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Twitter, Markets, Housing, And Jewelry (Podcast) · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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Speaker 1: my co host Matt Miller. Every business day, we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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. Dan Genter all right,
0:22
Speaker 1: he's a CEO CIO chairman of this r NC Genter
0:26
Speaker 1: Capital Management. That's all good, and we'll get to the
0:29
Speaker 1: markets there. There's also graduate of the University of Southern California.
0:32
Speaker 1: But California Day, I know, so I have to ask
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Speaker 1: the question, Danna. Maybe you don't have an opinion, but
0:38
Speaker 1: Southern cal and u c l A are leaving the
0:40
Speaker 1: Packed twelve for the Big ten. What are you guys thinking?
0:46
Speaker 1: You know, I don't know what they're thinking, because it's
0:48
Speaker 1: you know, we we the Pack ten has always been,
0:51
Speaker 1: you know, very very competitive. I think they just kind
0:54
Speaker 1: of don't like the way it's being run. And and and
0:56
Speaker 1: and look, when you look at the domination of college
0:58
Speaker 1: football here in America, stor only the SEC has dominated.
1:02
Speaker 1: They don't have any chance to go that way, but
1:04
Speaker 1: they can move a little further, eats get a little
1:06
Speaker 1: more integrated, and I think they're just trying to increase
1:08
Speaker 1: the level of play and frankly, get a little more
1:11
Speaker 1: competitive with regards to being able to recruit new players.
1:14
Speaker 1: So I think that's the strategy. You know, Well, we're
1:16
Speaker 1: gonna have to travel a little further to go to game.
1:19
Speaker 1: I will buy Dan a ticket to a Rutgers game
1:24
Speaker 1: in New Brunswick, New Jersey. Money says he doesn't show
1:27
Speaker 1: up though, I mean, they're not going to travel to
1:30
Speaker 1: you know, champagne. What does it mean for the Rose Bowl?
1:32
Speaker 1: I don't know. I don't know, guys, but you but
1:37
Speaker 1: but you know you you offer some champagne. Maybe it's
1:39
Speaker 1: some good whiskey, and I think we're we gotta bet
1:41
Speaker 1: going on board. Hey Dan, we've had a rocky few
1:44
Speaker 1: days here, a rocky two. What are you telling your
1:49
Speaker 1: clients here as boy? You know, Mr Pale is certainly
1:53
Speaker 1: making good on his interest rate rise regime. Yeah, you know, gentlemen,
1:58
Speaker 1: I've been doing this for forty three years, and despite
2:00
Speaker 1: the fact of how much everybody tries, we're just dealing
2:03
Speaker 1: with a very very classic You can't fight the FED situation,
2:07
Speaker 1: and and we can, you know, talk about all the
2:09
Speaker 1: theories behind that, but the basic reality is is that
2:12
Speaker 1: when you're when you're significantly increasing the cost of capital,
2:15
Speaker 1: you're gonna adjust pe ratios. And that's exactly what we're seeing.
2:18
Speaker 1: I mean, this is this is not an earnings issue.
2:21
Speaker 1: You know, the economy really is fairly solid across the board,
2:25
Speaker 1: which is also I think what's confusing people. But you know,
2:28
Speaker 1: when but when you're going to compress margins and you're
2:30
Speaker 1: going to compress earnings and you have this kind of uncertainty,
2:33
Speaker 1: you know, that's why we're sitting at a sixteen and
2:35
Speaker 1: a half p right now, and it's gonna be even
2:38
Speaker 1: though the earnings you know, look we're gonna be up
2:40
Speaker 1: nine percent next year based on one projections at about
2:42
Speaker 1: two forty three, and we're doing pretty well this year.
2:45
Speaker 1: So this really is not an earnings economic issue. It's
2:48
Speaker 1: a it's a consolidation issue, you know, based upon cost
2:52
Speaker 1: of capital. And there's not a near term end in
2:55
Speaker 1: sighting that you don't think that strategists are going to
2:57
Speaker 1: have to bring down earnings expect patians um into next year.
3:02
Speaker 1: I mean, Morgan Stanley and Bank America are already warning
3:04
Speaker 1: that because of this interest rate environment, they're gonna have to,
3:09
Speaker 1: you know, analysts are gonna have to continue to bring
3:12
Speaker 1: the bar lower the bar. I think they're gonna have to.
3:15
Speaker 1: But but the uncertainty is that nobody knows where because
3:18
Speaker 1: the same thing was said about this year. Yet we're
3:20
Speaker 1: still really on track to be two thirty this year
3:23
Speaker 1: because you people have they have raised prices. You've actually
3:27
Speaker 1: not had that much margin compression just because they've been
3:29
Speaker 1: able to raise prices and revenues have actually gone up
3:32
Speaker 1: about four So I think that's really where people keep
3:35
Speaker 1: trying to fight this back, saying, hey, what what is
3:38
Speaker 1: the FED seeing that we're not seeing? Is that things
3:41
Speaker 1: just don't look that bad. And then when the Fed
3:44
Speaker 1: comes out like Pole did and doubles down and saying, well,
3:47
Speaker 1: you know, we don't really care. We're gonna keep slamming
3:50
Speaker 1: on the brake here and you better be careful, have
3:53
Speaker 1: your seatbelt on, and all the luggage it's not strapped
3:55
Speaker 1: out of the back is gonna come flying forward. So
3:58
Speaker 1: that's what people are looking at. Well, they can, and
4:00
Speaker 1: I mean the FED can continue to raise rates as
4:03
Speaker 1: long as we're looking at three and a half percent
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Speaker 1: unemployment right, as long as jolts numbers come in the
4:08
Speaker 1: way they did today, as long as the economy feels
4:10
Speaker 1: like it's smooth sailing. Um, you know, the contraction and
4:16
Speaker 1: growth in the first and second quarter notwithstanding. Um. This
4:19
Speaker 1: is why I don't get how comes so many on
4:22
Speaker 1: the by side don't take the FED at its word.
4:26
Speaker 1: Why are so many people who have been you know,
4:29
Speaker 1: you're in the market for forty three years, Paul and
4:31
Speaker 1: I had lunch with the guy who's been in this
4:33
Speaker 1: market for twenty thirty years. I know some very big
4:35
Speaker 1: fund managers who've been in this market for thirty or
4:38
Speaker 1: forty years, and they're all fighting the FED. They don't
4:40
Speaker 1: believe Powell's narrative, and they think they're going to have
4:44
Speaker 1: to cut in. Well, look, the FED has a long
4:47
Speaker 1: term history of basically trying to, you know, walk back
4:50
Speaker 1: the economy, and I think for a lot of veterans,
4:54
Speaker 1: they're not convinced that they're not trying to do that.
4:56
Speaker 1: I think they're becoming more convinced. And certainly the comments
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Speaker 1: this this week, which I mentioned kind of double down
5:02
Speaker 1: is that, hey, our foots on the brake and we're
5:03
Speaker 1: gonna keep pushing harder. And and people are that they
5:07
Speaker 1: are finally getting the message that that's going to happen,
5:10
Speaker 1: and the concern is that they're gonna over that. They're
5:12
Speaker 1: just gonna overdo it. You mentioned USC. You know, one
5:16
Speaker 1: of my professors at USC's business school was Art Laugher.
5:19
Speaker 1: And one of the things that aren't always said is
5:21
Speaker 1: be careful the bullets that you shoot out there, because
5:24
Speaker 1: you're not going to know where they hit the target
5:26
Speaker 1: for nine to twelve months. And by the time you
5:29
Speaker 1: know where it's hitting the target, if the target gets shattered,
5:33
Speaker 1: then you've got another nine months before you can try
5:35
Speaker 1: to put up a new target and correct it. And
5:37
Speaker 1: so that's what's concerning people right now is to say, hey,
5:41
Speaker 1: are they just overdoing it to get inflation numbers down
5:44
Speaker 1: so they can post that. And what we're gonna do
5:47
Speaker 1: is now they're going to take what's a pretty good economy,
5:49
Speaker 1: drive it into a recession, and then we're gonna see
5:51
Speaker 1: earnings really come down. All right, Dan, thirty seconds, give
5:54
Speaker 1: us your pitch on E n B A. It's an
5:56
Speaker 1: EMU like, well, if the energy space and the utilities
6:00
Speaker 1: are the only as positive for the year. Uh we
6:02
Speaker 1: even though you're on a rough day today, we think
6:04
Speaker 1: is going to continue. And it's it has the largest
6:07
Speaker 1: North American infrastructure midstream as the biggest gas utilia in Canada.
6:12
Speaker 1: You've got a six point two percent yeo while you
6:14
Speaker 1: wait and only it's a good place to you know,
6:17
Speaker 1: to to hang out and make some money while you
6:18
Speaker 1: wait this out. Energy love it. It's having its time
6:21
Speaker 1: in the samething like healthcare, gilead. Yeah, I know, either
6:23
Speaker 1: all over that stuff. Well, we'll talk to Dan about
6:26
Speaker 1: that next time. Dan Genter, CEO, ce IO and chairman
6:29
Speaker 1: of r n C Genter Capital Management. Let's talk about
6:36
Speaker 1: the independent financial advisor business. That is a huge business
6:40
Speaker 1: as more and more advisors become independent and they're out
6:43
Speaker 1: there gathering assets and managing those assets, dealing with the
6:48
Speaker 1: changing technologies not as well as the changing markets. Natalie
6:51
Speaker 1: Wolfson's CEO of asset Mark, joins us here in our
6:54
Speaker 1: Bloomberg Interactive Brokers studio. Natalie, just take us a couple
6:57
Speaker 1: of seconds, just tell us what you do at ass
7:00
Speaker 1: set Mark and how to help these financial advisors. Thanks
7:03
Speaker 1: so much. Well, it asked Mark. What we do is
7:05
Speaker 1: we provide technology, investments, due diligence, and servicing and support
7:09
Speaker 1: for financial advisors so that financial advisors at all sizes
7:13
Speaker 1: can compete. Um. If they need uh, you know, support
7:16
Speaker 1: as it relates to how they talk to clients or
7:19
Speaker 1: the technology they use, they can come to asset Mark
7:21
Speaker 1: and we help them provide those services to their clients.
7:24
Speaker 1: It's very cool. You know. In the past, if I
7:27
Speaker 1: needed a financial advisor, I probably would have chosen somebody
7:29
Speaker 1: from New York and they have a ton of overhead
7:31
Speaker 1: and I would have paid a bigger fee. But now
7:33
Speaker 1: because everything is by zoom anyway, I have a financial
7:35
Speaker 1: advisor in Grandville, Ohio, and I meet with him over
7:38
Speaker 1: Zoom and he uses these kind of products to show
7:41
Speaker 1: me everything, you know, in real time. Um. You also though,
7:46
Speaker 1: supply household investor households with technology. Right, What's It's a
7:51
Speaker 1: much bigger uh number in terms of um, you know,
7:54
Speaker 1: the customers. What's what's that product? Yeah, So we served
7:58
Speaker 1: independent financial advisor is and about two hundred and twenty
8:01
Speaker 1: thousand households and those households are served by the independent
8:06
Speaker 1: financial advisors. By the independent financial advisors so that's counted
8:10
Speaker 1: in your platform massets, which is like eight billion dollars
8:13
Speaker 1: or something. That's right, eight two billion as of June
8:16
Speaker 1: of this year. And what we do is we provide
8:20
Speaker 1: advisors with technology, and those advisors need technology to have
8:23
Speaker 1: great conversations with their clients. Clients want to see their portfolios,
8:27
Speaker 1: they want to engage with their financial plans, they want
8:30
Speaker 1: to ask questions about what's happening with our portfolios, especially
8:32
Speaker 1: in markets like this, And the technology and the services
8:36
Speaker 1: and the diligence that Asset Mark provides helps the financial
8:38
Speaker 1: advisors deliver those services to investors. So for you, when
8:42
Speaker 1: you're engaging with your financial plan, you're probably doing it
8:45
Speaker 1: over a zoom meeting through technology that shows you different scenarios.
8:49
Speaker 1: What happens if fixed income comes off a little bit more,
8:51
Speaker 1: what happens if equities are depressed for the remainder of
8:55
Speaker 1: the year. What happens if my daughter goes to college
8:57
Speaker 1: in America or for free in Spain. Oh really, it's
9:02
Speaker 1: a it's a hugely different scenario. It is, it is,
9:05
Speaker 1: and our technology would help your financial advisor have that
9:08
Speaker 1: conversation with you. What are the financial advisors I wonder
9:11
Speaker 1: how your your business and the business of independent financial
9:14
Speaker 1: advisors changed during the pandemic. The business of delivering advice
9:20
Speaker 1: changed fundamentally during the pandemic um Overnight UH financial advisors
9:25
Speaker 1: and their clients were forced to adopt technology, and technology
9:31
Speaker 1: enriches the conversation. And it was very, very quickly after
9:36
Speaker 1: the pandemic started that financial advisors started to realize that
9:40
Speaker 1: you can have in many cases better conversations when the
9:45
Speaker 1: data is interactive. And so, going back to your conversation
9:48
Speaker 1: with your financial advisor, if you're worried about a particular
9:52
Speaker 1: particular market scenario, or you're interested and understanding the difference
9:56
Speaker 1: in your ability to retire, if your daughter goes to
9:58
Speaker 1: school in Spain or goes to United States, you can
10:01
Speaker 1: make those adjustments in real time using technology. And so
10:04
Speaker 1: what financial advisors have seen is while the one on
10:07
Speaker 1: one inner personal conversations are still important and powerful, the
10:12
Speaker 1: ongoing conversations to make sure you're on track, to make
10:15
Speaker 1: sure your portfolio is doing what you intended to do,
10:18
Speaker 1: that's better served online and through technology. I feel like
10:22
Speaker 1: there must have been two big changes. Right on the
10:24
Speaker 1: one hand, you had um a lot of business happening
10:29
Speaker 1: remotely or happening over um fiber. And on the other hand,
10:33
Speaker 1: you had a huge resurgence in interest, right because of
10:37
Speaker 1: stimmies and meme stocks and Wall Street bets in investing,
10:41
Speaker 1: and so even you know, non Wall Street bets board
10:44
Speaker 1: members were We're saying, hey, let me look at how
10:48
Speaker 1: I can make money in this market, how I can
10:49
Speaker 1: move my assets. Right, So is that is that part
10:51
Speaker 1: of the growth as well? I noticed you spent time
10:53
Speaker 1: at Charles Schwab, which must be a huge beneficiary of
10:55
Speaker 1: that as well. Yeah, you know, speaking of of charl Schwab,
10:58
Speaker 1: they they print at a report about the next generation
11:01
Speaker 1: of investors. And one thing that's incredibly exciting about this
11:05
Speaker 1: generation or this uh, this generation of investors is they're
11:09
Speaker 1: extremely excited about investing UM. In fact of all investors
11:14
Speaker 1: started investing post two thousand twenty, and so this generation
11:19
Speaker 1: that's that of new investors started investing post and they
11:25
Speaker 1: started investing in new asset classes. So whether it's a
11:29
Speaker 1: bitcoin or n f t s or they UM gravitated
11:33
Speaker 1: towards robin hood because of fractional shares, they're interested and
11:36
Speaker 1: excited about saving in that way. Now, the last year
11:40
Speaker 1: has been pretty tough for those investors. Doesn't stem their
11:44
Speaker 1: overall interests though, and their excitement about investing makes them
11:47
Speaker 1: think about investing differently. And that's where advice comes in.
11:50
Speaker 1: You don't have to be all or nothing as it
11:52
Speaker 1: relates to a particular type of investment all in bitcoin,
11:56
Speaker 1: all in game stop. Yeah, maybe I should get a
11:58
Speaker 1: financial advisor instead. Oh, that financial advisor uses your software exactly.
12:03
Speaker 1: All right, Natalie, great stuff. Really appreciate you coming into
12:06
Speaker 1: our Bloomberg and Director Broker studio. That's a sponsored job.
12:10
Speaker 1: There you go, uh, CEO of Asset Market. They're based
12:12
Speaker 1: in Concord, California. Uh, good stuff. And she is a
12:15
Speaker 1: product Matt of the California University System, the undergraded Berkeley
12:21
Speaker 1: NBA from u C l A. That's pretty good, Professor
12:24
Speaker 1: Scott Galloway at n y U. He says one of
12:26
Speaker 1: the greatest benefits he ever received his like was being
12:29
Speaker 1: born in the state of California, because then you can
12:31
Speaker 1: get the great education from the UC, great academics and
12:34
Speaker 1: great football. Yeah, and not a bad beach Elon Musk Twitter,
12:41
Speaker 1: that saga continues. He cited the recent accusations from a
12:46
Speaker 1: Twitter whistleblower as a new reason to terminate the forty
12:50
Speaker 1: four billion dollar takeover of the social media platform. Does
12:53
Speaker 1: this have any more value than perhaps the initial termination letter,
12:58
Speaker 1: which focused on the box. I don't know, but Dan
13:00
Speaker 1: ives he follows this stuff on Wall Street. He's a
13:03
Speaker 1: managing director and senior equity analysts web Bush Securities. Hey, Dan,
13:07
Speaker 1: as you when you know your institutional investor clients. Look
13:10
Speaker 1: at this latest news from Musk talking about the whistle blower.
13:14
Speaker 1: What do you guys make of it? Well? I think
13:17
Speaker 1: it gives Musk a leg to stand on going into
13:20
Speaker 1: Delaware Court in October. I mean from Musk, it's essential
13:24
Speaker 1: like a kid in Christmas morning finding something under the tree.
13:27
Speaker 1: Because Twitter had ironclad case going into court. And I
13:32
Speaker 1: think this does change the calculus. Really, I think you're
13:35
Speaker 1: seeing that reflecting Twitter stock. I mean it doesn't. I
13:38
Speaker 1: read this whole report. He doesn't say anything that I
13:43
Speaker 1: wouldn't have known was true before Elon Musk made the offer,
13:47
Speaker 1: or during or after. I mean, the idea that there
13:50
Speaker 1: are too many bots on Twitter. We all knew that
13:52
Speaker 1: two years ago, last year, a month ago, next month,
13:56
Speaker 1: Like none of the none of the stuff is New
13:57
Speaker 1: I feel like Elon Musk just spouts off on so
14:00
Speaker 1: media about stuff he's gonna do. He's gonna take his
14:02
Speaker 1: company private for four twenty, or he's gonna, you know,
14:05
Speaker 1: pump up doge coin, or he's gonna make a cyber truck,
14:09
Speaker 1: or he's gonna buy Twitter. He doesn't mean any of it.
14:12
Speaker 1: Look and I think finally he really find himself between
14:17
Speaker 1: the rock and hard place, because we really speaking, Twitter
14:21
Speaker 1: has a very strong stand going into Delaware Court, and
14:24
Speaker 1: I think must seize the writing on the wall. And
14:27
Speaker 1: that's why, you know, I think this is all a
14:28
Speaker 1: game of high stakes poker in some sort of renegotiation
14:32
Speaker 1: with Twitter, because he's basically going to find himself either
14:34
Speaker 1: needing to buy Twitter in terms of being forced by
14:38
Speaker 1: the courts of twenty or a massive settlement. And that's
14:42
Speaker 1: really where the Zacho situation, you know, has really been
14:46
Speaker 1: something where I think he has a small victory and
14:49
Speaker 1: he's definitely trying to pounce on it. Well, for those
14:52
Speaker 1: that are interested in this story, I recommend a column
14:56
Speaker 1: yesterday on the Bloomberg Terminal by Matt Levine Um and
15:00
Speaker 1: it's Matt Levine's money stuff, which I read every day
15:03
Speaker 1: because they're always awesome. And then he's been following this
15:06
Speaker 1: situation very closely, and you can get that at Bloomberg
15:08
Speaker 1: dot com, slash opinion or ni O P I R
15:12
Speaker 1: O P I n go on the terminal. It's really
15:15
Speaker 1: a good take on it. And by the way, he
15:17
Speaker 1: doesn't and he was an m and a lawert Walktell
15:19
Speaker 1: so he knows this kind of stuff cold and he
15:21
Speaker 1: says it ain't gonna happen for Mr Musk. Here all right, Dan,
15:25
Speaker 1: more importantly, you know, if I'm a Twitter shareholder and
15:29
Speaker 1: you're as close to this story as any from a
15:31
Speaker 1: Wall Street perspective, what's your call on Tesla right here?
15:36
Speaker 1: Does this noise around Twitter affect your call or maybe
15:41
Speaker 1: what some investors feel about this Tesla story. Yeah, I
15:46
Speaker 1: think it's started to be decoupled from the Tesla stock
15:51
Speaker 1: because of the situation where Musk has changed his moon
15:58
Speaker 1: and he's already sold stock, and that's been a clear
16:01
Speaker 1: overhang on Tessa stock. Now that said, it's been a
16:05
Speaker 1: black eye from Musk and is a Tessa holder, you
16:08
Speaker 1: just want this to end, this nightmare soap opera, because
16:12
Speaker 1: in a risk off market, the last thing you need,
16:15
Speaker 1: it's just another reason to sell Tesla. Does he keep
16:18
Speaker 1: selling his shares? I mean, he says it seems like
16:21
Speaker 1: he says every time he sells him that that's it,
16:23
Speaker 1: that's the last time. But is he going to keep
16:25
Speaker 1: reducing his steak? Well, guys have now he says it's done.
16:29
Speaker 1: But as you said, it's the boy that cried wolf
16:31
Speaker 1: and that continues to be a frustration for Testa investors,
16:36
Speaker 1: although ultimately for Tessa it's fundamentally that that I think
16:40
Speaker 1: what ultimately drives the stock higher, and I think it's
16:43
Speaker 1: all about China, and I think that's sort of over
16:46
Speaker 1: rude some of the i'll say dark clouds caused by
16:49
Speaker 1: the Twitter situation. Finally, Tesla just achieved a new lap
16:53
Speaker 1: record at Seabring. They continually break records in terms of
16:59
Speaker 1: um the speed and for formants and distance um that
17:02
Speaker 1: electric cars can achieve. This is something that no one
17:05
Speaker 1: can dispute. Elon Musk continues to defy. UM. The big
17:10
Speaker 1: incumbent automakers, Uh, you would expect Folkswagen or GM and
17:15
Speaker 1: Ford to be able to use their resources, knowledge of
17:19
Speaker 1: production and uh you know, giant market position too to
17:24
Speaker 1: beat Tesla. But they can't do it so far. What
17:27
Speaker 1: is it Dan that makes UM? What what is it
17:30
Speaker 1: that allows Tesla, you know, battery vehicles UM to drive
17:35
Speaker 1: further and faster and in some sense it's better than
17:39
Speaker 1: anyone else. Yeah. Look, it's a great point, and that's
17:42
Speaker 1: really why Tesla has really dominated the EV industry. It's
17:46
Speaker 1: not just battery technology, but I think in terms of
17:50
Speaker 1: what they've built at Fremont, at Giga, and they continue
17:54
Speaker 1: replicates the scale because they're able to do it from
17:57
Speaker 1: a scale perspective, and as well as the battery apology
18:01
Speaker 1: that's been the combo that's to needle them despite all competitions,
18:04
Speaker 1: despite all the sort of the skeptics, to continue now
18:09
Speaker 1: to be on a trajectory next year, to be on
18:12
Speaker 1: two million vehicles. It's so crazy because I get into
18:15
Speaker 1: like an Audi Etron right, and it's luxurious, and it's
18:20
Speaker 1: also familiar because it's very Audi like, and then UM
18:24
Speaker 1: on the Autobahn when I'm running at a battery power
18:27
Speaker 1: at a you know, a hundred and fifty miles in,
18:30
Speaker 1: I'm thinking, Man, I wish I was in a Tesla
18:32
Speaker 1: right now, And I don't know how they can come
18:35
Speaker 1: out with the vehicle that doesn't outperform a Tesla. I
18:37
Speaker 1: mean they're autie. I know it's well, that's the tesla
18:40
Speaker 1: gig there. Hey, Dan, most of our listeners know that
18:42
Speaker 1: you cover some of the big big names after the Apples,
18:45
Speaker 1: the Microsoft's of the world. Given the altility that we've
18:48
Speaker 1: seen so far here in two what's your top call
18:51
Speaker 1: right now or top call is Apple? But because of
18:56
Speaker 1: the aphone fourteen upgrade cycle and our checks in the
18:59
Speaker 1: easier continues show firm demand even in the macro that
19:03
Speaker 1: we're seeing. I think it's an underestimated cycle, and that's
19:07
Speaker 1: why this is a stock that I believe powers through
19:10
Speaker 1: the storm and that continues to be our favorite in
19:14
Speaker 1: terms of overall tech file by Microsoft. And what are
19:17
Speaker 1: you hearing on your channel checks? And again for those
19:19
Speaker 1: listening a lot of these a lot of animals, top
19:21
Speaker 1: animals like Dan, they really call all the suppliers and
19:24
Speaker 1: get a sense of what's going on out there in
19:26
Speaker 1: the supply chain. What are you hearing? Well, at this point,
19:30
Speaker 1: it's been firm in terms of ninety million orders four
19:34
Speaker 1: iPhone fourteen and that's in line with iPhone thirteen. You know,
19:38
Speaker 1: if there's when when you look at Tim Cook and Apple,
19:41
Speaker 1: they've been able to sort of nail that from the
19:43
Speaker 1: demand perspective. If that trajectory continues to play through the
19:47
Speaker 1: streets actually gonna have to raise numbers on iPhone fourteen
19:50
Speaker 1: rather than decline. And that's something that's obviously counterintuitive relative
19:55
Speaker 1: to the macro speaks of that golden install based of
19:58
Speaker 1: a Cupertino good stuff. As always, Dan i'ves he's a
20:02
Speaker 1: managing director senior equity analyst for web Bush Securities. Talking
20:06
Speaker 1: a little testa talk, a little Twitter. Uh. It is
20:08
Speaker 1: a never ending saga there. But we also wanted to
20:10
Speaker 1: get Apple his top his top call, which is Apple Boy.
20:17
Speaker 1: Those are just amazing how strong the housing market held
20:20
Speaker 1: up during the pandemic, the beginning, the middle of the end,
20:23
Speaker 1: and now we're starting to see see some signs that
20:25
Speaker 1: maybe the residential real estate market is rolling over. To
20:28
Speaker 1: get the latest, we welcome Brad Dillman, chief economist for Courtland.
20:32
Speaker 1: Brad love to get your thoughts. We've had the case
20:34
Speaker 1: Shiller's data come out this morning. We had some housing
20:37
Speaker 1: start data last week. Are rising interest rates, rising mortgage rates.
20:41
Speaker 1: They're taking a toll on the real estate market. How
20:43
Speaker 1: do you see this playing out? Finally? Uh, you know,
20:48
Speaker 1: seeing this impact from higher rates. You know, we did
20:50
Speaker 1: have sort of a false peak in home price appreciation
20:54
Speaker 1: about a year ago, only to see a really strong
20:56
Speaker 1: spring this year. Um, really shows you, I think, really
20:59
Speaker 1: the effects of the underbuilt environment and then just how
21:02
Speaker 1: accommodative rates were in the past. So what do we
21:06
Speaker 1: expect now? I mean I've heard um Marx Andy for
21:10
Speaker 1: Moody's said that in some local markets prices could fall
21:14
Speaker 1: redfin Um recently said that new HomeBuyer purchase agreements are
21:18
Speaker 1: rapidly falling. Black Night reported the first monthly national declines
21:22
Speaker 1: in home prices. What are we what are you setting
21:24
Speaker 1: up for? Well? I mean, you know, if you look
21:27
Speaker 1: at homes home prices of me, they're still up called
21:29
Speaker 1: eighteen percent year over year. Right, they may have fallen
21:31
Speaker 1: slightly month to month, we may see them come down
21:34
Speaker 1: a bit and and and frankly we should. Um. In
21:36
Speaker 1: my view, the cracks in the housing market are not
21:38
Speaker 1: so much of a rationalization from where we are today,
21:41
Speaker 1: but really just thee out of control home price appreciation
21:44
Speaker 1: that we had seen. I think there's certainly the possibility
21:47
Speaker 1: that we could see some markets become very illiquid to
21:50
Speaker 1: the degree that they had really been dependent on in migration,
21:53
Speaker 1: that movement of incomes and savings from other parts of
21:56
Speaker 1: the country and really dependent on on use of leverage.
21:58
Speaker 1: Just to say, the low mortgage rates had prevailed, so
22:02
Speaker 1: you know, unless you know, you didn't have individuals who
22:04
Speaker 1: may have gotten over their skis. But I don't think
22:06
Speaker 1: we're on deck for the kind of mass job losses
22:08
Speaker 1: that would result in systemic home price declins. Brad, you
22:12
Speaker 1: mentioned a topic that I've always find interesting, which is
22:16
Speaker 1: the housing shortage here. So when I read the you know,
22:20
Speaker 1: the quarter of the results of the publicly traded home builders,
22:23
Speaker 1: you know they're they're building the McMansions because that's where
22:26
Speaker 1: the margin is, but that's not necessarily where the demand
22:31
Speaker 1: or need is in some of the entry level housing.
22:33
Speaker 1: How do you square those two issues and deal with
22:36
Speaker 1: this American home shortage? Yeah, I mean, so we've had artificial,
22:40
Speaker 1: artificially low long term interest rates really during the pandemic.
22:44
Speaker 1: We've also gone through about of this in twelve, which
22:46
Speaker 1: had really created the underbuilt situation that we had going
22:49
Speaker 1: into the pandemic. Um So when you have really high
22:52
Speaker 1: prices like that, and you've canna only really deliver supply
22:56
Speaker 1: on the margin. That's the sweet spot the builders got
22:58
Speaker 1: a target now for currently, we have seen some movement
23:01
Speaker 1: in this over the last few years. The degree to
23:03
Speaker 1: which long term rates were low and carrying mortgage rates
23:06
Speaker 1: with them, saw such significant home price appreciation that we
23:09
Speaker 1: did see just a lot of single family housing starts.
23:12
Speaker 1: And so what we're under built by my estimate of
23:14
Speaker 1: about one million housing units nationally, and that's housing units
23:16
Speaker 1: of any time. We do have one point six eight
23:19
Speaker 1: million housing units under construction. So in many ways, we're
23:23
Speaker 1: very quickly writing this housing market to the degree that
23:26
Speaker 1: we're underbuilt. One flying the ointment in that is just
23:29
Speaker 1: what's really happening with with immigration, both legal and illegal.
23:33
Speaker 1: We're gonna need to see those new population figures to
23:35
Speaker 1: know have we been building enough housing or not. In
23:39
Speaker 1: terms of UM Courtland, what you're doing at Courtland, UM,
23:45
Speaker 1: you have thousands and thousands of homes, you you do
23:48
Speaker 1: multifamily housing investment, You have hundreds of apartment communities all
23:53
Speaker 1: around the US. UM, are you seeing price appreciation there?
23:58
Speaker 1: Are you? Are you seeing rental units doing well? Yeah?
24:03
Speaker 1: I mean the rental markets done fantastic coming out of
24:06
Speaker 1: the pandemic. You've got near twenty year highs and occupancy
24:10
Speaker 1: rates and multi family in general, they're starting to come
24:12
Speaker 1: down a little bit because there's been double digit rent
24:14
Speaker 1: growth in some parts of the country like Flora. This
24:16
Speaker 1: is hit highs in some markets of about which is
24:20
Speaker 1: a very significant real cost of living increase. So multi
24:23
Speaker 1: family has done incredibly well. We can actually see this
24:25
Speaker 1: reflected in the starts data. So while mortgage rates have
24:27
Speaker 1: gone up, you know, single family starts have now fallen
24:30
Speaker 1: back to pre COVID levels, But if you look at
24:33
Speaker 1: starts for structures with five units or more, they're really
24:35
Speaker 1: flirting with thirty five year highs. And so I think
24:38
Speaker 1: we can see this in the appealable density and also
24:40
Speaker 1: over renting. You know, Brandon, during the early days of
24:44
Speaker 1: the pandemic, we had you know, urban dwellers kind of
24:48
Speaker 1: flee from the cities and I guess, you know, head
24:50
Speaker 1: to Florida, head to Austin, Texas, head to Nashville. Is
24:54
Speaker 1: the perception in your industry that that's kind of a
24:57
Speaker 1: permanent shift or we are we seeing any data that
24:59
Speaker 1: says and maybe they're coming back. Well, we have seen
25:03
Speaker 1: a fairly strong urban core ran growth recovery. Uh. And
25:08
Speaker 1: we've also seen really because of this real cost of
25:10
Speaker 1: living increase in air swile affordable areas that in some
25:14
Speaker 1: respects urban core sub markets are actually becoming more attractive
25:17
Speaker 1: for the consumer. Again, when you square this with with
25:20
Speaker 1: energy prices as well, namely, like you know, the cost
25:22
Speaker 1: of gasoline and the and the potential that may go
25:24
Speaker 1: back up again, urban core more walkable living, this kind
25:27
Speaker 1: of thing becomes a little bit more appealing. There's there's
25:30
Speaker 1: still a lot of money out there for investments, um,
25:33
Speaker 1: and not a lot of places to put it right now.
25:35
Speaker 1: Are you seeing institutions get into uh real estate? Oh? Yeah,
25:40
Speaker 1: I mean there's certainly been a stronger level. I mean,
25:42
Speaker 1: I mean, you know, at a more rapid pace. Yeah,
25:45
Speaker 1: I mean there's uh, there's macro trends at play as well.
25:49
Speaker 1: What I can tell you is that there's been interest
25:51
Speaker 1: from abroad as the dollar has been relatively strong compared
25:53
Speaker 1: to other currencies. Who we're seeing foreign institutions move into
25:58
Speaker 1: the you know, the multi family space. UM. We're also seeing,
26:01
Speaker 1: of course, uh, continued activity in a single family rental
26:04
Speaker 1: space as well, all right, Brad, thanks so much for
26:06
Speaker 1: joining us. Always appreciate getting your perspective. Brad Dilman, chief
26:09
Speaker 1: economists for Cortland talking about the real estate business, maybe peaking.
26:18
Speaker 1: We really have a discussion about the global jewelry business,
26:21
Speaker 1: and we can do that. There's nobody better than Alexander Laser,
26:24
Speaker 1: CEO of Pandora Group. Alexander, thanks so much for joining us. Boy,
26:29
Speaker 1: I'd love to just get your thirty thou foot view
26:32
Speaker 1: of the global jewelry business. Kind of take us some
26:36
Speaker 1: nineteen until here we are today. Yeah, so we could
26:40
Speaker 1: go even further back. The category globally has grown a
26:44
Speaker 1: little bit ahead of GDP for the last ten years,
26:47
Speaker 1: let's say, up until the pandemic hit. And then the
26:50
Speaker 1: interesting thing happened, of course, when people were locked up
26:52
Speaker 1: at home or or couldn't go out to kind of
26:56
Speaker 1: go to restaurants, etceter. It seemed like the category kind
26:59
Speaker 1: of got a nice little boost um. And then, of
27:02
Speaker 1: course last year the US government decided to issue those
27:06
Speaker 1: stimulus checks, which made the in particularly the US category
27:10
Speaker 1: grow by a whopping, which, of course all the players
27:15
Speaker 1: took advantage of coming into this year. Then naturally that
27:19
Speaker 1: that kind of growth is nowhere to be found because
27:22
Speaker 1: the similar checks are gone. So what we're facing now
27:25
Speaker 1: in the U S Is a is a contraction of
27:27
Speaker 1: the category. But still, if I look, for instance, on
27:29
Speaker 1: my business in the second quarter of the year, it's
27:32
Speaker 1: down twelve percent versus the prior year, but it's up
27:36
Speaker 1: almost six versus So it's some kind of strange dynamics
27:40
Speaker 1: going on. But overall, I would say that the globally speaking,
27:43
Speaker 1: the category is in a good place. What about Europe,
27:47
Speaker 1: I mean, Um, I've just moved back to the States
27:51
Speaker 1: from Berlin. Um spent five or six years over there,
27:54
Speaker 1: and of course Pandora is a household name. Um in
27:58
Speaker 1: Europe in terms of the jewelry business, how hard are
28:02
Speaker 1: you getting hit by higher energy prices that are just
28:07
Speaker 1: draining consumer wallets? Mm hmm. So the first half of
28:12
Speaker 1: this year, we look at things like traffic, you know,
28:16
Speaker 1: conversion rates, basket size average, you know, price for transaction, etcetera, etcetera.
28:22
Speaker 1: All those retail metrics are intact intact across Europe, and
28:27
Speaker 1: Europe is actually up double digits in the second quarter
28:31
Speaker 1: of this year. And now again we need to bear
28:34
Speaker 1: in mind at the prior year we had a fair
28:35
Speaker 1: amount of stores closed due to the restrictions of COVID.
28:38
Speaker 1: But if you then back it up versus nineteen, which
28:41
Speaker 1: is kind of the last let's call it clean base
28:44
Speaker 1: here from a place from a financial standpoint, then we're
28:47
Speaker 1: up in double digit across European continent. So again pandora
28:51
Speaker 1: is actually varying really well in the in this situation,
28:54
Speaker 1: so it's important. I just flew, for example, from Valencia
28:58
Speaker 1: to Frankfurt and Loftanza. You still have to wear mask
29:00
Speaker 1: on the flight hold time. So Europe is still in
29:02
Speaker 1: a way kind of emerging from the pandemic. Here in
29:05
Speaker 1: the US, of course we are fully out um and
29:09
Speaker 1: in Asia you've still got certainly in China zero COVID policy.
29:13
Speaker 1: Is that the most difficult market by far, I mean
29:18
Speaker 1: the Chinese market is as you say, they run the
29:22
Speaker 1: zero tolerance policy, which makes it incredibly difficult to to
29:25
Speaker 1: operate a business there because from one day to the
29:27
Speaker 1: other day can shut the city like Shanghai twenty five
29:30
Speaker 1: million people. Uh, and you have no full warning. So
29:34
Speaker 1: trading in China right now is I think it's a
29:36
Speaker 1: challenged for not just for respect for anybody that that
29:39
Speaker 1: runs an operation out there. Alexander, give us the latest
29:43
Speaker 1: on the supply chain. How is that it's been a
29:46
Speaker 1: challenge for you. How have you overcome it? What's the
29:49
Speaker 1: current state of your supply chain? Well? And if I
29:53
Speaker 1: remember well when the first news came back and was
29:56
Speaker 1: a late nineteen early twenty of this kind of issue
30:00
Speaker 1: in Bjuhan, my first thought went to to our manufacturing
30:04
Speaker 1: sites were vertically integrated, so we we produced everything in Thailand,
30:08
Speaker 1: and and Thailand in particular bank Whip is a very
30:10
Speaker 1: popular tourist destination for Chinese. So I feared that you know,
30:15
Speaker 1: um that that we would have issues without supply chain
30:18
Speaker 1: coming out of Thailand. So we immediately introduced on our
30:22
Speaker 1: own strict strict rules and how we behave UM and
30:28
Speaker 1: and and also actually hired another two thousand people to
30:32
Speaker 1: ramp up our in mentory position just in case that
30:35
Speaker 1: that something would happen there were at that time, everything
30:37
Speaker 1: was unknown to all of us. Because now we've learned
30:40
Speaker 1: somehow to to maneuver that. So we've carried a higher
30:43
Speaker 1: in mentory position throughout the whole pandemic, including up to
30:46
Speaker 1: now uh And that's kind of how we have stayed
30:50
Speaker 1: in stock, so I have zero issues. In fact, my
30:53
Speaker 1: service levels are probably the best they've ever been in
30:56
Speaker 1: Pandora's good for you, guys. It seems like that early
30:59
Speaker 1: action work for you. Talk to us about kind of
31:02
Speaker 1: your storefront business versus your e commerce business, how the
31:08
Speaker 1: trends there have changed over the last few years, maybe
31:10
Speaker 1: where you're you know, invest investing going forward. Yeah, so,
31:16
Speaker 1: uh so, when I joined Pandora in some three and
31:19
Speaker 1: three and a half years ago, e commerce was not
31:21
Speaker 1: like something that the company has spent an awful lot
31:23
Speaker 1: of energy against which clearly I had a different point
31:27
Speaker 1: of view on. So we we started. That was one
31:29
Speaker 1: of the first things we started, kind of making sure
31:31
Speaker 1: that our platforms were a bit in better shape, the
31:33
Speaker 1: consumer experience was in better shape. And then actually we
31:36
Speaker 1: turned this into more of a full price uh sale
31:40
Speaker 1: environment rather than the historic way of using this as
31:44
Speaker 1: an outlet. Somehow, at the end of the day, I
31:47
Speaker 1: get ten times as much traffic coming to my website
31:49
Speaker 1: and then my physical store networks that this needs to
31:53
Speaker 1: be kind of the best, the best best version of
31:55
Speaker 1: Pandora need to be online in a way, at least visually.
31:59
Speaker 1: So so reput a lot of effort against that. Then
32:02
Speaker 1: of course the pandemic struck and we found ourselves in
32:05
Speaker 1: April what it is now with ninety I think of
32:09
Speaker 1: our physical network was shut. I lost that year. I
32:13
Speaker 1: only lost ten percent of my business because I have
32:17
Speaker 1: huge migration coming into the e commerce site. So now
32:21
Speaker 1: you know, so even in UK, I remember when this
32:24
Speaker 1: must have been back in April of twenty, I was
32:27
Speaker 1: actually growing with my entire physical network down. My business
32:30
Speaker 1: actually growing year or year purely through eCOM. Now then
32:35
Speaker 1: everybody said, oh, this is the end of retail and
32:37
Speaker 1: everything is going to go online, is very far from
32:41
Speaker 1: the truth. When when stores reopened, people come straight back
32:45
Speaker 1: into the stores. So I think, what you know, looking
32:47
Speaker 1: at it today, there is a systemic shift we have
32:50
Speaker 1: roughly you know, it's twice as big as a share
32:53
Speaker 1: of my business is online. That people love coming into
32:56
Speaker 1: the stores. As I jokingly say, there's a lot of
32:59
Speaker 1: our customers on and actually six of our customers on. Men,
33:04
Speaker 1: these poor souls need help our stores. I can say
33:10
Speaker 1: that being a man, so that it gets offended, but
33:13
Speaker 1: this is true. They love coming in through our stores
33:15
Speaker 1: and they'll still find a way to get offended, believe
33:19
Speaker 1: you me. But I think it's uh fascinating, absolutely fascinating
33:22
Speaker 1: and of course a really interesting uh business model to
33:27
Speaker 1: watch as we went into lockdown came out of lockdown.
33:30
Speaker 1: I think Pandora is really a um uh really one
33:34
Speaker 1: of one of the one of the most interesting businesses
33:37
Speaker 1: because of your connection to travel, because of your connection
33:40
Speaker 1: to excess cash, and because of you know, jewelries and
33:45
Speaker 1: supply chains and commodity is just such an interesting thing. Alexander,
33:48
Speaker 1: thanks so much for joining us. Alexander Lasik, there, the
33:50
Speaker 1: CEO of Pandora. Thanks for listening to the Bloomberg Markets podcast.
33:57
Speaker 1: You can subscribe and listen to interviews with Apple pod
34:00
Speaker 1: Casts or whatever podcast platform you prefer. I'm Matt Miller.
34:04
Speaker 1: I'm on Twitter at Matt Miller three, and I Fall
34:08
Speaker 1: Sweeney I'm on Twitter at pt Sweeney. Before the podcast,
34:11
Speaker 1: you can always catch us worldwide at Bloomberg Radio.