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Speaker 2: But it's hard to understand, at least for me. The
Speaker 2: ISM Services index. John was just saying comes in a
Speaker 2: bit light. Price is paid coming in light, employment coming
Speaker 2: in light, and new orders coming in light, but like
Speaker 2: some of them are still over expansion. So we've got
Speaker 2: to get to the guy behind the data. Anthony Yavis
Speaker 2: is chair of the Ism Services Business Committee, and he
Speaker 2: is here with us to help break down this data.
Speaker 2: Is this a good report or is this a slowing
Speaker 2: bad report?
Speaker 3: I look at it as being a good report, and
Speaker 3: the reason being, as we know the baseline being fifty,
Speaker 3: we're still experiencing growth month over months. So even though
Speaker 3: we had this pulled back of one point two percentage
Speaker 3: points to the fifty one point four from fifty two
Speaker 3: point six, activity still looks fairly strong. It's up point
Speaker 3: two percentage points and new orders, which tells us what's
Speaker 3: in the pipeline. Did come down one point seven percent,
Speaker 3: but again we're north of the fifty baseline. It's a
Speaker 3: fifty four point four, which indicates that we'll have continued growth.
Speaker 3: As you mentioned in the prelude, that we see employment
Speaker 3: and deliveries of what's pulling down the composite index here.
Speaker 4: So again, as we think about the services part of
Speaker 4: the economy, the major part of the US economy, again
Speaker 4: just for our listeners and our viewers, anything above fifty
Speaker 4: is expansion, So that part of the economy is still expanding,
Speaker 4: is that the way that you think about it.
Speaker 3: Absolutely, And we're measuring change month over a month, So
Speaker 3: what we're seeing is just a slowing in the rate
Speaker 3: of growth. And the employment picture is continues. As I've
Speaker 3: been saying for several months now, it's a mixed bag.
Speaker 3: Forty eight point five, it's down point five percentage points.
Speaker 3: And what the respondents are indicating is that, you know,
Speaker 3: they're very cautious and it's a controllable expense for them,
Speaker 3: and so interesting some of the respondents indicated in their
Speaker 3: comments that even though business activity is still going good,
Speaker 3: that they're not hiring. They're holding back, waiting to see
Speaker 3: how things materialize. In the upcoming months, because as you
Speaker 3: mentioned about pricing, pricing still shows increases month over month.
Speaker 3: It's strong, but it's somewhat stabilizing from where it was
Speaker 3: in the past. And well we see the most volatility
Speaker 3: continues to be in the food items.
Speaker 2: Do you get the impression when you talk to the
Speaker 2: respondents that they're going to have to look at layoffs
Speaker 2: or is it just more about hiring more.
Speaker 3: It's a combination, and it depends on the industry. It
Speaker 3: varies by industry within the sectors within this sector, i
Speaker 3: should say, and you know, certain industries like accommodation and
Speaker 3: food services is continuing to hire, whereas we know with
Speaker 3: the slowdown that we experienced in the past with real
Speaker 3: estate rental and leasing, there you're not hiring.
Speaker 2: All right, Anthony, thanks a lot, We really appreciate it.
Speaker 2: It's always good to get the details here. Anthony Javis
Speaker 2: share of the Ism Business Services Committee again that overall
Speaker 2: index still an expansionary territory, but definitely still slowing down just.
Speaker 5: A little bit.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 2: This is Bloomberg Intelligence Radio. We bring you all the
Speaker 2: amazing work from our Bloomberg Intelligence analysts. They cover over
Speaker 2: two thousand companies and one hundred and forty industries all
Speaker 2: around the world. And one of them is named Tim
Speaker 2: Craighead Bloomberg Intelligence Research Director for content fancy title. And
Speaker 2: the reason why is because he came up with a
Speaker 2: really great list along with his teammates about fifty companies
Speaker 2: to why in January they came up with that and
Speaker 2: that was the ones you got to watch for this year.
Speaker 2: And they're now back with ten specifically just for the
Speaker 2: second quarter, based on scenarios from Bloomberg Intelligence. You want
Speaker 2: to get the good apples from the bad apples, cross sector,
Speaker 2: cross regions, and he's here now to help us break
Speaker 2: it down. Hey, Tim, thanks for joining. Okay, so what
Speaker 2: are the top ten?
Speaker 6: So Alex, thanks for having me on a couple of
Speaker 6: things to keep in mind here. Top ten for two Q.
Speaker 6: These are part of a broader set of focus ideas
Speaker 6: that we've got there's roughly seventy five to eighty of
Speaker 6: them right now, across sectors, across regions. These specifically have
Speaker 6: important catalysts coming up into Q that we think can
Speaker 6: bring the market around to our perspective. All of these
Speaker 6: focus ideas have really strong, high conviction fundamental views that
Speaker 6: we think are different from the market, and these catalysts
Speaker 6: should bring that awareness around. It's it's a group of
Speaker 6: US companies. There's four of them. Uh, there's three in Europe,
Speaker 6: three in in Asia, and they span the gamut from healthcare,
Speaker 6: med tech products to big financials to tires. So interesting group.
Speaker 4: And Tim one of the ones that you know, I've
Speaker 4: been kind of thinking about. I just think these Olympics
Speaker 4: in Parish are going to be just huge, and I'm
Speaker 4: thinking that ways to play it. You guys have one
Speaker 4: of them in the lodging space. Talk to us about
Speaker 4: that opportunity.
Speaker 6: Yeah, we do. Acor it's a big French hotel company.
Speaker 6: You might not know Acor, but you probably know some
Speaker 6: of their underlying brands. And you know, anybody who's made
Speaker 6: a hotel booking as of late knows that the prices
Speaker 6: seem to be really high. Surprisingly so that's feeding Acor's
Speaker 6: rev par They're they're pricing, which is playing through into
Speaker 6: profit margins, and the catalyst for these guys is, in fact,
Speaker 6: the Paris Olympics. We should start to see early booking
Speaker 6: data over the course of two Q heading into Summer Olympics.
Speaker 6: Now Paris is only one part of their portfolio. They're
Speaker 6: across Europe and Asia, and we're seeing a strong sustained
Speaker 6: travel recovery story that we think is better than consensus expects.
Speaker 2: But apparently they have to like clean out the send.
Speaker 2: Did you read that that there's so much to you,
Speaker 2: Like can you imagine being an Olympic swimmer and like
Speaker 2: there's garbage hitting you in the send? I mean they're
Speaker 2: working on it.
Speaker 6: They're definitely working on it.
Speaker 5: Okay.
Speaker 2: Your second one is in retail chow Tai Fuk. No
Speaker 2: one's going to know this company here in the US,
Speaker 2: So tell us about it and why this makes the outlook.
Speaker 1: Yep.
Speaker 6: So that and the next one on the list from
Speaker 6: an alphabetical perspective, are both sort of interesting twists on
Speaker 6: the same underlying theme, and that's China. We all know
Speaker 6: that there's problems in China. From the standpoint that the
Speaker 6: property market, and now that's playing through in terms of sentiment,
Speaker 6: uh with the wealth effect on spending plans, et cetera.
Speaker 6: Child Tai Fook is arguably the best known Chinese retailer
Speaker 6: when it comes to jewelry, and it's a big market
Speaker 6: historically for tourists and travelers coming into Hong Kong and
Speaker 6: to make those purchases. In fact, what we're seeing right
Speaker 6: now is Hong kongers are going out of Hong Kong
Speaker 6: across the border in the mainland China to shop for
Speaker 6: pretty much everything because it's cheaper. So you combine that
Speaker 6: with negative sentiment, we think Hong Kong retail sales are
Speaker 6: going to disappoint, and Child Tai Fuk is a poster child.
Speaker 6: The other one, CSC Financial is one of the largest
Speaker 6: Chinese brokerages you know, good old fashioned, you know, wealth management,
Speaker 6: and they are the investment banking business we think is
Speaker 6: set for disappointment because I POS and other new new
Speaker 6: stock listings are way under way, underwater, and you know,
Speaker 6: we think you're going to see investment banking revenue disappoint
Speaker 6: You know.
Speaker 4: I was looking through the list here, Tim, and I
Speaker 4: was looking for a name from Michael Dean and the
Speaker 4: European Autos team, and I think I found one in
Speaker 4: Perelli Tires.
Speaker 6: Yes, indeed, I started to say, if you're an F
Speaker 6: one fan, but that's more from a European perspective than
Speaker 6: NASCAR in the US. But Perelli is a well known
Speaker 6: tire maker and what they're doing is twofold Number one,
Speaker 6: upgrading their mix. They're getting rid of some of their
Speaker 6: lower end products. And number two, they've taken on a
Speaker 6: pretty big initiative to shift production from core Europe to
Speaker 6: places like Romania over here in Mexico over there, all
Speaker 6: of which is driving better margins. And we think that
Speaker 6: this is going to continue more than what consensus currently
Speaker 6: bakes in.
Speaker 4: Plus, it's from one of my favorite analysts over in
Speaker 4: our London office, Gillian Davis, doing some good work there,
Speaker 4: so good stuff.
Speaker 7: Home Building Morrison made the list.
Speaker 2: That's not normally the company you think of when you
Speaker 2: think of like a homebuilder, right, you're thinking Lenar, KB homes,
Speaker 2: et cetera. How does one make a list?
Speaker 6: Yeah, I mean they're they're continuing to expand, specifically in
Speaker 6: some larger developments in Florida and Texas, and it just
Speaker 6: seems to be a case of good old fashioned running
Speaker 6: the numbers with those expansion plans feeding through and their
Speaker 6: order book coming through better than anticipated, where we think
Speaker 6: their positive surprises d but it certainly is you know,
Speaker 6: it is a classic story from the standpoint of expanding
Speaker 6: order books, expanding volumes.
Speaker 4: You know, one name that's onnor that surprising, but I
Speaker 4: think it's a potential rule opportunity. Is Tencent talks about
Speaker 4: big Chinese e commerce because for a lot of people
Speaker 4: tim as you well know, China's kind of taboot right now.
Speaker 4: From an investment perspective.
Speaker 6: It is, especially when it comes to technology and regulatory concerns,
Speaker 6: and you know, beij focusing in on you know, what
Speaker 6: the big tech companies are doing. You know, historically these
Speaker 6: have ten cents driven by online gaming and that growth
Speaker 6: rate is still somewhat muted. But there's more video that's
Speaker 6: coming through. There's AI assisted advertising that is that is growing.
Speaker 6: Both of those are drivers of their income statement that
Speaker 6: we think are underappreciated. We think it's mid teams of
Speaker 6: growth going forward. But if you do the math, the
Speaker 6: market seems to be discounting basically static to maybe low
Speaker 6: single digit growth rates and so there it's just a
Speaker 6: it's just a case where we think the market doesn't
Speaker 6: realize that they're back to having good, solid forward growth.
Speaker 4: Yeah, it's gonna be I mean it could be a
Speaker 4: really interesting story. A lot of folks again really not
Speaker 4: sure how to play that part of the market. Tim Craig,
Speaker 4: thanks for joining us. Always appreciate getting your thoughts. Tim
Speaker 4: craigett Research director for Content. He has also got a
Speaker 4: day job European Equity Streates just and we're appreciating some
Speaker 4: of his times from Bloomberg Intelligence. He's based in our
Speaker 4: London office, the Queen Victoria Street offices, which are just
Speaker 4: awesome right in the City of London, right near the
Speaker 4: Bank of England. You can't get more city of London
Speaker 4: and heart of the financial system in London than the
Speaker 4: Bank of England, and that's where Bloomberg has their offices.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 4: Intel disappointing outlooks, dock down seven percent. It's one of
Speaker 4: those chip makers that's really bucking the trend here. It's
Speaker 4: down nineteen percent a year to date, while you got
Speaker 4: some of the others, Nvidia Broadcom putting up just extraordinary gains.
Speaker 4: So it feels like it's Intel's missing that. So let's
Speaker 4: break it down a little bit more for Intel, the
Speaker 4: chip names, tech, the markets overall. We can do that
Speaker 4: on our next guest, Kim Forest. She's the founder and
Speaker 4: chief investment officer at Boca Partners, I believe, located in Pittsburgh,
Speaker 4: lovely city, big fan of Pittsburgh. All right, Kim, on
Speaker 4: your list on your notes, top picks continue to be Intel,
Speaker 4: A and D mu Let's start with Intel. What is
Speaker 4: Intel just not getting right here?
Speaker 5: Sure? Well, a couple of things.
Speaker 8: They are coming up a very steep hill from where
Speaker 8: prior CEOs left them, and what happened was they kind
Speaker 8: of fell behind the curve in making sure that they
Speaker 8: could make the very fastest, best chips they could, and
Speaker 8: their technology just floundered.
Speaker 5: That's pretty much the short answer.
Speaker 8: Now. Pat Gelsinger was a long time Intel employee, went
Speaker 8: over to run VMware, came back to Intel, and he's
Speaker 8: been trying to write the ship. But more than that,
Speaker 8: he's been trying to make them into a foundry for
Speaker 8: other company companies that designed chips. So this is a
Speaker 8: long and arduous process. Becoming a foundry is they've they've
Speaker 8: done that for specific companies in the past, but they
Speaker 8: want to make it more broad like akin to what
Speaker 8: Taiwan's Semiconductor can do. And they're just going to have
Speaker 8: to come up the curve and spend some money. So
Speaker 8: they have the one two Pine ship spending money and
Speaker 8: then not having that hot AI chip, which is what
Speaker 8: is driving everybody else in the world apparently.
Speaker 5: Yeah, exactly.
Speaker 4: So let's I love to just get your your AI
Speaker 4: AI call if you will. How much do you believe
Speaker 4: in it? How big can it be? And how are
Speaker 4: you guys maybe playing it?
Speaker 5: Sure? Well? A couple of things.
Speaker 8: You have to understand that before I came over to
Speaker 8: this side of the world finance, I was a software
Speaker 8: engineer doing AI.
Speaker 5: Like how lucky is that? Okay?
Speaker 8: I know how Right's super Yes, it's nerd girl right
Speaker 8: here anyhow. But moving on, So I believe in AI
Speaker 8: and I think a couple of things that are going
Speaker 8: to drive it forward.
Speaker 5: First, we have enough data.
Speaker 8: We didn't have enough data in the nineties when I
Speaker 8: was doing it to be able to meaningfully understand the
Speaker 8: world through the lens of AI problems. The second thing
Speaker 8: is we have cheap fast computers. Again, we're spending a
Speaker 8: lot of money on these computers, but for the compute
Speaker 8: power back in the day. These are incredibly fast machines
Speaker 8: that are incredibly cheap. And the third thing is, and
Speaker 8: I always look through technologies with technology with this lens,
Speaker 8: is we can actually make AI be productive, right like
Speaker 8: help humans out. And I think putting those three things together,
Speaker 8: I'm a strong believer in it. But the caveat is this,
Speaker 8: it's not going to happen in the next fifteen minutes
Speaker 8: or even next year. It's probably going to take seven
Speaker 8: to ten years for this really to play out and
Speaker 8: to change the world in fundamental ways, much like the
Speaker 8: rollout of the Internet was so kim.
Speaker 7: How do you play that?
Speaker 5: Then?
Speaker 2: Like, is it not an Nvidia play? Is it going
Speaker 2: to be a different kind of play?
Speaker 8: Well, I think you're going to have to cast your
Speaker 8: net a little wider than in Nvidia. I love Nvidia,
Speaker 8: but they do have a reputation for making the fastest
Speaker 8: chips at the highest prices, and that's why I'm a
Speaker 8: believer still in Intel, even as it rolls that rock
Speaker 8: up the hill to correct itself. I think that it
Speaker 8: can do that. And I also think AMD is a
Speaker 8: good supplier as well, and people building aid data centers
Speaker 8: aren't going to want to spend the bucks for Nvidia
Speaker 8: in perpetuity, and I think that's just what is going
Speaker 8: to drive those two names.
Speaker 2: Micron, Micron, go ahead, go ahead, go ahead.
Speaker 8: Okay, yeah, and I love to be cool like nerd girl,
Speaker 8: cool but still cool. Okay, but I'm back so Micron,
Speaker 8: I can't under estimate or understate this or overstate this enough.
Speaker 8: That's what I mean is that AI needs a lot
Speaker 8: of data, like tons and tons of data, and I
Speaker 8: won't get into it. That's beyond here. There are really
Speaker 8: good reasons why. But you're gonna need tons of data
Speaker 8: and you're gonna need to store it in duplicative ways,
Speaker 8: and so any bet on storing data is a good
Speaker 8: bet right now. And I think Micron is among the
Speaker 8: leaders of land storage, which is kind of non volatile
Speaker 8: chip storage and not a spinning disk.
Speaker 5: So that's the shortest answer. I can get for that one.
Speaker 2: Kim, I have an ancillary This is totally talking my
Speaker 2: own book here. What about power plays in relation to AI?
Speaker 2: Just because if you want to run all the stuff,
Speaker 2: you need a ton of power and the amount of
Speaker 2: money that these companies are gonna be willing to pay
Speaker 2: for it has got to be astronomical concerning that we
Speaker 2: haven't seen power demand grow at all in twenty years.
Speaker 7: Are you playing this derivative play at all?
Speaker 8: Not yet, because I don't really see a good way
Speaker 8: to do it. You know, there you can by like
Speaker 8: certain power companies that are probably physically well positioned, that
Speaker 8: have assets that are somewhat cheaper where the companies will
Speaker 8: build their data centers. That's one way to do it.
Speaker 8: It's too long of a play, Like, I'd rather stay
Speaker 8: back in the AI kind of direct space rather than
Speaker 8: that or even you know, the the data center providers.
Speaker 8: You could play it that way too, But again, I
Speaker 8: like my margins a little higher than those end markets.
Speaker 4: Yeah, hey, it's interesting Kim thinking about Tesla. I'm just
Speaker 4: I want to want to get your opinion on if
Speaker 4: you have one. I mean a stocks down thirty two
Speaker 4: percent year to date. Boy, has the tide turn on
Speaker 4: that name, the sentiment turned on that name. Do you
Speaker 4: have an opinion on Tesla here?
Speaker 8: I've never invested in Tesla because I like my CEO
Speaker 8: is more focused than Elon must But that being said,
Speaker 8: like it is a battery storage play, and your other question,
Speaker 8: Alex was on power plays. Maybe batteries are going to
Speaker 8: be one of the ways that we allow for, you know,
Speaker 8: the build out of electric power. So I think they
Speaker 8: have more than one product there. I think evs have
Speaker 8: also been overrated and people didn't do enough use case scenarios,
Speaker 8: Like I have family that lives in North Dakota. There's
Speaker 8: no way they could ever have an EV it gets
Speaker 8: to negative twenty three. There a lot, right, you can't
Speaker 8: charge them. There aren't enough towns where you could pull
Speaker 8: over and you know, recharge. It's just like it's like
Speaker 8: I look at use cases like that, and I know
Speaker 8: that not everybody lives in North Dakota, but enough people,
Speaker 8: do you know, like, and enough people live in the
Speaker 8: North that these things are not necessarily ready for it
Speaker 8: to be your only car. And I think that's a
Speaker 8: little bit behind it. I think they make a good automobile,
Speaker 8: and I'm not sure, people are just dying for that
Speaker 8: Chevy Vault or whatever they're making, So I think they
Speaker 8: they still have a product, and they still have a
Speaker 8: certain cachet, and they were a good first mover in evs,
Speaker 8: so I wouldn't throw them out necessarily.
Speaker 2: But funnily enough, my work car's recently all been Teslas.
Speaker 7: I don't know what that means, but that I mean something.
Speaker 2: Maybe they're as you're talking about Ed Ludlow, like, there's
Speaker 2: actually more teslas now because no one's actually buying them.
Speaker 7: So then you can tree hugger capital of the world.
Speaker 2: Yes, I live in parks that, yeah, but not necessarily.
Speaker 2: My drivers don't necessarily live there.
Speaker 4: Bar's not taking a EV from eastern Ohio here.
Speaker 1: I'm from Pennsylvania. We are a lot of pickups stack Yeah.
Speaker 2: Kim, before we let you go, do you care if
Speaker 2: the FED cuts rates or not? And when they do it?
Speaker 5: Oh? Sure I do.
Speaker 8: Heck yeah, I mean I think we're signed up for
Speaker 8: a rate cut, and I'll say it even crazy relatively soon,
Speaker 8: I'd say before July. And I do think that they
Speaker 8: need to cut. The dollar is awfully strong relative to
Speaker 8: other currencies, and that might be able to cool us
Speaker 8: off a little bit more on that, and I think
Speaker 8: that's important because even though I'm a generalist, I love technology.
Speaker 8: We sell technology to the rest of the world at
Speaker 8: the price of a dollar, and we have to have
Speaker 8: that in mind.
Speaker 4: Kim, thank you for joining us, as I always appreciate
Speaker 4: getting your views there. Kim Farest. She is to founder
Speaker 4: and chief investment officer Boca Capital Partners in Pittsburgh, a
Speaker 4: former software person, a tech geek by her own admissions,
Speaker 4: So good stuff there talking about AI and boy that
Speaker 4: Intel news that John was reporting earlier having problems with
Speaker 4: this the founder here, it's one of those chip stocks
Speaker 4: that is not participating in the whole AI rising tide
Speaker 4: thing like it is for Nvidia and Broadcommon others.
Speaker 2: We'll talk about a long play, right, because if they
Speaker 2: can get the founder of business really going, it could
Speaker 2: really help them either make chips for themselves and then
Speaker 2: also make it for others, and it could be a
Speaker 2: nice driver. I mean, just look at the revenue that
Speaker 2: TSM is minting. But you got to get it there, right,
Speaker 2: and it's just not quite there yet.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us Live
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Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.
Speaker 4: Matt Winkler joins us here in studio. Matt Winkler is
Speaker 4: the founder of Bloomberg News, as he editor at Meritis
Speaker 4: right now Bloomberg News. He joins us here in our
Speaker 4: studio and he's been doing a series of opinion pieces
Speaker 4: about key swing states in the upcoming election and give
Speaker 4: us the latest on county how the economies are doing
Speaker 4: in those key states. We started with Michigan ethic and
Speaker 4: then we did California by looking at La San Francisco.
Speaker 4: Now heading down to the great state of Georgia. Matt,
Speaker 4: what did you find in Georgia.
Speaker 1: I love Georgia.
Speaker 4: It seems like it's been growing for I don't know,
Speaker 4: twenty thirty years.
Speaker 5: It's a great story.
Speaker 9: Well, great to be with you, and you're right. Georgia
Speaker 9: population of more than eleven million makes it the eighth
Speaker 9: largest state, and it's booming right now like it never
Speaker 9: did before. Joe Biden became the forty sixth president and
Speaker 9: we know this because not since data was initially collected
Speaker 9: in nineteen ninety has there been a three year period
Speaker 9: when growth in the Peach States manufacturing payrolls came close
Speaker 9: to matching the eleven point nine percent increase in jobs
Speaker 9: since twenty twenty one, or its rate of employment gains
Speaker 9: compared with the US overall. And that's according to data
Speaker 9: compiled by Bloomberg. So we are seeing a manufacturing boom
Speaker 9: job boom in Georgia the likes of which Georgia has
Speaker 9: never seen. And by the way, this is counter to
Speaker 9: the trend in the twenty first century. Every presidency in
Speaker 9: the New century except Biden's has seen a decline in
Speaker 9: manufacturing jobs. So this is a departure.
Speaker 7: So how much of that do you attribute to the
Speaker 7: Chips Act and the Inflation Reduction Act, Because something that
Speaker 7: gets lost in all this messaging is with the IRA
Speaker 7: for example, So much of that money is actually going
Speaker 7: to Red States because they have the space to build stuff.
Speaker 9: Well, there's no question that actually Red states are a
Speaker 9: big beneficiary. But it's not just the American Rescue Act
Speaker 9: of twenty twenty one. It's also the Infrastructure Investment Jobs Act,
Speaker 9: the Chips and Science Act again, the Inflation Reduction Act,
Speaker 9: all of which have helped Biden make a legitimate claim,
Speaker 9: which is he created close to eight hundred thousand manufacturing
Speaker 9: jobs since he took office. And we know this is
Speaker 9: not an idle boast because those very careful fact checkers
Speaker 9: called PolitiFact actually took a look at this claim and
Speaker 9: they showed that the nation's manufacturing rebound is the strongest
Speaker 9: at this point after a recession since nineteen fifty one.
Speaker 10: You weren't around.
Speaker 7: There wasn't either.
Speaker 5: I'll leave it there.
Speaker 10: I'm not sure.
Speaker 4: So is Georgia per se doing anything right versus I mean,
Speaker 4: is this all just the largest of the federal government
Speaker 4: met or does Georgia have just better incentives, better tax
Speaker 4: and centives?
Speaker 5: Are they doing something?
Speaker 4: Maybe some other states aren't doing well.
Speaker 9: Well, There's no question that some of the credit has
Speaker 9: to go to, as I said, these acts, because the
Speaker 9: investments include, for example, South Korea's Hanwa Solutions Corp. Expansion
Speaker 9: of solar panel and manufacturing. They were already there. They
Speaker 9: got incentives to do a lot more than what they
Speaker 9: were doing. The same thing with Hyundai with EV vehicles,
Speaker 9: They're already there. They're doing more. And then there's this
Speaker 9: battery company from Norway, freyer Or Battery, which is going
Speaker 9: to make clean battery manufacturing in Koeda County in Georgia.
Speaker 9: So those things are definitely tied to the incentives that
Speaker 9: come out of these acts. There's no question state and
Speaker 9: local officials have been supportive. But interestingly enough, the governor
Speaker 9: of Georgia voted against or would have voted against, the
Speaker 9: Inflation Reduction Act. All of the Republicans in Congress voted
Speaker 9: against the Inflation Reduction Act, which is a big part
Speaker 9: of why George is doing well. But they're not ready
Speaker 9: to give the money back. They're very happy that it's
Speaker 9: all happening.
Speaker 2: We have seen with some of these acts that we
Speaker 2: get all excited about the money that's being spent, but
Speaker 2: then getting the shovel in the ground and actually doing
Speaker 2: the hiring and the manufacturing gets delayed a little bit
Speaker 2: and gets pushed out, or the plans get scaled back
Speaker 2: a bit. Are we seeing any of this in Georgia
Speaker 2: or is the outlook particularly rosy.
Speaker 9: It's more of the latter, you know. And then again
Speaker 9: the proof of that is that if you look at
Speaker 9: the unemployment rate, uh in. In Georgia it actually declined
Speaker 9: most recently and is several percentage points, you know, less
Speaker 9: than the national average. So you know, unemployment in the
Speaker 9: US actually is ticked up a bit. In Georgia it's
Speaker 9: gone the other way. And that's an example that the
Speaker 9: boom is very much underway and shows no signs of abating.
Speaker 4: You know, you have to remind yourself, I mean, how
Speaker 4: the economy in the South has really changed from you know,
Speaker 4: agricultural textiles, you know, very low technology touch types of
Speaker 4: venggees to now it seems like every new auto plant
Speaker 4: that you know, international automakers, they want to build them in.
Speaker 7: The movie studios.
Speaker 4: So much investments going to the Southeast. And that's again
Speaker 4: been a twenty third thirty year story. What's next on
Speaker 4: your state?
Speaker 5: Yeah?
Speaker 6: What state is?
Speaker 1: Next year?
Speaker 9: We'll probably get to Nevada. So we've done Pennsylvania and Michigan,
Speaker 9: now Georgia, and we're working through the list.
Speaker 4: So if you were advising President Biden his campaign about
Speaker 4: the messaging here, what would you say in terms of
Speaker 4: because I would argue that the messaging has not been effective,
Speaker 4: that this message of economic success has not been told well.
Speaker 9: I'd say actually their messaging has been pretty good. A
Speaker 9: lot of this data that we've compiled at Bloomberg is
Speaker 9: available in various announcements from either the White House or
Speaker 9: the Treasury. But the saying is, you know, you can
Speaker 9: lead a horse to water, but you can't get the
Speaker 9: horse to drink. The horse in this case is our profession,
Speaker 9: the media, and it's pretty much ignored what's in front
Speaker 9: of its nose, which are the fact. So unless reporters
Speaker 9: find this relevant, I do.
Speaker 4: It.
Speaker 9: You know, they'd rather focus on poles. And so that's
Speaker 9: perception not reality.
Speaker 4: Before we went on the area, you made a comment
Speaker 4: about California. How big is that economy now? Because I
Speaker 4: used to to me it was the seventh or ay
Speaker 4: largest economy.
Speaker 9: It's number four. It's now numbers and it's poised to
Speaker 9: overtake Germany. And that's because you know, you keep talking
Speaker 9: about the Magnificent seven on this show. If you look
Speaker 9: at corporate California, Corporate California just dwarfs corporate Anywhere, dwarfs
Speaker 9: Corporate Texas, It dwarfs corporate Germany. Corporate California is still
Speaker 9: a juggernaut. And you know who those companies are, but
Speaker 9: it's not just the big companies, big and small companies alike.
Speaker 9: In the Russell three thousand, Yeah, that make California unique.
Speaker 4: It's yeah, it's just extraordinary, all right, Matt, thank you
Speaker 4: so much for joining us. Matt Winkler, he's the editor
Speaker 4: in chief emeritus. He is the founder of Bloomberg News
Speaker 4: for and he's now part of Bloomberg Opinion, and he
Speaker 4: joins us here in our office talking about the great
Speaker 4: state of Georgia and the strong economic performance our friends
Speaker 4: down there are seeing, particularly you know, manufacturing and employment,
Speaker 4: and for my media business, they've long been a destination.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 5: So here's a.
Speaker 7: Stop for you.
Speaker 2: At Vander it's up about ten percent so far this year,
Speaker 2: done pretty well. The top on the street is that
Speaker 2: it wants to be really a mini Thermo Fisher. So
Speaker 2: part of its business is a supplier of R and
Speaker 2: D labs for the global farmer industry, and now it's
Speaker 2: trying to make a big push into bioproductions. That's basically
Speaker 2: the equipment of manufacturing biologic and biotech drugs. Luckily, we
Speaker 2: have the CEO and president with us to help understand
Speaker 2: what this company does, what's the opportunity, what's the margin,
Speaker 2: what's the growth. Michael Stubblefield is president and CEO of
Speaker 2: A vand Or and he joins us now from Allentown, Pennsylvania. Michael,
Speaker 2: thanks for joining walk us through dumb down what you
Speaker 2: guys do for people like me and Paul.
Speaker 10: Yeah, Alex and Paul, thanks for having me. Really happy
Speaker 10: to be here today now. I think it's a great
Speaker 10: place for us to start the conversation today. We're probably
Speaker 10: one of the bigger companies that a lot of people
Speaker 10: have never heard of, and we are really ubiquitous in
Speaker 10: the biopharma space. I would say we enable innovation across
Speaker 10: the life sciences and events technology industries, and we really
Speaker 10: embed ourselves with our customers. We support them every step
Speaker 10: of their scientific journey. We were in virtually every research
Speaker 10: lab around the world, more than three hundred thousand locations,
Speaker 10: and we have a really robust portfolio, an e commerce platform,
Speaker 10: and a whole host of productivity enhancing services that really
Speaker 10: help our the scientists that our customers, you know, develop
Speaker 10: the new therapies that you're referencing, and as those innovations
Speaker 10: advance to development and production, our materials and technologies become
Speaker 10: embedded into our customers applications, everything from biological therapies to
Speaker 10: medical plants to electronics.
Speaker 4: So, Michael, give us a sense of maybe who you're
Speaker 4: you know, a common customers, an average customer of your company.
Speaker 4: Who are your customer rebase and what did they really
Speaker 4: look to you guys for.
Speaker 10: You're really not going to be able to find too
Speaker 10: many customers that are doing work in the biopharma or
Speaker 10: the biotech space that we wouldn't be serving in some capacity.
Speaker 10: I think that's one of the more interesting aspects of
Speaker 10: our of our business model, is that we are deeply
Speaker 10: embedded across this space. So it's everything from you know,
Speaker 10: the traditional large pharma you know, the Johnson and Johnson's
Speaker 10: amjen No Artist's of the world all the way through
Speaker 10: to you know a lot of the startups and you
Speaker 10: know biotech companies that are out there. We have an
Speaker 10: exclusive relationship with one of the bioconsortiums here in the
Speaker 10: in the US that you know, literally thousands of how
Speaker 10: tech startups you know, uh, access our products and services
Speaker 10: across that platform. So we're extremely well positioned to serve
Speaker 10: this space.
Speaker 2: And so basically they come to you for stuff, right like, Hey,
Speaker 2: I need this ingredient do this thing, or I need
Speaker 2: this piece of equipment to do this thing.
Speaker 10: Right Yeah, I'm not sure we would call it stuff, but.
Speaker 5: We break it down for you here, so talk about it.
Speaker 10: So we have you know, you can almost think about,
Speaker 10: you know, there's nothing in a laboratory that a scientist
Speaker 10: would need that we don't supply. We have over six
Speaker 10: million products. That's everything from chemicals and reagents, to equipment
Speaker 10: and instruments to you know, plastic wear and glassware consumables.
Speaker 10: Think about just what a scientist needs in order to
Speaker 10: conduct their research in a laboratory they would be able
Speaker 10: to procure from us. We look to be a one
Speaker 10: stop shop to meet all of our customers needs within
Speaker 10: that laboratory environment. And one of the things that we
Speaker 10: really focus on is you know, bringing efficiency, you know,
Speaker 10: to our customers. A lot of the discussion in our
Speaker 10: space is how do we return time to the scientists
Speaker 10: so that they can really focus on, you know, pushing
Speaker 10: forward these breakthrough therapies that are really game changing for
Speaker 10: patients around the world. And so we have, in addition
Speaker 10: to the products, a whole host of services and digital
Speaker 10: capabilities that we deploy really all meant to improve the
Speaker 10: efficiency of how a lab works.
Speaker 4: I like to ask, you know, when we talk to
Speaker 4: healthcare companies anywhere within the space, I like to ask
Speaker 4: this following question, how is your business impacted by the pandemic?
Speaker 4: And maybe how is it different today than it was before,
Speaker 4: because it just seems like that whole corner of the
Speaker 4: you know, that the healthcare space really had to adjust.
Speaker 10: Yeah, certainly interesting time from a lot of different aspects.
Speaker 10: And you know, I think it's important to point out
Speaker 10: that we did play a really important role in you know,
Speaker 10: helping address you know, the pandemic. A lot of our
Speaker 10: materials were being used to produce you know, the vaccines
Speaker 10: and as well as a lot of the materials that
Speaker 10: needed to go into produce the tests to detect COVID.
Speaker 10: But you know, there's probably a couple of different dynamics
Speaker 10: that that I would point out that we experienced during
Speaker 10: the pandemic, first, really unpredestant, unprecedented supply chain constraints. There
Speaker 10: was shortages you know, throughout the value chain that made
Speaker 10: executing our supply chain you know, rather challenging. We had
Speaker 10: you know, significant step up in demand to support you know,
Speaker 10: some of these COVID based workflows. And then as things
Speaker 10: started to normalize, of course, you know, our industry has
Speaker 10: been facing some of the headwindes associated with just uh
Speaker 10: normalization of procurement and supply chain trends. So it's been
Speaker 10: a really dynamic time. But I think we've we've weathered
Speaker 10: the storm well, and you know, we've offered a lot
Speaker 10: of value you know, during that process to focus on
Speaker 10: executing our growth strategy, and we're really pleased with how
Speaker 10: we're positioned coming out of all that.
Speaker 2: So, as I mentioned, the stock up ten percent so
Speaker 2: far this year, zero cell ratings, six holds and fifteen buys,
Speaker 2: with a twelve month price target of about twenty seven,
Speaker 2: we're almost there, or like a stone's throw away from that.
Speaker 10: Now.
Speaker 2: I was talking to Jonathan Palmer, he's our Bloomberg intelligence
Speaker 2: guy who covers your company, and he was saying that
Speaker 2: the debate now on the street is when you can
Speaker 2: really return to growth and show some profitability improvements.
Speaker 6: When is that?
Speaker 10: Yeah, So, you know, one of the things that I
Speaker 10: really like about our business is just the exposure we
Speaker 10: have to some really attractive end markets. You've reught ferenced
Speaker 10: bile pharma and biotech and healthcare space, which is more
Speaker 10: than sixty percent of our revenues. And when I look
Speaker 10: at the health of those end markets, you know, I
Speaker 10: think we're quite excited about the long term positioning of
Speaker 10: the space, really driven by record levels of new drug approvals,
Speaker 10: pipelines that are as robust as they've ever been, and
Speaker 10: new therapeutic platforms, whether that be you know, selling gene therapy,
Speaker 10: you know, GLP ones that have been getting a lot
Speaker 10: of attention. And so I would say the fundamentals for
Speaker 10: our space are are really robust, and you know, as
Speaker 10: some of these headwinds that have been plaguing the industry
Speaker 10: that we just talked about, whether it be supply chain
Speaker 10: or you know, just some of the normalization coming out
Speaker 10: of covid is, as those things subside, you know, I
Speaker 10: think we're really well positioned to, you know, for a
Speaker 10: strong setup and to be able to leverage the momentum
Speaker 10: that's that's in our end markets.
Speaker 4: So one of the I guess, just what's one of
Speaker 4: the bigger headwinds that you are facing here that you
Speaker 4: need to get you know, your your hands around to
Speaker 4: kind of move this forward here. I mean, again, Stock's
Speaker 4: done well, but what's a key challenge for you guys
Speaker 4: these days.
Speaker 10: Yes, when we looked at, you know, some of the
Speaker 10: things that have impacted our growth in our industry over
Speaker 10: the last years. So it's things like inventory d stockings
Speaker 10: as our customers are normalizing their inventory, is you know,
Speaker 10: some of the supply chain constraints, whether it be access
Speaker 10: to raw materials or even just our own production capacity
Speaker 10: that we've been able to you know deep bottleneck with
Speaker 10: with investments, or you know some of the funding constraints
Speaker 10: in biotech and things as the capital markets have you know,
Speaker 10: been a bit challenged here over the last year. So
Speaker 10: you know, those things have largely normalized. When I look
Speaker 10: at the instability of the business in the back half
Speaker 10: of that last year and into the early you know
Speaker 10: quarter here in twenty twenty four, you know, I would
Speaker 10: say that things have largely stabilized and you know, the
Speaker 10: business I think is poised for you know, a nice
Speaker 10: recovery trajectory here as we move, you know, through this
Speaker 10: year and into next year.
Speaker 2: Before I let you go, we got jobs Friday coming up.
Speaker 2: You got a blood ADP. We had a super strong
Speaker 2: manufacturing ism data. We got a good jolt number. How's
Speaker 2: your hiring front?
Speaker 6: Are you hiring?
Speaker 3: Are you not?
Speaker 7: What is it like to get and retain talent?
Speaker 5: Yeah?
Speaker 10: I mean you mentioned a lot of you know, leading
Speaker 10: indicators there that that I think we look at, and
Speaker 10: you know, we also look at a whole host of
Speaker 10: other you know, levels of you know, activity and laboratories, funding,
Speaker 10: capital markets, you know, the pipelines. I think we just
Speaker 10: kind of put all that together and it does certainly
Speaker 10: signal you know, I think strong momentum in our in
Speaker 10: our space, and you know, has this incredibly optimistic about
Speaker 10: where things are headed. Talent is is critical to us,
Speaker 10: and you know, we're we're proud of the fourteen thousand
Speaker 10: plus associates that we have around the world that are
Speaker 10: focused on, you know, growing our business and serving our
Speaker 10: customers and helping enable some of these breakthrough therapies that
Speaker 10: are that are being developed, and you know, We're continuously
Speaker 10: in the market, you know, adding capabilities, whether that be
Speaker 10: you know, new new capabilities to serve some of the
Speaker 10: new modalities like selling gene therapy or you know, some
Speaker 10: of the digital capabilities around AI and automation. But you know,
Speaker 10: we've got a global footprint. We're in one hundred eighty
Speaker 10: countries around the world, and so you know, this is
Speaker 10: the heart of our business ours and we continue to
Speaker 10: lean in to make sure that we have the right
Speaker 10: capabilities to serve our customers.
Speaker 2: All right, Michael, thanks lot.
Speaker 7: We really appreciate Michael S. Doublefield.
Speaker 2: He's a ban Tour CEO joining us from Allentown, Pennsylvania.
Speaker 2: That stock is up by one point two percent today,
Speaker 2: up ten percent plus for the year. As I mentioned,
Speaker 2: zero cells and five hold with seventeen buys, sixteen buys
Speaker 2: something like that, a lot of buys there on the
Speaker 2: stock with an average price target of the next twelve
Speaker 2: months or about twenty seven dollars.
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