Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business
Speaker 1: Week Inside from the reporters and editors who bring you
Speaker 1: America's most trusted business magazine, plus global business, finance and
Speaker 1: tech news. The Bloomberg Business Week Podcast with Carol Messer
Speaker 1: and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Well, from money in the markets and in stocks to
Speaker 2: what's going on in the presidential election. The surging enthusiasm
Speaker 2: for Vice President Kamala Harrison Georgia and North Carolina is
Speaker 2: convincing local Democratic leaders that she can score the first
Speaker 2: double win in the southern swing states since Jimmy Carter.
Speaker 2: We got Michael Sasso with us Bloomberg News Real Economy reporter.
Speaker 2: He joins us from our Atlanta bureau, North Carolina and Georgia.
Speaker 2: Last time I checked, Michael, those were still firmly in
Speaker 2: the toss up category. What data are the Harris campaigns
Speaker 2: seeing that make them think they can pull this off?
Speaker 3: Well, some of the data comes from our own poll.
Speaker 3: The new Bloomberg Morning Console poll shows that the Harris
Speaker 3: campaign is up by two points in both Georgia and
Speaker 3: North Carolina. It's a somewhat of an improvement from just
Speaker 3: a month ago when Kamala had just ascended to the
Speaker 3: top of the ticket by a couple points in each state.
Speaker 3: But it's significantly better, I mean, six or seven points
Speaker 3: better than President Biden was doing about a month a
Speaker 3: half ago. So they're seeing some very positive numbers in
Speaker 3: each state.
Speaker 4: And even still though, I mean, I feel like it's
Speaker 4: important to note that we're still within the margin of error.
Speaker 4: I mean, even with this big surgeon momentum, we're kind
Speaker 4: of talking about a dead even heat here, which isn't
Speaker 4: exactly a runaway. And this, of course is such a strange,
Speaker 4: compressed campaign for Kamala Harris. It'll be really interesting to
Speaker 4: see where that goes from here. But you think about,
Speaker 4: of course, your reporting that you have, and you spin
Speaker 4: it into next week's debate. I mean, how much potential
Speaker 4: is there to sort of change the polling based on
Speaker 4: what we actually hear in the debate between Donald Trump
Speaker 4: and Kamala Harris.
Speaker 3: Well, I don't know that kind of goes beyond some
Speaker 3: of the reporting that I've done, but you're right, it
Speaker 3: is it remains very close. Some of the caveats there
Speaker 3: in North Carolina, for example, this is a very despite
Speaker 3: the big cities like Charlotte and Raleigh. It remains a
Speaker 3: fairly rural state. It has the second largest rural population
Speaker 3: in America, and so those tend to lean Republicans. So
Speaker 3: you know they're making efforts. But yeah, that is some
Speaker 3: of the There is some there are some questions about
Speaker 3: whether the polling will hold up, in whether some of
Speaker 3: the some of the what do you call it enthusiasm
Speaker 3: will wane particularly, We'll see, have to see what it
Speaker 3: comes out of the debates.
Speaker 2: As you said, Yeah, answering a question online or even
Speaker 2: on the phone is certainly different than getting to the
Speaker 2: pulls on or ahead of election day when you can
Speaker 2: vote in some of these areas. So every year, every
Speaker 2: four years or every two years after an election, there's
Speaker 2: a lot of hand raining that happens as to you know,
Speaker 2: which polls were spot on and which polls missed. We
Speaker 2: don't know what that's gonna say yet, But one thing
Speaker 2: that you can tell us, Michael, is the ground game
Speaker 2: in these states from the Harris campaign. What are they
Speaker 2: doing with all the volunteers that they've actually been able
Speaker 2: to garner in the last six weeks or so.
Speaker 3: Yeah, that's a big story. There are something like fifty
Speaker 3: two thousand additional volunteers that have come forward in between
Speaker 3: the two states. And that's a lot of people. So
Speaker 3: at the local level, places like Fayetteville, Georgia, and Greensboro,
Speaker 3: North Carolina, fairly small, middle sized cities, they're seeing twenty
Speaker 3: to thirty people new people every day. And whether they're
Speaker 3: trying the Harris pain is trying to put them to
Speaker 3: work mostly canvassing. What they tell me is there's nothing
Speaker 3: more effective than knocking on doors. And so if you
Speaker 3: live in a swing stay right now, you're most likely
Speaker 3: going to get a door knock. And you know, so
Speaker 3: that's they're also doing phone banking. You know, I hear
Speaker 3: they're even having pancake breakfast. Then pancake breakfast. Democratic pancake
Speaker 3: breakfast in Veayetteville, Georgia is through the roof right now,
Speaker 3: kind of standing room only. From from what I'm told.
Speaker 2: Well, I was actually down in your state just a
Speaker 2: couple of weeks ago. Sorry for not stopping by the office.
Speaker 2: By the way, I didn't have time. I was there
Speaker 2: for a Bloomberg event. Katie's giving me this look devastating.
Speaker 2: You're a terrible person. But one thing I did notice
Speaker 2: in my hotel room was when I turned on the television,
Speaker 2: was that literally no joke, every other ad was for
Speaker 2: Trump or Harris. And like, you are in a battleground
Speaker 2: state when you cannot avoid seeing some sort of political
Speaker 2: advertisement for the top of the ticket. Just give us
Speaker 2: an idea of what things are like on the ground
Speaker 2: for you, as somebody who covers this stuff but also
Speaker 2: lives in a swing state.
Speaker 3: Well, I have an eleven year old daughter, Veronica, and
Speaker 3: she can cite pretty much every Trump and Harris' campaign
Speaker 3: ad out there. I don't know, maybe it's a little
Speaker 3: bit scary because some of them get kind of negative,
Speaker 3: but you know, there's enough that she can cite the
Speaker 3: campaign ads as well as the pharmaceutical ads that are
Speaker 3: kind of unconstantly.
Speaker 2: You know, you actually bring up a funny You actually
Speaker 2: bring up a funny point though with that, which is
Speaker 2: that an eleven year old is not the target demographic
Speaker 2: of who they want to reach, Like they're only trying
Speaker 2: to reach a few, you know, as their own. Mark
Speaker 2: Gongloff told us, like a football stadium full of people
Speaker 2: who will decide the election in a handful of states, Michael,
Speaker 2: So it's pretty remarkable to see all the money spent
Speaker 2: on such a small number of people.
Speaker 3: Yeah, yeah, absolutely, what did they say? The state of
Speaker 3: Georgia came down to ten eleven million people came down
Speaker 3: a twelve thousand votes four years ago, So you're right.
Speaker 3: I mean that is well within the margin of error
Speaker 3: in these polls.
Speaker 2: Michael Sasso, Bloomberg New's Real Economy Reporter, joining us from
Speaker 2: our Atlanta bureau in the heart of a swing state.
Speaker 2: Down there in Atlanta.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from two to five pm Eastern. Listen
Speaker 1: on Apple card Play and then brout Auto with a
Speaker 1: Bloomberg Business app, or watch us live on YouTube.
Speaker 2: Well, attention New England listeners. Check out Bloomberg Radio in
Speaker 2: and around Boston on ninety two nine FM. Maybe you're
Speaker 2: listening to us right now on ninety two nine FM.
Speaker 2: It is your news source for business news from the
Speaker 2: financial center of New England. Bloomberg Radio ninety two nine
Speaker 2: FM in and around Boston. Well, speaking of Boston, it
Speaker 2: is the birthplace. I didn't know this before. Yeah, it's
Speaker 2: the birthplace of public transit. Did you know that?
Speaker 5: I didn't know it.
Speaker 3: You didn't know that, but now I do.
Speaker 2: Well, now you do.
Speaker 5: That's a treat.
Speaker 2: The country's first ever subway tunnel, it's still used today
Speaker 2: to connect the stop closest to the Mayor's office with
Speaker 2: the city's famed public garden. But Katie. Like other US
Speaker 2: transit systems, Boston has struggled with low ridership post pandemic.
Speaker 2: Decades of under investment have also left the region with
Speaker 2: antiquated infrastructure, a mishmash of technology, and a daunting budget shortfall.
Speaker 2: In fact, I could be saying the same thing about
Speaker 2: New York.
Speaker 5: That's true.
Speaker 2: Anyone listening or watching us in New York knows that well.
Speaker 2: Boston Mayor Michelle Wu has launched a social media campaign
Speaker 2: highlighting the transit systems shortfalls.
Speaker 6: Good morning, We are here in Hyde Park on every
Speaker 6: any day a little before.
Speaker 5: Nine am, and we're here to commute with tochi.
Speaker 2: Uh go into benaf Barbart.
Speaker 7: We're gonna say the bus a train at the end
Speaker 7: of the bus again.
Speaker 2: How long should we be expecting the trip to be by?
Speaker 8: Okay, let's go.
Speaker 2: A bus to a train to a bus about an
Speaker 2: hour commute. That type of thing has serious financial and
Speaker 2: economic implications not just for individuals, but for entire city economies.
Speaker 2: That's where Kate Deneen comes in. She's president in CEO
Speaker 2: of a Better City. It's a nonprofit made up of
Speaker 2: business leaders to promote Boston's economy and the quality of
Speaker 2: life for residents. Kate joins us from Boston. Kate, good
Speaker 2: to have you with us. Help us make the connection
Speaker 2: to reliable, solid, public transit in the economic health of
Speaker 2: a city.
Speaker 5: Well, thank you so much for having me.
Speaker 7: So from a Better Cities perspective, Greater Boston can't survive,
Speaker 7: let alone thrive without a safe, reliable, affordable, and a
Speaker 7: resilient public transit system. So it's really the key to
Speaker 7: unlocking our equitable growth and our global competitiveness. And so
Speaker 7: we see it as a foundational investment when we think about,
Speaker 7: you know, current affordability and retaining and recruiting new talent.
Speaker 4: And let's talk about the concept of congestion pricing, because
Speaker 4: of course our New York listeners, that's probably where their
Speaker 4: mind went. You think about congestion pricing at it as
Speaker 4: it had been proposed in New York. It was theoretically
Speaker 4: going to help boost revenue for the city subways and
Speaker 4: reduce traffic, two things I'm sure Boston goers would like
Speaker 4: to see as well. Congestion pricing, as we know in
Speaker 4: New York was pulled there at the last minute. Do
Speaker 4: you think it's a viable option for the City of Boston?
Speaker 5: Can you see that future?
Speaker 7: So I think we're at an inflection point where we
Speaker 7: need to have all options on the table. So the
Speaker 7: governor has convened a transportation funding task Force. I sit
Speaker 7: on that task force alongside other business leaders, and we
Speaker 7: are in the process right now of assessing different revenue
Speaker 7: raising policies, and that includes things like increasing fees on
Speaker 7: ubers and lifts, and then really more ambitious policies including
Speaker 7: roadway pricing and broad based taxes. So right now everything
Speaker 7: is on the table. All eyes are co watching what's
Speaker 7: happening in New York City. I think people are eager
Speaker 7: to see if that plan does come back into play.
Speaker 7: So when you look at Greater Boston, I think we
Speaker 7: are thinking about our existing tolling infrastructure. Where could we
Speaker 7: add new tolls, Where could we ultimately experiment with things
Speaker 7: like variable time of day pricing, you know, colloquially known
Speaker 7: as congestion pricing. So I think all options need to
Speaker 7: be on the table.
Speaker 2: I can tell you what's happening here in New York
Speaker 2: at this point, and it's nothing as of now. As
Speaker 2: you know, it was supposed to go into effect at
Speaker 2: the end of June and the governor decided to pull
Speaker 2: the plug on it at the last minute.
Speaker 8: Okay.
Speaker 2: We know the importance of reliable public transit in cities
Speaker 2: and how important it is to the economy, and we
Speaker 2: know that it costs money. But as soon as you
Speaker 2: start to raise that revenue, people say, I don't want
Speaker 2: to pay for it. How do you get people on
Speaker 2: the same page and help them understand that, well, this
Speaker 2: money will be used for something that will ultimately benefit
Speaker 2: including you, right right.
Speaker 5: So I think that your intro was spot on.
Speaker 7: You know, we are the birthplace of the American Revolution
Speaker 7: and the birthplace of public transit. So we have an
Speaker 7: aging infrastructure that has really suffered from decades of under investment.
Speaker 7: So we are at an inflection point again where the
Speaker 7: good news is that we have new leadership in place
Speaker 7: at the MBTA.
Speaker 5: We call it the tee here.
Speaker 7: Actually, somebody who came from the New York Transit System
Speaker 7: General manager Phil eng and he is starting to restore
Speaker 7: public trust in the system. Folks are seeing that the
Speaker 7: Tea is making smart investments in things like track improvement.
Speaker 7: Right This is really foundational work that is very disruptive.
Speaker 7: But there is a sentiment now here in Boston that
Speaker 7: this short term pain is worth the long term gain.
Speaker 7: So we're starting to, I think, rebuild trust with both
Speaker 7: writers and with those in the legislature that are going
Speaker 7: to be needed to enact any of these policies that
Speaker 7: we're talking about. And I think that's step number one.
Speaker 7: I think step number two is continuing to lean in
Speaker 7: on transparency so that everybody can see the results of
Speaker 7: the current investments that are being made. And that is
Speaker 7: an uphill battle for sure, but we're starting to see.
Speaker 5: The fruits of some of this labor that's happening right now. Well,
Speaker 5: can we be specific here?
Speaker 4: I feel like we're dancing around what we're talking about.
Speaker 4: So we're talking about raising fees right, like we're talking
Speaker 4: about making it more expensive to ride the Tea. I mean,
Speaker 4: walk us through some of the options here. You have that,
Speaker 4: and there's the communication challenge of trying to communicate that
Speaker 4: this isn't the long term benefit that you will feel this.
Speaker 4: I mean, what other feasible options are there beyond just
Speaker 4: raising the cost? Is that really the only one?
Speaker 7: So right now we're not focused on raising the cost
Speaker 7: of riding the tea. We in fact would love to
Speaker 7: experiment with new fair policies that makes it cheaper and
Speaker 7: easier for people to ride the tea. We're trying to
Speaker 7: assess different revenue raising policy outside of user fees that
Speaker 7: could go toward supporting both operating and capital investments at
Speaker 7: the tee. So we don't want to be raising faars
Speaker 7: on writers. We also don't want to be cutting service,
Speaker 7: but we want to be thinking about different different levers,
Speaker 7: like I said, potentially increased tolling, potential broad based taxes,
Speaker 7: adjusting existing fee structures like t NC fees, FeAs on
Speaker 7: ubers and lifts, or r m V fees. You know,
Speaker 7: there are a lot of different policy levers that have
Speaker 7: been put into play in different parts of the US
Speaker 7: and abroad, and so right now we're assessing all of
Speaker 7: those options.
Speaker 5: But it really you know.
Speaker 7: When when it comes to actually getting those policies across
Speaker 7: the finish line, I think it's on the business community
Speaker 7: and the advocacy community, and of course the t to
Speaker 7: make the case that money that is given to the
Speaker 7: tea is.
Speaker 2: Well spent to Yeah, that's very briefly, just in twenty seconds,
Speaker 2: what I wanted to end on. I think critics might say, yeah, well,
Speaker 2: there could be some inefficiencies when it comes to public trands.
Speaker 2: It certainly critics say that here in New York just
Speaker 2: in twenty seconds. Other places you think where without cutting service,
Speaker 2: they could actually be more efficient.
Speaker 7: Certainly, there's always an opportunity to capitalize on efficiencies. I
Speaker 7: think one way to ensure that the agency is using
Speaker 7: money more efficiently is to ensure that they have the
Speaker 7: procurement tools that they need to get the money out
Speaker 7: the door quickly. And they don't have all of those
Speaker 7: tools that they need. So it's not just about more
Speaker 7: money on the operating capital side, it's about the right
Speaker 7: procurement mechanisms to ensure that that money is being spent effectively.
Speaker 2: Hey, kath Deanene really appreciate you taking the time and
Speaker 2: joining us on Bloomberg BusinessWeek, President and CEO of a
Speaker 2: Better City, the nonprofit up in Boston.
Speaker 1: You're listening to the Bloomberg Business Week podcast listen live
Speaker 1: each weekday he is starting at two pm Eastern on
Speaker 1: Apple Car play Royd Auto with the Bloomberg Business. You
Speaker 1: can also listen live on Amazon Alexa from our flagship
Speaker 1: New York station Just Say Alexa playing Bloomberg eleven thirty.
Speaker 2: All right, I got another pop quiz for you. What
Speaker 2: are the brand's original Penguin by Mon Singware, Laundry by
Speaker 2: Shelley Siegel, Kubabera, Ben Hogan, Grand Slam, John Henry, Manhattan, Access,
Speaker 2: and of course Perry Ellis all have in common.
Speaker 4: I was hoping that you tell me.
Speaker 2: Actually, okay, I will tell you. They're all part of
Speaker 2: the portfolio of Perry Ellis International. It's the privately held clothing, fashion,
Speaker 2: cosmetics and beauty company that was started close to sixty
Speaker 2: years ago. We got with us Oscar Feldon Christ, the
Speaker 2: president and CEO of Perry Ellis International. He joins us
Speaker 2: here in the Bloomberg Interactive Brokers studio. How are you.
Speaker 8: I'm doing great? Thank you for having me today. It's
Speaker 8: a beautiful day in NYC.
Speaker 2: Yeah, it is nice up here today. Finally in the
Speaker 2: beginning of fall too humid. Oscar, Yes, people here, Perry
Speaker 2: and they think of one brand, I think, but it's
Speaker 2: a portfolio of brands, and I didn't even mention the
Speaker 2: licensing that you guys do Nike, Callaway, PGA Tour, Jack
Speaker 2: Nicholas for golf apparel. Explain that the sort of the
Speaker 2: way the brand works and the licensing versus the actual apparel.
Speaker 8: So where our business is basically a we operate with
Speaker 8: inbound licensees, where it's as you had mentioned, Callaway, Nike,
Speaker 8: PGA Tour, and Jack Nicholas. Then we have brands that
Speaker 8: we own, which are of course Perry Ellis, Original Penguin,
Speaker 8: Laundry by Shelley Siegel, and Kube Vera, just to name
Speaker 8: a few, And we operate the business seamlessly. So we work,
Speaker 8: we license product category gries out that we will never
Speaker 8: produce in house, so for example NetWare or if we
Speaker 8: want to go into the home business. And we operate
Speaker 8: today in trying to develop the brands as pure lifestyles
Speaker 8: because that today is very important. When the individual shops,
Speaker 8: they shop for a brand that they know, and if
Speaker 8: they can buy the same brand that they have security
Speaker 8: of what the brand stands for and what it is,
Speaker 8: they go out and they would buy other product categories
Speaker 8: of that brand.
Speaker 4: Right, Well, talk to us a little bit more about
Speaker 4: the distinction of a lifestyle brand versus, you know, maybe
Speaker 4: just an apparel company, because is it just about the
Speaker 4: actual products that you offer? Is it, you know, offering
Speaker 4: clothes and also maybe you have furniture or other home
Speaker 4: goods or what do you view as the distinction there?
Speaker 8: Well, I don't think that for us, the distinction would
Speaker 8: be is that we're really truly in apparel and accessory.
Speaker 8: Come BENI very focused on men'swear, which basically is about
Speaker 8: ninety percent of our business. We do have a lady's
Speaker 8: business under Rafaela, which has been around for twenty plus years.
Speaker 8: We also will be operating laundry by Shelley Siegel's Sportswear
Speaker 8: coming in the fall season. We'll be doing it in house. Now,
Speaker 8: the balance of our business is predominantly the big business
Speaker 8: is really men's wear and accessory. So when it's men'swear,
Speaker 8: it's Perry Ellis as I mentioned, golf, pickleball, tennis, etc.
Speaker 8: All the product categories that fall within the lifestyle that
Speaker 8: we produce those brands and product with.
Speaker 2: I'm curious because you have a really interesting view from
Speaker 2: your Perch is the CEO of this portfolio. We hear
Speaker 2: a lot about consumers, some doing well, some doing not well,
Speaker 2: the high end doing fine, the lower end consumer struggling.
Speaker 2: You have a diversified portfolio. Where are you seeing strength?
Speaker 2: Where are you seeing weakness?
Speaker 8: Well, we do business with basically every channel of distribution.
Speaker 8: I see strength still in Walmart is doing extremely well.
Speaker 8: The off price channel, as we've seen by their latest
Speaker 8: Q two earnings, is doing well. I think that department
Speaker 8: stores and chain stores are a little bit more challenging,
Speaker 8: but I think that they all have new senior management
Speaker 8: in place today in many cases, so I feel that
Speaker 8: their strategy going forward will definitely will be able to
Speaker 8: see a betterness in their business, probably for the second
Speaker 8: half of the year versus many of them are new
Speaker 8: to the job.
Speaker 2: Okay, So that's the distribution side, and.
Speaker 8: I also yes in the distribution so I also forgot
Speaker 8: to mention we also do business on the sporting goods side,
Speaker 8: which has been forming well throughout the entire couple of
Speaker 8: years ahead of the game because people are definitely their
Speaker 8: lifestyle since COVID has definitely changed more outside and more
Speaker 8: involved in doing you know, different sports.
Speaker 2: What about individual brands, where are you seeing strength versus
Speaker 2: weakness and individual brands that are in your portfolio.
Speaker 8: I would say that, you know, men's in general is
Speaker 8: a lot more conservative than the women's side of the business.
Speaker 8: Men's don't change that often as you see in women's
Speaker 8: where you know today a woman has the opportunity to
Speaker 8: buy a pair of pants from Rafaela with a with
Speaker 8: another branded top. Our golf business, anything that has to
Speaker 8: do with sports, which today amounts to about sixty percent
Speaker 8: of our total business for the company, continues to do
Speaker 8: well across all channels of distribution. We saw last month
Speaker 8: that rounds of golf played were a little bit down
Speaker 8: in general, but that's mainly more because of the wet
Speaker 8: weather that we had in certain parts of the country.
Speaker 8: But I would say golf continues to be strong. Tennis apparel,
Speaker 8: the excitement that you have currently today now with the
Speaker 8: US Open coming off the heels of Wimbledon, I think that,
Speaker 8: you know, overall, sports continues to be an important vehicle
Speaker 8: of success for our company. When it comes to the
Speaker 8: Periellis brand, we're seeing success in go to work dress wear,
Speaker 8: casual wear. If Periells today I would say, we're probably
Speaker 8: market share one of the top dress pants in the
Speaker 8: market today as well as belt. We probably own about
Speaker 8: twenty percent of the belt market in department stores.
Speaker 4: I want to go back to what you were saying
Speaker 4: about men's fast versus women's fashion, because the question I
Speaker 4: was going to ask you was how do you stay relevant?
Speaker 4: How do you stay relevant in changing fashion trends? Because
Speaker 4: you think about Lululemon, for example, you know there's been
Speaker 4: a lot of question marks over you know, the shifting
Speaker 4: silhouette that's popular right now, whether you know baggy jeans
Speaker 4: are coming back, and if that's bad for Lululemon. Then
Speaker 4: you think about Abercrombie and Fitch, which has been able
Speaker 4: to reinvent itself and somehow make itself cool again and
Speaker 4: appeal to, you know, millennial women, not necessarily the teens
Speaker 4: that they're known for. But it sounds like what you're
Speaker 4: saying is that when it comes to men's fashion, that
Speaker 4: that's maybe not as big of.
Speaker 5: A worry as it would be if you were women only.
Speaker 8: Oh, most definitely, So I think women's fashion, I mean
Speaker 8: you have to deliver. Like in Raphaela, we deliver a
Speaker 8: new collection every thirty days wow, and and in some
Speaker 8: cases it doesn't hit the floor until six weeks after
Speaker 8: the you know you ship it, so you know you're
Speaker 8: you're behind the eight ball in many cases. I think
Speaker 8: on the men's side it's definitely more conservative. But to
Speaker 8: your point, it's all about innovation. You constantly have to
Speaker 8: be out looking for newness. Maybe color, may be fabrics
Speaker 8: or silhouettes. If you're not on top of your game
Speaker 8: and shop and see what's out there and see the
Speaker 8: new up and coming brands. The amount of new brands
Speaker 8: that have been created over the last ten years just
Speaker 8: from the Internet has been unincredible.
Speaker 2: That's pretty amazing, seeing little.
Speaker 8: Small brands that you know, basically ten years ago didn't exist,
Speaker 8: and it's purely because of just using common sense and
Speaker 8: creating something that wasn't available. Hey.
Speaker 2: One thing we talk a lot about is AI and
Speaker 2: the beneficiaries of AI, and so far there've been a
Speaker 2: handful of stocks that have been huge beneficiarias of the
Speaker 2: AI trade. A question coming from one of our loyal
Speaker 2: listeners viewers, he's asking if AI bleeds into your portfolio
Speaker 2: at all.
Speaker 8: Well, AI is a function of operations, and how do
Speaker 8: you operate your business faster and being able to deliver
Speaker 8: quicker answers or even information. I think AI is definitely
Speaker 8: you're starting to see it maybe in prints where you
Speaker 8: tell you know you use AI to develop prints for you.
Speaker 8: You can use AI today in searches of product identity.
Speaker 8: So there's a lot of ways that we can use
Speaker 8: AI for. We're in the process now of installing a
Speaker 8: brand new planning system that has an AI capabilities that
Speaker 8: we'll be able to give us new data faster.
Speaker 2: Hey we're Bloomberg, so ten seconds then we got to run.
Speaker 2: Are you going to hit the public markets again? IPO
Speaker 2: coming anytime soon? All right, there it is that one second.
Speaker 2: That was one second. He's a man who knows time.
Speaker 2: And Oscar Feldon Christ, President and CEO of Perry Ellis International,
Speaker 2: brother Marco.
Speaker 1: Journal.
Speaker 8: How about you let me drive?
Speaker 6: Oh no, no, no, no, who's.
Speaker 8: Alright?
Speaker 1: Please excuse me?
Speaker 3: I want to drive.
Speaker 8: It's a good question.
Speaker 1: Good this is the drive to the clothes thing. Well
Speaker 1: around you down on Bloomberg Radio.
Speaker 2: Well look at that, Katie Greifeld. Here we are eighteen minutes.
Speaker 4: Till the close, and a lot of people will be
Speaker 4: happy for the markets to shut down. On has been
Speaker 4: a very brutal start to the trading month.
Speaker 2: Hey, speaking of happy, I got some good news for
Speaker 2: people up in Boston. Yeah, yeah, Okay, Attention New England listeners.
Speaker 2: You can now hear Bloomberg Radio in and around Boston
Speaker 2: on ninety two nine FM. It is your news source
Speaker 2: for business news from the financial center of New England.
Speaker 2: It's Bloomberg nine FM.
Speaker 4: I'm going to get that tattooed.
Speaker 2: You should Yeah, do you never mind? Okay, not happening, Okay,
Speaker 2: get it, get it, get it tattooed.
Speaker 1: Hey, speaking of.
Speaker 2: Boston, Yeah, we got Aaron done with us, all right,
Speaker 2: senior equity portfolio manager at Morgan Stanley Investment Management joining
Speaker 2: us from Boston. Erin I would say, Happy Labor Day,
Speaker 2: three day weekend, but it's not so pretty if you're
Speaker 2: long in this market.
Speaker 6: Yeah, it's been a I would say classical sort of
Speaker 6: sell off to start September. We got some not so
Speaker 6: great data from China that obviously set the tone a
Speaker 6: little bit. I think everyone's looking at the labor market
Speaker 6: report on Friday. I think you got a lot of
Speaker 6: profit taking and sort of deleveraging them on some of
Speaker 6: the probably shorter money. So you look at it, I
Speaker 6: mean you've got a very the defensive sectors classically holding
Speaker 6: in like staples, utilities, stuff like that, and otherwise it's
Speaker 6: really a cyclical trade down right. It's everything. It's energy, materials, tech,
Speaker 6: everything else is getting marked lower. I think people are
Speaker 6: looking at the fall with the market coming in at
Speaker 6: all time high, and historically, you know, September, October, maybe
Speaker 6: even in November with the election is not always the
Speaker 6: best time for the market, and I think that's probably
Speaker 6: painting positioning now that we're into a new month.
Speaker 4: Yeah, I mean, talk a little bit more about positioning
Speaker 4: and where you see the balance in markets right now,
Speaker 4: because this is a question I think I asked him
Speaker 4: sometime in the last hour. You think about what we
Speaker 4: saw last week and what we knew on Friday. Has
Speaker 4: anything changed between now and Friday? I mean, what are
Speaker 4: the fundamentals of this market and do they allow you
Speaker 4: to look past what we're seeing today.
Speaker 6: Yeah, so I think you've flipped a month. That's I
Speaker 6: don't want to downplay that. I do think the Chinese
Speaker 6: data just continues to point to really a tough turnaround,
Speaker 6: and let's not underestimate how important the Chinese economy is
Speaker 6: to sort of global markets, so I think that's very important. Otherwise,
Speaker 6: I don't think a lot has changed. You know, there's
Speaker 6: a lot of conferences going around Boston, New York, around
Speaker 6: the country. This is kind of the first week that
Speaker 6: conference season kicks on, and a lot of the messaging
Speaker 6: and what we're hearing and updates from companies hasn't really
Speaker 6: been that negative. I don't think you know, the chip
Speaker 6: sector has for instance, had a really negative one day
Speaker 6: news event or anything. This is really when I look
Speaker 6: at it, it's classically just risk off profit taking. So
Speaker 6: when I look at the economy, I think one of
Speaker 6: the things that really stands out. And you mentioned the
Speaker 6: word balanced, and I would actually argue the market's been
Speaker 6: not balanced very well. And I think you've got this
Speaker 6: leading sort of group of stocks and the tech sector
Speaker 6: and comm services sector that have just been leading the
Speaker 6: entire market and pulling it higher. Inevitably, that's going to
Speaker 6: be what has to take the market lower because they
Speaker 6: account for such a big part of the index. And argue,
Speaker 6: you know, I think we are going to be fighting
Speaker 6: a little bit of that. I think those are such
Speaker 6: crowded investments in portfolios, hedge funds, et cetera. That you
Speaker 6: are going to fight some sort of unwind at some point,
Speaker 6: and I think, you know, you're seeing some of that today.
Speaker 6: What I think is interesting and what allows us to
Speaker 6: look past that is I think you get some positioning
Speaker 6: trades here. Let's see what the employment says on Friday.
Speaker 6: What does that tell us about FED rate path going forward?
Speaker 6: But I also think there's a lot of sectors in
Speaker 6: the market that have really been left behind.
Speaker 1: Uh.
Speaker 6: You know, that's energy, that's materials, you know, even I
Speaker 6: would say healthcare hasn't had the best go here. So
Speaker 6: a lot of sectors just haven't done well. And I
Speaker 6: think that's a lot of cyclical sectors. And so what
Speaker 6: I think we have ahead of ahead of US is
Speaker 6: a global easing cycle. Right, You've seen rates cut globally,
Speaker 6: you've seen US rate rate cuts likely to come to me,
Speaker 6: barring sort of really drastically negative economic data, you are
Speaker 6: going to have an easing cycle here, which should help
Speaker 6: the cyclical stocks going forward.
Speaker 2: I want to make sure I understand this right. Do you, Aaron,
Speaker 2: see any other fundamental issues when you look out across
Speaker 2: the economy. You mentioned the jobs report. Yeah, coming for
Speaker 2: the month of August on Friday. That's the next sort
Speaker 2: of catalyst that investors are looking to. But when you
Speaker 2: look out there, do you see any weakness that maybe
Speaker 2: investors are responding to.
Speaker 6: Yeah, I think we've been watching this now for well
Speaker 6: over a year, and you know, last spring we started
Speaker 6: to do the math around this. The biggest issue is
Speaker 6: the consumer. We've been watching that last year. You saw,
Speaker 6: you know, early last year, mid last year, I think,
Speaker 6: you know, consumer pocketbooks and savings accounts were very padded
Speaker 6: through the sort of pandemic stimulus that came through. What
Speaker 6: eventually has happened is that inflation ate away at that
Speaker 6: labor rates tried to keep and so what you're seeing
Speaker 6: is a consumer in the US and maybe even you know,
Speaker 6: in Asia, et cetera, that is, you know, in a
Speaker 6: much tighter position than they were, say eighteen months ago.
Speaker 6: And so for that we sort of position ourselves to
Speaker 6: try to get into consumer names of healthy the economy.
Speaker 6: But I think this is a lot of the weakness.
Speaker 6: A lot of the concern is around the labor market,
Speaker 6: which the FED even pointed to as being something they're
Speaker 6: paying more attention to, and consumer spending, and if you
Speaker 6: get a big pull down and consumer spending, it's going
Speaker 6: to be tough for a number of people. The rest
Speaker 6: of the economy industrial, you know, whether it be clean energy,
Speaker 6: all these other trends are you know, they are in place,
Speaker 6: and companies are committed to spending a lot, you know,
Speaker 6: a lot of capital to build out sort of reshoring
Speaker 6: and data center stuff. So I think the industrial side
Speaker 6: tends to be good. It's that consumer piece that I
Speaker 6: think is the most concerning.
Speaker 4: And I'm running through your notes. I understand you have
Speaker 4: an eight member investment team, you average twenty five years
Speaker 4: of investment performance, and you're focus on asymmetric reward to
Speaker 4: risk opportunities. So tell us eron where you're finding those
Speaker 4: opportunities right now. What are some of your biggest convictions.
Speaker 6: Yeah, so we really follow what we term an opportunistic
Speaker 6: value approach. We want to focus on three key areas
Speaker 6: of companies and we're we are stock pickers at the
Speaker 6: crux of everything, but we want business editor inherently good,
Speaker 6: have good returns. We want a good balance sheet so
Speaker 6: that these companies can withstand cycles and invest properly at
Speaker 6: the bottom of the cycle. And we want good free
Speaker 6: cash flow generation, so hopefully they can compound value over
Speaker 6: time with that, We opportunistically look for where the market
Speaker 6: may be in our view, is misunderstanding something or maybe
Speaker 6: there's a management change that we think brings a lot
Speaker 6: of value to the ultimate value of the entire company.
Speaker 6: So that's very important to us. So some areas where
Speaker 6: we look are very stock driven. They're not say sector
Speaker 6: driven per se. But you know, Bristol Myers is one
Speaker 6: that we think the pharma sector has outside of the GIL,
Speaker 6: outside of you know, the two big manufacturer Jillps has
Speaker 6: really just been left behind in this market. And you
Speaker 6: look at the valuation of Bristol, I mean, it's a
Speaker 6: hot single digit multiple stock on pe UH and when
Speaker 6: we look at atrinsic value, we just think that's undervaluing
Speaker 6: the cash flow stream. It's got a four point seven
Speaker 6: percent dividend yield that's well covered. They've got a gap
Speaker 6: in the UH. They're gonna have an upcoming sort of
Speaker 6: exploration of some parents that's going to impact their Yes, we.
Speaker 2: Got to run, unfortunately, but we love it when you
Speaker 2: come with picks, love when you join us. It's Aaron Dunn, Senior,
Speaker 2: equity portfolio manager, joining us from Boston Morgan Stanley Investment Management.
Speaker 2: This is Bloomberg BusinessWeek.
Speaker 1: This is the Bloomberg Business Week Podcast. I've ailtble on Apple,
Speaker 1: Spotify and anywhere else you hit your podcast. Listen live
Speaker 1: weekday afternoons from two to five pm Eastern on Bloomberg
Speaker 1: dot com, the iHeartRadio app, tune In, and the Bloomberg
Speaker 1: Business App. You can also watch us live every weekday
Speaker 1: on YouTube. And oh, he's on the Bloomberg terminal.
Speaker 3: Mm hmm