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Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you.

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Speaker 1: Along with my co host Lisa Brahma Waits. Each day

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Speaker 1: we bring you the most noteworthy and useful interviews for

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Speaker 1: you and your money. Whether at the grocery store or

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Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple

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Speaker 1: podcast or wherever you listen to podcasts, as well as

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Speaker 1: at Bloomberg dot com. Everyone hates this rally. I think

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Speaker 1: it's fair to say this is probably one of the

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Speaker 1: most hated rallies ever, although there are a growing number

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Speaker 1: of people who say that the US equities can continue

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Speaker 1: to melt up. Here with us to talk about his

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Speaker 1: mid year outlook and what investors are looking to do

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Speaker 1: heading into the second half is Chris Heisie. He's chief

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Speaker 1: investment officer at Bank of America Global Wealth and Investment Management,

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Speaker 1: And I want to start with this sort of hatred

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Speaker 1: of this rally. There is a feeling that there's no

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Speaker 1: way that after more than ten years of an incredible

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Speaker 1: run and a slow growing economy, that this market can

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Speaker 1: just keep chugging along for another year. Do you think

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Speaker 1: that that is the most likely outcome that we will

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Speaker 1: just continue to chug along for another year. Yeah, that's

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Speaker 1: the most likely outcome in our view for a variety

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Speaker 1: of reasons, but I think the biggest one is the

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Speaker 1: fact that you hit it right off at the top there,

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Speaker 1: which is the barish sentiment if you if you talk

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Speaker 1: to people, uh, they feel like you know. Some of

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Speaker 1: this rally, at least the latest portion of this rally

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Speaker 1: is justified because of a stalemate on the trade front,

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Speaker 1: no further tariffs that were about to hit UH, an

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Speaker 1: easier FED, etcetera. But in action, the private investor is

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Speaker 1: simply not in the market as much as they normally

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Speaker 1: would be. That's point number one. Point number two is

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Speaker 1: is when you get a FED that goes from literally

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Speaker 1: hiking in December to an about face a big pivot

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Speaker 1: two months later, starting in January that on that panel

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Speaker 1: that share Powell did, and then now with the market

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Speaker 1: suggesting at least three cuts between now and the end

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Speaker 1: of the first quarter, that allows multiples to go up

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Speaker 1: climb the wall of worry, and if the risks remain muted,

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Speaker 1: that's where you get a pretty powerful surge between now

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Speaker 1: and the end of the year. Even though we are

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Speaker 1: pretty aggressively off of the lows um late last year. So, Chris,

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Speaker 1: we're coming into the earnings period for the June quarter.

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Speaker 1: How important is the near term earnings outlook for this market?

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Speaker 1: You know it's uh. I think it's the tail of

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Speaker 1: the tape. At this point. You've got a dual track

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Speaker 1: economy UH, led by the U S consumer in the US,

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Speaker 1: and you've got manufacturing and trade that is uh, the

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Speaker 1: leverage of global economies. And you're gonna get a mixed

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Speaker 1: bag in our view coming out of the industrial space

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Speaker 1: versus the financials, versus tech versus retail or consumer discretionary.

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Speaker 1: And when you roll it all up, the earnings numbers

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Speaker 1: that are coming out now should be a small beat.

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Speaker 1: Because of the low bar, a small beat is likely

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Speaker 1: to support the market. Uh. And then it's gonna come

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Speaker 1: down to guidance. It's all going to be guidance. Guidance

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Speaker 1: guidance on a go forward basis. UH. So we can

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Speaker 1: actually determine whether or not we're just bottoming out or

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Speaker 1: are we actually going to get some growth in the

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Speaker 1: second half. So, Chris, if you do think that we're

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Speaker 1: going to chug along here on the US equity side

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Speaker 1: for another twelve months, or so I'm wondering what that

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Speaker 1: means for bonds because there has been something of a

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Speaker 1: divergence with bond yields going lower and lower, typically a

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Speaker 1: bearish sign, while equity markets continue to climb higher. And

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Speaker 1: do you think that this is an incompatible reality that

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Speaker 1: has to at one point, at some point mean that

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Speaker 1: bonds are going to experience losses or stocks will? You know?

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Speaker 1: It's a great point, because I think what we have

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Speaker 1: to figure out is how long this can actually last

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Speaker 1: where bond yields do at least remain close to record

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Speaker 1: low levels or creep even lower from here with equities

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Speaker 1: going up. Part of that is the fact that the

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Speaker 1: multiple is going up as discount rates go down. But

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Speaker 1: most importantly it's a flow argument. At this point, I

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Speaker 1: think we've had the greatest divergence and flows uh probably

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Speaker 1: ever if you think about close to four billion difference

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Speaker 1: two into fixed income flows UH and two under billion

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Speaker 1: out of equities, even though we're at all time highs

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Speaker 1: on the equity side. So from our perspective, the big

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Speaker 1: reason for the creep lower and yields has a lot

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Speaker 1: to do with demographics around the world and the need

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Speaker 1: for any kind of a yield. Given the fact that

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Speaker 1: of the world's bond markets have a negative carrier negative

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Speaker 1: yield to them, which is close to twelve twelve to

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Speaker 1: thirteen trillion, people called, you know, Tina, there is no alternative.

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Speaker 1: I don't really like to use that phrase because there's

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Speaker 1: plenty of alternatives. But at the end of the day,

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Speaker 1: if you can get a dividend yield um potential total

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Speaker 1: return that's three times the tenure yield, UH, that's an

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Speaker 1: attractive equity market backdrop on an absolute and relative basis. So, Chris,

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Speaker 1: want to get your sense of valuation in the equity markets.

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Speaker 1: We've had this big run up, and equity markets this year,

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Speaker 1: earnings estimates for the most part have not risen. What

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Speaker 1: is your sense of where we are in terms of

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Speaker 1: valuation right here? It seems like we're borrowing a little

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Speaker 1: bit from from next year or borrowing a little bit

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Speaker 1: from the future in terms of returns, And that tends

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Speaker 1: to happen if the FED makes an about face switch,

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Speaker 1: and it's because there's the potential to create a soft landing.

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Speaker 1: So the FED is seems to be doing. They seem

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Speaker 1: to be trying to right size the curve. The yield curve.

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Speaker 1: If that's the case, which is what we believe, and

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Speaker 1: it's not a situation where the fed UM is raising

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Speaker 1: rates last year to stop inflation, because that's simply not

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Speaker 1: in the cards. But if they have to right size

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Speaker 1: the curve and that is likely to go on, then

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Speaker 1: you get earnings following later. You get multiple expansion first,

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Speaker 1: liquidity first, multiple expansion second, and then earnings follow And

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Speaker 1: that seems to be what UM investors that are coming

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Speaker 1: back into the market are telling us. Where we think

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Speaker 1: earnings are gonna come. Now, that's where comes into play.

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Speaker 1: Where if earnings don't show four or five six percent

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Speaker 1: earnings growth, that's where the market's got in ahead of itself. So, Chris,

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Speaker 1: if you do think that perhaps we're building in some

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Speaker 1: gains now, are borrowing from next year, what kind of

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Speaker 1: return can people expect to other equity investments over the

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Speaker 1: next twelve months. I think if you you put it well,

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Speaker 1: if you look away from the calendar. I know everyone's

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Speaker 1: patterned on the calendar. They ask you about year in

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Speaker 1: price targets, etcetera. But if we just look at a

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Speaker 1: rolling twelve month basis, we think earnings growth of around

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Speaker 1: five percent between now and that twelve month rolling basis,

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Speaker 1: plus the fact that yields should remain low, if not lower,

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Speaker 1: from here, that should push the multiple up another point.

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Speaker 1: And if we get five percent earnings growth, that gets

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Speaker 1: you still double digits low double digit return potential in

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Speaker 1: the next twelve months. So, Chris, one of the things

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Speaker 1: we've heard from some investors is this expanding their search

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Speaker 1: for yield and returns. What an alternative investments do you

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Speaker 1: think people should be looking at at this point in

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Speaker 1: the cycle. You know, I think, um, we have a

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Speaker 1: risk out there in the next two years of getting

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Speaker 1: too complacent on inflation. Meaning there's been an attempt to

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Speaker 1: get to the two percent level a couple of times

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Speaker 1: in the last eleven years, and we haven't really reached that,

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Speaker 1: and said realizes that, and now they're willing to let

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Speaker 1: things run hotter. So the big thing we have to

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Speaker 1: worry about is do we get too complacent on inflation.

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Speaker 1: That's number one, and then number two, when you just

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Speaker 1: step back a little bit in terms of earnings guidance

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Speaker 1: and earnings estimates, we have now pushed them too low.

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Speaker 1: The analyst community is about to do the same thing,

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Speaker 1: for they haven't pulled them back yet. Um. But as

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Speaker 1: they pull them back and then we we borrow some

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Speaker 1: future gains. At the end of the day, it's going

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Speaker 1: to come down to what type of correction and what's

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Speaker 1: the driver of it. UM. Typical years have two to

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Speaker 1: three five percent pullbacks. One correction. We had that this year. UM.

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Speaker 1: The question is is do we have another five percent

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Speaker 1: pullback in the cards that's likely to be earnings driven,

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Speaker 1: not necessarily FED driven, and that's a buy on weakness

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Speaker 1: pullback from our perspective. Chrisze, thank you so much for

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Speaker 1: joining us. Chris is the chief investment Officer for Bank

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Speaker 1: of America Global Wealth and Investment Management, based in New

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Speaker 1: York City. Well, we are ten plus years into this

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Speaker 1: economic cycle. The FED appears to remain quite dubbish, and

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Speaker 1: many investors are questioning how much risk they should be

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Speaker 1: taken given the extraordinary performance of the first six months

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Speaker 1: of this year. To get a better look at the

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Speaker 1: state of the global fixed income markets, returned to Ted

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Speaker 1: revel Tad as chief investment officer for fixed Income at

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Speaker 1: TCW with a hundred seventy billion dollars under management, based

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Speaker 1: in Los Angeles. H Tad thanks so much. For joining US.

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Speaker 1: I wonder if we could just start off by getting

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Speaker 1: a sense of your thoughts about allocation between you know,

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Speaker 1: investment grade, high yield, emerging markets. Where are you on

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Speaker 1: the risk curve here, Well, we're pretty defensive on the

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Speaker 1: risk curve. I think that the investors are supposed to

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Speaker 1: think about their asset allocation in terms of a protracted

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Speaker 1: asset price cycle that we have experienced obviously, but that

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Speaker 1: the time for taking enthusiastic risk with your fixed income

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Speaker 1: portfolio is typically in the first few years of the cycle.

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Speaker 1: That's when you want those big allocations to things like

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Speaker 1: high yields, emerging markets, leverage loans, the most leverage parts

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Speaker 1: of the capital structure. As you get into the later

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Speaker 1: stages of the cycle, which I think there is abundant

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Speaker 1: evidence that we are. In those late stages, you're supposed

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Speaker 1: to be actually very cautious about making allocations to leveraged

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Speaker 1: asset classes and against leverage business models. So that counsels

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Speaker 1: a portfolio that has a significant character um with respect

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Speaker 1: to using sovereign debt, using investment grade debt top of

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Speaker 1: the capital structure, type of exposure, and asset backs meaning

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Speaker 1: triple A triple a exposure and commercial mortgages and avoidance

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Speaker 1: generally speaking of let's say, uh, much of the high

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Speaker 1: yield market, and particularly the single be and below portions

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Speaker 1: of that So ted, One thing that I find striking

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Speaker 1: is that the vast majority of investment managers who we

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Speaker 1: speak to echo the sentiment that you just had. And

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Speaker 1: I'm wondering whether that in and of itself is a

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Speaker 1: reason to be more bullish, uh than cautious, just because

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Speaker 1: if so many people are baking in such caution, what

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Speaker 1: exactly is going to cause this market to turn? And

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Speaker 1: and the positioning isn't really there for something violent, right right? Yeah, Well,

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Speaker 1: those are great questions. First of all, I'm I do

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Speaker 1: sympathize with the observation that many people are talking the

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Speaker 1: late cycle game in terms of caution in their asset allocations.

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Speaker 1: I'm not sure how many our walk in the walk, though, Um,

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Speaker 1: the pricing that exists in much of the the fixed

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Speaker 1: income market doesn't suggest that that is actually the case.

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Speaker 1: But as it relates to what might be a catalyst

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Speaker 1: for turning the cycle and flushing out the risk, you

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Speaker 1: don't have to look very far. Indeed, look back at

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Speaker 1: the fourth quarter of last year, there wasn't really much

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Speaker 1: of a catalyst. It's simply that there was a there

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Speaker 1: was an abrupt shift in risk preferences, and you saw

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Speaker 1: an abrupt widening of the high yield market to roughly

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Speaker 1: five and a half or five and fifty basis points

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Speaker 1: over treasuries from a level that I think had started

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Speaker 1: the fourth quarter at about three hundred and today we're

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Speaker 1: sitting at about three hundred and seventy. But I think

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Speaker 1: that if you're looking for confirmation of the light cycle

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Speaker 1: type of environment, you have your inverted yield curve. You

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Speaker 1: have what may turn out to be a profits recession

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Speaker 1: as divine, as defined by two consecutive quarters of of

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Speaker 1: negative growth with respect to earnings, that potentially being this quarter.

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Speaker 1: There's a slowdown in China going on, We've seen the

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Speaker 1: statistics with respect to trade. There's a lot of leverage

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Speaker 1: already built into the investment grade market. We have actually

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Speaker 1: seen under performance in the triple ceas. And then you

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Speaker 1: have this whole conundrum of negative yields, that of the

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Speaker 1: global investment grade debt out there is yielding less than zero.

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Speaker 1: Not exactly a compelling argument for taking risk in your portfolio.

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Speaker 1: So tad. It kind of brings me into my next question,

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Speaker 1: kind of what are you seeing as you look across

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Speaker 1: UH your portfolio in terms of credit quality. Given where

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Speaker 1: we are in the psychole, are you seeing anything any

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Speaker 1: red flags popping up in terms of red flags in

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Speaker 1: the market. Absolutely, arguably even as recent as this morning

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Speaker 1: the news with the i p O that that failed

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Speaker 1: with him and that I don't know if I should

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Speaker 1: call it a failed i p O with in BEV,

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Speaker 1: but certainly one that was shelved and pulled. UH. That

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Speaker 1: is a relatively levered business model. That is one of

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Speaker 1: those investment grade companies out there that I think is

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Speaker 1: running at least four turns maybe closer to five turns

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Speaker 1: of leverage, which is out of alignment with what you

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Speaker 1: typically think of as an investment grade UH leverage level.

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Speaker 1: The fact that the i p O was pulled and

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Speaker 1: therefore the proceeds are not available for de leveraging tells

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Speaker 1: you something about this specific credit but it also I

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Speaker 1: think tells you a lot about the mood and the

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Speaker 1: mind of the marketplace that the the need or the

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Speaker 1: urgency to delever or to get your metrics back down

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Speaker 1: to more in line for where they ought to be

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Speaker 1: in a light cycle environment, isn't there. The reason this

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Speaker 1: is important, at least in our judgment, is that when

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Speaker 1: you look at past cycles, you'll actually see that something

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Speaker 1: like between at the low end and at the high

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Speaker 1: end of the triple bes. Okay, not the entirety of

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Speaker 1: the investment grade corporate market, but about a quarter to

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Speaker 1: a half of the triple B universe suffers downgrades to

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Speaker 1: below investment grades gets junked uh into a into a

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Speaker 1: de leveraging type of environment. Given how much triple bees

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Speaker 1: have expanded in terms of their market value and the

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Speaker 1: size of that market, it could have really devastating consequences

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Speaker 1: for the pricing of below investment grade debt and leverage loans.

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Speaker 1: So that's I think one avenue that you're supposed to

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Speaker 1: be very thoughtful about the fallen angel risk that may

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Speaker 1: exist in in the what would otherwise be thought of

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Speaker 1: as a relatively conservative investment grade portfolio. Ted Earlier in

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Speaker 1: the conversation, you were saying that a lot of people

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Speaker 1: talk the talk, but they don't walk the walk, and

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Speaker 1: they're not perhaps de risking as much as it may seem.

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Speaker 1: Where in particular are you seeing this I think you're

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Speaker 1: seeing it in the corporate markets primarily and in the

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Speaker 1: leverage loan markets, and the leverage loan market, since we

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Speaker 1: haven't spoken about it, is probably a really good place

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Speaker 1: to focus on that. So, the leverage loan market has

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Speaker 1: grown enormously over the course of this cycle and is

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Speaker 1: would appear to be one of the primary vehicles of

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Speaker 1: of choice as it relates to financing relatively leverage and

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Speaker 1: smaller type type type businesses. What appears to be the

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Speaker 1: case is that the covenant light structures and the very

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Speaker 1: generous terms that exist in these loan agreements vias of

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Speaker 1: that of the of the borrower, generous to the borrower.

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Speaker 1: That is um our suggestive that the traditional originators of

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Speaker 1: these loans are not putting them on their books. It's

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Speaker 1: a it's a going back to the Mark Twain is

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Speaker 1: um about cycles rhyming. In the last cycle, those that

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Speaker 1: were very knowledgeable and very up close and personal with

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Speaker 1: respect to the underwriting of sub prime mortgages weren't putting

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Speaker 1: it on their own balance sheets. They were securitizing them

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Speaker 1: and sending them into C d O type structures or

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Speaker 1: somewhere else. In this particular cycle, you're seeing an inordinate

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Speaker 1: amount of those leverage loans going into the CLO structure,

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Speaker 1: but something like six of all of these leverage loans

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Speaker 1: are not ending up on the balance sheets of the

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Speaker 1: people who are presumptively underwriting them. That in and of

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Speaker 1: itself should serve should serve to raise a question about

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Speaker 1: why is that the case? And of course the answer

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Speaker 1: is because there is cheap and a capital available in

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Speaker 1: the CLO market. How knowledgeable uh, that some of those

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Speaker 1: investors might be. I mean, obviously there are many investors

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Speaker 1: in that space that are knowledgeable, but it's not all

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Speaker 1: of them. Tad Revel, thank you so much. We could

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Speaker 1: speak with you all day. We love that you came on.

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Speaker 1: Tad Revel, chief investment officer for fixed income at TCW,

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Speaker 1: coming to us from Los Angeles. Well, we got some

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Speaker 1: economic data out of China overnight, and I guess the

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Speaker 1: takeaway is that Chinese economy slow to the weakest paced

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Speaker 1: since quarterly data began, but there was some signs of

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Speaker 1: stabilization as well. To get the latest, we welcome Tom

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Speaker 1: or like Tom's cheap economist for Bloombrick Economics. He joins

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Speaker 1: us on the phone from Washington, d C. Tom, thanks

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Speaker 1: so much for joining us. Kind of what your key

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Speaker 1: takeaways from the most recent round of economic data out

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Speaker 1: of China. I think you put it pretty well, Paul. Yes,

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Speaker 1: this is the weakest number since back in six point

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Speaker 1: two percent growth. Um. Yes, there are some signs of

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Speaker 1: a little bit of additional resilience coming through in the

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Speaker 1: more high frequency June data. We've got a bounce in

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Speaker 1: retail sales, we've got a bounce in industrial output. But

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Speaker 1: and this is the crucial caveat, I want to throw

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Speaker 1: in a bunch of the factors which were behind that

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Speaker 1: more optimistic June data aren't going to be very long lasting.

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Speaker 1: Retail sales, for example, a big factor there was one

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Speaker 1: off discounts to get rid of inventory of old cars

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Speaker 1: sitting on dealer's lots. That drove a huge surge in

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Speaker 1: car sales. That's not something which is going to be repeated. Um.

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Speaker 1: So we think the June numbers might be a bit

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Speaker 1: of a false dawn and there could be more weakening

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Speaker 1: to come for China. Tom, how much can we trust

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Speaker 1: these numbers as being accurate? So? Um, that's the perennial

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Speaker 1: question with China's data Lisa UM And what we do

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Speaker 1: is we run a bunch of different checks. We look

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Speaker 1: at the GDP numbers against what we call the Leaka

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Speaker 1: Chang Index that's based on rail freight, electricity UM and

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Speaker 1: loan numbers UM. We look at it based on different

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Speaker 1: private and academic gauges of how fast the Chinese economy

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Speaker 1: is going. At different points in the past, there's been

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Speaker 1: really wide deviation, especially back in two thousand and fifteen,

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Speaker 1: the government was saying six point five seven percent growth.

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Speaker 1: Are private gauges were saying now, Actually it's closer to

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Speaker 1: three or four percent. Right now, our private gauges and

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Speaker 1: the official numbers are actually matching up. So, Tom, you

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Speaker 1: lived and worked in China in Beijing for many many years.

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Speaker 1: Love to get your sense based upon your experience of

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Speaker 1: where do you think China is right now as they

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Speaker 1: think about trade negotiations with the US. We've got this

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Speaker 1: latest batch of economic data. It's a sense of where

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Speaker 1: you think they are and what they really want to achieve.

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Speaker 1: So I was in Beijing for the week ahead of

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Speaker 1: that G twenty negotiation between President she and President Trump

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Speaker 1: and the week after UM and we spoke to to

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Speaker 1: a bunch of people there, and I can tell you

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Speaker 1: the mood after that G twenty agreement was I would

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Speaker 1: say a combination of relief and caution. Relief that she

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Speaker 1: and Trump had at least managed a handshake deal things

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Speaker 1: didn't get any worse. Caution, because well, we've seen this show.

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Speaker 1: Before the top leaders meet, they agree to get along,

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Speaker 1: but once you get into the detailed negotiations of who's

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Speaker 1: going to give up what, talks start breaking down. Um.

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Speaker 1: So I think that's the view in Beijing right now.

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Speaker 1: Relief things aren't getting worse immediately, Caution, concern that we're

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Speaker 1: not far from the next blow up. Do we have

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Speaker 1: a sense of how much of the slowdown is due

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Speaker 1: to the trade, the tariffs and the trade wars, and

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Speaker 1: how much has to do with just the fact that

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Speaker 1: China has been slowing down as it shifts from an

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Speaker 1: industrial economy to more of a service oriented economy. Yeah.

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Speaker 1: So you've got three things going on at the same Timely, so,

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Speaker 1: you've got the trade war, which is hitting exports directly

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Speaker 1: but maybe more important having a big negative impact on sentiments. Um.

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Speaker 1: Then you've got the government's deliveraging agenda, that awareness that

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Speaker 1: they've taken on too much debt um and that needs

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Speaker 1: to be managed down if they're going to steer clear

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Speaker 1: of financial stability risks. And then you've just got the

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Speaker 1: kind of natural inertia, the natural drag that comes when

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Speaker 1: you've got a shrinking working age population UM and an

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Speaker 1: economy which is trying to shift to a new set

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Speaker 1: of growth drivers. All of these things are happening at

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Speaker 1: the same time, UM, and I think that's what's weighing

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Speaker 1: on growth. And until we see some more stimulus coming in,

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Speaker 1: our concern is that we could see some more weakness

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Speaker 1: in the months ahead. So Tom, just real quickly, maybe

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Speaker 1: next thirty seconds. It's just how committed do you think

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Speaker 1: the Chinese government is to this de leveraging issue. As

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Speaker 1: you mentioned, eight taken on tremendous amount of debt over

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Speaker 1: the last decade or so. So I think the thing

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Speaker 1: which China has on their side when it comes to

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Speaker 1: deleveraging is time. Yes, they've taken on a lot of debt,

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Speaker 1: but it's all domestic and that means they can manage

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Speaker 1: it down over a period of years, maybe even a decade.

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Speaker 1: They're not going to be forced into doing it over

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Speaker 1: a period a few months. UM. And so what we've

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Speaker 1: seen in two thousand and eighteen and two thousand and

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Speaker 1: nineteen is well, you know what, the trade war supporting growth,

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Speaker 1: that's the bigger priority now. Deleveraging, Yes, we need to

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Speaker 1: do it. We're not going to do it right now.

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Speaker 1: Tom more Like, thank you so much, as always for

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Speaker 1: your insights. Tom or Like as chief economist for Bloomberg Economics,

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Speaker 1: talking about those GDP data out of China overnight, oh,

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Speaker 1: a staggering forty two million people face hunger in the

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Speaker 1: United States, while at the same time, roughly the food

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Speaker 1: produced in America goes to waste. Our next guest is

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Speaker 1: trying to address a small part of this problem. Matt

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Speaker 1: jos mac jils We, act founder and executive director of

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Speaker 1: Rethink Food NYC that is based in Brooklyn, joins us

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Speaker 1: here in our Bloomberg Interactive Broker Studio. Matt, thanks so

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Speaker 1: much for joining us. I wonder if you could just

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Speaker 1: give us a sense of what your company does, Rethink

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Speaker 1: Food NYC. What do you guys do? So basically, we

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Speaker 1: take xx food that is you know, normally seen as unusable,

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Speaker 1: we repurpose it and we distribute it to community service

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Speaker 1: organizations to help alleviate the burden on running like you're

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Speaker 1: you know, what you would think of as a sup kitchen.

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Speaker 1: So we collect food from Goldman Sachs, the bank, the cafeterias,

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Speaker 1: fine dining restaurants, um so how Stumbo House, and we

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Speaker 1: bring it back to our kitchen. We make new meals

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Speaker 1: out of it, and we bring them to other community

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Speaker 1: service organizations and essentially cater them to alleviate that pressure,

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Speaker 1: that's stress of having to produce food every day for

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Speaker 1: hundreds of people. What's the economics here? I mean, how

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Speaker 1: do you incentivize these companies to work with you and

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Speaker 1: how do you fund yourself? So initially we're funded by

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Speaker 1: you know, large scale donations. Um you know the eleven

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Speaker 1: Madison Park guys have been really generous and helping us

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Speaker 1: raise money and raise awareness. But what we're trying to

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Speaker 1: do is help people realize that this food actually has

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Speaker 1: tangible value. Like if you were to go to a

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Speaker 1: restaurant like the Nomad and get like this beautiful roasted

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Speaker 1: chicken and just because it's eleven o'clock and it doesn't

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Speaker 1: mean that that chicken is now the value of that

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Speaker 1: is zero. Other you know, businesses that operate that way.

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Speaker 1: Like you know, the only one I can think of

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Speaker 1: is concert tickets that go to the value of zero.

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Speaker 1: But if you run a business like that, it's just

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Speaker 1: never going to be successful. So we're trying to do

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Speaker 1: is incentivized business owners to really truly realize the value

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Speaker 1: in their product so that we can offer and suggest.

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Speaker 1: We can't actually tell them what it's worth, but suggest

433
00:24:07,520 --> 00:24:10,560
Speaker 1: higher in kind donation receipts so that the tax return

434
00:24:10,760 --> 00:24:13,200
Speaker 1: is larger there in the air. So when you talk

435
00:24:13,320 --> 00:24:16,040
Speaker 1: to restaurants, is it is there prime just give us

436
00:24:16,040 --> 00:24:18,480
Speaker 1: a sense of what their motivation is for I guess

437
00:24:18,560 --> 00:24:22,400
Speaker 1: entering into relationship with you and uh donating their food. Well,

438
00:24:22,440 --> 00:24:24,280
Speaker 1: we all know, everybody knows it's a problem. I mean,

439
00:24:24,760 --> 00:24:26,320
Speaker 1: you know, when we were chatting here before, you had

440
00:24:26,320 --> 00:24:29,040
Speaker 1: some some options, you know, some situations where you know

441
00:24:29,080 --> 00:24:31,240
Speaker 1: it was a problem, and we all do. Everybody sees it.

442
00:24:31,240 --> 00:24:33,440
Speaker 1: Everybody knows, everybody is aware, we're all we're all we

443
00:24:33,480 --> 00:24:36,760
Speaker 1: all know poverty exists. Um, we're simply just solving the problems.

444
00:24:36,800 --> 00:24:39,199
Speaker 1: And everybody says, oh, the liability or this issue or

445
00:24:39,200 --> 00:24:41,480
Speaker 1: that issue. We think it's just a problem solving organization.

446
00:24:41,600 --> 00:24:44,320
Speaker 1: Every single food donor is different, and we take the

447
00:24:44,359 --> 00:24:46,680
Speaker 1: time and really put in the effort to make sure

448
00:24:46,720 --> 00:24:48,919
Speaker 1: that they you know, they get that food out safely.

449
00:24:49,320 --> 00:24:53,359
Speaker 1: And what you're referring to is something when back in college,

450
00:24:53,359 --> 00:24:54,840
Speaker 1: when I was working at a coffee shop and there

451
00:24:54,920 --> 00:24:56,400
Speaker 1: was food left over at the end of the day

452
00:24:56,440 --> 00:24:58,600
Speaker 1: and wanted to donate it to someone who is hungry,

453
00:24:58,960 --> 00:25:01,080
Speaker 1: I was told that we wouldn't because it was a

454
00:25:01,119 --> 00:25:04,520
Speaker 1: potential legal liability for us should the food be spoiled

455
00:25:04,560 --> 00:25:07,119
Speaker 1: and someone gets sick from it. You're saying, that's not true,

456
00:25:07,359 --> 00:25:09,399
Speaker 1: that's not true. So the Good Samaritan law protects you

457
00:25:09,440 --> 00:25:12,239
Speaker 1: that if you donate food in good faith, um with

458
00:25:12,280 --> 00:25:15,080
Speaker 1: the intent to feed the poor, that you are you're okay.

459
00:25:15,119 --> 00:25:16,399
Speaker 1: So you have to donate it to a five O,

460
00:25:16,520 --> 00:25:18,160
Speaker 1: one C three. So I'm sure in the neighboring area

461
00:25:18,200 --> 00:25:20,160
Speaker 1: there was some soup kitchen. And the reason that you're

462
00:25:20,200 --> 00:25:21,840
Speaker 1: you're the business owner didn't want to do that is

463
00:25:21,880 --> 00:25:24,240
Speaker 1: he's protecting his brand. He's saying that, look, we made

464
00:25:24,240 --> 00:25:25,680
Speaker 1: this product and we don't want to give it away

465
00:25:25,680 --> 00:25:27,919
Speaker 1: for free, because if we spread it out into the ecosystem,

466
00:25:27,960 --> 00:25:30,560
Speaker 1: it's going to eventually reduce its value. And what we're

467
00:25:30,560 --> 00:25:33,080
Speaker 1: saying is that's not true. It's still just as valuable.

468
00:25:33,200 --> 00:25:34,879
Speaker 1: You're just looking for the value in the wrong place,

469
00:25:35,119 --> 00:25:36,600
Speaker 1: all right. So I like the way you phrased it.

470
00:25:36,800 --> 00:25:39,280
Speaker 1: I'm sitting at a restaurant, beautiful meal in front of

471
00:25:39,280 --> 00:25:42,400
Speaker 1: me that I paid sixty dollars for. When that restaurant

472
00:25:42,400 --> 00:25:44,560
Speaker 1: closes that night at the stroke of eleven, in theory,

473
00:25:44,600 --> 00:25:46,960
Speaker 1: that value goes to zero and and the and the

474
00:25:47,000 --> 00:25:50,040
Speaker 1: restaurant owner would throw it away. What you guys do

475
00:25:50,280 --> 00:25:54,040
Speaker 1: is you have, um, I guess, um, some type of

476
00:25:54,119 --> 00:25:58,160
Speaker 1: method to really calculate the value of that meal, which

477
00:25:58,160 --> 00:26:00,920
Speaker 1: then becomes important for the restaurant as the restaurant thinks

478
00:26:00,920 --> 00:26:03,040
Speaker 1: about it, you know, the text deduction for it. So

479
00:26:03,160 --> 00:26:04,760
Speaker 1: just give us a sense of what you guys do

480
00:26:04,840 --> 00:26:09,080
Speaker 1: in terms of really assigning value to meals and food. Yeah.

481
00:26:09,119 --> 00:26:10,679
Speaker 1: So it's a really kind of a complicated thing, and

482
00:26:10,680 --> 00:26:13,240
Speaker 1: we we're still always working on it and still retooling

483
00:26:13,240 --> 00:26:15,880
Speaker 1: it and still you know, always under review. But basically

484
00:26:15,880 --> 00:26:17,879
Speaker 1: we say, you know, what is what portion of this

485
00:26:17,960 --> 00:26:21,040
Speaker 1: meal is this is this going for? What's the quality

486
00:26:21,080 --> 00:26:23,040
Speaker 1: of it? How labor intensive is it? And it's basically

487
00:26:23,080 --> 00:26:25,560
Speaker 1: an algorithm that kind of measures these things in and

488
00:26:25,640 --> 00:26:27,359
Speaker 1: we say, okay, how much food did you donate over

489
00:26:27,400 --> 00:26:29,159
Speaker 1: the course of a month or a quarter, depending on

490
00:26:29,240 --> 00:26:30,960
Speaker 1: how you want to do it. And this is what

491
00:26:31,000 --> 00:26:34,120
Speaker 1: we we kind of think the value of this food is,

492
00:26:34,240 --> 00:26:36,600
Speaker 1: and if we have to defend it, we will, but

493
00:26:37,280 --> 00:26:38,920
Speaker 1: you know, we're just trying to give a better sense

494
00:26:38,960 --> 00:26:41,719
Speaker 1: of it. What's important to note is that the average

495
00:26:41,760 --> 00:26:46,240
Speaker 1: food donation value assessment system is a dollar a pound.

496
00:26:46,400 --> 00:26:48,600
Speaker 1: So if you give me a watermelon, I tell you

497
00:26:48,640 --> 00:26:51,040
Speaker 1: that six pound watermelon six dollars. If you give me

498
00:26:51,119 --> 00:26:55,199
Speaker 1: six pounds of fua graw, it's also six dollars. If

499
00:26:55,240 --> 00:26:58,800
Speaker 1: you give me six pounds of caviare, it's also six dollars.

500
00:26:58,800 --> 00:27:01,639
Speaker 1: So it is completely nonsensical. So this is something for

501
00:27:01,680 --> 00:27:03,240
Speaker 1: the accountants that you need to sit down with the

502
00:27:03,240 --> 00:27:07,040
Speaker 1: accounts and figure this out fast. By well, I guess

503
00:27:07,040 --> 00:27:09,520
Speaker 1: that I'm struggling to understand. Also, so do you have

504
00:27:09,880 --> 00:27:12,320
Speaker 1: like what kinds of chefs you have in and and

505
00:27:12,800 --> 00:27:15,639
Speaker 1: how you get to figure out which areas need the

506
00:27:15,680 --> 00:27:18,879
Speaker 1: food the most. Considering the fact that the amount of

507
00:27:18,880 --> 00:27:20,760
Speaker 1: food that you're going to be getting will vary at

508
00:27:20,760 --> 00:27:24,560
Speaker 1: any given day. Yeah, that's a huge challenge. So what

509
00:27:24,600 --> 00:27:27,320
Speaker 1: we've done is we're super data heavy one because we're

510
00:27:27,320 --> 00:27:30,159
Speaker 1: super food safety heavy, so everything's monitored, all the temperatures,

511
00:27:30,200 --> 00:27:31,840
Speaker 1: what comes in, where it's coming from, coming from, and

512
00:27:31,880 --> 00:27:34,199
Speaker 1: all that stuff. So another issue we have is you're right,

513
00:27:34,240 --> 00:27:36,399
Speaker 1: so people usually it's like a two day rule, so

514
00:27:36,400 --> 00:27:38,320
Speaker 1: we'll get like huge spikes of food, not so much

515
00:27:38,359 --> 00:27:40,240
Speaker 1: the next day, so we have to buy like five

516
00:27:40,280 --> 00:27:43,960
Speaker 1: percent of our ingredients to supplement those lower valleys and

517
00:27:43,960 --> 00:27:45,919
Speaker 1: then we get it out there. It's really not our decision,

518
00:27:45,920 --> 00:27:47,160
Speaker 1: and we say this all the time, and we think

519
00:27:47,160 --> 00:27:49,719
Speaker 1: we're not community service leaders, were not like, you know,

520
00:27:49,760 --> 00:27:52,440
Speaker 1: trying to like out there trying to save the world. Basically,

521
00:27:52,480 --> 00:27:55,800
Speaker 1: there are institutions already in place that are distributing food

522
00:27:55,960 --> 00:27:58,960
Speaker 1: doing it well, and our job is to just help

523
00:27:59,080 --> 00:28:01,560
Speaker 1: make it easier for them. That's it on both sides.

524
00:28:01,920 --> 00:28:04,280
Speaker 1: So just real quick here, how can people donate if

525
00:28:04,320 --> 00:28:06,840
Speaker 1: they want to? If people go to rethink Food dot NYC,

526
00:28:07,000 --> 00:28:09,200
Speaker 1: there's a donate button at the top of the page. Also,

527
00:28:09,280 --> 00:28:10,960
Speaker 1: you know, I don't know if I regret saying this,

528
00:28:11,000 --> 00:28:12,760
Speaker 1: but my email address is actually on the page. If

529
00:28:12,760 --> 00:28:14,720
Speaker 1: you want to get out. We were trying to solve

530
00:28:14,760 --> 00:28:16,720
Speaker 1: this problem. We just need help and support, So reach

531
00:28:16,760 --> 00:28:18,640
Speaker 1: out if you think you can help in any way possible.

532
00:28:18,920 --> 00:28:21,760
Speaker 1: Matt Jobs we act just gave out his email address

533
00:28:21,840 --> 00:28:26,280
Speaker 1: on live radio and sitting here looking deeply uncomfortable as

534
00:28:26,320 --> 00:28:29,320
Speaker 1: a result. Matt jos React is founder and executive director

535
00:28:29,359 --> 00:28:32,800
Speaker 1: of Rethink Food NYC, based in Brooklyn, bejoining us here

536
00:28:32,800 --> 00:28:35,680
Speaker 1: in our eleven three oh studios talking about a problem

537
00:28:35,840 --> 00:28:39,040
Speaker 1: that many people have noticed, which is food waste as

538
00:28:39,080 --> 00:28:41,680
Speaker 1: well as hunger. The two things, you pair them up

539
00:28:41,840 --> 00:28:45,000
Speaker 1: and perhaps you can solve both. Thanks for listening to

540
00:28:45,000 --> 00:28:47,440
Speaker 1: the Bloomberg P and L podcast. You can subscribe and

541
00:28:47,440 --> 00:28:50,600
Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform

542
00:28:50,640 --> 00:28:53,760
Speaker 1: you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney.

543
00:28:53,800 --> 00:28:56,280
Speaker 1: I'm Lisa Abram Woyds. I'm on Twitter at Lisa Abram

544
00:28:56,280 --> 00:28:58,880
Speaker 1: Woyd's one before the podcast, you can always catch us

545
00:28:59,000 --> 00:29:04,400
Speaker 1: worldwide on Blue Brook radioh