WEBVTT - Startup Credit Crunch 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.440 gloom O Business Finance and tech news. The Bloomberg Business 0:00:13.440 --> 0:00:18.960 Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:19.760 --> 0:00:22.720 Jess Mitton and Madison Mills here in the Bloomberg Interactive 0:00:22.800 --> 0:00:26.080 Brokers studio, and Maddie, I know how much you enjoy 0:00:26.120 --> 0:00:29.480 talking about the consumer, also the retail space because we've 0:00:29.480 --> 0:00:31.600 talked so much about these big earnings coming up, especially 0:00:31.640 --> 0:00:34.360 with Amazon tomorrow, but we have another look as far 0:00:34.400 --> 0:00:37.760 as how retailers really struggled in the midst of COVID 0:00:37.760 --> 0:00:40.720 and especially when it comes to the inventory issues. So 0:00:40.720 --> 0:00:42.960 who better to come in and chat with us about 0:00:43.120 --> 0:00:46.360 the startup space, but then also the retail outlook here 0:00:46.560 --> 0:00:49.800 as we head into close to the fall season, obviously 0:00:49.840 --> 0:00:51.840 toward the end of the year, the holiday shopping season. 0:00:51.880 --> 0:00:56.320 With Ari Trosdale, who's founder and chief executive officer of 0:00:56.480 --> 0:00:59.080 CHRISP who's here in studio with us, So it's always 0:00:59.080 --> 0:01:01.600 great having someone here. Thank you so much for coming 0:01:01.600 --> 0:01:04.160 into the Bloomberg office here in New York. Tell us 0:01:04.200 --> 0:01:07.320 first off about your company and what it is you do. 0:01:07.880 --> 0:01:12.119 Great. Yeah, you've work with a lot of large retailers, 0:01:12.560 --> 0:01:15.400 about two point five trillion dollars of retail spent to 0:01:15.560 --> 0:01:18.479 the retailers we work with, and then we have about 0:01:18.480 --> 0:01:21.440 five six hundred large brand small brands on the platform. 0:01:21.560 --> 0:01:25.240 What we help with is that change of data between retailers, 0:01:25.400 --> 0:01:30.800 large distributors and also the large manufacturers and the large 0:01:31.160 --> 0:01:34.480 large brands. So this has historically been done with that 0:01:34.520 --> 0:01:38.160 technology called EDI, which was invented fifty years ago the 0:01:38.360 --> 0:01:41.080 year I was born, and hasn't been a lot of 0:01:41.080 --> 0:01:44.880 innovation in kind of this connective fabric that ties all 0:01:44.920 --> 0:01:50.000 these important trading partners together. But through a platform like CRISP, 0:01:50.440 --> 0:01:53.840 they can exchange information much better, so everybody wins. 0:01:54.120 --> 0:01:57.440 So what kind of data do you help these retailers? 0:01:57.600 --> 0:02:00.640 And again, as Jess mentioned, you've got the names like Amazon, 0:02:00.760 --> 0:02:04.480 BJ's all the Target, Whole Foods on this list, among 0:02:04.520 --> 0:02:08.720 many other big ones. What data do you provide them 0:02:09.000 --> 0:02:11.960 and how do they leverage that data into action? 0:02:12.400 --> 0:02:15.440 Yeah, it's particularly in that interface between the large retailers 0:02:15.480 --> 0:02:19.280 and the brands, and they typically have need for data 0:02:19.320 --> 0:02:22.400 around understanding how much is on the shelf, how much 0:02:22.520 --> 0:02:25.080 data is actually or how much is actuly sitting in 0:02:25.120 --> 0:02:26.560 the distribution center, what. 0:02:26.560 --> 0:02:28.480 Was the price or how do you help them know that? 0:02:28.760 --> 0:02:31.640 So, yeah, we actually connect into a lot of these 0:02:31.720 --> 0:02:36.120 legacy systems that the large retailers have, So they have 0:02:36.440 --> 0:02:40.000 point of sale systems, that have warehousing systems, they have 0:02:40.760 --> 0:02:44.520 logistical systems. So we help connect into these systems and 0:02:45.040 --> 0:02:47.440 make bring all of that data into the clouds that 0:02:47.480 --> 0:02:51.799 everybody can access. This throughout a supply chain. So if 0:02:51.840 --> 0:02:55.280 I'm now on the brand side and I'm planning advertising 0:02:55.280 --> 0:02:57.200 and marketing campaign or I'm going to push a new 0:02:57.240 --> 0:02:59.880 product out, I understand how much I need to manufacture 0:02:59.880 --> 0:03:03.720 in order to meet the demand. Now they have much 0:03:03.760 --> 0:03:07.080 better view of everything that's happening across all of the 0:03:07.120 --> 0:03:08.480 different retailers. 0:03:08.520 --> 0:03:10.520 How long does it take for them to access that 0:03:10.560 --> 0:03:11.760 type of data. 0:03:11.880 --> 0:03:14.840 So it's been been a big part of they've recently 0:03:14.919 --> 0:03:17.000 been able to get so many on the platform. We 0:03:17.200 --> 0:03:20.880 invested a huge amount of capital into building this infrastructure, 0:03:21.120 --> 0:03:23.880 but once they come on the platform, it takes less 0:03:23.880 --> 0:03:26.920 than an hour. And there's a lot of changes in 0:03:26.960 --> 0:03:30.560 the industry now, and some of them are around advertising right, 0:03:30.600 --> 0:03:34.440 So that the retailers are leveraging their data and their 0:03:34.480 --> 0:03:39.560 audience to drive more advertising revenue, they're also leveraging it 0:03:39.640 --> 0:03:44.160 in data sharing programs. So you have the large Amazons 0:03:44.200 --> 0:03:46.680 of the world, but you also have like a Walmart, 0:03:46.720 --> 0:03:51.240 for instance, that have incredible bottom line money now from advertising, 0:03:51.880 --> 0:03:54.600 and they also have a different program which is called 0:03:54.600 --> 0:03:59.920 Illuminate where they actively share the data out with their suppliers. 0:04:00.000 --> 0:04:02.000 So we help in that interface. How do we get 0:04:02.040 --> 0:04:04.560 all of that data out of Walmart and Illuminate and 0:04:04.640 --> 0:04:07.960 into all of the different systems that and a brand have. 0:04:08.520 --> 0:04:11.920 You might have cloud systems that have procurement systems, they 0:04:11.960 --> 0:04:14.200 have sales systems and all of that, and then we 0:04:14.240 --> 0:04:16.200 want to have one view of data across all the 0:04:16.200 --> 0:04:18.680 different places that they don't need the data. 0:04:18.760 --> 0:04:21.039 So that's kind of a solution for when there might 0:04:21.080 --> 0:04:24.080 be an undersupply of inventory for a product that's about 0:04:24.080 --> 0:04:27.600 to get a big marketing push. But what about access inventory? 0:04:27.760 --> 0:04:29.840 We saw that coming up a lot during the earning 0:04:29.880 --> 0:04:33.040 cycle last season, particularly with names like Target. How does 0:04:33.080 --> 0:04:36.080 your tool help these retailers with that? 0:04:36.279 --> 0:04:40.240 Yes, so they calculate based upon sales velocity, so they 0:04:40.320 --> 0:04:43.839 understand how much each store is selling this particular product, 0:04:44.160 --> 0:04:47.960 understand pricing, and then understand how much inventory actually sits 0:04:47.960 --> 0:04:50.400 out in the different stores, and how much inventory sits 0:04:50.440 --> 0:04:53.919 in the distribution centers that support the stores. So with 0:04:54.000 --> 0:04:56.520 all of that kind of real time information of consumer 0:04:56.600 --> 0:04:59.200 behavior because we see every day kind of what's happening 0:04:59.240 --> 0:05:01.800 in the stores, now they have an ability to do 0:05:01.880 --> 0:05:05.160 much better forecasts of how much products they actually going 0:05:05.200 --> 0:05:09.440 to need. And before it was much more reactive because 0:05:09.440 --> 0:05:12.360 it was based upon a purchase order that would come out. 0:05:12.400 --> 0:05:15.839 But now actually the suppliers and the brands have an 0:05:15.880 --> 0:05:18.200 opportunity to kind of see what's going on and then 0:05:18.520 --> 0:05:20.720 produce the right thing because it takes a while to 0:05:20.760 --> 0:05:23.599 produce these products. And that's I think what you're alluding 0:05:23.600 --> 0:05:27.120 to you to is you saw this huge build up 0:05:27.160 --> 0:05:30.360 in inventory because it takes you you pushed about in today, 0:05:30.400 --> 0:05:32.200 it going to take three months for this product to 0:05:32.240 --> 0:05:34.720 actually arrive. So being ahead of that is kind of 0:05:34.720 --> 0:05:35.560 what the tool helps with. 0:05:35.920 --> 0:05:38.680 Talk to us about this startup credit crunch, because we're 0:05:38.720 --> 0:05:41.040 coming off a few months ago. Obviously all of the 0:05:41.160 --> 0:05:43.840 drama that went on with these regional banks with SVB 0:05:44.040 --> 0:05:46.880 I was curious do you have exposure towards any sort 0:05:46.880 --> 0:05:50.039 of those banks that were in California and how you 0:05:50.160 --> 0:05:50.920 view that whole city. 0:05:51.080 --> 0:05:53.440 Oh, that's a good, big, big shift over to So 0:05:53.520 --> 0:05:56.240 that makes me very stressed. Right now. I can bring 0:05:56.320 --> 0:05:59.560 up my SVB card that didn't work for a couple 0:05:59.600 --> 0:06:03.159 of for a couple of days, but now I feel 0:06:03.160 --> 0:06:06.840 actually very good and comfortable around it with what the 0:06:07.200 --> 0:06:09.880 government there to help the banks, as that prevented a 0:06:09.920 --> 0:06:14.040 big crisis. I think for startups. I actually took the 0:06:14.080 --> 0:06:16.280 plastic of the televisions for as we've be and then 0:06:16.279 --> 0:06:18.520 moved into New York twenty years ago Sabina for a 0:06:18.600 --> 0:06:22.600 very long time and kind of seeing how that changed 0:06:22.640 --> 0:06:25.320 so quickly. But I also there's a lot of other 0:06:25.360 --> 0:06:27.919 banks that are coming into the space and seeing that 0:06:27.960 --> 0:06:30.920 there's a great opportunity in this area. Plus as will be, 0:06:31.000 --> 0:06:34.400 it's actually continuing operations very well under new ownership. 0:06:34.800 --> 0:06:37.200 Do you see sort of red flags brewing up kind 0:06:37.200 --> 0:06:38.800 of more broadly with startups at this point? 0:06:39.480 --> 0:06:42.160 You know, I think, yes, I'm doing this for twenty 0:06:42.240 --> 0:06:44.600 five years. It always goes in these huge waves of 0:06:45.040 --> 0:06:48.040 way too much money that comes into the space, and 0:06:48.480 --> 0:06:54.320 that drives valuations up and everything, and now the pendulum 0:06:54.320 --> 0:06:57.080 is certainly on the other side of that. And I 0:06:57.320 --> 0:07:01.080 liked this period more because it actually reads out a 0:07:01.160 --> 0:07:05.760 lot of the non real type of startups. So I 0:07:05.839 --> 0:07:10.200 believe if you solve big problems for big companies then 0:07:11.440 --> 0:07:15.200 and drive high ROI now this is something that's very 0:07:15.240 --> 0:07:18.640 investable and exciting for investors to be a part of. 0:07:18.840 --> 0:07:22.360 So so like I love the love both faces in 0:07:22.440 --> 0:07:24.520 a way, but I like this face a little bit 0:07:24.560 --> 0:07:26.080 more than the frothy face. 0:07:26.920 --> 0:07:29.600 Well's great getting your perspective on all things when it 0:07:29.680 --> 0:07:32.360 comes to startups, but then also what your startup has 0:07:32.400 --> 0:07:35.480 been doing. So it's Ari Trossdale, founder in chief executive 0:07:35.560 --> 0:07:39.560 officer at CHRISP joining us in studio with Madison Mills 0:07:39.640 --> 0:07:42.480 and myself. So great getting your perspective on all of this. 0:07:42.720 --> 0:07:45.480 Yeah, really interesting to think about how startup funding and 0:07:45.640 --> 0:07:48.320 credit tightening is kind of impacting what we're going to 0:07:48.360 --> 0:07:50.320 be seeing down the pipeline, and of course getting to 0:07:50.400 --> 0:07:54.080 check on the retail space as well. Jess, this is Bloomberg. 0:07:54.800 --> 0:07:58.320 You're listening to the Bloomberg Business Week podcast. Catch us 0:07:58.400 --> 0:08:01.680 live weekday afternoons from three to six Eastern. Listen on 0:08:01.800 --> 0:08:05.800 Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, 0:08:06.120 --> 0:08:07.800 or watch us live on YouTube. 0:08:08.600 --> 0:08:11.480 All right, So, in terms of needing some help here, 0:08:11.720 --> 0:08:13.760 I feel like I'm the one who needs help sussing 0:08:13.800 --> 0:08:17.560 out the market moves today, because obviously this Fitch downgrade 0:08:17.840 --> 0:08:21.520 is a huge move, but it seems like the Treasury 0:08:21.640 --> 0:08:24.600 Department is the real driver on the day because when 0:08:24.600 --> 0:08:27.040 it comes to that Pitch downgrading, it feels like traders 0:08:27.080 --> 0:08:30.400 don't really care, economists doubting the credibility of the move. 0:08:30.800 --> 0:08:33.640 So here to make sense of the day's trade for 0:08:33.920 --> 0:08:37.360 us is Elena Pappina from Bloomberg's equities team, and our 0:08:37.440 --> 0:08:40.800 chief economists Anamon joining us from DC. Elena, I want 0:08:40.800 --> 0:08:42.559 to start with you. Thank you so much for coming on. 0:08:42.640 --> 0:08:45.000 It's great to have you here. From the perspective of 0:08:45.080 --> 0:08:49.079 the market's reaction, would you say the Fitch rating is 0:08:49.200 --> 0:08:50.560 kind of a non event today? 0:08:51.120 --> 0:08:53.600 It was a non event yesterday after the well when 0:08:53.640 --> 0:08:56.800 the decision broke and the futures who are on the 0:08:57.080 --> 0:09:00.120 spy ETF we're down about zero point ten percent, so 0:09:00.240 --> 0:09:04.400 it wasn't a big reaction then today. Earlier today when 0:09:04.520 --> 0:09:07.880 you know, we got the announcement about the Treasury Department 0:09:08.120 --> 0:09:14.720 increasing the auction size. That's when the decision actually became 0:09:15.040 --> 0:09:17.480 a much bigger impact on the stock market. So we 0:09:17.559 --> 0:09:20.280 are now more than down more than one percent on 0:09:20.400 --> 0:09:23.319 the S ANDV five hundred. Not an unusual move, but 0:09:23.559 --> 0:09:26.200 it is getting some of the bestors worried about whether 0:09:26.320 --> 0:09:27.160 there is more to come. 0:09:27.480 --> 0:09:29.880 I want to bring Anna into this conversation because do 0:09:29.960 --> 0:09:33.120 you think that this move was actually warranted by Fitch? 0:09:34.679 --> 0:09:38.000 Yeah, so I think the substance of it, which is 0:09:38.200 --> 0:09:43.800 the fiscal trajectory of the US government balanty, is warranted 0:09:44.240 --> 0:09:48.160 because part of it is that, you know, just three 0:09:48.200 --> 0:09:52.520 weeks ago, the US Treasury released the year to date 0:09:52.800 --> 0:09:57.080 a picture of fiscal deficit, and actually it surprised many 0:09:57.160 --> 0:10:01.520 people by how we looked for that. In fact, the 0:10:02.000 --> 0:10:06.240 deficit for twenty twenty three is expected to be much 0:10:06.440 --> 0:10:11.280 larger than last year, partly because of weaker receipts. That 0:10:12.040 --> 0:10:15.400 was I think one perhaps one piece of information that 0:10:15.559 --> 0:10:19.120 Fitch was waiting after the debt feeling was resolved in 0:10:19.200 --> 0:10:21.000 thinking you should be down road or not so because 0:10:21.440 --> 0:10:24.360 this year fiscal deficit for you as is expected to 0:10:25.360 --> 0:10:28.559 surge to five point seven percent, and then on the 0:10:28.640 --> 0:10:31.280 longer term, the fiscal picture also doesn't look good. We 0:10:31.600 --> 0:10:35.679 forecast that twenty thirty three fiscal deficit, the debt to 0:10:35.760 --> 0:10:38.640 GDP ratio would be over one hundred and thirty percent 0:10:38.720 --> 0:10:41.520 of GDP. So yeah, on that ground, I think the 0:10:42.520 --> 0:10:43.559 decision was warranted. 0:10:44.080 --> 0:10:46.360 Well, and I want to stick with you for a second, 0:10:46.440 --> 0:10:50.800 because we are obviously seeing some comparisons to twelve years ago. Today, 0:10:50.920 --> 0:10:53.960 a lot of people saying that it's a completely different situation. 0:10:54.280 --> 0:10:58.080 Can you tell me exactly in your view how different 0:10:58.200 --> 0:11:01.280 the backdrop is today versus what we saw with the 0:11:01.480 --> 0:11:03.560 SMP rating downgrade in twenty eleven. 0:11:04.520 --> 0:11:07.199 Well, well, first of all, I would say that my 0:11:07.360 --> 0:11:10.480 view is different than the predominant view in the market 0:11:10.559 --> 0:11:14.280 that ultimately the market will shrug it off this downgrade. 0:11:14.280 --> 0:11:17.120 I do think there's a risk that ultimately the market 0:11:17.120 --> 0:11:19.280 won't shut shrug it off and we'll be having a 0:11:19.360 --> 0:11:22.400 repeat of twenty eleven. So I think most people think 0:11:22.440 --> 0:11:24.839 that it's different than twenty eleven because back then we 0:11:24.960 --> 0:11:28.280 still have the European debt sovereign sovereign debt crisis, and 0:11:28.400 --> 0:11:31.480 today we have no well, we actually today we still 0:11:31.559 --> 0:11:35.480 have a weakening global economic backdrop. Germany is looking like 0:11:35.559 --> 0:11:41.640 they're in recession, China is fueling hard lending scares, and 0:11:41.920 --> 0:11:44.960 US also is actually not as strong as many people. 0:11:45.200 --> 0:11:47.839 I think that's the reason Number one. Number two is, 0:11:48.080 --> 0:11:50.520 you know, back in and right now, when we look 0:11:50.559 --> 0:11:53.240 at the US, you know, various asset market like fix 0:11:53.840 --> 0:11:58.520 equities market, there's just this sort of complacency, and people 0:11:58.679 --> 0:12:03.280 have been ignoring negative data, negative data surprises in the 0:12:03.360 --> 0:12:05.960 last couple of months, and I feel like people are 0:12:06.160 --> 0:12:08.920 kind of well just so in love with that soft 0:12:09.040 --> 0:12:13.000 lending narrative that they I think markets are actually due 0:12:13.040 --> 0:12:15.400 for some kind of correction. So in that sense, I 0:12:15.440 --> 0:12:18.040 think we're pretty vulnerable at the stage. 0:12:18.280 --> 0:12:21.319 So Elena, with that said, and looking at the Nasdaq 0:12:21.520 --> 0:12:24.520 one hundred up i mean forty percent this year, and 0:12:24.600 --> 0:12:26.840 then the S and P five hundred also up double digits, 0:12:26.960 --> 0:12:29.040 it's an excuse to take some profits. 0:12:29.320 --> 0:12:32.040 It actually can be a lot of traders have been 0:12:32.080 --> 0:12:34.640 telling me that there hasn't been a catalyst to sell. 0:12:34.800 --> 0:12:38.559 We did know that no position became overextended, it was 0:12:38.640 --> 0:12:40.920 time for it. Whether it now comes to the catalyst 0:12:41.040 --> 0:12:43.040 now the bigger question is is it going to be 0:12:43.040 --> 0:12:44.839 a five percent correction? Is it going to be just 0:12:44.920 --> 0:12:48.319 a by the deep situation with the stocks rally tomorrow 0:12:48.400 --> 0:12:51.079 and into the weekend. So that is the big unknown. 0:12:51.400 --> 0:12:55.000 And I want to talk about earnings because earnings have 0:12:55.240 --> 0:12:57.520 been a big supporter to the S and P five 0:12:57.640 --> 0:13:01.360 hundred rally over the first quarter and earlier over the 0:13:01.440 --> 0:13:04.640 second quarter results. We do expect to see Apple and 0:13:04.760 --> 0:13:08.480 Amazon reporting tomorrow, so that can be a potential catalyst. 0:13:08.600 --> 0:13:13.319 You know, if they do report disappointing earnings, that trail expectations, 0:13:13.360 --> 0:13:16.040 so that could be a catalyst for a much bigger 0:13:16.160 --> 0:13:18.440 and potentially a more prolonged sell off. 0:13:18.840 --> 0:13:21.360 What does positioning tell us at this point as far 0:13:21.400 --> 0:13:23.880 as who could potentially be selling if we're talking about 0:13:23.960 --> 0:13:27.920 hedge funds, too early to really tell that versus retail investors. 0:13:28.120 --> 0:13:30.760 That's a great question, but we don't know yet. We 0:13:30.920 --> 0:13:35.120 do know that retail investors have been buying into last week, 0:13:35.240 --> 0:13:37.600 So last week was the first one when they were 0:13:37.760 --> 0:13:40.520 net sellers of equities. You know, whether that's a smart 0:13:40.600 --> 0:13:44.160 move considering today's route is yet to be seen. But yeah, 0:13:44.200 --> 0:13:47.319 they kind of paired back their appetite after jumping in 0:13:47.520 --> 0:13:51.640 earlier in May and earlier in June. So if hedge 0:13:51.679 --> 0:13:55.160 funds decide to become big sellers, you know that that 0:13:55.480 --> 0:13:56.960 may be an interesting story for sure. 0:13:57.400 --> 0:14:00.800 And bringing you back in here, I'm curious is about 0:14:01.200 --> 0:14:06.760 how you're viewing the move from Fitch from an economics perspective, because, 0:14:07.360 --> 0:14:09.760 as you noted, we're hearing a lot of pushback today, 0:14:10.280 --> 0:14:13.520 Jamie Diamond coming out against the move as well. Does 0:14:13.600 --> 0:14:17.120 this hurt their credibility and does that matter? 0:14:18.400 --> 0:14:21.960 Well? I think Fitch is kind of bringing reality back 0:14:22.000 --> 0:14:26.480 to everybody. I think, of course, from Jamie Diamond's perspective 0:14:26.520 --> 0:14:29.600 of market rally is great for Jamie Morgan, right, But 0:14:30.120 --> 0:14:34.240 but I think, as I was saying before, the market 0:14:34.360 --> 0:14:37.400 has been complacent in recent weeks because of this, you know, 0:14:37.560 --> 0:14:42.000 preveillance of the soft lending narrative and on a on 0:14:42.360 --> 0:14:45.920 on the eve of every recession in the past, you know, 0:14:46.040 --> 0:14:49.680 half a century, the soft lending narratives tends to dominate 0:14:49.760 --> 0:14:53.040 to and Fitch sorts of put the focus back on 0:14:53.160 --> 0:14:56.600 these ugly fiscal numbers. And I thought that one of 0:14:56.680 --> 0:14:59.520 the most interesting things that the Pitch down grade cost 0:14:59.600 --> 0:15:05.320 it is to notice is that the Treasury data showing 0:15:05.400 --> 0:15:09.360 the receipts and deficit that was released a couple of 0:15:09.400 --> 0:15:14.720 weeks ago, it shows that receipts was weaker than as weakening, 0:15:14.920 --> 0:15:19.840 and usually before a recession, receipts would weaken, and it's 0:15:19.960 --> 0:15:24.720 always case, and I think it does confirm our suspicion 0:15:24.800 --> 0:15:27.880 that maybe a lot of the activity data is overstating 0:15:27.920 --> 0:15:29.160 the strength in the economy. 0:15:29.640 --> 0:15:32.720 Something I'm curious about on a is whether or not 0:15:32.880 --> 0:15:35.840 when you're thinking about more market moving type reading agencies, 0:15:35.880 --> 0:15:38.440 whether it's Moody's or S and P, do you think 0:15:38.440 --> 0:15:40.400 we'd actually see downgrades like that from them. 0:15:41.600 --> 0:15:45.280 Well, SMP already downgraded back in twenty eleven and they 0:15:45.440 --> 0:15:49.920 never re upgraded the US. So right now two of 0:15:50.160 --> 0:15:54.680 three major rating agencies have taken away the US the 0:15:55.160 --> 0:15:57.920 Stellar rating, so it's just down to Moodies now. 0:16:00.040 --> 0:16:02.120 And on that, I guess, Elena, I want to ask 0:16:02.200 --> 0:16:04.960 you kind of what Anna was saying earlier. Anna mentioned 0:16:05.040 --> 0:16:09.640 that you think that the market slugging off this downgrade 0:16:09.880 --> 0:16:13.160 is not going to be the case in the coming weeks. 0:16:13.200 --> 0:16:14.960 Do you agree? Do you think that the market is 0:16:15.040 --> 0:16:18.040 going to start to have a more prolonged reaction to this. 0:16:18.600 --> 0:16:23.040 It's interesting that August and September traditionally seasonally the weakest 0:16:23.160 --> 0:16:27.600 months of the year going back the past thirty years, 0:16:27.680 --> 0:16:30.760 so there may be a reason for a bigger sell 0:16:30.880 --> 0:16:33.200 of just because of a confluence of factors. 0:16:33.320 --> 0:16:33.440 Right. 0:16:33.640 --> 0:16:36.600 Fich obviously was a big surprise for a lot of 0:16:36.680 --> 0:16:38.920 traders thinking that we're going to go to the moon. 0:16:39.400 --> 0:16:43.960 It's not the case, and the positioning looks extended on 0:16:44.080 --> 0:16:50.280 several fronts, and seasonality isn't adding confidence into the stock 0:16:50.360 --> 0:16:52.960 market trajector in the next couple of weeks. So there 0:16:53.040 --> 0:16:56.400 might be some choppiness in the next three to four 0:16:56.480 --> 0:16:57.800 weeks or maybe a couple of months. 0:16:57.840 --> 0:17:00.200 Even something I'm curio about anna is what or not 0:17:00.280 --> 0:17:02.040 this is a wake up call for Congress. 0:17:03.600 --> 0:17:07.879 Yeah, I think the debt ceiling fight back in June 0:17:08.000 --> 0:17:12.480 was a missed opportunity for the both sides addressed the 0:17:12.600 --> 0:17:16.960 real fiscal challenges, which is social security, healthcare. Right, I 0:17:17.040 --> 0:17:19.520 mean twenty years ago when al Gore was it twenty 0:17:19.600 --> 0:17:21.800 years ago, Yeah, twenty years ago when al Gore was 0:17:21.880 --> 0:17:24.600 debating George Bush as they were talking about reforming social 0:17:24.640 --> 0:17:27.800 security in lock box. Now, I don't hear that anymore 0:17:27.840 --> 0:17:30.879 in this presidential debate. I think those issues need to 0:17:30.960 --> 0:17:33.800 get back on the table, and I think when two 0:17:34.000 --> 0:17:37.639 of three major ratings agencies have downgraded the US, it 0:17:37.760 --> 0:17:39.000 certainly is a wake up call. 0:17:39.440 --> 0:17:42.280 What's the likelihood of this actually being a wake up call? 0:17:42.359 --> 0:17:42.520 Though? 0:17:42.680 --> 0:17:46.080 In our next twenty seconds, Anna, I. 0:17:46.440 --> 0:17:49.080 Don't Yeah, I'm not optimistic that it was truly. 0:17:50.400 --> 0:17:53.920 Wouldn't it be great if the big market moving, headline 0:17:54.000 --> 0:17:57.000 breaking news was in fact a wake up call for action? 0:17:57.920 --> 0:17:58.160 Anna? 0:17:58.280 --> 0:18:00.760 Thank you, thank you so much much for joining us 0:18:00.800 --> 0:18:03.520 and on our chief economists joining us from DC and 0:18:03.560 --> 0:18:05.520 Elena Papaina, Thank you so much. It was great to 0:18:05.600 --> 0:18:07.119 have you in studio with us. 0:18:07.920 --> 0:18:11.479 You're listening to the Bloomberg Business Week podcast. Catch us 0:18:11.520 --> 0:18:15.520 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:18:15.760 --> 0:18:18.960 the Bloomberg Business App, and YouTube. You can also listen 0:18:19.119 --> 0:18:22.200 live on Amazon Alexa from our flagship New York station, 0:18:22.680 --> 0:18:25.440 Just say Alexa play Bloomberg eleven thirty. 0:18:26.640 --> 0:18:29.080 It is time for our Bloomberg Business Week segment. Joel 0:18:29.119 --> 0:18:31.320 Weber is in the house with us in our Bloomberg 0:18:31.400 --> 0:18:34.920 Interactive Broker's studio Joel, thank you so much for coming 0:18:34.960 --> 0:18:36.879 into Oh, you know, it's always a pleasure. It's always 0:18:36.920 --> 0:18:39.600 a pleasure. We're going to talk about Amazon as the 0:18:39.800 --> 0:18:41.880 next potential grocery. 0:18:42.720 --> 0:18:43.080 That's right. 0:18:43.200 --> 0:18:47.280 So Matt Day has a very interesting story in the 0:18:47.400 --> 0:18:51.639 issue forthcoming issue about kind of a reboot that's going 0:18:51.680 --> 0:18:56.760 to happen at Amazon. Obviously, Whole Food's part of that portfolio, 0:18:56.800 --> 0:18:58.760 but there's a lot of other things in that portfolio. 0:18:59.840 --> 0:19:02.680 That's how we're you know, the story basically goes through 0:19:03.160 --> 0:19:04.399 what Amazon's going to do about it. 0:19:04.960 --> 0:19:07.720 Incredible. So I think this is a great time for 0:19:07.800 --> 0:19:10.320 us to bring in Bloomberg technology reporter Matt Day, who's 0:19:10.359 --> 0:19:12.720 joining us on zoom here. Matt, thank you so much 0:19:13.040 --> 0:19:15.600 for joining us. I know you just heard Joel's intro, 0:19:15.800 --> 0:19:17.720 but tell us a little bit more about your story 0:19:17.880 --> 0:19:18.920 and what people. 0:19:18.760 --> 0:19:19.440 Need to know about it. 0:19:20.440 --> 0:19:23.160 So Amazon, over what's called it twenty years of experimenting 0:19:23.200 --> 0:19:25.359 in groceries. They have a mishmash of businesses, right. They 0:19:25.400 --> 0:19:27.760 have Amazon Fresh where they'll deliver you know, to your 0:19:27.840 --> 0:19:30.800 home fresh food. They've got a Whole Foods, which they 0:19:30.840 --> 0:19:33.480 bought us six years ago, and they've got Amazon Fresh. 0:19:33.560 --> 0:19:36.080 The brick and mortar store. There's forty four of those, 0:19:36.160 --> 0:19:38.880 and then Amazon pause when they were cutting costs about 0:19:38.920 --> 0:19:41.919 a year ago. They're trying to kind of meld those together. 0:19:42.760 --> 0:19:45.480 They're trying to expand kind of on all fronts. You know, 0:19:45.600 --> 0:19:47.920 Amazon basically took a hard look at it's grocery business 0:19:48.000 --> 0:19:50.440 that we still think we want to be here. We 0:19:50.600 --> 0:19:52.520 just need these pieces to kind of play nicer together. 0:19:52.560 --> 0:19:54.440 And so they've and that's a bunch of things that 0:19:54.520 --> 0:19:56.280 maybe that one the stopper is going to notice. First, 0:19:56.359 --> 0:19:57.760 you know, you don't have to be a Prime member 0:19:57.920 --> 0:20:00.520 to order groceries at Amazon anymore, at the first for them, 0:20:00.600 --> 0:20:03.120 since they started selling groceries online in two thousand and seven. 0:20:03.240 --> 0:20:05.680 Previously you always had to pay into Prime. Now, you know, 0:20:05.800 --> 0:20:07.960 it's just kind of a referral or at least some 0:20:08.119 --> 0:20:10.400 sort of some sort of fea gatekeep that. So they're 0:20:10.440 --> 0:20:12.400 really trying to alight a fire into this business after 0:20:12.640 --> 0:20:14.200 flailing for a few years. 0:20:14.880 --> 0:20:18.359 Why is why do this? Why do any of this? 0:20:18.480 --> 0:20:20.520 What's the problem that they're trying to solve? 0:20:21.400 --> 0:20:23.960 I mean the problem is sort of size and scale. 0:20:23.960 --> 0:20:25.879 You know, Amazon wants to be a big deal. Amazon 0:20:25.920 --> 0:20:27.840 wants to be a big retailer, and to be a 0:20:27.880 --> 0:20:30.440 big retailer, you have to sell food, right, to be 0:20:30.480 --> 0:20:32.919 a big retailer for certain size. That the Walmart formula. 0:20:32.960 --> 0:20:35.000 That's how they went from you know, very big superstore 0:20:35.119 --> 0:20:38.320 to the world's biggest retailer. So over the years, you know, 0:20:38.400 --> 0:20:41.320 we've we've heard tell of you know, Jeff Bezos back 0:20:41.320 --> 0:20:42.960 in the day saying, listen, we're not going to be 0:20:43.000 --> 0:20:45.080 one hundred million dollar business unless we sell groceries, right, 0:20:45.119 --> 0:20:47.960 unless you get that touch point with customers, and you know, 0:20:48.119 --> 0:20:51.440 you are the meat and dairy run that causes folks to, oh, hey, 0:20:51.520 --> 0:20:53.360 I'll you know, grab something else while i'm there. 0:20:53.480 --> 0:20:53.600 Right. 0:20:53.840 --> 0:20:56.160 Amazon's very cognizant of that fact that it's the most 0:20:56.160 --> 0:20:58.320 common shop people make, and if you want to, you know, 0:20:58.440 --> 0:21:00.840 be a big retailer's where you've got to be. They're 0:21:01.040 --> 0:21:02.800 recent learning, though, is that you also have to be 0:21:02.960 --> 0:21:05.800 there in person. Amazon learned, you know, kind of the 0:21:05.800 --> 0:21:07.440 hard way, during the pandemic and coming out of the 0:21:07.480 --> 0:21:09.600 pandemic that you need a physical point of presence to 0:21:09.680 --> 0:21:12.320 make a difference in grocery, which is not their comfort 0:21:12.400 --> 0:21:13.400