Speaker 1: This is Bloomberg Business Wait inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: We're gonna stick Matt and myself with the markets, kind
Speaker 2: of continue the conversation that we just started off with
Speaker 2: Scarlett and rom Maine. We do have the FEDS preferred
Speaker 2: measure of US inflation cooling. In May, consumer spending stagnated,
Speaker 2: so justin the economy's main engine is starting to lose
Speaker 2: a momentum. Meantime, Euro Area core inflation reaccelerated in June.
Speaker 2: That's a setback for the ECB. And you've got the
Speaker 2: latest PMI numbers out of China showing that economy's growth
Speaker 2: momentum slowing further. It's a lot of moving parts globally.
Speaker 2: So to our eco chat, we go Bloomberg News International
Speaker 2: Economics and Policy correspondent Michael McKee on the phone in
Speaker 2: New York City and then on zoom in New York City.
Speaker 2: Apollo Global Management Chief economist and partner Torston. It's not
Speaker 2: great to have you two gents here with us might
Speaker 2: kick it off with us. Though when you look at
Speaker 2: the numbers good inflation data, we consumer spending data. I
Speaker 2: don't know what's the really important points here today.
Speaker 3: Well, I think the shocking news is that when you
Speaker 3: raise interest rates, the economy slows. As inflation starts to
Speaker 3: go down. The fan is having an effect. We saw
Speaker 3: personal spending rise just a tenth of eighty percent in
Speaker 3: the month of May. We've seen some weakness in there,
Speaker 3: and we saw reasonably good news. Put it that way.
Speaker 3: On the PCE inflation numbers. The headline number in particular
Speaker 3: up only a tent The core was of three tenths,
Speaker 3: so there's still room to go. But we're starting to
Speaker 3: see some progress be made and that's reflected in the
Speaker 3: numbers that got later in the data. Sentiment numbers. We're
Speaker 3: all up for the University of Michigan, so people are
Speaker 3: feeling a little bit better about the economy.
Speaker 4: Torson, let me bring you in here and also tell
Speaker 4: you I have actually created a slock button on my
Speaker 4: Bloomberg terminal, so I can hit it at any time
Speaker 4: and pull up the charts that you send me. They're
Speaker 4: really invaluable, so I want to just express my thanks
Speaker 4: for that. How do you see the FED right now,
Speaker 4: because it seems to me that everybody we talk to,
Speaker 4: and I'm going to sound like a broken record, but
Speaker 4: they don't believe that Powell is going to hike two
Speaker 4: more times. And especially when we see PCE coming down,
Speaker 4: you mish expectations going out one year coming down pretty significantly.
Speaker 4: It doesn't seem that the Fed is necessarily going to
Speaker 4: have a reason to hike.
Speaker 5: No, you're absolutely right.
Speaker 6: I mean the issue is that the market is certainly
Speaker 6: of the belief that if it will not do much more.
Speaker 6: Strictly speaking, fit fund futures is still pricing one more
Speaker 6: hike in July. But I think the data today and
Speaker 6: to what Mike just said, I mean four point six
Speaker 6: year of a year on COPSE. We were also at
Speaker 6: four point six in December, So, as j Powell highlighted
Speaker 6: at the last press conference, they have not made progress
Speaker 6: as getting inflation.
Speaker 5: Down towards two percent.
Speaker 6: I completely understand there's a lot of issues and debates
Speaker 6: about what's happening to the shelter, the housing and component
Speaker 6: of inflation that may roll off a little bit. But
Speaker 6: now with housing recovering. Well, we may then see some
Speaker 6: reversion later on. So I think that the FED would
Speaker 6: look at coinflation with important part for them and say, well,
Speaker 6: if that's at roughly five or four point six and
Speaker 6: that's where it was six months ago, we just cannot
Speaker 6: stop hiking rates, and we at least need to keep
Speaker 6: rates at these levels, as he said.
Speaker 5: At the press conference, for a couple of years.
Speaker 6: So the bottom line, Matt, to your point is that, yes,
Speaker 6: I understand headline is coming down. You miss short term
Speaker 6: also what's coming down. But the coinflation is not really
Speaker 6: making much progress at this point. It is still moving sideways,
Speaker 6: and I think the fedness telling us that we need
Speaker 6: all to take that more seriously.
Speaker 4: But ken can inflation continue to rise when A, I
Speaker 4: mean consumer expectations are down. B. There's a lot of
Speaker 4: talk about household excess savings being gone. I mean, you
Speaker 4: sent me the FED paper from last week that showed
Speaker 4: they think there are no more excess savings in this system.
Speaker 4: And if we start to lose some jobs, people aren't
Speaker 4: gonna have the money to spend to support inflation.
Speaker 6: Certainly, but as you know, none of that really has
Speaker 6: happened at this point. We're still looking at If I
Speaker 6: look at my Bloomberg terminal and look at what expectations out,
Speaker 6: so non farm payroll next week is two hundred and
Speaker 6: twenty five thousand, that's not a bad number. So if
Speaker 6: that's the case the Fed, we'll look at that and
Speaker 6: say we've got thirty nine.
Speaker 5: Thousand jobs traded in April.
Speaker 6: If we get two hundred and twenty five thousand in
Speaker 6: the month of I'm sorry, the month of June, then
Speaker 6: of course the conclusion would be that the economy is
Speaker 6: just not slowing down as quickly as they would like.
Speaker 5: And with that backdrop, it makes sense that their remain hookers.
Speaker 6: I completely agree that once the label mark starts cracking,
Speaker 6: that meaning falling apart, and we see the un empliner
Speaker 6: rate going up, then they we'll probably change the tone
Speaker 6: and talk about the other side of the dual mandate,
Speaker 6: maybe the labor market.
Speaker 5: But that's not where we are at the moment.
Speaker 6: So it makes complete sense also in CenTra earlier this
Speaker 6: week that they keep on being holkersh.
Speaker 2: I want to bring Mike back into the conversation. Mike,
Speaker 2: while we're talking about us consumption. What's interesting is there
Speaker 2: was our Bloomberg Economics team putting out a story basically
Speaker 2: that the bulls are wrong to take comfort in solid spending. Basically,
Speaker 2: they're saying, how bulls offer and say, hey, there's strong consumption,
Speaker 2: that means things are okay, and that the US economies
Speaker 2: nowhere near a recession. But what they basically say is
Speaker 2: that you don't start to see consumer spending slow down
Speaker 2: until we're actually in a recession, and that some measures
Speaker 2: of consumption are more important, like durable goods weigh in
Speaker 2: here on when you look at some of the personal
Speaker 2: consumption numbers, what's really really important in what the Fed
Speaker 2: probably pays attention to.
Speaker 3: Well, that's paying attention to overall consumer spending, not on
Speaker 3: a data point by data point basis. They want to
Speaker 3: know that the economy is still seeing some strength. Now,
Speaker 3: it's true, as the economics people pointed out, that real
Speaker 3: spending has been lower after you adjust for inflation, it
Speaker 3: has been lower. It hasn't been anything to write all about. Still,
Speaker 3: it's been relatively positive, and we don't know whether it'll
Speaker 3: start coming back or not. Maybe people take a breather,
Speaker 3: but you know, I don't think that the FED is
Speaker 3: too worried at this point about the consumer. They do
Speaker 3: think that spending is going to slow, that things are
Speaker 3: going to go according to their plan essentially, but at
Speaker 3: this point there's nothing that would cause them to think
Speaker 3: that they need to take any other action other than
Speaker 3: what is in the markets. At least one rate move
Speaker 3: and probably too.
Speaker 2: So Mike, just to follow In terms of what's going
Speaker 2: on inside the FED, are they really unanimous in their thought?
Speaker 2: And I bring it up right, anonymous vote for that
Speaker 2: June pause at least that's what came out. But you've
Speaker 2: got you know, Raphael Bostik basically saying we're done. And
Speaker 2: I understand he's, you know, a non voting member, But
Speaker 2: is there more tension inside the FED that maybe says
Speaker 2: things could play out differently depending on the data come
Speaker 2: the next couple of meetings.
Speaker 3: Sure there are people who are on the much more
Speaker 3: dubbish side. One of the more dubbish people, Austin Gouldsby,
Speaker 3: has deferred his decision on what he's going to do,
Speaker 3: saying he hasn't made up his mind yet, but he
Speaker 3: leans towards the dubtish side. And I think they could
Speaker 3: have a split vote if we see inflation staying where
Speaker 3: it is, or coming down just a little bit but
Speaker 3: not enough, and consumer spending remaining strong enough. Because there
Speaker 3: are others Mickey Bowman, who has made a lot of
Speaker 3: comments about the economy being too strong and more needs
Speaker 3: to be done. We haven't seen a descent from a
Speaker 3: board member since two thousand and five, but one could
Speaker 3: imagine that she would and possibly some others.
Speaker 4: Hey, Torson, I want to ask a question that I've
Speaker 4: got coming in from a listener. What level and unemployment
Speaker 4: breaks the consumer? We were talking about that and the
Speaker 4: broader economy. A higher unemployment means stress in credit card,
Speaker 4: real estate services spending, and we've seen certainly credit card
Speaker 4: usage jump and delinquencies start to rise as well, even
Speaker 4: before student loan debt kicks back in.
Speaker 6: Absolutely and that so just on your final point, absolutely,
Speaker 6: what's really unique is to think about it. The unemployer
Speaker 6: rate is essentially still at the lowest level in fifty years,
Speaker 6: and we are already seeing delinquagy rates going up for
Speaker 6: credit cards, for auto loans, We're beginning to see the
Speaker 6: weekly data for bankruptcies for companies also beginning to move high.
Speaker 6: So why all these things already starting to slow down
Speaker 6: even before the unemployer rate it has moved up. So
Speaker 6: I would take all that combined and answer your question
Speaker 6: by saying that, well, at least the feed says that
Speaker 6: in the long run, the unemployerent rate that we need
Speaker 6: to go above is roughly four and a half, and
Speaker 6: give it with we have three point seven. That means
Speaker 6: that we have several months ahead of us where the
Speaker 6: labor market needs to weaken before the event will begin
Speaker 6: to say Okay, enough is enough.
Speaker 7: At J.
Speaker 6: Powell again in Central and Portugal earlier this week very
Speaker 6: clearly said we need the label market to solve in
Speaker 6: which is another way of saying we need the unemployer
Speaker 6: rate to go up, and we have not really seen
Speaker 6: the unplroner rate go up meaningfully. And well that at least,
Speaker 6: in my view, one percentage point from here before we'll
Speaker 6: begin to see a more meaningful slow down in the
Speaker 6: broaday economy.
Speaker 2: All right, guys, we got to run. Thank you so
Speaker 2: much Tristan Slock, chief economist and partner over at Apollo
Speaker 2: Global Management on the New York City, and our thanks
Speaker 2: of course to our own Michael McKee, international economics and
Speaker 2: policy correspondent at Bloomberg joining us on the phone in
Speaker 2: New York City.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: I want to get to some other news that certainly
Speaker 2: caught my attention on the Bloomberg today, the SEC pushing
Speaker 2: back against a wave of filings by asset managers to
Speaker 2: launch the first US exchange traded fun ETF that invest
Speaker 2: directly in bitcoin, Matt. They said, the applications lack clarity
Speaker 2: and further information is needed before they are considered for approval.
Speaker 4: Yes, but they're going to get that. I think I
Speaker 4: saw that NASDAK is going to go back as well
Speaker 4: as the CBO. They're going to go back and refile
Speaker 4: answer the questions that the SEC had. I am really
Speaker 4: stumped as to the problems that the SEC has with
Speaker 4: a spot bitcoin ETF, because bitcoin has been acknowledged, even
Speaker 4: by Gary Gensler. It's a commodity, and there are a
Speaker 4: lot of ETFs that hold commodities, and there are a
Speaker 4: lot of commodities that are volatile, just like Bitcoin is volatile,
Speaker 4: so I'm thinking back, if anybody can handle uh handle it,
Speaker 4: Blackrock and Fidelity probably could.
Speaker 2: One would hope. So let's see what Timothy Tully has
Speaker 2: to say. He's see you at the digital asset wallet
Speaker 2: Xelcore Technologies. He's on Zoom from Bethany Beach, Delaware. Tim,
Speaker 2: good to have you back. It's been a few months here,
Speaker 2: so what do you make of this?
Speaker 7: Glad to be here. First of all, thank you Busy Friday. Yes. Interesting.
Speaker 7: You know two days.
Speaker 8: Ago we were talking about the two of the world's
Speaker 8: largest asset managers fifteen trillion dollars in assets filing for
Speaker 8: spot ets, right, so or the equivalent of five apples
Speaker 8: as of today.
Speaker 3: Right.
Speaker 8: And so today the SEC comes back and says, pushes
Speaker 8: back quickly. By the way, this pretty quick response under
Speaker 8: really under ten days to the Blackrock filing, saying lack
Speaker 8: of information and lack of clarity, and they need more information,
Speaker 8: specifically some of the surveillance monitoring that Blackrock and Fideli
Speaker 8: had proposed. So I think that's going to get ironed out.
Speaker 8: I actually think the quick response here is a good thing.
Speaker 8: I do think it's ironic that the SEC is saying
Speaker 8: that their quick read says this has a lack of clarity,
Speaker 8: it's choking with irony.
Speaker 4: But I think really is It's almost like Gary Gensler's joking.
Speaker 4: Is this some kind of satire?
Speaker 8: It certainly feels that way, doesn't it. But look, I
Speaker 8: think the reality is I think we all knew who
Speaker 8: the CEO of Blackrock is. He's an aggressive democrat, He's
Speaker 8: plugged into what's going on. BlackRock's batting average, I think
Speaker 8: is five hundred and seventy five to one for their
Speaker 8: ETF filings. They're going to win this one over time.
Speaker 8: The question is when it's going to happen. And I
Speaker 8: think for those of us in the crypto world, we
Speaker 8: kind of mixed feelings, right because this is a really
Speaker 8: good thing, particularly for the mass adoption crowd who sees
Speaker 8: two bell Weather companies that are going to offer access
Speaker 8: to bitcoin action in particular, and so I think that's great.
Speaker 8: I think that's great for crypto. It's going to be
Speaker 8: great for the broader crypto market. I think for me,
Speaker 8: as somebody who's been in traditional finance for a long time,
Speaker 8: the genesis for ETFs was to give everyone access to
Speaker 8: commodities in particular, think about gold. Your average human couldn't
Speaker 8: store and and and hold gold. It was it's impossible
Speaker 8: to do that. So the ETFs were created. Blockchain technology
Speaker 8: is specifically designed to address that particular issue. So I
Speaker 8: think this is good short, short term, long term. I
Speaker 8: hope we let the technology do its thing.
Speaker 7: But the other thing I think, and I'm sure many
Speaker 7: I know many people have cited.
Speaker 8: This in the news, but bitcoin holders are and this
Speaker 8: is I'm this has come from somebody who's been in
Speaker 8: the equity world's most of his career, right. Bitcoin holders
Speaker 8: are some of the longest holders, three to five years
Speaker 8: of holding bitcoin. So you've got to fix applot have assets,
Speaker 8: you've got a long holding, long hands holding bitcoin, and
Speaker 8: then you've got these huge players coming in the market
Speaker 8: trying to buy up apply. Price can only go one
Speaker 8: direction when that happens, right, So it's going to be
Speaker 8: really interesting about the timing how far in front of
Speaker 8: the timing the market is. But I think we're going
Speaker 8: to see some really positive price action a bitcoin over
Speaker 8: time very quickly.
Speaker 4: No, you've got to have the trust, you've got to
Speaker 4: have the belief in the asset, right, And it does
Speaker 4: look like we've had it for ten years and it's
Speaker 4: built up. Right now or today, we hit an inter
Speaker 4: day high on bitcoin as well. It was over thirty
Speaker 4: one thousand dollars. Hadn't been that high since June seventh.
Speaker 4: I think of last year and recall that it dropped
Speaker 4: precipitously in the period a couple weeks last June. Right,
Speaker 4: I wonder about you know, my take on the crisis
Speaker 4: that we saw with FTX and the other exchange was
Speaker 4: kind of serves you right for for keeping your bitcoin
Speaker 4: in their centralized exchange, Like, that's not the point of
Speaker 4: this asset. You're supposed to hold it yourself at home,
Speaker 4: you know, maybe or wherever you like. But it's very
Speaker 4: easy to put in cold storage and keep it safe.
Speaker 5: Right.
Speaker 7: Absolutely.
Speaker 4: I think we're going to see non custodial exchanges really
Speaker 4: flourish after this.
Speaker 7: Couldn't agree with you more, Matt.
Speaker 8: Obviously, my company is in the space of helping people
Speaker 8: individuals buystorm manage their own crypto.
Speaker 7: So I think.
Speaker 4: Your product, by the way, what is your what is
Speaker 4: your wallet?
Speaker 7: So we have a non custodio solution.
Speaker 8: We've been around for four or five years, multiplatforms, so
Speaker 8: you can get on desktop and mobile and basically every
Speaker 8: platform that you can think of. We support over seventy blockchains.
Speaker 8: So we believe in the ethos of whatever you want
Speaker 8: to hold, you can hold it on our wallet. And
Speaker 8: we believe digital assets are here to stay. And we're
Speaker 8: spending a lot of time talking about crypto finance, but
Speaker 8: we really believe that crypto technology and all of insurance
Speaker 8: and real estate and tokenized assets like securities and other things,
Speaker 8: all those things will be digital assets that you'll want
Speaker 8: to store in custody yourself, and our solution will help
Speaker 8: you do that.
Speaker 9: Well.
Speaker 4: Wall Street definitely is with you on most of that,
Speaker 4: probably not the custody part, but clearly even the big
Speaker 4: banks know it's all going towards tokenization.
Speaker 9: Absolutely.
Speaker 2: Yeah, I get that part of it. I guess I
Speaker 2: just still wonder that we're still figuring it out exactly
Speaker 2: what cryptocurrencies are.
Speaker 4: It's only been since two thousand and nine, Carol, I.
Speaker 2: Know, but still I think, considering what we saw over
Speaker 2: the last year, I think regulators are right to be
Speaker 2: cautious as they move forward.
Speaker 4: Yeah, well, what do you think about that, Timothy? I
Speaker 4: mean cautious. I get it, just seems like a little
Speaker 4: bit more than that and just.
Speaker 2: Got about twenty five to thirty seconds.
Speaker 8: Yeah, it absolutely feels like there's a lot more going
Speaker 8: on there. I think everybody that's in the space believes
Speaker 8: we need to have regulation, but we need clarity ourselves, right,
Speaker 8: So what we're getting is a lack of clarity from
Speaker 8: the administration and the SEC. And what we're seeing is
Speaker 8: a lot of countries outside of the US being more
Speaker 8: aggressive here. We want to be the innovation center for
Speaker 8: the world. We're going to need to get our stuff
Speaker 8: together here to make sure that people want to stay
Speaker 8: and develop in the United States.
Speaker 2: All right, Timothy, thanks so much. Have a great weekend
Speaker 2: and a great holiday. Timothy Tully, CEO at the Digital
Speaker 2: asset wallet Zelcore Technologies. Joining us on zoom from Bethany Beach, Delaware.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 1: Just Say Alexa, playing Bloomberg eleven.
Speaker 2: Thirty Well women hold a third of P five hundred
Speaker 2: board seats for the first time ever after scores of
Speaker 2: men gave up their directorships in May, a long elusive
Speaker 2: goal that's been touted as a baseline for lasting change.
Speaker 2: The threshold was pastoring, the peak season for annual meetings
Speaker 2: when many directors retire, men Matt vacating four times as
Speaker 2: many seats than women. And this was according to a
Speaker 2: recent data compiled by our team here at Bloomberg, reported
Speaker 2: out by her Jeff Green, So we've seen a shift.
Speaker 2: What's the matter?
Speaker 6: Nothing?
Speaker 2: Oh okay, you look, that's just my face perplexed. All right, well,
Speaker 2: let's get to you. We've a perfect guest. Carolyn Everson
Speaker 2: is board member of the not Worldwide, the global wedding marketplace.
Speaker 2: They operate in sixteen countries. She's also board member at
Speaker 2: the Walt Disney Company. Art under Armour. She is the president,
Speaker 2: a former president of Instacart, former VP of Global Business
Speaker 2: over at Meta, former corporate VP at Microsoft. We just
Speaker 2: wanted to lay it out and she joins us on Zoom.
Speaker 2: You have an incredible, incredible background. Carolyn, Thank you so
Speaker 2: much for joining us.
Speaker 9: Thank you for having me.
Speaker 2: It's great to be on well and I want to
Speaker 2: start with your background, because what is it. First of all,
Speaker 2: we're going to get into corporate boards and we want
Speaker 2: to talk about the business of the knot. But you know,
Speaker 2: the media world, social media or the evolving traditional media world.
Speaker 2: What do you find interesting and do you think should
Speaker 2: be watched by our audience.
Speaker 10: Well, I think the thing that is constant is change,
Speaker 10: and what I would say to the audience is lean
Speaker 10: into the change as much as possible, because the consumer
Speaker 10: in many ways is moving faster than even companies are.
Speaker 10: And this is there's a tremendous need for transformation still
Speaker 10: in twenty twenty three, and that was even prior to
Speaker 10: the advent of AI that everyone is talking about. There
Speaker 10: were still many traditional companies that had to transform everything
Speaker 10: that they were doing. And now AI is further putting
Speaker 10: a further find point on that and accelerating change even faster.
Speaker 4: So I mean, at the knot, does any change? Is
Speaker 4: any change still necessary? It seems like the business is
Speaker 4: very digital and very forward looking in terms of the
Speaker 4: way weddings are planned. I happen to know because I
Speaker 4: used the not to plan my wedding a couple of
Speaker 4: years ago.
Speaker 10: Oh well, thank you, thank you.
Speaker 9: Very much.
Speaker 10: Well, look, the let me take a step back and
Speaker 10: just sort of set the context for the audience. The
Speaker 10: wedding industry is a two hundred and fifty billion dollar industry.
Speaker 10: It is extremely robust. Twenty twenty two was considered sort
Speaker 10: of the super Bowl of weddings because there was such
Speaker 10: pent up demand. We had two point six million I
Speaker 10: dos in the United States alone this year'll it'll go
Speaker 10: back to pre COVID levels at about two point one
Speaker 10: million and then not have achieved its highest revenue and
Speaker 10: its history in twenty twenty two with four hundred million
Speaker 10: dollars in revenue, and it's been profitable for ten years.
Speaker 10: So it is a very strong business. And yet one
Speaker 10: of the reasons why I joined the board is I
Speaker 10: think that we are going to go through a pretty
Speaker 10: massive transformation. When you think about the advent of AI
Speaker 10: and what it can do for wedding planning and allowing
Speaker 10: couples to speak in natural language and have them not
Speaker 10: be a real assistant to help them with their planning,
Speaker 10: I think it's going to be a phenomenal user experience.
Speaker 10: I think the data that we have to help our
Speaker 10: eight hundred and fifty thousand vendors to serve their customers better.
Speaker 10: Is just going to get stronger and stronger as we
Speaker 10: utilize AI in our product development. So I'm very bullish
Speaker 10: about the opportunity. We currently operate in sixteen countries, We've
Speaker 10: got a lot of growth globally, and also it's a
Speaker 10: very nascent advertising business, and having been part of the
Speaker 10: team that helped build Meta's advertising business, I think there
Speaker 10: is a pretty significant opportunity for us to do that
Speaker 10: at the not What do.
Speaker 2: You think though, in terms of you know, it's interesting
Speaker 2: that you went there. In terms of advertising and Meta,
Speaker 2: the evolution of ads maybe as a result of AI,
Speaker 2: Is it going to change dramatically? Should we all be
Speaker 2: kind of ready for something very different?
Speaker 11: I think so.
Speaker 10: I mean I'm already seeing significant change. So when you
Speaker 10: think about the scale at which companies do advertising these
Speaker 10: days across digital platforms, AI has actually been utilized by
Speaker 10: companies like Meta and Google for years to get the
Speaker 10: right ad to the right person at the right time.
Speaker 10: So it's not like those companies just woke up and
Speaker 10: at the end of November November thirtieth, when the world
Speaker 10: woke up to chat GPT, AI is being utilized in
Speaker 10: tech companies for many years to make the advertising smarter.
Speaker 10: What I think you're going to see a big difference
Speaker 10: is in the creative development. What we're seeing now is
Speaker 10: using generative AI, marketers can literally put together thousands, if
Speaker 10: not hundreds of thousands of varieties of campaigns in a
Speaker 10: much more efficient and effective way than not has been
Speaker 10: experimenting with some of that. Marketing has already seen a
Speaker 10: twenty percent lift in conversion. So I think that's going
Speaker 10: to be a pretty transformational trend in digital advertising.
Speaker 2: You talk about transformational and boards are transforming. You are
Speaker 2: part of that, and I am curious though, when you
Speaker 2: in a week where we saw Supreme Court rulings dealing
Speaker 2: with affirmative action, you rejecting the use of race in
Speaker 2: university admissions. We've been talking about, well, how does that
Speaker 2: maybe impact ultimately the business community. What are the conversations
Speaker 2: that boards or companies are having as we see these changes.
Speaker 10: My experience through all the companies that I have the
Speaker 10: privilege of serving on is that they have an unwavering
Speaker 10: commitment to the principles of diversity, equity, and inclusion, and
Speaker 10: that is not going to change. I think the goal
Speaker 10: is to have boardrooms represent a diverse set of individuals,
Speaker 10: because that's the customer base that these companies are representing.
Speaker 10: And diversity comes in many many forms. It can come
Speaker 10: certainly and ender and race, sexual orientation, but geography plays
Speaker 10: a factor in some of the board's experience. You know,
Speaker 10: you have to have certain levels of experience to be
Speaker 10: on the audit committee, for example. And so each search
Speaker 10: that I have been part of, either for myself or
Speaker 10: in looking at new colleagues that could potentially join the
Speaker 10: boards that I'm on, there are a lot of criteria
Speaker 10: that the Board of Directors goes through and really thinks
Speaker 10: about what skill set does the boardroom need in order
Speaker 10: to help advise management, and that can span many, many
Speaker 10: different areas. And I think that there is an unwavering
Speaker 10: commitment to making sure that boardrooms stay diverse, become more diverse,
Speaker 10: but with a big capital D, because diversity of thought
Speaker 10: can mean many different things.
Speaker 2: Well, we've run out of time. I hope you will
Speaker 2: come back because there's many, many more things I would
Speaker 2: love to talk with you about, because I know you
Speaker 2: co founded the Gun Safety Alliance and I'm curious about
Speaker 2: which you work with business leaders and citizens to prevent
Speaker 2: unnecessary gun deaths in the United States. But I do
Speaker 2: would love to dig deeper into kind of the role
Speaker 2: of corporate activism, if you will so, Carolyn, I hope
Speaker 2: you'll come back soon. Carolyn Everson, board member at the
Speaker 2: not Worldwide, also on the Disney board and more joining
Speaker 2: us on Bloomberg brother.
Speaker 4: Marc a journal How about you let me drive?
Speaker 8: Oh no, no, no, no, who's going to drive?
Speaker 3: Honey?
Speaker 5: Please, I'll do the gravel.
Speaker 7: Let's mate, I want to dry.
Speaker 8: It's a good question.
Speaker 5: This is the drive to the Globes dot com.
Speaker 9: I think we'll buy yold.
Speaker 1: It on Bloomberg Radio.
Speaker 2: All right, everybody, we've got just about eighteen minutes left
Speaker 2: in today's trading session, getting ready to wrap up the day,
Speaker 2: the week, the quarter, the half, and the half. Yes, yeah,
Speaker 2: I forgot the half.
Speaker 4: Well you know I would normally forget the half too,
Speaker 4: except for that stat at the NaSTA has had the
Speaker 4: best half since well ever, it has ever the best
Speaker 4: first half ever, in the best six months since nineteen
Speaker 4: ninety nine. But it's just I didn't even like realize
Speaker 4: this was going to happen until this morning.
Speaker 2: You're not alone. Many people got the call on the
Speaker 2: markets wrong, and I thought it was interesting what Scarlett
Speaker 2: said earlier that here we are going into essentially a
Speaker 2: holiday weekend, right, it's going to be quiet. It's already
Speaker 2: kind of gotten quiet, and people are buying into this strille.
Speaker 2: I think volume though, I feel like it was a
Speaker 2: little bit lighter, but nonetheless, let's see what Ryan Kelly
Speaker 2: has to say. He's chief investment officer and portfolio manager
Speaker 2: of at Hennessee Funds, co manager of the Hennessy Gas
Speaker 2: Utility Fund MidCap thirty as well, which has beaten nearly
Speaker 2: all of its peers for five years and running, returning
Speaker 2: on average about eleven percent annually, and the Hennessy Gas
Speaker 2: Utility Fund beating most of its peers too in the
Speaker 2: past year and month, up nearly few percent in the
Speaker 2: past one month. He joins us on Zoom from Chapel Hill,
Speaker 2: North Carolina. Hey, Ryan, nice to have you back. It's
Speaker 2: been a little while this rally, especially from a handful
Speaker 2: of the big megacap tech names and the NAZACA performance.
Speaker 2: Does it make sense to you, Well, I.
Speaker 11: Mean, you know, you have to look at where we
Speaker 11: are over two years and with you know, the Nasdaq
Speaker 11: being down so significantly last year and then roaring back
Speaker 11: this year. I mean, overall, it's it's in a more
Speaker 11: normal range, I guess i'd say, so, does it make sense?
Speaker 11: I mean it seems a little bit fast for this year,
Speaker 11: a little bit, a little bit aggressive. It's been driven
Speaker 11: by a lot of you know, future promises, the future
Speaker 11: promise of AI.
Speaker 9: You know, that's part of it.
Speaker 11: Although I really enjoy what you said earlier about your
Speaker 11: iPhone being basically utility, because that's true.
Speaker 9: I mean it comes to Apple. They're not really driven
Speaker 9: by the whole AI crazy.
Speaker 11: They just continue to do, you know, two hundred billion
Speaker 11: dollars in sales every year, and what are you going
Speaker 11: to do with that?
Speaker 9: It's pretty amazing. So I don't think it's overdone.
Speaker 11: I think that probably in the second half the year,
Speaker 11: you might see, you know, slow down in some of
Speaker 11: those sectors that have really done exceptionally well. We've seen
Speaker 11: consumers do very well. Consumer discretionary has has really outperformed
Speaker 11: this year, as well as the large cap tech names.
Speaker 11: It's a it's a reversion of the meme, and I
Speaker 11: think that we probably would not expect a similar kind
Speaker 11: of experience next half of the year, but again over
Speaker 11: two years, it's a little.
Speaker 9: Bit more normal over time.
Speaker 4: Yes, I want to say thank you for adding that,
Speaker 4: for bringing us down to earth, because Rian, I hadn't
Speaker 4: really even thought about that all day. I've just been
Speaker 4: wrapped up in the hype of Wow, what an incredible
Speaker 4: half that was, and wow, Apple's a three trillion dollar company,
Speaker 4: and you know, we're on a tear, you know, even
Speaker 4: into just today's trade. But you know, the high we
Speaker 4: shouldn't forget, for the for the Nasdaq one hundred at least,
Speaker 4: was at the end of twenty twenty one, and we
Speaker 4: came really clattering down last year. It was an awful year,
Speaker 4: and anybody who was even holding the cues, you know,
Speaker 4: took a huge hit last year compared to you know,
Speaker 4: the game that we've seen in the first half. They
Speaker 4: haven't come back from that. So I think it's great
Speaker 4: to get that perspective. What do you think happens as well,
Speaker 4: when you know, people start to rotate into fixed income,
Speaker 4: that's got to be a move, right, especially with yields
Speaker 4: at this level. If you think the Fed's done, it
Speaker 4: looks like people are making that move, some of them today.
Speaker 11: It's true, I mean, it's fixed income, it's high yields
Speaker 11: on anything that has a yield. In other words, we've
Speaker 11: seen that pretty significantly all last year and then dramatically
Speaker 11: in the first quarter of this year, where people have
Speaker 11: been pulling money from the banks and moving and elsewhere.
Speaker 11: Now you know, some of it's gone into the equity markets,
Speaker 11: a lot of it's probably gone into you know.
Speaker 9: Higher yielding money market funds.
Speaker 11: And when you get rates up at that level, and
Speaker 11: the long term return for say the Dow over one
Speaker 11: hundred and forty years, one hundred and four years, I
Speaker 11: should say, is close to ten percent, and you can
Speaker 11: get five and a half percent with very little risk,
Speaker 11: you know, it's it's compelling. But you know, overall, I
Speaker 11: think that that money rotation is happening. But at the end,
Speaker 11: but on the other hand, that's really what's also driving
Speaker 11: a lot of this outperformance of the stock market in general,
Speaker 11: and that's cash.
Speaker 9: People have a lot of cash to invest.
Speaker 11: Still, a lot of people who put their money in
Speaker 11: the bank to do nothing with it for many years
Speaker 11: now have opportunities to invest in equities or in fixed income,
Speaker 11: and you know, cash on balance sheets of companies that
Speaker 11: makes the companies stronger, they can reinvest in their own
Speaker 11: stock through buybacks, they can give back higher dividends, so
Speaker 11: you know, cash continues to drive this higher as well.
Speaker 2: All right, what's not really driving the market higher at
Speaker 2: least here in twenty twenty three are the energy names.
Speaker 2: It's the worst major industry group or worst performing groups
Speaker 2: major industry group in the S and P five hundred
Speaker 2: out of eleven. It's down about seven percent. Now, mind you,
Speaker 2: it's after two blockbuster years where there was way out performance.
Speaker 2: But you guys have a fun where you have to
Speaker 2: think about utilities, gas utility in particular.
Speaker 6: So what is it?
Speaker 2: Where are you finding opportunities there?
Speaker 11: Sure, well, you know we're finding opportunities in utilities because
Speaker 11: it's actually not as much well it's not really dependent
Speaker 11: on the price of natural gas or the price of oil,
Speaker 11: or the price of whatever input there is to create
Speaker 11: the energy. You know, these utilities like your iPhone, you
Speaker 11: use it every day.
Speaker 9: You have to use the energy.
Speaker 3: You know you need that.
Speaker 11: And you know, utilities make money by basically moving in
Speaker 11: this case natural gas through their pipelines to the end customer.
Speaker 9: So you know, there's actually believe it or not.
Speaker 11: A pretty significant opportunity in utilities. I understand, utilities are defensives,
Speaker 11: utilities paid dividend, they have that you know, nice downside protection.
Speaker 9: But if you look forward.
Speaker 11: Over you know, many years and even many decades, this
Speaker 11: push towards the electrification of everything, towards a cleaner energy
Speaker 11: future means that we need an incredible build out of
Speaker 11: the utility sector. And you know, in our fund, we
Speaker 11: have about fifty percent of the fund is invested in
Speaker 11: electric and multi utilities, which have both you know, some
Speaker 11: natural gas components.
Speaker 9: Even the natural gas utilities.
Speaker 11: There's a lot of opportunity there as well as they
Speaker 11: continue to develop hydrogen, you know, a renewable natural gas,
Speaker 11: et cetera. But this really, you know, and I have
Speaker 11: to give credit to some of your analysts at Bloomberg.
Speaker 11: They did an incredible job, especially in the Bloomberg New
Speaker 11: Energy Finance Division. I'm going to read some of these numbers.
Speaker 11: It's going to take one hundred and ninety six trillion
Speaker 11: dollars by twenty fifty to reach the goals that we
Speaker 11: need to get. It's going to take you know, clean
Speaker 11: energy is eight gigawatts of capacity now it needs to
Speaker 11: go to forty you know you need to add sixty
Speaker 11: nine million miles of cable. So the way utilities work
Speaker 11: are when they invest in their business, when they invest
Speaker 11: in Radom r Grid, that team's growth for the company
Speaker 11: and that BILS earning over line.
Speaker 2: Well, breach, get your perspective and also bring us down
Speaker 2: to Eric Obecca the run up that we've seen, certainly
Speaker 2: on the tech side of things. Tech stocs, Ryan Kelly,
Speaker 2: have a good weekend at Hennessey Funds.
Speaker 5: This is Bloomberg.
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