1 00:00:01,400 --> 00:00:04,160 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 2 00:00:04,160 --> 00:00:06,240 Speaker 1: with my co host of Bonnie Quinn. Every business day 3 00:00:06,280 --> 00:00:10,400 Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts, 4 00:00:10,440 --> 00:00:13,640 Speaker 1: along with essential market moving news. Find the Bloomberg Markets 5 00:00:13,640 --> 00:00:17,040 Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts, 6 00:00:17,040 --> 00:00:20,000 Speaker 1: and on Bloomberg dot com. Now, I want to get 7 00:00:20,040 --> 00:00:22,480 Speaker 1: to somebody who knows I'm no aful lot about game Stop. 8 00:00:22,560 --> 00:00:25,400 Speaker 1: He's been involved with the company for a decade. He's 9 00:00:25,440 --> 00:00:29,639 Speaker 1: portfolio manager at Permit Capital and his name is John Broderick. So, John, 10 00:00:30,160 --> 00:00:33,000 Speaker 1: thanks for joining. I have to ask you if you 11 00:00:33,040 --> 00:00:35,680 Speaker 1: can give us any details that you can about you know, 12 00:00:36,000 --> 00:00:38,600 Speaker 1: how you own game Stop and what you own right now. 13 00:00:39,920 --> 00:00:42,120 Speaker 1: I'm sure I can't really go into the details of 14 00:00:42,159 --> 00:00:45,760 Speaker 1: what we own right now. We reduce our position somewhat 15 00:00:46,240 --> 00:00:50,760 Speaker 1: given the meteoric rise of stock. UM but we UM 16 00:00:50,800 --> 00:00:53,160 Speaker 1: and I'll just I'll just leave it there. UM. But 17 00:00:53,440 --> 00:00:55,640 Speaker 1: you know, we got involved with the stocks ten years 18 00:00:55,640 --> 00:00:58,720 Speaker 1: ago because it was just just this amazing UM it 19 00:00:58,800 --> 00:01:02,400 Speaker 1: had this amazing business where they were engaging with UM 20 00:01:02,440 --> 00:01:06,400 Speaker 1: this very dedicated group of customers. The power of rewards 21 00:01:06,400 --> 00:01:09,720 Speaker 1: customers and it was a very efficient business model that 22 00:01:09,959 --> 00:01:13,640 Speaker 1: that fell on hard times with digital disintermediation, a lot 23 00:01:13,680 --> 00:01:17,120 Speaker 1: of turnover in C suite. UM. But we believe, we 24 00:01:17,200 --> 00:01:19,880 Speaker 1: believe in the company, and we stuck with it. UM. 25 00:01:19,920 --> 00:01:23,720 Speaker 1: In fact, we we I partnered with Kurt Wolf that 26 00:01:23,800 --> 00:01:26,000 Speaker 1: has to be a capital uh this time last year, 27 00:01:26,000 --> 00:01:29,160 Speaker 1: and we ran a proxy campaign successfully and got ten 28 00:01:29,160 --> 00:01:32,720 Speaker 1: new board members, including Kurt Um onto the board. And 29 00:01:32,760 --> 00:01:35,039 Speaker 1: I think that that, UM my sense is that that 30 00:01:35,080 --> 00:01:37,920 Speaker 1: caught the attention of other people and special to retail, 31 00:01:38,480 --> 00:01:43,280 Speaker 1: particularly Ryan Cohen, who UM you know it understands a 32 00:01:43,280 --> 00:01:46,360 Speaker 1: lot about specialty retail, at least on in the online domain. 33 00:01:46,920 --> 00:01:50,680 Speaker 1: And UM, it's just we we've never looked back from there. 34 00:01:51,600 --> 00:01:56,480 Speaker 1: So game Stop is a trading halted. Uh. Once again here, John, Look, 35 00:01:56,520 --> 00:01:58,080 Speaker 1: can you tell us I'm not sure if you've if 36 00:01:58,080 --> 00:01:59,640 Speaker 1: you've been in touch with anybody at the company over 37 00:01:59,680 --> 00:02:02,880 Speaker 1: the last level days. What are they thinking, uh in 38 00:02:03,000 --> 00:02:04,840 Speaker 1: terms of what's going on in the marketplace. I have 39 00:02:04,920 --> 00:02:08,680 Speaker 1: no idea. I have no idea. My my sense is 40 00:02:08,720 --> 00:02:12,200 Speaker 1: that they're talking. I would have to imagine that there's 41 00:02:12,200 --> 00:02:15,639 Speaker 1: been a lot of internal discussion about this. UM. Uh. 42 00:02:15,680 --> 00:02:18,920 Speaker 1: You know about the situation, UM, but I have no 43 00:02:19,040 --> 00:02:21,800 Speaker 1: I have no idea. I I what the what the 44 00:02:21,800 --> 00:02:25,040 Speaker 1: company UM's planning to do, what they might do? I 45 00:02:25,080 --> 00:02:27,200 Speaker 1: just have no idea. I think they're about to were 46 00:02:27,200 --> 00:02:29,000 Speaker 1: about to close the quarters. So they are in a 47 00:02:29,040 --> 00:02:32,160 Speaker 1: blackout period and they will be UM for another couple 48 00:02:32,160 --> 00:02:34,600 Speaker 1: of weeks. UM. But you know, certainly with the move 49 00:02:34,680 --> 00:02:36,080 Speaker 1: in the stock, I'm sure there are a lot of 50 00:02:36,080 --> 00:02:40,040 Speaker 1: people inside game stop talking about what they you know, 51 00:02:40,040 --> 00:02:44,160 Speaker 1: what they can you know, what they can do UM strategically, John, 52 00:02:44,200 --> 00:02:46,280 Speaker 1: I have to ask you what you make of this movement? So, 53 00:02:46,960 --> 00:02:49,400 Speaker 1: I mean literally more than three million members of this 54 00:02:49,400 --> 00:02:52,800 Speaker 1: Wall Street Beth subreddit now, and the kind of language 55 00:02:52,800 --> 00:02:56,520 Speaker 1: on here is so I mean, it's it's deserves studying 56 00:02:56,560 --> 00:02:59,040 Speaker 1: in itself. It's that rhetoric that we've been getting used 57 00:02:59,080 --> 00:03:02,480 Speaker 1: to about, you know, the think going to the moon 58 00:03:02,600 --> 00:03:05,200 Speaker 1: and the rocket emojis and so on, and you know, 59 00:03:05,280 --> 00:03:06,840 Speaker 1: take all the cash you can afford to lose and 60 00:03:06,880 --> 00:03:10,160 Speaker 1: bye bye bye. Is this something that should ever be 61 00:03:10,200 --> 00:03:16,000 Speaker 1: associated with a stock? UM? I don't know. UM, I 62 00:03:16,040 --> 00:03:18,600 Speaker 1: guess I guess I would say why not? Uh, you know, 63 00:03:18,680 --> 00:03:20,799 Speaker 1: it's a it's a it's a free market, and it's 64 00:03:20,800 --> 00:03:24,280 Speaker 1: a free wold and um, you know, as long as 65 00:03:24,280 --> 00:03:27,920 Speaker 1: the people in those chat rooms are are not you know, 66 00:03:28,600 --> 00:03:32,600 Speaker 1: telling lies or you know, or disclosing material not public information. 67 00:03:33,120 --> 00:03:35,360 Speaker 1: I just don't see how that's an issue. People are 68 00:03:35,360 --> 00:03:38,320 Speaker 1: free to talk about investing ideas, you know, I think 69 00:03:38,360 --> 00:03:41,800 Speaker 1: that there is something there's always you know, you want 70 00:03:41,840 --> 00:03:43,480 Speaker 1: speech to be free, but you also want to speech 71 00:03:43,480 --> 00:03:46,480 Speaker 1: to be responsible. And I'm not I'm not that familiar 72 00:03:46,520 --> 00:03:48,600 Speaker 1: with small street sets, but what I have seen is 73 00:03:48,960 --> 00:03:52,920 Speaker 1: it's really just a lat of um um recycling of 74 00:03:52,960 --> 00:03:55,560 Speaker 1: the same you know, of the same emojis, you know, 75 00:03:55,560 --> 00:03:58,720 Speaker 1: the rocket to the moon and and uh diamond pans 76 00:03:59,040 --> 00:04:02,360 Speaker 1: and and so on. And I think that the I think, 77 00:04:02,360 --> 00:04:06,720 Speaker 1: what what what these amateur investors have have sniffed out 78 00:04:07,320 --> 00:04:11,800 Speaker 1: is how vulnerable um the short the short sellers are here. 79 00:04:11,840 --> 00:04:15,600 Speaker 1: There's a short interest based on the most recent AS 80 00:04:15,680 --> 00:04:17,760 Speaker 1: three data that I thought, maybe it's a little bit higher. 81 00:04:18,400 --> 00:04:21,960 Speaker 1: I don't know how that resolved. Yeah, I just want 82 00:04:22,000 --> 00:04:23,400 Speaker 1: to follow up if I can, Paul, I hope you 83 00:04:23,440 --> 00:04:27,640 Speaker 1: don't mind. Um, how are they sticking it to the man? 84 00:04:28,000 --> 00:04:30,919 Speaker 1: If there's pushing the stock higher, they're only sticking to 85 00:04:31,000 --> 00:04:33,640 Speaker 1: the short sellers, John, I, I don't understand how they 86 00:04:33,640 --> 00:04:37,719 Speaker 1: think they're getting the better of the institutional money that 87 00:04:37,800 --> 00:04:39,960 Speaker 1: are in some of these stocks. And we're talking about 88 00:04:40,040 --> 00:04:43,880 Speaker 1: the major institutions like black Rock and Vanguard. They're happy 89 00:04:44,120 --> 00:04:47,839 Speaker 1: out with this movement. That's a fair point, you know, 90 00:04:47,839 --> 00:04:50,880 Speaker 1: it's a fair point that you know, if they're if 91 00:04:50,920 --> 00:04:53,559 Speaker 1: they're sticking it to um, you know, a large hedge 92 00:04:53,560 --> 00:04:56,560 Speaker 1: fund that has a big short position, or is Wong 93 00:04:56,640 --> 00:05:00,520 Speaker 1: Poots or something, certainly, you know they might be hurting them, 94 00:05:00,560 --> 00:05:04,960 Speaker 1: but creating an enormous opportunity and and windfall for other 95 00:05:05,480 --> 00:05:09,919 Speaker 1: long oriented institutional holders. UM I would I would say 96 00:05:09,960 --> 00:05:13,279 Speaker 1: to that that, uh, you know they I think the 97 00:05:13,360 --> 00:05:15,680 Speaker 1: narrative here is just it's sort of the us against 98 00:05:15,760 --> 00:05:18,000 Speaker 1: them narrative. It's the dark side and the light side. 99 00:05:18,240 --> 00:05:20,880 Speaker 1: It's a it's a and it's it's you know where 100 00:05:21,640 --> 00:05:24,440 Speaker 1: Ryan Cohen is. They're kind of hero. Um. There's a 101 00:05:24,440 --> 00:05:26,880 Speaker 1: guy named d F D. I'll just leave it at that, 102 00:05:27,800 --> 00:05:30,560 Speaker 1: UM who's also kind of a folk hero. And it's 103 00:05:30,640 --> 00:05:33,040 Speaker 1: them versus the sort of big guys on Wall Street, 104 00:05:33,920 --> 00:05:36,240 Speaker 1: whether those big guys right, the big guys on Wall 105 00:05:36,240 --> 00:05:38,560 Speaker 1: Street quote unquote or not a monolithic group. It's a 106 00:05:38,640 --> 00:05:41,520 Speaker 1: very diverse group of people. But UM, they just that's 107 00:05:41,600 --> 00:05:44,520 Speaker 1: kind of a simple narrative. And whether or not it's 108 00:05:44,520 --> 00:05:47,080 Speaker 1: whether or not what in fact they're doing is really 109 00:05:47,080 --> 00:05:50,320 Speaker 1: sticking it to the man, as you say, I uh, 110 00:05:50,400 --> 00:05:51,920 Speaker 1: you know, I don't think they see it that way. 111 00:05:51,960 --> 00:05:54,440 Speaker 1: They just say, okay, if we can, um, you know, 112 00:05:54,720 --> 00:05:57,320 Speaker 1: take a you know, a hedge fund to its knees. 113 00:05:57,440 --> 00:06:00,400 Speaker 1: That that's that's good enough for them. All right, John, 114 00:06:00,680 --> 00:06:04,200 Speaker 1: you've been a shareholder in this company, UM, what can 115 00:06:04,240 --> 00:06:09,320 Speaker 1: you tell us about the business? What's the investment thesis here? Yeah? 116 00:06:09,400 --> 00:06:12,520 Speaker 1: I mean this is a company that UM, you know, 117 00:06:12,640 --> 00:06:15,080 Speaker 1: if you if you if you turn back five years 118 00:06:15,120 --> 00:06:17,400 Speaker 1: when um, maybe even longer than that. Now with Paul 119 00:06:17,520 --> 00:06:19,920 Speaker 1: Rains a CEO, is a company that was performing really 120 00:06:19,920 --> 00:06:23,280 Speaker 1: really well. The returns on invested capital far keep that 121 00:06:23,440 --> 00:06:27,640 Speaker 1: of the other UM of the other specialty retailers out there. 122 00:06:28,040 --> 00:06:29,680 Speaker 1: And they again they just fell on hard times. They 123 00:06:29,680 --> 00:06:32,120 Speaker 1: had a lot of turnover in the CEO suite. UM 124 00:06:32,240 --> 00:06:35,440 Speaker 1: Digital disti amreiation really hurt, the length of the console 125 00:06:35,520 --> 00:06:39,919 Speaker 1: cycle really hurt. And the UM the the there is 126 00:06:40,040 --> 00:06:43,400 Speaker 1: just the company just fell on hard times. UM. But 127 00:06:44,160 --> 00:06:46,520 Speaker 1: when you when you when you think about this category, 128 00:06:46,640 --> 00:06:49,280 Speaker 1: how big the video game industry is, and what kind 129 00:06:49,279 --> 00:06:51,440 Speaker 1: of role they can play in it. There's a big, 130 00:06:51,480 --> 00:06:53,560 Speaker 1: big opportunity here. I don't know if they're going to 131 00:06:53,600 --> 00:06:56,680 Speaker 1: be able to capitalize that. I don't think anybody knows, UM, 132 00:06:56,720 --> 00:06:59,000 Speaker 1: but there is a big opportunity where you already have 133 00:06:59,160 --> 00:07:03,680 Speaker 1: four millions dedicated power up rewards members to UM. You know, 134 00:07:03,720 --> 00:07:05,560 Speaker 1: if you can figure out a way to re engage 135 00:07:05,640 --> 00:07:09,920 Speaker 1: that customer, you can figure out a way to uh 136 00:07:10,040 --> 00:07:12,679 Speaker 1: to to just excite I think that's Ryan Cohen's wards 137 00:07:12,720 --> 00:07:16,400 Speaker 1: more in his UH in his letter to the shareholders. 138 00:07:16,400 --> 00:07:17,920 Speaker 1: If you can figure out a way to excite these 139 00:07:18,280 --> 00:07:21,720 Speaker 1: these members, you know, there's a lot of uh you know, 140 00:07:21,720 --> 00:07:24,640 Speaker 1: there's there's a lot of revenue potential there. What would 141 00:07:24,640 --> 00:07:26,480 Speaker 1: you say to the leadership now of game Stop? What 142 00:07:26,520 --> 00:07:29,640 Speaker 1: should they do with all of this extra cash? Presumably 143 00:07:29,800 --> 00:07:31,520 Speaker 1: they should be very very afraid that it will all 144 00:07:31,560 --> 00:07:34,200 Speaker 1: go away very quickly and that the stock might drop. 145 00:07:34,320 --> 00:07:36,160 Speaker 1: Don't don't know that that would happen, but it's a 146 00:07:36,480 --> 00:07:41,080 Speaker 1: sure possibility. What should they do today and tomorrow? You 147 00:07:41,120 --> 00:07:43,680 Speaker 1: know they're look pretty deposition is actually pretty good. So 148 00:07:43,720 --> 00:07:46,280 Speaker 1: I don't think that they need could necessarily issue stock 149 00:07:46,800 --> 00:07:50,560 Speaker 1: um and uh, I think that they should just sort 150 00:07:50,560 --> 00:07:53,560 Speaker 1: of keep doing what they're is distracting as this is. 151 00:07:53,840 --> 00:07:56,360 Speaker 1: You know, I think I've got a hundred million dollar 152 00:07:56,480 --> 00:08:00,960 Speaker 1: at the money UM shelf registration done. You know, maybe 153 00:08:00,960 --> 00:08:03,120 Speaker 1: they raised some equity here. I don't know, they don't 154 00:08:03,160 --> 00:08:05,720 Speaker 1: really need the money. They they they're liquidity again, it's 155 00:08:05,760 --> 00:08:08,880 Speaker 1: pretty good. Um, if there is an opportunity, maybe they 156 00:08:08,960 --> 00:08:12,440 Speaker 1: see an opportunity here to raise some more capital to 157 00:08:12,440 --> 00:08:16,760 Speaker 1: to uh just finance some of those uh those growth initiatives. 158 00:08:16,760 --> 00:08:19,040 Speaker 1: But I just described you know, I don't know how 159 00:08:19,080 --> 00:08:24,240 Speaker 1: capital intensive they're uh they're initiatives might be, but you know, 160 00:08:24,640 --> 00:08:26,480 Speaker 1: it might make sense at these levels to do that. 161 00:08:26,960 --> 00:08:29,360 Speaker 1: And and frankly, you know, the stock is so elevated. 162 00:08:29,640 --> 00:08:31,600 Speaker 1: You know, let's say that they issued I'm gonna throwing 163 00:08:31,640 --> 00:08:34,640 Speaker 1: this number out there. If they issued half a million shares, okay, 164 00:08:34,640 --> 00:08:36,280 Speaker 1: and they're raised, I don't know where the stock is 165 00:08:36,320 --> 00:08:38,720 Speaker 1: now A hundred three hundred thirty dollars. If a hundred 166 00:08:38,840 --> 00:08:42,640 Speaker 1: million dollars of capital, who can't fifty five minutes down 167 00:08:42,679 --> 00:08:45,560 Speaker 1: in the chair, and you know that's not really not 168 00:08:45,600 --> 00:08:49,000 Speaker 1: even a surrounding her. As a former banker, that would 169 00:08:49,000 --> 00:08:53,040 Speaker 1: be my advice. John Broderick, Portfolio managed for Permit Capital. 170 00:08:53,080 --> 00:08:57,079 Speaker 1: Thanks so much for joining us. We appreciate that. We 171 00:08:57,160 --> 00:08:59,600 Speaker 1: want to continue this conversation now with two more people 172 00:08:59,640 --> 00:09:01,440 Speaker 1: who know a lot about what's going on. We have 173 00:09:01,480 --> 00:09:04,200 Speaker 1: Jim Anderson, the CEO of Social Flow on the phone 174 00:09:04,200 --> 00:09:06,439 Speaker 1: with us. Sara Phonts like in studio, she's Bloomberg a 175 00:09:06,440 --> 00:09:09,040 Speaker 1: cross us a reporter. Sarah, let me quickly get to 176 00:09:09,080 --> 00:09:11,480 Speaker 1: you because give us an update. We've had a clamp 177 00:09:11,520 --> 00:09:13,720 Speaker 1: down from the brokerages and a lot of these stocks. 178 00:09:13,800 --> 00:09:16,320 Speaker 1: Right now, where do we stand right? We have so 179 00:09:16,440 --> 00:09:20,240 Speaker 1: from robin Hood. We've heard from another app called Trading 180 00:09:20,280 --> 00:09:23,680 Speaker 1: to one two also Interactive Brokers. So where we stand 181 00:09:23,720 --> 00:09:26,840 Speaker 1: now is that it seems as though robin Hood has 182 00:09:26,920 --> 00:09:30,040 Speaker 1: actually made it as though no new shares of a 183 00:09:30,080 --> 00:09:32,640 Speaker 1: couple of stocks can can be purchased. So game stop 184 00:09:32,800 --> 00:09:38,600 Speaker 1: AMC no kia Over at Interactive Brokers, they made some 185 00:09:38,880 --> 00:09:42,640 Speaker 1: changes to their margin requirements and they also made it 186 00:09:43,080 --> 00:09:47,480 Speaker 1: so that no new options positions can actually be opened 187 00:09:47,520 --> 00:09:49,400 Speaker 1: in some of these stocks as well, and that also 188 00:09:49,440 --> 00:09:52,680 Speaker 1: includes BlackBerry, the likes of Trading Too one two for example, 189 00:09:53,080 --> 00:09:55,480 Speaker 1: they seem to be saying that they're no longer taking 190 00:09:55,559 --> 00:09:58,679 Speaker 1: new users because they're just inundated with volume at the time. 191 00:09:59,040 --> 00:10:02,280 Speaker 1: And it's just been back and forth really for the 192 00:10:02,320 --> 00:10:06,520 Speaker 1: past twenty four hours. But yesterday evening after markets closed 193 00:10:06,520 --> 00:10:09,280 Speaker 1: after four pm, for a short period of time, we 194 00:10:09,320 --> 00:10:11,920 Speaker 1: saw a reddit go private, then we saw Shar's fall. 195 00:10:12,000 --> 00:10:13,760 Speaker 1: They came back public. But now this is weighing on 196 00:10:13,800 --> 00:10:16,680 Speaker 1: the stairs too. Jim, I want to bring you in, Jamanderson, 197 00:10:16,720 --> 00:10:18,960 Speaker 1: CEO of so Social Flow, Jim, give us a sense. 198 00:10:19,040 --> 00:10:21,760 Speaker 1: I mean, what's different about this from my perspective. I've 199 00:10:21,800 --> 00:10:24,320 Speaker 1: been in this stocks game for thirty years and people 200 00:10:24,360 --> 00:10:27,240 Speaker 1: always trying to squeeze shorts. But what's different this time 201 00:10:27,640 --> 00:10:30,880 Speaker 1: is social media and how that's leveraging the voices here. 202 00:10:30,880 --> 00:10:34,400 Speaker 1: What are you seeing? Yeah, exactly, I think you know this. 203 00:10:34,400 --> 00:10:35,959 Speaker 1: This has some of the hallmarks of a pump and 204 00:10:36,040 --> 00:10:37,760 Speaker 1: dump scheme. I know you've been talking about that, and 205 00:10:38,080 --> 00:10:40,280 Speaker 1: that's obviously a concern, but it sort of meets the 206 00:10:40,280 --> 00:10:42,959 Speaker 1: emotion of a mega rally, right. That's what difference is 207 00:10:43,040 --> 00:10:46,040 Speaker 1: time is the social media is the mechanism by which 208 00:10:46,080 --> 00:10:48,360 Speaker 1: is being amplified. But it's it's not clear if the 209 00:10:48,440 --> 00:10:51,559 Speaker 1: greater joy is coming from actually making money, but from 210 00:10:51,559 --> 00:10:53,720 Speaker 1: sticking it to the hedge fund in the long street types. 211 00:10:53,760 --> 00:10:56,880 Speaker 1: And that's pretty remarkable. Yeah, But as I keep saying, Sarah, 212 00:10:56,960 --> 00:10:59,280 Speaker 1: you know, they're only sticking it to the short hedge funds. 213 00:10:59,280 --> 00:11:01,400 Speaker 1: They're not sticking to the long hedge ones of anything. 214 00:11:01,440 --> 00:11:04,680 Speaker 1: They're helping them out, you would think so. But something 215 00:11:04,720 --> 00:11:06,599 Speaker 1: that has been interesting lately is if there's an E 216 00:11:06,679 --> 00:11:08,920 Speaker 1: t F that's g v I P GO and it 217 00:11:08,920 --> 00:11:12,560 Speaker 1: actually tracts hedge fund long positions too. And while today 218 00:11:12,760 --> 00:11:15,360 Speaker 1: it's having a bounce back up about three percent or so, 219 00:11:15,360 --> 00:11:19,080 Speaker 1: so outpacing the market, the SMP, for example, is up 220 00:11:19,120 --> 00:11:20,920 Speaker 1: a lesser. I'm trying to pull it up right now, 221 00:11:20,960 --> 00:11:22,959 Speaker 1: one and a half percentum. But if you look for 222 00:11:23,040 --> 00:11:24,720 Speaker 1: the past couple of days, there's been talk of some 223 00:11:24,760 --> 00:11:26,640 Speaker 1: of these hedge funds having to de gross and what 224 00:11:26,760 --> 00:11:30,040 Speaker 1: that's done is weighed unpopular long hedge fund positions as well. 225 00:11:30,320 --> 00:11:32,439 Speaker 1: Before today we had seen this g v I P 226 00:11:32,640 --> 00:11:35,640 Speaker 1: E t F down five straight days. Yesterday was down 227 00:11:35,640 --> 00:11:39,800 Speaker 1: four point three percent. Meanwhile, your most shorted basket was 228 00:11:39,920 --> 00:11:43,040 Speaker 1: up nine percent. So you see others being pulled into 229 00:11:43,080 --> 00:11:44,960 Speaker 1: it too. And yes, they might mostly be sticking it 230 00:11:45,000 --> 00:11:48,600 Speaker 1: to Melvin Capital, to Andrew Left, to Citron, for example, 231 00:11:48,840 --> 00:11:50,719 Speaker 1: But the way they view it, it it seems, especially when 232 00:11:50,720 --> 00:11:52,360 Speaker 1: you look at these message boards and you read the 233 00:11:52,360 --> 00:11:54,360 Speaker 1: way that they speak, they see it as a a 234 00:11:54,440 --> 00:11:57,960 Speaker 1: larger entity. They see it as a larger establishment, and 235 00:11:58,040 --> 00:12:01,400 Speaker 1: they say that if they can be successful and they 236 00:12:01,480 --> 00:12:05,760 Speaker 1: can prove that they can move markets and get a 237 00:12:05,800 --> 00:12:08,640 Speaker 1: group of people together and make a lot of money 238 00:12:08,679 --> 00:12:10,440 Speaker 1: on on the behalf of some of them, then then 239 00:12:10,480 --> 00:12:13,680 Speaker 1: they're sticking it to the man. So yeah, it's interesting. 240 00:12:13,720 --> 00:12:17,240 Speaker 1: And Jim, you know, I've seen from some Wall Streets strategists, 241 00:12:17,240 --> 00:12:19,800 Speaker 1: you know, lists of stocks that have a lot of 242 00:12:20,040 --> 00:12:22,240 Speaker 1: short interest. I mean, is your expectation as you take 243 00:12:22,280 --> 00:12:24,560 Speaker 1: a look at what's happening on social media, is this 244 00:12:24,640 --> 00:12:26,480 Speaker 1: something that's a flash in the pan or do you 245 00:12:26,480 --> 00:12:28,360 Speaker 1: think this might be with us for a while, this 246 00:12:28,440 --> 00:12:31,120 Speaker 1: type of trading. You know, my expectation, this is gonna 247 00:12:31,120 --> 00:12:33,800 Speaker 1: be with us for a while. Again, the emotion is law, right, 248 00:12:33,840 --> 00:12:35,960 Speaker 1: I mean, look at where we are politically and what's 249 00:12:36,000 --> 00:12:37,679 Speaker 1: going on in the world of politics, and I think 250 00:12:37,679 --> 00:12:40,800 Speaker 1: this is just the financial manifestation of that. So to say, oh, 251 00:12:40,840 --> 00:12:42,480 Speaker 1: it's just a flash on the plant pan and it's 252 00:12:42,480 --> 00:12:45,679 Speaker 1: going to go away maybe not supported by people's emotion. 253 00:12:46,000 --> 00:12:47,880 Speaker 1: But the other thing I'll add is, you know, we 254 00:12:47,880 --> 00:12:49,880 Speaker 1: we typically look at big tech, right, look at the 255 00:12:49,880 --> 00:12:52,760 Speaker 1: facebooks and the twitters and YouTube and by Google, et cetera. 256 00:12:52,840 --> 00:12:54,800 Speaker 1: But look at the names that we're talking about. Those 257 00:12:54,840 --> 00:12:57,439 Speaker 1: are there, But really this is read it and Discord 258 00:12:57,600 --> 00:13:00,760 Speaker 1: and the stock trading app robin Hood. You know, this 259 00:13:00,840 --> 00:13:02,960 Speaker 1: is not just a big tech story. There's lots of 260 00:13:03,040 --> 00:13:05,640 Speaker 1: smaller tech involved as well. And I think that the 261 00:13:05,760 --> 00:13:07,920 Speaker 1: morphing and evolving of this to not just be a 262 00:13:07,920 --> 00:13:10,320 Speaker 1: big tech story is another piece that we need to follow. 263 00:13:11,040 --> 00:13:14,920 Speaker 1: Sarah mc is down the moment. I'm just curious, is 264 00:13:14,960 --> 00:13:17,440 Speaker 1: this because of the rules that the brokerage is put 265 00:13:17,440 --> 00:13:19,560 Speaker 1: in place? And are we going to see a return 266 00:13:19,640 --> 00:13:22,840 Speaker 1: to some kind of normality because runaters are not happy 267 00:13:22,840 --> 00:13:25,199 Speaker 1: about this. They're not happy about not being able to 268 00:13:25,240 --> 00:13:27,600 Speaker 1: take on the free market in all its glory. They're 269 00:13:27,600 --> 00:13:29,360 Speaker 1: not happy about it at all. And it does seem 270 00:13:29,360 --> 00:13:31,680 Speaker 1: to be the case earlier today. So for example, game 271 00:13:31,679 --> 00:13:35,040 Speaker 1: Stop is currently down. You mentioned a MC currently down. 272 00:13:36,120 --> 00:13:38,480 Speaker 1: They were just halted due to a volatility halt and 273 00:13:38,520 --> 00:13:41,240 Speaker 1: they just became unhlted and are moving once again. But yeah, 274 00:13:41,280 --> 00:13:43,240 Speaker 1: when you looked at the news coming out this morning, 275 00:13:43,240 --> 00:13:45,240 Speaker 1: the first to really cross the tape was from Robin 276 00:13:45,320 --> 00:13:48,199 Speaker 1: Hood that customers were saying that they were facing restrictions 277 00:13:48,240 --> 00:13:51,640 Speaker 1: on buying some of these stocks. And you immediately, I mean, 278 00:13:51,679 --> 00:13:54,040 Speaker 1: I mean immediately you looked at Game Stop and it 279 00:13:54,080 --> 00:13:58,200 Speaker 1: turned negative after trading above five dollars a share just 280 00:13:58,360 --> 00:14:01,800 Speaker 1: within a few minutes. So does seem to be where 281 00:14:01,840 --> 00:14:04,720 Speaker 1: this is stemming from today? All right, both of you, 282 00:14:04,800 --> 00:14:07,520 Speaker 1: thank you so much for your insights. We continue to 283 00:14:07,520 --> 00:14:11,560 Speaker 1: follow this story all day. Obviously, the regulators and you know, 284 00:14:11,760 --> 00:14:14,199 Speaker 1: agencies like the FED aren't or can't do anything much 285 00:14:14,200 --> 00:14:16,839 Speaker 1: about this yet. But the brokerages are taking matters into 286 00:14:16,880 --> 00:14:19,200 Speaker 1: their own hands. Will see how the likes of the 287 00:14:19,240 --> 00:14:22,800 Speaker 1: Reggit traders respond to that throughout the Dame that is 288 00:14:22,880 --> 00:14:25,440 Speaker 1: Jim Anderson of Social Flow and of course our own 289 00:14:25,440 --> 00:14:28,920 Speaker 1: Saraponza across as a reporter here at Bloomberg. And once 290 00:14:28,960 --> 00:14:32,240 Speaker 1: again a MC is down. But don't forget it did 291 00:14:32,320 --> 00:14:35,240 Speaker 1: have that more than runoff the other day, so it 292 00:14:35,280 --> 00:14:38,080 Speaker 1: has plenty of room to spare. And in terms of 293 00:14:38,080 --> 00:14:40,480 Speaker 1: the major industries, we're seeing a bounce back today, the 294 00:14:40,600 --> 00:14:45,320 Speaker 1: SMB up one and a half percent. But we're going 295 00:14:45,360 --> 00:14:47,720 Speaker 1: to talk something slightly different now because we want to 296 00:14:47,760 --> 00:14:51,120 Speaker 1: bring in our next guest, who apparently, as as as 297 00:14:51,160 --> 00:14:52,440 Speaker 1: far as we know, let's put it that way, he 298 00:14:52,440 --> 00:14:54,280 Speaker 1: has nothing to do with game stoff these days. Jim 299 00:14:54,360 --> 00:14:57,840 Speaker 1: Keen is CEO of Steelcase, which is a leading manufacturer 300 00:14:57,920 --> 00:15:02,040 Speaker 1: furniture for offices, hospitals, and class rooms. Jim, first of all, 301 00:15:02,040 --> 00:15:04,360 Speaker 1: I presume, I mean, are you tempted as a as 302 00:15:04,360 --> 00:15:09,240 Speaker 1: a civilian to join this this uh this town car Well, 303 00:15:09,280 --> 00:15:11,600 Speaker 1: I am a video gamer. I love playing video games, 304 00:15:11,640 --> 00:15:15,280 Speaker 1: but I'm standing on the sidelines for this. Yeah, I 305 00:15:15,320 --> 00:15:18,880 Speaker 1: mean I think it's it's it's it's probably wise talk 306 00:15:18,920 --> 00:15:22,280 Speaker 1: to us about orders. Are people looking for furniture to 307 00:15:22,280 --> 00:15:24,800 Speaker 1: go back to offices, hospital and classrooms at any greater 308 00:15:24,880 --> 00:15:26,680 Speaker 1: other rate than they were over the last few months 309 00:15:27,560 --> 00:15:30,520 Speaker 1: at this point, I'd say it's still pretty um muted. 310 00:15:30,560 --> 00:15:32,280 Speaker 1: I mean, people are mostly working from home, as you know, 311 00:15:32,440 --> 00:15:37,040 Speaker 1: especially large corporations, certainly health care classrooms, education are doing 312 00:15:37,080 --> 00:15:40,520 Speaker 1: things as they prepare for what's next, and uh, of 313 00:15:40,520 --> 00:15:42,960 Speaker 1: we're seeing corporate office is beginning to take those actions 314 00:15:43,000 --> 00:15:46,520 Speaker 1: as well. So well, it hasn't necessarily turned into orders, 315 00:15:46,600 --> 00:15:50,680 Speaker 1: yet we're seeing an increasing activity because with the vaccine coming, 316 00:15:50,920 --> 00:15:54,040 Speaker 1: there's an end in sight. And what what we're hearing 317 00:15:54,040 --> 00:15:56,440 Speaker 1: from our clients. In fact, I just had a conversation 318 00:15:56,520 --> 00:15:58,720 Speaker 1: yesterday with one of our clients, the head of real 319 00:15:58,800 --> 00:16:02,120 Speaker 1: estate of you know me, your kind of top fifty company, 320 00:16:02,280 --> 00:16:04,320 Speaker 1: had just got off the phone with his CEO who 321 00:16:04,320 --> 00:16:05,680 Speaker 1: wanted to know how are they were going to come 322 00:16:05,720 --> 00:16:07,640 Speaker 1: back to the office. How are they're changing the office 323 00:16:07,680 --> 00:16:10,720 Speaker 1: to prepare for what's next. So, uh, it's on everyone's 324 00:16:10,760 --> 00:16:14,880 Speaker 1: mind and I think it's all coming So Jim, I 325 00:16:14,920 --> 00:16:17,560 Speaker 1: guess we'll all figure out at the same time. Uh, 326 00:16:17,680 --> 00:16:19,920 Speaker 1: you know how and to what the great people will 327 00:16:19,920 --> 00:16:21,880 Speaker 1: go back to the office. What do you think employees 328 00:16:22,840 --> 00:16:25,400 Speaker 1: want and need when they come back to the office. 329 00:16:25,960 --> 00:16:28,720 Speaker 1: Great questions. So we we spent this last year's studying 330 00:16:28,920 --> 00:16:31,840 Speaker 1: actually connecting with people around the world as they were 331 00:16:31,840 --> 00:16:34,600 Speaker 1: working from home to learn about their work from home 332 00:16:34,680 --> 00:16:38,080 Speaker 1: experience and to try to understand what they might expect 333 00:16:38,160 --> 00:16:40,600 Speaker 1: when they come back to the office. So and we 334 00:16:40,680 --> 00:16:42,320 Speaker 1: learned a ton. I mean, we learned a lot about 335 00:16:42,320 --> 00:16:45,080 Speaker 1: the work from home experience. What we learned about their 336 00:16:45,080 --> 00:16:48,520 Speaker 1: expectations is, Uh, first of all, safety, You know, safety 337 00:16:48,800 --> 00:16:51,840 Speaker 1: is not going to be less of the concern. Vaccines 338 00:16:51,880 --> 00:16:53,680 Speaker 1: are gonna solve a lot of problems, but they're not 339 00:16:53,680 --> 00:16:56,600 Speaker 1: going to completely eliminate COVID. Safety will still be on 340 00:16:56,600 --> 00:16:58,880 Speaker 1: the minds of people, particularly as they come back to 341 00:16:58,960 --> 00:17:02,240 Speaker 1: offices that had over time become you know, really dense, 342 00:17:02,360 --> 00:17:05,560 Speaker 1: really open. There's going to be some common sense adjustments 343 00:17:05,600 --> 00:17:08,479 Speaker 1: I think needed to reassure people that when they come 344 00:17:08,480 --> 00:17:10,400 Speaker 1: back to the office that they'll be safe and it'll 345 00:17:10,440 --> 00:17:13,359 Speaker 1: be safe to take off their masks again. A second 346 00:17:13,359 --> 00:17:17,000 Speaker 1: thing we heard from everyone is belonging. Uh, the the 347 00:17:17,040 --> 00:17:20,080 Speaker 1: relationships we all built when we can work face to face, 348 00:17:20,200 --> 00:17:24,919 Speaker 1: we're still leveraging. But over time those relationships begin to atrophy, 349 00:17:25,000 --> 00:17:27,240 Speaker 1: and it doesn't help us with that new employee who joined. 350 00:17:27,280 --> 00:17:30,159 Speaker 1: It doesn't help us as we change teams or organizations shift. 351 00:17:30,840 --> 00:17:33,119 Speaker 1: So people want a sense of belonging, They want to 352 00:17:33,160 --> 00:17:35,840 Speaker 1: be connected with each other, and they're looking forward to 353 00:17:35,920 --> 00:17:38,320 Speaker 1: coming back to the office for that reason as well, 354 00:17:38,880 --> 00:17:41,800 Speaker 1: and I think UM thirdly as productivity, we heard this 355 00:17:41,840 --> 00:17:44,240 Speaker 1: a lot well. In some ways people were able to 356 00:17:44,280 --> 00:17:47,320 Speaker 1: sustain pretty high levels of productivity at home, and in 357 00:17:47,320 --> 00:17:50,000 Speaker 1: some cases people felt they were even more productive because 358 00:17:50,040 --> 00:17:52,959 Speaker 1: they could work in an uninterrupted way for longer periods 359 00:17:53,000 --> 00:17:56,360 Speaker 1: of time. People also realize they're missing something, they're they're 360 00:17:56,359 --> 00:17:58,080 Speaker 1: not learning as much from their colleagues. They are not 361 00:17:58,160 --> 00:18:02,040 Speaker 1: able to have maybe some of the more informal task 362 00:18:02,440 --> 00:18:05,440 Speaker 1: pascit learning opportunities that you have when you when you 363 00:18:05,520 --> 00:18:07,359 Speaker 1: kind of just brush up against people, or you get 364 00:18:07,400 --> 00:18:10,280 Speaker 1: to see how someone handles the situation kind of from 365 00:18:10,280 --> 00:18:12,520 Speaker 1: the side. So those are some of the things people 366 00:18:12,520 --> 00:18:15,680 Speaker 1: are looking forward to as they think about coming back 367 00:18:15,680 --> 00:18:17,879 Speaker 1: to the office. So, Jim, you know, where are you 368 00:18:17,920 --> 00:18:21,480 Speaker 1: seeing the orders coming in from these days? Is more hospitals? 369 00:18:21,560 --> 00:18:25,920 Speaker 1: Is it more headquarters with you know, desks and lamps 370 00:18:25,960 --> 00:18:28,240 Speaker 1: and you know, standing desks and things like that, or 371 00:18:28,560 --> 00:18:31,280 Speaker 1: or have you had to pivot your supply chain and 372 00:18:31,320 --> 00:18:38,320 Speaker 1: your your work environment differently. Well, I'd say, first of all, 373 00:18:38,359 --> 00:18:41,159 Speaker 1: it's different by regions. So it's a global company. UM 374 00:18:41,440 --> 00:18:44,280 Speaker 1: Asia was the first to see the COVID crisis, but 375 00:18:44,680 --> 00:18:46,800 Speaker 1: also Asia was the first to come out of it, 376 00:18:46,840 --> 00:18:49,000 Speaker 1: and they haven't really seen the second and third waves 377 00:18:49,000 --> 00:18:52,359 Speaker 1: the way we have in Europe and the US. So 378 00:18:52,560 --> 00:18:57,119 Speaker 1: in Asia we're seeing business return to more normal levels 379 00:18:57,119 --> 00:19:00,240 Speaker 1: across across a wide range of companies, and that's good 380 00:19:00,240 --> 00:19:02,639 Speaker 1: sign for the rest of our business because you know, 381 00:19:02,760 --> 00:19:04,919 Speaker 1: eventually we hope to be in that same spot. In 382 00:19:05,000 --> 00:19:09,960 Speaker 1: markets like the US, customers like healthcare organizations, education have 383 00:19:10,080 --> 00:19:14,120 Speaker 1: remained pretty strong throughout. I'd say where orders have been 384 00:19:14,160 --> 00:19:16,720 Speaker 1: the weak as it's among the largest companies who are 385 00:19:16,760 --> 00:19:21,600 Speaker 1: often in headquarters buildings in the largest cities. That's where 386 00:19:21,600 --> 00:19:23,480 Speaker 1: the commutes are the toughest that you have to deal 387 00:19:23,520 --> 00:19:26,800 Speaker 1: with elevators and things like that. So the very largest 388 00:19:26,800 --> 00:19:29,440 Speaker 1: customers have cut back the most, and our business has 389 00:19:29,480 --> 00:19:33,160 Speaker 1: been the strongest among mid market, smaller companies that aren't 390 00:19:33,160 --> 00:19:35,240 Speaker 1: facing a lot of the same challenges. They're more distributed 391 00:19:35,240 --> 00:19:37,879 Speaker 1: around the country. So, Jim, when when you talk to 392 00:19:38,280 --> 00:19:41,720 Speaker 1: UH senior managers of the of the companies that you 393 00:19:41,840 --> 00:19:45,120 Speaker 1: do business with, what do they ultimately believe will be 394 00:19:45,680 --> 00:19:49,040 Speaker 1: the kind of the new normal workforce? Will everybody come back? 395 00:19:49,119 --> 00:19:52,600 Speaker 1: Will everybody come back on a kind of a split 396 00:19:52,680 --> 00:19:57,639 Speaker 1: type of schedule will what's what's the thinking. So the 397 00:19:57,720 --> 00:20:00,520 Speaker 1: thinking is that most people will work from home a 398 00:20:00,600 --> 00:20:02,960 Speaker 1: day or two a week if that's what they choose 399 00:20:03,000 --> 00:20:04,680 Speaker 1: to do, and that the last part of it is 400 00:20:04,720 --> 00:20:08,960 Speaker 1: really important. It's about choice. I'd say this is not 401 00:20:09,160 --> 00:20:12,800 Speaker 1: that different really from what progressive companies were doing before 402 00:20:12,800 --> 00:20:15,520 Speaker 1: all this. Most of our clients, who are kind of 403 00:20:15,560 --> 00:20:17,920 Speaker 1: at the leading edge of thinking about how to use 404 00:20:17,960 --> 00:20:20,080 Speaker 1: the workplace, gave people the choice if you wanted to 405 00:20:20,080 --> 00:20:21,520 Speaker 1: work from home before a day or two a week, 406 00:20:21,560 --> 00:20:24,320 Speaker 1: you could do so. And that's that's probably going to 407 00:20:24,440 --> 00:20:27,240 Speaker 1: just be more common across the broader range of companies. 408 00:20:28,119 --> 00:20:30,560 Speaker 1: Now some people are are saying, well, you know, there's 409 00:20:30,600 --> 00:20:32,320 Speaker 1: a handful of companies that are saying, well, maybe we're 410 00:20:32,320 --> 00:20:34,520 Speaker 1: gonna have everybody work from home, or we're gonna have 411 00:20:34,600 --> 00:20:38,280 Speaker 1: nobody work from home. That idea that a company is 412 00:20:38,320 --> 00:20:40,439 Speaker 1: going to try to control that, I think is a 413 00:20:40,480 --> 00:20:42,040 Speaker 1: bad idea and I don't think it's going to be 414 00:20:42,080 --> 00:20:44,159 Speaker 1: successful in the long run. So I think the biggest 415 00:20:44,240 --> 00:20:48,320 Speaker 1: changes that employees will have more choice, and the other 416 00:20:48,400 --> 00:20:51,840 Speaker 1: change I think is that now that the office will 417 00:20:51,880 --> 00:20:54,480 Speaker 1: have to compete against working from home, the office will 418 00:20:54,520 --> 00:20:57,879 Speaker 1: have to step it up. So it's no longer going 419 00:20:57,920 --> 00:21:00,399 Speaker 1: to be acceptable that when I come into the office, 420 00:21:00,440 --> 00:21:02,560 Speaker 1: I can't find a place to concentrate, or I can't 421 00:21:03,600 --> 00:21:06,080 Speaker 1: connect to a video call that I have to be on, 422 00:21:06,400 --> 00:21:08,800 Speaker 1: or or all the things that maybe you were able 423 00:21:08,840 --> 00:21:11,439 Speaker 1: to do at home, depending on how your home situation was, 424 00:21:12,080 --> 00:21:13,760 Speaker 1: you should be able to do that and more when 425 00:21:13,800 --> 00:21:15,280 Speaker 1: you're in the office. And I think a lot of 426 00:21:15,600 --> 00:21:17,679 Speaker 1: companies that are looking at that and saying, Okay, we 427 00:21:17,720 --> 00:21:20,040 Speaker 1: have to we have to make sure our offices are safe, 428 00:21:20,160 --> 00:21:23,080 Speaker 1: they have to be productive, they have to be inspiring. 429 00:21:23,440 --> 00:21:25,840 Speaker 1: So this is another I think important piece. You know, 430 00:21:25,840 --> 00:21:29,880 Speaker 1: if these days everyone's thinking about competitive advantage, it wasn't 431 00:21:29,880 --> 00:21:32,160 Speaker 1: that long ago when the main conversation would be about 432 00:21:32,160 --> 00:21:35,879 Speaker 1: digital transformation, or we'll be talking about destructive forces in 433 00:21:35,920 --> 00:21:39,360 Speaker 1: your industry, thinking about how you can innovate more quickly, 434 00:21:40,400 --> 00:21:44,160 Speaker 1: and ceo s were recognizing that to have a competitive 435 00:21:44,160 --> 00:21:47,680 Speaker 1: advantage in those areas, you needed to have a culture 436 00:21:48,320 --> 00:21:51,959 Speaker 1: that's supported higher levels of trust, that attracted the right 437 00:21:52,040 --> 00:21:55,280 Speaker 1: kinds of people to your organization. These are all very subtle, 438 00:21:55,320 --> 00:21:57,560 Speaker 1: but this is what competitive advantage has come to. I mean, 439 00:21:57,640 --> 00:22:00,119 Speaker 1: it's it's very small things that the fine winner and 440 00:22:00,200 --> 00:22:04,320 Speaker 1: losers in business these days. If you have everyone working 441 00:22:04,359 --> 00:22:07,200 Speaker 1: at home, your your people's homes are no different in 442 00:22:07,240 --> 00:22:09,760 Speaker 1: your competitors homes, you've basically given up an accepted parity. 443 00:22:10,200 --> 00:22:11,639 Speaker 1: And I think a lot of companies are saying, we 444 00:22:11,680 --> 00:22:14,320 Speaker 1: can't accept that. We have to have a work environment 445 00:22:14,880 --> 00:22:18,280 Speaker 1: that competes, where we can advance our culture, where we 446 00:22:18,320 --> 00:22:20,520 Speaker 1: can help people connect to the purpose of our organization, 447 00:22:20,680 --> 00:22:23,600 Speaker 1: we can inspire people. Where are people learn faster than 448 00:22:23,640 --> 00:22:27,160 Speaker 1: our competitors people? And that's that's the new aspiration for 449 00:22:27,359 --> 00:22:29,959 Speaker 1: a better a better way of working. Jim, What are 450 00:22:30,000 --> 00:22:35,760 Speaker 1: input costs like these days? Highly volaso right, So in 451 00:22:35,800 --> 00:22:39,360 Speaker 1: some for some commodities we see lower costs and then 452 00:22:39,400 --> 00:22:41,159 Speaker 1: for other things in the short run thing, but like 453 00:22:41,280 --> 00:22:44,880 Speaker 1: steel and transportation, we've seen higher costs. But it's it's 454 00:22:44,920 --> 00:22:48,280 Speaker 1: a very unstable situation, you know, steal in particular. So 455 00:22:48,320 --> 00:22:49,919 Speaker 1: how do you deal with that? I mean, do you 456 00:22:50,000 --> 00:22:52,560 Speaker 1: change the pricing that you charge your customer is constant 457 00:22:52,600 --> 00:22:55,120 Speaker 1: day or do you just eat the higher prices when 458 00:22:55,119 --> 00:22:57,359 Speaker 1: they come. Must be so difficult to deal with that. 459 00:22:58,000 --> 00:23:00,439 Speaker 1: We have long term contracts with our wires, but we 460 00:23:00,440 --> 00:23:03,160 Speaker 1: also have long term contracts with our customers. We don't 461 00:23:03,200 --> 00:23:07,640 Speaker 1: try to change the prices constantly us. We can't, so 462 00:23:07,880 --> 00:23:10,439 Speaker 1: there's a certain amount of observing the ups and downs. 463 00:23:10,480 --> 00:23:12,879 Speaker 1: But if you're managing your business properly, you capture the 464 00:23:13,000 --> 00:23:16,120 Speaker 1: ups and you capture the downs, and so it kind 465 00:23:16,119 --> 00:23:18,920 Speaker 1: of takes it comes out in the wash in the end. Yeah, 466 00:23:18,920 --> 00:23:20,280 Speaker 1: that's kind of where I want to go, Jim. I mean, 467 00:23:20,359 --> 00:23:22,040 Speaker 1: talk to us about supply chain. We don't. We haven't 468 00:23:22,040 --> 00:23:23,879 Speaker 1: talked about that in a while here with some of 469 00:23:23,920 --> 00:23:26,840 Speaker 1: the issues with China that were you know so much 470 00:23:26,840 --> 00:23:29,480 Speaker 1: in the news. Pre covid talked us about your supply 471 00:23:29,520 --> 00:23:32,480 Speaker 1: chain and kind of what you're seeing. Our supply chain 472 00:23:32,560 --> 00:23:35,359 Speaker 1: is distributed around the world and it's primarily set up 473 00:23:35,440 --> 00:23:38,840 Speaker 1: to support local customers. So in the America's most of 474 00:23:38,840 --> 00:23:41,399 Speaker 1: our product comes from factories in the Americas. In Asia 475 00:23:41,880 --> 00:23:44,680 Speaker 1: to serve Asian customers, it comes from factories in Asia 476 00:23:44,760 --> 00:23:47,359 Speaker 1: and the same in Amia, so we have kind of 477 00:23:47,359 --> 00:23:50,600 Speaker 1: a regional structure. We do have some components that are 478 00:23:50,640 --> 00:23:53,879 Speaker 1: made in one region that support the entire world, So 479 00:23:53,920 --> 00:23:55,879 Speaker 1: they may be made in Asia and they shipped to 480 00:23:55,920 --> 00:23:58,399 Speaker 1: the US. And they ship to Amia. But for the 481 00:23:58,440 --> 00:24:00,879 Speaker 1: most part, we try to keep our supply change relatively 482 00:24:00,920 --> 00:24:02,720 Speaker 1: short and close to the markets so we can keep 483 00:24:02,720 --> 00:24:05,920 Speaker 1: our lead times down and that helps us during times 484 00:24:05,920 --> 00:24:08,359 Speaker 1: of destruction. But it doesn't mean we're immune, you know, 485 00:24:08,359 --> 00:24:10,600 Speaker 1: We're still dealing with you know, making sure that we 486 00:24:10,640 --> 00:24:13,040 Speaker 1: can get our products on two containers which are in 487 00:24:13,119 --> 00:24:16,280 Speaker 1: short supply, and and so we still face our own 488 00:24:16,280 --> 00:24:18,600 Speaker 1: set of challenges. Has been difficult not to be able 489 00:24:18,640 --> 00:24:24,159 Speaker 1: to travel, you know. It has, of course because you 490 00:24:24,280 --> 00:24:27,520 Speaker 1: missed that face to face interaction. But like anybody else, 491 00:24:27,520 --> 00:24:30,160 Speaker 1: we're also using video a lot so and I would 492 00:24:30,160 --> 00:24:32,600 Speaker 1: imagine in the future and when we're hearing this from 493 00:24:32,600 --> 00:24:35,000 Speaker 1: our clients as well, everyone is learning what are the 494 00:24:35,080 --> 00:24:37,320 Speaker 1: things that you can do without traveling, and what are 495 00:24:37,359 --> 00:24:40,360 Speaker 1: the things that you should spend more time doing when 496 00:24:40,359 --> 00:24:43,200 Speaker 1: you when you go through the effort of traveling. So, 497 00:24:43,320 --> 00:24:46,320 Speaker 1: for example, UM, in the past, I might travel and 498 00:24:46,520 --> 00:24:48,959 Speaker 1: dedicate a lot of time to going through business reviews 499 00:24:48,960 --> 00:24:51,359 Speaker 1: in different regions. I can do a lot of that 500 00:24:51,480 --> 00:24:54,080 Speaker 1: over video. But what I can't do is have breakfast, lunch, 501 00:24:54,119 --> 00:24:56,080 Speaker 1: and dinner with all the people that I meet, you know, 502 00:24:56,119 --> 00:24:58,480 Speaker 1: and that's actually the most valuable part of the traveling 503 00:24:58,840 --> 00:25:01,199 Speaker 1: is the things you learn around the edges of what 504 00:25:01,240 --> 00:25:03,919 Speaker 1: you're doing. Hey, Jim, thanks so much for joining us. 505 00:25:03,960 --> 00:25:07,440 Speaker 1: We appreciate it as always. Jim Keane, President CEO of Steelcase. 506 00:25:07,480 --> 00:25:11,120 Speaker 1: They are based in Grand Rapids, Michigan, on the future 507 00:25:11,560 --> 00:25:17,119 Speaker 1: of the new work environment post pandemic. Busy night for 508 00:25:17,320 --> 00:25:20,040 Speaker 1: tech investors last evening we had a bunch of big 509 00:25:20,040 --> 00:25:24,919 Speaker 1: tech NATUS report earnings, including Apple and Down. We do 510 00:25:25,000 --> 00:25:27,719 Speaker 1: it with our good friend Dan Ives, Managing director Equity 511 00:25:27,760 --> 00:25:32,240 Speaker 1: Research at web Bush Securities, and a Penn State alum. 512 00:25:32,280 --> 00:25:35,919 Speaker 1: All right, Dan, let's start with Apple. Some blowout numbers, 513 00:25:35,920 --> 00:25:38,359 Speaker 1: over a hundred billion in revenue and a quarter. You 514 00:25:38,400 --> 00:25:39,760 Speaker 1: have the stocks off a couple of percent. I know 515 00:25:39,760 --> 00:25:42,520 Speaker 1: it's put up about over to traillion twelve months. What 516 00:25:42,600 --> 00:25:45,120 Speaker 1: did you make of the numbers last night? I mean, 517 00:25:45,280 --> 00:25:47,920 Speaker 1: I think in all my years cover and Apple, this 518 00:25:48,000 --> 00:25:51,360 Speaker 1: is one to frame for the history of books in Cupertina, 519 00:25:51,640 --> 00:25:56,000 Speaker 1: our five billion dollar blowout on iPhones. I think what 520 00:25:56,080 --> 00:25:58,879 Speaker 1: we saw last night is that the super cycle there 521 00:25:58,960 --> 00:26:02,200 Speaker 1: was a lot of hype, but the reality meant to 522 00:26:02,280 --> 00:26:04,840 Speaker 1: high and actually exceeded. And I think this is really 523 00:26:04,880 --> 00:26:07,680 Speaker 1: going to be the path to a three trillion dollar 524 00:26:07,760 --> 00:26:10,359 Speaker 1: mark Apple over the next six to nine months. For Apple, 525 00:26:10,840 --> 00:26:13,160 Speaker 1: despite you know a little bit of a knee jerk 526 00:26:13,240 --> 00:26:17,199 Speaker 1: negative reaction today, what keeps it going? So you know, 527 00:26:17,240 --> 00:26:19,840 Speaker 1: we're in a pandemic, people are on their phones a lot. 528 00:26:20,080 --> 00:26:22,320 Speaker 1: You can potentially see why Apple might do well in 529 00:26:22,400 --> 00:26:25,240 Speaker 1: this quarter, but what keeps it going from here on 530 00:26:25,440 --> 00:26:28,640 Speaker 1: out at least for the next few quarters. Down Sure, 531 00:26:28,680 --> 00:26:30,960 Speaker 1: a lot of it. And the reasons the supercycle is 532 00:26:31,080 --> 00:26:35,160 Speaker 1: fort of the installed its three hundred fifty million iPhones 533 00:26:35,280 --> 00:26:38,680 Speaker 1: have not upgraded three and a half years, and you're 534 00:26:38,760 --> 00:26:42,399 Speaker 1: seeing just a massive upgrade opportunity as well as five 535 00:26:42,480 --> 00:26:45,159 Speaker 1: G and that's going to continue be a catalyst for 536 00:26:45,200 --> 00:26:48,320 Speaker 1: the coming quarters. We think this will equipse the record 537 00:26:48,359 --> 00:26:51,320 Speaker 1: from two thousand and fifty for iPhone units, which is 538 00:26:51,320 --> 00:26:54,240 Speaker 1: two one million units. We could be looking two hundred 539 00:26:54,280 --> 00:26:57,800 Speaker 1: forty two and fifty million units this time. But services, 540 00:26:57,920 --> 00:27:01,120 Speaker 1: that's the key. Services We've believe got the big part 541 00:27:01,160 --> 00:27:03,720 Speaker 1: of the re ratings. Services alone, I believe it's worth 542 00:27:03,800 --> 00:27:06,760 Speaker 1: one point two to one point three trillion, and that's 543 00:27:06,760 --> 00:27:09,080 Speaker 1: why this is still a green light to own this name. 544 00:27:09,400 --> 00:27:11,760 Speaker 1: And I think we saw last night just puts another 545 00:27:11,880 --> 00:27:14,720 Speaker 1: feather in the cap for Cook in terms of for 546 00:27:14,800 --> 00:27:18,560 Speaker 1: investors in the bull case. Dan talks us about China. 547 00:27:18,680 --> 00:27:20,199 Speaker 1: There was a you know point, let's call it a 548 00:27:20,280 --> 00:27:23,480 Speaker 1: year or so ago when trade tensions were uh, you know, 549 00:27:23,560 --> 00:27:26,399 Speaker 1: really ratcheting up here and we were concerned about supply 550 00:27:26,480 --> 00:27:29,240 Speaker 1: chains and China and tariffs. Talk to us about that. 551 00:27:29,280 --> 00:27:32,560 Speaker 1: What's the company saying on those those issues this time around. Yeah, 552 00:27:32,600 --> 00:27:34,440 Speaker 1: when you think about Apple, I mean Apple is really 553 00:27:34,480 --> 00:27:36,920 Speaker 1: the poster child with the US China called tech boy, 554 00:27:36,920 --> 00:27:39,000 Speaker 1: and we've seen it overhang over the last year and 555 00:27:39,000 --> 00:27:43,439 Speaker 1: a half. But yet now China supply chain issues have 556 00:27:43,520 --> 00:27:47,920 Speaker 1: really corrected themselves, ratching down of tensions between the US 557 00:27:47,960 --> 00:27:51,120 Speaker 1: and China. Bullets for Apple and Semis. But the most 558 00:27:51,160 --> 00:27:54,159 Speaker 1: important thing too is demand. About demand is going to 559 00:27:54,240 --> 00:27:57,320 Speaker 1: come at China in that group fifty seven percent year 560 00:27:57,320 --> 00:27:59,920 Speaker 1: of the year. So it really just shows the hard 561 00:28:00,080 --> 00:28:03,480 Speaker 1: some lungs of this upgrade cycle as China and you 562 00:28:03,520 --> 00:28:07,520 Speaker 1: are seeing massive demand for Apple and for iPhones coming 563 00:28:07,560 --> 00:28:10,840 Speaker 1: out of China, which is huge. That that's really something 564 00:28:10,880 --> 00:28:12,879 Speaker 1: that's a signal that we're going to see over the 565 00:28:12,920 --> 00:28:15,679 Speaker 1: coming quarters at this place more and more of a 566 00:28:15,800 --> 00:28:19,320 Speaker 1: part not just on iPhones but services. And that's a 567 00:28:19,359 --> 00:28:22,480 Speaker 1: big part of the re rating that we're seen. Talk 568 00:28:22,520 --> 00:28:25,520 Speaker 1: to us about Tesla because a sixth straight profitable quarter. 569 00:28:25,720 --> 00:28:28,600 Speaker 1: It really had a great quarter. Stalk down about three percent. 570 00:28:28,640 --> 00:28:30,119 Speaker 1: But as you say, this could just be you know, 571 00:28:30,160 --> 00:28:32,840 Speaker 1: similarly to Apple, a little bit of cell on the news. 572 00:28:32,920 --> 00:28:35,080 Speaker 1: But what happens going forward with Tesla can to keep 573 00:28:35,160 --> 00:28:38,160 Speaker 1: up the record. I think right now we're in a 574 00:28:38,200 --> 00:28:41,840 Speaker 1: golden age of e vs three percent penetration globally going 575 00:28:41,840 --> 00:28:44,920 Speaker 1: to timber next three to four years. GM just talked 576 00:28:44,960 --> 00:28:47,760 Speaker 1: about going all e V and when you look at 577 00:28:47,760 --> 00:28:51,680 Speaker 1: Tesla in the e V markets, Tesla's world, everyone else's 578 00:28:51,720 --> 00:28:55,560 Speaker 1: paying rent. Last night's numbers route US lit't need jerk 579 00:28:55,640 --> 00:28:59,400 Speaker 1: negative reaction just we'll call conservative guidance for two thousand 580 00:28:59,440 --> 00:29:01,840 Speaker 1: twenty one. But that's what you want to see them do. 581 00:29:01,960 --> 00:29:04,560 Speaker 1: You don't want to see any of these companies, given 582 00:29:04,600 --> 00:29:08,920 Speaker 1: this backdrop, to come out and have aggressive guidance. And 583 00:29:09,120 --> 00:29:11,320 Speaker 1: and I think when as we look out right now, 584 00:29:11,400 --> 00:29:14,960 Speaker 1: the trajectory could be a million plus units of deliveries 585 00:29:15,280 --> 00:29:19,120 Speaker 1: by two thousand twenty two and a more profitable Tesla. 586 00:29:19,520 --> 00:29:23,160 Speaker 1: That's why we believe both case twelve fifty with our 587 00:29:23,160 --> 00:29:28,040 Speaker 1: base case price target. Dan talk to us about profitability 588 00:29:28,320 --> 00:29:32,080 Speaker 1: at Tesla on a unit basis. Do they make any 589 00:29:32,120 --> 00:29:37,640 Speaker 1: money manufacturing cars? Is is just the the credits, you know? 590 00:29:37,640 --> 00:29:39,600 Speaker 1: I think that's always been a bit of the misnomer 591 00:29:39,640 --> 00:29:42,440 Speaker 1: and the bull bearer thesis is that a year and 592 00:29:42,440 --> 00:29:45,320 Speaker 1: a half ago that could have been the argument today 593 00:29:45,480 --> 00:29:50,320 Speaker 1: given increased profitability, especially in China. We think the average 594 00:29:50,320 --> 00:29:53,960 Speaker 1: car sold in China is about twenty percent more profitable 595 00:29:54,000 --> 00:29:56,920 Speaker 1: than the US because the Giga three and what they've 596 00:29:56,960 --> 00:30:00,480 Speaker 1: built in terms of the ecosystem China and go and forward. 597 00:30:00,600 --> 00:30:03,840 Speaker 1: I believe they're profitable, not just on the actual car. 598 00:30:04,200 --> 00:30:06,280 Speaker 1: And of course tax credits are going to continue to 599 00:30:06,320 --> 00:30:09,520 Speaker 1: be a talent even with by administration. I think dub 600 00:30:09,640 --> 00:30:12,360 Speaker 1: went down on tax credits and restoring them to Tesla. 601 00:30:12,920 --> 00:30:14,760 Speaker 1: But at the end of the day, the reddings in 602 00:30:14,800 --> 00:30:16,560 Speaker 1: the rear view mirror, that's how they got in t 603 00:30:16,680 --> 00:30:19,680 Speaker 1: SUP five D and that continues to be a focus 604 00:30:19,720 --> 00:30:22,720 Speaker 1: of investors as we look forward into the next three 605 00:30:22,800 --> 00:30:25,880 Speaker 1: to four years. Briefly down almost at a time, but 606 00:30:26,080 --> 00:30:29,000 Speaker 1: it could a Reddit brigade do something to any of 607 00:30:29,000 --> 00:30:31,120 Speaker 1: the stocks that you covered. You imagine, are you a 608 00:30:31,120 --> 00:30:33,320 Speaker 1: little bit nervous that's something that you know they might 609 00:30:33,360 --> 00:30:37,640 Speaker 1: train their eyes on one of your coverage stocks. Yeah. 610 00:30:37,640 --> 00:30:39,080 Speaker 1: And I think when you look at Tessa and some 611 00:30:39,160 --> 00:30:41,240 Speaker 1: of the fang names, I mean they Robbins had a 612 00:30:41,240 --> 00:30:44,440 Speaker 1: lot of noise, but ultimately it's a market force that 613 00:30:44,760 --> 00:30:46,880 Speaker 1: needs to be focused on. It's going to be here 614 00:30:46,920 --> 00:30:50,160 Speaker 1: to stay in terms of the Reddit social media robin hood. 615 00:30:50,760 --> 00:30:54,040 Speaker 1: But when you look at these names, fundamentally, I continue 616 00:30:54,080 --> 00:30:56,120 Speaker 1: to think they continue to go up into the right 617 00:30:56,520 --> 00:31:00,600 Speaker 1: r V text box, are up another over then next year. 618 00:31:01,000 --> 00:31:03,320 Speaker 1: And what we're seeing with the rhetory doesn't make is 619 00:31:03,360 --> 00:31:06,240 Speaker 1: any more cautious or risk off on our names like you. 620 00:31:06,360 --> 00:31:10,320 Speaker 1: This is a contained risk situation, especially when we look 621 00:31:10,360 --> 00:31:15,160 Speaker 1: at names like Tessa, Microsoft, Apple or others. Dan ives 622 00:31:15,200 --> 00:31:17,440 Speaker 1: what Bush Security is always amazing to speak with you. 623 00:31:17,560 --> 00:31:19,720 Speaker 1: Thank you for all of your analysis on Apple and 624 00:31:19,720 --> 00:31:22,120 Speaker 1: Tessa that reported yesterday. Of course we'll speak to you 625 00:31:22,160 --> 00:31:26,840 Speaker 1: again soon. And it's interesting Paul Alexandria Ocasio Cortez jumping 626 00:31:26,880 --> 00:31:29,000 Speaker 1: in on the side of the redditor saying that we 627 00:31:29,080 --> 00:31:32,120 Speaker 1: must know more about robin hood Apps decision. At the 628 00:31:32,160 --> 00:31:34,880 Speaker 1: same time, of course, employees of game stop for a 629 00:31:34,920 --> 00:31:37,040 Speaker 1: little anois because they're not benefiting at all for many 630 00:31:37,040 --> 00:31:41,360 Speaker 1: of this. Thanks for listening to Boomberg Markets podcast. You 631 00:31:41,400 --> 00:31:44,920 Speaker 1: can subscribe and listen to interviews at Apple Podcasts or 632 00:31:45,000 --> 00:31:48,479 Speaker 1: whatever podcast platform you prefer. I'm Bonnie Quinn. I'm on 633 00:31:48,520 --> 00:31:51,080 Speaker 1: Twitter at Bonny Quinn, and I'm Paul Sweeney. I'm on 634 00:31:51,080 --> 00:31:54,040 Speaker 1: Twitter at pt Sweeney. Before the podcast, you can always 635 00:31:54,040 --> 00:31:56,360 Speaker 1: catch us worldwide at Bloomberg Radio.