1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day, we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,400 Speaker 1: at Bloomberg dot com slash podcast. Let's get to our 7 00:00:22,440 --> 00:00:24,560 Speaker 1: next guest right away, Bangs. The next guest is in 8 00:00:24,720 --> 00:00:29,480 Speaker 1: our Bloomberg Interactive Broker studio down from Boston this morning. Um, 9 00:00:29,520 --> 00:00:33,520 Speaker 1: where the Celtics lost last night. So Mike Vocuson, Chief 10 00:00:33,520 --> 00:00:36,960 Speaker 1: Investment Officer Managing Director, Cap Trust joins us. Mike, sorry 11 00:00:36,960 --> 00:00:39,400 Speaker 1: for your Celtics last night. Let's talk about the markets. 12 00:00:39,560 --> 00:00:41,440 Speaker 1: We got red and green on the tape here on 13 00:00:41,520 --> 00:00:45,320 Speaker 1: the screen. Last two days have seen some serious selling, 14 00:00:45,800 --> 00:00:48,159 Speaker 1: some serious moves in this market. You know, just kind 15 00:00:48,200 --> 00:00:50,920 Speaker 1: of putting a you know, underline under what's been a 16 00:00:50,960 --> 00:00:55,160 Speaker 1: tremendous underperformance this year in bonds and inequities. What are 17 00:00:55,160 --> 00:00:58,920 Speaker 1: you guys doing, a Cap Trust? Yeah, like everyone, we're 18 00:00:58,960 --> 00:01:01,520 Speaker 1: surprised by the sort of negativity in the in the 19 00:01:01,560 --> 00:01:04,200 Speaker 1: inflation print last week. And uh, I think the markets 20 00:01:04,280 --> 00:01:06,160 Speaker 1: just coming to terms with the reality that no, we're 21 00:01:06,200 --> 00:01:09,240 Speaker 1: not at peak inflation. Uh and uh, you know, the 22 00:01:09,360 --> 00:01:12,080 Speaker 1: terminal rate on interest rates could be much higher than 23 00:01:12,120 --> 00:01:15,039 Speaker 1: expectations a week ago. And so you know we're where 24 00:01:15,040 --> 00:01:18,959 Speaker 1: are we three three on the tenure today? That the 25 00:01:19,000 --> 00:01:22,560 Speaker 1: two year has just gone through the roof? Um? And 26 00:01:22,560 --> 00:01:24,360 Speaker 1: I think the equity markets just trying to figure out 27 00:01:24,400 --> 00:01:25,920 Speaker 1: what the new discount rate is going to be. And 28 00:01:25,920 --> 00:01:29,000 Speaker 1: and so you know, we're down what for the last 29 00:01:29,000 --> 00:01:31,880 Speaker 1: few days? Um. You know, by the way swings like 30 00:01:31,959 --> 00:01:35,560 Speaker 1: that in treasuries, somebody on a bond desk was like, 31 00:01:35,640 --> 00:01:39,160 Speaker 1: I wish I was trading cryptos, you know, because when 32 00:01:39,200 --> 00:01:43,840 Speaker 1: is the last time you saw moves like that in yields? Well, 33 00:01:43,920 --> 00:01:45,600 Speaker 1: let's just tells you how far the market was off 34 00:01:45,600 --> 00:01:48,920 Speaker 1: from reality. And and you know, don't forget, guys, we 35 00:01:48,960 --> 00:01:51,600 Speaker 1: haven't seen I mean I joined I joined the business 36 00:01:51,640 --> 00:01:55,240 Speaker 1: in eighty three, eight four, and no one has seen 37 00:01:55,480 --> 00:01:59,160 Speaker 1: rising inflation right effectively, I meant that sort of reasonably 38 00:01:59,200 --> 00:02:01,480 Speaker 1: close to the talent of my career. And so no 39 00:02:01,560 --> 00:02:05,600 Speaker 1: one in this business has lived through a rising inflationary environment. 40 00:02:05,840 --> 00:02:08,640 Speaker 1: And so I think that's playing into some of the surprise. Wait, 41 00:02:08,880 --> 00:02:12,680 Speaker 1: this was supposed to peak last fall or maybe this spring, 42 00:02:12,800 --> 00:02:15,240 Speaker 1: or maybe this summer, and it just keeps on coming. 43 00:02:15,280 --> 00:02:17,120 Speaker 1: It's the gift that keeps giving. Yeah, I mean, I look, 44 00:02:17,200 --> 00:02:18,280 Speaker 1: I don't know what to make of this. I'm an 45 00:02:18,280 --> 00:02:21,000 Speaker 1: equity guy, but I look at the two year, the tenure, 46 00:02:21,560 --> 00:02:24,679 Speaker 1: and the thirty year all yielding about three point three 47 00:02:24,680 --> 00:02:28,000 Speaker 1: five three, So I'm not sure that's what I call again, 48 00:02:28,080 --> 00:02:30,560 Speaker 1: not being a fixed income geek. That's a flat yield curve. 49 00:02:30,680 --> 00:02:36,080 Speaker 1: That's very good. You got some insight there. It's the 50 00:02:36,200 --> 00:02:39,120 Speaker 1: it's the the two year. Of course, it's trying to 51 00:02:39,120 --> 00:02:42,400 Speaker 1: anticipate where the next peak in the FED cycle will be, Right, 52 00:02:42,440 --> 00:02:44,720 Speaker 1: That's what the two years telling you. Um, the ten 53 00:02:44,800 --> 00:02:46,400 Speaker 1: year is just trying to figure out what the right 54 00:02:46,440 --> 00:02:49,160 Speaker 1: discount rate should be. And I just don't think the 55 00:02:49,200 --> 00:02:52,240 Speaker 1: market knows. Um, by the way, does it? I mean, 56 00:02:52,919 --> 00:02:56,240 Speaker 1: are you disappointed in the Federal Reserve? Does it hurt 57 00:02:56,280 --> 00:03:00,120 Speaker 1: you to the core? I mean, they really drop to 58 00:03:00,160 --> 00:03:03,280 Speaker 1: the ball on this, right. It's really it's really hard 59 00:03:03,320 --> 00:03:05,560 Speaker 1: to blame him, you know. Um, I think it was. 60 00:03:05,560 --> 00:03:07,799 Speaker 1: The Wall Street Journal had a really good article on 61 00:03:07,800 --> 00:03:09,720 Speaker 1: on sort of the mistake they made right, and and 62 00:03:09,760 --> 00:03:12,480 Speaker 1: why and how and what led to it? I think 63 00:03:12,480 --> 00:03:17,120 Speaker 1: the fact is that, Um, the the the game plan. 64 00:03:17,600 --> 00:03:20,600 Speaker 1: The last wars we had were the global financial crisis 65 00:03:20,680 --> 00:03:24,000 Speaker 1: and COVID, And the challenge we had there is we 66 00:03:24,080 --> 00:03:26,120 Speaker 1: had we had the federal reserve, we had to put 67 00:03:26,680 --> 00:03:28,919 Speaker 1: right on the equity market, so we had low interest rates, 68 00:03:28,960 --> 00:03:31,480 Speaker 1: we had dropping inflation. We were in a deflationary environment, 69 00:03:31,480 --> 00:03:34,639 Speaker 1: not inflationary. And as a result, the game plan is 70 00:03:34,680 --> 00:03:37,480 Speaker 1: different this time. We've never had had COVID, we've never 71 00:03:37,520 --> 00:03:41,560 Speaker 1: had a pandemic, we've never had Obviously, an incredible was 72 00:03:42,280 --> 00:03:46,200 Speaker 1: of economic activity was given away in in in fiscal stimulus. 73 00:03:46,440 --> 00:03:50,480 Speaker 1: You know, the FED dropped an equivalent nuclear bomb in 74 00:03:50,800 --> 00:03:53,880 Speaker 1: monetary policy. UM. I just don't think we have people 75 00:03:53,880 --> 00:03:57,840 Speaker 1: who've been through an inflationary cycle before. I know I haven't. Alright, 76 00:03:57,920 --> 00:04:01,320 Speaker 1: So Tom Keane, Tom, he was there, He was in 77 00:04:01,360 --> 00:04:07,160 Speaker 1: the Republic, he was in the Civil War. So I'll 78 00:04:07,160 --> 00:04:11,320 Speaker 1: ask Matt's question, Um, capitulation. Should we even waste our 79 00:04:11,360 --> 00:04:15,760 Speaker 1: time looking trying to identify capitulation or not? I don't. 80 00:04:15,800 --> 00:04:18,680 Speaker 1: I don't think so. I think, Um, what what's really 81 00:04:18,680 --> 00:04:20,800 Speaker 1: different about this? I think this time around, and the 82 00:04:20,920 --> 00:04:24,799 Speaker 1: last handful of them is uh that everyone is looking 83 00:04:24,839 --> 00:04:27,320 Speaker 1: for capitulation. Everyone started to find the right sign. Everyone 84 00:04:27,400 --> 00:04:28,920 Speaker 1: is looking for the one data point that's going to 85 00:04:28,960 --> 00:04:30,680 Speaker 1: tell them when the market's going to bottom and whether 86 00:04:30,680 --> 00:04:33,520 Speaker 1: it's fixed, or whether it's breaking through certain particular moving 87 00:04:33,520 --> 00:04:36,880 Speaker 1: averages or or you know, fear or consumer I think 88 00:04:36,920 --> 00:04:40,320 Speaker 1: what's odd here is you see investor sentiment plumbing lows 89 00:04:40,480 --> 00:04:42,839 Speaker 1: we've never seen before, and yet the market is just 90 00:04:42,880 --> 00:04:46,440 Speaker 1: sort of very carefully and I think methodically going down. 91 00:04:46,520 --> 00:04:48,840 Speaker 1: We've had a couple of active days the last last 92 00:04:48,880 --> 00:04:53,960 Speaker 1: few but this has not been panic um and so 93 00:04:53,960 --> 00:04:55,960 Speaker 1: so I just think when everybody's waiting for it, you're 94 00:04:55,960 --> 00:04:58,280 Speaker 1: not gonna see it. So what that means maybe we'll 95 00:04:58,320 --> 00:05:01,200 Speaker 1: get a panic day the COVID was, but that wasn't 96 00:05:01,240 --> 00:05:03,160 Speaker 1: a financial panic. That was a health panic. Am I 97 00:05:03,200 --> 00:05:05,000 Speaker 1: gonna get sick and I'm gonna die? Right? Is my 98 00:05:05,080 --> 00:05:08,240 Speaker 1: family going to be open? Is that why? Um? Okay, 99 00:05:08,560 --> 00:05:10,720 Speaker 1: that aspect of COVID is different than I thought. You're 100 00:05:10,720 --> 00:05:12,520 Speaker 1: talking to the market. The thing is, we had this 101 00:05:12,680 --> 00:05:15,479 Speaker 1: huge drop in the market, and the weirdest thing of 102 00:05:15,680 --> 00:05:20,040 Speaker 1: all economic times happen where every country around the globe 103 00:05:20,040 --> 00:05:24,320 Speaker 1: shut down and then restarted, and we dropped and bounced, 104 00:05:24,360 --> 00:05:26,200 Speaker 1: and then by the dip has been the mantra even 105 00:05:26,200 --> 00:05:29,560 Speaker 1: before that and after by the dip, everyone seems to 106 00:05:30,040 --> 00:05:33,240 Speaker 1: expect something to come come along and save us, right, 107 00:05:33,279 --> 00:05:36,920 Speaker 1: But in real bear markets, they don't stop at they 108 00:05:36,960 --> 00:05:40,520 Speaker 1: go even further and it hurts. So why aren't people panicking? 109 00:05:40,640 --> 00:05:43,440 Speaker 1: This is the first time we've not had the FED 110 00:05:43,640 --> 00:05:46,200 Speaker 1: put active. It's right, the Fed. The FED is in 111 00:05:46,200 --> 00:05:48,240 Speaker 1: a box. The FED got behind the curve. Now they 112 00:05:48,279 --> 00:05:51,039 Speaker 1: have to fight. Inflation has become a political issue. There's 113 00:05:51,120 --> 00:05:54,560 Speaker 1: pressure from from from the politicians. Of course, there's no 114 00:05:54,680 --> 00:05:56,640 Speaker 1: chance that the FED is going to bail out the 115 00:05:56,720 --> 00:05:59,480 Speaker 1: equity markets with lower interest rates. That's the first time 116 00:05:59,480 --> 00:06:01,440 Speaker 1: we've had that in a long time. So, hey, when 117 00:06:01,440 --> 00:06:03,479 Speaker 1: when the feed is, when the feed is got your back, 118 00:06:03,560 --> 00:06:06,320 Speaker 1: you're gonna buy the dips because it works. Today we don't, 119 00:06:06,640 --> 00:06:08,960 Speaker 1: so the FED is not not going to help, and 120 00:06:09,040 --> 00:06:11,560 Speaker 1: buying the dips hasn't worked, and people are getting blown up. 121 00:06:11,760 --> 00:06:14,960 Speaker 1: The world changed back, you know, And whenever it was 122 00:06:15,000 --> 00:06:18,520 Speaker 1: February when they basically when when when j Pow came 123 00:06:18,520 --> 00:06:22,440 Speaker 1: out and said we're targeting inflation. We're gonna be after it. 124 00:06:23,000 --> 00:06:25,039 Speaker 1: I thought the most important thing there was that he 125 00:06:25,120 --> 00:06:28,560 Speaker 1: talked about his great and deep respect for Paul Vulgar, 126 00:06:29,400 --> 00:06:32,279 Speaker 1: and we all know what Vulker did, so not what 127 00:06:32,600 --> 00:06:34,960 Speaker 1: not what we've had from pal though so far. Right, 128 00:06:34,960 --> 00:06:37,920 Speaker 1: he seems very much Arthur Burns right now because he's 129 00:06:37,920 --> 00:06:40,080 Speaker 1: not gonna do anything that doesn't surprise the markets. He's 130 00:06:40,080 --> 00:06:42,080 Speaker 1: always going to tell them ahead of time, whether it's 131 00:06:42,080 --> 00:06:44,960 Speaker 1: through a Wall Street Journal article or guidance, what's coming. 132 00:06:45,360 --> 00:06:48,440 Speaker 1: I agree. Look, we're never going to get the transparency 133 00:06:48,480 --> 00:06:50,560 Speaker 1: back in the box, right, We're never going to have 134 00:06:50,960 --> 00:06:53,480 Speaker 1: a federal Reserve. They can't be transparent. But what we 135 00:06:53,560 --> 00:06:56,279 Speaker 1: what we can have is a resolute Fed Reserve chairman 136 00:06:56,320 --> 00:06:59,960 Speaker 1: who says we're going after inflation and we've got us 137 00:07:00,040 --> 00:07:02,120 Speaker 1: stop it. And by the way, the guy who last 138 00:07:02,160 --> 00:07:04,680 Speaker 1: did this I respect greatly and I kind of want 139 00:07:04,680 --> 00:07:06,359 Speaker 1: to be like him, right, I mean, that's sort of 140 00:07:06,360 --> 00:07:08,400 Speaker 1: what he was saying in his in his remarks. All right, 141 00:07:08,480 --> 00:07:10,600 Speaker 1: so what are you looking for tomorrow when we hear 142 00:07:10,640 --> 00:07:15,000 Speaker 1: from this Fed chairman? Yeah? Um, um, you know, I 143 00:07:15,280 --> 00:07:17,880 Speaker 1: think the script is set. I think we're gonna hear 144 00:07:18,440 --> 00:07:21,520 Speaker 1: uh that inflation print this past week was too high. 145 00:07:21,520 --> 00:07:23,920 Speaker 1: I think that we we we have to get our 146 00:07:24,000 --> 00:07:27,600 Speaker 1: arms around it. My my concern is that, um, they 147 00:07:27,600 --> 00:07:30,280 Speaker 1: can control the parts of inflation that they can control, 148 00:07:30,320 --> 00:07:32,760 Speaker 1: which is which is end demand here in the States. 149 00:07:32,800 --> 00:07:35,080 Speaker 1: But this is this is a this is supply lead 150 00:07:35,120 --> 00:07:37,200 Speaker 1: in a lot of ways. They can't control COVID in China, 151 00:07:37,560 --> 00:07:40,400 Speaker 1: they can't control what putin does in Ukraine, and and 152 00:07:40,560 --> 00:07:43,280 Speaker 1: as a result oil prices. So there's a whole big 153 00:07:43,400 --> 00:07:46,320 Speaker 1: chunk of of inflation that is going to effectively be 154 00:07:46,360 --> 00:07:49,040 Speaker 1: irrelevant at what the Fed does. So the risk is 155 00:07:49,080 --> 00:07:52,080 Speaker 1: that the Fed over tightens, we get runaway inflation or 156 00:07:52,120 --> 00:07:55,720 Speaker 1: seven where stays where it is, and you kill the economy. 157 00:07:55,800 --> 00:07:57,960 Speaker 1: Right's the old Vietnam war, right, deal you we had 158 00:07:58,000 --> 00:08:00,200 Speaker 1: to destroy the village to save it, and so that 159 00:08:00,480 --> 00:08:02,920 Speaker 1: and and yet nothing gets accomplished because the thing that's 160 00:08:03,000 --> 00:08:06,360 Speaker 1: driving inflation is is other stuff. So that's that's our worry. 161 00:08:06,640 --> 00:08:08,680 Speaker 1: I'm That's what I'll be watching for to see what 162 00:08:08,800 --> 00:08:11,960 Speaker 1: how he plays that particular dynamic. Alright, my good stuff, 163 00:08:12,000 --> 00:08:15,680 Speaker 1: Thanks for easy. Nothing easy. It was easy since the 164 00:08:15,760 --> 00:08:17,520 Speaker 1: mid eighties and then it got a little bit tough here, 165 00:08:17,600 --> 00:08:20,600 Speaker 1: all right. Mikeae Vocason, chief investment Officer Managing director at 166 00:08:20,600 --> 00:08:22,880 Speaker 1: Cap Trust, joining us live here in on our Bloomberg 167 00:08:22,920 --> 00:08:26,840 Speaker 1: Interactive Broker studio as we prepare for a important meeting, 168 00:08:26,880 --> 00:08:29,360 Speaker 1: as they tend to be most times, from our foot 169 00:08:29,400 --> 00:08:33,080 Speaker 1: to reserve tomorrow afternoon. Bloomberg Radio and Television will bring 170 00:08:33,120 --> 00:08:39,280 Speaker 1: you full coverage as we tend to do. All right, 171 00:08:39,320 --> 00:08:41,080 Speaker 1: we got interest rates on the rise. We're gonna hear 172 00:08:41,080 --> 00:08:43,360 Speaker 1: from the Fed tomorrow. One of the concerns, obviously, is 173 00:08:43,400 --> 00:08:46,600 Speaker 1: what does that mean for the economy? Um Our next 174 00:08:46,640 --> 00:08:48,760 Speaker 1: guest gives us a really good look at what small 175 00:08:48,760 --> 00:08:52,040 Speaker 1: and midsized businesses are doing. Frank Sorrentino, chairman and CEO 176 00:08:52,040 --> 00:08:55,280 Speaker 1: of connect One Bank that has a publicly traded UH 177 00:08:55,440 --> 00:08:58,640 Speaker 1: stock on the nastack C n o B is articular 178 00:08:58,640 --> 00:09:01,120 Speaker 1: you can put into your Bloomberg terminal. Frank, thanks so 179 00:09:01,160 --> 00:09:03,120 Speaker 1: much for joining us here. You know, I know you 180 00:09:03,160 --> 00:09:09,000 Speaker 1: guys have a big construction portfolio. As interest rates have 181 00:09:09,120 --> 00:09:12,360 Speaker 1: been rising here, what are you hearing, uh from your 182 00:09:12,400 --> 00:09:14,960 Speaker 1: clients who have been pretty busy over the last several years. 183 00:09:16,440 --> 00:09:19,600 Speaker 1: Good to be back all in that great too, great 184 00:09:19,640 --> 00:09:22,000 Speaker 1: to be here. Uh. You know, our construction clients that 185 00:09:22,360 --> 00:09:26,800 Speaker 1: connect one bank are seeing a pretty strong economy going forward. 186 00:09:27,200 --> 00:09:32,000 Speaker 1: As you can well imagine, house pricing has been moving up, uh. 187 00:09:32,040 --> 00:09:36,280 Speaker 1: You know recently rents are have been moving up over 188 00:09:36,320 --> 00:09:39,360 Speaker 1: the last year or two. The you know, some of 189 00:09:39,360 --> 00:09:43,400 Speaker 1: the challenges there have been some of the inflation related issues. Um. 190 00:09:43,920 --> 00:09:47,640 Speaker 1: First off, getting product marketplace and the cost of that product. 191 00:09:48,360 --> 00:09:53,200 Speaker 1: A lot of UM energy inflation that creeps into the 192 00:09:53,240 --> 00:09:58,040 Speaker 1: construction industry, so is driving up costs. But overall, you know, 193 00:09:58,320 --> 00:10:01,680 Speaker 1: as a as a country, we are underdeveloped relative to 194 00:10:01,679 --> 00:10:03,959 Speaker 1: our housing. We're probably somewhere in the two to three 195 00:10:04,000 --> 00:10:09,320 Speaker 1: million houses short of what's needed for replacement. And so 196 00:10:09,480 --> 00:10:13,800 Speaker 1: it's a pretty good environment for construction in general. Um, 197 00:10:13,840 --> 00:10:16,560 Speaker 1: But there are definitely some storm clouds out there relative 198 00:10:16,600 --> 00:10:19,560 Speaker 1: to the rising interest rates, the lack of liquidity, and 199 00:10:19,640 --> 00:10:21,880 Speaker 1: some of the trends that are happening. Is it still 200 00:10:21,880 --> 00:10:24,439 Speaker 1: a good environment, Frank if mortgage rates go up from here. 201 00:10:24,440 --> 00:10:26,600 Speaker 1: I mean, I'm looking right now at the bank rate 202 00:10:26,760 --> 00:10:30,280 Speaker 1: thirty year average at five point eight seven percent. And 203 00:10:30,320 --> 00:10:34,080 Speaker 1: while I recognize that mortgage rates were much higher when 204 00:10:34,120 --> 00:10:39,320 Speaker 1: my parents bought a house in the late seventies, early eighties. Um, 205 00:10:39,360 --> 00:10:44,319 Speaker 1: this is increasing costs, It's hurting affordability. It's going to 206 00:10:44,400 --> 00:10:47,000 Speaker 1: be problematic for people that need to buy this year 207 00:10:47,080 --> 00:10:51,240 Speaker 1: and next. Right, Yes, so I do think that the 208 00:10:51,440 --> 00:10:54,560 Speaker 1: rise in interest rates will definitely slow things down. But 209 00:10:54,679 --> 00:10:56,720 Speaker 1: you do make a good point. I mean, my first 210 00:10:56,760 --> 00:11:01,520 Speaker 1: mortgage in was at thirteen and three quarters percent, and so, um, 211 00:11:01,559 --> 00:11:04,760 Speaker 1: these rates look pretty attractive to me. Let's keep in 212 00:11:04,800 --> 00:11:08,679 Speaker 1: mind we've gone from a near zero rate environment, or 213 00:11:08,679 --> 00:11:11,800 Speaker 1: actually at a zero rate environment for a very long time. 214 00:11:12,120 --> 00:11:14,520 Speaker 1: There's almost an entire generation here that doesn't know what 215 00:11:14,640 --> 00:11:17,960 Speaker 1: high interest rates are. These are not high interest rates. 216 00:11:18,000 --> 00:11:22,119 Speaker 1: These are more normalized interest rates. So we've gone from 217 00:11:22,320 --> 00:11:25,880 Speaker 1: extremely low zero interest rates to what I would still 218 00:11:25,920 --> 00:11:30,080 Speaker 1: consider to be somewhat low interest rates. Um. Yes, there 219 00:11:30,120 --> 00:11:33,760 Speaker 1: will be a general slow down. Um, there's I think 220 00:11:33,800 --> 00:11:36,720 Speaker 1: going to be a lot less speculation in the marketplace. 221 00:11:36,800 --> 00:11:41,040 Speaker 1: They will be potentially less investing investing um in some 222 00:11:41,120 --> 00:11:46,040 Speaker 1: of these asset classes. But overall, the ability to afford 223 00:11:46,080 --> 00:11:49,280 Speaker 1: a home today is still good. Think about consumers balance sheet. 224 00:11:50,280 --> 00:11:53,760 Speaker 1: That mean, Frank, we've seen prices, prices, prices may come 225 00:11:53,760 --> 00:11:56,360 Speaker 1: down a bit, right we we we will definitely see. 226 00:11:56,760 --> 00:11:58,559 Speaker 1: And it depends on what we're talking about. If we're 227 00:11:58,559 --> 00:12:01,520 Speaker 1: talking about, you know, a builder that we have that's 228 00:12:01,559 --> 00:12:03,720 Speaker 1: got ray land and is constructing a new home and 229 00:12:03,760 --> 00:12:06,640 Speaker 1: putting it for sale. Uh, that's one thing. If we're 230 00:12:06,679 --> 00:12:10,880 Speaker 1: talking about prices in markets where houses are being flipped, 231 00:12:11,240 --> 00:12:15,080 Speaker 1: you would expect those prices to come down. So Frank, 232 00:12:15,120 --> 00:12:19,040 Speaker 1: aside from construction, what are some small and midsized businesses 233 00:12:19,120 --> 00:12:20,760 Speaker 1: clients that you have, What are they saying? I mean, 234 00:12:20,800 --> 00:12:23,160 Speaker 1: I have to admit, like where I am in some 235 00:12:23,280 --> 00:12:25,200 Speaker 1: of New Jersey and surrounding towns, there are a lot 236 00:12:25,240 --> 00:12:28,120 Speaker 1: of vacant stores. But I'm starting to see more and more, 237 00:12:28,440 --> 00:12:31,280 Speaker 1: you know, science saying coming soon a certain business. You know, 238 00:12:32,000 --> 00:12:35,080 Speaker 1: what are you hearing from your clients? Look, I think again, 239 00:12:35,120 --> 00:12:37,080 Speaker 1: you know, notwithstanding all the noise we hear in the 240 00:12:37,120 --> 00:12:40,559 Speaker 1: marketplace and the news that's out there about a potential 241 00:12:40,600 --> 00:12:43,080 Speaker 1: recession or whatever, if we look at what our clients 242 00:12:43,120 --> 00:12:45,760 Speaker 1: are telling us, and we look at the positions that 243 00:12:45,800 --> 00:12:49,120 Speaker 1: they're in. They have strong balance sheets, they have good liquidity. 244 00:12:49,320 --> 00:12:52,320 Speaker 1: Business is good. People want to go out and shop. 245 00:12:52,360 --> 00:12:53,880 Speaker 1: You know, we're coming at it. We came out of 246 00:12:53,880 --> 00:12:59,040 Speaker 1: this pandemic. Uh, people are returning to retail. Uh. Restaurants 247 00:12:59,080 --> 00:13:03,760 Speaker 1: are full. Uh. There's just a lot of positive impetus 248 00:13:03,880 --> 00:13:06,760 Speaker 1: in the marketplace today, which is part of the you know, 249 00:13:06,840 --> 00:13:08,880 Speaker 1: part of the equation as to why we have some 250 00:13:08,920 --> 00:13:12,440 Speaker 1: of the inflation we have. But overall, I think our 251 00:13:12,480 --> 00:13:15,280 Speaker 1: clients are probably in the best position they've been in 252 00:13:15,280 --> 00:13:18,200 Speaker 1: in quite a while, and certainly in the best position 253 00:13:18,679 --> 00:13:21,319 Speaker 1: in the lead up to any thought of a recession 254 00:13:22,040 --> 00:13:25,160 Speaker 1: when you think about both where our clients are, where 255 00:13:25,160 --> 00:13:30,479 Speaker 1: consumers are, where small businesses are today, um, relative to profitability, 256 00:13:30,520 --> 00:13:34,160 Speaker 1: relative to their ability to take advantage of the marketplace. Uh, 257 00:13:34,160 --> 00:13:36,760 Speaker 1: it's it's still a pretty good environment out there. Thank. 258 00:13:36,800 --> 00:13:38,520 Speaker 1: If I want to start to grow up and sell 259 00:13:38,600 --> 00:13:41,440 Speaker 1: weed in New Jersey, can I get financing at the bank? 260 00:13:43,280 --> 00:13:48,800 Speaker 1: I don't think so. Um, most banks today still are 261 00:13:49,120 --> 00:13:52,720 Speaker 1: not able to provide that financing because it's still illegal 262 00:13:52,760 --> 00:13:56,080 Speaker 1: at the federal level. So certainly not a connect One bank. 263 00:13:57,320 --> 00:13:58,800 Speaker 1: All right, Well, I have to think of a different 264 00:13:58,800 --> 00:14:03,000 Speaker 1: career path then, Yeah, are different funding sources, And in 265 00:14:03,200 --> 00:14:08,720 Speaker 1: New Jersey y relatively high interest, there are alternative funding 266 00:14:08,760 --> 00:14:11,160 Speaker 1: sources for sure. In my in my home state, all right, 267 00:14:11,160 --> 00:14:14,400 Speaker 1: Frank Sorrentino, Chairman and CEO of Connect One Bank. Again 268 00:14:14,440 --> 00:14:17,679 Speaker 1: it is a NASAC listed traded security. C n o B. 269 00:14:22,600 --> 00:14:26,520 Speaker 1: Has been a year where stocks down, corporate bonds down 270 00:14:26,560 --> 00:14:30,680 Speaker 1: twelve but one area that continues to go higher is 271 00:14:30,960 --> 00:14:33,760 Speaker 1: energy and commodities in general, but energy in particular. Just 272 00:14:33,800 --> 00:14:38,080 Speaker 1: confound bitcoin. Oh yeah, bitcoin down, Thank you for identifying percent? 273 00:14:39,440 --> 00:14:42,320 Speaker 1: Why not? It's not another four percent today? But oil 274 00:14:42,400 --> 00:14:44,080 Speaker 1: just keeps going up. And I know it's a commodity, 275 00:14:44,120 --> 00:14:46,200 Speaker 1: so it's supplying demand. So I guess there's more demand 276 00:14:46,240 --> 00:14:48,120 Speaker 1: and supply, but I need to get a little bit 277 00:14:48,160 --> 00:14:51,280 Speaker 1: more colored on that. Fortunately, Julie Fence Haras she joins 278 00:14:51,360 --> 00:14:53,880 Speaker 1: us here. She's an oils futures reporter from Bloomberg News 279 00:14:53,920 --> 00:14:56,760 Speaker 1: joining us in studio, which I always appreciate. So, Julie, 280 00:14:56,840 --> 00:15:00,120 Speaker 1: is it just simply more demanded supply? That's exactly le 281 00:15:00,200 --> 00:15:03,800 Speaker 1: at No, Yeah, that's it. Okay, we're good to wrap up. 282 00:15:03,800 --> 00:15:06,080 Speaker 1: But the problem is, even as the FED and all 283 00:15:06,120 --> 00:15:08,360 Speaker 1: markets are being dropped down by the FED, in this 284 00:15:08,520 --> 00:15:12,080 Speaker 1: possible interest rate hi, I have trader saying even seventy 285 00:15:12,160 --> 00:15:15,080 Speaker 1: five basis points is not going to harm crude. But 286 00:15:15,120 --> 00:15:18,400 Speaker 1: if you get to one percent hike and continuously seeing that, 287 00:15:18,440 --> 00:15:21,280 Speaker 1: then that could have the impact of a stronger US dollar, 288 00:15:21,560 --> 00:15:23,560 Speaker 1: and that could slow down the economy so much so 289 00:15:23,640 --> 00:15:27,560 Speaker 1: that then it could impact crude prices. But of course 290 00:15:27,600 --> 00:15:31,880 Speaker 1: we don't expect that, so um, the administration is going 291 00:15:31,960 --> 00:15:35,200 Speaker 1: to have to do a little work on its own, right. 292 00:15:35,440 --> 00:15:39,000 Speaker 1: President Biden is going to head to Saudi Arabia. We've 293 00:15:39,040 --> 00:15:44,440 Speaker 1: just heard too um attempt. I guess he's gonna attempt 294 00:15:44,440 --> 00:15:47,360 Speaker 1: to convince them to boost production, although that's not the 295 00:15:47,400 --> 00:15:50,520 Speaker 1: official reason for the visit. I think that's not the 296 00:15:50,520 --> 00:15:52,960 Speaker 1: official reason for the visit. But oil historian that was 297 00:15:53,000 --> 00:15:55,920 Speaker 1: on Bloomberg TV yesterday Dan Jr. Again he said that 298 00:15:56,160 --> 00:15:58,720 Speaker 1: it looks like Saudi Arabia was just waiting to be 299 00:15:58,840 --> 00:16:01,720 Speaker 1: acknowledged and that if Biden goes there, they will be 300 00:16:01,760 --> 00:16:04,600 Speaker 1: willing to put in more oil, but that's still not 301 00:16:04,680 --> 00:16:06,720 Speaker 1: going to be enough to make up for the supply 302 00:16:06,760 --> 00:16:10,760 Speaker 1: and demand. And the problem is supplies are so razor 303 00:16:10,840 --> 00:16:14,800 Speaker 1: thin and Saudie and you are the last security blanket 304 00:16:14,800 --> 00:16:16,640 Speaker 1: that the market has that if they tap in and 305 00:16:16,680 --> 00:16:19,600 Speaker 1: deplete their oil inventories, then that's going to be a 306 00:16:19,600 --> 00:16:21,360 Speaker 1: real problem. For the market, and the markets are going 307 00:16:21,400 --> 00:16:24,560 Speaker 1: to be even more nervous then talking about capacity, why 308 00:16:24,600 --> 00:16:27,120 Speaker 1: can't I just I'm going down at Texas today. Why 309 00:16:27,120 --> 00:16:29,240 Speaker 1: can't I just go out find some guy to sell 310 00:16:29,280 --> 00:16:31,920 Speaker 1: me a rig and just start drilling. What's a big deal? 311 00:16:32,200 --> 00:16:36,040 Speaker 1: Big deal, really expensive, super expensive well bucks of barrel. 312 00:16:36,120 --> 00:16:38,040 Speaker 1: I think my cost is only forty or fifty bucks 313 00:16:38,080 --> 00:16:41,800 Speaker 1: done in the Permian. It's crazy because keeping up these 314 00:16:41,840 --> 00:16:44,640 Speaker 1: wells has Also there are there are refiners that are 315 00:16:44,680 --> 00:16:46,640 Speaker 1: saying we might even have to shut down one of 316 00:16:46,680 --> 00:16:49,440 Speaker 1: the wells because it's too expensive to upkeep, and even 317 00:16:49,600 --> 00:16:51,720 Speaker 1: refining it is not going to make up for it. 318 00:16:51,840 --> 00:16:54,480 Speaker 1: And so that's the issue there for refining capacities down 319 00:16:54,520 --> 00:16:56,400 Speaker 1: and it's too expensive to even start. Also, it's going 320 00:16:56,400 --> 00:16:58,000 Speaker 1: to take weeks for you to create a well to 321 00:16:58,120 --> 00:17:00,200 Speaker 1: restart a well, so it's going to take time. And 322 00:17:00,280 --> 00:17:02,400 Speaker 1: even though you can bet on oil prices staying up, 323 00:17:02,440 --> 00:17:04,080 Speaker 1: which a lot of traders are doing in the next 324 00:17:04,119 --> 00:17:07,080 Speaker 1: six months, it's not something that producers necessarily want to do. 325 00:17:08,000 --> 00:17:11,240 Speaker 1: Um what about the capacity that the Saudis have? Do 326 00:17:11,280 --> 00:17:13,680 Speaker 1: they have more spare capacity and anybody else? No? Peck 327 00:17:14,960 --> 00:17:18,560 Speaker 1: yes in the sense that they do have the most 328 00:17:18,560 --> 00:17:21,840 Speaker 1: spare capacity, but the problem is, well, the A also 329 00:17:21,880 --> 00:17:24,600 Speaker 1: has a lot of sporic pathy and run and Iran. 330 00:17:24,720 --> 00:17:28,119 Speaker 1: But Iran has some issues right now, and obviously right now, 331 00:17:27,760 --> 00:17:31,560 Speaker 1: right now I was born. Technically the U A has 332 00:17:31,600 --> 00:17:33,640 Speaker 1: as much spirit pacity, but Saddy probably is the one. 333 00:17:33,840 --> 00:17:35,639 Speaker 1: They are the ones that are most likely to tap 334 00:17:35,720 --> 00:17:38,520 Speaker 1: into that. But that's still not going to solve the 335 00:17:38,520 --> 00:17:40,560 Speaker 1: issues that we don't have these Russian barrels that we 336 00:17:40,640 --> 00:17:42,400 Speaker 1: once had in the market, and that demand is so 337 00:17:42,560 --> 00:17:44,040 Speaker 1: high right now. Why does the U A E have 338 00:17:44,119 --> 00:17:46,080 Speaker 1: so much spirit capacity? Why don't we go over to 339 00:17:46,119 --> 00:17:48,760 Speaker 1: the Emirates? I guess I'm guessing that the President Biden 340 00:17:48,840 --> 00:17:50,520 Speaker 1: is going to go there too. But I mean, you 341 00:17:50,560 --> 00:17:53,560 Speaker 1: have to remember that OPEC was trying not to put 342 00:17:53,600 --> 00:17:55,320 Speaker 1: as much a supply in the market because they were afraid, 343 00:17:55,440 --> 00:17:57,960 Speaker 1: as they were in fourteen, that prices were going to drop. 344 00:17:58,080 --> 00:18:01,160 Speaker 1: So they've been really slow and purposeful putting more output 345 00:18:01,280 --> 00:18:03,919 Speaker 1: on the market. That was OPEC plus, right, That was 346 00:18:04,000 --> 00:18:08,280 Speaker 1: OPEC and friends. Now the President is going to try 347 00:18:08,320 --> 00:18:11,200 Speaker 1: and convince them there is no plus so they don't 348 00:18:11,240 --> 00:18:13,840 Speaker 1: have to worry as much about prices falling right, especially 349 00:18:14,080 --> 00:18:17,200 Speaker 1: if China opens up again. Well, what they actually said 350 00:18:17,240 --> 00:18:19,639 Speaker 1: recently is they put out an output and they revised it, 351 00:18:19,680 --> 00:18:22,600 Speaker 1: and they said that it is possible that the demand 352 00:18:22,600 --> 00:18:24,760 Speaker 1: growth is actually going to slow in the second half 353 00:18:24,760 --> 00:18:27,199 Speaker 1: of this year. Why because China has not emergent. That 354 00:18:27,240 --> 00:18:29,040 Speaker 1: just came out today, and so even though it's not 355 00:18:29,080 --> 00:18:33,159 Speaker 1: necessarily a very barish report, it is revising that demand 356 00:18:33,200 --> 00:18:35,840 Speaker 1: growth down and it's saying that if we continue to 357 00:18:35,840 --> 00:18:38,399 Speaker 1: see these lockdowns in China, we may not see the 358 00:18:38,520 --> 00:18:41,680 Speaker 1: huge demand BUDE and continued demand for crew that we've 359 00:18:41,720 --> 00:18:44,040 Speaker 1: been seeing. It just feels like the next demand data 360 00:18:44,080 --> 00:18:46,760 Speaker 1: point is stronger to me because I kind of feel 361 00:18:46,760 --> 00:18:48,879 Speaker 1: like it's kind of going to be the next data point. 362 00:18:49,240 --> 00:18:52,640 Speaker 1: Material movement out of China I would think would be 363 00:18:52,760 --> 00:18:55,480 Speaker 1: a net opening versus kind of where we are now. 364 00:18:55,520 --> 00:18:57,800 Speaker 1: So I can see. If I'm a trader, I think 365 00:18:57,800 --> 00:19:00,840 Speaker 1: the demand story is pretty good. What I don't get 366 00:19:01,080 --> 00:19:03,919 Speaker 1: is this lack of supply. I was unaware that there 367 00:19:03,960 --> 00:19:06,720 Speaker 1: wasn't more spare capacity out there. I was unaware that, 368 00:19:07,520 --> 00:19:10,639 Speaker 1: and I didn't think the US men drillers would be 369 00:19:10,680 --> 00:19:14,080 Speaker 1: so disciplined and not just rushed you know, like they 370 00:19:14,080 --> 00:19:15,919 Speaker 1: have in the past, but they're disciplined in terms of 371 00:19:16,320 --> 00:19:17,720 Speaker 1: doing what they said they were going to do, which 372 00:19:17,720 --> 00:19:19,640 Speaker 1: is return cash. And I mean, think about it. There 373 00:19:19,640 --> 00:19:22,120 Speaker 1: has not been investment in this industry. That's what everyone's 374 00:19:22,160 --> 00:19:24,360 Speaker 1: been saying. And that's why we don't have this capacity 375 00:19:24,560 --> 00:19:26,160 Speaker 1: to ramp up when we need to, because if there 376 00:19:26,200 --> 00:19:28,000 Speaker 1: wasn't any investment, we can't just do it in a 377 00:19:28,200 --> 00:19:30,400 Speaker 1: drop of a hat when prices come. Why hasn't there 378 00:19:30,440 --> 00:19:32,720 Speaker 1: I mean, I know I recently saw a clip where 379 00:19:32,720 --> 00:19:38,920 Speaker 1: President Biden, as candidate Biden said oil executive should be jailed. Yeah, 380 00:19:38,960 --> 00:19:41,520 Speaker 1: that's not Is that attitude part of the reason that 381 00:19:41,600 --> 00:19:44,520 Speaker 1: there hasn't been so much investment in this industry? Absolutely, 382 00:19:44,520 --> 00:19:47,560 Speaker 1: and think about that. I mean the Green Transition, these 383 00:19:47,680 --> 00:19:50,080 Speaker 1: oil executives and the oil industry was very scared that 384 00:19:50,080 --> 00:19:52,080 Speaker 1: they were going to be out of jobs. And so this, 385 00:19:52,200 --> 00:19:53,879 Speaker 1: I mean now the old industry is very excited with 386 00:19:53,920 --> 00:19:56,359 Speaker 1: these high prices. But of course, the way that the 387 00:19:56,400 --> 00:20:01,159 Speaker 1: administration has talked about the oil industry, it has not 388 00:20:01,320 --> 00:20:05,080 Speaker 1: helped producers want to help Biden with rising oil costs 389 00:20:05,240 --> 00:20:07,200 Speaker 1: and energy costs in general. All Right, I'm gonna see 390 00:20:07,200 --> 00:20:08,520 Speaker 1: what I can do down there, Matt, So you know, 391 00:20:08,560 --> 00:20:10,160 Speaker 1: just give me a couple of days down there in Dallas. 392 00:20:10,200 --> 00:20:12,360 Speaker 1: I'm sure I could do. I know exactly what you're 393 00:20:12,359 --> 00:20:16,360 Speaker 1: gonna do down there. You're gonna jack up the air conditioning. Right. 394 00:20:16,480 --> 00:20:19,280 Speaker 1: It is hot in Texas. You're gonna need to use 395 00:20:19,320 --> 00:20:22,320 Speaker 1: electricity to cool yourself down. And you're probably not going 396 00:20:22,359 --> 00:20:24,600 Speaker 1: to go outside wildcatting. And I think they have a 397 00:20:24,720 --> 00:20:27,199 Speaker 1: big pool there, all right. Julia Fanzaris, thanks so much 398 00:20:27,200 --> 00:20:33,720 Speaker 1: for joining us oil futures reporter for Bloomberg News. But 399 00:20:33,840 --> 00:20:36,520 Speaker 1: June it is Pride month and a month when we're 400 00:20:36,600 --> 00:20:39,480 Speaker 1: focusing on equality issues here at Bloomberg. Today, we like 401 00:20:39,560 --> 00:20:43,399 Speaker 1: to welcome back Laura Mody, CEO and founder of Bobby, 402 00:20:43,600 --> 00:20:46,480 Speaker 1: the female founded in formula company. Today she's gonna talk 403 00:20:46,480 --> 00:20:49,760 Speaker 1: about the shortage of baby formula in the US, and 404 00:20:49,880 --> 00:20:53,480 Speaker 1: she's the only female CEO in the baby formula space. 405 00:20:53,520 --> 00:20:56,480 Speaker 1: That's an interesting there, Laura, thanks so much for joining 406 00:20:56,560 --> 00:20:59,240 Speaker 1: us here. I'm not really sure how we got to 407 00:20:59,280 --> 00:21:02,240 Speaker 1: this portage thing. I know there's a recall on all that. 408 00:21:02,440 --> 00:21:04,720 Speaker 1: Can you give us an update of kind of where 409 00:21:04,760 --> 00:21:06,960 Speaker 1: we are today? It's kind of faded a little bit 410 00:21:07,000 --> 00:21:10,560 Speaker 1: from the news flow. Love to get an update. Yeah, 411 00:21:10,720 --> 00:21:14,000 Speaker 1: lovely to be back chatting with you guys. You know, look, 412 00:21:14,040 --> 00:21:16,280 Speaker 1: we're not out of the woods. Yes, Look then, and 413 00:21:16,359 --> 00:21:19,520 Speaker 1: to be blownt there's probably too much speculation and still 414 00:21:19,560 --> 00:21:22,080 Speaker 1: a lot of uncertainty to know when this is really 415 00:21:22,080 --> 00:21:24,439 Speaker 1: going to be over. And you're right, I think the 416 00:21:24,760 --> 00:21:26,639 Speaker 1: error has been taken out of the room from a 417 00:21:26,720 --> 00:21:29,840 Speaker 1: news cycle. But when you look at the numbers, I 418 00:21:29,840 --> 00:21:34,560 Speaker 1: mean early June data assembly reportion reported that five states 419 00:21:34,560 --> 00:21:38,440 Speaker 1: were still out of stock. So we're definitely not out 420 00:21:38,440 --> 00:21:40,280 Speaker 1: of this and we're going to see continue for a while. 421 00:21:41,200 --> 00:21:45,040 Speaker 1: So what about you and Bobby, I know you had 422 00:21:45,920 --> 00:21:48,840 Speaker 1: um I guess has the right way to put it, 423 00:21:48,880 --> 00:21:51,640 Speaker 1: scaled back on new orders, just to focus on existing 424 00:21:51,680 --> 00:21:54,840 Speaker 1: clients so that you could serve your customer base best. 425 00:21:55,640 --> 00:21:58,560 Speaker 1: What does it look like for you? So we're still 426 00:21:58,640 --> 00:22:02,920 Speaker 1: in that situation on it. And you probably remember when 427 00:22:02,960 --> 00:22:07,200 Speaker 1: we made the decision, our customer count doubled the same 428 00:22:07,280 --> 00:22:09,560 Speaker 1: week that there was a recall. Our customer count double, 429 00:22:09,640 --> 00:22:12,080 Speaker 1: so we have more mouths defeat. So while we've been 430 00:22:12,119 --> 00:22:14,960 Speaker 1: producing more, we're still in a position where we're serving 431 00:22:15,200 --> 00:22:18,520 Speaker 1: seventies thou babies all across the country. We expect the 432 00:22:18,600 --> 00:22:20,359 Speaker 1: next few weeks we'll be able to start rolling people 433 00:22:20,359 --> 00:22:24,000 Speaker 1: off the waitlist, but still prioritizing customers. Overgrown the business 434 00:22:24,080 --> 00:22:26,960 Speaker 1: right now, By the way, Laura, how sticky is that business? 435 00:22:27,080 --> 00:22:31,040 Speaker 1: I mean, after this shortage is dealt with and people 436 00:22:31,080 --> 00:22:33,720 Speaker 1: can go back to whatever, I don't want to say 437 00:22:33,800 --> 00:22:37,760 Speaker 1: cheap store brand, but whatever kind of mainstream producer they've 438 00:22:38,280 --> 00:22:40,280 Speaker 1: previously shot with, are they going to stay with Bobby 439 00:22:40,320 --> 00:22:44,320 Speaker 1: you think? I mean, I do certainly hopeful for that. 440 00:22:45,560 --> 00:22:48,439 Speaker 1: There's something else that this recall has done. What it 441 00:22:48,520 --> 00:22:52,200 Speaker 1: has done is kind of raised more awareness for quality, 442 00:22:52,440 --> 00:22:56,080 Speaker 1: for safety, and honestly even convenience. What parents have been 443 00:22:56,119 --> 00:22:58,879 Speaker 1: going through over the last few months is getting in 444 00:22:58,920 --> 00:23:02,439 Speaker 1: their car. They've been drive hours to find formula. What 445 00:23:02,640 --> 00:23:06,800 Speaker 1: convenience does, especially for a director, consumer brand means you 446 00:23:06,840 --> 00:23:09,720 Speaker 1: get your product whenever you need it, wherever you need it. 447 00:23:10,440 --> 00:23:14,480 Speaker 1: Um So, I do think that there is stickyness associated 448 00:23:14,560 --> 00:23:18,760 Speaker 1: with this, and honestly, there's nothing more predictable and repeatable 449 00:23:18,800 --> 00:23:23,200 Speaker 1: than infant formula. Laura. Probably the economic slash financial topic 450 00:23:23,240 --> 00:23:24,879 Speaker 1: that's at the forefront of every of his mind over 451 00:23:24,880 --> 00:23:27,919 Speaker 1: the last several months has been inflation. Talk to us 452 00:23:27,920 --> 00:23:31,480 Speaker 1: about how you're feeling inflation in your business and your 453 00:23:31,520 --> 00:23:33,840 Speaker 1: cost structure, and to what extent you're able to pass 454 00:23:33,880 --> 00:23:38,359 Speaker 1: that along to your customers. You know, I think because 455 00:23:38,400 --> 00:23:40,600 Speaker 1: we're in the middle of the crisis right now, the 456 00:23:40,680 --> 00:23:44,240 Speaker 1: priorities just get as much formula on shelves as possible. 457 00:23:44,600 --> 00:23:47,680 Speaker 1: I don't think any industry is immune to inflation. I mean, 458 00:23:47,680 --> 00:23:50,520 Speaker 1: we're seeing it with some of our raw ingredients. But 459 00:23:50,600 --> 00:23:55,080 Speaker 1: to watch the entire industry, from suppliers to manufacturing all 460 00:23:55,119 --> 00:23:58,720 Speaker 1: just get behind producing as much formula and getting it 461 00:23:58,760 --> 00:24:01,639 Speaker 1: into hands the parents which haven't yet felt it or 462 00:24:01,720 --> 00:24:04,679 Speaker 1: passed it over to consumers. That may change when we 463 00:24:04,680 --> 00:24:08,879 Speaker 1: started seating stabilized before the moment we're in loc spots. Well, 464 00:24:08,960 --> 00:24:12,680 Speaker 1: what are your raw ingredients? You know, I always think 465 00:24:13,359 --> 00:24:16,960 Speaker 1: of milk, but I guess it's probably not a big 466 00:24:17,000 --> 00:24:20,720 Speaker 1: part of the input into into Bobby's formula. What do 467 00:24:20,760 --> 00:24:22,119 Speaker 1: you what do you make it with and how do 468 00:24:22,160 --> 00:24:26,040 Speaker 1: you differentiate yourself from the mainstream kind of Similac and 469 00:24:26,119 --> 00:24:29,399 Speaker 1: Famille players. Yeah, I mean, you're not wrong. Milk plays 470 00:24:29,440 --> 00:24:33,080 Speaker 1: a very large role in it. So you know, the 471 00:24:33,119 --> 00:24:37,040 Speaker 1: majority of the product does come from dairy sources, and 472 00:24:37,320 --> 00:24:41,160 Speaker 1: in in most infant formulas, that dairy source comes directly 473 00:24:41,200 --> 00:24:44,000 Speaker 1: from a cow. How we differentiate is that we get 474 00:24:44,000 --> 00:24:49,000 Speaker 1: our milk from pasture raised cows from organic valley farms. 475 00:24:49,119 --> 00:24:52,760 Speaker 1: And you know, just differentiating even your milk source is 476 00:24:52,800 --> 00:24:55,560 Speaker 1: a really big deal. But on top of that, it's 477 00:24:55,720 --> 00:24:58,879 Speaker 1: vitamins and minerals and making sure that it has the 478 00:24:59,000 --> 00:25:02,520 Speaker 1: right balance of harves proteins and facts. But you got 479 00:25:02,640 --> 00:25:07,119 Speaker 1: to write it's essentially milk. Talk to us about, you know, Laura, 480 00:25:07,160 --> 00:25:08,959 Speaker 1: as the co founder and CEO of one of your 481 00:25:09,000 --> 00:25:13,119 Speaker 1: responsibilities presumably is you know, properly capitalizing your company. And 482 00:25:13,119 --> 00:25:17,600 Speaker 1: you've experienced so much growth, probably turbo charged by the pandemic. 483 00:25:18,000 --> 00:25:21,200 Speaker 1: Talk to us about access to capital for your company 484 00:25:21,760 --> 00:25:25,280 Speaker 1: kind of what it may be your future plans. So 485 00:25:25,560 --> 00:25:29,000 Speaker 1: right before the yeah, right before the crisis hit, we 486 00:25:29,080 --> 00:25:33,480 Speaker 1: actually close our Series B of fifty million, and we've 487 00:25:33,480 --> 00:25:35,760 Speaker 1: just been on the market now for about eighteen months. 488 00:25:35,840 --> 00:25:39,240 Speaker 1: And that fifty million was to put behind more R 489 00:25:39,280 --> 00:25:42,440 Speaker 1: and D and innovation. And you know, ironically, being hit 490 00:25:42,480 --> 00:25:45,000 Speaker 1: with this moment in the crisis, it's woken us up 491 00:25:45,040 --> 00:25:47,600 Speaker 1: now more than ever, it's it's critical to make sure 492 00:25:47,640 --> 00:25:51,240 Speaker 1: that we get more innovation going. So we've launched Bobby Labs, 493 00:25:51,320 --> 00:25:54,400 Speaker 1: really a center of excellence for more innovation and more 494 00:25:54,480 --> 00:25:58,120 Speaker 1: product development. And I do think that we're watching more 495 00:25:58,240 --> 00:26:02,080 Speaker 1: capital be put into the and of companies that are 496 00:26:02,160 --> 00:26:08,359 Speaker 1: having impact like Bobby changing culture and feeding babies. So 497 00:26:08,560 --> 00:26:10,600 Speaker 1: I'm I'm very hopeful that this isn't the last time 498 00:26:10,600 --> 00:26:12,800 Speaker 1: we're going to see capital come into this market. What 499 00:26:12,840 --> 00:26:16,880 Speaker 1: about labor, how are you dealing with the shortage in labor, 500 00:26:19,400 --> 00:26:23,199 Speaker 1: especially in our industry labor we want we want to 501 00:26:23,200 --> 00:26:25,000 Speaker 1: see parents who are we want to see people who 502 00:26:25,040 --> 00:26:29,280 Speaker 1: represent this industry. So we're also going after and trying 503 00:26:29,280 --> 00:26:33,560 Speaker 1: to hire parents over a five percent of our company 504 00:26:33,680 --> 00:26:37,680 Speaker 1: or parents today. So far we haven't had much issue, 505 00:26:37,720 --> 00:26:39,920 Speaker 1: but there is a strain. There is a strain, and 506 00:26:41,119 --> 00:26:44,040 Speaker 1: fortunately we are a mission driven business and it's attracted 507 00:26:44,160 --> 00:26:47,320 Speaker 1: attracted some great talent. All right, laur great stuff. Really 508 00:26:47,320 --> 00:26:51,200 Speaker 1: appreciate it. Laura Modi, CEO and co founder of the 509 00:26:51,280 --> 00:26:55,000 Speaker 1: firm Bobby Uh. It is, you know, a baby formula 510 00:26:55,320 --> 00:26:58,280 Speaker 1: delivery startup that sells directed the consumer and office a 511 00:26:58,359 --> 00:27:00,679 Speaker 1: subscription service. So and it's on the high and and 512 00:27:00,680 --> 00:27:03,240 Speaker 1: to me it's so fascinating, not just because I just 513 00:27:03,359 --> 00:27:07,360 Speaker 1: had a baby, but uh, I've learned so much through 514 00:27:07,400 --> 00:27:13,560 Speaker 1: that process about the difficulty of breastfeeding and then the 515 00:27:13,600 --> 00:27:17,400 Speaker 1: sort of there are standouts in the formula products as well, 516 00:27:17,400 --> 00:27:19,280 Speaker 1: and very big difference between what you can get in 517 00:27:19,280 --> 00:27:20,880 Speaker 1: Europe we can get in the US. I just think 518 00:27:20,880 --> 00:27:23,480 Speaker 1: it's really fascinating industry. Yeah, and it's just one of 519 00:27:23,520 --> 00:27:26,320 Speaker 1: those things you never thought how that there would be 520 00:27:26,359 --> 00:27:28,200 Speaker 1: a shortage of baby for me. You just don't even 521 00:27:28,200 --> 00:27:31,359 Speaker 1: think about it until you have to think about it. 522 00:27:31,400 --> 00:27:36,080 Speaker 1: So hopefully that that can be addressed soon. Thanks for 523 00:27:36,119 --> 00:27:39,639 Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and 524 00:27:39,680 --> 00:27:43,760 Speaker 1: listen to interviews with Apple Podcasts or whatever podcast platform 525 00:27:43,800 --> 00:27:47,400 Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller. 526 00:27:49,200 --> 00:27:51,840 Speaker 1: On ball Sweeney, I'm on Twitter at pt Sweeney. Before 527 00:27:51,840 --> 00:27:54,960 Speaker 1: the podcast, you can always catch us worldwide at Bloomberg Radio.