WEBVTT - Boeing Report, US Retail Sales 0:00:02.920 --> 0:00:10.799 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.840 --> 0:00:15.040 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:15.040 --> 0:00:17.520 Eastern on Apple card Playing and Broyd Auto with the 0:00:17.520 --> 0:00:21.400 Bloomberg Business App. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:23.360 or watch us live on YouTube. 0:00:25.200 --> 0:00:28.160 Joining us speaking of is George Ferguson. He's senior Aerospace, 0:00:28.200 --> 0:00:31.200 Defense and Airlines analyst at Bloomberg Intelligence, and he joins 0:00:31.240 --> 0:00:35.239 us from Princeton, New York, OURVII headquarters over there in 0:00:35.280 --> 0:00:35.680 New Jersey. 0:00:35.720 --> 0:00:36.879 What did I say, Princeton, New York? 0:00:37.000 --> 0:00:37.279 I did? 0:00:37.479 --> 0:00:39.519 Yeah, sorry, coffee, coffee. 0:00:39.760 --> 0:00:42.120 I haven't had that second cup because it was delayed. 0:00:42.240 --> 0:00:42.800 I'll get you. 0:00:43.080 --> 0:00:44.959 Well, the eleven o'clock hour will be a good hour 0:00:45.000 --> 0:00:48.320 for me. So Boeing is having a lot of issues. 0:00:48.520 --> 0:00:52.360 The CEO will be facing leaders in Congress today. There 0:00:52.400 --> 0:00:56.200 was also Later's whistleblower report that alleged to the planemaker 0:00:56.280 --> 0:00:59.200 mishandled and lost track of hundreds of faulty parts, some 0:00:59.240 --> 0:01:01.760 of which had been in may have been installed in 0:01:01.840 --> 0:01:06.520 some new seven thirty seven Max planes. George, Well, okay, 0:01:06.600 --> 0:01:09.160 there's so many questions, but what is Dave Calhoun today 0:01:09.280 --> 0:01:11.600 going to face from Congress and then in the light 0:01:11.800 --> 0:01:15.760 of these consistent whistleblower claims. 0:01:15.840 --> 0:01:17.800 So my guess is that what Dave Calhoun's going to 0:01:17.840 --> 0:01:20.960 say today's going to stick to the script. He's going 0:01:21.000 --> 0:01:24.600 to say they're working on fixing all these problems. He'll 0:01:24.640 --> 0:01:27.199 probably you know, not be able to confirm or deny 0:01:27.360 --> 0:01:30.720 sort of individual reports. We saw the report come out, 0:01:31.840 --> 0:01:34.200 you know, the Boeing They gave us a summary of 0:01:34.200 --> 0:01:37.480 what they provided to the FAA and their action plan, 0:01:38.640 --> 0:01:42.800 you know, for improving the production process. It included things like, 0:01:42.920 --> 0:01:47.560 you know, making sure they appropriately tracked faulty parts and 0:01:47.560 --> 0:01:50.240 didn't put them in airplanes. So my guess is there 0:01:50.240 --> 0:01:53.960 were some situations where this was a problem. But again, 0:01:54.000 --> 0:01:55.080 I think he's not going to give a lot of 0:01:55.080 --> 0:01:58.640 specifics today in front of Congress. I think it's he'll 0:01:58.640 --> 0:02:01.320 stick to the script, is a plan out to fix it, 0:02:01.360 --> 0:02:03.920 and they'll say, we got the plan and we're going 0:02:04.000 --> 0:02:04.880 to drive on that plan. 0:02:05.440 --> 0:02:07.200 Hey, George, I know from speaking to you in the 0:02:07.240 --> 0:02:09.160 past and reading some of your research, one of the 0:02:09.240 --> 0:02:12.280 challenges as it relates to quality is outsourcing. You know, 0:02:12.320 --> 0:02:15.120 Boeing over the last number of years, ten twenty years, 0:02:15.000 --> 0:02:17.480 is maybe outsource a little bit more of their production, 0:02:17.600 --> 0:02:20.399 their parts and so on to third parties, and that 0:02:20.480 --> 0:02:25.120 may be introducing some more risk into their process. How 0:02:25.160 --> 0:02:28.120 are they talking about some of their outsourcing strategies. 0:02:29.320 --> 0:02:32.000 So in that same report, right, they talk about inspections 0:02:32.000 --> 0:02:35.440 at suppliers, they talk about monitoring quality at suppliers better. 0:02:36.040 --> 0:02:36.239 Yeah. 0:02:36.280 --> 0:02:39.640 I just think this is a it's a wholly different industry, right. 0:02:39.639 --> 0:02:41.320 I think there's a bunch of people that have come 0:02:41.840 --> 0:02:47.360 to the aerospace world from auto backgrounds and other mass 0:02:47.400 --> 0:02:51.920 production backgrounds, right, And in those worlds, safety isn't as important. 0:02:52.600 --> 0:02:56.120 Volume is a lot higher. You can get multiple suppliers 0:02:56.160 --> 0:02:59.280 to provide products to your production line, you can work 0:02:59.400 --> 0:03:02.919 cost on the suppliers, and I think that whole game 0:03:02.960 --> 0:03:06.960 plan is really really difficult to do in aviation. And 0:03:06.960 --> 0:03:09.560 I think this is part of what we're seeing. Right. 0:03:09.600 --> 0:03:13.519 I think you can outsource, but I think if you outsource, 0:03:14.520 --> 0:03:17.160 you know, you know, to your supplier base, I think 0:03:17.200 --> 0:03:19.800 it's still got to be you know, a pretty strong 0:03:19.880 --> 0:03:23.720 relationship with them, not a combative relationship where it's always 0:03:23.760 --> 0:03:27.200 about price, because it really matters the quality you get 0:03:27.200 --> 0:03:29.720 to your line right, safety is dependent upon it. And 0:03:29.800 --> 0:03:33.280 so I think what we're finding out as this sort 0:03:33.280 --> 0:03:38.120 of you know, whole Boeing saga unravels, is outsourcing and 0:03:38.160 --> 0:03:41.000 banging up your suppliers for price just isn't a winning 0:03:41.000 --> 0:03:42.120 strategy in aviation. 0:03:42.840 --> 0:03:46.920 Can have they course corrected enough? Or can they so? 0:03:47.160 --> 0:03:50.560 Look, I think they can. Everything can be fixed. I 0:03:50.600 --> 0:03:52.880 think if you look at their competitors across the pond, Airbus, 0:03:53.400 --> 0:03:55.760 they're not having these problems. I think Airbus has been 0:03:55.840 --> 0:03:59.160 less combative with some of their suppliers. They're in the 0:03:59.200 --> 0:04:02.520 middle of this correction. We know they want to buy 0:04:02.600 --> 0:04:05.880 Spirit Aerosystems. We're still waiting to hear news on that. 0:04:05.920 --> 0:04:08.640 There's still you know the challenge of getting some of 0:04:08.640 --> 0:04:12.520 the other companies that Spirit supplies, to name the Airbus 0:04:12.640 --> 0:04:16.560 probably out of the portfolio so they can recover. It's 0:04:16.600 --> 0:04:19.479 gonna it's gonna take some time. Uh, and it's gonna 0:04:19.520 --> 0:04:21.000 take a lot of work with our suppliers. 0:04:21.760 --> 0:04:26.080 So, George, if I think about, you know, rethinking my 0:04:26.120 --> 0:04:29.839 strategy with my suppliers and maybe focusing less on price 0:04:29.880 --> 0:04:32.400 competitives maybe a little bit more on quality, does that 0:04:32.440 --> 0:04:36.560 imply that Boeing's profit margins will be under pressure going forward. 0:04:37.160 --> 0:04:39.080 Yeah, I mean, I think I think for sure, right, 0:04:39.120 --> 0:04:41.719 I think you're you're not going to receive a return 0:04:41.839 --> 0:04:45.640 to the Boeing margins you saw at the end of 0:04:45.800 --> 0:04:49.880 last decade. I'm not gonna say ever, like in time, 0:04:49.960 --> 0:04:53.159 perhaps they could get back to that, you know, but 0:04:53.200 --> 0:04:55.719 I think it takes you know, it's it's gonna take 0:04:56.240 --> 0:04:59.840 a bunch of work here near term to improve the quality, 0:04:59.880 --> 0:05:02.719 and and that's going to cost money. Plus we already 0:05:02.720 --> 0:05:05.360 know that some of the business they've put in the books, right, 0:05:05.360 --> 0:05:07.840 they had some challenges delivering into China. That was kind 0:05:07.880 --> 0:05:11.000 of the one two whammy after they had the grounding 0:05:11.080 --> 0:05:14.039 of the Max and the crashes. We know they probably 0:05:14.080 --> 0:05:17.120 sold a bunch of airplanes for some pretty good prices 0:05:17.160 --> 0:05:21.599 to really core customers like United, like Southwest. So I 0:05:21.600 --> 0:05:23.760 think that I think both, you know, both on the 0:05:23.800 --> 0:05:28.080 cost side again, given this correction to improve the supply base, 0:05:28.480 --> 0:05:33.800 improve production, get get capacity rolling again, as well as 0:05:33.800 --> 0:05:37.560 some of the pricing they gave away on backfill for orders. 0:05:37.640 --> 0:05:40.520 Means you're not looking at a Boeing that's going to 0:05:40.560 --> 0:05:43.080 get those margins free through this decade. 0:05:43.080 --> 0:05:45.800 I think if I look at Boeing stock, then I 0:05:45.800 --> 0:05:48.760 mean it's down from December, it's down thirty four percent. 0:05:49.560 --> 0:05:54.200 Does that accurately reflect then this tighter profit margin world 0:05:54.320 --> 0:05:56.560 to sort of revamp and the course correcting that they 0:05:56.600 --> 0:05:57.080 have to do. 0:05:58.200 --> 0:06:01.160 So, you know, I think when you look at their valuations, 0:06:01.200 --> 0:06:05.160 you know, their historical valuations, One, they're really high right now, 0:06:05.240 --> 0:06:10.040 right because earnings are so low, you know, So I 0:06:10.080 --> 0:06:12.440 think that there is a little bit of investor look 0:06:12.560 --> 0:06:16.279 through at this point, you know, on the on the 0:06:16.320 --> 0:06:19.840 on the current problems they have, you know, but the 0:06:20.520 --> 0:06:23.599 sort of whether or not they're they're properly positioned for 0:06:23.680 --> 0:06:25.800 the out years right now. I think it's all a 0:06:25.839 --> 0:06:29.440 function of if they can you know, if they can 0:06:30.080 --> 0:06:34.240 quickly improve the build rate so they can improve economies 0:06:34.240 --> 0:06:37.120 of scale and start to get more profitability back into 0:06:37.160 --> 0:06:39.840 this business, and that, you know, really remains to be seen. 0:06:40.480 --> 0:06:43.400 George, you mentioned China. Where is Boeing in terms of 0:06:43.400 --> 0:06:45.680 getting the seventy three seven max in the air and 0:06:45.760 --> 0:06:48.560 China kind of how's that business looking in terms of 0:06:48.880 --> 0:06:50.520 sales and deliveries. 0:06:50.560 --> 0:06:54.120 So their deliveries going into China, right and uh, it 0:06:54.160 --> 0:06:58.720 looks to us to largely be deliveries that were you know, built, 0:06:59.440 --> 0:07:02.440 you know, when the seven three seven was grounded, and 0:07:02.480 --> 0:07:04.720 they're starting to get some of those back into the country. 0:07:05.080 --> 0:07:07.479 But China's also has this problem now with the flight 0:07:07.520 --> 0:07:12.840 recorder that's been authorized by other jurisdictions, including the US. 0:07:13.960 --> 0:07:17.120 So I mean it feels to me like China is 0:07:17.200 --> 0:07:21.000 allowing deliveries, but they still, you know, they're still not 0:07:22.520 --> 0:07:24.800 I don't know, maybe keen on taking a lot of 0:07:24.840 --> 0:07:27.800 deliveries from Boeing. I haven't seen a bunch of orders 0:07:27.840 --> 0:07:31.360 come in from China, you know, for Boeing. And so 0:07:31.480 --> 0:07:35.239 I would say that relationship still, while it's maybe thawing 0:07:35.280 --> 0:07:39.400 a bit, is nowhere near was it where it was 0:07:40.200 --> 0:07:42.440 in the last decade. And they have their problems too. 0:07:42.520 --> 0:07:45.120 Right now, I think they don't need as many airplanes, 0:07:45.120 --> 0:07:48.520 their economy isn't growing as fast, air travel isn't growing 0:07:48.520 --> 0:07:51.960 as fast. But I still think that relationship is not 0:07:52.080 --> 0:07:55.200 in the right place where it should be, where you'd 0:07:55.240 --> 0:07:57.160 like it to be. I think for Boeing. 0:07:57.400 --> 0:07:59.480 Before I let you go any word yet on and 0:07:59.520 --> 0:08:01.800 replacement for Dave Calhoun, Like, how's that going? 0:08:02.840 --> 0:08:03.360 He laughed? 0:08:03.560 --> 0:08:04.560 The answer is laughing. 0:08:04.760 --> 0:08:09.320 Yes, what I hear from news reports is picking up steam. 0:08:09.440 --> 0:08:12.760 But g I mean, I don't know, it's been a while. 0:08:13.160 --> 0:08:18.080 There's a lot of conjecture. It's a hard job. There's 0:08:18.080 --> 0:08:19.880 probably a lot of people that just aren't willing to 0:08:19.920 --> 0:08:25.000 take it. I don't know, you know, they got to 0:08:25.040 --> 0:08:26.640 the end of the year, and so maybe they're gonna 0:08:26.720 --> 0:08:27.640 use it all. I don't know. 0:08:28.400 --> 0:08:30.760 I mean, and anyone but Larry Cult that you keep 0:08:30.760 --> 0:08:31.920 hearing about, that's for real. 0:08:32.600 --> 0:08:34.640 So I don't really track the people that's you know, 0:08:34.640 --> 0:08:37.439 that's kind of hard for me. I do know, like 0:08:37.480 --> 0:08:41.600 it said, it's got to be a rock star manufacturing, 0:08:42.640 --> 0:08:45.160 you know, sort of CEO. I don't know that there's 0:08:45.200 --> 0:08:47.520 a lot of them left in America. I think we 0:08:47.600 --> 0:08:50.480 do a lot of outsourcing now, so maybe that makes 0:08:50.520 --> 0:08:52.160 it a taller order too. I don't know. 0:08:52.559 --> 0:08:54.360 All right, Hey, Georgia really appreciate it. 0:08:54.400 --> 0:08:57.880 George Ferguson, Bloomberg Intelligence senior Aerospace, Defense and Airlines analysts 0:08:57.920 --> 0:08:59.840 joining us in Princeton, New Jersey. 0:09:00.200 --> 0:09:02.200 Yes, who would have thunk? Yeah, it was a New 0:09:02.280 --> 0:09:02.679 Jersey and. 0:09:02.720 --> 0:09:06.280 You lovely home of hogi Haven, my favorite sandwich shop. 0:09:06.320 --> 0:09:07.520 Also up on that. 0:09:08.800 --> 0:09:11.440 Bowing down two percent today, down thirty three percent year 0:09:11.480 --> 0:09:14.600 to date. You know, it just feels like a stock 0:09:15.040 --> 0:09:16.840 No one wants to step in and really take a 0:09:16.840 --> 0:09:21.880 big position here until you see real signs of our 0:09:21.880 --> 0:09:23.760 turn around there, because it just feels like every day 0:09:24.040 --> 0:09:25.120 there's something coming out. 0:09:25.520 --> 0:09:27.000 And if you just time it out right, like say 0:09:27.000 --> 0:09:28.439 they do take the rest of the year to get 0:09:28.440 --> 0:09:30.000 a new CEO, like, let's just game that out for 0:09:30.040 --> 0:09:32.000 a second, then the new CEO has to come in right. 0:09:32.120 --> 0:09:34.320 Then it's a plan and it's going to be some 0:09:34.559 --> 0:09:37.600 kind of restructuring plan in that, like how we're going 0:09:37.679 --> 0:09:40.040 to manage the business, how we're dealing with suppliers. And 0:09:40.040 --> 0:09:43.520 then if you they do wind up buying a Spirit Aerospace. 0:09:43.000 --> 0:09:44.559 Then you got to integrate that. I mean that how 0:09:44.600 --> 0:09:45.600 long a process is that? 0:09:45.800 --> 0:09:46.040 Yep? 0:09:46.240 --> 0:09:49.000 Exactly, So I mean and is there a value here 0:09:49.440 --> 0:09:52.440 where it just says that I'm being compensated for that 0:09:52.559 --> 0:09:54.160 risk and that time and I don't know, and it 0:09:54.240 --> 0:09:56.520 just doesn't feel like it again. Stock down thirty three 0:09:56.520 --> 0:09:58.160 percent year to date. 0:10:00.000 --> 0:10:03.720 We're listening to the Bloomberg Intelligence podcast. Catch us live 0:10:03.800 --> 0:10:07.360 weekdays at ten am Eastern on Applecar Play and Android 0:10:07.360 --> 0:10:10.160 Auto with the Bloomberg Business app. You can also listen 0:10:10.240 --> 0:10:13.360 live on Amazon Alexa from our flagship New York station. 0:10:13.720 --> 0:10:16.480 Just say Alexa play Bloomberg eleven thirty. 0:10:17.960 --> 0:10:19.960 All right, coming up, we're gonna talk to Jill Blanchard. 0:10:20.000 --> 0:10:23.160 She is president of Enterprise Client Solutions at Abandoned Solutions, 0:10:23.640 --> 0:10:26.000 and we're going to get the take here on retail sales. 0:10:26.160 --> 0:10:28.760 So retail sales barely did anything, and the narrative here 0:10:28.880 --> 0:10:30.800 is that the consumer is strained that they're going to 0:10:30.960 --> 0:10:32.800 buy stuff, but they're going to buy it on sale. 0:10:33.200 --> 0:10:35.040 The rub here is that. 0:10:35.040 --> 0:10:37.760 This is mostly a goods report versus what we're going 0:10:37.840 --> 0:10:39.760 to get when we get consumer spending a little later 0:10:39.800 --> 0:10:42.840 in the month, where that might be actually a services reports. 0:10:42.880 --> 0:10:44.920 There's still questions as to as to what the real 0:10:44.960 --> 0:10:46.319 read through is for the consumer. 0:10:46.960 --> 0:10:48.200 Jill, what are your thoughts? 0:10:50.080 --> 0:10:52.600 Yes, so hello and thanks for having me back. Yeah, 0:10:52.800 --> 0:10:55.000 you know, I think I'd lead off with one big word, 0:10:55.000 --> 0:10:57.840 and that word is cumulative. And so the effect of inflation, 0:10:57.960 --> 0:11:00.000 the slow rise and income the high interest rates are 0:11:00.080 --> 0:11:03.800 really having finally a cumulative effect on the consumer and 0:11:03.800 --> 0:11:07.520 it's a really big impact there's a big difference between 0:11:08.040 --> 0:11:11.559 inflation and affordability as well as inflation and high prices, 0:11:11.600 --> 0:11:15.640 and so as consumers tried to get used to high prices, 0:11:15.720 --> 0:11:19.120 if wages aren't keeping pace and they're not, it creates 0:11:19.160 --> 0:11:21.840 a pretty big gap and drives very different behaviors. So 0:11:21.960 --> 0:11:25.560 you mentioned promotions before, consumers are really doing a lot 0:11:25.559 --> 0:11:29.200 of different things. They're still spending, but they are price conscious, 0:11:29.240 --> 0:11:32.160 they're creative, they're selective. They are and I'm just going 0:11:32.240 --> 0:11:34.800 to walk through like a myriad of strategies. They're delaying purchases. 0:11:34.800 --> 0:11:37.440 They're trading down, whether that's a brand or a retailer, 0:11:37.520 --> 0:11:40.920 or a product or experience. They're shopping promotions, they're price 0:11:40.960 --> 0:11:44.440 shopping across retailer somethind of that consolidated trip. They're going 0:11:45.160 --> 0:11:48.840 to multiple retailers. They are cutting out or reducing discretionary spending. 0:11:49.040 --> 0:11:51.240 They're looking for larger sized products that have a more 0:11:51.600 --> 0:11:56.360 economical value. They are sharing bolt grocery shopping. Third of 0:11:56.400 --> 0:11:59.679 consumers are now doing that. A quarter of consumers are 0:11:59.720 --> 0:12:04.240 skilled big meals and buying unhealthier options because of high prices. 0:12:04.280 --> 0:12:06.640 So it's a lot of different strategies that we're seeing 0:12:06.640 --> 0:12:07.199 come to play. 0:12:07.679 --> 0:12:10.040 When do I don't know if we have any data 0:12:10.480 --> 0:12:14.240 back this up, are when do consumers get used to 0:12:14.480 --> 0:12:15.880 this new price level? 0:12:16.000 --> 0:12:16.440 Is it? 0:12:16.520 --> 0:12:19.040 Because it seems like we've been here for a few years, 0:12:19.760 --> 0:12:22.480 and you know, when do we get used to it? 0:12:24.240 --> 0:12:24.440 Yeah? 0:12:24.520 --> 0:12:27.400 That's interesting. So I'd say it's a tale of two 0:12:27.600 --> 0:12:30.679 economies right now. And so at the macro level, we're 0:12:30.679 --> 0:12:33.760 seeing in flaten now. But when you really get underneath that, 0:12:34.400 --> 0:12:37.720 healthier income households, you know, are you know, do do 0:12:37.840 --> 0:12:40.640 have a healthy spend? They're driving demand, but it's balanced 0:12:40.679 --> 0:12:44.679 out by by low and mid income households that are 0:12:44.720 --> 0:12:47.760 curbing their spending. Now that that does split spending, that's 0:12:47.800 --> 0:12:49.800 a shift from what we've seen over the past couple 0:12:49.800 --> 0:12:54.640 of years because spending was really fuel by pandemic era benefits, 0:12:54.920 --> 0:12:59.080 stockpile savings, the cessation of student loan repayments, and rapid 0:12:59.120 --> 0:13:01.959 wage increase, so a number of things that are either 0:13:02.360 --> 0:13:07.760 reduced or actually illuminated now creating a bifurcation in spending 0:13:08.000 --> 0:13:10.520 amongst income households. 0:13:10.640 --> 0:13:14.480 When we take a look at the spending problem, how 0:13:14.520 --> 0:13:17.640 do we understand it? Because slowing versus falling off a 0:13:17.640 --> 0:13:21.640 Cliff are different and they're going to have different reaction 0:13:21.720 --> 0:13:22.920 functions for the FED. 0:13:23.559 --> 0:13:25.640 What's the best kind of description. 0:13:28.559 --> 0:13:33.000 Slow? I mean nothing's going to happen fast, right, I say, 0:13:33.000 --> 0:13:36.160 there's two things to consider, you know. One is spending 0:13:36.200 --> 0:13:38.760 is never going to take a sharp turn in either direction. 0:13:38.960 --> 0:13:42.120 It's going to slowly turn in either direction. And there 0:13:42.160 --> 0:13:45.400 are multiple factors influencing that, you know, like the reduction 0:13:45.640 --> 0:13:51.000 in the pandemic, arab benefits and stockpile savings as well 0:13:51.040 --> 0:13:54.000 as you know, higher prices as well as a lower 0:13:54.160 --> 0:13:57.000 wage increases right now, interest rates. So there's so many 0:13:57.000 --> 0:13:59.559 things that really affect it. I think that we can, 0:13:59.760 --> 0:14:03.040 you know, continue to expect to see things happen slowly 0:14:03.120 --> 0:14:07.080 over time and not be surprised by what it is 0:14:07.080 --> 0:14:09.520 that we're seeing today. It's it's been building to this 0:14:09.679 --> 0:14:10.280 for for. 0:14:10.280 --> 0:14:11.760 Many many months. 0:14:11.800 --> 0:14:15.200 Cicadas, Oh what talk to us about cicadas. 0:14:16.320 --> 0:14:19.520 I will talk to you about cicadas. So here's something interesting, 0:14:19.560 --> 0:14:22.120 and this is you know, partly about cicadas. And I 0:14:22.120 --> 0:14:24.840 happen to live in a cicada part of the country. 0:14:24.880 --> 0:14:27.160 It's brutal out there, the shining. 0:14:28.720 --> 0:14:32.440 Well, so here's the thing we've talked about inflation, we 0:14:32.560 --> 0:14:35.640 talked about the slow rise in income, the high interest rates. 0:14:35.920 --> 0:14:40.800 Let's talk about the effect of on retail spending of 0:14:41.120 --> 0:14:44.000 extreme weather, which I know we've talked about before. We 0:14:44.040 --> 0:14:46.440 saw today that there's going to be record breaking temperatures 0:14:46.480 --> 0:14:49.920 in the Midwest and the Northeast. So it's it's extreme heat, 0:14:50.040 --> 0:14:55.000 it's flooding, it's fires, it's hurricanes, snowstorms, tornados. All of 0:14:55.040 --> 0:14:58.920 those things curb outside of the home activities, which are 0:14:58.920 --> 0:15:01.800 typically a soci stated with bigger ticket spending. 0:15:01.920 --> 0:15:02.680 So think of. 0:15:02.640 --> 0:15:04.920 Things like going to an amusement park or a concert 0:15:05.000 --> 0:15:07.600 versus watching Netflix, going to a lakehouse for the weekend 0:15:07.720 --> 0:15:10.280 versus staying home, going out to dinner versus staying home. 0:15:10.760 --> 0:15:14.320 So the effect the curb on out of the home 0:15:14.480 --> 0:15:19.560 activities will translate into a different and a less retail spend. 0:15:19.960 --> 0:15:23.120 So that's somewhat having to do with cicadas. I stay 0:15:23.160 --> 0:15:24.440 in because it is life as. 0:15:24.400 --> 0:15:27.000 Shining, really horrifying. 0:15:27.040 --> 0:15:29.120 Where where are you, Jill? Where is this happening? 0:15:29.920 --> 0:15:30.640 I am home. 0:15:30.480 --> 0:15:33.280 Based in the Chicago market. They're pretty brutal. 0:15:33.480 --> 0:15:36.280 Interesting, man, I didn't eve think about the sit here? 0:15:36.320 --> 0:15:37.440 Do we know? We do we do. 0:15:37.680 --> 0:15:40.760 Yeah, yeah, no, I mean, like not yet, but they're 0:15:40.800 --> 0:15:41.680 they're definitely gonna come. 0:15:41.800 --> 0:15:43.280 Yeah yeah, okay, But to. 0:15:43.200 --> 0:15:44.880 Your point about extreme temperatures. 0:15:44.480 --> 0:15:45.960 Too, because then you stay home and guess what, you 0:15:45.960 --> 0:15:47.760 pump the air conditioner because if you don't, you're dealing 0:15:47.760 --> 0:15:49.760 with one hundred degree heat and that is a huge bill. 0:15:49.800 --> 0:15:52.680 I mean, already my electricity bill has jumped by what 0:15:52.880 --> 0:15:55.400 by two just just for May and. 0:15:55.360 --> 0:15:57.680 It wasn't even that hot. So that's going to be 0:15:57.680 --> 0:15:58.640 another impact as well. 0:15:58.720 --> 0:16:03.440 Yeah, as well as think about the damage that comes 0:16:03.440 --> 0:16:07.080 from a flood or hurricane tornado. So yeah, it really 0:16:07.200 --> 0:16:10.400 drives dollars being spent elsewhere, as well as the fact 0:16:10.400 --> 0:16:12.080 that it curves outside the home spending. 0:16:13.280 --> 0:16:16.080 Talk about then, in terms of how loyal people are 0:16:16.160 --> 0:16:18.040 to brands, like is it just going to be a 0:16:18.080 --> 0:16:20.480 pure value trade, like the lowest price that you can 0:16:20.480 --> 0:16:22.200 give me is what I'm going to buy? Or do 0:16:22.200 --> 0:16:24.160 you feel like it's going to be very selective and 0:16:24.240 --> 0:16:25.480 brand loyalty matters. 0:16:27.360 --> 0:16:29.200 So I heard somebody call this right now, and I 0:16:29.240 --> 0:16:31.720 thought it was pretty clever that we're ing that we're 0:16:31.840 --> 0:16:34.960 entering into the air of brand co miscuity, where we 0:16:35.040 --> 0:16:38.480 are essentially buying short term loyalty, but we're really creating 0:16:38.560 --> 0:16:42.560 long term disloyalty. So all those promotions buy today, but 0:16:42.600 --> 0:16:47.040 they sacrifice tomorrow. Having said that, I'd say that retailers 0:16:47.080 --> 0:16:49.280 are looking at a number of strategies. So it's not 0:16:49.360 --> 0:16:53.000 just promotions, it's their amping up their loyalty programs, their 0:16:53.040 --> 0:16:56.280 digital offers, their private label offerings. And let's talk a 0:16:56.320 --> 0:16:59.840 little bit about everyday price, right, So Walmart and Target 0:17:00.480 --> 0:17:03.520 publicly said that they plan to reduce the everyday price 0:17:03.600 --> 0:17:06.480 on thousands of items. This is a great trip driving 0:17:06.480 --> 0:17:09.399 strategy to get the consumer into their stores, especially the 0:17:09.400 --> 0:17:13.560 consumers that are struggling to buy the basics every day. 0:17:13.640 --> 0:17:15.640 And it's a real shift in what we've seen over 0:17:15.640 --> 0:17:17.879 the past two to three years, and it might mark 0:17:18.200 --> 0:17:20.920 the beginning of a price war the likes of which 0:17:20.920 --> 0:17:22.800 we haven't seen since inflation took hold. 0:17:23.680 --> 0:17:27.080 So what are retailers trying to do here? I mean, 0:17:27.160 --> 0:17:31.080 are they are they? Are they trying to keep customers? 0:17:31.119 --> 0:17:34.040 Are they are they just looking at for their own margins? 0:17:34.320 --> 0:17:35.880 What are retailers strategy here? 0:17:37.080 --> 0:17:41.359 Oh? Yes, and yes and maybe even more yeses. It 0:17:41.520 --> 0:17:44.920 is less today about a pie that's growing and it's 0:17:44.920 --> 0:17:48.600 more about stealing share versus creating demand. So somebody's win 0:17:48.720 --> 0:17:51.080 is somebody's loss again, could be a brand, a retailer, 0:17:51.640 --> 0:17:54.120 or a product choice. And so retailers you know, are 0:17:54.200 --> 0:17:58.760 trying to are trying to get purchases and consumers that 0:17:58.840 --> 0:18:02.119 they might not normally get and or have recently lost. 0:18:02.760 --> 0:18:05.359 One of the things that we're seeing now that's really 0:18:05.400 --> 0:18:10.480 interesting is both manufacturers and retailers trying to sell you know, 0:18:10.560 --> 0:18:13.879 call it non traditional products and non traditional outlets. And 0:18:13.920 --> 0:18:16.719 so you could expect to see health and beautycare products 0:18:16.760 --> 0:18:19.320 at a Dick Sporting Good, maybe some more food products 0:18:19.320 --> 0:18:21.399 at a TJ Max, And so they're really trying to 0:18:21.440 --> 0:18:25.840 get new avenues and distribution to get those consumers in store. 0:18:26.680 --> 0:18:29.159 A flip version of that is if you look at 0:18:29.160 --> 0:18:32.400 the dollar channel, the dollar channel has traditionally owned that 0:18:32.760 --> 0:18:35.840 you know, that lower price point or that opening price point, 0:18:36.040 --> 0:18:39.600 that so many other retailers are now entering into the 0:18:39.680 --> 0:18:43.000 smaller pack sizes for that opening price point and really 0:18:43.080 --> 0:18:45.600 getting that volume from the dollar stores. 0:18:46.040 --> 0:18:47.360 Wow, that's really interesting. It's true. 0:18:47.560 --> 0:18:49.879 As a frequent user of TJ Max, I do notice 0:18:49.920 --> 0:18:52.800 that there are is more packaged food, the home good store. 0:18:52.840 --> 0:18:55.479 Oh my god, it's everywhere on the half of it 0:18:55.480 --> 0:18:59.320 feels like it's food. Now, just to wrap this conversation 0:18:59.400 --> 0:19:01.080 up as we go to sort of the Fed, let's 0:19:01.080 --> 0:19:03.120 just pretend the FED cuts one or two times this year? 0:19:03.200 --> 0:19:04.800 Did they say one? Market says two? 0:19:05.160 --> 0:19:08.280 Does that matter for the consumers that we are talking about. 0:19:08.320 --> 0:19:10.919 Does that materially change kind of what they buy and 0:19:10.960 --> 0:19:13.480 how they spend long term? 0:19:13.560 --> 0:19:16.080 Yes, near in, not as much as we would think. 0:19:16.840 --> 0:19:18.640 It will have a little bit of an effect. But again, 0:19:18.880 --> 0:19:22.479 cumulative is really the word of the day here, and 0:19:22.520 --> 0:19:25.480 that it takes a while for any of these effects 0:19:25.920 --> 0:19:28.840 to catch up to the consumer. So what we're seeing 0:19:28.880 --> 0:19:31.159 today is the effect of what's been happening over the 0:19:31.160 --> 0:19:34.080 past twelve to twenty four months, and so it will 0:19:34.080 --> 0:19:36.200 have an effect, but not as big of an effect. 0:19:36.280 --> 0:19:37.080 Near In. 0:19:38.240 --> 0:19:40.119 Hey, Jill, thanks so much for joining us. They really 0:19:40.200 --> 0:19:43.479 appreciate it. Joe Blanchard, president of Enterprise Client Solutions at 0:19:43.520 --> 0:19:48.880 Advantage Solutions, on Zoom from Cicada infested Illinois. 0:19:50.800 --> 0:19:54.680 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:19:54.760 --> 0:19:57.560 weekdays at ten am Eastern on Effo Cardplay and then 0:19:57.600 --> 0:20:01.159 broud outo with the Bloomberg Business app demand wherever you 0:20:01.200 --> 0:20:04.880 get your podcasts, or watch us live on YouTube. 0:20:05.520 --> 0:20:07.879 One other stock we're watching is Lenar, down by almost 0:20:07.960 --> 0:20:11.240 three percent. So there's a homebuilder and it forecasted that 0:20:11.280 --> 0:20:12.720 deals in the third quarter. 0:20:13.119 --> 0:20:15.040 Missed consensus expectations. 0:20:15.080 --> 0:20:16.520 And then Barkley's pointed out that if you take a 0:20:16.560 --> 0:20:18.960 look at their fourth quarter guidance, it implies a very 0:20:19.000 --> 0:20:22.399 large ramp up in gross margins in that quarter, and 0:20:22.520 --> 0:20:24.280 investors are a little skeptical as to whether or not 0:20:24.280 --> 0:20:26.560 that actually is going to happen. So no one to 0:20:26.600 --> 0:20:29.639 turn to but Drew reading Bloomberg Intelligence home builder analysts. 0:20:29.640 --> 0:20:32.520 He joins us now from Princeton, New Jersey. Hey, Drew, 0:20:32.560 --> 0:20:34.119 I don't know. I thought it was all like, we 0:20:34.160 --> 0:20:35.119 don't have enough supply. 0:20:35.359 --> 0:20:37.360 This is bullish for builders. So what happened? 0:20:38.520 --> 0:20:41.280 Well, I think you framed it perfectly. The story with Lenar, 0:20:41.359 --> 0:20:43.240 why the stock sound? Is it so much about what's 0:20:43.240 --> 0:20:46.399 happening with the volumes they deliver good orders? They're up 0:20:46.480 --> 0:20:49.200 nineteen percent, they maintain their four year guidance for eighty 0:20:49.240 --> 0:20:52.000 thousand home closings. It has to do with their outlook 0:20:52.040 --> 0:20:56.159 for gross margin, they guided to about one hundred basis 0:20:56.160 --> 0:20:58.720 points below what the street was looking for, and as 0:20:58.760 --> 0:21:00.760 you mentioned, that would work quire a ramp in the 0:21:00.760 --> 0:21:03.600 fourth quarter to about twenty five percent. So, like you said, 0:21:03.600 --> 0:21:07.080 there's definitely some skepticism and their ability to meet their 0:21:07.119 --> 0:21:10.520 four year outlook. The reason for that is because we 0:21:10.560 --> 0:21:12.480 saw rates move up as high as seven and a 0:21:12.520 --> 0:21:15.040 half percent during the quarter. You know, they've come back 0:21:15.080 --> 0:21:17.199 in a little bit, but we're seeing their need to 0:21:17.240 --> 0:21:21.400 incentivize buyers remain elevated, and that's what's impacting profitability. 0:21:22.000 --> 0:21:24.280 So where are we in that activity there? If I'm 0:21:24.440 --> 0:21:27.000 if I'm looking at a seven percent mortgage, what are 0:21:27.000 --> 0:21:27.679 they going to do for me? 0:21:29.400 --> 0:21:32.280 Yeah, So typically what we're seeing is that the builders 0:21:32.359 --> 0:21:34.679 will maintain a spread versus the headline rate. So if 0:21:34.680 --> 0:21:36.720 you're seeing seven and a half percent in the market, 0:21:37.280 --> 0:21:39.639 typically you're going to get six percent from a builder. 0:21:40.480 --> 0:21:42.200 You know, there are some other builders and depending on 0:21:42.240 --> 0:21:45.080 the market, depending on how strong the market is, what 0:21:45.160 --> 0:21:47.760 demand looks like, they could get you into the fives. 0:21:48.800 --> 0:21:50.560 But obviously that's going to cost them on the gross 0:21:50.560 --> 0:21:53.920 margin line. So the incentives they're using are certainly working, 0:21:54.000 --> 0:21:55.520 it's just what's the cost. 0:21:55.840 --> 0:21:58.480 So that one hundred percent the one hundred bases point miss, 0:21:58.560 --> 0:22:01.000 but then keeping their guidance for ro's margin for the year, 0:22:01.119 --> 0:22:03.679 that must imply that they're looking for rake cuts. 0:22:05.720 --> 0:22:08.600 Yeah, I think a lot of it has to do 0:22:08.640 --> 0:22:10.600 with what they're doing on the call side. One of 0:22:10.800 --> 0:22:14.800 you know, Lenar's emphasis for their business over the last 0:22:15.119 --> 0:22:18.600 several years has really been running a more efficient manufacturing 0:22:18.680 --> 0:22:22.879 based business where they're not necessarily just chasing volume, but 0:22:22.880 --> 0:22:25.760 they're doing it the right way. They're fine tuning their 0:22:25.760 --> 0:22:28.600 floor plans, they're pushing back on their suppliers. You have 0:22:28.600 --> 0:22:31.199 to remember they're one of the second largest builder in 0:22:31.240 --> 0:22:33.360 the country, but they're one of the only builders who 0:22:33.400 --> 0:22:36.520 has scale at the national level, so they're able to 0:22:36.640 --> 0:22:38.919 leverage that and kind of push back a little bit. 0:22:38.960 --> 0:22:41.200 So certainly some of the benefit that they expect in 0:22:41.240 --> 0:22:43.240 foro Q, I would assume is going to come from 0:22:43.280 --> 0:22:45.320 what they're doing on the calls side, as well as 0:22:45.359 --> 0:22:49.000 fixed leverage from higher deliveries. But nonetheless that's still going 0:22:49.040 --> 0:22:51.199 to be the focal point for investors is how do 0:22:51.240 --> 0:22:51.760 they get there? 0:22:52.000 --> 0:22:52.400 How much? 0:22:52.480 --> 0:22:54.119 I mean, I remember this back in the beginning of 0:22:54.320 --> 0:22:58.480 the pandemic, lumber went crazy. Where are we in lumber 0:22:58.520 --> 0:23:02.520 and help? How is that a part of their gross margin? 0:23:03.760 --> 0:23:06.520 Sure so, lumbers about ten percent of the cogs for builders, 0:23:06.520 --> 0:23:09.000 so it's certainly the most important input costs. As you 0:23:09.040 --> 0:23:13.600 would expect, you know, lumber prices have come back down 0:23:13.760 --> 0:23:16.560 a lot, so builders have been benefiting on the margin side. 0:23:16.560 --> 0:23:19.800 I think we've seen more stabilization of late, perhaps a 0:23:19.800 --> 0:23:22.840 little rise to the upside, but really lumbers not impacting 0:23:22.880 --> 0:23:25.480 the business in as significant a way as it was 0:23:25.520 --> 0:23:26.720 over the last couple of years. 0:23:27.160 --> 0:23:29.520 So KB home reports after the bell today, right, So 0:23:29.600 --> 0:23:32.879 what kind of company is KB home versus Lenar and 0:23:32.960 --> 0:23:34.639 has that set up KB home for today? 0:23:36.000 --> 0:23:39.760 Sure so, KB is predominantly focused on the entry level business. 0:23:39.760 --> 0:23:43.479 It's about fifty percent or more of their total sales. 0:23:43.560 --> 0:23:46.240 So in addition to just focus on broadly on the 0:23:46.400 --> 0:23:48.600 entry level, we look at what they're doing from an 0:23:48.600 --> 0:23:51.480 asp perspective to get a more holistic look. And they're 0:23:51.640 --> 0:23:55.840 actually one of the more affordably priced builders, particularly when 0:23:55.880 --> 0:23:59.040 you compare them to the resale market and against you know, 0:23:59.080 --> 0:24:02.520 their public peers. So I think from a pricing perspective, 0:24:02.520 --> 0:24:05.000 they're pretty well positioned, so they'll give us a good 0:24:05.040 --> 0:24:07.600 sense what's happening on the lower end of the market. 0:24:08.160 --> 0:24:10.840 With that being said, as you would expect, entry level 0:24:10.880 --> 0:24:13.879 buyers are much more price sensitive. They're more sensitive to 0:24:13.920 --> 0:24:16.639 that monthly payment and what's happening with rates. And we 0:24:16.680 --> 0:24:19.640 saw that earlier with a low end builder LGI Homes 0:24:19.680 --> 0:24:22.680 who's looking to take buyers out of a rental situation 0:24:22.760 --> 0:24:25.160 and put them into a home, and we saw relative 0:24:25.200 --> 0:24:28.000 weakness there. I think what you see from some of 0:24:28.000 --> 0:24:30.040 the other builders is maybe a little bit more of 0:24:30.080 --> 0:24:33.080 a higher end entry level buyer, maybe duel income who's 0:24:33.080 --> 0:24:35.920 waited a little longer to purchase. So there still has 0:24:35.960 --> 0:24:37.760 been relative strength, but we'll get a good read on 0:24:37.800 --> 0:24:38.520 that buyer today. 0:24:39.040 --> 0:24:41.879 What are the companies tell you about their expectations for 0:24:42.440 --> 0:24:44.199 interest rates mortgage rates? What are they think is going 0:24:44.240 --> 0:24:44.600 to happen? 0:24:46.160 --> 0:24:49.440 So I think the expectation broadly is that mortgage rates 0:24:49.440 --> 0:24:51.000 will start to come in a little bit as we 0:24:51.040 --> 0:24:52.919 get through the end of the year. I don't think 0:24:52.960 --> 0:24:56.600 they're managing their business for any you know, significant dropping 0:24:56.720 --> 0:24:59.040 rates back to you know where we were previously. But 0:24:59.080 --> 0:25:02.080 I think as a builder from a demand perspective, if 0:25:02.080 --> 0:25:03.920 we get rates coming back to the six and a 0:25:03.960 --> 0:25:07.159 half percent range, you know, that's pretty much a sweet 0:25:07.160 --> 0:25:09.960 spot for them. You know, we've heard that as you 0:25:09.960 --> 0:25:11.920 get to five and a half percent, that's really when 0:25:12.040 --> 0:25:15.000 demand in the market starts to move. So the fact 0:25:15.000 --> 0:25:16.639 that if we can get to six and a half 0:25:16.680 --> 0:25:18.840 they're buying down rates one hundred basis points, I think 0:25:18.840 --> 0:25:22.040 they'll continue to do well. And you know what's interesting 0:25:22.160 --> 0:25:25.560 is the public builders are kind of at the top 0:25:25.600 --> 0:25:27.320 of the food chain as it comes to housing. You 0:25:27.480 --> 0:25:31.160 have to realize they're generating about fifty percent market share 0:25:31.280 --> 0:25:35.040 compared to call it thirty eight percent prior to the pandemic, really, 0:25:35.119 --> 0:25:37.800 so they've really leveraged that lack of inventory in the 0:25:37.800 --> 0:25:41.320 resale market and the struggles among some of the smaller 0:25:41.359 --> 0:25:43.280 private piers, and they've capitalized on it. 0:25:43.640 --> 0:25:45.320 So when you say we have to the five and 0:25:45.359 --> 0:25:47.200 a half percent is kind of a nice sweet spot. 0:25:47.440 --> 0:25:49.680 So that implies the Fed Funds rated six and a 0:25:49.720 --> 0:25:52.040 half percent, and the home builders still give thee hundred 0:25:52.040 --> 0:25:54.600 bases point discount. When the Fed Funds rate gets to 0:25:54.720 --> 0:25:57.399 five and a half percent, do the builders still offer 0:25:57.440 --> 0:25:58.960 that one hundred basis point discount. 0:26:00.320 --> 0:26:02.880 I think it's going to depend on what the broader 0:26:03.040 --> 0:26:06.840 macro economic situation looks like. If we get a pullback 0:26:06.840 --> 0:26:10.479 in rates, you know, a modest pullback, and we are 0:26:10.560 --> 0:26:14.320 still dealing with a pretty solid labor market, I think that, 0:26:14.760 --> 0:26:16.760 you know, builders will be able to definitely pull back 0:26:16.800 --> 0:26:19.480 on their use of incentives. I don't know that they'll 0:26:19.480 --> 0:26:21.720 go away all together, because at this point that's something 0:26:21.760 --> 0:26:24.360 that buyers are looking to and it certainly made their 0:26:24.400 --> 0:26:28.639 product more attractive. If we get a significant pullback in 0:26:28.720 --> 0:26:31.720 rates and it's because you know, the economic situation has 0:26:31.760 --> 0:26:35.280 deteriorated further, that's obviously more of a concern and we 0:26:35.280 --> 0:26:37.919 would see them probably push incentives even harder. 0:26:38.600 --> 0:26:41.600 What kind of homes are builders building these days, Drue. 0:26:41.640 --> 0:26:43.480 Is it the mcmanson where they can get the big 0:26:43.560 --> 0:26:46.199 profit margin or are they building what the market actually needs, 0:26:46.240 --> 0:26:49.120 which is some of these entry lever homes. 0:26:49.760 --> 0:26:52.240 Yeah, that's a great question, and we've seen one of 0:26:52.240 --> 0:26:56.440 the primary ways that builders are addressing the affordability equation. 0:26:57.000 --> 0:27:00.840 It's through smaller square footage floor plans. It's a shift 0:27:00.920 --> 0:27:02.680 most of them have done. We've seen it over the 0:27:02.760 --> 0:27:05.960 last couple of years more targeted towards the entry level. 0:27:06.760 --> 0:27:09.280 Interestingly enough, you even have someone like a Toll Brothers, 0:27:09.320 --> 0:27:13.000 who you traditionally think of as that luxury builder within 0:27:13.040 --> 0:27:16.520 the builder space, they've shifted to what they call affordable luxury. 0:27:16.880 --> 0:27:18.960 Now it's still not something that the masses are going 0:27:19.000 --> 0:27:21.119 to be able to afford, but it's certainly a lower 0:27:21.160 --> 0:27:24.160 price point that, as I said before, is attracting those 0:27:24.320 --> 0:27:27.840 more well healed, duel income buyers. So every builder has 0:27:27.920 --> 0:27:30.359 kind of attacked affordability in a different way, but I 0:27:30.400 --> 0:27:33.600 think square footage has been something consistent across the group. 0:27:33.880 --> 0:27:35.879 We only have about like forty five seconds left, But 0:27:35.920 --> 0:27:38.080 what's a builder that's kind of pulling on all levers 0:27:38.119 --> 0:27:38.960 correctly right now? 0:27:40.960 --> 0:27:43.639 I think Lenar is actually an interesting case, and the 0:27:44.320 --> 0:27:47.280 while the guidance may have disappointed a little bit, they're 0:27:47.280 --> 0:27:49.320 really delivering on what they said they're going to do. 0:27:49.359 --> 0:27:52.119 They're focused on price over pace and they're willing to 0:27:52.160 --> 0:27:54.560 sacrifice a little bit of gross margin to do so. 0:27:54.960 --> 0:27:56.960 And the idea is that they're going to generate a 0:27:57.000 --> 0:27:59.480 ton of cash that they can use to pay down 0:27:59.520 --> 0:28:02.800 debt return case to shareholders, which is something investors obviously 0:28:02.920 --> 0:28:04.120 like all right, he Drew. 0:28:04.000 --> 0:28:05.399 Really appreciate it, really great stuff. 0:28:05.400 --> 0:28:08.920 You're reading a Bloomberg Intelligence joining us on the NARS Earning. 0:28:09.800 --> 0:28:13.680 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:28:13.760 --> 0:28:17.560 weekdays at ten am Eastern on Applecarplay and Android Auto 0:28:17.720 --> 0:28:20.480 with the Bloomberg Business app. You can also listen live 0:28:20.600 --> 0:28:23.760 on Amazon Alexa from our flagship New York station Just 0:28:23.840 --> 0:28:28.720 Say Alexa playing Bloomberg eleven thirty. 0:28:28.440 --> 0:28:30.159 The Alex Steel and Paul Sweeney were live here in 0:28:30.160 --> 0:28:33.280 a Bloomberg Interactive Brokers studio, or streaming live on YouTube 0:28:33.280 --> 0:28:36.400 as well, So just head over to YouTube dot com 0:28:36.440 --> 0:28:40.040 and search for Bloomberg podcasts. Let's turn our attention to healthcare. 0:28:40.840 --> 0:28:43.960 How about this. Japan is dealing with rising cases of 0:28:44.000 --> 0:28:47.560 a disease caused by a rare flesh eating bacteria that 0:28:47.560 --> 0:28:50.040 can kill people within forty eight hours. Health authorities have 0:28:50.080 --> 0:28:55.239 reported over one thousand cases of streptocockle toxic syndrome. How 0:28:55.240 --> 0:28:57.680 about that as of early June, higher than the record 0:28:57.760 --> 0:28:59.520 nine hundred and forty one cases reporter for all of 0:28:59.520 --> 0:29:03.400 twenty twenty three. At the current rate of infection, experts 0:29:03.400 --> 0:29:06.440 fear the number of cases in Japan can reach twenty 0:29:06.440 --> 0:29:08.080 five hundred this year. For more on the story, we 0:29:08.160 --> 0:29:11.920 check out on Meshadalogia, Senior scholar at the Center for 0:29:12.000 --> 0:29:15.680 Health Security at John Hopkins Bloomberg School of Public Health. Uh, 0:29:15.840 --> 0:29:17.920 doctor Adalgia thinks, so much for joining us. Can you 0:29:17.960 --> 0:29:21.479 tell us about streptococcle toxic shock? What is it? 0:29:21.600 --> 0:29:25.160 N by the way I job tell us about it? 0:29:25.240 --> 0:29:29.400 So this is just this is Streptococcus is a bacteria 0:29:29.480 --> 0:29:31.440 that all of us have dealt with. It's the same 0:29:31.480 --> 0:29:35.520 bacteria that causes strep throat. What can happen though in 0:29:35.880 --> 0:29:38.719 certain individuals is it can be a much more severe 0:29:38.720 --> 0:29:42.240 infection where it can cause what we call, you know, 0:29:42.360 --> 0:29:46.680 necrotizing or flesh eating type of skin infections and then 0:29:46.720 --> 0:29:50.240 also spread systemically and cause multiple different organ systems to 0:29:50.280 --> 0:29:52.400 shut down. So that's when we use the kind of 0:29:52.480 --> 0:29:56.280 term toxic shocks. And it was said that bacteria basically 0:29:56.320 --> 0:29:58.920 disseminates toxins throughout your whole body and it's a very 0:29:58.920 --> 0:30:02.000 serious illness with high levels of morbidity immortality. 0:30:02.320 --> 0:30:05.160 Doctor, Is this new or is this always been the case? 0:30:06.080 --> 0:30:08.120 It's always been the case. But what's new is that 0:30:08.160 --> 0:30:11.720 in Japan post pandemic, they've reported at least two years 0:30:11.760 --> 0:30:14.800 where they've had higher than normal cases and trying to 0:30:14.880 --> 0:30:18.080 unravel the mystery of why that change in epidemiology occurred 0:30:18.440 --> 0:30:21.920 is what's getting headlines right now. But streptococcal toxic SHOCKSIM 0:30:21.920 --> 0:30:25.440 has been around forever. It's just this increase in Japan 0:30:25.520 --> 0:30:27.360 that people are interested in. 0:30:28.400 --> 0:30:31.720 How do the medical professionals, how are they treating this? 0:30:33.040 --> 0:30:36.000 So the mainstay is going to be antibiotics, but because 0:30:36.000 --> 0:30:38.840 it's this systemic toxin disease, we often give other drugs 0:30:38.880 --> 0:30:43.840 to modulate the immune system, and if there are elements 0:30:43.880 --> 0:30:46.840 of flesh eating disease going on, they basically have to 0:30:46.840 --> 0:30:49.720 do extensive surgery to kind of cut ahead of the infection. 0:30:50.440 --> 0:30:54.640 Oh my god, this sounds terrible. How quickly does this happen? 0:30:54.840 --> 0:30:58.120 I mean, you know strep can come on really quickly 0:30:58.200 --> 0:30:59.680 and it might take you a couple of days to 0:30:59.720 --> 0:31:00.760 realize that you have it. 0:31:00.920 --> 0:31:02.200 Like, what's the cycle for this? 0:31:03.880 --> 0:31:07.200 Well, when you get into that toxic shock syndrome spiral, 0:31:07.480 --> 0:31:10.520 it's very fast. They can be dramatic, you know, even 0:31:10.560 --> 0:31:12.480 in an hour can be a major difference in a patient. 0:31:13.080 --> 0:31:14.800 But It's important remember that not everybody that gets a 0:31:14.800 --> 0:31:18.280 strep infection is going to get it's still rare, and 0:31:18.280 --> 0:31:20.160 the most people who have a strep infection of their 0:31:20.160 --> 0:31:22.280 throat or if their skin, it's going to turn out 0:31:22.280 --> 0:31:24.520 to be kind of a garden variety infection. But it 0:31:24.600 --> 0:31:28.160 is important for clinicians to keep in mind that if 0:31:28.160 --> 0:31:30.560 people are getting worse, if they're not getting better, if 0:31:30.560 --> 0:31:34.720 they're more concerning systemic symptoms occurring, that they think about this. 0:31:35.000 --> 0:31:37.040 And it's also important for patients to know that as well, 0:31:37.080 --> 0:31:38.920 that if they're not getting better in the expected time, 0:31:39.000 --> 0:31:40.920 or they're taking a turn for the worst when they're 0:31:40.920 --> 0:31:43.920 already on antibiotics, that this is something where they need 0:31:43.960 --> 0:31:44.920 to seek care immediately. 0:31:45.440 --> 0:31:48.480 Is there any reason why it would be I guess 0:31:48.560 --> 0:31:53.200 localized in Japan here to anything that is unique to. 0:31:53.200 --> 0:31:56.200 That part of the world, not particularly, I mean, we've 0:31:56.200 --> 0:32:01.040 seen increases in streptococal infections, not necessarily toxic shock, all 0:32:01.080 --> 0:32:04.040 over all over different countries. For example, the UK had 0:32:04.080 --> 0:32:06.560 a major issue with this a couple of years ago, 0:32:06.760 --> 0:32:08.600 and it may be having to do with kind of 0:32:08.680 --> 0:32:12.040 idiosyncrasies in the immunity in the population in Japan. Remember, 0:32:12.080 --> 0:32:13.840 we all came through a pandemic where there was a 0:32:13.840 --> 0:32:17.160 lot of social distancing and many of the ordinary infections 0:32:17.160 --> 0:32:21.000 that people get every year were kind of disrupted. And 0:32:21.360 --> 0:32:23.440 there may have been different disruptions in different parts of 0:32:23.440 --> 0:32:27.320 the world and different prevalences of these infections, and now 0:32:27.320 --> 0:32:31.080 they're kind of coming back to their prior levels and 0:32:31.200 --> 0:32:32.200 there's some catching. 0:32:32.000 --> 0:32:32.360 Up to do. 0:32:32.960 --> 0:32:34.520 There are people who might not have had as much 0:32:34.520 --> 0:32:36.800 immunity because they weren't exposed at a low level over 0:32:36.800 --> 0:32:38.920 the last couple of years, or they just might not 0:32:38.960 --> 0:32:41.480 have been infected. And there's a certain number that are 0:32:41.480 --> 0:32:43.680 going to be expected every year in Japan, and because 0:32:43.680 --> 0:32:48.040 you had a two year lull, now it's coming back 0:32:48.080 --> 0:32:50.840 to baseline levels and that's what they're noticing. So this 0:32:50.920 --> 0:32:52.560 is kind of one of the leading hypothesis. But we 0:32:52.560 --> 0:32:54.720 don't know quite everything for sure what's going on in Japan, 0:32:54.800 --> 0:32:56.400 but that's what I think is at play. 0:32:56.720 --> 0:32:58.800 What are the sign you mentioned that if you're on 0:32:58.800 --> 0:33:00.920 antibiotics for strap and you know, get better, but you 0:33:00.960 --> 0:33:03.000 get worse. What are some other signs that people should 0:33:03.000 --> 0:33:03.720 be looking out for. 0:33:05.080 --> 0:33:09.000 Well, so severe a spreading rash that's getting severe, severe 0:33:09.000 --> 0:33:11.280 pain if there's a rash where the infection might have been, 0:33:12.520 --> 0:33:18.240 anything involving low blood pressure, extreme fatigue, not being clear mentally, 0:33:18.760 --> 0:33:21.800 difficulty breathing, all of those kind of signs that the 0:33:21.840 --> 0:33:23.360 infection is not localized. 0:33:24.200 --> 0:33:26.280 Nic doctor. I remember we used to talk to you 0:33:26.360 --> 0:33:28.400 all the time during the pandemic. You were very kind 0:33:28.440 --> 0:33:30.760 to share your time and you know, kind of educate 0:33:30.800 --> 0:33:34.280 a lot of folks on what this virus was, how 0:33:34.760 --> 0:33:37.800 doctors and health professionals were treating it, and then ultimately 0:33:37.840 --> 0:33:40.200 the vaccine and the efficacy of the vaccine. So we 0:33:40.320 --> 0:33:43.360 again appreciate all that time you gave us. Now that 0:33:43.360 --> 0:33:45.880 we've got that in the rear view mirror here, I 0:33:45.920 --> 0:33:47.960 know one of the themes that came out of that 0:33:48.080 --> 0:33:50.920 was just the stress on the healthcare system and the 0:33:51.040 --> 0:33:54.480 people of the healthcare system that doctors and nurses and 0:33:54.480 --> 0:33:57.000 everybody of the work they had to be in the 0:33:57.040 --> 0:34:00.600 front lines during those early months and in that year. 0:34:01.400 --> 0:34:03.320 How are the folks, the good folks at Johns Hopkins 0:34:03.360 --> 0:34:06.040 that you deal with in the facilities, how are they 0:34:06.240 --> 0:34:07.760 doing several years on now? 0:34:08.840 --> 0:34:11.320 Well, I think that most healthcare systems around the country 0:34:11.360 --> 0:34:14.400 have kind of come to a new normal where there's 0:34:14.520 --> 0:34:18.560 kind of chronic burnout, there are chronic staffing issues where 0:34:18.760 --> 0:34:22.680 people quite haven't recovered from the way that the pandemic 0:34:22.719 --> 0:34:26.640 altered hospital operations. And this is going to be one 0:34:26.680 --> 0:34:29.560 of the long tails of the pandemic. It's not something 0:34:29.600 --> 0:34:31.440 that you can just bounce back from. There wasn't a 0:34:31.440 --> 0:34:33.480 lot of resiliency built into the system. There wasn't a 0:34:33.560 --> 0:34:36.760 lot of kind of slack in it, and the pandemic 0:34:36.960 --> 0:34:39.239 ate up all that slack. And I just think that 0:34:39.239 --> 0:34:42.840 we're in a situation where a lot of people still 0:34:43.320 --> 0:34:46.120 are carrying those scars around of that time when they 0:34:46.120 --> 0:34:49.920 were overworked, where there were concerns about personal protective equipment, 0:34:50.040 --> 0:34:52.960 where hospitals were crashing, and even when you look at 0:34:52.960 --> 0:34:57.280 the economics of hospitals, we're seeing hospitals closed, rural hospitals 0:34:57.440 --> 0:35:01.080 really looking at their financial viability hospital banker. So this 0:35:01.160 --> 0:35:03.240 was something that took a major toll on the healthcare system, 0:35:03.440 --> 0:35:05.920 just like we expected and predicted it with And this 0:35:06.000 --> 0:35:09.760 is why it's so important to incorporate healthcare preparedness, healthcare 0:35:09.760 --> 0:35:14.040 resiliency into planning for the next infectious disease emergency, whatever 0:35:14.080 --> 0:35:16.440 it might be. This can't just be something that we 0:35:16.560 --> 0:35:19.000 think about when there's a crisis, when it's in the headlines. 0:35:19.239 --> 0:35:21.160 This is something that needs to be done kind of 0:35:21.239 --> 0:35:24.520 with a long term eye to the future to make 0:35:24.560 --> 0:35:29.680 a sustainable way to operate hospitals and make emergency prepared 0:35:29.719 --> 0:35:30.800 and as part of their core function. 0:35:32.160 --> 0:35:35.160 How are we doing with COVID? I mean, COVID loves me. 0:35:35.520 --> 0:35:38.560 It doesn't love Paul, but it loves me. How are 0:35:38.560 --> 0:35:41.680 we doing with COVID? What are the cases like? Where 0:35:41.719 --> 0:35:43.560 are we going to get vaccinations in the fall for 0:35:43.680 --> 0:35:44.640 fluen covid? 0:35:44.680 --> 0:35:45.239 What do you think? 0:35:48.000 --> 0:35:50.759 Well, COVID is something that's increased over time in the 0:35:50.880 --> 0:35:53.360 last several weeks or so. But we've seen is this 0:35:53.520 --> 0:35:57.359 virus is endemic, but it continues to mutate and spin 0:35:57.400 --> 0:36:00.520 off new variants that are able to infect us. Right now, 0:36:00.880 --> 0:36:03.720 all across the country, COVID cases are up, emergency department 0:36:03.840 --> 0:36:06.440 visits are up, but its ability to cause severe disease, 0:36:06.640 --> 0:36:09.480 its ability to crush the hospital severely constrained. Because of 0:36:09.520 --> 0:36:11.920 the community and the other tools that we have. We 0:36:11.960 --> 0:36:14.399 will have new vaccines in the fall that are better 0:36:14.400 --> 0:36:18.000 targeted to what's circulating and that will likely be something 0:36:18.040 --> 0:36:20.560 that's recommended to high risk individuals that they get right 0:36:20.600 --> 0:36:22.319 alongside their flu vaccine. 0:36:23.040 --> 0:36:25.680 All right, doctor George, thank you so much. We appreciate 0:36:26.080 --> 0:36:29.719 that as always. Doctor almesh Adology a senior scholar to 0:36:29.760 --> 0:36:32.719 Center for Health Security at Johns Hopkins Bloomberg School of 0:36:33.000 --> 0:36:36.000 Public Health. And again, the good folks at Johns Hopkins 0:36:36.000 --> 0:36:38.440 were so good to us, you know during those early 0:36:38.560 --> 0:36:40.120 days when we didn't know anything nothing. 0:36:40.320 --> 0:36:42.000 I actually want to say, we should get him back 0:36:42.120 --> 0:36:44.360 when there's not a crisis, just to like learn about 0:36:44.400 --> 0:36:47.600 stuff that isn't a flesh eating disease, right that comes 0:36:47.600 --> 0:36:50.200 from strap or like COVID spreading again, just to like 0:36:50.280 --> 0:36:53.040 learn about the system and like what cool things are 0:36:53.040 --> 0:36:55.560 in the pipeline to be discovered and what people are treating. 0:36:55.560 --> 0:36:57.359 And I mean everyone's living longer, yep. 0:36:57.480 --> 0:36:59.960 Right, we're letting people live longer, but then how we 0:37:00.080 --> 0:37:02.960 support them really fails. And then getting that dynamic from 0:37:03.000 --> 0:37:04.399 him and be super interesting yep. 0:37:04.440 --> 0:37:06.640 I went into a healthcare episodic for the first time 0:37:06.719 --> 0:37:10.280 yesterday and I can't remember how long and X rays. 0:37:10.480 --> 0:37:12.839 I mean what I was interesting to see, like how 0:37:12.880 --> 0:37:15.960 well it was staff, Like are there nursing shortages are there, 0:37:16.000 --> 0:37:19.239 you know, technician shortage, and it seemed like it was 0:37:19.640 --> 0:37:22.320 back to normal. There's plenty of folks there, you know, 0:37:22.360 --> 0:37:23.759 a few masks here and there from some of the 0:37:23.760 --> 0:37:28.360 healthcare professionals. But it seemed like pre pandemic business as usual. 0:37:28.360 --> 0:37:30.160 But I get as doctor Dalga was saying, there's some 0:37:30.560 --> 0:37:33.479 long tail issues for the industry as a whole. I guess, 0:37:33.560 --> 0:37:35.440 you know, they were so crushed. I think about the 0:37:35.480 --> 0:37:37.680 hospitals here in New York City that were so crushed. 0:37:37.680 --> 0:37:40.200 You should just see, like the ers are crazy, like 0:37:40.239 --> 0:37:42.799 they're just overflowing. It didn't take days to get a bed. 0:37:42.880 --> 0:37:46.440 And yeah, it's just it's it's the healthcare systems and 0:37:46.520 --> 0:37:47.440 real issues with that. 0:37:49.760 --> 0:37:53.640 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:37:53.719 --> 0:37:57.239 weekdays at ten am Eastern on applecar Play and royd 0:37:57.280 --> 0:37:59.959 Otto with the Bloomberg Business App. You can also listen 0:38:00.200 --> 0:38:03.239 live on Amazon Alexa from our flagship New York station, 0:38:03.640 --> 0:38:06.359 Just Say Alexa, playing Bloomberg eleven thirty. 0:38:08.160 --> 0:38:10.560 I'm Alex Thee alongside Paul Sweeney. This is the Boomberg 0:38:10.600 --> 0:38:12.480 Intelligence Radio. We bring you all the top news and 0:38:12.560 --> 0:38:15.680 business and finance live from an interactive Brokers studio right 0:38:15.719 --> 0:38:18.600 here in midtown Manhattan now for the month of June, 0:38:18.640 --> 0:38:21.680 Bloomberg Radio is committed to bringing you segments and guests 0:38:21.719 --> 0:38:24.239 focus on the topic of equality. And today we have 0:38:24.239 --> 0:38:27.200 the pleasure of speaking with a Lalua Ganga. She's US 0:38:27.320 --> 0:38:30.959 Chief investment Officer over at Mercer. She is a rock 0:38:31.000 --> 0:38:34.640 star in her own right as an investment analyst and 0:38:34.719 --> 0:38:38.439 a portfolio diversifier and talk about clients and. 0:38:38.400 --> 0:38:39.200 All those things. 0:38:39.480 --> 0:38:42.799 And also she is in the C suite and also 0:38:42.920 --> 0:38:46.000 working mom and that's hard, so we can cover both. 0:38:46.680 --> 0:38:48.560 So can you just tell me a little bit about 0:38:48.600 --> 0:38:50.480 you know, your career and how you got to where 0:38:50.520 --> 0:38:50.799 you were. 0:38:53.000 --> 0:38:56.240 Well, thank you for having me. I heard the introduction 0:38:56.320 --> 0:38:58.359 to kind and I just started laughing because my daughter 0:38:58.400 --> 0:38:59.480 would just be like, that's just. 0:38:59.520 --> 0:39:01.200 Mom, Yeah, totally. 0:39:01.360 --> 0:39:05.200 I can appreciate that that is what happened. 0:39:05.239 --> 0:39:09.319 So, you know, I there are days that I take 0:39:09.360 --> 0:39:12.359 a step back and I look at my career and 0:39:12.440 --> 0:39:18.200 I'm I'm even blown away and surprised. Frankly, I've had 0:39:18.200 --> 0:39:21.919 the privilege of being in the US. I moved here 0:39:21.960 --> 0:39:25.880 for college. I'm originally from Nigeria. My family's from Nigeria, 0:39:26.000 --> 0:39:29.520 born and raised both in Nigeria and Botswana, and I 0:39:30.400 --> 0:39:34.320 moved in nineteen ninety nine. I studied math. Didn't know 0:39:34.320 --> 0:39:36.680 what I was going to do with it. It was 0:39:36.719 --> 0:39:38.840 somewhat accidental. I was trying to find a place that 0:39:38.920 --> 0:39:40.080 gave work visas. 0:39:40.480 --> 0:39:42.920 Yep, such a big air. 0:39:42.760 --> 0:39:46.840 Got to be a big firm, and my family science based. 0:39:46.960 --> 0:39:51.400 I ended up working at a bank because big hires 0:39:51.440 --> 0:39:53.160 and they gave visas back in the day, and it 0:39:53.200 --> 0:39:56.080 was a trading desk, and all I could think I 0:39:56.200 --> 0:39:58.240 was I did to work really hard to keep this visa, 0:40:00.000 --> 0:40:03.480 and I learned about markets. I learned about trading. I 0:40:03.520 --> 0:40:06.239 realized that in order to stay here, I had to 0:40:06.560 --> 0:40:09.920 in my head work harder than everybody else and just 0:40:09.960 --> 0:40:12.120 show that I truly wanted it. And I was a 0:40:12.200 --> 0:40:16.279 student of markets. I just loved learning. And over time, 0:40:16.360 --> 0:40:20.160 I was fortunate that folks saw me and gave me 0:40:20.200 --> 0:40:23.719 a chance and opportunity to do more. I raised my 0:40:23.760 --> 0:40:26.840 hand and I asked for more, and you know, fast forward, 0:40:28.320 --> 0:40:33.799 I don't know, twenty something years or more, I'm the 0:40:33.880 --> 0:40:39.640 chief investment officer at one of the most major prominent 0:40:39.680 --> 0:40:45.160 platforms for in Dowmon's Foundation's healthcare pensions. Like the assets 0:40:45.160 --> 0:40:47.640 and the responsibility that we have blows me away, and 0:40:47.680 --> 0:40:50.760 I take it very seriously and I'm just truly grateful 0:40:50.800 --> 0:40:51.439 to be in the seat. 0:40:52.440 --> 0:40:57.400 Women in financial services on Wall Street a constant challenge, 0:40:57.440 --> 0:41:00.720 and in my prior role, I hired a lot of 0:41:00.760 --> 0:41:04.640 folks coming out of school, and our entering classes were 0:41:05.040 --> 0:41:08.879 perfectly diverse, perfectly diverse. Ten years later when it came 0:41:08.920 --> 0:41:12.440 time for the managing director or a partner discussion, not 0:41:12.520 --> 0:41:16.239 so much yep. So what was your experience going through 0:41:16.239 --> 0:41:19.439 this whole process? Having spend that much time in the business. 0:41:20.080 --> 0:41:24.359 I knew that I had to not think about it. 0:41:24.360 --> 0:41:26.680 It was a deliberate choice to not think about it, 0:41:26.719 --> 0:41:29.560 because if I did, and you look at the numbers, like, 0:41:29.680 --> 0:41:33.040 it's very easy to be discouraged. It's very easy to 0:41:33.120 --> 0:41:35.439 say I don't see it, So how can I think 0:41:35.520 --> 0:41:38.600 it and be it? And make no mistake, I did 0:41:38.640 --> 0:41:41.920 think it very often, but I just had to actively 0:41:41.920 --> 0:41:45.160 put it out of my mind. And there are certain 0:41:45.239 --> 0:41:49.680 points that you have as a woman, your choice of 0:41:49.719 --> 0:41:53.399 a partner, your choice of having a family, and when 0:41:53.480 --> 0:41:58.480 you do that, how much time you spend with I 0:41:58.480 --> 0:42:01.120 have a daughter, she's turning five in a few weeks. 0:42:02.320 --> 0:42:04.480 There are points that you will be slower in your 0:42:04.680 --> 0:42:07.200 career as a result of that. It's also a choice 0:42:07.200 --> 0:42:09.160 and there are times that you have the ability to 0:42:09.160 --> 0:42:12.440 do it. For me, I found that it's been support 0:42:12.920 --> 0:42:14.600 and the support system around me. 0:42:15.080 --> 0:42:18.319 And you mean like personal or job wise or both both? 0:42:18.680 --> 0:42:23.560 Yeah, definitely both. The if the job wise is like 0:42:23.600 --> 0:42:26.279 you can do this job, and personally it's hard, you 0:42:26.320 --> 0:42:28.200 have to make that choice. A lot of women are like, 0:42:28.239 --> 0:42:30.640 I will choose and it won't be you. It won't 0:42:30.680 --> 0:42:33.239 be you job, it will be the family because that's 0:42:33.480 --> 0:42:34.920 you know, at the end of the day, when we 0:42:35.040 --> 0:42:39.359 leave this world, that's what matters the most. So when 0:42:39.480 --> 0:42:41.719 put in a situation where you have to choose, and 0:42:41.840 --> 0:42:44.600 many people are in situations whereby they have to choose, 0:42:44.640 --> 0:42:49.400 they don't choose work. So how you have the support 0:42:49.440 --> 0:42:52.200 in place to be able to have both, which you 0:42:52.280 --> 0:42:55.280 can't have them at the same time at the same intensity. 0:42:56.160 --> 0:42:57.480 You know you can have it, but you have to 0:42:57.760 --> 0:43:01.120 stage like sad, my daughter's five are going to be five. 0:43:01.600 --> 0:43:04.440 So I had children later in life in order to 0:43:04.480 --> 0:43:07.480 be able to go as fast as I could without 0:43:07.520 --> 0:43:10.600 making some of those other trade offs, and then having 0:43:10.600 --> 0:43:13.319 the support system in place while you are doing the worst. 0:43:13.360 --> 0:43:14.560 So I love that you brought up support. 0:43:14.600 --> 0:43:17.279 I had a dinner last week with a bunch of 0:43:17.320 --> 0:43:20.719 women in finance, super successful, really great, and eventually it 0:43:20.760 --> 0:43:23.520 turned to the topic of they couldn't do those jobs, 0:43:23.600 --> 0:43:26.560 and it either could I without a really supportive partner, 0:43:26.920 --> 0:43:29.479 and that you learn really fast, particularly when you have kids, 0:43:29.520 --> 0:43:32.120 how supportive that partner is actually going to be, particularly 0:43:32.120 --> 0:43:36.040 when you travel. But that's hard, Like, that's not a given, 0:43:36.120 --> 0:43:38.319 particularly if you're in a if you're a woman with 0:43:38.440 --> 0:43:41.400 like a career driven role, and you put that first. 0:43:41.480 --> 0:43:44.839 That's not a given in the world, not a given 0:43:44.880 --> 0:43:45.160 at all. 0:43:45.200 --> 0:43:48.239 And you know, in life and in work, there is 0:43:48.760 --> 0:43:52.040 your ability to work hard, your intelligence, and then there 0:43:52.120 --> 0:43:54.800 is luck. And I will admit that there's there's a 0:43:54.880 --> 0:43:57.200 lot of luck that I've had. My husband, I've known 0:43:57.200 --> 0:43:57.920 since I was eighteen. 0:43:58.400 --> 0:43:59.200 Oh my goodness. 0:43:59.760 --> 0:44:02.240 So we grew up together. 0:44:02.640 --> 0:44:05.760 Essentially it was okay, you go to school, you're working, 0:44:05.880 --> 0:44:08.280 you're was going it was it was it was trade 0:44:08.280 --> 0:44:11.520 offs and who's on, who's off, How do we do 0:44:11.600 --> 0:44:16.080 it and who knew. You know, the stats in this 0:44:16.200 --> 0:44:19.640 in this country are not necessarily encouraging in that respect, 0:44:19.640 --> 0:44:22.239 But we communicate a lot, and we have honest conversations. 0:44:22.239 --> 0:44:26.480 Who's on, who's off, who, who picks up the gap 0:44:26.520 --> 0:44:27.279 and for how long? 0:44:28.200 --> 0:44:28.960 That's interesting. 0:44:29.280 --> 0:44:30.959 I think what we learned just real quickly at thirty 0:44:31.000 --> 0:44:34.879 seconds the childcare and now the elder care in this country. Boy, 0:44:34.920 --> 0:44:36.319 that's got to change. We learned that. I think during 0:44:36.360 --> 0:44:38.480 the pandemic, people who weren't aware of it, they got 0:44:38.520 --> 0:44:40.120 they became aware of it pretty quickly. 0:44:40.280 --> 0:44:47.000 Yes, absolutely, and the pandemic was a big equalizer for 0:44:47.200 --> 0:44:50.160 many family like men and women whatever. It was like 0:44:50.200 --> 0:44:53.360 everyone had to pitch up and roll up their sleeves. 0:44:54.239 --> 0:44:58.319 You could have a nanny, but could they come in Nope, right, 0:44:58.520 --> 0:45:01.960 So that was it. And then you had that plus 0:45:02.040 --> 0:45:06.160 if you had elderly parents, which my parents are not 0:45:06.200 --> 0:45:11.279 in this country, my husband had at the time, and 0:45:11.320 --> 0:45:15.600 how you're navigating that on both sides, you can get pulled, frankly, 0:45:16.320 --> 0:45:19.960 to be able to do that. During the pandemic, it 0:45:20.080 --> 0:45:22.960 was everybody was experiencing that. But if you remove the 0:45:23.000 --> 0:45:27.840 pandemic and quote unquote normal times, it's hard to be 0:45:27.880 --> 0:45:30.759 able to have that empathy in place with people that 0:45:30.800 --> 0:45:34.160 are managing a number of other personal commitments. 0:45:34.960 --> 0:45:37.640 I could talk to you for dance, so definitely come back. 0:45:37.760 --> 0:45:39.120 We can do a little bit of this. We can 0:45:39.120 --> 0:45:41.719 talk about your market views. 0:45:41.760 --> 0:45:43.560 Really amazing. Thank you so much for sharing. 0:45:43.560 --> 0:45:45.160 You're speaking a lot of what I hear about all 0:45:45.160 --> 0:45:46.719 the time and things that I go through too, So 0:45:46.719 --> 0:45:47.560 thank you for sharing that. 0:45:47.640 --> 0:45:51.720 Lalua Ganga. She's US Chief investment officer over at Mercer. 0:45:52.120 --> 0:45:56.640 This is the Bloomberg Intelligence podcast, available on Apples, Spotify, 0:45:56.840 --> 0:45:59.719 and anywhere else you will get your podcasts. Listen live 0:46:00.120 --> 0:46:03.600 weekday ten am toanoon Eastern on Bloomberg dot com, the 0:46:03.719 --> 0:46:07.160 iHeartRadio app, tune In, and the Bloomberg Business app. You 0:46:07.200 --> 0:46:10.400 can also watch us live every weekday on YouTube and 0:46:10.560 --> 0:46:12.160 always on the Bloomberg terminal.