A Look Ahead To Monterey Car Week

right over to Dave Major's. He is chief executive officer Mikam Auctions, and they've got uh uh, the Micham Montgomery Auction coming up August twelve through in what is now a record setting collector car market. Dave, thanks so much for joining us. Greg Jarrett had a nineteen fifty seven MG a hardtop racing coupe and blew out the freeze plugs one morning doing a hundred forty miles per hour when he saw a cop suddenly let off changing compression blow them all out. Can we find him another one?

I'm sure that we probably can do that. We don't I don't think we have one in the Monterey lineup. We certainly have a lot of interesting replacements if he, if he so chooses, So let's let's talk about some of that lineup. What do you think is the hottest car that's going to be auctioned off in a couple of days here. Well, you know, Monterey is always a pretty unique event for us, and it's uh, this will be our seventeenth events since we went back to auction

in in June. We've seen a lot of beautiful cars, but I don't think I've seen a collection like I have coming up Monterrey for the next three days Thursday, Friday Saturday next week. And there's it's such an eclectic mix. It's kind of one of those that whatever you're looking for, there's you know, just in my mind the cars that I look at that will be there. There's a nineteen twenty nine Dusenberg Model J which is and it's a convertible,

which makes it very unique. And those you know, everybody knows dus and Birds were spectacular vehicles to begin with. They were in their day back in the nineteen twenties and thirties, and and they still are today. But then there's a couple of other, um, what I think are going to be very interesting cars. In the eighteen fifty two Ferrari three forty that raced a Lama too. Yeah, the blue Car race to a fifth place finish. Um, you know again, kind of a one of one car.

That's I think it's going to attract a lot of attention. And my personal favorite, if you've seen any of the pictures online at at mecom dot com, is the thirty six Delahy Type one thirty five tier drop. If you're familiar with Dela Hayes, uh, they Delahayes to me are the epitome of art beauty. That's like the Ralph Lauren car, right, Ralph Laurens exactly. There's just absolutely every one of them, regardless of what model or yeared is. Every one of

the Dela Hayes is absolutely beautiful. And I think this is this is probably the best one I've seen in my career. So I'm I'm just excited to get to Monterey and get out on Delmonte Golf Course and see six hundred beautiful cars and and get get things underway. I love the Ferraris. The three forty is amazing. You've got a seventy two UM three sixty five Daytona that looks quite cool at sixty five super fast UM which which Kayley and I both love, but we're more into muscle.

You know. Kaylee's dad has a G t O. Yeah, and oh yeah, God blas him. I'm looking at, you know, the riviera. I like, big Al has a riviera. He's got a sixty eight in polya convertible. Um that that looks really nice. Who is big Al? I'm looking at big Al's collection. He's got a lot of cars for sale. Yeah. Actually I can't disclose that. I can tell you he is from the Northwest, I see, and that's about us. That's about as far as I can say. That's that's

why it's listed as the big Al collection. Well he's got even though that's a pretty eclectic group of cars too, because I think it, you know, as you mentioned, like a riviera, but there's a law ferrari. Yes, so it's you know, that's that's kind of one extreme to the other. But well, for me, a riviera means you've got taste,

and a law ferrari means you have money. So we just we just came from from our auction in Orlando, Florida last weekend, and there was a collection of I believe thirteen rivieras in that in that auction from one collector and all of them meticulously restored, beautiful cars. So how much are these going for him? I remember um watching mikam auctions one morning, probably a decade ago, and UM seeing a Barracuda go for like three point four million bucks, and I was like, oh my god, unbelievable.

So so so what are we talking about for American muscle It just seems amazing to me to see them going for ferrari prices. Yeah, you know, it really depends um and and certain models are hot at certain periods of time. Corvettes are particularly hot right now. Depends on the model, depends on the make, depends on the restoration. But American muscle cars, you know, there are those that you know, I might call beginner cars that from the sixties and seventies that you know, you I be able

to get into for twenty dollars or less. And then there are some that are in the millions of dollars depending on what they are. And you know, the Hemi Kudas, the Daytona coups Um, the super Birds. Those cars attract a lot of attention and obviously attract a lot of dollars as well. You know, here in New York the Auto Show they just canceled yesterday because of concerns around

the delta variant. Do you expect any disruptions not just at Monterey but in your events and auctions throughout the fall, Well, that just means more bitters online. Well, we, as I said, we came back to live auctions in June with a revised eleven page safety protocol and a completely different business model for for live auction events for live attended events, and we we've become very good at executing on that model.

So we're prepared as Mikam Auctions, as we have been for the last sixteen months, to to take whatever comes our way. But we do see because of the delta variant um going back, for instance, to the Orlando auction last weekend, in the middle of that auction, the Mayor of Orlando issued an indoor mass order, so we were

ready to comply with that. I don't think since Monterey is an outdoor auction on the golf course, I'm not really expecting much to change between now and then, But certainly as we look forward to the rest of our schedule and even into two with places like Dallas and Chicago and Las Vegas. I think we're probably going to see a little tightening of the of the restrictions. All right, Dave, thanks so much for joining us. Always a pleasure to

talk to. Dave Major, chief executive at Mikam Auctions on Monterey. Coming up, let's get over to Nick Freeling Highs and right now bring it back to markets. He's managing director

at Shelton Trust. He's a portfolio manager of equities there and Nick, you know, we we were talking with Brent Shooty a little bit earlier, and he was pretty bullish on UM, on the cyclical and also on you know, smaller cap stocks as well as European equities, saying that he thinks some of the money is going to come back in from the bond market and from these super growthy mega tech megacap tech stocks. What do you think

about that? Yeah, I mean I think that's first of all, it's nice to be with you guys today, and thanks

for having me on UM. You know, I think that that's perfectly possible if in fact we get a sharp move higher and raps um, because I think that sort of growth quarter to date has basically been dominating value right by about three fifty basis points because I think the concern more recently is sort of peak Garnians growth, peak GDP growth peak, you know, easy bet, easy money policies, and I think there has been sort of a return to a focus on quality and sort of durable growth,

which is actually as a sort of a investment philosophy is where children trust sort of focuses. But I think that's perfectly possible. I mean, look, we're we're reasonably constructive broadly in stocks, and you know, we have a lot of clients asked as constantly sort are we in an equity bubble? And um, I just think that, you know, the liquidity backdrop here is it's really pretty extraordinary. It's it's unlike you know, anything we've seen in a long time.

You've got corporate balance sheet sitting on over to trillion, you've got consumer sitting on three trillion and nextss savings. And then this morning the Journal found it interesting to note that both JP Morgan and Bank America are talking about sitting on one trillion and unused corporate credit. So, I mean, I think that all bodes quite well for people buying pullbacks in this market, but also for a sort of an imminent capex cycle that could be coming.

So obviously there's a lot of money splashing around in the system. Where do you think that money is going to be going Not just obviously equities broadly is what you think. But but where in the equity market do you think is going to see the like the highest returns going forward? Yeah, I mean, our focus really is on durable growth and we like to owned businesses where

we don't feel like we need to rely upon sick lotality. UM. So you know, I think that, um, it'll really sort of depend on sort of the inflationary picture going into next year. We sort of have a view that what we're seeing currently in in inflation isn't sort of something that's structural and going to be persistent. We actually think a lot of the inflation is concentrated in sort of

a select group of goods. And I think if if growth slows into two thousand twenty two, I think people are actually going to return to a focus on quality and growth. Um. And that's really sort of where our bread and butter is and where we focus our investments as a firm. What are you expecting in terms of the jobs number on Friday and and really in terms of jobs coming back throughout the rest of the year. I mean, I think the print is sort of the

expectation as anything short of a million would be a disappointment. UM, but you know, I think the return of labor is a critical component, uh, to sort of putting some of the inflation fears to rest, because I feel like UM as a firm, we're sort of focused on this issue that you know, consumers really never went through a recession

in two thousand and twenty. The sort of extraordinary thing about it was, you know, disposable personal income was actually up six percent, but then on the other side you had sort of massive supply chain bottlenecks that were a result of manufacturing and production really ramping down. Thinking that it would be several years before we got back to

two thousand nineteen levels. Really, you know, the hope is that we're going to see a lot of job growth, you know, particularly in things like manufacturing and logistics, UM, but as well in things like food service and what hospitality and leisure, because I think that's a critical component of sort of quieting this issue that we have with sort of you know, inflation and availability of labor. Yeah, so we know, the FED is watching the labor market

story and the inflation side of the story. And even if inflation is transitory, a lot of companies are raising prices is their face with higher input costs and they're passing that right onto the consumer. Do you expect that to remain the case in margins to hold in. Yeah, So that's the big concern in the second quarter. I mean, look,

the second quarter earnings, corporate earnings have been fantastic. If we are assigning classroom grades, I think it would be a straight a. The concern is the ability to pass on input costs inflation. So you know you're seeing sort of in a in a case like floor rox this week, you're seeing sort of that becoming a very big issue. I would sort of contract that with you know, one of our largest holdings of Sherwin Williams, where of their of their costs of good sould is impacted by the

moodity inflation. Well they passed about seven ten to eleven of that on in price because they can without an impact on demand. So I think if you're investing, it's critical to sort of be focused on on businesses that have pricing power that can raise prices without a big impact in terms of elasticity of demand. UM. But I think look in the sex in half of this year, comparisons are going to become more challenging. And I think for the next three to four months the CPI readings

are going to be hot. So this is an issue that will continue to be with us, and I think the bestor is going to be focused on it. Nick. Great to get some time with you. Really appreciate your insights. Nick frielinghis in there is a managing director at Child and Trust, where he's also a portfolio manager of equities. Now we've been getting increasing headlines about the delay to

the return to work. Janet Elkin joins us right now, President, chief executive officer Icon Medical Network out of Dallas, Texas. And Janet, is this getting worse? You know? As we speak, it seemed like, for example, for vaccinated people, UM, this pandemic was kind of over. But now a lot more breakthrough cases are scaring employers. There are, and of course although in most cases breakthrough cases are not are not

here if they're not going to send anyone to the hospital. Still, overall, we've got a lot more people that are getting sick that are unvaccinated and the hesitancy is obviously causing issues. And then people are also concerned I think about going back to the office if they have younger children at home as well. So let's talk about what the environment is like in hospitals. I saw a story earlier this week about the rising number of hospitals in Florida where

they're having serious staffing shortages. Something like thirteen percent of facilities say they are short on vital personnel. Um is this a situation that's going to get worse in terms of the people who are caring for those who are sick. I am concerned about it. You've got, as we also burn out, right, so many different kinds of healthcare workers that either took early retirement or just left because the burden was too difficult for them, I think emotionally as

well as physically. But also realize that you've got so many more patients. They're coming back in for things like collective surgeries, so it would have been a busy time anyway, people that postpone things, and then also the long callers, So you've got all that going on along with the rose the delta variant, and it's sadly a perfect dorm. How much do we know about long haul covid um It seems like one of those real concerns like chronic

lime disease that's just so hard to put your finger on. Well, you're right, and and actually we don't there's a lot we don't know, right. But I will tell you this that the rise in demand that we've had for say, pulmonary physicians or cardiology because of what we're seeing in some patients with heart and lung is really causing that kind of increase in demand um for us to be able to provide physicians. Can we talk about we don't

know yet. Yeah, there's the return to office on on one hand, and then there's what people have to do in order to return the office. And a lot of companies are mandating that their employees must be vaccinated in order to do so. And we've seen mandates like that put in for health care workers as well here in New York State, where Matt and I are frontline medical workers that work for state hospitals have to do that.

Is that the right policy? Well, I think it's a question of do you want people to be safe and what can we do to mitigate this? And so if you've got the idea of healthcare workers, the people that are there to protect and take care of patients, if they have it, then it's a situation that you think, how are we ever going to get out of this? And I think that I think in most cases, the majority of the healthcare workers that we deal with they

understand that. But you're right, it's accelerating across the country. Literally every day, I'm getting more emails from clients to say, all right now we're making a mandatory. Your physicians cannot your nurses cannot come back to work unless they're vaccinated. By the way, Janet, is I uh notice a resident of uh sorry, a native of New York City, Right, you're an Orange Man, and but you live in Dallas.

So I wonder if you're struck by you know, here in New York everyone is vaccinated and no one's really fighting back against it or or hesitant. And I would gather that in states like Florida and Texas, um, you have a lot more hesitancy. It's really incredible. On a personal note, my dad, who was a New York resident, died of the virus, and he would have been the first in line had they had the vaccine um that

early on. But yes, In fact, it's interesting because two of the three largest healthcare systems in the Dallas for Warth area have put in mandatory vaccine requirements. The other one, you too, Southwestern can't. Why can't they because the governor of Overset state has said you cannot mandate it, and they are a public entity. So it's interesting times here on the governor of Florida has refused to declare a state of emergency, and as a result, they're having difficulty

getting oxygen to the right places. There is enough oxygen there, they just don't have the licensed drivers who are equipped to carry oxygen. And uh, do you think that we need more federal action here, Janet? I think we're going to have to. I think that it's the only way because think about when heartbreaking when you talk about oxygen, right, but imagine in especially in rural areas where hospitals have closed to begin with, it could take someone forty minutes

to drive to a hospital. You've got to be able to have access for people. And I don't know if we don't have more action, what's going to be able to have. We can also hope that at the end of the month, I believe that the FDA will finally make this not emergency authorization anymore for the vaccine that may help us as well with vaccine hasidency quick. We just got twenty seconds here. Our healthcare workers paid enough in the US. I'm normally in Germany and they are

definitely not there. I think in some cases, I think that we are for physicians, for nurses. Overall, in we're definitely in better shape than in some countries, but in some very high demand areas like medical assistance to still paying them not much more than minimum wage. That's going to change, has to I guess if you want to get them in in the door. Janet, thanks so much, UM for your time. Really sorry for your loss, and Um, I think we all appreciate what you're doing to help

the rest of us in this pandemic. Jan Elkin is chief executive officer of Icon Medical Network. Let's get over to Brent Shooty right now. Brent overseas more than two billion dollars in retail assets, joins us on the phone from Milwaukee. And you know, before we get to the finer points of finance, you know the FED policy issues rates inflation. Et cetera. I just gotta ask about, you know, Robin Hood and Meme stocks. What's your take on all this because we saw that um, you know, disappointing I

p O and then it doubled in the last two days. Yeah, I think people focus too much on it. So it's kind of interesting that it occurs. And certainly there's some retail investors who are probably piling into these things and pushing them back and forth. But hopefully from majority of people listening to this call or on your radio station, they'll focus on those finer points of finance that you mentioned before, which I think are going to drive their

perfectly a longer term. So I do think at some point some of these stocks are going to come back to earth. Uh. And the question is when, probably not if, And to me, if you have too much in those you're going to probably not enjoy having that much of them at some point in the future. We probably could say a lot of that retail treading action is a bit disconnected from the fundamentals. So let's talk about some

of those fundamentals when it comes to the FED. Obviously, we have the jobs report tomorrow, and I'm wondering if a strong jobs report is actually a bad thing for this market. In that may that may mean a more hawkish FED possibly, but I think, you know, maybe that'll be the reaction tomorrow initially, but I think people will get their heads and see that it actually means that stronger economic growth on the way and more wages are occurring, and the economy is pushing forward, and so that will

be certainly a reaction post FED. And I suppose that if it's really strong, it could be that reaction, because it could be the more hawky FED. But in general I wouldn't trade that too much. I would think more about what that means for the intermediate term, which is stronger economic growth. Uh. And I do believe that inflation will fall back, which I think clear is one of the fears about the FED. Nonetheless, we still see rates

at well the tenure at one nineteen right now. If I take a look at the real yield, as I've been doing a lot more lately, I'm looking at negative hundred and thirteen, but we worked out at negative one two yesterday. Why, um, with your degrees in finance and business and your cf A, why why do we see rates this low? Well, I mean, I think you still have central banks around the world still buying a lot of bonds, which obviously puts downward pressure on yields in

many cases. I think you also have a lot of fears in the market. And so if you think about it in the way we've thought about it over the past few months, is that we got to June and we know where we're we thought we might be, and everything was pushing that direction. So COVID cases were coming down, economic growth was finally here, and then we got there and people said what's next. And so you have a cross current of fears that I think are out there.

You have too much crowd who's worried about inflation and thinks that may cause the Fed to do something. You have the two little crowd who's worried about the delta Iron was worried about China rolling over, was worried about peak economic growth. And last, but not least, you have the too expensive crowd, who thinks that stocks are too expensive and therefore there are for a fall. And I think the meeting place of all those three cross currents was in the ten year Treasure, because that is still

the safety place for markets. And when you combine that with what the bet is doing. I think that put the downward pressure on. I do think that will alleviate as you move towards the end of the year, and some of those fears prove out to be um not so scary as what people imagine they may be. Eventually, I think we push higher in the stock market, which probably takes some money back out of the bond market

towards the stock market. But within the stock market, I feel like you're seeing those growth fears show up as well in that Now the NASDAC one hundred is up on the year to date basis, and the small caps are lagging. They're only up twelve percent. And I know you like the small caps. Why do you think that

play is going to come back into favor. Yeah, I mean, I think that's also what's interesting is it used to be when the when people will worry about growth, it was stocks versus bonds in some way, shape or form more aggressively. Think about last year. Now I just think we're at it's it's reopening trade versus not reopening trade, or peak growth trade versus more growth trade. To me, I think economic growth remains strong. I don't think we're

at a peak, I think we're at a plateau. If I take you back to the I s M this week, think about this. You have a ton of new orders coming in, you have huge backlocks of order. You have to chew through those before growth slows, and even then you still have an inventory rebuilt because customer inventories are at all time lows. Do you think about the one point six trillion the next US savings upon consumer balance sheets?

I don't think that peak growth yet. And so if you're not a peak growth, if real inter negative as was mentioned earlier by Matt, if valuations are cheaper, and if people are over invested in tech stocks and memestock, I think there's a transition that has to go back to cychnicals, value and small caps, which typically are beneficial in that type of environment that I just laid out. And I think that's going to be the trade towards the end of the year of some of these years.

Uh kind of Ebb, it's very bullish, brent Um. You know the the major index, right, what do you think for the SMP year end? Well, I think the SMP probably does the least of all the U S Indussies, and I think there's actually an opportunity in the Eurozone, and so you know, I think we're past the easiest stage of a lot of the trades that we talked talked about. Um, certainly those were trades that we've put

on for over a year. And just for reference, we did take our equity ratio down a bit in June to reflect the fact that a lot of the games have made. But we're still overweight equities and we still think there's opportunities, but I think returns more moved towards the you know, the eight to ten return range, or maybe even a bit lower on the larger indices. Was still some opportunities in value small cap and even probably more so in the Eurozone, whether they're just emerging from

delta um where their earnings are growing rapidly. In fact, this may surprise some. Well, they're finally gonna overtake their two thousand and seven pre h GFC high, so let's take them that long. Um, that was a cheap market that you did, the catalyst, and I think it has it right now, all right, Brent, great to get some time with you. Thanks very much for your insight. Brent Shooty there, Chief investment Strategist, at Northwestern Mutual Wealth Management.

Brent overseas two and twenty billion dollars in assets, and he is bullish stocks, but as he said, more the small caps, cyclicals and what's going on in Europe. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. On Fall Sweeney, I'm on Twitter at pt Sweeney Before the podcast. You can always catch us worldwide at Bloomberg Radiat