Intel Is About to Relinquish Its Chipmaking Crown to Samsung

Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You can also listen to our radio show at two pm Eastern Time on the Bloomberg Radio or watch us on YouTube search Bloomberg clovel News. The fort annual JPMorgan Healthcare Conference underway. Virtually it's the event where it comes. It's the event where really anything in the healthcare space and everyone involved in the healthcare space typically gather on an annual basis. As we mentioned, it's virtual this year, and

one of the companies participating is our upcoming guest. Jeff Jonas is Chief Innovation Officer on on the board of directors of Stage Therapeutics. Jeff joins us on the phone from Florida. Jeff, how are you, You're You're all well and thanks for having me. Yeah, thanks so much for joining us. First, first off, an update from you know what you're seeing right now at the JP Morgan Healthcare Conference.

I know that you're attending it virtually as of now, as everybody is doing, but give us an update on on on really what the red is. Well, you know, it's a funny time. This has been a funny conference, and it's been, as you've mentioned, a standard get together conclay for biotech and pharma for decades, and this is the second year has been virtual. That said, I've been

attending virtually. Um, there's some interesting news in the Cristoper space, some M and A, but it's still not the same as you know, being packed like sardines and Union Square. I can tell you which right now. We're glad not to be packed like sardines. Hey, Jeff. One thing though, UM, I do think about the pandemic and how it's affected the medical community and all of us overall, the questions, the information we've learned as we've watched vaccines being raid

and understanding you know the process if you will. And I also think the world at large, the importance of mental wellness. We're talking about it like we've never before. How how how do you see the pandemic kind of

impacting that world? In your world specifically, Well, you know, I'm a psychiatrist by training or recovering psychiatrists, and it's if you look at what's happened, I think, as you've pointed out, UM, we've seen a vast increase in the diagnosis of people suffering from mental health disorders, anxiety disorders, and really across the economic and age spectrum. It's not focusing on any particular segment. It's really all of us. And you know, there's there's actually some really good data

around this. UM. And without belaboring this, if you look just for example, the economic costs are in the US just for depressive disorders in the year two thousand, year talking, it was about three billion, which was very substantial. In one the estimate of the cost of depress and is almost eight hundred billions, more than two and a half fold what we saw in the in the year two thousand and the same has been true that kind of increased for neurological disorders. So I think we all know

that our lives are different. People are under stress. Um, there is a paucity of of availability of mental health practitioners, people are isolating more so it really is a perfect swarm. But Jeff, you know, I hear the data from one and I asked myself, is that actually measuring the effect of the pandemic? Because here we are two and we're

entering your three of the pandemic. So I'm wondering to what extent you can actually attribute that increase in depression and anxiety to the pandemic versus what we won't see for years. Succomb Oh, I think that's exactly right. Remember, these are all instantaneous numbers or incidents as it were, the sequali or the after effects of what we're going through now. I think many of these things are still

yet to be counted. So, if you know, I think that's why we're seeing, you know, this, this negative impact on brain health and the increasing diagnosis of ment of depression and anxieties sorts across the board. Hey what about

to Jeff? You know, we talked so much here in Bloomberg about data collection, Right, the better the pros and cons of data collection, Right, But I do think about the data that's being collected during the pandemic about mental wellness, how that might help us in terms of figuring out more productive, more constructive strategies to really help all of us with our mental well being. Well, I think that's

a really important point. And mental health has not been on the forefront of people's minds, you know, over the last decade, even though it is almost a crisis in our ability to deliver beneficial care. And I think the data we're acquiring now are really pointing out to the area that we have significant unmet medical need. We don't

have enough practitioners. There hasn't been a lot of innovation and mental health medication and treatments over the last twenty years, so there's been a posse of that sort of innovation as well. So our hope is and and again the data are still coming in that with with better data and more information, we'll be able to craft better therapies that are really more tailored to individuals versus the sort of one size fits all that's really predominated, especially in

psychiatry over the last twenty years. So what does that actually look like on a practical level, Well, the first thing we have to do is start looking at people's individual problems, and you know, and the socioeconomic issues, but more importantly, to make accurate diagnoses and to provide therapies

as quickly as possible. If you think about this from a medical standpoint, if you had a broken leg, you wouldn't wait around, you know too, you know, two months in order to get better or to see a doctor. And yet we don't treat mental health with the same urgency. And these are life threatening conditions that we do with other medical conditions. So if you need to see a psychiatrist, you may have to wait, you know, several weeks or

if not months, or psychlotherapist. And so the kind of data that we need and what we're seeing is that is really demonstrating not only the economic loss but the personal cost of delaying therapy and not having better access to mental health across the board. All right, we've got to run. Hey, Jeff Um come back anytime. We'd love to continue this conversation. Jeff Jonas, his Chief Innovation Officer, Board of Directors member, former CEO of Stage Therapeutics, joining

us on the phone from Florida. I do think the increased conversation we're having about mental wellness, it's really important. Yeah, And I think his point about you know, what this looks like in a few years really stands because we don't know the effects. Yeah, exactly in personalization, right, individualization. That makes a lot of sense to me. Medicine increasingly moving in that direction. This is Bloomberg Business Week, and this is Bloomberg Radio. This is Bloomberg Business Week with

Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Well, as we mentioned, a lot coming this week on the US economy, Fitch J. Powell up on Capitol Hill for his confirmation hearing, and a lot is on the terminal and at Bloomberg dot com about interest rates and inflation. New York Fed President Bill Dudley winging Goldman Sacks also with some comments both writing about you know, Tim, more aggressive FED tightening cycles. Are all looking at the economy

thinking the Fed has to play catch up. We'll do that, howevery that's the question, because we're also seeing some major disruptions as a result of a Macron. A great story on the Bloomberg Terminal by Sean Donnan and other of our Bloomberg Economics colleagues. Here Sean Donn and his senior economics writer for Bloomberg News, He joins us on the

phone from Maryland. Sean, I was having a conversation with a friend earlier this morning over text because we were talking about the disruptions happening at our kids nursery school, and she wrote that short staffing because of COVID is the new supply chain And I said, oh, my god, you're absolutely right. You hit it the nail on the head. What have you found about the economic effects of all of these workers calling out sick? Well, I mean, that's

a great way of thinking about it. This is I mean, if you remember back that supply chain crisis that hit us all last skier starting to hit the tail end of that's something that we weren't really expecting in terms of UH an economic impact. And as we were going into this O Macron variant, we had kind of gotten into a groove and how we deal with surges the economy and businesses have become pretty good at adapting UH

to new conditions. And then all of a sudden, we've got this new condition UH in the economy, which is just we've got a lot of people outsick in America right now because we're getting all of these positive tests and people may not be getting as sick in the broadly as as as they were beforehand, but they still have to stay at home in quarantine for five days ten days, depending on the business that you work for. UH, that may affect their family members who may be forced

to stay home because of rules as well. And at a certain point, when you start talking to businesses, they're saying, actually, it's having a material impact on our ability to do business. So I talked Toledo Pizza, which is a pizza chain down here, and the CEO, James Beale, it's a family company, they've been around since you've never seen anything like this.

He's literally having the shut stores because they don't have enough people, and they don't have enough people, not because they can't hire enough people, which was a lot of the impact last year, but because it got too many people calling in sake right now, right and we've seen we've all been places where we see signs that they just you know, closed because they just don't have enough workers.

The other thing, though, Sean I'm thinking about, is the markets have this great ability to look through things, and we've had a lot of guests coming on like we have to look through this period of a macron and just get to the other side of the economy. Uh

and and things start to bounce back pretty quickly. Um, why shouldn't we just be doing that here, like we understand what's going on, and why won't it just be maybe a few week thing where we'll explain away in the data points what was going on and look forward. Oh sure, I mean look absolutely could be a question of just a few weeks. Uh. And we've seen that a lot of people point to what happened in South Africa,

what's been happening in the UK. Already some science possibly out of New York that the omicron cases are are peaking there. But really we've also got to think about the scale of the impact and how that kind of flows through the through the economy right now. As an economist I like called Nick Bunker, he's the chief economist that indeed the job site we're all familiar with, um.

And he grew up in the Boston area, and he says, this is a lot like the Blizzarders seventy eight, which is this legendary blizzard that hit uh, New England in nineteen seventy eight, which up to four feet of snow get dropped on the economy and for a few weeks there you have this huge disruption in the economy, there's a huge clean up operation, there's a big bounce back. But you've got to think about this as not just

a regional economic event. This is like the blizzard or seventy eight kind of hit everywhere in the US at the same time right now in terms of workers staying home, and that is um that's all. It may not be as big a deal as what we saw in March and April when we had these lockdowns in place and the pandemic was very new. We've adapted. We're all working from home, or a lot of us are working from home. We're finding new ways to to work and and and

do our jobs. But it could be pretty short and sharp, and that could flow through as well into supply chains. What if that brings us back to a place where, for example, those parts shortages that we were seeing last year that we're pretty acute again, those get extended further into this year and that starts affecting GDP. And that's one of the reasons we've seen economists UH downgrade their growth forecast for for the first quarter. And you know

that's the quarter we're in. Now, we can look at what's happened now, we can expect good things on the horizon, but you know, it pays to pay attention to what's happening around us now as well. Hey, Sean, what's the best what's the most important piece of data that you're gonna be watching for are in the coming weeks to help us understand what actually happens with the omicron variant in regard to technomic impact. I think there's there's there's

a couple of things. One is what really happens to some of the big industrial companies like the automakers and how many people do they have outsick? And does that really then again flow through into the economy. And remember that story about car prices that we were all telling last year and inflation. Uh so what do we see

in kind of heavy industry like that? Uh. The other one is one that's kind of harder to get a handle on, and that's I wish we had to take her on the on the terminal for how many Americans are outsick on any given day, because in some ways that would be the best economic barometer you could have right now. Sickco I'm one of our programmers are listening. Hey. One thing I do think about though, and highly recommended sixty minutes at a great piece about kind of what's

going on in the US labor force right now. I do wonder too, um sean for companies who are like man, I don't want to ever be in a position where we might go through something like this and where my you know, reliance on workers, um just really makes me so vulnerable. I want to automate as much as I can. I wonder how much automation is going on that's going to stay with us forever in certain industries that will

impact the labor force for years to come. I think there's no doubt that one of the long term I'm gonna call it a scar here, but it's a change, and some we'll see it as a positive change. Uh, in this economy is going to be more automation. I'm gonna bring us back to Ledo Pizza here in the DC area, and they've got a hundred and ten stores. It's a pretty thriving pizza chain here here. Locally, they have thirteen fewer people that they employ today than they

did before the pandemic. And that's not about being outsick. That's just fewer staff that they need. And what they've done, according to the CEO, James Biel, was you know, part of that was driven by by shortages in the labor market, the hard the hard times they were having finding workers. But they've adapted. And one of the ways they've adapted is they've automated their ordering down their menu. You just don't need to deal with as many people as you used to get a pizza pizza, and that's a scar

in this economy. Gotta runch on. It's a great story, Sean Donn, and he's seen your economics writer at Bloomberg News ruining us on the phone from Maryland. You're listening to Bloomberg Business Week and this is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stenovic

on Bloomberg Radio. This week, Bloomberg Business Week's magazine, it's all about the your head issue, those things to keep on your radar in two and Tim. That includes, of course, the semiconductor space big story. Last year, it's going to contin knew to be so this year innovation disruptors and just plain old competition playing its way out. Yeah. The big question is who reigned supreme? And how about the long time you know, Kings of chip making or King

of chip making? Does it remain king? We have our own king of chipmaking too, it's in King. He's US Semiconductor and Networking reporter at Bloomberg News. He joins the slide from the San Francisco studio and it's always great to have you on the program. Let's talk a little bit about Intel, because the company is on the brink of losing its status as the world's largest chipmaker. I thought that girl Singer came back to Intel to prevent this from happening. Yeah, no, that that's what he's been

talking about. He's very, very focused on basically restoring Intel to its dominance. You remember when he left in two thousand and nine. Until it was at the peak of its powers, it was the largest chip maker by market value, the largest chip maker by revenue, the leader in terms of technology, the best plants, the best profit margins. You know, it really was a leader, and now it's not. It's arguably going to lose the last of those titles, which is the one by revenue in two thousand for two

thousand and twenty one. And really everything that he said since he took over last year is look, I'm going to get Intel back. I'm going to put Intel back where it belongs. So hey, Ian, it's still going to be a dominant player Intel that is. But what's the significance of you know, Intel and the history of what it has done in terms of chipmaking and just really Silicon Valley. How is that just kind of remarkable in

terms of this shift. Yeah, I mean Intel basically taught the industry that, you know, these are the economics that matter, Moore's law that everybody quotes good and more, the founder of Intel. It's about economics, It's about scale, it's about speed. Intel has always had the most capital to deploy. It's always moved faster. It's always made it difficult for the opposition to keep up. Now it's facing and we talked about some song in the story, but also t SMC

in Taiwan. Companies that have as much access to capital, that are deploying as much capital, that are running just as fast as Intel, and they're enabling lots of other companies who they manufacture for to compete and to take market share away from Intel. Clearly that's not good for Intel. As you say, it's it's still a huge company. It's seventy billion dollars of revenue is not to be sniffed at. But that kind of lead that ability to say, hey,

here we are. You need to come chase me, and this is the pain that is involved in chasing me. That's gone away. What do we always say about Intel's ability or packed Elsinger's ability to to pull this off. Yeah, I mean it's Initially when he came, you know, back to Intel last February, said all the right things, said, look, this isn't good enough, this is not Intel. These you know, mismanagement that's been going on while I've been away. I'm

going to reverse that. Intel is back, you know, very much, beating his fist on his chest and using a lot of the throwbacks to Intel's prior leadership in terms of messaging. But then what became clear as Intel reported earnings averaged a seven percent decline on the day after every earnings was released because those earnings were showing margins narrowing and guess what, We're going to spend a lot of money

to get us back. And so what what's really going on is saying the right things, making the right decisions arguably, but at the same time showing what the cost is and the amount of time it might take to get Intel back to leadership. Hey, in in a world where so much of the global economy is all about services, and certainly for the United States, we don't make a lot of stuff anymore. But the opportunity with a company like Intel where we actually make something, how important is

that to the United States? And I think about you know, government intervention or government assistance here in making sure that we're still you know, making something in this global economy. Yeah, I mean if if you know, if you ought to view it from a nation centric point of view, and Gelsing are certainly one of those that does suit. So the chip industry is enormously important. It's a it's a fundamental piece of technology that underpins everything UM and the US.

You know that the ability to manufacture that is really centered in only Intel and a bit in Micron. Everybody else kind of doesn't do it anymore. It's done by Sam song it's done by t SMC. Those are arguably the leaders right now. And what Girl Singer has argued, and there's you know, gained some traction with politicians who are listening to him, saying, look, if we don't have this, we we lose that ability. It's not something you can

just get back, you know. It's it's based on knowledge, it's based on experience, and if that's going away, maybe it's gone for good. So he's really trying to do something about that. And you're not unprecedented, right, go back to is it the seventies right where the US you know, there was a consortium to really help develop the U S semiconductor sector. So it's not unprecedented, No, it's it's it's not unprecedented if you look at the numbers. You know,

Intel became the world's largest chipmaker in ninety two. Up until nineteen ninety is you know, the US was responsible for sort of a third of production worldwide, Europe almost as much. You know, Asia was just a third. Now that's massively changed and that's a lot of money, and but it's it's nohow I think that people are much more concerned about that once you lose that. Know how, once you lose that experience, once that's gone, it's very

hard to get back. And do you get the sense from your reporting that policymakers understand the importance of the chip industry to the United States? Do they understand what you know is does Intel and do my crime? Do they get what they're what they want from the US government in terms of actual help. I think there's two ways to look at this. You have an unprecedented piece of industrial policy, which is something that the US just

doesn't do before Congress. Right now, the Chips Acts fifty two billion dollars sounds like a lot of money on the flip side hasn't been funded yet. It's still stalled, and that's causing frustration amongst the chip industries like Okay, so you finally woken up, you finally get it, but there's not enough money and be you haven't even funded that.

So yes and no, I think is the answer to that? Hey, and I think about you know, investors who are into your conversation here and what you're saying, Um, I'm just look an outward. Intel was up about three point four percent last year. I mean, the SAX has been on a tear. So what do they need to keep in mind when they think about investing in or not investing in Intel. Well, you know, it's a very good question. Intel is the best performing chip stock this year. That's

a very small sample size. We've had what six trading days. That's based upon what Intel has said at CS new products were coming back to leadership, We're going to do well, We're gonna start taking back market share. Maybe there's a chance that people are getting behind Intel's story, that they're looking over the horizon and saying, hey, maybe Intel's back on the flip side. We've got earnings coming later this quarter.

The numbers there don't look good, you know, the numbers look for revenue down again, look for profit margins under um you know, under threat again. So it's a it's a do you believe in the future? Do you believe in this management? Do you believe that they're not just saying the right things, but they're putting the company in a position to exceed because short term it's not looking good. Yeah. Intel actually one of my gainers. We talked about the

markets a little bit later on. It's one of the few stocks, uh in a lot of the selling that we're seeing today. That's actually a standout, uh Ian. I know I say it a lot, but I really mean it. And we do your must read always when it comes to anything in the semi space in King U, semiconductor networking reporter at Bloomberg News from our San Francisco studio. His story in the new issue upcoming issue the year Ahead issue of Bloomberg Business Week on newsstands later this week,

online and always on the Bloomberg terminal. Check it out. You're listening to Bloomberg Radio. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Well, a macron has flared in a Chinese sports city that borders Beijing and spread inland. See the variant on the doorstep of the nation's capital, less than one month before the Winter Olympics in Beijing begin, and we know Tim pulling off safe games will be

a big test for President. G Andy Brown is editorial director at Bloomberg New Economy. He joins us on the phone from New York City over the weekend, and you had a column out that was titled China's Betting on Olympic victory over COVID. This was New Economy Saturday. Since then, though, we've learned more about community spread in China. What do we know about how on then is spreading in the in the country and give us an update on COVID zero policy. Well, what we know is that there are

forty cases in Tensin, is Beijing's ports city. It's less than a hundred miles from the Chinese capital, half an hour on the train. Um that outbreak UM has leaked into Honan Province to the south. Hanan is right now battling a delta outbreak. Both Tenjin and Honan um press up against Hubei Province, which is where many of the Winter Olympic ski and skating competition and lose competitions are

taking place. This is really Beijing's nightmare. I mean, it has profound implications for the Chinese economy, for global supply chains, and indeed for domestic Chinese politics. This is an incredibly sensitive year when President Jijimping at the end of the year is seeking a twenty third term in office at the twentieth Party Congress. And you know China's success, his success in defeating COVID um has been is a is

a big part of of his program this year. I mean basically, Andy, you write that his political credibility and China's political credibility really at stake here. Yeah. So you know they've presented the and and look, China, China defeat it Delta. It was, it's it's an extraordinary victory. Um. You know, they talked, they talked about a people's war, um. And they've compared and contrasted their success against COVID with America's failures. So they say, you know, propaganda, sort of

nationalistic chess stumping propaganda. Look, the American democratic system is completely failed. Eight hundred thousand people, you know, died in the United States. It proves the superiority of the socialist system. And look, you know here it is UH in China. And if they can't contain this, and it looks it's going to be a really difficult job for them to hold to hold to their zero COVID policy. Given that Omicron is by some accounts seventy times more infectious UH

than than Delta. It really seems that this is this is a this is an uphill battle for them. Yeah, it's one thing to be able to do this if borders are closed and you're not holding an event that attracts people from all over the world. Still, though, they are putting into place some huge restrictions when it comes to the Olympics. How are they trying to prevent this becoming a super spreader event? And indeed even one case it's too many for the Chinese government. Yes, so the

Olympics is going to be held in the bubble. Um. I'm actually going, and I'm gonna be part of a part of that bubble, so we won't be allowed out of the venues, and that they're allowed to wander around. I ken indy um uh. But you know, it seems to me, and I'm not in any way medical special, but it seems to me almost a certainty that you're gonna get omikron outbreaks. Uh in the Olympic village among the athletes. It could well knock out individual athletes. It

could even knock out whole teams. Um it really, it really does. Um. You know, Uh, foretell some some chaos during the games. Yeah, you do think about Andy, you know, fingers crossed things improve and and and everybody who goes, including yourself. You know are safe, uh, and that the

numbers go in a different direction. But you do wonder if it doesn't go well, you know, what could be the implications, I mean, what could be the longer term implications for President g going forward if if things don't go well, Well, there's the economy that he has to think about. So, you know, to keep to defeat COVID, they've had these rolling lockdowns and travel restrictions. Uh, it's disrupted ports UM, it's closed down factories, it's dampened domestic

consumption UM, and growth is slowing. And economists, even before there's omicron I'll break, the economists have been downgrading Chinese growth forecasts UM for next year and or rather for this year, and of course with a knock on impact the global economy through supply chain, many of which reports

run through China. I do wonder, though, what has more of an effect on supply chains, you know, the closing of of something because of COVID, or you know, just people not showing up work because they are sick andy. So it's like you it's really it's hard to imagine a scenario where where this doesn't have an economic effect, because even a COVID zero policy that includes lockdowns, mass testing, and school being canceled. That is serious economic implications. Absolutely.

You know, China, China did very well in two thousand and twenty and two thousand and twenty one when rich countries were all in lockdown and what people weren't buying services, they weren't going out to eat, they weren't traveling, They were buying goods, and these goods were made in China. Well, if only krone turns out to be as mild as we think we hope it will be, that situation could reverse within implications for China's exports right at the time

when domestic consumption falls. This is really the worst of all worlds for China. God, it's so tricky, all right, Andy, Thank you so much, Bloomberg New Economy Editorial Director. You can sign up for the New Economy daily newsletter at Bloomberg dot com slash New hyphen Economy. This is Bloomberg Business Week Chart of the day coming up right here on Bloomberg Radio. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.

Let's get to the drive to the close. At New gagar Is with US global investment strategist for Commonwealth Financial Network. She joins us once again on the phone in Waltham, Massachusetts, and new great to have you here with us. Happy New Year. What a year it's already been in two, which is kind of funny for us to talk about this. How much how much do you pay attention to what's happened in these first five six trading days of two? You know, we talked about the first five days indicator

and some market watchers watch that pretty closely, do you. Oh, Carol Kim, Happy New Year to you as well, and thank you so much for having he here. Uh so you know, the thing goes ast Jane. Where he goes, so goes the year, know, um, you know to that extent of course, you know we're watching markets every day, but of course we're not really um making any predictions on you know, a one day move or a ten day move, so to speak. Um. But yeah, you pointed

to the market reactions today, What a day. Who would have thought when we started the day this morning that the NASACT composite would actually be one of the best book forming major composites and major indexes to end the day. So what happened here, which is it's really funny. I mean, we're on the NASDAC. They're barely down four tens of not even down four tens of one percent, and we're

down more than two percent earlier. Yeah, so it looks like there is some technical buying coming in by you know, the buy the dip sort of traders. But really the equity sell off today and in the first ten days of twenty two and two is just a market reaction to the f O m C meeting minutes. So that reinforce the FEDS resolve of a hawkish pivots armicron or not. The fit is on a path to tapering. And now the debate is whether it is three rate hikes next year or four or more and the speed of balance

is run off. You know. The thing is, it's just at this point, even if we get what three or four rate increases, it speaks to a growing economy. It speaks to earnings growth. Gina Martin Adams reminding us of our Bloomberg intelligence team that they're looking at s and earnings growth. Uh, this year, that's significant. You know, we might get some recalibration of multiples out of that because of the run up that we've already seen, but nonetheless

it's still growth. How do you see this maybe recalibration in the equity trade playing out this year. How do you make the bets at this point or do you wait a little bit? Well, overall, I think we riskonssts are still resilient as liquid liquidity conditions remain easy and economic growth. As your point, it is also a tailor um and when starting from such low rates, higher interest rates are not successfully negative for equities, and equities could

prove to be an inflation hedge to an extent. But of course higher interest rates doom pressure profitability and evaluation multiple for it to use the spending power. So I am expecting a more bumpier right in twenty twenty two and lower returns well for the last two years lights out performance that may not necessarily be alarming, right exactly like perspective everybody, it's interesting, there's a great chart. I'm

going to talk about it. I didn't want to give it away, but I think I'm gonna do it with our team. I've been dying to talk about it all day. Um, we've got it right through on the markets and it. It cites some h new some research from Strategious Securities, and they say, in the past three decades, there have been four distinct periods of rate high cycles by the FED on average technology, which has been under pressure as we know in this first week too, UM is among

the best performing sectors during those FED rate hikes cycles. So, you know, what are your thoughts about that? And that's according to their research. Yeah, well, if you think about Carl, what what has really been driving technology sveteran the product market in the last few years, It's really been those very big large cap growth names still you know, you call them fang or fan, Meg, whatever it is. But UM most of these companies that they tend to have UM,

you know, better visibility in their in their earning. They they don't have quite as much leverage. So even that higher interest rates, we talk about how it can impact higher duration stock. Those are stocks that either have higher leverage or they have earnings coming way into the future. So those are not these lune cap growth names. So okay, so raises the question and what we should be keep an eye on right now and and and here's here's

what's interesting. I'm playing around on the Bloomberg, and I'm looking at Arcum, Cathy Woods, arc Investment Management, right, the Ark Innovation ETF, a lot of the high flying stocks, and I like to check that out when we do see some broad selling off in the NASDAC, because the companies that she has in that are are those ones that she calls disruptive technology stocks. This was down more than five earlier in the day, it's it's now flat

on the day today. What gives? Yeah, that's right. So, as I said, there is a lot of buying coming in from all the you know, technical pressures. A lot of stocks are hitting those fifty day or two hundred day moving averages and getting some buying, uh come support coming in at those levels. So not surprising because those higher flying stocks, of course, they bought a lot of the brunt in the early days, so not surprising for them to find a at least momentary bottom. So where

would you be allocating new money at this point? Oh? Well, I I would be more diversified at this point because, of course it's not a surprise that we are expecting higher interest rates. So in a higher interest rate environment, financials, particularly banks, tend to do better. So that is certainly an area that I do find attractive. But also of the large tap tech names that have declined with the rest of the market and those higher flying names, I

think they can get quite attractive as well. M okay, So help us think about where else our audience should be thinking about in terms of where they're putting their money and asset allocation. For me too, Um, we haven't talked much about fixed income, and I'm wondering if you see a place for that in a portfolio. Still. Yeah, so fixed income it's even trickier, you know, with expectations of rates rising. Certainly don't want to be in those

very high duration uh fixed incomes. So I would still keep it to keep it mostly shorter duration at this point. M So short. I'm sorry you said you should have exposure to shorter duration. That's right, Yeah, you know, what's what's the what's the surprise that you think my catch investors off guard, especially when it comes to fixed income and we've already seen a big move up in yields at this point, it's safe to say that we've been

recalibrating in terms of the expectations about FED policy. Could are you anticipating that the FED is a lot more aggressive than everybody is anticipating. That is quite likely. Uh, you know, the FED start to get aggressive, and especially if it starts to become clearer that the Feds behind the cove, well and we start to get more than start to see indications that the FED might actually hid more than four times, I might let the banda sheet run off much quicker and start much quicker on balance

sheet run off. All right, We're gonna leave it on that note. Um, and thank you so much, really appreciated. A new Gagard Global Investment Strategies, a Commonwealth Financial Network on the phone from Waltham, Massachusetts. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com. And you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube search Bloomberg Global News