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Speaker 1: search Bloomberg Clovel News. We did get the latest minutes
Speaker 1: from the last policy setting meeting of the Federal Resort
Speaker 1: that was earlier this month. At meeting, we did see
Speaker 1: uh in terms of the SMP five hundred equities rolling
Speaker 1: over SMP five hundred e racing some of those earlier
Speaker 1: gains and just turning lower after the Fed minutes, So
Speaker 1: we are seeing some market reaction on a day where
Speaker 1: we're seeing little volume. We also got a big batch
Speaker 1: of economic news, so here filtering through it all for
Speaker 1: us and great to have back with us is Steven
Speaker 1: Skanky he's chief economic advisor over at keel Point. Former
Speaker 1: US Treasury and White House National Security Council staff member
Speaker 1: Steve based in Washington. We find him on the phone
Speaker 1: from Washington, d C. On this Wednesday, UH, Steve, good
Speaker 1: to have you here with Creedy and myself. UM. First
Speaker 1: of all, happy Thanksgiving, UH five minutes. What stands out
Speaker 1: for you? Well, I think what what stands out most
Speaker 1: is that is that the governors were really sangment about
Speaker 1: their decision to UH to begin to taper without making
Speaker 1: a decision on interest rates. And it's not that there's
Speaker 1: not turbile. I mean, if you if you look at
Speaker 1: the big picture, even coming into that meeting, it was
Speaker 1: before they that they knew the good jobs report for
Speaker 1: October and the increase for August and September UM. But
Speaker 1: you know, it would have been very easy to conclude
Speaker 1: that their job was done when when you look at
Speaker 1: the trend increase in employment and then the fact that
Speaker 1: we've seen the level of price increases even with the
Speaker 1: PC personal Consumption Expenditure and Index Act today at five
Speaker 1: percent headline core A three and a half roughly UM,
Speaker 1: the fense easily could have declared victory and gotten on
Speaker 1: with their plans. And yet that wasn't That wasn't the
Speaker 1: tenor of the meeting, Steve, I want to ask you
Speaker 1: what the variables are here? Because we know that the
Speaker 1: market is waiting for this rate liftoff. We know they're
Speaker 1: waiting for this accelerated tapering. What could change between now
Speaker 1: and say January or stay December when we really get
Speaker 1: a new kind of tapering amount for January? What are
Speaker 1: we watching here? The labor market, the commandities market. What
Speaker 1: are the variables involved in this decision making? Well, there's
Speaker 1: there are several carol uh, and first, happy Thanksgiving to you.
Speaker 1: It's always great to be with you, and I'm so
Speaker 1: glad to be on with you a creety today. Um,
Speaker 1: it's always a pleasure. The variables the FET has in
Speaker 1: front of I mean that the personal uh, the consumption
Speaker 1: expenditures uh coming in still strong. It looks like fourth
Speaker 1: quarter g d P is on track to be up
Speaker 1: six and a half percent on an annualized basis. That's
Speaker 1: significantly above the sort of the four four and a
Speaker 1: half that have been in the consensus forecast. The FETE
Speaker 1: is not unaware of that, and as they come into
Speaker 1: December when they have to decide what's going to happen,
Speaker 1: uh with well, they've already announced what they're gonna do
Speaker 1: with the paper beginning December fifteen. So November fifteen to
Speaker 1: December fifteen, that's said, December fifteen to January fifteen, that's
Speaker 1: set also. But but but they're seeing in real time
Speaker 1: a better than expected GDP growth number. They have in
Speaker 1: front of them, better than expected October jobs number and
Speaker 1: the upward revision. So they have a chance out to
Speaker 1: see what happens to November jobs and uh, you know,
Speaker 1: which is measured mid mom and we just saw the
Speaker 1: the the unemployment claims number coming out today weekly. Uh,
Speaker 1: way better than expected. Uh, it's it's a long time
Speaker 1: since it's it's been this low. Right, So here go ahead, Well, Steve,
Speaker 1: you know, and and Crey brought up some good, you know,
Speaker 1: a good question in terms of the variables that we
Speaker 1: can expect the Fed to be focusing on to kind
Speaker 1: of figure out as they find tune their policy and
Speaker 1: really fine tune their message. I think they've been many
Speaker 1: would argue they've been very clear and very careful about
Speaker 1: messaging to the markets and um really to all of
Speaker 1: us who watch the economy. Uh, what is it? I mean,
Speaker 1: if we get that strong jobs report next Friday, is
Speaker 1: that it in your view? Or all bets are off
Speaker 1: because they're waiting for the latest and greatest, and we
Speaker 1: know with COVID still out there, anything can happen. I
Speaker 1: don't think all bets are off there. There's certainly being
Speaker 1: very careful. One of the things that this current FED
Speaker 1: share learned as did this process, remember the taper tent
Speaker 1: from going back under Chair Bernaki, It's it's important for
Speaker 1: the markets to to have a clear and clean understanding
Speaker 1: of what the Fed is planning to do. Uh and uh.
Speaker 1: With the information that we have in front of us
Speaker 1: just today, you're very easy for them to change course,
Speaker 1: accelerate paper, say something about raising interest rates. You know,
Speaker 1: coming into the meeting a couple of weeks ago, the
Speaker 1: markets were the market bet the that was three rate increases,
Speaker 1: three fund rate increases in one in June at the
Speaker 1: end of taper, one in September, and then one in December.
Speaker 1: Very aggressive and defenses shut that down, and the market
Speaker 1: accepted that easily and readily. Remarkably so in my opinion,
Speaker 1: still with us is Steve skanky chief Economic advisor at
Speaker 1: keel Point, as well as the former U. S. Treasury
Speaker 1: and White House National Security Council staff member joining us
Speaker 1: on the phone from Washington, d C. It's so handy
Speaker 1: to have you here, Steve, because we are still talking
Speaker 1: about those FOMC miths that we just got things looking
Speaker 1: kind of good from the FEDS perspective, but they are
Speaker 1: saying there is room for them to really accelerate some
Speaker 1: of that tapering. How fast does is fast? How fast
Speaker 1: can this actually happen? How quickly can it happen? A
Speaker 1: quick reminder to our audience is that the last time
Speaker 1: they actually announced the tapering, they only really gave an
Speaker 1: amount till December. From January on, we don't know what's
Speaker 1: happened things. So Steve to you, how fast is fast? Well,
Speaker 1: right now, they're they're scheduled to to have phased out
Speaker 1: their bond buying program by June. And UH, from you know,
Speaker 1: from from the discussion after the meeting and from reading
Speaker 1: to the minutes, as I said, they seem to be
Speaker 1: sanguine about where prices are UH and where the economy
Speaker 1: is generally. Now, obviously we've got some some great news
Speaker 1: on the employment side with the August, Attember, October jobs numbers,
Speaker 1: and if we get similarly good news for November, they
Speaker 1: could at their December meeting decided to accelerate. What would
Speaker 1: what would acceleration look like? Probably not more than doubling
Speaker 1: up at the most. Recall that they get into the
Speaker 1: most trouble and think about December of uh two years ago,
Speaker 1: um when three years ago, when when there are comments
Speaker 1: just caused the financial markets into turmoil. So it's not
Speaker 1: going to be a big change, and any change is
Speaker 1: going to be well telegraphed, and the market is is
Speaker 1: going to feel good about it about it coming. What
Speaker 1: the market is seems to be most concerned about is
Speaker 1: waking up and finding FED is is behind the curve
Speaker 1: and then is rushing or struggling to to catch up.
Speaker 1: At that point, confidence is lost as to whether the
Speaker 1: FED really has rain on inflation and its policy actions.
Speaker 1: And Steve I asked, sorry, I asked, how fast is fast?
Speaker 1: But this is already a much faster pace than what
Speaker 1: we saw in the wake of drop. Yes, yes, uh,
Speaker 1: But but they've been preparing us for it for a
Speaker 1: good bit and many would argue that they've waited way
Speaker 1: beyond when they logically could have started this UM and
Speaker 1: uh so, so to go at this pace, to to
Speaker 1: have it done over over eight months is Yeah, it's
Speaker 1: faster than before. But markets seems to be very comfortable
Speaker 1: with it, and it also seems to be consistent with
Speaker 1: the data that they have in front of them. Well,
Speaker 1: that's what I was thinking about, because we were just
Speaker 1: talking so much about this on Monday as deals were
Speaker 1: moving up. UM Steve is that whether or not the
Speaker 1: data points we knew we'd get a big data dump
Speaker 1: this week, whether or not they would confirm that move
Speaker 1: up in race, and it certainly seems like it's playing
Speaker 1: out that way. If the FED decides to UM reduce,
Speaker 1: you know, they're they're the tapering moving along much faster.
Speaker 1: Should we assume that as soon as that done, they're
Speaker 1: going to start raising rates or that's a bad assumption.
Speaker 1: I think that's a bad assumption. At this point, they
Speaker 1: want to give themselves as much latitude as they can.
Speaker 1: And you recall schure Apol at the press conference on
Speaker 1: November three, when asked about rates, he just shut it down.
Speaker 1: He said, we're not even talking about that. We're going
Speaker 1: to finish the taper of the bomb buying program, and
Speaker 1: then we'll look at what we're gonna do with rates. Uh,
Speaker 1: there'd have to be some dramatic change, uh in the data,
Speaker 1: and in particular that that all of a sudden employment
Speaker 1: just blossoms. G d P growth is running hot into
Speaker 1: January February. And and they can come to his inclusion,
Speaker 1: you know, at the at the end of at the
Speaker 1: end of their March meeting, for example, and just say,
Speaker 1: as we complete our taper and if it were accelerated,
Speaker 1: it could end in March. We we will we will
Speaker 1: be looking at what what what the environment suggests as
Speaker 1: far as an adjustment in the interstate policy. Well, and
Speaker 1: I feel like even if there are questions out there right,
Speaker 1: we know for certain that the Fed, Steve and creating
Speaker 1: that the VET has been very good about telegraphing and
Speaker 1: spoon feeding us um what's to come, so that to
Speaker 1: avoid any kind of big surprises. Steve Skanky have a
Speaker 1: safe and happy and healthy Thanksgiving. So great to check
Speaker 1: in with you. Steve Skankey over at kill Point, former U. S.
Speaker 1: Treasury and White House National Security Council staff member. This
Speaker 1: is Bloomberg Business Week with Carol Masser and Bloomberg Quick
Speaker 1: Takes Tim Stenovich from Bloomberg Radio. So we have often
Speaker 1: talked on air about mounting student debt. We've talked about
Speaker 1: the levels of credit card debt. Another mounting pile of
Speaker 1: debt on our radar is a hundred forty billion dollars
Speaker 1: in medical debt. It's all in a story that you
Speaker 1: will find online at Bloomberg dot com slash business Week.
Speaker 1: So let's get to it with Bloomberg News healthcare reporter
Speaker 1: John Tazzi with us on the phone in New York City,
Speaker 1: along with Bloomberg business Week editor Joel on the access
Speaker 1: line in Brooklyn. So I have to say Krety and
Speaker 1: I were talking about this story, it's it's really upsetting
Speaker 1: to see the levels of debt that we're talking about
Speaker 1: and who's in particular targeted with all of this. Yeah,
Speaker 1: and it was I think timely because you know, as
Speaker 1: we kind of enter whatever phase of the pandemic um
Speaker 1: we're in now, we're you know, left with the consequences
Speaker 1: and the legacies of some of this stuff, and and
Speaker 1: the the amount of debt that um medical debt that
Speaker 1: is crewing for all Americans is obviously really troubling, but
Speaker 1: then to know that there's this racial element on top
Speaker 1: of it, that um is clearly clearly affecting people of
Speaker 1: color more than white people, uh, just shows how um,
Speaker 1: how pervasive some of this stuff can be. So so
Speaker 1: John walk us into the data and and how the
Speaker 1: story came about. Sure, Yeah, I mean the kind of
Speaker 1: poor thing we were trying to understand is, um, you know,
Speaker 1: it's been well known for a long time that medical
Speaker 1: debt is uh sort of disproportionate or you distributed that
Speaker 1: black Americans in particular are more likely to have medical
Speaker 1: debt than white Sitspanics are more likely to have medical
Speaker 1: debt than whites. And so we were really kind of
Speaker 1: just trying to understand, you know, why that's the case,
Speaker 1: and UM, you know what it's like to um, you know,
Speaker 1: to experience that. You know. One of the things that
Speaker 1: UM you know turned up in our reporting is that
Speaker 1: there's sort of a lot of variability. If the hospital
Speaker 1: or healthcare provider has an unpaid bill, UM, then they
Speaker 1: have sort of a set of choices of kind of
Speaker 1: what they can do. UM. You know, they can sort
Speaker 1: of try to pursue that uh payment maximally and take
Speaker 1: patients to cord or put leans on their houses or
Speaker 1: garnish their wages, um you know, or they can um
Speaker 1: you know, sort of uh check whether the patient is
Speaker 1: eligible from finance unel it and in fact, non nonprofit
Speaker 1: hospital they're supposed to do that. But there's a lot
Speaker 1: of variability in the industry about sort of how those
Speaker 1: um you know, how those practices are put into into place.
Speaker 1: So actually, let's just stick with this hospital element um
Speaker 1: for a moment, because I found that to be a
Speaker 1: particularly interesting part of the article. And as you're reporting,
Speaker 1: revealed even executives at hospitals weren't exactly in in the
Speaker 1: know about how some of their their facilities were actually
Speaker 1: enforcing this and actually you know, going after people's credit, right, Yeah,
Speaker 1: I mean, I think that's one of the most revealing
Speaker 1: things that came up in this recording. As you know,
Speaker 1: there were at least one large hospital system in New
Speaker 1: York City, the public hospital system, your Health and hospitals
Speaker 1: corporations UM you know. Uh. When advocates brought to their
Speaker 1: attention that they were shooting patients in court over unpaid
Speaker 1: bill um, the CEO stopped it. He said, I didn't
Speaker 1: know that was happening, um, and they put a stop
Speaker 1: to it, and that actually kind of led to some
Speaker 1: change in their practices and they said they've added more
Speaker 1: financial counselors, they're doing more to proactively reach out to patients, uh,
Speaker 1: you know, who may not be able to pay. And
Speaker 1: I think, you know, it just goes to show that
Speaker 1: there is, you know, there's a whole sort of like
Speaker 1: set of discretionary choices for healthcare uh providers here about
Speaker 1: like how they respond in one of these situations, which
Speaker 1: are you know, all too common that this is not
Speaker 1: a rare thing that happens if somebody has trouble paying
Speaker 1: their bill, um, But there's a lot of variability and
Speaker 1: how how they respond. John, first off, fantastic story. Like,
Speaker 1: like Carol said, we were talking about that, it's really
Speaker 1: just unbelievable when you're reading it. Highly recommend our listeners
Speaker 1: to go out go and check it out. You mentioned
Speaker 1: in the story. Are you write in the story that
Speaker 1: there are some ways that hospitals are trying to make
Speaker 1: things a little bit easier on the folks that can't
Speaker 1: afford it, But some patients say they didn't apply to
Speaker 1: those benefits, They didn't even know how to do it.
Speaker 1: Can you speak to more of that element? Where where
Speaker 1: is the disconnect here? Yeah, I mean I think it's
Speaker 1: a it's a conversation that the whole healthcare industry is happening.
Speaker 1: I mean, first of all, we could just start by
Speaker 1: saying that this is a you know, this is a
Speaker 1: complex transaction, right access in healthcare often you know, sometimes
Speaker 1: in emergency circumstances, people have different insurance plans that pay
Speaker 1: for different things. Some people may be eligible for certain
Speaker 1: assistance or certain programs. Like this is all super complicated.
Speaker 1: Anybody who's had healthcare in the US knows that. And
Speaker 1: I think in that complexity is where a lot of
Speaker 1: these sort of problems arise. UM. So you know, I
Speaker 1: think there is a conversation going on within the health
Speaker 1: care industry about like how do we you know, UM,
Speaker 1: how do we respond in situations and what should we
Speaker 1: be doing as you know, hospitals or healthcare providers, UM,
Speaker 1: you know, to make sure that patients who who deserve
Speaker 1: charity care, who deserve finding out to help UM know
Speaker 1: about it first of all and and can get it.
Speaker 1: And I mean one of the things, you know, we
Speaker 1: spoke to a patient who had you know, twenty eight
Speaker 1: thousand dollars of medical data creed over years, and we're
Speaker 1: struggling to pay our bills. And she said she had
Speaker 1: never been offered financial assistance. Well, John, this is like
Speaker 1: you know, as I read through your story, I was
Speaker 1: curious and like, is this because minorities and lower socioeconomic
Speaker 1: individuals are on the lower socio economic scale don't have
Speaker 1: great medical coverage? Or is it that it's a system
Speaker 1: that repeatedly takes advantage of the vulnerable both. To be honest,
Speaker 1: I think we fully we don't fully know the explanation
Speaker 1: of why thisety exists. Right, there are some underlying inequities
Speaker 1: and income, wealth, healthcare, health insurance coverage that I think
Speaker 1: I'll contribute to it. But you know, one thing that
Speaker 1: you know, people told me as I was reporting the
Speaker 1: story is that you know, and I'm white, UM, black
Speaker 1: people who I of you, We're saying, you know, we
Speaker 1: are spoken to you differently in UM when we get
Speaker 1: medical care. We are there's already a kind of underlying
Speaker 1: UM fear of being treated differently. I don't think that,
Speaker 1: you know, could surprise anyone UM in the United States today.
Speaker 1: And so I think the question and again this hasn't
Speaker 1: fully been answered this, you know, to what extent do
Speaker 1: some you know, biases or implicit biases or differential practices
Speaker 1: have a disproportionate impact on people of color. Well, I
Speaker 1: gotta say it's one of those remarkable numbers. And as
Speaker 1: you said, creating the details in it. Um, you know,
Speaker 1: it just is a really serious situation and problem. Um, John,
Speaker 1: thank you so much, really appreciate you bringing it to light.
Speaker 1: Healthcare reporter at Bloomberg News. You can find this story
Speaker 1: online at Bloomberg dot com Slash business Week. Have a
Speaker 1: good Thanksgiving. Joe Webber, same to you, editor of Bloomberg
Speaker 1: Business Week, on the access line from Brooklyn. I should
Speaker 1: point out it's a special double issue of Bloomberg Business
Speaker 1: we deep dive into inflation, which is so relevant, especially
Speaker 1: considering some of the data points that we got today
Speaker 1: from various government agencies and private institutions. So um, but
Speaker 1: it's just again another sign of I feel like those
Speaker 1: who are most vulnerable just kind of getting another another
Speaker 1: a tough situation. Yeah. And the disparities, whether it's regional,
Speaker 1: by whether it's by race, I mean, there's so many
Speaker 1: ways to dissect and splice this but at the end
Speaker 1: of the day, it really is just sad. Carol, There's
Speaker 1: probably no other way to say it, right, and there's
Speaker 1: assistance out there to help these individuals. You're listening to
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes
Speaker 1: Tim Stenovit on Bloomberg Radio. Indeed, this is Bloomberg Business
Speaker 1: Week on this Wednesday before Thanksgiving. Tim's off and Krita
Speaker 1: Gupta in his place joining me here in our Interactive
Speaker 1: Broker studio. Well, the U s economy's main growth engine.
Speaker 1: We're talking about American consumers continuing to power ahead, and
Speaker 1: as we heard from Bloomberg Intelligence Pudham Goyle yesterday, that's
Speaker 1: expected to bode pretty well for the nation's retailers. So
Speaker 1: let's get to it and let's see what we're hearing
Speaker 1: from the nation's retailers ahead of the all important holiday
Speaker 1: shopping season. Tom McGhee is back with us. He's president
Speaker 1: of the i C s C. That's the global trade
Speaker 1: Association for the marketplaces industry, and Tom is with us
Speaker 1: once again, joining us right now from Los Angeles. Tom,
Speaker 1: good to have you here with Creating Myself. How are
Speaker 1: you good? How are you Happy Thanksgiving. Happy Thanksgiving. I'm
Speaker 1: getting ready planning to do probably a lot of my
Speaker 1: shopping online, to be quite honest, Um, tell me, we've
Speaker 1: got some really strong economic data on consumers spending. What
Speaker 1: are you hearing from members of the marketplaces community, whether
Speaker 1: it's storefronts, online, what are they saying about the upcoming
Speaker 1: holiday shopping season? Yeah, it's going to be a super
Speaker 1: strong holiday shopping season. We're forecasting eight growth in all
Speaker 1: the conditions for a strong a season or their good um,
Speaker 1: you know, strong economy, jobs, etcetera. So you know, although
Speaker 1: you know there has been strong retail demand to date,
Speaker 1: and obviously a lot of holiday sales have already taken place,
Speaker 1: given some of the supply chain concerns, etcetera, you know,
Speaker 1: all systems to go for the balance of the holiday
Speaker 1: season as well. I don't see anything that would deter
Speaker 1: me from many point nine percent of protection and quite frankly,
Speaker 1: potentially beating it. Well, Tom, you mentioned it's going to
Speaker 1: be a pretty good season. You mentioned some of it's
Speaker 1: already front run as well. How much of this preparation
Speaker 1: are our stores really doing? How much are like talk
Speaker 1: inventories to us? Yeah? I think the retailers have done
Speaker 1: a lot to try to prepare, you know, to manage
Speaker 1: to disapply chain issues. I mean, the first and most
Speaker 1: important thing they've done is trying to encourage shoppers to
Speaker 1: come out early, you know, to to you know, straight
Speaker 1: line demand over a longer period of time. You know,
Speaker 1: the larger retailers have done a lot to try to
Speaker 1: manage inventory in advance, um, you know, everything from looking
Speaker 1: at alternative sources to uh, you know, even getting different
Speaker 1: logistical operations in place to assist. So I think all
Speaker 1: of those things have really played a part in helping
Speaker 1: managing you know, some legitimate supply chain concerns that exists.
Speaker 1: But despite those supply chain concerns and and clar frankly,
Speaker 1: you know, obviously trained on consumer sentiment that has just
Speaker 1: not translated itself into any change. And consider demand or
Speaker 1: behavior right now, I mean it is it is very strong.
Speaker 1: Foot traffic, online traffic, all of all of the above
Speaker 1: is really at very robust levels right now, and I've
Speaker 1: see no indications that's going to change. Pretty remarkable, And
Speaker 1: I know you guys share some data with my team
Speaker 1: and my producer. On average, shoppers are projected to spend
Speaker 1: an average of four over the course of the weekend.
Speaker 1: Um is the bulk of it still brick and mortar.
Speaker 1: I mean we are still a brick and mortar world,
Speaker 1: aren't we. Yeah. No, I think the majority of those
Speaker 1: sales will be within physical stores and and you know,
Speaker 1: but there will be strong oath on e commerce as well.
Speaker 1: I mean, it really is a is a perfect situation
Speaker 1: where you're going to find strong demands throwing demand about channels,
Speaker 1: and as we talked about before, Carroll, I mean, those
Speaker 1: lines are really started to blur, and you know, there's
Speaker 1: a lot of trones acceleratoring the pandemic, and quite frankly
Speaker 1: because of the supply chain issues as well. You know,
Speaker 1: retailers have done a really good job of managing inventory
Speaker 1: and they're using their stores not only as a place
Speaker 1: where people can go and browse ails and shop, but
Speaker 1: they're also using their stories as a way to fulfill
Speaker 1: online orders as well. So it's a way of managing
Speaker 1: inventory um and fulfilling orders. And of course you have
Speaker 1: you know firchite pick up and pick and collect and
Speaker 1: all those types of things um that are really speaking
Speaker 1: to convergence. But as you get closer to the holiday too.
Speaker 1: You will see traffic and stories pick up also because
Speaker 1: people are going to be more concerned about the ability
Speaker 1: to get that product in their office if they buy
Speaker 1: it online because of the concerns around I change is
Speaker 1: just shipping straight on the shipping system right there, Tom,
Speaker 1: you mentioned was a pretty good deal for the consumer.
Speaker 1: This holiday season is looking pretty good already with Black Friday,
Speaker 1: Cyber Monday. How high is the bar set for two
Speaker 1: when it comes to this holiday season? Um, I think
Speaker 1: that two is going to be Personally, I think the
Speaker 1: signs are there for a very strong Um. You know,
Speaker 1: the only thing that would concern me in regards to
Speaker 1: demand going into twenty two are broader economic issues around
Speaker 1: the supply chain and obviously inflation and if the if
Speaker 1: inflation was wasn't transitory and it continued to have an
Speaker 1: impact of time. Um, consumer consumer sentiment that at some
Speaker 1: point it's going to translate into into retail sales and
Speaker 1: consumer behavior. Absent that, I think all the conditions are
Speaker 1: in place where a very robust retail environment in twenty
Speaker 1: twenty two and quite frankly potentially in the twenty twenty
Speaker 1: three and beyond. Uh, you know, there's a lot of
Speaker 1: the times that you saw during the pandemic. You know,
Speaker 1: the acceleration that people moving back to the suburbs, millennials,
Speaker 1: you know, buying homes, beginning to have families, et cetera.
Speaker 1: Those are all very good for demands because as you
Speaker 1: buy homes and have kids, you tend to buy a
Speaker 1: lot of stuff. And those things, coupled with a strong
Speaker 1: economy and emergence from the pandemic, I think created pretty
Speaker 1: good environment for retail s over before. As long as
Speaker 1: this supply chain issues are you know, our temporary and
Speaker 1: inflation doesn't become something that's sticking. Hey, um, Tom, just
Speaker 1: got about fifty seconds left here. I mean, how many
Speaker 1: shopping places are you going to be checking in over
Speaker 1: the holiday weekend? You're gonna be walking the malls and
Speaker 1: all that good stuff. Yeah, sure I will be. And
Speaker 1: I you know, I'm obviously in constant contact with our members,
Speaker 1: both our both our retailers and property developer members, and
Speaker 1: and and you know, get get reports in the am
Speaker 1: on how things are going. So and again, you know,
Speaker 1: as we said here today, Um, you know, the day
Speaker 1: before Thanksgiving, a lot of optimism about the weekend and
Speaker 1: about the balance of holiday season in general. I mean
Speaker 1: it's I think this could be a record breaking. It's palpable.
Speaker 1: I mean, I agree with you. All of a sudden,
Speaker 1: it feels like everybody's a beat. The big concern, as
Speaker 1: you said that supply chains and certainly the inflation outlooks
Speaker 1: definitely on everybody's mind. Hey, Tom, have a great Thanksgiving.
Speaker 1: Always good to hear your voice, Tomygee. He's president and
Speaker 1: chief executive officer, and I c SC represents the marketplaces industry,
Speaker 1: so we're talking a big time view when it comes
Speaker 1: to retalk. You're gonna be at shop in this weekend.
Speaker 1: I will be online shopping this weekend from the comfort
Speaker 1: of my bed, very excited about it. Do you get
Speaker 1: does is it like when you see Black Friday deals?
Speaker 1: Is it a catalyst for you to like check it out,
Speaker 1: maybe do something? It is? And you know, I hate
Speaker 1: that because I heard that they are baked in the discounts,
Speaker 1: are are baked into the prices. I don't know if
Speaker 1: that's true. We should say you feel managed. I feel
Speaker 1: a little managed, but that doesn't stop me from spending.
Speaker 1: I'm a shopoholic. You're listening to Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick takes Tim stint of it
Speaker 1: on Bloomberg Radio. A little bit about Amazon today, if
Speaker 1: we may. There's a great story about Bloomberg's Matt Day
Speaker 1: and Spencer soaper and creates about how far Amazon is
Speaker 1: willing to go to make sure you get all the
Speaker 1: things you want on time. And that doesn't make you
Speaker 1: feel good. Carol, tell me the truth. How many Amazon
Speaker 1: packages have you bought in the last year? You know what,
Speaker 1: I bought a lot during It was NonStop. Yeah, it
Speaker 1: was kind of crazy. We we paired back a little
Speaker 1: bit for me. It wasn't a habit I ever ever
Speaker 1: shook still still doing it all right, Well, let's see
Speaker 1: what Spencer has to say. Is Bloomberg News Technology and
Speaker 1: e commerce reporter. He is on the phone in Seattle.
Speaker 1: So Spencer, what is Amazon up to? Well, they're up
Speaker 1: to anything and everything to get packages to customers this holiday.
Speaker 1: So they're really trying to, you know, sidestep the shipping
Speaker 1: log jams. We have one anecdote in particular that kind
Speaker 1: of portrays this where it was, you know, shiploaded with
Speaker 1: rolled steel heading into a port, sleepy port and Everett, Um,
Speaker 1: Amazon had nothing to do at that, But what had
Speaker 1: managed to do is get space on the on the
Speaker 1: top of the ship to just load it up to
Speaker 1: containers that it needs inventory for the holiday, and even
Speaker 1: empty containers that it needs to shuffle inventory around. UM.
Speaker 1: The company plans to spend about four billion dollars this
Speaker 1: year extra just just to deal with the inefficiencies of
Speaker 1: all the log jams. But the message is sending is
Speaker 1: that it's going to pay whatever it takes to uh,
Speaker 1: you know, have the inventory available and get the inventory
Speaker 1: two people over the holiday. I actually love that. It
Speaker 1: is very reassuring, Carol. It's good to know I'm gonna
Speaker 1: get my packages no matter what. Spencer. I want to ask,
Speaker 1: what is this doing to their bottom line? How much
Speaker 1: is this digging into at the end of the day,
Speaker 1: their profits, because it wasn't too long ago that they
Speaker 1: reported pretty I think this want to say, correct me
Speaker 1: if I'm wrong, but they reported not so great earnings
Speaker 1: because they said shipping was costing so much that it
Speaker 1: ended up cutting into their profits. Yeah, and they and
Speaker 1: they forecast UM for the fourth quarter that they might
Speaker 1: just break even UM, which is a pretty big step
Speaker 1: back for them because they have been moving profit margins
Speaker 1: pretty regularly, so they waived a big red flag that
Speaker 1: the profits could be pretty marginal uh this quarter. But again,
Speaker 1: the Amazon calculation is we'd rather disappoint investors than disappoint customers.
Speaker 1: So the ultimate loss for them would be to have
Speaker 1: people go on Amazon, not find what they need, not
Speaker 1: be able to get it in time, and end up
Speaker 1: going to Walmart or Target or Best Buy. So Amazon
Speaker 1: wants to avoid that at all costs, even if even
Speaker 1: if that includes profits. Well, you know, Spencer right there,
Speaker 1: something to be said. Funny. My husband John and I
Speaker 1: were just talking about this at home. It's like, we
Speaker 1: don't we go to order something, we go straight to Amazon.
Speaker 1: We don't even we don't even shop around anymore, which
Speaker 1: is so Amazon wants to make sure that we don't
Speaker 1: get ticked off, right, that we don't get our stuff
Speaker 1: and that we start looking elsewhere. Yeah, exactly. They That's
Speaker 1: an extremely enviable position, right to be kind of the
Speaker 1: destination of choice for so many people, and the last
Speaker 1: thing you want to do is a road that by
Speaker 1: disappointing people. Another event is is this marketplace, uh, that
Speaker 1: they have the online marketplace, so it's not just buying
Speaker 1: from uh, inventory that Amazon owns directly. It's also this
Speaker 1: huge mix of online merchants who put their wears on
Speaker 1: Amazon for precisely the reason you mentioned, because so many
Speaker 1: people shop there and so that gives them this deep,
Speaker 1: deep inventory. And even if you don't find precisely the
Speaker 1: product you're looking for. Uh. You know, if you do
Speaker 1: that in a store, you go into a store looking
Speaker 1: for some specific thing and don't find it, there's an
Speaker 1: empty shelf, you walk out disappointed. On Amazon, there's this
Speaker 1: deep secondary inventory that could service and emerge and maybe
Speaker 1: you don't find exactly what you're looking for, you you
Speaker 1: find a pretty good alternative, and in this shopping environment,
Speaker 1: you're gonna be pretty happy about that. Spencer, tell us
Speaker 1: a little bit more about Amazon Air and their their
Speaker 1: efforts to take to the skies and transport cargo that way. Yeah. Well,
Speaker 1: a big thing that we saw this year. We've we've
Speaker 1: known about Amazon Air for a while now and they're
Speaker 1: up to like, I think eighty five planes this season
Speaker 1: that that really just get inventory around country. So that
Speaker 1: just helps them react quickly to any inventory shortages in
Speaker 1: any critical markets within the country. Another thing that they're
Speaker 1: doing this year that we highlighted, um, is that they're
Speaker 1: actually chartering planes, uh, internationally, so they'll they'll secure space
Speaker 1: on aircraft, you know, flying from China into the US.
Speaker 1: It costs a little more to do that than by sea.
Speaker 1: But right now, uh, you know a lot of merchants
Speaker 1: would rather have inventory in the US available for sale
Speaker 1: than sitting on a factory floor in China where it's
Speaker 1: where it's doing doing no good. So they're they're leaning
Speaker 1: on planes as well this year. Al Right, so Spencer,
Speaker 1: they figured out how to charter freighters, They've got Amazon Air, etcetera. Um,
Speaker 1: what about having enough people in the warehouse is to
Speaker 1: ultimately get it kind of the last mile or last
Speaker 1: few miles. Yeah, that's the big challenge and something they've
Speaker 1: acknowledge that this is unique for Amazon this year. It's
Speaker 1: it's usually capacity constrains, you know, doesn't have enough space
Speaker 1: in its facilities world of goods. This year, the big
Speaker 1: strain is going to do they have enough people they
Speaker 1: have enough people in the warehouses to get the inventory in,
Speaker 1: to pack it up, get it out the door. And
Speaker 1: also do they have enough drivers? You know they have
Speaker 1: these uh these Amazon Delivery service partners which are kind
Speaker 1: of small businesses around the country that operate these Amazon vans,
Speaker 1: and those companies have had trouble hiring as well. So yeah,
Speaker 1: it's going to be a big The ultimate test for
Speaker 1: Amazon now is going to be that that last smile,
Speaker 1: well they have the people that they need to deliver,
Speaker 1: and to do that, they've been offering pretty big hiring bonuses,
Speaker 1: you know, like up to three thousand dollars in some
Speaker 1: cases of requires you to stay a certain period of time.
Speaker 1: They've boosted wages, so once again they're they're trying to
Speaker 1: you know, outspend others in in competing for the labor
Speaker 1: pool as well. All right, well, another great, great piece
Speaker 1: of reporting when it comes to Amazon. Spencer, thank you
Speaker 1: so much, have a great Thanksgiving. Spencer Soaper, he's technology
Speaker 1: and e commerce reporter at Bloomberg News on the phone
Speaker 1: in Seattle. Took him out on Twitter at Spencer's Soaper.
Speaker 1: It's smart, right, Amazon just about to keep us in
Speaker 1: their network. It's kind of brilliant actually, right, Like it
Speaker 1: just stays get blown away and it is truly like
Speaker 1: our destination trade for everything. Imaginely going on Amazon and
Speaker 1: not finding something you would be like what you can't
Speaker 1: even imagine it. I'm yeah, but you let me drive.
Speaker 1: Oh no, no, no, no, this is not a toy. Please,
Speaker 1: I want to dry. Good question. This is the drive
Speaker 1: to the clothes on Bluebird Radio. All right, everybody, we
Speaker 1: are driving to the clothes, getting ready to wrap up
Speaker 1: the trading day before Thanksgiving. We do have a short
Speaker 1: and trading day on Friday, so we're not quite ready
Speaker 1: to wrap up the week. But let's get to it
Speaker 1: because we do have equities pretty much at their best
Speaker 1: levels of the session. After bouncing around a bit um.
Speaker 1: We did see some reaction in terms of those fed
Speaker 1: minutes yields off their highs of the session, but we
Speaker 1: definitely have seen a bump up in yield equation over
Speaker 1: the week overall. So let's get to it. Back with
Speaker 1: us as Tom Plumb, He's president chief investment officer at
Speaker 1: Plumb Funds based in Madison, Wisconsin, joining us on the
Speaker 1: phone from there. By the way, that Plumb balance fund
Speaker 1: in the ENTI for the past five years based on
Speaker 1: Bloomberg data, meaning a beach just about all other funds
Speaker 1: in its category, returning on average annually nearly fourteen percent.
Speaker 1: Hey Tom, nice to have you here with Crety Gupta
Speaker 1: and myself. Interesting week here. How do you see in
Speaker 1: terms of some of the broad macro trends that we've seen,
Speaker 1: yields moving up a little bit. Uh, and we certainly
Speaker 1: are seeing a strong patch of economic news. Does that
Speaker 1: bode well for the equity markets? For you? For you
Speaker 1: in your view? Alright, Carol Creedy? Ye, the question is
Speaker 1: are we going to continue the move that we've had
Speaker 1: for this multiple year period of time since the pandemic started?
Speaker 1: And and we think that we will. Um, it bodes well.
Speaker 1: I think on your guests just on a few minutes
Speaker 1: ago talked about how the consumers in such good shape.
Speaker 1: Purchases that we expect to be over the holiday season,
Speaker 1: uh set a record again. Uh. The consumer is so
Speaker 1: liquid they have been saving. Um, they're now more confident
Speaker 1: of the economy than they were a year ago. And
Speaker 1: we think that that liquidity that the Federal Reserve has
Speaker 1: provided has basically translated into asset prices going up. Certainly
Speaker 1: we see some of that in the inflation, but a
Speaker 1: lot of times we forget about that. One of the
Speaker 1: assets that's gone up tremendously in last year has been
Speaker 1: the stock market. I want to ask what your thoughts
Speaker 1: are on the next what do we have left month?
Speaker 1: Six weeks? Ish? We have volume already dropping this week.
Speaker 1: We know that for Thanksgiving holiday, we can kind of
Speaker 1: expect on the last maybe Christmas, New Year's kind of holidays. Well,
Speaker 1: but between that, is there really any room for any
Speaker 1: near term volatility? What do you think? Uh, Well, volatility
Speaker 1: is always and certainly most of the companies reported the
Speaker 1: third quarter, we've had a sprinkling of companies reporting, and
Speaker 1: sometimes that's caused an incredible amount of volatility with their stocks.
Speaker 1: But we we think that there's a number of companies
Speaker 1: that are great companies that really haven't participated in this
Speaker 1: year's advance, and those might be the stocks for next year,
Speaker 1: especially since we think that the economy is still going
Speaker 1: to be pretty strong next year and we're going to
Speaker 1: work through a lot of international things. You're going to
Speaker 1: work through a lot of supply chain issues, and a
Speaker 1: lot of companies are going to deal with this rising
Speaker 1: prices by figuring out how to become more lean and
Speaker 1: more efficient to One of the things we love talking
Speaker 1: about you is you've got a top performing fund consistently
Speaker 1: over the past five years and you talk names with us,
Speaker 1: and I love kind of digging into your holdings. One
Speaker 1: of the names that you like is Amazon, and that
Speaker 1: is a top holding within your fun. We just talked
Speaker 1: with our spencer Soaper about how Amazon is going to
Speaker 1: do basically whatever they need to do to make sure
Speaker 1: that if you place an order, they can get a
Speaker 1: product to you, even if it costs them more money
Speaker 1: to do so. Uh, you like Amazon? The stocks up
Speaker 1: about ten percent so far this year. What's the thinking
Speaker 1: or continue thinking when it comes to Amazon, Carol. When
Speaker 1: you think about it, there are very very few years
Speaker 1: that we've seen in the last ten years where Amazon
Speaker 1: has lagged the market advance, and this is one of
Speaker 1: them where it's about behind the rest of the side market.
Speaker 1: We think that this was a consolidation year that the
Speaker 1: sales are going to go and as they have shown before,
Speaker 1: they can pick their margins. Right now, they're picking growth
Speaker 1: over margins, and so this year is not our big
Speaker 1: earnings for here for the retail side. But you know,
Speaker 1: the retail side is becoming less and less important, even
Speaker 1: though it's growing, you know, in the double digits, it's
Speaker 1: still peals by the growth of other services and by aws.
Speaker 1: So there's this year the online retail will probably be
Speaker 1: less than fifty of their total sales, which is such
Speaker 1: a good point, right in terms of where the growth
Speaker 1: is going forward. Uh and Amazon, you know, we look
Speaker 1: at that, right, Creedy, We look at I love going
Speaker 1: to the d e S page and looking at revenue
Speaker 1: growth and you look at a w S over the
Speaker 1: past three years. You're talking about average are over the
Speaker 1: last three years growth here, and that is much more
Speaker 1: than what we're seeing in online. Yeah. But you know
Speaker 1: what's scary about that is Tom we were just talking
Speaker 1: with our very on Spencer Soaper about our own Amazon
Speaker 1: story dealing with essentially the supply chain issues where Amazon
Speaker 1: is kind of cutting into their own profits. He said,
Speaker 1: this holiday season they might just be breaking even That's
Speaker 1: a story you're hearing across a lot of big tack,
Speaker 1: a lot of these major companies. How does that affect
Speaker 1: the index as a whole, which, of course probably the
Speaker 1: majority of America is invested in some way. Well, well,
Speaker 1: that's a good point that this year is going to
Speaker 1: be here where they're basically are defending the position, maintaining
Speaker 1: their dominance in the online retail and they have shown
Speaker 1: us in the past. They're they're very willing to skip
Speaker 1: a profit here to contain to build this enterprise value,
Speaker 1: and so we expect that that will be what we
Speaker 1: see here. That earnest growth has been non existence, and
Speaker 1: but the revenue growth is going to continue to be
Speaker 1: so strong that they're going to continue to put all
Speaker 1: their co editors in an adverse position. Hey, I want
Speaker 1: to make sure Tom that we get in another name.
Speaker 1: Microsoft is another one that you continue to like at
Speaker 1: top holding. It's up fifty this year. Um, why is
Speaker 1: it that you think investors should continue to commit new
Speaker 1: money to it? Well, I think Microsoft is a neat
Speaker 1: company that has put together everything they need in this
Speaker 1: digital world. They moved the old services that we've all
Speaker 1: seen into a subscription service, high recurring revenue. None of
Speaker 1: us is going to stop paying our monthly or annual
Speaker 1: feasts to have Outlook and have Excel and all the
Speaker 1: different services that are in Microsoft Office. But the other
Speaker 1: side is that their their cloud based business has just exploded.
Speaker 1: And again we'll see when the Defense Department decides who's
Speaker 1: going to be responsible for that multi jointy billion dollar project.
Speaker 1: But they one at once, and they have a chance
Speaker 1: to win it again and talk about the other thing.
Speaker 1: I Carrol the other stock, and I know you don't
Speaker 1: have much time, but I think this is the incredible
Speaker 1: opportunity to buy Autodesk AFT that they reported yesterday. Everything
Speaker 1: that they said in their or matches what we think
Speaker 1: is in there for the long term. Well, we never
Speaker 1: have enough time, Tom, so come back soon. Tom Plumb,
Speaker 1: He's president, chief investment officer of at Plumb Funds, joining
Speaker 1: us on the phone from Madison, Wisconsin. Thanks for listening
Speaker 1: to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
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