Latest / Bloomberg Intelligence / Market Volatility, Real Estate, And The Supply Chain

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Market Volatility, Real Estate, And The Supply Chain · 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: called Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. Well, the I m
• 0:22
  Speaker 1: F today cut World growth forecast on weaker US and
• 0:27
  Speaker 1: China outlooks. Let's get the latest. We can do that
• 0:30
  Speaker 1: with Ellen Zetner, chief US economists from Morgan Stanley. She
• 0:33
  Speaker 1: grew up in Austin, Texas. Did you know that? Man?
• 0:36
  Speaker 1: I did know that. You did know that? Okay, so
• 0:39
  Speaker 1: business Ohio was awesome, But I am a little jealous.
• 0:42
  Speaker 1: I feel like growing up in Texas would be the
• 0:44
  Speaker 1: second best. That would be cool thing to Growing up
• 0:46
  Speaker 1: in Austin is like the it town right now. Back
• 0:50
  Speaker 1: then it was like up and coming right. Let's ask going,
• 0:52
  Speaker 1: I know, Ellen, Ellen, tell us about Austin. Should we
• 0:55
  Speaker 1: be relocating there like all the kids are doing. I've
• 0:57
  Speaker 1: been there since the nineteen seventies. The I own real
• 1:00
  Speaker 1: estate there, so I'm on the winning end of it
• 1:03
  Speaker 1: right now. But it's a shock if you grew up
• 1:05
  Speaker 1: there and you go back to visit, it's like, what,
• 1:08
  Speaker 1: I have to wait for a reservation? What do you mean,
• 1:11
  Speaker 1: I can't just walk in anywhere. Can tell you. As
• 1:15
  Speaker 1: shocking as it is, if you grew up there, it
• 1:18
  Speaker 1: is still a really cool town when you go back
• 1:20
  Speaker 1: to visit. I just love the old keep Austin weird,
• 1:24
  Speaker 1: you know that. I like the new awesome because they
• 1:28
  Speaker 1: put in CODA and I've seen UM Formula one there.
• 1:32
  Speaker 1: I've seen Moto g P there. It's absolute and absolute
• 1:35
  Speaker 1: blasts such a great trap. I think that was a
• 1:37
  Speaker 1: good move when they when they put it in there. Hey,
• 1:39
  Speaker 1: you know, I used to do economic development modeling for
• 1:42
  Speaker 1: the State of Texas when GW was still governor there,
• 1:44
  Speaker 1: and boy, we really did a good job at attracting
• 1:47
  Speaker 1: those big venues. You know. It's a great place to
• 1:50
  Speaker 1: do business, by the way, you know what it I
• 1:52
  Speaker 1: often think of the housing um bubble or the housing situation.
• 1:56
  Speaker 1: Maybe it's a bubble, maybe not um when I think
• 1:58
  Speaker 1: of Austin, how do you look at you know, the
• 2:01
  Speaker 1: incredible rise in prices that we've seen coupled with lack
• 2:04
  Speaker 1: of inventory. Well, the lack of inventory is always the
• 2:08
  Speaker 1: number one reason why that pushes up prices, and of
• 2:11
  Speaker 1: course homebuilders finally catch up and then that's usually when
• 2:14
  Speaker 1: the cycle turns. But I think this time, you know,
• 2:18
  Speaker 1: we did some work back in nineteen pre COVID that
• 2:23
  Speaker 1: where we looked at the demographic trends in the U
• 2:25
  Speaker 1: S where millennials plus gen Z our biggest demographic bubble ever.
• 2:30
  Speaker 1: I mean, they dwarf the baby boomers, and when we
• 2:32
  Speaker 1: looked at their preferences and how they approach housing, it's
• 2:37
  Speaker 1: set up for a really strong trend of fundamental demand
• 2:41
  Speaker 1: for housing and specifically single family rentals because they still
• 2:45
  Speaker 1: want mobility UM and want to be able to work wherever.
• 2:48
  Speaker 1: Then COVID hits and it's that additional catalyst. So I
• 2:51
  Speaker 1: think we're seeing a lot of magration patterns around the
• 2:54
  Speaker 1: US that we're already gravitating toward these areas with high
• 2:57
  Speaker 1: home prices already, that have just continued UH to pressure
• 3:01
  Speaker 1: those areas higher. Now, eventually home prices will be so
• 3:04
  Speaker 1: out of line with with fundamental income that it will
• 3:07
  Speaker 1: push people back towards UH multi family units or delay
• 3:11
  Speaker 1: their home buying decisions. But you've got to reach that point.
• 3:14
  Speaker 1: We also had obviously incredibly low interest rates plus a
• 3:17
  Speaker 1: ton of fiscal stimulus. Did that add to it? And
• 3:21
  Speaker 1: are we set up for a reckoning? Now? Yeah? Well
• 3:25
  Speaker 1: I think so certainly it added to it. I mean,
• 3:27
  Speaker 1: I think out of out of all that we've talked about,
• 3:30
  Speaker 1: including covid UM, the number one determined is always the
• 3:34
  Speaker 1: cost of housing, which the interest rates are a big
• 3:37
  Speaker 1: chunk of that. So you've got record low mortgage rates
• 3:40
  Speaker 1: UM that had moved lower from already very low levels
• 3:44
  Speaker 1: uh in the last cycle. So that was that was
• 3:46
  Speaker 1: a huge boost behind the REFI way, freeing up more income,
• 3:51
  Speaker 1: getting more people into homes being able to afford them.
• 3:54
  Speaker 1: So you know, naturally, right as the cycle gets uh,
• 3:57
  Speaker 1: you know, the economy gets tighter and tighter, the FED
• 4:00
  Speaker 1: does want to slow that down, and they slow that
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  Speaker 1: down by restricting access to credit, and they're doing that
• 4:05
  Speaker 1: by raising rates. UM. Now how quickly they raise rates
• 4:09
  Speaker 1: will matter. I mean, they don't want to choke off
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  Speaker 1: economic activity. Uh. And so you know, the fear out
• 4:15
  Speaker 1: there in the market is that the Fed's going to
• 4:17
  Speaker 1: hike in March and just keep on going almost you know,
• 4:20
  Speaker 1: being deaf to any kind of incoming data or financial conditions.
• 4:24
  Speaker 1: And that's just not the case, right The FED will
• 4:26
  Speaker 1: still be uh. FED path will be determined by incoming data. UM.
• 4:31
  Speaker 1: But I tell you what I'm most interested that was
• 4:33
  Speaker 1: also the case last cycle, and that is that, unlike
• 4:37
  Speaker 1: pre GFC cycles, the household balance sheet is locked in
• 4:42
  Speaker 1: at an extraordinarily low fixed rate. So one thing that
• 4:45
  Speaker 1: we saw in the last cycles, what's what we when
• 4:47
  Speaker 1: we finished the leveraging, we never levered back up. And
• 4:51
  Speaker 1: the longer that the rates remain low, the more chance
• 4:56
  Speaker 1: you give for the balance sheet to transition into those
• 4:58
  Speaker 1: very low fixed rates. The majority of debt we hold
• 5:01
  Speaker 1: is in mortgages, and the outstanding yield on effective yield
• 5:04
  Speaker 1: on all of those mortgages is in the threes uh.
• 5:08
  Speaker 1: And so it's just we're just very insensitive to a
• 5:13
  Speaker 1: rising interest rate environment right now in terms of the
• 5:15
  Speaker 1: household side. It's encouraging talk to just real quickly. What
• 5:20
  Speaker 1: was your take on the I m F move today
• 5:21
  Speaker 1: to cut the GDP forecasts? Is that surprise you at all? No?
• 5:25
  Speaker 1: I mean, I think you know what we've seen is
• 5:26
  Speaker 1: that the I m F tends to get into this
• 5:28
  Speaker 1: pattern of lagging behind changes in in street forecasts. I mean,
• 5:33
  Speaker 1: you know when the Build Back Better Plan, so so
• 5:36
  Speaker 1: as you mentioned it's driven by China and US downgrades. Well,
• 5:39
  Speaker 1: I downgraded first quarter GDP growth um sharply on the
• 5:44
  Speaker 1: back of the Build Back Better Plan that failed to pass,
• 5:47
  Speaker 1: simply because we had assumed that that child tax credit
• 5:50
  Speaker 1: that low income households were getting would be extended, and
• 5:53
  Speaker 1: so that takes a chunk out of uh personal consumption
• 5:57
  Speaker 1: in the first quarter. Besides the omicron effects, you've got
• 6:00
  Speaker 1: to account for the omicron effects as well. Uh. You know,
• 6:03
  Speaker 1: we haven't even started to get the really bad data
• 6:06
  Speaker 1: yet because we haven't gotten January data yet. So as
• 6:08
  Speaker 1: we're moving into February and we're already on the other
• 6:11
  Speaker 1: side of o Macron, we're gonna be getting January data
• 6:13
  Speaker 1: confirming just how big of us slow down there was,
• 6:16
  Speaker 1: so you could get as low as a one handle
• 6:18
  Speaker 1: on GDP this quarter. But the FEDS looking through that
• 6:21
  Speaker 1: going to give that a pass. And here's why, because
• 6:23
  Speaker 1: there are so many factors you can point to that
• 6:25
  Speaker 1: are one off. So I think they're going to deliver
• 6:28
  Speaker 1: that March hike. I know you're gonna be talking to
• 6:29
  Speaker 1: Danielle about that. She's a she's a she's a great
• 6:32
  Speaker 1: gal um. But but yeah, but I think the growth
• 6:35
  Speaker 1: scare is real and I think people have been building
• 6:38
  Speaker 1: that into their forecast. All right, Ellen, thank you so
• 6:40
  Speaker 1: much for joining us to really appreciate getting your thoughts.
• 6:42
  Speaker 1: Ellen's that in their chief US economist from Morgan Stanley
• 6:45
  Speaker 1: and an avid fly Fisher person. All right, let's talk
• 6:53
  Speaker 1: about the consumer. It's some better and expected numbers out today.
• 6:55
  Speaker 1: Joining us to break it down. Lyn Franco, director of
• 6:58
  Speaker 1: the Economic Indicators and Serve is at the conference board.
• 7:01
  Speaker 1: Lynn talked to us about the consumer. How is he
• 7:05
  Speaker 1: and or she looking? The consumer is holding up, I
• 7:09
  Speaker 1: think remarkably well. Even though we did have a bit
• 7:12
  Speaker 1: of a dip in January where we saw the index decline,
• 7:16
  Speaker 1: but mixed news there. We saw the consumers gave the
• 7:19
  Speaker 1: present situation a stronger rating than they had in December,
• 7:23
  Speaker 1: a little bit of softening in terms of their expectations. Um,
• 7:27
  Speaker 1: but holding up remarkably well. So talk to us about
• 7:32
  Speaker 1: you know, one of the things I think when I
• 7:33
  Speaker 1: think about the consumer is the labor market. You know,
• 7:36
  Speaker 1: I keep hearing about there are three or four or
• 7:38
  Speaker 1: five million people that are not back in the labor market.
• 7:42
  Speaker 1: Yet I see for sales, I mean, I see, you know,
• 7:44
  Speaker 1: help wanted signs everywhere. How does the labor market play
• 7:47
  Speaker 1: into consumer confidence data that you see, It plays a
• 7:51
  Speaker 1: very big role. And actually we're getting some very positive readings.
• 7:55
  Speaker 1: So in terms of the percent of consumers who tell
• 7:57
  Speaker 1: us that jobs are plentiful, we did a little bit
• 8:00
  Speaker 1: of a dip from nine to one, but by historical standards,
• 8:05
  Speaker 1: a very strong reading and the present to tell us,
• 8:08
  Speaker 1: you know, jobs are hard to get dipped a little bit.
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  Speaker 1: So I think they're very positive on the labor market,
• 8:13
  Speaker 1: a little bit of softening in their expectations um, but
• 8:16
  Speaker 1: still strong. So we expect that this, coupled with, you know,
• 8:19
  Speaker 1: some of the wage increase that we're seeing, to help
• 8:22
  Speaker 1: continue to support consumer confidence in the months ahead. Is
• 8:26
  Speaker 1: there any concern about FED rate rises? I mean, we've
• 8:29
  Speaker 1: gone from expecting too to seeing three in the dots
• 8:32
  Speaker 1: to now Goldman Sachs forecast four saying the risk is
• 8:35
  Speaker 1: to the upside. Um. Does this hit consumer confidence at all?
• 8:42
  Speaker 1: It's not really hitting consumer confidence. I mean, we do
• 8:45
  Speaker 1: ask a question about interest rates. Um, and it's not
• 8:48
  Speaker 1: really having any significant impact. You know, we'll see if
• 8:52
  Speaker 1: it does, and when it occurs, soften growth a little
• 8:56
  Speaker 1: bit and that could hurt confidence, but it's not having
• 8:59
  Speaker 1: an impact. Neither is inflation. Surprisingly, we've actually seen back
• 9:03
  Speaker 1: to back months declined in consumers inflation expectations, so which
• 9:08
  Speaker 1: seems that at least the heightened uncertainty and concern that
• 9:12
  Speaker 1: they were expressing in November seems to be cooling a bit.
• 9:16
  Speaker 1: All right, Lynn, thank you so much. We appreciate that
• 9:18
  Speaker 1: as always getting that monthly data check from you. Linn Franco,
• 9:22
  Speaker 1: Director of Economic Indicators and Surveys at the conference board.
• 9:30
  Speaker 1: On the train today, Matt, there was like again nobody
• 9:33
  Speaker 1: on the train of my commute in here. That's awesome.
• 9:35
  Speaker 1: People are not coming into the office. I don't know
• 9:39
  Speaker 1: when or if they ever will. I don't know what
• 9:41
  Speaker 1: that means for the people who own these beautiful, huge,
• 9:45
  Speaker 1: sky high office towers here in New York City. UM,
• 9:49
  Speaker 1: but let's check in and get some with a professional
• 9:51
  Speaker 1: who might have some color on that. Hassam Naji, President
• 9:55
  Speaker 1: and CEO of Marcus and Mill Chup. That's a publican
• 9:57
  Speaker 1: traded company on the n Y S C M M.
• 10:00
  Speaker 1: I for those folks that are interested in the real
• 10:02
  Speaker 1: estate bis So Hassam, thanks so much for joining us here.
• 10:06
  Speaker 1: I don't get it. I don't think people are coming
• 10:08
  Speaker 1: back to work. I don't know who is going to
• 10:11
  Speaker 1: ever take up a lot of this commercial office space.
• 10:14
  Speaker 1: What do you think, Well, there's definitely a transition going
• 10:17
  Speaker 1: on within the office sector. If you zoom out, commercial
• 10:20
  Speaker 1: real estate has such a menu of options from drug
• 10:24
  Speaker 1: stores and fast food restaurants being very, very stable and
• 10:27
  Speaker 1: have done very well throughout the pandemic. We call necessity retail,
• 10:31
  Speaker 1: grocery anchored stores ironically in retail doing very well. Apartments
• 10:37
  Speaker 1: on fire because demand is at record levels, and you
• 10:40
  Speaker 1: switch over to the office buildings and seniors housing facilities,
• 10:44
  Speaker 1: those are the two where there's a lot of uncertainty
• 10:46
  Speaker 1: and clouds over future demand because of what's happened through
• 10:50
  Speaker 1: the pandemic. People are changing lifestyles, they are working virtually
• 10:54
  Speaker 1: and they're going to be we believe, for forever. But
• 10:58
  Speaker 1: that doesn't mean that the office market is in for
• 11:02
  Speaker 1: a permanent doom and gloom. In that you see the
• 11:06
  Speaker 1: new demand forming new company formations are at a record
• 11:09
  Speaker 1: level just in the last nine months of New York
• 11:14
  Speaker 1: at it almost two hundred thousand jobs. A lot of
• 11:16
  Speaker 1: those jobs are being executed virtually right now. But as
• 11:20
  Speaker 1: the virus becomes more of a kind of a part
• 11:24
  Speaker 1: of normal life and not a constant speed bump and
• 11:27
  Speaker 1: you know resurgence and panic kind of on and off
• 11:32
  Speaker 1: interruption to business. In the next two to three years,
• 11:35
  Speaker 1: we really do believe people will come back into the
• 11:38
  Speaker 1: office because of the collaboration and teamwork. Demand will be
• 11:41
  Speaker 1: less because people will be in a hybrid work model,
• 11:45
  Speaker 1: partly virtual, partly in the office. But new demand is
• 11:48
  Speaker 1: going to also offset some of that short term. Remember
• 11:52
  Speaker 1: most leases that are in place now, sty'll have three
• 11:54
  Speaker 1: and a half to four years before they expire, so
• 11:57
  Speaker 1: the tenants are obligated to pay rent, so it's it's
• 12:01
  Speaker 1: kind of a buffer. But as these leases roll over,
• 12:04
  Speaker 1: that's where the uncertainty kicks in with a new demand
• 12:07
  Speaker 1: offset the hybrid work model or is the office market
• 12:10
  Speaker 1: in for some you know revaluations and price corrections. Well,
• 12:14
  Speaker 1: and we've seen kind of a bifurcation, you know, on
• 12:18
  Speaker 1: Wall Street there are some firms that are saying, hey,
• 12:22
  Speaker 1: you know what, I'm gonna reduce my UM commercial real
• 12:26
  Speaker 1: estate bills and UM save some costs that way because
• 12:30
  Speaker 1: I don't need as many people in the office. Others
• 12:33
  Speaker 1: are saying, you know what, we need a lease extra
• 12:35
  Speaker 1: space because we can't be sitting these people, um like
• 12:39
  Speaker 1: little hamsters right next to each other and they're tiny
• 12:42
  Speaker 1: little bullpen the way I do it here, desks, I'm
• 12:45
  Speaker 1: not I'm not criticizing the way we do it here.
• 12:48
  Speaker 1: I love the way we do it, but um, not
• 12:50
  Speaker 1: everybody likes to be sitting in these little desks and
• 12:52
  Speaker 1: not have your own office and not have any space
• 12:55
  Speaker 1: and not have any privacy. So you know, you're seeing
• 12:57
  Speaker 1: um people go at this and differ of ways. That's
• 13:01
  Speaker 1: exactly right. And we're seeing more team oriented space reconfiguration.
• 13:07
  Speaker 1: You're seeing some of the tech giants acquire new office
• 13:10
  Speaker 1: buildings and and the fact that many many industries rely
• 13:14
  Speaker 1: heavily on that in person training, in person interaction, and
• 13:17
  Speaker 1: I do think I mean look at the IBM, for example,
• 13:20
  Speaker 1: that led the charge in telecommuting over the last fifteen years,
• 13:23
  Speaker 1: and a few years ago they put an end to
• 13:25
  Speaker 1: that because of the inefficiencies it was creating for the
• 13:29
  Speaker 1: cultural part of their team, collaboration and so on. People
• 13:33
  Speaker 1: want to be together, they want to work together. I
• 13:35
  Speaker 1: just don't think we need to come back into the office,
• 13:37
  Speaker 1: you know, from eight to five every single day. Thanks
• 13:41
  Speaker 1: to technology, the hybrid work model is actually you know,
• 13:44
  Speaker 1: much more efficient. But from an office perspective, you have
• 13:48
  Speaker 1: to wait to see what's going to make up the
• 13:50
  Speaker 1: you know, that reduced demand. The good news is that
• 13:52
  Speaker 1: there's very little construction at a at a national level.
• 13:56
  Speaker 1: There are pockets where we had some buildings underway, and
• 13:59
  Speaker 1: so apply is going to be a short term problem
• 14:03
  Speaker 1: in light of the lower demand. But all in all,
• 14:06
  Speaker 1: the office market is out of the historical cycle of
• 14:09
  Speaker 1: overbuilding and then crashing that hasn't happened for the last
• 14:13
  Speaker 1: two cycles. Miami, what a story there? Maybe just because
• 14:17
  Speaker 1: I'm in New York and but I just hear so
• 14:19
  Speaker 1: many stories of people relocating businesses, relocating personally residences to Miami.
• 14:26
  Speaker 1: Is there any end in sight for the growth of
• 14:28
  Speaker 1: South Florida, well, South Florida, Texas, Arizona, Nevada, all these
• 14:33
  Speaker 1: U states that are benefiting from the outmigration from California
• 14:38
  Speaker 1: and New York and some of the other states are
• 14:40
  Speaker 1: actually seeing a surgeon office demand. To your point, We've
• 14:43
  Speaker 1: done some case studies for our office investor clients showing
• 14:48
  Speaker 1: that in some of these pockets there is a dearth
• 14:51
  Speaker 1: of office space and there's gonna be a development wave
• 14:53
  Speaker 1: because demand is the exceeding supply that migration was happening
• 14:57
  Speaker 1: pre COVID, but based we got significantly elevated after the
• 15:04
  Speaker 1: pandemic hit. We don't see it slowing down so much
• 15:07
  Speaker 1: this year by going into it'll level off, and urban
• 15:12
  Speaker 1: America in New York in particular, San Francisco, Chicago will
• 15:16
  Speaker 1: take time to recover. But three or five years from now,
• 15:19
  Speaker 1: I think we'll be talking about what a great investment
• 15:21
  Speaker 1: opportunity urban real estate was during this time. Alright, Hassam,
• 15:26
  Speaker 1: we really appreciate getting your thoughts. As Sam Nagy, president
• 15:29
  Speaker 1: and CEO of Marcus and Mill chap that is a
• 15:32
  Speaker 1: real estate development company. But you know, it's interesting you
• 15:36
  Speaker 1: cannot get an apartment in New York City. Um, but
• 15:39
  Speaker 1: I just don't know where all the people are. I
• 15:41
  Speaker 1: don't know where they're going, what are they doing. They're
• 15:43
  Speaker 1: not coming into the offices, So I'm not sure what
• 15:45
  Speaker 1: they're doing. I want to bring in Laura Moody. She
• 15:52
  Speaker 1: is CEO and co founder of Bobby, which is a
• 15:56
  Speaker 1: baby formula delivery startup. But she's also a board member
• 16:00
  Speaker 1: of some startups that have become big businesses that you know,
• 16:04
  Speaker 1: task Rabbit for example, um eat Reel a former product
• 16:08
  Speaker 1: operations exact at Google Finance, and we're glad to have
• 16:13
  Speaker 1: her on the program. Laura, thanks so much for your time. UM.
• 16:16
  Speaker 1: Talk to us first of all about what it's like
• 16:19
  Speaker 1: doing business in startups or younger UM firms during the pandemic.
• 16:25
  Speaker 1: I mean, do you have to just be able to
• 16:26
  Speaker 1: pivot a lot faster? Do you have to be a
• 16:28
  Speaker 1: lot more agile lovely to be here with you? I
• 16:33
  Speaker 1: mean absolutely, UM, I mean now more than ever, the
• 16:37
  Speaker 1: need to be agile to watch the change in consumer
• 16:40
  Speaker 1: trends is more important than ever. But I will say
• 16:43
  Speaker 1: I think as a startup, and especially one that predominantly
• 16:46
  Speaker 1: operates online, were given an opportunity to leave those consumer
• 16:51
  Speaker 1: trains a lot easier and better than most companies can. So, Laura,
• 16:56
  Speaker 1: talk to us about again. Your company, FOSS focuses primarily
• 17:00
  Speaker 1: in a baby formula delivery market. How is your business
• 17:04
  Speaker 1: changed during the pandemic? Well, um, so many people. You've
• 17:11
  Speaker 1: probably seen the news and the scarcity of instant formulate
• 17:14
  Speaker 1: today on retail shelves. So being a direct consumer instant
• 17:18
  Speaker 1: formula company, we've seen a huge trend of people coming
• 17:21
  Speaker 1: online over the last year. The instant formula category has
• 17:24
  Speaker 1: seen the increase alone in people coming to purchase online
• 17:29
  Speaker 1: in two four of last year. Bobby really saw that
• 17:32
  Speaker 1: impact with a hundred and eighty seven percent growth in
• 17:35
  Speaker 1: our sales. So we need to remove the anxiety of
• 17:40
  Speaker 1: someone showing up to retailer not being able to buy
• 17:43
  Speaker 1: the instant formula of choice and have peace of mind
• 17:47
  Speaker 1: that when they need their formula, they can get it
• 17:50
  Speaker 1: on time wherever they are. By the way, as someone
• 17:54
  Speaker 1: who recently had a baby, I've got a lot of
• 17:55
  Speaker 1: experience with this, and I got a couple of questions.
• 17:59
  Speaker 1: Number One, it does seem to me, although maybe this
• 18:02
  Speaker 1: is pure snobbery, that the European formula market is better
• 18:06
  Speaker 1: than the US formula market in terms of the end product.
• 18:09
  Speaker 1: Is that right? I love that you're calling this out,
• 18:13
  Speaker 1: you know, I know I always hate pointing fingers at
• 18:16
  Speaker 1: any one formula or a collective of formulas to say
• 18:19
  Speaker 1: one is better than another. But you're right, there is
• 18:22
  Speaker 1: a clamoring for EU formula across this country, and it
• 18:26
  Speaker 1: really comes down to the way the recipe is designed
• 18:29
  Speaker 1: and the standards. If you look at the EU market,
• 18:33
  Speaker 1: the last time that they have updated their standards it
• 18:37
  Speaker 1: was in two thousand nineteen. In comparison to here in
• 18:40
  Speaker 1: the US, the last time was in the nineteen eighties.
• 18:44
  Speaker 1: So to put simply, maybe there is some truth to
• 18:47
  Speaker 1: people turning to EU formula. I also have noticed that,
• 18:52
  Speaker 1: and this may be worse than the EU than in
• 18:54
  Speaker 1: the US, there was a huge push from UM for
• 19:00
  Speaker 1: hospitals and doctors towards breastfeeding, which is great. We all
• 19:03
  Speaker 1: know it's very healthy way to raise kids, but I
• 19:06
  Speaker 1: don't know that everyone understands how difficult it can be
• 19:09
  Speaker 1: for a lot of people, and there is a m
• 19:13
  Speaker 1: a stigma on, at least in the EU mothers who
• 19:18
  Speaker 1: can't do it and go straight to formula. Is that
• 19:21
  Speaker 1: you think going to change as we come up with
• 19:23
  Speaker 1: healthier UM formulas and more nutritious ways to feed babies.
• 19:28
  Speaker 1: I mean, I mean, first off, it's amazing to hear
• 19:32
  Speaker 1: you as a new dad. Even just highlighting this, we
• 19:34
  Speaker 1: need to have the conversation and we need to be
• 19:36
  Speaker 1: more open about it. The reality is the world that
• 19:40
  Speaker 1: we're living in today does not match the world that
• 19:43
  Speaker 1: we used to live in, and there's a lot of
• 19:45
  Speaker 1: reasons that we need to be open to accepting formula
• 19:48
  Speaker 1: as an alternative. You look at what it means to
• 19:51
  Speaker 1: become a parent or even to preparent in today's world.
• 19:54
  Speaker 1: There's more adoption, surrogacy, same sex couples, moms who have
• 19:59
  Speaker 1: a doubleness sectively underlying health conditions. I mean, you finish
• 20:03
  Speaker 1: so many as Titus. I mean that is that was
• 20:07
  Speaker 1: my issue. I don't think a lot of men understand
• 20:09
  Speaker 1: how serious it is and how uh and how widespread
• 20:12
  Speaker 1: it is. In any case, it's been great talking to you,
• 20:14
  Speaker 1: and I hope we can talk to you again. Laura. UM.
• 20:17
  Speaker 1: I'm obviously interested in the subject, and we are all
• 20:20
  Speaker 1: all interested in um starting these businesses and helping our
• 20:23
  Speaker 1: society grow in a faster and healthier way. Laura Modi
• 20:25
  Speaker 1: is the CEO and co founder of Bobby. Thanks for
• 20:30
  Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and
• 20:33
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• 20:38
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• 20:41
  Speaker 1: Miller three. On False Sweeney, I'm on Twitter at pt Sweeney.
• 20:45
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• 20:48
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