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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business app.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: US live on YouTube.

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Speaker 2: US Treasury Secretary Scott Bessont participating in a Q and

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Speaker 2: A session with the Institute of International Finance. The President

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Speaker 2: there and CEO Tim Adams having a little conversation about

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Speaker 2: the economy, about trade policy, and we want to you know,

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Speaker 2: get a sense of kind of where we go from here.

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Speaker 2: Let's bring our next guest, Stewart Paul, us economist with

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Speaker 2: Bloomberg Economic Stewary. It seems like Secretary Bessant and even

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Speaker 2: the President in his most recent tweets and social media posts,

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Speaker 2: I guess, seemingly pulling back from some of the most

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Speaker 2: you know, stringent tariff requirements. How are you guys reading that?

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Speaker 2: From an economic perspective, is a US trying to to

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Speaker 2: be I guess less confrontational.

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Speaker 3: From a trade perspective, I think the US is less confrontation,

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Speaker 3: is trying to be a little bit less confrontational, especially

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Speaker 3: when it comes to dealing with our global trading partners,

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Speaker 3: that we need to offset what we typically would get

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Speaker 3: from China, and I think that that's an important thing

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Speaker 3: to keep in mind. When we have, let's say, a

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Speaker 3: universal tariff of twenty five percent, or an average effect

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Speaker 3: of tarifrate of twenty five percent, net's relatively evenly spread

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Speaker 3: across all of our trading partners. That gives us a

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Speaker 3: relatively limited ability to substitute across sources and across suppliers.

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Speaker 3: When we ramp up our efforts to combat China with

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Speaker 3: tariffs with trade barriers, and we lower our trade barriers

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Speaker 3: everywhere else, we are becoming less confrontational globally. We're directing

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Speaker 3: more of our efforts specifically towards China, and in doing so,

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Speaker 3: we open up other sources for inputs to production that

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Speaker 3: we might need, so probably less confrontational, and we're just

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Speaker 3: becoming more specifically targeted towards China. That's probably a good

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Speaker 3: thing in terms of maintaining the global commercial order, but

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Speaker 3: it also will make it an especially difficult list when

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Speaker 3: it comes to negotiating some sort of a trade deal

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Speaker 3: with China, who's responsible for eleven twelve percent of our imports.

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Speaker 4: He did say that the goal isn't too decoupled. But

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Speaker 4: then as each day passes with no resolution or no

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Speaker 4: dramatic lowering of tariffs, the viability of businesses and other

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Speaker 4: things remain at risk. What can we expect, like how

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Speaker 4: long can this keep on going? I guess is the question?

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Speaker 3: Yeah, it's going to be a slow de escalation. I

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Speaker 3: think that that's the direction that we're going to be going.

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Speaker 3: So you could talk about both the level and the direction.

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Speaker 3: Right the level is, things are bad. We are at

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Speaker 3: an all time a difficult moment when it comes to

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Speaker 3: our relationship with China and especially our economic relationship with China.

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Speaker 3: But in terms of the direction of travel, things are

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Speaker 3: moving slowly in the right direction, and it can take years.

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Speaker 3: It can last well beyond the Trump administration. As we

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Speaker 3: saw in the first Trump administration, he imposed Section three

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Speaker 3: zero one tariffs that lasted through the Biden administration with

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Speaker 3: no material change. Now there's been a ramp up. We're

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Speaker 3: starting to change direction, and the de escalation process can

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Speaker 3: take years.

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Speaker 2: So I guess, is Bloomberg Economics forecasting every recession.

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Speaker 3: We are not forecasting a recession at this point. We

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Speaker 3: have very modest growth of just over half a percent

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Speaker 3: for twenty twenty five. The contour of growth is going

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Speaker 3: to be determined in large part by what segments of

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Speaker 3: GDP are driving quarter to quarter dynamics. So we know

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Speaker 3: that in the first quarter we should see slow growth

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Speaker 3: because we've front loaded our imports of inputs to production

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Speaker 3: ahead of tariff implementation. Then when uncertainty really hits, When

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Speaker 3: in certain uncertainty really hits in Q two and into

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Speaker 3: Q three, we should see slower fixed investment growth That

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Speaker 3: should hollow out GDP growth in the middle of the year,

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Speaker 3: but probably not enough to offer set the rebound that

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Speaker 3: we'll get in that export in the middle of the year.

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Speaker 3: So the contour of GDP and the dynamics for the

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Speaker 3: different components of GDP are probably going to be enough

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Speaker 3: to just keep modest positive growth throughout the year.

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Speaker 4: We think President Trump said that the US was doing

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Speaker 4: just fine quote unquote with Beijing and did not anticipate

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Speaker 4: a quote hardball negotiation. What was your team's reaction. Did

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Speaker 4: you anticipate that it's.

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Speaker 3: Going to be hardball? I mean, the President's going to

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Speaker 3: be able to do The President could say whatever he wants,

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Speaker 3: but The reality is that the metals, let's say that

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Speaker 3: we need for just base metals, inputs of production, raw

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Speaker 3: materials for building buildings, electure for the electric grade for

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Speaker 3: battery production, they come from China. China needs a lot

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Speaker 3: of food from US. They're going to try to replace

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Speaker 3: US food, but let's say food from Brazil. So this

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Speaker 3: is just a massive geopolitical upset that's going on right out.

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Speaker 3: You do have to play hardball. You do have to

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Speaker 3: manage your trading partners. You have to you have to

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Speaker 3: prohibit let's say, geopolitical and economic promiscuity between trading partners

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Speaker 3: who stand between the US and China. And so it

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Speaker 3: is going to be hardball for a while. Trump likes

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Speaker 3: to say that he holds all the cards to use

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Speaker 3: a different analogy, but it doesn't entirely seem to be

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Speaker 3: the case. Yes, China does need food imports from the US,

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Speaker 3: and they've shown they're not going to retaliate one for one,

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Speaker 3: because they've only imposed you know, low double digitarifs on

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Speaker 3: US corn for example. But it is going to have

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Speaker 3: the opportunity to source food elsewhere, and so over the

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Speaker 3: long run, it's going to be a difficult a difficult negotiation.

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Speaker 2: All right, we will stay on top of it, of course.

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Speaker 2: Stuart Paul, us economists for Bloomberg Economics, joining us slid

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Speaker 2: here in our Bloomberg Interactive Broker studio.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple Coarclay and Android

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Speaker 1: Auto with the Bloomberg Business Apps and demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: Tesla stocks up just under eight percent today. It came

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Speaker 2: out with numbers last week that last night, which were

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Speaker 2: really bad, will blow expectations the worst we've seen in

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Speaker 2: years yet to stock trading out because Elon Musk says

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Speaker 2: that he will devote quote far more of his time

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Speaker 2: to Tesla starting next month, and that's clearly what investors

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Speaker 2: wanted to hear. Craig Trudell joins us Global autos editor

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Speaker 2: for Bloomberg News, joining us from London via that Zoom thing. So, Craig,

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Speaker 2: is just as simple as Elon's coming back. Let's buy

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Speaker 2: the stock.

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Speaker 5: Yeah, you know, I think as as our colleague Liam

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Speaker 5: Denning put it. You know, the cure for musks missteps

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Speaker 5: is more Musk apparently, so, you know, I do think

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Speaker 5: that there were a lot of investors who wanted to

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Speaker 5: see him, you know, sort of come come back and

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Speaker 5: you know, devote more of his time. You know, I

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Speaker 5: think you can find people who can say that, you know,

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Speaker 5: that will necessarily fix all that that ails the company.

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Speaker 5: And you do have to wonder when he was saying

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Speaker 5: in the same breath last night that you know he'll

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Speaker 5: still you know, one or two days a week. Uh,

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Speaker 5: you know, advise for the administration. Just how much he's

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Speaker 5: he's really going to step back here. I would be

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Speaker 5: surprised to see him. He's he's not much of a

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Speaker 5: sort of backseat driver. He likes to be in control.

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Speaker 4: And Tesla sales started to really slow even before Musks

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Speaker 4: through his waight around politics, and they also go through

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Speaker 4: guidance for the year ahead. What are you going to

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Speaker 4: look at now that he's back and we're getting more

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Speaker 4: elon Musk?

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Speaker 5: Yeah, I mean I think, you know, the first thing

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Speaker 5: that comes to mind for me is is, uh, you know,

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Speaker 5: given all of all of the challenge challenges they're having

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Speaker 5: with growing sales, you know, around this time last year

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Speaker 5: is when we saw the company make these really dramatic

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Speaker 5: uh you know, changes to to uh you know, headcount

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Speaker 5: and and you know, restructure in this really aggressive way.

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Speaker 5: I think Tesla cut quite a lot of employees last year.

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Speaker 5: And do we see Musk in his words, you know,

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Speaker 5: come back and be hardcore and sort of uh you know,

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Speaker 5: throw throw his weight around. Because I think that the

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Speaker 5: challenge that we're going to find this company have until

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Speaker 5: and unless they follow through on these promises for you know,

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Speaker 5: more affordable vehicles in the offering, uh you know, and

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Speaker 5: and also I think vehicles that sort of are differentiated

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Speaker 5: from just what they already have, uh, they're they're going

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Speaker 5: to have trouble you know, continuing to grow and and

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Speaker 5: so there's I think real concern about you know, if

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Speaker 5: they're just offering a you know, de contented version of

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Speaker 5: the Model Y and or the Model three, is that

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Speaker 5: really going to be enough to sort of move the

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Speaker 5: needle and sort of you know, tie them over until

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Speaker 5: they make some headway on on other efforts that are

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Speaker 5: sort of going to take them more time, like say

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Speaker 5: autonomous driving or robots.

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Speaker 2: So just with the core auto business, I know mister

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Speaker 2: Musk would like to people look to other parts of

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Speaker 2: his company, but the core auto business, one can argue

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Speaker 2: it's never been a tougher time to compete for them.

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Speaker 2: I mean, you just think it just feels like China

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Speaker 2: by D specifically just kind of taken over the global

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Speaker 2: EV market. What's the competitive landscape book for TESTA these days.

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Speaker 5: Yeah, I think that's a great point. You know, the

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Speaker 5: Chinese market is incredibly competitive. We're seeing you know, just

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Speaker 5: this week, uh, you know, fresh indication of just how

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Speaker 5: tough the sledding is there at the Shanghai Auto Show,

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Speaker 5: where you know, Jaomi is turning lots of heads. You know,

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Speaker 5: it's it's sort of the Apple car that that Apple

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Speaker 5: decided they couldn't pull off making their su seven that

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Speaker 5: that really has done well there. You know, b y

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Speaker 5: D continues to just go from sort of strength to

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Speaker 5: strength and really dominate in that market, and Tesla hasn't

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Speaker 5: really had answers. You know, they they play in higher

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Speaker 5: priced you know brackets. It's not that they are are

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Speaker 5: you know, falling apart there, but in terms of of

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Speaker 5: you know, being able to sort of hang on to

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Speaker 5: the position that they have, it's becoming more difficult when

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Speaker 5: you have you know, a fairly stale lineup and your

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Speaker 5: competitors are of peppering the market with fresh product and

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Speaker 5: innovating in a way that we used to you know,

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Speaker 5: kind of find Tesla was able to. The Chinese industry

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Speaker 5: has really sort of taken up the mantle in this regard.

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Speaker 4: Can you talk to us more about how much of

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Speaker 4: the tire of discussion was in the call, which took

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Speaker 4: longer than usual. We have must sing it's pretty expensive

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Speaker 4: to bring in things from China right now, and that

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Speaker 4: he'll continue to advocate for lower tireff so we know

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Speaker 4: that this has hurt his business, which does a lot

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Speaker 4: of production and manufacturing in China.

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Speaker 5: Yeah, it was. It was a long call. It was

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Speaker 5: a late night for those of us tuning in from London,

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Speaker 5: so you know, it was I was a little bit surprised,

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Speaker 5: I would say to hear Musk, you know, be as

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Speaker 5: frank as he was about tariffs. He's of course a

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Speaker 5: very frank person, but he has tended to be very

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Speaker 5: careful about, you know how and when he speaks about

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Speaker 5: having any daylight between him and President Trump. But he

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Speaker 5: was he was very you know, uh, sort of honest

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Speaker 5: and open about this idea that he does not think

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Speaker 5: that you know, tariffs are the best approach to prosperity,

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Speaker 5: as he put it. And you know, while Tesla is

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Speaker 5: somewhat insulated and that they make the vehicles they stell

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Speaker 5: in the US, you know, in the US, and they

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Speaker 5: have a plant in Shanghai that is is massive and

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Speaker 5: and you know a huge source of their exports for

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Speaker 5: places other than the US. UH, the company is still

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Speaker 5: affected and and particularly on the side of their energy business,

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Speaker 5: which has been a bright spot, the fact that they

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Speaker 5: import battery cells from China for that business. You know,

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Speaker 5: there's a big concern.

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Speaker 2: There, Craig, excellent reporting. Thank you very much, appreciate it.

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Speaker 2: Craig Trudelle, Global autos editor for Bloomberg News, joining us

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Speaker 2: from London on Tesla.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

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Speaker 1: with the Bloomberg Business app. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: We're talking about Boeing putting up some results that were

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Speaker 2: a little bit better and expected, and I've learned from

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Speaker 2: George Ferguson that I need to focus on the cash

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Speaker 2: situation of this company, particularly their free cash flow, because

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Speaker 2: they need to get the free cash flow positive sooner

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Speaker 2: rather than the later. And they made some progress there

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Speaker 2: is what is what my read is. So let's check

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Speaker 2: in with the extra George Ferguson. He covers airspace, he

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Speaker 2: covers the airlines and all that kind of stuff for

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Speaker 2: Bloomberg Intelligence. George talk to us about Boeing stocks up

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Speaker 2: seven percent here today? What at the company? What did

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Speaker 2: your takeaways from their earnings?

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Speaker 6: Yeah, I mean, I think the biggest issue there was

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Speaker 6: a cash general came in a billion dollars better than expectations.

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Speaker 7: I mean, I kind of get the sense that Boeing

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Speaker 7: management has sort of.

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Speaker 6: Give us some pretty conservative estimates for cash generation for

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Speaker 6: the year. I think they showed it in the first quarter,

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Speaker 6: coming up, coming out pretty strong. I think there's a

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Speaker 6: real good potential that Boeing could be sort of cash flat,

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Speaker 6: meaning no usage for the year, or maybe even a

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Speaker 6: bit of generation.

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Speaker 7: And I think as we've.

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Speaker 6: Gotten into the earnings call what we've heard ish the

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Speaker 6: tariff effects are pretty manageable outside of China.

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Speaker 7: China's a bit of a challenge.

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Speaker 6: They know that, but again, a lot of the backlog

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Speaker 6: is is not Chinese airplanes. A lot of that's been

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Speaker 6: the Chinese haven't placed many orders, and you know, Boeing

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Speaker 6: has been sort of busy getting deliveries out to them

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Speaker 6: to get some of those airplanes they've already built for

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Speaker 6: them off the balance sheet. So China the major issue

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Speaker 6: again not not not big though. And the rest of

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Speaker 6: tariff world sounds like where there's occasions that they have

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Speaker 6: to pay, they're paying. They can claw back some of

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Speaker 6: those costs from the administration. So it sounds like I

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Speaker 6: would say things are continued to be on track for recovery,

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Speaker 6: for a strong recovery.

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Speaker 7: Hopefully it's here.

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Speaker 4: Yes, And Boeing last earned a profit in mid twenty

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Speaker 4: twenty one, and it's definitely coming off. It's worse there

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Speaker 4: and it's century long history. We have the CEO okay

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Speaker 4: or break saying at twenty twenty five is the turnaround here?

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Speaker 4: What ising going to do differently?

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Speaker 6: Well, I mean I think they're going to deliver airplanes, right,

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Speaker 6: So that's the biggest challenge. When you're an aircraft manufacturer

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Speaker 6: and you stop delivering airplanes and you have quality problems,

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Speaker 6: that's why they stop delivering. You're just not going to

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Speaker 6: generate cash. They've really been trying to keep the supply

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Speaker 6: chain I would say warm, by buying components from the

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Speaker 6: supply chain, and that's why they've seen inventories balloon to

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Speaker 6: like eighty seven billion dollars. I got to check and

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Speaker 6: see what it was on today's balance sheet, but last

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Speaker 6: balance sheet eighty seven billion dollars. So, I mean a

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Speaker 6: lot of the turnaround is build those airplanes with existing inventory.

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Speaker 6: Means the cash generation for the airplanes they build and

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Speaker 6: deliver ought to.

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Speaker 7: Be higher than historically.

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Speaker 6: Use that money to pay it, do on debt, keep

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Speaker 6: the balance sheet, or heal the balance sheet.

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Speaker 7: That's the recovery plan, George.

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Speaker 2: I know, if I'm talking to you and reading your research,

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Speaker 2: the cash story hinges in large part on getting those

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Speaker 2: seven three sevens out the door. Talk to us about

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Speaker 2: where production is today and where do you think it's

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Speaker 2: going to go in the future.

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Speaker 6: Yeah, So they said that they were the factory was

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Speaker 6: building at thirty low thirties number of aircraft per month.

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Speaker 6: You know, we had kind of been tracking and I

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Speaker 6: think we saw high twenty. So probably Kelly's got maybe

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Speaker 6: just a more current number on that. I think that

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Speaker 6: they'll they'll get up to the thirty eight limits. This

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Speaker 6: is all on the seven thirty seven that the FAA

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Speaker 6: is put in place for them this year and go

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Speaker 6: past that.

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Speaker 7: I think they'll get an.

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Speaker 6: FA approval for that, and probably at the back half

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Speaker 6: of the year, we're kind of looking for them to

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Speaker 6: be forty ish. And so again that you know, the

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Speaker 6: more you use the factory, the more overhead gets absorbed

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Speaker 6: over a larger number of airplanes. The more profitable you are,

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Speaker 6: the more cash you're going to generate.

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Speaker 7: Part of that story.

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Speaker 4: Can you talk to us a bit more about how

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Speaker 4: much the tariff headwind will affect the company's top line

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Speaker 4: or bottom line, especially with this really heated tit for

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Speaker 4: tat it seems with China, well.

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Speaker 6: So again, China has really become much less of an

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Speaker 6: issue for Boeing. The Chinese have placed sixteen orders this

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Speaker 6: decade for airplanes. There's some four hundred orders on the

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Speaker 6: Boeing books. Still that's of a backlog, that's six thousand large.

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Speaker 6: Kelly Orberg is just talking on the call that you

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Speaker 6: know he's prepared to He was planning and delivering forty

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Speaker 6: to fifty into China this year, So not a lot

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Speaker 6: of airplanes that would be mostly seven thirty sevens and

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Speaker 6: that's out of an expected build of maybe four hundred

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Speaker 6: and seven thirty sevens or so this year.

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Speaker 7: So you can already see the sizes and that large.

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Speaker 6: And he's ready to go out and he's going to

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Speaker 6: talk to the customers, see what they want to do,

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Speaker 6: and he's ready to go out and remarket those airplanes.

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Speaker 6: I think we've already seen Air India raise their hand

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Speaker 6: say hey, we'd take some airplanes. And there's other folks

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Speaker 6: around the world that just haven't gotten the deliveries they wanted.

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Speaker 6: They're ready to take airplanes too. So on the top line,

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Speaker 6: I just don't see China impacting things that much.

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Speaker 7: The bottom line again.

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Speaker 6: Boeing said eighty percent of their supplier base is US based.

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Speaker 7: A lot more a lot of the other stuff is

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Speaker 7: Canada and Mexico, which you're under.

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Speaker 6: You know, the agreement between those countries that allows things

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Speaker 6: to flow without a tariff. And then there's cases where

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Speaker 6: when airplanes would be sold overseas, they can call those

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Speaker 6: tariffs back.

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Speaker 2: Excell and George, we got go to some breaking news.

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Speaker 2: George ferguson covering the airlines and aerospace companies.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarclay, and Android Auto

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Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: Markets are moving. Let's see what the professionals are doing.

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Speaker 2: I mean, you can get whipsawed around here. I don't

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Speaker 2: care who you are. Shelby McFadden joins US investment analyst

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Speaker 2: for Motley Full Asset Management, located down in Arlington, Virginia. Shelby,

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Speaker 2: how are you guys kind of day to day dealing

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Speaker 2: with the volatility of this market? Again, We've got a

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Speaker 2: VIX that's come in today but still up near thirty.

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Speaker 2: How do you guys deal with the volatility?

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Speaker 8: At this point, we've really just buckled ourselves in, you know,

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Speaker 8: that sort of overhead harness that you pull down when

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Speaker 8: you're on a roller coaster. That's been our tool of choice,

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Speaker 8: and it's mainly because the swings that we've seen in

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Speaker 8: the market, they're usually the up and down swing tend

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Speaker 8: to be about the same magnitude down nine hundred, up

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Speaker 8: thousand next day or within thirty six to forty eight hours.

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Speaker 8: And the other thing too, is that the swings have

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Speaker 8: been pretty broad, right, We're not seeing any major changes

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Speaker 8: in sort of like relative valuations up until today, with

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Speaker 8: you know, consumer discretionary outperforming. It tends to just be

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Speaker 8: a really big, sort of congealed swing in the market,

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Speaker 8: which doesn't leave too too much room for the sort

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Speaker 8: of relative valuation opportunity. So we are watching the headlines

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Speaker 8: a little bit more closely, not because we want to

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Speaker 8: trade on them, but we're trying to be able to

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Speaker 8: see where the dust is going to settle. And so

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Speaker 8: I think today what we're seeing in the market is

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Speaker 8: a reaction to the prospect that the dust will be

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Speaker 8: settling soon. And I don't really expect there to be

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Speaker 8: too much of an overreaction to Secretary buston sort of

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Speaker 8: follow up headline. So yeah, I think as active investors

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Speaker 8: we have sat tight so that we can really get

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Speaker 8: a better lay of the land and waited for the

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Speaker 8: real opportunity to show up and not necessarily just move

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Speaker 8: at every sort of down opportunity. Really trying to say

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Speaker 8: discipline and what we believe to be fair.

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Speaker 4: Value, Sitting tight seems to be the consensus these days.

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Speaker 4: But how are you allocating your funds? Have you shifted

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Speaker 4: anything recently, cut something to overweight or boosted something to overweight.

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Speaker 8: Yeah, that's a great question. In terms of allocation, what

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Speaker 8: we have looked at is, I would say, in terms

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Speaker 8: of at the top, we've taken a look at what

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Speaker 8: is our cyclical exposure, so whether that's going to be

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Speaker 8: industrials or consumer cyclical. That was one of the first

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Speaker 8: things that we had to look at really after inauguration.

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Speaker 8: So at election we pretty much had to sit down

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Speaker 8: and said, Okay, what are the main sort of like

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Speaker 8: tax policies that we think are going to be the

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Speaker 8: most impactful. But right now it's more so been okay,

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Speaker 8: what is going to be the most sensitive to any

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Speaker 8: sort of slowdown because we've been back and forth right

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Speaker 8: on whether or not we're going to be able to

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Speaker 8: hold on to this soft landing that was so they

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Speaker 8: worked so hard for or is it going to sort

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Speaker 8: of fall through our fingers. So allocation has been a

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Speaker 8: lot more focused on, Okay, the company is doing very well.

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Speaker 8: We know that they're going to probably perform ahead of

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Speaker 8: their peers, but we may want to pull back just

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Speaker 8: a little bit because the growth is not going to

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Speaker 8: be a little bit more deferred into the future.

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Speaker 2: So Shelby, you know, there's with all the tariff talk,

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Speaker 2: it's created a level of uncertainty and you here which

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Speaker 2: is sapped corporate confidence. We're seeing companies pull back on

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Speaker 2: some of their cappecs guidance and so on, and some

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Speaker 2: of their earnings guide and so it's even impacted consumer confidence.

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Speaker 2: We see that in the survey data, like the University

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Speaker 2: of Michigan data. Yet a name on your list is

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Speaker 2: American Express. That seems to be a play on the consumer.

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Speaker 2: How do you think about American Express in this world?

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Speaker 8: Well, there's a couple of things I really like about

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Speaker 8: American Express. The first is they are in that sort

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Speaker 8: of premium part of the spectrum, so it's a little

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Speaker 8: bit stickier in terms of being able to maintain those revenues,

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Speaker 8: being able to maintain that spend, so they're just you know,

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Speaker 8: on the higher end of the credit spectrum. The second

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Speaker 8: thing is more recent and it came from their most

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Speaker 8: recent earnings call where management has basically said, hey, we're

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Speaker 8: not going to be just full stop cutting our allocation

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Speaker 8: of spend to things like product refreshes and reinvesting in

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Speaker 8: the business just to pad earnings. Right, They're going to

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Speaker 8: continue to try and serve the customer and serve the

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Speaker 8: business for the long term at a time when management

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Speaker 8: of different companies, and rightfully so, are a lot more cautious.

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Speaker 8: So it's not to say that they are sort of

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Speaker 8: in the wild wild West and thinking that they're completely

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Speaker 8: sort of insulated from any sort of macro issue, but

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Speaker 8: also saying we've got the balance sheet, we've got the

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Speaker 8: financial health to keep investing in this business, and we're

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Speaker 8: going to do so. And as active managers, that's something

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Speaker 8: that we really like to see, is a commitment to

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Speaker 8: continuing to make the business better and serve customers up

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Speaker 8: into a point where you say, okay, now we need

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Speaker 8: to go ahead and pull things back, but not doing

437
00:22:46,480 --> 00:22:49,080
Speaker 8: so prematurely is what keeps me excited about that business.

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Speaker 4: What about TransUnion, that's another company that you like. We

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00:22:52,960 --> 00:22:55,760
Speaker 4: know that definitely Americans are relying more and more on

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00:22:55,840 --> 00:22:58,360
Speaker 4: credit when it comes to consumer spending.

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00:22:59,359 --> 00:23:02,080
Speaker 8: Absolutely, and so there's another dual sided story to TransUnion

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00:23:02,080 --> 00:23:04,399
Speaker 8: as well. So one is again the increasing reliance on

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00:23:04,440 --> 00:23:10,280
Speaker 8: credit and debt and also the need for identity verification

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00:23:10,400 --> 00:23:12,480
Speaker 8: goes along with that as well, and that is something

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00:23:12,480 --> 00:23:14,600
Speaker 8: that one of their peers actually did a lot more of,

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00:23:14,640 --> 00:23:17,360
Speaker 8: which is sort of what made the valuation a bit

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00:23:17,359 --> 00:23:20,359
Speaker 8: more attractive for TransUnion. Whether or not that sort of

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00:23:20,400 --> 00:23:24,600
Speaker 8: federal identity valuation market sort of starts to shrink is

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00:23:24,600 --> 00:23:27,719
Speaker 8: something that could very well serve Transunion's valuation in the future.

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00:23:28,440 --> 00:23:32,160
Speaker 8: But the fact is they've been pretty robust up against

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00:23:32,240 --> 00:23:34,919
Speaker 8: this environment where we're not quite sure how consumers are

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00:23:34,960 --> 00:23:38,399
Speaker 8: going to behave but increasingly people are using more credit,

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00:23:38,520 --> 00:23:40,800
Speaker 8: not just because they need to stretch out the financing,

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00:23:40,960 --> 00:23:43,199
Speaker 8: but because of the rewards. So if you're looking at

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00:23:43,200 --> 00:23:46,639
Speaker 8: a situation where in the past maybe you'd use credit

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00:23:46,640 --> 00:23:49,159
Speaker 8: because you had to, but now the younger generations are

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00:23:49,160 --> 00:23:52,760
Speaker 8: getting into credit early, they're using multiple different cards for

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00:23:52,840 --> 00:23:56,240
Speaker 8: multiple different purposes, and that's going to require credit check

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00:23:56,280 --> 00:23:58,560
Speaker 8: every time, and Transunions does it most affordably.

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Speaker 2: Shelby, thank you so much for joining us, Shelby McFadden

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Speaker 2: Investment and also Motley Full Asset Management joining us from Arlington, Virginia.

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