1 00:00:01,800 --> 00:00:04,400 Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm 2 00:00:04,440 --> 00:00:07,240 Speaker 1: Bloomberg Quick Takes Tim Stanivik. We're here every day bringing 3 00:00:07,280 --> 00:00:09,760 Speaker 1: you the latest news from the world of business and finance, 4 00:00:09,800 --> 00:00:13,640 Speaker 1: plus technology, politics, economics, all partnising the power of Business 5 00:00:13,640 --> 00:00:17,119 Speaker 1: Week reporters and editors, not to mention our journalists and 6 00:00:17,120 --> 00:00:19,960 Speaker 1: analyst in more than one twenty countries. You can download 7 00:00:19,960 --> 00:00:23,439 Speaker 1: Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You 8 00:00:23,440 --> 00:00:25,400 Speaker 1: can also listen to our radio show at two pm 9 00:00:25,400 --> 00:00:28,360 Speaker 1: Eastern Time on Bloomberg Radio or watch us on YouTube 10 00:00:28,360 --> 00:00:31,880 Speaker 1: search Bloomberg Global News. Let's bring in our next guest here, 11 00:00:31,960 --> 00:00:35,760 Speaker 1: Melissa Baker. She's the founding partner of Fenwick Brands, a 12 00:00:35,840 --> 00:00:39,599 Speaker 1: female led consumer focused investment firm. Melissa, thank you as 13 00:00:39,640 --> 00:00:42,320 Speaker 1: always for joining us. How are you doing great, Happy 14 00:00:42,360 --> 00:00:44,640 Speaker 1: to be with you all today. We're happy to have you. Well, 15 00:00:44,720 --> 00:00:48,319 Speaker 1: let's dive right in here. Retail consumer package goods. I'm 16 00:00:48,360 --> 00:00:51,479 Speaker 1: a market scale from a stock market perspective. These stocks 17 00:00:51,800 --> 00:00:54,120 Speaker 1: have been doing really well because people are saying, in 18 00:00:54,120 --> 00:00:56,960 Speaker 1: the time of recession, everyone's going to need food, Everyone's 19 00:00:56,960 --> 00:01:00,000 Speaker 1: going to need these kind of basic items. So naturally 20 00:01:00,440 --> 00:01:02,560 Speaker 1: you have to invest in those shares, but talk to 21 00:01:02,600 --> 00:01:06,600 Speaker 1: us about the trends in this industry right now. Yeah, 22 00:01:06,680 --> 00:01:09,720 Speaker 1: it's definitely an interesting time. I think, you know, if 23 00:01:09,760 --> 00:01:12,280 Speaker 1: I put my investor head on, you know, we we 24 00:01:12,360 --> 00:01:16,280 Speaker 1: are focused more on earlier stage consumer businesses and it's interesting. 25 00:01:16,280 --> 00:01:18,280 Speaker 1: You know, we're coming off this period of what I 26 00:01:18,280 --> 00:01:22,200 Speaker 1: would call, you know, over inflated and over invested markets 27 00:01:22,240 --> 00:01:25,760 Speaker 1: where we saw a lot of capital come into the market, 28 00:01:25,959 --> 00:01:30,080 Speaker 1: pressure to get it to work, causing really high valuations 29 00:01:30,200 --> 00:01:34,480 Speaker 1: and really kind of gross prioritized over profit. You know. 30 00:01:34,800 --> 00:01:38,039 Speaker 1: Fast forward to today. Um, you know, I think the 31 00:01:38,120 --> 00:01:40,560 Speaker 1: positive news is we're starting to see some much needed 32 00:01:40,600 --> 00:01:45,360 Speaker 1: course correction. You know, you're right, consumers need staples, um. 33 00:01:45,440 --> 00:01:48,360 Speaker 1: But more importantly, we need these earlier stage businesses to 34 00:01:48,480 --> 00:01:51,960 Speaker 1: build healthy and profitable companies, and I think we're starting 35 00:01:51,960 --> 00:01:55,840 Speaker 1: to become prioritized to gaps. Melissa, Melissa, I just want 36 00:01:55,840 --> 00:01:56,960 Speaker 1: to jump in here, is we don't have a ton 37 00:01:57,000 --> 00:01:59,920 Speaker 1: of time. I'm wondering how you're seeing this course for 38 00:02:00,000 --> 00:02:01,720 Speaker 1: should play out in the private side as a private 39 00:02:01,720 --> 00:02:04,520 Speaker 1: equity investor, of what you're hearing from your portfolio companies, 40 00:02:04,560 --> 00:02:07,960 Speaker 1: which include URSA, major let me shine Madison read back 41 00:02:08,000 --> 00:02:10,639 Speaker 1: to the roots among others. Um, what are you hearing 42 00:02:10,680 --> 00:02:14,520 Speaker 1: from them about course correction right now? Are they under pressure? Yeah? 43 00:02:14,600 --> 00:02:17,800 Speaker 1: I think Look, everybody's under pressure to just maintain some 44 00:02:17,960 --> 00:02:20,360 Speaker 1: consistent levels of growth. But I think we've got strong 45 00:02:20,440 --> 00:02:23,839 Speaker 1: value propositions to the consumer. I think we're being much 46 00:02:23,880 --> 00:02:26,480 Speaker 1: more thoughtful and discerney as we think about you know, 47 00:02:26,680 --> 00:02:29,720 Speaker 1: omni channel models and where the product is and being 48 00:02:29,760 --> 00:02:32,040 Speaker 1: with the consumer where they are in purchase. And I 49 00:02:32,080 --> 00:02:35,480 Speaker 1: think all of our companies are well positioned, but definitely 50 00:02:36,160 --> 00:02:39,760 Speaker 1: long term minded, right um, and really focused on loyalty 51 00:02:39,800 --> 00:02:42,560 Speaker 1: and retention. So what are you worried about here? What 52 00:02:42,639 --> 00:02:48,400 Speaker 1: keeps you up at night? Oh? Lots of thanks, um, 53 00:02:48,440 --> 00:02:51,360 Speaker 1: But no, I think look, consumers are evolving, right and 54 00:02:51,400 --> 00:02:53,320 Speaker 1: they purchased with their head in their heart. And I 55 00:02:53,360 --> 00:02:57,520 Speaker 1: think the definition of brand and and the value of 56 00:02:57,639 --> 00:03:01,399 Speaker 1: brand to the consumer um ever changing. And it's it's 57 00:03:01,440 --> 00:03:04,760 Speaker 1: important for our companies to be well positioned, right. They 58 00:03:04,760 --> 00:03:06,680 Speaker 1: have to solve for the purchase friction. They have to 59 00:03:06,720 --> 00:03:08,639 Speaker 1: meet the consumers where they are in the head and 60 00:03:08,680 --> 00:03:12,520 Speaker 1: the heart and well developed omni channels. And so for me, 61 00:03:12,600 --> 00:03:15,800 Speaker 1: it's like Look, we've we've got good value propositions, but 62 00:03:15,880 --> 00:03:18,160 Speaker 1: we just need to be with that consumer and the 63 00:03:18,160 --> 00:03:22,160 Speaker 1: consumers changing, and that's a constant struggle and opportunity for 64 00:03:22,200 --> 00:03:26,480 Speaker 1: our businesses and making sure we're well positioned. Melissa. You know, 65 00:03:26,840 --> 00:03:30,160 Speaker 1: it's so funny. I I moderated panel at Milkin with 66 00:03:30,240 --> 00:03:33,400 Speaker 1: a bunch of folks in private equity, and I think 67 00:03:33,440 --> 00:03:35,760 Speaker 1: every single one of them was based in New York 68 00:03:35,800 --> 00:03:40,040 Speaker 1: City and you're joining us from Birmingham, Alabama, where you're based, 69 00:03:40,080 --> 00:03:42,920 Speaker 1: And I'm wondering how that goes. And I mean, if 70 00:03:42,960 --> 00:03:44,880 Speaker 1: you think about it, you know, we see it so 71 00:03:44,960 --> 00:03:47,080 Speaker 1: much of the focus here in New York City, So 72 00:03:47,320 --> 00:03:49,640 Speaker 1: how does it help and how does it hinder you 73 00:03:49,640 --> 00:03:52,800 Speaker 1: at points to be based there? Yeah, well, look, I 74 00:03:52,840 --> 00:03:56,960 Speaker 1: think look we're hide Jim right, UM, and I think 75 00:03:57,000 --> 00:04:00,000 Speaker 1: we've got a great portfolio. So I think our portfolio, 76 00:04:00,000 --> 00:04:03,520 Speaker 1: our reputation, you know, speaks for UM itself. But I 77 00:04:03,600 --> 00:04:06,840 Speaker 1: will say that we're very relational, and I think like 78 00:04:06,960 --> 00:04:09,720 Speaker 1: sometimes being a non coastal UM, you know, we have 79 00:04:09,760 --> 00:04:14,240 Speaker 1: a different approach to kind of Middle America. Lens On right, 80 00:04:14,480 --> 00:04:18,160 Speaker 1: the consumer UM and the consumers not just in coastal cities, 81 00:04:18,200 --> 00:04:20,680 Speaker 1: and I think we have right. We kind of leverage 82 00:04:20,760 --> 00:04:23,840 Speaker 1: that mindset and being where we are to to our advantage, 83 00:04:23,839 --> 00:04:26,160 Speaker 1: and I think we bring something right that's a little 84 00:04:26,200 --> 00:04:30,120 Speaker 1: bit different to the to the table. Let's try and 85 00:04:30,120 --> 00:04:35,159 Speaker 1: talk very quickly about just being a female lead investment firm. 86 00:04:35,200 --> 00:04:38,599 Speaker 1: I think that's incredible. Walk us through perhaps a little 87 00:04:38,600 --> 00:04:41,359 Speaker 1: bit of your perspective being a female founder in a 88 00:04:41,400 --> 00:04:44,839 Speaker 1: private equity business. We got about a minute here. Yeah, 89 00:04:44,920 --> 00:04:47,720 Speaker 1: I took a very unsimentional path, you know, the classical 90 00:04:47,800 --> 00:04:52,360 Speaker 1: musician turn marketer turned, you know, sorry, classical musicians. Yes, 91 00:04:52,640 --> 00:04:57,919 Speaker 1: what did you play violence? Ye? That second grade was 92 00:04:57,960 --> 00:05:02,400 Speaker 1: not a classical musician. But nevertheless continue Lissa, Yeah, nonetheless, 93 00:05:02,400 --> 00:05:05,600 Speaker 1: I'm not your typical kind of right PE pedigree. Um. 94 00:05:05,640 --> 00:05:07,479 Speaker 1: You know, for me, it was about leveraging all of 95 00:05:07,520 --> 00:05:10,480 Speaker 1: my in the trenches operating an expertise to small brands 96 00:05:10,520 --> 00:05:13,040 Speaker 1: that needed help. We saw an inefficiency kind of in 97 00:05:13,120 --> 00:05:16,719 Speaker 1: the funding market between VC and PE and where partnerships 98 00:05:16,760 --> 00:05:19,360 Speaker 1: and value added capital really could could make a difference. 99 00:05:19,360 --> 00:05:21,800 Speaker 1: Then I think for us, being a female lead firm, 100 00:05:21,800 --> 00:05:25,279 Speaker 1: we're the consumer um the gain conviction of the product early, 101 00:05:25,320 --> 00:05:26,919 Speaker 1: and I think we can bring more EQ to the 102 00:05:26,960 --> 00:05:30,880 Speaker 1: partnership building companies is hard. It takes time. Um, I 103 00:05:30,920 --> 00:05:33,360 Speaker 1: think there's lots of pivots, right, and I think it's 104 00:05:33,400 --> 00:05:36,720 Speaker 1: not just a spreadsheet, but it's a relationship and a partnership, 105 00:05:36,760 --> 00:05:40,159 Speaker 1: and I think we kind of can can bring a 106 00:05:40,240 --> 00:05:43,719 Speaker 1: little more of the relationship and the empathy to the 107 00:05:43,760 --> 00:05:46,359 Speaker 1: table with these companies and kind of what they're going through. 108 00:05:46,480 --> 00:05:49,039 Speaker 1: And yes, we have the capital capital of the commodity, 109 00:05:49,040 --> 00:05:52,040 Speaker 1: it's everywhere, but I think for us, it's like how 110 00:05:52,080 --> 00:05:54,520 Speaker 1: you capitalize on the pivots and how you manage through 111 00:05:54,520 --> 00:05:57,560 Speaker 1: growth inflection and I think that, um, you know, takes 112 00:05:57,600 --> 00:05:59,640 Speaker 1: a lot of work in handholding and we bring that 113 00:05:59,680 --> 00:06:03,200 Speaker 1: relate Schnell Peace to the public as well. Melissa Baker, 114 00:06:03,480 --> 00:06:05,839 Speaker 1: really great to have you back on Bloomberg Business Week Radio. 115 00:06:05,880 --> 00:06:08,120 Speaker 1: Thanks for joining us once again. She's founding partner of 116 00:06:08,160 --> 00:06:11,320 Speaker 1: Fenwick Brands. Joining us on the phone from Birmingham, Alabama. 117 00:06:11,560 --> 00:06:15,600 Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg 118 00:06:15,640 --> 00:06:19,839 Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. Well story featured 119 00:06:19,880 --> 00:06:22,560 Speaker 1: in the new issue of Business Week magazine, written by 120 00:06:22,600 --> 00:06:27,520 Speaker 1: Alex Barrinka, Technology reporter for Bloomberg News. Is all about 121 00:06:27,520 --> 00:06:31,520 Speaker 1: how one of TikTok's biggest stars is roasting dudes for 122 00:06:31,600 --> 00:06:35,920 Speaker 1: misogyny and racism. Alex Brinka's technology reporter for Bloomberg New. 123 00:06:36,000 --> 00:06:38,440 Speaker 1: She joins us from our Los Angeles bureau. You can 124 00:06:38,440 --> 00:06:40,839 Speaker 1: see her on YouTube if you're watching us there. Also 125 00:06:40,880 --> 00:06:43,680 Speaker 1: with us is Joel Weber, the editor of Bloomberg Business Week. 126 00:06:43,680 --> 00:06:47,480 Speaker 1: He's with us right now in the Bloomberg Interactive Broker studio. So, Joel, 127 00:06:47,760 --> 00:06:51,799 Speaker 1: it's so funny. We're talking about a person named Drew F. Wallow, 128 00:06:52,400 --> 00:06:55,720 Speaker 1: and you know, we think about the power of that 129 00:06:55,960 --> 00:06:59,680 Speaker 1: people have with these platforms. She has got seven point 130 00:06:59,760 --> 00:07:04,040 Speaker 1: five five million followers on TikTok. So it's fewer than 131 00:07:04,440 --> 00:07:08,200 Speaker 1: Justin Bieber, but she's got like as many as Jimmy Fallon, 132 00:07:08,440 --> 00:07:10,680 Speaker 1: almost as much as Jimmy Fallon, and and yet you know, 133 00:07:10,760 --> 00:07:13,920 Speaker 1: not maybe not a household name, and it just speaks 134 00:07:13,920 --> 00:07:18,640 Speaker 1: to how well uh, she owns TikTok. And on top 135 00:07:18,680 --> 00:07:21,680 Speaker 1: of that, we're um and working on a special issue 136 00:07:21,960 --> 00:07:24,760 Speaker 1: this week. You're gonna see some more stories that are 137 00:07:24,760 --> 00:07:27,440 Speaker 1: gonna be thematically linked to this one. UM. This was 138 00:07:27,480 --> 00:07:30,600 Speaker 1: the first out of the gate. Uh. And it was 139 00:07:30,640 --> 00:07:33,200 Speaker 1: also just totally caught our attention from the moment that 140 00:07:33,320 --> 00:07:37,640 Speaker 1: Alex of flagged. Uh. This is an option because uh, 141 00:07:38,040 --> 00:07:43,800 Speaker 1: Drew in the aftermath of the Supreme Court decision, Uh 142 00:07:44,040 --> 00:07:48,840 Speaker 1: that basically you know, upended Row versus Wade. Um. We're 143 00:07:49,760 --> 00:07:53,920 Speaker 1: thematically talking about that. Uh. This this in this week's issue. Um. 144 00:07:54,000 --> 00:07:57,600 Speaker 1: And this is a sort of a surprising silver lining 145 00:07:57,600 --> 00:08:00,280 Speaker 1: to all of that, which is how laughter can actually 146 00:08:00,320 --> 00:08:05,119 Speaker 1: become a weapon. Alex Philis more about Drew's approach here. Yeah, 147 00:08:05,160 --> 00:08:07,120 Speaker 1: and you know, you say she's not a household name, 148 00:08:07,120 --> 00:08:10,080 Speaker 1: but if you're on TikTok, she's absolutely a household name 149 00:08:10,480 --> 00:08:14,480 Speaker 1: for better or for some of these, um, misogynistic type 150 00:08:14,520 --> 00:08:17,880 Speaker 1: online trolls. For worse, Drew as a character who's really 151 00:08:18,120 --> 00:08:22,480 Speaker 1: um increased in popularity over the last year. She we 152 00:08:22,560 --> 00:08:25,280 Speaker 1: got to chat for this story. She is sharp, she 153 00:08:25,480 --> 00:08:29,760 Speaker 1: is witty, but she also cares really deeply about women 154 00:08:29,920 --> 00:08:33,440 Speaker 1: who she says she's protecting. On the platform, if you 155 00:08:33,480 --> 00:08:36,400 Speaker 1: see a Drew video in your feed on TikTok, you'll 156 00:08:36,440 --> 00:08:39,680 Speaker 1: be scrolling and um, a video of a guy will 157 00:08:39,679 --> 00:08:43,240 Speaker 1: typically pop up saying some pretty awful things. There are 158 00:08:43,360 --> 00:08:46,920 Speaker 1: the racists, their sexist, uh, they're fat phobic. And then 159 00:08:47,000 --> 00:08:49,480 Speaker 1: all of a sudden, Drew's face will cut in, usually 160 00:08:49,520 --> 00:08:53,240 Speaker 1: with her kind of trademark laughter, cackling at these men, 161 00:08:53,760 --> 00:08:57,240 Speaker 1: and she basically kind of dismantles them, and she doesn't 162 00:08:57,280 --> 00:09:00,600 Speaker 1: in a really interesting way. Drew is very smart and clever, 163 00:09:00,800 --> 00:09:04,080 Speaker 1: and she makes some really like logical points and and 164 00:09:04,200 --> 00:09:08,280 Speaker 1: basically picks apart these guys with logic. But she also 165 00:09:08,360 --> 00:09:12,800 Speaker 1: takes these tactics that online trolls are really known for comedy, 166 00:09:12,920 --> 00:09:16,520 Speaker 1: commenting on people's appearance, telling the guy he's already going 167 00:09:16,600 --> 00:09:20,120 Speaker 1: bald and kind of wraps the logic in this wrapper 168 00:09:20,200 --> 00:09:22,880 Speaker 1: of of the same tactics that online trolls like to 169 00:09:22,960 --> 00:09:25,680 Speaker 1: use when they go after women on the platform. And 170 00:09:25,720 --> 00:09:29,240 Speaker 1: I'll tell you, I've seen these guys takedown videos or 171 00:09:29,280 --> 00:09:32,320 Speaker 1: just like completely delete their accounts. They don't take it 172 00:09:32,360 --> 00:09:35,320 Speaker 1: as well um as maybe some of their victims do. 173 00:09:35,520 --> 00:09:38,640 Speaker 1: So she's really kind of established this role for herself, almost, 174 00:09:38,640 --> 00:09:42,280 Speaker 1: this like folk hero type role going after guys who 175 00:09:42,280 --> 00:09:50,120 Speaker 1: are kind of awful on the internet, editorializing too much, Alex, 176 00:09:50,160 --> 00:09:53,120 Speaker 1: you should know the minute you said balding, there was 177 00:09:53,160 --> 00:09:56,960 Speaker 1: a major reaction in the control room and studio when 178 00:09:56,960 --> 00:09:59,600 Speaker 1: I was not prepared for. I will admit, um, Alex, 179 00:09:59,679 --> 00:10:02,520 Speaker 1: Let's talk about the the approach that TikTok takes here. 180 00:10:02,880 --> 00:10:05,920 Speaker 1: The internet makes it very easy for people to say 181 00:10:06,000 --> 00:10:10,040 Speaker 1: all sorts of things. It's also, I think something social 182 00:10:10,040 --> 00:10:14,320 Speaker 1: media platforms have really tried to address walkers through how 183 00:10:14,400 --> 00:10:18,679 Speaker 1: maybe that's not enough. Yeah, so the platforms are are 184 00:10:18,760 --> 00:10:22,160 Speaker 1: a little bit reactive, right. They might ban certain words 185 00:10:22,320 --> 00:10:26,040 Speaker 1: or allow creators to mute words or block people. Um, 186 00:10:26,040 --> 00:10:29,400 Speaker 1: but these guys will um kind of take tactics that 187 00:10:30,000 --> 00:10:33,680 Speaker 1: that stay step ahead or trolls to speak more generally. 188 00:10:34,160 --> 00:10:37,520 Speaker 1: If they are banning things like, um like quote I 189 00:10:37,640 --> 00:10:41,400 Speaker 1: hate fat women, and folks notice that that language is 190 00:10:41,400 --> 00:10:44,480 Speaker 1: getting banned or taken down for bullying by the platforms, 191 00:10:44,760 --> 00:10:47,839 Speaker 1: they'll change tact and say things like I only love 192 00:10:47,920 --> 00:10:51,880 Speaker 1: men who weigh less women who weigh less than twenty pounds. So, um, 193 00:10:51,920 --> 00:10:56,080 Speaker 1: the platforms are, whether it's TikTok, Instagram, Facebook, Twitter, they 194 00:10:56,120 --> 00:10:59,320 Speaker 1: all have policies in place to kind of combat bullying. 195 00:10:59,440 --> 00:11:02,600 Speaker 1: But frankly, um, these bad actors on the platform move 196 00:11:02,640 --> 00:11:05,480 Speaker 1: a lot quicker and speak in different languages or use 197 00:11:05,640 --> 00:11:09,080 Speaker 1: code that is very well recognized by people on the internet. 198 00:11:09,120 --> 00:11:11,040 Speaker 1: But it's this little bit of a game of kind 199 00:11:11,040 --> 00:11:14,000 Speaker 1: of whackable. Um. What Drew has been able to do 200 00:11:14,320 --> 00:11:18,120 Speaker 1: is basically keep up with the times and kind of um, 201 00:11:18,160 --> 00:11:22,240 Speaker 1: you know, uh, slide a knife through these guys UM 202 00:11:22,320 --> 00:11:26,079 Speaker 1: online and keep up with what they're saying and how 203 00:11:26,080 --> 00:11:28,680 Speaker 1: they're kind of skirting these rules. So there's some things 204 00:11:28,679 --> 00:11:32,480 Speaker 1: out there. A lot of it depends on UM fans, followers, 205 00:11:32,600 --> 00:11:36,160 Speaker 1: or people on the platforms to report things themselves. Um. 206 00:11:36,200 --> 00:11:37,959 Speaker 1: But you know, if you can stay a step ahead, 207 00:11:38,040 --> 00:11:40,120 Speaker 1: then maybe that hand to hand combat is a little 208 00:11:40,120 --> 00:11:42,520 Speaker 1: bit more fierce. In the moment, it just feels like 209 00:11:42,760 --> 00:11:46,760 Speaker 1: you she may have like no shortage of options to 210 00:11:46,920 --> 00:11:49,880 Speaker 1: pick from. And I'm curious, did you put that towards Earlia? 211 00:11:49,920 --> 00:11:53,880 Speaker 1: How does she pick who she takes down? Yeah, so 212 00:11:53,960 --> 00:11:56,640 Speaker 1: initially she would kind of um, I'm talking a year 213 00:11:56,679 --> 00:11:59,319 Speaker 1: and a half ago and she started this um uh 214 00:11:59,320 --> 00:12:02,640 Speaker 1: this kind of half. She would look for guys and 215 00:12:02,720 --> 00:12:06,520 Speaker 1: find them who are kind of saying awful things. These days, 216 00:12:06,559 --> 00:12:11,280 Speaker 1: she wakes up to thousands and thousands of notifications across 217 00:12:11,320 --> 00:12:14,640 Speaker 1: all platforms. She has those notifications turned off because there 218 00:12:14,640 --> 00:12:16,560 Speaker 1: are so many of them. Um, but a lot of 219 00:12:16,600 --> 00:12:20,560 Speaker 1: times now her fans, her followers will actually tag her 220 00:12:20,720 --> 00:12:23,920 Speaker 1: in videos of people who are going after women or 221 00:12:23,920 --> 00:12:28,160 Speaker 1: who are uh you know, um slewing racist, misogynistic or 222 00:12:28,240 --> 00:12:31,440 Speaker 1: fat phobic comments on the platform. There's another camp. Um, 223 00:12:31,480 --> 00:12:33,480 Speaker 1: there's a lot of folks who like to attack her. 224 00:12:33,880 --> 00:12:38,640 Speaker 1: So those are coming straight into her notifications as well. Um, 225 00:12:38,679 --> 00:12:41,320 Speaker 1: but you know, it seems like there's a lot out there. 226 00:12:41,600 --> 00:12:44,160 Speaker 1: I will say, Um, she didn't tell me that it's 227 00:12:44,200 --> 00:12:46,240 Speaker 1: getting a little bit tougher to find guys that she 228 00:12:46,240 --> 00:12:50,640 Speaker 1: hasn't roasted before or subject matters she hasn't roasted before. Um, 229 00:12:50,760 --> 00:12:53,319 Speaker 1: So you know, whether that's because she's doing her job 230 00:12:53,400 --> 00:12:55,679 Speaker 1: too well as she sees it, or if things are 231 00:12:55,679 --> 00:12:58,640 Speaker 1: cracking down a little bit, who knows. But a lot 232 00:12:58,679 --> 00:13:01,880 Speaker 1: of these things are referrals. Yeah, she should come over 233 00:13:01,920 --> 00:13:04,160 Speaker 1: to Twitter. I see a lot of this stuff there. Hey, Alex, 234 00:13:04,200 --> 00:13:05,800 Speaker 1: just in the last minute that we have with you, 235 00:13:06,400 --> 00:13:08,240 Speaker 1: can you talk a little bit about the business of 236 00:13:08,240 --> 00:13:11,400 Speaker 1: of somebody with seven point million, seven point five million 237 00:13:11,400 --> 00:13:14,960 Speaker 1: followers on TikTok, Like how does she make money? Yeah? 238 00:13:15,000 --> 00:13:17,960 Speaker 1: Absolutely so, Drew wouldn't divulge exactly how much she makes, 239 00:13:17,960 --> 00:13:20,240 Speaker 1: but she will say she's making a living off of it. Um. 240 00:13:20,320 --> 00:13:22,600 Speaker 1: There are a few venues for somebody like her to 241 00:13:22,760 --> 00:13:25,880 Speaker 1: make money. The platforms do pay out a small amount 242 00:13:25,920 --> 00:13:29,200 Speaker 1: if you're in something like TikTok's creator fund um, but 243 00:13:29,320 --> 00:13:31,880 Speaker 1: when I talk to creators across the platform outside of 244 00:13:31,920 --> 00:13:35,800 Speaker 1: just Drew, they say that's basically coffee money or lunch money. UM. 245 00:13:35,840 --> 00:13:37,880 Speaker 1: Where they make a lot of their money is on 246 00:13:38,400 --> 00:13:42,560 Speaker 1: brand sponsorships, brand partnerships where they'll post sponsored post with 247 00:13:42,640 --> 00:13:45,920 Speaker 1: clothing or other products. Drew also has a podcast, so 248 00:13:45,960 --> 00:13:48,480 Speaker 1: folks will start to venture outside of the platforms as 249 00:13:48,520 --> 00:13:52,800 Speaker 1: well for opportunities for advertisers or sponsors to work with her. 250 00:13:52,920 --> 00:13:56,640 Speaker 1: So mostly platforms, sponsorships or other partnerships is where a 251 00:13:56,640 --> 00:13:59,040 Speaker 1: lot of these folks are making money. Well, it's a 252 00:13:59,080 --> 00:14:02,800 Speaker 1: great story. Al highlights a really important issue and certainly, uh, 253 00:14:02,880 --> 00:14:04,839 Speaker 1: somebody think who's not a household name for people who 254 00:14:04,880 --> 00:14:08,320 Speaker 1: are not on TikTok, including myself Alex Brinka, technology reporter 255 00:14:08,400 --> 00:14:10,440 Speaker 1: for Bloomberg News. Check out our story in the new 256 00:14:10,480 --> 00:14:13,120 Speaker 1: issue of Business Week magazine, on the Bloomberg and online. 257 00:14:13,120 --> 00:14:18,160 Speaker 1: Now this is Bloomberg business Week with Carol Messer and 258 00:14:18,240 --> 00:14:22,680 Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio, Creating. When 259 00:14:22,720 --> 00:14:25,920 Speaker 1: we talk about the health of the markets, we not 260 00:14:26,040 --> 00:14:28,720 Speaker 1: only look at the equity market and the bond market, 261 00:14:28,760 --> 00:14:31,080 Speaker 1: of course, but we also look at trends that we've 262 00:14:31,120 --> 00:14:32,920 Speaker 1: seen this year I p O S, M and A 263 00:14:33,040 --> 00:14:35,240 Speaker 1: and what's actually happening in the space. And it was 264 00:14:35,280 --> 00:14:38,120 Speaker 1: interesting because in the first half of two we saw 265 00:14:38,200 --> 00:14:40,920 Speaker 1: quite the decline when it came to when it came 266 00:14:40,920 --> 00:14:42,960 Speaker 1: to I p O S and new deals. We are 267 00:14:43,040 --> 00:14:45,360 Speaker 1: still seeing those some M and A activity. I mean, 268 00:14:45,520 --> 00:14:48,320 Speaker 1: what comes to mind last week is the Frontier Sprint 269 00:14:48,400 --> 00:14:51,360 Speaker 1: merger getting dropped and then Jeff Blue coming in and 270 00:14:51,440 --> 00:14:53,760 Speaker 1: being the company that comes in and triest to make 271 00:14:53,800 --> 00:14:56,440 Speaker 1: that acquisition. Let's get an update on the health of 272 00:14:56,800 --> 00:14:59,600 Speaker 1: M and A right now. Mark Cooper is CEO at 273 00:14:59,600 --> 00:15:02,120 Speaker 1: Solemn Partners Mark this afternoon, joins us on the phone 274 00:15:02,160 --> 00:15:06,000 Speaker 1: from New York City, Mark, how are you doing pretty well? 275 00:15:06,040 --> 00:15:07,720 Speaker 1: How are you doing pretty well? So if we were 276 00:15:07,720 --> 00:15:09,720 Speaker 1: doing this conversation a year ago, I think our conversation 277 00:15:09,760 --> 00:15:11,320 Speaker 1: would be a lot different because we would be coming 278 00:15:11,320 --> 00:15:14,640 Speaker 1: off of this, you know, quarter, first half of the 279 00:15:14,720 --> 00:15:16,880 Speaker 1: year that was just so hot. When it came to 280 00:15:17,600 --> 00:15:18,960 Speaker 1: M and A, when it came to I p O. 281 00:15:19,040 --> 00:15:21,280 Speaker 1: Spacks were on the decline BECAUSEY was kind of the 282 00:15:21,280 --> 00:15:23,600 Speaker 1: peak for that. So we saw that coming. Help us 283 00:15:23,640 --> 00:15:25,520 Speaker 1: understand where we are right now though, as we get 284 00:15:25,520 --> 00:15:31,320 Speaker 1: into August. You know, I think we're in a reasonably 285 00:15:31,320 --> 00:15:35,400 Speaker 1: good market. You know, you you can't look at two 286 00:15:35,440 --> 00:15:41,200 Speaker 1: thousand twenty one and compare it to anything. It's a 287 00:15:41,200 --> 00:15:49,160 Speaker 1: a once, it's a once in a generational market for 288 00:15:49,320 --> 00:15:51,560 Speaker 1: M and A and was hitting on all filmsers for 289 00:15:51,640 --> 00:15:54,560 Speaker 1: all kinds of reasons, which no, no need to go 290 00:15:54,600 --> 00:15:57,600 Speaker 1: into right now. But the fact of the matter is, yeah, 291 00:15:57,640 --> 00:16:01,240 Speaker 1: we're off considerably from last year, but we're tracking only 292 00:16:01,320 --> 00:16:04,200 Speaker 1: modestly down down in the nineteen which would be the 293 00:16:04,240 --> 00:16:08,400 Speaker 1: first sort of comparable clean year, if you will, which 294 00:16:08,480 --> 00:16:11,320 Speaker 1: was a very good year. Are they are they different? Mark? 295 00:16:11,360 --> 00:16:14,720 Speaker 1: Are they different types of deals happening this year than 296 00:16:14,800 --> 00:16:19,160 Speaker 1: last year? Well? Yeah, I think you're seeing more going 297 00:16:19,200 --> 00:16:22,000 Speaker 1: private transactions and that would be natural given stock prices 298 00:16:22,040 --> 00:16:26,040 Speaker 1: has been lower. I think you're seeing a higher percentage 299 00:16:26,040 --> 00:16:31,120 Speaker 1: of transactions being done by private equity buyers. Uh. And 300 00:16:31,400 --> 00:16:36,680 Speaker 1: interestingly enough, you're seeing probably more in volume of mega 301 00:16:36,760 --> 00:16:40,520 Speaker 1: transactions and they sold last year. Now that doesn't necessarily 302 00:16:40,560 --> 00:16:45,160 Speaker 1: have anything to do with macroeconomic conditions. It could be 303 00:16:45,240 --> 00:16:48,720 Speaker 1: everything about just specific transactions like you know, like Musk 304 00:16:48,800 --> 00:16:51,320 Speaker 1: buying Twitter for four billion. That could move the needle 305 00:16:51,400 --> 00:16:56,200 Speaker 1: pretty significantly. But the private equity community still has I 306 00:16:56,240 --> 00:16:59,240 Speaker 1: don't know, trillion and a half dollars of excess capital 307 00:16:59,800 --> 00:17:03,600 Speaker 1: or dound. And you know, one interesting aspect of the 308 00:17:03,640 --> 00:17:07,960 Speaker 1: market this go around versus two thousand and eight is 309 00:17:08,000 --> 00:17:12,160 Speaker 1: the whole private credit markets. It's the debt markets. So 310 00:17:12,280 --> 00:17:17,800 Speaker 1: traditionally stock markets went down as they did, uh and 311 00:17:17,880 --> 00:17:21,960 Speaker 1: infestrates go up as they are. The public debt markets 312 00:17:22,640 --> 00:17:27,800 Speaker 1: just closed down. They shut which happened to happen, you know, 313 00:17:27,960 --> 00:17:29,960 Speaker 1: for a couple of weeks or a couple of months 314 00:17:30,800 --> 00:17:33,600 Speaker 1: this year. But what really is going on is the 315 00:17:33,640 --> 00:17:37,359 Speaker 1: private credit markets are stepping in and picking up the slack. 316 00:17:37,440 --> 00:17:40,760 Speaker 1: And the private correct credit markets don't care as much 317 00:17:40,800 --> 00:17:44,960 Speaker 1: about near term volatility. What they care about is credit 318 00:17:45,640 --> 00:17:50,040 Speaker 1: and return on capital. So while interests going up slightly, 319 00:17:50,240 --> 00:17:54,480 Speaker 1: it's still still working well. Speaking of interest rates going 320 00:17:54,560 --> 00:17:59,920 Speaker 1: up slightly slightly, as a feeling an understatement. But it's 321 00:18:00,000 --> 00:18:02,359 Speaker 1: an't there this incentive built into the market here that 322 00:18:02,480 --> 00:18:03,920 Speaker 1: if I mean, I think a five year old could 323 00:18:03,920 --> 00:18:07,880 Speaker 1: say this. If you're say allowance is worth less tomorrow 324 00:18:07,920 --> 00:18:10,600 Speaker 1: given an inflationary environment, and makes sense to spend it today, 325 00:18:10,960 --> 00:18:13,600 Speaker 1: you're saying that a toddler can do time value of money. 326 00:18:14,240 --> 00:18:19,000 Speaker 1: I'm saying you can. Yeah, if you tell can your 327 00:18:19,040 --> 00:18:21,760 Speaker 1: daughter do this stuff? No? Okay, come on, this is 328 00:18:21,800 --> 00:18:24,320 Speaker 1: like business school stuff. Keep continue, Please thank you if 329 00:18:24,359 --> 00:18:26,280 Speaker 1: you give. If you give a child a quarter and 330 00:18:26,320 --> 00:18:28,080 Speaker 1: say this quarter is not going to get you a 331 00:18:28,200 --> 00:18:31,000 Speaker 1: Rubik's Cuba candy bar or whatever tomorrow, they're going to 332 00:18:31,080 --> 00:18:35,280 Speaker 1: say I have to spend it today. It's true. I'm 333 00:18:35,400 --> 00:18:39,199 Speaker 1: clearly steaking to a different anyways, Mark My point is 334 00:18:39,240 --> 00:18:41,200 Speaker 1: that there's so much cash on the balance sheets right now. 335 00:18:41,240 --> 00:18:42,960 Speaker 1: This is going to be worth less tomorrow. Just give 336 00:18:43,000 --> 00:18:48,760 Speaker 1: them the inflationary environment. Why aren't we seeing more emine? Well, 337 00:18:49,600 --> 00:18:52,280 Speaker 1: you know you got to be careful with that concept. 338 00:18:52,600 --> 00:18:57,040 Speaker 1: It's worth less tomorrow unless you invested well. Right, So 339 00:18:57,960 --> 00:19:01,359 Speaker 1: the answer is, we're not. Corporation are gonna essentially do 340 00:19:01,480 --> 00:19:04,280 Speaker 1: M and A because they think it's the best, because 341 00:19:04,320 --> 00:19:08,800 Speaker 1: they think it is as simply a good way to 342 00:19:08,840 --> 00:19:10,959 Speaker 1: return on their capital. I mean, yes, of course ray 343 00:19:11,000 --> 00:19:13,919 Speaker 1: return comes into play, but they're looking at strategic issues. 344 00:19:14,320 --> 00:19:16,920 Speaker 1: They're looking at, you know, do they have more better 345 00:19:16,960 --> 00:19:20,719 Speaker 1: investment opportunities within their existing business, So they look at 346 00:19:20,720 --> 00:19:22,440 Speaker 1: a whole beriad of things. They're also looking at the 347 00:19:22,480 --> 00:19:25,080 Speaker 1: health of their business. And frankly, the flip side of 348 00:19:25,119 --> 00:19:28,359 Speaker 1: your argument is with inflation as it is, consumer demand 349 00:19:28,440 --> 00:19:32,400 Speaker 1: dropping and the consumer driven companies, I mean, that could 350 00:19:32,520 --> 00:19:34,040 Speaker 1: suggest that they're gonna have a fall off in their 351 00:19:34,080 --> 00:19:37,000 Speaker 1: business and so they might want to be conservative. Now 352 00:19:37,320 --> 00:19:40,600 Speaker 1: to your to to the ultimate point is if you 353 00:19:40,640 --> 00:19:42,959 Speaker 1: look back on two thousand and eight, that was a 354 00:19:43,000 --> 00:19:46,399 Speaker 1: great time to be a buyer, because when do you 355 00:19:46,440 --> 00:19:48,919 Speaker 1: want to buy. You want to buy when things aren't 356 00:19:49,000 --> 00:19:52,520 Speaker 1: so great. You're buying a better prices, uh theoretically, and 357 00:19:52,600 --> 00:19:57,359 Speaker 1: hopefully you're buying assets that weren't necessarily available to you 358 00:19:57,480 --> 00:20:00,439 Speaker 1: before when the markets were so robust then there was 359 00:20:00,440 --> 00:20:04,800 Speaker 1: such a great demand. But Mark you said the best 360 00:20:04,800 --> 00:20:07,200 Speaker 1: time to buy with two thousand eight and and and 361 00:20:07,400 --> 00:20:09,439 Speaker 1: a lot of that, I mean going back to I 362 00:20:09,440 --> 00:20:11,800 Speaker 1: think a very famous call made by the by Norway's 363 00:20:12,119 --> 00:20:14,920 Speaker 1: major state fund is that you just you buy tech 364 00:20:14,960 --> 00:20:17,399 Speaker 1: in two thousand eight and you do super well for 365 00:20:18,000 --> 00:20:20,879 Speaker 1: I think up til now really and I'm wondering, but 366 00:20:21,000 --> 00:20:23,719 Speaker 1: one of the biggest kind of tail winds for that 367 00:20:23,800 --> 00:20:26,919 Speaker 1: trade was that Tech was really using a lot of 368 00:20:26,920 --> 00:20:29,480 Speaker 1: the cash that they had in terms of acquisitions, which 369 00:20:29,520 --> 00:20:31,639 Speaker 1: brings me back to the M and A story. You 370 00:20:31,720 --> 00:20:34,440 Speaker 1: have so much cash on these tech balance sheets, they're 371 00:20:34,440 --> 00:20:37,080 Speaker 1: not able to spend it because of the antitrust scrutiny, 372 00:20:37,200 --> 00:20:42,440 Speaker 1: So how do you make any sense of that? So 373 00:20:43,119 --> 00:20:46,000 Speaker 1: you brought up a couple of points. You're right. Antitrust 374 00:20:46,240 --> 00:20:51,280 Speaker 1: is probably, in my view the biggest issue UH headwind 375 00:20:51,359 --> 00:20:54,600 Speaker 1: issue that we have in M and A, or one 376 00:20:54,600 --> 00:20:57,960 Speaker 1: of the biggest issues. Certainly obviously the economy being the 377 00:20:58,000 --> 00:21:02,600 Speaker 1: other macroeconomic conditions obviously be being very important as it 378 00:21:02,640 --> 00:21:06,399 Speaker 1: relates to UH tech. You know, tech buyers doing roll 379 00:21:06,480 --> 00:21:09,840 Speaker 1: up strategies. I don't think that's stopping. We're talking about 380 00:21:09,920 --> 00:21:12,800 Speaker 1: larger transactions now and as you do tuck ins, I 381 00:21:12,840 --> 00:21:14,720 Speaker 1: mean you see it happen all the time, and they're 382 00:21:14,720 --> 00:21:17,600 Speaker 1: continuing to do them now. Anti trust is the big issue, 383 00:21:18,160 --> 00:21:21,200 Speaker 1: and that won't stop. In my view, and you're right, 384 00:21:21,320 --> 00:21:25,239 Speaker 1: that was a great opportunity for success. And you're right 385 00:21:25,560 --> 00:21:28,480 Speaker 1: two thousand and eight because it was a down year 386 00:21:28,560 --> 00:21:32,040 Speaker 1: and it was a tough year obviously great recession. That 387 00:21:32,160 --> 00:21:34,919 Speaker 1: was a great time to be a buyer. And I'm 388 00:21:34,960 --> 00:21:37,439 Speaker 1: not suggesting it's not now a great time to be 389 00:21:37,480 --> 00:21:40,320 Speaker 1: a buyer, but there are a lot of considerations. Mark, 390 00:21:40,359 --> 00:21:43,919 Speaker 1: does it become a better time to be a buyer? Uh, 391 00:21:44,320 --> 00:21:49,000 Speaker 1: in the remainder of rather into I mean, what's your 392 00:21:49,000 --> 00:21:53,800 Speaker 1: call for this moving forward? So I think it's a 393 00:21:53,840 --> 00:21:56,399 Speaker 1: good time. I think you have to be selective, and 394 00:21:56,840 --> 00:21:59,560 Speaker 1: no one knows, uh, you know, are we in a 395 00:21:59,640 --> 00:22:02,640 Speaker 1: recept shan or are we going to be in a recession? 396 00:22:02,760 --> 00:22:05,600 Speaker 1: What's the demand profile gonna look like going forward? How 397 00:22:05,680 --> 00:22:07,879 Speaker 1: business is going to perform? So far, earnings has been 398 00:22:07,920 --> 00:22:11,600 Speaker 1: good for you two. You know, I'm bullish long term, 399 00:22:11,640 --> 00:22:14,320 Speaker 1: and I don't know what long term means. So my 400 00:22:14,400 --> 00:22:17,560 Speaker 1: attitude about buying is this is probably a pretty good 401 00:22:17,600 --> 00:22:21,119 Speaker 1: time to buy if you've got staying power at a 402 00:22:21,200 --> 00:22:24,560 Speaker 1: long hold period, and strategics obviously do and if they're 403 00:22:24,600 --> 00:22:29,840 Speaker 1: doing something that is uh. Those attitudes to the business 404 00:22:30,000 --> 00:22:33,439 Speaker 1: that has savings and synergies that pushes them in a 405 00:22:33,520 --> 00:22:36,760 Speaker 1: positive direction. And the answer is yes. And from financial buyers, 406 00:22:37,520 --> 00:22:42,080 Speaker 1: they are continuing to invest. They're not stopping. Mark, we 407 00:22:42,119 --> 00:22:45,639 Speaker 1: only have twenty seconds left. Tell us some industries to 408 00:22:45,720 --> 00:22:49,280 Speaker 1: keep an eye on. I think it's gonna be across 409 00:22:49,280 --> 00:22:52,920 Speaker 1: the board. I think healthcare seems to be seems to 410 00:22:53,000 --> 00:22:57,440 Speaker 1: be active, industrials seems to be active. Business services, which 411 00:22:57,440 --> 00:23:00,560 Speaker 1: has been a great middle market business of an equity. 412 00:23:00,600 --> 00:23:03,200 Speaker 1: And then finally, I think tech will continue to be important. 413 00:23:03,600 --> 00:23:06,840 Speaker 1: All right, Mark Cooper, CEO of Solomon Partners this afternoon, 414 00:23:06,920 --> 00:23:08,680 Speaker 1: joining us on the phone from New York City, talking 415 00:23:08,720 --> 00:23:16,040 Speaker 1: all things m n A A Jolneal. Yeah, I bet 416 00:23:16,080 --> 00:23:20,840 Speaker 1: you let me drive. Oh no, no, no, no, please 417 00:23:21,160 --> 00:23:27,480 Speaker 1: do dravels. I want to drive. It's a good question. 418 00:23:31,200 --> 00:23:37,600 Speaker 1: This is the Drive to the Clothes on Bluebird Radio. 419 00:23:37,680 --> 00:23:39,760 Speaker 1: All right, well, here we go. We got nine minutes 420 00:23:39,800 --> 00:23:42,720 Speaker 1: to go in trading today on this first day of August. 421 00:23:42,720 --> 00:23:44,920 Speaker 1: We just heard the numbers from Charlie Pellett. But worth 422 00:23:44,960 --> 00:23:47,320 Speaker 1: another check here is we're pretty much flat on the NAZAC. 423 00:23:47,400 --> 00:23:49,400 Speaker 1: We're down just about a little more than one tenth 424 00:23:49,440 --> 00:23:51,080 Speaker 1: of one percent on the S and p the dows 425 00:23:51,080 --> 00:23:54,080 Speaker 1: in the green, but just ever so slightly. This comes 426 00:23:54,080 --> 00:23:57,720 Speaker 1: after just a monstrous month, the best rally for stocks 427 00:23:57,720 --> 00:24:01,639 Speaker 1: since in the month July. Really curious to hear what 428 00:24:01,720 --> 00:24:04,080 Speaker 1: Lisa Shallatt has to think of it. She's Chief Investment 429 00:24:04,160 --> 00:24:07,080 Speaker 1: Officer for Wealth Management at Morgan Stanley. Lisa joining us 430 00:24:07,080 --> 00:24:09,879 Speaker 1: this afternoon on the phone from New York City. Lisa, 431 00:24:09,920 --> 00:24:12,960 Speaker 1: how are you? Um? Fine? Thank you all right? So 432 00:24:13,480 --> 00:24:16,600 Speaker 1: where are you when it comes to whether or not 433 00:24:16,680 --> 00:24:19,280 Speaker 1: the bottom is in here? Are you in the Mike 434 00:24:19,320 --> 00:24:23,520 Speaker 1: Wilson school or are you in the idea that okay, 435 00:24:23,560 --> 00:24:27,679 Speaker 1: well we are we got a bottom in here? Absolutely not, 436 00:24:27,880 --> 00:24:31,120 Speaker 1: So you know, Mike, Mike Wilson is a dear colleague 437 00:24:31,160 --> 00:24:36,000 Speaker 1: of mine and heads up our Global Investment Committee along 438 00:24:36,000 --> 00:24:38,840 Speaker 1: with us over here at the wealth management business at 439 00:24:38,840 --> 00:24:42,520 Speaker 1: Morgan Stanley. UM and I think you know. Our our 440 00:24:42,560 --> 00:24:46,040 Speaker 1: perspective is that investors um have made a lot of 441 00:24:46,040 --> 00:24:53,359 Speaker 1: assumptions here, assumptions about inflation peaking, assumptions about UH peak fed, 442 00:24:54,000 --> 00:24:57,919 Speaker 1: assumptions about the fact that you know, multiple should expand 443 00:24:58,160 --> 00:25:01,520 Speaker 1: as you know interest rates um it uh. And our 444 00:25:01,640 --> 00:25:05,880 Speaker 1: view is that, look, while some of that narrative may 445 00:25:06,000 --> 00:25:10,240 Speaker 1: UH be beginning to take shape. Um, there's big elements 446 00:25:10,280 --> 00:25:15,440 Speaker 1: of it that remain unknowns, And the single biggest element 447 00:25:15,760 --> 00:25:18,800 Speaker 1: is what what where are we really in this earnings 448 00:25:18,880 --> 00:25:24,280 Speaker 1: trajectory and can corporate earnings really hold up against this 449 00:25:24,400 --> 00:25:29,560 Speaker 1: backdrop that that we're seeing. Um, you know, can are 450 00:25:29,600 --> 00:25:33,280 Speaker 1: we really going to see corporations resist or recession if 451 00:25:33,320 --> 00:25:36,800 Speaker 1: that's what the bond markets pricing? Um, we don't think 452 00:25:36,840 --> 00:25:40,440 Speaker 1: so at leasta. How much of this is a waitings game, 453 00:25:40,560 --> 00:25:44,560 Speaker 1: and that similar to when there was that amount of uncertainty, 454 00:25:44,880 --> 00:25:47,760 Speaker 1: everyone just kind of flocked to big tech names that 455 00:25:47,840 --> 00:25:49,840 Speaker 1: have a lot of cash on their balance sheets because 456 00:25:49,840 --> 00:25:51,600 Speaker 1: it was the cash that could kind of cushion them 457 00:25:51,840 --> 00:25:54,879 Speaker 1: from that recessionary blow. We're now in an environment where 458 00:25:55,160 --> 00:25:57,880 Speaker 1: I would argue a lot of the SMP five companies 459 00:25:58,080 --> 00:26:00,399 Speaker 1: have a ton of cash on their balance eat as 460 00:26:00,440 --> 00:26:03,520 Speaker 1: a byproduct of those extremely low rates. So can't that 461 00:26:03,680 --> 00:26:07,800 Speaker 1: help cushing it from any sort of recessionary blow? I 462 00:26:07,920 --> 00:26:10,560 Speaker 1: think that I definitely think that that is the case, 463 00:26:10,600 --> 00:26:15,280 Speaker 1: and we are quite bullish on the longer term outlook 464 00:26:15,359 --> 00:26:18,400 Speaker 1: for the economy once we get through this FED rate 465 00:26:18,480 --> 00:26:22,320 Speaker 1: hiking cycle because of the health of balance sheets but 466 00:26:22,440 --> 00:26:25,480 Speaker 1: we do think that that um, what we've seen in 467 00:26:25,600 --> 00:26:29,280 Speaker 1: Q two so far from companies UM is a little 468 00:26:29,320 --> 00:26:33,359 Speaker 1: bit of of an illusion in terms of the read 469 00:26:33,400 --> 00:26:37,920 Speaker 1: through being. Oh, look how resilient everybody is. Remember when 470 00:26:38,080 --> 00:26:41,800 Speaker 1: Q two began, Uh, you know, the FED was really 471 00:26:41,880 --> 00:26:44,520 Speaker 1: kind of at seventy basis points on FED funds. A 472 00:26:44,600 --> 00:26:48,680 Speaker 1: lot has happened and policy operates with a lag. It 473 00:26:48,800 --> 00:26:52,280 Speaker 1: still remains to be seen what real levels of demand 474 00:26:52,280 --> 00:26:55,560 Speaker 1: are going to be for folks products. Um, if inflation 475 00:26:55,640 --> 00:26:59,120 Speaker 1: is really rolling over, so is all this wonderful pricing 476 00:26:59,160 --> 00:27:02,240 Speaker 1: power that comes and needs claimed to be taking as 477 00:27:02,240 --> 00:27:04,679 Speaker 1: a way of helping them make the numbers. And the 478 00:27:04,720 --> 00:27:08,160 Speaker 1: bottom line is when you really take a step back, UM, 479 00:27:08,200 --> 00:27:12,119 Speaker 1: we're starting to see negative operating leverage, meaning sales of 480 00:27:12,160 --> 00:27:15,639 Speaker 1: the SMP five are growing more quickly than profits. And 481 00:27:15,720 --> 00:27:20,240 Speaker 1: that's what tends to happen just as inflation peaks. But 482 00:27:20,359 --> 00:27:23,240 Speaker 1: our sense is that you know that that as quickly 483 00:27:23,400 --> 00:27:27,640 Speaker 1: as that those pricing gains came in to corporate earnings, 484 00:27:27,640 --> 00:27:30,439 Speaker 1: they're going to go out. And that's just not in 485 00:27:30,520 --> 00:27:33,120 Speaker 1: the forward estimates. So at least that raises the question 486 00:27:33,160 --> 00:27:35,840 Speaker 1: about where the opportunities are right now for our investor audience, 487 00:27:36,000 --> 00:27:38,639 Speaker 1: if you get new money, how are you deploying it? 488 00:27:38,640 --> 00:27:41,320 Speaker 1: Where are you putting it? Yeah, so we're you know, 489 00:27:41,440 --> 00:27:47,720 Speaker 1: looking for places where the recession is already fully valued 490 00:27:47,760 --> 00:27:50,760 Speaker 1: and they're very low expectations. Like you're saying there is 491 00:27:50,800 --> 00:27:54,080 Speaker 1: going to be a recession. Um, we actually don't think 492 00:27:54,119 --> 00:27:56,639 Speaker 1: that we know that for sure, and actually our base 493 00:27:56,720 --> 00:28:00,800 Speaker 1: cases that we escape one. But that's why we're looking 494 00:28:00,840 --> 00:28:05,080 Speaker 1: for areas of the market where expectations are washed out, 495 00:28:05,200 --> 00:28:09,360 Speaker 1: where recession is already priced, whether we get one or not. Uh. 496 00:28:09,400 --> 00:28:11,800 Speaker 1: And so we're finding that in some small and mid 497 00:28:11,880 --> 00:28:15,880 Speaker 1: cap stocks. We're finding it in healthcare, we're finding it, uh, 498 00:28:15,920 --> 00:28:19,280 Speaker 1: in financials. We're finding it in energy stocks, which we 499 00:28:19,320 --> 00:28:22,680 Speaker 1: think are going to continue to surprise on the upside. Uh. 500 00:28:22,840 --> 00:28:25,080 Speaker 1: So those would be some of the places that that 501 00:28:25,160 --> 00:28:28,680 Speaker 1: we're looking. Hey, uh, Lisa, jump on, I want to 502 00:28:28,720 --> 00:28:31,840 Speaker 1: go back to you. Well, I should say, fretty excuse me, 503 00:28:31,840 --> 00:28:34,800 Speaker 1: I want to jump in here. Um. You know, a 504 00:28:34,840 --> 00:28:36,919 Speaker 1: listener is getting in touch right now. He wants to 505 00:28:36,920 --> 00:28:38,960 Speaker 1: know where inflation is turning over a comment that you 506 00:28:39,000 --> 00:28:41,120 Speaker 1: made a little earlier. Where are you seeing that specifically? 507 00:28:41,880 --> 00:28:45,040 Speaker 1: So we're seeing it in two places. So obviously at 508 00:28:45,080 --> 00:28:50,160 Speaker 1: the gasoline pumping in uh, you know, oil prices more broadly, 509 00:28:50,320 --> 00:28:53,320 Speaker 1: more broadly in commodities, those are things that the market 510 00:28:53,400 --> 00:28:57,960 Speaker 1: is telling you have definitively rolled over as part of 511 00:28:58,000 --> 00:29:04,560 Speaker 1: that commodities trade. We've seen industrial metals, things like copper rollover, etcetera. 512 00:29:05,160 --> 00:29:09,720 Speaker 1: Perhaps more powerfully, we're seeing it in the manufacturing surveys, 513 00:29:10,120 --> 00:29:13,560 Speaker 1: where manufacturers are now telling us that prices paid are 514 00:29:13,600 --> 00:29:16,800 Speaker 1: coming down hard. For example, we got the I S 515 00:29:17,000 --> 00:29:21,800 Speaker 1: M survey this morning, UH, and that uh index of 516 00:29:21,920 --> 00:29:26,240 Speaker 1: prices paid UM came down really hard. UM. Last month 517 00:29:26,280 --> 00:29:29,240 Speaker 1: we were running that index at seventy eight point five 518 00:29:29,280 --> 00:29:32,520 Speaker 1: and today it came in at sixty versus an expectation 519 00:29:32,560 --> 00:29:36,080 Speaker 1: of seventy four point three. So prices do look like 520 00:29:36,200 --> 00:29:41,840 Speaker 1: on one level, uh, they are um moderating. Certainly, we 521 00:29:41,880 --> 00:29:45,320 Speaker 1: haven't seen that in wages yet. We haven't fully seen 522 00:29:45,400 --> 00:29:50,040 Speaker 1: it in housing prices and rents yet, as those tend 523 00:29:50,080 --> 00:29:53,560 Speaker 1: to be you know, lagging. But we have begun to 524 00:29:53,600 --> 00:29:55,640 Speaker 1: see the front end of some of those supply chain 525 00:29:56,200 --> 00:30:00,280 Speaker 1: related problems in commodities and gasoline easing up. We something've 526 00:30:00,280 --> 00:30:03,040 Speaker 1: got about a minute here, how concerned are you about 527 00:30:03,280 --> 00:30:07,720 Speaker 1: liquidity as we talk about really unprecedented amount of quantitative 528 00:30:07,760 --> 00:30:12,560 Speaker 1: tightening um very uh And and this is another element 529 00:30:13,160 --> 00:30:17,120 Speaker 1: where I think the market maybe premature in its um 530 00:30:17,160 --> 00:30:20,640 Speaker 1: conviction that the coast is clear. Um. You know, we 531 00:30:20,720 --> 00:30:23,600 Speaker 1: are you know, going to move into a very dangerous 532 00:30:23,640 --> 00:30:27,760 Speaker 1: seasonal time for the year. Uh. In the best of seasons, right, 533 00:30:27,920 --> 00:30:31,600 Speaker 1: summer tends to be August in particular, tends to be 534 00:30:31,640 --> 00:30:36,680 Speaker 1: a tough liquidity uh. Chapter we're accelerating and ramping up 535 00:30:36,800 --> 00:30:41,200 Speaker 1: to t in the month of September and into October. UM. 536 00:30:41,280 --> 00:30:46,000 Speaker 1: So liquidity here as these rates um kick in with 537 00:30:46,040 --> 00:30:50,000 Speaker 1: a leg Um. We believe folks should you know, keep 538 00:30:50,040 --> 00:30:54,440 Speaker 1: their seatbelt, keep their seat belts buckled, um, and wait 539 00:30:54,440 --> 00:30:57,080 Speaker 1: and learn because we really haven't been here. These are 540 00:30:57,200 --> 00:31:01,320 Speaker 1: somewhat unchartered waters. Lisa Shalit, chief investment Officer for Wealth 541 00:31:01,360 --> 00:31:03,800 Speaker 1: Management at Morgan Stanley, joining us on the phone from 542 00:31:03,800 --> 00:31:05,640 Speaker 1: New York City. Lisa, always great to chat with you. 543 00:31:05,680 --> 00:31:08,520 Speaker 1: Thanks so much for taking the time. Thanks for listening 544 00:31:08,520 --> 00:31:12,000 Speaker 1: to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, 545 00:31:12,080 --> 00:31:14,240 Speaker 1: or Bloomberg dot com, and you can also listen to 546 00:31:14,280 --> 00:31:16,840 Speaker 1: our radio show at two pm Eastern on Bloomberg Radio, 547 00:31:16,960 --> 00:31:19,680 Speaker 1: or watch us on YouTube. Search to Bloomberg Global News