Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside my co host Matt Miller.
Every business day we bring you interviews from CEOs, market pros, and Bloomberg experts, along with essential market moven news.
Find the Bloomberg Markets Podcast on Apple Podcasts or wherever you listen to podcasts, and at Bloomberg dot com Slash podcast. Let's go right through our next guest, because we want to talk Apple. The stock is up about just about one percent today. It had tumbled over the last couple of days, costing a couple hundred billion dollars in lost market caps. Since there are some concerns over iPhones and China and all that kind of stuff, so we're going
to dig right into it with Dan Ives. He's a managing director senior equity analyst at Wedbush Securities, joining us via the Zoom thing. Hey, Dan, you know there is some concern here about Apple and the use of Apple products apple phones in China. Can you summarize kind of what the issue is and how material of risk is it at all to you?
I mean, Paul, in my opinion, Bar's lot worse than bite. I mean, there's essentially been a pseudo ban of government employees for Apple in terms of iPhones the last two years. Now, maybe there was a little more restrictions here, but we're still talking about what we believe five hundred thousand iPhones max. Relative to what we believe is gonna be forty five
million sold in China in the next year. So look, I mean, these black Swan types of fears of Apple and China just continue to be the issue year of the year. But I just believe here, especially when you're in Huawei Phone two generations behind, there's no Chinese consumer that in my opinion, that unless they're forced, are buying that over an iPhone.
Still, you know, we saw a huge drop in Apple shares at the beginning of August on iPhone sales slow down concerns. We kind of ticked back up there, but we're back down near the near the near the lows of the year.
Not quite there yet.
They have a chance to rectify that next week when they come out with new product. Is it gonna knock our socks off? Is Paul Sweeney gonna go out and buy a new iPhone?
I think Paul Sweeney does by buyers new iPhone. In my opinion, because look, it keeps coming down to if you look at the chip, you look at the camera technology combined with the types of promotions we're going to see from carriers, especially in the US, and then you look at twenty five percent of the install bases not upgrade their iPhone of four plus years. I believe it relates into something where you're going to see actually an
uptick in units over iPhone fourteen. And that's why we're buyers at the stock here despite haters continuing to heat pricing.
I mean, I'm probably like a lot of other folks and I haven't bought an iPhone or upgrade my iPhone in you know, several years.
Talk about the.
Price of the eleven, right, Yeah, I have the eleven, so that's they're coming out with the fifteen.
So that kind of kind of tells you where it's at.
So what kind of pricing power does Apple have in this market, which, at least here in the US, is I guess to fully penetrate it.
Yeah, I mean, look, we expect for the first time in years, the base prices will be up about one hundred dollars. When you look at iPhone pro as well as on the Promax, and this is something where we expect minimal churn because it just keeps coming down to it is the gold standard phone across the world, which is why I believe, I know you talk about Luberg that I believe at the end of this year, the
smartphone leader globally will be Apple. I think they continue to gain more and more share in China, and despite a lot of the noise with Huawei and obviously Cotton's cold tech war, it also comes down to it's just the best phone out there, and I think they're years ahead.
It annoys me when somebody in my group chat has an Android phone. Oh I know, it's the worst, Yeah, green bubble, and then if they like a comment, it ends like a new text.
And Yeah, my son, my oldest son is one of those people, and he won't go to iPhone, so of course he's excluded from all one of our little.
Existing my dad.
My dad won't go to iPhone, so we knock him out of the family chest.
Yeah exactly, all right.
So, Dan, Apple, I guess you're you think is a streaming buy at this level.
I think it's a table pounder, especially what's happened over the last week and I get it. You know, bears come out of hibernation mood. You know, obviously missed a huge run here. This could be at the quote unquote black Swan moment. We just don't see it. I mean, coming from what we see from a unit perspective in terms of our trips to Asia over the last called six to nine months. So we're buyers here and I
continue to things. You know, as we've talked about, the new tech bull market is here and I think tech rips into your end.
Hey, Dan, what is you know?
I know Tim Cook was recently over in trying to trying to work his diplomatic magic here.
What is I mean? China?
Apple can't escape China both as a supply chain provider as well as a huge end market. What do you hear from Cupertino as to kind of their longer term strategy about China here? How concerned are they?
Yeah?
It's twenty percent politician, eighty percent CEO right in terms of Cook, and he's been able to navigate China basically as well as anyone out the obvious along with Musk in terms of US star warts. Look there, when you look at fox Con the supply chain, I mean They're essentially the number one employer in China from a private perspective in all of the country, right, so they are so important from a production perspective, but it is it's a game of high stakes poker. They know that they
can move things to Vietnamin and India. Obviously that will be painful to do. China obviously is trying to play a poker game as well. But it comes down to the hearts and lungs of the growth story in Cup Patino are in China. That's where the sharegions have been. And that's why there's so much nervousness over the last week because this kind of dusts off what's always been that sort of ghost that you're battling when it comes to Apple in China.
I mean, navigating China's pretty easy. You go over there, you kiss the ring, you never say anything bad about China, and you put factories there and employee tens of thousands of people.
That's the strategy.
I could do it too.
The problem is you have to kind of cowtow to she does that bite them in the butt at all. I mean, it doesn't seem to have hurt their image in the US.
Because it comes down to you're talking about the biggest technology and consumer brand in the world, and if you like three thousand dollar iPhones, then we should start producing them in New Jersey. Yeah, But if you like thousand dollar iPhones, they're going to continue being China and look, and it just comes down to like that, right now, that web in terms of the supply chain, that's been
a huge part of Apple success. But it goes back to, like from the trillion to three trillion, many of just that China was going to continue to be the risk for Apple, but ultimately it's actually been the trophy case, both from a demand perspective as well as it comes to production. And that's why, like Cooper Tino continues to play Chush, others play checkers, and this is no different. They see these chess moves and I think we'll navigate
it very contained. Despite many yell fire in a crowd theater.
Hey Dan, thirty seconds left. What's your other than Apple? What's your top pick?
I mean to me, it's Microsoft here because of what I've used, just the overall cloud and AI opportunity. I think we are now starting to actually see numbers over the next six to nine months this AI tidal wave of playing out and of course tasslo on evs that continues to be the play there. And so I look, this is, in my opinion, suppourth industrial revolution playing out in the weft lane of technology innovation.
All right, Dan, thanks so much for joining us. Appreciate it.
Good luck to this Penn state Nili Lances. They played the mighty Blue Hens of Delaware.
So it's going to be tough.
Dan.
I's managing director, senior equity analysts for Webush Securities.
There you're listening to the team Ken's are live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, or listen on demand wherever you get your podcasts.
Will Ryan, he's a chief executive officer.
He's also talking about Aston Martins too, so I'm kind of stuck in the middle between these two knuckleheads.
He's a chief executive officer. Granted chairs advisors.
We like to talk to Will about ETFs and kind of where is he seeing demand for ETFs? And Will thanks for joining us here. Appreciate you coming into our Bloomberg Interactive Broker studio Single stock ETFs. What are you guys doing with single stock ETFs?
Yeah, this has really been the big growth area for US as a business, but I think a new category for the market over the last year. So we've just gone through a year of the first single stock ETFs and very simply they provide leverage tip although if you're an inverse one it's not necessarily leveraged. But they provide exposure to single companies, so very popular companies such as Tesla or Nvidia, and provide people prepackaged leverage to those companies.
So an example would be granted shares one point five x short TSL daily ETF.
What does that do?
Yeah, so that provides one and a half times short exposure, so leverage short exposure to the daily price of Tesla and then TSLR, which is the sort of corresponding one. That's the highest leveraged ETF you can get on Tesla. So one point seventy five times levered to Tesla.
Wow.
I mean that that's a way to play it. So what's the risk to you guys to offering that leverage.
It's not so much a risk to us. I mean the risk in terms of managing it is really that you get outsize moves clearly because you have leverage. So if the if the stock price falls, our assets under management and full and clearly were levered to the market. So all things been equal, you know we lose, we lose more money. But the idea is that, you know,
these are very popular trading vehicles. We have nv d L, which has been probably the star of the show this year, which is the one point five times leverage in VideA, and so you can imagine since the beginning of the year, people have gone crazy for anything AI, anything in video, and the nvd L ETF has just been a rock star for us this year. So I think it's it's really just a category that's growing and there's a lot of demand for both the long and the short side with some of these popular names.
How do you so, I that's up only three and ninety two exactly.
I on Mondays, I have an et ETF show, so I'm looking at ETFs all the time, and.
She gets to leave this show early to go prepare for.
Yeah, I have to, so, but you know, expens ytios are something I look at quite often and typically one point one percent, which is what you charge on the short short amd.
ETF or the NVDL is.
Typically that's a relatively high expense ratio, but if you're going short, it seems low. How can you afford to charge that? When you do, you need to get the borrow or how do you get how do you structure the trades?
Yeah, so that's that's in the price. But these are designed to be held for short periods of time, so they're actually super cheap when you think about it. We have to display an expense ratio just like everybody else on an annual basis. So the actual fee we charge is ninety nine basis points typically, but that's for if
you held it for three hundred and sixty five days. Now, the average person is probably held holding these for just a couple of days or at least, you know, a short period of time, so the fee on a pro rated basis that they pay is minuscule. And indeed, if people are trading, which you get a lot of these algorithmic traders quant shops, you know on this they are probably intra day they pay nothing, just the spread. So it's an incredibly efficient vehicle if you want to trade.
And to your point, Matt I mean when you look at the shorts, I mean, this is incredibly attractive for people because one of the biggest things is majority of people can't go short number one, but number two they can't find the borrow, and they do find the borrow. The borow fees for some of these stops got to be incredibly high, exactly.
I'd imagine for Tesla, it's not cheap because highly a popular stock.
To short exactly, so they can be huge expensive.
I mean you seem to like the thing I like about it? Where you guys, do you seem to find the hot story like nvidio slash ai. How quickly can you get an ETF from inception to in the market.
It very much depends so providing it's following the kind of basic rule set which is set by the SEC. It's seventy five days from when you file the registration statement to getting it out. That's the the latest, if you will, I guess they could have, you know, technically grant you effectiveness sooner than that. Where you have an issue is when you step outside of that standardized rule set.
So for example, the crypto ETFs or the bitcoin ETFs that everybody talks about, you know, when you're outside of that standardized rule set, then you could be looking at years to get approval.
Well, do they make it more difficult for leveraged dtfs for single stock ETF, for short ETF because those are also you know that some people might criticize them, especially regulatory watchdogs.
Yeah, no, it's not more difficult because they're in the standardized rule set. And remember, leverage dtfs have been around for well over a decade and so you get leverage dtfs on broad equity indices, on broad fixed inco indices, on commodity indices, and individual commodities. So single stocks is really just a continuation of an already big and successful category.
What's next for you guys in terms of new ETFs coming.
Yeah, for us, I think more single stock products is where we're seeing the growth. We're seeing the action in the market. You know, this is this is almost like a perfect market environment for these products because it's very volatile. People really don't know how to trade this market. In other words, don't have high conviction that the market's going massively up in one direction or massively down in the direction.
So you see a lot of volatility in these names, and that's what you know, traders active investors really like and that's why they love these leverage single stocks.
Does the rising rate environment affect your day to day work at all.
For these products, I would have to say it's almost a benefit because people want to try and make more money in a world where the returns by definition you know, are less because of the high rates. So it works well. But for some of our other products, you know, we have income products clear that were even though our product hips, for example, about ten percent per annum. That was awesome when yields were zero, but now yields are a lot higher.
It's sort of cutting half. It's still attractive product. It's just you know, that's harder environment for those income products.
But it doesn't change like the data day mechanics of creation and redemption.
No, No. Interesting.
I always find that kind of that kind of detail really fascinating because it's something that you don't have to understand to trade ETFs, and most people don't.
Well what it does do Matt, I mean, this is probably a bit of inside baseball, but I do think that the environment for getting seed capital for bringing ETFs to launch has gotten harder because seed capital is typically given to you by a third party firm, typically a market maker or a broker, so their financing costs have gone up for the cost of them providing that seed capital that you has gone up, so that makes it more challenging.
How long will you I mean, if you bring a new product to market, it takes a while to get inflows assets under management. Well, how long will you go before you say, Okay, this is a hit or this is a miss, and we're going to shut it down.
I think nowadays we're much more ruthless about that than perhaps we were a few years ago, and I think the taboo around shutting products has really gone.
Away, and so that large totally no one cares so exactly.
So I think a year maximum will probably go before making a call if something's taken or not. And this market, I think is a good market to do that, because people have gotten so used to ETFs that I think you can tell fairly quickly if something's going to take or not.
Yep, hey, well thanks so much for joining us.
Again.
Has always loved check it in with you, will Ryan. He's the chief executive officer at Granted Chairs Advisors, LLC.
Talking ETF, you're listening to the tape.
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Have some M and A news.
Today, Kroger and Albertson's agreed to sell four hundred and thirteen stores to CNS wholesale Grocers in a divestiture designed to help win antitrust approval for their twenty four point six billion dollar merger. Let's break that down with a couple real pros here, Jenri and Jen bartashis to both the Bloomberg Intelligence Generally, she covers all the antitrust stuff. For Bloomberg Intelligence generally is our retail anels covering the supermarkets.
And they join us here, Jenri, Let's start with you here in our Bloomberg Interactive Broker studio. Is this enough for the regulators?
You know, I'm not so sure. I'll say, I think this.
Will exactly take a tough views I.
Do, you know, I'm just skeptical. Look at what the ftc has been doing for the last couple of years. And the line they drew in the sand. You know, when this administration came in, they said, you know what, we're not going to settle deals that have problems anymore because we've been doing that for forty years and it hasn't worked. It's left us with markets that are too concentrated. So we have to take a different approach. And they've
done that. They've taken a different approach even where companies offer up what I think is a pretty fulsome agreement to settle this matter. But here's the thing, they've been losing in court because the judges look at these divestiture agreements and the commitments that the companies are willing to make, and they say, look, FDC, this is good enough to fix these problems that you've outlined. And I think that's what's going to happen here. I think even if the
FTC doesn't like this matter, they think theyre groceries. It's food prices, it's sensitive to consumers. We have a problem with this. The chair Lenacon has written extensively about having issues with grocery mergers and thinking they're problematic. But I think when these two companies exactly get that and go into court with this agreement, they have a really good shot at winning in court.
Jen Bartasha's jump in here and tell us what investors view of this deal is.
Well, you know, obviously tailing off of what Jen just said, you know, I think ultimately this deal will go through. You know, there are a lot of things that can happen, you know, with a combined Kroger and Albertson's entity that that ultimately could be good for the industry. But one of the things I think is interesting about CNS as a as a buyer in the situation is that their primary businesses as a wholesaler. It's not as a retailer.
They do own Grand a couple of Grand Union stores, and they own Pigley Wiggly Midwest, but those are larger, but those are largely franchised operations. And when you look at the track record of wholesalers that also operate retail operate retail stores, there's not the greatest track record there. So to me, that could be one area where the FTC might push back on CNS as a as a buyer, only in that you know, Super Value was a was a distributor. They sold off the Shoppers chain that they
had acquired. United Natural Has you know, had tried to sell off the residual part of the cub Foods chain in Chicago and Spartan Nash only operates a handful of of retail stores as well. And so that to me is is one potential area of risk. You know, as the FTC evaluates this. Granted, CNS has the balance sheet, they have the strength there to finance such a deal, but they're not actually known as an operator.
Interesting, so Jenry, is that would the FTC do? They typically look at who the buyer is and whether that's a good buyer.
Absolutely, that's half of the evaluation. First, the assets to be divested in the buyer. So here's what I have to say about CNS. It does sound like an odd buyer. But this FTC in twenty twenty one approved the merger of Price Chopper in Tops and they had to divest a number of stores and the buyer was CNS, and the FTC approved that buyer. Now, right now, we have
three commissioners. Two of the three voted yes on that deal back in twenty twenty one, So it seems at least at that time, they evaluated CNS for that specific deal in those specific stores and found it to be sufficient. I think this is much larger scale, and it also remains to be seen how did CNS do with those stores that they acquired. The FDC will be looking at that and they're going to have to show that they were able to be viable competitors.
Hey, Jem bartashis from the talk to us about the supermarket business in general. I mean, again, I'm just amazed that Walmart. I'm sorry, you know, Walmart's just the biggest grocery store chain in the US.
That just kind of blows me away every time you mentioned that to us.
Talk to us about this merger in the context of the industry overall, is that going to make a big, big change.
Well, what it does is it takes the number two and the number three sized retailers and combines them into
an entity, A combined Kroger Albertson's. Gives them a lot more in terms of purchasing power and theoretically, you know, well, I mean, Walmart does dominate the US grocery landscape by far in terms of market share and in terms of being the largest retailer So if a combined entity between Albertson's and Kroger compete, can compete more effectively against Walmart, that's actually not a bad thing for the industry as
a whole. They're you know, they're it's been pushedback about the overall consolidation of the industry, but you know, it could actually, you know, enable these companies to be even more competitive against the largest, the largest player out there.
Paul, have you seen Dope Sick No or Painkiller No? These are two series.
I think Netflix and HBO. I can't remember who, but anyway, they are touching, touching in an extraordinary way. You know, I knew that opioid addiction was a problem, and I've been reading the stories and headlines just like everybody else, but this like really hits home when you watch these shows because it's so hardcore. Kroger has agreed to one point two billion dollar settlement for its role in distributing
these extremely damaging drugs. Okay, Jenry, I was listening to the news this morning and they said this does not mean that they admit any wrongdoing.
Have you ever thought to pay one.
Point two billion dollars without admitting any wrongdoing? Isn't the payment itself and admission of extreme wrongdoing.
Well, you know, people with common sense and look at these things logically would exactly think that yes. But technically, with settlements you never have to admit to the wrongdoing. You're saying, hey, it's worth it for us to pay this money just to get this off our back, to move on, to move forward, get rid of litigation, put it behind us. We're putting resources in to defend it, and that's why we've agreed to pay this amount of money.
They're not alone.
It's to me it's a little shocking because I grew up going Krogering for the best of everything, including the price. I didn't think they were killing everybody in my community. But you know what, others have also settled. CVS, Walgreens, Walmarts have also entered global settlements of about thirteen billion dollars.
Jen Bartasha say, is this behind us?
I think for the we've we've not seen settlements from the biggest players out there. I think that you're still going to see settlements from some of the smaller, you know, smaller players that may still filter through. But it does appear at this point that we may have kind of reached that tipping point.
All right.
The gens, the two gens, Jen bartash is Jenerary, thanks so much for joining us here, talking about a lot of things in the supermarket business.
M and A.
Kroger's Albertson trying to get this deal over the finish line, announcing divestit. You're there to do it as well, so we appreciate both of them joining us.
You're listening to the team Ken's are Live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, the iHeartRadio app and the Bloomberg Business app, or listen on demand wherever you get your podcasts.
Thinking about these markets. You know, in the early summer, I think you felt pretty good. Economic growth picking up again, stocks were working, even crypto was working. August it kind of petered out a little bit. The question is where do we go from here? Not that everybody's back in the office, well maybe not today, but Cali Cox joins us. He's a US interest investment analyst at E Touro. And of course she is a proud graduate of the University of North Carolina at Chapel Hill. But we talked to
her nonetheless, Cali. Thanks so much for joining us via zoom here. I mean it kind of felt like August kind of petered out a little bit for some of these risk assets here.
What are you telling your clients these days?
Yeah, so, first of all, Paul, great football win this past week. You know, cheering for Duke always totally risk BacT the school unless they're playing US, of course, But of course attorney to August, I mean August being look across the board, there was a lot of red, and I think it was a case of things got a little too good. I mean, yield started spiking. Everybody thought the economy was coming back. It was coming back, but
suddenly inflation worries popped back up again. You know, we are telling customers that there's a lot of pressure on the economy, and really what we're seeing in the inflation picture is higher gas prices, and of course that's something to pay attention to that can strain consumer's wallets. But is this an inflation crisis like we ran into in twenty twenty two. We don't think so.
It is we are seeing much higher gas prices. I went to fill up this morning, and you know, I think we quote the cash price yeah, you know, gas stations will charge you like you're a credit guy, ten well who pays cash for gasoline?
Like why you even have a cash price?
Nobody's running around with Franklin's, you know, paying for gas and cash. Three eighty nine was the regular price I saw today at the pump. But I obviously don't tank the Aston Martin with regular grade.
Gasoline, no way premium stuff.
It was like five to nineteen the credit price for the premium at a BP.
Yeah, it's nuts.
So you do see.
Pressure on the economy, Cali, Do you see it coming through in the labor market at all, because it still looks pretty damn good.
It does look pretty damn good, but at the same time, it's weakening, Matt. I mean, it's hard to find things to complain about in the job market.
Let's be real.
I mean, I'm watching jobless claims and they are a little bit higher their husband a bit of a move in the wrong direction or the right direction when you consider the FEDS objectives here, but it's still nowhere near you know, the amount of jobless claims that we saw at the beginning or you know, right before recessions in the past. And I mean job data follows that as well. I mean, hiring in the you know, high one hundreds
was about average in the twenty tens. And you have to remember, too, we're dealing with a bigger labor force here. I mean, it's tough to look at absolute numbers, but you know, I'm pretty happy with what we're seeing in the job market, even though there is a lot of pressure and we're seeing wage growth come down as well.
What do we need to see? What do we need to see? What does the FED need to see to cut rates? Kelly, So this is a.
Big, big question and right now. And Jay actually told us in July that the FEB would be open to cutting rates if they saw enough progress on inflation. That surprised me because before that the FED had alluded. The FED had tried not to allude to rate cuts, first of all, but it also, you know, talked about rate cuts in a recessionary manner. Now, were forced to cut rates because the economy falls off a cliff, then you know, we'll do it, but don't expect that anytime soon. Powell's
stone tone changed a lot in July. Powell again hinted to you know, cutting rates if inflation made enough progress. Obviously, inflation is moving in the wrong direction right now. Rate cuts still seem far off. You know, one more hike could be on the table, but you know, I think with inflation where it's at right now, that that is something we should consider the fact that, you know, the Powell is kind of seeing this risk reward balance even out a little bit.
Kelly, how do you guys think about valuation in the stock market here? A lot of folks are telling me if you pull out the you know, the magnific since seven, this market's not that expensive here, and you should be looking for some names, maybe some names that have not participated.
How do you guys think about valuation?
Yeah, so we actually agree.
We don't.
We don't think valuation is a big risk right now. But you have to dig down to a sector level. If you look at a sector bisector painting, you can see that text valuation is quite high compared to where it was in the past, and also the S and
P five hundreds valuation. I like looking at the value, the valuation of value versus growth said value a lot there the pees that we're seeing in value versus growth because value stocks are heavily discounted on a historic perspective relative to growth, and we're pointing that out to customers, saying, if interest rates stay high, we could see some opportunities there.
And growth is also already too expensive, right or do you see any growth stocks that look attractive?
You know, growth, I think again, and you have to dig below the surface. I mean I said tech. You know, tech looks quite expensive. You know, there are different flavors of tech that you have to look at. But you know there are other growth and rate sensitive sectors that do look a little bit cheaper. Of course they don't have the profile of tech. But we don't hate going long duration here, and you know, preparing yourself for rates eventually coming down because again there's a lot of pressure
on the economy. I mean, we know what the FED is trying to do. So you know, when we're in this position, when people are worried about rates moving higher, it may make sense to take the contrarian view.
How about energy, because we've been paying a lot of attention to this move up in oil, got WT crude oil up another one percent today, that just under eighty.
Eight dollars per barrel. How do you guys think about the energy space.
Well, you know, if you think inflation is coming back in force, then you know it's probably smart to look at energy and those tangible assets and the companies that benefit from the rise in tangible assets. You know, we think this rise in gas prices and oil prices isn't sustainable. We think it's a technical move. We think it's supply driven. So based on that, we wouldn't expect energy stocks to you know, maintain this rally.
Uh.
The question is for how long?
Though?
We think that that's a short term view. But how long is short term? We're not sure. We can't predict the day to day, but long term thinking you know, months, several months down the road. I mean, we don't expect oil prices to.
Keep this up.
You like, any risk assets outside of the US?
Cali, do you look outside of the US?
I mean, we have US focused customers, but e Toro is a global platform, so of course we look outside the US. You know, globally, I think the rise of the dollar is going to be a huge pressure, especially on emerging markets. And then you have what you see what's happening in China overseas, and you know, I'll sum it all up with you know, there's a reason why global stocks are trading at a lower pe than the
US right now. Is there value there? I think you have to evaluate it on a country but country basis. But you know, there again, there's a reason why global markets are cheap, and it's smart to diversify, but you have to also reckon with you know, the different situations you're running into.
So within the US, are there sectors cali that you like right here?
Yeah? So I think this again depends on timeframes. You know, as long as the economy is chugging along, especially given the you know pop and growth that we could see this quarter and that we have seen for the past few months, I think some cheaper cyclicals could be an interesting short term play. However, again, a lot of pressure on the economy, and you know, if you think that the economy is going into recession, then you know, certain sectors like bonds and real estate for example, could look
cheap as well. I mean, right now, we're telling customers that portfolio positioning isn't black and white, and there's a big difference between a month from now and a year from now.
So you know, we like.
Long duration here, We like you know, piling into the rate sensitive sectors, but at the same time, you know, cheaper cyclicals could perform well if we continue to see economic data do well.
Hey, Kelly, thanks so much for joining us. Always appreciate getting your thoughts there. Kelly Cox, us investment analyst at e Touro.
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Let's talk about a new IPO potentially coming that's going to be very interesting. Amber Sports, the maker of Wilson tennis rackets and Solomon ski boots. That got my attention, Dubert, I have to say, also my favorite boots and my favorite skis typically Yeah, so they're just like a go to, I know, they do good stuff. And tennis rackets who I've had a Wilson tennis record forever. Bloomberg Intelligence analysts Katherine Limb. She covers all the consumer and technology for Sumergantology.
She's based in Singapore. I have no idea where she is today, but I see her on the zoom. I hope she's in Singapore.
Is it a mayor sports? By the way, is it Catherine? Is it like a mayor Rica? Are they trying to pull a fast one on us or how do you pronounce it?
Well?
Well, do you know what?
This is?
A Finnish company which Anta Sport had actually acquired sometime back in twenty nineteen, that's when the deal was concluded. You know, they started initiating the plans to actually acquire this again Finnish company that you know you've actually mentioned. They've got very well known brands. Wilson just one, Solomon is one, and actually our t Rex is the one that has actually done exceptionally well in China. And notwithstanding, of course, you know, they actually do have atomic which
I believe. You know, it is a complete.
Year, so great year.
It makes my favorite scuba gear actually really incredible regulators, high high end, high end equipment.
Yes, so it's a it's a midst of them, you know, very well established brands, and it is interesting to see that they're actually seeking a us IPO IPO and obviously looking to raise funds, which I do believe it is for their expansion, both in China as well as over.
So, I mean, they've got some competition out there. I just think about the consumer brands Nike, Audi, Dos, VF Corp. How are they doing in terms of market share?
Did they buy Solomon from Audi Dos because Audio doc used to own Solomon?
Right?
Do you know what? That is a very interesting point that you actually raised, because as you may be aware, there's actually an increasing shift towards niche labels out there, particularly by the sports fanatic, you know, who's looking for outdoor year out your brands itself that goes beyond the North Facet or Columbia that you know we're familiar with
with beer. And then of course, you know, notwithstanding are t Rex that's actually I would consider a higher end brand and particularly doing actually very well here in Asia, and because of the price points and for the fact that you know, it is a niche brand. What Anta Sport has actually been doing over the last four years since they've actually acquired the company was to slowly but surely expand the merchandise offerings. So we're looking at you know,
more apparels going into the shoes as well. So expanding the merchandise offerings is definitely a key to actually growing this business, Catherine.
So is the company's pitch here in coming private that hey, we have some market share gains in China, that's where our growth is. Is that kind of their pitch.
I believe they have their eyes beyond China and this is really key to establishing, you know, your international brands. So this is going beyond you know, the Chinese brands that the company had actually made a bit splashed at home with that's the Anti Sports brand. And let's take a step back. Anti Sports. They made a name for themselves.
They've established themselves being now I believe it is you know, the seventh of the eighth year to which they are the official sponsors for the Chinese Olympic Committee, so you know, they are now very well associated among the Chinese. But the company has obviously biggest goals to which they are looking to actually have a portfolio of established labels that go beyond you know, your homegrown brands. But the higher
price Yer brands are t Rex Parloment. You know, even Wilson and I do believe that, you know, they will be rolling out plans for Wilson to be beyond basketball, you know, racket that we have seen. They've actually talked about it back in twenty nineteen when they first acquired the company, that they will be looking into apparels for Wilson. Let's see what happens. You know, when the when Irma makes a successful IPO.
Wilson makes pick aball rackets as well. Now that's a growth business, you know.
Yeah, yeah, to play, so for sure you have to play.
I was playing yesterday.
Nice Hey, Catherine.
I'm looking at the you know, some of the comps and how the stocks have done. I mean it's kind of all over the board. Adidas is up thirty seven percent year to date, but you know Nike and under Armour they're down fifteen to thirty percent. How do the comps look here? How do you ho's evaluation here? How do you think this company should be positioned within the group?
Well, I think general sentiment wise, obviously, you know, we see growing concerns about global demand, you know, the sentiment wise towards the discretionary goods, and that's what you've probably been seeing, you know, reflecting in the prices of Nike
and BF. Now our data is a bit of a different thing because you know, again the company has actually gone through major changes, including a new CEO, and they are actually picking themselves up from what I would say the load to which, you know, take a step back. Remember last year they lost eas the partnership and then or rather they terminated the Easy partnership. You know, they re looked at their inventory situations and they've actually realigned
it along with what they've set themselves going forward. So it's a bit of a different story. It's like a you know, a turnaround, if you actually call it. So, I think it's very mixed right now. Really there are eyes and I would say that what we've actually touched on one of the growth list virtually be coming from China, And do you know when the sentiment actually turns for China fingers crossed on that one, you know, you might actually see a more enticing story for.
Interesting stuff.
Yep, great stuff.
I mean, hey, we got an IPO that's exciting in and of itself, and then we talk about some of the cool products they have, it makes even more interesting. Katherine Limb, thanks so much for joining us. Katherine Limb is a senior analyst. She covers the consumer in tech space, and she's head of Asian Equities for Bloomberg Intelligence, so we appreciate getting some of her time. She's formerly at Credit Swiss and City, so we appreciate that she's now at Bloomberg Intelligence.
You're listening to the tape Cat's are live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com.
And the Bloomberg Business app.
You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
It is riting.
It is the time to ask what is Matt Miller driving. I really don't know, and quite frankly, I'm not really super car guy. But our next guest is Michael Dean. He says, senior analys are covering the European automotives for Bloomberg Intelligence. I can't believe we actually pay this guy to do this, because we can get it done for free.
He would do it.
That's so glad we pay it is because I think he takes all of his paycheck and buys new cars and buys new car A lot of people who cover cars. Don't really care about cars, but Michael Dean does, which is why we love having him on. Michael, I want to get first your thoughts on this beast of a car. I've been talking about it for most of the show already. It's the Aston Martin DBX seven oh seven that I'm
lucky enough to test out this week. Six hundred and ninety seven horsepower, zero to sixty and three point one seconds, even though it weighs five pounds.
What's your take?
Yeah, it's a great car, it sounds good, it's got the performance, so it's the fastest luxury suv out there. It's even quicker than the Ferrari pure same way, which is done with the price and it makes up seventy percent of the mix of DBXLF so it's a better price point. It's a better car, and it's setting well for Aston Martin.
So I haven't driven the new Ferrari yet. Well, I don't know if I will. That's kind of like a different level and they're very difficult to get.
Michael Dean can help you out.
Hannah Elliott, has Michael, have you used driven the new Ferrari. I don't get sidetracked, but no, I've been in it.
I haven't driven it.
But Hannah Elliotts has so well. I have to ask her.
She has like better access than anybody.
But but and she's driven this asked in a few times, I have to say, I absolutely love driving it.
Okay, Now it has different modes.
You can put it in an all terrain mode has a GT Grand Touring mode has Sport and Sport Plus. I think they're useless. You only need sport plus. Everything else sucks, and Sport Plus is the greatest experience you could possibly have in an suv, at least in my uh in my experience, but it's frustrating in a number of other ways.
Michael.
There's no wireless car play, which means I can't use Google Maps. I have to use their extremely dated navigation technology, which just doesn't work that well. If I do want to plug in my iPhone to the Aston Martin, it still has the old clunky USB ports, it doesn't have the new USB C ports, so I can't. I don't have that those old plugs anymore. At my health house. There's no touch screen right now. I know these are for most people. It doesn't matter if you buy a
car for the engine and to drive it. But honestly, on a day to day basis, if I'm spending three hundred thousand dollars, I want the best tech, why can't they deliver it.
Yeah, maybe you're just being fussy, but that it's true when the competition has the high tech. So if you look at the LAMB beginning yours, it has a touch screen, it has all the correct interface, it has the connectivity, and what happens is that Aston Martin uses Mercedes technology.
But this is the old technology. So you'll have an updated version, probably about twelve to eighteen months, which will have a flat screen, which will have the compactivity, and also you'll probably have a plug in hybrid option, so that is coming. But hopefully that doesn't take away the experience of driving the vehicle.
It doesn't at all, but there's certain So it has these hydraulic struts in the doors. I've never seen anything like this. You can actually look at them when you open and close the door.
We probably have.
Video of it.
That's supposed to make the doors, I guess, more comfortable and easy to use, but in fact they're the hardest doors to open and close that I've experienced in almost any car in the.
Last decade, which is weird.
I do like it better than the Lamborghini Orus on almost every level, which says a lot because I'm a Lamborghini, a huge Lamborghini fanboy. But I think it looks better. I think, well, it's definitely faster. I think it's more fun to drive. The transmission I like a lot better, which I guess is a Mercedes transmission as well. Right, so in terms of the driving experience, I don't know
if it can be beat. There's a new challenger the in the class, actually a little bit lower, the Porsche Cayenne Turbo Hybrid, which is just coming out that seems to be at least on paper as fast and like half the price.
What do you think about that?
Yes, I'm with you.
I think Aston Martin's my favorite brand as well, and the driveability is there. But also Porsche ranks pretty high on my best list. But I think the new Porsche Cayenne is an excellent vehicle, has all the high tech, the engine is fantastic, and it will sell extremely well because it's.
At a better price point.
So yeah, they're doing well with the new Kyen. There's no doubt about that.
Aston Martin stock is up one hundred and seventeen percent year to date. What's going on there.
Yeah, you've got to take into account that it's almost ninety percent from when IPOs in two thousand and eight. Team, so it's had a really tough time since it's come to the stock market. It's got a new set of managers, it's got some new investors, so Lawrence Stroll, he's the main owner. You've had Dale tak a ten percent steak. You've got the Saudi PIF taking a steak. So they're finally getting it right. They've got new products just being launched.
So the new dB twelve was launched this month. This is hopefully going to turn around the cashload to be positive. It hasn't been positive in you know, the years that it's been a listed company. And they had two other vehicles coming fairly soon, so they're on the right path.
They've got enough cash to manage certainly for the next six to twelve months, and it's getting this free cashblow into positive territory that will be key to them in terms of their performance in the next twelve months or so.
We're showing the video of the car.
Now we work for a moment, and if you go to YouTube dot com and search Bloomberg Radio, you can walk us streaming live.
And guys, let's keep showing the video. It's about the car, right, Let's keep showing the car.
One of the things that I thought was, that's a little bit disappointing for a car that you know, blows me away in almost every aspect from the driving perspective, is the boringness of the engine layout. The Lamborghini URIs, the Mercedes AMGS, the Portie Cayenne Turbo, the Aston Martin DBX, they all have a twin turbo like four liter V eight.
What gives you know? Why not have this raging V twelve in this In this sense, I think Ferrari tops everybody else, although obviously it's more expensive as well.
Yeah, the V twelve six point five litsa that's in the pure same way is a special engine indeed. But the thing is, because Ferrari only makes less than twenty thousand cars, it doesn't have to adhere to this my mission regulation. The likes of Porsche and even Lamborghinni because it's part of fogs far and has to so they have the twin surbos to make them more fuel efficients, but hopefully that doesn't take away too much from the
enjoyment at least listening to the edge. And I quite like the d eights in those vehicles.
No, it sounds delicious in fact, but we're not going to be able to say that for many more years, are we?
No?
We won't.
I don't know how you guys, your car guys deal with that.
And accept it.
This is something that I asked. I was asking Michael Andretti yesterday. I've asked Laurence.
Stroll as well.
Laren Stroll is like the owner of Aston Martin, or at least a huge chunk of it, and he runs their F one team as well. What do you think, Michael, how do how does racing and how do luxury cars make this transition? I was test driving the BMW x M a couple of weeks ago and the sound was really disappointing that that has a V eight but you know it's a hybrid.
Yeah, we're going to disappoint you.
And also my colleague Kevin Tynan in that I've actually bought a full electric vehicle, so I've got the pmw IX fifty and I've got to say it's awesome performance, but the one thing that is lacking is the engine noise, and it does make a difference and it will put people off the good thing for the luxury car maker is they've got an extended period of grace into which they can phase out their V twelve, so the details
will become V eights V eights. We've come V six is, so we'll still have a ic so internal commossioner engine in the luxury brand for many years to come, but they will be electrified in some way. And that's certainly going to happen with the Asta Martin TVX, It's going to happen with Eurous, It's always already happened with the Ben Saga, and as you mentioned, it's on the co En. So yeah, we're going to have ice engines for many more years yet for the luxury car makers.
I think.
All right, Michael, thanks so much for indulging my partner here in discussion of all things automobiles. Michael Dean, he's the senior ANAMS covering the European automotives. You mentioned Kevin Tynan. He covers the US companies. They're both super duper car guys, and.
You mentioned the bmwix Ah, yes again, is on my list?
Is on your list? All right?
Michael Dean from Bloomberg Intelligence, We've got and we've got somebody in Asia that covers the Asian companies as well, so we've got the global auto business absolutely covered from Bloomberg Intelligence perspective.
You're listening to the tape Cat's are live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com.
And the Bloomberg Business App.
You can also listen live on Amazon Alexa from our flagship New York station just say Alexa playing Bloomberg eleven thirty.
All right, I realtreat here. We're talking serious trading here.
Now.
We booked this guest to talk about the markets, but quite frankly, we've got a lot of markets guests on the week, so let's talk about some real trading in the pits. JJ Kinahan joins us. He's the CEO of IG Group North America. Joins us live here on our Bloomberg Inner to Brooker Studios. He is from Chicago and that that kind of goes to the story here. JJ, thanks for coming into the studio here Chicago Board of Options Exchange.
See boat, what is it? And what did you do there?
So I traded there from nineteen eighty five to two thousand and six, and I traded in what At the time, everything was open outcry, people jumping up and down and yelling at that's what this whole hand signals, all the hand signals, you know, so you'd be someone way across, you'd be checking, you know, check a trade. I BT twenty paid thirty for it, whatever it may be, And it was a wonderful way to make a living. It was very at the time, incredibly efficient. You know, obviously
electronic trading is much more efficient. And it's been the greatest scene it's ever happen in retail traders. Yea, but you know there were five hundred and fifty people in there, leaning on each other, spitting on each other, yelling and screaming.
You know.
It was kind of funny. Even if you didn't know anything, if you didn't like the person you stood next to, you knew everything about him because you dood next to you did it for six and a half hours, all day, every day, and I feel very fortunate. Pauly that was part of my background. I met some of the greatest people in the world. And the one thing I will say was the greatest trade there is your world was your bond. You said by them, you bought them. If
you said sold, you sold them. And if you didn't do that, you were quickly found out an outcast. And so you know, you think of the millions, hundreds of millions of dollars that went through there every single day, and it went through on people's words, and that was really special.
And so I mean in Chicago, and I think of some of those you know, screaming in the pits, I think Chicago. So there was a there's a community there, right, I mean, you know, kind of everybody and that kind of thing.
Yeah, what's ended up happening is a lot of us have ended up on the retail side and brokerage, and many have ended up still on the trading side with some of the bigger firms. And so it's really helped in terms of the relationships we have. And you know, as we were building I went on to think or swim. At the time we built that platform, we kind of built it for ourselves and then you know, ended up
selling it to TD. Merriatade then started with Tasty Trade, saying people who built think as something to begin with. And so I've been fortunate. I've worked with my friends my whole life. Right, I've worked in an industry I absolutely love, and I went from the part of the business where it was all about me to now a Tasty Trade. It's all about helping other people understand the markets and what we did, and it feels really good to do that everything.
So how do you all right?
So you go from trading in the pits back in the eighties and nineties, how are options and other securities that you deal with, how are they traded these days?
Well, everything's done electronically. So if you put in to buy something, if you went in to buy Apple right now, and he had the money calling Apple, you know in the front month, you would get filled and you know, before we could blink our eyes.
Yep.
It's really amazing how quick the electronics work. Whereas back when I was in the pit, you might not know what you did for ten minutes, okay, And that's why there were something called runners. They literally ran back and forth from the pit to the you know, that's where everyone started. You just ran back and forth all day long.
You were in great shape. It was a young man's case. Yeah, but you know, so, I just think that everything that's happened in our business since I started in eighty five has been to the benefit of a retail trader, that everything about it has even the playing field so that you know, the platforms that we produce today are so much better than anything I ever had in a pit.
And the information flow now is better for you sitting at home in front of your screen than it is for now that there are still a few pits left. They don't have the information flow you have at home, all.
Right, So I mean, so is that lower the cost for the average.
Invest You know, we think about this. Most equity trades are zero now, right, Yeah, So you know, think about from that point of view again, platforms, the education we spend you know, almost ten hours every single day on our tasty live side broadcasting live about you know, you guys are doing a lot of news, et cetera. Yeah, we're doing some of that, but we're doing more is talking about strategies about how to learn about how to think about risk. Because the biggest thing that the average
person at home doesn't truly understand yet. I shouldn't say it doesn't understand yet newer people particularly and as you go up, what I love about the market the most? That humble says you know from your background, yep, you know we started in the business almost the same time. Is it humbles you every single day and you can
take losing days, you just can't get blown out. And understanding how risk works is the biggest thing the average person has to do if they're going to have success long term in the markets.
So what is your platform now, IG Group North North America. What do you so?
IG is the parent company out of London. We're listed on the London Stock Exchange and our IgG and Tasty Trade is our brokerage firm in the US, and so you know a tasty trade dot com and anything I can help anybody with JJ at tasty trade dot com. But you know all that we want to provide. We're
kind of a fintech company where you consider ourselves. We build great platforms that incorporate anything a retail trader would need so that they can interact with the markets in a way that hopefully is simple for them to understand. And also if they want to just trade equities. Wonderful if they want to be somebody who trades futures with options, et cetera. We have the tools for that.
Your audience retail. Our audience is one retail. Okay, So but for the institutions, how did they trade?
I mean did they Like in my day, you just if I had to buy three hundred thousand of pan am, I'd go see who on PanAm? I start bidding them for Now it's you go to citadel or to sell.
So you know, it's the citadels.
The virtues of the world are.
They have a market making business, so they'll take the other side of anything anybody wants to do, and they operate on volume, and they operate on speed. They they provide a very important function for the markets. And I think it's sometimes underrated what the market makers do. Maybe I'm a little buias because I started my career as a marketmaker, But you know, if somebody wants to come in and sell, you'll buy them. Somebody wants to come in and buy, you'll sell them. And you do that
all day every day. You take advantage of a little bit of a small, small spread which is very small, but outside that you're putting on positions all day which
help you make money. Also, now when somebody comes with a big block to buy, they may call around still that that market still exists, because think about it on if you're on an electronic screen and the market, you know, many people see it like ten by ten, which usually means a thousand by a thousand thousand to buy, a thousand of sell, and all of a sudden you see like a three thousand number up there. Somebody's got three hundred thousand chairs to buy. Obviously, is going to tilt
the market. So that's why when people hear about all the algorithms and stuff, they may say, oh my god, that's terrible they're using them. They actually serve a function, and that is so that firms don't have to necessarily tip their hand when they do have big blocks to buy. They can buy them in smaller amounts without actually making the market go crazy one way or the other.
All right, So if I walked onto a you know, gome sas trading desk, it wouldn't look anything like back in the day.
Right now, it still would look like it did. There certainly be a lot less people, okay, absolutely, and the electron. You know, the amount of technology they're using is absolutely amazing overall, and back when you were on the desk, you know you might have had somebody Paul might have been responsible. I believe you used pan Am as an example for pan Am right for the airlines. Right now, you may have one person in charge of one hundred
different stocks etcare keeping track of everything on there. So we've used technology to the advantage of everyone.
JJ, thanks for coming in.
Fascinating, it's a lot of fun.
JJ Kinahan, he's the CEO of IG Group North America. Talking a little bit of trading down in the pits.
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