A slowdown in job market growth leading
to a pickup in the stock market rally. Live from Studio two here at bloomberg
headquarters in new york. I'm Romaine Bostick and i'm Alix Steel
made it to friday. We did make it to friday.
Quite a wild week. We had earnings there.
We got jobs. We got apple.
We made it through. And now we're looking at a rally for the
s&p up by 1.3%. Now, what put a sort of limited shine on
the market action today was the services ISM data that came out and that really
led to the S&P off the highs of the session.
But we've recovered since that since about 10 a.m.
in part helped by Amgen. That stock up a whopping 11% mentioned
GLP one. Boom, you get a nice stock rally.
We've seen that story before. You're also seeing money come into the
bond market again, less than we saw earlier.
We had a 17 basis point move lower when the jobs number came out.
Then we get the eye of some services and now we're just off by about six basis
points. I just want to highlight a dollar yen
because no doubt that jobs number a sigh of relief over in Japan and sort of,
okay, maybe we won't have that dollar strength anymore, but watching that over
the weekend remain if we get any more intervention.
Yeah, absolutely. Here was a rough start to the week for
the yen. It was a rough start to the week for
equities, but here we are on the Friday with a two day high note that is a race.
The prior day's losses pushing the S&P and the Nasdaq back up to and above
their 50 day moving averages on the day. You can thank the one two punch from the
softest US unemployment report in about six months and the strongest showing by
Apple stock in 18 months. Apple, for the most part, closing the
book on big tech earnings with just in video left a report among the mega-cap
names. Now we did have some pleasant surprises
out of those mega-cap names, including from Microsoft Alphabet and Amazon.
This earnings cycle. A few disappointments to Intel, IBM
there a fact Mehta still down 8% since it reported a week and a half ago.
But despite those bumps and lumps results this earnings season, at least
for big tech, we're still way better than expected.
And it really speaks to the continued growth potential out there, especially
when it comes to artificial intelligence.
At least that's the view of money managers over at UPS who remain bullish
on the sector. But with tech out of the way now, the
next big back to earnings, well, it's going to be a little bit of a hodgepodge
of industry representation. Next week we get Uber, Kellogg, Disney,
Affirm and Instacart just to name a few of the notables.
Now, the price action today, it really is a fitting end to a wild week, a week
that started with a surprising Treasury funding announcement ended with a
surprising jobs report with an unsurprising Fed decision sandwiched
right in between. The net effect of it all was a risk on
pivot for the markets that included buying stocks but also buying bonds.
In fact, we're on track for what is now the biggest weekly rally this year in
two year Treasury prices and conversely, the biggest weekly drop in yields.
Gennady Goldberg over at TD Securities calling the April payrolls report
unambiguously positive for the rates market.
And Mohamed El-Erian, well, he's dusting off that Goldilocks narrative, saying
the report showed that demand for workers is moderating, Alex, but not
weakening. A minor distinction, but an important
one. And it raises the question like, is this
actually Goldilocks? I really hate that comparison, but
nonetheless, like, yeah, is it? Well, here's a chart that says maybe it
isn't. And this comes from Ian Shepherdson over
at Pantheon Economics. He tweeted this out.
I thought it was a really interesting one.
So the Orange Line is the NFIB hiring intentions, and that's advanced by about
four months. And then you have the blue in the white
line, which is private payrolls. The white line is the estimate, the
latest estimate, and then the blue is the initial estimate.
So basically it just shows maybe where the job market is actually headed.
So if you look at the latest estimate, it kind of winds up tracking the orange
line fairly well. The first estimate maybe not, but once
you get to the latest, it kind of tracks it.
Which begs the question, are we going to see a decline then in jobs and then by
July actually be negative jobs if we're following that And the NFIB.
So I it throws into question, is it Goldilocks or is it actually getting a
teeny tiny bit too cold? All right.
Well, that, of course, will be the parlor game for the next few months and
quarters. Let's kick things off here at the start
of the close. Stephanie Kelton, professor of public
policy and economics at Stony Brook University, joining us right now.
She's also the author of The Deficit Myth Modern Monetary Theory and the
Birth of the People's Economy. She also formerly served as chief
economist for the US Senate Budget Committee.
All right, Stephanie, let's get right to it.
I mean, we talk about the job market and the word for months now has been
resilient, resilient, resilient. I know one jobs report doesn't change
the narrative, but how healthy is the market, in your view?
The job market? The job market.
Yeah, well, I think the labor market is still healthy.
You know, if we you can look at today's number, obviously that's what
everybody's looking about. That's what we're talking about right
now. Any time you expect a bigger number and
the number comes in off as much as it did today, it feels disappointing.
But I think it's a mistake to just kind of focus in the here and now.
We got to look at where we've been just this year.
We've still got a really healthy pace of job creation.
Yeah, on average every month for this year.
We're still pretty pretty much a cooking economy here in the U.S.
and I think all of us on set were old enough to remember where 175,000 jobs in
a month was actually a good, really good job.
But I do want to point out, too, I mean, we mentioned your book at the start that
there was a lot of hay going into this rate hiking cycle, a lot of hay heading
into this current election cycle about the labor market, the unemployment rate,
and where that really needed to be to get inflation down.
And I feel like there have been a lot of sort of myths, if you will, that have
been busted over the last year and a half, two years, sort of conventional
wisdom that is not necessarily determined to be false, certainly
determined to be maybe a little bit too, I guess, misinterpreted.
I think that's right. And I think, you know, we started to see
it Romania even before COVID. I can remember Jerome Powell being, you
know, in Congress and testifying and being asked questions about the Phillips
curve. And, you know, did you really need to
start raising rates? Was it necessary?
And he sort of said, no, I think the model might be breaking down.
And then we get this really interesting case study with Covid where, you know,
inflation goes above 9% and we're talking headline CPI and almost
everybody, the conventional wisdom was it's going to take a real economic
slowdown, probably a recession and unemployment moving sharply higher to
wrestle inflation back down. And once again, it just turned out not
to be the case. What are your models say the Fed should
be doing right now, like the market saying, okay, maybe two cuts this year
cut in September. The Fed's on hold.
What do you think? Well, I think, you know, we have all
these different ways to measure inflation.
And, you know, by the time you pass through a core measure and a headline
measure and a pie, you got to pick something to pay attention to.
And if we're paying attention to, I think, an inflation rate that has more
meaning than the one we tend to lean into, that one would probably strip out
things like owners equivalent rent. Maybe we would look at harmonised CPI,
something closer to what the Europeans do.
And if we did that, we won this battle nine months ago.
Inflation has been running sub 2% for almost a year now.
So, you know, it could be normalization. And what would that look like or would
it be, let's cut real fast because something's wrong.
Like what? So that's the thing, right?
What is normalization? It's such an interesting word to use
because when you sit close to zero for almost a decade and then you start
talking about what's normal, I don't know what normal is in the wake of
almost a decade of near zero or zero interest rates.
So what does it mean to get back to normal?
Is it It's not zero in most people's minds.
So then we have to start talking about things like our star, which are just
make believe sort of measures of neutral rates of interest.
And I don't really know how to think about that.
I mean, I teach economics. I've taught Ph.D.
macro for a long time. I know what the theories are, but it's
hard for me to do some of this with a straight face when we talk about things
like our star and imaginary rates of interest and so forth.
Is there is there, though, a argument to be made for more formal mechanisms or
guardrails when it comes to monetary policy?
I know Jay Powell has made it clear he doesn't want to be that rigid.
You have former members of the Treasury and Fed people like John Taylor, who, of
course, want a more formal sort of parameters for when you raise and lower
rates. Something like that is an argument to be
made that that could be useful? No, I don't think so.
I think the argument is going in a very different direction.
I think, you know, we we had the whole experience in the wake of the financial
crisis where basically every central bank around the world was trying to push
inflation up to their own 2% targets and couldn't get there.
I think if anything, the big rethink is going to be about, you know, a better,
more nuanced toolkit that central bankers really do need more tools to
work with than just the overnight interest rate And thinking about models
and frameworks that provide less flexibility, I think, is the direction
we're least likely to head into. I think we're going to see a big
rethink, and I think Ben Bernanke was part of this in the UK.
He does have somebody trying to help. But doesn't that mean that we're going
to put a lot more faith in and whoever is running the Fed?
You know, when Janet Yellen was Fed chair, I think it was the last meeting
in Jackson Hole where she talked about the need for greater automatic
stabilisers. She said, look, if we had better,
stronger automatic stabilisers on the fiscal side, it would take a lot of
pressure off of the central bank to try to get creative with things like QE and
cut. So I think that's where the action
really needs to be. All right, Stephanie, going to have to
leave it there. Always great to talk to you.
One of the best minds in economics, Stephanie Kelton.
They're professor of public policy and economics at Stony Brook University.
A lot more coming up here on the big show, including a look at one of the
biggest movers in the market today, Amgen.
That stock having its best day since 2009.
We're going to talk about what's fueling that optimism with an analyst from
Mizuho. Plus, the US Consumer Financial
Protection Bureau is taking aim at credit card fees.
We're going to get a discussion with CFP B director Rocky Chopra and stormy
weather for Cloudflare. Shares of that company think.
Today on the back of the firm's latest results.
A lot of questions right now about the health of the cybersecurity space.
That's our stock of the hour. All that and more coming up in just a
bit. This is the close on Bloomberg. Inflation is above target, but not
nearly as much as it was. And certainly most people think it's
going to head back to the target as we go forward.
So these are good problems to have. That was former US St Louis Fed
president James Bullard adding to the positive market sentiment that we're
seeing today. Stocks wipe out this week's losses
weren't the highs, though. Stay tuned for that.
So joining us now is David Sauerbrey, managing director and portfolio manager
over at Ancora Advisors. So is this the playbook here?
We're going to buy stocks, buy bonds, sell the dollar.
Alex, listen to you. And Romania ahead of time and the
discussion of Goldilocks economy. I'm not quite sure it's that yet, but I
do know for a fact those three bears are long U.S.
stocks and that that's been the right formula.
It's going to continue to be the right formula, even even in a sticky inflation
environment and a Fed that still probably has more work to do.
Are we learning anything from the bond market signal today, though, or is this
a straight up short covering situation? I always take you to the bond market.
I think really in particular the corporate bond market where spreads are
tight. And I think that bodes well for a
economy that continues to grow. Corporate profits that I'll give them a
B-plus so far for Q1 earnings season. Free cash flow margins at 11 and a half
percent. That's some of the highest levels in the
last 5 to 7 years. So the credit markets are still telling
us that the equity markets are the place to be.
Well, and I'm aware, even though in the equity markets, David, I thought it was
kind of interesting the last two days to see how much of a bid we saw coming back
into cyclical names, more economically sensitive and for that matter, interest
rate sensitive names as well here. Is this finally going to be maybe that
moment where we do get a broader embrace of non tech or non big tech
romance? I sure believe that's going to be the
case. But one thing I know as a investor who
lived this in 2000 in particular, in a narrow market, it can last longer than
your patience can dictate, but when it does change, it will change quickly.
So here we are. Year to date, the S&P 570% of the
index's gains are driven off of five stocks.
Still a narrow market. The S&P is up seven and a half percent,
but the median, the 250th company is up a little better than 3%.
So breadth absolutely needs to improve. I think it is still going to be the case
where it does in 2024. We just don't know when.
But you have to be there ahead of time. So that'll be having a good weight.
And small cap stocks, which have been accelerating off those Halloween lows of
last year and just simply a market where more stocks are rowing the boat rather
than five stocks accounting for 70% of the index's returns.
Absolutely. And I mean, that really is the search
that's going on right now. David, I want to get your thoughts,
though, on one particular sector and that's in construction.
We probably could call it the housing market or even the commercial market.
I was looking at some of the picks that you had, individual picks.
And on one name that jumped out at me was CRH, a name that I haven't seen on
too many people's lists here. Pretty decent stock, obviously.
They're right at the center of residential construction.
What gives you, I guess, optimism that a stock like that can outperform?
It is a certain it is definitely a play on on construction that unlike the
infrastructure bill in 2010, this one infrastructure bill has more meat to it
and it's still only about the second or third inning of actual spending on on
roads. So CRH is a European company that is now
U.S. listed.
I believe more U.S. analysts will pick up the stock they
operate both in cement and aggregates. Aggregates is the higher profit margin
out of the two. And whether it's a name like CRH that's
done well or Martin Marietta. The good thing with CRH is it trades at
about a 40% discounted valuation to Vulcan materials and Martin Marietta.
That's what makes it interesting as more U.S.
analysts are likely to pick up the company since its listing here last
fall. All right, David, always great to talk
to you. Got to leave it there.
Have a wonderful weekend. David Swaby, managing director and
portfolio manager at Ancora Advisors. And it's kind of interesting, too, Alex.
I mean, I was kind of looking at kind of the price action, like what's being
bought. I mean, obviously big tech is having its
moment in the sun, but there really is a lot of bids into, you know, I do use
this phrase, but real economy stocks. No, I think it's a real phrase.
We have some materials is the second best performing stock.
So it is a real asset. I don't like it.
Why don't you like it? I don't know.
I think I mean, it really is. I understand like everything is tech,
but in terms of the stuff you need to build things like move a car and go, I
mean, you know, real economy. But I think that that brings into
question the real economy being in a structural shift, but still a cyclical
market and for an investor. Ah, yeah, that must be very difficult on
how you manage that, particularly for some of the smaller companies that are
involved in that. Absolutely.
At least with some of the valuations here, if you are brave enough here,
there's certainly some entry points out there and you're seeing people come in
to that. Meanwhile, we should point out one of
the hottest sectors on the day and on the week is actually in the biotech
space here. But there's one particular stock that we
want to focus on, Amgen. The CEO over there says he's very
encouraged by early results for his experimental obesity drug.
And some analysts are seeing the upside as well.
That's our top one of our top calls. And it's coming up next right here on
the close on Bloomberg. All right.
Let's get a view from the sell side with our top calls, the big movers on the
back of analyst recommendations. And we start off with Paramount, the
media entertainment company hit with a downgrade to sell earlier this morning
over at Argus Research. But the analyst calling the M&A process
a, quote, fiasco, citing the departure of CEO Bob Baksh and dueling bids from
Sky Dance and Sony Apollo. And then, of course, this afternoon, we
just learned on the back of a report from Variety that neither of those two
offers in play are likely to come to fruition.
Investors bailing out, at least for the day, a 5% drop in the stock.
Next up, let's take a look at Expedia. Piper Sandler downgrading to neutral on
disappointment with the travel company's first quarter earnings report and that
scaled back sales forecast that it gave us last night.
Analyst Tom Champion says bookings growth worsening and the margin uplift
from tech improvements still elusive. The shares have one of their worst days
in a while, down about 15%. And finally, let's take a look at a
sprout social. We don't talk about this, but this
really is the software that underpins a lot of social media sites.
They really disappointed analysts after missing sales estimates in the first
quarter. It was especially disappointing for
KeyBanc Capital Markets, which it once considered a favorite among small cap
growth stocks. KeyBanc says facts have changed too
much, leading it to cut its recommendation on the company to sector
weight, though shares dropping a whopping 37%.
And those are some of our top calls. All right.
Let's turn to something that's, well, a little bit more bright.
Amgen having a phenomenal day here, reported quarterly results Thursday
afternoon. The biggest takeaway from the earnings
call was the CEO's optimism about early results for its experimental obesity
drug. And judging by the market reaction,
investors are optimistic as well. Psyllium seed senior biotechnology
analyst over at Mizuho joining us right now.
He has a neutral rating on the shares. All right.
Let's talk about this. I know, you know, it's still a long way
before something like this gets to market here, but what exactly is sort of
the market opportunity for this drug if they are able to bring it to market and
we should point out, bring it to market? Well, after two of its biggest
competitors. Yeah.
Thanks, Ramon, for having me on. I mean, look, the market opportunity for
obesity obviously is a large one. I don't think folks generally know how
large this market could be. But I mean, you look at some of the the
leaders in this space, I think Eli Lilly people are modeling something in the
order of 25, $30 billion and in zip bound and something similar, maybe
slightly below that for the Novo Nordisk Wegovy people are not modeling that much
in for for Amgen's what they call AMG 133 or maritime that the drug that the
company took a look at the data and communicated some qualitative remarks
yesterday in the call. But you know right now where the stock
is, we think there's something in the ballpark of about 60, $70 billion of
market cap already in the stock for for obesity for Amgen in particular.
So I am curious though, because, I mean, when you go back and you look at some of
the other drug cycles we've been to, where you've had sort of a big
breakthrough and then of course, every drug manufacturer has to go in a race
into that space here. I assume these obesity drugs in some
form or another are now kind of that new trend here.
When it comes to competition, though, how does Amgen stand out?
Is there going to be product loyalty, brand loyalty, I should say, or is Amgen
just going to have to strongarm doctors into prescribing this?
I think they have a lot of work to do. And the onus is really, especially after
last night's commentary, the onus is really on on Amgen to prove that they
have something here that folks are going to use.
The specific wording that management used last night on the call was
differentiated not best in class, but differentiated.
What that exactly means, it's a little bit to be determined.
Right now. What we know is that they're trying for
to develop a product that's more less frequently injected.
So perhaps once a month or even more less frequent than that versus a weekly
or even a daily product. But but other than that, we don't really
know too much about where Amgen is trying to place itself in in the
treatment paradigm. It's going to be used alongside or in
direct competition with the market leaders, with ZAP down with Wegovy, or
is this going to be something more of a maintenance regimen for folks?
It's not exactly clear yet. As an investor, then how do you know
when to buy these stocks? Because if you wait so too long to get
actual numbers, then you miss the move, right?
There might be more of a move, but then you're not getting in the right kind of
time. How do you know when I think I think
it's very tricky, Alex. I mean, you know, depending on the
investing mandate that various folks have here, again, for for something like
Amgen and we've seen this cycle twice already before with AMG 133 in
particular, where people have bought in to the to the euphoria and to the rally
and then the stocks. In both of those instances, Amgen traded
at 300 bucks or around. On there or slightly above it.
And then quickly traded off of it. And, you know, it's always because,
well, what you know, what are the expectations being set and then what's
the data that gets presented? For example, we got the phase one, some
phase one data earlier this year which disappointed people on safety.
Right. In particular or in certain
discontinuations in the high dose. But when do you buy these stocks?
It's a little bit, I think, depending on style of investment.
For example, if you're if you're a long only investor, you may want to just be
have enough in your portfolio to match the benchmark so that you're not left
underperforming at the end of the year. But you have to be very careful because
if the data doesn't come out as you as you hope it would, you know, it's a
little bit of a double edged sword. Yeah, but if you just like mentioned the
GLP one, like look what happens, Amgen up 15%.
So I mean, thanks a lot. Celine said over at Mizuho.
Really appreciate that. And then you would even talk of the
supply issue remain that like if you wind up having a drug that you only take
once a week or once a month or something that might solve some supply issues like
Novo Nordisk is getting hit with a little bit.
Yeah, it'll be interesting to I thought it was good point about he said it's
going to where does this drug fall in the regiment?
Is this a complement to something else or is it kind of its own standalone
thing? And that'll be a big determinant where
we go. Yeah.
In which case like it's not necessarily a first mover advantage in this in this
world. Are you coming up you got banks versus
the CFP. B We're going to hit the latest with
Rohit Chopra, director of the CFP. B This is the close.
I'm Bloomberg. I'm. Just about 3:30 p.m.
here in New York. This is the countdown to the close.
I'm Romaine Bostick Alix Steel and the rally still underway here.
Whether you're looking at bonds, really looking at stocks, just definitely not
the dollar, but it has been a week for sure.
Yeah, absolutely. But I mean, look, it's a pretty strong
end to the week. I mean, we're looking still like one of
the best days going back to February. And we came into this week and no one, I
think, really expected this. Right.
We were all kind of expecting something a lot worse.
And I guess Apple, the Fed, jobs, whatever, you know, you want to do that
whole sort of cocktail together. It gets us where exactly?
And then you have like, oh, is it positioning?
And we just book squaring at the end of this.
Anyway, video next week is gonna be very interesting.
So let's turn now to credit cards. There's a new rule that's targeting high
credit card late fees, and that rule may be delayed by the court.
This is ahead of its May 14th effective date.
The Consumer Financial Protection Bureau credit card late fee rule would reduce
the typical credit card fees from 32 to 8 or by 8 to 32 by 832 down down to
eight and 32. It could impact credit cards issued by
banks and department stores that generate about $14 billion a year from
late fees. Bank trade groups filed a suit against
the rule back in March. So here in studio and he just help me
out with the facts and his perspective on where things go from here is Rohit
Chopra, director of the Financial Protection Bureau.
Roger, thank you so much. It's great to have you.
Thank you for coming in the studio. Of course.
So what do you think's going to happen here?
Well, we went hard against the abuses in the credit card industry, and we found
that the largest credit card issuers were exploiting a loophole when it came
to late fees to the tune of $14 billion a year.
We did a rule to make clear that, sure, they can charge a late fee, they just
either have to justify it by their costs or keep it under $8.
And surprise, surprise, the credit card lobby is fighting us hard and we are
fighting back. But we are hoping to make sure that
there is a little more sanity to today's credit card market where consumers are
seeing high rates and high fees. So how close do you think you are to
getting this done? Well, it takes effect May 14th.
We are are battling us in court and we are presenting our case.
We think what we have done is exactly in the confines of the law.
Congress banned unreasonable fees. And so we have presented the data on why
an update makes sense. Conventional wisdom is that you're going
to lose. If you do lose, What's the strategy
then? Well, we have to keep appealing and keep
going. And we have a lot more to do when it
comes to credit cards. It's not just these late fees.
We also see bait and switches when it comes to cash back and rewards.
This Thursday, the secretary of Transportation, I will be hosting a
hearing on airline credit cards. We're also trying to make it easier for
people to quit. Those higher interest rates switch to a
lower one. We think this could save people tens of
billions of dollars per year. Kind of in that same vein, there's been
a lot of discussion about some of these buy now, pay later services and
Afterpay, etc.. So I'm forgetting a couple a like a firm
here. The expectation in the market is that
something's afoot in Washington. Are you planning any sort of major
regulatory actions against those buy now pay later companies this year?
Well, we are trying to make sure that those buy now pay later.
Companies are not evading the core consumer protections when it comes to
disputes returns. We have published a very detailed report
about where people are having issues and we're going to hold them to some similar
standards when it comes to treating people fairly.
Have you seen evidence of mistreatment? We have lots of consumer complaints and
we are investigating some of them. And we're going to take action if we
find there's lawbreaking. So put together your old hat of the FTC
and then this hat. So what confuses me and this is whether
you're looking at, say, JetBlue and Spirit or you're looking at Discover and
Capital One, some of these tie ups you make that they make the argument we
need, that they can compete with the really big guys like Capital One
discover need each other because otherwise they can't compete with, say,
American Express or MasterCard. So it actually makes it harder for the
consumer in the long run. Where am I wrong?
It's enticing and intuitive sometimes to think that, but when we look at the
record, all of this three is better than four.
Or the medium sized guys have to merge to go after the big ones.
Often fewer choices mean higher prices at the end of the day.
We have seen when it comes to the credit card market, it's dominated by a
relatively small set of issuers. Our own analysis shows that the smallest
credit card companies are even offering lower rates, even when controlling for
credit tiers. So often the economic evidence suggests
that the more players, the better. And we should be quite skeptical of the
arguments about how do you do that? I mean, some of this isn't even under
your purview, right? I mean, the reason why we have so few
players is I mean, we've had banking regulations over the last few years that
effectively shut out any sort of new players.
Well, I'm not sure that's true. If you look at the assets and a lot of
our mid-tier banks. They actually have a very big footprint
when it comes to mid-sized businesses and even large corporates.
I think we should all be very worried that the very largest banks, though,
there's a perception you get free unlimited deposit insurance from them
because they will be bailed out. We've got to take out that unfair
advantage and let people compete on the merits.
What do you think of the economy right now?
I think I think you're seeing a pretty steady.
We're clearly better off than Europe and other parts of the world.
But there's no question that labour markets strong, but there's high costs
on many key items, especially housing and the rate environment when it comes
to mortgages and credit cards, can feel very daunting to people.
You have so many people in America who are in a three and a half percent
mortgage and cannot move. They feel because of the mortgage rates
they're facing today. So I do think that for many people, the
rate environment is having a real effect on how they might view their future
prospects. But it is good to see that at the lowest
end we have really seen wages increase and outpace inflation now for many
consecutive quarters. And I think that's a good thing.
How much visibility do you have in that? This goes partly to her question and
also partly to my question before about the banking system.
There's been a lot of discussion. Again, buy now, pay later.
A lot of that stuff doesn't show up on credit reports.
You have other pockets of the financial system right now that are is, I mean,
for lack of a better phrase, kind of off balance sheet, if you will.
How much visibility do you have as regulators into sort of the true debt
load and debt servicing costs that consumers have?
Yes. So it is true that the traditional
metrics that the Federal Reserve has often used when it comes to consumer
debt really need to be modernized. You're right.
It doesn't include all the buy now, pay later.
We have hit over $1,000,000,000,000 in credit card debt, but there is even more
on that. So I do think in some ways that picture
of household debt is one that it has it has increased.
But of course, people's income has as well.
We are seeing in all sorts of consumer borrowing that the increases in rates
and the credit card rates are particularly noteworthy.
They've far outpaced the increases in the Fed funds rate.
And so we're seeing a lot more consumers paying up big in interest and not able
to pay down their credit card bill. All right, Robert, it's great to have
you here on the program. I'm going to have to leave it there.
Robert Chopra, he is the director of the U.S.
Consumer Financial Protection Bureau and, of course, a very busy man in
addition to, you know, all the things he talked about.
Of course, he's got to deal with all the nonsense coming out of Congress, trying
to sort of clip the wings of that agency.
Yeah, you what? Congress and so on.
And what are you talking about? Congress and so on.
Yeah, it's just so weird. Well, they're they're definitely on
something. All right.
Coming up here on the big program, as you count down to the closing bell and a
closer look at some of the big movers on the day.
And that includes Cloudflare dropping the most.
Going back to April, we break down what's fueling the weakness.
It's our Stock of the Hour. And it's up next on the close on
Bloomberg. Earnings season is here.
I think we're all asking the same question just how much earnings growth
we're expecting. Bloomberg is first to break the numbers.
Iliad is coming out right now. We have take two numbers.
Shares of pinterest, Citigroup coming out with its earnings.
All eyes right now on nvidia. A loss still to come with the smartest
insights how much better could profit and revenue have been better than what
the street was expecting? Bang in line with estimates, we will
have full and instant analysis. Continuing coverage on Bloomberg Context
changes everything. All right.
Shares of Cloudflare, the Web hosting and cybersecurity company sinking the
most since April of last year. This after the cloud security firm
posted strong first quarter results that was overshadowed by a weak forecast.
Let's focus on that weak forecast, Abigail Doolittle.
Joining us right now to talk a little bit more about this, and I think this
caused a lot of people off guard here because coming in, they expectations not
just for Cloudflare but really all of its cohorts was relatively high.
Yeah, very high demonstrated by the fact that at the end of the day yesterday,
the stock up 110% over the last year. So on the one hand they do the
cybersecurity, they also do something called content delivery network.
But the other thing that they don't do, but they've been talking about doing AI.
So a lot of that rally into the report. So relative to the revenue guide, it
actually wasn't that like their revenue range guide range for this quarter's
three 93.5 to 394.5 million to estimate 394.5 million.
The CEO describing it as prudent, but I think that people were maybe looking for
an announcement or some kind of extra A.I.
in there, maybe a little bit of a whisper.
The other thing you have to think about is the fact that the first quarter did
beat with big growth means that the rest of the year that they didn't guided
higher. It actually means that growth is
sliding. So they talked about macro uncertainty,
geopolitical. And then this is the exact quote, which
is kind of interesting. Things are brewing that could impact
customer buying behavior. So is that geopolitical is that I it
doesn't sound good now. It doesn't sound good.
So have other companies echoed that same kind of macro uncertainty then for the
for the back half of the year? Well, it's interesting because Fortinet,
another cybersecurity company, they reported today, they actually missed in
their first quarter, but they're talking about European weakness.
Other companies, not really a big tech, not so much at all.
Palo Alto, another cybersecurity firm, they'll be reporting later this month.
One thing that is coming up relative to A.I.
in terms of some of this macro weakness, and it could actually be the things
brewing. There's this theory that A.I.
development, it's such a rage that it's taking money away from other projects.
So maybe people already have the cybersecurity that they need.
So it's a little bit less here. It's hard to know.
But yeah, I agree. It does not sound great.
Yeah, and there's like a broader question too, about some of these
standalones. I mean, we've had some of the more
conglomerate type of software companies that offer sort of these security
packages. And of course they like to beat their
chest saying, look, you don't need Cloudflare, you can just come to us and
report net, just come to us. Whether that is actually true remains to
be seen. But the share is, of course, taking a
big hit today, down 17%. Abigail Doolittle there with our stock
of the hour, a closer look at Cloudflare.
Alex Burns I'd like a bazillion smaller software companies like I think the
shale patch is fragmented. Yeah, I saw I mean well bloom I think it
was a Bloomberg Intelligence thing. I mean it was insane.
I mean, it was literally like in the thousands and it was insane.
I mean, just and we're we're talking publicly traded.
It was insane. And they were saying that most of these
are just going to go away or be bought or something like that.
So I wonder what the wait is. Why haven't they consolidated to begin
with? Particularly, there's going to be a
CapEx cycle that includes I yeah, I don't know.
Interesting. I'll have to see it and who the buyers
are, etc.. All right.
Let's take a look at this market real quick here.
You're looking at the S&P, which is up by about 1.3%.
Volume is a little bit mixed, but you're looking at a lot of advancers, 371
stocks were looking, materials are looking at tech.
It definitely feels like a full on risk on Phase I.
I guess the question is remain, does that continue, particularly as you end
up getting in video next week or is this just position squaring because we didn't
know what Apple was going to look like, We didn't know what the what with the
jobs that it was going to look like. And you walk through cross assets here
we have the dollar down for another day, down on the week.
In fact, looks looking like that's going to be one of the biggest down weeks for
the dollar spot index in quite some time.
You're seeing a bid coming back into Bitcoin despite the slump we saw earlier
in the week. But, well, in addition to that equity
rally, you have to talk about what we saw in the Treasury market this week, a
monster rally here that really defied a lot of expectations, pushing yields
higher there. I think that's your two year yield right
back down to a 4.8. I'm still saying that short covering,
but that's just me. I also love with Austan Goolsbee said
earlier with Mike McKee, don't think that nothing is never on the table.
I just take a moment to think of what that actually means when it comes to the
Fed. All right.
Coming up, we're going to count you down to the closing bell, as I like to do so.
A senior equity strategist over at Federated Hermes will be joining us.
This is the close on Bloomberg. This is the countdown to the close
Romaine Bostick alongside Alix Steel. 10 minutes until we get to those closing
bells. Closing out the week on a really strong
note. Yep.
You look at the Nasdaq 100 and you look at the S&P, we sort of rebounded from
hitting a session lows earlier in the morning at the ESM services.
I do want to have the Russell 2000, though, is losing some ground up just
8/10 of 1%. S&P materials is the second best
performing sector within the S&P. Important to note, if we kind of back
out tech and here's a question head scratcher, anything for you.
GameStop up a whopping 32%. It's basically best two day gain since
November for reasons and other reasons, but for reasons, I don't know.
Whenever I see GameStop moving like this, I have to scratch my head.
Yeah, we saw it rally yesterday and of course saw this extending today.
If you're looking for a reason, well, you're not going to find it other than
people are buying. Maybe we got some news over the weekend,
but of course the meme stock, I guess doing what it does best, which is
meaning which is biased. Got to work on it.
I make a board, so I totally think you should meaning it.
A little bit earlier, we kicked you off to the close with David Swaby over at
Encore Advisors. We actually asked him about the positive
momentum in US stocks and see what he had to say in the discussion of
Goldilocks economy. I'm not quite sure it's that yet, but I
do know for a fact those three bears are long U.S.
stocks and that's that's been the right formula.
It's going to continue to be the right formula, even even in a sticky inflation
environment and a Fed that still probably has more work to do.
All right, David, sorry, he kicked us off a little while ago.
Here to help take us to those closing bells as Linda DISSELL, senior equity
strategist over at Federated Hermes. And I'm not sure which bear you are the
mama or the papa or the baby, or maybe you're just Goldilocks.
Who knows? A lot of questions right now, Linda,
about market sentiment and where you sort of fall in this space.
I mean, there are a lot of positives, but there are still some big negatives
out there as well, Linda. Yes, there are.
And and it's obviously why people think this is a Goldilocks earnings.
Our jobs report is because it might have the Fed just like definitely not raising
rates. That's not necessarily a happy mood, but
it's off a two strong move. What we're doing is we're catching up.
I've read catch up twice this week, wants to explain the strong employment
cost index number because we were catching up with the union workers.
And then today the catching up in so far is weaker than expected job numbers in
some areas like hospitality and leisure and government and construction, which
may be over hired for the COVID crisis. So wouldn't that be nice if we were just
settling back down to pre-pandemic times?
That would be kind of Goldilocks. It's certainly so.
So when you take a look at though, with the economy and you know this debate,
Linda, we've been having it for a while as to whether we're in kind of some sort
of two tiered phase of this economic cycle where you have, you know, more
people at the higher income spectrum doing okay, but people at the lower
income spectrum kind of struggling. And I guess there's a question as to how
true that representation is. And if that is true, is there a gap to
be closer? Yes, Well, definitely on the lower
income side or anyone who has to borrow money to lower income running out of
their stimulus money. And that's true, although the jobs are
still there, notwithstanding what I just said about leisure and hospitality, the
jobs are still there for them. They just can't.
It's just not good If you need to borrow money on the other side, on the on the
upper income area, that's what I'm watching for, something that has been
termed rich cession where because labor hoarding is now starting to bite and you
have companies that are unable to get the top line, such as during this week,
Peloton and the CEO's comment, I have to find a way to cut costs then if my
revenues don't hold up, I travel all the time.
I was in New Hampshire this week. I was in Pennsylvania, New York last
week, and I continue to hear rumblings of higher paid workers in that, you
know, plus $100,000 crowd and even more getting laid off.
And some people that had been working for many years with these higher
figures. So with that in mind, what's the best
kind of allocation? Because to that point, I look at the
worst performing stocks in the S&P so far this week, and a handful of them are
all consumer related. Norwegian cruise, you got Expedia,
Starbucks, CVS. Yes, Yes, indeed.
And I like some of those names are some of the more premium names, you know, and
there's a lot of discussion about, you know, maybe some of these companies in,
let's say, the restaurant or services businesses raised raise prices to us as
consumers more than what the inflation rate was.
We paid it. And now it's really starting to bite.
And we say, you know, I don't know. I'm starting to know people that have
lost their jobs and I might have to pull back.
You may see a bifurcation then where companies which have the great demand
that will include tech companies, that will still include, in our view, at
Federated Hermes Cyclical Company. Jesus, there's no recession on sight.
You'll have a have versus have not situation, but some of the more premium
things. And if I'm right about this rich season,
maybe start a show space next year and that's going to start to bite certain
companies that are, you know, expensive. All right.
So what stocks do you like based on that?
How do you avoid a rich session? Well, you know, the types of like
premium areas where you might buy something, and that's where it comes
into place for sure. But if you believed, as we do, that
there's not a recession on the horizon, you won't worry too much about the big
tech stocks blowing up because they'll still carry on.
The craze is not a craze, but a revolution.
We'll see what Nvidia says since everybody owns that next week.
But you'll look out even further into the financials, which we like, the
energy stocks which are inexpensive. That's one way to avoid trouble is buy
less expensive areas of the market and let's see it broaden.
And I would say that the earnings season, as we've seen it so far, looks
good for the better of a broadening market and broadening earnings
throughout this year. Really, I am curious because a lot of
people have sort of said the similar thing as you, Linda, but when do we see
that kind of mass adoption of it? I mean, I feel like you have like you
and a few other brave souls are kind of out in front of this and everybody else.
I don't know what they're waiting for. They're just waiting for, I guess, the
fireworks to go off, to know that that's the time to jump back into the pool.
What's the signal people are looking for, you're talking about in terms of
the eye situation? Yeah, the broadening of the rally, I
mean. Well, sorry.
The broadening of the rally. Yeah.
You know, you know, we are we are definitely look at look at things year
over year a lot. That's, I think, how we're most
comfortable and year over year it's not been such such easy comps, if you will,
for the that what they say the 493. And as the year progresses gets much
easier into the fourth quarter for these sectors.
I think it's you know a decent amount has been written about this in terms of
the back end of the year. Those are those are the broadening of
the stocks where last year your big danger, your seven, if you will, were up
almost 68% or something like that in the fourth quarter.
Tough comps for them. So you will see it as the quarters
progress. All right, Linda, I got to leave it
there. Linda does sell their a senior equity
strategist over at Federated Hermes, helping us count you down to the closing
bell. So just about two and a half minutes
away from that, Alex, and the markets holding on to the gains on the day.
Again positioning I go to that now the next catalyst comes what is that going
to be? I know in video next weeks we're going
to pay attention to that in terms of the broader stock market.
But otherwise, what are we doing to wait until September until the Fed actually
cuts? So yeah, I hate the sell in main go away
thing. It's not a real thing, which again,
we're going to be looking at. Right.
And we should just point out and video is still about two weeks away.
That's at the end of the month here. But we do get to the week ahead of big
ones. Next week.
We are moving closer to the closing bell here on this Friday afternoon.
Stick with us. Full market coverage coming up right now
as we take it to the bell and beyond the bell, Bloomberg's comprehensive
cross-platform coverage of the U.S. market close starts right now.
And right now we are 2 minutes away from the end of the trading day.
Romaine Bostick alongside Alix Steel. We're counting down to the closing bell
here. They'll take us beyond the bell.
We're joined right now by Scarlet Fu in the tv studio, Carol Massar and tim
stanwick in that thing we call the fishbowl.
Welcome to our audiences across all this from our bloomberg platforms.
Okay. And you are the two of the best looking
fish. I know that short that we are real fast.
I think Nemo is calling. Having said that, what an interesting
week. I feel like just when we kind of have a
Fed meeting and we have a certain narrative and Jay kind of plays down
this idea of maybe an rate cut anytime soon, I feel like, well, wait a minute,
just give it, what, 48 hours? And you get not even 48 hours.
You get a different thing when it comes to rates.
Yeah, I think a week ago we were kind of asking, okay, what's going to be the
most consequential event to happen next week?
Is it Apple earnings? Is it Amazon earnings?
Is it Fed Chair Powell, his press conference or is it the employment
report? And I think it's easy to say today.
Well, with the reset that we saw in rates post the employment report that
softer than expected number it was certainly that this morning.
Yeah but this is one data point right in the data dependent.
So we got to wait for CPI, we got to wait for those other inflation measures
to to backstop what we're getting from this latest jobs report.
But the thing is, if the Fed is data dependent, then how do we front run the
pet the Fed? So if they're data dependent, they're
going to look at everything that we're looking at.
How is the market going to front run like they normally?
Therein lies the frustration, right? I mean, I mean, you look at the Fed's an
absolutely nothing, and yet the two year yields been all over the place, for
example. Yeah, well, I mean, I think you had your
own question. I mean, I think it means we're going to
have a lot of volatility up ahead and I guess the direction the market will sort
that out. All right.
Let's walk you through the numbers here, because earlier this week, it looked
like we were really heading for a down week.
But all the major indices today rallying for a second straight day and all the
major indices now closing out the week on a high note.
The Dow Jones Industrial Average is going to close out the day higher by
about more than 400 points or about 1.2%.
That's going to be good enough for a gain of about.
Percent on the week. The S&P 500 up about 64 points, or 1.3%.
The NASDAQ composite up 2% on the day, a more than 300
point gain here on the day. And the Russell 2000, let's take a look
at that. Not the strongest showing on the day
here, all adding up about a percent. So lagging the rest of the sector.
But I was just taking a quick look here, at least among the major indices here
that you're outperforming on a weekly basis.
The Russell up about 1.7 on the week. All right.
Back to the big caps ago and the S&P 500.
Just the big broad picture, guys, and 378 names in the S&P 500 actually
gaining ground today, 122 to the downside and Scarlett three unchanged.
So a more of a risk on trade, no doubt about it.
Absolutely. That's a pretty lopsided split there in
terms of gainers versus losers. Let's take a look at the map, which
shows the sector performances in the S&P 500.
A big pie with a lot of green in terms of the 11 sector groups, the only
industry group that finished in the red and that's just barely is energy as oil
prices fall for a fifth day. But really, tech leading the way with
the biotech index up 3%, the biggest section of the S&P 500.
And that, of course, is led by Apple Communications Services and materials,
each gaining at least 1% as well. All right, off to the individual
gainers. I go and check this out, guys, in a day
where Apple. Yes, did well, big earnings report.
We watched it. We broke it down last night.
The number one gainer in the S&P 500 and the NASDAQ 100 is drum roll, please, is
Amjad, which is kind of fascinating. Up almost 16% at a time today, finishing
the day with about just shy of a 12% gain, soaring up at the most in its
intraday high. Going all the way back to, I think it
was 2009. The CEO coming out and saying he was
very encouraged by early results from a study by of the company's experimental
obesity drug. What's interesting is we talked with our
Madison Molar saying I don't know that there was anything necessarily new in
this news, but nonetheless, investors sat up and took note.
All right. Another one, Scarlet, you mentioned
Apple. It was definitely among my big gainers
of the day, up about 6%, finishing now off at 8% high earlier in the session.
We know the stock jumping after the company posted stronger than expected
sales last quarter, predicting a return to growth in the current period.
So that sparked some optimism that maybe the slowdown at the company is easing.
Revenue was down, we know, 4.3% in the March quarter, but it was better than
what analysts were projecting in terms of the overall number.
Profit topping two. And then, of course, they had the
biggest buyback that they announced in their history.
So, again, an outperformer live nation and the dropping to see that that
Bloomberg story, Carol, where they saw biggest buybacks of all time.
Yes. And it was just Apple Apple Apple Apple
have all Apple. Oh, it's so funny.
When we were talking about it with analog, it's like, listen, they always
do a big buyback. But this was a really big buyback.
You know, Boeing's market cap, $110 billion,
maybe they should buy you just there's also no Apple car, but maybe an Apple
plane. Is that what you're saying, Tim?
Maybe. I don't know if you saw the Bloomberg
opinion piece about Warren Buffett potentially buying Boeing.
That's saying it's going to happen. But, you know, among the most read he
has the case to do, You know, he definitely has the cash to do it.
Did I cut you off, Carol? It's okay.
It's okay. It's okay.
I'm sorry. Live Nation, another one, number four
gainer in the S&P 500. This one up just checking my Bloomberg
up about 7% here. The company reported first quarter
results that beat expectations. These were all the earnings we were
breaking down yesterday. All right, Over to you.
Okay. Speaking of earnings that we were
breaking down yesterday, you got to check in on shares of Expedia because in
terms of decliners, this one and we got to talk about falling 15.3%, shares
hitting their lowest level going back to November.
The company did post disappointing first quarter bookings, also lowered its full
year guidance. The company came out on the earnings
call and blamed a slower than expected recovery in VRBO, its vacation rental
business, and saw slower than expected growth in the rest of its consumer
business as well. Expedia CEO Peter Kern did say on the
earnings call that verbal has lost share to Airbnb and Booking Holdings, which is
the parent company of Kayak. And Priceline also, Carol, mentioned
Amgen move higher. Well, as a result of Amgen moving higher
on the news that it has made progress on a potential weight loss drug.
We saw shares of the GLP one makers, Eli Lilly and Novo Nordisk move lower today.
Lilly, the maker of Mujuru and stepped down novo, the maker of wegovy and
ozempic. Shares of Eli Lilly closing down about
2.8% after Amgen's CEO said he was, quote, very encouraged by early results
from a study of merit tide. And finally, Cloudflare Ticker and ITI.
The cybersecurity company fell as much as wow close to 18% today, finishing the
day lower by 16. Yeah.
Is that 15 or 16? Guys, help me out here.
Look at that. It was.
Oh, is it 16? Yes.
That's why we got to retweet, you know, That's why we got to get a return
monitor here. Just our bit better glasses.
Maybe that maybe that's what it is. Biggest falls.
It's going back to you. Just April of last year, the company did
post second quarter revenue projections fell short of analyst expectations.
Analysts did say that a strong first quarter report was overshadowed by that
weak forecast. Cloudflare also the other cyber.
Security companies. They faced headwinds in recent months as
businesses have scaled back that spend and when it does come to it.
All right. Let's go to yields here, because they
did some buying across the curve. We saw much more extreme buying once the
jobs number came out at 830 than the ISE.
And services kind of tempered that, buying a little bit and a little bit
more, buying kind of in the belly of the curve.
But weekly guys, it was pretty tremendous.
The two year yield is down at one point as much as 28 basis points, the ten year
down 21 basis points. This is at the max of of the move lower
in yields. And the two year yield kind of just
cratered below its 50 day and 200 day moving average.
So that's just some technical levels that were hit.
That's why I keep mentioning positioning, positioning.
And I do wonder what's going to be the next catalyst for yield.
So I was like a month out early for Nvidia, but there's nothing happening
next week in terms of economic data, for example.
You know, I feel like we need to give a shout out to the yen as well, given the
massive monster moves in that currency, that currency pair, especially dollar
yen for the weak dollar losing 3.4% versus the Japanese currency.
We haven't gotten any confirmation that the finance ministry is behind any yen
support, but presumably what else could have driven the yen to to such extreme
moves over the last couple of days? Yeah, I mean, 152 I mean, quite
remarkable here. And we talk about the catalyst for next
week. We do get some earnings out of Disney
and a few other kind of second tier companies, but I'm going to use this as
a shameless plug for our coverage that Carole and I will have at the Milken
Conference. We'll have a big conversation over the
next three days, Monday, Tuesday and Wednesday with a lot of the biggest
asset managers, a lot of folks in the private equity and private capital
space. You see a couple of big names up there,
including Katie Kotch over at TCW, Ray McGuire over at Lazard and and Walsh,
Carroll over at Guggenheim. Yeah.
Listen, this is a great place to it's everybody in anybody, certainly in the
financial sector. And there's more players and certainly
traditional business. But it really you get a good gut check
about what's top of mind for folks who are managing so much money globally, and
especially at a time when there are so many questions and big macro issues,
whether it's geopolitics, artificial intelligence.
You do wonder what's top of mind. And even like you look at the volatility
we see in the bond market, Scarlett, is we are data dependent moving from data
point to data point. Curious to see what really kind of
tracks with them in terms of what they're focusing on to make those
investment decisions. One thing, of course, that we should
note is that the event will be in West L.A., which is fairly close to the UCLA
campus. I'm curious whether college students and
their alleged outside agitators might hold demonstrations here in the Beverly
Hilton. It's one thing to protest on campus,
calling for your school's endowment to disclose and divest, but some of the
fund managers who are investing the school's money will be attending the
conference. Yeah, that's a good point.
Directing the investments. I mean, I was there 20, 21 and 2022 and
there were protests taking place. And it was I would think it was fair to
say it was a calmer environment across the country.
So I sort of chuckle and I think we were there that same year.
They had those broke, but I thought it was I chuckle because they made sure
they kind of kept them on. I can't remember what that one street
is, and they kept them on that one side there and away from the main entrances.
So as you know, security is tight. But yeah, I, I agree with Scarlet.
I'm sure some of those people might feel the need to stop on, but it's on you
guys, though, Carol. Mean, you guys got to make the news next
week. All right.
Pressure somewhere else if nothing happens on you guys.
Oh, thanks a lot. Okay.
All right, guys, listen, have a great, great weekend.
That's a wrap across platform radio TV's YouTube, Bloomberg Originals.
We call it Beyond the Bell. Join us, though, for all our special
coverage next week. And have a great weekend, everybody.
And we're not done just yet. Our coverage continues here on the
close, a broader look at the health of the economy.
And we're going to take it from a few different angles here when we come back
after the break, we're going to talk to Eugene Rimm, is the co-founder over at
the Cat Hospitality Group. And they've been on a big expansion
plan. We're going to get his thoughts here
about the state of the restaurant industry.
That's coming up next here on the close on Bloomberg. I'm. Welcome back to the close.
I'm Scarlet Fu and I'm Romaine Bostick. This has been a crazy Scarlet Fu.
We started it off earlier in the week and looked like this was going to be a
down week for equities. We had a lot going on.
Of course you had the Fed meeting in the middle of the week.
We started the week with the Treasury refunding announcement, ended it with
the jobs report and there were a lot of earnings in between.
But the net effect of it all was a strong two day rally to end the week.
That pushed the Nasdaq 100, 100 composite excuse me, the Nasdaq
composite up about 2% here on the day. The S&P posting about a 1% gain.
And you also saw a lot of the cyclical stocks really get a strong bid here.
Take a look at the two year yield, though, 4.8 right now.
And in fact, we talk about the big moves in the volatility in that space.
This was the strongest week on a price basis for the two year Treasury all week
long. And of course, that means the worst week
in terms of yields going down. Spot gold also had an awful day and an
awful week. But let's go back to the equity market.
Scarlette. I was taking a look at all the big
indices out there and what outperformed on a weekly basis, up 6%, Nasdaq
biotechs. Absolutely.
And in fact, Amgen and this is the name leading the Nasdaq biotech was the best
performer for not just the S&P 500 and the Nasdaq, but also the Dow Industrials
gaining almost 12% on the day. Biggest rally since 2009.
And all of this after the CEO said he's very encouraged by recent or early test
results from its experimental obesity drug.
So as a result, we saw shares in Eli Lilly and Novo Nordisk decline in the
wake of Amgen's big rally. Now, on the flip side, you have
Fortinet. This is the cybersecurity company
tumbling down almost 10%. Biggest slide this year after the
company reported a miss in first quarter billings due to weakness in Europe and
also difficult year on year comparisons. Now, the big question here, when it
comes to Fortinet or any of these cybersecurity companies is how much of
this is a read through to the rest of the sector and to business spending
versus this being kind of a one off before today?
It's worth mentioning here that Fortinet shares had gained as much as 29% since
early November. Now, of course, our top story this hour
is the labor market is showing signs of weakening the US economy added 175,000
jobs. That is the smallest increase in about
half a year. While investors did read.
That is good news for both stocks and bonds, It is worrisome for job hunters.
We're going to take a deep dive into how that's playing out for one restaurant
company across different cities and also explore how employers are increasingly
turning to AI to now screen applicants. All right.
Well, let's get right into it right now. Scarlett, Katie Barcelo joining us right
now, senior vice president at the recruiting company Branstad.
And I mean, you know more about these trends than anyone else, Katie, given
the data and the stuff that you guys collect here, I was looking at that not
only the jobs report that we got this morning that Scarlett was mentioning,
but later than the day we got that ISM report showing the services sector and
weakening there here. Are you still seeing an uptick in
applications or are we starting to see those applications fall?
You know, we're still seeing an uptick in applications.
We're seeing, in fact, an uptick in professionals applying for positions
that they might not be entirely qualified for.
But absolutely, we're seeing professionals still applying for four
positions. This gets to a question, too, because,
you know, I don't know was a couple of years ago when the labor market was red
hot. I mean, if you had a pulse, you can find
a job. Now, I think things seem to be a little
bit more competitive here. So for those folks who are seeking jobs
or maybe planning to seek jobs here, how do you stand out in an environment like
this? I think, first and foremost, to create a
concise resumé that doesn't over inflate your experience or your qualifications,
but speaks directly to what you're qualified to accomplish and the various
things that you've been able to achieve in your most recent roles will help you
stand out. Yeah, there's always a debate over
whether you list your skills or not, whether you include a cover letter or
not, whether you customize your resume or not.
And a lot of that depends on whether employers are using AI or any kind of
computer software to screen their applications.
First. I'm curious from where you sit and based
on what you've seen, what do the settings for that eye to screen
candidates look like? Is it set to a predetermined number of
applicants to go through the top X percent of applicants?
That's an excellent question. It's set to a lot of different things,
and I think each organization will allow that to vary.
It could be a keyword, it could be specific qualifications, it could be a
number of applicants. The reality is this is still a human
factor. People are people.
And so organizations will continue to reach out to qualified professionals.
And, you know, although I will screen people out, it's certainly the
determining factor. And whether or not professionals get an
interview will be the communication they have directly with the organization.
Right. And I guess those settings can be
adjusted and customized by different employers.
So one thing that people do include on their resumes are often do, especially
when they do get the interview is references.
How often are their follow ups on references?
How deep do employers go on that? Are there spot checks out of every
reference listed, or do they kind of go above and beyond what's actually
offered? Yeah, I think there are definitely
companies will reach out to the references that are listed.
Beyond that, though, organizations are going to want to verify your
qualification. And right now, in a world with
overinflated qualifications and quite a few qualified applicants for roles,
companies will reach out to references to verify that you're the right
personality set along with those qualifications that you've listed.
Is there are you seeing significant differences on a sector by sector,
industry by industry basis getting when you say differences, are you
speaking specifically to the differences in AI or the various applicants and the
use of AI? Yeah, I think that we definitely see
differences. Obviously, I was heavily adopted in the
tax base and there are less adoption rates, if you will, in the accounting
and financial sector. So it does vary from from sector to
sector. Again, what's overwhelming though, is
the the personal touch that will be involved in the tech piece of the pie.
Got it. Katie, really appreciate your joining
us. Katie Birchall of Randstad talking to us
about what employers are looking for from where she sits.
And what I heard from her that really piqued my interest remain was the right
personality fit. So it's really incumbent upon the
applicant to do their homework to figure out what the employer is looking for.
Right? Well, that's the thing, though.
It seems so confusing to me because when I hear personality fit, I think that has
to be human to human, right? Yeah.
Like a robot Can't assess my personality or I don't think so.
I hope not. But it gets to the question is the
balance, right? Yeah.
Because to get in the door, you're going to be screened by something that's more
automated. So maybe those keywords and all that,
you need that. And then at some point you get before
the skills first and then personality. Oh boy, this is exhausting.
I'm just glad I'm old. I know I feel for the younger generation
just to say my, my, my son has been looking for a job.
I mean, he's a high school senior and it's been almost impossible.
And today's jobs report kind of vindicated my my feeling that, you know,
it's actually a lot softer than we thought.
All right. We're going to discuss the labor market
and how it's affecting the restaurant business, in particular.
Eugene Ren, co-founder and partner at Cash Hospitality Group, will be joining
us next. This is the close. The Middle East and Africa.
Vibrant resources and high yield investment opportunities abound.
Join me on Horizon, Middle East and Africa for the stories, newsmakers and
insights from this exciting region premieres Monday only on Bloomberg. This morning's jobs report showed a
slowdown in leisure and hospitality hiring.
But there is one restaurant group that is expanding.
Catch is opening a new location in Miami Beach on May 10th.
That is the formal opening that marks their seventh location.
Joining us now is Eugene Ram. He is co-founder and partner at CAC
Hospitality Group. And Eugene, we know the soft launch is
this weekend. You guys have been gearing up.
Tell me a little bit about the hiring that you've done to staff up catch on
Miami Beach and what that looks like now versus, let's say, six months from now?
Well, it's very different. So right now we have about 120 people on
board training, but the majority of the team is coming from our New York stores,
our Los Angeles stores, our Aspen stores and our Las Vegas stores, because the
first 90 days, you really need to create that culture of the people who are key
and understand our brand afterwards. Then I think we get to bring in a lot
more of the locals. But if you want to set the standard in a
new market, you really need to bring the people who are closest to the brand and
those are the people who have lived, breathed the brand in all of our
existing markets because it's very hard to teach something.
It's not in a manual. You actually have to show them and
there's no better way to show them than the people that have actually been doing
it in our existing stores. Right.
I get that. So we were just talking to Katie Burkle
over at Randstad, which is an employment services company, and she was talking
about how employers are looking for the right personality fit.
How do you determine the right personality fit without putting someone
through a probation period? Well, the wonderful thing about the
restaurant industry is it's a lot about what you feel, right?
There's no there's no tangible like, hey, are you going to be better at this?
Or you're going to be better at that? So we're always hiring.
That's our point of view. But we're always hiring for special
people who have special talents. And the good news or the bad news is
there are that many of them. So when we find someone special, we will
always invest in that talent. But it's not something that we're going
to say, Hey, you meet these four criterias, you're good to go.
It's a feeling. It's a 51% like we always say.
It's like it's not what you can teach people, it's what you can make them do.
So if they can feel hospitality, then we know they're the right type of person.
But it's very different for the restaurant business.
And some of these like air or tech companies, it's just a completely
different business model. Yeah, well, Eugene, I mean, you've
obviously got a good feel just on the industry as a whole.
And I kind of curious about your expansion and really the strategy behind
it. Kind of piggybacking off a Scarlets
question here, I mean, the obvious locations, you know, Miami, Aspen,
Dallas, where else? So I mean, is there sort of a market
that maybe you have your eye on that you haven't quite found that opening yet,
but that you certainly want to be there? Well, I could tell you this New York and
Los Angeles are challenges right now with the minimum wages and the ability
to operate. Also, you're you're working with cities
that have three day workweek. So markets like Miami right now, which
are just on fire. You come here on a Friday night, on a
Tuesday night, a Wednesday night, it's all the same night.
It's just one big boom. And it's a combination of celebrity,
athlete, tech, finance, everything. So it's also a lot of safety.
And that's important here. So Miami is a great market.
Dallas is another great market. Scottsdale is another great market.
So we're looking at any market where maybe people from New York and Los
Angeles have moved to for a cheaper cost of living but still want that lifestyle
experience. So that's how we think about it.
Do you feel it's more competitive or potentially more competitive down in
Miami versus, say, a New York City? I think there's nothing more competitive
than New York City on planet Earth. But if I were to say something would be
a second option, it would be Miami. And I think there's always room at the
top and there's always room at the super affordable and there's no room in
between. So when you come into a market like
Miami, you need to go for the absolute top and be the very best that you could
possibly be, because the best of the best will always want something new and
we'll always want something quality, and there's always room for that.
You mentioned briefly California and some of the challenges there.
I know you have a restaurant in Los Angeles.
You're not a fast food restaurant, but you do have a presence there.
So I'm curious, given the state's new minimum wage law, $20 for fast food
employees, how does that affect the talent pool and the expectations that
potential employees have? Well, it's really simple.
You can't raise prices. The cost of products continues to go up.
The cost of construction continues to go up.
The rent is not going down. So the only option that you have is to
do more with less, which which means you have less people to do more work.
And unfortunately, the goal of some of these minimum wage
ideas is to give more benefits to the employee.
But what it actually creates is less opportunity for people to get jobs,
which is maybe something that you're seeing in this job report.
So we're going to have to do more with less because a $20 an hour for minimum
wage, plus the fact that these are people who are making two, three, four,
five, $600 a shift. On top of that, it starts to get really
expensive and there's no other places to make additional revenue.
And our margins are so slim to begin with that there isn't they're not
leaving very much after that fact. So we have to do more with less.
I am here's to about I mean, you kind of alluded to the tipping on top of that
that we know restaurant workers are really depended on for the chunk of.
Their income even before, obviously before this law.
I know there have been some experiments with going to no tipping in here in New
York. Danny Meyer, of course, famously
experimented with that. And, you know, I won't speak for him,
but of course, you know, some of those folks took tail and had to reverse
course here. Do you think there is a model in the
future longer term where we have a wage based pay system for servers without the
tipping aspect as a part of it? Listen, I think some of those things
that some of those operators did were more for labor law purposes, where they
were protecting themselves from any labor law issues.
And that's been another challenge in New York and Los Angeles.
So I'm not so sure if it was truly based on what was best for the server, but
maybe more what was best to protect the business.
I think the way I think about it is the best service should make the best money.
And I've never seen the best service work the best when they're in a pooled
house. So I think if the guest wants to
continue to get the best experience, they should be paid appropriately by the
service that they get. All right.
You're going to have to leave it there. Eugene Ram up the Couch Hospitality
group opening up his new restaurant in Miami a week from now.
Formula One this weekend there. A lot more coming up here on the big
program. Stick with us.
This is Bloomberg. Welcome back to the big program.
If there's a creative, stylish and savvy project generating buzz and music, arts,
entertainment and fashion, well, there's a good chance that one of the people
behind it is Pharrell Williams. Now he's using his influence and stature
to elevate black and Latino businesses, aiming to close that racial wealth gap
we talked so much about here on this program.
And he's trying to do that through his nonprofit.
It's called Black Ambition Opportunity Fund, and he's entrusted running that
fund to our next guests. Felicia Hatcher, she's leading the
charge here, and she joins us here in Studio two in New York.
As the CEO of Black Ambition. We're also joined remotely in Detroit by
Justin Turk. His company, Logistics is one of black
ambitions grand prize winners. Thanks to both of you for here for being
on the program. And I want to start with you, Felicia.
A lot of interest here in this program and the idea here of exactly what
Pharrell's intent was when he started it.
Yeah, the intent for Pharrell founding the organization four years ago was to
not only close the opportunity and wealth gap, but to create uninterrupted
opportunities to wealth through entrepreneurship and to
entrepreneurship. And that requires us to inject a high
level of capital into those companies, a sense of community.
So there's a camaraderie there, a sense of care.
We have literally therapists on staff to support our entrepreneurs from a
holistic standpoint, and I think the coaching and mentorship that they need
in order to grow and succeed their companies.
How do you select who you think is going to be the.
It's become one of the most competitive like prize processes as it was
specifically relates to black and Hispanic and HBCU entrepreneurs.
And so with partners, we get over 2000 applications a year and a pretty
rigorous process to get down to 250 entrepreneurs that we then mentor for
three months. And so I would say, Justin, our million
dollar prize winner from the first year, and Khadijah are our HBCU top prize
winners, literally kind of became the blueprint of how we select entrepreneurs
and what we're looking for year over year.
All right. Well, let's bring Justin into this
conversation. Of course, the grand prize winner from a
few years ago. Justin, tell us, first of all, about
your business. What is the problem that your startup
aims to solve? Well, thank you for having me.
First off, I appreciate being here. We're live just six where B2B software
platform for producers, transporters and processors of waste.
And the great thing is that most of our customers are construction companies and
landfill waste manager management companies.
By the end of the day, everybody produces waste and we want them to be
more sustainable. We want to recyclable recycle.
So our company targets processors, people who want to be enthuses about not
only waste but the burning waste as well.
And that's our market. Okay, got it.
Thank you for explaining all that. I know you were shocked when it turned
out that you won the $1 million prize. Clearly, there's a funny system where
you had to beat out your competitors. Tell us a little bit about the process
of getting to that final prize, because even if you didn't win the final prize,
you went through this three week boot camp that really fortified you with the
skills that you needed to kind of move forward.
Great question. So first off, three month boot camp and
the network that Black Ambition opened us to have been tremendous.
I mean, we still have partners from that industry to date who are advisors, who
are partners to strategy and whatnot. But it was it was intense, you know, not
only from the point that you had to level up as far as your data, as far as
how you're presenting your work. But you have to, you know, be punctual
that you had to commit on our day to day basis and you still had to run a
business. I've still been in touch with a lot of
people from that cohort and I think it prepared us for the real world, not only
Black Ambition and invest in our companies, how we could sustain
ourselves and be more profitable down the road before this contest, before
Black Ambition came along. Justin, What was your relationship or
what I should say? What was your experience in trying to
raise money and I guess find partners, if you will, for that business?
A great question. So I was fortunate to have an advisor.
We went to friends and family around and we did angel investing early on.
So I learned about just, you know, venture capital from a small standpoint.
We reached out to VCs, We talked about our problem.
We had early traction with Fortune 500 companies, but the reality was that a
lot of people weren't interested in really investing in us.
And I will say that, you know, black investors not only were strategic in
nature, in helping to support our business, to be sustainable, but the
idea that companies were more interested in us after a company like Black
Investing invest $1,000,000 is a reality.
And that was definitely the case. And we we owe so much gratitude to
Felicia Farrell. And I say we we won't know for years how
much it'll be, but it'll be very generous and repay.
Yeah, you definitely got lucky by having somebody like Felicia at your side.
And I do think it's interesting here, Justin, when we talk about sort of the
help that she was saying that she gives, I mean, this is more than just about
money, right? I mean, this is also about some
hand-holding, that mentorship and really the guidance.
So you don't always get that the venture funds and other sort of investment
funds, they just kind of cut a check and hope that you know what you're doing
here. So that had to have been impactful,
right? Extremely impactful.
I mean, $1,000,000 seems like a massive amount.
But the reality is that it only is going to it's going to burn out.
And you look at just the industry in general, it takes cap.
To grow a company. And when you think about just the
knowledge, the network programs like Black Ambition, it takes a tremendous
change and it takes people who care to make that difference because early on
it's not going to shoulder the fruits of a labor.
You see, a year over year, you're starting to see the returns because
people are learning, they're growing, they're scaling, which is the most
important part. And we learned all that through Black
Ambition. So, Felicia, I asked earlier just in his
business and what it does, But we know that when it comes to startups and
entrepreneurs, they have a vision for something.
But that business plan can change. That idea of will change because market
conditions have changed. When you are looking at these
entrepreneurs and these founders, you're looking for a quality and you're
investing in the person rather than the idea What is that single most important
quality you're looking for? Yeah, we're looking at not just the CEO
or the founder. We're looking at their team, their team
dynamics, how they can really kind of disrupt the marketplace that they're in.
We're looking for resiliency, right, Knowing that like they are going to go
out and get it every single day. We're looking for a term that I learned
from going green, a level of resource, magnetism, magnetism, magnetism.
Right. Like they have everything, the
stickiness that they need to attract the resources.
And then we're looking for them to be a good steward of Pharrell's resources.
Right? And so our corporate partners at pour a
lot into those entrepreneurs, additional follow on capital that they may receive
as a result of their mentors being a part of the program and then like being
able to just kind of go out and get it and be disruptive and then massive
contributors back into their communities by being employers as well, are some of
the things that we look for. You mentioned Pharrell's resources.
That means his network, his partners. Talk a little bit about that, about how
often, how that works, that that chemistry between the entrepreneur is
your seeding and Pharrell's network. Yeah, you know, a mentor of mine has
this quote like money screens but wealth whispers.
And if we're talking about closing the wealth gap, well, we have to make sure
that we're sharing the knowledge of what it requires to actually grow wealth.
And a lot of that is access, right? So when we talk about being underserved,
they're also under our access, right, if that's a word.
And so we need that access to happen to them faster.
And we need wealth to happen and opportunities to happen to them faster.
And so Pharrell has picked up the phone for some of our companies and got them
connected into Tiffany's, which is a partner.
Right. He's the creative director at Louis
Vuitton Men's. He's picked up the phone and gotten our
entrepreneurs into Marriott locations. Family is one of those companies.
And time and time again, if it's not him, it's people that are connected to
his network that the entrepreneurs would never have access to if they're not a
part of Black Ambition. And we also teach them how to ask for
what they need to grow and scale their companies.
But that is a community that we've built with Black Ambition, and that's his
passion and his resources injecting into these entrepreneurs that we know are
going to change the world. All right, Justin, we only have time for
one more question. So I'm going to give you the last word
here. Just about a minute left here for
somebody like you say, go back five, ten years when you were kind of coming up
with these ideas. I mean, what is the advice that you
would give them first, kind of that budding entrepreneur, particularly a
budding entrepreneur who is a person of color looking at this world and trying
to figure out the best way to sort of, I guess, weasel their way in to the top.
So the advice I'd give is that if you look at market conditions in a way that
we're going, every company is at scale, every company scaling.
And if as a minority we are jumping into the game, we aren't putting our foot in
there and we aren't solving problems at a very granular level.
We become the employer, I mean the employee and not the employee.
So we absolutely have to be a part of scale.
So companies like Black Ambition who support your vision and your growth take
the leap, solve a problem and get out of this sign up because this tremendous
about what their role looks like. It's a tough journey.
But when you have support systems like Felicia Hatcher, like other programs
we've been a part of, it shows that it can be resolved and you can grow and you
can scale and you can win. All right.
Good stuff. Justin, really appreciate your joining
us. Justin Turk is CEO of Live Justice and
of course, our thanks as well to Felicia Hatcher, CEO of Black Ambition.
Really appreciate both of you joining us today.
All right. Let's shift gears and take a look at the
top three. Every day at this time, we take a deep
dive into the folks at the center of some of the day's big stories.
And first up is Serena Williams, the goat.
The tennis superstar sat down with Alex Rodriguez and Jason Kelly on the latest
episode of the deal, and she talked about boosting diversity in venture
capital. So, Serena, as I hear you speaking, I
can't help but think about like when I transitioned from baseball to business.
And it's quite daunting. And I know for me there was some
imposter syndrome. But we're both former athletes.
I'm a man of color. You're a woman of color.
As you enter the world of capital raising, which is very difficult,
especially when you haven't had the track record early on.
Yeah. How does that make you feel when you
went to help potential piece to raise capital?
It's a competition. I loved it.
It's what I it gave me energy. It gives me life in telling my story.
And also it's isn't about me and it's not about me raising capital.
We are investing in women. We are investing.
People of color like that. 2% is women.
People of color. Women of color is less than a fraction.
Right? Like, if I want to start a business and
my name is and Serena Williams, I'm going to have to take something out on
my house. I'm going to have to go to the bank like
it's not I'm not going to be I'm just going to not be able to get b c money.
But we're changing that. And we don't only invest in women, we
don't only invest in people of color, but we're putting that on a platform.
Our portfolio right now, as it stands, is 68% women are person of color, and
that is unheard of in the VC world. And so for me, it's all about diversity
and bring everyone together. We invest in literally everyone.
We don't care what you look like, but we hear your story.
If you're a woman and we hear your story of your personal color and a lot of
people that look like me don't even get their her story heard.
And so when you do go to these LPs and you genuinely tell them story, if they
pass, they pass. But at least you get them thinking, you
get them here, and maybe they'll invest in another fund that is doing the same
thing. Maybe that has been around a bit longer
with the track record a little bit longer, but they'll come around us at
some point and that's kind of how I feel.
But I love talking to LPs and just getting that story told on a platform
that a lot of people don't have. And so that is it's super amazing for
us. And of course, you can catch the rest of
that conversation on the latest episode of the Deal tonight at 7 p.m., Bloomberg
TV's Serena Williams, known for really getting into the details, remain of
everything she does, including what she's done with her VC fund.
All right. Another person I'm keeping an eye on is
Boaz Wine, seen here the most read story on the Bloomberg terminal.
Of course, he's been rattling the cages over at BlackRock for quite some time.
Three proxy battles last year that failed.
But an interesting story today here that he's really re-upping.
He's basically saying that the stewardship of at least six funds over
there, these are primarily closing funds.
He thinks they're underperforming based on the way BlackRock is doing it.
Not only does he want control over those funds, he's actually seeking board seats
once again on BlackRock itself here, You know, no real sense that he's going to
get any of those. But he's you know, what do you say he's
going for the Goliath, if you will, in the asset management space?
Yeah. I mean, this is the activist investor
playbook, right? Except this time he's focused on closed
end funds that are trading below their net asset value.
So it's a different target, but it's the same playbook.
And he's had success before, I mean, with the Voyager funds and a few others.
But of course, those aren't BlackRock. No, that wasn't Larry Fink.
That was right. No.
Are the last person I'm watching. Speaking of Goliath is Warren Buffett.
He's going to be hosting his first Berkshire Hathaway annual meeting this
weekend, but without Charlie Munger, who passed away last November.
So it's going to be, you know, kind of bittersweet for Warren Buffett, who's 93
years old. And of course, Charlie Munger was just
shy of his 100th birthday when he passed away.
But this is something those who make the pilgrimage to Omaha will also be feeling
the loss. Yeah, absolutely.
Their first year without Munger. Of course, everyone's still there for
the excitement to see. Buffett and more importantly, I guess to
see who everyone assumes are the heir apparent, Greg Abel and Jain, a couple
other folks there as well here. But yeah, really sad now to see one of
the most familiar faces in the world of investing, one that we always look to at
least twice a year for these big meetings and now no longer with us.
All right. In terms of I guess we should talk about
the markets because it was a weird and wacky week.
Yeah. And it's not just equities.
I mean, I know we focus so much on the moves, but you talk about the strongest
week that we've seen for short term treasuries all year long, one of the
weakest weeks we've seen all year long for the dollar.
And then don't even talk to me about whatever the heck happened with the yen.
Yeah, well, I mean, we got to ask the Ministry of Finance over at Japan and
they're not answering any questions. Yeah, they're not taking your call.
No, they're not. They're they're pointedly ignoring us.
They're not commenting. But I mean, the speculation is, of
course, they stepped in to support the yen after got dollar yen got to 160.
But for now, equities finish the week higher and treasuries have resumed their
rally. The yield on the two year getting down
to 4.80%. And the VIX definitely not broken 13 or
nine. This is a close on bloomberg.
There we go. And. And. And. It is time now for next up, where we
highlight the entrepreneurs and founders moving the needle for our economy, our
markets and technology. Our next guest turned her near-death
experience into an A-list skincare empire.
Lima uses laser technology to help treat aging scars and pigmentation in the
skin. Here now in studio, I'm pleased to say
to tell us more about the wellness brand is Lucy Goff.
She is founder of Lima. So, I mean, we have to start with your
origin story. Tell me about this near-death experience
and how that led to your founding Lima. Well, thank you so much for having me
today. Yeah, it was really after the birth of
my daughter in 2012. Everything went wrong.
I caught septicemia and I was in hospital for in the ICU for weeks while
they battled to save my life. And although medicine saved my life, it
came at a cost. I left the hospital and my body was
completely finished. And I was going to all these physicians
and they were saying, Well, actually, there's nothing wrong with you, because
the benchmark for me being, well was I didn't have septicemia anymore and I
just couldn't function. I couldn't stand up.
I mean, I couldn't even hold the baby. So I went to a clinic in Geneva and it
was there that I had a complete life changing moment and that I got I got
talking to a professor called Professor Paul Clayton, who was there speaking at
a conference, and he introduced me to a category of pharmaceutical grade
ingredients that changed my life. And that was really the premise for
starting Lima. It was in an industry, in a supplement
industry where over 90% of the of the products are not proven because there's
little legislation in place. This was a formula that was truly proven
with patented ingredients, all peer reviewed and very different proposition
to the rest of the market. Okay, so you try that and it worked for
you clearly and you bought into it. But how did you turn that experience
into weight? I can build a business off of this.
I can build this central profitable business that others can afford.
I think it was really I used to do the PR for Selfridges, and I remember
vividly standing in the beauty hall launching all these different beauty
brands and just looking at how how clever it was that people took a
commoditized product and turned it into a lifestyle statement for the homes like
Jo Malone turning candles that you get from a supermarket into a lifestyle
statement for the home. And by the same token, I knew that we
had the world's most effective formula. But by making a brand out of this as
well and putting it in a in a copper vessel that people kept out in the home,
I just thought this is these are kind of all the ingredients that we need to
really gain traction in an industry that was not really speaking to the consumer.
It was more shouting to the consumer. And now this has evolved.
I mean, we're looking right now at one of your newer products here, and this is
the laser treatment of the laser device, I should say, that you use on your face.
Is that how it works? Well, you can actually use it on your
face or your body. So this is the this is the Lima laser.
And it's the it really is the future of laser technology because it's a zero
damage laser technology. So traditionally, lasers provide some
kind of damage to your skin to stimulate collagen production.
But at the end of the day, your skin is an organ and it's not really there to be
damaged for the sake of reducing a wrinkle.
And with technologies like this that's actually been used in the medical world
since the 1960s. Yeah.
So it's completely safe, but it's never been brought to the cosmetic market.
And I can't see this whatsoever because I am curious.
I mean, I've seen this kind of stuff in professional dermatologists office and I
guess to a certain extent in these salons.
Now how is the technology in here? Is that comparable to maybe what you
would get in a more professional environment?
So this is actually the first FDA cleared clinic grade laser that's ever
been cleared for at home use. And the reason is because the consumer
is totally protected from the laser. So you can look at it.
It's not going to damage your eyes as retinal protect.
It's great because I just let you take it.
You see, you can still see. So it's not providing any harm to the
consumer. You can't feel it.
I mean, if you put it on your hand, you can't feel it.
Okay. Yeah.
So you put that on romain's hand. This creates pigmentation in the skin.
His skin color is very different from my skin color.
Yeah, that's a good point. How do you address that?
Well, traditionally, lasers are not meant to be used on all skin tones.
So the more pigment you have in the skin, the more risk of damage that there
is. But this is a zero damage laser
technology. It actually triggers a genetic switch
inside each of your cells that basically that halts the aging process.
So you're not providing any damage. So there's no risk to to people using
it. I want to talk quickly about the success
of this and the idea of a business, particularly a growing business, where
you sort of reach that critical mass, where you've got all this demand, but
not necessarily the capacity. To meet that demand.
How have you dealt with this sort of upswell in attention and adoption?
Have you been able to pivot to, I guess, a broader manufacturing
platform? So we're not I mean, we've got an
incredibly stable manufacturing process. There's nothing we've built our supply
chain for success. So, I mean, yes, you always get factors
that come into play. So we were around during COVID, were
around during Brexit. So there's always going to be obstacles
that come in. But in terms of our supply chain, we've
got no problem. We've never sold out on our website,
we've sold out in our retailers like GOOP and Violet Grey and other retailers
that perhaps have underestimated the demand that they would experience for
the product. What's more important for your business
in terms of distribution? Is it selling directly through your own
website or through the third party? So about 70% of our business is direct.
Is direct, Yeah, yeah, yeah. We work off tech margins, so it's a very
different margin to the rest of the beauty industry.
So yeah, we've built distribution centers in the US, in the UK and Europe,
so we're well-placed for a global delivery.
Are you planning to stay a private company?
Yes. All right.
For today? Yes, for today.
All right, good. Lucy, we got to talk again here.
A fascinating product and a fascinating founder.
They are. Lucy Gough is the founder of Olema.
Stick with us. We're going to set you up for what to
watch over the next week. This is Bloomberg. All right.
Closing out a busy week and a busy week up ahead.
And we're going to actually start with some special coverage Monday, Tuesday
and Wednesday, starting at 2 p.m. Eastern time.
The Milken Global Conference taking place out there in Beverly Hills.
We'll have special coverage. A lot of great interviews, including
with the heads of Guggenheim, the heads of State Street, as well as the head of
TCW and the conversations that take place there, you know, that's remain
kind of set the tone for the markets. You know, it really everyone talks about
what is on their mind and it can really have an effect on how people discuss
what's going to happen going forward. Yet the people in that room and the
amount of money that they're responsible for would well make you weep here.
Also, a few things going on overseas. President Xi Jinping of China in Europe.
Yes, he's going to France. He's going to Serbia.
He's going to Hungary. He's going to have a dinner at the
palace. All right.
We also have a big tech summit coming up next week.
Evan SPIEGEL, as well as Adam Neumann scheduled to appear.
It's a big earnings out of Tyson Disney, Reddit and over.
This is Bloomberg and.
