Robinhood Sinks, Hertz and Uber Team Up

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. You are listening to Bloomberg Business Week Carol Masser along with Tim Stanovik and our

interactive broker's studio. Watching shares of the eight r s at trade here in the US of Tema Pharmaceutical it's down about three percent, and as we speak, shares of the Israeli based generic's companies we mentioned under a little bit of pressure following the company's latest quarterly update, the company missing on both the top and bottom lines for the third quarter, and Tim also launching a sustainability linked bond today, planning to raise four billion tied to e

s G efforts to increase access to medicines in low and middle income countries. It's something we just talked about. It is Core Schultz as president and CEO of Tapa Pharmaceutical joining us now from Partsippany, New Jersey. Court. It's great to have you on the show. How are you. I'm very fine, Tim, And Carol, its great to be with you. I'm very fine. Thanks. Well, let's start with the quarter. Carol went through some of the numbers. Why

the misses. Basically, you could say that the expectations that we saw in the marketplace and also the the expectations we had at the beginning of the year was that the COVID nineteen effects would sort of start to slow down in the second quarter and then in the third and the fourth quarter we will basically be back to normal.

But what we've seen is that we have seen in Europe a lower volume in the total market in both the first and the second quarter, and then a return taught normality here in the third quarter, but not quite

getting there. So we see an improvement in Europe, but it's not quite back to where we thought it would be based on a full normalization and that's basically because there's still a bad luck of people not getting to the doctor, not getting to the specialist, and therefore not going for those prescriptions that we would be expecting they would be going for. It is normalizing, it is getting better. We are optimistic about the fourth quarter that we will

see a further sort of increasing volumes in Europe. So so that's really the story on Europe. The story on the US it is a little different, but basically the same. That we did not see the specialist opening up in the second quarter the way we were hoping for. So we are very dependent on headache specialists for JOVI and on psychiatrists for Osteto, and we saw that they were

opening up their clinics slower. We are now at the end of the third quarter here we're getting very close to psychiatrist officers being sort of back to where they would have been at the end of two thous But that natural growth you see of a couple of on on patient population and doctor visits, we haven't seen. So we've had a setback in the sense that the growing brands, we have a joey for prevention of migraine or stead of for charter dis Skenesia and Korea in huntress disease.

They are growing nicely, but the growth slowed down in the first and the second quarter. So even though they're growing nicely now in the third quarter, the numbers are still below what we hope for at the beginning of the year. So basically we're optimistic about the growth patterns, but the absolute numbers are probably a hundred million below what we were hoping for. So core is it by the end of this year, the first quarter of next year that you anticipate in terms of the numbers at

their back to pre pandemic levels. When does it happen? We anticipate that here in the fourth quarter. The numbers in terms of script volumes and the numbers in terms so they're normalized numbers, you would say, will be bad to pre pandemic levels here in the fourth quarter of all right, And we know and that that's for both

of Europe and North America are one of them. Is that for every every region, we know the North American market is your biggest market based on revenues, both Europe and North America and it and it plays a big role for us. So we're really not talking about US not having the right you know, market shares. We're gaining market shares with Jovi in Europe, we're gaining markets here with Osteedo, so we're performing nicely, but the total volume in the market is just lower than what we were

moving for Core Are you a CORE are you? Are you confident that people returned to the physical doctor's office, the physical psychiatrist office to the same degree that they did before the pandemic. Does it ever fully recover with the rise of telemedicine. I think the number of consultations will fully recover. Some of them will be telemedicine consultations,

and that is in principle is fine. I mean, the main thing is that people have an in depth discussion with their psychiatrist, all with their headache specialists, because you could say the problem about launching new drugs is that you need to communicate with the specialist. So our sales reps needs to communicate with the specialist and you need the specialist to communicate with the patients in order to

get the conversions to linu and better products. Hey what oh, go ahead, please finish And that can happen of course on video, and it can happen physically on average, I would say the conversion rate or whatever you want to call it, the pull through is higher if you have face to face conversations between the doctors and the salesforce, and if you have face to face conversations between the doctor and the patient. Hey, just got about forty seconds,

and we'll come back and talk some more. Um in terms of growth engines once we get kind of back to more normal, is it. Do you see catalyst coming for you? Guys? Got about forty seconds and will come back and talk some more. In terms of new drugs that you can put out to the market, Yeah, it's really more of a stato, more of a jovi. And then in a long edging we spirit on l Ai that we hope to get approved next year. All right,

And is there a COVID play for you guys? Not really not a part of the fact that we are distributing COVID vaccines for instance in Israel, and we have a lot of Parma suitables that have been used when you treat these sort of effects of COVID in intensive care units and so on, But we don't have a play specifically targeted towards COVID nineteen Hey, core. A few things we want to bounce around off of you and

just get to that. I feel like are out out outlying issues, if you will, uh, and curious about your view. First of all, earlier this month, you guys had recalled more than two and a half million vials of drugs that the company that you guys had said may not be sterile um and there were used inspectors that discovered this at a Tever production plant in California. I think there were medicine used to help to cancer. They may have contained mold contamination. What's the update on that. Yeah, So,

first of all, just two correct a few facts. We actually ourselves discovered some environmental issues related to mold. It was not the case that the products were not sterile, and we did recalls in the first quarter and the second quarter, and that's something we did based on our own internal investigations. And then following that, we had an

FDA inspection which resulted in a three. And we are now addressing all the points raised in the three, working together with FDA to secure that we get all the remediation done and the factory is still in operation. From the point of you, we're still packaging and shipping products, but in the sterile area in order to make sure

that the environment is in completing perfect compliance. We have stopped manufacturing for a shorter period where we're doing remediation, and we expect to be back manufacturing here at the end of the quarter. And this is all done in close collaboration with FDA. How far along are you in working out all of those issues? How long do you think you will be collaborating with the FDA. So some of these issues takes, you know, a shorter period to correct.

Other issues take a longer period. So typically when you have a situation like this, before you reach a complete remediation, it can be one to two years. But that doesn't mean that you can't be manufacturing and supplying your patients in the meantime. What's the cost of the company because of this the downtime as well as the fixes. So it's relatively insignificant. It's not a major manufacturing site, it's not a major part of our revenues, so the consequences

are basically included in our accounting for the third quarter. Hey, and also one of the things that we've been watching and I want to get you the way in on as A Nerve Artists considering selling or spinning off its Sanders generic drug business. How do you view that? Is that a good thing? Is it something that you're interested in purchasing? So I viewed as something and of course

you have to ask them why they're doing it. I wouldn't know that, but if I, if I just took it from the outside, it reminds me of what fights A did with their up joint unit. They basically we had some generic and old products that they spun out and put together with my Land into Viatress, And I think it looks like Navartists doing the same. And one of the you could say arguments you've heard is that, of course you get better ray sios, you get better growth.

RAY shows if you have an old business that you spin off and you keep your innovative specialty business, and your numbers from that point of view, will look better, And that might be the motivation. In terms of us thinking about Sanders, we're not really looking into it. We don't have any appetite for any major acquisition, simply due to the fact that we're focusing on reducing our debt,

so it's not something we would be interested in. May course, I want to get your thoughts on why you're planning the four billion dollars in E s G bonds tied to medicine access. Why go to E s G route with these bonds. Well, basically because we believe in doing good for the environment and doing good for patients. That's really the foundation of the company. We are the world's largest manufacture of medicine. We sell more medicine per day than anybody else in the world, and we believe in

doing good in while doing that. So what we've decided to do is to issue these four billion dollars in bonds. And just to explain that, we issue four billion dollar in bonds five seven, eight years out and we use all that money to repay debt, which is you know, one to three four years out, so it's really a

question of moving some of the debt. And the reason why we do it is because our debt repayments in some of the coming years, for instance in twenty three is more than the two billion plus cash flow we make every year. So that's just to explain why we are making a bond offering. We basically sell bonds in order to buy some MOLA bonds, so that we change

the timing of the debt. The reason why we do sustainability link bonds is basically because we can do it and because it's good for society to What we do on the exers side is really we commit to ensuring access to essential medicines in loan middle income countries. Now essential medicines, that's a list of medicines that w U h O has to find that essential to healthcare. Hey,

court just got about twenty seconds here. What are the metrics though and transparency that you will use to make sure that that is E s G and working to meet your intended goals? Just quickly. Yeah, So it's already certified by external bodies that you know, independent and they do this, the Independent Access to Medicine Foundation, the I S S s G people, So they look at and say,

this makes sense. This is bona fide. This is something that will be measured and reported and that will help societies around the world and the actual kid guys get more essential medicines registered in more of these lone middle income countries. Okay, we gotta run unfortunately, core Um. Hopefully you'll come back and let us know how that's going. Course Salties President CEO T have a Pharmaceuticals on the phone in New Jersey. It is the Blueberg Big Take Today.

It's also the upcoming cover story domestic cover story Bloomber business Week Magazines, out tomorrow online at business Week dot com on the Bloomberg terminal and Tim It's about the impact the pandemic has really had on the American worker, for better or worse, and for better perhaps in terms of some of the lasting leverage we could see when it comes to unemployment reform. Josh Idolsen wrote the story's labor reporter for Bloomberg News. He joins us from the

Bloomberg nine sixties studio in San Francisco. Josh, congratulations on a great story. Along with the great resignation and strike toober, jobless Americans are fighting for unemployment reform that could translate into lasting leverage, but it hasn't yet begun to translate. Take us into it. Thanks for having me. We are at this rare, turbulent moment in the workplace in the US.

You have workers who labored through the pandemic, who shouldered great risk to themselves and to their families, and didn't get the compensation or the safety protections that they felt they deserved. You have workers who were benched involuntarily and saw an unemployment system that they thought should be available and should be reliable fing them. You have lots of workers, historic numbers choosing to quit their jobs. So this is

a moment of both exit and voice. Some people are leaving their jobs, some people are trying to ban together, and in the places where workers have a union in the United States, we're seeing large numbers of workers authorized strikes, making October Striketober, as some put it. So this is all playing out at a moment when we have perhaps the last big bill of the Democrats, last stretch for a while of being able to legislate unilaterally being wrangled over.

And it's one that could make permanent changes in ways that would change workers leverage, including the unemployment system. That there's a relatively unusual effort a foot right now to organize jobless workers to transform So uh, norm and norma Ray moment. Everybody go back and google that movie. But I mean, is this a big move forward then, because we've seen unions right declining in power and in uh in membership. But is this potentially a critical change when

it comes to the power of the worker. It's a moment of possibility, and in some ways it has the flavor of the way one historian put it to me is when you have a national mobilization like a world war or a pandemic, you have all of these workers who get the country through it and bottle up some frustrations along the way, and then afterwards expect a debt

to be paid back. We're in a different political moment when where there's attention to essential workers, into inequality, into labor that hasn't been there at times, and we're in a moment where many workers, like people that I talked to in the film and TV industry over the past week, have higher expectations than they used to, have a different consciousness both from the work they did during the endemic, but also from their time out of work during the

shutdowns about the importance of their own time, and feel unwilling to accept some of the things they did in the past in terms of how work dominates their schedules and encroaches on their personal lives. Josh, for the story, you spoke to people in several different parts of the country. I'm wondering though the Washington d C. Connection. The lawmakers who are really on the side of labor right now, Senator Ron Wyden, Alexandroocazio Cortez, representative from New York. What

are they doing so? Widen, the chairman of the Senate Finance Committee, told workers that he will fight like heck to get something that is at least a down payment on fundamental change to the unemployment system into the Reconciliation bill.

There are things that could be done that would address some of the issues that workers have been raising over the years, and that some experts have been raising for years without a lot of attention in Washington areas, like the exclusion of many workers from the unemployment system and

the race amongst states to cut off benefits more quickly. Well, and I always think it's important when we do a story like this and you do it is and you go there, Josh, in terms of what the u S system is may be compared to what we see in other countries, and and it's meager, right, in terms of the benefits compared to what other countries do for workers, that's right. The maximum months that people can get benefits here are lower than you see elsewhere. In peer O E. C.

D countries. It's a pretty stingy system in the US, and unemployment insurance, as stingy and unreliable as it is, is still controversial in part because it does give people a little more leverage to hold out a little longer against a mediocre offer they don't want. Well, that's what we see happening in the labor force right now, right

this imbalance between supply and demand. Companies telling us each and every day they're having trouble finding workers, yet workers aren't ready to get off the sidelines and go take those jobs. Well, keep in mind, many workers don't qualify for unemployment benefits, and many circumstances where you leave your job don't qualify you to get the benefits, and many people who are receiving benefits now are no longer eligible, either because of the federal cut off or because of

state cutoffs that happened before that. But that said, there is research that where there are more unemployment benefits, workers in some cases are able to hold out and choose to hold out for jobs that pay a little better. And that, depending who you ask, is one of the best or worst things about having this system. So the fight about unemployment is in part a fight about leverage

in the labor market. And we did this cover story in part because right now there's a fight over workers leverage that's happening on picket lines, and there's a fight over workers leverage that's happening in Congress at the same time. Well, and probably last question, Josh, but I am wondering about the political will, right, I mean, politicians are always thinking about their next ballot and also the support to keep

their election or re election race is going. Um, what is the political will to pick up on something like this, because are these people who are fighting for some of these benefits? Are these the people who really go out

and vote? That is part of why this organization Unemployed Action has come into existence is that the jobless are not usually seen as a prominent political constituency that people have to cater to, and being unemployed is often not how someone wants to self identify, and it's generally not something they want to continue to be true of them.

And so this group has been struggling against the tide in many ways to create a forceful political constituency and one that people continue to be active with even after they've personally found another job. Josh just in the last thirty seconds that we have with you, at what point will you know? At what point will we know if this is a moment like post World War two in terms of power for the labor movement, And just got

about twenty seconds. We're going to have to see what happens in Congress as well as on the picket lines over the next months. But labor has been in a real catch twenty two of needing more members and needing legal change, and people are desperate for a way to break out of that. All right, it's the domestic cover story of Bloomberg Business Week. It's written by Bloomberg News labor reporter Josh Idolsin, so be sure to check it out.

It's also on the Bloomberg terminal and you can find it at Bloomberg dot com and business week dot com. Good story, Josh, and congratulations on the big take. But just as another reminder of the pandemic impact in our world. All Right, you're listening to Bloomberg Radio. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim

Stinovik on Bloomberg Radio. Well, we've brought her in to talk about Robin and but we've really been talking about taxes and tax billionaires behind the scenes around our table here in our studio. Tax policy expert too. She knows Robin Hood. She knows tax policy. She is our investing reporter at Bloomberg News here in her interactive broker studio. Let's talk though, a little bit about Robin Hood. It's down about ten point six percent in today's trade. Reported

earnings after the close. I think it's below right easily. It's I p O price. So there you have it. Revenue fell short of Wall Street estimates, cryptocurrency transactions plunging from the preceding period. What do we need to know? Annie, So robin Hood's earnings yesterday did disappoint, and you're seeing the effect on the share price today. Like you mentioned, the stocks down ten percent. The real story was around crypto transaction revenue, which was seventy eight percent lower versus

the previous quarters, like it disappeared overnight. Yeah. And the reason we saw that, of course, is we there was this gigantic run up in doge coin in Q two and that kind of abated. So now the big question is that users have is will Robin Hood add more cryptocurrencies. They want Sheba, a new coin which is completely different from doj coin, and they've struck a more cautious approach, completely different, but still a joke, exactly, a different joke

about Sheba. You news it's a mean coin. Yeah, yeah, exactly, like wrapped up in a crypto. I was particularly struck by the decline in crypto because bitcoins price had gone up. Do any of us own it? No? No, no, no,

you know, I don't know. No, shea over here. But I was particularly struck by this when these earnings crossed yesterday because the price of bitcoin had gone up by something along the lines of since the company last reported earnings, And my thought was, Okay, well, doesn't that get more people off the sidelines and more people trading crypto and

more crypto revenue for the company. But no, So across the board's crypto volumes were down by around a little over thirty percent in this quarter, um, just across the boards in the industry, but robin Hood felt it particularly because they had even said in the second quarter that doge coin made up more than sixty of their crypto transaction revenue, so it wasn't just crypto trading generally, um, it was specifically the surgeon dozed doge coin that was

juicing their transaction revenue in the second quarter, and now you've seen that abate. And then the other thing that's kind of spooking investors is the guidance that they gave. They gave some guidance in Q two that like, hey, Q three will probably look a little bit quieter on the trading front, and they've given similar guidance for Q four unless we have another crazy meme stock or meme crypto.

Is because everybody's got back to work, because I'm hearing everybody hasn't come back to work, so helped me out here. Like you know, I had a note and I was gonna say, has the company peaked already? I mean, they definitely went public at just the right time. I mean they were going public when they were absolutely on fire coming off of Q one with stocks and options going insane over a game stop and all the meme stock trading.

And then Q two you had this huge run up in dojcoin, which they were ready to catch because they already offered doj cooin coin based didn't until June. So now now that they're being a little bit more cautious than their approach on cryptos, and that now that there wasn't just one singular event that was quite like that in the third quarter, you're seeing a little bit of wildbliness.

It's that caution you write in your most recent story, Annie, that is playing out in terms of attention between the safety that robin Hood is going for. It's in the crosshairs of regulators right now, and it doesn't really want to necessarily add every meme stock or every meme coin excuse me, uh, the ability to trade there. So, so how is that playing out for investors if robin Hood doesn't embrace the SEBA news of the world. That's a

really good question. Robin Hood has gone through this evolution where they're trying to show now and and have made really big strides towards being a more established, regulatory compliant brokerage. So they've done things like they've added added customer service twenty customer service calls seven, they've added some protections and

bulked up in that area. And now they've got this problem of like they allow retail investors to ask questions on their earnings calls in the top one was when will you add more cryptos and when will you add new coin. So there they have this tension of trying to walk to the line maybe a bit more on the regulatory front, will also trying to placate these customers who really want at least some of them really want

some meme tokens. Well, and you did point out in your story the brokerage brought on more, brought on about more employees in the period compared with the second quarter. So engineer's customer support and compliance. Who are we supposed to compare them against? Because the CEO or the CFO kind of warned that we don't expect our growth to be linear. We do think it's going to ebb and it's going to flow. It's going to be highly dependent

on things like market conditions and volatility. So can we compare them with I don't know, the trading floor of a big bank or one of the you know, traditional brokerage with it's a Schwab or something. Who do we compare them against. It's a bit of a tricky comparison because Schwab or Interactive Brokers are of course both retail trading platforms, but they have these other services, particularly Schwab

has a bank function. They earned tons of money from net interest income, so they have these other streams of revenue, whereas robin Hood is still mostly dependent just on transactions in cryptocurrency stocks and options to earn its revenue. Um. So it sounds like it leaves them a little bit vulnerable, right,

which it does to things like volatility too. When when fortunes shift as far as how much people are trading, that impacts robin Hood a lot more than it would a company that is kind of cushioned by having other business lines. What about those other business lines that robin hood is interested in adding crypto walllet's I think it's Bloomberg Intelligence. Is Julie Sherriel that has written about the

idea of this becoming potentially a super app. Yeah, robin Hood is really into this idea of becoming a financial super app, so offering more, like you said, crypto Wall. They reaffirmed last night UM in their earnings that they're looking to add retirement type accounts, even though they didn't give a timeline for it. So they are trying to move forward on offering more and more products. But you know they're moving along on that. We haven't seen these launch,

but we have the promise of those additional um ideas. Mauricio, who's a listener, says, dog is a meme coin. She is a meme of a meme ak scam coin. We don't know, right, We really don't know how all this stuff is going to play out. Yeah, I mean it is like a meme squared. Yes, it's a meme inception situation. Oh my god, my brain hurts. Annie Massa, thank you so much. You always set stuff straight when it comes

to this world. So thank you. Annie Massa. She's an investing reporter here at Bloomberg News in her Interactive Broker studio and among our most read stories on the Bloomberg another one having to do with Hurts and Tesla's. This time we're adding an Uber and Caravanna. Let's get an update on this ongoing story from our own Eric Shatzker. He's editor at Large at Bloomberg News. He's with us

any Bloomberg Interactive Broker Studios. That big news earlier this week was, of course, Hurts buying one hundred thousand Teslas over the next fourteen months. Now it's partnering with Uber to provide Tesla's to Uber drivers. How's it going to work out? Eric? Quite simply. Uber drivers are going to rent Tesla's from Hurts, not quite the same way you and I rent Tesla's, or will rent Tesla's perhaps from Hurts, but pretty close. Instead of it being a day by

day rate, there's going to be a weekly rate. It starts at three dollars, it's going down to two. And the sales pitch to the Uber driver goes something like this. Right now, you've got to bring your own car, and if you want to drive an e V, you have to bring your own e V. That means, generally speaking, you have to go to Tesla. Perhaps you could go to GM, perhaps you could go to a few other companies, but you're probably going to lease it or you're gonna

buy it and finance it with a bank. You're gonna have to make payments, you're gonna have to maintain it, you're gonna have to get insurance, gonna have to do all the things that those of us who own cars do. And in addition to sitting behind the wheel for twelve twelve hours a day, that's not so much fun and it's a hassle. And the idea being if you pay this weekly rate, you get rid of all that stuff.

Hurts takes care of that for you. All you have to do is show up to the Hurts location, take the car, go out, do you you know, pick up your rider's, complete your trips and drop the car back off and the eye and furthermore, I should add that that Uber because it wants to go green. Daracaus Rashahi, the CEO, has some very big ambitions when it comes to fighting climate change. Is paying Uber drivers a dollar per ride up to a maximum of four thousand dollars

per year. And if you the Uber customer, chooses to go green, the driver gets an extra fifty cents. So in many cases it could actually work out to the driver's financial benefit to do this as opposed to buying or leasing. Wait wait, it sounds like certainly for the Uber drivers. Yes, yes, you know, at the very very very least, even if it's a wash financially, think of all the hassle you give up. You know, I have

to say this story. I am fascinated by the Tesla component, Eric, but I am so fascinated by what's going on at Hurst and how they are redesigning that company. Just a few months out of bankruptcy and thinking about what they want to be going forward. It's not like your father's rental car count. No, these guys are not old hands at the car rental business, their hedge fund people, their

private equity people. They look at this with a fresh set of eyes and question every single aspect of the business model, as opposed to getting up every morning and thinking, oh, I'll just do what I did yesterday. Well, but how much of it is Mark Fields too, who is kind of your old car guy, right, I know he now works for TPG, But what's how much of what's going on is Mark's vision as well? Well, he's the interim CEO, and it's not clear how long he's going to last.

It hurts he is clearly well, he is most definitely a part of the execution. He's responsible for making this happen. But the ideas actually came from the financial guy eyes. They concocted these ideas and nurtured them as they were contemplating whether to make a bid during the Hurts bankruptcy auction. They put in a six billion dollar bid. It was very competitive. Many people thought perhaps they were overpaying, And

now it looks like an awfully good deal. I keep thinking of Jim Coulter, who we talked to at UM when we were at Stanford, and you know the Rise Fund. Like he right, he's thinking about climate, He's thinking about disruption certainly and the impact on our environment. And I just feel like you can see that over this. Mark Field said it to me this morning. He said, we are trying to disrupt ourselves and hopefully then disrupting the industry. Eric,

where does Carvonna come into this? Caravanna comes at the back end. If you think about the car rental business being three principal components, buying cars, renting cars, and then selling cars. Caravanna comes in on the selling part. Up until now, Hurts has been disposing or exiting vehicles, as they like to say, either by selling them off at Hurts locations, which is not a bad business, but also

getting rid of them through wholesalers or through auctions. And those are bad businesses because those cars tend not to sell at high prices. They give up a lot to the middlemen, and the recovery is low, and of course if you have low recovery on the back end, your profit margins overall deteriorate. The idea by partnering with carbona home of the car vending machine, is that you'll get a much higher resale price after carbon, even after carbon

is commissioned, by going direct to consumer. So the same DTC concept that is animating a company like Nike is now actually helping to improve margins at Hurts. Did you use the word our our phrase asset utilization yet we haven't used asset utilization. Well, because one of the missions when you're renting cars is to keep them on the road as much as possible. Goes without saying, however, if many of your customers only want a car on the weekend or infrequently, you've got to find something to do

with that car during the week. So think about it this way. A leisure customer like myself perhaps might go and rent a Model three for the weekend, and then the Uber driver takes over and uses that car from Monday to Friday. Thus the car is busy seven days a week, and Hurts comes out on top. That's goodilization, right, yes, maximal asset utilization. Does it lead to more sales of test the vehicles beyond the one thousand that you recorded

on Monday? Well, there's clearly an implication that it might because in the you know, as part of the Uber agreement, there's fifty tho cars set aside for Uber drivers, as many as fifty thousand between now and the end of two thousand twenty three, but there's the potential to extend it to a hundred and fifty thousand. These are all Tesla's. It's an exclusive deal with Uber to rent Tesla's two drivers. So yes, potentially many more Teslas down the road. Yes?

Or now? Should we be watching Avis? Next move? Avis is watching Avis, that's for sure. Eric shatzk are great stuff. This is Bloomberg. Yeah, but you let me drive? Oh no, no, no, no, this is not a toy. All right, please Gravels, I want to drive. It's a good question. Drive. This is the drive to the clothes well up on Bloomberg Radio.

All right. Definitely a different market picture that we've seen in the last hour or so because we were bouncing around a little bit, but we have fallen off our highs, really taking a leg down and taking another leg down as we get closer to that closing bell. Charlie of course, breaking down the numbers. The Nazak just barely holding on to a two tenths of a percent gain after the

NAZAC one hundred. We did see hit a record earlier in the session, an all time high propelled by some of those big tech names, Microsoft and Google among them, which has really provided a lot of momentum. Let's get to the drive to the close. Barry James is the president, CEO, and portfolio manager at James Investment Research. He joins us on the phone from Alpha, Ohio. Barry, it's great to have you. I want to get your overall thoughts on the market before we get to your stock picks. How

do you trade a market like this? I think we're in a rotation period. I say, a confluence like the Mississippi and Missouri rivers where they meet, You've got a green river and a brown river, and then it becomes a straight brown river after that. And that's kind of where we are. You know, the COVID is looking like it's it's coming back down. Inflations of problem bottlenecks are a problem rates even though they're down today. You know, I've been hitting higher and the economy is a little

more normal. So I think we have this transition from the tech area from the growth area from the large cap into the cyclical value in smaller types of stocks. And that's where I would I would be focusing today. And yet you say that about rotation from tech, and yet every he's been all in on Google and Microsoft today. You're right, and it's kind of like these big storms on East and West coast. You know, something can come up that totally changes everything for the moment, and that

big thing is interest rates. If you just follow the bouncing ball, as the rates go down, Tech goes up, Rates go up, Tech goes down. So uh, you know it's it's it's maybe a one off. I don't know what right, Well, what is though the smart correlation? Because also higher interest rates can mean and improving economy, and those companies stand to benefit as much as anything else of a reopening of the economy, obviously supply chains and

inflation fears aside. I mean, we saw companies like McDonald's and Coca Cola being able to push higher prices through. That's that's exactly right, and that's exactly what we're looking for. And like our our fund, the Golden Rainbow Fund UM, we're trying to find companies that have pricing power and Uh, if they don't. And the easy way to do that is to look at the operating margins and can they really give them a boost? That kind of the behind

the scenes type of numbers to look at. But without that, the companies are going to really be hurting, that's for sure. Why specifically are you concerned about stagflation? What are the signs that you're seeing that are telling you that we could be in a stagflation in your period? It's it's very interesting. I got a job offer at McDonald yesterday, you know, in my my bag to come work for us, and then the ladies no, that just actually, I mean

they had it there. They're they're giving everybody that goes through their their drive because they're looking for workers. And the college student told the professor around here, he says, they asked one question at the interview, what's your size? But anyway, that is an indication that you know, we're gonna have higher wages. You see it all over the place,

and so that's that's one side of it. Um stagflation is maybe a little bit of a strong term, I would say, just because you've got you know, consumers with a D and forty trillion dollars that they they have that they can spend, and you have all these companies are needing to expand, so those should continue to keep the economy going, but it will be more expensive. In the lady that works up you know, at the front up here at my office, she said, she went to

get a roast. It was like thirty dollars for a small roast. She says, Well, I guess we won't be having roast for dinner. No, people are talking about Thanksgiving. Get ready to pay up. You know. We often see some maybe a price tick because of the demand or just because people know we gotta buy turkeys and all that good stuff, but because of some of the concerns about the supply chains, that we are going to see higher prices. Hey, economic news, You've got a FED meeting

just around the corner. We get a read on GDP tomorrow. How might that impact investor sentiment? I think, Um, everybody knows the Fed is gonna you know, taper, but maybe they'll believe them this time. I'm not sure. But as we've seen before, the last you know taper back in the thirteen or so, um it it had a very short term impact and then rebounded, So I don't think it's going to have that much of a of a

of a call on things, to be honest. Maybe a short term and maybe that's what today is all about, you know, an anticipation of that, but probably not all long term thing. Well, I promise we get to some of your stock picks, and I want to start with an Ohio company where you're joining us from Fifth Third Bank? Uh, the fifth Third Bank Corps. Why I pick for you? Well,

it's a it's it's a really well run company. I don't have any inside information, but they they have a history of beating you know, their estimates, both the top and bottom line. Uh. Looks like loan growth is picking up again. Uh. And um, you know, if we do have this fed tapering, pushing rates up is always a good play for the banks, not obviously today, but this has maybe a better chance to do some buying. So uh, those are those are the areas and intends to focus

Midwest Southeast, which are very very strong areas. So it has it has the pieces of the puzzle land. It's more of the cyclical type of stock that we're looking for right now. Got another name for us? Yeah, Well you were you were talking about the shipping were like Old Dominion, maybe it's not you know, the the guys right at the at the port, but they do more

into regional and multi regional type of off halls. But they've done real heavy investing in their employees and equipment, and they're really keeping the people that they have, which a lot of trucking companies are having having difficulty doing um And we really see that they have you know, gas search charges and whatever, so they have great pricing power. So we believe that you know, they're hime operating margins and the free cash flow margins and those sorts of

things are good for the future. Old Dominion tear this year, it's up almost six as we speak. Hey, we gotta run, Barry, Thank you so much. Barry James getting an offer to go work at McDonald's. UH president and CEO and portfolio manager over a James Investment Research joining us on the phone from Alpha. But that is our world that we live in. That really speaks the way that companies are looking for workers. Right now, he's going through the drive through,

he's getting an offer for a job. Right They're desperate. We we see it big time, and we see it certainly at some of those um entry levels you would say are lower positions. We definitely heard it from some of the CEOs that we've talked to. 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 to Bloomberg Global News