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Speaker 2: All right, everybody, we just talked a little bit about
Speaker 2: the housing data. Certainly that we got here in the US,
Speaker 2: US housing starts unexpectedly surging in May by the most
Speaker 2: sins twenty sixteen. Applications to build increased, suggesting residential construction
Speaker 2: is on track to help fuel economic growth. In the UK,
Speaker 2: mat we've seen house prices fall about thirteen percent in
Speaker 2: real terms from March twenty twenty. Second that peak then,
Speaker 2: that's according to Bloomberg Economics our European economist nourrage Shaw.
Speaker 2: And then you certainly highlighted something about what's going on
Speaker 2: in Sweden specifically.
Speaker 3: Yeah, you're seeing real crisis there with real estate funds
Speaker 3: that are starting to fail, and we've had a couple
Speaker 3: of big failures there and in Chy also a real
Speaker 3: loss of confidence in owning property as a reliable or
Speaker 3: a safe asset. So globally, I think there's a real
Speaker 3: estate concern that made me wonder whether these housing starts
Speaker 3: aren't a little bit too speculative and it could mean
Speaker 3: maybe bad news down the road. But if you look
Speaker 3: at the share prices of you know, home builders, the homebuilders,
Speaker 3: they're doing incredibly well. So I guess investors aren't worried, all.
Speaker 2: Right, So let's get to it. Let's see what our
Speaker 2: team has to say. Bloomberg News Economics. That are Mollie
Speaker 2: Smith in our Interactive Brokers studio along with Bloomberg News
Speaker 2: reporter Simon and Foxman. So Molly kick it off for us.
Speaker 2: Talk about this housing data we got today. It seems
Speaker 2: really bullish. What does it really tell us?
Speaker 4: Yeah, and I think, you know, I can understand like
Speaker 4: a bit of like the hesitation on Matt's part there.
Speaker 4: But the thing is is, like when we're looking at
Speaker 4: housing sales data right now across the countries, that all
Speaker 4: the action has been with new home sales. So you
Speaker 4: can see that like builders are following that demand and
Speaker 4: breaking more ground on new construction because people who already
Speaker 4: are in their homes are so hesitant to lists. They've
Speaker 4: probably locked in low mortgage rates from a couple of
Speaker 4: years ago, and they have no interest in trying to
Speaker 4: back out of that right now. The lock in effects
Speaker 4: that we'd call it in the real estate world, So
Speaker 4: it makes a lot of sense from that perspective. Obviously,
Speaker 4: would want to see it more than on just one
Speaker 4: reading to see if this is a trend that would hold.
Speaker 4: But if it did, that'd be really positive for.
Speaker 3: Do we know how much of these starts are speculative?
Speaker 3: Do people still build on spec or is that a
Speaker 3: thing of two thousand and six.
Speaker 4: I can't tell that from this report at least, so
Speaker 4: I'm gonna stick quite on that one.
Speaker 2: No, it is interesting, right because we did talk about
Speaker 2: what Jay Powell had to say. Simone, come on in
Speaker 2: on it, because, first of all, on the US side
Speaker 2: of things, you cut up with I think the CEO
Speaker 2: of Lenar, is that correct.
Speaker 5: The chairman, Yeah, the executive chairman there, and he was
Speaker 5: talking about, you know, there is no desire by existing
Speaker 5: homeowners to leave the three four percent mortgage rates they have,
Speaker 5: But there are all these people that lived at home
Speaker 5: with their parents for a very long long time that
Speaker 5: are now finally getting around to having families. They want
Speaker 5: to move out, and there is simply no new stock
Speaker 5: and that is why you are seeing, particularly on the
Speaker 5: more affordable ends right of this piece, these new homes.
Speaker 5: There is a long term sort of generational shift here
Speaker 5: that we're likely to see in the next couple of years.
Speaker 5: Maybe we don't feel it for the next year or
Speaker 5: so as interest rates remain high, but you know when
Speaker 5: we move out of this, you know, there's a real
Speaker 5: affordability problem in US housing.
Speaker 3: And that's that son building starters, because every time I
Speaker 3: talk to somebody from a home building company, they're putting
Speaker 3: up McMansions, you know, because they say, yeah, we could
Speaker 3: do starters, but there's not as much of a profit
Speaker 3: margin in that as the bigger price tag homes.
Speaker 5: Yeah, I mean, look, it's a little bit on all sides. Right,
Speaker 5: you have this Barbelle effect of the people who want
Speaker 5: really expensive homes and the both millennials who are just
Speaker 5: starting out their first homes, as well as retirement aged people,
Speaker 5: the boomers who are now retiring who want the smaller stuff.
Speaker 5: And a lot of this is a zoning issue. It's
Speaker 5: not as much of a profit margin issue. They're just
Speaker 5: simply not allowed to build houses in so many places.
Speaker 5: And so you know, you hear Lenar. You hear a
Speaker 5: lot of the other home builders really appealing to cities
Speaker 5: and saying.
Speaker 2: This commodity land right right.
Speaker 5: Yes, these are small, these are maybe not these are
Speaker 5: affordable homes, yes, but these are strong buyers that are
Speaker 5: going to spend money in your town.
Speaker 2: So Molly come back in on, you know, in terms
Speaker 2: of housing data and how it applies to the to
Speaker 2: economic growth and how something like a housing starts number,
Speaker 2: we can think about it more broadly in terms of
Speaker 2: growth momentum.
Speaker 4: Sure, So this would be the part of GDP that
Speaker 4: we call residential investment. So when you look at some
Speaker 4: of the biggest drivers of GDP, obviously consumer spending is
Speaker 4: the biggest one by far, but residential investment not too
Speaker 4: far behind. And that's what's been a real drag on
Speaker 4: growth for the past two years, as we've seen home
Speaker 4: prices skyrocket and mortgage rates go up and just not
Speaker 4: a whole lot of moment menum in the housing market.
Speaker 4: But this would be if sustained right now. Obviously we're
Speaker 4: looking at for now the second quarter of growth, so
Speaker 4: this would be for the May data. We'd still have
Speaker 4: to incorporate April and June into that as well, but
Speaker 4: that would be if sustained the first positive contribution to
Speaker 4: from residential investment to GDP in two years.
Speaker 3: Why now, why do we see all these starts all
Speaker 3: of a sudden. I mean someone described it to me
Speaker 3: as an eleven sigma move, which I don't really know
Speaker 3: what that means, but I'm guessing it's like in terms
Speaker 3: of standard deviations, it's like amazing. I'm sure Tom Keane
Speaker 3: understands that. But it was higher than the new housing
Speaker 3: starts were higher than the highest estimate in our survey.
Speaker 3: So why all of a sudden this month?
Speaker 4: I think it takes time for some of these other
Speaker 4: data points to filter through. You know, home builder sentiment
Speaker 4: has slowly but surely been coming up, and it takes
Speaker 4: time to also break ground on projects, you know, to
Speaker 4: simone's point about the zoning concerns, and to find like
Speaker 4: where all of this land is going to come from.
Speaker 3: This doesn't just happen overnight.
Speaker 2: O Builders don't want to buy too if there's not
Speaker 2: going to be people to buy, they don't do that anymore.
Speaker 4: I think there was a lot of a too of
Speaker 4: waiting to see what was going to go on with
Speaker 4: mortgage rates and are they really going to stay this
Speaker 4: high all year? And are are we going to maybe
Speaker 4: start to see them come down as inflation is easing.
Speaker 4: And now that it's like all right, we're buckled in,
Speaker 4: we're maybe going to get to another two increases. People
Speaker 4: have kind of settled and realized that this rate is
Speaker 4: the new normal for now and or this might be better
Speaker 4: than this exactly.
Speaker 5: Yeah, new normal is certainly I think the phrase of
Speaker 5: the day. But if you want me to broaden this
Speaker 5: out a little bit to particularly Europe, which is feeling
Speaker 5: some of these same pains of interest rate increases, it's
Speaker 5: not every city that is seeing housing prices drop. You
Speaker 5: look at London, for example, home prices are actually up
Speaker 5: one point one percent year on year. There's simply, again
Speaker 5: as in the United States, some limited stock of housing.
Speaker 5: You have also the foreign buyer element that comes in
Speaker 5: in London. Madrid is the same way, up five percent
Speaker 5: year on year. At the same time, though, you're looking
Speaker 5: at places like Sweden where we've seen double digit drops
Speaker 5: in the home prices. So I think it's a really
Speaker 5: divergent story, you know, from city to city in Europe.
Speaker 5: Even though we're hearing all these you know, headlines about
Speaker 5: property woes. That's not consistent and state to the state
Speaker 5: in the US too.
Speaker 4: You know, you can't really speak about the US housing
Speaker 4: market as a whole country. You know, we look at
Speaker 4: San Francisco and that some location location location. Well you
Speaker 4: look at San Francisco and that's a much different picture
Speaker 4: from say Austin or Miami right now. So also tough
Speaker 4: to you know, paint it with a broadbrush.
Speaker 3: It's really interesting. I just wonder, you know, how sustainable
Speaker 3: the housing market here is, especially at these prices, with
Speaker 3: these rates. I know, Jay Powell said we hit a bottom,
Speaker 3: and if the Fed Chare says you hit a bottom,
Speaker 3: you might as well go ahead and buy. But it
Speaker 3: just seems like we could come sliding down. If those
Speaker 3: people are locked into their homes have to sell, they're
Speaker 3: going to have to expect accept much lower prices than
Speaker 3: they probably want.
Speaker 4: Sure, And yeah, and prices I mean have been coming
Speaker 4: down here at least, like you know, from the peak
Speaker 4: which was last year. So in that sense, like, yeah,
Speaker 4: that probably will happen. We'll get some more data on
Speaker 4: that this week, on the existing home sales data for
Speaker 4: May next week, so we'll get a new home sales data,
Speaker 4: and that's really, like I said, where more of the
Speaker 4: positive activity has been coming from.
Speaker 5: I think it feeds into this idea that there has
Speaker 5: to be something else in this economic downturn to really,
Speaker 5: you know, pull the floor out of housing, you either
Speaker 5: have to see a lot higher marchin interest rates or
Speaker 5: you have to see some commercial lending stress. I mean,
Speaker 5: that's kind of the concern we've seen in Sweden. You know,
Speaker 5: we were talking about SBB and these other they call
Speaker 5: fallen angels. A lot of them had a lot of
Speaker 5: exposure to the home market to rent to home rentals
Speaker 5: and that sort of thing and running these commercial real
Speaker 5: residential properties have been very impacted. But the concern there
Speaker 5: is that the banks have a lot of this on
Speaker 5: their books. And so then you know, if you have
Speaker 5: these fallen angels impacting the banking sector, then you see
Speaker 5: sort of another leg down and then you know where
Speaker 5: do we go from here? And you know there are
Speaker 5: green shoots in the Swedish housing market as well, are.
Speaker 2: The green shoots in China? What's your just kind of
Speaker 2: thirty second quip on that.
Speaker 5: I mean, it looks like and Bloomberg Intelligence has a
Speaker 5: great note about this cuts two interest rates aren't having
Speaker 5: the same bounce back factor in China that they used
Speaker 5: to have, and therefore, if home prices only go up
Speaker 5: five percent this year, that doesn't really isn't really helpful
Speaker 5: for all those people who have been betting that home
Speaker 5: prices would surge back.
Speaker 2: Well, it used to be a sure thing, right, like
Speaker 2: this whole idea of kind of creating some property wealth.
Speaker 5: And therefore you get this angsty consumer that doesn't want
Speaker 5: to spend because they've seen the value of they're at
Speaker 5: their you know, their assets, they're home, well, their wallets
Speaker 5: not increasing the way that they expected.
Speaker 3: I mean, I think the Chinese have to come in
Speaker 3: and do something about their property market, right, That's what
Speaker 3: everyone's waiting for, and they're not doing enough.
Speaker 2: So I think the assumption is right that that they
Speaker 2: will because that they always seem to come to the rescue.
Speaker 2: But but the things they used.
Speaker 5: Last night, the things they used last time, they're just
Speaker 5: not working as well. And how much more do you
Speaker 5: want to do?
Speaker 2: Molly thirty seconds FED Chairman J Powell up on Capitol
Speaker 2: Hill in terms of housing, are you watching out for
Speaker 2: anything just quickly?
Speaker 4: I don't know if that's so much the focus in
Speaker 4: the next two days. I think, you know, everyone was
Speaker 4: really still pretty surprised about the projections that we heard
Speaker 4: last week in the June in the new material that
Speaker 4: the FED released, So yeah, I would definitely want to
Speaker 4: hear like again, how do you kind of explain this
Speaker 4: message of why you paused at this meeting but you
Speaker 4: still see two more hikes for the year. I think
Speaker 4: that's still going to be the challenge in conveying that message.
Speaker 2: And did you mean skip? Come on, do you mean
Speaker 2: I mean?
Speaker 4: He said it's not a skip, so we can't call.
Speaker 2: It a We might finally get that answer on the
Speaker 2: Grateful Dead song too.
Speaker 3: I think, yeah, well, maybe I'll see him at the
Speaker 3: shows tomorrow and Thursday at Cityfield.
Speaker 2: Molly Smith, Simone Foxman of Bloomberg thank you guys so much.
Speaker 2: Bloomberg Business Week on Bloomberg Radio.
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Speaker 2: Sign Steel Delivered. Yeah that you could say of FedEx
Speaker 2: earnings as we continue to track that one in the aftermarket.
Speaker 2: I just want to pull it up on my Bloomberg
Speaker 2: because we did see it down.
Speaker 3: Four point six percent.
Speaker 6: There was a bug.
Speaker 3: There was a bug on the stream.
Speaker 2: It's down four point six percent, okay, and it's dragging
Speaker 2: UPS down as well, which is down about one and
Speaker 2: a quarter percent. They're not apples to apples, which is
Speaker 2: always important to point out when we talk about these
Speaker 2: two companies. Let's get to it though, with our man
Speaker 2: on the job when it comes to FedEx.
Speaker 3: And also joins us senior transport Logistics and shipping analysts
Speaker 3: at Bloomberg Intelligence and Lee. For those who aren't you
Speaker 3: know deep into this, what are the important differences between
Speaker 3: FedEx and UPS?
Speaker 6: One's purple and one's brown. Thank you very much, talking
Speaker 6: to you, see you later.
Speaker 2: No different.
Speaker 6: You know that there's a lot of differences. Obviously, First
Speaker 6: and foremost is a UPS is as a union UP
Speaker 6: they have their employees are unionized. They're representative by the Teamsters,
Speaker 6: where FedEx has a mix of UH employees and third
Speaker 6: party contractors. A lot of the folks that deliver for
Speaker 6: their ground network are really employed by small businesses that
Speaker 6: are independent contractors. And that's really the biggest difference. In
Speaker 6: Another difference is UPS started as a ground network and
Speaker 6: grew an air fleet, and FedEx started as an air
Speaker 6: fleet and then grew a ground network. So there are
Speaker 6: a little nuances behind that. And then also I would
Speaker 6: say one of the biggest differences is UPS started its
Speaker 6: transformation about three years earlier than fed X, and FedEx
Speaker 6: has been playing catch up to UPS. Carol Tomey, the
Speaker 6: CEO of a UPS, has done a fantastic job of
Speaker 6: really focusing on what's important for UPS, getting rid of
Speaker 6: unprofitable businesses, getting rid of the fat if you will.
Speaker 6: They got rid of their less than truckload business, which
Speaker 6: was marginally profitable and during good years, and so that
Speaker 6: has freed them up not only freed up capital, but
Speaker 6: also freed them to focus on what they do, I
Speaker 6: guess better than the LTL business.
Speaker 2: A woman named Carol, what's not to love? I'm just
Speaker 2: going to say, no, Hey, let's go back to fed
Speaker 2: X in terms of their.
Speaker 3: You were on CFO just now, weren't we we're talking
Speaker 3: about while we're we were talking about you. Yeah, but
Speaker 3: while we're on CFO, let's get back to FedEx and
Speaker 3: ask what the deal is, like Lens, I mean, was
Speaker 3: he planning to retire? As Scarlett points out, he's fairly youthful,
Speaker 3: and we noticed that he's only been the CFO since
Speaker 3: June of twenty twenty, So what's the deal.
Speaker 6: Yeah, I'm not really too sure about that. You know,
Speaker 6: he's been in the role for under three years, like
Speaker 6: you mentioned. You know, I don't really know if it's
Speaker 6: really a shake up of the c suite or if
Speaker 6: it's just you know, he just like said, I don't
Speaker 6: want to go play golf. I really don't know what
Speaker 6: the rationale is there. I think the movement on the
Speaker 6: stock really has nothing to do with the CFO announcement.
Speaker 6: It's really about the guidance. You know. This fourth quarter
Speaker 6: was was fine, nothing, you know, nothing to get excited about,
Speaker 6: nothing to get depressed about either. But you know, I
Speaker 6: think that people were expecting maybe a little better outlook.
Speaker 6: I think you guys mentioned earlier that the low end
Speaker 6: of the range is pretty far from you know, the
Speaker 6: where consensus is, and I think that people were looking
Speaker 6: for maybe slightly better earnings. But what I would say,
Speaker 6: I'm assuming that management there being extremely conservative, Uh, they
Speaker 6: had a track record, shall we say, of not executing.
Speaker 6: Uh So, I think they don't want to disappoint. So
Speaker 6: my guess is that they're they're they're coming in, coming
Speaker 6: in low and hoping to move up from there. But
Speaker 6: you know, they're they're really you know, there's things that
Speaker 6: that are within their control and there's a lot of
Speaker 6: things that are not within their control. Obviously, on the
Speaker 6: demand side, they're doing all the right things when it
Speaker 6: comes to pricing, they're doing they're starting to do all
Speaker 6: the right things in terms of the restructuring of their
Speaker 6: networks into one. You know, they announced that they're combining
Speaker 6: the ground and express in Canada. Obviously, you know that
Speaker 6: is a step in the right direction. This is going
Speaker 6: to be you know, this is going to take time.
Speaker 6: It's it's it's gonna you know, take a lot of
Speaker 6: time for them to make inroads on that, especially to
Speaker 6: do that for their whole global network. But what we
Speaker 6: should see is more freight moving through its ground network
Speaker 6: when it makes sense for the company, and that should
Speaker 6: should should should do well for margin.
Speaker 2: When a company FedEx or other puts out a twenty
Speaker 2: twenty four just at EPs of sixteen dollars fifty cents
Speaker 2: a share to eighteen dollars fifty cents a share. I
Speaker 2: mean that seems like a huge gap. I mean, should
Speaker 2: we see it as a huge gap? And is it
Speaker 2: just that they're so uncertain or how do how do
Speaker 2: you kind of analyze that?
Speaker 6: I don't really think so. I mean it's you know,
Speaker 6: we're talking we listen, we're talking about earnings per share
Speaker 6: in the teams. We're not talking about twenty cents, right,
Speaker 6: So obviously the dollar amount is going to be a
Speaker 6: lot higher. The percentage I don't think really is so
Speaker 6: out of whack with what a lot of other companies
Speaker 6: provide in terms of guidance. You know, I think to
Speaker 6: your point, there's a lot of uncertainty out there. You know,
Speaker 6: there's still a risk of a US recession. There's still
Speaker 6: we don't really know what's going on with China. You know,
Speaker 6: are they going to increase stimulus? Is that going to
Speaker 6: you know, help that economy? You know China. I'm sorry,
Speaker 6: FedEx is pretty big in China, so you know that's
Speaker 6: been kind of a drag on the on their results,
Speaker 6: kind of the slow reopening of China and the related
Speaker 6: Asian markets. So, you know, I think there's just a
Speaker 6: lot of uncertainty for them. You know, they don't know,
Speaker 6: like you know, they're going to try to combine these
Speaker 6: networks in certain regions. It could happen faster, it could
Speaker 6: happen slower. You know, there's a lot of unknowns out there.
Speaker 6: And of course, you know, the US economy there's still
Speaker 6: sixty five percent probability of going to recession, according consensus
Speaker 6: on the Bloomberg terminals, so you know, there's still that
Speaker 6: that they might have to contend with. You know, we've
Speaker 6: been in a freight recession for quite some time, you know,
Speaker 6: whether if you're talking about parcels, trucking, railroads, and that's
Speaker 6: really just a renormalizing from the shocks of the pandemic.
Speaker 6: Supply chains are finally getting back to normal. You know,
Speaker 6: rates are coming down across the board, no matter what
Speaker 6: mode you're talking about. Some have fallen a lot, a lot,
Speaker 6: some have just slowly declined because maybe they're not getting
Speaker 6: search arges or assessasorial fees. But you know, we are
Speaker 6: seeing a more normalizing of and of demand. So I
Speaker 6: think that's something to consider as well is FedEx.
Speaker 3: You think a better bell weather for the US economy
Speaker 3: than UPS or vice versa.
Speaker 6: Now, I think they're both the same. You know, I
Speaker 6: think they you know, I think they all cut pretty
Speaker 6: similar customers. The biggest, one big difference at UPS is
Speaker 6: Amazon is still a sizeable customer of UPS, where FedEx
Speaker 6: is pretty much doesn't really deal with with Amazon, you know,
Speaker 6: maybe on the margin, but it's really you know, UPS
Speaker 6: has been a service provider for Amazon still and one
Speaker 6: would just assume that's lower margin business just because of
Speaker 6: the scale, and UPS has you know, said they're they're
Speaker 6: looking to you know, maybe walk back that that that concentration.
Speaker 6: They still want Amazon to be a customer, but maybe
Speaker 6: not such a large percentage, and you know, we should
Speaker 6: see that probably decline over time. So I think that's
Speaker 6: that's another difference, you know, when we started the segment.
Speaker 6: But the end of the day, you know, I think
Speaker 6: they're both bell Weathers. The only thing that I would
Speaker 6: say is FedEx might be a little bit more all
Speaker 6: inclusive because they still have that less than truckload business
Speaker 6: that I mentioned that UPS divested in, and that business
Speaker 6: is usually associated with manufacturing and industrial. They do other
Speaker 6: things like consumer retail, you know, e commerce as well.
Speaker 6: But the majority of its manufacturing and industrial.
Speaker 2: How come FedEx has been such an outperformer versus UPS
Speaker 2: this year? UPS is up just shy of two percent.
Speaker 2: FedEx is up thirty three percent.
Speaker 6: Easy commps. They just underperformed for so long. They're finally
Speaker 6: getting their act together.
Speaker 3: I mean, if you look at the five year comp,
Speaker 3: UPS is killing it and FedEx is.
Speaker 2: Still so playing catch up here.
Speaker 7: As you said, the FedEx was so low last year.
Speaker 6: Yeah, for a number of issues that they've had a
Speaker 6: lot of issues with executing. And I think that you know,
Speaker 6: the streets finally say seeing that the company is finally
Speaker 6: realizing that it needs to trim the fat get more productive,
Speaker 6: and they have a plan for it, and let's just
Speaker 6: see if they execute.
Speaker 2: Hey, real quickly, just got about twenty five seconds, Lee,
Speaker 2: what's the number one top of mine question for the
Speaker 2: analyst call, at least for you.
Speaker 6: I you know, for me, you know, it's probably a
Speaker 6: network two o two point zero.
Speaker 7: You know, I would want to know a little more
Speaker 7: about what's going on in Canada, what the actual process is,
Speaker 7: what are the benchmarks that we can see over time,
Speaker 7: just to show that they're actually making progress, because again,
Speaker 7: FedEx was a story that it.
Speaker 6: Was not executing, and people want to not only they
Speaker 6: want to hear and see and feel in touch that
Speaker 6: they're executing. And and if people have that confidence, you know,
Speaker 6: FedEx is a great long term story because of all
Speaker 6: the things going.
Speaker 2: For another headline, FedEx fourth quarter Express. FedEx Express revenue
Speaker 2: for the fourth quarter ten point forty one billion versus
Speaker 2: an estimate of ten point seventy six billions. So just
Speaker 2: hair light, Lee Klaskow, thank you so much of our
Speaker 2: Bloomberg Intelligence team. Joining us on zoom in New Jersey.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.
Speaker 2: We're going to talk a little bit about kind of
Speaker 2: the HR environment because we've seen a small but growing
Speaker 2: list of big name companies, including black Rock, Disney, Chipottele.
Speaker 2: They are taking their return to office mandates up a notch,
Speaker 2: calling employees back to their desks four days a week.
Speaker 2: We've been calling it the rto creep in terms of
Speaker 2: getting people back to the office. We talk about this
Speaker 2: a lot. We talk also about how workers are interested
Speaker 2: in balance, they're also interested in wellness issues, so we
Speaker 2: thought we'd get into that a little bit.
Speaker 3: Mat I'm looking forward to you know, I've never been
Speaker 3: I've never worked from home. You never worked from oh
Speaker 3: you d During the pandemic, I went to the studio.
Speaker 3: I couldn't every single day. It just seemed a little
Speaker 3: bit difficult in my role on TV and we had
Speaker 3: a studio that was fully robotic in Berlin, so we
Speaker 3: just sent everybody else home and I was the only
Speaker 3: person in the office. However, I would love the opportunity
Speaker 3: to work from home every day because it would mean
Speaker 3: a totally different relationship with my household, with my daughter
Speaker 3: and my wife, and I feel like the work life
Speaker 3: balance that I could achieve working from home would be
Speaker 3: far better than the one I have to endure commuting
Speaker 3: into New York City every day.
Speaker 2: All Right, Well, I'm guess that our next guest has
Speaker 2: some thoughts on this. Hollymay's global chief human resources officer
Speaker 2: at the twenty eight billion dollar market cap company Walgreens
Speaker 2: boots alliance, and she joins us on zoom from Deerfield, Illinois. Holley,
Speaker 2: nice to have you here. We do have some strong
Speaker 2: thoughts on this and opinions, as you can tell. First up,
Speaker 2: I think most people do. First up, if you will,
Speaker 2: it's so great to have you here, talk to us
Speaker 2: if we may. On the general macro environment for hiring.
Speaker 2: What does it look like right now? Is the labor
Speaker 2: force still tight? Are you having to pay up? Or
Speaker 2: are things easy? What are you guys seeing.
Speaker 8: I really would say it depends on the area of
Speaker 8: the business where you're hiring. We're seeing things loosen up
Speaker 8: quite a bit, but there's still some competition and some
Speaker 8: key skill sets and areas.
Speaker 2: So it says to you it's not as tight as
Speaker 2: it was a year ago coming off the pandemic.
Speaker 8: Absolutely all right.
Speaker 2: Having said that, what are the things that workers want?
Speaker 2: You know Matt was talking about, Yeah, working from home.
Speaker 2: I did work from home during the pandemic and did
Speaker 2: my broadcast and it was kind of nice not to
Speaker 2: have to commute. I got two hours back of my life,
Speaker 2: which was kind of cool.
Speaker 3: That's it to me, that's the killer, it's the commute.
Speaker 2: So and I did the show in my office.
Speaker 3: We're next door to my house. That would be another story.
Speaker 8: So talk to us about what workers want, I think
Speaker 8: what you see as it varies from company to company,
Speaker 8: and that's something we've done at Walgreens. We've stayed really
Speaker 8: close to our people through focus groups, through our surveys,
Speaker 8: just to make sure we have a good understanding of
Speaker 8: what it is they're looking for, what it is they
Speaker 8: need in terms of remote work. We've really adopted in
Speaker 8: our support office a leader led hybrid philosophy, which means
Speaker 8: that really defining moments that matter depending on the area
Speaker 8: of the business. So in our support center, that could
Speaker 8: be a town hall, a moment to come in and socialize,
Speaker 8: to get your know your colleagues, so that when you
Speaker 8: do go remote on days where you work from home,
Speaker 8: that you know you've forged those relationships, so perhaps collaboration
Speaker 8: looks a little easier.
Speaker 3: So you have at Walgreens proclaimed a real commitment to
Speaker 3: improving mental health and well being. This is something that
Speaker 3: you know well. I hear a lot here at bloom
Speaker 3: as well. We care about your mental health, we care
Speaker 3: about your well being.
Speaker 6: Does that.
Speaker 3: Show results in terms of performance if you really do
Speaker 3: dedicate yourself to your employees' mental health and well being.
Speaker 3: Do they pay you back by being better workers in
Speaker 3: the long run.
Speaker 8: Well, I would say our vision and philosophy for our
Speaker 8: team members, which are our employees, is really to deliver
Speaker 8: for them as whole humans. Really to deliver for them
Speaker 8: on both the personal and the professional side. And we
Speaker 8: feel that when they can come to the office and
Speaker 8: really show up as their authentic selves and really connect
Speaker 8: with their leaders, that's when we're going to get the
Speaker 8: best performance out of them. So what we're looking at
Speaker 8: is delivering on their whole selves. So mental health is
Speaker 8: a big component of that. We introduced a new program
Speaker 8: called be Well Connected last year in May during Mental
Speaker 8: Health Awareness Month, where we really delivered a trio of
Speaker 8: solutions and platforms. Given we knew that our workforce, whether
Speaker 8: it be in our stores and our distribution centers, are
Speaker 8: in our support centers, needed to receive that support in
Speaker 8: very different ways, So we partnered with Journey Live for
Speaker 8: a series of mental health related classes and support. Indeflix
Speaker 8: is the second of those solutions, and then our EAP
Speaker 8: solution round that out as the third.
Speaker 2: Wait, so Holly break it down for so how does
Speaker 2: it work. You're partnering, So what does what does it
Speaker 2: mean for? Is it employees, younger employees or family members
Speaker 2: of employees? What does it really mean?
Speaker 8: It's for employees and their family members as well as
Speaker 8: there are larger communities and networks. So Journey Live as
Speaker 8: a great example, it's a web based is also an
Speaker 8: app solution that has these demand classes. They can also
Speaker 8: be experienced live on a variety of mental health related
Speaker 8: topics and we extend that membership to the app, that
Speaker 8: subscription service not only to the employees, all of their
Speaker 8: family members and their external networks of friends or different
Speaker 8: relationships that they might have. So with that, it's been
Speaker 8: a great partnership for us because they have really partnered
Speaker 8: in helping deliver customized content. So most recently we developed
Speaker 8: a class for pharmacists specifically, as well as for families,
Speaker 8: parents and caregivers of children with special needs. So we're
Speaker 8: listening to our people, we're trying to better understand their needs,
Speaker 8: and then we're delivering on that.
Speaker 2: So what made you, guys, Because forgive me, but there's
Speaker 2: lots of conversations about companies and theirs, their caring of
Speaker 2: wellness and for their employees. But what was it that
Speaker 2: made you guys said, it's not just talk anymore, it's
Speaker 2: something we had to do, did something and within the
Speaker 2: company or what was it? What was the final catalyst?
Speaker 2: And forgive me, just got about thirty seconds or so.
Speaker 4: Yes.
Speaker 8: Of course, with listening to our employees and also recognizing
Speaker 8: in a recent survey, we've seen that ninety percent of
Speaker 8: this country believes we're in a mental health crisis right now.
Speaker 8: So making sure we were delivering on that for our
Speaker 8: people and also ensuring we had solutions that met them where.
Speaker 9: They are, does it.
Speaker 2: Yeah, Okay, we'll have to continue this conversation because there's
Speaker 2: a lot that goes on around this. Holly, thank you
Speaker 2: so much. Really appreciate getting some time with you. Holly May.
Speaker 2: She's Global chief human Resources Officer at Walgreen's Boots Alliance
Speaker 2: on Zoom from Deerfield Illini. Would you really work at home?
Speaker 2: You seem to like coming to the office.
Speaker 3: Well, I do like having a separate environment to do
Speaker 3: my job. I just like I said, I don't like
Speaker 3: the commute, so I know it would save it would
Speaker 3: save me two hours a day of kind of frustration.
Speaker 3: And I'm when you're commuting, You're usually with a bunch
Speaker 3: of other people who also don't want to go where
Speaker 3: you're going.
Speaker 2: I'm on the show planning call for with you when
Speaker 2: you're on the in the car.
Speaker 6: The beeping in the Yeah.
Speaker 3: Beeping is a nice way to put it.
Speaker 2: Yeah, it is, brother mac.
Speaker 5: A journal.
Speaker 3: Now about you? Let me drive?
Speaker 4: Oh no, no, no, no, he's going to drive, honey, please,
Speaker 4: I'll do gravels.
Speaker 2: Let's wait, I want to drive.
Speaker 3: It's good question.
Speaker 1: This is the Drive to the Clothes. Do well? Brian
Speaker 1: young Don on Bluebird Radio.
Speaker 2: All right, everybody, we've got chest under eighteen minutes left
Speaker 2: to go until we wrap up the Tuesday Tree Carol
Speaker 2: Master along with Matthew Miller Mad of course in for Tim.
Speaker 2: Let's get to it.
Speaker 3: Let's drive to the clothes.
Speaker 2: Because I don't know Matt, we're for lows on the
Speaker 2: equity side of it.
Speaker 3: I'm pretty pumped actually, because our next guest is someone
Speaker 3: that I heard on Brian and Doug show. And you know,
Speaker 3: I go home and I listen to Brandon Doug Show,
Speaker 3: and when I hear a good guest, I like write
Speaker 3: it down in my car and then I try and
Speaker 3: steal on the next series. Yeah, so let's bring in
Speaker 3: David Trainer. I'm pretty pumped to have him on, chief
Speaker 3: executive officer at New Constructs. He joins us on Zoom
Speaker 3: Adam Nashville and David that I first heard you talking
Speaker 3: about I believe it was Tesla, and right now that
Speaker 3: that company is just ripping again. They're doing well because
Speaker 3: other carmakers have been forced to recognize, you know, the
Speaker 3: dominance of the Tesla supercharger network, and I wonder, you know,
Speaker 3: what's your what's your take on how important this is
Speaker 3: for the growth of evs and for the global car market.
Speaker 9: You know, I think it's good for EV's. More importantly,
Speaker 9: I think it's good for taxpayers that given all the
Speaker 9: money that has flowed to Tesla, that they are making
Speaker 9: sure that that much is not spent to disproportionately benefit
Speaker 9: just one company. I'm not really so sure how it's
Speaker 9: such a good thing for Tesla that they're forced to
Speaker 9: open up their charging network to other cars and that
Speaker 9: other people can build to it. There's nothing proprietary about
Speaker 9: it now, it's really more of public utility. I don't
Speaker 9: really think they make any money in their charging stations,
Speaker 9: so I'm not at all sure about how this is
Speaker 9: good for the stock, but we've seen that stock go
Speaker 9: up for no good reason in the past before, and
Speaker 9: this just might be another one.
Speaker 2: I always think that anybody who creates some kind of
Speaker 2: architecture or infrastructure in the long run, David, it's a
Speaker 2: smart move and maybe we don't pay anything for it yet,
Speaker 2: but I could see certainly in the future there are
Speaker 2: some kind of significant revenue stream if Tesla becomes the
Speaker 2: de facto, you know, charging platform for everyone. No, isn't
Speaker 2: that how we see it or could could see it.
Speaker 9: Typically it's really the other way around. I mean, you know,
Speaker 9: how much did the person who invented the end that make?
Speaker 9: How much of the person who's invented blockchain make how
Speaker 9: much the person who you know invented electricity, right like
Speaker 9: or the electrical grid. These things that are public utilities
Speaker 9: tend not to be real money makers for individuals.
Speaker 3: I mean, so, I guess you could debate some of those,
Speaker 3: right because Satoshi could be sitting on billions of dollars
Speaker 3: if that were a one person. But let's get to
Speaker 3: the market here, David, Because we have had an incredible
Speaker 3: rally and finally, by the end of last week it
Speaker 3: was starting to look really broad based as well. Today
Speaker 3: there's a little bit of I guess profit taking it
Speaker 3: you could call it, or you could say maybe that
Speaker 3: rally was just a bear market rally. How was your view?
Speaker 9: I think that these are our you know, it's really
Speaker 9: hard to tell these days, because look, we're only really
Speaker 9: in a bear market if the Fed's going to stand
Speaker 9: by their guns and inflation down and keep rates higher.
Speaker 9: If not, it's just kind of back to what we
Speaker 9: saw even in twenty twenty and twenty twenty one, where
Speaker 9: the markets were really, you know, for the most part,
Speaker 9: just headed straight up the cava ipo. I mean that
Speaker 9: was very reminiscent of the twenty twenty one IPOs, ridiculously
Speaker 9: expensive on the front end, and then just got you know,
Speaker 9: even more ridiculously expensive when it went public finally and
Speaker 9: started trading. So yeah, you know, these are difficult times.
Speaker 9: I mean, I definitely think there's a lot more risk
Speaker 9: than reward out there. I think investors, as we always say,
Speaker 9: should be discerning about where they put their capital. Don't
Speaker 9: chase momentum, don't chase fomo. It's a recipe for disaster.
Speaker 9: Even if it's pleasing in the moment, and otherwise it's
Speaker 9: you know, I'm kind of out of the business. My
Speaker 9: crystal ball is in.
Speaker 6: The shop in predictable for the overall market's.
Speaker 3: Going to go all right?
Speaker 1: AI?
Speaker 2: Though, if you go to your website, you guys talk
Speaker 2: about your research powered by AI. It's not a new thing.
Speaker 2: You've been doing this for a long time. How do
Speaker 2: you put the AI mania and euphoria in perspective?
Speaker 1: Right?
Speaker 9: I think most people misunderstand, Carol, like how much goes
Speaker 9: into what is good machine learning and AI. They feel
Speaker 9: like it's this kind of magic wand formula or magic
Speaker 9: wand code that you just kind of wave over things
Speaker 9: and all of a sudden it can do things on
Speaker 9: its own, you know. I think that there's a lot
Speaker 9: of really long term, diligent work that goes into making
Speaker 9: it useful. Most of the other stuff is smoking mirrors.
Speaker 2: Is Nvidia smoking mirrors? Or is that something you think
Speaker 2: is interesting?
Speaker 9: And video has got a good business model, but is
Speaker 9: it a good stock? I don't think so, no. I
Speaker 9: mean the evaluation is long run away from it. I mean,
Speaker 9: we were bullish on Nvidia gosh seven eight ten years ago.
Speaker 9: I can't even remember how long ago, and it ran
Speaker 9: away from us from a fundamental perspective a while ago,
Speaker 9: because we think it's a good business, great returns on capital.
Speaker 9: But the idea that any one company is going to
Speaker 9: earn the lines of profits as implied by the current valuation,
Speaker 9: we think is very unrealistic. This is yet another big
Speaker 9: technological fad. It may be as big or bigger than
Speaker 9: some of the others. I don't know for sure, but
Speaker 9: you know, the size of the fad is only makes
Speaker 9: the amount of competition higher.
Speaker 2: I should say, the current PE for Nvidia is two
Speaker 2: hundred and twelve. That's back yeah, that's yeah, that's backwards
Speaker 2: fifty seven. If you look at a forward looking pe,
Speaker 2: still high, right, David.
Speaker 9: No, it's super high, and it's so high that it
Speaker 9: implies there will not be significant competition, and I just
Speaker 9: think that's a bad bet, right. I mean, anytime other businesses,
Speaker 9: non Nvidia businesses, think they can get into a business
Speaker 9: with that kind of valuation, they'll spend absurd amounts of
Speaker 9: money into getting into it, to the point where you know,
Speaker 9: they were happy to lose money just to try to
Speaker 9: get a chance at that super high valuation. And that
Speaker 9: inevitably being brings down returns and profits for the leaders
Speaker 9: in that section.
Speaker 3: All right, so, but what about investing around AI? We
Speaker 3: have a story on the Bloomberg about in Australia an
Speaker 3: investor who is saying essentially the same thing as you
Speaker 3: are about Nvidia or the companies that think they're going
Speaker 3: to own AI, but he wants to pick companies that
Speaker 3: he thinks will be enhanced or helped by AI, or
Speaker 3: companies that can never be competed with through AI. Do
Speaker 3: you think there are ways to invest around AI that
Speaker 3: makes sense?
Speaker 2: And just got about thirty seconds.
Speaker 9: Yeah, no, I mean I think, for example, like honestly,
Speaker 9: what we focus on, which is to deliver to the
Speaker 9: public a previously unavailable data set based on very deep
Speaker 9: analysis of footnotes. And the key to that, and the
Speaker 9: key to I think any really good AI is you've
Speaker 9: got a ton of very unique human expertise baked into it.
Speaker 9: It isn't without having gone through hundreds of thousands of
Speaker 9: filings and marked up all these different disclosure scenarios. If
Speaker 9: not for that, we would not have been able to
Speaker 9: POPULATERII with the underlying intelligence it needs to create more
Speaker 9: value at scale people that are doing things like that,
Speaker 9: that are taking very specific and complex tasks and feeding
Speaker 9: that into a machine learning algorithm or machine learning or
Speaker 9: AI capability.
Speaker 6: That's what value is.
Speaker 9: But again that comes back to unique human expertise.
Speaker 2: Hey, come back soon, David. I really enjoyed this. David Trainer,
Speaker 2: chief executive officer at New Constructs and Independent Research Technology,
Speaker 2: from joining us on zoom from Nashville, Tennessee.
Speaker 1: This is the Bloomberg Business Week podcast, all available on Apple, Spotify,
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