WEBVTT - Consumer In Great Shape, Room To Spend: Michael Hans 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.640 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.320 at Bloomberg dot com slash podcast. Well, as we've been 0:00:22.320 --> 0:00:24.319 discussing really over the last several months, one of the 0:00:24.360 --> 0:00:28.080 one of the driving narratives of these markets is inflation. 0:00:28.760 --> 0:00:31.000 We are seeing it. The question is a transitory is 0:00:31.040 --> 0:00:33.800 it's something more permanent that could really put up some 0:00:33.880 --> 0:00:36.199 roadblocks for this economy. You know, I'm looking at the 0:00:36.280 --> 0:00:38.800 ten years. We're talking with Ira Jersey just earlier again, 0:00:38.920 --> 0:00:40.879 one point five three percent on the ten years, So 0:00:40.880 --> 0:00:43.440 the bond market is not seeing Michael Hans he's the 0:00:43.520 --> 0:00:47.159 chief investment officer for Clarfeld Financial Advisors. They about seventeen 0:00:47.320 --> 0:00:50.920 billion dollars in assets under management. Michael joints this. Michael. 0:00:50.920 --> 0:00:53.280 We appreciate you taking the time here as you look 0:00:53.280 --> 0:00:56.040 at markets here, we I know you've been constructive on 0:00:56.120 --> 0:00:59.880 these markets. How do you think about the inflation risk 0:01:00.160 --> 0:01:04.440 to these markets, Good morning, Thanks for having me. So 0:01:04.480 --> 0:01:07.240 I think the biggest risk that we discuss is we 0:01:07.319 --> 0:01:10.320 sit down and try to think about setting investment policy 0:01:10.319 --> 0:01:15.320 and direction for our clients is not necessarily the individual 0:01:15.319 --> 0:01:18.360 asset class performance that you're going to see directly resulting 0:01:18.440 --> 0:01:21.640 from moves into the inflation data. Is more so the 0:01:21.720 --> 0:01:25.840 challenges that it puts on the FED, who's really guessing 0:01:26.120 --> 0:01:30.040 at this point in time, with two potential outcomes. One 0:01:30.120 --> 0:01:34.720 is that they're right and guiding towards transitory levels of inflation, 0:01:35.200 --> 0:01:38.160 in which case they will have the ability of reasonable 0:01:38.200 --> 0:01:43.119 growth coming in these inflation dynamics moderating with what we're 0:01:43.160 --> 0:01:45.840 seeing right now is a complience of issues but making 0:01:45.840 --> 0:01:48.640 it really challenging and the base effects, and then they 0:01:48.680 --> 0:01:51.960 have the ability to set policy and be somewhat restrictive 0:01:51.960 --> 0:01:55.120 at the margin in a more gradual pace. The flip 0:01:55.200 --> 0:01:58.040 side is what I think many market participants are afraid of, 0:01:58.480 --> 0:02:02.120 is that they are somewhat complaced because of their desire 0:02:02.200 --> 0:02:06.320 to maintain policy focusing on the labor side of their mandate, 0:02:06.680 --> 0:02:10.800 and then forced to more aggressively restrict policy down the line. 0:02:11.280 --> 0:02:16.320 So from our vantage point, not an issue likely, right 0:02:16.360 --> 0:02:20.400 we're still talking about first thinking about some form of paper, 0:02:20.680 --> 0:02:22.400 and there's a lot that's going to happen before they 0:02:22.480 --> 0:02:26.040 raise rates, and so the market right now. Frankly, I 0:02:26.040 --> 0:02:28.280 think some of your your guests point about you as well. 0:02:28.919 --> 0:02:30.840 It's a little bit of back and forth here in 0:02:30.919 --> 0:02:34.040 a in a relatively tight range both on equities and 0:02:34.440 --> 0:02:38.959 on fixed income, waiting for some directional movement that will 0:02:38.960 --> 0:02:41.440 then set the tone for the pounds of the year. Yeah, 0:02:41.440 --> 0:02:44.760 it's interesting. Bill Dudley wrote a piece for Bloomberg yesterday 0:02:44.919 --> 0:02:48.760 and said just that, Um, well two things, one the 0:02:48.800 --> 0:02:53.280 focus on UM the labor markets, and to the insistence 0:02:53.320 --> 0:02:57.640 that UH inflation be allowed to run hot, therefore overheating 0:02:57.680 --> 0:03:00.800 the economy. He then said, you know they raise rates 0:03:00.880 --> 0:03:03.359 after that, Um, they'll be forced to do it at 0:03:03.360 --> 0:03:06.440 a faster pace than they previously had. And if they 0:03:06.440 --> 0:03:10.120 push up unemployment by just half a percent, this is 0:03:10.120 --> 0:03:13.400 what I found surprising over the past seventy five years. 0:03:13.400 --> 0:03:17.120 Every time the unemployment right rate rises just half a percent, 0:03:18.040 --> 0:03:23.720 a full blown recession occurs thereafter. UM. And this is 0:03:23.760 --> 0:03:25.600 the this is the problem, right, This is the concern 0:03:25.680 --> 0:03:28.960 that the Fed is going to have to tighten harder 0:03:29.000 --> 0:03:32.520 than it previously would have had to because it's allowing 0:03:32.560 --> 0:03:36.440 the economy to overheat. If you buy into his his narrative, 0:03:37.280 --> 0:03:39.680 it's a very valid question, and they think what's interesting, 0:03:40.120 --> 0:03:42.160 And it was a question in one of the prior 0:03:42.400 --> 0:03:45.240 you know, FED press conferences that like McKay brought up, 0:03:45.320 --> 0:03:48.200 was you know, we're not hearing that narrative that we 0:03:48.240 --> 0:03:51.040 did in the prior rate hiking cycle of we'd like 0:03:51.200 --> 0:03:55.160 to reset some level of ammunition for that next downturn. 0:03:55.280 --> 0:03:57.480 I think it's very it is somewhat premature, but the 0:03:57.600 --> 0:04:01.240 question really beg do you need to be buying billion 0:04:01.240 --> 0:04:04.280 dollars of securities on a monthly basis? And I think 0:04:04.280 --> 0:04:06.560 we're in a different position today than we were on 0:04:06.600 --> 0:04:09.800 the prior cycle because we've blown out the balance sheet 0:04:10.000 --> 0:04:12.840 substantially more than what we did during the financial crisis. 0:04:13.040 --> 0:04:15.520 So there are little pockets of areas where you know, 0:04:15.560 --> 0:04:18.919 the Fed last week it was wasn't heavily paid attention to, 0:04:19.360 --> 0:04:22.160 but they're starting at the margins to nibble down at 0:04:22.200 --> 0:04:24.320 that balance sheet. They made comments related to the corporate 0:04:24.360 --> 0:04:27.440 credit facility and their ets purchases. So this is going 0:04:27.520 --> 0:04:30.160 to be something that I think of volumes and from 0:04:30.200 --> 0:04:33.920 their perspective in a methodical fashion over a prolonged period 0:04:33.920 --> 0:04:36.840 of time. But we are likely sitting in that in 0:04:37.440 --> 0:04:40.280 the environment right now over the course of the next 0:04:40.320 --> 0:04:43.360 couple of months, where there may not be a major 0:04:43.440 --> 0:04:47.119 direction the news and the data flows might not matter 0:04:47.160 --> 0:04:49.760 all that much because we all have this heightened level 0:04:49.760 --> 0:04:53.080 of expectations for a high cp I print, right And 0:04:53.120 --> 0:04:55.800 so at this point, I think it's really when does 0:04:55.800 --> 0:04:59.839 the FED start detailing their plans, because they really do 0:05:00.120 --> 0:05:03.960 want to, you know, calm the market. Hey, Michael, just 0:05:04.000 --> 0:05:08.240 real quickly thirty seconds. Given that FED backdrop, where what 0:05:08.240 --> 0:05:10.000 are you telling clients right now in terms of risk? 0:05:11.480 --> 0:05:13.839 In terms of risk, and I think an important dynamic 0:05:13.920 --> 0:05:16.840 is that the equity market still has you know, and 0:05:16.960 --> 0:05:20.560 as you mentioned the onset, we are fairly constructive because 0:05:20.600 --> 0:05:24.400 of the relatively low yield dynamic. What we're looking at 0:05:24.520 --> 0:05:27.320 is just a lower duration position across our fixed income 0:05:27.360 --> 0:05:31.000 portfolios because you will not get the same benefit even 0:05:31.000 --> 0:05:33.919 if rates start coming back in, So be more mindful 0:05:33.960 --> 0:05:37.280 about what you own across fixed income, but also being 0:05:37.440 --> 0:05:40.240 you know, cognizant of the potential for lower rates of 0:05:40.279 --> 0:05:43.160 return in in the balance of this cycle because we 0:05:43.240 --> 0:05:46.040 pulled a lot of that forward. Michael, thanks so much 0:05:46.480 --> 0:05:49.080 for your insight. Always great to get your view on 0:05:49.080 --> 0:05:52.040 this market. Michael Hans is the chief investment officer at 0:05:52.080 --> 0:05:57.520 Clarfeld Financial Advisors, talking to us about UM, the market's 0:05:57.600 --> 0:06:00.880 view on inflation, which really has been UM going through 0:06:01.160 --> 0:06:03.919 a bit of a back and forth over the past days, 0:06:03.960 --> 0:06:11.359 sometimes hours. This is crazy but fastly I think would 0:06:11.360 --> 0:06:14.600 count as a small cap stock. UM. It's only it's 0:06:14.640 --> 0:06:18.279 only worth six and a quarter billion dollars in market cap. 0:06:18.880 --> 0:06:20.840 And this is a company that before today I didn't 0:06:20.839 --> 0:06:24.120 realize has the power to shut down the Internet, even 0:06:24.160 --> 0:06:27.560 if just momentarily. Nate Langston joins us Bloomberg Europe Tech 0:06:27.640 --> 0:06:31.080 editor and consumer tech reporter UM and Nate, I get 0:06:31.160 --> 0:06:33.320 why these shares were up, because the first thing I 0:06:33.360 --> 0:06:36.719 thought when I when I heard this is, Man, this 0:06:36.800 --> 0:06:40.440 is a powerful and important company. I kind of want 0:06:40.440 --> 0:06:44.880 to buy shares in that. You're absolutely right, and that 0:06:44.960 --> 0:06:49.400 was exactly my reaction, UM when I first saw this, 0:06:49.640 --> 0:06:53.040 is that this is not a company that many people, UM, 0:06:53.279 --> 0:06:55.839 you know, myself included. And I've been covering technology for 0:06:56.000 --> 0:06:58.760 over fifty years and I hadn't really ever paid any 0:06:58.760 --> 0:07:01.400 attention to this company, and when you see some of 0:07:01.400 --> 0:07:04.640 the sites that it is possible for it to have, 0:07:04.720 --> 0:07:09.120 you know, have a hand in taking offline, ilbeit obviously 0:07:09.160 --> 0:07:12.760 accidentally you have to sort of it turned heads a 0:07:12.800 --> 0:07:14.760 little bit and you think, well, maybe we should be 0:07:14.800 --> 0:07:17.080 paying more attention to this company, and certainly I will 0:07:17.120 --> 0:07:20.360 be doing in terms of how we cover it. Um, 0:07:20.400 --> 0:07:23.520 it's it's and as you say, the the investor response 0:07:23.560 --> 0:07:27.080 and that the stock price since since the opens has 0:07:27.080 --> 0:07:30.600 been really quite fascinating. All right, Nate, tell us what 0:07:30.920 --> 0:07:35.600 happened this morning and how did it happen? Well, as 0:07:35.640 --> 0:07:40.120 far as we know, this all originated as essentially user 0:07:40.320 --> 0:07:44.480 error within the company itself. There's no suggestion here that 0:07:44.960 --> 0:07:47.800 that it was a a hack or or the subject 0:07:47.960 --> 0:07:52.960 of any kind of UM cyber attack. This is essentially 0:07:52.960 --> 0:07:55.760 the equivalent to somebody pressing the wrong button on a 0:07:55.840 --> 0:08:00.560 computer and then having to quickly roll it back. Certainly, 0:08:00.600 --> 0:08:04.120 the speed with which this both happened and was fixed, 0:08:04.160 --> 0:08:07.040 all of which took place within about an hour, UM 0:08:07.280 --> 0:08:10.120 makes me very confident that that that is the case. 0:08:10.200 --> 0:08:13.200 But the short version of what happened is people started 0:08:13.240 --> 0:08:17.000 noticing that they weren't able to access websites. UM for 0:08:17.080 --> 0:08:20.120 a little while, Bloomberg dot com included in in that 0:08:20.560 --> 0:08:26.360 and um the Amazon and read it exactly and read it, 0:08:26.440 --> 0:08:32.480 and there was Spotify was reporting outages Shopify as well. Yeah, 0:08:32.480 --> 0:08:34.600 and it's just a lot of a lot of averages. 0:08:34.880 --> 0:08:38.840 And people started reporting this. The company within about I 0:08:38.880 --> 0:08:41.960 think twenty five thirty minutes have posted a status update 0:08:42.080 --> 0:08:44.720 on its service datas page, which ironically for a little while, 0:08:44.840 --> 0:08:48.480 was also taken offline to say that an issue had 0:08:48.520 --> 0:08:51.000 been identified and a fix is being deployed. And in 0:08:51.160 --> 0:08:53.960 just under an hour total, from the first outage to 0:08:54.760 --> 0:08:59.040 a resolution, things started taking back online. UM, and the 0:08:59.080 --> 0:09:01.920 company said, it's you know, it's further investigating. And generally 0:09:01.920 --> 0:09:04.240 when something like this happens, it takes a day or 0:09:04.280 --> 0:09:07.480 two for sort of full disclosure on the you know, 0:09:07.520 --> 0:09:11.200 the cause for that to be. Yeah. They were like, 0:09:11.200 --> 0:09:17.280 our intern accidentally pressed the red button. He's been fired, Nate. Um. 0:09:17.320 --> 0:09:19.640 You gotta wonder whether or not this makes companies want 0:09:19.640 --> 0:09:22.480 to diversify. I mean, if if I was running a 0:09:22.520 --> 0:09:25.240 website and this took me down, I would think, man, 0:09:25.360 --> 0:09:27.439 is there can I get two people that offer the 0:09:27.480 --> 0:09:32.320 same service. Yeah, I mean, that's definitely the first reaction. 0:09:32.960 --> 0:09:37.400 But realistically, for the kind of systems administrators that are 0:09:37.400 --> 0:09:40.640 in charge of these websites, this is something that it's 0:09:40.720 --> 0:09:43.960 just understood to happen from time to time. You know, 0:09:44.040 --> 0:09:47.280 if if the the entirety of a year, your website 0:09:47.280 --> 0:09:49.040 goes down for a few minutes here or a few 0:09:49.040 --> 0:09:51.680 minutes there over the course of that year, you know, 0:09:51.760 --> 0:09:55.000 you're still talking way above up time, which is what 0:09:55.040 --> 0:09:58.079 a lot of these companies promise and guarantee, and there 0:09:58.160 --> 0:10:00.400 is often a you know, small amount of edit and 0:10:00.440 --> 0:10:04.160 compensation that are applied based on the percentage of total 0:10:04.200 --> 0:10:07.000 autage with course of say a month. Um. So, I 0:10:07.040 --> 0:10:11.560 can't imagine they will see a fallout in people moving uh, 0:10:11.920 --> 0:10:14.600 purely because of this one incident. But if this turns 0:10:14.600 --> 0:10:17.800 out to be one of many over the coming weeks, months, 0:10:17.880 --> 0:10:19.640 or whatever, that's when things start to get a lot 0:10:19.679 --> 0:10:22.040 more serious. Sure. All right, Nate, thanks so much for 0:10:22.120 --> 0:10:25.080 joining us. Really appreciate your time and getting your thoughts 0:10:25.160 --> 0:10:27.719 on this fascinating story. To start this uh this day, 0:10:27.800 --> 0:10:31.120 Nate Lengths and Bloomberg grob Tech editor and consumer tech 0:10:31.240 --> 0:10:36.880 reporter Matt, You're gonna like this. Our next guests participated 0:10:36.920 --> 0:10:40.040 on a panel at the largest bitcoin conference in the world, 0:10:40.559 --> 0:10:44.760 entitled Bitcoin One, which took place in Miami, Florida. What 0:10:44.800 --> 0:10:48.480 I found interesting is, Uh, this conference was held two 0:10:48.520 --> 0:10:52.800 years ago, attracted about two thousand people, but in one 0:10:52.800 --> 0:10:56.880 they're an estimated twelve thousand people in attendance, so assign 0:10:56.960 --> 0:11:00.559 that bitcoin and cryptos really are getting into the mainstream. 0:11:01.000 --> 0:11:03.920 Frank Holmes he joins US today. Frank's the CEO and 0:11:04.000 --> 0:11:07.600 chief investment officers US Global Investors. Frank, I love to 0:11:07.640 --> 0:11:09.600 start there. There's lots to chat with you about, but 0:11:09.840 --> 0:11:11.640 just give us a sense of what was the vibe 0:11:11.840 --> 0:11:18.480 down a bitcoin in Miami. It was electrifying. I've spoken 0:11:18.480 --> 0:11:22.560 as so many investment conferences over the past thirty years, 0:11:22.880 --> 0:11:26.400 attended so many of them, uh, and never has been 0:11:26.400 --> 0:11:30.800 to an event where we're twelve thousand people spent six 0:11:30.920 --> 0:11:33.720 hundred dollars to get in the door and on on 0:11:33.920 --> 0:11:39.480 game day. Basically the tickets were twelve hundred dollars. Uh. 0:11:39.679 --> 0:11:43.600 The big retail conference for investors and ETFs and mutual funds. 0:11:43.600 --> 0:11:46.920 The money shown Orlando, you know they'll get six thousand people, 0:11:46.960 --> 0:11:51.200 but it's free. So I was really impressed with this. 0:11:52.200 --> 0:11:55.320 That just the level and it wasn't close to anything 0:11:55.360 --> 0:11:57.880 like you had to have a fifteen minute Uber drive 0:11:57.960 --> 0:12:01.040 to get there. UH. Usually as a big convention right 0:12:01.080 --> 0:12:03.760 beside the hotel, these other events, if you get lots 0:12:03.800 --> 0:12:06.960 of people, but people who were really committed. People flew 0:12:06.960 --> 0:12:10.120 in from all over the world to an end. Uh. 0:12:10.160 --> 0:12:13.280 And so I thought that was fascinating and the caliber 0:12:13.360 --> 0:12:18.560 of speakers was outstanding. Great event. I know Mike mcglowan 0:12:18.679 --> 0:12:22.160 are Bloomer Commodities analysts, was down there as well. What 0:12:22.240 --> 0:12:25.839 did you what did you take away from the event? Um? 0:12:25.880 --> 0:12:30.280 What did you learn? Um? Down in Miami? Well, you know, 0:12:30.320 --> 0:12:33.080 on on stage I spoke regarding the cryptal mining companies. 0:12:33.120 --> 0:12:36.120 I launched the first UH cryptal mining company in the 0:12:36.160 --> 0:12:41.200 world in two thousand seventeen, called High Blockchain Technology. And uh, 0:12:41.240 --> 0:12:44.160 it's interesting because on that panel it was all about 0:12:44.200 --> 0:12:48.120 being green and clean your coins, and uh, I got 0:12:48.160 --> 0:12:51.720 booed and then I got hurrah. So you have some 0:12:51.800 --> 0:12:56.839 real devotees there, bitcoin enthusiasts that are like religious fanatics, 0:12:57.120 --> 0:12:59.080 and then the other hand you have lots of scientists 0:12:59.080 --> 0:13:02.800 and people are for sort of the non centralized or 0:13:02.800 --> 0:13:07.600 decentralized financial network. Uh. And that spectrum was was huge. 0:13:07.640 --> 0:13:10.400 There was four thousand people in standing room only in 0:13:10.480 --> 0:13:12.640 file marshals had to come in and tell people they 0:13:12.640 --> 0:13:17.040 couldn't stand at the back. Amazing. Yes, Frankie, what's the 0:13:17.200 --> 0:13:20.120 What do you think was the overriding key issue for 0:13:20.280 --> 0:13:23.520 participants in this conference? Here? Is it? Is it regulation? 0:13:23.880 --> 0:13:28.160 Is it a greater adoption? Um, greater you know, just 0:13:28.280 --> 0:13:31.840 more technology? What are some of the key takeaways? All 0:13:31.880 --> 0:13:34.120 of them? It was interesting, It was all of them. 0:13:34.480 --> 0:13:36.560 Ron Paul, I hope when I'm in my eighties I 0:13:36.559 --> 0:13:40.040 can uh moonwalk like he was. I mean, he was 0:13:40.160 --> 0:13:44.240 unbelievable his energy up there on that on that stage. 0:13:44.440 --> 0:13:47.040 So he had the sort of the the political positioning 0:13:47.240 --> 0:13:50.840 of uh, financial independence, etcetera. And and then you had 0:13:51.040 --> 0:13:55.199 the Michael Sailor did a phenomenal job. He had the 0:13:55.280 --> 0:13:59.800 standing room ovation. Uh. So I think it was very broad, 0:14:00.080 --> 0:14:03.839 uh doors he was there for Twitter, uh and he 0:14:03.880 --> 0:14:07.120 was sort of a philosophical approach. We had a Heckler 0:14:07.200 --> 0:14:10.120 for him. But you know, it was it was just 0:14:10.200 --> 0:14:13.800 fascinating to observe what I you know, I did see 0:14:13.880 --> 0:14:17.200 is is that there is a push for crypto mining 0:14:17.200 --> 0:14:19.400 to be done in North America and Europe and away 0:14:19.440 --> 0:14:23.960 from China. The pools for more transparency is better to 0:14:24.000 --> 0:14:27.280 have than coming from China. That there was a The 0:14:27.320 --> 0:14:31.400 mayor spoke very well and how he's trying to create 0:14:31.440 --> 0:14:34.280 the Silicon Valley of the East Coast is going to 0:14:34.400 --> 0:14:38.080 be in Miami. So you know, that was very interesting 0:14:38.120 --> 0:14:41.600 to see that shift. So there's many dynamic things happening 0:14:41.640 --> 0:14:45.200 at the same time in all ages. You had the 0:14:45.360 --> 0:14:49.760 venture capital funds, the bigonaire players flying in from San Francisco, 0:14:50.360 --> 0:14:53.080 uh to the kid and his flip flops on walking 0:14:53.080 --> 0:14:55.720 around with his knapstack. That's up three million dollars on 0:14:55.800 --> 0:14:58.200 his bitcoin holdings. Is that Mat Miller? Matt, were you 0:14:58.240 --> 0:15:02.160 in Miami? I is not, but I would definitely be 0:15:02.240 --> 0:15:06.240 wearing flip flops because I hate shoes. Everyone who knows 0:15:06.280 --> 0:15:09.800 me knows how I feel about shoes. Frank I promised 0:15:09.840 --> 0:15:11.800 our listeners that would get you to talk a little 0:15:11.800 --> 0:15:14.240 bit about airlines, and I know that on the day 0:15:14.240 --> 0:15:18.600 you left there were one point six million passengers screened. Um, 0:15:18.640 --> 0:15:21.240 that's up from a year ago. We gotta get you 0:15:21.280 --> 0:15:22.960 back because we've run out of time, but I do 0:15:23.040 --> 0:15:24.600 want to hear from you in the future, so well, 0:15:24.920 --> 0:15:27.160 hopefully you have time we can rebook you talk a 0:15:27.160 --> 0:15:29.000 little bit about airlines and about the jets E T 0:15:29.160 --> 0:15:31.920 F as well. Frank Holmes, c i O, Chief Investment 0:15:31.920 --> 0:15:34.480 Officer US Global Investors. He was a speaker at the 0:15:34.480 --> 0:15:38.080 Big Bitcoin Conference in Miami and founder of one of 0:15:38.120 --> 0:15:48.080 the first big bitcoin minds. This is Bloomberg. Let's bring 0:15:48.080 --> 0:15:51.560 in Dan Gantner now, he's president, chief executive officer, and 0:15:51.680 --> 0:15:55.920 chief investment officer at r NC Gender Capital Management and 0:15:56.360 --> 0:15:59.480 Dan Um. It's great to get somebody who has skin 0:15:59.560 --> 0:16:01.680 in the game game. You've got five billion and asked 0:16:01.760 --> 0:16:05.960 under management and has some stock picks for us UM. 0:16:06.040 --> 0:16:09.120 Let's talk about what you want right now. Well, first 0:16:09.160 --> 0:16:10.960 of all, let's talk about your inflation outlook, because I 0:16:10.960 --> 0:16:15.160 guess that drives your decisions to some degree. Yeah, man, 0:16:15.160 --> 0:16:17.560 I think that you know right now, certainly inflation is 0:16:17.600 --> 0:16:19.680 the is the hot button, and it's the watchword and 0:16:19.680 --> 0:16:22.600 the overall market and uh, it's you know, we're we're 0:16:22.600 --> 0:16:24.440 waiting to see what these numbers come out with with 0:16:24.520 --> 0:16:27.440 cp I and obviously for PC which is really what 0:16:27.480 --> 0:16:29.720 the FED is looking at. But you know, the numbers 0:16:29.720 --> 0:16:32.200 are very very hot right now, and there there's certainly 0:16:32.480 --> 0:16:35.360 I think a little above the Fed's expectations. The market 0:16:35.400 --> 0:16:37.640 is little concerned about it. You know, we're seeing PC 0:16:37.920 --> 0:16:40.640 that just came out at three point six per uh, 0:16:40.760 --> 0:16:44.120 FED once a long term target of about two uh. 0:16:44.160 --> 0:16:48.280 You know, the watchword right now is transitory, though I 0:16:48.320 --> 0:16:50.960 think what you're going to see is that the definition 0:16:50.960 --> 0:16:53.520 of transitory is going to change over time, and I 0:16:53.560 --> 0:16:55.680 think the market is really looking to see, is this 0:16:55.800 --> 0:16:57.680 something that really is going to be a few months 0:16:58.520 --> 0:17:01.720 that's going to open up as you have supply chain. 0:17:02.280 --> 0:17:05.240 Basically reopening of supply chain is what we're dealing with, 0:17:05.720 --> 0:17:07.800 and so is that going to be truly a few 0:17:07.800 --> 0:17:10.920 months of transitory nature? We get back on the feds 0:17:10.960 --> 0:17:14.920 more or less two percent guideline for inflation, and therefore 0:17:15.040 --> 0:17:17.679 any unwinding that they're going to do is going to 0:17:17.720 --> 0:17:21.840 be either insignificant or non existent. If it stays longer 0:17:21.880 --> 0:17:26.320 than that and really becomes more cyclical, then the market's 0:17:26.320 --> 0:17:28.159 going to adjust to that. You know. We uh we 0:17:28.240 --> 0:17:30.760 think employment's a huge part of this right now, and 0:17:30.800 --> 0:17:33.640 that that's the main thing we're watching. Yeah, we got 0:17:33.760 --> 0:17:37.680 some very interesting jolts data out this morning about the 0:17:37.720 --> 0:17:40.879 record job openings. Uh so that was very interesting for 0:17:40.920 --> 0:17:45.520 this market. Then you know that that cyclical trade, if 0:17:45.520 --> 0:17:48.200 you will, that started it's called it last September has 0:17:48.280 --> 0:17:51.280 really worked out well for investors that have played, you know, 0:17:51.320 --> 0:17:53.960 some of the more cyclical parts of the marketingbe even 0:17:54.000 --> 0:17:56.959 the small caps um A, are you in on that 0:17:57.000 --> 0:18:00.680 trade and be you know kind of what's your outlook. Well, 0:18:00.760 --> 0:18:02.600 we're very heavy on that trade as a matter of fact, 0:18:02.640 --> 0:18:06.080 and really started in the end of the third quarter 0:18:06.160 --> 0:18:08.560 and pretty heavily into the fourth quarter of last year. 0:18:08.960 --> 0:18:11.640 I mean the look the energy sector, you know, which 0:18:11.760 --> 0:18:15.080 was beat up so badly last year, has led the 0:18:15.119 --> 0:18:17.159 market this year. I mean, the energy sector is upt 0:18:18.760 --> 0:18:21.280 hot on its heels, as financials at up almost tht 0:18:22.000 --> 0:18:25.400 and even materials are up over so it's it's been 0:18:25.400 --> 0:18:27.919 a big part of our portfolios and and even in 0:18:27.960 --> 0:18:31.040 our growth and value portfolios. As we reached the second 0:18:31.040 --> 0:18:33.040 half of last year, we went much heavier towards the 0:18:33.119 --> 0:18:35.840 value side, and I think that that's going to continue. 0:18:36.200 --> 0:18:38.560 I think what you're what you're seeing in this market, 0:18:38.640 --> 0:18:42.320 despite some of the side shows that are taking headlines, uh, 0:18:42.600 --> 0:18:45.440 is that this market is moving back to being very 0:18:45.520 --> 0:18:49.719 earnings oriented. And whether that's reopening trade or whether or not, 0:18:49.760 --> 0:18:53.520 it's just fundamentals of ongoing companies. I mean, that's where 0:18:53.520 --> 0:18:57.760 we're going. And and so valuations have become very very 0:18:57.760 --> 0:19:00.960 critical and and so the market is fully moving that way. 0:19:01.040 --> 0:19:04.439 We think franktically, what we're early in that rotation of 0:19:04.560 --> 0:19:07.359 rotation back the value. So it's it's something we definitely 0:19:07.400 --> 0:19:10.639 intend to participate with. And and uh, and something that 0:19:10.680 --> 0:19:12.320 you know, we think is going to pull more and 0:19:12.320 --> 0:19:15.159 more investors into it as they see confirmation and you 0:19:15.200 --> 0:19:19.560 like Philip sixty six here with a four percent yield. Yeah, 0:19:19.600 --> 0:19:20.840 I think it's you know, I think it's one of 0:19:20.880 --> 0:19:25.560 the create the very key um underlyings with regards to 0:19:25.640 --> 0:19:28.840 investor sentiment right now is that people are looking for, 0:19:28.920 --> 0:19:31.480 you know, not just again things that are going to 0:19:31.520 --> 0:19:34.240 be extraordinarily volatile. They may play in those areas, but 0:19:34.560 --> 0:19:37.400 for core portfolio assets. You know, they want to see 0:19:37.400 --> 0:19:39.280 not only some stability of earnings growth, but they want 0:19:39.280 --> 0:19:41.560 to see some income and some yield. And what we're 0:19:41.600 --> 0:19:45.119 seeing now is also a very significant transformation and transition 0:19:45.560 --> 0:19:48.240 of bond holders that are realizing if they're going to 0:19:48.320 --> 0:19:51.239 have some income out there, looking at where pen your 0:19:51.280 --> 0:19:54.320 treasury rates are and rates overall, they're gonna have to 0:19:54.359 --> 0:19:57.280 have more risk, and they're going to start to gravitate 0:19:57.359 --> 0:20:01.640 towards high dividend stocks that are in many cases three 0:20:01.720 --> 0:20:03.960 or four times what they're going to get in fixed 0:20:03.960 --> 0:20:06.160 income assets because they need to have some cash flow, 0:20:06.359 --> 0:20:08.080 they need to have something to live on. And so 0:20:08.119 --> 0:20:10.199 when you look at a Philip sixty six, which is 0:20:10.840 --> 0:20:15.240 still trading at ten percent below its pre COVID values, uh, 0:20:15.320 --> 0:20:17.720 then it's a it's a we think it's a very 0:20:17.720 --> 0:20:21.840 strong play, especially you get four that's tax preferred. While 0:20:21.880 --> 0:20:25.200 you wait, how about Christol Myers squib that's a obviously 0:20:25.320 --> 0:20:28.760 the we've seen the healthcare stocks with Biogen kind of 0:20:28.800 --> 0:20:30.840 in the news over the last couple of days. Is 0:20:30.960 --> 0:20:33.439 Bristol Myers? Is that another one like a Philip sixties 0:20:33.440 --> 0:20:36.320 six where it's just a steady eddy kind of a 0:20:36.359 --> 0:20:39.800 good long term performer. Well, I think it's a combination. 0:20:39.880 --> 0:20:42.840 You know, first of all, it clearly it's the cheapest 0:20:42.880 --> 0:20:46.040 of the large farmer stocks right now trading at about 0:20:46.080 --> 0:20:48.960 p of eight and it's got a good strong yield 0:20:49.000 --> 0:20:51.960 once again three in cash flow while you wait. And 0:20:52.320 --> 0:20:55.439 one of the real values we see in Bristol Myers 0:20:55.520 --> 0:20:58.840 is we think that the market is just severely handicapping, 0:20:59.359 --> 0:21:00.840 you know, some of the need drugs that are going 0:21:00.880 --> 0:21:03.119 to come off of patent and at the at the 0:21:03.160 --> 0:21:05.240 tail end of the pipeline, and what they're not taking 0:21:05.240 --> 0:21:08.320 into consideration. They had four new drugs last year, They've 0:21:08.320 --> 0:21:12.120 got four new launches that are coming out. They're modeling 0:21:12.200 --> 0:21:15.040 about ten billion from those new releases, and we think 0:21:15.040 --> 0:21:18.760 that that's uh, just significantly lower than the five billion 0:21:18.800 --> 0:21:21.879 dollars that we're modeling. So when you look at you know, 0:21:21.920 --> 0:21:24.280 based upon that, we think overall earnings are going to 0:21:24.320 --> 0:21:26.600 be about eighties six dollars even on a multiple of 0:21:26.680 --> 0:21:29.720 ten half of the overall market. You know, we're you know, 0:21:29.800 --> 0:21:32.400 we think it's eighty six dollar stock right from where 0:21:32.400 --> 0:21:35.360 it is now sixty that would be a good return there, 0:21:35.440 --> 0:21:38.399 Dan getting their president, CEO and c i O of 0:21:38.560 --> 0:21:41.400 r n C Genter Capital Management, they have about five 0:21:41.400 --> 0:21:44.200 billion dollars in assets under management. Looking at some of 0:21:44.240 --> 0:21:46.280 those big cap names and I guess, you know, for 0:21:46.960 --> 0:21:48.919 the market. A lot of investors in the market, you know, 0:21:48.960 --> 0:21:53.359 those cyclical names have really worked well in this reopening trade, 0:21:53.359 --> 0:21:54.960 if you will. And the question I hear from a 0:21:54.960 --> 0:21:57.240 lot of investors is, you know, what's the duration? How 0:21:57.320 --> 0:22:00.400 much legs does that trade have? Can I still ride 0:22:00.440 --> 0:22:02.959 the energy stocks? Can I still ride the financial stocks, 0:22:03.400 --> 0:22:05.520 uh for example? Or do I need to pivot back 0:22:05.560 --> 0:22:07.720 to the tried and true top line growth stories? That 0:22:07.840 --> 0:22:11.280 is what markets are looking at. This is Bloomberg. Thanks 0:22:11.280 --> 0:22:14.760