Apple Should Partner With Tesla On EVs: Wedbush's Ives

and on Bloomberg dot com. Apple is up two points x percent today for the year, though year over year, I should say from this day last year, Apple is up eight So this two and a half percent increase probably not the biggest of its year. Nevertheless, it's up on an electric vehicle report. It's going to make one. We knew it was going to, but now we have a little bit more detail. So let's bring in somebody who knows a lot about what Apple is doing and how it can be successful done Eyes of web Bush

Securities joins so down. We knew that at some point we would probably get an electric vehicle from Apple. What do we know now that we didn't know in the last few days. Well, I think it's really around the battery technology and some of the innovations going on within Cupertino. I mean, if you look at the e V and the autonomous visioned Apple. There's been a lot of starts and stops, but clearly they're going to dive into the

deep end of the pool. I believe it's going to be through more of a strategic partnership where clearly it's going to send a ripple effect across e VY and from a stock perspective, it's just another arrow in the quiver when you look at the overall ecosystem going forward, Where does the confidence come from that Apple will be successful? I mean it's it's great at other things, but I

mean vehicles are a whole different kettle fish. As they say, yeah, no doubt, And that's why I don't believe that they ultimately start manufacturing their own cars. I believe they're going to leave that to a partner, potentially a Tesso or v W because you know, I think that's the thing investors want to see them, from a software perspective, vertically

integrate their software into vehicles. And I think if you go out into the next few years, EVE, it's a golden age and I think it's even similar what we're seeing in China and Bay Do that they potentially you're going to get into evs because we're talking about a trillion dollar mark at the next decade, and the Apple recognizes where they sit. Autonomous is key, and I think this is just going to be another way for them

to monetize that you know, brand, which is unparalleled. Um, this same argument is partially what's behind Tesla is nearly seven h again this year, right while we're at three percent or so ev take up right now, there will be a point at which that becomes, you know, exponentially larger.

What about the idea of Apple teaming up with a Tesla, is that something that would ever happened, Well, I think they could potentially Apple and Tesla, and I think that's a partnership that potentially could happen in terms of how it fits strategically. So I think that could be somewhere on the horizon two thousand one Musk and Cook on EVS.

That would be something that could have a ripple. In fact, that's why I believe a test or VW is ultimately who Apple partners with, right and essentially Apple needs to find a partner. So what would be the best partner. I'm the bed the best partners in stree mode in Tesla, I think that's one that would make the most sense strategically in terms of going after that market, especially where e V is right now. I mean right now, in terms of the e V market, it's Testa's world and

everyone else is paying rent. And that's something I can see Apple further and further penetrating through a partnership. Down talk to us about the rest of Apple's future. What's your price target on Apple right now and what do you see coming in the nearer future. Yeah, right now we're a hundred sixty dollar price target two hundred bult case. I continue to you as a supercycle iPhone twelve. I think it's really just playing out in terms of China.

This is a key market, and to me, Apple is a stock that I think invest is just further and further appreciating in terms of what I'd view as an unparalleled upgrade opportunity. That's why the super cycle pieces is taken hold amazing. Then I also want to ask you about the performance of Tesla on its first day in the SMP five hundred and whether it adds to volatility. So obviously we saw you know, run up and then a little bit of a set off. What happens you know,

does it settle into regular SMP action. Yeah, I think that was a bit of a sell in the news. You know, obviously parabolic move into SMP five hundred inclusions. It's really all about demand here. Demand looks very strong in terms of December, especially in China. That's really the

winchman to move the stock higher. And that's why, you know, we have a thousand hour bulk case on Tessa, and I think it just comes down to execution in this market you're seeing in China too, where it's only three percent of all overall autos today, we think going to ten percent untill two thousand twenty five. That's why right now, e Z is you know, I think one of the more transformational market opportunities we've seen in our last twenty years. Yeah. Well,

for sure of you watching that. I mean a lot of people that that's that's all that coming are benefiting, right. So I want to ask you as well about the solar winds and the hat I mean the cybersecurity industry, will is ultimately benefit it or hurt it. Well, for cybersecurity, I think it could have three to five dips of

growth in the near term. I mean, this is what likely looks like probably the biggest cyber security attack potentially in the history and and and it's it's a black eye for the overall for the industry, but the beneficiaries are going to be massive. Because government agency is an enterprise, they're gonna need to spend on companies like z Scale

or Tenable power Out, stail Point, among others. And that's why you've seen these stocks continue move higher in terms of where cybersecuit is going, especially in the shift to claud Out. And this is you know, obviously this attack just speaks of sophistication and threat, but that's a silver lining in this very unfortunate incident. It's bullish for cybersecurity stocks and investors are continuing to move those higher. What

are your topics in the space right now? Down the topics and cybersecurity are Tenable, sail Point, z Scaler as well as pal Out, So those are kind of names front and center that I think benefit here. And we believe cybersecurity stocked overall could be up more than between now and the two thousand one. To me intact, taking a step back, it's cloud cyber security and overall than games led by Apple. That's the way to play this market. Amazing, Dum, thank you so much for all of that, all of

your intelligence. Down Lives, Managing Director of Equity Research at web Bush Securities. Well, it's pretty wild year for equity markets. We're u S five hundred, but we really, I mean we dropped into you bear market territory more than that. In fact, we were down about thirty something percent at one point in March. It's been even wilder year for treasuries. We went from you know, one point nine something percent right down to fifty basis points and we've retraced a

little bit of that now. So let's bring in somebody you have to advise clients through this whole volatility. Lisa Charlotte is the chief investment officer for wealth management at Morgan Stanley about two and a half trillion dollars in client assets. Lisa, how are you feeling as we approach the end of twenty twenty So, um, look, we're feeling um bullish. Uh, clearly, you know we believe that that um,

we're in a v shaped recovery. Although it's unfortunate that you know, we're currently experiencing this this latest surge in the virus um, we are constructive that potential it will be the last such surge. Um. You know, as we get through the months of the tough months of January and February and and get larger portions of the population vaccinated. But the momentum, the underlying momentum in the economy continues

to be very solid. I think, you know, some of the backward looking data that we've gotten over the last eight weeks, you know, showed that there was slowing in November and December. We could as you noted, that the consumer confidence numbers fell more than expected. But uh, you know, the past is the Finally, the passage of this fiscal stimulus spell should put a floor underneath confidence. And that combined with with um, you know, the vaccine should should be able to to bridge us to to uh a

full recovery by the middle of next year. And and you know, we think markets can kind of get uh huh so more to go. Obviously, you're you said your bullish. I mean, if you had stayed in the market, if you had kept your nerves this whole time, you'd be quite happy. But now I wonder what's priced in lison, what's left to price and surely some of that good

news is already priced. Yeah. Look, I think that the reason markets have stalled out here at the end of the year is in part, uh, not just about you know, sentiment about the virus itself, but it's about the fact that we don't have a lot of more positive catalysts

to go. This is a market that has priced an extraordinary amount of what has proven to be upside surprises, right, whether we're talking about the speed of recovery, whether we're talking about the fact that retail sales have held up, whether we're talking about the fact that consumer balance sheets have not deteriorated, credit card chart drops or not skyrocketing, bankruptcies are not sky rocketing. The stimulus measures, uh, you

know thus far appear to have worked. Um. And you know, we are looking at uh consensus forecast for corporate profits next year to actually be up year over year about pent So, uh, that's a lot of good news. And that's certainly what you know, a price earning ordered price earnings ratio of of twenty two times tells you I and so this is a market that's going to have to digest and and let a little bit of main street and reality and the numbers catch up to the anticipation.

But you know, we think that next year, UM, you know, stocks uh, at least as measured by the index, you know, can be up another you know, five seven percent for those deliance however that need you know something more than that that are looking for ten percent or fifteen. What we've said is you've got to look at individual stocks. You've got to look outside the US. You've got to look in small and mid caps, uh, because the index

itself is really pretty rich. What about stocks that had been overlooked, such as financials where we saw a massive rally yesterday a Goldman, Zachs, Take Morgan and so on after the buybacks and dividends news. They're you know, undervalued according to some value investors right now. So our surgeon, areas of healthcare, anything in those areas attract to you, Lisa,

absolutely so. Our our number one idea for is financials. Uh. You know, we published our report this week, you know, talking about the fact that, um, not only do we think that the yield curve does steepen next year, which will help with net interest income, but we do think that the charge offs this cycle loan losses are going to be significantly less than historical and therefore a lot of the reserves that were taken by the banks will

be released back into currenting. Obviously. Uh, you know, we've gotten a little bit of regulatory forbearance here and and you know we saw that as he said, with the FED allowing the resumption of of of share buy backs. That's going to help the factor. And look, last, last, but not least, is there are lasting behavioral changes that that occurred during this pandemic that we believe create huge

profit opportunities and efficiencies for the bank. Well, Lisa, we are going to have to get into those behavioral changes another time, but we really really appreciated looking forward to that particular conversation and happy holidays to you. Much appreciate. That's Lisa Shallows of Morgan Standie Wealth Management. Let's bring in something else now. David Garrity is with us, his chief market strategists for laid Law and Company also partner

at bt Block, a cybersecurity and blockchain firm. And we've got the laid Law five forecasts for one, so David gets straight into it. What's your five forecast for next year? Yeah, the five forecasts are starting off bunny, looking at the fact that the market is still very much dependent upon government fiscal stimulus, whether it's here in the US or

whether it's coming from overseas um. You know, from that standpoint, we think that the markets will start the year off choppy, with games going more towards the back half of the year. Talking about markets, we have an objective for the S and P five hundreds of four thousand for two thou one, about eight percent upside, and we think that against this backdrop, we're going to have interest rates rise on the ten

ure to about one and a half percent. Obviously, we think inflation is gonna run hot, break evens going from one to two point three. And then against that backdrop, we're going to have the dollar weekend against foreign currencies by ten, you know, off the strength of better economic

growth forecasts outside the US then the US. We're calling for international stocks non US to appperform over the course of one and we think that here within the US, with an economic reopening value sectors are actually going to perform tech in the year ahead, although tech will continue to have growth from disrupting as it does. Yeah, fascinating. So that's a really complex look at the markets. Is that one forecast. I just want to make sure David or all five. Um, that's all five sort of wrapped

into one statement. Well, talk to us that about the and I'll get to that at the end. Talk to us about the value plays. Because we were speaking earlier to somebody who thought that financial stocks and some areas of healthcare might be the places to look for free, fresh value. Where are you seeing that? Yeah, and I

certainly would agree. Relative to financials and the fact that you know, central banks are allowing the financials to go engage in buy backs, namely the federal reserves, and now it's been in the impact that will have in the lights of the JP Morgan as well as Goldman, Sacks and others certainly favors the financials. Clearly, it's the steepening yield curve which is a thing that really will serve

to drive the financials. We think also at the same time that a recovering oil price going from forty dollars a barrel now backed up towards sixty over the course of one will certainly prove to support what has been one of the weakest sectors this year, which has been energy. You know, down about or so in under formed the s and p f UM. You know, so we think that energy really is going to be probably the leading

recovery trade. But along with that, we'd also would throw in with the financials with energy also looking at industrial stocks industrials. Interesting, what area of industrialism would that be dedicated on some kind of an infrastructure package. It may be very much driven by an infrastructure package. Certainly have seen positive performance coming out of the likes of Caterpillar UM so far here in the fourth quarter of We

think that there's further upside relative to that. We certainly think that you know, the ground is that uh in the US to see a good infrastructure program being put in place. Hopefully Congress cooperates, but that's what's going to give people, we think in the markets preps someone on hold until we get a better idea as to whether we're really going to become bipartisan in one and not necessarily as partisan as we've been. David, I want to

ask you a little bit about cybersecurity as well. Bt block is a place where your partner and it's a cybersecurity intelligence and a blockchain firm. I'm not sure how related the two are, but certainly we've had this massive, massive cybersecurity breach. It's very very serious and it goes back as far as six months maybe more, to places

like Treasury and other agencies. How do you see this playing out or are we in endanger that right now without even realizing it, into the extent of foll have gone more and more online over the course of has worked from home became the new normal and is likely to extend into uh, you know, the fact that people having information observed or leaked certainly grows. And from the standpoint, what we've been doing within DT block have been you know,

developing improved ways of managing passwords. One of the things that was the major weakness within Solar Winds was that they really hadn't practiced anything near decent password management discipline, and that's what created the the open window, if you will, that others were we're able to come in from, especially from Russia, will be able to find a fix or

a patch or whatever you do find for this. I mean, it sounds like it's gone so viral that we're talking about you know, x number of Fortune copies, X number of US agencies and governmental departments and so on, how

do you patch that up? Yeah, I mean the issue that you had with solar winds, the hack was that there was essentially code that was put into software updates if they were sending out to all their installed clients, both government agencies as well as also private sector entities, and you know, that's how the backdoor basically got populated

across the user base. Now, the problem you're going to have here and trying to remedy this problem is that the backdoor that was put in wasn't necessarily the only one. Um you know, there are also other additional means of establishing backdoors in the various systems that have been populated as a result of this act. So trying to find a way to actually go through and clean it up

is going to take some extended period of time. Relative to government policy, you know, there clearly is an opportunity and in need here on the policy front to basically become or unified as regards cybersecurity how it's practiced, not just within the government but across the US as a whole. David, if there are some stocks in that area that you would recommend, would be very grateful not just to cybersecurity,

but also blockchain. Um. You know, in terms of looking at blockchain, there have been a number of vehicles we think that you know, our Investment Management has had a blockchain ETF that's out there that's very good in terms

of highlighting some of the stronger names. Our Investment Management through their disruption UH or innovation ETF you know, had a bannery year of a hundred and fifty two m. Granted it might have been more due to Tesla in terms of their vehicles, but you know, I think over the course of emerging there will be more names that will be looking at and be happy to highlight at that time. Great well, David, thanks so much for joining us today, and have a wonderful rest of your year.

David Garity is chief market strologist at laid Law and Company, also partner at bat Block of Cybersecurity, Intelligence and blockchain firm. On there to talk about is laid Law five. Those forecasts for one hospitals are deluged in the United States and places such as California. I see you capacity is down to less than two and a half percent right now, and of course fatalities are climbing. Let's bring in some Fazali, Senior farm analyst and head of e m A Research

at Bloomberg Intelligence. To talk about this obviously, as well as the vaccines and this variant that we're seeing in the United Kingdom that may already be in Germany and France some how important is a distress that this is a variant and not a new strain. Oh, hi, Vannie, So I mean, look, it's it's nomenclature, scientific nomenclature. I mean a strain Star two is a new strain of the coronavirus versus Stars kobe us. So it's just it's just to be to be pedantic. It's the right it's

the right way to put it. This is a variant because it's the same family. Still, does it mean that the current vaccines will also work against it? Or do we know that yet? So we don't know for sure. There are lots of reasons to remain optimistic the vaccines will be Apparently, at least the fires A BioNTech one. The immune response they've seen to it does not seem to correlate with the areas where the mutations are, but

mutations can also change the shape of this. The confirmation, if you like, of the spike protein which is being targeted by the vaccines, so it might diminish the efficacy, but luckily we're starting at efficacy, so it's going to be quite good to see what that might be. Even if it's is still a pretty pretty serious help in managing the pandemic. Now, this particular variant, we know that it's more contagious. Do we know how people are reacting when they get it? Is it the same type of reactions?

Are they as sick? You know, our ventilator is something that did come up. It's too early to tell, you know, the the the the only way we know is in a few weeks time as hospitalizations mortality data come through and then you can see what what what variant of

the virus was was causing those issues. You need the data to be able to tell, and just by looking at the numbers it's impossible to be able to tell because, as you rightly said, if the ice use are jam packed, then people's mortality is likely to go up because they can't deal with them better. So that's that's Those are key elements that that some serious science needs to be

done to figure it out. The measure is being taken, so lockdown and various countries restricting travel into their countries from the United Kingdom for various amounts of time, and those may get extended. Is that the right thing to do?

They It's possible that it's that it's a bit late in terms of shutting the stable doors after the horse has already bolted, And it's possible that they already that they that the virus has evolved the same mutations in you know, we've seniored already in South Africa, very similar mutation is not identical, but to very similar mutations in other countries. And I would be amazed if it's not already in the United States. So that's the key thing here.

I'm going to repeat that Sam Fazali, who is head of our pharma analytics and really has been on top of everything coronavirus related, understands it all, says that he would be amazed if this new variant is not already in the United States, a variant that is more contagious some. The longer that this you know, COVID nineteen plus its variants get to linger in a country and in the world,

the more mutations will have. Right, How isn't it getting more and more serious and more and more urgent that you know, we impose draconian measures to try and stop this thing. Well, I kind of wrote that back in if you remember Vannie back here a couple of months ago,

as the US cases were starting to rise. The issue is that the more the virus, as you rightly say, the more the virus mutass, the more people have got this virus, the more opportunity gets to me to sorry, the more opportunity gets to mutate, and that obviously eventually it finds ways around our immune system. So the key thing is to really try and bring it down to

levels that a lot of Europe. You know, in France, if you look at the case numbers, they've managed to bring it down quite meaningfully, although they've just relaxed a little bit their rules. And I'm worried that cases will start rising again. So that that's the element. And Drew Conian or not, I mean, you've seen the effect you can have on a country if they don't if they don't make the right decisions. But what's going on in the UK. Yeah, so some we are seeing vaccines rollout today.

Fauci and friends got the MODERNA vaccine. We had already seen other officials get the Visor vaccine. I guess you know, when we eventually are able to get a vaccine, doesn't matter which one we receive. Oh, they are very lucky people, actually, I mean I don't care which one I get. If if whatever one's available between Maderna and finds my on take, I would happily take it. It's um, they're pretty similar.

One's got maybe a little bit less a little a little bit more troublesome than the other, but frankly it's neither here nor there. So I'm just jealous of them getting it. So do you have any concerns at all about the idea that there may have been extra doses that Fiser wasn't willing to sort of allow. It was putting a little extra into vials just to allow for you know, maybe a little bit of spillage or what

have you. But hospitals are now seeing that, you know, they can be made into extra doses and maybe even a dozen and a half. Does that concern you at all? Should these administrators be confined to just five doses per vile? No, it doesn't. It doesn't concern me at all. I mean,

you know this, you're activating the immune system here. Even if you get twenty five micrograms or thirty five micrograms, and please, I am hyph pothesizing here, right, it probably doesn't make that much difference um in terms of the kind of immune reaction that it causes. So the important thing is that, you know, the more doses we have,

the better. I am, however, not a fan of what a lot of people seem to be talking about, which is, let's just do one does because it showed some efficacy after one does, and then we can extend this out. We have no idea what it does after one dose. It was just part of a trial where the endpoint of the trial was a two dose trial. You can't make these decisions based on what anecdotal evidence one trial shows you what So that that that's a big concern

for me. These interviews are always full of public health announcements, and there is another one. Don't just take one does if you're lucky enough to be in the system, go back for your second dos because you don't know what you're in for if you just take the one. But you do know how lucky you are if you happen to get to some how long will it be before we know if there are any adverse effects and the

population in general that are vaccinated. We so I just put a update ut today on our BI platform looking at the data that we've seen already. If the numbers are right, CDC has reported six allergic reactions by Friday night, and I estimate about five hundred thousand people have been vaccinated in the US. So that's a case rate of not point not not one to percent. I mean, it's let's put it this way, it's a very small percentage of people. Of course, if one person getting a side

effect is not a good thing. But this seems to be manageable. And we'll have to wait till January February to hear about Bell's palsy because that takes a little while longer at least in the trials to surface. So let's see how that shows up. Some thank you so much, and thank you for all of your hard work all year keeping an eye and everything coronavirus related for us being much much appreciated. That is some for sale who has head of E M. E. A Research as Bloomberg

Intelligence but also senior pharmer analyst. Thanks for listening to Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever a podcast platform you prefer. I'm Bonnie Quinn, I'm on Twitter at Bonnie Quinn. And I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio