Breakthroughs in the Commercial Space Industry

Jeff Bezos for commercialization of space. If you will, Let's bring in uh Andrew shen And he's a chief executive officer procure a m Andrew, you know a lot of folks talking about space, talking about the commercialization of space, privatization of space. You're right on the front lines. What did you take away from what we've seen over the last you know, ten days, first with Sir Richard Branson

and then yesterday with Jeff Bezos. What's your takeaway? I think it's truly incredible and inspiring, and we're seeing, you know, in real time in our lives, how people that you know focus money and technology and invest in these types of techechnologies are able to achieve their goals. And I think it's you really encouraging for individuals, whether you're students, whether you're entrepreneurs UM, whether you're just fascinated by space

to CEO over and over again. I feel like this year we've seen some incredible breakthroughs and some new technologies, and it's opening up the commercial space industry. As you said, So in terms of investors, what kind of interest have you got? I mean, I know we've seen incredibly inflows into space um related assets, but but where do people want to put their money? Where? Where are you looking to invest in space related stuff? Yeah, so, you know,

space is also a risky proposition. You know, it takes time, it takes money, and you know, certainly safety is something that needs to be figured out before companies can really uh move forward quickly. And you know, for us from the you know, my whole experiences being in the h F market, diversification was always something that I thought was, you know, something investors might want look at, especially with earlier stage, longer term kind of industry such as space

being one of those. And you know, right now, if you look at UFO, it's got thirty five companies from around the world, all specializing in different areas. But you have a real large exposure to satellites and communications and you're not really getting much of that exposure through other

types of ets. But you're getting all different areas to like space tourism and launch companies as well as those using your creative technology that we can use in space, as well as using space to help us benefit ourselves down here on Earth. Andrew, you know, I think what yesterday's launch and the launch from Richard Branson earlier just kind of revised the conversation about. Okay, remind me again, what is the business case for commercializing space? Is it

space tourism, is it hauling stuff around? Um? How do how do you think about it? Yeah, well, if you if you look at Blue Origin, their goal is to build the road to space so that you know, the future can can enjoy space. And being able to create things like reusable rockets which help lower the cost of launching things into outer space is one way you can do that. And by being able to lower the barriers of entry to space, it could bring in completely new

companies and entrances and research projects and whatnot. Um that maybe we're preventedive before at higher costs. So there's a lot that they're doing right now in space, and they're trying to build out that infrastructure so we can really start to see what we can do when when we can get these costs down. Space tourism is just you know, one small part of the broader space industry, and so that hasn't stopped it from getting the lion share of

the attention in recent days. Yeah, I mean, tourism is exciting. I can't wait till me and Paul can go broadcast live from some private space station. But what else can you do up there? I mean, can you can you mine resources up there? Can you um bring some heavy industry up there so we don't have to have the carbon emissions here on Earth? I mean, is there really

uh a lot allread planned? There's a tremendous amount of things that you can do in space and we're not even scratching the surface where we haven't even gotten to the surface. Really, when you look at things and yes, you know manufacturing and outer space, well, when you're building with with zero, with weightlessness, you know, that's that's incredible. You know, you can build things more efficiently, you can build things larger, but really, you know, you mentioned your

resource extraction and mining asteroids. Yes, it might be a little bit further along, but we already have plans of going to the Moon and building permanent bases, and China wants to build a permanent research based on the Moon. By well, you can't do that without being able to extract the resources around you unless you want to try to send every single item that you're going to need in space to outer space, which takes time and a

significant amount of money. So being able to actually harness the resources that are available in outer space becomes extremely critical as we try to expand humanity beyond Earth. And so you know the resources are there, figuring out the technologies on how we can bring them to two people. How do you sustain life on the Moon, on Mars, on the space station, and we have already seen some incredible technologies like being able to better purify water, and

that's something that we can use here on Earth. We saw space helped build out and further improved technologies for solar technology, which is another benefit. So there's a lot that you could do with space and here all right, Andrew, thank you so much for joining us. We always appreciate getting your thoughts in perspective here on this space race,

if you will, commercialization, privatization of space. Andrew Shannon, Chief Ecazette Officer of Procure a M and again it was a busy week with the Jeff Bezos Blue Origin UFO, the UFO E t F. Yeah, the UFO et F. It's has to be that ticker. There's no other ticker that could consider called Cristopher, head of Global Market Strategy at Wells Fargo Investment Institute, based in the city of St. Louis. Paul, thanks so much for joining us here again just this week.

It seems to be a little bit of a microcosm what we've been dealing with. You know, a little bit of volatility, but I mean a lot of altility, arguably from a Monday through a wednes but still grinding higher. How do you guys think about equities in a market where you have, boy, the tenure on seven. Yeah, there's there's just no reason for the tenure to be at two a one point to seven percent. But look at the twos to tens spread. Look at that yield curve slope.

It's the last time you had a hundred and seven basis points or one point seven percent and that slope was two thousand seventeen, pretty good year for equities. We still think that what we're looking at here is a market that ran very hard, very fast. Uh And and and expectations got ahead of themselves. But we think the the growth is still strong. Equities have further to run, and we think that the yield curve will steep and eventually further. How how does that happen with the yield

curve and what's going on right now with rates? So what's going on right now some combination of I mean one twenty for heaven's sake on the tenure, that's like our recession. So so people have run ahead the expectations for growth a run ahead of reality. Uh. And now now we're seeing discussions about pete growth. We're seeing discussions about could have fed make a policy mistake? Are they withdrawing liquidity? Uh? You're seeing central banks around the world

withdrawing liquidity. And then you you've got also the conversation about the delta variant? Is that going to result in more lockdown? So markets need to get through work themselves through those several issues, and then we think you'll start to see if you're gonna have inflation higher, and we think we will have inflation somewhat higher than the average of the last ten years. Will it'll be higher for

the next couple You're gonna have inflation at two. You're gonna have yields higher than what they are right now, eventually. But some of these psychological issues have to be worked through, all right, Paul. Some people in the marketing, the equity markets, you know, they're kind of it's at pull and tug.

Do I embrace some of those big growth stories that have been so good for so long, the Amazons, the Netflix of the world have just reported last night, Or do I, you know, kind of play into that rotation trade, maybe a little bit of a reopening trade some of the cyclicals, some the financials maybe, do you How do you guys think about that? Yeah, So for a while this year we were actually barbelled. We had an overweight

to cyclicals and an overweight to growth. Um, we've decided to go tactically short term with an overweight now to cyclicals, and we returned growth. So I think TEX think a consumer discretionary. We returned those to their long term allocations. So if you have sort of a long term view, and you're willing to give text some reasonable allocation over that long term. Stick with that allocation right now, but take money from defensives like utilities UH and stapled and

put that into cyclicals for the moment. No one likes defensives right now and they're underperforming. Yeah, well, that's one of our best calls this year. I guess that's why you want to stay out of the area. What do you think regionally? Does the US continue to outperform? Do you bet on other reopening trades in Europe, for example, or in Asia? We don't think it's time to to bet on that opening trade. They will struggle with the delta more than we will. UH. They're they're being more

close together. You will have parts of the U s that will adopt mask mandates back again, we think, but the US is probably still the place to be. We've done well with that preference over time. We'd like emerging markets better than Europe and Japan also, but they may struggle a little bit in the coming months until their vaccination rates get up there. So stick for right now, stick with the U s as and overweight, and if you have anything left over cash wise stick that in

emerging markets. How about yield? I mean, boy, is again we were just talking about the ten year at one point to seven. Where are you looking for or where do you suggest to your clients they look for yield? Well, right now we're thinking kind of like two percent of the end of the year. We're reviewing that number though that might be a little bit high, but it's certainly going to be higher, we think, than where it is

right now. Alright, So, uh, we're looking at a situation where it's not it's not easy to find a return. I mean, if you're not looking in stocks, um, do you do you trust the high yield market to not default? I mean, uh, we saw I think it was um uh it was Standard Pores that said only one percent of junk dad is going to default this year. It seems like a big bat to me. It's an interesting question. I mean the question for investors that the real question that you should always come back to is am I

getting paid to take that risk? Exactly? And with the dividend yield in the in the SMP right now at a percent and a half, you're not that much below where what you would get in yield on a on a high yield, but with a lot more risk. We think not this year perhaps, but in the coming year. So you know, I wouldn't be buying a lot of

high yield here. Certainly your long term allocation. If you have some fixed income in your long term goals, take your high yield up to that allocation, but don't overweight it at the expense of equities. Very good. Paul Christopher, head of Global market Strategy at the Wells Fargo Investment Institute based in St. Louis. We appreciate getting of thoughts here. I'm pretty pumped because we're gonna bring in Adam Johnson right now. He's the founder and author of The Bulls

eyebrew a brief but um full disclosure. He's also one of my favorite people. We have uh we used to play a lot of squash together. We've been known to have the occasional beverage together. And he's got a lot of great ideas about stocks that he likes, especially American kind of ingenuity plays. And he's done everything on Wall Street traded like jet fuel futures. He has run a hedge fund, found and run a hedge fund. He was an anchor here at Bloomberg TV Um, Adam, great to

have you with us. UM. I'm looking through I'm looking through the bulls Eye brief from Monday, and I see you've got some new picks. And this is what you do. You're an idea factory right for people who love stocks. So one of them stands out to me because you are, UM, a very clean cut Princeton man. But I see a marijuana company here, you like purely foldings. What's the deal. Well, you know, I've been resisting this for so long. In fact,

I started off the note I said to people. You know, I've I've never inhaled, I've never had a hash rownie. But I think I need to start taking this thing seriously. And and I'll tell you why. I'll give you one statistic that I think really UM sort of frames the conversation about UM. I hesitate to say pot stocks, but let's call them cannabis stocks. UM. In the state of Illinois, in the first quarter, total tax revenues from cannabis almost

equaled total tax revenues from liquor. That's amazing. So you know it's it's yeah, it gets my attention to and and again you know, it's not the sort of thing my whole thing's American ingenuity right to people and companies driving the world forward. And um, you know, I don't usually think of recreational activities, which may include cannabis, as as necessarily innovative. And yet, uh, there is some incredibly

innovative stuff that's happening. Um, I mean there are a number of pharmaceuticals that actually are starting to use CDD, one of the two essential chemicals in cannabis, to treat things like autism. And you know, so I think, I just think it. The reason I wrote this up is I feel like again, it's kind of funny. I feel a little tongue in cheek. It's the blue chip pure Leaf is the blue chip operator. It's the most profitable operator.

It's the largest, it's growing the fastest, it does everything right. It operates in about twenty three different states. It's margins are the highest. And I think there's just enough going on here that that I wanted to educate myself about this thing, and and I decided that I was sold on it. So I wrote it up for my buals Eye subscribers as the current pick. So I've been buying it this week. Interesting, Adam, I know, you know, I've again I've always considered you just a fine stock picker.

I know you're uh focus a lot on technology and and how that's changing lives. And I think if we've I'm out of anything out of this pandemic. I think probably investors have a perhaps even a more a better appreciation for med tech biotech and you know some of the advances they've had in terms of the vaccines. Where are you looking right now in that med tech biotech space?

What's got your attension? Well, I'll tell you, I think the intersection of artificial intelligence and wearables is incredibly exciting. I actually call it the Holy Grail of healthcare. What we're now doing is using UM wearables. UM you know, an eye watch that that monitors your your vital signals, transmits that data to a doctor thanks to five G who then not only compares UM that incoming data in real time to your own baseline, but to millions of

other patients. And all of a sudden, now you can start to have a conversation with a doctor, or really between a patient a doctor whereby they say, well, you know, maybe you want to adjust your behavior this way, and again it could be done in real time. So to me, that intersection um of of data and preventative care, that's the holy grail of healthcare. It's longer lives for patients,

it's lower costs for providers. It's very exciting. There a whole bunch of aims that we could, you know, get into from Health Catalyst h C A T too in Novolan I n O V obviously to a doc which bought love angoum on and on. I mean, it's just that that really gets my attention. Guys, you like nine meter, you like telamed Um, You've got a few picks, and I'll let I guess um listeners subscribe the bulls Eye brief for that. I wonder about Chipotle. Why do you

like Chipotle? We've been talking a lot about it. I think Paul had five burritos for lunch. But I see that you were buying it on on the dip. I guess on Monday. Well, actually you know what I was. I was buying charge point. Uh the ticker for which is uh, oh, excuse me, my mistake c HPT. I instantly thought of Mexican food. What's the charge point? You know? Look? You you and I are you and I are are big fans of Mexican food, so you know, I'm not

gonna hold it against you. It's not your favorite Mexican place. I know that because I've been there with Mexicano. There you go. Ye, what's charge Point then? Oh? Charge Point is really really cool company, believe it or not. It's the largest UM producer and operator of what's called level two chargers for electric vehicles. And Level two chargers, by the way, are the ones that that you have if you want to be able to charge your card, you know, within an hour or two, as opposed to a Level

one which takes all night. UM. You can buy a level two charge you r at home depot at auto Zone. Amazingly, charge Point again tickers c HPT. This I recommended to both I subscribers a couple of weeks ago, so I've been buying it recently, building my position UM market share here in the US. That's incredible about in Europe UM again, strong margins obviously, the things growing like a weed. Um uh. And it's just it's you know, it's an exciting place

to be talk about American ingenuity. You know, here's the company that enables us to be cleaner electric vehicles on and on. Great having you, Adam, thanks so much for joining us. Adam Johnson there, who is the founder and the author of the Bulls Eye Brief, calling in from maybe he is at Rosa, Mexicana right now. He's got to be great Twitter feed as well. That's a musse follow from me, follow him. This is Bloomberg. Bloomberg Markets

does roll on. Unfortunately, so does the coronavirus. And I'm gonna bring in Sam Facility to talk a little bit about that right now. He's got his latest research out on the terminal delta variants bad attributes may warrant a new COVID vaccine. He is, of course, or senior pharmaceutical analyst. He also runs AMA Research. Paul and I were talking about this. He's got a PhD in the stuff, so he knows what he's talking about. Sam My. My concern after reading your story is we know that, um, the

delta variant is more infectious. Um, you point out that there's a raised viral load but also potentially worst disease outcomes. What do we know? What don't we know about the

actual effects of this virus? Yeah? Hi, Math, So you've obviously got the data that came out of the de continues to flow out of Public Health England that looks at the phrase that that a lot of virologists don't like transmissibility of the virus, and that increased relative to the alpha variant in the region of thirty fiftiest seven

seven or so present. And then and then you've got on top of that what looks to be a higher rate of hospitalizations in people who get infected, which of course depends on age and a lot of other factors. So you've got that data, and then what this data that came out that shows that the virus obviously have higher viral loads, so the more virus you have in your body, it is possible that it gets to the different corners of your body better or even has much

bigger impact on your lung. And then also you get this thing that that these some of these viruses do, which is to basically force your the cells that they infect to fuse together, which is part of the pathology, but they use that also to multiply under the radar from your antibodies. So then you get one massive release of virus that is not good either. And this this delta varian seems to have all these wonderful attributes that

that that do do the damage. Sam, do you is there what's the science telling us now about the ability of the various vaccines that are in the marketplace now as it relates to this delta variant. It's a pot

There's two ways to to answer that question. If you want to go by what the world seems to get excited about, which is case counts, mild infections, anything that that tests positive and a PC are, then then we're in trouble because this delta variant is it's very fit us as quickly from person to person, and it's possible that it's more resistant to that initial shield of antibodies that vaccines give us, particularly antibodies for instance that we

just saw recently from data from Johnson and Johnson. But if we go one step further and say, I actually know what we really worry about or care about is prevention of disease, not not costant sniffles, but actually lung damage, hospitalization, severe disease, etcetera. I think all the vaccines are capable of preventing that to about the same level as they have been to the other variants. My my biggest concern is the long haul COVID, and we don't really know

so much about it yet. We can't obviously it hasn't been around long enough. But you know, I suffered from long term lime disease. I still have issues occasionally. Is this going to be the same kind of thing, Sam, that some people who get this are going to suffer chronically? Yeah. I mean the uk AT is estimating something like six percent of people who got COVID or who think you've got COVID. There's there's there's a little new ones there

are suffering from some form of long term effects. And then of course that's a lot, right If you've had then like two or three million people infected, that's a lot of people who continue to suffer. And I hear horror stories. I mean I have a friend whose sister is like a thirty year old marathon runner and she has been lethargic and really unable to do anything for months. Yeah. Yeah, but we need to tell that to all these people who don't want to take the vaccine thinking that they

have a risk from the vaccine. Everybody will eventually get this virus. They can't unless they're going as I kind of remember who it wasn't set down unless you go and live in ardly the ahead of the medical the chief medical medicine officer in the UK, unless you gonna live in the meadow, in the middle of the meadow, from away from everybody else. So you can't lead your normal life, not get the vaccine and then think everything is gonna be fine. You don't know, it's a lottery,

he said, washing Roulette. Sam, how about booster shots? I mean, how do you think this is going to evolve going forward? What we need booster shots? What do you think we're going to hear from somebody? So i can't wait to get my booster shot. I'm lined up as soon as

they offer them, right exactly. So the issue is again if you were if you're going to run your country, which is a little bit what the UK is trying to do right now, right saying, look, we can control hospitalizations, we can reduce death, a little worry about cases and infections,

which is of course lots of questions on that. Right, then you don't probably need the booster shot unless you know that there is a group of people who have an immune response that's weaker, or you're much older and you're way in the fact is going to get a

booster shot. But if we're saying we need to stop infections and spreading and we don't want to have lockdowns anymore, but we have, we either need booster shots to boost the immune response or actually going to get a new vaccine, which is kind of what I'm suggesting here that represents the new variants that probably also protects you against the previous variants and and then hope that you really rebuild that shield and keep it there. Is that what we're

seeing from the farmer companies is that? Or maybe is that what we're hearing from these farmer companies that hey, you know, we've already got a vaccine in there for fiser modern or jan J, but we're working on two point oh three point oh. Well, certainly MODERNA is already in trials with the with the beta variant vaccine and iterations of just and find the BioNTech are are are doing the same thing, and whether they want to Delta

time will tell. But I think if I were them, I would have a vaccine for Delta and a vaccine for Beta, possibly mixed together or as separate, because then you've got the whole kind of variety of mutations covered. Assuming that they will work equally well, then you've got the opportunity to protect people. To san and Johnson, I'm sure we'll be doing the same Afterdnicaster, that they'll be doing the same. So no, found, no, no company that makes vaccines would in the right mind not to do

not do this. Are you watching out for omega? Are we going to get Sigma kai, kappa kappa gamma? I mean, is there going to be more and more variants or or is delta kind of the end of it? I guarantee you, And it's if I've ever guaranteed anything. There's taxes and viral mutations. That is what these viruses do, right. There is no way that this virus doesn't continue to mutate.

The question is will it emerge with another variant that has developed under pressure from vaccinated people or not That there's a lot of I don't think virologists believe that that actually is a real Is there a reality vaccine resistant viruses? But it's possible that by magic or by accident or by luck, it develops one mutation that allowed it to bypass the antibodies. Again, but again that's still back to the antipod. Thanks for listening to the Bloomberg

Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three at ball Sweeney, I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.