Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day, we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. Matt and I are
Speaker 1: calling a trend here. We had some good CPI data
Speaker 1: last week, we had some good PPI data. This week
Speaker 1: we're calling out a trend. This FED can cool its jets.
Speaker 1: What's the market telling you? Yeah, well, the market is
Speaker 1: certainly thinking that. You know, we're fully priced now for
Speaker 1: only fifty basis points without much chance of a of
Speaker 1: a seventy five at all at four December, and then
Speaker 1: you know one or two basis point hikes after that,
Speaker 1: and and and you know this idea that whether or
Speaker 1: not this is a trend, if you look at the
Speaker 1: month over month numbers for both CPI and pp I,
Speaker 1: this is now four months in a row that we've
Speaker 1: been at significant a lower month of month prince than
Speaker 1: the previous eight months. So so if if we think
Speaker 1: about this from just from a time perspective, if we
Speaker 1: stay at this kind of level, UM, inflation will come
Speaker 1: down to almost where where inflation break evens are currently pricing,
Speaker 1: So where one year inflation swaps are pricing UM basically
Speaker 1: in the year in the next eight months. So so
Speaker 1: so it makes perfect sense, you know. I I think
Speaker 1: you know the idea that inflation has peaked. People were
Speaker 1: looking for confirmation of that. Now that again, now that
Speaker 1: we have four months of uh, you know prints that
Speaker 1: are are pretty reasonable for both CPI and pp I,
Speaker 1: it seems that, you know, we have turned a corner here.
Speaker 1: So what are you expecting now in terms of a
Speaker 1: terminal rate? I mean, um, when I was on sabbatical
Speaker 1: UM in the Maldives or wherever you were, seemed like
Speaker 1: I was in raja Ampat in Indonesia, but I was
Speaker 1: reading the news from Afar and I saw that, you know,
Speaker 1: expectations were climbing over six percent. Are they had they
Speaker 1: come back down? Oh yeah, yeah, there's come way back down. UM.
Speaker 1: So you know, when we when we look at what
Speaker 1: um uh, what FED funds futures are now pricing, we're
Speaker 1: we're talking more about a five percent top end terminal
Speaker 1: rate is what's currently being priced. I think that that's reasonable. Maybe,
Speaker 1: you know, if if we do get more prints like
Speaker 1: this on inflation over the next couple of months, maybe
Speaker 1: the Fed doesn't hike in um uh in in March.
Speaker 1: And if they don't, then you might even have a
Speaker 1: slightly lower terminal rate, which was more what our expectations
Speaker 1: were for for quite a long time, of of a
Speaker 1: top end of four point seven five percent. But you know,
Speaker 1: we're we're playing semantics here. We we're talking about one
Speaker 1: hike more, one hike less. We're certainly not going to
Speaker 1: six percent, and we're probably not only going to four
Speaker 1: and a half percent. We're going to go somewhere in
Speaker 1: between there. So you're talking about um you know, at
Speaker 1: at the upper bound at four and three quarters or
Speaker 1: five percent. I think either way, the Fed has obviously
Speaker 1: taken a lot of liquidity out of the market, still
Speaker 1: doing quantitative tightening, so they're shrinking the size of their
Speaker 1: balance sheet overall, and all of those things are having
Speaker 1: an effect on financial conditions. And and you know, you
Speaker 1: you heard a lot of Fed speakers, you know, Lyle
Speaker 1: brainerd On on Bloomberg Television and Radio yesterday mentioned the
Speaker 1: same thing Um, you know about financial conditions being much tighter.
Speaker 1: But these things don't don't These things work with a leg, right,
Speaker 1: And it's not it doesn't happen immediately, right. So housing
Speaker 1: we know has fallen, right, Housing activity has fallen, So
Speaker 1: that has knock on effects that don't take a month
Speaker 1: or two or three. It takes six months, nine months
Speaker 1: too for that the filter through the economy. So so
Speaker 1: so I think we are going to see a slowing
Speaker 1: not a not only of inflation, but also of just
Speaker 1: economic activity in general. And that's gonna be quite frankly
Speaker 1: for the market that I look at. That's gonna be
Speaker 1: good for treasuries and and I think we've seen a
Speaker 1: peak and treasury yields well, I mean for investors. Timing
Speaker 1: is so key, right, These things work with a lag.
Speaker 1: It kind of reminds me of shooting skee. You gotta
Speaker 1: you're not gonna shoot where what You're not gonna shoot
Speaker 1: where the pigeon is. Now you're gonna shoot what you
Speaker 1: gotta shoot where the pigeon is gonna be When you're um,
Speaker 1: when you're uh, babies get there. So I saw a
Speaker 1: note yesterday from Matthew miss at Ubs. He says Um
Speaker 1: in his Global Credit out, Like he says, once in
Speaker 1: a decade opportunity. Nice. But timing is everything. So what
Speaker 1: do you think are we looking at? For example, on
Speaker 1: the long end, you know, we're seeing Mom and pop
Speaker 1: in e t s start to go after um uh
Speaker 1: long duration debt right now because they think they're locking
Speaker 1: in peak rates. Yeah. I don't disagree with that. I
Speaker 1: mean I I put out a note two weeks ago
Speaker 1: saying that that we were at peak rates and and uh,
Speaker 1: you know that was a little bit pre s and
Speaker 1: on my on my part, but it's, you know, we're
Speaker 1: I think the idea that you get a bigger sell off,
Speaker 1: what you would need in order for the bond market
Speaker 1: to sell off significantly more than it already has is
Speaker 1: really for another uptick in inflation and better economic activity.
Speaker 1: And it's hard to see how things get better from here,
Speaker 1: right It's you know, things might stay the same, which
Speaker 1: would be the great scenario and the soft landing scenario
Speaker 1: for for the Federal Reserve, but it's hard to see
Speaker 1: how they improve significantly with financial conditions right enough on
Speaker 1: the rates side, enough on the rates. Sunday, the World
Speaker 1: Cup starts ira As you know, I have Holland as
Speaker 1: my sleeper pick. Where else should I be looking for value?
Speaker 1: I don't want to go Spain or Germany or France
Speaker 1: or any of that kind of stuff. Okay, sleeper pick.
Speaker 1: So I am gonna so I said Germany when you
Speaker 1: asked me this question last week. Well, I am going
Speaker 1: to go with Taylor Rockwell sleeper pick from the Total
Speaker 1: Soccer Show. Give him a shout out from from the
Speaker 1: podcast that I listened to. He thinks Japan is going
Speaker 1: to get out of a group that includes Germany and Spain,
Speaker 1: and if Japan does get through there, then they can
Speaker 1: make a bit of a run. I don't know. I
Speaker 1: don't think that they could win the whole thing, but
Speaker 1: you know, could they make a run to the semifinals
Speaker 1: for the first time. Maybe? You know, they have a
Speaker 1: really good they played really well against the US last month,
Speaker 1: and they're you know, they have some really talented players.
Speaker 1: So so maybe Japan. Let me ask, in a day
Speaker 1: and age where a lot of the players on a
Speaker 1: team don't really come from that country, doesn't matter as much. Well,
Speaker 1: I think, well, Japan. They're almost all were born in
Speaker 1: Japan for sure, and now they play in the Premier
Speaker 1: League and the bundes League in Spain. Right, but they're
Speaker 1: they're mostly Japanese crash, all right, Next time we talked
Speaker 1: to you, it's all soccer, all the time, and we're
Speaker 1: going to ignore that Federal Reserve because the World Cup
Speaker 1: is coming up, folks, that's our jersey. He does it
Speaker 1: off the Bloomberg Intelligence So we got one of those
Speaker 1: creamy things. Street not a rogy, and he's a senior
Speaker 1: reporter of Bloomberg News. Joins us here, uh at you
Speaker 1: and your partner crime Max table. So you guys have
Speaker 1: a story out there on a Bloomberg trmina about Goldman Sachs.
Speaker 1: What do you guys find, Well, something that's allowing on
Speaker 1: two levels. Very rarely do you have someone who has
Speaker 1: risen to the level of a Goldman partner airing their
Speaker 1: ugliest experiences, even if it is in an internal complaint
Speaker 1: at the film. And then when you look at how
Speaker 1: the process went and the fact that Goldman Sachs settled
Speaker 1: with the complaining to a tune of more than well
Speaker 1: more than two million dollars an eight figure payout, tells
Speaker 1: you that a what was in the complaint wasn't the
Speaker 1: most pleasing reading and the price they were willing to
Speaker 1: pay to avoid embarrassment. And that's why this is important. Correct, Correct,
Speaker 1: this is a former government partner around two years ago
Speaker 1: settled with the bank after finding what was what we
Speaker 1: understand to be able Aluminous complained that detailed a sexist
Speaker 1: culture at the bank, including senior managing making crude and
Speaker 1: dismissive remarks, paid disparities, the lack of promotions for women.
Speaker 1: Some of these issues have been things that Goldman and
Speaker 1: everyone else on Wall Street have been dealing with and
Speaker 1: have been trying to get past and make real progress.
Speaker 1: But the fact that this happened, in the fact that
Speaker 1: most of the issues an incidents described in the complaint
Speaker 1: were from twenty eighteen and nineteen tell you that this
Speaker 1: is not from a Wall Street long, long, long ago.
Speaker 1: This is very much the now in present. So are
Speaker 1: we talking about the kind of paid disparities that we
Speaker 1: don't see elsewhere or are these kind of paid disparities
Speaker 1: common across Wall Street? Unclear? Right, it's it's it's it's
Speaker 1: very I mean, I'm assuming the complaining in this case
Speaker 1: would only have had access to internal compensation figure and
Speaker 1: an understanding of what pay was like at Goldman Sex
Speaker 1: would would would we be right in saying that Goldman
Speaker 1: Sachs for somehow is an outlier and the rest of
Speaker 1: the Wall Streets can be absolved of some of these sins,
Speaker 1: perhaps not in fact most definitely. No, this is this
Speaker 1: is a threat that runs across Wall Street and across
Speaker 1: many other industries, and Wall Street in particular has maybe
Speaker 1: just because you know, their high profile company names, their
Speaker 1: high profile people, they make a lot of money, they're
Speaker 1: they're always a target of you know, a lot of activists.
Speaker 1: But Wall Street has been an industry that's tried to
Speaker 1: put this front and center and tried to, at least
Speaker 1: from external perspectives, deal with this issue aggressively. Yet it's
Speaker 1: another setback here, you know, your story suggesting that they
Speaker 1: got a lot of work to do as an industry.
Speaker 1: That's a very interesting point because when you think of
Speaker 1: the post me to reckoning, we've seen a lot of
Speaker 1: troubling things emerged from many other industry, not so much
Speaker 1: from the highest ranks of Wall Street. One theory has
Speaker 1: been that Wall Street's go go days, or perhaps in
Speaker 1: the seventies and eighties, and I was well darn good time.
Speaker 1: I I will still stick to the fact that I
Speaker 1: just mentioned Wall Streets go Go days, or perhaps in
Speaker 1: the seventies and eighties and uh raunchy remarks, lude behavior
Speaker 1: wasn't all that uncommon. So maybe there's one theory is
Speaker 1: Wald Street has cleaned up a little bit and has
Speaker 1: managed to get past that. But at the same time,
Speaker 1: you also remember these are firms with very deep pockets.
Speaker 1: These are firms that have a process in their employment
Speaker 1: contracts where a lot of the claims are handled in
Speaker 1: secretive arbitration. In fact, for the longest time, even sexual
Speaker 1: harassment complaints had to go through the forced arbitration process.
Speaker 1: So there is some validity to the theory that some
Speaker 1: of the worst things never got aired because they were
Speaker 1: able to dip into their wallets and pay a big
Speaker 1: time to score some of these settlements and keep these
Speaker 1: things private and secret well. And also it's seems from
Speaker 1: your reporting that some of the alleged bad behavior wasn't typical, right,
Speaker 1: And you describe a situation where David Solomon made a
Speaker 1: comment and then you say that his colleagues were surprised
Speaker 1: because it was so out of character. So it's as
Speaker 1: if he let something slip and now and now he's
Speaker 1: paying like twenty million dollars to cover it up. I mean,
Speaker 1: let's be very clear all the understanding we have that
Speaker 1: CEO of Goldman Sectavis Solomon, wasn't central to the complaint. Yes,
Speaker 1: there is an incident described that looks to quote something
Speaker 1: that David Solomon did say to a gathering of male
Speaker 1: colleagues that was scrude, to put it mildly, But there
Speaker 1: were many other managers that were sort of allegedly implicated here,
Speaker 1: many other managers who were quoted. And that's one of
Speaker 1: the things that rattled the top rungs of the bank
Speaker 1: is the broad institutional issue that this problem tried to
Speaker 1: sketch out, the scope for public embarrassment because of that
Speaker 1: and the need for them to try and make it
Speaker 1: go away. Alright, three good stuff. We appreciate it. Shrieta Rogen,
Speaker 1: senior reporter with Bloomberg News, joinings here in our Bloomberg
Speaker 1: Interactive Brokers studio. Hey, when you want to get a
Speaker 1: handle on how the retailers doing out there, how the
Speaker 1: consumers doing out there, you really can look at some
Speaker 1: of the results from the big retailers, and we got
Speaker 1: a couple of big ones. Today Walmart reported numbers some
Speaker 1: good numbs home depot. I thought the numbers were good.
Speaker 1: They have some inventory issues. We're gonna get to the
Speaker 1: latest there, but we're gonna break it on down. We're
Speaker 1: gonna roundtable this stuff we do with Jen Bartashes. She
Speaker 1: covers all things retail for Bloomberg Intelligence. He's based in Princeton. Uh.
Speaker 1: And Drew Reading, he covers the home builders for Bloomberg Intelligence.
Speaker 1: We got both of those folks on the line here. Um, Jen,
Speaker 1: let's talk with you. Start with you, Uh, Walmart. I
Speaker 1: mean people are still spending money, aren't they? They are, Um,
Speaker 1: and I think that's actually you know, the bright spot
Speaker 1: here is that the consumer is holding up relatively well. Um.
Speaker 1: They are shifting where they're spending and what they're spending on,
Speaker 1: but they are still spending money. And that is very important.
Speaker 1: And as we're looking at the economic environment and heading
Speaker 1: into that very important holiday season. So the holiday season important,
Speaker 1: But I mean, how is it going to roll out? Um?
Speaker 1: This year, We've gotten so much bad news from shippers.
Speaker 1: You know, if that Exit just said they're gonna furlough workers, Um,
Speaker 1: we're gonna get DHL tomorrow Thursday. I believe I'm looking
Speaker 1: forward to that. It's German, but it's a very big,
Speaker 1: you know, global shipper. And then Amazon cutting jobs going
Speaker 1: into holiday season. I was shocked, Yeah, what is up
Speaker 1: with that? Jen? Well, you know, when you're you're looking
Speaker 1: at cutting jobs, a lot of the jobs are more
Speaker 1: corporate type jobs as opposed to jobs that are in
Speaker 1: distribution centers. UM. And we started off with people going
Speaker 1: into the holiday planning to hire fewer people this year
Speaker 1: than they have in prior years. And I think we're
Speaker 1: seeing that come through, and then we're seeing this additional
Speaker 1: round of layoffs that are more in the in the
Speaker 1: product development, in the corporate side. UM. But it does
Speaker 1: it does indicate that that could be a really big
Speaker 1: boon for retailers like Target and Walmart that have store bases,
Speaker 1: because if there are delays in shipping and you're worried
Speaker 1: that your gifts aren't going to get there, they have
Speaker 1: great alternatives in terms of people either going to the
Speaker 1: store or being able to pick things up at the
Speaker 1: store to make sure that they have those gifts. So
Speaker 1: it could actually be a positive for these retailers. Drew
Speaker 1: right and let me bring you in. What's the differentiation
Speaker 1: differentiation here? I mean, um, I feel like Lowe's and
Speaker 1: Home Depot is going to be a very different story
Speaker 1: than necessarily um, well even Amazon, right, yeah, I mean,
Speaker 1: it was certainly certally a good quarter for Home Depot,
Speaker 1: and you're right, they do have a different customer base
Speaker 1: than than much of, um, the rest of the retail environment,
Speaker 1: and I think it speaks to the resiliency of the
Speaker 1: market despite you know what we're seeing in housing with
Speaker 1: transactions down at maybe down another ten next year. I
Speaker 1: do think it's important to point out though that growth
Speaker 1: this quarter really for the last several quarters, has been
Speaker 1: driven exclusively by higher average tickets. So a lot of
Speaker 1: that is the result of product inflation. Um You've got
Speaker 1: some commodity inflation from from earlier in the quarter. And
Speaker 1: then you know, particularly for Home Depot, there's there's relative
Speaker 1: strength due to their exposure to professional customers, which tend
Speaker 1: to be a little bit higher spending. Uh. You know.
Speaker 1: On the flip side, though, customer transactions UM have declined
Speaker 1: for for several quarters now. We think that's gonna probably
Speaker 1: remain a head wind, you know, as we go to
Speaker 1: next year. Just given our expectations for housing for many weeks.
Speaker 1: Hey drew talking about the home depot, the inventory number
Speaker 1: grew kind of really jumped out of me. It seems
Speaker 1: like the retail industry has had plenty of quarters to
Speaker 1: deal with the inventory issues, and a lot of them
Speaker 1: have kind of done it very well. What's what's different
Speaker 1: a depot. Yeah, so it's it's actually down a little
Speaker 1: bit from last quarter, but inventories relative to last year
Speaker 1: higher because you've got a lot of product inflation due
Speaker 1: to costs. There's also something interesting they pointed out, is
Speaker 1: a mix up in a mixshift higher to high value
Speaker 1: products and what they're selling there hasn't been a trade
Speaker 1: down among consumers. Um. They've also made a lot of
Speaker 1: investments in inventory for the holidays. They pointed out that
Speaker 1: they had the best UM year for Halloween sales on records,
Speaker 1: so we think there's probably some investments being made ahead
Speaker 1: of the Christmas season. And then they also pointed out
Speaker 1: that the higher inventories are result of some of the
Speaker 1: supply chain challenges that we've seen over the last year. So,
Speaker 1: I mean, part of that's probably the fact that they
Speaker 1: were ordering ahead of anticipated challenges and now you're starting
Speaker 1: to see demand slow a little bit relative to when
Speaker 1: they made these purchases. True, just gets since we got
Speaker 1: you here, the home market here, the builders, I mean,
Speaker 1: are they gonna build stuff here? I mean, you've got
Speaker 1: an interesting more more mortgage rates is seven percent here?
Speaker 1: I mean, are they gonna build houses over the next year?
Speaker 1: So it's it's a good question. We think there's probably
Speaker 1: gonna be a pretty severe poolback and housing starts. We've
Speaker 1: already started to see it. Um. You know, we're thinking
Speaker 1: that from you know, the peak of last year to
Speaker 1: where we eventually trot could be somewhere around the percent declient,
Speaker 1: just based on what we've seen in prior housing downturns.
Speaker 1: So builders have certainly taken their their foot off the
Speaker 1: gas pedal. They're not spending as much on land, and
Speaker 1: they're taking a degree of caution. You know. That being said,
Speaker 1: I think I think the group as a whole is
Speaker 1: in a much better position relative to the last downturn,
Speaker 1: which is, you know where everybody tends tends to look. Jen,
Speaker 1: how does inflation play into a factor into this holiday season,
Speaker 1: Because at the same time as we're looking at you know,
Speaker 1: seven point seven pc CP I prints. UM. We're also
Speaker 1: telling consumers that these big box stores have to cut
Speaker 1: prices because they have too much inventory. So as the
Speaker 1: consumer reacting, well, it's it's a delicate balance for the
Speaker 1: retailers because they want to have a compelling value proposition
Speaker 1: and consumers are seeking that that you know, low price,
Speaker 1: but they also need to not completely blow up their
Speaker 1: margins UM. And so as you know, as we look
Speaker 1: forward through the holiday season, we're expecting to see a
Speaker 1: much higher rate of promotions UM because it is going
Speaker 1: to be competitive for the dollars that people are willing
Speaker 1: to spend UM, So the promotion rate will be up there. UM.
Speaker 1: But we we are expecting that as inflation comes down,
Speaker 1: these are the retailers that pivot very quickly and try
Speaker 1: to bring prices down as quickly as they can UM.
Speaker 1: And Walmart alluded to that on their call today, and
Speaker 1: so UM it'll be it'll be an interesting challenge to
Speaker 1: see how they manage through the inventory without needing and
Speaker 1: still can meet that value proposition. Have some discounts, but
Speaker 1: they may not be UM crazy huge discounts in order
Speaker 1: to preserve a little bit of margin. It it will
Speaker 1: help to see how the the season unfolds, and if
Speaker 1: sales are slow, the council go up. Hey, Jen, just
Speaker 1: about twenty seconds if I go into a Walmart and
Speaker 1: shop from my g I Joe with the Kung Fu grip,
Speaker 1: is it gonna be on the shelves house of supply chain?
Speaker 1: Supply chain is much better. Um So, they've worked very
Speaker 1: hard at inventory being you know, and having in stocks.
Speaker 1: Um So this year they brought they brought product in earlier.
Speaker 1: There seems to be at this point plenty of product
Speaker 1: on the shelves. Um And we'll see how long that
Speaker 1: last to the holiday season. But right now it's at
Speaker 1: a healthy level. All right, Jen, Great stuff, appreciated Jen Bartashes.
Speaker 1: She covers all things retail for Bloomberg Intelligence and drew
Speaker 1: reading our housing analysts. We got the round table. That's
Speaker 1: great stuff. You can bring these real smart people together
Speaker 1: get perspectives on the retails. We've got another roundtable coming up,
Speaker 1: do we Oh, we've got this guy Eli Manning coming up.
Speaker 1: All right, we'll talk to him in a couple minutes.
Speaker 1: Were We love talking to the b I folks. They're
Speaker 1: wicked smart as well as the best quarterbacks and some
Speaker 1: of the best analysts on Wall Street, Walmart, home depot
Speaker 1: reporting numbers and retailers put up some good numbs here.
Speaker 1: Does that bode well for the holiday shopping season? Let's
Speaker 1: talk private equity here, Private equity and a sports biz?
Speaker 1: How can that go wrong? Former New York Giant quarterback
Speaker 1: and partner with the investment firm Brand Velocity, Eli Manning
Speaker 1: joined us here in our Bloomberg Interactive Broker studio along
Speaker 1: with Brand Velocity founding and managing partner Steve Liebowitz. Um. Eli, Steve,
Speaker 1: thanks so much for joining us here in our Bloomberg
Speaker 1: Interactive broker. So let's talk about sports first. I'm a
Speaker 1: I'm a Wall Street guy. For last, I'm a Wall
Speaker 1: Street guy. All these aheads, I want to talk sports.
Speaker 1: I want to talk to Wall Street. So, Eli, private equity.
Speaker 1: You've now step back from football a few years. You
Speaker 1: and your brother are doing all kinds of crazy TV
Speaker 1: stuff Manning cast, which is very fun. Um, but talk
Speaker 1: just about kind of what you're thinking about in the
Speaker 1: private equity space. Well, I'm excited. I've excited to join
Speaker 1: with the Brand Velocity group. We've been with them about
Speaker 1: a year and just really have had a kind of
Speaker 1: a private equity one on one uh and learning about
Speaker 1: the business and UH. Just I've been a part of
Speaker 1: one acquisition and it was in the sports world. It
Speaker 1: was Score Sports, which is a designer, manufacturer seller of
Speaker 1: youth sports uniforms, which uh, I'm passionate about. I have
Speaker 1: four kids and they're playing every sport. I think that's
Speaker 1: one I think business and area that so many people
Speaker 1: are familiar with. They love they love their kids playing sports.
Speaker 1: But it's also in a in a part of this
Speaker 1: where it is the cost of reasonable you know, you
Speaker 1: can get your jersey and your kid for eighteen to
Speaker 1: twenty dollars, and so for me, it's promoting families to
Speaker 1: get your kids outside, get them playing sports, get them
Speaker 1: in and different things. It's the life lessons that are
Speaker 1: taught through sports, and so you know, the cost of
Speaker 1: a uniform shouldn't be something holding your back from from
Speaker 1: getting your your your kids out there and get them active.
Speaker 1: Steve talked to us about your view, your private equity
Speaker 1: view of sports. I was just mentioned that. ELI just
Speaker 1: seems like like I've been following the media industry for
Speaker 1: thirty years and my big media companies, whether it's Disney,
Speaker 1: your Votico. They spend more and more and more in
Speaker 1: sports rights every year. It seems like a natural spot
Speaker 1: for Privamly, you're not in the big ten rights, Like,
Speaker 1: what are you buying? How do you screen for companies? Yeah,
Speaker 1: good questions. Sports. It really is the media, as you
Speaker 1: mentioned that that under underpins all the growth with the
Speaker 1: media rights, and there's just a scarcity with all the
Speaker 1: entertainment options that people have out there nowadays, live sports
Speaker 1: still is the king. And as long as live sports
Speaker 1: is the king, there's gonna be insatiable demand for it,
Speaker 1: and that demand leads to the media rights, which in
Speaker 1: turn leads to the growth of the franchises. So we
Speaker 1: think it's a great industry. I mean, it's a broad industry.
Speaker 1: If you take sports sports adjacent you're talking, you know,
Speaker 1: five hundred billion dollar plus global industry. And it maybe
Speaker 1: arguably one of the only industries that really is recession proof.
Speaker 1: Because people always say recession resistant, recession proof sports, really
Speaker 1: the data backs it up. So what kind of companies
Speaker 1: are you looking at? What are the sizes? How long
Speaker 1: do you want to stay involved? Um, what's your plan?
Speaker 1: So we're looking at companies typically with ten million or
Speaker 1: greater of IBATA. We're looking at all sort of businesses,
Speaker 1: consumer sports adjacent businesses as well as you know, potentially
Speaker 1: minority interest in sports teams or you know, controlling interests
Speaker 1: in sports teams in Europe. So those are all sorts
Speaker 1: of different things. I mean, like any other investment, you
Speaker 1: can't just rely on the greater fool theory. You've got
Speaker 1: to do your homework. You've got to look at the valuation.
Speaker 1: Sports clearly fetches more because of the growth, but you've
Speaker 1: got to be cognizant of it. And we will only
Speaker 1: swing at the pitch if we think it's the right pitch.
Speaker 1: That doesn't guarantee will be right. But you have to
Speaker 1: be super patient and super careful. You're lucky not to
Speaker 1: get into the whole crypto thing because some of your
Speaker 1: rivals have been deeply involved with f t X. I
Speaker 1: don't know if you noticed that, yes, stories other than
Speaker 1: bone coin, which you are shielding with Al Roker, Right,
Speaker 1: wasn't that? It was like Frank's red Hoots. If you
Speaker 1: eat the most buffalo wings, you can get it n
Speaker 1: f t UM. But how did you avoid that? I mean,
Speaker 1: so many uh people were sucked in I guess it
Speaker 1: was big money. It's an exciting story as well. Um,
Speaker 1: were you just too busy with other stuff? Yeah, And
Speaker 1: I think just the idea that I just didn't quite
Speaker 1: understand it, like you know, there's something that comes, you know,
Speaker 1: to that. And I didn't quite understand private equity a
Speaker 1: year ago also, but it made sense, like you buy
Speaker 1: a company that's has doing well, they're making revenue, they're
Speaker 1: making money, there's real growth, there's a profit there, and
Speaker 1: we can come in and and make it better with crypto.
Speaker 1: Uh you kind of heard these stories and people making
Speaker 1: jazillions of dollars and great, you know, but I just
Speaker 1: kind ofn't know like where is going house is gonna workout?
Speaker 1: So I had a great team of people just saying,
Speaker 1: you know, let's just learn more. Let's learn more, and
Speaker 1: we just kind of kept trying to learn more, but
Speaker 1: never never pulled the trigger on it. So no crypto,
Speaker 1: but yes to private equity. And the cool thing is,
Speaker 1: you know, um, a skeptic or a cynics view of
Speaker 1: private equity is you know, these locusts that come in
Speaker 1: and eat up the company, borrowing tons of debt with
Speaker 1: the brand and then destroying the value of what the
Speaker 1: employees have built. You guys are doing it in a
Speaker 1: very different way. You were ship airing the gains. I
Speaker 1: think that's like your mantra, right, and you're letting the
Speaker 1: employees in on the deal. Yeah, and that's the idea,
Speaker 1: and that's why I got involved and Steve started this
Speaker 1: BBG and got involved just could change the culture of
Speaker 1: private equity. And he truly cares and we care about
Speaker 1: the people. I mean, the people are the most important
Speaker 1: thing with these companies that we're looking at and the
Speaker 1: culture of these businesses. And we have a program called
Speaker 1: Share the Gains where we're giving ten percent of our
Speaker 1: carried interests back to the employees that are not part
Speaker 1: of the upper management. They're getting taken care of in
Speaker 1: different ways. But we want the people who are working
Speaker 1: at these companies to be a part of the success.
Speaker 1: You know, when we sell it and we make a profit,
Speaker 1: we want them to kind of be a part of that.
Speaker 1: Note that they can you know, if we do well,
Speaker 1: and they're gonna do well also, and they're gonna be
Speaker 1: a part of this and it really creates a team environment. Steve,
Speaker 1: what do you think you know? Partning up with with
Speaker 1: a guy as accomplished as Eli is a many walks
Speaker 1: of life. What does that bring to your firm too,
Speaker 1: and kind of how do you look to kind of
Speaker 1: leverage that. Well, the first thing I'll say is that
Speaker 1: Eli is an incredibly humble person and he is the
Speaker 1: same person in private that he is in public, which
Speaker 1: that's critical because for us, like culture is everything, and um,
Speaker 1: Eli is just perfect fit with our culture. Like Eli
Speaker 1: his passion for for for for the culture of the companies,
Speaker 1: for for um. You know, everybody loves Eli. Um. So
Speaker 1: when Eli believes in Yeah, Tom Brady's parents probably as well.
Speaker 1: A few super Bowls taken away there between Eli and Payton.
Speaker 1: But but we love um you know, his connectivity, I mean,
Speaker 1: and everybody loves him. And when he says it, he's
Speaker 1: saying what the truth and what he believes. So it
Speaker 1: just really fits well with what we want to do
Speaker 1: and getting our message out with share the gains, you know,
Speaker 1: we do that as very important. We think private equity
Speaker 1: often um, you know, companies aren't made of spreadsheets, They're
Speaker 1: made of people in private equity often loses sight of that.
Speaker 1: And Eli is as a big believer in the message,
Speaker 1: he really can get that message out, and our hope
Speaker 1: is to really make an impact through that message. Talk
Speaker 1: about the Manning cast because all my buddies, uh, the
Speaker 1: man everybody loves to watch it. Um, it's a new
Speaker 1: format and it's something that I thought this was gonna
Speaker 1: something like this was gonna happen ten years ago, and
Speaker 1: nobody ever really did it right until you guys have
Speaker 1: done it. What's your what's been your experience? How do
Speaker 1: you get into it? Yeah, I mean I think you know,
Speaker 1: we got into it just the idea. We we saw
Speaker 1: you know, Kurt herb Street broadcasting game because he had
Speaker 1: COVID and so he couldn't be at the game, so
Speaker 1: he didn't. He's often at the Ohio State University, so
Speaker 1: he just did it from home. And kind of talking
Speaker 1: with Payton to say, well, we could I want a
Speaker 1: broadcast game from that sounds pretty good, Like sitting on
Speaker 1: my couchs watching football making fun of my brother Like
Speaker 1: that sounds like a good job, and you're like paying
Speaker 1: me for it, Like yeah, I mean, I know, I
Speaker 1: went to Old Miss, but I know a good deal
Speaker 1: when I see one. And so that was the idea,
Speaker 1: and really, you know, just saying Hey, what would it
Speaker 1: be like if Peyton and I were in your living
Speaker 1: room watching the game? How would we watch it? You know,
Speaker 1: we're not going to talk about the first and tent
Speaker 1: run for two yards and tell you where the running
Speaker 1: back went to college? Like, we don't know that answer.
Speaker 1: We don't know where he went to college, and you
Speaker 1: probably don't care either. So let's bring in some guests.
Speaker 1: Have it fun. We'll talk some XS and knows. Tell
Speaker 1: you what's going through the quarterbacks mind right now? What
Speaker 1: you know, how should they handle this situation? Have Peyton
Speaker 1: calls sixty seven time outs? You know when different needs
Speaker 1: to call it time out? And so you know, it's
Speaker 1: really just kind of uh having fun and in a
Speaker 1: different way to watch the game. And you guys got
Speaker 1: a great list of guests, the committed. I mean, it's
Speaker 1: super eclectic. How does that all come about? Well, I
Speaker 1: think you just you realize there's so many people that
Speaker 1: have a passion for sports and have a passion for
Speaker 1: football and they grew up with a certain team and
Speaker 1: we used so we try to bring in people that
Speaker 1: are associated with one of the two teams playing that night,
Speaker 1: and whether it's Barack Obama or Snoop Dogg, and I'm
Speaker 1: talking about the eighties Chicago Bears, eighty five Chicago Bears,
Speaker 1: or the Steelers of the seventies with Snoop Dogg. And
Speaker 1: he's listing players that he grew up watching. So you know,
Speaker 1: Conda Lisa Rice talking about the Browns, and you have
Speaker 1: so many people that have a passion for their hometown
Speaker 1: football team and for them to kind of talk about
Speaker 1: that and get it out, it's natural for them. And
Speaker 1: we have fun and we we don't ask any hardball
Speaker 1: questions like you guys are asking today. We try to
Speaker 1: keep it pretty simple. So you guys, you guys, you've
Speaker 1: been so busy since leaving the the NFL. You have
Speaker 1: a job, like a day job with the Giants and
Speaker 1: you're doing the manning cast and the private equity. I
Speaker 1: mean yeah, I mean exactly. So how how's the Elis
Speaker 1: places gonna play out? Are you gonna keep doing those?
Speaker 1: We got to decide. I gotta talk with Big Bro
Speaker 1: and and I'm up, I'm up for a contract, so
Speaker 1: I'll have to, you know, have some some tough discussions
Speaker 1: with him. But you, I mean, you really have in
Speaker 1: Peyton as well, Um developed a knack for broadcasting and
Speaker 1: you know a way that a lot of athletes can't. Um,
Speaker 1: are you gonna be appearing in how Hollywood movies? What's
Speaker 1: your I don't consider myself a broadcaster, by the way,
Speaker 1: just I don't I think they have a I don't
Speaker 1: think I would have been good at broadcasting in the
Speaker 1: typical way of being in studio and booth and and
Speaker 1: doing those things. I think the fact that I could
Speaker 1: sit on my couch, you know, just talk football, keep
Speaker 1: it very casual, uh fits more um you know style
Speaker 1: for me. And so I'm enjoying what I'm doing. I
Speaker 1: enjoy the football part, staying involved in the game I enjoy,
Speaker 1: but also learning and learning about private equity. And you know,
Speaker 1: each each day and each deal we look at and
Speaker 1: company we look at, I'm learning something new and and
Speaker 1: just understanding how businesses work. And you know, just the
Speaker 1: timeframe of how you decide whether you want to buy
Speaker 1: a company, like looking at the profit loss, looking at statements,
Speaker 1: looking you know, do do do diligence? You know, given
Speaker 1: a pitch. All these things were new to me, exciting
Speaker 1: for me, and I'm enjoying the process. Hey, Steve, You're
Speaker 1: know slout yourself. I mean, you know, went to some
Speaker 1: trade school up in Cambridge, Massachusetts. I think, uh, New
Speaker 1: York State High School, chess champion and old Miss really yeah,
Speaker 1: at the end of the day, I mean, you got
Speaker 1: to take englnch you gotta take math. What's what's what's
Speaker 1: the big called Harvard the Old Miss of the North exactly. Well,
Speaker 1: we interview every Thursday coach Murphy from Harvard because we
Speaker 1: carry the Harvard football games up in Boston on our
Speaker 1: radio station. Your Bills fan, tough two weeks, dude, But
Speaker 1: you've got a great you got a great quarterback doing
Speaker 1: about it. But this is the story I want to get.
Speaker 1: You're a family farmer supplying this year's Rockefeller Christmas tree. Yeah,
Speaker 1: that's just that's just nuts. Yeah. Basically, so my family did,
Speaker 1: like your great grandfather planted or something. I mean I asked.
Speaker 1: It was like ninety years old. I don't even know
Speaker 1: who planted it. But our family owned, my father's generation
Speaker 1: owns the property, and the head gardener at Rockefeller Center
Speaker 1: was actually and they get hundreds of submissions for the tree.
Speaker 1: And so he was going to drive to see another
Speaker 1: tree in Glenn's Falls and he was driving down the street,
Speaker 1: happened to drive by a bacon lot which had the tree,
Speaker 1: and he's like, that is the tree. The tree was
Speaker 1: like discovered like a starlet or something. Right, So it's
Speaker 1: just like a wild experience, you know, for you gotta
Speaker 1: be the tree family trees. He like, give me thirty
Speaker 1: seconds on the Giants seven and two. Yeah, I mean
Speaker 1: these guys are good. I think we've got a quarterback too.
Speaker 1: By the way, he went to Duke, so he's with me,
Speaker 1: what do you think? Yeah, Daniel Jones is playing great.
Speaker 1: Se Kwon is running, running hard, defense is playing well.
Speaker 1: So in the most important thing, they're finding ways to
Speaker 1: win close games. And they're finding ways to close games
Speaker 1: out and that's something we haven't been able to do
Speaker 1: for a while. And and what that does it also
Speaker 1: this prepares you for late in the year, you're gonna
Speaker 1: have these close games. Can you win them? They're they're
Speaker 1: they're kind of tried and tested, and I think it's
Speaker 1: gonna be a good run if you ever get tired
Speaker 1: of having Barack Obama or Condoleeza Rice over. You know,
Speaker 1: Paul and I are exactly down the good stuff. Eli
Speaker 1: Manning he plays football I don't know what he does.
Speaker 1: He's doing a ton of stuff. He's doing private equity,
Speaker 1: doing broadcast. Yes, I mean no sitting on the couch
Speaker 1: for this guy, Steve Leebwitz. He's managing partner founder of
Speaker 1: the firm is known as brand Velocity. And they joined
Speaker 1: us here in a Bloomberg and Actor. They're doing some good,
Speaker 1: good stuff. We appreciate them stopping by. We are they
Speaker 1: come back to earth a little bit. That was exciting,
Speaker 1: little fun. Yeah, it's always fun, you know. I took
Speaker 1: my mom for sixtieth birthday. I took her to the
Speaker 1: Super Bowl when Eli and the Giants played Tom Brady
Speaker 1: and what is that team called the Patriots out in
Speaker 1: Luke Oil Stadium? Where's that Luke Oil State? Indian Alis, Indianapolisanapolis?
Speaker 1: Was pretty cool. I also got to see Jane's addiction
Speaker 1: before the game, and I got to meet Anna Ferris.
Speaker 1: Oh pretty pretty sweet. Good weekend. Take care of your mom,
Speaker 1: good Jane and my mom especially. But we want to
Speaker 1: get back to UH finance right now, and we're gonna
Speaker 1: do that with the Automated Liquidity Exchange. We're gonna talk
Speaker 1: to the CEO of Alex chin Zoo Sue Um. She
Speaker 1: joins us down the line right now and Chin talk
Speaker 1: to me first about the collapse of f t X.
Speaker 1: What does that mean? Ken Griffin said, it's a problem
Speaker 1: for the entire industry, the entire financial world, not just crypto.
Speaker 1: What do you read into it? Hi, Met Paul m
Speaker 1: thank you for having me today on your show. I mean,
Speaker 1: then the collapse of the ft exchange was so devastating.
Speaker 1: I think the crypto industry has experienced the most shocking
Speaker 1: event since mounts. I don't know if you remember the
Speaker 1: Mount Goog that was around the mt g o X right,
Speaker 1: it stands for Magic the Gathering Online Exchange. It was
Speaker 1: the first big bust in crypto. Yeah, I think up
Speaker 1: to fifty tho bitcoins was stolen. That's about hundred six
Speaker 1: thirty six billion worth of bitcoin were stolen, and many
Speaker 1: many people in the cryptal industry is in the same
Speaker 1: opinions mean that the collapse of this epting ex exchange
Speaker 1: is pretty much as bad as that one. So can
Speaker 1: you imagine just in one week, the third largest cryptural
Speaker 1: change of TX, they experienced a bank around, they halted
Speaker 1: customer withdraw, they enter into a failed talk to be
Speaker 1: acquired by the competitive bideness. They discover that they are
Speaker 1: short between eight to ten billion customer funds. They got
Speaker 1: hacked about half a billion. The file chapter PHAPS wasn't
Speaker 1: maybe an inside job who took those coins? What do
Speaker 1: you think about how it happened, Shinzo, Yeah, it really
Speaker 1: started with is really interesting. Started with with the coin
Speaker 1: deesk article, right, it featured a breakdown of the league
Speaker 1: Alameda Research balance sheet. Now Alameda is the hedge found
Speaker 1: is a trade in firm that also started uh founded
Speaker 1: by sand Banking Tree. And what happened was that as
Speaker 1: of June thirties, you could see that the Alameters essay
Speaker 1: mounted to about fourteen point six billion. However, this single
Speaker 1: beings access was three point six six billions of a
Speaker 1: lack ft T and f CT is the f T
Speaker 1: s own token. And then the third largest entry was
Speaker 1: to a bit more than two billions of this collecter.
Speaker 1: So basically the majority of Alameters egty is actually f
Speaker 1: T s own token um f t T. And this
Speaker 1: is obviously you know the completely runway west risk and
Speaker 1: I crediting Ouden on the treature. She she used this example.
Speaker 1: She said, imagine McDonald makes its own money and called
Speaker 1: clown bucks, right, it keeps most of it and then
Speaker 1: it's still some of it to the market, and then
Speaker 1: McDonald then stand their remaining clumb box to its trading arm,
Speaker 1: which is Alameda, which then use it as a collateral
Speaker 1: for the actual loves from McDonald. Exactly. That's the problem
Speaker 1: with SPF told The New York Times yesterday that UM
Speaker 1: Alameda had a large margin position at f t X,
Speaker 1: which is another way of saying they had all of
Speaker 1: f t X his money and the eventually essentially lost it.
Speaker 1: What do you do with ALEX? What does the automated
Speaker 1: liquidity exchange do? Because liquidity was one of the big
Speaker 1: problems here, right, so ALEX Central Automatic Change. We are
Speaker 1: at if I built on bitcoin, what it means that
Speaker 1: all the transactions are settled on bitcoin. UM. I really
Speaker 1: like this. I really appreciate this opportunity to come on
Speaker 1: the air today to really to UM say that out loud,
Speaker 1: that there's really a huge difference between fight and ce
Speaker 1: fight right, And I want to stress that c F
Speaker 1: I should not be confused with defect. So if we
Speaker 1: look back to what happened with the f t X, right,
Speaker 1: who caught bank Man Free. It's not sec, it's not set.
Speaker 1: It was cryptography and crypto community SPF could influence regulators
Speaker 1: legally bright politicians with donations and show faith balance and
Speaker 1: due to the opaquness or c fact, but it could
Speaker 1: not be bitcoins verification, right, So yeah, go ahead, I
Speaker 1: just should point out that, um, you know, bribery is
Speaker 1: illegal and that's a big allegation. So we don't know
Speaker 1: what happened. We don't know. We don't want to say, um,
Speaker 1: we don't want to make that kind of accusation. Of course,
Speaker 1: SBF was a big political donor. I think he gave
Speaker 1: thirty forty fifty billion a million dollars million with an
Speaker 1: m UM to political candidates in this election cycle. But
Speaker 1: you know, we still have yet to find out. The
Speaker 1: interesting thing I think is that, um, this was supposed
Speaker 1: to be bitcoin initially it's a trust less currency, right,
Speaker 1: and it's all about decentralized finance. But at the end
Speaker 1: of the day, too many people trusted Sam Bankman Freedom
Speaker 1: f t X gave him their private keys, essentially giving
Speaker 1: him their fiat and crypto to hold, and of course
Speaker 1: he seemingly then used it wasted it spent it and
Speaker 1: they didn't know that was going to happen. Is he
Speaker 1: going to be prosecuted for fraud or do you think
Speaker 1: there could be criminal charges coming? Yeah? I think so
Speaker 1: because you know, this f t X collapse reflects the
Speaker 1: failure not only by you know, from an inexperienced CEO
Speaker 1: who puts short term great ahead of long term value.
Speaker 1: I mean I I myself have been regulative for more
Speaker 1: than two decades because I was working on a wall street.
Speaker 1: I think the cryptal industry needs more, you know, growing
Speaker 1: up in the room experienced financiers, that's stay on the
Speaker 1: course and apply the best practice. But you know you
Speaker 1: rightly say so. You know CEFI has custody of users deposits,
Speaker 1: and user are left trusting in these people running that
Speaker 1: business to carry out the services for you and coming
Speaker 1: back to you know, DEFY, you know, brilliant. Yeah, decentralized finance, right,
Speaker 1: you know what happened with HPS is not possible happening
Speaker 1: on DeFi Why because it's computer code, it's smart contract
Speaker 1: that provides the services offered. You keep your funds in
Speaker 1: your own wallet and enter into peer to peer transaction
Speaker 1: via a smart country there's no middlemen, there's no centralized authority. So,
Speaker 1: you know, the event over the past few months making
Speaker 1: really really clear to the whole industry and US builders
Speaker 1: that we need more deference services. The goal of the
Speaker 1: crypto is to eliminate the rest and the indefficiency in
Speaker 1: traditional finance, right and to build a more efficient, decentralized,
Speaker 1: open financial ecosystem, and the one that in a where
Speaker 1: to put it simply, the need for trust is removed
Speaker 1: and to cuoss Easy, the CEO of violence. You know,
Speaker 1: DeFi is the end game, right, all right, and so
Speaker 1: thank you so much for breaking that down force. We're
Speaker 1: all still learning a lot about crypto in general and
Speaker 1: kind of what went wrong at ft X in particular.
Speaker 1: Shin Zoo Sue, she's CEO of ALEX, the automated Liquidity exchange.
Speaker 1: This Federal Reserve has been clear this year about raising
Speaker 1: interest rates to fight inflation. Rising interest rate environment has
Speaker 1: had an impact on a broad variety of industries, not
Speaker 1: the least of which is the housing industry. The housing
Speaker 1: manufacturing business, uh really feeling the brunt of that. So
Speaker 1: we want to get some color as to how that
Speaker 1: business is dealing with this new environment. We turned to
Speaker 1: Brian Fairbanks. He's the CEO of treks uh. It is
Speaker 1: a New York Stock Exchange listed company. T r X,
Speaker 1: not surprisingly, is the ticker to put into your Bloomberg terminal.
Speaker 1: The manufacture non would decking alternative products, you know, all decking, railing,
Speaker 1: all that kind of stuff that people do to their homes. Brian,
Speaker 1: thanks so much for joining us here. Really appreciate it. Um,
Speaker 1: tell us about your business. How is it faring? I know,
Speaker 1: I'm just looking at the chart. The stocks down this
Speaker 1: year is you know, one of those as many are,
Speaker 1: but one of those sectors that doesn't really do well
Speaker 1: with rising interest rates. But talk to us about the
Speaker 1: the state of your business. Good morning, Matt and Paul.
Speaker 1: Thanks for having me on this morning. The consumers for
Speaker 1: outdoor living products have remained remarkably resilient over this year.
Speaker 1: Past couple of years, we've grown quite significantly as people
Speaker 1: have been spending more time expanding their existing living areas.
Speaker 1: As we moved into this year, of course, we've seen
Speaker 1: inflation start to catch up with the consumer. Prices of
Speaker 1: our products have gone up as well. But what we've
Speaker 1: seen is, rather than growing the year, the volume told
Speaker 1: by our company is about flat was the prior prior year.
Speaker 1: Uh and given the kind of growth that we've seen,
Speaker 1: we're pretty pleased with that. So inflation has definitely been
Speaker 1: an impact, but consumers are still flocking to the track's brand.
Speaker 1: What about the stock I mean, the chart is pretty
Speaker 1: amazing to behold. Um. As Paul said, you know, a
Speaker 1: lot of companies got to run up in the reopening
Speaker 1: um push at the end of last year and then
Speaker 1: crater this year. But what happened in October and November,
Speaker 1: I mean, it just took off from the span of
Speaker 1: a few weeks. We were absolutely a beneficiary during the
Speaker 1: pandemic run up. As we moved into the later stages
Speaker 1: of the pandemic, we announced significant sales growth and then
Speaker 1: adding additional capacity in Little Rock, Arkansas. And with that,
Speaker 1: the market may have gotten a little bit ahead of
Speaker 1: itself in the back half of this year. Coming out
Speaker 1: of our second quarter earnings, we announced that we would
Speaker 1: be reducing the back half of the year by about
Speaker 1: two hundred million dollars to take into account inventory that
Speaker 1: had been built in the channel. You heard me mentioned
Speaker 1: earlier that are sales to consumer have been flat year
Speaker 1: every year, but our channel did build assuming that they
Speaker 1: would grow fifteen in two and we felt that we
Speaker 1: should be aggressive get that inventory normalized so that we
Speaker 1: can start with the right level of inventories moving into
Speaker 1: So talk to us about the competitive nature of your
Speaker 1: business here. You know how fragmented it is in where
Speaker 1: what is your position? How do you think about market
Speaker 1: share in your business? Compositicking and railing is a very
Speaker 1: unique business. There are three major players in the marketplace.
Speaker 1: Trex has about market share, the number two competitor has
Speaker 1: about market share, and the number three competitor has about
Speaker 1: market share. So it is a consolidated industry and all
Speaker 1: three of the competitors understand the value within the industry itself,
Speaker 1: uh and we each make the other better in the industry.
Speaker 1: So the sustainability side of it is that a benefit
Speaker 1: um that consumers are that are into Absolutely thank you
Speaker 1: for asking that. Trecks is very unique in that of
Speaker 1: the content that we use in our deck boards is
Speaker 1: recycled and reclaimed. The deck board is made of roughly
Speaker 1: fift recycled plastic and the other is from reclaimed Would
Speaker 1: we get that from furniture flooring and other manufacturers that
Speaker 1: have wood scrap. So it's a very unique manufacturing environment
Speaker 1: where we have a lot of variability going into the
Speaker 1: plant with our ramic sial, but our manufacturing technology allows
Speaker 1: us to strip out those that variability that comes through
Speaker 1: in the raw material and create a very consistent, high
Speaker 1: value added product at the end of the line. Well
Speaker 1: what does that chain look like? It's so fascinating to
Speaker 1: me because well, right now, um, we've just come out
Speaker 1: of COP twenty seven, right or maybe people are still
Speaker 1: there in Charmel Shake talking about this, you know, global
Speaker 1: plastic problem and here you are. You found, um here
Speaker 1: in the US at least one one small solution doing
Speaker 1: kind of your part. Where do you get the plastic?
Speaker 1: You know, what are the prices like? Um, how do
Speaker 1: you how do you put that all together? RECs has
Speaker 1: been using recycled content in our product since day one,
Speaker 1: and we've been in business for over thirty years now,
Speaker 1: so it's part of the culture of this organization to
Speaker 1: be doing green solutions. The push for e s G
Speaker 1: over the past years has been a benefit where more
Speaker 1: material has become available on the market. We are the
Speaker 1: largest buyer of polyethylene films in the marketplace and we
Speaker 1: will source from all over the country and up into Canada,
Speaker 1: will ship to one of our two existing manufacturing locations
Speaker 1: and eventually a third one in Arkansas. From there, we
Speaker 1: can run that material either direct to our manufacturing line
Speaker 1: or we will send it through other processing manufacturing operations
Speaker 1: to create a more consistent product for our decking. So
Speaker 1: Brian talked to us about labor. You know, every business
Speaker 1: we talked to just challenging to attract and retain labor.
Speaker 1: What's it like in your business during the midst of
Speaker 1: the pandemic, we were adding a significant amount of capacity
Speaker 1: while most organizations were just fighting to hold onto their
Speaker 1: existing labor. We were having to add about more heads
Speaker 1: to our overall operations, and we were effective in doing that.
Speaker 1: It's fair to say it was quite a challenge. Since
Speaker 1: earlier this year, we've seen much more stability in the
Speaker 1: labor marketplace, and I expect that will continue as we
Speaker 1: go forward. Uh and we have we don't have nearly
Speaker 1: the same growth requirements at this point from a labor
Speaker 1: need perspective. Brian, great talking to you, Thanks so much
Speaker 1: for joining us. Brian Fairbanks, there is the CEO of Treks.
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
Speaker 1: at Matt Miller. P On Fall Sweeney, I'm on Twitter
Speaker 1: at pt Sweeney. Before the podcast, you can always catch
Speaker 1: us worldwide at Bloomberg Radio