Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: today that early last year, at the outset of the
Speaker 1: coronavirus pandemic, there was a small genetics startup. Call company
Speaker 1: was called Color Genomics. It's set up a COVID nineteen
Speaker 1: testing lab. It was the company's really first step towards
Speaker 1: what we've become a full transformation of its business. Well
Speaker 1: today the company continuing that transformation. It's now known as Color.
Speaker 1: It completed another round of funding today that gives it
Speaker 1: a four point six billion dollar valuation triple Katie. What
Speaker 1: it was just like a love and months ago. So
Speaker 1: that's been quite a bump up. Let's get more. Let's
Speaker 1: bring in our guests. Utman Laura Key. He's co founder
Speaker 1: and CEO of color Ink, and he joins us on
Speaker 1: the phone in San Francisco. I'm nice to have you
Speaker 1: here with Katie and myself. How are you good? Thanks
Speaker 1: for having me. Well, tell us a little bit about
Speaker 1: what you guys are doing right now and how it
Speaker 1: fits into what's going on more broadly, of course when
Speaker 1: it comes to COVID, Sure, maybe I can give you
Speaker 1: a little bit of context about colors. So fundamentally, what
Speaker 1: we do is we make public health happen where public
Speaker 1: life also happens. And what I mean by that is that,
Speaker 1: for example, today we're running about seven thousand sites across
Speaker 1: the country between testing and vaccination sites UM, where we
Speaker 1: deliver essential services in context where that are like directly
Speaker 1: connected to where people's lives actually happen. So for example,
Speaker 1: thousands of schools, workplaces, um, churches, other community centers. And
Speaker 1: what we found is that when you take essential health
Speaker 1: services directly into people's community and so that they're immediately
Speaker 1: accessible in the context of where their lives actually happened.
Speaker 1: You're able to make these basic services dramatically more accessible
Speaker 1: than if people have to jump through hoops in order
Speaker 1: to to to access to access them like they normally do.
Speaker 1: And you know thet what we think of a standard
Speaker 1: healthcare And let's talk about your latest financing round, a
Speaker 1: hundred million dollars Series E that has your valuation of
Speaker 1: four point six billion dollars. What do you plan to
Speaker 1: do with that money? YEA. So, our our overall approach
Speaker 1: on this is that we believe that UM, in part
Speaker 1: through the pandemic or due to the effects of the pandemic,
Speaker 1: we have been decidedly forced i thing, to really change
Speaker 1: gears and how we deliver basic care UM. And we
Speaker 1: view this as kind of this pretty durable transformation in
Speaker 1: that expectation and how basic health care will work. And
Speaker 1: so our our goal and our plan for the over
Speaker 1: the next years is to keep building services in these
Speaker 1: kind of access points that are uh immediately part of
Speaker 1: the community. So I'll give you a few examples, if
Speaker 1: that's helpful. So, for example, we work with UM large
Speaker 1: employer basis so essential care essential workers, whether they're UM
Speaker 1: farm workers or tech workers and so on, and one
Speaker 1: of the biggest things that's happened over the pandemic in
Speaker 1: addition obviously to dealing with the effects of the COVID pandemic,
Speaker 1: has been that people have been falling behind on their
Speaker 1: basic preventative care, so literally your annual checkups, basic medications
Speaker 1: and so on. UM. So we've been asked by a
Speaker 1: number of our partners started developing solutions that are similar
Speaker 1: to our approach to managing COVID testing and vaccinations, but
Speaker 1: to make basic care accessible to these road distributed workforces
Speaker 1: and going from like farm workers all the way to
Speaker 1: white collar workers. UM. That's one example, but there are
Speaker 1: many other examples in other contexts. For example, if you
Speaker 1: look at schools again being a UM one of the
Speaker 1: places where a very big part of our society lives
Speaker 1: as in like all this all the school children, UM,
Speaker 1: and thinking of the school systems as themselves being a
Speaker 1: place where you can deliver basic health care services such
Speaker 1: as vaccines and so right now we started working with
Speaker 1: initially with testing, but we're rolling out vaccinations within schools,
Speaker 1: initially for COVID, but then broadening that to other types
Speaker 1: of organizations. Well, that's what I'm interesting. Will you stay
Speaker 1: kind of the immunization route. Is that enough of a
Speaker 1: sustainable business long term or do you then build out
Speaker 1: the types of services that you might provide, almost like
Speaker 1: bringing urgent care, whether it's to rural communities or to
Speaker 1: churches or to workplaces. And so we've do this suff
Speaker 1: something that UM will likely end up applying to abroad
Speaker 1: surface area of how we think of healthcare. Like I'll
Speaker 1: give you another example that we're working right now in
Speaker 1: public health, which is around managing HIV and other sexually
Speaker 1: transmitted diseases. Similar to challenges that we're faced with COVID,
Speaker 1: there is the challenge of immediacy and access UM and
Speaker 1: using that same model, for example, for creating fully integrated
Speaker 1: HIV management programs within communities UM that go from initial
Speaker 1: screening to counseling all the way to medications and management
Speaker 1: for people but in a context that is much more
Speaker 1: part of their lives as opposed to requiring them to
Speaker 1: go out of their lives to seek basic care UM.
Speaker 1: And so this overall approach we viewed as applying to
Speaker 1: infectual diseases, to metabolic and other kind of UM CHRONICCT
Speaker 1: disease management that you know, whether it's psych cholesterol and
Speaker 1: so on. Women's health is another very large area. I
Speaker 1: think when we step back ten years from now, I think, well,
Speaker 1: we're likely to to look back and it'll feel very
Speaker 1: much how our lives have shifted with e commerce and retail,
Speaker 1: where initially it felt like, you know, only a few
Speaker 1: things would be interesting to buy online, but it turns
Speaker 1: out over time that convenience and immediacy is one of
Speaker 1: the biggest features and drivers of people being able to
Speaker 1: access any form of service. And I think healthcare is
Speaker 1: going to be no difference. No, I think you're you're
Speaker 1: totally onto something. Um one quick question, just got about
Speaker 1: twenty five seconds left here. Can you find the labor
Speaker 1: force that you need to be able to continue to
Speaker 1: build out as you hope just quickly? I believe. So.
Speaker 1: I think what happens here is that there's much more
Speaker 1: leverage on technology, especially through I think public health has
Speaker 1: been incredibly innovative through through this phase. So we're seeing
Speaker 1: all of our partners in big departments of public health
Speaker 1: like California, Masters and so on, I think themselves also
Speaker 1: being very innovative and how they think about this. So
Speaker 1: I think it actually going to create a lot more
Speaker 1: leverage on the on the labor force. We're gonna leave
Speaker 1: it there. Hey, um, hopefully you'll come back and give
Speaker 1: us updates as you continue into the new year, uh
Speaker 1: and rolling out what you're doing in terms of services
Speaker 1: up in Laraki. He is chief executive officer, co founder
Speaker 1: of Color Incorporated. Joining us on the phone in San Francisco.
Speaker 1: You listen to Bloomberg Business Week. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic
Speaker 1: from Bloomberg Radio. So we've been hinting at it a
Speaker 1: change in leadership at the Fed. How likely is it?
Speaker 1: As news of Fed Governor Lal Branard being interviewed by
Speaker 1: President Binden, a Bloomberg scoop, by the way, interviewed last
Speaker 1: week for the top spot at the US Central Bank,
Speaker 1: leaked out. We've seen it playing out in the financial
Speaker 1: markets today. So let's get to it. Joining us with
Speaker 1: a look at it is Peggy Collins, Bloomberg News Washington
Speaker 1: Bureau chief, a friend of our show, a favorite person
Speaker 1: to talk with. She is in her Bloomberg not anyone
Speaker 1: studio in the nation's cappele. Peggy is so good to
Speaker 1: have you here with Katie and myself. So, first of all, congratulations,
Speaker 1: great Bloomberg scoop by the Washington team. What do we
Speaker 1: know about the President sitting down with Leo Branard? Yes, Carol,
Speaker 1: and great to be with you and Katie today. As
Speaker 1: you said, we had a great scoop out by my
Speaker 1: colleagues Craig Tourist, Jennifer Jacobs and Slamson. Basically what it
Speaker 1: could what it tells us is that the White House
Speaker 1: has interviewed up Brainerd for the chair spots. So people
Speaker 1: were know know that Brainard was in consideration for for
Speaker 1: one of the open seats at the FED um. But
Speaker 1: what we didn't know was that when she was at
Speaker 1: the White House last week that the interview was specifically
Speaker 1: for the FED chair slot as opposed to one of
Speaker 1: the other open seats. She has been talked about as
Speaker 1: a top contender for the vice chair of Supervision slot,
Speaker 1: which Randall Quarrels was in until October and just yesterday
Speaker 1: said he was going to be exiting the FED at
Speaker 1: the end of the year. And that vice chair slot
Speaker 1: of Supervision is really the FEDS top regulator of Wall Street.
Speaker 1: So Brainard is still considered in the running potentially for
Speaker 1: one of those open seats, and particularly that one as well.
Speaker 1: But it's clear that she now she and Powell are
Speaker 1: the two top contenders for the FED chair slot, and
Speaker 1: powell seat is open in February of this year for
Speaker 1: that and so, Peggy, something I've been thinking about is
Speaker 1: the saying that, you know, a wartime president always gets
Speaker 1: re elected, and if we look at the US economy,
Speaker 1: there's a light at the end of the tunnel, but
Speaker 1: obviously still in a pretty tense place. So I mean,
Speaker 1: one are the odds that pal actually gets replaced at
Speaker 1: this juncture with the FED, you know, starting to actually
Speaker 1: taper and enter this really interesting period of normalization. Well,
Speaker 1: it's great question, Katie. I do think, you know, the
Speaker 1: pandemic economy is something that really is in Powell's pro
Speaker 1: column in the sense that a lot of people credit
Speaker 1: him for having handled the crisis, particularly in March and April,
Speaker 1: when the FED really stepped in not only on a
Speaker 1: US level but a global level to try to inject
Speaker 1: tons of support into the economy and markets and for
Speaker 1: businesses kind of opening up the floodgates to make sure
Speaker 1: that interest rates were as low as they could go
Speaker 1: and that business has had access to funding. So there's that,
Speaker 1: But I also do think the markets, um, you know,
Speaker 1: no brainerd well as as well. She's on been on
Speaker 1: the FED board since um she's certainly seen as one
Speaker 1: of the most accomplished people like in the business she's
Speaker 1: worked at Treasury. She definitely has been like a key
Speaker 1: architect alongside her FED colleagues of the feds new framework
Speaker 1: that they created in August, which really put more of
Speaker 1: the focus on full employment being broad and inclusive, which
Speaker 1: is very much so in line with the Biden administration's goals.
Speaker 1: So I think, you know, I think there's certainly an argument,
Speaker 1: and I think markets and economists up until now had
Speaker 1: really waited their expectations in the column of Powell. But
Speaker 1: the longer that this has gone on, the more question
Speaker 1: marks have arisen in terms of whether the Biden administration
Speaker 1: would take this moment to shake things up. All right,
Speaker 1: but well, the Fed's not supposed to be political. We
Speaker 1: know that politics will be at play. Um lyle Brennard
Speaker 1: is what the only Democrats serving on the FED board,
Speaker 1: I mean, how might politics play in her favor or
Speaker 1: against her? And just got about thirty seconds pack. I
Speaker 1: think it's a question market, did you say, Carol, The
Speaker 1: tradition in the past, up until the Trump administration had
Speaker 1: been to keep with the FED chair of the incoming president.
Speaker 1: So that will be something that the Biden administration has
Speaker 1: to pest it away in terms of independence of the
Speaker 1: FED and politics and how that may be seen in
Speaker 1: light of past tradition. Alright, TikTok. We'll have to wait
Speaker 1: and see what happens. And there are a lot of
Speaker 1: FED positions. We have a lot of FED officials leaving
Speaker 1: and I know or are up for you know, is
Speaker 1: it Clarata, Rich Clarata Right, his term as governor expires
Speaker 1: at the end of January. There's a lot of potential
Speaker 1: movements for open spots of accounted correctly, and you think
Speaker 1: about what that impact those changes could mean in terms
Speaker 1: of FED policy longer term. Um, Peggy Collins, she's our
Speaker 1: Washington burea chief of Bloomberg News, joining us from our
Speaker 1: not anyone studio in the nation's capital. You're listening to
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes
Speaker 1: Tim Stinovic on Bloomberg Radio. Well, first came this estimate
Speaker 1: then z prices, then I buying, and then of course
Speaker 1: there was the damage in the fallout. So tracking it all,
Speaker 1: we're talking about the story that is Zillo. That stock,
Speaker 1: by the way, it is down about sixty seven percent
Speaker 1: from its February sixteenth high this year, so tracking it
Speaker 1: all is Bloomberg News real estate reporter Patrick Clark reports
Speaker 1: on Zillow's trajectory that changes for the upcoming issue of
Speaker 1: Bloomberg business Week, which is due out later this week
Speaker 1: online at Bloomberg dot com, on business Week dot com,
Speaker 1: and on the Bloomberg pat joining us on the phone
Speaker 1: in New York City. This is just an amazing story.
Speaker 1: And I think back when it was I believe a
Speaker 1: cover story Business Week magazine just a few years ago
Speaker 1: about Zillo wanting to flip your house. Um what ultimately
Speaker 1: went wrong? They did it poorly? Well said, it's you're
Speaker 1: exactly right. We did a long Business Week story on Zillo,
Speaker 1: which is, uh, you know, best known for one publishing
Speaker 1: homeless ins what you can then go in Browns and
Speaker 1: too publishing what they called estimates, which is, you know,
Speaker 1: an attempt to approximate the value of just about every
Speaker 1: home or I don't know, I think it's more than
Speaker 1: a hundred million homes in America for first sport. Basically, Uh,
Speaker 1: at some point, I guess in two thousand eighteen, they
Speaker 1: decided to take all the people and technology that they
Speaker 1: used for those first two things and apply them to
Speaker 1: flipping houses, which is a you know, I would say,
Speaker 1: a notoriously sort of risky business. It's it's it's it's
Speaker 1: not the first time that a company or you know,
Speaker 1: offen an individual has gotten the business of buying and
Speaker 1: selling and had home prices move on them in the
Speaker 1: interim period and gotten burned. And so about you write
Speaker 1: that this is a five hundred sixty million dollar cautionary tail.
Speaker 1: I'm curious what are the takeaways that Zillo is going
Speaker 1: to take from this. I mean, obviously they've paused the
Speaker 1: home flipping experiment. Do you expect this to bleed into
Speaker 1: some of the other ways that they operate. I think
Speaker 1: that their old business should be fine. Um, people are
Speaker 1: still going to go to Zillow's websites and apps and
Speaker 1: look at houses, and that's still going to be a
Speaker 1: great place for a real estate agent to getting on
Speaker 1: a you know, house centers. Basically, Uh, they shouldn't have
Speaker 1: trouble making money that way. The question is, you know,
Speaker 1: number one, how are they going to sail the sort
Speaker 1: of pull in their strategic purpose that that ending this
Speaker 1: Dellow Offers program creates? And then too, you know, I
Speaker 1: mean I think there is a big push not just Dillow.
Speaker 1: It wasn't just Billow doing this. There there are other
Speaker 1: companies in the same I buying sort of tech power
Speaker 1: flipping business as they are. And then there are other
Speaker 1: companies that are are buying off different pieces of the
Speaker 1: housing transaction. Uh it seems fairly likely to me that
Speaker 1: some of them will succeed in some form, and we won't,
Speaker 1: you know, we're not tied to this sort of hundred
Speaker 1: year old method of buying or selling house. So not
Speaker 1: only did Zilo you know, sort of plush some money
Speaker 1: down the drain, but they also they also wasted time
Speaker 1: that they could have been using to, you know, figure
Speaker 1: out what the big opportunity is. Well, and I feel
Speaker 1: like until Weber come on in of course the editor
Speaker 1: Bloomberg Business Week, I felt like, algorithms, can't we trust them?
Speaker 1: Like don't they know? All right? Yeah? Totally? Um, And
Speaker 1: now that that was sort of I think, Um, you
Speaker 1: know what what sort of inticated Pat wanting? I wanted
Speaker 1: Pat to write this story for the for the magazine
Speaker 1: was like, look, as a society, like we've come to
Speaker 1: put a lot of faith in algorithms and entire business
Speaker 1: models will rest on it. And in this case, the
Speaker 1: sort of the future of Zillo is sort of intrinsically
Speaker 1: tied to this al go. And Pat, you know, just curious, like,
Speaker 1: what do we know changed? Did they? Did they juice it?
Speaker 1: Did they did they try and get more than than
Speaker 1: might have they might have wanted? In hindsight, my best
Speaker 1: understanding is, uh, this was more human failure that a
Speaker 1: technology failure. I mean they you know, on the individual um,
Speaker 1: on the level of an individual home. Uh, it's you know,
Speaker 1: it's a computer program telling Zello, here's how much we
Speaker 1: think it's worth. But number one, when they first started
Speaker 1: doing this, they had human eyeballs every offer and multiple
Speaker 1: touch points where a person was saying that this makes sense.
Speaker 1: And and you know, as they did it more, they
Speaker 1: got more confident in their ability to get pricing right.
Speaker 1: And uh so that's that's number one. Um, if they
Speaker 1: sort of took away all of the the human touch ones.
Speaker 1: But the other thing is they were sort of flagging
Speaker 1: their competition. And you know, there there's open door technologies,
Speaker 1: which is the biggest of these eye buyers were playing
Speaker 1: way more homes and billows or very ambitious plans to
Speaker 1: catch up. And uh, you know, they they was very
Speaker 1: clear to them that if they made more aggressive offers,
Speaker 1: they would be able to buy more homes. And and
Speaker 1: and they believed they had to buy an awful lot
Speaker 1: of homes, you know, in order to make the business work,
Speaker 1: and and and so they basically just started feeding, uh,
Speaker 1: you know, to the best of my knowledge, started just
Speaker 1: feeding the algorithms more aggressive assumptions of home price appreciation.
Speaker 1: You know, so if if, if instance, like they had
Speaker 1: been assuming that home prices were going to grow twelve
Speaker 1: per said year over yere, you know what they said, Well,
Speaker 1: let's let's let's see what happens to pcent. I'm sure
Speaker 1: enough they bought a lot of homes. Um, you know,
Speaker 1: the home prices appreciation. It's home prices are still growing,
Speaker 1: but at a slightly slower pace than they were earlier
Speaker 1: in the year. And what those executives have said is
Speaker 1: the the sort of slow down was outside the sort
Speaker 1: of range of outcomes they thought more likely. But you
Speaker 1: know that's why when people when they got into this business,
Speaker 1: people say said, well, you're exposing yourself to a lot
Speaker 1: of market risks. So you've got a lot of houses
Speaker 1: that are suddenly on the market, um that that Zelo
Speaker 1: would bought. Do we have any since yet? Who's gonna
Speaker 1: buy these? Um? Yeah, we'll see. I mean they've they've
Speaker 1: sent you know, information on you know, something like seven
Speaker 1: thousand homes the large single family landlords um. And that
Speaker 1: I mean so much money that has gone in to
Speaker 1: this from an institutional standpoint, right there's been an enormous
Speaker 1: amount of money that's come into that business. Um during
Speaker 1: the pandemic in particular, very appealing way to invest behind
Speaker 1: like millennial household formation, you know, migration to the south
Speaker 1: and southwest, and also just like you gotta put you know,
Speaker 1: if you're if you're a pensive, but you gotta put
Speaker 1: your money somewhere and rental houses. Uh is a hot
Speaker 1: idea right now. I think that you know, there's so
Speaker 1: much demand and if it's not clear yet, you know,
Speaker 1: the agree to which Zilo wants to transact you know
Speaker 1: at a at a bulk scale. But you know, people
Speaker 1: have been telling me that if if you could buy um,
Speaker 1: if you could buy two thousand homes, and you know,
Speaker 1: the snap of the fingers, and it's not a snap
Speaker 1: of the fingers, right if there's a lot of due
Speaker 1: diligence in time, but you would you might not have
Speaker 1: to pay, you might not get a discount. Right, There's
Speaker 1: like a there's a premium you get for being able
Speaker 1: to deliver bulk to an investor. Right now you a
Speaker 1: little be able to tap into that. Well, it's an
Speaker 1: interesting story. Uh. The CEO is still in place, the
Speaker 1: co founder still in place. Uh, and you get into
Speaker 1: why because he certainly owns a certain type of stock
Speaker 1: that enables him to still be there. But it's a
Speaker 1: great uh right through of what's been going on at
Speaker 1: Zillo and how it got there. Um, thank you so much,
Speaker 1: really appreciated. Bloomberg News real estate reporter Pat Clark, along
Speaker 1: with Bloomberg Business Editor Jill Webber. This is Bloomberg Business
Speaker 1: Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic
Speaker 1: on Bloomberg Radio three. Maybe better than one, at least
Speaker 1: that's how General Electric investors seem to be voting today
Speaker 1: by bidding up shares of GE as the couple announces
Speaker 1: it will split into three units, ending a remarkable and
Speaker 1: long run as an industrial behemoth that was revered a
Speaker 1: market and economic bell weather, once the world's most valuable
Speaker 1: company until it wasn't well. David Weston caught up with
Speaker 1: the current GE CEO, Larry Colp, earlier on Bloomberg TV,
Speaker 1: talking about the breakup. These businesses will be more focused,
Speaker 1: will be a higher, greater level of accountability. We should
Speaker 1: have sharper capital allocation, more strategic flexibility, and frankly, I
Speaker 1: think it's gonna be good for the team as well.
Speaker 1: I think we'll end up with investor bases focused on
Speaker 1: these pure plays, investors that are probably under invested in
Speaker 1: GE today. You put all that together, it's clear this
Speaker 1: is the best path for us to unlock and create value.
Speaker 1: G e CEO Larry Colp speaking to Bloomberg's David Weston
Speaker 1: earlier about that stunning breakup of G. Let's get more
Speaker 1: on the slaying of the gebs that Jack Welch built.
Speaker 1: Brooks Sutherland Bloomberg Opinion, Deals and Industrials columnists in our
Speaker 1: Interactive Broker studio here in New York City. It is stunning.
Speaker 1: Like when you saw the news, you have followed this company,
Speaker 1: you follow the industrial sector, but you've all this company
Speaker 1: for a long time. Were you just kind of speechless?
Speaker 1: Or I always thought that this was the way that
Speaker 1: the saga was going to end. But I do have
Speaker 1: to say, I don't think anybody saw it coming this week,
Speaker 1: UM this year even in so I think in that
Speaker 1: way it shocking, but I think that this is sort
Speaker 1: of the way that g E had to go. It
Speaker 1: had to adapt to the modern times, and it's um
Speaker 1: combination of businesses has never really made a lot of sense,
Speaker 1: but particularly in recent years, just with UM, you know,
Speaker 1: all of the breakups that we've seen across the industrial sector,
Speaker 1: I think that the logic tying these businesses together had
Speaker 1: had really been tested. And then, of course, just with
Speaker 1: all of the challenges that g E had, a lot
Speaker 1: of that can be traced back to its complexity. It
Speaker 1: just was too complex for investors, for customers, and ultimately
Speaker 1: for its own good. And so Brooke, you had a
Speaker 1: great column out today and you write that you know
Speaker 1: this will be messy, but breaking up is the right
Speaker 1: thing to do. What kind of messy. Are we talking
Speaker 1: about what should we be keeping an eye on the
Speaker 1: next few months in a year? Sure? So, like I said,
Speaker 1: I mean, there's not really a strategic logic to keep
Speaker 1: these businesses together. But they are different in that the
Speaker 1: healthcare business tends to be shorter cycle and it's casual
Speaker 1: tends to be much steadier, much more reliable. And so
Speaker 1: you know, the aviation in power businesses outside of the
Speaker 1: recent periods of crisis have tended to benefit from that
Speaker 1: steady supply of cash flow because those are businesses where
Speaker 1: you need sort of longer term investments that tend to
Speaker 1: be very expensive drag out over a number of years,
Speaker 1: and the healthcare businesses we've seen has been sort of
Speaker 1: a reliable backstop when those businesses do run into tough times,
Speaker 1: whether those are of g zone making or more recently
Speaker 1: with the pandemic. And so I think there is a
Speaker 1: question of what will these businesses look like when they're
Speaker 1: on their own, what will that capital structure look need
Speaker 1: to be um in order that yet, right, that's the
Speaker 1: thing that's tricky, and I know, uh, in David's interview
Speaker 1: with Larry Hope, I think he was trying to get
Speaker 1: to a little bit more of the specifics. We didn't
Speaker 1: get it. We don't have very many specifics at all. UM,
Speaker 1: they've sort of left that is that will be clarified
Speaker 1: at a later date. But what specifically do we want
Speaker 1: to know about that? I think we want to know
Speaker 1: what kind of debt is going to be allocated to
Speaker 1: these companies. Another big question is what will they be called?
Speaker 1: The g E brand, for all of the company's struggle,
Speaker 1: still has a lot of value, So who gets to
Speaker 1: keep that brand? UM? What do the leadership structures look
Speaker 1: like once you get past the CEO level. We do
Speaker 1: know sort of the the key CEO leaders of these
Speaker 1: three divisions, but what what else? What goes into that UM?
Speaker 1: And so I think those are the big question marks,
Speaker 1: and also just the plan for these businesses and a
Speaker 1: little bit more clarity on what they're going to look like.
Speaker 1: It is this was sort of a big picture idea,
Speaker 1: and I think it's it's a huge moment for g
Speaker 1: even to be going down this path. This is something
Speaker 1: that passed. CEO has certainly gotten a lot of questions about,
Speaker 1: but none of them have been willing to sort of
Speaker 1: make this break. And so I don't want to take
Speaker 1: away from the fact that it's a key step, but
Speaker 1: there's still a huge amount of information that we need
Speaker 1: to know to understand what exactly this is going to
Speaker 1: look like once it's all done. And it's interesting. I
Speaker 1: mean you said that a lot of CEOs have been
Speaker 1: sort of badgered about this step. Talk a little bit
Speaker 1: about Larry Colt, because I mean, he didn't come up
Speaker 1: through the ranks. He's an outsider to this company. How
Speaker 1: much did that play a factor in your view? I
Speaker 1: think it helps and that you know, it gives him
Speaker 1: more of a dispassionate look at how all of these
Speaker 1: businesses fit together versus if you you know, had really
Speaker 1: come up through the ranks working in healthcare, working with aviation,
Speaker 1: I mean, really had a culture where they moved their
Speaker 1: executives around, and I think that sort of naturally breeds attachment.
Speaker 1: But I did, you know, talk to Larry today and
Speaker 1: I think he would be the first to admit that
Speaker 1: this wasn't necessarily his game plan when he first started.
Speaker 1: And if you look back in there was so much
Speaker 1: to do just to get ge and sort of a
Speaker 1: steady state and make sure that it could pay its debts.
Speaker 1: UM and was financially sound, and so I think a
Speaker 1: lot of work had to be done to get to
Speaker 1: this point. And that's to Larry Colpe's credit, whether it
Speaker 1: was asset sales or just helping GE clean up its
Speaker 1: act a little bit. I mean a lot of this
Speaker 1: you really can't see from the outside looking in, but
Speaker 1: it's sort of basic stuff of how do we make
Speaker 1: sure that customers get their orders, how do we manage
Speaker 1: um you know, our side of the business, to make
Speaker 1: sure that we're doing everything productively and efficiently and all
Speaker 1: it helps. Just just got that twenty five seconds. So conglomerates,
Speaker 1: are we done? It feels like this or is it
Speaker 1: just this is the EBB? I mean, I feel like
Speaker 1: G represented sort of the worst of the conglomerate genre.
Speaker 1: And I think there are companies out there where the
Speaker 1: structure still does make sense. But it's a different kind
Speaker 1: of conglomerate from what you think of from like the
Speaker 1: nineteen sixties and fifties and all of that. And there
Speaker 1: is a future if you can really tell a narrative
Speaker 1: and if the businesses actually put it together. Who's next?
Speaker 1: Three AM? Just quickly? I think three M is a
Speaker 1: hard one to break up because because they have so
Speaker 1: much overlap on the technology side, they shared a lot
Speaker 1: of research. You're always a Mustary brook Sutherland. She's deals
Speaker 1: in industrials columnist at Bloomberg Opinion. Thank you, thank you,
Speaker 1: this is Bloomberg. Yeah, I'll bet you. Let me drive.
Speaker 1: Oh no, no, no no, this is not a twin
Speaker 1: home O night Please, I want to drive. It's good question,
Speaker 1: drive Drive to the clothes down radio. All right, just
Speaker 1: about Timmy's left in today's trading session, getting ready to
Speaker 1: wrap up that Tuesday trade, and definitely a different tone
Speaker 1: than what we've seen, certainly yesterday and what we've seen
Speaker 1: in the last what was it, Katie eight, It would
Speaker 1: have been nine days, That would have been nine days.
Speaker 1: No longer. Cheez, come on markets, Come on, bulls. No,
Speaker 1: I embrace you all bulls and bears alike. All right,
Speaker 1: let's get to it, the Drive to the close. Jessica
Speaker 1: Biemer is with us. She's portfolio manager at the asset
Speaker 1: management company Easterly Investment Partners. She's on the phone in Pennsylvania.
Speaker 1: So good to have you here, Jessica. Today's tone definitely
Speaker 1: a different one. We have all talked about the different reasons.
Speaker 1: Maybe it's a different FED chief looking at just some
Speaker 1: different reasons inflation concerned. What do you make of the trade?
Speaker 1: Are we just taking a breather? How do you see
Speaker 1: it or how do you interpret it? Yeah, Hi, Carol
Speaker 1: and Katie, it's so nice to be with you today.
Speaker 1: It feels less like a Tuesday and more like a Friday.
Speaker 1: We've had a really long WEEKO that we wish. I mean,
Speaker 1: lots of news flow today and we're three quarters of
Speaker 1: the way through earning season. Um, we have a lot
Speaker 1: of news. We're still processing it. And then we get
Speaker 1: news from GE. I mean they reported two weeks ago
Speaker 1: and then just today decided to split up the company. Um,
Speaker 1: you know, six thirty am up early with an eight
Speaker 1: fifteen am call. I think, uh, so very busy and UM,
Speaker 1: I think some of that is related to the fact
Speaker 1: that companies are acting less defensively for the first time
Speaker 1: in a really long time. They're going on the offensive
Speaker 1: and they're really starting to shift their strategies. UM. I
Speaker 1: think some of that's just the recovery from COVID, but
Speaker 1: they're also looking across landscape and and seeing the macro economy. UM.
Speaker 1: But you know, we're also looking at the upcoming holiday season.
Speaker 1: We're sixteen days away from Thanksgiving, and I gotta tell you,
Speaker 1: and Kate's made me very nervous a little earlier in
Speaker 1: your show with that statistic that turkey supplies are down
Speaker 1: six I mean that's a big number. Um, we're looking
Speaker 1: at that kind it's time. But you know the other
Speaker 1: thing that's interesting about her stats with air travels up
Speaker 1: eighty percent. So we're all going to celebrate Thanksgiving one
Speaker 1: way or another, right, Um, we may be eating a
Speaker 1: different type of turkey this year, but we're all going
Speaker 1: to be celebrating. We heard it from Dr Kathy Faucci
Speaker 1: talking to her David Western earlier on blueber TV. I mean, Katie,
Speaker 1: they were talking about thought. She said, you know, we're
Speaker 1: going to be together as a family, which was not
Speaker 1: really how it was last year. I know, I mean
Speaker 1: think back twelve months ago, totally different landscape. But we
Speaker 1: are headed into the holiday season expected to be a
Speaker 1: kind of fraud one. And just I was looking through
Speaker 1: some of your stock pick picks. I see Hasbro, Carter's,
Speaker 1: Cole's retail. I find that really interesting because you know,
Speaker 1: with all these supply chain issues, a lot of people
Speaker 1: have warned that it's gonna be really hard to actually
Speaker 1: shop for the holidays. I'm curious what you see as
Speaker 1: the bowl case for some of these names. Yeah, so
Speaker 1: we're going to find out a lot more next week
Speaker 1: from retailers in general. Although we had a lot of
Speaker 1: the majority of SMP companies have reported, only about half
Speaker 1: of retailers have reported, So we're going to get a
Speaker 1: lot more news there. But from what we've heard so far, UM,
Speaker 1: there are a couple issues that I think are going
Speaker 1: to affect the near term but but probably work themselves
Speaker 1: out over the next few quarters. We're talking about things
Speaker 1: like freight and shipping costs, which has clearly weighed on
Speaker 1: results at various companies UM. But we're also seeing tremendous
Speaker 1: consumer demand and I think that we're seeing that across
Speaker 1: the board as the delta variant really peaked in September.
Speaker 1: UM banks during earning season talked about higher purchase volumes
Speaker 1: UM and increased use of credit cards. So people are
Speaker 1: going out and shopping. The demand is certainly there, UM,
Speaker 1: but I expect there to be a rocky conversation from
Speaker 1: a lot of companies about certainly their ability to get
Speaker 1: inventory into the country. We started hearing about that this summer. UM.
Speaker 1: This conversation is going to continue and then we'll certainly
Speaker 1: have a very detailed conversation on earning. It is called
Speaker 1: about labor and to the extent that UM. A lot
Speaker 1: of these companies typically hire UM people seasonally bring them
Speaker 1: in and my guess is that this year that will
Speaker 1: be a lot more challenging. And that's one of the
Speaker 1: reasons why I think we've been hearing so much about
Speaker 1: supply chain issues in the news and in headlines. I
Speaker 1: think companies themselves want us to come in early, and UM,
Speaker 1: I think that will start to do that. Hey, one
Speaker 1: thing I wanted to ask you, Jessica, you Overwright Consumer Discretionaire,
Speaker 1: which is getting beat up today. It's done about one
Speaker 1: point five percent. If I look at the eleven major
Speaker 1: industry groups in the S and P five hundred, you
Speaker 1: like industrial as you mentioned, companies kind of rethinking and
Speaker 1: the big news at a g E today. Do you
Speaker 1: like General Electric more has someone who follows the industrial
Speaker 1: sector as a broken up company, three separate companies? Does
Speaker 1: that make is it more attractive to you as an investor?
Speaker 1: You know, I have to say, it's more interesting today
Speaker 1: or it will be when they break up. I think
Speaker 1: part of the challenge in being an analyst on G
Speaker 1: is that it's such a large company. I mean, they
Speaker 1: have thirty p m L statements and many of their
Speaker 1: business models are are just so different and hard to
Speaker 1: follow as an analyst, And so it may be the
Speaker 1: case that UM as they split up, will have more
Speaker 1: granular detail by by business line and by segment, so
Speaker 1: that it's more easy to compare it to the direct peers. UM. Also,
Speaker 1: at the same time, it will be harder for them
Speaker 1: to hide problems in different you know, in different parts
Speaker 1: of the business as they become smaller, and so I
Speaker 1: think it'll just be an interesting transition. The big question
Speaker 1: for me UM with G, and one of the reasons
Speaker 1: why we're not currently investing there, is their legacy liabilities
Speaker 1: and what that long term care book looks like. Where
Speaker 1: is going to be once the company splits up, and
Speaker 1: who's really responsible over the long term. So I think
Speaker 1: there is going to be a process by which all
Speaker 1: of the sell side analysts to really understand the different
Speaker 1: individual spun off business models and and we'll really begin
Speaker 1: to understand if there's an investment case there and just go.
Speaker 1: I want to do your your thoughts on the financials
Speaker 1: a little bit more because you are bullish on some
Speaker 1: of the big banks Wells, Fargo, Bank of America, JP,
Speaker 1: Morgan Chase, And it feels like those names. I mean,
Speaker 1: they've posted blowout after blowout quarter when it comes to trading,
Speaker 1: but it seems like they follow the trajectory of treasury
Speaker 1: yields more than anything else. Curious about how you consider
Speaker 1: those names. And we have about thirty seconds left. Yeah,
Speaker 1: that's that's true. I mean, we we are focused on, um,
Speaker 1: a few things with the banks. I think one of
Speaker 1: them is loan growth, and it's something that we've all
Speaker 1: been waiting for. We really haven't been able to see
Speaker 1: the full power of earnings with loan growth and with
Speaker 1: a normalized credit cycle, so we're looking for some upside there. Um.
Speaker 1: These are very stable balance sheets, they're very shareholder friendly,
Speaker 1: and I think there's a lot more to come in
Speaker 1: terms of what they're able to earn for investors. All Right,
Speaker 1: we're gonna leave on that note. He thank you so much.
Speaker 1: Jessica Beamer. She is portfolio manager at Easterly Investment Partners,
Speaker 1: joining us on the phone from Pennsylvania. Thanks for listening
Speaker 1: to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
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