Speaker 1: This is Bloomberg Business Week. I'm Charle Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube and now also on Bloomberg Quick Take. Talking about
Speaker 1: those retail names and how they are trading. There's a
Speaker 1: Bloomberg opinion piece today that talked about Black Friday fatigue,
Speaker 1: how it's a warning sign for retail. In the column,
Speaker 1: it was noted online sales during the crucial kickoff to
Speaker 1: the holiday season reaching though a record nine point one billion.
Speaker 1: This is according to Adobe Analytics, but the two point
Speaker 1: three percent increase from last year's supply chain crunched season
Speaker 1: tep it compared with thirteen percent in nine in twenty
Speaker 1: nine uh nineteen, So in in store traffic about apparently
Speaker 1: similarly insipid. So let's see what our next guest has
Speaker 1: to say about all of this, because he has tons
Speaker 1: of data that makes him an expert on holiday retail shopping.
Speaker 1: Back with us, we welcome Patrick Brown, VP of Growth
Speaker 1: Marketing and Insights over at Adobe. He's with us on
Speaker 1: the phone from Burlingame, California. So Patrick, nice to be
Speaker 1: with you again. Um, how are you. I'm doing fine.
Speaker 1: Nice to chat with you a getting Carol So tell
Speaker 1: us you were on with us in early October, talked
Speaker 1: to us about the retail environment, how it's changed, gotten better,
Speaker 1: gotten worse since then. Yeah, So, I mean we've seen, uh,
Speaker 1: you know, the strength leading into Black Friday, you know,
Speaker 1: was really driven by the discounting, and discounting started each year.
Speaker 1: It seems to start earlier and earlier. In this year,
Speaker 1: you know, we saw consumers or retailers rather starting to
Speaker 1: discount as early as October when we had a Prime Day.
Speaker 1: And what we've seen is those discounts just stayed low
Speaker 1: and they've stayed you know, continuing through the Black Friday
Speaker 1: and well Black Friday year over years, you know, was
Speaker 1: was only a two point U up year a year.
Speaker 1: It was it did exceed nine billion online. And what's
Speaker 1: happening now through the weekend is we're seeing the demand
Speaker 1: actually online accelerate. So Saturday and Sunday we saw the
Speaker 1: equivalent of a Black Friday in sales nine point five billion,
Speaker 1: which is about four point four percent year of a year.
Speaker 1: So and then leading into Cyber Monday, where we think
Speaker 1: the strength is going to continue on to be about
Speaker 1: a five percent year of a year growth. So I
Speaker 1: think as as retailers continue to deeply discount and figure
Speaker 1: out where consumers are are are um, you know, have
Speaker 1: got some demand across some categories like toys, they're they're
Speaker 1: leaning into the discounts and driving some growth. Patrick when
Speaker 1: I hear the word discount as as a cheap skate
Speaker 1: or I guess frugal shopper some Sunday called me I
Speaker 1: my year's percuff at discount. But are there any certain
Speaker 1: categories where you're likely to get better discounts this year?
Speaker 1: And are are they all gone there there's still discounts
Speaker 1: available for the rest of the season. Well, it's a
Speaker 1: great question, and I think smart shopper is the right
Speaker 1: the right word. I'm similar. I mean, we've seen. The
Speaker 1: discounts started, like I mentioned in kind of with Prime
Speaker 1: Day in October, and then what's happened is for categories,
Speaker 1: especially around Cyber Monday, where you see electronics like traditionally
Speaker 1: has been really core deeply discounted category discounts um but
Speaker 1: toys continues to kind of rule the day for Black Friday,
Speaker 1: answer the weekends or we see up to thirty three
Speaker 1: percent discounts, but sporting goods down jewelry. Interestingly, one of
Speaker 1: the categories that we're also seeing come up as as
Speaker 1: consumers are more comfortable buying larger products online is furniture.
Speaker 1: Furniture and appliances. Believe it or not, we're seeing discounts
Speaker 1: and things in demand work discounts or in the ten
Speaker 1: to fifteen percent or even those products. Do I have
Speaker 1: to wait twelve months six months to get my couch?
Speaker 1: I hope I do that well, thankfully. I think you
Speaker 1: know last year it was all about there wasn't really
Speaker 1: very good discounting, and it was all because of supply chain.
Speaker 1: Retailers just didn't have things in their shelves and distribution
Speaker 1: centers to to fulfill some of the demands, so they
Speaker 1: had to keep prices higher. I think in some cases
Speaker 1: retailers are working off a bit of an inventory glott,
Speaker 1: so they are using this to manage some of their demand. There.
Speaker 1: They're they're spurring growth with with with with lower prices.
Speaker 1: But I think you will actually get your couch and
Speaker 1: it won't be it won't be eight months. Hey, one
Speaker 1: thing I want to ask you if you have any thoughts.
Speaker 1: I mean, if this extreme discounting continues, and I think
Speaker 1: about the retailers, what that means for margins and what
Speaker 1: kind of numbers will see ultimately when they in the
Speaker 1: new year report their fourth quarter numbers. Because I was
Speaker 1: in Sacks just walking through on Friday and Black Friday,
Speaker 1: didn't buy a thing, but spend a hundred and fifty
Speaker 1: you get a seventy five gift card, and I'm thinking, Wow,
Speaker 1: that's great for the consumer. It also guarantees you're going
Speaker 1: to come back and spend. But I mean that's got
Speaker 1: to hurt retailers. Well, I mean they are managing their inventories.
Speaker 1: I think, like you're alluding to it, so they're able
Speaker 1: to kind of, you know, it's better to sell some
Speaker 1: product and drive some future growth and drive some lt
Speaker 1: V where somebody can come back and potentially be a
Speaker 1: future shopper, even even in the in the coming year.
Speaker 1: I think interestingly, even though if you're in your in
Speaker 1: the store, one of the things that we're observing, or
Speaker 1: maybe it's the World Cup related, mobile shopping is eclipsed
Speaker 1: the sales through Black Friday and through the weekend. So
Speaker 1: even as people have been out there still purchasing, maybe
Speaker 1: not in the store, but they're buying online and they're
Speaker 1: just finding themselves. The way that they're buying is much
Speaker 1: more fluid, and so I think that retailers are driving
Speaker 1: volume and driving demand. There is consumer demand out there.
Speaker 1: I think they're leading into into it with discounting, and
Speaker 1: I think that's likely to continue into the coming coming
Speaker 1: in December. Those cell phones are dangerous. I always say,
Speaker 1: you know, it's so easy to go click click, It's
Speaker 1: gotten so good the technology. I agree. So your spouse
Speaker 1: is like, do you do you know what? You just did?
Speaker 1: It like the last twenty minutes, Um, Patrick Brown, good
Speaker 1: to check in with you. Hopefully we will again over
Speaker 1: the Holiday's VP of Growth Marketing and Insights over to
Speaker 1: Adobe on the phone from California. This is Bloomberg Business
Speaker 1: Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic
Speaker 1: on Bloomberg Radio. Nearly impossible to miss the video and
Speaker 1: pictures and stories about the protests that I've erupted against
Speaker 1: China's COVID zero strategy. We were talking about it with
Speaker 1: our TV colleagues in terms of the market impact. We
Speaker 1: talked about it earlier about Apple specifically, but it does
Speaker 1: represent one of the most significant challenges to Communist Party
Speaker 1: rules since the Tianamen Crisis more than thirty years ago.
Speaker 1: So great to have a voice back with us, a
Speaker 1: member of the Bloomberg family. To be quite honest, he's
Speaker 1: back in our Bloomberg Interactive Brokers studio. Andy Brown, former
Speaker 1: editorial director at Bloomberg New Economy, spent three decades in
Speaker 1: Asia's both China editor and columnist for The Wall Street Journal.
Speaker 1: Pulitzer Prize winning journalist. He leads the China Hub as
Speaker 1: a partner at Brunswick Group today, a critical issues advisory firms.
Speaker 1: So so grateful that you came back to Bloomberg to
Speaker 1: talk with us, Andy again. So, the disruptions, the protests,
Speaker 1: how do you think President g is kind of what's
Speaker 1: the calculus around that for him. But first of all, Carol,
Speaker 1: it's great to be back. Thanks for having me. Um.
Speaker 1: So this is historic, the events in China over the weekend,
Speaker 1: and I think it is the beginning of the end
Speaker 1: of COVID zero. And it is going to be I fear,
Speaker 1: a messy, chaotic and deadly unwinding of an irrational, poorly conceived,
Speaker 1: and and disastrously executed policy that has Si jinpings name
Speaker 1: all over it. He owns it, and he owns the
Speaker 1: public outrage that led to this, to these street protests
Speaker 1: and campus protests all all over all over China over
Speaker 1: the weekend. Look, it's an indictment of she himself, but
Speaker 1: it's also an indictment of the system that he set
Speaker 1: up UM. And it is a top down, heavy handed,
Speaker 1: personalized system, UM, inflexible, ideological, highly politicized, at times brutal,
Speaker 1: and the system failed and it's failed catastrophically. And you know,
Speaker 1: the irony is that it has triggered precisely the thing
Speaker 1: that see jimping most fears. So you know, for the
Speaker 1: first time protest right, well, protest, but the type of protests,
Speaker 1: so you know, their protests in China occur all the time. Okay,
Speaker 1: but they're you they're almost always localized single issue protests. Uh.
Speaker 1: You know, workers aren't getting paid in a factory or
Speaker 1: in a rural area. You know, some government connected business
Speaker 1: has grabbed your land. A lot of protests, um this
Speaker 1: is but they're never they're never networked, right, and and
Speaker 1: they're very easily contained. This These are nationwide protests that
Speaker 1: bring together disparate groups of people, poor people, rich people,
Speaker 1: students work together for a common cause, and that is
Speaker 1: to defeat COVID zero, which has led to enormous amounts
Speaker 1: of frustration within the population. And the trigger for this
Speaker 1: was a fire in the room chet in an apartment
Speaker 1: blog killed at least ten people, including we see the
Speaker 1: picture of this lovely weaker lady and and and and
Speaker 1: her children. And the suspicion was that they had got
Speaker 1: trapped in their apartment by COVID restrictions. So fire exit's
Speaker 1: being blocked or you know, in these concrete barriers to
Speaker 1: get placed around blox of the fire trucks couldn't get
Speaker 1: in and extinguished the blaze. And this trigger is something
Speaker 1: very deep, very emotional. You know that that that lady
Speaker 1: was was everybody's mother. Everybody's sister, you know, everybody's wife.
Speaker 1: Those children could have been my kids. Because you've got
Speaker 1: four hundred million people in China now living under some
Speaker 1: kind of a lockdown. Many of those in precisely those conditions.
Speaker 1: You know, their front doors have been well did close
Speaker 1: because they can't get out, and people live in fear
Speaker 1: and have been living in fear now for a long time.
Speaker 1: And so you know, this five just just triggered this,
Speaker 1: this this swelling sort of surge of anger right across
Speaker 1: the country, and it was so big, it wasn't you
Speaker 1: know how how clever they are and how how you
Speaker 1: know efficient they are blocking discussion on social media. This
Speaker 1: out this outbreak a bust was was was just so
Speaker 1: passionate that they couldn't contain it. Um. I was amazing,
Speaker 1: like the amount of video and pictures that we were
Speaker 1: able to all see right throughout the weekend. Yeah. Well,
Speaker 1: and I wonder what the next few days look like.
Speaker 1: Do you think, I mean, will there be an effort
Speaker 1: to suppress these protests, to put them down and and
Speaker 1: sort of put people in jail and and counterattack against
Speaker 1: the protesters. Um, it seems like it could get ugly
Speaker 1: in the next few days. You know, my, his his his,
Speaker 1: the realities she jimping has no good options here, okay,
Speaker 1: he only has tough decisions, difficult trade offs. So I
Speaker 1: am I'm pretty sure that with every fiber of his
Speaker 1: body he wants to crack down. Okay. I mean he
Speaker 1: is haunted by the collapse of the Soviet Union, which
Speaker 1: you know he blames. They lost their ideology, abandoned style
Speaker 1: and repudiated style, and but they lost controls of the
Speaker 1: levers of power they compromised, you know, Glass, Gnast and
Speaker 1: PERISTROI he's absolutely determined that that is not going to happen.
Speaker 1: And I say he doesn't. He doesn't want his policy,
Speaker 1: his signature policy, to be derailed, to be challenged by
Speaker 1: street protests. And I'm pretty sure that they are already now,
Speaker 1: you know, going after some of these leaders of the protest.
Speaker 1: But here's the thing. The more, you know, if if
Speaker 1: he cracks down violently, you know, he he could he
Speaker 1: could promote an even bigger social explosion. People have had enough.
Speaker 1: I mean, they've they're really up to here with with
Speaker 1: zero COVID. Now, on the other hand, if he opens
Speaker 1: up and opens up too quickly, uh, he risks, an
Speaker 1: explosion in cases and and and mass death. Uh. You know,
Speaker 1: even under the most optimistic scenarios, if if they opened
Speaker 1: up like Taiwan dead or Singapore, did you know, because
Speaker 1: of the infectiousness of om Crown, you know, and the
Speaker 1: vulnerabilities that you have in and even a highly vaccinated
Speaker 1: uh society, you're still going to get you know, a
Speaker 1: million or more death. Now that that's dynamite and pig
Speaker 1: you know, the Americans lost a million, Uh, the Europeans
Speaker 1: lost a million. This proves you know, the the decadence
Speaker 1: and incompetence and the corruption of their system. Their their
Speaker 1: careless system. But we in China have to have a
Speaker 1: have a superior system. You know, nobody, very few people
Speaker 1: died outside of the original outbreak. So he's he's going
Speaker 1: to be very very careful. And but you know, look
Speaker 1: uh this, you know, the real problem here is that
Speaker 1: there has been a staggering failure and it is the
Speaker 1: failure to build defenses against om Crown that you know,
Speaker 1: they've been so fixated on, you know, on zero COVID
Speaker 1: that they haven't invested in I see you beds in
Speaker 1: train specialist medical staff. Most importantly, they haven't adequately vaccinated
Speaker 1: the elderly population, you know, so, and and of course
Speaker 1: they have no natural immunity. Now, so how do you
Speaker 1: like a lot of I've been hearing a lot of
Speaker 1: commentary that this isn't another Tianamen square. But could it
Speaker 1: get to that point that a bad comparison. Yeah, Look,
Speaker 1: we've we've moved on UM and and look, I wouldn't
Speaker 1: rule I wouldn't rule anything out, but we've moved on.
Speaker 1: The government UM has far far more sophisticated tools now
Speaker 1: to counter dissent than they ever did back then. As
Speaker 1: I say, I'm pretty sure. Look, every square inch of
Speaker 1: every city in China uh is watched by by a camera.
Speaker 1: They already know you know who the leaders of these
Speaker 1: protests were, voice recognition, recognition, gate recognition. They're probably in
Speaker 1: touch now with their networks, with their professors, with their colleagues,
Speaker 1: with their with their families. But you know, here's the
Speaker 1: other thing, Um, the protesters are also pretty clever too,
Speaker 1: and they've shown a tremendous amount of ingenuity. So you
Speaker 1: see these these students at Qinghua. This is a crazy
Speaker 1: one where they they're holding up a banner with a
Speaker 1: mathematical equation. I guess you need to be a mathema
Speaker 1: and I'm not. You need to be a mathematician to
Speaker 1: understand that this equation was written by a mathematician called Freeman. Okay,
Speaker 1: it's Freeman's equations. There was this sort of subtle algebraic
Speaker 1: cry for liberty, you know, blank sheets of paper and
Speaker 1: so on. Is this is g at risk of losing
Speaker 1: some of his political cloud, which he just cemented, you
Speaker 1: know recently, you know, his his his more in his
Speaker 1: governance style, and now are going to be open to
Speaker 1: much greater scrutiny on a global stage, well domestic, domestically, domestically,
Speaker 1: you know, I mean here, here's here's the operation. Here's
Speaker 1: here's the the operating model for Shi jimpings China. Okay.
Speaker 1: And it starts with this vast institutional capacity, endless sums
Speaker 1: of money, you know, bottomless pit of of of of resources. Um.
Speaker 1: It's all powered by high technology and animated by this
Speaker 1: whole of nation, you know, mass mobilization. It's an awesome machine, right,
Speaker 1: but you know, and and and it's capable of great good.
Speaker 1: You know, you aim this machine at the problem of poverty,
Speaker 1: and you know you eliminate absolute poverty and they've done
Speaker 1: it right. And or you aim this machine at building
Speaker 1: well class infrastructure and you get within a few years,
Speaker 1: like the most extensive high speed train network in the world.
Speaker 1: But it's also capable of great harm. Right, So you
Speaker 1: you aim this machine at Shin John and you get
Speaker 1: the horrors of you know, internment camps in a million weeks.
Speaker 1: You know, you aim this machine at COVID and you
Speaker 1: get COVID zero. Okay, and and and it's the faction.
Speaker 1: But it actually shows the limitations of this operating model
Speaker 1: because it has clearly failed, you know, against against COVID. Andy.
Speaker 1: Do you think if China had accepted the Western vaccines,
Speaker 1: the Maderna and viasor vaccines, would would it be a
Speaker 1: whole different scenario here? Would would the they'd be able
Speaker 1: to open a lot, a lot less risky than they
Speaker 1: are now. You know, I think people exaggerate this point.
Speaker 1: Uh Look, it's baffling, right why they didn't take mRNA vaccine.
Speaker 1: It's the best in class vaccine, but it's not. It's
Speaker 1: not the game change that people say it. It might
Speaker 1: be Chinese vaccines are okay, they're fine, right, they do
Speaker 1: a fine job. Um, they prevent serious illness, they and death.
Speaker 1: But that's if you have your your three dose regimen, right,
Speaker 1: you get your two vaccines and your boosted. The problem
Speaker 1: that they have is that they haven't insisted that the
Speaker 1: elderly get vaccinated. You know, I was in Singapore this
Speaker 1: time last year actually for the Bloomberg New Economy Form.
Speaker 1: We were part of the reopening, and they were adamant
Speaker 1: about that. They weren't going to reopen until they had
Speaker 1: and I can't remember what it was, eighty or more
Speaker 1: percent of them elderly people, and they had a lot
Speaker 1: of resistance, and they overcame that by telling the elderly,
Speaker 1: if you don't get vaccinated and you get ill, you're
Speaker 1: gonna pay for your hospital treatment. Right. So they put
Speaker 1: a lot of pressure on but they focused on this, right.
Speaker 1: Why China hasn't focused on this is something of a mystery, well, um,
Speaker 1: lots of mysteries. And it feels like every week there's
Speaker 1: something new coming out of China that certainly up ends things.
Speaker 1: And we really appreciate you coming in to help us
Speaker 1: make sense of it. So Andy, thank you, Thanks Carol,
Speaker 1: Thanks Mike. I always appreciate Andy Brown of course he
Speaker 1: is partner at Brunswick Group. He is a critical or
Speaker 1: that is, a critical issues advisory firm and of course
Speaker 1: former editorial director of Bloomberg New Economy and so much more.
Speaker 1: We really appreciate it and thank you. This is Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovic on Bloomberg Radio. So the holiday season often running,
Speaker 1: many haaded to spend time with families over this past
Speaker 1: week and a week and for perhaps the first time
Speaker 1: in two or three years, because of the COVID pandemic
Speaker 1: right reunions. Yes, we know that, but Mike, it can
Speaker 1: also be a charge time when it comes to conversations
Speaker 1: around the dinner table, and more right, we hear about
Speaker 1: stress and all that good stuff. Absolutely no politics, please.
Speaker 1: My husband always used to be like, don't because I
Speaker 1: always used to bring upolitist at dinner. All right, So
Speaker 1: our next guest can probably help all of us with that.
Speaker 1: His book The Art of Conscious Conversations, Transforming How We talk, listen,
Speaker 1: and interact. Let's get to check uh Wisener. He is
Speaker 1: uh someone who has worked with leaders and their teams
Speaker 1: at Google Forward, Tesla, Shell General Motors and Chrysler. He
Speaker 1: joins us on the phone on this Monday. Hey, Chuck,
Speaker 1: nice to have you here with us. Did I say
Speaker 1: your last name correctly? It's Wiser Weasner. Forgive me my bad?
Speaker 1: Um check we w I v W yeah. Okay, okay check. Well,
Speaker 1: good to have you here with us, Um, and let's
Speaker 1: talk about your book, because you have worked with a
Speaker 1: lot of companies. Um, tell us about your background and
Speaker 1: the work that you've done in the past. Okay, Um. Well,
Speaker 1: I've actually formally trained as an architect, and I changed
Speaker 1: careers because I couldn't stand the conflict and I figured
Speaker 1: there was a better way to have conversations, and so
Speaker 1: I had studied, uh, the ontology of language and what
Speaker 1: didn't mediation training and all that. One thing led to
Speaker 1: another and I changed careers and then I've been working
Speaker 1: with the leaders and their teams for the last thirty years. So, Chuck,
Speaker 1: when you talk to these executives, what are what are
Speaker 1: sort of their goals to improve conversation? Is it you
Speaker 1: know that they want to have more personality, be more engaging.
Speaker 1: What are they looking to do? Well? It varies, but
Speaker 1: I think the biggest problem is offen. Uh, there's a
Speaker 1: lot of miscommunications and there's a lot of misunderstanding for
Speaker 1: leaders about how how powerful their voice is. UM. And
Speaker 1: I say that as an example, like a leader could
Speaker 1: be in a meeting and say, well, that was really
Speaker 1: a stupid idea, and they think they're just sort of
Speaker 1: bantering about and someone could leave that meeting thing, oh gosh,
Speaker 1: I'm I'm really in trouble. I might get fired tomorrow.
Speaker 1: So there there's authority issues and issues of power in
Speaker 1: their voice, and then there's the also a lot of
Speaker 1: of of leaders forget to create a good story and
Speaker 1: enough context for people to really understand what they're doing. UM.
Speaker 1: And so having a clear mission context and then being
Speaker 1: really really mindful of how to create safe psychological safety
Speaker 1: so you can have robust conversations. Is is one of
Speaker 1: the biggest things we work on. So check. I gotta
Speaker 1: say that, UM. In reading in and looking at your
Speaker 1: book and looking at your background and knowing that you
Speaker 1: worked with Tesla, I was dying to ask you, how
Speaker 1: do you think Elon Musk is doing well? Um, Ellen,
Speaker 1: I think needs to take a little breath and step
Speaker 1: back from the circus that he's involved in because building
Speaker 1: a car or building a rocket ship is really different
Speaker 1: than what he's entering into now. Um, it's such a
Speaker 1: different kind of a way. It's just such a social
Speaker 1: cultural um format that that every thing that he does
Speaker 1: and everything that he says again has carries a lot
Speaker 1: of authority, a lot of people listen to him, and
Speaker 1: so I think he needs to find a little bit
Speaker 1: more courage to step back and really decide what he
Speaker 1: wants to do and speak speak more mindfully. Yeah, Chuck,
Speaker 1: I wonder what you've learned about successful executives when it
Speaker 1: comes to sort of the art of conversation. Is it, know,
Speaker 1: dominating a conversation, Does that sort of correlate to success
Speaker 1: in the business world or is there more to it
Speaker 1: than that. I think that's the that's the biggest downside. Um.
Speaker 1: So leaders, leaders get to where they get to because
Speaker 1: they were expert engineers, are expert tech people or whatever,
Speaker 1: and then they get they get elevated and we actually
Speaker 1: are and they are rewarded for having the answers. But
Speaker 1: the how you get in an organization, the less you
Speaker 1: can have all the answers for all the problems that
Speaker 1: you face, or less you can know about everything that's
Speaker 1: going on in the organization. So actually a great book
Speaker 1: years ago called Good, Good to Great. Uh. They were
Speaker 1: trying to figure out why companies that became great instead
Speaker 1: of good? What happened and one and they didn't want
Speaker 1: to focus on the leader. But one thing they kept
Speaker 1: coming through and through and through is these leaders that
Speaker 1: were doing the great companies, they had a humility that
Speaker 1: allow them to trust their experts, allow them to trust
Speaker 1: their team, and to create a space so they have
Speaker 1: really open, honest, creative and good conversations. So humility is
Speaker 1: a better better attribute than than say, arrogant and thinking
Speaker 1: you have all the answers. So who's the CEO or leader?
Speaker 1: Leader could be any walk that you think is just
Speaker 1: spot on when it comes to conscious conversations. Okay, that's
Speaker 1: a tough question. I have to be careful because I work,
Speaker 1: I mean all my work is so confidential. UM. I
Speaker 1: certainly have worked with Doug Field, who was at Apple
Speaker 1: and is now at forward UM, who really takes this
Speaker 1: stuff to heart and he his ability to communicate with folks,
Speaker 1: UM to to to create the excitement around the mission
Speaker 1: and then to really allow people to bring in the
Speaker 1: best people and draw all the best people and allow
Speaker 1: those folks to do great work. I think he's one example,
Speaker 1: and in the past I'm thinking of of of a
Speaker 1: few uh so another energy company that I won't name,
Speaker 1: but that I've worked with and where that leader really
Speaker 1: transformed from not understanding sort of ideas about business culture
Speaker 1: to realizing how much culture shape the success and the
Speaker 1: and the way companies do their work. Yeah, Chuck, Carol
Speaker 1: and I were joking at the beginning there about no
Speaker 1: politics sture in the holidays, no politics conversations. But but
Speaker 1: it has politics have gotten so divisive in this country, um,
Speaker 1: and I wonder how that affects conversation. Is it best
Speaker 1: to just not go near it? Or is there a
Speaker 1: way to actually talk politics without sort of wanting to
Speaker 1: ring the other person's neck by the end of it? Right, Yeah,
Speaker 1: I think we've gotten to a point where what I
Speaker 1: might have had a different answer six or eight years
Speaker 1: ago than I have now right now, I think we've
Speaker 1: gotten to a point where we're so off the mark
Speaker 1: as far as being able to listen and hear one
Speaker 1: another that, Um, we can't just jump into a political
Speaker 1: conversation and start, you know, having our position or you know,
Speaker 1: pushing our position. Um. I think the fundamental problem is
Speaker 1: that if you're in a conversation that's sort of doesn't
Speaker 1: feel right, the best thing you can do is just
Speaker 1: to stop, stop talking about what your perspective is, and
Speaker 1: step back and say, are there's are there a few
Speaker 1: facts we could agree on? Because fundamentally we have lost
Speaker 1: that art saying women, what what? What do we know?
Speaker 1: What don't we know? And if we can't agree on
Speaker 1: those head foundation of facts, you're not going to get
Speaker 1: anywhere in a conversation. And in fact, I've walked away
Speaker 1: from multiple conversations and multiple groups dogs right where I
Speaker 1: couldn't get the group or the people to just settle
Speaker 1: down on some fundamental fact. I was talking to my
Speaker 1: sister about this in terms of social like, don't get
Speaker 1: angry and start like kind of being nasty in terms
Speaker 1: of someone's view, just put out some facts and say
Speaker 1: you know and kind of respond in that way Chuck,
Speaker 1: this is fun. Hope you can come back um real
Speaker 1: soon and check Wistener he is leadership advisor and author
Speaker 1: his book The Art of Conscious Conversations, Transforming how we talk, listen,
Speaker 1: and interact a journal Now, but you let me drive. No,
Speaker 1: no, no no, no, honey, please, I'll do the dravel. I
Speaker 1: want to drive. It's good questions D. This is the
Speaker 1: Drive to the Globe down on Bluebird Radio, and we
Speaker 1: have just about ten minutes left in today's trading session,
Speaker 1: getting ready to wrap up what will be a busy week,
Speaker 1: certainly chock full of economic data. We're here from j Pal.
Speaker 1: We talked about this, We're already hearing from members of
Speaker 1: the Fed today. But let's get to it with Anne Miletti.
Speaker 1: So great to have her back in our studio ahead
Speaker 1: of Active Equity at all Spring Global Investments. She joins
Speaker 1: us here in our Bloomberg Interactive broker's studio. Welcome back.
Speaker 1: It feels good, feels more normal. It does to anything
Speaker 1: normal about this market environment? Or how do you assess it? Well,
Speaker 1: it's getting more and more normal every day. Um, why
Speaker 1: do you say that? Because the volatility. Even though like
Speaker 1: I think you know a lot of us look at
Speaker 1: the vics and say, oh, that is volatility. I think
Speaker 1: investors in the market think, gosh, you never know from
Speaker 1: where the market starts in the morning to where it ends,
Speaker 1: what's really going to happen. I think we've had more
Speaker 1: one percent moves than we've seen since the Great procession
Speaker 1: UM this year, and that's a lot for everyday investors
Speaker 1: to handle. Well, So what are what are the conversations
Speaker 1: with clients like in an environment like that and our
Speaker 1: people you know, doing the right thing and getting greedy
Speaker 1: when others are fearful or they fearful like everybody else.
Speaker 1: I think, you know, it's really challenging to get people
Speaker 1: who even even who are in the business professional investors
Speaker 1: to take emotion out of the decision making and to
Speaker 1: really think long term when there's news flower every day,
Speaker 1: when things change all of the time, and so a
Speaker 1: lot of our conversations with clients are just about you know,
Speaker 1: staying diversified, thinking about long term and looking at this
Speaker 1: volatility as opportunity and not just as a tough time.
Speaker 1: But you know, what opportunity does it present for the
Speaker 1: next you know, several years potentially? Is it problematic? And
Speaker 1: if you think about um Jim Ballard coming out from
Speaker 1: the St. Louis fed and talking about you know, maybe
Speaker 1: a higher rate environment not only next year, but into
Speaker 1: is that problematic? I mean for equity valuations to still
Speaker 1: have to maybe come down even further or just as
Speaker 1: a classes in general. You know, it's so it's a
Speaker 1: great question, Shan Carroll, and it's one that we've had
Speaker 1: to wrestle with for the last you know, more than
Speaker 1: twelve months. The good news, I think, if there is
Speaker 1: a good side to this, is that the market, the
Speaker 1: multiple compression has happened. A lot of it has been
Speaker 1: in a you know, the markets down more than um
Speaker 1: that's all multiple compression. Earnings are still going to be
Speaker 1: positive for the year, and a lot of consensus is
Speaker 1: still positive for next I'm not so sure about that,
Speaker 1: but um that that expectation has really really been lowered,
Speaker 1: we're starting to see earnings also kind of come in
Speaker 1: a bit. I think we're going to see more of that.
Speaker 1: And so when you were an investor not a trader,
Speaker 1: you go, Okay, the future is different, and you know,
Speaker 1: the cost of capital is more expensive. You have to
Speaker 1: build that into your modeling and into your fundamentals. And
Speaker 1: if you're running a company, you have to run your
Speaker 1: company a little bit differently than you have in the
Speaker 1: last decade. Is the risk appetite just not there? Do
Speaker 1: you think among the CEOs, the CFOs too of you know,
Speaker 1: invest in their companies to boost their buy backs, boost
Speaker 1: their dividends. Is that part of the issue, do you think?
Speaker 1: I do think they're human, just like UT's right, and
Speaker 1: they're captured by emotion and the unknown. And when you
Speaker 1: listen to the FED officials, you know, threaten of much
Speaker 1: higher rates, they are probably pausing. I think what our
Speaker 1: investment teams are really trying to stay focused on are
Speaker 1: what companies have the strength to whether what, however long
Speaker 1: the storm is going to be right And if it's
Speaker 1: just a shallow recession um and short lived, great, But
Speaker 1: what if it's longer, what if it's deeper? And I
Speaker 1: think management's good CEO CFOs think through those scenarios as well.
Speaker 1: And if you look at balance sheets and free cash flow,
Speaker 1: those are metrics that allow you to have flexibility as
Speaker 1: a company for a long period of time and gain
Speaker 1: competitive ground even in downturns. And those are the types
Speaker 1: of companies our investment teams are really focused on right now.
Speaker 1: And do you model for maybe a recession, whether it's
Speaker 1: shallow or a little bit deeper, but a recession where
Speaker 1: people are working. You know, it's so interesting, right because
Speaker 1: this is crazy question. It is um. Look, I do
Speaker 1: think we're going to see some weakness in the labor market.
Speaker 1: It's not showing up as quickly as some would expect,
Speaker 1: but we all know it's a legging indicator. We're seeing
Speaker 1: job freezes. We have seen layoffs in some of the
Speaker 1: tech companies. I think you're going to start to see
Speaker 1: it in some financial companies as well, likely as we
Speaker 1: head into the new year. Um it's going to show
Speaker 1: up in other places as well. It may not be
Speaker 1: unemployment levels that we've seen historically, and there's other reasons
Speaker 1: for it to write, just demographic reasons why we might
Speaker 1: not hit those low levels. So I think, you know,
Speaker 1: never say never, never say the future looks different than
Speaker 1: the past, But there's a good possibility this one won't
Speaker 1: look exactly like they haven't. It could be different, couldn't
Speaker 1: it time? You know, I wonder, you know, you sort
Speaker 1: of get the impression that with this huge rally we've
Speaker 1: seen in equity since the middle of October, that people
Speaker 1: are kind of, you know, hoping or betting that the
Speaker 1: worst is over with inflation, with the Fed rate hikes.
Speaker 1: You know, we have seen inflation. It's still hot, but
Speaker 1: it's come down. Interest rates have kind of leveled off.
Speaker 1: Is that wishful thinking? I think, you know a little
Speaker 1: bit that there's a little there's been a lot of
Speaker 1: money on the sidelines waiting to get in, and I
Speaker 1: think people are worried about missing it. I do think
Speaker 1: there's gonna be yeah, exactly, I do think there's gonna
Speaker 1: be a little more downside risk here right there. We're
Speaker 1: not again. Earnings expectations have just started to come in
Speaker 1: a little bit this past quarter. I think we need
Speaker 1: to see more of that happened before we officially hit
Speaker 1: the bottom. And I also think investors cannot expect v
Speaker 1: shape recovery brought on by policy or the FED, and
Speaker 1: we've had that in the past. That's what's caused these
Speaker 1: huge inflections. I don't think we're going to get that.
Speaker 1: So where would you commit your money at this point?
Speaker 1: You to talk about the importance of free cash flow
Speaker 1: key metric to wash so to watch excuse me, so?
Speaker 1: And where would you put assessments? It's you know, it's
Speaker 1: really hard to pick a sector. I would say, you know,
Speaker 1: if you want a sector, healthcare is a good one
Speaker 1: because there's still innovation, there's still growth, there's still the
Speaker 1: possibility for dividends, and we know and in recessionary time periods,
Speaker 1: healthcare has been an area that's had the least amount
Speaker 1: of EPs of earnings UM pulled back and and in
Speaker 1: fact it's been positive most of the time. Outside of that,
Speaker 1: there are a lot of attractive names in all kinds
Speaker 1: of other industries. And I think when we get to
Speaker 1: general about saying move away from tech or move away
Speaker 1: from industrials, we're painting things with a broad brush when
Speaker 1: there are unique opportunities at all sectors. Right, So sticker
Speaker 1: that b stock care exactly exactly well, And I know
Speaker 1: you're a stock picker and preach the gospel stockpicking, but
Speaker 1: at some point you got to say, these bond deals
Speaker 1: look attracted to they are, and you know you got
Speaker 1: me there. It's it's one of those unique times where
Speaker 1: you know, look, you've had bonds and equities go up.
Speaker 1: They're not supposed to be so polated. You also had
Speaker 1: them painfully go down together. And I do think that
Speaker 1: the bond market is, you know, showing some really attractive
Speaker 1: areas for investors right now too. So again, there's a
Speaker 1: lot to be fearful of, but there's a lot of
Speaker 1: opportunity out there like the optimism that's out there, and
Speaker 1: Letty who brought us that optimism, Head of Active Equity,
Speaker 1: Olvert Allspring Global Investments, thank you so much, Happy holidays,
Speaker 1: hope we see you again soon. Thanks for listening to
Speaker 1: Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or
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