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 00:00:11,560 --> 00:00:15,560 Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast 5 00:00:15,560 --> 00:00:18,479 Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,560 Speaker 1: at Bloomberg dot com slash podcast. We're gonna get into 7 00:00:22,600 --> 00:00:25,360 Speaker 1: it now. At Dave Harden, the founder and president of 8 00:00:25,480 --> 00:00:28,520 Speaker 1: Summit Global Investments, we're gonna look at his market outlook 9 00:00:28,520 --> 00:00:32,680 Speaker 1: for two inflation, FED tapering. Dave, thank you for joining us. 10 00:00:32,720 --> 00:00:37,360 Speaker 1: When we think about how are you positioning yourself? Well, 11 00:00:37,360 --> 00:00:38,800 Speaker 1: thank you for having to me. Glad to be on 12 00:00:38,840 --> 00:00:41,920 Speaker 1: again today. UM, I think you want to be positioned 13 00:00:42,360 --> 00:00:45,440 Speaker 1: for choppy and more volt markets ahead. We've got a 14 00:00:45,479 --> 00:00:48,199 Speaker 1: lot with the FED. Everybody's talked about their combination going 15 00:00:48,240 --> 00:00:50,400 Speaker 1: away and what's going to have. We also have Congress 16 00:00:50,440 --> 00:00:53,840 Speaker 1: actively involved, COVID nineteens, you have political events. I think 17 00:00:53,880 --> 00:00:58,040 Speaker 1: it's a lot more choppy in the next year. Yield hire, 18 00:00:58,440 --> 00:01:00,720 Speaker 1: I think it's positive, but just not as big of 19 00:01:00,720 --> 00:01:03,840 Speaker 1: a return over the whole year as one would expect. 20 00:01:03,880 --> 00:01:05,560 Speaker 1: There's going to be periods though we're it's up a 21 00:01:05,560 --> 00:01:06,960 Speaker 1: lot and down a lot. I think we're gonna have 22 00:01:07,000 --> 00:01:10,240 Speaker 1: some choppy trading. So what do I do there? Do 23 00:01:10,319 --> 00:01:14,080 Speaker 1: I stick with maybe the big top line growth stories tech, 24 00:01:14,120 --> 00:01:16,960 Speaker 1: for example, healthcare, or do I go a little bit 25 00:01:16,959 --> 00:01:19,680 Speaker 1: more cyclical and try to play what should be some 26 00:01:19,760 --> 00:01:24,039 Speaker 1: type of reopening or continued reopening next year. I think 27 00:01:24,040 --> 00:01:26,400 Speaker 1: that's a really good question, Paul. I think one of 28 00:01:26,440 --> 00:01:29,520 Speaker 1: the things this creates is a higher awareness for the 29 00:01:29,560 --> 00:01:32,479 Speaker 1: desire for risk management. And the more you, as an 30 00:01:32,520 --> 00:01:36,959 Speaker 1: investor understand your risk management that's inside your portfolio, it's essential. 31 00:01:37,360 --> 00:01:40,639 Speaker 1: The better you understand it, the better your portfolio perform 32 00:01:40,720 --> 00:01:42,600 Speaker 1: as you hope. So I think the biggest thing you 33 00:01:42,640 --> 00:01:45,400 Speaker 1: need to do is understand the risks within your protfolio. Now, 34 00:01:45,440 --> 00:01:48,360 Speaker 1: saying that, I do think you want to have a 35 00:01:48,400 --> 00:01:52,320 Speaker 1: more value tilt, and probably a bigger company tilt over 36 00:01:52,800 --> 00:01:57,080 Speaker 1: over overall, but small companies will probably in my estimation, 37 00:01:57,240 --> 00:02:00,640 Speaker 1: outperform large companies as a whole. But I think the 38 00:02:00,680 --> 00:02:03,080 Speaker 1: core of your portfolio needs to be in some of 39 00:02:03,080 --> 00:02:06,640 Speaker 1: these companies you really really trust. Um so companies that 40 00:02:06,680 --> 00:02:09,040 Speaker 1: I've been talking about more more recently, and I know 41 00:02:09,120 --> 00:02:12,320 Speaker 1: it's up over a hundred percent year today. Is Ford. 42 00:02:12,560 --> 00:02:14,720 Speaker 1: Um Ford I think is a really really good company. 43 00:02:14,760 --> 00:02:16,960 Speaker 1: It's a great play. They have a ton of momentum 44 00:02:17,040 --> 00:02:19,320 Speaker 1: in the number of buys that they have and sells 45 00:02:19,840 --> 00:02:23,880 Speaker 1: companies selling cars um and and a great opportunity with 46 00:02:24,040 --> 00:02:26,560 Speaker 1: electric vehicles. They haven't even gotten started yet, just the 47 00:02:26,680 --> 00:02:29,639 Speaker 1: f one fifty. Their Mustang is really not even the Mustang, 48 00:02:29,760 --> 00:02:31,680 Speaker 1: so they I think they have a lot of opportunity 49 00:02:31,720 --> 00:02:36,600 Speaker 1: to grow there. Less eccentric than Elon, but really good 50 00:02:36,639 --> 00:02:38,840 Speaker 1: management and forward So that's one of the core holdings 51 00:02:38,880 --> 00:02:41,480 Speaker 1: I would look. So you mentioned this small cap idea. 52 00:02:42,080 --> 00:02:44,560 Speaker 1: We're going to speak to Liz Young later. She loves 53 00:02:44,720 --> 00:02:48,960 Speaker 1: them to How does inflation, though, throw a wrench in 54 00:02:49,040 --> 00:02:52,440 Speaker 1: the ability for smaller companies to navigate a choppy environment 55 00:02:52,480 --> 00:02:55,960 Speaker 1: next year? It's going to be difficult, and so you 56 00:02:56,080 --> 00:02:58,560 Speaker 1: want to look I think if you're going into small cap, 57 00:02:58,880 --> 00:03:00,920 Speaker 1: you want to look for company needs that have the 58 00:03:00,960 --> 00:03:05,000 Speaker 1: opportunity either to combat inflation with their growth, so that's 59 00:03:05,000 --> 00:03:08,120 Speaker 1: really really important, or they have some type of unique 60 00:03:08,120 --> 00:03:12,280 Speaker 1: technology that I think or a position in their um 61 00:03:12,280 --> 00:03:15,280 Speaker 1: peer group that really makes a difference. So the other 62 00:03:15,320 --> 00:03:17,040 Speaker 1: thing that I think that's really important is I don't 63 00:03:17,040 --> 00:03:19,840 Speaker 1: think you want to have all the risk on the table. 64 00:03:20,160 --> 00:03:21,840 Speaker 1: And in other words, if you looked at the beta 65 00:03:21,919 --> 00:03:24,440 Speaker 1: of your small cap portfolio to the Russell to or 66 00:03:24,480 --> 00:03:27,000 Speaker 1: the S and P six, your beta I think needs 67 00:03:27,000 --> 00:03:29,560 Speaker 1: to be a little bit smaller. Our small cap beta 68 00:03:29,639 --> 00:03:33,040 Speaker 1: is about point eight right now. It's about fi year 69 00:03:33,080 --> 00:03:35,840 Speaker 1: to day versus the Russell to about ten. So I 70 00:03:35,880 --> 00:03:39,320 Speaker 1: think you can do a lot better with um less 71 00:03:39,440 --> 00:03:43,440 Speaker 1: volatile companies, but stay in that small cap space. David, 72 00:03:43,680 --> 00:03:45,760 Speaker 1: how do you think about valuation here? There's a lot 73 00:03:45,800 --> 00:03:48,160 Speaker 1: of folks that are concerned about evaluation. But on the 74 00:03:48,160 --> 00:03:50,520 Speaker 1: other hand, people saye g. But that given where interest 75 00:03:50,600 --> 00:03:54,920 Speaker 1: rates are, don't worry. Earnings have been very good over 76 00:03:54,960 --> 00:03:56,920 Speaker 1: the past several quarters, but likely to slow. How do 77 00:03:57,000 --> 00:04:00,720 Speaker 1: you think about evaluation in this market? Now? Well, there's 78 00:04:00,720 --> 00:04:03,200 Speaker 1: no doubt it's high. Right you look at any type 79 00:04:03,240 --> 00:04:05,360 Speaker 1: of chart you want to look at across the market, 80 00:04:05,440 --> 00:04:09,320 Speaker 1: valuation is extremely high. It's a very narrow market, and 81 00:04:09,360 --> 00:04:12,680 Speaker 1: so that is concerning. The problem is is I think, well, 82 00:04:12,720 --> 00:04:16,120 Speaker 1: not the problem, but the opportunity is is that valuations 83 00:04:16,160 --> 00:04:19,760 Speaker 1: never really created a burst of the bubble so I 84 00:04:19,800 --> 00:04:22,960 Speaker 1: don't think you worry about valuation. You more worry about 85 00:04:23,160 --> 00:04:26,800 Speaker 1: what are the downside risks with my individual names in 86 00:04:26,880 --> 00:04:30,520 Speaker 1: my portfolio and what causes the bubble to burst. So 87 00:04:30,640 --> 00:04:33,400 Speaker 1: I would set valuation aside a little bit and look 88 00:04:33,400 --> 00:04:36,240 Speaker 1: at the FED, look at the COVID, which I think 89 00:04:36,680 --> 00:04:38,880 Speaker 1: you know we've talked about a million times over, and 90 00:04:38,920 --> 00:04:41,200 Speaker 1: look at what events are going on with Congress and 91 00:04:41,240 --> 00:04:43,520 Speaker 1: how that's going to affect the downside risk of my nature. 92 00:04:43,640 --> 00:04:47,080 Speaker 1: Is there a paradigm shift, a move away from chasing 93 00:04:47,160 --> 00:04:51,400 Speaker 1: yield into protecting your capital? I think there there There 94 00:04:51,440 --> 00:04:54,159 Speaker 1: has to be for at least a portion of everyone's portfolio, 95 00:04:54,680 --> 00:04:59,040 Speaker 1: so yields are higher. Um, you can't just chasing yield 96 00:04:59,080 --> 00:05:00,520 Speaker 1: is not going to give you the actually I think 97 00:05:00,520 --> 00:05:02,800 Speaker 1: that you need, and so you need to look at 98 00:05:03,040 --> 00:05:07,200 Speaker 1: how does your portfolio fit together and what is the 99 00:05:07,240 --> 00:05:09,920 Speaker 1: potential risk to your portfolio losing money? And if you 100 00:05:10,000 --> 00:05:12,560 Speaker 1: do it that way and you start talking about risk, 101 00:05:12,600 --> 00:05:14,159 Speaker 1: I think your profolio is going to perform as you 102 00:05:14,200 --> 00:05:18,080 Speaker 1: want um throughout the year. All right, David, thank you 103 00:05:18,120 --> 00:05:21,360 Speaker 1: so much for joining us. Really appreciate getting your thoughts 104 00:05:21,400 --> 00:05:31,400 Speaker 1: and perspective. David Harden, founder, president of Summit Global Investments. 105 00:05:31,400 --> 00:05:35,839 Speaker 1: One of the interesting economic fallouts from this pandemic has 106 00:05:35,880 --> 00:05:39,680 Speaker 1: been a large number of people have simply left the workforce, 107 00:05:39,720 --> 00:05:42,200 Speaker 1: maybe four to five million of them here in the US. 108 00:05:42,240 --> 00:05:43,800 Speaker 1: And of course we see the help on it signs 109 00:05:44,080 --> 00:05:47,400 Speaker 1: in just about every restaurant and retail establishment, but it's 110 00:05:47,440 --> 00:05:51,679 Speaker 1: also impacting larger companies like Micron Technology has a hundred 111 00:05:51,720 --> 00:05:55,640 Speaker 1: billion dollar market capp chip company. April Arnston joins us. 112 00:05:55,640 --> 00:05:59,400 Speaker 1: She's a chief people officer at Micron Technology. April talked 113 00:05:59,440 --> 00:06:02,760 Speaker 1: to us about the labor market for again, a big 114 00:06:02,800 --> 00:06:07,680 Speaker 1: tech company like Micron Technologies, what are you guys dealing with? Hi, 115 00:06:07,800 --> 00:06:11,039 Speaker 1: good morning, Thanks for having me. Yeah. So, while the 116 00:06:11,160 --> 00:06:14,960 Speaker 1: labor shortage is real, you know, we also believe it 117 00:06:15,000 --> 00:06:19,200 Speaker 1: presents opportunities that can create retention challenges for sure, but 118 00:06:19,320 --> 00:06:23,000 Speaker 1: we've also found that it has created hiring opportunities and 119 00:06:23,120 --> 00:06:26,640 Speaker 1: it it really hasn't stalled our efforts, that hasn't stalled 120 00:06:26,640 --> 00:06:31,040 Speaker 1: our innovation efforts, that hasn't stalled our diversity efforts. In fact, 121 00:06:31,400 --> 00:06:36,040 Speaker 1: we believe that our focus on things like the ei UM, 122 00:06:36,080 --> 00:06:39,240 Speaker 1: things like our company success and our innovation, it's given 123 00:06:39,320 --> 00:06:43,880 Speaker 1: us a competitive advantage in the talent marketplace. People are 124 00:06:44,080 --> 00:06:47,640 Speaker 1: rethinking where they want to work. They want fulfilling work, 125 00:06:47,880 --> 00:06:51,920 Speaker 1: they want flexibility, and they want companies to share their values. 126 00:06:51,960 --> 00:06:55,760 Speaker 1: So now is the time for companies to really double 127 00:06:55,880 --> 00:06:59,480 Speaker 1: down on those efforts and UM make sure that they 128 00:06:59,560 --> 00:07:04,440 Speaker 1: are seeing keen about what they offer to employees, both 129 00:07:04,480 --> 00:07:08,560 Speaker 1: in terms of the work and the environment that they create, 130 00:07:09,040 --> 00:07:12,360 Speaker 1: so that people can find a purpose in the work 131 00:07:12,520 --> 00:07:15,720 Speaker 1: and they feel valued and they feel like they're contributing 132 00:07:15,800 --> 00:07:19,160 Speaker 1: to success. You know, I'm curious about the most compelling ways, 133 00:07:19,240 --> 00:07:27,040 Speaker 1: the most compelling examples of how the workplace is really changing. Yeah, 134 00:07:27,080 --> 00:07:30,160 Speaker 1: you know, at Micron, I think there's a few things that, 135 00:07:30,400 --> 00:07:33,080 Speaker 1: you know, we are looking at to make sure that 136 00:07:33,200 --> 00:07:37,920 Speaker 1: we provide a modern work experience. I think number one 137 00:07:38,160 --> 00:07:42,160 Speaker 1: I just mentioned people want a place where they feel fulfilled, 138 00:07:42,560 --> 00:07:46,960 Speaker 1: UM that they are doing work that impacts UM, impacts 139 00:07:47,120 --> 00:07:52,960 Speaker 1: greater society, and impacts their community. They want flexibility. They 140 00:07:53,000 --> 00:07:55,320 Speaker 1: want to work UM the way they want to work 141 00:07:55,320 --> 00:07:58,880 Speaker 1: and the way that they best work, whether that's working 142 00:07:58,880 --> 00:08:02,920 Speaker 1: from home or or whether that's you know, leveraging technology 143 00:08:03,000 --> 00:08:06,920 Speaker 1: to be engaged in different ways. They also want you know, 144 00:08:06,920 --> 00:08:09,360 Speaker 1: they want to be socially connected, so when they come 145 00:08:09,400 --> 00:08:12,640 Speaker 1: to work, you know, we're finding that people still want 146 00:08:12,680 --> 00:08:15,559 Speaker 1: to connect and when they come to work, they want 147 00:08:15,640 --> 00:08:18,120 Speaker 1: a unique experience. They want to still be able to 148 00:08:18,120 --> 00:08:22,360 Speaker 1: connect with our colleagues UM and and work in an 149 00:08:22,440 --> 00:08:25,320 Speaker 1: environment where you know, they feel like they're they're making 150 00:08:25,320 --> 00:08:28,000 Speaker 1: a difference and and they want to feel respected and valued. 151 00:08:28,040 --> 00:08:30,560 Speaker 1: And this is why Micron's d I efforts are so 152 00:08:30,600 --> 00:08:34,600 Speaker 1: incredibly important UM to make sure that we're providing a 153 00:08:34,720 --> 00:08:38,880 Speaker 1: culture of inclusion where people feel like they can thrive. 154 00:08:39,160 --> 00:08:41,520 Speaker 1: We believe it's the right thing to do, and talent 155 00:08:41,720 --> 00:08:45,280 Speaker 1: is demanding it. April, how do how are you guys 156 00:08:45,320 --> 00:08:48,719 Speaker 1: what thinking about this? You know work from home phenomena 157 00:08:48,760 --> 00:08:52,160 Speaker 1: that's really just gained so much momentum during this pandemic 158 00:08:52,160 --> 00:08:56,440 Speaker 1: and many employees saying I'm just not coming back. What's 159 00:08:56,480 --> 00:08:57,920 Speaker 1: your policy right now and how do you think it 160 00:08:58,000 --> 00:09:03,360 Speaker 1: might evolve? Yeah, So from Micron, we UM we're your manufacturer, 161 00:09:03,440 --> 00:09:07,800 Speaker 1: so we design, develop, and manufacture memory and storage products. 162 00:09:07,840 --> 00:09:11,040 Speaker 1: So as you can imagine, we have a pretty diverse workforce. 163 00:09:11,520 --> 00:09:15,079 Speaker 1: We do have a population that has to be working 164 00:09:15,200 --> 00:09:19,760 Speaker 1: at a physical Micron location to manufacture our products. Uh. 165 00:09:19,920 --> 00:09:24,599 Speaker 1: We have a population of technical folks, research and development 166 00:09:25,000 --> 00:09:28,640 Speaker 1: team members who have to occasionally access the site. They 167 00:09:28,679 --> 00:09:31,160 Speaker 1: have to be in labs, they have to be testing 168 00:09:31,200 --> 00:09:34,120 Speaker 1: the product. They can do some of their work remotely, 169 00:09:34,320 --> 00:09:36,679 Speaker 1: but by and large they need to be on site. 170 00:09:36,720 --> 00:09:39,440 Speaker 1: And then we have a third population at Micron where 171 00:09:39,480 --> 00:09:42,160 Speaker 1: a lot of their work can be done flexibly. So 172 00:09:42,240 --> 00:09:46,640 Speaker 1: we've devised the strategy that really addresses all three populations 173 00:09:46,679 --> 00:09:50,880 Speaker 1: and allows the most flexibility for those different populations. You 174 00:09:50,920 --> 00:09:54,080 Speaker 1: do have to base it on the role on the work, UM, 175 00:09:54,200 --> 00:09:57,640 Speaker 1: and that's exactly what we've done. And and as I've mentioned, 176 00:09:57,960 --> 00:10:00,720 Speaker 1: you know, certainly there is a population, although I would 177 00:10:00,720 --> 00:10:03,880 Speaker 1: say it's a smaller population that wants to work fully 178 00:10:03,920 --> 00:10:07,120 Speaker 1: remote UM and and not come to a site. What 179 00:10:07,160 --> 00:10:11,440 Speaker 1: we're finding, UM is that people do want to be connected. 180 00:10:11,840 --> 00:10:15,040 Speaker 1: They just want flexibility and how they do it and 181 00:10:15,160 --> 00:10:17,840 Speaker 1: when they do it and where they do it. But 182 00:10:17,960 --> 00:10:20,959 Speaker 1: we are finding people still crave those social connections and 183 00:10:21,120 --> 00:10:23,880 Speaker 1: coming to work for part of the time in some 184 00:10:24,000 --> 00:10:26,960 Speaker 1: sort of hybrid arrangement for the roles that allow for 185 00:10:27,040 --> 00:10:30,880 Speaker 1: that is seeming to be the recipe for success. I'm 186 00:10:30,880 --> 00:10:33,480 Speaker 1: wondering if the skills are changing that are needed for 187 00:10:33,520 --> 00:10:36,920 Speaker 1: this workforce of the future. When you look at the 188 00:10:37,000 --> 00:10:40,440 Speaker 1: candidates in front of you for jobs, which are bound 189 00:10:40,480 --> 00:10:45,480 Speaker 1: to be the most successful. Yeah, I would to answer 190 00:10:45,559 --> 00:10:49,520 Speaker 1: your question directly to skills are absolutely changing. Uh, as 191 00:10:49,600 --> 00:10:52,160 Speaker 1: you know, as we look at candidates, the ones that 192 00:10:52,200 --> 00:10:55,480 Speaker 1: will be successful are the ones. Of course, you know, 193 00:10:55,840 --> 00:10:59,000 Speaker 1: technical capability is important, but what's even more important is 194 00:10:59,040 --> 00:11:02,120 Speaker 1: the ability to learn. Because we're not even able to 195 00:11:02,160 --> 00:11:05,400 Speaker 1: predict what skills someone might need, and three and five 196 00:11:05,480 --> 00:11:08,400 Speaker 1: years down the road, we know that the skills required 197 00:11:08,440 --> 00:11:12,040 Speaker 1: are changing so rapidly. We need to have the ability 198 00:11:12,080 --> 00:11:14,480 Speaker 1: to learn our our team members, our workforce has to 199 00:11:14,520 --> 00:11:17,360 Speaker 1: be able to pivot and be agile and adapt so 200 00:11:17,440 --> 00:11:21,080 Speaker 1: we can capitalize on market opportunities as they emerge. So 201 00:11:21,200 --> 00:11:25,560 Speaker 1: the ability to learn, the ability to collaborate and connect 202 00:11:25,600 --> 00:11:30,120 Speaker 1: with people so critically important. And this is again where diversity, 203 00:11:30,160 --> 00:11:34,000 Speaker 1: equality and exclusion UM. Making sure that your team members 204 00:11:34,080 --> 00:11:39,479 Speaker 1: are working together, collaboratively, respecting each other, leveraging each other's 205 00:11:39,640 --> 00:11:44,120 Speaker 1: strength UM to really innovate in in an incredible way. 206 00:11:44,280 --> 00:11:48,559 Speaker 1: It's really really important and why it's the foundation for Micron. 207 00:11:49,080 --> 00:11:53,480 Speaker 1: So I would say learning UM continuous learning critically important, 208 00:11:53,880 --> 00:11:58,960 Speaker 1: ability to communicate, collaborate very very important. And then of 209 00:11:58,960 --> 00:12:03,520 Speaker 1: course at MICROME, we need a strong pipeline of STEM 210 00:12:03,600 --> 00:12:09,240 Speaker 1: talent and we need students in the pipeline ready to 211 00:12:09,320 --> 00:12:13,520 Speaker 1: take on these tough challenges. So we have invested quite 212 00:12:13,520 --> 00:12:17,760 Speaker 1: a bit in that STEM pipeline. At micron UM, we're 213 00:12:17,800 --> 00:12:21,559 Speaker 1: committed to growing the pipeline of underrepresented talent and making 214 00:12:21,640 --> 00:12:25,079 Speaker 1: STEM education investments around the world. In fact, in f 215 00:12:25,280 --> 00:12:29,160 Speaker 1: y twenty one, Micron Foundation distributed more than seven million 216 00:12:29,160 --> 00:12:33,760 Speaker 1: dollars and grants targeting equitable access to STEM education and 217 00:12:33,800 --> 00:12:38,200 Speaker 1: basic human needs. So those types of investments to prepare 218 00:12:38,240 --> 00:12:42,800 Speaker 1: the workforce of the future are incredibly important. April, thank 219 00:12:42,840 --> 00:12:45,319 Speaker 1: you so much for joining us. Really fascinating stuff. There 220 00:12:45,400 --> 00:12:49,520 Speaker 1: is a corporate American global economies deal with some labor 221 00:12:49,520 --> 00:12:52,559 Speaker 1: shortages and certainly some skilled labor shortages across the board 222 00:12:52,600 --> 00:12:55,080 Speaker 1: as well for some of those tech companies. April Arts 223 00:12:55,080 --> 00:12:58,720 Speaker 1: and Chief People Officer Micron Technology. It's a Simil Trades 224 00:12:58,720 --> 00:13:01,880 Speaker 1: on the NAZAC MU. It's got about a hundred billion 225 00:13:01,920 --> 00:13:10,440 Speaker 1: dollar market cap. I'm wondering, you know, you gotta wonder, Paul, 226 00:13:10,480 --> 00:13:12,760 Speaker 1: how much the retail bidder is going to be the 227 00:13:12,800 --> 00:13:17,000 Speaker 1: marginal buyer in this market. Yeah, exactly, And it seems 228 00:13:17,280 --> 00:13:19,160 Speaker 1: like that, you know, we've seen in this pandemic and 229 00:13:19,280 --> 00:13:22,120 Speaker 1: with the meme stocks in particular, retailers with a lot 230 00:13:22,120 --> 00:13:25,920 Speaker 1: of these zero fee apps really jumping into the market 231 00:13:26,080 --> 00:13:28,520 Speaker 1: absolutely spend money on clothes or spend money on the 232 00:13:28,520 --> 00:13:31,520 Speaker 1: stock market. We're gonna talk now to David Luke's he's 233 00:13:31,559 --> 00:13:34,080 Speaker 1: the Site Center's president at CEO. He's going to talk 234 00:13:34,080 --> 00:13:38,520 Speaker 1: about holiday spending, retail supply, chain, bottlenecks. David, thank you 235 00:13:38,559 --> 00:13:42,920 Speaker 1: for joining us. Once we get past this holiday shopping season. 236 00:13:43,600 --> 00:13:47,239 Speaker 1: Is the buyer going to be there for these retailers. 237 00:13:48,760 --> 00:13:50,680 Speaker 1: It sure looks like it. I mean, they've showed up 238 00:13:50,720 --> 00:13:52,280 Speaker 1: quite a bit in the past couple of months. But 239 00:13:52,440 --> 00:13:54,719 Speaker 1: I guess you know, as you're saying, it's always nice 240 00:13:54,760 --> 00:13:57,160 Speaker 1: to look at the foot traffic and the holiday season, 241 00:13:57,200 --> 00:13:59,319 Speaker 1: but that that doesn't really tell you what happens to 242 00:13:59,320 --> 00:14:01,880 Speaker 1: the next ten years. I think what we're really seeing 243 00:14:02,000 --> 00:14:04,360 Speaker 1: is that the way people are shopping is a lot 244 00:14:04,480 --> 00:14:06,360 Speaker 1: different than it used to be. Uh and a lot 245 00:14:06,360 --> 00:14:08,719 Speaker 1: of retailers are making bets on what that future looks like, 246 00:14:09,800 --> 00:14:11,640 Speaker 1: all right, so David, that's kind of where I wanted 247 00:14:11,679 --> 00:14:14,360 Speaker 1: to go. As we've talked to, you know, retailers over 248 00:14:14,400 --> 00:14:16,920 Speaker 1: the years, there's been this obviously, this argument that the 249 00:14:17,040 --> 00:14:20,680 Speaker 1: United States is overstored, need to take out a lot 250 00:14:20,720 --> 00:14:23,880 Speaker 1: of stores out of the inventory. And and you at 251 00:14:23,960 --> 00:14:28,360 Speaker 1: site centers, you're a reat that focuses on these properties. 252 00:14:28,520 --> 00:14:32,000 Speaker 1: What's your view, Well, if you look at the data 253 00:14:32,040 --> 00:14:34,240 Speaker 1: and what's what's so nice about the sectors Now, we've 254 00:14:34,240 --> 00:14:37,200 Speaker 1: got very good mobile phone data that goes back five 255 00:14:37,280 --> 00:14:40,480 Speaker 1: or six years, and what you're seeing coming out of 256 00:14:40,520 --> 00:14:44,160 Speaker 1: the pandemic is that customer visits are up. In other words, 257 00:14:44,160 --> 00:14:46,920 Speaker 1: people are going to shopping centers more times per week. 258 00:14:47,560 --> 00:14:49,960 Speaker 1: But what's really interesting is they're spending less time there. 259 00:14:50,840 --> 00:14:52,440 Speaker 1: And so if you kind of stay back and say, well, 260 00:14:52,480 --> 00:14:54,640 Speaker 1: how how is that possible or why is that happening? 261 00:14:54,840 --> 00:14:58,000 Speaker 1: And I think the reasons are pretty clear. There's more 262 00:14:58,040 --> 00:15:00,920 Speaker 1: people in the suburbs, they have more money, and because 263 00:15:00,960 --> 00:15:04,200 Speaker 1: of this ongoing hybrid work, they're just around shopping the 264 00:15:04,200 --> 00:15:07,800 Speaker 1: centers more frequently. So they're using convenience trips to drive 265 00:15:07,840 --> 00:15:10,480 Speaker 1: a lot of sales. And the retailers are banking on this. 266 00:15:10,640 --> 00:15:12,880 Speaker 1: I mean, the the amount of leasing right now is 267 00:15:12,920 --> 00:15:16,280 Speaker 1: so much higher than it's been in twenty years. Retailers 268 00:15:16,280 --> 00:15:18,800 Speaker 1: are banking on the fact that these suburbs are going 269 00:15:18,840 --> 00:15:21,880 Speaker 1: to have people that are more approximate to properties long term, 270 00:15:21,920 --> 00:15:24,400 Speaker 1: and it's generate sales. Incredible. I grew up in Paramus, 271 00:15:24,400 --> 00:15:26,960 Speaker 1: New Jersey, which is, you know, the mall center of America, 272 00:15:27,640 --> 00:15:30,880 Speaker 1: and yeah, you know, I wonder here, how is this changing? 273 00:15:30,920 --> 00:15:35,400 Speaker 1: How are the suburbs really changing across the country. Which 274 00:15:35,960 --> 00:15:40,760 Speaker 1: areas are seeing the most traffic. Well, I think remember 275 00:15:40,760 --> 00:15:44,480 Speaker 1: in retail from a landlord perspective, there's two food groups. 276 00:15:44,520 --> 00:15:48,080 Speaker 1: There's fashion malls and then there's convenience properties. And the 277 00:15:48,080 --> 00:15:50,400 Speaker 1: fashion malls are more destination trips. Right. You go there 278 00:15:50,440 --> 00:15:52,080 Speaker 1: and you're looking for luxury goods and you might have 279 00:15:52,120 --> 00:15:54,480 Speaker 1: it might be a social event. It's not a social 280 00:15:54,480 --> 00:15:57,120 Speaker 1: event to go to a Walgreens or a grocery store. Um, 281 00:15:57,200 --> 00:15:59,760 Speaker 1: but that's what's generating a lot of the sales. Are 282 00:15:59,480 --> 00:16:03,080 Speaker 1: these big box chains, these national chains where you know, 283 00:16:03,160 --> 00:16:07,640 Speaker 1: seventy of the property is parking. So the convenience aspect 284 00:16:07,680 --> 00:16:10,920 Speaker 1: has become really really important. And I think in the suburbs. 285 00:16:11,000 --> 00:16:14,720 Speaker 1: You're seeing so much demand for housing. Um it's very 286 00:16:14,760 --> 00:16:18,080 Speaker 1: difficult to entitle and get land permits to build new 287 00:16:18,120 --> 00:16:20,760 Speaker 1: shopping centers, and so there's a very little construction for 288 00:16:20,800 --> 00:16:23,080 Speaker 1: the last ten years. And all of a sudden, the 289 00:16:23,120 --> 00:16:25,440 Speaker 1: retailers are saying, wait a minute, the customers are in 290 00:16:25,480 --> 00:16:28,640 Speaker 1: the suburbs three four, five days a week. They're making 291 00:16:28,680 --> 00:16:32,040 Speaker 1: trips throughout every weekday, which we can see. I mean 292 00:16:32,080 --> 00:16:34,440 Speaker 1: the new business lunch is that five guys in the suburbs. 293 00:16:34,480 --> 00:16:36,640 Speaker 1: It's not, as you know, a steakhouse in the city. 294 00:16:37,080 --> 00:16:39,360 Speaker 1: So um so. So you're seeing a lot of this 295 00:16:39,840 --> 00:16:42,000 Speaker 1: demand that just didn't exist a couple of years ago. 296 00:16:42,000 --> 00:16:44,440 Speaker 1: The same thing with dentists and doctors right there leaving 297 00:16:44,480 --> 00:16:47,040 Speaker 1: the cities. They're moving to the suburbs, and that's that's 298 00:16:47,240 --> 00:16:50,160 Speaker 1: sponsoring a lot of leasing demand. Hey David, real quick, 299 00:16:50,160 --> 00:16:52,400 Speaker 1: thirty seconds, just a question from one of our listeners. 300 00:16:52,560 --> 00:16:54,920 Speaker 1: M and a activity in a strip center space picked 301 00:16:54,960 --> 00:16:58,200 Speaker 1: up this year. You're expected to continue next year? Yeah? 302 00:16:58,360 --> 00:17:01,040 Speaker 1: Did there? You know there there were two companies that merge, 303 00:17:01,120 --> 00:17:03,120 Speaker 1: so we lost two reads in our sector, and then 304 00:17:03,120 --> 00:17:05,320 Speaker 1: there were two companies that I p owed. Um so 305 00:17:05,359 --> 00:17:08,680 Speaker 1: there were two new entrants. The reality is the private 306 00:17:08,720 --> 00:17:12,640 Speaker 1: market values on assets are higher than the public market pricing. 307 00:17:12,720 --> 00:17:14,800 Speaker 1: And whenever that happens, you know, you do have to 308 00:17:14,840 --> 00:17:18,360 Speaker 1: wonder if if either further m and A or take 309 00:17:18,400 --> 00:17:20,720 Speaker 1: private start to occur. So, if I had to bet, 310 00:17:20,760 --> 00:17:24,439 Speaker 1: I would say there's probably fewer publicly traded reads in 311 00:17:24,480 --> 00:17:27,320 Speaker 1: the next couple of years than there are now, just 312 00:17:27,320 --> 00:17:29,600 Speaker 1: because there's so much private capital looking for real estate. 313 00:17:30,240 --> 00:17:31,879 Speaker 1: All Right, David, thank you so much for joining us. 314 00:17:31,880 --> 00:17:35,320 Speaker 1: Really appreciate you taking the time. David Luke's chief investment 315 00:17:35,320 --> 00:17:39,280 Speaker 1: Officer and president of Site Centers ny SC listed stock 316 00:17:39,560 --> 00:17:45,960 Speaker 1: s I t C is the ticker there. Let's talk 317 00:17:46,240 --> 00:17:49,160 Speaker 1: retail sales. We only got a few more days shopping 318 00:17:49,240 --> 00:17:52,320 Speaker 1: days until Christmas, but I'm gonna talk about how you 319 00:17:52,359 --> 00:17:54,879 Speaker 1: actually pay for the stuff you buy. It used to 320 00:17:54,880 --> 00:17:58,239 Speaker 1: be cash, then credit debit cards. Now I just use 321 00:17:58,359 --> 00:18:01,840 Speaker 1: my phone. It's really changing. Um let's talk to video. 322 00:18:02,119 --> 00:18:05,960 Speaker 1: Peter's CEO of mar Ghetta Video. Thanks so much for 323 00:18:06,040 --> 00:18:08,600 Speaker 1: joining us here. Tell us what your company does, how 324 00:18:08,680 --> 00:18:14,399 Speaker 1: you fit into that supply chain of global retail. Thanks 325 00:18:14,400 --> 00:18:17,720 Speaker 1: for having me. Marcatta is the first modern card issuing platform, 326 00:18:17,800 --> 00:18:21,640 Speaker 1: we enable any disruptive company to build a payments card 327 00:18:21,720 --> 00:18:25,040 Speaker 1: of their choice. And so the specific example that you 328 00:18:25,160 --> 00:18:28,520 Speaker 1: shared is in the Buying Out pay leaders space. Many 329 00:18:28,600 --> 00:18:30,639 Speaker 1: of the leaders in the Buying Now paid leader space 330 00:18:30,840 --> 00:18:34,960 Speaker 1: use Marcatta to instantly issue a virtual card for their 331 00:18:35,000 --> 00:18:38,760 Speaker 1: customers while they're in the shopping checkout experience to pay 332 00:18:38,800 --> 00:18:41,280 Speaker 1: for their purchase over time. But you can think about 333 00:18:41,280 --> 00:18:44,520 Speaker 1: this card experience being used in non demand delivery by 334 00:18:44,720 --> 00:18:48,159 Speaker 1: crypto providers so that they can monetize their crypto holding. 335 00:18:48,840 --> 00:18:52,439 Speaker 1: It's used in digital banking, it's using industries across the world. 336 00:18:52,680 --> 00:18:54,360 Speaker 1: But very excited to talk to you a little bit 337 00:18:54,359 --> 00:18:58,400 Speaker 1: more about how it's impacting shopping this season for our consumers. 338 00:18:58,440 --> 00:19:01,480 Speaker 1: I'm glad you went there. I am so interested in 339 00:19:01,560 --> 00:19:04,600 Speaker 1: this by now pay later theme. You know, you do 340 00:19:04,800 --> 00:19:08,520 Speaker 1: have some companies that let you buy now, pay later 341 00:19:08,920 --> 00:19:12,080 Speaker 1: with your credit card, And I'm wondering if there are 342 00:19:12,119 --> 00:19:17,000 Speaker 1: any concerns here about customers really adding up their debtloads 343 00:19:17,040 --> 00:19:22,600 Speaker 1: here into the holiday season. You know, I think consumers 344 00:19:22,640 --> 00:19:26,240 Speaker 1: should always be very mindful about managing their cash flow, 345 00:19:26,680 --> 00:19:30,120 Speaker 1: about managing all of the financial obligations that they are 346 00:19:30,160 --> 00:19:33,600 Speaker 1: taking on across channels. That said, I think that by 347 00:19:33,640 --> 00:19:36,879 Speaker 1: Now pay Later is experiencing the same frenzy that we 348 00:19:36,920 --> 00:19:39,040 Speaker 1: saw on the credit card market a few decades ago 349 00:19:39,320 --> 00:19:41,680 Speaker 1: when people ask the question of gosh, is this discally 350 00:19:41,760 --> 00:19:45,239 Speaker 1: responsible for consumers to be buying on credit? And what 351 00:19:45,280 --> 00:19:49,440 Speaker 1: we're seeing decades later is that absolutely. It gives consumers 352 00:19:49,440 --> 00:19:53,359 Speaker 1: the flexibility and the optionality to pay on their own time, 353 00:19:54,240 --> 00:19:57,359 Speaker 1: using all of the options at their disposal. And what 354 00:19:57,440 --> 00:20:00,600 Speaker 1: by now pay Later does is give consumer is the 355 00:20:00,720 --> 00:20:04,400 Speaker 1: option to pay in installments over time, while the merchant 356 00:20:04,680 --> 00:20:07,280 Speaker 1: pays for that benefit to the buy now, pay later 357 00:20:07,359 --> 00:20:10,640 Speaker 1: providers because they now are able to attract a broader 358 00:20:10,680 --> 00:20:14,600 Speaker 1: swap of customers and to make that checkout experience as 359 00:20:14,640 --> 00:20:18,159 Speaker 1: seamless as possible. It's it's just another payment option. It 360 00:20:18,200 --> 00:20:21,280 Speaker 1: acts very differently from debit and credit, and consumers are 361 00:20:21,320 --> 00:20:26,280 Speaker 1: demanding it more now than ever. So how payment trends? 362 00:20:26,359 --> 00:20:29,720 Speaker 1: How are they trending these days? Video are people using 363 00:20:30,480 --> 00:20:36,240 Speaker 1: primarily credit cards, cash, buy now, pay later, crypto? How 364 00:20:36,400 --> 00:20:40,560 Speaker 1: the how are the trends right now? This is a 365 00:20:40,720 --> 00:20:45,200 Speaker 1: very rapidly changing space, and I think the COVID pandemic 366 00:20:45,280 --> 00:20:49,679 Speaker 1: has been probably the biggest accelerant in payments transformation. So 367 00:20:49,760 --> 00:20:52,040 Speaker 1: what we are seeing is that the use of cash 368 00:20:52,400 --> 00:20:56,320 Speaker 1: has dropped off dramatically, as you'd expect. It's a question 369 00:20:56,480 --> 00:20:59,399 Speaker 1: of safety and hygiene, but also just convenience that people 370 00:20:59,480 --> 00:21:02,200 Speaker 1: just don't want to deal with grubby cash. We are 371 00:21:02,280 --> 00:21:06,480 Speaker 1: seeing digital payment skyrocket and we are particularly seeing the 372 00:21:06,560 --> 00:21:09,880 Speaker 1: use of buying out paid leader grow by triple digits. Now, 373 00:21:09,920 --> 00:21:12,640 Speaker 1: a lot of experts thought this was a one time phenomenon, 374 00:21:13,040 --> 00:21:15,719 Speaker 1: it was a novelty of payments that would quickly fade. 375 00:21:16,040 --> 00:21:18,880 Speaker 1: And while we saw buy now pay Leader grow by 376 00:21:18,960 --> 00:21:22,360 Speaker 1: two hundred and fifty eight percent on Black Friday last year, 377 00:21:22,800 --> 00:21:25,400 Speaker 1: it continued to grow at triple digits this year too. 378 00:21:25,440 --> 00:21:27,239 Speaker 1: So this year on Black Friday, we saw buying our 379 00:21:27,280 --> 00:21:30,200 Speaker 1: pay leader volume and grow by a hundred and five percent, 380 00:21:30,800 --> 00:21:34,080 Speaker 1: and so it continues to be a huge way with 381 00:21:34,119 --> 00:21:37,200 Speaker 1: how consumers are demanding to pay. I'm wondering what other 382 00:21:37,320 --> 00:21:41,560 Speaker 1: changes you are seeing in terms of where people are shopping, 383 00:21:41,720 --> 00:21:44,359 Speaker 1: how they're paying for it. You work with so many 384 00:21:44,400 --> 00:21:48,000 Speaker 1: companies in the space that you probably have the cutting 385 00:21:48,080 --> 00:21:52,320 Speaker 1: edge here. So there are a few things that we're seeing. 386 00:21:52,520 --> 00:21:56,119 Speaker 1: Um One is that while Black Friday continues to be 387 00:21:56,119 --> 00:21:58,639 Speaker 1: a top shopping day. Another trend that we are seeing 388 00:21:58,720 --> 00:22:02,359 Speaker 1: is that Cyber Mondays started to drop off in its significance. 389 00:22:02,760 --> 00:22:06,120 Speaker 1: So usually what we saw was that Cyber Monday had 390 00:22:06,520 --> 00:22:09,520 Speaker 1: a pop of about seventy two when compared to Black 391 00:22:09,560 --> 00:22:12,320 Speaker 1: Friday about two years ago. That has dropped down by 392 00:22:12,320 --> 00:22:15,680 Speaker 1: about twenty points to roughly fifty five percent this year, 393 00:22:16,280 --> 00:22:19,600 Speaker 1: telling us that consumers are now spreading out their purchases, 394 00:22:19,960 --> 00:22:23,560 Speaker 1: not limiting it just to Cyber Monday. And also companies 395 00:22:23,600 --> 00:22:27,280 Speaker 1: are probably giving their promotions also the holiday season rather 396 00:22:27,320 --> 00:22:30,400 Speaker 1: than saving it just for Cyber Monday. The other trend 397 00:22:30,440 --> 00:22:34,440 Speaker 1: that we're seeing is that people are demanding for shopping 398 00:22:34,480 --> 00:22:38,040 Speaker 1: to be very seamless and a digital experience, and so 399 00:22:38,200 --> 00:22:41,440 Speaker 1: one of the customers that we have, Klarna, has built 400 00:22:41,480 --> 00:22:44,399 Speaker 1: a wonderful shopping app which allows you to shop hundreds 401 00:22:44,400 --> 00:22:47,520 Speaker 1: of merchants through their app, so you get customized rewards 402 00:22:47,680 --> 00:22:50,240 Speaker 1: all the while while you know by now and paying later. 403 00:22:51,480 --> 00:22:54,919 Speaker 1: Another phenomenon that work yeah sorry, go oh no, go 404 00:22:54,960 --> 00:22:59,760 Speaker 1: and continue please. Another phenomenon that we are seeing is 405 00:23:00,000 --> 00:23:03,439 Speaker 1: at the use of crypto obviously has been skyrocketing and 406 00:23:03,520 --> 00:23:07,000 Speaker 1: people aren't just investing in crypto for the sake of 407 00:23:07,040 --> 00:23:09,240 Speaker 1: the novelty, but they actually wanted to use it in 408 00:23:09,280 --> 00:23:11,280 Speaker 1: their day to day in lives. And so when you 409 00:23:11,320 --> 00:23:14,359 Speaker 1: look at company bl coin Base, they are building cards 410 00:23:14,359 --> 00:23:17,520 Speaker 1: on marketas platforms so that their customers can with the 411 00:23:17,560 --> 00:23:20,400 Speaker 1: swipe of their card, monetize their crypto holdings and pay 412 00:23:20,520 --> 00:23:23,240 Speaker 1: for a coffee at Strawbucks. So crypto is very much 413 00:23:23,320 --> 00:23:28,080 Speaker 1: entering mainstream life and not just being a novelty investment product. Interesting. 414 00:23:28,280 --> 00:23:30,240 Speaker 1: I guess that they had to come and here it 415 00:23:30,359 --> 00:23:34,680 Speaker 1: is video Peter's chief operating officer for Marquetta. Again, it's 416 00:23:34,720 --> 00:23:38,520 Speaker 1: a nastack listed company. Credit card issuing company under the 417 00:23:38,560 --> 00:23:42,480 Speaker 1: symbol m QUE became public this year. Dollars to share 418 00:23:42,480 --> 00:23:45,800 Speaker 1: now trade just about the eighteen dollars to share, So 419 00:23:46,080 --> 00:23:51,360 Speaker 1: take a look for that digital payments, retail. It's all changing. 420 00:23:52,359 --> 00:23:55,480 Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can 421 00:23:55,480 --> 00:23:59,280 Speaker 1: subscribe and listen to interviews of Apple podcasts or whatever 422 00:23:59,359 --> 00:24:03,040 Speaker 1: podcast platform you prefer. I'm Matt Miller, I'm on Twitter 423 00:24:03,280 --> 00:24:06,720 Speaker 1: at Matt Miller V three and I'm false Sweeney I'm 424 00:24:06,720 --> 00:24:09,360 Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can 425 00:24:09,400 --> 00:24:11,640 Speaker 1: always catch us worldwide at Bloomberg Radio.