Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business
Speaker 1: Week inside from the reporters and editors who bring you
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Speaker 1: tech news. The Bloomberg Business Week Podcast with Carol Messer
Speaker 1: and Tim Stenebek from Bloomberg Radio.
Speaker 2: Well, cross it op your list, folks.
Speaker 3: We got that first inflation print of the week earlier
Speaker 3: this morning. US consumer prices rose at a firm pace
Speaker 3: in the month of November, in line with expectations, solidifying
Speaker 3: expectations that yes, indeed the essential bank, the FED, should cut.
Speaker 2: Interest rates next week.
Speaker 3: As for the so called Core Consumer Price Index, the
Speaker 3: Core CPI that backside, of course, as you know the
Speaker 3: food and energy costs, they can be volatile. Well, it
Speaker 3: increased three tens of a percent for a fourth straight month.
Speaker 4: Tip the US Treasury rates dipping on the news with
Speaker 4: one on the inflation read and the market reaction and
Speaker 4: what it all means for US rates meeting next week
Speaker 4: and also what things might look like in twenty twenty
Speaker 4: five with us in Bloomberg News Economics editor Molly Smith.
Speaker 4: She's here in the Bloomberg Business Week Studio. Also along
Speaker 4: with Bloomberg News chief correspondent for Global macro Markets Liz McCormick,
Speaker 4: joining us from New Jersey. Molly, I do want to
Speaker 4: start with you walk us through the CPI report, because
Speaker 4: it was kind of bang on when it came to
Speaker 4: what economists and surveyed by Bloomberg would think.
Speaker 5: Also, any revisions to the prior.
Speaker 6: Month, No revisions.
Speaker 7: But that's the thing is that this was exactly in
Speaker 7: line with expectations. And if you were to just look
Speaker 7: at those numbers Zough in isolation, you think like zero
Speaker 7: point three percent on the core four months in a row.
Speaker 7: You take that times twelve, that's three point six percent.
Speaker 7: If you were to annualize that rate, that's clearly not
Speaker 7: two percent inflation. That's not consistent with that target. It's
Speaker 7: well above it. And we're thinking, why are we sitting
Speaker 7: here talking about cutting interest rates next week? But that's
Speaker 7: exactly the thing is that we were, the markets were
Speaker 7: really bracing for hopefully it's not going to be worse
Speaker 7: than expected, and thank god it wasn't. So green light
Speaker 7: fed you cut rates next week.
Speaker 3: So I expects, Okay, so it wasn't worse than everybody thought.
Speaker 2: But as you said, we still have inflation.
Speaker 6: We still have inflation.
Speaker 7: And interestingly, I took a look back at the estimates
Speaker 7: in the Bloomberg survey just to see was anyone expecting
Speaker 7: point four nobody h estimates were zero point two percent
Speaker 7: and point three percent, So if anything, maybe we would
Speaker 7: have hoped for surprise to the downside. But again, the
Speaker 7: relief was just that it did not come in worse
Speaker 7: than expected. So I think that's just really good enough
Speaker 7: right now. Obviously, I'm sure Liz would have a lot
Speaker 7: more to say about.
Speaker 3: That, So Liz, come on in on it. You did
Speaker 3: write about the market reaction, you track it. We've also
Speaker 3: had a treasury auction, which we'll get to in just
Speaker 3: a moment.
Speaker 2: Talk to us about market reaction.
Speaker 3: We did see some movement right after the data.
Speaker 8: Yeah, No, I think Molly nailed a lot of it,
Speaker 8: because it is true that we, you know, right after
Speaker 8: the data, Carol, we had two year yields really tumble.
Speaker 9: Now they're about flat.
Speaker 8: I'll get into, you know, why we're oscillating around, but
Speaker 8: I think, yeah, remember the backdrop was Friday, we had
Speaker 8: that payroll report that everyone was bracing for as well,
Speaker 8: and that came out let's call it mixed enough, right,
Speaker 8: the people thought, because a lot of the Fed officials said, like,
Speaker 8: especially Governor Waller, you know, I think I'll cut in December,
Speaker 8: but I got to see all the data and he
Speaker 8: listed all the data right, which included jobs and CPI,
Speaker 8: PPI retail sales a bunch of other stuff. So we thought, oh,
Speaker 8: jobs was okay, lean into the cut a little bit,
Speaker 8: so that pricing went up for that, and then we're like, well,
Speaker 8: we have a you know, inflation next week. And like
Speaker 8: Molly said, it was just bang on. But you know,
Speaker 8: I'm becoming a little bit of an economist.
Speaker 9: Scary maybe, but.
Speaker 8: I thought so too, if you like step your head
Speaker 8: back and say, wow, you know, over three percent analyzed,
Speaker 8: it's not really good number, and the trend has not
Speaker 8: been tracking in the right direction.
Speaker 9: But I think for the bond market they feel like, you.
Speaker 8: Know, especially because let's remember, looking forward, we have so
Speaker 8: much uncertainty.
Speaker 9: We know President Trump won, we know there was.
Speaker 8: A Republican SUITEP at Congress, but we now we don't
Speaker 8: really know what's going to happen, how much of the
Speaker 8: tariffs just a bargaining tool, how much we'll go through,
Speaker 8: will you know every well, even if they have all
Speaker 8: the same you know, politicians on the same party, are
Speaker 8: they going to get everything through they want?
Speaker 9: So now the bomb.
Speaker 8: Market's like, yeah, kind of, we don't know what happens
Speaker 8: next year, nor does the FED. Pal said, we're starting
Speaker 8: to try to model all the scenarios. So but it
Speaker 8: was enough that they think the Fed wants to get
Speaker 8: one more cut in while they know what they know, right,
Speaker 8: But then you're looking to next year.
Speaker 9: Uncertainty and you know, Molly can talk to this too.
Speaker 9: There's a lot of uncertainty of like kind of where
Speaker 9: the end is, what is neutral? You know, what happens
Speaker 9: the run rate? Right?
Speaker 8: I mean that's the I feel like I keep saying
Speaker 8: neutral the new black.
Speaker 9: Everyone keeps bringing it up.
Speaker 8: So I think that's why the market kind of rallied.
Speaker 9: It now is like stabilizing.
Speaker 8: But it was enough to say, Okay, we think for
Speaker 8: sure they're going to cut in December, which is next week.
Speaker 9: Right.
Speaker 4: Why Why though, there seems to be this disconnect between
Speaker 4: what the data says and what traders think is going
Speaker 4: to happen, Molly, because like you said, you know, we're
Speaker 4: not at two percent. Well, and it doesn't seem like
Speaker 4: necessarily this last is coming as easily as many people
Speaker 4: thought it would.
Speaker 7: Well, I think, you know, something I always like to
Speaker 7: think about is that markets see what they want to see,
Speaker 7: and that you know, if we're going to price in,
Speaker 7: you know, before the CPI data today, an eighty six
Speaker 7: percent chance that the Fed is going to cut next week.
Speaker 7: There's not really a whole lot of room for that
Speaker 7: to not happen, Like the numbers would have had to
Speaker 7: have been so awful right in so many levels to really,
Speaker 7: you know, nix that possibility. The other thing, though, is
Speaker 7: that easy to look at this one month in isolation
Speaker 7: and think, okay, that zero point three percent that we've
Speaker 7: now had for four months in a row like that
Speaker 7: clearly doesn't seem to indicate that inflation is coming down.
Speaker 7: But you look at this from a broader perspective where
Speaker 7: inflation was two and a half years ago and how
Speaker 7: high rates got in order to bring that down, and
Speaker 7: that rates are still very high. They haven't really come
Speaker 7: down a whole lot, right, We've only had seventy five
Speaker 7: basis points of cuts so far after raising them up
Speaker 7: to five and a half percent, and that was when
Speaker 7: inflation was at nine percent right now inflation is in
Speaker 7: the two to three percent area. So so rates do
Speaker 7: need to come down. It's just more now about the
Speaker 7: pacing and the spacing of the cuts.
Speaker 3: I keep thinking too about how much of the FED
Speaker 3: rate increases have they worked their way completely through the
Speaker 3: economy at this point, Molly. And then as you say,
Speaker 3: we've only had a few cuts here and we'll see, right,
Speaker 3: all of this kind of has to work its way through.
Speaker 7: Well, that's I think what you know, central bankers are
Speaker 7: always wondering about these you know, so called long and
Speaker 7: variable lags of monetary policy. And I think there's also
Speaker 7: a lot of reason to say though that a lot
Speaker 7: of the disinflation we've seen you could probably argue you
Speaker 7: has nothing to do with interest rates and just had
Speaker 7: you know, people just getting a little bit back to
Speaker 7: normal after the pandemic distortions.
Speaker 3: Liza, I want to bring you back in because I
Speaker 3: did think about you know, we've had some auctions this week,
Speaker 3: had a ten year right just today, we had three
Speaker 3: year notes yesterday nearly matching expectations.
Speaker 2: We've got a thirty year bond reopening tomorrow. But tell
Speaker 2: us about what.
Speaker 3: We're seeing in terms of the auctions and what that
Speaker 3: says to us about investors willing to kind of step
Speaker 3: up to the plate here.
Speaker 8: Yeah, I mean today's ten year note auction went very well.
Speaker 8: You know, the yield that the auction came below the
Speaker 8: one issue, which is a sign of good demand.
Speaker 9: And I think, you know, every investor.
Speaker 8: I talked to, whether I want to talk to them
Speaker 8: about that or not, they bring up, well, you know,
Speaker 8: rates at above four percent, and hey, if we went
Speaker 8: back to four and a half on the on the
Speaker 8: ten year, it's a buying opportunity because they're looking kind
Speaker 8: of longer space, Like, we do have a positive total
Speaker 8: return for the treasury market this year, not a lot,
Speaker 8: but you know, a little over two percent, and they
Speaker 8: were up a little bit last year, and you figure
Speaker 8: you're getting these, you know, coupons that are over four percent,
Speaker 8: even if the FED doesn't end up cutting a lot,
Speaker 8: so you don't get a lot of you know.
Speaker 9: Capital appreciation.
Speaker 8: People feel like, hey, you know, the these levels of yields.
Speaker 9: Remember for years we had.
Speaker 8: Such low yields and we don't know, no one thinks
Speaker 8: we're going back to this uber zero rate environment. But
Speaker 8: they also don't think we're going back to you know,
Speaker 8: ten percent. So if you can lock in getting these
Speaker 8: higher yields above four percent, that's why you're seeing you know,
Speaker 8: bouts of good demand.
Speaker 9: But there's so much uncertainty.
Speaker 8: You still people more are leaning towards you know, call
Speaker 8: it the middle to the belly of the curve, to
Speaker 8: five year notes, that kind of thing.
Speaker 9: But we did see good demand today for.
Speaker 8: Tens and then I think it's the fiscal that we
Speaker 8: really want to know. What's going to happen to the
Speaker 8: long end? What when does debtish one start to increase?
Speaker 8: Is the new Treasury secretary who has to be confirmed,
Speaker 8: does he accomplish some of the things he would like
Speaker 8: to do as far as he says he wants to
Speaker 8: reduce the deficit as a share of GDP and a
Speaker 8: lot of things. So I think that's why the jury's
Speaker 8: still out.
Speaker 3: Just quickly, Molly, twenty seconds PPI. Can this do anything?
Speaker 3: What we get tomorrow on PPI change the Fed's thinking
Speaker 3: just quickly.
Speaker 7: No, I think it's really matter. What PPI really matters
Speaker 7: more for now is like looking at PCE just to
Speaker 7: add a few more acronyms to the list. So we
Speaker 7: get the Fed's favorite inflation gauge later this month depends
Speaker 7: a lot on what comes in tomorrow, So that's really more.
Speaker 2: The ticket gets factored into it, exactly.
Speaker 7: Some of those categories feed through.
Speaker 3: All Right, great staff, guys, both of you, thank you
Speaker 3: so much. Bloomberg News Economics editor Molly Smith here in
Speaker 3: studio and Bloomberg News chief correspondent for Global macro markets
Speaker 3: are one and only Liz McCormick out there in New Jersey.
Speaker 2: And that is today's economic data.
Speaker 4: All right, Well, we're getting some headlines here too, some
Speaker 4: breaking news. FBI Director Christopher Ray resigns his position. This
Speaker 4: according to Fox News. The New York Times also confirming that,
Speaker 4: saying that Christopher Ray has told employees at the bureau
Speaker 4: today that he intends to resign before the next Trump
Speaker 4: administration begins. Remember, he was nominated by Donald Trump to
Speaker 4: be FBI director. But it also comes as the President
Speaker 4: elect has expressed that he would like to nominate Cash
Speaker 4: Ptel to serve as FBI director.
Speaker 2: So the news out of DC certainly continues.
Speaker 3: And that kind of gets us to some news that
Speaker 3: did evolve the FTC yesterday and a ruling. We want
Speaker 3: to get to some company news, and this is on.
Speaker 3: Albertson's filed a lawsuit against Kroger, claiming it failed to
Speaker 3: exercise best efforts and take any and all actions their
Speaker 3: words needed to secure regulatory approval for the company's proposed
Speaker 3: twenty four point six billion dollar deal. Meantime, Kroger put
Speaker 3: out a statement they refute the allegations. They say their
Speaker 3: board is evaluating next steps and looks forward to responding
Speaker 3: to claims in courts. So kind of let the court
Speaker 3: when battle begin, or so it feels. Let's get an
Speaker 3: update on this story. We head back to Bloomberg Intelligence
Speaker 3: senior anti trust litigation Alice. Listen to her this morning,
Speaker 3: Jennifer ree here in studio. You were with the gang
Speaker 3: on surveillance. Jen, we caught up with you yesterday late
Speaker 3: breaking headlines.
Speaker 2: I guess we kind of thought that was it.
Speaker 5: Well, I did ask her.
Speaker 4: I said, Jen, do you think you'll be back in
Speaker 4: our studio before the end of the year, And you
Speaker 4: said yes, I think I will.
Speaker 2: Well, both of you are crystal.
Speaker 5: Four hours later, she's back.
Speaker 4: I didn't think it would be today, but you did
Speaker 4: indicate to us that you thought the deal was done.
Speaker 10: Oh yeah, yeah, and it is done. This is now
Speaker 10: not about the deal. This is about whether one or
Speaker 10: both of them reached the contract, the purchase agreement. The
Speaker 10: deal's finished, you know, they are now in extended litigation
Speaker 10: about the merger agreement and whether or not, according to
Speaker 10: Albertson's Kroger breached that agreement. And I think this is
Speaker 10: about the remedy, the remedy that was offered to fix
Speaker 10: the problematic issues. I mean, this was a horizontal agreement
Speaker 10: between two competitors. Both Kroger and Albertsons knew it raised
Speaker 10: antitrust problems. There was no doubt about that, and that's
Speaker 10: why they offered a remedy, because you don't need to
Speaker 10: fix something if it doesn't raise an issue. The remedy
Speaker 10: wasn't good enough, and that became really apparent during the trial.
Speaker 10: It was complicated, it was piecemeal, it didn't completely resolve
Speaker 10: the concerns, and it really had an inadequate buyer. And
Speaker 10: I think the issue here is that Albertsons is probably saying, look,
Speaker 10: that was an inappropriate remedy. We weren't going to win
Speaker 10: with that remedy, and so you didn't use best efforts.
Speaker 10: That's what I'm guessing they're going to say the complaint
Speaker 10: and all the papers are confidential and not available, so
Speaker 10: we don't know the details.
Speaker 3: Well, that's what I wondered if they have a legal case,
Speaker 3: because Alberson said that Kroger willfully right reached the mergent
Speaker 3: agreement by refusing to Divesta's assets needed for anti trust approval. Like,
Speaker 3: how do you you know this world? Like Kroger knew
Speaker 3: probably what needed to be done. I would assume it's
Speaker 3: loyal to get that deal done. How are you looking
Speaker 3: at it as obviously more information will come out, you know.
Speaker 3: I think in a way it's a difficult claim. And
Speaker 3: the reason I say that is because there's a difference
Speaker 3: between the way the Federal Trade Commission might evaluate a
Speaker 3: remedy and the way a judge would evaluate the remedy.
Speaker 10: And what we have seen in the last three years
Speaker 10: because the FDC has been so difficult, really they have
Speaker 10: really not accepted anything. We've seen several cases where the
Speaker 10: parties have gone to the court with what they call
Speaker 10: a fix it. First FTC said remedies insufficient or DJ
Speaker 10: has said it, and the court has said, no, it's okay,
Speaker 10: and I'm going to let the deal close. So in
Speaker 10: some respects Kroger's using their judgment, abiding by legal advice,
Speaker 10: thinking we can go before a judge and we can
Speaker 10: convince a judge this remedy's okay, even if we couldn't
Speaker 10: convince the FTC. And you know, I think that it's reasonable.
Speaker 10: There's a reasonable argument that they might have had success
Speaker 10: in doing that. And so it becomes so subjective and
Speaker 10: such a difficult cause it's.
Speaker 2: A risk, right, It's a risk. Kind of playing your
Speaker 2: card is the right strategy?
Speaker 6: Absolutely?
Speaker 5: Risk?
Speaker 4: Is this typically what happens after regulators got all a deal?
Speaker 4: Do the companies go from sort of being like, hey,
Speaker 4: we're going to be best friends forever, we're going to
Speaker 4: get married to a very quick and acrimonious divorce.
Speaker 9: It is not.
Speaker 10: Typical, but it has happened. And I go back to
Speaker 10: Anthem and Signa Boy. They litigated for several years in
Speaker 10: Delaware after they terminated their agreement. That was when Anthem
Speaker 10: tried to buy Signa. They were blocked in court, then
Speaker 10: it was blocked on appeal, and they both turned around
Speaker 10: and said the other one breached. And the crazy thing
Speaker 10: about that was that Signa was supposed to get over
Speaker 10: one billion and a breakup fee, and then the anthem
Speaker 10: sued them for billions of dollars, and the Delaware court
Speaker 10: basically said, company gets anything. You've just spent a lot
Speaker 10: of money litigating, and neither of you get anything. You know,
Speaker 10: you both breached, but I'm not going to make either
Speaker 10: of you pay each other a fee. And you know
Speaker 10: they it was just such a long, extended effort with
Speaker 10: so much money spent and nothing to show for it.
Speaker 3: Listen, when these legal cases go on, I think about it,
Speaker 3: whether it's an antitrust case, go back to Microsoft years ago, Like,
Speaker 3: you know, these stocks and companies kind of twisted the
Speaker 3: wind for a while.
Speaker 2: Is that part of it?
Speaker 3: I mean Albertson stock was up four percent today, one
Speaker 3: and a half percent. It's down about two thirds of
Speaker 3: one percent as I look right now. But I mean,
Speaker 3: is this Albertson not loving that a stock has been
Speaker 3: kind of kicked around during this process? Like is there
Speaker 3: a financial element of like this has not been great
Speaker 3: for me? And I wonder is Albertson's damage goods? Now?
Speaker 10: Well, you know that's exactly it. That's what a breakup
Speaker 10: fee in a purchase agreement is meant to take care
Speaker 10: of because in that interim period, that long investigation and litigation,
Speaker 10: there is no doubt the stock of the seller is hurting.
Speaker 10: It goes up and down. But the seller also the
Speaker 10: business struggles, right because they can't enter supply agreements. They
Speaker 10: lose employees. You know, they think they're gonna get bought
Speaker 10: and they're going to lose their job, So why not
Speaker 10: take something else that comes along before they're fired? You know,
Speaker 10: we're laid off, and that is why they're supposed to
Speaker 10: get a breakup fee. And I think in this situation,
Speaker 10: Alberts may feel that they've been pretty significantly damaged. This
Speaker 10: has been a long road for a deal. They don't
Speaker 10: usually last this long, and they are supposed to get
Speaker 10: six hundred million a breakup fee, but maybe they feel
Speaker 10: they really need more to be made whole.
Speaker 5: Why not try again again?
Speaker 2: I mean, is it really over?
Speaker 4: Andrew Ferguson, Yes, would serve as the agency's chair. That's right,
Speaker 4: if all goes according to plan?
Speaker 5: Uh huh.
Speaker 4: We just learned that late yesterday we did. Would this
Speaker 4: work under a different chair?
Speaker 10: I don't think it would. So let me say this
Speaker 10: about the next administration. I think there's a lot of
Speaker 10: exuberance in while on Wall Street about deals, and I
Speaker 10: do think more deals are going to get closed, absolutely,
Speaker 10: But at the end of the day, big problematic deals,
Speaker 10: especially between horizontal competitors, are still going to go get
Speaker 10: challenged by an FTC, even if it's run by Andrew Ferguson.
Speaker 10: And I think this is an example of one that
Speaker 10: probably would have been challenged under Republicans.
Speaker 3: To be sure, you're not going to come back later
Speaker 3: this week you might, we will stand by.
Speaker 2: I was standing by for you, Jen.
Speaker 3: Thank you so much, Jenry, Bloomberg Intelligence Senior Anti Trust
Speaker 3: Litigation Alice.
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Speaker 3: It is about the fifty companies to watch in twenty
Speaker 3: twenty five and the list, Tim and I know this
Speaker 3: list well, we've done it, we look forward to It's
Speaker 3: compiled by our Bloomberg Intelligence team.
Speaker 2: A lot of factors go into it.
Speaker 4: Oh yeah, they do a lot of factors and a
Speaker 4: lot of people too. With more we head to London
Speaker 4: into Bloomberg Intelligence. Senior European strategist Tim Craig had Tim,
Speaker 4: we love going through this list every year and remind
Speaker 4: everybody just how it's put together and the catalysts here.
Speaker 4: It's not a list for you know, to tell investors too, Okay,
Speaker 4: these are the companies that you should be investing in
Speaker 4: for these reasons. It's sort of a more holistic approach.
Speaker 4: Talk us through the approach here, absolutely.
Speaker 11: And thanks for having me on. So the fifty Companies
Speaker 11: to Watch are based largely off of a group of
Speaker 11: companies that we have as focus ideas, and our focus
Speaker 11: ideas are where our analysts around the globe, on a
Speaker 11: bottom up basis, sector by sector, are looking for fundamental
Speaker 11: situations where they have a really strong view, a high
Speaker 11: conviction view that they think is out of consensus, that's
Speaker 11: differentiated from what the market is thinking. And we zero
Speaker 11: in on fifty out of that broader list that have
Speaker 11: specific catalysts in twenty twenty five in this case that
Speaker 11: we think will bring them bring the market around to
Speaker 11: our point of view. And you know, it's pretty balanced
Speaker 11: across sectors. About half our US or Americas oriented. The
Speaker 11: other fifty percenters were equally split between Europe and Asia
Speaker 11: about twenty percent or negative, about eighty percent or positive.
Speaker 12: So there's a good balance around.
Speaker 11: And you know, there's lots of different drivers, as you
Speaker 11: rightfully set up front, that are behind the list. You know,
Speaker 11: company about company and sort of theme by theme, and.
Speaker 3: There are some buckets tam that they fall into, whether
Speaker 3: it's cyclical recovery AI related, which tends to hit a
Speaker 3: lot of companies nowadays, but give us a few, give
Speaker 3: us a little bit of context on that.
Speaker 11: Yeah, it's an interesting thing because if I, if I
Speaker 11: actually juxtaposed this.
Speaker 12: Year versus last.
Speaker 11: AI was a big deal a year ago, but it
Speaker 11: was a lot of the big AI companies, the software companies,
Speaker 11: the LLM guys and whatnot. This year it's more geared
Speaker 11: towards the semiconductors and enabling technologies behind it.
Speaker 12: We can get into some of those.
Speaker 11: China was a big deal last year, but it was
Speaker 11: all negative about the property crisis.
Speaker 12: This year, the list.
Speaker 11: Has changed complexion from a China perspective, and it's more
Speaker 11: positive oriented about a cyclical recovery because of the stimulus
Speaker 11: that's coming through, you know. And you can also look
Speaker 11: at other topics such as a broader based cyclical recovery
Speaker 11: in Europe or the US because of lower interest rates.
Speaker 11: There's a lot of innovation and new product stories in
Speaker 11: there as well, and some other factors.
Speaker 3: All right, we want to get into some of the names.
Speaker 3: I know it's alphabetical, but we got to get into
Speaker 3: first of all, Broadcom.
Speaker 2: It's something that we are following in a big way.
Speaker 2: It's in the news today.
Speaker 3: Apple developing a server chip designed especially for AI. Working
Speaker 3: with Broadcom on the chips networking technology as it's six
Speaker 3: point three percent right now, it's one of my top
Speaker 3: gainers today.
Speaker 2: Why are you guys highlighting it?
Speaker 11: Well, Broadcom is interesting because you think of this as
Speaker 11: a simming in doctor company, but it's much more than
Speaker 11: a simbing inductor company because it's gotten into infrastructure software
Speaker 11: and it's one of the few company these that combines
Speaker 11: semiconductors and software. And importantly, it's part of the AI
Speaker 11: theme because a lot of what it's doing feeds into
Speaker 11: the whole AI story, whether it's with Google or Meta
Speaker 11: or what have you. So you know, it's it's a
Speaker 11: pretty intriguing story. And you know software business came from
Speaker 11: you know, their acquisition of VMware a couple of years ago.
Speaker 4: Okay, I want to go to Tesla, another company that's
Speaker 4: in the news today, Shares jumping to a record. That's
Speaker 4: a job with the list guys, six weeks.
Speaker 5: Yeah, pretty amazing.
Speaker 4: How you can see the future out there at Bloomberg Intelligence.
Speaker 5: Why is Tesla on the list this year?
Speaker 11: So Tesla is there, and I'm going to bring in
Speaker 11: one other company at the same time. This falls into
Speaker 11: that category of new products, innovation and whatnot. Obviously, Tesla
Speaker 11: is all about electric vehicles, but importantly, as we look
Speaker 11: into next year.
Speaker 12: There's new vehicles that are coming through an.
Speaker 11: Important refresh of their their core cars, and we think
Speaker 11: that that's an opportunity for a lift. Similarly, Porsche. You know,
Speaker 11: we all like Porsches. I think we all like Porsches.
Speaker 11: I'd like to like a Porsche they got.
Speaker 3: Well, I'm going to tell you you can like it.
Speaker 2: It's just right about ownership.
Speaker 12: Right, yeah.
Speaker 11: Well, it's funny because back in the day, you know,
Speaker 11: these were relatively well, relatively affordable. The way that Porsche
Speaker 11: has driven its business pun intended is to go higher
Speaker 11: and higher end to where you know, the the average
Speaker 11: selling price of their cars are quite significant. And essentially
Speaker 11: what they're trying to do is attain a Ferrari like
Speaker 11: profit margin. And and they've got a number of products,
Speaker 11: whether it's hybrid related or other, that should help propel
Speaker 11: the company along in its profits. And it's more urgents
Speaker 11: along interestingly, and it flies a little bit in the
Speaker 11: face of Tesla, clearly that's pure battery electric vehicle. There
Speaker 11: has certainly been a pause in the US and in
Speaker 11: Europe about that whole sort of transition to electric vehicles
Speaker 11: and Porsha's core.
Speaker 12: Combustion engine business.
Speaker 11: Is doing better than what a lot of people thought
Speaker 11: it was going to do, and frankly, they make more
Speaker 11: money in the old stuff.
Speaker 2: Up's a little bit of a freeze there.
Speaker 3: We're going to try and reconnect with Tim craighead of
Speaker 3: our Bloomer Intelligence team, because you want to keep talking
Speaker 3: through some of these names. He was just talking about
Speaker 3: Porsche and so really highlighting them in a positive way,
Speaker 3: their ability to raise prices. We've talked about high end
Speaker 3: in many ways doing okay, and this is kind of
Speaker 3: but it's not true across the board.
Speaker 4: Yeah, let's get right back to Tim craighead out there
Speaker 4: in London. Looks like we've shored up that connection a
Speaker 4: little bit.
Speaker 5: Tim.
Speaker 4: I want to stick with the transportation theme here and
Speaker 4: talk Airbus because a lot has happened with this duopoly
Speaker 4: over the last year, including at the beginning of this
Speaker 4: year that a door panel blowing out on that seven
Speaker 4: thirty seven Max that Alaska Airlines jet and that sort
Speaker 4: of sent Boeing into its most recent struggles and new
Speaker 4: executive there and the like why air Bus on the list?
Speaker 11: Yeah, So there's a couple of elements that play in.
Speaker 11: Part of it is just pure cyclical recovery. You know,
Speaker 11: there is continued recovery and air traffic. There's continued recovery
Speaker 11: and order flow for airlines, and at the same time,
Speaker 11: there's been a real constraint on supply on the supply
Speaker 11: channel going into the airline or airframe business. We think
Speaker 11: both of these elements are in play for twenty twenty five.
Speaker 11: And to the degree that Airbus, we think continues to
Speaker 11: gain relative market share versus Boweing. You know, there's an
Speaker 11: host of factors that play into a pretty positive view here.
Speaker 2: All Right, I like planes too, but I also like makeup.
Speaker 2: I'm just gonna put.
Speaker 4: You're going to say trains that there is a train
Speaker 4: company on the list, a railroad on the list, right, Steve.
Speaker 2: T's all right, all right, We're going to get back
Speaker 2: to that in a moment.
Speaker 13: St.
Speaker 9: Latter.
Speaker 2: I want to bring that one. It's been under pressure.
Speaker 3: It's a well known company, kind of company in the
Speaker 3: cosmetic business. If you go back to Sdi Latter who
Speaker 3: created it. It has gone through some changes. It's down
Speaker 3: I think more than forty percent this year, but it's
Speaker 3: been on quite a rally since kind of mid November,
Speaker 3: up about thirty percent.
Speaker 2: You guys highlighted it.
Speaker 3: Are you expecting some kind of not liquidation, but some
Speaker 3: kind of I don't know, event that maybe changes the
Speaker 3: fortunes going forward.
Speaker 11: Yeah, well so Stay Ladder is an interesting one because
Speaker 11: you have to love the brands that make up Stay Ltder,
Speaker 11: you know, whether it's Estay Latder.
Speaker 12: Itself or mac or Clinique what have you.
Speaker 11: But it really does seem like they've lost a bit
Speaker 11: of an edge in some of their brands.
Speaker 12: They're also.
Speaker 11: Particularly skewed towards airline I should say, airport travel related retail,
Speaker 11: which continues to be under pressure. Notwithstanding air travel coming
Speaker 11: back spending all duty free has continued to remain a
Speaker 11: pressure point. We think este Lauder continues to have some
Speaker 11: potential for disappointment in the first half of the year
Speaker 11: before maybe things then come around. They've announced a big restructuring.
Speaker 12: That will happen.
Speaker 11: We think actually that restructuring charge that they'll take could
Speaker 11: actually be even more with a with new CEO who's
Speaker 11: coming in place, So stay tuned. By the end of
Speaker 11: next year there could be an interesting recovery. But it's
Speaker 11: a rough road in between.
Speaker 12: Now and then.
Speaker 4: All right, I'm getting back to transit and get to
Speaker 4: say planes make a trained, Yeah.
Speaker 5: Please make up a train.
Speaker 4: Doesn't have the same rings with the John Candy film
Speaker 4: Norfolk Southern.
Speaker 5: What's going on with Norfolk Southern.
Speaker 11: So it's an interesting story. I have a long long
Speaker 11: standing association with Norfolk Southern previously Norfolk and Western. My
Speaker 11: dad worked there for over forty years, Rest his soul,
Speaker 11: and they've had issues over the last couple of years.
Speaker 11: Unlike Union Pacific, which actually was on our list last year,
Speaker 11: that had really gotten moving with precision rail to be
Speaker 11: very precise and the logistics and it's really good for
Speaker 11: customers and it's great for the margins and efficiency. Norfolk
Speaker 11: Southern had been lagging. They have a new CEO who's in,
Speaker 11: they're bringing management and who's much more geared towards this
Speaker 11: precision transportation. We think this is a recovery story in
Speaker 11: two thousand and twenty five somewhat akin to what we
Speaker 11: had set U and P last year.
Speaker 3: Really quickly twenty seconds, you said twenty percent negative eighty
Speaker 3: percent positive stories. Is it always that mix or does
Speaker 3: it tell you anything about kind of sentiment or what's
Speaker 3: going on in the markets. And you just got to
Speaker 3: be really quickly if you could.
Speaker 9: No.
Speaker 11: You know, we try to have a balance of you know,
Speaker 11: this standard view is looking at glass half full, but
Speaker 11: we try to keep an eye out towards where do
Speaker 11: we see expectations that are run too far, too fast.
Speaker 11: And you know, our ideas range from a couple of banks,
Speaker 11: to some consumer product companies to some tech companies.
Speaker 2: Go yes, it's a great list. Pallenteers also on it
Speaker 2: Octa Tapestry. Check it out, everybody.
Speaker 3: Tim Craighead, thank you so much, Senior European Strategists, Director
Speaker 3: of Research Content at Bloomberg Intelligence.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Listen live
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Speaker 1: Just say Alexa playing Bloomberg eleven thirty.
Speaker 2: All right, everybody, We're going to cut to the chase.
Speaker 3: AI it is everywhere, seems to be in every conversation
Speaker 3: that we have, and just one story on our radar
Speaker 3: on this Wednesday, open AI's chief financial officer, Sarah Fryar,
Speaker 3: saying it's reasonable to eventually charge business users thousands of
Speaker 3: dollars a month for its artificial intelligence software to better
Speaker 3: reflect the value of the technology provides to companies.
Speaker 4: I will say the best recipe for grilled chicken I've
Speaker 4: ever gotten from open Ai.
Speaker 2: So you're ready to pony up and pay?
Speaker 5: No, that's the free version. That's the free version.
Speaker 3: All right, let's get some thoughts on YESAI and tech
Speaker 3: trends for twenty twenty five with us as Mike Bechdel,
Speaker 3: he's chief futurist at Deloitte right here in studio. Happy
Speaker 3: almost new year.
Speaker 2: How are you?
Speaker 5: Happy new year to you?
Speaker 14: I'm great and thanks for having me.
Speaker 3: Thank you you guys sixteen years in running your annual
Speaker 3: tech Trends report.
Speaker 2: First of all, step back.
Speaker 3: We always care about what goes into when somebody does
Speaker 3: a survey, some somebody does a report. How do you
Speaker 3: do terman and identify the trends?
Speaker 14: Well, you know, Carol, it's interesting. I like to tell
Speaker 14: my client's futurists are closeted historians, and a big part
Speaker 14: of making heads or tails out of what's coming is
Speaker 14: by looking at what's been and so in our sixteen
Speaker 14: years of tech Trends We've learned that there tends to
Speaker 14: be about six areas that have really buttered enterprise bread
Speaker 14: and by that I mean, you know, made or save money.
Speaker 14: The way we interact with machines, the way we extract insights,
Speaker 14: the way we power the math behind it. Those three
Speaker 14: buckets have always mattered. It might have been older tech.
Speaker 14: Today it happens to be things like AI and augmented
Speaker 14: virtual reality. But the point is that the categories tend
Speaker 14: to stay the same. Then there's a whole bunch, well
Speaker 14: three precisely categories that kind of require us to take
Speaker 14: a breath and make sure we don't mess up today
Speaker 14: and pursue it tomorrow. Cybersecurity always matters, Modernizing old, rusty
Speaker 14: core systems always matters. And then there's the people finance side.
Speaker 14: So those are really the big six, and there's always
Speaker 14: something each year.
Speaker 4: All right, Carol knows, I'm gonna go here because I
Speaker 4: just returned from San Francisco and riding in my first
Speaker 4: way moo.
Speaker 5: Okay, just when is this going to happen?
Speaker 4: And we're all going to be in cars without steering wheels.
Speaker 4: I have no interest in ever driving again.
Speaker 14: We'll be honest, Well, you know, what worst future is
Speaker 14: ever resistant to giving you hard timelines on that, but
Speaker 14: I'll tell you what's him.
Speaker 4: Because this seems to fall into the core modernization, yes
Speaker 4: bucket of your analysis.
Speaker 14: Well, what's interesting is for this year it falls into
Speaker 14: the compute side, namely for twelve fifteen years right mark
Speaker 14: injuries and injuries and Horrowitz He famously said software is
Speaker 14: eating the world. Everything's all about software and bits. And
Speaker 14: I used to be a VC. We wouldn't look at
Speaker 14: something unless it was software as a service. Let me
Speaker 14: tell you this year in our Deloitte Tech Trends, we're
Speaker 14: really starting to see that physical hardware suddenly matters again.
Speaker 14: It's gone from commodity you don't think about to oh
Speaker 14: my goodness, it matters. And part of that tim is robotics.
Speaker 14: Physical robotics. Eighty five percent of the world's economy is
Speaker 14: about physical stuff moving products. So much of the AI
Speaker 14: revolution is about bits and pixels and so things like
Speaker 14: but not limited to WEIMO they're going to be coming
Speaker 14: in hot because people are starting to see WHOA We've
Speaker 14: neglected the physical lived space for a good ten to
Speaker 14: twelve years. So I think it's coming.
Speaker 9: It's coming.
Speaker 2: This decade. How do you feel like, are you ready?
Speaker 5: I was ready years ago. Gid yo right.
Speaker 4: I mean nothing motivates you to like want a future
Speaker 4: like this than having kids and not wanting them to
Speaker 4: get behind the wheel.
Speaker 2: Ever, I hear yeah, you know.
Speaker 14: Well, let's say briefly, I would tell you one of
Speaker 14: the other things we found in our Delay Tech Trends
Speaker 14: research is that, you know, last year, the conversation was
Speaker 14: uh oh, like robots coming for jobs and you know,
Speaker 14: AI replacing.
Speaker 5: People bring it out on.
Speaker 14: Well, let me tell you though, it's it's more nuanced.
Speaker 5: I think it's more optimistic than that.
Speaker 14: What we're seeing this year is it's AI automating muck
Speaker 14: to free folks on higher order magic. So that's what
Speaker 14: you're saying, like, if I can do less of the
Speaker 14: annoying stuff, I'll have more bandwidth to do the interesting stuff.
Speaker 14: And that's what our clients are showing us.
Speaker 3: I am curious, and forgive me, I was actually trying
Speaker 3: to go back to your report that was maybe indicating
Speaker 3: what was going to go on in twenty twenty three.
Speaker 3: But how much of AI did you feel like you
Speaker 3: guys got right? How much were you surprised by because
Speaker 3: the impact it has had, certainly on our conversations and
Speaker 3: the investment world, has been pretty powerful.
Speaker 14: Yeah, you know, you know, Carol, I think the part
Speaker 14: we got right was that, you know, AI isn't new.
Speaker 14: There's an old computer scientist and he had this great quote.
Speaker 14: He said, AI is whatever the heck computers can't do yet.
Speaker 14: And I love that definition. It works ten years ago
Speaker 14: to work ten years from now. But I think two
Speaker 14: years ago on a report, we saw AI as one
Speaker 14: of say six movements that are really going to move
Speaker 14: the market and you know, affect our clients. I don't
Speaker 14: think we were prepared for the fact that it would
Speaker 14: become sort of the foundation for everything.
Speaker 2: Yeah.
Speaker 14: And so you know, we had trends about cybersecurity, Well,
Speaker 14: AI's in there. We had trends about, as we said,
Speaker 14: physical robotics, about HR and human staff augmentation. AI's in
Speaker 14: there and there, And so I think the part we
Speaker 14: might have gotten wrong was not recognizing how foundation will be.
Speaker 14: It's electricity, it's the world Wide Web, It'll be baked
Speaker 14: into every thing.
Speaker 5: Are you scared?
Speaker 2: No, I'm not, No, I'm not.
Speaker 3: I actually think technology can be a really good thing.
Speaker 3: I just you know, I'm hoping the regulatory environment kind
Speaker 3: of keeps up with it.
Speaker 2: Yeah. Yes, trillion dollar question twenty seconds. Is there something
Speaker 2: non AI that you think keep us on your radar?
Speaker 12: Yes?
Speaker 14: I think the big thing we've uncovered this year that's
Speaker 14: off the AI path is quantum cryptography and cybersecurity. Here's
Speaker 14: the punchline and here's the term the headline, Why too Q?
Speaker 5: Remember why two K?
Speaker 3: Yeah, I had a walkie talkie on New Year's Eve.
Speaker 3: I'm ready to talk with my team in case everything
Speaker 3: went offline. Seriously, here at Bloomberg.
Speaker 14: The bummer with y two Q is we don't know
Speaker 14: precisely when it comes, but our clients need to be
Speaker 14: ready for it.
Speaker 2: Why too C?
Speaker 9: Are you ready for that?
Speaker 5: Who knows?
Speaker 3: Mike Bechdel, thank you so much. Over to Loyd gif Futurism.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from two to five pm Eastern Listen
Speaker 1: on Apple car.
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Speaker 1: Business app, or wants us live on YouTube.
Speaker 3: Let's get a little bit into healthcare, which is obviously
Speaker 3: something that has been top of mind for a lot
Speaker 3: of people. Give it the events over the last week,
Speaker 3: and great to have back with us with someone who
Speaker 3: has really a great vantage point when it comes to
Speaker 3: what's going on in healthcare and specifically the nursing community,
Speaker 3: which is such a big part of it. Certainly a
Speaker 3: support network within the healthcare community. Back with us is
Speaker 3: doctor Eyman Abouzaid. She's co founder and CEO of the
Speaker 3: nursing talent platform Incredible Health, and they essentially connect nurses
Speaker 3: and hospitals. Doctor Abuze joining us once again from Austin, Texas.
Speaker 2: Great to have you back with us. How are you
Speaker 2: you doing well?
Speaker 13: Thank you so much for having me again.
Speaker 2: Well, it's great to be talking with you.
Speaker 3: There is a lot that we want to get to,
Speaker 3: but top of mind something in our planning call and
Speaker 3: thinking about our conversation with you today that we wanted
Speaker 3: to ask you about. And that is something that because
Speaker 3: you are so locked into the healthcare world, and that
Speaker 3: is the fatal shooting of the United Health executive. A tragedy,
Speaker 3: no doubt about that, but something that has also captivated
Speaker 3: millions of Americans and set off a pretty fiery online
Speaker 3: debate about health insurance. What do you hear since that
Speaker 3: incident on your platform among the nursing community, what are
Speaker 3: you seeing about the thoughts about the healthcare system, what works,
Speaker 3: but also maybe some of the injustices within the system.
Speaker 3: Is our healthcare system broken in some way?
Speaker 13: Yeah? So, when in speaking with healthcare workers, whether it's
Speaker 13: nurses or physicians, there is quite a lot of frustration
Speaker 13: with the healthcare insurance industry, particularly when it comes to
Speaker 13: denials and claims that aren't accepted for patients. So, I mean,
Speaker 13: some of the debate that this incident has highlighted is
Speaker 13: certainly being intensely debated by healthcare workers as well.
Speaker 3: And I do wonder where they hope it goes from
Speaker 3: this point. Again a tragedy and no one wants to
Speaker 3: see what happened earlier this week happened again. But having
Speaker 3: said that, the healthcare system, I feel like I've been
Speaker 3: talking about it for years, for decades, and the problems
Speaker 3: that are there. We thought many thought Obamacare was a
Speaker 3: step forward, but even some say there needs to be
Speaker 3: some work there. So what is it that you and
Speaker 3: maybe those on your platform and others within the healthcare industry,
Speaker 3: what are you hearing about? They hope is maybe the
Speaker 3: narrative or conversation that happens next.
Speaker 11: Right.
Speaker 13: Ultimately, what we want to make sure is that Americans
Speaker 13: and patients right get the care they need, and so
Speaker 13: anything that could be blocking that, they want to remove
Speaker 13: any blockers to access to care.
Speaker 6: And so the insurance company is.
Speaker 13: A very important part of that, and some of these
Speaker 13: challenges need to be addressed. We do work with health systems,
Speaker 13: specific ones that have struggled in their negotiations with United
Speaker 13: health Care and others, and we even work with health
Speaker 13: systems that had to drop United health Care as a pairer.
Speaker 13: So certainly this is intensely debated, and the debate is
Speaker 13: mostly around, hey, what do we need to do to
Speaker 13: ensure we can deliver care to Americans.
Speaker 4: One thing that's been particularly shocking to me to learn
Speaker 4: over the last week is the way that doctors have
Speaker 4: struggled and fought with insurance companies over denials for prescriptions
Speaker 4: that they write to patients for anti nagen medication in
Speaker 4: the wake of chemotherapy, or procedures that they see as essential.
Speaker 4: That insurance companies don't provide for transportation for babies who
Speaker 4: are just born and who need special services, but that
Speaker 4: transportation does not get approved for days and days?
Speaker 2: Why does this frustrate in this country?
Speaker 5: Right?
Speaker 13: I mean, look, the frustration level around this topic is
Speaker 13: high among healthcare professionals. And we've talked before about the
Speaker 13: challenge the burnout challenges among healthcare professionals. And you know,
Speaker 13: this kind of administrative load that they have to take
Speaker 13: on just to get what are considered relatively straightforward claims
Speaker 13: approved is challenging and it does pile on to the
Speaker 13: burnout challenge we already have with our healthcare workforce.
Speaker 4: One thing you're trying to do to alleviate that burnout
Speaker 4: challenge is to use technology, especially AI to help these nurses,
Speaker 4: help those on the platform of incredible health do their
Speaker 4: job more efficiently.
Speaker 5: What are you.
Speaker 4: Doing with these AI powered this AI powered marketplace to
Speaker 4: help alleviate the shortage of nurses here?
Speaker 13: Yeah, So our vision and mission is to help healthcare
Speaker 13: professionals live better lives and help them find and do
Speaker 13: their best work. And so yeah, our two side and
Speaker 13: marketplace is enabled with software and with AI and we
Speaker 13: have many features that drive the success here. Ultimately, what
Speaker 13: we're trying to do is expand the number of opportunities
Speaker 13: for nurses and then also ensure that the health systems
Speaker 13: that we work with are able to hire the talent
Speaker 13: they need. We now work with over one million US
Speaker 13: nurses are on the platform using Incredible Health to manage
Speaker 13: their careers, and over one thy five hundred hospitals use
Speaker 13: the platform as well. We were one of the first
Speaker 13: platforms to add AI to our platform. So, for example,
Speaker 13: we have a Resume Wizard feature that ensures that nurses
Speaker 13: can create generate a resume from the Incredible Health mobile app,
Speaker 13: which is completely free and can create a high quality
Speaker 13: resume to make sure that they're not left out of
Speaker 13: the job search experience.
Speaker 4: All right, doctor ingman Abuzaid, We're gonna have to leave
Speaker 4: it there, Co founder and CEO of the nursing talent
Speaker 4: platform Incredible Health.
Speaker 5: Always great to have you on the program.
Speaker 4: Joining us from Austin, Texas this afternoon, Come.
Speaker 12: A journal.
Speaker 9: How about you let me drive?
Speaker 12: Oh no, no, no, no, no drug any please, I'll do the
Speaker 12: gravel ease. Wait, I want to drive.
Speaker 9: It's a good question.
Speaker 5: This is the drive to the globe for me. A
Speaker 5: thing well by a young and Don on Bloomberg Radio.
Speaker 3: All right, TikTok, everybody, eighteen nineteen minutes to go, and man,
Speaker 3: we've got a strong rally, especially among those big tech
Speaker 3: cap names. I love it because I just keep thinking
Speaker 3: about every year we go through, stop putting money there,
Speaker 3: stop putting money there.
Speaker 2: The valuations are crazy, and then you just see investors
Speaker 2: buy it.
Speaker 4: We'll see what twenty twenty five looks like. Yes, we
Speaker 4: got with us, back with us. Sevesti belafis CEO over
Speaker 4: at Goalfest Advisory. Goalfest Advisory has about six hundred million
Speaker 4: dollars in assets under management. Savasti joins us here in
Speaker 4: the Bloomberg Interactive Brokers studio. You have some really interesting
Speaker 4: tech investments on the private side. I want to talk
Speaker 4: about those in a minute, but I want you to
Speaker 4: weigh in on what's happening in public markets when it
Speaker 4: comes to tech, because, as Carol mentioned, we're seeing quite
Speaker 4: the rally today. Some of the indexes at records as
Speaker 4: a result of the way tech is climbing today. Things
Speaker 4: are getting expensive or is this okay?
Speaker 6: Things are getting expensive? It's true. We do think about that,
Speaker 6: but I think there's more room to run. It's exciting.
Speaker 15: I mean, next year we are expecting thirty percent growth
Speaker 15: in earnings from these tech companies. So yes, it's expensive,
Speaker 15: but at the same time earnings are backing it up.
Speaker 6: But at the same.
Speaker 15: Time, given where we are with the economy as well,
Speaker 15: interest rates are coming down in a good place though,
Speaker 15: labor market in a good place.
Speaker 6: But you know, so things look good right now, that
Speaker 6: can quickly change.
Speaker 15: So when things are expensive, we do need to consider
Speaker 15: what else are we going to be buying into.
Speaker 6: Should we be trimming, should we.
Speaker 15: Be not necessarily selling from tech again, expected earnings next year,
Speaker 15: but selling or trimming and rebalancing for sure?
Speaker 3: Does it matter what the Fed does next week and
Speaker 3: into twenty twenty five because there's that thinking of we
Speaker 3: talked earlier about the CPI print, and if you carry
Speaker 3: out what we've seen over the what the last twelve
Speaker 3: months I think it was or ten months in terms
Speaker 3: of inflation, we're well about that two percent target.
Speaker 2: So why do we.
Speaker 3: Need a rate cut if inflation is still trending well
Speaker 3: above two percent and the economy seems to be doing well.
Speaker 3: So I'm just tell me how you're thinking about that.
Speaker 15: Great question, and interest rates absolutely matter. I do think
Speaker 15: the Fed will cut because it's not only interest rates
Speaker 15: but interest rate expectations. The FED is expecting this cut
Speaker 15: to happen in flat That's.
Speaker 2: Not their mandate. It's inflation and.
Speaker 15: Employment, labor exactly and employment. But they've communicated pretty well.
Speaker 15: I think in terms of the December cut that we
Speaker 15: will expect to see labor.
Speaker 2: Look, do you think they need to cut? Do you
Speaker 2: think it makes sense?
Speaker 9: I do.
Speaker 15: I think we need to get to a lower terminal rate.
Speaker 15: I think we need to go down that path. Interest
Speaker 15: rates were essentially zero before they started raising rates in
Speaker 15: twenty twenty two. They've started to normalize rates. So I
Speaker 15: do think at this point because of the communication that
Speaker 15: they've given the market and in terms of market expectation, yes,
Speaker 15: I do think they need to cut in December, given
Speaker 15: that unemployment overall, it's a mosaic of numbers that we
Speaker 15: need to look at to conclude on unemployment. But we're
Speaker 15: just one print away from starting to talk about maybe
Speaker 15: unemployment not looking so great. So companies aren't necessarily hiring,
Speaker 15: aren't necessarily laying off, and not necessarily hiring a lot either.
Speaker 6: That could change very quickly.
Speaker 4: The challenge, though, is inflation hasn't come down to that
Speaker 4: two percent, So even if we do see the employment.
Speaker 4: If we see the job market softening a little bit,
Speaker 4: what if we don't see inflation hit that two percent goal.
Speaker 15: I don't know that we will. It's a different environment.
Speaker 15: And also the two percent number, that headline number, there
Speaker 15: are certain underlying elements that aren't necessarily reflected. So I
Speaker 15: don't know that. So the Fed has talked about there.
Speaker 15: They are more lenient. It was that two percent threshold
Speaker 15: that they had for a while, but they're willing to
Speaker 15: see it come down towards the two percent number.
Speaker 6: They're not as strict with the mandate on the two
Speaker 6: percent number.
Speaker 3: All right, So let's talk investments. You've been super psyched
Speaker 3: about talking about where you are.
Speaker 5: Have you ever had ollipop?
Speaker 9: No?
Speaker 2: But I know of it.
Speaker 4: Okay, It's like you know that the quote unquote healthy soda.
Speaker 3: It was all over.
Speaker 2: Was it the super Bowl? Was it the Super Bowl
Speaker 2: where we saw fridge? Oh? Yeah?
Speaker 4: So that was one of your investments. Other investments and
Speaker 4: a r Ill and Ill really really hot defense company
Speaker 4: based out there in La A. Palmer Lucky of Oculus
Speaker 4: fame started that company. These are previous investments.
Speaker 5: In other funds.
Speaker 4: You've recently launched the Venture Growth Fund. What that does
Speaker 4: is it gives accredited investors through Oria's access to venture deals.
Speaker 4: What's the thinking behind this?
Speaker 15: So part of it is going to the beginning part
Speaker 15: of the conversation where we're seeing public tech still love it,
Speaker 15: but also very expensive or public markets expensive. I think
Speaker 15: it's a good time to recalibrate portfolios. Growth has outperformed value,
Speaker 15: large cap has upperformed small cap. This has been happening
Speaker 15: for a wild stocks have unperformed bonds. This has been
Speaker 15: happening for the last couple of years and decade actually,
Speaker 15: if you talk about growth and large cap, et cetera.
Speaker 15: So it's time to look at where else can we diversify.
Speaker 15: Private markets is one of those areas that we can
Speaker 15: look at. Back in twenty twenty when rates were very
Speaker 15: low and we saw these high valuations in the private markets,
Speaker 15: we saw that come down. In twenty twenty two, private
Speaker 15: markets were at all time lows. Public markets have since
Speaker 15: gone up. Now, I do expect and I do think
Speaker 15: we're going to see a reversal of that. So we
Speaker 15: had launched Fund one and we made some of those
Speaker 15: investments in Olipop Core Weave, which I'm excited about could
Speaker 15: be one of the first IPOs we see next year.
Speaker 15: So we had made those investments. Now it's about fun too.
Speaker 15: We're continuing with the private market. So for clients looking
Speaker 15: to rebalance but still want that growth potential, private markets,
Speaker 15: I think is a great way to go.
Speaker 3: So private markets, so you're notsarily speaking about private equity
Speaker 3: or private credit, you're actually early venture like companies that
Speaker 3: have not yet gone public.
Speaker 15: Not yet gone public. For us, it's not early venture.
Speaker 15: It's the later stage growth companies that we're looking at.
Speaker 15: But when we start thinking of AI, for example, all
Speaker 15: the money that has been spent in AI in investments
Speaker 15: in AI, we had AI infrastructure investments, what's round.
Speaker 6: Two of that or what's the next stage of that?
Speaker 15: How is AI? Where are the applications of AI? So
Speaker 15: you may have heard of companies like Harvey for example,
Speaker 15: that they're a co pilot for lawyers or Magic co
Speaker 15: pilot for coding teams. So AI in use in a
Speaker 15: way that will actually have continued productivity gains, I think
Speaker 15: that's what we're excited.
Speaker 3: Like that what anog starting he was starting about software right, Yeah,
Speaker 3: of AI platforms.
Speaker 4: Yeah, the idea of like incorporating these not necessarily chatbots,
Speaker 4: but AI assistants and Salesforce is betting big on that too.
Speaker 5: Insomnia cookies. Yes, have you had an insomnia?
Speaker 3: I have not?
Speaker 5: Had pretty good open late order.
Speaker 2: Uh have you done this?
Speaker 5: Uh yeah, yeah, yeah.
Speaker 4: Okay, who doesn't love cookies in the middle of the night.
Speaker 15: And within thirty minutes warm big to your door.
Speaker 4: Elizabeth our YouTube producer, saying that she's had she had
Speaker 4: so much insomnia in college. The delivery guy knew knew her.
Speaker 4: Uh so that's a good sign. That's one of your
Speaker 4: investments too. But there's like it's like Krispy Kreme had
Speaker 4: some JB Holdings had some what happened there?
Speaker 5: Like where what's the status of that investment?
Speaker 6: Yeah?
Speaker 15: So they're growing great. I mean they're expanding. We know
Speaker 15: them in Uix City in New York City. They're less
Speaker 15: well known across the US, but they're expanding. Uh so
Speaker 15: we're really excited about them. But that's another example of
Speaker 15: a CpG company, a consumer goods company similar to Ollipop
Speaker 15: that we like. So for round two, fun two, we're
Speaker 15: looking at additional consumer names. But again, as I mentioned,
Speaker 15: the aim.
Speaker 2: Now I just want to cook.
Speaker 4: Okay, So from drones at Anderell to cookie. You said
Speaker 4: insomnia cookies. The investments sort of run the.
Speaker 2: Gam Can I get a drone to bring me a
Speaker 2: cookie right now?
Speaker 5: Those are not the type of drugs. You don't want
Speaker 5: these drugs near you. And yeah, we have the friendly drones.
Speaker 5: Let's just say that.
Speaker 3: Syvestie, thank you so much, really appreciate it. Happy holiday.
Speaker 3: It's great to have you back in the studio. She's
Speaker 3: CEO of go Best Advisory. You are listening and watching
Speaker 3: Bloomberg Business Week.
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