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Speaker 1: Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Okay, so maybe not quite yet the time to crack
Speaker 2: open the perier, Joe, if I may.
Speaker 3: Say, really good pronunciation of that.
Speaker 2: I had to google it.
Speaker 3: Okay, why not. Mike mckey's here, We could do, we
Speaker 3: could do. It's a weep day.
Speaker 2: Let's talk about the report underline, Well, we'll talk about
Speaker 2: me with the price of Champa. Let's just bring Mike
Speaker 2: in because let's get to the report and what we got.
Speaker 2: It is the report Mike, we have been talking about
Speaker 2: for a while. Here, we know this is the one
Speaker 2: that the FED watches. Tell us what we got and
Speaker 2: why there was a bit of sigh of relief here.
Speaker 4: Well, the sigh of relief was it wasn't worse. The
Speaker 4: numbers came in on a month over month basis higher
Speaker 4: than they had in previous months. The core rate was
Speaker 4: up on a month over month basis, four tenths, which
Speaker 4: was the highest in a year, and it sounds terrible,
Speaker 4: but because of base effects and in the progress they've
Speaker 4: made on disinfilation on the year over year basis, we
Speaker 4: continued to see the PCE and the CORE go down,
Speaker 4: and that's what people want to see, because that's what
Speaker 4: the FED wants to see. We're still a ways from
Speaker 4: two percent if you're using CORE as sort of your
Speaker 4: measuring stick, at two point eight percent, but there was
Speaker 4: progress and the economy is not doing badly. People what
Speaker 4: personal income went up one percent and wages still went
Speaker 4: up four tenths of a percent, which is healthy. Spending
Speaker 4: was a little weak, but remember there was a lot
Speaker 4: of storms in January. People didn't go out. We know
Speaker 4: they didn't buy cars and things like that. So overall,
Speaker 4: this is the Goldilocks soft landing story continues.
Speaker 2: So break up Champagne.
Speaker 5: In other words, I.
Speaker 4: Knew you'd get around to that.
Speaker 3: It's only it's only two o'clock.
Speaker 4: Yes, yes, yes, go right ahead.
Speaker 3: So Mike remind us why this is the Fed's preferred
Speaker 3: measure of inflation. Why do we care so much about
Speaker 3: PCE and over CPI.
Speaker 4: For well, basically, the PCE is a bit broader, but
Speaker 4: it also is a little bit more reflective of what
Speaker 4: people are spending on. It includes a lot of imputed data,
Speaker 4: which is data that they try to figure out by
Speaker 4: measuring parts of the economy rather than just prices, because
Speaker 4: they don't have prices on things like financial portfolio management
Speaker 4: was one of the biggest movers, up five percent of
Speaker 4: the month because the markets are doing so well, right,
Speaker 4: so they're looking at the markets, and they're looking at
Speaker 4: the gain in the markets, and they're guessing sort of
Speaker 4: what the commissions would be et cetera, and the fees,
Speaker 4: and they impute a number from that, but that's not
Speaker 4: counted in the CPI. And for example, the CPI will
Speaker 4: measure what you pay for your monthly car insurance, whereas
Speaker 4: the PCU will measure what you pay and it also
Speaker 4: measures what value you get, in other words, how much
Speaker 4: will your policy pay if you're in an accident, And
Speaker 4: of course that has to keep likely going up because
Speaker 4: cars keep getting more expensive. So that's the kind of
Speaker 4: thing that's the difference between them, and so the FED
Speaker 4: just prefers it. They normally don't run very far apart,
Speaker 4: but they have been running far apart over the last year.
Speaker 2: Well, as an economist, I mean, what do you trust
Speaker 2: as really kind of telling the true picture of inflation?
Speaker 2: Because I do feel like there's a bit of a
Speaker 2: debate when it comes to some of the economic statistics
Speaker 2: that are out there about whether they not, you know,
Speaker 2: accurately reflect what's going on in the US economy. How
Speaker 2: do you see it? Because I feel like, Mike, you're
Speaker 2: so good at kind of pulling in yes, government statistics,
Speaker 2: real words, real world statistics. I don't know, how do
Speaker 2: you see it?
Speaker 4: They actually had this debate on the podcast with Tracy
Speaker 4: Alloway and Joe Eisenthal today, and the experts they were
Speaker 4: talking to basically came down I think about where I
Speaker 4: would come down, that there are so many different measures
Speaker 4: and even though there's a wedge between the PCE and CPI,
Speaker 4: it's about one hundred basis points now, it's normally somewhere
Speaker 4: between thirty five and fifty, so it's not very wide.
Speaker 4: And really we can't say, given all the different measures,
Speaker 4: exactly what inflation is. So the CPI has the most categories,
Speaker 4: it's the most up to date the PPI and the
Speaker 4: CPI feed into PCE, so PCE depends on CPI, So
Speaker 4: I guess I would go with the CPI. That doesn't
Speaker 4: mean I think that the three point nine percent is
Speaker 4: where we should be. There's a lot of talk of
Speaker 4: the FED maybe changing its inflation target to maybe three
Speaker 4: percent or something like that, but overall maybe this CPI,
Speaker 4: you know, that's just talk.
Speaker 3: The Fed has denied that they're going to do that
Speaker 3: many many times over the last year.
Speaker 4: Well, they're denying it now because if you do it
Speaker 4: now when you have you're moving the equation, you're moving
Speaker 4: the goalposts.
Speaker 1: Right.
Speaker 4: They do now have a procedure so that every five
Speaker 4: years they look at their monetary policy framework, and that's
Speaker 4: coming up in twenty twenty five.
Speaker 3: So do you think that given what we've had we've
Speaker 3: seen over the last eighteen months with the data MIC,
Speaker 3: that they would consider actually changing it when there is
Speaker 3: a time.
Speaker 1: To do that.
Speaker 4: I think they would. Two percent was never a number
Speaker 4: written in stone. It was what the New Zealand Central
Speaker 4: Bank adopted number of years ago and it sort of
Speaker 4: became a de facto standard. And the idea was basically,
Speaker 4: what's not too high and not too low because if
Speaker 4: you're too low number you have no way to lower
Speaker 4: rates if you're at zero, and if you're too high
Speaker 4: then people get mad because you have inflation. So they
Speaker 4: picked two percent. They could easily pick three percent, and
Speaker 4: people have been urging that on them for years, so
Speaker 4: it's something I'm sure they'll talk about, all right.
Speaker 2: So the data this week we all were kind of
Speaker 2: leading up, I feel like in a big way to
Speaker 2: this Thursday report of pc core and the read on
Speaker 2: inflation that the Fed follows the narrative if you put
Speaker 2: it all together, including some of the other data points
Speaker 2: that we got today, is there one clear narrative or
Speaker 2: a bit of a mixed narrative.
Speaker 4: It's a mostly clear narrative that the economy is doing well.
Speaker 4: Interesting number we haven't mentioned and didn't get a lot
Speaker 4: of attention today because of the PCEE was pending home
Speaker 4: sales really tanked in the last month, and that's maybe
Speaker 4: a sign that we're seeing the higher mortgage rates bite,
Speaker 4: which is despite Elizabeth Warren's desires, that's what the FED
Speaker 4: wants to see. So we seem to be doing and
Speaker 4: getting what the Fed is looking for. Next week, we'll
Speaker 4: see jobs, and if the job's numbers hold in, it'll
Speaker 4: tell you that the other side of their mandate is
Speaker 4: doing well, and that's the feeling that they will hold in.
Speaker 4: So at this point, you know, we get volatility.
Speaker 2: Powell was right saying, Hey, the economy's good.
Speaker 4: J Powell was reasonably right. I don't know if you
Speaker 4: saw the Wall Street Journal story today about whether Chris
Speaker 4: Waller or Larry Summers was right, and Nick Timmers from
Speaker 4: the Wall Street Journal comes down on Chris Waller's side
Speaker 4: that we didn't have to have six percent unemployment.
Speaker 3: So it's interesting to hear that we did speak to
Speaker 3: someone yesterday who said that we've already had a soft landing.
Speaker 3: Chris Allman over at CalPERS A cal stars. Excuse me?
Speaker 3: Are we going to start seeing more of that?
Speaker 1: Mike?
Speaker 3: Are people going to finally say, okay, we can declare
Speaker 3: that this landing has happened and has indeed been a
Speaker 3: soft one.
Speaker 4: Yeah, it's kind of a at what point do you
Speaker 4: consider the economy landed? There have been people who say
Speaker 4: we've been on the runway for a while, and others say, well,
Speaker 4: you know, it's never quite there. So it'll be a
Speaker 4: couple of months probably when the Fed starts cutting rates.
Speaker 4: If we get to that point. That would suggest that
Speaker 4: we're still making a lot of progress towards sustainable low inflation,
Speaker 4: and you could call that a soft landing. Other people
Speaker 4: will look back in history and say, well, this has
Speaker 4: been a soft landing. If it's done a pretty good
Speaker 4: heals like it. They'll never say it.
Speaker 5: Goldilock says, it's.
Speaker 4: Yeah, it's like jinxing yourself. But they'll they will feel it.
Speaker 4: All right.
Speaker 2: We're going to say thanks to Michael McKey Bloomberg News
Speaker 2: International Economics and Policy Cours.
Speaker 1: But you're listening to the Bloomberg Business Week podcast. Catch
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Speaker 2: Got to talk a little b about WW International shares dropping,
Speaker 2: falling earnings last night and news at Oprah Winfrey said
Speaker 2: she's preparing to leave its board. We've been talking about
Speaker 2: it all day here at Bloomberg. Stock down nearly twenty
Speaker 2: seven percent of its low's today lowest points since they
Speaker 2: began trading back in one two thousand and one. And
Speaker 2: you might recall that back in twenty fifteen that's when
Speaker 2: Oprah signed on bought a ten percent stake in the company.
Speaker 2: That news and move revived the stock for a while,
Speaker 2: and the narrative tim around the company.
Speaker 3: Well, narrative changing again today and news of Oprah's departure
Speaker 3: delivering the latest blow to the obesity focused company that's
Speaker 3: struggling to stay relevant in the ozempic era. We got
Speaker 3: a great roundtable joining us to discuss the news in
Speaker 3: the environment that WW exists in Bloomberg News. Reporter Jerry
Speaker 3: Smith is with us right now in Bloomberger News health
Speaker 3: reporter Madison Mueller both here in the studio. Good to
Speaker 3: have you both with us. Hey, Jerry, I want to
Speaker 3: start with you because we did see the stock WW
Speaker 3: stock drop last night following quarterly results and the news
Speaker 3: that Oprah was leaving the board. What's bigger here is
Speaker 3: the results or is it Oprah no longer being on
Speaker 3: the board Here.
Speaker 5: I mean, I think Oprah deciding that she's not going
Speaker 5: to run for reelection on the board is a big deal.
Speaker 5: I can't think of many celebrity brand relationships that are
Speaker 5: more iconic than her relationship with WA Watchers. So for
Speaker 5: her to no longer be on the board. I think
Speaker 5: investors saw that as you know, potential concern.
Speaker 2: To be fair, and we're going to bring up the
Speaker 2: chart again for everybody. We just showed it. I mean
Speaker 2: the chart of WW shares what they have done since
Speaker 2: Oprah came on board, and you could see that uptick
Speaker 2: that was shortly after she came on board, hitting a high,
Speaker 2: and then it's just been kind of a tougher slog
Speaker 2: if you will, since then. Madison Kman in on here.
Speaker 2: You know, we've talked with you two about WW. I mean,
Speaker 2: you know, they've got a new strategy moving forward right right.
Speaker 6: And I think that this is sort of in a
Speaker 6: time when they are trying to make their brand appear
Speaker 6: to be relevant still and really get people, you know,
Speaker 6: signed onto the idea that Weight Watchers is still needed,
Speaker 6: that it's relevant. Like Oprah leaving at this time is
Speaker 6: just not a good It's not good for the image
Speaker 6: when they're already struggling with their image. It's sort of
Speaker 6: a dumb away, I mean, kind of crazy.
Speaker 2: She's doing exactly right, Jerry, with what the company's trying
Speaker 2: to do. They're saying, we're going to embrace these new
Speaker 2: weight loss drugs. That's what she has done too.
Speaker 5: Yeah, I mean, I think the company itself, it's been fascinating,
Speaker 5: how you know, It's a fundamental shift in how we
Speaker 5: think about weight loss. And this was a company that
Speaker 5: really emphasized for years you could lose weight if you
Speaker 5: just eat right and you have enough real power. Yeah,
Speaker 5: and now I mean their arrival of a zepic and
Speaker 5: all these weight loss drugs has really forced this company
Speaker 5: to recalculate.
Speaker 2: But it doesn't. It just makes me like, I'm trying
Speaker 2: to understand that this is what Oprah's doing. So you
Speaker 2: would think it would almost make more sense for her
Speaker 2: to stay because she's used these drugs, gets what the
Speaker 2: company is doing in kind of this latest brand ship.
Speaker 3: Perhaps that's why investors are concerned if she's not sticking
Speaker 3: with it. Maybe there's a difference in strategy or something
Speaker 3: that you know, remains to be seen at this point,
Speaker 3: not saying that's happening, but yeah, you know, and that
Speaker 3: could be one of the reasons why the stock is
Speaker 3: reacting that way. So Madison, talk a little bit about
Speaker 3: the shift that we're seeing at WW right now, because,
Speaker 3: as Carol mentioned, this is a company known for counting
Speaker 3: well counting points. I should say that the meetings, the
Speaker 3: in person stuff, the line of food. How have the
Speaker 3: GLP ones disrupted that?
Speaker 7: Yeah?
Speaker 6: So I mean weight Watchers acquired Sequence, which is a
Speaker 6: telehealth provider, last year, and so what they're trying to
Speaker 6: do is bring this old or you know, the historic
Speaker 6: weight Watchers brand to GLP one prescribing and sort of
Speaker 6: combine them and say, you know, you're still going to
Speaker 6: have this community. You're still going to get support, behavioral support,
Speaker 6: you know, medication management things like that, and have that
Speaker 6: sort of along with the drug and you know, have
Speaker 6: a provider who can help you manage the medications and everything.
Speaker 6: And so that's sort of been their rebrand, and I
Speaker 6: guess I mean it sort of shows like Oprah is
Speaker 6: she said that she's taking one of these drugs now
Speaker 6: and so she, I mean, her departure from weight Watchers
Speaker 6: sort of like proves again that she herself baby doesn't
Speaker 6: need those services. I don't know if she said, like
Speaker 6: whether or not she's actually using their product, but a
Speaker 6: lot of the page that I've spoken to that are
Speaker 6: taking GLP on drugs are like, we don't feel like
Speaker 6: we would need something like this. We have that community
Speaker 6: sort of on social media. We have doctors that can
Speaker 6: help us manage the side effects or help us manage,
Speaker 6: you know, the medications in general, so we don't really
Speaker 6: see the need for something like what Weight Watchers is offering,
Speaker 6: which is this sort of behavioral support program in tandem
Speaker 6: with prescribing GLP one drugs.
Speaker 2: I mean, it's a great question, Jerry. You do wonder like,
Speaker 2: what does ww become going forward when the community aspect
Speaker 2: of this and the platform to support you in your
Speaker 2: goal of losing weight, if that goes away? Are they
Speaker 2: just a distributor of drugs basically, right, of these weight
Speaker 2: loss drugs, Like what do they become?
Speaker 5: Yeah, I mean I think that's that's the big question
Speaker 5: is how does this company stay relevant right now? You know,
Speaker 5: I mean there's analysts who think this market for OBC
Speaker 5: drugs is going to be huge, and but you know not,
Speaker 5: They're not for every bud. And you know, there's people
Speaker 5: you take these drugs, but you have to keep taking
Speaker 5: them over and over, and maybe there's a role for
Speaker 5: Weight Watchers in the future and just supporting these people
Speaker 5: who you know, maybe they don't want to take it
Speaker 5: for their entire life. But yeah, I mean, that's something
Speaker 5: this company is really struggling to figure out.
Speaker 3: To Jerry's point, Madison, do you think that it's fair
Speaker 3: to say some critics could argue that investors are kind
Speaker 3: of putting the cart before the horse here because we
Speaker 3: don't know. Carroll, When I say we don't know, you
Speaker 3: always point out that these drugs have been around for
Speaker 3: other uses for quite a bit of time.
Speaker 2: Diabetics have been using right to be fair, but.
Speaker 3: We don't necessarily know when they're yearsed purely for weight loss,
Speaker 3: not long term effects, but sort of long term trends.
Speaker 3: What needs to be done other support systems that people need, right.
Speaker 6: I mean, that's very true. It's a good point that
Speaker 6: Jerry brought up, because there's a lot of issues with
Speaker 6: like long term durability with these drugs right now. One,
Speaker 6: because they're very expensive, not all insurance companies cover them,
Speaker 6: so some people can't afford them, and then they're forced
Speaker 6: to go off of the drugs. There's still really widespread
Speaker 6: supply shortages, which a lot of the doctors I've spoken
Speaker 6: to have said that that continues to be an issue.
Speaker 6: It's not something that has really gotten any better, and
Speaker 6: so they're having to take patients off of the drugs
Speaker 6: and then you know, these are drugs that are meant
Speaker 6: to be taken forever, so what happens after that? So
Speaker 6: like there could still be a place for weight watchers.
Speaker 6: Maybe there maybe that's their sweet spot. But there are
Speaker 6: so many telehealth companies that are cropping up now to
Speaker 6: one prescribe weight loss drugs to help with you know
Speaker 6: what happens after you go off of weight loss drugs,
Speaker 6: offering different types of nutrition therapy, things like that. Like,
Speaker 6: this industry has just gotten more competitive, so they're just
Speaker 6: going to have more people to face off with.
Speaker 2: Well and Jerry, maybe that played out in terms of
Speaker 2: the twenty twenty twenty twenty four revenue forecasts, right, because
Speaker 2: that was a disappointment from WW.
Speaker 5: Yeah, they are twenty twenty four forecast for sales came
Speaker 5: in lower than what Wall Street was expecting. So I
Speaker 5: think it was probably a combination of Oprah's decision to
Speaker 5: leave the board and the lighter revenue forecast that investors
Speaker 5: were concerned about. I just think big picture this is
Speaker 5: it's very hard to be in this business on Wall
Speaker 5: Street where we're seeing these companies. Just the other day
Speaker 5: at Biotech company said that you know, they had good
Speaker 5: data on an OBC drug in their stock at don't.
Speaker 2: That's Viking Therapeutic.
Speaker 4: Yeah.
Speaker 5: Right, So it's just like you, we're seeing these enormous
Speaker 5: swings in share prices based on you know, are you
Speaker 5: going to be relevant in the weight loss drug era?
Speaker 5: Are you not going to be relevant? So I think
Speaker 5: it's tough for weight watchers when you know, an announcement
Speaker 5: where Oprah puts out a press release saying she's not
Speaker 5: gonna join, you know, be on the board, and then
Speaker 5: the stock just gets you know, hammered.
Speaker 2: Madison go to Viking though, because and I'm glad you
Speaker 2: brought that up, because it does feel like every week
Speaker 2: or something, we're looking at a different company. What do
Speaker 2: we know about that company and kind of their potential
Speaker 2: role in all of this?
Speaker 6: Yeah, I mean we were looking at that company the
Speaker 6: other day. I think there's something like thirty seven employees.
Speaker 6: It's really small, and this is phase two data that
Speaker 6: we're talking about, so it still is a long way
Speaker 6: before it actually gets to there are a b CD drug.
Speaker 3: Yes, yes, But Madison, does it raise the question that
Speaker 3: the moat that a company like Eli Lilly and that
Speaker 3: Novo nord Disc would have is not as deep of
Speaker 3: a moat, given that there is progress being made by
Speaker 3: these other companies.
Speaker 6: Yeah, I mean there's progress being made by these other companies,
Speaker 6: and those are sort of making them a possible acquisition
Speaker 6: target for drug makers that don't have a presence in
Speaker 6: weight loss yet Eli, Lilly and Novo Nordisk. I mean,
Speaker 6: from the conversations I've had with them, like their pipelines
Speaker 6: run very deep, and they are looking at every single thing,
Speaker 6: like they have really early stage you know, discovery programs,
Speaker 6: and they're looking at every single thing that these other companies,
Speaker 6: or they say they are that these other smaller biotech
Speaker 6: companies are looking at. But companies like Merk, like Bristol
Speaker 6: Myers Pfizer, who sort of need to get into this
Speaker 6: giant market still they could, you know, buy one of
Speaker 6: these smaller companies.
Speaker 2: Biking, by the way, now an eight point six billion
Speaker 2: dollar market company, but on Tuesday was up like one
Speaker 2: hundred and twenty one percent on this news. Well, last thought,
Speaker 2: Jerry uh Oprah still is going to kind of be
Speaker 2: involved though with the company. She's gonna help them, I
Speaker 2: guess with the conference and stuff. So she's kind of
Speaker 2: still around.
Speaker 5: Yeah, she said that she's still gonna, you know, continue
Speaker 5: to collaborate with weight watchers, you know, and address issues
Speaker 5: like the stigma of obesity. I mean, as we were talking,
Speaker 5: I was just thinking like how interesting it would be
Speaker 5: if Oprah you know, got involved with like Eli Lilly
Speaker 5: or Novo. I would think those two companies are probably
Speaker 5: reaching out to her people. I mean it's you know,
Speaker 5: that would be a very interesting development.
Speaker 3: And you know what, they have lots of money.
Speaker 7: That's true.
Speaker 8: It's a good point.
Speaker 2: That's actually a really interesting point. Great stuff, and this
Speaker 2: is certainly something that's very topical again for a second
Speaker 2: year in terms of uh, these weight loss drugs. Guys,
Speaker 2: Thank you so much, really appreciated. Jerry Smith for porter
Speaker 2: of Bloomberg News here in studio with us along with
Speaker 2: Madison Muller, whose health report at Bloomberg News but shairs
Speaker 2: of WW really taking tim in today's session.
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Speaker 3: Okay, Carol, we've talked about this before. Just how much
Speaker 3: value did Taylor Swift bring to the NFL and to
Speaker 3: the Chiefs well. According to the brand analytics firm Apex
Speaker 3: Marketing Group, the tie up between Travis Kelcey and Swift
Speaker 3: is worth three hundred and thirty one point five million
Speaker 3: dollars to the NFL and to the Chiefs. These figures
Speaker 3: courtesy of The Wall Street Journal earlier this month.
Speaker 2: That's some real money, all right. The reason fandom the
Speaker 2: people like my like my sister, like your sister, right,
Speaker 2: like my daughter. Well maybe I don't know if she
Speaker 2: started watching, but we certainly talked about it a lot.
Speaker 7: This year.
Speaker 2: They started watching every Kansas City Chiefs game and even
Speaker 2: got a Swift jersey. Your sister someone who actually she's.
Speaker 3: Like right, it was really annoying. She's like we're all
Speaker 3: together once. She's like, I have to watch the game.
Speaker 3: Since when do you watch the game?
Speaker 2: Like, did you guys see that plan? So you guys
Speaker 2: see Taylor like cheers?
Speaker 7: All right?
Speaker 2: Well, the concept of fandom is what got our next
Speaker 2: guest to look into how it feeds into consumer sentiment.
Speaker 2: We got with us Katie Thomas back with us, lead
Speaker 2: at the Carneie Consumer Institute, jeting us on Zoom from Pittsburgh, Pennsylvania. Katie,
Speaker 2: great to have you back with us. I do feel
Speaker 2: like man Taylor makes us the effect that she has
Speaker 2: had on our world in so many different ways. Talked
Speaker 2: us about fandom and what you guys looked at do specifically.
Speaker 8: Well exactly, I mean, thanks, It's great to be back
Speaker 8: with you guys. That's exactly what motivated is was all this,
Speaker 8: you know, it was sort of two fandoms clashing together, right,
Speaker 8: Taylor Swift and the NFL. But we also have a
Speaker 8: podcast called Inside the Mind where we were talking to
Speaker 8: super fans. We had fans of sports teams that were
Speaker 8: you know, Manchester United, that were just so committed and
Speaker 8: they invest a lot of time and money into their fandom.
Speaker 8: And we realize as we dug into it further though,
Speaker 8: it's particularly topical in the US right now and all
Speaker 8: around the world because we're so polarized that fantom used
Speaker 8: to be generally a good thing or something maybe you'd
Speaker 8: have a bit of fun with. You'd have a rival
Speaker 8: or a product that you hated on in a fun way,
Speaker 8: but it's really now that we're so polarized, it can
Speaker 8: actually be a challenge of finding that sweet spot of
Speaker 8: you know, really being an enthusiast of a brand, but
Speaker 8: not tipping over that edge into if you're not with me,
Speaker 8: you're against me. And that's what really motivated us to
Speaker 8: dig into fandom and understand a little bit more how
Speaker 8: it relates to some of the big challenges we're seeing today,
Speaker 8: such as brand risk, brand loyalty, and even how to
Speaker 8: build and cultivate community.
Speaker 3: Yeah, so talk about that a little bit, because there's
Speaker 3: certainly this double edged sword, as you mentioned in your
Speaker 3: research about when it comes to fandom, and I think,
Speaker 3: for example, I don't know if this is relevant to
Speaker 3: this conversation, but it makes me think of, Carol, what
Speaker 3: we saw with Wendy's earlier this week, when you know,
Speaker 3: they said there was going to be surge pricing and
Speaker 3: their earnings call and everybody freaked out about the price
Speaker 3: of the bacon eat or changing on these digital digital
Speaker 3: meal Uh, these these digital menus at drive throughs and
Speaker 3: at restaurants. So so how did this type of sort
Speaker 3: of you know, fandom come into the research.
Speaker 8: Yeah, So, I mean, I think your spot on tim
Speaker 8: which is that's exactly what we've seen. Hating on a
Speaker 8: brand used to be lighthearted. It used to be Miracle
Speaker 8: whip right, which was a polarizing product that some people
Speaker 8: loved it, some people hated it. Then a few years
Speaker 8: ago we saw it start to get a little bit
Speaker 8: more political with you know, perhaps Nike and other brands
Speaker 8: that you know, seemed like they were taking a stance.
Speaker 8: But we've just become further entrenched in some of this
Speaker 8: polarization as well as access to information, so you're seeing
Speaker 8: people just so quickly get spun up into a story.
Speaker 8: And so what we really said was, first you want
Speaker 8: to start by just understanding who your consumers are and
Speaker 8: just how much of a fan they are. They I'm
Speaker 8: your product because it's had, because they're truly loyal, They're
Speaker 8: truly a fan or an enthusiast of the brand. And
Speaker 8: then if they are a super fan, how much risk
Speaker 8: does that open you up to. So when we think
Speaker 8: about you know, like certain football teams, for instance, I
Speaker 8: think are a great example. You see people with trade
Speaker 8: decisions or draft decisions. You see people get really opinionated
Speaker 8: to the point where they get angry and they feel
Speaker 8: personally betrayed by it. So it's really thinking about how
Speaker 8: to balance that emotional connection to the brand and still
Speaker 8: drive engagement.
Speaker 2: Yeah, you know what's kind of rough is I just
Speaker 2: think about you know, especially coming off the pandemic and
Speaker 2: George Floyd we talked about the importance of companies to
Speaker 2: step up and take positions on, you know, things that
Speaker 2: are going on in society, helping to kind of you know,
Speaker 2: play out what's right, what's wrong, and take positions support
Speaker 2: their employee base as a result. But I feel like
Speaker 2: companies and also the influencers or stars that they align
Speaker 2: with like can be can can work out greater, or
Speaker 2: it also can get them into trouble. So it's not easy.
Speaker 8: Absolutely, Yeah, absolutely, Carol. We've seen just what you're describing,
Speaker 8: which is, for a long time we all fell into
Speaker 8: that sort of narrative around people are seeking transparency for brands.
Speaker 8: People want brands to stand up and say something. And
Speaker 8: you're seeing that walk back a little bit because we're
Speaker 8: realizing that's exactly what happened, which is it made just
Speaker 8: simple things you buy and made it political. And so
Speaker 8: the conversations we're having are really around are the stances
Speaker 8: that we're taking true to the brand or true to
Speaker 8: certain people that work on the brand. And that's where
Speaker 8: it starts to get a little bit trickier of making
Speaker 8: sure it's like stances you take on specific social issues
Speaker 8: feel like they're part of the ethos of a brand,
Speaker 8: and most importantly, perhaps that you're willing to lose sales.
Speaker 8: And so we've seen you know, Patagonia is a good
Speaker 8: example to brand. Yeah, but as willing to take a stand.
Speaker 3: Oh, go ahead, But well it's a private company and
Speaker 3: you know, every it's fair I think to say that
Speaker 3: a lot of the people who buy Patagonia would be
Speaker 3: aligned with the company's values. So I feel like that's
Speaker 3: not really a risky one. Or but it's exactly it's
Speaker 3: kind of an outlier today. I mean, are there any
Speaker 3: other brands?
Speaker 8: Oh?
Speaker 3: For sure, I mean, are there any other brands you
Speaker 3: can point to?
Speaker 7: Oh? I think, I know.
Speaker 8: I think that's actually the exact argument to be made here,
Speaker 8: which is, when you really are a bigger, mainstream brand,
Speaker 8: there should be a lot of thoughtfulness around exactly what
Speaker 8: it means to take a stand and what good looks
Speaker 8: like and really checking in with you know, am I,
Speaker 8: is there any risk here in terms of alienating the core?
Speaker 8: How do we stay on message? What's the simple brand
Speaker 8: message that we're trying to stay true to here? And
Speaker 8: if we do have any backlash, how do we stay
Speaker 8: true to that message as opposed to getting lost in
Speaker 8: the nu once of it all? But sometimes less is
Speaker 8: more and we're realizing that even though for a while
Speaker 8: consumers we're voicing, oh I want a brand to stand
Speaker 8: up for a specific cause, that maybe that's not actually
Speaker 8: the case and there's more risk there than good Katie.
Speaker 2: Is it safe to say?
Speaker 1: Though?
Speaker 2: When it comes down to it, companies they're going to
Speaker 2: be very careful cautious in terms of who they align with.
Speaker 2: I mean, I think a bud light right the controversy
Speaker 2: over there. I mean, because they don't want to impact,
Speaker 2: especially if they're publicly held, they don't want to impact
Speaker 2: the top line. They don't want to impact sales growth.
Speaker 2: So if they are nervous, they're going to back away exactly.
Speaker 8: And that's why, you know, coming all the way back
Speaker 8: around to fandom, it's really thinking about who your lovers are.
Speaker 8: How do you take the people that are in a
Speaker 8: bit of a lower part of the funnel. So maybe
Speaker 8: they're buying your products on habit or maybe they're a fan,
Speaker 8: but they're not necessarily outspoken and advocating for your brand.
Speaker 8: How do you move them up the funnel little a
Speaker 8: little bit become more of a lifestyle brand. So some
Speaker 8: of those brands you've seen recently are anything from you know,
Speaker 8: car Heart's a good example, Lululemon. You've seen those brands
Speaker 8: start to extend a little bit and feel like they're
Speaker 8: more ingrained in people's lifestyles. So really focusing on that
Speaker 8: upside and then mitigate eating the risks on the other
Speaker 8: side is how you can kind of like almost leverage
Speaker 8: that fandom to operate through this this hazy environment.
Speaker 2: Yeah, when it works, it works really well or ken
Speaker 2: for a company. When it goes south, not so great.
Speaker 2: Katy Thomas, thanks so much. Have a great weekend. She's
Speaker 2: the lead at the Carney Consumer Institute.
Speaker 1: Brother mark.
Speaker 4: A journal.
Speaker 7: How about you let me drive?
Speaker 4: Oh no, no, no, no, he's going to drive, honey, Please,
Speaker 4: I'll do the riding gravels.
Speaker 2: Let's wat I want to try it.
Speaker 5: It's a good question.
Speaker 8: Good try.
Speaker 1: This is the drive to the Globe do me thing
Speaker 1: well by another it on Bloomberg Radio.
Speaker 2: All right, everybody, just about eighteen minutes left in today's
Speaker 2: trading session. Our next guest says investors are living through
Speaker 2: a bull market and that the bull market is just
Speaker 2: hitting its drive.
Speaker 3: Let's drive to the clothes with Lauren San Felipos, senior
Speaker 3: investment strategist for Merrill and a Bank of America Private bank. Lauren,
Speaker 3: good to have you with us right now. You argue
Speaker 3: that investors are living through a bull market, but it's
Speaker 3: hindered by negativity bias. What does that mean?
Speaker 9: Yeah, I think this setup this year is certainly hindered
Speaker 9: by an election year. Right, there's a lot of volatility
Speaker 9: and associated volatility and uncertainty, but there's a lot of
Speaker 9: things to look forward to.
Speaker 7: Right. We have this said pivot that's.
Speaker 9: Being priced in growth is certainly surprising to the upside.
Speaker 7: The set Atlanta.
Speaker 9: Tracker for GDP for this quarter three point two percent.
Speaker 9: So again, surprises to the upside will certainly matter and
Speaker 9: I think carry the market through this year.
Speaker 2: All right, So kind of interesting. It's funny to hear
Speaker 2: what you're saying, and I feel like it builds on
Speaker 2: the guests that we had yesterday Louisnavalier, right, who was
Speaker 2: saying that markets are kind of getting ready to are
Speaker 2: they're partying like it's nineteen ninety ninety, But he wasn't
Speaker 2: saying that they're the same kind of market Lauren having
Speaker 2: said that, in terms of your broad macro view, what
Speaker 2: parts of them are cold you find interesting?
Speaker 9: Yeah, So I think what we're seeing now is still
Speaker 9: this narrow trade at the top, right, but I think
Speaker 9: there are other sectors that are doing less bad as
Speaker 9: compared to last year.
Speaker 7: So look no further than financials.
Speaker 9: They're up seven percent so far this year, Healthcare up
Speaker 9: another six percent. So we are expecting this broadening to
Speaker 9: sort of take place, and I think that certainly will
Speaker 9: include energy even right we can think about getting cyclical
Speaker 9: for the first time in a while, So that's exciting us,
Speaker 9: and we're actually making allocations towards those areas.
Speaker 2: It what can I just ask you though, the energy
Speaker 2: and I'm looking at it, it's yeah, it's kind of
Speaker 2: near the bottom of the pack when you look at
Speaker 2: the major industry groups and the S and P five
Speaker 2: hundred out of eleven, it's a ninth place, still up
Speaker 2: about two point two percent. How much of your interest
Speaker 2: is the consolidation that we're seeing a little bit.
Speaker 9: Well, right, So I think that definitely is a factor
Speaker 9: in it. But I mean we're nowhere near peak oil demand.
Speaker 9: There are such good fundamentals I think in the energy patch,
Speaker 9: and you know that green transition it's definitely been tricky,
Speaker 9: and energy's balances just generally look good. So we think
Speaker 9: that's an attractive sector where we're looking to put.
Speaker 7: Money to work.
Speaker 3: What concerns you right now? What worries you in the team?
Speaker 9: You know, what concerns me is that we're fairly convinced
Speaker 9: of this FED pivot, right and I think the runway
Speaker 9: now two months into the year, I think the runway
Speaker 9: for the March watch list items, we definitely have to
Speaker 9: get confirmation that pmis have bottom.
Speaker 7: So that sort of needs to come through.
Speaker 9: I think next week's job report we're going to be
Speaker 9: looking at pretty carefully right for that other side of
Speaker 9: the mandate. And I just think every print really on
Speaker 9: the runway to June, which we anticipate being the first
Speaker 9: rate cut, we'll be watching very carefully.
Speaker 8: You know.
Speaker 2: It's kind of interesting too, and like I'm saying, kind
Speaker 2: of layering on some of the market conversations that we've
Speaker 2: had around this table, Lauren. But this idea of profits
Speaker 2: going forward, maybe expectations are too low for the next
Speaker 2: couple of quarters. So that provides some good good impetus
Speaker 2: if you will to send shares equity shares higher election years,
Speaker 2: because you tend to have candidates who promise you everything
Speaker 2: tend to ultimately be pretty good. And I think that
Speaker 2: there is one more was it the kind of fed
Speaker 2: being maybe done, kind of put it all together, and
Speaker 2: that basket really provides maybe a very good environment, certainly
Speaker 2: for more equity momentum, which you argue for.
Speaker 9: Yeah, you know, I think it's interesting electioneer. I actually
Speaker 9: think is an opportunity to.
Speaker 7: Be smarter than the rest.
Speaker 9: And I talk to clients all the time who feel
Speaker 9: skittish in this environment, right, But I think the underlying
Speaker 9: idea here is just to stay invested, and actually that
Speaker 9: is smarter than the rest. So I think, you know,
Speaker 9: that's really the main tenant for this year.
Speaker 3: So it's so interesting to hear this from you because
Speaker 3: this is the I mean, this is the conversation that
Speaker 3: it really seems like the conversation is pivoted, and it
Speaker 3: feels like, at least to me, Carroll, that more and
Speaker 3: more of our guests lately have been optimistic than pessimistic
Speaker 3: and something has really shifted. And I don't know in
Speaker 3: recent weeks.
Speaker 2: Well, and I think some of it, Lauren, how much.
Speaker 2: You know, Tim brings up a good point and we
Speaker 2: talk about it all the time here. We got, you know,
Speaker 2: the Fed's perverred inflation gauge, right and what it tells us,
Speaker 2: and you know, it's still you know, not exactly where
Speaker 2: the Fed wants it to be, but we're way down
Speaker 2: from where we were a year ago, and it didn't
Speaker 2: come in hotter than forecast. Having said that, you know,
Speaker 2: this clarity that maybe we're getting when it comes to
Speaker 2: Fed policy, right that the Fed, you know, despite some
Speaker 2: outliers saying we could actually get higher and some more
Speaker 2: rate increases, for the most part, the market is just
Speaker 2: saying it's not if we're going to get rate cuts,
Speaker 2: it's just a matter of when. And that does provide
Speaker 2: some clarity about the outlook.
Speaker 9: Yeah, it's a question of not if. Bo When totally
Speaker 9: agree with you on that, and you know, Core this
Speaker 9: morning headline running at two point four no excuse me,
Speaker 9: headline running at two point four, core running a two
Speaker 9: point eight. What's interesting about that is that actually that's
Speaker 9: where the Fed thought that those measures would be running
Speaker 9: by year end, right, So come March we're gonna have
Speaker 9: to see their update third new rendition.
Speaker 7: Of the summer of economic projections.
Speaker 9: They're doflot. So I think a recalibration, you're right, does
Speaker 9: need to happen. There's a lot of bullishness out there.
Speaker 9: It's actually a little bit tougher to find a bear.
Speaker 3: Right it is, And that's that has me wondering if
Speaker 3: there's a contrarian signal there.
Speaker 9: Yeah, you know, I think perhaps we don't think.
Speaker 7: I mean, we don't think. So we're in this bullish camp.
Speaker 9: I mean, I understand the hesitation when everyone's sort of
Speaker 9: on one side of the bold right, you wonder, right,
Speaker 9: I totally, I totally understand that hesitation. And I can
Speaker 9: remember last year when strategists, economists were all forecasting for
Speaker 9: a recession, right, and that never happened.
Speaker 7: So I'm with you, I'm with you.
Speaker 9: But I do think that earnings basically what you were
Speaker 9: talking about, Carol, eleven percent earnings growth for this year.
Speaker 7: I mean, that's just.
Speaker 9: Gonna that's going to drag the market higher. Right, It
Speaker 9: might be a bit lofty. We a Bank of America
Speaker 9: think we're looking at maybe five or six percent growth
Speaker 9: for this year, but again, that's still pretty good growth
Speaker 9: after that earnings reset that we got left.
Speaker 2: Well on the other thing is Lauren, nothing's ever in
Speaker 2: a vacuum, right, So you're looking at the US as
Speaker 2: a developed market compared to other developed markets around the
Speaker 2: world that are not it's not going as well as
Speaker 2: it is in the United States, So investors who can
Speaker 2: choose anywhere. Having said that, you see any kind of
Speaker 2: overvaluation when you look at the US market, anything getting
Speaker 2: a little bit too hot, that makes you a little
Speaker 2: bit nervous. I think about the Magnificent seven. I think
Speaker 2: about you know, the AI names, the big tech cap names,
Speaker 2: anything that you say it's okay to maybe take some
Speaker 2: money off the table. I hate to use that expression,
Speaker 2: but any areas that you think are a little hot
Speaker 2: and that a little bit of a correction will make
Speaker 2: them more attractive in your view.
Speaker 9: Well, that's an interesting point, right, because international is breaking
Speaker 9: out now to some all time highs you've seen on
Speaker 9: their indices, for some time, and we're definitely getting questions
Speaker 9: from clients now on when international.
Speaker 7: Will come back.
Speaker 9: I think all along though, there's been some quality companies
Speaker 9: to look at, like even in Europe as the example here, right,
Speaker 9: I mean, you're seeing actually a very concentrated trade happening there.
Speaker 9: It's sort of like the Magnificent Seven in Europe. So
Speaker 9: that's certainly playing out. And you know, Europe can be
Speaker 9: in recession and there are multinationals are leveraged to the
Speaker 9: US right and the US consumer, so as a benefit,
Speaker 9: really those.
Speaker 7: Names can work.
Speaker 9: So I think we're seeing a little bit of that
Speaker 9: now and maybe global growth is even bottoming.
Speaker 2: All right, can leave it on that note. Hey, Lauren,
Speaker 2: thanks so much, thanks for dropping by and sharing your
Speaker 2: view with us. Lauren sen Philippo, she's senior investment strategist
Speaker 2: over at Merrill and Bank of America Private Bank, joining
Speaker 2: us in New York City.
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