WEBVTT - EU Growth is OK for Credit, Not So Much For Stocks 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel podcast on Paul Swing You. 0:00:05.360 --> 0:00:07.680 Along with my co host Lisa Brahma wits each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money, whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:27.080 at Bloomberg dot com. Earlier today, the European Commission cut 0:00:27.080 --> 0:00:30.240 its growth forecasts for the euro Area and slashed its projection, 0:00:30.280 --> 0:00:34.479 in particular for Germany, warning that escalating trade tensions threatened 0:00:34.520 --> 0:00:37.480 to make the outlook even worse. Not a huge surprise, 0:00:37.680 --> 0:00:40.640 and yet there definitely was a market response, with guilds 0:00:40.680 --> 0:00:44.200 going even lower in Germany. Joining us now Alberto Galla, 0:00:44.320 --> 0:00:47.800 partner in folio manager for the Algebras Macro Credit Fund 0:00:47.880 --> 0:00:51.159 as well as a Bloomberg Opinion calumnist. Alberto, what was 0:00:51.200 --> 0:00:56.040 your take on the European Commission's forecast that was cut 0:00:56.120 --> 0:00:59.480 yet again and the fact that the market moved on it. 0:01:02.280 --> 0:01:08.080 The European region is clearly um into a Japan like 0:01:08.319 --> 0:01:13.600 environment for growth, so we have had repetitive downgrades on 0:01:13.760 --> 0:01:18.800 growth over the last month with limited fiscal stimulus. Um. 0:01:18.840 --> 0:01:21.080 Only some countries have been able to do it, but 0:01:21.240 --> 0:01:25.160 the core countries remained very conservative. And we are in 0:01:25.200 --> 0:01:27.080 the run up to European elections at the end of 0:01:27.120 --> 0:01:31.000 this month, so that could be perhaps a game changer. 0:01:31.280 --> 0:01:35.759 UM we could see maybe after European elections some reaction 0:01:35.880 --> 0:01:39.200 to these luggish growth environment which we have had. But 0:01:39.280 --> 0:01:42.720 you know, so far it's just the ECB has been 0:01:43.120 --> 0:01:45.840 doing most of the stimulus and marty policy on its 0:01:45.880 --> 0:01:50.680 own cannot really lift growth. We have seen that across 0:01:50.880 --> 0:01:54.120 several countries. You actually end up having the opposite results. 0:01:54.120 --> 0:01:57.120 You go into liquidity trap if you only have monetary 0:01:57.160 --> 0:02:00.440 policy keeping interest rates negative for too long. So we 0:02:00.480 --> 0:02:03.680 need a fiscal boost, but we don't have the willingness. 0:02:03.720 --> 0:02:07.120 Germany is still on the sided, and the other countries 0:02:07.120 --> 0:02:10.000 don't have a lot of ammunition we better. You mentioned 0:02:10.040 --> 0:02:11.920 in Germany, and that's kind of what surprised me the 0:02:11.919 --> 0:02:14.679 most out of this morning's data, the e c B 0:02:14.880 --> 0:02:19.040 slashing the growth projection to just zero point five from 0:02:19.080 --> 0:02:23.480 one point one. What's really driving that deceleration in Germany. 0:02:25.080 --> 0:02:27.119 There is a number of theories, So I would say 0:02:27.120 --> 0:02:33.040 first there's been a global desileration with Chinese orders for 0:02:32.120 --> 0:02:36.399 UM for important goods including cars, you know, falling very 0:02:36.440 --> 0:02:39.960 sharply at the end of last year. This hasn't recovered. 0:02:40.080 --> 0:02:43.560 Then there's a second factor specific to Germany, which is Turkey. 0:02:43.560 --> 0:02:47.120 You know, the Turkish economies under pressure. UM. Turkey and 0:02:47.120 --> 0:02:50.480 Germany are very close import expert partners. You know, the 0:02:50.560 --> 0:02:53.360 President Erdogan is just called for the rerun of the 0:02:53.400 --> 0:02:56.360 Istanbul elections and this is creating a lot of volatility 0:02:56.440 --> 0:02:59.960 in the Turkish lira and in in generally in busines 0:03:00.000 --> 0:03:05.639 as flows to Turkey UM, which affects affects Germany being 0:03:05.680 --> 0:03:09.360 part of the supply chain UM. But there's also a 0:03:09.480 --> 0:03:12.960 lack of domestic demand UH in Europe. UM. There is 0:03:13.400 --> 0:03:15.680 a rebound from last year for short p M I 0:03:15.840 --> 0:03:18.600 have gone back to positive. We're not in a recession, 0:03:18.880 --> 0:03:22.200 but we also don't have a V shaped rebound. It's 0:03:22.360 --> 0:03:26.040 it's something between a U shaped and an L shaped rebound. Now, 0:03:26.080 --> 0:03:30.200 to re accelerate an economy in in an late stage 0:03:30.400 --> 0:03:33.720 in you know, in the late stage of an expansion, UM, 0:03:33.760 --> 0:03:37.280 you need some physical stimulus. You don't, it just doesn't 0:03:37.280 --> 0:03:39.560 happen on its own. Well, you know, if you just 0:03:39.680 --> 0:03:42.560 had a recession and you tend to grow much faster 0:03:42.640 --> 0:03:45.120 because you have pent up demand. You have you know, 0:03:45.160 --> 0:03:48.560 consumers that haven't spent for many years and companies that 0:03:48.600 --> 0:03:50.960 haven't invested. Here where the late at late stage of 0:03:51.000 --> 0:03:55.800 the cycle, and we need some some government top down 0:03:55.800 --> 0:04:01.000 decision um either from Germany or or broadly from China. 0:04:01.040 --> 0:04:03.119 But we have seen that the Chinese stimulus is relatively 0:04:03.160 --> 0:04:08.160 smaller compared to what they did in on nine. So Alberto, 0:04:08.280 --> 0:04:11.600 as an investor, is this a time to stay away 0:04:11.640 --> 0:04:15.480 from European assets in particularly in Germany? Or from a 0:04:15.480 --> 0:04:18.279 credit standpoint, is this a positive because it means the 0:04:18.320 --> 0:04:20.919 ECB isn't going to be backing away from its stimulus 0:04:20.960 --> 0:04:25.919 anytime soon. So exactly, if you take Japan as an example, 0:04:26.000 --> 0:04:30.360 So what happened over fifteen years, twenty years? Rates remained 0:04:30.360 --> 0:04:34.640 relatively low. UM equities didn't do much. They you know, 0:04:34.680 --> 0:04:37.520 they kept going down. You could trade some rallies, but 0:04:37.600 --> 0:04:41.359 they kept going down. Credit was fine except the worst 0:04:41.480 --> 0:04:48.039 banks and corporates UH. Credit UH survived because once you 0:04:48.080 --> 0:04:50.479 are you know, the definition is you are in a UM. 0:04:50.720 --> 0:04:53.480 You're in a slow growth environment with persistent lower rates, 0:04:53.600 --> 0:04:56.520 companies kick the can. You may have don't be firms, 0:04:56.600 --> 0:04:59.359 don't be banks that survived because of lower rates. So 0:04:59.520 --> 0:05:03.880 essentially credit is okay in a Japan like environment, it's 0:05:03.880 --> 0:05:07.200 not extremely exciting. But actually in Europe you have yields 0:05:07.200 --> 0:05:10.320 which are you know, in dollar terms, close to high 0:05:10.360 --> 0:05:13.440 single digit sometimes double digit UM. You don't want to 0:05:13.440 --> 0:05:15.720 go in the lowest rated names in the you know, 0:05:15.760 --> 0:05:18.799 in the triple c's or lower rated smaller single bees. 0:05:18.880 --> 0:05:22.600 But overall the stimulus from this b will stay there, 0:05:22.960 --> 0:05:25.600 and that's part that's been part of our view. Where 0:05:25.640 --> 0:05:28.400 we go for growth. Where there's upside risk is some 0:05:28.520 --> 0:05:31.640 other countries outside of Europe, in emerging markets or in 0:05:31.640 --> 0:05:35.040 the US UM. But I think Europe for now seems 0:05:35.880 --> 0:05:38.880 very much in a very stable, lower rate environment, good 0:05:38.920 --> 0:05:42.080 for fixing, good for corporate bonds, not so good for 0:05:42.120 --> 0:05:45.560 equities in the medium term. So abrot to what extent 0:05:45.720 --> 0:05:50.880 is the ongoing Brexit uncertainty impacting the economies across your 0:05:51.080 --> 0:05:54.080 you know, we saw again that big down grade for German, 0:05:54.240 --> 0:05:59.760 Just wondering is that uncertainty still an issue a meaningful issue. 0:06:00.240 --> 0:06:03.080 I would say that in the investment world, in markets 0:06:03.120 --> 0:06:06.680 there has been a lot of fears. UM, there have 0:06:06.760 --> 0:06:09.680 been a lot of fears about Brexit and also European elections, 0:06:09.640 --> 0:06:13.120 so there's a lot of investors that are disengaged from Europe. 0:06:13.760 --> 0:06:16.279 So on the one hand, yes, fundamentals are not great. 0:06:16.400 --> 0:06:20.680 Growth is very slow compared to em or or the US, 0:06:20.680 --> 0:06:23.400 But on the other hand, positioning is very very light. 0:06:23.760 --> 0:06:27.680 According to the Bank America's Fund Managers Survey, short in 0:06:27.720 --> 0:06:31.880 European equities the most crowded trade across global portfolio managers. 0:06:31.920 --> 0:06:35.480 So if you have a bit of positive news, you 0:06:35.640 --> 0:06:40.080 can you know, prices can rise relatively quickly, both in 0:06:40.080 --> 0:06:43.240 in in in bonds and in UM in corporate bonds 0:06:43.279 --> 0:06:45.840 and in an inequities. So you know, we do have 0:06:46.000 --> 0:06:49.440 an unexciting fundamental view. We are stuck in a low 0:06:49.520 --> 0:06:53.400 growth f loor rate environment. But um there's also very 0:06:53.440 --> 0:06:57.960 little um lungs at the moment, so we sometimes like 0:06:58.040 --> 0:07:00.760 to be contrarian, we don't go into the warst areas. 0:07:01.800 --> 0:07:05.000 But there is still some value. And I think European 0:07:05.000 --> 0:07:07.479 elections are going to be a non event because the 0:07:07.520 --> 0:07:10.320 populace just may win a quarter of the European Parliament, 0:07:10.320 --> 0:07:12.960 but then all the other parties will we'll create a 0:07:13.000 --> 0:07:15.360 pro European coalition. In the end, you're in the European 0:07:15.400 --> 0:07:19.280 Parliament and the pro Europeans are the majority. Brexit will 0:07:19.360 --> 0:07:24.320 have to see what happens, you know, towards the end 0:07:24.320 --> 0:07:26.760 of the extension period in the in the second half 0:07:26.760 --> 0:07:30.600 of the year, after the summer um. We do think that, 0:07:30.680 --> 0:07:34.640 you know, the base case remains either a longer extension 0:07:35.680 --> 0:07:40.160 or a Norway style deal. So a deal soft deal, 0:07:40.480 --> 0:07:43.600 yea very good Alberto Gallo, thank you so much. Alberta, 0:07:43.600 --> 0:07:46.640 as a partner and portfolio manager for the Algebras Macro 0:07:46.800 --> 0:07:51.000 Credit Fund with about twelve point three billion pounds under management, 0:07:51.040 --> 0:08:03.520 is also a Bloomberg Opinion calumnist. Well, US and China 0:08:03.600 --> 0:08:07.000 trade negotiations are back on investors radar, that's for sure. 0:08:07.240 --> 0:08:11.000 Definitely a risk off day today after a very volatile 0:08:11.080 --> 0:08:14.520 day yesterday, driven in part by some of the tariff concerns. 0:08:14.720 --> 0:08:16.440 To get the latest on what these may mean for 0:08:16.480 --> 0:08:19.760 the market, we welcome Matt Mally Matts, managing director and 0:08:19.800 --> 0:08:23.280 equity strategist at Miller tebec Um. Matt, thanks so much 0:08:23.320 --> 0:08:25.640 for joining us again taking a look at what's happened 0:08:25.680 --> 0:08:28.520 over the past couple of days following President Trump's tweets 0:08:28.520 --> 0:08:33.840 about the tariffs. Clearly the market is rightfully concerned about 0:08:33.880 --> 0:08:37.080 some of these issues. What is your call, Well, you know, 0:08:37.160 --> 0:08:39.160 it's funny. I I think that you know, yes, I 0:08:39.200 --> 0:08:41.920 totally agree they should be at least a little bit concerned. 0:08:42.200 --> 0:08:43.560 And we also have to look at what was the 0:08:43.600 --> 0:08:46.439 market doing before this came Before this news came out. 0:08:46.480 --> 0:08:49.160 I mean, this is negative news. And even if you 0:08:49.280 --> 0:08:51.280 believe that you know, we're we're going to get a 0:08:51.360 --> 0:08:55.200 deal eventually, Uh, the odds of that, odds of having 0:08:55.200 --> 0:08:57.920 a being it pushed out further or you know, more 0:08:57.960 --> 0:09:01.360 strains within that situation have bob the risen. And when 0:09:01.400 --> 0:09:04.480 you have a situation where the stock markets rally twenty 0:09:04.559 --> 0:09:07.599 five percent in just four months, had become quite overbought 0:09:08.360 --> 0:09:10.880 on a near term basis. Anyway, when you get negative news, 0:09:10.960 --> 0:09:12.760 it should pull back. And to be honest with you, 0:09:12.880 --> 0:09:15.959 yesterday's reaction where it rallied back so strongly, that made 0:09:16.000 --> 0:09:17.880 me a little worried about. But there's a little bit 0:09:18.200 --> 0:09:20.520 too much complacency in the market. I think this is 0:09:20.520 --> 0:09:23.400 a natural and healthy things that that that the market 0:09:23.520 --> 0:09:25.880 is coming back down and we could fall a little 0:09:25.880 --> 0:09:29.200 bit further again after rally. Not the worst thing in 0:09:29.240 --> 0:09:31.520 the world. Yeah, and we should note that actually the 0:09:31.559 --> 0:09:36.000 losses are deepening near session lows negative one point four 0:09:36.080 --> 0:09:39.480 percent on the NASDAC. I'm just wondering, uh, you know, 0:09:39.520 --> 0:09:42.680 you look at the technical underpinnings here and I'm wondering, 0:09:42.880 --> 0:09:46.760 if the trade talks were really fundamentally break down and 0:09:46.800 --> 0:09:49.720 put on ice for a while, how big of a 0:09:49.760 --> 0:09:53.480 down draft could we see. Well, I think it could be, 0:09:53.640 --> 0:09:55.760 you know, a fairly decent one. I mean, certainly in 0:09:55.760 --> 0:09:59.560 the uh uh, you know, kind of the five to 0:09:59.640 --> 0:10:02.040 seven p sent pullback. Uh. And even you know, in 0:10:02.320 --> 0:10:05.760 today's markets where where the you know, mechanized tracing, the 0:10:05.800 --> 0:10:08.800 algal mechanized trading and the algales and things like that 0:10:09.400 --> 0:10:11.280 have a big impact on the market, it could take 0:10:11.559 --> 0:10:14.360 even down towards correction territory. And the reason why I 0:10:14.400 --> 0:10:16.559 say that is it is it because a lot of 0:10:16.600 --> 0:10:19.760 the turnaround in or at least people literally looking for 0:10:19.800 --> 0:10:22.640 earnings to pick up on the second half, uh, And 0:10:22.679 --> 0:10:24.160 a lot of that has to do with with a 0:10:25.200 --> 0:10:27.920 you know, an agreement had being made sometime in the 0:10:27.960 --> 0:10:30.040 near future. So if that doesn't happen, some of those 0:10:30.040 --> 0:10:32.560 earnings forecasts are going to come down, and uh, I 0:10:32.559 --> 0:10:33.800 think that would put a little bit of a dent 0:10:33.880 --> 0:10:36.240 in the market. So, Matt, you're just talking about earnings. 0:10:36.240 --> 0:10:38.959 What is your takeaway from the first quarter here? Seems 0:10:38.960 --> 0:10:42.160 to have come in better than expected? Um? What is 0:10:42.200 --> 0:10:46.400 your take? Well, that is true and and and the 0:10:46.400 --> 0:10:49.680 one problem, of course, though is that they always beat expectations. Uh, 0:10:49.760 --> 0:10:52.040 this time a little bit more than expected and and 0:10:52.040 --> 0:10:54.440 and it's very good that it went from expectations of 0:10:54.480 --> 0:10:57.520 a negative earning season to one that is a positive one, 0:10:57.559 --> 0:11:00.400 which you know, takes an earnings recession off the table. 0:11:00.720 --> 0:11:03.640 And that's good. But the my my concern a little 0:11:03.640 --> 0:11:06.920 bit here is that the guidance wasn't really raised. In fact, 0:11:06.920 --> 0:11:09.079 that it's come down a little bit for future quarters 0:11:09.360 --> 0:11:12.160 and we're really relying heavily on this, uh on a 0:11:12.240 --> 0:11:14.880 big fourth quarter where estimates are now at a plus 0:11:15.679 --> 0:11:18.080 eight and nine percent, where most of the other quarters 0:11:18.080 --> 0:11:19.840 are start of the second and third quarters are down 0:11:19.840 --> 0:11:23.520 in the one to three percent range. Uh So, Uh, yes, 0:11:23.559 --> 0:11:27.600 it's been a good earning season. Um, but I wouldn't 0:11:27.640 --> 0:11:29.280 like to see if much better, if we've been raising 0:11:29.280 --> 0:11:32.560 expectations a little bit more. And Lori Kelvicina over at 0:11:32.640 --> 0:11:35.640 RBC Capital had a really interesting point today saying that 0:11:36.040 --> 0:11:38.959 UH earnings really weren't even as good as many people 0:11:38.960 --> 0:11:41.720 are putting them out as because you did see the 0:11:41.760 --> 0:11:45.160 earnings per share beats UH. Seventy six percent of companies 0:11:45.200 --> 0:11:47.880 that have reported so far as something about that have 0:11:48.120 --> 0:11:50.840 beaten on the EPs side. On sales side, it's about 0:11:50.840 --> 0:11:54.439 half UH, and that's harder to engineer, whereas EPs were 0:11:54.440 --> 0:11:57.240 engineered by things like share buybacks, which were actually at 0:11:57.240 --> 0:12:00.600 the highest level post crisis in the first quarter. And 0:12:00.640 --> 0:12:02.920 I'm just wondering, from your perspective, how much of a 0:12:03.000 --> 0:12:06.320 sort of warning flag is that UH that companies pulled 0:12:06.360 --> 0:12:08.440 out all the stops in the first quarter and really 0:12:08.480 --> 0:12:10.840 cannot do a repeat of that when it comes to 0:12:10.880 --> 0:12:15.480 engineering the EPs beats later in the year. Yeah, I mean, obviously, 0:12:15.600 --> 0:12:18.520 you know, the quote unquote quality of earnings UH has 0:12:18.559 --> 0:12:21.080 been something that people were worried about for a while now. 0:12:21.280 --> 0:12:23.400 And the thing is, the quality of earnings were quite 0:12:23.400 --> 0:12:25.360 good last year, UM, and I say that they were 0:12:25.360 --> 0:12:27.200 worried about it, you know before you know, in two 0:12:27.200 --> 0:12:30.280 thousand and fourteen fifteen sixteen, we were worried about that. Uh. 0:12:30.360 --> 0:12:32.280 Last year they were you know, they were quite good. 0:12:32.520 --> 0:12:34.280 But now the quality again it seems to be more 0:12:34.280 --> 0:12:36.720 financial engineering. Now that the tax that has been pushed 0:12:36.960 --> 0:12:38.959 to the to the side, and now that will we 0:12:39.000 --> 0:12:43.040 get a problem again with this agreement on the tax side. 0:12:43.200 --> 0:12:46.440 It definitely lowers that, uh, not just the stated earnings, 0:12:46.480 --> 0:12:48.840 but the quality of earnings. And and again when the 0:12:48.880 --> 0:12:51.600 market has moved as much as it has, it doesn't 0:12:51.640 --> 0:12:54.160 just you know, uh, it doesn't necessarily mean that we're 0:12:54.160 --> 0:12:55.959 gonna have a disaster here, you know, any kind of 0:12:56.000 --> 0:12:58.120 a repeat of two thousand eight or two thousand, but 0:12:58.200 --> 0:13:00.960 it does begin to get people to worry about, you know, 0:13:01.000 --> 0:13:03.800 that we could have another a down draft something like 0:13:03.840 --> 0:13:05.320 we had in the fourth quarter. I'm not not calling 0:13:05.320 --> 0:13:08.439 for correction, but I wouldn't be surprised at all if 0:13:08.480 --> 0:13:10.360 we saw something in the five to seven percent range. 0:13:10.720 --> 0:13:12.560 Matt Malie, thank you so much for being with us. 0:13:12.600 --> 0:13:15.800 Matt Malie as chief equity strategist for Miller, Tabac and Co. 0:13:16.160 --> 0:13:35.520 Talking about market, it is time for a public service announcement. 0:13:35.720 --> 0:13:39.080 If you have a mother or a wife who has 0:13:39.200 --> 0:13:43.160 a children or a grandmother. This Sunday is Mother's Day. 0:13:43.280 --> 0:13:46.000 You might want to remember that. Paul Sweeney, what are 0:13:46.000 --> 0:13:48.320 you doing for Mother's Day? Um, we are having brunch 0:13:48.440 --> 0:13:51.040 and there'll probably be some type of flower thing involved, 0:13:51.160 --> 0:13:54.120 some type of flower gifting going on, a lot of 0:13:54.160 --> 0:13:56.560 people giving flowers. We are so lucky to have Chris McGann, 0:13:56.720 --> 0:14:00.360 chief executive officer of one flowers dot Com. I'm here 0:14:00.400 --> 0:14:03.360 with us in our bloombergett to Active Broker's studios. So, Chris, 0:14:03.400 --> 0:14:07.000 how important is Mother's Day to your business? Well? How 0:14:07.040 --> 0:14:10.600 important is Mother's Day to you? In other words, how 0:14:10.600 --> 0:14:13.760 many flowers am I hoping to get? I mean, you know, 0:14:14.040 --> 0:14:16.080 I'm one of those people. If my kids make a 0:14:16.120 --> 0:14:19.760 handmade card and they, you know, put some effort into it, 0:14:20.360 --> 0:14:22.320 I'll be happy. Well, we'll take it up a step. 0:14:24.040 --> 0:14:26.840 So some Mother's Days are very important holiday for our business. 0:14:26.880 --> 0:14:29.080 You know, if you really look at our business overall 0:14:29.160 --> 0:14:32.240 on an annual basis, because we're driven by such everyday 0:14:32.240 --> 0:14:35.960 occasions like birthdays, anniversaries, Mother's Day is only about six 0:14:36.000 --> 0:14:37.840 percent of our business. But if you look at the 0:14:37.840 --> 0:14:40.640 floral side of our business for this quarter, Mother's Day 0:14:40.600 --> 0:14:44.200 can counsel for about about consumer floral business in this 0:14:44.280 --> 0:14:47.960 quarter about fiscal fourth quarter. So it's an important day 0:14:47.960 --> 0:14:50.200 and it's an important day to celebrate. Yeah, well I'm 0:14:50.240 --> 0:14:52.320 looking I like to celebrate the stock. The stock is 0:14:52.360 --> 0:14:59.400 of about sixty eight percent this year. Of let's get 0:14:59.400 --> 0:15:01.560 down to the you know, the dollarsand cents in the stock. 0:15:01.960 --> 0:15:03.680 So I mean, even on a day when the markets 0:15:03.720 --> 0:15:05.440 down one and a half percent, your stock is up 0:15:05.440 --> 0:15:07.880 one and a half percent. So what's the story behind 0:15:08.080 --> 0:15:11.200 your company's great stock race performance this year? I think 0:15:11.200 --> 0:15:13.880 it's driven mostly by mothers investing in our stock right now, 0:15:15.880 --> 0:15:18.200 and take it back to the sentimental I don't think so. 0:15:19.680 --> 0:15:22.480 But really what's been happening and what we the investment 0:15:22.520 --> 0:15:25.080 community is recognizing that we're doing what we said we 0:15:25.080 --> 0:15:26.560 were going to do and we laid out for the 0:15:26.600 --> 0:15:29.800 last couple of years. Actually, when we've been accelerating our growth. 0:15:29.800 --> 0:15:32.200 We took the growth rate from three percent two years 0:15:32.200 --> 0:15:34.760 ago to four percent. This year, we came out, we 0:15:34.800 --> 0:15:38.120 guided the five to seven percent growth. We raised our 0:15:38.120 --> 0:15:41.280 guidance after the holiday season to seven to eight percent. 0:15:41.560 --> 0:15:43.800 We just raised our guidance again two weeks ago to 0:15:43.800 --> 0:15:46.160 the high end of that range. So our growth rate 0:15:46.200 --> 0:15:49.240 is accelerating as customers are becoming more and more aware 0:15:49.240 --> 0:15:52.040 of our family of brands and ordering from more than 0:15:52.120 --> 0:15:56.160 one brand. What's the highest margin aspect of your business? 0:15:56.160 --> 0:15:59.040 The food? The Flowers going may food side of our business, 0:15:59.040 --> 0:16:01.080 we're probably get in the mid to hire uh to 0:16:01.360 --> 0:16:04.160 up at range margin. The one in a hundred of 0:16:04.160 --> 0:16:07.720 Flowers business is usually around that thirty. That's where it's 0:16:07.720 --> 0:16:10.200 going to stay. But really the higher margin products are 0:16:10.200 --> 0:16:12.240 goingmet food side for us. I'm looking at the p 0:16:12.360 --> 0:16:15.080 g O function on the Bloomberg terminal, which gives a 0:16:15.120 --> 0:16:17.640 breakdown of kind of where your revenue comes from, and 0:16:17.680 --> 0:16:19.960 I was shocked to see that the gourmet food and 0:16:20.000 --> 0:16:22.760 get baskets is over fifty percent of your business and 0:16:22.760 --> 0:16:25.680 Flowers are about forty of your business. Is a time 0:16:25.720 --> 0:16:28.160 to rename the company? Because you're more than Flowers, You're 0:16:28.200 --> 0:16:33.560 kind of all year round, lots of gifts and sat foods. Yeah, 0:16:33.600 --> 0:16:36.560 that's right, But we get that question all the time, Paul, 0:16:36.600 --> 0:16:39.760 should we rename the company? As we've become really this 0:16:39.840 --> 0:16:42.480 company of celebrations. But when we look at it from 0:16:42.520 --> 0:16:45.560 a marketing perspective, we have such iconic brands, especially the 0:16:45.640 --> 0:16:48.280 two lead ones one in a hundred flowers dot com, 0:16:48.280 --> 0:16:50.960 Harry and David, and they bring in such great traffic. 0:16:51.160 --> 0:16:53.960 We'd only be renaming it really for the investment community. 0:16:54.280 --> 0:16:56.520 And I think one hundred Flowers and Harry and David 0:16:56.560 --> 0:16:59.080 both has such brand equity, will stay with this multi 0:16:59.080 --> 0:17:02.400 brand strategy. I love the idea also though of calling 0:17:02.640 --> 0:17:05.359 it to order something is also an athema to people 0:17:05.440 --> 0:17:07.719 under a certain age. But just do it online. So 0:17:07.760 --> 0:17:10.920 it's not only is it also more food than than 0:17:10.960 --> 0:17:13.919 it is flowers, but also the concept of one hundred 0:17:14.000 --> 0:17:16.480 is probably going to be obsolete in about ten years. 0:17:16.880 --> 0:17:19.240 So I mean, from that perspective, how much of the 0:17:19.680 --> 0:17:22.919 how much of the sales come online? Well, we're predominantly 0:17:22.920 --> 0:17:25.160 an e commerce driven company, and even if you look 0:17:25.160 --> 0:17:28.560 at one eight hundred of Flowers brand itself, of the 0:17:28.560 --> 0:17:31.760 businesses e commerce mobile commerce driven. So I think the 0:17:31.840 --> 0:17:35.000 brand has become so well known most younger people don't 0:17:35.000 --> 0:17:39.399 even realize it was named after a telephone number. So 0:17:39.440 --> 0:17:41.360 all right, I'll go back sentimental a little bit more. 0:17:41.440 --> 0:17:45.199 What are the most popular flowers for Mother's Day? That's 0:17:45.200 --> 0:17:49.840 how sentimental? Yet that's impressive. So for Mother's Day, I 0:17:49.880 --> 0:17:54.040 think we see mix of vibrant colors. So it's roses, lilies, daisies, carnations, 0:17:54.040 --> 0:17:55.879 which have made a nice comeback, which are one of 0:17:55.920 --> 0:17:59.880 my favorites. They last forever, I love them. But really 0:17:59.880 --> 0:18:02.440 a mix of vibrant colors. And one of the great 0:18:02.480 --> 0:18:05.360 products that we sell is called Mother's Embrace and it's 0:18:05.440 --> 0:18:08.119 named after what's the most comforting thing you can get 0:18:08.200 --> 0:18:10.359 from your mom but a hug. So we turn that 0:18:10.400 --> 0:18:15.360 around and one of our creative one of our creative 0:18:15.359 --> 0:18:18.719 florists and Stafford, Virginia, Devil and Reid, created this Mother's 0:18:18.720 --> 0:18:21.639 Embrace product and it's just a fantastic product, one of 0:18:21.640 --> 0:18:26.880 our top selling. What are you getting your wife? Flowers? Actually? 0:18:26.880 --> 0:18:29.080 This this this Mother's Day, I won't be because we'll 0:18:29.119 --> 0:18:34.560 be celebrating my daughter's graduation from William and Mary. So no, 0:18:34.720 --> 0:18:36.320 so I won't be able to have flowers there. Well, 0:18:36.320 --> 0:18:38.919 well down Williamsburg, Virginia. What's the growth area for you? 0:18:39.520 --> 0:18:42.480 The growth area is both really right now, all three 0:18:42.520 --> 0:18:45.160 areas of our business are growing. The gourmet food side 0:18:45.200 --> 0:18:47.800 is growing nicely to consume, a floral business is growing. 0:18:48.040 --> 0:18:50.600 What's driving the gomet food side is the acquisition of 0:18:50.640 --> 0:18:52.640 Harry and David that we did a number of years ago. 0:18:53.040 --> 0:18:55.520 You take a business like Harry and David that went 0:18:55.560 --> 0:18:58.560 through a bankruptcy, was stagnant for three years. Coming out 0:18:58.600 --> 0:19:01.760 of the bankruptcy, we we put it on our platform. 0:19:02.040 --> 0:19:04.760 We take out over twenty million dollars of operating costs 0:19:04.760 --> 0:19:07.359 doing so, and now we have the e commerce business 0:19:08.119 --> 0:19:12.159 Joe growing about eight right now. That's that shows the 0:19:12.200 --> 0:19:15.479 benefits of the platform for growth that we've created. Well, 0:19:15.520 --> 0:19:18.080 my favorite study here is about twenty million stems for 0:19:18.200 --> 0:19:21.399 Mother's Day alone will be delivered. That's a lot, some 0:19:21.520 --> 0:19:25.479 of them to the Sweeney House hopefully yea Christmas can 0:19:25.560 --> 0:19:28.720 President CEO Flowers dot com does trade on the NaSTA 0:19:28.720 --> 0:19:31.840 act onto the symbol f LWS. Based in Long Island. 0:19:31.920 --> 0:19:34.640 Joining us here in our Bloomberg Interactive Broker studio, Chris, 0:19:34.640 --> 0:19:51.800 thanks so much for joining us. Well. US markets are 0:19:51.800 --> 0:19:55.320 going lower led by the NAZAC down one point six percent, 0:19:55.480 --> 0:20:00.520 driven really by the increasing question around whether the US 0:20:00.600 --> 0:20:03.520 and China will come to a trade agreement after all. 0:20:03.640 --> 0:20:06.640 Joining US, I'm very pleased to say, is Dr Henry Wong. 0:20:06.800 --> 0:20:09.240 He is founder and president of the Center for China 0:20:09.320 --> 0:20:13.080 and Globalization based in Beijing, but joining us here in 0:20:13.119 --> 0:20:16.280 our boombergadda active broker studios in New York. Dr Wong, 0:20:16.400 --> 0:20:19.200 thank you so much for being here. Just how much 0:20:19.359 --> 0:20:22.600 of a disagreement seems to be going on right now 0:20:22.640 --> 0:20:25.399 between the US and China that's impeding some sort of 0:20:26.280 --> 0:20:29.520 trade trade pact here. Thank you, thank you for having me. 0:20:29.600 --> 0:20:32.840 I actually I think that all along we have been 0:20:32.880 --> 0:20:36.879 seeing President Trump giving tweets and Secretary Lightheiser and the 0:20:36.920 --> 0:20:41.199 minutul talking about all positive news about negotiations. If according 0:20:41.280 --> 0:20:43.880 to the Secretary, that has been done well, I think 0:20:43.880 --> 0:20:47.640 that's already very great achievement. So so so I think 0:20:47.680 --> 0:20:50.040 that there may be some finalizing when they put into 0:20:50.119 --> 0:20:53.159 the printing and put into the details, that could be 0:20:53.200 --> 0:20:56.480 a little I think still negotiation going on on the 0:20:56.480 --> 0:20:59.359 final awarding of that. So I think that probably needs 0:20:59.359 --> 0:21:03.760 both and oak sides to really take the wisdom and leadership, 0:21:04.320 --> 0:21:07.640 you know, a role in finalize they Still I think 0:21:07.680 --> 0:21:10.960 it's it will be highly irresponsible to to to really 0:21:11.600 --> 0:21:14.080 uh to not having this do because not only the 0:21:14.119 --> 0:21:16.560 business community in China and the US wants days, but 0:21:16.600 --> 0:21:18.200 also the rest of the world and whole world is 0:21:18.320 --> 0:21:20.600 highly watching on this. I don't think both countire can 0:21:20.680 --> 0:21:24.040 forward now that trade tiiff war going on, and I 0:21:24.080 --> 0:21:28.119 think this this, this final differences could be solved, you know, 0:21:28.240 --> 0:21:30.560 Cervier consultation and a friend that they discussion rather than 0:21:30.840 --> 0:21:33.320 really hostile and the maker, you know, force people to 0:21:33.359 --> 0:21:35.600 the corner, which I think with backfire maybe in the end. 0:21:35.880 --> 0:21:38.600 So dr One, you mentioned that both sides, certainly from 0:21:38.640 --> 0:21:41.440 the business community, would like to have a trade deal 0:21:41.520 --> 0:21:45.119 done in China. From the Chinese perspective, Um, is that 0:21:45.200 --> 0:21:47.760 consistent with what the government wants? Is the government and 0:21:47.880 --> 0:21:52.240 business are they on the same page or is there 0:21:52.280 --> 0:21:54.800 just a fundamental problem from the government's perspective about some 0:21:54.840 --> 0:21:57.560 of the bigger issues about trade. I think it's it's 0:21:57.600 --> 0:22:00.680 finally clear enough in China, you know, after this Tradelo 0:22:00.760 --> 0:22:02.359 has already started for a year or not in its 0:22:02.400 --> 0:22:06.119 friction going on, and we all go through ups and 0:22:06.240 --> 0:22:09.639