1
00:00:00,280 --> 00:00:02,920
Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm

2
00:00:02,920 --> 00:00:05,760
Speaker 1: Bloomberg Quick Takes Tim Stanebeck. We're here every day bringing

3
00:00:05,760 --> 00:00:08,280
Speaker 1: you the latest news from the worlds of business and finance,

4
00:00:08,320 --> 00:00:12,120
Speaker 1: plus technology, politics, economics, all harnessing the power of Business

5
00:00:12,119 --> 00:00:15,600
Speaker 1: Week reporters and editors, not to mention our journalists and

6
00:00:15,640 --> 00:00:18,480
Speaker 1: analyst in more than one twenty countries. You can download

7
00:00:18,480 --> 00:00:21,720
Speaker 1: Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot Com.

8
00:00:21,880 --> 00:00:23,600
Speaker 1: You can also listen to our radio show at two

9
00:00:23,640 --> 00:00:26,320
Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on

10
00:00:26,360 --> 00:00:31,200
Speaker 1: YouTube search Bloomberg Global News. One of the things that

11
00:00:31,240 --> 00:00:34,000
Speaker 1: we've been watching, certainly we continue to get some earning stories.

12
00:00:34,080 --> 00:00:36,599
Speaker 1: Tim and Mattel reported out after the Clothes you were

13
00:00:36,600 --> 00:00:39,440
Speaker 1: breaking it down. Stock is down about one point seven percent.

14
00:00:39,560 --> 00:00:43,640
Speaker 1: That despite the company coming out and surpassing analysts estimates

15
00:00:43,680 --> 00:00:46,160
Speaker 1: for the fourth quarter, they had a lot of kind

16
00:00:46,159 --> 00:00:48,760
Speaker 1: of beats, if you will, in terms of their metrics.

17
00:00:49,240 --> 00:00:51,320
Speaker 1: I caught up earlier with the chairman CEO of Mattel,

18
00:00:51,680 --> 00:00:53,720
Speaker 1: Enn Cries. He was in l A. We talked about

19
00:00:53,720 --> 00:00:56,360
Speaker 1: a lot of things, and in this excerpt he talks

20
00:00:56,360 --> 00:00:59,080
Speaker 1: about why this quarter is just one step in Mattel's

21
00:00:59,160 --> 00:01:02,600
Speaker 1: long term stret g check it out. This is not

22
00:01:02,920 --> 00:01:06,120
Speaker 1: just about the quarter or the year. It's about a

23
00:01:06,200 --> 00:01:10,440
Speaker 1: multi year turn around that is tracking very well, which

24
00:01:10,440 --> 00:01:13,040
Speaker 1: puts us in a strong position to continue to increase

25
00:01:13,080 --> 00:01:18,520
Speaker 1: profitability and accelerate growth in one and beyond. You know,

26
00:01:18,640 --> 00:01:20,600
Speaker 1: talk to us about that because you know, reading through

27
00:01:20,680 --> 00:01:23,920
Speaker 1: last night some of the research and there are you know,

28
00:01:23,920 --> 00:01:26,839
Speaker 1: folks saying, well, listen, it's really because of the pandemic.

29
00:01:26,920 --> 00:01:29,440
Speaker 1: Families our home, they've had a fine different ways to

30
00:01:29,520 --> 00:01:33,800
Speaker 1: spend time with their families, games, you name it, and kids,

31
00:01:33,880 --> 00:01:36,520
Speaker 1: you know, being at home that parents are spending a

32
00:01:36,520 --> 00:01:38,679
Speaker 1: lot more on toys. Talk to us a little bit

33
00:01:38,680 --> 00:01:41,319
Speaker 1: about what you have been doing to really kind of

34
00:01:41,400 --> 00:01:43,200
Speaker 1: juice some of the brands that have been you know,

35
00:01:43,200 --> 00:01:45,520
Speaker 1: that have been in your portfolio for for a long time.

36
00:01:45,640 --> 00:01:49,320
Speaker 1: The demand driven by COVID is difficult to quantify, as

37
00:01:49,360 --> 00:01:52,240
Speaker 1: the industry was projected to grow even before the pandemic,

38
00:01:53,000 --> 00:01:56,680
Speaker 1: and we believed that much of our overall performance has

39
00:01:56,720 --> 00:02:00,360
Speaker 1: been driven by the work of our organization and by

40
00:02:00,360 --> 00:02:02,800
Speaker 1: the strength of our brands and quality of our products.

41
00:02:03,280 --> 00:02:05,760
Speaker 1: So you know, we relieved the categories where we are

42
00:02:05,840 --> 00:02:09,320
Speaker 1: a global leaders. Vehicles and infant or the pre school

43
00:02:09,360 --> 00:02:12,639
Speaker 1: will continue to perform well and we expect to accelerate

44
00:02:12,720 --> 00:02:16,360
Speaker 1: the growth and increase overall share. Listen, I have grown

45
00:02:16,400 --> 00:02:19,360
Speaker 1: up with Mattel. I'm from a large family, you know.

46
00:02:19,600 --> 00:02:23,440
Speaker 1: Inheriting my older sisters, Barbies was a big thing. And

47
00:02:23,440 --> 00:02:26,320
Speaker 1: then I've got a seventeen year old where I've Bitty

48
00:02:26,400 --> 00:02:31,080
Speaker 1: Baby Kit, Marie Grace. These were all throughout my home. Um,

49
00:02:31,280 --> 00:02:32,960
Speaker 1: so tell me a little bit about some of the brands.

50
00:02:32,960 --> 00:02:36,440
Speaker 1: Talk to me about Barbie. Barbie continue to go from

51
00:02:36,440 --> 00:02:39,720
Speaker 1: strength to strength, up eighteen in the quarter and for

52
00:02:39,800 --> 00:02:44,680
Speaker 1: the year, with retail sales up more than thirty. Barbie

53
00:02:44,919 --> 00:02:48,800
Speaker 1: ended up being the overall number one toy property globally

54
00:02:49,280 --> 00:02:51,839
Speaker 1: for the industry both in the fourth quarter and full year.

55
00:02:52,800 --> 00:02:55,040
Speaker 1: The Barbie Dreamhouse was the number one toy in the

56
00:02:55,160 --> 00:02:57,600
Speaker 1: US in the fourth quarter and the full year. I

57
00:02:57,720 --> 00:02:59,360
Speaker 1: had one of those in my house. I had one

58
00:02:59,360 --> 00:03:02,600
Speaker 1: of those in my so you know exactly what I'm

59
00:03:02,639 --> 00:03:05,519
Speaker 1: talking about. So it's been really, you know, an incredible

60
00:03:05,600 --> 00:03:09,280
Speaker 1: monta year journey for Barbie. UM carrying the flag for

61
00:03:09,400 --> 00:03:13,240
Speaker 1: diversity and plusivity and purposeful play. But you know what

62
00:03:13,240 --> 00:03:16,120
Speaker 1: what is Um, what is interesting is that you know,

63
00:03:16,160 --> 00:03:19,680
Speaker 1: without taking anything away from the incredible success of Barbie,

64
00:03:20,360 --> 00:03:22,800
Speaker 1: this is you know, very much a story about the

65
00:03:22,800 --> 00:03:26,640
Speaker 1: matel playbook, because the Barbie success is driven by the

66
00:03:26,680 --> 00:03:32,720
Speaker 1: same mythodology, same capabilities, uh, same approach UM that we

67
00:03:32,880 --> 00:03:37,360
Speaker 1: that we applied across our entire product offering about brand.

68
00:03:37,880 --> 00:03:43,000
Speaker 1: So it's about brand, purpose, design, lead, innovation, cultural relevance

69
00:03:43,360 --> 00:03:47,920
Speaker 1: and executional accident. There's a reason why you play without toys.

70
00:03:48,000 --> 00:03:51,280
Speaker 1: It's beyond the play system. Our toys carry, you know,

71
00:03:51,320 --> 00:03:53,760
Speaker 1: carry messages. And it's very clear with Barbie, as I

72
00:03:53,760 --> 00:04:00,920
Speaker 1: mentioned earlier, carrying the flag for diversity inclusivity. UM evolved

73
00:04:00,960 --> 00:04:06,920
Speaker 1: in body, ethnicity, storytelling and likewise American Girls one of

74
00:04:07,600 --> 00:04:12,000
Speaker 1: the most rich brands in terms of content and messaging

75
00:04:12,520 --> 00:04:19,200
Speaker 1: about the historical doll figures and teaching and and and

76
00:04:19,520 --> 00:04:23,160
Speaker 1: you know, working with parents as a trusted partner, we

77
00:04:23,200 --> 00:04:26,520
Speaker 1: evolved and developed their children. It was, as you said,

78
00:04:26,600 --> 00:04:30,600
Speaker 1: really a blowout year, a blowout quarter for you guys. Um,

79
00:04:30,720 --> 00:04:33,800
Speaker 1: is this as good as it gets? Well, absolutely not.

80
00:04:34,240 --> 00:04:41,560
Speaker 1: We just announced that we expect to accelerate growth and

81
00:04:42,000 --> 00:04:44,919
Speaker 1: also provided guidance, or I should say, so you know,

82
00:04:45,000 --> 00:04:48,600
Speaker 1: guidance but goals. But twenty two and twenty three, where

83
00:04:48,600 --> 00:04:53,479
Speaker 1: we UH still expect to achieve mids single mid single

84
00:04:53,560 --> 00:04:59,200
Speaker 1: digit digit growth in our top line and and on profitability.

85
00:04:59,240 --> 00:05:02,000
Speaker 1: We also expect to achieve between seven hundred and seventy

86
00:05:02,080 --> 00:05:06,760
Speaker 1: five to eight hundred million dollar IBIDA adjusted IBIDA in one.

87
00:05:07,400 --> 00:05:10,839
Speaker 1: This is following a growth of almost six hundred million

88
00:05:10,839 --> 00:05:14,640
Speaker 1: dollars between two thousand and eighteen to two thousand and twenty,

89
00:05:15,000 --> 00:05:19,560
Speaker 1: and we expect to achieve mid teen UM offered an

90
00:05:19,640 --> 00:05:23,960
Speaker 1: income margin by twenty three. So from where we see today,

91
00:05:24,279 --> 00:05:27,040
Speaker 1: you UM, you know, you should expect to see us

92
00:05:27,040 --> 00:05:31,560
Speaker 1: accelerating our top line growth and continuing to improve profit ability,

93
00:05:31,839 --> 00:05:34,960
Speaker 1: not just in one, but for the two years after that.

94
00:05:35,240 --> 00:05:37,599
Speaker 1: You know what I'm curious to you about is you

95
00:05:37,640 --> 00:05:40,000
Speaker 1: know how important You've heard you talk a lot about,

96
00:05:40,440 --> 00:05:42,919
Speaker 1: you know, growth and director consumer UM. I did a

97
00:05:42,920 --> 00:05:46,040
Speaker 1: lot of buying online UM when I was buying from

98
00:05:46,080 --> 00:05:49,960
Speaker 1: my daughter years ago. E commerce the strength that you've seen,

99
00:05:50,040 --> 00:05:52,760
Speaker 1: does that become an even bigger part of the business

100
00:05:52,800 --> 00:05:56,440
Speaker 1: going forward? I'm curious about that. Yes, this was another

101
00:05:56,880 --> 00:05:59,560
Speaker 1: major driver for US and part of a big part

102
00:05:59,560 --> 00:06:01,800
Speaker 1: of US says. In the quarter and in the year,

103
00:06:02,360 --> 00:06:07,360
Speaker 1: e commerce grew significantly for US and continue to maintain momentum.

104
00:06:07,400 --> 00:06:11,320
Speaker 1: In the fourth quarter we grew, and for the full year,

105
00:06:11,440 --> 00:06:15,480
Speaker 1: we were up at this point online retail and ew

106
00:06:15,520 --> 00:06:20,200
Speaker 1: commerce represents about a third of our retail sales. We

107
00:06:20,200 --> 00:06:22,760
Speaker 1: were the number one manufacturer in e commerce in the

108
00:06:22,839 --> 00:06:24,719
Speaker 1: US in the fourth quarter, and we grew our e

109
00:06:24,760 --> 00:06:27,440
Speaker 1: commerce here in the US in the fourth quarter and

110
00:06:27,520 --> 00:06:30,840
Speaker 1: the full year. All right, And that was matelsa EO

111
00:06:30,960 --> 00:06:33,640
Speaker 1: you know on Cries catching up with him earlier to

112
00:06:33,680 --> 00:06:36,159
Speaker 1: talk about their latest quarter really the outlook, and you

113
00:06:36,160 --> 00:06:38,039
Speaker 1: can hear more of that interviewed him. It's coming up

114
00:06:38,080 --> 00:06:39,560
Speaker 1: on our weekend show. It's also going to be on

115
00:06:39,600 --> 00:06:42,159
Speaker 1: our podcast feed at Bloomberg dot com. But you know,

116
00:06:42,440 --> 00:06:44,600
Speaker 1: he said, obviously they got a kick from the pandemic,

117
00:06:44,640 --> 00:06:46,920
Speaker 1: but they've also been putting some strategies into place to

118
00:06:47,040 --> 00:06:52,159
Speaker 1: really you know, kind of set demand four years to come. Yeah,

119
00:06:52,200 --> 00:06:54,880
Speaker 1: you know, we talk a lot about pandemic trends, and

120
00:06:55,200 --> 00:06:58,000
Speaker 1: I think one pandemic trends that trend that actually makes

121
00:06:58,040 --> 00:07:01,200
Speaker 1: me smile is the idea of parents and grandparents spoiling

122
00:07:01,240 --> 00:07:04,800
Speaker 1: their children because they've been stuck inside and buying them dolls.

123
00:07:04,839 --> 00:07:07,680
Speaker 1: I mean, doll sales surging nine per cent for all

124
00:07:09,720 --> 00:07:12,520
Speaker 1: the pemic I know. And they were struggling a lot

125
00:07:12,520 --> 00:07:15,560
Speaker 1: with Barbie is an American girl, So they definitely think

126
00:07:15,760 --> 00:07:17,880
Speaker 1: it looks like things are back on track. So be

127
00:07:17,960 --> 00:07:20,920
Speaker 1: sure to check out that full interview. This is Bloomberg

128
00:07:20,920 --> 00:07:24,640
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim

129
00:07:24,640 --> 00:07:29,440
Speaker 1: Stinovich from Bloomberg Radio. In this latest episode of Bloomberg

130
00:07:29,480 --> 00:07:32,120
Speaker 1: Studio One point Oh, host Emily Chang sits down for

131
00:07:32,160 --> 00:07:36,400
Speaker 1: an exclusive interview with Microsoft CEO Satya Nadela. In this excerpt,

132
00:07:36,480 --> 00:07:39,720
Speaker 1: Nidela discusses anti trust issues facing the tech sector. Take

133
00:07:39,760 --> 00:07:45,040
Speaker 1: a listen. You need to have a business model, um

134
00:07:45,080 --> 00:07:48,240
Speaker 1: that really is aligned with the world doing well. I

135
00:07:48,240 --> 00:07:50,640
Speaker 1: think that's what's being litigated right, which is there are

136
00:07:50,680 --> 00:07:56,280
Speaker 1: certain categories of products where the unintended consequences of the

137
00:07:56,360 --> 00:08:00,200
Speaker 1: growth on that category or lack of competition in it

138
00:08:00,240 --> 00:08:02,760
Speaker 1: creates issues. And so that's what I think people are

139
00:08:02,800 --> 00:08:05,520
Speaker 1: all looking at and saying, hey, what's the fixed for that?

140
00:08:06,280 --> 00:08:09,120
Speaker 1: But I don't think big by itself is bad or

141
00:08:09,160 --> 00:08:12,840
Speaker 1: but competition is good. And every business, in particular the

142
00:08:12,880 --> 00:08:16,240
Speaker 1: businesses that are large and have high scale, the unintended

143
00:08:16,280 --> 00:08:19,920
Speaker 1: consequences of your scale cannot be dealt after the fact.

144
00:08:20,000 --> 00:08:23,400
Speaker 1: They need to be dealt while you're scaling. So when

145
00:08:23,400 --> 00:08:27,880
Speaker 1: it comes to the d platforming of President Trump, Facebook

146
00:08:27,960 --> 00:08:30,600
Speaker 1: or a Twitter, Google or YouTube or Twitch have the

147
00:08:30,600 --> 00:08:32,760
Speaker 1: power to say who we can and cannot hear from,

148
00:08:33,360 --> 00:08:36,959
Speaker 1: and if not, who should. Yeah, I mean, this is

149
00:08:37,000 --> 00:08:40,160
Speaker 1: another one of those places where I think unilateral action

150
00:08:40,920 --> 00:08:45,240
Speaker 1: by individual companies in democracies like ours is just not

151
00:08:45,520 --> 00:08:48,880
Speaker 1: I think long term stable. We do need to be

152
00:08:48,920 --> 00:08:52,520
Speaker 1: able to have framework of laws and norms which are

153
00:08:52,559 --> 00:08:57,120
Speaker 1: societal norms around even internet safety. Uh. And what is

154
00:08:57,600 --> 00:09:00,320
Speaker 1: the public square that really is in a lot indment

155
00:09:00,400 --> 00:09:03,800
Speaker 1: with a thriving democracy. So we just need to get

156
00:09:03,800 --> 00:09:07,680
Speaker 1: to a stable state, uh in that because otherwise, depending

157
00:09:07,760 --> 00:09:10,960
Speaker 1: on any one individual CEO in any one of these

158
00:09:11,000 --> 00:09:13,960
Speaker 1: companies to make calls that are going to really help

159
00:09:14,080 --> 00:09:17,640
Speaker 1: us maintain something as sacred and as important as our

160
00:09:17,640 --> 00:09:20,160
Speaker 1: democracy in the long run is just no way at

161
00:09:20,200 --> 00:09:23,800
Speaker 1: least I, as a citizen, would advocate for now. Slack

162
00:09:23,840 --> 00:09:28,559
Speaker 1: has alleged that Microsoft combining teams into offices anti competitive. Um,

163
00:09:28,600 --> 00:09:31,360
Speaker 1: what's your response to that? How does the landscape change

164
00:09:31,400 --> 00:09:33,719
Speaker 1: now that Slack has been bought by Salesforce and as

165
00:09:33,760 --> 00:09:37,960
Speaker 1: part of this bigger entity. I think both Slack and

166
00:09:38,160 --> 00:09:42,360
Speaker 1: Salesforce have been successful. For example, I always point out

167
00:09:42,480 --> 00:09:45,280
Speaker 1: that when we think about what they were able to do,

168
00:09:45,360 --> 00:09:48,400
Speaker 1: I always ask the question would Slack have even existed

169
00:09:48,720 --> 00:09:51,160
Speaker 1: if it was not for the free access they had

170
00:09:51,160 --> 00:09:53,600
Speaker 1: on top of say the Windows platform. They didn't have

171
00:09:53,679 --> 00:09:56,040
Speaker 1: to call Microsoft, they didn't have to go through any

172
00:09:56,040 --> 00:09:59,000
Speaker 1: of our app stores, they didn't have need any uh,

173
00:09:59,280 --> 00:10:02,120
Speaker 1: you know, off of permission. Compared to any of the

174
00:10:02,200 --> 00:10:06,000
Speaker 1: other platforms that they're available on, we perhaps provide the

175
00:10:06,080 --> 00:10:09,199
Speaker 1: most open platform and Windows and even on Office five

176
00:10:09,280 --> 00:10:12,040
Speaker 1: you can in fact use all of the APIs that

177
00:10:12,120 --> 00:10:16,440
Speaker 1: we expose, integrate with any application, and people use it.

178
00:10:16,480 --> 00:10:18,600
Speaker 1: If you look at even the usage reports, this Slack

179
00:10:18,720 --> 00:10:21,400
Speaker 1: usage and Microsoft three five years, it's so and same

180
00:10:21,440 --> 00:10:24,280
Speaker 1: thing with Salesforce. So the fact that they're combining will

181
00:10:24,320 --> 00:10:27,160
Speaker 1: compete with them, and they will also cooperate with them

182
00:10:27,160 --> 00:10:30,319
Speaker 1: and provide them access to our platforms. And I think

183
00:10:30,320 --> 00:10:33,560
Speaker 1: they should measure it by what type of success they've

184
00:10:33,600 --> 00:10:36,640
Speaker 1: had on top of our platform. You worked at Microsoft

185
00:10:36,679 --> 00:10:39,559
Speaker 1: through its own antitrust battles, You remember what that was like.

186
00:10:39,640 --> 00:10:43,960
Speaker 1: It's been called the Lost Decade, if you will. What

187
00:10:44,160 --> 00:10:46,880
Speaker 1: cultural risks do you believe these companies face, even if

188
00:10:46,880 --> 00:10:49,440
Speaker 1: they're not broken up. What's happening on the inside as

189
00:10:49,480 --> 00:10:52,440
Speaker 1: these investigations play out. So I don't know if there

190
00:10:52,440 --> 00:10:55,600
Speaker 1: are real parallels between what happened with Microsoft and any

191
00:10:55,640 --> 00:10:58,200
Speaker 1: of them, but I would say I think the core,

192
00:10:58,400 --> 00:11:01,120
Speaker 1: as I always go back, is you know, if you

193
00:11:01,280 --> 00:11:05,400
Speaker 1: have a business and a business model where when you

194
00:11:05,480 --> 00:11:09,480
Speaker 1: are doing well around you, people are doing well, and

195
00:11:09,559 --> 00:11:13,400
Speaker 1: that is something that your own employees feel, then I

196
00:11:13,440 --> 00:11:17,120
Speaker 1: think things will work out culturally. When that is not true,

197
00:11:17,440 --> 00:11:19,960
Speaker 1: I think it's very very hard because one of the

198
00:11:20,000 --> 00:11:22,280
Speaker 1: things I feel is, as somebody said, you've got to

199
00:11:22,360 --> 00:11:25,280
Speaker 1: keep it simple. What do you say, what you do,

200
00:11:25,320 --> 00:11:28,400
Speaker 1: and what you think all need to be consistent. You

201
00:11:28,480 --> 00:11:32,520
Speaker 1: can't sort of have a real distance between those three things.

202
00:11:32,559 --> 00:11:34,760
Speaker 1: And that's what at least would be my advice and

203
00:11:35,240 --> 00:11:39,600
Speaker 1: to anybody, and starting with ourselves. All right, That was

204
00:11:39,640 --> 00:11:42,320
Speaker 1: of course Bloomberg Studio at one point, Oh check it out,

205
00:11:42,360 --> 00:11:45,080
Speaker 1: you can see that entire interview that's going to happen

206
00:11:45,080 --> 00:11:47,120
Speaker 1: at five thirty pm Moll Street Time on Bloomberg TV,

207
00:11:47,120 --> 00:11:49,720
Speaker 1: And of course that's host Emily Chang sitting down for

208
00:11:49,800 --> 00:11:53,120
Speaker 1: that exclusive with Microsoft CEO such An Adela, who was

209
00:11:53,600 --> 00:11:57,440
Speaker 1: the cover story for Bloomberg Business Week. Um, I'd have

210
00:11:57,520 --> 00:11:58,840
Speaker 1: to look at I have to pull it out and

211
00:11:58,840 --> 00:12:01,040
Speaker 1: tweet it, but some time ago. But it was a

212
00:12:01,080 --> 00:12:03,080
Speaker 1: really nice deep dive into kind of who he is

213
00:12:03,720 --> 00:12:05,599
Speaker 1: and how his approach has differed from some of the

214
00:12:05,640 --> 00:12:09,079
Speaker 1: other folks who've been or who did run Microsoft. I

215
00:12:09,160 --> 00:12:12,760
Speaker 1: love that answer that he gave to Emily's question about

216
00:12:12,840 --> 00:12:16,800
Speaker 1: Salesforce and Slack teaming up, I mean, without skipping a beat,

217
00:12:17,240 --> 00:12:20,160
Speaker 1: Nidela talks about the Windows platform and the way that

218
00:12:20,200 --> 00:12:22,760
Speaker 1: Slack was able to succeed because it was on the

219
00:12:22,800 --> 00:12:24,800
Speaker 1: Windows platform, and he did say, you know the fact

220
00:12:24,800 --> 00:12:27,720
Speaker 1: that they're combining, we'll compete with them, but we'll also

221
00:12:27,800 --> 00:12:30,959
Speaker 1: cooperate with them, sort of the the frenemies idea with

222
00:12:31,000 --> 00:12:33,440
Speaker 1: these companies. They're also big that they have to work together,

223
00:12:33,480 --> 00:12:35,720
Speaker 1: but you know they're also competitors. Yeah, I mean, this

224
00:12:35,800 --> 00:12:38,040
Speaker 1: is what's interesting about the technology environment, right, Like you

225
00:12:38,080 --> 00:12:41,040
Speaker 1: do have to, you know, work with them, you know,

226
00:12:41,200 --> 00:12:44,600
Speaker 1: work with others, work with your competitors often. Um. But

227
00:12:44,679 --> 00:12:46,599
Speaker 1: it makes for a kind of an interesting environment. And

228
00:12:46,600 --> 00:12:49,480
Speaker 1: you're right he didn't miss abeed Um, that's for sure.

229
00:12:49,480 --> 00:12:57,520
Speaker 1: So check that out that full episode Road Journal. Yeah,

230
00:12:57,559 --> 00:13:02,559
Speaker 1: but you let me drive, no no, no no drug home please,

231
00:13:02,679 --> 00:13:09,840
Speaker 1: I'll do the right drivel. I want to drive, Just drive, baby,

232
00:13:12,360 --> 00:13:22,600
Speaker 1: it's the questions trying. This is the drive to the globe.

233
00:13:23,360 --> 00:13:26,960
Speaker 1: Com Me thanks, we'll drying us down on Bloomberg Radio.

234
00:13:27,840 --> 00:13:29,560
Speaker 1: All right, it is time for the Drive to the close.

235
00:13:29,640 --> 00:13:32,080
Speaker 1: Just about eleven minutes left in today's trading session. It

236
00:13:32,120 --> 00:13:34,160
Speaker 1: does feel like another day where we're just trying to

237
00:13:34,160 --> 00:13:36,720
Speaker 1: take it in, trying to slow it down a little

238
00:13:36,760 --> 00:13:40,320
Speaker 1: bit and see where we go from here in terms

239
00:13:40,360 --> 00:13:43,160
Speaker 1: of inflation, in terms of growth, a lot to get to.

240
00:13:43,280 --> 00:13:45,760
Speaker 1: Let's bring in David Diet's back with us, managing principal

241
00:13:45,760 --> 00:13:49,800
Speaker 1: and senior portfolio strategist at Pepack Private Wealth Management. They've

242
00:13:49,800 --> 00:13:52,400
Speaker 1: got eight billion in assets under management. David once again

243
00:13:52,760 --> 00:13:55,800
Speaker 1: joining us on the phone from Summit, New Jersey. It

244
00:13:55,960 --> 00:13:58,280
Speaker 1: is kind of I don't know, David, We've we've been

245
00:13:58,280 --> 00:14:01,280
Speaker 1: bouncing around the last couple of days kind of quietly,

246
00:14:01,520 --> 00:14:03,160
Speaker 1: what do you I don't know, how do you see

247
00:14:03,160 --> 00:14:07,000
Speaker 1: the market environment right now? Well, we've had a wonderful

248
00:14:07,280 --> 00:14:11,840
Speaker 1: period since the pandemic low March twenty three UM, and

249
00:14:11,920 --> 00:14:14,800
Speaker 1: really for a good reason. We've got UH, you know,

250
00:14:14,880 --> 00:14:18,000
Speaker 1: two vaccines being rolled out now a third one from

251
00:14:18,080 --> 00:14:21,560
Speaker 1: Jane Jay soon to be approved. That's the key factor

252
00:14:21,600 --> 00:14:25,080
Speaker 1: that's gonna drive consumers re engaging with the economy. Of course,

253
00:14:25,120 --> 00:14:27,480
Speaker 1: the Federal Reserve has done the right thing, lowering interest

254
00:14:27,560 --> 00:14:31,320
Speaker 1: rates down to close to zero UM, stabilizing all things

255
00:14:31,400 --> 00:14:35,480
Speaker 1: having to do with credit, giving UH investors tremendous confidence

256
00:14:35,720 --> 00:14:38,320
Speaker 1: corporate earnings, you know, Carol, at the start of TO

257
00:14:38,560 --> 00:14:43,400
Speaker 1: four they're projecting double digit year over year losses. But

258
00:14:43,600 --> 00:14:46,840
Speaker 1: now we may actually have a chance to have our

259
00:14:46,880 --> 00:14:51,080
Speaker 1: first year over year slight gained since the pandemic started.

260
00:14:51,160 --> 00:14:55,000
Speaker 1: So the improvements versus expectations have been wonderful. And that's

261
00:14:55,000 --> 00:14:58,520
Speaker 1: not just on earnings, it's also on sales, and the

262
00:14:58,520 --> 00:15:00,040
Speaker 1: beats have been some of the best we've seen in

263
00:15:00,240 --> 00:15:02,880
Speaker 1: the last decade. Of course, they're putting the finishing touches

264
00:15:02,880 --> 00:15:05,320
Speaker 1: on a fiscal stimulus package which will help the most

265
00:15:05,400 --> 00:15:08,720
Speaker 1: challenged Americans get through this period. So there's a lot

266
00:15:08,920 --> 00:15:11,720
Speaker 1: of tail wind here for the market. What do you

267
00:15:11,720 --> 00:15:14,360
Speaker 1: make of fed chair Palace comments earlier today, quote, we

268
00:15:14,400 --> 00:15:16,960
Speaker 1: are still very far from a strong labor market whose

269
00:15:17,000 --> 00:15:20,280
Speaker 1: benefits are broadly shared. Look, you're talking about the market.

270
00:15:20,280 --> 00:15:23,680
Speaker 1: We've had record highs earlier this week, but still millions

271
00:15:23,720 --> 00:15:27,400
Speaker 1: of Americans struggling to find work. Um. What do you

272
00:15:27,440 --> 00:15:30,680
Speaker 1: make of of what Power commented on earlier today? Well,

273
00:15:30,680 --> 00:15:33,560
Speaker 1: he's absolutely right. We've got a lot to a lot

274
00:15:33,640 --> 00:15:37,040
Speaker 1: to do in terms of getting the rate of unemployment down.

275
00:15:37,400 --> 00:15:39,640
Speaker 1: I think he'd be the first to admit that there's

276
00:15:39,680 --> 00:15:44,840
Speaker 1: a strong role for fiscal stimulus to narrowly target those Americans,

277
00:15:44,880 --> 00:15:48,320
Speaker 1: those main street businesses that are still challenged amid these

278
00:15:48,320 --> 00:15:53,160
Speaker 1: pandemic woes and just lowering interest rates everywhere. Um, is

279
00:15:53,240 --> 00:15:57,800
Speaker 1: kind of a blunt tool to achieve that, although certainly

280
00:15:57,800 --> 00:16:00,960
Speaker 1: a necessary one. We were most focused on his comments

281
00:16:01,000 --> 00:16:04,960
Speaker 1: on inflation. Um, you know, that's the big problem. He

282
00:16:05,000 --> 00:16:07,640
Speaker 1: said he's going to keep that those interest rates down

283
00:16:07,720 --> 00:16:11,360
Speaker 1: low until we're well past the two inflation rate. Well,

284
00:16:11,560 --> 00:16:13,640
Speaker 1: you know, if you look at the commodity market, Tim

285
00:16:13,920 --> 00:16:17,560
Speaker 1: inflation is starting to move with commodities like oil, lumber,

286
00:16:17,560 --> 00:16:19,880
Speaker 1: and corn moving up. And of course the other thing

287
00:16:19,880 --> 00:16:23,240
Speaker 1: I look at is the built in inflation expectations. When

288
00:16:23,240 --> 00:16:28,360
Speaker 1: you look at tips treasury inflation protection securities versus conventional treasuries,

289
00:16:28,400 --> 00:16:31,560
Speaker 1: they're not forecasting two point two over two percent in

290
00:16:31,640 --> 00:16:34,520
Speaker 1: terms of inflation the next ten years. So inflation expectations

291
00:16:34,560 --> 00:16:38,480
Speaker 1: are moving up. So do you anticipate, h David, that

292
00:16:38,560 --> 00:16:43,440
Speaker 1: we could see significant inflation and yet still have millions

293
00:16:43,480 --> 00:16:48,200
Speaker 1: of workers out of work? You know? Unfortunately I've been

294
00:16:48,200 --> 00:16:50,320
Speaker 1: doing this long enough. I saw that in the seventies.

295
00:16:50,360 --> 00:16:55,680
Speaker 1: They called that stag inflation. So it's more than theoretically possible. Um.

296
00:16:55,840 --> 00:16:59,040
Speaker 1: Certainly in the financial markets, in the commodity markets we

297
00:16:59,080 --> 00:17:01,760
Speaker 1: are seeing in inflation. And the spack market, the I

298
00:17:01,840 --> 00:17:05,480
Speaker 1: p O market, the cryptocurrency market we are seeing huge inflation.

299
00:17:05,600 --> 00:17:08,680
Speaker 1: So obviously there there is two economies out there. That's

300
00:17:08,720 --> 00:17:11,720
Speaker 1: one of our concerns here as as a nation. Um.

301
00:17:11,760 --> 00:17:16,080
Speaker 1: But certainly, if the vaccines are successful and people re engage,

302
00:17:16,119 --> 00:17:18,440
Speaker 1: you could see a rush to travel or rush to

303
00:17:18,520 --> 00:17:20,960
Speaker 1: eat out, a rush to to take advantage of a

304
00:17:20,960 --> 00:17:23,359
Speaker 1: lot of things. But that may not be enough to

305
00:17:23,359 --> 00:17:26,240
Speaker 1: get everyone who's most challenged back to work. So certainly

306
00:17:26,480 --> 00:17:28,760
Speaker 1: that is a possibility. So David, where are you seeing

307
00:17:28,800 --> 00:17:30,760
Speaker 1: opportunity right now? I know you have a focus on

308
00:17:30,800 --> 00:17:34,720
Speaker 1: dividend paying stocks, City Group for eyes and XS on um.

309
00:17:34,960 --> 00:17:38,520
Speaker 1: Why are you optimistic there? So you know, I think

310
00:17:38,760 --> 00:17:41,400
Speaker 1: that the next thirty basis points in terms of interest

311
00:17:41,480 --> 00:17:44,439
Speaker 1: rate move is more likely to be up then down.

312
00:17:44,880 --> 00:17:48,640
Speaker 1: And when interest rates move up, of course, the highest

313
00:17:48,720 --> 00:17:52,080
Speaker 1: duration bonds in the market go down the hardest, and

314
00:17:52,119 --> 00:17:54,679
Speaker 1: the short duration go down the least. So if you

315
00:17:54,840 --> 00:17:58,399
Speaker 1: take the analogy to the stock market, growth stocks, where

316
00:17:58,600 --> 00:18:01,600
Speaker 1: they're being valued on earning to be going out years

317
00:18:01,640 --> 00:18:05,840
Speaker 1: if not decades um, maybe have the biggest challenge there.

318
00:18:05,880 --> 00:18:09,399
Speaker 1: In a higher interest rate environment, well, dividend paying stocks

319
00:18:09,440 --> 00:18:12,840
Speaker 1: so called value stocks, where there's more cash flow immediately

320
00:18:13,200 --> 00:18:15,720
Speaker 1: more dividends may actually hold up better. And of course,

321
00:18:16,000 --> 00:18:19,640
Speaker 1: large swaths of the that economy, like for example, financials,

322
00:18:19,640 --> 00:18:22,960
Speaker 1: why actually do better if their most important product, their loans,

323
00:18:23,000 --> 00:18:26,760
Speaker 1: can attract a higher interest rate. So did you say

324
00:18:26,800 --> 00:18:32,080
Speaker 1: specific names forgive me? Yeah? So for me, the quintessential

325
00:18:32,640 --> 00:18:37,560
Speaker 1: um pandemic recovery plate is Exxon Why because you know,

326
00:18:38,320 --> 00:18:42,840
Speaker 1: we didn't use fossil fuels last year because everyone's locked down.

327
00:18:43,080 --> 00:18:45,600
Speaker 1: I mean, just think back to last Thanksgiving. Everyone stay

328
00:18:45,640 --> 00:18:47,520
Speaker 1: at home, and what are we gonna do next Thanksgiving.

329
00:18:47,520 --> 00:18:49,680
Speaker 1: We're gonna see Grandma, we're gonna see the kids, We're

330
00:18:49,680 --> 00:18:52,560
Speaker 1: going to travel, right, and so energy use, I think

331
00:18:52,560 --> 00:18:56,159
Speaker 1: it's going to explode um and and and you know

332
00:18:56,840 --> 00:18:59,520
Speaker 1: a few years ago fossil fuel prices where a hundred

333
00:18:59,520 --> 00:19:02,159
Speaker 1: dollars a barrel. Right now sknocking on sixty and so

334
00:19:02,280 --> 00:19:04,119
Speaker 1: then I'm looking at, well, what if I'm wrong? So

335
00:19:04,200 --> 00:19:07,400
Speaker 1: I'm looking for the biggest publicly trade player out there.

336
00:19:07,600 --> 00:19:10,040
Speaker 1: That would be Exxon, who, by the way, is paying

337
00:19:10,040 --> 00:19:12,320
Speaker 1: a seven point four percent dividend. You have to have

338
00:19:12,359 --> 00:19:14,600
Speaker 1: a very high treasury before you're not gonna be making

339
00:19:14,600 --> 00:19:18,200
Speaker 1: more money with the xcen did um than than the

340
00:19:18,200 --> 00:19:20,440
Speaker 1: than the treasury. And of course, Excellence making all the

341
00:19:20,520 --> 00:19:24,040
Speaker 1: right moves now to protect that dividends slash capital expenditures, which,

342
00:19:24,080 --> 00:19:27,200
Speaker 1: by the way, if all energy producers slash capital expenditures,

343
00:19:27,240 --> 00:19:31,200
Speaker 1: that's gonna reduce supply. That's gonna push up UM prices

344
00:19:31,240 --> 00:19:33,080
Speaker 1: when the demand recovers. Yeah, I was going to ask

345
00:19:33,080 --> 00:19:35,000
Speaker 1: you about that supply demand equazing because I feel like

346
00:19:35,040 --> 00:19:37,159
Speaker 1: pre COVID we were still talking that there was a

347
00:19:37,200 --> 00:19:39,560
Speaker 1: fair amount of supply still in the system. You really

348
00:19:39,560 --> 00:19:43,199
Speaker 1: do think that that gets that dramatically changes when we

349
00:19:43,280 --> 00:19:47,679
Speaker 1: come back. Well, unfortunately, I mean we were you know,

350
00:19:47,840 --> 00:19:51,000
Speaker 1: people have very little confidence as to the continuing demand

351
00:19:51,000 --> 00:19:54,840
Speaker 1: on fossil fuel prices for many reasons, including the political

352
00:19:54,880 --> 00:19:58,240
Speaker 1: winds and so forth. So whatever people were going to

353
00:19:58,320 --> 00:20:00,480
Speaker 1: do in terms of exploration before, they're not going to

354
00:20:00,600 --> 00:20:03,040
Speaker 1: do it now. And so ironically that will have to

355
00:20:03,119 --> 00:20:06,680
Speaker 1: Tennessee to push up prices so that I think, um

356
00:20:06,800 --> 00:20:09,600
Speaker 1: deserve someplace in your portfolio. All Right, we gotta run. Hey, David,

357
00:20:09,600 --> 00:20:12,360
Speaker 1: thank you so much. David. It's managing principal senior portfolio

358
00:20:12,440 --> 00:20:16,240
Speaker 1: strategist over at Pepack Private Wealth Management, aprilion in Assets

359
00:20:16,359 --> 00:20:20,200
Speaker 1: under Management, joining us on the phone from Summit, New Jersey.

360
00:20:24,080 --> 00:20:26,960
Speaker 1: Thanks for listening to Bloomberg Business Week. Download the podcast

361
00:20:26,960 --> 00:20:29,919
Speaker 1: on iTunes, SoundCloud, or Bloomberg dot com, and you can

362
00:20:29,960 --> 00:20:32,119
Speaker 1: also listen to our radio show at two pm Eastern

363
00:20:32,160 --> 00:20:34,800
Speaker 1: on Bloomberg Radio or watch us on YouTube. Sarah to

364
00:20:34,800 --> 00:20:36,000
Speaker 1: Bloomberg Global News