Latest / Bloomberg Intelligence / CDK Hack, Apple EU Warning

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CDK Hack, Apple EU Warning · Bloomberg Intelligence

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Speaker 2: So here's a headline for you. Blacksuit cyber crime gang
0:28
Speaker 2: is blamed for major CDK ransomware attacks.
0:31
Speaker 3: So this is the deal.
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Speaker 2: Fifteen thousand car dealerships across the US in Canada have
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Speaker 2: gone days now without software systems that are crucial to
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Speaker 2: running their business, and this is after multiple cyber attacks
0:43
Speaker 2: on CDK Global. Now that company's just a handful of
0:46
Speaker 2: dealer management systems that provide auto retailer's ability to basically function,
0:51
Speaker 2: schedule appointments, customer records, etc. And so apparently Blacksuit cyber
0:56
Speaker 2: crime Gang is blamed in that attack.
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Speaker 4: It's a real deal.
1:00
Speaker 5: Buddy Mine manages a dealership in Jersey and he said
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Speaker 5: it's definitely. It impacts everything they do. And the net
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Speaker 5: result is it just takes longer to serve your customer,
1:09
Speaker 5: gives them.
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Speaker 4: More time to walk out the door, and.
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Speaker 5: So it's impacting, you know, a little bit of an
1:14
Speaker 5: impact on units sold per day they're noticing, so they
1:16
Speaker 5: need to get that fixed as quickly as possible.
1:19
Speaker 3: That's interesting.
1:19
Speaker 2: But also like when you go to a car dealership,
1:21
Speaker 2: you already spend half your day there, so you extended
1:23
Speaker 2: and like forget it. Steve Mann is Bloomberg Intelligence Global
1:26
Speaker 2: Auto is an industrials research analyst, and he joins us. Now, Steve,
1:28
Speaker 2: you've been following this and the hack.
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Speaker 3: What happened?
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Speaker 6: Oh, this is very significant. I mean, I mean, Paul
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Speaker 6: just said he spoke to some of the dealership in
1:39
Speaker 6: New Jersey. If I've reached out to some of the
1:42
Speaker 6: dealerships that I've that I've talked to, the impact is significant.
1:46
Speaker 6: It's not just only sales, but it's also service and parts.
1:50
Speaker 6: You know, the systems interrupted to a point where they
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Speaker 6: can't even get certain cars registered and delivered to their customers,
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Speaker 6: the ones that's already sold. So you know, Inventor is
2:02
Speaker 6: gonna get a little pick up. It's gonna be you know,
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Speaker 6: I don't know when it's gonna get fixed. They probably
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Speaker 6: have to pay that fine, and I think they will
2:10
Speaker 6: pay that fine. But at the end of the day,
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Speaker 6: I think if I look at from the automaker's perspective,
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Speaker 6: it's it's a temporary, temporary blip. Inventory is gonna rise,
2:20
Speaker 6: but I think sales will be delayed, and hopefully when
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Speaker 6: this gets resolved, customers will come back. More customers will
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Speaker 6: come back to the to the showroom.
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Speaker 5: And it seems I mean Bloomberg News reporting CDK plans
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Speaker 5: to make the ransomware payment.
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Speaker 4: Oh yeah, frustrating. It's just but I guess they kind
2:39
Speaker 4: of have to.
2:40
Speaker 5: I don't know, all right, Steve talked to us about
2:42
Speaker 5: China europe tariffs. We've got the European Union reporting you know,
2:48
Speaker 5: we talked to you last week initiating some tariffs here.
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Speaker 5: Now Beijing's kind of responding here. What's the latest.
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Speaker 6: Yeah, it's uh, it's it's a big deal for the Germans,
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Speaker 6: especially the luck through automakers like BMW, Mercedes and Audi
3:03
Speaker 6: which Volkswagen owns Audi. Uh. You know, they have about
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Speaker 6: eighty percent of the market, the luxury car market in China,
3:11
Speaker 6: so they sell a huge amount of cars in China.
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Speaker 6: About a third to forty percent of these companies' revenues
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Speaker 6: actually generate in China, so they yeah, so they want
3:24
Speaker 6: to make good with the Chinese. As you know, Germany
3:27
Speaker 6: has been against the tariffs. So if the Germans are
3:32
Speaker 6: able to get something from China and help ease some
3:36
Speaker 6: of the tariffs or China. You know, if China can
3:41
Speaker 6: get the Germans to help them ease some of the
3:43
Speaker 6: tariffs in the EU, I think it will benefit you know,
3:47
Speaker 6: potentially companies like Stilentis as well, which is which also
3:51
Speaker 6: has a new joint venture.
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Speaker 2: But here's the thing that I get confused, is it
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Speaker 2: China's making a pitch to individual countries versus the European
4:00
Speaker 2: Union trying to operate as one body in relation to tariffs,
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Speaker 2: and I wonder how that's gonna work itself out.
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Speaker 6: Yeah, I think it's it's that conquer, divine and conquer
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Speaker 6: strategy they're they're taking. So but you know, I think
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Speaker 6: the Germans probably has the most to lose out of
4:20
Speaker 6: the global automakers here. You know, about sixteen percent of
4:24
Speaker 6: their battery electric vehicles that are produced in China, it's
4:27
Speaker 6: actually shipped out globally. So China plays an important part
4:31
Speaker 6: for the BEEV market as a low cost producer. So
4:36
Speaker 6: you know, I don't think there's a lot of other
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Speaker 6: automakers that are you know that have that many bev's
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Speaker 6: produced in China and sold elsewhere around the world.
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Speaker 5: And Steeve just a red headline crossing the Bloomberg terminal.
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Speaker 5: Now Canada now gets into the game. Canada announces planned
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Speaker 5: to curb imports of Chinese made evs.
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Speaker 4: I mean, what's going on here?
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Speaker 5: I mean, I mean, first of all, just give us
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Speaker 5: a sense of how good, how competitive are these Chinese evs,
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Speaker 5: because if you tell me they're good vehicles, let's bring
5:07
Speaker 5: them into the market.
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Speaker 6: I don't know, Yeah, I think some if you talk
5:10
Speaker 6: to some of the al makers, they actually have the
5:13
Speaker 6: same thinking. Let's let's let's compete, right. I think competition
5:16
Speaker 6: will make the whole industry better. You saw that with
5:20
Speaker 6: Tesla being the you know, fourth or third automaker in
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Speaker 6: the US and actually helped drive a lot of the
5:27
Speaker 6: b EV costs down. But you know, it's not surprising
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Speaker 6: that Canada is is implementing tariffs. Uh. They are part
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Speaker 6: of the US Mexico Canada Free Trade Agreement, and I
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Speaker 6: think you know they have to close that that door,
5:43
Speaker 6: that back door where the Chinese evs can come in.
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Speaker 6: It is it is very competitive. I think you know,
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Speaker 6: Chinese evs are cheap enough that if you know, some
5:53
Speaker 6: argue that even with the tariffs, even with some engineering
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Speaker 6: change to to so that they're they fit thet they
6:00
Speaker 6: fit the regulatory safety and mission rules here, is still
6:05
Speaker 6: be a very competitive price vehicle for North America.
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Speaker 2: So then to that point, we're waiting for Mexico now, right,
6:13
Speaker 2: because I think we talked about this before. So not
6:15
Speaker 2: only is Canada gonna put tariffs on EV imports, they're
6:17
Speaker 2: also going to curb imports.
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Speaker 3: Of Chinese made evs.
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Speaker 2: The idea is that if Mexico doesn't have any of
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Speaker 2: those restrictions, that they can just import EV's from China
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Speaker 2: and then through Mexico go into the US. And that's
6:27
Speaker 2: a different way of operating. When do we get that
6:30
Speaker 2: from Mexico.
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Speaker 6: I think there are some negotiation that's happening now with
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Speaker 6: Mexico to kind of implement similar tariff. I've heard that
6:40
Speaker 6: VOVO is already kind of lobbying. VOVO is actually part
6:44
Speaker 6: of Chile, is actually lobbying the Mexican government to not implement,
6:49
Speaker 6: to not put tariffs in place. So then negotiations are ongoing.
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Speaker 6: I don't think we were gonna wait, have to wait
6:57
Speaker 6: too long to hear any news from that.
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Speaker 5: All right, So stepping back a little bit, give us
7:03
Speaker 5: the latest thinking out of Detroit and other auto capitals
7:07
Speaker 5: around the world about.
7:09
Speaker 4: EV's versus the hybrids.
7:12
Speaker 5: Is the hybrid going to be I guess the stepping
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Speaker 5: stone to a pure EV environment? Do you think is
7:19
Speaker 5: that still the thinking?
7:20
Speaker 6: Yeah, I think that is still the thinking. I think
7:22
Speaker 6: with BEEV sales slowing down or growth slowing down, the
7:28
Speaker 6: automakers do need something else to meet the cafe, the
7:34
Speaker 6: few economy regulations, the emissions regulations. So hybrid is a
7:39
Speaker 6: stopgap measure. But if you talk to the all the
7:42
Speaker 6: automakers just still spending a lot of money on BEV.
7:45
Speaker 6: They think that is the future because at the end
7:48
Speaker 6: of the day, hybrid vehicles do still spill spell out
7:52
Speaker 6: pollution or greenhouse gases. So you know, as you know,
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Speaker 6: these emission standards, these few economy standards, they're only going
8:02
Speaker 6: to get tighter and tighter.
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Speaker 3: All right, Steve, we appreciate it, Thank you very much.
8:06
Speaker 2: I feel like your sector is moving so fast right
8:08
Speaker 2: now in terms of all the rules and regulations. Steve
8:11
Speaker 2: Man Bloomberg Intelligence, Global Autos and industrials research analyst.
8:16
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8:35
Speaker 5: One of the pieces of news crossing the tape here,
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Speaker 5: Alex just reaching is you know Apple, there's some concerns
8:40
Speaker 5: there at the European Union regulators once again looking at
8:44
Speaker 5: a big US tech company, in this case Apple, looking
8:46
Speaker 5: at their app store and maybe some abuses. Their Temlin
8:52
Speaker 5: Basent Joints is here. Temlin is a technologyannelst for Bloomberg Intelligence.
8:57
Speaker 5: He was in the US, but now he's in London.
9:00
Speaker 4: Get to London. I have no idea how that happened.
9:02
Speaker 4: I did not complane.
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Speaker 3: I mean a ship would take a way too long.
9:04
Speaker 4: Yeah, I did not approve that.
9:06
Speaker 5: But anyway, Tamlin, thanks so much for joining us here.
9:08
Speaker 6: Talent.
9:09
Speaker 5: Tell us what's happening with Apple today as it relates
9:11
Speaker 5: to the European Union and some of the regulators there.
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Speaker 8: Yeah. Sure, So what happened today is the European Commission
9:18
Speaker 8: announced preliminary findings in an investigation into Apple under the
9:23
Speaker 8: Digital Markets Act. This is the sweeping new competition rules
9:27
Speaker 8: that the European Union is sort of implemented in March
9:30
Speaker 8: of this year. Now, the findings of this probe relate
9:35
Speaker 8: to anti steering rules, so essentially to Apple's rules that
9:40
Speaker 8: it has in place to sort of prevent app developers
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Speaker 8: from informing users of maybe cheaper subscription options outside of
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Speaker 8: the app store. Now this might sound familiar because just
9:50
Speaker 8: in early March, before the DMA took effect, the Commission
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Speaker 8: did find Apple one point eight billion euros over sort
9:57
Speaker 8: of the same anti steering. Now, what today their commission
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Speaker 8: said is that Apple is still not complying now with
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Speaker 8: the d m A in terms of really letting developers
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Speaker 8: freely engage with users and direct them to cheaper options. Specifically,
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Speaker 8: this kind of they want developers to be able to
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Speaker 8: market within the app and show cheaper subscriptions within that.
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Speaker 8: So it's really this is kind of more pressure on
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Speaker 8: those sort of app store revenues that Apple.
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Speaker 2: So what does Apple say to that, Like, well, what's
10:31
Speaker 2: their defense to that, because presumably they had months to
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Speaker 2: kind of get it together.
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Speaker 8: They did, and they haven't responded. What do they said
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Speaker 8: is they think that they do comply with all of this.
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Speaker 8: What's interesting about the DMA, though, is that this is
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Speaker 8: the DMA that European Commission did play a strong role
10:49
Speaker 8: in drafting these rules, and it's also responsible for enforcing them,
10:53
Speaker 8: and there are a lot of sort of subjective interpretations
10:58
Speaker 8: in terms of first complying with it. So I think
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Speaker 8: what we are going to see is probably the European
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Speaker 8: Commission taking a very strict view of what's reasonable in
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Speaker 8: these circumstances and probably really try to get strict adherance here.
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Speaker 8: So it's going to be going to be up to
11:14
Speaker 8: them to decide whether Apple is complied or not, and
11:17
Speaker 8: then Apple can then sort of appeal to the courts.
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Speaker 8: But I do think it's it's pretty likely we're going
11:21
Speaker 8: to see another fine in this and some behavioral remedies
11:24
Speaker 8: coming down the line.
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Speaker 5: You know, Alex, I love talking to Tamlin. Good guy,
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Speaker 5: smart guy, But you know what, it just doesn't matter.
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Speaker 5: Apple stock up a tenths of one percent today, It's
11:34
Speaker 5: a nine percent year to date. We've seen this time
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Speaker 5: and time again where the Europeans just start nitpicking at
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Speaker 5: these US technology companies, Tamila, what's the feeling within the
11:45
Speaker 5: regulatory environment of Europe as to really what they're trying
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Speaker 5: to do here, because it just doesn't seem like it's
11:51
Speaker 5: even relevant. I mean, it just at the end of
11:54
Speaker 5: the day, they just these whether it's Google or Facebook,
11:57
Speaker 5: or they just write checks here to make could all
12:00
Speaker 5: go away? I mean, is that kind of do European
12:04
Speaker 5: regulators recognize that it just doesn't seem to be that
12:08
Speaker 5: I material what they're doing.
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Speaker 8: Right, Yeah, So I think if you look at this
12:11
Speaker 8: specific investigation, you know, this is one that sort of
12:14
Speaker 8: came out of sort of Spotify, which of course is
12:17
Speaker 8: headquartered in Europe, and the app developers are complaining that
12:20
Speaker 8: the Apple is squeezing them too hard. So I think
12:23
Speaker 8: in some of these instances, Europe is trying to protect
12:26
Speaker 8: some local players by sort of ordering a sort of
12:30
Speaker 8: loosening of these rules that sort of maybe benefit the
12:33
Speaker 8: gatekeeper on the NBA, which DNA, which would be at Apple, Google,
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Speaker 8: Microsoft brothers, and they are sort of trying to show
12:41
Speaker 8: domestic industry that they are trying to pry open the markets.
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Speaker 8: But I do think you're right that I think at
12:47
Speaker 8: this point investors are sort of kind of just shrugging
12:50
Speaker 8: this off. This is just one thing after another. I
12:53
Speaker 8: will point that may point out that a difference under
12:55
Speaker 8: the DMA is that the timeline is really much quicker
12:59
Speaker 8: than under sort of former case law, where it may
13:02
Speaker 8: take three four years until you got a result after
13:05
Speaker 8: an industiation. Here that this finding came just three months
13:09
Speaker 8: after the inquiry opened, and we're going to have sort
13:12
Speaker 8: of a final remedial measure by early next year. So
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Speaker 8: I do think the timeline is faster. Whether or not
13:19
Speaker 8: this results and sort of the impact that the regulators
13:22
Speaker 8: might be looking for, I think definitely remains to be seen,
13:25
Speaker 8: and I think investors are definitely looking a little bit
13:28
Speaker 8: of skew at it and thinking maybe this is sort
13:30
Speaker 8: of just more of the same.
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Speaker 5: And Alex, I mean, you know, it's really almost, maybe
13:34
Speaker 5: even more than thirty years ago that Microsoft started going
13:37
Speaker 5: through the same whole thing with the European Union, and
13:40
Speaker 5: again it investors became conditioned to it's no big deal.
13:43
Speaker 5: They just write it check and it kind of goes away.
13:45
Speaker 5: The tobacco industry, you know, investors kind of said, put
13:48
Speaker 5: it in context, it's not that big a deal, and
13:51
Speaker 5: you kind of wonder, you know, given that the US
13:54
Speaker 5: regulators have taken a very light touch to technology and
13:57
Speaker 5: then allowing these companies to get so big, like the
14:00
Speaker 5: Europeans are trying to do what they can to kind
14:03
Speaker 5: of rein it in, but it seems almost too little,
14:05
Speaker 5: too late, right.
14:06
Speaker 2: And also you can make the argument too that you know,
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Speaker 2: Europe doesn't have a lot of technology companies. They have some,
14:10
Speaker 2: of course, like ASML for example, Yes, but yeah, exactly SAP,
14:14
Speaker 2: but I mean, can you name anymore? No, there's some,
14:18
Speaker 2: But I think that that's kind of the point. Maybe
14:20
Speaker 2: take a look at you know, European stocks versus the
14:22
Speaker 2: S and P and market cap like twenty years ago
14:24
Speaker 2: versus now, Oh my gosh, forget that different. Hey Tamlin,
14:28
Speaker 2: what's going on with Apple in general? Like it's it's
14:30
Speaker 2: it seems to be making a little bit of a
14:32
Speaker 2: comeback here. It's actually ups extensive one percent, despite you know,
14:35
Speaker 2: in video for example, down over two percent.
14:36
Speaker 3: What do you make of that?
14:38
Speaker 8: Yeah, I mean I think some of this comes some
14:40
Speaker 8: sort of the recent announcement to sort of build AI
14:43
Speaker 8: into the into the iPhone and maybe maybe sort of
14:47
Speaker 8: accelerate the recycle in terms of getting people to buy
14:51
Speaker 8: those phones. I do think it probably definitely. I don't
14:56
Speaker 8: think the regulatory headwinds are really causing it much damage
15:01
Speaker 8: right now. I will point out that although the US
15:04
Speaker 8: is definitely like ASSAD taking a light touch approach, the
15:07
Speaker 8: one area they are getting involved in is on sort
15:09
Speaker 8: of these apps for rules, where where Apple's obviously been
15:12
Speaker 8: in litigation with Epic for years and years and years.
15:14
Speaker 8: So I think on both sides of the Atlantic, there
15:16
Speaker 8: are some pressure on that on those services revenues that
15:20
Speaker 8: we might see shaking out over the next you know,
15:22
Speaker 8: nine to eighteen months to see how that plays out.
15:24
Speaker 5: So Timmley, you've you've been based both in the US
15:28
Speaker 5: and now in the UK. What's your view of kind
15:31
Speaker 5: of the technology and landscape and the ability for new
15:35
Speaker 5: technologies to kind of be developed and grow in in
15:39
Speaker 5: the UK and Europe. What's what's your view given your
15:41
Speaker 5: experience in the US.
15:43
Speaker 8: Yeah, well, I think the US probably probably has more
15:47
Speaker 8: of a fostering environment for that startups stage. I think
15:51
Speaker 8: that's why you've seen some of your US companies really flourished.
15:56
Speaker 8: I do think in Europe there's trying to create that
15:58
Speaker 8: fostering environment, specifically for the artificial intelligence field. I think
16:03
Speaker 8: you have seen some they are. There's an AI regulation
16:06
Speaker 8: that's taken effect. I don't think it's nearly as strict
16:08
Speaker 8: as it could have been. I think a large reason
16:10
Speaker 8: for that are lawmakers, specifically in France and Germany, really
16:15
Speaker 8: wanted to try to foster and incubate beat AI industries
16:18
Speaker 8: that they had going on. So I think we'll have
16:20
Speaker 8: to see whether that works out and whether we have
16:23
Speaker 8: the European large scale AI players. I think historically definitely,
16:28
Speaker 8: I think you've seen more of that sort of startup,
16:31
Speaker 8: startup fostering taking place in the US than Europe.
16:33
Speaker 3: All right, Tamlin, we really appreciate it. Thank you so much.
16:36
Speaker 3: Do you like living in Europe? By the way, are
16:37
Speaker 3: you enjoying the UK?
16:39
Speaker 1: Yeah?
16:39
Speaker 8: Quite nice?
16:40
Speaker 2: Excellent, right, I get you. It's not ninety two degrees there.
16:43
Speaker 3: Yeah, humidity. I'm just put that out there, all right, Tamlin.
16:46
Speaker 3: We appreciate you. Thank you.
16:48
Speaker 2: Tamlin based in joining US A Bloomberg Intelligence technology analyst
16:53
Speaker 2: from the UK. Here's my question for you, Paul, what
16:56
Speaker 2: do you think is going on with tech right now? Like?
16:58
Speaker 3: Is this like a rebalancing to the end of the
16:59
Speaker 3: cour order. Is this like a pause? Is there something
17:03
Speaker 3: more disastrous going on here? What do you think?
17:05
Speaker 5: I don't think so. I mean again, we just heard.
17:07
Speaker 5: I just got a note from Vince from out in
17:11
Speaker 5: the audience. Bid in stocks's quarter end window dressing. That's
17:14
Speaker 5: all he's hearing so far, Vince Cignarella kind of rating
17:17
Speaker 5: in here. So no, I think tech is you know,
17:19
Speaker 5: I just think it's a pause here.
17:20
Speaker 4: I mean, I think they're gonna be.
17:22
Speaker 5: The question for a lot of folks, is you know
17:24
Speaker 5: tech has been the leader in this stock market performance
17:28
Speaker 5: for years now?
17:29
Speaker 4: Can it continue to be?
17:30
Speaker 5: And I just think you look at the tech spending
17:34
Speaker 5: and you see where it continues to be a significant
17:37
Speaker 5: growth story, and just in terms of old total tech
17:39
Speaker 5: spending throughout the entire tech stack.
17:41
Speaker 4: Led by AI.
17:43
Speaker 5: So maybe the AI trade maybe got the sector a
17:46
Speaker 5: littlehead of itself. Maybe time for a pause, but boy,
17:49
Speaker 5: the longer term trend seems really solid.
17:53
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Speaker 2: And the NASDA gets flat on the day. I mean,
18:10
Speaker 2: go figure. I feel like we're definitely on our way back.
18:12
Speaker 2: Alleren Gilbert's CEO of Wealthfuised Financial, is joining us right
18:16
Speaker 2: now for her take. So, Alaren Paul and I were
18:19
Speaker 2: talking just earlier about what is going on. Is it
18:21
Speaker 2: a tech breather, is it rebalancing into the end of
18:24
Speaker 2: the quarter. Is last week kind of the start of
18:26
Speaker 2: something more severe?
18:28
Speaker 3: How do you view it?
18:30
Speaker 9: Yeah, I mean I think let's not forget it's starting
18:34
Speaker 9: to be summer. People are off to the Hamptons, off
18:37
Speaker 9: to international trips, et cetera. So part of this would
18:41
Speaker 9: be just seasonality. But another part is I think we're
18:44
Speaker 9: going through a shift when it comes to AI from
18:48
Speaker 9: development to deployment, and so I think with that, we're
18:52
Speaker 9: going to see a broadening out of the market, not
18:55
Speaker 9: just the companies like Nvidia that are the start of AI,
18:59
Speaker 9: but moving into how companies can monetize it. And so
19:03
Speaker 9: I think we're going to continue to see this broadening
19:05
Speaker 9: out with other companies that are able to actually profit
19:09
Speaker 9: from it.
19:10
Speaker 5: What are some of those companies on what are some
19:12
Speaker 5: of those sectors that can benefit from the actual deployment
19:16
Speaker 5: of this technology.
19:18
Speaker 9: Well, it goes across all sectors really, but you know,
19:21
Speaker 9: when we think about even even just industrials and how
19:27
Speaker 9: the technology here is going to be able to broaden out.
19:33
Speaker 9: You know, even companies like Caterpillar and John Deere are
19:37
Speaker 9: going to be able to use AI to improve efficiencies.
19:41
Speaker 9: So really it's across all sectors, whether it's healthcare or industrials,
19:45
Speaker 9: et cetera.
19:46
Speaker 3: So that's the AI play.
19:47
Speaker 2: And then you do like, plus, let's look at valuation
19:50
Speaker 2: and where we're at, what's a good bet?
19:52
Speaker 3: Like do you like industrials right now?
19:55
Speaker 9: I do like industrials. We think that that is going
19:57
Speaker 9: to be a backbone and when we look to add
20:00
Speaker 9: infrastructure spending, that is going to continue to be a theme. So,
20:06
Speaker 9: you know, and I think we have to take in
20:07
Speaker 9: mind where we are with the FED and that we're
20:11
Speaker 9: definitely about to see ray cuts, you know, and the
20:14
Speaker 9: question is just when do they start. But we know
20:17
Speaker 9: that trend is going to be our friend, and so
20:20
Speaker 9: I think you can't give up on technology. It's going
20:23
Speaker 9: to continue to be the driver here moving forward, and
20:27
Speaker 9: with interest rates that will go down. That's a risk
20:30
Speaker 9: on move in the market, so we have to be mindful,
20:33
Speaker 9: but it is all about what are you buying at
20:35
Speaker 9: what price?
20:37
Speaker 5: All right, Lauren, you're a graduate of the University of Texas,
20:40
Speaker 5: so that means by default you must have an energy call.
20:43
Speaker 5: What do you think what do you think energy stocks
20:46
Speaker 5: are going to be doing here? How do you think about,
20:48
Speaker 5: you know, investing in energy stocks.
20:50
Speaker 9: Yeah, we like energy a lot, and we like utilities.
20:55
Speaker 9: Looking at the play just continued expansion in the need
21:00
Speaker 9: for energy with regards to AI. If you look at
21:04
Speaker 9: those numbers, they're astronomical and so there has to be
21:08
Speaker 9: this continued build out and making energy more efficient. So
21:12
Speaker 9: we definitely like the energy play.
21:16
Speaker 2: Where in the energy play because this is something that
21:18
Speaker 2: I've been thinking about, Like oil companies aren't power companies,
21:21
Speaker 2: and power companies are the ones that are going to benefit,
21:24
Speaker 2: But utilities are regulated. So does that kind of change
21:26
Speaker 2: how you want to be investing in utility companies versus
21:29
Speaker 2: power companies.
21:30
Speaker 3: We're on that spectrum. It makes the most sense.
21:33
Speaker 9: Yeah, So it's true that utility companies are regulated, but
21:37
Speaker 9: what we're seeing is that there's going to be there's
21:40
Speaker 9: just so much demand that the demand versus supply is
21:44
Speaker 9: going to be the story there. So definitely there I
21:48
Speaker 9: agree with you, not so much just oil and gas companies,
21:53
Speaker 9: but really everything that is behind the idea of what's
22:01
Speaker 9: going to help with AI.
22:04
Speaker 5: All right, so how do we think about that's at equities?
22:07
Speaker 5: How about fixed income?
22:08
Speaker 8: Here?
22:08
Speaker 5: What are you telling your clients these days about bond market?
22:12
Speaker 9: Well, we love the bond market. It couldn't be you know,
22:16
Speaker 9: more excited about bonds, and who gets excited about bonds?
22:18
Speaker 9: So right now is a very good time because when
22:22
Speaker 9: you look at where we are once again with rates
22:25
Speaker 9: going to be going down, the story is that all
22:29
Speaker 9: that money that's sitting in money markets is going to
22:31
Speaker 9: be moving. It's already started to move a little bit,
22:35
Speaker 9: and while some of it may land in the equity markets,
22:38
Speaker 9: a lot of it's going to end up in the
22:40
Speaker 9: bond markets. And so with that, you know, now is
22:43
Speaker 9: the time to be moving money because for people that
22:46
Speaker 9: are going to be in money markets a year later,
22:48
Speaker 9: they're going to be very disappointed and moving into the
22:52
Speaker 9: bond markets. Now you have the yield, but you also
22:55
Speaker 9: have capital appreciation opportunities. We like preferred stock as well,
23:00
Speaker 9: other good play that's fixed income to equity. So keeping
23:05
Speaker 9: it though, I would say all high quality, not venturing
23:10
Speaker 9: into as our economy has been softening, keeping it on
23:15
Speaker 9: the high quality side.
23:17
Speaker 2: This brings up my question that I have is that
23:19
Speaker 2: why are we convinced that money market funds are going
23:21
Speaker 2: to go somewhere else? Because if we're in a rate
23:23
Speaker 2: normalization cycle, doesn't mean we're going to go back to
23:27
Speaker 2: one percent of the Fed funds rate, Like if we
23:28
Speaker 2: stay at four, I don't know, three and a half, Like,
23:32
Speaker 2: why would I maybe take on more resk when it
23:34
Speaker 2: can sit there and still make money.
23:36
Speaker 9: Well, because what you're doing is locking in to a
23:40
Speaker 9: higher rate for longer by moving into the fixed income
23:44
Speaker 9: markets versus seeing the rates continue to go down in
23:49
Speaker 9: money markets. So right now, if you move into just say,
23:54
Speaker 9: you know, a six year duration on your fixed income,
23:58
Speaker 9: you're looking at between you know, four to five percent
24:02
Speaker 9: on the yield with some capital appreciation opportunity that you
24:06
Speaker 9: can lock in for the next six years. That's what
24:09
Speaker 9: history tells us, So I'd liken it too. You know,
24:12
Speaker 9: if you could go back in time a couple of
24:15
Speaker 9: years ago and lock into a home mortgage rate at
24:19
Speaker 9: three percent, So if.
24:20
Speaker 3: You could be alan statically, yes, so Paul's we can
24:23
Speaker 3: go back in time and be me that's what you.
24:25
Speaker 9: Would do, be a static about that. And so similarly,
24:29
Speaker 9: right now we have the opportunity in fixed income to
24:32
Speaker 9: lock in at the higher rate for a period of
24:34
Speaker 9: time and instead of watching the rates go down.
24:38
Speaker 5: Uh, Lauren, you mentioned preferred stock, and we don't talk
24:41
Speaker 5: about prefers stock a lot.
24:43
Speaker 4: How do you use perfertock in your port portfolio? Why
24:47
Speaker 4: is it attractive right now?
24:49
Speaker 9: Yeah, so we use it as part of our fixed
24:51
Speaker 9: income allocation because you're getting a yield from it, but
24:54
Speaker 9: you also have equity like exposure with you know, some
24:59
Speaker 9: upside there. So it's this hybrid as it were, and
25:03
Speaker 9: it gives off a very nice yield while you're waiting.
25:07
Speaker 9: So it is kind of this more conservative way, more
25:11
Speaker 9: conservative approach and looks very attractive right now.
25:15
Speaker 3: What do you think of corporate credit, Well, you.
25:20
Speaker 9: Know, I think that we would prefer agency mortgage backed
25:27
Speaker 9: securities corporate credit. You know, in a diversified fixed income portfolio,
25:34
Speaker 9: you're going to have some corporate credit, but more so
25:37
Speaker 9: than that agency even treasury, but a smaller allocation I
25:44
Speaker 9: would say to corporate just with the softening of the economy.
25:48
Speaker 5: I mean I was speaking with a large group of
25:51
Speaker 5: registered investment advisers recently now surprised by how aggressive they
25:55
Speaker 5: were in terms of allocating their client's portfolio to alternative investments.
25:59
Speaker 5: While it's hedge funds, private equity, private credit, How do
26:03
Speaker 5: you view alternatives in a client's portfolio.
26:07
Speaker 9: Well, I think alternatives have their space, and we allocate
26:11
Speaker 9: to alternatives as well, but it is a smaller piece
26:15
Speaker 9: of the puzzle. So you know, we look at, you
26:19
Speaker 9: know how much between equity and fixed income and in
26:24
Speaker 9: all alternatives in general, we consider that part of the
26:28
Speaker 9: equity exposure that gives us more diversification than just going
26:33
Speaker 9: along on equity. But I think you have to be
26:36
Speaker 9: careful because some alternatives can lock you in for a
26:40
Speaker 9: very long time, so liquidity needs have to be considered.
26:44
Speaker 9: And the other thing is as they can be a diversifier,
26:49
Speaker 9: but that doesn't always mean that they're going to outperform
26:54
Speaker 9: other areas of the market. So yes, we use it,
26:58
Speaker 9: and we're always looking for what the opport tunities are.
27:01
Speaker 9: I think there's been there's been quite a bit of
27:03
Speaker 9: investment in private credit as an alternative investment. And I
27:08
Speaker 9: don't know how much more legs that really have.
27:11
Speaker 2: Great stuff really appreciated some counterintuitive views.
27:15
Speaker 3: They're so fun to get.
27:16
Speaker 2: Hullarene Gilbert, CEO of wealth Wise Financial, kind of you know,
27:20
Speaker 2: sort of tempering.
27:21
Speaker 3: Expectations when it comes to private credit. Maybe it's not
27:24
Speaker 3: the bazillion dollar industry that we all think in.
27:26
Speaker 5: Yeah, we'll see how the asset class performs here with
27:29
Speaker 5: these higher for longer interest rates, because you've got to,
27:33
Speaker 5: you know, now, some of the banks are kind of
27:34
Speaker 5: getting you know, maybe getting a little bit more aggressive
27:36
Speaker 5: in their leverage lending businesses here, trying to you know,
27:40
Speaker 5: kind of compete a.
27:41
Speaker 4: Little bit better with this private credit.
27:44
Speaker 5: But the private credit's done really well, particularly in the
27:45
Speaker 5: mid middle markets where maybe some of the regional banks
27:48
Speaker 5: have dialed back since a great financial crisis their risk
27:51
Speaker 5: taking environment.
27:52
Speaker 4: So keep an eye on that.
27:55
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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28:03
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28:14
Speaker 2: Malex Steel alongside pauls. We need this Bloomberg Intelligence Radio.
28:17
Speaker 2: We bring you all the top news and analysis with
28:20
Speaker 2: our analysts from Bloomberg Intelligence. They cover two thousand companies
28:23
Speaker 2: and one hundred and thirty industries worldwide. And Friday means
28:27
Speaker 2: the end of the second quarter, we will be halfway
28:29
Speaker 2: through the year. So it's that time where we're getting
28:31
Speaker 2: all the mid year outlooks, which are super helpful, particularly
28:34
Speaker 2: from Bloomberg Intelligence and joining us in studio as Michael Halen,
28:38
Speaker 2: He's consumer Products senior Bloomberg Intelligence industry analyst.
28:42
Speaker 3: Michael in studio, We're very excited about this.
28:44
Speaker 4: I'm excited too.
28:45
Speaker 3: Thanks for joining. He finally came in.
28:48
Speaker 2: Yeah.
28:48
Speaker 10: Yeah, I was digging through my junk drawer, but I
28:51
Speaker 10: found it.
28:52
Speaker 3: We found it. It was just important.
28:53
Speaker 2: Well, I mean, is New Jersey Transit even running? I
28:55
Speaker 2: think is more of the question.
28:57
Speaker 4: It's tough.
28:57
Speaker 3: Nice.
28:58
Speaker 2: Okay, So midyear outlook give us the broad sweeps, like
29:01
Speaker 2: what are you expecting for the back half, and then
29:02
Speaker 2: we can get to specific stocks.
29:04
Speaker 10: Yeah, sure, you know, broad sweeps. I'd say sales are
29:09
Speaker 10: probably looking a little bit better just because than they
29:12
Speaker 10: were in the first half. Because the year over year
29:14
Speaker 10: comparisons are getting easier. Higher income consumers should have money
29:20
Speaker 10: to spend, right, we see we see stock markets at
29:24
Speaker 10: all time highs, bitcoins having a rough day, but not
29:27
Speaker 10: far off the highs, and home prices have held in
29:30
Speaker 10: despite the higher rates, so that those should kind of
29:34
Speaker 10: buoy restaurants sales. But on the other end, the other
29:38
Speaker 10: end of the k, the low income consumers continue to struggle.
29:42
Speaker 10: You know, consumers under seventy five thousand were cited by
29:45
Speaker 10: Darden the other day on their earnings call is struggling,
29:48
Speaker 10: especially consumers you know that are earning less than fifty thousand.
29:51
Speaker 10: So we have kind of a push and a pull there.
29:57
Speaker 10: You know, Margins are okay, you know.
30:00
Speaker 4: We would like to see better sales because that's really.
30:02
Speaker 10: What drives most of the margin expansion in that business.
30:05
Speaker 10: Right There's a lot of operating leverage in the model,
30:07
Speaker 10: so so maybe some modest margin expansion. And the stocks
30:13
Speaker 10: generally haven't done so well this year, you know. You
30:17
Speaker 10: know what we wrote is that we we think we're
30:18
Speaker 10: going to see a larger spread between the stock market,
30:22
Speaker 10: you know, the market share winners and losers this year,
30:26
Speaker 10: you know, which we've largely seen in the first half.
30:28
Speaker 4: You've seen stocks like Chipotle, you.
30:30
Speaker 10: Know, actually absolutely knocked the cover off the ball again
30:33
Speaker 10: and and really appreciate where where other chains like Darden
30:39
Speaker 10: you know, actually, I'm sorry, Darden's done pretty well, like
30:41
Speaker 10: blooming I should say, is kind of struggled in the
30:43
Speaker 10: first half, and you've seen that stock, you know, sell
30:46
Speaker 10: off pretty precipitously.
30:47
Speaker 5: Talk to us about California and their new minimum wage law.
30:52
Speaker 5: What's the impact been on the fast food business?
30:55
Speaker 2: We have like a famous Hollywood restaurant closed because of that,
30:58
Speaker 2: like the famous like Hollywood Donalds or something.
31:01
Speaker 10: Oh, San Fran, Yeah, San Fran closed, Yeah, yeah, So
31:07
Speaker 10: it's not been.
31:08
Speaker 4: Good so far. April results were.
31:11
Speaker 10: Kind of in line with the US in terms of
31:14
Speaker 10: same star sales at quick service restaurants. But I think
31:19
Speaker 10: everybody went in April and then they had got sticker
31:21
Speaker 10: shock and they did not return in May.
31:24
Speaker 5: So the McDonald's are the world the restaurants in general California.
31:28
Speaker 5: Are they raising prices to cover their.
31:30
Speaker 10: Higher labor Yeah, high single digits is typical, which is
31:34
Speaker 10: a lot, and and that's not even covering it because
31:37
Speaker 10: the traffic loss that that that we've seen here in May,
31:41
Speaker 10: it's it's not even gonna cover it. So they may
31:42
Speaker 10: even have to raise prices again if they can.
31:47
Speaker 4: Quick Service.
31:49
Speaker 10: Uh, California Same Star sales underperformed by almost four hundred
31:52
Speaker 10: basis points in May versus the US. Yeah, so you know,
31:56
Speaker 10: what we wrote is that we expect quick service to
31:59
Speaker 10: continue to outperform casual dining just because it's a cheaper check.
32:04
Speaker 10: Even though it's gotten all the bad press about the
32:06
Speaker 10: eighteen dollars big Mac meal twenty two dollars smash Burger meal,
32:10
Speaker 10: it's still you can eat there a lot cheaper on
32:12
Speaker 10: the value menu and stuff like that. Also, you know,
32:15
Speaker 10: chains are starting to discount more Burger King and McDonald's
32:18
Speaker 10: five dollars meals, things of that nature. But California is
32:23
Speaker 10: definitely gonna weigh on quick service growth throughout your end
32:26
Speaker 10: for sure.
32:28
Speaker 2: So as the k shape recovery grows even wider, it
32:31
Speaker 2: feels like, so do the valuations of those companies that
32:34
Speaker 2: service those two lines.
32:35
Speaker 3: Is that a fair statement?
32:37
Speaker 1: Yeah?
32:37
Speaker 10: If you if you're a chain that can attract high end,
32:40
Speaker 10: can high income consumers like Chipotle's done such a good
32:43
Speaker 10: job of doing and McDonald's has done a good job
32:46
Speaker 10: of it as well since since the start of the pandemic.
32:49
Speaker 2: Chipotle is their Wednesday day, Paul, It varies, but it's
32:52
Speaker 2: seven one day week they get Chipotle.
32:54
Speaker 4: But here's a funny Chipotle story.
32:56
Speaker 5: They got slammed in social media for like underfilling their
32:59
Speaker 5: time and things like that. Now they've gone overboard and
33:03
Speaker 5: they overfilled them. So the net result for me, instead
33:06
Speaker 5: of getting three hard tacos with chicken and I'll give
33:08
Speaker 5: you the whole order later, I only get two.
33:10
Speaker 1: Oh, there you go.
33:12
Speaker 5: So it's got to be hurting their sales. So that
33:14
Speaker 5: is an interesting tidbit.
33:16
Speaker 10: Yeah, so we were thinking about doing some work into it,
33:21
Speaker 10: but we haven't done anything yet all right here, but
33:26
Speaker 10: there was definitely some heat and some shade thrown at
33:29
Speaker 10: Chipotle for a little while there.
33:30
Speaker 5: I'm gonna say a year and a half ago, somebody
33:32
Speaker 5: came in here. This is kind of the beginning of
33:34
Speaker 5: this whole AI thing, And somebody came in to this
33:37
Speaker 5: studio and said, one of the biggest areas is going
33:39
Speaker 5: to be like, for example, drive through going through a
33:42
Speaker 5: drive through McDonald's, it's gonna be all AI blah blah
33:45
Speaker 5: blah blah blah. So my question to you is, are
33:47
Speaker 5: local I don't know McDonald's or Burger Kings, did they
33:50
Speaker 5: have fewer employees because they're using technology or at all
33:53
Speaker 5: like that?
33:54
Speaker 10: Well, they have tried to cut labor hours in other ways,
33:59
Speaker 10: that's a goal using AI, for sure.
34:02
Speaker 7: Uh.
34:02
Speaker 10: It's been harder though at the drive through then anticipated
34:06
Speaker 10: a lot of things just like accents, you know, you know,
34:10
Speaker 10: something like that. You know, actually is is has caused
34:13
Speaker 10: some issues something else there. Uh, they're also using AI
34:18
Speaker 10: with these cameras that are using AI to see if
34:20
Speaker 10: orders are being played packaged correctly, you know, since takeout
34:24
Speaker 10: and delivery has become such.
34:26
Speaker 4: A big part of these businesses.
34:27
Speaker 10: But uh, you know, one of the companies that was
34:29
Speaker 10: doing that got caught using people in India watching like screens.
34:35
Speaker 4: Videos supposedly quote unquote AI.
34:37
Speaker 10: So we're not quite there yet with the AI in that.
34:43
Speaker 3: That's interesting.
34:44
Speaker 2: It's like the practical application, like how it really makes
34:47
Speaker 2: the difference. We may not quite be there yet. Here's
34:49
Speaker 2: my question if you and Ken Shae Fromloomberg Intelligence, who
34:52
Speaker 2: covers many things but in particular he covers all the
34:56
Speaker 2: cannabis companies got together, like what is your interplay between
35:00
Speaker 2: you guys?
35:01
Speaker 3: And I'm not actually trying to be that funny, but
35:03
Speaker 3: like you know, with all the.
35:05
Speaker 2: Weed stores coming up and you can get kind of
35:07
Speaker 2: cannabis anywhere in many places, Like, does that have a
35:09
Speaker 2: direct impact on the companies that you cover? Like have
35:12
Speaker 2: you noticed something along those lines?
35:15
Speaker 10: They haven't necessarily necessarily attributed any you know, lower alcohol
35:21
Speaker 10: sales to that, you.
35:22
Speaker 3: Know, or like more food sales or like runchy sales.
35:26
Speaker 1: Yeah.
35:26
Speaker 10: I mean, you know, we've had some of our companies
35:28
Speaker 10: like Jack in the Box and other companies that do
35:30
Speaker 10: a big late night business kind of lean into that
35:33
Speaker 10: stuff on their advertising. You know, they've used snoop you know,
35:38
Speaker 10: and some of their stuff. I think ice Cube now is.
35:40
Speaker 5: But on the flip side of that, is the GLP
35:43
Speaker 5: one situation true?
35:46
Speaker 4: Because is that real? Because your company has called it out.
35:49
Speaker 10: Yeah, but like the panic over it seems to have
35:53
Speaker 10: uh subsided.
35:54
Speaker 4: Is it real? Yeah? But there's still a lot of
35:57
Speaker 4: question marks.
35:59
Speaker 1: You know.
36:00
Speaker 10: Uh, there is definitely concern because like people are less
36:03
Speaker 10: likely to go to fast food restaurants like there's a
36:07
Speaker 10: lot of people saying they feel sick eating fast food
36:09
Speaker 10: on GLP ones.
36:11
Speaker 4: There's a lot lower alcohol.
36:13
Speaker 10: Consumption on GLP one. So it's definitely something that's being monitored.
36:17
Speaker 10: But right now it's still like such a small it's
36:22
Speaker 10: just had such small distributions so far. I think what's
36:24
Speaker 10: going to be more of a concern is once it's
36:27
Speaker 10: in a in a pill or something that's easier than
36:29
Speaker 10: a shot.
36:30
Speaker 4: Yeah, right, it's interesting.
36:31
Speaker 5: So I'm looking at the S and P Restaurant Index
36:33
Speaker 5: VAT member returns. The second worst performing stock for restaurants
36:39
Speaker 5: is cracker Barrel Old Country. That kills me because I'm
36:42
Speaker 5: a huge advocate for Cracker brow So I don't know
36:44
Speaker 5: why this stock's not working.
36:47
Speaker 4: All right, all right, I'm going to improve by breakfast.
36:49
Speaker 5: All right, Michael Halen, Bloomberg Intelligence, Thank you very much.
36:52
Speaker 4: This is Bloombergen.
36:56
Speaker 1: You're listening to the Bloomberg Intelligence podcast cat I have
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37:14
Speaker 5: Well for the month of June, Bloomberg Radio is committed
37:17
Speaker 5: to bringing new segments and guests focus on the topic
37:19
Speaker 5: of equality. Today, we're speaking with Mike Heider, President and
37:22
Speaker 5: CEO of Executive Leadership Council. Mike, thanks so much for
37:26
Speaker 5: joining us here. Tell us what the Executive Leadership Council is.
37:30
Speaker 4: What are you guys doing over there?
37:33
Speaker 11: Well, it's good. Thank you for having me. It's nice
37:36
Speaker 11: to be here. I appreciate it. The Executive leaders of Council,
37:40
Speaker 11: otherwise known as the ELC, we're an organization of the
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Speaker 11: highest ranking black executives in global organizations worldwide with a
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Speaker 11: commitment to the leadership and development of talent in corporations.
37:56
Speaker 7: Been around thirty eight years.
37:58
Speaker 4: Right, good stuff.
37:59
Speaker 5: What are you finding these days? Just in terms of
38:02
Speaker 5: overall that DEI concept which had been ascending for many
38:07
Speaker 5: years and for some people feels.
38:09
Speaker 4: Like it may have peaked. How how do you view
38:12
Speaker 4: that commitment?
38:14
Speaker 11: Well, the diversity, equity and inclusion is and continues to
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Speaker 11: be a very strong element and element for organizations that
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Speaker 11: are beneficial for them. Unfortunately, there's a lot of heated
38:31
Speaker 11: rhetoric about the diversity, equity, inclusion I guess being perceived
38:37
Speaker 11: as reverse discrimination, which we don't. We fundamentally disagree with
38:43
Speaker 11: that assertion. It is failing to sort of readdress the
38:49
Speaker 11: facts that diversity equity inclusion has actually been benefited the
38:54
Speaker 11: United States economy over the years with its But it
38:59
Speaker 11: just has to be folks as properly if in order
39:01
Speaker 11: for that to happen.
39:02
Speaker 2: How do we do that, How does that? How is
39:05
Speaker 2: it focused properly? And one of the steps that need
39:07
Speaker 2: to be taken.
39:07
Speaker 11: Now the steps should be the diversity equity inclusion should
39:12
Speaker 11: be considered the impetus behind superior business performance, increase access
39:21
Speaker 11: and opportunity for development for all people, and that the
39:26
Speaker 11: focusing on increasing building corporate culture to increase and enhance
39:32
Speaker 11: the engagement of as many employees as possible is what
39:37
Speaker 11: diversity equity inclusion means.
39:40
Speaker 7: It doesn't mean lowering standards.
39:43
Speaker 11: So if it's applied as the significant contributed to the
39:49
Speaker 11: business driver that it is, then it's it will be
39:55
Speaker 11: strategically relevant in the organizations and less concerned as something
40:02
Speaker 11: that is being merely tolerated.
40:05
Speaker 5: So I mean, give us a sense how you think
40:09
Speaker 5: that about this, Miket and how your counsel thinks about
40:12
Speaker 5: this because again it seems like DEI is sharing a
40:16
Speaker 5: similar type of situation or environment as e SG is
40:20
Speaker 5: Environmental Social governance investing. As people are just kind of
40:23
Speaker 5: pushing back on both of those types of initiatives, whether
40:27
Speaker 5: it's from a political perspective.
40:28
Speaker 4: Or a business perspective.
40:31
Speaker 11: How do you think about that, Well, it's unfortunate that that's.
40:37
Speaker 7: Been the case.
40:39
Speaker 11: We're focusing on we want organizations need to be and
40:46
Speaker 11: shareholders and customers are expecting and employees are expecting companies
40:51
Speaker 11: to be peak performers. And specifically the ELC, we are
40:57
Speaker 11: corporate officers that are our executives and major corporations around
41:02
Speaker 11: the world.
41:03
Speaker 7: So where we.
41:04
Speaker 11: Look at the diversity equity inclusion as a piece of
41:09
Speaker 11: increasing the effectiveness of an organization's ability to be more
41:13
Speaker 11: profitable and be more successful as how we would suggest
41:17
Speaker 11: organizations focus on it as opposed to it being something
41:21
Speaker 11: that's perceived as a political issue.
41:24
Speaker 2: What do you think would be helpful, Mike, because to
41:28
Speaker 2: not politicize it just a few months before an election
41:32
Speaker 2: that will definitely politicize this. How do you sort of
41:35
Speaker 2: manage that?
41:38
Speaker 11: Yeah, that's an excellent question, and I guess the challenge
41:44
Speaker 11: of the day. Our assessment on managing it is staying
41:50
Speaker 11: focused on what is required to be functional on the
41:55
Speaker 11: ground in organizations and to be less I guess, less
42:01
Speaker 11: defined by other people's assessment about what it is or
42:05
Speaker 11: it isn't. That's the only way we think is the best.
42:11
Speaker 11: I guess the best avenue is to be consistent for
42:16
Speaker 11: addressing what I called this disparities in terms of numbers
42:23
Speaker 11: based on representation of talent within organizations, and to have
42:27
Speaker 11: talent strategies and development strategies that ensure that everybody is
42:32
Speaker 11: reaching their full potential in organizations as our suggestions for
42:37
Speaker 11: what organizations are to do, and to stay focused on
42:40
Speaker 11: that independent of what it's called or indefinitive of what
42:43
Speaker 11: the acronyms are that people are defining it.
42:46
Speaker 5: By Mike, you mentioned that the EOC is a global
42:50
Speaker 5: Council global entity. Giving your global view here, how does
42:54
Speaker 5: the US doing on DEI initiatives maybe versus some other
42:58
Speaker 5: parts of the world.
43:01
Speaker 7: I think it is mixed relative to other parts of
43:07
Speaker 7: the world, but I do believe that the.
43:11
Speaker 11: Focus on productivity and team benefits globally is much more
43:20
Speaker 11: pronounced and less it's less it's less defined by race
43:25
Speaker 11: and culture, and so it has less less baggage, I guess,
43:33
Speaker 11: if you will, relative to how it's perceived globally than
43:39
Speaker 11: it does here in the United States. I think team productivity,
43:44
Speaker 11: maximizing the contributions of all types of folks independent of
43:49
Speaker 11: their background or gender, sexual orientation, continues to be something
43:54
Speaker 11: that all organizations are striving towards. You know, they're some
44:00
Speaker 11: companies who are more effective at it globally than others.
44:03
Speaker 11: But you know, I just think the whole issue around
44:06
Speaker 11: the discussion that you all are referencing is primarily much
44:11
Speaker 11: more I guess, aggressive in the United States, because I
44:15
Speaker 11: think there is an over interpretation of this as a
44:19
Speaker 11: byproduct of a racial issue as opposed to something that
44:23
Speaker 11: is looked at as a full production of all types
44:26
Speaker 11: of people independent of race.
44:28
Speaker 7: In the United States.
44:30
Speaker 2: I think that's such a great point that it gets
44:32
Speaker 2: stuck on race versus all diversity, like you need full
44:35
Speaker 2: diversity in order to sort of deliver that profitability, to
44:38
Speaker 2: deliver synergies, et cetera. So, yeah, it's true, all right, Mike,
44:43
Speaker 2: we appreciate it.
44:43
Speaker 3: Thanks very much.
44:44
Speaker 2: Mike Hicher, President and CEO of Executive Leadership Committee ELC
44:49
Speaker 2: joining us excuse me, Leadership Council joining us on all
44:53
Speaker 2: the efforts through DEI. And you know, I wonder what
44:57
Speaker 2: this happens once we get past November, Paul, Like, what
45:00
Speaker 2: the result will wind up being?
45:02
Speaker 3: Does this conversation get easier, get harder?
45:04
Speaker 2: Can we refocus it into diversity is good for many reasons?
45:07
Speaker 2: Here are the numbers that show it versus making it
45:10
Speaker 2: a race issue.
45:11
Speaker 4: At the end of the day, yep, exactly.
45:12
Speaker 5: If you can put in the context of profitability and returns,
45:14
Speaker 5: let's probably get the board's attention.
45:16
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