WEBVTT - Big Take: Cathie Wood Bad Spring Only A Blip 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.720 at Bloomberg dot com slash podcast. Well in financial markets, 0:00:22.760 --> 0:00:25.600 the rise of Kathy Wood and her ARC Funds has 0:00:25.640 --> 0:00:28.680 just been extraordinary, and it's been predicated in large part 0:00:28.840 --> 0:00:31.880 upon the cool new technologies that are out there that 0:00:31.920 --> 0:00:34.480 they've really embraced in terms of investments, think no further 0:00:35.000 --> 0:00:37.199 uh than Tesla. But the recent months have been a 0:00:37.280 --> 0:00:39.559 little bit challenging. Let's dig into it. We can do 0:00:39.600 --> 0:00:42.200 that with Ben Stepherman. He's a pronounce personal finance editor 0:00:42.800 --> 0:00:45.080 for Bloomberg News. Ben, thanks so much for joining us here. 0:00:45.120 --> 0:00:49.159 The big take story here's Kathy Wood's bad spring is 0:00:49.159 --> 0:00:51.720 a blip when the future is so magnificent. Tell us 0:00:51.720 --> 0:00:56.400 what you found about Kathy Wood and the ARC Funds. Yeah, 0:00:56.720 --> 0:01:00.560 so this story looks at She's been such a phenomenon 0:01:00.640 --> 0:01:03.440 over the last year. You know, she's sort of perfectly 0:01:03.480 --> 0:01:07.360 captured the mood of the market last year UM, when 0:01:07.840 --> 0:01:09.560 you know, we were also a lot of people were 0:01:09.560 --> 0:01:14.400 stuck inside and UM people wanted nothing more to than 0:01:14.440 --> 0:01:16.800 to look forward to the future, to this too, in 0:01:16.920 --> 0:01:19.479 this beautiful future that Kathy Would is talking about, which 0:01:19.520 --> 0:01:24.400 is one of rapid technological change and UM one where 0:01:24.880 --> 0:01:26.880 investors can make a lot of money by betting on 0:01:26.959 --> 0:01:31.560 innovative companies. So those companies just really soared through up 0:01:31.640 --> 0:01:34.520 until about February and then they kind of turned over 0:01:34.560 --> 0:01:37.360 and she's had a really rough spring. So so the 0:01:37.400 --> 0:01:39.480 story looks at her, and it really looks at her 0:01:39.560 --> 0:01:41.959 vision of the world and and how she sees she 0:01:42.959 --> 0:01:45.880 what basically what what the vision that she's selling to 0:01:46.000 --> 0:01:48.120 investors than the one that she thinks she can make 0:01:48.160 --> 0:01:52.200 money on if you're patient. I always think UM the 0:01:52.240 --> 0:01:55.440 timing is perfect for Kathy Would and E T S 0:01:55.480 --> 0:01:59.960 as well, right, because I've been following UM these exchange 0:02:00.040 --> 0:02:03.680 traded funds for a good decade. I always try and 0:02:03.680 --> 0:02:06.600 get Eric Balcunas on the show. He's like our resident 0:02:06.840 --> 0:02:10.000 UM genius on E T F. There's never been a 0:02:10.120 --> 0:02:14.239 breakout manager with the kind of fame that Cathy Wood 0:02:14.240 --> 0:02:19.600 has in this sector of finance. And it's like the 0:02:19.680 --> 0:02:23.960 generational um timing is perfect, right because the kids are 0:02:24.000 --> 0:02:27.320 now investing and they're doing it through E t S 0:02:27.400 --> 0:02:29.320 and this is an e t F that speaks to 0:02:29.360 --> 0:02:34.400 them because they hear about it on their social media platforms. 0:02:34.440 --> 0:02:36.720 She's such a throwback in some ways, not just an 0:02:36.720 --> 0:02:41.200 E t S but just in investing generally. Like who 0:02:41.280 --> 0:02:45.440 is the last person who really appealed to read? Who's 0:02:45.480 --> 0:02:47.959 the last manager that really appealed to the retail investor? 0:02:48.040 --> 0:02:49.840 You have to go back to, like you know, like 0:02:49.919 --> 0:02:52.640 you guess Warren Buffett is is some in some ways 0:02:52.760 --> 0:02:55.239 or around the two thousand's, but we've had this long 0:02:55.280 --> 0:02:57.480 period where people have been really really all about the 0:02:57.480 --> 0:03:01.400 index funds and passive past of investment, and we haven't 0:03:01.440 --> 0:03:05.559 had a big star come along and capture retail investors imagination. 0:03:06.240 --> 0:03:09.480 And and here she comes along and she's UM. Not 0:03:09.600 --> 0:03:11.720 only not in the mutual fund world, she's in the 0:03:11.760 --> 0:03:13.560 E t F world. That she's a woman, you know, 0:03:14.280 --> 0:03:17.840 is very male dominated UM industry. UM. I think she's 0:03:18.120 --> 0:03:21.079 That's that's just a fascinating phenomenon. Ben, Is there anyone 0:03:21.120 --> 0:03:23.120 else in E T S? Is there any other a 0:03:23.280 --> 0:03:27.200 t S manager that we all know. No, I don't 0:03:27.200 --> 0:03:32.280 think so, otherwise Ben would have written a story on them. Um, yeah, Ben, 0:03:32.639 --> 0:03:37.080 what is uh what is the thinking here? I mean, 0:03:37.360 --> 0:03:41.360 what is Cathy Wood saying now about her her strategies here, 0:03:41.400 --> 0:03:43.920 given that her performance has lagged over the last uh 0:03:43.960 --> 0:03:47.360 you know quarter or so. What she says is you 0:03:47.480 --> 0:03:49.640 gotta gotta keep the faith. That's what she says. And 0:03:49.760 --> 0:03:53.040 she's a religious person and I really think that that 0:03:53.160 --> 0:03:57.440 her views about technology and in religion and kind of 0:03:58.160 --> 0:03:59.760 they kind of aligned a little bit. But but she 0:03:59.800 --> 0:04:04.720 say to people is, um, we were like, the this 0:04:04.920 --> 0:04:07.640 sell off and the innovative stocks just means that we 0:04:07.680 --> 0:04:09.880 have we're going to make more money over the long term. 0:04:09.920 --> 0:04:12.760 They think that that their portfolio can triple over the 0:04:12.800 --> 0:04:17.320 next five years. They have these very bullish um estimates 0:04:17.360 --> 0:04:19.800 for what's going to happen to say, electric vehicles or 0:04:19.880 --> 0:04:23.839 DNA sequencing or artificial intelligence, and a lot of the 0:04:23.880 --> 0:04:26.240 traditional analysts on the street are just like, think, these 0:04:26.240 --> 0:04:29.680 these things are completely crazy and a little delusional. But um, 0:04:29.760 --> 0:04:32.360 she has been proved and right, I mean in terms 0:04:32.400 --> 0:04:36.320 of at least Bitcoin and Tesla when she made targets, 0:04:36.720 --> 0:04:39.320 price targets for them a couple few years ago. Um, 0:04:39.839 --> 0:04:43.039 they eventually were hit, um and what they were huge. 0:04:43.320 --> 0:04:45.120 There was a huge amount of skepticism at the time. 0:04:45.160 --> 0:04:48.720 But but you know, basically, for for her to be 0:04:48.720 --> 0:04:52.280 proven right, technological change really has to accelerate coming out 0:04:52.320 --> 0:04:54.400 of this pandemic and and you know it may but 0:04:55.040 --> 0:04:57.320 we'll see if that actually makes our money. It's so 0:04:57.360 --> 0:05:00.400 weird that that that um, you know, the read it 0:05:01.080 --> 0:05:05.920 uh phenomenon has boosted her along with these really um, 0:05:05.960 --> 0:05:07.800 I mean bitcoin is in some ways I read it 0:05:07.839 --> 0:05:10.400 phenomenon as well. Now it's kind of moved to Twitter. 0:05:10.960 --> 0:05:16.200 But um, she's got this millennial draw even though, as 0:05:16.240 --> 0:05:19.920 you point out, her mentor is Art Laugher, who is 0:05:19.960 --> 0:05:22.839 like a psion of the eighties. And right now as 0:05:22.880 --> 0:05:26.920 we're going through this real shift from reagan Omics over 0:05:26.920 --> 0:05:30.720 the last forty years too, now the era of six 0:05:30.760 --> 0:05:35.279 trillion dollar big government budgets, um from President Biden. She 0:05:35.440 --> 0:05:40.360 still she's she's now coming on and reigning Supreme Yeah, 0:05:40.400 --> 0:05:42.839 she's a really contradiction. I mean, she's sixty five years old. 0:05:43.080 --> 0:05:45.960 I guess she's capturing the attention of all these young 0:05:46.000 --> 0:05:50.400 investors and she's politically conservative, but yet she's also huge 0:05:50.400 --> 0:05:53.240 investor in green investments and she doesn't use the word 0:05:53.240 --> 0:05:56.120 climate change a lot, but she's she's been a champion 0:05:56.160 --> 0:05:59.320 of Tesla and other kind of and the investors are 0:05:59.360 --> 0:06:00.880 sticking with our aren't they been? I mean there, I 0:06:00.920 --> 0:06:04.359 mean there's just been some redemptions, but not that much. No, 0:06:05.160 --> 0:06:07.640 like fairly a billion dollars has come out of the 0:06:07.640 --> 0:06:12.600 funds um since February. And she's she's really people are 0:06:12.600 --> 0:06:15.240 really sticking with her, and she does a good she 0:06:15.279 --> 0:06:17.719 goes on she she really wouldn't have an in depth 0:06:17.760 --> 0:06:20.840 interview with us for this long profile, but she's been 0:06:20.880 --> 0:06:23.800 on the on the records so much, so many times 0:06:23.800 --> 0:06:26.440 she comes on TV. She does conferences once a week 0:06:26.520 --> 0:06:32.120 she's on Yeah, and and that really helped that communication strategy. 0:06:32.160 --> 0:06:33.880 She really gets out there and tells a story to 0:06:34.000 --> 0:06:37.520 people about about what they can get. They just a 0:06:37.600 --> 0:06:40.000 patient and stick with her. I mean, in some ways, 0:06:40.000 --> 0:06:42.800 she's really going to benefit from this new era of 0:06:42.800 --> 0:06:45.799 big spending as well, right because um, as we build 0:06:45.800 --> 0:06:49.160 out the infrastructure and invest in this in that country, 0:06:49.640 --> 0:06:53.080 this country is well. Here in Germany, we're helping out 0:06:53.320 --> 0:06:58.320 Tesla and you know the electronic vehicles. Yeah, her vision 0:06:58.360 --> 0:07:00.880 for where the economy is headed is is pretty interesting. 0:07:00.880 --> 0:07:03.280 I mean, do you think that inflation is not going 0:07:03.320 --> 0:07:06.160 to be a problem because he's an innovation these because 0:07:06.240 --> 0:07:08.840 these technologies really are guys. The cost of a lot 0:07:08.880 --> 0:07:11.320 of these technologies is going to fall as they become 0:07:11.360 --> 0:07:14.080 more popular. And all right, he's not worried about the 0:07:14.160 --> 0:07:18.360 economy overheating at all. Ben, congratulations to you and Annie 0:07:18.400 --> 0:07:22.120 and Claire on this Bloomberg Business We cover story as well. 0:07:22.160 --> 0:07:25.200 It's an awesome cover. I recommend our listeners check it out. 0:07:25.240 --> 0:07:27.240 If you have a Bloomberg terminal sitting in front of you, 0:07:27.280 --> 0:07:30.960 just type NI big take go to see this story. 0:07:31.040 --> 0:07:34.000 Cathy Wood's bad spring is a blip when the future 0:07:34.120 --> 0:07:41.720 is so magnificent. This is Bloomberg. Well. One of the 0:07:41.840 --> 0:07:45.640 areas of the economy that really got a boost during 0:07:45.800 --> 0:07:49.800 the pandemic was sports betting online and gaming. People were 0:07:49.840 --> 0:07:52.040 stuck at home, and the more and more states are 0:07:52.080 --> 0:07:55.680 allowing sports betting off site, electronic sports betting, it's been 0:07:55.720 --> 0:07:58.560 a big growth driver. Mike Tavarrella, he's Chamber of the 0:07:58.560 --> 0:08:01.320 Board of LLIS Game Technolo logies. He joins us to 0:08:01.360 --> 0:08:05.200 talk about this business pre pandemic, post pandemic. Mike, thanks 0:08:05.200 --> 0:08:06.720 so much for joining us here. I love for you 0:08:06.800 --> 0:08:08.400 to just talk to us a little bit, just give 0:08:08.480 --> 0:08:11.920 us a brief description of what LS game Technology is. 0:08:11.920 --> 0:08:15.960 What do you guys do? Sure? Well, great, good good morning, gentlemen. 0:08:16.120 --> 0:08:19.720 Um So just l L Game Technology has been in 0:08:19.760 --> 0:08:23.080 the leisure sports betting business for about twenty years, primarily 0:08:23.120 --> 0:08:26.000 in the Italian market, which is a hugely competitive market 0:08:26.040 --> 0:08:29.840 in Europe. In Italy were UH we're customer facing, would 0:08:29.880 --> 0:08:32.680 beat the sea licenses, both online and land based. And 0:08:32.720 --> 0:08:35.280 we own our own technology stack and that text stack 0:08:35.400 --> 0:08:38.640 that we own we developed it only a few years ago, 0:08:38.679 --> 0:08:41.319 so it's considered one of the newest betting platforms in 0:08:41.360 --> 0:08:43.800 the world. And if I got put an analogy to 0:08:44.760 --> 0:08:47.680 building buildings and real estate, it's kind of like a 0:08:47.720 --> 0:08:50.680 design build where we, you know, took time to understand 0:08:50.720 --> 0:08:53.680 the behavior of betters, what our clients were driving for. 0:08:54.200 --> 0:08:57.920 And we uniquely designed this platform to specifically work in 0:08:58.000 --> 0:09:02.199 the sports betting UH world, and that's our current business 0:09:02.240 --> 0:09:05.320 and and in one we're looking at coming into the 0:09:05.400 --> 0:09:09.120 US and capitalize them on the brilliant growth opportunity here, 0:09:09.240 --> 0:09:14.120 since possible is repealing. So what how does this work? Then? 0:09:14.200 --> 0:09:16.800 Can I bet on Buckeyes football? Do I bet on 0:09:17.120 --> 0:09:21.200 um Paul Sweeney's knicks in the NBA? UM? Can I 0:09:21.240 --> 0:09:25.240 bet on no hitters in in Major League Baseball? What? What? What? What? 0:09:25.320 --> 0:09:29.040 Betting goes? Sure? So so I guess the first point 0:09:29.080 --> 0:09:32.680 about that is that sport, any any h sports bet 0:09:32.720 --> 0:09:35.880 that you are permitted to do in any regional jurisdiction, 0:09:35.920 --> 0:09:39.120 if you will, is always dependent upon the regulation in 0:09:39.160 --> 0:09:42.199 the area. So for example, in Italy, we're our our 0:09:42.240 --> 0:09:44.600 clients are able to bet on just about anything under 0:09:44.640 --> 0:09:46.520 the sun, as you would imagine, and we as an 0:09:46.559 --> 0:09:50.240 operator get a full feed from our data providers and 0:09:50.280 --> 0:09:52.959 we use a variety of them UH and and then 0:09:53.000 --> 0:09:56.679 we distribute it. And of course the primary UH products 0:09:56.679 --> 0:09:59.600 like say in Europe and saw in Italy it'll be 0:09:59.600 --> 0:10:04.240 soccer right song in US like that will differ on 0:10:04.320 --> 0:10:07.800 state to state basis. And obviously, but if you want 0:10:07.800 --> 0:10:11.439 to bet on the Buckeyes, UH, certainly, if our feed 0:10:11.520 --> 0:10:14.880 provides it, then we'll be able to allow you to 0:10:14.920 --> 0:10:17.000 bet on it, depending on the area that you're in. 0:10:17.640 --> 0:10:21.240 So it just seems Mike that sports betting. I live 0:10:21.240 --> 0:10:24.480 in New Jersey where it's been legal for some time. Um, 0:10:24.520 --> 0:10:26.800 it's just all over the place. It's all over sports 0:10:26.840 --> 0:10:29.560 or radio. In terms of the ads for you know, 0:10:29.960 --> 0:10:32.480 as this economy reopens, one of the key areas is 0:10:32.520 --> 0:10:36.680 kind of restaurants and entertainment venues. Do you expect sports 0:10:36.679 --> 0:10:40.719 betting to be integrated into that kind of experience? Well, 0:10:40.800 --> 0:10:42.559 let me just say this way. UM. You know, the 0:10:43.040 --> 0:10:47.000 European market is more or less a leading indicator. And 0:10:47.080 --> 0:10:50.520 when you look at, um, at what where people are 0:10:50.559 --> 0:10:53.760 able to uh to bet in those jurisdictions, Like they 0:10:53.800 --> 0:10:56.880 can go to a local coffee shop or a sports 0:10:56.880 --> 0:11:00.480 betting Uh, you know outfit so easy ag when you 0:11:00.480 --> 0:11:03.520 walk into like an agency where you can bet on 0:11:03.520 --> 0:11:07.439 on anything. Um. That model there has been active in 0:11:07.760 --> 0:11:10.240 Europe for the better part of twenty years. And we 0:11:10.360 --> 0:11:13.400 see that ultimately in the United States, after the repeal 0:11:13.440 --> 0:11:15.560 have passed a couple of years ago, a lot of 0:11:15.600 --> 0:11:19.720 the states sort of took out the opportunity and get started. Uh. 0:11:19.720 --> 0:11:23.240 I see that they tethered certain licenses. The large casinos 0:11:23.280 --> 0:11:26.800 are single operators. However, I think that that dynamic is 0:11:26.800 --> 0:11:30.679 going to change over time simply because um, you know, 0:11:31.200 --> 0:11:35.960 the sports betting is a is a product that needs 0:11:36.000 --> 0:11:39.600 to be uh well actually should not be monopolized because 0:11:39.920 --> 0:11:43.080 sports vetters need the variety, They need the variation at 0:11:43.120 --> 0:11:46.880 odds because the ultimate outcome of the game, uh is 0:11:46.920 --> 0:11:50.600 the same. They're regardless of what what who's playing and 0:11:50.920 --> 0:11:53.520 who the who the athletes is like in a golf tournament, 0:11:53.720 --> 0:11:56.040 so the outcome is the same. So sports vetters need 0:11:56.160 --> 0:11:58.920 a variety of operators to be able to compete because 0:11:58.960 --> 0:12:02.040 the secret sauce between operators is the odds, and you, 0:12:02.160 --> 0:12:05.560 as a sports vettor are shopping odds. And if there's 0:12:05.559 --> 0:12:09.240 a monopoly in the area, then obviously uh sports vettors 0:12:09.240 --> 0:12:11.800 will go offshore and keep it in the dark. And 0:12:11.960 --> 0:12:16.120 that's not the purpose of being regulated. So what what 0:12:16.240 --> 0:12:19.760 our model does is it takes aim at the entrepreneurial 0:12:19.800 --> 0:12:22.760 engine of economy in America and if you could think 0:12:22.800 --> 0:12:26.000 about it the restaurant economy in places like New York 0:12:26.120 --> 0:12:29.360 or Washington. You have millions of people that visit these 0:12:29.360 --> 0:12:32.040 places throughout the year, like if there's a Super Bowl 0:12:32.520 --> 0:12:36.760 or a NBA finals, santy cop and you know March madness. 0:12:36.880 --> 0:12:40.240 You know, these establishments are flocked by LSU fantas during 0:12:40.360 --> 0:12:43.960 championship games, so it really becomes a supercharge and social 0:12:44.040 --> 0:12:47.200 environment where sports and sports betting is already consumed the most. 0:12:47.600 --> 0:12:51.000 So our model even though we're able to do everything 0:12:51.040 --> 0:12:54.600 that say, for example, New Jersey requires like requires from 0:12:54.600 --> 0:12:57.800 a licensing perspective, be it online or land base. Our 0:12:58.280 --> 0:13:00.800 technology because of the this a bit a model that 0:13:00.840 --> 0:13:03.400 we use in the Italian market and all these small shops, 0:13:03.840 --> 0:13:06.360 it is able to scale down as opposed to just 0:13:06.480 --> 0:13:08.840 only scale up. It's able to scale right down to 0:13:09.400 --> 0:13:13.600 the smallest denominator and we're able to service these restaurants 0:13:13.600 --> 0:13:16.200 and bars and allow them the opportunity to do that. 0:13:16.280 --> 0:13:19.640 But again it's always predicated on regulations. So in New Jersey, 0:13:19.720 --> 0:13:23.600 for example, they would need to permit restaurants and bars 0:13:23.640 --> 0:13:26.840 or small entities to be able to get a license 0:13:26.920 --> 0:13:31.120 to process a sports bet as an axillary product to 0:13:31.160 --> 0:13:34.440 their core business, and that really has to happen. We 0:13:34.600 --> 0:13:37.200 hope to see that, we see that that trend is occurring, 0:13:37.280 --> 0:13:39.440 and it started in d C and and that really 0:13:39.480 --> 0:13:41.440 would be a cool trend. And I think that that's 0:13:41.600 --> 0:13:43.640 uh that's gonna be a differentiator in the US as 0:13:43.679 --> 0:13:45.880 we brought alright, Mike, Well, we hope to get you 0:13:45.920 --> 0:13:49.280 back on as we learn more. As you know, this 0:13:49.360 --> 0:13:54.800 progresses post um legislation, post regulation. Mike Chavarella is the 0:13:54.880 --> 0:13:58.199 chairman of the board at l S Game Technology, talking 0:13:58.240 --> 0:14:02.400 to us about sports betting and um how it could 0:14:02.480 --> 0:14:06.600 look as the economy reopens and as these businesses start 0:14:06.679 --> 0:14:09.440 to really get going. He's betting on l s U. 0:14:09.760 --> 0:14:15.520 I'm betting on the buck Eyes. This is Bloomberg Now. 0:14:15.520 --> 0:14:18.120 I want to bring in Kim Bussing. He is a 0:14:18.240 --> 0:14:21.160 US luxury reporter for Bloomberg News. He's got a news 0:14:21.200 --> 0:14:24.080 story on the terminal. Macy's needs another miracle on thirty 0:14:24.120 --> 0:14:27.440 fourth Street to secure its future. But Kim, I gotta 0:14:27.520 --> 0:14:31.720 start out with some props. Man. I first started following 0:14:31.720 --> 0:14:34.600 you after I saw that two sixty million dollar park 0:14:34.680 --> 0:14:36.400 that you posted about in New York, and then I 0:14:36.520 --> 0:14:38.520 started reading through your stories, and I think you have 0:14:38.720 --> 0:14:43.720 an incredible unique eye and picking out some trends in 0:14:44.240 --> 0:14:48.440 some social trends that are really carrying through to the markets. 0:14:48.480 --> 0:14:52.160 I read your story on Another Lane that the sneaker 0:14:52.600 --> 0:14:56.760 seller that I thought was great, UM about the the 0:14:56.800 --> 0:14:59.800 pot users that are spending eight hundred dollars on bong 0:15:00.000 --> 0:15:03.920 say stigmas fade here in Canada's becomes more mainstream, and 0:15:03.960 --> 0:15:05.680 I just think it's so cool that you're able to 0:15:05.720 --> 0:15:09.000 piece these things together that are are kind of trendy 0:15:09.040 --> 0:15:13.760 among a new generation UM that is now getting more 0:15:13.760 --> 0:15:16.800 and more money to spend, but also tie in so 0:15:16.840 --> 0:15:20.600 well to to markets and the growth areas that we're seeing. Well, 0:15:20.600 --> 0:15:23.360 thank you. I really appreciate that. It's really important to 0:15:23.360 --> 0:15:27.080 look at at cultural things and how they're influencing companies 0:15:27.120 --> 0:15:29.720 and what they do and and the products they sell 0:15:29.760 --> 0:15:33.200 it and what people buy. Alright, So Macy's, you talk 0:15:33.280 --> 0:15:36.680 about a pillar of New York City and New York 0:15:36.680 --> 0:15:39.560 City retail sits smack there that in the middle of 0:15:39.640 --> 0:15:43.320 Manhattan at thirty fourth Street and sixth Avenue. But it's 0:15:43.360 --> 0:15:45.920 a department store and that's a tough business. Talk to 0:15:46.000 --> 0:15:51.840 us about how they're boring. Is looking to reinvigorate the company. Yeah, 0:15:51.880 --> 0:15:55.800 Macy's wants to build a skyscraper on top of the 0:15:55.800 --> 0:15:59.120 biggest department store in America. So this would be an 0:15:59.160 --> 0:16:03.160 office tower, UM at somewhere around nine feet, which is 0:16:03.200 --> 0:16:06.360 a bit shorter than the Empire State Building nearby, uh, 0:16:06.480 --> 0:16:08.800 just a couple blocks away, and Macy's Herald Square. That 0:16:08.880 --> 0:16:12.520 store is their flagship. It's their most important store in 0:16:12.560 --> 0:16:15.600 the country. It's their most valuable real estate. Their headquarters 0:16:15.640 --> 0:16:19.440 are there. UH, it's their most productive store. It's the 0:16:19.640 --> 0:16:24.880 overwhelming center of gravity for this business. So it makes 0:16:24.880 --> 0:16:27.040 sense that they would want to double down on that. 0:16:27.080 --> 0:16:29.400 But of course there's questions here right whether it's something 0:16:29.400 --> 0:16:34.160 like that would work, what's the business situation with Macy's, 0:16:34.200 --> 0:16:37.080 because you know, I'd prefer to go to Bloomingdale's, which 0:16:37.120 --> 0:16:41.400 is also there's up across street from our les headquarters. 0:16:41.440 --> 0:16:44.440 I'd rather go to Birdworf Goodman UM to look around 0:16:44.680 --> 0:16:48.680 stuff that I probably can't afford. Um. You know, there's 0:16:48.720 --> 0:16:53.280 so many other choices UM in London, in New York, 0:16:54.160 --> 0:16:57.440 around the world. Macy's just seems kind of like Sears 0:16:57.480 --> 0:16:59.640 in terms of how exciting it is to walk through. 0:17:00.200 --> 0:17:04.520 Macy's had just embarked on a their latest turnaround plan 0:17:04.680 --> 0:17:08.560 in February twenties. Line that up with the pandemic, and 0:17:08.840 --> 0:17:10.880 a whole lot of that was derailed and they went 0:17:10.880 --> 0:17:14.840 into emergency mode, just like just like everyone else out there, um, 0:17:15.000 --> 0:17:18.440 and they're there, everyone's still in it. So the department 0:17:18.440 --> 0:17:21.359 stores have been on the decline for for so very long, 0:17:22.040 --> 0:17:23.840 but that there have been glimmers of hope. You know. 0:17:23.960 --> 0:17:28.760 Macy's has been closing stores to to have less square 0:17:28.800 --> 0:17:34.040 footage out there, and while investing in digital commerce, e commerce, 0:17:34.080 --> 0:17:36.240 online sales and all of that, and so they've been 0:17:36.280 --> 0:17:40.280 making those steps, but it's still just seems like an 0:17:40.280 --> 0:17:42.879 eternal struggle for for department stores. Can they get New 0:17:42.960 --> 0:17:47.080 York City approval to build a skyscraper on top of Macy's. Yeah, 0:17:47.240 --> 0:17:49.919 so where that that's at right now? Is the latest 0:17:49.960 --> 0:17:53.000 thing they've done is submit a proposal to invest two 0:17:53.480 --> 0:17:57.040 thirty five million dollars in the area surrounding the Macy's 0:17:57.080 --> 0:17:59.160 store that's Harold Square itself. That means pumping money into 0:17:59.160 --> 0:18:02.240 the neighborhood and order to secure those rights to build 0:18:02.560 --> 0:18:06.600 the skyscraper. Um. These plans will turn that plaza, the 0:18:06.600 --> 0:18:11.879 Herald Square Plaza, into a more pedestrian friendly area with 0:18:11.960 --> 0:18:14.720 a bunch of new transit entrances because it's on top 0:18:14.760 --> 0:18:19.000 of a subway station that nobody likes. I use every day, 0:18:19.000 --> 0:18:22.600 by the way, every single day, and that proposals now 0:18:22.680 --> 0:18:25.280 public and will will be set to go through the 0:18:25.280 --> 0:18:30.160 city's review procedure that involves the community Board, local leaders, 0:18:30.200 --> 0:18:33.120 city council and everything. Alright, just real quick, Kim, any 0:18:33.160 --> 0:18:34.879 sense of timing and whether we're gonna get some clarity 0:18:34.920 --> 0:18:38.280 here whether they can do this. Uh, We're just gonna 0:18:38.280 --> 0:18:40.679 have to see what they think about about these plans. Uh, 0:18:40.840 --> 0:18:43.680 something like this will take many years anyway, and they're 0:18:43.680 --> 0:18:46.880 currently in preliminary talks with developers to try to find 0:18:46.880 --> 0:18:48.800 some some partners for it. All right, that's an aggressive 0:18:48.840 --> 0:18:51.960 move by Macy's to try to add some value to 0:18:52.160 --> 0:18:54.520 a company that's really in a challenging space up in 0:18:54.560 --> 0:18:57.720 the department store of business, Kim, to see maybe it 0:18:57.760 --> 0:18:59.800 plays in though, you know, to the way the city 0:18:59.880 --> 0:19:02.480 is gonna change post pandemic. It's gonna be really interesting. 0:19:02.520 --> 0:19:05.399 And Kempstone some reporting on like the new look of 0:19:05.440 --> 0:19:09.399 New York and with the impetus of massive spending that 0:19:09.400 --> 0:19:11.280 we're gonna get across the country, maybe we do see 0:19:11.280 --> 0:19:13.639 a change. Yeah, maybe it's it's really interesting, but it 0:19:13.640 --> 0:19:16.080 would be great for that area as I walk past 0:19:16.080 --> 0:19:18.840 it every day, can passing us luxury reporter for Bloomberg News. 0:19:18.920 --> 0:19:21.679 He joins us here in the Bloomberg Interactive Broker studio. 0:19:21.640 --> 0:19:26.560 Is so good to have folks coming in live. I 0:19:26.600 --> 0:19:28.439 want to bring in Dave King right now. He's senior 0:19:28.480 --> 0:19:32.640 portfolio manager and head of Income and Growth Strategies over 0:19:32.680 --> 0:19:36.760 at Columbia thread Needle Investments. They have five hundred sixty 0:19:36.800 --> 0:19:41.360 four billion dollars in assets under management. Dave um, we're 0:19:41.400 --> 0:19:46.440 seeing today more growth for I noticed this morning cyclicals 0:19:46.440 --> 0:19:50.120 again are rising Ford and General Motors. We got games 0:19:50.119 --> 0:19:53.600 in General Electric and Boeing, and there's some clear catalyst 0:19:53.680 --> 0:19:56.960 there um as our stocks. Thattor told us earlier with 0:19:57.200 --> 0:20:02.560 you know, airbuses announcement yesterday and GM's plant openings forwards investments. 0:20:02.560 --> 0:20:08.000 But it seems like this whole reopening m reflation respending 0:20:08.040 --> 0:20:11.600 trade is really getting back on track. Is it something 0:20:11.640 --> 0:20:15.879 you're betting on as well? Well? I think that that's true. 0:20:16.000 --> 0:20:18.600 But I also think the reason to bet on it 0:20:18.680 --> 0:20:25.400 is last year's market favored quality bonds and disruptive growth stocks. 0:20:25.440 --> 0:20:29.280 So not only are you benefiting from the strength in 0:20:29.359 --> 0:20:33.359 the economy, which at some point was predictable, but also 0:20:33.520 --> 0:20:37.760 good starting valuations on the kind of companies that you're 0:20:38.080 --> 0:20:42.399 you're referencing um Ford Motors having a great day, but 0:20:42.520 --> 0:20:45.280 the stock price is lower than when I joined Columbio 0:20:45.359 --> 0:20:48.800 eleven years ago for Examp. So you're you're, you're really 0:20:49.600 --> 0:20:54.560 have that combination and um, as I've said too many 0:20:54.600 --> 0:20:57.760 people for several months now, I think the play is 0:20:58.400 --> 0:21:01.120 the dogs of the Dadao or revenge of the nerds, 0:21:01.359 --> 0:21:03.840 you know, by the by the big companies that people 0:21:03.880 --> 0:21:07.680 thought were boring. And as the economy recovers and perhaps 0:21:07.720 --> 0:21:12.040 you see some price inflation, make money. All right, give 0:21:12.119 --> 0:21:15.959 us some name some of those dogs, would you. Well, 0:21:16.359 --> 0:21:18.880 the dogs of the Tao for people that don't know 0:21:19.600 --> 0:21:23.159 the procedure, are simply the ten highest yielding stocks in 0:21:23.200 --> 0:21:28.280 the Dow, and at the moment that's Chevron, IBM, Verizon, 0:21:28.720 --> 0:21:34.560 Dow Chemical, no relation, um Walgreens, Merk, Coca Cola, am 0:21:34.680 --> 0:21:39.280 Gen three M, and Ciscose do no. I know. I 0:21:39.480 --> 0:21:42.280 try try getting through a day without using the products 0:21:42.320 --> 0:21:46.719 and services with those companies, and you know, imagine that 0:21:46.760 --> 0:21:49.600 those stocks were woefully out of favor last year, and 0:21:49.640 --> 0:21:52.960 I think you get the investment opportunity. It's it's not 0:21:53.040 --> 0:21:55.439 something you need a master's degree to figure out. But 0:21:55.480 --> 0:21:58.280 it's not on Reddit, and it's not you know, um, 0:21:58.400 --> 0:22:02.280 Cathy Wood isn't investing in these companies. Well, you know, 0:22:02.320 --> 0:22:04.919 I don't know the second point for a fact. The 0:22:04.960 --> 0:22:08.080 first point, I'm sure you're right. Um, it's it's really 0:22:08.119 --> 0:22:11.240 old fashioned. You know, I'm just sitting here staring at 0:22:11.240 --> 0:22:14.160 one monitor with my sleeves rolled up and buying stocks 0:22:14.200 --> 0:22:19.200 like this. And I'm clearly not in vogue. But we're 0:22:19.280 --> 0:22:22.800 up between fifteen and and Dividend Opportunity Fund this year, 0:22:22.880 --> 0:22:26.280 so it's it's not crazy. There's something going on here, David. 0:22:26.320 --> 0:22:29.760 You know, I think investors, certainly since the financial crisis, 0:22:29.800 --> 0:22:32.480 they've been pretty comfortable with some of the big tech, 0:22:32.760 --> 0:22:35.440 big cap tech names, you know, an Apple or Amazon. 0:22:35.480 --> 0:22:37.160 I can buy those things, put them in my four 0:22:37.200 --> 0:22:39.359 one K and really not have to think about them 0:22:39.400 --> 0:22:42.480 for a long time. Now. This rotation play has been 0:22:42.480 --> 0:22:46.760 working so well for you know, value investors and in 0:22:47.320 --> 0:22:50.119 and even small cap investors. Give us a sense of 0:22:50.160 --> 0:22:51.920