1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,600 Speaker 1: with essential market moving news on the Bloomberg Markets Podcast, 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:23,239 Speaker 1: at Bloomberg dot com slash podcast. I have a all 7 00:00:23,400 --> 00:00:27,800 Speaker 1: work from home team for Bloomberg and on the first team, 8 00:00:27,800 --> 00:00:30,800 Speaker 1: along with Vince Signarella, is our next guest, Cameron christ 9 00:00:31,080 --> 00:00:34,120 Speaker 1: macro strategist Bloomberg News. He has mastered this work from 10 00:00:34,159 --> 00:00:38,120 Speaker 1: home thing and he's never coming back. Cameron, is there 11 00:00:38,200 --> 00:00:44,320 Speaker 1: a bare case for the mighty US dollar UH in 12 00:00:44,440 --> 00:00:50,160 Speaker 1: the short run? Um? Probably not, I mean anything beyond positioning. 13 00:00:51,360 --> 00:00:58,280 Speaker 1: Is it's tough to tough to enviantage simply because um yeah, 14 00:00:58,320 --> 00:01:01,840 Speaker 1: I mean interest rate expectations may go up, they may 15 00:01:01,880 --> 00:01:04,840 Speaker 1: go down after Jackson Hole, But so much of the 16 00:01:04,880 --> 00:01:09,880 Speaker 1: rest of the world, particularly major UM, major economies and 17 00:01:09,880 --> 00:01:14,920 Speaker 1: major currencies, are facing a significant headwind because of energy 18 00:01:14,920 --> 00:01:18,199 Speaker 1: prices UM, not just the price of oil, but most 19 00:01:18,200 --> 00:01:21,160 Speaker 1: particularly in Europe in the UK, the price of natural 20 00:01:21,200 --> 00:01:28,840 Speaker 1: gas UH and electricity and the US has re engineered 21 00:01:28,880 --> 00:01:34,720 Speaker 1: itself to be um much more independent in terms of 22 00:01:34,959 --> 00:01:38,280 Speaker 1: energy prices. Obviously we've got natural gas, but also even 23 00:01:38,280 --> 00:01:42,399 Speaker 1: even um crude oils. So a lot of what we've 24 00:01:42,520 --> 00:01:45,959 Speaker 1: a lot of the weakness we've seen in euro and 25 00:01:46,160 --> 00:01:50,160 Speaker 1: Sterling in particular, have been driven by this parabolic rise 26 00:01:51,040 --> 00:01:56,080 Speaker 1: in natural gas prices and electricity prices UM largely the 27 00:01:56,120 --> 00:01:58,920 Speaker 1: function obviously of the of the sanctions on Russia, and 28 00:01:58,960 --> 00:02:04,960 Speaker 1: there's not necessarily an obvious solution um to to mitigate that. Cam. 29 00:02:05,000 --> 00:02:07,680 Speaker 1: I love the title of your column today, and for 30 00:02:07,680 --> 00:02:10,079 Speaker 1: for international audience, you should definitely check it out on 31 00:02:10,080 --> 00:02:13,040 Speaker 1: the Bloomberg terminal says, what would you say Friday if 32 00:02:13,040 --> 00:02:16,800 Speaker 1: you were Jerome Powell? Kim, What would you say Friday 33 00:02:16,880 --> 00:02:22,160 Speaker 1: if you were Jerome Powell? Other than I resigned? So no, 34 00:02:22,320 --> 00:02:25,280 Speaker 1: I had to. I wouldn't necessarily say that, but I 35 00:02:25,320 --> 00:02:27,760 Speaker 1: know I had to put a disclaimer in the column 36 00:02:27,800 --> 00:02:29,720 Speaker 1: because I know people would write in to say that 37 00:02:29,800 --> 00:02:32,359 Speaker 1: that's what they would say. I would I would try 38 00:02:32,400 --> 00:02:37,119 Speaker 1: to say nothing. Um. Listen, last year he gave a 39 00:02:37,120 --> 00:02:39,919 Speaker 1: talk on the economic outlook, and he said that the 40 00:02:40,040 --> 00:02:43,880 Speaker 1: thought inflation was going to be transitory. And that the 41 00:02:43,919 --> 00:02:47,560 Speaker 1: official data understated the amount of labor market slack. I 42 00:02:47,600 --> 00:02:53,280 Speaker 1: mean with with I couldn't have gotten it anymore wrong, right, Uh, 43 00:02:54,960 --> 00:02:59,600 Speaker 1: has as the visibility in terms of the economic trajectory 44 00:02:59,800 --> 00:03:03,880 Speaker 1: increased or decrease since then, I would argue it's decreased. Um. Yes, 45 00:03:03,960 --> 00:03:07,080 Speaker 1: inflation has obviously run up and inspired without a control. 46 00:03:07,520 --> 00:03:10,359 Speaker 1: Maybe it's peaking. Maybe it isn't. I mean on a 47 00:03:10,440 --> 00:03:13,800 Speaker 1: year on year basis, it almost certainly is on a 48 00:03:13,880 --> 00:03:17,400 Speaker 1: on a broader, more high frequencies a month to month basis, 49 00:03:17,440 --> 00:03:24,040 Speaker 1: hasn't Maybe maybe not. The growth trajectory is obviously highly uncertain. Uh, 50 00:03:24,280 --> 00:03:26,320 Speaker 1: look at the disparity between says some of the p 51 00:03:26,480 --> 00:03:29,079 Speaker 1: m I data that we've had, which has been kind 52 00:03:29,080 --> 00:03:31,200 Speaker 1: of uniformly awful at least if you look at the 53 00:03:31,280 --> 00:03:35,480 Speaker 1: SMP iteration. Uh, And the the hard data has held 54 00:03:35,560 --> 00:03:38,480 Speaker 1: up relatively better in terms of like industrial production or 55 00:03:38,520 --> 00:03:43,640 Speaker 1: even core durable goods orders were pretty decent today. So listen, 56 00:03:43,640 --> 00:03:45,360 Speaker 1: the Fed doesn't have a clue what the world's gonna 57 00:03:45,360 --> 00:03:47,000 Speaker 1: look like or what the economy is gonna look like 58 00:03:47,000 --> 00:03:50,680 Speaker 1: in a year, so to trying to set out a 59 00:03:50,800 --> 00:03:55,680 Speaker 1: trajectory that's sort of carved in stone, and to guide 60 00:03:55,680 --> 00:03:59,080 Speaker 1: the market based on an outlook that's so uncertain, I 61 00:03:59,080 --> 00:04:02,680 Speaker 1: think is kind of kind of foolhardy. And they've already 62 00:04:02,680 --> 00:04:05,440 Speaker 1: said in fairness that they are kind of moving to 63 00:04:05,520 --> 00:04:10,480 Speaker 1: a more reactive meeting to meeting um framework. So in 64 00:04:10,520 --> 00:04:14,240 Speaker 1: that context, why would they do anything but keep their 65 00:04:14,240 --> 00:04:17,839 Speaker 1: options open while at the same time sort of validating 66 00:04:17,839 --> 00:04:21,360 Speaker 1: the expectation for the pricing of the market that rates 67 00:04:21,360 --> 00:04:23,520 Speaker 1: are going to go up by another sort of hundred 68 00:04:23,640 --> 00:04:26,520 Speaker 1: hundred fifty basis points. I mean, that's great from economic perspective, 69 00:04:26,560 --> 00:04:28,960 Speaker 1: but I think from a market's perspective that is extremely 70 00:04:29,000 --> 00:04:32,640 Speaker 1: positioned for some sort of hawk ish tilt from from 71 00:04:32,680 --> 00:04:36,760 Speaker 1: Chairman Powell on Friday? Does that almost set up the 72 00:04:36,839 --> 00:04:39,320 Speaker 1: chairman to fail to some extent. I mean, this is 73 00:04:39,360 --> 00:04:41,359 Speaker 1: just coming in the context of what we heard in 74 00:04:41,480 --> 00:04:44,479 Speaker 1: June where he basically implied that a recession is on 75 00:04:44,520 --> 00:04:47,039 Speaker 1: the table if that's what it takes to tackle inflation, 76 00:04:47,279 --> 00:04:49,960 Speaker 1: and then any comments kind of coming after that, even 77 00:04:49,960 --> 00:04:54,159 Speaker 1: in July was interpreted as relatively duvish. Is Shermon Powell 78 00:04:54,160 --> 00:04:57,040 Speaker 1: in the same position once again, Yeah, to a to 79 00:04:57,120 --> 00:05:01,440 Speaker 1: a degree. Um with the with the proviso. As you 80 00:05:01,480 --> 00:05:05,640 Speaker 1: allude to that market positioning has recently become quite a 81 00:05:05,640 --> 00:05:11,719 Speaker 1: bit more UH skewed towards betting on more more rate hikes. 82 00:05:12,200 --> 00:05:14,880 Speaker 1: If you look at the combined position of your dollar 83 00:05:15,000 --> 00:05:21,520 Speaker 1: futures and so for futures. According to CFTC, the non 84 00:05:21,520 --> 00:05:24,159 Speaker 1: commercial short has increased by about one and a half 85 00:05:24,240 --> 00:05:27,360 Speaker 1: million contracts since the June's that meeting, And that's thirty 86 00:05:27,440 --> 00:05:30,839 Speaker 1: seven and a half million dollars UH per basis point. 87 00:05:31,760 --> 00:05:35,800 Speaker 1: That's that's not inconsiderable, right, uh So, I think there 88 00:05:35,800 --> 00:05:40,320 Speaker 1: probably is a risk that if he doesn't say, well, 89 00:05:40,360 --> 00:05:41,919 Speaker 1: if we need to, we'll hike you back to the 90 00:05:41,960 --> 00:05:45,560 Speaker 1: stone age, that you have some sort of risk management 91 00:05:45,640 --> 00:05:49,080 Speaker 1: exercise where people end up being forced to cover a 92 00:05:49,080 --> 00:05:52,080 Speaker 1: few a few shorts because we are, after all, pricing 93 00:05:52,080 --> 00:05:55,120 Speaker 1: and something close to, if not quite at um the 94 00:05:55,160 --> 00:05:58,200 Speaker 1: peak policy rate for the entire cycle. Cameron is a 95 00:05:58,240 --> 00:06:00,760 Speaker 1: fellow do graduate. You got ten set? Is how confident 96 00:06:00,880 --> 00:06:05,839 Speaker 1: are you and coach Schier replacing coach k um moderate. 97 00:06:07,960 --> 00:06:10,240 Speaker 1: I think k lost as fastball in terms of game 98 00:06:10,279 --> 00:06:13,200 Speaker 1: coaching a long time ago. So WHOA, that's a hot 99 00:06:13,240 --> 00:06:16,839 Speaker 1: take coming at a Cameron Christ Although I would tend 100 00:06:16,839 --> 00:06:19,039 Speaker 1: to agree with that the Zion Williamson team should have 101 00:06:19,080 --> 00:06:21,240 Speaker 1: wanted all and I would just suggest that he was 102 00:06:21,240 --> 00:06:24,680 Speaker 1: out coached. You've gotta play defense, sorry, Cameron christ Macro 103 00:06:24,760 --> 00:06:28,360 Speaker 1: Strategies Bloomberg News and given us just the cold hard 104 00:06:28,400 --> 00:06:31,200 Speaker 1: truth as relates to coach k Um a little bit. 105 00:06:31,279 --> 00:06:33,080 Speaker 1: I love that you mentioned he's a duke rad after 106 00:06:33,080 --> 00:06:35,360 Speaker 1: I said John Griffin with the E v A g Yes, exactly. 107 00:06:35,360 --> 00:06:37,480 Speaker 1: We gotta even it up a little bit because I'm 108 00:06:37,560 --> 00:06:41,559 Speaker 1: surrounded by U v A and worse yet, Carolina people 109 00:06:41,600 --> 00:06:47,000 Speaker 1: here at Bloomberg News. I want to get to our 110 00:06:47,040 --> 00:06:50,200 Speaker 1: next guest, Johan Grown, VP and head of et F 111 00:06:50,320 --> 00:06:54,039 Speaker 1: Strategy to Alliance Investment Management. Johan, thanks so much for 112 00:06:54,160 --> 00:06:56,039 Speaker 1: joining us year. Appreciate you taking the time. I know 113 00:06:56,120 --> 00:07:01,279 Speaker 1: you guys at Alliance do your surveys on a pretty 114 00:07:01,760 --> 00:07:04,880 Speaker 1: periodic basis. I wonder what your survey work is telling 115 00:07:04,920 --> 00:07:08,320 Speaker 1: you about recession. Is that something we should really be 116 00:07:08,400 --> 00:07:13,440 Speaker 1: baking into our outlooks. Well, you have the recession fears 117 00:07:13,520 --> 00:07:18,800 Speaker 1: you know, are discussed by academics and politicians alike, right, 118 00:07:19,160 --> 00:07:22,040 Speaker 1: even more so perhaps politicians these days. But nevertheless, we 119 00:07:22,200 --> 00:07:24,400 Speaker 1: do a survey, So thank you for bringing that up. 120 00:07:24,400 --> 00:07:27,840 Speaker 1: And we actually see and have seen now for you know, 121 00:07:28,000 --> 00:07:29,680 Speaker 1: more than a couple of quarters in a row, that 122 00:07:29,800 --> 00:07:32,560 Speaker 1: we have two and three Americans that they're worrying about 123 00:07:32,560 --> 00:07:35,400 Speaker 1: a major recession might be around the corner. So not 124 00:07:35,400 --> 00:07:38,400 Speaker 1: not just a recession like you, but but a major recession. 125 00:07:38,400 --> 00:07:41,480 Speaker 1: There's a pretty fine distinction between those two. And then 126 00:07:41,480 --> 00:07:44,480 Speaker 1: we also see, obviously, you know, Asian chat Americans expecting 127 00:07:44,480 --> 00:07:46,880 Speaker 1: inflation to get worse. So we kind of have this 128 00:07:47,040 --> 00:07:49,720 Speaker 1: double a ammu of inflation and recession coming. And what 129 00:07:49,800 --> 00:07:51,840 Speaker 1: you can read between the tea leaves here is that 130 00:07:52,200 --> 00:07:54,440 Speaker 1: the average American is going to take action, you know, 131 00:07:54,480 --> 00:07:57,040 Speaker 1: based on their beliefs about the president that they're feeling 132 00:07:57,120 --> 00:07:59,560 Speaker 1: and seeing, but also about the future that they're expecting. 133 00:08:00,120 --> 00:08:03,320 Speaker 1: We'll square those two ideas here, because for a while, 134 00:08:03,320 --> 00:08:05,560 Speaker 1: it kind of felt like the wealth effect was perhaps 135 00:08:06,040 --> 00:08:10,800 Speaker 1: offsetting this kind of demand destruction implication of inflation, perhaps 136 00:08:10,880 --> 00:08:13,960 Speaker 1: pushing that recession timeline further and further out. But it 137 00:08:14,000 --> 00:08:16,559 Speaker 1: also feels like, just based on recent data, that wealth 138 00:08:16,560 --> 00:08:21,320 Speaker 1: effect is deteriorating. Would you agree, Yeah, you definitely see 139 00:08:21,360 --> 00:08:23,800 Speaker 1: the wealth effect of the tier rating and that will 140 00:08:24,240 --> 00:08:26,920 Speaker 1: further impact you know how people respond and react. And 141 00:08:26,960 --> 00:08:30,280 Speaker 1: you see that a lot of companies now are taking 142 00:08:30,280 --> 00:08:35,199 Speaker 1: some action and with layoffs and fingering around with the wages. 143 00:08:35,280 --> 00:08:38,040 Speaker 1: But it's the interesting part there, it's really that they're taking. 144 00:08:38,080 --> 00:08:40,760 Speaker 1: It's kind of like a preemptive strike. If you know 145 00:08:40,840 --> 00:08:43,280 Speaker 1: that there is way to pressure coming as people are 146 00:08:43,280 --> 00:08:46,160 Speaker 1: getting getting sensed by inflation, you know, you gotta you 147 00:08:46,240 --> 00:08:49,040 Speaker 1: gotta take accident as a business as a business owner, 148 00:08:49,080 --> 00:08:51,079 Speaker 1: and a couple of things you can do. And if 149 00:08:51,080 --> 00:08:53,560 Speaker 1: you signal through the workforce that you know now it's 150 00:08:53,600 --> 00:08:55,480 Speaker 1: not a good time to ask for a race, for example, 151 00:08:55,600 --> 00:09:00,480 Speaker 1: and then that can be helpful both on communication from 152 00:09:00,559 --> 00:09:03,720 Speaker 1: but also in terms of margin, keeping the margins cleaner. 153 00:09:03,840 --> 00:09:06,040 Speaker 1: So there are a couple of reasons for for for 154 00:09:06,080 --> 00:09:09,920 Speaker 1: all this. All right, John Johan, We've got some economic 155 00:09:09,960 --> 00:09:13,440 Speaker 1: geeks getting together out in Jackson Hole, Wyoming later this week. 156 00:09:13,480 --> 00:09:15,320 Speaker 1: What do you expect to hear from some of these 157 00:09:15,360 --> 00:09:18,160 Speaker 1: central bankers, from somebody some of these economists, and most 158 00:09:18,200 --> 00:09:22,480 Speaker 1: importantly for FED chairman j Pal. Yeah, I'll tell you. 159 00:09:22,720 --> 00:09:26,120 Speaker 1: I'm actually heading out there myself. Oh you're a geek. Nice, 160 00:09:27,040 --> 00:09:30,480 Speaker 1: very good. I'll be I'll be at you know, fair 161 00:09:30,480 --> 00:09:32,959 Speaker 1: distance from there from all the acts in there, but okay, 162 00:09:33,000 --> 00:09:35,559 Speaker 1: good stuff on a speech. I'm gonna head out in 163 00:09:35,640 --> 00:09:38,040 Speaker 1: the details and get some much needed are and all 164 00:09:38,080 --> 00:09:41,360 Speaker 1: good for you. I'll handle with the speeches, but I 165 00:09:41,360 --> 00:09:44,040 Speaker 1: think it's pretty for me. It's pretty clear what we 166 00:09:44,120 --> 00:09:46,400 Speaker 1: are is going to take the speech. She said many 167 00:09:46,440 --> 00:09:49,360 Speaker 1: times that inflation is the primary targets and them to 168 00:09:49,440 --> 00:09:52,680 Speaker 1: fight and it's basically unconditional that they can't fail on 169 00:09:52,720 --> 00:09:54,400 Speaker 1: this target, and they want to bring it out to 170 00:09:54,440 --> 00:09:57,480 Speaker 1: two percent. Well we are miles away from that. So 171 00:09:57,840 --> 00:10:01,440 Speaker 1: for him to waiver off of the the previously expressed 172 00:10:01,480 --> 00:10:06,400 Speaker 1: you know, desire to go aggressive, I think that's a 173 00:10:06,480 --> 00:10:09,280 Speaker 1: low probability that that it will start, you know, throwing 174 00:10:09,320 --> 00:10:12,520 Speaker 1: the dubbish feathers around the table at this point. So 175 00:10:12,559 --> 00:10:15,520 Speaker 1: I would expect him to lean harder into the basis 176 00:10:15,600 --> 00:10:19,000 Speaker 1: points cameras. I'm sorry the campras seventy five basis points 177 00:10:19,000 --> 00:10:21,440 Speaker 1: of over eight TI get opposed to fifty. But that 178 00:10:21,600 --> 00:10:23,680 Speaker 1: being said, he's also said that he's not going to 179 00:10:23,800 --> 00:10:28,720 Speaker 1: be providing as much predictive communication, you know, still let 180 00:10:28,720 --> 00:10:31,360 Speaker 1: the markets know where it might be going. So cannot 181 00:10:31,400 --> 00:10:34,480 Speaker 1: painted himself into a corner on that one. But the 182 00:10:34,520 --> 00:10:37,120 Speaker 1: longer the shortest is that he, uh, if he were 183 00:10:37,160 --> 00:10:41,240 Speaker 1: to go and backtrack now to become a little bit 184 00:10:41,240 --> 00:10:43,200 Speaker 1: more dubish and talk about a pivot, I think that 185 00:10:43,320 --> 00:10:46,079 Speaker 1: was really tarnish the credibility of of of him and 186 00:10:46,120 --> 00:10:49,360 Speaker 1: the set. So for me, it's a pretty clean cut 187 00:10:49,440 --> 00:10:51,880 Speaker 1: that it's going to be more of the same with 188 00:10:51,920 --> 00:10:56,800 Speaker 1: a little sprinkle of opening for September changes to the past, 189 00:10:57,040 --> 00:10:59,920 Speaker 1: but it should be minor or he will stir a 190 00:11:00,080 --> 00:11:03,880 Speaker 1: more anxiety in the market, you know, Uh, Johan, we 191 00:11:03,960 --> 00:11:07,480 Speaker 1: just asked our macro strategist slash Macroman Cameron crisis question. 192 00:11:07,480 --> 00:11:09,920 Speaker 1: I want to pose it to you as well. To 193 00:11:10,040 --> 00:11:12,800 Speaker 1: what extent is the bar set so high on the 194 00:11:12,840 --> 00:11:15,719 Speaker 1: hawkish front that the market is basically saying what you're 195 00:11:15,760 --> 00:11:18,480 Speaker 1: saying is that Charon Powell has to deliver, He has 196 00:11:18,520 --> 00:11:21,600 Speaker 1: to have some kind of commentary along the lines of inflation, 197 00:11:21,720 --> 00:11:26,160 Speaker 1: Trump's recession odds. But to what extent is he almost 198 00:11:26,160 --> 00:11:31,640 Speaker 1: set up to fail because the expectations are so hawkish. Well, 199 00:11:31,800 --> 00:11:34,959 Speaker 1: I don't think he can fail in this case, because 200 00:11:34,960 --> 00:11:38,319 Speaker 1: I don't think he has an option to to go jabsh. 201 00:11:38,440 --> 00:11:40,840 Speaker 1: You know, he needs to be steadfast in his commitment 202 00:11:41,679 --> 00:11:44,720 Speaker 1: and if again, if the waivers from that, I think 203 00:11:44,760 --> 00:11:46,679 Speaker 1: that the risk is that he will lose his most 204 00:11:46,720 --> 00:11:49,280 Speaker 1: important tool, and that is the one of verbal communication. 205 00:11:50,120 --> 00:11:53,199 Speaker 1: And for now that is the most precious commodity that 206 00:11:53,360 --> 00:11:56,160 Speaker 1: that has with it and that they can control. And 207 00:11:56,240 --> 00:12:01,679 Speaker 1: to to try to waiver from the predetermined path at 208 00:12:01,720 --> 00:12:04,600 Speaker 1: this point I think would be difficult. I mean, they 209 00:12:04,679 --> 00:12:07,319 Speaker 1: keep saying that their data driven, right, and that's that 210 00:12:07,520 --> 00:12:10,080 Speaker 1: might be fine. At this juncture, They're going to have 211 00:12:10,200 --> 00:12:11,719 Speaker 1: to be, you know, a little bit more brave. I 212 00:12:11,720 --> 00:12:13,240 Speaker 1: think it used a little bit more of their guts 213 00:12:13,240 --> 00:12:15,120 Speaker 1: because some of the day that will point in the 214 00:12:15,200 --> 00:12:18,439 Speaker 1: direction that may have been predicting in other works. Uh, 215 00:12:18,600 --> 00:12:22,920 Speaker 1: some receptionary winds starting to show up. Yeah, they could, 216 00:12:23,040 --> 00:12:25,000 Speaker 1: you know, point out I'm sure they will point that out. 217 00:12:25,040 --> 00:12:27,320 Speaker 1: But how much of that is their own doing and 218 00:12:27,360 --> 00:12:30,720 Speaker 1: how much of that is related to uh energy prices 219 00:12:30,880 --> 00:12:34,240 Speaker 1: and and other facts? Has you got to be saying? 220 00:12:34,280 --> 00:12:38,040 Speaker 1: All right, Johan, great stuff. Appreciate getting your perspective. Johan Grant, 221 00:12:38,679 --> 00:12:42,240 Speaker 1: vice president, head of et F Strategy at Alliance Investment Management, 222 00:12:42,480 --> 00:12:44,520 Speaker 1: as he gets ready to get out to the Grand Teatons. 223 00:12:44,600 --> 00:12:47,200 Speaker 1: That is a spectacular part of the country. I can 224 00:12:47,200 --> 00:12:50,360 Speaker 1: see why these central bankers like to get together out 225 00:12:50,400 --> 00:12:53,160 Speaker 1: there in August. It is absolutely spectacular. They might see 226 00:12:53,160 --> 00:12:55,920 Speaker 1: a bison or elk or something like that. We'll see. 227 00:12:56,600 --> 00:12:58,679 Speaker 1: Of course. Tom Keenan, the Surrounds team was there as well. 228 00:13:01,360 --> 00:13:06,200 Speaker 1: Let's switch gears to healthcare investing. You know, I'm probably 229 00:13:06,240 --> 00:13:08,439 Speaker 1: like a lot of people where when I think healthcare communis, 230 00:13:08,480 --> 00:13:10,520 Speaker 1: I'm I just think at the high cost of drugs 231 00:13:10,559 --> 00:13:12,840 Speaker 1: and they're just like, uh, you know, such a pain 232 00:13:12,960 --> 00:13:15,240 Speaker 1: and it's just such a drain on a lot of people. 233 00:13:15,280 --> 00:13:18,800 Speaker 1: But boy did they come through during this pandemic. I mean, 234 00:13:18,840 --> 00:13:23,360 Speaker 1: getting us this vaccine in record time just extraordinary. Uh, 235 00:13:23,400 --> 00:13:25,040 Speaker 1: And I for one to think a little bit differently 236 00:13:25,080 --> 00:13:28,720 Speaker 1: about some of those biotech and healthcare sectors. Shannon Susko, 237 00:13:28,920 --> 00:13:33,120 Speaker 1: she's a managing director for Edelman Smithfield joins us Shannon, 238 00:13:33,360 --> 00:13:37,079 Speaker 1: you know, I guess how did the impact of the 239 00:13:37,440 --> 00:13:41,960 Speaker 1: how did the pandemic impact invest investor allocation and healthcare sector? 240 00:13:42,000 --> 00:13:47,199 Speaker 1: Did you see any change or any allocation changes for 241 00:13:47,280 --> 00:13:50,280 Speaker 1: investors over the last several years as it relates to healthcare. 242 00:13:52,080 --> 00:13:55,120 Speaker 1: Good morning, Paul, Thanks for having me. Yes, absolutely. In fact, 243 00:13:55,120 --> 00:13:57,120 Speaker 1: one of the things that we saw was that, well, 244 00:13:57,200 --> 00:14:00,400 Speaker 1: health care has been traditionally a well insulated factor in 245 00:14:00,440 --> 00:14:04,120 Speaker 1: both good and down economies. Um, that we did see 246 00:14:04,160 --> 00:14:07,120 Speaker 1: that it has become more attractive since the pandemic and 247 00:14:07,160 --> 00:14:10,880 Speaker 1: the inaugural study that we just issued results for. In fact, 248 00:14:11,400 --> 00:14:14,760 Speaker 1: um investors were increasing their allocation at a greater rate 249 00:14:15,280 --> 00:14:17,480 Speaker 1: UM and in fact the greatest beneficiary of that were 250 00:14:17,480 --> 00:14:21,960 Speaker 1: really frontline services, so things such as device equipment and supplies, 251 00:14:22,040 --> 00:14:26,440 Speaker 1: pharmaceutical and specialty pharmaceuticals, and health and hospital systems, which 252 00:14:26,440 --> 00:14:28,680 Speaker 1: probably won't come as a surprise to your point on 253 00:14:28,720 --> 00:14:31,480 Speaker 1: the fact of of innovation in the pandemic and some 254 00:14:31,560 --> 00:14:36,680 Speaker 1: of the efforts to really galvanize and support of developing vaccines. Um, 255 00:14:36,720 --> 00:14:40,040 Speaker 1: certainly this was a key driver in the increased allocation 256 00:14:40,680 --> 00:14:44,320 Speaker 1: within the sector during this period. Well, it kind of 257 00:14:44,360 --> 00:14:47,000 Speaker 1: seems like when you're lacking about healthcare, the momentum in 258 00:14:47,080 --> 00:14:50,440 Speaker 1: healthcare has naturally taken off a massive interest from the 259 00:14:50,440 --> 00:14:53,760 Speaker 1: investor community and also broadly from the public since COVID nineteen, 260 00:14:53,880 --> 00:14:55,840 Speaker 1: that kind of makes sense. But now that we are 261 00:14:56,680 --> 00:14:59,000 Speaker 1: two and a half years. I want to say out 262 00:14:59,080 --> 00:15:02,040 Speaker 1: from from the sal onset of COVID, I'm curious if 263 00:15:02,080 --> 00:15:05,560 Speaker 1: the momentum behind the sector and the enthusiasm for investing 264 00:15:05,560 --> 00:15:10,400 Speaker 1: in things like biotech is waning your take. Now, that's 265 00:15:10,400 --> 00:15:12,560 Speaker 1: a it's a good point. And certainly biotech has been 266 00:15:12,960 --> 00:15:15,480 Speaker 1: you know, head hard in recent months, UM, despite the 267 00:15:15,480 --> 00:15:18,480 Speaker 1: fact that we saw, you know, something really miraculous from 268 00:15:18,520 --> 00:15:20,720 Speaker 1: an innovation perspective, right, we saw the development of a 269 00:15:20,800 --> 00:15:23,720 Speaker 1: vaccine that would normally take six to ten years happen 270 00:15:23,880 --> 00:15:27,160 Speaker 1: in twelves of fourteen months UM and and the data 271 00:15:27,200 --> 00:15:30,120 Speaker 1: from our survey really shows that investors expect the health 272 00:15:30,120 --> 00:15:33,960 Speaker 1: care sector to really continue to grow post pandemic um and. 273 00:15:34,000 --> 00:15:37,840 Speaker 1: Amongst those who increase their allocation UM, fifty seven percent 274 00:15:37,920 --> 00:15:40,720 Speaker 1: actually believe the sector will continue to grow post pandemic, 275 00:15:41,040 --> 00:15:46,800 Speaker 1: and fifty six expect higher returns compared to pre pandemic performance. UM. 276 00:15:46,800 --> 00:15:49,840 Speaker 1: You know, there's great interest in the sector, and in particular, 277 00:15:49,880 --> 00:15:53,680 Speaker 1: innovation UM has been a value driver that's quite clear 278 00:15:53,720 --> 00:15:57,040 Speaker 1: and very attractive to investors, um and and eighty seven 279 00:15:57,040 --> 00:16:00,360 Speaker 1: percent investors actually believe that the industry's response the COVID 280 00:16:00,440 --> 00:16:03,600 Speaker 1: nineteen pandemic proves out that the sector has the ability 281 00:16:03,640 --> 00:16:06,760 Speaker 1: to innovate and speed, and it's attracted more to the space. 282 00:16:06,840 --> 00:16:08,640 Speaker 1: So I do think we're going to continue to see 283 00:16:08,680 --> 00:16:12,440 Speaker 1: increased allocation pushing into healthcare um and and certainly we 284 00:16:12,480 --> 00:16:15,760 Speaker 1: expect the biotech markets to recover, hopefully within the coming year. 285 00:16:16,520 --> 00:16:20,280 Speaker 1: So in your report on investing in the healthcare sector, 286 00:16:20,400 --> 00:16:23,440 Speaker 1: there's I noticed the importance of the CEO and the 287 00:16:23,480 --> 00:16:27,680 Speaker 1: board of directors for healthcare investors, and we saw a 288 00:16:27,680 --> 00:16:30,480 Speaker 1: lot of CEOs get you know, primetime media coverage as 289 00:16:30,480 --> 00:16:34,360 Speaker 1: they were talking about their various approaches to COVID nineteen 290 00:16:35,000 --> 00:16:36,840 Speaker 1: talk to us about that the importance of the CEO 291 00:16:36,880 --> 00:16:40,600 Speaker 1: on the board. Sure, happy to, so, I think, you know, 292 00:16:40,720 --> 00:16:43,760 Speaker 1: it's really important that we don't underestimate the importance of 293 00:16:43,840 --> 00:16:47,320 Speaker 1: both the CEO but equally the board for healthcare investors. 294 00:16:47,320 --> 00:16:52,080 Speaker 1: In particular, our survey results indicated that investors much actually 295 00:16:52,160 --> 00:16:54,960 Speaker 1: trust the board nearly as much as the CEO when 296 00:16:55,000 --> 00:16:59,920 Speaker 1: making investment decisions. More specifically, of investors surveys um said 297 00:17:00,080 --> 00:17:02,760 Speaker 1: need to trust the healthcare company's board of directors, and 298 00:17:02,800 --> 00:17:06,320 Speaker 1: that compares to that say they need to trust the CEO, 299 00:17:06,440 --> 00:17:10,240 Speaker 1: before either investing or making a recommendation to invest um. 300 00:17:10,280 --> 00:17:13,840 Speaker 1: I think it. Also Marist mentioned that the trust in 301 00:17:14,240 --> 00:17:16,800 Speaker 1: a healthcare company before investment also came up as an 302 00:17:16,840 --> 00:17:20,119 Speaker 1: important factor. The vision and leadership of a CEO and 303 00:17:20,200 --> 00:17:23,600 Speaker 1: the board were second only to financial performance. All right, 304 00:17:23,640 --> 00:17:27,480 Speaker 1: good stuff. Shennon Susko managing director Edelman Smithfield out there 305 00:17:27,480 --> 00:17:31,119 Speaker 1: at with a report on investing in the healthcare system 306 00:17:31,119 --> 00:17:39,680 Speaker 1: of how investors perceived the healthcare space. Important stuff. Let's 307 00:17:39,720 --> 00:17:42,680 Speaker 1: talk the housing market pretty I think I can call 308 00:17:42,760 --> 00:17:45,560 Speaker 1: the peak of the market is when I sold my 309 00:17:45,680 --> 00:17:50,480 Speaker 1: home and Matt Miller bought his. That is that is 310 00:17:50,520 --> 00:17:53,280 Speaker 1: the people people have people have died on that hill. 311 00:17:53,400 --> 00:17:55,240 Speaker 1: I think so, I think so. I don't know. It 312 00:17:55,280 --> 00:17:57,879 Speaker 1: just seems like they're getting interest rates rising up. And 313 00:17:57,920 --> 00:17:59,600 Speaker 1: so let's talk the housing market. We can do that 314 00:17:59,640 --> 00:18:03,400 Speaker 1: with Eric Aidelberg, mortgage backed security strategist for Bloomberg Intelligence. 315 00:18:03,440 --> 00:18:05,200 Speaker 1: She's been on the street a long time. She knows 316 00:18:05,320 --> 00:18:08,280 Speaker 1: what she's talking about. She's also a biker. I e 317 00:18:08,440 --> 00:18:11,359 Speaker 1: bike pretty, so that's how you bike. You e bike 318 00:18:11,960 --> 00:18:13,960 Speaker 1: e bike. Yes, you have a little electric thing. That's 319 00:18:14,000 --> 00:18:15,359 Speaker 1: so when you go up hills, you have a little 320 00:18:15,359 --> 00:18:17,800 Speaker 1: bit of extra help. This is your peloton take. Yeah, 321 00:18:17,920 --> 00:18:20,719 Speaker 1: that's it. Erica talked to us about the housing market. 322 00:18:20,760 --> 00:18:23,600 Speaker 1: Here has it rolled over? If so, what does it 323 00:18:23,640 --> 00:18:27,960 Speaker 1: mean for investors? Well, you know, it certainly seems like 324 00:18:28,600 --> 00:18:32,399 Speaker 1: existing home sales, new home sales, building starts, home builder 325 00:18:32,440 --> 00:18:36,800 Speaker 1: inventor homebuilder or confidence. Everything is plummeting at this point. 326 00:18:36,840 --> 00:18:39,280 Speaker 1: And that's really based on the fact that the affordability 327 00:18:39,480 --> 00:18:43,080 Speaker 1: for the average homeowner is just deteriorated, with mortgage rates 328 00:18:43,080 --> 00:18:47,040 Speaker 1: having risen almost doubled this year. Um higher housing prices 329 00:18:47,040 --> 00:18:49,320 Speaker 1: has to help that case, but really the biggest factor 330 00:18:49,359 --> 00:18:52,199 Speaker 1: recently has been the rise in mortgage rates, which was 331 00:18:52,240 --> 00:18:55,280 Speaker 1: what the FED was intending when they started raising rates, 332 00:18:55,280 --> 00:18:58,040 Speaker 1: so they actually probably right now. See it is a 333 00:18:58,160 --> 00:19:00,600 Speaker 1: positive that you know, their ta been the breaks in 334 00:19:00,640 --> 00:19:04,120 Speaker 1: the housing market. Well, how long is that going to last? 335 00:19:04,160 --> 00:19:06,960 Speaker 1: When we're talking about something like affordability, for example, or 336 00:19:07,040 --> 00:19:09,320 Speaker 1: for new entrants. I mean, I have friends, Paul, You're 337 00:19:09,600 --> 00:19:11,600 Speaker 1: not going to believe this. I have friends who actually 338 00:19:11,640 --> 00:19:16,160 Speaker 1: put down payments on houses during the pandemic and now 339 00:19:16,280 --> 00:19:20,920 Speaker 1: our property owners and I can't even imagine owning property. Well, 340 00:19:20,920 --> 00:19:23,920 Speaker 1: the interesting thing is, if you look at historical mortgageates, 341 00:19:24,600 --> 00:19:26,720 Speaker 1: the two percent rates, three percent rates we saw in 342 00:19:26,760 --> 00:19:28,960 Speaker 1: the past couple of years during the pandemic. That's really 343 00:19:28,960 --> 00:19:31,840 Speaker 1: an aberration and if anything, maybe it's for a little 344 00:19:31,880 --> 00:19:34,879 Speaker 1: too much housing euphoria. Um So, as I said, the 345 00:19:35,160 --> 00:19:38,040 Speaker 1: FED probably doesn't mind that the housing market is slowing 346 00:19:38,080 --> 00:19:43,520 Speaker 1: down a little bit. But at this point, affordability is 347 00:19:43,560 --> 00:19:47,000 Speaker 1: actually below where a lot of people can buy a house. 348 00:19:47,080 --> 00:19:50,120 Speaker 1: So what's gonna happen is that home prices may have 349 00:19:50,200 --> 00:19:52,359 Speaker 1: to come down a little bit to adjust. That's what 350 00:19:52,440 --> 00:19:55,480 Speaker 1: I was thinking, because I hear my feder reserve and 351 00:19:55,480 --> 00:19:58,680 Speaker 1: they're're gonna get together again this week later this week 352 00:19:58,720 --> 00:20:01,320 Speaker 1: in Jackson Hole, I hear my fooders are talking about 353 00:20:01,359 --> 00:20:05,320 Speaker 1: higher rates, you know, and uh, that's doesn't seem to 354 00:20:05,320 --> 00:20:08,280 Speaker 1: be changing in your term. So if housing affordability is 355 00:20:08,320 --> 00:20:11,080 Speaker 1: going to improve, prices got to come down. But that 356 00:20:11,200 --> 00:20:14,880 Speaker 1: doesn't happen overnight, does it. It doesn't happen overnight. Though 357 00:20:14,920 --> 00:20:18,040 Speaker 1: we did see already existing home prices coming down in 358 00:20:18,119 --> 00:20:21,080 Speaker 1: the latest report, new home sales have bounced off their highs, 359 00:20:21,080 --> 00:20:24,520 Speaker 1: and certainly loan applications from the Mortgage Banker Association again 360 00:20:24,560 --> 00:20:28,640 Speaker 1: this morning showed purchase loans down. That doesn't necessarily mean 361 00:20:28,800 --> 00:20:31,480 Speaker 1: that all homes are going to fall in price, but 362 00:20:31,560 --> 00:20:33,560 Speaker 1: it might mean that the homes that people are willing 363 00:20:33,600 --> 00:20:36,639 Speaker 1: to buy might be lower priced homes. How about just 364 00:20:36,680 --> 00:20:39,000 Speaker 1: building homes? What's what are the builders saying? Are they 365 00:20:39,040 --> 00:20:41,320 Speaker 1: still building homes? Because I think one of the issues 366 00:20:41,680 --> 00:20:43,399 Speaker 1: that I've heard over the years is they're just not 367 00:20:43,480 --> 00:20:46,480 Speaker 1: building starter homes, entry level homes. They're building the big 368 00:20:46,560 --> 00:20:49,120 Speaker 1: mcmansion's because that's where the profit margin is for them, 369 00:20:49,160 --> 00:20:52,240 Speaker 1: but that's not really where the need is. Yeah. Well, 370 00:20:52,280 --> 00:20:55,840 Speaker 1: and even even in that sector, home builders right now 371 00:20:55,920 --> 00:20:59,320 Speaker 1: they're they're confidence level. There's an index that measures how 372 00:20:59,359 --> 00:21:03,320 Speaker 1: many homebuild there's are optimistic versus pessimistic, and when it's 373 00:21:03,359 --> 00:21:08,280 Speaker 1: below fifty, that means that more home builders are pessimistic. Uh, 374 00:21:08,320 --> 00:21:10,440 Speaker 1: and it just fell to forty nine for the first time. 375 00:21:10,720 --> 00:21:14,320 Speaker 1: So they are probably housing starts are actually pulling back, 376 00:21:14,320 --> 00:21:17,000 Speaker 1: building permits are pulling back. They're probably going to reduce 377 00:21:17,040 --> 00:21:20,800 Speaker 1: their building altogether. On the bright side, so far, new 378 00:21:20,840 --> 00:21:22,920 Speaker 1: homes for sale has been going up, but it's the 379 00:21:23,000 --> 00:21:26,720 Speaker 1: highest it's been actually since the before the Great Financial Crisis, 380 00:21:26,720 --> 00:21:30,119 Speaker 1: So you know, hopefully at least the current homes you 381 00:21:30,160 --> 00:21:32,359 Speaker 1: know in the pipeline will helpful some of the void 382 00:21:32,840 --> 00:21:35,840 Speaker 1: of the inventory gap that we're having. So how do 383 00:21:35,880 --> 00:21:40,360 Speaker 1: you trade this market? The mortgage market talky olds, talk spreads. It. 384 00:21:40,359 --> 00:21:42,719 Speaker 1: It's a little bit challenging because right now, given how 385 00:21:42,800 --> 00:21:45,199 Speaker 1: much mortgage rates have risen, and given how much of 386 00:21:45,200 --> 00:21:48,800 Speaker 1: the mortgage market was created in the past two years 387 00:21:48,840 --> 00:21:53,359 Speaker 1: between refinancings and purchases, almost all mortgages outstanding in the 388 00:21:53,400 --> 00:21:56,840 Speaker 1: mortgage index right now are trading at deep discounts. We're 389 00:21:56,840 --> 00:21:59,800 Speaker 1: talking like ninety dollar price. And the problem is that 390 00:21:59,800 --> 00:22:03,119 Speaker 1: if a housing market is slowing, prepayments on those is 391 00:22:03,119 --> 00:22:05,439 Speaker 1: gonna are going to be very slow, which, for one thing, 392 00:22:05,480 --> 00:22:07,439 Speaker 1: means that's going to still be the dominant part of 393 00:22:07,440 --> 00:22:09,639 Speaker 1: the mortgage index because they're not going to pay off, 394 00:22:10,000 --> 00:22:12,480 Speaker 1: but and it's also the dominant part of the fence holdings, 395 00:22:12,520 --> 00:22:15,199 Speaker 1: by the way, But it also means that you know, 396 00:22:15,320 --> 00:22:18,880 Speaker 1: you really have to gauge if the current level of turnover, 397 00:22:18,960 --> 00:22:22,399 Speaker 1: which is what determines mortgage value for deep discounts, is 398 00:22:22,440 --> 00:22:25,879 Speaker 1: going to be even slower than models project, and in 399 00:22:25,920 --> 00:22:28,840 Speaker 1: that case, mortgages might look a little expensive here as 400 00:22:28,880 --> 00:22:31,040 Speaker 1: in terms of the mortgage index. On the flip side, 401 00:22:31,080 --> 00:22:33,399 Speaker 1: if you turn that to what's currently being produced what 402 00:22:33,440 --> 00:22:37,359 Speaker 1: we call the current coupons, slower mortgage turnover and slower 403 00:22:37,359 --> 00:22:40,200 Speaker 1: mortgage prepaise is actually a good thing for those. So 404 00:22:40,920 --> 00:22:42,719 Speaker 1: you really have to probably pick your spots right now 405 00:22:42,720 --> 00:22:45,919 Speaker 1: in the mortgage index. Are we expecting other housing market 406 00:22:46,320 --> 00:22:50,040 Speaker 1: crash coming off of these usually high levels from the pandemic? 407 00:22:50,800 --> 00:22:55,200 Speaker 1: I don't see anybody talking about a housing market crash 408 00:22:55,720 --> 00:22:59,119 Speaker 1: because the amount of equity that most homeowners have in 409 00:22:59,160 --> 00:23:01,560 Speaker 1: their homes is so high right now given the recent 410 00:23:01,600 --> 00:23:04,919 Speaker 1: home forrice appreciation, that there's no reason for people to 411 00:23:05,240 --> 00:23:08,000 Speaker 1: really have foreselling or at least to default on their homes. 412 00:23:08,680 --> 00:23:11,800 Speaker 1: Um you know, it just could mean that people that 413 00:23:11,800 --> 00:23:14,520 Speaker 1: that offering prices that some people are trying to get 414 00:23:14,520 --> 00:23:16,199 Speaker 1: on their homes could well have to come down a 415 00:23:16,200 --> 00:23:19,920 Speaker 1: little bit absolutely, all right. Bachelors and mathematics from the 416 00:23:20,000 --> 00:23:23,200 Speaker 1: Universe of Chicago. That does not sound like fun at all. 417 00:23:23,680 --> 00:23:27,080 Speaker 1: Oh yeah, they always call university University of Chicago the 418 00:23:27,080 --> 00:23:28,879 Speaker 1: place that fund goes to die. But I had a 419 00:23:28,880 --> 00:23:33,840 Speaker 1: great experience there and it was fantastic education. Yeah, exactly, 420 00:23:34,080 --> 00:23:37,120 Speaker 1: everybody I know from Chicago that just wicked smart as 421 00:23:37,200 --> 00:23:41,240 Speaker 1: like Lisa bron it's another math geek, you know, I mean, 422 00:23:41,800 --> 00:23:43,199 Speaker 1: I don't know. I guess it's the thing that's just 423 00:23:43,240 --> 00:23:46,920 Speaker 1: something in the water, something exactly all right. Erica Heidelberg, 424 00:23:47,160 --> 00:23:49,919 Speaker 1: mortgage backed security Strategies for Bloomberg Intelligent. Thanks so much 425 00:23:49,920 --> 00:23:52,320 Speaker 1: for joining us here. And I will note she was 426 00:23:52,440 --> 00:23:58,040 Speaker 1: live and on Bloomberg Interactive Broker Studio. Let's talk about 427 00:23:58,040 --> 00:24:01,040 Speaker 1: the restaurant business to fast food business. A big name 428 00:24:01,040 --> 00:24:04,080 Speaker 1: that you're probably not familiar with, h Jolly B Group. 429 00:24:04,320 --> 00:24:07,159 Speaker 1: We have Mary Beth Dela Cruz, president of Jolly B 430 00:24:07,280 --> 00:24:09,919 Speaker 1: Group North America. She joins us on the phone. Mary Beth, 431 00:24:10,200 --> 00:24:12,520 Speaker 1: thanks so much for taking the time. Let's just start 432 00:24:12,560 --> 00:24:15,720 Speaker 1: with Jolly B Group. What are you guys? Talk to 433 00:24:15,760 --> 00:24:20,680 Speaker 1: us about your company and your presence in North America. Okay, 434 00:24:20,760 --> 00:24:23,199 Speaker 1: Hi Paul. First of all, I'd like to thank you 435 00:24:23,240 --> 00:24:26,600 Speaker 1: for this opportunity to talk about our company. Well. Jolly 436 00:24:26,600 --> 00:24:30,960 Speaker 1: Be Pots Corporation is the largest and fastest growing restaurant 437 00:24:31,040 --> 00:24:34,280 Speaker 1: company from Asia. So far, we are president already in 438 00:24:34,280 --> 00:24:38,879 Speaker 1: certified countries with over eighteen grants under the portfolio. Jolly 439 00:24:38,920 --> 00:24:42,240 Speaker 1: b is actually our flagship brand, and so far we 440 00:24:42,320 --> 00:24:45,720 Speaker 1: already have more than one thousand, five hundred locations globally. 441 00:24:46,160 --> 00:24:49,280 Speaker 1: UM North America has been sagged as UM like, you know, 442 00:24:49,320 --> 00:24:52,840 Speaker 1: a key growth siller for the business, and our vision 443 00:24:53,000 --> 00:24:55,320 Speaker 1: is to become one of the top five restaurant companies 444 00:24:55,320 --> 00:24:59,240 Speaker 1: in the world. Certainly an ambitious vision. I'm curious about 445 00:24:59,280 --> 00:25:01,600 Speaker 1: how your r pumping up at a time when food 446 00:25:01,600 --> 00:25:05,560 Speaker 1: prices are extremely high, inflation getting even higher, and I 447 00:25:05,560 --> 00:25:09,119 Speaker 1: think the willingness for people to spend on restaurants and 448 00:25:09,160 --> 00:25:12,080 Speaker 1: spend broadly is actually waning. How do you ramp up 449 00:25:12,080 --> 00:25:16,320 Speaker 1: in that environment? Well, UM, for while there's actually a 450 00:25:16,359 --> 00:25:19,199 Speaker 1: panse up demand for the brand. Right now, currently we 451 00:25:19,240 --> 00:25:23,320 Speaker 1: only have eighty four locations in UH North America, and 452 00:25:23,320 --> 00:25:26,360 Speaker 1: and so we continue to UM, you know, just continue 453 00:25:26,359 --> 00:25:30,680 Speaker 1: to aggressively expanded the United States. UM. The environment has 454 00:25:30,680 --> 00:25:34,560 Speaker 1: actually been very UM challenging, but the fact that we 455 00:25:34,640 --> 00:25:38,199 Speaker 1: are a quick service restaurant actually occurs well in this 456 00:25:38,400 --> 00:25:42,360 Speaker 1: kind of inflationary environment. I mean, people are actually UM 457 00:25:43,080 --> 00:25:45,960 Speaker 1: trading down to q s rs, and so we make 458 00:25:46,040 --> 00:25:49,080 Speaker 1: sure that we continue to offer the value to consumers 459 00:25:49,400 --> 00:25:52,159 Speaker 1: so that you know, they get to enjoy the product, 460 00:25:52,240 --> 00:25:55,080 Speaker 1: but at the same time find value in the offerings 461 00:25:55,080 --> 00:26:00,239 Speaker 1: that we have. Mary Bethew recently opened a store in 462 00:26:00,760 --> 00:26:02,879 Speaker 1: Times Square in New York. Tell us about that. What 463 00:26:02,920 --> 00:26:05,760 Speaker 1: are you kind of learning there in the first few days. Well, 464 00:26:05,800 --> 00:26:09,119 Speaker 1: it's truly exciting for us to finally land a location 465 00:26:09,160 --> 00:26:12,520 Speaker 1: in Times Square, and Time Square is all about like, 466 00:26:12,560 --> 00:26:14,640 Speaker 1: you know, the number of people going through it, and 467 00:26:14,880 --> 00:26:17,679 Speaker 1: you know, just the opportunity of being there and you know, 468 00:26:17,720 --> 00:26:21,280 Speaker 1: getting the brand exposed and uh, making it accessible to 469 00:26:21,320 --> 00:26:25,280 Speaker 1: a broader market really is a very good opportunity for us. UM. 470 00:26:25,320 --> 00:26:28,520 Speaker 1: We have been getting very good feedback on since the 471 00:26:28,560 --> 00:26:32,080 Speaker 1: opening day. We actually serve more than two thousands, five 472 00:26:32,160 --> 00:26:34,560 Speaker 1: hundred customers on opening day, which was like, you know, 473 00:26:34,600 --> 00:26:38,840 Speaker 1: crazy busy, and people are like, you know, welcoming the 474 00:26:38,920 --> 00:26:42,080 Speaker 1: kind of food and flavors that we offer. We know 475 00:26:42,240 --> 00:26:44,680 Speaker 1: that flavor or great food does not have any kind 476 00:26:44,720 --> 00:26:48,240 Speaker 1: of boundaries, and you know the fact that people are 477 00:26:48,320 --> 00:26:51,600 Speaker 1: open to our flavors right now just really is you know, 478 00:26:51,960 --> 00:26:57,120 Speaker 1: um putting in that curiosity to our brand a location 479 00:26:57,119 --> 00:26:59,680 Speaker 1: in Time Square. It's no secret that property prices a 480 00:26:59,800 --> 00:27:02,479 Speaker 1: rise in across the country. They're extremely expensive in New 481 00:27:02,560 --> 00:27:06,760 Speaker 1: York and Times Square is some pretty exciting property. Is 482 00:27:06,760 --> 00:27:09,679 Speaker 1: it paying off in terms of the consumer traffic that 483 00:27:09,680 --> 00:27:12,560 Speaker 1: you're getting, which, once again, costs are high, property prices 484 00:27:12,600 --> 00:27:17,440 Speaker 1: are high. Is the traffic making up for those costs? Um? 485 00:27:17,480 --> 00:27:20,640 Speaker 1: Certainly the traffic is doing or the kind of traffic 486 00:27:20,720 --> 00:27:23,840 Speaker 1: that we have is better than a lot better than 487 00:27:23,880 --> 00:27:27,639 Speaker 1: we expected. In fact, like you know, almost the traffic 488 00:27:27,680 --> 00:27:30,760 Speaker 1: in Time Square has gone to its pre pandemic level. Um. 489 00:27:31,000 --> 00:27:34,320 Speaker 1: I know that rent prices are really high, but it's 490 00:27:34,359 --> 00:27:37,320 Speaker 1: an overall investment for the brand. We know that tilS 491 00:27:37,359 --> 00:27:39,760 Speaker 1: and profits are part of it, but you know, just 492 00:27:39,800 --> 00:27:43,440 Speaker 1: the location of the business impact far beyond the monetary elements, 493 00:27:43,480 --> 00:27:46,520 Speaker 1: as it actually elevates our branding to the global stage 494 00:27:46,520 --> 00:27:49,560 Speaker 1: with other top brands. And you know, the big payoff 495 00:27:49,680 --> 00:27:53,320 Speaker 1: is actually expanding the visibility to m both tourists and 496 00:27:53,359 --> 00:27:57,480 Speaker 1: local to like. So, how do you compete in what 497 00:27:57,560 --> 00:28:00,480 Speaker 1: I would think is a very crowded kind the fast 498 00:28:00,520 --> 00:28:04,320 Speaker 1: food kind of business at McDonald's, Burger King, all of 499 00:28:04,440 --> 00:28:07,399 Speaker 1: all the names that we know, how do you guys 500 00:28:07,760 --> 00:28:11,520 Speaker 1: plan to compete here in North America? Well, our menu, 501 00:28:11,640 --> 00:28:14,320 Speaker 1: for one, is the one unique thing that we offer 502 00:28:14,400 --> 00:28:17,520 Speaker 1: to help us different shape ourselves from all the other 503 00:28:17,560 --> 00:28:20,240 Speaker 1: players in the market. Um, if you look at our menu, 504 00:28:20,320 --> 00:28:23,879 Speaker 1: we actually have like a unique breath of products, okay, 505 00:28:23,960 --> 00:28:26,600 Speaker 1: and flavors that you know, I'm not offering the other 506 00:28:26,680 --> 00:28:30,840 Speaker 1: fast food places case in poite familiar products like pie. Um, 507 00:28:31,080 --> 00:28:33,680 Speaker 1: you know you have apple pie, but you know, um, 508 00:28:33,760 --> 00:28:36,200 Speaker 1: we offer a pitch mango pie, which is our own 509 00:28:36,200 --> 00:28:39,120 Speaker 1: take off, like you know, apply that's made of pitches 510 00:28:39,160 --> 00:28:42,360 Speaker 1: and real Filippine mangoes. Uh in like you know, a flaky, 511 00:28:42,400 --> 00:28:45,640 Speaker 1: crusty bun, and that is what makes it different. We 512 00:28:45,680 --> 00:28:48,400 Speaker 1: also offer other products that are familiar to the market, 513 00:28:48,480 --> 00:28:51,920 Speaker 1: but we put in our own flavors that helped differentiate 514 00:28:52,000 --> 00:28:54,680 Speaker 1: it from all the other players. You know that all 515 00:28:54,720 --> 00:28:56,920 Speaker 1: sounds great. I'm curious about what you're what you're worried about, 516 00:28:56,960 --> 00:28:59,280 Speaker 1: what keeps you up at night? Just given the wall 517 00:28:59,320 --> 00:29:03,000 Speaker 1: of worry that would feel like we talked about every day, 518 00:29:03,640 --> 00:29:07,320 Speaker 1: you know, just the uncertainty of the economic environments that 519 00:29:07,400 --> 00:29:10,240 Speaker 1: keeps us, like, you know, really up at night. Um. 520 00:29:10,360 --> 00:29:13,280 Speaker 1: You know, our procurement departments, our real estate departments, are 521 00:29:13,360 --> 00:29:16,719 Speaker 1: store development departments. We've all been faced with, like you know, 522 00:29:16,760 --> 00:29:20,400 Speaker 1: increasing costs, costs, and and so we just have to 523 00:29:20,440 --> 00:29:23,200 Speaker 1: be you know, very agile when it comes to coming 524 00:29:23,320 --> 00:29:26,760 Speaker 1: up with alternative plants. Um, you know, if US stock 525 00:29:26,880 --> 00:29:29,720 Speaker 1: is coming or like you know, uh, you know we'll 526 00:29:29,720 --> 00:29:31,800 Speaker 1: be able to open a restaurant, those are like you know, 527 00:29:31,840 --> 00:29:34,720 Speaker 1: a lot of variables. But you know, through the pandemic, 528 00:29:34,800 --> 00:29:37,360 Speaker 1: we have learned how to peeve us and you know, 529 00:29:37,400 --> 00:29:40,600 Speaker 1: how to adjust. We've made alternative plans to make sure 530 00:29:40,720 --> 00:29:42,920 Speaker 1: that you know, if plann they didn't work, then we 531 00:29:42,960 --> 00:29:45,320 Speaker 1: have a plan D or C to uh to work with. 532 00:29:45,480 --> 00:29:47,000 Speaker 1: So what does that look like? Have us a little 533 00:29:47,040 --> 00:29:49,880 Speaker 1: bit more detail on how you prepare for an inevitable 534 00:29:49,920 --> 00:29:54,680 Speaker 1: recession for example? Um, First of all, we work very 535 00:29:54,720 --> 00:29:58,400 Speaker 1: closely with our suppliers and vendors. I mean we have 536 00:29:58,600 --> 00:30:01,480 Speaker 1: a lot of vendor school have worked with us already 537 00:30:01,520 --> 00:30:04,400 Speaker 1: for the past ten to fifteen years, and we continue 538 00:30:04,440 --> 00:30:07,400 Speaker 1: to nurture that kind of relationship with them. UM. So 539 00:30:07,520 --> 00:30:11,360 Speaker 1: that kind of uh you know, uh relationship with the 540 00:30:11,480 --> 00:30:14,280 Speaker 1: vendors helps us keep ahead of the curve. We know 541 00:30:14,640 --> 00:30:17,440 Speaker 1: what costs are about to commerce or any price in 542 00:30:17,520 --> 00:30:20,640 Speaker 1: crisis that's coming, uh, and then we plan for it. Um. 543 00:30:20,720 --> 00:30:24,000 Speaker 1: We do a lot of research and development work. Knowing 544 00:30:24,080 --> 00:30:27,000 Speaker 1: that there are supply issues as well. We make sure 545 00:30:27,040 --> 00:30:29,880 Speaker 1: that there are alternative raw materials that you know, we 546 00:30:29,920 --> 00:30:32,360 Speaker 1: can go to just so to ensure that there is 547 00:30:32,400 --> 00:30:35,360 Speaker 1: business continuity and and so there is a plan to 548 00:30:35,440 --> 00:30:38,320 Speaker 1: a plan in order for us to you know, just 549 00:30:38,360 --> 00:30:42,360 Speaker 1: really continue to uh go ahead with our with our 550 00:30:42,400 --> 00:30:45,480 Speaker 1: aggressive expansion. All right, Mary Beth, thank you so much 551 00:30:45,680 --> 00:30:47,640 Speaker 1: for joining us getting us up to date on all 552 00:30:47,720 --> 00:30:50,560 Speaker 1: things for the Jolly B Group. Very Beth de la Cruz, 553 00:30:50,640 --> 00:30:55,520 Speaker 1: President of the Jolly B Group North America. Thanks for 554 00:30:55,560 --> 00:30:59,040 Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and 555 00:30:59,120 --> 00:31:03,640 Speaker 1: listen to interviews, Apple Podcasts, or whatever podcast platform you prefer. 556 00:31:04,040 --> 00:31:08,000 Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three, 557 00:31:08,440 --> 00:31:10,920 Speaker 1: and I Fall Sweeney I'm on Twitter at pt Sweeney. 558 00:31:10,960 --> 00:31:13,640 Speaker 1: Before the podcast, you can always catch us worldwide at 559 00:31:13,640 --> 00:31:14,400 Speaker 1: Bloomberg Radio.