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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. Find 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. Right now, let's get

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Speaker 1: over to Hans Albrished. He is a portfolio manager and

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Speaker 1: option strategist at Horizons E t F Management and UM,

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Speaker 1: a great day to have you on, Hans, because we've

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Speaker 1: had some really kind of weird news in the E

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Speaker 1: t F space. I'm thinking of the short arc E

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Speaker 1: t F, which Matt Levine was writing about yesterday. I mean,

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Speaker 1: if you don't like Cathy Woods strategy, you could just

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Speaker 1: find out what she's going along and short at yourself. Um,

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Speaker 1: or you could just short the arc E t F.

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Speaker 1: Why would someone feel compelled to build a short arc

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Speaker 1: et F. Well, I think, uh, you know, I think

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Speaker 1: it's a bit like shorting bitcoin. You know, there's a

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Speaker 1: we have a product actually that allows you to take

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Speaker 1: part in a short bitcoin effectively. Uh, and I think

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Speaker 1: that becomes a bit of a trading vehicle for people,

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Speaker 1: because you know, the stocks that Kathy tends to invest in,

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Speaker 1: or these exponential, these emerging technologies that often get uh,

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Speaker 1: you know, stretched and overextended, and and I think this

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Speaker 1: sort of gives people away to kind of play both

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Speaker 1: sides of the equation um because you know, some of

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Speaker 1: these companies are smaller, and uh, we know that Cathy's uh,

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Speaker 1: you know, can have large a large percentage of the

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Speaker 1: holdings of some of these companies, and some people think

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Speaker 1: that that's sort of something that can reverse over time,

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Speaker 1: So a bit of a mean reversion play from that perspective,

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Speaker 1: I think. But I say that's more of a trader's

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Speaker 1: trader's vehicle than something you want to hold for a

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Speaker 1: long time, because of course I'm I'm a true believer

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Speaker 1: in these technologies over time, so Hans. Other news we

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Speaker 1: got today came from BMW kind of learning about the

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Speaker 1: impact of the chip shortage on its business. So maybe

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Speaker 1: that's not a reason to want to be invested in

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Speaker 1: an automaker like that, but maybe it's a good investment

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Speaker 1: idea to invest in the company that makes the products

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Speaker 1: that are seeing shortage. The chipmakers and you obviously at

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Speaker 1: Horizon ETFs launched uh C HPS, the first Canadian semiconductor

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Speaker 1: e t F. What kind of interest are you seeing

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Speaker 1: in that product. We're seeing some good interest. It's the

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Speaker 1: first one that really takes a very global perspective. So

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Speaker 1: a lot of the products you see out there, the

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Speaker 1: socks and things like that, have very much a US focus.

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Speaker 1: And what we'd like to talk about is that, you know,

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Speaker 1: this is really a global movement, this exponential and emerging

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Speaker 1: movement where semiconductors are the new oil. Right we hear

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Speaker 1: about data being the new oil. Semis are really the

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Speaker 1: new oil. The oil. They make up the foundation for

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Speaker 1: almost everything in our new world, and and that goes

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Speaker 1: for everywhere in the world. And so you've got some

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Speaker 1: areas of the world. Asia is the biggest cloud growth

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Speaker 1: area in the world. You've got robotics and automation being very,

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Speaker 1: very big in that part of the world. So it's

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Speaker 1: better to have exposure to companies that are some of

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Speaker 1: the very big and influential companies that exist outside of

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Speaker 1: outside of the US. Is there gonna be a time

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Speaker 1: in you know, the near to medium term future when

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Speaker 1: we ramp up chip production by so much and demand

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Speaker 1: falls off that we have a glut. Well, it could

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Speaker 1: be you know, we oftentimes we kind of uh, we

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Speaker 1: overextend one way or another. I think it's going to

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Speaker 1: be difficult in the in the chip space because it

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Speaker 1: is very very capex um extend, very capex intensive um

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Speaker 1: and so it's not that easy to adjust. And we

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Speaker 1: saw that in the during the pandemic where some some

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Speaker 1: areas like automakers sort of it was very much uh,

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Speaker 1: an example of expectation versus an actual reality Jewels, where

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Speaker 1: everybody sort of took their pedal, took their foot off

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Speaker 1: the pedal, and then suddenly auto demand you know, went

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Speaker 1: through the roof because everybody started doing the good old

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Speaker 1: American day trip, uh, the good old American road trip. Um.

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Speaker 1: And so when when things get out of balance in

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Speaker 1: that to that perspective, you can have some problems. Some

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Speaker 1: of that capacity went to other areas of chip demand,

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Speaker 1: and then when the automakers needed that demand again, it

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Speaker 1: wasn't there. And it's very difficult to kind of move

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Speaker 1: to shift that capacity around. Uh. And it's going to

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Speaker 1: take a little while for for us to solve this

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Speaker 1: problem because it isn't as easy as flicking a switch.

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Speaker 1: I'm a road trip fanatic, and when I go on

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Speaker 1: a road trip at all, I like to bring my iPhone,

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Speaker 1: my Apple Watch, my iPad. I need as many chips

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Speaker 1: as I basically can in the car to feel like

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Speaker 1: I'm safe. Hans, thanks so much for joining us, Hans

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Speaker 1: alversh there is a VP and portfolio manager at Horizons

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Speaker 1: et F Management. Gotta get you back on and talk

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Speaker 1: more about chips in the future. Let's bring in Kara Murphy.

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Speaker 1: She is cheap in vestment officer at Kestra Holdings. They

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Speaker 1: have a hundred twenty three billion dollars of assets under management.

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Speaker 1: And Carrey, you are optimistic, right, I mean, at least

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Speaker 1: in terms of the economy. You think we see uh

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Speaker 1: some good signs with foot traffic, air traffic, consumer spending,

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Speaker 1: et cetera. How much longer does that continue or have

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Speaker 1: we maybe peaked? So I am optimistic, and I think

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Speaker 1: part of it is because we still have a tremendous

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Speaker 1: amount of momentum in the system, both from fiscal and

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Speaker 1: monetary stimulus that started last year. But you know, we've

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Speaker 1: been looking very closely as COVID case counts go up,

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Speaker 1: like how is the consumer actually reacting. So, while certainly

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Speaker 1: a health concern, on a continuing basis, what we're seeing

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Speaker 1: is that people aren't really changing their behavior very much. Um.

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Speaker 1: We're continuing to see foot traffic even in COVID hotspots,

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Speaker 1: in places like restaurants, hotels, gems. Air traffic is holding

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Speaker 1: study at pre COVID levels. Consumer spending is now above

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Speaker 1: pre COVID levels. So what we're seeing is that the

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Speaker 1: economic impact of the increased case counts are pretty minimal. Okay,

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Speaker 1: So does that mean you want to keep going towards

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Speaker 1: the value, the cyclical, the reopening kind of place. Yeah, well,

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Speaker 1: I think we are starting to see a rotation towards

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Speaker 1: a little bit more quality UM in the market. But

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Speaker 1: I do think there's a nice consumer theme out there

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Speaker 1: as well. So areas like home builders, discount retailers, those

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Speaker 1: are areas that will continue to benefit from both the

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Speaker 1: consumer kind of coming out of their pandemic shell low

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Speaker 1: interest rates being willing to actually walk stores again. Um.

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Speaker 1: And so I think there's some interesting opportunities there. What

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Speaker 1: about the growth stocks, what about those mega texts that

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Speaker 1: have powered this market higher? Are you done with those? Yeah?

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Speaker 1: It's very hard to bet against those stocks, right, I mean,

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Speaker 1: like tremendous top line growth, free cash flow generation um

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Speaker 1: at a norm arisen out of momentum. So so I

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Speaker 1: wouldn't want to bet against them, but I think their

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Speaker 1: attractiveness compared to let's say a year ago, is lower.

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Speaker 1: Let's talk about E s G. But we actually have

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Speaker 1: a great live law going on on the terminal right now.

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Speaker 1: You can type T live T L I V go

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Speaker 1: into your terminal and it's with Steve Liberatory over at

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Speaker 1: nu Vene talking about E s G and the risk

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Speaker 1: of green washing. How do you get around that green

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Speaker 1: washing risk when trying to make E s G oriented investments?

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Speaker 1: So I think first of all, it's important to understand

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Speaker 1: that that there is a growing demand for the ability

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Speaker 1: to express your values in a portfolio. And so we

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Speaker 1: certainly see this um with our clients who are asking

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Speaker 1: to be able to have some consistency between what's important

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Speaker 1: to them and the holdings that they have. So I

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Speaker 1: think that's one very important trend to keep in mind.

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Speaker 1: Another is that like the data that we have in

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Speaker 1: E s G is so much better, the analytical capability

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Speaker 1: is so much better than what we had like ten

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Speaker 1: years ago. So you know, I think this concern about

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Speaker 1: greenwashing is the idea that you know, suddenly everybody has

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Speaker 1: got an E. S. D. BEN and everybody's you know,

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Speaker 1: using these other factors to sort of determine investment. Um.

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Speaker 1: And that is a risk. But we're in so much

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Speaker 1: better place today than we were ten years ago. UM.

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Speaker 1: So I think that's all a very good thing. Yeah.

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Speaker 1: And also, I mean, what are you gonna gonna do.

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Speaker 1: You're gonna drive up the cost of capital of bad

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Speaker 1: businesses or do you invest in good businesses hoping that

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Speaker 1: sometime regulation gets past. Um. It seems like an interesting

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Speaker 1: conundrum to me. I want to get to home builders because, um,

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Speaker 1: you have written about the pullback that we've seen. Um,

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Speaker 1: but there's still so much demand, as Kaylee and I

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Speaker 1: can attest to m for homes and so little inventory.

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Speaker 1: What happens here? Well, and I think you can guess right,

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Speaker 1: tremendous demand, limited supply. You know, I think that's really

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Speaker 1: going to continue to buoy prices, particularly at homes. And

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Speaker 1: you know, the home builders have been very deliberate and

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Speaker 1: sort of holding back some of their inventory. UM. So

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Speaker 1: we'll start to see that come online in the second

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Speaker 1: half of this year and then even into next year.

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Speaker 1: And then the meantime, we've seen a lot of input

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Speaker 1: costs really received. I mean, lumber has gotten a lot

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Speaker 1: of attention and that's come back tremendously at the same

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Speaker 1: time that home builders shares have been receiving. So and

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Speaker 1: then even when we look at valuations, while they're you know,

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Speaker 1: towards the high end of their typical valuation range, as

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Speaker 1: earnings continue to increase, um, as these homes come back online,

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Speaker 1: as prices hold firm, um, I think you'll continue to

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Speaker 1: see these stocks do well. Maybe good news for the

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Speaker 1: home builders stocks, less so for Matt Miller who's trying

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Speaker 1: to buy a house in Westchester potentially, I don't know

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Speaker 1: how much luck that's going to have. I've had some

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Speaker 1: listeners right in with some tips, so if anybody knows

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Speaker 1: a place in Bronxville, Yeah, Matt is using his platform

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Speaker 1: to get tips. And we only have about thirty seconds left,

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Speaker 1: but of course, earning seasons winding down, we still do.

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Speaker 1: We'll hear from the retailers later on this month. How

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Speaker 1: strong a position are they in. I think the retailers

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Speaker 1: are in a great position, so you know, We're particularly

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Speaker 1: focus on the discount ones who didn't benefit as much

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Speaker 1: from the rush to online last year. But like I said,

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Speaker 1: starting to see more foot traffic. We're also seeing um

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Speaker 1: wage increases, particularly in low wage earners, which again should

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Speaker 1: really help those discount retailers. Kara, thanks so much for

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Speaker 1: joining us today. Kara Murphy, their chief investment officer over

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Speaker 1: at Castro Holdings that said they had a hundred twenty

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Speaker 1: three billion dollars in assets under management, So um, some

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Speaker 1: real firepower there and some great insight on what to

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Speaker 1: do in this market you're not looking for. I thought

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Speaker 1: you were looking for a house too. I would in

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Speaker 1: theory that would be great map, But after looking at

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Speaker 1: what prices has done over the last couple of months,

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Speaker 1: I think I'm just gonna have to wait it out.

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Speaker 1: See when it cools down, maybe I'll find my entry point. Yeah,

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Speaker 1: I mean I may try and wait it out as well.

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Speaker 1: Hopefully it'll cool down by like January or February. UM.

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Speaker 1: But it's an amazing market right now. If you're a seller.

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Speaker 1: I know a guy who sold a house. He put

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Speaker 1: his house on the market Friday and it was done cash,

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Speaker 1: no contingencies within like five minutes. Uh yeah, very very

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Speaker 1: hot marketly alright, Our big take today is on Gary Gensler,

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Speaker 1: the head of the SEC, readying more crypto oversight. His

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Speaker 1: intention is to protect investors and he's made that pretty clear.

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Speaker 1: But the thing is he's also um, I guess he's

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Speaker 1: said at least open or neutral on the technology, the

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Speaker 1: blockchain technology, and he even taught a class at m

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Speaker 1: I T about it, so a lot of people have

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Speaker 1: speculated he might be a friend to the crypto world.

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Speaker 1: Robert Schmidt joins us who wrote the big take story

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Speaker 1: today with Benjamin Bain and Robert. I guess you know.

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Speaker 1: The issue is a lot of crypto investors, a lot

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Speaker 1: of crypto believers are also very libertarian, and a lot

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Speaker 1: of people take that to mean also anti regulation. Hey Matt, Yeah,

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Speaker 1: thanks for having me. And it is true. I mean

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Speaker 1: this is a you know, a system that has developed

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Speaker 1: kind of outside of the government, So there's kind of

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Speaker 1: a real hesitancy on some of the people who are

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Speaker 1: real enthusiasts here, uh to have the government wagh in

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Speaker 1: uh and said rules for this market. Um. But as

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Speaker 1: you saw with our Ginseler piece, Ginseler is um saying

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Speaker 1: you know what the government has to have a role here.

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Speaker 1: This is a one point six trillion dollar market and growing,

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Speaker 1: and so from an investor standpoint, he doesn't think that

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Speaker 1: there's a lot of protections. Talk a little bit about

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Speaker 1: his his background and how exactly that informs his opinion

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Speaker 1: in his policy approach when it comes to crypto. Yeah,

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Speaker 1: it is fascinating because the government, as you guys might imagine,

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Speaker 1: is not full of crypto experts, replaced crypto with anything

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Speaker 1: well true, and especially you know talking to people say

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Speaker 1: on Capitol Hill, right, nobody knows exactly what any of

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Speaker 1: this stuff is and it is confusing. Um. So Ginsler

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Speaker 1: has really put himself in an interesting place because he's, uh,

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Speaker 1: he's one of the few people who really understands this stuff.

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Speaker 1: And he developed a very popular course at m I

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Speaker 1: T on blockchain and money. Um. He's long been interested

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Speaker 1: in kind of these intersection of finance and technology. Uh,

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Speaker 1: and he studied it for three years before he was

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Speaker 1: appointed SEC chairman. So he says, well, look, this is serendipity,

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Speaker 1: but I'm glad I'm here and I'm glad I understand

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Speaker 1: this stuff well. And there are a lot of people, Um,

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Speaker 1: there are people in the crypto space. I shouldn't say

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Speaker 1: a lot, because I don't know how many, but I

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Speaker 1: we talked to on a regular basis people who work

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Speaker 1: with crypto in the investment world, and UM, people who

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Speaker 1: are pro regulation of in some form or another, who

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Speaker 1: say that we need to have some clear cut rules

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Speaker 1: in order to get this really widely adopted and going. Um,

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Speaker 1: maybe Gainsler is their friend. Yeah, he is. I think

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Speaker 1: although you know, it all comes down to um as

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Speaker 1: everything does in Washington, and the details of this stuff

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Speaker 1: and what kind of regulation and oversight you want. But um,

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Speaker 1: that's true. Ginsler talked to us about, you know, the

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Speaker 1: early days of the auto industry, and he said, well,

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Speaker 1: you know, people were driving around. There were barely roads,

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Speaker 1: there were no traffic lights, there were no speed limits,

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Speaker 1: people were getting killed, you know, and once the government

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Speaker 1: stepped in and said, hey, we've got to have some

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Speaker 1: some kind of rules here. Uh, the industry took off.

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Speaker 1: And he sees, you know, UM, crypto as as similar,

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Speaker 1: that it really does need some guardrails there before it's

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Speaker 1: widely adopted. I should point out that I normally live

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Speaker 1: in Berlin, and living in Germany, probably the number one

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Speaker 1: best thing about living in Germany actually by far in

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Speaker 1: a way, is the fact that there's no speedle in

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Speaker 1: it on the auto bun. I can't believe no other

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Speaker 1: developed Western countries have that, because it's such a great

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Speaker 1: part of life there. But to the story, back to

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Speaker 1: Gary Gainsler, Robert, I guess once he forms an opinion

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Speaker 1: about this and kind of decides what direction he wants

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Speaker 1: to go with this regulation, what kind of speed and

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Speaker 1: or lack thereof are we talking about? Was how some

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Speaker 1: of these things could actually come to fruition. Yeah, well,

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Speaker 1: you know that the government is never fast about anything. Um.

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Speaker 1: And Ginsler also has a lot on his plate, a

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Speaker 1: lot of stuff that we've talked about over the over

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Speaker 1: the months, you know about the game stop trading and

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Speaker 1: Arcagos family office blow up. He's got a lot of

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Speaker 1: things that he needs to deal with, uh, stuff that's complex,

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Speaker 1: high profile. UM And he's just added this to his list.

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Speaker 1: So we're not totally sure, but it will be a while.

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Speaker 1: And you know he is, as we point out in

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Speaker 1: our article, he ran the Commodities Futures Trading Commission during

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Speaker 1: the Obama administration and put in a whole new set

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Speaker 1: of rules for swaps, which you know, many people think

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Speaker 1: was a big cause of the financial crisis, and he

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Speaker 1: did it fast and he muscled it through, so people

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Speaker 1: are not discounting his ability to do this. You know,

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Speaker 1: he's he's he's I guess he's kind of heroic almost

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Speaker 1: in in that he came to the rescue there, and

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Speaker 1: I think a lot of people on both sides of

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Speaker 1: the aisle have a lot of respect for him. You

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Speaker 1: quote Hester Pierce, Republican commissioner on the sec UM who

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Speaker 1: is also more of a libertarian. She says, I come

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Speaker 1: from a perspective that people should have the maximum freedom

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Speaker 1: to engage in transactions they want to engage in voluntarily.

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Speaker 1: Sounds almost American of her um, but she is supportive

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Speaker 1: too of some regulations. She says society needs to have

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Speaker 1: that discussion about what the right regulatory framework is. Yeah,

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Speaker 1: she thinks that like, hey, we need to set rules,

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Speaker 1: and maybe what she sees as regulations might be different

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Speaker 1: than what Ginceler j'ss regulation. But she kind of agrees

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Speaker 1: that in order for this all to take off and

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Speaker 1: be beneficial to society and um, you know, maybe help

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Speaker 1: our economy grow, that you really do need to kind

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Speaker 1: of tell everybody what the what the rules are, so

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Speaker 1: you know, they don't disagree on that. They probably do

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Speaker 1: disagree on on you know, what the actual policy might be.

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Speaker 1: But that's what these commissions do. They have five members,

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Speaker 1: they get together, they talk about it, and they try

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Speaker 1: to hash something out. And just to be clear, you know,

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Speaker 1: one of the big problems that we have in crypto.

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Speaker 1: Anybody who reads Matt Levin's columns UM gets a lot

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Speaker 1: of info about the defive space and the fact that

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Speaker 1: there are these Ponzi schemish rug poll um scams that

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Speaker 1: continue to get investors over and over again. Not that

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Speaker 1: the investors don't expect it to happen. I think a

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Speaker 1: lot of people going into this no that they're gonna

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Speaker 1: get ripped off half the time. But this is what

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Speaker 1: they one of the main things they want to put

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Speaker 1: a stop to, right, Yeah, they sure do. And the

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Speaker 1: SEC kind of since, uh you since crypto exploded, has

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Speaker 1: been kind of pursuing an aggressive enforcement approach on this

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Speaker 1: and and Gaincler definitely says that, you know, the fraud

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Speaker 1: has got to stop. We've got to figure out how

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Speaker 1: to do this, uh, and he said he was going

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Speaker 1: to continue um the investigations into all of this stuff.

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Speaker 1: Can you talk about the influence gainst their wheels outside

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Speaker 1: of just the sec you you talk about in the

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Speaker 1: article how he also sits on the Financial Stability Oversight Council. Yeah,

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Speaker 1: there's two kind of panels that that are important in

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Speaker 1: this area. One is the Financial Stability Oversight Council that's

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Speaker 1: kind of an uber group of regulators that looks at, um,

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Speaker 1: you know, practices that are potentially dangerous to the financial system.

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Speaker 1: And then the President's Working Group on Financial Markets, which

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Speaker 1: is a smaller group that advises the President on some

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Speaker 1: of these same you know, market impacts of things. And uh,

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Speaker 1: he's really, um, the main person on both those panels

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Speaker 1: that is, uh, you know, most experienced in crypto. So

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Speaker 1: people who've worked with him on this stuff say that

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Speaker 1: his his views are taken pretty seriously. Robert. He didn't

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Speaker 1: give you any clue as to whether or not we're

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Speaker 1: going to get a bitcoin ETF allowed in the U

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Speaker 1: S anytime soon. Yeah, unfortunately not. Um, but he is

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Speaker 1: giving a speech today at the Aspen Security Forum which

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Speaker 1: may touch on some of that, and UM he said that,

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Speaker 1: you know, he's continuing to think about it. And he

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Speaker 1: understands that a lot of people are very interested in this.

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Speaker 1: I feel like if he was going to tell Aspen,

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Speaker 1: he probably would have told you, Benjamin, I have a

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Speaker 1: feeling we're gonna be as well. Yeah, exactly. I think

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Speaker 1: it's still going to be a little while, but for now,

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Speaker 1: I think there's some Canadian ETFs that do pretty much

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Speaker 1: the same thing. Great Big Take story, Robert, thanks so

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Speaker 1: much for joining us. Really appreciate your insight. Robert Schmidt

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Speaker 1: writing with Benjamin Bain about Gary Gensler getting ready for

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Speaker 1: more crypto over society wants to make rules, which makes

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Speaker 1: sense considering the fact that that's his job. He's a

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Speaker 1: rulemaker UM in the Securities and Exchange Commission, and he's

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Speaker 1: going to be dealing with something that he knows fortunately

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Speaker 1: a lot about, So maybe people will be less angry

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Speaker 1: about the rules that he makes. I think there are

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Speaker 1: a lot of people that just don't understand what goes

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Speaker 1: on in this space to begin with. But if you

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Speaker 1: want to get a look at the story, decide n

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Speaker 1: I big take go. This is Bloomberg. Let's get away

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Speaker 1: from politics and get back over to the markets, because

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Speaker 1: we're seeing a lot of action in the markets, say,

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Speaker 1: not a lot of direction in terms of equity indexes,

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Speaker 1: but um, we still see yields and incredible lows one

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Speaker 1: sixteen fifty six on the tenure right now, and we see, uh,

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Speaker 1: the the real yields right now dropping and they and

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Speaker 1: they have been down for a while, but right now

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Speaker 1: down at negative one hundred and eighteen basis points. So

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Speaker 1: it's a pretty incredible Uh, it's a pretty incredible environment

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Speaker 1: to working in. Dan Genter joins us. He is the

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Speaker 1: chief executive officer of r NC Genter Capital Management. They've

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Speaker 1: got five billion dollars of assets under management, and Dan,

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Speaker 1: I wonder what you make of this. It must be

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Speaker 1: one of the most asked questions. Why are rates so

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Speaker 1: low if we're looking at economic growth that's so strong. Well,

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Speaker 1: I think the only thing you can really look at, Matt,

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Speaker 1: is that just a fairly typical flight to quality and

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Speaker 1: the and the real concern here is what's happening with

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Speaker 1: the delta variant of COVID nineteen. I mean, you we've

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Speaker 1: had a number of false starts with regards to you know,

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Speaker 1: people trying to come come out of the closet and

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Speaker 1: get back and reintegrate into society and and now I

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Speaker 1: think when companies literally were setting guidelines and dates for

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Speaker 1: people to return to the office and setting in those parameters,

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Speaker 1: you know, now they don't know what to do again.

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Speaker 1: So I think that you're you're in a situation where

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Speaker 1: you're combining two factors, which is the market has just

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Speaker 1: had a tremendous run of what we've seen so far

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Speaker 1: this year, both on the back of earnings and some

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Speaker 1: multiple expansion. You know, it's it's trying to take a

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Speaker 1: deep breath anyway, and now when you put the new

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Speaker 1: COVID fears on top up of it, you're just again

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Speaker 1: you're seeing some concern, You're seeing some flight to quality.

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Speaker 1: You're seeing or you're going to be able to continue

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Speaker 1: to push these earnings forward at this pace, which is

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Speaker 1: what we really need to support the market. Are you

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Speaker 1: one of those people fleeing to quality, Dan, or where

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Speaker 1: are you positioning now? We were really in a situation

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Speaker 1: where right now we're we're just looking for values. So

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Speaker 1: I guess too some degree you could say that we're

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Speaker 1: going to quality, but but for us, it's belling more

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Speaker 1: with that we've been really focusing on since the fourth

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Speaker 1: quarter of last year. I mean, we we feel that

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Speaker 1: the overall market itself is it's look, it's earnings are

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Speaker 1: really the game right now. We think the concerns about

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Speaker 1: inflation are really have kind of faded into the background

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Speaker 1: at least for the time being, and earnings is really

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Speaker 1: what is going to drive this market. The ability to

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Speaker 1: expand multiples beyond here we think is very very limited.

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Speaker 1: So being focused on earnings and then in line with that,

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Speaker 1: being focused on valuations to us we think is key,

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Speaker 1: you know, and that we feel will continue with a

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Speaker 1: resurgence of some rotation back to value that we saw

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Speaker 1: in the first half. It's great to have somebody on

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Speaker 1: the program UM who actually in a sense puts his

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Speaker 1: money where his mouth is with stock picks. And you've

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Speaker 1: got a couple that I think are pretty popular. UM,

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00:23:16,720 --> 00:23:19,119
Speaker 1: b m Y and CVX are are a couple that

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00:23:19,160 --> 00:23:22,560
Speaker 1: we've had UM guys and and and gals on in

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00:23:22,600 --> 00:23:26,280
Speaker 1: the past. Who are really behind these these stocks? Why? Well,

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00:23:26,320 --> 00:23:28,240
Speaker 1: I think again it's value. I mean, when you look

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00:23:28,280 --> 00:23:31,359
Speaker 1: at what you're getting for Bristol Myers. The biggest issue

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00:23:31,400 --> 00:23:34,399
Speaker 1: with Bristol Myers is that people are very concerned about

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00:23:34,400 --> 00:23:37,199
Speaker 1: the back end of the pipeline. As certain drugs are

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00:23:37,200 --> 00:23:40,320
Speaker 1: coming off a pattern, we don't have as much concern

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00:23:40,359 --> 00:23:42,320
Speaker 1: and we think the current flows are very strong. I mean,

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00:23:42,359 --> 00:23:44,399
Speaker 1: they're going to continue to be a leader in oncology

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00:23:44,400 --> 00:23:47,000
Speaker 1: and cardio vasco disease. I mean they have some of

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00:23:47,040 --> 00:23:49,560
Speaker 1: the biggest drugs that are in that area. You look

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00:23:49,600 --> 00:23:51,399
Speaker 1: at where their cash flow is right now, they have

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00:23:51,520 --> 00:23:54,320
Speaker 1: eight percent free cash flow as you have a company

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00:23:54,359 --> 00:23:56,879
Speaker 1: that's trading at at a you know, an eight point

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00:23:56,880 --> 00:23:59,920
Speaker 1: three pe right now based upon our estimates. So I

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00:24:00,119 --> 00:24:02,119
Speaker 1: think that the real issue is is that we like

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00:24:02,240 --> 00:24:06,040
Speaker 1: the healthcare space. We think this is really undervalued and

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00:24:06,080 --> 00:24:08,320
Speaker 1: the and the big thing becomes, as I mentioned, is

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00:24:08,320 --> 00:24:10,920
Speaker 1: the back end, because we feel that when you look

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00:24:10,920 --> 00:24:13,280
Speaker 1: at the new drugs that are coming online, I mean,

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00:24:13,359 --> 00:24:18,159
Speaker 1: these have revenue capability that's twenty billion, and the street

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00:24:18,480 --> 00:24:21,720
Speaker 1: very cautiously is putting roughly a ten billion dollar number

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00:24:21,720 --> 00:24:25,399
Speaker 1: on that. So so we see that potential being significantly higher.

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00:24:25,720 --> 00:24:27,800
Speaker 1: And then when you look at the current valuation at

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00:24:27,880 --> 00:24:30,439
Speaker 1: roughly eight times and you get a two point eight

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00:24:30,480 --> 00:24:33,000
Speaker 1: percent yield while you wait, you know, we find that

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00:24:33,080 --> 00:24:35,800
Speaker 1: very attractive. And when you look at cv X, it's

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00:24:35,880 --> 00:24:39,239
Speaker 1: It's a similar thing in the oil space. Uh. And

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00:24:39,280 --> 00:24:41,679
Speaker 1: if you want to make a pure play on the

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00:24:41,680 --> 00:24:43,960
Speaker 1: commodity price, this is one of the best places to

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00:24:43,960 --> 00:24:46,720
Speaker 1: do it. And we think at roughly seventy dollars a

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00:24:46,760 --> 00:24:49,040
Speaker 1: barrel now we think will continue to creep up near

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00:24:49,080 --> 00:24:52,359
Speaker 1: closer to eighty. Uh. You're in a situation where you

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00:24:52,400 --> 00:24:54,880
Speaker 1: look at forward you know, earnings of what we think

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00:24:54,920 --> 00:24:58,080
Speaker 1: is quite reasonable here. You know, you're trading about fourteen

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00:24:58,119 --> 00:25:01,000
Speaker 1: times and a big kicker is you're getting five and

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00:25:01,040 --> 00:25:04,080
Speaker 1: a quarter percent while you wait in dividend yield and

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00:25:04,080 --> 00:25:06,080
Speaker 1: they only need fifty dollars a barrow to cover it.

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00:25:06,440 --> 00:25:09,440
Speaker 1: So it's to us once again, very strong value. Dan

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00:25:09,520 --> 00:25:11,600
Speaker 1: just quickly, we only have about thirty seconds left. But

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Speaker 1: what would you be staying far away from here? What

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00:25:14,080 --> 00:25:18,119
Speaker 1: kind of sector? Well, I don't want to paint it

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00:25:18,160 --> 00:25:20,080
Speaker 1: with a total brush, but I think would be taking

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00:25:20,119 --> 00:25:22,200
Speaker 1: some money off the table and some of the technologies.

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00:25:22,320 --> 00:25:24,200
Speaker 1: I mean, you're you know, once again, we think they've

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00:25:24,240 --> 00:25:26,600
Speaker 1: had a good run again. They've come back, you know,

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00:25:26,680 --> 00:25:28,560
Speaker 1: after a value took over in the fourth quarter, in

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00:25:28,560 --> 00:25:30,239
Speaker 1: the first half of the year, and so you know,

478
00:25:30,280 --> 00:25:32,239
Speaker 1: looking at that to maybe lighten up a little bit

479
00:25:32,280 --> 00:25:35,280
Speaker 1: and get back into some of the cyclicals. Dan, thanks

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00:25:35,400 --> 00:25:38,840
Speaker 1: very much for your time. Really appreciate getting your insight today.

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00:25:39,280 --> 00:25:42,480
Speaker 1: Dan Genter is the chief executive officer at r n

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00:25:42,600 --> 00:25:46,360
Speaker 1: C Genter Capital Management, and as I said, he's got

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00:25:46,359 --> 00:25:50,399
Speaker 1: five billion dollars in assets under management and talk talks

484
00:25:50,440 --> 00:25:54,000
Speaker 1: to us about stocks that he likes, about actual picks,

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00:25:54,000 --> 00:25:56,240
Speaker 1: which is great to have. You like Lincoln National, he

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00:25:56,320 --> 00:25:59,879
Speaker 1: likes b m, Y, like CVX, and he likes Altrea.

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Speaker 1: This is Bloomberg. Thanks for listening to the Bloomberg Markets podcast.

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00:26:05,119 --> 00:26:08,320
Speaker 1: You can subscribe and listen to interviews of Apple Podcasts

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00:26:08,440 --> 00:26:12,360
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm

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00:26:12,400 --> 00:26:16,600
Speaker 1: on Twitter at Matt Miller three. On Fall Sweeney, I'm

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00:26:16,600 --> 00:26:19,240
Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can

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00:26:19,280 --> 00:26:21,480
Speaker 1: always catch us worldwide at Bloomberg Radio.