1 00:00:05,800 --> 00:00:08,320 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim 2 00:00:08,400 --> 00:00:11,440 Speaker 1: Fox along with my co host Lisa Bramowitz. Each day 3 00:00:11,480 --> 00:00:15,000 Speaker 1: we bring you the most important, noteworthy, and useful interviews 4 00:00:15,040 --> 00:00:17,520 Speaker 1: for you and your money, whether you're at the grocery 5 00:00:17,520 --> 00:00:20,560 Speaker 1: store or the trading floor. Find the Bloomberg p m 6 00:00:20,680 --> 00:00:27,400 Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. 7 00:00:27,440 --> 00:00:30,720 Speaker 1: We're broadcasting for the Bloomberg Interactor Broker Studios. I'm Kim 8 00:00:30,840 --> 00:00:33,640 Speaker 1: Fox along with Romaine Bostick. I want to bring in 9 00:00:34,040 --> 00:00:37,879 Speaker 1: Stephen Serge Gilfoil. He is the founder and the president 10 00:00:37,920 --> 00:00:42,959 Speaker 1: of Serge nine eight six l l C. Joining us 11 00:00:43,000 --> 00:00:47,080 Speaker 1: from the New York Stock Exchange. Serge always a pleasure. 12 00:00:47,159 --> 00:00:50,040 Speaker 1: Happy Christmas and New Year to you and your family. 13 00:00:50,960 --> 00:00:53,920 Speaker 1: What do you say to them? What do you say 14 00:00:54,000 --> 00:00:57,680 Speaker 1: to your family or relatives when they ask you why 15 00:00:57,720 --> 00:01:02,120 Speaker 1: does stocks go up and down? You know that answer 16 00:01:02,200 --> 00:01:04,720 Speaker 1: is evolved over time. They don't say why do stocks 17 00:01:04,760 --> 00:01:07,480 Speaker 1: go up and down? Now because the way they used to, 18 00:01:07,480 --> 00:01:09,679 Speaker 1: Because they used to just ask the question the way 19 00:01:09,720 --> 00:01:11,520 Speaker 1: you just did, and I would try to explain to 20 00:01:11,560 --> 00:01:15,000 Speaker 1: them how price discovery works at a certain point of sale. 21 00:01:15,880 --> 00:01:18,080 Speaker 1: Now they would ask probably wider stocks and down go 22 00:01:18,680 --> 00:01:21,160 Speaker 1: Why do stocks move up and down so quickly and 23 00:01:21,240 --> 00:01:24,880 Speaker 1: so violently? And now it's largely a function of electronic 24 00:01:24,959 --> 00:01:28,280 Speaker 1: trading and trading in fractions of pennies. It's well, it's 25 00:01:28,280 --> 00:01:30,680 Speaker 1: a kind of throwing a piece, maybe a tree trunk, 26 00:01:30,680 --> 00:01:33,399 Speaker 1: into a wood chipper and just watching the spray behind 27 00:01:33,400 --> 00:01:36,520 Speaker 1: the machine. That's kind of how I explained stock trading 28 00:01:36,560 --> 00:01:40,160 Speaker 1: these days. And Steven, so yesterday, after the decline we 29 00:01:40,200 --> 00:01:42,560 Speaker 1: had yesterday, you know, I've reached out to a lot 30 00:01:42,600 --> 00:01:45,319 Speaker 1: of traders that I know, and none of them were around, 31 00:01:45,440 --> 00:01:48,680 Speaker 1: none of them were working. So I'm who's trading this week? 32 00:01:48,840 --> 00:01:53,680 Speaker 1: What's behind these big movements that we're having. Well, maybe 33 00:01:53,720 --> 00:01:56,480 Speaker 1: they don't have to presently where they used to have 34 00:01:56,560 --> 00:01:58,160 Speaker 1: to be in an office in Manhattan or on the 35 00:01:58,160 --> 00:02:00,640 Speaker 1: floor of the New York Stock Exchange or or someplace 36 00:02:00,680 --> 00:02:02,840 Speaker 1: close to the NASDAQ market side like they used to. 37 00:02:03,320 --> 00:02:05,760 Speaker 1: They could probably be in Iowa or or out of 38 00:02:05,760 --> 00:02:08,880 Speaker 1: the country and still have their their machines working for them, 39 00:02:08,880 --> 00:02:10,960 Speaker 1: will even be making decisions, even if they do it 40 00:02:11,000 --> 00:02:14,320 Speaker 1: in slow motion like I do, still working through a computer. 41 00:02:15,080 --> 00:02:18,760 Speaker 1: I really I can't imagine taking off when the when 42 00:02:18,800 --> 00:02:21,120 Speaker 1: the volumes you know are going to be light, because 43 00:02:21,160 --> 00:02:24,600 Speaker 1: that's when you're at your largest risk. Really, and I 44 00:02:24,639 --> 00:02:26,840 Speaker 1: think you you really have to defend yourself. I'm probably 45 00:02:26,880 --> 00:02:30,160 Speaker 1: working more hours these days that I do normally. Well, 46 00:02:30,200 --> 00:02:32,959 Speaker 1: you've got an assistant there, I think, who's got four legs, 47 00:02:33,000 --> 00:02:36,519 Speaker 1: So that's probably adding to the energy in the office place. 48 00:02:37,160 --> 00:02:40,720 Speaker 1: That's okay. So what well, what do you if an 49 00:02:40,720 --> 00:02:43,240 Speaker 1: investor comes to you and says, how do you make 50 00:02:43,440 --> 00:02:47,640 Speaker 1: sense of a one thousand, nearly an eleven hundred point 51 00:02:47,760 --> 00:02:51,600 Speaker 1: gain in the Dow Jones Industrial Average and then the 52 00:02:51,840 --> 00:02:55,840 Speaker 1: next day you see a decline Right now we're talking 53 00:02:55,840 --> 00:03:00,520 Speaker 1: about a drop of over four hundred points. How do 54 00:03:00,560 --> 00:03:07,880 Speaker 1: you explain in rational terms evaluation based on those changes? Well, 55 00:03:07,919 --> 00:03:11,799 Speaker 1: you you you really cannot justify this through the laws 56 00:03:11,800 --> 00:03:13,840 Speaker 1: of supply and demand. But what you have to do 57 00:03:13,880 --> 00:03:16,040 Speaker 1: is explain to your clients or your friends, or whoever's 58 00:03:16,080 --> 00:03:20,440 Speaker 1: asking you that the machines are designed to overshooting both directions, 59 00:03:20,520 --> 00:03:23,800 Speaker 1: or they're almost I feel they're designed to cause instability. 60 00:03:24,160 --> 00:03:26,600 Speaker 1: What you have to do as a trader, is you 61 00:03:26,840 --> 00:03:30,160 Speaker 1: you even if you prefer fundamental analysis, like that's how 62 00:03:30,200 --> 00:03:32,720 Speaker 1: I came into this business from a fundamental angle, on 63 00:03:32,760 --> 00:03:34,880 Speaker 1: a macro angle. But now you really do have to 64 00:03:34,960 --> 00:03:39,600 Speaker 1: learn technical analysis because the guys who control of the algorithms, 65 00:03:39,600 --> 00:03:41,520 Speaker 1: who they hire guys like me who know how to 66 00:03:41,520 --> 00:03:43,720 Speaker 1: read charts. So if you can learn how to read 67 00:03:43,760 --> 00:03:46,520 Speaker 1: the charts, you're you're almost in their heads a little bit. 68 00:03:46,600 --> 00:03:48,800 Speaker 1: And what you have to do as a trader is 69 00:03:48,920 --> 00:03:51,720 Speaker 1: narrow your book, and you have you have to focus 70 00:03:51,760 --> 00:03:54,040 Speaker 1: short term instead of long term. You've always been taught 71 00:03:54,080 --> 00:03:56,160 Speaker 1: to be a long term investor. Well it's okay if 72 00:03:56,200 --> 00:03:58,040 Speaker 1: you do that to some degree, but you have to 73 00:03:58,040 --> 00:04:00,360 Speaker 1: be a short term trader on days like this because 74 00:04:00,640 --> 00:04:02,520 Speaker 1: because technicals are the only way to get out of 75 00:04:02,520 --> 00:04:06,400 Speaker 1: this without a big, big minus sign on your portfolio. Well, 76 00:04:06,440 --> 00:04:07,839 Speaker 1: I mean, when you look at the drop that we've 77 00:04:07,840 --> 00:04:10,640 Speaker 1: had in the market, you know, seventent or so on 78 00:04:10,680 --> 00:04:14,200 Speaker 1: the SMP since the beginning of October, do you think 79 00:04:14,240 --> 00:04:17,480 Speaker 1: this has been a fair repricing of some of these 80 00:04:17,520 --> 00:04:21,360 Speaker 1: assets when you look at some of those fundamental measures, Uh, 81 00:04:21,400 --> 00:04:24,440 Speaker 1: this is a fair repricing if indeed we are headed 82 00:04:24,440 --> 00:04:29,240 Speaker 1: into a recession in late the transports, it, down commodities, 83 00:04:29,320 --> 00:04:32,200 Speaker 1: down stocks have been violently devalued. I think they're about 84 00:04:32,240 --> 00:04:34,839 Speaker 1: just barely fifteen times before we're looking earnings now, and 85 00:04:34,839 --> 00:04:37,760 Speaker 1: that's only if those earnings are actually decent or or 86 00:04:37,800 --> 00:04:41,800 Speaker 1: as expected. So yes, if we are slowing down to 87 00:04:41,839 --> 00:04:44,240 Speaker 1: the point where we probably will experience a recession, maybe 88 00:04:44,279 --> 00:04:49,279 Speaker 1: globally but domestically at least the then items are being 89 00:04:49,320 --> 00:04:51,640 Speaker 1: fairly priced at this point, and it's probably more to go. 90 00:04:52,120 --> 00:04:55,480 Speaker 1: I would think that as we move into the new year, 91 00:04:55,600 --> 00:04:57,760 Speaker 1: we're gonna we might see a little seasonal bouncy. We 92 00:04:57,839 --> 00:04:59,560 Speaker 1: got some of that yesterday. There's going to be a 93 00:04:59,560 --> 00:05:02,680 Speaker 1: rebound going into the end of the year. So next 94 00:05:02,680 --> 00:05:05,440 Speaker 1: week you might feel good about your stocks, but it's 95 00:05:05,480 --> 00:05:07,719 Speaker 1: probably going to be short lived because we're going to 96 00:05:07,760 --> 00:05:11,440 Speaker 1: be up against some serious headline risk regarding politics, geo politics, 97 00:05:11,560 --> 00:05:13,960 Speaker 1: the trade wars. All of these are going to produce 98 00:05:14,440 --> 00:05:17,920 Speaker 1: negative headlines multiple times and likely or likelihood before they 99 00:05:18,000 --> 00:05:21,440 Speaker 1: produce any possibility of a positive outcome, and the market 100 00:05:21,440 --> 00:05:23,479 Speaker 1: will die a thousand deaths over that time. Unless you 101 00:05:23,520 --> 00:05:26,880 Speaker 1: know how to defend yourself. Sorge. Let's just assume that 102 00:05:26,960 --> 00:05:30,719 Speaker 1: there's an investor out there who's willing to wait five years. 103 00:05:31,480 --> 00:05:34,920 Speaker 1: What would you recommend they do. All right. I would 104 00:05:34,920 --> 00:05:37,960 Speaker 1: actually tell that that investor to split his book in 105 00:05:38,040 --> 00:05:40,520 Speaker 1: two ways. One, you want you want the income, so 106 00:05:40,560 --> 00:05:42,400 Speaker 1: you need to go to the dividend names. Maybe not 107 00:05:42,560 --> 00:05:45,120 Speaker 1: utility names, but you need you need dividend names in 108 00:05:45,120 --> 00:05:47,320 Speaker 1: your book. Is you need to provide income while you wait, 109 00:05:47,680 --> 00:05:52,240 Speaker 1: and you don't want to completely exclude yourself and growth. 110 00:05:52,320 --> 00:05:54,680 Speaker 1: So you actually want to expose yourself a little to 111 00:05:54,839 --> 00:05:57,080 Speaker 1: energy because even though it's dangerous right now, they still 112 00:05:57,080 --> 00:05:59,280 Speaker 1: pay the dividend and if they're they're the only dividend 113 00:05:59,279 --> 00:06:01,960 Speaker 1: payers out there that if there is growth, they're gonna 114 00:06:02,000 --> 00:06:04,160 Speaker 1: grit with it. And you need the cloud. You need 115 00:06:04,200 --> 00:06:06,800 Speaker 1: the cloud because that's where potential growth is going to be. 116 00:06:07,200 --> 00:06:09,400 Speaker 1: And they're not exposed to China for the most part. 117 00:06:09,640 --> 00:06:11,720 Speaker 1: So this is this is the part of technology that 118 00:06:11,760 --> 00:06:15,039 Speaker 1: will survive much better than semi conductors because they're oversupplied 119 00:06:15,120 --> 00:06:17,440 Speaker 1: right now. Yeah, I tell you about but a little 120 00:06:17,480 --> 00:06:19,920 Speaker 1: bit more about the growth side of this, because I mean, 121 00:06:19,920 --> 00:06:22,520 Speaker 1: obviously you know this bull market, it was easy to 122 00:06:22,560 --> 00:06:25,640 Speaker 1: find growth, and now we're at a stage where even 123 00:06:25,640 --> 00:06:27,200 Speaker 1: though we're not falling off a cliff, it's a lot 124 00:06:27,279 --> 00:06:29,880 Speaker 1: harder to find those growth socks. Is there anywhere else 125 00:06:29,920 --> 00:06:32,760 Speaker 1: other than just some of the cloud software companies where 126 00:06:32,839 --> 00:06:36,160 Speaker 1: we can find that well cloud and like and like 127 00:06:36,200 --> 00:06:38,120 Speaker 1: I said the energy, because I think the energy is 128 00:06:38,200 --> 00:06:40,000 Speaker 1: kind of it's it's a double edged sword. You're gonna 129 00:06:40,000 --> 00:06:42,279 Speaker 1: die with the commodity. But if you can wait, they're 130 00:06:42,279 --> 00:06:45,120 Speaker 1: gonna pay you five six percent. So don't turn you 131 00:06:45,200 --> 00:06:48,279 Speaker 1: back completely on oil right now, even though it seems difficult. 132 00:06:48,560 --> 00:06:50,920 Speaker 1: I've actually been buying oil last week and this week 133 00:06:50,960 --> 00:06:53,159 Speaker 1: got at these horrendous prices, and most of these names 134 00:06:53,160 --> 00:06:56,280 Speaker 1: are actually against those purchases already. But I do know 135 00:06:56,360 --> 00:06:58,280 Speaker 1: that I'm that Royal Dutch Shell is going to pay 136 00:06:58,279 --> 00:07:00,080 Speaker 1: me six percent, that Excel is going to pay me 137 00:07:00,160 --> 00:07:02,800 Speaker 1: five percent, that British Petroleum is gonna pay me five percent. 138 00:07:03,040 --> 00:07:04,680 Speaker 1: So I have a little ligor room here. I can 139 00:07:04,680 --> 00:07:06,520 Speaker 1: take a little bit of a lass before I'm actually 140 00:07:06,520 --> 00:07:10,280 Speaker 1: in trouble. So I think I actually think at these 141 00:07:10,320 --> 00:07:14,480 Speaker 1: prices that energy becomes your the best way to both 142 00:07:14,480 --> 00:07:17,280 Speaker 1: provide income and a little bit of growth. Many thanks 143 00:07:17,480 --> 00:07:20,880 Speaker 1: Stephen Serge Gilfoil. He is the founder of the President's 144 00:07:20,920 --> 00:07:24,640 Speaker 1: Serge nine eight six LLC. The floor of the new 145 00:07:24,680 --> 00:07:27,560 Speaker 1: York Stock Exchange and just taking a look right now, 146 00:07:27,680 --> 00:07:31,720 Speaker 1: remain at the dividend deal the BP it is six 147 00:07:31,800 --> 00:07:39,440 Speaker 1: point seven percent Romaine. You know, whatever anybody says is 148 00:07:39,480 --> 00:07:42,320 Speaker 1: going to turn into a year of questioning whether the 149 00:07:42,400 --> 00:07:47,200 Speaker 1: market can digest very large initial public offerings. Right. I 150 00:07:47,240 --> 00:07:51,560 Speaker 1: mean we've heard about Lift, We've heard about Uber Valenteer. 151 00:07:52,520 --> 00:07:55,320 Speaker 1: This is like a huge list of companies that want 152 00:07:55,360 --> 00:07:57,200 Speaker 1: to go public. Yeah, and and I mean, you know, 153 00:07:57,240 --> 00:07:59,240 Speaker 1: who would have thought that this is the environment they're 154 00:07:59,240 --> 00:08:01,240 Speaker 1: going to try to sell into, assuming they go through 155 00:08:01,280 --> 00:08:03,840 Speaker 1: with it. But you know there's an appetite out there, right, 156 00:08:04,160 --> 00:08:06,760 Speaker 1: very good point. Let's find out if there is indeed 157 00:08:06,800 --> 00:08:09,920 Speaker 1: an appetite. Joining us now is a Tich Davta. He 158 00:08:10,040 --> 00:08:13,400 Speaker 1: is the chief executive of Equity Zen A Tich. Thanks 159 00:08:13,440 --> 00:08:16,800 Speaker 1: for being here. Just give us the outlook for the 160 00:08:16,920 --> 00:08:21,440 Speaker 1: kinds of companies and the characteristics that they display that 161 00:08:21,560 --> 00:08:25,720 Speaker 1: you believe are going to go public in Yeah, twenty 162 00:08:25,840 --> 00:08:27,640 Speaker 1: nineteen is going to be a year where we're not 163 00:08:27,680 --> 00:08:29,960 Speaker 1: going to see any records being said, with the number 164 00:08:30,000 --> 00:08:31,880 Speaker 1: of IPOs that we see, it's going to be nowhere 165 00:08:31,920 --> 00:08:35,480 Speaker 1: near the activity we saw in teen. We might not 166 00:08:35,520 --> 00:08:38,439 Speaker 1: even hit the i p o s that were slated 167 00:08:38,480 --> 00:08:40,840 Speaker 1: to prices this year. What we are going to see though, 168 00:08:40,960 --> 00:08:43,560 Speaker 1: are some blockbuster I p o s, those companies that 169 00:08:43,600 --> 00:08:46,040 Speaker 1: are over ten years old now and it's time to 170 00:08:46,040 --> 00:08:48,200 Speaker 1: move out of the parents basement, out of the private 171 00:08:48,240 --> 00:08:52,600 Speaker 1: markets into the public markets. I'm talking about names like Uber, Airbnb, Slack. 172 00:08:53,400 --> 00:08:55,520 Speaker 1: But you talk about moving out of the parents basement 173 00:08:55,960 --> 00:08:58,319 Speaker 1: the old days of I p o s, These companies 174 00:08:58,360 --> 00:09:00,600 Speaker 1: moved out of their parents basement at a pretty young age. 175 00:09:00,640 --> 00:09:02,520 Speaker 1: And I feel like all of these companies you mentioned, 176 00:09:02,840 --> 00:09:06,600 Speaker 1: particularly Uber for example, are are pretty weathered companies. On 177 00:09:06,600 --> 00:09:08,079 Speaker 1: one hand, I guess that could be a good thing, 178 00:09:08,160 --> 00:09:10,880 Speaker 1: but once you go into the public markets, particularly for 179 00:09:10,880 --> 00:09:13,800 Speaker 1: the secondary investors, what are they really getting out of this? 180 00:09:13,840 --> 00:09:16,360 Speaker 1: Hasn't all the growth sort of taken place with these 181 00:09:16,400 --> 00:09:19,440 Speaker 1: companies that so you're absolutely right in that these companies 182 00:09:19,480 --> 00:09:21,560 Speaker 1: are a lot more mature than they used to be, 183 00:09:21,720 --> 00:09:24,360 Speaker 1: you know, twenty years ago when when when companies won public. 184 00:09:24,760 --> 00:09:28,319 Speaker 1: You know, equisons business is that of conducting secondary transactions 185 00:09:28,400 --> 00:09:32,120 Speaker 1: while these companies are still private. So, you know, with 186 00:09:32,360 --> 00:09:34,840 Speaker 1: not talking about any company in particular, we've now helped 187 00:09:34,920 --> 00:09:38,559 Speaker 1: well over a hundred firms conduct these secondary transactions, over 188 00:09:38,600 --> 00:09:40,439 Speaker 1: a dozen of them. A couple dozen of them actually 189 00:09:40,480 --> 00:09:43,880 Speaker 1: have gone public since then. And what we see is 190 00:09:44,120 --> 00:09:48,640 Speaker 1: a growing appetite while these companies are still private, uh 191 00:09:48,720 --> 00:09:51,520 Speaker 1: in people wanting to invest in these companies and existing 192 00:09:51,559 --> 00:09:56,040 Speaker 1: shareholders wanting liquidity from these from these companies shares, and 193 00:09:56,200 --> 00:09:58,959 Speaker 1: as they go public, you know, effectively you can expand 194 00:09:59,000 --> 00:10:01,560 Speaker 1: the pool of people can access it outside of just 195 00:10:01,600 --> 00:10:05,960 Speaker 1: accredited investors. Do you see do you see more activity 196 00:10:06,080 --> 00:10:10,760 Speaker 1: uh on on your platform nowadays with some of the 197 00:10:10,840 --> 00:10:13,120 Speaker 1: insiders maybe wanting to sort of you know, take some 198 00:10:13,200 --> 00:10:16,320 Speaker 1: of the uh you know, whatever potential profits they've already gotten. 199 00:10:16,920 --> 00:10:19,240 Speaker 1: Has that increased or is it just about the same. 200 00:10:19,559 --> 00:10:21,840 Speaker 1: You know, our business has kept growing, so I wouldn't 201 00:10:21,880 --> 00:10:24,480 Speaker 1: say it's specific to anyone company, and we're seeing more 202 00:10:24,480 --> 00:10:27,560 Speaker 1: activity now than before. I think we're generally seeing more activity. 203 00:10:27,760 --> 00:10:29,320 Speaker 1: But frankly, I think a lot of this has to 204 00:10:29,320 --> 00:10:32,760 Speaker 1: do with education to the broader public that look, before, 205 00:10:33,120 --> 00:10:35,200 Speaker 1: unless you had ten million dollars, there was no way 206 00:10:35,240 --> 00:10:38,640 Speaker 1: you can access this asset class in the first place. Uh. 207 00:10:38,679 --> 00:10:40,360 Speaker 1: You know, you could call up your broker at Goldman 208 00:10:40,440 --> 00:10:42,800 Speaker 1: or private wealth manager Morgan Stanley. But outside of that, 209 00:10:42,840 --> 00:10:45,880 Speaker 1: you had no options today with a business like equities, 210 00:10:45,880 --> 00:10:48,760 Speaker 1: and we can allow these accredited investors to invest as 211 00:10:48,760 --> 00:10:52,360 Speaker 1: little as ten thousand dollars into these late stage private companies. 212 00:10:52,480 --> 00:10:55,360 Speaker 1: What we do see though, is people saying, look, exactly 213 00:10:55,360 --> 00:10:58,079 Speaker 1: as you said, you know the values being created in 214 00:10:58,120 --> 00:11:00,520 Speaker 1: the private market. Why am I sitting on the sidelines? 215 00:11:00,559 --> 00:11:02,320 Speaker 1: Why do you have to continue to wait until this 216 00:11:02,360 --> 00:11:05,760 Speaker 1: company's public? And by the way, worth potentially five times 217 00:11:05,760 --> 00:11:08,439 Speaker 1: more than what I already know is a good stock today. 218 00:11:08,559 --> 00:11:11,400 Speaker 1: Where's the money going to come from to buy these 219 00:11:11,440 --> 00:11:14,640 Speaker 1: initial public offerings at a time when people are looking 220 00:11:14,679 --> 00:11:17,480 Speaker 1: at their year to date performance. For let's say, the 221 00:11:17,640 --> 00:11:21,400 Speaker 1: SMP five hundred approaching a drop of ten percent, you 222 00:11:21,480 --> 00:11:24,120 Speaker 1: might have to correct that in about an hour from now. 223 00:11:25,040 --> 00:11:27,960 Speaker 1: You no, Look, it's a good point. I think what 224 00:11:27,960 --> 00:11:31,559 Speaker 1: we're seeing here is long term and short term minded 225 00:11:31,600 --> 00:11:34,600 Speaker 1: investors coming together. And what we see is long term 226 00:11:34,600 --> 00:11:37,520 Speaker 1: minded investors. Basically, the reason a lot of these companies 227 00:11:37,559 --> 00:11:39,360 Speaker 1: try to go public in the first place, the reason 228 00:11:39,400 --> 00:11:41,400 Speaker 1: they try to pursue the I P or route, is 229 00:11:41,440 --> 00:11:44,480 Speaker 1: so that they can lock in these you know, these 230 00:11:44,520 --> 00:11:48,120 Speaker 1: cornerstone investors these anchor investors, the mutual funds out there well, 231 00:11:48,120 --> 00:11:49,720 Speaker 1: but also they come on to be honest, they just 232 00:11:49,760 --> 00:11:52,120 Speaker 1: want to get out. I mean, if you've invested, you've 233 00:11:52,120 --> 00:11:55,280 Speaker 1: been waiting, waiting, waiting, you want a big pay day, 234 00:11:55,960 --> 00:11:59,280 Speaker 1: and whether it's Uber or air b and B, you 235 00:11:59,320 --> 00:12:01,600 Speaker 1: want to get out. That always raises the question if 236 00:12:01,600 --> 00:12:05,480 Speaker 1: it's such a great investment, why are you selling it? 237 00:12:06,240 --> 00:12:08,280 Speaker 1: So you know, it definitely used to be the case 238 00:12:08,320 --> 00:12:11,040 Speaker 1: that the I p O was the liquidity event for 239 00:12:11,080 --> 00:12:14,200 Speaker 1: all these insiders. I think what we've what we've seen 240 00:12:14,240 --> 00:12:17,320 Speaker 1: in the last five, six, seven, eight years. EQUITISN has 241 00:12:17,320 --> 00:12:19,040 Speaker 1: been around for the last six years. What we've seen 242 00:12:19,360 --> 00:12:22,319 Speaker 1: is not only the the c suite but also the 243 00:12:22,400 --> 00:12:25,480 Speaker 1: rank and file be able to get that pay day, 244 00:12:25,520 --> 00:12:28,560 Speaker 1: you know, over time in bits and piece. Because if 245 00:12:28,559 --> 00:12:32,040 Speaker 1: you've got a thirty billion valuation for something like Airbnb, boy, 246 00:12:32,120 --> 00:12:34,600 Speaker 1: I mean, why wait? You want to be able to 247 00:12:34,600 --> 00:12:37,160 Speaker 1: take that money and run well, and you're hoping that 248 00:12:37,160 --> 00:12:39,920 Speaker 1: the thirty billion dollar valuation hopefully can be even bigger, 249 00:12:39,960 --> 00:12:41,600 Speaker 1: So you want to at least take a few chips 250 00:12:41,640 --> 00:12:44,200 Speaker 1: off the table, right, and that liquidity we can go 251 00:12:44,240 --> 00:12:46,280 Speaker 1: towards paying off your loans or buying a house or 252 00:12:46,280 --> 00:12:48,640 Speaker 1: buying a second house or what have you. It certainly 253 00:12:48,800 --> 00:12:51,000 Speaker 1: used to be the case that that wasn't possible before. 254 00:12:51,320 --> 00:12:53,760 Speaker 1: Now it's possible even in the private markets. The I 255 00:12:53,840 --> 00:12:56,120 Speaker 1: p O. Isn't this discrete event that it used to 256 00:12:56,120 --> 00:12:59,000 Speaker 1: be quite as much. Uh you know, but before it 257 00:12:59,040 --> 00:13:00,960 Speaker 1: was like, oh, you haven't grab duated yet, boom you've 258 00:13:01,040 --> 00:13:03,280 Speaker 1: you've graduated into the public markets. Now it's a little 259 00:13:03,360 --> 00:13:05,520 Speaker 1: more continuous than that. And I think what we're gonna 260 00:13:05,520 --> 00:13:08,439 Speaker 1: see is, uh, you know, a lot of capital coming 261 00:13:08,480 --> 00:13:11,280 Speaker 1: from individuals who are saying, well, I'm not accredited, I 262 00:13:11,280 --> 00:13:15,520 Speaker 1: couldn't access this investment before. I still believe this valuation 263 00:13:15,600 --> 00:13:18,719 Speaker 1: is going to increase from here. Otherwise we wouldn't have 264 00:13:18,760 --> 00:13:21,720 Speaker 1: seen a lot of sophisticated investors coming too these stocks 265 00:13:21,720 --> 00:13:23,640 Speaker 1: while we were still pro Are you hearing or sending 266 00:13:23,760 --> 00:13:26,800 Speaker 1: hearing or seeing any issues with regards to the valuations 267 00:13:26,800 --> 00:13:29,960 Speaker 1: on some of these private companies Because we've had at 268 00:13:30,000 --> 00:13:33,240 Speaker 1: least some of the bigger investors that have been required 269 00:13:33,280 --> 00:13:35,560 Speaker 1: to disclose their stakes and some of these private companies, 270 00:13:35,679 --> 00:13:38,000 Speaker 1: we have some some of those valuations ratcheted down a 271 00:13:38,040 --> 00:13:39,920 Speaker 1: little bit. What are you saying, you know, you see 272 00:13:40,000 --> 00:13:42,480 Speaker 1: mutual funds. You know that after report at least quarterly, 273 00:13:42,480 --> 00:13:45,320 Speaker 1: if non monthly, basically mark their book to market. What 274 00:13:45,360 --> 00:13:49,440 Speaker 1: we see is they their accuracy uh leaves a little 275 00:13:49,480 --> 00:13:52,560 Speaker 1: bit to be desired in terms of valuing these private companies. 276 00:13:52,600 --> 00:13:55,360 Speaker 1: I mean, they're the ones that mark down Dropbox right 277 00:13:55,400 --> 00:13:58,120 Speaker 1: before Drawbucks announced it was going to go public. Uh. 278 00:13:58,160 --> 00:14:00,320 Speaker 1: And so there's just not a very strong know they're 279 00:14:00,360 --> 00:14:02,320 Speaker 1: just not a very strong predictor. It is, of course, 280 00:14:02,320 --> 00:14:04,960 Speaker 1: still a signal. And what we're seeing on the private 281 00:14:04,960 --> 00:14:07,520 Speaker 1: side as far as equities on goes is as we 282 00:14:07,880 --> 00:14:10,360 Speaker 1: see the order books effectively and legally it's a different 283 00:14:10,360 --> 00:14:12,400 Speaker 1: structure of course, but effectively, as we see the supply 284 00:14:12,440 --> 00:14:14,600 Speaker 1: and the demand on the private side start to build up, 285 00:14:14,880 --> 00:14:17,400 Speaker 1: we can start to see that, you know, where the 286 00:14:17,440 --> 00:14:19,280 Speaker 1: pricing is going to shake out. This happened quite a 287 00:14:19,280 --> 00:14:22,960 Speaker 1: bit before Spotify went through with its direct listing, uh, 288 00:14:23,000 --> 00:14:24,960 Speaker 1: and we were able to get a pretty decent price 289 00:14:25,200 --> 00:14:27,600 Speaker 1: um level on that. We gotta leave it there. I 290 00:14:27,640 --> 00:14:30,320 Speaker 1: want to thank you very much. A teacher doctor, chief 291 00:14:30,320 --> 00:14:35,920 Speaker 1: executive equity Zen talking all about initial public offerings. This 292 00:14:36,160 --> 00:14:42,680 Speaker 1: is Bloomberg. I'm Pim Fox along with Romaine Bostick, and 293 00:14:42,760 --> 00:14:46,880 Speaker 1: we're broadcasting from the Bloomberg Interactor Broker's studios. You know, 294 00:14:46,960 --> 00:14:51,560 Speaker 1: remain today Saudi Arabia's King Salmon. He named the former 295 00:14:51,760 --> 00:14:56,720 Speaker 1: finance minister, Ibrahim Alasaf as the foreign minister. He becomes 296 00:14:56,760 --> 00:14:59,960 Speaker 1: the kingdom's top diplomat. And here to tell us more 297 00:15:00,000 --> 00:15:03,680 Speaker 1: about changes at the top of the governing pyramid in 298 00:15:03,880 --> 00:15:09,240 Speaker 1: Saudi Arabia is Dr Ellen Wald, President of Transversal Consulting. 299 00:15:09,800 --> 00:15:12,840 Speaker 1: Dr Wald is also a nonresident Senior Fellow at the 300 00:15:12,840 --> 00:15:17,440 Speaker 1: Atlantic Council's Global Energy Center. Dr Wald, thank you very 301 00:15:17,520 --> 00:15:20,640 Speaker 1: much for being with us. What did these changes in 302 00:15:20,760 --> 00:15:27,960 Speaker 1: Saudi Arabian's leadership mean? So it's not unexpected that he 303 00:15:28,080 --> 00:15:30,960 Speaker 1: was that they were going to reshuffle the Saudi cabinet um, 304 00:15:31,000 --> 00:15:35,280 Speaker 1: particularly given what the Saudias have gone through this past year. UM. 305 00:15:35,360 --> 00:15:39,640 Speaker 1: I think it's significant, uh that certain individuals have remained 306 00:15:39,840 --> 00:15:44,560 Speaker 1: um Holida Fali, the oil minister, and um the current 307 00:15:44,600 --> 00:15:47,600 Speaker 1: Finance minister, staying at their post. These are really key 308 00:15:47,640 --> 00:15:50,800 Speaker 1: positions for the Saudias, and it does seem like the 309 00:15:50,800 --> 00:15:53,400 Speaker 1: Saudis are very pleased with how they've been been handling 310 00:15:53,480 --> 00:15:57,920 Speaker 1: them this year um UH Foreign Minister Ada al Jubert, 311 00:15:58,240 --> 00:16:02,400 Speaker 1: who was used to be the ambassador to the United States, 312 00:16:02,480 --> 00:16:06,200 Speaker 1: has been reappointed UM. I would I would say that 313 00:16:06,320 --> 00:16:10,240 Speaker 1: this is an interesting move because he was you know, young, 314 00:16:10,520 --> 00:16:13,840 Speaker 1: very well educated. Um it really able I think to 315 00:16:13,880 --> 00:16:18,000 Speaker 1: connect with UM with foreigners, and he is being replaced 316 00:16:18,000 --> 00:16:21,400 Speaker 1: with someone who's older, maybe more experienced, but someone who 317 00:16:21,560 --> 00:16:25,040 Speaker 1: was detained in the writs for for quite some time. 318 00:16:25,200 --> 00:16:28,720 Speaker 1: So it's an interesting move. I would say that perhaps 319 00:16:28,720 --> 00:16:32,600 Speaker 1: they were not particularly satisfied with the way that at 320 00:16:32,600 --> 00:16:37,080 Speaker 1: al Jubert handled UH the issues surrounding the Kashogi affair, 321 00:16:37,480 --> 00:16:40,080 Speaker 1: although I'm not really sure he could have handled them 322 00:16:40,080 --> 00:16:43,440 Speaker 1: any better than than he did, so it'll be interesting 323 00:16:43,520 --> 00:16:46,320 Speaker 1: to see how this how this falls out. It also 324 00:16:46,320 --> 00:16:49,320 Speaker 1: seems that they're kind of trying to separate UH and 325 00:16:49,320 --> 00:16:51,800 Speaker 1: and make sure that it seems at least from the 326 00:16:51,840 --> 00:16:55,720 Speaker 1: outside that King Salmon is playing a greater role, whether 327 00:16:55,760 --> 00:16:57,760 Speaker 1: he really is playing a greater role, but I do 328 00:16:57,840 --> 00:17:01,400 Speaker 1: think that this definitely shows the outside world that King 329 00:17:01,480 --> 00:17:05,840 Speaker 1: Salmon is definitely UM taking a more prominent role in 330 00:17:06,560 --> 00:17:08,879 Speaker 1: the government. Well, well, that's that was the thing that 331 00:17:09,080 --> 00:17:12,200 Speaker 1: struck out struck me the most about that the motion 332 00:17:12,240 --> 00:17:15,240 Speaker 1: I guess of al Gibert. Is this really a sign 333 00:17:15,280 --> 00:17:18,160 Speaker 1: that maybe MBS is being reined in a little bit 334 00:17:18,520 --> 00:17:23,320 Speaker 1: considering what happened with the show Gi affair. You know, frankly, 335 00:17:23,960 --> 00:17:27,960 Speaker 1: I've always thought that King Salmon was really always you know, 336 00:17:28,040 --> 00:17:30,440 Speaker 1: kind of behind behind the scenes, and that he shouldn't 337 00:17:30,440 --> 00:17:35,480 Speaker 1: have been underestimated. But um, it does seem like this 338 00:17:35,640 --> 00:17:39,600 Speaker 1: is perhaps the reaction. Perhaps they want someone who, um 339 00:17:39,760 --> 00:17:43,200 Speaker 1: has maybe a longer presence, someone who's h He's been 340 00:17:43,240 --> 00:17:48,840 Speaker 1: described as kind of very calm and kind of stay present, 341 00:17:49,080 --> 00:17:52,760 Speaker 1: and perhaps that's what they're going for. It's definitely a 342 00:17:52,960 --> 00:17:56,080 Speaker 1: change because the Saudi's traditionally kept their foreign ministers in 343 00:17:56,359 --> 00:17:59,160 Speaker 1: their posts for very long time, as supposed to having 344 00:17:59,160 --> 00:18:02,760 Speaker 1: these rapid change is. But we're really we're gonna have 345 00:18:02,840 --> 00:18:05,520 Speaker 1: to see how this goes. Some people have said that 346 00:18:05,600 --> 00:18:09,320 Speaker 1: it reflects kind of a desire to in a sense, 347 00:18:09,440 --> 00:18:13,600 Speaker 1: rehabilitate the individuals who were detained in the risks. I'm 348 00:18:13,640 --> 00:18:17,440 Speaker 1: not necessarily sure that that's what's really going on here. 349 00:18:18,119 --> 00:18:22,880 Speaker 1: Dr Wall, can you explain the US's involvement in Saudi 350 00:18:22,920 --> 00:18:26,480 Speaker 1: Arabia's war in Yemen? And how this could affect the 351 00:18:26,600 --> 00:18:30,920 Speaker 1: U S. Saudi relations. Well. The War Yemen is very 352 00:18:30,960 --> 00:18:34,720 Speaker 1: problematic from the US point of view because, uh, first 353 00:18:34,760 --> 00:18:37,800 Speaker 1: of all, it hasn't achieved the objectives that it was 354 00:18:37,840 --> 00:18:42,200 Speaker 1: supposed to achieve. The entire idea was to eliminate the 355 00:18:42,240 --> 00:18:47,240 Speaker 1: Iranian backed militia type presence in Yemen. And it's well 356 00:18:47,320 --> 00:18:51,439 Speaker 1: known that the Iranians are supplying the the forces in 357 00:18:51,520 --> 00:18:55,160 Speaker 1: Yemen with weapons. And it just seems that this war 358 00:18:55,400 --> 00:18:57,360 Speaker 1: in a sense, has been going on and on and on. 359 00:18:57,960 --> 00:19:02,160 Speaker 1: I think the US perspective was they want combat Iranian 360 00:19:02,800 --> 00:19:06,440 Speaker 1: expansion in this way, but they want to win actually, 361 00:19:06,440 --> 00:19:09,760 Speaker 1: and the Tinies haven't necessarily been winning at this and 362 00:19:09,800 --> 00:19:11,840 Speaker 1: so I think the US perspective at this point is 363 00:19:12,960 --> 00:19:16,119 Speaker 1: this war needs to be wound down, even if it 364 00:19:16,320 --> 00:19:20,440 Speaker 1: is not h a case of every every objective has 365 00:19:20,480 --> 00:19:24,439 Speaker 1: been achieved or the um whopies have been defeated. A 366 00:19:24,520 --> 00:19:27,560 Speaker 1: negotiated settlement for this point at the US would probably 367 00:19:27,560 --> 00:19:31,119 Speaker 1: be preferable, given the fact that public opinion has really 368 00:19:31,160 --> 00:19:37,560 Speaker 1: turned against the US involvement in this essentially humanitarian catastrophe. 369 00:19:37,640 --> 00:19:39,640 Speaker 1: When you look at the landscape of the Middle East, 370 00:19:39,680 --> 00:19:43,240 Speaker 1: the political landscape, the military landscape, the pullback of the 371 00:19:43,320 --> 00:19:45,479 Speaker 1: US from from a lot of areas in that region, 372 00:19:45,880 --> 00:19:49,280 Speaker 1: the decline and influence of Saudi Arabian OPEQ in the 373 00:19:49,280 --> 00:19:53,000 Speaker 1: oil markets. Who has the most influence in terms of 374 00:19:53,200 --> 00:19:56,040 Speaker 1: country leaders, Who has the most influence over that region 375 00:19:56,080 --> 00:19:59,760 Speaker 1: as a whole right now? Well, right now, I think Iran. 376 00:20:00,720 --> 00:20:03,760 Speaker 1: Iran is definitely playing a major role here. They in 377 00:20:03,760 --> 00:20:05,520 Speaker 1: a sense, they're calling the shots, and a lot of 378 00:20:06,040 --> 00:20:10,760 Speaker 1: other powers are essentially reacting to what Iran does. So 379 00:20:11,240 --> 00:20:13,920 Speaker 1: there's always this threat Iran seems to like to make 380 00:20:14,200 --> 00:20:17,720 Speaker 1: that oh maybe it will send its military and close 381 00:20:18,200 --> 00:20:20,879 Speaker 1: the straits before moons to shipping, and that's that's really 382 00:20:21,440 --> 00:20:24,960 Speaker 1: not a threat that Iran can seriously follow through on, 383 00:20:25,320 --> 00:20:27,119 Speaker 1: But just the fact that it likes to make this 384 00:20:27,200 --> 00:20:30,920 Speaker 1: threat and kind of send everyone into this great hubbub 385 00:20:30,920 --> 00:20:33,199 Speaker 1: of oh my goodness, what are we going to do? Uh? 386 00:20:33,240 --> 00:20:36,760 Speaker 1: You know, Militarily, the U. S. Navy could certainly combat 387 00:20:36,840 --> 00:20:38,920 Speaker 1: that in a very short amount of time and it 388 00:20:38,920 --> 00:20:41,760 Speaker 1: wouldn't cause any dislocation. But the fact that Iran likes 389 00:20:41,760 --> 00:20:44,400 Speaker 1: to make these threats and everyone kind of reacts to them, 390 00:20:44,440 --> 00:20:47,119 Speaker 1: I think shows that Iran certainly has the upper hand 391 00:20:47,359 --> 00:20:53,280 Speaker 1: when it comes to creating um dessenter or fomenting instability 392 00:20:53,359 --> 00:20:56,800 Speaker 1: in the region. Dr Wad. We've learned that the United 393 00:20:56,920 --> 00:21:01,600 Speaker 1: Arab Emirates, which is a US ally has reopened its 394 00:21:01,720 --> 00:21:07,920 Speaker 1: embassy in Damascus, and in a report, the U a 395 00:21:08,119 --> 00:21:12,160 Speaker 1: E says that the reason that they are normalizing relations 396 00:21:12,240 --> 00:21:17,040 Speaker 1: with Syria is to quote curb the risks of regional 397 00:21:17,240 --> 00:21:23,000 Speaker 1: interference in Arab Syrian affairs, and that is described as 398 00:21:23,040 --> 00:21:29,280 Speaker 1: a reference to Iran's expansionist policies in Syria. Do you 399 00:21:29,359 --> 00:21:32,280 Speaker 1: agree with that? Well, I think that that makes a 400 00:21:32,280 --> 00:21:34,879 Speaker 1: lot of sense from the U a E, UH and 401 00:21:35,000 --> 00:21:38,399 Speaker 1: other Gulf country's perspectives, is they see the US is 402 00:21:38,520 --> 00:21:42,480 Speaker 1: kind of drawing back and that leaves the primary forces 403 00:21:42,600 --> 00:21:46,080 Speaker 1: in UH Syria right now as Russia and Iran. And 404 00:21:46,119 --> 00:21:51,360 Speaker 1: if they don't want Syria to become an Iranian outpost essentially, 405 00:21:51,359 --> 00:21:54,159 Speaker 1: then they've got to get in there and do something. 406 00:21:54,240 --> 00:21:57,320 Speaker 1: And so opening an embassy is is a very small 407 00:21:57,400 --> 00:21:59,760 Speaker 1: step towards that, but it's certainly a step, and I 408 00:21:59,800 --> 00:22:02,760 Speaker 1: do think that in some sense that is actually what 409 00:22:02,800 --> 00:22:05,160 Speaker 1: the US would like to see. They would like to 410 00:22:05,200 --> 00:22:08,679 Speaker 1: see their powers in the Middle East, that they are 411 00:22:08,680 --> 00:22:13,080 Speaker 1: friendly with the U a UH, Saudi Arabia, Egypt, perhaps 412 00:22:13,320 --> 00:22:16,840 Speaker 1: go in there and play a larger role in UM 413 00:22:16,920 --> 00:22:20,359 Speaker 1: in pushing for US goals. So I don't see that 414 00:22:20,440 --> 00:22:25,200 Speaker 1: necessarily as as something that is negative, but rather they 415 00:22:25,480 --> 00:22:28,600 Speaker 1: want to play a greater counterpart to Iranian and perhaps 416 00:22:28,640 --> 00:22:31,960 Speaker 1: even Russian influence in that area. Thanks very much for 417 00:22:32,000 --> 00:22:34,520 Speaker 1: being with us as always. Dr ellen Wald is the 418 00:22:34,600 --> 00:22:39,720 Speaker 1: president of Transversal Consulting, a Bloomberg opinion columnist, and non 419 00:22:39,800 --> 00:22:44,040 Speaker 1: resident Senior Fellow at the Atlantic Council's Global Energy Center. 420 00:22:44,480 --> 00:22:48,240 Speaker 1: You're listening to Bloomberg Markets. I'm Pim Fox. He's Romaine Bostick. 421 00:22:51,359 --> 00:22:54,800 Speaker 1: I'm Pim Fox. He's Romaine Bostick. We are broadcasting from 422 00:22:54,800 --> 00:22:58,760 Speaker 1: the Bloomberg Interact of Broker's Studios and Romaine, how much 423 00:22:58,760 --> 00:23:02,680 Speaker 1: shopping did you do during this season? Oh? Way too much. 424 00:23:02,960 --> 00:23:05,800 Speaker 1: I always go overboard always, yeah, really yeah. You got 425 00:23:05,800 --> 00:23:08,320 Speaker 1: a lot of brown boxes, a lot a lot of 426 00:23:08,359 --> 00:23:10,080 Speaker 1: brown boxes. We packed them up, put them in the 427 00:23:10,080 --> 00:23:13,159 Speaker 1: recycling bend. Now we'll go wherever they go. And you 428 00:23:13,240 --> 00:23:15,640 Speaker 1: even said that sometimes you don't even open the presence 429 00:23:15,720 --> 00:23:19,720 Speaker 1: because you got so much. Well, you know sometimes you lucky. 430 00:23:20,440 --> 00:23:22,720 Speaker 1: Let's find out if that's a trend that people all 431 00:23:22,840 --> 00:23:25,960 Speaker 1: around the United States are experiencing. We've got Craig Johnson. 432 00:23:26,000 --> 00:23:28,879 Speaker 1: He is the president of Customer Growth Partners. They are 433 00:23:28,920 --> 00:23:32,000 Speaker 1: based in New Canyan, Connecticut, but he joins us here 434 00:23:32,080 --> 00:23:34,960 Speaker 1: in studio. Craig, great to see you. I know this 435 00:23:35,040 --> 00:23:38,680 Speaker 1: is your busiest, busiest time of the year. What can 436 00:23:38,720 --> 00:23:40,960 Speaker 1: you tell us about the health of the consumer? First. 437 00:23:40,960 --> 00:23:43,320 Speaker 1: We'll get to the actual retailers in this in a moment. 438 00:23:43,840 --> 00:23:46,840 Speaker 1: But the consumers have more money in their pocket to spend. 439 00:23:47,440 --> 00:23:50,200 Speaker 1: They not only have more money money to spend, they 440 00:23:50,240 --> 00:23:53,760 Speaker 1: are as fiscally sound as have been in years and otherwids. 441 00:23:53,800 --> 00:23:57,879 Speaker 1: They've de leverage since the whole cratering of the recession 442 00:23:58,480 --> 00:24:00,919 Speaker 1: UH brought the debt down. Credit card dead is going 443 00:24:01,000 --> 00:24:02,600 Speaker 1: up a little bit since then, but on a per 444 00:24:02,600 --> 00:24:06,120 Speaker 1: capita basis, that's still way way down UM. And they 445 00:24:06,160 --> 00:24:09,760 Speaker 1: have money to spend. And unlike ten years ago when 446 00:24:09,760 --> 00:24:12,399 Speaker 1: people are going crazy on the credit bubble, you know, 447 00:24:12,600 --> 00:24:15,639 Speaker 1: charging up Christmas presence off of home equity or off 448 00:24:15,680 --> 00:24:17,760 Speaker 1: a plastic which is not a good way to spend 449 00:24:18,240 --> 00:24:22,439 Speaker 1: their work, they're spending out of current income, which is 450 00:24:22,440 --> 00:24:24,480 Speaker 1: the right way to do it. And we've seen those 451 00:24:24,480 --> 00:24:26,520 Speaker 1: current incomes go up or at least be eighted in 452 00:24:26,520 --> 00:24:28,960 Speaker 1: somewhere or another. They're up three point one percent, wages 453 00:24:29,000 --> 00:24:31,720 Speaker 1: are up three point one percent, and um that's the 454 00:24:31,720 --> 00:24:34,639 Speaker 1: strongest growth in a decade. And then but it's not 455 00:24:34,760 --> 00:24:37,480 Speaker 1: simply wages growing up. It's also the fact that versus 456 00:24:37,560 --> 00:24:40,360 Speaker 1: last year, there's two and a half a million more 457 00:24:40,480 --> 00:24:43,679 Speaker 1: full time jobs. So those combinations of the two vectors 458 00:24:43,760 --> 00:24:46,480 Speaker 1: the job growth, that's not unemployment, right, it's the employment 459 00:24:46,560 --> 00:24:48,600 Speaker 1: number of people, millions of employed that's up two and 460 00:24:48,600 --> 00:24:51,520 Speaker 1: a half million hips and full time jobs, and wage 461 00:24:51,520 --> 00:24:56,600 Speaker 1: growth is up. That combines to about a five increase 462 00:24:57,160 --> 00:25:00,840 Speaker 1: in real disposable person income overall household and come and 463 00:25:00,920 --> 00:25:03,320 Speaker 1: that in turns what drives what i was our initial 464 00:25:03,359 --> 00:25:06,080 Speaker 1: forecast to five point one percent growth, which we said, 465 00:25:06,240 --> 00:25:08,600 Speaker 1: this is a good season, maybe ben very good. And 466 00:25:08,640 --> 00:25:11,440 Speaker 1: now what's happening. It's going from good to great good 467 00:25:11,480 --> 00:25:16,680 Speaker 1: too great for for whom? Is it for big box retailers? Well, 468 00:25:16,760 --> 00:25:19,000 Speaker 1: first of all, it's good for the consumer, this is 469 00:25:19,200 --> 00:25:22,440 Speaker 1: this is positive, but but for retailers it's very very 470 00:25:22,480 --> 00:25:26,240 Speaker 1: positive and the winners are not always just the usual 471 00:25:26,240 --> 00:25:29,760 Speaker 1: suspect because a rising tide lists all but you know, 472 00:25:30,160 --> 00:25:32,760 Speaker 1: most but not all boats. And so the big box 473 00:25:32,840 --> 00:25:34,800 Speaker 1: guys are doing fine. And this is whether it's the 474 00:25:34,840 --> 00:25:39,639 Speaker 1: big box discounters, UM, Walmart, Costco, Target, They're doing fine, 475 00:25:40,320 --> 00:25:45,000 Speaker 1: the big box off pricers, t J's, Burlington Ross all 476 00:25:45,040 --> 00:25:50,000 Speaker 1: having strong seasons, UM and some other sectors doing well too. Well. 477 00:25:50,080 --> 00:25:54,720 Speaker 1: What about the luxury UH retailers and the luxury brands, 478 00:25:54,800 --> 00:25:58,639 Speaker 1: because well, you know, I'm a man of refined tastes. 479 00:25:58,720 --> 00:26:01,159 Speaker 1: What can I say? And not? But we saw that, 480 00:26:01,200 --> 00:26:02,600 Speaker 1: you know, some of these companies kind of ran into 481 00:26:02,640 --> 00:26:05,320 Speaker 1: a little bit of trouble in their most recent earnings report. UH. 482 00:26:05,520 --> 00:26:06,919 Speaker 1: Seemed they had like they had more to do of 483 00:26:07,160 --> 00:26:10,320 Speaker 1: a global issue rather than a US domestic consumer issue. Well, 484 00:26:10,320 --> 00:26:12,520 Speaker 1: how's that holding up? Well, you mentioned global, and that 485 00:26:12,640 --> 00:26:15,800 Speaker 1: is part of the issue. Wanted. Luxury has been you know, 486 00:26:15,840 --> 00:26:19,000 Speaker 1: really pretty good this year, and it'll grow mid single digits, 487 00:26:19,000 --> 00:26:21,840 Speaker 1: but we don't see double digit growth occurring there. Some 488 00:26:21,920 --> 00:26:26,440 Speaker 1: individual categories are great, in other words, UM like luxury outerwear, 489 00:26:26,480 --> 00:26:31,200 Speaker 1: I think Canada, Goose, think Montclair very very fine. Uh, 490 00:26:31,280 --> 00:26:34,440 Speaker 1: Tiffany's will do okay, we believe you know, they've been 491 00:26:34,600 --> 00:26:37,000 Speaker 1: doing a little bit better. But in general, there's a 492 00:26:37,040 --> 00:26:39,639 Speaker 1: little bit of softness, just a touch of softness in luxury, 493 00:26:40,040 --> 00:26:44,399 Speaker 1: heavily due to the foreign tourism issue, meaning mostly that 494 00:26:44,440 --> 00:26:48,240 Speaker 1: it's a Chinese folks tourism and tourism spinning is a 495 00:26:48,280 --> 00:26:51,520 Speaker 1: little on the soft side versus past years. You sounded 496 00:26:51,600 --> 00:26:54,440 Speaker 1: very upbeat here at a time when the stock market 497 00:26:54,960 --> 00:26:57,879 Speaker 1: is showing a different story. And indeed, right now we're 498 00:26:57,920 --> 00:27:01,000 Speaker 1: getting word that the euro stocks fifth has dropped more 499 00:27:01,040 --> 00:27:06,159 Speaker 1: than one percent, entering the bear market. When or if 500 00:27:06,200 --> 00:27:09,520 Speaker 1: this continues, does that have an effect on the retail 501 00:27:09,600 --> 00:27:14,200 Speaker 1: market well to a limited extent. But but what we've 502 00:27:14,240 --> 00:27:17,439 Speaker 1: seen is as a major disconnect between Wall Street and 503 00:27:17,520 --> 00:27:21,000 Speaker 1: Main Street. You know, Wall Streets running around the chickens 504 00:27:21,200 --> 00:27:23,080 Speaker 1: with a head cut off that and then you know 505 00:27:23,359 --> 00:27:26,679 Speaker 1: Mr and Mrs main Street is out there spending. They're happy, 506 00:27:26,880 --> 00:27:30,040 Speaker 1: they have jobs, they're employed, and their wages are up, 507 00:27:30,400 --> 00:27:33,679 Speaker 1: and so they tune out a lot of the Washington nonsense, 508 00:27:33,720 --> 00:27:37,119 Speaker 1: the stock market gyrations, and they're just focusing on what 509 00:27:37,480 --> 00:27:39,240 Speaker 1: they have in their pocket. And even that's been helped 510 00:27:39,280 --> 00:27:44,400 Speaker 1: because of the plunging gasolene prices down six or two 511 00:27:44,400 --> 00:27:47,320 Speaker 1: cents a gallon and barely two months. It's unbelievable. And 512 00:27:47,400 --> 00:27:50,040 Speaker 1: let's put extra money in people's pocket. What do you 513 00:27:50,119 --> 00:27:53,080 Speaker 1: see as the outlook now? Uh? And on the short 514 00:27:53,160 --> 00:27:56,040 Speaker 1: term basis for the retail environment, now that we're sort 515 00:27:56,040 --> 00:27:58,800 Speaker 1: of past the frenzy of buying for Christmas and the 516 00:27:58,800 --> 00:28:02,159 Speaker 1: other holidays, you what happens when we get to January? Well, 517 00:28:02,480 --> 00:28:04,399 Speaker 1: we see, you know, when you know, we've done this 518 00:28:04,400 --> 00:28:09,240 Speaker 1: for twenty years, and so we see what's driving the growth? Uh? 519 00:28:09,280 --> 00:28:12,280 Speaker 1: And is are the drivers of it? The fundamentals are 520 00:28:12,320 --> 00:28:14,720 Speaker 1: they safe and sound? And again, when you go back 521 00:28:14,720 --> 00:28:17,920 Speaker 1: to the last time we had, you know, two consecutive 522 00:28:17,960 --> 00:28:20,040 Speaker 1: years of five percent growth, which is two thousand, five 523 00:28:20,080 --> 00:28:22,480 Speaker 1: and six. So much of that growth was you know, 524 00:28:22,520 --> 00:28:25,000 Speaker 1: out of you know, by by leveraging yourself up off 525 00:28:25,000 --> 00:28:28,520 Speaker 1: of home equity. Now people are spending out of current income. 526 00:28:29,119 --> 00:28:31,760 Speaker 1: And as long as people still have jobs, and this 527 00:28:31,920 --> 00:28:34,320 Speaker 1: job growth is still continuing, and as long as wages 528 00:28:34,400 --> 00:28:36,880 Speaker 1: keep rising, they may not always rise three point one percent, 529 00:28:37,000 --> 00:28:40,360 Speaker 1: but you know, somewhere positive, those are the key drivers 530 00:28:40,400 --> 00:28:44,600 Speaker 1: that create the household cash flow that people spend out 531 00:28:44,800 --> 00:28:51,120 Speaker 1: but on spending wisely, that's sounds spending. Craig Johnson. Athletisure. 532 00:28:51,640 --> 00:28:55,720 Speaker 1: This is an acronym that I were, a compound word 533 00:28:55,840 --> 00:28:57,920 Speaker 1: that I guess I'll have to learn how to use 534 00:28:57,960 --> 00:29:03,840 Speaker 1: and more refined context. What is ath leisure and isn't 535 00:29:03,880 --> 00:29:07,800 Speaker 1: doing well? Uh? Yes? And what it is it's doing well. 536 00:29:07,920 --> 00:29:10,680 Speaker 1: But another word for it is performance where and so 537 00:29:10,760 --> 00:29:16,120 Speaker 1: it's basically athletic oriented apparel. And the classic companies to 538 00:29:16,200 --> 00:29:21,280 Speaker 1: think of are like UM, Lululemon, the athletic brand of Gap, 539 00:29:21,320 --> 00:29:24,560 Speaker 1: which is Gaps, smallest of their four big brands but 540 00:29:24,680 --> 00:29:29,000 Speaker 1: the fastest growing UM. But also think outer where, Goose Canada, 541 00:29:29,040 --> 00:29:34,000 Speaker 1: Goose and Montclair. Uh that those are all the types 542 00:29:34,040 --> 00:29:36,560 Speaker 1: of companies that comprise it. But youu a cells at 543 00:29:36,600 --> 00:29:41,920 Speaker 1: under Armor, cells at Nike, cells obviously Athletisure, Adidas, UM 544 00:29:42,120 --> 00:29:45,800 Speaker 1: and it's a very hotgoing category. Apparel in general is 545 00:29:45,840 --> 00:29:49,280 Speaker 1: having its best year in seven years. Um it's gonna 546 00:29:49,320 --> 00:29:52,520 Speaker 1: be up about at least about six and you know, 547 00:29:52,600 --> 00:29:55,080 Speaker 1: the final returns aren't in yet. This we're now in 548 00:29:55,120 --> 00:29:57,680 Speaker 1: retail second season the week between Christmas and New Year's 549 00:29:57,760 --> 00:30:00,840 Speaker 1: and this could be a very important week of the year. Um, 550 00:30:00,880 --> 00:30:03,760 Speaker 1: but athletes, you're in general is in particularly doing good, 551 00:30:03,800 --> 00:30:08,440 Speaker 1: and apparel in general is doing good. But people aren't 552 00:30:08,440 --> 00:30:10,640 Speaker 1: wearing this apparel for performance reasons. I mean, part of 553 00:30:10,680 --> 00:30:13,320 Speaker 1: the whole appeal is that it's so you don't have 554 00:30:13,360 --> 00:30:15,040 Speaker 1: to go to the gym. You put it on and 555 00:30:15,080 --> 00:30:18,520 Speaker 1: you lose the weight and you get fit without you say, 556 00:30:18,560 --> 00:30:20,880 Speaker 1: we're in the second season now, and I actually bought 557 00:30:20,880 --> 00:30:23,320 Speaker 1: something the other day. I bought some towels they were off, 558 00:30:23,360 --> 00:30:25,720 Speaker 1: and I'm very proud of myself. But so do we 559 00:30:25,800 --> 00:30:29,200 Speaker 1: see this surge of spending uh in this second period? 560 00:30:29,280 --> 00:30:31,920 Speaker 1: Is that going to be run mainly by discounts or 561 00:30:31,960 --> 00:30:34,640 Speaker 1: just again, is this just a consumer Uh? Well, the 562 00:30:34,960 --> 00:30:37,160 Speaker 1: nature of the Christmas to New Year's week to sit 563 00:30:37,200 --> 00:30:38,800 Speaker 1: what we call it second seeds. The second season of 564 00:30:38,880 --> 00:30:41,120 Speaker 1: retail has changed over the years. He used to be 565 00:30:41,200 --> 00:30:45,280 Speaker 1: a place time for returns, exchanges and clearance sounds. Now 566 00:30:45,320 --> 00:30:48,680 Speaker 1: a lot of smart merchants are actually putting on the 567 00:30:48,720 --> 00:30:51,680 Speaker 1: floor new fresh merchandise. Nobody wants to go into the 568 00:30:51,760 --> 00:30:54,320 Speaker 1: store and get a bunch of picked over stuff that's 569 00:30:54,400 --> 00:30:57,480 Speaker 1: left over that they saw that three weeks ago. Much appreciated, 570 00:30:57,600 --> 00:31:00,560 Speaker 1: thanks very much and thanks for your insight as always. 571 00:31:00,600 --> 00:31:05,880 Speaker 1: Craig Johnson, President, Customer Growth Partners. They're based in New Canaan, Connecticut. 572 00:31:06,200 --> 00:31:10,000 Speaker 1: Thanks for listening. I'm Pim Fox. He's Romaine Bostic, and 573 00:31:10,080 --> 00:31:14,600 Speaker 1: this is Bloomberg. Thanks for listening to the Bloomberg P 574 00:31:14,720 --> 00:31:17,720 Speaker 1: and L podcast. You can subscribe and listen to interviews 575 00:31:17,760 --> 00:31:21,800 Speaker 1: at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. 576 00:31:22,200 --> 00:31:25,800 Speaker 1: I'm Pim Fox. I'm on Twitter at pim Fox. I'm 577 00:31:25,800 --> 00:31:29,200 Speaker 1: on Twitter at Lisa abramowits one before the podcast. You 578 00:31:29,240 --> 00:31:31,760 Speaker 1: can always catch us worldwide on Bloomberg Radio