Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market crows, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. Well July, Matt, I'm
Speaker 1: not sure you know this is plastic free July. People
Speaker 1: being urged to really think about and limit their use
Speaker 1: of plastics, not just for the month of July, but
Speaker 1: going forward. And that's a big, big issue globally. Uh,
Speaker 1: certainly here in the United States in terms of limiting pollution.
Speaker 1: Stuart Landisburg, co founder and CEO of Grove Collaborative. He
Speaker 1: joins us, Stewart, thanks so much for joining us here.
Speaker 1: Talk to us about this plastic crisis if you will,
Speaker 1: in terms of you know, our landfills. Just give us
Speaker 1: some numbers to kind of frame it out for us. Sure,
Speaker 1: thanks so much for having me. Uh. The plastic is
Speaker 1: an environmental crisis at the same level as some of
Speaker 1: the impacts of animal agriculture and the carbon dependent dependent
Speaker 1: energy account. The prevalence of plastic throughout our society is
Speaker 1: incredible because our ability to dispose of the enormous amount
Speaker 1: of plastic to be created is so limited. We make
Speaker 1: worldwide almost a trillion with a t pounds of plastic
Speaker 1: every year, almost fifty percent of that single use plastic
Speaker 1: packaging alone. So single use plastic packaging about four hundred
Speaker 1: billion pounds produced annually, And no matter how much plastic
Speaker 1: we put into our recycling bins, only about nine gets recycled.
Speaker 1: So you have this incredibly massive machine shirting out forever garbage,
Speaker 1: and that garbage is going into landfills, it's getting incinerated,
Speaker 1: and it's ending up in our ocean and ultimately ending
Speaker 1: up in our water and our food in the form
Speaker 1: of microplastics. So a huge problem, which I ahs, um,
Speaker 1: all right, well, we're gonna try and get him back there.
Speaker 1: But here's here's the thing that he just said that
Speaker 1: really jumped out of me. Only nine plastics are recycled.
Speaker 1: I mean, it seems like we take so much time
Speaker 1: and effort, certainly here at Poburg, but they do it
Speaker 1: a great job. But just in general recycling plastics, I
Speaker 1: don't know where the rest of it goes. I mean,
Speaker 1: I think nine sounds high. I don't know if people
Speaker 1: really buy into that recycling myth is it? How was
Speaker 1: it there versus they're being I mean, everybody in Germany
Speaker 1: separates so much stuff, and you know, you spend so
Speaker 1: much time separating your your waste, and then we all
Speaker 1: know at the end of the day most of these
Speaker 1: waste management companies just put it into landfills or throw
Speaker 1: it out in the ocean. I mean, it's no one
Speaker 1: believes that we're really recycling all this stuff. And my
Speaker 1: question for Stewart, if we haven't back, he's back, why
Speaker 1: you know, who are the biggest offenders in terms of
Speaker 1: for example, the SMP five or Stoxis Hunter companies that
Speaker 1: that we invest in. Which of them are making so
Speaker 1: much single use plastic that they know is going to
Speaker 1: end up just polluting the planet. It's a great question.
Speaker 1: So I'm not sure if you've heard me say before
Speaker 1: of the trillion towns of plastics we create each year,
Speaker 1: which right you you create this plastic bottle that can
Speaker 1: last thousands and thousands of years for use in ten minutes.
Speaker 1: And so the biggest companies from a plastic solution standpoint.
Speaker 1: The biggest contributors are the big consumer products companies who
Speaker 1: rely on this to get their product out there and
Speaker 1: distribute it. And I really think this is this is
Speaker 1: one of the reasons I'm actually but let's name them, Stewart,
Speaker 1: I mean, are we talking about Coca Cola here? Are
Speaker 1: we talking about Procter and gamble Um? Are you talking
Speaker 1: about Nestley? Who are who are the who are the
Speaker 1: companies doing this? You've named a couple of them, and look,
Speaker 1: there are a bunch of NGOs who come out with
Speaker 1: with more accusatory folks. The toad I like to take
Speaker 1: is really one of Hey, how do we as an
Speaker 1: industry and grow? The company that I run is a
Speaker 1: CpG business, and we look for alternative materials to package
Speaker 1: our products, materials like aluminum that are infinitely recyclable. Materials
Speaker 1: like paper you can use over and over again, unlike plastic.
Speaker 1: Rank you said, well, plastic recycling is a bit of
Speaker 1: a myth. Plastic has to be down cycled, so it
Speaker 1: can only be recycled two or three times at most,
Speaker 1: whereas aluminum is infinitely recyclable with energy savings. So I
Speaker 1: think that companies like Grow can change the industry by
Speaker 1: looking for alternative materials that have a different sustainability profile.
Speaker 1: When I gets the huge opportunity that hopefully many of
Speaker 1: these companies that you named and others will gravitate towards
Speaker 1: what's the cost differential, I'm guessing that's kind of the
Speaker 1: gating issue for a lot of these companies and a
Speaker 1: lot of these industries. The cost differential in sort of
Speaker 1: in terms of the whole product is actually nominal because
Speaker 1: the cost of packaging is fairly small, and we're able
Speaker 1: to build business models where the product is just as
Speaker 1: high quality, it's affordable for consumers, and it's much more sustainable.
Speaker 1: I think bigger issue is the traditional innovator's dilemma, whereas
Speaker 1: UH diluted product in big plastic bottle is so wildly
Speaker 1: profitable for large companies, and there's billions, tens of billions
Speaker 1: of dollars in infrastructure supply chain built out to support
Speaker 1: that profit pool. The cost of disrupting yourself if you're
Speaker 1: a large, successful organization is really big, and that's why
Speaker 1: brands like ours that speak with an authentic mission and
Speaker 1: we're created from the beginning with a supply chain that's
Speaker 1: cleaner and delivering a higher quality products of consumers are
Speaker 1: able to see even in the face of big competition.
Speaker 1: Is there one big you know, uh dam that has
Speaker 1: to break? Is there one big piece of the solution
Speaker 1: we need to see, like government interaction. I would love
Speaker 1: to see government regulation on the classic front, but in general,
Speaker 1: I'm more of a free market person, and I think
Speaker 1: the thing that we are seeing now is that consumers
Speaker 1: are getting more and more educated. The plastic waste was
Speaker 1: a problem we could mostly ignore for the last fifty years,
Speaker 1: but for the next fifty years, we're not going to
Speaker 1: be able to ignore it. And I think that's going
Speaker 1: to change consumer sentiment, and ultimately that changing consumer sentiment
Speaker 1: will drive companies to change their behavior. Gotta vote with
Speaker 1: your dollar. Stuart Landisburg, co founder and CEO of Grove Collaborative.
Speaker 1: This is Bloomberg. Let's get over right now to daniel
Speaker 1: De Martino Bouch. She's CEO and director of Intelligence at
Speaker 1: Quill Intelligence. She used to be an advisor the Dallas
Speaker 1: FED and she also is Bloomberg still a Bloomberg opinion contributor.
Speaker 1: Danielle or I am. I I have not written anything
Speaker 1: in a very very long time. Get to work. Um,
Speaker 1: we published seven days a week at Quill, But I'll
Speaker 1: get to work. No, no, I no, I know you're
Speaker 1: working hard, and we'd love to have you on radio
Speaker 1: and television with us. I have been. You know, we've
Speaker 1: seen yields come down, down, down, ever since the Fed.
Speaker 1: UM took a more hawkish pivot, at least on the
Speaker 1: dot plot got a little more hawkish. Um admitted, now
Speaker 1: they're starting to talk taper, and now they are really
Speaker 1: talking taper. Um, why if the if the economy looks
Speaker 1: strong enough for the Fed to start talking taper, why
Speaker 1: are we seeing yields come down? Well, you know, if
Speaker 1: you look at first of all, let's let's dispense with
Speaker 1: the technicals argument. I get that the short trade and
Speaker 1: treasuries was enormous, but you could have said the same thing,
Speaker 1: you know, nine months ago at the dollar trade and
Speaker 1: how crouded that was. And we haven't seen this massive
Speaker 1: boom or in short squeeze effect in the dollars. So
Speaker 1: technicals played a role. But I think if you looked
Speaker 1: at it's the history of que tapering that you see
Speaker 1: that that the yield curve latin and that long maturity
Speaker 1: bond fields come in during times of paper because financial
Speaker 1: markets don't like to have their passy taken away. And
Speaker 1: that's what you're talking about. You're talking about the dissipation
Speaker 1: of liquidity. We forget that global que in two thousand
Speaker 1: seventeen was running north of quete sillion a month, and
Speaker 1: that the threat of global que coming off in two
Speaker 1: thousand eighteen was what set off of all mcgeddon and J.
Speaker 1: Pali's first day in office when the Dow closed more
Speaker 1: than a thousand points down. The markets don't like even
Speaker 1: a hint that the liquidity is going to be tempered.
Speaker 1: All right, Daniel, given that backdrop, how do you expect
Speaker 1: this feeder reserve to in fact temper paper however you
Speaker 1: want to phrase it. Well, So here's the issue, and
Speaker 1: this is what prior, this is what Powel three predecessors
Speaker 1: did not have to deal with. They were always worried
Speaker 1: about deflation, deflation, deflation, that was the bookman. But what
Speaker 1: we're seeing right now is stagflationary risks rising. You look
Speaker 1: at single family rentals, for example, Morgan Stanley has a
Speaker 1: prietary model that shows that the year of the years
Speaker 1: through the second quarter, those rents are running north that's
Speaker 1: eleven Class A and B properties. Those rents are running
Speaker 1: north of nine percent. These are sticky sources of inflation,
Speaker 1: and the greatest risk is that we're seeing peak growth
Speaker 1: at the same time, we're seeing inputs to inflation that
Speaker 1: are not going to be transitory, as we've seen in
Speaker 1: food commodities rolling over today, in lumber rolling over, in
Speaker 1: other uh in some of the metals complex rolling over
Speaker 1: those might those may prove to be transitory. We'ven seeing
Speaker 1: trucking rates the United States come down. Those can all
Speaker 1: prove to be transitory. But the biggest input to inflation
Speaker 1: is housing. And we've seen the FEDS quantity of using
Speaker 1: in mortgage backed securities go on so long, too long
Speaker 1: did it feeding through two very rapid rental price games,
Speaker 1: and that is going to be problematic for J. Powell. Danielle,
Speaker 1: thanks so much for joining us. Too short of a time,
Speaker 1: Danielle di Martino Booth will have you back on soon,
Speaker 1: we hope. Daniel Did Martino Booths CEO and Director of
Speaker 1: Intelligence for Quill Intelligence. She's also a former advisor at
Speaker 1: the Dallas FEDS, though she knows a thing or two
Speaker 1: about the FED. Well, we've been talking a lot over
Speaker 1: the past. It's called a couple of years of perhaps
Speaker 1: a growing overhang for these big tech names, um big
Speaker 1: social media company names from a regulatory standpoint in the US,
Speaker 1: not just the European Union but in the US. But
Speaker 1: at the end of the day, nobody seems to be
Speaker 1: that concerned. But it's still out there, and in fact,
Speaker 1: Google parent Alphabet has been sued by thirty six states
Speaker 1: over alleged play store abuses. I look at Google stock here,
Speaker 1: it's all about one point four percent in line with
Speaker 1: the market, so not that big a deal. But let's
Speaker 1: again into it a little bit and talk about some
Speaker 1: of these big tech names. Man Deep Sing senior tech
Speaker 1: analysts for Bloomberg Intelligence. He joins us live, I say,
Speaker 1: live Matt Miller in our Bloomberg Interactive Broker studio. So
Speaker 1: it's good to have a good analyst in here. Men Deep,
Speaker 1: talk to us about let's just start with these states
Speaker 1: suits here. Anything to worry about from Google and what
Speaker 1: are the state's alleging. Well, so in this case the
Speaker 1: focus is on their app store, and what Google and
Speaker 1: Apple have done is already lured their commissions. I think
Speaker 1: what the states are religion is especially when it comes
Speaker 1: to certain companies like gaming sector. Gaming sector relies heavily
Speaker 1: on app store for generating all their revenue. If Google
Speaker 1: and Apple are taking a cut, that's a lot and
Speaker 1: given the payments have to be processed through the app store,
Speaker 1: that's what they're alluding to. So I think the endgame
Speaker 1: here is this suit obviously goes in tandem with the
Speaker 1: Fortnight suit against Apple, and you know these companies will
Speaker 1: have to change their commission structure. You can't charge that's
Speaker 1: too much. It's if you own the store. You started
Speaker 1: the business right and now you own the store, and
Speaker 1: it's not necessary for life. You don't need to be
Speaker 1: able to play Fortnite, although it is loads of fun. Well,
Speaker 1: so look at Netflix. Netflix, you can sign up outside
Speaker 1: the app store and you can still use it as
Speaker 1: an app on the app store. So in case of
Speaker 1: gaming companies, the problem is you can't play you know,
Speaker 1: that game on Roku or the dot com so and
Speaker 1: you are relying on that app store. And the case
Speaker 1: that these companies are making is why can't consumers pay
Speaker 1: outside the app store and why do we have to
Speaker 1: pay a thirty percent cut? And I think that's where
Speaker 1: they will have to change that. Com I wonder if
Speaker 1: people are going to start bringing suits against Walmart, why
Speaker 1: do I have to pay them at the checkout that
Speaker 1: you might play Walmart somewhere else. That's kind of my
Speaker 1: way of thinking. I'm if I were if I were
Speaker 1: Facebook or alphabet In or Apple, my response will be,
Speaker 1: why do you have to pay me a thirty percent?
Speaker 1: Because I delivered a couple of billion people to you? Um,
Speaker 1: that's huge value. Offer your app on roku, you know so,
Speaker 1: so they will have to make modifications. Right now, any
Speaker 1: of these apps can't even show an ad saying you
Speaker 1: can sign up for our app outside the app store.
Speaker 1: At least allow them the option, the consumer the option
Speaker 1: to pay for it outside the app store. You can't
Speaker 1: do that right now. And that is what this to
Speaker 1: suit religious that you know, they need to change their practices.
Speaker 1: So what would be the remedy, Like, what would Apple
Speaker 1: store or the Google store? What is it simply as
Speaker 1: simple as allowing you to access Yeah, why are they
Speaker 1: Why are consumers forced to pay through the app store?
Speaker 1: Why can't they sign up on the dot com or
Speaker 1: through you know, some other way. It's like, you know,
Speaker 1: if you have if you're paying through credit card. You
Speaker 1: can pay through any of these four credit cards. You
Speaker 1: know how max Visa discovered, So it's the same. They
Speaker 1: have the to give users the option to sign up
Speaker 1: for the services and probably open the app store. If
Speaker 1: if these companies want to maintain their own app store,
Speaker 1: maybe that's also an option. But that's a far fetched option,
Speaker 1: and it just seems like Google should be able to
Speaker 1: do whatever they want within their own business. You know,
Speaker 1: I mean they started this, they invested the money, they
Speaker 1: grew it. Um, you know the same. I feel it
Speaker 1: is true with Apple. Now. The argument is that you
Speaker 1: need some of these services to live a lot of
Speaker 1: people have to use certain apps to access work for example, um,
Speaker 1: but you don't can't. So they are providing value. The
Speaker 1: app store value is that they are vetting all the apps,
Speaker 1: making sure all the apps are good, there is no malware,
Speaker 1: and you know, they are doing all the basic background
Speaker 1: x that you know, you don't end up paying ransomware
Speaker 1: to somebody because the app is bad. So there is
Speaker 1: value and that's why they need to charge a commission
Speaker 1: for you know, these businesses that are operating on the
Speaker 1: app Store. The question is are they giving users enough
Speaker 1: options to pay for it in different ways, and that
Speaker 1: is I think the point of contention is that is
Speaker 1: that is this argument the stags pursuing similar to what
Speaker 1: the FTC, the Federal Trade Commission is looking at as
Speaker 1: well well. So I think there is the monopoly, the
Speaker 1: ad monopoly side of it, where you know, Google has
Speaker 1: a monopoly or a perceived monopoly in search, and then
Speaker 1: this one is more aimed at just the you know,
Speaker 1: the app store commissions that Google is charging. I'm surprised
Speaker 1: why Apple wasn't included in this because you know, they
Speaker 1: have a very similar structure and going by what's going
Speaker 1: on with the Fortnite case, but apparently the Apple wasn't
Speaker 1: part of this may just twenty seconds here. Should investors
Speaker 1: be worried about the Trump suit? No? I think again,
Speaker 1: think of these businesses as you know, I mean, they
Speaker 1: have established franchises and nothing changes, you know with this
Speaker 1: headline news got it man Deep Singh is a senior
Speaker 1: tech industry analyst for US at Bloomberg Intelligence, and he
Speaker 1: joined Paul Live out of the Bloomberg Interactive Broker studio.
Speaker 1: We're getting workers back there doing their job at seven
Speaker 1: thirty one Lexington Avenue, the mothership. This is Bloomberg. Now
Speaker 1: I want to bring in Mark Doubting is the chief
Speaker 1: investment officer at Blue Bay Asset Management. And do I
Speaker 1: start off by congratulating you, Mark? Are you? I hope? So? Yeah?
Speaker 1: It was, um, I think a pretty decisive when yesterday
Speaker 1: Denmark seemed so tired by sixty seventy minutes, they clearly
Speaker 1: weren't going to do much. Um. Although I can't, I can't,
Speaker 1: I can't really buy into their guilt in the in
Speaker 1: the penalty, it seemed like a really bad call. Did
Speaker 1: well we we we deserved our luck. I think on
Speaker 1: this occasion exactly you last night and I've I've always
Speaker 1: lost my voice. I was screaming that hard. It's the
Speaker 1: first final for England in over fifty years, so it's
Speaker 1: quite a moment and it's been some time coming. But
Speaker 1: certainly there was plenty to him about. It was great
Speaker 1: to watch hopefully it's coming home. At the energy I
Speaker 1: thought was amazing. Of the England players, Harry Kane was
Speaker 1: was amazing, but Raheem Sterling was on fire. The guy
Speaker 1: still had so much energy after a hundred twenty minutes.
Speaker 1: Let's get to the stock market. It has no more
Speaker 1: energy today, but it's um, you know, won a championship recently,
Speaker 1: so no big deal to me. The bond market is
Speaker 1: the more interesting thing here, Mark. Why are we seeing
Speaker 1: yields at one seven um when the economy, when the
Speaker 1: future looks so bright? Yeah, so I think you you
Speaker 1: hit on a great point, and I think that there's
Speaker 1: been plenty of head scratching around sort of bond desks
Speaker 1: over the course of the past week. I think the
Speaker 1: one thing that you are starting to see here is
Speaker 1: almost a bit of a sense where some are bailing
Speaker 1: on the whole reflation trade and thinking that maybe the
Speaker 1: growth has peaked and we're moving towards back towards this
Speaker 1: narrative of secular stagnation. But I really struggled to to
Speaker 1: actually take that on board. I mean, certainly from my perspective,
Speaker 1: it continues to look as if the US economy is
Speaker 1: running hot. We think that US CPI next week is
Speaker 1: going to be really pretty slong, and actually some of
Speaker 1: the moves in prices may be going to prove less
Speaker 1: transitory than some are thinking. So we remain in the
Speaker 1: group that's pretty upbeat on on on growth, and so
Speaker 1: we we sense that in a world where the FED
Speaker 1: isn't giving any leadership. Effectively, you're prone to these wings
Speaker 1: in sentiment. And at the moment the growth bears the
Speaker 1: secular stagnationists are in the ascendency. But we don't think
Speaker 1: that that will necessarily be something that holds too much
Speaker 1: longer over the course of the summer. Well, market does
Speaker 1: seem like central bankers around the world. We heard from
Speaker 1: the ECB and and of course the FED over the
Speaker 1: past couple of weeks, it's lower for longer. We're no
Speaker 1: rush to do anything here were you know, the FED,
Speaker 1: we may consider tapering at some point. But I guess
Speaker 1: from the central banks perspective, they feel like their playbook
Speaker 1: is working. I would guess, yeah, I think it's easy,
Speaker 1: does it. I would emphasize that a lot of the
Speaker 1: global central banks a world behind the situation in the
Speaker 1: US that we see today. Obviously, in the US we've
Speaker 1: already surpassed where g d P was before we actually
Speaker 1: entered into the pandemic, and yet we continue to see
Speaker 1: very aggressive bombuying by the FED, a lot of policy
Speaker 1: stimulus in the fiscal and also in the montary channel.
Speaker 1: So we would naturally think that the US would probably
Speaker 1: be leading the charge in terms of actually starting to
Speaker 1: roll back on some of the balance sheet expansion. And
Speaker 1: you know what, I think, if we're right on economic data,
Speaker 1: and if economic data are as strong as we think
Speaker 1: they're going to be, we still think that we could
Speaker 1: well see the fit actually moved to taper is balance
Speaker 1: sheet purchases as early as September. After having a bit
Speaker 1: of a chat about this at the Jackson Hole meeting
Speaker 1: in August, do you think, mad I think I need
Speaker 1: to be at this Jackson Hole meeting. What do you think?
Speaker 1: Definitely definitely need need to be there? Um? What do
Speaker 1: you think about stocks right now? I mean fair enough?
Speaker 1: They hit another all time high yesterday, rowing every day
Speaker 1: for a couple of weeks. But um, is everything already
Speaker 1: priced in? I noticed the Bloomberg Surprise Index is back
Speaker 1: down to zero after a year or two of being
Speaker 1: in positive territory. Are we fair really valued? Well? I
Speaker 1: think the sense that I would sort of conveying in
Speaker 1: both stocks and in credit markets is that, you, I mean,
Speaker 1: valuations just aren't particularly compelling to to jump into the trade.
Speaker 1: I think there's probably more sense that investors would rather
Speaker 1: buy on a dip that necessarily chase prices all the
Speaker 1: time higher here. But the other thing that you need
Speaker 1: to sort of keep in mind all the while is
Speaker 1: that although even if we're correct and we do ultimately
Speaker 1: end up seeing the FED drawing back and bond yields
Speaker 1: moving higher, in an economy which is growing at sort
Speaker 1: of nine percent real percent on inflation on the top
Speaker 1: in fourteen percent sort of nominal GDP growth is going
Speaker 1: to mean super strong earnings. And so that sort of
Speaker 1: strong earnings growth is going to be very supportive even
Speaker 1: if yields do go up. And if you would say
Speaker 1: as long as they can't are, you've got to believe
Speaker 1: that stocks should end up being pretty well supported. So
Speaker 1: I can't see a dip going to say fall. All right, Hey, Mark,
Speaker 1: thanks so much for joining us. We appreciate it. Marked Oubting,
Speaker 1: chief investment Officer for Blue Bay Asset Management, and good
Speaker 1: luck to that England side in their big match against Italy.
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
Speaker 1: at Matt Miller V three on fall Sweeney. I'm on
Speaker 1: Twitter at pt Sweeney Before the podcast, you can always
Speaker 1: catch us worldwide at Bloomberg Radio