Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
Speaker 1: plus technology, politics, economics, all furnishing the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
Speaker 1: analyst in more than one twenty countries. You can download
Speaker 1: Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You
Speaker 1: can also listen to our radio show at two pm
Speaker 1: Eastern Time on the Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Clovel News than keeping a watch on
Speaker 1: Mattel shares, by the way, or up about since a
Speaker 1: recent low last October, They're up six percent year to date.
Speaker 1: We've often checked in with the company CEO, and we've
Speaker 1: got another key member of the c suite. Our next guest,
Speaker 1: who we last caught up with about a year ago.
Speaker 1: Great to have back with us at the president CEO
Speaker 1: of Mattel, Richard Dixon. He's here in our Bloomberg Interactive
Speaker 1: Broker studio. How are you. I'm well, Thank you for
Speaker 1: having me. It's good to see in person. And be
Speaker 1: here with everybody in person. It feels like it feels
Speaker 1: like a little bit more normal. It's definitely more normal,
Speaker 1: but out of out but the world not so normal
Speaker 1: for sure. Well, it's a new normal because it's changing
Speaker 1: every every every day. So talk to us about this
Speaker 1: new normal, Like, what is it in terms of running
Speaker 1: a company in this environment where things feel like they
Speaker 1: keep coming at us from all different angles. And maybe
Speaker 1: just as we start to feel like supply chains so
Speaker 1: important to you guys start to ease, you know, then
Speaker 1: they get kind of upended again. So what's this like? Well, look,
Speaker 1: I think we're all dealing with lots of changes, both cultural,
Speaker 1: systemic political. You know, we're living in a day and
Speaker 1: age where nothing is the same. There is a degree
Speaker 1: of excitement around it as well. When you're running a company,
Speaker 1: the pivots, the flexibility, the degree of speed and which
Speaker 1: we need to move and make decisions, Particularly for a
Speaker 1: company like Mattel, which is this storied, legendary toy company.
Speaker 1: We've got, you know, an unbelievable portfolio of legendary brands that,
Speaker 1: as we look at them today, are probably one of
Speaker 1: the most you know, pop culture relevant conversations that are
Speaker 1: happening in the world, particularly in toys, but as we
Speaker 1: extend our brand into entertainment and content digital gaming, it's
Speaker 1: been a really exciting time for these storied brands to
Speaker 1: become part of the pop culture conversation. And f t
Speaker 1: s and f t s are another part of our dynamically,
Speaker 1: you know, growing business and and most importantly, I think
Speaker 1: as you as you think about it today, purpose really
Speaker 1: does matter. You know, you hear a lot about that.
Speaker 1: In fact, that walked into the office of today and
Speaker 1: you have a big, you know, display of the purpose
Speaker 1: of Bloomberg. And I think in terms of toys and
Speaker 1: what they represent people's lives, um unlocky imaginations, cognitive, social
Speaker 1: emotional development, creating relationships with parents through toys. It's a
Speaker 1: really important part of development that we feel a great
Speaker 1: degree of responsibility for it. This time, we've gotten to
Speaker 1: talk a lot with the non crisis CEO of Mantel
Speaker 1: over the last year or so eighteen months to understand
Speaker 1: the changes that you guys have had to make when
Speaker 1: it comes to supply chain and making sure that you
Speaker 1: are able to deliver on those experiences and on those
Speaker 1: toys throughout the year. I know that you're doubling employment
Speaker 1: in Mexico right now, and I'm wondering if if you
Speaker 1: have start, if you've actually opened the plant there. If
Speaker 1: you have, m are considering making other moves to Mexico
Speaker 1: to help e supply chain challenges right now, So you know,
Speaker 1: it's it's a great question. And I think part of
Speaker 1: the strong performance of our supply chain this year is
Speaker 1: attributable to our scale, our expertise, and our flexible model.
Speaker 1: We've spent the last several years through a capital light
Speaker 1: program consolidating our footprint geographically. We've re oriented much of
Speaker 1: our manufacturing footprint to be more flexible, and as you mentioned,
Speaker 1: recently expanded our facilities in Mexico, um and for a
Speaker 1: variety of reasons cost reduction, consolidation. Obviously, close to shore
Speaker 1: helps with shipping and speed to market um and in general,
Speaker 1: I think the supply chain for MATEL has been a
Speaker 1: competitive advantage. You know, while the world is dealing with
Speaker 1: incredible challenges both in supply chain issues inflation issues, I
Speaker 1: think the performance that we've had in our supply chain
Speaker 1: has really proven that it's a competitive advantage. From attel,
Speaker 1: you guys were doing this prepad nemic, weren't you. We've
Speaker 1: been working on this for several years. It's part of
Speaker 1: a capital light model, that's correct. How much of though
Speaker 1: the tensions the geopolitical this is one of the big
Speaker 1: macro rethinks that we're having right now about we're seeing
Speaker 1: it certainly the energy market, I mean energy oil obviously
Speaker 1: very important to plastics as we know. But how are
Speaker 1: you rethinking about kind of where you're getting things because
Speaker 1: you're like, you know what, geo politically, we can't say
Speaker 1: globalization is going to cure all that helps us? How
Speaker 1: much of that is also at play in this that
Speaker 1: might make you do even more aggressive moves in terms
Speaker 1: of protecting that supply chain. It's a really important part
Speaker 1: of our strategic roadmap, and I think as you've seen
Speaker 1: over the last several years, by example, you know, through
Speaker 1: consolidation as well as geographically expanding our footprint, UM offsetting
Speaker 1: if you will, any reliability on any particular market whatsoever,
Speaker 1: and in fact, m opening up various different plants in
Speaker 1: different countries for the same brand and gives us the flexibility,
Speaker 1: the nimbleness that we need UM to accommodate and to
Speaker 1: always keep the business moving despite political issues that may
Speaker 1: be arising in local markets. It's proven incredibly effective, particularly
Speaker 1: our performance in one We're in a quiet period currently,
Speaker 1: but you can see the performance in large part due
Speaker 1: to our our ability to effectively get product to consumers
Speaker 1: and retailers on time. So if there's a problem somewhere,
Speaker 1: it's very easy to say, Okay, plant number A, you've
Speaker 1: got problems plant number eight, We're just gonna amp it up. Yeah. Well,
Speaker 1: I wouldn't say it's that easy. Uh, but certainly it's
Speaker 1: not easy. But we have incredible expertise that have been
Speaker 1: with a company of a very long time and added
Speaker 1: new talent as well, but strategically made a concerted effort
Speaker 1: over the last several years. So you know, we didn't
Speaker 1: have to react in real time because we were already
Speaker 1: moving strategically. But did you say when that happened, You're like, man,
Speaker 1: we're waiting ahead of the game, because we would have
Speaker 1: had to do some shift. We we certainly felt confident
Speaker 1: in our strategy and in the plans that we had
Speaker 1: and executing bar none within the industry besting class, and
Speaker 1: I think that continues to be a strength of Mattel.
Speaker 1: And we're building upon strength. Yeah, Richard, what about when
Speaker 1: it comes to rising commodities costs? This is something that
Speaker 1: affects every company, whether you know, not just companies that
Speaker 1: you know our airlines or oil companies. But the price
Speaker 1: of of h W T I is up more than
Speaker 1: thirty five pcent just this year. Tell uses a lot
Speaker 1: of plastic you have to ship stuff. Uh. How does
Speaker 1: that hit margins? Well? Look, uh, you know, cost factors
Speaker 1: have been you know, a real issue in our business
Speaker 1: and in every business for that matter. We've had a
Speaker 1: couple of years of significant inflation and we do this
Speaker 1: year is different. This year is to hate to tell
Speaker 1: you there's a lot of plastic and toys there are
Speaker 1: working on that too. We've got a lot of sustainability
Speaker 1: efforts in place. UM. But it looked through a combination
Speaker 1: of pricing UH and cost savings. We expect to exceed
Speaker 1: inflation over time UM and to higher prices or better
Speaker 1: manufacturing or lower There's not a silver bullet, right, So,
Speaker 1: I mean there there are pricing adjustments and strategies that
Speaker 1: will take place across our portfolio, and there's also cost
Speaker 1: savings as well that we've been also sharing and enjoying
Speaker 1: as part of our structural simplification plans, the two combined,
Speaker 1: if you will mitigate inflation to some degree and contribute
Speaker 1: to the margin expansion that we have UH shared over time. UM. Granted,
Speaker 1: we've we've spent a lot of time talking about the
Speaker 1: impact of inflation and supply chain, but as you can
Speaker 1: see from our results and from the guidance that we've given,
Speaker 1: particularly in a quiet period right now, but from our
Speaker 1: two thousand on the side, again, as we take as
Speaker 1: we take strategic price increases and look for cost savings.
Speaker 1: The most important part of our consumer proposition is to
Speaker 1: make sure our consumers really do love and get the
Speaker 1: value and innovation that our toys provide. But you're confident
Speaker 1: that the consumer can handle price increases, that the consumer
Speaker 1: is willing to pay, that you have that pricing power
Speaker 1: at Mattel to raise those prices. I believe that our
Speaker 1: brands resonate with consumers around the world, and I think
Speaker 1: it's going to be UM the innovation and the brand
Speaker 1: reputation and the quality that ultimately consumers judge UH and
Speaker 1: and jury UH in the in the toy industry, and
Speaker 1: certainly our brands stand the test of time. I also
Speaker 1: think there's a reflection back on nostalgic brands. We have
Speaker 1: brands that mom, dad grew up with and are enjoying
Speaker 1: that relationship with their Alright, So I brought I brought
Speaker 1: a little that I actually have had on my desk.
Speaker 1: It's probably from one of either ian On or somebody
Speaker 1: coming coming to visit. Um grew up with Barbie, loved it,
Speaker 1: loved it. We're talking with Richard Dixon, he's president and
Speaker 1: chief operating off a certain mantel here with Tim and myself. Um,
Speaker 1: these are iconic brands. UM, and my kids played with him.
Speaker 1: Are my daughter, I should say my one kid? Um?
Speaker 1: And I certainly did. Where is the big growth? Because
Speaker 1: we talked about you guys, I've talked with the folks
Speaker 1: at w W E. I mean, you have these partnerships,
Speaker 1: these alliances. You have older collectibles n F T s.
Speaker 1: I assume play into the older collector of Mattel Brands,
Speaker 1: content creation, Barbie movie, Like, when is that happening? Where's
Speaker 1: the real growth going forward? And answer it all in
Speaker 1: two minutes? Well, I think you have to stay, take
Speaker 1: a step back and look at our our strategic roadmap,
Speaker 1: which has really been to be an i P driven
Speaker 1: high performing toy companies, very Disney esque. Well, it's it's
Speaker 1: it's very Mattel. You know. We we have a portfolio
Speaker 1: of incredibly strong i P many of which as you mentioned,
Speaker 1: and there are a lot of brands within our portfolio
Speaker 1: that have you know, stood the test of time and
Speaker 1: could be revitalized. Masters of the Universe is a great
Speaker 1: example of that. A huge property in the eighties, ran
Speaker 1: dormant for decades and we brought it back. No, I
Speaker 1: didn't play with might might have missed my generation, I
Speaker 1: don't know, But anyway, it's back and it's it's arguably
Speaker 1: better than ever. Um. But I think that the growth
Speaker 1: strategy of Mattel is really to continue to expand our
Speaker 1: i P into verticals, digital gaming content and f t
Speaker 1: s as you mentioned. But is it the adult collector
Speaker 1: that's the real like, where where's the growth come from?
Speaker 1: It's both. It's it's literally across the board. If you
Speaker 1: look at our performance, every category that we're in and
Speaker 1: we're in seven categories, all grew. We grew market share
Speaker 1: across the world. Our biggest most important franchise brands are
Speaker 1: all in growth mode. Barbie Fisher price, Hot Wheels, American Girl, Thomas,
Speaker 1: the Tank Engine, our games portfolio, you know, single largest
Speaker 1: card game in the world. You know, we've done a
Speaker 1: lot of work. We vital in our brands with the
Speaker 1: Mattel Playbook that we take a lot of pride and innovation,
Speaker 1: cultural relevance and executional excellence have been the forefront of
Speaker 1: making our business successful. When you're thinking about communicating to
Speaker 1: potential customers, the marketing of this, how big of a
Speaker 1: play is nostalgia? I mean, I think about my dad
Speaker 1: is probably more into Hot Wheels than my three year
Speaker 1: old at this point, but he's yeah, he's been in
Speaker 1: a Hot Wheels his whole life. So are you trying
Speaker 1: to reach him? Are you trying to reach my three
Speaker 1: year old? I think, first of all, that's that's a
Speaker 1: great example of what we believe our growth strategy offers
Speaker 1: us as a multigenerational appeal. You know, we obviously have
Speaker 1: a core based business with kids three to eight and
Speaker 1: some younger, some older, but as the brand of sells
Speaker 1: Hot Wheels, Barbie and others have have have affinity and
Speaker 1: emotional connection. We have a collector audience that's growing rapidly
Speaker 1: and becomes an incremental part of our toy business. So again,
Speaker 1: when you look at our three trajectories, growth in our
Speaker 1: core franchises with our core audience, and then incrementality with
Speaker 1: adults and collectors, that are going to be really exciting
Speaker 1: going forward. Probably movie production start this month. It started.
Speaker 1: We're in second week in production. It is unbelievable. We
Speaker 1: might want to, I might want to. I can't disclose
Speaker 1: all the information, by the way counter discloses. Being on
Speaker 1: set was absolutely magical, and it's going to be a
Speaker 1: pop culture conversation man the actors. Richard Dixon, thank you
Speaker 1: so much. Thank you any time with both of you.
Speaker 1: Great to have you here. Richard Dixon, he's the president,
Speaker 1: chief operating officer at Mattel here in studio. This is
Speaker 1: Bloomberg Business Week with Carol mass Her and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio. So Florida wants to
Speaker 1: be known for more than a place to have some
Speaker 1: fun in the sun. They're already attracting. We know the
Speaker 1: financial types. We talked about that a lot, and just
Speaker 1: recently we talked about the surging retail sale industry. Retail
Speaker 1: sales or the retail industry in in Palm Beach, and
Speaker 1: then of course there's crypto. Crypto uh huge when it
Speaker 1: comes to Miami, or at least that's what Miami Mayor
Speaker 1: Francis Suarez is hoping to make it. He's trying to
Speaker 1: do what Finance was in New York and what Web
Speaker 1: two was in San Francisco and Silicon Valley happened for
Speaker 1: Web three in Miami. Mr lane A Golfa Pulu is
Speaker 1: personal finance reporter for Bloomberg new She's with us in
Speaker 1: the Bloomberg in Ractive Broker studio, but she spent some
Speaker 1: serious time in Miami talking to the mayor and talking
Speaker 1: to others, uh, including people who are behind crypto firms there,
Speaker 1: missy Uh. Can they pull it off? Can Miami pull
Speaker 1: it off? Can Miami become the center of crypto in
Speaker 1: the US. That's the million dollar question? Um. You know,
Speaker 1: I think that as someone who lives in New York.
Speaker 1: When I first visited Miami a couple of weeks ago,
Speaker 1: I wanted to see what this hype is about. You know,
Speaker 1: everyone talks about crypto in Miami, but is it there?
Speaker 1: Can you feel it? And the truth is you definitely can.
Speaker 1: I mean you walk around the street and you see
Speaker 1: pain bitcoin signs everywhere. You're seeing restaurants, nightclubs starting to
Speaker 1: accept it as a form of payment. You're seeing n
Speaker 1: F team murals pop up everywhere around the city. And
Speaker 1: it's sort of like sliding into real estate as well.
Speaker 1: So if you want to put you know, money down
Speaker 1: for a down payment for an apartment, you can do
Speaker 1: so with crypto in Miami. And so the hype is
Speaker 1: the regular people or is it the you know, wealthy
Speaker 1: people who can throw crypto around. I don't think it's
Speaker 1: the regular people. I do think it's the piece people.
Speaker 1: I'm a regular person too. I think it's you know
Speaker 1: what I mean, Like definitely, I think it's the people
Speaker 1: that moved down there during COVID and have been able
Speaker 1: to sort of form a community that really sort of
Speaker 1: embrace this crypto. But it is permeating throughout different aspects
Speaker 1: of life in a way that you don't see it
Speaker 1: in any other city. But is this going to be
Speaker 1: long lasting? Right? Because this is sort of coming off
Speaker 1: of the back of what happened during COVID. A lot
Speaker 1: of people moved down there, A lot of rich people
Speaker 1: moved down there. So investors are plentiful in Miami right now.
Speaker 1: But will this last for a long time? We don't know. Okay,
Speaker 1: this is Bloomberg. So we like the data. We have
Speaker 1: the numbers. You got the numbers from pitchbook. This chart
Speaker 1: in your story, this INTERACTI chart to encourage evility to
Speaker 1: read this online because it is interactive. Uh, missy, San
Speaker 1: Francisco and New York just blow Miami out of the
Speaker 1: water when it comes to deal value, whether we're talking
Speaker 1: one or so far this year. Yeah, I mean Miami
Speaker 1: crypto Starbucks have startups excuse me, have attracted a sliver
Speaker 1: of the money that San Francisco and New York have
Speaker 1: have attracted. We have them here. This is for crypto
Speaker 1: to like. So this is of Victor crypto exactly, but
Speaker 1: I mean throughout like the whole industry, and the difference
Speaker 1: is way bigger. So this is wait, this is okay,
Speaker 1: This is tracking money going into crypto startups in Miami,
Speaker 1: and that number is compared to San Francisco, New York exactly.
Speaker 1: In Miami, that number is eighty eight million. In San Francisco,
Speaker 1: it's twelve point seven billion. In New York it's seven billies.
Speaker 1: The numbers don't lie. The numbers don't lie. But look
Speaker 1: at the year of her year increase that Miami stawped
Speaker 1: as I do, not as I say, like, I mean,
Speaker 1: this is like really what's happening right exactly? But again
Speaker 1: the year of her year increase that Miami saw between one,
Speaker 1: I mean, it's crazy. They went from six million into
Speaker 1: crypto startups startups to seven hundred million into crypto start
Speaker 1: ups within a year, right, And so you see the
Speaker 1: growth there. It's gonna take time to reach the levels
Speaker 1: that New York and San Francisco are in, but we're
Speaker 1: seeing this crazy growth. So when we think about crypto,
Speaker 1: like I do wonder about like how you create a
Speaker 1: crypto infrastructure world, right, I mean, are there other cities
Speaker 1: that are making moves to actually kind of provide an
Speaker 1: environment where it's easy and fluid to kind of move
Speaker 1: within crypto? Definitely, I mean New York is one of them.
Speaker 1: We saw Mayor Eric Adams go and I'm not doing
Speaker 1: anything in crypto. Yeah, it's definitely not seeing it's definitely
Speaker 1: not happening in the way it's happening in Miami. I'll
Speaker 1: put it that way. I think it that sort of
Speaker 1: organizational sort of um campaign that the mayor brought forth
Speaker 1: really attractive people, and we talked still getting paid in crypto?
Speaker 1: I don't think so. Um. You know. We spoke to
Speaker 1: the blockchain dot Com CEO who moved his office down
Speaker 1: to Miami, and he told us that he was actually
Speaker 1: negotiating with several states when COVID hit to decide where
Speaker 1: he would move his headquarters to. And when I asked him,
Speaker 1: you know why Miami, he said that the vision the
Speaker 1: mayor had really just convinced him to do it because
Speaker 1: for a company like blockchain dot Com, think about how
Speaker 1: much easier it is to actually retain talent and attract
Speaker 1: talent in a city where crypto is something that everyone
Speaker 1: is sort of on board with. So for him, he
Speaker 1: was like, I can hire people here that I may
Speaker 1: not necessarily be able to hire other cities, thinking about
Speaker 1: you could be part of that lab in this experiment exactly.
Speaker 1: And he had the mayor come and speak to you know,
Speaker 1: on site at his company, to all the workers there,
Speaker 1: and so that kind of interaction between city officials and
Speaker 1: people having like a vision down there is really prevalent
Speaker 1: in Miami. You did also right though, Missy about the
Speaker 1: governor of Florida, and how that in his policies could
Speaker 1: prevent people from wanting to live there and relocating from
Speaker 1: New York or San Francisco. Perhaps, Yeah, it's it's hard
Speaker 1: to separate Miami from the state of Florida, which it's based,
Speaker 1: you know, and politics down there are very controversial for
Speaker 1: a lot of people. Well, what I will say is
Speaker 1: it doesn't seem to matter for all those people that
Speaker 1: decided to move down to Miami during COVID, And I
Speaker 1: think that tells us something. I mean, Miami in and
Speaker 1: of itself, I think has to really separated itself from
Speaker 1: the rest of the state. And if all these people
Speaker 1: are willing to move down there because nothing was shut
Speaker 1: down and because they had freedoms to do whatever they
Speaker 1: wanted in their day to day life during COVID, you know,
Speaker 1: it doesn't necessarily point to the fact that this is
Speaker 1: going to be a problem, at least for now. But
Speaker 1: the state has other issues as well, right. I think
Speaker 1: we also speak in the story about how it doesn't
Speaker 1: have top tier if I educational institutions like San Francisco
Speaker 1: and New York, and so I think that might be
Speaker 1: something that we should keep our eyes onto it's important.
Speaker 1: Mister Laney got a poolly personal finance reporter for Bloomberg
Speaker 1: News with us in the Bloomberg INTERACTI Broker Studio. Check
Speaker 1: out her story on Bloomberg dot com. You're listening to
Speaker 1: Bloomberg business Week with Carol Messer and Bloomberg Quick Takes
Speaker 1: Tim Stinovic on Bloomberg Radio in the upcoming issue of
Speaker 1: the magazine, a story that also happens to be among
Speaker 1: her the most read on the Bloomberg Today and Tim,
Speaker 1: it's about how an ultra type job market as employers
Speaker 1: from law of healthcare dropping some of those tough job requirements. Yeah,
Speaker 1: these job requirements are known in the industry as quote
Speaker 1: unquote credential lane. It's not something that I had thought
Speaker 1: a lot about before reading this story, and it's not
Speaker 1: us doctors and lawyers that require this type of credentialing.
Speaker 1: Jordan do is US economics reporter for Bloomberg Economics. J
Speaker 1: Jordan joins us on the phone from Washington, d C.
Speaker 1: Jordan's story is featured in the upcoming issue of Business
Speaker 1: Week magazine. Check it out at the Bloomberg Terminal and
Speaker 1: of course, at Bloomberg dot com. Slash business Week as well.
Speaker 1: Joe Weber is editor at Bloomberg Business Week. He's with
Speaker 1: us in the Bloomberg Interactive Broker Studio Joel. Credential NG
Speaker 1: obviously coming to a head right now because of a
Speaker 1: tight labor market, but it would seem that changes, Uh,
Speaker 1: we're we're kind of happening before the pandemic to or
Speaker 1: sort of on their way to happen, because it's part
Speaker 1: of a broader conversation about access. Do you have credentials
Speaker 1: to ask me such a question? Um, that's a good question.
Speaker 1: I'm unfortunately, unfortunately I'm overqualified. Yeah, that's that's a problem
Speaker 1: that on another day. And boy is that over sorry
Speaker 1: over credential not overqualified? That that that does kind of
Speaker 1: sum it all up though, right, And what the pandemic
Speaker 1: did was allow a lot of people to say, wait
Speaker 1: a second, maybe we can't we don't need all these
Speaker 1: prerequisite things that we've always required it And so some
Speaker 1: of some people basically that that kind of threshold came down.
Speaker 1: And now the question is do you raise the threshold
Speaker 1: again or does it make you just rethink everything? And
Speaker 1: in Jordan, what did you learn in your reporting? Well,
Speaker 1: what I learned. What was interesting for me here is
Speaker 1: is so much of this conversation historically has been about
Speaker 1: workers well, I guess you could say are sort of
Speaker 1: on the lower end of the labor market, or who
Speaker 1: work in fields that are sort of lower stakes, that
Speaker 1: have less interaction with people, So care dressers, even florists,
Speaker 1: um plumbers. These workers are all subjected to different types
Speaker 1: of licensing requirements, and for many years a lot of
Speaker 1: policymakers across the spectrum have called for a reevaluation of
Speaker 1: these requirements. But I think what we're seeing in more
Speaker 1: recent years, really brought on by the pandemic, is this
Speaker 1: debate kind of broadening to include more white collar advanced professions.
Speaker 1: So we're seeing it in law, We're seeing it in
Speaker 1: healthcare and education where you have either job shortages or
Speaker 1: you have you know, COVID causing disruption and causing us
Speaker 1: to question the status quo way of doing things. You know,
Speaker 1: COVID has has upended so many conventions when it comes
Speaker 1: to work, when it comes to schooling, And it's interesting
Speaker 1: now that we're two years out to see what might
Speaker 1: stick um where, you know, and in which cases we
Speaker 1: might kind of snap back to how things were done historically,
Speaker 1: or if people will use this as an opportunity to
Speaker 1: kind of re evaluate, um, not just that ninth to
Speaker 1: five office routine, but sort of the path to getting there. Jordan,
Speaker 1: There's a stat that really jumped out at me. In
Speaker 1: the nineteen fifties, about one in twenty Americans needed a
Speaker 1: license to work in their field. Now it's about one
Speaker 1: in four. What's happened so over the decades, there's there's
Speaker 1: absolutely been an explosion in licensing, and it's really across
Speaker 1: all different types of fields. So, as I mentioned earlier, um,
Speaker 1: you know some types of jobs and occupations that you
Speaker 1: might not imagine. Florists is a good example. And these
Speaker 1: are state by state licensing requirements, and that's what historically
Speaker 1: a lot of this debate has been about that if
Speaker 1: you live in one state and if you you know,
Speaker 1: relocate to another, which is what we saw a lot
Speaker 1: of during the pandemic, um that it causes a lot
Speaker 1: of red tape because you have to go through all
Speaker 1: of the steps again to get re licensed in the
Speaker 1: new state for doing fairly similar work. You know, where
Speaker 1: the require you know, the the nature of the work
Speaker 1: doesn't really shift much from state to state UM. And
Speaker 1: so over the years we've seen more and more of
Speaker 1: this thing, which is which is overseen by seen by
Speaker 1: states and state licensing boards, UM, you know, more and
Speaker 1: more of it UM. But I think what's what's different
Speaker 1: now is that the pressure is not just on those
Speaker 1: types of jobs where people where you know, there's there's
Speaker 1: greater consensus about do we really need licensing here? We're
Speaker 1: now seeing that in these um you know, in jobs
Speaker 1: where people are working in courtrooms and schools and hospitals,
Speaker 1: where there is a lot of concern about you know,
Speaker 1: your your people's health is on the line, people's you know,
Speaker 1: you're representing clients and court rooms that the arguments and
Speaker 1: support of licensing when it comes to protecting public health
Speaker 1: and safety are probably most pronounced in these professions. And
Speaker 1: so it's interesting that we're that that it's expanding in
Speaker 1: those areas as well. It's also interesting there is when
Speaker 1: what you're describing on a state by state basis, it
Speaker 1: just seems like there's got to be a way of
Speaker 1: you know, being used to generate revenue, right, and so
Speaker 1: how much of that has entered the conversation licensing as
Speaker 1: a way to boost state revenues. Yeah, I think I
Speaker 1: think that's a lot of the arguments, for sure. A
Speaker 1: lot of the you know, the pushback against some of
Speaker 1: these regimes is that it is sort of self serving.
Speaker 1: The sense that you know, you're you know, the woman
Speaker 1: we spoke with, calls of our exam for example, like
Speaker 1: a gate keeping measure, and there's a sense that these
Speaker 1: restrictions serves the members that you know, if you can
Speaker 1: restrict the number of people entering the field, you can,
Speaker 1: those people are going to get paid more because there
Speaker 1: are fewer of them UM providing their services. UM. Similarly,
Speaker 1: for the associations and the boards who are dolling out
Speaker 1: these licensing UM, these licenses, it is, it is the
Speaker 1: source of revenue and so UM. I spoke with a
Speaker 1: professor at the University of Minnesota who's done a lot
Speaker 1: on licensing, Morris Kleiner. He wrote a piece in two
Speaker 1: thousand eighteen approximating two hundred billion dollars up to two
Speaker 1: hundred billion dollars annually and what he calls misallocated resources
Speaker 1: I'm connected to excessive licensing. Well, I gotta say, I
Speaker 1: want my electrician that to be licensed, because I really
Speaker 1: do care. He was over dent. You know that this
Speaker 1: feels like to what's going on with college is right
Speaker 1: the application process, you know, with the test option, because
Speaker 1: I feel like it's such a huge industry, there's so
Speaker 1: much money involved, but you're increasingly seeing college a step away.
Speaker 1: But there's also a component to your story, Um, Jordan,
Speaker 1: when it comes to racial exclusion because of excessive licensing.
Speaker 1: UM just got about thirty seconds what you found out
Speaker 1: on that? Sure, Well, the Minneapolis Federal Reserve just put
Speaker 1: out research last month showing that is the case that
Speaker 1: across education levels, we see this gap when it comes
Speaker 1: to licensing, UM, where white workers are disproportionately more licensed.
Speaker 1: And you know, in a lot of these and a
Speaker 1: lot of different sectors, obtaining a license is very costly
Speaker 1: and very time consuming, and it can be cost prohibitive.
Speaker 1: So people who have more money to begin with are
Speaker 1: more likely to break through those hoops, UM, And so
Speaker 1: we're definitely the data definitely supports that. Well, it's certainly
Speaker 1: a sign of the times. Um. We're gonna leave it there.
Speaker 1: I really appreciate it. Jordan jordanad He's US economics reporter
Speaker 1: at Bloomberg Economics, joining us on the phone from Washington,
Speaker 1: and of course, thanks to Joe Weber, editor Bloomberg Business Week.
Speaker 1: Here in our interacted broker studio, can we tell everybody
Speaker 1: why you're dressed up? We got some national magazine awards tonight,
Speaker 1: a couple nice Joel good Lass. Maybe we come in
Speaker 1: tomorrow with the trophy here, So okay, fingers crossed it
Speaker 1: that plays out? All right? Check out this story to
Speaker 1: the upcoming issue of Bloomberg Business Week magazine. It will
Speaker 1: be out later this week online though already and on
Speaker 1: the Bloomberg terminal. You're listening to Bloomberg Radio. This is
Speaker 1: Bloomberg Business Week. You're listening to Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio. Alright, everybody,
Speaker 1: just about ten minutes left in the trading session in
Speaker 1: lo and behold. Remember we had a pretty hot m
Speaker 1: and a uh year last year, and we're continuing to
Speaker 1: see stuff happening. Just to rehash, we heard it from
Speaker 1: Charlie Spirit Airlines making an off for our getting an
Speaker 1: offer from Jet Blue, a takeover offer, and we're seeing
Speaker 1: shares of Spirit up about it is a three point
Speaker 1: six billion dollar offering again, this is from the New
Speaker 1: York Times. Yeah, that offers a roughly premium over the
Speaker 1: offer that Frontier had made in cash and shares to
Speaker 1: buy spirit uh Jeff Police shares by the way down
Speaker 1: of just about eight percent. Yeah, no, no surprise, they're
Speaker 1: right as the potential acquirer. All right, let's get to it.
Speaker 1: It's a different market day. We heard Caroline Hyde, one
Speaker 1: of our TV colleagues, saying very different kind of from
Speaker 1: what we had yesterday. So let's see what our guest
Speaker 1: has to say about the current environment because we have
Speaker 1: stocks pretty much at their lows. A Newgagar is back
Speaker 1: with us, global investment strategist for Commonwealth Financial Network. She
Speaker 1: is once again with us on the phone in Waltham, Massachusetts. Hey,
Speaker 1: a new Uh, nice to have you here. Had a
Speaker 1: bunch of FED speakers out there, esther George mary Dale
Speaker 1: or Lale brainerd uh, And they seem to be pretty aggressive,
Speaker 1: or at least some of them, when it comes to
Speaker 1: what we might get out of the balance sheet in
Speaker 1: terms of reductions on that specifically come at main meeting,
Speaker 1: and that has put pressure about the equity trade and
Speaker 1: certainly the fixed income treasury market. Trade. Um, how does
Speaker 1: that factor into your market projections if we start to
Speaker 1: see more aggressive moves on the balance sheet? O, Carol,
Speaker 1: thank you so much for having me. Great to be
Speaker 1: back here today with you. So you are correct. The
Speaker 1: market is pricing in a more hawkish bed, which includes
Speaker 1: not just rate heights, but also a more aggressive balance
Speaker 1: sheet normalization process and likely most sanctions impol John Russia
Speaker 1: with the derivative impact belt in the commodity markets. So
Speaker 1: and an inflation globally. And Um, what we're seeing with
Speaker 1: the Fed, the more hawkish Fed is we saw the
Speaker 1: youth of in voting earlier this week, last week, So
Speaker 1: the youth gold seems to be signaling of upcoming recession?
Speaker 1: And is it is it productive to keep having this
Speaker 1: recession talk? I can't. I feel like at this point
Speaker 1: we all know that at some point Republic can get
Speaker 1: a recession. It might be equivalent. I mean, come on,
Speaker 1: I no, you don't know. I completely agree with you.
Speaker 1: I mean, look at the last recession that we predicted.
Speaker 1: It predicted it in but the only reason the recession
Speaker 1: happened was because of COVID, which was not something in right,
Speaker 1: So is it at this point? Is there a more
Speaker 1: constructive conversation to have then, are we are not going
Speaker 1: to have a recession? You made a great point, and
Speaker 1: we actually do need to take a more holistic perspective
Speaker 1: on the inversion, uh, and also separate the correct co
Speaker 1: relation from the causation. So historically there is about an
Speaker 1: eighty percent probability that a Nields in version is followed
Speaker 1: by a recession, and that is a strong core relation
Speaker 1: and explains why the market is so volatile. But the
Speaker 1: inversion in and of itself does not cause a recession,
Speaker 1: and the not give a good sense of the timing
Speaker 1: for a recession. So what would cause that? So it's
Speaker 1: not the inversion right that causes the recession? What would
Speaker 1: cause our recession? So uh to uh, you know, it
Speaker 1: says that we need to look at the other economic
Speaker 1: data points and they have what we're seeing right now.
Speaker 1: In the economy, it's still it's on a very strong footing.
Speaker 1: There are more job openings than people looking for employment.
Speaker 1: Wages are growing, convealers are spending, companies are growing learning,
Speaker 1: and most importantly, household and copper balance sheets are quite strong. So, yes,
Speaker 1: as you said, recessions risk, it might happen. It's an
Speaker 1: economic cycle. It goes up and goes down. So the
Speaker 1: session risk has risen and we have likely paschment cycle
Speaker 1: and it's possibly heading into late cycles. But this part
Speaker 1: of the cycle could last for as little as six
Speaker 1: to seven months and as high as three years before
Speaker 1: we hit recessions, so we can technically be out of it,
Speaker 1: and then we'll get the reports of hey, for cause
Speaker 1: we were in a recession. Right, yeah, that's right. It
Speaker 1: could be just a shallow recession. Yeah, okay, So how
Speaker 1: do you how does our investing audience play the next
Speaker 1: six or twelve months? Yea. So it is important to
Speaker 1: note that even when when the years goes it work,
Speaker 1: it's really a poor signal for getting out of this
Speaker 1: gases such as equity because late cycle is not the end,
Speaker 1: not the same as the end of cycle, and equities
Speaker 1: can continue to offer positive return. In fact, in the
Speaker 1: last six episodes of yields goes in version since nineteen
Speaker 1: seventy five, global equities have an aggregate written in the
Speaker 1: twelve month period after that version. But of course, under
Speaker 1: the surface there are shifts and leadership and that's where
Speaker 1: we need to focus. Well, So and that's a really
Speaker 1: good point, and I think maybe that is and I
Speaker 1: know certainly we do this with our TV colleagues and
Speaker 1: beyond the bell um in terms of constructive conversations about
Speaker 1: right sector rotation, market rotation, like we we can see
Speaker 1: that that will still provide some momentum for the equities,
Speaker 1: but it's not just an all in rally, that's right.
Speaker 1: So UM returns generally have been weaker in the post
Speaker 1: in version period U when we start looking at how
Speaker 1: to go state defensive sectors have typically outperformed the C
Speaker 1: clicking sectors in the twelve months period after the two
Speaker 1: ten englosion. And they should make into it of sense
Speaker 1: because if we are nearing late cycles, equities are probably expensive,
Speaker 1: Copper learnings have peaked. We are already looking at UM
Speaker 1: earning expectations for two one twenty two of about four
Speaker 1: points seven six cents, which is UM much lower than
Speaker 1: what we've seen in the last several quarters. And UM
Speaker 1: the feeder raising rates, so all of these factors can
Speaker 1: damfinitely return MUM also, you know, so basically would be
Speaker 1: what I'm saying is you have to be more defensively positioned.
Speaker 1: And also if you look at the US versus non US,
Speaker 1: US equally inaggregate book more attractive than not US. All right,
Speaker 1: It's it's tricky, hey, and you always feel like we
Speaker 1: have a very thoughtful conversation with you. So thank you
Speaker 1: so much for for coming out. Tim and I were
Speaker 1: both jotting notes furiously, typing pretty frantically um our drive
Speaker 1: to the closer that new gagar is Global investment Strategist
Speaker 1: are coming with Financial Network. Thanks for listening to Bloomberg
Speaker 1: Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg
Speaker 1: dot com, and you can also listen to our radio
Speaker 1: show at two pm Eastern on Bloomberg Radio or watch
Speaker 1: us on YouTube search Bloomberg Global News