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Speaker 1: listen and always I'm Bloomberg Radio, the Bloomberg Terminal, and
Speaker 1: the Bloomberg Business App. We're going to dive into the
Speaker 1: economic data right now. We've given Tiffany wild Over at
Speaker 1: PIMCO Newport Beach, California, time to do it. But Tiffany,
Speaker 1: I gotta rip up the script right now. The new
Speaker 1: CEO at Starbucks is going to stay in Newport Beach
Speaker 1: instead of commute to Smarts. I mean, Tiffany, what is
Speaker 1: the attraction, the allure of beach versus him and the
Speaker 1: fam moving up to Seattle.
Speaker 2: Well, I think it's your it's your favorite restaurant, Malarkey's
Speaker 2: Bye Bye by Fashion Island. But to be fair, the
Speaker 2: beaches here are are very gorgeous. It's like living in
Speaker 2: a resort community. It's it's very different than New York City.
Speaker 2: It's a very nice place to life, for sure. I'm
Speaker 2: not surprised they're killing me.
Speaker 1: That's migrate to retail sales right now. It's just such
Speaker 1: a tough life for Tiffany. Wow, I got a nominal
Speaker 1: number here port and Tiffany as I got some revisions
Speaker 1: that are actually pretty quiescent. This is a constructive set
Speaker 1: of data, isn't it.
Speaker 3: Yeah.
Speaker 2: I mean, I think the bottom line is I'm just
Speaker 2: looking through this is is this completely confirms that the
Speaker 2: US was not in recession in July. And obviously the
Speaker 2: risks of that, or at least the the market's focus
Speaker 2: on the risks of that, were increased because of the
Speaker 2: unemployment report, and specifically the increase in the unemployment rate,
Speaker 2: which has triggered the so called SAM rule. Historically, this
Speaker 2: sm rule has been a good indicator that we are
Speaker 2: in recession right now. But you know, as we've been discussing,
Speaker 2: there's good reasons to believe why this time is actually
Speaker 2: different with that rule. We've had pretty big supply side
Speaker 2: gains in the labor market over the last few years
Speaker 2: as a result of immigration and just folks coming back
Speaker 2: post pandemic, and that's not the markings of an economy
Speaker 2: that's in recession. This retail sales report just completely confirm that.
Speaker 3: So on the retail sales at Tiffany again, I'm going
Speaker 3: to look at the control group. I'm not sure what's
Speaker 3: all excluded, but let's go with it. The control group
Speaker 3: positive zero point three percent. The consensus was a zero
Speaker 3: point one percent. What do you make of the US
Speaker 3: consumer these days?
Speaker 2: Yeah, I mean, I think overall the consumer is still strong,
Speaker 2: you know, I do think that it's you have seen
Speaker 2: some deceleration in consumption at but that's okay.
Speaker 4: We we were.
Speaker 2: Living in an economy where you had a lot of
Speaker 2: above trend growth. Some of that was due to immigration,
Speaker 2: but some of that was due to just the fact
Speaker 2: that we had a lot of stimulus post pandemic. As
Speaker 2: that is wearing off, you're seeing things just normalized. So
Speaker 2: I would argue it's just a healthier environment for consumers.
Speaker 2: You're seeing them more picky, you know, with pricing. Obviously,
Speaker 2: we had the Amazon Prime Day and related promotions that
Speaker 2: probably boosted nominal retail sales in July. But overall, I
Speaker 2: would say that we're getting back to normal for the consumer.
Speaker 1: Okay, My problem is Tiffany, and it was the number
Speaker 1: one fight I had with a wonderful Alan Meltzer Cardegie Mellon.
Speaker 1: The average Newport Beach, California home price is three point
Speaker 1: three nine three million dollars. That's the average price wow
Speaker 1: off Zillow for the Tiffany wildhood three point ninety three
Speaker 1: million dollars. Tiffany, that's not America. How much of the
Speaker 1: buoyancy and retails sales is coming from ten percent of
Speaker 1: the public.
Speaker 2: Yeah, No, you're you're absolutely right on the distribution of
Speaker 2: outcomes given wealth level, and we very clearly see that
Speaker 2: in the data. So you know, when we look at
Speaker 2: the retail sales number, that's the average consumer, and that
Speaker 2: hides a lot of you know, a lot of differentiation
Speaker 2: under the surface. And you're absolutely right. What we're seeing
Speaker 2: is that lower income consumers, you know, they they are struggling.
Speaker 2: You know, we are seeing more delinquencies on credit cards,
Speaker 2: on auto loans and things like that. You know, but
Speaker 2: but you know, overall, you know, the consumer is doing
Speaker 2: quite well. The consumer in terms of its balance sheet.
Speaker 2: We came out of this recession, the pandemic related recession,
Speaker 2: with actually consumer balance sheets being stronger than where they
Speaker 2: were when we came in. That's something that never happens
Speaker 2: in a recession. Consumers are also enjoying a lot of
Speaker 2: wealth that's been created in their the largest asset that
Speaker 2: they have their homes as a result of home prices increasing,
Speaker 2: you know, and a lot of them also have low
Speaker 2: mortgage rates still, so you know, I would say, you know, yes,
Speaker 2: there is some you know, differences you know, by income level,
Speaker 2: but overall, the consumers is doing quite well.
Speaker 3: All right, the consumers doing quite well in general. We've
Speaker 3: got I guess inflation coming down moderating as we continue
Speaker 3: to see that in both the PPI and the CPI data.
Speaker 3: So what does that set up the Fed to do
Speaker 3: in September? Do you believe, Tiffany?
Speaker 2: Yeah, I mean, I think I think there's when you
Speaker 2: have an economy that's getting back to normal, you need
Speaker 2: to have monetary policy that's also getting back to normal.
Speaker 2: And I think I think FED officials would argue that
Speaker 2: they think policy is in restrictive territory, you know, we
Speaker 2: would agree with them, you know, we do think it.
Speaker 2: Higher interest rates are restricting the economy to some degree,
Speaker 2: and just bringing that back to normal also makes sense.
Speaker 2: And we think that's what they're going to start to
Speaker 2: do in September, you know, and they're you know, probably
Speaker 2: going to do that. You know, they could do it
Speaker 2: at varying degrees. You know, the market's obviously pricing in
Speaker 2: some chain they cut rates by fifty basis points. You know,
Speaker 2: we we definitely we think twenty five is more likely,
Speaker 2: just because the economy is not going into recession, you know,
Speaker 2: so they can kind of do this in a you know,
Speaker 2: a measured paced way and get the economy back to
Speaker 2: back to normal.
Speaker 1: And Tiffany, if you're sitting with the animals like Jerome
Speaker 1: Schneider and they're just snirling and they're angry, it's miserable
Speaker 1: out there at Pimco, Tiffan, You're you're talking to Jerome Schneider,
Speaker 1: and he goes, what's your GDP call quickly? Here? What's
Speaker 1: your real GDP call?
Speaker 2: Up?
Speaker 1: Twelve months?
Speaker 2: Yeah, I mean so, so we're still looking for an
Speaker 2: economy that's doing quite well, you know, maybe not as
Speaker 2: well as last year. When it clocked three percent growth,
Speaker 2: but our forecast for this year is around two and
Speaker 2: a little bit below that, you know, in twenty twenty five.
Speaker 1: Okay, so let's it's it's grim two point two percent.
Speaker 1: What portion of America is living Laurence Summer's stagflation beneath
Speaker 1: two percent or even feeling a recession when you're aggregating
Speaker 1: it two point x percent real GDP.
Speaker 2: Well, I think that you know, the thing to remember
Speaker 2: is is that you know, looking back at the labor
Speaker 2: market statistics, the unemployment rate has been going up, not
Speaker 2: because people have been losing jobs on aggregate. We've actually
Speaker 2: had job growth over the time period that we've seen
Speaker 2: the unemployment rate rise. So you're seeing people that are
Speaker 2: coming back to the labor market, and folks that have
Speaker 2: entered the country entering the labor market, and the folks
Speaker 2: that have jobs are keeping them. So that's not really
Speaker 2: the marketings of an economy that is stressed.
Speaker 1: Tiffany, thank you. This is the Interview of the day
Speaker 1: from Newport Beach, California. She's a thousand miles from where
Speaker 1: she wants to be. Tiffany Wildly of PIMCO greatly appreciated
Speaker 1: in retail sales. Dana Telsea joins us right now. And
Speaker 1: for Lisa Matteo and Tom Keane who have children in
Speaker 1: All to Beauty, Why, Dana Telsey, you have an outperform
Speaker 1: on All to Beauty, Warren Buffet, listen to you. Why
Speaker 1: is alta beauty the future of my paycheck going out
Speaker 1: the door?
Speaker 5: Because look what? First of all, thank you for having me. Tom.
Speaker 5: Great to hear and see you. I think, first of all,
Speaker 5: when you think about ALTI beauty in the beauty category,
Speaker 5: it basically appeals to so many different ages. You look
Speaker 5: at the categories within it, whether it's skincare, whether it's makeup,
Speaker 5: whether it's hair care. A lot of innovation. You see
Speaker 5: that your daughters, they're basically being attracted by all the
Speaker 5: new initiatives, all the new brands that are out there.
Speaker 5: There's a sustainable, clean emphasis on it also, and people
Speaker 5: have fun with beauty, especially today given that we live
Speaker 5: more in a zoom society than we do a pre pandemic.
Speaker 5: So whether you're seeing people in person, whether you're seeing
Speaker 5: them on zoom, all the beauty gives the opportunity to
Speaker 5: look good with all different brands and all different categories.
Speaker 1: I'm glad we have hair routines. You'll love their best
Speaker 1: back to school hairstyle. Great. What are they doing? Why
Speaker 1: are they distinctive versus Sephora to mister Buffett?
Speaker 5: A couple things. First of all, the stocks come down
Speaker 5: a lot. It used to be trading it around forty times.
Speaker 5: Now it's trading below twenty times. You think about their
Speaker 5: customer base. They offer from mass to prestige, so a
Speaker 5: wide income span. They have hair salons, so people go
Speaker 5: there for services too. When you go for service, there's
Speaker 5: an attachment sale that rings up with it. When you
Speaker 5: look at their locations, they have very close destinations and
Speaker 5: there a lot of them are outside of them all
Speaker 5: so they're convenient. And now with a new five thousand
Speaker 5: square foot box that they're testing, there's even potential to
Speaker 5: go into some smaller areas. So you've got breadth of categories.
Speaker 5: You've got closeness and convenience, and you have massd to prestige.
Speaker 5: And with that, the grandmother, the mom, and the daughter.
Speaker 3: Hey Dan, I'm looking at Walmart here. They reported numbers
Speaker 3: here this morning, beating estimates. They raised their sale guidance
Speaker 3: for the full year. The stocks up nine percent pre market.
Speaker 3: What did you take away from our friends in Mettenville.
Speaker 5: I thought, overall, excellent execution and look what they're doing.
Speaker 5: They're gaining share. If they can say they've gotten a
Speaker 5: bigger share of the wealthier consumer and they haven't seen
Speaker 5: any weakness in some of their core customers. What does
Speaker 5: that mean to me? The dollars that the consumer has
Speaker 5: they're allocating to Walmart, and their more effectiveness in their
Speaker 5: category offering and their price offering and the meaning of
Speaker 5: value their share gainer.
Speaker 1: Dan, I want to talk about luxury here because there's
Speaker 1: a lot of negative talk about it, and there's other
Speaker 1: things doing well, different companies, selective, but I'm witnessing some
Speaker 1: a name I didn't even know, Roger Vivier. Basically, folks,
Speaker 1: i've been editorial is on fire. They've got a thing
Speaker 1: where Laura Dern they're doing with their daughter, and their
Speaker 1: internet exposure of shoes nobody can afford is like unbelievable, Dana,
Speaker 1: tell us, just give us one vignette about how a
Speaker 1: brand like Roger Vivier gets a moonshot in the summer
Speaker 1: of twenty twenty four.
Speaker 5: I think what you said a little bit of collaborations
Speaker 5: of who's wearing it like Laura Dern. Check out their
Speaker 5: store on Madison Avenue which they recently reopened, renovated, and
Speaker 5: you have a very iconic offering in terms of what
Speaker 5: their shoes are and certainly the emblem that's attached to it,
Speaker 5: and they've modernized it. This is an example of intentional buying.
Speaker 5: Brands is driving demand and you have intention there. It's
Speaker 5: an iconic offering and it's back in vogue again.
Speaker 1: How can our listeners and viewers profit from things like
Speaker 1: Roger Vivier.
Speaker 5: I think overall, when you think about some of the
Speaker 5: lux brands, you take a look today, Tapestries results were
Speaker 5: very very good, high gross margin, new customers are transacting
Speaker 5: at a higher average unit retail selling price. So when
Speaker 5: you think of brands that have they say what they do,
Speaker 5: they do what they say, and they stand for something
Speaker 5: I think you have, whether it's LVMH, I don't think
Speaker 5: that while their sales growth may have slowed, the brands
Speaker 5: and how they innovate and create demand, it's something that's
Speaker 5: so unusual and compelling.
Speaker 1: Dana is such a retail animal. Did you hear what
Speaker 1: she just said? She said customers are transacting. That's Dana
Speaker 1: Telsey talk for spending.
Speaker 3: Months clear and Dana, I have no idea how Tom
Speaker 3: Kean knows about Roger Viva shoes. But the Vi skate
Speaker 3: metal bucket sneakers in soft leather and white retail one thousand,
Speaker 3: seventy five dollars. Yes, there you go, sneakers, one thousand dollars.
Speaker 1: There you go.
Speaker 3: So talk to us about data about in the in
Speaker 3: the luxury category, where's China? Where the Chinese consumers?
Speaker 5: They say slowing down. The Chinese consumers are slowing down.
Speaker 5: They're spending within China, They're not traveling as much as
Speaker 5: they had a lot of them are buying some local
Speaker 5: Chinese brands and companies are having to work harder with
Speaker 5: their marketing dollars in order to win business from the
Speaker 5: Chinese customer. And you've seen it among many different brands
Speaker 5: out there. There's still opportunity going forward in China, and
Speaker 5: I think the specific marketing to that core consumer within
Speaker 5: China is really what's going to win the day, and
Speaker 5: we're seeing companies refocus on that.
Speaker 3: Are companies still I mean again, China's a huge market
Speaker 3: has been a huge driver of the luxury space. How
Speaker 3: do luxury companies how do they operate in China? Are
Speaker 3: they still investing in China because a lot of industries
Speaker 3: away from retail are really concerned about that.
Speaker 5: They are concerned about it, but yes, they are still investing.
Speaker 5: The ability to have a physical footprint basically provides the
Speaker 5: brand awareness. Have goods that are exclusive to China is
Speaker 5: key because when these are traveling outside of China, they
Speaker 5: have to know that they're getting exactly what it looks
Speaker 5: like in China and its authenticity. So being able to
Speaker 5: show what that brand aesthetic means is key for getting
Speaker 5: them to transact in other places when they travel.
Speaker 1: Dana Telsea Advisor your thoughts on walmart It's future out five.
Speaker 5: Years, stronger and bigger and being able to capture a
Speaker 5: wider consumer base. The physical footprint will be even more
Speaker 5: omni channel than what it is today, and I think
Speaker 5: the marketplaces area and the whole omni channel initiatives are
Speaker 5: going to be made easier. I think the seamless ability
Speaker 5: of Walmart to capture more households what you're seeing now
Speaker 5: with even wealthier consumers buying from Walmart makes it easier.
Speaker 5: It's value and convenience that's the synonym for Walmart.
Speaker 1: Dana Telsea. Thank you so much, just brilliant there. Particularly,
Speaker 1: I really appreciate the altered conversation. Lisa and I commiserate
Speaker 1: over that. Thank you for the international response to our
Speaker 1: covers of the Mars transaction with Kellogg's over their snack foods.
Speaker 1: We wanted to go out across Wall Street to the
Speaker 1: east side, not the cell side of the byside, but
Speaker 1: people that actually try the product, joining us now with
Speaker 1: their full teen coverage of cheese its amand align them
Speaker 1: for blackrock as well.
Speaker 4: So jalapino is the way to.
Speaker 1: Should I go with the duos where that I split
Speaker 1: it between a jalopino and the traditional.
Speaker 4: But you do have to you do have to try
Speaker 4: the house.
Speaker 1: Okay, we will try that at our house. Not for me,
Speaker 1: but howipinos is very big. I swear, folks. This is
Speaker 1: our final discussion of Jesus, other than congratulations to the
Speaker 1: Mars people, the Mars family thirty twenty nine billion dollar transaction,
Speaker 1: six billion dollars of debt, Good luck with that on
Speaker 1: the bond market is showing a new message off the
Speaker 1: equity panic of eight days ago? Is there a new
Speaker 1: tone to your fixed income space at Blackrock.
Speaker 6: So actually, in good morning, thank you for having me.
Speaker 6: The credit markets resilience was probably the big takeaway over
Speaker 6: the volatility of the past two weeks. You saw markets,
Speaker 6: the volatility index, the VVIX, certain parts of global equity
Speaker 6: markets set new post financial crisis records or even pre
Speaker 6: financial crisis records. Actually credit spreads didn't even come close
Speaker 6: to their median or the average over the post financial
Speaker 6: crisis period. So I would say the takeaway is that
Speaker 6: credit held in better than other asset classes all things considered,
Speaker 6: and actually we saw better buying on the little bit
Speaker 6: of widening that we did have, and we've at this
Speaker 6: point retraced depending on the asset class and the rating,
Speaker 6: around fifty to seventy five percent of the widening that
Speaker 6: we saw. I think there's a lot of kind of
Speaker 6: uh focus on the resilience of credit spreads and kind
Speaker 6: of why this is happening. Obviously, lots of well telegraphed
Speaker 6: reasons for that in terms of sector shifts, in the
Speaker 6: composition of the index, rating shifts, but one of the
Speaker 6: points I think that's actually not discussed enough is that
Speaker 6: just companies are staying private for longer in this new cycle,
Speaker 6: and by the time they actually issue into the public markets,
Speaker 6: they're larger and more diversified.
Speaker 4: And so that's why credit, we believe is holding in better.
Speaker 3: How much credit risks do you want to take? I mean,
Speaker 3: I mean I considered it to your treasury where I'm
Speaker 3: happy to hang out at four percent here, how much
Speaker 3: creditists do I want to take?
Speaker 6: We like owning, we like taking credit risk. I think
Speaker 6: one of the actual interesting things. And you can see
Speaker 6: this on the Bloomberg Intelligence data. Actually on the terminal,
Speaker 6: margins for high old credit have been improving over the
Speaker 6: past few quarters, which is a bit of a counterintuitive results.
Speaker 1: What mean what does margins for credit?
Speaker 6: So margins for your highield index you have the LF
Speaker 6: nine eight Highield Index l uac IG index. Actually in
Speaker 6: n aggregate, the margins for the high old universe have
Speaker 6: actually been improving. So in this in this kind of era,
Speaker 6: focusing on a higher cost of capital, a slow down
Speaker 6: in the economy, you would not expect ebit on margin.
Speaker 1: How many basis points? How many percentage points do you
Speaker 1: pick up on a high yield Amanda.
Speaker 4: Line M piece yes.
Speaker 1: Versus full faith and credit or some triple A Microsoft.
Speaker 6: So the spread, the actual spread on the highled indexes
Speaker 6: around three hundred and thirty eight basis points over treasuries. Yes, yes,
Speaker 6: but actually when high old investors are deploying, they're focusing
Speaker 6: more on the dollar price in the yield. The yield
Speaker 6: on the high old indexes around seven point five to
Speaker 6: five percent, so that's a meaningful cushion in terms of
Speaker 6: when you're actually deploying capital in this credit market that
Speaker 6: you're at, you're able to earn a pretty attractive on
Speaker 6: yield in IG for comparison, that's around five percent. We've
Speaker 6: seen significant demand for IG at five and a half
Speaker 6: percent yield, so we're slightly below that given the rate move.
Speaker 6: But in general, I think so long as you expect
Speaker 6: trend or ideally above trend and growth and we're actually there,
Speaker 6: we're at above trend now, that's actually a pretty supportive
Speaker 6: outcome for credit.
Speaker 3: For these credit people argus them, I understood that, I
Speaker 3: think Tom. I think if you're a salesman on Wall Street,
Speaker 3: you know, credit salesman, and you got a new issue,
Speaker 3: is the first company called black Rock?
Speaker 1: Yeah it used to be, but you know, Larry's been
Speaker 1: working so you.
Speaker 3: So you called black rock. What's your interest in new issues?
Speaker 3: When when Wall Street calls you with a new issue?
Speaker 3: What are the things you look at?
Speaker 6: So, in general, new issues have been an attractive way
Speaker 6: to deploy capital because they often come at a discount
Speaker 6: to the existing debt.
Speaker 4: We call that a concession.
Speaker 6: Sometimes those concessions are large. More recently they've been quite modest,
Speaker 6: but still it's an attractive way to deploy capital. The
Speaker 6: really interesting thing, and we're actually writing about this this week,
Speaker 6: is that supply in the IG market has outpaced the
Speaker 6: monthly average every month so far this year, despite the
Speaker 6: higher rate environment. Right in high yield, it's outpaced most months.
Speaker 6: So what that tells you is that corporates are not
Speaker 6: being sidelined by high rates.
Speaker 4: They're moving forward with what they need to do.
Speaker 6: The other interesting point, strategic M and A acquisition activity
Speaker 6: is actually tracking well above the twenty twenty two and
Speaker 6: twenty twenty three pace, and it's actually only six percent
Speaker 6: below the tenure average. So there too, like the news
Speaker 6: that we've seen recently, corporates are moving forward with strategic
Speaker 6: plans despite the higher rate environment. But I think the
Speaker 6: one point on supply that I would make. It does
Speaker 6: feel like this is a bit of a pull forward
Speaker 6: towards late in the year. We're running well above what
Speaker 6: would typically be implied for the summer, so I would
Speaker 6: expect to slow down, but we haven't seen it yet.
Speaker 1: Okay, fine, But to get to the real world where
Speaker 1: Mars is a private company takes out holipedo cheese, it's yeah,
Speaker 1: I get that, and forget it. You know, Mars has
Speaker 1: their own way. How do people finance those large transactions?
Speaker 1: The big munk's out.
Speaker 6: There, yes, yes, So it depends in aggregate. We've seen
Speaker 6: cash only deals represent fifty two percent of the year
Speaker 6: to date volume, which is actually slightly above the longer
Speaker 6: term trend.
Speaker 4: Stock only deals are actually also.
Speaker 6: Above the longer term trend, so that what's actually narrowed
Speaker 6: is the mix of cash and equity transactions. It's a
Speaker 6: little bit misleading to call it cash in debt though,
Speaker 6: because for a bondholder, when an acquisition is funded with cash,
Speaker 6: that can either deplete the excess liquidity on the balance
Speaker 6: sheet or ultimately it gets replaced with debt. So so
Speaker 6: from the perspective of a bondholder, we care how this
Speaker 6: is funded.
Speaker 1: We're taking I'm taking here. Everybody in the room is
Speaker 1: just staring across the Javit Center and amand alne them going,
Speaker 1: it's not fair curve, Amandon, You're going to ruin the curve.
Speaker 3: How about the private credit? How do you guys think
Speaker 3: about private credit? I mean, how does that impact your business?
Speaker 6: So we actually think about private credit as this third
Speaker 6: and viable funding option for a wide range of corporates
Speaker 6: in addition to the traditional bank lending channel and the
Speaker 6: public debt markets.
Speaker 4: That wasn't the case several years ago.
Speaker 6: That's because private credit has now grown into a sizable
Speaker 6: and scalable asset class on its own right, so it
Speaker 6: can compete in areas where it previously could not. We
Speaker 6: think that that kind of ability to coexist peacefully with
Speaker 6: the public debt markets is here to stay. We expect
Speaker 6: the mixshift between the two markets to EBB and flow
Speaker 6: over time, depending on market conditions. Probably the most notable
Speaker 6: thing that I've seen is that companies with demonstrated access
Speaker 6: to the public markets, either high old or loan, are
Speaker 6: actually choosing in some instances to refine in the sul Mars.
Speaker 3: As Thomas just talking about the Mars transaction they're going
Speaker 3: to finance this, they said, with cash on hand and
Speaker 3: then with new borrowing. So presumably they're going to go
Speaker 3: to I think it's JP Morgan and City are their
Speaker 3: bankers on this transaction. They'll see what kind of I
Speaker 3: guess credit terms they get from them, maybe the public
Speaker 3: markets as well. They'll hear from their bankers about what
Speaker 3: they can do in the public markets. Will they also
Speaker 3: go out and put bids out for private credit use?
Speaker 6: So leaving that transaction aside, it is common to see
Speaker 6: what we call dual track processes where corporates cfo's treasures
Speaker 6: evaluate their funding options in both markets, just like anyone
Speaker 6: would do in terms of do I issue a high
Speaker 6: old bond or a leverage loan? Right, that whole kind
Speaker 6: of slate of financing opportunities isailable similar time to your
Speaker 6: point on the M and A funding mix, that's a
Speaker 6: decision that corporates make depending on what is the balance
Speaker 6: sheet capacity that they have to add debt at the
Speaker 6: ratings where they're comfortable, where is their stock price in aggregate,
Speaker 6: I would say that that funding mix for M and
Speaker 6: A is tracking in a fairly kind of benign way
Speaker 6: for bondholders, meaning not skewed super strongly to debt, but
Speaker 6: it does matter a lot under the surface depending on
Speaker 6: the sector. And as you can imagine, there are certain
Speaker 6: kind of cash rich sectors like tech.
Speaker 4: And pharma that are leaning more heavily on cash and debt.
Speaker 1: What will mag seven do. I find it, from a
Speaker 1: z body at Boston University's standpoint, almost immoral that they
Speaker 1: haven't popped out to ten or twelve percent.
Speaker 6: Yeah, Well, in general in the credit market, as you know,
Speaker 6: that's a much smaller section of the credit market relative
Speaker 6: equities leverage, net leverage is still really low for that
Speaker 6: sector in aggregate, So I think it's reasonable to assume
Speaker 6: that when they're adding debt, they're just moving closer to
Speaker 6: their leverage target as they build that up over time.
Speaker 1: Amanda, thank you so much. I'm n aligning with us
Speaker 1: at black Reck just to clinic there, darn. Look at
Speaker 1: the front page is a Lisa matteo our What do
Speaker 1: you have?
Speaker 3: All right?
Speaker 7: So we just talked about you know, Starbucks new ceo
Speaker 7: not working in you know, Seattle. Google's x CEO. He's
Speaker 7: talking about the work from home. He's actually blaming it
Speaker 7: in the company's losing battle in the AI race, so
Speaker 7: he's saying, Eric Schmid, he's also the former executive chairman.
Speaker 7: He said this during a talk at Stanford University. He
Speaker 7: was responding to a question about Google competing with Open Ai,
Speaker 7: and he said Google deciding that work life balance and
Speaker 7: going home early, working from home was more important than winning.
Speaker 4: So that was a shot right there.
Speaker 7: He also said startup work is important because people work
Speaker 7: like heck to get those startups going.
Speaker 5: Yes, you gave me.
Speaker 4: I did give it before you.
Speaker 3: Know, but you're right. I mean, Lisa, I mean the startups.
Speaker 3: I mean he's right on that. I mean you talk
Speaker 3: to folks that work in the startup business. That's their
Speaker 3: entire life. They sues them day and night, and they're
Speaker 3: just it because it's make or break. You either make
Speaker 3: it or you go bust, and so they work like crazy.
Speaker 1: To disclose a loop on this. To The Wall Street
Speaker 1: Journal yesterday, mister Schmidt said, quote, I misspoke about Google
Speaker 1: and their work hours. Schmid said wednesday in an email quote,
Speaker 1: I regret my error. They'll push back. Must have been something, yep.
Speaker 3: But he joins a long list of corporate leaders including
Speaker 3: JP Morgan, Chase CEO, Jamie Diamond and testa CEO Elon Musk,
Speaker 3: who have complained about work from home policies, saying they
Speaker 3: make companies less efficient and less.
Speaker 1: You know what it needs to do out Stanford Pellow
Speaker 1: alto go see you. Professor Booth Nicholas Booth has really
Speaker 1: led on this and actually studying the issue. In a
Speaker 1: lot of tycoons like Eric Schmidt will say I really
Speaker 1: don't care or I don't believe. But the answer is,
Speaker 1: at the minimum, it's raging debate. Ly's I see it
Speaker 1: in the streets of New York. I mean, I'm a
Speaker 1: thunderstruck at Lexington and Park Avenue. I mean, I know
Speaker 1: there's a summer slowdown. I get it, sure, but it
Speaker 1: was more Now work from home?
Speaker 5: Next?
Speaker 1: What do you have?
Speaker 7: This new study shows gen Z voters don't want social
Speaker 7: media restrictions. Shocker here, gen Z voters they don't because
Speaker 7: there's all these talk about regulators trying to cut back
Speaker 7: and get some tough regulations on these social media apps
Speaker 7: to protect kids. But these kids gen Z, you know,
Speaker 7: I'm twelve to twenty seven, They're saying they don't want
Speaker 7: the restrictions. There was a sety out more than sixty
Speaker 7: percent new voters oppose requiring kids under sixteen to ask
Speaker 7: for their parents permission to use social media. The reason
Speaker 7: why this is important, though, is because gen Zers more
Speaker 7: than are getting closer to that voting age, so they're
Speaker 7: starting to have a say in this. And there's such
Speaker 7: a huge proponent of social media. I mean, most of
Speaker 7: the gen z is the most active people on isn't the.
Speaker 1: Biggest debate here on August fifteenth or whatever it is?
Speaker 1: This whole idea. A lot of schools now are saying
Speaker 1: leave your cell phone at the door. Yeah, to me,
Speaker 1: this is a lot bigger deal.
Speaker 3: Yeah, yeah, exactly. I mean I think that's a lot
Speaker 3: of schools in a lot of states, but actually not
Speaker 3: a lot of states. I think there's about eight or
Speaker 3: nine states that have had some legislation saying, you know,
Speaker 3: you got to put your phone here in a secure place.
Speaker 3: You're not taking into the classroom.
Speaker 7: Right like my daughter, Yeah for dinner, Yes, we do
Speaker 7: that too.
Speaker 3: No cell phones, phones, households.
Speaker 1: It is bill, all of you misskiing my phone. All
Speaker 1: of them get lined up good, but then we all
Speaker 1: dash for them afterwards.
Speaker 4: I don't want to serve you go for the phone.
Speaker 7: No, but it's true a lot of them, like even
Speaker 7: my daughters school. You got to keep it in the backpack.
Speaker 7: But there is notifications too, Like the kids turn on
Speaker 7: notifications for social media, so their phone's constantly dinging, you
Speaker 7: know when they get like some kind of posts or
Speaker 7: someone responds to them. So it's distraction. Okay, we've been
Speaker 7: talking about, you know, grocery stores, a growing grocery built well,
Speaker 7: grocery stores are now getting selective about their shelf space.
Speaker 7: We talked about them leaving more space for the store
Speaker 7: brands because people are switching to the store brands that
Speaker 7: see you've done it, I've done it too. So you
Speaker 7: see the grocery aisles starting to change.
Speaker 2: Now.
Speaker 4: These major food.
Speaker 7: Companies they're fighting for the shelf space. You know that
Speaker 7: they once had that major part of it, and now
Speaker 7: they're fighting for it for the store brands who are
Speaker 7: getting you know, some more greater competition there. They're trying
Speaker 7: new things, they're trying new products, they're trying to work
Speaker 7: to ensure they're packaging prices appeal to shoppers. But the
Speaker 7: thing is, yesterday.
Speaker 3: I learned a new term that I had not heard before.
Speaker 3: It's called inner store. Jen Bartash to cover supermarkets grocery
Speaker 3: stores for Bloomberg Intelligence, just throughout this term innerstore, and
Speaker 3: like what's inner store. That's the stuff that's like in
Speaker 3: the core of the supermarket, and that's like the basics,
Speaker 3: soups and things like that. The outer of the store,
Speaker 3: the edges of the aisles, the ends of the aisles
Speaker 3: are the higher margin stuff and where they tend to
Speaker 3: have maybe some promotions and things like that. Where the
Speaker 3: basics the stuff you just have to get every time
Speaker 3: that you don't need to promote, you don't need to
Speaker 3: do anything that's in there. I don't.
Speaker 1: I'm in the camp that everybody's buying the same thirty
Speaker 1: seven products. Try to get a court or a half
Speaker 1: gallon of one percent milk. Good luck with that, all
Speaker 1: sold out. Butter gone. Everybody wants the same. It's an
Speaker 1: Irish butter yes, but.
Speaker 4: More Yes.
Speaker 7: Your favorite topic break dancing in the Olympics. So there's
Speaker 7: actually some controversy around it now because there's a breaker
Speaker 7: from Australia. Her name is Rachel Gunn her aka raygun
Speaker 7: She's from Sydney. She's a Sydney University professor. She did
Speaker 7: this dance it was called like the Kangaroo dance. She
Speaker 7: did some other weird moves, but she scored zero points.
Speaker 7: And the thing is that a lot of people are
Speaker 7: making zero a lot of people making fun of her.
Speaker 7: They went to the late night talk shows. But there's
Speaker 7: actually an online petition that's criticizing her. So now you
Speaker 7: have the Australian Olympic Committee getting in the middle and saying, hey,
Speaker 7: leave this one alone, like she you know, we represent
Speaker 7: you know, we're we're behind her. They support her, But
Speaker 7: the question is will it come back to.
Speaker 3: The elete some Olympic sports? How does something get approved
Speaker 3: of be an Olympic sports?
Speaker 1: A lot of politics? I guess I don't know.
Speaker 3: I mean, did Rich Truman agreed to say breakdancing?
Speaker 7: I mean, I don't get how you have breakdancing you
Speaker 7: don't have like softball or basically, yes.
Speaker 1: Potaged Lisa's hair in glam Rock, Yes, totally. Lisa is
Speaker 1: out on Long Island jon Jets playing Thursday Night. She's
Speaker 1: got the five inch platform, you know, the shoes on
Speaker 1: the glam Rock hare. We did boy bands yesterday. Although
Speaker 1: the emails are so kind. This is the Bloomberg Surveillance
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