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Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you

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Speaker 1: along with my co host Lisa Brahma Waits. Each day

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Speaker 1: we bring you the most noteworthy and useful interviews for

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Speaker 1: you and your money, whether at the grocery store or

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Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple

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Speaker 1: podcast or wherever you listen to podcasts, as well as

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Speaker 1: at Bloomberg dot com. Switch gears a little bit again.

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Speaker 1: We have the FED tomorrow expectations are for a rate

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Speaker 1: in rate cut. Let's get a sense of what the

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Speaker 1: markets are positioned for. Neila Richardson, investment strategists at Edward Jones. Neila,

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Speaker 1: thanks so much for joining us. What is it? What

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Speaker 1: are you looking for tomorrow? Out of the FED tai fall.

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Speaker 1: I'm looking for a return to the hard data. I

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Speaker 1: really want to see what their projection for the is

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Speaker 1: for the economy going forward. We we have a really

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Speaker 1: mixed picture right now. It's still a resilient consumer, but

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Speaker 1: there's some praying around the edges. In terms of the

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Speaker 1: jobs market producing the same number of jobs that we

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Speaker 1: saw last year. We've seen a flight uptick and delinquencies

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Speaker 1: in terms of credit cards and automobile, And so I

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Speaker 1: want to know, with inflation firming another different factor since

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Speaker 1: the Fed um in June and and really started us

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Speaker 1: on this rate cutting cycle, I want to know, has

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Speaker 1: their outlook for the economy changed? So are you expecting

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Speaker 1: them to actually answer that question? Well, they've they've been

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Speaker 1: pretty consistent about the economy. Uh, They've said that the

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Speaker 1: economy is in good shape. And is that still their

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Speaker 1: operating outlook? Is the economy still in good shape? And

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Speaker 1: if so, is this next move by the Fed, whether

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Speaker 1: it's a pause or a cut, is this consistent with

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Speaker 1: the economy that we see before us or are they

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Speaker 1: still looking around the corner at rising risks like a

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Speaker 1: trade which again we've gotten some improving more positive rhetoric,

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Speaker 1: or or other risks you're seeing abroad in terms of

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Speaker 1: slowing cora. So, Nila, we've you know, we're expecting, as

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Speaker 1: you suggested, you know, a rate cut tomorrow. It continued

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Speaker 1: moderately dubbish. Uh, Fed, We've got maybe some good news

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Speaker 1: coming on some of the geopolitical fronts as relates to

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Speaker 1: trade and you know, gosh, maybe even Brexit. The markets

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Speaker 1: certainly discounted that this year. Do you sense that from

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Speaker 1: evaluation perspective, this market is is kind of stretched. We

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Speaker 1: think that the pricing is reasonable because we're still seeing

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Speaker 1: good economic fundamentals. We still see an economy that's growing

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Speaker 1: but at a slow rate. That's been very positive for equities.

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Speaker 1: Very low interest rates have been positive, Monetary stimulus has

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Speaker 1: been positive, and so we think it's a reason it's

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Speaker 1: not a cheap market, but it is a reasonably priced

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Speaker 1: rue given what we know to be solid fundamentals. And

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Speaker 1: I think what we're seeing on the earning s front

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Speaker 1: is validating that view. So coming up're gonna be talking

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Speaker 1: about consumer confidence, and we just got some readings showing

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Speaker 1: that consumer confidence felt to the lowest since June. We

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Speaker 1: also seem to linquencies pick up, if for particularly auto

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Speaker 1: loans and credit card loans. How does that sort of

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Speaker 1: square with this idea of the strong US consumer and

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Speaker 1: a strong US economy. Well, it goes back to my

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Speaker 1: initial point that the consumer has been resilient. It's been

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Speaker 1: carrying the water for this economy for ten years. Are

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Speaker 1: we starting to see a fray? And that's what we're

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Speaker 1: very watchful of. H if you care that with U

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Speaker 1: corporate sectors, that's healthy, but really hasn't contributed on the

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Speaker 1: growth front in terms of capex spending, our investment, what

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Speaker 1: you or on the fiscal side. We never got that

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Speaker 1: infrastructure bill We've all been waiting for a week after

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Speaker 1: a week, and so it's really the consumer. And while

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Speaker 1: these uh praying of the consumer might be okay if

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Speaker 1: you had other players in this game, when you only

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Speaker 1: have one, you're really concerned about the health of that one.

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Speaker 1: Naylor Richardson, thank you so much as always for joining us.

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Speaker 1: Neil Regardson as an investment stargis at Edward Jones. Let's

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Speaker 1: look at the consumer here, and the consumer has become

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Speaker 1: you know, it is the US economy, and with the

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Speaker 1: manufacturing sector in the US showing signs of weakness, the

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Speaker 1: pressure is on the consumer even more to keep this

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Speaker 1: economy going forward. To get a sense the latest read

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Speaker 1: on how the consumers doing, we welcome Lynn Franco. Lynn

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Speaker 1: is a senior Director of Economic Indicators and Surveys at

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Speaker 1: the Conference Board. So Lynn, give us the latest data

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Speaker 1: that you guys have at the Conference Board on the

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Speaker 1: consumer confidence. We had a marginal decrease. Confidence is now

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Speaker 1: nine versus one point three last month. UM but holding steady,

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Speaker 1: and we think it's going to continue to prop up

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Speaker 1: the economy, prop up growth, and um, you know, we're

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Speaker 1: we're sort of in I think, a good place right here,

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Speaker 1: as consumers have sort of you know, shrugged off all

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Speaker 1: the trade rhetoric. Um, there's no signs here that the

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Speaker 1: impeachment inquiry is having any impact on competence overall. So

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Speaker 1: I think we're in pretty good shape heading into the

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Speaker 1: holiday season. I guess some people appoint to the unexpected

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Speaker 1: decline as being somewhat worrisome. What would you tell them?

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Speaker 1: We're still at a relatively strong level. You know, we've

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Speaker 1: been seeing sort of this same seasaw momentum for much

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Speaker 1: of this year, and there's really been no sort of

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Speaker 1: downward trend visible. So I think we're in a we're

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Speaker 1: in a pretty good place here. I mean, one point

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Speaker 1: nine is a relatively strong reading, and it's it's interesting, Lynn,

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Speaker 1: I mean, when you think about the consumer, so much

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Speaker 1: of it is do I have a job? Am I

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Speaker 1: getting raises in my job? And I, you know, more

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Speaker 1: or less content with where I am? In terms of employment,

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Speaker 1: We're pretty pretty good spot right now with unemployment at

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Speaker 1: you know, you know, fifty year lows. What what's your

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Speaker 1: survey talking about the employment situation. Um, you know, current

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Speaker 1: employment situation is very good. We saw a bit of

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Speaker 1: an uptick in the people telling us that, you know,

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Speaker 1: jobs are plentiful, a slight uptick, and those telling us

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Speaker 1: jobs are hard to get but historically very strong levels.

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Speaker 1: They did express some mild concerns going forward. Um, but

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Speaker 1: I think we're still in a relatively good place. I mean,

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Speaker 1: we're anticipating somewhat slower employment growth going forward, but no

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Speaker 1: red flags coming out of there that you know, suddenly

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Speaker 1: we're going to have a spike in layoffs or or freezes.

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Speaker 1: So I think it should be enough to support confidence.

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Speaker 1: So we've actually seen a softening in the trade rhetoric.

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Speaker 1: We know that trade tensions have weighed on consumer sentiment.

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Speaker 1: What was it that was responsible for the unexpected decline

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Speaker 1: this time around? It's relatively um, you know, kind of

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Speaker 1: moving sideways again. It was a little bit of apprehensiveness

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Speaker 1: about where business conditions and employment are headed. On the

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Speaker 1: flip side of that, though, they're more positive about their

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Speaker 1: income prospects and that should bode well for spending both

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Speaker 1: in the holiday season season in a little bit longer

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Speaker 1: term as well, Lynn, is your work take into account

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Speaker 1: um kind of home ownership because it seems like with

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Speaker 1: interest rates so low here, uh, you know, people who

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Speaker 1: want homes have the homes that they can trade up

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Speaker 1: if if if they if they want. Um, how do

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Speaker 1: you guys try to capture the whole home ownership thing

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Speaker 1: as it waits to consumers. Well, we're trying to capture

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Speaker 1: in two ways. So for instance, we ask a question

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Speaker 1: about interest rate expectations of the last three months, more

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Speaker 1: than a quarter of consumers are telling us that they

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Speaker 1: expect to cut so that sort of baked into confidence

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Speaker 1: and it's a large increase from what we had seen

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Speaker 1: in prior months. And in terms of home purchasing intentions,

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Speaker 1: we saw a little bit of a pick up there,

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Speaker 1: and I think, you know, the decline that we're seeing

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Speaker 1: an interest draw in mortgage rate is filtering into that

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Speaker 1: and major appliance purchases, you know, the big ticket items

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Speaker 1: there is pretty flat and holding it at a high level.

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Speaker 1: So I think, um, you know, both housing interest rates,

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Speaker 1: job growth, and wage growth should continue to support confidence

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Speaker 1: for the remainder of the year. Thank you so much,

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Speaker 1: Lynn Franco. We always appreciate your insights. Lind Anco, a

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Speaker 1: senior director of Economic Indicators and Surveys at the conference board, Well,

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Speaker 1: was supposed to be the year of the Unicorn I

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Speaker 1: p O. Everybody was gonna make moneys, the bankers, certainly, investors,

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Speaker 1: maybe even the private equity folks themselves. Lots of IPOs

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Speaker 1: on tap, but they have been quite disappointing to date.

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Speaker 1: The questions what does that mean for the tech community

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Speaker 1: and I p O s and valuations to get some

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Speaker 1: answers to those questions, and welcome Ted Smith Ted as

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Speaker 1: a co founder and president of Union Square Advisors. So Ted,

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Speaker 1: thanks so much for joining us. Just wonder if you

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Speaker 1: could give us your thoughts and kind of what we

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Speaker 1: saw with Uber, with Lift, with Smile Direct, and then

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Speaker 1: of course with we work in terms of employed the

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Speaker 1: evaluation seems to be a big gap between the private

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Speaker 1: market is valuing these companies and where the public market

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Speaker 1: evaluations are hipaul and highly soa thanks for having me on.

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Speaker 1: Really appreciate it. Yes, we've certainly seen a very interesting

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Speaker 1: year uh in the I p O markets at this point,

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Speaker 1: but I also think it's important to point out there

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Speaker 1: have been a number of notable successes, and there's a

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Speaker 1: little bit of a the haves and the have nots

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Speaker 1: this year, and I think there's obviously been a lot

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Speaker 1: of focus on the tech unicorns and a number of

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Speaker 1: the folks that you are, the companies that you just mentioned,

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Speaker 1: particularly We Work, have kind of dominated the headlines. So

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Speaker 1: but despite that, I think we have an I p

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Speaker 1: O market that's open and accepting um by investors for

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Speaker 1: business models that are actually making money or have the

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Speaker 1: opportunity to make money in the near term, so a

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Speaker 1: path to profitability that's well defined. What I think the

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Speaker 1: market has risen up and said decidedly at this point

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Speaker 1: is that ever widening losses or a lack of even

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Speaker 1: a vision of how to get to profitability clearly is

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Speaker 1: not going to be acceptable for new I p O opportunities.

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Speaker 1: And therefore we've seen things like the we Work situation

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Speaker 1: crop up where simply there's just no way to get

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Speaker 1: that come any public in the near term. By the way,

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Speaker 1: talking about we Work, just across the Bloomberg Week are

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Speaker 1: we Companies is has been quietly building an electronic gaming business.

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Speaker 1: How that fits with everything else, we shall see how

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Speaker 1: I see that anyway, I'd love to get your sense

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Speaker 1: tad of where you expect to see a lot of

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Speaker 1: consolidation going forward, other particular sectors that you expect to

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Speaker 1: be particularly active in the next couple of months. UM.

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Speaker 1: We certainly continue to see a lot of activity around

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Speaker 1: enterprise software. Generally, it's been one of the arenas that

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Speaker 1: has been most successful. It's certainly been one of the

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Speaker 1: areas where we've seen successful I p O s this year,

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Speaker 1: with a number uh a number of really great companies

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Speaker 1: coming public. It also appears to be the place where

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Speaker 1: the largest tech acquirers, and that's everybody from Microsoft, Salesforce, Adobe,

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Speaker 1: et cetera, are continuing to focus their attention their energies

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Speaker 1: and sort of next generation enterprise software UM. It's it's

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Speaker 1: certainly a sector that's fairly highly valued, making those act

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Speaker 1: editions UM somewhat expensive, at least on a historically relative basis.

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Speaker 1: But it's also UM the arena where we think the

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Speaker 1: global market opportunities are the largest, and therefore we think

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Speaker 1: where both corporate acquires like some of those that I mentioned,

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Speaker 1: as well as the large private equity firms that focus

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Speaker 1: on that arena are likely to continue to be very

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Speaker 1: focused on acquiring interesting businesses. So t I know you

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Speaker 1: folks that you need square really focused on the technology sector.

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Speaker 1: And we've seen i would say a little bit of

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Speaker 1: a C change maybe over the last year two whereby

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Speaker 1: the U S regulators, US Congress are really taken a

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Speaker 1: look at the technology sector from a regulatory perspective. That's

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Speaker 1: kind of new. Are you sensing that that's kind of

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Speaker 1: impacting the tech business, whether it's startups or even some

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Speaker 1: of the bigger, more established companies. Well, it's certainly causing

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Speaker 1: the bigger, more established companies to try to figure out

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Speaker 1: how to deal with this C change, right this is

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Speaker 1: the first to your point, this is kind of the

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Speaker 1: first time in several years that the largest tech companies

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Speaker 1: have kind of been in the crosshairs of the regulators

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Speaker 1: and Congress and presidential candidates kind of all at the

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Speaker 1: same time. Uh. This is a This is a pretty

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Speaker 1: interesting topic for a lot of folks right now, and

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Speaker 1: it's one that that sort of continually seems to rise

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Speaker 1: rise above the fold. So what we're seeing from the

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Speaker 1: largest companies is is um some ongoing thoughtfulness if you will,

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Speaker 1: about can M and A be pursued in certain arenas

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Speaker 1: UH and not put them even further into those crosshairs.

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Speaker 1: But I think they're they're firmly there now. UM. I

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Speaker 1: was at an interview last week with the chief of

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Speaker 1: the DJ Enforcement issue where he basically said that all

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Speaker 1: options are on the table with respect to the largest

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Speaker 1: tech companies UM and how we may think about dealing

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Speaker 1: with the bad behavior that has come to light over

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Speaker 1: the course of the last two to two to three years.

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Speaker 1: So I think they're clearly on notice with respect to

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Speaker 1: the their activities in a number of ways, how they

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Speaker 1: handle personal data, how they deal with the freedom of

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Speaker 1: speech issues, how they deal with putting their thumb on

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Speaker 1: the scale with respect to very as business activities. I think,

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Speaker 1: to the point that I made, everything is on the table,

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Speaker 1: and so I think those largest tech companies are taking

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Speaker 1: that into consideration. What does that mean for startups? What

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Speaker 1: does that mean for newer companies? Well, it may mean

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Speaker 1: opportunity for them UH as they're able to go into

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Speaker 1: markets that might have been otherwise dominated by these these

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Speaker 1: larger players. But I also think there's the question of

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Speaker 1: what does it mean for innovation UH and if we

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Speaker 1: somehow put the regulatory shackles on these largest tech companies

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Speaker 1: doesn't in fact crimp their ability uh to uh really

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Speaker 1: significantly innovate from here, which is very important for for

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Speaker 1: this country and for the tech sector generally. Ted Smith,

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Speaker 1: thank you so much for being with us. Ted Smith,

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Speaker 1: co founder and president of Union Square Advisors, definitely has

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Speaker 1: been an active year, uh for I P O S

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Speaker 1: and for M and A. The question is going forward,

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Speaker 1: how much that can continue in light of some sort

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Speaker 1: of rocky or receptions that we've gotten. Thanks for listening

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Speaker 1: to the Bloomberg pl podcast. You can subscribe and listen

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Speaker 1: to interviews at Apple Podcasts or whatever podcast platform you prefer.

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Speaker 1: UM Paul Sweeney, I'm on Twitter at pt Sweeney. I'm

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Speaker 1: Lisa abram Woods. I'm on Twitter at Lisa abram Woods.

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Speaker 1: One before the podcast, you can always catch us worldwide

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Speaker 1: on Bloomberg Radio