WEBVTT - Ridding CPG Industry Of Plastic 

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<v Speaker 1>Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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<v Speaker 1>my co host Matt Miller. Every business day we bring

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<v Speaker 1>you interviews from CEOs, market crows, and Bloomberg experts, along

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<v Speaker 1>with essential market moving news. Find the Bloomberg Markets Podcast

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<v Speaker 1>on Apple Podcasts or wherever you listen to podcasts, and

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<v Speaker 1>at Bloomberg dot com slash podcast. Well July, Matt, I'm

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<v Speaker 1>not sure you know this is plastic free July. People

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<v Speaker 1>being urged to really think about and limit their use

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<v Speaker 1>of plastics, not just for the month of July, but

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<v Speaker 1>going forward. And that's a big, big issue globally. Uh,

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<v Speaker 1>certainly here in the United States in terms of limiting pollution.

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<v Speaker 1>Stuart Landisburg, co founder and CEO of Grove Collaborative. He

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<v Speaker 1>joins us, Stewart, thanks so much for joining us here.

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<v Speaker 1>Talk to us about this plastic crisis if you will,

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<v Speaker 1>in terms of you know, our landfills. Just give us

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<v Speaker 1>some numbers to kind of frame it out for us. Sure,

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<v Speaker 1>thanks so much for having me. Uh. The plastic is

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<v Speaker 1>an environmental crisis at the same level as some of

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<v Speaker 1>the impacts of animal agriculture and the carbon dependent dependent

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<v Speaker 1>energy account. The prevalence of plastic throughout our society is

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<v Speaker 1>incredible because our ability to dispose of the enormous amount

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<v Speaker 1>of plastic to be created is so limited. We make

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<v Speaker 1>worldwide almost a trillion with a t pounds of plastic

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<v Speaker 1>every year, almost fifty percent of that single use plastic

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<v Speaker 1>packaging alone. So single use plastic packaging about four hundred

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<v Speaker 1>billion pounds produced annually, And no matter how much plastic

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<v Speaker 1>we put into our recycling bins, only about nine gets recycled.

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<v Speaker 1>So you have this incredibly massive machine shirting out forever garbage,

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<v Speaker 1>and that garbage is going into landfills, it's getting incinerated,

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<v Speaker 1>and it's ending up in our ocean and ultimately ending

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<v Speaker 1>up in our water and our food in the form

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<v Speaker 1>of microplastics. So a huge problem, which I ahs, um,

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<v Speaker 1>all right, well, we're gonna try and get him back there.

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<v Speaker 1>But here's here's the thing that he just said that

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<v Speaker 1>really jumped out of me. Only nine plastics are recycled.

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<v Speaker 1>I mean, it seems like we take so much time

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<v Speaker 1>and effort, certainly here at Poburg, but they do it

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<v Speaker 1>a great job. But just in general recycling plastics, I

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<v Speaker 1>don't know where the rest of it goes. I mean,

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<v Speaker 1>I think nine sounds high. I don't know if people

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<v Speaker 1>really buy into that recycling myth is it? How was

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<v Speaker 1>it there versus they're being I mean, everybody in Germany

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<v Speaker 1>separates so much stuff, and you know, you spend so

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<v Speaker 1>much time separating your your waste, and then we all

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<v Speaker 1>know at the end of the day most of these

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<v Speaker 1>waste management companies just put it into landfills or throw

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<v Speaker 1>it out in the ocean. I mean, it's no one

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<v Speaker 1>believes that we're really recycling all this stuff. And my

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<v Speaker 1>question for Stewart, if we haven't back, he's back, why

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<v Speaker 1>you know, who are the biggest offenders in terms of

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<v Speaker 1>for example, the SMP five or Stoxis Hunter companies that

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<v Speaker 1>that we invest in. Which of them are making so

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<v Speaker 1>much single use plastic that they know is going to

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<v Speaker 1>end up just polluting the planet. It's a great question.

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<v Speaker 1>So I'm not sure if you've heard me say before

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<v Speaker 1>of the trillion towns of plastics we create each year,

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<v Speaker 1>which right you you create this plastic bottle that can

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<v Speaker 1>last thousands and thousands of years for use in ten minutes.

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<v Speaker 1>And so the biggest companies from a plastic solution standpoint.

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<v Speaker 1>The biggest contributors are the big consumer products companies who

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<v Speaker 1>rely on this to get their product out there and

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<v Speaker 1>distribute it. And I really think this is this is

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<v Speaker 1>one of the reasons I'm actually but let's name them, Stewart,

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<v Speaker 1>I mean, are we talking about Coca Cola here? Are

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<v Speaker 1>we talking about Procter and gamble Um? Are you talking

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<v Speaker 1>about Nestley? Who are who are the who are the

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<v Speaker 1>companies doing this? You've named a couple of them, and look,

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<v Speaker 1>there are a bunch of NGOs who come out with

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<v Speaker 1>with more accusatory folks. The toad I like to take

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<v Speaker 1>is really one of Hey, how do we as an

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<v Speaker 1>industry and grow? The company that I run is a

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<v Speaker 1>CpG business, and we look for alternative materials to package

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<v Speaker 1>our products, materials like aluminum that are infinitely recyclable. Materials

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<v Speaker 1>like paper you can use over and over again, unlike plastic.

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<v Speaker 1>Rank you said, well, plastic recycling is a bit of

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<v Speaker 1>a myth. Plastic has to be down cycled, so it

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<v Speaker 1>can only be recycled two or three times at most,

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<v Speaker 1>whereas aluminum is infinitely recyclable with energy savings. So I

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<v Speaker 1>think that companies like Grow can change the industry by

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<v Speaker 1>looking for alternative materials that have a different sustainability profile.

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<v Speaker 1>When I gets the huge opportunity that hopefully many of

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<v Speaker 1>these companies that you named and others will gravitate towards

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<v Speaker 1>what's the cost differential, I'm guessing that's kind of the

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<v Speaker 1>gating issue for a lot of these companies and a

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<v Speaker 1>lot of these industries. The cost differential in sort of

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<v Speaker 1>in terms of the whole product is actually nominal because

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<v Speaker 1>the cost of packaging is fairly small, and we're able

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<v Speaker 1>to build business models where the product is just as

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<v Speaker 1>high quality, it's affordable for consumers, and it's much more sustainable.

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<v Speaker 1>I think bigger issue is the traditional innovator's dilemma, whereas

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<v Speaker 1>UH diluted product in big plastic bottle is so wildly

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<v Speaker 1>profitable for large companies, and there's billions, tens of billions

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<v Speaker 1>of dollars in infrastructure supply chain built out to support

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<v Speaker 1>that profit pool. The cost of disrupting yourself if you're

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<v Speaker 1>a large, successful organization is really big, and that's why

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<v Speaker 1>brands like ours that speak with an authentic mission and

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<v Speaker 1>we're created from the beginning with a supply chain that's

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<v Speaker 1>cleaner and delivering a higher quality products of consumers are

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<v Speaker 1>able to see even in the face of big competition.

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<v Speaker 1>Is there one big you know, uh dam that has

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<v Speaker 1>to break? Is there one big piece of the solution

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<v Speaker 1>we need to see, like government interaction. I would love

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<v Speaker 1>to see government regulation on the classic front, but in general,

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<v Speaker 1>I'm more of a free market person, and I think

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<v Speaker 1>the thing that we are seeing now is that consumers

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<v Speaker 1>are getting more and more educated. The plastic waste was

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<v Speaker 1>a problem we could mostly ignore for the last fifty years,

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<v Speaker 1>but for the next fifty years, we're not going to

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<v Speaker 1>be able to ignore it. And I think that's going

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<v Speaker 1>to change consumer sentiment, and ultimately that changing consumer sentiment

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<v Speaker 1>will drive companies to change their behavior. Gotta vote with

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<v Speaker 1>your dollar. Stuart Landisburg, co founder and CEO of Grove Collaborative.

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<v Speaker 1>This is Bloomberg. Let's get over right now to daniel

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<v Speaker 1>De Martino Bouch. She's CEO and director of Intelligence at

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<v Speaker 1>Quill Intelligence. She used to be an advisor the Dallas

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<v Speaker 1>FED and she also is Bloomberg still a Bloomberg opinion contributor.

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<v Speaker 1>Danielle or I am. I I have not written anything

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<v Speaker 1>in a very very long time. Get to work. Um,

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<v Speaker 1>we published seven days a week at Quill, But I'll

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<v Speaker 1>get to work. No, no, I no, I know you're

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<v Speaker 1>working hard, and we'd love to have you on radio

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<v Speaker 1>and television with us. I have been. You know, we've

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<v Speaker 1>seen yields come down, down, down, ever since the Fed.

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<v Speaker 1>UM took a more hawkish pivot, at least on the

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<v Speaker 1>dot plot got a little more hawkish. Um admitted, now

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<v Speaker 1>they're starting to talk taper, and now they are really

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<v Speaker 1>talking taper. Um, why if the if the economy looks

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<v Speaker 1>strong enough for the Fed to start talking taper, why

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<v Speaker 1>are we seeing yields come down? Well, you know, if

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<v Speaker 1>you look at first of all, let's let's dispense with

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<v Speaker 1>the technicals argument. I get that the short trade and

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<v Speaker 1>treasuries was enormous, but you could have said the same thing,

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<v Speaker 1>you know, nine months ago at the dollar trade and

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<v Speaker 1>how crouded that was. And we haven't seen this massive

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<v Speaker 1>boom or in short squeeze effect in the dollars. So

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<v Speaker 1>technicals played a role. But I think if you looked

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<v Speaker 1>at it's the history of que tapering that you see

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<v Speaker 1>that that the yield curve latin and that long maturity

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<v Speaker 1>bond fields come in during times of paper because financial

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<v Speaker 1>markets don't like to have their passy taken away. And

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<v Speaker 1>that's what you're talking about. You're talking about the dissipation

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<v Speaker 1>of liquidity. We forget that global que in two thousand

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<v Speaker 1>seventeen was running north of quete sillion a month, and

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<v Speaker 1>that the threat of global que coming off in two

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<v Speaker 1>thousand eighteen was what set off of all mcgeddon and J.

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<v Speaker 1>Pali's first day in office when the Dow closed more

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<v Speaker 1>than a thousand points down. The markets don't like even

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<v Speaker 1>a hint that the liquidity is going to be tempered.

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<v Speaker 1>All right, Daniel, given that backdrop, how do you expect

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<v Speaker 1>this feeder reserve to in fact temper paper however you

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<v Speaker 1>want to phrase it. Well, So here's the issue, and

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<v Speaker 1>this is what prior, this is what Powel three predecessors

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<v Speaker 1>did not have to deal with. They were always worried

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<v Speaker 1>about deflation, deflation, deflation, that was the bookman. But what

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<v Speaker 1>we're seeing right now is stagflationary risks rising. You look

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<v Speaker 1>at single family rentals, for example, Morgan Stanley has a

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<v Speaker 1>prietary model that shows that the year of the years

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<v Speaker 1>through the second quarter, those rents are running north that's

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<v Speaker 1>eleven Class A and B properties. Those rents are running

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<v Speaker 1>north of nine percent. These are sticky sources of inflation,

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<v Speaker 1>and the greatest risk is that we're seeing peak growth

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<v Speaker 1>at the same time, we're seeing inputs to inflation that

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<v Speaker 1>are not going to be transitory, as we've seen in

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<v Speaker 1>food commodities rolling over today, in lumber rolling over, in

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<v Speaker 1>other uh in some of the metals complex rolling over

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<v Speaker 1>those might those may prove to be transitory. We'ven seeing

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<v Speaker 1>trucking rates the United States come down. Those can all

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<v Speaker 1>prove to be transitory. But the biggest input to inflation

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<v Speaker 1>is housing. And we've seen the FEDS quantity of using

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<v Speaker 1>in mortgage backed securities go on so long, too long

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<v Speaker 1>did it feeding through two very rapid rental price games,

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<v Speaker 1>and that is going to be problematic for J. Powell. Danielle,

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<v Speaker 1>thanks so much for joining us. Too short of a time,

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<v Speaker 1>Danielle di Martino Booth will have you back on soon,

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<v Speaker 1>we hope. Daniel Did Martino Booths CEO and Director of

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<v Speaker 1>Intelligence for Quill Intelligence. She's also a former advisor at

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<v Speaker 1>the Dallas FEDS, though she knows a thing or two

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<v Speaker 1>about the FED. Well, we've been talking a lot over

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<v Speaker 1>the past. It's called a couple of years of perhaps

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<v Speaker 1>a growing overhang for these big tech names, um big

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<v Speaker 1>social media company names from a regulatory standpoint in the US,

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<v Speaker 1>not just the European Union but in the US. But

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<v Speaker 1>at the end of the day, nobody seems to be

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<v Speaker 1>that concerned. But it's still out there, and in fact,

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<v Speaker 1>Google parent Alphabet has been sued by thirty six states

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<v Speaker 1>over alleged play store abuses. I look at Google stock here,

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<v Speaker 1>it's all about one point four percent in line with

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<v Speaker 1>the market, so not that big a deal. But let's

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<v Speaker 1>again into it a little bit and talk about some

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<v Speaker 1>of these big tech names. Man Deep Sing senior tech

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<v Speaker 1>analysts for Bloomberg Intelligence. He joins us live, I say,

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<v Speaker 1>live Matt Miller in our Bloomberg Interactive Broker studio. So

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<v Speaker 1>it's good to have a good analyst in here. Men Deep,

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<v Speaker 1>talk to us about let's just start with these states

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<v Speaker 1>suits here. Anything to worry about from Google and what

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<v Speaker 1>are the state's alleging. Well, so in this case the

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<v Speaker 1>focus is on their app store, and what Google and

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<v Speaker 1>Apple have done is already lured their commissions. I think

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<v Speaker 1>what the states are religion is especially when it comes

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<v Speaker 1>to certain companies like gaming sector. Gaming sector relies heavily

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<v Speaker 1>on app store for generating all their revenue. If Google

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<v Speaker 1>and Apple are taking a cut, that's a lot and

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<v Speaker 1>given the payments have to be processed through the app store,

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<v Speaker 1>that's what they're alluding to. So I think the endgame

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<v Speaker 1>here is this suit obviously goes in tandem with the

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<v Speaker 1>Fortnight suit against Apple, and you know these companies will

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<v Speaker 1>have to change their commission structure. You can't charge that's

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<v Speaker 1>too much. It's if you own the store. You started

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<v Speaker 1>the business right and now you own the store, and

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<v Speaker 1>it's not necessary for life. You don't need to be

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<v Speaker 1>able to play Fortnite, although it is loads of fun. Well,

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<v Speaker 1>so look at Netflix. Netflix, you can sign up outside

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<v Speaker 1>the app store and you can still use it as

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<v Speaker 1>an app on the app store. So in case of

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<v Speaker 1>gaming companies, the problem is you can't play you know,

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<v Speaker 1>that game on Roku or the dot com so and

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<v Speaker 1>you are relying on that app store. And the case

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<v Speaker 1>that these companies are making is why can't consumers pay

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<v Speaker 1>outside the app store and why do we have to

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<v Speaker 1>pay a thirty percent cut? And I think that's where

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<v Speaker 1>they will have to change that. Com I wonder if

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<v Speaker 1>people are going to start bringing suits against Walmart, why

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<v Speaker 1>do I have to pay them at the checkout that

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<v Speaker 1>you might play Walmart somewhere else. That's kind of my

0:12:59.160 --> 0:13:01.200
<v Speaker 1>way of thinking. I'm if I were if I were

0:13:01.400 --> 0:13:04.800
<v Speaker 1>Facebook or alphabet In or Apple, my response will be,

0:13:05.280 --> 0:13:06.480
<v Speaker 1>why do you have to pay me a thirty percent?

0:13:06.559 --> 0:13:09.440
<v Speaker 1>Because I delivered a couple of billion people to you? Um,

0:13:09.480 --> 0:13:13.679
<v Speaker 1>that's huge value. Offer your app on roku, you know so,

0:13:13.880 --> 0:13:17.800
<v Speaker 1>so they will have to make modifications. Right now, any

0:13:18.040 --> 0:13:21.640
<v Speaker 1>of these apps can't even show an ad saying you

0:13:21.679 --> 0:13:24.679
<v Speaker 1>can sign up for our app outside the app store.

0:13:24.720 --> 0:13:28.520
<v Speaker 1>At least allow them the option, the consumer the option

0:13:28.720 --> 0:13:30.920
<v Speaker 1>to pay for it outside the app store. You can't

0:13:30.920 --> 0:13:33.199
<v Speaker 1>do that right now. And that is what this to

0:13:33.559 --> 0:13:36.640
<v Speaker 1>suit religious that you know, they need to change their practices.

0:13:37.120 --> 0:13:39.400
<v Speaker 1>So what would be the remedy, Like, what would Apple

0:13:39.520 --> 0:13:42.320
<v Speaker 1>store or the Google store? What is it simply as

0:13:42.320 --> 0:13:46.120
<v Speaker 1>simple as allowing you to access Yeah, why are they

0:13:46.280 --> 0:13:50.160
<v Speaker 1>Why are consumers forced to pay through the app store?

0:13:50.200 --> 0:13:52.760
<v Speaker 1>Why can't they sign up on the dot com or

0:13:52.960 --> 0:13:55.720
<v Speaker 1>through you know, some other way. It's like, you know,

0:13:55.840 --> 0:13:58.800
<v Speaker 1>if you have if you're paying through credit card. You

0:13:58.800 --> 0:14:01.200
<v Speaker 1>can pay through any of these four credit cards. You

0:14:01.200 --> 0:14:03.720
<v Speaker 1>know how max Visa discovered, So it's the same. They

0:14:03.800 --> 0:14:06.760
<v Speaker 1>have the to give users the option to sign up

0:14:06.760 --> 0:14:09.640
<v Speaker 1>for the services and probably open the app store. If

0:14:09.679 --> 0:14:12.560
<v Speaker 1>if these companies want to maintain their own app store,

0:14:12.600 --> 0:14:15.400
<v Speaker 1>maybe that's also an option. But that's a far fetched option,

0:14:17.120 --> 0:14:21.080
<v Speaker 1>and it just seems like Google should be able to

0:14:21.120 --> 0:14:23.680
<v Speaker 1>do whatever they want within their own business. You know,

0:14:24.400 --> 0:14:27.640
<v Speaker 1>I mean they started this, they invested the money, they

0:14:27.880 --> 0:14:32.240
<v Speaker 1>grew it. Um, you know the same. I feel it

0:14:32.280 --> 0:14:34.480
<v Speaker 1>is true with Apple. Now. The argument is that you

0:14:34.560 --> 0:14:37.760
<v Speaker 1>need some of these services to live a lot of

0:14:37.760 --> 0:14:44.240
<v Speaker 1>people have to use certain apps to access work for example, um,

0:14:44.280 --> 0:14:48.200
<v Speaker 1>but you don't can't. So they are providing value. The

0:14:48.280 --> 0:14:52.600
<v Speaker 1>app store value is that they are vetting all the apps,

0:14:53.120 --> 0:14:56.160
<v Speaker 1>making sure all the apps are good, there is no malware,

0:14:56.640 --> 0:14:59.800
<v Speaker 1>and you know, they are doing all the basic background

0:15:00.200 --> 0:15:02.800
<v Speaker 1>x that you know, you don't end up paying ransomware

0:15:02.960 --> 0:15:05.920
<v Speaker 1>to somebody because the app is bad. So there is

0:15:06.000 --> 0:15:08.560
<v Speaker 1>value and that's why they need to charge a commission

0:15:08.680 --> 0:15:11.640
<v Speaker 1>for you know, these businesses that are operating on the

0:15:11.640 --> 0:15:15.600
<v Speaker 1>app Store. The question is are they giving users enough

0:15:15.680 --> 0:15:19.040
<v Speaker 1>options to pay for it in different ways, and that

0:15:19.160 --> 0:15:22.040
<v Speaker 1>is I think the point of contention is that is

0:15:22.080 --> 0:15:25.160
<v Speaker 1>that is this argument the stags pursuing similar to what

0:15:25.200 --> 0:15:27.520
<v Speaker 1>the FTC, the Federal Trade Commission is looking at as

0:15:27.560 --> 0:15:30.640
<v Speaker 1>well well. So I think there is the monopoly, the

0:15:30.720 --> 0:15:33.960
<v Speaker 1>ad monopoly side of it, where you know, Google has

0:15:33.960 --> 0:15:37.240
<v Speaker 1>a monopoly or a perceived monopoly in search, and then

0:15:37.640 --> 0:15:41.040
<v Speaker 1>this one is more aimed at just the you know,

0:15:41.120 --> 0:15:46.480
<v Speaker 1>the app store commissions that Google is charging. I'm surprised

0:15:46.480 --> 0:15:49.760
<v Speaker 1>why Apple wasn't included in this because you know, they

0:15:49.840 --> 0:15:54.440
<v Speaker 1>have a very similar structure and going by what's going

0:15:54.480 --> 0:15:58.560
<v Speaker 1>on with the Fortnite case, but apparently the Apple wasn't

0:15:58.600 --> 0:16:02.040
<v Speaker 1>part of this may just twenty seconds here. Should investors

0:16:02.080 --> 0:16:06.280
<v Speaker 1>be worried about the Trump suit? No? I think again,

0:16:06.480 --> 0:16:10.840
<v Speaker 1>think of these businesses as you know, I mean, they

0:16:10.840 --> 0:16:15.200
<v Speaker 1>have established franchises and nothing changes, you know with this

0:16:15.320 --> 0:16:18.080
<v Speaker 1>headline news got it man Deep Singh is a senior

0:16:18.120 --> 0:16:22.800
<v Speaker 1>tech industry analyst for US at Bloomberg Intelligence, and he

0:16:23.000 --> 0:16:25.920
<v Speaker 1>joined Paul Live out of the Bloomberg Interactive Broker studio.

0:16:25.920 --> 0:16:29.080
<v Speaker 1>We're getting workers back there doing their job at seven

0:16:29.120 --> 0:16:37.000
<v Speaker 1>thirty one Lexington Avenue, the mothership. This is Bloomberg. Now

0:16:37.040 --> 0:16:38.600
<v Speaker 1>I want to bring in Mark Doubting is the chief

0:16:38.600 --> 0:16:43.080
<v Speaker 1>investment officer at Blue Bay Asset Management. And do I

0:16:43.080 --> 0:16:49.160
<v Speaker 1>start off by congratulating you, Mark? Are you? I hope? So? Yeah?

0:16:51.280 --> 0:16:55.840
<v Speaker 1>It was, um, I think a pretty decisive when yesterday

0:16:56.440 --> 0:17:00.240
<v Speaker 1>Denmark seemed so tired by sixty seventy minutes, they clearly

0:17:00.240 --> 0:17:04.399
<v Speaker 1>weren't going to do much. Um. Although I can't, I can't,

0:17:04.480 --> 0:17:08.879
<v Speaker 1>I can't really buy into their guilt in the in

0:17:08.920 --> 0:17:12.160
<v Speaker 1>the penalty, it seemed like a really bad call. Did

0:17:12.520 --> 0:17:15.359
<v Speaker 1>well we we we deserved our luck. I think on

0:17:15.440 --> 0:17:19.080
<v Speaker 1>this occasion exactly you last night and I've I've always

0:17:19.119 --> 0:17:21.800
<v Speaker 1>lost my voice. I was screaming that hard. It's the

0:17:22.560 --> 0:17:25.920
<v Speaker 1>first final for England in over fifty years, so it's

0:17:26.200 --> 0:17:28.439
<v Speaker 1>quite a moment and it's been some time coming. But

0:17:29.520 --> 0:17:32.600
<v Speaker 1>certainly there was plenty to him about. It was great

0:17:32.640 --> 0:17:35.760
<v Speaker 1>to watch hopefully it's coming home. At the energy I

0:17:35.760 --> 0:17:39.520
<v Speaker 1>thought was amazing. Of the England players, Harry Kane was

0:17:39.520 --> 0:17:42.120
<v Speaker 1>was amazing, but Raheem Sterling was on fire. The guy

0:17:42.160 --> 0:17:44.639
<v Speaker 1>still had so much energy after a hundred twenty minutes.

0:17:44.800 --> 0:17:46.840
<v Speaker 1>Let's get to the stock market. It has no more

0:17:46.920 --> 0:17:51.840
<v Speaker 1>energy today, but it's um, you know, won a championship recently,

0:17:51.960 --> 0:17:55.119
<v Speaker 1>so no big deal to me. The bond market is

0:17:55.119 --> 0:17:57.960
<v Speaker 1>the more interesting thing here, Mark. Why are we seeing

0:17:58.040 --> 0:18:01.639
<v Speaker 1>yields at one seven um when the economy, when the

0:18:01.640 --> 0:18:05.680
<v Speaker 1>future looks so bright? Yeah, so I think you you

0:18:05.800 --> 0:18:08.040
<v Speaker 1>hit on a great point, and I think that there's

0:18:08.080 --> 0:18:11.240
<v Speaker 1>been plenty of head scratching around sort of bond desks

0:18:11.320 --> 0:18:13.720
<v Speaker 1>over the course of the past week. I think the

0:18:13.800 --> 0:18:16.639
<v Speaker 1>one thing that you are starting to see here is

0:18:16.680 --> 0:18:19.280
<v Speaker 1>almost a bit of a sense where some are bailing

0:18:19.320 --> 0:18:22.760
<v Speaker 1>on the whole reflation trade and thinking that maybe the

0:18:22.840 --> 0:18:26.360
<v Speaker 1>growth has peaked and we're moving towards back towards this

0:18:26.480 --> 0:18:30.639
<v Speaker 1>narrative of secular stagnation. But I really struggled to to

0:18:30.720 --> 0:18:34.199
<v Speaker 1>actually take that on board. I mean, certainly from my perspective,

0:18:34.560 --> 0:18:36.760
<v Speaker 1>it continues to look as if the US economy is

0:18:36.840 --> 0:18:40.200
<v Speaker 1>running hot. We think that US CPI next week is

0:18:40.200 --> 0:18:42.960
<v Speaker 1>going to be really pretty slong, and actually some of

0:18:43.000 --> 0:18:46.120
<v Speaker 1>the moves in prices may be going to prove less

0:18:46.160 --> 0:18:49.480
<v Speaker 1>transitory than some are thinking. So we remain in the

0:18:50.000 --> 0:18:53.720
<v Speaker 1>group that's pretty upbeat on on on growth, and so

0:18:54.040 --> 0:18:56.600
<v Speaker 1>we we sense that in a world where the FED

0:18:56.680 --> 0:19:00.280
<v Speaker 1>isn't giving any leadership. Effectively, you're prone to these wings

0:19:00.280 --> 0:19:04.159
<v Speaker 1>in sentiment. And at the moment the growth bears the

0:19:04.320 --> 0:19:08.400
<v Speaker 1>secular stagnationists are in the ascendency. But we don't think

0:19:08.440 --> 0:19:11.800
<v Speaker 1>that that will necessarily be something that holds too much

0:19:11.840 --> 0:19:14.360
<v Speaker 1>longer over the course of the summer. Well, market does

0:19:14.400 --> 0:19:17.080
<v Speaker 1>seem like central bankers around the world. We heard from

0:19:17.080 --> 0:19:19.240
<v Speaker 1>the ECB and and of course the FED over the

0:19:19.240 --> 0:19:22.720
<v Speaker 1>past couple of weeks, it's lower for longer. We're no

0:19:22.840 --> 0:19:24.960
<v Speaker 1>rush to do anything here were you know, the FED,

0:19:25.040 --> 0:19:28.680
<v Speaker 1>we may consider tapering at some point. But I guess

0:19:28.680 --> 0:19:32.120
<v Speaker 1>from the central banks perspective, they feel like their playbook

0:19:32.200 --> 0:19:35.960
<v Speaker 1>is working. I would guess, yeah, I think it's easy,

0:19:36.040 --> 0:19:38.359
<v Speaker 1>does it. I would emphasize that a lot of the

0:19:38.400 --> 0:19:42.560
<v Speaker 1>global central banks a world behind the situation in the

0:19:42.640 --> 0:19:46.320
<v Speaker 1>US that we see today. Obviously, in the US we've

0:19:46.359 --> 0:19:50.680
<v Speaker 1>already surpassed where g d P was before we actually

0:19:50.880 --> 0:19:54.280
<v Speaker 1>entered into the pandemic, and yet we continue to see

0:19:54.400 --> 0:19:58.400
<v Speaker 1>very aggressive bombuying by the FED, a lot of policy

0:19:58.400 --> 0:20:01.320
<v Speaker 1>stimulus in the fiscal and also in the montary channel.

0:20:02.000 --> 0:20:04.840
<v Speaker 1>So we would naturally think that the US would probably

0:20:04.840 --> 0:20:08.560
<v Speaker 1>be leading the charge in terms of actually starting to

0:20:08.760 --> 0:20:11.560
<v Speaker 1>roll back on some of the balance sheet expansion. And

0:20:11.920 --> 0:20:14.480
<v Speaker 1>you know what, I think, if we're right on economic data,

0:20:14.520 --> 0:20:16.920
<v Speaker 1>and if economic data are as strong as we think

0:20:16.960 --> 0:20:19.320
<v Speaker 1>they're going to be, we still think that we could

0:20:19.320 --> 0:20:23.199
<v Speaker 1>well see the fit actually moved to taper is balance

0:20:23.240 --> 0:20:26.520
<v Speaker 1>sheet purchases as early as September. After having a bit

0:20:26.560 --> 0:20:29.080
<v Speaker 1>of a chat about this at the Jackson Hole meeting

0:20:29.080 --> 0:20:33.160
<v Speaker 1>in August, do you think, mad I think I need

0:20:33.200 --> 0:20:34.920
<v Speaker 1>to be at this Jackson Hole meeting. What do you think?

0:20:35.400 --> 0:20:39.040
<v Speaker 1>Definitely definitely need need to be there? Um? What do

0:20:39.040 --> 0:20:41.280
<v Speaker 1>you think about stocks right now? I mean fair enough?

0:20:41.359 --> 0:20:45.360
<v Speaker 1>They hit another all time high yesterday, rowing every day

0:20:45.400 --> 0:20:49.119
<v Speaker 1>for a couple of weeks. But um, is everything already

0:20:49.160 --> 0:20:52.120
<v Speaker 1>priced in? I noticed the Bloomberg Surprise Index is back

0:20:52.160 --> 0:20:56.600
<v Speaker 1>down to zero after a year or two of being

0:20:56.640 --> 0:21:02.879
<v Speaker 1>in positive territory. Are we fair really valued? Well? I

0:21:02.960 --> 0:21:06.200
<v Speaker 1>think the sense that I would sort of conveying in

0:21:06.480 --> 0:21:09.840
<v Speaker 1>both stocks and in credit markets is that, you, I mean,

0:21:09.960 --> 0:21:14.000
<v Speaker 1>valuations just aren't particularly compelling to to jump into the trade.

0:21:14.200 --> 0:21:17.560
<v Speaker 1>I think there's probably more sense that investors would rather

0:21:17.680 --> 0:21:21.480
<v Speaker 1>buy on a dip that necessarily chase prices all the

0:21:21.560 --> 0:21:24.320
<v Speaker 1>time higher here. But the other thing that you need

0:21:24.359 --> 0:21:26.720
<v Speaker 1>to sort of keep in mind all the while is

0:21:26.760 --> 0:21:30.120
<v Speaker 1>that although even if we're correct and we do ultimately

0:21:30.280 --> 0:21:32.639
<v Speaker 1>end up seeing the FED drawing back and bond yields

0:21:32.680 --> 0:21:35.800
<v Speaker 1>moving higher, in an economy which is growing at sort

0:21:35.840 --> 0:21:39.440
<v Speaker 1>of nine percent real percent on inflation on the top

0:21:39.920 --> 0:21:43.960
<v Speaker 1>in fourteen percent sort of nominal GDP growth is going

0:21:44.000 --> 0:21:46.679
<v Speaker 1>to mean super strong earnings. And so that sort of

0:21:46.680 --> 0:21:50.200
<v Speaker 1>strong earnings growth is going to be very supportive even

0:21:50.240 --> 0:21:52.440
<v Speaker 1>if yields do go up. And if you would say

0:21:52.440 --> 0:21:55.119
<v Speaker 1>as long as they can't are, you've got to believe

0:21:55.200 --> 0:21:58.320
<v Speaker 1>that stocks should end up being pretty well supported. So

0:21:58.640 --> 0:22:01.680
<v Speaker 1>I can't see a dip going to say fall. All right, Hey, Mark,

0:22:01.720 --> 0:22:03.840
<v Speaker 1>thanks so much for joining us. We appreciate it. Marked Oubting,

0:22:03.880 --> 0:22:06.719
<v Speaker 1>chief investment Officer for Blue Bay Asset Management, and good

0:22:06.800 --> 0:22:09.000
<v Speaker 1>luck to that England side in their big match against Italy.

0:22:09.160 --> 0:22:12.200
<v Speaker 1>Thanks for listening to the Bloomberg Markets podcast. You can

0:22:12.200 --> 0:22:16.000
<v Speaker 1>subscribe and listen to interviews with Apple Podcasts or whatever

0:22:16.080 --> 0:22:19.760
<v Speaker 1>podcast platform you prefer. I'm Matt Miller. I'm on Twitter

0:22:20.000 --> 0:22:23.520
<v Speaker 1>at Matt Miller V three on fall Sweeney. I'm on

0:22:23.520 --> 0:22:26.439
<v Speaker 1>Twitter at pt Sweeney Before the podcast, you can always

0:22:26.480 --> 0:22:28.359
<v Speaker 1>catch us worldwide at Bloomberg Radio