Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanebeck. We're here every day bringing
Speaker 1: you the latest news from the worlds of business and finance,
Speaker 1: plus technology, politics, economics, all harnessing the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
Speaker 1: analyst in more than one twenty countries. You can download
Speaker 1: Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot Com.
Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. One of the things that
Speaker 1: we've been watching, certainly we continue to get some earning stories.
Speaker 1: Tim and Mattel reported out after the Clothes you were
Speaker 1: breaking it down. Stock is down about one point seven percent.
Speaker 1: That despite the company coming out and surpassing analysts estimates
Speaker 1: for the fourth quarter, they had a lot of kind
Speaker 1: of beats, if you will, in terms of their metrics.
Speaker 1: I caught up earlier with the chairman CEO of Mattel,
Speaker 1: Enn Cries. He was in l A. We talked about
Speaker 1: a lot of things, and in this excerpt he talks
Speaker 1: about why this quarter is just one step in Mattel's
Speaker 1: long term stret g check it out. This is not
Speaker 1: just about the quarter or the year. It's about a
Speaker 1: multi year turn around that is tracking very well, which
Speaker 1: puts us in a strong position to continue to increase
Speaker 1: profitability and accelerate growth in one and beyond. You know,
Speaker 1: talk to us about that because you know, reading through
Speaker 1: last night some of the research and there are you know,
Speaker 1: folks saying, well, listen, it's really because of the pandemic.
Speaker 1: Families our home, they've had a fine different ways to
Speaker 1: spend time with their families, games, you name it, and kids,
Speaker 1: you know, being at home that parents are spending a
Speaker 1: lot more on toys. Talk to us a little bit
Speaker 1: about what you have been doing to really kind of
Speaker 1: juice some of the brands that have been you know,
Speaker 1: that have been in your portfolio for for a long time.
Speaker 1: The demand driven by COVID is difficult to quantify, as
Speaker 1: the industry was projected to grow even before the pandemic,
Speaker 1: and we believed that much of our overall performance has
Speaker 1: been driven by the work of our organization and by
Speaker 1: the strength of our brands and quality of our products.
Speaker 1: So you know, we relieved the categories where we are
Speaker 1: a global leaders. Vehicles and infant or the pre school
Speaker 1: will continue to perform well and we expect to accelerate
Speaker 1: the growth and increase overall share. Listen, I have grown
Speaker 1: up with Mattel. I'm from a large family, you know.
Speaker 1: Inheriting my older sisters, Barbies was a big thing. And
Speaker 1: then I've got a seventeen year old where I've Bitty
Speaker 1: Baby Kit, Marie Grace. These were all throughout my home. Um,
Speaker 1: so tell me a little bit about some of the brands.
Speaker 1: Talk to me about Barbie. Barbie continue to go from
Speaker 1: strength to strength, up eighteen in the quarter and for
Speaker 1: the year, with retail sales up more than thirty. Barbie
Speaker 1: ended up being the overall number one toy property globally
Speaker 1: for the industry both in the fourth quarter and full year.
Speaker 1: The Barbie Dreamhouse was the number one toy in the
Speaker 1: US in the fourth quarter and the full year. I
Speaker 1: had one of those in my house. I had one
Speaker 1: of those in my so you know exactly what I'm
Speaker 1: talking about. So it's been really, you know, an incredible
Speaker 1: monta year journey for Barbie. UM carrying the flag for
Speaker 1: diversity and plusivity and purposeful play. But you know what
Speaker 1: what is Um, what is interesting is that you know,
Speaker 1: without taking anything away from the incredible success of Barbie,
Speaker 1: this is you know, very much a story about the
Speaker 1: matel playbook, because the Barbie success is driven by the
Speaker 1: same mythodology, same capabilities, uh, same approach UM that we
Speaker 1: that we applied across our entire product offering about brand.
Speaker 1: So it's about brand, purpose, design, lead, innovation, cultural relevance
Speaker 1: and executional accident. There's a reason why you play without toys.
Speaker 1: It's beyond the play system. Our toys carry, you know,
Speaker 1: carry messages. And it's very clear with Barbie, as I
Speaker 1: mentioned earlier, carrying the flag for diversity inclusivity. UM evolved
Speaker 1: in body, ethnicity, storytelling and likewise American Girls one of
Speaker 1: the most rich brands in terms of content and messaging
Speaker 1: about the historical doll figures and teaching and and and
Speaker 1: you know, working with parents as a trusted partner, we
Speaker 1: evolved and developed their children. It was, as you said,
Speaker 1: really a blowout year, a blowout quarter for you guys. Um,
Speaker 1: is this as good as it gets? Well, absolutely not.
Speaker 1: We just announced that we expect to accelerate growth and
Speaker 1: also provided guidance, or I should say, so you know,
Speaker 1: guidance but goals. But twenty two and twenty three, where
Speaker 1: we UH still expect to achieve mids single mid single
Speaker 1: digit digit growth in our top line and and on profitability.
Speaker 1: We also expect to achieve between seven hundred and seventy
Speaker 1: five to eight hundred million dollar IBIDA adjusted IBIDA in one.
Speaker 1: This is following a growth of almost six hundred million
Speaker 1: dollars between two thousand and eighteen to two thousand and twenty,
Speaker 1: and we expect to achieve mid teen UM offered an
Speaker 1: income margin by twenty three. So from where we see today,
Speaker 1: you UM, you know, you should expect to see us
Speaker 1: accelerating our top line growth and continuing to improve profit ability,
Speaker 1: not just in one, but for the two years after that.
Speaker 1: You know what I'm curious to you about is you
Speaker 1: know how important You've heard you talk a lot about,
Speaker 1: you know, growth and director consumer UM. I did a
Speaker 1: lot of buying online UM when I was buying from
Speaker 1: my daughter years ago. E commerce the strength that you've seen,
Speaker 1: does that become an even bigger part of the business
Speaker 1: going forward? I'm curious about that. Yes, this was another
Speaker 1: major driver for US and part of a big part
Speaker 1: of US says. In the quarter and in the year,
Speaker 1: e commerce grew significantly for US and continue to maintain momentum.
Speaker 1: In the fourth quarter we grew, and for the full year,
Speaker 1: we were up at this point online retail and ew
Speaker 1: commerce represents about a third of our retail sales. We
Speaker 1: were the number one manufacturer in e commerce in the
Speaker 1: US in the fourth quarter, and we grew our e
Speaker 1: commerce here in the US in the fourth quarter and
Speaker 1: the full year. All right, And that was matelsa EO
Speaker 1: you know on Cries catching up with him earlier to
Speaker 1: talk about their latest quarter really the outlook, and you
Speaker 1: can hear more of that interviewed him. It's coming up
Speaker 1: on our weekend show. It's also going to be on
Speaker 1: our podcast feed at Bloomberg dot com. But you know,
Speaker 1: he said, obviously they got a kick from the pandemic,
Speaker 1: but they've also been putting some strategies into place to
Speaker 1: really you know, kind of set demand four years to come. Yeah,
Speaker 1: you know, we talk a lot about pandemic trends, and
Speaker 1: I think one pandemic trends that trend that actually makes
Speaker 1: me smile is the idea of parents and grandparents spoiling
Speaker 1: their children because they've been stuck inside and buying them dolls.
Speaker 1: I mean, doll sales surging nine per cent for all
Speaker 1: the pemic I know. And they were struggling a lot
Speaker 1: with Barbie is an American girl, So they definitely think
Speaker 1: it looks like things are back on track. So be
Speaker 1: sure to check out that full interview. This is Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovich from Bloomberg Radio. In this latest episode of Bloomberg
Speaker 1: Studio One point Oh, host Emily Chang sits down for
Speaker 1: an exclusive interview with Microsoft CEO Satya Nadela. In this excerpt,
Speaker 1: Nidela discusses anti trust issues facing the tech sector. Take
Speaker 1: a listen. You need to have a business model, um
Speaker 1: that really is aligned with the world doing well. I
Speaker 1: think that's what's being litigated right, which is there are
Speaker 1: certain categories of products where the unintended consequences of the
Speaker 1: growth on that category or lack of competition in it
Speaker 1: creates issues. And so that's what I think people are
Speaker 1: all looking at and saying, hey, what's the fixed for that?
Speaker 1: But I don't think big by itself is bad or
Speaker 1: but competition is good. And every business, in particular the
Speaker 1: businesses that are large and have high scale, the unintended
Speaker 1: consequences of your scale cannot be dealt after the fact.
Speaker 1: They need to be dealt while you're scaling. So when
Speaker 1: it comes to the d platforming of President Trump, Facebook
Speaker 1: or a Twitter, Google or YouTube or Twitch have the
Speaker 1: power to say who we can and cannot hear from,
Speaker 1: and if not, who should. Yeah, I mean, this is
Speaker 1: another one of those places where I think unilateral action
Speaker 1: by individual companies in democracies like ours is just not
Speaker 1: I think long term stable. We do need to be
Speaker 1: able to have framework of laws and norms which are
Speaker 1: societal norms around even internet safety. Uh. And what is
Speaker 1: the public square that really is in a lot indment
Speaker 1: with a thriving democracy. So we just need to get
Speaker 1: to a stable state, uh in that because otherwise, depending
Speaker 1: on any one individual CEO in any one of these
Speaker 1: companies to make calls that are going to really help
Speaker 1: us maintain something as sacred and as important as our
Speaker 1: democracy in the long run is just no way at
Speaker 1: least I, as a citizen, would advocate for now. Slack
Speaker 1: has alleged that Microsoft combining teams into offices anti competitive. Um,
Speaker 1: what's your response to that? How does the landscape change
Speaker 1: now that Slack has been bought by Salesforce and as
Speaker 1: part of this bigger entity. I think both Slack and
Speaker 1: Salesforce have been successful. For example, I always point out
Speaker 1: that when we think about what they were able to do,
Speaker 1: I always ask the question would Slack have even existed
Speaker 1: if it was not for the free access they had
Speaker 1: on top of say the Windows platform. They didn't have
Speaker 1: to call Microsoft, they didn't have to go through any
Speaker 1: of our app stores, they didn't have need any uh,
Speaker 1: you know, off of permission. Compared to any of the
Speaker 1: other platforms that they're available on, we perhaps provide the
Speaker 1: most open platform and Windows and even on Office five
Speaker 1: you can in fact use all of the APIs that
Speaker 1: we expose, integrate with any application, and people use it.
Speaker 1: If you look at even the usage reports, this Slack
Speaker 1: usage and Microsoft three five years, it's so and same
Speaker 1: thing with Salesforce. So the fact that they're combining will
Speaker 1: compete with them, and they will also cooperate with them
Speaker 1: and provide them access to our platforms. And I think
Speaker 1: they should measure it by what type of success they've
Speaker 1: had on top of our platform. You worked at Microsoft
Speaker 1: through its own antitrust battles, You remember what that was like.
Speaker 1: It's been called the Lost Decade, if you will. What
Speaker 1: cultural risks do you believe these companies face, even if
Speaker 1: they're not broken up. What's happening on the inside as
Speaker 1: these investigations play out. So I don't know if there
Speaker 1: are real parallels between what happened with Microsoft and any
Speaker 1: of them, but I would say I think the core,
Speaker 1: as I always go back, is you know, if you
Speaker 1: have a business and a business model where when you
Speaker 1: are doing well around you, people are doing well, and
Speaker 1: that is something that your own employees feel, then I
Speaker 1: think things will work out culturally. When that is not true,
Speaker 1: I think it's very very hard because one of the
Speaker 1: things I feel is, as somebody said, you've got to
Speaker 1: keep it simple. What do you say, what you do,
Speaker 1: and what you think all need to be consistent. You
Speaker 1: can't sort of have a real distance between those three things.
Speaker 1: And that's what at least would be my advice and
Speaker 1: to anybody, and starting with ourselves. All right, That was
Speaker 1: of course Bloomberg Studio at one point, Oh check it out,
Speaker 1: you can see that entire interview that's going to happen
Speaker 1: at five thirty pm Moll Street Time on Bloomberg TV,
Speaker 1: And of course that's host Emily Chang sitting down for
Speaker 1: that exclusive with Microsoft CEO such An Adela, who was
Speaker 1: the cover story for Bloomberg Business Week. Um, I'd have
Speaker 1: to look at I have to pull it out and
Speaker 1: tweet it, but some time ago. But it was a
Speaker 1: really nice deep dive into kind of who he is
Speaker 1: and how his approach has differed from some of the
Speaker 1: other folks who've been or who did run Microsoft. I
Speaker 1: love that answer that he gave to Emily's question about
Speaker 1: Salesforce and Slack teaming up, I mean, without skipping a beat,
Speaker 1: Nidela talks about the Windows platform and the way that
Speaker 1: Slack was able to succeed because it was on the
Speaker 1: Windows platform, and he did say, you know the fact
Speaker 1: that they're combining, we'll compete with them, but we'll also
Speaker 1: cooperate with them, sort of the the frenemies idea with
Speaker 1: these companies. They're also big that they have to work together,
Speaker 1: but you know they're also competitors. Yeah, I mean, this
Speaker 1: is what's interesting about the technology environment, right, Like you
Speaker 1: do have to, you know, work with them, you know,
Speaker 1: work with others, work with your competitors often. Um. But
Speaker 1: it makes for a kind of an interesting environment. And
Speaker 1: you're right he didn't miss abeed Um, that's for sure.
Speaker 1: So check that out that full episode Road Journal. Yeah,
Speaker 1: but you let me drive, no no, no no drug home please,
Speaker 1: I'll do the right drivel. I want to drive, Just drive, baby,
Speaker 1: it's the questions trying. This is the drive to the globe.
Speaker 1: Com Me thanks, we'll drying us down on Bloomberg Radio.
Speaker 1: All right, it is time for the Drive to the close.
Speaker 1: Just about eleven minutes left in today's trading session. It
Speaker 1: does feel like another day where we're just trying to
Speaker 1: take it in, trying to slow it down a little
Speaker 1: bit and see where we go from here in terms
Speaker 1: of inflation, in terms of growth, a lot to get to.
Speaker 1: Let's bring in David Diet's back with us, managing principal
Speaker 1: and senior portfolio strategist at Pepack Private Wealth Management. They've
Speaker 1: got eight billion in assets under management. David once again
Speaker 1: joining us on the phone from Summit, New Jersey. It
Speaker 1: is kind of I don't know, David, We've we've been
Speaker 1: bouncing around the last couple of days kind of quietly,
Speaker 1: what do you I don't know, how do you see
Speaker 1: the market environment right now? Well, we've had a wonderful
Speaker 1: period since the pandemic low March twenty three UM, and
Speaker 1: really for a good reason. We've got UH, you know,
Speaker 1: two vaccines being rolled out now a third one from
Speaker 1: Jane Jay soon to be approved. That's the key factor
Speaker 1: that's gonna drive consumers re engaging with the economy. Of course,
Speaker 1: the Federal Reserve has done the right thing, lowering interest
Speaker 1: rates down to close to zero UM, stabilizing all things
Speaker 1: having to do with credit, giving UH investors tremendous confidence
Speaker 1: corporate earnings, you know, Carol, at the start of TO
Speaker 1: four they're projecting double digit year over year losses. But
Speaker 1: now we may actually have a chance to have our
Speaker 1: first year over year slight gained since the pandemic started.
Speaker 1: So the improvements versus expectations have been wonderful. And that's
Speaker 1: not just on earnings, it's also on sales, and the
Speaker 1: beats have been some of the best we've seen in
Speaker 1: the last decade. Of course, they're putting the finishing touches
Speaker 1: on a fiscal stimulus package which will help the most
Speaker 1: challenged Americans get through this period. So there's a lot
Speaker 1: of tail wind here for the market. What do you
Speaker 1: make of fed chair Palace comments earlier today, quote, we
Speaker 1: are still very far from a strong labor market whose
Speaker 1: benefits are broadly shared. Look, you're talking about the market.
Speaker 1: We've had record highs earlier this week, but still millions
Speaker 1: of Americans struggling to find work. Um. What do you
Speaker 1: make of of what Power commented on earlier today? Well,
Speaker 1: he's absolutely right. We've got a lot to a lot
Speaker 1: to do in terms of getting the rate of unemployment down.
Speaker 1: I think he'd be the first to admit that there's
Speaker 1: a strong role for fiscal stimulus to narrowly target those Americans,
Speaker 1: those main street businesses that are still challenged amid these
Speaker 1: pandemic woes and just lowering interest rates everywhere. Um, is
Speaker 1: kind of a blunt tool to achieve that, although certainly
Speaker 1: a necessary one. We were most focused on his comments
Speaker 1: on inflation. Um, you know, that's the big problem. He
Speaker 1: said he's going to keep that those interest rates down
Speaker 1: low until we're well past the two inflation rate. Well,
Speaker 1: you know, if you look at the commodity market, Tim
Speaker 1: inflation is starting to move with commodities like oil, lumber,
Speaker 1: and corn moving up. And of course the other thing
Speaker 1: I look at is the built in inflation expectations. When
Speaker 1: you look at tips treasury inflation protection securities versus conventional treasuries,
Speaker 1: they're not forecasting two point two over two percent in
Speaker 1: terms of inflation the next ten years. So inflation expectations
Speaker 1: are moving up. So do you anticipate, h David, that
Speaker 1: we could see significant inflation and yet still have millions
Speaker 1: of workers out of work? You know? Unfortunately I've been
Speaker 1: doing this long enough. I saw that in the seventies.
Speaker 1: They called that stag inflation. So it's more than theoretically possible. Um.
Speaker 1: Certainly in the financial markets, in the commodity markets we
Speaker 1: are seeing in inflation. And the spack market, the I
Speaker 1: p O market, the cryptocurrency market we are seeing huge inflation.
Speaker 1: So obviously there there is two economies out there. That's
Speaker 1: one of our concerns here as as a nation. Um.
Speaker 1: But certainly, if the vaccines are successful and people re engage,
Speaker 1: you could see a rush to travel or rush to
Speaker 1: eat out, a rush to to take advantage of a
Speaker 1: lot of things. But that may not be enough to
Speaker 1: get everyone who's most challenged back to work. So certainly
Speaker 1: that is a possibility. So David, where are you seeing
Speaker 1: opportunity right now? I know you have a focus on
Speaker 1: dividend paying stocks, City Group for eyes and XS on um.
Speaker 1: Why are you optimistic there? So you know, I think
Speaker 1: that the next thirty basis points in terms of interest
Speaker 1: rate move is more likely to be up then down.
Speaker 1: And when interest rates move up, of course, the highest
Speaker 1: duration bonds in the market go down the hardest, and
Speaker 1: the short duration go down the least. So if you
Speaker 1: take the analogy to the stock market, growth stocks, where
Speaker 1: they're being valued on earning to be going out years
Speaker 1: if not decades um, maybe have the biggest challenge there.
Speaker 1: In a higher interest rate environment, well, dividend paying stocks
Speaker 1: so called value stocks, where there's more cash flow immediately
Speaker 1: more dividends may actually hold up better. And of course,
Speaker 1: large swaths of the that economy, like for example, financials,
Speaker 1: why actually do better if their most important product, their loans,
Speaker 1: can attract a higher interest rate. So did you say
Speaker 1: specific names forgive me? Yeah? So for me, the quintessential
Speaker 1: um pandemic recovery plate is Exxon Why because you know,
Speaker 1: we didn't use fossil fuels last year because everyone's locked down.
Speaker 1: I mean, just think back to last Thanksgiving. Everyone stay
Speaker 1: at home, and what are we gonna do next Thanksgiving.
Speaker 1: We're gonna see Grandma, we're gonna see the kids, We're
Speaker 1: going to travel, right, and so energy use, I think
Speaker 1: it's going to explode um and and and you know
Speaker 1: a few years ago fossil fuel prices where a hundred
Speaker 1: dollars a barrel. Right now sknocking on sixty and so
Speaker 1: then I'm looking at, well, what if I'm wrong? So
Speaker 1: I'm looking for the biggest publicly trade player out there.
Speaker 1: That would be Exxon, who, by the way, is paying
Speaker 1: a seven point four percent dividend. You have to have
Speaker 1: a very high treasury before you're not gonna be making
Speaker 1: more money with the xcen did um than than the
Speaker 1: than the treasury. And of course, Excellence making all the
Speaker 1: right moves now to protect that dividends slash capital expenditures, which,
Speaker 1: by the way, if all energy producers slash capital expenditures,
Speaker 1: that's gonna reduce supply. That's gonna push up UM prices
Speaker 1: when the demand recovers. Yeah, I was going to ask
Speaker 1: you about that supply demand equazing because I feel like
Speaker 1: pre COVID we were still talking that there was a
Speaker 1: fair amount of supply still in the system. You really
Speaker 1: do think that that gets that dramatically changes when we
Speaker 1: come back. Well, unfortunately, I mean we were you know,
Speaker 1: people have very little confidence as to the continuing demand
Speaker 1: on fossil fuel prices for many reasons, including the political
Speaker 1: winds and so forth. So whatever people were going to
Speaker 1: do in terms of exploration before, they're not going to
Speaker 1: do it now. And so ironically that will have to
Speaker 1: Tennessee to push up prices so that I think, um
Speaker 1: deserve someplace in your portfolio. All Right, we gotta run. Hey, David,
Speaker 1: thank you so much. David. It's managing principal senior portfolio
Speaker 1: strategist over at Pepack Private Wealth Management, aprilion in Assets
Speaker 1: under Management, joining us on the phone from Summit, New Jersey.
Speaker 1: Thanks for listening to Bloomberg Business Week. Download the podcast
Speaker 1: on iTunes, SoundCloud, or Bloomberg dot com, and you can
Speaker 1: also listen to our radio show at two pm Eastern
Speaker 1: on Bloomberg Radio or watch us on YouTube. Sarah to
Speaker 1: Bloomberg Global News