Speaker 1: This is Bloomberg Business Wait inside from the reporters and
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Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: As you know, President Biden and congressional leaders they are
Speaker 2: planning to resume discussions on the debt ceiling next week.
Speaker 2: They had been scheduled to meet today, but session was
Speaker 2: postponed as Republican and Democratic staff members continue to negotiate. Meantime,
Speaker 2: as you've been hearing on Bloomberg, are Henry Horden catching
Speaker 2: up with US Treasury Secretary Jenny Yellen an exclusive from
Speaker 2: the G seven summit in Japan, and she says there's
Speaker 2: no satisfactory solution to solving the debt limit other than
Speaker 2: Congress basically acting to do just that, raise the debt ceiling.
Speaker 3: Here's some of that conversation.
Speaker 4: There is no satisfactory solution for the United States. A
Speaker 4: solution will be good for the economy and financial markets.
Speaker 4: Other than Congress acting to raise the debt ceiling. There
Speaker 4: are potential different paths that could be taken. If that
Speaker 4: doesn't happen. But there is not a single thing that
Speaker 4: can be done that will save the United States from
Speaker 4: considerable economic and financial damage.
Speaker 5: But this plan was outlined back in twenty eleven, and
Speaker 5: you were there at the FMC meeting about it, and
Speaker 5: it said that treasury principles and securities would be paid.
Speaker 5: Is this something that at least for contingency plan has
Speaker 5: been discussed with the president.
Speaker 4: So my understanding i was at the FED in twenty
Speaker 4: eleven is that this plan was never presented to the
Speaker 4: President and never approved.
Speaker 3: And would you present it now?
Speaker 4: Look, we would. You're working full time to work with
Speaker 4: Congress to raise the debt sealing. That's where our focus is.
Speaker 4: We know that the only good outcome is one in
Speaker 4: which Congress act acts, as it has many times, almost
Speaker 4: eighty times since nineteen sixty, to raise the debt ceiling.
Speaker 4: What global markets and American households and businesses need to
Speaker 4: see is that we have a Congress that's committed to
Speaker 4: paying the bills that we have incurred as a consequence
Speaker 4: of our legislation, that we're not a deadbeat country. And
Speaker 4: if Congress fails to do that, it really impairs our
Speaker 4: credit rating. We have to default on some obligation, whether
Speaker 4: it's treasuries or payments to Social security recipients. That's something
Speaker 4: America hasn't done since seventeen eighty nine, and we shouldn't
Speaker 4: start now. So we've not discussed what to do if
Speaker 4: that doesn't occur with the president. Our focus is on
Speaker 4: getting it done.
Speaker 5: Because, as you know, treasuries are the bedrock of a
Speaker 5: global financial system, and the asset managers I speak to
Speaker 5: the investors, they don't have the luxury of not contingency planning,
Speaker 5: So at this point should they assume that debt may
Speaker 5: not be serviced if.
Speaker 3: There's no deal.
Speaker 4: Look, if Congress doesn't raise the debt ceiling, we face
Speaker 4: economic and financial catastrophe.
Speaker 3: One way or the other.
Speaker 4: And that's why our focus is on making sure that
Speaker 4: Congress does raise the debt sealing. I feel that that's
Speaker 4: something we're going to succeed at doing, and we're working
Speaker 4: hard to make sure that that gets done.
Speaker 2: That, of course, is the voice of US Treasury Secretary
Speaker 2: Johnny Yellen, speaking exclusively with Bloomberg's and Mary Horden earlier
Speaker 2: today from the sidelines of the G seventh summit in Japan. Hey,
Speaker 2: we want to get more on the dead ceiling, the
Speaker 2: looming deadline. We can just kind of get a handle
Speaker 2: of the US government's finances, especially by those people we
Speaker 2: pay to do.
Speaker 3: Just exactly that.
Speaker 2: Miami Gindus is with US President of the Committee for
Speaker 2: a Responsible Federal Budget.
Speaker 3: She's on Zoom in Washington, d C.
Speaker 5: Maya.
Speaker 2: It's been a while, but great to have you here
Speaker 2: with Matt and myself. I feel like we are constantly
Speaker 2: fighting for a responsible federal.
Speaker 3: Budget and never getting it, and we never get it.
Speaker 1: What you feel right, that is.
Speaker 6: It has been a long long time since we've had
Speaker 6: a responsible federal budget. The fiscal environment is getting worse,
Speaker 6: and it is in great, great connection with the fact
Speaker 6: that the political environment is getting worse. And we now
Speaker 6: have two parties that are so busy fighting against each
Speaker 6: other trying to either maintain or gain leadership majorities, that
Speaker 6: they aren't willing to do the hard work of budgeting,
Speaker 6: which means deciding what you want to do and deciding
Speaker 6: how you want to pay for it, And so we're
Speaker 6: borrowing for pretty much everything. It's contributing to a bad
Speaker 6: fiscal situation, a bad economic situation, a bad national security situation,
Speaker 6: and UH it's it's tough to see what's going to
Speaker 6: turn this around in any meaningful way.
Speaker 7: So when was the last time we had, you know,
Speaker 7: a balanced budget. Is it just because of COVID that
Speaker 7: we're doing this tremendous deficit spending.
Speaker 6: No, it's been a long time sort of constant deterioration.
Speaker 6: So you'll recall that President Bush and then President Clinton
Speaker 6: put forth packages and President Clinton worked with Republicans in
Speaker 6: Congress put forth packages on track and Nu Gingrich and
Speaker 6: I mean there's a lot of dominici. Things were different
Speaker 6: back then. They did work together. They might not have
Speaker 6: enjoyed it, but they got some things done and they
Speaker 6: got budget surpluses. But quickly after that we entered a
Speaker 6: period where we had wars that weren't paid for or
Speaker 6: unpaid for, tax cuts and recessions, all of which made
Speaker 6: the situation worse. Surpluses turned to deficits, But now things
Speaker 6: are much worse. We borrowed a lot during the Great
Speaker 6: Financial Crisis and COVID, and we should have Those were
Speaker 6: exactly when we should have borrowed. But we also borrow
Speaker 6: when the economy is strong. For instance, the past few years,
Speaker 6: the economy has been so strong that we are plagued
Speaker 6: with inflation, the opposite of what you should be doing
Speaker 6: borrowing more. But we have borrowed for every single piece
Speaker 6: of legislation other than the Inflation Reduction Act, and that
Speaker 6: fiscal policy has exacerbated the inflationary situation.
Speaker 2: Well, so crisis problems in crisis are management or is
Speaker 2: it more I'm a big follow the money, and when
Speaker 2: I follow the money in Congress, it's all about election
Speaker 2: and making sure that you are playing to the right individuals, institutions, organizations,
Speaker 2: sectors to make sure you are back in Congress. And
Speaker 2: so then I always feel like we're not necessarily getting
Speaker 2: the smartest policy. We're just trying to do whatever we
Speaker 2: can do to make sure we get reelected, and that
Speaker 2: means not ticking off anybody.
Speaker 3: So how do that?
Speaker 6: To me?
Speaker 2: Is an incredibly broken system, and I don't know how
Speaker 2: we ever get around it.
Speaker 6: You have articulated the reason for my ongoing despair, which
Speaker 6: is I am not at all convinced that we are
Speaker 6: going to turn the ship around. As I watch the
Speaker 6: growing polarization and all the additional factors that are contributing
Speaker 6: to that polarization in this country, I think debt and
Speaker 6: deficits are one of the casualties of the fact that
Speaker 6: we used to have politicians who knew what they had
Speaker 6: to get done, put in place savings packages, lift the
Speaker 6: debt ceiling. They'd fight about it, but they wouldn't threaten
Speaker 6: default in a way that where they work together enough
Speaker 6: to get things done. But importantly, some of those things
Speaker 6: were difficult. And the truth is political pandering works. So
Speaker 6: just I'll give you an example, social Security and Medicare.
Speaker 6: They both face insolvency. We have to make changes. It's
Speaker 6: not a political statement. Anyone can read the trustee. We
Speaker 6: have to make changes. There's nothing to disagree there. There
Speaker 6: is plenty disagree on what changes we should make, and
Speaker 6: that's where the policy disagreement should be. But instead first
Speaker 6: President Trump, now President Biden. After the State of the Union,
Speaker 6: pretty much everyone as out there promising not to touch
Speaker 6: those programs instead of using their important platforms to let
Speaker 6: the country know that we have to make changes so
Speaker 6: we can pay the benefits that we've promised and not
Speaker 6: face insolvency and not have across the board benefit cuts
Speaker 6: or provider cuts. But the politics of demagogue and Social
Speaker 6: Security and medicare are so successful. I am deeply concerned
Speaker 6: about the presidental potential election. We're about to see where
Speaker 6: everyone is going to be tripping over themselves promising what
Speaker 6: they won't do instead of how they would actually fix
Speaker 6: the programs, and that's damaging.
Speaker 7: Maya, Why don't they I mean, we knew when the
Speaker 7: last budget was passed that we were going to have
Speaker 7: to lift the debt ceiling to pay for it, right,
Speaker 7: Why don't they just make that? Why don't they work
Speaker 7: that into the budget.
Speaker 3: And just got about forty five seconds?
Speaker 8: Maya, Yeah, Well.
Speaker 6: First, there has been no budget. The budget committees failed
Speaker 6: to do budgets, and we don't have a bugudget ready
Speaker 6: for next year and that's quite common. And second, I
Speaker 6: believe part of this deal that they have to lift
Speaker 6: the debt ceiling, which has to be lifted without drama,
Speaker 6: should include a commission that does two things. Reforms our
Speaker 6: structural and balances everything's on the table, look at socialcurity,
Speaker 6: to look at medicare, look at taxes, and second, reforms
Speaker 6: the debt ceiling so it becomes an actual part of
Speaker 6: the budget process. Because we can't continue this way. It's
Speaker 6: too dangerous for the country and it's not effective. We
Speaker 6: need to fix our broken budget process.
Speaker 3: All right, Gonna leave it there.
Speaker 2: Hey, Maya, great to talk with you once again, Miam
Speaker 2: again as president of the Committee for a Responsible Federal Budget.
Speaker 2: Joining us via zoom from Washington, DC. Let's just go
Speaker 2: home to our spouses. Hey, debt ceiling, Let's just raise it.
Speaker 3: Yeah, we have no debt ceiling.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: You know, all week we've been talking a lot about AI.
Speaker 2: The world is a wash in artificial intelligence. We had Google,
Speaker 2: we had ibmvolunteer this week, and I gotta say, Matt, ever,
Speaker 2: since Microsoft announced that ten billion dollar investment in Open
Speaker 2: AI's chat GPT, it's just been like off and running.
Speaker 7: Yeah. I don't know if we knew at that time
Speaker 7: what we were going to get, right, it was a
Speaker 7: massive amount of money, and I remember thinking, Wow, that's
Speaker 7: a lot that they're paying for this because until then
Speaker 7: AI I had never had a great experience with it.
Speaker 7: But now I'm obsessed with AI powered being. And by
Speaker 7: the way, I was also someone who I couldn't be
Speaker 7: far enough away from being previously. Like if Being accidentally
Speaker 7: popped up on my computer, I changed it to Google
Speaker 7: as quickly as I could, and I'm made Chrome, like
Speaker 7: you know, my default. But now AI powered being is
Speaker 7: so much more useful to me than Google Search.
Speaker 2: All right, so this is good to know. So it's
Speaker 2: changing impacting your behavior. Let's see how it's changing things
Speaker 2: in our next guest life back with us. As the
Speaker 2: co founder and CEO of the three point eight billion
Speaker 2: dollar market cap content and file sharing company we're talking
Speaker 2: about Box. Aaron Levy is with us on Zoom from
Speaker 2: Redwood City, California, and Box just announcing its own integration
Speaker 2: of open ais chatchypt that was earlier this month. Eron anyway,
Speaker 2: nice to have you here with us.
Speaker 3: How are you house? Business?
Speaker 6: Good?
Speaker 8: Good, good to be here, and thanks for thanks for
Speaker 8: having me. We definitely are are extremely excited about AI
Speaker 8: and the role that it's going to have and how
Speaker 8: companies work with all of their most important content and information.
Speaker 8: And you know, really the big opportunity is when you
Speaker 8: think about how much data we have in the enterprise.
Speaker 8: That is sort of what we call unstructured data. So
Speaker 8: structured data is you know, stuff that goes into a database.
Speaker 8: It's CRM information, it's financial data. Well, inside of your documents,
Speaker 8: it's all unstructured. It's your marketing materials, it's your contracts,
Speaker 8: it's your financial wait wait wait wait wait.
Speaker 2: Wait, So how is tell us how AI generative? AI
Speaker 2: is going to change things dramatically for.
Speaker 7: You, especially for customers, which I mean when I see,
Speaker 7: first of all, the utility of your company is undeniable,
Speaker 7: So I'm not downplaying it. But it's a box, right,
Speaker 7: we put stuff in and we take stuff out. How
Speaker 7: does AI help?
Speaker 8: Yeah, So, well, we store tens of billions of documents
Speaker 8: for customers, and so with AI, we can actually unlock
Speaker 8: what's actually inside of that data for the first time ever.
Speaker 8: So you can ask questions of your documents. You can
Speaker 8: you can look inside of a contract and figure out
Speaker 8: what terms in that contract might have the highest amount
Speaker 8: of risk. You can look at a marketing asset and
Speaker 8: ask AI to improve that marketing asset. You can look
Speaker 8: inside of an HR document and ask questions. So it's
Speaker 8: a complete transformation of what we can do with all
Speaker 8: of the data we have in an enterprise.
Speaker 2: How does it move the needle for top and bottom line?
Speaker 2: So basically, how does it for you guys move the
Speaker 2: needle financially in terms of growth of users and or usage.
Speaker 8: Yeah, so we think it's going to just unlock the
Speaker 8: potential of what you can do with your content, so
Speaker 8: we can speed up productivity and an enterprise, we can
Speaker 8: make employees be able to have instant expert analysis on
Speaker 8: top of their data on demand. So again, imagine being
Speaker 8: able to talk to a lawyer instantly about the contract
Speaker 8: you're looking at, or a marketing expert about your marketing
Speaker 8: asset that you're creating. And so all of a sudden
Speaker 8: you get all of the power of these advanced AI
Speaker 8: models and you can start to understand your data in
Speaker 8: completely new ways.
Speaker 7: So how do you think this is going to improve
Speaker 7: your your revenue? I mean, what's this going to add
Speaker 7: to to the top line or is it a bottom
Speaker 7: line booster?
Speaker 9: Yeah?
Speaker 8: I think it's ultimately going to be a major tailwind
Speaker 8: for enterprise software in general. We haven't, you know, you know,
Speaker 8: sort of finalized exactly how we're going to monetize or
Speaker 8: commercialize the product. We've we've first introducing the technology to
Speaker 8: a select set of customers. There will be some elements
Speaker 8: that we likely do charge for and you know that
Speaker 8: could provide a top line boost over the long term.
Speaker 8: But we also think that this is going to be
Speaker 8: incorporated into all software. I don't think you're going to
Speaker 8: expect to use sort of, you know, less intelligent software
Speaker 8: in the future, and so I think all the enterprise
Speaker 8: software that we leverage is going to fundamentally be infused
Speaker 8: with artificial intelligence. And that's just going to be expectation
Speaker 8: that people have about their software going forward.
Speaker 7: Is it cheap or is expensive to use? I mean,
Speaker 7: how do I don't know, do you pay like a
Speaker 7: one time thing or license every time someone uses it?
Speaker 7: How's it going to work out in terms of what
Speaker 7: you pay for it?
Speaker 8: Yeah, well, we pay for the underlying usage of the
Speaker 8: GPUs that the AI models run on top of. And
Speaker 8: so every time you ask a question that has to
Speaker 8: go into a set of computers that that go and
Speaker 8: you know, process that data. That can be kind of
Speaker 8: relatively expensive, you know, more so than the usage of
Speaker 8: just a core CPU, but it's it's pretty manageable, and
Speaker 8: so we're going to you know, find an efficient way
Speaker 8: to price that into the product.
Speaker 2: Safe to say, there's still a lot to be learned,
Speaker 2: a lot to be developed, a lot to be fine tuned.
Speaker 3: When we're talking about.
Speaker 8: All of this eron, Yeah, I think there's Uh. What
Speaker 8: we've worked on is is fundamentally focusing on things like
Speaker 8: the accuracy and the reliability of the answers that you're
Speaker 8: getting back. So you know, you know that that sometimes
Speaker 8: you'll go ask chatchapt a question and it can do
Speaker 8: this thing called hallucination, which is it sort of makes
Speaker 8: up the answer in some cases. We've worked to ensure
Speaker 8: that doesn't happen with corporate data. And the reason for
Speaker 8: that is we're telling the AI model to only answer
Speaker 8: the question based on the limited set of data that
Speaker 8: we're giving it, which dramatically improves its ability to answer accurately.
Speaker 8: And so these are the kind of things that we've
Speaker 8: worked on. Data privacy, data security, data integrity. Working with
Speaker 8: these AI models. We don't have any of the AI
Speaker 8: models being trained on the data that we're leveraging. So
Speaker 8: we're building really a safe and securing compliance solution for
Speaker 8: enterprises to bring AI into their organizations.
Speaker 7: You know, what's very cool. Throughout the year, I get
Speaker 7: various tax documents in the mail, and I guess I
Speaker 7: put them in a file in my filing cabinet, a
Speaker 7: paper filing cabinet, right, okay. But if I could put
Speaker 7: them in box and then just forget about them, and
Speaker 7: at the beginning of the next year, hook up my
Speaker 7: tax software to box and say, hey, go find all
Speaker 7: of my tax documents, and then you have this AI setup,
Speaker 7: I wouldn't have to do anything.
Speaker 1: Right.
Speaker 8: That is certainly, you know, the potential of this exactly
Speaker 8: what you've just you know, thought about.
Speaker 3: You know.
Speaker 8: One of the things that's incredibly exciting is imagine you're
Speaker 8: inside of a sales organization of a large company and
Speaker 8: there's you know, hundreds or thousands of documents that have
Speaker 8: the answers to critical questions you might have. Now you
Speaker 8: can just ask the question. You could say, what's the
Speaker 8: price of this product or what's the best way that
Speaker 8: we sell this technology to our customers, and AI will
Speaker 8: give you an answer back based on the existing assets
Speaker 8: that you have in the enterprise, as opposed to you know,
Speaker 8: waiting around for some expert inside the organization to hopefully
Speaker 8: be able to answer your question right at the right moment.
Speaker 8: And so these are the kind of things that we're
Speaker 8: going to be able to do with all of the
Speaker 8: data we have leveraging AI.
Speaker 7: I don't think my pitch was juicy enough for Aaron.
Speaker 7: I think he's he's looking at a much bigger, scalable
Speaker 7: enterprise issues and I would just worry about.
Speaker 2: Doing my tim I do wonder Aaron, that where is
Speaker 2: it when you look at industries that you think will
Speaker 2: be the most uptick and most growth potential for you
Speaker 2: guys specifically?
Speaker 8: Yeah, I think industries that are very information heavy, so
Speaker 8: financial services, consulting, professional services, global manufacturing, lots of supply
Speaker 8: chain data. You know, these are these healthcare, government, you know,
Speaker 8: these are industries where there's a lot of documents. There's
Speaker 8: a lot of value that is trapped inside of those
Speaker 8: documents right now, A tremendous amount of intellectual property within
Speaker 8: these you know, organizations are trapped inside of files, and
Speaker 8: AI lets us actually go and leverage that data. For
Speaker 8: the first time, we were talking to a customer within
Speaker 8: the media and entertainment industry and they had this great
Speaker 8: use case that literally you could not have been done
Speaker 8: before without AI, which is they have a sponsor that
Speaker 8: wants to be able to sponsor certain projects, you know,
Speaker 8: within the organization, and right now they rely on kind
Speaker 8: of you know, fortuitous luck that the advertising person happens
Speaker 8: to know all of the projects that might be possible
Speaker 8: across the entire organization. They don't have a database where
Speaker 8: that knowledge is sort of kept inside of But now
Speaker 8: you can actually just ask the documents. You can say, well,
Speaker 8: which projects would be the most relevant to this particular sponsor.
Speaker 8: And so this actually is going to create new revenue
Speaker 8: generating opportunities for customers by being able to leverage what's
Speaker 8: actually inside of the data.
Speaker 10: That they have.
Speaker 2: All Right, good to check in with you, Aaron Levy.
Speaker 2: He is, of course, the co founder and CEO of Box,
Speaker 2: joining us on Zoom from Redwood City, California. One thing
Speaker 2: I would argue a Matt is that we're still kind
Speaker 2: of figuring this out.
Speaker 7: I just think there's so many use cases for it.
Speaker 7: I mean, it is a juicy, juicy technology.
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Speaker 2: We are going to talk a little bit about Twinkies
Speaker 2: and Hostess cakes, maybe some Big Texas Cinnamon Rolls and
Speaker 2: clover Hill Honeymuns, kind of hungry.
Speaker 3: These are all the.
Speaker 2: Brands and more that are under the Hostess brand's umbrella.
Speaker 2: They did report, by the way, early this week earlier
Speaker 2: some earnings. The stock initially popping on the news as
Speaker 2: much as five percent, but it did lose most of
Speaker 2: the gains by day's end following the report. Stock though
Speaker 2: up about seventeen percent so far in twenty twenty three.
Speaker 2: So let's get a look at the business I know.
Speaker 2: Matt also talked with our next guest earlier in the week,
Speaker 2: Hostess Brands President CEO Andy Callahan, joining us on Zoom
Speaker 2: in Chicago.
Speaker 3: Andy, how are.
Speaker 10: You, Carol? I'm doing great, Thanks for having me well.
Speaker 3: Nice to have you here with us.
Speaker 2: Matt has been eating Twinkies and some other things heading
Speaker 2: into this interreparation.
Speaker 10: Can I just say I love the intro. Don't forget
Speaker 10: our boart Man cookie franchise as well. But we're proud
Speaker 10: of all of our brands.
Speaker 7: Yes, well, but Twinkie is the main I mean, TWNK
Speaker 7: twink is a ticker. I went out, I talked to Andy,
Speaker 7: I think yesterday he did. He said that they've changed,
Speaker 7: you know, they're they're constantly working to improve the Twinkies.
Speaker 7: And so I went out and I bought a lot
Speaker 7: of them, and I've eaten multiple and they are very good.
Speaker 7: They do taste better than I remember last time I
Speaker 7: had them. They still love the same, but just more
Speaker 7: kind of ziny a little bit.
Speaker 1: Yeah.
Speaker 10: Well, being able to do great tasting and moist cake
Speaker 10: at scale is not an easy fee. We like it
Speaker 10: that way. It's hard to replicate our business, and we
Speaker 10: love bringing great, high quality snack products to consumers.
Speaker 7: It's moist, Carol.
Speaker 3: No, I like ristake too.
Speaker 2: Hey, let's get a little serious though, Andy, I do
Speaker 2: think about your business, like when you guys, what channel
Speaker 2: is it Walmart? Where is it that you really sell
Speaker 2: the most of your product?
Speaker 10: You know, one of the strengths of our portfolio. Obviously
Speaker 10: that customer is a large and important customer ours, but
Speaker 10: we're leading in single serve sales and media consumption. One
Speaker 10: of the strengths of our distribute of our businesses, our
Speaker 10: distribution model, we're able to access almost everywhere that consumers are,
Speaker 10: and in the bake goods category, we're about ten points
Speaker 10: higher availability than our next closest competitor, and that's really
Speaker 10: due to the power of our supply chain, our business model,
Speaker 10: and our access. So all of our customers are important
Speaker 10: to us. The diversification of our distribution is important. That
Speaker 10: customer you mention is obviously highly important, and we focus
Speaker 10: a lot on building sustainable partnerships with all of them.
Speaker 7: Where do you So I went to Dwayne Reid to
Speaker 7: get these? I did stop by the local you know,
Speaker 7: like single, like mom and pop.
Speaker 10: L r A.
Speaker 7: They didn't have Twinkies, So I went over to Dwayne
Speaker 7: read how do you get them into every shop? Or
Speaker 7: are you only focused on like CBS, Walgreens? You know,
Speaker 7: what's what's your distribution strategy?
Speaker 10: Yeah, so this is one of the beauties when we
Speaker 10: reimagine the business model that allowed us to create this
Speaker 10: great snacking business of modern contemporary business under a one
Speaker 10: hundred year old iconic brands that you talked about. We
Speaker 10: did it in a way with new technology allowed us
Speaker 10: to bring high quality products through a distribution system that's
Speaker 10: really hard to do in bake goods. So for a
Speaker 10: Dwayne we read for example terrific customer Walgreens that we
Speaker 10: partner with, we have a distributor partner that are classic
Speaker 10: distributors that allow us to get it there. For some
Speaker 10: of our larger, maybe traditional grocery retail customers, we have
Speaker 10: a tremendous internal distribution network that we've we actually opened
Speaker 10: our distribution center several years ago and we go direct
Speaker 10: to those customers through their warehouse. So it depends on
Speaker 10: the customer, but that partnership with our very important distributor
Speaker 10: customers allow us to get access to all small doors
Speaker 10: large c store customers as well as smaller ones.
Speaker 7: You'll toeen read had three separate displays they had with
Speaker 7: the bread products, they had some hostess a separate a
Speaker 7: separate hostess section. With the candies, they had a separate
Speaker 7: hostess section, and then right when you walk up to
Speaker 7: the checkout, they had a hostess section there as well.
Speaker 3: So it's called impulse buy.
Speaker 2: Like you're standing on the line and you're hungry, I've
Speaker 2: been there, I've done that. Hey, Andy, I'm sure You've
Speaker 2: gotten this question a million times. As you know, people
Speaker 2: focus on healthier eating, and I'm not saying that what
Speaker 2: you offer is not, but I'm just saying, you know,
Speaker 2: I have a twenty year old and she has been
Speaker 2: for years turning things around, looking what's in the product.
Speaker 3: How do you think about that moving forward?
Speaker 2: And are you seeing pressure you know, and demand from
Speaker 2: customers younger customers that you know they want you to
Speaker 2: shift some of what's in the product. And I think
Speaker 2: you have been to some extent.
Speaker 10: We have been. We're we are. You know, First of all,
Speaker 10: we make our products with real eggs flour like everybody does.
Speaker 10: There's certainly some other ingredients in there that allow us
Speaker 10: get through shelf life, but we're working to minimize them
Speaker 10: as much. From a consumer perspective, you know, nearly seventy
Speaker 10: percent of consumers snack indulgent snacks more than or snack
Speaker 10: more than at least seventy percent of the time and
Speaker 10: almost two half the time. That's been in an unrelenting
Speaker 10: trend over the years.
Speaker 1: Now.
Speaker 10: Consumer and there's a false choice that consumers that eat
Speaker 10: healthy don't also treat themselves or reward themselves with indulgent snacks.
Speaker 10: They can both grow and they are growing because consumers
Speaker 10: snack more often and that's the trend's been happening. So
Speaker 10: we look to bring our snacks to consumers in a
Speaker 10: very contemporary way, whether it's a two byte bouncer that
Speaker 10: we just launched, or our new kaz Bars that are
Speaker 10: in multi pack form a smaller version or a larger
Speaker 10: one that we do in our C store for our
Speaker 10: male consumers that are looking for so we give them snacks.
Speaker 10: Snacks and indulgent snacks are on trend, and we do
Speaker 10: it in a very contemporary way. That's what brings them through.
Speaker 10: Just we call it a moment of joy, and that's
Speaker 10: what our team works for to inspire these moments of
Speaker 10: joy when consumers are looking for reward, me, treat me.
Speaker 10: You got to get off to it.
Speaker 7: You got to get the Rock out of the day.
Speaker 7: You gotta get Dwayne Johnson, the Rock, to eat these
Speaker 7: on his cheat day.
Speaker 10: You know, Rock should Rock should call me? I bet
Speaker 10: you Rock Love would love our kas bars. The Rock
Speaker 10: would love these kas Bars and I know his kids
Speaker 10: would too. Millennial parents, young C store males. When we
Speaker 10: tested the kasbars, they love it because it brings the
Speaker 10: great cake we're talking about in a multi layered form.
Speaker 7: And every time I talk to you're pushing the kasbar.
Speaker 7: I will I'll bite.
Speaker 2: You know, Andy, He's gonna leave here and he's gonna
Speaker 2: stop at the Dwayne Read or something and find the kasbars.
Speaker 3: I'm just telling you, listen, listen.
Speaker 10: We do both. We do our contemporary icons Twinkies, cupcakes,
Speaker 10: ding Dongs, reimagining them with quality and bringing them to
Speaker 10: our consumers, and also bring out new innovation. They both
Speaker 10: are important.
Speaker 3: We gotta run. I'm hungry. That's all I'm going to say.
Speaker 2: Adie Callahan, CEO, over toastest friends on zoom from Chicago.
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Speaker 3: All right, everybody, let's get to it.
Speaker 2: We've got just about seventeen and a half minutes left
Speaker 2: in today's trading session, getting ready to wrap up the
Speaker 2: Friday trade as well as the week we got.
Speaker 7: I know, right, thank you.
Speaker 3: Why why are you so tired?
Speaker 7: I'm not. I just got very stressed out in the
Speaker 7: last few minutes.
Speaker 3: What happened?
Speaker 7: I'm trying to organize a big interview.
Speaker 3: Okay, all right, so well, let's focus now. You're a
Speaker 3: good guests coming up right now.
Speaker 2: We've got, as we said, Stock's kind of turning the
Speaker 2: corner but still in the red, but off their loads
Speaker 2: of the session. You get it to year note at
Speaker 2: three nine nine. Let's get to it with David Deet's
Speaker 2: back with us, senior portfolio strategist at Peeback pe Pack
Speaker 2: Private Wealth Management. They've got about ten billion dollars in
Speaker 2: assets under management, and he joins us on the phone
Speaker 2: from Summit, New Jersey. David, nice to have you here.
Speaker 2: You know, what is top of mind because it does
Speaker 2: feel like it was a bit of a meth week.
Speaker 2: Although some of the action on the treasury side of
Speaker 2: things was certainly interesting, But I don't know. We are
Speaker 2: all looking for direction in terms of what comes next.
Speaker 2: What kind of visibility do.
Speaker 9: You have, Well, it's debt cap, debt cap, debt cap negotiations,
Speaker 9: and that is dominating mentality both on Wall Street, but
Speaker 9: also small business and on Main Street. You know, we
Speaker 9: just got a survey that showed that the sentiment of
Speaker 9: small business people is now at a ten year low.
Speaker 9: Consumer sentiment indexes released today showed the consumers rather six
Speaker 9: months low. And I think it's all because of the
Speaker 9: frustration in Washington as to failure to come together.
Speaker 3: Can I ask you something.
Speaker 2: If I walked on the street of Main Street, USA
Speaker 2: and I talked to people about the debt ceiling, I
Speaker 2: have a feeling I don't know that everybody would be
Speaker 2: that concerned.
Speaker 9: Well, I mean the hand, you're you know. On the
Speaker 9: one hand, you're right, you know, people are still going
Speaker 9: to send their kids to school next year. The probably
Speaker 9: going to go out for dinner this weekend. There's still
Speaker 9: have some idea to take a vacation in the summer.
Speaker 9: So in that sense it shouldn't be a problem. But
Speaker 9: we can't say, the risk of a default is zero percent,
Speaker 9: and all the experts are saying that no one really
Speaker 9: knows what the effects would be. But the so called
Speaker 9: foundation blocks the treasury debt, if they were to become
Speaker 9: undone in default, what would be the fallout? It would
Speaker 9: not be pretty Yeah.
Speaker 7: Well, actually Anry Horden was just talking to Janney Yellen
Speaker 7: about that this morning, saying, you know, there's a lot
Speaker 7: of investment professionals out there who you know, they don't
Speaker 7: have the luxury of not caring about this issue, right,
Speaker 7: they can't make really a plan B. They need to
Speaker 7: be prepared in case there's a default. Do you have
Speaker 7: to adjust your strategy?
Speaker 1: That's a great question.
Speaker 9: First question every client today had on their mind was
Speaker 9: what are we going to do about that? But you know,
Speaker 9: we go back to time horizon here and I said, well,
Speaker 9: if you're in stocks, you shouldn't have a one or
Speaker 9: two month horizon. That ten year treasury is much below
Speaker 9: where it was just two months ago. So what people
Speaker 9: are saying in the marketplace, the experts are saying, in
Speaker 9: the short term, there's uncertainty involvetility. In the long term,
Speaker 9: of course, the Republic will pay its debts. They've raised
Speaker 9: this debt cap thing about seventy eight times since nineteen sixty,
Speaker 9: and they will do it again. The one thing I
Speaker 9: love about this, Matt, is this is not an asteroid
Speaker 9: coming in from outer space. This is not putin and
Speaker 9: you know, an unknown quantity. These are just there. Our
Speaker 9: top leaders just have to make an agreement to push
Speaker 9: that kick that can down the road and we're going
Speaker 9: to be fine.
Speaker 7: David, what do you like right now? Let's assume that
Speaker 7: the debt crisis gets resolved and we and move on
Speaker 7: from that. What do you like in this market? We've
Speaker 7: had a pretty good run year to date. Obviously last
Speaker 7: year is awful, But where do you want to put
Speaker 7: your money?
Speaker 9: You know, everywhere except something that says we're all about AI.
Speaker 9: You know, if you strip out those ten AI popular
Speaker 9: stocks from the S and P five hundred, do you
Speaker 9: go from an eight percent year today gain to negative
Speaker 9: two which means, you know, quite frankly, Matt, we haven't
Speaker 9: done that well this year, and so anything other than
Speaker 9: chasing stocks because they have a big AI plan, you know,
Speaker 9: which could do as well as streaming did three years
Speaker 9: ago when that was announced, is something to be avoided.
Speaker 9: But I mean, so we want to be diversified. I
Speaker 9: think you got to look at some of them.
Speaker 3: Well wait a minute, is can I.
Speaker 2: Ask you something though, David, Is it chasing AI or
Speaker 2: just being smart about it? I mean, you know, this
Speaker 2: technology AI nothing new. It's getting much more advanced. We've
Speaker 2: been talking about that over the last couple of weeks.
Speaker 2: You've seen Nvidia and a couple of names, a handful
Speaker 2: of names that have really been the reason why you
Speaker 2: see market averages when they do move up or when
Speaker 2: they do rally, it's because of that AI connection. And yes,
Speaker 2: we'll figure out some of the stuff that doesn't make sense,
Speaker 2: but safe to say that this is going to impact
Speaker 2: our world in a pretty significant way.
Speaker 9: You know it will absolutely, just like the metaversas said
Speaker 9: that it was going to impact on.
Speaker 3: Level now.
Speaker 9: Well, so you know the AIS. It's not a hardline AI,
Speaker 9: non AI. Many companies say they've been incorporating AI like
Speaker 9: features for the last decade. Here's the thing. The large companies,
Speaker 9: no question about your your Microsoft, your alphabet, UH, your
Speaker 9: your meta platforms, they're incorporating that. They're not the pure plays. Fine,
Speaker 9: they will be big players in this and and and
Speaker 9: that's good. Where you I'm discouraging investors from getting involved
Speaker 9: with is the smaller companies which all of a sudden
Speaker 9: have an epiphany. You know, BuzzFeed in January said, oh,
Speaker 9: we're going to write our articles for the AI that's
Speaker 9: doc trippled. There's been no follow through whatsoever. So that's
Speaker 9: where you really have to avoid.
Speaker 7: By the way, David, we got a guy coming on
Speaker 7: later who's gonna kind of gawk at all the people
Speaker 7: who lost money on crypto. And I was thinking, you
Speaker 7: could have done the same thing with the housing crisis,
Speaker 7: as you could have done the same thing with the
Speaker 7: dot com bubble. Amazon is one of your picks, and
Speaker 7: I just wonder what you think, where does it go
Speaker 7: from here? Because it's been an awesome ride for the
Speaker 7: last twenty five years, right, But can they grow anymore?
Speaker 7: They're already so dominant in online marketing?
Speaker 9: Yeah, absolutely, I love Amazon. First, it's down forty percent
Speaker 9: from its peak, so although it's been one of the
Speaker 9: best stocks that the planet's ever seen, is still well
Speaker 9: off of its highs. What I like is they are
Speaker 9: market leaders in the two best businesses in my view
Speaker 9: on the planet, FIRSTUS the cloud. We know the cloud's
Speaker 9: going to be growing at a double digit clip as
Speaker 9: far as the eye can foresee. The other one is
Speaker 9: e commerce. I mean, what's easier and better than just
Speaker 9: clicking on your screen to get what you want delivered
Speaker 9: to your doorstep. And they're number one there. You know,
Speaker 9: in fact, they have twice the market share over the
Speaker 9: next competitor on the cloud, which is the Azure of Microsoft.
Speaker 9: So I love that. I'm not quite sure necessarily see
Speaker 9: the connection between e commerce and clouds. So in a
Speaker 9: worst case scenario, they could divide that company. We're seeing
Speaker 9: Ali Baba doing some of that over in China and
Speaker 9: perhaps unlock shareholder value there. But I think here's an
Speaker 9: opportunity is trading matt at two times sales. You can
Speaker 9: buy as you're at Microsoft, but Microsoft trading yet eleven
Speaker 9: time sales. Even eBay, which is an inferior e commerce platform,
Speaker 9: the Amazon's training at a higher price for sales ratio.
Speaker 2: All right, good leave it on that note, Have a
Speaker 2: great weekend. David deets He is senior portfolio strategists and
Speaker 2: managing principle over at Pepac Private Wealth Management. They've got
Speaker 2: toughly ten billion in assets under management.
Speaker 3: Joining us, all of them. Let's get from summit in Jersey.
Speaker 7: I love cheap price to sales that's achieved.
Speaker 3: Yeah, honestly considering. Right, all right, you're listening and watching
Speaker 3: Bloomberg Business Week. I'm invited, right, Yeah, this is good.
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