WEBVTT - Nike's CEO Switch, Beverage M&A, and the Markets 0:00:02.440 --> 0:00:09.119 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:09.160 --> 0:00:13.320 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.360 --> 0:00:16.360 Eastern on Affo card playing Android Auto with the Bloomberg 0:00:16.400 --> 0:00:19.759 Business App. Listen on demand wherever you get your podcasts, 0:00:19.960 --> 0:00:22.080 or watch us live on YouTube. 0:00:23.200 --> 0:00:24.079 Let's go to put them Boyle. 0:00:24.160 --> 0:00:27.720 She's a Bloomberg Intelligence senior US retail analyst. She covers 0:00:27.800 --> 0:00:31.680 all this stuff. Put what's going on at Nike? That's 0:00:31.680 --> 0:00:33.720 still my brand? I mean, aren't Aren't they still the 0:00:33.760 --> 0:00:35.200 dominant player here? What's going on? 0:00:35.240 --> 0:00:37.120 I'm going to say, you're not the target audience. 0:00:37.240 --> 0:00:39.199 Some think I'm the target. I mean, just catch the 0:00:39.200 --> 0:00:41.599 target demo for like anybody anymore? All right? Put them? 0:00:41.600 --> 0:00:42.520 What's going on in Nike? 0:00:43.600 --> 0:00:46.599 So so, Paul. Nike definitely is still the largest death 0:00:46.680 --> 0:00:49.200 leisure brand in the world, with over fifty billion dollars 0:00:49.240 --> 0:00:52.440 in sales, but in the last few years it has 0:00:52.640 --> 0:00:57.320 lost a share to Hoka, to On and even to Adita's, 0:00:57.400 --> 0:00:59.520 if you want to say. And part of that is 0:00:59.520 --> 0:01:02.040 because it pulled out a wholesale it pulled out of 0:01:02.040 --> 0:01:05.160 where people shop, and also it focused a little too 0:01:05.280 --> 0:01:10.040 much on the digital space. Giving product really little focus, 0:01:10.160 --> 0:01:13.000 and that's why we're seeing a change today. We need 0:01:13.040 --> 0:01:16.039 someone who can come back, go back to the Nike DNA, 0:01:16.520 --> 0:01:21.000 and really focus on product performance to deliver what Nike 0:01:21.080 --> 0:01:23.280 has delivered for the last thirty plus years. 0:01:23.440 --> 0:01:24.920 When you said they pulled out of retail, what do 0:01:24.959 --> 0:01:27.880 you mean they tried to sell it themselves online and 0:01:28.120 --> 0:01:29.000 their website. 0:01:29.640 --> 0:01:31.360 Well, it's not that they pulled out of all retail, 0:01:31.400 --> 0:01:34.280 but they definitely curbed their exposure into retail, whether it 0:01:34.319 --> 0:01:38.839 was through foot locker, Macy's, etc. They had materially pulled 0:01:38.880 --> 0:01:41.440 back what they were selling into those stores and now 0:01:41.440 --> 0:01:44.520 they're back in. So they did come back. But what 0:01:44.720 --> 0:01:47.040 happened is if you went to a foot locker prior 0:01:47.120 --> 0:01:51.040 to twenty twenty, twenty, nineteen, twenty eighteen, you'd see a 0:01:51.080 --> 0:01:54.120 lot of Nike there. Right, Nike was the predominant brand, 0:01:54.520 --> 0:01:57.880 And had you walked in yesterday, even what you'll see 0:01:57.920 --> 0:02:01.320 is Nike, you'll see Adidas, the Hoka you'll see on 0:02:01.880 --> 0:02:06.120 So now people are being exposed to more brands and 0:02:06.480 --> 0:02:08.359 that's part of the reason. But also those brands are 0:02:08.360 --> 0:02:11.200 good brands, right. They have performance Hoka for running on 0:02:11.400 --> 0:02:15.720 for running for lifestyle, they've really gained traction, and that's 0:02:15.760 --> 0:02:17.359 because Nike let them. 0:02:17.919 --> 0:02:19.360 I guess it was a week or so ago we 0:02:19.440 --> 0:02:23.000 had Derek Jeter in here with the founder of Untucket, 0:02:23.240 --> 0:02:26.920 Chris Riccobano, and they were talking about their introducing a 0:02:26.919 --> 0:02:32.440 new brand of performance athletic leisure, and I heard their story, 0:02:32.480 --> 0:02:34.200 I heard their pitch, but I'm like, what in the hill? 0:02:35.000 --> 0:02:39.880 There's so much competition in there? How competitive is that market? 0:02:40.040 --> 0:02:44.000 At leisure? Nobody's wearing the suits anymore, Plum, that thing's gone, 0:02:44.040 --> 0:02:45.800 So I guess everybody is kind of into ath leisure. 0:02:45.800 --> 0:02:46.839 How competitive is that part? 0:02:47.919 --> 0:02:51.240 That's very competitive, But Nike's still the dominant player at 0:02:51.280 --> 0:02:55.000 fifty billion dollars plus in sales. It is definitely winning 0:02:55.040 --> 0:02:58.160 in the shoe category. In apparel, I'd say the gap 0:02:58.240 --> 0:03:01.480 is much narrower to other players, including Adidas and others. 0:03:01.800 --> 0:03:04.040 But it's also a space that's growing, right, So as 0:03:04.040 --> 0:03:07.120 we hear more competition encroaching on the space, it's because 0:03:07.160 --> 0:03:10.000 more people want more at leisure in their wardrobe. So 0:03:10.040 --> 0:03:12.880 I'd say it's a category where it's not necessary that 0:03:12.960 --> 0:03:16.240 one has to lose for another to win the category itself. 0:03:16.320 --> 0:03:17.239 Is growing globally. 0:03:17.919 --> 0:03:21.480 How long does it take to bring a new product, sneaker, 0:03:21.919 --> 0:03:24.120 whatever to market? 0:03:24.840 --> 0:03:28.280 It takes more than six months, depending on whether it's 0:03:28.520 --> 0:03:31.160 just another color wave or depending on if it's a 0:03:31.200 --> 0:03:34.520 new performance based product. But the pipeline is long. And 0:03:34.560 --> 0:03:38.240 remember most of these sneakers are made in Vietnam. Vietnam 0:03:38.400 --> 0:03:42.400 is a sneaker hub for manufacturing sneakers. Therefore, there is 0:03:42.440 --> 0:03:45.080 a transit time involved as well. Now you can argue 0:03:45.120 --> 0:03:47.400 that AI is going to cut some of that because 0:03:47.440 --> 0:03:52.040 the design can happen faster and you can pre secure fabrics, etc. 0:03:52.480 --> 0:03:54.080 But still it's still a long window. 0:03:54.840 --> 0:03:58.960 The CEO who's getting canned, I don't know who's outgoing? 0:04:00.360 --> 0:04:02.800 Was Was he a bean counter? I mean, what was 0:04:02.800 --> 0:04:03.839 the problem with this guy? 0:04:04.880 --> 0:04:06.920 It's not that there was a problem. He was not 0:04:07.120 --> 0:04:11.000 a merchant. So John Donaho came in with DTC exposure. 0:04:11.360 --> 0:04:14.480 So he is the one who led the digital first strategy, 0:04:14.560 --> 0:04:17.520 wanting to lean more into digital, and well, that's great, 0:04:17.800 --> 0:04:20.200 it is great to lean forward into digital, but at 0:04:20.240 --> 0:04:23.640 the end of the day, retail is about product, especially 0:04:23.640 --> 0:04:26.800 when it comes to a brand. Nike is not a marketplace. 0:04:26.880 --> 0:04:30.760 It's not Amazon, so product matters most and he just 0:04:30.839 --> 0:04:33.600 didn't have that product expertise behind him. 0:04:34.080 --> 0:04:36.240 John, You and I know the fellow who runs this place. 0:04:36.279 --> 0:04:38.600 But if I were running this place here, here's how 0:04:38.680 --> 0:04:42.880 we go. No shorts in the workplace and no sandals. 0:04:42.920 --> 0:04:46.039 That is a just did you know Puonhum that Paul 0:04:46.160 --> 0:04:49.839 is the fashion police here at Bloomberg World headquarters and 0:04:49.880 --> 0:04:50.560 he's driving. 0:04:50.400 --> 0:04:53.640 Every He's always in Shortthills malls for us right checking 0:04:53.680 --> 0:04:54.200 out the story. 0:04:54.320 --> 0:04:56.080 I am, I do, I do some product as some 0:04:56.240 --> 0:04:58.200 channel checks for Punham in the Short Hills mall. All right, 0:04:58.200 --> 0:04:59.880 put him, thanks so much for joining us, appreciate it. 0:05:00.000 --> 0:05:01.800 Put them Gil. She covers all the retail stuff for 0:05:01.839 --> 0:05:06.280 Bloomberg Intelligence. She was Bloomerg Intelligence just celebrated his fifteenth 0:05:06.360 --> 0:05:10.520 year anniversary. She was my first hire here and I've 0:05:10.600 --> 0:05:14.560 hired one thirty analysts and she was number one, So 0:05:14.680 --> 0:05:16.919 that was a good one for us. 0:05:18.760 --> 0:05:22.640 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:05:22.720 --> 0:05:26.240 weekdays at ten am Eastern on applecard Play and Android 0:05:26.279 --> 0:05:29.039 Auto with the Bloomberg Business app. You can also listen 0:05:29.160 --> 0:05:32.240 live on Amazon Alexa from our flagship New York station. 0:05:32.640 --> 0:05:36.359 Just say Alexa Play Bloomberg eleven thirty. 0:05:36.880 --> 0:05:39.360 All right, what do you do here? The Fed cuts rates? 0:05:39.760 --> 0:05:42.520 You're a financial advisor? What do you do with your clients? 0:05:42.520 --> 0:05:44.800 What do you tell your clients in world work? Finally 0:05:45.400 --> 0:05:47.400 rates are coming down. Let's check in with somebody who 0:05:47.440 --> 0:05:50.440 does that stuff for a living. Sarah Ponzek, financial advisor 0:05:50.480 --> 0:05:52.400 for UBS Private Wealth Management. 0:05:52.440 --> 0:05:53.120 Full disclosure. 0:05:53.200 --> 0:05:55.760 I am a client of UBS Private Wealth Management here 0:05:56.440 --> 0:05:58.040 in New York. They take care of me. She's done 0:05:58.040 --> 0:06:02.880 a Boca raton Florida. That's not a bad place to be. Sarah, 0:06:02.920 --> 0:06:04.599 Thanks so much for joining us. Here are the FED 0:06:04.640 --> 0:06:07.560 cuts rates. What kind of phone calls were you feeling 0:06:07.720 --> 0:06:11.320 from your clients after that news, which was for some 0:06:11.360 --> 0:06:12.480 people's surprise. 0:06:13.880 --> 0:06:15.440 Yeah, it's great to be with you, Paul and John. 0:06:15.600 --> 0:06:18.760 It didn't really come as a surprise. I would say, 0:06:18.800 --> 0:06:22.160 we've all been talking about this since last year, it feels, 0:06:22.160 --> 0:06:25.440 but finally the first rate cut since twenty twenty, and 0:06:25.480 --> 0:06:27.960 the Fed came out swinging with a fifty basis point 0:06:28.040 --> 0:06:31.839 rate cut. So the conversations that we've been having with clients, 0:06:31.880 --> 0:06:33.800 even though it should not have come as a surprise. 0:06:33.880 --> 0:06:36.320 You know, we've been talking all year long. 0:06:36.400 --> 0:06:41.240 About locking in interest rates, extending out duration, slowly moving 0:06:41.279 --> 0:06:44.520 out of high savings accounts and money markets with cash 0:06:44.560 --> 0:06:45.240 that you do have. 0:06:45.760 --> 0:06:48.240 You know, it's been difficult for some people to do that. 0:06:48.440 --> 0:06:51.719 So finally this week, now that we actually saw the 0:06:51.760 --> 0:06:55.320 fifty basis point cut, the question is okay, am I 0:06:55.400 --> 0:06:57.559 too late? If I still have a lot of money 0:06:57.560 --> 0:07:00.400 in cash, what do I do with that cash? So 0:07:00.640 --> 0:07:03.279 those are the conversations, the types of conversations that we've 0:07:03.279 --> 0:07:04.040 been having this week. 0:07:04.080 --> 0:07:08.400 Ball So, Sarah, what do I do with my cash? Sarah? 0:07:08.960 --> 0:07:10.200 Great question, John. 0:07:10.320 --> 0:07:14.480 So you know what's interesting is, yes, we're continually and 0:07:14.600 --> 0:07:19.120 repeatedly saying, all right, if you haven't already locked in 0:07:19.360 --> 0:07:23.520 yields through fixed income and extended duration, now's the time 0:07:23.560 --> 0:07:26.280 to do so. And what's interesting is sometimes we do 0:07:26.360 --> 0:07:29.600 get pushedback. There's this this gap or this misunderstanding where 0:07:29.600 --> 0:07:32.320 someone might say, well, well, why would I lock in 0:07:32.720 --> 0:07:36.440 you know, a three, a five, a ten year bond 0:07:37.000 --> 0:07:41.360 that's yielding four or five percent when my money market 0:07:41.640 --> 0:07:45.440 is still yielding you know, four point eight or five percent. 0:07:46.360 --> 0:07:49.960 You know, there's this trade off that some people feel 0:07:49.960 --> 0:07:51.880 as though they're making in the short term and what 0:07:51.920 --> 0:07:54.880 you really need to be aware of is the fact that, yes, 0:07:55.040 --> 0:07:57.160 your money market might still be paying you, you know, 0:07:57.240 --> 0:07:59.880 close to five percent today, but if you look at 0:07:59.880 --> 0:08:03.880 the expectations of where you know, short term interest rates 0:08:03.920 --> 0:08:06.000 are going to be a year from now, at the 0:08:06.080 --> 0:08:08.840 end of twenty twenty five, we're looking at short term 0:08:08.880 --> 0:08:11.720 yields being close to three percent most likely. So if 0:08:11.720 --> 0:08:15.040 you can lock in a four percent Treasury bill, you know, 0:08:15.200 --> 0:08:18.080 years out into the future, yeah, you know, you might 0:08:18.160 --> 0:08:20.679 have a trade off for the next couple of months, 0:08:21.040 --> 0:08:23.920 but you're going to set yourself up for success over 0:08:23.960 --> 0:08:25.720 a longer period of time, which is really the name 0:08:25.720 --> 0:08:27.680 of the game. So that's on the fixed income side, 0:08:27.720 --> 0:08:30.720 extending out duration, we're talking about you know, maybe three 0:08:30.720 --> 0:08:33.720 to seven years in maturity, looking at that intermediate duration 0:08:33.880 --> 0:08:36.240 in the curve, and also staying up in quality, so 0:08:36.280 --> 0:08:39.520 looking at treasuries, also looking at investment grade corporates. Now, 0:08:39.840 --> 0:08:42.680 on the equity side, we still believe that the risk 0:08:42.800 --> 0:08:46.559 reward for equities is pretty strong here. And yes, we've 0:08:46.600 --> 0:08:48.640 seen a twenty percent return in the S and P 0:08:48.720 --> 0:08:52.320 five hundred this year. Stocks are trading at records. That's great, 0:08:52.640 --> 0:08:55.520 but we're seeing this broadening out. You know, if you 0:08:55.559 --> 0:08:57.600 look at an equal weighted version of the S and 0:08:57.600 --> 0:09:00.560 P five hundred, it also traded out a record high yesterday. 0:09:00.559 --> 0:09:02.400 If you look at the sector breakdown of the S 0:09:02.440 --> 0:09:05.920 and P five hundred, all but two sectors are trading 0:09:05.920 --> 0:09:09.040 at fifty two week highs. So we've seen this broadening 0:09:09.080 --> 0:09:12.200 in the stock market and that's really encouraging as an investor. 0:09:12.640 --> 0:09:16.360 Sir, ETFs, how do you position them for your clients? 0:09:16.520 --> 0:09:19.079 How much incoming calls do you get from your clients 0:09:19.120 --> 0:09:19.960 about ETFs? 0:09:21.160 --> 0:09:22.080 Great question, Paul. 0:09:22.160 --> 0:09:25.800 You know, obviously we can talk about investing and where 0:09:25.840 --> 0:09:28.600 to invest, but then there's a question of structure and 0:09:28.640 --> 0:09:31.920 how you invest. You know, how do you what products 0:09:31.920 --> 0:09:35.360 do you use to invest your money? So I would say, 0:09:35.440 --> 0:09:37.920 you know, we use we do use ETFs and portfolios, 0:09:37.960 --> 0:09:39.520 but we use this them and more so in a 0:09:39.559 --> 0:09:42.960 supplementary way. When we think about the core portion of 0:09:43.000 --> 0:09:45.960 our client's equity portfolios. A lot of what we do 0:09:46.040 --> 0:09:49.240 is actually what's called direct indexing, which we would describe 0:09:49.240 --> 0:09:53.040 as being a step above ets. It's like, as an investor, 0:09:53.120 --> 0:09:56.000 you have your own index that's catered to you. 0:09:56.160 --> 0:09:58.040 And why is that important? 0:09:58.120 --> 0:09:59.760 You know, there's a couple of things that you can 0:09:59.800 --> 0:10:02.880 do with the direct index that you cannot do with 0:10:02.960 --> 0:10:05.160 an ETF. You know, when you have an ETF, let's 0:10:05.160 --> 0:10:07.520 say an S and P five hundred ETF, that's one 0:10:07.559 --> 0:10:10.520 line item in your portfolio. So if the market's up, 0:10:10.679 --> 0:10:13.200 your ETF's up in value, there's not much tax planning 0:10:13.200 --> 0:10:15.520 you can do there. You really can't do tax loss harvesting, which, 0:10:15.679 --> 0:10:17.600 especially as we're getting towards the end of the year, 0:10:17.840 --> 0:10:19.520 this is the time of year that we're gonna start 0:10:19.520 --> 0:10:22.199 seeing tax planning really come to the forefront of portfolios. 0:10:22.520 --> 0:10:25.320 So within a direct index, you actually own a couple 0:10:25.480 --> 0:10:29.559 hundred positions within the portfolio. We all know that even 0:10:29.600 --> 0:10:32.320 in a year in which the broader stock market is up, 0:10:32.600 --> 0:10:35.040 there's a lot of individual stocks that trade at losses 0:10:35.080 --> 0:10:37.400 and pretty hefty losses throughout the year. So what that 0:10:37.480 --> 0:10:40.640 allows you to do is continue to get market performance 0:10:40.640 --> 0:10:44.720 in your portfolio, but do plenty of tax planning on 0:10:44.760 --> 0:10:46.960 the bottom side. And really, what a lot of research 0:10:46.960 --> 0:10:48.920 has shown is that can add you know, an extra 0:10:49.000 --> 0:10:52.960 two percentage of performance per year on an after tax basis. 0:10:52.960 --> 0:10:55.240 So usually for US large cap stocks. 0:10:54.920 --> 0:10:57.960 We're pretty big believers and passive indexing there, we'll use 0:10:58.000 --> 0:11:01.360 direct indexing and then we'll use eat is to supplement that. 0:11:01.520 --> 0:11:03.920 So that's where we you know, right now, for example, 0:11:04.040 --> 0:11:07.560 small caps might perform pretty well with the expectation of 0:11:07.559 --> 0:11:10.320 interest rates coming down, So adding to small caps, adding 0:11:10.360 --> 0:11:13.760 to size exposure there, diversifying internationally there, maybe adding a 0:11:13.760 --> 0:11:15.760 little bit of international exposure. 0:11:15.480 --> 0:11:17.640 And then also playing industries and sector tilts. 0:11:17.679 --> 0:11:20.679 You know, we've had some exposure to some etss that 0:11:21.040 --> 0:11:24.679 really more so focused on artificial intelligence and cybersecurity this year, 0:11:24.720 --> 0:11:28.880 for example, So using ETS as a supplementary play to 0:11:29.000 --> 0:11:31.960 say your large cap core indexed portfolio. 0:11:32.280 --> 0:11:35.880 Okay, so if with risk assets, Sarah, it's as easy 0:11:35.960 --> 0:11:38.600 as just finding stocks that do well in a lower 0:11:38.679 --> 0:11:41.160 rate environment, i e. Tech. 0:11:42.520 --> 0:11:45.840 So yes, look, I think there's a couple of reasons 0:11:45.840 --> 0:11:46.719 that we're still there. 0:11:46.880 --> 0:11:53.199 I'm not saying your job as in hard, Sarah. 0:11:51.440 --> 0:11:54.360 It's very U I would say it's pretty difficult, and 0:11:54.480 --> 0:11:57.360 you're dealing with a lot of interesting personalities sometimes who 0:11:57.600 --> 0:11:58.640 you know who. 0:11:58.480 --> 0:12:01.720 Are and you're in BOCO, which all the retirees. 0:12:01.160 --> 0:12:03.479 Right, lower retirees. 0:12:03.559 --> 0:12:06.319 But it's been raining a lot here, so I honestly, 0:12:06.440 --> 0:12:08.640 envy you up in New York right now, but we're 0:12:08.679 --> 0:12:09.360 about to get to. 0:12:09.280 --> 0:12:11.280 The nice time to be to be in Florida. 0:12:11.320 --> 0:12:14.000 But no, I think what's interesting about tech is it's 0:12:14.040 --> 0:12:16.559 not just an interest story play. Look, tech has been 0:12:16.600 --> 0:12:18.600 the leading sector in the leading industry for the past 0:12:18.640 --> 0:12:20.439 couple of years when interest rates were high. 0:12:21.280 --> 0:12:25.800 You know, nowadays tech is quality. Tech is also you know, megacap. 0:12:25.880 --> 0:12:29.520 Tech is a play on the artificial intelligence trade and 0:12:29.559 --> 0:12:30.160 growth that we. 0:12:30.160 --> 0:12:31.120 Expect to see. 0:12:31.840 --> 0:12:35.480 And yes, you know growth is an area of the 0:12:35.520 --> 0:12:39.719 market that's interest rate sensitive because essentially, at the end 0:12:39.720 --> 0:12:42.400 of the day, when you look at tech, you know, 0:12:42.920 --> 0:12:46.080 we have to think about the net present value of 0:12:46.160 --> 0:12:48.960 future earnings, and the lower interest rates are, the more 0:12:49.000 --> 0:12:52.679 attractive that future stream of earnings looks. So yes, we've 0:12:52.679 --> 0:12:55.520 been optimistic on tech in the past, and that wasn't 0:12:55.520 --> 0:12:57.320 an interest rate reason, and now I would say interest 0:12:57.360 --> 0:12:59.480 rates are coming down is even more so a reason 0:12:59.520 --> 0:13:01.920 to be a com optimistic on tech. With that said, 0:13:01.960 --> 0:13:04.400 though you don't want tech to make up your whole portfolio, yes, 0:13:04.440 --> 0:13:06.560 we do think it makes up a very significant portion 0:13:06.960 --> 0:13:09.160 of a portfolio. But I mentioned earlier on we're seeing 0:13:09.160 --> 0:13:11.320 a broadening out in the market. We're seeing some cyclical 0:13:11.360 --> 0:13:14.000 sectors of the market, you know, start to play catch up, 0:13:14.240 --> 0:13:16.080 so you want to make sure that you're well diversified. 0:13:16.080 --> 0:13:19.600 But absolutely tech has you know, been a predominant role 0:13:19.679 --> 0:13:22.560 player in portfolios for the past few years, and we 0:13:22.600 --> 0:13:23.760 really don't see that changing. 0:13:24.520 --> 0:13:27.800 Sar to what extent to your clients ask you about 0:13:28.080 --> 0:13:31.240 getting exposure to alternative investments, whether it's hedge funds or 0:13:31.240 --> 0:13:33.440 private equity, private credit, how does that play. 0:13:34.559 --> 0:13:37.160 So it's becoming more of a common theme. I would 0:13:37.200 --> 0:13:39.960 say it's still a conversation that we're bringing up rather 0:13:40.000 --> 0:13:42.120 than a lot of clients coming to us and asking 0:13:42.160 --> 0:13:45.920 about it. Because alternatives are so important when we think 0:13:45.920 --> 0:13:48.560 about the universe of public companies, you know, think about 0:13:48.679 --> 0:13:51.959 the universe of companies nowadays that go through an IPO 0:13:52.400 --> 0:13:54.920 to list on a public stock exchange. I mean, it's 0:13:55.000 --> 0:13:57.640 a very different world than it was, you know, ten 0:13:57.720 --> 0:14:01.120 years ago, twenty years ago. Few were companies are going 0:14:01.200 --> 0:14:05.000 public nowadays, and many of the largest companies in our 0:14:05.000 --> 0:14:07.960 global economy, especially in the US economy, are actually still 0:14:08.000 --> 0:14:08.679 private companies. 0:14:08.679 --> 0:14:09.640 They haven't gone public. 0:14:10.000 --> 0:14:13.200 So now more than ever, it's important to get exposure 0:14:13.200 --> 0:14:15.720 to private markets, because it's a whole area, a whole 0:14:15.840 --> 0:14:18.560 universe of the economy that you just don't have exposure 0:14:18.600 --> 0:14:21.280 to you in your portfolio if you don't have exposure 0:14:21.320 --> 0:14:24.200 to private markets. So where within private markets, you know, 0:14:24.280 --> 0:14:26.920 do we look? We do still like private credit. You know, 0:14:27.000 --> 0:14:30.560 private credit has been paying an annualized distribution yield of 0:14:30.640 --> 0:14:33.400 around ten percent. Yes, a lot of these loans are 0:14:33.400 --> 0:14:35.320 floating right, so we are going to start to see 0:14:35.360 --> 0:14:37.200 that come down, but we still see that as an 0:14:37.200 --> 0:14:39.120 attractive place to be, especially as. 0:14:38.960 --> 0:14:42.680 An alternative to just traditional fixed income. Also, private equity. 0:14:42.880 --> 0:14:45.680 Private equity is you know, we see as a very 0:14:45.680 --> 0:14:47.160 important piece of portfolios. 0:14:47.240 --> 0:14:49.080 Talk about lowering volatility. 0:14:49.120 --> 0:14:50.760 You don't have the day to day swings of what 0:14:50.800 --> 0:14:54.120 you see on public stock exchanges, but still getting those 0:14:54.480 --> 0:14:57.800 strong double digit returns in private equity. And what's also 0:14:57.800 --> 0:15:00.520 been really interesting in the private equity space is we've 0:15:00.520 --> 0:15:04.320 seen more, you know, investor friendly structures where you're not 0:15:04.440 --> 0:15:06.440 locked up for seven to ten years, you're not dealing 0:15:06.480 --> 0:15:09.320 with capital calls. There's these evergreen structures that have been 0:15:09.360 --> 0:15:12.120 produced where you can actually get out on a quarterly basis. 0:15:12.120 --> 0:15:13.280 You have more liquidity. 0:15:13.560 --> 0:15:17.080 So the environment for private privates, I would say, has 0:15:17.120 --> 0:15:19.920 become much more investor friendly over the past year or 0:15:19.920 --> 0:15:20.400 two years. 0:15:20.440 --> 0:15:23.920 Even speaking of volatility, have you seen the volumes today? 0:15:23.960 --> 0:15:27.640 Triple witching day? Oh real quick, Sarah, just a minute. 0:15:28.440 --> 0:15:30.640 Can you use how do you use volatility to your 0:15:30.680 --> 0:15:33.960 advantage as an investor for your quer Absolutely so. 0:15:34.760 --> 0:15:37.160 Especially Look, we've seen some volatility over the past couple 0:15:37.200 --> 0:15:40.040 of months in a year in which volatility really hasn't existed. 0:15:40.400 --> 0:15:42.720 So look on the equity side, if you're someone who 0:15:42.720 --> 0:15:45.160 sells a business, if you are sitting on a hoard 0:15:45.160 --> 0:15:47.680 of cash, no, you have emotional ties to the money. 0:15:47.680 --> 0:15:49.080 You don't want to invest at all at once, So 0:15:49.240 --> 0:15:52.400 use volatility to your advantage. Yes, have a set plan. 0:15:52.440 --> 0:15:54.760 You want a slowly dollar cost average into the market. 0:15:54.960 --> 0:15:57.360 But if you have a week or a day in 0:15:57.400 --> 0:16:01.040 which you see more volatility, may be speed that dollar 0:16:01.040 --> 0:16:04.000 costs averaging up. Maybe you pull your investments forwards and 0:16:04.040 --> 0:16:07.160 you use those doundies to slowly get yourself invested, because 0:16:07.160 --> 0:16:08.800 at the end of the day, you know, the longer 0:16:08.800 --> 0:16:11.080 you're sitting on the sidelines, the longer it is to 0:16:11.120 --> 0:16:11.480 get in. 0:16:11.760 --> 0:16:13.880 All right, Sarah, Thank you so much. We always appreciate 0:16:13.920 --> 0:16:15.640 getting a few minutes of your time from South Florida. 0:16:15.680 --> 0:16:20.840 Sarah Ponsek, Financial Advisor, UBS Private Wealth Management. Here again, 0:16:20.920 --> 0:16:22.800 investing in a world where, for the first time in 0:16:22.840 --> 0:16:24.640 a little bit more than four years, we actually have 0:16:24.720 --> 0:16:27.360 rates coming down for a lot of folks. That's kind 0:16:27.360 --> 0:16:28.960 of a new environment to invest in. 0:16:31.200 --> 0:16:35.080 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:16:35.160 --> 0:16:38.240 weekdays at ten am Eastern on Affo Car Playing Androud 0:16:38.240 --> 0:16:41.360 Auto with the Bloomberg Business app. Listen on demand wherever 0:16:41.400 --> 0:16:45.720 you get your podcasts, or watch us live on YouTube. 0:16:46.440 --> 0:16:50.120 How about this ready mixed drink? Things you see like 0:16:50.280 --> 0:16:52.320 vodkn iced, you see the little banish. 0:16:52.240 --> 0:16:55.440 I have my favorite what is it is a my 0:16:55.680 --> 0:16:58.760 tie and it's just like out of this world at Curison, 0:16:59.280 --> 0:17:03.160 uh top shelf liquor. I can't remember who makes it, 0:17:03.400 --> 0:17:06.199 but it is out of this world and you can 0:17:06.240 --> 0:17:08.840 only have one because more than that, you're like you're 0:17:08.880 --> 0:17:09.600 in a coma. 0:17:09.680 --> 0:17:12.720 Really, I mean, that's what the kids are doing these days. 0:17:12.720 --> 0:17:14.439 I don't know what's going on out there, not that 0:17:14.440 --> 0:17:16.400 I'm a kid, but I'll. 0:17:16.200 --> 0:17:18.479 Tell you someone who knows this stuff. He knows his booze. 0:17:18.560 --> 0:17:22.120 He knows his weed. That is Ken senior consumer products 0:17:22.119 --> 0:17:25.280 analysts hopefully is. 0:17:26.440 --> 0:17:27.359 And he's sitting upright. 0:17:27.440 --> 0:17:30.240 He's sitting upright. But he's been covering all these beverage 0:17:30.280 --> 0:17:33.160 companies and he's seen every fad come and go. Can 0:17:33.520 --> 0:17:36.800 what's the latest kind of strategy there for you know, 0:17:36.880 --> 0:17:39.639 the Coca Colas of the world. The pepsis, where do 0:17:39.680 --> 0:17:41.680 they see growth these days in new products? 0:17:42.880 --> 0:17:47.960 YEAHI guys. So for Coca Cola, you know, they feel 0:17:48.040 --> 0:17:51.280 themselves as a total beverage company. That's their aspiration. They 0:17:51.359 --> 0:17:54.639 want to beat all beverages. Having said that, it's also 0:17:54.680 --> 0:17:59.360 a company that is very image and reputational conscious, so 0:17:59.480 --> 0:18:01.960 it's moving at a very measured pace to get into 0:18:02.000 --> 0:18:06.200 the two trillion dollars global alcoholic beverage space. So they're 0:18:06.240 --> 0:18:11.600 doing so by partnerships and alliances. Uh so, you just 0:18:11.640 --> 0:18:16.640 heard the other day they've entered into a partnership with Bacarty, 0:18:16.760 --> 0:18:19.600 the big drum company, to make bricardy and coke a product. 0:18:19.640 --> 0:18:22.439 And we all kind of know, and so it's a 0:18:22.480 --> 0:18:25.399 ready to drink It saves people time, you know, that 0:18:25.480 --> 0:18:28.879 kind of thing. They've entered similar kind of arrangements with 0:18:29.480 --> 0:18:32.280 Brown Foreman, with Jack and Coke. You know, Jack Daniels 0:18:32.320 --> 0:18:32.640 and Coke. 0:18:34.560 --> 0:18:36.879 With how lazy did he have to be to not 0:18:37.080 --> 0:18:39.439 be able to figure out you can pour one and 0:18:39.480 --> 0:18:40.120 pour the other. 0:18:41.359 --> 0:18:44.159 Well, you know you have a point. You have a 0:18:44.160 --> 0:18:45.919 point there, John. But think about it. If you want 0:18:45.960 --> 0:18:47.439 to go to the beach, right if if if you 0:18:47.480 --> 0:18:49.119 want to if you want to go somewhere to have 0:18:49.160 --> 0:18:52.240 a picnic, you don't want to carry all these bottles 0:18:52.280 --> 0:18:55.000 around and work about ice and you know whatever. Uh 0:18:55.480 --> 0:18:58.840 So it's just it's a convenience and consumers are willing 0:18:58.840 --> 0:19:02.080 to pay for that convenient It's all right, explain. 0:19:01.720 --> 0:19:05.720 To me, Ken, because this is not John Tucker's demo 0:19:06.400 --> 0:19:09.119 White Claw? What is this stuff? Why are all the 0:19:09.160 --> 0:19:10.600 kids drinking it down the Jersey Shore? 0:19:11.960 --> 0:19:15.520 Well, you know White Claw that's produced by E. J. Gallow. 0:19:15.600 --> 0:19:19.159 They know the wine market really well, they know their demographics. Well. Uh, 0:19:19.359 --> 0:19:24.520 they sense that there was an opportunity for a arguably 0:19:25.040 --> 0:19:28.920 arguably a better tasting, more modern version of a low 0:19:28.960 --> 0:19:33.480 alcohol refresher. And they've really hit a home run with 0:19:33.520 --> 0:19:35.600 that product. I think it was really a game changer 0:19:35.800 --> 0:19:38.800 in the whole heart Seltzer area, and it's still a 0:19:38.880 --> 0:19:42.679 very strong, uh you know entrant that said and that 0:19:42.760 --> 0:19:44.840