1 00:00:02,720 --> 00:00:10,520 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,560 --> 00:00:14,480 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,560 --> 00:00:18,520 Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 4 00:00:18,600 --> 00:00:21,800 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:21,920 --> 00:00:23,040 Speaker 1: us live on YouTube. 6 00:00:23,960 --> 00:00:27,200 Speaker 2: Happy Thursday, Everybody, I'm Alex ste alongside normal Linda Paulsweeni 7 00:00:27,320 --> 00:00:27,840 Speaker 2: is off today. 8 00:00:27,880 --> 00:00:29,320 Speaker 3: This is Bloomberg Intelligence Radio. 9 00:00:29,360 --> 00:00:31,440 Speaker 2: We bring you all the top news and business, economics 10 00:00:31,440 --> 00:00:34,000 Speaker 2: and finance through our lens of our Bloomberg Intelligence folks. 11 00:00:34,000 --> 00:00:36,200 Speaker 2: They cover two thousand companies and one hundred and thirty 12 00:00:36,200 --> 00:00:39,159 Speaker 2: industries all around the world. We also keep our pulse 13 00:00:39,440 --> 00:00:41,760 Speaker 2: on the market in all different forms, and today it 14 00:00:41,840 --> 00:00:46,960 Speaker 2: is about the IPO market. Sale point is ipoing today 15 00:00:47,080 --> 00:00:50,600 Speaker 2: we're waiting for that first trade. They received orders for 16 00:00:50,720 --> 00:00:53,960 Speaker 2: more than twenty times shares available. This is according to 17 00:00:53,960 --> 00:00:57,200 Speaker 2: people familiar with the matter, and they also upped their 18 00:00:57,240 --> 00:01:00,520 Speaker 2: IPO range as well, raising about one point three to 19 00:01:00,560 --> 00:01:03,280 Speaker 2: eight billion dollars shares. Are looking to open about twenty 20 00:01:03,280 --> 00:01:06,199 Speaker 2: five dollars to share, so hire them that twenty three. 21 00:01:06,400 --> 00:01:08,240 Speaker 2: So we we're lucky that we have the CEO of 22 00:01:08,240 --> 00:01:11,600 Speaker 2: sale point Technologies with us Mark McLain, he joins us. 23 00:01:11,640 --> 00:01:14,240 Speaker 3: Now walk me through. First of all, congrats. 24 00:01:14,440 --> 00:01:16,600 Speaker 2: IPOs are always a really big day and a ton 25 00:01:16,640 --> 00:01:19,240 Speaker 2: of work, so nice job getting that over the finish line. 26 00:01:19,520 --> 00:01:23,440 Speaker 2: But how does this IPO mesh with your long term 27 00:01:23,520 --> 00:01:24,400 Speaker 2: vision for the company? 28 00:01:25,120 --> 00:01:27,080 Speaker 4: Well, I think in general, we've tried to stay focused 29 00:01:27,120 --> 00:01:30,160 Speaker 4: as a business on building great business with our customers 30 00:01:30,280 --> 00:01:30,960 Speaker 4: and winning. 31 00:01:30,680 --> 00:01:31,240 Speaker 5: In the market. 32 00:01:31,319 --> 00:01:33,640 Speaker 4: In some ways, what happens in the financial ownership of 33 00:01:33,680 --> 00:01:35,760 Speaker 4: the business matters a lot, but it doesn't actually affect 34 00:01:35,800 --> 00:01:37,920 Speaker 4: our day to day lives, if you will, and finding 35 00:01:38,000 --> 00:01:41,600 Speaker 4: and securing customers and making them successful, that's certainly always 36 00:01:41,600 --> 00:01:44,000 Speaker 4: our focus. We do think though, that the IPO gets 37 00:01:44,040 --> 00:01:45,880 Speaker 4: us back out in the public eye a little more. 38 00:01:46,240 --> 00:01:48,680 Speaker 4: The importance of what we do and what's called identity 39 00:01:48,720 --> 00:01:52,840 Speaker 4: security is raising an awareness and importance to the large 40 00:01:52,840 --> 00:01:55,400 Speaker 4: companies all around the world that we typically serve, and 41 00:01:55,480 --> 00:01:56,920 Speaker 4: this will help with our visibility. 42 00:01:56,960 --> 00:01:59,280 Speaker 5: It'll give us future fuel to grow the business. 43 00:02:00,000 --> 00:02:01,920 Speaker 4: We've had a great run as a private company with 44 00:02:02,000 --> 00:02:02,600 Speaker 4: Toma Bravo. 45 00:02:02,920 --> 00:02:04,000 Speaker 5: Some folks know this. 46 00:02:04,080 --> 00:02:06,720 Speaker 4: We were public before and before that we were runed 47 00:02:06,720 --> 00:02:07,360 Speaker 4: by Toma Bravo. 48 00:02:07,400 --> 00:02:09,240 Speaker 5: It's a little bit of an interesting. 49 00:02:08,800 --> 00:02:13,160 Speaker 4: Story of a PE backed IPO, same PE backed IPO again. 50 00:02:13,280 --> 00:02:15,519 Speaker 4: But all the while, our focus continues to be on 51 00:02:16,000 --> 00:02:18,400 Speaker 4: doing great things for our customers and helping them secure 52 00:02:18,440 --> 00:02:20,640 Speaker 4: their enterprises with identity well. 53 00:02:20,680 --> 00:02:24,080 Speaker 6: Cyber threats have continued to increase. How does sale points 54 00:02:24,080 --> 00:02:26,160 Speaker 6: stay ahead in identity security? 55 00:02:27,040 --> 00:02:29,519 Speaker 4: Yeah, what's happened in the world of cybersecurity. There's a 56 00:02:29,560 --> 00:02:32,440 Speaker 4: lot of shifting things in the landscape. A simple metaphor 57 00:02:32,480 --> 00:02:35,320 Speaker 4: that sometimes helps folks is that the bad actors are 58 00:02:35,320 --> 00:02:37,480 Speaker 4: the attackers. Not so long ago, their metaphor was to 59 00:02:37,520 --> 00:02:40,240 Speaker 4: break the glass and grab the jewels and run. Quite 60 00:02:40,240 --> 00:02:42,480 Speaker 4: often now, and we've seen this in breach reports, they'll 61 00:02:42,560 --> 00:02:44,519 Speaker 4: try to sneak in the back of the jewelry store, 62 00:02:44,760 --> 00:02:47,120 Speaker 4: poses an employee and eventually try to quote clean out 63 00:02:47,160 --> 00:02:50,000 Speaker 4: the jewelry store. And that's because they've been able to impersonate, 64 00:02:50,040 --> 00:02:53,040 Speaker 4: so to speak, an employee, and that's a compromised identity. 65 00:02:53,240 --> 00:02:55,600 Speaker 5: What we do is help businesses. 66 00:02:55,280 --> 00:02:58,400 Speaker 4: Typically mid to large enterprises around the world, focus on 67 00:02:58,840 --> 00:03:02,280 Speaker 4: understanding all the identities they have, both human and non human, 68 00:03:02,520 --> 00:03:04,959 Speaker 4: all the data they care about protecting, and making sure 69 00:03:05,000 --> 00:03:07,240 Speaker 4: that at any point in time, all of those connections 70 00:03:07,280 --> 00:03:10,160 Speaker 4: are secure. It's a pretty complex problem at scale. 71 00:03:10,520 --> 00:03:12,560 Speaker 2: Who are your competitors right now and how can you 72 00:03:12,600 --> 00:03:13,400 Speaker 2: help differentiate? 73 00:03:14,120 --> 00:03:17,160 Speaker 4: Yeah, the truth is we've got more I like to 74 00:03:17,200 --> 00:03:19,839 Speaker 4: call them PowerPoint competitors than real competitors. I mean, there's 75 00:03:19,840 --> 00:03:22,119 Speaker 4: folks that are talking about this space quite a bit, 76 00:03:22,400 --> 00:03:23,960 Speaker 4: but if you look at what happens day to day 77 00:03:23,960 --> 00:03:25,920 Speaker 4: when we're out in the market, there's very few companies 78 00:03:25,960 --> 00:03:28,520 Speaker 4: that are capable of delivering the success at scale that 79 00:03:28,560 --> 00:03:31,480 Speaker 4: we have. We're fortunate to be in almost half of 80 00:03:31,520 --> 00:03:34,000 Speaker 4: the Fortune five hundred, about a quarter of the Fortune 81 00:03:34,000 --> 00:03:38,000 Speaker 4: two thousand, and they're generally throwing out older legacy products 82 00:03:38,040 --> 00:03:40,360 Speaker 4: like from Oracle and IBM. There really hasn't been a 83 00:03:40,360 --> 00:03:43,240 Speaker 4: strong challenger to us in this key space, and that's 84 00:03:43,640 --> 00:03:45,720 Speaker 4: part of what I think has gotten investors excited about 85 00:03:45,720 --> 00:03:47,680 Speaker 4: our potential for long term, durable growth. 86 00:03:48,480 --> 00:03:51,440 Speaker 6: So another thing that's been in conversation, I'm curious, how 87 00:03:51,480 --> 00:03:53,800 Speaker 6: are you all planning to address your debt load? 88 00:03:54,560 --> 00:03:56,840 Speaker 4: Well, you know, one of the key use of proceeds 89 00:03:56,840 --> 00:03:58,240 Speaker 4: will be to pay down a lot of the debt. 90 00:03:58,280 --> 00:04:00,960 Speaker 4: We actually had a little more debt about six months ago. 91 00:04:01,360 --> 00:04:03,480 Speaker 4: Our backers home a Bravo chose to take some of 92 00:04:03,520 --> 00:04:06,040 Speaker 4: that debt out with equity before the IPO, and we'll 93 00:04:06,160 --> 00:04:08,000 Speaker 4: use the bulk of the proceeds from the IPO to 94 00:04:08,000 --> 00:04:10,760 Speaker 4: pay that debt down significantly, putting ourselves in what they 95 00:04:10,800 --> 00:04:13,880 Speaker 4: call a debt zero, meaning we'll have as as much 96 00:04:13,920 --> 00:04:16,120 Speaker 4: more cash as we have debt, which from a financial 97 00:04:16,120 --> 00:04:18,240 Speaker 4: profile standpoint makes investors really happy. 98 00:04:19,000 --> 00:04:20,960 Speaker 2: Why do you guys decide to do the IPO? Now, 99 00:04:21,040 --> 00:04:23,000 Speaker 2: we were just talking about IPOs in general, and I 100 00:04:23,080 --> 00:04:26,400 Speaker 2: was talking about an LNG export that went public at 101 00:04:26,480 --> 00:04:29,800 Speaker 2: seemingly a great time and it didn't go so well. 102 00:04:29,839 --> 00:04:32,679 Speaker 2: So I wonder why strategically you guys chose right now. 103 00:04:33,200 --> 00:04:35,960 Speaker 4: Well, we've been watching markets as everyone has, and I 104 00:04:36,000 --> 00:04:38,160 Speaker 4: think we were really pleased with the progress of the business. 105 00:04:38,160 --> 00:04:39,839 Speaker 4: We went private about two and a half years ago. 106 00:04:40,440 --> 00:04:42,240 Speaker 4: As part of our S one filing, we talked about 107 00:04:42,279 --> 00:04:44,080 Speaker 4: the fact that as of our third quarter last year, 108 00:04:44,080 --> 00:04:46,400 Speaker 4: we'd grown the business at thirty percent, We've been able 109 00:04:46,400 --> 00:04:49,800 Speaker 4: to deliver non gap margins of about fourteen percent and 110 00:04:49,880 --> 00:04:52,560 Speaker 4: had a strong sense that durable growth would continue. And 111 00:04:52,600 --> 00:04:53,359 Speaker 4: that was at scale. 112 00:04:53,440 --> 00:04:54,120 Speaker 5: We're over an eight. 113 00:04:54,080 --> 00:04:56,920 Speaker 4: Hundred million dollar revenue business now and investors don't see 114 00:04:56,920 --> 00:04:59,960 Speaker 4: a lot of profiles of growth at scale with profit, 115 00:05:00,160 --> 00:05:00,880 Speaker 4: And I think. 116 00:05:00,760 --> 00:05:02,600 Speaker 5: Our sense was that the markets were kind of. 117 00:05:02,560 --> 00:05:05,760 Speaker 4: Hungry, so to speak, for new issuances, particularly I think 118 00:05:05,800 --> 00:05:09,159 Speaker 4: in technology security has been considered a really good market 119 00:05:09,160 --> 00:05:09,840 Speaker 4: for a long time. 120 00:05:09,880 --> 00:05:12,000 Speaker 5: I think we looked like a company. 121 00:05:11,640 --> 00:05:14,880 Speaker 4: That would fit many of their requests, so to speak, 122 00:05:14,880 --> 00:05:17,360 Speaker 4: for a durable growth company in the security space. 123 00:05:17,839 --> 00:05:22,040 Speaker 6: How are regulatory shifts driving demand for identity security solutions 124 00:05:22,160 --> 00:05:25,040 Speaker 6: as enterprises continue shifting to the cloud? How a sale 125 00:05:25,080 --> 00:05:27,120 Speaker 6: point evolving its offerings? 126 00:05:27,400 --> 00:05:30,440 Speaker 4: Well, it's interesting you mentioned that regulatory is indeed part 127 00:05:30,480 --> 00:05:33,040 Speaker 4: of the landscape we're addressing. Sometimes, you know, audits or 128 00:05:33,040 --> 00:05:34,880 Speaker 4: the threat of failed audits or not being able to 129 00:05:35,000 --> 00:05:38,520 Speaker 4: comply with regulations is a driver. But increasingly our space 130 00:05:38,600 --> 00:05:41,840 Speaker 4: is less about that. Not it hasn't moved away from that, 131 00:05:42,040 --> 00:05:45,480 Speaker 4: but it's less about that than truly securing their data. Again, 132 00:05:45,520 --> 00:05:48,600 Speaker 4: what's happened is this concern that data can be compromised 133 00:05:48,800 --> 00:05:51,440 Speaker 4: through this lens of identity. If a bad actor can somehow, 134 00:05:51,880 --> 00:05:54,720 Speaker 4: you know, get in, break in, steal an identity, or 135 00:05:55,640 --> 00:05:58,520 Speaker 4: in some way get access to data through those identities, 136 00:05:58,839 --> 00:06:01,120 Speaker 4: they can do a lot of damage, so that focus 137 00:06:01,160 --> 00:06:03,440 Speaker 4: on truly protecting the data is really more of an 138 00:06:03,440 --> 00:06:05,280 Speaker 4: issue today than just regulatory compliance. 139 00:06:05,760 --> 00:06:08,840 Speaker 2: Before we let you go, what's it like attracting talent 140 00:06:09,400 --> 00:06:10,839 Speaker 2: right now in the market. 141 00:06:11,360 --> 00:06:13,800 Speaker 4: Well, I'd say attracting talent is never easy in a 142 00:06:13,880 --> 00:06:16,760 Speaker 4: very competitive technology market. I think we're very fortunate at 143 00:06:16,800 --> 00:06:18,880 Speaker 4: sale Point. One of the things that we pay a 144 00:06:18,920 --> 00:06:21,520 Speaker 4: lot of attention to is our culture and our values and. 145 00:06:21,480 --> 00:06:22,360 Speaker 5: How that shows up. 146 00:06:22,720 --> 00:06:25,080 Speaker 4: And as you probably are familiar, a glass Door runs 147 00:06:25,080 --> 00:06:27,800 Speaker 4: around and surveys the world and tries to understand how 148 00:06:27,839 --> 00:06:31,479 Speaker 4: companies are doing. We're super pleased they released those results recently. 149 00:06:31,520 --> 00:06:34,039 Speaker 4: We were number seventeen in the world, and if you 150 00:06:34,080 --> 00:06:36,440 Speaker 4: want to cut it by an interesting factor, we were 151 00:06:36,520 --> 00:06:39,960 Speaker 4: the highest ranked tech company with under five thousand employees 152 00:06:40,160 --> 00:06:42,480 Speaker 4: on glass Door. I think that speaks a lot about 153 00:06:42,480 --> 00:06:44,280 Speaker 4: the kind of culture and the values that we live 154 00:06:44,279 --> 00:06:47,279 Speaker 4: out in our company. It attracts and retains very good talent, 155 00:06:47,360 --> 00:06:48,359 Speaker 4: and we're very fortunate. 156 00:06:48,760 --> 00:06:50,400 Speaker 3: Hey, Mark, we appreciate your time today. 157 00:06:50,400 --> 00:06:52,040 Speaker 2: We look forward to catching up with you again once 158 00:06:52,040 --> 00:06:54,800 Speaker 2: you've had some time to be public. Mark McLain, CEO 159 00:06:54,960 --> 00:06:58,880 Speaker 2: of sale Point Technologies, ipming today on the Nasdaq. Prices 160 00:06:58,920 --> 00:07:01,000 Speaker 2: look to indicate to open it round twenty five at 161 00:07:01,040 --> 00:07:03,640 Speaker 2: iPod about twenty three, so we will keep you updated 162 00:07:03,839 --> 00:07:06,400 Speaker 2: when that stock officially starts trading. 163 00:07:07,440 --> 00:07:11,120 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 164 00:07:11,200 --> 00:07:14,280 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 165 00:07:14,320 --> 00:07:17,600 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 166 00:07:17,680 --> 00:07:21,000 Speaker 1: you get your podcasts, or watch us live on YouTube. 167 00:07:21,320 --> 00:07:24,600 Speaker 6: We're going to move to a conversation with Christopher Chillino. 168 00:07:24,680 --> 00:07:27,720 Speaker 6: He's Bloomberg Intelligence senior US machinery analysts, and he's here 169 00:07:27,760 --> 00:07:30,400 Speaker 6: to talk about Deer earnings. We've got shares of Deer 170 00:07:30,480 --> 00:07:34,000 Speaker 6: down about one point seven percent right now in trading, 171 00:07:34,040 --> 00:07:36,160 Speaker 6: and this is after a report that it is having 172 00:07:36,200 --> 00:07:40,000 Speaker 6: some issues with tough farms economics in focus, Christopher, what 173 00:07:40,080 --> 00:07:42,720 Speaker 6: has really been the broad strokes of what you got 174 00:07:42,920 --> 00:07:45,560 Speaker 6: and gleaned from this earnings report today? 175 00:07:46,680 --> 00:07:48,840 Speaker 7: Yeah, we knew going into the quarter that was going 176 00:07:48,880 --> 00:07:52,040 Speaker 7: to be a pretty ugly print, but these results were really, 177 00:07:52,160 --> 00:07:55,320 Speaker 7: you know, well below even some of the most bearish expectations. 178 00:07:56,520 --> 00:08:01,360 Speaker 7: The company really continues to underproduce retail them and across 179 00:08:01,360 --> 00:08:03,600 Speaker 7: the board to bring down some of the excess inventories 180 00:08:03,600 --> 00:08:07,200 Speaker 7: that the industry has been plagued with. We also sounds 181 00:08:07,200 --> 00:08:10,320 Speaker 7: like some products there were some timing issues, so products 182 00:08:10,360 --> 00:08:14,240 Speaker 7: got pushed out to subsequent quarters, which weighed on the 183 00:08:15,240 --> 00:08:19,239 Speaker 7: one Q performance. Now, Deer did reaffirm its twenty twenty 184 00:08:19,240 --> 00:08:22,240 Speaker 7: five net income outlook, and it certainly seems that we 185 00:08:22,280 --> 00:08:25,840 Speaker 7: are approaching a cyclical trough this year. But just our 186 00:08:25,880 --> 00:08:28,320 Speaker 7: concern lies that you know, earnings may not be fully 187 00:08:28,360 --> 00:08:31,160 Speaker 7: de risked here. You continue to see further softness on 188 00:08:31,200 --> 00:08:35,760 Speaker 7: the LARGEAG side. Used equipment inventories remain somewhat of an overhang. 189 00:08:36,480 --> 00:08:38,600 Speaker 7: Currency headwinds are going to be more pronounced in the 190 00:08:38,640 --> 00:08:41,880 Speaker 7: back half, and really we still have this uncertainty around 191 00:08:41,920 --> 00:08:44,920 Speaker 7: what the US trade policy is going to be and 192 00:08:44,920 --> 00:08:47,640 Speaker 7: and what those retaliatory actions are going to be as well. 193 00:08:47,720 --> 00:08:50,480 Speaker 2: Well, I was going to say they sound relatively confident 194 00:08:50,520 --> 00:08:52,920 Speaker 2: they'll be a trough, but then you add on tariffs. 195 00:08:52,920 --> 00:08:55,640 Speaker 3: How well does that confidence hold up? 196 00:08:56,720 --> 00:08:59,000 Speaker 7: Yeah, I mean that's the million dollar question, right. I mean, 197 00:08:59,080 --> 00:09:02,680 Speaker 7: I would say that AG historically has had a tremendous 198 00:09:02,720 --> 00:09:06,720 Speaker 7: amount of pricing power, and Deer in particular, this is 199 00:09:07,559 --> 00:09:10,360 Speaker 7: a company in a market that even gets positive price 200 00:09:10,440 --> 00:09:13,800 Speaker 7: in down markets. You know, this quarterly sales were down 201 00:09:13,800 --> 00:09:16,880 Speaker 7: over thirty five percent, earnings down significantly, and we were 202 00:09:16,880 --> 00:09:20,319 Speaker 7: still up on pricing. It will add costs, but they 203 00:09:20,360 --> 00:09:22,160 Speaker 7: have a history and the track record of being able 204 00:09:22,160 --> 00:09:23,120 Speaker 7: to pass those through. 205 00:09:25,240 --> 00:09:27,680 Speaker 6: What has really been the concern for investors out of 206 00:09:27,679 --> 00:09:29,240 Speaker 6: this report as they're looking forward? 207 00:09:30,720 --> 00:09:33,640 Speaker 7: Yeah, I think there's two big concerns here. One is, 208 00:09:33,960 --> 00:09:37,240 Speaker 7: you know, the expectation is that, yes, twenty five is 209 00:09:37,280 --> 00:09:39,679 Speaker 7: trough and that we should start to see this recovery 210 00:09:39,679 --> 00:09:42,760 Speaker 7: build into twenty six. But I still think there's a 211 00:09:42,760 --> 00:09:45,640 Speaker 7: lot of uncertainty out there as to what the recovery 212 00:09:45,679 --> 00:09:50,520 Speaker 7: trajectory looks like, just given the uncertainty around trade and tariffs. 213 00:09:50,600 --> 00:09:52,760 Speaker 7: You know, I think we're probably looking at a lower 214 00:09:52,760 --> 00:09:55,600 Speaker 7: for longer type cycle, So maybe we don't get that 215 00:09:56,360 --> 00:09:59,920 Speaker 7: typical acceleration in the first year after a cyclical trough. 216 00:10:00,240 --> 00:10:02,720 Speaker 7: So I think investors are still trying to digest that. 217 00:10:03,559 --> 00:10:06,040 Speaker 7: And then too, you know, the cost side of the equation. 218 00:10:06,600 --> 00:10:08,480 Speaker 7: It certainly seems that costs are going to go up. 219 00:10:08,800 --> 00:10:10,560 Speaker 7: How are they going to mitigate that through some of 220 00:10:10,600 --> 00:10:13,520 Speaker 7: their you know, internal initiatives or even from shifting some 221 00:10:13,520 --> 00:10:15,319 Speaker 7: production around with their footprint. 222 00:10:15,840 --> 00:10:19,040 Speaker 2: I alsom wondering where we are in terms of the 223 00:10:19,080 --> 00:10:23,600 Speaker 2: cyclicality of equipment, Like are our farmers operating on older 224 00:10:23,640 --> 00:10:25,200 Speaker 2: stuff that they're going to have to replace or did 225 00:10:25,200 --> 00:10:27,559 Speaker 2: they already do that, say during the pandemic. So they're 226 00:10:27,600 --> 00:10:29,240 Speaker 2: good for a while, and it's going to take like 227 00:10:29,320 --> 00:10:32,040 Speaker 2: really new high tech products to get them to fork 228 00:10:32,080 --> 00:10:34,239 Speaker 2: over that kind of cash. 229 00:10:34,280 --> 00:10:36,120 Speaker 7: I think we're good for a little bit, a little 230 00:10:36,120 --> 00:10:38,000 Speaker 7: bit of time here. I mean, you have to remember, 231 00:10:38,480 --> 00:10:41,319 Speaker 7: we had you know, three four strong years of growth 232 00:10:41,440 --> 00:10:45,240 Speaker 7: up to the twenty twenty three peak. Yes, twenty four 233 00:10:45,360 --> 00:10:47,439 Speaker 7: was a down year. We were down, you know, fifteen 234 00:10:47,520 --> 00:10:50,800 Speaker 7: sixteen percent in terms of units on high horsepower equipment. 235 00:10:51,440 --> 00:10:53,959 Speaker 7: We're looking at somewhere of a twenty five to thirty 236 00:10:54,000 --> 00:10:57,520 Speaker 7: percent decline in volumes this year. So that's going to 237 00:10:57,559 --> 00:11:00,480 Speaker 7: put us you know, at at low's of you know, 238 00:11:00,760 --> 00:11:03,400 Speaker 7: over the last two decades where we haven't seen before. 239 00:11:03,440 --> 00:11:07,360 Speaker 7: So from these levels, we think there's probably limited downside risk. 240 00:11:07,440 --> 00:11:10,840 Speaker 7: But you know, farmers still have the ability to you know, 241 00:11:10,880 --> 00:11:13,520 Speaker 7: push out some of these replacement purchases at least for 242 00:11:13,559 --> 00:11:14,400 Speaker 7: another few years. 243 00:11:14,400 --> 00:11:17,440 Speaker 6: We think, what do investors really need to see from 244 00:11:17,480 --> 00:11:20,640 Speaker 6: this company to have a bit of a more positive 245 00:11:20,679 --> 00:11:23,679 Speaker 6: outlook and to see them actually bypass their competitors. 246 00:11:25,280 --> 00:11:29,240 Speaker 7: I think you need to see you know, inventories greater 247 00:11:29,360 --> 00:11:31,800 Speaker 7: confidence that we've you know, are starting to see some 248 00:11:31,920 --> 00:11:35,360 Speaker 7: downward movement on inventories. We've seen inventory's peak just these 249 00:11:35,400 --> 00:11:38,360 Speaker 7: past few months. We're just coming down off that peak. 250 00:11:38,400 --> 00:11:40,640 Speaker 7: So I think we need to see more progress on 251 00:11:40,679 --> 00:11:43,680 Speaker 7: the inventory reduction front, not only in the new new equipment, 252 00:11:43,720 --> 00:11:47,040 Speaker 7: but used equipment as well. And then certainly, you know, 253 00:11:47,360 --> 00:11:50,800 Speaker 7: higher crop prices are going to help their customers and 254 00:11:50,960 --> 00:11:54,240 Speaker 7: ultimately drive equipment purchases. So we've seen a little bit 255 00:11:54,240 --> 00:11:56,679 Speaker 7: of a rebound in crop prices here over the last 256 00:11:56,679 --> 00:11:59,560 Speaker 7: three plus months. I think that has you know, spurred 257 00:11:59,559 --> 00:12:01,440 Speaker 7: some op and ism in the space that you know, 258 00:12:01,520 --> 00:12:05,040 Speaker 7: maybe we do return to a growth in twenty twenty six, 259 00:12:05,760 --> 00:12:08,360 Speaker 7: but I think if we continue to see that progress, 260 00:12:08,440 --> 00:12:11,079 Speaker 7: that would certainly, you know, bode well for the company. 261 00:12:11,240 --> 00:12:14,400 Speaker 2: All Right, Chris really appreciated Christopher Cillino, Bloomberg Intelligence Senior 262 00:12:14,520 --> 00:12:17,360 Speaker 2: US machinery analyst, joining us on Deer. 263 00:12:19,080 --> 00:12:22,760 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 264 00:12:22,840 --> 00:12:25,920 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 265 00:12:25,920 --> 00:12:29,240 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 266 00:12:29,320 --> 00:12:32,400 Speaker 1: you get your podcasts, or watch us live on YouTube. 267 00:12:33,080 --> 00:12:34,720 Speaker 3: All right, one of their asset class that's moving. 268 00:12:34,800 --> 00:12:36,760 Speaker 2: Yes, it's definitely a tariff story, but it's also a 269 00:12:36,800 --> 00:12:39,040 Speaker 2: potential end of war in Ukraine. 270 00:12:39,200 --> 00:12:40,640 Speaker 3: Story is oil. 271 00:12:40,720 --> 00:12:42,720 Speaker 2: So oil prices are down by about half a percent, 272 00:12:42,760 --> 00:12:44,920 Speaker 2: but yesterday they got really kicked down the road, down 273 00:12:44,960 --> 00:12:47,280 Speaker 2: by about two and a half percent on a potential 274 00:12:47,320 --> 00:12:49,880 Speaker 2: resolution to the conflict in Ukraine. So I wanted to 275 00:12:49,880 --> 00:12:52,480 Speaker 2: dig more into this with Dan Pickering, chief investment officer 276 00:12:52,480 --> 00:12:55,480 Speaker 2: at Pickering Energy Partners, joining us here. Dan, it's just 277 00:12:55,520 --> 00:12:57,160 Speaker 2: the main question, like how are you guys looking at 278 00:12:57,160 --> 00:12:58,880 Speaker 2: the oil price right now? 279 00:13:00,960 --> 00:13:03,480 Speaker 3: Alex That was a very pregnant pod there, Yeah. 280 00:13:03,320 --> 00:13:05,840 Speaker 8: It was because there are so many things happening. I know, 281 00:13:06,559 --> 00:13:12,000 Speaker 8: so many variables, whether they're political, geopolitical, supply demand. We 282 00:13:12,080 --> 00:13:16,480 Speaker 8: got news today that the IEA International Energy Agency thinks 283 00:13:16,520 --> 00:13:20,240 Speaker 8: that supply and demand is tightening. We have the risk 284 00:13:20,280 --> 00:13:24,000 Speaker 8: of Iranian sanctions, We have a Russia conflict that if 285 00:13:24,040 --> 00:13:28,000 Speaker 8: it concludes, everyone's nervous that well price goes lower because 286 00:13:28,080 --> 00:13:29,480 Speaker 8: Russian production goes higher. 287 00:13:30,400 --> 00:13:31,439 Speaker 5: So many variables. 288 00:13:31,640 --> 00:13:33,640 Speaker 8: The way I think about it, supply and demand is 289 00:13:34,400 --> 00:13:41,240 Speaker 8: generally generally sloppy, not particularly tight. The geopolitical stuff is 290 00:13:41,360 --> 00:13:43,600 Speaker 8: keeping it a little bit tighter. And so I would 291 00:13:43,600 --> 00:13:47,800 Speaker 8: take the current seventy one dollars WTI number for twenty 292 00:13:47,840 --> 00:13:49,880 Speaker 8: five I'd put in the bank if I could get 293 00:13:49,880 --> 00:13:50,480 Speaker 8: it today. 294 00:13:50,640 --> 00:13:52,280 Speaker 3: So, so many things moving right now. 295 00:13:52,559 --> 00:13:55,080 Speaker 6: Where would you say is the best outlook for energy 296 00:13:55,080 --> 00:13:57,040 Speaker 6: investments this year? Gas oil? 297 00:13:57,280 --> 00:13:57,920 Speaker 3: Services? 298 00:13:58,160 --> 00:13:58,760 Speaker 5: Great question? 299 00:13:58,920 --> 00:14:01,480 Speaker 8: Or I think the natural gas is the area that's 300 00:14:01,480 --> 00:14:05,320 Speaker 8: getting better. If you look, particularly in the US, we 301 00:14:05,440 --> 00:14:10,000 Speaker 8: have LNG exports that will rise about five percent of 302 00:14:10,040 --> 00:14:12,760 Speaker 8: total US demand between now and the end of next 303 00:14:12,800 --> 00:14:16,760 Speaker 8: year early twenty twenty seven, and so the market's very 304 00:14:16,760 --> 00:14:20,600 Speaker 8: optimistic that we'll see tightening supply and demand. Natural gas 305 00:14:20,640 --> 00:14:23,400 Speaker 8: prices we're in the twos for most of twenty twenty four, 306 00:14:23,440 --> 00:14:26,640 Speaker 8: they're in the high threes right now. They're forecasts to 307 00:14:26,640 --> 00:14:28,960 Speaker 8: be in the fours next year, could be fives. And 308 00:14:29,000 --> 00:14:32,240 Speaker 8: so natural gas is the hottest area. I would say 309 00:14:32,720 --> 00:14:37,400 Speaker 8: services is probably rig count is probably the weakest because drill, 310 00:14:37,440 --> 00:14:38,200 Speaker 8: baby drill is. 311 00:14:38,160 --> 00:14:38,880 Speaker 5: Not on the table. 312 00:14:39,720 --> 00:14:42,880 Speaker 2: Just to jump in here more headlines coming out. This 313 00:14:42,960 --> 00:14:46,520 Speaker 2: is also from CNBC saying that President Trump's reciprocal tariffs 314 00:14:46,680 --> 00:14:49,360 Speaker 2: I will take effect some months later. So this is 315 00:14:49,400 --> 00:14:53,840 Speaker 2: not a Today's story, just an announcement story today. 316 00:14:54,480 --> 00:14:55,120 Speaker 3: Want we to oh? 317 00:14:55,160 --> 00:14:58,200 Speaker 2: Also another head red headline here, Blue Origin is set 318 00:14:58,240 --> 00:15:00,440 Speaker 2: to cut about ten percent of its work for This 319 00:15:00,680 --> 00:15:04,040 Speaker 2: is Jeff Bezos's back to Blue Origin. That's quite interesting. 320 00:15:04,040 --> 00:15:07,480 Speaker 2: It said to cut about ten percent of its workforce. Okay, Dan, 321 00:15:07,560 --> 00:15:11,080 Speaker 2: there's a lot like you said to unpack, I do 322 00:15:11,200 --> 00:15:13,240 Speaker 2: want to go so Okay. Last year at Sarah Week, 323 00:15:13,280 --> 00:15:14,840 Speaker 2: and for those of you who don't know, Sarah Week 324 00:15:14,880 --> 00:15:16,680 Speaker 2: is when all the energy nerds can mean on Houston 325 00:15:16,720 --> 00:15:18,320 Speaker 2: and they talk about energy for five days and it's 326 00:15:18,320 --> 00:15:21,640 Speaker 2: super awesome. The conversation was, look, you can only own 327 00:15:21,800 --> 00:15:25,000 Speaker 2: one energy stock in your portfolio now maybe two max, 328 00:15:25,120 --> 00:15:26,760 Speaker 2: So like you really got to pick the best of 329 00:15:26,800 --> 00:15:28,520 Speaker 2: the best. And that led to some m and a. 330 00:15:29,000 --> 00:15:32,560 Speaker 2: It also led to really the Kreme de la Crem 331 00:15:32,600 --> 00:15:36,760 Speaker 2: stocks doing better than everybody else. Is that narrative still 332 00:15:36,800 --> 00:15:38,520 Speaker 2: intact or can you own more? 333 00:15:38,560 --> 00:15:38,840 Speaker 8: Now? 334 00:15:38,960 --> 00:15:40,000 Speaker 3: Is it a different world? 335 00:15:41,080 --> 00:15:44,560 Speaker 8: Well, it's definitely a different world. I think that last year, 336 00:15:44,600 --> 00:15:47,920 Speaker 8: the last couple of years, energy has been a bad word, 337 00:15:47,920 --> 00:15:50,720 Speaker 8: and there's been a headwind just kind of around the 338 00:15:50,720 --> 00:15:54,680 Speaker 8: whole space. That headwind's probably turning into a tailwind. Doesn't 339 00:15:54,720 --> 00:15:58,800 Speaker 8: necessarily mean the commodities improve, but I think sentiments clearly improving. 340 00:16:00,120 --> 00:16:02,280 Speaker 8: Not clear to me that money flow toward the energy 341 00:16:02,320 --> 00:16:05,320 Speaker 8: sector is picking up much, and so I think it's 342 00:16:05,360 --> 00:16:07,880 Speaker 8: still a very selective market. I kind of think about 343 00:16:07,880 --> 00:16:10,960 Speaker 8: it as an alpha market, not a beta market right now, 344 00:16:11,040 --> 00:16:14,360 Speaker 8: and I think it will expand over time. But we've 345 00:16:14,360 --> 00:16:17,360 Speaker 8: got this opec oversupply that we've got to deal with 346 00:16:17,400 --> 00:16:20,760 Speaker 8: three million barrels today and all of this geopolitical uncertainty. 347 00:16:20,840 --> 00:16:23,280 Speaker 8: So the winds are better, I don't know that it's 348 00:16:23,280 --> 00:16:24,800 Speaker 8: pulling in investors quite yet. 349 00:16:25,520 --> 00:16:27,600 Speaker 6: So, Dan, you mentioned natural gas as being one of 350 00:16:27,600 --> 00:16:31,160 Speaker 6: the potential best outlooks for the energy investments this year. 351 00:16:31,560 --> 00:16:35,560 Speaker 6: What's the upside case here the commodity or additional exports. 352 00:16:36,600 --> 00:16:39,400 Speaker 8: Yeah, so the exports take a long time to put 353 00:16:39,400 --> 00:16:43,280 Speaker 8: in place, big multi billion dollar projects that take a 354 00:16:43,320 --> 00:16:47,560 Speaker 8: long time to put in place, and so the export pipeline, 355 00:16:47,560 --> 00:16:50,560 Speaker 8: if you will, is pretty set from now until the 356 00:16:50,880 --> 00:16:54,240 Speaker 8: later part of the decade. So the tightness in the 357 00:16:54,280 --> 00:16:59,240 Speaker 8: market comes from those projects. Turning on the fact that 358 00:16:59,280 --> 00:17:03,000 Speaker 8: we haven't been drilling aggressively for either oil or natural gas. 359 00:17:03,080 --> 00:17:06,560 Speaker 8: So the supply sides constrain the demand sides improving. So 360 00:17:06,640 --> 00:17:09,879 Speaker 8: it feels like price is the reaction function here. So 361 00:17:09,880 --> 00:17:12,720 Speaker 8: I'd say that higher price is not more exports, at 362 00:17:12,800 --> 00:17:13,240 Speaker 8: least not in. 363 00:17:13,160 --> 00:17:15,920 Speaker 2: The short room going to oil in the drill baby 364 00:17:16,000 --> 00:17:20,200 Speaker 2: drill scenario. Is it possible for President Trump to lower 365 00:17:20,240 --> 00:17:23,879 Speaker 2: the cost curve enough through deregulation less, say methane tax, 366 00:17:24,240 --> 00:17:28,639 Speaker 2: easing of federal land tax, et cetera, to incentivize more 367 00:17:28,800 --> 00:17:31,840 Speaker 2: drilling even at say seventy or sixty five oil. 368 00:17:32,240 --> 00:17:32,400 Speaker 5: Yeah. 369 00:17:32,480 --> 00:17:36,119 Speaker 8: The one word answer there is no. The industry is 370 00:17:36,920 --> 00:17:40,159 Speaker 8: on a path of capital discipline that says they are 371 00:17:40,200 --> 00:17:43,360 Speaker 8: not going to spend above their cash flows. In fact, 372 00:17:43,400 --> 00:17:47,400 Speaker 8: they're returning capital shareolders aggressively, and so at seventy or 373 00:17:47,520 --> 00:17:50,800 Speaker 8: sixty five dollars a barrel, nobody in the US is 374 00:17:50,840 --> 00:17:53,159 Speaker 8: drilling more alex. What I think that means is we 375 00:17:53,240 --> 00:17:57,000 Speaker 8: have to look to the geopolitical piece of this. Maybe 376 00:17:57,320 --> 00:17:59,720 Speaker 8: price comes down or energy in the US gets cheaper 377 00:17:59,720 --> 00:18:03,480 Speaker 8: because of things that happened in Saudi Arabia, Iran, Russia, 378 00:18:04,000 --> 00:18:04,680 Speaker 8: not the. 379 00:18:04,680 --> 00:18:06,480 Speaker 3: End of like a Ukraine war kind of exactly. 380 00:18:06,800 --> 00:18:12,160 Speaker 8: So there's a big The US government has more flexibility 381 00:18:12,200 --> 00:18:14,840 Speaker 8: on energy policy than has ever had before because we 382 00:18:14,880 --> 00:18:17,879 Speaker 8: are running at record levels of production. We are a 383 00:18:17,920 --> 00:18:21,240 Speaker 8: net exporter, not a net importer, and so the actions 384 00:18:21,240 --> 00:18:25,040 Speaker 8: that happen internationally around oil markets like the Middle East, 385 00:18:25,040 --> 00:18:28,080 Speaker 8: for instance, we've got more flexibility than we've had in 386 00:18:28,280 --> 00:18:29,200 Speaker 8: fifty years. 387 00:18:29,760 --> 00:18:32,520 Speaker 6: Quickly, just off of that whole conversation about President Trump 388 00:18:32,600 --> 00:18:36,040 Speaker 6: wanting drill, baby drill, is that what energy investors want. 389 00:18:37,280 --> 00:18:42,040 Speaker 8: No drill, baby drill turned into oversupplied situation, what we 390 00:18:42,119 --> 00:18:44,600 Speaker 8: call the shale bus that went from twenty fourteen to. 391 00:18:44,720 --> 00:18:46,720 Speaker 3: Baby Yeah, exactly, it was. 392 00:18:47,040 --> 00:18:50,680 Speaker 8: It was quite awful, and so energy investors have pushed 393 00:18:50,720 --> 00:18:55,000 Speaker 8: aggressively for companies to stop drilling, stop growing, stop over 394 00:18:55,040 --> 00:18:58,879 Speaker 8: supplying the market, and instead get more profitable and return 395 00:18:58,920 --> 00:19:02,359 Speaker 8: those profits to CHERYLD. So it will take more than 396 00:19:02,400 --> 00:19:07,080 Speaker 8: a request from the Trump administration for US to see 397 00:19:07,119 --> 00:19:08,200 Speaker 8: an increase in activity. 398 00:19:08,240 --> 00:19:10,040 Speaker 2: All right, Dan, it's really good to see you in person. 399 00:19:10,520 --> 00:19:12,240 Speaker 2: I'll see you in Houston a couple of weeks. That's great, 400 00:19:12,240 --> 00:19:15,520 Speaker 2: all right, Dan Pickering, Chief investment Officer Pickering Energy Partners, 401 00:19:15,520 --> 00:19:17,960 Speaker 2: truly one of the best in the industry in terms 402 00:19:18,000 --> 00:19:21,400 Speaker 2: of energy trends, sector trends, etc. So I'll be catching 403 00:19:21,440 --> 00:19:23,280 Speaker 2: up with him in Houston for Sarah week. 404 00:19:23,280 --> 00:19:23,879 Speaker 3: All right, com up. 405 00:19:23,880 --> 00:19:26,000 Speaker 2: Ellen Hayzen will be joining us, chief market strategist and 406 00:19:26,080 --> 00:19:27,240 Speaker 2: portfolio manager at f L. 407 00:19:27,280 --> 00:19:28,560 Speaker 3: Putnam Investment Management. 408 00:19:30,200 --> 00:19:33,920 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 409 00:19:34,000 --> 00:19:37,080 Speaker 1: weekdays at ten am Eastern on Apple, Coarplay and Android 410 00:19:37,080 --> 00:19:40,400 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 411 00:19:40,480 --> 00:19:43,600 Speaker 1: you get your podcasts, or watch us live on YouTube. 412 00:19:44,400 --> 00:19:47,399 Speaker 6: Well, welcome back to Bloomberg Intelligence Radio. I'm Nora Melnda 413 00:19:47,440 --> 00:19:49,879 Speaker 6: here with Alex Steel. I'm filling in for Paul Sweeny. 414 00:19:49,920 --> 00:19:52,520 Speaker 3: Today. We are looking at a market that's in the green. 415 00:19:52,560 --> 00:19:54,080 Speaker 6: As John was just noting, we have the S and 416 00:19:54,119 --> 00:19:56,320 Speaker 6: P five hundred up six tens of a percent and 417 00:19:56,320 --> 00:19:59,040 Speaker 6: the NASDAG up over one percent. We've really got the 418 00:19:59,080 --> 00:20:02,919 Speaker 6: market that's digests saying jobs data, also PPI data. But 419 00:20:03,000 --> 00:20:06,160 Speaker 6: really what we're looking forward to is what will bring 420 00:20:06,280 --> 00:20:09,480 Speaker 6: more clarity in terms of the tariff conversation. Today we're 421 00:20:09,520 --> 00:20:12,960 Speaker 6: joined by Ellen Hazen, chief market strategist and portfolio manager 422 00:20:13,000 --> 00:20:15,959 Speaker 6: at f Outputnam Investment Management. She's here to discuss her 423 00:20:15,960 --> 00:20:20,119 Speaker 6: outlook on the markets today. Ellen, While the tariff's conversation 424 00:20:20,240 --> 00:20:23,640 Speaker 6: may be an ongoing negotiation tactic for President Trump, it's 425 00:20:23,640 --> 00:20:26,720 Speaker 6: obviously putting many investors on edge. How are you currently 426 00:20:26,760 --> 00:20:29,600 Speaker 6: advising your clients in this uncertain climate? 427 00:20:31,640 --> 00:20:34,520 Speaker 9: Thanks for having me. I think that the tariffs are 428 00:20:34,520 --> 00:20:36,879 Speaker 9: a big question mark right now. Our prediction for the 429 00:20:36,960 --> 00:20:41,159 Speaker 9: year is that expect the unexpected, expect the unpredictable. So 430 00:20:41,200 --> 00:20:44,200 Speaker 9: we expect that tariffs and some of the other things 431 00:20:44,320 --> 00:20:47,440 Speaker 9: that the administration is talking about will lead to higher volatility. 432 00:20:47,880 --> 00:20:51,080 Speaker 9: So what that means is you want to be extra selective, 433 00:20:51,240 --> 00:20:54,879 Speaker 9: extra careful about finding companies to invest in and areas 434 00:20:54,880 --> 00:20:57,880 Speaker 9: of the market to invest in that are not going 435 00:20:57,920 --> 00:21:00,760 Speaker 9: to be overly impacted one way or the other. So 436 00:21:00,920 --> 00:21:03,040 Speaker 9: go a little bit more toward quality, a little bit 437 00:21:03,040 --> 00:21:08,879 Speaker 9: more towards safety, and don't take any bets that are 438 00:21:08,920 --> 00:21:12,320 Speaker 9: too big because that can come back to bite you 439 00:21:12,400 --> 00:21:13,680 Speaker 9: when the unexpected happens. 440 00:21:13,880 --> 00:21:16,480 Speaker 2: Which is funny because consumer staples are near an all 441 00:21:16,480 --> 00:21:19,040 Speaker 2: time high, so it seems like you're not alone in 442 00:21:19,080 --> 00:21:21,800 Speaker 2: this view, is that where that safety is. 443 00:21:23,560 --> 00:21:27,320 Speaker 9: Actually, I think consumer staples is pretty uninteresting right now. 444 00:21:27,359 --> 00:21:30,560 Speaker 9: It's very expensive, the growth isn't there, and as you've 445 00:21:30,560 --> 00:21:33,800 Speaker 9: seen with the inflation numbers, you aren't seeing the staples 446 00:21:33,840 --> 00:21:37,640 Speaker 9: companies able to pass through that cost inflation that they 447 00:21:37,720 --> 00:21:39,800 Speaker 9: have had on the input cost side. You saw that 448 00:21:39,840 --> 00:21:42,840 Speaker 9: with Mondolis, You're seeing that with a lot of staples companies. 449 00:21:43,320 --> 00:21:46,600 Speaker 9: So I want quality and I want predictability. But in 450 00:21:46,600 --> 00:21:49,560 Speaker 9: my mind that does not actually mean consumer staples. It 451 00:21:49,600 --> 00:21:52,760 Speaker 9: means growth areas where the growth is not going to 452 00:21:52,760 --> 00:21:55,879 Speaker 9: be subject to cost changes or inflation, where the growth 453 00:21:55,960 --> 00:21:58,120 Speaker 9: is being driven by underlying forces. 454 00:21:59,359 --> 00:22:01,760 Speaker 6: So where is this quality, Where is this safety? 455 00:22:01,840 --> 00:22:02,760 Speaker 3: Is that an equities? 456 00:22:02,880 --> 00:22:03,240 Speaker 6: Bonds? 457 00:22:03,240 --> 00:22:08,399 Speaker 9: Maybe FX, So we like equities more than bonds. We 458 00:22:08,440 --> 00:22:10,480 Speaker 9: think rates are going to stay higher for longer, which 459 00:22:10,520 --> 00:22:13,840 Speaker 9: makes us cautious on bonds in general, and then in particular, 460 00:22:14,359 --> 00:22:17,720 Speaker 9: corporate spreads are very tight, as you know, in terms 461 00:22:17,760 --> 00:22:20,200 Speaker 9: of FX. We still think the dollar will remain strong, 462 00:22:20,240 --> 00:22:23,000 Speaker 9: so we're sticking with US, and we think that equities 463 00:22:23,040 --> 00:22:26,400 Speaker 9: are actually the best hedge against inflation, So we would 464 00:22:26,440 --> 00:22:29,760 Speaker 9: want to stay in US equities, and particularly those that 465 00:22:29,840 --> 00:22:33,040 Speaker 9: have increasing earnings estimates that are writing growth curves, whether 466 00:22:33,080 --> 00:22:36,480 Speaker 9: that's artificial intelligence, not just in the chip and hardware space, 467 00:22:36,520 --> 00:22:39,760 Speaker 9: but also in the software space, whether that's healthcare and 468 00:22:39,800 --> 00:22:44,000 Speaker 9: new drugs getting approved, whether that's some areas of consumer discretionary. 469 00:22:44,040 --> 00:22:47,199 Speaker 9: But we want to own companies that are growing, that 470 00:22:47,240 --> 00:22:49,359 Speaker 9: are seeing their earnings inflect positively. 471 00:22:50,800 --> 00:22:53,280 Speaker 2: What if how do you manage Okay, let me just 472 00:22:54,040 --> 00:22:57,760 Speaker 2: retrack that. What if tariffs kind of go away, as 473 00:22:57,800 --> 00:23:01,119 Speaker 2: if like we're all prepping to avoid the drug But 474 00:23:01,200 --> 00:23:04,240 Speaker 2: if this is just going to be, you know, some 475 00:23:04,359 --> 00:23:08,480 Speaker 2: negotiating tactic and the drama is avoided, what then becomes interesting. 476 00:23:11,480 --> 00:23:13,840 Speaker 9: I think it's really difficult to make a bet based 477 00:23:13,880 --> 00:23:16,879 Speaker 9: on tariffs or no tariffs. Yeah, I would seek to 478 00:23:17,040 --> 00:23:19,040 Speaker 9: look for those companies that are going to be somewhat 479 00:23:19,040 --> 00:23:21,840 Speaker 9: immune to tariffs. Either way, I don't know that they 480 00:23:21,920 --> 00:23:24,399 Speaker 9: do go away instantly. I think that this is a 481 00:23:24,560 --> 00:23:27,439 Speaker 9: tool in the toolkit that the administration is probably going 482 00:23:27,480 --> 00:23:29,679 Speaker 9: to pull out more than once. So even if they 483 00:23:29,720 --> 00:23:31,399 Speaker 9: go away in the short term, as they have for 484 00:23:31,520 --> 00:23:33,879 Speaker 9: Mexico and Canada, they might not go away in the 485 00:23:33,880 --> 00:23:37,280 Speaker 9: long term. So I think I would have trouble expecting 486 00:23:37,440 --> 00:23:40,280 Speaker 9: that tariffs are going to be something that's absent for 487 00:23:40,359 --> 00:23:43,560 Speaker 9: the longer time horizon if they do go away. I 488 00:23:43,600 --> 00:23:48,160 Speaker 9: think the obvious areas are things like automobiles and other 489 00:23:48,200 --> 00:23:51,600 Speaker 9: areas that are imported from China and so forth. But 490 00:23:51,960 --> 00:23:54,280 Speaker 9: I'm not sure that that's the wisest way to invest 491 00:23:54,320 --> 00:23:56,239 Speaker 9: at the moment, just because I think this is going 492 00:23:56,280 --> 00:23:57,520 Speaker 9: to continue to be on predicted. 493 00:23:58,760 --> 00:24:01,760 Speaker 6: Well, there's been lots of different conversations about what could 494 00:24:01,760 --> 00:24:03,480 Speaker 6: be going on in the government and what changes to 495 00:24:03,560 --> 00:24:06,639 Speaker 6: expect moving forward. How are you thinking about the potential 496 00:24:06,760 --> 00:24:09,600 Speaker 6: impact of DOGE and how it may affect different parts 497 00:24:09,600 --> 00:24:12,160 Speaker 6: of the economy, and of course how that changes your 498 00:24:12,200 --> 00:24:17,639 Speaker 6: investment decisions, if at all. 499 00:24:17,880 --> 00:24:19,800 Speaker 9: I would love to see a lot more transparencies with 500 00:24:19,840 --> 00:24:22,359 Speaker 9: respect to DOUGH so that we under so that we 501 00:24:22,440 --> 00:24:25,399 Speaker 9: understand exactly what's going to happen there. I think the 502 00:24:25,440 --> 00:24:29,359 Speaker 9: biggest issue, or the biggest negative impact of DOGE is 503 00:24:29,400 --> 00:24:34,119 Speaker 9: going to be if many millions or hundreds of thousands 504 00:24:34,160 --> 00:24:36,080 Speaker 9: of government employees are lego, that's going to be a 505 00:24:36,119 --> 00:24:39,720 Speaker 9: significant negative hit to the economy. So I think we 506 00:24:40,040 --> 00:24:42,679 Speaker 9: want to understand how many people are going to be 507 00:24:42,760 --> 00:24:45,320 Speaker 9: let go, what areas of the economy those are in 508 00:24:46,000 --> 00:24:50,199 Speaker 9: and whether or not that means that the consumer and 509 00:24:50,240 --> 00:24:54,320 Speaker 9: those households impacted is going to really take take a hit. 510 00:24:55,640 --> 00:24:57,800 Speaker 2: All right, thanks so much, Ellen, really appreciate it. Ellen 511 00:24:57,800 --> 00:25:01,240 Speaker 2: Hazen joining us. She is chief Arches Strategists and portfolio 512 00:25:01,280 --> 00:25:03,600 Speaker 2: manager at fl Putnam Investments. 513 00:25:04,359 --> 00:25:09,080 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 514 00:25:09,280 --> 00:25:12,720 Speaker 1: and anywhere else you get your podcasts. 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