Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
I s what we'd like to call kind of a well moment happened first in the aftermarket last night.
Still going on, Tim safe to say today's straight.
Yeah, we're talking about Lyft, the stock Johns Carroll sixty seven percent and after hours trading. After saying margins initially we're set to expand this year by an eyewatering five hundred at basis points. Well, it turns out Lift did have a strong earnings report, just not that strong when it came to its forecast on margins.
Well, look, first of all, it's on me. There are a lot of eyes on this press release. But at the end of the day, my bad. But look, I don't want it to take anything away from the butt kicking performance that the business did thanks to all of our employees and thanks to millions of drivers. I mean, look, we had our financially strongest quarter we have ever had, and I'm super excited about with.
The clerical error around the gig economy and in financial markets. Let's get to Bloomberg Technology co host ed La Low inner San Francisco Bureau, And first of all, props for him saying it's on me, my bad, got it, Love it, and far be it from us, because we all make mistakes.
You have never made a mistake, Carol, so you don't know what I've made, many, many, many, But this is important.
How many eyes saw that release before it went out? I mean, how the heck does this kind of happen? And I don't know, how are you thinking about it?
You know, here we are the morning or afternoon after.
I mean, like I put it straight to David Richer and he gave me a straight answer. And you know, for our global audience, it's worth noting that David's held in high regard. He's a thoroughly nice guy, and you know, he fronted up and answered our questions. But it's simply human error, you know. And what we went on to ask him frankly, is well, what about the CFO, Aaron Brewer? Is her job safe? Is the finance team's job safe?
Because this had a real market impact. But it's as simple as the press release and the shareholder debt goes out with five hundred basis points on the analysts call the CFO reads are prepared and remarks and says fifty basis points, and the analysts asked the question and says, hold on, you said fifty, but the release said five hundred, and they admitted it was a mistake.
And it's as simple as that.
Hey, you know, it's interesting. Sec chair Gary Gensler was on Bloomberg TV a little earlier, ed with David West, and he declined a comment on Lift's clerical error, but he did say, quote, public companies are responsible for accuracy of filings, so they're responsible.
They are.
And look what LIFT will be doing. What David Richard told us they're doing. What they are definitely doing is the finance in internal order team will have to reflect on what happened.
You know. As part of this exercise, Bloomberg.
Interviewed a number of securities experts, and I think that the general consensuses they moved quickly to correct their mistake. Clearly, if this move had been to the downside, I think we'd probably be having a bit of a more severe conversation, but as it happens, this for.
Me is the wild part of this story.
Yes, the stock spike sixty seven percent in after hours, but when they corrected their mistake, it held gains at seventeen percent.
In today's session, it has traded.
Above thirty percent for most of the day, which puts Lyft on track for its biggest jump ever. I don't think the market is lingering on this clerical mistake. I think they're looking at the earnings gone and the forecast and saying, actually, lifted pretty well.
Agreed.
I totally agreed, because I think when I came in this morning and when it started trading, I thought it's going to be you know, up, maybe a little bit, or maybe it'll be even down, who knows. But to see it up still about the threaty one thirty two percent as we are speaking, it's pretty impressive. So let's talk about Lift's business living up to the expectations of what investors wanted, and then some in many ways talk to us about the business.
Yeah, I think that at a minimum that's fair. And I'm so glad to be on the show with you guys, because we had a great conversation earlier this week about the gig economy, and what I was writing about in the Tech Daily was that we were worried about Lyft because it doesn't have as wide or diverse a business as Uber. There's no food component, and Uber seems to be doing really, really well. So you can look at
it one of two ways. Would Lift go through the same positive experience the same trends that Uber did, or is Uber going to continue taking market share from Lyft? But Lift stood up on its own two feet. You know, there is evidence that ridership was strong and the demand based on their growth booking out Booking's outlook is good. But we also talked about this idea of the take rate, which is the amount of money that company makes per
transaction on their platform. And David Risher, since he's come in, has made Lift a bit of a mean, not green but pink machine, and they are starting now to get positive signs around free cash flow. These are boring company things, but it's important.
Isn't there an issue If the take rate ends up being too big, then you're not going to attract drivers to the same extent that competing company would or competing service. I mean these drivers are they're free agents. They can go anywhere.
Yeah, And earlier in the week I said to you guys, let's look at the driver supply numbers. So for Uber that was up thirty five percent, not to the same extent for Lift. But they're seeing drivers flying increase. Where are those drivers coming from? Well, there is some evidence actually based on a conversation I had with David, that they might be people that lost their job but found work in the gig economy quickly. But you're on the take rate. A part of it as well is also
the removal of the heavy incentives that Lift had. You know, Lift was only able to be competitive with Uber by basically saying, we'll cut prices, we'll offer promos, we'll give you a gift voucher, we'll give you a credit if you use a particular airline. When you scale back on those things, you get a better sense of how you can make money in that marketplace. And I think Lift shows some evidence of that.
I feel like too, and I want to kind of maybe roll Uber into this. And there's some more specific stuff that we want to talk about with Uber their stock buyback, But it feels like Lift Uber kind of growing up, like coming off the pandemic, right, and how that impacted them.
But is that the case, like walk us through in terms.
Of I like what you said about what's going on at Lift that the CEO leaner, meaner machine.
Here does sound like to some extent they're growing up a little bit.
Yeah, I mean I was a bit unkind about Lift saying earlier in the week and today they don't have a very diverse business. They do offer other mobility things, and Tim made the point on bikes, right, and David Risher himself used a Lift bike to get to the bureau today for that interview, and they're proving that that
is working. But the definitive story right now, and maybe one reason why the stock is up so much is that there is evidence that ride hailing or ride sharing is not just a fad, it is a stable market in the wake of the pandemic, and Uber spoke to the corporate side of that story. Lift is basically resonating with a particular age group demographic cities like San Francisco.
But ed you bring up a really good point that we talked a lot about before the pandemic. I remember speaking to people twenty eighteen twenty nineteen, as these companies were hitting the public markets for the first time, and they would say things like people who are millennials and Gen Z, they're not going to own cars because they're going to be able to get cars anywhere on demand.
The pandemic shifted that. Are we back to that conversation where you know there is this trend of people foregoing car ownership and just relying on these services or is that not going to happen?
I think your right to recall those trends from twenty eighteen nineteen. I can't even remember what I talked about yesterday.
He's got a great memory.
But what you're doing is tying together the whole point of this week, which is why is the gig economy doing this in a high rate environment. Yes, you're right, car sales are under pressure, particularly electric vehicles, because the high rate environment makes the financing of those purchases less than attractive. Your car payment, not just the buying of the car or the leasing, but the running of it is the most significant outgoing you have after your mortgage,
if you have a mortgage or rent. And I do think that that's a really good point, and you have to take the idea that consumers appear to be willing to spend on convenience with other data sets credit card data right now is a little bit worrying, you know. I think we see that trickling up. So while the consumer's strong, let's continue to watch this ridership and willing to spend on convenience. And I think we talked about earlier this week. Right, well, what if we do have
a recesson what if Lift and Uber benefit? Right you stop spending on big ticket items like vacations and dinners out at restaurants. You start getting takeout and delivery, which Lift does not have. But you might take a ride in a lift rather than I don't know, I don't know what the alternative would be, but it's a good existential question for them, along with well why doesn't somebody that's bigger than them that does other stuff by them? And we also got to that in the interview too.
Yeah, hey listen quick, Uber up about twelve percent here, just off its highs at a record first share buy back. Ever, it's a big one seven billion dollars share. But what's going on here? I mean interesting?
I certainly got get Bi's man deep sing on the show. He's always felt that these gig economy apps are undervalued. You know, Uber had its first year of profit. It has proved the doubt is wrong on the business model. It's free cash flow is improved. What do investors love? They love sweeteners, and this is one hell of a sweetener to start twenty twenty four.
Yeah, pretty impressive and like we said, definitely getting noticed among investors.
Part of the S and P five hundred now two. Can't forget that it was added just a few.
Months ago at a record as well.
Hey listen, Ed, thank you as always, great interview and great to be able to talk with you about it. Ed Ludlow, he's co host at Bloomberg Technology and Bloomberg Television. Catch him and Caroline Hyde at eleven am Wall Street Time on Bloomberg TV. For Bloomberg Technology. He of course joined us from our San Francisco bureau.
You know, it's refreshing to see executives make mistakes and like this.
You know, well, you know, stuff happens. What are you going to say? Like, what would do?
Right?
I agree with you, Like, yep, we messed up. We corrected as soon as we noticed it.
Maybe we stopped saying basis points for certain percentages and just you know, stick the percentage of zero.
Yeah, that would have I don't know, maybe, I don't know. I'm not to see it.
All I know is when that came down last night, we saw this a stock reaction understandably, so we're just like, WHOA, what's going on?
My jaw is still dropped for thirty percent increase.
Today, it's still pretty impressive.
You're listening to the Bloomberg Business Week podcast. Catch us Live weekday afternoons from two to five pm Eastern. Listen on Apple card Play and then Bright Auto with a Bloomberg Business act or wan't just live on YouTube?
What people have.
Talked about kind of years of regret over bad calls when it.
Comes to forecasting about the US economy, recession calls, inflation calls, transitory anyone.
By the way, it's not been.
Easy even for Fedchair J Powell. Remember back in November twenty twenty one when Chair Powell addressed the Senate Banking Committee about that testy word transitory.
I think clearly has been met now, you know, you're absolutely right, inflation has run well above two percent for long enough. The word transitory has different meanings to different people. I think it's it's probably a good time to retire that word and try to explain more clearly what we mean.
All Right, it's not easy being the FED chair.
Really.
Many the end of zero rates ushering in a new era of investment era in particular in Bloomberg Markets, it's the mistakes issue. How many missed the market over the past two years. I love that you guys are doing a mistakes issue with us as the editor of Bloomberg Markets magazine, Pat Regne or here in our Bloomberg Directive broker studio. A lot of people missed. This was an air unlike and most had never seen before.
Yeah, we we spent a whole issue looking at mistakes, but one of the things we wanted to focus on was sort of what happened in this time period after the liftoff from rates, which seems to have scrambled everybody's compass. And it's not just a matter of you know, I think at first people weren't sure how bearished to be, and then maybe they were wrong about how bullish to be.
And we've just sort of, uh watched like all of these different switchbacks, both for forecasters, economists, traders, I mean just kind of you know, how do you get a handle on big tech stocks, for example. So we just went back and had to look at this and part part of the logic of the story, but also the whole issue was not to kind of point and laugh, although that can be fun.
Uh I think I think.
There's a German word for you'd.
Also be pointing. Get a lot of people.
Absolutely, you know, it's it's really we have the instinct that if you're a trader, if you're in finance, if you're in market's, mistakes.
Are a part of your work.
And everyone I've ever met who's good at it learns from it and they'll talk as much about their mistakes.
So that's okay. So that's a really good point, and that's a big takeaway. Another big takeaway that I had after reading this was that there is so much we just don't know, and as Carol mentioned, that's what makes a market. And we have people come on the program every day who talk with conviction that, Okay, this is what the Fed's gonna do, this is what rates are going to do, this is what inflation is going to do, this is what the stock market is going to do and they.
Really seem to believe it.
It's like they know it got it wrong. I'm like, you know what, this is what happens, right like.
And it's okay, you're saying that's that's the way, that's the way this works.
Yeah.
You know. The great economist Kenneth Arrow told the story and his memoirs about doing weather reports for the army and the general wanted to know what's the weather going to be like two weeks before the invasion and the answer was, we cannot make a forecast two weeks before the invasion. And the general said said to him, we understand that, but we need it for planning purposes. And I love that story because we all need forecasts and we all need to have a theory for planning purposes.
We can't get out of that in the morning if we if we don't have if we don't have a forecast.
I thought that was really interesting, right because we talk about forecasts all the time, whether it's whether it's earnings, whether it's economic forecast. This idea of like there needs you need this to kind of figure out a narrative, because within that narrative, there's probably gonna be some really truth to the way forward.
Right, Yes, and then you and or at least it's a way of like gaming out catastrophes and kind of you know, planning out what are what are going to be your contingency plans and kind of trying to think think ahead to the future. That having been said, you can make some pretty disastrously bad traits.
That's true, That's very true.
You know what I'm just thinking care of. But how do we open the show?
In the two o'clock hour, we talked about the error that lifts CFO made, right. I don't know if you saw this path. This is like a perfect day to be talking about this issue.
And you know, this was an.
Issue where they said they made an error, you know, five hundred basis points versus fifty basis points. They literally left another zero on there when they made their projection, and it caused the stock to move higher. Like these things happen.
That's right.
And I've never cursed a deadline as much as when right after I've closed the mistakes issue that happened. Okay, I'm sorry the heck of a story. Seriously, Seriously, the lesson don't talk in basis points.
That's what I said.
I said, let's go back to old fashioned percentages exactly.
Well, it's interesting and you guys kind of in doing your coverage, you talk about the bond market, you talk about the equity market, you talk about the magnificent stuff like you really go through because it really, you know, you saw it play out throughout all the different markets and all the different asset classes.
Yeah, all kudos to our newsroom because we really worked with a lot of the reporters across the Bloomberg newsroom and every one of them, you know, I sent out the memo asking for mistakes, and everybody had and every you know, everybody had a great tale, you know, and some of them were probably surprising to a lot of people in the US. I mean, one of the I think the most interesting ones is the the huge mistake
made by SBB, the Swedish housing company. We all know about everything that's happened in China with property, but this was this is at a smaller scale. The ways that you can get in trouble kind of thinking that you know, an interest rate situation is going to stay the same, and you know, you borrow to the hilt expecting that the financing will always be there and then suddenly it's not.
Can we at this point, though, in your opinion, say that the FED has made a mistake.
Well, we we talk about that. It's interesting the fed's forecasts were consistently wrong, and yet they seem to be it's at least in contention, and that they'll stick the landing here, you know. I you know, we'll know when we know. But you know, we so far seem to continue to have you know, inflation coming down, maybe not as fast as everybody expected, and we've been able to do it without you know, having painful unemployment like that
at the moment, that looks great. Now there's a warning in the story, and somebody says, it always looks like it's going to be a soft landing until it's not right.
That's right, you know what it thought also about this, that the importance of it. And this is why I love talking with people who have reported on or been investing in a lot of different market cycles. You learn each time we go through some crisis or some some anomaly or seemingly anomaly, about when we get to another point, you're like, well, remember that time, like we were fooled, Like I feel like this is so helpful.
We do learn from all of this.
Yeah, yeah, it was.
It was.
It was fun to do it and to review all of these, all of these there's that professionals make all the time, and every journalist in the newsroom can has their own stories. I can sympathize.
I already said this is hard for Caroll relate to because she's never made a mistake, so I don't know. So congratulations for all the time.
Yeah, no, Crypto, though you left that to another that had to be a whole story all on its own, and that's actually a fun one because it's like, what, you know, what is it still a mistake at fifty thousand.
Really thoughtful peace as we try to make sense of the environment and where we continue to see a fair amount of volatility in the narrative.
Powry me Or, editor of Bloomberg Markets Magazine.
Check it out.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Apple car Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, just Say Alexa playing Bloomberg eleven thirty.
What do Shanghai day on Precision automobile component company, Suju Dongshan Precision Manufacturing, and Xing chang Yinglan Many machinery company all have in common?
Well, I cheated because I read the story.
Oh okay, but quiz doesn't work.
Then all are kind of finding a home base in the same area.
Okay, you're right.
These are all Chinese automobile component companies that have recently set up shop on the outskirts of Monterey, Mexico.
So you're spot on.
Yeah.
In fact, Chinese autoparts makers are rapidly setting up plants in the region, which is only about one hundred and fifty miles from the US border. The value of Chinese autoparts made in Mexico specifically and exported to the US reached one point one billion last year. That's up fifteen percent over the previous year, according to previously unreported preliminary data out froma that's Mexico's National Autoparts Industry Association. So we're getting some numbers on exactly what's happening.
Amy Stillman writes all about it. She's Bloomberg News Mexico Business reporter, she joins us from Mexico City. Amy, great story. It's so funny. Carol and I were literally just talking about this yesterday, this exact thing. We spoke to some folks who had been in the Monterey area and were just shocked at what they saw in terms of auto parts manufacturers. So you're reading minds here.
This is great.
One thing we didn't talk about with them, though, is why the search has set off alarm bells in Washington.
So give us the details there.
Sure, thank you, Tim, and I appreciate the effort with the names. A very good job on the association. So yeah, certainly we're seeing a pretty big surge of investment of Chinese auto park companies into Mexico. This is a trend that really began around the time of Trump's protectionist teriffs, which essentially were designed to keep the Chinese out. We started seeing in around twenty twenty one companies starting to set up in a bigger way in Mexico in order
to avoid that twenty five percent tariff. Now, since then, we've seen other measures by the US. One for instance, is under the Inflation Reduction Act, there are some new measures against foreign entities of concern, which also includes uh, you know, companies that have China China origin and ownership.
And so the reason for this is because you know, as as a essentially trade war keeps up between the US and China, there is a lot of concern over the fact that China is sort of winning the race on electric vehicles, that they have a very efficient, very very large supply chain, and that it will be very difficult for US companies to compete. There are some security concerns that should vehicles Chinese vehicles enter the US, that this could also present a security risk or or spying risk.
And so really this has been very much a sort of lack of mole uh policy where the US is trying to keep the Chinese out and the Chinese are finding some loopholes.
So talk to us about those loopholes.
You kind of get what they're doing, right if the if the US imposes a certain policy they're trying to I mean, is essentially a go around. But having said that, you know the auto supply chain, it's a global one, and you understand that their end users need these.
Parts well exactly, So those sort of way that the Chinese have been able to get around some of these measures by setting up shop in Mexico. It's just quite simply that you know, if they're producing in Mexico, they're not producing in China, and so some of these rules which are really based on the you know, country of origin, won't apply, so they are considered you know, North American content.
And then I would also say at the same time, you know that it's very difficult to implement these measures, particularly along the supply chain, because many of these did you US automakers rely on Chinese parts makers because the parts are considered to be high quality and cheaper, and it's very difficult to block them out of that supply chain.
I want to go back to though.
It is a key part of the story, and that is certainly one of the reasons why people who are reading on the Bloomberg are clicking on at big time, if you will, Elon Musk's role in maybe advising urging suggesting that some of these Chinese suppliers head to Mexico to do this.
Talk to us about what we know on that front.
Sure well, certainly that has been part of the trend, the catalyst. We know that Elon Musk had proposed opening a Gigo factory in Mexico, and that you know, as as we understand it from from our sources, you know, these suppliers were actually asked directly by Tesla to get established in Mexico to start supplying to Tesla. Obviously, the Gigo factory planned in Mexico is still some time away
from from kicking off. Construction hasn't really started yet, and so a lot of these suppliers are are you know, moving to Mexico in this sort of you know, hope that they're going to be supplying to Tesla's Mexico factory, and some as well are supplying to the factory and in Austin. So yeah, certainly Tesla has been a part
of this. We know that Tesla you know, gets a lot of its you know, supply chain from from Chinese suppliers in Shanghai, and so what we've really seen is that Tesla has really tried to replicate that supply chain in Shanghai, you know, to be able to compete more effectively.
One thing that surprises me though, is it's not necessarily an Elon Musk's best interest to have Chinese auto manufacturers so close to the US, like BYD for example, they're a huge competitor to Tesla. What happens if at some point these cars can and be sold in the US, that would take market share from Tesla.
Now that's a great question, and certainly this is the concern that that the auto parks companies from China. You know that this is a stepping stone that you could start to see, you know, these electric vehicle makers from China bringing their cars into the US market, which, as you point out, would create greater competition with Tesla. Now, the aspect of this, you know that that perhaps Elon Musk is calculating, is that that is still quite uh,
you know, quite a way ways off. First, you know, the companies will need to establish production plants in Mexico. We have heard, you know that YD is looking at Sherry and and MG and some of these other electric vehicle makers, but as of right now, there are no production plants. And so this that whole process, you know, analyst estimate could take you know, between five to six years. The electric vehicles would need to meet the US sestif case,
but it certainly is a threat. It just might not be the most imminent threat, and perhaps not the most imminent threat in Elon Musk's mind, right.
But you do wonder if you're Mexico and you're balancing you want that look at what's going on with China. You want that foreign direct investment. You don't want to alienate the North American auto manufacturers, the US auto manufacturers, who are you know, setting up shop there or some of the parts suppliers that are are working there.
Like it's a delicate balance.
So it'll be interesting to see how much more of a presence we have when it comes to Chinese suppliers in Mexico, because right now it does seem like they're going to continue to amp up their president presence. Excuse me, Amy, thank you so much, Amy Stillman. She's Mexico business reporter at Bloomberg News. She's joining us on the phone from Mexico City, and this story certainly catching our attention today.
B Marco.
Journal.
Now about you let me drive?
No, no, honey, please, I'll do the driving travels.
Excuse me, I want to drive.
It's a good question to fit time.
This is the drive to the clothes.
Communick well drier up Jaga.
Don on Bloomberg Radio.
It is about that time we got about what seventeen minutes of the close right now, and it's time for Drive to the Clothes with Aaron Kennon, co founder and chief executive officer at Clear Harbor Asset Management. The firm manages over one point five at billion dollars. Aaron joining us from Stamford, Connecticut.
Aaron, good to see you. How are you.
I'm doing just fine. How are you doing tow.
Yeah, we're doing pretty well. Thanks.
Trying to figure out yesterday's sell off in the context of today's gains. How are you thinking about the hotter than expected CPI print that we got yesterday and whether or not all the what all the fuss was about?
Yeah, well, you know, it's interesting. It all really started with the jobs report of a week ago. And you know, the January data was was was stronger than anticipation, and I think market sentiments started shifting, where we went from sort of six to seven rate cuts anticipated by the market through FED Fund's futures contracts too. Now it looks like closer to the Fed's Summary of Economic Projections otherwise known as their dot plot, which is three rate cuts
for this year. And you know, I think the CPI just sort of fed into that narrative. What I will say though, is that as we all know that the CPI number yesterday was quite noisy because some of the owner equivalent rent data is sort of backward looking and is more of a survey rather than a reality, and so it really oeer is more about, you know, if you were to rent your home, what would it rent out for, rather than an actual increased CPI number on
housing itself, which which wasn't too bad. So CPI if you strip all that out, is running about two percent, and that's pretty much in line with the Fed's PCE indicator that they like to look at.
Having said that, Aaron, I mean markets, we're seeing some buying into the clothes here. We're pretty much at our best levels of the session. So now up about one percent on the Nasdaq, up about eight tens of a percent on the S and P. Interesting talking with our Ira Jersey earlier and said kind of the trifecta. The things that moved the Treasury market is non farm payrolls.
It's CPI, it's also retail sales data.
And we'll get that read if we get jobs came in hot. CPI, as you said, maybe a little noisy in terms of the CPI print, but you know it did come in higher than expected overall. If we get a hot retail sales number, I don't know, do you start to rethink a little bit about what the FED is going to have to do And could we get a FED that potentially even has to raise rates again.
Yeah, it's always a possibility, Carol, But I think at the end of the day, we're seeing Look at we came from nine point one percent headline inflation in June of two thousand and twenty two too. Now you know, somewhere around three percent on a year of a year basis and closer to two percent on a three to six months or a rolling basis, depending on which metric you look at. I think the Fed is essentially seeing
what they want to see. Saw Austin Goals will be one of the voting members on the FLMC this morning, essentially saying we don't need to see two percent inflation on an annualized basis to start cutting rates. And so I think the risk is still towards cutting rather than the possibility of a surprise to the market, which is that rates move higher.
Okay, Erin, I want to dig deeper into the equity side of this, and talk a little bit about what we've seen in the S and P five hundred, the market cap weighted s and P five hundred so far this year, versus what we've seen in the equal way equal weighted S and P five hundred so far this year, there's a dispersion. Once again, the market cap weighted one is outperforming the equal weighted index. What story does that tell about how the year is going to shake out?
Well, it's it's interesting, Tim, because this was a dynamic that we saw throughout the entire entirety of twenty twenty three for the most part, where you had the SMP market CAAP Weighted Index, which is the sp index that everyone talks about, driven by the Magnificent seven. And you know, most of those seven stocks are pushing it higher again this year, led by Nvidia again up almost fifty percent. In fact, if you look at the SMP last year, the seven stocks that I just referenced were up about
one hundred and ten percent. The rest of the market was only up about twelve and a half percent. And that's sort of the thematic that's playing out this year. With a little bit of a caveat around some strength and the healthcare segment of the market. And so, you know, I think it's an important reminder that the vast majority of stocks really over the last you know, two years, if you look back to December of twenty twenty one to today, you have the SMP up about seven percent
over that long two plus year period. You have the Russell two thousand down about ten percent, you have the Emerging Markets Index down thirteen percent, and you have eighty four percent of the S and P five hundred constituents that are actually not back towards the twenty twenty one peaks.
And so that's not necessarily a bad thing that that actually means, I think if you look at the glass half full, it means that there are lots of opportunities in the marketplace for stocks that haven't really been on this ride high over the last year or so.
So where would you put client money new client money right now?
Well, you know, we start with, you know, how do we create asset allocations for our clients what makes good sense? But within the equity markets, because I think that was the question you were asking. You know, we've seen opportunities you know, across you know, many different segments of the economy. There's been this sort of rolling recession happening, and just over the last couple of years, you look at, you know, COVID.
In the healthcare segment, you had something like syringe use, for example, skyrocket because everyone's receiving their shot, and then you had it fall off a cliff. And now you have the ozempics, you know, the g LP one drug impacting that demand. So you know, it's it's it's those things that we're looking for. Which is this this sense that you know, there are lots of opportunities even in in segments of the economy that are that are viewed
as more defensive. You know, we see opportunities in the utility sector, in natural gas distribution companies and water utilities. Even within technology, we see, you know, wonderful opportunities there. Back over in healthcare, you look at sort of the robotic surgical space. You know that the idea that a doctor in Los Angeles can can do work and open heart surgery work on someone sitting in New York City or lying on a bed in New York City. I mean,
this is going to become much more commonplace. But with that, we're also staying away from certain areas of the economy at certain moments in time. If you look at elective surgeries having surged post COVID, well, what does that mean from a win perspective? That means healthcare insurance companies have a lot of bills to pay and so, uh, you know, we're trying to look at both both sides of the docket.
There the industrial spending that's coming out of the government, we've seen, We've seen those dollars surging coming out of COVID and still you know, at six point four trillion dollars a year, lots of opportunities on the water infrastructure infrastructure front there as well.
Here, it definitely provides momentum. So good to check in with you as always. Aaron Kennon, co founder CEO at Clear Harbor Asset Management, joining us from Connecticut.
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