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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Apple car Play and

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Speaker 2: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 3: This is Bloomberg Intelligence Radio Malexy alongside Paul Sweeney. We

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Speaker 3: cover all the main news and business economics and finance

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Speaker 3: through our lens of our Bloomberg Intelligence folks. They cover

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Speaker 3: two thousand companies and one hundred and thirty industries all

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Speaker 3: around the world. And we finally get to the pressing question.

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Speaker 4: Of the day, will we now have chocolate cheeses?

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Speaker 3: And the only person asked about this is Jen Bartash's

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Speaker 3: Bloomberg Intelligence senior analyst Retail Staples and Packaged Food is

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Speaker 3: joining us. So Jen, seriously, we're actually kind of serious

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Speaker 3: chocolate cheeses.

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Speaker 4: Is that going to be a thing?

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Speaker 1: You never know? I mean it certainly maybe Snickered flavor,

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Speaker 1: Snickers flavored cheese its or eminem s micks.

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Speaker 3: I don't know, Wait, what about like that have been

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Speaker 3: Eminem's No, that'd be gross, that'd be gross, Like cho.

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Speaker 1: Checks mix kind of thing where it's got eminem's and

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Speaker 1: cheese its and everything all mixed together. You might see

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Speaker 1: something like that.

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Speaker 5: Why is this deal happening? What's give us a strategic

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Speaker 5: ration now for this deal?

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Speaker 1: Well, there's there's a couple of things. The first is,

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Speaker 1: you know, from a Mars portfolio perspective, when it comes

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Speaker 1: to the snacking category, they are heavily exposed to chocolate

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Speaker 1: and the coco. You know, coco has been a structural

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Speaker 1: issue in terms of cost for a while and we

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Speaker 1: think that's going to continue indefinitely. And so this helps

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Speaker 1: them diversify out that snacking side of their portfolio, and

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Speaker 1: it also helps them do a little bit more in

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Speaker 1: emerging markets. It's which is an area where Keilenova has

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Speaker 1: some strength.

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Speaker 3: So okay, so is it offense or defense from that perspective,

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Speaker 3: because it feels like it could be a combination of both,

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Speaker 3: like diversify away from just pure coco, but but also expand.

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Speaker 1: Yeah, I think it's a combination of the two. It's

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Speaker 1: it's on the cocoa side, it's a little bit of

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Speaker 1: risk mitigation, you know, and helping to ease some of

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Speaker 1: the costs they're feeling there and you know, traditionally chocolate

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Speaker 1: has held up actually really well through the pandemic and

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Speaker 1: after the pandemic, but we're finally starting to see a

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Speaker 1: little bit of weakness and consumer demand for chocolate just

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Speaker 1: because of food inflation, and so diversification will will certainly

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Speaker 1: help with that. And then you know, on a global basis,

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Speaker 1: Mars has leading you know, they're in the top three

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Speaker 1: market share in almost every region in confectionery, and so

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Speaker 1: having more of the salty snack side and getting more

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Speaker 1: into that can only consolidate their market share position in

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Speaker 1: a lot of leading global, you know, regions.

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Speaker 5: Jen, What makes us deal really interesting for me is

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Speaker 5: the Mars company because it's a private company. What do

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Speaker 5: we know about Mars? Maybe I don't know the size capitalization.

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Speaker 5: Did they ever talk to investors.

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Speaker 1: Very rarely, you know, but what they have disclosed, you know,

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Speaker 1: their annual revenue is a little over fifty billion dollars,

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Speaker 1: so definitely a sizable company. And what I think is

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Speaker 1: very interesting is when you break that revenue down, nearly

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Speaker 1: sixty percent of their revenue is coming from pet food.

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Speaker 1: So although everybody associates Mars with chocolate, the larger portion

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Speaker 1: of their business is pet and so they own the

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Speaker 1: Pedigree brand, they own the Whiskers brand, and that is

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Speaker 1: a big powerhouse for them. And so when you know

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Speaker 1: that's that's part of the reason we think there actually

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Speaker 1: won't be a lot of FTC pushback on this because

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Speaker 1: it's a smaller port of their portfolio and the products

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Speaker 1: are there's really no overlap between what Kelenova does and

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Speaker 1: what Mars does.

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Speaker 4: Amazingly, I did not know that. I did not know

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Speaker 4: that at all. Why we love Jen Bart.

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Speaker 3: I mean, that would kill them, but sure right, dogs

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Speaker 3: can't have chocolate from that thing. And so Jen, does

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Speaker 3: this mean we're going to see a lot of other

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Speaker 3: M and A in the space? And if so, sort

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Speaker 3: of who and where would we see that?

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Speaker 1: Well, we've seen, you know, we've seen a lot of

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Speaker 1: a sentiment towards tuck in acquisitions over the last couple

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Speaker 1: of years. But there are some pressures that are affecting

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Speaker 1: the industry. So when you listen to what all of

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Speaker 1: these package food companies are saying, their priority for twenty

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Speaker 1: twenty four and headed into twenty twenty five is regaining volume.

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Speaker 1: But the problem is that consumers not yet in a

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Speaker 1: position where they're buying bigger volumes of food, and so

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Speaker 1: M and A is a potential route to be able

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Speaker 1: to better navigate the market. So you know, in this instance,

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Speaker 1: with this deal, we're expecting over a billion dollars in

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Speaker 1: synergies between Mars and Kelenova, coming from procurement, coming from manufacturing,

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Speaker 1: things like that. So I think that this deal may

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Speaker 1: spark some at least some consideration for larger deals again

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Speaker 1: in the package food space, as they're trying to find

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Speaker 1: ways to contain costs, expand their geographic and product footprint

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Speaker 1: at a time when it's hard to spend to spur

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Speaker 1: consumers into buying greater volumes, So it may be an

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Speaker 1: alternative for them.

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Speaker 5: Gen here's the big quest out there for I think

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Speaker 5: most consumers, as John Tucker digs into a bag of cheese,

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Speaker 5: it's in food inflation. You cover the package of good companies,

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Speaker 5: You covered the grocery stores as well. Those prices while

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Speaker 5: the rate of inflation has slowed, those prices ain't coming down,

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Speaker 5: are they.

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Speaker 1: They're coming down, but very very slowly. And so if

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Speaker 1: you look on it on a basis, you know, comparison

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Speaker 1: back to twenty nineteen food prices are still almost twenty

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Speaker 1: percent higher than they were in twenty nineteen. Now in

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Speaker 1: certain categories where there's been relief, especially from the cost

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Speaker 1: of commodities, So as corn has come down, and soy

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Speaker 1: has come down, and wheat has come down, sugar has

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Speaker 1: come down, we've seen you know a little bit of

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Speaker 1: price relief, but it's going to take some time for

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Speaker 1: that to really translate into something that consumers feel in

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Speaker 1: their pocketbook instead of just individual products being you know,

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Speaker 1: either not getting increases or coming down slightly in price.

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Speaker 3: So which company in your space do you feel like

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Speaker 3: is doing pretty well on the margin and the top

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Speaker 3: line side, because if margins are gonna get squeezed, you

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Speaker 3: need the top line to grow. But the top line

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Speaker 3: is still really struggling with consumers right now. So who's

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Speaker 3: managing not the best?

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Speaker 1: Well? You know, up until the probably the the you know,

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Speaker 1: the last quarter or two, Mandalis has actually navigated that

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Speaker 1: pretty well, you know, because the demand for suites and

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Speaker 1: indulgences has had held up pretty well. You know, companies

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Speaker 1: that do have that exposure to snacking, generally speaking, are

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Speaker 1: doing better overall than companies that are more center store.

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Speaker 1: And I would point to Kraft heines as an example

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Speaker 1: of center store or Campbell Soup is a center store type.

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Speaker 5: Center store. I have heard that before.

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Speaker 1: So center store is when you're in a grocery store.

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Speaker 1: Everything that's not on the not on the outside, so

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Speaker 1: it usually is like shelf stable products. So think about

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Speaker 1: your canned soups, your pasta, your pasta sauces, things like that,

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Speaker 1: and and those are those are the pantry staples that

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Speaker 1: most people you know purchase. And then the perimeter is

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Speaker 1: of course all of your fresh you know, your fresh foods,

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Speaker 1: your produce and your meat and your dairy and things

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Speaker 1: like that.

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Speaker 4: And I learned today that's why we love Jen.

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Speaker 5: That's why we love Jen. Yeah, all right, Jen, thanks

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Speaker 5: so much for joining us. Jen Bartash, I've senior retail

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Speaker 5: analyst for Bloomberg Intelligence. But when I do, of course,

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Speaker 5: when I see an M and A trade cross the tape,

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Speaker 5: I go m A, go click on advisors and see

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Speaker 5: which one of my banker buddies are getting paid for

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Speaker 5: the acchoiry here from Mars. They were solely advised by

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Speaker 5: City Group. Good for them, and then for the target,

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Speaker 5: which is really where you want to be as an advisor.

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Speaker 5: They had Goldman, Saxonell's art. So some blue chip names

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Speaker 5: getting paid across the board on that big big trade

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Speaker 5: there thirty six billion with including debt.

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Speaker 3: And this was an easier fix, and that, like the

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Speaker 3: anti trust issue is probably not there versus other companies

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Speaker 3: where you know you're going to have it.

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Speaker 4: Do you get in the Q now? Do you wait

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Speaker 4: till after the election? What do you do? Increasingly you

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Speaker 4: what do you do?

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Speaker 5: Oh? Yeah, just get let's get move and get this enclosed.

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Speaker 3: Yeah, but you're the banker, of course you're going to

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Speaker 3: say that.

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Speaker 5: Yeah, but they only I was reading Gen's research, a

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Speaker 5: combind company only has like six point two percent global

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Speaker 5: retail spend or whatever the metric is. I think the

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Speaker 5: regulators will use.

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Speaker 4: So it's akady yeah for that one. But for other companies,

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Speaker 4: I don't know.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on applecar Play and Android

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Speaker 2: Auto with the Bloomberg Business. You can also listen live

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Speaker 2: on Amazon Alexa from our flagship New York station, Just

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Speaker 2: say Alexa play Bloomberg eleven thirty.

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Speaker 3: It was a nothing burger the CPI, But we could

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Speaker 3: also make an argument we've already had a humongous move

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Speaker 3: over the last couple of weeks. Volumes also light, so

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Speaker 3: you're kind of in a different positioning stage. Emily Roland

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Speaker 3: is co chief investment strategist for John Hancock Investment Management,

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Speaker 3: joining us.

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Speaker 4: Now, Hey, Emily, what do you make.

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Speaker 3: Of the non reaction in the market, Like, what does

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Speaker 3: that tell you about positioning and sentiment?

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Speaker 6: Well, it tells us that the PPI report yesterday really

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Speaker 6: sort of stole the show, coming in lighter than estimates,

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Speaker 6: and you saw big moves in bond markets as well

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Speaker 6: as across equity market. So I think today, you know,

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Speaker 6: coming in right around in line with expectations. Of course,

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Speaker 6: that sticky shelter or housing components still looking like the

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Speaker 6: primary driver of inflation, and you know, we're seeing the

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Speaker 6: housing data take a long time to slow down.

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Speaker 7: Inventories are still really.

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Speaker 6: Low, prices are still elevated, so we think that inflation

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Speaker 6: is certainly coming down. That's great news for markets, but

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Speaker 6: it's not happening in a straight line exactly.

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Speaker 5: So what does that mean for our feder reserve here?

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Speaker 5: I mean, it feels like this is kind of giving

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Speaker 5: them some run by. I know, we have some more

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Speaker 5: economic data between now and September, but boy, it seems

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Speaker 5: like they could certainly go here.

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Speaker 6: Yeah, this certainly gives the Fed the green light to

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Speaker 6: go in September, which, of course the boondo market was

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Speaker 6: already pricing in. The expectation shifted a little bit after

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Speaker 6: the report. We went from fifty basis points being.

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Speaker 7: Kind of the slight odds, and.

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Speaker 6: Now it's back to twenty five basis points, which feels

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Speaker 6: about right for us. Again, the Fed has noted that

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Speaker 6: the labor market is seeing some cracks. They're confident that

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Speaker 6: inflation's decelerating, and I think they certainly want to cut rates,

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Speaker 6: and that's our expectation going into September. There's still some

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Speaker 6: more data though, We're going to get another jobs report,

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Speaker 6: another CPI report, and of course we have Jackson holl

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Speaker 6: at the end of the month. So I think, kind

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Speaker 6: of hemming and hawing about fifty versus twenty five, we've

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Speaker 6: still got some time to go out here.

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Speaker 4: Yeah.

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Speaker 3: It's just also so interesting to point out that the

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Speaker 3: Fed didn't change their tune, like they were still talking

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Speaker 3: about we want to see more progress, we want to wait,

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Speaker 3: want to wait.

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Speaker 4: It was the markets that change their reaction function.

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Speaker 3: So after we've kind of cleaned out positioning, here are

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Speaker 3: we sort of on the same page markets, bond markets,

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Speaker 3: equity markets, and the Fed.

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Speaker 7: Yeah, I mean we're getting there.

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Speaker 1: You know.

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Speaker 7: We want to be patient here as it relates to bonds.

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Speaker 6: We're seeing a lot of volatility across high quality bonds here.

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Speaker 7: You know, again the data continue to chop around.

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Speaker 6: We do want to lean into duration into high quality

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Speaker 6: bonds here, but again it's not going to happen in

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Speaker 6: a straight line, and.

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Speaker 7: We've seen some massive moves.

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Speaker 6: This is type of volatility around bonds is not normal,

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Speaker 6: So we want to be patient here, but we do

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Speaker 6: continue to like the income that's available the aggregate bond

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Speaker 6: index yielding close to five percent. We like the idea

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Speaker 6: of locking in that income stream for years, even if

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Speaker 6: you're not getting paid yet on the duration component, you're

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Speaker 6: still getting that income, which we think is really attractive

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Speaker 6: in an environment where an economic contraction is likely in

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Speaker 6: our view.

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Speaker 5: So Emily, let's flash back to a week ago Monday.

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Speaker 5: What did you and the good folks up at John

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Speaker 5: Hancock Investment Management, what did you make about the volatility

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Speaker 5: we saw on last Monday's trading.

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Speaker 6: You know, it was so remarkable, and you know, everybody

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Speaker 6: was kind of thinking.

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Speaker 7: About the smoking gun.

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Speaker 6: You know, was it that ism manufacturing data?

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Speaker 7: Was it initial claims jumping?

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Speaker 6: Of course, everybody scrambled to try and explain the yes

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Speaker 6: and carry trade all of their clients and the unwind.

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Speaker 7: Of that and the surprise move from the Bank of Japan.

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Speaker 6: But I'll tell you the one thing that you couldn't

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Speaker 6: point to was earnings. And over time, we all know

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Speaker 6: that stock prices are going to follow profits, and we

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Speaker 6: look at earning season, we're up about twelve percent year

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Speaker 6: over years. Still a couple of big names to report here,

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Speaker 6: but earnings have come in pretty solid. I think the

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Speaker 6: challenge for investors on the earnings front is this impressive

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Speaker 6: run up in prices that we saw prior to the

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Speaker 6: earnings report, so you almost had to be perfect in

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Speaker 6: order to see an outsize reaction from markets there.

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Speaker 7: But earnings growth continues to come in solid.

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Speaker 6: It's being driven by those megacap tech names communications.

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Speaker 7: Services up there as well.

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Speaker 6: We're seeing some broadening out in earnings, so the fundamental

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Speaker 6: backdrop is remaining intact, which makes us know pretty optimistic.

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Speaker 7: On the equity front.

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Speaker 3: Does it also make us much more sensitive than to

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Speaker 3: Nvidia's earnings since that's going to be one of the

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Speaker 3: big earnings catalysts and you get Walmart on, I get that,

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Speaker 3: But is it now like an Nvidia story for earnings

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Speaker 3: and the market?

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Speaker 6: Absolutely, And it's you know, it's funny how navidia is

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Speaker 6: so far delayed versus everything else. You kind of think

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Speaker 6: that earning seasons over and then you remember that this

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Speaker 6: massive driver of the market is still yet to report.

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Speaker 6: So that's really going to be I think the next

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Speaker 6: big event, you know, coming up in a couple of weeks.

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Speaker 6: Watching that Obviously, it's been incredibly important to markets, especially

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Speaker 6: on the US equity front, so we'll learn a lot

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Speaker 6: from that report.

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Speaker 7: Absolutely.

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Speaker 5: So, people we're talking to us earlier today about small

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Speaker 5: cap stocks, if we are in fact going to see

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Speaker 5: some rates coming down, this could maybe be an opportunity

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Speaker 5: for small caps to perform. Are you willing to make

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Speaker 5: that leap? Is that seem reasonable?

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Speaker 3: And some of the small cap earnings like weren't terrible,

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Speaker 3: like they delivered.

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Speaker 7: Yep, yep, some of them did.

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Speaker 6: But overall, if you look at small cap earnings, they're

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Speaker 6: negative for this quarter versus large and mid cap equities.

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Speaker 6: So we think it's a bit early to lean into

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Speaker 6: small cap here. We would be looking for a shift

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Speaker 6: into an early cycle environment.

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Speaker 7: We'd want that contraction to play out.

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Speaker 6: We never really bought into the idea of lower rates

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Speaker 6: helping small cap equities. In fact, we have to remember

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Speaker 6: that when rates are coming down and the Feds cutting,

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Speaker 6: it's because something not great is going on and that

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Speaker 6: should not benefit the more cyclical areas of the market.

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Speaker 6: Small caps feature a lot of stocks that are unprofitable,

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Speaker 6: some growth at any price names. In fact, about two

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Speaker 6: thirds of the Russell two thousand index is comprised of

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Speaker 6: companies that don't make money. Those names, again, they can

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Speaker 6: rip when cyclicalities awarded in an early cycle environment, but

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Speaker 6: we simply think it's too early to lean in there.

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Speaker 6: We'd be moving up in cap. We'd be embracing quality.

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Speaker 6: We want companies with great balance sheets, tons of cash.

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Speaker 7: Great margins.

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Speaker 6: Remember, yes, inflation coming down is great news for sure,

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Speaker 6: especially for the consumer, but it also means revenue growth

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Speaker 6: is slowing. So again we want to lean into quality

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Speaker 6: for the reason. For that reason, because those companies can

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Speaker 6: defend their margins better when revenue growth is coming down.

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Speaker 3: So before we let you go, Emily quickly, aside from tech,

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Speaker 3: where is that spot?

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Speaker 6: Yeah, so we're looking at areas of the market that

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Speaker 6: are cheaper.

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Speaker 7: Think about quality at a reasonable price.

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Speaker 6: Areas like US mid cap stocks, which are trading at

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Speaker 6: the most significant discount to their large cap counterparts since.

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Speaker 7: The late nineteen nineties.

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Speaker 6: Midcaps also have an overweight to industrial stocks that are

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Speaker 6: benefiting from on shoring in this manufacturing renaissance that we're

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Speaker 6: having in the United States today. So it's really about again,

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Speaker 6: I think we might have made this term up. I'm

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Speaker 6: not sure, but quality at a reasonable price is really

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Speaker 6: the sweet spot for us for the remainder of this year.

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Speaker 5: All right, Emily, thank you so much for joining us.

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Speaker 5: We always appreciate getting few minutes of your time. Emily

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Speaker 5: Roland Co Chief investment Strategist, John Hancock Investment Management joining

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Speaker 5: us via that zoom thing from Boston here. So I know,

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Speaker 5: I guess one of the questions I have is, you know,

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Speaker 5: twenty five basis points or fifty basis points if they

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Speaker 5: do cut in September, and what would either of those

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Speaker 5: tell us? It's fifty basis points. Would that suggest to

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Speaker 5: the market, oh boy, something is wrong maybe, or will

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Speaker 5: twenty five or will twenty five not suffice the market?

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Speaker 4: You know, well that's so tricky, right, because you're right.

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Speaker 3: If you do fifty, then the narrative is gonna be like, oh,

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Speaker 3: things are a lot worse than we think. It didn't

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Speaker 3: seem like the inflation was coming down. The disinflation story

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Speaker 3: was coming down fast enough to justify the fifty basis

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Speaker 3: point cut. But if you look at WORP, we're still

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Speaker 3: pricing in over twenty five basis points, not fifty, but

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Speaker 3: still over twenty five within the market.

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Speaker 4: That's a different scenario.

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Speaker 2: Yep. You're listening to the Bloomberg Intelligence Podcast. Catch us

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Speaker 2: live weekdays at ten am Eastern on Apple car Play

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Speaker 2: and then broud Otto with the Bloomberg Business app. Listen

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Speaker 2: on demand wherever you get your podcasts, or watch us

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Speaker 2: live on YouTube.

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Speaker 5: All right, let's get to a story that is very

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Speaker 5: widely read on the Bloomberg coming. John Tucker's been following

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Speaker 5: it closely all day this he doesn't understand it. Yeah,

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Speaker 5: I'm not. All I know is the store's not there

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Speaker 5: across the street, and it was before Mary Ross Gilbert

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Speaker 5: joins us Bloomberg Intelligence Senior Equeryanna. She covers retail and

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Speaker 5: the story is Victoria's Secret has notd Rihanna Brands CEO

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Speaker 5: to lead a turnaround there and I didn't know Victoria's

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Speaker 5: Secret needed to turn around, but apparently it does in

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Speaker 5: the area. Go that's why the store is no longer

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Speaker 5: across the street from our office in that space has

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Speaker 5: been vacant for like five years. There we go, there

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Speaker 5: we go? All right, Mary Ross Gilbert, thanks so much

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Speaker 5: for joining us. Here is this a big deal for

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Speaker 5: Victoria's Secret?

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Speaker 7: I think this is.

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Speaker 8: A big deal for Victoria's Secret. Being a woman focused brand,

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Speaker 8: we think that Hillary super And as you mentioned, she

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Speaker 8: was just the CEO at Rihanna's brand fenty x Savage,

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Speaker 8: and that's a lingerie company. It's a teeny, teeny tiny company.

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Speaker 8: But Hillary has three decades of experience. She was the

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Speaker 8: chief of the Anthropology brands. More recently and prior to that,

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Speaker 8: she's worked at a number of other brands, including American Eagle.

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Speaker 8: And speaking of competition to Victoria's Secret and why they've

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Speaker 8: lost share, American Eagle has a brand called Airy and

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Speaker 8: that's about you know, one point six billion dollar business.

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Speaker 8: So Victoria's Secret has lost market share, but they have

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Speaker 8: been in a turnaround mode for the past three to

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Speaker 8: four years and we're starting to see some traction. But

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Speaker 8: we really think that with Super's understanding of the consumer,

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Speaker 8: working with multiple brands and really getting the brand heat,

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Speaker 8: we think that she could really make a difference here

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Speaker 8: at the HELM.

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Speaker 7: So we think this is good news.

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Speaker 8: And of course it comes as they say that they

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Speaker 8: just beat two Q earnings. You know, they gave preliminary

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Speaker 8: estimates for their second quarter.

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Speaker 4: When did things really fall apart for Victoria's Secret? What

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Speaker 4: was the trigger?

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Speaker 8: Yeah, the trigger was really this sort of me too

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Speaker 8: movement and given that it was a brand that was

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Speaker 8: sort of focused on the perspective of what made women

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Speaker 8: sexy from a male perspective rather than from the female

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Speaker 8: consumer perspective.

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Speaker 7: And that has has shifted.

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Speaker 8: When it used to be part of Limited Brands, it

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Speaker 8: was then spun off and Martin Waters, who has now

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Speaker 8: left the company as CEO, he was the one who

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Speaker 8: came in and really spearheaded that and they've become a

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Speaker 8: more inclusive brand. I mean, how many companies out there

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Speaker 8: can say that they have one hundred percent equal pay

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Speaker 8: across the business. I don't know of any others, but

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Speaker 8: they have achieved that. It's uh, you know, it's third

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Speaker 8: party documented or certified, I should say. So they've made

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Speaker 8: tremendous progress. They've really improved the lineup and it is

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Speaker 8: coming from the perspective.

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Speaker 9: But I think kind of.

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Speaker 8: Getting it to the next level and really getting that

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Speaker 8: turnaround to a point where they can get back to growth.

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Speaker 8: I think this is the right time at a moment

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Speaker 8: to pivot and bring in somebody like Hillary super So.

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Speaker 8: I think it's very, very exciting for the company at

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Speaker 8: this time.

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Speaker 5: Well, Mary, if the if the industry has changed, that

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Speaker 5: the lingerie part of the business has changed, where are

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Speaker 5: success coming from in that new world?

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Speaker 8: Yeah, well, so there's a couple of things that happened.

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Speaker 8: I mean, the category had been growing for many years

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Speaker 8: and had been expected to grow, but they did experience

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Speaker 8: a slow down last year. But we're already starting to

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Speaker 8: see improvements in the category, at least in the US. Internationally,

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Speaker 8: by the way, Victoria's Secret is growing in the double digits.

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Speaker 8: I think in the last quarter international was up eleven percent.

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Speaker 8: So the category did weaken, but it looks like it's

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Speaker 8: starting to turn back up again. And really what happened

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Speaker 8: is with this sort of me too moment, it became

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Speaker 8: more inclusive, and so Victoria Secret has adopted their brands

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Speaker 8: to be more inclusive and you know, once again to

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Speaker 8: come from the perspective of a woman and what the

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Speaker 8: woman needs, you know, and it's a whole assortment, and

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Speaker 8: if you go into the stores, you will see a

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Speaker 8: dramatic improvement in the assortment that they have. In the

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Speaker 8: employee culture, I would say it's very positive, very exciting

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Speaker 8: environment when you go into the stores. But they do

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Speaker 8: need to remodel most of the stores. They've only been

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Speaker 8: able to touch a small percentage of the store base

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Speaker 8: so far, so there's still more to go. And then

441
00:21:37,160 --> 00:21:39,919
Speaker 8: the Pink brand is really at an earlier stage of

442
00:21:39,920 --> 00:21:43,959
Speaker 8: a turnaround, but we're already seeing fallen assortments really improve.

443
00:21:44,040 --> 00:21:49,040
Speaker 8: And they they brought on Natalia Bryant as a brand ambassador,

444
00:21:49,160 --> 00:21:53,400
Speaker 8: so that's pretty exciting. So the stock I think we're

445
00:21:53,480 --> 00:21:54,520
Speaker 8: heading in the right direction.

446
00:21:54,760 --> 00:21:57,440
Speaker 5: Yeah, the stock market agrees with these stock Trading Hire

447
00:21:57,520 --> 00:21:59,520
Speaker 5: today on the news, Mary Ross Gilbert, thank you so

448
00:21:59,560 --> 00:22:01,600
Speaker 5: much for joining. It's Mary Ross Gilbert. She's a senior

449
00:22:01,640 --> 00:22:05,080
Speaker 5: Eco analyst covering retail for Bloomberg Intelligence. She's based in

450
00:22:05,240 --> 00:22:08,840
Speaker 5: our LA office, Wiltshire. Now how are they now? They're

451
00:22:08,880 --> 00:22:11,919
Speaker 5: it's Central Century sent They're in Central Cited in the

452
00:22:11,920 --> 00:22:15,280
Speaker 5: new office. Very good office, very cool, overlooking the country club.

453
00:22:16,760 --> 00:22:20,639
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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459
00:22:38,119 --> 00:22:40,480
Speaker 3: We bring you all the top news in business, economic,

460
00:22:40,520 --> 00:22:43,439
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461
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462
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Speaker 3: industries worldwide. We also take you outside Bloomberg Intelligence to

463
00:22:49,480 --> 00:22:52,760
Speaker 3: get the broader take from some chief investment officers, and

464
00:22:52,840 --> 00:22:55,280
Speaker 3: one of them is Brent Shot. He is a CIO

465
00:22:55,359 --> 00:23:02,240
Speaker 3: at Northwestern Mutual Wealth Management Company. He joins us from Milwauk, Wisconsin. Brent,

466
00:23:02,320 --> 00:23:04,400
Speaker 3: really great to see you and you get your take here.

467
00:23:04,440 --> 00:23:08,959
Speaker 3: So if we take into account CPI, the non reaction

468
00:23:09,080 --> 00:23:12,720
Speaker 3: that we've seen. How aggressive does the Fed actually need

469
00:23:12,760 --> 00:23:14,879
Speaker 3: to be now in September.

470
00:23:15,440 --> 00:23:17,720
Speaker 10: Well, I think absent any further labor market weekning, I

471
00:23:17,720 --> 00:23:20,840
Speaker 10: think the Fed only does twenty five basis points. To me,

472
00:23:20,920 --> 00:23:23,480
Speaker 10: you've had three good reports after four bad. Look at

473
00:23:23,480 --> 00:23:25,199
Speaker 10: the three month numbers that look pretty good. The six

474
00:23:25,280 --> 00:23:27,119
Speaker 10: month numbers are still kind of in the middling area,

475
00:23:27,200 --> 00:23:29,800
Speaker 10: but the longer term numbers on things like services, etc.

476
00:23:30,359 --> 00:23:32,760
Speaker 10: Are still a bit elevated. And I think the Fed

477
00:23:32,840 --> 00:23:35,520
Speaker 10: wants to avoid a repeat of nineteen sixty six where

478
00:23:35,560 --> 00:23:37,959
Speaker 10: they cut too early and that led to inflation. Or

479
00:23:38,000 --> 00:23:40,560
Speaker 10: even if you think about last year, this time in

480
00:23:40,640 --> 00:23:43,240
Speaker 10: the fourth quarter, we had CPI that was coming down,

481
00:23:44,359 --> 00:23:47,359
Speaker 10: the Fed expressed an optimism, investors priced in a ton

482
00:23:47,400 --> 00:23:50,639
Speaker 10: of rate cuts, optimism regrew, and what you saw was

483
00:23:50,680 --> 00:23:53,520
Speaker 10: inflation coming back. And so the reality is we're later

484
00:23:53,560 --> 00:23:56,320
Speaker 10: in an economic cycle, and typically late in an economic cycle,

485
00:23:56,359 --> 00:23:59,320
Speaker 10: the Fed does not cut aggressively, especially where they don't

486
00:23:59,320 --> 00:24:00,399
Speaker 10: know where the neutral it is.

487
00:24:01,880 --> 00:24:05,040
Speaker 5: So Brent, I think historically I kind of considered your

488
00:24:05,119 --> 00:24:08,800
Speaker 5: view probably more conservative than maybe then that the consensus

489
00:24:08,840 --> 00:24:11,240
Speaker 5: as a related steed economy and maybe the FED and

490
00:24:11,359 --> 00:24:14,360
Speaker 5: markets overall. Has anything changed in the last several weeks

491
00:24:14,400 --> 00:24:17,960
Speaker 5: in terms of either economic data or company earning data

492
00:24:18,000 --> 00:24:18,600
Speaker 5: that would change that.

493
00:24:19,560 --> 00:24:21,600
Speaker 10: Look, I think over the past year there's been plenty

494
00:24:21,600 --> 00:24:24,080
Speaker 10: of things that historically have led to recessions, and investors

495
00:24:24,119 --> 00:24:26,920
Speaker 10: have been able to say, yeah, but that yeah, but

496
00:24:27,080 --> 00:24:29,480
Speaker 10: always ended with the labor market. And to me, what

497
00:24:29,520 --> 00:24:31,360
Speaker 10: has changed is you have seen the labor market week

498
00:24:31,359 --> 00:24:33,080
Speaker 10: and although we've been pointing to that for some time,

499
00:24:33,240 --> 00:24:35,640
Speaker 10: non farm payrolls versus the household and plumber report has

500
00:24:35,640 --> 00:24:38,640
Speaker 10: had a huge divergence, and you've seen other indicators show

501
00:24:38,640 --> 00:24:40,760
Speaker 10: that the labor market is weakening. And this is where

502
00:24:40,760 --> 00:24:42,600
Speaker 10: I think the market woke up last week at least

503
00:24:42,600 --> 00:24:44,800
Speaker 10: a bit for a touch of time at least that

504
00:24:44,920 --> 00:24:49,439
Speaker 10: this beloved som rule that everybody talked about was finally broken. Also, look,

505
00:24:49,880 --> 00:24:51,840
Speaker 10: I invite you to go look on your Bloomberg how

506
00:24:51,880 --> 00:24:54,160
Speaker 10: many times the unemployment rate has risen zero point nine

507
00:24:54,160 --> 00:24:56,560
Speaker 10: percent and we haven't been in a recession or headed

508
00:24:56,560 --> 00:24:58,480
Speaker 10: towards one. And this is where I think, if you

509
00:24:58,480 --> 00:25:01,520
Speaker 10: think the labor market's are lagging into because companies want

510
00:25:01,520 --> 00:25:03,760
Speaker 10: to hang on to people because they're hard to find

511
00:25:03,760 --> 00:25:06,920
Speaker 10: and expensive. That's where I worry that we're a little

512
00:25:06,920 --> 00:25:10,439
Speaker 10: bit too optimistic in mind is not conservative, it's just

513
00:25:10,480 --> 00:25:12,560
Speaker 10: that can we admit there are risk out there and

514
00:25:12,600 --> 00:25:15,119
Speaker 10: the stock market on many measures is expensive as I've

515
00:25:15,160 --> 00:25:16,480
Speaker 10: seen it since nineteen ninety nine.

516
00:25:16,640 --> 00:25:19,480
Speaker 3: Well, that's the funny thing is that last Monday and

517
00:25:19,480 --> 00:25:22,000
Speaker 3: the Friday before we would be like, yeah, you're right,

518
00:25:22,040 --> 00:25:23,800
Speaker 3: there are the risks in there, and we are taking

519
00:25:23,800 --> 00:25:25,800
Speaker 3: it on a chin, and then all of a sudden,

520
00:25:25,920 --> 00:25:28,359
Speaker 3: it feels like yesterday, it's a go ahead, put on

521
00:25:28,440 --> 00:25:29,080
Speaker 3: some more risk.

522
00:25:29,720 --> 00:25:31,440
Speaker 4: So what is it? Which is it?

523
00:25:32,520 --> 00:25:34,800
Speaker 10: I think you've had investors for fifteen years who have

524
00:25:34,880 --> 00:25:36,840
Speaker 10: kind of been lulledlessleep by the Federal Reserve, who has

525
00:25:36,840 --> 00:25:40,080
Speaker 10: always supported risk assets post the Great Financial Crisis because

526
00:25:40,119 --> 00:25:42,439
Speaker 10: they needed to to get the economy higher. Now I

527
00:25:42,440 --> 00:25:43,840
Speaker 10: think we're on the opposite side of that. And this

528
00:25:43,880 --> 00:25:46,480
Speaker 10: is where this continual commentary that I hear about the

529
00:25:46,520 --> 00:25:49,320
Speaker 10: Fed cutting rates because the market fell last week was

530
00:25:50,200 --> 00:25:52,639
Speaker 10: a bit I don't know if word is silly, but

531
00:25:52,720 --> 00:25:54,520
Speaker 10: a bit premature. And that's where I don't think you're

532
00:25:54,520 --> 00:25:56,280
Speaker 10: going to have the Fed be as easy any longer

533
00:25:56,920 --> 00:25:59,399
Speaker 10: because there are no shortage of risk takers, and so

534
00:25:59,440 --> 00:26:01,560
Speaker 10: to me, we're a bit on the frothier side of

535
00:26:01,920 --> 00:26:04,480
Speaker 10: the equity market. And that is not an all equity

536
00:26:04,520 --> 00:26:06,479
Speaker 10: market thing. That is just in some of the places

537
00:26:06,520 --> 00:26:09,280
Speaker 10: where people want to go. No matter what I think,

538
00:26:09,280 --> 00:26:12,200
Speaker 10: there are plenty of opportunities for long term focused investors.

539
00:26:12,440 --> 00:26:14,800
Speaker 10: I heard about your I listened to your prior guest.

540
00:26:15,119 --> 00:26:17,280
Speaker 10: I think small caps, certainly there are some issues that

541
00:26:17,320 --> 00:26:19,320
Speaker 10: are there, but I think if you're thinking about a

542
00:26:19,359 --> 00:26:21,720
Speaker 10: three to five year time horising, given how cheap they are,

543
00:26:22,040 --> 00:26:24,080
Speaker 10: that is where I think if you're willing to stay

544
00:26:24,240 --> 00:26:26,680
Speaker 10: through a downturn, which I still think one is likely,

545
00:26:27,000 --> 00:26:29,880
Speaker 10: that's where I think there is opportunity now in those

546
00:26:29,920 --> 00:26:31,800
Speaker 10: areas even if we have that downturn.

547
00:26:32,520 --> 00:26:35,720
Speaker 5: How about some sectors, brand are some sectors that screen

548
00:26:35,800 --> 00:26:39,639
Speaker 5: well for you guys if the economy is in fact slowing,

549
00:26:39,680 --> 00:26:42,680
Speaker 5: but there will may be an easing interest rate environment.

550
00:26:43,400 --> 00:26:45,200
Speaker 10: That's the irony. I think small caps if you look

551
00:26:45,200 --> 00:26:47,080
Speaker 10: back to nineteen ninety nine, which is a similar time period,

552
00:26:47,119 --> 00:26:50,080
Speaker 10: they actually did fairly well into the recession because they

553
00:26:50,080 --> 00:26:52,000
Speaker 10: were trading at similar levels to where they are today

554
00:26:52,040 --> 00:26:54,960
Speaker 10: and people had placed money into that late cycle economy,

555
00:26:55,119 --> 00:26:57,439
Speaker 10: into a narrow group of stocks based upon the belief

556
00:26:57,520 --> 00:27:00,720
Speaker 10: that they were impervious to any economic downturn and we're

557
00:27:00,760 --> 00:27:03,800
Speaker 10: longer term things that you needed to own no matter what.

558
00:27:04,080 --> 00:27:06,680
Speaker 10: And that's where small caps actually did okay into that downturn.

559
00:27:06,800 --> 00:27:09,199
Speaker 10: And then I think this one will be mild, and

560
00:27:09,240 --> 00:27:12,280
Speaker 10: that's where I think the economy turns from a headwind

561
00:27:12,400 --> 00:27:15,199
Speaker 10: to a tailwind. The FED turns from a headwind to

562
00:27:15,280 --> 00:27:17,680
Speaker 10: a tailwind, and that's where I think there are opportunities there.

563
00:27:17,800 --> 00:27:19,520
Speaker 10: And even in parts of the S and P five hundred,

564
00:27:19,520 --> 00:27:21,640
Speaker 10: we happened to like the S and P equal weight

565
00:27:21,720 --> 00:27:23,720
Speaker 10: just a bit, and so I think there are plenty

566
00:27:23,720 --> 00:27:27,119
Speaker 10: of opportunities in this kind of odd period where you

567
00:27:27,200 --> 00:27:28,960
Speaker 10: hear things that made sense in the past that don't

568
00:27:29,000 --> 00:27:30,960
Speaker 10: make sense today. That just worries me a bit, and

569
00:27:31,000 --> 00:27:32,640
Speaker 10: it brings me back to those moments in my thirty

570
00:27:32,680 --> 00:27:35,120
Speaker 10: year career where I've heard these things in the past

571
00:27:35,119 --> 00:27:37,880
Speaker 10: shrugged off, and history does have a tendency to repeat.

572
00:27:38,359 --> 00:27:41,560
Speaker 4: What do you do with then bonds at this point.

573
00:27:42,240 --> 00:27:44,480
Speaker 10: So we've been extending our duration and we were actually

574
00:27:44,520 --> 00:27:47,840
Speaker 10: overweight bonds right now, and so we've been pretty much

575
00:27:47,920 --> 00:27:49,840
Speaker 10: underweight bonds for most of my career here because of

576
00:27:49,840 --> 00:27:51,480
Speaker 10: the belief that the Fed would would do what they

577
00:27:51,480 --> 00:27:54,240
Speaker 10: did even post COVID and the fiscal policy makers. Now

578
00:27:54,240 --> 00:27:56,960
Speaker 10: we're just a bit overweight bonds and a bit underweight equities.

579
00:27:57,680 --> 00:27:59,399
Speaker 10: The thing I think people are missing is that I

580
00:27:59,400 --> 00:28:01,320
Speaker 10: don't think you want to just hide out in cash.

581
00:28:01,440 --> 00:28:04,760
Speaker 10: You saw what happened during those two days, which was

582
00:28:04,760 --> 00:28:08,760
Speaker 10: supposedly traumatic of market downturns, in which the long treasury

583
00:28:08,760 --> 00:28:11,480
Speaker 10: actually did quite well. And so I think bonds are

584
00:28:11,520 --> 00:28:13,440
Speaker 10: back to being a hedge against equities because I think

585
00:28:13,480 --> 00:28:16,240
Speaker 10: any downside this time is not going to be caused

586
00:28:16,240 --> 00:28:18,960
Speaker 10: by rising inflation, but falling inflation. And that's where I

587
00:28:18,960 --> 00:28:21,760
Speaker 10: think people are missing kind of the second question that

588
00:28:21,800 --> 00:28:24,920
Speaker 10: you ask about inflation falling, Why is it falling? Usually

589
00:28:24,960 --> 00:28:27,440
Speaker 10: it falls because demand falls, and I think you're seeing

590
00:28:27,440 --> 00:28:29,600
Speaker 10: that on the services side, and I think you're seeing

591
00:28:29,600 --> 00:28:30,880
Speaker 10: that in the labor market.

592
00:28:31,600 --> 00:28:34,480
Speaker 5: In a fixing can market, Brent, how much credit risk

593
00:28:34,640 --> 00:28:36,719
Speaker 5: should I be taking? I can sit into your treasury

594
00:28:36,720 --> 00:28:39,800
Speaker 5: and get almost four percent here. How do you think

595
00:28:39,800 --> 00:28:41,040
Speaker 5: about credit and credit risk?

596
00:28:42,160 --> 00:28:43,360
Speaker 10: I think you want to be higher in the credit

597
00:28:43,480 --> 00:28:45,440
Speaker 10: quality spectrum. I think you're not being paid much to

598
00:28:45,480 --> 00:28:48,080
Speaker 10: take on excess credit risk right now, spreads are pretty tight,

599
00:28:48,160 --> 00:28:49,640
Speaker 10: and it kind of goes back to the reality that

600
00:28:49,680 --> 00:28:52,959
Speaker 10: I just don't think people are pricing in the possibility

601
00:28:53,080 --> 00:28:55,200
Speaker 10: of all the warning signs that are out there potentially

602
00:28:55,200 --> 00:28:58,680
Speaker 10: being actual, real warning sids, not things that are going

603
00:28:58,720 --> 00:29:01,880
Speaker 10: to go away because of the post COVID period being odd. Look,

604
00:29:01,880 --> 00:29:04,560
Speaker 10: that's my bottom line. It's not that people shouldn't be

605
00:29:04,640 --> 00:29:07,120
Speaker 10: taking risk or you should dramatically alter your asset allocation.

606
00:29:07,560 --> 00:29:09,160
Speaker 10: Just make sure you're taking the risk that you want

607
00:29:09,200 --> 00:29:11,240
Speaker 10: to take, and that if the stuff does hit the fan,

608
00:29:11,560 --> 00:29:13,880
Speaker 10: that you don't do what I tell every investor not

609
00:29:13,960 --> 00:29:15,760
Speaker 10: to do, and yet they want to do it every time,

610
00:29:15,760 --> 00:29:18,280
Speaker 10: which is not sell stocks while there's people panic. And

611
00:29:18,320 --> 00:29:19,960
Speaker 10: so just make sure you're comfable at the risk level

612
00:29:19,960 --> 00:29:22,080
Speaker 10: and if last week comes to fruition that happens again,

613
00:29:22,360 --> 00:29:24,200
Speaker 10: that you're able to hold through that, because I do

614
00:29:24,240 --> 00:29:27,040
Speaker 10: think it will be brief and mild, but I do

615
00:29:27,040 --> 00:29:29,160
Speaker 10: think there will be uncomfortable moments for people in the future,

616
00:29:29,240 --> 00:29:31,520
Speaker 10: especially with an election on the docket. For example.

617
00:29:31,640 --> 00:29:33,160
Speaker 3: Well, I was going to bring up the election too,

618
00:29:33,200 --> 00:29:36,520
Speaker 3: because more and more I feel like I'm hearing anecdotally

619
00:29:36,920 --> 00:29:39,600
Speaker 3: that the election is becoming a big risk for say,

620
00:29:39,640 --> 00:29:42,680
Speaker 3: capital expenditures, that who what CEO is going to will

621
00:29:42,760 --> 00:29:44,760
Speaker 3: lay out a lot of capex in the US when

622
00:29:44,760 --> 00:29:46,840
Speaker 3: they don't even know what tax tax policy is going

623
00:29:46,880 --> 00:29:49,320
Speaker 3: to be, and there is so much risk. I also

624
00:29:49,360 --> 00:29:50,560
Speaker 3: was reading an article I think it was in the

625
00:29:50,640 --> 00:29:53,440
Speaker 3: Journal that talked about how or the Ft, that talked

626
00:29:53,440 --> 00:29:56,160
Speaker 3: about how the IRA projects have been delayed and delayed

627
00:29:56,160 --> 00:29:59,200
Speaker 3: and delayed, and this is all that capex cycle we've

628
00:29:59,200 --> 00:30:01,880
Speaker 3: been waiting to see deployed. How do you think that

629
00:30:01,920 --> 00:30:02,520
Speaker 3: plays out?

630
00:30:03,760 --> 00:30:05,400
Speaker 10: I think it plays out exactly the way that you

631
00:30:05,440 --> 00:30:07,360
Speaker 10: just mentioned, So thanks for answering the question for me.

632
00:30:08,200 --> 00:30:10,640
Speaker 10: I mean, I do think that's a reality. Look, investors

633
00:30:10,640 --> 00:30:15,160
Speaker 10: should not overreact to any recep to any presidential cycle.

634
00:30:15,680 --> 00:30:17,760
Speaker 10: If you look historically, what matters more is where you're

635
00:30:17,800 --> 00:30:19,960
Speaker 10: at in the business cycle, not who's in actually in office.

636
00:30:20,200 --> 00:30:22,080
Speaker 10: And that's where I think you know, just right now,

637
00:30:22,440 --> 00:30:24,440
Speaker 10: we're later in a business cycle. The unemployment rate is

638
00:30:24,480 --> 00:30:27,880
Speaker 10: still low, it's actually rising, but it's still low, and

639
00:30:27,880 --> 00:30:31,080
Speaker 10: typically in that environment you do get presidents who actually

640
00:30:31,160 --> 00:30:33,800
Speaker 10: preside over a recession. I think all those things that

641
00:30:33,800 --> 00:30:36,040
Speaker 10: you mentioned are concerns that are out there, as well

642
00:30:36,080 --> 00:30:38,920
Speaker 10: as the economic concerns which I don't think are settled yet,

643
00:30:39,440 --> 00:30:41,800
Speaker 10: which I do think means that there'll be more volatility

644
00:30:41,800 --> 00:30:44,240
Speaker 10: that I just want people to be prepared for. It's

645
00:30:44,280 --> 00:30:45,600
Speaker 10: been a bit odd that the market has kind of

646
00:30:45,640 --> 00:30:47,520
Speaker 10: gone in one direction, at least those seven stocks have

647
00:30:47,560 --> 00:30:50,520
Speaker 10: pushed in one direction while everything else has been a

648
00:30:50,520 --> 00:30:52,960
Speaker 10: little bit weaker. But it's kind of an interesting period

649
00:30:53,000 --> 00:30:55,080
Speaker 10: of time where I think we're closer to a recession

650
00:30:55,240 --> 00:30:57,480
Speaker 10: at least according to labor market, than any point in

651
00:30:57,520 --> 00:31:00,680
Speaker 10: the last fifteen or sixteen years absent COVID, and people

652
00:31:00,680 --> 00:31:03,080
Speaker 10: are willing to take all kinds of risk at this

653
00:31:03,160 --> 00:31:05,240
Speaker 10: moment because they don't believe things that work in the

654
00:31:05,240 --> 00:31:06,400
Speaker 10: past will work in the future.

655
00:31:07,120 --> 00:31:08,920
Speaker 5: All Right, Brent, thanks so much for joining us. Always

656
00:31:08,920 --> 00:31:11,560
Speaker 5: appreciate getting a few minutes of your time. Brent Shouty,

657
00:31:11,760 --> 00:31:15,560
Speaker 5: chief investment officer at Northwestern Mutual Wealth Management Company there

658
00:31:15,560 --> 00:31:18,800
Speaker 5: based in Milwaukee, Wisconsin, And again my call on Milwaukee,

659
00:31:18,880 --> 00:31:21,400
Speaker 5: pound for pound, some of the smartest money managers I've

660
00:31:21,440 --> 00:31:23,880
Speaker 5: ever seen, and I don't know why it is. Maybe

661
00:31:23,880 --> 00:31:27,760
Speaker 5: it's a water. Maybe it's a water. University of Michigan, University, Wisconsin.

662
00:31:27,800 --> 00:31:30,360
Speaker 5: I'm sorry, Ben, I have a mistake there. Anyway, Still

663
00:31:30,400 --> 00:31:31,400
Speaker 5: cut some smart folks there.

664
00:31:31,440 --> 00:31:36,680
Speaker 2: So you're listening to the Bloomberg Intelligence Podcast. Catch us

665
00:31:36,720 --> 00:31:40,120
Speaker 2: live weekdays at ten am Eastern on applecard Play and

666
00:31:40,120 --> 00:31:43,040
Speaker 2: Android Otto with the Bloomberg Business app. You can also

667
00:31:43,120 --> 00:31:46,280
Speaker 2: listen live on Amazon Alexa from our flagship New York

668
00:31:46,360 --> 00:31:50,480
Speaker 2: station Just Say Alexa playing Bloomberg eleven thirty.

669
00:31:51,320 --> 00:31:54,840
Speaker 5: Another big story out there is Google that hard justice

670
00:31:54,920 --> 00:31:57,280
Speaker 5: coming down hard. Yeah, but I just don't know what

671
00:31:57,360 --> 00:32:00,960
Speaker 5: it really means. What can they do? Jennifer re joins

672
00:32:01,040 --> 00:32:05,240
Speaker 5: us Bloomberg Intelligence Senior litigation analyst on the DOJ thinking

673
00:32:05,240 --> 00:32:08,320
Speaker 5: about Google may thinking about breaking up a Google after

674
00:32:08,360 --> 00:32:11,640
Speaker 5: pushing through a landmark anti trust case. So, Jen, thanks

675
00:32:11,680 --> 00:32:14,800
Speaker 5: so much for joining us here. Explain to us what

676
00:32:14,880 --> 00:32:17,920
Speaker 5: the DOJ has done is thinking about doing as it

677
00:32:17,920 --> 00:32:19,080
Speaker 5: relates to Google.

678
00:32:19,080 --> 00:32:19,320
Speaker 2: Here.

679
00:32:20,560 --> 00:32:22,800
Speaker 9: Yeah, well, you know, now push comes to shove with

680
00:32:22,880 --> 00:32:25,600
Speaker 9: this case because it hasn't. The DOJ hasn't really talked

681
00:32:25,600 --> 00:32:28,680
Speaker 9: too much about remedies. It's been working on liability in

682
00:32:28,720 --> 00:32:31,160
Speaker 9: it won and it won pretty resoundingly, So now it

683
00:32:31,200 --> 00:32:33,080
Speaker 9: has to think about what it wants to ask the

684
00:32:33,160 --> 00:32:36,240
Speaker 9: judge to do to remedy what the judge found to

685
00:32:36,280 --> 00:32:39,640
Speaker 9: be anti competitive about what Google's been doing. And I

686
00:32:39,720 --> 00:32:42,680
Speaker 9: have to say that the idea of a structural request

687
00:32:42,800 --> 00:32:45,640
Speaker 9: or a breakoup's been around since twenty twenty because the

688
00:32:45,680 --> 00:32:48,280
Speaker 9: Department of Justice inserted it into the first complaint at

689
00:32:48,320 --> 00:32:51,160
Speaker 9: filed back in October of twenty twenty. It said, we

690
00:32:51,240 --> 00:32:54,040
Speaker 9: may be asking the judge for structural relief as necessary,

691
00:32:54,080 --> 00:32:56,200
Speaker 9: and it's something the DJ's thinking about. And I don't

692
00:32:56,240 --> 00:32:59,200
Speaker 9: think it's a surprise. Why not go for it? You know,

693
00:32:59,240 --> 00:33:01,640
Speaker 9: there's kind of a big is bad mentality right now,

694
00:33:01,680 --> 00:33:04,000
Speaker 9: And if that's the case, then you want to break

695
00:33:04,040 --> 00:33:07,000
Speaker 9: apart these dominant firms and they have this win, why

696
00:33:07,040 --> 00:33:08,560
Speaker 9: not try to go for the gold on this?

697
00:33:08,920 --> 00:33:10,640
Speaker 3: So that's the case, though, I mean, is it one

698
00:33:10,680 --> 00:33:12,160
Speaker 3: of those things where they're going to go for it

699
00:33:12,200 --> 00:33:14,040
Speaker 3: but really it's going to be okay and they're not

700
00:33:14,040 --> 00:33:15,600
Speaker 3: going to do it, and they're going to do something else,

701
00:33:15,640 --> 00:33:17,600
Speaker 3: and then what's that something else instead?

702
00:33:18,600 --> 00:33:20,480
Speaker 9: Look, I think they will. It's going to be up

703
00:33:20,520 --> 00:33:22,440
Speaker 9: to the judge and my gut here is that the

704
00:33:22,520 --> 00:33:25,800
Speaker 9: judge probably would not order that kind of drastic relief.

705
00:33:27,160 --> 00:33:29,680
Speaker 9: I just think that the judge was really specific here

706
00:33:29,760 --> 00:33:32,479
Speaker 9: about finding that it's the default agreements that Google had

707
00:33:32,600 --> 00:33:36,000
Speaker 9: entered into that were anti competitive, and what was harmful

708
00:33:36,000 --> 00:33:39,160
Speaker 9: about them was that it did not allow the rivals

709
00:33:39,200 --> 00:33:41,800
Speaker 9: to gain the data they needed through searches to have

710
00:33:41,880 --> 00:33:43,840
Speaker 9: scale to be a good enough search engine. And those

711
00:33:43,880 --> 00:33:46,560
Speaker 9: are two big issues. So if those are the two

712
00:33:46,640 --> 00:33:49,120
Speaker 9: things that are anti competitive, my suspicion is the judge

713
00:33:49,120 --> 00:33:51,560
Speaker 9: will say, hey, no more default, no more payment to

714
00:33:51,600 --> 00:33:54,760
Speaker 9: be the default search engine at these key search access points.

715
00:33:54,960 --> 00:33:56,680
Speaker 9: And by the way, maybe you need to share some

716
00:33:56,760 --> 00:33:58,920
Speaker 9: of this data you've collected over the years through all

717
00:33:58,920 --> 00:34:01,520
Speaker 9: these searches with rivals to give them a chance to

718
00:34:01,560 --> 00:34:04,479
Speaker 9: get better. Those are two options. And leahon Island's reporting

719
00:34:04,560 --> 00:34:07,400
Speaker 9: was great about also this AI issue and concerned about

720
00:34:07,520 --> 00:34:10,000
Speaker 9: using its dominance to get a lead in AI. And

721
00:34:10,040 --> 00:34:12,040
Speaker 9: maybe the dj will do something there too.

722
00:34:12,360 --> 00:34:15,560
Speaker 5: Because the AI thing is the one that I think

723
00:34:15,719 --> 00:34:18,799
Speaker 5: has a lot of people concerned, not investors but just

724
00:34:18,800 --> 00:34:21,520
Speaker 5: people think about AI and what it means for privacy

725
00:34:21,560 --> 00:34:23,640
Speaker 5: and all these other issues. What does it mean for

726
00:34:23,960 --> 00:34:27,440
Speaker 5: jobs and security and all these things which the market

727
00:34:27,480 --> 00:34:29,719
Speaker 5: nobody has an idea, and certainly not the courts or

728
00:34:29,920 --> 00:34:35,480
Speaker 5: regulators here. But what are Google's defenses here here, given

729
00:34:35,520 --> 00:34:38,439
Speaker 5: that they did lose that antitrust case.

730
00:34:39,400 --> 00:34:41,120
Speaker 9: I think one of the things Google will do will

731
00:34:41,160 --> 00:34:43,160
Speaker 9: point to language by the judge, And actually there was

732
00:34:43,239 --> 00:34:45,160
Speaker 9: quite a bit of it in the complaint about the

733
00:34:45,200 --> 00:34:47,480
Speaker 9: fact that it really has been a great innovator, that

734
00:34:47,520 --> 00:34:49,759
Speaker 9: it's been ingenius, that the fact of the matter is

735
00:34:50,040 --> 00:34:52,920
Speaker 9: it developed the best quality search engine in the world

736
00:34:53,200 --> 00:34:55,880
Speaker 9: by putting in money, by putting in innovation, by hiring

737
00:34:55,920 --> 00:35:00,880
Speaker 9: great engineers and ingenuity, the judge did say, And I

738
00:35:00,880 --> 00:35:03,439
Speaker 9: think Google will say, look, you have no And also

739
00:35:03,480 --> 00:35:05,279
Speaker 9: the judge, by the way, said, even though Google had

740
00:35:05,280 --> 00:35:08,440
Speaker 9: obtained a monopoly position, it continued to innovate, even though

741
00:35:08,440 --> 00:35:10,760
Speaker 9: it didn't really have to once it gained that spot.

742
00:35:11,239 --> 00:35:13,560
Speaker 9: So Google will say, look, you know, you have no

743
00:35:13,680 --> 00:35:16,400
Speaker 9: guarantee that that same kind of innovative spirit will be

744
00:35:16,400 --> 00:35:19,160
Speaker 9: behind the parent of this new company. If you cleave

745
00:35:19,200 --> 00:35:21,960
Speaker 9: off Android or cleave off Chrome and it's run by

746
00:35:21,960 --> 00:35:24,239
Speaker 9: some other entity, you know that might not be in

747
00:35:24,280 --> 00:35:27,640
Speaker 9: that entity's DNA. You have acknowledged that we're innovators and

748
00:35:27,680 --> 00:35:29,759
Speaker 9: that will continue to innovate, and it makes the most

749
00:35:29,760 --> 00:35:32,120
Speaker 9: sense for these assets to stay in our hands. That's

750
00:35:32,120 --> 00:35:33,279
Speaker 9: what I think Google will say.

751
00:35:33,880 --> 00:35:37,120
Speaker 3: Google stock is down by Bowel, okay, alphabet stock down

752
00:35:37,160 --> 00:35:41,759
Speaker 3: about three point five percent. Does that feel right in

753
00:35:41,800 --> 00:35:44,719
Speaker 3: relation to what you're talking about and what you're looking

754
00:35:44,719 --> 00:35:47,960
Speaker 3: at in the timeline or are we underpricing this kind

755
00:35:47,960 --> 00:35:49,200
Speaker 3: of some kind of risk here?

756
00:35:49,239 --> 00:35:49,879
Speaker 4: What do you think?

757
00:35:51,080 --> 00:35:53,479
Speaker 9: I tend to think the market always overreacts a little

758
00:35:53,480 --> 00:35:55,640
Speaker 9: bit to headlines. It might have been a little bit

759
00:35:55,640 --> 00:35:58,400
Speaker 9: of a shock the news that the dj is actually

760
00:35:58,440 --> 00:36:00,320
Speaker 9: going to ask for this, but this has been handied

761
00:36:00,360 --> 00:36:02,600
Speaker 9: around as a possibility now for a couple of years,

762
00:36:02,600 --> 00:36:05,279
Speaker 9: and I don't think anybody should be very surprised. And

763
00:36:05,320 --> 00:36:06,880
Speaker 9: you know what, this is still going to take a

764
00:36:06,880 --> 00:36:09,719
Speaker 9: really long time. Google's going to appeal. Google will fight this,

765
00:36:09,800 --> 00:36:12,480
Speaker 9: and in particular, if there's a divestit your order, Google

766
00:36:12,520 --> 00:36:14,440
Speaker 9: will try to take this all the way to the

767
00:36:14,440 --> 00:36:17,160
Speaker 9: Supreme Court. And I have little doubt that that kind

768
00:36:17,160 --> 00:36:19,600
Speaker 9: of an order would be stayed pending all these appeals,

769
00:36:19,719 --> 00:36:22,080
Speaker 9: so it would be years before they'd be implemented. So

770
00:36:22,120 --> 00:36:25,920
Speaker 9: I think that the impact really is still to be

771
00:36:25,960 --> 00:36:27,120
Speaker 9: felt for quite some time.

772
00:36:27,880 --> 00:36:30,840
Speaker 5: All right, Jen, thanks as always, life savery. When it

773
00:36:30,840 --> 00:36:32,640
Speaker 5: comes to this stuff, I have no idea, you know,

774
00:36:32,680 --> 00:36:35,120
Speaker 5: kind of how to gauge the risk here, but fortunately

775
00:36:35,120 --> 00:36:36,840
Speaker 5: we have experts like General to help us out. Generally

776
00:36:36,880 --> 00:36:39,799
Speaker 5: is a senior litigation analyst when we're intelligence, you know.

777
00:36:39,840 --> 00:36:42,520
Speaker 5: To answer your question, Alex, I kind of thought this

778
00:36:42,719 --> 00:36:44,680
Speaker 5: was more than I would have thought that the stock

779
00:36:44,680 --> 00:36:46,640
Speaker 5: would have traded down. I thought it would have been

780
00:36:46,640 --> 00:36:48,440
Speaker 5: a nothing burger. Oh, here we go again, trying to

781
00:36:48,440 --> 00:36:50,839
Speaker 5: break up bake Tech. Nothing ever comes from it.

782
00:36:51,200 --> 00:36:51,560
Speaker 1: But it all.

783
00:36:51,640 --> 00:36:53,520
Speaker 5: It's off three point four percent, which leads me to

784
00:36:53,520 --> 00:36:55,080
Speaker 5: believe that some people are saying, we need to think

785
00:36:55,080 --> 00:36:58,520
Speaker 5: about some remedies that the judge may impose and what

786
00:36:58,560 --> 00:36:59,920
Speaker 5: that may mean for the value.

787
00:37:00,440 --> 00:37:01,879
Speaker 3: I mean, to be fair, it wasn't a whole lot

788
00:37:01,880 --> 00:37:04,200
Speaker 3: of nothing before the cash market opened.

789
00:37:04,520 --> 00:37:04,919
Speaker 4: It wasn't.

790
00:37:04,960 --> 00:37:07,680
Speaker 3: It was down barely, so clearly there might be something

791
00:37:07,680 --> 00:37:08,799
Speaker 3: to that as well.

792
00:37:10,440 --> 00:37:14,320
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

793
00:37:14,400 --> 00:37:17,920
Speaker 2: weekdays at ten am Eastern on applecar Play and Android

794
00:37:17,960 --> 00:37:20,720
Speaker 2: Auto with the Bloomberg Business app. You can also listen

795
00:37:20,840 --> 00:37:23,919
Speaker 2: live on Amazon Alexa from our flagship New York station,

796
00:37:24,320 --> 00:37:27,080
Speaker 2: Just say Alexa playing Bloomberg eleven thirty.

797
00:37:28,400 --> 00:37:30,000
Speaker 3: All right, let's get about our take on the markets

798
00:37:30,000 --> 00:37:33,600
Speaker 3: here with Victoria Fernandez, Chief market strategistic Crossmark Global Investments.

799
00:37:34,480 --> 00:37:36,640
Speaker 3: Victoria been saying it's a nothing burger CPI, and it

800
00:37:36,680 --> 00:37:38,879
Speaker 3: was a nothing burger market reaction. Am I right or wrong?

801
00:37:39,840 --> 00:37:41,719
Speaker 11: Well, Alex, I think you're right in the sense of

802
00:37:41,760 --> 00:37:44,960
Speaker 11: the report itself did not probably bring any big news.

803
00:37:45,160 --> 00:37:47,799
Speaker 11: I think the ramifications in regards to what the Fed

804
00:37:47,920 --> 00:37:51,280
Speaker 11: is going to do have probably changed because of this report.

805
00:37:51,400 --> 00:37:54,120
Speaker 11: So we know, after the last ten days or so,

806
00:37:54,360 --> 00:37:57,080
Speaker 11: the market's really been pricing in that fifty basis point

807
00:37:57,120 --> 00:38:01,840
Speaker 11: move after the weekly jobless claim's last week, really anticipating

808
00:38:01,880 --> 00:38:03,680
Speaker 11: that the Fed was going to jump in and really

809
00:38:03,760 --> 00:38:05,840
Speaker 11: kind of give us a lift off here of fifty

810
00:38:05,880 --> 00:38:09,879
Speaker 11: basis points. I think that's changed following today's report. You're

811
00:38:09,920 --> 00:38:11,919
Speaker 11: seeing some of that get priced out of the market.

812
00:38:11,960 --> 00:38:14,680
Speaker 11: It's why we originally saw yields and move a little

813
00:38:14,719 --> 00:38:17,399
Speaker 11: bit higher after the report. They've kind of settled back

814
00:38:17,440 --> 00:38:19,560
Speaker 11: down again, but I think we're going to have to

815
00:38:19,560 --> 00:38:22,800
Speaker 11: see some repricing where it's just a twenty five basis

816
00:38:22,840 --> 00:38:27,240
Speaker 11: point cut in September, although the market is still anticipating

817
00:38:27,400 --> 00:38:29,399
Speaker 11: one hundred basis points by the end of the year,

818
00:38:29,480 --> 00:38:32,120
Speaker 11: and I think that is too much and we'll continue

819
00:38:32,160 --> 00:38:34,920
Speaker 11: to see some repricing over the next couple months.

820
00:38:35,239 --> 00:38:37,400
Speaker 5: All right, Victoria, Now, with a little bit of hindsight,

821
00:38:37,680 --> 00:38:40,719
Speaker 5: what did you and your colleagues Acrossmark make of that

822
00:38:40,800 --> 00:38:44,600
Speaker 5: market action a week ago Monday? From your perspective, what happened?

823
00:38:45,640 --> 00:38:48,240
Speaker 11: Yeah, so it was interesting because you got a weekly

824
00:38:48,320 --> 00:38:51,200
Speaker 11: jobless claims number and then we got the non farm

825
00:38:51,239 --> 00:38:54,520
Speaker 11: payrolls number. Okay, it came down, but it wasn't like

826
00:38:54,640 --> 00:38:59,640
Speaker 11: this huge difference that really just caused us to take

827
00:38:59,800 --> 00:39:01,800
Speaker 11: a step back and look and say, oh, my goodness,

828
00:39:01,840 --> 00:39:06,280
Speaker 11: everything's changed. We have seen a lot of maybe yellow flags,

829
00:39:06,280 --> 00:39:08,239
Speaker 11: I don't want to say red flags, but concerns in

830
00:39:08,280 --> 00:39:11,239
Speaker 11: the market around growth, where we've already been in that

831
00:39:11,320 --> 00:39:14,080
Speaker 11: camp that we think the economy is slowing, that we

832
00:39:14,239 --> 00:39:16,360
Speaker 11: have to be cautious of pullbacks in the market so

833
00:39:16,360 --> 00:39:19,359
Speaker 11: that there's overvaluations and we need to see those names

834
00:39:19,400 --> 00:39:21,840
Speaker 11: come back. I mean, you look at the numbers in

835
00:39:21,880 --> 00:39:25,879
Speaker 11: the Jolts market, forget non farm payrolls right, immigration affects that,

836
00:39:25,920 --> 00:39:28,719
Speaker 11: there's other things that affect it. In seasonality. You look

837
00:39:28,760 --> 00:39:32,600
Speaker 11: at the jolts number. Openings are down, quits are down.

838
00:39:33,000 --> 00:39:35,920
Speaker 11: The key number we watch is the rehiring rate or

839
00:39:35,920 --> 00:39:40,400
Speaker 11: the hiring rate itself. Both of those are in downward trends.

840
00:39:40,560 --> 00:39:44,920
Speaker 11: So we've been seeing that manufacturing has been poor. So

841
00:39:45,000 --> 00:39:47,880
Speaker 11: there's other elements coming in there that are telling you

842
00:39:47,960 --> 00:39:50,000
Speaker 11: things don't look so good. For us, it was more

843
00:39:50,000 --> 00:39:53,239
Speaker 11: of a confirmation of what we had been thinking. What's

844
00:39:53,280 --> 00:39:57,520
Speaker 11: surprising to us was the turnaround. How quickly the market

845
00:39:57,840 --> 00:40:00,560
Speaker 11: just went from oh, my goodness, the sky is falling

846
00:40:00,600 --> 00:40:03,240
Speaker 11: to oh, never mind, the sun's out and everything's great.

847
00:40:03,560 --> 00:40:06,000
Speaker 11: There was such a quick turnaround that that makes us

848
00:40:06,000 --> 00:40:08,719
Speaker 11: a little bit nervous as to where we're sitting right now.

849
00:40:09,239 --> 00:40:10,520
Speaker 4: So if you're nervous, what do you do?

850
00:40:11,560 --> 00:40:14,920
Speaker 11: Yeah, So for our clients, what we've been doing because

851
00:40:14,960 --> 00:40:17,480
Speaker 11: we've been nervous, and what we continue to do is

852
00:40:17,600 --> 00:40:19,719
Speaker 11: really kind of add to more of that defensive or

853
00:40:19,800 --> 00:40:21,799
Speaker 11: staples part of our portfolio.

854
00:40:22,080 --> 00:40:23,439
Speaker 7: We have exposure to tech.

855
00:40:23,520 --> 00:40:26,040
Speaker 11: Hopefully people were doing what we've been doing all year

856
00:40:26,080 --> 00:40:29,120
Speaker 11: and trimming some of those tech names is those valuations

857
00:40:29,120 --> 00:40:31,720
Speaker 11: got a little bit too high, and we've been adding

858
00:40:31,719 --> 00:40:34,319
Speaker 11: into more of the defensive areas, into some of the

859
00:40:34,360 --> 00:40:37,719
Speaker 11: healthcare names, into those staples names. We do like the

860
00:40:37,760 --> 00:40:41,160
Speaker 11: banks because of the yield curve steepening again will be

861
00:40:41,160 --> 00:40:43,759
Speaker 11: beneficial for banks, but it all comes down to those

862
00:40:43,800 --> 00:40:46,160
Speaker 11: companies with solid balance sheets. You really got to kind

863
00:40:46,160 --> 00:40:48,759
Speaker 11: of dig in there. It's not just all sectors, but

864
00:40:48,880 --> 00:40:53,000
Speaker 11: discretionary versus staples continues to be low, and for us,

865
00:40:53,040 --> 00:40:56,480
Speaker 11: that's another signal that the market has not reached a

866
00:40:56,600 --> 00:40:59,640
Speaker 11: conviction low. We could see the market pulling back to

867
00:40:59,680 --> 00:41:02,560
Speaker 11: the low that we saw last week again. So I

868
00:41:02,560 --> 00:41:04,799
Speaker 11: think you need to kind of fill in your portfolio

869
00:41:04,920 --> 00:41:06,560
Speaker 11: a little bit on the defensive side.

870
00:41:06,880 --> 00:41:10,680
Speaker 5: How about on fixed income Victoria Here we're the opportunities here.

871
00:41:10,680 --> 00:41:13,080
Speaker 5: I mean to your treasury, we're just just a little

872
00:41:13,080 --> 00:41:16,280
Speaker 5: bit below four percent here. That seems like a reasonable return.

873
00:41:16,800 --> 00:41:18,520
Speaker 5: Or do I want to take some credit risk out there?

874
00:41:19,640 --> 00:41:22,280
Speaker 11: So look, I mean you're talking my language. I manage

875
00:41:22,280 --> 00:41:26,160
Speaker 11: our taxable fixed income strategies here at Crossmark, So we

876
00:41:26,239 --> 00:41:29,239
Speaker 11: want people to have some fixed income exposure. If you

877
00:41:29,280 --> 00:41:31,000
Speaker 11: think the FED is going to cut rates, and I

878
00:41:31,000 --> 00:41:33,200
Speaker 11: think everyone assumes they will at some point over the

879
00:41:33,239 --> 00:41:36,160
Speaker 11: next couple of months. Then you can have some advantage

880
00:41:36,160 --> 00:41:38,320
Speaker 11: to being in the short end of the curve. Even

881
00:41:38,400 --> 00:41:41,160
Speaker 11: now with yields lower than where they had been, you

882
00:41:41,400 --> 00:41:44,160
Speaker 11: still have the opportunity to get in and take advantage

883
00:41:44,200 --> 00:41:46,440
Speaker 11: of that short end of the curve coming down. I

884
00:41:46,480 --> 00:41:50,120
Speaker 11: do think also you mentioned credit credit spreads have behaved

885
00:41:50,160 --> 00:41:53,160
Speaker 11: really well. Did they widen out, you know, when all

886
00:41:53,160 --> 00:41:55,360
Speaker 11: the volatility was going on in the market, Yes, but

887
00:41:55,400 --> 00:41:57,799
Speaker 11: they've already tightened up a little bit. So I think

888
00:41:57,840 --> 00:42:00,680
Speaker 11: you can add some credit exposure, high quality credit we

889
00:42:00,680 --> 00:42:03,879
Speaker 11: don't like junk bonds, investment grade credit a little bit

890
00:42:03,920 --> 00:42:06,399
Speaker 11: further out the curve to lock in some of those

891
00:42:06,480 --> 00:42:09,560
Speaker 11: rates you see right now and have good cash flow

892
00:42:09,840 --> 00:42:13,280
Speaker 11: to help buffer maybe some equity volatility going forward.

893
00:42:14,000 --> 00:42:16,120
Speaker 4: When you take a look at the rest of earning season.

894
00:42:16,160 --> 00:42:18,840
Speaker 3: By the way, how closely are you looking at the

895
00:42:18,880 --> 00:42:21,319
Speaker 3: specifics when we have so much uncertainty with the Fed

896
00:42:21,360 --> 00:42:22,960
Speaker 3: as well as the upcoming election.

897
00:42:24,080 --> 00:42:26,239
Speaker 11: Yeah, earnings are key, and I know we're kind of

898
00:42:26,280 --> 00:42:29,440
Speaker 11: winding down this earning season and it's actually kind of

899
00:42:29,480 --> 00:42:32,399
Speaker 11: produced numbers better than what we thought that we would see.

900
00:42:32,400 --> 00:42:35,480
Speaker 11: We actually thought we'd see more margin compression coming, although

901
00:42:35,719 --> 00:42:38,840
Speaker 11: the PPI numbers tell us that there was some margin

902
00:42:38,880 --> 00:42:41,239
Speaker 11: compression in there, so maybe it starts to show up

903
00:42:41,239 --> 00:42:44,480
Speaker 11: in the third quarter. Guidance was very weak for the

904
00:42:44,520 --> 00:42:46,920
Speaker 11: majority of companies in regards to consumers.

905
00:42:46,920 --> 00:42:49,000
Speaker 7: You were talking about the strength of the consumer.

906
00:42:49,640 --> 00:42:51,319
Speaker 11: So I think we're going to see a lot of

907
00:42:51,360 --> 00:42:55,160
Speaker 11: that flow through. Hiring its down, so wages will stagnate.

908
00:42:55,400 --> 00:42:57,160
Speaker 11: I think a lot of that is going to filter

909
00:42:57,200 --> 00:42:59,960
Speaker 11: into third quarter earnings. People are already starting to look

910
00:43:00,080 --> 00:43:03,560
Speaker 11: afforward to that quarter and what's going to happen there.

911
00:43:03,920 --> 00:43:06,799
Speaker 11: That could also weigh on the markets a little bit.

912
00:43:06,920 --> 00:43:10,600
Speaker 11: But this quarter turned out to be somewhat better than

913
00:43:10,600 --> 00:43:11,840
Speaker 11: what we expected it to be.

914
00:43:12,239 --> 00:43:14,000
Speaker 7: But again right there.

915
00:43:13,880 --> 00:43:17,240
Speaker 11: At that double digit line, right about ten percent EPs growth?

916
00:43:17,840 --> 00:43:19,839
Speaker 5: All right, very good, Victoria Fernandez, Thank you so much.

917
00:43:19,880 --> 00:43:24,320
Speaker 5: We appreciate it. Victoria Fernandez. Market strategists across Mark Global Investments,

918
00:43:24,360 --> 00:43:28,200
Speaker 5: the Pride of the Houston, Texas native Houston Kalstan put

919
00:43:28,239 --> 00:43:29,360
Speaker 5: there some good stuff.

920
00:43:29,600 --> 00:43:34,120
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921
00:43:34,320 --> 00:43:37,240
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922
00:43:37,320 --> 00:43:40,920
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923
00:43:41,000 --> 00:43:44,440
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924
00:43:44,520 --> 00:43:47,680
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925
00:43:47,760 --> 00:43:49,640
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