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Markets, Cars, And Ice Cream (Radio) · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day, we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. Now, let's bring in
• 0:22
  Speaker 1: Lauren Gilbert right now from Wealthwise Financial Services. She's the
• 0:26
  Speaker 1: founder and the CEO. And what a time to be investing,
• 0:31
  Speaker 1: making investment decisions, deciding on investment strategy. What do you do,
• 0:35
  Speaker 1: Loreen after a nine point one percent cp I print right.
• 0:41
  Speaker 1: It's a shocking number, definitely, and it's got investors nervous.
• 0:44
  Speaker 1: But I think when we think about having a level head,
• 0:49
  Speaker 1: when we look at core inflation has been coming down
• 0:52
  Speaker 1: to hit a peak, and I don't think that the
• 0:56
  Speaker 1: FED will be as aggressive as some people are thinking.
• 0:59
  Speaker 1: I think they night stick to the basis points. Nonetheless,
• 1:03
  Speaker 1: no matter what it is and whatever it is that
• 1:06
  Speaker 1: we're looking at, we just have to focus on long
• 1:11
  Speaker 1: term investing. And with that, I think that investors are
• 1:14
  Speaker 1: actually probably too uh too worried, too fearful about this
• 1:20
  Speaker 1: and keeping their equity exposure in line with their risk tolerance.
• 1:24
  Speaker 1: So while we've pulled in some cash, not being overly
• 1:28
  Speaker 1: conservative with equity exposure. Loreen, let's talk about this Humiss
• 1:33
  Speaker 1: data if we can here. It's coming in pretty good
• 1:36
  Speaker 1: actually at a time when consumer sentiment is extremely extremely low.
• 1:41
  Speaker 1: How much stocks should be put in this particular report? Yeah,
• 1:45
  Speaker 1: exactly that the consumer sentiment has been extremely low. Um,
• 1:50
  Speaker 1: but when you look at today and the retail sales number,
• 1:54
  Speaker 1: it shows that consumers are still spending. So there's this
• 1:56
  Speaker 1: disconnect between consumer sentiment and and actually what people are doing.
• 2:01
  Speaker 1: And I think hopefully that holds because we rely on
• 2:05
  Speaker 1: our economy on the consumer. Two thirds of our GDP
• 2:09
  Speaker 1: is based on the consumer spending. So, uh so we
• 2:12
  Speaker 1: are seeing the consumer spending. Now, what we don't really
• 2:14
  Speaker 1: know is how much of that is just higher prices,
• 2:17
  Speaker 1: So higher prices, but people are actually purchasing less but
• 2:20
  Speaker 1: the prices are higher, so we have to factor that in.
• 2:23
  Speaker 1: But people are spending. The consumer is still strong, and
• 2:27
  Speaker 1: so we think the consumer can weather this, but they're
• 2:29
  Speaker 1: not happy about it. They're not They're not happy that
• 2:32
  Speaker 1: they're spending extra money on goods. In terms of the
• 2:36
  Speaker 1: FED UM, you know, a hundred basis points has been floated,
• 2:40
  Speaker 1: but it seems like seventy five is pretty much a lock.
• 2:42
  Speaker 1: What do you expect for you know, the the year
• 2:46
  Speaker 1: end rate or the terminal rate from the Federal Reserve. Yeah,
• 2:50
  Speaker 1: I think we're the three and a half more than
• 2:52
  Speaker 1: the four that might be expected. So you know, we
• 2:55
  Speaker 1: do think the seventy five and then um, you know,
• 2:58
  Speaker 1: we'll see, hopefully there's a breather where the Federal Reserve
• 3:02
  Speaker 1: will take a look at how that's really being priced
• 3:06
  Speaker 1: in with the economy and how the economy is taking
• 3:10
  Speaker 1: it um and so I think that what we're going
• 3:13
  Speaker 1: to see this year is an aggressive fad and next
• 3:17
  Speaker 1: year they might have to completely reverse course and become
• 3:21
  Speaker 1: much more accommodative based on the economy. So uh so,
• 3:25
  Speaker 1: so I think, you know, consumers as well as investors
• 3:29
  Speaker 1: just ride this out. Looking specifically, what we're doing is
• 3:34
  Speaker 1: looking for companies that are spending on capex, what's going
• 3:38
  Speaker 1: on with share buy backs, you know, what is their
• 3:41
  Speaker 1: strength on cash flow? And those strong companies are what
• 3:45
  Speaker 1: we're looking for. Well, you're talking about fundamentals here, Can
• 3:48
  Speaker 1: we just have a sentiment for a second, because do
• 3:51
  Speaker 1: people really want to even be in this market when
• 3:53
  Speaker 1: there's this much uncertainty. It's something you're seeing in commodities,
• 3:56
  Speaker 1: for example, that simply open interest in that market is
• 3:59
  Speaker 1: drop because nobody wants to navigate the volatility. Can the
• 4:02
  Speaker 1: same be said for the SMP five Well, you mentioned
• 4:06
  Speaker 1: a really good point. For sure. Definitely, emotions get involved
• 4:10
  Speaker 1: when it comes to investing, and that's where we have
• 4:13
  Speaker 1: to help our investors keep emotion out of it and
• 4:17
  Speaker 1: really look at that, you know, how to client call
• 4:20
  Speaker 1: the other day saying all I'm hearing is recession, recession, recession, recession.
• 4:25
  Speaker 1: How bad is it? And our feeling is that, you know, one,
• 4:29
  Speaker 1: we're not in a recession yet and to uh, it's
• 4:33
  Speaker 1: probably not going to be as bad as people think
• 4:35
  Speaker 1: it's going to be. So with that, yes, we could
• 4:37
  Speaker 1: still see some downside from here on equity prices, but
• 4:42
  Speaker 1: when we look at our year in numbers, on our
• 4:44
  Speaker 1: expectations on the SMP, it's higher than what it is
• 4:48
  Speaker 1: right now. So as long as investors can take, you know,
• 4:51
  Speaker 1: and look at it out longer term view, um, it
• 4:55
  Speaker 1: makes more sense to be invested, and like I was
• 4:58
  Speaker 1: saying earlier, the average investor is still as too little
• 5:02
  Speaker 1: equity exposure. So if I came to you with a
• 5:05
  Speaker 1: million bucks in the three to five year time horizon,
• 5:07
  Speaker 1: what would you do. We have that situation right now.
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  Speaker 1: We're investing that money, We're putting it to work. Now,
• 5:14
  Speaker 1: that investor that I'm talking about is a modern investor,
• 5:17
  Speaker 1: So holding to that sixty allocation and of course including
• 5:21
  Speaker 1: including alternatives in the mix, uh would make sense? All right? Loreen,
• 5:26
  Speaker 1: thanks so much. Lori and Gilbert, their founder and CEO
• 5:30
  Speaker 1: of Wealthwise Financial Services talking to us about the current
• 5:33
  Speaker 1: investment environment. Me and pretty have a bet. Now, we
• 5:40
  Speaker 1: do have a bet. I think that inflation peaked at
• 5:43
  Speaker 1: least in terms of the headline CPI number with the
• 5:47
  Speaker 1: reading that we got what was that Wednesday? Right? Nine nine?
• 5:53
  Speaker 1: Handle yet? So if if we get a higher number
• 5:56
  Speaker 1: than that, I will take you to dinner wherever you
• 5:59
  Speaker 1: like and one of your friends. So it's not a date.
• 6:04
  Speaker 1: Maybe maybe my wife could come over. Yeah, let's do that. Um,
• 6:08
  Speaker 1: if I'm right and hold on, If I win and
• 6:12
  Speaker 1: inflation is higher and has not, Pete, what do you want?
• 6:18
  Speaker 1: I don't know, if I take you to dinner, and
• 6:21
  Speaker 1: if if I win, you pay for dinner. Exactly, you
• 6:24
  Speaker 1: take me to the Flying j um in in Harrisburg.
• 6:28
  Speaker 1: We're gonna interview the CEO right now, Schamik Konar, CEO
• 6:31
  Speaker 1: of the Pilot Company. I grew up with Pilot and
• 6:35
  Speaker 1: the Flying j I used to drive all the time.
• 6:38
  Speaker 1: I still kind of do from Grandville, Ohio to New
• 6:41
  Speaker 1: York City and I always stop at um at your
• 6:45
  Speaker 1: what do you call them truck stops? Convenience centers? What
• 6:48
  Speaker 1: do you call the Flying j are the pilots called
• 6:51
  Speaker 1: them travel travel centers? That's right, I always say truck
• 6:54
  Speaker 1: stop people being a cupstomer Matt to be appreciated and
• 6:57
  Speaker 1: hopefully we do a good job for you. No, obviously
• 7:01
  Speaker 1: I love it, or I wouldn't stop there all the time. Um,
• 7:03
  Speaker 1: although it is very convenient, right, they seem to be everywhere,
• 7:07
  Speaker 1: at least for a Midwest boy like me. How many
• 7:09
  Speaker 1: stores do you have? And and and where are they?
• 7:12
  Speaker 1: Where they focused concentrated? No, we were, Actually we're we're
• 7:16
  Speaker 1: all over the country. So you know, we sell a
• 7:19
  Speaker 1: few a lot of about eight hundred and twenty locations
• 7:22
  Speaker 1: around the country. And and Canada and uh, you know,
• 7:26
  Speaker 1: we're pretty much on every major rangstate and uh and
• 7:30
  Speaker 1: and some of the local roads depending on the amount
• 7:32
  Speaker 1: of amount of traffic there. So you know, it's a
• 7:35
  Speaker 1: pretty uh, pretty broad network. And so I guess the
• 7:43
  Speaker 1: story is, now you're gonna put e V chargers everywhere?
• 7:46
  Speaker 1: Is that in it? Well? Yes, that is. We are
• 7:50
  Speaker 1: partnering out with General Motors to put EV chargers at
• 7:54
  Speaker 1: at five hundred of locations to start with. Yes, So
• 7:58
  Speaker 1: talk to us a little bit about the transition there
• 8:00
  Speaker 1: went from gas stations to e vs. We had a
• 8:02
  Speaker 1: guest on almost like yesterday from GMO. From from GM. Yeah,
• 8:04
  Speaker 1: that's what he's talking about, right, I'm aware, thank you,
• 8:07
  Speaker 1: uh talking about well, you know, we're still have this
• 8:11
  Speaker 1: massive infrastructure to build, but I'm curious about the trade
• 8:13
  Speaker 1: off there. You know, the way we pretty the way
• 8:18
  Speaker 1: we look at this is our goal is to provide
• 8:21
  Speaker 1: a great experience for our guests and to be able
• 8:24
  Speaker 1: to deliver the form of energy that they need. Right,
• 8:28
  Speaker 1: so you know, whether whether whether people need electricity or
• 8:32
  Speaker 1: whether they need gasoline, our goal is to provide whatever
• 8:35
  Speaker 1: form of energy they need. So you know, we view
• 8:38
  Speaker 1: this as a as a bit of the natural transition
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  Speaker 1: as we uh you know, move away from fossil fields,
• 8:44
  Speaker 1: which is gonna take a long time in my opinion.
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  Speaker 1: But but we are moving to a world where we
• 8:49
  Speaker 1: are going to have to service many kinds of guests
• 8:52
  Speaker 1: as we call them at our travel centers. And I
• 8:55
  Speaker 1: see a future where, you know, for a period of time,
• 8:58
  Speaker 1: we will be selling so mean diesel. Uh you know,
• 9:02
  Speaker 1: we we currently sell a lot of bio diesel, renewable diesel,
• 9:07
  Speaker 1: ethan al, and we'll be selling electricity and possibly hydrogen
• 9:12
  Speaker 1: and uh, you know, possibly compressed natural gas. So I
• 9:15
  Speaker 1: see this kind of multi few future for us as
• 9:18
  Speaker 1: we work our way through this transition. I mean, I
• 9:21
  Speaker 1: assume that you also want to make money though, right,
• 9:23
  Speaker 1: So what kind of margins, uh do you expect from
• 9:28
  Speaker 1: or or or maybe even you know, gross revenue do
• 9:33
  Speaker 1: you expect from an electric vehicle customer versus someone who's
• 9:38
  Speaker 1: fueling up a gas or diesel. That my, my, my
• 9:43
  Speaker 1: shareholders will be pleased that you bring that up. But
• 9:48
  Speaker 1: you know, look at this point, it's a little bit
• 9:50
  Speaker 1: of a complicated question. And the reason I the reason
• 9:53
  Speaker 1: I say that is, uh, you know, uh the electric
• 9:58
  Speaker 1: UH procurement rates are actually fairly complicated around the country,
• 10:03
  Speaker 1: so and this is one of the challenges we're working
• 10:05
  Speaker 1: to figure out. It's based on the rate structures that
• 10:09
  Speaker 1: are offered by utilities in different states. You can actually
• 10:13
  Speaker 1: have pretty significant variations in the price of electricity and
• 10:18
  Speaker 1: the way electricity is priced because you have these things
• 10:21
  Speaker 1: called demand charges where you have to pay regardless of
• 10:24
  Speaker 1: whether you're whether people are charging at your location or not.
• 10:28
  Speaker 1: And if I have to pass all of that onto
• 10:30
  Speaker 1: our customers or you know, if you have large demand charges,
• 10:33
  Speaker 1: it's gonna be help for us to make money for
• 10:35
  Speaker 1: some period of time. In all those states where you
• 10:38
  Speaker 1: don't have demand charges, it's gonna be you know, possible
• 10:41
  Speaker 1: for us to UH to make money. But ultimately, the
• 10:45
  Speaker 1: way I think about it is, we have to be
• 10:47
  Speaker 1: competitive with the price of gasoline. So when you think
• 10:51
  Speaker 1: about it on a you know, for a mile basis,
• 10:54
  Speaker 1: for a mile cost of fuel, we have to be
• 10:56
  Speaker 1: competitive with gasoline. So right now, it's it's it's a
• 11:00
  Speaker 1: difficult call to make, but this is something that we're
• 11:04
  Speaker 1: going to have to work through state by state and
• 11:06
  Speaker 1: work through with our customers as well. From a market's perspective.
• 11:10
  Speaker 1: It feels like President Biden's comments that operators of such
• 11:16
  Speaker 1: facilities as yours have the ability to control the prices
• 11:21
  Speaker 1: at the pump, the prices that consumers are facing from
• 11:23
  Speaker 1: marcus perspective, which which Matt and Night talked about on
• 11:26
  Speaker 1: the daily, that seems like a very challenging thing to do.
• 11:29
  Speaker 1: But I'd like to get your response as the owner
• 11:32
  Speaker 1: of one of such operators. You know, um, what ends
• 11:37
  Speaker 1: up happening is the factors that drive are pricing are
• 11:40
  Speaker 1: are generally three things, right. First is what the cost
• 11:43
  Speaker 1: of the fuel is. And this is what you guys
• 11:46
  Speaker 1: talk about all the time, right Like double Pi is
• 11:48
  Speaker 1: trading at ninety forty two right now, and you know
• 11:52
  Speaker 1: you've got on letter gasoline trading at two two right,
• 11:55
  Speaker 1: So the cost of the product. Uh And and one
• 11:57
  Speaker 1: of the challenges we do run into is we has
• 12:00
  Speaker 1: to carry inventory. So the markets move up and now
• 12:02
  Speaker 1: and every day, but we have to carry a fair
• 12:05
  Speaker 1: amount of inventory. So you know, how we price also
• 12:08
  Speaker 1: depends on what the thought stuff that inventory in our
• 12:11
  Speaker 1: tanks place. The second factor that comes into play is
• 12:14
  Speaker 1: what our competitors are doing. Right as you know, this
• 12:17
  Speaker 1: is uh. You know, retail retail fuel is a hyper
• 12:21
  Speaker 1: competitive industry. I mean I grew up in India. When
• 12:24
  Speaker 1: I came to the US, I was absolutely shocked by
• 12:26
  Speaker 1: the fact that you could have three or four gas
• 12:29
  Speaker 1: stations at one intersection right competing for prices. So competitive
• 12:34
  Speaker 1: behavior comes into play a lot. And these days, uh,
• 12:38
  Speaker 1: you know, with with what's happened in the US uh
• 12:41
  Speaker 1: uh fuel industry, with the fact that our refining capacity
• 12:45
  Speaker 1: has gone down, you know, kind of six six or
• 12:47
  Speaker 1: seven percent over COVID and the fact that we're running
• 12:51
  Speaker 1: law and inventories. Localized markets have tremendous dislocations and fuel.
• 12:57
  Speaker 1: You can have markets which are or you can have
• 12:59
  Speaker 1: term those which a hundred miles apart, and you see
• 13:02
  Speaker 1: fifty different in the cost of fuel. So you know,
• 13:06
  Speaker 1: what you see on the imax of what you see
• 13:08
  Speaker 1: on the trading in the trading markets every day are
• 13:11
  Speaker 1: not necessarily the cost of fuel that we face in
• 13:14
  Speaker 1: local markets. So you know, those are the two factors
• 13:18
  Speaker 1: that come into play, and they basically, um, you know,
• 13:21
  Speaker 1: we're in the world right now where we have hurricane
• 13:24
  Speaker 1: level of volatility. Yeah, absolutely, every day Shamik listen if
• 13:29
  Speaker 1: you're in New York City, please stop by. I love
• 13:32
  Speaker 1: to have you in the studio and talk further about this.
• 13:34
  Speaker 1: If you're in Washington, d C. Maybe go to the
• 13:36
  Speaker 1: White House and explain that to them. I'm in my
• 13:42
  Speaker 1: sweet spot right now. My buddy Kevin Tynan just walks into.
• 13:45
  Speaker 1: I haven't seen you in like six years, dude. It's
• 13:48
  Speaker 1: a real bromance in here. Bloomberg Bloomberg Intelligence. He covers
• 13:51
  Speaker 1: the carmakers and uh Critty, you'll get to know him well.
• 13:54
  Speaker 1: Me and Tretty are starting a car podcast. Yeah, we'll
• 13:57
  Speaker 1: have to have you on it. Um, let's start by
• 13:59
  Speaker 1: talking about the CT four black Wing. No, this is
• 14:02
  Speaker 1: a Cadillac product that Um it's tough to get right now, right,
• 14:06
  Speaker 1: just like every really special vehicle. But I want to
• 14:10
  Speaker 1: hear specifically about this as well. What is it? Well,
• 14:14
  Speaker 1: what what's beautiful? Is uh? Manual transmission? I think it's
• 14:18
  Speaker 1: close six horsepower something ridiculous like that, but luxury. So
• 14:24
  Speaker 1: what is it? A supercharged six point two lead V eight? Yeah, yeah,
• 14:28
  Speaker 1: it's it's essentially it's the four door z O six
• 14:32
  Speaker 1: more or less. Well, now they have an escalade coming out.
• 14:35
  Speaker 1: It's going to have the same power plant. In terms
• 14:37
  Speaker 1: of getting these cars, it's just impossible. I've you know,
• 14:40
  Speaker 1: I've thought a Chevy Silverado z R two. I think
• 14:43
  Speaker 1: it's the sweet spot for uh, the sort of off
• 14:46
  Speaker 1: road style commuter trucks, Starbucks trucks. But I'm not gonna
• 14:52
  Speaker 1: get it. I'm worried I won't get it till the
• 14:53
  Speaker 1: end of the year because of this chip shortage. And
• 14:55
  Speaker 1: I just saw this morning a number across the Charmer
• 14:57
  Speaker 1: that was really depressing. Porsche first half, say, ails down
• 15:00
  Speaker 1: five per cent. And you know that the giant empire
• 15:03
  Speaker 1: of Volkswagen should be able to move all of their
• 15:06
  Speaker 1: chips to their highest margin business. So if they can't
• 15:09
  Speaker 1: even get Porsche sales to rise, we're in trouble. Well.
• 15:12
  Speaker 1: And the other thing that not only are you and
• 15:15
  Speaker 1: customers waiting for product, your at least in this country,
• 15:18
  Speaker 1: you're paying over M S r P, you know, over
• 15:22
  Speaker 1: for just a regular truck YEP. And and it's amazing, right,
• 15:26
  Speaker 1: in all my years of doing this, we've been above
• 15:29
  Speaker 1: M S r P as an industry since October of
• 15:32
  Speaker 1: last year. I wouldn't think that I would have ever
• 15:35
  Speaker 1: seen that, even maybe for one or two automakers for
• 15:39
  Speaker 1: one month, never mind an entire industry for It'll be
• 15:44
  Speaker 1: a year by the time this this rings out. But
• 15:47
  Speaker 1: I just looked at the chart. Out of the thirty
• 15:50
  Speaker 1: some odd brands in the US, there's six that are
• 15:52
  Speaker 1: still selling below ms RP. Everybody else is above. Wait,
• 15:58
  Speaker 1: what what's below? What's below? Uh there's BMW, Mini, Ram,
• 16:04
  Speaker 1: Jeep and Alpha Romeo. Oh well, brand, I'm talking to
• 16:09
  Speaker 1: brand brand on average, Kevin, Let's broaden this out for
• 16:13
  Speaker 1: the people like myself who don't know half the words
• 16:15
  Speaker 1: you just said. You and Matt just nerded out about
• 16:17
  Speaker 1: let's talk about supply chains here, chip shortages. Already. We
• 16:21
  Speaker 1: were just talking to a guest who was saying they're
• 16:23
  Speaker 1: putting more EV charging stations in their their gas trucking stops,
• 16:28
  Speaker 1: transportation centers, whatever, pilot flying j that's the one, um,
• 16:33
  Speaker 1: But I'm curious how much of it is getting ahead
• 16:35
  Speaker 1: of itself. You have a chip shortage, you need more
• 16:37
  Speaker 1: chips to make evs. That production it almost feels like
• 16:41
  Speaker 1: it's plateauing to some extent, and yet you have this
• 16:43
  Speaker 1: infrastructure that's being built out, and that doesn't even take
• 16:45
  Speaker 1: into account the affordability of EVS, which is more expensive anyway. Right,
• 16:49
  Speaker 1: And we could do a whole podcast on this, but um, look,
• 16:56
  Speaker 1: I am of the belief and you're probably not going
• 16:58
  Speaker 1: to hear this in many places that a lot of
• 17:00
  Speaker 1: this shortages are being orchestrated for those reasons of balancing
• 17:05
  Speaker 1: supply and demand, getting over ms RP for product. Uh
• 17:10
  Speaker 1: you know, so costs have been rationalized in this industry
• 17:13
  Speaker 1: to the point where automakers don't have to push push
• 17:16
  Speaker 1: push production choked the dealers would supply then throw a
• 17:20
  Speaker 1: ton of incentives at it to to move it out
• 17:22
  Speaker 1: the door. So to put it in context, four million
• 17:28
  Speaker 1: units inventory prior to the pandemic, four million units on
• 17:32
  Speaker 1: the ground in the US rolling every month. We now
• 17:34
  Speaker 1: have one point two million. There be roughly a good
• 17:38
  Speaker 1: month in the U s would be one point five
• 17:39
  Speaker 1: million sales from one point five million transactions. So we
• 17:42
  Speaker 1: had two and a half times as many units on
• 17:44
  Speaker 1: the ground prior to the pandemic. Now we're nicely imbalance,
• 17:49
  Speaker 1: and you're seeing the effect on margins and on pricing power.
• 17:53
  Speaker 1: So in my mind, the motivation for the automakers is
• 17:57
  Speaker 1: it's not a chip. Yeah, there's a chip otherwise I
• 18:02
  Speaker 1: want my truck right now. But you're right. I mean
• 18:05
  Speaker 1: between the time that I started shopping for my truck
• 18:10
  Speaker 1: in February and then actually put in the order in April,
• 18:15
  Speaker 1: they raised prices twice on that one specific model, and
• 18:19
  Speaker 1: of course they're raising prices across the industry. The only
• 18:22
  Speaker 1: thing that makes me doubt and orchestration. I mean maybe
• 18:25
  Speaker 1: there's a mild orchestration, but not like a full blown
• 18:29
  Speaker 1: conspiracy theory is that dealerships are getting the amount over
• 18:33
  Speaker 1: M S R P the A D M if you will,
• 18:36
  Speaker 1: And I think that makes um the and correct me
• 18:39
  Speaker 1: if I'm wrong, the big producers kind of angry. I
• 18:42
  Speaker 1: think this is an excuse for GM and Ford to say,
• 18:45
  Speaker 1: you know what, we're moving to a direct sales model. Well,
• 18:48
  Speaker 1: first of all, I don't think you can scale direct sales, right.
• 18:51
  Speaker 1: If you're a g MM Ford and you're selling two
• 18:53
  Speaker 1: and a half million units a year in this country,
• 18:57
  Speaker 1: I just don't know how you're going direct. The other
• 18:59
  Speaker 1: thing is, look, you're a manufacturer and and I say
• 19:03
  Speaker 1: this to people all the time as a consumer, where
• 19:06
  Speaker 1: you think that the that the dealership model is is
• 19:11
  Speaker 1: a bad experience what do you think that's going to
• 19:14
  Speaker 1: be like when you try and buy vehicles at retail
• 19:17
  Speaker 1: from a manufacturer who's never done it? Right, So, so
• 19:20
  Speaker 1: the idea that that process would actually be better going
• 19:25
  Speaker 1: to a company who has never done anything like it
• 19:27
  Speaker 1: and it's hundred plus years of existence, to me makes
• 19:30
  Speaker 1: no sense. But there wouldn't be the a d M,
• 19:33
  Speaker 1: which is, by the way, the additional dealer market. Yeah,
• 19:35
  Speaker 1: they're sure there would, right. So, so if if a
• 19:38
  Speaker 1: manufacturer sells to a dealer at wholesale, you think they're
• 19:41
  Speaker 1: going to leave that money on the table for you know,
• 19:43
  Speaker 1: they're gonna sell the you and and if there's if
• 19:46
  Speaker 1: there's if you don't want your truck at the price
• 19:49
  Speaker 1: they want you to pay, and there's three people behind you.
• 19:52
  Speaker 1: Good point, right. So, so the idea that the manufacturer
• 19:55
  Speaker 1: is going to do the consumer a favor by selling
• 19:58
  Speaker 1: directly to them, I think is is just misguided. All right, Well,
• 20:01
  Speaker 1: we'll see if they can maybe break off little pieces
• 20:04
  Speaker 1: of their business to do that, like Ford split, you know,
• 20:07
  Speaker 1: the E VS away from the ice business. Yeah. Well
• 20:10
  Speaker 1: that that tells me two things, right, One is that
• 20:13
  Speaker 1: that either and I don't believe this to be the
• 20:15
  Speaker 1: case that you don't get how things are retailed at
• 20:17
  Speaker 1: scale in this country, or it's not going to be scaled. Kevin.
• 20:20
  Speaker 1: I could do this for hours, obviously, and someday we will.
• 20:27
  Speaker 1: Nathan Hagar is there to join me because he loves
• 20:31
  Speaker 1: ice cream so much. Mentioned Spider Man back in the day.
• 20:36
  Speaker 1: I used to make the Spider Man Sunday. Have you
• 20:38
  Speaker 1: ever heard of that? No? What's how do you do that?
• 20:40
  Speaker 1: So it's vanilla ice cream and you put chocolate syrup
• 20:43
  Speaker 1: on it in a web pattern. That's all it is. Yeah,
• 20:46
  Speaker 1: not too exciting, but I thought it would be read
• 20:49
  Speaker 1: yeah you would think so. Yeah that actually, Oh my goodness,
• 20:52
  Speaker 1: that sounds pretty nice. Strawberry ice cream with chocolate. Kim
• 20:58
  Speaker 1: Padal Regwam joins us CEO Dryers Grand ice Cream. Kim,
• 21:03
  Speaker 1: thanks so much for your time. Is it is it
• 21:05
  Speaker 1: National ice Cream Day today? No? Sunday Sunday? Yes, of
• 21:10
  Speaker 1: course it's on Sunday, Matt, I didn't know it was
• 21:14
  Speaker 1: Sunday ice Cream Sunday. It's perfectly positioned on Sunday. Yeah,
• 21:20
  Speaker 1: is it on Sunday? Every years it is on Sunday. Well,
• 21:25
  Speaker 1: there you go. So um how's business right now? I mean,
• 21:29
  Speaker 1: I I imagine I was just looking for milk futures
• 21:33
  Speaker 1: on the Bloomberg terminal. I imagine those prices have risen
• 21:36
  Speaker 1: along with everything else, you know, So business is very
• 21:41
  Speaker 1: very strong. So our business Dryers, Grand ice Cream, and
• 21:45
  Speaker 1: the brands that we have Hogen, Dass, Dryers, Drumstick, Outshine,
• 21:49
  Speaker 1: they are all performing so well in the marketplace. I mean,
• 21:52
  Speaker 1: if you look so far this year, we're a double
• 21:55
  Speaker 1: digit growth coming off you know, a couple of really
• 21:58
  Speaker 1: big years as well. Also, we're the We're very proud
• 22:02
  Speaker 1: we're the biggest ice cream manufacturer in America and we
• 22:05
  Speaker 1: have the biggest brand with Hogan Dust. You know, prices
• 22:09
  Speaker 1: on some products and we've seen the inflation like everybody has,
• 22:13
  Speaker 1: and so what we've been trying to do is keep
• 22:15
  Speaker 1: our focus on investing in factory so we are building capacity.
• 22:20
  Speaker 1: It's all we've been focused on for the last two
• 22:23
  Speaker 1: years because we want to make sure when people go
• 22:25
  Speaker 1: to the store, and you know, it's a tough time
• 22:28
  Speaker 1: right now, right prices are high that we can put
• 22:30
  Speaker 1: a smile on faces with the ice cream that we have,
• 22:33
  Speaker 1: so um, that has been our big agenda to fight
• 22:36
  Speaker 1: all the challenges going on. Yeah, and it is a
• 22:39
  Speaker 1: tough time. And I know when I walk through the
• 22:42
  Speaker 1: ice cream frozen section, I look not just at the
• 22:46
  Speaker 1: prices but at the size of the cartons. Whether you're
• 22:50
  Speaker 1: gonna have to shrink things just a little bit more
• 22:53
  Speaker 1: to keep the prices where we expect them to be.
• 22:56
  Speaker 1: Is that something that you're thinking about. So we what
• 23:00
  Speaker 1: we have done is we have across all of the
• 23:03
  Speaker 1: brands offered kind of a variety of prices and sizes.
• 23:07
  Speaker 1: So if you look at our hog Enough Um bars
• 23:10
  Speaker 1: and those are snack items that are on sticks, we
• 23:13
  Speaker 1: have brought to the market mini versions of those, so
• 23:16
  Speaker 1: a six pack of minis in addition to the regular
• 23:20
  Speaker 1: size item to try to get at that price point
• 23:23
  Speaker 1: that anyone can afford if they want to have, you know,
• 23:27
  Speaker 1: a frozen treat um. So right now I think we're
• 23:30
  Speaker 1: well positioned with a big variety in that area. Um,
• 23:34
  Speaker 1: but we're looking at it all the time. You're totally right.
• 23:37
  Speaker 1: We have a lot of singles items as well. So
• 23:39
  Speaker 1: if you know you're in the market for just one
• 23:41
  Speaker 1: item and you want to have a treat versus buying
• 23:43
  Speaker 1: you know, a multi pack and bringing it home. We've
• 23:46
  Speaker 1: been focused on making sure that as we build up capacity,
• 23:49
  Speaker 1: we're building good capacity in that area with those smaller
• 23:52
  Speaker 1: size items as well. Is there any place to buy
• 23:56
  Speaker 1: UM you know, is there any online business for frozen foods?
• 24:01
  Speaker 1: Because when I go to my local grocer, well any
• 24:04
  Speaker 1: of them, I can't find exactly what I want. They'll
• 24:08
  Speaker 1: have like drumsticks that are a variety pack, or they'll
• 24:11
  Speaker 1: have the chocolate core, but I only want the caramel
• 24:14
  Speaker 1: filled drumsticks. Uh, And I don't know how to get
• 24:18
  Speaker 1: hold of just a big like a twenty four pack
• 24:21
  Speaker 1: of those twenty We don't have a twenty four pack
• 24:25
  Speaker 1: of the caramel ones only, UM. But we do, back
• 24:28
  Speaker 1: to your question, we do have online business absolutely right.
• 24:32
  Speaker 1: As we've seen consumers in the last two years, in
• 24:34
  Speaker 1: particular accelerate that shift to grocery shopping UM, you know,
• 24:38
  Speaker 1: from behind their iPad or computer at home. We've seen
• 24:42
  Speaker 1: a rise in ice cream as well. People are buying
• 24:44
  Speaker 1: that way all the time. So UM. We have great
• 24:47
  Speaker 1: relationships with UM you know, the UM standalone UM, you know, Amazon,
• 24:53
  Speaker 1: insta cart companies like that. But also we we sell
• 24:56
  Speaker 1: quite a bit through the e commerce arms of major
• 25:00
  Speaker 1: grocery retailers. I've had to wrap my head around the
• 25:03
  Speaker 1: idea of ice cream delivery because I'm always worried that
• 25:06
  Speaker 1: it's going to melt on the way. But that's probably
• 25:09
  Speaker 1: try people. That is not people. We don't have that problem,
• 25:14
  Speaker 1: and we tested all of the time ourselves. So I
• 25:16
  Speaker 1: buy it, you know, myself, just to make sure is
• 25:18
  Speaker 1: the consumer experience the one that we would want? Um,
• 25:22
  Speaker 1: but you know, the delivery service is great these days.
• 25:26
  Speaker 1: Where do you see margins going? I mean I had
• 25:30
  Speaker 1: a bet with pretty Gupta moments ago that we saw
• 25:33
  Speaker 1: inflation peak at the last cp I figure. Um, do
• 25:37
  Speaker 1: you agree? And do you think margins are going to
• 25:39
  Speaker 1: start to widen out towards the end of the year.
• 25:43
  Speaker 1: I think that, you know, all I can really talk
• 25:46
  Speaker 1: to is sort of out what we're trying to do
• 25:49
  Speaker 1: with our agenda. So what I'd say is my biggest
• 25:51
  Speaker 1: focus is making sure that we continue to invest in
• 25:55
  Speaker 1: the core brands, the quality of the product so that
• 25:58
  Speaker 1: when consumers go to the store, are they're they're willing
• 26:01
  Speaker 1: to pay the price that they see on the shelf
• 26:03
  Speaker 1: for that brand right nothing else. And so we've been
• 26:06
  Speaker 1: focused on that. You know, we are starting to see
• 26:10
  Speaker 1: some um you know that price increases, hit peaks and
• 26:15
  Speaker 1: slow a little bit. So that's really promising, UM, because
• 26:18
  Speaker 1: we want the category to be affordable for people and
• 26:21
  Speaker 1: the brands to be affordable. But what I you know,
• 26:24
  Speaker 1: can absolutely say is we have not slowed down at all.
• 26:27
  Speaker 1: As I mentioned in the capacity investment, but also the
• 26:29
  Speaker 1: consumer investment. UM, the quality of the rappers, on the packaging,
• 26:34
  Speaker 1: the print, the flavors, the inclusions that we're using. We're
• 26:38
  Speaker 1: trying to make those better and better, and we have
• 26:41
  Speaker 1: not slowed down on any of those agendas despite you know,
• 26:45
  Speaker 1: cost pressures, because at the end of the day, we
• 26:48
  Speaker 1: believe that's you know, when someone buys the product, if
• 26:51
  Speaker 1: they love it the way you love the drumstick caramel cone,
• 26:54
  Speaker 1: they will come back and buy it again just quickly.
• 26:57
  Speaker 1: What sells really well right now when it's super hot
• 27:00
  Speaker 1: in the middle of July. Do you see, like popsicles
• 27:02
  Speaker 1: do better than ice cream? What's what's the big flavor?
• 27:06
  Speaker 1: So our brand, Outshine is on fire right now. Um.
• 27:10
  Speaker 1: It is a fruit based brand. So fruit is the
• 27:13
  Speaker 1: first ingredient. UM. We have it in a variety of flavors.
• 27:17
  Speaker 1: My personal favorite is the lime Outshine bar UM. And
• 27:20
  Speaker 1: you know, all of ice cream in the hot weather
• 27:22
  Speaker 1: does very well, but that's in particular. We're we're selling
• 27:27
  Speaker 1: um quite a few outshine bars um strawberry, pineapple, mango.
• 27:31
  Speaker 1: If you have not tried them, please do. But they're
• 27:34
  Speaker 1: extremely refreshing, and I would say on a really hot day,
• 27:38
  Speaker 1: it's what I would reach for. I gotta go hit
• 27:40
  Speaker 1: the pantry right now, Matt, dude, you get to go.
• 27:43
  Speaker 1: Laurel Maryland, I think is one of the biggest ice
• 27:45
  Speaker 1: cream manufacturing facilities in the world. For dryers. Yeah, I'm
• 27:48
  Speaker 1: gonna have to go there. Greg Jarek can head over
• 27:51
  Speaker 1: to Bakersfield. I mean for a number of reasons, but
• 27:54
  Speaker 1: for the ice cream. That's the hike from San Francisco
• 27:56
  Speaker 1: though it's probably far, but he can fly. He's got
• 27:59
  Speaker 1: a pie, that's true. M Cam thanks so much for
• 28:02
  Speaker 1: joining us. Always a pleasure're talking about ice cream, especially
• 28:04
  Speaker 1: ahead of National ice Cream Day on Sunday. Nathan Hagar
• 28:07
  Speaker 1: and Matt Miller, thanks for listening to the Bloomberg Markets podcast.
• 28:12
  Speaker 1: You can subscribe and listen to interviews with Apple Podcasts
• 28:15
  Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
• 28:19
  Speaker 1: on Twitter at Matt Miller. Pet On Paul Sweeney, I'm
• 28:23
  Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can
• 28:26
  Speaker 1: always catch us worldwide at Bloomberg Radio