we put in the collection

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Speaker 1: of our three outlooks, not just hours on the equity side,

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Speaker 1: but you know my colleague Cathy Jones, so I know

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Speaker 1: you guys know over there on the sixth income side,

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Speaker 1: we really were reinforcing the better environment for the bond market,

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Speaker 1: and I think that's a better set up for investors.

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Speaker 1: Were extrapolating that the negative returns in both asset classes

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Speaker 1: we're going to persist in and we were really emphasizing

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Speaker 1: that that was not likely the case in terms of

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Speaker 1: within the equity market. What our recommendations were in two

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Speaker 1: have continued into at least the first part of three,

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Speaker 1: which is take more of a factor based approach than

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Speaker 1: a sector based approach. Stay up in quality, look for

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Speaker 1: factors that represent what's dear from a macro perspective, so

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Speaker 1: positive earning to revision, strong free cash flow, shorter duration equities,

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Speaker 1: dividend growers, and at least for the early part of three.

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Speaker 1: We continue to suggest that that's the best way on

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Speaker 1: the equity side of portfolios to navigate through this. And

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Speaker 1: then lastly, consider stepping up the pace of rebalancing. If

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Speaker 1: you're more of a calendar based rebalancing, maybe consider volatility

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Speaker 1: based rebalancing, so taking advantage of volatility across asset classes

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Speaker 1: to make some adjustments and do what we all know

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Speaker 1: we're supposed to, which is, you know, by low cell

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Speaker 1: high or add low trim high. We've heard more and

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Speaker 1: more strategies come out and say they like Europe in

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Speaker 1: three and I know it's only been you know, handful

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Speaker 1: of trading days so far, but European equity index is

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Speaker 1: on the continent are up six and the US is

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Speaker 1: only up one or two or three percent. Thing where

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Speaker 1: you look, is that a rally that has legs? Do

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Speaker 1: you think europe continuous er market's also up quite a

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Speaker 1: bit year to date that you know, we're very early

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Speaker 1: in the year to state the extreme obvious, but we've

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Speaker 1: been saying that in the past. When you go through

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Speaker 1: what I generally call these dual cycles, where you you

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Speaker 1: have an expansion that turns into a recession or a

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Speaker 1: severe slowdown. I've been calling it a rolling recession in

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Speaker 1: conjunction with a bear market. When you come out of

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Speaker 1: those dual cycles and you start a new cycle, both

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Speaker 1: in the economy and in the market, you tend to

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Speaker 1: see pretty significant shifts in leaders ship at the broad

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Speaker 1: asset class level. And one of those that we've been

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Speaker 1: emphasizing is pretty likely is maybe a shift back to

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Speaker 1: some international outperformance or at least an environment that's supportive

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Speaker 1: of staying diversified with international that that we're probably past

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Speaker 1: the days where you can easily say, you know what,

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Speaker 1: it's everything is US, Why should I have my money

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Speaker 1: invested anywhere other than the US. We think that is

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Speaker 1: largely transitioning, and that may be partly reflected in what

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Speaker 1: we're seeing with the out performance of both IFA and

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Speaker 1: e M. So it's not a sell your US by international.

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Speaker 1: Let's just make sure you haven't, particularly via lack of rebalancing,

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Speaker 1: let the diversification wane via your international exposure going to

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Speaker 1: a significantly lower percentage of port forward. And let me

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Speaker 1: ask you about the retail investor cultural is in because

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Speaker 1: it really exploded, uh, you know, on the fringes you

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Speaker 1: had the Wall Street bets and the meme stocks. But

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Speaker 1: I think a lot more people started to pay attention

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Speaker 1: to the market, if only because they had more time

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Speaker 1: and nowhere else to spend money through the throughout the pandemic.

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Speaker 1: Is that going to hold to some extent do you think?

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Speaker 1: Or was that a flash in the pan? Well, it

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Speaker 1: wasn't really a flash in the pan. It really represented

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Speaker 1: a new cohort, kind of newly minted day traders that

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Speaker 1: the younger cohort, and it did fuel speculative pockets of

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Speaker 1: the market like heavily shorted stocks and nonprofitable tech um

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Speaker 1: even some trading in the zombie companies. Obviously the meme stocks.

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Speaker 1: I think that morphed over into the spack space and

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Speaker 1: the crypto space, and that's where you saw these kind

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Speaker 1: of microbubbles driven by that cohort pop in spectacular fashion.

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Speaker 1: And I think some valuable lessons were learned by that cohort.

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Speaker 1: But then there are some of the big ones, even

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Speaker 1: some of the fangs, right, I mean teslast that was

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Speaker 1: less spect driven, but driven by the surgeon inflation and

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Speaker 1: in turn and aggressive stance by the set raising the

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Speaker 1: discount rate. And when you're looking at companies that don't

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Speaker 1: have near term cash flows or earnings. That makes those

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Speaker 1: very far in the future earnings much less valuable. So

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Speaker 1: I think that that was more of a fundamental thing

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Speaker 1: that occurred in conjunction with maybe some of the speculations

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Speaker 1: sitting behind it. So I think there's been lots of

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Speaker 1: explanations depending on what asset class you're talking about or

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Speaker 1: what cohort you're talking about. All right, Lizianne, thank you

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Speaker 1: so much for joining us. We always appreciate getting a

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Speaker 1: few minutes of your time, Lizianne Saunders. She's the chief

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Speaker 1: investment strategist of course. Over there at Charles Schwab the

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Speaker 1: latest aunt what's happening in Europe. There's an interestingt story

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Speaker 1: on the Bloomberg terminal here headline Europe's inflation anxiety is

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Speaker 1: fading quicker than prices. To get the latest on here,

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Speaker 1: we always turned to Maria today, so she's we don't

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Speaker 1: turn to Maria today or no, that's right, are more

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Speaker 1: often I'm today our European corresponding for Bloomberg News. She's

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Speaker 1: based in our Brussels bureau. That's where she is today.

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Speaker 1: It's the capital of the European Union. Of course, that's

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Speaker 1: where you gotta be if you're Maria today. Maria, I

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Speaker 1: know you had a conversation recently the Belgium's Prime Minister,

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Speaker 1: Alexander de Crue. What did you guys talk about? What

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Speaker 1: were your takeaways? Look, this was a conversation we had yesterday.

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Speaker 1: Of course is January tenth, eleventh, that's what we did

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Speaker 1: the interview yesterday. This is a happy new Year. I

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Speaker 1: talked about this with Matt. In continental Europe, you still

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Speaker 1: say happy new year. The years only just getting started now,

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Speaker 1: and if your Spanish, you can take it out for

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Speaker 1: like maybe two or three more weeks and it's actually yeah,

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Speaker 1: And that's how it is. Especially this is about Senity agenda,

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Speaker 1: and I guess perhaps you both will agree with this

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Speaker 1: idea that there has been this shift, this huge turnaround

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Speaker 1: in the European story. I remember before I went to

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Speaker 1: my Christmas break, this is all about the winter from Hell,

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Speaker 1: this emminent recession in Europe, the energy crisis, the gas

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Speaker 1: prices and all this rocketing. And then we're now back

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Speaker 1: and Goldman Sacks has just dropped the recession called They

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Speaker 1: now see growth of zero point six percent for this year.

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Speaker 1: It's not great, but it's not the contraction they expected.

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Speaker 1: You have Deutsche banks say, actually, the Europe and the

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Speaker 1: European Union, the meeting Europe could be a winner of

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Speaker 1: the China reopening. It has been chaotic, but it could

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Speaker 1: be good for sectors like luxury and tourism. And yesterday

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Speaker 1: when I spoke with the Belgium Prime minister, he actually

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Speaker 1: told me from his perspective, and of course he sees

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Speaker 1: this as a politician, he also got this impression that okay,

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Speaker 1: we can breathe. The crisis is not over, but the

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Speaker 1: worst case scenario has not manifested. So I think that's

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Speaker 1: pretty amazing news. The Goldman Sachs upgrade the idea that

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Speaker 1: this inflation um in Europe is coming down more rapidly

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Speaker 1: than had been anticipated, and I wonder what it means

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Speaker 1: for the e c B. I'm sure they still want

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Speaker 1: to tighten because you know, if you look around the world,

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Speaker 1: you can use your f CEO and go function and

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Speaker 1: too to look at fiscal financial conditions in Europe as well.

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Speaker 1: They are still easing, but you know, if they have

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Speaker 1: strong UH or if they have a rapid decline inflation

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Speaker 1: and decent growth, you know, zero point six percent for Europe.

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Speaker 1: That's pretty good. Um, they really don't have to raise

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Speaker 1: too much more, do they? Absolutely? I think you can

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Speaker 1: look at it two ways. You know, if you have inflation,

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Speaker 1: and I guess they'll say, yes, it's headline inflation that's dropping.

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Speaker 1: And there's respect to the energy and of course the

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Speaker 1: energy bills have gone down because the wholesale price have

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Speaker 1: gone down, but the core elements of inflation continue to

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Speaker 1: be on acceptably high. And remember the European Central Bank,

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Speaker 1: and you covered this for years, Matt. This is a

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Speaker 1: single mandate central bank. It's a two percent and they

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Speaker 1: have really missed the boat now for for almost a year.

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Speaker 1: And beyond that, with the criticism of the central bank

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Speaker 1: is that the entire diagnosis of inflation, they also got

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Speaker 1: it wrong. Remember for many months they said to just

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Speaker 1: all a one off and then it would cold down,

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Speaker 1: and then it was in transic and then it would

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Speaker 1: stay on. So I see there is a lot of

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Speaker 1: scrutiny and the European Central Bank on getting things right.

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Speaker 1: Uh this year. Now you could argue, as I say,

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Speaker 1: it's both ways. If you don't have this recession, then

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Speaker 1: you don't have this argument that, oh you can't hike

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Speaker 1: so aggressively because you hike into recession. But if you

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Speaker 1: do see this price pressure actually go down and really

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Speaker 1: reflect on a more sustainable basis, but maybe you don't

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Speaker 1: have to be as aggressive. The problem is, and this

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Speaker 1: is the issue for Christian le guard. If you remember

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Speaker 1: that December meeting, she repeated so many times I lost

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Speaker 1: track of this. We're not going to pivot, We're going

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Speaker 1: to continue to hike. There is essentially no limits to

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Speaker 1: the actions that we can take to bring that inflation

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Speaker 1: back to target. And she really put herself in this box.

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Speaker 1: Next high gets fifty basis points, and she wouldn't rule

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Speaker 1: out there would be more fifty basis points to come.

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Speaker 1: So she cornered herself in a way that now it

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Speaker 1: is tricky in this changing environment. Maria, give us the

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Speaker 1: latest on the energy environment in Europe these days, going

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Speaker 1: into the winter. Obviously there's grave concerns because of the

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Speaker 1: supply issues from resulting from the Russian Ukraine War. Where

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Speaker 1: are we today and kind of what's the outlook for

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Speaker 1: energy in Europe? Well, look, I think today we heard

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Speaker 1: from the Nature Secretary General. Of course we're talking about

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Speaker 1: this idea that perhaps things are better for Europe now

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Speaker 1: and and this terrible winter, you know, the winter from

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Speaker 1: Hell did not manifest for continental Europe, but in in

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Speaker 1: in Ukraine. And of course it's to be very serious

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Speaker 1: about this. The war still going on, and we know

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Speaker 1: it is costing the lives of Ukrainians and and the

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Speaker 1: soldiers d RMY. Just a damage that has been done

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Speaker 1: to this country for a year's very traumatic experience. We

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Speaker 1: did hear from the Nature Secretary General today say there

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Speaker 1: is fierce fighting going on in Solidor and back that

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Speaker 1: would be significant, a symbolic victory for Russia if they

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Speaker 1: managed to take the two towns, that's fat for Ukraini

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Speaker 1: and we're out. But again insisting we have to give

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Speaker 1: Ukrainians everything that they asked for. And this goes back

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Speaker 1: to the perennial debate if shoot Germany sent the banks,

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Speaker 1: and this is something that Matt knows very well. The

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Speaker 1: Germans do not like to be the first in doing

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Speaker 1: something that is perceived as aggressive. They do not like

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Speaker 1: to be the pioneer in that sense, and and they

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Speaker 1: like to stay in the consensus when it comes to

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Speaker 1: the military in the army, and again there's a lot

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Speaker 1: of inertia to the feet from the Mercal years. So

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Speaker 1: the elephant in the room is are we going to

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Speaker 1: see the tanks delivered to Ukraine or not. I can't

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Speaker 1: even imagine that they have any tanks. I mean, this

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Speaker 1: is a country where soldiers had to exercise with broomsticks

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Speaker 1: since they didn't have enough rifles. You know, I think

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Speaker 1: they had one sub and it wasn't working. They had

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Speaker 1: a couple of a four hundreds and one of them

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Speaker 1: was down. Remember even angel A Miracle couldn't get on

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Speaker 1: a military flight because they didn't have the crew. So

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Speaker 1: Germany is woefully underprepared for any kind of military conflict.

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Speaker 1: I want to quickly search the subject because we started

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Speaker 1: out talking about Brussels, the capital of European Union. You

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Speaker 1: lived there and have for many years. Do you like it?

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Speaker 1: Would you rather live in Paris or Madrid? What do

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Speaker 1: you think? What's your what's your pick? If you had,

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Speaker 1: if you had, if you could choose, where would you go? Listen?

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Speaker 1: I bought a house in the south of Spain. This

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Speaker 1: is a real scoop. That's where I see myself. I am.

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Speaker 1: The older I get, the more Spanish I feel. But

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Speaker 1: at times I also, you know, I have this very

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Speaker 1: bipolar mind in which I've always worked my entire life

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Speaker 1: for Bloomberg, a very U S company, a very international

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Speaker 1: So at times I feel like my brain goes in

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Speaker 1: short circuit. I have an impulse it's very Spanish, and

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Speaker 1: then this kind of Anglo thing kicks in, and then

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Speaker 1: I try to like bring myself in. But going back

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Speaker 1: to your question, and I'm very happy in Brussels. I

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Speaker 1: do not see myself retiring here. I know I will

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Speaker 1: go back retiring. She's barely turned thirty and she's talking

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Speaker 1: about retiring. I think about my famish a lot. You know,

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Speaker 1: I wasn't staying over the Christmas holidays, and I would

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Speaker 1: see the pensioners and I'll be like, it's a very

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Speaker 1: nice life. It's good, and I'm glad that a young kid,

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Speaker 1: uh your age, is thinking about retirement. That's a smart

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Speaker 1: and prudent. But I have to say, I worked a

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Speaker 1: lot and I saved a lot. Well, that's good, that's good.

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Speaker 1: That's what the young folks, that's what they should do.

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Speaker 1: That more people should be like Maria exactly. I don't

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Speaker 1: do a lot of brunch. My life is very I mean,

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Speaker 1: all I do is work. Eventually, she doesn't do a

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Speaker 1: lot of brunch. Not enough avocado toast for Maria Today O. Exactly,

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Speaker 1: she's a saver. All right, let us know the next

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Speaker 1: time you're in New York. Well, we'll change that. We'll

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Speaker 1: get you out the brunch. Maria Today O. She covers

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Speaker 1: all the all of Europe for Bloomberg News television radio.

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Speaker 1: She kind of does it all. She's based it is

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Speaker 1: a newshound. By the way, she's one of those people

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Speaker 1: who's working seven. She'll wake up in the middle of

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Speaker 1: the night, check her Twitter feed, you know, check the markets. Um,

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Speaker 1: she's a star. I mean's she's a star star. And

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Speaker 1: she's based in Brussels, which is where you need to

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Speaker 1: be if you're covering Europe. That whole European Union thing

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Speaker 1: is still thinking. That's based in Brussels. So it's good

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Speaker 1: to have Maria checking in with us. Nathan Hagar, passing

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Speaker 1: along the Bloomberg red headline, Delta Airline says will issue

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Speaker 1: fair waiver for January eleven flights. So they got that

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Speaker 1: going for them, is Nathan air waiver. So wait, you

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Speaker 1: don't want to pay for flights today? I don't know.

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Speaker 1: Maybe maybe it's like if you're changing your I don't

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Speaker 1: know what. We've got more reporting on. Yeah, we can

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Speaker 1: talk to George Ferguson. You know why, because he covers airlines, aerospace,

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Speaker 1: all that kind of stuff. Should we dial him up? Yeah,

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Speaker 1: we got him here. I got him right here on

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Speaker 1: on the line. That's that's how he works. He's always

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Speaker 1: on air. George, thanks for joining us here. From your perspective,

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Speaker 1: kind of what happened today, and it's I don't remember

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Speaker 1: it happening before, but just the nuts and bolts kind

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Speaker 1: of what happened today to the f a A A. I mean,

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Speaker 1: it looks like that there are no tam system. Noticed

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Speaker 1: the Airman system which advises you know, pilots and other

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Speaker 1: other people in the industry on problems. I went down.

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Speaker 1: It's a it's a safety system, right, and so I

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Speaker 1: think in order to keep people as safe as possib well,

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Speaker 1: they initiated a stop on on traffic, which is the

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Speaker 1: right thing to do, and now it appears that they're

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Speaker 1: in the middle of resolving it and starting to move

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Speaker 1: move the traffic. So, George, does this indicate that our

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Speaker 1: Federal Aviation whatever the A is UM Association administration? Thank you?

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Speaker 1: I got two out of the three. Um f A A.

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Speaker 1: Do they need to come into the twenty one century

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Speaker 1: from a technology perspective that they need some investment here?

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Speaker 1: But hang on, the no tam system doesn't go down

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Speaker 1: every few weeks. I've never heard of this. I've never

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Speaker 1: heard of it either. I'm just I'm just kind of wondered.

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Speaker 1: Does this is this the tip of an iceberg or

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Speaker 1: anything like that? Well, I mean, I don't think it's

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Speaker 1: a tip of an iceberg, but for sure there's there

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Speaker 1: could be money spent to bring them, uh further up

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Speaker 1: the curve and technology, right, and so the government agency,

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Speaker 1: you know, they're um, every everything is a function of budgets.

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Speaker 1: There's lots of different priorities in the federal budget. Uh

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Speaker 1: and probably when we you know, we're busy deciding in

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Speaker 1: Congress what we're gonna spend our money on the no

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Speaker 1: tamps system probably near the bottom of this, right. So,

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Speaker 1: I don't know, Well, it works perfectly every other day, exactly.

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Speaker 1: I've never heard of that before. You I hadn't either. Um.

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Speaker 1: In any case, I'm glad that they h you know,

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Speaker 1: paused while they were fixing it. Or I guess we

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Speaker 1: don't really know what's happened to it yet I just

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Speaker 1: saw that Pete Buddha Judge tweeted they're gonna basically do

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Speaker 1: an autopsy and recommend a fix if they find a problem. Um, nonetheless,

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Speaker 1: I would expect this kind of thing to back up

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Speaker 1: flights for the rest of the day, if not a

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Speaker 1: few days. Is that? Is that? Am I on or

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Speaker 1: or or can they get back to normal in a

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Speaker 1: few hours? No, I think you're right. I think I

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Speaker 1: think this will impact operations for I think I think

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Speaker 1: you're going to see even in tomorrow and you could see,

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Speaker 1: you know, little remaining problems throughout the week. But look,

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Speaker 1: if you're gonna have this problem, probably after the holidays

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Speaker 1: in mid January, probably your time, not a It's not

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Speaker 1: an intense time for travel, although we do have the

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Speaker 1: three day weekend coming up. It's not an intense time

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Speaker 1: for travels. With the recovery ought to be easier than

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Speaker 1: it would be had we had this problem. All right,

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Speaker 1: I'm flying on Sunday, George. You just get it all

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Speaker 1: cleared up by then. I expect that. So, all right,

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Speaker 1: so let's pull back and look at your airline industry, George,

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Speaker 1: one of the questions, is just capacity. Where are we

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Speaker 1: today in terms of capacity, number of planes, number of routes,

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Speaker 1: Where are we today versus pre pandemic? So we keep

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Speaker 1: creeping up one levels of capacity, which is kind of

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Speaker 1: the benchmark we keep using. Uh, we haven't exceeded it.

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Speaker 1: I think it's going to take us until this summer

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Speaker 1: to to sort of exceed that high water mark. Um,

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Speaker 1: Domestic closer to that twenty nineteen level of capacities than

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Speaker 1: international Asia well behind you know, um that twenty nineteen

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Speaker 1: level still where there's still sort of reawakening in Asia, uh,

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Speaker 1: you know, reopening things. So, um, they're considerably below levels,

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Speaker 1: but we're still sub in all markets. What about pricing?

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Speaker 1: I mean, my wife always complains about how expensive flights are,

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Speaker 1: but then I remind her that, um, it seems to

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Speaker 1: me that the prices have been the same since I

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Speaker 1: was a kid. You know, I fly back and forth

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Speaker 1: to Columbus, Ohio from New York City all the time,

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Speaker 1: and I can I could get tickets back then for

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Speaker 1: two hundred bucks, and I can get tickets now for

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Speaker 1: two hundred bucks. So does that change? I? Well, I

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Speaker 1: I agree with you. I think that there's always a

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Speaker 1: lot of sensitivity around airline pricing, and lately it's been higher, um, right,

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Speaker 1: and it's above levels of of prices to which is

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Speaker 1: what we watch. Again, we sure of benchmarking a lot

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Speaker 1: of stuff against twenty nineteen. But fuel prices are are

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Speaker 1: much higher than they were in twenty nineteen. They're settling

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Speaker 1: back down, and I would expect the airlines to give

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Speaker 1: that back to the consumer because it's a very competitive marketplace. Um.

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Speaker 1: But I mean, I personally don't think you know, it's

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Speaker 1: definitely haven't you know, risen faster than inflation. In fact,

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Speaker 1: I think Airlines for America showed some numbers that showed

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Speaker 1: pricing did sort of decline over that period. But again,

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Speaker 1: fuel has a lot weighs into that a lot, and

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Speaker 1: fuel has been pretty relaxed since the middle of last decades. So,

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Speaker 1: and labor I gather is still a problem. I heard

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Speaker 1: you talking with Tom and Paul about it earlier. Um.

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Speaker 1: Some airlines are starting academies to train pilots, and they've

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Speaker 1: got to convince people that flying planes is fun again?

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Speaker 1: Is flying planes fun? These big airliners? George, do you

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Speaker 1: think you know pilots that are um at the helm

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Speaker 1: of a you know Boeing Dreamliner are having a good

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Speaker 1: time or is it? Um all automated and they're like

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Speaker 1: board and napping like flying a computer right, Um, I

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Speaker 1: don't know. I mean I gotta think that doing like

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Speaker 1: a Cat three approach to Newark Airport in the middle

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Speaker 1: of a rainstorm, no visibility outside, with a heads up

427
00:22:57,880 --> 00:22:59,600
Speaker 1: display telling you how far you got to go to

428
00:22:59,640 --> 00:23:02,120
Speaker 1: the threat world, that sounds like a lot more fun.

429
00:23:02,160 --> 00:23:08,399
Speaker 1: Thank the guys I know, Um I talked to. They'll

430
00:23:08,520 --> 00:23:11,439
Speaker 1: list all the problems in their business, right, and then

431
00:23:11,480 --> 00:23:14,320
Speaker 1: when they're all done, they always say, but you know,

432
00:23:14,400 --> 00:23:16,880
Speaker 1: I love what I do, right, And so I think

433
00:23:16,880 --> 00:23:18,920
Speaker 1: that I think it is fun. Matt, you're still younger.

434
00:23:19,000 --> 00:23:21,439
Speaker 1: If you could go a retrain man, become a you know,

435
00:23:21,520 --> 00:23:25,680
Speaker 1: I have friends kids, uh, friends who are kids and

436
00:23:25,840 --> 00:23:29,440
Speaker 1: they live on these simulators. And a buddy of mine

437
00:23:29,520 --> 00:23:34,200
Speaker 1: in Berlin, um, Fritzie Burger. He desperately wants to fly

438
00:23:34,880 --> 00:23:37,600
Speaker 1: big airliners. And I always say, why aren't you flying

439
00:23:37,600 --> 00:23:39,760
Speaker 1: fighter planes on these stems. He's like, Nah, I'd rather

440
00:23:39,800 --> 00:23:41,840
Speaker 1: fly like an eight retrain right school is George just

441
00:23:41,920 --> 00:23:45,919
Speaker 1: told us in the past this industry needs pilots, Uh, desperately.

442
00:23:46,000 --> 00:23:48,919
Speaker 1: So again, a younger person, go retrain, Go do it.

443
00:23:49,160 --> 00:23:52,320
Speaker 1: George Ferguson, Uh, he is too old to retrain, let's

444
00:23:52,320 --> 00:23:55,040
Speaker 1: be honest. He but he is a very sounds young

445
00:23:55,080 --> 00:23:58,200
Speaker 1: and healthy he is, and he's a former Army captain

446
00:23:58,520 --> 00:24:01,719
Speaker 1: in intelligence. We thank him for service always. George Ferguson

447
00:24:01,800 --> 00:24:04,640
Speaker 1: covers the airlines, the aerospace, all that kind of fun

448
00:24:04,720 --> 00:24:07,959
Speaker 1: stuff for Bloomberg Intelligence. He's based in our Princeton, New

449
00:24:08,040 --> 00:24:13,280
Speaker 1: Jersey office. Well, we have Will Ryan to the studio.

450
00:24:13,280 --> 00:24:15,280
Speaker 1: He's in studio. This is I think the first time

451
00:24:15,280 --> 00:24:16,879
Speaker 1: he's been in studio. We talked to Will all the

452
00:24:16,880 --> 00:24:19,080
Speaker 1: time about E T F and stuff like that, but

453
00:24:19,119 --> 00:24:20,919
Speaker 1: I think this might be the first time in studio,

454
00:24:21,000 --> 00:24:23,880
Speaker 1: certainly since the pandemic. Will Ryany's the chief executive officer

455
00:24:23,960 --> 00:24:27,240
Speaker 1: granted chairs Advisors. Well, we asked you what we want

456
00:24:27,240 --> 00:24:29,399
Speaker 1: to talk about, and then Matt blurted out, let's talk gold.

457
00:24:29,440 --> 00:24:31,720
Speaker 1: So I'll definitely talk. We'll look at the chart, dude,

458
00:24:31,760 --> 00:24:34,879
Speaker 1: I mean, you're right. Try in x a U currency,

459
00:24:35,160 --> 00:24:38,600
Speaker 1: and you know, we hit a low of about sixteen

460
00:24:38,720 --> 00:24:42,879
Speaker 1: thirty back in November, the very beginning of November, and

461
00:24:42,880 --> 00:24:45,280
Speaker 1: it's shot up since then right now trading at eighteen

462
00:24:45,320 --> 00:24:48,200
Speaker 1: sixty eight, but it's been a little bit higher. Well

463
00:24:48,240 --> 00:24:51,640
Speaker 1: why why is that? Is that people kind of hedging

464
00:24:51,720 --> 00:24:56,160
Speaker 1: for a recession or our investors getting ahead of a

465
00:24:56,160 --> 00:24:59,640
Speaker 1: fed pivot um Because I would think an rising rate

466
00:24:59,680 --> 00:25:03,520
Speaker 1: enviro a mint gold which yields you know, a donut

467
00:25:04,240 --> 00:25:07,000
Speaker 1: isn't very attractive. Yeah, I mean, the the story of

468
00:25:07,119 --> 00:25:10,359
Speaker 1: last year was really all about the dollar. So because

469
00:25:10,400 --> 00:25:13,960
Speaker 1: you had rising rates and aggressive rising rates, you know,

470
00:25:14,000 --> 00:25:16,000
Speaker 1: we saw the dollar going to a high, and it's

471
00:25:16,000 --> 00:25:19,240
Speaker 1: a high, but you know, a multi decade high when

472
00:25:19,280 --> 00:25:22,679
Speaker 1: you compared the dollar with other currencies around the world.

473
00:25:23,119 --> 00:25:26,120
Speaker 1: So the gold really struggled in that environment. But what

474
00:25:26,160 --> 00:25:28,199
Speaker 1: you've seen from the chart is the moment that the

475
00:25:28,240 --> 00:25:31,080
Speaker 1: dollars started to back off, you know, gold started to

476
00:25:31,160 --> 00:25:32,960
Speaker 1: rock it. And that is you know, that's some of

477
00:25:33,000 --> 00:25:38,560
Speaker 1: the expectations of the terminal rate being softer than people expect.

478
00:25:38,600 --> 00:25:40,240
Speaker 1: But it's really more of a dollar story for me.

479
00:25:40,840 --> 00:25:43,160
Speaker 1: And is it. Are you seeing inflows into the gold

480
00:25:43,200 --> 00:25:45,840
Speaker 1: eat ETFs people trying to jump onto this trade? Yeah,

481
00:25:45,840 --> 00:25:48,159
Speaker 1: we we we are. I mean it's not as not

482
00:25:48,280 --> 00:25:50,200
Speaker 1: as kind of big as you might think. I think

483
00:25:50,240 --> 00:25:54,240
Speaker 1: that because of last year and because of still the

484
00:25:54,280 --> 00:25:56,960
Speaker 1: dollar strength and still a bit of uncertainty around where

485
00:25:57,160 --> 00:25:59,800
Speaker 1: we end up on the interest rate side. Um, we're

486
00:25:59,800 --> 00:26:02,720
Speaker 1: not seeing that right now as much as perhaps you

487
00:26:02,800 --> 00:26:05,200
Speaker 1: might see from the chart, but you know, certainly it's

488
00:26:05,200 --> 00:26:06,919
Speaker 1: going to be renewed interests and of course if we

489
00:26:07,000 --> 00:26:10,160
Speaker 1: do go into a slowdown, UM, I think it could

490
00:26:10,200 --> 00:26:11,840
Speaker 1: be a little bit more like we saw in two

491
00:26:11,880 --> 00:26:14,800
Speaker 1: thousand and eight, where you know, gold backed off pretty

492
00:26:14,840 --> 00:26:19,359
Speaker 1: sharply initially when everybody was selling assets and discriminately, but

493
00:26:19,400 --> 00:26:21,880
Speaker 1: then bounce back very quickly and end of the year positive.

494
00:26:22,080 --> 00:26:24,800
Speaker 1: You know, when people start to think about a hedge

495
00:26:24,840 --> 00:26:29,680
Speaker 1: against the market collapse. So BAR is, I guess, your

496
00:26:30,080 --> 00:26:33,600
Speaker 1: big gold etf, right, Um, how do you differentiate that

497
00:26:33,880 --> 00:26:36,880
Speaker 1: from other gold ETFs. There's a good question. I mean,

498
00:26:37,240 --> 00:26:40,080
Speaker 1: at the high level, there are things like we have custody,

499
00:26:40,200 --> 00:26:43,280
Speaker 1: so where we actually store the goals a different location

500
00:26:43,359 --> 00:26:46,080
Speaker 1: to some of the other ETFs. You know, the fee

501
00:26:46,160 --> 00:26:48,240
Speaker 1: is probably the main thing that people will point out.

502
00:26:48,320 --> 00:26:51,320
Speaker 1: So you know, Bar is significantly less expensive than say

503
00:26:51,359 --> 00:26:53,920
Speaker 1: the largest gold et F and the market the g

504
00:26:54,119 --> 00:26:57,000
Speaker 1: l D or I even I a U UM, we

505
00:26:57,080 --> 00:26:59,119
Speaker 1: have some other governance things in terms of the amount

506
00:26:59,200 --> 00:27:02,760
Speaker 1: of order that we have in terms of independent inspectors

507
00:27:02,840 --> 00:27:06,120
Speaker 1: coming in and looking at the gold and publishing that online.

508
00:27:06,560 --> 00:27:08,040
Speaker 1: But I think a lot of people just look at

509
00:27:08,040 --> 00:27:10,600
Speaker 1: the fee and say it's cheaper. You told us, we

510
00:27:10,680 --> 00:27:12,440
Speaker 1: he before we started here that we need to pay

511
00:27:12,440 --> 00:27:16,960
Speaker 1: attention to platinum. Why platinum p LTM is your platinum TM. Yeah,

512
00:27:17,040 --> 00:27:19,200
Speaker 1: so so p LTM is is the platinum metf for

513
00:27:19,280 --> 00:27:22,080
Speaker 1: platinum was the best performing precious metal last year. So

514
00:27:22,080 --> 00:27:25,719
Speaker 1: who ended the year eleven percent up in a market

515
00:27:25,800 --> 00:27:29,080
Speaker 1: where obviously most of things were down. The reason why

516
00:27:29,200 --> 00:27:31,760
Speaker 1: it is kind of interesting. So platinum is used in

517
00:27:31,920 --> 00:27:37,160
Speaker 1: catalytic converters, mainly for diesel engine vehicles, and despite all

518
00:27:37,240 --> 00:27:40,080
Speaker 1: of the negative news that you hear about the economy

519
00:27:40,119 --> 00:27:43,240
Speaker 1: slowing down, autos is actually still one of the bright spots.

520
00:27:43,440 --> 00:27:48,159
Speaker 1: So auto sales are expected to increase this year and

521
00:27:48,480 --> 00:27:51,399
Speaker 1: even next year, which is good obviously four sales of

522
00:27:51,440 --> 00:27:55,040
Speaker 1: catalytic converters. But the main thing I think with platinum

523
00:27:55,280 --> 00:27:57,960
Speaker 1: is that the markets going into a deficit, or is

524
00:27:58,000 --> 00:28:00,560
Speaker 1: in a deficit, i should say, which means that there's

525
00:28:01,119 --> 00:28:04,280
Speaker 1: more demand than there is supply. Where do you get platinum.

526
00:28:04,480 --> 00:28:08,920
Speaker 1: We get platinum from South Africa is the main country, Russia.

527
00:28:09,040 --> 00:28:11,920
Speaker 1: Russia is the secondary country, but the main, the main

528
00:28:12,200 --> 00:28:15,239
Speaker 1: depository is in South Africa. And that's a contrast. It's

529
00:28:15,240 --> 00:28:17,720
Speaker 1: a palladium which is also used in catalytic converters, where

530
00:28:17,720 --> 00:28:21,560
Speaker 1: the majority comes from Russia. Which is why you're telling

531
00:28:21,640 --> 00:28:24,960
Speaker 1: is the industry is trying to switch towards platinum. For

532
00:28:25,080 --> 00:28:29,080
Speaker 1: even gasoline engines, typically they use palladium, but I guess

533
00:28:29,280 --> 00:28:31,479
Speaker 1: some of them want to stay away from Russia for now. Yes,

534
00:28:31,560 --> 00:28:34,480
Speaker 1: so it's a big, big potential demand source for platinum

535
00:28:34,520 --> 00:28:37,560
Speaker 1: because they can be used interchangeably in catalytic converters. And

536
00:28:37,600 --> 00:28:41,600
Speaker 1: typically we've seen palladium being used over platinum because it

537
00:28:41,680 --> 00:28:44,600
Speaker 1: was a lower cost. But the price of palladium skyrocket

538
00:28:44,680 --> 00:28:47,040
Speaker 1: and is now trading a lot higher than the price

539
00:28:47,120 --> 00:28:50,200
Speaker 1: of platinum. And then you had the situation last year

540
00:28:50,240 --> 00:28:53,200
Speaker 1: which no one could have foreseen, which was the Ukraine War.

541
00:28:54,000 --> 00:28:57,800
Speaker 1: And one thing that I think is something that auto

542
00:28:57,880 --> 00:29:00,240
Speaker 1: manufacturers starting to think of, in addition to just the

543
00:29:00,320 --> 00:29:03,640
Speaker 1: lower cost of platinum for substitute, is the ethical considerations

544
00:29:03,720 --> 00:29:07,880
Speaker 1: around sourcing metal from Russia. So if it's a case of, well,

545
00:29:08,440 --> 00:29:10,680
Speaker 1: we can get a cheaper metal, which is platinum, and

546
00:29:10,720 --> 00:29:12,680
Speaker 1: we don't have to source it from Russia. Sounds like

547
00:29:12,760 --> 00:29:14,560
Speaker 1: a win win, and I think that will increase the

548
00:29:14,640 --> 00:29:17,640
Speaker 1: demand for platinum. So you've got the gold e t

549
00:29:17,800 --> 00:29:21,480
Speaker 1: F bar, you've got platinum, you've got the Combined Bloomberg

550
00:29:21,480 --> 00:29:24,800
Speaker 1: Commodities Index et F as well. Um, but you're some

551
00:29:24,880 --> 00:29:27,400
Speaker 1: of your other products are really interesting to me before

552
00:29:27,480 --> 00:29:31,960
Speaker 1: we get to like short Tesla and long Baba which

553
00:29:32,040 --> 00:29:35,280
Speaker 1: has gone crazy this year. What is hips? That is

554
00:29:35,360 --> 00:29:38,880
Speaker 1: a high income e t F and I see some

555
00:29:39,040 --> 00:29:41,080
Speaker 1: interesting holdings here to to talk us through this e

556
00:29:41,160 --> 00:29:43,680
Speaker 1: t F. So, so hips, actually the acronym stands for

557
00:29:43,800 --> 00:29:47,520
Speaker 1: high income pass through securities. So that's an interesting part

558
00:29:47,560 --> 00:29:52,560
Speaker 1: of the market where you have they're all non corporate taxpayers.

559
00:29:52,680 --> 00:29:55,360
Speaker 1: So example of a pastory security could be a REAT,

560
00:29:55,840 --> 00:29:59,760
Speaker 1: it could be an MLP, massive Limited partnership b DC,

561
00:30:00,040 --> 00:30:04,600
Speaker 1: your business development company, or a closed and fund. But

562
00:30:04,880 --> 00:30:06,520
Speaker 1: the thing they have in common is they don't pay

563
00:30:06,600 --> 00:30:09,840
Speaker 1: corporation taxes, so you automatically start with a higher level

564
00:30:09,880 --> 00:30:12,880
Speaker 1: of yield. So HIPS is like a ten percent yielding

565
00:30:13,000 --> 00:30:17,000
Speaker 1: product right now. The underlying is not fixed income UM,

566
00:30:17,080 --> 00:30:20,360
Speaker 1: so they're equity like securities. But they're just an interesting

567
00:30:20,440 --> 00:30:23,400
Speaker 1: segment of the market where they're not dividend paying stocks

568
00:30:23,560 --> 00:30:26,520
Speaker 1: and they're not bonds, but they have a high yield

569
00:30:26,960 --> 00:30:29,600
Speaker 1: and that's a a monthly cash low products. But how

570
00:30:29,680 --> 00:30:31,600
Speaker 1: does that work in an e t F? I get

571
00:30:31,680 --> 00:30:33,160
Speaker 1: if Paul, you know, he sits at home on the

572
00:30:33,200 --> 00:30:35,600
Speaker 1: weekends and clips coupons when he's not flying to a Ruba.

573
00:30:35,680 --> 00:30:38,360
Speaker 1: But how does a high yield work in an e

574
00:30:38,480 --> 00:30:41,600
Speaker 1: t F product? So it pays a fixed cash distribution

575
00:30:41,800 --> 00:30:44,160
Speaker 1: every month to the holder. To the holders, you get

576
00:30:44,200 --> 00:30:47,720
Speaker 1: ten point seven five cents per share per month, which

577
00:30:47,920 --> 00:30:50,000
Speaker 1: on the current stock price, like I says about ten

578
00:30:50,080 --> 00:30:54,240
Speaker 1: percent perannum. And so literally whatever amount you invest, you

579
00:30:54,400 --> 00:30:56,400
Speaker 1: lock in that yield at that time that you buy

580
00:30:57,040 --> 00:30:59,240
Speaker 1: um and then you just sit home and if your Paul,

581
00:30:59,240 --> 00:31:01,560
Speaker 1: you can clip the coupon. M M. That sounds good

582
00:31:01,600 --> 00:31:04,120
Speaker 1: to me, all right. So Matt was mentioning the single

583
00:31:04,160 --> 00:31:06,440
Speaker 1: stock E t F s you have, which I think

584
00:31:06,480 --> 00:31:09,760
Speaker 1: he has launched in December. That might look at it's

585
00:31:09,800 --> 00:31:12,040
Speaker 1: up fifty this year, and I think it might have

586
00:31:12,040 --> 00:31:13,520
Speaker 1: been the last time we we checked in with you

587
00:31:13,920 --> 00:31:15,840
Speaker 1: will talk to us about what you're doing here with

588
00:31:15,920 --> 00:31:18,600
Speaker 1: some of these single stocky kiss. So this is really

589
00:31:18,680 --> 00:31:21,160
Speaker 1: just an evolution of the t F industry and that

590
00:31:21,400 --> 00:31:23,520
Speaker 1: on the one hand of the industry think of e

591
00:31:23,640 --> 00:31:26,680
Speaker 1: t F as being traditional buy and hold products of SMP,

592
00:31:26,840 --> 00:31:29,880
Speaker 1: five D, etcetera. On the other side, E t F

593
00:31:29,920 --> 00:31:32,400
Speaker 1: s can also be used to cater for short term

594
00:31:32,440 --> 00:31:35,800
Speaker 1: investors or traders, you know, who are looking to speculate

595
00:31:35,920 --> 00:31:39,120
Speaker 1: on different assets, different parts of the market. So single

596
00:31:39,160 --> 00:31:40,960
Speaker 1: stocks are something that we've been doing in Europe. We

597
00:31:41,000 --> 00:31:44,560
Speaker 1: have leveraged single stock platform in all major European markets

598
00:31:44,640 --> 00:31:47,160
Speaker 1: and we bought that here to the US at the

599
00:31:47,240 --> 00:31:49,760
Speaker 1: end of August, rolled out some new products towards the

600
00:31:49,840 --> 00:31:52,520
Speaker 1: end of the year, including barber. You know, we've got

601
00:31:52,640 --> 00:31:57,240
Speaker 1: mata Um and we have in Vidio as well. Those

602
00:31:57,240 --> 00:31:59,880
Speaker 1: are all long. They're all long with exception Tesla to

603
00:32:00,000 --> 00:32:03,200
Speaker 1: so that we have a short tesla which t cl

604
00:32:03,280 --> 00:32:07,600
Speaker 1: I exactly very good performer people might expect, you know.

605
00:32:07,640 --> 00:32:09,880
Speaker 1: It really just allows people to take a leverage exposure

606
00:32:10,000 --> 00:32:12,440
Speaker 1: on the single stops. So coin base is another one

607
00:32:12,520 --> 00:32:15,239
Speaker 1: that's been going crazy over the last few weeks as

608
00:32:15,280 --> 00:32:18,040
Speaker 1: crypto is kind of rebounded. It's up thirty two percent

609
00:32:18,160 --> 00:32:21,920
Speaker 1: year to date exactly. UM, so people, these are these

610
00:32:21,920 --> 00:32:24,360
Speaker 1: are again products for active traders, people looking to take

611
00:32:24,400 --> 00:32:27,600
Speaker 1: a short term exposure. They love some of these underlying

612
00:32:27,760 --> 00:32:30,600
Speaker 1: names and it just gives leveraged exposure or inverse exposure

613
00:32:30,600 --> 00:32:31,880
Speaker 1: to them. I'll tell you what to do, Paul. You

614
00:32:31,960 --> 00:32:34,200
Speaker 1: type E t F go on your Bloomberg and then

615
00:32:34,240 --> 00:32:37,640
Speaker 1: in the yellow search box, UM, you might as well

616
00:32:37,720 --> 00:32:40,960
Speaker 1: ex out the equity funds only uh portion there and

617
00:32:41,040 --> 00:32:43,600
Speaker 1: just typing granite shares and then you can click on

618
00:32:43,840 --> 00:32:47,600
Speaker 1: to see all of Will's UM products. The E t

619
00:32:47,800 --> 00:32:51,520
Speaker 1: F industry has been incredible, the growth um you know

620
00:32:51,720 --> 00:32:55,520
Speaker 1: in Europe, and then here the introductions or the new

621
00:32:55,560 --> 00:32:58,800
Speaker 1: funds that we saw the launches last year. We're still strong,

622
00:32:58,920 --> 00:33:00,880
Speaker 1: even though there were no I p O s, even

623
00:33:00,920 --> 00:33:03,440
Speaker 1: though M and A was dead. Does that continue? You think?

624
00:33:03,480 --> 00:33:06,800
Speaker 1: In three? Is this just a new way of investing

625
00:33:06,880 --> 00:33:08,880
Speaker 1: that Paul has to get used to you? It is?

626
00:33:08,960 --> 00:33:11,200
Speaker 1: And I think the other thing that perhaps gets talked

627
00:33:11,240 --> 00:33:14,760
Speaker 1: about less, which sounds counterintuitive at first, but you know,

628
00:33:14,800 --> 00:33:17,240
Speaker 1: when people are making money in otherwids, when the market's

629
00:33:17,240 --> 00:33:20,520
Speaker 1: going up, you care less about what you're paying for things,

630
00:33:20,560 --> 00:33:22,560
Speaker 1: in other words, what you're paying for your funds, what

631
00:33:22,640 --> 00:33:25,720
Speaker 1: you're paying for your advisor. If you're up, you know,

632
00:33:25,840 --> 00:33:28,560
Speaker 1: people can be sort of generally happy about that situation

633
00:33:29,040 --> 00:33:31,959
Speaker 1: the moment you start losing money, and obviously last year

634
00:33:32,080 --> 00:33:35,720
Speaker 1: was the first year that portfolio lost money, that most

635
00:33:35,760 --> 00:33:38,800
Speaker 1: people lost money for a long time. And so in

636
00:33:38,960 --> 00:33:41,840
Speaker 1: that environment, you start looking at what you're investing, what's

637
00:33:41,880 --> 00:33:44,680
Speaker 1: in your portfolio, how much you're paying your advisor. You know,

638
00:33:44,800 --> 00:33:47,440
Speaker 1: these things become a lot more important. And that's why

639
00:33:47,520 --> 00:33:51,160
Speaker 1: we saw record growth in ETF industry last year, because

640
00:33:51,360 --> 00:33:53,640
Speaker 1: a lot of that provides the money and motions of

641
00:33:53,680 --> 00:33:57,000
Speaker 1: people fire their advisor, they look for lower costs, more management,

642
00:33:57,040 --> 00:34:00,920
Speaker 1: manage more money than themselves. They go to a cost options,

643
00:34:01,480 --> 00:34:03,840
Speaker 1: and that is something I think that that is happening

644
00:34:03,880 --> 00:34:07,680
Speaker 1: doesn't get talked about enough. Um that when times are tough,

645
00:34:08,200 --> 00:34:10,480
Speaker 1: you look at your costs a lot more. How big

646
00:34:10,600 --> 00:34:12,440
Speaker 1: is Granite Shairs. I don't know how you even measured

647
00:34:12,680 --> 00:34:15,399
Speaker 1: employees assets and the management and how big are you guys?

648
00:34:15,520 --> 00:34:19,040
Speaker 1: We're one and half billion in terms of assets. We've

649
00:34:19,080 --> 00:34:24,200
Speaker 1: got a lot. It has been Obviously last year it declined.

650
00:34:24,640 --> 00:34:26,680
Speaker 1: So we're two billion at the start of last year,

651
00:34:27,440 --> 00:34:29,680
Speaker 1: end of the year one and a half billion, but

652
00:34:29,800 --> 00:34:32,640
Speaker 1: majority of that was just market move So clearly we're

653
00:34:32,880 --> 00:34:36,600
Speaker 1: an assets under management business where you know, geared to

654
00:34:36,640 --> 00:34:38,680
Speaker 1: the market in that case, so the market goes down,

655
00:34:38,920 --> 00:34:40,560
Speaker 1: you know, all things being equal to go down as well.

656
00:34:40,960 --> 00:34:43,279
Speaker 1: Good story. I mean, it's great stuff. I'm glad you're

657
00:34:43,320 --> 00:34:45,759
Speaker 1: close by your downtown where all the hip kids are,

658
00:34:45,840 --> 00:34:47,800
Speaker 1: but you can come up at Midtown every once in

659
00:34:47,840 --> 00:34:49,440
Speaker 1: a while and hang with us Wall Street types. But

660
00:34:49,480 --> 00:34:52,200
Speaker 1: we appreciate it. Will Ryan, chief executive officer of Granite

661
00:34:52,239 --> 00:34:58,480
Speaker 1: Chairs Advisors, joining us here in our studio. Last week

662
00:34:58,560 --> 00:35:02,160
Speaker 1: was a consumer electronics show. A couple hundred thousand tech

663
00:35:02,320 --> 00:35:05,520
Speaker 1: geeks descend upon the desert of Las Vegas and talk

664
00:35:05,560 --> 00:35:07,759
Speaker 1: about all the new gadgets. But let's be honest, I

665
00:35:07,840 --> 00:35:09,680
Speaker 1: think for the last five, six, seven, eight years, it's

666
00:35:09,719 --> 00:35:13,719
Speaker 1: really been the Global Auto Show. Was some electronic gadgets

667
00:35:13,800 --> 00:35:16,759
Speaker 1: kind of thrown in because these cars these days, they are,

668
00:35:17,000 --> 00:35:20,880
Speaker 1: you know, just software platforms, technology platforms. Michael Dean was

669
00:35:20,920 --> 00:35:24,200
Speaker 1: out there. He's an automotive equity research annalys for Bloomberg Intelligence.

670
00:35:24,239 --> 00:35:27,200
Speaker 1: He's based in London. It's so important that he made

671
00:35:27,239 --> 00:35:29,719
Speaker 1: the trip over from London to Vegas to join Kevin

672
00:35:29,760 --> 00:35:31,880
Speaker 1: Tyne and a bunch of other miscreants and kind of

673
00:35:31,920 --> 00:35:36,040
Speaker 1: look at all the latest new technology. Michael. Again, the

674
00:35:36,120 --> 00:35:39,239
Speaker 1: auto industry has taken over the CES, the Consumer Electronic Show.

675
00:35:39,280 --> 00:35:41,640
Speaker 1: What we're what were your takeaways here? Yeah, it was

676
00:35:41,680 --> 00:35:43,640
Speaker 1: a good show. It was good to see as busy

677
00:35:43,680 --> 00:35:46,080
Speaker 1: as it was pre COVID and as you say, it

678
00:35:46,239 --> 00:35:48,279
Speaker 1: is a car show now. On the west wing. It

679
00:35:48,360 --> 00:35:52,239
Speaker 1: was well represented by the European automakers, particularly BMW and

680
00:35:52,280 --> 00:35:56,799
Speaker 1: Stalentes UM. They showed their concept cars UM. BMW showed

681
00:35:56,840 --> 00:36:01,239
Speaker 1: their d car, which is digital Emotional Experiences, showing the

682
00:36:01,320 --> 00:36:05,360
Speaker 1: key features really for the next gen digital platforms, and

683
00:36:05,400 --> 00:36:08,719
Speaker 1: in particular like they're using the actual windscreen now to

684
00:36:08,840 --> 00:36:11,080
Speaker 1: show all the display for the car, so they won't

685
00:36:11,120 --> 00:36:13,960
Speaker 1: have a dashboard or have heads up display, and then

686
00:36:14,040 --> 00:36:17,040
Speaker 1: eventually changes colors as well, right exactly, and eventually when

687
00:36:17,040 --> 00:36:19,920
Speaker 1: we have autonomous driving, you'll be able to watch movies

688
00:36:20,000 --> 00:36:22,160
Speaker 1: and stuff on the windscreen. So so it's pretty cool.

689
00:36:22,600 --> 00:36:26,520
Speaker 1: It changes the outside of the car, changes colors, like

690
00:36:26,640 --> 00:36:30,120
Speaker 1: depending what color you want that day, it's insane and

691
00:36:30,920 --> 00:36:32,680
Speaker 1: what it's Stilantis show. I mean, I know they have

692
00:36:33,680 --> 00:36:38,439
Speaker 1: what Chrysler Fiat, right Stilantis owns, yeah, Fiat, as well

693
00:36:38,600 --> 00:36:43,080
Speaker 1: as Chrysler, Dodge and Ram, but also what pe Um.

694
00:36:43,840 --> 00:36:47,040
Speaker 1: I only care about the Dodge Challenger, you know, and

695
00:36:47,280 --> 00:36:49,879
Speaker 1: but that's dead. This is the last year for the Challenger. Well,

696
00:36:49,920 --> 00:36:52,040
Speaker 1: they had their electric version. It looks pretty cool and

697
00:36:52,080 --> 00:36:54,400
Speaker 1: they have an electric truck also the Ram truck is

698
00:36:55,160 --> 00:36:58,800
Speaker 1: So the main feature was really the round revolutions, so

699
00:36:58,960 --> 00:37:02,000
Speaker 1: that's their pickup which comes out in two THO. They

700
00:37:02,000 --> 00:37:03,880
Speaker 1: didn't feature too much on the powertrain, but what they

701
00:37:03,920 --> 00:37:07,560
Speaker 1: did show was utility aspects. So the back end pushes

702
00:37:07,560 --> 00:37:10,400
Speaker 1: out if you've got an extended load. Um, you can

703
00:37:10,520 --> 00:37:13,799
Speaker 1: just have more utility within the vehicle itself and take

704
00:37:13,880 --> 00:37:17,680
Speaker 1: the the seats out. It was pretty impressive, but it's

705
00:37:17,719 --> 00:37:20,160
Speaker 1: two years behind the likes of the F one fifty

706
00:37:20,719 --> 00:37:24,200
Speaker 1: and the Silver. Arms actually drove the F one oh yeah,

707
00:37:25,719 --> 00:37:28,319
Speaker 1: he had a loner on it. And I actually drove

708
00:37:28,440 --> 00:37:33,239
Speaker 1: the electric Silverado out in Milford at the GM proving grounds. Um,

709
00:37:34,120 --> 00:37:39,640
Speaker 1: you know, they're good, but for me, electric just doesn't

710
00:37:39,719 --> 00:37:42,920
Speaker 1: quite do it yet. Well, Mercedes had a very good

711
00:37:42,960 --> 00:37:45,399
Speaker 1: stand at the show, so they weren't really showing the tech,

712
00:37:45,440 --> 00:37:47,359
Speaker 1: but they're showing their new beds, and in particular they've

713
00:37:47,360 --> 00:37:51,200
Speaker 1: got the which are electric vehicles, so the e q

714
00:37:51,520 --> 00:37:54,560
Speaker 1: E SUV battery electric vehicles. So this is a really

715
00:37:54,640 --> 00:37:57,560
Speaker 1: good looking car unlike some of the other beds, and

716
00:37:57,640 --> 00:38:00,520
Speaker 1: in particularly it drives well. It's got good off road apability,

717
00:38:00,560 --> 00:38:02,320
Speaker 1: and it's going to give the gl E, which to

718
00:38:02,360 --> 00:38:05,080
Speaker 1: the complection and engine equivalent, a real run for its money.

719
00:38:05,160 --> 00:38:07,759
Speaker 1: But you know, Paul's point is always, you know, we

720
00:38:07,800 --> 00:38:09,919
Speaker 1: can sit around and talk about motors all day long.

721
00:38:10,160 --> 00:38:14,600
Speaker 1: Engines that is, gasoline engines. And for someone like me,

722
00:38:14,880 --> 00:38:17,960
Speaker 1: I don't really care as much about the design of

723
00:38:18,040 --> 00:38:21,800
Speaker 1: the car or the infotainment as I do about you know,

724
00:38:21,920 --> 00:38:25,360
Speaker 1: the lump under the hood. What's going to happen in

725
00:38:25,719 --> 00:38:29,400
Speaker 1: like ten or twenty years, Um, Is it only going

726
00:38:29,440 --> 00:38:32,120
Speaker 1: to be about the design and the software. Well, you'll

727
00:38:32,120 --> 00:38:35,120
Speaker 1: have nothing to talk about by then, unfortunately. But some

728
00:38:35,920 --> 00:38:38,120
Speaker 1: you know, some of these cars do drive extremely well,

729
00:38:38,200 --> 00:38:40,600
Speaker 1: so like the Porsche Taken which is getting fully electric,

730
00:38:40,960 --> 00:38:45,279
Speaker 1: awesome handling, very good acceleration. It will be more about

731
00:38:45,320 --> 00:38:49,160
Speaker 1: the interior will be more about the software and the connectivity,

732
00:38:49,920 --> 00:38:52,280
Speaker 1: but there's still be good constantly drive. I think Porsche

733
00:38:52,360 --> 00:38:54,920
Speaker 1: seems to be still behind the curve in terms of

734
00:38:55,560 --> 00:38:57,759
Speaker 1: why isn't there an electric Macan, Why isn't there an

735
00:38:57,760 --> 00:39:00,600
Speaker 1: electric Cayenne? Whether it would be electric mccohan if it

736
00:39:00,680 --> 00:39:03,360
Speaker 1: wasn't for the software issues that Volkswagen is having. So

737
00:39:03,600 --> 00:39:05,520
Speaker 1: that's been delayed by twelve months. It comes at the

738
00:39:05,600 --> 00:39:08,600
Speaker 1: end of this year. The electric Cayenne comes in two

739
00:39:08,640 --> 00:39:11,080
Speaker 1: thousand twenty five, so by the middle of this decade

740
00:39:11,120 --> 00:39:14,720
Speaker 1: Porsche will have forty five maybe the cars being fully electric.

741
00:39:15,000 --> 00:39:19,759
Speaker 1: So they're probably the leading legacy automaker that committed no

742
00:39:19,840 --> 00:39:22,839
Speaker 1: sign of test. Interesting, I guess did they? Were they

743
00:39:22,840 --> 00:39:27,080
Speaker 1: here in a year's past or never? Interesting? Um Sticking

744
00:39:27,200 --> 00:39:30,160
Speaker 1: with Porsche, so I had I lived in Germany, it's

745
00:39:30,200 --> 00:39:31,600
Speaker 1: the best place to own a nine eleven, and I

746
00:39:31,640 --> 00:39:36,439
Speaker 1: had the previous generation with a three point eight leader

747
00:39:36,560 --> 00:39:39,120
Speaker 1: naturally aspirated flat six, which I loved, and I thought,

748
00:39:39,320 --> 00:39:41,719
Speaker 1: there's no way to improve on this car. I mean

749
00:39:41,840 --> 00:39:45,360
Speaker 1: everything about it was perfect. Now I just got the

750
00:39:45,480 --> 00:39:48,440
Speaker 1: new GTS Targa. It's a loner. I didn't buy it.

751
00:39:48,560 --> 00:39:52,160
Speaker 1: I'm just testing it. It is much better, and it's

752
00:39:52,200 --> 00:39:54,920
Speaker 1: got a twin turbo. It's almost sacrilegious for me to

753
00:39:55,040 --> 00:39:59,480
Speaker 1: like a turbocharged engine. But there's no lag and I'm

754
00:39:59,520 --> 00:40:03,399
Speaker 1: kind of a acted to the wine. Um. The transmission

755
00:40:03,600 --> 00:40:06,640
Speaker 1: works better than the one I had, and I can

756
00:40:06,800 --> 00:40:09,560
Speaker 1: literally feel the feedback is so good. I can feel

757
00:40:09,680 --> 00:40:12,719
Speaker 1: that there's a wider front track. It's amazing. Yeah, it's

758
00:40:12,719 --> 00:40:15,000
Speaker 1: a bit of disingenious to actually have a nine eleven

759
00:40:15,040 --> 00:40:17,280
Speaker 1: turbo because the all turbos now for a few officient,

760
00:40:17,760 --> 00:40:20,880
Speaker 1: but they're just so good. It's the handling that looks um.

761
00:40:21,239 --> 00:40:23,280
Speaker 1: That's why Porsche is doing so well. That's why Porsche

762
00:40:23,360 --> 00:40:25,640
Speaker 1: is worth a hundred billion euros. Now, that's why why

763
00:40:25,680 --> 00:40:28,480
Speaker 1: it's worth more than Volkswagen, which owns seventy five percent

764
00:40:28,560 --> 00:40:30,560
Speaker 1: of it, because of the portion nine eleven and the

765
00:40:30,640 --> 00:40:34,320
Speaker 1: other new products that are coming. So Porsche just refreshment memory.

766
00:40:34,680 --> 00:40:37,840
Speaker 1: What has Volkswagen spun out and what are we expecting

767
00:40:37,880 --> 00:40:42,000
Speaker 1: the left? So Volkswagen sold twelve and a half percent

768
00:40:42,160 --> 00:40:46,280
Speaker 1: of its holding in Porsche a G and that company

769
00:40:46,400 --> 00:40:49,640
Speaker 1: is now worth a hundred billion the nine eleven and

770
00:40:49,680 --> 00:40:51,440
Speaker 1: then you've got to put g R or g y

771
00:40:51,520 --> 00:40:54,400
Speaker 1: so penn and eleven g R Volkswagen even though it

772
00:40:54,480 --> 00:40:58,400
Speaker 1: still owns you know, if UM is only worth seventy

773
00:40:58,480 --> 00:41:01,360
Speaker 1: three billion and his lamb begine need so Lamborghini we

774
00:41:01,440 --> 00:41:05,000
Speaker 1: think is valued at fifteen billion, that's interest. Volkswagen as

775
00:41:05,040 --> 00:41:08,560
Speaker 1: a whole is worth seventy three billion, even though they

776
00:41:08,600 --> 00:41:10,960
Speaker 1: own seventy a poor show which is trading for over

777
00:41:11,000 --> 00:41:19,520
Speaker 1: a hundred billion, And in addition to that they own Lamborghini, Bentley, Audi, Scota, Ducati, UM.

778
00:41:19,760 --> 00:41:23,640
Speaker 1: You know, Volkswagen obviously, it's just unbelievable that they don't

779
00:41:23,880 --> 00:41:26,640
Speaker 1: get any credit for all the other businesses they own.

780
00:41:26,680 --> 00:41:29,560
Speaker 1: Why is that the market just doesn't think they're gonna

781
00:41:30,280 --> 00:41:34,719
Speaker 1: materialize that value. So until they say they're gonna start

782
00:41:34,800 --> 00:41:37,520
Speaker 1: to maybe sell down some of the other Porsche shares,

783
00:41:37,719 --> 00:41:40,239
Speaker 1: or maybe they're going to spin off Lamborghini, they're just

784
00:41:40,280 --> 00:41:43,120
Speaker 1: not getting Recognition't Lamborghini have to prove itself an electric

785
00:41:43,160 --> 00:41:45,479
Speaker 1: car before investors are willing to pay up? I don't

786
00:41:45,520 --> 00:41:47,280
Speaker 1: think so. I think, you know the same with Ferrari.

787
00:41:47,600 --> 00:41:51,120
Speaker 1: I think they've got many more years of combustion engines, UM, Bentley,

788
00:41:51,120 --> 00:41:52,759
Speaker 1: They're going to be purely electric by the end of

789
00:41:52,800 --> 00:41:59,800
Speaker 1: this century. Um by um. They're worth twenty billion euros.

790
00:42:00,000 --> 00:42:02,799
Speaker 1: So some of the parts that you have Ferrari. Yeah,

791
00:42:02,840 --> 00:42:05,600
Speaker 1: the ticker is Race and they actually sold shares in

792
00:42:05,640 --> 00:42:09,640
Speaker 1: the US, so I'm not sure if it's euros or dollars.

793
00:42:09,719 --> 00:42:13,480
Speaker 1: Forty billion market cap um, you know stock, you know,

794
00:42:13,520 --> 00:42:15,640
Speaker 1: trolling twelve months is kind of flatish, up eight percent

795
00:42:15,880 --> 00:42:18,080
Speaker 1: this year. But it's just you're right, this is an

796
00:42:18,080 --> 00:42:21,319
Speaker 1: investment bankers dream. Let's let's spin out this one. Let's

797
00:42:21,320 --> 00:42:22,960
Speaker 1: spin out this one, you know. I mean, you can

798
00:42:23,040 --> 00:42:24,800
Speaker 1: just make money off these guys all day long. You

799
00:42:24,840 --> 00:42:28,440
Speaker 1: can remember, Ferrari is up two from when I a

800
00:42:28,840 --> 00:42:31,279
Speaker 1: six years ago. It's just launched the pure sang Way,

801
00:42:31,320 --> 00:42:36,120
Speaker 1: which is their first SUV cost three euros six v

802
00:42:36,239 --> 00:42:39,160
Speaker 1: a so V twelve engine. They're gonna save eleven thousand

803
00:42:39,239 --> 00:42:43,879
Speaker 1: of those. They're gonna from the summit. Mom. I'm glad

804
00:42:43,880 --> 00:42:45,759
Speaker 1: it has the twelve, because there was for a while

805
00:42:45,760 --> 00:42:47,560
Speaker 1: the rumors that would come with a with a V eight.

806
00:42:47,640 --> 00:42:50,520
Speaker 1: N Alright, Michael Dean's great stuff. We talked to him

807
00:42:50,520 --> 00:42:52,040
Speaker 1: all the time on autos. We could go down this

808
00:42:52,160 --> 00:42:54,719
Speaker 1: rabbit hole forever, but it's not enough. We don't talk

809
00:42:54,760 --> 00:42:57,120
Speaker 1: to enough on autos. We can do it more, and

810
00:42:57,200 --> 00:42:58,920
Speaker 1: we know a guy who can make that happen. Michael

811
00:42:58,960 --> 00:43:02,319
Speaker 1: Dean automotive to research channels for Bloomberg Intelligence. He's based

812
00:43:02,400 --> 00:43:03,960
Speaker 1: in London, but he's coming through New York on his

813
00:43:04,040 --> 00:43:09,759
Speaker 1: way back to Vegas at the Consumer Electronics Show. Thanks

814
00:43:09,800 --> 00:43:13,239
Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe

815
00:43:13,320 --> 00:43:17,000
Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast

816
00:43:17,080 --> 00:43:20,560
Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at

817
00:43:20,640 --> 00:43:24,440
Speaker 1: Matt Miller three. On Fall Sweeney, I'm on Twitter at

818
00:43:24,480 --> 00:43:27,319
Speaker 1: pt Sweeney before the podcast. You can always catch us

819
00:43:27,360 --> 00:43:28,759
Speaker 1: worldwide at Bloomberg Radio