Meme Trading Continues Rolling On

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Global News. I want to go back to Qualcom, one of the big players, a hundred and fifty six billion dollar market cap in the semi space, and as I mentioned, that stock is up more than

four percent after ours. Let's get to it because a lot of it's got to have to do with that first quarter outlook, which is ten billion to ten point eight billion, which beats the estimate of nine point seventy billion. Talk about optimism. Mandy Sing he's the one who really gets this. He's senior tech industry analysts for us here at Bloomberg Intelligence. Here in our interactive broker's studio feels

like an upbeat report. Yes, it is a great print and it just goes through show that some of the secular trends that we've been witnessing, the digital transformation, connectivity overall, five G rollouts, it's kind of playing into Qualcom strength and that's what we're seeing in the numbers. How are they managing it? We spend so much time talking about supply jain problems, supply gain problems. We just did it with ch Chief J. Powell. Are they managing it well?

Is there some reason why it doesn't necessarily seem to be hurting them too much or that much? So clearly they are managing it well. And some of it has to do with the type of chips these cells. So they also use t SMC, but they use other foundries as well. And what we have seen companies do see being time and conductors. So companies that have kind of diversified their foundry exposure have done well because they could

source their chips from all these different foundry makers. So that is what has helped them on the supply side in terms of demand side. Really, uh, they seem to be doing well in all the kind of segments I mentioned except for autos. So autos is one of the high growth segments where Nvidia has done particularly well, and that is one area where investors may want to see Quelcom really up their game. What do we know about

pricing power? What is what Qualcom tell us about their ability to raise prices in an environment where demand is high and supplies low. Yeah, so clearly their gross margins have improved and that is a function of pricing, and they have been able to command you know, the higher prices, especially on the you know, the latest chips when it comes to the five G rollouts. So whether it's uh, the data center build out or the tablets that they are selling, it's really the latest chips that are that

they're selling our commanding premium pricing. You know. I do think about like the differences, and we have to remember that because we are seeing this with companies and certainly big players in the chip sector that some manage better than others. And that's just a case like it goes to really understanding this industry, right, And you said you mentioned the founderies, like who are they playing into or

what's sector that they sell into? Correct? Yes, And look, I mean we know industrial IoT has become a big trend after the pandemic because from an enterprise perspective, you want everything connected going forward, and that's what everyone realized during the pandemic, that if you're connected, you can get your work done. So connectivity as an overall trend is really a tailwind for all the semiconductor guys, not just Welcome, but Qualcom is exposed more to mobility and five D

rollouts and that is why they're doing well right now. Okay, help us understand the relationship between Qualcom and who they supply to Apple, for example, how has that relationship changed and what should investors now? Yes, so with Apple, their exposure to Apple has gone down because Apple has been basically doing a lot of things in house and they have this system on a chip that has got everything except they still have to pay a toll to Qualcom

on the modem side. So when it comes to five D rollout, Apple will have another chip from Qualcom, but for the most part they have replaced the core mobile chip that they used to use from Qualcom with their own internal chips, So revenue exposure to Apple has gone down. Where Qualcom has benefited is from huawei' So because of that Huawei band, what has happened is Qualcom has been the main beneficiary of all the Android phones they're selling.

To show me, all the Chinese handset makers because Huawei is banned they can't sell those like Qualcom can't even sell any chips to Huawei because of the band right now. So clearly Qualcom has been the beneficiary of that band. But that whole China exposure, it's I mean, when you think about it, something could happen at the geo political level and that has a big impact on Calcom. So that's something that investors have an eye on. Manti, thank you.

This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. One of the other things that we've been tracking big time this year, thinking all right, yolo trading, it's done, all right, put it to bed, we're all coming back to work. We're not happening. And then you have as some others, well, I want to talk about this with any Massa. She's

investing reporter at Bloomberg News. She joins us live here from New York City, and I got the first question I gotta ask you is can you see the future, because I would imagine that you wrote this story before we saw what happened with Avis and bed Bath and beyond today. Yeah, I mean, it's actually pretty funny. When I first was thinking about writing this story, uh, several weeks ago, I was thinking, Hey, maybe it's time to write a story about how Yolo trading has tapered off.

And literally that day the Trump's Back happened, and so I had to rethink it, and I was like, you know what, Yolo trading hasn't tapered off at all. What am I talking about? Like, sure, game Stop and AMC have you know fallen. AMC is still trading, you know, fall or above where I was at the beginning of the year. Um, But like we've had these cycles almost

like different vintages of meme stocks so and crypto. So you had the first wave of game Stopping a m C, then it was doge Coin, then it was sheepa a new coin than the Trump's Back. Now we have Evis. It's just an never ending cycle. It seems, well, we love how you do did this, and we talked with Bloomberg Business Week editor Joe Weber about your take and how you guys likened it to vintages of wine. Right,

we're kind of moving through some different vintages. Yeah, and each different meme episode has its own ter war nicely done but them bum um. What's interesting too is, uh, it is kind of fascinating this week. You talked about the you know, Trump in the last couple of weeks, uh, and Digital World acquisition, but the Avis beyond even um bed Bath and beyond, Like, should we can we call that a meme stock? Yeah? I mean that's a really

good question. What qualifies exactly as a meme stock? Now, we had a whole group of them at the beginning of the year that became popular at the same time very obviously got hot on message boards, but it seems like an expanding definition in some ways. And something that we address in the story is it's reflective of how investing has really changed in the past about six years.

It didn't used to. Even even when social media and uh, you know, more accessible online investing became widespread, it wasn't quite as easy as it is today to see something on Reddit or Twitter or anywhere else and just quickly click into an app on your phone um and and buy a share or a fractional share of a company or a new cryptocurrency. So the information cycle and the ease of trading have both changed remarkably in just the

past couple of years. Well, any A big part of the narrative that has emerged around meme stocks such as the one we've been talking about have been the role of retail traders and retail investors that they have in these meme stocks. But I wonder about Wall Street's role and to what extent you have hedge funds getting involved in the bigger companies actually tracking these meme stocks and

trying to get in. Well, we definitely saw that the hedge funds had a wake up call in the game Stop era, and that in particular was, um, you know, the things that help happened with Melvin Capital, for example, just show how there needs to be a new awareness around the force with which a wave of retail traders

can come into the market. And I think that hedge funds did take note of that, and um you know, now you hear from some traders and from some firms that they have made some tweaks around how they monitor um, you know, social media phenomena. So wait a minute, So

just how I understand this. I mean, these people that we all thought were going to go back to work and not be able to trade because of the ease of doing it on these platforms can still be back at work, right, and trading is and how we see this well, I mean it differs from person to person, I guess, but it's definitely easier to do just quickly on the side on your phone, maybe while you're walking out to get lunch or something, than you know, opening

a whole desktop application like you might have had to do several years ago. Um. So it's just getting more discreet and easier as time goes on. The conversations online changed around meme stocks. UM. Well, I guess one prominent aspect of the game Stop run up was trying to execute a short squeeze. So I wouldn't say that that's uh,

that's not the case across the boards. Some of the popularity of certain meme names, especially in crypto, um are just you know, bidding up the price of something that almost in the quite case of Shiba a new coin, or in the case of doge coin, really had almost no value whatsoever. And uh, it's just riding a wave of popularity basically. Alright, so all right, too early to

say fad this point. I mean no, really, Like it's just fascinating how you set out to do one story and then it was like, uh yeah, no, Annie, it's not gonna be the case. Talk about a wake up call right now. I'm going to be very cautious to call it a fad. Well, I have to say, well, what do you watch for then? Like, how do we kind of figure that? Wait a minute, this is now just like algorithms, right, we're at one point kind of

newer to the market. There now a part of the normal way we trade when do we do we is there is some point that you look at and say, okay, this is just a part of how trading is. It's part of our trading environment. Yeah, I mean we have seen the retail part participation in the market taper off a little bit, but not not not by too much. It's still above the levels it was at at least in the equity market before UM, before the pandemic hit.

So this whole year and a half or so, the crazy UM waves that we've gone through have ray is some awareness among retail investors. I guess one open question is if there were some huge market wide sell off or another big occurrence like that, or you had some retail traders really get burned on one of these meme names to a huge extent, that could limit the popularity going forward. But at least this year we haven't really

seen at a bait. It's kind of one by one, these these meme names will taper off in popularity, but someone something else will come up in its place, just like a game of whack a mole or okay, anny, So what's it going to be? What's the next meme? Stock? Black Away stock? Wow? I guess we're gonna have to check Reddit to figure that out. Alright, Like a good reporter, no speculation there goes to the grindstone when you find out let us know. Alright, any massa, thank you so much.

Check out that story. It is in the upcoming edition of Bloomberg Business magazine. She is, of course Bloomberg News investing reporter. Yeah, but you let me drive Oh no, no, no, this is not a toy on the drugs. I want to dry. Good question. This is the drive to the clothes on Bluebird Radio. All Right, the Fed the FED chief has come and spoken, and markets seem to be okay with it. In fact, we're seeing records on those major equity averages here, Charlie, we are at our highs

of the session. When it comes to the SMP down and the NASDAC yields moved down, then they moved up. Uh, it seems like stocks up, Treasury is down, yields up. We're okay. Everything is awesome, right, My My big takeaway is that J. Powell and the Federal Reserve have done any really good job communicating because look at the way markets are reacting. Well, there's one thing he said specifically when it comes to pace, and he says, we will

not surprise the markets on a change in pace. If anything we have learned about this FED in particular J Pal of course at the helm of that Fed, is that are going to feed information to the markets. There's nothing that he necessarily wants to surprise, but he stands ready to act and change policy direction if needed and as warranted by the economy. All right, let's see what our guest has to say as we count you down

to the closing bell on this FED Wednesday. Hillary Kramer is back with us President and Chief investment Officer at A and G Capital Research. She joins us once again on the phone in New York City. Hillary, he does seem to be among the great communicators when it comes to FED policy. What is it about what we heard from FED Chief J Powell and that FED decision? We only have one more left in this year of one? What stands out for you that it's a dangerous policy

we're in. Why dangerous? It's it's dangerous because Powell wants to wait for full full employment before he starts raising rates. So in the meantime, Carol, we have how the housing market it's like a casino with so much speculation. And a few people say, hey, Hillary, why is gold not going up? And I kind of I think of crypto. Of course, it's the opposite of gold, but but an alternative for those that are fearful that prices are going you know, through the roof. And although Powell did exactly

what we expect, right, we're going to sustain. Look, we're going to sustain rally, there's no question about that. Because we're getting ready to close the books and a year and uh and look we're tapering way too slowly. That's another takeaway for me, like, you know, there's no need to keep buying a billion a month. I mean now we're going to hundred and five billion months ninety and then in June will start, we'll be we'll be completely done, and the in the FED will be done buying bonds

and keep rate slow. Hillary, I just we don't have a ton of time, so I want to make sure we we drill into what you're saying here, what specifically about the Fed's policy dangerous to you right now? It's causing a speculation. Money is free, money is free, it's phony money. Look at the supplaine supply chain disruptions, right, just look at those. All of that has to do with you know, phony interest rates and a FED policy that has everybody buying and buying, you know, for their home,

for their life. But wait, wait, wait, wait, you're saying interest rate low rate is what's causing supply disruptions. Isn't it a case of just this The supply chains just aren't actually working, whether it's not enough people in the ports, not enough people at work to make it all happen. We also do have incredible demand because we do have

we talked about this constantly about consumption. It is at their big time and whether people are whether it's corporate buying, individual buying, kind of buying it advanced concerned about running at a supply It's kind of this weird little cycle. But isn't it because of that and not necessarily cheap money. But that's what you just said in my opinion, Carol, is that it actually is from cheap money. It's it's all of this demand. This demand has created this supply

chain disruption. Why is there so much demand out there because rates are so low, because money is so incredibly cheap. You know, this policy has people buying just buying homes, look at the real estatement. But if you try to go buy a car right now, you can't actually buy a car. That's so much money and money so cheap. They're they're they're all buying now. Of course, we also know part of the problem has to do with labor shortages,

and that's why there's a supply chain disruption. Why do we have a labor shortage because people want to be paid more because everything costs more, and they're looking for their wages to go up, which they're starting to. And eventually we're going to as I go love wage inflation. Now I'm all for someone who works at Walmart getting twenty hour and so seventeen. But uh, but still it makes a question what's going on here? People are saying, I'm not going to bother work. It doesn't make sense.

Plus the entitlements, uh, they have gone, you know, they pretty much have tapered off to nothing. But so then why aren't people back at work? I mean, that's the thing we have to kind of figure out. And there's been some really smart conversations to me, and I've talked

about this even off air. It's just you maybe have couples making decisions that can afford to say, maybe you're not going to go back to work because we don't want to go back to the way life was, or we can afford to do without some things, or kind of figuring out different ways of doing things. Maybe there is something And it sounds like the Fed and J.

Powell in particular. You know, one of the things that really stuck out for me is he said we have to be humble about what we know about this economy. I also read into that what we don't know about this economy. He said, it's still delta dependent, and that puts us on a new path. We really don't know what our economy will truly be, especially when it comes

to the labor market on the other side of this pandemic. Uh, we don't know what the labor market will look like, but we do know one aspect of it, which is that people who are working are going to demand a lot more money. I mean they have to. Let's go back to let's say October one. That isn't a great example Chipotle's earnings fact that said it would be up sixty eight percent, right, you know, there are hudd fifty five percent. That's beside the point. What's really important. Labor

costs spiked twenty four percent. Food and beverage rows there are those expenses rose four percent. So at the end of the day, Chipotle, which to me was going to be like off the charts and it was um, really got muted because of all of this inflation. Uh. People aren't going to go back to work all that faff. They got used to being home. They got used to that gig economy of up work and UH and small

projects and getting paid on venmo. There's no reason to have to have to you know, march to the train and get on and think to the subway and go into your office building. It doesn't make sense. Everyone has found a new way to make, to make and meet. So for so hillary for investors who aren't listening to this, how do you trade this very carefully? I'm looking at potential bullishness with the biotechs. You know, if anyone wants to be speculative, many of these biotechs haven't even started

to partake in in inflation and in the speculation. So there are a number of them which we can do another point in time. There's about seven or eight that are billion dollar, you know backed biotex. The other way to do it is to be really safe because just because we're strong right now again we're getting ready to close those books. Next year is going to be weak. Next year is going to be a problem. So that's why I still like stocks like Ingredient, even though their

earnings are a little bit shaky. We went below ninety, but now it's at You have a three percent of in yield Hormel h r L. All the hedge funds get nervous when the market goes down, they start buying. It goes up, you know they have Skippy and applegate and spam of course. Um, so that's also a good one. And um with Lockheed Martin having had uh you know, earning miss so to speak, and the stock they're having

gone down, um, I think Lockheed Martin l MT. We have a good entry point now for for Lockheed Martin because it's uh, it's there. They're also the technology cyber security driven that and they have a great client. Their biggest client is one that has lots of money and you always printed this thing before. Yeah, we know him well, the U. S. Government. Hey, Hillary, thank you so much. A good spirited conversation and thoughtful on this fed Wednesday.

Hillary Kramer, President and chief investment Officer for at a G Capital Research, on the phone from New York City. 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