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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 1: my co host Matt Miller. Every business day we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. Let check out with

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Speaker 1: the Annaka Tregon Managing Director, head of the Competence Center

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Speaker 1: at Vance Launch at Kempen Anica. Thanks so much for

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Speaker 1: joining us. First off, what is the competence Center? What

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Speaker 1: do you guys do there? Hi, Good morning. Well, what

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Speaker 1: we do is um Bridge bridge different expertise areas we

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Speaker 1: have within our within our business because we are a

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Speaker 1: private bank. We're actually Europe's oldest banks. We are we're

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Speaker 1: a private bank. We're also an investment bank and have

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Speaker 1: investment management, the institutional asset management where we deal a

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Speaker 1: lot with the big funcion funds because the Dutch counsction

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Speaker 1: sounds are very very big and bringing that all together

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Speaker 1: to um see what the biggest intelligence comes out of

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Speaker 1: battle and see how that can be helpful to our clients.

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Speaker 1: It's actually cool looking at your resume, you worked at

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Speaker 1: some of the oldest and most important banks in the world.

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Speaker 1: We're at Rothschild, You're at Goldman sachs Um, and now

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Speaker 1: you're at van Lanche. What are you focused on right now? Annaka?

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Speaker 1: I mean, there's so much to watch here in the US,

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Speaker 1: we're so concerned about the FED, in the macro picture.

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Speaker 1: In Europe obviously energy and inflation is insane um. And

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Speaker 1: then in Asia we learned this morning there's another lockdown

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Speaker 1: in China, in a city with twenty one million people.

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Speaker 1: Where do you look? Where do you look? I mean,

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Speaker 1: there's there's so much to look at, and I think,

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Speaker 1: you know, the only thing you can do is keep

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Speaker 1: it very, very simple. And you know, the world's become

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Speaker 1: obsessed with the latest inflation prints. The world is obsessed

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Speaker 1: with how inflation prints are reacting to central bank policy

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Speaker 1: rates moving, which almost every bank is, every central bank

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Speaker 1: is doing the sides a few. That's that's what's different

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Speaker 1: this time around. And I think talking about keeping it simple,

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Speaker 1: the main thing that I think we're very often missing

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Speaker 1: the mark on is the fact that it's it's illogical,

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Speaker 1: it's nonsensical to see, how you know, spot inflation print

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Speaker 1: are an adverted comments responding to the latest seventy basis

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Speaker 1: points by the FED or the latest fifty basis points

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Speaker 1: by the ECB, because it simply doesn't work that way.

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Speaker 1: And I think the thing that we are most concerned

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Speaker 1: about is the fact that central banks, particularly the FED,

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Speaker 1: is so driven by trying to restore their credibility, so

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Speaker 1: much so that they say, well, we continue to lift

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Speaker 1: rate until inflation spot inflation near is our target of two.

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Speaker 1: That's scary because there's a long work through mechanism and

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Speaker 1: inflation today is a picture of you know, of of

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Speaker 1: what the conditions were like one two years ago. So

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Speaker 1: give us a sense, just from your perch in Europe here,

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Speaker 1: how how our markets discounting the European Central Bank, the

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Speaker 1: Bank of England in terms of their response and maybe

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Speaker 1: what their goals should be, because again you've so many

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Speaker 1: challenges for the Europeanic enemy in including the war in

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Speaker 1: Ukraine and the impact on commodities, had it unique the

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Speaker 1: central bankers and you're are thinking about it, well, we

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Speaker 1: all forget actually the fact that around ECB actually started

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Speaker 1: a strategic review and the reason they've charted a strategic

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Speaker 1: reviewers they only have one mandate, it's not a dual mandate,

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Speaker 1: and that mandates inflation full stop. And they had not

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Speaker 1: been successful in getting inflation to the level they wanted.

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Speaker 1: It was always too low. And suddenly, you know, out

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Speaker 1: of nowhere, we've got the reverse problem. And the point

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Speaker 1: is that you know that the problem was actually much

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Speaker 1: less complex then when they were already doing a strategic review.

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Speaker 1: Now it's far more complex. And I think the issue

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Speaker 1: is really well sums up by the fact that on

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Speaker 1: one hand, it's more hawkish behavior. KIWI has only recently

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Speaker 1: just ended. Actually rates are obviously going up. On the

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Speaker 1: other hand, you've got this, you know, this mechanism to

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Speaker 1: protect southern Europe, which you could argue with nothing more

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Speaker 1: than a sort of yield spread mechanism. But that feels

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Speaker 1: like hitting the accelerator and the break at the same time.

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Speaker 1: And I think that sort of sums up the troublesome

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Speaker 1: situation in Europe. And you know what, Yeah, the murky

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Speaker 1: picture that the ECB is trying to deal with. Murky

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Speaker 1: is a great word to describe what the ECB has

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Speaker 1: has to do is doing. Does um I don't know

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Speaker 1: where to go with that when I think about um

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Speaker 1: economy in Europe, I'm more concerned about people operating on

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Speaker 1: the ground, especially in the UK where you are. I mean,

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Speaker 1: if you look at financing costs, they're just shooting higher.

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Speaker 1: If you look at the value of the pound, it's

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Speaker 1: dropping like a lead balloon. And imagine what kind of

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Speaker 1: position that puts your average, you know, midsize business owner

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Speaker 1: in UM. He has to buy everything from France, Germany,

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Speaker 1: Italy and uh, he has to finance in a in

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Speaker 1: a climate that just makes it almost impossible to survive that.

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Speaker 1: That must mean a huge recession ahead. And I mean

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Speaker 1: compounded with that's you know, the sort of ripple effects

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Speaker 1: of Brexit. You know, we're still figuring that out. Talk

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Speaker 1: about just basic shipping, basic customs, delays, costs, I mean,

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Speaker 1: we're still we're still figuring that all out. So it

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Speaker 1: is a to your point, So that with a local

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Speaker 1: man woman on the ground, you know, just trying to

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Speaker 1: do their thing, trying to do their business, it is

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Speaker 1: a really really challenging environment. The only thing which is

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Speaker 1: sort of odd, I think sitting in Europe, which we're

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Speaker 1: all trying to kind of get our heads around. On

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Speaker 1: one hand, you've got all of this, which is extremely scary.

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Speaker 1: On the other hands, try and book a restaurant on

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Speaker 1: a Friday night, it's hopeless, you know, and obviously more

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Speaker 1: in central London that is. But you know, try and

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Speaker 1: book a holiday right during the holiday season. So it's

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Speaker 1: this sort of bizarre situation where it doesn't look like

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Speaker 1: a recession, it doesn't feel like one. When you want

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Speaker 1: to go out and you know, get hold of a

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Speaker 1: service somehow, or especially in the luxury goods market, I mean,

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Speaker 1: good luck finding a pair of shoes or something. But

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Speaker 1: on the other hand, you've got all these sort of

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Speaker 1: very very scary factors coming together. And that's why everyone

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Speaker 1: is talking about a cold winter for Europe, because I

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Speaker 1: think the summer period is all about let's just go

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Speaker 1: have fun, enjoy the summer of you know, close our

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Speaker 1: eyes to all the scary staff and enjoy the sun.

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Speaker 1: But what happens when the sun goes away? Or what

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Speaker 1: happens when you book a flight on Luftanza flying in

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Speaker 1: and out of Frankfort or her Munich tomorrow stranded there?

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Speaker 1: Of course they're going on because they want Look, it

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Speaker 1: makes perfect sense to me. I want a ten percent raise, right,

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Speaker 1: wouldn't you if you look at inflation like that, you

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Speaker 1: want you want that, you know, if you've got to

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Speaker 1: if you want to stop it somewhere, stop it on

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Speaker 1: profit margins. But that's just not as easy to do. Annika,

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Speaker 1: great having you on. Thanks so much for joining us.

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Speaker 1: Annikatre On their managing director. She is the head of

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Speaker 1: the Competence Center at Van Lanche at kemp and the

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Speaker 1: oldest bank in Europe. It's very cool and great perspective

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Speaker 1: getting in that from Anika. Get right to our next guest,

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Speaker 1: Johnathan Hurdle. He's executive chairman Hurtle and call Hurtle, Callahan

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Speaker 1: and Company. I mean he's all in Penn State Batchelor

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Speaker 1: degree mb A. Penn State opens the season. I believe

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Speaker 1: tonight at per Due Penn State is a I think

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Speaker 1: there are a three and a half point favorite to see.

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Speaker 1: All right, John, thanks so much for joining us here.

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Speaker 1: Um boy, you've been in this market a long time.

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Speaker 1: You've seen the site longer than Paul, even longer than me,

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Speaker 1: and that's saying something. What do you make about our

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Speaker 1: current environment right here? Well, good morning Matt and Paul.

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Speaker 1: It's nice to talk to you again. You know, I

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Speaker 1: think we're still in the equoffex from the from the

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Speaker 1: COVID crisis, and so it's going to take us a

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Speaker 1: while to work through. Here. We had this period of

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Speaker 1: time where we had six trillion dollars of fiscal stimulation

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Speaker 1: while we had the most flexible and supportive monetary policy

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Speaker 1: in history, and there's a lot of ramifications for that.

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Speaker 1: So that's what we're going through right now. We had,

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Speaker 1: you know, we have more than full employment. You think

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Speaker 1: about the FED having a dual mandate full employment and

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Speaker 1: contain inflation. Well, we have more than full employment. We've

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Speaker 1: sort of overshot this and so now they're focused on

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Speaker 1: percent on inflation control. And you know, we saw that

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Speaker 1: with the Chairman's commentary. I'm actually in Jackson Hole right now,

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Speaker 1: still out here, so you know, it was a you know,

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Speaker 1: very clear message from the Chairman and that's what the

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Speaker 1: markets reacting to right now. What do you think about

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Speaker 1: UM their willingness to hold firm, I mean, especially if

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Speaker 1: we start to see real job losses, you know, real

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Speaker 1: families who all of a sudden can't finance their American

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Speaker 1: dream lives. Um is the FED going to continue to

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Speaker 1: put them out of work on purpose in order to

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Speaker 1: retain drain and inflation. Well, it's it's that's the dynamic.

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Speaker 1: How much will employment where they're going to look at

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Speaker 1: that unemployment number, and you know, the risk is that

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Speaker 1: they overshoot. We overshot in the pandemic, and that was

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Speaker 1: understandable because I really think it's hard for people to

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Speaker 1: turn back the clock and what was it like two

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Speaker 1: years ago and how frightened everyone was, and we didn't

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Speaker 1: know we were going to have a vaccine. But Jonathan,

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Speaker 1: you made the point that we had six trillion dollars

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Speaker 1: of fiscal stimulus. I mean, remember when TARP was unbelievably huge,

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Speaker 1: that was eight billion. Six trillion dollars is absolutely loony tunes.

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Speaker 1: Six trillion And by the way, you know, you have

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Speaker 1: to give Larry Summers credit because he said we were

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Speaker 1: trying to fill a two trillion dollars gap was six

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Speaker 1: So there was that the government's tend to overreact. We're

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Speaker 1: they're very not very good at fine tuning, and so

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Speaker 1: they overreacted. They put six trillion at the same when

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Speaker 1: the FED was being aggressively flexible and supportive. So that

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Speaker 1: combination in retrospect um is unprecedented. But we were facing

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Speaker 1: unprecedented times and to look backwards. This is a classic

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Speaker 1: kind of a behavioral economics problem where we think it

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Speaker 1: was more predictable than it was at the time. We

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Speaker 1: look back global pandemic, World's coming to an end. We've

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Speaker 1: got to be dramatic. We were too dramatic in retrospect.

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Speaker 1: So it is a good investor supposed to do today.

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Speaker 1: What are you telling your clients? Do you do you

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Speaker 1: have to be all macro all the time? By the way, John,

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Speaker 1: I mean I know, well yeah, so I mean if

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Speaker 1: you look at allocations, that's going to control about of

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Speaker 1: the variability and performance over time. So your allocations most

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Speaker 1: unless you've got a concentrated position in ten stocks. But

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Speaker 1: if you're a traditional investor, you still want to be

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Speaker 1: overweight stocks because bond rates are rising, and so we

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Speaker 1: want to be short duration, relatively short duration, fully invested

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Speaker 1: in patient here. Alright, So are there some sectors here

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Speaker 1: that we should be focusing on? Um? Do I need

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Speaker 1: to get orfully diversified? Yeah? What do I want to

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Speaker 1: be fully diversified here? I want to stay fully diversified.

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Speaker 1: But personally, because inflation is rising, I want to be

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Speaker 1: with the companies the secular growth companies that have real

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Speaker 1: pricing power. The best hedge against inflation over the long

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Speaker 1: run is a diversified equity portfolio because the managers can

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Speaker 1: pass through the inflation increases in pricing. But you want

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Speaker 1: to be with the companies who can do that so

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Speaker 1: on the margin, not dramatically, but on the margin. I

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Speaker 1: want to be with those high quality growth companies who

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Speaker 1: have pricing power. By the way, we just got a

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Speaker 1: minute left, but I'm looking at your resume. We see

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Speaker 1: that you went straight out of the Marines to Goldman

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Speaker 1: Sachs and nowadays you know Goldman Sachs. The kids they're

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Speaker 1: are making videos and posting them on TikTok about how

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Speaker 1: they work too hard and they have to do it

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Speaker 1: from home. They don't want to go into the office.

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Speaker 1: What do you think about today's class of bankers, of

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Speaker 1: young bankers. I think Golden Sacks is a wonderful company.

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Speaker 1: I've been away from there for a long time, but

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Speaker 1: I just would say this that you know, hard work matters,

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Speaker 1: and uh, you know, whether they're working too hard or

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Speaker 1: not is deal specific. But we've gotta that's your apprenticeship,

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Speaker 1: that's where you weren learn your trade and the people

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Speaker 1: are going to work hard and smart or going to succeed.

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Speaker 1: So you know, I realized. I also think that you

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Speaker 1: mentioned earlier that we're getting people coming back to work.

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Speaker 1: This is another part of that COVID echo effect. It's

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Speaker 1: going to take a couple of years here for people

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Speaker 1: to figure this out, but we're gonna have people back

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Speaker 1: at work. It's good. I'd like to describe it as

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Speaker 1: two thousand nineteen No one improved and we're gonna go

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Speaker 1: back to pre COVID, but it's we're going to have

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Speaker 1: the ability to work more flexibly from home when we

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Speaker 1: need to because we've all developed that. So that's a

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Speaker 1: that's a very significant improvement in our lives. So we'll

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Speaker 1: get there, all right, John, great stuff, as always, always

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Speaker 1: appreciate getting your perspective. John Hurdle, Executive Chairman Hurdle, Callahan

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Speaker 1: and Company and a proud Nitnity lion. All right, let's

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Speaker 1: talk the flowers business, and we talk to floral business,

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Speaker 1: floors business. We talked to Chris McCann, who else. He's

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Speaker 1: the CEO of one eight hundred Flowers. Chris, thanks so

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Speaker 1: much for joining us here. Just tell us how your

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Speaker 1: company one eight hundred flowers, how it kind of evolved

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Speaker 1: and was impacted by the pandemic and kind of what's

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Speaker 1: your outlook right here? Well, thank you, it's good to

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Speaker 1: be here, gentlemen. It's been a turbulent couple of years,

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Speaker 1: that's for sure. The interesting thing is we pretty get

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Speaker 1: down into the kind of these three categories, these three

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Speaker 1: sectors pre COVID, during COVID, and post COVID. And during

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Speaker 1: the pre COVID stage, we've been we committed to growing

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Speaker 1: our business or increasing the growth rate from a low

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Speaker 1: single digit to a double digit growth rate. We made

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Speaker 1: the appropriate investment to that and achieved that. That helped

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Speaker 1: position us well for then the unprecedented surgeon demand that

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Speaker 1: we saw during the pandemic where we set record levels

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Speaker 1: and revenue record levels, and profits record levels and customers

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Speaker 1: customer database. And then we've moved now into the late

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Speaker 1: stage COVID or or hopefully post COVID stage, and as

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Speaker 1: we're coming out of that, we have the comps that

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Speaker 1: we're dealing with which we're holding onto the business and

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Speaker 1: retaining the business that we gained during the pandemic, but

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Speaker 1: we're doing so in this inflationary environment. That's you know,

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Speaker 1: causing challenges for us on the close Morgent line. And well,

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Speaker 1: and this is why, this is why I love having

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Speaker 1: you on, Chris, because it's not just about the flower business.

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Speaker 1: I think your business is representative of a lot of

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Speaker 1: companies that have grown really successful brands. Um. You know,

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Speaker 1: businesses that thrived during the lockdowns, but now are going

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Speaker 1: to have trouble maintain the same growth in the face

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Speaker 1: of higher labor costs, higher energy costs, um, you know,

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Speaker 1: supply chain issues. Where do you see uh or do

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Speaker 1: you see any kind of light at the end of

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Speaker 1: the tunnel in terms of that, I'm sure you've got

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Speaker 1: people who want to be paid more. Um. Delivery costs

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Speaker 1: must be higher and higher as gasoline, although they're coming

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Speaker 1: down again, but gasoline prices went up um uh. And

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Speaker 1: you know you've got to be getting these flowers from

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Speaker 1: all over the world. Yeah, so we certainly see great

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Speaker 1: opportunity in front of us. Know. Well, you know, even

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Speaker 1: though you pointed out people who you know, the challenges

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Speaker 1: against copying, against the record us A we had, we

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Speaker 1: still grew for the year four percent over last year,

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Speaker 1: which was over the year just prior to the pandemic,

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Speaker 1: so and we're holding onto that customer base, we're holding

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Speaker 1: onto that higher revenue stream. So now we're dealing with

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Speaker 1: the unprecedented cost persons that came in and we're mitigating

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Speaker 1: those as fast as we can. Good news is we're

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Speaker 1: starting to see is I just heard the report, We're

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Speaker 1: starting to see more and more indicators that the inflation

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Speaker 1: is eating. We're seeing ocean freight rates drop, was seeing

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Speaker 1: labor moderate and availability of labor getting better. So we're

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Speaker 1: seeing the light at the end of the tunnel. But

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Speaker 1: in addition to that, we're making sure that we're making

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Speaker 1: the investments in our business for the future. We're spending

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Speaker 1: money to automate our facilities, are distribution centers, spending money

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Speaker 1: to build inventory early and bring inventory in early to

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Speaker 1: make sure we're helping without labor challenges that we've had. So,

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Speaker 1: you know, a company like ours, we're not just sitting

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Speaker 1: by and hoping things get better. We're making sure we

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Speaker 1: change our business to meet through to come and demand today.

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Speaker 1: So what is it like working in this rising rate environment?

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Speaker 1: Do you make sure UM You've got all your financing

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Speaker 1: needs taken care of before rates get out of control?

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Speaker 1: UM you know, is it. I mean, I'm sure you're

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Speaker 1: generating a ton of cash, so it's not that as

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Speaker 1: much of a problem for you as it is for

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Speaker 1: other businesses. But you still got to be looking at

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Speaker 1: these rates right oh, constantly, and we're constantly in the

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Speaker 1: conversations with our banks making sure that we have the

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Speaker 1: appropriate banking facilities we need well, you know, for right now,

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Speaker 1: for example, ramping out our inventory for the holiday season,

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Speaker 1: so we rely on the appropriate revolval facilities for that

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Speaker 1: to make sure we can do that. In addition to

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Speaker 1: the free cash flow that were generated, and we're looking

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Speaker 1: to make sure that we continue to grow out business

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Speaker 1: and make the investment for the long term because we

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Speaker 1: see great opportunity in front of us. You know, the

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Speaker 1: world changed with this pandemic, and one of the benefits

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Speaker 1: of the change is that it's made people realize that

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Speaker 1: we need to stay connected to each other and build

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Speaker 1: and maintaining relationships. That's what our business does. We inspire

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Speaker 1: our customers to stay connected. So, Chris, talk to us

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Speaker 1: about some of the challenges that you and are facing.

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Speaker 1: I'm thinking labor number one. You mentioned number two, fertilizer.

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Speaker 1: We hear a lot of inflation costs there, right, inflation

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Speaker 1: costs there, and you know, supply availability talks just about

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Speaker 1: some of the challenges from the supply side, you guys

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Speaker 1: aren't dealing with. The supply chain for us has been

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Speaker 1: certainly has been challenging, and mostly he's on the food

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Speaker 1: group side about business, not so much on the floral side.

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Speaker 1: You mentioned fertilizer itself, that's close with some of our

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Speaker 1: plants supplies the challenge, but it's not a major challenge.

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Speaker 1: And on the fresh cut floral side, it's not been

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Speaker 1: a major challenge for us. Again, I think that which

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Speaker 1: is because just so people know it's not just flowers

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Speaker 1: that you're delivering. You also have obviously, you know, balloons

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Speaker 1: and teddy bears and you know melon balls, right, that's

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Speaker 1: what you're talking about, you know. In our food group,

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Speaker 1: which is headlined by Harry and David um Cheryl's Cookies

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Speaker 1: wanting to one a hundred baskets. Newest acquisition we just

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Speaker 1: made a few months ago, Vital Choice sustainably caught seafood,

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Speaker 1: wild caught seafood. So we bring all these different Coli

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Speaker 1: made foods to the table, and the packaging for that

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Speaker 1: is where the supply chain gets disrupted a little bit,

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Speaker 1: so we made made all of the adjustments when that

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Speaker 1: necessary to make sure they were in a good position

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Speaker 1: for this holiday and we're looking forward to It is

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Speaker 1: the dollar at all, um, you know, a tailwind for you?

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Speaker 1: It does it give you a little bit more strength

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Speaker 1: to have this incredibly strong currency or do you operate

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Speaker 1: um in terms of purchases mostly in the US. Oh,

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Speaker 1: it always helps to have a stong currency, but mostly

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Speaker 1: where we operate within the US. We employed some products

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Speaker 1: from Major and that's you know, caused problems last year.

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Speaker 1: It's looking much better this year, both as far as

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Speaker 1: cost to come out of these costs as well as shipping.

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Speaker 1: But I'll always take the tail wind. If ever there

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Speaker 1: was a time to buy a British or European company, Chris, now,

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Speaker 1: is it? I don't know. I look at somebody inflation

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Speaker 1: rates that they're looking at over there. I'm not sure

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Speaker 1: I can jump to that so quick. Hey, Chris, I'm

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Speaker 1: just looking at your price chart. It looks like you're

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Speaker 1: one of those, you know, um kind of a pandemic

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Speaker 1: type of stock. You know people Your stock trade up

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Speaker 1: dramatically up to close above thirty five on during the

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Speaker 1: early days of the pandemic has traded down since what's

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Speaker 1: kind of the message that you're you're giving your shareholders. Well,

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Speaker 1: we've just keep focusing on the down the core of

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Speaker 1: the business. And again, as we look and we've doubled

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Speaker 1: the size at a customer base in the last couple

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Speaker 1: of years, we've doubled the size of the business overall,

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Speaker 1: We've doubled the size of our passport loyalty membership program,

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Speaker 1: We've significantly expanded our product offering. And when we look

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Speaker 1: at the underlying health of the business, we still see

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Speaker 1: the relationships with building with the customers, customers cohorts that

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Speaker 1: are buying from more than one brand coming back more

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Speaker 1: frequently than like two to three times out of the

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Speaker 1: average customer. So that underlying health of the business tells

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Speaker 1: us as we work through this challenging inflation every period,

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Speaker 1: we are extremely well positioned company to get back go

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Speaker 1: on tracks from a higher growth rate in a higher

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Speaker 1: profitability rate. You're always gonna keep the one eight hundred.

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Speaker 1: I just type in flowers dot com when I want

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Speaker 1: to go to your website, but it's obviously one eight

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Speaker 1: hundred flowers dot com. You own both domains. We own

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Speaker 1: both do means the brand that we really built is

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Speaker 1: one hundred Flowers. It's a question we It's a question

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Speaker 1: we go through all the time. We want to make

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Speaker 1: sure our brands are always appropriate and elevant for the day.

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Speaker 1: Level off already, all right, great stuff as always, Chris

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Speaker 1: always loved getting h update on your business and the

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Speaker 1: retail space in general. Chris McCann, he's the CEO of

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Speaker 1: one eight hundred Flowers f l w S is the

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Speaker 1: tigger to type into your Bloomberg terminal. Always a fascinating discussion.

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Speaker 1: One eight hundred Flowers. We all know the brand. Well.

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Speaker 1: We did get some pretty good m manufacturing data this morning.

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Speaker 1: Let's break it down with Tim Fury, the chairman of

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Speaker 1: the Institute of Supply Management. Tim, I s M. Come

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Speaker 1: in a little bit better expected, steady with last month.

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Speaker 1: What do you make of it? We'd beat expectation, and

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Speaker 1: I think you know, this is the third straight month

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Speaker 1: of running about fifty three within a couple of tenths.

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Speaker 1: It really feels like we're in a great fly path here.

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Speaker 1: We're not you know, flying sky high at sixty feet

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Speaker 1: and we're not skimming across the mountaintops and we're so

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Speaker 1: we're pretty level now. The sub indexes that go into

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Speaker 1: that p M I indexes are shifting, but the shift

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Speaker 1: is often the positive. You know, we've got manufacturing inventories

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Speaker 1: coming down a little bit, Supplier deliveries are stable at

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Speaker 1: fifty five. That's an appropriate tension. You've got new orders

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Speaker 1: moving back into an expansion environment at not really great rates,

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Speaker 1: but that's the reason they're an expansion. Lead times came

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Speaker 1: down a little bit, maybe to the low single digits,

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Speaker 1: but lead times came down. Prices came down in the

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Speaker 1: last couple of months. So we've gone for three months

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Speaker 1: of suppliers getting easier to deliver to two months of

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Speaker 1: prices easy and dramatically town. Now we're in a month

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Speaker 1: of lead time softening as well as employment expansion. So

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Speaker 1: the month going into September, the period going into September

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Speaker 1: from a production standpoint should be pretty positive because we're

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Speaker 1: able to put people on the factory floor and the

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Speaker 1: supplier materials are flowing better. Um. We saw we've been

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Speaker 1: seeing job cuts in Silicon Valley for for months now, um,

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Speaker 1: either hiring freezes or you know, companies taking out ten workforce.

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Speaker 1: Today we see a manufacturer three m um going down

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Speaker 1: that road. Are we going to start seeing more of that?

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Speaker 1: Do you hear from the manufacturers you talked to that

428
00:22:24,320 --> 00:22:27,840
Speaker 1: that's on in the cards in terms of cost cuts? Well,

429
00:22:27,920 --> 00:22:30,320
Speaker 1: I think that's what everybody's looking for. That's when we

430
00:22:30,440 --> 00:22:32,639
Speaker 1: really know that we've slowed down the band, when companies

431
00:22:32,640 --> 00:22:35,160
Speaker 1: start to lay off. I mean the Silicon Valley stuff

432
00:22:35,160 --> 00:22:39,239
Speaker 1: are not manufacturing people, uh exactly. But today we got

433
00:22:39,320 --> 00:22:42,080
Speaker 1: an industry, an industrial company doing it for you know.

434
00:22:42,200 --> 00:22:45,159
Speaker 1: So that's what's kind of caught my eyes that this

435
00:22:45,359 --> 00:22:50,520
Speaker 1: is not um some social media you know weirdness. Yeah. Correct.

436
00:22:50,560 --> 00:22:53,919
Speaker 1: But our panelists were eight to one hire to force manage,

437
00:22:54,000 --> 00:22:58,040
Speaker 1: meaning nine companies, eight of them are hiring and the

438
00:22:58,119 --> 00:23:01,560
Speaker 1: other one is either freezing or letting themselves a trip out.

439
00:23:01,920 --> 00:23:05,520
Speaker 1: We actually improved on the quits rate. We had quits

440
00:23:05,600 --> 00:23:07,040
Speaker 1: rate in the month of July. We're now down to

441
00:23:08,080 --> 00:23:10,200
Speaker 1: which indicates to me that people are staying in their

442
00:23:10,320 --> 00:23:12,600
Speaker 1: job more than they were a couple of months ago.

443
00:23:12,720 --> 00:23:16,960
Speaker 1: And and the panel's indicated said that things are getting

444
00:23:17,040 --> 00:23:20,280
Speaker 1: easier to hire up from seven last months. So we're

445
00:23:20,320 --> 00:23:22,720
Speaker 1: able to hire and keep people better than we have

446
00:23:23,359 --> 00:23:25,840
Speaker 1: in the last nine months, and I think that's positive,

447
00:23:25,920 --> 00:23:28,440
Speaker 1: positive movement, and it could very well be because there's

448
00:23:28,440 --> 00:23:30,760
Speaker 1: a little bit of uncertainty out there. If I had

449
00:23:30,840 --> 00:23:33,240
Speaker 1: some tenure at the company, I wouldn't be so inclined

450
00:23:33,280 --> 00:23:35,639
Speaker 1: to jump. And the uncertainty is not only the economy,

451
00:23:36,080 --> 00:23:38,679
Speaker 1: but it's also company's interest in letting people work from

452
00:23:38,720 --> 00:23:41,440
Speaker 1: a hybrid standpoint. Good stuff, all right, Tim, thanks so

453
00:23:41,520 --> 00:23:43,560
Speaker 1: much for breaking it down force. Tim Fury, the chairman

454
00:23:43,600 --> 00:23:46,680
Speaker 1: of the UH Institute of Supply Management. With some data

455
00:23:46,760 --> 00:23:49,359
Speaker 1: out this morning better than expected on the manufacturing flint,

456
00:23:52,119 --> 00:23:56,359
Speaker 1: let's get over to our chief correspondent for Global macro markets,

457
00:23:56,440 --> 00:23:59,920
Speaker 1: Liz McCormick joins us to talk about, um, what we're

458
00:24:00,040 --> 00:24:03,240
Speaker 1: seeing happen in the fixed income. On the fixed income

459
00:24:03,320 --> 00:24:05,399
Speaker 1: side of things, Me and Paul are just done equity guys.

460
00:24:05,480 --> 00:24:09,280
Speaker 1: So um, it's good to get too smart persons. Take yeah,

461
00:24:09,320 --> 00:24:13,359
Speaker 1: please use small words for us. UH. You have a

462
00:24:13,440 --> 00:24:16,240
Speaker 1: story out today that jobs, the jobs data that we

463
00:24:16,280 --> 00:24:19,240
Speaker 1: see tomorrow's potential to push the FED towards a third

464
00:24:19,640 --> 00:24:23,120
Speaker 1: jumbo hike. So a third what seventy five basis point hike?

465
00:24:23,560 --> 00:24:28,720
Speaker 1: If if if payrolls beat right, right, right. Well, you know,

466
00:24:28,920 --> 00:24:31,080
Speaker 1: even like you saw the I S M numbers today,

467
00:24:31,200 --> 00:24:34,240
Speaker 1: the sub index on employments showed it was, you know,

468
00:24:34,320 --> 00:24:37,800
Speaker 1: decently holding in some strength. So if if the job's

469
00:24:37,920 --> 00:24:40,359
Speaker 1: number comes out, especially if it beats like you said,

470
00:24:40,400 --> 00:24:42,680
Speaker 1: I mean, the data just seems to be building, that

471
00:24:42,840 --> 00:24:46,200
Speaker 1: shows the FED has room to keep rising. Inflation is

472
00:24:46,240 --> 00:24:49,040
Speaker 1: still a problem. Pal has said, I think the economy

473
00:24:49,119 --> 00:24:51,879
Speaker 1: can withstand it. So while we get these numbers that

474
00:24:52,000 --> 00:24:54,080
Speaker 1: kind of back that up for him, it seems to

475
00:24:54,240 --> 00:24:56,920
Speaker 1: bode for that them going seventy five basis points the

476
00:24:57,000 --> 00:24:59,040
Speaker 1: next time. So yeah, there's a lot of eyes on

477
00:24:59,160 --> 00:25:04,840
Speaker 1: payrolls tomorrow, you know. Vince Cignarella Bloomberg has a call

478
00:25:04,960 --> 00:25:07,080
Speaker 1: here that basically the market is taken care of itself.

479
00:25:07,160 --> 00:25:09,960
Speaker 1: It's taken care of inflation, and as a result, the

480
00:25:10,040 --> 00:25:12,960
Speaker 1: Fed is should and it's likely to pause after this

481
00:25:13,560 --> 00:25:15,960
Speaker 1: next rate heke, and that in and of itself is

482
00:25:16,359 --> 00:25:19,520
Speaker 1: bullish for risk assets. I don't know. The market's not

483
00:25:19,600 --> 00:25:22,960
Speaker 1: sure about that, do you think? Yeah? Yeah, I think

484
00:25:23,040 --> 00:25:25,840
Speaker 1: it's uh, the markets in the quandary. Right, Um, there

485
00:25:25,880 --> 00:25:28,400
Speaker 1: are some that we're saying, yeah, Fed's got to slow down.

486
00:25:28,680 --> 00:25:31,359
Speaker 1: There's a decent amount that say, hey, the FED can

487
00:25:31,400 --> 00:25:33,920
Speaker 1: get the funds rate to maybe a little under four percent,

488
00:25:34,040 --> 00:25:35,680
Speaker 1: and then like Vince says, they got to kind of

489
00:25:35,760 --> 00:25:39,040
Speaker 1: slow down pause. And then there are others that even

490
00:25:39,119 --> 00:25:42,800
Speaker 1: our Anna wag I keep bringing her upcomics, she says

491
00:25:42,920 --> 00:25:45,639
Speaker 1: FED goes to five percent. The folks that Bridgewater have

492
00:25:45,800 --> 00:25:49,480
Speaker 1: said FED goes even higher. So I think it's like,

493
00:25:49,680 --> 00:25:51,080
Speaker 1: I hate to say it, but the truth is in

494
00:25:51,160 --> 00:25:54,120
Speaker 1: the data. Does inflation really keep, you know, rolling over,

495
00:25:54,520 --> 00:25:57,440
Speaker 1: does the economy start to faulter or not? You know,

496
00:25:57,600 --> 00:25:59,440
Speaker 1: there's a lot of data the Fed's got to sift

497
00:25:59,480 --> 00:26:01,760
Speaker 1: through and to side. But they there there's a lot

498
00:26:01,840 --> 00:26:04,479
Speaker 1: saying if they do another seventy BIPs that maybe they

499
00:26:04,560 --> 00:26:07,040
Speaker 1: have to at least slow down the pace. You know, um,

500
00:26:07,480 --> 00:26:09,440
Speaker 1: but we have to see. But what about turning around?

501
00:26:09,520 --> 00:26:11,960
Speaker 1: Yesterday Mester said, you know what, in my opinion, we're

502
00:26:11,960 --> 00:26:15,439
Speaker 1: not gonna cute, And that was kind of the Fed's

503
00:26:15,480 --> 00:26:19,160
Speaker 1: message at Jackson Hole that to the market, like, hey, guys, seriously,

504
00:26:19,320 --> 00:26:21,560
Speaker 1: we're not going to cut next year. You're gonna keep

505
00:26:21,680 --> 00:26:24,880
Speaker 1: raising and then we're gonna wait until inflation comes down.

506
00:26:24,960 --> 00:26:28,240
Speaker 1: Cash Cary has been extremely hawkish and then yesterday Rich

507
00:26:28,320 --> 00:26:31,240
Speaker 1: Miller had a piece out saying Powell is now aiming

508
00:26:31,280 --> 00:26:35,320
Speaker 1: for something much more painful for the economy. Somebody wrote

509
00:26:35,359 --> 00:26:36,960
Speaker 1: into me and said, the idea that one of the

510
00:26:37,040 --> 00:26:39,639
Speaker 1: most powerful arms of the U. S. Government is purposely

511
00:26:39,760 --> 00:26:42,360
Speaker 1: aiming for pain. They're trying to put American people out

512
00:26:42,440 --> 00:26:46,200
Speaker 1: of work, they're trying to raise unemployment is absolutely insane.

513
00:26:46,960 --> 00:26:49,720
Speaker 1: If you see jobs starting to miss, if you see

514
00:26:49,800 --> 00:26:51,920
Speaker 1: unemployment starting to go to five percent, don't they have

515
00:26:52,080 --> 00:26:55,560
Speaker 1: to cut? Isn't the political pressure too strong? Well, you know,

516
00:26:55,880 --> 00:26:58,520
Speaker 1: that's what Elizabeth Warren would say. She's been out saying,

517
00:26:58,840 --> 00:27:00,600
Speaker 1: you know, we're worried about the FED is going to

518
00:27:00,680 --> 00:27:04,719
Speaker 1: crush the economy jobs. That's terrible. But the other argument,

519
00:27:04,800 --> 00:27:06,359
Speaker 1: and I have to say I kind of lean to that,

520
00:27:06,680 --> 00:27:09,480
Speaker 1: is what pal saying is, you know, kind of inflation

521
00:27:09,720 --> 00:27:12,920
Speaker 1: is let's call it a cancer attacks on everyone that

522
00:27:13,040 --> 00:27:16,200
Speaker 1: if that lasts and it is strong, that's worse than

523
00:27:16,320 --> 00:27:18,879
Speaker 1: sadly some people losing their jobs. So it's a bit

524
00:27:18,960 --> 00:27:21,400
Speaker 1: of a push pull that the FED, of course would

525
00:27:21,440 --> 00:27:23,480
Speaker 1: love a soft landing. But I think you know, through

526
00:27:23,560 --> 00:27:26,879
Speaker 1: the months, Palace kind of moved away from that hole. Well,

527
00:27:26,920 --> 00:27:31,639
Speaker 1: but Liz, what's the idea, what's the consentus on how

528
00:27:31,760 --> 00:27:35,720
Speaker 1: great a tool monetary policy is to fight supply side

529
00:27:35,800 --> 00:27:39,760
Speaker 1: driven inflation. Well, of course that's a lot of people

530
00:27:39,800 --> 00:27:41,840
Speaker 1: say not a good tool at all. Right, so then

531
00:27:41,880 --> 00:27:44,320
Speaker 1: what's the point. Well, the FED will say, well, if

532
00:27:44,359 --> 00:27:47,200
Speaker 1: we slow down we can, we can affect what we can.

533
00:27:47,480 --> 00:27:50,640
Speaker 1: That's demand, right, and let's say the supply stuff they

534
00:27:50,880 --> 00:27:53,560
Speaker 1: have limited control over. FED has admitted that, but if

535
00:27:53,600 --> 00:27:55,920
Speaker 1: they slow down demand, that they'll slow what they can.

536
00:27:56,240 --> 00:28:01,000
Speaker 1: So yeah, So if if the supply issues, and sadly

537
00:28:01,280 --> 00:28:03,760
Speaker 1: with the war and the energy crisis in Europe, if

538
00:28:03,840 --> 00:28:07,440
Speaker 1: all that energy sector, all that remains sticky with inflation,

539
00:28:07,680 --> 00:28:09,440
Speaker 1: then the FED may not be able to bring down

540
00:28:09,560 --> 00:28:12,200
Speaker 1: that arm. But maybe, sadly, maybe it's going to crush

541
00:28:12,280 --> 00:28:15,000
Speaker 1: the part that they can, which is you know, demand,

542
00:28:15,119 --> 00:28:17,159
Speaker 1: and you know from the U. S. Consumer So I

543
00:28:17,280 --> 00:28:19,200
Speaker 1: guess that, you know, the feeling is they've got to

544
00:28:19,240 --> 00:28:21,159
Speaker 1: do what they can. But you're right, I mean, they

545
00:28:21,520 --> 00:28:23,879
Speaker 1: and I think they've admitted that they can't control everything,

546
00:28:23,960 --> 00:28:26,040
Speaker 1: but they I think if they sit on their hands,

547
00:28:26,119 --> 00:28:28,680
Speaker 1: they they're in big trouble. There's enough of this macro

548
00:28:28,880 --> 00:28:32,480
Speaker 1: stuff I'm looking at the global agg here down basically

549
00:28:33,720 --> 00:28:37,119
Speaker 1: from its highs, right, and this month we're just starting

550
00:28:37,119 --> 00:28:41,440
Speaker 1: September today, Paul, huge month for issuance. Um, what's going

551
00:28:41,520 --> 00:28:46,160
Speaker 1: on on the ground and the real you know financing markets? Well,

552
00:28:46,240 --> 00:28:49,400
Speaker 1: first of all, companies need money, right, and summertime is

553
00:28:49,440 --> 00:28:51,760
Speaker 1: usually a lull for issuance, not a good time, so

554
00:28:51,920 --> 00:28:54,360
Speaker 1: they tend to come in after the summer's over. So

555
00:28:54,800 --> 00:28:58,160
Speaker 1: so they need some funding. And as bad as things are,

556
00:28:58,280 --> 00:29:01,680
Speaker 1: and it's pretty brutal where yeah has been, Like you said, Um,

557
00:29:02,360 --> 00:29:04,840
Speaker 1: if rates are only going higher, you would kind of

558
00:29:04,960 --> 00:29:08,440
Speaker 1: like wanna get, yes, get some fixed rates. Three and

559
00:29:08,480 --> 00:29:10,640
Speaker 1: a half may not be as bad as four and

560
00:29:10,680 --> 00:29:12,680
Speaker 1: a half in a year. I don't know where it's going,

561
00:29:12,800 --> 00:29:15,400
Speaker 1: but I think that's the thing. They need a certain

562
00:29:15,400 --> 00:29:18,479
Speaker 1: amount of financing. It looks like rates are just at

563
00:29:18,600 --> 00:29:21,200
Speaker 1: least for a while, going nowhere but up. So try

564
00:29:21,280 --> 00:29:24,200
Speaker 1: to get in there when you can. All right, Liz,

565
00:29:24,280 --> 00:29:27,440
Speaker 1: good stuff as always. List McCormick, Chief correspondent Global macro

566
00:29:27,560 --> 00:29:31,280
Speaker 1: Markets for Bloomberg News. Thanks for listening to the Bloomberg

567
00:29:31,400 --> 00:29:34,800
Speaker 1: Markets podcast. You can subscribe and listen to interviews with

568
00:29:34,840 --> 00:29:39,640
Speaker 1: Apple podcasts or whatever podcast platform you prefer. I'm Matt Miller.

569
00:29:39,920 --> 00:29:43,840
Speaker 1: I'm on Twitter at Matt Miller three. Put on false

570
00:29:43,840 --> 00:29:46,680
Speaker 1: Sweeney I'm on Twitter at pt Sweeney. Before the podcast,

571
00:29:46,760 --> 00:29:49,240
Speaker 1: you can always catch us worldwide at Bloomberg Radio