Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app.
Speaker 1: Listen on demand wherever you get your podcasts, or watch
Speaker 1: us live on YouTube.
Speaker 2: We get lucky. Jay Hatfield joins us to get us
Speaker 2: the PPI here in a moment. I mean you're making
Speaker 2: a moment to moment in your note. You have an
Speaker 2: optimistic tone on the opening of the Gulf of our MOUs.
Speaker 2: You're beholden to whatever the headlines are. Like everyone else.
Speaker 3: What We've had a non consensus view that the Iranians
Speaker 3: would not come to the table, just using common sense.
Speaker 3: I didn't study Iranian studies at Wharton.
Speaker 2: But they've been.
Speaker 3: Warring with the US for forty seven years, So why
Speaker 3: all of a sudden, after we killed the top leaders
Speaker 3: that they go into capitulate. So we actually view this
Speaker 3: more aggressive move as bullish. We think the Strait's going
Speaker 3: to have to be reopened by force and it's going
Speaker 3: to require boots on the ground.
Speaker 4: Wow, okay, maybe we're moving there today. You've also got
Speaker 4: a nine thousand target on the SMP five hundred. That's
Speaker 4: non consents. How do you get there?
Speaker 3: Well, this is not an Internet style. You know aol
Speaker 3: time warners worth two thousand dollars. All we did is
Speaker 3: just mark our original forecast to market. So we're in
Speaker 3: an earnings bubble. And in fact, you have to be
Speaker 3: on SPX EEO Go Index Go every day because the
Speaker 3: twenty seven earnings are going up every day, so they're
Speaker 3: up twelve percent since we started very eight thousand tarks,
Speaker 3: so we're using twenty three times twenty seven to get
Speaker 3: to twenty three. You need lower rates, you need the
Speaker 3: war to end.
Speaker 2: And the interpolation that posts of the Dow, which I
Speaker 2: just did is now sixty one thousand, which is not
Speaker 2: in anybody's framework. When you say earnings bubble to find
Speaker 2: what the bubble is, is it not legitimate that the
Speaker 2: earnings will be there in eighteen months.
Speaker 3: No, it's just rising so fast you can't keep tracking it.
Speaker 2: It's a bubble that it's just moving, but it could
Speaker 2: be moving constructively with free caps development.
Speaker 3: Absolutely, and we're one hundred percent earnings given. So that's
Speaker 3: why we're bullish on the market.
Speaker 2: I got a time this to get to the PPI.
Speaker 2: But this is critical, Jay, with your wonderful foundational economics.
Speaker 2: The heart and soul of this is, for whatever reason,
Speaker 2: a buoyant nominal GDP which starts with okay revenues at least.
Speaker 3: Right, absolutely, although it's important to note that you don't
Speaker 3: need super strong GDP to get earnings growth. Earnings growth
Speaker 3: comes from retained earnings and strong return on investment capital.
Speaker 3: So most analysts are too negative bet earning because they say, oh, well,
Speaker 3: GDP's only one percent, so it doesn't really require a
Speaker 3: really reor best economy.
Speaker 2: I can't spell it, but Paul Sweeny pression here to
Speaker 2: say least we were talking about, like, is this the
Speaker 2: inflation top four point two percent? Select people, including Mic
Speaker 2: read RBC say no, And there's PPI final demand year
Speaker 2: over year six point zero, the next month survey six
Speaker 2: point four and it came into an enjoyable six point
Speaker 2: five percent. You know, I'm sorry, that's an inflation. It
Speaker 2: maybe only for one months, but there it is.
Speaker 5: How do you view inflation? Here? Is it?
Speaker 4: You know, to use a word that people don't like
Speaker 4: any more, transitory is or something more fundamental out there?
Speaker 3: Do you think, well, there's two critical leading indicators of
Speaker 3: inflation the money supply, which is negative, so we have
Speaker 3: a very very tight fed and oil prices which are
Speaker 3: horrendously higher. So not surprisingly it's bleeding through already the
Speaker 3: PPI that has not fled through to PC core yet,
Speaker 3: only in airline fares, which is the most obvious, but
Speaker 3: usually it bleeds through to everything. But surprisingly the pc
Speaker 3: core was really team because you are seeing some pandemic
Speaker 3: inflation come out like insurance. So we're still bullis we're
Speaker 3: going to get three cuts that as soon as the
Speaker 3: war ends, PCE should go close to target. And if
Speaker 3: also we have a competent FED chair now and he
Speaker 3: does adjust. He doesn't use our numbers. I guess he's
Speaker 3: not aware of him, but he does trim mean into
Speaker 3: other adjustments, because if you really look under the hood,
Speaker 3: PCE is a horrible, horrible measure. They don't use market rates,
Speaker 3: They impute a lot of rates. Shelter is just ridiculous.
Speaker 3: It should not exist. It's six months delayed on purpose,
Speaker 3: terrible measure of inflation.
Speaker 2: Jay's laughing. You can't see the folks on radio and YouTube.
Speaker 2: You can see that Alanis Moris set irony in his
Speaker 2: voice there. I mean, come on, Cleveland, the University of
Speaker 2: Michigan in Kansas City revolutionized how we measure inflation. And
Speaker 2: there's a select group out there stuck in a time
Speaker 2: long ago and far away. That's all there is to it.
Speaker 3: Absolutely complete, a horrible thing that caused our fed to
Speaker 3: completely miss the inflation of twenty one.
Speaker 2: I mean, Paul, I can't tell you the revolution. It
Speaker 2: was called Cleveland CPI, and there's gone to many other improvements.
Speaker 2: A guy named Matt Shapiro at Michigan O the Claudiusum studied, Yeah,
Speaker 2: among others.
Speaker 4: What do you make of a seventy five billion dollar IPL.
Speaker 2: Think, Well, we'll see.
Speaker 5: Did you get your allocation?
Speaker 3: We didn't indicate because we don't pay a lot of commissions,
Speaker 3: So we get a lot when the deal does poorly
Speaker 3: and get nine when it does well.
Speaker 2: So you got to play the commission, folks. That's the
Speaker 2: single smartest thing work continue.
Speaker 3: But so I think there's three people in the world
Speaker 3: who know we all work in equity capital markets at
Speaker 3: Golden Sacks. But our guests is there's more than seventy
Speaker 3: five billion a musk acolytes and if you look at Tesla,
Speaker 3: it's about three hundred percent overvalued in our models, and
Speaker 3: this is only about fifty percent overvalued, so it could
Speaker 3: double triple and I'll have that Musk premium out there.
Speaker 2: Unfortunately, Jay, I have to go to break. We got
Speaker 2: to get you back in here. S just to talk
Speaker 2: about what you two know far better than me, which
Speaker 2: is the body language of a transaction. In Paul, it's
Speaker 2: about future business, isn't it.
Speaker 5: Yeah?
Speaker 4: Oh yeah, and it's pain.
Speaker 6: You know.
Speaker 4: Jay doesn't pay commissions. He's not getting a love he He's.
Speaker 2: The loveless Jay Hatfield makes a smarter off inflation. Stay
Speaker 2: with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Apple Karplay and Android Otto with the Bloomberg Business app,
Speaker 1: or watch us live on YouTube.
Speaker 2: Ian stally sure that he could join us here international
Speaker 2: had fixed income. Thank you so much for joining us.
Speaker 2: This is this morning. The newsflow is just nuts. I
Speaker 2: was actually almost shaking yesterday coming out of the the studio.
Speaker 2: How do you how do you do a mid year review?
Speaker 2: Given this madness with difficulty.
Speaker 7: Look, there's this huge amounts going on, and actually I
Speaker 7: think the market's very well behaved.
Speaker 2: Yep.
Speaker 7: So if you look at everything that it's been thrown
Speaker 7: at it, whether it's the oil price moves, whether it's
Speaker 7: now the expectation of central banks possibly hiking rates. Obviously
Speaker 7: ECB is going to start that process.
Speaker 5: Today.
Speaker 7: Market's very well behaved. And you know, even though we've
Speaker 7: seen yields move significantly higher on kind of core fixed income,
Speaker 7: you're talking thirty five basis points. Also on the ten
Speaker 7: year treasury. I look at a US agg today, it's flat. Yeah,
Speaker 7: And that benefit of having that yield that carry you know,
Speaker 7: steep yeeld curves or upward sloping year curves, maybe not
Speaker 7: that steep. It's all beneficial. So actually, the actual overall
Speaker 7: impact that the market hasn't been as dramatic as maybe
Speaker 7: was feared come and a first of March when it's
Speaker 7: all kicked off.
Speaker 4: How much credit risk are you taking at there in
Speaker 4: the marketplace? And well, you can sit there in a
Speaker 4: US treasure you can get hit a very nice coupon
Speaker 4: these days, you can do.
Speaker 7: But you can get an even nicer coopon Okay, in
Speaker 7: credit and I think what we've learned over the sort
Speaker 7: of you know, Q one is that corporates are in
Speaker 7: pretty good health. You know, corporate fundamentals look great. Everything
Speaker 7: that when I talk to all of our credit analysts
Speaker 7: I hear is the corporate America and actually corporates around
Speaker 7: the world are in a pretty good spot. So yes,
Speaker 7: I fully understand that spreads are tight and everyone's looking
Speaker 7: at that, but I don't see a real risk of
Speaker 7: a big widening there unless you're talking recession, and again
Speaker 7: that feels a long way off, even with oil doing
Speaker 7: what what oil has been doing.
Speaker 4: The Federal Reserve, we're going to hear from them next week.
Speaker 4: I mean, presumably this our US Federal Reserve chair has
Speaker 4: some pressure to cut rates, but the data is just
Speaker 4: not there, is it.
Speaker 7: No, definitely not. So I think, you know, you saw
Speaker 7: the move start at the last meeting. They're going to
Speaker 7: have more of a neutral bias. I think, you know,
Speaker 7: the labor market is obviously in a better position. I
Speaker 7: go back and look at where we were in February.
Speaker 7: The three month run rate for non farm jobs was
Speaker 7: actually marginally negative. We're now one hundred and eighty eight thousand,
Speaker 7: and again if you look at them sort of the
Speaker 7: mosaic of labor data and not everything's pointing, you know, flashing,
Speaker 7: flashing green. If you look at the unemployment rate, obviously
Speaker 7: that's stable. If you look at wage growth, that's not reaccelerating.
Speaker 7: Some of the small business surveys, tensions to hire aren't
Speaker 7: looking great. But there's there's no question that we've seen
Speaker 7: a bit of a looks like we've seen a bit
Speaker 7: of a pickup. So for me, you know, from a
Speaker 7: credibility standpoint, I think we've got to be neutral.
Speaker 2: Instantly with this international I have a fixed income at
Speaker 2: JP Morgan this morning, you go into endless meetings. Is
Speaker 2: there an appetite for bonds with all this issue and
Speaker 2: the tech thing and you know SpaceX and all that,
Speaker 2: But is there is there just still in a wall
Speaker 2: of international money looking for a warm spot and bills,
Speaker 2: notes and bonds.
Speaker 5: I think there is.
Speaker 7: You just need to look at the huge amounts of
Speaker 7: supply that we've had in the US corporate mark.
Speaker 5: Exactly this year. It's all been very well observed.
Speaker 7: Kelsey Bureau has aged ke never ages no, but you
Speaker 7: just look at it and we see it from our
Speaker 7: client base. Everyone wants to own the fixed income market
Speaker 7: with yields where they are. Everyone's sitting on too much
Speaker 7: cash at the moment, and we're seeing that flow come in.
Speaker 7: And I think the market as a whole when I
Speaker 7: look at the demand for the issuance within the corporate space,
Speaker 7: the concessions are small, the demand the over subscriptions are elevated.
Speaker 7: There's phenomenal demand of bonds out there.
Speaker 2: This to me is just a huge deal. Is you know,
Speaker 2: Scarlett Truez talking eight trillion in money market funds and
Speaker 2: the question to me is like, Okay, do they go
Speaker 2: to a cash equivalent And the answer is no, they're
Speaker 2: looking at the Sweeney out there.
Speaker 4: Yeah, two percent? You have four point one two percent Europe.
Speaker 4: What's the fixed income call in Europe these days?
Speaker 7: So we've had a big shift in market expectations in Europe.
Speaker 7: The US is actually is catching up a little bit now.
Speaker 7: But obviously that the sort of the highlight of where
Speaker 7: the problem was was Europe UK massive repricing in the
Speaker 7: front ends very early on in the conflict. I think
Speaker 7: there's some value to be had there. I think ECV
Speaker 7: obviously they're going to hike rates today. I'm not sure
Speaker 7: they're going to be able to hike rates three times
Speaker 7: over the next year or so. And I think talks
Speaker 7: to the Bank of England, they're not that keen on
Speaker 7: hiking hiking rates.
Speaker 5: They see this more.
Speaker 7: You know, Yes, it's a near term inflation shop, but
Speaker 7: it's a tax and an economies that aren't particularly strong
Speaker 7: at the moment. They haven't got all the good stuff
Speaker 7: you've got over here when AI tech what's really driving
Speaker 7: driving the economy? So for me, yes, the market's repriced,
Speaker 7: but I think there's a bit of an opportunity there.
Speaker 2: Harry McGuire, are you kid me? Did he just lose
Speaker 2: out on the England team because of his age? Is
Speaker 2: it just that simple?
Speaker 7: I think he should be there.
Speaker 2: Should he's done enough? Absolutely disgusted?
Speaker 5: Is that right?
Speaker 2: Religion over there? Right?
Speaker 5: I don't.
Speaker 2: I mean a lot of people were left off the team.
Speaker 2: I mean there's a real shock in England, isn't there?
Speaker 5: There has been.
Speaker 7: I think ultimately you've got a manager that wants the
Speaker 7: team as a whole to do well rather than individual players.
Speaker 7: So let's see if that works out.
Speaker 4: So what is the expectation in England for your team
Speaker 4: this year?
Speaker 7: I think it's difficult to look away from France in
Speaker 7: all honesty, but you guys, look, we've got a very
Speaker 7: good team, you know, on that day, I think they
Speaker 7: can probably be anyone so pretty excited about it.
Speaker 4: I don't even know what the feeling is for the
Speaker 4: US team, Like, are we what we're getting there? What
Speaker 4: are the expectations?
Speaker 2: We're doing three teams a day. Christmas we'll be talking.
Speaker 2: It's turned to do are you really just like you
Speaker 2: over here just to see the World Cup? Is that
Speaker 2: you know? Did you just bring a deal here with
Speaker 2: Mary or nose or something here.
Speaker 7: To I'm flying home this evening. Unfortunately in our first
Speaker 7: game is not still next week, so that's not the case.
Speaker 2: Get one more in here.
Speaker 4: So what are we doing here outside of the US,
Speaker 4: outside of Europe?
Speaker 5: Talk to us about Asia?
Speaker 4: What's the call there from your perspective, because I mean,
Speaker 4: we've hear a lot of concern about energy for that
Speaker 4: part of the world, given what's going on.
Speaker 7: With Yeah, and I think if you think maybe maybe
Speaker 7: Europe's in the spotlight, Asia is probably even more so
Speaker 7: in the spotlight from from an energy standpoint, And actually
Speaker 7: what you had there was very very low yields to
Speaker 7: start with. Now the central banks have tried to sort
Speaker 7: of maybe avoid having to move and they're now playing
Speaker 7: a bit of catch up if you look at what's
Speaker 7: happened in sort of Indonesia, although there's there's other kind
Speaker 7: of political ramifications that are going on there, So I
Speaker 7: do think that's a more challenging environment for us. Though
Speaker 7: when I look across other parts of emerging markets, if
Speaker 7: I look at sort of latter and the Brazils and
Speaker 7: New Mexico's, well that's where that's where we see the
Speaker 7: opportunity to get much more attractive nominal yields, much more
Speaker 7: attractive real yields than you can get over in Asia.
Speaker 2: Within the politics of the United Kingdom, I haven't talked
Speaker 2: to France in like quite a week so and not
Speaker 2: at the speed on this, but we have a headline
Speaker 2: here across the Bloomberg out of Queen Victoria's Street in London.
Speaker 2: The Secretary Heally has resigned from the Starmar government, the
Speaker 2: Defense Secretary here. I don't want you to do the
Speaker 2: International Relations Act, that's not appropriate with compliance, but what
Speaker 2: is a state of guilt? Does JP Morgan look at
Speaker 2: the trauma of UK politics in say UK Full Faith
Speaker 2: and Credit paper is an opportunity here.
Speaker 7: I think there is an opportunity with in the guilt market. Ultimately,
Speaker 7: there is definitely political questions coming up. We're obviously got
Speaker 7: the by election and ultimately that's probably going to lead to,
Speaker 7: you know, a possible shift in leadership, and the market's
Speaker 7: very focused on what that would mean for the guilt market. Ultimately,
Speaker 7: we're you know, an economy at the moment that has
Speaker 7: a lot of debt and how will the fiscal rules
Speaker 7: be adhered adhere to? But I think what we've heard
Speaker 7: is that there's not much wiggle room, you know, the
Speaker 7: UK government is going to have to sort of, you know,
Speaker 7: all in line with what the markets is is after
Speaker 7: your guilts do look attractive relative to other core fixed
Speaker 7: income markets around the world, but there's going to be
Speaker 7: some volatility as we go through these political headlines.
Speaker 2: Your first three games are Croatia, Ghana and Panama.
Speaker 5: That's not easy.
Speaker 2: Who made the schedule of the king.
Speaker 7: Croatia could be a tough game.
Speaker 5: Yeah, an interesting opener, YEP.
Speaker 2: I agree, I'm watching it.
Speaker 5: I think it's gonna be good here. I think are
Speaker 5: faking this, like.
Speaker 2: Still no idea. The level of dumbness here, Yeah, I'd
Speaker 2: be Christy. I'm a I'm a Tots fan. That's dumb,
Speaker 2: Dumbiami and Steely, thank you so much for Chicken Morgan.
Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Otto with the bloombergs us up, or
Speaker 1: watch us live on YouTube.
Speaker 2: This is my conversation of the day. No question about
Speaker 2: a Bailey Lipschaltz with this. Senior reporter of Bloomberg News
Speaker 2: barely describes his competency on the IPO dynamics going on
Speaker 2: right now. In your wonderful story this morning, there's a
Speaker 2: single sentence and on the back of it you link
Speaker 2: open Ai and anthropic in the Wall Street Journal bombshell
Speaker 2: on pricing of tokens, and you bring that over to
Speaker 2: rocket ships and Elon Musk. How in God's name do you.
Speaker 8: Do that working hard in a lot of coffee, I guess,
Speaker 8: but I mean, Tom, this is something we've been waiting for.
Speaker 8: Everyone's been waiting for any of these companies to go public.
Speaker 8: Anthropics obviously much younger than SpaceX, which is more than
Speaker 8: two decades old. But this is the moment we've been
Speaker 8: waiting for, and we're going to see how this actually
Speaker 8: shakes out today, tomorrow, and through the next few weeks.
Speaker 2: The common theme is nobody's making megda desiah Ls's keyword
Speaker 2: profit where on the xxs.
Speaker 8: Is profit for the companies for all of them. Well, so,
Speaker 8: SpaceX before it merged with Xai elon Musk kind of
Speaker 8: x Twitter rock component, the company was quite profitable. They
Speaker 8: dominate launch. They essentially have a space monopoly. Now, analysts
Speaker 8: aren't expecting free cash flow positivity for a number of years.
Speaker 8: Anthropic on their latest run rate Bloomberg reported that they
Speaker 8: actually are a profitable on a monthly basis. What does
Speaker 8: that mean for an annual basis TBD And I think
Speaker 8: open Ai, depending who you talk to, is a much
Speaker 8: more long term thesis for that company to really turn profitable.
Speaker 4: SpaceX we have a fixed price for the IPO. It
Speaker 4: was one hundred and thirty five. What's the thought here?
Speaker 4: Are we going to price at that number below it
Speaker 4: above it?
Speaker 8: Our expectation is this price is sticking to it, size
Speaker 8: is sticking to it. Elon Musk and the team at
Speaker 8: SpaceX came out and treated it kind of like a
Speaker 8: private fundraising ground and said we're raising money.
Speaker 5: We're raising seventy five billion, Are you in?
Speaker 2: Are you out?
Speaker 8: One point seven to seven trillion? Show us what you
Speaker 8: want and that's the expectation. So it's going to be
Speaker 8: an interesting dynamic how they allocate the shares later today
Speaker 8: and then what we see with trading tomorrow.
Speaker 4: Do we think we're going to have any surprising investors,
Speaker 4: whether it's a technology company, a list private equity firm,
Speaker 4: or is it just going to be a run of
Speaker 4: the middle institutional IPO with some retail component.
Speaker 8: I think there's a lot of interest if there is
Speaker 8: a strategic component, just given the announcements we've seen between
Speaker 8: the company and anthropic companies, a Google.
Speaker 4: For example, might to step in and buy something.
Speaker 2: Here at the IPO. Yeah.
Speaker 5: Yeah, we saw that with core Weave.
Speaker 8: Core Weave's IPO really only happened because Nvidia showed up
Speaker 8: in huge size and was able to get that deal
Speaker 8: done because there's such a close partner. So that's just
Speaker 8: another dynamic track.
Speaker 5: Now you've got to report out here today.
Speaker 4: From reporting, SpaceX tells investors it has lined up a
Speaker 4: blue chip credit ratings. Are they going to come to
Speaker 4: the botmarket after this?
Speaker 8: You?
Speaker 5: That is the expectation.
Speaker 8: One of the things we've been hearing is that there's
Speaker 8: a view from SpaceX that this is the only equity
Speaker 8: financing they will do. Everything from now on will be kay.
Speaker 8: So the expectation in these meetings is we've got ig
Speaker 8: rating from the three firms.
Speaker 5: We're going to tap the debt markets.
Speaker 8: We can do that no one else can from an
Speaker 8: AI perspective. When you look at some of the cell
Speaker 8: side expectations, hundreds of billions of dollars have to come
Speaker 8: from somewhere, so seemingly the debt market.
Speaker 2: What does the selling start? Like Toby Nangel and the
Speaker 2: Ft and Isabelle Leave for Bloomberg talked a lot about
Speaker 2: all the index dynamics and all that like restricted stock
Speaker 2: and other things. Maybe I understand in July, August, September,
Speaker 2: are there people out there ready to sell who are insiders?
Speaker 5: So they have an interesting lock up structure.
Speaker 8: After their second quarter earnings, which realistically could come anytime
Speaker 8: in July, they'll have a chunk of shares available for
Speaker 8: sale from early investors. If the stock meets certain thresholds,
Speaker 8: that number gets even higher as the time rolls on
Speaker 8: over that sixty eighty ninety day period, they're going to
Speaker 8: continue to kind of increase that float incrementally to try
Speaker 8: to make it so some of these dynamics with the
Speaker 8: Nasdaq one hundred inclusion, are less rocky, just because we
Speaker 8: know money will be flowing in fifteen trading days from
Speaker 8: tomorrow from the Nasdaq one hundred trying to match the
Speaker 8: buying and selling.
Speaker 4: Does Elon have a locked up I can't imagine him
Speaker 4: every see.
Speaker 5: It's locked up for over a year.
Speaker 8: But if you buy into the notion that SpaceX and
Speaker 8: Tesla are going to merge, he is super voting right,
Speaker 8: So there would be no incentive for Elon Musk if
Speaker 8: that's the vision to sell.
Speaker 2: It totally unfair and then there's no one listening. So
Speaker 2: it's okay, Bailey, what's going to happen when it trades tomorrow?
Speaker 2: What's your single guess understanding? You could well be wrong,
Speaker 2: but what's the Bailey Lipshal's guess on what the stock does?
Speaker 5: It goes up?
Speaker 8: Wall Street needs this deal to work because of the
Speaker 8: companies that they want to and need to take public
Speaker 8: later this year. Wall Street needs this steal to work
Speaker 8: because the company needs to raise a heck of a
Speaker 8: lot of money to build out space infrastructure, to build
Speaker 8: out AI infrastructure. This is a deal that people need
Speaker 8: to make money on. People need to have trade well
Speaker 8: day one. The interesting dynamic is this is a deal
Speaker 8: that was pitched globally. It's going to open. Call it
Speaker 8: one or two o'clock on a Friday. If you got
Speaker 8: allocated in Australia or Japan, you're not pretending unless you're
Speaker 8: pulling on all nier. This doesn't really impact your until Monday,
Speaker 8: so who knows what the weekend?
Speaker 5: That's right, I have.
Speaker 2: Jim Chainos tomorrow and Bloomberg money. I think of Georgia
Speaker 2: and Noble working with Peter Lynch at FIDELDI. They are
Speaker 2: to be polite, scathing. How would mister Musk respond to
Speaker 2: experienced intelligent people going you gotta be kidnaping?
Speaker 8: They would He would probably point at Tesla and say,
Speaker 8: look what I've done with Tesla.
Speaker 2: Look to the chart yesterday. The vector on Tesla's up.
Speaker 5: This is a company.
Speaker 8: Tesla is a company that has been valued at north
Speaker 8: of one and a half trillion dollars on the expectation
Speaker 8: that robotaxis and robots are something we all live with
Speaker 8: in the next five years.
Speaker 5: It's not a car company came out.
Speaker 2: Carver published yesterday that fifty nine robotaxis are in three cities.
Speaker 2: That's it.
Speaker 8: Fundamentals don't align with this company, and it hasn't with Tesla.
Speaker 2: We'll lend it right. There're the smartest thing I've heard
Speaker 2: of the entire thing. Stay with us. More from Bloomberg
Speaker 2: Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on
Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 2: Julia Wilson joins US now principal consumer retail Strategy and
Speaker 2: why in God's name is the four of The biggest
Speaker 2: thing going part of your consumer act is beauty. We
Speaker 2: were talking to Alexis helping here and I said, at
Speaker 2: the Dinagram table, says Clarence still a big deal and
Speaker 2: nobody knew what Clarence was. Your world of beauty the
Speaker 2: money of lotion. It's nuts, right.
Speaker 6: It's definitely nuts. It speaks to the summer of experience.
Speaker 6: And you can never underestimate the American consumer when it
Speaker 6: comes to spending.
Speaker 2: So and skincare fifty six bottles, tip a toad on
Speaker 2: the sink in the bathroom. How did we get there?
Speaker 6: Well, you know, it's interesting who's buying it and who's
Speaker 6: actually building up that volume. It's not just the teenage
Speaker 6: younger Alpha generation females are buying it, but you're seeing
Speaker 6: it expand across all segments and demographics.
Speaker 5: So so you mean guys are buying it, dies are buying.
Speaker 6: If you look at their their medicine cabinet, it's not
Speaker 6: the same soap for your hair anymore.
Speaker 5: Fragrances, I'm sorry to well, I have sons too, and
Speaker 5: I know, I.
Speaker 4: Know, yeah, we like when my sons were living in home,
Speaker 4: the axe was all over the place.
Speaker 5: Remember acts, Oh they move beyond acts now, I know
Speaker 5: what are they? What are people doing the summer?
Speaker 4: Are people traveling the summer? I'm going to got gas
Speaker 4: at four dollars and thirty cents. I don't know. I
Speaker 4: get airline fares going higher? Are traveling this summer.
Speaker 6: You know, the US consumer is very similar to the Knicks,
Speaker 6: and they're very resilient. So there's there's definitely that disconnect
Speaker 6: that you see with some of the signals. There's a
Speaker 6: little bit softness in the belly, so to speak, of
Speaker 6: the US economy, but the consumer is still out there spending.
Speaker 5: The way that I think about.
Speaker 6: It is we're about to host a really big party.
Speaker 5: That's right, and so far what you see.
Speaker 6: One of the things that I took away from.
Speaker 5: The jobs report yesterday earlier this week was.
Speaker 6: That seventy thousand of those jobs are actually related to
Speaker 6: the you know, the the act of hotel tourism, et cetera.
Speaker 6: And so people have jobs, they are spending on things
Speaker 6: that go along with hosting a party, which is putting
Speaker 6: on makeup, getting closed. You think about the summer spending
Speaker 6: spree that we had, an apparel was also pretty strong.
Speaker 4: So I mean, overall the consumer, How do you see
Speaker 4: the k shaped economy from your work in terms of
Speaker 4: how people spend money? How do you guys keep him?
Speaker 4: How do you guys think about it?
Speaker 6: Yeah, so the luxury consumer, you know, if you think
Speaker 6: about what is luxury but someplace to hold your dream,
Speaker 6: so to speak. I would see someone yesterday and they
Speaker 6: use that expression, so, you know, thinking about who do
Speaker 6: I want to be, and the luxury beauty in particular
Speaker 6: is a form of self expression. They're still spending really
Speaker 6: big on that, and they're spending in areas that you
Speaker 6: would see it more in the wellness so wellnification of
Speaker 6: all the different categ wellnification, it's hard to it doesn't
Speaker 6: come across here to be able.
Speaker 5: To come up with these names.
Speaker 6: I know that actually came from when I was at
Speaker 6: the Beauty Independent. That was one of the terms that
Speaker 6: they came up with. But the US consumer, the luxury
Speaker 6: in particular, is doing well and they're being really they're
Speaker 6: still being choiceful about, you know, where do I want
Speaker 6: to spend, whether it's on neurotoxins or some of these
Speaker 6: really big ticket items that are almost experienced based. But
Speaker 6: then on the case shape there are people where you know,
Speaker 6: you mentioned the gas crisis, so the average consumer on
Speaker 6: average was spending about two hundred dollars on gas and
Speaker 6: they're spending about two hundred and thirty, so it is
Speaker 6: a much bigger portion of their budget, so to speak,
Speaker 6: and they are making those choices. You know, private labels
Speaker 6: always an area that if you have faith and conviction
Speaker 6: in that product and you believe in it, you're willing
Speaker 6: to trade down more easily. But it happens across the
Speaker 6: demographic segments. So as you think about I might go
Speaker 6: for a more luxury lip gloss, but then I feel
Speaker 6: perfectly comfortable with the mass haircare. So you're making those
Speaker 6: choices in and out of consumer segment.
Speaker 2: Julie Wilson with this principle and consumer retail strategy all
Speaker 2: the beauty stuff out there KPMG. So with KPMG, you
Speaker 2: go out and talk to companies, what makes them lean forward,
Speaker 2: What part of your act is where they really lean
Speaker 2: in and listen.
Speaker 6: For us, we're seeing companies really focus or continuing to
Speaker 6: focus on the three things that they've been focused on
Speaker 6: over the past two years, which is really portfolio simplification,
Speaker 6: so as fewer things, fewer things, and really focusing on
Speaker 6: what they do well. I see ORG design really related
Speaker 6: to AI. So translated, so if you think about AI
Speaker 6: is supposed to give companies this whole next level view
Speaker 6: of productivity. The way that you actually get that out
Speaker 6: is by redesigning your workforce it doesn't always mean fewer bodies.
Speaker 6: It could mean reshaping, upskilling, et cetera. So thinking about
Speaker 6: what is the org that's really going to take me
Speaker 6: into the future so I don't fall behind as the
Speaker 6: second area and then the last area that we're really
Speaker 6: seeing is still that cost because of gas prices in particular,
Speaker 6: and some of the other areas that are either direct
Speaker 6: inputs or indirect inputs into their supply chain, we're still
Speaker 6: seeing people cut those AI.
Speaker 4: So for your clients, I think we're all and I
Speaker 4: think I speak for a lot of us, we're all
Speaker 4: just learning day by day what AI is, what it
Speaker 4: can do, how we should interact with it. Where do
Speaker 4: you think your companies are that you talk to at
Speaker 4: the board level, the c suite level, where are they
Speaker 4: kind of that whole AI?
Speaker 6: I would say it's still a bell shaped curse. So
Speaker 6: there's some that are leading the pack. There's still a
Speaker 6: whole bunch that are figuring things out and trying to
Speaker 6: understand where it could be most impactful, and there's some
Speaker 6: that are laggards. You know, KPMG, we had some of
Speaker 6: our leaders talking about the partnership that we did with
Speaker 6: Anthropic and you just see every next generation that we
Speaker 6: have is so much smarter. When I started using it,
Speaker 6: I thought you are a very hard working, but not
Speaker 6: the brightest analyst in you know, my team. When I
Speaker 6: think about what I was using even six months ago,
Speaker 6: when you start to see what you're doing now, the
Speaker 6: capability is amazing and you really think about that, the shape,
Speaker 6: the size and scope and shape of your organizations are
Speaker 6: totally different.
Speaker 8: Yeah.
Speaker 2: One final question here. I saw that Mike Ashley is
Speaker 2: going to buy the rest of Hugo Boss. Are we
Speaker 2: going to see a big industry roll up? I mean,
Speaker 2: as the bottom line is after COVID, the luxury trauma
Speaker 2: blah blah blah, that we're just going to see one
Speaker 2: ginormous roll up.
Speaker 6: Well, I think boards are pushing companies to think bigger.
Speaker 6: So we're seeing that across the board, but in particular
Speaker 6: in apparel. When you think about brands and what can
Speaker 6: I do to give those brands the operational leverage to
Speaker 6: be you know, affordable in the market, sometimes bigger is better.
Speaker 6: So you're going to see, you know, where the brand
Speaker 6: needs to lean in and have their own direct supply chain,
Speaker 6: where they need to tell their stories slightly differently, they're
Speaker 6: going to keep that separate. But when you're going to
Speaker 6: think about what is it that I could you know,
Speaker 6: band together, you know, paperboard, some of that secondary in
Speaker 6: tertiary packaging, those types of areas, you're going to see
Speaker 6: companies come together to get that scared.
Speaker 2: Julie thank is Julie Wilson with a KPMS. You just
Speaker 2: love heaven or get a huge turnout here to some
Speaker 2: of the things that we're pouring money into each in
Speaker 2: every day.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live each
Speaker 1: weekday seven to ten am Eastern on Bloomberg dot com,
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal.