Virgin Galactic Reaches New Heights

school in our classrooms. Launches and splashdowns in the middle of the ocean. We have people walking on the moon. It was really really cool time. Space is making a big comeback. You know, it's been kind of quiet since the Space Shuttle era, but it's making a big comeback. And now we've got billionaires going up seemingly weekly here into space or Richard Branson over the weekend. I think we've got Jeff Bezos and a matter of days and

then Elon Musk is out there somewhere. I'm sure, um, let's get an over you what's going on in the world of space. Laura for Sick Space analysts and owner of Astroltical, author of rise of the space age millennial. She's also NASA subject matter expert for Planetary Science Missions. Laura, this is really a cool time for space travel and people that are really into space travel. UM, give us your sense, your takeaway on the importance of Sir Richard

Branson's flight yesterday and the upcoming Jeff Bezos flight. What does it tell you about the future of space travel. This is really a great time because this is the

emergence of true commercial private space flight. Where back in the two thousands we saw commercial space flight beginning with tourists going to the International Space Station, but through Russian rockets and Russian training, and now we're seeing purely commercial efforts where um, just now yesterday we saw Richard Branson and a crew flying on his own rocket through Virgin Chalactic and then, as you said, in about eight days, we're going to see Jeff Bezos and his crew fly

on a Blue Origin rocket. And then later this year in September, we're gonna see a crew go to um orbital space and just orbit Earth for a few days through the inspiration formission with Space Sex. So lots of really great private spacelight going on, Laura, is it okay to ask sort of how you're thinking about the difference between the Virgin Galactic versus the Blue Origin. There's differences, I believe in one has a few pilots. One I

think is more automated. Is there a difference in the way you're thinking about profitability for these companies or just frankly, the technicals of of going up there on on two or three different different ships that are operated differently. You're exactly right, there's a there's a big difference between the two. So one yesterday we saw was a carrier plane that released a space plane that launched with two pilots and

four passengers. And the one that we're going to see in eight days Blue Origin is the traditional rocket with a capital on top and a capsule separates and lands with parachutes. So that is a difference in approach, and we're going to have to see how the market plays out on whether customers prefer one method or the other, or whether safety plays out one method or the other. But I think it's too early to say that one

is better than the other. I think we're just gonna have to see, and I will go on both of them. I'm sure you and I would too. I'm not sure two or fifty thousand dollars a seat though, but for a lot of folks probably worth it. So, Laura, what's the what are like next steps do you think for the commercialization if you will, of space and space travel? What are there? I mean, these things are great, Uh,

it's really interesting, but what are the next steps? We're seeing these two sub orbital carriers come online with paying passengers and also science. There's science has being done. There was a science experiment on the one yesterday, So there's some really great opportunities there for not just rich tourists, but also for research institutions, NASA and other governments that might be able to fly their science or do training

for astronauts. There's also think I said, space X, who is going to be flying not just um, not just paying people to the International Space Station as they've been doing with the astronauts since last year, but also just in orbit around the Earth and a free flyer just doing a crew dragon fleece free flyer not even attached

to the space station. But speaking of space stations, there are going to be private space stations coming on board in the next decade, so we should see companies like Axiom Space and others starting to put up space stations that will um work with the International Space Station and

eventually replace the International Space Station. It's just incredible, I think when you think about how far we've come, Paul in the last even just decade in terms of commercial space flight, and and Laura, I mean it's interesting hearing some funny conversations earlier this morning that eventually we'll run out of billionaires who can afford this, and it'll want to be more mass market. How are you thinking about pricing and making it more affordable? What does that look

like to you? Right so, right now, a trip to the International Space Station costs roughly fifty million dollars. There's not many people who can't afford that, but a trip to several will space is were affordable for for a larger group of people. Still not me, but as you said, roughly a quarter of a million dollars. We don't know the price that Blue Origin is going to sell their tickets for um, and that might be affordable for people who save up enough money or for people who are sponsored.

There's a group called Space for Humanity and other groups that are trying to sponsor the quote unquote normal people who can fly on suborbital space flight. Um. And then as this technology become more and more common, just as other technologies started out with the wealthy and then we're brought downs in price to make it more accessible to the common person. The theory is that will happen with spaceflight as well. So Laura just want to get a sense here what I grew up again, It was NASA,

It was the U. S. Government leading the way. My question now is where is NASA in the global space competitive race visa v. China, Russia. Where we as a country now as becomes you know, maybe some of the responsibility shifts from NASA to these commercial entities. NASA is very focused on its Artemis program right now, which is going to send the next the next man, and the first woman and the first person's color to the Moon.

It is as soon as four and that's really exciting because there is a bit of a jew political competition there because the Chinese and the Russian partner to do a winner base as well. It's in a different time frame, about a decade later than NASA intends to. But NASA's partnering with countries all around the world something called the Artemis Accords where they partnered with twelve countries around the world. Um,

it's gonna be a real international partnership there. It's not going to be like the Apollo program where it was mainly you focused on the United States. This is really going to be an international partnership. We even have a Canadian astronaut confirmed to fly with American astronaut on the Artemist mission around the Moon before the first woner landing in the Artemist three mission. So that's really exciting to

see us finally returned back to the Moon. Laura, I'm going to get a lot of hate mail for this, but it's my job to ask, so I'm going to ask it anyways. I'm going to try to do this in the nicest way possible as a space analyst, what is the risk the headline risk around the carbon footprint. I mean, you think about all the focus on going green and protecting our planet and then you have a bunch of billionaires who are going into space for fun. Is there a risk of any backlash on wondering what

this is doing to the environment. It's no more harmful to the environment than the other types of transportation that we use is a key that's a key point right there, right that we need to be responsible and how we develop our technology and improve our technology to be responsible

stewards of Earth. And one thing that I would like to personally experience I've only heard from other astronauts is something called the open view effect where people who see the Earth from above, whether that's in orbit or in SubOrbit um, they come across a different perspective where they actually feel more environmentally connected to our planet. So that might be a way that changes people's minds and makes them more environmentally conscious by seeing our Earth as one

fragile planet. Hey Laura, thanks so much for joining us, or really appreciate you coming on and sharing your thoughts. Law Force like space annalys and owner of Asterioltical, also rise of the Space age millennials. This is Bloomberg. You know. As I talked to Tom Keane, as I typically do, it's always a question of when do we get Tom into this market. He's in that triple leverage all cash fund and uh, he always feels like he's missed his opportunity. But here we are at all time highs again for

the equity Indusseries is it time to raise cash? What do we do here? David ko Talk, chairman and chief investment officer Kumblin Advisors, joins us. I believe he's in Colorado today. Why would you be in Florida when you can be in Colorado in uh the summer. David, thanks so much for joining us here. Again, what do we

tell our good friend Tom Keane about these equity markets? Well, thank you very much, fall and I gathered Taylor as with you, and it's very nice to chat with old friends from Summit County, Colorado, where nine thousand feet nice and you just announced Webber Grill and I would say, if Taylor and you can find your way to Colorado, I will cook you a steak on the deck on

that Webb grilled sole. As for Tom Kane and what he should do with cash, I can't say, but I can tell you we have built a cash reserve here recently. We are not fully invested. Um. It's been a marvelous first quarter, much beyond anyone's expectations. And my grandfather, bless his memory, taught me you never get hurt taking some profits. So we took a part of the profits of the first quarter where we had achieved in six months what we thought we would achieve in the whole year, and

we banked a little and are waiting for opportunity. The rest of the portfolios in the United States et F structured portfolio, the U S. E t F portfolio is heavily overweight. The health sector almost double market wait market wait for the if you look at the sectors is

approximately four or so. We're about twenty eight, very broadly diversified within healthcare, devices, parmaceutical, biotech, the gamut structured with E t F, and we believe the pandemic is not over long haul Covid is with us for a while, maybe years, and the healthcare sector has a monumental task ahead of it and will step up and deliver results as best as it care. You know, David, we love getting you on this program more than just the opportunity

to have you grill us some stakes. You mentioned you're not fully invested, and I am curious, what would it take. What is the opportunity? Is it a ten pullback? What is it that you would be willing to commit more cash? Well, I think there's several major issues about which there's uncertainty.

Uncertainty means you can't put probabilities on that. Taylor. We don't know where this China initiative, which is anti US, anti capital markets, pulling I p o s, putting on restrictions, dealing with two hundred and fifty securities of various types that trade in the United States, is going to lead us. We have a capital market conflict between the United States and China, the two largest economies in the world number one.

We don't know where that goes, but it can't be pretty. Second, we don't have herd immunity in the United States, and we have twenty five of the population that is rejecting science. Now there's a debate about science, no question about it, but there's also evidence. And when you look around, you see that the vaccination rollout is not work being completely

as expected. You then you look at the rest of the world and you say, there's six point eight billion people out of seven point eight billions that have not had a vaccination at all. They're in places where public health systems are deficient. So these are massive shocks in addition to fires and climate change as a massive shock. So what do you do when you have several black

swans flying around in the flock. You pause, you put some cash on the side, you wait, you say, I don't know, and therefore I've had a great run in the stock market recovery. Now I need to pause, and that's what we're doing when we redeploy and where remains to be seen were open, but we're not committing to that now. David, about thirty seconds left. What is what do you think will be the next movement by this

foot to reserve? Well, I think that FAID doesn't do anything until they get to the Jackson Whole meeting, and then they have to soft gradualistically, very baby steps, try to ease back on easing, a very difficult task or any central bank, especially ours, under these circumstances. That's how it looks to Bigful. All right, David, thank you so much. We as always appreciate your time. Enjoy the cool weather, hopefully out in ten thousand feet in Colorado. David Ko talk,

chairman and chief investment officer Cumbling Advisors again. They have about three billion dollars in assets under management, and I love Taylor, David. He tells you exactly what he's doing with his cash, whether he's building cash, putting it to work. It's really an interesting perspective, and he's one of the guys that is the in the middle of all the craziness of Muni bonds and the technicals and actually manages to sit down and explain it to you and great

Muni portfolio as well. So that's certainly some fun memories. Well, I'm gonna bring it. Ben Emmon's managing director of Global macro Strategy at Medley Global Advisors, because I get his research notes and the problem with his research notes is he writes just too many of them, so whenever they hit my inbox, I gotta stop. But I'm ever I'm doing and read them because there's always good stuff in there. But before we get the earnings and markets and all

that kind of stuff, I'm gonna talk space with Ben. Ben. We saw sir Richard Branson go into space over the weekend. Is this a business as as an investor? Do you pay attention to that kind of stuff? Hi? Thanks for having us, Yeah, you'll pay attention. You know, it was obviously an amazing moments. I have to have this commercial

flights into space. You know what I think is really good by Richard Branson is you know, he's the CEO of the company, and he takes the risk right to go up there because it's not without risk, and then comes down back to Earth safety and says, I just did the customer experience that just showed you live on Twitter in the capsule what you can experience me go up in space. Right, So you know that's a perfect marketing strategy. But it does highlight how far we've gotten

with this technology. And he spoke to that this was not he was dreaming about this like two thousand and four because of seven so that they were working on these plans to get themselves up in space. So I guess what will happen in the future will go a lot faster. Now we're gonna get a lot more flights in the future. And if you look at that business, you know they estimate that the total valuation of space economy.

So to speaks about how the fifty eight billion, which is a lot of different elements to it, but you know, as in space exploration and all kinds of industrial activity, but that can become significantly larger with events every so yesterday, So I think if I would put my mind into Kathy Wood's mind, I'd say, like she's probably right, like this is a a new industry and Richard Branson just took this right up lead bound with a rocket right there yesterday. You know, you want to talk about other

things that the market is certainly in attention to. Ben. We love that you can go across a set for us, from space tourism to bond yields, and I feel like we're at that sweet spot where we were happy that bond yields came down because of the way that that can inflate some of the equity valuations, but it's also given us a little bit of a worrying signal about the future of economic growth. Where are you in the sweet spot of what yields are telling you at this moment?

You're right, Taylor, there is you know something about the climbing yields in an environment where economic data is really strong. It doesn't coinciber one another. And it reminds me a little bit of you know, prefinential crisis and the two five beer. You know, really strong economy, strong housing market,

a lot of confidence, but yields with data decline. So there is a bit of a dynamic on the one hand of positioning that's that's causing that so people were short and get wrong fooded is I think improved message by theF fect just like back then, maybe someone more predictable what we can expect it. There's a tapering, but there's also something about the economy itself and be made gotten to a point of of a form of overheating, and the bond market is said like, you're gonna start

cooling off. So I come down on that debate that yields probably this low reading because we're maybe maybe somewhat of a cooling economy and that keeps you know, the balances in the markets pretty solid. Right, we have low volatility, stock market is doing fairly well. If anything, the rotation

back into the tech is also supporting other sectors. Ahead of these earnings, I think low yields play into the people's mind like, yes, the economy is not in the recession of anything, it's just moderating against really strong earnings. So I think it's it's good for markets. Ben We're gonna have the large finance institutions begin to report earnings this week. What are you looking for? Yeah, I think that the banks itself have obviously a tremendous base effect

and they're earning some last year. You know, your your colleague and the Martins has these great charts on that, and I looked up yesterday. The year and year growth rate is unbelievable. Will will see in the next few days it could be could these percent of some of these cases. What you, of course will look for is that what is really the loan demands look like on the ground, because now the economy is really attraction and

we're open. What's really changed there is that the kind of the process and what they're planning to do with all that excess liquidity they've taken up at the reserve, Yeah, the reserves and sell the excess reserves as well as the reverse repo facility. And then obviously what they've announced after the cess test the buy back plans that do

metical markets. I think there's expectations you could tell today from the price section that the banks will come out not only with good earnings, but with intentions to really further support the equity valuation. So I think banks will do quite well in this period. Are those buy backs boosting those valuations that you alluded to within the financial sector?

Is that broad based as well? Are we expecting to hear in these second quarter earnings from CEO is a lot of commentary about using this excess cash to buy back shares. So the banks have a unique tail in that sense, right, because you know, they basically got relief from the Federal Reserve to start buying back shares after

a year of being excluded from that. Whereas the buy back index itself, you have an SEP SMP buy back in next that's now, by the way, game quite a bit of value, but the buy back levels have been low, so yes, it could be, you know, depending upon again,

this is a signal. I think maybe what people try to connect with the strong economy and low yields is this our earnings telling us that you know, a lot of companies sit on a lot of cash, are not going to deploy it then investment, but buy back shares and then in that sense would not necessary to be a good signal. So I think it's really the banks that will take the lead there. Because they've been given

the lead, the other companies will see, right. I think it's a there's a lot going on in the economy, that's for sure. Hey, Ben, thanks so much for joining us. We always appreciate chatting with you as well as your research notes. Ben Emmon's Managing director Global macro Strategy at Eddy Global Advisors, giving us his thoughts on these markets, on space and on some of these bank earning's coming up this week. What we've got markets once again, equity

markets setting all time highs. And that's despite the fact that the COVID nineteen UH is still very much with us on a global scale. Even within the confines of the United States, there's there's large portions of this country that are under vaccinated and again as a result, facing some challenges in the delta variant. But the markets that once was a thing for the markets, it doesn't appear like it is as much anymore. Christina Hooper joins us.

This is chief global market strategist for Investco. UH. Why do we like Christina because she's a very nice person to have on She's very smart and Investco has one point three trillion in assets under management, so she knows where the money is going. Christina, thanks so much again for joining us here. Again, how do you think about I mean, you gots you just take us back you know a year plus and the markets was the narrative was completely driven by UH you know, virus trends and

and hospitalization rates. That was really moving the market. And now even though we have vaccines, there's still some concerns out there there. But the market just doesn't seem to care. Well, the market, the stock market doesn't seem to care, right, but it seems as though the ten year treasury yield,

the treasury market does seem to care. Now, I was raised in this industry on the notion that quite often the ten year treasury yield is a better indicator of fear than anything we can find, like the vix in the stock market. So this could be a scenario where we have stocks um seeing that there is economic growth that's quite strong, um, seeing very accommodative monetary policy and reacting one way, and then we see the ten year

treasury seeing the other side of the coin. Right, Um, the parts of the world that aren't well vaccinated, even the pockets of America that aren't well vaccinated, and are suggesting there are reasons to be concerned. Um. It's it's arguably a little bit of diversification here in terms of the different reactions in different parts of market. Christine, if I could politely push back on that could you argue that spreads are also telling us about the equity markets.

I'm looking at eighty five basis points on investment grade over treasuries under to seventy on high yield over treasuries. Spreads are telling me there's nothing to worry about. What do you make of that? Well, I think that that is arguably the overarching story, right that, Um, that what we are going through right now is likely to be temporary. Um. Last year, at this time, we did not have a

cure for COVID nineteen. We had no vaccine vaccine available, and in fact, we were hearing from medical experts who said that it was unlikely we get an effective vaccine against a coronavirus anytime soon. Now fast forward a year and the scenario is very different. Our biggest problem is vaccine rollouts. We have effective vaccines, so we know that the challenges we're going through now are likely very temporary in nature. All right, So Christina earnings week is kicking

off this week with the big bank earnings here. Um. What are you looking for, uh from earnings this quarter? Well? I think we we very much expect a strong earning season and that should come as no surprise. Um, so what we really want to hear from is the guidance

and the future. UM. What can we expect because there are of course concerns that maybe this is as good as we're going to get, and so to hear that guidance from companies in all different industries is going to be very, very important in terms of giving a sense of where the stock market goes from here. UM in the back half of this year. Christina. One thing that we love getting you on the program is because you have global in your title. What is the headline risk

of investing in Chinese stocks? Given the regulatory crackdown, as we spoke last week on TV, a stroke of a pen Beijing changes the rules. How do you think about that as sort of a risk to a China to an e M portfolio. Well, certainly there are regulatory risks in all corners of one's portfolio right now. There are concerns that we could see greater regulation of technology in

the United States. So I think investors need to look at their portfolio with uh an eye towards where there could be potential regulatory changes, and of course that includes what is happening in China. UM, and that would argue for more diversification, more potentially UM, more exposure to other parts of emerging markets right now. UM. But but but I

would say that we can't panic about this, UM. We just need to follow it closely and again recognize that there are regulatory risks in all different kinds of places, including those who have UM crypto components to their portfolio. Christina, where are you and the portfolio managers investgo right now? Where are you guys doing your most work looking for opportunities? UM? Well, certainly every every portfolio manager is looking at their investible

universe for opportunities. UM. What I would say is when I take a step back and we're looking at it more from a big picture perspective. UM. There are a lot of very very interesting things going on right now, UM, in particular areas like cyber security. UH. It's not getting

as much attention, I don't believe as it should. UM. But this UM, this is an area that is UM regularly cited by CEO before COVID nineteen as one of the biggest concerns right cyber security, And so I would anticipate that we're going to see more capex spending in general, more capex spending on tech um more specifically and more tech capex spending on cyber security. So that's just one theme among many, but it's one that I think deserves

a lot of attention right now. It's very interesting. We always love getting your thoughts, Christina who per chief Global market strategist for Investo, getting your thoughts on markets again a big earnings week, which will give us a real view on the strength of corporate Americans. Christina was suggesting. The focus also and maybe increasingly will be on that forward looking guidance. Uh and we'll certainly have all of that for you. This is Bloomberg. 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 V three pint on False Swhee. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.