Sternlicht’s Starwood Gives Up on Malls

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 Global News. And we've been watching a couple of the names. When it comes to their results. Chippy Morgan is down one point three percent, and a quick check on Goldman Sacks again it is down just about half percent off its loads of the days. Yeah, let's get right into it with Alison at william Senior

Global Banks Analysts for Bloomberg Intelligence. Okay, so here, we are not quite halfway through a big bank earnings. Allison, how would you summarize what we know so far based on the two banks that reported today? So I think no big surprises, but really a sort of a continuation of the trend in terms of some of the key

concerns around that interesting income and higher expenses. So the the key for investors that are really focusing on is the potential for loan growth to return in the second half. Banks really need that to help loose their net interest income. Trading was very good in the quarter on the equity side of things. Fixed income down as we expected. We expect further normalization in the second half. The big surprise out of the investment banking arm of the businesses was

U merger and advisory. We expect that, excuse me, mergers and acquisitions. The advised business we expect to continue to be strong in the second half UM. But but that's a small piece of it. And so in general we have the big capital markets piece normalizing. We have UM not interesting income a little bit disappointment. Disappointing just because consumers are not borrowing. Corporations are using cash to buy companies, consumers are using cash to fund their spending. Where well,

it's interesting. Well when it comes to borrowing, Uh, is it just consumers and businesses aren't interested, or is it that the banks are picky about who they give loans to it's really more about the cash that corporations and consumers have on their balancy. For consumers, it's really UM. It's been fueled by the stimulus, so UM. Our Economics Department of UM Bloomberg and Economics department has calculated over

two trillion dollars UM. And what we've seen with all the stimulants payments that have come so far is consumers have used that money to pay down debt. So that's healthy UM but UM and they're spending, but they're just paying that out of savings. And then on the corporate side of things UM. As you recall a year ago, in the pandemic took hold, corporations drew down on their credit lines banks. However, when the capital markets opened up,

especially the large corporates, UM tapped those capital markets. So we've seen very strong debt issuance UM over the past year and effect in the most recent quarter, very strong high yield issuance UM. So they're continuing to to raise funds UM. And then what you know on the commercial side of things, UM, it's really that UM again, we we need the demand side to pick up. So it's not the banks are out there, they have tons of deposits, tons of liquidity. They want to make lens, but the

demand is just not there yet. So I wonder what what was expected from from shareholders and if their expectations were not met, especially when it comes to JP Morgan, because shares down by more than one point three percent, it doesn't sound like there wasn't that much that was surprising. Well, yes, so I would keep in mind it was a very strong quarter, but most of the strength that we saw were things that UM had been expected. We had a

huge reserve release UM. Again, that's something that investors are expecting that I guess the new news and again that interest in come disappointing, but we had sort of, you know, been trending that way over the last several quarters. But the new news in terms of expenses and expenses I think are something we're going to continue to be focusing on this week. Across the banks. JP Morgan got into

sixty eight billion of expenses in January. That's gone up UM to sixty nine, to seventy and now today seventy one billion. And I do think that, you know, part of it is because the revenue is better, but part of it is they're investing. And I think that even though investors might be disappointed today, JP Morgan has shown over the last several years UM this ability to fund what we call the virtuous cycle. So they're spending more UM, but that's helping them to make more right, it's longer

term investments. It's you know, we all want management to think long term, and so I think we need to think long term along with them. And and with the incredible trading that we've had over the last couple of years, we think it's actually healthy UM that the banks are investing this, especially with all the talk about fintech, all the competition from fintech UM and everything going on on

that front. Well exactly, we just talked about city groups specifically, right, like, you know, looking at fintech, I mean they're all staring at down city city debuting that no fee retail trading to compete with you know, others. So a little bit of an opener for the rest of the big banks too. We're gonna get here from what city group we've got, what Bank of America we've got Wales, UM, tell us

what you're watching out for. So with city group UM, they had actually already got into a higher expenses for this particular quarter. We're going to be listening to see

what the guidance is for the full year. We think the expense story there is a little bit more negative because a lot of the driver there is that they have to spend more UM to get sort of their systems and compliance, so they have some regulatory concerns and issues, So that UM expense spending where it's not generating revenue is a little bit less positive to us, but that that's the main thing we're looking for them. Bank America similarly, they last quarter guided up expenses for the full year,

whilst Fargo already has had out of it expenses. We're hoping them to come down. For all those banks, we're going to be looking in terms of again what is the loan growth outlook, what is the nut interesting some outlook, and then one thing we didn't touch on quickly, prime brokerage business very strong. Will Bank America and City Group also show some strength. They're gaining some share in the week of start see is pulled back. You did it.

You cover the universe. You're incredible, Alison, Thank you, thank you. Bloomberg Intelligence Senior Global Banks analyst, Allison Williams. This is a busy week for her. We know that she's joining us on the phone and now earning is often running. This is Bloomberg. This story among our most read on the Bloomberg about Barry Stern Licks investment firm and given up on malls. Yes, Starward Capital Group they owned a thirty mills before the COVID nineteen pandemic. It is now

down to eight. That is a massive decline. Yeah, so let's find out what's going on. John Getleson is it with us real Estate and Investing Report at Bloomberg News on the phone in l a Hey, John, nice to have you here with Tim and me. First of all, I mean Barrastone looks really well known to our audience. I mean this is a guy who is big time in different types of commercial real estate. That's right, Yeah, I mean Starwood Hotels now part of Marriott anyway, that

was his original you know, branding opportunity. Um. But yeah, he started out and distressed real estate, and uh around twelve he started buying up malls. He thought, you know, I can get a good deal on these and I could make money on him. Uh. But basically the market was changing fast and then COVID hit and things got even worse. So he got caught basically underwater with a lot of these properties, and rather than pay and try

and revive them, it didn't make sense to him. It made more sense essentially, self for loss or walk away and look, two billion dollars sounds like a lot of

money to for most things. But this is a relatively small part of star Wars portfolio, right, Well, yeah, I mean about five of Star Wars portfolio was in what it was is known as Starwood Retail Partners, So um, yeah, it's it's I mean, imagine your stock portfolio and you have a bunch of companies that you're like, I'm just going to get rid of them and focus my energy my resources on other opportunities out there that have more upside. It's a lot of work to deal with these malls.

If you want to redevelop them, you take time, patient skill sets that maybe, if I'm very stern lick, I'd rather be spending my time on something that I can make money on faster. Is this someone who's cutting their losses before they get worse? Like seeing the writing on the wall. Let me think what other little cool phrases, pity phrases. Can I say, but you know what I'm saying, like saying, this is just not a good commercial space anymore.

And does it speak to a bigger larger story here, John, Well, it's definitely a bigger larger story. I mean we've all seen ghost malls have been developing for decades now, um, and it's accelerated since COVID, since you know, e commerce, um and and since shopping habits changed, Like Carol you were saying earlier, you haven't been to a mall in

a while. Malls were built around department stores, and department stores are like the biggest casualties you know of shoppers who can go to Amazon or go to Walmart and all those other kind of things. But John, I do you always wonder and forgive me because I do feel like the coasts, you know, especially in New York, were like,

all right, I'm just shop online constantly. But if I go across the country and I've been in different states where I'm traveling and you do go to a mall or you have to go to a store for like you just you shop different? Is that true the case? I just don't want to be so East Coast centric or is it? I mean, yeah, are they breaking down kind of all over the country. I would say it's all over the country. I mean because these malls that Barry Sternly gones, they're sort of like secondary malls and

secondary markets. If you have a good mall. I live in southern California, in Beverly Hills, UH in Orange County, UH in the right parts of you know, the San Francisco Bay Area, Silicon Valley outside Seattle. Those those are doing great and people are still going to them, and they're now eating outside, They're going to movies, they're starting to do all of the other kind of activities on top of buying clothes that used to do it a mall,

but there's so many malls in the United States. We are overstored, over retailed compared everywhere else and on Earth's And then there are places that are really easy to get to. I mean a Walmart or It's Target is like a mall in one place for a lot of people, and they're really you know, discount good prices and easy and easy out. Hey, John, just in the last thirty seconds we have with you, who's buying these malls and

what are they doing with them? Well, basically, people who are getting them are getting them at very low cost, And it really depends on the location. You can take out a department store, turn it into an apartment, You can turn it into maybe an office. You can turn it into a medical office or a school, or you could turn it into a sort of last mild distribution place.

But you have to get the cost of the property down and an owner who has patient money so that they could take time because it takes a long time to get all the approvals that are involved with re purposing a mall like this, right, It's it's not so easy to just make a quick quick stetch. What what are you thinking? Yeah, it's just like such a small portion of the portfolio, It's crazy. Yeah, And I do think there's something to be like top tier versus secondary tier.

I think that's a good point that John made. Um John kittleson Thank You so Much, real estate and investing reporter at Bloomberg News from l A, joined him on Twitter at John gitt This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovich from Bloomberg Radio. We are highlighting another one of our most read stories on the Bloomberg Today, This one about the NFL player turn lawmaker that was a rising star in the Republican

Party tim until he wasn't. It's in the upcoming issue of the magazine. It's written by Josh Green, National correspondent for Bloomberg Business Week. Joel Weber is joining us as well editor for Bloomberg Business Leeak. He's with us in the Interactive Broker studio in New York. Josh is joining us on the phone from Washington. D c Um, who

is Anthony Gonzolison? Why why isn't he a national name? Well, he is a national name, I think, um, And I guess it's well, I guess in the Cheney I guess I would say, well, he's he's actually kind of purposely kept his profile slightly lower, I think, than than Cheney did. And you know, Cheney obviously it's like pretty prominent position

in the GOP. But I think what's really interesting about Josh's story is there were people pre January six who who really kind of looked like the future of the of the GOP right, and and Gonzalez was one of those. And now he finds himself in a very difficult role of being a kind of once future leader of GOP, potentially a rising star, but mired by what has become from the Trump Um supporting GOP. Uh and and Josh's brtting you in a little bit to talk about that.

What what has been his his tactic to date and and how does that put him um with his constituents, you know, I mean, what's passing about Gonzalez is that he is every he embodies everything the Republican Party has wanted itself to be for the last twenty five years. Uh, he's young, he has the son of a Cuban immigrant, he was the first round draft pick of the Indianpolis called he's got a business school degree, you know, serious young hip, all that kind of stuff. Clearly marked as

a rising star. And then Trump came along and and Gonzalez became one of the ten people who had voted who voted to impeach him, and practically overnight, that's sort of eclipsed everything else there is about Anthony Gonzalez and the reason I picked this race as as somebody said earlier, he's not as prominent as Liz Cheney, who also voted doing peach Trump and has made that the entire like

centerpiece of her political life. Uh, he's just a guy who who voted on his conscious voted in peach Trump, but is still a conservative congressman with what he thinks of a successful record. So what it sets up is this wonderful test case. It's almost like a laboratory experiment in whether a serious Republican conservative can get reelected after voting for Donald Trump. And and what what's so interesting

about this is that it's not just Republicans. The Democrats too are fascinated by this race because we think it's going to be a sort of a gauge about how strong Trump's influence continues to be. One of my consultants, i quote in Peace, likened it to groundhog Day. That you know, if if if the Trump challenger to Gonzalez's wins, then we know it's gonna be another season of Trump

dominating Republican Party. But if Gonzalez manages to hold onto his seat, then maybe spring has arrived and we've begun to move beyond Donald Trump and who's he gonna be in a showdown with who's the lukie at their faces? So his main challenge has got named Max Miller, who is a former Trump aide um from the local area. Immediately one Trump's endorsement as soon as he jumped in

the race. Because Trump, as we all know, revels in punishing his enemies, especially Republicans, and has gone after Gonzalez with Avenger. It's his first big rally. Trump's post election. At the end of June, he flew to Ohio, right outside gonzalez district to trash him and tell Republicans to vote against him. So that's a bit of a millstone if you're a Republican congressman running for re election. But

that's what Gonzalez has to deal with. I love that you write in your story that he Gonzalez appears to have a healthy relationship with his own political mortality. So he understands. He's a football player. Sometimes you win, sometimes you lose. Sometimes you're gonna play and be a star player, and sometimes you're gonna have another career after it tell

us a little bit about his his kind of approach. Yeah, well, I mean, what's what's been so I think disconcerting to a lot of you know, Republicans and just just sort of Americans general. I think is is the the number of Republicans who have kind of truckled to Trump and gone along with, you know, whatever the conspiracy theory or

why is that that he's sort of pushing. One name that gets mentioned a lot as South Carolina Senator Lindsey Graham, who who sort of reinvents himself according to whatever politics necessitates. And Gonzalez is adamant that he's not going to do that. Um, and I think the impeachment vote backs that up. But as he put it to me, I mean, he was

a first round draft pick with a great NFL career going. Uh, he tore up his knee, that that career ended abruptly, but he was able to reinvent himself, went to business school, got elected as a congressman. So he doesn't fear his own political mortality and quite the way I think a lot of other UH politicians do, and that makes him interesting. He's willing to kind of speak the truth, stand up for what he believes in, and let the chips fall

where they may. You also make the point, Josh, that he's set out to do and he's actually getting done exactly what he set out to do, from infrastructure to to COVID relief, to vaccines. And also he's had a pretty good couple of quarters of fundraising, so he's been

pretty successful thus far. Yeah. I mean the other fast thing you think about this is like back in the times before Trump, Um, you know, congressman used to get measured for re election on hey did you do what your campaigned and and said you had set out to do? The two two big components of of Gonzalz's last race where he said, look, we want to produce vaccine and distribute to everybody who wants it. That's obviously happening now.

And I want to push for a big bipartisan infrastructure bill. Uh. You know, and in a couple of weeks ago, Biden came out and announced big bipartisan infrastructure agreement the Gonzals had had a hand in negotiating. So, you know, by the old measure of whether or not you're you're an effective congressman, Gonzalas has a really good case to make

and he is a believer. Not everybody is, but he is a believer that that will still count for something with the Republican voters when primary time comes next spring. So next spring still feels like a long way away. When when are we going to start to get a sense of what even the polls might suggest in this case study, Josh, I don't think we're gonna note for a long time. By the early measures Gonzalaz is doing, okay.

I mean, his favorability ratings are strong, as you mentioned, you know, he had He's had two quarters very strong fundraising. But he also has the loudest, most important voice in the Repulican Party, Donald Trump's going against him. So I think part of it will depend, you know, is Trump as powerful and influenced, you know, nine months from now as he is today. If so, I think Gonzalas is gonna have a tough time getting reelected. But a lot can happen between now and then, and Gonzalas has enough

money to make a good case for himself publicly. So you know, we're going to get just what I said, We're going to get into this piece, which is a measure of Trump's effectiveness. Um. And I think that's why everybody in the country is gonna be looking at this race come next spring. Yeah. I did also think, as you pointed out, that it's he's had some strong fundraising kind of the strongest that he's ever seen, and maybe it's an early indication. Hey, Josh, thank you so much.

Josh Green, National correspondent, Bloomberg Business Week on the phone from Washington, d C. Joel Da have a last thought. Well, I'm also you know, this is one of many races where there were people who voted again for impeachment, and I just am also going to be very curious to what happens in all those other districts and do they go one way or is it like half and half or something? You know, Yeah, it'll be really telling in terms of what it means for how much just Trump

hit the road ahead of that too. Yeah, well, I'm guessing a lot. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio on the Wall. I couldn't wait to get to our next This is what's so great about having everyone come back to work. We can like talk during the breaks. I love it all right, so let's get to it.

She is in our studio with Tim and myself. It's one of our most read stories about those that are speaking out pushing for more aggressive government policies to address societal problems. Let's get more on the X E s G insiders who are dissing and dismissing corporate cream goals as hype on this story. Bloomberg NEWSSG reporter Sagel Kashan, she is with us in our Interactor Broker studio. I do love this story, So tell us about the individual. Um Tarik Fancy. Yeah, well, he was well in the

hospital the b so to speak. He should be at Black Rock, the world's biggest black cute UM. And as you remember last year, Life Fink came out and said he was going to put climate at the center of its investments and its investment strategy. Um Tarret was actually there. He actually left before black really ramped up. But you know, he talked about his experiences and it wasn't so much about being at Black Rocket. His experiences were more broadly

directed at the sort of the sustainable investment of investing world. UM. And yeah, he talked about how it's great having all these like low carbon funds, these climate friendly friends E s g. E. T f s and exchange traded funds, but they're not really enough to move the needle when we're dealing with the climate crisis because it is a crisis. That's what the scientists are saying. So what more needs to be done? I mean, what are these ex SG

insiders saying, isn't going far enough? Yeah? I mean, look, they all say corporate sustainability efforts have been good. It's not like it's been a waste of time, but there needs to be more aggressive government. Well okay, So I'm glad you brought that up because when I when I read your piece, I was again reminded of the lofty goals that we hear from companies. And these are companies that say, Okay, in three decades we will be carbon

neutral or net zero emissions. And I'm thinking to myself, Okay, is anyone listening to this right now or involved in what they're saying going to be involved in this company three decades from now? Like these are goals that are are so far away now, absolutely, And I think that's what I mean. What we've seen just this year, with just in the last last week week before, with the heats in the Northwest and Texas earlier this year, like this is a you know, we're seeing the effects of

climate change as we speak. You know, this is not something that's going to happen in fifty years on. We're already there. Well, you know, because we have the Sustainable Business Summit Global going on right now by Bloomberg. It's a couple of days of programming. I you know, and we'll hear a little bit of my conversation with the CFO of ab InBev and also the Chief Sustainability Officer, and you know, we talked about this and I think they would agree that it's not perfect, but it's a journey.

But I think what you're saying to me is, you know, there's those slow, meandering walks that we take through the park and then there's like I gotta get to work, bam. That's where we are. We from what you're hearing is that we need to be more aggressive about the steps exactly. I mean, this is what all of these executives or former executives have said, is that you know, we're in a crisis mode. So yeah, all of these efforts are great, all the corporate saying ability efforts are good, Um, but

we are in a climate crisis. So they're saying that the government needs to come in and implement things like carbon taxes and the like and more aggressive ones, more penalties to some right impunitive actions that if you don't abide more quickly, right, you're going to pay unfortunately, But we are so entangled with the phiosophial industry using you know, oh,

existence is all the fueling emissions. So we really need to sort of like change things around if we're going to meet any of these targets that companies are setting. Someone who spoke to you said, the problem with greenwashing is green wishing. What does that mean? Great quote? Yeah, um so he used to work Duk duncan Astin used to work at out Goals investment firm. And you know, there's always this talk about greenwashing, which is where companies

or groups are exaggerating their environmental sort of credentials. But he's saying, like green wishing, thinking that we're doing better than what we what we really are is even more harmful because it's this sort of like false sense of security. Well,

it's interesting. I do feel like the EU is leading the way, especially with the government involvement, and they are putting metrics and money um to that is that the model, but just a more aggressive form of what you know, what is I'm always like caught up in this specifics of what more we need to do to make it different. I'm on the same the same page as you on that one. I mean, there are lots of things going on.

I mean the SEC is looking at a raft of you know, potential moves and yeah, those debates going on and be anything from like disclosing like things like you know, E, s G metro And that's part of the problem, right, I know, even the A, B and guys are like, you know, the metrics between you know, when you're defining E or S or T, some of them are easier

than others. Absolutely, Yes, it seems to be the sort of the sticking point where there's just a lack of data compared with the E where there is emissions data or wor to usage data and the like. So it's a it's a working motion. Yeah. We hear from companies that that have s G products that investors are demanding these. What do we know about actual investor demand for for

products that provide more than just a return? Yeah, no, absolutely, I mean you know we've got like the country's biggest pension plans like Calsters, Cowper's new York City who are And so in New York States, sorry, who are really ramping up. They've set their own like net zero goals on the East Coast here, So it's all in line of sort of like divesting, ramping up and putting sort of channeling capsule to sort of cleaner technologies and the like.

That's going to help us all meet these goals. But yes to investing, I mean this as part of the problem, Like you can have a company that's working on it, but it is still really hurting the environment. But people say you can be in the e s G Fund because you're working on it. So so as an investor, it's like, wait a minute, is really my money going

to support you know, the better end outcome? I mean what somebody has says has said to me, it's really difficult to be a purist here, Like we're all entangled in this. So it is a working motion. Unfortunately, which government is most aggressive right now. I mean, well the e USE, as Carol said that, they are way ahead, but I mean the US is fast catching up. And and again it's like a geopolitical thing as well, like he wants to own this space, he wants to own

clean technologies. He wants to be sort of at the forefront of this sort of like transition to a low carbon existence. But if the pandemic taught us anything, it's so just a reminder that, you know, things like a health crisis or things like climate change really no no borders. So if we don't figure out something globally the situation, it's already very difficult for certain parts of the world. I love, love, love this story. It's a most read and I'll be bringing it up with some of my

panels at the Sustainable Business Summit. Um Sachel, thank you. I really appreciate you coming by. Sachel. Um is e s G. Report of Bloomberg News in or Bloomberg Interactive Broker Studio. Yeah, a great, great piece. Check it out Bloomberg dot Com in on the terminal. I'm somebody who likes metrics and how do you you know, UM measure something? And I think it's really tricky right now, we don't know,

we don't know, it's not exact. I'm bro a journal Yeah, but you let me drive No, no, honey, please, I'll do I want to drive strive the question. Yeah, thanks, we'll try us down. Bloomberg Radio all right, just about ten and a half minutes left. Its trade flies, Carol, when you're having fun. It has been a busy two days. Luck going on, and equity is definitely off their has of the session. Charlie breaking down. Those numbers were down across the board, just about point three percent down on

those major equity averages. Let's get to with Anna Barton. She is co director of Global of Growth Equities at Eaton Vanced, Co director of Growth Equities. Let's get it right at Eaton Vance on the phone from Boston. Um, yeah, nice to have you here with us. How are you I'm doing great, good afternoon. Good to be with you guys again. Yeah, good to have you here. It's a funny day. Bank earnings. I don't know what what is it that you think we should be focusing on in

today's trade. Well, there's a lot that is coming at investors, and I think the market is reacting to uh, pretty much a little bit for everyone. I think, you know, when you think about the marketplaces a balance sheet, there are plenty of assets and liabilities. On the plus side, I think we've got a ton of confirmation that economic recovery is with us, a very positive comments from Jamie Diamond and the rest on the consumer spending and the sentiment.

But on the flip side, obviously, the the million dollar question on the stickiness of the inflationary pressures and whether it remains with us for years to come or just a couple of months. Is um kind of confirmation of the fact that inflation is heading higher, But I would

say it's heading higher alongside higher growth rate. So uh, that equation if holes is okay for now, well, is it heading higher though permanently, or is it heading higher in a way that that lumber prices headed higher Because if we look and we talked about this with Carl Ricdona from Bloomberg Intelligence Bloomberg Economics earlier in the day today, and he pointed out that the prices for used cars and trucks they jumped ten point five but that was

responsible for a third of the rise of the index. Yeah, that's a fair appoint him. And I think, um, I think many of your guests previous to me stated correctly, which is some of these pressures are truly going to be transitory and some are not. Lumber is a perfect example where um it was transitory and now where something like off where we were just even a couple of months ago. UM wages, for example, you can't give somebody

a raise and then take it away. UM. So I think the the answer to the question ultimately pricing power. That's something that we've talked about. Companies that haven't you can pass it on UM. You know, Pepsi being a perfect example of that, will not see as much a destrimental sort of impact to the margins as companies that have to eat the higher input costs. So UM. Again, it's a little bit of everything, and we just have to be contient and watch what the market is giving us.

So you're not worried about runaway inflation, not yet, uh not yet. But I think I think what what what we are worried about is going after sort of those theme that was taking a hold in the beginning of the year, which is this reopening trade, this value trade, irrespective of you know, legitimacy and sustain sustainability of that

trend and that growth rate. And I think the most important thing for investors to focus on is a balance diversified approach in in stories that are stock specific meanings, secular growth stories with addressable market that is disrupting along alongside stable growth opportunities like apochescy for example, UM and others that provide that sort of buoyancy and provide that UM eligibility to kind of play in both sides of the trade. What are some other of those stocks that

you're betting on? So some other ones interesting enough? You know where I would go is with laggers. I mean, that's one area of the market. Unfortunately, we've got something like six areas of the market that have lagged the S and P five hundreds. So I would go where the price performance and the valuation has already been reset. Technology is actually a perfect place for that. I think we're undergoing that right now, particularly in the Hardware and

Equipment UM area of the market. UM SMPI is up something like seventeen and a half percentage points, but tech well definitely regained some leadership, is still lagging. Another interesting area is chemicals. Believe it or not, While materials UM is underperforming interesting enough, chemicals is trading at a discount to the market, casually yield and accessible percentage points and

has growth rate that is double digits. So that's another area. Hey, I'm gonna ask you, you're eating vans growth opportunities fun. It's up about in the last twelve months. I also beating most of its peers, UH in that category, the top names Amazon, Microsoft, Alphabet. I mean, these are a bunch of your big growth names. So are you guys still all in on this? Yeah? I think UM. Just as a note, I'm actually no longer a PM of that strategy, but I have a ton of a ton

of my own personal investment associated with that strategy. I think growth is a place where you want to be right now, UM, and the names that you mentioned have more cash on hand, have more top line growth, and I would argue more pricing power than many of the companies UM that we talked about. So I think growth at a reasonable prices where you want to be in many of those names, to be honest with your trading,

at a discount to their growth rate. So that's interesting because I was gonna say, Dave Wilson was talking about technology in particular being a little hot in terms of valuation and kind of making the comparison to what we saw in the tech bubble, and so I did wonder if are you comfortable letting some of these names run a little bit hot because of who they are and their growth opportunities and possibilities and potentials versus maybe some

other names. That's fair. I think tech is one of those areas of the market, like industrials, where you have a ton of different industries. So there's definitely a lot of enablers and software plays that have UM had tremendous

price appreciation. But if you take a step back and you think about all the things that we've been talking about, identity, governance and cyber attacks and all of those things, UM, there is still this wallet share that is transitioning, and there's still not enough money being spent on the most important things right now, and that's infrastructure as we think about sort of the digital world and digital economy that

we're part of. So I think we just have a lot of investment that is still yet to take hold. When we think about the overall I T spend is being in trillions of dollars in less than time, percent being spent on security, UM or other sort of enabling things. And I want to jump back to something that you said earlier in our conversation. You said you're not concerned, and this is because this is what the market is doing today. This is what it's thinking about. Um, you're

not concerned about inflation yet, when will you be? I think, you know, statsulation was the most um, I think, most heated word in economics, which is when you just don't have enough growth to offset these taxes to your to your bottom line. And what we need to be mindful of. And this is why I think, you know, investors will benefit from being active in the market and responding to

what the market is telling us right now. What it's telling us exactly what you mentioned is that if you sort of decipher where the inflationary pressures are coming from, a third of it is is driven by you know, demand and supply um dynamics that we believe are going to be transitory, some supply chain dynamics that we also there might be more lingering that we'd like them to be,

but should be transitory. So I think what you need to be mindful of is cause and effect and understanding what are the sources of the inflationary pressures and how the company sort of offset them for the longer term. And that's why I go back to the big guys that do have the price and power and can do well irrespective of the inflation um levels that we're living with, and I do under when do we respect the bond market? Do we resk backed it? You know? Sometimes we blow

it off when it gets too low. Thing, well, that can't be real um. And then when it goes up, we're like, go, wait, that's real. So it's interesting kind of investor perspective on all of this. U Jana Barton, thank you so much, co director of Growth Equities at EAT Advance, joining us once again on the phone from Boston. 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

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