Speaker 1: This is Bloomberg business Week Inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Masser and Tim Stenebec from Bloomberg Radio.
Speaker 1: All right, everybody, in other busy days, you know, media
Speaker 1: frenzy around former President Donald Trump. We covered that a
Speaker 1: lot earlier, and while it kind of felt like today
Speaker 1: almost was like you were watching a bit of a
Speaker 1: streaming series, we did want to share with you a
Speaker 1: couple of stories Buyer Bloomberg Business Week team from the
Speaker 1: actual world of media and entertainment that you can find
Speaker 1: at Bloomberg dot com slash business Week. In fact, one
Speaker 1: of the stories is going to be in the upcoming
Speaker 1: new issue of Bloomberg Business Week out later this week.
Speaker 1: One is on a streaming service at Linsgate is still
Speaker 1: looking to unload. Another about the writer strike that Maddie
Speaker 1: is fearful is booming and we'll disrupt her viewing habits.
Speaker 1: So let's get to Bloomberg News reporter Thomas Buckley. He's
Speaker 1: out there in Los Angeles joining us via zoom and
Speaker 1: right here in our studio is the editor of Bloomberg
Speaker 1: business Week, Joel Webber. So, Joe, let's can we start
Speaker 1: with lions Gate? Why not? All right? So I seen
Speaker 1: john Wick yet number four except that one. I'm ready
Speaker 1: for it. It's not going to save the day. No, Well,
Speaker 1: we hope, you know, we live in Hope, and and
Speaker 1: this has become obviously a real hit and favorite in Hollywood.
Speaker 1: Was a bit of a sleeper and then it just
Speaker 1: continued to rack up more and more eyeballs. Um, what's
Speaker 1: at stake here for lions Gate? Though? Because um, maybe
Speaker 1: you've seen the recent Business Week cover Dungeons and Dragon
Speaker 1: cover story which overtook at the box office this weekend.
Speaker 1: John Wick? So what's at store for for Lionsgate? Who
Speaker 1: really has has bet the house on john Wick? Well,
Speaker 1: let me tell you, well, I mean at first i'd
Speaker 1: be REMISAPPI didn't say that You're going to be absolutely
Speaker 1: loving john Wick four when you go see it. If
Speaker 1: you enjoyed one, two, and three up, can't wait? Yeah, exactly.
Speaker 1: There are actually no plans for a sequel. When john
Speaker 1: Wick one came out, says tremendous feed To have gotten
Speaker 1: this far with the franchise is exactly right, and and
Speaker 1: John Wick has really moved into one of them, Lionsgate's
Speaker 1: largest franchises of late they will so you know, own
Speaker 1: the rights to the likes of Twilight and Hunger Games.
Speaker 1: And what's interesting, it's structupposing the strength of that film
Speaker 1: studio against some of the weakness in its streaming service operations.
Speaker 1: And that's precisely why the company is seeking to demerge
Speaker 1: Wishes and Effects, say unwind, a merger that they created
Speaker 1: in twenty sixteen from the acquisition of Stars for the
Speaker 1: four point four billion dollars. The acquisition has not delivered
Speaker 1: for them. The combined market cab of the company now
Speaker 1: is around half that and so they're exactly and their
Speaker 1: feeling is once they unwind the two distinct businesses, investors
Speaker 1: see more value in each rather than the sum of
Speaker 1: the parts. Why didn't streaming, I mean, come on, help
Speaker 1: me out here, Thomas. I mean, streaming supposed to be
Speaker 1: all the rage, and I know we're kind of getting
Speaker 1: some filtering of that, I feel like over the last
Speaker 1: year or so, because we do have so many different services,
Speaker 1: But why did it not work out? I mean, Stars
Speaker 1: was the home of an Outlander. Didn't we know that
Speaker 1: was kind of a huge as well, and some other things. Yeah,
Speaker 1: but why didn't work out? So yeah, right to a
Speaker 1: nice sense, streaming was all the rage stillers all the rage.
Speaker 1: The issue is that investors really have shifted their focus
Speaker 1: from what used to be entirely subscribe the growth to
Speaker 1: now profitability with the rights of interest rates and seeing
Speaker 1: how a lot of these tech companies adapt to this
Speaker 1: new normal in streaming. There is an enormous cash burn
Speaker 1: associated with the business. I mean, you saw, for example,
Speaker 1: the departure last year of the Disney chief executive officer
Speaker 1: Bob Chapec as a result of a one point five
Speaker 1: billion dollar loss in a single course run streaming. So
Speaker 1: I think that now the attention has turned to that
Speaker 1: side of the This is a little more investors a
Speaker 1: much more favoring, you know, solid studio operations that can
Speaker 1: be arms dealers, rather than prioritize shows for their own
Speaker 1: streaming operations. Well, it seems like Lionsgate didn't exactly help
Speaker 1: the Stars case here, based on some comments that you
Speaker 1: got from a source who basically said that a John
Speaker 1: Wicks spinoff was pulled from the Stars lineup after Amazon
Speaker 1: and Comcast Peacocks streaming service offered lions Gate one hundred
Speaker 1: million dollars for the show. That seems tough. It seems
Speaker 1: tough for Stars. And this is what's quite interesting. I mean,
Speaker 1: it's tough for Stars, but great for Lionsgate because I
Speaker 1: think that there when you have a real you know,
Speaker 1: equity story for the studio going forward, as they can
Speaker 1: farm out you know, very high value, high price properties
Speaker 1: like this to the highest bidder, that highest bidder is
Speaker 1: unlikely to be starts for any of its shows going
Speaker 1: forward because it starts, you know, relative to likes of
Speaker 1: Netflix is you know, under a fifth the size of Netflix,
Speaker 1: and you know, fellow competitors, so I think that, you know,
Speaker 1: going forward, it is going to be tough of the
Speaker 1: Stars to compete. And I think that, you know, the
Speaker 1: people who run Stars have said that of their own
Speaker 1: volition as well. But it puts signs get in a
Speaker 1: great studio wherein they can you know, sell as I mentioned,
Speaker 1: to the highest bidder and and do very well from
Speaker 1: their existing franchises. Okay, so there's some other stuff happening
Speaker 1: in Hollywood, like a potential writer strike, and it's we've
Speaker 1: seen that before, but it's been a little while. So
Speaker 1: what what the timeline look like here and what are
Speaker 1: the you know, the issues, because I think streaming comes
Speaker 1: up yet again in that whole conversation, right, yeah, absolutely, So.
Speaker 1: The last time we saw a significant right strike, as
Speaker 1: you mentioned, was probably in two thousand and seven, when
Speaker 1: the strike lasted about one hundred days, give or take,
Speaker 1: and it costs the LA economy, you know, anywhere between
Speaker 1: two and three billion dollars. That's because all Hollywood productions
Speaker 1: shut down during a writer strike. I mean scripts have
Speaker 1: to be finast and reworked to your production. Obviously, that
Speaker 1: can't happen if all your writers are picketing the lines.
Speaker 1: At the moment, what's at stake is really in part
Speaker 1: of residuals from streaming. A number of writers feels like
Speaker 1: their conditions are necessarily as good as they were ten
Speaker 1: years ago, and the rise of streaming has really affected
Speaker 1: them in that regard. And what's interesting is there is
Speaker 1: some parallel give them the two thousand and seven writers strike.
Speaker 1: The main point of contention there happened to be DVD residuals,
Speaker 1: and we're seeing the same sort of thing now. And
Speaker 1: now you said something it was like a technology interpretation.
Speaker 1: Please do you not remember those? Yeah? What does that mean? No?
Speaker 1: Go ahead, No, it's just it's so interesting the DVD
Speaker 1: thing in comparison to what I was thinking about reading
Speaker 1: your story as someone who's I shouldn't bring up laser
Speaker 1: discs then either, huh. I guess I'll be like laughed
Speaker 1: out of the studio VHS is I mean, all of it.
Speaker 1: But it's so interesting because one of the things that
Speaker 1: the writers are thinking about is the performance of their
Speaker 1: shows and whether or not they should be getting a
Speaker 1: premium if their show gets a lot of clicks or
Speaker 1: makes it into the Netflix top ten. As someone who
Speaker 1: works on our social team mainly, I would never want
Speaker 1: to be judged on the clicks because that can also
Speaker 1: be a bad thing if it doesn't go well. What
Speaker 1: are your sources saying about that? Yeah? Absolutely, And this
Speaker 1: is a fascinating thing, right, I mean I think that previously,
Speaker 1: writers who are writing for TV, I mean, when the
Speaker 1: shows are widely syndicated around the world, you know they
Speaker 1: would benefit from that very consistent income and cold plan. Accordingly, now,
Speaker 1: I think you know, if a writer is paid upfront
Speaker 1: for a show and it happens to then break into
Speaker 1: the top ten, and that's very limited upside for them
Speaker 1: because the performance based bonus is that much smaller than
Speaker 1: it is to say, by comparison a big film released
Speaker 1: in theaters and how well that does at the box office.
Speaker 1: I think a lot of them are thinking, we'll look,
Speaker 1: we're seeing our shows breaking in the top ten, racking up,
Speaker 1: you know, hundreds of millions of hours worth of viewing,
Speaker 1: and we're not being compensated fairly for it. So what
Speaker 1: are the goals that the Writer's Guild is seeking out for?
Speaker 1: So basically they are working under a current contract that
Speaker 1: expires on May first, and so they've sat down now
Speaker 1: with the studios and promot to understand, you know, perhaps
Speaker 1: that loggerheads not making much progress yet, but what they're
Speaker 1: seeking is a number of assurances, certainly as regards to
Speaker 1: residual compensation, so that they're better paid for that shows
Speaker 1: going forward. You know, it does feel like, you know,
Speaker 1: we constantly see this as things change, especially in terms
Speaker 1: of how we consume content. Thomas is that, you know,
Speaker 1: it's got to kind of catch up right with the
Speaker 1: players in it so that they are just like compensated.
Speaker 1: I'm curious what outside observers are saying that do they
Speaker 1: have a good point that it makes sense because things
Speaker 1: are changing exactly it is changing. I think that, you know,
Speaker 1: it's it's interesting because as I think about this story,
Speaker 1: it can sometimes feel a bit like inside Baseball. But
Speaker 1: the truth is there are some real world, you know,
Speaker 1: ramifications for us of you as I mean, certainly during
Speaker 1: the last writer strike you had shows from The Simpsons,
Speaker 1: the Desperate Housewives that all had to make do with
Speaker 1: far shorter seasons because Hollywood just ground to a halt.
Speaker 1: So but you know, even though it might feel like
Speaker 1: inside Baseball at times, we will be affected as fans
Speaker 1: of these shows if they don't find a resolution in
Speaker 1: the coming weeks. What do you think the potential impact
Speaker 1: of that is going to look like? In which specific
Speaker 1: shows do that? Don't worry like watching things Maddie's terrified? Specifically?
Speaker 1: Can we I'm sorry, let's just up and final Succession right,
Speaker 1: because it's already done and that's the that's the only
Speaker 1: thing that I live and die for. But what are
Speaker 1: what are the other ones in production right now that
Speaker 1: we need to worry about? And what's the timeline? Like
Speaker 1: let me let me read that thine back to you
Speaker 1: every US movie and TV show risk stopping as writer
Speaker 1: strike clothes like, truly, this is an existential one, right, Thomas, Exactly,
Speaker 1: It's it's pretty pervasive. Um. What I will say is
Speaker 1: that you know, hopefully what happens in the situations and
Speaker 1: they can't find a resolution and people do go on strike.
Speaker 1: You know, the risk are very very high profile shows,
Speaker 1: you know, being outright canceled. It's probably quite low. I
Speaker 1: think that what we saw the last write to strike
Speaker 1: is that you know, the shows that work canceled are
Speaker 1: probably you know, shows that the studios weren't necessarily that
Speaker 1: bent on renewing anyway. So there is a comfort there.
Speaker 1: And also put any fan of reality TV out there,
Speaker 1: you know that a genre doesn't necessarily to you know,
Speaker 1: that much writing at all. If any I think, you know,
Speaker 1: they their appetites will be satiated and the thank god, yeah,
Speaker 1: I hope you like reruns though it could be a
Speaker 1: little bit right like and remember last time, the part
Speaker 1: of the joy was like, you know, people took a
Speaker 1: little break, and I remember more than a few actors
Speaker 1: who looked a little different when they came back. There
Speaker 1: was the continuity folks were like, wait, wait, wait, wait
Speaker 1: a minute, we got a problem here. Um, okay, So
Speaker 1: timeline May first, exactly, So that's when the contract expires.
Speaker 1: And so currently negotiations being had between the two parties.
Speaker 1: And I hope in part resolution before May first. All right,
Speaker 1: And and are you hearing anything moving on that front
Speaker 1: at the moment, I'm not hearing a lot of resolution.
Speaker 1: I'm hearing of our talks and that and that the
Speaker 1: talks are a little bit more tense than usual. How
Speaker 1: would you compare the intensity of the talks to previous
Speaker 1: writer strikes. I would say that it's probably the most
Speaker 1: tensible it's been since two thousand and seven. I know
Speaker 1: certainly that a number of agencias and studios are really
Speaker 1: preparing themselves for potential strikes. So that means, you know,
Speaker 1: stockpiling scripts and the like to make sure that there
Speaker 1: isn't that dramatic a close down if a strike were
Speaker 1: to occur. I think that the view from the top
Speaker 1: of these places is that, you know, if not fifty fifty,
Speaker 1: then that probably is going to be a strike. It's
Speaker 1: probably more fifty one forty nine in favor of a strike.
Speaker 1: At the minutes Okay. So one of the things that
Speaker 1: I'm just remembering is actually the last time this happened,
Speaker 1: there was that surge in reality TV shows, which you
Speaker 1: mentioned because you don't need a screenplay for reality TV.
Speaker 1: So is there is there some speculation or talk that
Speaker 1: between I don't know, like TikTok on TV or Reality
Speaker 1: TV like new versions of reality TV? Are we going
Speaker 1: to see any of that? Like what happens? Like, you know,
Speaker 1: how quickly do they do they dust off that playbook? Yeah?
Speaker 1: They can absolutely default to that. Um. I don't know
Speaker 1: about you guys. Are certainly myself during the pandemic, I
Speaker 1: watch way too much. Reality TV got into the Kardashians
Speaker 1: in a big way. Also below Deck, I don't know
Speaker 1: really you've seen that show, but it's fair exactly. So
Speaker 1: these are shows that are, you know, relatively inexpensive to
Speaker 1: shoot versus you know, a scripted show certainly less expensive
Speaker 1: to script. So I think that that's something that could
Speaker 1: definitely take off in a big way all over again
Speaker 1: if we were to see us right, that's right, So
Speaker 1: this could fuel some extra creativity on the reality TV
Speaker 1: show the word development process. That's exciting. Blow Deck just
Speaker 1: hitting ten years by the way, that is a must watch,
Speaker 1: all the variations. Hey, listen, we just have a nitor
Speaker 1: a minute and a half left here while we have you,
Speaker 1: and forgive me, I'm going to go a little bit.
Speaker 1: It is a week where we get a lot on
Speaker 1: the labor market. Are things are there still? What is
Speaker 1: the labor market? You know on the West Coast when
Speaker 1: it comes to filming and doing stuff within the content world?
Speaker 1: I think you know you saw the huge wave of
Speaker 1: layoffs originating in Silicon Valleys as the West Coast is concerned.
Speaker 1: I mean, Hollywood is certainly catching up to that very quickly.
Speaker 1: The story at the moment this most closely followed is
Speaker 1: the number of layoffs that occurring at Disney right, and
Speaker 1: they're cutting a workforce for about seven thousand people. That
Speaker 1: doesn't include so much you know, front of health employees
Speaker 1: at their parks, but certainly a number of back office
Speaker 1: employees losing their jobs. Sad time for the company in
Speaker 1: that regard, But everybody is seeking to streamline as fast
Speaker 1: as possible to prepare for a new normal, new normal
Speaker 1: new you heard it there. I don't even know what
Speaker 1: that is. Reality TV, Bring it on, Bring it on.
Speaker 1: Love is blind. Um, We're gonna leave it there. Thomas,
Speaker 1: thank you so much, So appreciate two great stories. Thomas Buckley,
Speaker 1: reporter at Bloomberg News via Zoom from Los Angeles, History
Speaker 1: on Stars and lines Gate. You can catch that in
Speaker 1: the new issue of Bloomberg Business Week. You'll be out
Speaker 1: on newsstands on Thursday. It's already on the Bloomberg and
Speaker 1: you can find it up Bloomberg dot com slash business Week.
Speaker 1: Jill Webber, the editor Bloomberg Business Week, your favorite indulgence
Speaker 1: when it comes to streaming. Oh man, uh, Bluie what yeah, exactly.
Speaker 1: We don't have a kid, all right, Disney Plus, what
Speaker 1: would you watch? Oh, it's it's Hanny Time. Very you know,
Speaker 1: it's like less than ten minutes and so wholesome, like
Speaker 1: you know, Bluie Blue. I'll give it a try tonight.
Speaker 1: We'll be looking it up. Don't regret. I always look
Speaker 1: at him differently then, you know these facets. Um, Joel,
Speaker 1: thank you so much, really appreciate it. As we said,
Speaker 1: the new shop Bloomberg Business Week coming out later on.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern Listen on
Speaker 1: Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app,
Speaker 1: or watch us live on YouTube. We do want to
Speaker 1: also bring you one of the most read stories. I
Speaker 1: think it is the most read on the Bloomberger has
Speaker 1: been for most of the day. It's about what we
Speaker 1: often say is the most listened to voice on Wall Street,
Speaker 1: Jamie Diamond. He came out with his annual letter to shareholders.
Speaker 1: So let's get into it with Sally Bakewell. She joins
Speaker 1: Maddy and me. She is Bloomberg News America's finance team leader.
Speaker 1: She's here in our Bloomberg Interactive Broker's studio. Sally, we
Speaker 1: know it when Jamie Diamond talks, when he goes to Washington,
Speaker 1: when he writes something, we all go over it with
Speaker 1: a fine tooth comb. Right, yes, correct, we do. So
Speaker 1: what did we get from him today? I think one
Speaker 1: of the big takeaways here is his perspective on regulation
Speaker 1: and how it caused potentially a lot of what happened
Speaker 1: with Silicon Valley Bank. So, by the way, let's note
Speaker 1: he has long ray old against post financial crisis regulation.
Speaker 1: He's called it complex, he's said it harms the country.
Speaker 1: He's been pretty vociferous about it. Is he now a
Speaker 1: fanboy of it? No, he's so that would be fantastical,
Speaker 1: fantastically interesting. So here today in his annual letter that
Speaker 1: is passed out, as you say, by bankers, traders, politicians alike,
Speaker 1: he said that post crisis regulation that actually encouraged banks
Speaker 1: to load up on a lot of these US Treasury
Speaker 1: bonds that ultimately sort of became their downfall because they
Speaker 1: saw their value eroded as interest rates rose, and they
Speaker 1: weren't really prepared or hedged for that. And so we
Speaker 1: have banks like Silicon Value Bank and Signature Bank that
Speaker 1: were left with these sort of big holes in the
Speaker 1: balance sheet and that ultimately led to their demise. And
Speaker 1: he was also kind of like everyone it was at
Speaker 1: fault here, right, Like, it's the banks themselves, it's regulation,
Speaker 1: it's the authorities. What was his biggest concern? Would you
Speaker 1: say on what authorities could do in term of overreaction?
Speaker 1: Do we have any specifics from him about his biggest worry? There?
Speaker 1: Great question. He very much cautioned against any kind of
Speaker 1: knee jerk reaction in regulation, and I guess he also
Speaker 1: doesn't want to see a repeat of the financial crisis,
Speaker 1: where probably in his view, that's exactly what they did,
Speaker 1: and they proposed all these, in his view again unnecessary
Speaker 1: rules that have made things a bit difficult for the
Speaker 1: banking industry, even though it has also protected them in
Speaker 1: some regard. So he just said, any regulation that we
Speaker 1: have now and there is likely to be some because
Speaker 1: we know that Biden is looking at increasing scrutiny on
Speaker 1: banks with one hundred billion to two hundred and fifty
Speaker 1: billion assets, that we are likely to see heightened and
Speaker 1: tough and regulation. He said, it should just be a
Speaker 1: real the right mix of rules that take into consideration
Speaker 1: things like the banks and should deposits, their accounting practices,
Speaker 1: their deposit concentration. I think he just doesn't want to
Speaker 1: sort of blunt whackamole like tools. It's kind of interesting
Speaker 1: considering we know we went and met right with Trojury
Speaker 1: Secretary Janet Yell, and you know he is a voice
Speaker 1: that government officials certainly reach out to. I know there
Speaker 1: was a lot of speculation. I mean, is he gunning
Speaker 1: for a position in Washington, perhaps next Treasury secretary? I mean,
Speaker 1: is that's something I don't know a great question, because
Speaker 1: he asked it right, Yeah, and he did sort of
Speaker 1: reprise his role of the from the past financial crisis.
Speaker 1: By the way, he is the only CEO still in
Speaker 1: command since they've just press remarkable. Yeah, and he has
Speaker 1: you know, he has been positioning himself as a kind
Speaker 1: of elder statesman like character on the banking and sort
Speaker 1: of geopolitical and other spheres and stages. So who can
Speaker 1: say what's on his mind, but he doesn't shy away
Speaker 1: from being in these roles. And indeed he and Yellen
Speaker 1: kind of conjured up this plan which Diamonds sort of
Speaker 1: took the lead on to basically rescue one of their
Speaker 1: smaller peers in First Republic when he sort of galvanized
Speaker 1: eleven banks to all throw in thirty billion dollars of
Speaker 1: rescue money to that bank. Well, our final two minutes
Speaker 1: with you on this, there were some non banking things
Speaker 1: that he talked about. He's talked about AI before, but
Speaker 1: he brought it up again, right. He also brought up
Speaker 1: the importance of free market capitalism. What were the things
Speaker 1: outside of the banking turmoil that he brought up that
Speaker 1: stood out to you as critical? Yeah, so I think
Speaker 1: CHAT GBT AIM were two things that they said that
Speaker 1: they Jamie Diamond said that they are you know, looking
Speaker 1: at and using I had to say, because every CEO
Speaker 1: is now saying but go ahead, No exactly that, but
Speaker 1: you know, finding ways to use it to fight against fraud.
Speaker 1: For example, energy security has been a topic that he
Speaker 1: talks about a lot, and you know, improving investments into
Speaker 1: renewable energy to sort of improve energy security was another one.
Speaker 1: He also brought up succession and pointed to you know,
Speaker 1: the number of successor candidates that are well known to
Speaker 1: the board and well known to the community that could
Speaker 1: replace him if he ever, one day and it's not
Speaker 1: looking likely, decided to not be Jai JP Morgan see
Speaker 1: you anymore? Is there a bottom line takeaway? Because you guys,
Speaker 1: you know you and your team, you know, covering the
Speaker 1: banks on Wall Street, covering the finance industry at an
Speaker 1: interesting time another time, if you will, how do you
Speaker 1: kind of put what Jamie Diamond said against the whole
Speaker 1: industry and how you're thinking about it and thinking about
Speaker 1: stories and so on and so forth. Definitely, regulation, the
Speaker 1: unintended consequences they're in I think is the big takeaway
Speaker 1: from Jiffy Diamond's letters. Stay all right, it's an interesting
Speaker 1: Carol though. We were just talking about how usually when
Speaker 1: a Jamie Diamond shareholder letter comes out, that's like the
Speaker 1: big news for a large part of our shows. And
Speaker 1: look at us today. Well, and it's interesting because it
Speaker 1: really did stay atop the most read I'm just looking
Speaker 1: now it's number two in the past eight hours, and
Speaker 1: now we have how the markets ended. But it's it's
Speaker 1: been a funny day right where our focus has been
Speaker 1: so much on what's been going on in Lower Manhattan,
Speaker 1: not because the financial sector are the exchange is down there,
Speaker 1: but because of the former president. Thank you for breaking
Speaker 1: it down, because we know it's something that our audience
Speaker 1: really cares about. Sally Bakewell, she's Bloomberg News America's Finance
Speaker 1: team leader. Joining us here in our Bloomberg Interactive Broker's studio.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Eastern on Bloomberg Radio,
Speaker 1: the Bloomberg Business App, and YouTube. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa play Bloomberg eleven thirty. Something that we
Speaker 1: want to get to and is certainly front and center
Speaker 1: this week, and that is what's going on with the
Speaker 1: US workforce because we get a lot of data points
Speaker 1: this week. Yep, we got the job the Jolts Report today,
Speaker 1: I should say, which, as our Bloomberg Economics team noted,
Speaker 1: shows the labor market is unambiguously cooling. And then we've
Speaker 1: got jobs numbers on Friday as well. Right, A lot,
Speaker 1: a lot to unpack here with more thoughts, especially when
Speaker 1: it comes to skills and jobs at the high end
Speaker 1: of the labor market. We're going to speak with Amelia Tiagi.
Speaker 1: She is the co founder and CEO of the executive
Speaker 1: talent consultant Business Talent Group, which is owned by the
Speaker 1: executive search and consulting firm Hydrick and Struggles. Amelia is
Speaker 1: with us on Zoom from Rome. Amelia, thank you so
Speaker 1: much for joining us. Just for anyone who may not
Speaker 1: be familiar, can you back up and tell us a
Speaker 1: little bit about your firm and your clients as well. Sure,
Speaker 1: I'm happy too. It's good to be here, and I
Speaker 1: should say I am visiting Rome. I'm actually based in America.
Speaker 1: I'm the co founder and CEO of Business Talent group,
Speaker 1: a Hydrick and Struggles company. We provide on demand talent,
Speaker 1: interim executives, management consultants, and experts to companies. We have
Speaker 1: a network of over twenty thousand and we're the leader
Speaker 1: of the US. So what are you seeing in terms
Speaker 1: of demand for your executives? I mean, give us an idea,
Speaker 1: give us some color if you will, how it compares
Speaker 1: to perhaps a year ago or before that, industries where
Speaker 1: there's lots of demand or not geography in terms of variations. Sure,
Speaker 1: so we do a study every year tracking the trends
Speaker 1: that we're seeing across the market. We literally study thousands
Speaker 1: of inquiries that we hear from all sectors of the economy.
Speaker 1: We're seeing broad based growth and we're actually seeing that
Speaker 1: as the economy gets choppier and there's more uncertainty out there,
Speaker 1: that folks are really turning to on demand solutions because
Speaker 1: they want that kind of flexibility. They still need to
Speaker 1: get things done and they need it fast, but they
Speaker 1: don't want to necessarily make long term commitments. The big story, though,
Speaker 1: is the rise in demand for the interim cfo. We
Speaker 1: saw demand for an interim CFOs double over the last year.
Speaker 1: So what is that of that because because typically a CFO,
Speaker 1: and if anything I've learned, you know, coming off the
Speaker 1: financial crisis, the Great Financial Crisis, is that CFOs were
Speaker 1: crucial to keeping companies running, making sure those balance sheets
Speaker 1: are sound and solid and companies had money, same thing
Speaker 1: during the pandemic. Right, we know that this is an
Speaker 1: important position. So tell us about why this trend is happening.
Speaker 1: You're exactly right. It's a critical position, and I think
Speaker 1: it's getting harder. I think that's what's happening is that
Speaker 1: the CFOs office is under more pressure, and as there's
Speaker 1: more uncertainty in the economy, we're seeing turnover in the role.
Speaker 1: There's some burnout among CFOs. There's a lot of companies
Speaker 1: also that are experiencing changes in what the skills are
Speaker 1: that they truly need in that role as there shifts
Speaker 1: in the economy, so people pull in an interim CFO.
Speaker 1: Often when the old CFO goes out, you need somebody
Speaker 1: in really fast. You can't have any time with that
Speaker 1: role vacant, especially in this kind of economy. That's so
Speaker 1: interesting to me because I've always thought of the type
Speaker 1: of person to pursue a CFO role as someone who
Speaker 1: would not want to quit when things get tough and
Speaker 1: when the economy gets a little bit tighter. So I
Speaker 1: guess I just I would not have anticipated that being
Speaker 1: the type of role where you see a lot of turnover,
Speaker 1: just given some macroeconomic headwinds. Some of what we're seeing
Speaker 1: is some skill realignment out there. You know. I think
Speaker 1: the traditional skills of a CFO just sort of those
Speaker 1: financial skills, oh, I think a ticket to play, and
Speaker 1: the CFO is increasingly being asked to wear a number
Speaker 1: of additional hats, especially in this kind of environment. In
Speaker 1: some situations they're being asked to raise money and others
Speaker 1: they're asked to manage cash in a whole different way.
Speaker 1: They're asked to help with restructuring. They may even be
Speaker 1: asked to assist with big IT projects. It's a lot
Speaker 1: of hats, and with that skill alignment, I think you're
Speaker 1: finding different changes going on in the role. We also
Speaker 1: find the other trend that's happening behind the scenes. We
Speaker 1: work with a network of over twenty thousand professionals who
Speaker 1: want to be independent. They've chosen a different path. They
Speaker 1: don't want to be in a traditional role for five
Speaker 1: or ten or twenty years. They like going from project
Speaker 1: to project. There's a lot of people who enjoy that
Speaker 1: and who are seeking it out. And we're seeing a
Speaker 1: growth on the talent side as well, and changes in
Speaker 1: what senior level talent really want. Amelia, give us some
Speaker 1: insight into the pay that these individuals typically get. And
Speaker 1: I'm curious, especially if the CFOs in particular, as you're
Speaker 1: talking about temporary or otherwise, you know, if they're in demand,
Speaker 1: you know, how does that work? Is it per project?
Speaker 1: Is it hourly? Are the individuals ultimately in the driver's
Speaker 1: seat right now because CFO positions and finance professionals are
Speaker 1: in demand. As you are saying, well, it's a great question,
Speaker 1: and I do think they're in the driver's seat. They
Speaker 1: get to pick and choose which projects they work on,
Speaker 1: and so they work on what they think is most exciting,
Speaker 1: and they get to pick the people that they want
Speaker 1: to work on work with. Typically pay a structures pay
Speaker 1: as you go and that offers companies total flexibility. So
Speaker 1: maybe an engagement's going to last for a couple of months,
Speaker 1: maybe it gets extended last six to eight months, but
Speaker 1: you just pay as you go. We tend to see
Speaker 1: a day rate is most common, but they're a variations
Speaker 1: on that. Does it change the demographic too for the CFO,
Speaker 1: I wonder if you're seeing more millennial gen zers getting
Speaker 1: in on a top dog role like the CFO spot. Well,
Speaker 1: that's certainly where the trend is going to go over time.
Speaker 1: We see a lot of mid career professionals in this today,
Speaker 1: but definitely where the younger folks are coming over time.
Speaker 1: We also see where the trend is going, is that
Speaker 1: a lot of the Gen Z and millennials want to
Speaker 1: work independently. I think they're pushing me on even faster
Speaker 1: than the gen xers did. Well, it's interesting you brought
Speaker 1: up the idea of you know, these professionals want some
Speaker 1: balance in their life as well. I want to just
Speaker 1: full transparency. Your mom is Senator Elizabeth Warren, and she
Speaker 1: is someone who you know, talks about things like pay
Speaker 1: and equity in the system, often talking about executives in
Speaker 1: the C suite. Are you finding that for younger finance
Speaker 1: professionals that it isn't so much about pay, but it
Speaker 1: is about that balance and that's what that they're prioritizing.
Speaker 1: And just got about thirty seconds left. I think people
Speaker 1: choose to be independent for a range of reasons. Professional
Speaker 1: control is the number one reason we hear, although we
Speaker 1: also hear that they're satisfied financially. All right, We're gonna
Speaker 1: leave it on that note. Listen, we so appreciate getting
Speaker 1: some time with you and hearing about your survey. Amelia
Speaker 1: Tayugi she is, as we said, co founder and chief
Speaker 1: executive officer Business Talent Group, joining us via zoom as
Speaker 1: she said visiting Rome. She is based in the United States.
Speaker 1: If you're listening to the Bloomberg Business Week podcast, catch
Speaker 1: us live weekday afternoons from three to six Eastern Listen
Speaker 1: on Bloomberg dot com, the iHeartRadio app, and the Bloomberg
Speaker 1: Business app, or watch us live on YouTube. We're gonna
Speaker 1: get a read on how consumers are doing when it
Speaker 1: comes to what they're being paid. On Friday, that's what
Speaker 1: the latest read on average hourly earnings. It's all part
Speaker 1: of the monthly jobs report. Luckily for us, we've got
Speaker 1: a next guest who knows a lot about that as well,
Speaker 1: joining us on that and on a campaign to create
Speaker 1: a more inclusive and equitable workspace for members of the
Speaker 1: black community. We welcome see Eaglestone Bracy. She's the President
Speaker 1: of Unilever USA, CEO of Unilever Personal Care North America,
Speaker 1: and she's with us on the phone from Englewood Cliffs,
Speaker 1: New Jersey. See. Is so nice to have you here.
Speaker 1: We want to get into your campaign. It's really fascinating.
Speaker 1: We want to share it with our audience. First up, though,
Speaker 1: we'd be your miss not to ask you, as a
Speaker 1: head of Unilever Unilever USA, to ask you about today's
Speaker 1: environment when it comes to consumer spending, inflationary pressures, you know,
Speaker 1: finding workers. How how do you see it? How would
Speaker 1: you describe it? Hi? First, thank you for having me
Speaker 1: on your show. It's great to be here and I'm
Speaker 1: excited to talk about our initiative. Yeah, I do. I
Speaker 1: am the president of Unilever. Unilever is quite a big
Speaker 1: global company. We're over sixty billion dollars in euro we
Speaker 1: compete in over one hundred and fifty markets and you know,
Speaker 1: times continue to be dynamic. We're always optimistic about our growth,
Speaker 1: health and the potential for the future. But one thing
Speaker 1: we've learned during COVID times you cannot things don't stay still,
Speaker 1: always changing, and we're excited that we have the portfolio
Speaker 1: that helps us win in all sorts of times, the
Speaker 1: good times and the bad times. So when you say
Speaker 1: to leave this business, no, it's a massive company and
Speaker 1: I've in the past talked with the CEO of all
Speaker 1: of it and you guys, you know is certainly one
Speaker 1: of the benefits during the pandemic when people were buying
Speaker 1: so much stuff. But let me ask you when you
Speaker 1: say dynamic, do you feel like more optimistic about the
Speaker 1: future in terms of the economic global economic outlook or
Speaker 1: are a little bit more cautious Again, I think at
Speaker 1: Unilever we have such a breath in our portfolio that
Speaker 1: we have the right products and the right price points
Speaker 1: to across the times. Make sure we have what people need,
Speaker 1: and that's what we're really focused on, is making sure
Speaker 1: we meet people's needs. So I continue to be confident
Speaker 1: in our business and our growth prospects consistent with what
Speaker 1: you know we have previously discussed and share well. See
Speaker 1: one of the ways that you are working to meet
Speaker 1: customer needs is through campaigns like this one you've just
Speaker 1: launched hashtag black hair is professional. I want to get
Speaker 1: into the details of the campaign itself, but for folks
Speaker 1: who just may not be familiar with the depth and
Speaker 1: breadth of this issue. Can you talk to me about
Speaker 1: the research that you've done on Black women in natural hairstyles,
Speaker 1: not just at the workplace, but in general facing discrimination
Speaker 1: on that. Yeah. Absolutely, we're here also to talk about
Speaker 1: the crowneck. But it's really interesting. One of the brands
Speaker 1: that we have a Unilever is Dove, and what we
Speaker 1: are committed to is beauty inclusivity. What does that mean?
Speaker 1: That means we all have the right to feel confident
Speaker 1: and be seen as beautiful. What happens we have narrow
Speaker 1: Eurocentric beauty standards that make most of us not feel beautiful.
Speaker 1: In fact, seventy three percent of women today say that
Speaker 1: they don't feel beautiful, and we know that's particularly true
Speaker 1: among Black women and underrepresented populations. And what we've seen
Speaker 1: happen in the workplace and in schools is that people
Speaker 1: are turned away because of the way black women and
Speaker 1: black kids our hair grows out of our head, textured hairstyles, locks,
Speaker 1: bantu knots, etc. It's characterized as untidy or unkept, and
Speaker 1: so they're grooming policies that are established that say you
Speaker 1: have to not have braids, or you can't have locks
Speaker 1: to go to school, or you'll be expelled, or corporate
Speaker 1: grooming policies important in this case, will give you those
Speaker 1: policies to say those hairstyles are not acceptable. And we
Speaker 1: call that race based hacrimination because to change your hair
Speaker 1: from the way it naturally grows out of your head
Speaker 1: and a style that is reflective of your culture means
Speaker 1: that you're not valuing and respectful of diversity. And that's
Speaker 1: why we call that race based hair discrimination. So because
Speaker 1: of that, what Dove champion back in twenty nineteen was
Speaker 1: something called the Crown Coalition and the Crown Act, and
Speaker 1: Crown is an acronym that stands for creating a respectful
Speaker 1: and open world for natural hair. And we started at
Speaker 1: first in California July third, twenty nineteen, Governor k Newsom
Speaker 1: signed it, and today we have over twenty states that
Speaker 1: have passed the Crown Act or similar legislation and over
Speaker 1: forty municipalities, you know, a fancy word for cities, and
Speaker 1: so we've made incredible progress. And you asked about the
Speaker 1: research what helped us see how prevalent this issue is
Speaker 1: of race based hair discrimination. We learned at the time
Speaker 1: in twenty nineteen, eighty percent of black women believe that
Speaker 1: we have to change our hair to fit in in
Speaker 1: the workplace. But what we have done recently is a
Speaker 1: new study and what we show is we've made progress.
Speaker 1: It's no longer eighty percent, it's fifty seven percent, but
Speaker 1: that's still too high and the issue still persist. So
Speaker 1: we are committed to championing this legislation. We're not going
Speaker 1: to stop until all fifty states have passed. But what
Speaker 1: we've done we're really excited about is this partnership with
Speaker 1: Dove and LinkedIn with Dove as a co founder of
Speaker 1: the Crown Coalition that champions the Crown Act. Essie, what's
Speaker 1: the direct correlation between those states that have passed the
Speaker 1: legislation and improvement in those statistics where it is easier
Speaker 1: for individuals from the black community. I think the impact
Speaker 1: the Crown Act has had is actually beyond the states
Speaker 1: that have passed. We hear all the time how what
Speaker 1: a difference it makes in the states that have passed.
Speaker 1: But also what we have done is I'm going to
Speaker 1: put in air quotes help normalize textured hair, and that's
Speaker 1: what this program we're doing with LinkedIn is about black
Speaker 1: hair is professional. That's the campaign is all about establishing.
Speaker 1: What is establishing what we've been fighting against is that
Speaker 1: black hair has not been considered professional. It's been unkept, untidy,
Speaker 1: not for the workplace, and trying to drive awareness in that.
Speaker 1: What we see in that fifty seven percent number that
Speaker 1: I shared is that more and more it is becoming normalized.
Speaker 1: You are seeing more people in the workplace, black women
Speaker 1: in the workplace wearing textured hair styles, but still not
Speaker 1: enough and what we see I'm sorry, go ahead, no,
Speaker 1: I guess I want to get to because we've all
Speaker 1: got a couple of minutes or so left here. Is
Speaker 1: it educating people understanding you know, maybe you know their
Speaker 1: unconscious biaseness, are not understanding you know, different people in
Speaker 1: our society or different cultures of black culture, you know
Speaker 1: in particular, is that what it comes down to his education?
Speaker 1: Do you think it comes down to education? And it
Speaker 1: comes down to allowing education around what is professional and
Speaker 1: telling stories and seeing people more and more with textured
Speaker 1: hairstyle so in professional settings. And because black women think
Speaker 1: that we have to change our hair. In the past,
Speaker 1: you saw less than that and like approximately two thirds
Speaker 1: of Black women change their hair for a job interview
Speaker 1: because we believe we have to. So that is a
Speaker 1: part of the education not doing that and changing corporate
Speaker 1: mindsets to allow that to happen. No, Black women with
Speaker 1: textured hair two times as likely to experience microaggressions in
Speaker 1: the workplace. You know, it's really acute. Among young women,
Speaker 1: let's call it twenty five to thirty four more of
Speaker 1: them experience these issues. Forty four Black women under thirty
Speaker 1: four feel pressured to have a headshot with straight hair.
Speaker 1: So it is about education, and it's about creating an
Speaker 1: environment where black women feel confident to wear their textured hairstyles,
Speaker 1: which in turn creates more education and association with the
Speaker 1: image of what it takes to be professional, which of
Speaker 1: course is here is professional, which is a part of
Speaker 1: the LinkedIn campaign. Absolutely, and thank you for walking us
Speaker 1: through that. Se I wonder if you can talk about
Speaker 1: the federal efforts on the Crown Act, because if I'm
Speaker 1: understanding correctly, the Crown Act has faced challenges in getting
Speaker 1: through at the federal level. Can you talk about just
Speaker 1: I imagine that's very frustrating, and we've just got about
Speaker 1: forty seconds left. Yeah, and forty seconds. I would say, hey,
Speaker 1: we have not been successful with federal legislation, and we're
Speaker 1: committed to getting federal legislation and it's through a bipartisan movement.
Speaker 1: But in the meantime, we continue to go state by
Speaker 1: state to make sure we have coverage there. So it's
Speaker 1: our intention and we continue to make progress despite not
Speaker 1: achieving our ambition in twenty twenty two. Well, we wish
Speaker 1: you well with those efforts and progress. See Eaglestone Bracy
Speaker 1: joining us on the phone from Englewood Cliffs, New Jersey.
Speaker 1: She's the president of Unilever USA and CEO of Unilever
Speaker 1: Personal Care North America. You're listening to the Bloomberg Business
Speaker 1: Week podcast. Catch us live weekday afternoons from three to
Speaker 1: six Eastern on Bloomberg Radio, the Bloomberg Business App, and YouTube.
Speaker 1: You can also listen live on Amazon Alexa from our
Speaker 1: flagship New York station, jose Say Alexa playing Bloomberg eleven
Speaker 1: thirty stock market pulfing a four day rally. We did
Speaker 1: see banks coming under some pressure. I'm so glad that
Speaker 1: we have our next guest because he's got a technical
Speaker 1: take on the markets, always looks at things really smart
Speaker 1: and deeply. Riddy Watts is back with US chief investment
Speaker 1: strategists at O'Neil Global Advisors. Lucky for us, he's here
Speaker 1: in our Bloomberg Interactive Broker's studio. It is so nice
Speaker 1: to have you here in studio. How are you? I'm
Speaker 1: great and it's nice to see you in person. Now
Speaker 1: at the pandemic is wound down and see a familiar face. Well,
Speaker 1: can I say it's normal on a day where we
Speaker 1: were just saying before we got going that you know,
Speaker 1: it feels like we watch a lot of reality TV.
Speaker 1: But this isn't you know reality TV. This is the
Speaker 1: real world and it's it's interesting. Things keep coming at
Speaker 1: as politically, economically, monetary, policy wise. How do you make
Speaker 1: sense of it? Someone who looks at things technically, how
Speaker 1: do you think about all of these issues that continue
Speaker 1: to come at us? I think, unfortunately, the extreme bipartisan
Speaker 1: nature of the political system right now is going to continue,
Speaker 1: at least for the foreseeable future. That something investors have
Speaker 1: to deal with. Right now, we have a mixed government. Obviously,
Speaker 1: historically the market actually does okay under that scenario, and
Speaker 1: so I really try to stay focused on what's going
Speaker 1: on with the economy, and what's going on with companies.
Speaker 1: So not super concerned about the Trump situation, even though
Speaker 1: markets like predictability, right and this is a little bit unpredictable.
Speaker 1: I think the market's much more concerned about what's going
Speaker 1: on with the economy, what's going on with the FED,
Speaker 1: what's going on with the financial system, and you know,
Speaker 1: don't want to digress too far into into politics, but
Speaker 1: I don't think that's what's driving stocks right now, all right,
Speaker 1: So tell us what you think is driving stocks at
Speaker 1: a year where, like I said, we just went through
Speaker 1: I don't know whether to call it a bank crisis,
Speaker 1: but we did have the collapse of three banks here
Speaker 1: in the United States. We're continuing to watch to see
Speaker 1: if there's other shoes that drop, whether it's a commercial
Speaker 1: real estate or what have you. What does this market
Speaker 1: show you tell you about maybe what's to come. I
Speaker 1: think the market's focused on three things right now. It's
Speaker 1: focused on what the Fed's going to do. And we
Speaker 1: should note that the odds of another rating crease in
Speaker 1: May has actually fallen to forty percent, So now the
Speaker 1: market is not expecting another rating crease. The market's right
Speaker 1: on this. I think it's very tough to say. I
Speaker 1: think it's I think it is kind of fifty fifty.
Speaker 1: Not not to dodge the question, but I think it's
Speaker 1: kind of up in the air. But I think it's
Speaker 1: clear that we are probably getting near the end of
Speaker 1: the FED tightening cycle. I do think that is because
Speaker 1: of the volatility we're seeing in treasuries. Does it look
Speaker 1: what's the indication that tells you that, or is it
Speaker 1: because of what we're hearing from the FED. I think
Speaker 1: it's a couple of things. I think inflation is starting
Speaker 1: to slow down. Okay, I think the economy is starting
Speaker 1: to slow down. I think the FED has done an
Speaker 1: awful lot in a very short period of time, and
Speaker 1: at some point I think they're going to want to
Speaker 1: pause and see how that plays through the system. I
Speaker 1: think importantly, what is going on with the banks and
Speaker 1: the real world is very significant. There is a credit
Speaker 1: contraction going on. Remember, small banks make about forty percent
Speaker 1: of the loans in the US, though in some areas
Speaker 1: like commercial real estate, they make closer to seventy and
Speaker 1: so that contraction of small business loans is going to
Speaker 1: have a big impact on the economy. That's just starting.
Speaker 1: The Fed's aware of that. I think they're gonna want
Speaker 1: to see how that plays out. But you're a technicals
Speaker 1: guy as well, So when you hear these big news
Speaker 1: events like the banking crisis, quote unquote, like the OPEC
Speaker 1: production cuts, do you weigh those heavily on how you're
Speaker 1: thinking about markets? I do, I would say technically. A
Speaker 1: couple things to say. First is, I'd say the top
Speaker 1: thing for the market, it's been a very narrow market.
Speaker 1: So if you look at the qqqs, which represent the
Speaker 1: nastic one hundred, right, they're up about twenty percent year
Speaker 1: to date. The equal weighted SNP is only up about
Speaker 1: two So it's been a very narrow market. The market
Speaker 1: has not been as strong as we haven't seen value
Speaker 1: either on its right correct, and the market does not
Speaker 1: look as strong as it appears on the surface. That's
Speaker 1: the first point. The second point is once you do
Speaker 1: get though to the end of the FED tightening cycle,
Speaker 1: and we can debate right now whether we've already seen
Speaker 1: the peak in ten year yields, they've pulled back a lot.
Speaker 1: They've gone from basically four twenty five to three thirty
Speaker 1: five today at the close that's a huge drop once
Speaker 1: ten year yields peak. That's good for growth stocks and
Speaker 1: long duration assets. And one of the things we're seeing
Speaker 1: happen in the market over the last six weeks or
Speaker 1: so is a shift away from cyclicality and back into growth.
Speaker 1: So I do think we could be in a situation
Speaker 1: where at the end of the year, maybe the economy
Speaker 1: is not quite as good as it is right now,
Speaker 1: but the FED tightening cycle has ended, bond yields have
Speaker 1: come down, and people are feeling better about stock. Yeah,
Speaker 1: it's pretty remarkable. I mean we've been now a two
Speaker 1: year easily back below four percent three point eight two
Speaker 1: to be exact. M Randy Having said that, do you
Speaker 1: think recession? Did you say recession? I didn't say recession.
Speaker 1: I like how you how you set that up. I
Speaker 1: do think we're looking at a slower economy. I do
Speaker 1: think at some form of recession is likely. But let's
Speaker 1: remember stocks normally bottom during the recession and start going up.
Speaker 1: They take a lot of the pain in front of
Speaker 1: the recession because they're a discounting mechanize that already We've
Speaker 1: done an awful lot of damage in the market over
Speaker 1: the last year, so I mean the SMP is down
Speaker 1: what roughly nine ten percent over the last year here. Um.
Speaker 1: I think the thing everyone's really focused on in that
Speaker 1: sense is are we going to go back and retest
Speaker 1: that October loow? The October loow was a thirty four
Speaker 1: ninety one. We've done some touch and go there, We've
Speaker 1: we've gone down to around thirty seven sixty four was
Speaker 1: the December low. UM. I don't know if we have
Speaker 1: to go all the way back and retest that October low.
Speaker 1: Right now, the market's been in kind of a trading range,
Speaker 1: and that trading range is being driven by what's going
Speaker 1: on with the FED. And then the next thing to
Speaker 1: occur is going to be earning season. And I do
Speaker 1: have a feeling that this earning season, which starts on
Speaker 1: April fourteenth with the big banks reporting, though I will
Speaker 1: note the big banks should actually be okay because they're
Speaker 1: going to have an awful lot of deposit inflows, so
Speaker 1: I think those quarters may actually be kind of positive.
Speaker 1: But I think as we moved through earning season and
Speaker 1: we start to listen to some of the industrials and
Speaker 1: some of the consumer stocks, I do think estimates are
Speaker 1: going to come down they've already started to come down.
Speaker 1: Bloomberg itself in your intelligence Bureau is looking for minus
Speaker 1: two percent earnings growth for Q one. Used to be positive,
Speaker 1: now it's coming down. So I do think the one
Speaker 1: other negative the market has to kind of adjust to
Speaker 1: is that earnings have to get reset for the new
Speaker 1: reality on the economy. I have to say that one
Speaker 1: of the conversations I think is smart to have about
Speaker 1: our error right now is just this reset post pandemic. Right,
Speaker 1: we had a normal economy, we had a pandemic. We
Speaker 1: had an incredible amount of stimulus that came into on
Speaker 1: a global basis, right, and then we're trying to figure
Speaker 1: out work from home, We're trying to figure out real
Speaker 1: estate needs, We're trying to figure out a lot of
Speaker 1: things that got impacted by the pandemic and kind of
Speaker 1: what the reality is. And that's the same thing when
Speaker 1: it comes to valuations or earnings expectations, and there's do
Speaker 1: you know what I'm saying, Like it's just kind of
Speaker 1: a big macrowth think or rethink about kind of what
Speaker 1: is our world supposed to be post pandemic now? Is
Speaker 1: it like what it used to be pre pandemic or
Speaker 1: is it something different? So I think that's well said.
Speaker 1: And are we going back to a slower growth rate
Speaker 1: that we were kind of in pre pandemic? So, in
Speaker 1: other words, as we come off that sugar high of
Speaker 1: the trillions of dollars that got pumped into the economy
Speaker 1: and that place through, as we move through that and
Speaker 1: we go through this tightening cycle, does that mean like
Speaker 1: coming out of it, we're actually going to have a
Speaker 1: pretty slow growth environment again for company earnings, company revenues
Speaker 1: GDP and two percent inflation? Is that target? That's something
Speaker 1: that we talk about a lot, Maddie. Yeah, yeah, And
Speaker 1: I'm not sure we're going to get all the way
Speaker 1: back to two percent. I think we probably won't. I
Speaker 1: do think that the reverse in globalization and on shoring, etc.
Speaker 1: Is going to lead to kind of a higher inflation
Speaker 1: rate going forward as we do more manufacturing et cetera. Here,
Speaker 1: but I think it can be lower than where it was.
Speaker 1: Remember PC was four point six in the last print.
Speaker 1: I think that's coming down. I think rates are going
Speaker 1: to stabilize. So while I think the near term is
Speaker 1: going to be very very bumpy, especially as we go
Speaker 1: through earning season, I think at the end of the year,
Speaker 1: we could be looking at a much much better picture
Speaker 1: for stocks. Yeah, I wonder if we just look at
Speaker 1: today though, I mean I wondered to what extent it
Speaker 1: was technically driven a little bit as the SMP drops
Speaker 1: right below a range, But we also have really weak volume.
Speaker 1: What does that indicate to you? I would say if
Speaker 1: you look inside those numbers, industrial stocks had a pretty
Speaker 1: tough day to day. So I think we're continuing to
Speaker 1: see elements of cyclicality in the market get sold off
Speaker 1: and people moving back towards growth. So I think I
Speaker 1: think we aren't a trading range. I think they're waiting
Speaker 1: to see what the FED does next and what happens
Speaker 1: with this earning season. But I think there is a
Speaker 1: rotation back towards more long duration assets and growth stock.
Speaker 1: It was pretty remarkable, was it a couple of weeks ago,
Speaker 1: like pulling in a name like microso after something like
Speaker 1: these names have really rallied. So add it all up. Strategy,
Speaker 1: What do we do in this environment? I think right
Speaker 1: now you still have to be you still have to
Speaker 1: be cautious. I do want to get through this earning season.
Speaker 1: I do want to see what the FED does next.
Speaker 1: I do think, however, though, that this is the time
Speaker 1: to start to slowly accumulate growth stocks. I think the
Speaker 1: markets headed towards growth stocks, and I think by the
Speaker 1: end of the year you're gonna be happy on them.
Speaker 1: I have to ask you this, do you trust treasuries?
Speaker 1: Here we thought the ultimate trust investment vehicle and then
Speaker 1: to see the problems and obviously we're in these interesting
Speaker 1: times where you saw a FED that very quickly raised rates.
Speaker 1: It was a big change within the last twelve months.
Speaker 1: Are you comfortable with what happened in the exposure? I
Speaker 1: think when you were buying treasuries when they were yielding
Speaker 1: on the ten year seventy five bases points, you had
Speaker 1: to be asking yourself what you were doing. Now out
Speaker 1: they're yielding three thirty five. I feel much better about them.
Speaker 1: And I do think as the economy slows, diven, end
Speaker 1: paying stocks and higher yielding assets are going to start
Speaker 1: to do better. So I think it's an okay bet
Speaker 1: right now? Okay? And just in terms of what happened
Speaker 1: to the banks, just bad management. I mean you've got
Speaker 1: a head indus rate risk, right, I mean, that's that's
Speaker 1: what happened, and they had a mismatch in their and
Speaker 1: their assets and the reliabilities, and so I don't think
Speaker 1: people can be surprised when you go through the fastest
Speaker 1: bet tightening cycle ever. Let that work backs. All right,
Speaker 1: We unfortunately have to leave it there can thank you
Speaker 1: so much, really appreciate it. We don't leave yet, all right.
Speaker 1: That's Randy Watts, chief investment Strates at O'Neil Global Advisors.
Speaker 1: Here her Bloomberg Interactive Broker Studio. This is the Bloomberg
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