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Speaker 1: This is Bloomberg Business. Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
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Speaker 2: With Jim.
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Speaker 3: Don't you let.
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Speaker 4: Down all right, Mike? So, today was a big deal news day when it comes to drug makers. So Bristol Meyers Squib agreeing to buy schizophrenia drug developer Karuna Therapeutics for fourteen billion dollars in a fast moving deal that does highlight the drug maker's race to fill pipeline holes. Here, Karuna is developing a schizophrenia treatment called car xt that's upper approval in the US and would expand Bristol's portfolio of New York science So, which is a growing area interest for many drug makers. With us is Laura Chico, Managing director of Equity Research for Biotechnology at web Bush Securities, joining us on Zoom from Chicago, alongside Mark Monks, who is our US deal's team leader at Bloomberg News on the phone in New York City, Matt, I want to start with you first. Here would walk us through this deal and what investors need to know because Bristol views this as something that would add promising treatment to schizophrenia.
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Speaker 5: Yeah, I think. I mean, you've got to put in the broader context, there's a race and farmer right now to get new treatment. So this is a really hot area. There's about two or three different companies like this that are out there, and you know they're paying a fairly high price to get out front of this treatment. You're seeing this across the sector and you know we can expect to see more coming ahead.
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Speaker 6: Well, Laura, I'd love to bring you in here too, talk to us about the actual sort of prospects for this schizophrenia treatment. I mean, obviously such a debilitating condition for a lot of people. Is this you know, does Bristol's take over this company really imply a lot of optimism that this product will come to market and really be a breakthrough.
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Speaker 7: Yeah, thanks for having me. Absolutely, I think this car XT is really a game changer. Is the way that we viewed it. Our model assigned credit in schizophrenia, adjunctive treatment, an add on therapy, and then Alzheimer's related psychosis. But Bristol's also looking to further expand out the indications there. And you often hear the phrase pipeline in a product, but this is definitely one where I think it might have really broad applications.
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Speaker 6: Here, you know, Matt, I'm wondering about the sort of the broader takeaway for the biotech industry when you think about a deal like this and the smaller drug industry. You know, when prior to the pandemic, that was the big theme that these big drug makers their pipelines were running dry, they're really needed to start rolling up some of these more promising younger companies. Are we sort of back to that theme now in the m and A space for pharmaceuticals.
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Speaker 5: Yeah, I mean biotech MNA is incredibly hot right now. You know, coming off of the pandemic where they got the boost from the COVID nineteen treatments, that revenue bomp has tailed off, and I think we're back to where we were, you know, before that all took off. And like I said, there, you know, there's a couple of treatments out there like this, and there's a couple of different targets, and I think we're going to expect to see more of this to come.
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Speaker 4: Laura, I want to bring you back into this conversation, how do you think that shareholders on both sides view this deal right now?
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Speaker 7: Yeah. On the Corona side, certainly, I think takeout has been a theme that's been present for some time for Karuna, and we certainly had the Sarahbelle at the acquisition not too long ago as well, So I don't think there's too much surprise here. And then from the Bristol side, this is definitely a strategy they're looking to use to deploy more growth opportunities in their pipeline. As Matt said, this is at an exciting time. Barma has a lot of capital to deploy and pipeline gaps to fill, so I think it makes sense from both sides.
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Speaker 6: Yeah, Matt, you mentioned that premium. While fifty three percent premium to the Thursday closing price not too shabby, I mean, are are they basically trying to, you know, get ahead of some potential other suitors with that big of a premium.
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Speaker 5: Our understanding is that it was a fairly competitive process. I'm not going to say who else you think was around it, but there was a couple other parties and so that's just a reflection and you're not just seeing this in pharma. You're seeing this in other sectors, oil and gas, where you're seeing you know, where there's some demand and m and a demand, people are willing to pay for really quality assets.
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Speaker 4: Hey, Laura, are there regulatory hurdles that could stand in the way.
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Speaker 7: I don't think so at this point. You know, when you look at the schizophrenia market, there are a number of branded and generic players, and Bristol's footprint in CNS is arguably still on the comb. So I think this is actually an area that would avoid significant FDC scrutiny.
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Speaker 6: You know, Laura, I look at stories like this and I try to think, you know, put myself in the shoes of a stock picker trying to figure out where the next one, what's the next target going to be? Are there any sort of promising product categories and diseases that you think drug makers are most interested in right now?
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Speaker 3: Yeah?
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Speaker 7: CNS is definitely one that you can see today that we're getting quite a few bits here, and I think Xeno Pharmaceuticals is kind of in that bucket, focuses on vocal epilepsy. But outside of CNS, I think inflammation and immunology is definitely another hot area. I think one name that we cover in that bucket would be Brilliant Therapeutics tick A VRDN.
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Speaker 4: Hey, Matt, when is the deal expected to close?
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Speaker 5: I think that they said later next year, right, And what else.
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Speaker 4: Do you think is important for shareholders to be aware of more than the kind of shorter term timetable at this point?
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Speaker 5: I would say that I seek maybe another interloper coming in that could be interesting. While they did pay a quality price, I mean a very high price, that it's still possible that somebody could come in interlope here. And also that fat price, you know, could with that raise any hackles from you know, potential activists that you know might fail here. Those are always just two continual risks that we see, especially when the deals are so few and far between.
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Speaker 6: Right now, Matt, I understand that the Biden's Inflation Reduction Act played into the decision making on this deal.
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Speaker 8: Could you tell us a little bit about how.
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Speaker 5: I actually, I don't know. I don't know how to answer that.
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Speaker 9: I don't really.
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Speaker 8: How about you?
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Speaker 6: Or is there is there a reason why the Inflation Reduction Act is.
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Speaker 8: Inspiring deals like this?
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Speaker 7: Yeah, I think one of the concerns here is you know, small molecule drugs under the IRA are going to have somewhat shorter exclusivity because the negotiations are going to a little bit earlier versus biologics. So this is a product that's going to be a small molecule and they will be pursuing Alzheimer's disease related psychosis and agitation with this. So there is some potential for this to be deployed in a Medicare medicaid population, But I do think that, you know, at this point, it doesn't seem to be too much of a concern at this point. I think the bigger deal here is that this is a brand new modality and this schizophrenia space, and I think patients and physicians are going to be really excited to deploy that.
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Speaker 4: Laura, I know that you cover equity research from the biotech perspective, but I'm kind of wondering more broadly going into next year with different m and A activity there, if you expect this to continue to expand, Like what this really tells us about markets going into next year.
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Speaker 7: Yeah, I guess for the biotech sector specifically, you know, it's definitely been an up and down year, but there's so many fundamentals that have been pretty positive. Valuations are attractive, is very productive. We had over fifty drugs approved this year alone, and we've started to catch this M and A tailwind. I do think this theme persists now. Maybe we've gotten a little bit of pull forward from deals that might have been announced in January, but I think bigger picture, as I mentioned before, the large pharma on biotechs have a lot of capital and the balance sheet that they really are prepared to deploy as assets get more mature and go through these de risking events with data. I think that's really the gating factor for the M and A to occur. And we do have a number of later stage readouts on deck for twenty four. So I do think this is a continued theme in biotech.
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Speaker 6: You know, Matt and when you zoom out to the broader market, not just biotech, I mean, is M and A as strategy as a whole?
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Speaker 8: Are we are we going to be back to merger? Mondays?
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Speaker 6: Do you think in the new year, now that you know the risk appetites are back, stocks are rallying again, interest rates are on the down side. I mean, is it is M and A back in twenty twenty four, I.
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Speaker 5: Would say that we've probably hit a bottom. So we could say, you know, twenty twenty three has been the slowest year for M and A since about twenty thirteen. I think we're about two point eight trillion in deal volumes, which you know, that's the softest in twenty thirteen. I don't think we're going to get any lower than that. You're seeing this big spate of kind of transactions in December, and I mean this year. This week alone, I think we've seen about one hundred billion dollars in deals. We had this Bristol transaction. There's a big insurance brokerage deal Nippon a grad readed by US Steel. I mean, like what we'd like to say in the M and A, you know, coverage areas, you know, deals to get deals. So you know, we're seeing that there is pent up demand for large transactions. That said, is it going to be like, you know, this is the dam bursting. I don't necessarily think so. I think that we're just kind of seeing you know, large strategic transactions in a couple of different sectors that you know, make sense for the buyers.
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Speaker 4: Lisa Laura. Rather, what I'm wondering is, if you were able to ask a question to either one of the CEO's at Bristol or Karuna, a question, what would you ask them?
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Speaker 7: I would actually be interested to see what comes next in CNS. What are they most excited about. This has been a really interesting period to see the evolution of how we're approaching CNS drug development, and Bristol indicated today they're not looking for any additional large scale transactions at this point, but CNS is an area of focus that they're looking to expand upon, so really be interested to understand what they see as most promising in terms of modality or targets at this point.
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Speaker 4: Well, it's great having both of you with us to walk us through this big deal. That was Lord Chico, Managing director of Equity Research for Biotechnology at webbush To Securities, joining us on Zoom from Chicago, alongside Matthew Monk's US Deals team leader at Bloomberg News on the phone in New York City. So great getting their perspective right when it comes to this big deal. Bristol Myers script agreeing to it. It's worth Usually we do this on Monday Mike. But here we are on a Friday.
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Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, or watch us live on YouTube.
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Speaker 3: It's the most wonderful time.
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Speaker 8: With the kids jingle bowling and everyone telling you be of good seat.
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Speaker 4: All right, Mike, Now that we finished up the simulcast here, we have seen a rebound in unloved corners of the market, especially at year end, with market participation broadening out that I know a lot of technicians we're looking and hoping to see toward the final quarter of this year, and including everything from small caps to regional banks. Though small caps obviously have had a tough few years here while the Russell two thousand value index has under per for the broader US stock market this year, but some of those value stocks in particular have had some support over the last month or so. So what I'm wondering is the pain over yet when you're looking at some of these unloved corners of the market. So here to discuss more. John Mawory, Chief Investment officer at NFJ Investment Group, joining us on zoom from Dallas. Thanks so much for joining us, John on this Friday, heading into a holiday weekend. I know you focus particularly on value investing. Where do you see pockets of opportunity in twenty twenty four when in particular value has underperformed growth once again it has.
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Speaker 10: And I think that you know, particularly what we've seen in the last few months is that investors can be surprised very quickly. You know, a couple of areas that we think are very attractively priced, the mid and small cap areas. You know, big about the small cap value area for just a moment. Roughly twenty percent of that opportunity set is in regional banks, another ten percent is in reads, and another five or six and utilities. All of those are very interest rate sensitive, which has been a very negative thing over the last couple of years because of increasing bond yields and because concerns about refinancing at those higher rates. But now there's a bit of a glide path for investors with lower rates coming through next year. Is signaled by Powell, and you know, separate from even what Pal signaled. The bond market was already signaling this. One of the things that we were pining the table with with our investors just a few months ago was that if you look at the spread, okay, between the two year bond yield, which of course is set by the market, relative to the Fed funds rate, which is set by the Fed, that spread was very historically and statistically very wide. And historically, when you see very wide spreads between the two year bond yield and a Fed funds rate, that signals that those need to come in. And in fact, the Fed funds rate was very elevated, the most elevated had been historically going back over that to your bond yield. So the point I'm trying to make here is that to your bond yield was signaling to the Fed, hey, you need to cut and you need to bring rates down, and investors should be positioned for that, particularly as we head into next year.
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Speaker 6: You know, John, it's been such a frustrating many years now for value investors, which you know, I think is a tough pill to swallow for people you know, who read Graham and Dodd, who really study the fundamentals and you know, just expect value to be a winning strategy and so many false dawns too. Last year it started looking like value was finally going to outperform growth again and it just didn't last.
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Speaker 8: What are this sort of macro.
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Speaker 6: Conditions that you think we need to see that value revival really take hold and stay in charge.
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Speaker 3: Well, it's a great question. You know.
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Speaker 10: One thing I'll point to that I think is similar to the late two thousands is you have a very strong dollar. You know, that's coincided with a lot of pressure on the emerging markets, and it's also coincided obviously with the FED having to raise rates, which really put pressure on some of the value areas that tend to be a little bit more levered and a little bit more economically sensitive, and particularly when you think about me and the value stocks, it's more difficult for them to just tap their balance sheet when they need additional capital. The growth names, the Magnificent seven were squarely positioned to benefit from that. But I will pivot and just point out that you know, in video was down sixty seven percent just last year, Meta was down you know, similar by similar magnitude.
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Speaker 3: So the Magnificent seven or.
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Speaker 10: The Measley seven just one year ago, and things can change great quickly, and I will share just a couple of color comments around around value. You know, the Russell one thousand value over the last three years is up thirty one percent. The S and P's up thirty five I think a lot of people would be surprised to learn that. I think the perception is that, hey, value is really lagging. Value is almost caught up, and really the dislocations are as wide as we've seen going back to two thousands. So I think that when you consider the fact they're almost tied for three years, and you've got tremendous valuation dislocations, and you have a FED that is definitely going to be more accommodative, I think those all all bode well to be investing in value, and particularly the banking sector, I think is an area that is unloved. And again, I think investors would be surprised to learn that the SMP five hundred regional bank sub industry is now beating the SMP by fifteen hundred bases points over the last six months. And I think the perception is, hey, the magnizue seven are doing all the work. It's like, actually, you would have a much better return if you had been moving away from the SMP, the NASDAK, moving into regional banks. Very difficult to do, very uncomfortable. But you need to be buying those straw hats in the winter.
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Speaker 4: Okay, So what are your top stock picks?
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Speaker 3: Then?
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Speaker 10: So some of the areas that we really like, I'll actually I mentioned reads first. There's one office rate that we own in particular, Alexandra Reality. You know, office rates are hated, and that's understandable. You know, the pandemic definitely has shifted the appetite for working in an office space. But what's unique about Alexandria Reality is that this particular office rate caters to the bio companies, pharmaceutical companies, life science companies, and they simply can't.
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Speaker 3: Move those labs.
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Speaker 10: They're strategically located on the East Coast and the West coast. For example, during COVID, many of those folks were not able to take the luxury of working from home, as we're all grateful for, because they were hard working looking for ways to navigate a very challenging environment.
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Speaker 3: So they can't simply move offices quickly.
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Speaker 10: And if you look at this particular read, it's trading at one of the steepest discounts in a decade. They've reaffirmed FFO guidance, they're growing their dividend, and the collection rates from their tenants are ninety eight percent. So names like that, you know, where we see dislocations in the valuations, but not dislocations in the fundamentals. I think are set up really nicely going into next year. We've already seen a big move in alexander A Realty. It's up twenty five percent in the last month. I think that's just getting started. So I would I would encourage investors to look at some of the higher quality rates, you know, industrial reads like a Rexford or like an SBAC A tower rate. All of those look very attractive as we enter next year. If I were to pivot to healthcare for just a moment, you know, Edward Live Science is a name that we really like.
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Speaker 3: Currently. The name has a net cash.
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Speaker 10: Position, double digit margins, over ten percent earnings growth, and really has been knocked down for a couple of reasons. First, the life sized companies got very expensive coming out of COVID, and understandably so, so those have been really punished as those ealuations have moved lower. And then Secondarily, they've been tied into some of the biotech names that really came under a lot of pressure that also got expensive and too boot. You have fears about the ozebic and other weight loss drugs, and there may be less need for some of those medical devices going forward, But the reality is we don't have the ability to model that out yet. And again, if I look at the fundamentals of an Edward life science, they have not been dislocated. We see no change in the earnings for next year currently, So I think that's another area that investors should be looking at life sciences.
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Speaker 6: You know, John, everyone got so much wrong this year. You know, economists were convinced we're going to see a recession. You know a lot of people were perished to start the year. I can't help but think though now as we head in the twenty twenty four I see the reaction to like this Nike outlook today and just people selling with both fists that the sense that that recession maybe wasn't canceled, but just postponed.
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Speaker 8: How are you thinking about that next year?
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Speaker 6: And really, how how do you play defense in this market? I feel like the you know, the strategies for playing defense in this market are not what they used to be. But how are you thinking about that?
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Speaker 10: Such a great question, So I'll put it back to last year for just a moment. So we took the very contrarian position back in October, November, and December. The cyclicals were a big time on sale and we actually took our defensive positioning down to the lowest weight that I can remember. And if Jay's been around for thirty years, I've thought the NFJ for eighteen years, So we were very overweight cypicals going into this year based on our bottom up process. Right, if I think about defensive, you asked a really good question. What I like about what we're seeing today on a bottom up basis is guess what utilities are looking cheaper?
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Speaker 7: Right?
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Speaker 3: Stateful for looking cheaper?
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Speaker 8: So time the old question.
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Speaker 4: I'll love to leave it at that, John, But thanks so much, John Maury, Chief Investment Officer at NFJ Investment.
00:21:01
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
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Speaker 4: Mike, We've been talking this afternoon obviously about travel the holidays, and here's a stat for you. So Triple A recently forecasted a record seven and a half a million people are expected to fly from December twenty third, which would be tomorrow to January first, So that would mark the busiest year in travel season since Triple A began tracking the data in two thousand and that also beats the pre COVID record of seven point three million scene during that same time period in twenty nineteen. So it's pretty incredible, right when you think about, yeah, where we've come since the depths of COVID.
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Speaker 6: Absolutely absolutely well, we've got a great guest to talk us through.
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Speaker 4: We definitely do who better. Brett Heller's chief executive officer at Priceline, joins us on the phone from Connecticut to discuss tips for efficient holiday travel. Thanks so much for taking the time to speak with us heading into the holiday weekend here. First off, what can you tell us about when it comes to travel prices this year, given that we've seen inflation come down pretty dramatically over the last year and a half. But it seems like these ticket prices, at least for me when I've been traveling over the past couple of months, still pretty pricey.
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Speaker 11: Here.
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Speaker 4: What does this mean for consumers?
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Speaker 9: Hi, well, welcome, thank you, thank you for having me when it comes to travel here through the holiday period. You know, the overall cost of travel, unfortunately for consumers in the US, is still higher than last year. It's up about three or four percent. But it's a combination of things. You know, when you look at airfare in particular, airfare domestically is actually down about five percent. It just still feels very expensive because we're, i think, in the back of our minds comparing it to several years ago, and prices are up materially since you thought I was in nineteen. So you'll save a little bit underfair, you're certainly going to say, on your rental car, but you're still paying more for your hotel. Prices for hotels are still up two or three percent on average in the industry right now, and you're paying a lot more for food and beverage and especially for events when you travel.
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Speaker 6: You know, Brett, one thing I find really fascinating right now is COVID is raging again, you know, at least anecdotally. I know so many people have caught it. One friend literally started coughing and shivering while it was on.
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Speaker 4: Oh wow, I feel like everybody has that reaction right just because of COVID and then you hear it, and if you're the person that coughs, I've had people look at yeah too.
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Speaker 8: Yeah, especially when you're on a plane. I caught it at Thanksgiving. I've started shiverings.
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Speaker 4: Kind of triggers people.
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Speaker 6: But Brett, it just doesn't seem like it matters to the travel industry anymore. I mean, is that a fair assessment of sort of the risk of COVID right now?
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Speaker 9: Well, I think that's what the data would certainly suggest that consumers are for the most part, just learning to live with it like they did in the past with colds and flu. When you look at the TSA checkpoint data through airports just for the last three days, each of those days has significantly exceeded where we were in twenty nineteen by ten to fifteen percent and up over last year. So it certainly hasn't put a damper on holiday travel this year.
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Speaker 4: So when are the best and worst days to travel this holiday.
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Speaker 9: Season, well, we're in one right now, so today would be considered the very Today and tomorrow are certainly some of the most heavy traffic days of the holiday period. When you're thinking about returning from your Christmas vacation. In particular, you know, the twenty eighth and twenty ninth will be quite busy, and the day right after New Year's so if you can avoid those days, it's a little too late for pre Christmas travel. But as you look forward, and many consumers are doing this, you know, with more flex travel in their schedules, and this was an extended holiday period, people are spreading their travel out a little bit more than they were a few years ago and taking advantage of their work policies. But these are some very, very busy days. The good news is the the TSA checkpoint seems to be moving much smoother this year, and the airlines are operating much more efficiently this year. And if you recall a couple of years ago and even last year, we ran into some both storms as well as just poor operations. But they've staffed up and are largely handling the traffic quite well.
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Speaker 6: You know, Brett, I think what they used to call a frugal traveler, so they call me a cheap skate. I guess the other way too, But you know, when I go on Priceline, I'm looking for a deal. Look, I'll vacation in Clevelands, right, you know, But so where where are the sort of the bargain Where can I find a bargain vacation these days?
00:25:48
Speaker 9: Well, if you're looking for a destination right now, North and South is pretty economical. So if you're going up to Canada, this may not be your time of year to go to Canada, but that is more cost effective from what it's been in the past. And going south into Mexico, you know, Cancun had a bit of a tough run last year because so many consumers and into this year we're heading overseas. They were heading to Europe, they were starting to head to Asia, and so there was less traffic heading down to Mexico. And now you know, those resorts are really trying to boost traffic down to their destination and so we're seeing some really nice value heading down there. If you want to stay domestic, listen, Orlando will always be a great destination to travel from a price conscious point of view. There's a lot of flight lift that goes down to Orlando from just about any market in the US, and there is one of the largest supply of hotels in the country in that city, and so that always has great value. But we've seen a lot of consumers now moving back into major metro areas, so they're heading to New York, which is a very expensive city to travel. They're certainly heading to warm destinations like Miami and Anaheim and Las Vegas perennially always the number one destination in the US any time of year, and typically you can find really great value from a hotel perspective in Las Vegas.
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Speaker 6: You know, Bret, I'm a market's nerd, as you may guess from working at Loomberg, and I can't help but wonder about the currency market and how it influences travel. You know, you're talking about Europe being a hot destination last year. I imagine the strong dollar was part of that. Is there sort of a correlation between what the dollar is doing versus other currencies and where the destinations start picking up in popularity.
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Speaker 9: Absolutely, travel to Europe is materially less expensive than it was, you know, three or four years ago, with the currency plane to the favor of US consumers. You're saving you know, twenty to thirty percent on a trip just because of the currency conversion. Now you have been paying more for airline tickets this year to get there, but hotels in general are still cost effective in many cities in Europe. And when you look over the holiday period right now, flies to Europe are actually down twenty percent from where they were last. So there was so much interest in Europe moving through this year that the airlines opened up a lot of new routes, a lot of new carry there. But that's now I think reversing just to touch and so there's a lot of value if you want to head to Europe today now. Conversely, the US has seen significantly less traffic from other countries coming into Europe. Part of that was COVID and many of the Asian countries shutting down and staying shut down much longer, but those are now opening up. We just haven't seen as much traffic moving back this way again, and the currency is playing a very big role in preventing that travel.
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Speaker 4: Brett, I have to pick your brain on your thoughts about the health of the US economy because there's been so much skepticism, as you know, coming into this year about recession. Calls clearly have not come to fruition, and the economy still has remained resilient, especially on the back of consumer spending, even though we're seeing some numbers slow a little bit in the holiday quarter here. But from your perspective, how do you view the economy, especially going into twenty twenty four.
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Speaker 9: Yeah, Well, in the travel industry, there's a couple of keydata once we look at to understand the health of the economy. One in the hotel industry in particular, it's just looking at the average daily rate that the hotel chains and the independence are charging consumers. They have pushed those rates up considerably over the last two or three years, and even now with some other commodities and things moving backwards, they're still pushing up on the ADRs. And the expectation next year is that hotel ADRs, meaning average daily rate that you'd pay at a hotel, is going to still be three to four percent up year over year. So the hotel industry is essentially saying, we understand that other prices may be dropping, but we're going to keep pushing our pricing and higher. Now, the question is what will happen to demand as a result of that decision, and demand this year has been relatively healthy. However, as we moved into November, demand started to soften just a little bit in the industry here in the US in particular, and so we'll see if those rates continue to stay high or if they start to bring those down for consumers. And the second, of course is airfare. But there's a lot baked into airfare, you know, jets fuel pricing is down about fifteen percent from where it was last year, but the cost of labor and operating the airlines is up meaningfully, and so those kind of play against each other, and we're just not seeing quite as much of a drop in airfare. But there is a little bit shifting down there, which would mean consumers are traveling a bit less in the shoulder periods than they were in twenty twenty two and even earlier this summer. And so there's a little bit of a sign that, hey, consumers really prioritize travel in twenty two into twenty three, and I think now they're being a little more cautious. But just looking at the the traffic moving through this week, it's still quite strong, all right.
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Speaker 4: Brett Keller, chief executive officer at Priceline, joining us on the phone from Connecticut. Thanks so much for your time.
00:30:45
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business App, or watch us live on YouTube.
00:31:02
Speaker 4: I'm so glad you're here with me for this next segment, Mike, because you being the team leader of crypto here at Bloomberg, you know, it's been quite a wild right here. So just to kind of refresh where we've been the past year. So there were at least five arrests, multiple bankruptcies, and of course Sam bankmin Free did go to jail. And if any year could have up into this sector, this probably would have been it. Yet that didn't exactly happen. So crypto comeback potentially brewing here and not too long ago. Bitcoin's value did briefly surpass a forty four thousand earlier this month came back a little bit below that, but that was its highest point in more than a year. That clearly, as you know, Mike, was fueled by the anticipation over the possible SEC approval of a bitcoin ETF. So joining us now to dig deeper into this is ANACOY partner and national financial services leader at Whitfley joining us on Zoom from Chicago. As Mike and I both know this anticipation that's continued to build over the last few months for this bitcoin ETF, what I'm wondering is how much of this has actually already been priced in to bitcoin.
00:32:09
Speaker 12: Yeah, so thanks for having me on, guys.
00:32:12
Speaker 11: I think that there's a part of it that already priced in. I think we're going to see a bull market coming back, and I think that it's you know, going to be a wild ride throughout the entire you know, anticipated for the ets as well as the regulatory anticipated changes.
00:32:32
Speaker 3: You know.
00:32:33
Speaker 6: And it seems like the consensus, if not everybody, believes that the approval of an ETF is a done deal, that the SEC uh you know, lost that big, big case against uh GBTC, which was trying to convert from a regular fund into an ETF, and that they've just given up fighting against a bitcoin ETF. But we had a story today looking at how there is a lot of activity in the big point options market to hedge against a disappointment against another rejection. Is there any scenario in your mind where the SEC could once again reject the tfs in early January instead of approving them as everyone believes to be the case.
00:33:19
Speaker 11: You know, I think that there is a scenario that that could happen. I think that's why we're seeing the options continue to go where they're headed. Just recently you might have seen the quote from SEC Chairman Gimbler where he, you know, is going to be in a lot of non compliance in the fift the space and it undermines the confidence and a lot of people have been hurt, like your referenced earlier, and so I think that the SEC is very weary and to where this might go.
00:33:49
Speaker 12: And although you know, the markets believe that.
00:33:52
Speaker 11: They will pass it, it could also be the first.
00:33:55
Speaker 4: Talk to us also about the regulation aspect on Washington, because that's been delayed for a while here. But whatever, you're speaking with some of your clients here, what are their kind of concerns when it comes from a regulatory perspective.
00:34:12
Speaker 11: Right, So, we just recently had the Ripple Lab case with the SEC around in the crypto a.
00:34:22
Speaker 12: Security or not, and the crypto industry is still really unclear about, you know, what the regulatory framework is going to be. Congress has you know, trying been to add some stability and confidence for market participants here in this space. But I think that you know, the regulatory.
00:34:41
Speaker 11: Shifts and everybody's really asking for the regulatory framework so that folks can be their participating if they like to. But also for those like rip Boland, point Base has them out as well for them to all continue to play in the fold, you know.
00:34:58
Speaker 6: And we've talked so much about this massive rebound in bitcoin one hundred and fifty something percent as of now year to date, but I think for the true crypto heads out there, they are more excited about what's going on with a blockchain called Solana and the native token soul on that chain up something like eight hundred percent this year. What's going on with Solana.
00:35:25
Speaker 12: You know, I think that there's just a lot of excitement around it.
00:35:28
Speaker 11: Right now, and so you know, as far as where it's going to ahead, I think we're all you know, here to be game.
00:35:37
Speaker 4: Yeah, what's your thought from more of the wealth management perspective, because when you think back Mike to twenty twenty one, where sort of the fur not just for game Stop in AMC, but especially with a lot of these coins, even beyond Bitcoin doge coin here when you're thinking of those, but from a wealth management perspective, a lot of people still very to add that as some sort of allocation toward their portfolios. How do you view this from the wolf management perspective.
00:36:07
Speaker 11: Yeah, I think we all of u saw Black Rocks get in. Plus, you know, they're just one of ten other asset managers to get into the space and really look to adapt the new potential ETFs that are potentially coming out. We're still seeing their interest right, whether it be the asset manager setting out.
00:36:28
Speaker 12: The new funds as well as you know the.
00:36:31
Speaker 11: Fore one key plans looking to allow additional opportunities and investment options for folks to get into. So I think we're going to continue to see the increase availability to the market as the regulation.
00:36:46
Speaker 6: Continues, you know, and to bring it squarely into your wheelhouse at with FLEE. Another big story recently was the recent passage of that will allow fair value accounting.
00:36:59
Speaker 8: For crypto assets.
00:37:00
Speaker 6: What does that mean for the company's public companies out there that actually do hold bitcoin.
00:37:07
Speaker 8: Is this good news?
00:37:09
Speaker 11: I think everybody is looking to add clarity around how to account the crypto assets. It's been a long time asked by many howaday should be accounting for crypto assets, and now having the new accounting standards out there for crypto acids to be accounting for at fair value will add some clarity for everybody, not only investors but also those holding it. It's going to add more volatility into the financial statements for those companies that do hold it, but it is going to at least add more clarity for investors as well as the investing hobles.
00:37:46
Speaker 4: All Right, Anakoy, partner in national financial services leader at Whipfley, joining us on zoom from Chicago, giving her perspective here, Mike when it comes to where crypto potentially headed after all a year, but a big year in crypto after suffering a lot of pressure there last year. We'll have more coming up. Stick with us this afternoon. This is Bloomberg.
00:38:11
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business app and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirtys.
00:38:39
Speaker 4: Wow, this music pretty brilliant. Our producer back there, Paul Brennan with the hits, And as Mike and I were mentioning earlier, the forthcoming issue of Bloomberg Business Week on newsstands today is the Longevity Issue. It tells some of the stories of the billions of dollars that are being spent to live longer or age slow in the never ending quest for the fountain of youth. So today we are delving into why tech titans, ventral capitalist crypto enthusiasts, which I know Mike is eager to hear about, as well as AI researchers have turned longevity research into something between the hottest science and a tragic comedies. So this is by Ellen Hewitt, tech features writer at Bloomberg News, whose story Silicon Valley's quest to live forever has many warring fractions. It's featured in the Longevity Issue. Like I mentioned, of BusinessWeek magazine, available on newstands, on the Bloomberg and at Bloomberg dot com. Slash BusinessWeek with more Ellen will join us shortly, but also with us is actually the editor of Bloomberg BusinessWeek, Joel Weber on Zoom from Brooklyn. Joel, this is a really cool story. But first I swear I thought I saw you in the office earlier, and now you're on Zoom.
00:39:51
Speaker 11: Sir.
00:39:51
Speaker 4: We're sad that you're not here with us. But was I wrong? Were you here in the office?
00:39:55
Speaker 2: No, you had being earlier. So we set out to do this longevity issue and wanted to touch a lot of different things because what we noticed, based on some stories that we had done earlier in the year, is just this insatiable appetite to want to live longer, live better, and if you have a certain amount of money or a certain interest, possibly live closer to forever. So when we set out to kind of do this cover to cover issue, there are a number of people that we wanted to talk to. Ellen Hewitt was like right at the top of that list, because Silicon Valley has a lot of money and a unique obsession with anti aging and longevity, which takes us to the sidewalks of San Francisco where you're If you're a brave reporter like Ellen, you go out and like you know, happen upon people who are not asking for Mike Reagan's bitcoin. Ellen, what'd you find on the sidewalks of San Francisco?
00:40:51
Speaker 13: So can you all hear me? There was some Yeah, I think I'm on the you're good great, So yeah, I mean, this is such a fun story and I love this whole issue and then kind of the theme of the issue. But yeah, in in not just in San Francisco, although I think that's kind of where the heartbeat is. But there's this there's this group of social activists called the Stay Forever Organization, and they their goal is to raise awareness about kind of the social possibility of living forever. Their idea is less about, you know, raising money for particular gene therapies or stem cell treatments or things that might extend our life. But instead they're really focused on trying to spread awareness about this possibility, trying to inspire art for people who might want to discuss the philosophical like ramifications of living forever. And yeah, what they do is they take to the streets and they survey people on how long they want to live, and they carry around posters that say, like dying is unacceptable, don't die. Death is boring, Stay alive and and and they're they're serious, They're like and that's what's so interesting to me is like, I think they really feel like what they're working on is the most important thing that you could be doing. And that and that's true across not just this corner of longevity, but but this whole sort of multifaceted longevity culture in the valley beyond.
00:42:13
Speaker 2: Okay, there's there's a phrase that you introduced to me in the story, Ellen, I had never heard of it before. Anti death activism. Is that the same thing as what you're talking about or different?
00:42:23
Speaker 4: Yes?
00:42:23
Speaker 13: Definitely?
00:42:24
Speaker 4: And what was that?
00:42:25
Speaker 3: You know?
00:42:25
Speaker 13: Some of the most interesting conversations I had when reporting this story was talking to philosophers and other sort of you know, it's not it's not just these people on the streets. It's like philosophers who are writing books about, you know, with titles like the Case Against Death, or you know, AI theory theorists like Nick Bostrom who published this famous fable called like the Fable of the Dragon Tyrant, in which he characterizes death as this dragon that's like tormenting this kingdom. Basically, they just they're uniting ideas that they reject that death is like a good and natural part of life. They basically feel that like death is like, if you step back and look at it, death is bad and that we've just come to accept it because we don't believe that it's possible to avoid it. So one of that one of the philosophers described it to me as like the acceptance of mortality is a fallacy meant to protect us from the tragedy of wanting things that we can't have. So theseeop are kind of like psychologically mathochistic, is I think, one way to look at it. But they really believe that they are like harnessing some truth, which is that like we we in order to make strides against you know, like aging and eventual death from aging related causes, we need to accept and believe that death from aging is a bad thing that we should.
00:43:40
Speaker 9: Get rid of.
00:43:41
Speaker 3: All right.
00:43:41
Speaker 6: I got to stop here for a minute and say that if I think about living forever, jess my four one, Okay, I just cannot cannot.
00:43:53
Speaker 8: So if I went up on work forever, I don't know.
00:43:56
Speaker 2: But because you don't have crypto in your fury.
00:44:02
Speaker 8: That doge coin is going to keep me, keep me going forever.
00:44:05
Speaker 6: A couple of things I really got to wonder here, Like a how realistic is this in our lifetime to even really extend the say, the average life span by any you know, material amount and be you know, what about the rest of us, Like, if you're a Silicon Valley billionaire, who can afford you know, a million dollars worth of uh, you know, pharmaceuticals and treatments and whatnot. Sure, but you know, is this is there an inequality aspect to this where only the rich will get to live forever the rest of us you know, no way, you know. But also how realistic is this idea?
00:44:44
Speaker 13: Yeah? Well, I mean, what's an interesting part of the longevity world in the Valley right now is that there's actually a lot of infighting.
00:44:51
Speaker 9: I mean, there's people who really.
00:44:53
Speaker 13: Disagree on how best to approach this. So of course there are these anti death activists who like to call themselves immortalists and stuff, and they're definitely on one end of the spectrum, and on the other end of the spectrum, there's much more conservative people who work in biotech who are running you know, I think that some of the other stories and the issue are touching on some of these some of these like advancements, And I think what's interesting is you talk to those people, they say that, oh, actually, the people who talk about immortality and stuff, they're doing us a huge disservice because they're making people, you know, they're they're they're just making people dismiss the field overall. And if you talk to them, they're like, hey, there are advancements that we feel that we can make that could get FDA approval in the next decade that could extend you know, help span. So not necessarily getting into the scary idea of living forever or even necessarily living that much longer, but just about the idea of extending sort of healthy life. And I think they're they're really trying to win people's hearts and minds through a different way, which is like FAA approval drugs that are shown to work in in like you know, rigorous settings, And the idea there, I believe is that if if these treatments work, there will be such a demand for it that the market like, yes, it might start out as something that's only available to those with MutS of resources, but that it will like other treatments, that we've seen for other diseases and things. It will eventually become more accessible. And so they're very aware of the image of like the billionaire who spent you know, the billionaire spends on somebody trying to like look eighteen again. And I think they're they're very at least conscious of wanting to push back against that.
00:46:29
Speaker 6: Joel, I got to say, I'm a little disappointed in you missed headline opportunity could have been immortalist combat. So you're losing your fast.
00:46:40
Speaker 8: I'm just gonna.
00:46:41
Speaker 2: It's not It's not too late, Mike. You know, we've got plenty of times since it's the longevity issue.
00:46:48
Speaker 4: Nice So, Ellen, you did write about how the Fields leaders have been discredited in a variety of ways. Walk us through this.
00:46:57
Speaker 11: Yeah.
00:46:57
Speaker 13: So, I think one of the most interesting sub sort of subcurrents of this world is that Aubrey de Gray, who is this famous anti aging researcher, Like he's someone who gave a Ted talk in two thousand and five about the idea of longevity escape philosophy through the idea that we may one day soon get to a place where advancements and anti aging are moving faster than we age and therefore you could kind of just indefinitely extend the horizon. And he's been this sort of very famous provocateur and researcher in the in the longevity field. And a couple of years ago there were these two young women who are also like very established researchers in anti aging as well, who came out and said that he had sexually harassed them in sort of a mentor role, and and it did it did raise for me this interesting idea of like the way that when when a group of people feels like they're working on something that is so important, like extending human life, it can often overshadow these like you more everyday things that are that are quite damaging. You know, if this is the field that you want to have more people be entering because they you want to have the best researchers in there so that they can try to find the best advancements and and help the human race live longer, then it is quite damaging, I think to have an environment in which you know, new researchers might not feel safe or might not feel welcome, but but you you also get the sense that people in the longevity field care so much about extending human life, that they might be willing to overlook some things like that in order to get to this bigger goal.
00:48:37
Speaker 2: And these worrying factions remind me a little bit of the competing newsrooms in Inkormand so may the sad tire. Hopefully it can be a spirited one like that. But just on the on the on how all this plays out in the real world. One of the things I wanted to ask you about was Montenegro because there have and Mike, you maybe this was something that you caught. You know, there was a gathering with a burning Man style kind of allure that was like one part crypto, one part AI, one part longevity, and you know, it's just it's interesting to see something like that become longevity being like a center of that. And it feels a little bit like all this crypto money, all this venture capital interests, it's like longevity is part of that. So talk to us about the allure of Montenegro and all of that this summer totally.
00:49:33
Speaker 13: And Yeah, something that's really interesting is that crypto money is a major funding source for longevity research. Why exactly that is? People gave me different theories. I think they feel like Oh, this is a if people are united by the idea of kind of breaking the rules. But I think it also just has to do with the fact that the toleic Uterin, the co creator of theoreum, I think, is just also really into longevity. So he had organized this summer a two month temporary city in Montenegro that was called Zuzalu. Uh, don't ask me what it means, because they've said specifically it's supposed to mean nothing.
00:50:08
Speaker 5: But Zuzalu was this, you.
00:50:10
Speaker 13: Know, two months gathering of you know, hundreds of people. As you said, Jule, Crypto, AI, longevity, you know, these were major motifs and and yeah, they were getting together to try to talk about this sort of far flung future in which we might live forever, have this you know, totally new financial system. And to me, it's it's showing up in other places as well, this idea of building temporary cities in places where regulations might be more amenable to experimental treatment. So exactly like in Prospera in Honduras and in these other like you're just starting to see these special economic zones or like network states like these are the terms that people used to talk about these. It's the idea that like people who are gathered by this philosophy might go to a physical place and build structures and regulations that are in favor of what they'd like to pursue. And I think Voulu was like an experiment in that, and I think we're going to be seeing a lot more of those in the years to come.
00:51:09
Speaker 6: You know, Ellen, you know, God bless the tech geeks and the crypto bros out there for their big their big dreams.
00:51:16
Speaker 8: I love it.
00:51:17
Speaker 6: I'm on board, But I got to wonder, what how does the medical community fit into this. Is anyone on sort of the medical side of this on board?
00:51:26
Speaker 1: You know?
00:51:26
Speaker 8: Is there optimism from that side of things?
00:51:29
Speaker 4: Yeah?
00:51:29
Speaker 13: I mean one of the companies that we wrote about in the story is called Loyal and they make longevity drugs for dogs, and they recently got a sort of preliminary i'd call it a preliminary FDA any approval. It's not like a full thing, but basically they're, you know, they're advancing their drugs in a way that they feel is going to point the way toward eventual drugs that might help humans.
00:51:53
Speaker 8: You know.
00:51:53
Speaker 13: They envision a much more uh, sort of everyday application of this. They often like to compare the drugs like statins or things that people could take every day to sort of extend their health. It's not going to be marketed as this like live Forever drug. So I think in terms of small advancements like that, I think there is actually a lot of excitement in the medical community for ways that could be you know, that we might see in the next you know, ten years, just like extending our health and and so, Yeah, it's just interesting to see how why the range of attitudes is on this, on this idea like a thing that you'd think the longevity world would really be united, they're actually is like quite vocal in their disagreements on the best way to approach this.
00:52:40
Speaker 8: If you can get my dog to live forever, I'm definitely on board.
00:52:42
Speaker 4: I love that love.
00:52:43
Speaker 13: I love dogs, especially large dogs live you know, shorter lives. I think this is where they're starting with like big dogs and trying to extend their lives.
00:52:53
Speaker 4: Fascinating story. Ellen Hewett, tech features writer at Bloomberg News whose story Silicon Valley's Quest to Live Forever has many warring fraction that is featured in the Longevity issue, like we mentioned of BusinessWeek magazine available on newsstands, on the Bloomberg and at Bloomberg dot com slash BusinessWeek, and we also had with us the editor of Bloomberg BusinessWeek, Joel Weber, who joined us on zoom from Brooklyn. Glad we had to chance to chat with them both about the latest edition in the magazine. But stick with us, We're gonna have more coming up. This is Bloomberg.
00:53:28
Speaker 3: I'm brother Marco, a journal How about you let me drive?
00:53:35
Speaker 2: No no, no no please go ve honey please, how do the riding gravel?
00:53:41
Speaker 3: Let's mate, I want to try it.
00:53:43
Speaker 9: Try It's good question.
00:53:49
Speaker 8: This is the drive to the clothes.
00:53:51
Speaker 11: Dot Com trimular thing well BYRN shout it.
00:53:54
Speaker 4: On on Bloomberg Radio, Jasmin and Mike Reagan here in for Carol and Tim today and with just twenty minutes left to go before the closing bell, the S and P five hundred has pulled back from session highs, but does remain on track for an eight week run. So who better than to walk us through the last two months in the stock market than Adam Sarhan, chief executive officer at fifty Park Investments, joining us on Zoom from Florida and Adam, I just want to point out that you actually correctly called the rebound in US stocks at the beginning of this year, and then also back in March when we had all of those regional bank stretches stresses. Rather, you got that call right as well as far as what it would mean for still a resilient economy and how that was actually what was going on in the market wasn't concerning for those banks and actually a bullish sign for the broader market. And as we are at the end of twenty twenty three, please give us a kind of a year in review here as far as what your sort of takeaways are as you're trying to position your portfolios going into next year.
00:54:57
Speaker 14: Well, Jess, thank you so much for having me on the show. So the pleasure, and yes it's right. I'm a big fan of studying market history, and you know the expression market history rhymes and repeats all that fun stuff. And you look at the stock market. The last two big bear markets were dot Com crash back in March of two thousand all the way to October of two thousand and two, and then you had the Oait crash. We all right about a year ago was twenty twenty two. I looked at market history, I said, what if history repeats itself? So in October of two thousand and two, the stock market bottomed. This is the Nasdaq one hundred. Let's look a the QQQ just for one index, right, And then in March of two thousand and three, we had a new bull market that officially began, and then it rallied for the next four or five years, all the way unto October of over seven. And then in eight the Nasdaq one hundred bottomed in November or Q four of two thousand and eight, but a new bull market didn't begin until March of two thousand and nine. And I said, in about a year ago, I said, in twenty twenty two, I said, you know what, what if that October twenty twenty two bottom on that SEATI report that we all remember was indeed the bottom, not a bottom, but the bottom. And then in March of this year, I noticed two hundred and seventy five cup and handle patterns. It's a bullish technical pattern that this doesn't typically happens in new bull markets. And one or two or three might be bullish, four or five might be bullish, but two hundred and seventy five of them. I published the report and the rest is history. So at the time I said, this happened twice before, where the market bottom in Q four and then a new bowl began in three in March of three, and then it happened again this time around in October of twenty two and then March of twenty twenty three. So the year in review. We began the year in January, had a nice rally up until February, then early February pulled back. March happened. You had the regional bank concerns with Silicon Valley Bank and so on and so forth, but it wasn't enough to break the market down. We actually stabilized in March and we rallied all the way up until July, and a lot of that was due in part to two majors. In twenty twenty two, the two major headwinds for the market were higher yield than a ten year interest rates going up, to put it simply, and then the dollar going up. This year, those trends, you know, somewhat changed where the beginning of this year the dollar and yield and ten year both fell up until midyear, and then in July, both those headwinds came back. You saw the yeald in the ten year spike again in the spring all the way up until October, and then you saw the dollar rally as well, and then the stock market fell. Now July to October, let's you know, focus on that part. You had a pullback in the market. You had three waves down or three legs down. And I noted in the summer that we're forming a bullish massive cup and handle pattern. If you look on a monthly chart of the S and P five hundred and or the NASDAQ and or NASDAQ one hundred, let's look at the QQQ, the NASDAK one hundred, and this is I cited at the time.
00:57:51
Speaker 1: I said, this is a.
00:57:52
Speaker 14: Very bullish setup. We need to handle the form. It formed from July to October, and then in November again the year interview I had basically told us they indirectly said that we're done raising rates. The market just took off.
00:58:05
Speaker 4: Then this Well, what a bosk, though, is is that with all of this in the backdrop, does that make you bullish still going into twenty twenty four.
00:58:15
Speaker 14: Yeah, So that's where I was going. I said in November, you had the Fed tell us, hey, we're done raising rates. In December they signaled they're going to begin cutting rates. So you broke out of that bullish cup and handle pattern. Now focus on twenty twenty four. We had a phenomenal year in the market, and if you notice, just something really important happened too, where leadership expanded. For the first two thirds of this year, it was predominantly the Magnificent seven, Big cap tech and semiconductors were the driver of the market massively this year. But since November and in December, after the FED pivot, we saw a paradigm shift where we even said in one of your articles recently that inflation is no longer public. I mean number one, that's number one.
00:58:53
Speaker 3: Number two.
00:58:53
Speaker 14: A lot of the areas that were repressed, think of it, basketball underwater, that were held down because of higher interest rates exploded. Now going into next year, I'm of the belief that we're in the early innings of a new bull market that could last the next three to five years, if not longer. So, and a lot of leadership is expanding. It's not just big cap tech, the Magnificent seven. We're seeing the areas that were beaten down for most of twenty twenty two and most of twenty twenty three really begin to lead. And I love that.
00:59:22
Speaker 6: Hey, hey Adam, let's let's rewind a little bit and talk about that big cap tech because you know, in addition to the bullish chart situation that you pointed out, you know, we had this sort of wildcard thematic trade going on with artificial intelligence. Now I'm looking at the biggest movers of the year, upmovers in Nvidia up two hundred and thirty three percent, Meta platforms up one hundred and ninety three percent.
00:59:44
Speaker 8: Real Caribbean up one hundred and fifty eight percent. Just I don't know if that's an AI play.
00:59:47
Speaker 6: Maybe the second is that if the AI does all work, we'll all take cruises.
00:59:52
Speaker 4: Right.
00:59:52
Speaker 6: But I'm wondering what you think about. You know, obviously, in Vidia's put some numbers on the scoreboard as far as AI, some of the other bet fisheries not so much. How much patience will investors have with this AI theme? Are they going to want to see numbers in the four Q reports and the one Q reports And if they don't see them, we could get some some sort of pullback in these AI team plays.
01:00:16
Speaker 3: Yeah, it's a really good point.
01:00:17
Speaker 14: So there's two sides of the coin here, full disclosure on long the video for just for disclosure purposes, and the video's earnings if you want to see, like the proof is in the pudding. Last year, in twenty twenty two, they earned four dollars forty four cents. This year twenty three, they're expected to earn three dollars thirty four cents. Now get ready, in twenty four they're expected to earn eleven dollars and twenty two cents, and twenty five they're expected to earn eighteen dollars and seventy three cents. So to recap, in twenty twenty three, they're going to earn three dollars thirty four cents. Two years later, almost twenty dollars. That is monstrous, ginormous growth. Now, other companies that are jumping on the AI bandwagon have to put up the numbers, and if they're not able to put up the numbers, this could be another fad, just like we had by the way many times throughout the decades in Wall Street. I won't go too far back. Just recently we had the marijuana stocks years ago, three D printing stocks and all these different rages. Oh my god, things are going to change and next thing you know, they just yeah he's album.
01:01:16
Speaker 4: Hey Adam, we only have about ten seconds left. But what's your top pick to buy next year stock?
01:01:21
Speaker 14: I'd say the individual stocks. I'd go with the video for sure.
01:01:26
Speaker 4: There we go, so people sticking with then video Mike after the huge rally this year. That's Adam, Sorry and chief executive officer at fifty Park Investments joining us on zoom from Florida. We'll have more coming up. This is Bloomberg.
01:01:40
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01:02:10
Speaker 12: MHM
Speaker 1: This is Bloomberg Business. Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
00:00:21
Speaker 2: With Jim.
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Speaker 3: Don't you let.
00:00:27
Speaker 4: Down all right, Mike? So, today was a big deal news day when it comes to drug makers. So Bristol Meyers Squib agreeing to buy schizophrenia drug developer Karuna Therapeutics for fourteen billion dollars in a fast moving deal that does highlight the drug maker's race to fill pipeline holes. Here, Karuna is developing a schizophrenia treatment called car xt that's upper approval in the US and would expand Bristol's portfolio of New York science So, which is a growing area interest for many drug makers. With us is Laura Chico, Managing director of Equity Research for Biotechnology at web Bush Securities, joining us on Zoom from Chicago, alongside Mark Monks, who is our US deal's team leader at Bloomberg News on the phone in New York City, Matt, I want to start with you first. Here would walk us through this deal and what investors need to know because Bristol views this as something that would add promising treatment to schizophrenia.
00:01:29
Speaker 5: Yeah, I think. I mean, you've got to put in the broader context, there's a race and farmer right now to get new treatment. So this is a really hot area. There's about two or three different companies like this that are out there, and you know they're paying a fairly high price to get out front of this treatment. You're seeing this across the sector and you know we can expect to see more coming ahead.
00:01:51
Speaker 6: Well, Laura, I'd love to bring you in here too, talk to us about the actual sort of prospects for this schizophrenia treatment. I mean, obviously such a debilitating condition for a lot of people. Is this you know, does Bristol's take over this company really imply a lot of optimism that this product will come to market and really be a breakthrough.
00:02:16
Speaker 7: Yeah, thanks for having me. Absolutely, I think this car XT is really a game changer. Is the way that we viewed it. Our model assigned credit in schizophrenia, adjunctive treatment, an add on therapy, and then Alzheimer's related psychosis. But Bristol's also looking to further expand out the indications there. And you often hear the phrase pipeline in a product, but this is definitely one where I think it might have really broad applications.
00:02:39
Speaker 6: Here, you know, Matt, I'm wondering about the sort of the broader takeaway for the biotech industry when you think about a deal like this and the smaller drug industry. You know, when prior to the pandemic, that was the big theme that these big drug makers their pipelines were running dry, they're really needed to start rolling up some of these more promising younger companies. Are we sort of back to that theme now in the m and A space for pharmaceuticals.
00:03:08
Speaker 5: Yeah, I mean biotech MNA is incredibly hot right now. You know, coming off of the pandemic where they got the boost from the COVID nineteen treatments, that revenue bomp has tailed off, and I think we're back to where we were, you know, before that all took off. And like I said, there, you know, there's a couple of treatments out there like this, and there's a couple of different targets, and I think we're going to expect to see more of this to come.
00:03:31
Speaker 4: Laura, I want to bring you back into this conversation, how do you think that shareholders on both sides view this deal right now?
00:03:39
Speaker 7: Yeah. On the Corona side, certainly, I think takeout has been a theme that's been present for some time for Karuna, and we certainly had the Sarahbelle at the acquisition not too long ago as well, So I don't think there's too much surprise here. And then from the Bristol side, this is definitely a strategy they're looking to use to deploy more growth opportunities in their pipeline. As Matt said, this is at an exciting time. Barma has a lot of capital to deploy and pipeline gaps to fill, so I think it makes sense from both sides.
00:04:07
Speaker 6: Yeah, Matt, you mentioned that premium. While fifty three percent premium to the Thursday closing price not too shabby, I mean, are are they basically trying to, you know, get ahead of some potential other suitors with that big of a premium.
00:04:22
Speaker 5: Our understanding is that it was a fairly competitive process. I'm not going to say who else you think was around it, but there was a couple other parties and so that's just a reflection and you're not just seeing this in pharma. You're seeing this in other sectors, oil and gas, where you're seeing you know, where there's some demand and m and a demand, people are willing to pay for really quality assets.
00:04:40
Speaker 4: Hey, Laura, are there regulatory hurdles that could stand in the way.
00:04:45
Speaker 7: I don't think so at this point. You know, when you look at the schizophrenia market, there are a number of branded and generic players, and Bristol's footprint in CNS is arguably still on the comb. So I think this is actually an area that would avoid significant FDC scrutiny.
00:05:00
Speaker 6: You know, Laura, I look at stories like this and I try to think, you know, put myself in the shoes of a stock picker trying to figure out where the next one, what's the next target going to be? Are there any sort of promising product categories and diseases that you think drug makers are most interested in right now?
00:05:21
Speaker 3: Yeah?
00:05:21
Speaker 7: CNS is definitely one that you can see today that we're getting quite a few bits here, and I think Xeno Pharmaceuticals is kind of in that bucket, focuses on vocal epilepsy. But outside of CNS, I think inflammation and immunology is definitely another hot area. I think one name that we cover in that bucket would be Brilliant Therapeutics tick A VRDN.
00:05:41
Speaker 4: Hey, Matt, when is the deal expected to close?
00:05:45
Speaker 5: I think that they said later next year, right, And what else.
00:05:53
Speaker 4: Do you think is important for shareholders to be aware of more than the kind of shorter term timetable at this point?
00:06:01
Speaker 5: I would say that I seek maybe another interloper coming in that could be interesting. While they did pay a quality price, I mean a very high price, that it's still possible that somebody could come in interlope here. And also that fat price, you know, could with that raise any hackles from you know, potential activists that you know might fail here. Those are always just two continual risks that we see, especially when the deals are so few and far between.
00:06:24
Speaker 6: Right now, Matt, I understand that the Biden's Inflation Reduction Act played into the decision making on this deal.
00:06:33
Speaker 8: Could you tell us a little bit about how.
00:06:36
Speaker 5: I actually, I don't know. I don't know how to answer that.
00:06:39
Speaker 9: I don't really.
00:06:42
Speaker 8: How about you?
00:06:43
Speaker 6: Or is there is there a reason why the Inflation Reduction Act is.
00:06:48
Speaker 8: Inspiring deals like this?
00:06:50
Speaker 7: Yeah, I think one of the concerns here is you know, small molecule drugs under the IRA are going to have somewhat shorter exclusivity because the negotiations are going to a little bit earlier versus biologics. So this is a product that's going to be a small molecule and they will be pursuing Alzheimer's disease related psychosis and agitation with this. So there is some potential for this to be deployed in a Medicare medicaid population, But I do think that, you know, at this point, it doesn't seem to be too much of a concern at this point. I think the bigger deal here is that this is a brand new modality and this schizophrenia space, and I think patients and physicians are going to be really excited to deploy that.
00:07:33
Speaker 4: Laura, I know that you cover equity research from the biotech perspective, but I'm kind of wondering more broadly going into next year with different m and A activity there, if you expect this to continue to expand, Like what this really tells us about markets going into next year.
00:07:50
Speaker 7: Yeah, I guess for the biotech sector specifically, you know, it's definitely been an up and down year, but there's so many fundamentals that have been pretty positive. Valuations are attractive, is very productive. We had over fifty drugs approved this year alone, and we've started to catch this M and A tailwind. I do think this theme persists now. Maybe we've gotten a little bit of pull forward from deals that might have been announced in January, but I think bigger picture, as I mentioned before, the large pharma on biotechs have a lot of capital and the balance sheet that they really are prepared to deploy as assets get more mature and go through these de risking events with data. I think that's really the gating factor for the M and A to occur. And we do have a number of later stage readouts on deck for twenty four. So I do think this is a continued theme in biotech.
00:08:35
Speaker 6: You know, Matt and when you zoom out to the broader market, not just biotech, I mean, is M and A as strategy as a whole?
00:08:45
Speaker 8: Are we are we going to be back to merger? Mondays?
00:08:48
Speaker 6: Do you think in the new year, now that you know the risk appetites are back, stocks are rallying again, interest rates are on the down side. I mean, is it is M and A back in twenty twenty four, I.
00:09:02
Speaker 5: Would say that we've probably hit a bottom. So we could say, you know, twenty twenty three has been the slowest year for M and A since about twenty thirteen. I think we're about two point eight trillion in deal volumes, which you know, that's the softest in twenty thirteen. I don't think we're going to get any lower than that. You're seeing this big spate of kind of transactions in December, and I mean this year. This week alone, I think we've seen about one hundred billion dollars in deals. We had this Bristol transaction. There's a big insurance brokerage deal Nippon a grad readed by US Steel. I mean, like what we'd like to say in the M and A, you know, coverage areas, you know, deals to get deals. So you know, we're seeing that there is pent up demand for large transactions. That said, is it going to be like, you know, this is the dam bursting. I don't necessarily think so. I think that we're just kind of seeing you know, large strategic transactions in a couple of different sectors that you know, make sense for the buyers.
00:09:52
Speaker 4: Lisa Laura. Rather, what I'm wondering is, if you were able to ask a question to either one of the CEO's at Bristol or Karuna, a question, what would you ask them?
00:10:06
Speaker 7: I would actually be interested to see what comes next in CNS. What are they most excited about. This has been a really interesting period to see the evolution of how we're approaching CNS drug development, and Bristol indicated today they're not looking for any additional large scale transactions at this point, but CNS is an area of focus that they're looking to expand upon, so really be interested to understand what they see as most promising in terms of modality or targets at this point.
00:10:33
Speaker 4: Well, it's great having both of you with us to walk us through this big deal. That was Lord Chico, Managing director of Equity Research for Biotechnology at webbush To Securities, joining us on Zoom from Chicago, alongside Matthew Monk's US Deals team leader at Bloomberg News on the phone in New York City. So great getting their perspective right when it comes to this big deal. Bristol Myers script agreeing to it. It's worth Usually we do this on Monday Mike. But here we are on a Friday.
00:11:01
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, or watch us live on YouTube.
00:11:17
Speaker 3: It's the most wonderful time.
00:11:24
Speaker 8: With the kids jingle bowling and everyone telling you be of good seat.
00:11:30
Speaker 4: All right, Mike, Now that we finished up the simulcast here, we have seen a rebound in unloved corners of the market, especially at year end, with market participation broadening out that I know a lot of technicians we're looking and hoping to see toward the final quarter of this year, and including everything from small caps to regional banks. Though small caps obviously have had a tough few years here while the Russell two thousand value index has under per for the broader US stock market this year, but some of those value stocks in particular have had some support over the last month or so. So what I'm wondering is the pain over yet when you're looking at some of these unloved corners of the market. So here to discuss more. John Mawory, Chief Investment officer at NFJ Investment Group, joining us on zoom from Dallas. Thanks so much for joining us, John on this Friday, heading into a holiday weekend. I know you focus particularly on value investing. Where do you see pockets of opportunity in twenty twenty four when in particular value has underperformed growth once again it has.
00:12:41
Speaker 10: And I think that you know, particularly what we've seen in the last few months is that investors can be surprised very quickly. You know, a couple of areas that we think are very attractively priced, the mid and small cap areas. You know, big about the small cap value area for just a moment. Roughly twenty percent of that opportunity set is in regional banks, another ten percent is in reads, and another five or six and utilities. All of those are very interest rate sensitive, which has been a very negative thing over the last couple of years because of increasing bond yields and because concerns about refinancing at those higher rates. But now there's a bit of a glide path for investors with lower rates coming through next year. Is signaled by Powell, and you know, separate from even what Pal signaled. The bond market was already signaling this. One of the things that we were pining the table with with our investors just a few months ago was that if you look at the spread, okay, between the two year bond yield, which of course is set by the market, relative to the Fed funds rate, which is set by the Fed, that spread was very historically and statistically very wide. And historically, when you see very wide spreads between the two year bond yield and a Fed funds rate, that signals that those need to come in. And in fact, the Fed funds rate was very elevated, the most elevated had been historically going back over that to your bond yield. So the point I'm trying to make here is that to your bond yield was signaling to the Fed, hey, you need to cut and you need to bring rates down, and investors should be positioned for that, particularly as we head into next year.
00:14:18
Speaker 6: You know, John, it's been such a frustrating many years now for value investors, which you know, I think is a tough pill to swallow for people you know, who read Graham and Dodd, who really study the fundamentals and you know, just expect value to be a winning strategy and so many false dawns too. Last year it started looking like value was finally going to outperform growth again and it just didn't last.
00:14:42
Speaker 8: What are this sort of macro.
00:14:46
Speaker 6: Conditions that you think we need to see that value revival really take hold and stay in charge.
00:14:55
Speaker 3: Well, it's a great question. You know.
00:14:56
Speaker 10: One thing I'll point to that I think is similar to the late two thousands is you have a very strong dollar. You know, that's coincided with a lot of pressure on the emerging markets, and it's also coincided obviously with the FED having to raise rates, which really put pressure on some of the value areas that tend to be a little bit more levered and a little bit more economically sensitive, and particularly when you think about me and the value stocks, it's more difficult for them to just tap their balance sheet when they need additional capital. The growth names, the Magnificent seven were squarely positioned to benefit from that. But I will pivot and just point out that you know, in video was down sixty seven percent just last year, Meta was down you know, similar by similar magnitude.
00:15:38
Speaker 3: So the Magnificent seven or.
00:15:39
Speaker 10: The Measley seven just one year ago, and things can change great quickly, and I will share just a couple of color comments around around value. You know, the Russell one thousand value over the last three years is up thirty one percent. The S and P's up thirty five I think a lot of people would be surprised to learn that. I think the perception is that, hey, value is really lagging. Value is almost caught up, and really the dislocations are as wide as we've seen going back to two thousands. So I think that when you consider the fact they're almost tied for three years, and you've got tremendous valuation dislocations, and you have a FED that is definitely going to be more accommodative, I think those all all bode well to be investing in value, and particularly the banking sector, I think is an area that is unloved. And again, I think investors would be surprised to learn that the SMP five hundred regional bank sub industry is now beating the SMP by fifteen hundred bases points over the last six months. And I think the perception is, hey, the magnizue seven are doing all the work. It's like, actually, you would have a much better return if you had been moving away from the SMP, the NASDAK, moving into regional banks. Very difficult to do, very uncomfortable. But you need to be buying those straw hats in the winter.
00:17:00
Speaker 4: Okay, So what are your top stock picks?
00:17:02
Speaker 3: Then?
00:17:04
Speaker 10: So some of the areas that we really like, I'll actually I mentioned reads first. There's one office rate that we own in particular, Alexandra Reality. You know, office rates are hated, and that's understandable. You know, the pandemic definitely has shifted the appetite for working in an office space. But what's unique about Alexandria Reality is that this particular office rate caters to the bio companies, pharmaceutical companies, life science companies, and they simply can't.
00:17:33
Speaker 3: Move those labs.
00:17:34
Speaker 10: They're strategically located on the East Coast and the West coast. For example, during COVID, many of those folks were not able to take the luxury of working from home, as we're all grateful for, because they were hard working looking for ways to navigate a very challenging environment.
00:17:47
Speaker 3: So they can't simply move offices quickly.
00:17:49
Speaker 10: And if you look at this particular read, it's trading at one of the steepest discounts in a decade. They've reaffirmed FFO guidance, they're growing their dividend, and the collection rates from their tenants are ninety eight percent. So names like that, you know, where we see dislocations in the valuations, but not dislocations in the fundamentals. I think are set up really nicely going into next year. We've already seen a big move in alexander A Realty. It's up twenty five percent in the last month. I think that's just getting started. So I would I would encourage investors to look at some of the higher quality rates, you know, industrial reads like a Rexford or like an SBAC A tower rate. All of those look very attractive as we enter next year. If I were to pivot to healthcare for just a moment, you know, Edward Live Science is a name that we really like.
00:18:42
Speaker 3: Currently. The name has a net cash.
00:18:44
Speaker 10: Position, double digit margins, over ten percent earnings growth, and really has been knocked down for a couple of reasons. First, the life sized companies got very expensive coming out of COVID, and understandably so, so those have been really punished as those ealuations have moved lower. And then Secondarily, they've been tied into some of the biotech names that really came under a lot of pressure that also got expensive and too boot. You have fears about the ozebic and other weight loss drugs, and there may be less need for some of those medical devices going forward, But the reality is we don't have the ability to model that out yet. And again, if I look at the fundamentals of an Edward life science, they have not been dislocated. We see no change in the earnings for next year currently, So I think that's another area that investors should be looking at life sciences.
00:19:32
Speaker 6: You know, John, everyone got so much wrong this year. You know, economists were convinced we're going to see a recession. You know a lot of people were perished to start the year. I can't help but think though now as we head in the twenty twenty four I see the reaction to like this Nike outlook today and just people selling with both fists that the sense that that recession maybe wasn't canceled, but just postponed.
00:19:56
Speaker 8: How are you thinking about that next year?
00:19:59
Speaker 6: And really, how how do you play defense in this market? I feel like the you know, the strategies for playing defense in this market are not what they used to be. But how are you thinking about that?
00:20:09
Speaker 10: Such a great question, So I'll put it back to last year for just a moment. So we took the very contrarian position back in October, November, and December. The cyclicals were a big time on sale and we actually took our defensive positioning down to the lowest weight that I can remember. And if Jay's been around for thirty years, I've thought the NFJ for eighteen years, So we were very overweight cypicals going into this year based on our bottom up process. Right, if I think about defensive, you asked a really good question. What I like about what we're seeing today on a bottom up basis is guess what utilities are looking cheaper?
00:20:49
Speaker 7: Right?
00:20:50
Speaker 3: Stateful for looking cheaper?
00:20:51
Speaker 8: So time the old question.
00:20:54
Speaker 4: I'll love to leave it at that, John, But thanks so much, John Maury, Chief Investment Officer at NFJ Investment.
00:21:01
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern on Bloomberg Radio, the Bloomberg Business app, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
00:21:20
Speaker 4: Mike, We've been talking this afternoon obviously about travel the holidays, and here's a stat for you. So Triple A recently forecasted a record seven and a half a million people are expected to fly from December twenty third, which would be tomorrow to January first, So that would mark the busiest year in travel season since Triple A began tracking the data in two thousand and that also beats the pre COVID record of seven point three million scene during that same time period in twenty nineteen. So it's pretty incredible, right when you think about, yeah, where we've come since the depths of COVID.
00:21:55
Speaker 6: Absolutely absolutely well, we've got a great guest to talk us through.
00:21:58
Speaker 4: We definitely do who better. Brett Heller's chief executive officer at Priceline, joins us on the phone from Connecticut to discuss tips for efficient holiday travel. Thanks so much for taking the time to speak with us heading into the holiday weekend here. First off, what can you tell us about when it comes to travel prices this year, given that we've seen inflation come down pretty dramatically over the last year and a half. But it seems like these ticket prices, at least for me when I've been traveling over the past couple of months, still pretty pricey.
00:22:28
Speaker 11: Here.
00:22:29
Speaker 4: What does this mean for consumers?
00:22:32
Speaker 9: Hi, well, welcome, thank you, thank you for having me when it comes to travel here through the holiday period. You know, the overall cost of travel, unfortunately for consumers in the US, is still higher than last year. It's up about three or four percent. But it's a combination of things. You know, when you look at airfare in particular, airfare domestically is actually down about five percent. It just still feels very expensive because we're, i think, in the back of our minds comparing it to several years ago, and prices are up materially since you thought I was in nineteen. So you'll save a little bit underfair, you're certainly going to say, on your rental car, but you're still paying more for your hotel. Prices for hotels are still up two or three percent on average in the industry right now, and you're paying a lot more for food and beverage and especially for events when you travel.
00:23:16
Speaker 6: You know, Brett, one thing I find really fascinating right now is COVID is raging again, you know, at least anecdotally. I know so many people have caught it. One friend literally started coughing and shivering while it was on.
00:23:29
Speaker 4: Oh wow, I feel like everybody has that reaction right just because of COVID and then you hear it, and if you're the person that coughs, I've had people look at yeah too.
00:23:39
Speaker 8: Yeah, especially when you're on a plane. I caught it at Thanksgiving. I've started shiverings.
00:23:43
Speaker 4: Kind of triggers people.
00:23:45
Speaker 6: But Brett, it just doesn't seem like it matters to the travel industry anymore. I mean, is that a fair assessment of sort of the risk of COVID right now?
00:23:55
Speaker 9: Well, I think that's what the data would certainly suggest that consumers are for the most part, just learning to live with it like they did in the past with colds and flu. When you look at the TSA checkpoint data through airports just for the last three days, each of those days has significantly exceeded where we were in twenty nineteen by ten to fifteen percent and up over last year. So it certainly hasn't put a damper on holiday travel this year.
00:24:21
Speaker 4: So when are the best and worst days to travel this holiday.
00:24:24
Speaker 9: Season, well, we're in one right now, so today would be considered the very Today and tomorrow are certainly some of the most heavy traffic days of the holiday period. When you're thinking about returning from your Christmas vacation. In particular, you know, the twenty eighth and twenty ninth will be quite busy, and the day right after New Year's so if you can avoid those days, it's a little too late for pre Christmas travel. But as you look forward, and many consumers are doing this, you know, with more flex travel in their schedules, and this was an extended holiday period, people are spreading their travel out a little bit more than they were a few years ago and taking advantage of their work policies. But these are some very, very busy days. The good news is the the TSA checkpoint seems to be moving much smoother this year, and the airlines are operating much more efficiently this year. And if you recall a couple of years ago and even last year, we ran into some both storms as well as just poor operations. But they've staffed up and are largely handling the traffic quite well.
00:25:27
Speaker 6: You know, Brett, I think what they used to call a frugal traveler, so they call me a cheap skate. I guess the other way too, But you know, when I go on Priceline, I'm looking for a deal. Look, I'll vacation in Clevelands, right, you know, But so where where are the sort of the bargain Where can I find a bargain vacation these days?
00:25:48
Speaker 9: Well, if you're looking for a destination right now, North and South is pretty economical. So if you're going up to Canada, this may not be your time of year to go to Canada, but that is more cost effective from what it's been in the past. And going south into Mexico, you know, Cancun had a bit of a tough run last year because so many consumers and into this year we're heading overseas. They were heading to Europe, they were starting to head to Asia, and so there was less traffic heading down to Mexico. And now you know, those resorts are really trying to boost traffic down to their destination and so we're seeing some really nice value heading down there. If you want to stay domestic, listen, Orlando will always be a great destination to travel from a price conscious point of view. There's a lot of flight lift that goes down to Orlando from just about any market in the US, and there is one of the largest supply of hotels in the country in that city, and so that always has great value. But we've seen a lot of consumers now moving back into major metro areas, so they're heading to New York, which is a very expensive city to travel. They're certainly heading to warm destinations like Miami and Anaheim and Las Vegas perennially always the number one destination in the US any time of year, and typically you can find really great value from a hotel perspective in Las Vegas.
00:27:03
Speaker 6: You know, Bret, I'm a market's nerd, as you may guess from working at Loomberg, and I can't help but wonder about the currency market and how it influences travel. You know, you're talking about Europe being a hot destination last year. I imagine the strong dollar was part of that. Is there sort of a correlation between what the dollar is doing versus other currencies and where the destinations start picking up in popularity.
00:27:31
Speaker 9: Absolutely, travel to Europe is materially less expensive than it was, you know, three or four years ago, with the currency plane to the favor of US consumers. You're saving you know, twenty to thirty percent on a trip just because of the currency conversion. Now you have been paying more for airline tickets this year to get there, but hotels in general are still cost effective in many cities in Europe. And when you look over the holiday period right now, flies to Europe are actually down twenty percent from where they were last. So there was so much interest in Europe moving through this year that the airlines opened up a lot of new routes, a lot of new carry there. But that's now I think reversing just to touch and so there's a lot of value if you want to head to Europe today now. Conversely, the US has seen significantly less traffic from other countries coming into Europe. Part of that was COVID and many of the Asian countries shutting down and staying shut down much longer, but those are now opening up. We just haven't seen as much traffic moving back this way again, and the currency is playing a very big role in preventing that travel.
00:28:31
Speaker 4: Brett, I have to pick your brain on your thoughts about the health of the US economy because there's been so much skepticism, as you know, coming into this year about recession. Calls clearly have not come to fruition, and the economy still has remained resilient, especially on the back of consumer spending, even though we're seeing some numbers slow a little bit in the holiday quarter here. But from your perspective, how do you view the economy, especially going into twenty twenty four.
00:28:57
Speaker 9: Yeah, Well, in the travel industry, there's a couple of keydata once we look at to understand the health of the economy. One in the hotel industry in particular, it's just looking at the average daily rate that the hotel chains and the independence are charging consumers. They have pushed those rates up considerably over the last two or three years, and even now with some other commodities and things moving backwards, they're still pushing up on the ADRs. And the expectation next year is that hotel ADRs, meaning average daily rate that you'd pay at a hotel, is going to still be three to four percent up year over year. So the hotel industry is essentially saying, we understand that other prices may be dropping, but we're going to keep pushing our pricing and higher. Now, the question is what will happen to demand as a result of that decision, and demand this year has been relatively healthy. However, as we moved into November, demand started to soften just a little bit in the industry here in the US in particular, and so we'll see if those rates continue to stay high or if they start to bring those down for consumers. And the second, of course is airfare. But there's a lot baked into airfare, you know, jets fuel pricing is down about fifteen percent from where it was last year, but the cost of labor and operating the airlines is up meaningfully, and so those kind of play against each other, and we're just not seeing quite as much of a drop in airfare. But there is a little bit shifting down there, which would mean consumers are traveling a bit less in the shoulder periods than they were in twenty twenty two and even earlier this summer. And so there's a little bit of a sign that, hey, consumers really prioritize travel in twenty two into twenty three, and I think now they're being a little more cautious. But just looking at the the traffic moving through this week, it's still quite strong, all right.
00:30:39
Speaker 4: Brett Keller, chief executive officer at Priceline, joining us on the phone from Connecticut. Thanks so much for your time.
00:30:45
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business App, or watch us live on YouTube.
00:31:02
Speaker 4: I'm so glad you're here with me for this next segment, Mike, because you being the team leader of crypto here at Bloomberg, you know, it's been quite a wild right here. So just to kind of refresh where we've been the past year. So there were at least five arrests, multiple bankruptcies, and of course Sam bankmin Free did go to jail. And if any year could have up into this sector, this probably would have been it. Yet that didn't exactly happen. So crypto comeback potentially brewing here and not too long ago. Bitcoin's value did briefly surpass a forty four thousand earlier this month came back a little bit below that, but that was its highest point in more than a year. That clearly, as you know, Mike, was fueled by the anticipation over the possible SEC approval of a bitcoin ETF. So joining us now to dig deeper into this is ANACOY partner and national financial services leader at Whitfley joining us on Zoom from Chicago. As Mike and I both know this anticipation that's continued to build over the last few months for this bitcoin ETF, what I'm wondering is how much of this has actually already been priced in to bitcoin.
00:32:09
Speaker 12: Yeah, so thanks for having me on, guys.
00:32:12
Speaker 11: I think that there's a part of it that already priced in. I think we're going to see a bull market coming back, and I think that it's you know, going to be a wild ride throughout the entire you know, anticipated for the ets as well as the regulatory anticipated changes.
00:32:32
Speaker 3: You know.
00:32:33
Speaker 6: And it seems like the consensus, if not everybody, believes that the approval of an ETF is a done deal, that the SEC uh you know, lost that big, big case against uh GBTC, which was trying to convert from a regular fund into an ETF, and that they've just given up fighting against a bitcoin ETF. But we had a story today looking at how there is a lot of activity in the big point options market to hedge against a disappointment against another rejection. Is there any scenario in your mind where the SEC could once again reject the tfs in early January instead of approving them as everyone believes to be the case.
00:33:19
Speaker 11: You know, I think that there is a scenario that that could happen. I think that's why we're seeing the options continue to go where they're headed. Just recently you might have seen the quote from SEC Chairman Gimbler where he, you know, is going to be in a lot of non compliance in the fift the space and it undermines the confidence and a lot of people have been hurt, like your referenced earlier, and so I think that the SEC is very weary and to where this might go.
00:33:49
Speaker 12: And although you know, the markets believe that.
00:33:52
Speaker 11: They will pass it, it could also be the first.
00:33:55
Speaker 4: Talk to us also about the regulation aspect on Washington, because that's been delayed for a while here. But whatever, you're speaking with some of your clients here, what are their kind of concerns when it comes from a regulatory perspective.
00:34:12
Speaker 11: Right, So, we just recently had the Ripple Lab case with the SEC around in the crypto a.
00:34:22
Speaker 12: Security or not, and the crypto industry is still really unclear about, you know, what the regulatory framework is going to be. Congress has you know, trying been to add some stability and confidence for market participants here in this space. But I think that you know, the regulatory.
00:34:41
Speaker 11: Shifts and everybody's really asking for the regulatory framework so that folks can be their participating if they like to. But also for those like rip Boland, point Base has them out as well for them to all continue to play in the fold, you know.
00:34:58
Speaker 6: And we've talked so much about this massive rebound in bitcoin one hundred and fifty something percent as of now year to date, but I think for the true crypto heads out there, they are more excited about what's going on with a blockchain called Solana and the native token soul on that chain up something like eight hundred percent this year. What's going on with Solana.
00:35:25
Speaker 12: You know, I think that there's just a lot of excitement around it.
00:35:28
Speaker 11: Right now, and so you know, as far as where it's going to ahead, I think we're all you know, here to be game.
00:35:37
Speaker 4: Yeah, what's your thought from more of the wealth management perspective, because when you think back Mike to twenty twenty one, where sort of the fur not just for game Stop in AMC, but especially with a lot of these coins, even beyond Bitcoin doge coin here when you're thinking of those, but from a wealth management perspective, a lot of people still very to add that as some sort of allocation toward their portfolios. How do you view this from the wolf management perspective.
00:36:07
Speaker 11: Yeah, I think we all of u saw Black Rocks get in. Plus, you know, they're just one of ten other asset managers to get into the space and really look to adapt the new potential ETFs that are potentially coming out. We're still seeing their interest right, whether it be the asset manager setting out.
00:36:28
Speaker 12: The new funds as well as you know the.
00:36:31
Speaker 11: Fore one key plans looking to allow additional opportunities and investment options for folks to get into. So I think we're going to continue to see the increase availability to the market as the regulation.
00:36:46
Speaker 6: Continues, you know, and to bring it squarely into your wheelhouse at with FLEE. Another big story recently was the recent passage of that will allow fair value accounting.
00:36:59
Speaker 8: For crypto assets.
00:37:00
Speaker 6: What does that mean for the company's public companies out there that actually do hold bitcoin.
00:37:07
Speaker 8: Is this good news?
00:37:09
Speaker 11: I think everybody is looking to add clarity around how to account the crypto assets. It's been a long time asked by many howaday should be accounting for crypto assets, and now having the new accounting standards out there for crypto acids to be accounting for at fair value will add some clarity for everybody, not only investors but also those holding it. It's going to add more volatility into the financial statements for those companies that do hold it, but it is going to at least add more clarity for investors as well as the investing hobles.
00:37:46
Speaker 4: All Right, Anakoy, partner in national financial services leader at Whipfley, joining us on zoom from Chicago, giving her perspective here, Mike when it comes to where crypto potentially headed after all a year, but a big year in crypto after suffering a lot of pressure there last year. We'll have more coming up. Stick with us this afternoon. This is Bloomberg.
00:38:11
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business app and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirtys.
00:38:39
Speaker 4: Wow, this music pretty brilliant. Our producer back there, Paul Brennan with the hits, And as Mike and I were mentioning earlier, the forthcoming issue of Bloomberg Business Week on newsstands today is the Longevity Issue. It tells some of the stories of the billions of dollars that are being spent to live longer or age slow in the never ending quest for the fountain of youth. So today we are delving into why tech titans, ventral capitalist crypto enthusiasts, which I know Mike is eager to hear about, as well as AI researchers have turned longevity research into something between the hottest science and a tragic comedies. So this is by Ellen Hewitt, tech features writer at Bloomberg News, whose story Silicon Valley's quest to live forever has many warring fractions. It's featured in the Longevity Issue. Like I mentioned, of BusinessWeek magazine, available on newstands, on the Bloomberg and at Bloomberg dot com. Slash BusinessWeek with more Ellen will join us shortly, but also with us is actually the editor of Bloomberg BusinessWeek, Joel Weber on Zoom from Brooklyn. Joel, this is a really cool story. But first I swear I thought I saw you in the office earlier, and now you're on Zoom.
00:39:51
Speaker 11: Sir.
00:39:51
Speaker 4: We're sad that you're not here with us. But was I wrong? Were you here in the office?
00:39:55
Speaker 2: No, you had being earlier. So we set out to do this longevity issue and wanted to touch a lot of different things because what we noticed, based on some stories that we had done earlier in the year, is just this insatiable appetite to want to live longer, live better, and if you have a certain amount of money or a certain interest, possibly live closer to forever. So when we set out to kind of do this cover to cover issue, there are a number of people that we wanted to talk to. Ellen Hewitt was like right at the top of that list, because Silicon Valley has a lot of money and a unique obsession with anti aging and longevity, which takes us to the sidewalks of San Francisco where you're If you're a brave reporter like Ellen, you go out and like you know, happen upon people who are not asking for Mike Reagan's bitcoin. Ellen, what'd you find on the sidewalks of San Francisco?
00:40:51
Speaker 13: So can you all hear me? There was some Yeah, I think I'm on the you're good great, So yeah, I mean, this is such a fun story and I love this whole issue and then kind of the theme of the issue. But yeah, in in not just in San Francisco, although I think that's kind of where the heartbeat is. But there's this there's this group of social activists called the Stay Forever Organization, and they their goal is to raise awareness about kind of the social possibility of living forever. Their idea is less about, you know, raising money for particular gene therapies or stem cell treatments or things that might extend our life. But instead they're really focused on trying to spread awareness about this possibility, trying to inspire art for people who might want to discuss the philosophical like ramifications of living forever. And yeah, what they do is they take to the streets and they survey people on how long they want to live, and they carry around posters that say, like dying is unacceptable, don't die. Death is boring, Stay alive and and and they're they're serious, They're like and that's what's so interesting to me is like, I think they really feel like what they're working on is the most important thing that you could be doing. And that and that's true across not just this corner of longevity, but but this whole sort of multifaceted longevity culture in the valley beyond.
00:42:13
Speaker 2: Okay, there's there's a phrase that you introduced to me in the story, Ellen, I had never heard of it before. Anti death activism. Is that the same thing as what you're talking about or different?
00:42:23
Speaker 4: Yes?
00:42:23
Speaker 13: Definitely?
00:42:24
Speaker 4: And what was that?
00:42:25
Speaker 3: You know?
00:42:25
Speaker 13: Some of the most interesting conversations I had when reporting this story was talking to philosophers and other sort of you know, it's not it's not just these people on the streets. It's like philosophers who are writing books about, you know, with titles like the Case Against Death, or you know, AI theory theorists like Nick Bostrom who published this famous fable called like the Fable of the Dragon Tyrant, in which he characterizes death as this dragon that's like tormenting this kingdom. Basically, they just they're uniting ideas that they reject that death is like a good and natural part of life. They basically feel that like death is like, if you step back and look at it, death is bad and that we've just come to accept it because we don't believe that it's possible to avoid it. So one of that one of the philosophers described it to me as like the acceptance of mortality is a fallacy meant to protect us from the tragedy of wanting things that we can't have. So theseeop are kind of like psychologically mathochistic, is I think, one way to look at it. But they really believe that they are like harnessing some truth, which is that like we we in order to make strides against you know, like aging and eventual death from aging related causes, we need to accept and believe that death from aging is a bad thing that we should.
00:43:40
Speaker 9: Get rid of.
00:43:41
Speaker 3: All right.
00:43:41
Speaker 6: I got to stop here for a minute and say that if I think about living forever, jess my four one, Okay, I just cannot cannot.
00:43:53
Speaker 8: So if I went up on work forever, I don't know.
00:43:56
Speaker 2: But because you don't have crypto in your fury.
00:44:02
Speaker 8: That doge coin is going to keep me, keep me going forever.
00:44:05
Speaker 6: A couple of things I really got to wonder here, Like a how realistic is this in our lifetime to even really extend the say, the average life span by any you know, material amount and be you know, what about the rest of us, Like, if you're a Silicon Valley billionaire, who can afford you know, a million dollars worth of uh, you know, pharmaceuticals and treatments and whatnot. Sure, but you know, is this is there an inequality aspect to this where only the rich will get to live forever the rest of us you know, no way, you know. But also how realistic is this idea?
00:44:44
Speaker 13: Yeah? Well, I mean, what's an interesting part of the longevity world in the Valley right now is that there's actually a lot of infighting.
00:44:51
Speaker 9: I mean, there's people who really.
00:44:53
Speaker 13: Disagree on how best to approach this. So of course there are these anti death activists who like to call themselves immortalists and stuff, and they're definitely on one end of the spectrum, and on the other end of the spectrum, there's much more conservative people who work in biotech who are running you know, I think that some of the other stories and the issue are touching on some of these some of these like advancements, And I think what's interesting is you talk to those people, they say that, oh, actually, the people who talk about immortality and stuff, they're doing us a huge disservice because they're making people, you know, they're they're they're just making people dismiss the field overall. And if you talk to them, they're like, hey, there are advancements that we feel that we can make that could get FDA approval in the next decade that could extend you know, help span. So not necessarily getting into the scary idea of living forever or even necessarily living that much longer, but just about the idea of extending sort of healthy life. And I think they're they're really trying to win people's hearts and minds through a different way, which is like FAA approval drugs that are shown to work in in like you know, rigorous settings, And the idea there, I believe is that if if these treatments work, there will be such a demand for it that the market like, yes, it might start out as something that's only available to those with MutS of resources, but that it will like other treatments, that we've seen for other diseases and things. It will eventually become more accessible. And so they're very aware of the image of like the billionaire who spent you know, the billionaire spends on somebody trying to like look eighteen again. And I think they're they're very at least conscious of wanting to push back against that.
00:46:29
Speaker 6: Joel, I got to say, I'm a little disappointed in you missed headline opportunity could have been immortalist combat. So you're losing your fast.
00:46:40
Speaker 8: I'm just gonna.
00:46:41
Speaker 2: It's not It's not too late, Mike. You know, we've got plenty of times since it's the longevity issue.
00:46:48
Speaker 4: Nice So, Ellen, you did write about how the Fields leaders have been discredited in a variety of ways. Walk us through this.
00:46:57
Speaker 11: Yeah.
00:46:57
Speaker 13: So, I think one of the most interesting sub sort of subcurrents of this world is that Aubrey de Gray, who is this famous anti aging researcher, Like he's someone who gave a Ted talk in two thousand and five about the idea of longevity escape philosophy through the idea that we may one day soon get to a place where advancements and anti aging are moving faster than we age and therefore you could kind of just indefinitely extend the horizon. And he's been this sort of very famous provocateur and researcher in the in the longevity field. And a couple of years ago there were these two young women who are also like very established researchers in anti aging as well, who came out and said that he had sexually harassed them in sort of a mentor role, and and it did it did raise for me this interesting idea of like the way that when when a group of people feels like they're working on something that is so important, like extending human life, it can often overshadow these like you more everyday things that are that are quite damaging. You know, if this is the field that you want to have more people be entering because they you want to have the best researchers in there so that they can try to find the best advancements and and help the human race live longer, then it is quite damaging, I think to have an environment in which you know, new researchers might not feel safe or might not feel welcome, but but you you also get the sense that people in the longevity field care so much about extending human life, that they might be willing to overlook some things like that in order to get to this bigger goal.
00:48:37
Speaker 2: And these worrying factions remind me a little bit of the competing newsrooms in Inkormand so may the sad tire. Hopefully it can be a spirited one like that. But just on the on the on how all this plays out in the real world. One of the things I wanted to ask you about was Montenegro because there have and Mike, you maybe this was something that you caught. You know, there was a gathering with a burning Man style kind of allure that was like one part crypto, one part AI, one part longevity, and you know, it's just it's interesting to see something like that become longevity being like a center of that. And it feels a little bit like all this crypto money, all this venture capital interests, it's like longevity is part of that. So talk to us about the allure of Montenegro and all of that this summer totally.
00:49:33
Speaker 13: And Yeah, something that's really interesting is that crypto money is a major funding source for longevity research. Why exactly that is? People gave me different theories. I think they feel like Oh, this is a if people are united by the idea of kind of breaking the rules. But I think it also just has to do with the fact that the toleic Uterin, the co creator of theoreum, I think, is just also really into longevity. So he had organized this summer a two month temporary city in Montenegro that was called Zuzalu. Uh, don't ask me what it means, because they've said specifically it's supposed to mean nothing.
00:50:08
Speaker 5: But Zuzalu was this, you.
00:50:10
Speaker 13: Know, two months gathering of you know, hundreds of people. As you said, Jule, Crypto, AI, longevity, you know, these were major motifs and and yeah, they were getting together to try to talk about this sort of far flung future in which we might live forever, have this you know, totally new financial system. And to me, it's it's showing up in other places as well, this idea of building temporary cities in places where regulations might be more amenable to experimental treatment. So exactly like in Prospera in Honduras and in these other like you're just starting to see these special economic zones or like network states like these are the terms that people used to talk about these. It's the idea that like people who are gathered by this philosophy might go to a physical place and build structures and regulations that are in favor of what they'd like to pursue. And I think Voulu was like an experiment in that, and I think we're going to be seeing a lot more of those in the years to come.
00:51:09
Speaker 6: You know, Ellen, you know, God bless the tech geeks and the crypto bros out there for their big their big dreams.
00:51:16
Speaker 8: I love it.
00:51:17
Speaker 6: I'm on board, But I got to wonder, what how does the medical community fit into this. Is anyone on sort of the medical side of this on board?
00:51:26
Speaker 1: You know?
00:51:26
Speaker 8: Is there optimism from that side of things?
00:51:29
Speaker 4: Yeah?
00:51:29
Speaker 13: I mean one of the companies that we wrote about in the story is called Loyal and they make longevity drugs for dogs, and they recently got a sort of preliminary i'd call it a preliminary FDA any approval. It's not like a full thing, but basically they're, you know, they're advancing their drugs in a way that they feel is going to point the way toward eventual drugs that might help humans.
00:51:53
Speaker 8: You know.
00:51:53
Speaker 13: They envision a much more uh, sort of everyday application of this. They often like to compare the drugs like statins or things that people could take every day to sort of extend their health. It's not going to be marketed as this like live Forever drug. So I think in terms of small advancements like that, I think there is actually a lot of excitement in the medical community for ways that could be you know, that we might see in the next you know, ten years, just like extending our health and and so, Yeah, it's just interesting to see how why the range of attitudes is on this, on this idea like a thing that you'd think the longevity world would really be united, they're actually is like quite vocal in their disagreements on the best way to approach this.
00:52:40
Speaker 8: If you can get my dog to live forever, I'm definitely on board.
00:52:42
Speaker 4: I love that love.
00:52:43
Speaker 13: I love dogs, especially large dogs live you know, shorter lives. I think this is where they're starting with like big dogs and trying to extend their lives.
00:52:53
Speaker 4: Fascinating story. Ellen Hewett, tech features writer at Bloomberg News whose story Silicon Valley's Quest to Live Forever has many warring fraction that is featured in the Longevity issue, like we mentioned of BusinessWeek magazine available on newsstands, on the Bloomberg and at Bloomberg dot com slash BusinessWeek, and we also had with us the editor of Bloomberg BusinessWeek, Joel Weber, who joined us on zoom from Brooklyn. Glad we had to chance to chat with them both about the latest edition in the magazine. But stick with us, We're gonna have more coming up. This is Bloomberg.
00:53:28
Speaker 3: I'm brother Marco, a journal How about you let me drive?
00:53:35
Speaker 2: No no, no no please go ve honey please, how do the riding gravel?
00:53:41
Speaker 3: Let's mate, I want to try it.
00:53:43
Speaker 9: Try It's good question.
00:53:49
Speaker 8: This is the drive to the clothes.
00:53:51
Speaker 11: Dot Com trimular thing well BYRN shout it.
00:53:54
Speaker 4: On on Bloomberg Radio, Jasmin and Mike Reagan here in for Carol and Tim today and with just twenty minutes left to go before the closing bell, the S and P five hundred has pulled back from session highs, but does remain on track for an eight week run. So who better than to walk us through the last two months in the stock market than Adam Sarhan, chief executive officer at fifty Park Investments, joining us on Zoom from Florida and Adam, I just want to point out that you actually correctly called the rebound in US stocks at the beginning of this year, and then also back in March when we had all of those regional bank stretches stresses. Rather, you got that call right as well as far as what it would mean for still a resilient economy and how that was actually what was going on in the market wasn't concerning for those banks and actually a bullish sign for the broader market. And as we are at the end of twenty twenty three, please give us a kind of a year in review here as far as what your sort of takeaways are as you're trying to position your portfolios going into next year.
00:54:57
Speaker 14: Well, Jess, thank you so much for having me on the show. So the pleasure, and yes it's right. I'm a big fan of studying market history, and you know the expression market history rhymes and repeats all that fun stuff. And you look at the stock market. The last two big bear markets were dot Com crash back in March of two thousand all the way to October of two thousand and two, and then you had the Oait crash. We all right about a year ago was twenty twenty two. I looked at market history, I said, what if history repeats itself? So in October of two thousand and two, the stock market bottomed. This is the Nasdaq one hundred. Let's look a the QQQ just for one index, right, And then in March of two thousand and three, we had a new bull market that officially began, and then it rallied for the next four or five years, all the way unto October of over seven. And then in eight the Nasdaq one hundred bottomed in November or Q four of two thousand and eight, but a new bull market didn't begin until March of two thousand and nine. And I said, in about a year ago, I said, in twenty twenty two, I said, you know what, what if that October twenty twenty two bottom on that SEATI report that we all remember was indeed the bottom, not a bottom, but the bottom. And then in March of this year, I noticed two hundred and seventy five cup and handle patterns. It's a bullish technical pattern that this doesn't typically happens in new bull markets. And one or two or three might be bullish, four or five might be bullish, but two hundred and seventy five of them. I published the report and the rest is history. So at the time I said, this happened twice before, where the market bottom in Q four and then a new bowl began in three in March of three, and then it happened again this time around in October of twenty two and then March of twenty twenty three. So the year in review. We began the year in January, had a nice rally up until February, then early February pulled back. March happened. You had the regional bank concerns with Silicon Valley Bank and so on and so forth, but it wasn't enough to break the market down. We actually stabilized in March and we rallied all the way up until July, and a lot of that was due in part to two majors. In twenty twenty two, the two major headwinds for the market were higher yield than a ten year interest rates going up, to put it simply, and then the dollar going up. This year, those trends, you know, somewhat changed where the beginning of this year the dollar and yield and ten year both fell up until midyear, and then in July, both those headwinds came back. You saw the yeald in the ten year spike again in the spring all the way up until October, and then you saw the dollar rally as well, and then the stock market fell. Now July to October, let's you know, focus on that part. You had a pullback in the market. You had three waves down or three legs down. And I noted in the summer that we're forming a bullish massive cup and handle pattern. If you look on a monthly chart of the S and P five hundred and or the NASDAQ and or NASDAQ one hundred, let's look at the QQQ, the NASDAK one hundred, and this is I cited at the time.
00:57:51
Speaker 1: I said, this is a.
00:57:52
Speaker 14: Very bullish setup. We need to handle the form. It formed from July to October, and then in November again the year interview I had basically told us they indirectly said that we're done raising rates. The market just took off.
00:58:05
Speaker 4: Then this Well, what a bosk, though, is is that with all of this in the backdrop, does that make you bullish still going into twenty twenty four.
00:58:15
Speaker 14: Yeah, So that's where I was going. I said in November, you had the Fed tell us, hey, we're done raising rates. In December they signaled they're going to begin cutting rates. So you broke out of that bullish cup and handle pattern. Now focus on twenty twenty four. We had a phenomenal year in the market, and if you notice, just something really important happened too, where leadership expanded. For the first two thirds of this year, it was predominantly the Magnificent seven, Big cap tech and semiconductors were the driver of the market massively this year. But since November and in December, after the FED pivot, we saw a paradigm shift where we even said in one of your articles recently that inflation is no longer public. I mean number one, that's number one.
00:58:53
Speaker 3: Number two.
00:58:53
Speaker 14: A lot of the areas that were repressed, think of it, basketball underwater, that were held down because of higher interest rates exploded. Now going into next year, I'm of the belief that we're in the early innings of a new bull market that could last the next three to five years, if not longer. So, and a lot of leadership is expanding. It's not just big cap tech, the Magnificent seven. We're seeing the areas that were beaten down for most of twenty twenty two and most of twenty twenty three really begin to lead. And I love that.
00:59:22
Speaker 6: Hey, hey Adam, let's let's rewind a little bit and talk about that big cap tech because you know, in addition to the bullish chart situation that you pointed out, you know, we had this sort of wildcard thematic trade going on with artificial intelligence. Now I'm looking at the biggest movers of the year, upmovers in Nvidia up two hundred and thirty three percent, Meta platforms up one hundred and ninety three percent.
00:59:44
Speaker 8: Real Caribbean up one hundred and fifty eight percent. Just I don't know if that's an AI play.
00:59:47
Speaker 6: Maybe the second is that if the AI does all work, we'll all take cruises.
00:59:52
Speaker 4: Right.
00:59:52
Speaker 6: But I'm wondering what you think about. You know, obviously, in Vidia's put some numbers on the scoreboard as far as AI, some of the other bet fisheries not so much. How much patience will investors have with this AI theme? Are they going to want to see numbers in the four Q reports and the one Q reports And if they don't see them, we could get some some sort of pullback in these AI team plays.
01:00:16
Speaker 3: Yeah, it's a really good point.
01:00:17
Speaker 14: So there's two sides of the coin here, full disclosure on long the video for just for disclosure purposes, and the video's earnings if you want to see, like the proof is in the pudding. Last year, in twenty twenty two, they earned four dollars forty four cents. This year twenty three, they're expected to earn three dollars thirty four cents. Now get ready, in twenty four they're expected to earn eleven dollars and twenty two cents, and twenty five they're expected to earn eighteen dollars and seventy three cents. So to recap, in twenty twenty three, they're going to earn three dollars thirty four cents. Two years later, almost twenty dollars. That is monstrous, ginormous growth. Now, other companies that are jumping on the AI bandwagon have to put up the numbers, and if they're not able to put up the numbers, this could be another fad, just like we had by the way many times throughout the decades in Wall Street. I won't go too far back. Just recently we had the marijuana stocks years ago, three D printing stocks and all these different rages. Oh my god, things are going to change and next thing you know, they just yeah he's album.
01:01:16
Speaker 4: Hey Adam, we only have about ten seconds left. But what's your top pick to buy next year stock?
01:01:21
Speaker 14: I'd say the individual stocks. I'd go with the video for sure.
01:01:26
Speaker 4: There we go, so people sticking with then video Mike after the huge rally this year. That's Adam, Sorry and chief executive officer at fifty Park Investments joining us on zoom from Florida. We'll have more coming up. This is Bloomberg.
01:01:40
Speaker 1: This is the Bloomberg Business Week podcast. I'll a a little Apple, Spotify and anywhere else you get your podcasts. Listen live weekday afternoons from three to six Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and oh my is on the Bloomberg terminal.
01:02:10
Speaker 12: MHM
