1
00:00:02,720 --> 00:00:10,560
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

2
00:00:10,560 --> 00:00:14,560
Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

3
00:00:14,600 --> 00:00:17,840
Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

4
00:00:17,920 --> 00:00:21,040
Speaker 1: Business App. Listen on demand wherever you get your podcasts,

5
00:00:21,320 --> 00:00:23,240
Speaker 1: or watch us live on YouTube.

6
00:00:23,880 --> 00:00:26,880
Speaker 2: Let's get to Dana Diorio, a co chief investment officer

7
00:00:26,920 --> 00:00:29,960
Speaker 2: at Investment, joining us from Hartford, Connecticut.

8
00:00:30,320 --> 00:00:31,440
Speaker 3: Okay, so what do you do?

9
00:00:31,680 --> 00:00:34,760
Speaker 2: It's been a crazy twenty four hours within the market.

10
00:00:35,159 --> 00:00:35,960
Speaker 3: How do you position?

11
00:00:38,080 --> 00:00:39,480
Speaker 4: Yeah, that's that's the big question.

12
00:00:39,560 --> 00:00:42,880
Speaker 5: It's so funny because so actually I met our conference

13
00:00:42,960 --> 00:00:45,720
Speaker 5: in Las Vegas, our Investment Elevate conference, and I was

14
00:00:45,760 --> 00:00:48,519
Speaker 5: just on stage yesterday literally as the pause was happening

15
00:00:48,880 --> 00:00:52,519
Speaker 5: telling everyone to stay the course. It was the timing was,

16
00:00:52,720 --> 00:00:55,200
Speaker 5: you know, madness and kind of showing what had happened

17
00:00:55,200 --> 00:00:57,960
Speaker 5: on Monday when we had you know, this false report

18
00:00:58,040 --> 00:01:01,440
Speaker 5: of a reprieve and stop, you know, skyrocket and only

19
00:01:01,480 --> 00:01:03,760
Speaker 5: to come back down. And when you're a financial advisor

20
00:01:03,800 --> 00:01:06,839
Speaker 5: trying to trade on this, it's absolutely impossible, of course,

21
00:01:07,200 --> 00:01:10,840
Speaker 5: and so you know, the messaging then and now is

22
00:01:11,200 --> 00:01:13,240
Speaker 5: you know, kind of you've got to stay put I mean,

23
00:01:13,319 --> 00:01:15,640
Speaker 5: certainly if you have clients who are not diversified and

24
00:01:15,640 --> 00:01:18,160
Speaker 5: they're super concentrated, or you know, a lot of people

25
00:01:18,240 --> 00:01:20,880
Speaker 5: let their equity positions get a little bit big in

26
00:01:20,880 --> 00:01:25,120
Speaker 5: this hopes of a pro growth, pro you know, corporate

27
00:01:25,720 --> 00:01:30,440
Speaker 5: corporate uh type of policy from the administration. That's obviously

28
00:01:30,480 --> 00:01:34,039
Speaker 5: all you know, kind of been obliterated and now we're

29
00:01:34,080 --> 00:01:36,240
Speaker 5: looking at a picture that's very different. And so you

30
00:01:36,319 --> 00:01:38,280
Speaker 5: had people who are high in equities, if you're if

31
00:01:38,319 --> 00:01:40,640
Speaker 5: you're too high inequities, you know, take them off the

32
00:01:40,640 --> 00:01:44,520
Speaker 5: table for sure. But you know, you really these are

33
00:01:44,560 --> 00:01:46,920
Speaker 5: the times that you that you need to ultimately stay

34
00:01:46,959 --> 00:01:49,320
Speaker 5: the course and wait it out, or you turn the

35
00:01:49,320 --> 00:01:51,520
Speaker 5: paper losses into a real loss.

36
00:01:52,120 --> 00:01:55,000
Speaker 6: Conference in Vegas. Nobody is conferences in like Sheboygan. They're

37
00:01:55,000 --> 00:01:58,279
Speaker 6: always in Vegas or Miami, Scottsdale, Danis.

38
00:01:58,760 --> 00:02:00,760
Speaker 3: I mean, they know what they're doing data. So what

39
00:02:00,880 --> 00:02:01,720
Speaker 3: about earnings here?

40
00:02:01,760 --> 00:02:04,320
Speaker 6: I think, you know, I have not seen earning assesstments

41
00:02:04,440 --> 00:02:06,840
Speaker 6: really come down that much. But I've got companies left

42
00:02:06,880 --> 00:02:09,240
Speaker 6: and right pulling their guidance and all that kind of stuff.

43
00:02:09,280 --> 00:02:12,200
Speaker 6: How much earnings how much earnings risk is out there?

44
00:02:12,240 --> 00:02:12,600
Speaker 3: Do you think?

45
00:02:13,480 --> 00:02:15,600
Speaker 5: Yeah, I mean, your last speaker said it, right. I mean,

46
00:02:16,520 --> 00:02:18,280
Speaker 5: what's going to be crazy right now is you're going

47
00:02:18,320 --> 00:02:20,320
Speaker 5: to have the first quarter earnings come out, You're going

48
00:02:20,400 --> 00:02:24,080
Speaker 5: to have you know, March economic reports come out, and

49
00:02:24,160 --> 00:02:25,720
Speaker 5: of course all of these are going to paint this

50
00:02:26,200 --> 00:02:28,640
Speaker 5: incredibly rosy picture that's not reality anymore.

51
00:02:28,680 --> 00:02:28,840
Speaker 7: Right.

52
00:02:28,880 --> 00:02:30,040
Speaker 3: In fact, they'll.

53
00:02:29,840 --> 00:02:33,079
Speaker 5: Probably be rosier even than they normally would have because

54
00:02:33,320 --> 00:02:37,440
Speaker 5: you have folks, you know, pulling forward consumption, pulling forward demand,

55
00:02:37,680 --> 00:02:39,880
Speaker 5: and so things will look great and you'll have this

56
00:02:40,000 --> 00:02:42,440
Speaker 5: series of reports and earn and this earning season is

57
00:02:42,480 --> 00:02:44,520
Speaker 5: going to be part of that, and so paying attention

58
00:02:44,560 --> 00:02:46,680
Speaker 5: to that, of course, it gives you no information.

59
00:02:46,800 --> 00:02:48,200
Speaker 4: It's really what is the guidance?

60
00:02:48,440 --> 00:02:51,080
Speaker 5: And if you're a corporate planner, I'm not sure you

61
00:02:51,120 --> 00:02:54,640
Speaker 5: can give great guidance, right, I mean the volatility of

62
00:02:54,919 --> 00:02:57,760
Speaker 5: you know, just what you have to potentially plan for

63
00:02:57,800 --> 00:03:00,240
Speaker 5: in the short run. And then you know, if you're

64
00:03:00,280 --> 00:03:02,320
Speaker 5: you know, the idea. Some of the idea here, of course,

65
00:03:02,400 --> 00:03:04,480
Speaker 5: is hey, look let's bring you know, some of the

66
00:03:04,480 --> 00:03:08,200
Speaker 5: manufacturing back to the States. Let's let's you know, kind

67
00:03:08,200 --> 00:03:11,640
Speaker 5: of encourage people to have capex here. But how do

68
00:03:11,680 --> 00:03:14,320
Speaker 5: you do a long term plan. I mean, it takes years,

69
00:03:14,520 --> 00:03:16,119
Speaker 5: right to bring this stuff here?

70
00:03:16,240 --> 00:03:17,840
Speaker 4: Yeah, how do you?

71
00:03:18,040 --> 00:03:20,560
Speaker 5: How do you plan around that? So I think Guidance

72
00:03:20,639 --> 00:03:25,119
Speaker 5: is going to be probably overly I'll almost say might

73
00:03:25,280 --> 00:03:28,560
Speaker 5: likely be overly pessimistic, because nobody really knows what they're

74
00:03:28,639 --> 00:03:29,200
Speaker 5: dealing with.

75
00:03:29,400 --> 00:03:32,640
Speaker 2: Which to that point, Delta yesterday with Drew Guidance, stock

76
00:03:32,720 --> 00:03:35,320
Speaker 2: pop Today CarMax does something similar, I mean, and pulled

77
00:03:35,320 --> 00:03:38,080
Speaker 2: back its financial goals because of the volatility. But same thing,

78
00:03:38,240 --> 00:03:40,720
Speaker 2: and that stacks down twenty percent. So where are we

79
00:03:40,800 --> 00:03:41,640
Speaker 2: in valuations?

80
00:03:42,800 --> 00:03:45,440
Speaker 5: Yeah, well, I mean, obviously we started the year very high.

81
00:03:45,480 --> 00:03:49,240
Speaker 5: We've shaved a good piece of that, you know, but

82
00:03:49,320 --> 00:03:51,560
Speaker 5: that was part of the problem, right. We came into

83
00:03:51,600 --> 00:03:54,600
Speaker 5: the air with that expectation of a goal market with

84
00:03:54,720 --> 00:03:58,440
Speaker 5: high valuations as a start, not not everywhere, but certainly

85
00:03:58,880 --> 00:04:02,680
Speaker 5: as an index, right, market cap weighted basis, valuations were high,

86
00:04:02,760 --> 00:04:05,760
Speaker 5: and so you know, when you come in with high valuations,

87
00:04:06,040 --> 00:04:08,960
Speaker 5: really everything has to go well. And if you have

88
00:04:09,040 --> 00:04:12,560
Speaker 5: this exogenous shock, you know, and everybody knew tariffs are coming,

89
00:04:12,600 --> 00:04:16,200
Speaker 5: it's not as though you know, this was entirely unexpected,

90
00:04:16,240 --> 00:04:18,800
Speaker 5: and that's why you have that pull forward of consumption

91
00:04:19,200 --> 00:04:22,640
Speaker 5: but the magnitude, right, the breadth of it, how quickly

92
00:04:22,680 --> 00:04:26,120
Speaker 5: it all was was intended to come to pass, that

93
00:04:26,160 --> 00:04:29,040
Speaker 5: did catch everybody off card and you know, kind of

94
00:04:29,080 --> 00:04:32,760
Speaker 5: wiped out that picture that rationalized those higher valuations that

95
00:04:32,760 --> 00:04:33,600
Speaker 5: we were sitting with.

96
00:04:33,880 --> 00:04:35,839
Speaker 6: Dana, Thank you so much for joining us. Always appreciate

97
00:04:35,839 --> 00:04:36,920
Speaker 6: getting a few minutes of your time.

98
00:04:37,000 --> 00:04:37,600
Speaker 3: Dany de Aoria.

99
00:04:37,920 --> 00:04:41,880
Speaker 6: She is co chief investment officer at invest Net, joining

100
00:04:41,960 --> 00:04:43,560
Speaker 6: us from Hartford, Connecticut.

101
00:04:43,120 --> 00:04:46,080
Speaker 3: Via that zoom thing here Vegas, remember, oh Vegas, that's right?

102
00:04:46,160 --> 00:04:47,280
Speaker 4: Time? Is Ava for you?

103
00:04:47,400 --> 00:04:50,360
Speaker 3: Exactly? Oh a Vegas. There we go.

104
00:04:52,240 --> 00:04:55,960
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

105
00:04:56,040 --> 00:04:59,080
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

106
00:04:59,120 --> 00:05:02,440
Speaker 1: Auto with the Work Business Up. Listen on demand wherever

107
00:05:02,480 --> 00:05:05,600
Speaker 1: you get your podcasts, or watch us live on YouTube.

108
00:05:06,320 --> 00:05:11,560
Speaker 2: Michael McKee, Bloomberg International Economics and Policy Correspondent, joins us. Now, So, Mike,

109
00:05:11,640 --> 00:05:14,279
Speaker 2: it was interesting with the CPI. Bloomberg Economics had a

110
00:05:14,320 --> 00:05:17,080
Speaker 2: note out that said this wasn't about falling prices necessarily,

111
00:05:17,080 --> 00:05:20,280
Speaker 2: but it was more about falling demand in travel, leisure

112
00:05:20,360 --> 00:05:22,640
Speaker 2: and apparel and furniture sales and stuff like that.

113
00:05:22,880 --> 00:05:23,960
Speaker 3: Walk me through the details.

114
00:05:24,160 --> 00:05:26,920
Speaker 8: Well, the biggest drop was in gasoline prices, which is

115
00:05:26,960 --> 00:05:32,720
Speaker 8: sort of a combination of anticipated falling demand by the

116
00:05:32,800 --> 00:05:35,039
Speaker 8: gasoline producers and refiners, etc.

117
00:05:36,400 --> 00:05:38,600
Speaker 3: Given the impending tariffs.

118
00:05:39,080 --> 00:05:42,800
Speaker 8: And then we also saw some declines as you mentioned,

119
00:05:42,839 --> 00:05:47,200
Speaker 8: in travel prices, and that was definitely terriff related, But

120
00:05:47,400 --> 00:05:50,599
Speaker 8: the rest of it was sort of mixed news. Food

121
00:05:50,640 --> 00:05:55,040
Speaker 8: prices were up by food at home, grocery store prices

122
00:05:55,040 --> 00:05:57,400
Speaker 8: were up by half a percent of fairly large gain

123
00:05:57,960 --> 00:06:01,000
Speaker 8: than two months in a row where food prices are up,

124
00:06:01,360 --> 00:06:04,480
Speaker 8: and we saw apparel prices rise, but is that just

125
00:06:04,560 --> 00:06:11,080
Speaker 8: a natural move or was that also an anticipation of tariffs.

126
00:06:11,760 --> 00:06:14,400
Speaker 8: Furniture prices we get Furnit love furniture from China, those

127
00:06:14,440 --> 00:06:15,200
Speaker 8: were also up.

128
00:06:15,279 --> 00:06:15,880
Speaker 9: So the.

129
00:06:17,600 --> 00:06:21,040
Speaker 8: Report is kind of a mixed news thing, except that

130
00:06:21,160 --> 00:06:23,720
Speaker 8: the overall good news as it went down. And if

131
00:06:23,760 --> 00:06:27,120
Speaker 8: you were not going to have tariffs, if none of

132
00:06:27,120 --> 00:06:29,480
Speaker 8: this had happened, it would be exactly what the Fed

133
00:06:29,720 --> 00:06:30,920
Speaker 8: would love to see.

134
00:06:30,920 --> 00:06:35,200
Speaker 6: Right, So, when do we expect to see any inflation

135
00:06:35,320 --> 00:06:38,400
Speaker 6: impact in these CPI numbers and the other the pc deflator.

136
00:06:38,400 --> 00:06:40,160
Speaker 6: When do we expect if there's going to be any

137
00:06:40,200 --> 00:06:42,320
Speaker 6: inflation impact. When do we expect to see that.

138
00:06:43,279 --> 00:06:44,440
Speaker 3: It's a little hard to say.

139
00:06:44,800 --> 00:06:51,760
Speaker 8: Probably probably maybe could be hedged enough here next month,

140
00:06:53,000 --> 00:06:56,279
Speaker 8: this month's data when it comes out next month, because

141
00:06:56,320 --> 00:06:59,400
Speaker 8: it could reflect tariffs that the President has already put on,

142
00:07:00,480 --> 00:07:02,839
Speaker 8: But it's probably going to take a couple of months.

143
00:07:02,839 --> 00:07:05,479
Speaker 3: Maybe we get something in the May numbers.

144
00:07:05,520 --> 00:07:08,880
Speaker 8: First of all, companies have to figure out whether their

145
00:07:08,920 --> 00:07:10,200
Speaker 8: products are tarra affed or not.

146
00:07:10,400 --> 00:07:11,920
Speaker 3: That seems to be bouncing around.

147
00:07:12,320 --> 00:07:15,080
Speaker 8: And then it's a question of how many how much

148
00:07:15,080 --> 00:07:17,520
Speaker 8: stuff people have an inventory they can sell that they

149
00:07:17,640 --> 00:07:22,440
Speaker 8: bought at the lower prices, how soon inventory actually docks

150
00:07:23,400 --> 00:07:26,880
Speaker 8: at a port, and is the tariffs are applied. So

151
00:07:26,960 --> 00:07:29,440
Speaker 8: it's kind of hard to say exactly when we're going

152
00:07:29,520 --> 00:07:32,480
Speaker 8: to see this, but it would be coming. And given

153
00:07:32,520 --> 00:07:35,640
Speaker 8: the fact that we still have ten percent tariffs on

154
00:07:35,720 --> 00:07:38,640
Speaker 8: everybody and now these huge shafts in China, you will

155
00:07:38,680 --> 00:07:39,040
Speaker 8: see it.

156
00:07:40,240 --> 00:07:44,280
Speaker 2: When is the biggest what are you looking at next

157
00:07:44,320 --> 00:07:46,280
Speaker 2: in terms of the biggest indicator? Is it going to

158
00:07:46,280 --> 00:07:48,480
Speaker 2: be inflation expectations? Like is that going to be the

159
00:07:48,480 --> 00:07:50,840
Speaker 2: thing that's going to sort of give us that kind

160
00:07:50,840 --> 00:07:51,320
Speaker 2: of insight?

161
00:07:51,680 --> 00:07:52,800
Speaker 3: Yeah, because that's tomorrow.

162
00:07:52,840 --> 00:07:55,800
Speaker 8: So I'm pitching ahead to all the appearances I will

163
00:07:55,800 --> 00:07:57,679
Speaker 8: do with you guys tomorrow.

164
00:07:57,720 --> 00:08:01,280
Speaker 2: Well, John Ticker's in charge tomorrow, sol you on the show,

165
00:08:01,920 --> 00:08:03,720
Speaker 2: but University of Michigan tomorrow.

166
00:08:04,400 --> 00:08:08,600
Speaker 8: The FED has sort of downplayed the long term inflation

167
00:08:08,720 --> 00:08:13,760
Speaker 8: expectations number is suggesting that it doesn't quite reflect reality

168
00:08:14,320 --> 00:08:16,720
Speaker 8: in the history of the Michigan numbers. But they do

169
00:08:16,840 --> 00:08:19,840
Speaker 8: worry about the short term and that has gone up significantly,

170
00:08:20,320 --> 00:08:25,600
Speaker 8: and they have said, and Jay Pole said that we

171
00:08:25,640 --> 00:08:29,480
Speaker 8: are obligated to keep prices down and we are very

172
00:08:29,520 --> 00:08:34,280
Speaker 8: worried about the short term inflation expectations should they become unanchored.

173
00:08:34,640 --> 00:08:36,800
Speaker 8: So that'll be somewhat big news tomorrow.

174
00:08:36,880 --> 00:08:37,520
Speaker 3: But I think.

175
00:08:39,440 --> 00:08:43,480
Speaker 8: We're redefining what big news in economic data brings here

176
00:08:43,559 --> 00:08:46,280
Speaker 8: because everybody's once we get to the point that you

177
00:08:46,320 --> 00:08:48,440
Speaker 8: asked about, when does this hit. Once we get to

178
00:08:48,480 --> 00:08:50,800
Speaker 8: that point, then markets are going to react to every

179
00:08:50,840 --> 00:08:54,000
Speaker 8: little data bit. But anything that is up to this point,

180
00:08:54,320 --> 00:08:58,160
Speaker 8: people are gonna say old news PPI tomorrow.

181
00:08:58,240 --> 00:09:01,880
Speaker 6: How do we interpet PPI versus well, PBI is.

182
00:09:02,840 --> 00:09:06,000
Speaker 8: The easy difference to know is that CPI is what

183
00:09:06,440 --> 00:09:10,000
Speaker 8: you pay to buy things and PPI is what companies

184
00:09:10,200 --> 00:09:14,800
Speaker 8: charge to sell things. And we may see some of

185
00:09:14,840 --> 00:09:17,680
Speaker 8: the China impact in the PPI because we saw those

186
00:09:17,720 --> 00:09:22,280
Speaker 8: big inventory builds in terms of industrial supplies and things

187
00:09:22,320 --> 00:09:24,120
Speaker 8: like that in the past couple of months.

188
00:09:24,160 --> 00:09:27,880
Speaker 3: And so if you were a Chinese company.

189
00:09:27,559 --> 00:09:29,960
Speaker 8: Or from anywhere else in the world selling to the

190
00:09:30,040 --> 00:09:33,559
Speaker 8: United States and there was this rapid rise in demand,

191
00:09:33,880 --> 00:09:34,920
Speaker 8: you might raise prices.

192
00:09:34,960 --> 00:09:37,800
Speaker 3: So we could look for some of that tomorrow.

193
00:09:38,160 --> 00:09:41,400
Speaker 8: But so far producer prices have been much better behaved

194
00:09:41,440 --> 00:09:46,560
Speaker 8: than consumer prices. So overall, it hopefully is a continuation

195
00:09:46,640 --> 00:09:48,160
Speaker 8: of the good news that no longer matters.

196
00:09:48,240 --> 00:09:50,000
Speaker 7: Can you clear something up for me? This is the

197
00:09:50,080 --> 00:09:54,880
Speaker 7: stupid question for me from the peanut gallery. A guy

198
00:09:55,000 --> 00:09:57,959
Speaker 7: picking up stuff at the port. That's the person who's

199
00:09:58,000 --> 00:10:01,479
Speaker 7: going to pay for the town. It's not the exporter

200
00:10:01,760 --> 00:10:04,200
Speaker 7: often whatever it's trying to the exporter. This is a

201
00:10:04,240 --> 00:10:07,360
Speaker 7: guy in Newport Elizabeth, Ork, New Jersey.

202
00:10:07,559 --> 00:10:10,080
Speaker 8: This is the silly thing that the administration keeps pushing

203
00:10:10,120 --> 00:10:13,600
Speaker 8: that what they're talking about is that not that the

204
00:10:13,679 --> 00:10:17,480
Speaker 8: exporter is going to pay anything, but that currencies, the

205
00:10:17,559 --> 00:10:20,679
Speaker 8: dollars should rise and that makes their currency cheaper, and

206
00:10:20,720 --> 00:10:25,800
Speaker 8: so they you know, there's an impact on them in

207
00:10:25,840 --> 00:10:29,600
Speaker 8: that case. And sure, but it's the person, it's the

208
00:10:29,640 --> 00:10:31,320
Speaker 8: company that is bought the stuff.

209
00:10:31,640 --> 00:10:32,839
Speaker 3: So this is the whole story for me.

210
00:10:32,920 --> 00:10:35,880
Speaker 2: Yesterday there was like a back channel one thing that

211
00:10:35,960 --> 00:10:38,800
Speaker 2: he wanted to buy some guy at blooms Oh yeah yeah,

212
00:10:39,160 --> 00:10:39,720
Speaker 2: go back and listen.

213
00:10:40,000 --> 00:10:42,040
Speaker 3: Yeah yeah, it don't even go into the whole different thing.

214
00:10:42,080 --> 00:10:42,240
Speaker 2: Mike.

215
00:10:42,240 --> 00:10:42,839
Speaker 4: Thanks a lot, Mike.

216
00:10:42,880 --> 00:10:45,240
Speaker 2: M keep moving to National Economics and Policy corresponding.

217
00:10:45,320 --> 00:10:50,160
Speaker 1: Joining us now, you're listening to the Bloomberg Intelligence podcast.

218
00:10:50,520 --> 00:10:53,440
Speaker 1: Catch us live weekdays at ten am Eastern on Apple,

219
00:10:53,480 --> 00:10:56,720
Speaker 1: Cocklay and Android Auto with the Bloomberg Business app. Listen

220
00:10:56,800 --> 00:10:59,800
Speaker 1: on demand wherever you get your podcasts, or watch us

221
00:11:00,040 --> 00:11:00,880
Speaker 1: I've on YouTube.

222
00:11:01,480 --> 00:11:03,800
Speaker 2: All right, we're debating in the last hour, like if

223
00:11:03,880 --> 00:11:08,440
Speaker 2: John Tucker is Versace and Michael McKee is Prada, now

224
00:11:08,440 --> 00:11:11,040
Speaker 2: they're going to be uniting. So it's like Mike Tucker

225
00:11:12,000 --> 00:11:16,200
Speaker 2: Prada Versaci thing, all right, track and Boomberg Intelligence luxury

226
00:11:16,200 --> 00:11:17,680
Speaker 2: goods analyst joined us.

227
00:11:17,720 --> 00:11:17,880
Speaker 5: Now.

228
00:11:17,960 --> 00:11:20,200
Speaker 2: It's funny because neither of them are those things. So

229
00:11:20,240 --> 00:11:21,920
Speaker 2: Prada is going to buy Versus a chip for about

230
00:11:21,920 --> 00:11:24,840
Speaker 2: one point three eight billion dollars. Walk us through the

231
00:11:24,880 --> 00:11:26,200
Speaker 2: intricacies of this deal.

232
00:11:26,960 --> 00:11:27,160
Speaker 4: Hi.

233
00:11:27,920 --> 00:11:31,680
Speaker 9: Yeah, So it's been talked about for quite a while

234
00:11:31,880 --> 00:11:37,119
Speaker 9: and we already last night heard maybe that the acquisition

235
00:11:37,200 --> 00:11:39,520
Speaker 9: price would be done by a couple of hundred million.

236
00:11:40,120 --> 00:11:45,080
Speaker 9: The big thing here has been that under Capri, Fasachi

237
00:11:45,200 --> 00:11:48,880
Speaker 9: is not hard enough investment in it over the last year,

238
00:11:49,320 --> 00:11:54,560
Speaker 9: particularly in the field of the Tapestry bid for Capri

239
00:11:54,679 --> 00:11:57,319
Speaker 9: which didn't go ahead and which took a lot of

240
00:11:57,360 --> 00:12:00,560
Speaker 9: the headlines last year and where all brand under the

241
00:12:00,559 --> 00:12:07,480
Speaker 9: Capri banner suffered. We've had chairman John Idel come back

242
00:12:07,520 --> 00:12:11,680
Speaker 9: into the business as CEO for Capri, and with the

243
00:12:11,760 --> 00:12:16,320
Speaker 9: focus really on Michael Corese, which is seventy percent of

244
00:12:16,360 --> 00:12:19,320
Speaker 9: the sales and after a difficult year last year one

245
00:12:19,400 --> 00:12:23,439
Speaker 9: hundred percent of the profitability of the company leading into

246
00:12:23,480 --> 00:12:27,520
Speaker 9: this this year. So it's all about turning around Michael

247
00:12:27,559 --> 00:12:30,960
Speaker 9: cause which has seventy percent of its business in Americas,

248
00:12:31,960 --> 00:12:36,760
Speaker 9: is at accessible price point and where actually we think

249
00:12:36,800 --> 00:12:40,079
Speaker 9: that they'll be much more pressure given the tariff situation

250
00:12:40,400 --> 00:12:43,840
Speaker 9: and the cost of living on all consumers. And also

251
00:12:43,960 --> 00:12:48,320
Speaker 9: in the US if we turn over to the Versace

252
00:12:48,760 --> 00:12:52,600
Speaker 9: acquisition and what's going on there with Prada. Prada has

253
00:12:52,640 --> 00:12:57,120
Speaker 9: been one of the top performing companies. It's really done

254
00:12:57,160 --> 00:12:59,560
Speaker 9: ever so well with Proud of the last few years

255
00:12:59,559 --> 00:13:02,720
Speaker 9: and gone to normalized single digit growth. And then it

256
00:13:02,760 --> 00:13:06,880
Speaker 9: has a brand Meo Meu within its portfolio doing ever

257
00:13:06,960 --> 00:13:09,720
Speaker 9: so well. It's number one on the list index for

258
00:13:10,240 --> 00:13:13,320
Speaker 9: luxury brands in terms of brand equity brand heat, with

259
00:13:13,480 --> 00:13:17,520
Speaker 9: Praderate number three, and during the December quarter Versaci dropped

260
00:13:17,520 --> 00:13:20,720
Speaker 9: three places to number fourteen. So we think it shifts

261
00:13:20,760 --> 00:13:24,920
Speaker 9: Forsaci into the right hands into Italian luxury owners who

262
00:13:24,920 --> 00:13:28,480
Speaker 9: can really work well to try to reinvigorate this brand

263
00:13:28,520 --> 00:13:30,800
Speaker 9: and the brand equity behind Fasaci.

264
00:13:31,080 --> 00:13:33,280
Speaker 6: Hey, dab, I'm really interested in evaluation here, being a

265
00:13:33,280 --> 00:13:35,720
Speaker 6: former banker myself. They're selling this thing for one point

266
00:13:35,760 --> 00:13:40,080
Speaker 6: three eight billion US dollars in twenty eighteen, they paid

267
00:13:40,280 --> 00:13:44,559
Speaker 6: two billion dollars for this, so a lot of value destruction.

268
00:13:44,800 --> 00:13:49,079
Speaker 6: Is that a Versace specific issue or does that reflect

269
00:13:49,160 --> 00:13:52,120
Speaker 6: lower valuations in luxury Generally.

270
00:13:52,640 --> 00:13:58,400
Speaker 9: I would say it's both, but it's mostly Versaci specific

271
00:13:58,480 --> 00:14:01,679
Speaker 9: because if we look at the Asarchi then to now

272
00:14:02,160 --> 00:14:06,040
Speaker 9: the fact that it's given double digit declines in organic

273
00:14:06,120 --> 00:14:08,880
Speaker 9: sales growth through the couple of years, where actually the

274
00:14:08,960 --> 00:14:12,439
Speaker 9: market was growing five percent or so, and that one

275
00:14:12,520 --> 00:14:15,080
Speaker 9: point seven, to put it into perspective on an EV,

276
00:14:15,240 --> 00:14:18,520
Speaker 9: would have been against traditionally a market for a very

277
00:14:18,559 --> 00:14:22,240
Speaker 9: solid brand for Sarti with a lot of heritage, running

278
00:14:22,240 --> 00:14:25,400
Speaker 9: from anywhere from three to five times, probably three times

279
00:14:25,480 --> 00:14:30,000
Speaker 9: for Versargi, given it isn't particularly big. Under the what

280
00:14:30,080 --> 00:14:35,680
Speaker 9: was Michael Cause and then became the Capri Group. The

281
00:14:35,760 --> 00:14:38,160
Speaker 9: expectation was that they would run it from one billion

282
00:14:38,200 --> 00:14:42,400
Speaker 9: in sales toward two billion, and that just didn't happen. Yeah,

283
00:14:42,480 --> 00:14:45,240
Speaker 9: So that's partly why. I think also because of the

284
00:14:45,240 --> 00:14:48,240
Speaker 9: state of the market. We started twenty twenty five with

285
00:14:48,720 --> 00:14:52,800
Speaker 9: the luxury market focusing for low to mid single digit growth.

286
00:14:53,000 --> 00:14:56,000
Speaker 9: With everything that's going on, we pull that back towards neutral.

287
00:14:56,440 --> 00:14:58,440
Speaker 6: Hey, deb, thanks for joining us. Aways appreciate getting your

288
00:14:58,440 --> 00:15:01,360
Speaker 6: thoughts there. Deb eight the lead voice on all things luxury.

289
00:15:01,360 --> 00:15:03,840
Speaker 6: She gets luxury goods analysts for Bloomberg Intelligence. She's based

290
00:15:03,880 --> 00:15:04,320
Speaker 6: in London.

291
00:15:05,960 --> 00:15:09,640
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

292
00:15:09,760 --> 00:15:12,840
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

293
00:15:12,840 --> 00:15:16,160
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

294
00:15:16,200 --> 00:15:19,320
Speaker 1: you get your podcasts or watch us live on YouTube.

295
00:15:19,800 --> 00:15:22,000
Speaker 3: All right, here's my Janice story.

296
00:15:22,040 --> 00:15:24,040
Speaker 6: The first time I ever went to a Starbucks, like

297
00:15:24,080 --> 00:15:26,600
Speaker 6: twenty years ago, was waiting to go into a meeting

298
00:15:26,600 --> 00:15:29,720
Speaker 6: of Janis out in Denver, Colorado. I'm not a coffee guy,

299
00:15:29,760 --> 00:15:31,160
Speaker 6: so I had no idea what to order, So I

300
00:15:31,240 --> 00:15:33,040
Speaker 6: just ordered what the person in front of me ordered.

301
00:15:33,120 --> 00:15:36,000
Speaker 6: There you go, that's my Janis story. Lara Castleton joins

302
00:15:36,040 --> 00:15:39,840
Speaker 6: us US head of Portfolio Construction and Strategy Janis Henderson,

303
00:15:40,440 --> 00:15:41,320
Speaker 6: based in Denver.

304
00:15:41,840 --> 00:15:42,840
Speaker 3: Laura, you sit.

305
00:15:42,760 --> 00:15:45,560
Speaker 6: Back and you think about portfolio.

306
00:15:45,040 --> 00:15:46,600
Speaker 3: Construction and strategy.

307
00:15:47,320 --> 00:15:50,040
Speaker 6: How do you do that with this volatility that we're

308
00:15:50,040 --> 00:15:51,160
Speaker 6: dealing with this year?

309
00:15:53,080 --> 00:15:54,360
Speaker 4: Well, thank you for having me.

310
00:15:54,400 --> 00:15:56,680
Speaker 10: There's a couple more Starbucks that have popped up over

311
00:15:56,800 --> 00:15:59,640
Speaker 10: she said, sure, you were here. Yeah, there's a little

312
00:15:59,680 --> 00:16:02,400
Speaker 10: bit of volatility going on the market, making our conversations

313
00:16:02,440 --> 00:16:05,760
Speaker 10: a lot more in demand. You should say very clearly,

314
00:16:06,120 --> 00:16:08,880
Speaker 10: planning long term is what we need to be focused

315
00:16:08,880 --> 00:16:13,760
Speaker 10: on for our clients. Near term volatility is very extremely difficult.

316
00:16:13,960 --> 00:16:17,120
Speaker 10: Heading into the tariff announcement a couple of weeks ago,

317
00:16:17,160 --> 00:16:19,320
Speaker 10: we were talking to clients about really staying the course,

318
00:16:19,440 --> 00:16:22,480
Speaker 10: not panicking, but being more diversified than what we had

319
00:16:22,480 --> 00:16:23,560
Speaker 10: maybe been in the past.

320
00:16:24,320 --> 00:16:25,600
Speaker 4: What does diversified mean?

321
00:16:26,000 --> 00:16:27,920
Speaker 2: And I know that's a stupid question, but I say that,

322
00:16:27,960 --> 00:16:28,200
Speaker 2: and you.

323
00:16:28,160 --> 00:16:28,960
Speaker 3: Know the thirty year.

324
00:16:29,000 --> 00:16:31,120
Speaker 2: If I on the thirty year for diversification, I just

325
00:16:31,120 --> 00:16:31,800
Speaker 2: got burned.

326
00:16:33,040 --> 00:16:33,440
Speaker 4: Correct.

327
00:16:33,600 --> 00:16:37,600
Speaker 10: So on diversification, what we're talking about in our client consultations,

328
00:16:37,880 --> 00:16:42,440
Speaker 10: it's diversification of that typical sixty forty portfolio, absolutely, but

329
00:16:42,480 --> 00:16:46,160
Speaker 10: then it's also diversification within the sixty and within the

330
00:16:46,160 --> 00:16:48,920
Speaker 10: forty and when we actually survey, so we work with

331
00:16:49,200 --> 00:16:52,120
Speaker 10: We've worked with over twenty five thousand model portfolios over

332
00:16:52,160 --> 00:16:55,080
Speaker 10: sixty five hundred clients globally, and recently came out with

333
00:16:55,120 --> 00:16:58,160
Speaker 10: a piece just kind of isolating the average moderate portfolio

334
00:16:58,200 --> 00:17:00,880
Speaker 10: that we come across. One of the biggest topics of

335
00:17:00,880 --> 00:17:03,320
Speaker 10: conversation we're talking about right now today is actually the

336
00:17:03,360 --> 00:17:08,760
Speaker 10: diversification within the US equity allocation because that concentrations reached

337
00:17:08,800 --> 00:17:12,840
Speaker 10: north of eighty percent of investor portfolios. So it's not

338
00:17:13,080 --> 00:17:16,240
Speaker 10: just across assets, but it's also within Hey.

339
00:17:16,119 --> 00:17:18,879
Speaker 6: Laura, how about international markets? You know in the first quarter,

340
00:17:19,040 --> 00:17:22,400
Speaker 6: the rest of the world's markets really outperformed the US.

341
00:17:22,440 --> 00:17:24,600
Speaker 6: The S and P five hundred and that doesn't happen

342
00:17:25,400 --> 00:17:28,359
Speaker 6: very often. Is that kind of a short term blip

343
00:17:28,440 --> 00:17:30,760
Speaker 6: or is that something that we need to, you know,

344
00:17:30,800 --> 00:17:32,119
Speaker 6: think about longer term.

345
00:17:32,760 --> 00:17:34,000
Speaker 4: That's a very good question.

346
00:17:34,080 --> 00:17:36,040
Speaker 10: It was very interesting to me to actually get some

347
00:17:36,119 --> 00:17:39,480
Speaker 10: incoming calls from clients asking about international because to your point,

348
00:17:39,840 --> 00:17:43,600
Speaker 10: that has never happened before. I do believe with the

349
00:17:43,640 --> 00:17:46,040
Speaker 10: tariff policy that's come in, Obviously we don't know what's

350
00:17:46,080 --> 00:17:49,040
Speaker 10: going to happen long term, but it is signaling a

351
00:17:49,080 --> 00:17:52,520
Speaker 10: structural shift in what we're trying to accomplish longer term.

352
00:17:52,320 --> 00:17:53,480
Speaker 4: With our budget deficits.

353
00:17:53,800 --> 00:17:57,359
Speaker 10: To me, that does warrant potentially diversifying away from only

354
00:17:57,440 --> 00:18:00,320
Speaker 10: the US dollar. And so while international market have been

355
00:18:00,320 --> 00:18:03,600
Speaker 10: strong this year, there's a shift in how they're spending abroad,

356
00:18:03,640 --> 00:18:07,440
Speaker 10: they're stimulating their economies, and that warrants having some diversification

357
00:18:07,640 --> 00:18:10,480
Speaker 10: only outside of just only that heavy concentration of the

358
00:18:10,560 --> 00:18:11,040
Speaker 10: US dollar.

359
00:18:11,840 --> 00:18:15,399
Speaker 2: What do you expect in terms of this volatility? Like, clearly,

360
00:18:15,440 --> 00:18:18,000
Speaker 2: diversification is good for all, I mean, the idea is

361
00:18:18,000 --> 00:18:20,040
Speaker 2: that it should be good for all investing climates.

362
00:18:20,280 --> 00:18:21,240
Speaker 4: However, the longer the.

363
00:18:21,200 --> 00:18:23,960
Speaker 2: Volatility goes on, the harder it is for investors to.

364
00:18:23,920 --> 00:18:26,440
Speaker 4: Stomach that absolutely.

365
00:18:26,520 --> 00:18:29,080
Speaker 10: So that's exactly what we're coaching our clients through.

366
00:18:29,680 --> 00:18:31,160
Speaker 4: Is very clearly, even.

367
00:18:31,000 --> 00:18:32,919
Speaker 10: In the past week, if you wanted to make some

368
00:18:33,000 --> 00:18:35,720
Speaker 10: pretty big bets on going into certain areas of the market,

369
00:18:35,800 --> 00:18:38,640
Speaker 10: let's talk even fixed income markets, you could easily get

370
00:18:38,640 --> 00:18:41,800
Speaker 10: whipsod the next day, the next week. And so when

371
00:18:41,800 --> 00:18:45,400
Speaker 10: you're talking about diversification, you need to be spread across

372
00:18:45,440 --> 00:18:49,440
Speaker 10: the yield curve, across sectors within fixed income, across regions,

373
00:18:49,440 --> 00:18:53,520
Speaker 10: within equities, and you should start to see some bounces

374
00:18:53,520 --> 00:18:55,760
Speaker 10: from some of these other areas while other ports of your.

375
00:18:55,640 --> 00:18:57,439
Speaker 4: Portfolio are kind of dipping.

376
00:18:57,520 --> 00:19:00,480
Speaker 10: So we're really talking about staying to it's that long

377
00:19:00,600 --> 00:19:02,359
Speaker 10: term goal. And luckily a lot of the clients that

378
00:19:02,400 --> 00:19:04,439
Speaker 10: we work with are managing money for clients I have

379
00:19:04,440 --> 00:19:07,360
Speaker 10: a long term financial plan. So while they're getting headlines

380
00:19:07,400 --> 00:19:10,200
Speaker 10: every day about the volatility, for the most part, they're

381
00:19:10,240 --> 00:19:13,359
Speaker 10: being able to coach their clients that volatility happens, this

382
00:19:13,520 --> 00:19:15,680
Speaker 10: is not outside of the norm, but on a long

383
00:19:15,800 --> 00:19:18,320
Speaker 10: term basis that you're still well within your reach of

384
00:19:18,359 --> 00:19:18,879
Speaker 10: your goals.

385
00:19:20,000 --> 00:19:22,359
Speaker 6: Laura, are the folks that Jenna Senderson are you guys?

386
00:19:23,400 --> 00:19:25,320
Speaker 6: You know is there a base case of recession or

387
00:19:25,320 --> 00:19:26,600
Speaker 6: maybe we can skirt past it.

388
00:19:27,920 --> 00:19:31,160
Speaker 10: So base case is not recession that obviously has been

389
00:19:31,240 --> 00:19:34,280
Speaker 10: coming up into conversations quite a bit. More so, it's

390
00:19:34,280 --> 00:19:36,480
Speaker 10: not out of the picture this year. And remember before

391
00:19:36,480 --> 00:19:39,400
Speaker 10: the tariff announcements, growth was already slowing. There was already

392
00:19:39,440 --> 00:19:42,240
Speaker 10: that lack of confidence within the economy that could bleed

393
00:19:42,320 --> 00:19:45,320
Speaker 10: into slower growth leading to a recession this year.

394
00:19:45,600 --> 00:19:46,600
Speaker 4: So it's not without the.

395
00:19:46,600 --> 00:19:49,600
Speaker 10: Realm of possibilities, but it's not a base case, and

396
00:19:49,640 --> 00:19:54,639
Speaker 10: it's also not necessarily a doomsday scenario for portfolios. Recessions happen,

397
00:19:55,000 --> 00:19:57,480
Speaker 10: it doesn't necessarily mean it will be the exact recession

398
00:19:57,520 --> 00:20:00,000
Speaker 10: we experienced the past two times, which were quite severe,

399
00:20:00,400 --> 00:20:02,760
Speaker 10: and there are ways to plan around that, namely, be

400
00:20:02,880 --> 00:20:05,800
Speaker 10: high quality within your names, focus on the fundamentals within

401
00:20:05,840 --> 00:20:07,000
Speaker 10: your company balance.

402
00:20:06,680 --> 00:20:08,399
Speaker 4: Sheets and within fixed income.

403
00:20:08,520 --> 00:20:12,000
Speaker 10: Really shore up the quality in your fixed income portfolios

404
00:20:12,000 --> 00:20:12,320
Speaker 10: as well.

405
00:20:12,400 --> 00:20:13,119
Speaker 3: Before we let you go.

406
00:20:13,240 --> 00:20:16,040
Speaker 2: Corporate credit spreads have blown out, they're continuing to blow out,

407
00:20:16,080 --> 00:20:17,280
Speaker 2: particularly in high yield.

408
00:20:17,280 --> 00:20:18,720
Speaker 4: Does corporate credit play a role.

409
00:20:18,600 --> 00:20:22,320
Speaker 10: Here, Yeah, that was one of our biggest overweights we

410
00:20:22,320 --> 00:20:24,439
Speaker 10: saw in a lot of client portfolios leading into these

411
00:20:24,480 --> 00:20:27,720
Speaker 10: events was the heavy allocation to corporate credit, and really

412
00:20:27,760 --> 00:20:30,320
Speaker 10: one direction spreads could go was wide. We've started to

413
00:20:30,320 --> 00:20:33,040
Speaker 10: see that, although they've maybe started to trickle back in

414
00:20:33,080 --> 00:20:36,320
Speaker 10: a little bit, that is still an ongoing risk and

415
00:20:36,359 --> 00:20:39,680
Speaker 10: easily avoidable in our minds to be diversified across yield curve.

416
00:20:39,800 --> 00:20:42,119
Speaker 10: So on the shorter end of the corporate credit spread curve,

417
00:20:42,320 --> 00:20:44,960
Speaker 10: you do get a little bit more insulation from spreads widening.

418
00:20:45,240 --> 00:20:47,679
Speaker 10: And then within the securitized area of the market, spreads

419
00:20:47,680 --> 00:20:48,879
Speaker 10: were already a little bit wider.

420
00:20:48,880 --> 00:20:50,280
Speaker 4: We weren't able.

421
00:20:50,040 --> 00:20:53,680
Speaker 10: To insulate ourselves from that area by hiding into securitize.

422
00:20:53,720 --> 00:20:57,080
Speaker 10: But corporate credits are typically that canarying the coal mine,

423
00:20:57,080 --> 00:20:59,760
Speaker 10: and it's something to watch for that recession indicator going forward.

424
00:21:00,840 --> 00:21:02,520
Speaker 3: All Right, Laura, thank you so much for joining us.

425
00:21:02,560 --> 00:21:06,480
Speaker 6: Laura Castleton, US head of Portfolio Construction and Strategy. Janie

426
00:21:06,800 --> 00:21:11,560
Speaker 6: Henderson Investors out there in Denver, Colorado, great offices out there,

427
00:21:11,560 --> 00:21:14,840
Speaker 6: A great firm actually was when I was on the

428
00:21:14,880 --> 00:21:16,960
Speaker 6: south side. It was the biggest account in Denver. You

429
00:21:17,200 --> 00:21:19,760
Speaker 6: had to get the vote from Janie, and I did.

430
00:21:20,400 --> 00:21:25,080
Speaker 1: This is the Bloomberg Intelligence podcast available on Apple, Spotify,

431
00:21:25,280 --> 00:21:29,240
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

432
00:21:29,440 --> 00:21:32,720
Speaker 1: ten am to noon Eastern on Bloomberg dot Com, the

433
00:21:32,800 --> 00:21:36,679
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

434
00:21:36,720 --> 00:21:40,000
Speaker 1: can also watch us live every weekday on YouTube and

435
00:21:40,240 --> 00:21:42,160
Speaker 1: always on the Bloomberg terminal