Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
Speaker 1: with my co host of Bonnie Quinn. Every business day
Speaker 1: we bring you interviews from CEOs, A, market pros, and
Speaker 1: Bloomberg experts, along with essential market moving news. Find the
Speaker 1: Bloomberg Markets Podcast on Apple Podcasts or wherever you listen
Speaker 1: to podcasts, and on Bloomberg dot com. It is time
Speaker 1: for Bloomberg Opinion. We welcome Bloomberg Opinion columns. Jared Dillion.
Speaker 1: He's also an editor and publisher of the Daily Dirton
Speaker 1: app and investment strategists at Malden Economics based in Myrtle Beach,
Speaker 1: South Carolina. Jared, thanks so much for joining us here.
Speaker 1: Interesting column you had about mom and pop trading, this
Speaker 1: robin Hood app. This reminded me of kind of the
Speaker 1: late nineties when we had a lot of individual retail
Speaker 1: investors get in there really speculating at what turned out
Speaker 1: in hindsight in March of two thousand to be the
Speaker 1: peak and the bubble, particularly the dot com boom. Give
Speaker 1: us a sense of kind of what's happening now with
Speaker 1: these mom and pop investors and all the trading apps
Speaker 1: that are out there. Yeah, I wouldn't even say it's
Speaker 1: really modern pop. I mean these are young people. I mean,
Speaker 1: these are people in their twenties and early thirties, and
Speaker 1: I think people underestimate the scale of what is happening.
Speaker 1: I mean, you saw that robin Hood had three million
Speaker 1: accounts opened in the first quarter of a loan. You're
Speaker 1: talking about You're talking about just millions of people that
Speaker 1: have dived into day trading. And the interesting thing about
Speaker 1: this is that you know, for the last ten years
Speaker 1: there were a lot of retail investors that um jumped
Speaker 1: into the market, but they did it the right way.
Speaker 1: They did it slow, they did it with index funds,
Speaker 1: they paid low fees, and just over the last six months,
Speaker 1: everything has gone out the window. Jared, before we get
Speaker 1: to why no one should blame the FED for robin
Speaker 1: Hood and it's its sins and the sins thative emanated
Speaker 1: promis users, talk to us about what you can actually
Speaker 1: do on robin hood financials up because it seems like
Speaker 1: you can do some really sophisticated financial trades. You're not
Speaker 1: talking about just buying stocks and not even just shorting stocks.
Speaker 1: There's plenty of other things that you can do, and
Speaker 1: there doesn't appear to be a limit to the amount
Speaker 1: of leverage you can take. Yeah, I mean, robin Hood
Speaker 1: is a platform that allows options trading, and you know,
Speaker 1: I used to work in the options industry, That's where
Speaker 1: I started my career. And if you look back at
Speaker 1: you know, back then, total options volume in a given
Speaker 1: day across the Fork exchanges would be about two million contracts.
Speaker 1: Now it's up to about twelve million contracts. And these
Speaker 1: people are, you know, very uneddicated when it comes to options. Uh,
Speaker 1: they don't really know anything about option pricing at all,
Speaker 1: and they're just buying upside calls in stocks just for
Speaker 1: extreme amounts of leverage, just under the idea that stocks
Speaker 1: always go up. So, um, I think this is not
Speaker 1: going to end too well. Jared. I'm trying to get
Speaker 1: a sense of kind of what's driving this move into
Speaker 1: this retail trading in the in the you know, the
Speaker 1: robin Hood apps and all of that, and a lot
Speaker 1: of these young folks coming in into the market. And
Speaker 1: I've read it might be simply the fact that we're
Speaker 1: all stuck at home, we're all quarantined. Uh, there's no
Speaker 1: sports to bet on, there's no casinos to go to
Speaker 1: and to satisfy that speculative urge. Maybe folks are turning
Speaker 1: to the stock market, particularly the options market. Does that
Speaker 1: have value in your opinion? Now, that's that's absolutely what's
Speaker 1: going on. People are at home and board you know.
Speaker 1: I actually, um, you know, for five years I taught
Speaker 1: at the local university and I checked in with one
Speaker 1: of my former students and he's, you know, living in
Speaker 1: his mom's basement, quarantined and he's trading you know. Um,
Speaker 1: So it's a it's a function of it's a function
Speaker 1: of boredom. It's a function of getting no action on
Speaker 1: sports betting. I think it's also partially a function of
Speaker 1: the stimulus and unemployment money that's been going out because
Speaker 1: people are speculating with very small amounts of money. You know,
Speaker 1: I get questions about people with you know, they have
Speaker 1: a thousand dollars to put the work, and they're asking
Speaker 1: about how to trade stocks. And this goes to the
Speaker 1: kernel of your column because you say that rather than
Speaker 1: it brings with liquidity out there and thanks to the Fed,
Speaker 1: the real villains here are the discount brokers who have
Speaker 1: caught trading commissions to zero. Explained that Jared, Yeah, I mean,
Speaker 1: you know, commissions were never a huge portion of the
Speaker 1: discount brokers revenue. They were about or less. Uh, And
Speaker 1: these were competitive forces that drove commissions lower. I mean,
Speaker 1: it wasn't anything finister, It wasn't really a marketing employ
Speaker 1: to try to get more people to trade. It was
Speaker 1: just competitive pressures that drove commissions lower. So that's really
Speaker 1: you know, it's it's just like supply and demand. You know,
Speaker 1: if you lower the price of something, there's going to
Speaker 1: be more demand for it. And you've seen trading volumes
Speaker 1: just absolutely explode since there's no commission. Now, I've always
Speaker 1: been of the view that commissions and fees are not
Speaker 1: necessarily a bad thing because they shape investor behavior and
Speaker 1: then encourage buy and hold strategy. Just briefly, Jared, how
Speaker 1: much has this to do with Dave Portnoy, whose course
Speaker 1: Barstool Sports is founder and really hyped Robin Hood Financial
Speaker 1: and his day trading. I think it has quite a
Speaker 1: bit to do with it, actually, I mean, he has
Speaker 1: a pretty large following, and I think, you know, I
Speaker 1: think people take him a bit too literally and a
Speaker 1: bit too seriously. You know, he's gone after people like
Speaker 1: Warren Buffett, and Jim Simons and stuff like that, and
Speaker 1: he says he's the greatest day trader in the world.
Speaker 1: But you know, he's given confidence to a lot of
Speaker 1: people that they can do the same thing. Yeah. Man,
Speaker 1: it's just not that easy. As of course anyone who's
Speaker 1: done it for a living it can attest to Jared Dillion,
Speaker 1: his columnist for Bloomberg Opinion. He's editor and publisher of
Speaker 1: The Daily Dirt Nap also investment Strategists Add Mold than Economics,
Speaker 1: And of course he's the author of that book that
Speaker 1: I'm sure you've all read, Street Freak, Money and man
Speaker 1: as At Lehman Brothers, and another novel, All The Evil
Speaker 1: of This World. Jar Dileona, thank you for joining Paul.
Speaker 1: Can I ask you if you have a robin Hood
Speaker 1: trading account. I do not, absolutely do not. I wouldn't
Speaker 1: be allowed to. I'm not like Tom Keene. I'm not
Speaker 1: long the triple leverage all cash fund. But I'm also
Speaker 1: not day trading. I'm also not a gamer, which doesn't help. Apparently,
Speaker 1: if you're a trainer, you've got faster fingers. Some of
Speaker 1: the stocks that has performed exceptionally well during this pandemic
Speaker 1: is Amazon dot Com. The stock is up forty five
Speaker 1: percent year to date. It sports a market cap of
Speaker 1: one point three four trillion dollars. With a t company
Speaker 1: got and the stock got a new supporter this week
Speaker 1: on Wall Street. Law Martin senior analysts that need him,
Speaker 1: a company based in Los Angeles, initiated coverage this week
Speaker 1: with a by rating a thirty price target. Stocks currently
Speaker 1: trading at HUDD eighty three. Laura, thanks so much for
Speaker 1: joining us here. Give us your thesis on Amazon right here. So,
Speaker 1: I think the most important thing we're saying that's new
Speaker 1: on this name fall is that this is really a
Speaker 1: services company and not a product company, which is to say,
Speaker 1: because consumers relationships with with Amazon is from a consumer
Speaker 1: pacing where they think of it as an e commerce company.
Speaker 1: But today of his company's revenue comes from services, and
Speaker 1: they have an eight percent profit margins compared to e
Speaker 1: commerce which is a three percent profit margin. So when
Speaker 1: you look at contributions to actually operating profits, it really
Speaker 1: comes from services like prime video, like music, like advertising
Speaker 1: a huge here. We think they do eight billion of advertising.
Speaker 1: So together we value what we call the media businesses
Speaker 1: at five billion, which is about the same size as aws,
Speaker 1: which together means it's about eight services are about eight
Speaker 1: percent of the value here at Amacle, Laura, this is
Speaker 1: something that's an Amazon's DNA. You talk about Amazon having
Speaker 1: a track record of expanding total addressable market decisions, so
Speaker 1: it's just constantly, constantly expanding the people that it reaches,
Speaker 1: and all of those decisions are driving higher profitability and
Speaker 1: lower shareholder risk. So it feels like this may never end.
Speaker 1: I think that's possible. I think one of these things
Speaker 1: I cover oppur as well, and I think both Apple
Speaker 1: and Amazon they're about the same size of company, two
Speaker 1: seventy billion dollars a year of revenue. I think they
Speaker 1: both generate sixty billion dollars a free cash flow a year.
Speaker 1: Apple turns around and buys and shares and so it
Speaker 1: drives higher earnings for share growth with that. I think
Speaker 1: what Amazon does, by contrast, it takes creean of that
Speaker 1: and invest in what you just characterize as these can
Speaker 1: expanding you know, new verticals that are non visible, and
Speaker 1: it turns them into a WUS or advertising or groceries
Speaker 1: or delivery last mile delivery innovations, and then it reports
Speaker 1: out much lower free cash flow and much lower margins
Speaker 1: to apprentices of the incometry. So I think might never
Speaker 1: end because this is how Basis is wired. They have
Speaker 1: grown in these ways that for the last twenty years
Speaker 1: under the CEO Jeff Basis. So Laura talked to us
Speaker 1: a little bit about the uh cloud business that's really
Speaker 1: been a you know, a profit driver for Amazon for
Speaker 1: years and years. Investors were, I guess used to our
Speaker 1: conditioned to little to no profitability coming out of the
Speaker 1: core e commerce business, but once they really started building
Speaker 1: out the cloud business, it's been a real profit generator
Speaker 1: for them. How do you view the growth and the
Speaker 1: profitability of that business? You know, I think that it's
Speaker 1: important they break out the cloud business is separately financially,
Speaker 1: so there's been a lot of good financial analysis. What
Speaker 1: we would say of our value added in this messaging
Speaker 1: is that we think this is a playbook that you
Speaker 1: should look at Amazon repeat they're doing it now and
Speaker 1: advertising and what happens is when Amazon gets big enough
Speaker 1: it's something they're successful at, they break it out separately
Speaker 1: so you can value it separately. So um, we think
Speaker 1: that they do about eighteen billion dollars of advertising today,
Speaker 1: which has a profit margin and that business is soon
Speaker 1: going to get big enough. We think it is. Together
Speaker 1: the services businesses are almost as large as a WS.
Speaker 1: So we think at some point in the next two
Speaker 1: years they will break out these what I would call
Speaker 1: their media businesses or their media revenue streams into a
Speaker 1: separate business, and you will be able to value it
Speaker 1: and it will be more profitable than a WS. But
Speaker 1: right now it's hidden in this massive, you know, conglomerate.
Speaker 1: So I always call that. What's important about AWS is
Speaker 1: it is a playbook for how Amazon runs businesses and
Speaker 1: then uncovers it's hidden value over time so that Wall
Speaker 1: Street can more easily value it. You know, you talk
Speaker 1: about Amazon also having media asset values about five billion dollars.
Speaker 1: What happens there where a dollars going Laura, So there's
Speaker 1: advertising in their subscription. That prime subscription product has a
Speaker 1: profit margin. Let's remember that Netflix decieted at nine times revenue,
Speaker 1: and it loses money prime which is mostly for shipping,
Speaker 1: but twenty of prime subscribers stay there. There for the media,
Speaker 1: which is Twitch, which is really important, music and video.
Speaker 1: All of those assets are bundled in that prime subscription
Speaker 1: and that makes turn lower. It breaks the average revenue
Speaker 1: for user of the lifetime values higher UM and then
Speaker 1: they have advertising as well. So all of those businesses
Speaker 1: have much higher margins than the average, even higher than
Speaker 1: clouds by a lot, a much higher margin than cloud
Speaker 1: and that's you know, three times as higher margin as
Speaker 1: the e commerce business. So these media businesses, I think
Speaker 1: not only are they growing faster, they're helping churn fall
Speaker 1: for the commerce part of the Amazon's and they have
Speaker 1: much higher profitability in which was on capital. So, Laura,
Speaker 1: what does this mean for the i'll call them traditional
Speaker 1: media companies that you and I grew up covering. There's
Speaker 1: been a lot of consolidation. Is that enough or is
Speaker 1: there really not a boolk case to be made for
Speaker 1: some of these traditional vertically integrated media companies. UM, So
Speaker 1: I think Amazon is trying to Amazon is doing something,
Speaker 1: dear prints in our traditional media companies with you and
Speaker 1: I started in the world covering, And what I would
Speaker 1: say is they have a bigger they have a bigger
Speaker 1: they're thinking globally for one thing, um and and their
Speaker 1: margin structure is different. They're very much data and technology driven. UM.
Speaker 1: As you and I have seen from the past. You know,
Speaker 1: data alone does not good content make UM, So I
Speaker 1: don't necessarily think of Amazon as a core competitor. I
Speaker 1: think it is much more likely that if they decide
Speaker 1: to really go into the media business, they buy the
Speaker 1: Walt Disney Company or they buy Fox. They can buy
Speaker 1: these traditional media companies because their margin profile is globally
Speaker 1: scale much more profitable. But I gotta tell you, Paul,
Speaker 1: I think this man, this this company really thinks that
Speaker 1: much bigger total addressable market like we think he's going
Speaker 1: after the logistics market next. That's this one point six
Speaker 1: trillion dollar total addressable market like media is too small
Speaker 1: for him. But I don't think he's going to look backwards.
Speaker 1: A go ahead, Paul, Sorry, no, no, no, that was good. Uh.
Speaker 1: I guess we should ask a really about Apple on
Speaker 1: Monday as well, because it's the first virtual w WDC
Speaker 1: conference in in ever. Is there anything that you're anticipating
Speaker 1: that will blow us away? I think the most important
Speaker 1: thing we're waiting to hear from Apple is what's going
Speaker 1: on with the five get phone, because I think the
Speaker 1: stock has been running on the hopes that we have
Speaker 1: a five get phone this year. Um, it's going to
Speaker 1: be late. All of their products. We're going to be
Speaker 1: late because of the COVID pandemic shutting down factories, um,
Speaker 1: And so we're waiting to hear what's the new five
Speaker 1: get phone going to be? And I think I think
Speaker 1: then our next step is after we know what their
Speaker 1: product mix is gonna be and when it's coming out,
Speaker 1: when it's gonna they also usually announced when things are
Speaker 1: going to be hitting the market, shelves available for purchase, um,
Speaker 1: then we're gonna all have to go do surveys about
Speaker 1: does any consumer care? Is anyone buying a new Apple
Speaker 1: phone this year? I mean, I think that's a separate question.
Speaker 1: But first we need the data on what is Apple
Speaker 1: delivering to the marketplace and when all right, Laura's thank you,
Speaker 1: We will eagerly await that on Monday. But also just
Speaker 1: a very happy to chat with you about your initiation
Speaker 1: of coverage of Amazon. The company's a hidden value multiplier
Speaker 1: and so on. Looking for Amazon to hit thirty two
Speaker 1: hundred dollars in the next twelve months and obviously has
Speaker 1: a by rating on it. That's Laura Martin there, senior
Speaker 1: media analyst at Needham and Company, and of course Paul
Speaker 1: as soon as she said Disney, I I heard you
Speaker 1: park up exactly. Yeah, you have to just really think
Speaker 1: about the future of these traditional media companies, including Disney. Exactly.
Speaker 1: Let's get back to our market coverage now. We have
Speaker 1: Dave Pudla joining us and David Couldla of course as founder,
Speaker 1: CEO and chief investment strategist of Mainstay Capital about two
Speaker 1: point seven billion dollars in assets under management and named
Speaker 1: my Baron as Barons as one of the top financial advisors,
Speaker 1: one of the top twenty five over the past six years. David,
Speaker 1: great to speak with you again. We've been asking participants
Speaker 1: here of show to tell us why exactly stocks continue
Speaker 1: to reach new highs even if we see some volatility,
Speaker 1: and even if today is quotruple witching, it's a bit
Speaker 1: of a bit of an exception. Well, we've been in
Speaker 1: Good Morning, Bonnie. The mantra that I think all investors
Speaker 1: need to heed all professionals, uh, that somehow I think
Speaker 1: have forgotten and are remembering now is that the mantra
Speaker 1: of don't fight the Fed. And we've seen some professionals,
Speaker 1: some bears that have thrown in the town recently and
Speaker 1: come back to a bullish dance. But This has been
Speaker 1: our mantra on this rally all the way back up,
Speaker 1: and I think that it continues to push stocks higher.
Speaker 1: You can't. It's just very difficult to justify these levels
Speaker 1: and even certainly continued advance on fundamentals of uh some
Speaker 1: of these companies, fundamentals of the market and the economic reality.
Speaker 1: But it's it's essentially fed stimulus and central bank stimulus.
Speaker 1: Um this continued continuing to put push asset prices higher
Speaker 1: and specifically stocks higher. So, David, you know, it's kind
Speaker 1: of my thought here and what what I read in
Speaker 1: here and talk to folks like you, that a lot
Speaker 1: of this market movement, particularly the rally off the bottom,
Speaker 1: which we're you know, roughly four off the bottom, has
Speaker 1: been driven literally by a handful of stocks, the fang
Speaker 1: plus kind of names. How broad based is this? And
Speaker 1: if to the extent it's not broad based and the
Speaker 1: depth is not there, the breath is not there, how
Speaker 1: concerning is that to you? It's not concerning At this point.
Speaker 1: We've seen, really, we've seen that kind of advance for
Speaker 1: that kind of narrow leadership for quite a while. We
Speaker 1: were seeing that in ten and early before we had
Speaker 1: the bear market decline, and I think a lot of
Speaker 1: that is a function of, you know that there was
Speaker 1: this a lot of concern about the fang stocks, a
Speaker 1: lot of concern about big cap tech that you know,
Speaker 1: and specifically the fang stocks either you know, those stocks
Speaker 1: that are big cap tech or retail stocks that are
Speaker 1: being enabled by technology, that it was a house of
Speaker 1: cards that was eminently going too far, eventually going to crumble.
Speaker 1: And you know, our our school of thought on that
Speaker 1: has been that, you know, technology is changing the world,
Speaker 1: technology is eating the world. And if you look at
Speaker 1: what happened, what's happened through the pandemic, some of these um,
Speaker 1: the cloud stocks, I T stocks, you know, those have
Speaker 1: been the enablers for uh, the different businesses that have
Speaker 1: done quite well through the pandemic. It's just another another
Speaker 1: scenario where we've seen how technology has mattered. And so
Speaker 1: we think that, uh, it's it's a secular grows story
Speaker 1: that remains and that these stocks are going to continue
Speaker 1: to trade at high multiples, are going to continue to
Speaker 1: do well, and we're continued well, we will continue to
Speaker 1: see that leadership. We saw a rotation back into value
Speaker 1: stocks here recently, and it was just another head fake,
Speaker 1: the the tech stocks I t cloud, all those came
Speaker 1: right back into leadership positions, and you know, we we
Speaker 1: have been uh overweight growth stocks. We continue to be.
Speaker 1: We don't fall for those value stock head fakes. And
Speaker 1: except for we've taken a Barbell approach in our portfolios
Speaker 1: here more recently over the past couple of months because
Speaker 1: the we call it the lockdown rebound plays. But basically
Speaker 1: some of these cyclical areas, whether it's the airlines, travel, leisure, uh, energy, construction, housing,
Speaker 1: you know, there's been some some good plays on those
Speaker 1: on the rebound, but we're staying with these secular growth stories,
Speaker 1: specifically technology. Dave, how long does this narrative play out for? Though?
Speaker 1: I mean it seems like nothing can go wrong for
Speaker 1: these companies. I mean Amazon put on a four hundred
Speaker 1: billion dollars worth of market capitalization during the pandemic. Well
Speaker 1: that's just it. I mean, we we say that nothing
Speaker 1: can go wrong, and I think it's that they're just
Speaker 1: in a place where, you know, everything is right for them. Amazon,
Speaker 1: you know, Amazons being a category killer for years and
Speaker 1: will continue to be, you know, coming back to what's
Speaker 1: happened during the pandemic, Um, there was an e t
Speaker 1: F that we invested in called Clicks that was it
Speaker 1: was just it was a slam dunk. It is an
Speaker 1: e t F along short et F that is, it
Speaker 1: was long uh, e commerce and short brick and mortar.
Speaker 1: The government was closing down brick and mortar stores. Even
Speaker 1: people that weren't accustomed to shopping online. We're being compelled
Speaker 1: or almost forced to do so. So that was a
Speaker 1: boost to Amazon and other online retailers. But in some
Speaker 1: of those habits have changed forever um and and so
Speaker 1: people are continuing to move more and more to shopping online. Uh.
Speaker 1: That trend will continue, So the Amazons of the world,
Speaker 1: and specifically Amazon will continue to do well. So, David,
Speaker 1: if I believe that the economy is going to slowly
Speaker 1: rebound in the back half of this year, then have
Speaker 1: a much stronger I want to go along some cyclicals.
Speaker 1: Do I want to go along some transportations? Something in
Speaker 1: the rails, the truckers, the you know, the cargo ships
Speaker 1: that are gonna be shipping all that cargo around the globe?
Speaker 1: Is that a play? If I believe in a stronger yeah,
Speaker 1: I think so. You know, I think you need to
Speaker 1: be careful. You know, you need to look at the charts. Uh.
Speaker 1: You know when we look at the airlines, for instance,
Speaker 1: you know there is an opportunity because they took such
Speaker 1: a plunge down as much as sixty on the downside,
Speaker 1: you know when they come back to their pre COVID levels. Um.
Speaker 1: You know, we look at the chart of the airlines
Speaker 1: and it's it's like an e KG with noise in it.
Speaker 1: And you know that's an industry that operates and razor
Speaker 1: thin margins with an airline going out of business every
Speaker 1: filing for bankruptcy every year or two. We look at
Speaker 1: construction and housing that was on a nice upward slope
Speaker 1: that got interrupted. It's had a nice rally back. All
Speaker 1: those other cyclicals you're talking about though, um, some of
Speaker 1: them have a long runway left in this in this rebound,
Speaker 1: and I think that you, you know, investors need to
Speaker 1: look at those areas to include in portfolios as we
Speaker 1: moved through this recovery in the economy, but not just
Speaker 1: here but globally. David couldla thank you so much for
Speaker 1: joining us. David's the CEO and chief investment strategist at
Speaker 1: main Stake Capital Management. About two point seven billion dollars
Speaker 1: under management. We always love speaking to David, very thoughtful
Speaker 1: analysis of the market and Vannie. You know, I love
Speaker 1: how he talked about don't fight the FED. That was
Speaker 1: literally the first lesson I learned on Wallstreet. When I
Speaker 1: was on the pain Warber block trading desk back in
Speaker 1: the mid to late eighties, managing director came up to
Speaker 1: me and said, why are you selling stocks here? Said, well,
Speaker 1: you know, and I said, he said, the rates are
Speaker 1: going down, kid, buy stocks, you know. So that's one
Speaker 1: that is stuck with me. And well, do you have
Speaker 1: a photograph of that time? No, I do not, thankfully. Yeah.
Speaker 1: It was a lot of fun, but so but it's
Speaker 1: atually interesting. I think David's right spot on here. We've
Speaker 1: had central banks around the world, UH and you know,
Speaker 1: led by the US Photo Reserve pumping liquidity into the marketplace.
Speaker 1: And some someone we had on the show coined a
Speaker 1: great phrase which I love, which is back stopping. The
Speaker 1: markets are back stopping risk assets here, and that's kind
Speaker 1: of what it feels like. You get a little bit
Speaker 1: of a pullback in the market, but investors still have
Speaker 1: confidence to come back in uh and buy that dip
Speaker 1: despite some of the economic conditions we are facing. It
Speaker 1: is Juneteenth. It is perhaps also the first time that
Speaker 1: nationally this is being recognized, and companies are actually recognizing junetee,
Speaker 1: some of them offering employees who so wish to take
Speaker 1: a day off Morgan's down, the Target and Uber among them.
Speaker 1: But whether the moves will be scrutinized as enough, or
Speaker 1: whether companies will also be forced to devote resources actually
Speaker 1: make concrete, measurable changes in areas such as hiring, vendor diversity,
Speaker 1: that's still up for grabs. Let's bring in Bloomberg Finance
Speaker 1: reporter Laana Nuyon has been looking at what companies have
Speaker 1: been doing and whether it's going to be enough to
Speaker 1: satisfy public impressions. Right now, Lana, and thanks for joining
Speaker 1: first give us an idea of just how widespread the
Speaker 1: moves have been, particularly the juneteenths recognition. Thanks Fohnnie, it's
Speaker 1: nice to speak to you. So, I think the widespread
Speaker 1: factor of this is very interesting because it's more about
Speaker 1: the major companies that have done it. So from Nike
Speaker 1: to Target, we're seeing very large household names give employees
Speaker 1: a day off in recognition of June teams. So I
Speaker 1: think there's an element of corporate leadership on top of
Speaker 1: which you have banks like JP Morgan, which is closing
Speaker 1: branches early, and other banks, Bank of America and City
Speaker 1: which basically told staff that they could take a day,
Speaker 1: a personal day, um to to commemorate junetein. So we
Speaker 1: are seeing a lot of really really big companies try
Speaker 1: to mark the moment in some way, and so that's
Speaker 1: just having a ripple effect across corporate America. York City
Speaker 1: to make Juneteenth city school holiday next year, that's according
Speaker 1: to mayor the Belasia. So just another example and had
Speaker 1: to lean on. I have to admit, I'm I always
Speaker 1: consider myself a fairly well read student of American history,
Speaker 1: but I have to admit I had never heard the
Speaker 1: term Juneteenth or its significance until a couple of days ago.
Speaker 1: What's the phenomenon behind this? Is this just a recognition
Speaker 1: of the racial inequality in this country and ways to
Speaker 1: kind of, uh, you know, kind of call it to attention. Yes, Paul,
Speaker 1: And I think that you're not alone in in being
Speaker 1: new to this. I think, um, it's lesser known outside
Speaker 1: of the black community. Um, and it has suddenly kind
Speaker 1: of jumped onto the agenda of many people, including ourselves
Speaker 1: as business reporters. UM. And so the movement is similar
Speaker 1: to Martin Luther King Day to commemorate the end of
Speaker 1: slavery UM and to recognize and fight against um, you know,
Speaker 1: racial inequality. UM. One of those sources I spoke to
Speaker 1: for the story said that she and her family and
Speaker 1: her network used the day as a day of service
Speaker 1: and reflection to be with their families or to participate
Speaker 1: in the community service events and so UM you know,
Speaker 1: there there is a push here by the corporate sector
Speaker 1: to acknowledge that people in the black community, UM, you know,
Speaker 1: take this seriously, and also people outside of that community
Speaker 1: as well, and so UM you know, the marketing consultant
Speaker 1: I spoke to said, last year, nobody did anything for Juneteenth,
Speaker 1: and now suddenly this wave of companies is doing UM
Speaker 1: events and and commemorating in some way. Yeah. I was
Speaker 1: on air when Nike announced thought it was going to
Speaker 1: take juneteenths as a vacation date for employees who wanted
Speaker 1: to observe it. And I actually thought, in some ways
Speaker 1: it was I don't want to say a joke, because
Speaker 1: it's an important thing and it's it's nice that a
Speaker 1: company would recognize that, but it also does feel very
Speaker 1: much like lip service. Lannan, I mean, when are we
Speaker 1: going to see actual you know, corporate mandates devoting resources
Speaker 1: to making measurable changes, doing things like fixing their hiring practices,
Speaker 1: making sure that there's vendor diversity. So for a recently
Speaker 1: was one of those vendors that signed up to what's
Speaker 1: been called a fifteen percent pledge. The founder of brother
Speaker 1: is talking about the fifteen percent pledge, so that at
Speaker 1: least fifteen percent of products and stores are from black
Speaker 1: owned businesses. We need more of this, No, Ronnie, that
Speaker 1: is a very important question because a lot of the
Speaker 1: sources I spoke to said this is extremely important. That
Speaker 1: people are not just going to be sort of pleased
Speaker 1: with a an announcement for one day or an observance
Speaker 1: for one day. This is supposed to be part of
Speaker 1: a lasting change, and people in the community are looking
Speaker 1: at UM, at these companies to see, first of all,
Speaker 1: what is your record in the past, what are you
Speaker 1: doing to UM, you know, fix any previous problems, and
Speaker 1: then what are you doing going forward to hire black people,
Speaker 1: elevate them in management and UM you know, enforced policies
Speaker 1: that are going to help to rectify racial inequality. Um.
Speaker 1: Another person that we suppose to in a brand consult
Speaker 1: or brand strategy firm said, if it's just this day
Speaker 1: and the company doesn't do anything else, more broadly, it's
Speaker 1: going to ring hollow, and consumers and and other business
Speaker 1: partners are going to see that. So, UM, everyone is
Speaker 1: looking to see that the Juneteenth actions are backed up
Speaker 1: with broader measures in order to correct racial inequality. Interesting.
Speaker 1: I mean, you know, employees Lennon are certainly like reflecting
Speaker 1: the broader populous, you know, more sensitive arguably just in
Speaker 1: the last couple of weeks months to racial inequality. Uh.
Speaker 1: Is this a reflection companies trying to do really the
Speaker 1: right thing, or again, as Vannie suggested, maybe it's just
Speaker 1: a little bit of lip service. I think the jury
Speaker 1: is out, Paul. I think there are some companies that
Speaker 1: are really trying to listen and do the right thing,
Speaker 1: and others that just want to make sure that they're
Speaker 1: covering themselves and having the optics of you know, commemorating
Speaker 1: the day. So the marketing firm that we spoke to
Speaker 1: said that employees in companies that they surveyed UM really
Speaker 1: do support anti racism protests. Two percent of them support
Speaker 1: their protests, and fifty five percent say that their employers
Speaker 1: should respond directly to racial issues. So there's a conversation
Speaker 1: that's taking place in worth places right now that has
Speaker 1: is much more open about race than every husband before. Hey, Len,
Speaker 1: and thank you so much for joining us and sharing
Speaker 1: this reporting that you had Lennon new and Bloomberg Financial reporter,
Speaker 1: uh talking about Juneteenth and again just coming across the
Speaker 1: Bloomberg terminal headline New York City to Juneteenth a city
Speaker 1: and school holiday next year, and that's according to Mayor
Speaker 1: Bill Deblasia. So again falling along what we've seen a
Speaker 1: lot in corporate America. Uh, as we tend to deal
Speaker 1: with this racial inequality. This is Bloomberg. Thanks for listening
Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen
Speaker 1: to interviews at Apple Podcasts or whatever a podcast platform
Speaker 1: you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonnie Quinn,
Speaker 1: and I'm Paul Sweeney. I'm on Twitter at pt Sweeney.
Speaker 1: Before the podcast, you can always catch us worldwide at
Speaker 1: Bloomberg Radio