WEBVTT - AutoNation CEO on the Environment for Vehicle Sales 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.840 at Bloomberg dot com slash podcast. Mike Jackson, he's the 0:00:21.840 --> 0:00:24.759 CEO of Auto Nation. Um, I'm not going to say 0:00:24.760 --> 0:00:27.480 one of the biggest car dealers in the world. Is that? 0:00:27.760 --> 0:00:29.520 Is that true globally? Mike? Are you guys one of 0:00:29.520 --> 0:00:32.199 the biggest in the world. Well, if there's life on 0:00:32.280 --> 0:00:34.640 other planets, we might not be being be the biggest 0:00:34.640 --> 0:00:38.040 in the universe. But um, yeah, I think we are. 0:00:38.159 --> 0:00:40.720 I think we are, and we arned to your point. 0:00:41.120 --> 0:00:43.640 I mean, think about it. We did seven billion dollars 0:00:43.640 --> 0:00:47.920 worth of revenue in the second quarter this year, and 0:00:48.000 --> 0:00:53.159 the environment for vehicle sales is very good. You and 0:00:53.200 --> 0:00:55.840 I talked about it a year ago where I said, 0:00:55.920 --> 0:00:59.040 you know, with this pandemic and shelter in place, America 0:00:59.120 --> 0:01:02.360 is reasserting sense of independence and they want to decide 0:01:03.000 --> 0:01:04.760 where they go when they go and how they go 0:01:04.840 --> 0:01:07.200 and they want a personal vehicle. So demand is strong 0:01:07.920 --> 0:01:13.200 and automation's performance within that environment is exceptional. Is it 0:01:13.200 --> 0:01:18.800 difficult to get UM inventory? Well, on the new vehicle side, 0:01:19.200 --> 0:01:23.560 there's no question that the manufacturers had a tremendous challenge 0:01:23.600 --> 0:01:25.760 to restart production, and I have to tip my hat 0:01:25.800 --> 0:01:29.000 to them. And then earlier this year they really got 0:01:29.080 --> 0:01:34.000 hit with the shortage on microchips. But I would point 0:01:34.000 --> 0:01:37.880 out our shipments in the second quarter doubled from a 0:01:37.959 --> 0:01:44.360 year ago, are only six to seven percent down from UM, 0:01:44.400 --> 0:01:47.240 but demand is far far higher. So it's not that 0:01:47.319 --> 0:01:52.120 the industry can't make anything. Uh, it's that this earlier 0:01:52.160 --> 0:01:55.600 point that I made, that demand is very strong for 0:01:55.720 --> 0:02:00.560 vehicles and that's both new and preoped. So give the center, 0:02:00.960 --> 0:02:04.440 having you know, a little bit of a hindsight, are 0:02:04.440 --> 0:02:07.320 you surprised that the O E M s had that 0:02:07.520 --> 0:02:12.560 production difficulty still have that production difficulty, that that perhaps 0:02:12.639 --> 0:02:17.280 this just in time inventory may not maybe too finely tuned, 0:02:17.400 --> 0:02:22.920 that a chip shortage of all things can halt Detroit, Well, 0:02:23.880 --> 0:02:30.480 it is halting the world. So yes, the entire just 0:02:30.680 --> 0:02:35.000 in time production system is being rethought because the relative 0:02:35.160 --> 0:02:39.720 cost of a chip versus the disruption to production is 0:02:39.960 --> 0:02:43.079 tremendously out of whack, and they're having meetings right now 0:02:43.440 --> 0:02:46.720 saying why shouldn't we have more of this, more of 0:02:46.720 --> 0:02:50.119 these chips on hand. That you can't, you can't bring 0:02:50.160 --> 0:02:53.639 the whole thing uh to such a disrupted state. So 0:02:53.919 --> 0:02:57.799 that that is a fair point. UH. What no one 0:02:57.919 --> 0:03:01.720 foresaw though, is that again going back to this god 0:03:01.800 --> 0:03:08.040 awful pandemic TOI. Consequences came out of that the consumer reorder, 0:03:08.400 --> 0:03:11.840 reoriented parking book towards their home. They wanted more space, 0:03:12.280 --> 0:03:16.480 larger space with more electronics, and they wanted personal vehicles, 0:03:17.200 --> 0:03:20.040 both of which demand chips. So the demand for chips 0:03:20.040 --> 0:03:22.639 went up in the housing electronics industry at the same 0:03:22.680 --> 0:03:26.000 time one up in the avnable bull industry, and therefore 0:03:26.120 --> 0:03:28.519 we have this chip shortage. You can't build these microchip 0:03:28.600 --> 0:03:32.320 factories from one day to the next. They're extremely complex. 0:03:32.840 --> 0:03:36.840 And that then also asked another whole strategic question, should 0:03:36.840 --> 0:03:41.120 we be so dependent America on microchips coming out of 0:03:41.120 --> 0:03:43.600 Southeast Adia? Is this really where we want to be 0:03:43.600 --> 0:03:46.160 as a country. So all of that's being rethought and 0:03:46.200 --> 0:03:49.040 rediscussed as a consequence of this pandemic. Well, and we're 0:03:49.200 --> 0:03:51.480 you know, taking on a ton of debt in order 0:03:51.520 --> 0:03:54.280 to um figure out what's going on here on a 0:03:54.600 --> 0:03:57.200 national level. On a company level, you guys are just 0:03:57.320 --> 0:03:59.760 killing it right now. And makes me, uh, you know 0:04:00.040 --> 0:04:04.040 under in a buyer's market, you're just struggling and competing 0:04:04.080 --> 0:04:07.560 and maybe you're borrowing to try and or our margins 0:04:07.560 --> 0:04:10.320 are getting hit right now. Um, you know these are 0:04:10.360 --> 0:04:13.680 good times for you. Are you taking advantage of that too? 0:04:14.440 --> 0:04:19.280 You know, um, somehow retrench somehow reorganized somehow you know. 0:04:19.600 --> 0:04:22.240 I mean, you have the money now, so are you 0:04:22.279 --> 0:04:24.040 Are you looking to change the business a little bit? 0:04:24.080 --> 0:04:26.080 While while we're in the will, while you have the 0:04:26.120 --> 0:04:31.000 gravy train, I feel like we're doing more than running 0:04:31.000 --> 0:04:34.279 the gravy train. But there's no question in the environment 0:04:34.320 --> 0:04:37.880 for vehicles is good, and there's no question that automation 0:04:38.080 --> 0:04:44.000 is outperforming tremendously in that positive environment. And we've done 0:04:44.000 --> 0:04:48.200 it all. We've dramatically increased revenue with our brand and 0:04:48.240 --> 0:04:51.120 our customer experience on our digital platform. We use the 0:04:51.160 --> 0:04:54.920 digital platform to take out costs. Uh, We reduced by 0:04:55.040 --> 0:04:58.400 We're doing a much larger business with several thousand fewer 0:04:58.400 --> 0:05:03.320 employees because our digital tool are so strong and so capable. 0:05:03.680 --> 0:05:08.800 We have aggressively led the market in uh supplying our 0:05:09.480 --> 0:05:11.960 our stores with pre owned vehicles when we saw the 0:05:11.960 --> 0:05:15.599 swords coming in new vehicles. Imagine our pre owned business 0:05:15.680 --> 0:05:20.279 on a revenue basis is up six year over year. Yeah, 0:05:20.320 --> 0:05:24.600 I would say that's grabbing the opportunity. Mike. I'd love 0:05:24.640 --> 0:05:27.160 to get your thoughts. I mean, nobody has you know, uh, 0:05:27.400 --> 0:05:29.440 you know, greater feel for where the consumer is, the 0:05:29.440 --> 0:05:32.279 auto buying consumer is right now, just give us your 0:05:32.320 --> 0:05:35.320 thoughts on this whole e V transition. How do you 0:05:35.360 --> 0:05:37.800 think it will proceed? Are you ever going to convince 0:05:37.800 --> 0:05:41.680 a you know, Matt Miller to go electric? I'm not 0:05:41.720 --> 0:05:46.839 sure I have to. So the inflection point for the migration, 0:05:46.960 --> 0:05:51.000 let's use that word. It's not a stampede, it's a migration. Uh. 0:05:51.160 --> 0:05:54.479 Despite all the headlines from the internal combustion engine two 0:05:54.480 --> 0:05:58.760 electric battery electric vehicles is underway. So let me put 0:05:58.839 --> 0:06:00.680 that in some sort of perspect though. If I go 0:06:00.720 --> 0:06:05.640 out to which is a long time away, I think, okay, 0:06:06.320 --> 0:06:11.279 of what's sold new will be all electric, uh, and 0:06:11.480 --> 0:06:14.919 the vehicles and operation in the United States six seven 0:06:15.800 --> 0:06:18.200 will be all electric. So this is not like going 0:06:18.240 --> 0:06:20.440 from the flip phone to the smartphone, where you throw 0:06:20.480 --> 0:06:23.839 one thing away. The internal combustion engine vehicles have a 0:06:23.920 --> 0:06:27.080 lifespan of twenty five years something like that. Are going 0:06:27.120 --> 0:06:29.840 to be have a useful life that somebody will pay 0:06:29.920 --> 0:06:33.200 for them and are of value to them. But I'm 0:06:33.200 --> 0:06:35.840 also not in denial. We love of electric vehicles. We're 0:06:35.839 --> 0:06:39.000 gonna sell electric vehicles. We offer them from all the manufacturers. 0:06:39.200 --> 0:06:41.880 They have great stuff coming. But it's going to be 0:06:41.920 --> 0:06:45.920 a gradual migration, not a stampede. Yeah, I mean, I'm 0:06:45.960 --> 0:06:50.080 still I'm gonna get there eventually, but I'm waiting for, 0:06:50.680 --> 0:06:52.880 you know, the new raptor to come out. The raptor 0:06:53.000 --> 0:06:55.440 are to come out. I want to get there. You've 0:06:55.440 --> 0:06:57.560 got that hummer. I could even maybe talking into that 0:06:58.160 --> 0:07:01.719 Humber at all electric converse. Well well well wait, well wait, 0:07:01.760 --> 0:07:04.479 I just need one more big V eight and then 0:07:04.480 --> 0:07:07.719 I'm gonna switch switch over. But Mike, it's always great 0:07:07.760 --> 0:07:09.760 to talk. I just bought my last V twelve, and 0:07:09.760 --> 0:07:12.880 the last one made I'm very happy V twelve. That's 0:07:13.200 --> 0:07:15.720 that's on another level. But of course, your stocks at 0:07:15.720 --> 0:07:18.720 an all time high. So you can do that, Michael Jackson. 0:07:18.720 --> 0:07:20.960 There you see of Auto Nation stock trading right now 0:07:21.000 --> 0:07:23.960 at a hundred and seven dollars and fifty three cents, 0:07:24.000 --> 0:07:25.400 as I said, in an all time high. It's but 0:07:25.440 --> 0:07:28.800 it's an incredible chart to look at. Um. And because 0:07:28.840 --> 0:07:30.760 the business has done so well, I'm always looking on 0:07:30.800 --> 0:07:33.880 the on the website. Uh. And there is drive Electrified 0:07:34.000 --> 0:07:37.400 right there on the website. So they are definitely pushing 0:07:37.400 --> 0:07:43.520 and selling those cars. This is Bloomberg, Matt. When I 0:07:43.560 --> 0:07:45.600 was on the South side, boy, you had to get 0:07:45.600 --> 0:07:48.200 the Pittsburgh at least once a year to see the 0:07:48.240 --> 0:07:51.800 good folks at Federated Federator at Hermes. Now I would 0:07:51.800 --> 0:07:54.920 tend to do it during a baseball or hockey season. 0:07:55.160 --> 0:07:58.400 I can catch a game. R J. Galli, Senior portfolio manager, 0:07:58.400 --> 0:08:01.240 head of the bond group at Federator Hermi's he joins us. 0:08:01.440 --> 0:08:03.280 I was an equity guy, r J. So I never 0:08:03.320 --> 0:08:07.400 bothered you. But boy, I look at the tenure one 0:08:07.440 --> 0:08:11.000 point to zero percent. What do you make of this 0:08:11.040 --> 0:08:14.640 treasury market right here? Well, good morning, and I have 0:08:14.720 --> 0:08:18.120 my glasses on so I can see. Um. You know, 0:08:18.160 --> 0:08:21.720 it's been brutal. Uh. You know, Frankly, we as a firm, 0:08:22.400 --> 0:08:25.160 especially the duration pot which on the chair of and 0:08:25.160 --> 0:08:27.440 we sort of assess what we think are the likely 0:08:27.600 --> 0:08:31.040 drivers of raids and position accordingly within our actively managed 0:08:31.080 --> 0:08:34.160 fixed income funds. We've had a pretty significant short on 0:08:34.760 --> 0:08:36.800 for for what I would say has been a painful 0:08:36.880 --> 0:08:42.120 pain trade. Um. I think initially markets moving, Yeah, exactly, 0:08:42.160 --> 0:08:44.760 markets have trouble moving. When everybody's position to one side 0:08:44.800 --> 0:08:46.679 of the boat, you know, it moves the boat, and 0:08:46.960 --> 0:08:49.160 so some of that is is just the sort of 0:08:49.200 --> 0:08:52.600 the way markets work. I think it's clearly been inflamed, however, 0:08:52.640 --> 0:08:55.640 by the fact that there was some sense that we're 0:08:55.640 --> 0:08:59.680 moving past COVID. The delta variant uh was was not 0:09:00.000 --> 0:09:02.360 ppping up on the UK, but it's certainly crept up 0:09:02.720 --> 0:09:05.080 on the United States and then in the last number 0:09:05.080 --> 0:09:07.839 of weeks. Um. That's not the only factor, though, you know, 0:09:07.880 --> 0:09:10.160 the US has been a pretty good place to put 0:09:10.160 --> 0:09:12.600 money for yield for foreign investors if you hedge out 0:09:12.640 --> 0:09:16.040 the f X risk again or Euro based investors getting 0:09:16.240 --> 0:09:19.120 much higher yields here than they are on their home markets. 0:09:19.120 --> 0:09:21.320 So there's been reasons that capitals found its way to 0:09:21.320 --> 0:09:24.199 our shores. We felt that that would be a temporary 0:09:24.679 --> 0:09:29.360 technical boost to treasury prices and pushing yields down. UM. Now, 0:09:29.400 --> 0:09:31.760 you know, with the delta variant, it's it's been a 0:09:31.800 --> 0:09:34.040 little humbling. We had a pretty good confidence that our 0:09:34.080 --> 0:09:37.360 call was gonna work, uh drive driven by inflation and growth, 0:09:37.520 --> 0:09:40.000 and then there's a lot of headwinds to it right now. Yeah. 0:09:40.000 --> 0:09:43.520 I was talking to UM a portfolio manager this morning 0:09:43.520 --> 0:09:47.800 who was saying, you know, people should maybe buy treasuries 0:09:48.040 --> 0:09:51.760 as a hedge, as insurance in case everything goes wrong. 0:09:51.800 --> 0:09:54.640 But that has to be terrifying to do, especially at 0:09:55.679 --> 0:09:58.280 the long end, you know, because if then all of 0:09:58.320 --> 0:10:01.800 a sudden um rates rise a hundred basis points, you're 0:10:01.840 --> 0:10:05.839 out twenty percent of your capital. If he was talking 0:10:05.880 --> 0:10:08.160 about t buills where you're not taking a lot of 0:10:08.200 --> 0:10:10.800 price risk, I think he's got a point. But I'm 0:10:10.840 --> 0:10:13.719 with you. Like to buy ten year or thirty year 0:10:13.760 --> 0:10:17.160 treasuries as insurance, that's insurance that could sort of burn 0:10:17.200 --> 0:10:19.199 you up if you don't have the house fire. I mean, 0:10:19.240 --> 0:10:23.200 that's just not prudent. Our vue has been all along 0:10:23.720 --> 0:10:26.760 that even though real yields now, have you have returned 0:10:27.320 --> 0:10:30.280 to you know, basement levels the ten year tips right 0:10:30.320 --> 0:10:33.000 now that are negative hundred and eleven basis points. The 0:10:33.080 --> 0:10:37.679 economy is not in that basement. These really yields fundamentally 0:10:37.720 --> 0:10:41.760 should not preside for much longer. That's right. GP Morgan says, 0:10:41.800 --> 0:10:46.160 these yields indicate an expectation of only a half percent 0:10:46.240 --> 0:10:49.480 GDP growth of the next twelve months, even though the 0:10:49.559 --> 0:10:52.959 JP Morgan analysts who said that expect more than three 0:10:53.040 --> 0:10:55.040 and a half percent of GDP growth over the next 0:10:55.040 --> 0:10:57.720 twelve months. So what's Yeah, there's a huge disconnect I 0:10:57.760 --> 0:11:00.960 think between what is what is an intact economic recovery 0:11:01.000 --> 0:11:04.320 with huge supports from fiscal policy that's still being spent, 0:11:04.400 --> 0:11:07.320 but albeit out of diminishing rates, And this idea of 0:11:07.360 --> 0:11:09.840 peak growth makes very little sense if you look at 0:11:09.840 --> 0:11:13.000 the charts for forty years. It is true that when 0:11:13.000 --> 0:11:16.520 you hit peak growth in an economic recovery, thereafter rates 0:11:16.559 --> 0:11:19.719 tend to somewhat decline. But all those other periods, really 0:11:19.800 --> 0:11:23.640 yields were astronomically positive and high. You know, we are 0:11:23.679 --> 0:11:26.280 at a period now where really yields are shockingly low 0:11:26.320 --> 0:11:30.200 and negative. So attaching that explanation to this seems to 0:11:30.240 --> 0:11:32.560 be a bit of a reach. I think really this 0:11:32.679 --> 0:11:36.760 started is technical and now has become a concern. Is 0:11:36.760 --> 0:11:38.679 the COVID nightmare is still all very fresh in our 0:11:38.679 --> 0:11:41.400 minds and it's not yet over. I do think some 0:11:41.520 --> 0:11:44.200 of it is capital flows, some of it is foreign flows, 0:11:44.240 --> 0:11:46.320 A good bit of it is shortcovering and pain trade. 0:11:46.559 --> 0:11:49.000 We still like being short, but I have to admit 0:11:49.040 --> 0:11:51.560 it's been humbling. We're looking for an opportunity to reassess 0:11:51.640 --> 0:11:54.920 at somewhat higher yield than today that make more sense 0:11:55.320 --> 0:11:57.520 in you know, the medium term, than what we've seen 0:11:57.520 --> 0:11:59.560 on our screens right now. It feels it feels like 0:11:59.600 --> 0:12:03.199 a kind of the momentum e type market here are 0:12:03.320 --> 0:12:05.400 j Is Is there something that you guys are looking 0:12:05.440 --> 0:12:09.439 forward to perhaps reverse that momentum? Is it a data point? 0:12:09.520 --> 0:12:12.880 Is it perhaps an incremental positive data point on the 0:12:12.920 --> 0:12:15.680 delta variant? Is it something technical? What are you looking 0:12:15.679 --> 0:12:20.040 forward to perhaps turn this thing around? Well? Up till 0:12:20.200 --> 0:12:24.599 even today, we've been feeling that in that repeated inflation 0:12:24.720 --> 0:12:28.880 prints will convince enough in the market that they need 0:12:28.920 --> 0:12:31.960 greater compensation for the inflation risk, which is clearly biased 0:12:31.960 --> 0:12:35.000 to the upside. That the transitory argument will apply to 0:12:35.040 --> 0:12:38.199 many components of the c p I and pc PC, 0:12:38.600 --> 0:12:41.240 but not enough of them and inflation will be too 0:12:41.280 --> 0:12:44.200 strong relative to the Fed Zone expectations. That's a narrative. 0:12:44.240 --> 0:12:46.920 I think Powell almost has come around to their acknowledging 0:12:46.960 --> 0:12:49.840 that inflation risk is to the high side, and they're 0:12:49.880 --> 0:12:52.160 saying if it doesn't prove to be the translatory, they 0:12:52.160 --> 0:12:54.800 may act differently. So we felt that the inflation data, 0:12:54.880 --> 0:12:57.600 just the drumbeat of continued inflation, would sort of cast 0:12:57.600 --> 0:13:00.040 a shadow over the transitory argument and help reest that 0:13:00.240 --> 0:13:02.720 yields to somewhat higher levels than where they are today, 0:13:02.760 --> 0:13:05.640 still not record levels. We thought that maybe the tenure 0:13:05.679 --> 0:13:08.080 would be closer to it with a one seventy uh 0:13:08.200 --> 0:13:10.959 come the end of you know, the third quarter, maybe 0:13:11.000 --> 0:13:12.640 two percent by the end of the year, and we 0:13:12.679 --> 0:13:14.960 haven't thrown the talent on that. I do feel that 0:13:15.000 --> 0:13:18.120 the delta variant story as we head into the fall, 0:13:18.160 --> 0:13:19.760 I know it's still very much summer, but when you 0:13:19.760 --> 0:13:22.599 start getting more and more people inside, we need the 0:13:22.679 --> 0:13:26.440 vaccination to take the narrative back, and right now the 0:13:26.720 --> 0:13:30.240 vaccination narrative is on the wayne and instead we're having 0:13:30.240 --> 0:13:33.920 more political controversy over vaccines and you're seeing lower vaccinated 0:13:33.960 --> 0:13:41.800 areas get more cases, and possitalizations have picked up. While 0:13:41.840 --> 0:13:44.600 we're on bitcoin, let's talk about TikTok. They launched a 0:13:44.600 --> 0:13:48.600 new resumes program in here in the US, enabling people 0:13:48.600 --> 0:13:53.079 to post job resumes, job pitches, or job well, I 0:13:53.120 --> 0:13:57.440 guess like apply for jobs with videos. Angie Hannah joins us. 0:13:57.440 --> 0:14:01.040 She's the global Chief Talent Office or for our g A. 0:14:01.240 --> 0:14:03.800 And this is kind of like a new era I 0:14:03.800 --> 0:14:07.280 guess that we're entering. I would think you don't take 0:14:07.320 --> 0:14:11.120 somebody seriously if they give you a TikTok resume video. 0:14:11.200 --> 0:14:13.520 But I guess you know, I'm just too old, Angie, 0:14:13.559 --> 0:14:17.880 is this legit? It's it's funny that you you say that, 0:14:17.880 --> 0:14:20.960 because I have the same reaction at first, Um, and 0:14:21.080 --> 0:14:23.520 thought would I even do such a thing since I 0:14:23.560 --> 0:14:27.800 have my nine year old begging for TikTok all the time. However, Um, 0:14:27.840 --> 0:14:30.600 as I looked into it a lot further, it's I 0:14:30.640 --> 0:14:33.320 think it's a pretty brilliant idea. What for me? It 0:14:33.440 --> 0:14:37.280 really allows companies to engage in a meaningful way. Um, 0:14:37.320 --> 0:14:40.760 I think it will be for more of the gen z. However, Um, 0:14:40.800 --> 0:14:44.600 I've had a couple of different people since TikTok launched 0:14:44.680 --> 0:14:48.080 this reach out to me different platforms to talk about 0:14:48.080 --> 0:14:52.840 more integrative ways of hiring. And so I think that 0:14:53.120 --> 0:14:56.080 this is this could be a you know, a place 0:14:56.080 --> 0:14:59.000 where people could get niche career advice. They also can 0:14:59.120 --> 0:15:01.560 really show who they are, which is what I love 0:15:01.600 --> 0:15:04.880 about it. People can be really authentic and resumes, there's 0:15:04.880 --> 0:15:07.600 so much about what you've done versus what you can do. 0:15:07.920 --> 0:15:09.840 But I think I think this is I think it's 0:15:09.920 --> 0:15:13.160 it's a really interesting way for companies to engage with talent. 0:15:13.280 --> 0:15:15.560 It does actually show who you are. Though you know, 0:15:15.600 --> 0:15:18.240 I have to say growing up um here in New 0:15:18.320 --> 0:15:20.080 York and in the Great State of Ohio and then 0:15:20.120 --> 0:15:22.520 moving to New York, I was always taught that you 0:15:22.520 --> 0:15:25.280 don't include a picture with the resume because you don't 0:15:25.280 --> 0:15:28.120 want that to influence. Now, in Europe, it's a standard 0:15:28.160 --> 0:15:32.080 part of your Yeah, at least in Germany it's it's 0:15:32.200 --> 0:15:35.640 it's it's standard. But of course everybody in Germany looks 0:15:36.120 --> 0:15:38.920 the same. Right, are there going to be any issues 0:15:39.000 --> 0:15:42.520 with that? You think? You know, that's it's a good question. 0:15:42.560 --> 0:15:46.160 I think time will tell um you're right. Standard practice 0:15:46.280 --> 0:15:48.320 wasn't to have a picture on there. I think now 0:15:48.360 --> 0:15:51.120 more than ever, with all the things going on in 0:15:51.160 --> 0:15:53.440 the world. UM, I don't think it's a I don't 0:15:53.600 --> 0:15:55.560 think it's a bad thing at all. I do think 0:15:55.600 --> 0:15:58.640 it allows people to be more authentic and actually show 0:15:58.760 --> 0:16:02.560 some of their you know there yourself, Angie. UM, I'm 0:16:02.600 --> 0:16:05.240 just gonna hear the markets here, the dow off just 0:16:05.280 --> 0:16:08.280 about eight points here, we keep two point two. And 0:16:08.480 --> 0:16:10.800 let's talk about just hiring in general. Here we Matt 0:16:10.840 --> 0:16:12.680 and I hear from company CEOs all the time that 0:16:12.720 --> 0:16:16.520 they have a hard time, uh, finding people to fill slots. 0:16:17.080 --> 0:16:19.520 Is it as simple as just paying people more money? Now? 0:16:21.400 --> 0:16:26.160 Good question. We you know, my industry we're seeing seeing this, UM. 0:16:26.200 --> 0:16:29.680 It's it's not about just paying more money at all. 0:16:29.760 --> 0:16:31.840 People After what we've gone through in the last year 0:16:31.880 --> 0:16:34.800 and a half, people want choice, they want flexibility. We're 0:16:34.800 --> 0:16:37.080 still in a pandemic, you know. Let's be honest, and 0:16:37.440 --> 0:16:39.200 I think after the last year and a half, people 0:16:39.200 --> 0:16:42.120 have spent a lot of time UM thinking about what 0:16:42.120 --> 0:16:45.040 what they want to do. And even within our own organization, 0:16:45.120 --> 0:16:49.040 we've seen an uptick in our internal mobility program. People 0:16:49.080 --> 0:16:53.040 wanting to UM switch careers all together, moving into a 0:16:53.280 --> 0:16:56.480 different departments. And so I think I think we're gonna 0:16:56.520 --> 0:16:59.400 have to. Companies are really going to have to not 0:16:59.440 --> 0:17:02.720 only give that flexibility, but create more choices and more 0:17:02.720 --> 0:17:06.360 opportunity for people. And money is something we're also seen. 0:17:06.520 --> 0:17:08.439 And they want to work remotely and they want to 0:17:08.840 --> 0:17:10.399 you know what they want. They want your boss to 0:17:10.400 --> 0:17:12.480 be nice to you. I read a story today about 0:17:12.520 --> 0:17:15.320 some boss said, you know, he had a gun to 0:17:15.720 --> 0:17:19.000 his employees heads. Obviously he didn't. Really, that's a figure 0:17:19.000 --> 0:17:20.280 of speech. When I was a kid, that's what your 0:17:20.320 --> 0:17:23.719 boss said to you. Apparently now that's considered bullying and 0:17:23.720 --> 0:17:26.280 it creates I can't remember. They call a toxic culture. 0:17:26.359 --> 0:17:30.920 Toxic culture. That's bad, right, that is bad. It is bad, yes, 0:17:30.960 --> 0:17:35.560 and it is. It is happening more and more. Um that. Yes, people, 0:17:35.600 --> 0:17:38.439 do you want more of that flexibility? Again, it's we 0:17:38.600 --> 0:17:41.919 everybody's been working from home over zoom or you know 0:17:41.960 --> 0:17:45.719 whatever platform people use, and and so yes, they do 0:17:46.160 --> 0:17:50.840 want some different, uh, different opportunities and they do want 0:17:50.880 --> 0:17:54.719 to see um an environment where they can thrive. And 0:17:54.760 --> 0:17:56.800 you know, I have to agree, I think you get 0:17:56.800 --> 0:17:58.600 the best set of people when you're not holding a 0:17:58.600 --> 0:18:02.120 gun to their head. And so I think I think 0:18:02.119 --> 0:18:05.080 that companies shifting a little bit more to a growth mindset. 0:18:05.200 --> 0:18:08.800 It's probably what we could call that. Just get over 0:18:08.880 --> 0:18:11.560 right now to Lewis. Navalier is the chairman, CEO and 0:18:11.600 --> 0:18:15.679 c i O of Navalier and Associates, And I guess 0:18:16.440 --> 0:18:18.520 you know the most important thing. Well, I'd like to 0:18:18.560 --> 0:18:20.760 ask you what is the most important thing to focus 0:18:20.800 --> 0:18:24.640 on this earning season, because it seems like especially companies 0:18:24.640 --> 0:18:27.760 that have stable margins that can pass on input costs, 0:18:27.760 --> 0:18:33.280 that can deal with inflation are doing best correct, and 0:18:33.400 --> 0:18:36.720 the ones that provide strong guidance are definitely going to 0:18:36.800 --> 0:18:39.880 be rewarded. You know, this is peak sales and arrange 0:18:39.960 --> 0:18:43.640 momentum because of easy ear year comparisons. But those few 0:18:43.680 --> 0:18:47.960 stocks that will sustain strong sales arens momentum um should 0:18:47.960 --> 0:18:50.000 break out as leaders. I expect the market to them 0:18:50.040 --> 0:18:53.760 more narrow, more fun, the night focused and um. You know, 0:18:53.800 --> 0:18:56.480 we're very fortunate where we have three weeks of very 0:18:56.480 --> 0:18:59.119 strong earnings coming out now and that should help the 0:18:59.160 --> 0:19:02.119 market turn here. All right, when you get a day 0:19:02.160 --> 0:19:04.760 like today, Louis, you know again we're off two point 0:19:04.800 --> 0:19:09.600 three on the DOW, on on the SMP healthy one 0:19:09.680 --> 0:19:12.520 day short term pullback or are you're reading anything more 0:19:12.520 --> 0:19:15.920 into this? Well, I have to watch the volume. If 0:19:15.960 --> 0:19:20.479 the volumes high, it's going to continue. But we've been 0:19:20.520 --> 0:19:23.199 in an asselin market for some time, so what I 0:19:23.240 --> 0:19:26.360 expect is we might get a reversal, maybe as late 0:19:26.440 --> 0:19:29.159 as the last hour today. UM. A lot of it 0:19:29.200 --> 0:19:31.760 also depends on the e t F world. You know, 0:19:31.920 --> 0:19:35.600 E t s do trade at premiums and discounts, and 0:19:35.640 --> 0:19:39.119 if those discounts today starting to widen a bit, that 0:19:39.160 --> 0:19:41.919 will cause a panic in the e t F world. 0:19:42.040 --> 0:19:44.480 And so we don't want to see that because then 0:19:44.480 --> 0:19:47.199 the market would feed on itself. But you know, the 0:19:47.240 --> 0:19:49.280 market to maut of crowd, we just have to exhaust 0:19:49.280 --> 0:19:52.200 the selling pressure. So it will be interesting to see 0:19:52.240 --> 0:19:54.560 how long it lasts. I mean how much. If I 0:19:54.640 --> 0:19:59.760 look at treasury yields at one seventeen, if I look 0:19:59.760 --> 0:20:02.720 at you yields, it negative one point one percent or 0:20:02.760 --> 0:20:06.159 even lower. Right now, that just freaks me out, you know, 0:20:06.200 --> 0:20:09.960 because like JP Morgan says, um, that means the bond 0:20:10.040 --> 0:20:12.399 market and these are supposed to be the smart guys, 0:20:12.520 --> 0:20:14.320 right this is the smart money. That's what we said 0:20:14.320 --> 0:20:15.920 in the in the eighties and the nineties. This is 0:20:15.920 --> 0:20:19.919 a smart money. The air forecasting economic growth of zero 0:20:20.040 --> 0:20:23.560 point five percent over the next year. So is that 0:20:23.600 --> 0:20:29.359 part of the sell off? Uh well, it's clearly the 0:20:29.400 --> 0:20:32.960 short term oasis. Okay, but yeah, we're all freaked out 0:20:33.040 --> 0:20:36.880 that inflation spikes and an interest rate spell that's not normal. Um. 0:20:36.920 --> 0:20:40.439 I was personally freaked out by Thursday's producer price index 0:20:41.160 --> 0:20:44.439 because it was service costs and those costs aren't going 0:20:44.480 --> 0:20:47.679 to back off. So although we have oil and lumber 0:20:47.720 --> 0:20:51.399 and some other commodity costs back enough, the core rate 0:20:51.480 --> 0:20:54.280 inflation is going to be suvenly high, and I don't 0:20:54.280 --> 0:20:56.359 think it's gonna be as transitory as that said wants. 0:20:56.520 --> 0:21:01.120 The other thing is we're definitely entering and menteur. Our 0:21:01.160 --> 0:21:05.520 government is doing what Europe's doing, and the problem is 0:21:05.600 --> 0:21:08.080 that means we may be on the road to negative rates, 0:21:08.440 --> 0:21:12.840 and uh so there's a flight for yield. Um. You know, 0:21:12.920 --> 0:21:17.960 the corporate demand for bonds is unbelievable, and I've been 0:21:18.000 --> 0:21:20.720 saying that, you know, corpor heels mighty being shoving Trevor 0:21:20.880 --> 0:21:24.040 Kurgie Oels Lolla but nothing makes any sense right now. 0:21:24.600 --> 0:21:27.360 But when the dust settles, stocks are great buy and 0:21:27.400 --> 0:21:30.120 of course the stock market heels more than the bonds 0:21:30.160 --> 0:21:34.000 and socks are still at tax avenge. All right, Louis, 0:21:34.000 --> 0:21:36.440 I've been trying to get my colleague Tom keenan entry 0:21:36.440 --> 0:21:38.920 point into this market. So when you get some of 0:21:38.920 --> 0:21:40.919 those panic phone calls, which you may get on a 0:21:41.000 --> 0:21:43.600 day like today, do you tell folks to say, hey, 0:21:43.600 --> 0:21:45.880 we're still constructive on this market. Look, this is as 0:21:45.960 --> 0:21:47.760 as perhaps a buying opportunity. What do you what do 0:21:47.760 --> 0:21:51.080 you say? I tell the and I do have those 0:21:51.119 --> 0:21:53.639 calls today, um, and I had some last week. I 0:21:53.680 --> 0:21:57.880 tell everybody that UM in social buying pressure to add 0:21:58.000 --> 0:22:01.600 last week after the inflation numbers. And I tell everybody 0:22:01.640 --> 0:22:04.879 the shorts love to try to use the strong stocks 0:22:05.040 --> 0:22:07.119 just before it needs to come out, but when er 0:22:07.200 --> 0:22:09.680