WEBVTT - Inflation, Crypto, Commodities, And Credit (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.520 with essential market moving news on the Bloomberg Markets Podcast, 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.640 at Bloomberg dot com slash podcast. All right, the Inflation 0:00:22.680 --> 0:00:24.920 Reduction Act. Matt and I talked about it a lot, 0:00:25.400 --> 0:00:27.200 as it relates to E s G, As it relates 0:00:27.240 --> 0:00:30.080 to taxes, as it relates to climate. But the title 0:00:30.760 --> 0:00:33.600 Inflation Reduction Act, as I read through it, I'm like 0:00:33.680 --> 0:00:36.800 my hands around it. Is it reducing inflation? I don't know. Say. 0:00:36.880 --> 0:00:39.960 Yesterday we talked with Sadequaba right from I Squared Capital 0:00:40.560 --> 0:00:43.440 Infrastructure at Morgan Stanley. This guy is super plugged in 0:00:43.560 --> 0:00:46.320 and way smarter than me, like exponentially smarter, and he 0:00:46.400 --> 0:00:49.680 said it is longer term going to have a serious 0:00:49.680 --> 0:00:52.400 impact inflation. All right, Good for him. Carol Murphy's CEO 0:00:52.479 --> 0:00:54.880 of Kestro Holdings, joins us today. Carol, what do you 0:00:55.040 --> 0:00:57.560 what's your read of this Inflation Reduction Act? How should 0:00:57.560 --> 0:01:01.160 we think about it? Here? Well, I have to say, 0:01:01.200 --> 0:01:03.560 I'm with you, guys, and I think the title is 0:01:03.640 --> 0:01:07.199 a very clever piece of marketing, so kudos to whoever 0:01:07.360 --> 0:01:09.880 came up with the name. But I agree once you 0:01:10.080 --> 0:01:13.440 dig in, I mean, this is really about climate change policy. 0:01:13.600 --> 0:01:17.800 It's about access to healthcare. It's not about inflation. The 0:01:17.920 --> 0:01:20.200 thing that I mean, I understand why they named it 0:01:20.319 --> 0:01:23.120 that right got to it. They're selling it, and I 0:01:23.160 --> 0:01:25.240 don't even know how smart it was, because when you 0:01:25.319 --> 0:01:27.360 look at the details, you start to think this has 0:01:27.400 --> 0:01:31.000 nothing to do with inflation. But what gets me is 0:01:31.160 --> 0:01:35.320 they left in the carried interests tax loophole for you know, 0:01:35.560 --> 0:01:37.920 rich pe guys. And good for those rich pe guys. 0:01:37.959 --> 0:01:40.200 I'm not, you know, knocking them, but it just doesn't 0:01:40.240 --> 0:01:42.479 sound like something that Democrats would do. Then they didn't 0:01:42.520 --> 0:01:45.520 put the salt deduction in, which hurts middle class people 0:01:45.800 --> 0:01:48.480 like me, you know, and that seems like something the 0:01:48.520 --> 0:01:50.600 Democrats would want to I understand how this is a 0:01:50.640 --> 0:01:55.200 Democratic bill. Frankly on the tax side of things. Yeah, 0:01:55.320 --> 0:01:57.480 I have to agree, And it's a disappointment that those 0:01:57.520 --> 0:01:59.760 two got you know, left on the cutting room floor. 0:02:00.040 --> 0:02:02.280 I think those those are those have been objectives of 0:02:02.520 --> 0:02:05.480 you know, Democrats and others for quite some time now. 0:02:05.800 --> 0:02:08.680 They did get in the corporate minimum tax, which has 0:02:08.760 --> 0:02:12.440 been a goal and attack on share repurchases. So you know, 0:02:12.600 --> 0:02:14.760 that gets a little bit more to turn the screws 0:02:14.800 --> 0:02:17.280 on some companies in a way that you know supports 0:02:17.320 --> 0:02:20.400 democratic policy goals. UM. But I think you know, some 0:02:20.520 --> 0:02:22.840 of those other things that were left out were disappointed. 0:02:22.960 --> 0:02:24.360 What do you think about that? I mean, are they 0:02:24.440 --> 0:02:30.000 throwing a big giant blanket over all large corporations and saying, 0:02:30.160 --> 0:02:32.679 you know, these companies are all from now, I'm gonna 0:02:32.680 --> 0:02:37.359 pay minimum No. I mean when we look at the numbers, 0:02:37.400 --> 0:02:39.639 it's really just on the margin. I mean, it's a 0:02:39.720 --> 0:02:42.240 handful of companies that are going to be very impacted 0:02:42.320 --> 0:02:45.760 by that corporate minimum tax UM. And I think politically 0:02:45.800 --> 0:02:48.840 it plays very well to write this idea that very large, 0:02:49.080 --> 0:02:52.520 very profitable companies are able to avoid paying any taxes 0:02:52.600 --> 0:02:54.799 does not fit well with a lot of Americans. So 0:02:55.520 --> 0:02:57.880 I think it helps to kind of close the loophole, 0:02:57.919 --> 0:03:00.000 but really isn't going to impact all that many company 0:03:00.040 --> 0:03:04.000 me Karrot, we we've got somebody here at Bloomberg govin Signarelli. 0:03:04.000 --> 0:03:06.239 He's a strategist force here, and he spent his career 0:03:06.320 --> 0:03:09.640 on Wall Street trading UH currencies and bonds and all 0:03:09.639 --> 0:03:11.880 that kind of stuff. He kind of says, this focused 0:03:11.880 --> 0:03:14.959 by the FED on inflation is misplaced. He kind of 0:03:15.000 --> 0:03:17.120 feels like inflation is kind of taking care of itself. 0:03:17.280 --> 0:03:19.240 And I only look at you know, I look at 0:03:19.280 --> 0:03:24.679 gasolene prices three dollar for regular a gallant? Thank you? 0:03:24.800 --> 0:03:26.880 Did I say bar a gallant? I do that all 0:03:26.880 --> 0:03:29.840 the time. Okay, So that's for a regular unletted. So 0:03:31.080 --> 0:03:35.520 what's you're calling inflation here? So it's interesting because we've 0:03:35.600 --> 0:03:38.360 sort of been in that same camp, and that for 0:03:38.600 --> 0:03:42.280 good prices at least, it's pretty easy to follow the 0:03:42.400 --> 0:03:45.640 pig and the python and see how these inflationary pressures 0:03:45.640 --> 0:03:50.320 are working themselves out, and you know, things like container prices, subsiding, 0:03:50.480 --> 0:03:54.880 commodity prices easing. The harder part is on the services side. 0:03:55.320 --> 0:03:57.360 Those are prices that tend to move around a lot 0:03:57.480 --> 0:04:00.640 less and have still seen a lot of inflation. Um 0:04:00.920 --> 0:04:03.680 those prices tend to be very closely aligned with the 0:04:03.760 --> 0:04:07.120 labor market. So cooling the labor market is going to 0:04:07.200 --> 0:04:10.560 be really key to bringing that down. And we started 0:04:10.640 --> 0:04:13.480 to see some anecdotal evidence that the labor marketed cooling, 0:04:13.560 --> 0:04:16.000 but that typically takes a lot longer, so I think 0:04:16.080 --> 0:04:18.520 that will be the more difficult objective. Well, and not 0:04:18.680 --> 0:04:23.320 even um really anecdotal anymore. Yesterday I saw a survey 0:04:23.520 --> 0:04:27.040 from Price Waterhouse Coopers and they talked to more than 0:04:27.120 --> 0:04:30.720 seven US executives and board members across a range of industries. 0:04:31.200 --> 0:04:35.360 They said are They found that half of respondents said 0:04:35.360 --> 0:04:38.520 they're reducing headcount or planned to, fifty two percent have 0:04:38.600 --> 0:04:42.440 implemented hiring freezes. Um more than four and ten are 0:04:42.520 --> 0:04:46.680 ascending job offers. This is These are some real storm 0:04:46.720 --> 0:04:50.400 clouds on the horizon, yeah, for sure, and those will 0:04:50.400 --> 0:04:52.560 start to work their way into the actual numbers over 0:04:52.600 --> 0:04:55.280 the next couple of months. So I think this will be, 0:04:55.720 --> 0:04:59.440 you know, a big headwind. And I've been warning folks 0:04:59.520 --> 0:05:02.200 who are sort of newer to the job market that 0:05:02.839 --> 0:05:05.520 this is not a normal job market. This is so 0:05:05.760 --> 0:05:07.920 much easier to get a job than we often see 0:05:08.040 --> 0:05:10.520 during cycles. So I think folks who have only been 0:05:10.560 --> 0:05:12.200 in the job market for a couple of years really 0:05:12.240 --> 0:05:14.440 need to brace themselves. But Karen, can I ask you 0:05:14.440 --> 0:05:17.720 about something completely different here? Looking through your resume Um, 0:05:17.839 --> 0:05:19.840 I'm guessing you fell in love with Prague at some 0:05:19.960 --> 0:05:22.440 point and decided to stay there for a while. Do 0:05:22.600 --> 0:05:24.960 they not have the best beer in the world? I 0:05:25.120 --> 0:05:27.520 have never in all of my travels, and I drink 0:05:27.560 --> 0:05:31.159 beer everywhere I go, have better beer, had better beer 0:05:31.200 --> 0:05:34.400 than in the Czech Republic. It is so true. And 0:05:34.520 --> 0:05:37.760 the tech pride themselves on drinking the largest amount of 0:05:37.800 --> 0:05:44.360 beer per capita. And there's a reason that's great. So alright, So, Karen, 0:05:44.400 --> 0:05:46.960 I mean, you know, it's interesting in this economy here 0:05:47.960 --> 0:05:50.000 we focus on the consumer. The consumer seems like in 0:05:50.080 --> 0:05:53.600 pretty decent shape. It seems like the consumer has been 0:05:53.720 --> 0:05:57.320 so confounding because you're absolutely right, you know, job we 0:05:57.480 --> 0:05:59.760 we talked about the job market slowing, but right now 0:05:59.839 --> 0:06:04.920 it's very very strong. Wages are up, consumer balance sheets 0:06:04.920 --> 0:06:09.400 are very strong, but consumer confidence continues to look really poor. 0:06:09.720 --> 0:06:11.440 I mean, it's among the lowest that we've had in 0:06:11.640 --> 0:06:15.560 quite a number of years. So consumers are spending money 0:06:15.640 --> 0:06:17.640 like they feel good, but they're telling us that they 0:06:17.680 --> 0:06:19.640 don't feel good. And I'm worried that's going to fall 0:06:19.640 --> 0:06:22.640 off a cliff here when this when this job news 0:06:23.160 --> 0:06:26.280 comes home to roost and savings are down. I know 0:06:26.440 --> 0:06:28.880 that data is a little bit sketchy, but um credit 0:06:28.960 --> 0:06:31.800 card uses going up at some point, I'm worried consumer. Right, 0:06:32.000 --> 0:06:33.599 all right, Karen, thank you so much for joining us. 0:06:33.640 --> 0:06:37.240 Kara Murphy, c IO of Chestra Holdings here. She has 0:06:37.240 --> 0:06:41.240 a master's International Relationship University of Chicago and it be 0:06:41.320 --> 0:06:44.560 as an international politics from Georgetown. That's pretty darn good. 0:06:44.600 --> 0:06:47.599 I mean, you go to Georgetown, you're thinking about public service, 0:06:48.200 --> 0:06:50.880 you know, going into government, all that kind of good stuff. 0:06:50.920 --> 0:06:52.920 And then she gets a masters in Chicago. Not bad. 0:06:58.200 --> 0:07:03.320 Looking at bitcoin off eight point four seventy five four 0:07:03.400 --> 0:07:05.520 bitcoin and we can talk bitcoin because Tom Keen is 0:07:05.600 --> 0:07:08.520 not here. It's generally during surveillance. It is a bitcoin 0:07:08.680 --> 0:07:12.200 free studio. But Everett Millman East, chief markets analyst at 0:07:12.240 --> 0:07:16.760 Gainesville Coins. You look at precious metals at Gainesville Coins. Everett, 0:07:16.800 --> 0:07:20.000 but we also like talking to you about bitcoin. Any 0:07:20.120 --> 0:07:22.760 thoughts here about what we're seeing? Is this just a 0:07:22.880 --> 0:07:25.880 trading thing that isn't because of the FED? It's because 0:07:25.920 --> 0:07:27.520 of the Fed? Right? Yeah, I guess you're right. I 0:07:27.560 --> 0:07:28.640 guess you're right. What do you what do you have 0:07:28.720 --> 0:07:33.400 for us effort? Well? Sure, I think basically across markets 0:07:33.480 --> 0:07:35.360 right now, pointing to the FED is going to be 0:07:36.080 --> 0:07:38.840 the correct answer more often than not. But really, what 0:07:38.960 --> 0:07:41.600 I look at with the cryptocurrency market as it stands 0:07:41.800 --> 0:07:44.680 is it's caught in a bit of a catch twenty two. UM. 0:07:44.800 --> 0:07:49.240 The lack of a regulatory one of my favorites. The 0:07:49.400 --> 0:07:53.360 lack of a regulatory framework UM is certainly hampering adoption 0:07:53.800 --> 0:07:56.800 of bitcoin and other cryptos. But on the other hand, 0:07:57.240 --> 0:08:01.880 tight regulation really is antithetical to the core principles of 0:08:02.040 --> 0:08:05.040 bitcoin and many other cryptos, which is to say that, um, 0:08:05.240 --> 0:08:08.880 they're the entire animust behind bitcoin is to have completely 0:08:09.000 --> 0:08:14.000 private and largely anonymous transactions through a decentralized network. So 0:08:14.480 --> 0:08:17.800 the more that regulation comes in, the less likely that 0:08:18.040 --> 0:08:20.840 is to be the case. But again, I think almost 0:08:20.840 --> 0:08:23.120 anyone involved in the crypto space wants to see some 0:08:23.360 --> 0:08:26.760 sort of regulation to kind of put some people's fears 0:08:26.840 --> 0:08:29.640 to rest. Well, it's exactly the people who are selling 0:08:29.920 --> 0:08:34.040 you know, the picks and uh wheelbarrows that they want 0:08:34.080 --> 0:08:37.440 to see regulation because that's how they make their money 0:08:37.559 --> 0:08:40.640 on on the whole gold rush, not actually the gold 0:08:40.960 --> 0:08:44.680 The people who are into um bitcoin for real don't 0:08:44.720 --> 0:08:49.400 want to see UM censorship, government censorship allowed on money right. 0:08:49.679 --> 0:08:52.760 I talked to UM, the CEO of Cracking, a couple 0:08:52.760 --> 0:08:54.160 of days ago, and I thought it was really interesting 0:08:54.200 --> 0:08:56.199 because he's kind of torn. Cracking is one of the 0:08:56.240 --> 0:08:59.839 biggest crypto exchanges. Jesse Powell is the CEO, and he's you. 0:09:00.000 --> 0:09:01.640 And what you talked to him, you can see he's 0:09:01.640 --> 0:09:03.800 clearly torn because on the one hand, he has this business, 0:09:04.080 --> 0:09:06.360 he employs a ton of people, he wants to make money, 0:09:06.480 --> 0:09:09.400 and regulation and working with the government is he goes 0:09:09.480 --> 0:09:11.680 hand in hand with that. On the other hand, he's 0:09:11.720 --> 0:09:14.920 clearly like an early stage bitcoiner who wants who has 0:09:15.000 --> 0:09:18.000 the kind of libertarian viewpoint, and you just can't reconcile 0:09:18.120 --> 0:09:21.880 those two things. I tend to agree. I think the 0:09:22.120 --> 0:09:25.319 the idealism behind bitcoin, as he said, to have this 0:09:25.400 --> 0:09:28.760 sort of libertarian bent to being sound money and being 0:09:28.840 --> 0:09:32.280 censorship resistant UM. Even on a personal level, that was 0:09:32.400 --> 0:09:34.679 one of the main reasons that I got interested in 0:09:34.800 --> 0:09:37.880 bitcoin early on. But as we see, there really does 0:09:38.040 --> 0:09:42.520 need to be some establishment backing UM, and you know, 0:09:42.679 --> 0:09:46.640 some regulation would certainly spur that. We've seen that over 0:09:46.720 --> 0:09:49.760 the past year. A lot of major US corporations have 0:09:49.880 --> 0:09:54.080 been rather enthusiastic investors in crypto startups, but it's still 0:09:54.320 --> 0:09:57.360 on the order of about a billion dollars over a 0:09:57.440 --> 0:10:01.160 twelve month period. UM. That's being held back because again, 0:10:01.600 --> 0:10:04.719 if they make those investments, they start businesses and then 0:10:04.880 --> 0:10:07.880 here comes Washington with a hammer to crush all of 0:10:07.960 --> 0:10:11.319 those businesses. Well, that's um, that's that's a reason to 0:10:11.440 --> 0:10:13.680 not invest. That's the reasons shy away. So we're still 0:10:13.720 --> 0:10:15.439 seeing that playoff. Well, I mean every I tend to 0:10:15.480 --> 0:10:18.199 see it like this. There does need to be regulation, 0:10:18.360 --> 0:10:21.199 and there has to be a framework for bitcoin to 0:10:21.280 --> 0:10:24.079 work with governments around the world. If you wanted to 0:10:24.200 --> 0:10:26.959 trade trade for twenty dollars, right, if you want a 0:10:27.000 --> 0:10:29.240 bitcoin to cost ten tho dollars, if you need it 0:10:29.280 --> 0:10:32.360 to cost five grand for bitcoin, then yes, but not 0:10:33.200 --> 0:10:36.520 if you don't care about that, Not if you're someone 0:10:36.600 --> 0:10:40.120 who wants to use bitcoin just within the community of 0:10:40.200 --> 0:10:43.000 people who all have the same principles, Because if you 0:10:43.120 --> 0:10:45.920 open it up to regulation, as we've seen with um, 0:10:46.280 --> 0:10:49.760 the Russian invasion of Ukraine, they're gonna censor it. They're 0:10:49.800 --> 0:10:52.440 going to tell exchanges you can't trade with anybody who 0:10:52.480 --> 0:10:56.800 has a Russian residence, which I mean you can have 0:10:56.920 --> 0:10:59.440 your own view on what Vladimir Putin does, but certainly 0:11:00.440 --> 0:11:04.400 random dude you know in in the uh suburban or 0:11:04.920 --> 0:11:08.240 urban areas or rural areas of Russia has little to 0:11:08.280 --> 0:11:12.240 do with that, correct. And and that is a constant 0:11:12.320 --> 0:11:16.080 threat um, not just from censorship, but from the idea 0:11:16.240 --> 0:11:19.720 that uh, you know, governments and central banks would sort 0:11:19.760 --> 0:11:23.520 of co opt the idea with central bank digital currencies. 0:11:23.920 --> 0:11:27.920 That would because their government money, they would be very um, 0:11:28.320 --> 0:11:31.640 they would have no resistance to to censorship. Um. And 0:11:31.840 --> 0:11:35.040 we're still obviously although bitcoin has been around about a decade, 0:11:35.320 --> 0:11:40.120 we're still these early stages where the the pass forward 0:11:40.280 --> 0:11:43.000 is not entirely clear. And then we have to also 0:11:43.080 --> 0:11:46.720 take into account that it is not like bitcoin against 0:11:47.040 --> 0:11:51.280 one central enemy. Um. You have governments all over the 0:11:51.320 --> 0:11:54.079 world with their own individual interests that are kind of 0:11:54.120 --> 0:11:56.959 attacking this problem from their own angles. So I think 0:11:57.000 --> 0:11:59.880 that does create a although a very kind of wild 0:12:00.040 --> 0:12:03.640 West dynamic. Um, it is still fertile ground for some 0:12:04.000 --> 0:12:07.880 growth and experimentation with how how best to tackle is 0:12:07.920 --> 0:12:13.400 from a regulatory standpoint, Where is Lutz, Florida, Ah, So 0:12:13.559 --> 0:12:15.959 it was just north of Tampa. It's in the Tampa 0:12:16.000 --> 0:12:20.840 Bay area. That's where uh you guys, that's for your base, right, Yes, 0:12:21.000 --> 0:12:23.640 that's where Gainesville Coins headquarters. Of the name is a 0:12:23.720 --> 0:12:26.439 holdover from where we were founded. Um, but we do 0:12:26.600 --> 0:12:31.440 also have offices internationally, um in London and one in Singapore. Alright, 0:12:31.480 --> 0:12:35.559 So Gainesville is what's Gainesville? Isn't that the Gators? Is that? 0:12:35.600 --> 0:12:38.240 The University of Florida? Yeah, the University of Florida in 0:12:38.520 --> 0:12:40.920 the central part of the state. Alright, awesome, all right? 0:12:40.960 --> 0:12:43.720 And then Tallahassee's Florida State. I'm just getting my because 0:12:43.760 --> 0:12:45.679 you think about Florida, you know, you know, I just 0:12:45.760 --> 0:12:47.880 kind of think South Florida. But you gotta you gotta 0:12:47.880 --> 0:12:50.719 go to tahas for Florida State. Well, personally, I love 0:12:50.800 --> 0:12:56.640 the Panhandle the best, the best beaches, literally, folks listening 0:12:56.679 --> 0:12:57.840 around the world, you want to go to the best 0:12:57.880 --> 0:13:01.520 beaches in the US destin Florida and that kind of panhandles. Awesome? 0:13:01.679 --> 0:13:03.360 All right, Everett, thanks so much for joining us. We 0:13:03.400 --> 0:13:05.719 always appreciate talking to you. Everett Millman. He's a chief 0:13:05.760 --> 0:13:10.200 market analyst at Gainesville Coins. Located and beautiful Lut's Florida, 0:13:10.280 --> 0:13:14.880 just north of Tampa, Matt. I spend a lot of 0:13:14.960 --> 0:13:18.800 time in the central California coast, and I tell you, 0:13:19.160 --> 0:13:21.880 you know, like around Selina's you look as far as 0:13:21.920 --> 0:13:26.559 the eye can see literally our farms, and it's like 0:13:26.760 --> 0:13:30.040 we're most It just seems like most of our countries 0:13:30.320 --> 0:13:32.880 fruits and veggies come from. I mean, they're just everywhere 0:13:32.920 --> 0:13:35.360 for Aunt, miles and miles and miles and miles and miles. 0:13:35.559 --> 0:13:39.000 And one of the big companies there in Watsonville, uh 0:13:39.360 --> 0:13:42.319 is Drift Calls Thinks Strawberries, fresh strawberries. Those are the 0:13:42.320 --> 0:13:43.880 folks that bring you that kind of stuff so sore 0:13:43.960 --> 0:13:47.079 and boring. He's a president of Drift Calls of the America's. 0:13:47.120 --> 0:13:50.280 They are in fact based in Watsonville, California, near my 0:13:50.440 --> 0:13:53.400 crib in Carmel. Uh sore and thanks so much for 0:13:53.520 --> 0:13:56.760 joining us here. Talk to us about your business here. 0:13:56.840 --> 0:14:00.520 How's it from both a supply you know, in terms 0:14:00.559 --> 0:14:05.000 of the farms, the the environment, all that type of stuff, 0:14:05.000 --> 0:14:09.120 as well as the demand for your products. Yeah, and 0:14:09.320 --> 0:14:10.920 for the most part, I would say these things have 0:14:10.960 --> 0:14:14.199 been pretty good. Um. I think the reality is there's 0:14:14.280 --> 0:14:16.599 more people work from home and had to get a 0:14:16.640 --> 0:14:19.000 mid morning snack on afternoon snack. You know, they went 0:14:19.080 --> 0:14:22.120 to varies very frequently. And so the demand side in 0:14:22.160 --> 0:14:24.600 officiness has been very strong the last couple of years, 0:14:25.480 --> 0:14:27.720 and we actually don't really see that ending as we're 0:14:27.720 --> 0:14:29.600 sort of coming out on the other side. And so 0:14:29.880 --> 0:14:32.760 I think the demand side has been very good. Production 0:14:32.920 --> 0:14:36.320 is way more challenged. M We certainly had some pretty 0:14:36.360 --> 0:14:39.680 significant weather events, and an inflation, of course, is hitting us. 0:14:39.760 --> 0:14:42.240 I mean, we are planning next year's crop right now, 0:14:43.320 --> 0:14:45.800 and we are doing that with a cost structure that 0:14:46.400 --> 0:14:48.840 that we've never seen before. So what so inflation is 0:14:48.880 --> 0:14:51.360 gonna be with us? I can think of a few 0:14:51.440 --> 0:14:54.040 ways in which inflation would hit you. One of the 0:14:54.720 --> 0:14:57.040 stories we've been seeing a lot lately is the water 0:14:57.200 --> 0:15:01.160 shortage in California. Is that an issue for you? I 0:15:01.200 --> 0:15:03.840 mean a different issue in the long run. I think 0:15:03.880 --> 0:15:07.160 the reality is we have it off water today to 0:15:07.200 --> 0:15:10.080 grow up the crops we have, but we are several 0:15:10.080 --> 0:15:12.720 places where we're getting rationed down to sort of the 0:15:12.760 --> 0:15:15.400 minimum level where that we need. And if we get 0:15:15.480 --> 0:15:17.720 rationed anymore, then then some of the crops will not 0:15:17.800 --> 0:15:21.800 be combiable. So if you get rationed anymore. You can't say, 0:15:21.840 --> 0:15:24.960 all right, well we'll spend another ten There's there's little 0:15:25.000 --> 0:15:28.400 you can do, right, Yeah, I mean typically the way 0:15:28.440 --> 0:15:30.880 it it gets allocated out is like on a per 0:15:30.960 --> 0:15:33.480 acre basis, and we need about two and a half 0:15:33.480 --> 0:15:36.320 a computer water to grow strawberry crop. And if our 0:15:36.360 --> 0:15:39.240 allocation goes below that, you're just not going to have 0:15:39.240 --> 0:15:41.120 a product to crop. Right. So, and we are right 0:15:41.160 --> 0:15:42.720 there on the on the edge of that in a 0:15:42.800 --> 0:15:46.120 couple of districts in southern California. So and talk to 0:15:46.200 --> 0:15:48.920 us about your labor situation. We hear about it, you know, 0:15:49.000 --> 0:15:52.400 across almost every single industry, uh, you know, over the 0:15:52.480 --> 0:15:55.840 less several years, a labor shortage, and of course your 0:15:55.920 --> 0:15:58.920 labor uh you know market is a little bit unique. 0:15:58.960 --> 0:16:02.120 It's a lot of immigrants, legal and illegal. Talk to 0:16:02.240 --> 0:16:06.960 us about your labor supply kind of what you're doing there. Yeah, 0:16:06.960 --> 0:16:09.120 I mean I think that what's happening in California now, 0:16:09.200 --> 0:16:13.400 it's we're finally seeing a significant increase in the agricultural 0:16:13.480 --> 0:16:16.440 labor coming in under the age to a guest worker program. 0:16:17.320 --> 0:16:19.840 Really not something that you saw very much in California. 0:16:19.920 --> 0:16:23.080 Is much more common on the East Coast and that 0:16:23.240 --> 0:16:26.120 wasn't needed to supplement the shortage that we have. Without that, 0:16:26.360 --> 0:16:29.000 we we simply couldn't pick the crops. And we expect 0:16:29.040 --> 0:16:31.960 that to increase year after yearfter year going forward. So 0:16:32.120 --> 0:16:35.920 even if you're bringing in workers from other countries, I'm 0:16:35.960 --> 0:16:39.240 assuming um wage costs are still going up. There must 0:16:39.280 --> 0:16:43.080 be some pressure there with the inflation that everyone's seeing. Yeah, 0:16:43.120 --> 0:16:44.920 and I think on top of that, you know, California 0:16:45.000 --> 0:16:47.800 has passed, you know, a number of pieces of legislation 0:16:47.920 --> 0:16:50.640 that's made labor costs a lot more expensive. So even 0:16:50.720 --> 0:16:55.320 before you know, the general economy start feeling inflation, we've 0:16:55.360 --> 0:16:57.320 been feeling inflation for quite a long time. I would 0:16:57.360 --> 0:17:00.520 say for almost ten years. Labor costs has been going 0:17:00.600 --> 0:17:03.480 up twice the rate of inflation. And so we've been 0:17:03.520 --> 0:17:06.600 dealing this for a long time. And so efficiencies and 0:17:07.520 --> 0:17:10.639 increasing productivity has been a major focus of ours for 0:17:10.920 --> 0:17:12.560 you know, I would say the last six seven years. 0:17:13.119 --> 0:17:18.120 So our consumers willing to pay um the boost in prices. 0:17:18.200 --> 0:17:20.160 You know, every time I go to the grocery store, 0:17:20.240 --> 0:17:23.280 I throw a couple of boxes of strawberries and blueberries 0:17:23.320 --> 0:17:25.120 in the cart without looking. But my wife says, wait 0:17:25.160 --> 0:17:27.879 a second, those are ten dollars a box. You know, 0:17:27.920 --> 0:17:29.720 I don't know where we're shopping, but you get my 0:17:29.920 --> 0:17:33.280 you get my point. Yeah, absolutely, So yeah, I think 0:17:33.280 --> 0:17:36.000 the good nurses and it's that consumers are willing to 0:17:36.119 --> 0:17:39.640 pay for really good fruits. Okay, that's you know, if 0:17:40.280 --> 0:17:43.520 consumers are not going to trade down to cheaper, lower 0:17:43.640 --> 0:17:46.000 quality strawberries. I think that the evidence of that is 0:17:46.119 --> 0:17:50.040 very clear. Our company has historically done well and there's 0:17:50.080 --> 0:17:53.600 been an economic downturn because consumers may trade down their 0:17:53.680 --> 0:17:55.880 car or the vacation or not eat out as much, 0:17:56.520 --> 0:17:59.000 but they're not they're never trading down the quality of 0:17:59.040 --> 0:18:01.520 their berries when they eat them at home. So so 0:18:01.680 --> 0:18:03.960 that's definitely we believe that that's here to stay. And 0:18:04.000 --> 0:18:06.720 that's how that makes sense. Right. This is a relatively 0:18:06.800 --> 0:18:09.959 cheap indulgence and there's really no reason to go off 0:18:10.040 --> 0:18:12.720 to the three dollars strawberries when you can get better 0:18:12.760 --> 0:18:17.119 for dollar strawberries. So dry schools again, I know the 0:18:17.200 --> 0:18:21.080 Brandon listeners. Go google it. You'll you'll recognize the brand immediately. 0:18:21.080 --> 0:18:25.119 When when when you see it, Um, who does the 0:18:25.280 --> 0:18:29.040 average California strawberry? Who does that? Who? Does it compete 0:18:29.080 --> 0:18:32.480 with you know, I think we we like to think 0:18:32.520 --> 0:18:35.840 that we compete against you know, there's snacking alternatives, right, 0:18:35.880 --> 0:18:38.720 and that's what we've seen throughout the pandemic. We're not 0:18:38.800 --> 0:18:43.080 really competing against the other fruits. We really mean competing 0:18:43.200 --> 0:18:46.000 for a share the consumer stomach. And so we are 0:18:46.040 --> 0:18:49.520 really focused on going outside and looking to bring consumers 0:18:49.560 --> 0:18:52.760 into coming in from other categories and and make them, 0:18:53.400 --> 0:18:56.199 you know, make a healthier choice and eat fresh berries instead. 0:18:56.440 --> 0:18:58.280 I was wondering what the cheaper I guess the cheaper 0:18:58.640 --> 0:19:01.960 alternative would just be old and yuckier, as my daughter 0:19:02.000 --> 0:19:05.560 would say, strawberries. So you're obviously going to pick the 0:19:05.640 --> 0:19:07.520 best looking box that you can find at the store, 0:19:07.640 --> 0:19:12.280 right what what what you don't You don't compete with bananas, 0:19:12.359 --> 0:19:17.440 You don't compete with Kiwi's or blueberries. I mean, in 0:19:17.520 --> 0:19:19.399 the end, there's only so much fruit that ends up 0:19:19.440 --> 0:19:21.280 in the shopping basket. So of course there is some 0:19:21.480 --> 0:19:24.960 of that going on and um, but your strawberries is 0:19:25.040 --> 0:19:27.440 by far the number one category in produce and is 0:19:28.119 --> 0:19:30.760 the fastest growing category, has been so for ten years. 0:19:31.320 --> 0:19:33.760 It's not twice the size, So the the second biggest 0:19:33.920 --> 0:19:37.000 fruit category, which would be apples, and uh, you know, 0:19:37.040 --> 0:19:39.400 bananas is not growing that much and hasn't really grown 0:19:39.440 --> 0:19:41.639 for a long time. And I think it's just it's 0:19:41.680 --> 0:19:44.200 the versatility of berries, is the health benefits of berries. 0:19:44.280 --> 0:19:46.800 It is the indulgence of berries, right, I mean, not 0:19:47.040 --> 0:19:49.640 too many categories to sort of check all the boxes. 0:19:50.320 --> 0:19:54.119 And we're very fortunate our stars so so. And just 0:19:54.280 --> 0:19:55.399 you know, I spent a lot of time in the 0:19:55.480 --> 0:19:58.159 Central Valley. I see the folks picking the berries. So 0:19:58.240 --> 0:20:01.879 my question is what the time between the barry getting 0:20:01.960 --> 0:20:06.800 picked in Watsonville or Salinas and getting to a supermarket 0:20:06.880 --> 0:20:11.600 in New Jersey. That's not expensive. It's got an expensi 0:20:11.640 --> 0:20:14.400 cificate against the truck across. I mean, well over ten 0:20:14.440 --> 0:20:16.760 thousand dollars would be typical to get that truck across. 0:20:17.440 --> 0:20:19.679 We will have it there in three to four days, right, 0:20:19.760 --> 0:20:21.600 and then it gets to a distribution center in New 0:20:21.680 --> 0:20:23.520 Jersey and then out to the store, right, And so 0:20:24.880 --> 0:20:27.800 you know, New Jersey consumers probably realistically I can get 0:20:27.840 --> 0:20:30.160 their hands on the berries in six to seven maybe 0:20:30.200 --> 0:20:32.320 eight days, depending on you know, exective way it's at. 0:20:32.880 --> 0:20:35.320 So you know it's pretty fast. Yeah, that's the kind 0:20:35.320 --> 0:20:37.520 of trucking I want to do. That's when I get 0:20:37.560 --> 0:20:40.359 my CDL. That's what I want to Watsonville. I'm not 0:20:40.400 --> 0:20:42.520 doing these little hundred mile John's. Yeah, I want to 0:20:42.560 --> 0:20:44.639 go across country in three to four days. All right. 0:20:44.640 --> 0:20:46.240 It's good stuff. I'm telling you, folks. You go to 0:20:46.320 --> 0:20:49.320 Central Valley, California, and it is amazing. And we're gonna 0:20:49.320 --> 0:20:51.080 go back to Central Valley. We're gonna go back to 0:20:51.160 --> 0:20:53.480 California just a little bit. You know why Why because 0:20:53.480 --> 0:20:55.200 we're gonna talk to the CEO of Lamborghini. He's a 0:20:55.240 --> 0:20:56.960 pebble beach. He's a pebble beach. All right, that's how 0:20:57.040 --> 0:20:59.240 far away? How far away are you staring from pebble Beach. 0:21:00.119 --> 0:21:02.320 I'm twenty miles away, okay. And I saw all the 0:21:02.400 --> 0:21:07.280 cars yesterday. So there you got all right, good stuff. 0:21:07.320 --> 0:21:10.480 So in boring the president of Driscoll's of the America's 0:21:10.800 --> 0:21:13.800 think strawberries, blueberries, all that kind of stuff. And I 0:21:13.960 --> 0:21:17.600