Speaker 1: This is Bloomberg Business Wait inside from the reporters and
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Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: We did see Mattel. We talked about it actually after
Speaker 2: the post yesterday because they came out with their earnings
Speaker 2: and man, the stock really rallied big time today on
Speaker 2: heavy volume, and this is after the company reported it
Speaker 2: actually rallied earlier in the day. I think by the
Speaker 2: end of the day it was lower like the overall market.
Speaker 3: Yeah, it ended up finishing the day up by about
Speaker 3: four tens of one percent, so like a lot of
Speaker 3: the stocks out there today, kind of all over the place.
Speaker 2: Right up six percent earlier. So let's get to it.
Speaker 2: Because the company did report sales and profit that beat
Speaker 2: Alice expectations with us and delighted to have us back
Speaker 2: with us. Is Enon cries, chairman and CEO of Mattel,
Speaker 2: on the phone in Elsugundo, California. Forgive me, Ino, there's
Speaker 2: a lot going on. Try to keep track of it.
Speaker 2: I know you've had a busy plate as well, first
Speaker 2: of all, congratulations on Barbie, because we have been talking
Speaker 2: about that with you for a while. I almost feel
Speaker 2: like since the beginning and your strategy of bringing Mattel
Speaker 2: Toys to life, what does the success of the movie
Speaker 2: mean to you and the company.
Speaker 4: Yes, that's right, Carol, and thank you for having me
Speaker 4: on the show. As you remember from the very beginning,
Speaker 4: this was never about just making a movie. This was
Speaker 4: about creating a cultural event, a societal moment, and we
Speaker 4: could not be happier where we are today with such
Speaker 4: strong performance right out of the gate the first week,
Speaker 4: with over five hundred million dollars in growth in box
Speaker 4: office receipts, and more importantly the audience reaction with people
Speaker 4: going too and even three times already in the first
Speaker 4: week to see the movie, a very broad audience including men,
Speaker 4: and very strong performance internationally that is stronger than than
Speaker 4: the US. And it's not because the US is not
Speaker 4: doing well. It's just a very strong performance across the world.
Speaker 4: And all in all, it really is, uh, you know,
Speaker 4: an exciting moment and a showcase for the cultural resonance
Speaker 4: of our brands, our ability to attract and collaborate with
Speaker 4: top creative talent and our marketing and demand creation capabilities
Speaker 4: to create what is now you know, a cultural phenomenon.
Speaker 2: You know what does it mean for merchandise? I mean,
Speaker 2: I've actually bought some Barbie products. To be quite honest,
Speaker 2: I grew up with Barbie's, introduced them to my daughter,
Speaker 2: My older sisters introduced me to them, and it's nostalgic
Speaker 2: for me. But I also have been in the stores
Speaker 2: where all ages are snapping out products. How how does
Speaker 2: that move the needle for you guys financially as well?
Speaker 4: All those Yeah, we did see incredible take up of
Speaker 4: the movie related merchandise. We we have a having been
Speaker 4: sixty more than a hundred and sixty five different consumer
Speaker 4: product partners, different different industry, different products, all over the world,
Speaker 4: and we're seeing incredible excitement and as you say, you know,
Speaker 4: product is selling out quickly. Yeah, this is movie related merchandise.
Speaker 2: Doesn't financially have a material financial material impact on you guys.
Speaker 4: Well, we haven't broken it out, but this is already
Speaker 4: part of what we expect will be an uplift in
Speaker 4: Barbie sales in the second half. This is where really
Speaker 4: where it kicked in. And of course don't forget the
Speaker 4: Helo effect on the overall Barbie brand, with the significant
Speaker 4: improvement in consumer demands already in the third quarter, and
Speaker 4: expect Barbie to grow in the third quarter and for
Speaker 4: and the full year.
Speaker 3: Nan you called it a cultural moment, and certainly that
Speaker 3: means that it can polarize some people, at least here
Speaker 3: in the United States. Got to ask about the high
Speaker 3: profile people on the right who've criticized the film. Ben
Speaker 3: Shapiro made this forty minute YouTube video. It's been viewed
Speaker 3: nearly two million times. He says he destroys the movie.
Speaker 3: He actually burns Barbie's in it. Elon Musk says, if
Speaker 3: you take a shot every time Barbie says the word patriarchy,
Speaker 3: you'll pass out before the movie ends. How do you
Speaker 3: react to that criticism?
Speaker 4: So, Barbie has been a flag carrier for diversity and inclusivity.
Speaker 4: Barbie inspired the limitless potential in Every Girl, and the
Speaker 4: genius of Greta is what she did. She took this
Speaker 4: message you know that focuses on female empowerment and made
Speaker 4: this movie appealing and relevant to everyone and people who
Speaker 4: go to the movie, you know, whether you're a Barbie
Speaker 4: fan or or you know or looking to be entertained
Speaker 4: and inspired by by a modern day interpretation of one
Speaker 4: of the most iconic brands in modern culture. This movie
Speaker 4: Will Will Will Be, Will Be, Will be an experience
Speaker 4: for you. And what we believe is this movie will
Speaker 4: recontextualize the way people think of Barbie and what Barbie
Speaker 4: means for the world. And we could not be more
Speaker 4: proud of of the of the messages, uh and the
Speaker 4: unique voice that Greta has in this movie.
Speaker 2: Well, and I'm curious to does it mean that we're
Speaker 2: going to see a Barbie sequel or is it a
Speaker 2: case of you guys move on to other toys.
Speaker 4: You know, we have an announcer sequel, and you know
Speaker 4: we're still barely a week into the religion.
Speaker 2: But how we journalists are, We're like, okay, now, now,
Speaker 2: what what's next?
Speaker 4: You know, you're not alone, You're not alone and asking
Speaker 4: the question. But of course, you know, it's such a success,
Speaker 4: such a phenomenal success. You know, of course we'd be
Speaker 4: looking to extend, extend this. And we've always said that
Speaker 4: our goal is not this is broadly not just about Barbie.
Speaker 4: Is We're not looking to create single movies, but to
Speaker 4: build film franchises for the long term. And of course
Speaker 4: this is part of our strategy in terms of capturing
Speaker 4: the full value from our intellectual properties.
Speaker 2: You know, does that intellectual property be it in movies
Speaker 2: or streaming series or what have you. How you guys,
Speaker 2: you know, whichever ways you go, does that ultimately become
Speaker 2: a big generator of revenues.
Speaker 4: Yeah, we absolutely said that our strategy in capturing the
Speaker 4: full value of our ip outside the toy isle can
Speaker 4: be meaningful in success, you know, and we're looking to
Speaker 4: scale this. This is not just about a movie or
Speaker 4: a TV series. This is about participating in the highly
Speaker 4: accreative business verticals outside the toy isle that are all
Speaker 4: driven by big franchises, big brands, and in some cases
Speaker 4: these verticals are larger than the toy industry. So we
Speaker 4: believe that we have you know, the assets, the capabilities,
Speaker 4: the relationship and with the Barbie movie, this really positions
Speaker 4: us in a very strong way as a key player
Speaker 4: that can participate in this in these verticals and create
Speaker 4: meaningful shareholder value and build a meaningful business out of this.
Speaker 3: You know. It's like Carol said, this has been a
Speaker 3: busy week for you. Got to ask about the big
Speaker 3: news yesterday the co president and CEO Richard Dixon moving
Speaker 3: on to be CEO of the Gap. Let's get your
Speaker 3: comments on that. How big of a loss is this
Speaker 3: for the company?
Speaker 4: Richard is a friend and has been a great colleague
Speaker 4: and partner for me since I joined the company. But
Speaker 4: one of Richard's biggest accomplishments is that we built a
Speaker 4: very very strong team of leaders, of designers, of innovators,
Speaker 4: of creative talent within the company and the executives who
Speaker 4: take over from Richard. Between Lisa McKnight, who has been
Speaker 4: the head of Barbie since twenty and sixteen and very
Speaker 4: much manage the transformation together with Richard and the head
Speaker 4: of Dogs in twenty nineteen. And Josh Silverman, who has
Speaker 4: been at Disney for twenty years that is now where
Speaker 4: he oversaw all of Disney's third party relationships with licenses
Speaker 4: now running our non toy commercial activities.
Speaker 2: So you're not worried.
Speaker 4: Two world class leaders really taking charge, and we could
Speaker 4: not be more confident of our team that he's running
Speaker 4: this business.
Speaker 2: You know, in ten seconds, gott to be correct, did
Speaker 2: you give tips to Will Farrell? I'm playing a CEO
Speaker 2: of Mattel.
Speaker 4: I can learn a lot from him on the comedy side,
Speaker 4: but I'm a big fan and it's great to see
Speaker 4: him playing the role.
Speaker 2: We congratulations and we're looking forward to following more of
Speaker 2: this story and what comes next. Inon Cris, chairman and
Speaker 2: chief executive officer at Mattel, on the phone from elsin Gundo, California.
Speaker 2: This is Bloomberg.
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Speaker 2: We do want to get to another company in stock
Speaker 2: that was certainly in the news today, and we're talking
Speaker 2: about Chippotle Mexican Grill. The stock under pressure today, down
Speaker 2: the most since March of twenty twenty after second quarter
Speaker 2: sales fell short of expectations and third quarter outlooks suggested
Speaker 2: maybe momentum is slowing. So keep in mind that the Little
Speaker 2: perspective stock has been on a run in twenty twenty three.
Speaker 2: It's still up what about thirty five percent.
Speaker 3: Yeah, expectations, it's fair to say we're very high going
Speaker 3: into this print. We got with us right now and
Speaker 3: we're very happy to have him. Here is Chipotle COO,
Speaker 3: Scott Boat. He's the chief operating officer there. He's with
Speaker 3: us on zoom from Newport Beach, California. Scott, how are
Speaker 3: you this afternoon.
Speaker 5: I'm well, thank you for having us on this afternoon.
Speaker 3: So let's go through yesterday's numbers and you know what
Speaker 3: did disappoint analysts? Give us your take on the quarter.
Speaker 6: You know, we still feel like we had a really
Speaker 6: strong quarter, up seven point four percent in comparable sales,
Speaker 6: the highest margins margin numbers we have produced as an
Speaker 6: organization at quite some time, coming in at twenty seven
Speaker 6: point five diluted innings per share at twelve thirty two,
Speaker 6: all really in line with consensus. We felt great about
Speaker 6: the quarter, specifically that the comp number was driven primarily
Speaker 6: by transaction growth, and so we're still excited about Q
Speaker 6: three as we look at what Q three will be
Speaker 6: for end up for our organization, where we're trending and
Speaker 6: what we anticipate. It's still driven by healthy transaction growth,
Speaker 6: and so our full year guidance still remains unchanged. I
Speaker 6: think analysts were.
Speaker 5: A concerned about the estimate comp sales estimate for Q three.
Speaker 6: But keep in mind, there's there are other things that
Speaker 6: we have in the pipeline. You know we have We
Speaker 6: still have pricing leverage, which we believe as our economic
Speaker 6: model still holds up.
Speaker 5: We feel like the Chipotle.
Speaker 3: Meanings you can use. You're confident you could still raise prices.
Speaker 5: I think there's I say that to say, I think
Speaker 5: there's still a room yet.
Speaker 6: And then we have a fourth quarter lt O promotion
Speaker 6: that we will launch sometime probably around the September time frame,
Speaker 6: and so I say that to say, we still feel
Speaker 6: great about the year. We feel great about the healthy
Speaker 6: transaction growth that's happening, that's driving our comparable sales growth.
Speaker 5: Uh, and the story still holds for the year. So
Speaker 5: we feel still feel confident.
Speaker 2: How much. Listen, you're the chief operating officer, so how
Speaker 2: things work and operate is really important, and how you
Speaker 2: can make the systems more productive and more efficient. Talk
Speaker 2: to us a little bit about some of the automation
Speaker 2: technology that you guys are doing and playing with. About
Speaker 2: years ago, I caught up with your CFO, Jack Hartung
Speaker 2: and talked about the amount of hours and how labor
Speaker 2: intensive it was dealing with avocados, because you guys are
Speaker 2: all about fresh guacamole and fresh avocados. So talk to
Speaker 2: a little bit about automation and how that helps the
Speaker 2: growth story going forward.
Speaker 5: Yeah, it's a great question, Carol. I think there are
Speaker 5: a couple of things that really fuel our economic model.
Speaker 5: One of those, I'll speak to you very quickly is
Speaker 5: around throughput.
Speaker 6: And we still have throughput advantages that have yet to
Speaker 6: be pulled through, and so we're working aggressively as an
Speaker 6: organization to get back to the throughput levels and efficiency
Speaker 6: levels we experienced in the brand back in twenty seventeen
Speaker 6: through twenty nineteen, really pre pandemic, before there was this
Speaker 6: massive shift to digital, and the new people in our
Speaker 6: organization today aren't accustomed to the speed at which we
Speaker 6: could deliver the Chipotle experience, and so we're really leveraging
Speaker 6: that and flexing that muscle here in the upcoming quorder
Speaker 6: to really get back to our throughput prowles.
Speaker 5: Again.
Speaker 6: It's also leveraging cobotics, where it makes sense to really
Speaker 6: remove some of the routine, mundane tasks like coring and
Speaker 6: fitting avocados each day in our restaurant to really move
Speaker 6: that labor to more consumer facing engagement and creates a
Speaker 6: better experience for the team member and a better experience
Speaker 6: for the consumer as well.
Speaker 3: Can Scott, can your partner, Can you just give us
Speaker 3: some numbers behind the automation the automation process when it
Speaker 3: comes to peeling or incoring avocados for that guacamole, Like,
Speaker 3: how how long does it take a person to do it?
Speaker 3: And how long does it take a machine to do it?
Speaker 6: Yeah, it takes one individual about fifty minutes to complete
Speaker 6: one batch of guacamole. That's starting with a fresh k
Speaker 6: K case of ripe avocados all the way through.
Speaker 5: The hand mashing process.
Speaker 6: So we think autocado can remove about fifty percent.
Speaker 5: Of that time. Wow, and really make it.
Speaker 6: Increasingly more efficient to get through that process and get
Speaker 6: towards more guest facing activity.
Speaker 2: But you're watching on streaming and YouTube that can see
Speaker 2: some of okado. First of all, I just love the
Speaker 2: name of it, but they're actually seeing the process of
Speaker 2: how do you.
Speaker 3: Lose do you lose some of that vegetable? Do you
Speaker 3: lose a little bit of it with the automated process.
Speaker 6: You know, that's one of the things that we are
Speaker 6: testing for jam is we think about autocado's effectiveness in restaurant,
Speaker 6: It's got to be able to deliver on a few things. Hey,
Speaker 6: it has to be able to protect this incredible ingredient
Speaker 6: as we bring it into our restaurant.
Speaker 5: It has to continue to be as food safe as.
Speaker 6: It can and should be in our restaurants, and it
Speaker 6: has to deliver on our specification. And so if it
Speaker 6: doesn't beat that criteria, then it doesn't move forward.
Speaker 5: And it's testing protocols.
Speaker 6: But early days, we're very excited about the opportunity and
Speaker 6: feel good about what the product is today.
Speaker 2: All Right, what about workers? That's the other thing, right,
Speaker 2: You don't want turnover. You want to train people and
Speaker 2: have them stay. So one of the things many years ago,
Speaker 2: I was very impressed with what was done by the
Speaker 2: company to hold on to workers, to promote workers, to
Speaker 2: keep them in the system them. So talk to us
Speaker 2: a little bit about manager turnover and what you guys
Speaker 2: are seeing in the hourly turnover.
Speaker 5: Yeah, great question.
Speaker 6: I think those early investments that you're referencing, Carol, have
Speaker 6: paid huge dividends for our organization as it relates to
Speaker 6: retention and turnover specifically, and then overall development.
Speaker 5: For the organization. As you think about the growth that
Speaker 5: is ahead of us. We are currently.
Speaker 6: Experiencing all time low turnover numbers for the brand and so,
Speaker 6: and that's throughout our salary rates and our hourly team members.
Speaker 6: And so we feel like more and more team members
Speaker 6: are coming into the organization. They see the opportunity for growth,
Speaker 6: advancement and to hit their career goals, and they're met
Speaker 6: with an organization that has very competitive wage rates across
Speaker 6: the industry, across the United States, and is very competitive
Speaker 6: in the industry and what I believe to be industry
Speaker 6: leading benefits in total that really capture things around financial health,
Speaker 6: mental health, and personal health.
Speaker 2: Is there still pressure though to raise wages? Give us
Speaker 2: an idea? I mean that such a big part of
Speaker 2: you know, we're coming off of FED meeting yesterday and
Speaker 2: we talked a lot about wage inflation and that is
Speaker 2: still sticky. Is that still you can't back off? It's
Speaker 2: are you paying up more or is it leveling off?
Speaker 5: Carol?
Speaker 6: There's always inflation in the wage markets, as you're well aware,
Speaker 6: and we do we go through an air twice annual
Speaker 6: merit process for our team members and that's a practice
Speaker 6: we've had for many, many years in the organization. We're
Speaker 6: experiencing about five percent wage inflation, which has anticipated and
Speaker 6: built into our annual plan, but nothing extraordinary.
Speaker 3: Do those benefits that you talked about that are not
Speaker 3: directly impacting a higher hourly wage? Do those?
Speaker 1: Do those work?
Speaker 3: Do those create a stickier workplace? It's a great question
Speaker 3: is people at the end of the day, people are
Speaker 3: gonna people are gonna want more money.
Speaker 5: It's a philosophical question.
Speaker 6: It's one that I talk about often, So thanks for
Speaker 6: asking you question the question. If your wage rates aren't
Speaker 6: working hard enough for you, then the benefits conversation never
Speaker 6: comes into play. And it's Maslow's hierarchy. If you're not
Speaker 6: meeting the basic needs of your team members and your workforce,
Speaker 6: you can have all the benefits in the world, but
Speaker 6: if they're not able to meet the needs of making rent,
Speaker 6: having food on the table for their families, then those
Speaker 6: benefits can't work for you and your behalf.
Speaker 5: And so what we try to do.
Speaker 6: Is maintain a competitive wage no matter what market we
Speaker 6: operated in the country, and that allows us to have
Speaker 6: a robust benefits conversation that really creates the employee. Value
Speaker 6: proposition keeps people engaged, keeps them bought into our vision,
Speaker 6: our purpose of cultivating a better world and looking for
Speaker 6: more opportunity within the Chipotle brand.
Speaker 2: All right, so just got about thirty seconds left here, Scott,
Speaker 2: when you look at the horizon six to twelve months
Speaker 2: feels a beat, a little cautious. How would you describe it?
Speaker 5: I'll tell you, Carol, I'm really bullish.
Speaker 6: I know this summer there a lot of US travelers
Speaker 6: that are out of the country, so we're seeing a
Speaker 6: little bit of softening and demand across retail and in
Speaker 6: the hospitality space. I think it rebounds very quickly in
Speaker 6: the fall. Consumer spending is still obviously a big part
Speaker 6: of our economy, is still driving our economy.
Speaker 5: I feel good.
Speaker 6: About where we're situated from our value proposition perspective. We're
Speaker 6: still a low cost provider that provides abundance, variety and
Speaker 6: a very high quality, great tasting meal and affordable price.
Speaker 7: All right.
Speaker 2: Well, so glad we got some time with you, and
Speaker 2: our best to Brian as well as Jack Scott boat right,
Speaker 2: Thank you so much. Chief Operating officeerch Potle Mexican Grill
Speaker 2: joining us on zoom from Newport Beach and why.
Speaker 3: Do these interviews always make me hungry?
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Speaker 2: Kind of reading for this segment, I came across Tim
Speaker 2: something from Voice of America and it talked about how
Speaker 2: climate change gives rise to increase precipitation, higher tempts, higher humidity,
Speaker 2: conditions under which mosquitoes thrive and multiply. And so it
Speaker 2: got into some new research from the World Health Organization
Speaker 2: that even dry weather enables mosquitoes to breed, and so
Speaker 2: getting into just a lot more mosquitos out there and
Speaker 2: the implications of it with these weather patterns.
Speaker 3: Here's something I didn't know until you told me. Scientists
Speaker 3: say that dry weather makes mosquitos thirsty, and when they
Speaker 3: become dehydrated, they want to feed on blood more often.
Speaker 2: Love That creeps me out a little bit, all right,
Speaker 2: So let's get more on the implications of mosquitos and
Speaker 2: their attraction to us All Connor McMahon. He is Professor
Speaker 2: of molecular microbiology and Immunology at the Johns Hopkins Bloomberg
Speaker 2: School of Public Health, which of course is supported by
Speaker 2: Michael R. Bloomberg, founder of Bloomberg ELP and Bloomberg Philanthropies.
Speaker 2: Connor is with us on Zoom from Baltimore. Connor, we
Speaker 2: all know mosquitoes. We all hate them. They drive us crazy.
Speaker 2: Tell us a little bit about the report that you
Speaker 2: guys just did there over at Hopkins.
Speaker 8: Yes, so we recently in Zambia actually created the world's
Speaker 8: largest multi choice small test for mosquitoes. We all know
Speaker 8: from our backyard barbecues and picnics that mosquitoes tend to
Speaker 8: target some humans more than others, and some of us
Speaker 8: more alluring to mosquitoes than say, our partners or our
Speaker 8: family members, and so we were really interested to create
Speaker 8: a way to firstly test this. And what we found
Speaker 8: was the scent of certain humans, the chemistry of the
Speaker 8: scent of certain humans actually dictates how attractive we are
Speaker 8: to the mosquito. And in this particular interest, in the instance,
Speaker 8: it was the mosquito that transmits malaria in Africa.
Speaker 3: So it's not as my mom always said when I
Speaker 3: was growing up, if you eat sweet things, you know
Speaker 3: have sugary blood, and you know the mosquitoes, well we'll
Speaker 3: get you. I'm sure you've heard that before, Professor. In
Speaker 3: all seriousness, though, this is a huge issue around the
Speaker 3: world because of malaria, because of mosquito born illnesses that
Speaker 3: affects so many people each and every year. So I'm
Speaker 3: wondering what the implications of this study are for the
Speaker 3: way that people can protect themselves. If we know what
Speaker 3: attracts and what doesn't attract mosquitoes, how do we extrapolate
Speaker 3: that data and put it to use in the real world.
Speaker 8: Yeah. Absolutely, I think a really molecular understanding of the
Speaker 8: chemistry of mosquito attraction to human scent could be really
Speaker 8: used to effectively inform the risk of being bidden by mosquitoes.
Speaker 8: And as you pointed out, malaria still kills around six
Speaker 8: hundred thousand people per year, mostly in Sub Saharan Africa,
Speaker 8: children aged under the five years and also pregnant women.
Speaker 8: So in addition to perhaps in forming a way to
Speaker 8: prevent nuisance biting, we could also potentially use an understanding
Speaker 8: of the chemistry of attraction in mosquitoes towards humans to
Speaker 8: develop new solutions to combat mosquito born diseases and also
Speaker 8: make new methods to stop them biting us here within
Speaker 8: the United States.
Speaker 2: So do we know exactly?
Speaker 5: All right?
Speaker 2: First of all, you're saying, if the mosquitoes don't come
Speaker 2: after us, lucky for us. And it's not like that
Speaker 2: there's something wrong with us in terms of how we smell.
Speaker 2: But I'm just curious, is there something specific in particular
Speaker 2: of what really does attract attract a mosquito to one
Speaker 2: individual versus another.
Speaker 8: Yes, So, our research suggests that individuals who have body
Speaker 8: odor signatures that are enriched for our class of molecules
Speaker 8: called carboxilic acids, which are typically chemicals produced by the
Speaker 8: natural microbiota or bacteria that live in our skin. Individuals
Speaker 8: with high levels of these airborne carboxilic acids, particularly light
Speaker 8: forms of these corboxilic acids, are actually more alluring to mosquitoes.
Speaker 8: On the flip side, we also find individuals that are
Speaker 8: not so alluring to mosquitoes, Individuals who seem to be
Speaker 8: depleted of a lot of these corboxilic acids and also
Speaker 8: enriched for some other chemicals that are also putatively acquired
Speaker 8: through the diet. I think this is a really exciting
Speaker 8: area for future research.
Speaker 3: What should so is there a simple message to what
Speaker 3: people should and should need to make themselves less or
Speaker 3: more attractive to mosquitoes?
Speaker 1: Yeah?
Speaker 8: So, I think this is still in a merging area
Speaker 8: for research. The molecule that we found enriched in the
Speaker 8: sense signature of an individual that wasn't very attractive to
Speaker 8: the malaria mosquito was actually a chemical called eucalypto, which
Speaker 8: is found in a wide variety of herbs and also spices.
Speaker 8: This is an emerging area of research. I think that
Speaker 8: we definitely need to perform future research and perhaps clinical
Speaker 8: trials to actually evaluate the impact of eating certain foods
Speaker 8: on how attractive we are to mosquitoes. And a lot
Speaker 8: of this is, you know, the source of a lot
Speaker 8: of anecdotes that also get flown around as we were
Speaker 8: talking about earlier. So there is no simple solution at
Speaker 8: the moment, but there are protective measures we can implement
Speaker 8: in the interim to protect our cells against mosquitoes.
Speaker 2: Is climate change making your job even busier?
Speaker 8: Yes, I would say so. Actually here within the United States,
Speaker 8: I think the the eight recent acquired cases of malaria
Speaker 8: that we've seen in the southern part of the United
Speaker 8: States tends to suggest that we name we need to
Speaker 8: remain continually vigilant against mosquitoes. They do like warm tropical
Speaker 8: weather many of the species that transmit diseases around the world,
Speaker 8: So I think we need to maintain sort of continual
Speaker 8: vigilance against mosquitoes.
Speaker 3: Is the is the solution today, The best solution today
Speaker 3: still sort of the most mundane, just mosquito nets.
Speaker 8: Yeah, so mosquito nets are one potential way to stop
Speaker 8: mosquitoes biting us, you know, screening your home, also cleaning
Speaker 8: up debris and potential breeding sites in your backyard where
Speaker 8: they might like to sort of hang out and sort
Speaker 8: of relax. Perhaps the most practical way we can use
Speaker 8: to prevent mosquitos from boding us is applying an EPA
Speaker 8: registered insect repellent y e p A registered because they're
Speaker 8: being tested for efficacy and also safety. There's a range
Speaker 8: of different synthetic compounds like guns that are really effective.
Speaker 8: The cardon IR thirty five to thirty five is an
Speaker 8: active ingredients hunter.
Speaker 2: We get to run unfortunately, but a lot of good
Speaker 2: advice there Connor mc mannon over at Johns Hopkins Bloomberg
Speaker 2: School of Public Health. This is Bloomberg Radio.
Speaker 1: Room, a journal.
Speaker 7: How about you let me drive?
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Speaker 5: It's a good question, which is the drive to the
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Speaker 1: On on Bloomberg Radio.
Speaker 2: All right, everybody, just about eighteen minutes left in today's
Speaker 2: trading session, getting ready to wrap up the Thursday trade.
Speaker 2: And what a different picture, certainly on the equity side
Speaker 2: of things from where we were a few hours ago.
Speaker 2: Had to rally and then it just kind of came undone,
Speaker 2: and so we're looking at stocks pretty much at their lows,
Speaker 2: and you know, there's a couple of things going on.
Speaker 2: Katie talked about Japan earlier, the Bank of Japan, but
Speaker 2: also you know, we had some upbeat economic news here
Speaker 2: in the United States and have a ten year at
Speaker 2: four percent, so that's a big move up.
Speaker 3: Let's get into all of this with Sarah Ponsik, financial
Speaker 3: advisor at UBS Private Wealth Management. She joins us on
Speaker 3: Zoom in Fort Lauderdale, Florida. And No, I don't know
Speaker 3: if everybody listening and watching knows this. But Sarah used
Speaker 3: to be our colleague here at bloom Curser.
Speaker 7: I did. And I've got to say really quickly, I'm
Speaker 7: so lucky that I'm here with both of you, because Carol,
Speaker 7: I hear your checked out going on vacation, and Tim,
Speaker 7: I know you just got back.
Speaker 2: I yeah, like passing a baton for a little while.
Speaker 7: Yeah, great to see you, Bote.
Speaker 3: Okay, so let's talk markets here because for as Carol said,
Speaker 3: there was a big reversal today. Let's get into today's
Speaker 3: trade because of the economic data that we saw. There
Speaker 3: was a lot to love in there earlier today with
Speaker 3: inflation coming down another signal there some good numbers when
Speaker 3: it comes to the jobs front, some good numbers when
Speaker 3: it comes to GDP. What do you make of today's reversal?
Speaker 7: So when you look at the market reaction today, some
Speaker 7: might question, Okay, are we back to a world in
Speaker 7: which good news is bad news? And that sounds very strange,
Speaker 7: but we all know what that means is just that
Speaker 7: when we get good economic data, does that mean that
Speaker 7: it gives the Fed more clout to keep interest rate
Speaker 7: higher for longer, which the market might not like. So
Speaker 7: that might have a little bit at play with what
Speaker 7: we're seeing with the market reversal. But I would point
Speaker 7: out that you really don't want to extrapolate too much
Speaker 7: from one day's trade, because if we look at how
Speaker 7: markets have been trading over the last month or so,
Speaker 7: as you know, recession risk has been receding. I know,
Speaker 7: we hear many more people nowadays talk about a potential
Speaker 7: soft landing, can the FED pull it off? But the
Speaker 7: market has been trading as though that might be the case.
Speaker 7: So you know, all year long we've been talking about
Speaker 7: this really top heavy market growth leading the way, tech
Speaker 7: leading the way, small caps for example, underperforming. But if
Speaker 7: you look at the last month, it's actually pretty interesting.
Speaker 7: The Russell two thousand small caps have outperformed the Russell
Speaker 7: two thousand, up about nine percent. Meanwhile, the SMP, the
Speaker 7: market cap weighted version of the S and P, which
Speaker 7: really takes technology stocks, those megacat techniques and to effect
Speaker 7: up about five and a half percent. And this hasn't
Speaker 7: been the case all year long. If you look at
Speaker 7: that equal weighted version of the SMP that takes financials,
Speaker 7: energy industrials into account just as much as those tech
Speaker 7: names it's actually outperforming the SMP. And we see those
Speaker 7: more cyclical sectors of the economy like energy, financials, industrials
Speaker 7: actually performing as the best performing sectors in the S
Speaker 7: and P five hundred. So today, you know, it's a
Speaker 7: little bit wonky seeing the overall reversal in the market.
Speaker 2: Tim's but it's interesting, Tim is Mathew me so broadening out,
Speaker 2: which is something we've been talking about, like over the
Speaker 2: last week or so, broaden out. But having said that,
Speaker 2: you know, when you've got a ten year at four percent,
Speaker 2: we'll see whether or not it stays there. I mean,
Speaker 2: you know, moving into the fixeding, comes out of the market,
Speaker 2: moving into cash, you can actually make some money here
Speaker 2: when we're still not quite sure what the way forward
Speaker 2: maybe might be.
Speaker 7: One hundred percent. Look, we're big proponents of the fixed
Speaker 7: income market right now and of bonds. We feel as
Speaker 7: though there's still a good amount of risk in the
Speaker 7: stock market, in the equity market. Yeah, a lot of
Speaker 7: people are getting a little bit more comfortable with it,
Speaker 7: but bonds right now are a great place to park
Speaker 7: your cash. And you mentioned bonds and cash, Carol, I
Speaker 7: would really caution investors if you have a lot of
Speaker 7: cash on the sidelines. Great, you're getting five plus percent
Speaker 7: right now probably on your cash, but remember that rate
Speaker 7: is not going to be there forever. Reinvestment risk is very,
Speaker 7: very real. So right now, if you look at the
Speaker 7: bond market, you know, all in yields look really attractive
Speaker 7: across municipals, corporate bonds, and government bonds. So it makes
Speaker 7: sense to spread yourself out, extend your duration a little
Speaker 7: bit more, lock in those all in yields, and then
Speaker 7: not only are you locking in those rates for years
Speaker 7: to come, but remember, if we do see a reversal
Speaker 7: in yields, yields coming down, you'll also get that price appreciation,
Speaker 7: that negative correlation to the stock market potentially should we
Speaker 7: see a recession or some type of softness there.
Speaker 3: I'm wondering if there's sort of a flip side to
Speaker 3: Carol's question, which is this money on the sidelines now
Speaker 3: having FOMO and saying, wait a second, I missed out
Speaker 3: on this twenty percent rally. I've been in fixed income,
Speaker 3: I've been in cash. Now that money being put to
Speaker 3: work and extending this rally in the stock market.
Speaker 7: I think many people would argue that the twenty percent
Speaker 7: almost rally we've seen in the s and P five
Speaker 7: hundred is due to just that, tim. You're very very right.
Speaker 7: I think we've already seen FOMO take place in the market,
Speaker 7: and that's why we have seen performance chasing in some
Speaker 7: of the best performing stocks and best performing industries and
Speaker 7: sectors in the market. They just continue to lead and
Speaker 7: lead and lead, and that's why we were talking about
Speaker 7: this broadening. Now you question, okay, allre we going to
Speaker 7: see more flows into the laggards because people feel as
Speaker 7: though maybe you can't keep cha chasing those names quite
Speaker 7: as much. And yes, if you look at the flow data.
Speaker 7: I've looked at the flow data before, you know, across ets,
Speaker 7: mutual funds, there's definitely been evidence of that tim of
Speaker 7: money flowing from cash into stocks. Because yes, you know,
Speaker 7: while it's great that you can get a five percent
Speaker 7: returning cash, if you're someone who last year got nervous
Speaker 7: at the lows you sold when say your stock portfolio
Speaker 7: was down fifteen to twenty five percent, you went to cash. Well, congratulation,
Speaker 7: you've made five percent on your cash, but you've also
Speaker 7: missed out on this twenty percent rally and comeback and
Speaker 7: you actually end up in a worse position by just
Speaker 7: sitting in cash for so long.
Speaker 2: You sound like somebody who's managing money. I'm just gonna say,
Speaker 2: he's why. What's the big risk right now?
Speaker 1: Though?
Speaker 7: The biggest risk I think, you know, I would say
Speaker 7: the biggest risk is probably that inflation does not continue
Speaker 7: to come down. And inflation is a lot stickier than
Speaker 7: most people expect it to be, meaning that the Fed
Speaker 7: is going to have to continue to hike interest rates.
Speaker 7: That's what the market is most scared at this point
Speaker 7: in time, and if that's the case, it also presents
Speaker 7: a risk for bond markets as well.
Speaker 2: I think that's a really good point, especially when you
Speaker 2: have you know, Jay Powell yesterday saying, hey, folks, you
Speaker 2: know two percent inflation, Maybe we don't get to that
Speaker 2: about two percent until twenty twenty five. So I'm looking
Speaker 2: at a calendar. It's twenty twenty three and we're just
Speaker 2: halfway through. So that's a long ways away.
Speaker 7: It is a very long ways away, and even just
Speaker 7: to the next meeting, we have this very rare eight
Speaker 7: week stretch. We've all learned over the past two years
Speaker 7: that a lot can change really quickly, you know, when
Speaker 7: it comes to data and for the FED because, as
Speaker 7: we all know, fet your Powell loves to say that
Speaker 7: they're data dependent. He said it again yesterday. He'll say
Speaker 7: it over and over and over again until it's drilled
Speaker 7: into everyone's minds that they're going to watch GPI data,
Speaker 7: They're going to watch the employment data. And although what
Speaker 7: they said yesterday might stick today if the data changes,
Speaker 7: so too, well their message two months from now, I.
Speaker 2: Think I can't remember. I think it was on surveillance
Speaker 2: this morn whether it was Lisa Bramowitz or one of
Speaker 2: their guests, said that it's almost like j Powell when
Speaker 2: he was at the podium, had a little yelly yellow
Speaker 2: sticky that said data dependent, data dependent, Like.
Speaker 7: I would say at every at every meeting, every press conference,
Speaker 7: he gives it's it's it's ingrained into his mind. I
Speaker 7: think it's ingrained in my mind. It's probably ingrained into
Speaker 7: your minds now too. We hear it over and over
Speaker 7: and overcap that and long and very old.
Speaker 3: I was just going to say that, Sarah, long invariable
Speaker 3: leg that's.
Speaker 7: You read my mind.
Speaker 2: He's called like garage bands, right, long and variable legs, And.
Speaker 7: Could we could make a song exactly.
Speaker 2: Exactly, Sarah Ponza, I have a great weekend. She's financial
Speaker 2: advisor UBS Private Wealth Management Order Board.
Speaker 3: Of course, Bloomberg aid great to check in.
Speaker 5: This is Blomboy.
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