Apple Introduces iPhone 12 With 5G

us too on YouTube by searching Bloomberg Global News. Well, I gotta say this surprised me and I actually should go back and check out the most read because you know, Paul, I always like to check where our daily virus updates on the Bloomberg sit among our most read stories on the Bloomberg. I had to actually go to page the second page to find it exactly exactly, which I thought

was kind of interesting considering our enquirement. Yeah, maybe that's it right, And we've got a bunch of headlines out. We've got worldwidecast cases thanks for passing thirty nine million, the U S reporting the most daily infections in two months total cases near an eight mill and so some of the headlines definitely jarring. Let's bring in Dr Ian

LUs Beder. We go to him every week for an update for some clarity and perspective on the viruses, Clinical Associate Professor of Medicine at n y U Land Good Medical Center, and he joins us on the phone in New York. Um, Dr LUs bed are good to have you back with us. How are you doing this week? Okay, thank you, Carol and Paul hope you guys are doing well and definitely uh, a very busy news week and certainly on the on the COVID front as well well. Tell us what you're seeing in terms of the virus.

I'm curious, UM. I was actually a doctor's office today and I'm like, are you guys seeing in an uptick? And they're like, nope, we're not yet, but we know that there's pockets around New York City. Where are you seeing UM in your You know, certainly when you're at the hospital or in your private practice. So certainly in private practice, we are seeing a lot of the post

COVID syndrome and a lot of the long haulers. UM, We're not really seeing a big surge in cases, although a lot of those are really more were in the in the Midwest. I mean, we certainly know nationally are cases are up over fifty thousand a day of positive tests. Now, obviously not everyone is ill and not everyone has so does poorly, but certainly the number of cases increasing. And in the New York City area we certainly have a few pockets where uh there is uh kind of a

surge in cases. We're not seeing a lot of that in the office yet, at least in with my colleagues, and the hospitals too seem to have, you know, not zero cases, but certainly not the surge that we saw previously. So will it come hard to know? We're certainly in Europe and around the world we're seeing really that second or third wave hit. So that is the challenge. So dr at n y U Landgoing Medical Center, a huge medical center, UM, one of the finest obviously in New

York City. How have you in the hospital as they're kind of starting to prepare yourself what might be a second wave? That first wave that we all experienced back in March and April was so jarring for sin for

the medical facilities. What changes have been made? Well, it's deferently a challenge because we're now beginning to really see over the last month or so, all of those patients that were afraid to come in, so elective surgery and colonoscopies and stress tests and uh, you know, all of their general medical care is really surged two pre COVID levels,

which is good news. People are getting taken care of everyone for sort and certainly um, whether it's surgery or some cases, uh, they get swabbed to make sure everyone to all the patients are in a COVID free zone. But there's certainly awareness among hospital leadership that a similar strategy may have to be implemented where the hospital has more beds and more areas available if if those COVID patients come back. And certainly in terms of treatment, it's

a very dynamic area. There were just some studies that really questioned how effective ramdesivie is. UM. There was a w h O study and and so that is part of the standard cocktail. President Trump got that certainly alone, that may not be that effective. So it's really a dynamic landscape where we're trying a number of things and things are not completely proven. But you know, there's good news as well. Fiser uh, coming to the end of their Phase three study and may be able to get

vaccine approval. We're not hearing a lot of complications from the vaccines. Now again they don't publicize all of that. Eventually that we'll all have to go through the FDA, But we're not hearing a lot of problems. So I'm encouraged by the vaccine, although it certainly is going to be months away before everyone starts getting it right, especially when you se about the ramp up right, like we've

we've got some stories on the Bloomberg just now. States are figuring out like there isn't one one version where the federal government says, hey, guys, here's how we're going to roll out the vaccine. It's states are kind of scrambling to figure out how to do it right. Well, first, you know, they have to be approved and if you know approved and the data reviewed, and you know, there's some concerns, are they really rushing it? And this is

a record time because it's not even a year. It's amazing, you know, February March is when the first cases came out and we're now in you know, October, so it is really quite amazing to have developed it and with unique technology that messager r n A, you know, Majorna Fiser. I mean, there are a variety of techniques and all of them are really much faster than the traditional methods. And it's amazing to be, you know, in these phase three studies, which is really sort of the before approval

and release. And I think it's encouraging if you have thirty patients. Granted it's not millions or hundreds of millions, but if we're not really seeing significant side effects, I think that that's encouraging. So I do want to ask you Ian, you know, so goes Europe? Does so go the United States? And I asked that because I've been talking with some folks over in Asia and they're like, if you want clues of kind of maybe what happens next for you in the US, just look at what's

going on in Asia. But we know it's not apples to apples, whether it's Asian in the U S or Europe in the US. So when we see those rising numbers in Europe, what should we take from that, potentially as US citizens or nothing? Maybe? You know, I I agree with you. I think globally we're certainly seeing another wave. And in South America and certainly in Europe France, uh almost declaring a state of emergency is a things borderline and both student seasonal factors. As the weather gets cooler,

there's less outdoor distancing, there's more indoor meeting. Um until it's not uncommon. We sold this in with very as waves of the H one N one Spanish flu. Well, I did not see that at did not memory. Uh right, so uh so, and without a vaccine and without effective treatment, it's not totally shocking to see that. It is a little hard to explain country by country variations that are part of that is habits and mask wearing and social distancing.

Part of it may also relate to underlying health. In other words, there are some countries that are thinner, healthier, and we do know that diabetes, high blood pressure, elevated weight, and unfortunately, in the United States, we have an epidemic of obesity, we have an epidemic of type two diabetes, We have an epidemic um of a lot of those health issues, and that makes us more vulnerable to the virus.

So when when people who are not in in optimal health get exposed to the virus, higher complication rights, higher hospitalizations, and higher death rates. So individually we need to take care of ourselves and and do smart things like mass scoring. I certainly agree. I think we we have a good consensus alone, that's probably not enough. And certainly people need to get their diseases under control of better diet, lose weight,

exercise more. Should we make sure we get like the normal flu shot things like that, just to make sure we're not kind of, you know, more vulnerable in terms of health. Yeah, Carol is usual, You're you're on the case, and yeah, absolutely want to minimize co morbidities or the worst thing would be getting flu and COVID, and most we think that that double virus hit would have a

much higher morbidity and mortality. So while we're waiting for approval of monoclonal LANDI buddies, and while we're waiting approval for messenger RNA and other um vaccines, we have to be very vigilant, you know, with mass scoring and handwashing and and some people feel Tony Faucci Vitamin D supplementation. You don't want to take too much, you don't want to take too little. You know, you can find your find your levels and of course diet exercise, so weight loss.

We've seen a lot of increased in weight by people staying indoors and eating poorly and gaining weight. So, you know, we have to take individual control while we're waiting for some technologic breakthroughs, which I think are coming. I mean they're they're they're here in a few months. All right, dr, let's go there. Vaccines, We've got a lot of companies working on them. Let's say we do, in fact to get some vaccines, you know, late this year, maybe first

half of next year. What are your patients telling you about they're willing us to take a vaccine? Yeah, another good question. Certainly all the health care professionals I speak to, they are ready to take those vaccines. I'm certainly ready to do that because we're exposed every day. Uh, the patients really are. Some of them are afraid that we've rushed this. Uh. Some of them are afraid to take any vaccine, including what we recommend, you know, tetanus, pneumonias,

shingles vaccine. So there are some not anti vaxxers, but people who are a little afraid to you know, to take vaccines. So it may be a challenge to get everybody on board with a COVID vaccine, and if only a small percentage of people take it, it's obviously going to be less effective. So I think if the first wave of people, perhaps helf care professionals and or elderly people in nursing homes take it, and they seem to do well, hopefully that will encourage everyone uh to line

up and get on board in really quickly seconds. Are you surprised or comforted by New York schools that it seems to be for the most part, going fairly well. Yes, I I think there are a lot of reasons to get back. I think if it's done carefully, UH, it should be successful. This is Bloomberg Business Week with Carol Masser from Bloomberg Radio. So, Paul, kind of amazing. We're just seventeen days. I was going to ask you, because you're always good with how many days left? Seventeen days

and I've got a clock up on my computer. I'm serious. Well, good for you, that's what we need. I mean, And last night was just compelling, you know, the dueling uh town halls, different networks, just crazy. Yeah, it's actually seventeen days, ten hours eleven minutes twenty nine seconds. That's how how much it's like the debt clock that we used to see. And I think it's still in New York City. All right, let's get to it with Bloomberg News White House correspondent

Josh wyn Grove. He's on the phone, Um, and we were talking about your story on the Bloomberg the most read on the past I think eight hours, Josh about news. Yeah, well, I hope your editors are listening. But it talks about the president and how he's undercutting the campaign. Yeah, I mean, this is this is just the you take the good and the bad if you work for Donald Trump, you know. So, Yeah,

all these poles are showing him trailing. It's narrower in the swing states, but pretty much not a lot of science of hope and seniors in suburban women or two groups that really stick out Trump one seniors in sixteen crucial, particularly for states like you know, Florida, Arizona, that kind of thing. And now he's losing to Biden by about the same margin, a huge swing among the senior vote.

They're targeting ads and seniors. But uh, and he's as I speak, President Trump is giving an address in Florida aimed at seniors in particular, but that with that and with women, he tends to sort of counteract the message that his campaign is giving. In other words, you know, he makes fun of Biden for, you know, belonging in a nursing home while at the same time trying to commence seniors to vote for him. And with women, he's sort of has put these please you literally said this week,

suburban women, will you please like me? As as these gender gaps just get wider with Biden. So you know that the Trump campaign they're trying to catch up. If you believe these polls are anything close to the sort of ten point nine point twelve point gap range, then you then you acknowledge they've got some catching up to do, and they're trying to do this. They kind of got work with what the President's only to give them. Yeah, Josh, it seems, you know, his campaign strategy seems to be

these make it America Great rallies. But as I look at these rallies on TV, everybody's got the hat on um. It seems like there's not too many undecided uh that are being impacted by his strategy. Here in his last seventeen days. It seems like it's just kind of playing to his base and he's already got those folks there. There's a preaching to the choir risk for sure, and I think it's a little unclear into how big that is.

The campaigns had to get a lot of data from the stuff, right, Like folks sign up for tickets, they could to sup phone number. A lot of these folks didn't vote in twenty six Some of them are independent, some of them are Democrats. That the campaign says, look, these rallies, a Trump likes them, and having Donald Trump a good mood is crucial if you work for the Trumps campaign. But be you know, it's it's about voter identification to certain extents. But that's how they're doing it.

But look, you know, like Donald Trump's own approval rating is pretty locked in as well, you know, but they're not really backing off on him. In fact, keeps coming out every day, it seems, with a rally or two rallies. Heel be in Georgia later tonight. Every day. You know, it's just like more Trump all the time. So you know, there, if they're going to turn this around their banking that it's Donald Trump himself will be able to do it.

And you know, there's there's not a lot of evidence in the polls that that kind of path will work, and they're early signs that turnout is going to spike. I think I think that was concerning to the Trump camp, you know, really sores that that. I don't think we'll be good news for Republicans. I mean, we've been all talking all day on Bloomberg that, you know. I think one of the stories I read um or and yours too, I think, you know, more than twenty one million Americans

already participating in early voting. I mean, that's a that's a pretty big number. Two quick questions, can can either candidate win without Florida? Trump tech the yes. But basically Trump needs Florida a lot more than Biden does. Biden

doesn't really need Florida at all. It'd be mixed to have, you know, but if Biden is winning Florida, we're probably looking at a blowout as Trump needs Florida and then some uh so, so you know, it's a it's a very competitive state, but it really you know, they just announced that Barack Obama is a campaign in Pennsylvania that looks to be the real sort of tipping points state. Biden is leading in Michigan, leading in Wisconsin. If he wins those and takes Pennsylvania, that will probably do it.

But there's other paths to get there as well. And we'll see. For instance, the President is going to go to Michigan and wisconsinin this weekend, Arizona and Nevada as well. And what about when it comes to early polling, does that usually go more in favor I know we talked about this, is Josh Green more in favorite Democrats versus Republicans? Or is there something different this time around? We've seen

the lines. Yeah, yeah, I mean two things. So when I wrote about the morning, how Trumps, the notion of losing to Biden looks to irk Trump, right. It bothers him that he could lose to the joke practice, and that's starting to work its way into his speeches these

last few days. The other thing that's worked its way and as he started talking about a red waves, he thinks that you know, come voting day, Republicans are going to show up in such numbers that they're gonna really swamp the high numbers on advanced turnout and that that speaks to the reality, which is the Democrats are far likelier to vote in advance, either in person, advance or by mail than Republicans are UH. And Republicans, conversely, are far more likely to vote on the day of and

show up in person. And so you know, this is it's important to bear in mind as we prepare for the night of November three, in the morning of November fourth, and maybe the night of November four, because this could take a while. Every state treat advanced vot a little differently. Some are allowed to count them in advance, some are not. We are seeing blowout numbers in advanced voter turn UH in a lot of states right now. Of course, the

pandemic is playing a role in it. Hey, Josh, what do we know about the future of any debate between now an election day? We know, well, they have one more schedule for next Thursday, six nights from now. That will be the last one, you know, they try. The Trump campaign wanted to push the debate that was supposed to be last night in its format. Excuse me. The Biding campaign wanted to push it until next week so they could do that. The Trump campaign wanted to push

both of them a week. Fiding campaign said no, you know a bit of back and forth on that. That's why you had those dueling advanced last night. So it really all comes down to next week. You know, Traditionally it's the people that are trailing campaigns that need debates to catch up, right, you know, the leader gets the luxury of autopilot, and so we'll see what Donald Trump gets on that. Of course, we'll see. I don't know, I'm not looking more than the evance at this page.

Things like things are so fast moving in some way. They just got about a minute left here, Josh, or about forty five seconds. Did either one come out ahead or gain something from last night? Um? I think the Donald Trump's answers on Q and on are going to resonate a bit, you know, not refusing to do devow it, but anything less than you know, a gain or a good night for Trump. It's a wing provide. And I think we're in that range. You know, we talked about

not a lot of undecided voters. People have made up their minds. You sort of love the president or you don't love him. At this point, Uh, there's not a lot of evidence of their even early ratings or the sort of early reviews that suggest Trump hit a home run, and anything doing a home run for Trump is probably bad news for him because he needs to catch up.

I feel like I'm watching like some great movie, you know, political movie, you know fiction, and then I'm like, no, no, no, this is a this is this is our life, it's our reality, right. Um, Josh, thank you so much, really appreciate it. Josh wind Grove, he'ss White House correspondent. Definitely check out all of his work on Bloomberg. You can find him at Josh Underscore. Wind Grove Um just kind

of wild stuff. Paul, Yeah, wild stuff. And against seventeen days to the election, I wonderfu I'm gonna have to start counting down also to the Electoral College, you know, certifying uh this thing. I see that number out there as well. Hopefully this will be a clear enough decision on where they are they're on, you know, honor about election night, and the country can begin to move forward. Yes, this is Bloomberg Business Week with Carol Masser from Bloomberg Radio.

When you talk to technology investors, two themes come up. It just seems time and time again. One is the cloud. Everything's going to the cloud, and that's gonna drive spending for the Mexican jillion years. And then the second one is five G. How this is the future of wireless Even Apple it got into the act this week launching its iPhone twelve with its five G capabilities. Let's get

a sense of what this really means. And there's nobody better than Craig Moffatt, founding partner and senior analyst at Moffatt Nathanson. And if you want to know anything that's going on in the t MT space, you have to get the research from Moffatt Nathanson. He joins on the phone from New York. Craig, thanks so much for joining us here. What did you make of Apple, the iPhone twelve and just kind of five G in general? First of all, thank you for having me back on, Paul.

It's good to talk to you again. You know, I would say this, I would say that if anything, UM, the Apple five G event, it sort of has been a little bit of an uncomfortable reminder for everybody that five G is not really fully baked yet UM and the the announcement has sort of forced everybody to come to grips with the idea that um that right now, UM, five G is still very much um a year or so away. And and I thought they were all kinds of queues about that in the in the Apple launch.

So is it crazy? Um, high Craig, And I hope you're doing well. I do what I do. Wonder you know, my husband was up at eight am or before that, you know, because he wanted to order his new Apple iPhone, I swear to God. And he stayed up till three in the morning, you know, because when they open it all up, and he's going to order my new phone when it comes out, I think in a week or two. And so are we crazy? We've been kind of waiting for this. Are we crazy? Because five G isn't completely

built out here? Well, if if five G is the reason that you're getting a new phone, then yes, that's not that's crazy. Um, it's just not ready yet. There are other reasons to get new phones, and if if you like the new camera and that sort of thing. Um. And and look, the handset cycles have been lengthening for a long time, so there are an awful lot of old phones out there that need replacement anyway. But five

G as a rationale. It just isn't very compelling. I mean, here, here's the problem, and and sorry if this is a little bit technical, but we love technical. If you deploy five G on on low frequency spectrum to get the coverage of the country, it's no faster than four G. If you deploy it in very high frequency spectrum and big spectrum blocks, it's very very fast. They demo that

with Verizon, but it's hardly ever available. It's only available in in something like one percent of the time that you're going to be on your phone, because the propagation distances of those spectrum bands are so short that they're only really usable in exceptionally dense cities and inside shopping malls and airports and and arenas and stadiums and all the places where nobody is anymore because of covid um. And so the value proposition right now just isn't there yet.

You're gonna end up with a phone that is essentially uh has a little five G light on it runs it about the same speed as fog and drains your battery faster for the trouble um. And that's not going to be compelling for very many people. So again, there may be other good reasons why you want to get a new phone, and the new iPhones are great looking. But then maybe you like the flat edges instead of the curved edges. But but it's not going to be

because of five G yet. All right, So Craig, given that, I'm surprised or are you surprised that Apple rolled it out now as opposed to waiting. Typically their strategy has been, hey, we don't need to be the first or even the second, will be there when there's a market. Well, to be fair, they've already waited. Samsung has had five G phones out for more than a year. And and also remember that this is not just a US story. This is also

a global story. Um and five G is a little bit further along in China and Korea and Japan, using the same chip sets by and large. So although interestingly the US chips, the US Apple devices are the only ones that will actually support millimeter wave spectrum um and and that's a real compromise. Um it gives you those blindingly fast speeds, but um it's again not available much of anywhere except um a little bit of New York and a handful of other very dead cities UM in

the US. But again drains your battery so so fast, it generates a lot of heat UM. And so they've decided not even not even put that in the handsets that they're making for overseas markets. Alright, you popped my bubble.

And I've got to say Mark German was also writing our Mark German here a Bloomberg wrote about, you know, Apple getting ready to launch, and then we've got this unready US market, so Verizon a T and T T Mobile, So as we're waiting for them to kind of really roll it out in a big way five G. When will they What are we all waiting for? Is it just they don't want to make the investment yet? What's

holding it up? Well, there's a couple of things. But I said a minute ago, low frequency spectrum for broad coverage UM, but not high speed. High frequency spectrum for high speed but but insufficient coverage. That obviously leaves the broad medal, and the broad medal predictably is mid band spectrum UM. Right now, T Mobile has a huge advantage and head start and that they have a very large block of midband spectrum that they acquired in the Sprint acquisition.

In fact, you can make a good case that's really the whole reason they bought Sprint was to get that spectrum UM that will be the support for the first really credible five G network in the United States, and T Mobile will have a big advantage that could well last for years. Verizon will probably catch up UM at least to a degree, when they buy a big chunk

of spectrum later this year. Everyone seems to be quite certain that they will buy what's called C band Spectrum, which is going to be auctioned by the FEC in December UM, but that will take them a couple of years before they get it and then fully deploy it, and even then it's probably not going to have quite the same reach and coverage that T Mobile will enjoy.

And the real challenge is going to be a T and T R. A T and T s balance sheet is in so much trouble that it's just not clear they have the money to be able to buy a significant amount of spectrum or to build it out at the pace that's going to be required to keep pace with Verizon and a T and T. You have a Verizon and T Mobile crag. We talked about a T and T a little bit earlier in the earlier segment.

When I think about A T and T, now, unfortunately, what I think about is their balance sheet here, so you know my senses and you noted that as well, you know, So as I look at their business, I kind of got to start thinking about some asset disposals to try to pay down my balance sheet. And the thing that jumps at me is Direct TV. Can they ever sell this thing and get any remote value out of it? Not enough value that it's going to make

a dent in their balance sheet? You know that that that's really the problem, right, I mean, they bought the business for all in including the debt that they took on, for sixty billion dollars, and New York Post reported last week that they're getting offers just four years or five years later for between fifteen and sixteen billion dollars, and so just a massive destruction of value. And here's the problem.

It's still probably does something like five billion dollars of IBADA, So you're talking about evaluation that's in the range of three and a half times. That's their leverage. Remember, their their leverage on the balance sheet looks like it's too six two point six times UM cash flow, but in fact it's it's higher than that because they have all those operating leases that the rating agencies count as debt. Those are the operating leases for all the cell towers

that they've got UM. And then you also have unfunded, unfunded pension obligations and that sort of thing. So you're really talking about a company that's levered three and a half times, way outside the norm for investment grade credit. And you can't sell an asset at three and a half times and de lever it's it leaves you exactly

where you started UM. And and it's a real problem for them be because UM, if they can't find something to sell, it's not clear they have the headroom and the balance sheet to buy spectrum that they really need. So they're in they're in a very real bind here, and you can see them trying to sell anything that

isn't nailed down right now. They're they're trying to sell direct TV, they're trying to sell the Warner Brothers Entertainment business, which is the video game unit small inside of Warner Brothers. There's there's been some talk they might try to sell Cartoon Network from inside of Turner UM. They're trying to shop the direct TV Latin America business. UM, they haven't been able to find any buyers for that. They're trying to sell their advanced advertising business. They haven't been able

to find any buyers for that. And it's they're clearly just desperately trying to raise cash. UM. One argument is they're trying to do it to prepare for the Spectrum auction. Another is that the rating agencies may already be breathing down their neck and saying you've got to do something to deliver this balance sheet faster. So, Craig, what does a T and T want to be when it grows up?

And I just think about all of the deals that it's done, Direct TV, Time, Warner, t C. I. I mean, I just think about, you know, the failed purchase of T Mobile. UM. They have done so many big things. You have activist investors. Certainly we saw that last year with Elliott Management. I mean, what do they need to be? What should they be? In your view? Well, I think they're going to have to pare back eventually to be

a communications business again. But it's breathtaking just how quickly this has happened, right, I mean, remember they were it's they've owned Time Warner for less than two years, um and and already they're they're looking at unwinding the whole strategy that that put the company together. You know, I think, Carl, you put your finger on it when you mentioned T Mobile. They tried to buy T Mobile in and that would have been a perfectly rational strategy. There would have been

lots of synergies. It would have been horizontal expansion in the US telecom market. Everything, everything we've heard since eleven said, the d o J told them, not only can you not do this deal, remember that deal was blocked by the Department of Justice and never happened. Um, but but you can't really buy any more telecom in the United States. You're as big as we're going to let you get

in telecom. And so they were faced from eleven with a question, which is, so do you want to go outside the United States and buy telecom in Europe or the rest of world, or do you want to buy something non telecom in the US. And they felt like they needed to do a deal to sustain the dividend. They ultimately chose be that is, to buy something that was essentially unrelated in the United States, UM, direct TV, and then they tried to spend a story around it

to to pretend that it was a strategic acquisition. It really wasn't. And when when you start strategy by saying what can we buy and then how do we justify it? As opposed to saying what are the the assets that we need and how do we get them? Um, you're starting in the wrong place and it's never going to end well. And I think almost immediately Direct TV went pear shaped. UM. They should have known it was going

to go pear shaped. And and because of the burden of the dividend, they felt like they had to double down and buy something else UM in order to keep the free cash flow sufficient to fund the dividend, and they bought Time Warner. And in retrospect, Time Warner had a lot of the same problems as Direct TV. It was a business that was at its at the very

tail end of its life, at least for the Turner networks. Remember, HBO gets all the attention, the movie studio gets a lot of attention, but the bulk of what they bought is cable networks. UM, and they're at the tail end of their useful life, and they're starting a secular decline, just like Direct TV was when they bought it um and so now they're suffering from the same problem of this not only cyclical but secular decline. We could continue on and on, so come back, I hope, and I

love the deep dives. I know pauled us too, So thank you so much for it, Craig, and I hope you and your family are doing well amid this crazy time. Craig Moffatt, founder and senior Alice at Mofatt Nathanson on the phone in New York City, Brother, Mac Journal, Now, but you let me drive? No, no, no home, honey, please, I'll do the right ravel. Let me I want to drive, Just drive, baby, good question trying. This is the drive to the globe. Give me thanks. We'll drying up to

dawn on Bloomberg Radio. All right, just got about eleven minutes left in today's trading session, getting ready to wrap up the trading day and also of course the trading week. Back with us in our time for the drive to the close is Michael Sheldon, executive director and chief Investment Office at R D m I Natural Group, based in Westport, Connecticut, and that's where he joins us on the phone. How

are you Carol, Nice to see you. Um, we're still working on the markets, looking ahead and building client portfolios. We're still trying to figure everything out. And uh, I think you know, it's been an interesting summer. It's been an interesting two thousand twenty and we're not done yet. We still have an election to get through, a little thing called the election. I think, you know, from our perspective, I think over the near term we could very well

see some added volatility in the markets. But I think over the intermediate term we're probably in the early stages of new economic cycle. And I think one thing that's important for investors to realize is that economic expansions typically last a number of years as opposed to just a

number of months. If you go back to, for example, when when the UH the government started tracking GDP DAD in the late nineteen forties, the average US economic expansion has been almost six years, while the contract while contractions have been about three months. So you have to sort

of take an intermediate to longer term viewpoint. UM, we are constructive on the markets, but certainly there are a lot of companies and industries that have been left behind, and only of all the workers that were let go have been rehired, so it's sort of a two speed recovery at this point. So, Michael, what are some of the sectors As you're constructing your portfolio, you're taking the outlook called intermediate to longer term. What are some of

the sectors? Are you brave enough to say I can look towards the other side of this and maybe take a look at some of those sectors that are fundamentally good businesses, like it's leisure or travel, but have been knocked down because of this pandemic. Well, for the individual stocks that we purchased, we really focus on companies with

strong balance sheets, industry leaders, companies with good outlooks. In terms of our portfolio right now, the way we're sort of thinking about things is we have a barbell approach. So on the one side, you need to have some growth in your portfolio to achieve the long term invest and goals to meet your horizon. So we own some technology. We have some of the stocks in the communication services industry as well. That's sort of an interesting sector. It's

a mix, but we own some growth there. On the other side, we own some companies in the consumer discretionary area, as well as some industrials, because we also think we're in the early stages of an economic expansion and then sort of in the middle. We own some healthcare stocks. We have exposure to healthcare. That's sort of our GARP sector or growth at a reasonable price. You don't hear

that term that often anymore. Just saying that to somebody, it's just kind of you're either, Carol, you're either in the big growth camp or you're buying deepsical. Yeah, exactly. Well, it's interesting that you say that you sound rather optimistic, Michael, No, no, no, no, we're no optimism I say, I say, we're constructed. But but it is important to point out that again we've

only recovered all the jobs lost. When you look at last week weekly jobless claims, that actually went in the wrong direction and it came out closer to nine thousand. I think next week's weekly jobs numbers will be really important. Also, there's a lot of housing data which has been positive.

But also next week, investors should keep an eye in the Leading Economic Index on Thursday because that tends to forecast the direction of the economy over the next six to twelve months, and a lot of data recently has had a big jump after a we had a really big decline in the economy in the second quarter, and now we've had a really big bounce back in the

third quarter. Are thinking is that some of this data will start to even out a little bit and we see better times ahead over the next twelve to twenty four months. But we think it's it's going to be a bumpy ride as for some parts of the economy as we move forward, can we do it without stimulus or another round of stimulus? You see the debate, the back and forth, and it's not only just over the size at this point, there's a lot of Republicans and

maybe some others that think we don't really need anything. Yeah. I think we're going to get some stimulus no matter who the next president is, but at this point it seems more likely that it will be in two thousand twenty one as opposed to this year. You know, I think in terms of the market itself, the two big supporting factors for the market right now are stimulus talks, which again it seems like this is more of a

two thousand twenty one issue. But we will likely get some stimulus next year, and hopes of a vaccine, which we have a number of different trials and Phase three trials right now, and it seems like we're likely to get a vaccine. Plus you combine that with the fact again that we're probably in the early stages of an economic cycle, which typically lasts a number of years as opposed to a number of weeks or months. So how

are you factoring it if at all? Again, it sounds like you're uh focus on that intermediate to longer term approach. But Joe Biden seems to be pretty strong in the polls, maybe even strong enough to bring the Senate along with him. Would that change your calculus at all? Yeah, that's definitely a risk to the to the story. I think one of the issues with Joe Biden. Of course, on the one hand, he's talked about raising taxes, which you never really want to raise taxes, especially during a during an

economic recovery when things they're not at full speed. On the other hand, he's also talked about things like infrastructure spending and manufacturing jobs. So and and we're going to likely get some fiscal spending and spending on areas which could benefit companies and new companies and industries which will open up new opportunities. So it's sort of a mixed bag.

But our thinking right now is that the stimulus spending will probably come in the first half of his term, and he's while he's certainly talked about raising taxes, it's possible that if the economy is not unstable or strong footing, he may delay that a little bit until the economy gets on better footing and we start to see a stronger recovery. So, but of that is something that will

certainly have to monitor. Where don't you want to be in this market environment right now, Michael Well, I think over the past ten years or so, we've been overweight growth versus value, and we've been overweight the US versus foreign and that's worked out pretty well. At some point,

these things tend to go in cycle. So we're still keeping those overweights right now, but at some point we probably will rotate into those areas of the market that haven't participated, so for example, adding maybe a little bit too far and moving more to the middle between growth and value and picking up more in some of the beaten down cyclical stocks or areas of the market that haven't quite participated, but would participate if there's a more robust,

sustained economic recovery. And Michael, just about thirty seconds, is it too early to look at small caps? Well, right now? It's interesting more than the small cap market actually doesn't make money right now, so um, those are more of a risk on sort of trade. So if there is a more robust economic recovery, then small caps should participate

and maybe even lead for a period of time. But but you have to keep in mind that a lot of those don't make money right now, so the or more volatile um depending on your outlook for the market. All right, we're gonna leave it on that note, Michael, good to check in with. You have a great weekend. Michael Sheldon, executive director and chief investment Officer at r DM Financial Group. Thanks so much for listening to Bloomberg

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