Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day, we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast
Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com Slash podcast. Let's get to our
Speaker 1: next guest straight away. Danielle di Martino, Booth CEO and
Speaker 1: chief strategist for Quill Intelligence. Danielle, Yesterday, as I was
Speaker 1: watching football and eating turkey, I was just kind of
Speaker 1: flipping through my Twitter feed. I started seeing more and
Speaker 1: more mentions about this South African varying here and then
Speaker 1: you wake up this morning and boom, Europe trading off
Speaker 1: three percent equities. Uh, and here we've got the U
Speaker 1: S market. How are you trying to contextualize the news
Speaker 1: that we're getting today about this new variant as it
Speaker 1: relates to kind of just the overall economic outlook? You know,
Speaker 1: you know, I keep up this USA Today map of
Speaker 1: the United States, and two months ago there were only
Speaker 1: four cases up four states where there were COVID cases growing.
Speaker 1: I've had to flip the way that I tabulate now
Speaker 1: there are eleven There are eleven states now with cases falling,
Speaker 1: and the words the rest of the country has already
Speaker 1: got COVID cases rising. So I've been watching this pretty
Speaker 1: closely for the last month. So this has kind of
Speaker 1: been an accident waiting to happen if there's a new
Speaker 1: variant that's going to come on top of this. So
Speaker 1: we've we've already got the bulk of the country. And
Speaker 1: trust me when I say, my my seventy five year
Speaker 1: old mother her birthday's Sunday, God lover um. She and
Speaker 1: her friends, they pay attention to these data. And because
Speaker 1: we know that the savings, in fact, this was a
Speaker 1: good terminal story, because we know that the savings are
Speaker 1: concentrated in the hands of the wealthiest and the oldest,
Speaker 1: that really has implications for US consumption, which is the economy.
Speaker 1: Because they pay attention to where COVID cases are rising
Speaker 1: and where they're not rising. They pay attention to these
Speaker 1: COVID headlines because they're the ones who who are going
Speaker 1: to tend to stay home as we head into this
Speaker 1: critical holiday season. And so Danielle, given that you have
Speaker 1: been following this closely, and like you said, I mean,
Speaker 1: this was an accident waiting to happen. If you look
Speaker 1: at US cases, I'm still curious. I mean, if you
Speaker 1: do look at the reaction in this stock market right now,
Speaker 1: I'm looking at the SMP five hundred down almost two percent,
Speaker 1: biggest drops in September. Is this justified or at what
Speaker 1: point does this become maybe an overreaction? Well, you know,
Speaker 1: it's hard to say. I've been watching the movement decks
Speaker 1: very closely, and that's what I follow much more closely
Speaker 1: than UM than the VICS index. I followed treasury volatility
Speaker 1: much more closely. And you know, we've been seeing it
Speaker 1: in up very very rapidly, so the highest levels since
Speaker 1: we have the pandemic breakout. So the bond market has
Speaker 1: been screaming that there's risk in the system for weeks now,
Speaker 1: and we've seen the yield between the two year and
Speaker 1: the ten year treasury slam down to one basis points
Speaker 1: despite the increase in the shorter maturity treasuries, because the
Speaker 1: markets are concerned. At the FED, my former employer is
Speaker 1: going to be tightening at a at an increasingly fast
Speaker 1: pace going into two because even the most devilish as
Speaker 1: in Mary Daily out of San Francisco have advocated for
Speaker 1: a quicker tightening to combat the inflation. That I mean,
Speaker 1: I sent out a tweek that went viral a few
Speaker 1: days ago. There I've got almost a thousand. Like. All
Speaker 1: I did was take a photograph of Austin Mayer bacon
Speaker 1: in Dallas, Texas. It was ian there's something wrong. I
Speaker 1: saw that. So there's something wrong with inflations. And it's
Speaker 1: a regressive tax that hurts the lowest income earners the
Speaker 1: most at a time when there's been no legislation past.
Speaker 1: And the little cast that is coming to US families,
Speaker 1: which is the child tax credit, is set to roll
Speaker 1: off as of the December payment. Daniel Worth, the markets
Speaker 1: is certainly reacting to this variant news this morning, and
Speaker 1: actually on some decent volume. We were just noting earlier
Speaker 1: relative to obviously being a holiday, uh kind of day
Speaker 1: after on holiday. How do you think the FED looks
Speaker 1: at data points like you know what we're seeing today? Well,
Speaker 1: this this is a friendly reminder. Actually it's a very
Speaker 1: unfriendly reminder to the Fed that they waited too long
Speaker 1: to tighten and that they're tightening into a slowing economy
Speaker 1: that was always going to be vulnerable to the next
Speaker 1: COVID virant, and now that we do have the next
Speaker 1: code mutation on our hands, that we're that we're staring
Speaker 1: at again with forties states, with rising cases. It's it's
Speaker 1: very problematic for the FED to be pressured by politicians
Speaker 1: and there are quite a few politicis. Politicians have crawled
Speaker 1: out of their skins. When was the last time in
Speaker 1: your career you you heard quite a few politicians saying, gee,
Speaker 1: I think monetary policy needs to be tighter, and yet
Speaker 1: we have this chorus. So there's a lot of there's
Speaker 1: a lot of pressure to to to shift the narrative,
Speaker 1: especially with a hundred thousand print on jobless claims, there's
Speaker 1: a lot of pressure to shift shift the narrative away
Speaker 1: from maximum inclusive employment back to inflation. Yeah. Absolutely, definitely
Speaker 1: a tight wire act for high wire act for the
Speaker 1: FED continues. Danielle de Martino Booth, thank you so much
Speaker 1: for joining us. We really appreciate getting your perspective here,
Speaker 1: your learned perspective here on kind of a new kind
Speaker 1: of a you know, monkey wrench thrown into this market
Speaker 1: and economic outlook. Daniel DeMartino Booth and chief strategist at
Speaker 1: Quinn Intelligence. Also, as she mentioned earlier, former advisor at
Speaker 1: the Federal Reserve Bank of Dallas. So we always appreciate
Speaker 1: getting Danielle's view of the markets and of what this
Speaker 1: Federal Reserve may do big risk off day. Today's Charlie
Speaker 1: was just reporting let's get a look at what's happening
Speaker 1: with the small cap stocks. We do that every day
Speaker 1: at this time with Bloodmark Sucks editor Davilson. How's it going, Dave?
Speaker 1: Not well? I'm short. I mean the Russell two thousand
Speaker 1: down almost four and a half percent. That's more than
Speaker 1: twice as much as the today's trade. Energy stocks weighing
Speaker 1: on the Russell is all prices tumble. Uh. The index
Speaker 1: steepest decline belongs to Calan Patroleum, whose ticker is CPN
Speaker 1: or CPE. I'm sorry, Uh, that stock down nineteen percent.
Speaker 1: Laredo Petroleum ticker l p I is down seventy and
Speaker 1: a half percent. Matt Or Resources ticker mt d R
Speaker 1: is down thirty and a half percent. Hotel the resort
Speaker 1: owners are lower as well. Part of order decline among
Speaker 1: travel stocks, Ashford Hospitality Trust ticker HT is down sixteen percent,
Speaker 1: and the Grand Old Operies owner Ryman Hospitality ticker r
Speaker 1: HP is down about eleven and a half percent. Now
Speaker 1: two of the Rustle's biggest games belongs to companies that
Speaker 1: were named to the SMP small Caps six hundred indecks
Speaker 1: late Wednesday. Uh. They'll join that benchmark before uh next
Speaker 1: week's open on Thursday, U and one of them is
Speaker 1: cars dot Com ticker c a r s UH. The
Speaker 1: automotive side is up eighteen percent and UH the other
Speaker 1: is engineering company n V five. Glow will take her
Speaker 1: envy e e and that stock hired by about all right,
Speaker 1: Bloomberking stock seditor Dave Wilson, thank you so much. We
Speaker 1: appreciate it. All right, Black Friday people are shopping, you know.
Speaker 1: I know I'm gonna drive by the Short Hills mall
Speaker 1: later today and it will be back. The question is
Speaker 1: how are shopping malls doing in general? How is the
Speaker 1: real estate in the retail space doing. Let's check in
Speaker 1: with Jim Sullivan. He's a managing director and reet analysts
Speaker 1: at B T I G. Jim, thanks so much for
Speaker 1: joining us here. I know you've been covering the reets
Speaker 1: for a long time here. There was a time when,
Speaker 1: you know, you everybody just thought the retail brick and
Speaker 1: mortar business was literally going out of business. Has that happened? No,
Speaker 1: absolutely not Uh. And in fact, what we've seen this
Speaker 1: year is the two major mall red that we cover,
Speaker 1: Assignment Property Group in mace Rich, they're both up delivered
Speaker 1: total returns of proximately before today. UM. And they've done
Speaker 1: so because we've in a strong recovery and retail sales
Speaker 1: at the stores UM. And it's been consistent really since
Speaker 1: since going back to March. So UM. You know, the
Speaker 1: delta variant in August had a little bit of a
Speaker 1: slight negative impact, but it was short lived UM, and
Speaker 1: sales growth in September was robust so UM. The result
Speaker 1: is companies reported their third quarter beating rays quarter for
Speaker 1: both may Switch and Simon. So the stocks have done
Speaker 1: very well. And so we were talking to Bloomberg Intelligences
Speaker 1: who not' goyle earlier in the show, who is at
Speaker 1: the mall today? Uh? And it sounds like there's plenty
Speaker 1: of foot traffic. But I'm curious how you think about
Speaker 1: the risk of you know, these new variants, and in
Speaker 1: particular this one from South Africa, which we don't yet
Speaker 1: have a name yet. Maybe that's coming, But I mean,
Speaker 1: how do you how do you factor that in to
Speaker 1: your analysis because it almost feels like a black Swan
Speaker 1: event we don't know which is going to be a
Speaker 1: really big deal. Well, I think you know the comment
Speaker 1: you just made is obviously the key. How serious this going,
Speaker 1: this is going to be? UM? How serious the reaction
Speaker 1: for those who infected will be in the UM uh
Speaker 1: you know, how long they'll be um they'll be impacted
Speaker 1: by that remains to be seen. But if we make
Speaker 1: the analogy with what happened with the delta variant, which
Speaker 1: obviously increased infections substantially, UM, and that impacted the third quarter.
Speaker 1: When we look at the third quarter retail sales numbers,
Speaker 1: what we see and it will just say, as an example,
Speaker 1: apparel and accessories, which is kind of the key category
Speaker 1: for malls and for sales in the malls. You know,
Speaker 1: back in July UM clothing and clothing accessory stores their
Speaker 1: sales grew nine versus UM. In August that sales growth
Speaker 1: fled to eight percent, but in September it was backed
Speaker 1: up to just over We saw something similar in the
Speaker 1: hotel business as well, where we did see some travel
Speaker 1: numbers decline, and we saw that hotel occupancy rates and
Speaker 1: room rates slid at the same time in the same
Speaker 1: way and had a similar recovery. So that was the
Speaker 1: impact of the delta variant. Now, whether this variant is
Speaker 1: going to have a more severe impact or not remains
Speaker 1: to be seen with waiting for the information to see
Speaker 1: what impact it will have on sales. But if we
Speaker 1: make the analogy with the delta variant, it was about
Speaker 1: a thirty day impact. Jim, there's a you know, school
Speaker 1: thought out there in a retail that the the US
Speaker 1: is still overstored. What what what are you three companies
Speaker 1: that you fall say about that? Will there be a
Speaker 1: lot more closures? Um? I don't think so. I mean
Speaker 1: I've been following this space for a long time, as
Speaker 1: you noted, and I think as long as I've followed,
Speaker 1: if two things have always been true. One is this
Speaker 1: too much retail square footage when you look at square
Speaker 1: feet per capita in the country versus other major markets. However,
Speaker 1: there's never been enough of the best space. So you
Speaker 1: had mentioned um in your prepared comments. The Short Hills Mall,
Speaker 1: the short Hills mall cannot be expanded anymore. Um it
Speaker 1: is um it is capped out in terms of square footage,
Speaker 1: and yet in the zip code that its services has
Speaker 1: been a substantial amount of wealth created obviously over the
Speaker 1: last one to two years, both in terms of real
Speaker 1: estate prices and equity market prices. So spending power is
Speaker 1: increased and you have the square footage has it, so
Speaker 1: the result should be better productivity for the malls that
Speaker 1: are located in the best zip codes, and particularly big
Speaker 1: malls and suburban markets cannot be expanded. Jim, thank you
Speaker 1: so much for joining us. Really appreciate it. Jim Sullivan,
Speaker 1: Managing director and read analyst at b T I e G.
Speaker 1: Talking about the mall business again, Folks aren't flocking to
Speaker 1: the malls. It appears here as we do Black Friday protests. Yeah,
Speaker 1: we're gona stick here for another two hours with you.
Speaker 1: We've got these markets just moving pretty dramatically. I want
Speaker 1: to bring a guy Johnson Bloomberg News from London joining
Speaker 1: us for the next couple of hours. Guy, you as
Speaker 1: heady ripping day, very tough day in the footsie of
Speaker 1: three points six percent today. We were expecting to David
Speaker 1: to be a day that we would spend our day
Speaker 1: talking about shopping. Yes, it was meant to be Black Friday.
Speaker 1: It turns out it's Red Friday. And and we have
Speaker 1: been yeah, looking at some really brutal numbers. Um this
Speaker 1: as we try and figure out whether or not actually
Speaker 1: we are done with COVID, not done with COVID and
Speaker 1: we got COVID under control, or as COVID got us
Speaker 1: under control. Certainly today it feels like it is the latter,
Speaker 1: because this new variant to certainly spook markets. I think
Speaker 1: it's just a lack of information Paul, that we that
Speaker 1: we have at the moment that I think it's really
Speaker 1: spooky people. Everybody thought that they got their arms around
Speaker 1: understanding what delta and the variant was gonna mean, whether
Speaker 1: or not we would be able to control it with vaccine. Certainly,
Speaker 1: the evidence thus far has been that we were doing
Speaker 1: a fairly good job of that. Yes, we're seeing a
Speaker 1: pick up in Europe, but in areas where we have
Speaker 1: seen high vaccination levels, it does seem that we have
Speaker 1: our arms around it. Today that's been completely thrown out
Speaker 1: of the window. The real question is does the health
Speaker 1: care sector had the health care sector seen this one coming.
Speaker 1: Let's find out. Dr April Capoo, acute nurse practitioner and
Speaker 1: president of the Association of Nurse Practitioners, joining us. Now, Dr,
Speaker 1: let's just talk about what we've seen today and what
Speaker 1: we've learned today. A lot of people in financial markets
Speaker 1: have been caught by surprise by the emergence of a
Speaker 1: new variant that is much mutated and as a result,
Speaker 1: has the potential maybe to evade vaccines, to be more transmissible,
Speaker 1: to be potentially more deadly. As you, as a health
Speaker 1: care professional, had you expected like something like something like
Speaker 1: this would happen, Well, thank you, I agree with you,
Speaker 1: and I think what we know is that until we
Speaker 1: have more of our population fully vaccinated, we're going to
Speaker 1: continue to see the emergence of the variants, and the
Speaker 1: variants will continue to get more severe, the transmission rate
Speaker 1: will get higher. We know this because we know this
Speaker 1: is what happens with viruses, and so we need to
Speaker 1: get more of the population vaccinated. That's our number one defense.
Speaker 1: As far as what we're seeing today, still, the patients
Speaker 1: that are coming into the hospital, um, those the severe disease,
Speaker 1: those continue to remain the unvaccinated for the most parts
Speaker 1: or those that are very compromised, and it still remains
Speaker 1: to be the DELFA variant. Now what we're seeing in
Speaker 1: South Africa today. Yes, this has been um big breaking
Speaker 1: news for everyone and we are following it very closely
Speaker 1: and we have to see what happens with this variant.
Speaker 1: But in the meantime, it is continue to urge to
Speaker 1: answer questions, to get the word out, to make the
Speaker 1: vaccine available because it has been shown to be effective
Speaker 1: in reducing severity of disease, severity of illnesses and hospitalization
Speaker 1: and deaths. And so let's get people vaccinated as our
Speaker 1: number one tool. And then in the meantime, for those
Speaker 1: that cannot be vaccinated, they're not in eligible for whatever reason,
Speaker 1: wear the mask, get tested often. Um, but I completely
Speaker 1: agree we're going to continue to see these variants until
Speaker 1: we have more of our population vaccinated. So, Dr you're
Speaker 1: a professor at Vanderbilt University, one of the leading healthcare
Speaker 1: universities in the United States. It's also in a region
Speaker 1: of the country down to Nashville, Tennessee, that has had
Speaker 1: some challenges with vaccination rates. With mask wearing, You're on
Speaker 1: the front lines here. Do you have any confidence that
Speaker 1: we in the US, and more importantly in other parts
Speaker 1: of the world, can get vaccination rates materially higher. Well,
Speaker 1: what we're saying, according to the CDC, now we've had
Speaker 1: about six of our population across the US is fully vaccinated,
Speaker 1: so that means they've had two doses, and then we've
Speaker 1: had over thirty seven million that have gotten boosters, and
Speaker 1: now all adults are eligible for boosters. So we are
Speaker 1: seeing movement in that direction. But Tennessee, we remain lower
Speaker 1: UM or more around fifty of our population is fully vaccinated,
Speaker 1: and so that still means we have lots of work
Speaker 1: to do. I'm a nurse practitioner. I spend a lot
Speaker 1: of time out in the community talking to communities about
Speaker 1: the importance of vaccinating and answering questions. These are great
Speaker 1: questions that they bring up every day as to why
Speaker 1: they're not getting vaccinated. Until answering those questions, UM is
Speaker 1: very important. Are you expecting that as we head into
Speaker 1: into winter that we are going to be seeing higher
Speaker 1: case counts? I appreciate that we're Novembre about to go
Speaker 1: into the say, but but I imagine it's still pretty
Speaker 1: warm where you are, are we going to see high
Speaker 1: case counts? You just give me a number that's in
Speaker 1: the fifties of the population vaccinated. Eastern Europe, which is
Speaker 1: in the mid sixties has seen an absolute explosion of
Speaker 1: cases over the last few weeks. And that's what we're
Speaker 1: seeing in the US. We're saying seeing in case counts.
Speaker 1: We're seeing that as well. UM. However, we are not
Speaker 1: seeing the dramatic increase in hospitalizations and deaths. So that's
Speaker 1: that's the number that's very important to follow. UM. But
Speaker 1: we are seeing an increase in case counts, and so
Speaker 1: what is to come after that is very important to follow. UM.
Speaker 1: We need to make sure testing is available to everyone
Speaker 1: everywhere so that they can get tested as soon as
Speaker 1: they experience signs their symptoms. UM, even if they if
Speaker 1: they are unvaccinated and they're going somewhere, get tested where MASK.
Speaker 1: We have to do whatever we can to reduce the
Speaker 1: transmission rate UM so that we can keep our numbers
Speaker 1: of hospitalizations and deaths down. That you mentioned fully vaccinated,
Speaker 1: that's tennessee, but in the United States we're around fully vaccinated.
Speaker 1: All right, Dr April Capo, thank you so much. We
Speaker 1: really appreciate. Dr April Capo, acute nurse practitioner and president
Speaker 1: of the American Association Nurse Practitioners, also professor at Vanderbilt University.
Speaker 1: And again, guy, it's just challenging. It just seems like
Speaker 1: once you get a handle on one wave delta, here
Speaker 1: comes another one potentially. Well, yeah, that is what we're
Speaker 1: dealing with here. We The problem is we just don't
Speaker 1: know enough about it at the moment to form informed,
Speaker 1: uh sort of decision making. We're cutting flights. But the
Speaker 1: but the suggestion of all the people I've been talking
Speaker 1: to today is that basically this is probably already spread,
Speaker 1: we should expect it to pick up. Well, I'll admit
Speaker 1: something to you all, um, A lot of the smart
Speaker 1: kids are talking about distributed finance. I don't really know
Speaker 1: what it means, but fortunately our next guest does, Cam Harvey.
Speaker 1: He's a professor finance at Duke University's Fuqua School of Business,
Speaker 1: my former professor when I was a student at Fuqua. Camp.
Speaker 1: Thanks so much for joining us here. I know you've
Speaker 1: got a new book out, which is really why this
Speaker 1: is great to chat with you, entitled Defy in the
Speaker 1: Future of Finance. What is what is defying. So decentralized
Speaker 1: finance is a way to transact where you kind of
Speaker 1: avoid a lot of middle people. So, for example, if
Speaker 1: you want to buy or sell stock, you need to
Speaker 1: deal with a broker, you need to go to a
Speaker 1: stock exchange and things like that, Whereas in decentralized finance,
Speaker 1: you're training with an algorithm, so the algorithm doesn't care
Speaker 1: if you're a buyer or seller. You sell or you
Speaker 1: buy with algorithm. So it takes a lot of the
Speaker 1: middle layer out, and decentralized finance does a lot more
Speaker 1: because it's not just trading of securities. It could be UH,
Speaker 1: savings and lending, UH, it could be tokenization, UH, it
Speaker 1: could be insurance. That. There's many different things that are
Speaker 1: possible in this space, but the key thing is that
Speaker 1: you take a lot of that middle layer out. And
Speaker 1: when you do that, it's very interesting because today, if
Speaker 1: you buy a stock, for example, you can buy it
Speaker 1: pretty instantly, but the settlement of the stock it actually
Speaker 1: takes two days, whereas in this space the settlement is immediate.
Speaker 1: So there's no difference between execution of a trade and
Speaker 1: the settlement of a trade that regulates feel about that Professor, Um,
Speaker 1: we spend a lot of time over the last few years, uh,
Speaker 1: making sure that that a lot of price action on
Speaker 1: financial markets is centrally cleared. It allows visibility, it allows safety.
Speaker 1: Does this allow for that? So on the visibility, everything
Speaker 1: is transparent in these markets. So the current markets are
Speaker 1: the markets that are actually opaque. And it's also the
Speaker 1: case that the same asset could be traded on multiple
Speaker 1: decentralized exchanges. And and let me be clear here, um,
Speaker 1: popular exchanges like finance and coin base, they're not decentralized finance.
Speaker 1: They're just centralized broker exchanges that people actually deal with.
Speaker 1: And decentralized finance, you're just dealing with an algorithm. And look,
Speaker 1: to me, it's not too hard to imagine in the
Speaker 1: future we're gonna be dealing with algorithms, not just in finance,
Speaker 1: but in finance. It's kind of low hanging fruit to
Speaker 1: actually do this as sort of the regulators, um, And
Speaker 1: there's multiple layers here. Uh, this is a new space,
Speaker 1: and they've got a tough job because obviously cryptocurrency wasn't
Speaker 1: detailed in the nine three Securities Act, so they need
Speaker 1: to improvise. But they need the balance and what I
Speaker 1: mean by that is nobody wants people taking the advantage
Speaker 1: of by people in the crypto space, and we've seen
Speaker 1: some of that already. But if the regulations are too
Speaker 1: harsh and they reduced that risk to zero, then these
Speaker 1: new ideas will simply move off shore and uh and
Speaker 1: and no country wants their best ideas to move off shore.
Speaker 1: So we'll see in the next few years some sort
Speaker 1: of regulatory guidance. You know, I do think that that's
Speaker 1: important given that most of the trading today is just
Speaker 1: purely speculative trading in the too complex. So when I
Speaker 1: say decentralized finance, that's a small part today of what's
Speaker 1: actually happening. And indeed, today's market action verifies that most
Speaker 1: of the trading going on in the crypto space is
Speaker 1: purely speculative in a risk risk off day. Um, you
Speaker 1: talk about the market going down two percent, to take
Speaker 1: a look at what's happening to bitcoin and ethereum bitcoin
Speaker 1: down seven point professor. You know, when I think about
Speaker 1: the centralized finance, and when I think that even you know,
Speaker 1: just just crypto, which we have some more experience with,
Speaker 1: I don't see it being led by JP Morgan or
Speaker 1: Bank of America who was going to innovate and develop
Speaker 1: this new area of finance. Yeah, it's really interesting because
Speaker 1: you ask the traditional banks like JP Morgan and Bank
Speaker 1: of America to innovate, they essentially look at this as
Speaker 1: a cannibalization of their business. US. So decentralized finance is
Speaker 1: an existential threat to our current commercial banks. So so
Speaker 1: for them, uh, to be a leader in this space
Speaker 1: is fraught with risk because they're basically if they jump
Speaker 1: into this, uh, it means that their role will be
Speaker 1: a much smaller role in the future. So this just
Speaker 1: to be clear, Um, decentralized finances, where you're dealing with peers,
Speaker 1: everybody's appear, there's no client, there's no customer, there's no banker.
Speaker 1: Everybody's appear and and that's a totally different model. So
Speaker 1: we don't rely upon JP Morgan or Bank of America
Speaker 1: and to innovate in this space. There's like a whole
Speaker 1: new ecosystem out there. Uh. That is it's driven by
Speaker 1: economists and computer scientists to essentially rebuild our financial system,
Speaker 1: not to renovate, but to rebuild to reduce those current
Speaker 1: sactions costs and reducing those transaction costs is a good
Speaker 1: idea that leads to economic growth. Can when you see
Speaker 1: a market like this, um, you know, it's just I'm
Speaker 1: just gonna talk since the pandemic where we had that
Speaker 1: dramatic sell off at the beginning of the pandemic, then
Speaker 1: an extraordinary rally, uh, and then you get days like today.
Speaker 1: Is today an efficient market from your perspective or how
Speaker 1: do you think about it? So no market is perfectly efficient.
Speaker 1: So there's information that came to the market today, um,
Speaker 1: and it's negative information and we go into risk off.
Speaker 1: So it reminds me somewhat of March if you recollect
Speaker 1: that that was the month where we realized how serious
Speaker 1: the COVID nineteen actually was. Equity markets plunge, UM and
Speaker 1: other kind of risk on assets the same thing. So
Speaker 1: gold drop, UM, Bitcoin drop, and people piled into safe haven,
Speaker 1: which is US treasury bones in cash. And it's very
Speaker 1: similar in terms of what is happening today. Um, we're
Speaker 1: scared that we're going to replicate or could be even
Speaker 1: worse in terms of COVID UH nineteen. And it's a
Speaker 1: risk off day. And again do you see that in
Speaker 1: the market. Uh, it's interesting to me that the so
Speaker 1: called safe haven asset gold is essentially unchanged today, whereas
Speaker 1: stocks are substantially down and as you mentioned, bitcoin is
Speaker 1: down nearly eight percent and the other speculative cryptos like
Speaker 1: doge coin down even more. Like does that, in your
Speaker 1: mind draw a line between growth stock um, the mean stocks,
Speaker 1: the retail stocks, and crypto. Has crypto become very correlated
Speaker 1: with equity markets? Yes? So, and I've mentioned this for
Speaker 1: a very long time. So given the speculative interest in cryptocurrencies,
Speaker 1: they actually have data. So that means that when the market,
Speaker 1: the equity market plunges, they tend to do the same thing.
Speaker 1: And again March is a good example of that. And
Speaker 1: then what happened afterwards, the stock market realized that we're
Speaker 1: going to have a vaccine eventually, UH it turned to
Speaker 1: a risk on situation. People piled into UH, into equity markets,
Speaker 1: drove them to all time highs. Gold went to its
Speaker 1: third highest level ever and Bitcoin went through the roof.
Speaker 1: So so this is very consistent with the narrative that
Speaker 1: the crypto complex UH is very influenced by speculative investors theoretically,
Speaker 1: so theoretically the cryptocurrencies are decoupled from the economy in general.
Speaker 1: So bitcoin has got an algorithmic money supply that caps
Speaker 1: out at twenty one million. It has nothing to do
Speaker 1: with FED policy or FED money supply or any other
Speaker 1: central bank. Yet given the speculative interest in the cryptos,
Speaker 1: they tend to move with the other risk assets, and
Speaker 1: they tend to move more than the other risk assets,
Speaker 1: especially in a period of a draw down like today.
Speaker 1: All right, Cam, thank you so much. We really appreciate
Speaker 1: your time here. Cam Harry, Professor Finance at Duke University's
Speaker 1: uh Fuqual School of Business. He has a new book
Speaker 1: app Defy and the Future of Finance, so as we
Speaker 1: all try to get a little bit smarter about decentralized finance.
Speaker 1: I read that book. It's a quick way to kind
Speaker 1: of get up the speed. So I wreck commend that,
Speaker 1: and we appreciate some moment we became hurry. We focused
Speaker 1: on coming into today. What was happening with inflation. We've
Speaker 1: seen obviously the supply chain crunches. We've seen the impact
Speaker 1: that they've been happening having there's been labor shortages. We've
Speaker 1: been watching that carefully. We've obviously seen a high price
Speaker 1: of fuel as well. That started to certainly abate today
Speaker 1: with a massive move down in the price of fuel.
Speaker 1: The question is is this just a brief blip and
Speaker 1: we bounce back, or are we going to start to
Speaker 1: see actually a new normal starting to assert itself as
Speaker 1: we realize that maybe actually we're going to be dealing
Speaker 1: with this, with this COVID crisis for a lot longer.
Speaker 1: Supply chains absolutely front and center, particularly on a day
Speaker 1: like today Black Friday, So let's get some some insight
Speaker 1: into what is happening. Page Van Fossen joins us now
Speaker 1: vice president of e Commerce Operations for DHR, working on
Speaker 1: the supply chain side of the business. Page. Welcome to
Speaker 1: the program. Thank you very much, indeed for your time.
Speaker 1: We've been talking to a number of people already about
Speaker 1: how the shopping season is going today, that there does
Speaker 1: seem to be a sense that we have fully stacked
Speaker 1: shells that actually not only in bricks and mortar, but
Speaker 1: also any commerce that actually inventories are reasonably good and
Speaker 1: as a result of which consumers are going to get
Speaker 1: what they want. You've also been working very hard just
Speaker 1: give us your sense kind of where we are, how
Speaker 1: how well stacked are we with inventories. Do you expect
Speaker 1: the consumers are going to see any shortages? I would
Speaker 1: say right now, our facilities are looking really stacked with inventory.
Speaker 1: As you say, I think it was a little bit
Speaker 1: later coming that than we would usually have experienced in
Speaker 1: previous years. So we have been UH had a glut
Speaker 1: of labor needs as we're both bringing in inventory that's
Speaker 1: been expedited as well as trying to get the orders
Speaker 1: out the door. I was out on the floor this
Speaker 1: morning and some of our operations. UM, so it's been
Speaker 1: a good start to the Blacks Friday, and I would say, um,
Speaker 1: right now, if consumers are placing orders, they should be
Speaker 1: able to get what they are looking for. Page. You know,
Speaker 1: as we think about this UH supply chain, it's it's
Speaker 1: it's a global issue. It's it's probably an area the
Speaker 1: economy that most folks didn't even really think about. They
Speaker 1: just assume that it just happens. The box shows up
Speaker 1: when they say it is. One of the backdrops seems
Speaker 1: to be labor, you know what. That seems to be
Speaker 1: a real challenge, whether it's having folks on the doctor
Speaker 1: onload the ships, having truckers to actually get the goods Inland.
Speaker 1: How are you thinking about labor and how is it
Speaker 1: impacting your business? Yes, definitely, labor is a challenge across
Speaker 1: the board. You know. I think as anyone who's driving
Speaker 1: through their hometown, they can see all of the help
Speaker 1: wanted signs out in the front of businesses and it's
Speaker 1: no different and supply chain. You know, at dhl UM,
Speaker 1: we are very excited to report that we have really
Speaker 1: had a very successful season and UM recruiting and obtaining labor. Uh.
Speaker 1: You know, in past years, especially the last few, we
Speaker 1: have seen a tightening of the labor market and the
Speaker 1: competition was really forgetting the best talent. UM. Today there
Speaker 1: just isn't enough talent to go around. There's not enough
Speaker 1: people for all of the jobs that there are, and
Speaker 1: so really there are gonna be winners and losers when
Speaker 1: it comes to labor and d h l UM, you know,
Speaker 1: leveraging our strong brand recognition along as our with our
Speaker 1: reputation as UH employer of choice, UM have really seen
Speaker 1: good success this year. Despite that, as you say, there
Speaker 1: is a there is a kind of ongoing issue with labor.
Speaker 1: While you may have been successful recently, you're obviously looking
Speaker 1: to the future and wondering whether that will continue. As
Speaker 1: a result, are we going to see increasingly fulfillment centers
Speaker 1: being automated? How much automation are you seeing now? How
Speaker 1: much aultomation did it? We'll see in five years time,
Speaker 1: Oh for sure, I think. UM, I guess I would
Speaker 1: call this and I've been I've been an e commerce
Speaker 1: since uh when, since it was mail order, So I've
Speaker 1: been in the business for a very long time. And
Speaker 1: I would say from an operation's perspective, this is going
Speaker 1: to be one of the most transformative periods that we
Speaker 1: have seen UM specifically because of the labor shortage. You
Speaker 1: know how over the last few years we have seen
Speaker 1: innovation began two UH appear though UM it wasn't quite
Speaker 1: mature enough and the return on the investment wasn't quite there,
Speaker 1: And that has really shifted in the last twelve months.
Speaker 1: Being from a DHL perspective, UM, we've been a little
Speaker 1: bit ahead of the curves. We've been focused on integrating
Speaker 1: relevant UM innovation into our solutions for quite a while now,
Speaker 1: UM and and we UH specifically around driver lists, forklifts
Speaker 1: and picking assisted robotics. UM and we've doubled the number
Speaker 1: of collaborative robots that we had um to last year
Speaker 1: and expect to double that number again next year. So
Speaker 1: technology is definitely coming automation. You're going to see e
Speaker 1: commerce operations specifically because they are so labor intensive, really
Speaker 1: start to implement some of that emerging technology. Page DHL
Speaker 1: is a global company. Give us a sense of where
Speaker 1: you're seeing, maybe some the most challenging area of the
Speaker 1: globe from a supply chain and maybe some of the
Speaker 1: maybe some regions that are doing better. Oh. Um, I
Speaker 1: would say it is across the board challenging. I don't
Speaker 1: know that there is a place where it is particularly easy. UM.
Speaker 1: I'd say in North America because I think have had
Speaker 1: UM not as necessarily as much impact from COVID restrictions,
Speaker 1: We've probably seen a little bit of easier time than
Speaker 1: we have in some other parts of the globe. UM.
Speaker 1: Just to find a quick question from me, we've got
Speaker 1: a couple of minutes left. When I talk to people
Speaker 1: in the logistics industry, one of the biggest challenges they're
Speaker 1: facing right now is is how to deal with returns
Speaker 1: at a period when inventory is quite tight because of
Speaker 1: what has been happening with the global supply chain story.
Speaker 1: Managing your inventry when you get it is absolutely critical.
Speaker 1: A lot of people buy stuff, they try it on,
Speaker 1: they figure out what they want, they send some of
Speaker 1: it back. How how much faster is that process now
Speaker 1: and how critical is that part of the process in
Speaker 1: terms of maintaining retailer's margins. Yeah, it is actually a
Speaker 1: very important part of the project. You know, when merchants
Speaker 1: are placing their orders, they are factoring in returns as
Speaker 1: part of the inventory that would be available to sell,
Speaker 1: and so we have seen increased focus on that. UM.
Speaker 1: The interesting thing is through the COVID years, UM, people
Speaker 1: were ordering much more comfortable clothing, and so we actually
Speaker 1: saw return rates go down because the sizing which was
Speaker 1: much more forgiving. UM. We are I mean, yeah, I know,
Speaker 1: a lot of sweat pants and leggings. UM. We are
Speaker 1: starting to see that turn around a little bit as
Speaker 1: people are, you know, starting to order I think Denham
Speaker 1: is having a new resurgence UM, starting to order more
Speaker 1: typical types of clothing. Uh. And there is definitely a
Speaker 1: focus on that UM as well as returns. As you know,
Speaker 1: capacities continue to increase. Returns is one of those places
Speaker 1: where you can be a little more innovative, maybe move
Speaker 1: that off site, um, so that you can create more
Speaker 1: capacity for your picking and shipping orders. Um. But you
Speaker 1: still have to be able to then get those returns
Speaker 1: back into inventory very quickly. All right, Page, thank you
Speaker 1: so much for joining us. Really appreciate getting your perspective
Speaker 1: on this busy day. Gotta be one of the busiest
Speaker 1: days of the year for folks of the likes of
Speaker 1: d h L, So Page van Foston, we appreciate the time.
Speaker 1: She's a vice president of e commerce Operations at d
Speaker 1: h L. Supply lots of red on the screen here,
Speaker 1: And as Charlie was just discussing, is this a fair
Speaker 1: response to an additional unknown in this marketplaces? And uh
Speaker 1: too much or is it not enough? Here? As this
Speaker 1: market tries to dissect and discount some new information in
Speaker 1: the marketplace, let's check in with a professional who does
Speaker 1: this for a living. David Deed's managing principle and senior
Speaker 1: portfolio strategist at Gloodstone Bank. David, thanks so much for
Speaker 1: joining us. You've got lots of perspective in this market.
Speaker 1: When we saw the trading today, what did you take away? Well,
Speaker 1: certainly it was a very panicky response, and I think
Speaker 1: the key thing is, first of all, you know, people
Speaker 1: who trade stocks for a living are not epidemiologists. So
Speaker 1: the concern, of course, is this new mutation. Who is
Speaker 1: now calling it a micron coming out of South Africa.
Speaker 1: You know, it could be terrible, it might not be,
Speaker 1: but Wall Street professionals are not trained to immediately assess
Speaker 1: what the risk is, and therefore the default is perhaps
Speaker 1: moved some tips to the sidelines. It is not helped
Speaker 1: by the fact that a lot of people are at
Speaker 1: home in this holiday shortened trading week, and particularly some
Speaker 1: of the senior executives, and so there's probably a lot
Speaker 1: of stop losses. They were triggered, and people just want
Speaker 1: to take a deep breath and enjoy the weekend and
Speaker 1: figure it out on Monday. What happens on Monday is
Speaker 1: now the key question. We have seen volatility spoke really
Speaker 1: quite considerably. That sort of the reason maybe to manage
Speaker 1: risk a little bit more carefully. Risk offices will be
Speaker 1: tapping people on the shoulder just looking at the value
Speaker 1: at risk, and so well, volatility is up here. You
Speaker 1: need to rethink exactly what your positioning looks like. But
Speaker 1: the instinct time and time again is to buy the dip.
Speaker 1: Do you think that instinct will prove correct again? Well, certainly,
Speaker 1: all eyes are gonna be on the people, the scientists
Speaker 1: at Fiser and Maderna and indeed J and J. They're
Speaker 1: gonna be working feverously this weekend to try and get
Speaker 1: an early assessment. Is this something that the existing vaccines
Speaker 1: can handle or will take tweaking and this? So how
Speaker 1: long is that going to take the other thing, I
Speaker 1: think people are gonna be watching for what are the
Speaker 1: government's responses. So for example, um UH Israel and um Belgium,
Speaker 1: and I think Hong Kong now have prohibited people coming
Speaker 1: in from South Africa neighboring countries. Do we do the
Speaker 1: same thing on Monday morning and say people from Africa
Speaker 1: are no longer welcome no matter what their vaccination status is.
Speaker 1: So that's gonna be another key bit of information. Having
Speaker 1: said all this, you did see some knee jerk selling
Speaker 1: in so forth. I think people are going to be
Speaker 1: doing a little bit of bargain hunting. You know, it's
Speaker 1: just a few days ago. Everyone's worried about how high
Speaker 1: is going to be high in terms of what the
Speaker 1: Federal Reserve ultimately hikes rates two and when, um, how
Speaker 1: bad will inflation be? Is that all off the table? Uh?
Speaker 1: If so? Our interest rates seemed to be very very
Speaker 1: low now below one point five and some for example,
Speaker 1: financial institutions for sold because the strates that too low
Speaker 1: for them to make money. How long can that last? So, David,
Speaker 1: it's a lot of folks from the medical community and
Speaker 1: elsewhere saying, you know, this might just be kind of
Speaker 1: the new normal for the foreseeable future. That is, new
Speaker 1: variants come along, and that's the nature of a virus.
Speaker 1: You just kind of got to learn to live with it.
Speaker 1: If that's in fact the case, where do you think
Speaker 1: investors should be, you know, kind of intermediate to long
Speaker 1: term given that level of given that backdrop, Well, I mean,
Speaker 1: you know, we've had pandemics from time immorial um, We've
Speaker 1: had variants and so forth. We just perhaps have gotten
Speaker 1: finished with the delta one, so you know, and Marcus
Speaker 1: has moved to new highs uh this month. So certainly
Speaker 1: I think that with the vaccines on the market, with
Speaker 1: the anti viral pills, um with um, you know, the
Speaker 1: tools social distancing mass and so forth, this country and
Speaker 1: certainly other countries around the world have learned how to
Speaker 1: live with it, and so I think economic activity continues
Speaker 1: to expand and get better. Just because we can't say
Speaker 1: there will never be another variant or pandemic doesn't mean
Speaker 1: you stop. So what does that mean in terms of
Speaker 1: what the FED does next? The talk over the last
Speaker 1: few days has been that we will see an accelerated taper.
Speaker 1: Goldman Sachs was talking about that yesterday in the notes
Speaker 1: with Jan Hatsias, talking about the fact that we could
Speaker 1: see a doubling of the FED tape to around thirty
Speaker 1: billion a month. Do you think that's still on I don't,
Speaker 1: because the Fed is cautious. They lowered the interest rates
Speaker 1: because in certainly of the pandemic. Now that uncertainty has
Speaker 1: opened up again, there were there was noise in the
Speaker 1: recent release Federal uh FM O see minutes about increasing
Speaker 1: the taper UM. I think, and that might be announcement
Speaker 1: de Scember. I think that's off the table. If you
Speaker 1: also look at FED fund futures and so forth. A
Speaker 1: possible first rate hike UM in June at one point
Speaker 1: today was pushed off into two thousand twenty three. So
Speaker 1: certainly this is going to cause a pause and a
Speaker 1: rethinking by the Federal Reserve again. They're gonna be looking
Speaker 1: at the listening to what the epidemiologists and the scientists
Speaker 1: say as well. Right, all right, David Deeds, thank you
Speaker 1: so much once again for joining us. David Deet's managing
Speaker 1: principle and senior portfolio a strategist at Gladstone Bank, giving
Speaker 1: us his thoughts on these markets after a crazy trading day.
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
Speaker 1: at Matt Miller three on Fall Sweeney, I'm on Twitter
Speaker 1: at pt Sweeney before where the podcast. You can always
Speaker 1: catch us worldwide at Bloomberg Radio. M