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Investing, Education, Retail, and the Fed (Podcast) · Bloomberg Intelligence

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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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Speaker 1: my co host Matt Miller. Every business day, we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
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Speaker 1: on Apple podcast or wherever you listen to podcasts, and
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Speaker 1: at Bloomberg dot com slash podcast. Lyle him Baugh he
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Speaker 1: is co founder at Granite Group Advisors. They're an independent
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Speaker 1: wealth management firm, and he joins us on the phone
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Speaker 1: on his Black Friday. Lyle, Hey, good to have you
0:31
Speaker 1: here with Paul and myself. So it's been quite a year.
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Speaker 1: I'm looking forward to wrapping it up, but I'm a
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Speaker 1: little cautious and concerned about what three brings. How do
0:40
Speaker 1: you see it? Well, thanks for having me and happy
0:44
Speaker 1: trip to fend overload day. So I think you know
0:49
Speaker 1: right now the way we're looking at the market. You know,
0:51
Speaker 1: the market. Just to give you some contacts, the market
0:54
Speaker 1: historically trade at fifteen to sixteen times forward numbers. Right
0:57
Speaker 1: now the market refrain to the smp uh, we're trading
1:02
Speaker 1: around almost seventeen and a half times forward numbers, which
1:05
Speaker 1: is not really terribly expensive. But when you overlay the
1:08
Speaker 1: backdrop of uh, you know, a potential slow down or
1:13
Speaker 1: even a recession. We don't believe we're going to go
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Speaker 1: to a recession. We think we're just going to slow down.
1:16
Speaker 1: To that of spending is pretty pretty strong. But what
1:19
Speaker 1: really concerns me is, you know, the personal savings rate
1:23
Speaker 1: as a percentage of disposal income is right where it
1:27
Speaker 1: was back in O eight, and we all knew what
1:29
Speaker 1: happened after that, right from O to O nine. So um,
1:33
Speaker 1: so I'm a little concerned. I mean, if I'm a
1:36
Speaker 1: if I'm a short term trader investor, I would be
1:40
Speaker 1: very cautious here. I would not put on new positions.
1:44
Speaker 1: If you have your gigantic profits and Apple that you've
1:48
Speaker 1: held for ten years, great, keep going Uh I went
1:51
Speaker 1: buy uh too much? I'd be I'd wait for the
1:54
Speaker 1: market to present an opportunity to get a better entry point.
1:59
Speaker 1: So I mean, lie, we're up about twelve off of
2:02
Speaker 1: the recent lows in the SMP. That feels kind of
2:07
Speaker 1: real to me or my getting a head fake here, No,
2:10
Speaker 1: that it's real, But I just think you know, people
2:12
Speaker 1: have you know, there's a lot of hope built in
2:14
Speaker 1: this market that the FED is gonna slow the rate
2:17
Speaker 1: to increase, and and they're going to but you have
2:20
Speaker 1: to understand the FED is data driven, and they can't
2:22
Speaker 1: get all the data until January for the fourth quarters,
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Speaker 1: so they're going to raise rates again, you know, I
2:27
Speaker 1: would you know, I think the investors need to take
2:29
Speaker 1: a real hard listen to what Mr Powell says. And
2:33
Speaker 1: he's raising rates. Is it fifty, it's seventy five. It's
2:35
Speaker 1: still a raise, and he's probably gonna raise again in
2:38
Speaker 1: the future. It's just gonna be a slow rate. So
2:40
Speaker 1: I think there's a lot of expectation built in that.
2:43
Speaker 1: Uh it's it's gonna really slow or stop and right
2:47
Speaker 1: now I don't see it. But then you have the
2:50
Speaker 1: market valuation on top of that, so there's not a
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Speaker 1: real lot. I don't see a big catalyst for the
2:55
Speaker 1: markets to go up here in the short term. Well
2:57
Speaker 1: what do you make that when, as you said, the
2:58
Speaker 1: FED is data driven. Doubt about a great story from
3:01
Speaker 1: the Wall Street Journal today, how the Fed's gonna be
3:04
Speaker 1: watching Black Friday Cyber Monday for insights into the health
3:07
Speaker 1: of the US consumer. Wall Street Journal putting it this way,
3:09
Speaker 1: the diagnosis this year takes on UH increased significance in
3:14
Speaker 1: light of the deteriorating economic landscape. We know how important
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Speaker 1: the consumer is to the US economy. So if we
3:20
Speaker 1: see some sobering consumer spending numbers, might that change your
3:24
Speaker 1: thought about maybe when the FED is done. Absolutely listen
3:29
Speaker 1: of GDPs retail sales, right, So that's why they have
3:33
Speaker 1: to look at that. So when you when you take
3:35
Speaker 1: that consideration, if we have a tough UH, if we
3:38
Speaker 1: have a tough retail sales numbers come out after this weekend,
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Speaker 1: I think the Fed's going to really keep going. They haven't.
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Speaker 1: They haven't really seen anything different. They say they're going
3:49
Speaker 1: to keep going, So I think he'll just But you
3:51
Speaker 1: know what I have to say, I was thinking about
3:53
Speaker 1: this Paul coming in, which is pretty sobering since I
3:55
Speaker 1: was half awake, and this is what I was thinking about.
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Speaker 1: But FED policy that if they do smaller increments, that
4:01
Speaker 1: leaves the door open that they might not go to
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Speaker 1: that higher FED funds. Right, they might see data points
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Speaker 1: that say we don't have to go as high as
4:09
Speaker 1: we thought, and it could change the thinking in terms
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Speaker 1: of evaluations. Well, that would that would absolutely change the thinking.
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Speaker 1: But as of today, you know, or maybe we'll find
4:21
Speaker 1: out on Monday that thinking hasn't changed. So I'm not
4:24
Speaker 1: going to be one of those you know, hoping, hoping,
4:28
Speaker 1: pray for, you know, the power to change his mind. Right,
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Speaker 1: So you've you've got to listen to what the man
4:34
Speaker 1: is saying, right, he's and he's not going to get
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Speaker 1: all the data he really needs to make a really
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Speaker 1: informed decision until really January, Lyle, you've got a call
4:43
Speaker 1: on Mickey Mouse the Walt Disney Company. They made a
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Speaker 1: CEO change, shocking change in the CEO. What's you're calling
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Speaker 1: the Walt Disney Company? You know, I think Disney is
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Speaker 1: a great company for the long term. It's it's one
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Speaker 1: of the few stocks I fold, uh intimately, Um, but
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Speaker 1: I think you know, Disney is fairly valued. I do
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Speaker 1: think there's some upside there. I think that Mr Iger
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Speaker 1: I always called him Mr Positivity. He is an absolute
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Speaker 1: phenomenal leader. Bob Jacob Speck was clearly not the right
5:18
Speaker 1: guy here at this moment in time. And we'll see
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Speaker 1: what happens down the road. But uh Iger is going
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Speaker 1: to do a great job. But here's the reality is
5:27
Speaker 1: as great as is it's going to take some time
5:30
Speaker 1: for him to you know, turn the battleship around. It's
5:33
Speaker 1: not going to happen overnight. He will turn around. It's
5:36
Speaker 1: just amount of time. Right now. The valuation on Disney
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Speaker 1: is fair. Canna go up to one ten, one tw absolutely,
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Speaker 1: I think eventually gets there. They've got the world's largest library,
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Speaker 1: They've got you know, ESPN and all the other ABC
5:52
Speaker 1: and everything else in there in Disney. Plus it's just
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Speaker 1: going to take some time. I would not be a
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Speaker 1: seller here, and in fact, if we have any type
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Speaker 1: of pull back, I'd be a pretty strong barrier of it.
6:01
Speaker 1: All right, we're gonna leave it on that note. Listen,
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Speaker 1: thank you so much. Disney shares, by the way, they're
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Speaker 1: down thirty six percent so far. Here in Lyle Himba,
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Speaker 1: partner at Granted Group Advisors, joining us on the phone.
6:17
Speaker 1: You might recall a Bloomberg story last month. It was
6:21
Speaker 1: a pretty big deal, and I think she and I
6:23
Speaker 1: are next guest. We talked about this, and I think
6:25
Speaker 1: even Paul you might have been there. It was about
6:27
Speaker 1: University of Pennsylvania's warton announcing it's NBA class was the
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Speaker 1: first in the programs a hundred and forty year history
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Speaker 1: to be majority female, because you just don't see that happen.
6:37
Speaker 1: So let's see what Alyssa's sankster has to say. She
6:40
Speaker 1: is CEO at Forte Foundation. She joins us on the
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Speaker 1: phone on this Friday, ALYSSA, nice to have you here
6:47
Speaker 1: with Paul and myself. UM tell us and remind our
6:50
Speaker 1: audience exactly what you guys do at Forte Sure, Hi Carol,
6:55
Speaker 1: Hi Paul. It's nice to be with you. And we
6:58
Speaker 1: are celebrating twenty years this year. Forte Foundation is and
7:01
Speaker 1: our goal is to increase opportunities for women in business leadership,
7:05
Speaker 1: and we partner with top business schools like the Wharton
7:08
Speaker 1: School m among many others. And this year we were
7:11
Speaker 1: really excited to see that number and then also that
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Speaker 1: about seventeen of our member schools had reached or greater,
7:19
Speaker 1: which is also a really significant milestone. And we've been
7:21
Speaker 1: following this trend for the twenty years we've been working.
7:26
Speaker 1: So UNLESSA, I see you've got your undergraduate degree from
7:30
Speaker 1: Texas A and M and proud Aggie and then the
7:32
Speaker 1: m b A from the Lowry Mayze School of Business.
7:36
Speaker 1: And I know Lowry very well from Clear Channel Communications.
7:38
Speaker 1: Great great individual when you see women going into an
7:42
Speaker 1: NBA program, what are they looking to do? Is it
7:45
Speaker 1: a career change? Is it just I want to better myself?
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Speaker 1: And from a career perspective, what do most women look
7:53
Speaker 1: for when they go into a business program? Sure, and
7:57
Speaker 1: and NBA students generally our career changers, especially in full
8:01
Speaker 1: time programs, And so when they make that commitment to
8:04
Speaker 1: go back, they really are looking for a different type
8:07
Speaker 1: of opportunity. And so women, much like men and women
8:10
Speaker 1: going back to NBA programs are also doing that. But
8:13
Speaker 1: what we see on the back side of that is
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Speaker 1: that women report higher levels of confidence. They feel like
8:19
Speaker 1: they're specialists in particular areas. They're able to walk back
8:23
Speaker 1: out into the workforce and feel empowered and um respected
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Speaker 1: for the degree that they have and for the knowledge
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Speaker 1: that they bring to the table. So it really does
8:32
Speaker 1: build that confidence and um set them on that trajectory
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Speaker 1: towards leadership. And leadership is really where the NBA pathway
8:41
Speaker 1: h takes you. Unlus, it sounds so it sounds like,
8:43
Speaker 1: you know, like poke pol a little bit. So it
8:45
Speaker 1: sounds like men and women both go to get an
8:47
Speaker 1: NBA for the same reason. But I do wonder a
8:50
Speaker 1: man having an NBA versus a woman having an NBA,
8:53
Speaker 1: what's the difference? Does truly an m B A A
8:55
Speaker 1: give a woman a huge leg up when it comes
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Speaker 1: to climbing the corporate ladder? Um? Well, about six point
9:03
Speaker 1: six percent of CEOs or women, and of that six
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Speaker 1: point six percent of them have an m B A.
9:10
Speaker 1: That statistic is a little bit stronger for the men.
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Speaker 1: So if you look at all of the other CEOs um,
9:16
Speaker 1: it's you know, closer to So it's clearly a very
9:19
Speaker 1: significant pathway leading to that c suite UM. The difference
9:23
Speaker 1: between men and women is that when women get that
9:26
Speaker 1: m B A it almost levels the playing field versus
9:29
Speaker 1: giving them a leg up. And so where you see
9:32
Speaker 1: women walking into a room to talk about business with
9:37
Speaker 1: other men, if they don't have that NBA, their competence
9:40
Speaker 1: level can sometimes not be as strong, and then they're
9:43
Speaker 1: not feeling like they are contributing it the same way.
9:45
Speaker 1: So I think it's more of a leveling the playing
9:47
Speaker 1: field than it is um necessarily giving them a leg up.
9:51
Speaker 1: And listen, I serve on the Fuqua School of Business
9:55
Speaker 1: at Duke University on their board of Visitors and and
9:57
Speaker 1: and it seems that at Duke there's a real focus
10:01
Speaker 1: on attracting UH a diverse class into their business school.
10:06
Speaker 1: Is that typical of some of the leading schools out there?
10:09
Speaker 1: Do you find? Yes? I think that the schools we
10:13
Speaker 1: work with UM, you know, gender equity has been very
10:15
Speaker 1: much a focus UM. But at the same time they
10:18
Speaker 1: are very interested in the intersection of race and gender
10:21
Speaker 1: and making sure that UM that their their student body
10:26
Speaker 1: is diverse. We do a lot of work around UH
10:29
Speaker 1: female protagonists in case studies. They're they're looking at how
10:33
Speaker 1: they teach the students, how many faculty members are diverse.
10:36
Speaker 1: They're trying to create a diverse student profile. But they're
10:39
Speaker 1: also looking at many other dimensions and how they deliver
10:42
Speaker 1: business education. And that's because companies want that as well.
10:46
Speaker 1: And the companies are saying to the business schools, we
10:48
Speaker 1: want diversity in our pipeline, and we we need your
10:51
Speaker 1: help and your partnership to create that diverse pipeline to
10:54
Speaker 1: schools and businesses hand to hand, Alyssa, And forgive my sarcasm,
10:57
Speaker 1: but I do feel like I had this conversation ten
10:59
Speaker 1: years go, twenty years ago. I know it sometimes gets
11:02
Speaker 1: better and all of a sudden, we see more women
11:04
Speaker 1: who are CEOs, and then those numbers dwind alls. So
11:07
Speaker 1: I and I get building out the pipeline. But what
11:10
Speaker 1: is the real problem in terms of more women penetrating
11:14
Speaker 1: really the C suite? If you will, Yeah, I think
11:18
Speaker 1: it's um gosh, you know, I wish I had a
11:21
Speaker 1: silver bullet. UM. It really has been this layered onion
11:24
Speaker 1: approach more that we've seen, and you know, the pipeline
11:27
Speaker 1: getting more as many women in business school as there
11:29
Speaker 1: were in law in medicine. I think that's healthy. I
11:32
Speaker 1: think though, when companies bring an onboard these classes of employees,
11:38
Speaker 1: they've got to really think about monitoring and watching and
11:41
Speaker 1: closely UM investing in all populations and making sure they
11:45
Speaker 1: have the same access and they have the same mentors
11:48
Speaker 1: and sponsors. And so that's hard work. I mean, that's
11:52
Speaker 1: every single day you have to be thinking intentionally about
11:55
Speaker 1: how you're advancing employees into these leadership ranks. And if
11:59
Speaker 1: you're not doing it care fully, and if you're not
12:01
Speaker 1: UM monitoring it and looking at metrics and making sure
12:05
Speaker 1: that you push those metrics UM, then you're not going
12:08
Speaker 1: to see success UM. And it really is about access
12:11
Speaker 1: and opportunity, because you can't go to the C suite
12:13
Speaker 1: if somebody hasn't pulled you forward into those leadership UM ranks.
12:18
Speaker 1: So it's it's hard work and there's always something more
12:21
Speaker 1: to be done. But I am encouraged because when I started,
12:24
Speaker 1: there were zero CEOs. Now there's at least close to
12:28
Speaker 1: seven women's CEO. Hey, hey, listen, how did this all
12:33
Speaker 1: play out during the pandemic? Were there any meaningful changes
12:35
Speaker 1: in the trends of women in NBA programs? Um? No,
12:40
Speaker 1: I mean, I think the enrollment in NBA programs is
12:43
Speaker 1: watches the markets, and it it goes. When economy is strong,
12:47
Speaker 1: you see more UM students staying in the economy, and
12:50
Speaker 1: when the economy weakens a little bit, you see more
12:52
Speaker 1: students going back to get their NBA women held their own.
12:55
Speaker 1: They really stayed consistent in terms of their percentages. I
12:58
Speaker 1: think in NBA enrollment to dipped a little bit this
13:01
Speaker 1: year over the pandemic, they were quite strong, UM, and
13:05
Speaker 1: so we're seeing the women are retaining that percentage that
13:08
Speaker 1: they've always had. All right, UM, I think we're gonna
13:11
Speaker 1: leave it at that. Really appreciate your time, Alyssa. Thank
13:14
Speaker 1: you so much. Have a great holiday season. Alyssa Sankster,
13:17
Speaker 1: she's CEO at Forte Foundation, joining us on the on
13:20
Speaker 1: this Friday. I may drive past the Short Hills mal tonight,
13:28
Speaker 1: but that's as bad as close as it's a full
13:30
Speaker 1: contact sport in the parking lot there. Man, you have
13:33
Speaker 1: to be really aggressive to get a spot. I guess
13:36
Speaker 1: it's a good thing for the retailers inside they do,
13:39
Speaker 1: but I don't do that. I'm a man at the
13:41
Speaker 1: people here. UM put them Coyle. She covers all that
13:44
Speaker 1: retail stuff for Bloomberg Intelligence. She's been doing that for
13:47
Speaker 1: a long time. She's seen her share of black Fridays.
13:51
Speaker 1: Where are you now in the great state of New Jersey? Putament,
13:54
Speaker 1: what are you seeing? I am on my way to
13:56
Speaker 1: Dick Sporting Goods. Um, it's crowded. You know. We have
13:59
Speaker 1: analysts out on the West coast in Massachusetts. Um. In Chicago,
14:03
Speaker 1: it is crowded and it is only getting more crowded. Um,
14:08
Speaker 1: it's it's boss flowing down. I mean, you know, we
14:10
Speaker 1: came into the season thinking that sales would be a little,
14:13
Speaker 1: a little muted. If this day is proof of anything,
14:16
Speaker 1: it's that people are spending I gotta tell you, Pam,
14:19
Speaker 1: I like to do Twitter polls, and I said, are
14:20
Speaker 1: you shopping at stores this Black Friday? It's been out
14:23
Speaker 1: there for about three hours this Paul fifteen, almost six
14:26
Speaker 1: say yes, they're out shopping at stores. Six said no,
14:32
Speaker 1: said yes, but they're shopping online today, So I don't know.
14:35
Speaker 1: Maybe my poll is just people are just sitting at
14:38
Speaker 1: home listening to us, so that's why they're not out shopping.
14:40
Speaker 1: But it sounds like you and your team are really
14:42
Speaker 1: surprised by the people coming back to the stores. And
14:45
Speaker 1: the lines are there too, right, so that means they're
14:47
Speaker 1: not only just looking at stuff, they're buying. Yeah. No,
14:51
Speaker 1: I mean the poles are the poles. But as I
14:54
Speaker 1: said earlier, it's really the younger generation. I mean it
14:58
Speaker 1: is the team, the teenager is, the millennials. They are
15:01
Speaker 1: who aren't in the store. So depending on who took
15:04
Speaker 1: that pole. But they're spending. Um, there's lots of shopping
15:07
Speaker 1: bags floating around. It's busy and it's just getting busier.
15:11
Speaker 1: Put And we were just talking to Daniel di Martino Booth.
15:13
Speaker 1: She's the CEO and chief strategist that Quill Intelligence, and
15:16
Speaker 1: she was just pointing out that the consumers not as
15:19
Speaker 1: strong as maybe we think. The consumer has drawn down savings,
15:23
Speaker 1: credit card debt is going up. What are the retail
15:26
Speaker 1: companies say about the health of the consumer. You know,
15:30
Speaker 1: I'd agree with that. I mean, retailers have been concerned
15:32
Speaker 1: for some time that consumers are going to be pinged,
15:35
Speaker 1: and that's why their bargain hunting and deal hunting, which
15:38
Speaker 1: is maybe why it's so busy today, right because somewhere
15:42
Speaker 1: in their minds they know that's the best field they're
15:44
Speaker 1: going to occur this weekend. So if they want to
15:46
Speaker 1: save money, if they want to get maximized what's on
15:48
Speaker 1: their wallets, they need to be out today. They need
15:51
Speaker 1: to be buying over this weekend. Yeah, I was thinking
15:54
Speaker 1: about I was just looking at Visa uh, and I'm
15:56
Speaker 1: going to be interested to see what Visa master card
15:59
Speaker 1: all of those folks have to say. No, no, are
16:01
Speaker 1: you still there? Punham? Maybe we lost her? Um, she's dropped. Yeah,
16:07
Speaker 1: she's out and about and she's checking out she said
16:10
Speaker 1: Dick Sporting good which I do think like when it
16:13
Speaker 1: comes to shopping around the holidays, sometimes those specialty stores,
16:16
Speaker 1: like people have very specific things on their wish lists
16:19
Speaker 1: and they tend to do well. Um, I feel like,
16:22
Speaker 1: you know, whether it's electronics, whether it's sports, whether it's
16:25
Speaker 1: you know, kind of different items like this. Yeah, I
16:27
Speaker 1: was interested. I'm gonna be interested to see how this
16:29
Speaker 1: all plays out in terms of the retail sales. Because
16:31
Speaker 1: you come out of the pandemic and it's all about experiences, traveling. Um,
16:36
Speaker 1: you know that kind of thing. But the consumers still
16:39
Speaker 1: out there in Strantham and Punam. We we we got you back.
16:41
Speaker 1: Thanks so much for joining us again. So when you
16:43
Speaker 1: think about a small segment of retail like sporting goods,
16:48
Speaker 1: what do you look for? What do analysts look for
16:50
Speaker 1: when I go to a sporting goods store and trying
16:52
Speaker 1: to get a channel check, I think it's really the
16:55
Speaker 1: inventory levels, right, So when you see the shelves, how
16:58
Speaker 1: high are they stopped? Are they picked through? Our consumers
17:02
Speaker 1: gravitating towards one brand versus another, and then looking across
17:06
Speaker 1: the brand, right, is Nike more on sale than Idia does?
17:09
Speaker 1: It's a lot more discounted. What are consumers picking after?
17:13
Speaker 1: Those are kind of the things that we look for.
17:15
Speaker 1: Dick Sporting Goods guys from about mid June it is
17:19
Speaker 1: up almost seventy percent, so it has had quite a
17:23
Speaker 1: run and quite a rally. Is there something to it?
17:25
Speaker 1: You know, we were talking Paula myself put it just
17:28
Speaker 1: this whole idea that when it comes to holidays, you know,
17:31
Speaker 1: when it's something very special or specialty store, I feel
17:33
Speaker 1: like those are the things that tend to show up
17:36
Speaker 1: on wish lists. Um, and I wonder if that's the
17:38
Speaker 1: case when you look at retail and what tends to
17:40
Speaker 1: do better? Is it? Is it those firms and those
17:42
Speaker 1: companies and those retailers that have something very special and
17:45
Speaker 1: unique to offer. Yeah, I think it's value or it's
17:49
Speaker 1: something very special and very special. The only name that
17:51
Speaker 1: comes to mind really is that See. I think that's
17:53
Speaker 1: where at he's been driving all year and they will
17:56
Speaker 1: continue to because they truly offer differentiated products, customer and
18:00
Speaker 1: more personalized products. And put when we talk to retail
18:03
Speaker 1: experts like yourself, you know, a topic that comes up
18:06
Speaker 1: as kind of the US being overstored. There's still too
18:10
Speaker 1: many stores for the demand out there. But this is
18:14
Speaker 1: an issue we've been talking about for years and years.
18:17
Speaker 1: Where are we now in terms of the industry, and
18:20
Speaker 1: it's it's it's retail footprint. I think there still are
18:24
Speaker 1: too many stores, and I think you will continue to
18:26
Speaker 1: see see store consolidation. But then there are stores that
18:30
Speaker 1: need to expand. To write, whether it's the off price retailer,
18:33
Speaker 1: there's some of the growth groups where some of the
18:35
Speaker 1: international retailers, they're trying to gain presence here, whether it's
18:38
Speaker 1: like a Prime Mark which is a value oriented retailer,
18:41
Speaker 1: or um some of the brands that are just looking
18:44
Speaker 1: to open up some retail out with but they're all
18:46
Speaker 1: looking in the same space. They're all looking at area,
18:50
Speaker 1: so you know, the shorthills mall and malls like the
18:53
Speaker 1: Garden State Plausa. It's hard to still find real estates
18:55
Speaker 1: there because that's where people want to be. You know,
18:58
Speaker 1: it's interesting. I was looking at Etsy to you like there.
19:00
Speaker 1: I guess it was like around mid June there a
19:02
Speaker 1: lot of retailers kind of bottomed out, or at least
19:04
Speaker 1: a recent bottom. It is up sevent since. Made you
19:07
Speaker 1: like that is pretty remarkable. Um. I was thinking about
19:11
Speaker 1: so many stories put them coming into Black Friday that
19:14
Speaker 1: we said, you know, maybe tempered demand, maybe it's not
19:16
Speaker 1: going to be as optimism. Are you getting ready to
19:19
Speaker 1: kind of rethink your research based on what you're seeing
19:21
Speaker 1: and what you're hearing from the team. What we see
19:24
Speaker 1: today is that it's Black Friday is back in motion.
19:28
Speaker 1: People are shopping, people are spending. It doesn't look muted
19:31
Speaker 1: to me by any means, but you know, there's a
19:34
Speaker 1: lot of holiday shopping still to go. This weekend is
19:37
Speaker 1: just the beginning. So if everyone has shopped this weekend
19:40
Speaker 1: and they don't go back out over the next three weeks,
19:43
Speaker 1: then holiday sales could still come in at the estimates
19:46
Speaker 1: that we've seen around which are normalized to be four
19:49
Speaker 1: to eight percent growth. So it really the beginning is
19:52
Speaker 1: off to a great start, but we need to see
19:54
Speaker 1: if that momentum continues for the next three weeks because
19:57
Speaker 1: the bulk of holiday shopping still lies ahead of us,
19:59
Speaker 1: especially as bill's are to come in. It's like, okay,
20:01
Speaker 1: well that we needed to hey, put them. I'm not
20:03
Speaker 1: sure if you've spoken to your counterpart in London, Charles Allen,
20:07
Speaker 1: who covers retail for Bloomberg Intelligence. What's the expectation for
20:10
Speaker 1: good friends over there in England or maybe just you're
20:13
Speaker 1: broadly defined. I have not spoken to my London London counterproducts.
20:17
Speaker 1: I have spoken of people on the West Coast and
20:19
Speaker 1: they're seeing the same trend. We have an analyst at
20:22
Speaker 1: in the malls there and it's busy. It's the same
20:24
Speaker 1: stores that are seeing the traffic. Where do you go
20:27
Speaker 1: from here? And we've you've been so great talking to
20:29
Speaker 1: us at the top of each hour. You know, you
20:31
Speaker 1: started off at the Freehold Freehold Mall, mall? Excuse me,
20:35
Speaker 1: you went to Coals, You're off to Dicks. Where else
20:37
Speaker 1: are you going to go check out? Today? So there's
20:39
Speaker 1: another smaller mall, and I do want to go check
20:42
Speaker 1: out the off price retailers which are in Black Friday destination,
20:45
Speaker 1: but they do offer a lot of value to see
20:47
Speaker 1: if traffic picks up. It usually picks up later in
20:49
Speaker 1: the day. They're at the tv xs of the world.
20:52
Speaker 1: But um, and then maybe take another trip back to
20:54
Speaker 1: the mall to see does it get busier or is
20:56
Speaker 1: it just you know through three four o'clock and then
20:58
Speaker 1: the mall is kind of normalized it all right? Well,
21:01
Speaker 1: you know, maybe I'll go out and if you want,
21:03
Speaker 1: I'll go to shorth Host Mall for you and report back.
21:05
Speaker 1: But that would you don't have to pay me a lot,
21:07
Speaker 1: get a drive by. He's already said it. Yeah, I
21:09
Speaker 1: think I might just drive by and I'll take a
21:11
Speaker 1: picture of the parking lot and send it to you. Uh, Danielle, sorry,
21:14
Speaker 1: but put him Goyle, thanks so much for joining us
21:16
Speaker 1: again at the top of the hour giving us the
21:19
Speaker 1: latest on what's going on in Black Friday, and put him.
21:21
Speaker 1: Goyle covers all that retail stuff for Bloomberg Intelligence. So
21:27
Speaker 1: it just seems like every FED president speaks all the time.
21:32
Speaker 1: Has that always been the case? It just seems like
21:34
Speaker 1: more and more every time we turn around when they're
21:37
Speaker 1: not in the quiet period, we're hearing from a FED Now.
21:40
Speaker 1: I guess it's Yeah, the only person I care about
21:42
Speaker 1: is a j pal, and I guess we're gonna hear
21:44
Speaker 1: from him next week. And so when I want to
21:46
Speaker 1: get a sense on what's going on at the FED
21:48
Speaker 1: and on the economy, large return to Danielle di Martino Booth.
21:52
Speaker 1: She's the CEO and chief strategist that Quill Intelligence, former
21:56
Speaker 1: advisor at the Federal Reserve Bank of Dallas. She's or
22:00
Speaker 1: go to voice on this stuff. So, Danielle, what is
22:02
Speaker 1: my FED chairman going to tell me next week? Uh?
22:07
Speaker 1: I think, I think if that chair Um come Wednesday
22:09
Speaker 1: is going to be resolute, even though reading through those
22:14
Speaker 1: minutes on Wednesday it revealed that he is increasingly alone
22:20
Speaker 1: in standing up against the doves. Um. By the way,
22:23
Speaker 1: it is Friday, so I've got the Some people have
22:26
Speaker 1: the clock running down to New Year's Eve. I've got
22:28
Speaker 1: the clock running down to blackout, which is seven days
22:31
Speaker 1: from now, which is when those set officials. Now, that's
22:35
Speaker 1: a really good point, Um. And it did feel like
22:37
Speaker 1: the minutes, you know, even though they were a few
22:40
Speaker 1: weeks old, at this point, there was something almost for
22:43
Speaker 1: everyone Danielle and that maybe we'll see smaller increases by
22:47
Speaker 1: the f O m C, but still we're talking about
22:50
Speaker 1: a higher ultimate Fed funds rate. UM, So it did
22:54
Speaker 1: feel like there was something for everyone. What could J
22:56
Speaker 1: Powell say when he addresses the Brookings Institution in wash
23:00
Speaker 1: Ington on Wednesday. He's going to talk economy, is going
23:02
Speaker 1: to talk about the labor market, He's going to take
23:04
Speaker 1: audience questions, brave man. What could he say that could
23:07
Speaker 1: change the thinking about Fed policy? I think as long
23:12
Speaker 1: as J. Powell sticks to his narrative that you know,
23:16
Speaker 1: going from to fifty is still unusually large. Right, we
23:20
Speaker 1: didn't have fifty until before this there were still at
23:24
Speaker 1: twice the magnitude, and that and that he sees nothing
23:28
Speaker 1: on the immediate horizon that suggests that the FED has
23:31
Speaker 1: achieved returning to two percent, meaning we're not accustomed to
23:35
Speaker 1: the FED bringing the FED funds rate up and keeping
23:38
Speaker 1: it there. And I think he's going to re emphasize
23:41
Speaker 1: his idea of until the job is done, and that
23:45
Speaker 1: is going to fly in the face of those who
23:47
Speaker 1: are expecting some kind of easing in the near term.
23:51
Speaker 1: I say near term meaning six to nine months. I
23:52
Speaker 1: think he's going to refute that idea. So the Bolk
23:56
Speaker 1: case out there for risk assets, I guess Daniel is
23:59
Speaker 1: particated to some degree that, Hey, the FED has already
24:03
Speaker 1: raised the interest rates pretty substantially and lo and behold,
24:06
Speaker 1: it's actually working. Whether you look at the housing market
24:08
Speaker 1: and maybe look at some of the commodity prices rolling
24:10
Speaker 1: over that a pause is a reasonable thing. But you're
24:15
Speaker 1: suggesting that's not where our FED chairman is. It's not
24:19
Speaker 1: that he doesn't remember he's the lawyer. He's not a
24:21
Speaker 1: PhD in economics. He follows the real time data, probably
24:25
Speaker 1: more closely than a PhD in economics who would follow
24:29
Speaker 1: only seconally adjusted long data series. He knows what's happening
24:32
Speaker 1: in the in the in the market, but again, financial
24:35
Speaker 1: conditions remain very loose historically speaking, and I think that
24:40
Speaker 1: that is more of his target, is trying to flush
24:42
Speaker 1: out this whole speculative nature that we've had in the
24:45
Speaker 1: markets for the last forty years. If his I've been maintaining,
24:49
Speaker 1: he's got a grander plan. He's trying to put monetary
24:52
Speaker 1: policy making back in the hands of the people. The
24:56
Speaker 1: officials at the Federal Reserve as opposed to the market
24:59
Speaker 1: make monetary policy on behalf of the Fed the tail
25:03
Speaker 1: wagging the dog. But it is hard for to be
25:05
Speaker 1: fair for the Fed. It feels like Danielle, especially when
25:09
Speaker 1: you do whether it's the pandemic that causes all of
25:11
Speaker 1: a sudden precedented stimulus to be out there. Uh, you know,
25:14
Speaker 1: we constantly see when we run into trouble that it
25:17
Speaker 1: does feel like lawmakers UM in Washington are quick to
25:20
Speaker 1: kind of help out and lend a hand, and that
25:22
Speaker 1: create changes kind of the liquidity story and does make
25:25
Speaker 1: it trickier for the FED. It does, UM and you know,
25:30
Speaker 1: to the point of some St. Louis Fed research. You know,
25:32
Speaker 1: we injected forty three of g d P into the
25:36
Speaker 1: economy inside of twelve months. You know that compares to
25:38
Speaker 1: that the entire New Dealer forty fort of GDP. It
25:42
Speaker 1: does make it more difficult, but we have to remember
25:44
Speaker 1: that they monetized every last penny of that. So the
25:47
Speaker 1: Fed played the role of enabler um. By the way,
25:49
Speaker 1: I don't think you get that out of this next congress.
25:52
Speaker 1: I don't think you get the same form of stimulus
25:55
Speaker 1: as we as there's a greater recognition of recession. Eight
25:58
Speaker 1: weeks ago, we had one stay with rising unemployment state
26:01
Speaker 1: initial unemployment claims. As of the nineteenth Wednesday's report, we
26:05
Speaker 1: have twenty nine states with rising initial state unemployment claims.
26:09
Speaker 1: But that's a real shift. That's kind of where I
26:11
Speaker 1: want to go, Danielle, because we're gonna get a jobs
26:13
Speaker 1: numbered next week. But we've got record low unemployment. We've
26:17
Speaker 1: been hearing from our retail analyst on the top of
26:21
Speaker 1: every hour, here is out at the shopping malls. People
26:23
Speaker 1: are out there shopping. It seems like we've got a
26:25
Speaker 1: pretty strong consumer judging. If nothing else everybody's kind of
26:29
Speaker 1: got a job, well, but everybody doesn't kind of have
26:33
Speaker 1: a job. If if if jobless claims were down forty
26:37
Speaker 1: eight point nine percent, that was the best that it
26:39
Speaker 1: was right down as good jobless claims down, you over
26:41
Speaker 1: your nationwide As of September, as of the nineteenth, jobless
26:45
Speaker 1: claims were only down two point zero percent. In other words,
26:48
Speaker 1: the time we get Thursday's print, this next Thursday's print,
26:51
Speaker 1: jobless claims nationwide are going to be rising year over year.
26:55
Speaker 1: That's why I think high high income consumers in University
26:59
Speaker 1: of Michigan data are telling you that they expect the
27:02
Speaker 1: unemployment rate to rise as opposed to that middle here
27:05
Speaker 1: and the lowest tier. They don't see it coming yet,
27:09
Speaker 1: so do you. We go as far as to say
27:11
Speaker 1: that FED policy it is working. We see it in
27:13
Speaker 1: the housing market. And I agree with you that last
27:15
Speaker 1: weekly jobless print showed, you know that things are starting
27:19
Speaker 1: to slow down in the labor market. We still have
27:21
Speaker 1: ways to go. And you know, we certainly saw in
27:23
Speaker 1: the FOMC minutes to you know, FED staff warning of
27:26
Speaker 1: a chance of recession in next year's now near fifty percent.
27:30
Speaker 1: So FED policy is working. Oh, it absolutely is. I mean,
27:35
Speaker 1: obviously you see it most in interest rate sensitive sectors.
27:39
Speaker 1: But for heaven's sake, I was I was just telling
27:41
Speaker 1: a friend we had a furniture Manufacturerloyees announced that they
27:46
Speaker 1: were closing, like shutting up shop. We're not talking young
27:50
Speaker 1: furniture manufacturer in Mississippi. Let's go on Tuesday period end.
27:54
Speaker 1: There will be ripple effects into the economy from this
27:58
Speaker 1: slamming the brakes on the housing market. It's not just
28:01
Speaker 1: going to be contained mortgage lenders. It's going to have
28:04
Speaker 1: broader economic rammifications. And we're beginning to see that. I
28:08
Speaker 1: suspect we'll see a lull in layoff activity in the
28:10
Speaker 1: month of December, because who wants to lay people off
28:13
Speaker 1: right in front of the holidays? And then we get January,
28:16
Speaker 1: and then we get January, and it's gonna hurt. Hey, Danielle,
28:19
Speaker 1: you're in When I think of one of the most
28:21
Speaker 1: vibrant markets in the United States, Dallas Fort Worth area,
28:24
Speaker 1: that metroplex down there, how's the economy down there? Well,
28:29
Speaker 1: the economy down here is still relatively strong. If you
28:34
Speaker 1: look at the nation as a whole. Um Texas unemployment claims,
28:37
Speaker 1: you're still down four. So we're just on the cusp
28:40
Speaker 1: of starting to enter recession in Texas. It has certainly
28:43
Speaker 1: been delayed because of the mass um migration here to
28:48
Speaker 1: these markets, but even here you're seeing homebuilders put incentives
28:52
Speaker 1: out there, cut home prices and not gain any traction.
28:56
Speaker 1: And that tells you something about basically, if you follow
29:00
Speaker 1: the entrails of consumer confidence, there's now a recognition. And
29:04
Speaker 1: I think that that's what's critical is nationwide people have
29:07
Speaker 1: recognized that we're going into recessions. This isn't just a
29:10
Speaker 1: CEO survey. This is a broader recognition among the public
29:14
Speaker 1: and that's a game change. Or whenever in any cycle,
29:16
Speaker 1: whenever you get to that point of recognition, that's when
29:19
Speaker 1: things start to change. Danielle. We heard from Lyle him
29:22
Speaker 1: back him by earlier of Grantit Group Advisors reminding us
29:26
Speaker 1: g d P is retail sales. So this is something
29:29
Speaker 1: obviously we're focused on today. Because of Black Friday. We've
29:32
Speaker 1: been talking with our Punum Goyle, a Bloomberg intelligence out
29:35
Speaker 1: at the malls. They're busy, they're getting busier, people waiting
29:37
Speaker 1: for parking spots. Black Friday can be a great data
29:41
Speaker 1: point for the Federal Reserve in terms of whether or
29:43
Speaker 1: not consumers feel confident about shopping. At the same time,
29:47
Speaker 1: I think it was maybe the New York FED that
29:49
Speaker 1: put out some data about, you know, Americans, consumers are
29:52
Speaker 1: adding more to their credit cards. So how might the
29:55
Speaker 1: FED take Black Friday Cyber Monday data and kind of
30:00
Speaker 1: at it into their thinking about FED policy. Well, I
30:03
Speaker 1: think I think consumer confidence, in the way you describe
30:06
Speaker 1: it um really speaks to people's willingness to completely max
30:12
Speaker 1: out their credit cards. And the data that's not being
30:14
Speaker 1: followed as closely is that we're about tapped out in
30:18
Speaker 1: terms of credit card lines, so and we've taken savings
30:22
Speaker 1: down to such a level on a nominal basis that
30:25
Speaker 1: there wasn't enough savings to spend what Americans spent last
30:29
Speaker 1: December in terms of burning through their savings. The willingness
30:33
Speaker 1: is a corollary, if you will, to financial conditions being easy.
30:38
Speaker 1: Many Americans have never lived through the double difpercession of
30:42
Speaker 1: the nineteen eighties, and they don't they don't know of
30:45
Speaker 1: a FED that doesn't come in and rescue the economy
30:48
Speaker 1: very quickly and not let the pain be failed. And
30:51
Speaker 1: I think that's how many. That's how many households and
30:54
Speaker 1: many investors are operating. Daniel. We're gonna get the Jolts
30:58
Speaker 1: data next week job openings, and it's still a big number.
31:02
Speaker 1: It seems to me more than ten million. How do
31:04
Speaker 1: you interpret the Jolt's number or do you just kind
31:06
Speaker 1: of toss it aside? You know, I don't toss it aside.
31:10
Speaker 1: I allowed some FED staff papers to allow me to
31:12
Speaker 1: tos us it aside. If you if you net FED research,
31:16
Speaker 1: there's the irony is that Powell is ignoring FED research.
31:19
Speaker 1: If you net out job postings that are written specifically
31:23
Speaker 1: to poach existing employed individuals. So I want to get
31:27
Speaker 1: a good employee from my competition and hire them for
31:31
Speaker 1: more money. If you net those types of job postings out,
31:34
Speaker 1: according to Federal research data, your job openings are basically flat.
31:38
Speaker 1: There was a little bumped during COVID, but otherwise basically
31:41
Speaker 1: flat job openings for people who are unemployed. So there's
31:45
Speaker 1: a critical distinction to be made there. It's a weird economy,
31:48
Speaker 1: I think, making sense of it and coming out of
31:50
Speaker 1: this pandemic, right, we haven't lived through this before. Um,
31:54
Speaker 1: so what is this thing? I mean? FED policy monetary policy,
31:57
Speaker 1: never never assure thing there is in a playbook that
32:01
Speaker 1: says this is exactly what you have to do. Daniel,
32:03
Speaker 1: you know this better than most. So what is the
32:05
Speaker 1: tricky thing? What is the major risk factor right here
32:09
Speaker 1: at this point in time for J. Powell and Company.
32:13
Speaker 1: So the way I liken it's for for Quill's clients
32:16
Speaker 1: is cycle compression. So the way that he brushed off
32:21
Speaker 1: the idea of lag when he was the podium, as
32:23
Speaker 1: opposed to being recognized and written into the statement up
32:27
Speaker 1: by the doves. And my greatest concern is that fannimated
32:31
Speaker 1: research that showed that on average it takes five quarters
32:35
Speaker 1: for home price increases in home price declines to manifest
32:38
Speaker 1: in the consumer price inflation consumer price index. It's taking
32:42
Speaker 1: only half of that time. In other words, the magnitude
32:45
Speaker 1: of the FED rate hiking cycle plus q T in
32:49
Speaker 1: the background is moving monetary policy into the real economy
32:53
Speaker 1: at twice the speed as what we've seen when it
32:56
Speaker 1: used to be Alan Greenspan seventeen rate hikes in a row,
32:59
Speaker 1: only any five basis points at a time. So I
33:02
Speaker 1: think that that's what we have to pay attention to,
33:04
Speaker 1: is the rapidity with which lag is making its mark
33:07
Speaker 1: on the real economy. Hey, Danielle, just thirty seconds left.
33:11
Speaker 1: What's the what do you get asked the most right
33:13
Speaker 1: now by your clients? Hey? Explain this to us what
33:18
Speaker 1: my clients want to know the most right now? Or
33:21
Speaker 1: why are credit spreads as wide as they are and
33:24
Speaker 1: what's going to break? And my stock answer is you
33:27
Speaker 1: have to pay attention to other parts of the world.
33:30
Speaker 1: How yielding in Europe is degrading at a much faster pace.
33:33
Speaker 1: The credit event will happen, but so far because financial
33:37
Speaker 1: conditions remain easy. It's going to keep the Feds pedal
33:40
Speaker 1: to the metal, so to speak. But credit remains on
33:42
Speaker 1: everybody's front mind. It always does end in credit. Danielle,
33:46
Speaker 1: thank you so much. Really appreciate and have a great weekend.
33:48
Speaker 1: Danielle de Martinez de Martino excuse me, Booth CEO and
33:52
Speaker 1: chief strategist over at Quill Intelligence. Thanks for listening to
33:55
Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to
33:59
Speaker 1: interviews of Apple Podcasts or whatever podcast platform you prefer.
34:03
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three
34:08
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34:11
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