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Stocks at Record; Consumer Confidence Drops to Four-Month Low · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you
• 0:05
  Speaker 1: along with my co host Lisa Brahma Waits. Each day
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  Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
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  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:17
  Speaker 1: at Bloomberg dot com. Switch gears a little bit again.
• 0:21
  Speaker 1: We have the FED tomorrow expectations are for a rate
• 0:25
  Speaker 1: in rate cut. Let's get a sense of what the
• 0:28
  Speaker 1: markets are positioned for. Neila Richardson, investment strategists at Edward Jones. Neila,
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  Speaker 1: thanks so much for joining us. What is it? What
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  Speaker 1: are you looking for tomorrow? Out of the FED tai fall.
• 0:40
  Speaker 1: I'm looking for a return to the hard data. I
• 0:42
  Speaker 1: really want to see what their projection for the is
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  Speaker 1: for the economy going forward. We we have a really
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  Speaker 1: mixed picture right now. It's still a resilient consumer, but
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  Speaker 1: there's some praying around the edges. In terms of the
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  Speaker 1: jobs market producing the same number of jobs that we
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  Speaker 1: saw last year. We've seen a flight uptick and delinquencies
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  Speaker 1: in terms of credit cards and automobile, And so I
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  Speaker 1: want to know, with inflation firming another different factor since
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  Speaker 1: the Fed um in June and and really started us
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  Speaker 1: on this rate cutting cycle, I want to know, has
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  Speaker 1: their outlook for the economy changed? So are you expecting
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  Speaker 1: them to actually answer that question? Well, they've they've been
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  Speaker 1: pretty consistent about the economy. Uh, They've said that the
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  Speaker 1: economy is in good shape. And is that still their
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  Speaker 1: operating outlook? Is the economy still in good shape? And
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  Speaker 1: if so, is this next move by the Fed, whether
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  Speaker 1: it's a pause or a cut, is this consistent with
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  Speaker 1: the economy that we see before us or are they
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  Speaker 1: still looking around the corner at rising risks like a
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  Speaker 1: trade which again we've gotten some improving more positive rhetoric,
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  Speaker 1: or or other risks you're seeing abroad in terms of
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  Speaker 1: slowing cora. So, Nila, we've you know, we're expecting, as
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  Speaker 1: you suggested, you know, a rate cut tomorrow. It continued
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  Speaker 1: moderately dubbish. Uh, Fed, We've got maybe some good news
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  Speaker 1: coming on some of the geopolitical fronts as relates to
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  Speaker 1: trade and you know, gosh, maybe even Brexit. The markets
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  Speaker 1: certainly discounted that this year. Do you sense that from
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  Speaker 1: evaluation perspective, this market is is kind of stretched. We
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  Speaker 1: think that the pricing is reasonable because we're still seeing
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  Speaker 1: good economic fundamentals. We still see an economy that's growing
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  Speaker 1: but at a slow rate. That's been very positive for equities.
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  Speaker 1: Very low interest rates have been positive, Monetary stimulus has
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  Speaker 1: been positive, and so we think it's a reason it's
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  Speaker 1: not a cheap market, but it is a reasonably priced
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  Speaker 1: rue given what we know to be solid fundamentals. And
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  Speaker 1: I think what we're seeing on the earning s front
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  Speaker 1: is validating that view. So coming up're gonna be talking
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  Speaker 1: about consumer confidence, and we just got some readings showing
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  Speaker 1: that consumer confidence felt to the lowest since June. We
• 3:00
  Speaker 1: also seem to linquencies pick up, if for particularly auto
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  Speaker 1: loans and credit card loans. How does that sort of
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  Speaker 1: square with this idea of the strong US consumer and
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  Speaker 1: a strong US economy. Well, it goes back to my
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  Speaker 1: initial point that the consumer has been resilient. It's been
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  Speaker 1: carrying the water for this economy for ten years. Are
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  Speaker 1: we starting to see a fray? And that's what we're
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  Speaker 1: very watchful of. H if you care that with U
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  Speaker 1: corporate sectors, that's healthy, but really hasn't contributed on the
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  Speaker 1: growth front in terms of capex spending, our investment, what
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  Speaker 1: you or on the fiscal side. We never got that
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  Speaker 1: infrastructure bill We've all been waiting for a week after
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  Speaker 1: a week, and so it's really the consumer. And while
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  Speaker 1: these uh praying of the consumer might be okay if
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  Speaker 1: you had other players in this game, when you only
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  Speaker 1: have one, you're really concerned about the health of that one.
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  Speaker 1: Naylor Richardson, thank you so much as always for joining us.
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  Speaker 1: Neil Regardson as an investment stargis at Edward Jones. Let's
• 4:12
  Speaker 1: look at the consumer here, and the consumer has become
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  Speaker 1: you know, it is the US economy, and with the
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  Speaker 1: manufacturing sector in the US showing signs of weakness, the
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  Speaker 1: pressure is on the consumer even more to keep this
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  Speaker 1: economy going forward. To get a sense the latest read
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  Speaker 1: on how the consumers doing, we welcome Lynn Franco. Lynn
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  Speaker 1: is a senior Director of Economic Indicators and Surveys at
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  Speaker 1: the Conference Board. So Lynn, give us the latest data
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  Speaker 1: that you guys have at the Conference Board on the
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  Speaker 1: consumer confidence. We had a marginal decrease. Confidence is now
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  Speaker 1: nine versus one point three last month. UM but holding steady,
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  Speaker 1: and we think it's going to continue to prop up
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  Speaker 1: the economy, prop up growth, and um, you know, we're
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  Speaker 1: we're sort of in I think, a good place right here,
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  Speaker 1: as consumers have sort of you know, shrugged off all
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  Speaker 1: the trade rhetoric. Um, there's no signs here that the
• 5:04
  Speaker 1: impeachment inquiry is having any impact on competence overall. So
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  Speaker 1: I think we're in pretty good shape heading into the
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  Speaker 1: holiday season. I guess some people appoint to the unexpected
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  Speaker 1: decline as being somewhat worrisome. What would you tell them?
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  Speaker 1: We're still at a relatively strong level. You know, we've
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  Speaker 1: been seeing sort of this same seasaw momentum for much
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  Speaker 1: of this year, and there's really been no sort of
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  Speaker 1: downward trend visible. So I think we're in a we're
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  Speaker 1: in a pretty good place here. I mean, one point
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  Speaker 1: nine is a relatively strong reading, and it's it's interesting, Lynn,
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  Speaker 1: I mean, when you think about the consumer, so much
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  Speaker 1: of it is do I have a job? Am I
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  Speaker 1: getting raises in my job? And I, you know, more
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  Speaker 1: or less content with where I am? In terms of employment,
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  Speaker 1: We're pretty pretty good spot right now with unemployment at
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  Speaker 1: you know, you know, fifty year lows. What what's your
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  Speaker 1: survey talking about the employment situation. Um, you know, current
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  Speaker 1: employment situation is very good. We saw a bit of
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  Speaker 1: an uptick in the people telling us that, you know,
• 6:01
  Speaker 1: jobs are plentiful, a slight uptick, and those telling us
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  Speaker 1: jobs are hard to get but historically very strong levels.
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  Speaker 1: They did express some mild concerns going forward. Um, but
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  Speaker 1: I think we're still in a relatively good place. I mean,
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  Speaker 1: we're anticipating somewhat slower employment growth going forward, but no
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  Speaker 1: red flags coming out of there that you know, suddenly
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  Speaker 1: we're going to have a spike in layoffs or or freezes.
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  Speaker 1: So I think it should be enough to support confidence.
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  Speaker 1: So we've actually seen a softening in the trade rhetoric.
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  Speaker 1: We know that trade tensions have weighed on consumer sentiment.
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  Speaker 1: What was it that was responsible for the unexpected decline
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  Speaker 1: this time around? It's relatively um, you know, kind of
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  Speaker 1: moving sideways again. It was a little bit of apprehensiveness
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  Speaker 1: about where business conditions and employment are headed. On the
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  Speaker 1: flip side of that, though, they're more positive about their
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  Speaker 1: income prospects and that should bode well for spending both
• 6:55
  Speaker 1: in the holiday season season in a little bit longer
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  Speaker 1: term as well, Lynn, is your work take into account
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  Speaker 1: um kind of home ownership because it seems like with
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  Speaker 1: interest rates so low here, uh, you know, people who
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  Speaker 1: want homes have the homes that they can trade up
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  Speaker 1: if if if they if they want. Um, how do
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  Speaker 1: you guys try to capture the whole home ownership thing
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  Speaker 1: as it waits to consumers. Well, we're trying to capture
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  Speaker 1: in two ways. So for instance, we ask a question
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  Speaker 1: about interest rate expectations of the last three months, more
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  Speaker 1: than a quarter of consumers are telling us that they
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  Speaker 1: expect to cut so that sort of baked into confidence
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  Speaker 1: and it's a large increase from what we had seen
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  Speaker 1: in prior months. And in terms of home purchasing intentions,
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  Speaker 1: we saw a little bit of a pick up there,
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  Speaker 1: and I think, you know, the decline that we're seeing
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  Speaker 1: an interest draw in mortgage rate is filtering into that
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  Speaker 1: and major appliance purchases, you know, the big ticket items
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  Speaker 1: there is pretty flat and holding it at a high level.
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  Speaker 1: So I think, um, you know, both housing interest rates,
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  Speaker 1: job growth, and wage growth should continue to support confidence
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  Speaker 1: for the remainder of the year. Thank you so much,
• 7:57
  Speaker 1: Lynn Franco. We always appreciate your insights. Lind Anco, a
• 8:00
  Speaker 1: senior director of Economic Indicators and Surveys at the conference board, Well,
• 8:19
  Speaker 1: was supposed to be the year of the Unicorn I
• 8:22
  Speaker 1: p O. Everybody was gonna make moneys, the bankers, certainly, investors,
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  Speaker 1: maybe even the private equity folks themselves. Lots of IPOs
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  Speaker 1: on tap, but they have been quite disappointing to date.
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  Speaker 1: The questions what does that mean for the tech community
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  Speaker 1: and I p O s and valuations to get some
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  Speaker 1: answers to those questions, and welcome Ted Smith Ted as
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  Speaker 1: a co founder and president of Union Square Advisors. So Ted,
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  Speaker 1: thanks so much for joining us. Just wonder if you
• 8:46
  Speaker 1: could give us your thoughts and kind of what we
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  Speaker 1: saw with Uber, with Lift, with Smile Direct, and then
• 8:51
  Speaker 1: of course with we work in terms of employed the
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  Speaker 1: evaluation seems to be a big gap between the private
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  Speaker 1: market is valuing these companies and where the public market
• 9:00
  Speaker 1: evaluations are hipaul and highly soa thanks for having me on.
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  Speaker 1: Really appreciate it. Yes, we've certainly seen a very interesting
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  Speaker 1: year uh in the I p O markets at this point,
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  Speaker 1: but I also think it's important to point out there
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  Speaker 1: have been a number of notable successes, and there's a
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  Speaker 1: little bit of a the haves and the have nots
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  Speaker 1: this year, and I think there's obviously been a lot
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  Speaker 1: of focus on the tech unicorns and a number of
• 9:21
  Speaker 1: the folks that you are, the companies that you just mentioned,
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  Speaker 1: particularly We Work, have kind of dominated the headlines. So
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  Speaker 1: but despite that, I think we have an I p
• 9:30
  Speaker 1: O market that's open and accepting um by investors for
• 9:34
  Speaker 1: business models that are actually making money or have the
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  Speaker 1: opportunity to make money in the near term, so a
• 9:39
  Speaker 1: path to profitability that's well defined. What I think the
• 9:41
  Speaker 1: market has risen up and said decidedly at this point
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  Speaker 1: is that ever widening losses or a lack of even
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  Speaker 1: a vision of how to get to profitability clearly is
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  Speaker 1: not going to be acceptable for new I p O opportunities.
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  Speaker 1: And therefore we've seen things like the we Work situation
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  Speaker 1: crop up where simply there's just no way to get
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  Speaker 1: that come any public in the near term. By the way,
• 10:01
  Speaker 1: talking about we Work, just across the Bloomberg Week are
• 10:05
  Speaker 1: we Companies is has been quietly building an electronic gaming business.
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  Speaker 1: How that fits with everything else, we shall see how
• 10:14
  Speaker 1: I see that anyway, I'd love to get your sense
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  Speaker 1: tad of where you expect to see a lot of
• 10:19
  Speaker 1: consolidation going forward, other particular sectors that you expect to
• 10:23
  Speaker 1: be particularly active in the next couple of months. UM.
• 10:26
  Speaker 1: We certainly continue to see a lot of activity around
• 10:28
  Speaker 1: enterprise software. Generally, it's been one of the arenas that
• 10:31
  Speaker 1: has been most successful. It's certainly been one of the
• 10:34
  Speaker 1: areas where we've seen successful I p O s this year,
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  Speaker 1: with a number uh a number of really great companies
• 10:39
  Speaker 1: coming public. It also appears to be the place where
• 10:42
  Speaker 1: the largest tech acquirers, and that's everybody from Microsoft, Salesforce, Adobe,
• 10:48
  Speaker 1: et cetera, are continuing to focus their attention their energies
• 10:53
  Speaker 1: and sort of next generation enterprise software UM. It's it's
• 10:57
  Speaker 1: certainly a sector that's fairly highly valued, making those act
• 11:00
  Speaker 1: editions UM somewhat expensive, at least on a historically relative basis.
• 11:04
  Speaker 1: But it's also UM the arena where we think the
• 11:08
  Speaker 1: global market opportunities are the largest, and therefore we think
• 11:11
  Speaker 1: where both corporate acquires like some of those that I mentioned,
• 11:14
  Speaker 1: as well as the large private equity firms that focus
• 11:16
  Speaker 1: on that arena are likely to continue to be very
• 11:19
  Speaker 1: focused on acquiring interesting businesses. So t I know you
• 11:23
  Speaker 1: folks that you need square really focused on the technology sector.
• 11:26
  Speaker 1: And we've seen i would say a little bit of
• 11:28
  Speaker 1: a C change maybe over the last year two whereby
• 11:32
  Speaker 1: the U S regulators, US Congress are really taken a
• 11:35
  Speaker 1: look at the technology sector from a regulatory perspective. That's
• 11:38
  Speaker 1: kind of new. Are you sensing that that's kind of
• 11:41
  Speaker 1: impacting the tech business, whether it's startups or even some
• 11:45
  Speaker 1: of the bigger, more established companies. Well, it's certainly causing
• 11:49
  Speaker 1: the bigger, more established companies to try to figure out
• 11:52
  Speaker 1: how to deal with this C change, right this is
• 11:54
  Speaker 1: the first to your point, this is kind of the
• 11:55
  Speaker 1: first time in several years that the largest tech companies
• 11:59
  Speaker 1: have kind of been in the crosshairs of the regulators
• 12:01
  Speaker 1: and Congress and presidential candidates kind of all at the
• 12:03
  Speaker 1: same time. Uh. This is a This is a pretty
• 12:06
  Speaker 1: interesting topic for a lot of folks right now, and
• 12:09
  Speaker 1: it's one that that sort of continually seems to rise
• 12:12
  Speaker 1: rise above the fold. So what we're seeing from the
• 12:14
  Speaker 1: largest companies is is um some ongoing thoughtfulness if you will,
• 12:19
  Speaker 1: about can M and A be pursued in certain arenas
• 12:23
  Speaker 1: UH and not put them even further into those crosshairs.
• 12:27
  Speaker 1: But I think they're they're firmly there now. UM. I
• 12:30
  Speaker 1: was at an interview last week with the chief of
• 12:33
  Speaker 1: the DJ Enforcement issue where he basically said that all
• 12:36
  Speaker 1: options are on the table with respect to the largest
• 12:38
  Speaker 1: tech companies UM and how we may think about dealing
• 12:42
  Speaker 1: with the bad behavior that has come to light over
• 12:44
  Speaker 1: the course of the last two to two to three years.
• 12:47
  Speaker 1: So I think they're clearly on notice with respect to
• 12:50
  Speaker 1: the their activities in a number of ways, how they
• 12:52
  Speaker 1: handle personal data, how they deal with the freedom of
• 12:55
  Speaker 1: speech issues, how they deal with putting their thumb on
• 12:58
  Speaker 1: the scale with respect to very as business activities. I think,
• 13:01
  Speaker 1: to the point that I made, everything is on the table,
• 13:05
  Speaker 1: and so I think those largest tech companies are taking
• 13:07
  Speaker 1: that into consideration. What does that mean for startups? What
• 13:10
  Speaker 1: does that mean for newer companies? Well, it may mean
• 13:12
  Speaker 1: opportunity for them UH as they're able to go into
• 13:14
  Speaker 1: markets that might have been otherwise dominated by these these
• 13:18
  Speaker 1: larger players. But I also think there's the question of
• 13:21
  Speaker 1: what does it mean for innovation UH and if we
• 13:23
  Speaker 1: somehow put the regulatory shackles on these largest tech companies
• 13:27
  Speaker 1: doesn't in fact crimp their ability uh to uh really
• 13:32
  Speaker 1: significantly innovate from here, which is very important for for
• 13:35
  Speaker 1: this country and for the tech sector generally. Ted Smith,
• 13:38
  Speaker 1: thank you so much for being with us. Ted Smith,
• 13:40
  Speaker 1: co founder and president of Union Square Advisors, definitely has
• 13:43
  Speaker 1: been an active year, uh for I P O S
• 13:46
  Speaker 1: and for M and A. The question is going forward,
• 13:49
  Speaker 1: how much that can continue in light of some sort
• 13:51
  Speaker 1: of rocky or receptions that we've gotten. Thanks for listening
• 13:53
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