1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,520 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:23,160 Speaker 1: at Bloomberg dot com slash podcast. Housing Starts month a month, 7 00:00:23,200 --> 00:00:26,400 Speaker 1: down nine point six percent. It's been really during this 8 00:00:26,560 --> 00:00:29,600 Speaker 1: entire pandemic. The one area the economy that just powered 9 00:00:29,720 --> 00:00:33,519 Speaker 1: on from day one was the housing market. Announcing a 10 00:00:33,520 --> 00:00:36,080 Speaker 1: little bit of challenges out there in terms of higher 11 00:00:36,080 --> 00:00:38,720 Speaker 1: interest rates and just other macro trends. But let's get 12 00:00:38,720 --> 00:00:42,519 Speaker 1: the latest on what's going on in the world of construction, housing, construction, 13 00:00:42,560 --> 00:00:46,760 Speaker 1: residential construction. Peter Jackson, chief financial officer of Builders First Choice. 14 00:00:47,040 --> 00:00:49,640 Speaker 1: That is a New York Stock Exchange listed company b 15 00:00:50,240 --> 00:00:53,599 Speaker 1: l d R's a ticker you put into your Bloomberg terminal. Uh, 16 00:00:53,600 --> 00:00:56,000 Speaker 1: it's got about a ten point seven billion dollar market 17 00:00:56,000 --> 00:00:59,080 Speaker 1: cap here it's off off a couple of percent today 18 00:00:59,480 --> 00:01:02,320 Speaker 1: at sixty eight cents per share. Bet thanks what for 19 00:01:02,400 --> 00:01:04,520 Speaker 1: joining us here. We saw that housing start data here 20 00:01:04,720 --> 00:01:06,520 Speaker 1: we'd love for you to just provide us kind of 21 00:01:06,520 --> 00:01:09,080 Speaker 1: from your perspective of your company, kind of how do 22 00:01:09,200 --> 00:01:13,679 Speaker 1: you view viewing the housing market today? Yeah, good morning, gentleman, 23 00:01:13,720 --> 00:01:15,880 Speaker 1: thank you for having me on UM. You know, this 24 00:01:15,920 --> 00:01:19,000 Speaker 1: market has been really amazing for quite a long run, 25 00:01:19,280 --> 00:01:21,160 Speaker 1: and Q two for us, we were really hitting on 26 00:01:21,160 --> 00:01:26,559 Speaker 1: all cylinders, certainly seeing nice volumes, pricing, good volume, approad 27 00:01:26,880 --> 00:01:29,600 Speaker 1: swath of the products that we sell. So it's certainly 28 00:01:29,640 --> 00:01:34,000 Speaker 1: been a very nice trend over the recent past. But 29 00:01:34,080 --> 00:01:36,160 Speaker 1: certainly we've been watching it the same way you have, 30 00:01:36,280 --> 00:01:40,360 Speaker 1: and and the impacts of interest rates and inflation have 31 00:01:40,480 --> 00:01:42,520 Speaker 1: started to have an impact on consumers. Now we've been 32 00:01:42,560 --> 00:01:45,280 Speaker 1: buffered a bit, certainly because of the youths under construction, 33 00:01:45,800 --> 00:01:48,080 Speaker 1: but we've seen a bit of that pause, you know, 34 00:01:48,160 --> 00:01:52,120 Speaker 1: some some lower end maybe first time buyers getting priced out, 35 00:01:52,360 --> 00:01:56,640 Speaker 1: but also some thoughtfulness by home buyers and i'd say 36 00:01:56,640 --> 00:01:59,280 Speaker 1: maybe a prudent reaction to by home builders to be 37 00:01:59,320 --> 00:02:02,040 Speaker 1: thoughtful about how many homes are being built and what 38 00:02:02,120 --> 00:02:07,480 Speaker 1: they're going to purchase those at what prices. So how 39 00:02:08,120 --> 00:02:14,440 Speaker 1: much damage is the Federal Reserve doing to this housing market? Well, 40 00:02:14,480 --> 00:02:17,440 Speaker 1: they're an important component. No doubt. Um, you can't move 41 00:02:17,840 --> 00:02:23,399 Speaker 1: mortgage rates that much without having a tempering impact. Um, certainly, 42 00:02:23,480 --> 00:02:25,960 Speaker 1: we've we've had an impact as a results of inflation. 43 00:02:26,040 --> 00:02:29,240 Speaker 1: You know, broadly speaking, building product costs have gone up 44 00:02:29,280 --> 00:02:32,880 Speaker 1: quite a bit, and that combination has has certainly slowed 45 00:02:32,919 --> 00:02:35,840 Speaker 1: things down. But there's no question that capacity on the 46 00:02:35,880 --> 00:02:41,519 Speaker 1: supply side have limited the available products available homes, and 47 00:02:41,880 --> 00:02:44,640 Speaker 1: demand has really held up quite strong. We're confident in 48 00:02:44,680 --> 00:02:47,280 Speaker 1: that demand in the mid to long term, even if 49 00:02:47,280 --> 00:02:50,280 Speaker 1: fires are taking a pause right now. You know, on 50 00:02:50,360 --> 00:02:53,760 Speaker 1: the you guys employ about twenty employees. That's what we 51 00:02:53,800 --> 00:02:55,800 Speaker 1: show here on a Bloomberg terminal. Talk to us about 52 00:02:55,880 --> 00:02:59,680 Speaker 1: labor and getting people on the you know, for your 53 00:02:59,720 --> 00:03:02,079 Speaker 1: comp and it's just that we see it across the board. 54 00:03:02,440 --> 00:03:05,560 Speaker 1: Companies really really challenge in terms of labor. What's it 55 00:03:05,600 --> 00:03:10,000 Speaker 1: like in your business, Yeah, you're right, it's challenging for 56 00:03:10,120 --> 00:03:14,120 Speaker 1: us to you know, there's always a challenge to find 57 00:03:14,160 --> 00:03:17,160 Speaker 1: great people. There's a challenge to fill roles that are 58 00:03:17,760 --> 00:03:22,760 Speaker 1: critical to the business, things like both like drivers, roles 59 00:03:22,880 --> 00:03:26,760 Speaker 1: like fabricators, and a lot of our manufactured product facilities. 60 00:03:27,120 --> 00:03:30,120 Speaker 1: And there's a lot of competition out there for that 61 00:03:30,160 --> 00:03:33,680 Speaker 1: type of excellence throughout the industry right and broader than 62 00:03:33,680 --> 00:03:37,600 Speaker 1: our industry. We continue to find ways to you know, 63 00:03:37,840 --> 00:03:42,640 Speaker 1: lwer people in right looking for performance opportunities. We compensate 64 00:03:42,760 --> 00:03:45,880 Speaker 1: very well. I think the opportunity to be part of 65 00:03:45,880 --> 00:03:49,640 Speaker 1: the American dream certainly has an allure um you know, 66 00:03:49,720 --> 00:03:53,000 Speaker 1: even if it maybe has some dark days at certain points. 67 00:03:53,040 --> 00:03:55,760 Speaker 1: I think overall it's still a great industry to be in, 68 00:03:55,840 --> 00:03:58,080 Speaker 1: and we continue to be able to recruit. Can you 69 00:03:58,160 --> 00:04:01,600 Speaker 1: get uh? Is this stronger dollar helping you out? In 70 00:04:01,680 --> 00:04:07,840 Speaker 1: terms of costs for commodities? You know, most of what 71 00:04:07,920 --> 00:04:10,720 Speaker 1: we do in commodities is domestic. You know, there's a 72 00:04:10,720 --> 00:04:14,280 Speaker 1: bit that comes in from Canada. Certainly, probably about of 73 00:04:14,320 --> 00:04:16,320 Speaker 1: the would that we that we use in this country 74 00:04:16,400 --> 00:04:19,640 Speaker 1: comes from Canada, but most of it, most of its domestic, 75 00:04:19,720 --> 00:04:23,480 Speaker 1: So not that much impact from currentcy. You know. It's 76 00:04:23,480 --> 00:04:25,880 Speaker 1: interesting we think about the housing market in the US, 77 00:04:26,440 --> 00:04:28,880 Speaker 1: Peter and people say there's a there's a real shortage there, 78 00:04:28,880 --> 00:04:30,719 Speaker 1: and I think, you know, as as I think about 79 00:04:30,760 --> 00:04:32,839 Speaker 1: some of the you know, the homebuilding companies we talked to, 80 00:04:33,800 --> 00:04:35,839 Speaker 1: you know, they talked about, you know, building these McMansions, 81 00:04:35,880 --> 00:04:38,000 Speaker 1: if you will, because that's where the margin is. But 82 00:04:38,080 --> 00:04:40,440 Speaker 1: how about you know, some of the starter homes are 83 00:04:40,480 --> 00:04:42,280 Speaker 1: you what kind of activity are you seeing there in 84 00:04:42,360 --> 00:04:45,040 Speaker 1: terms of some of the entry level buildings. I think 85 00:04:45,040 --> 00:04:47,080 Speaker 1: about some of these markets that are just exploding in 86 00:04:47,080 --> 00:04:49,880 Speaker 1: the last couple of years, like in Austin, Texas, for example, 87 00:04:49,920 --> 00:04:53,880 Speaker 1: they gotta awesome kind of starter homes, don't they. You're 88 00:04:53,880 --> 00:04:56,760 Speaker 1: absolutely right, Yeah, starter homes has been a challenge, right, 89 00:04:56,839 --> 00:05:01,120 Speaker 1: it's the it's the opportunity to allow people to take 90 00:05:01,120 --> 00:05:04,239 Speaker 1: advantage of that American dream. And it's a challenge because 91 00:05:04,279 --> 00:05:07,719 Speaker 1: they're they're smaller, right, there's less dollars available, there's left 92 00:05:07,760 --> 00:05:11,159 Speaker 1: opportunity for margin. But I think home builders have made 93 00:05:11,279 --> 00:05:15,280 Speaker 1: really good progress in creating offerings that makes sense for 94 00:05:15,320 --> 00:05:17,760 Speaker 1: people in that category, right that are you know, a 95 00:05:17,760 --> 00:05:20,920 Speaker 1: bit smaller, maybe a bit simpler to build, fewer options. 96 00:05:21,520 --> 00:05:23,680 Speaker 1: But certainly, you know, some of the large builders have 97 00:05:23,760 --> 00:05:26,839 Speaker 1: really committed to it, and we see them staying committed 98 00:05:26,880 --> 00:05:28,359 Speaker 1: to it, you know, even in a bit of a 99 00:05:28,400 --> 00:05:31,120 Speaker 1: downturn like this, and I think you'll see more of 100 00:05:31,160 --> 00:05:34,320 Speaker 1: that into the future because it is a critical part um. 101 00:05:34,400 --> 00:05:36,200 Speaker 1: That's not to say we don't like building the bigger 102 00:05:36,240 --> 00:05:38,359 Speaker 1: houses who are certainly you know, a good way to 103 00:05:38,360 --> 00:05:41,640 Speaker 1: build the higher margins. Leave the starter houses to Paul 104 00:05:41,680 --> 00:05:45,520 Speaker 1: and his company exactly, all right, Peter, thanks so much 105 00:05:45,520 --> 00:05:48,279 Speaker 1: for joining us. Really appreciate getting your thoughts there. Peter Jackson. 106 00:05:48,320 --> 00:05:52,120 Speaker 1: He's a chief financial officer for Builders First Source as 107 00:05:52,160 --> 00:05:55,360 Speaker 1: a New York exchange company. B L d R is 108 00:05:55,400 --> 00:05:57,520 Speaker 1: a ticket you can put into your Bloomberg terminal. They're 109 00:05:57,520 --> 00:06:04,520 Speaker 1: based in Dallas, Texas doing the homebuilding stuff. You know what, 110 00:06:04,800 --> 00:06:07,080 Speaker 1: I don't know, call me a glass half full kind 111 00:06:07,120 --> 00:06:10,120 Speaker 1: of person, but we had some some pretty good jobs 112 00:06:10,160 --> 00:06:12,840 Speaker 1: numbers a couple of weeks ago, inflation coming in a 113 00:06:12,839 --> 00:06:16,080 Speaker 1: little bit better than expected. Maybe that's you know, kind 114 00:06:16,080 --> 00:06:19,000 Speaker 1: of peeking. Um. One can make the argument that may 115 00:06:19,120 --> 00:06:21,320 Speaker 1: you know, things aren't so bad at there, that the Fed, 116 00:06:21,520 --> 00:06:23,400 Speaker 1: you know, may not have to be as aggressive as 117 00:06:23,440 --> 00:06:24,800 Speaker 1: we originally thought. That's kind of what some of the 118 00:06:24,839 --> 00:06:26,520 Speaker 1: equity markets have been telling us over the last four 119 00:06:26,600 --> 00:06:28,720 Speaker 1: or five weeks. Um, But let's check with somebody who 120 00:06:28,760 --> 00:06:31,440 Speaker 1: does this stuff for a living. Ben Emmon's, managing director 121 00:06:31,480 --> 00:06:35,480 Speaker 1: of Global macro Strategy at Medley Global Advisors, joins us. 122 00:06:35,560 --> 00:06:39,080 Speaker 1: Live here in our Bloomberg Interactive Broker Studio. So Ben, 123 00:06:39,480 --> 00:06:41,520 Speaker 1: you know again, I'm gonna be a half the glass 124 00:06:41,520 --> 00:06:43,680 Speaker 1: half full person. It seems pretty good out there. Can 125 00:06:43,720 --> 00:06:47,000 Speaker 1: my Felter reserve maybe not be as aggressive in raising 126 00:06:47,080 --> 00:06:50,760 Speaker 1: rates as maybe were originally thought Paul and math it's 127 00:06:50,800 --> 00:06:53,440 Speaker 1: great to be here. Um well, I think we want 128 00:06:53,440 --> 00:06:56,560 Speaker 1: to be cautious there, because you know, the inflation story 129 00:06:56,640 --> 00:06:59,600 Speaker 1: isn't done. I think that's what the equity market may 130 00:06:59,640 --> 00:07:02,320 Speaker 1: have been assuming, is that as we started to turn 131 00:07:02,400 --> 00:07:05,600 Speaker 1: in commodity prices around the mid June, and that now 132 00:07:05,720 --> 00:07:11,400 Speaker 1: coming through headline inflation and no Master and um Brainard 133 00:07:11,440 --> 00:07:13,800 Speaker 1: had guided the markets earlier saying okay, we want to 134 00:07:13,840 --> 00:07:16,280 Speaker 1: see the client in headline inflation every month and then 135 00:07:16,280 --> 00:07:19,800 Speaker 1: well maybe change our course. That the markets listened too 136 00:07:19,880 --> 00:07:23,320 Speaker 1: much to that that the inflation picture isn't so changing 137 00:07:23,360 --> 00:07:26,119 Speaker 1: just yet. And I take note of like the gas 138 00:07:26,120 --> 00:07:30,080 Speaker 1: prices in Europe spiking again, in Asia spiking again, Canadian 139 00:07:30,120 --> 00:07:32,720 Speaker 1: inflation much stronger than expected the more this morning, which 140 00:07:32,840 --> 00:07:36,200 Speaker 1: is by the way, effects are inflation. So I think 141 00:07:36,240 --> 00:07:38,840 Speaker 1: you want to be somewhat cautious on that. The fat 142 00:07:38,960 --> 00:07:42,440 Speaker 1: is just turning his course here. The communications come out 143 00:07:42,480 --> 00:07:44,360 Speaker 1: obviously clear about what we want to try to reach 144 00:07:44,400 --> 00:07:47,520 Speaker 1: four percent of a fat funds rate maybe higher. They're 145 00:07:47,560 --> 00:07:49,800 Speaker 1: pushing back and the market hasn't listened so far to that, 146 00:07:49,880 --> 00:07:51,640 Speaker 1: and that's what everybody's looking at. There's a big di 147 00:07:51,760 --> 00:07:55,280 Speaker 1: virgins again. But I think the inflation pressure is is 148 00:07:55,280 --> 00:07:58,360 Speaker 1: not abating such that we're in a let's say, automatic 149 00:07:58,360 --> 00:08:01,760 Speaker 1: descent and inflation the next months. I had, right, And 150 00:08:01,760 --> 00:08:04,240 Speaker 1: if they go fifty instead of seventy five, isn't that 151 00:08:04,280 --> 00:08:07,120 Speaker 1: a signal that they're soft that you could take it 152 00:08:07,160 --> 00:08:11,280 Speaker 1: that way? Yeah, you know, I will. You could think 153 00:08:11,320 --> 00:08:14,720 Speaker 1: about it like, okay, they are moderating the tightening paces 154 00:08:14,840 --> 00:08:18,200 Speaker 1: powless set at some point they would do that. Um, 155 00:08:18,240 --> 00:08:19,840 Speaker 1: So it's a bit of a toss still here. Right, 156 00:08:19,880 --> 00:08:21,880 Speaker 1: the market is actually priced right in the middle of 157 00:08:21,960 --> 00:08:24,480 Speaker 1: fifty and seventy five for September. I think there is 158 00:08:24,560 --> 00:08:26,960 Speaker 1: caution markets and the interest rates are at least thinking 159 00:08:27,600 --> 00:08:29,400 Speaker 1: you can't take your chances that they may have to 160 00:08:29,440 --> 00:08:32,560 Speaker 1: move seventy five to be sure that infacient is indeed 161 00:08:32,559 --> 00:08:37,040 Speaker 1: in this descent lower from here. So I think the 162 00:08:37,080 --> 00:08:40,520 Speaker 1: feathers is still in a tough position, definitely, given the 163 00:08:40,520 --> 00:08:44,680 Speaker 1: the commodity picture, that's not like completely changed. I'm watching, 164 00:08:44,720 --> 00:08:47,319 Speaker 1: for example, what's happening in Europe yep. Alright, so f 165 00:08:47,440 --> 00:08:50,240 Speaker 1: o MC meeting minutes tomorrow at two pm Wall Street time. 166 00:08:50,280 --> 00:08:54,079 Speaker 1: My natural inclination is to ignore it. I probably shouldn't 167 00:08:54,080 --> 00:08:56,720 Speaker 1: ignore it tomorrow, should I should pay a little with attention. 168 00:08:56,920 --> 00:08:58,839 Speaker 1: You should always pay attention to it no matter what 169 00:09:00,240 --> 00:09:03,800 Speaker 1: there's But it was very interesting discussions in there and information. 170 00:09:03,840 --> 00:09:06,560 Speaker 1: Of course, this is the July meeting. They were debating 171 00:09:06,960 --> 00:09:09,160 Speaker 1: the pace of tightening there. That will be in there. 172 00:09:09,600 --> 00:09:12,480 Speaker 1: They were debating there, maybe even the balance sheet and 173 00:09:12,559 --> 00:09:15,720 Speaker 1: the outlook. I think it will be much about what 174 00:09:15,840 --> 00:09:18,040 Speaker 1: we saw that press conference. Of what has come out 175 00:09:18,120 --> 00:09:20,400 Speaker 1: so far since the press conference, by the likes of 176 00:09:20,520 --> 00:09:24,480 Speaker 1: Cascari and Ballard and Master and others. Everyone is still 177 00:09:24,480 --> 00:09:28,600 Speaker 1: on the same camp of about we move. We have 178 00:09:28,679 --> 00:09:31,520 Speaker 1: to keep moving with rage. We can't stop, right, that's clearly, 179 00:09:32,040 --> 00:09:34,560 Speaker 1: we can maybe even slow down. We can certainly not 180 00:09:34,679 --> 00:09:38,520 Speaker 1: say what the market's price from going from September investigates 181 00:09:38,559 --> 00:09:42,640 Speaker 1: to November. That's probably not likely either. So I think 182 00:09:42,640 --> 00:09:44,600 Speaker 1: a lot of that will be in the minutes tomorrow. 183 00:09:45,080 --> 00:09:47,839 Speaker 1: The market reaction maybe muted because it's a lot of 184 00:09:47,920 --> 00:09:51,280 Speaker 1: us communicated out there, but everybody's kind of edgy here. 185 00:09:51,280 --> 00:09:53,600 Speaker 1: I think still about these surprises, right right, it's the 186 00:09:53,600 --> 00:09:56,000 Speaker 1: minutes or the Jackson hole coming up. You mentioned the 187 00:09:56,040 --> 00:09:59,280 Speaker 1: balance sheet. What do you see when you look under 188 00:09:59,280 --> 00:10:01,640 Speaker 1: the hood, you know, Paul and I just know about 189 00:10:01,720 --> 00:10:04,120 Speaker 1: the headline rate, but there's a lot of other things 190 00:10:04,160 --> 00:10:07,120 Speaker 1: that the Fed do, the discount window and money supply 191 00:10:07,400 --> 00:10:12,640 Speaker 1: and what are they doing that, um maybe affecting financial 192 00:10:12,679 --> 00:10:16,160 Speaker 1: conditions because they're certainly not bringing them down, you know, no, 193 00:10:16,360 --> 00:10:19,480 Speaker 1: and the financial conditions of late have been particularly influenced 194 00:10:19,520 --> 00:10:22,559 Speaker 1: by real interest rates right where at least in Julyman 195 00:10:22,600 --> 00:10:25,000 Speaker 1: they were falling as much to come up a bit 196 00:10:25,160 --> 00:10:28,880 Speaker 1: from from since then, Um, yeah, the balance sheet is 197 00:10:28,920 --> 00:10:33,160 Speaker 1: about an asset and liability site accounting entity. If you 198 00:10:33,160 --> 00:10:36,200 Speaker 1: think about the liability sign in particular, you have reverse 199 00:10:36,320 --> 00:10:39,480 Speaker 1: repos and you have these reserves, and there's a lot 200 00:10:39,480 --> 00:10:41,640 Speaker 1: of analysis out there of how the feather is going 201 00:10:41,640 --> 00:10:46,320 Speaker 1: to manage to too. Because the experience was about money 202 00:10:46,360 --> 00:10:50,320 Speaker 1: center banks, the big banks hoarding quote unquote reserves as 203 00:10:50,440 --> 00:10:52,840 Speaker 1: the economy started to change, as they cut more cautious 204 00:10:52,920 --> 00:10:55,440 Speaker 1: as they started to see that the foot and foot 205 00:10:55,440 --> 00:10:58,320 Speaker 1: of a drawing liquating from the system. I think that's 206 00:10:58,360 --> 00:11:00,920 Speaker 1: still a risk to mark gets in the sense of 207 00:11:01,160 --> 00:11:04,160 Speaker 1: we've got repo disruptions from that. But there's also an 208 00:11:04,160 --> 00:11:06,960 Speaker 1: effect on the economy in itself of banks heart reserves. 209 00:11:07,360 --> 00:11:10,160 Speaker 1: They're not lending as much, credit is being more constrained. 210 00:11:10,520 --> 00:11:12,400 Speaker 1: That's one thing under the hood of the bounty I 211 00:11:12,400 --> 00:11:14,920 Speaker 1: think to pay attention to. The Other part is that 212 00:11:14,960 --> 00:11:18,960 Speaker 1: reverse repo facility that's so bloated because there's so limited 213 00:11:19,000 --> 00:11:22,240 Speaker 1: supply of T bills at the moment that can change. 214 00:11:22,720 --> 00:11:25,160 Speaker 1: I've always thought about that as a low hanging food 215 00:11:25,160 --> 00:11:27,960 Speaker 1: for the fat to online that first and leave reserves 216 00:11:27,960 --> 00:11:31,440 Speaker 1: alone and then manage the assets side. If that's the case, 217 00:11:31,520 --> 00:11:35,360 Speaker 1: then that's a more benign strategy for markets. In terms 218 00:11:35,400 --> 00:11:38,280 Speaker 1: of the bound sheet, some say that that's maybe the 219 00:11:38,280 --> 00:11:40,520 Speaker 1: direction we're heading. At the end of the day, the 220 00:11:40,520 --> 00:11:42,560 Speaker 1: bound she is going to contract, and I think when 221 00:11:42,600 --> 00:11:45,319 Speaker 1: Barkin was on the other day in one of the networks, 222 00:11:45,440 --> 00:11:47,760 Speaker 1: he said, like, it's the bounc sheet and rad has 223 00:11:47,760 --> 00:11:50,280 Speaker 1: are symmetric, so in other words, we're going to continue 224 00:11:50,320 --> 00:11:53,400 Speaker 1: to wind it out ninetllion a month, and we're gonna 225 00:11:53,440 --> 00:11:56,800 Speaker 1: keep raising rates. That's I think a viewing in the 226 00:11:56,800 --> 00:11:59,000 Speaker 1: fat that's more broadly health. That's what they want to 227 00:11:59,000 --> 00:12:01,800 Speaker 1: stay on on that course. All right, Ben, we appreciate 228 00:12:01,800 --> 00:12:05,839 Speaker 1: you coming to our studios here here at is your 229 00:12:05,880 --> 00:12:09,600 Speaker 1: firm based at one World Trade World Trade Center? Yeah? 230 00:12:09,640 --> 00:12:12,160 Speaker 1: What's it like? What's the one World Trade Center building? Like? 231 00:12:12,200 --> 00:12:15,240 Speaker 1: I've not been in it. It's fantastic. It's like brand new, 232 00:12:15,840 --> 00:12:18,640 Speaker 1: really hyper modern building. I went all the way up 233 00:12:18,640 --> 00:12:21,960 Speaker 1: to the upper floor, right, fantastic. Yeah, it's really nice. 234 00:12:22,040 --> 00:12:25,000 Speaker 1: Like is anybody in it? Yeah, it's a favorite of 235 00:12:25,160 --> 00:12:26,840 Speaker 1: what's it like down in Lower manhatt I haven't been 236 00:12:26,840 --> 00:12:28,439 Speaker 1: down there in a long time. On a weekday, a 237 00:12:28,559 --> 00:12:31,320 Speaker 1: work day, is there are there people there? I mean 238 00:12:31,440 --> 00:12:34,559 Speaker 1: we we we look at the prep index, which manages traffic. 239 00:12:34,679 --> 00:12:37,959 Speaker 1: You know, what's it like downtown on a weekday, It's 240 00:12:38,080 --> 00:12:40,320 Speaker 1: it's I think it's fairly busy there. If you know, 241 00:12:40,640 --> 00:12:44,040 Speaker 1: you can tell people are definitely behind the past the pandemic. 242 00:12:44,480 --> 00:12:48,480 Speaker 1: No masks everybody. It's like, you know, walking around, it's 243 00:12:48,480 --> 00:12:51,679 Speaker 1: not fully back to full occupancy. That's clear. Even on 244 00:12:51,760 --> 00:12:56,240 Speaker 1: the office they're not fully occupied. Um, maybe after Libid 245 00:12:56,280 --> 00:12:58,960 Speaker 1: Day they want to change advice. Are the tourists coming back. 246 00:12:59,240 --> 00:13:03,560 Speaker 1: I've definitely seen tourism even in midtown here right, that's 247 00:13:03,559 --> 00:13:05,800 Speaker 1: just happening. You've got to get the man on the 248 00:13:05,800 --> 00:13:08,520 Speaker 1: ground kind of view because I don't get to downtown. 249 00:13:08,760 --> 00:13:10,560 Speaker 1: We could just go down there, we could just do that, 250 00:13:10,800 --> 00:13:12,360 Speaker 1: but I mean we just you know, I kind of 251 00:13:12,559 --> 00:13:15,520 Speaker 1: kind of go back and forth the Bloomberg HQ, but 252 00:13:15,559 --> 00:13:17,560 Speaker 1: you wonder about what different parts of the city and 253 00:13:17,600 --> 00:13:20,880 Speaker 1: downtown you know, Um, the New seven World Trade that's 254 00:13:20,880 --> 00:13:22,520 Speaker 1: where I worked when I was at Solomon Brothers, the 255 00:13:22,520 --> 00:13:25,400 Speaker 1: old seven World Trade, the One World Trade, they got 256 00:13:25,400 --> 00:13:28,400 Speaker 1: the whole. A couple of towers are up and running 257 00:13:28,400 --> 00:13:31,680 Speaker 1: and looks just awesome down there, and the oculus and everything. 258 00:13:31,960 --> 00:13:34,160 Speaker 1: I mean, the rebuilding Lower Manhattan. Folks, if you haven't 259 00:13:34,160 --> 00:13:36,760 Speaker 1: been to the city in a while, go down to 260 00:13:36,760 --> 00:13:39,320 Speaker 1: the Lower Manhattan. The rebuilding there has just been awesome, 261 00:13:40,040 --> 00:13:43,120 Speaker 1: anchored by One World Trade Center, which is just an 262 00:13:43,160 --> 00:13:46,720 Speaker 1: awesome building. And uh and Ben Emmon's Managing Director Global 263 00:13:46,720 --> 00:13:49,720 Speaker 1: macro Strategy at Medley Global Advisors uh MET that's where 264 00:13:49,720 --> 00:13:51,880 Speaker 1: Medley is. They're based on One World Trade Center, forty 265 00:13:51,920 --> 00:13:54,880 Speaker 1: seven floor. So we appreciate Ben coming into our Bloomberg 266 00:13:54,880 --> 00:13:59,360 Speaker 1: and Actors studios here in midtown. Uh, Manhattan, folks out 267 00:13:59,400 --> 00:14:02,559 Speaker 1: and about Tuesday, Wednesday and Thursdays. This city is pretty bustling, 268 00:14:05,080 --> 00:14:09,360 Speaker 1: all right. We had some retailer's report. Home Depot stocks 269 00:14:09,400 --> 00:14:12,800 Speaker 1: up four percent today, Walmart a little bit better than expected, 270 00:14:12,800 --> 00:14:15,880 Speaker 1: although they lower their expect their forecast twice. But that 271 00:14:15,920 --> 00:14:18,360 Speaker 1: stocks up five percent today. But we've got somebody who 272 00:14:18,400 --> 00:14:23,240 Speaker 1: does uh follow these big retailers, Jen Bartashes, senior equity 273 00:14:23,280 --> 00:14:26,760 Speaker 1: research analysts for Bloomberg Intelligence. Jen, you joined Bloomberg in 274 00:14:26,800 --> 00:14:29,800 Speaker 1: two thousand two. This is twenty years for you. It's 275 00:14:29,800 --> 00:14:32,120 Speaker 1: been a long time, that's for sure. Paul Nice and 276 00:14:32,200 --> 00:14:35,520 Speaker 1: Jen's had leadership positions all throughout Bloomberg and you know, 277 00:14:35,560 --> 00:14:38,000 Speaker 1: maybe ten years ago we we entice her to join 278 00:14:38,040 --> 00:14:41,359 Speaker 1: Bloomberg Intelligence, and since then she's built this great franchise 279 00:14:41,400 --> 00:14:44,160 Speaker 1: looking at some of these big retailers here. Uh, And 280 00:14:44,200 --> 00:14:47,560 Speaker 1: we appreciate Jen's research at b I Go. Jen talked 281 00:14:47,560 --> 00:14:50,840 Speaker 1: to us about home Depot, Walmart, maybe what you expect 282 00:14:50,840 --> 00:14:53,960 Speaker 1: from Target tomorrow. What are some of the takeaways from 283 00:14:53,960 --> 00:14:57,640 Speaker 1: these retailers? Well, thanks, Paul. You know, when I look 284 00:14:57,720 --> 00:15:00,000 Speaker 1: at these big retailers, I think some of the big 285 00:15:00,040 --> 00:15:03,840 Speaker 1: takeaways are that things are maybe not as bad as 286 00:15:03,840 --> 00:15:08,400 Speaker 1: everyone was thinking, um, And that these retailers, especially Walmart 287 00:15:08,680 --> 00:15:11,960 Speaker 1: in particular, is really getting better at managing their supply 288 00:15:12,080 --> 00:15:14,680 Speaker 1: chain UM and that's helping to smooth things out throughout 289 00:15:14,680 --> 00:15:18,280 Speaker 1: the entire business UM. And so it does give a 290 00:15:18,280 --> 00:15:20,720 Speaker 1: little bit of confidence that the second half of this 291 00:15:20,880 --> 00:15:23,280 Speaker 1: year may actually turn out to be better than we 292 00:15:23,320 --> 00:15:27,400 Speaker 1: additionally has anticipated, especially for retailers that cater to kind 293 00:15:27,440 --> 00:15:31,160 Speaker 1: of the lower income to middle income consumer. So, Jen, 294 00:15:31,680 --> 00:15:33,840 Speaker 1: one of the things that we had learned over the 295 00:15:33,840 --> 00:15:36,960 Speaker 1: past several quarters is some of the retailers had some 296 00:15:37,400 --> 00:15:40,640 Speaker 1: bloated inventories and that was kind of impacting their margins 297 00:15:40,680 --> 00:15:42,600 Speaker 1: as I had to cut price to kind of move 298 00:15:42,640 --> 00:15:45,800 Speaker 1: that inventory. Is that still an issue? It is definitely 299 00:15:45,840 --> 00:15:48,080 Speaker 1: still an issue. Um. We we heard Walmart talk about 300 00:15:48,120 --> 00:15:51,120 Speaker 1: it this morning, but more importantly when we're looking and 301 00:15:51,240 --> 00:15:54,480 Speaker 1: turning it to look at Target for tomorrow. UM. You know, 302 00:15:54,560 --> 00:15:57,800 Speaker 1: Target had a slightly different approach to handling their inventory 303 00:15:57,880 --> 00:15:59,760 Speaker 1: than Walmart, and that they were choosing to sort of 304 00:15:59,800 --> 00:16:02,040 Speaker 1: rip the band aid off and try to shed as 305 00:16:02,120 --> 00:16:04,480 Speaker 1: much as their inventory in the second quarter as possible 306 00:16:04,920 --> 00:16:06,960 Speaker 1: UM and so they were really looking to call that 307 00:16:07,120 --> 00:16:09,560 Speaker 1: they were canceling some future orders in order to right 308 00:16:09,600 --> 00:16:12,880 Speaker 1: size their inventory. UM and that does mean that their 309 00:16:12,920 --> 00:16:17,160 Speaker 1: their profit will be significantly crimp tomorrow. But if if 310 00:16:17,160 --> 00:16:19,880 Speaker 1: the consumer is behaving a little bit better than expected, 311 00:16:20,120 --> 00:16:22,400 Speaker 1: there may be a slight surprise for Target tomorrow on 312 00:16:22,440 --> 00:16:27,560 Speaker 1: the upside. So what's the UM deal with the inventory 313 00:16:27,600 --> 00:16:31,440 Speaker 1: issues that Walmart has been having? Target had had them 314 00:16:31,480 --> 00:16:34,320 Speaker 1: as well. Do you think they're going to fare just 315 00:16:34,400 --> 00:16:38,280 Speaker 1: as poorly as Walmart on the home goods and electronic side. Well, 316 00:16:38,600 --> 00:16:40,960 Speaker 1: you know, home goods and electronics are certainly two of 317 00:16:40,960 --> 00:16:43,360 Speaker 1: the areas UM where Target actually has a little more 318 00:16:43,400 --> 00:16:46,560 Speaker 1: exposure even than Walmart is on apparel because they are 319 00:16:46,640 --> 00:16:49,840 Speaker 1: so strong in apparel. And you know, this is the 320 00:16:49,880 --> 00:16:52,680 Speaker 1: time when they're selling through their excess summer inventory, when 321 00:16:52,720 --> 00:16:55,760 Speaker 1: they're trying to clear out seasonal merchandise UM and so 322 00:16:56,000 --> 00:16:58,960 Speaker 1: the discounting that's been happening is is higher than it 323 00:16:59,240 --> 00:17:03,080 Speaker 1: usually is this time of year because of that excess inventory. So, 324 00:17:03,360 --> 00:17:05,000 Speaker 1: you know, the good news is that if they were 325 00:17:05,040 --> 00:17:09,040 Speaker 1: successful in actually canceling orders, and Walmart mentioned this morning 326 00:17:09,040 --> 00:17:11,840 Speaker 1: that they also canceled a lot of orders to sort 327 00:17:11,880 --> 00:17:14,440 Speaker 1: of right size inventory. Then they should be set up, 328 00:17:14,600 --> 00:17:16,760 Speaker 1: you know, pretty well for the second half of the year. 329 00:17:17,920 --> 00:17:20,560 Speaker 1: All right, Jen, it's mid August. The last thing I 330 00:17:20,640 --> 00:17:23,000 Speaker 1: want to think about are the holidays. But I know, 331 00:17:23,080 --> 00:17:26,399 Speaker 1: you retail analyst people, you do, in fact think about 332 00:17:26,400 --> 00:17:29,000 Speaker 1: that at this time. So what are the retailers telling 333 00:17:29,000 --> 00:17:32,320 Speaker 1: me about the back to school and the holiday season? 334 00:17:32,440 --> 00:17:34,240 Speaker 1: Did they think it's going to be good, bad, or 335 00:17:34,240 --> 00:17:36,720 Speaker 1: and different? Well, right now we're in the midst of 336 00:17:36,760 --> 00:17:39,040 Speaker 1: back to school, Um, it seems that it will be 337 00:17:39,080 --> 00:17:42,240 Speaker 1: a fairly solid season. Um. It's probably not going to 338 00:17:42,320 --> 00:17:45,320 Speaker 1: be stellar, um, but but fairly solid. Um. But when 339 00:17:45,320 --> 00:17:49,119 Speaker 1: you look at holiday, um, it's it's looking a little 340 00:17:49,119 --> 00:17:51,479 Speaker 1: better than it did even a month ago. Um. You know, 341 00:17:51,560 --> 00:17:55,439 Speaker 1: as these retailers are showing that they're able to to 342 00:17:55,520 --> 00:17:57,960 Speaker 1: work through some of their supply chain issues, UM, that 343 00:17:58,040 --> 00:18:00,600 Speaker 1: that gives a little bit of confidence. But but more importantly, 344 00:18:01,040 --> 00:18:03,560 Speaker 1: on the macro side, we're seeing fuel prices come down, 345 00:18:03,960 --> 00:18:07,880 Speaker 1: We're seeing food inflations start to stabilize in some categories, 346 00:18:08,320 --> 00:18:11,080 Speaker 1: and that means that you know, the consumer pivoted very 347 00:18:11,119 --> 00:18:14,560 Speaker 1: quickly when those costs escalated, and if the consumer pivots 348 00:18:14,680 --> 00:18:17,960 Speaker 1: back just as quickly as those costs come down, that 349 00:18:18,000 --> 00:18:20,920 Speaker 1: could really set us up for a nice strong holiday 350 00:18:20,920 --> 00:18:24,000 Speaker 1: season this fall. Jen, I know you also follow the 351 00:18:24,040 --> 00:18:28,080 Speaker 1: supermarket business. Talk to us about the cost of food, 352 00:18:28,320 --> 00:18:31,240 Speaker 1: kind of where are we how did the supermarkets think 353 00:18:31,280 --> 00:18:33,879 Speaker 1: it's gonna trend over the next several months. I know 354 00:18:33,880 --> 00:18:36,480 Speaker 1: you're pretty close to that industry. Yeah, and you know, 355 00:18:36,520 --> 00:18:39,760 Speaker 1: food inflation is is slowly starting to stabilize. UM. But 356 00:18:39,800 --> 00:18:42,000 Speaker 1: the issue that we really have is that the package 357 00:18:42,000 --> 00:18:45,399 Speaker 1: food companies are still struggling to control their costs, and 358 00:18:45,440 --> 00:18:49,640 Speaker 1: that means that they're passing through still additional price increases 359 00:18:49,640 --> 00:18:52,280 Speaker 1: to the retailers. And for the retailers then like the 360 00:18:52,359 --> 00:18:54,520 Speaker 1: Krogers of the world, or the Albertson's of the world, 361 00:18:54,840 --> 00:18:58,080 Speaker 1: and Walmart for that matter, who sells a lot of groceries. UM, 362 00:18:58,119 --> 00:19:01,960 Speaker 1: it's very hard to to not pass prices on to consumers, 363 00:19:01,960 --> 00:19:04,919 Speaker 1: and so there's a there's a lag effect that you know, 364 00:19:04,960 --> 00:19:07,920 Speaker 1: when the actual commodity prices come down, it takes time 365 00:19:07,960 --> 00:19:11,120 Speaker 1: to move through that whole food chain, from the manufacturers 366 00:19:11,119 --> 00:19:13,240 Speaker 1: through the through to the retailers and then to the 367 00:19:13,280 --> 00:19:16,719 Speaker 1: consumer before we see some relief. And so you know, 368 00:19:16,760 --> 00:19:18,600 Speaker 1: when we look out towards the end of the year, 369 00:19:19,000 --> 00:19:21,880 Speaker 1: we see food inflation remaining elevated until we get into 370 00:19:21,920 --> 00:19:26,159 Speaker 1: the early but it should become more manageable as the 371 00:19:26,240 --> 00:19:30,679 Speaker 1: year progressive. Alright, So the stock does it recover to 372 00:19:30,760 --> 00:19:35,480 Speaker 1: the highs that we saw before the profit warning? Your 373 00:19:35,520 --> 00:19:39,320 Speaker 1: meaning target? Um? No, I'm talking about Walmart, but in 374 00:19:39,359 --> 00:19:42,560 Speaker 1: general retailers, I mean, did they come back? Well? I 375 00:19:42,600 --> 00:19:44,840 Speaker 1: think that if if we have a good back to 376 00:19:44,880 --> 00:19:47,439 Speaker 1: school season, that will create a lot of confidence in 377 00:19:47,520 --> 00:19:51,000 Speaker 1: terms of investors for the holiday season. Um. I don't 378 00:19:51,000 --> 00:19:53,760 Speaker 1: know that we'll recapture everything that was lost um year 379 00:19:53,800 --> 00:19:57,040 Speaker 1: to date, um, given given the challenges that they've had, 380 00:19:57,080 --> 00:19:59,760 Speaker 1: but there's certainly some cause for some optimism as we 381 00:19:59,800 --> 00:20:01,800 Speaker 1: will towards the end of the year. And Jen just 382 00:20:01,840 --> 00:20:04,880 Speaker 1: real quickly, thirty seconds are people going to the stores? 383 00:20:05,000 --> 00:20:06,480 Speaker 1: So when I have to look at the Walmart earnings 384 00:20:06,520 --> 00:20:10,000 Speaker 1: is hard target earnings? Is that e commerce? Is that 385 00:20:10,040 --> 00:20:12,520 Speaker 1: people going to the stores? Where are we on that trend? Yeah? 386 00:20:12,560 --> 00:20:15,159 Speaker 1: People are definitely going back into stores more. Um. And 387 00:20:15,160 --> 00:20:18,119 Speaker 1: actually one of the things that that differentiates Target above 388 00:20:18,160 --> 00:20:21,040 Speaker 1: Walmart is the traffic that they bring into stores. UM. 389 00:20:21,080 --> 00:20:24,160 Speaker 1: They historically outpaced Walmart by a huge margin in terms 390 00:20:24,200 --> 00:20:27,440 Speaker 1: of traffic growth UM. So e commerce is still continuing 391 00:20:27,480 --> 00:20:30,080 Speaker 1: to grow UM, but people are a lot more comfortable 392 00:20:30,119 --> 00:20:33,080 Speaker 1: being out and about UM, and so visits into stores 393 00:20:33,200 --> 00:20:35,960 Speaker 1: is pretty strong. And it's you know, supporting people buying 394 00:20:36,240 --> 00:20:38,639 Speaker 1: those impulse purchases when they're in the store as well. 395 00:20:38,760 --> 00:20:41,080 Speaker 1: All Right, Jen, good stuff. As always, we can ask 396 00:20:41,160 --> 00:20:44,919 Speaker 1: Jen anything about retail and she's got an informed opinion. 397 00:20:45,000 --> 00:20:50,359 Speaker 1: Jen Bartash a senior equity research analysts. She covers consumer staples, retail. Basically, 398 00:20:50,400 --> 00:20:53,359 Speaker 1: we just bring her on to talk anything retail for 399 00:20:53,440 --> 00:20:56,680 Speaker 1: Bloomberg Intelligence. Really one of our leaders at bloombergt Talents. 400 00:20:56,680 --> 00:21:02,440 Speaker 1: We appreciate getting some of her time. All Right, let's 401 00:21:02,440 --> 00:21:07,920 Speaker 1: talk eco friendly products, green products in the household, talking 402 00:21:07,960 --> 00:21:12,960 Speaker 1: consumer products. Allison written Er, CEO of Seventh Generation, joins us. Allison, 403 00:21:12,960 --> 00:21:15,600 Speaker 1: thanks so much for taking the time here. I'd love 404 00:21:15,640 --> 00:21:19,960 Speaker 1: to just start by you're right, it's right now, and 405 00:21:20,080 --> 00:21:22,359 Speaker 1: let's let's let's say, Allison Allison, how do we pronounce 406 00:21:22,359 --> 00:21:25,280 Speaker 1: your last name? You got it, It's right, Nor Thank 407 00:21:25,320 --> 00:21:29,080 Speaker 1: you Okay, very good, I'll get it. Seventh generation. Tell 408 00:21:29,160 --> 00:21:33,719 Speaker 1: us about what seventh generation is. What are you guys doing? Yeah? Great. 409 00:21:33,960 --> 00:21:37,240 Speaker 1: So we're a company that for more than thirty years 410 00:21:37,320 --> 00:21:39,920 Speaker 1: has been on a mission to transform the world into 411 00:21:40,000 --> 00:21:44,160 Speaker 1: a healthy, sustainable, and equitable place for the next seven generations. 412 00:21:44,800 --> 00:21:47,879 Speaker 1: And we do that by way of household cleaning products. 413 00:21:47,880 --> 00:21:51,199 Speaker 1: And so we really invest um in making sure we 414 00:21:51,240 --> 00:21:54,320 Speaker 1: have the most sustainable plant based products and market and 415 00:21:54,359 --> 00:21:58,280 Speaker 1: that allows us then to invest back into advocacy work. Um, 416 00:21:58,359 --> 00:22:01,080 Speaker 1: so work that we do with our partners to make 417 00:22:01,080 --> 00:22:03,879 Speaker 1: sure that we're standing up for the climate crisis and 418 00:22:03,920 --> 00:22:06,560 Speaker 1: making sure that we are taking active strides on fighting 419 00:22:06,600 --> 00:22:11,159 Speaker 1: for climate justice every day. So, um, in terms of 420 00:22:11,160 --> 00:22:13,040 Speaker 1: the products that you make, what does that mean? Are 421 00:22:13,080 --> 00:22:18,840 Speaker 1: we talking about recycled materials? Are they the soaps biodegradable? Um? Uh? 422 00:22:19,040 --> 00:22:24,199 Speaker 1: Do you know the wipes disintegrate? How? How does that work? Yeah? Great, 423 00:22:24,240 --> 00:22:27,199 Speaker 1: So you've got so much of that right. So. Um. 424 00:22:27,240 --> 00:22:29,920 Speaker 1: You know, from from a product standpoint, we really focus 425 00:22:29,960 --> 00:22:34,040 Speaker 1: on less impact, less, waste less materials and so what 426 00:22:34,080 --> 00:22:36,480 Speaker 1: that means for us is that we strive to make 427 00:22:36,560 --> 00:22:41,720 Speaker 1: everything one percent recyclable or recycled and our primary primarily 428 00:22:41,720 --> 00:22:44,240 Speaker 1: our source of ingredients as plant based, which means we 429 00:22:44,359 --> 00:22:48,600 Speaker 1: used the same type of ingredients as our competitors, that 430 00:22:48,640 --> 00:22:53,240 Speaker 1: we make them from plants, not petroleum. So, Alison, how 431 00:22:53,840 --> 00:22:56,240 Speaker 1: from your businesses and your experience here over the last 432 00:22:56,280 --> 00:23:00,920 Speaker 1: with seven generation during a pandemic, that people pivot more 433 00:23:01,040 --> 00:23:04,280 Speaker 1: towards your types of eco friendly products away from it, 434 00:23:04,320 --> 00:23:07,400 Speaker 1: because boy, the pandemic and being shut in your home 435 00:23:07,440 --> 00:23:12,320 Speaker 1: and has really changed away people consume various products. Yes, 436 00:23:12,480 --> 00:23:15,080 Speaker 1: I will say it's been a wild ride. Um SO. 437 00:23:15,240 --> 00:23:18,919 Speaker 1: Certainly through those early pandemic days we saw a huge 438 00:23:19,000 --> 00:23:23,000 Speaker 1: spike in our household cleaning products um SO, cleaning sprays, 439 00:23:23,400 --> 00:23:26,720 Speaker 1: um A, paper products, and and since then, I think, 440 00:23:26,760 --> 00:23:29,399 Speaker 1: along with the category, we weathered, you know, some pretty 441 00:23:29,480 --> 00:23:33,600 Speaker 1: volatile demand spikes, just as consumers have normalized the amount 442 00:23:33,600 --> 00:23:35,679 Speaker 1: of products that they have at home. But the thing 443 00:23:35,760 --> 00:23:38,199 Speaker 1: that's been most interesting for us in this is the 444 00:23:38,240 --> 00:23:41,679 Speaker 1: fact that through this time UM more and more consumers 445 00:23:41,680 --> 00:23:45,560 Speaker 1: say that they are interested in environmentally friendly products. But 446 00:23:45,680 --> 00:23:48,719 Speaker 1: what we've seen in practicality UM is that it's been 447 00:23:48,760 --> 00:23:51,320 Speaker 1: harder for them to purchase it. So he think real 448 00:23:51,400 --> 00:23:56,719 Speaker 1: life challenges like supply availability, UM financial challenges. You know, 449 00:23:56,880 --> 00:23:59,280 Speaker 1: folks have a lot of things on their plate these days, 450 00:23:59,280 --> 00:24:01,800 Speaker 1: and so I think really making sure that we're clothing 451 00:24:01,840 --> 00:24:05,080 Speaker 1: that gap between intention and action has been the primary 452 00:24:05,119 --> 00:24:08,479 Speaker 1: focus of our company. What about the prices, I mean, 453 00:24:08,480 --> 00:24:12,520 Speaker 1: obviously inflation is the hottest issue right now. UM. You know, 454 00:24:12,640 --> 00:24:18,320 Speaker 1: the UH President's most recent climate bill is actually called 455 00:24:18,359 --> 00:24:21,160 Speaker 1: the Inflation Reduction Act, just to show you how key 456 00:24:21,280 --> 00:24:24,720 Speaker 1: inflation is. UM. Have you seen your input costs rise? 457 00:24:24,800 --> 00:24:27,440 Speaker 1: Are you able to keep margins at a steady level? 458 00:24:27,480 --> 00:24:30,639 Speaker 1: Can you still compete on price with the nonplant based 459 00:24:30,680 --> 00:24:35,399 Speaker 1: kind of petroleum products or can you even undercut them? Yeah? Great? 460 00:24:35,440 --> 00:24:37,119 Speaker 1: So what I will say is that we have not 461 00:24:37,320 --> 00:24:39,880 Speaker 1: been immune to a lot of the challenges that we've 462 00:24:39,920 --> 00:24:42,600 Speaker 1: seen in our categories and through our competitors, and so 463 00:24:42,640 --> 00:24:46,200 Speaker 1: I think we've been weathering the inflation storm like many 464 00:24:46,480 --> 00:24:48,840 Speaker 1: UM and as a result of that. Actually, it's one 465 00:24:48,880 --> 00:24:50,639 Speaker 1: of the things that I'm most proud about over the 466 00:24:50,680 --> 00:24:53,000 Speaker 1: course of this year is that, well, we had to 467 00:24:53,000 --> 00:24:55,600 Speaker 1: make a lot of hard choices about our business model. 468 00:24:55,720 --> 00:24:57,960 Speaker 1: I think the one thing that we have not done 469 00:24:57,960 --> 00:25:00,320 Speaker 1: is taking the quality out of our products, and so 470 00:25:00,400 --> 00:25:03,760 Speaker 1: we've ensure that we're continuing to invest in plant based products. 471 00:25:04,080 --> 00:25:06,200 Speaker 1: We've continued to make sure that we're investing in a 472 00:25:06,280 --> 00:25:09,160 Speaker 1: hundred percent recycled materials to make sure that we're really 473 00:25:09,160 --> 00:25:11,879 Speaker 1: living through on the promise that we're creating for consumers 474 00:25:11,920 --> 00:25:14,160 Speaker 1: that you know, they're really clear on what they're getting 475 00:25:14,160 --> 00:25:17,000 Speaker 1: when they buy into the company and the brand. So 476 00:25:17,040 --> 00:25:19,919 Speaker 1: Alison matt was mentioned the Inflation Reduction Act and some 477 00:25:19,960 --> 00:25:24,120 Speaker 1: folks are saying this is a historic move and climate justice. 478 00:25:24,720 --> 00:25:26,400 Speaker 1: Do you buy into that or what do you make 479 00:25:26,400 --> 00:25:29,159 Speaker 1: of it? Yeah, well, first of all, this is a 480 00:25:29,160 --> 00:25:32,560 Speaker 1: super you know, super exciting time for us. Um. So 481 00:25:32,600 --> 00:25:34,560 Speaker 1: I want to start with the fact that you know, 482 00:25:34,600 --> 00:25:38,199 Speaker 1: we're about to approve unless four hundred billion to be 483 00:25:38,440 --> 00:25:41,920 Speaker 1: allocated for climate change and energy efforts within our country, 484 00:25:41,920 --> 00:25:44,840 Speaker 1: which is absolutely remarkable. Right. So we've been in this 485 00:25:44,920 --> 00:25:47,720 Speaker 1: work for a long time alongside with the front line 486 00:25:47,760 --> 00:25:50,760 Speaker 1: communities and our partners, and so this is a historic 487 00:25:50,880 --> 00:25:53,720 Speaker 1: step in the climate fight, especially with the fact now 488 00:25:53,760 --> 00:25:56,480 Speaker 1: that we have a real path to reducing carbon emissions 489 00:25:56,480 --> 00:26:06,560 Speaker 1: by Um that's said from right, that's right. But you know, progress, progress, 490 00:26:06,560 --> 00:26:09,760 Speaker 1: progress is what I would say. And so, um, you know, 491 00:26:09,840 --> 00:26:12,719 Speaker 1: for us the Climate Reduction Act. You know, while it's 492 00:26:12,760 --> 00:26:15,760 Speaker 1: a great step forward, it's not climate justice. And the 493 00:26:15,840 --> 00:26:18,840 Speaker 1: fact that it still allows drilling for fossil fuels to 494 00:26:18,880 --> 00:26:22,919 Speaker 1: happen period, Right, So we're continuing to put marginalized communities 495 00:26:22,960 --> 00:26:25,840 Speaker 1: in places of drilling at risk, um, And we're asking, 496 00:26:25,880 --> 00:26:28,399 Speaker 1: but wouldn't those communities also be at risk if they 497 00:26:28,400 --> 00:26:30,520 Speaker 1: had to pay like six dollars a gallon for gas? 498 00:26:30,560 --> 00:26:32,399 Speaker 1: I mean, they'd be stuck, wouldn't be able to get 499 00:26:32,440 --> 00:26:36,360 Speaker 1: to work or school. Yeah. So I mean, obviously there's 500 00:26:36,359 --> 00:26:39,040 Speaker 1: an argument on on either side of this, but we've 501 00:26:39,040 --> 00:26:41,040 Speaker 1: seen it play out, and we've seen it play out 502 00:26:41,040 --> 00:26:44,280 Speaker 1: in real life as gas prices have soared, um, the 503 00:26:44,359 --> 00:26:47,960 Speaker 1: low income communities had been the worst affected. They can't 504 00:26:47,960 --> 00:26:50,240 Speaker 1: afford to put food on their table or drive to 505 00:26:50,320 --> 00:26:55,359 Speaker 1: working back. So you've got to choose between that and drilling, right, Yeah, 506 00:26:55,400 --> 00:26:59,000 Speaker 1: And I guess we choose to see a world, um 507 00:26:59,080 --> 00:27:01,159 Speaker 1: where you don't have to compromise the short term in 508 00:27:01,200 --> 00:27:03,240 Speaker 1: the long term. And I think you know, the big 509 00:27:03,280 --> 00:27:05,600 Speaker 1: picture for us around the i ra A is that 510 00:27:05,640 --> 00:27:08,160 Speaker 1: this is a huge step forward. But as simply as 511 00:27:08,200 --> 00:27:10,280 Speaker 1: I can put it, it's it's about throwing up a 512 00:27:10,320 --> 00:27:12,480 Speaker 1: balloon that still has a little bit of weak right, 513 00:27:12,520 --> 00:27:14,760 Speaker 1: So there's continued work that needs to happen on the 514 00:27:14,800 --> 00:27:17,080 Speaker 1: other side of that, and we're just here to, you know, 515 00:27:17,200 --> 00:27:20,360 Speaker 1: to make sure that we're continuing to to rally um 516 00:27:20,760 --> 00:27:23,040 Speaker 1: the the US around the fact that the climate work 517 00:27:23,080 --> 00:27:26,920 Speaker 1: will continue and and protecting our community is to continue 518 00:27:26,960 --> 00:27:29,439 Speaker 1: to be at climate risk is a key priority for 519 00:27:29,480 --> 00:27:32,520 Speaker 1: this company. All Right, Allison, good stuff. I really appreciate 520 00:27:32,560 --> 00:27:35,400 Speaker 1: you taking the time to chat with us. Allison right, 521 00:27:35,480 --> 00:27:40,639 Speaker 1: nor CEO of Seventh Generation making some eco friendly consumer products. 522 00:27:40,680 --> 00:27:43,760 Speaker 1: They're owned by Unilever, which is a little bit of 523 00:27:43,800 --> 00:27:49,520 Speaker 1: a bendeg summer products they had everything. Thanks for listening 524 00:27:49,520 --> 00:27:53,000 Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen 525 00:27:53,040 --> 00:27:57,320 Speaker 1: to interviews with Apple Podcasts or whatever podcast platform you prefer. 526 00:27:57,680 --> 00:28:01,439 Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller seventy 527 00:28:01,480 --> 00:28:04,520 Speaker 1: three and on Fall Sweeney I'm on Twitter at pt Sweeney. 528 00:28:04,640 --> 00:28:07,280 Speaker 1: Before the podcast, you can always catch us worldwide at 529 00:28:07,280 --> 00:28:08,080 Speaker 1: Bloomberg Radio.