WEBVTT - Examining The Markets, Berkshire Earnings, And Retail 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.360 at Bloomberg dot com slash podcast. Now, I want to 0:00:22.400 --> 0:00:25.200 get over to Marcus Morris, and Asian portfolio manager at 0:00:25.280 --> 0:00:30.200 Zeo Capital Advisors, and let's go over the data that 0:00:30.280 --> 0:00:33.000 we've had in the data to come. Marcus, starting with 0:00:33.000 --> 0:00:36.199 the jobs report, what do you make of the you know, 0:00:36.280 --> 0:00:43.559 strong numbers, but still we I guess relatively percip participation. UM, 0:00:43.680 --> 0:00:48.080 I'm out there. Uh, thanks for having me. Um. And 0:00:48.280 --> 0:00:51.239 you know, I thought the jobs number Friday was was 0:00:51.560 --> 0:00:57.120 was encouraging. Um. You definitely saw the beginning of you know, 0:00:57.920 --> 0:01:00.640 people coming back when not from a participation standpoint, but 0:01:00.760 --> 0:01:03.360 the hiring and taking place. UM. These A fifty three 0:01:03.360 --> 0:01:06.920 thousand probably tell you when cap thousands jobs added, UM 0:01:06.959 --> 0:01:10.720 two thirty five thousand and upper revisions. Very strong wage 0:01:10.720 --> 0:01:12.920 growth four point nine percent over the last year. I 0:01:12.959 --> 0:01:15.120 think that's up from anything we've seen over the last 0:01:15.160 --> 0:01:17.680 ten years prior UM and so there were some good 0:01:17.720 --> 0:01:20.880 things in the jobs report, um, I think to your point, 0:01:20.920 --> 0:01:23.080 one of the things that is somewhat discouraging is that 0:01:23.120 --> 0:01:26.600 the participation rate has stayed relatively flat. Um. And then, 0:01:27.080 --> 0:01:28.760 and one of the things we think about as we 0:01:28.800 --> 0:01:30.880 think about these jobs numbers is the role of the FED. 0:01:31.360 --> 0:01:35.600 And you saw minority underrepresented minority employment lag relative to 0:01:35.640 --> 0:01:39.240 the larger index, and so that for us causes the 0:01:39.360 --> 0:01:42.480 question in terms of like where the Fed is willing 0:01:42.520 --> 0:01:45.920 to step in, right, because obviously they've already acknowledged and 0:01:46.000 --> 0:01:48.760 pal did so last week that inflation is gonna run 0:01:49.040 --> 0:01:53.720 hotter for longer, even longer than they initially anticipated. But um, 0:01:53.760 --> 0:01:57.280 his their focus has really been on this underrepresented minority 0:01:57.400 --> 0:01:59.760 UM employment and if you look at the jobs report 0:01:59.840 --> 0:02:02.760 they came out Friday, there's still a ways to go there. 0:02:03.080 --> 0:02:05.600 Instead of the question I think that's on the top 0:02:05.640 --> 0:02:08.320 of our minds is just how long and what does 0:02:08.360 --> 0:02:12.519 the FED need to see before that full unemployment test 0:02:12.639 --> 0:02:17.200 has been met? Because I think throughout they can easily 0:02:17.240 --> 0:02:19.839 say that the unemployment test will be made in terms 0:02:19.919 --> 0:02:21.919 of the met in terms of their ability to raise 0:02:22.040 --> 0:02:24.920 rate mark. As you mentioned the wage data, I think 0:02:25.040 --> 0:02:27.360 something like five gain year on year, and you know, 0:02:27.480 --> 0:02:31.079 wage inflation is kind of representative of stickiness in inflation, right. 0:02:31.160 --> 0:02:33.000 But at the same time, you have the FED betting 0:02:33.280 --> 0:02:36.079 that we see this mass return to employment that will 0:02:36.120 --> 0:02:38.440 help ease inflation in the wrong run, because the supply 0:02:38.520 --> 0:02:42.240 side of the economy comes back on is the is 0:02:42.240 --> 0:02:45.120 the FED reading this data right in the interpretation of 0:02:45.240 --> 0:02:49.640 in the context of inflation. I think, again, there's so 0:02:49.720 --> 0:02:51.760 much noise, and I mean I think I do not 0:02:51.919 --> 0:02:54.200 envy the job j Pal has right now on the FED, 0:02:54.880 --> 0:02:59.519 largely because so much of big picture. I think they're 0:02:59.600 --> 0:03:01.840 right when they tried to say transitorial, because you know, 0:03:01.880 --> 0:03:04.560 we parted the word transitory five in a different ways. 0:03:04.600 --> 0:03:07.959 But what they're really trying to say is their inflation 0:03:08.120 --> 0:03:12.640 factors that are just abnormal. And if you think about it, 0:03:12.639 --> 0:03:14.880 we started with a complete shutdown of the economy when 0:03:14.919 --> 0:03:19.040 the pandemic hit. The federal government provided significant amount of stimulus. 0:03:19.240 --> 0:03:22.480 Um the FED has provided significant amount of monetary stimulus 0:03:22.560 --> 0:03:25.800 to businesses. And then when there was when we reopened, 0:03:26.280 --> 0:03:29.200 everyone had pens of demand. You know, everyone had been 0:03:29.200 --> 0:03:32.000 sitting in the house for anywhere from six months, you know, 0:03:32.080 --> 0:03:35.440 a year, not traveling, not having access to the goods 0:03:35.440 --> 0:03:38.760 and services that they're used to. And so you took 0:03:38.760 --> 0:03:41.600 a supply chain that you know was starting from zero, 0:03:42.080 --> 0:03:44.880 but the demand curve that was, you know, well beyond 0:03:45.040 --> 0:03:47.640 where we would have you know, started um where we 0:03:47.680 --> 0:03:50.640 would have ended before the pandemic, because there was so 0:03:50.720 --> 0:03:53.480 much pent up demand. And so the FED understands that 0:03:53.520 --> 0:03:56.160 a lot of the inflation we're seeing is simply that 0:03:56.760 --> 0:04:00.640 there is relation to this really strong demand, you know, 0:04:00.800 --> 0:04:05.160 matching up with basically the restarting of supply chains, throwing 0:04:05.240 --> 0:04:08.800 the fact that you've seen additional disruption overseas and in 0:04:08.840 --> 0:04:11.880 the US as virus cases have spiked the delta varian 0:04:11.880 --> 0:04:13.960 et cetera. And so there's an element of the FED 0:04:14.000 --> 0:04:17.920 that sitting there saying a lot of this inflation isn't real. Now, yes, 0:04:17.960 --> 0:04:20.119 I do think that the wage inflation that you're seeing 0:04:20.240 --> 0:04:22.080 is going to be a real element that is going 0:04:22.160 --> 0:04:25.760 to continue on. But there's still parts of this that 0:04:25.839 --> 0:04:27.880 the FED wants to part out to figure out, like 0:04:27.920 --> 0:04:30.440 what's real, what's fake. And I do think once you 0:04:30.480 --> 0:04:34.080 get supply chains fully online you will start to see 0:04:34.120 --> 0:04:36.760 some of those pressures ease, but again that could be 0:04:36.839 --> 0:04:42.279 well into two and wage the demand picture and wages 0:04:42.279 --> 0:04:45.440 aren't keeping up right. Um, right, what do you what's 0:04:45.480 --> 0:04:47.760 your view on the markets? Then when we look at 0:04:47.960 --> 0:04:51.840 right now all time high, doesn't seem like there's a 0:04:51.880 --> 0:04:53.760 lot of room left to run. Ed was talking about 0:04:53.800 --> 0:04:56.080 Goldman tacts. They think we're only going to by the 0:04:56.160 --> 0:04:58.040 end of next year. UB says we're only going to 0:04:58.120 --> 0:05:02.080 five thousand by the three What do you think, Um, 0:05:02.120 --> 0:05:04.800 you know, over the last few weeks, Uh, we had 0:05:04.920 --> 0:05:07.640 zeal I've been kind of bouncing around this idea of 0:05:07.640 --> 0:05:11.359 peak everything right, and it just feels that everything is 0:05:11.360 --> 0:05:14.280 at a peak. You've got wage growth at a peak 0:05:14.320 --> 0:05:16.279 that we've seen over the last team years. You've got 0:05:16.279 --> 0:05:18.320 the stock market at a peak. You've got inflation at 0:05:18.320 --> 0:05:21.239 peaks we haven't seen in a really long time. Um. 0:05:21.279 --> 0:05:25.080 It's a challenging market. And but you also have a 0:05:25.120 --> 0:05:28.039 backdrop in which you know companies are going to You know, 0:05:28.120 --> 0:05:30.040 to date, I think the S and P five hundred 0:05:30.120 --> 0:05:33.560 has generated higher earnings on a year over year basis, 0:05:33.800 --> 0:05:36.440 And even if you go back to three to nineteen 0:05:36.480 --> 0:05:39.960 before the pandemic. I think you're up about sixteen seventeen percent, 0:05:40.000 --> 0:05:43.479 which is of solid growth rate. So I mean there's 0:05:43.480 --> 0:05:45.599 a lot of competing forces in the market right now. 0:05:45.640 --> 0:05:48.960 The more the focus I think is on the bead 0:05:49.080 --> 0:05:52.719 that is basically said, we're watching inflation, but we're not worried, 0:05:53.520 --> 0:05:55.800 and then you have this strong earnings growth, so you 0:05:55.839 --> 0:05:58.200 are seeing these kind of record highs. But I think 0:05:58.640 --> 0:06:01.520 you know, our focus is the really has been on 0:06:01.800 --> 0:06:03.600 what are the risk of the downside, And I think 0:06:03.680 --> 0:06:07.080 the biggest risk of the downside is continued inflation, continue 0:06:07.080 --> 0:06:09.960 to supply, chain disruption, higher interest races we run and 0:06:10.040 --> 0:06:12.640 fixed them, come portfolio and so those are the things 0:06:12.680 --> 0:06:15.960 that we keep have been saying very mindful of. And 0:06:16.120 --> 0:06:17.719 you know, as we look at companies, one of the 0:06:17.760 --> 0:06:20.200 things we'd like to do is, as we've talked about 0:06:20.240 --> 0:06:23.839 this very tight wage environment, we've been looking at companies 0:06:23.880 --> 0:06:26.599 and how they historically have treated their employees, because I 0:06:26.600 --> 0:06:30.440 think in this environment, those companies that have historically paid 0:06:30.440 --> 0:06:33.040 their employees well, treated them well, and they had a 0:06:33.120 --> 0:06:36.880 high level of route has a significant competitive advantage going forward. 0:06:36.960 --> 0:06:39.000 All right, Marcus, thanks so much for joining us. Marcus 0:06:39.000 --> 0:06:47.159 Moore there from Zero Capital Advisors. This is Bloomberg. Let 0:06:47.240 --> 0:06:49.200 shift gears a little, mat Miller, let's talk about the 0:06:49.320 --> 0:06:53.800 retail sector and bringing Murray shaw seni XT analyst at 0:06:53.839 --> 0:06:56.400 Columbia fred Need to Investments. And this is interesting because 0:06:56.440 --> 0:06:58.159 what I hear is a lot of abolitionists on the 0:06:58.160 --> 0:07:00.919 street about the retail sector. And yeah, these are the 0:07:00.960 --> 0:07:04.279 same companies, the same industry that are kind of faring 0:07:04.400 --> 0:07:07.920 the brunt of these higher input costs. So first question, Marshal, 0:07:08.400 --> 0:07:10.440 what's the good news for wool Street about retail this 0:07:10.480 --> 0:07:14.000 week this coming week? Well, the good news is that 0:07:14.200 --> 0:07:18.960 overall sentiment from the companies remains very positive heading into 0:07:18.960 --> 0:07:21.680 the holidays. And I think we have to remember that 0:07:21.720 --> 0:07:25.800 these companies have been living with supply chain disruption for 0:07:25.840 --> 0:07:28.400 the past year and a half and they have been 0:07:28.440 --> 0:07:32.240 planning well for it, and the companies have proven to 0:07:32.280 --> 0:07:37.160 be quite resilient. And I think, um from the investor standpoint, 0:07:37.600 --> 0:07:40.240 we really need to give both the companies and the 0:07:40.280 --> 0:07:45.400 consumer the benefit of the doubt. So the consumer has 0:07:46.160 --> 0:07:48.960 UH saved up a lot during the pandemic, spent off 0:07:49.000 --> 0:07:51.080 some of that, but still has a ton of savings 0:07:51.080 --> 0:07:55.760 relative to you know the historical average um. There won't 0:07:55.760 --> 0:07:58.840 be any shortage of demand, will there or cash this 0:07:58.880 --> 0:08:04.320 holiday season? Absolutely not. We still feel really positive about 0:08:04.400 --> 0:08:07.440 the overall health of the consumer. Of course, at the 0:08:07.480 --> 0:08:13.680 lower end, we've seen stimulus that has driven um increase 0:08:13.760 --> 0:08:17.800 savings and now the return to work and higher minimum 0:08:17.840 --> 0:08:21.800 wages is a positive for that consumer. At the hire 0:08:21.880 --> 0:08:27.000 income level, the wealth effect has been very significant, and 0:08:27.360 --> 0:08:31.280 that plus still a very strong job market and income 0:08:31.320 --> 0:08:35.360 potential is really driving strengths across the board at all 0:08:35.480 --> 0:08:38.720 levels for the consumer. Very quickly. We're thinking about names 0:08:38.720 --> 0:08:41.400 the next ten days, like Walmart, like Target. There's all 0:08:41.440 --> 0:08:44.040 these reports out there about the pull forward of e 0:08:44.160 --> 0:08:47.040 commerce spending because of the pandemic. How well positioned to 0:08:47.080 --> 0:08:51.600 those companies in about thirty seconds to take advantage going 0:08:51.640 --> 0:08:55.600 into the holiday season. We feel really good about the 0:08:55.640 --> 0:09:00.000 companies that can use their scale to manage better through 0:09:00.120 --> 0:09:04.160 the current situation. And we've seen incredible share gains from 0:09:04.160 --> 0:09:07.880 both Target and Walmart throughout the pandemic, and we do 0:09:08.000 --> 0:09:10.600 think that those share gains will stick on the other 0:09:10.679 --> 0:09:13.959 side of it, especially as they are able to leverage 0:09:13.960 --> 0:09:19.880 their omni channel capabilities and their penetration across different categories, 0:09:20.280 --> 0:09:24.840 and so especially now as companies are dealing with UM 0:09:24.920 --> 0:09:28.640 increased distruction in the supply chain, we feel really good 0:09:28.679 --> 0:09:32.880 about companies like Target and Walmart being able to leverage 0:09:32.920 --> 0:09:36.640 their scale. All right, you gonna bear with me here, Uh, 0:09:36.840 --> 0:09:41.040 what's omni channel mean? Again? Omni channel is really the 0:09:41.080 --> 0:09:44.520 ability of the retailers to service the customer both in 0:09:44.720 --> 0:09:48.200 store and online. And if you look at what UM, 0:09:48.240 --> 0:09:50.920 some of the will really all retailers. But I would 0:09:51.000 --> 0:09:53.280 use Target as an example what they've done with their 0:09:53.840 --> 0:09:57.200 drive up and pick up in store that has been 0:09:57.520 --> 0:10:00.960 UM a huge competitive advantage for them throughout the pandemic. 0:10:01.480 --> 0:10:02.840 We kind of touched on this, but I want to 0:10:02.840 --> 0:10:05.560 dig into the psychology of the consumer. You know, yeah, okay, 0:10:05.600 --> 0:10:09.240 everyone's flush with cash, but we have all these higher 0:10:09.240 --> 0:10:12.319 input costs. What is the pain threshold for the consumer 0:10:12.320 --> 0:10:15.439 in your view, to absorb those higher costs, to accept 0:10:15.640 --> 0:10:18.120 the level that these companies will pass on the costs 0:10:18.360 --> 0:10:22.360 to the consumer. I think it really varies by category. 0:10:22.440 --> 0:10:25.880 I think there are certain categories like food where the 0:10:26.160 --> 0:10:29.640 prices are highly visible to the consumers. Think about things 0:10:29.679 --> 0:10:33.360 like milk and bananas that you're buying weekend and week out. 0:10:33.400 --> 0:10:36.480 You see when the price increases, and it's very easy 0:10:36.520 --> 0:10:40.640 to substitute and potentially trade down in the food category, 0:10:40.679 --> 0:10:44.840 but in more discretionary categories. I'm very confident in the 0:10:44.880 --> 0:10:48.960 company's ability to pass through higher pricing UM And the 0:10:49.000 --> 0:10:51.840 truth is that they have been a lot less promotional 0:10:51.960 --> 0:10:56.280 throughout the pandemic UM and that and the consumer has 0:10:56.280 --> 0:11:01.040 still been buying the goods, especially where they're strong brand 0:11:01.240 --> 0:11:06.080 and strong product innovation to UM to support the higher price. 0:11:06.400 --> 0:11:10.000 But the companies are all being very strategic and selective 0:11:10.120 --> 0:11:14.000 about the price increases that they do pass through. And 0:11:14.000 --> 0:11:17.200 and just by being less promotional, they're also in effect 0:11:17.240 --> 0:11:21.240 taking pricing. And again this is not something new, this 0:11:21.320 --> 0:11:24.480 is something that the companies have been doing for the 0:11:24.520 --> 0:11:27.200 past year or so, and I think that that's giving 0:11:27.200 --> 0:11:32.160 them the confidence to continue to UM selectively take pricing 0:11:32.280 --> 0:11:35.240 for some time to come, given that some of these 0:11:35.280 --> 0:11:38.480 cost pressures they're seeing now are transitory, but others like 0:11:38.559 --> 0:11:42.080 wage pressure that they're seeing are more structural. And well, 0:11:42.960 --> 0:11:45.960 you don't see those prices reverting back either, do you write? 0:11:45.960 --> 0:11:50.720 As soon as they get increases, even in milk or 0:11:50.840 --> 0:11:55.959 bread UM, those stick absolutely I think at some point 0:11:56.000 --> 0:11:59.400 we will see promotions start to normalize a little bit, 0:11:59.520 --> 0:12:03.360 especially when the supply comes back online, so you will 0:12:03.400 --> 0:12:06.440 see that happen. But again, I think the companies have 0:12:06.679 --> 0:12:09.720 really learned throughout the pandemic that they can do more 0:12:09.840 --> 0:12:14.800 with last and dry full price selling, and that has 0:12:14.840 --> 0:12:18.360 resulted in higher sales and gross margins. And that is 0:12:18.400 --> 0:12:21.280 something because something that the company do not want to 0:12:21.360 --> 0:12:24.040 give back. As you said, Mary, thanks so much for 0:12:24.120 --> 0:12:27.160 joining us for a pleasure having your insight today. Mary Shore, 0:12:27.160 --> 0:12:33.960 their senior equity analyst with Columbia thread Needles. Let's get 0:12:33.960 --> 0:12:36.720 over to Matthew Paula Zola right now. He's a senior 0:12:36.720 --> 0:12:40.400 analyst for property and casually insurance from Bloomberg Intelligence, and 0:12:40.400 --> 0:12:44.840 he's going to talk to us about Warren Buffett signaling 0:12:45.360 --> 0:12:47.520 a little bit of a wariness with a soaring stock 0:12:47.600 --> 0:12:51.720 market as he extends a selling streak. What do we 0:12:51.760 --> 0:12:57.000 know about Berkshire Hathaway, Matt, Yeah, we know that um 0:12:57.080 --> 0:13:01.280 Berkshire Hathaway's third quarter results were pretty good. They follow 0:13:01.320 --> 0:13:04.520 the trend of the general economy. Things started picking back 0:13:04.600 --> 0:13:07.760 up at the end of last year and kind of 0:13:07.880 --> 0:13:12.679 rolled through you know, to higher than average pre pandemic earnings. 0:13:13.080 --> 0:13:15.400 What I think is kind of a concern for the 0:13:15.440 --> 0:13:17.360 next couple of quarters is going to be the supply 0:13:17.520 --> 0:13:21.040 chain's impact on their kind of vast array of businesses 0:13:21.080 --> 0:13:23.880 going forward. I do want to touch on that, But 0:13:24.320 --> 0:13:27.840 let's talk about the big issue, the best issue anyone 0:13:27.880 --> 0:13:30.959 can possibly have. Warren Buffett and bucksh have Away, have 0:13:31.080 --> 0:13:34.400 Away have too much money. They have so much money 0:13:34.440 --> 0:13:35.960 that they don't know what to do with it, and 0:13:36.000 --> 0:13:39.000 they can't spend it on anything. Walk me through that one. 0:13:40.320 --> 0:13:43.240 So so yeah, I mean, because of a consequence of 0:13:43.240 --> 0:13:47.120 these good earnings, they're just piling up cash, right And 0:13:48.080 --> 0:13:51.680 from the beginning of the pandemic, Warren Buffett struck a 0:13:51.880 --> 0:13:56.800 very cautious tone on the market about the risk inherent 0:13:56.880 --> 0:13:59.800 in what's coming up. And they pretty much sat on 0:13:59.840 --> 0:14:03.440 the hands at the beginning of the pandemic. And at 0:14:03.480 --> 0:14:07.160 their last time You're leading, Buffett expressed remorse about doing that. 0:14:07.320 --> 0:14:09.120 So we should have we should have been more active. 0:14:09.720 --> 0:14:11.400 But then I feel like they kind of got caught 0:14:11.440 --> 0:14:14.280 in a little bit of a trap because valuations did 0:14:14.320 --> 0:14:17.240 nothing but go up since then, and it just makes 0:14:17.280 --> 0:14:23.080 things less attractive if you look at his um established philosophy. 0:14:23.400 --> 0:14:25.800 All that said, though, I do think he could ignore 0:14:25.880 --> 0:14:30.200 valuation and make a best in class business deal if 0:14:30.200 --> 0:14:35.040 he sees it. So where do we see those kinds 0:14:35.040 --> 0:14:37.840 of deals? It's a big size. You can't see these 0:14:37.880 --> 0:14:41.960 elephants everywhere, can't you. Yeah? No, I mean so their 0:14:41.960 --> 0:14:44.480 cash is a hundred and forty nine billion dollars, right, 0:14:44.480 --> 0:14:47.880 so they could pretty much buy almost anything they want. Um. 0:14:47.920 --> 0:14:49.880 I wouldn't want to speculate on where they're going to 0:14:49.960 --> 0:14:52.800 go because you know, it could be anything. You know 0:14:52.880 --> 0:14:56.600 Berkshire's businesses, you know, from owning a ton of apple stock, 0:14:56.880 --> 0:15:00.280 They make airplane parts, they sell candy, they do pretty 0:15:00.320 --> 0:15:02.800 much everything under the sun. And so I wouldn't be 0:15:02.840 --> 0:15:05.040 surprised to see something come out of left field that 0:15:05.120 --> 0:15:07.320 maybe no one's ever heard of, you know, for a 0:15:07.360 --> 0:15:09.960 couple of billion dollars here and there, But to make 0:15:10.000 --> 0:15:12.240 a huge damp in that cash pile, I don't think 0:15:12.240 --> 0:15:14.640 it's going to happen anytime soon. So let's go back 0:15:14.680 --> 0:15:18.000 to what you were discussing earlier. Bugsher Buffett view of 0:15:18.040 --> 0:15:21.760 the world. Because the conglomerate touches so many parts of 0:15:21.800 --> 0:15:25.480 the economy, so many different industries and associated supply chains. 0:15:25.480 --> 0:15:29.320 What do we learn on that? From the third quarter 0:15:29.400 --> 0:15:32.160 results were good? I mean, supply chain was mentioned several 0:15:32.200 --> 0:15:36.960 times in the ten queue. Uh, it's it's affecting all 0:15:36.960 --> 0:15:39.320 of their businesses. I think what remains to be seen 0:15:39.680 --> 0:15:43.320 is how much those businesses can pass through costs to 0:15:43.400 --> 0:15:46.680 the consumer. I think I think generally businesses are able 0:15:46.720 --> 0:15:48.920 to do that just because of the kind of strong 0:15:49.640 --> 0:15:52.280 economy that you know, people are willing to pay more 0:15:52.360 --> 0:15:55.680 for things UM. But I think because of their their 0:15:55.840 --> 0:15:57.440 vast the rate of businesses, there's going to be some 0:15:57.520 --> 0:15:59.800 things that they just can't push along. And they're in 0:16:00.080 --> 0:16:02.600 they're in home building, and you know, I don't know 0:16:02.680 --> 0:16:07.040 how much higher those prices can go if their materials, 0:16:07.080 --> 0:16:11.520 you know, keep going up. And in terms of an end, 0:16:11.760 --> 0:16:14.520 do we get any signal from Buffett or from Berkshire 0:16:15.040 --> 0:16:18.440 as to how the supply chain crisis is going? You know, 0:16:18.520 --> 0:16:22.960 how UM input costs are rising? Is this is this 0:16:23.000 --> 0:16:27.000 going to soften anytime soon? You know, they didn't really 0:16:27.040 --> 0:16:31.320 speculate on the future or the longevity of it. I 0:16:31.320 --> 0:16:35.200 think I think we can see these issues last easily 0:16:35.400 --> 0:16:38.600 through through next year. Given all the businesses they're in, 0:16:38.640 --> 0:16:41.640 then one of the biggest businesses is they make airplane parts, 0:16:41.680 --> 0:16:45.400 precision airplane parts. And you know that market, even though 0:16:45.600 --> 0:16:48.760 travel is coming back, uh, you know, the market has 0:16:48.840 --> 0:16:51.800 yet to rebound. And even if it does, they're having 0:16:51.880 --> 0:16:56.720 trouble um sourcing the parts for that business. Precision airplane 0:16:56.720 --> 0:16:59.760 parts are the best kind, you know, because I hate 0:16:59.760 --> 0:17:04.760 when people just make rough guesstimates and they're producing pieces 0:17:04.800 --> 0:17:10.280 for planes. It just doesn't work. Um, precision cast parts, 0:17:10.760 --> 0:17:14.360 what do they make? They make that? Those are those 0:17:14.400 --> 0:17:17.920 are the precision auto parts that they do make and 0:17:18.040 --> 0:17:20.760 that and that's that's kind of one of those businesses 0:17:20.800 --> 0:17:24.440 that that frankly you may have never heard of, but 0:17:24.680 --> 0:17:29.240 has this kind of huge global near monopoly in these 0:17:29.600 --> 0:17:32.480 kind of And when I say precision, you know it's 0:17:32.520 --> 0:17:34.359 there probably are parts on the plane that are not 0:17:34.440 --> 0:17:36.920 exactly precision, right Like if you're talking about just kind 0:17:36.920 --> 0:17:39.280 of a piece of metal for the wing, maybe that's 0:17:39.320 --> 0:17:41.520 not as precision as some of the instruments that go 0:17:41.600 --> 0:17:44.480 in the cockpit. I know, I was I was just 0:17:44.600 --> 0:17:47.359 joking around a little bit, but um, yeah, no, I've 0:17:48.200 --> 0:17:51.440 I've been flying a lot lately. Uh, I guess relative 0:17:51.520 --> 0:17:53.880 to during the lockdown, and I feel like a lot 0:17:53.920 --> 0:17:57.359 of it is imprecise. But yes, they don't crash, they 0:17:57.359 --> 0:18:00.119 don't fall out of the sky very often, so they 0:18:00.119 --> 0:18:02.320 should be put together pretty well. Matt's thanks so much 0:18:02.359 --> 0:18:04.840 for joining us. Great to get your inside on Berkshire Hathaway. 0:18:05.200 --> 0:18:09.320 Matthew Palazola. There is a senior analysts property and casually insurance, 0:18:09.320 --> 0:18:12.080 and of course Berkshire Hathaway is still in the insurance 0:18:12.119 --> 0:18:14.959 business as well as all of the other stuff that 0:18:15.040 --> 0:18:23.520 they do. Alright, you you mentioned vacation and I want 0:18:23.560 --> 0:18:25.840 to bring in our next guest right now. Matt Roberts 0:18:25.920 --> 0:18:29.360 joins us. He's the CEO of a case uh formerly 0:18:29.800 --> 0:18:31.679 um running open Table, so is he a lot of 0:18:31.920 --> 0:18:35.600 He has a lot of experience in these businesses. And Matt, 0:18:35.680 --> 0:18:40.600 I guess, um, the CASA is a portman too? Is 0:18:40.600 --> 0:18:44.119 that what it's called portmanteau portman. It's a combination of 0:18:44.160 --> 0:18:46.679 two words, I guess, vacation and casa. Right, what do 0:18:46.720 --> 0:18:49.159 you do? Yeah, that's that, that's right. Uh yeah, No, 0:18:49.240 --> 0:18:51.280 we're your focused on first, thanks for having me on. 0:18:51.400 --> 0:18:55.640 We are focused on the supply side of the vacation 0:18:55.720 --> 0:18:58.960 rental equation we both have. You know, we have over 0:18:59.119 --> 0:19:02.679 thirty parties, are the largest in the nation. UH. And 0:19:02.840 --> 0:19:05.960 what we do is we bring online UH nights for 0:19:06.040 --> 0:19:09.560 people to rent at vacation Rentals and so we then 0:19:09.600 --> 0:19:11.439 retail that on our own site, but we also do 0:19:11.480 --> 0:19:16.920 it on verbo Booking, AIRBNBA, et cetera. Matt, you heard. 0:19:16.960 --> 0:19:19.000 Matt and I are just talking about the great reopening 0:19:19.000 --> 0:19:22.399 of the Transatlantic route. What is the demand? You know, 0:19:22.480 --> 0:19:25.680 what are you seeing November eight on wood from Europeans, 0:19:25.720 --> 0:19:28.520 from Brits that want to come to the United States 0:19:28.560 --> 0:19:32.440 for vacation, to visit loved ones, whatever it may be. Yeah, 0:19:32.560 --> 0:19:36.240 really excited to see the reopening and it's going to, 0:19:36.400 --> 0:19:39.399 in our opinion, just add to the already incredibly strong 0:19:39.480 --> 0:19:42.639 demand that we're seeing. Our business is booming, and you know, 0:19:42.680 --> 0:19:45.200 we just happened to be focusing also on the hottest 0:19:45.520 --> 0:19:49.080 segment of the entire travel industry right now, which is 0:19:49.160 --> 0:19:52.159 vacation rentals. You know, what we're seeing is more and 0:19:52.200 --> 0:19:55.600 more people are going to travel over the holidays, especially 0:19:55.760 --> 0:19:59.120 folks with young children. I think that's like six are 0:19:59.119 --> 0:20:02.880 planning on travel ing. So this incremental demand on top 0:20:02.920 --> 0:20:06.560 of an already very very healthy market is a welcome 0:20:06.600 --> 0:20:09.320 to uh, you know, to all of us in this industry. 0:20:09.440 --> 0:20:13.359 Healthy and changing, right. I mean you mentioned um you 0:20:13.440 --> 0:20:16.360 do your own business, but you also work through Verbo 0:20:16.440 --> 0:20:21.960 and Airbnb. I had a wedding in Valencia last month, 0:20:22.040 --> 0:20:26.280 and so many guests were poo pooing the you know, 0:20:26.960 --> 0:20:32.119 uh standard hotel reservation and looking immediately instead for other rentals. 0:20:32.200 --> 0:20:36.200 So how much has this market changed? I think it's 0:20:36.280 --> 0:20:38.919 changed quite a bit. It has changed a lot, not 0:20:39.240 --> 0:20:42.080 just over the pandemic, but really over the last decade. 0:20:42.600 --> 0:20:45.480 It's grown at two times vacation rentals is two times 0:20:45.520 --> 0:20:48.800 the growth rate of traditional accommodations. And now that you're 0:20:48.840 --> 0:20:52.320 seeing post pandemic or in pandemic changes to the way 0:20:52.359 --> 0:20:55.680 people are working and traveling, there's more war day weekends available, 0:20:56.040 --> 0:20:58.879 people can work from anywhere. You know, homes are just 0:20:59.000 --> 0:21:02.240 the logical joy for that type of flexibility. Can we 0:21:02.280 --> 0:21:04.760 talk a little bit quickly about the holiday season? You know, 0:21:04.840 --> 0:21:07.480 it's really interesting. Is there any sort of geographical split 0:21:07.560 --> 0:21:10.040 for where the demand is in the United States? Is 0:21:10.040 --> 0:21:13.959 it literally holiday traffic, holiday season traffic that's driving sales. 0:21:15.760 --> 0:21:19.159 That's right, again a continuation of the strong demand we 0:21:19.200 --> 0:21:23.080 had all the way through the summer season. Uh. Travelers 0:21:23.119 --> 0:21:25.600 are still opting to drive to their destinations. So that 0:21:25.760 --> 0:21:28.760 part of the of the pandemic is is still really strong. 0:21:28.960 --> 0:21:32.239 Long way, it's a long way to appen. Yeah, a 0:21:32.280 --> 0:21:35.400 long way to over the value exactly. But we're also 0:21:35.400 --> 0:21:39.400 seeing just in general, confidence level is way up. Uh. 0:21:39.480 --> 0:21:41.439 And you know, before they said, like there was a 0:21:41.560 --> 0:21:45.440 spike in in any kind of COVID cases, only said 0:21:45.480 --> 0:21:47.439 they would change their plans, and that was compared to 0:21:47.480 --> 0:21:50.960 nearly sev would change your plans before. So there's just 0:21:51.040 --> 0:21:54.320 such an increased confidence level, not just in the holiday season, 0:21:54.359 --> 0:21:56.919 but six of Americans said that they would plan to 0:21:56.920 --> 0:22:00.520 take a trip in twenty two, and eighty two percent 0:22:00.560 --> 0:22:02.600 of those said they're going to travel more in twenty 0:22:02.600 --> 0:22:06.120 two than twenty one. Just people are very much excited 0:22:06.160 --> 0:22:09.160 to get back to a more normalized travel environment. Everybody 0:22:09.160 --> 0:22:11.119 wants to get out there. Everybody wants to do a 0:22:11.119 --> 0:22:14.640 spack merger. You have one of TPG pay solutions. Why 0:22:14.640 --> 0:22:19.000 do you choose that instead of a traditional IPO. Well, look, 0:22:19.040 --> 0:22:21.479 the end result is the same. We're gonna be trading 0:22:21.520 --> 0:22:25.720 on Natic under VP s a H. The approach was 0:22:25.920 --> 0:22:29.639 really partner based PPG pay Solutions has has just a 0:22:29.760 --> 0:22:33.000 great been great business partners for us. And and you 0:22:33.040 --> 0:22:35.960 know Carl Peterson was the co founder of hot Wire. 0:22:36.040 --> 0:22:38.800 He's gonna be joining our board. It very much looks 0:22:38.840 --> 0:22:41.240 like a traditional IPO though, I mean there's really there's 0:22:41.240 --> 0:22:45.879 no warrants, there's no selling shareholders, relatively low float relative 0:22:45.960 --> 0:22:49.400 to UH to the overall market cap, so I think 0:22:49.440 --> 0:22:52.240