INSIGHT ON EARLY
MORNING, TRADING. I'M JOINED BY
ADAM KUZ'S THE PORTFOLIO
MANAGER AT ENTRUST CAPITAL
MANAGEMENT ADAM GOOD TO HAVE
YOU HERE WITH US THIS MORNING,
THE S AND P 500
IS UP ALMOST ONE PERCENT FOR
THE WEEK LESS THAN HALF A
PERCENT AWAY FROM AN ALL-TIME
HIGH AND SO EVEN AS WE'RE
SEEING SOME THINGS HIGHS ACROSS
THE BOARD TO KICK OFF TODAY'S
ACTIVITY. WHAT ARE YOU KEEPING
AN EYE ON THIS WEEK GIVEN THE
BROADER CONTEXT OF WHERE WE SIT
IN RELATION TO SOME OF THOSE
ALL-TIME HIGHS.
>> YEAH, I THINK ONE OF THE BIG
DRIVERS REALLY IS GOING TO BE
WHERE WE FIND GROWTH GOING
FORWARD IT'S BEEN A GREAT
YEAR FOR STOCKS IN P 500 YOU
SAID JUST UP OVER 20% HERE
TODAY SO IT IS
LOOKING FORWARD TO WHAT THE THE
REMAINDER OF THIS YEAR AND IN
2022. WE'VE GOT A REALLY GOOD
RETAIL SALES NUMBER SO WE SEE
THAT THE CONSUMER CONTINUES TO
BE FAIRLY STRONG
AND DESPITE SOME ISSUES WITH
THE SUPPLY CONSUMERS ARE STILL
ABLE TO SPEND MONEY SO I THINK
THAT THAT IS POSITIVE FOR
GROWTH HERE IN
THE 4TH COLDER SO WHAT WE'RE
LOOKING AT IS CONTINUING TO
PLAY
WHICH WERE THROUGH 2021 WHICH
ARE THE CYCLICALS TECHNOLOGY
STOCKS. WE THINK THAT'S GOING
TO CONTINUE TO OUTPERFORM GOING
THROUGH THE REST OF THE YEAR
AND IN LOOKING TO SHIFT AS
GROWTH POSSIBLY SLOWS IN
2022.
>> THE VALUATIONS OF TECHNOLOGY
STOCKS HAVE CONTINUALLY COME
INTO QUESTION HERE,
YOU KNOW WHERE DO YOU BELIEVE
THAT KIND OF GOING FORWARD FROM
THIS POINT HOW FAR OUT ARE THE
MARKETS LOOKING FROM YOUR
PERSPECTIVE.
>> VALUATION IS SOMETHING THAT
IT ALL AND THAT YOU NEED TO
FOCUS ON RIGHT NOW BECAUSE WE
YOU JUST
ORACLE LEVELS. BUT WHEN YOU
LOOK AT COMPANIES LIKE
MICROSOFT OUT FOR THAT I ON A
PRICE EARNINGS RATIO BASIS THAT
RIGHT IN LINE WITH THE S P
500. SO IT RIGHT NOW THE
VALUATIONS ARE ARE ARE DRIVEN
LONG-TERM GROWTH WHICH
IN TURN.
>> BIGGEST DRIVER.
>> WHETHER VALUATIONS CAN
BE SUSTAINED WHERE THEY ARE
RIGHT NOW IS WHAT INTEREST
RATES TOO SO IF WE SEE INTEREST
RATES RISE. WE THINK THAT'S
GOING TO HAVE A NEGATIVE
CORRELATION ON
TECHNOLOGY STOCKS.
>> IF INTEREST RATES REMAIN
LOWER EVEN
MOVE LOWER. WE THINK TECHNOLOGY
VALUATIONS CAN REMAIN WHERE
THEY ARE FOR THE
FORESEEABLE FUTURE.
>> IS THERE CONCERN THEN THAT
THE FED MAY RAISE RATES TOO
LATE RELATIVE TO THE RISING
INFLATION, THE CONTRACT.
I MEAN I THINK THEY'RE
PURPOSELY ACTING SLOW HERE IN
THE U WE'RE COMING OFF OF MANY
YEARS THE INFLATION RATE WAS
BELOW
THE TARGET.
>> AND SO YES WE'RE SEEN
ACCELERATION HERE. BUT IT'S
REALLY SUPPLY SIDE RATHER THAN
IF THIS IS THE MAN DRIVEN OR
MONEY
SUPPLY ISSUE. THAT I MIGHT
AGREE WITH HE SAID THAT THE FED
COULD ACT
TO SLOWLY BUT RIGHT NOW I THINK
THE TIMING OF THE FAT IS LESS
IMPORTANT TO INFLATION.
THEN REALLY THE SUPPLY CHAIN
REALLY A THING OF THE DAY WE
DON'T THINK WHAT THE FED DOES
IS GOING TO HAVE A MATERIAL
IMPACT ON INFLATION IS GOING TO
BE DRIVEN BY SUPPLY CHAIN FOR
THE NEXT 6 TO 12 MONTHS.
>> JUST BECAUSE SUPPLY CHAIN
AND WE'VE
BEEN TRACKING A LOT OF THE
MAJOR RETAIL FIRES, THIS WEEK
THAT I'VE MET EARNINGS REPORT
TIME TO ADDRESS SUPPLY CHAIN
AND INFLATION. AT ONE POINT OR
TODAY WE GOT TARGET AND LOWE'S
THOUGH THEY POSTED TO BE DONE
BUT TOP AND BOTTOM LINES AND
THEIR KEY
3 EARNINGS REPORTS IN-STORE
SALES ALSO BEATING
EXPECTATIONS, BOTH COMPANIES
HOWEVER DID NOTE THAT SUPPLY
CHAIN CONSTRAINTS MAY LEAD
INTO THE 2ND HALF OF 2022.
I'D LOVE TO GET YOUR OUTLOOK ON
SOME OF THESE RETAILERS OUT WE
GOT HOME DEPOT AND WALMART AS
WELL
THIS WEEK AND WHAT HAPPENS TO
THE RETAIL SECTOR IF SUPPLY
CHAIN ISSUES DO PERSIST FOR AS
LONG AS SOME OF THEM ARE
FORECAST.
>> YES AND I THINK THAT'S OUR
BIGGEST CONCERN IN 2022 WHEN
YOU'RE LOOKING AT THE POTENTIAL
FOR STAGFLATION WE CONTINUE TO
SEE INFLATION. BUT YOU SEE A
GROWTH BEGAN TO SLOW AND WE
THINK THAT IF GROWTH IS GOING
TO SLOW IS GOING
TO CUT COME FROM THE FACT THAT
RETAIL COMPANIES LIKE TARGET
WALMART JUST
SIMPLY CAN'T GET THEIR PRODUCTS
ON THEIR THAT THAT THERE'S
DEMAND FOR SO WE SEE THAT AS A
REAL ISSUE.
WE THINK IT'S GOING TO LAST
LONGER. THEN WHAT MAY MANY
PEOPLE BELIEVE WHETHER IT'S THE
CHIP SHORTAGE WHICH WE THINK IS
GOING TO TAKE A LOOK A LOT
LONGER THAN
WHAT'S EXPECTED OR JUST THE
FACT OF REALLY THE FACTOR WHEN
YOU GET MORE PEOPLE TO WORK WE
NEED TO GET TRUCK MORE TRUCK
DRIVERS TO GET THINGS OUT OF
COURTS. WE NEED PEOPLE WORKING
AT THE SO THAT WHEN THE SHIPS
ARE COMING IN WITH CONTAINERS
THEY CAN EFFECTIVELY GET ON
TO TRUCKS. SO THAT THAT'S
REALLY WHERE THIS IS GETTING
CHOKED IS THE LABOR FORCE
PARTICIPATION RATE STILL HAS A
61% SO UNTIL WE CAN ENTICE
WORKERS BACK INTO THE
WORKFORCE. I THINK THAT THAT'S
GOING TO CONTINUE TO
TO ENDURE. SUPPLY LOCKING SO
YES THAT WILL HAVE A NEGATIVE
IMPACT ON EARNINGS GROWTH OF
THE
RETAIL SECTOR AND AS THE U.S.
ECONOMY AS
A WHOLE.
>> YEAH THAT THAT LABOR FORCE
PARTICIPATION RATE HAS
ESSENTIALLY BEEN RANGE BOUND AS
WE'VE BEEN TRACKING THAT OVER
THE LAST SEVERAL
REPORTS HERE. AND DESPITE THIS
WE SEE A SOMEWHAT RESILIENT
CONSUMER WE TAKE A LOOK AT
RETAIL
SALES DATA. EVEN CPI LAST WEEK
AS WELL AROUND SPENDING SLOWING
AS WE GO INTO THE HOLIDAY
SEASON.
>> AND I REITERATE I THINK I
THINK IF SPENDING SLOWS IT'S
IT'S REALLY GOING TO BE DONE BY
THE FACT THAT PEOPLE CAN BUY
WHAT THEY WANT TO WRITE YOU
WANT THAT NEW
70 INCH TV. YOU'VE GOT THE
MONEY IN YOUR BANK ACCOUNT TO
BUY IT, BUT IT'S JUST NOT THERE
ON THE SHELVES AND I THINK
THAT'S GOING TO BE THE BIG
DRIVER. I THINK THERE'S PLENTY
OF DEMAND. FROM THE CONSUMER
SIDE. I THINK WE'VE SEEN YOU
KNOW SOME FLUCTUATIONS AND
CONSUMER CONFIDENCE. IF THAT
WAIVERS MAYBE THE CONSUMER AND
BEGINS TO BACK OFFICE ARE
WORRIED ABOUT THEIR THEIR JOBS
OR WHAT NOT
RIGHT NOW THERE'S MORE
AVAILABLE JOBS AND PEOPLE
LOOKING FOR THEM SO I DON'T SEE
THE CONSUMER
TO SCARE HERE THAT THERE MAY BE
A POTENTIAL FOR THE LOSER JOB
WHICH WOULD CAUSE
HIM TO YOU KNOW INCREASED
THEIR SAVINGS RATE AT THE AT
THE MOMENT WE WE THINK THAT THE
SAVINGS RATES ARE GOING TO
BEGIN TO IF THERE ARE THINGS
FOR CONSUMERS TO BUY OTHERWISE
THEY CAN CONTINUE TO SAVE AND
IT WE WILL SEE
YOU KNOW OVERALL SALES DECLINE,
BUT IT WILL NOT BE DRIVEN BY A
CONSUMER
IS FEARFUL.
>> THE FUTURE SEMICONDUCTORS
PRECIOUS METALS, ANOTHER ERROR
ONE TO DISCUSS HERE. BRIEFLY
THEY'VE BEEN ON A TEAR OVER THE
LAST FEW SESSIONS AS AN
INVESTMENT IN RENEWABLE ENERGY
AND TV'S RAMP.
I WANT TO GET YOUR TAKE ON THE
FUTURE OF THE TV MARKET,
PARTICULARLY HERE AS WE'VE BEEN
TRACKING NAMES LIKE
MOOS SAID AS WELL AS RIVIAN AND
THEIR RECEPTION INTO THE PUBLIC
MARKETS THIS YEAR AND WHERE
MORE BROADLY PERHAPS THE
RENEWABLE ENERGY SPACE SHOULD
WHERE IN THERE SHOULD INVESTORS
BE LOOKING RIGHT NOW.
>> YEAH, I MEAN I THINK THE
MARKET IS ABSOLUTELY IT THE
FUTURE
IF YEAR IN DENIAL ABOUT THAT
YOU'RE GOING TO INVESTMENT
SO IT YOU KNOW I FROM OUR
STANDPOINT TESLA IS GOING TO
HAVE
A DIFFICULT I'M GOING FORWARD
IS GOING TO BE MORE COMPETITION
MOVING INTO THE SPACE AND WHEN
YOU LOOK AT GERMAN
MANUFACTURERS ARE COMING TO
MARKET WAS REALLY GREAT
PRODUCTS AND THEN CHINA.
IS ALSO COMING WITH THEIR THEIR
OWN PRODUCTS AND IS GOING TO BE
MORE COMPETITION FOR US STOCKS
LIKE TESLA I DOESN'T MEAN THAT
IT DOES SO IT
IS GOING AND HAPPENING TIME
SOON FOR BUT YES WE THINK THAT
IF WE CAN GET PAST THE SUPPLY
CHAIN ISSUE WITH.
SEMICONDUCTORS THAT
THE MARKET IS GOING TO JUST
CONTINUE TO ACCELERATE AND
THOSE WHO HAVE SET THEMSELVES
UP WELL
AND TESLA HAS SET THEMSELVES UP
WELL TO TO WHETHER THE
SEMICONDUCTOR THEN MANY WILL BE
MORE PROFITABLE I THINK THE
THE DIFFICULTIES FOR FORD AND
GM IS THAT THEY SHUT DOWN
THERE. WORSE FOR SEMICONDUCTORS
AND SO THEY'RE PAYING THE PRICE
NOW WHERE THEY CAN ACTUALLY
PRODUCE EVEN THE MARKET WITH
WHERE THE DEMAND IS SO YEAH.
IF YOU CAN GET TO THAT IF
YOU SET YOURSELF UP WELL IF
YOU'RE PRODUCING OR IF YOU'RE
DESIGNING YOUR OWN CHIPS LIKE
TESLA DOES I THINK YOU'RE SET
UP BUT IF YOU'RE A KIND OF A
HOLE INTO THE MARKET YOU'RE
GOING TO HAVE A DIFFICULT
TIME BUT YOU KNOW THAT THIS WE
ALL SEE SEMICONDUCTOR SHORTAGE
ANY ANYTIME SOON IF YOU LOOK AT
THE DEMAND FOR
FOR ALL OF THE PRODUCTS RIGHT
USE SEMICONDUCTORS NOW I MEAN
YOUR LIGHT BALL NOW HAS YEAH,
YOU KNOW MICROCHIPS IT SO
AND THEN TODAY THAT DEMAND IS
NOT GOING AWAY. IT'S ONLY GOING
RAMP UP IN THE PROBLEM
IS THAT SEMICONDUCTOR A
FACTORIES TAKE SUCH A
A LONG TIME TO RAMP UP THEIR
VERY EXPENSIVE SO IT TO SAY
THAT THIS IS
GOING TO RESOLVE ITSELF ANY
TIME SOON 6 TO 12 MONTHS IS IS
IS A DREAM FOR PLANS TO TAKE 3
TO 5 YEARS
TO BUILD. SO THIS IS GOING TO
BE A DIFFICULT TIME FOR FOR
THOSE THAT ARE RELYING ON
SHIPS. BUT IT WILL BE A BENEFIT
TO THOSE THAT PRODUCE AND THAT
IS AND YOU KNOW THEY CAN
INCREASE THEIR PRICING THE
MARGINS ARE GOING TO GO UP SO
YES THAT'S WHY WE'RE SEEING AN
ACCELERATION IN THE
SEMICONDUCTOR STOCKS AND WE