Six rate cuts.
Three rate cuts. How about no rate cuts this year at all?
Live from studio two here at bloomberg headquarters in new york, i'm Romaine
Bostick. Pretty bold call.
It is a bold and Alix Steel. Is that like kind of more hikes then in
theory. All right.
Let's take you out to the closing bell right here in the US.
I'm Alix Steel. All right.
So the S&P is up by 8/10 of 1%. We've got ISM manufacturing with the
headline level. Didn't look great, but underneath things
are holding up really
, really well. And you do see that reflected within the
equity market. A big part of that is going to be tech.
However, you take a look at the Russell 2000, we're still up 1%.
So that outperformance continuing, the economy was rolling over.
Would you really see small caps continue to outperform?
I want to take a look at the 210 curve, because you had Governor Walker of the
Fed in a semiannual report. There's a meeting for Fed officials
going on right now on Michael McKee is they're basically say
ing that he wants
the Fed to buy more in the front end of the curve.
So you really see a bull steepening here because more demand coming in in the
front end of the curve. So yields a bit higher there on the back
end. And crude over 80 or was over 80 for the
first time since November, I don't know remain.
Is that because of demand stronger economy you tell me yeah big stealth
move in the commodities space something I think we should focus a little bit
more on Alex but there's so much to choose fr
om today.
A lot going on, whether it's that rally in chip maker stocks to the sell off and
regional banks, the cracks in the corporate IT market to the resignation
of at least four major CEOs and equity investors taking it all in and saying,
yeah, I'm still buying the dip. The strongest February performance for
the S&P and the Nasdaq since 2015, feeding into a strong start here in
March 2024, as many traders still clinging to their belief that the Fed
will cut interest rates and they will do so
multiple times this year.
That is the consensus on Wall Street. But at least one person out there is
ready to break consensus and say what seemed unthinkable just a few weeks ago
that the Fed maybe won't cut rates at all.
Apollo chief economist Torsten Slok telling clients in a note that a re
accelerating U.S. economy will prevent the FOMC from
easing. Tom Keene had a chance to catch up with
Dawson this morning and ask him for an explanation.
The market now has to realize that the data is just n
ot slowing down.
And if it pivot has given an additional tailwind to the economy and to financial
markets and financial conditions and to capital markets and all that is likely
to continue to be supporting growth in consumer spending and CapEx spending in
hiring for most likely the better part of this year.
Now, if that sounds familiar, maybe it's because well Fed members have been
saying something similar for weeks now. Atlanta Fed President Raphael Bostic
just today reiterating he wants to wai
t to start cutting five other Fed
officials speaking today on the same topic.
And next week, the Grand Puba Fed chair Jerome Powell.
Alex will have to say something, I would think, because he's got two days of
testimony on Capitol Hill. Right.
And what are you going to do when the senators, for example, push back on a
weak economy in their constituents, whereas the numbers continue to be
really good? So here is I try to sum up what Torsten
Slok was talking about. He hit a lot of points and a lot
of
charts in his notes. So I decided to go ahead and pick this
one. So the white line is the Bloomberg U.S.
Financial Conditions index. When it goes down, it means conditions
are tightening, it goes up, it means conditions are loosening.
And the blue line is the S&P. And I mean, I don't know, just look at
it. They're really tracking each other here.
You saw the bottom there in October for both.
And then a grind higher. Financial conditions, looser, looser,
looser. Equity markets higher, higher,
higher.
And that's continuing. What's going to slow that down.
I think the point is, if you have financial conditions continue to be
loose, why would you then wind up cutting?
Would you be cutting into some kind of bubble?
Would you be cutting into a better economy?
And how would that really work remain? Well, the answer to that, I guess,
depends on, well, how you actually view the economy.
Let's get the view of our first guest to help us kick off to the close here on
this Friday afternoon Cath
y, Andrea. Joining us right now, chief economist
over at Nationwide. Kathy, great to see you as always.
You got me a little tongue tied today, but I do want to get your thoughts
really on kind of where we stand right now.
You saw that PC report, you saw the CPI pie the week before.
You've seen the GDP numbers. I don't know.
It seems like a strong economy to me. Unless there's something else out there
we should be paying attention to. Well.
Hi, roommate. Always good to talk to you.
Yeah, there's
a lot of momentum in the economy, so, you know, I do
have some sympathy for what person is is Slack is saying, you know, financial
conditions have eased at a time when you know, we do have that strong momentum
does raise the question, you know, does the Fed really need to to cut rates?
But, you know, I think if you look beneath some of the numbers of the
headline, you do see some slowing in inactivity.
Real consumer spending, which we we got yesterday was was negative on the month.
And and that
suggests that, you know, maybe the consumer's starting to rein
things in a little bit. We had a big pop in personal income but
the savings rate is still really low. Well, you know what?
Below 4%. So and we're seeing delinquencies on and
credit cards and auto loans increase. So to me and our group, you know, we see
the consumer as sort of overextended at this point or at least portions of it.
And they're not prepared for any slowdown in the labor market.
Now, granted, if we don't get a slowing in
employment growth in wage growth,
then consumer could continue to power along and and the economy will.
But, you know, if we got to see some pull back, you know, that's going to hit
the consumer pretty hard. Well, when it comes to the Fed funds
rate and this kind of piggybacks off what Alex was kind of getting at with
regards to at least financial market conditions.
I mean, how restrictive right now is five and a quarter or five and a half
percent here? I mean, I know relative to the last
cycle
we were and that's restrictive, but relative to history, that's still
seems pretty low. And, you know, in real terms, if you
adjust for inflation, you know, we're at a level now that is, you know, typically
consistent with late cycle, you know, and and then the next couple months or a
quarter, you know, tends to be recessionary.
Now, part of it is we haven't been at that restrictive real level for very
long. Right.
So so the real Fed funds rate, you know, is is quite high right now, you know,
o
ver 2%. But we've only been there for for a
short period of time. The longer that persist, I think that
keeps open a question of whether, you know, we end up having a hard landing
for now doesn't seem to be the case. Right.
Lots of strong momentum and and recession fears are behind us.
But the Fed does keep, you know, the brakes on a little longer.
You have to wonder, you know, how long can we persist here?
Right. Remember, the consumers have gone
through most of their pandemic related savings a
nd the housing market is still
pretty stalled because of high interest rates.
So does this, though, become like a chicken and an egg thing?
So everything you're saying is true. And if we get weak data points, then we
start to sort of start pricing that in. But then we anticipate that the Fed will
cut, maybe bring forward those cuts, therefore that loosens financial
conditions and actually inhibits the transmission of monetary policy.
Is that the kind of weird hamster wheel that we're in?
Well, y
ou know, usually the Fed does, you know, ease and cut interest rates
and financial conditions ease once there's signs of a slowing economy.
Right. But this time, it does seem a bit
different, Right, that they're going to error on the side of being slower to
ease and cut rates. You know, there's that old adage, you
know, they ride the elevator on the way down and the escalator on the way up and
they're raising rates and the opposite this time.
Right. And I think that just still, you know,
gives u
s some pause. They are right.
Again, things look good, but then they cut rates.
You know, it's supposed to help, you know, buffer the economy, but it doesn't
really necessarily save it from from a downturn.
All right, Kathy, always great to talk to you.
Kathy NASDAQ there, chief economist at Nationwide, helping us kick off to the
close here on this Friday afternoon with a lot of great interviews up ahead on
the big program, including a sit down with Antonio Neri, the CEO of HP, as a
company cutt
ing its full year forecast. His take on what's driving the slowdown
in corporate I.T. investment, except that's Governor
Walrath or Williams or Waller, one of those guys.
Anyway, we're also going to take a look at Fubo.
It is on the move after the sports streaming platform released some
results. A conversation with the CEO, David
Gambler, about the report, as well as the company's legal battles against the
likes of Disney and Fox. And a closer look at NYSE, the New York
Community Bank plunging t
he bank, flagging material weaknesses, and a CEO
who's out the door. A deeper dive into our stock of the
hour. Stick around.
A lot more coming up right here on the close on Bloomberg. We already know that the social media
platform Reddit is planning to IPO this year.
And now some fresh details as to when that might happen.
The Wall Street Journal reporting that Reddit is preparing to IPO this month
here in the month of March and looking to aim for a range of valuation, range
of $31 to $34 a shar
e in that IPO. That would give it a valuation of about
six and a half billion dollars. Once again, this is based on reporting
from The Wall Street Journal. Their reporter finding based on people
familiar with the situation there. Reddit will debut at some point this
month looking for a range of 31 to $34 a share Alex.
All right. Looking forward to that.
They're also allowing to some employees to sell some shares in that IPO.
All right. Let's get to shares of HP.
They're in the green after initia
l weakness.
The company cutting its full year forecast, citing lower demand for
networking products and a crunch in computer chip availability.
Romanian. I sat down with CEO Antonio Neri about
the outlook. Supply is start to improve.
We have already have a low supply but is being now held through either customer
acceptances or customer readiness to accept these products because they need
the space, the power and the cooling. And in some cases, you know that they
are taking a little bit longer th
an we expected and we're going to have a lower
revenue convert in the back half because of those two issues are going to be much
better manageable. Say lead times continue to be long, I
mean, in the 20 plus weeks. So this is the reality we are dealing
with and we are setting expectations upfront with customers.
That obviously is going to take that long time to get it.
But the demand continued to be very strong.
The pipeline is very strong. We see now demand in the enterprise
space, in the influe
nce inside and this is one of the benefits remain with as a
service model because this these systems are very expensive near the low, low
power. Most of the times they don't have
neither the power or the cool in the space.
And honestly, they don't want to outlay the massive amount of CapEx upfront.
So that's why RHP Green Lake value proposition is going to help us going
forward. And that also will smooth the revenue
linearity of the systems so that recovery In terms of lead time, does
that line
up explaining why your back half of this year outlook looks a little
bit better? You cut your full year guidance, but it
does still look a little bit back loaded.
Is that why? Part of Alex and also part because we
also have a lot of systems now being installed that takes, you know, another
couple of quarters to get the acceptances.
Remember that these systems, we recognize many of the time with
acceptance not as a type of shipment. And so you have a combination of better
supply and a significant
number of acceptances that will materialize on the
back of what I understand. Maybe you can help me clarify is that
Dell seems to be doing pretty well. So I'm just wondering what the
difference is between you and Dell. Is it the CPU's like, where is it
trickier for you? I don't think there is that much
difference, to be honest with you. But the investors think so because the
stocks are reacting differently. Yeah.
Well, I think the networking softness is is actually affecting us.
They'll have a
networking based on it at all.
And remember that we deliver amazing growth in the last two years and now
you're going a little bit of a slowdown. But when it comes to the are we booked
$4 billion of cumulative orders and and we have grown equal or maybe even in
some cases better than Dell. But our backlog sits at $3 billion.
As a as I looked at yesterday, Dell has 2.9 billion.
And the difference for us is going to be a favor for us as we go forward because
we have deep expertise in data center s
ervices.
Dell doesn't have that. We have two data centers that now are up
and operational to provide you as a service to customers.
That would be a benefit. Third is we have a networking business
to scale systems that they don't have either, particularly with HP Slingshot,
and that is HP, Greenlake and Greenlake will give customers the ability to
access this technology without paying CapEx.
Today, Alex, the vast majority of the action we have seen has been in mobile
builders and those are, you k
now, our customers do just that, a lot of
capital. And then, you know, just in Egypt was a
bit of metal. A lot of analysts raised concerns on the
call about the acquisition of Juniper Networks, a pending acquisition, I
should say, and whether that pending acquisition did maybe cause a little bit
of a chill for customers adopting new orders in the quarter.
We have not lost one single deal, but a single customer and partner we talked
to, they were excited about this combination because through the
se
inflection point you're going to need more network ports, not less ports, and
the ability to really bring together the native world, the cloud Native world is
what customers are going to struggle. And as you think about the combination,
HP will double the size of the networking business.
At the core, HP will be a networking company that will provide hybrid cloud
anyhow services. From a shareholder perspective, this is
amazingly accretive day one and we have a path to create more synergies as
we go
forward. The CEO of Hewlett Packard Enterprise,
Antonio Neri, speaking with me and Alex a little bit earlier today here.
We should point out the shares have really been oscillating.
They opened not down by about five or 6% and now in the green here.
But I thought you raise a good point, kind of the disparity that we're seeing
in the shares of Dell, which are at record highs, having their best day ever
and not necessarily seeing that same sort of juice in HP.
What's going on here? Yeah, and
you look at a contract and
realized basis and even before today, like those are two different stocks on
two very different trajectories. And I have to wonder, too, do we just
figure out that Dell has an AI component that you can actually invest in that's
making money? Like, is that what's happening?
Well, one thing that I've been trying to get to the bottom of is Dell was very
candid about the amount of sort of A.I. optimized servers that it actually
shipped during the quarter. HP wasn't necess
arily as forthcoming
about the exact amount. He talked a lot about the backlog and
about all of these orders in the system. But as you know, they don't actually get
that cash until they deliver. And they had troubles being able to
deliver because they can't get the GPUs. Yeah, exactly.
But then again, the stock was down a lot more and it was up despite a downgrade.
So a little bit of a pass. All right.
Got to go here. We'll be back in a moment here with a
closer focus on the streaming wars, the
future of streaming with the CEO of
Fubotv. Stick around.
That's coming up next. This is Bloomberg and. And live streaming platform FUBU is on
the path to major growth and they have the revenue and subscription numbers to
prove it. Michael Pachter joining us right now.
He's the managing director and equity research analyst over at Wedbush
Securities. It's got an outperform rating on the
shares this year under pressure here on the day.
But Michael, this is really about the long term story here.
A
nd I guess whether FUBU is now kind of the new cable bundle.
Yeah, I think that's right. And, you know, obviously we have
choices. So a lot of people think YouTube TV has
already won. What Fubo has done differently from the
others is they've really focused on the sport.
So they have the same news offering and the same kind of basic cable package of
the ABC, NBC, CBS package. But they also have a lot more sports.
So they're going for the sports fan. It appears to be working.
And I think the best
part of the story is they were you know, they burned only
about $3 million of cash in the fourth quarter.
They're on the precipice of being cash flow positive.
And once they get there, I think the stock actually works.
Do you think that's Baloo, which is the Disney Warner Brothers Discovery Fox
Sports Unit here that everyone is calling it?
Is that sort of the existential threat, though, for football?
It is. And I think that Disney is is and has
been behaving especially stupidly. I mean, how they
've approached
streaming. You know, these guys are all all those
participants are cutting their own throats on retransmission fees because
they're going to give that undecided cable subscriber an excuse to cut the
cord. And so, you know, ESPN is not going to
get its ten bucks a month per household with that, households stop subscribing.
It's a really dumb idea. But, you know, will they do it?
Sure, they'll do it. I think through HBO's lawsuit, which is
unlikely for them to win. I mean, I don't t
hink they're going to
prevail, but it's going to serve as an advance warning.
The legal term is interim effect. They're going to scare Disney and the
rest into making sure that they cross every T and dot every I and they don't
collude. So I think it's really smart, you know,
positioning by football to say you guys better not act out of line and we're
going to be right on you in court. I expect that the sports leagues are
going to continue to charge whatever they can charge.
But you get a better
package if you're a sports fan by subscribing to Fubo than
you will if you subscribe to YouTube TV plus the new sports offering.
Is there any way, though I mean, I understand the logic of why they would
pursue a lawsuit like this, but is there any way that maybe this ends up sort of
coming back to them, the idea here that they're going to get push back?
And I don't mean just from the ESPN's and the bigger boys, but even some of
the other competitors that maybe not necessarily want to side with E
SPN, but
certainly don't want Fubo Fubo to take the crown.
Well, I think that anybody who behaves in a retaliatory manner is going to
suffer a lot. I don't expect that anybody really can
retaliate against them. And remember that, you know, football is
not suing CBS or NBC. They're they're suing this partnership
and saying that they're colluding to kind of pull content from other other
providers. It's not in the best interests of
consumers. If we have to subscribe to Peacock to
watch a playoff ga
me that, you know, that was an interesting experiment, but
it's really not good for consumers. And, you know, I think that the FTC is
going to get involved in this. Ultimately, Google is going to
accelerate that, of course. I just don't think that they're going to
win. So what's going to happen is it's going
to drag out for two or three years. And we know that Disney will be on best
behavior during those two or three years.
They're going to step out of bounds and risk losing a lawsuit.
So they'r
e going to they're going to behave properly.
And I think football's going to thrive. I really do.
Hey, Michael, great stuff. Really appreciate it.
Good to see you. Michael Pachter over at Wedbush.
So let's continue the conversation and do a deeper dive with the man himself,
co-founder and CEO of Weibo, David Gansler.
Hey, David, thank you so much for joining us.
We really appreciate it. I want to start where we just left off
with Michael Pachter, which is the lawsuit.
Have you spoken to the Just
ice Department about your concerns about
Sulu, for lack of a better word? Well, you know, obviously I can't
comment on any of the discussions that we're having.
But as you know, we have filed the complaint.
And even before we filed a complaint, you know, the DOJ had decided to look
into it. So we'll do our best to provide as much
information as possible if when asked. But I think there's enough evidence here
that warrants them to look into it. Disney, Fox and Warner Brothers have
said they won't
negotiate sports rights together.
So how does that actually in your mind? I mean, you laugh, so it seems like you
don't believe it. Why not?
Well, I don't know. I don't know if anyone in the world can
believe it. Think about it this way.
The three of us decide to buy a piece of content.
Let's say you buy it, and then we're all looking at the subscriber numbers of our
joint venture. And the subscriber numbers don't move.
Why would I then want to bid on this type of content or piece of content th
e
next go around? So, you know, it just doesn't make any
sense. There have there has been and always
will be some collusion, whether it's explicit or implicit.
But again, I'll leave that to the DOJ. I'm sure there's a lot of smart people
there that know where to look. What's the then the strategy here going
forward, David? I don't mean specifically with this
lawsuit, but the idea that you are trying to build an ecosystem here, an
ecosystem that could potentially not include some major sporting e
vents.
Assuming that this deal actually goes through here.
What then becomes of what you're trying to build?
Yeah, well, that's actually not the case.
You know, we have contracts with these companies that go well beyond the launch
of their joint venture. Obviously, I can't comment on the deals
themselves, but we have these deals, but we're already missing content.
We're missing a key component of what you would believe to be a very, very
strong package, which is to the Turner Network and TBS for
basketball, March
Madness, hockey and baseball playoffs. So, you know, again, customers vote with
their wallets. We've done a tremendous job this
quarter, again, adding record numbers across all of our top line KPIs,
revenue, advertising, sales, subscribers.
And you know, on the bottom line, four quarters now that we have delivered on
that front this quarter, our most recent quarter now 00 million improvement in
free cash flow. Right.
And so, you know, we're doing our jobs will continue to do t
hat.
And, you know, in parallel, we'll we'll be dealing with with these three.
Yeah. Defendants.
Where are your customers coming from, though?
The new customers, I should say? Are we talking about new people kind of
in the streaming space or are this sort of people gravitating away from the
individual streaming packages and going to something that's a little bit more
aggregated like like what you have? Yeah, Well, I think if you if you're a
focus group of one, I think you'll agree with me that i
t's very difficult to jump
around from service to service. We offer an aggregated service with over
50,000 sporting events in the platform. We have a premium experience that's
personalized with, you know, one bill easily manageable, you know, And so we
think that people will continue to look for an aggregated package of package
with as much content as they can get. And by the way, that is already
evidenced in what you've seen. I mean, these these companies have
started with plus services that we
re very thin.
Then they decided to go into bundling and bundle with, you know, Verizon and
other services. I think Netflix and Paramount was one of
the more recent ones that I've seen. And now ultimately, that hasn't worked.
And so the churn levels are too high. And so now they're thinking.
Why don't we circumvent M&A and just jump right into a joint venture?
That, in my view, is more like a sports cartel.
Those are allegations, not facts. We just want to remind our viewers,
allegations is true.
Okay.
So, David, the broadening out in terms of the ad landscape.
Right. Fubo has really been a beneficiary of
the ad dollars moving from linear to digital.
But I'm just wondering, at some point we have to reach saturation, right?
Like every ad now has the ad tier and then the non ad tier.
At one point we just reach saturation. You're not able to benefit as much.
Yeah, well, I think on the subscriber side, you're already seeing that, right?
If you combine the pay-TV ecosystem with the virtual e
cosystem can get to about
75, 80 million households.
If you look at Netflix, which is, you know, the the pinnacle of all streaming,
they have roughly about 65 million households.
So it's unlikely that any of the others will achieve anything close to what
Netflix is able to achieve in the United States, which is obviously the key
market. From an advertising perspective, you're
completely right. The inventory is undifferentiated.
In our case, it's very different. We skew male 18 to 49, which is a
highly
coveted demographic, and most of our programming is sports related.
And so advertisers love buying inventory and sports programming
and drives brand recall, and there's lots of Halo around it.
So we're actually very well positioned as it relates to advertising.
What about in terms of differentiating, like I'm sports betting or something?
I mean, ESPN is thinking about doing that.
You walked away from that, but do you need that now, particularly for a
demographic is just so targeted to tha
t area?
It seems like sports betting is a no brainer.
Yeah, sports betting is a no brainer, by the way.
Everything that we've ever said or developed has been copied by all of
these services. Our strategy for the sports stay for the
entertainment or multi-view that YouTube has recently released.
And, you know, we stepped away from betting we were planning to do it
another way when the markets started to turn against us.
But, you know, as part of the claim that we have, we have a significant numbe
r of
restrictions that these programmers force us to comply with, that they don't
force their own services to comply with and give themselves a lot more
flexibility. So this is one of the things that you
mentioned that we would love to explore because we think we can do a great job
for our customers. Again, leveraging all of the data and
the capabilities that we have to drive a more personalized and premium
experience. Can you continue to do that, David,
Longer term as a standalone company? Well
, you know, lots of companies have
been able to succeed. Netflix obviously started a long time
ago. Spotify has been able to do that
successfully. I think under normal competitive
circumstances, just fair pricing. It's the only thing we would require.
You would see a very different scenario because, as I said, we've been able to
amass 1.6 million customers with a price that is higher than what YouTube TV
offers with 17 less channels. So how can a company like ours public
four, or I should say, s
ince our listing on the NYSE, you know, has exceeded
guidance, 11 out of 12 quarters improved on the bottom line by about I think it's
four quarters now in a row, has 17 fewer channels, a higher price and obviously
very little margin to speak for. So, you know, my view is once that
happens and we can sort of play on the same playing field equal footing.
This is a company that can ramp up, I would say, relatively quickly.
All right, David, thanks a lot. Super appreciate your time today.
Thank you
so much. CEO and co-founder David Candler joining
us. And as a reminder, we are out to Disney,
Fox and Warner Brothers for comment on that lawsuit.
But remain you look at the stock, though, over Fubo.
It's down about 8% today, but it's down about 47% since the high that it hit in
December. Yeah, I mean, this is now about
monetization and the idea that if they are stealing people or getting people, I
guess to gravitate from that sort of bifurcated system to a more aggregated
system here, are the
y the beneficiaries or does they sort of maybe go to, I
don't know, an aggregator like Warner Brothers Discovery, which I know they
wouldn't call themselves that, but that's effectively what they've become.
Yeah, Yeah. I honestly I can't keep track anymore of
like who has what, what app has what what sports team is where can you know.
But you know, that just means I just don't watch anything anymore.
So you said, look at the wall. It's fair enough.
But you know what? Yeah.
You can always find Bl
oomberg. You can always find we have our own app.
It's right there. It's amazing.
And you can watch us every day. All right.
Let's turn now to some breaking news we had earlier in the day.
Bloomberg learning that boeing is in talks to acquire Spirit aerosystems, a
move that would reclaim control of its struggling former aerostructures unit
and the main supplier at the center of quality issues affecting the 737 max
airliner. Bloomberg intelligence senior analyst
George Ferguson joins us now. Hey,
George, gain this out for me.
What happens with this over the next six months?
I mean, I don't think it's going to take that long.
And I would think that Boeing could strike a deal that would have spirit
purchased in the next month or so. And, you know, right now, the CEO of
Spirit is a gentleman by the name of Shanahan.
He was a former Boeing executive. I don't think I think Boeing's already
there on the line and they just have a lot more of a presence at Spirit our
systems. And they'd be in t
he room when it's time
to make decisions about things that do impact quality.
And so I think that's the big change is just having a very direct reporting line
on on issues about manufacturing. Well, I get that in theory, George, but
haven't they been in the room on these decisions already?
Haven't a lot of the decisions, at least the ones that have impacted this
company, been decisions that have been made less on the Spirit Aerosystems side
and more on the Boeing side already? Well, I mean, I th
ink that Boeing has
absolutely influenced the decisions and, you know, to date, but they haven't been
there to implement them or Spirit's been implementing them on the line.
And so I do think it takes on a different complexion.
I think it takes on, you know, maybe a higher sense of urgency.
I think it takes, you know, the employees know that they ought to be
answer in the Boeing in a straight line, not through spirit management.
So that eliminates ambiguity. I do I do think it's a positive.
But
I agree with you. Boeing's already had a lot of influence
in this company. Yeah.
Did two wrongs make a right? Does a have a wrong and a full wrong or
some right make a right? Hey, George, thanks a lot.
We appreciate it. Best analysis there on the St George
Ferguson at Bloomberg Intelligence. Let's stick with M&A, but go to tech
right now. Our next guest expects the positive
momentum will continue here in the studio with more.
As Ted Smith, a partner, co-founder and president of Union Square Advi
sors,
which has helped more than 175 deals valued in excess of 29 billion.
And you're probably really happy we're not asking you about spirit and buying.
Yeah, okay. Tech M&A, what can we expect and where
in the tech space? I think we're going to see a certainly a
better year this year than we saw last year.
Last year was sort of the year to forget in tech M&A, we're seeing a lot of
positive momentum both from corporate buyers as well as private equity buyers
that fuel the space. Certainly can't
watch this show or any
other news show and not talk about AI. So we're certainly seeing a lot of
activity around AI. But what's most interesting to me is how
quickly we've gravitated to the use of AI for real enterprise use cases.
So things that are actually going to help the CFO, things that are going to
help the general counsel, things are going to help senior executives do their
jobs better, make their companies more efficient.
Right? So we're seeing a lot of investment
interest in that. So
is the investment interest, though,
in the providers of those AI tools or the beneficiaries of those A.I.?
Well, the interest right now is in the providers of those tools, and that's
certainly where we spend our time. Yeah, So talk about it.
I am curious though, about the end user, meaning I mean, I'm talking primarily
come from the corporate side, not not for individual consumers here.
Have we reached a stage here where the adoption or the interest on the
corporate side is enough to sustain, I
guess, some of these sky high valuations
and more importantly, some of the sky high expectations that investors have?
I think the valuations are still sky high and we have to grow into those over
time. But there are real companies that are
using real large language models, real AI, to do things like analyze
conversations in a medical setting to get to better outcomes for patients, to
help the general counsel review a raft of contracts and understand where are
the risks for the business. Those th
ings are actually in companies
today. They're being sold into those
enterprises and there's real value to be had in those.
Whether they'll grow into an open A.I. like valuation, that remains to be seen.
The bid ask spread. Where is it?
Are we reaching a happy medium here? Who's the holdout?
I think right now we are we up for a long time and I would say that 2023 was
characterized by the holdout on the seller's parts.
They were still stuck in 21, early 22 valuation land.
Most of the buyers quickl
y adjusted to the 23 realities.
It took a while for the sellers to come back around.
Now, I think we're much closer and it's certainly one of the reasons we're
seeing more activity. How much of this will provide private
equity with an exit that they may not have had before?
Well, it's interesting because while we're certainly seeing activity on the
IPO front, right, lots of news around Reddit and others, we don't forecast a
significant resurgence in the tech IPO environment.
It just takes you ha
ve to be such a large company now to become public and
to want to be public. So the real private equity exits are
more likely sales to strategics or sales to other private private equity.
Well, that's what I'm curious about. Do we even need that path?
We actually need. But is that pathway to the IPO as
important as it may have been? I don't know, five or six years ago when
there were fewer options for an exit? That's exactly right.
I don't think we needed as as robust. More to the point, we've r
ipped out a
lot of the system that will allow those middle sized companies to trade
effectively. Right.
So you're either a large public company or you're private.
I am curious, though, for those companies, the private companies that
maybe see a path for investors that doesn't involve an IPO, does that change
their management approach or more importantly, how you as an investor?
Advise them on how they manage the business.
It really doesn't because the reality of the statistics behind it, the dat
a show
that for a venture backed company that gets to an exit more than 95% of the
time, that's through a sale. So that's been true for many years.
So it doesn't really change the dynamics of how you manage it.
It may change the dynamics of which ones you think could get public in the
current environment. All right.
Great to have you here. Ted Smith over Union Square Advisors.
A closer look here at the tech landscape.
And I guess maybe, Alex, a pathway not to an IPO, but certainly into an exit.
Yeah, I guess you have to wonder what the regulatory backdrop is going to look
like. And some deals like you make an argument
like, let's announce it now, wait out the clock and see if something different
happens mid-November of this year as you get sort of a changeover maybe in the
government. Yeah, I mean, out the clock there.
Yeah, but in the meantime we just have to get.
Social media site Reddit going. But coming up here, we're going to take
a look at a stock that's already in the public dom
ain, though not necessarily
doing well. New York Community Bank Corp sliding
here. More of the internal issues rattling the
market. That's coming up next after the break.
It's our stock of the hour right here on Bloomberg. Huge week ahead in politics on March
5th. It's Super Tuesday, and former President
Trump is looking to cement his place as the Republican nominee.
Then two days later, as the border, the economy and the November elections
dominate the headlines, President Biden will deliver hi
s State of the Union
address. Balance of power as Joe Matthew of
Kailey Leinz and Bloomberg's top political analysts will bring you live
global coverage of both events starting Tuesday, March 5th.
Bloomberg Context changes everything. All right.
Time now for our Stock of the Hour. Taking a closer look at the shares of
New York Community Bancorp falling today after the regional bank flagging
material oversight and how it tracks loan risk.
The CEO out new leadership here as they try to grapple wit
h the turmoil.
Investors heading for the door. Abigail Doolittle joining us right now
for a little bit more on this. And Abigail, we'd be remiss in not
pointing out we're just a few days away from the one year anniversary of the Sjb
collapse back in March of last year. Here, I know this isn't quite a repeat
of that, but still kind of jarring to see that the regional banking crisis
still apparently had not been resolved. Yeah, that's a great point, because it
seems to be ripple effects in some wa
ys, even though this is fairly different in
the fact that they are saying, as you mentioned, that the oversight relative
to the loans that they've made, well, it really just wasn't so great.
They weren't assessing risk appropriately.
Now, the good news around it is they're saying that their 2023 results aren't
going to be affected. They're also saying that the loan loss
provisions relative to 2023 aren't going to be increased.
But relative to the future, we don't know because a big portion of it
is
commercial real estate. So that, of course, is under pressure
with not great occupancy relative to office and then rising rates.
Now, they, of course, have a big portion of their portfolio in rent regulated
apartments right here in New York City now.
The risk to this is a lot of those loans were made when rates were when Alex got
her mortgage at like 1% or half a percent.
Now it's 5%, 6%. So the cost of capital really comes into
question. One other good thing is the fact that
liquidity well
is good and bad. Last we knew, liquidity was decent in
February, but they clearly admitted what their deposits were now, which if it was
good, you would think that they would include that.
So I should actually backtrack and say we don't know about their liquid.
And also, of course, New York changed the rules back in 2019 for rent
controlled apartments. So usually you'd go in, you'd buy em,
you fix them up, you rent them for more. But now there's a cap and that's where
we really cap their profita
bility. What's interesting, though, is if you
take a look at going forward, you know, they were hailed as being awesome
because they rescued some assets from a signature.
And I wonder if regulators are going to be like, let's rethink what awesome
means and what banks can actually take on other areas of distress from other
banks. It's a great point, Alex, because one of
the big problems for this bank is the fact that they did acquire Signature
Bank and other banks. So they went above 00 billion i
n
assets having nothing really to do with the rent regulations, but the regulation
on them, period is much bigger. So there's much more stringent controls
relative to New York Community Bank and any banks with assets over 00 billion.
Now, relative to whether we're going to see this come out into other banks.
The top 25 regional banks, they have about 13% commercial loans.
And I'm told that that the stress is pretty manageable for them.
But the smaller banks, we could see more blowups.
About 44%
of the commercial real estate loans are owned by those smaller banks.
So it's an interesting mix of like a little bit of idiosyncratic here with
New York Bancorp. And then the broader picture.
I was speaking to somebody a big time New York developer, actually a national
developer who will be speaking to in a few weeks.
And he was saying he doesn't think it's going to be as bad as expected because
banks don't want these assets. They're going to try to work it out to
the best of their ability. But
if you have a bank in this position
who may not be able to work it out, then it kind of creates a double whammy.
Right. And again, you saw the rent stabilized
issue. Wedbush had a cool note out that just
sort of said here are the other banks that had that New York rent regulated
market. All right, Abigail, thanks a lot.
We really appreciate that. But the thing is, with shareholders and
with the company, like they knew that that happened.
That was 2019, right? Like, that shouldn't have come as a
surprise on top of that. So it is a surprise to me.
Why it's such a surprise. Yeah.
And I don't know if it was a surprise. I mean, we had seen the softness there,
but I think when we go back, what I was using, the help that they did do a last
year, I think bought them some time. There are a lot of people I think they
look at first the public and say, maybe that's the one.
They should have put a lot of more help into.
Yeah. All right.
Well, coming up, we are talking to Michael Couture Gugino, pr
esident,
portfolio manager over permanent. This is Bloomberg. This is the countdown to the close
Romaine Bostick alongside Alix Steel. 10 minutes until we get to those bells.
Alex And remember earlier this week, you said it was a nothing burger.
Well, guess what? The market as well is something burger,
I don't know is not quite. I don't know if this is really a strong
rally, but I think some people will take it.
I mean, no, fair enough. And like, it's definitely tech driven in
some areas, Right.
Like NetApp is doing really well.
Dell's at a record like, fair enough. Like they have.
And that's a broadening of the rally. Those are nice good burgers.
But on the flip side, let me point two things.
At one, Apple really seemed to be breaking down miraculous the session,
but were under 180 and that was that level.
Well we might see some shorts coming on And then check this one out.
The gambling stocks, when you also have Las Vegas Sands Macao gaming revenue
disappointed and January Las Vegas
strip gambling revenue fell almost 4% really
wasn't at the Super Bowl time that was supposed to be like gambling for
everybody. I thought so, too.
Interesting move there. But also, I mean, maybe there was such a
run up in those stocks in anticipation of the Super Bowl being there.
You get a little bit of a pullback, but definitely some softness in those are
those Macao number that I was kind of seeing.
Yeah. Here we do want to say here in the U.S.
as we countdown to the closing bell with 9 minut
es to go.
Michael Fujino joining us right now, president and portfolio manager at the
Permanent Portfolio Family of Funds. Mike, great to have you here on the
program. And I mean, I'm sure you've seen the
market action for the first couple of months of the year, which I think defied
a lot of expectations, a pretty strong market, at least here in the U.S..
And Mark, just kind of starting off on the same foot.
Are you buying it? We're not buying it, but we are enjoying
the positions that we are on
. And we've actually trimmed a little bit
as well into some of the the highs and some stocks, even ones we like, like in
in video, for example. And so, you know, I think the story for
equities is strong, but they're not cheap.
And and if the Fed is darned if they're going to cut rates soon, that's a good
argument for stocks. If there's a soft landing or, you know,
landing or whatever. That's also a good argument.
And there's a lot of energy around technology and artificial intelligence,
especial
ly for companies that are disappointing.
And so I think that's been the big driver this week.
Well, let's talk a little bit more about that, Michael, because, I mean, I know a
lot of folks out there are still looking for opportunities.
And as you said, not a lot is cheap, but that is clearly what people are looking
for. Maybe they find it in the small and
mid-caps. Maybe you could find that in the big
caps. Do you find it anywhere?
Well, I would argue that maybe they say they're looking for chea
p stocks, but
they're actually buying the ones that are pretty expensive.
But but, you know, that is there's a reason for that, though.
I mean, I joke, but these are the companies that are growing earnings and
revenues and cash flows that at a tremendous clip.
And so it makes sense that investors are going to be attracted to some of those
names. And interestingly enough, the names that
have disappointed you know, you look at Snowflake earlier in the week, you look
at Palo Alto Networks recently,
companies that have disappointed have
been punished. And so it does make sense in a in a
certain way that investors are going to where they are.
But but the sort of consolidation that we've seen, I don't believe is healthy
in the longer term. And we do need some diversification and
some broadening. And hopefully we continue to see that or
start to see it more than we have so far.
So, Michael, it's Garp. Great growth at a reasonable price.
I feel like that's the Holy Grail for everybody.
Where d
o you see that potential the most?
I see it in areas that aren't running up, to be honest.
But we're long term investors and we're looking out over, in some cases, a
multi-year time horizon. So we would look at some of the areas,
know some of the industrials, energy and commodities we think are are not they
have not performed that well. And we think longer term, that area has
a lot of potential to it, especially if global growth resumes.
The dollar comes off. It's almost decade highs and supply
demand constraints exist in an emerging growth situation globally.
Those companies tend to also manage shareholder returns very well with
special dividends, regular dividends, buybacks, etc..
And so we think for patient investors with strong stomachs, that's an area
that is a lot cheaper in many cases, stocks, you know, trading at below
market multiples. Biotech would be another area,
especially those that have cash to make acquisitions and certain,
you know, therapies that maybe they're not dev
eloping but can buy that capacity
somewhere else. Amgen comes to mind as one of our
holdings in that area. So there are opportunities.
But broadly speaking, we're not buying stocks right now because they're not
cheap, but we are enjoying the names that we own in our asset allocation, our
bonds cheap. They were cheaper yesterday.
They may get cheaper in the future, but we again, as diversified investors, I
mean, we run a bond strategy specifically as well as an equity
strategy, but we also run ou
r permanent portfolio, which is an asset allocation
model. And so in that model, we're pairing up
equity exposure with bond exposure, and we've been finding value in shorter
duration investment grade corporates where you're getting nominal yields
five, six, seven, in some cases higher percent.
We're not going out that far on the yield curve and then extending duration.
And for the moment that makes sense. You know, there's going to be a time to
extend duration. Some firms have already tried to d
o
that. I think we've been a little bit cautious
on that because we still see some volatility in interest rates, whether
it's the Fed, whether it's the uncertainty of the inflation picture,
which, you know, maybe having a tougher time going from 3% to 2% and maybe the
Fed's going to be higher for longer. So at some point duration will want to
be extended. We're not sure where.
So we're playing it cautious and we're finding yields that work at staying
pretty low in duration. How much confidence d
o you have right
now or certainty do you have right now, Michael, in your view, about the pace of
rate cuts this year? A big debate right now, not just whether
the Fed will cut rates, how many times it will cut rates, but now, of course,
some discussions about whether they'll cut rates at all.
Well, it's hard to see a recession with, you know, sub 4% unemployment and
consumer spending. I, I know it's out there.
And we actually do think some of the anecdotal information out there is is
leading to
a a really gradually paced move towards a slowdown.
But. But that's not, you know baked in it
could change and so it's hard to see that sort of situation.
So with without a slowing down of the economy, whether it's aggressive or not,
the Fed can afford to be patient and stay higher for longer and manage
inflation. If it is stubborn getting from the mid
threes down to two, you can stay higher for longer and see what happens If the
economy does slow quickly or the pace pick ends up, then they can
always cut.
We think cuts are going to happen at some point, but we're not predicting
that. And as a result, that's been a little
bit behind our, you know, hesitancy to extend duration at the moment.
Yeah, inflation could pick up again. You know, I don't nobody's really knows,
but oil prices are going up again. Oh, Alex.
Oh, I know. They're good.
Yeah, Your number was pretty good. Yeah, It confirmed that inflation wasn't
as bad as maybe the other numbers a week or two ago.
Yeah, but you could e
asily, you know, energy prices go up.
You've got global risk, geopolitical risk that inflation may be getting
stubborn for consumers and that means higher interest rates for longer.
So, you know, you're out there. We don't know yet.
All right, Michael, going to have to leave it there.
Always great to talk to you, Michael Kors.
You know, they are president and portfolio manager at the Permanent
Portfolio Family of Funds, as we count you down to the closing bell here on
this Friday afternoon, abou
t 2 minutes to go.
Stick with us. We're taking you to the bell and beyond
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 and here they'll take us beyond the
bell. It's a global simulcast with Scarlet Fu
Carol Massar Tim Stanwick And welcome to our audiences across our bloomberg
platforms,
television, radio originals, our partnership with YouTube here.
A strong day this Friday, a strong week with stocks, Carol at record highs, gold
at record highs and Bitcoin having its best week in a year.
Yeah, I don't know what that says. Risk on trade, I guess, is kind of the
net net, right? Take a look at the semiconductor index,
ISE. It's up for a second day in a row,
rallying more than 4% today. That's after an almost 3% gain
yesterday. So we continue to see that sector really
on fire, if
you will, this week alone. And in the last I actually feel like
year to date here easily, we spent a good portion of our 2:00 hour talking to
Torsten Slok over at Apollo about his call that I would say reverberated in
the sense of a lot of people are talking about it.
But if you look at yields and if you look at equities, not a lot of people
are actually buying into his call that the Fed is not going to lower rates this
year. But I think it does add to the chorus
that there are a handful of peop
le out there who say, okay, well, the next move
from the Fed could be keeping rates where they are or in fact, making them
higher, maybe making them higher, although some
Fed officials have come out. John Williams notably saying that he
thinks that the Fed will end up cutting rates.
What interests me, given the slow move up, the melt up in prices, is that
volume is actually higher than the 20 day average on a day like today.
Typically when you see a melt up, you see less involved participation.
And interesting, because Apple had a terrible day and it has been pretty
terrible, but small caps breaking through that December high.
So if we can really go without Apple, I think that could be quite interesting.
Remain. Well, we definitely did it, at least on
a weekly basis for one week here for an across the screen here on this Friday
afternoon as we get the closing bells here in New York, the Dow Jones
Industrial Average only finished the day higher by about 90 points or so, about
2/10 of a
percent here on the day. On a weekly basis, though, it is going
to finish in the red. The S&P 500 bucking that trend, up about
8/10 of a percent on the day and about 1% on a weekly basis.
The Nasdaq composite higher by about 183 points or more than a percent here on
the day. And that's going to be good enough to
lock in a 2% gain on the week. But let's go to it.
We've been talking a lot about the broadening of this rally.
And you did get that once again on the day and on the week.
The Russell 20
00 up 4% here on the day, 3% gain logged on a weekly basis.
All right. Let's get to back to the S&P 500.
Just looking a little bit deeper into the index and scarlette.
Most of the names in the index higher today, 307 to the upside, 196 lower on
the day. So really seeing some fairly broad based
buying, if you will, certainly among the big caps.
Yeah, broad based buying, but technology continues to lead the way.
Take a look at the eye map and it shows technology leading the advance up 1.8%,
thanks
to NetApp, among others. Energy stocks also getting a lift as WTI
moves past $80 a barrel. You have 22 out of 23.
Big cap oil stocks higher today. Rates bring up the rear, up 1.1%.
And on the flip side, the weakness is really in the utilities, the financials
and the consumer staples. All right, folks, let's get to some of
the individual gainers, if I may, in the Friday trade.
And let's start with, you know, a big business story, another corporate story
that's been out there involving Boing Boin
g.
Again, remember, it used to own a spirit Aerosystems.
Now it's saying after spinning it out in 2005, now it's saying maybe it could be
in talks to buy it once again, according to those familiar with the story and the
matter. So that said, shares of Spirit
aerosystems up about 15% in today's session.
If so, Boeing would reclaim control of that struggling former Aerostructures
unit. It's also the main supplier at the
center of numerous quality issues affecting Boeing Max Jets, Boeing's most
imp
ortant generator of cash flow. We know that, Max certainly program for
Boeing. All right.
So that's an outperformer. Dell certainly a big outperformer in
today's session. Let's bring it up for you, everybody.
Just finishing off its high of the day. That was 38% to the upside, finishing
with about a 31% gain, soaring to a record options trading volume hitting a
record, too, as well. There's a lot of activity around this
name. You know what the news was?
We got it last night after the closed compa
ny reported better than expected
sales and profit fueled by demand for information technology, equipment to
handle artificial intelligence work. So that has certainly been an
outperformer there for them. Evercore Wells Fargo.
Morgan Stanley among those raising their price target on the company.
Morgan also reinstating it as a top pick that is Dell.
And one more for you are Broadcom ticker AVGO.
Let's bring it up for everybody. That was an outperformer, up just shy of
8% in today's session, a top
gainer in the S&P and the NASDAQ 100 B of A
raising its price target on the stock to 1500 dollars a share from 1250 heading
into earnings next week. And they say any stock pullback to be
likely short lived. As investors look forward to its March
20th Investor Day. So watching out for that.
But again, that one big outperformer in today's trade.
All right, Kels, got the gainers. I'll do the decliners.
Alex, you mentioned Apple not having so great of a weaker apple having not so
great of a year so
far, down close to 7% this year.
So far today on a points basis, the worst performer in the S&P 500 was down
as much as 1.9% earlier in the session, finishing that down by just shy of 1%
today, down 6/10 of 1%. This after Goldman removed the stock
from its conviction list. It did keep a buy rating on the stock.
It did raise its price target from $223 to $232, but removed it from its
conviction list, along with Merck and Vertex Pharmaceuticals.
It did replace them with Amgen, Money.com and Vulca
n Materials and then
New York Community Bank. We got to talk about this one.
We had Herman Chen on from Bloomberg Intelligence a little earlier dissecting
what this means for not just New York community Bank, but also for the
regional banks and seems to be relatively contained at this point
because of New York community banks, exposure to rent regulated real estate.
But shares finished. They're down by wow, more than 25%,
closing at the lowest level, going all the way back to 1997.
The company d
id say that it discovered, quote, material weakness in how it
tracks loan risks, wrote down the value of companies acquired years ago and
replaced its leadership all to as it's grappling with all of this turmoil.
And finally, shares of Boeing, Carol, talked about shares of Spirit
Aerosystems moving higher on the day after that Wall Street Journal report.
Shares of Boeing moving when that came out, but then moving lower as the day
went on, closing the day down about 1.8% on the news that it could
be taking back
control of Spirit Aerosystems we're here.
We get take a look at the bond market buying all across the curve.
Let's call it a bulls steepen our guys so basically went in pounding a steeper
curve because there's more buying in the front end.
I mean, I might say that we did get a headline weaker fry ism manufacturing,
maybe that's what started it. But then you had Governor Waller talking
about that the Fed could boost the share of short term treasuries.
That was in a semi-annual mon
etary policy report and a panel on QE.
You just the point is like they could buy more.
That stopped and there are more buying coming in.
Yeah I know. Be interesting to see just how much
volume and volatility we see in the yield space.
Of course, a lot of Fed speaking next week.
Of course, Jay Powell on Capitol Hill for that two day testimony here, Carol
Massar. And we talk about this idea that what's
the market really going to be focused on now with earnings season over?
And we still got a coupl
e of weeks before we get to the next Fed meeting?
Well, what they're going to be focused on is any clues that he gives in terms
of, you know, kind of not if but when that the Fed might think about cutting
rates, although I really feel like the narrative is getting a little bit
cloudy. Oh, you're doing it.
Well, what are we doing? I'm just saying what's up?
Carol did Carol did ask Torsten Slok about what to watch for next week with
Jay Powell testifying. And he did say he thinks that he's going
t
o come out more aggressive, more hawkish because of what happened back in
December in the way that we've seen markets rise since then.
Look, he's trying to maybe rein in the markets a little, try to rein in the
markets. But, look, you reminded him, Carol, that
the market is not the economy. Yeah, not just because markets are up
doesn't necessarily mean the Fed needs to think differently about how it's
going to cut rates moving forward. Well, it's a data dependent Fed.
And we know that investors
are looking at what companies have told them.
And at least for a couple of companies, there have been some alarming details
about internal controls. That's never a good two words to hear in
a company's earnings release. And there's a great Bloomberg News story
about this, about how with the market warnings I remember, lifts one extra
zero in its earnings report generating this.
You know, there's a shortage of CPAs right
now and perhaps that might be part of the story with these companies maybe n
ot
getting the right accounting under control.
So is that my plan B? You guys get a CPA?
Yeah, it's just my thing. I'd hire you as an account owner.
I trust you Just don't have the extra zero, Alex.
I mean, you know, my eyesight's great. Yeah, I mean, I mean, the CPA story has
been one that's been unfolding for a while, but then you look at some of the.
I mean, I can understand, like something like live you make a mistake that maybe
that's because you don't have somebody there really, you know,
crossing their
eyes and dotting their teeth. But then what do you make of the lack of
internal controls that I don't know. New York community Bank material leads
to these other things. Like I feel like if we had 300,000 more
CPAs, I still wouldn't have addressed that issue.
But it raises the question as to what's really going on behind the scenes here.
Is this about oversight? Is this about internal controls or is
this about the fact that our standards are and I mean, the royal we hear the
stand
ards in the market right now are just a lot lower, at least they had been
for years, the standards in the market. What do you mean the standards in the
market or the standards within investors are what?
Yes, that's exactly what I'm talking about, because I actually feel like when
things go wrong, that they work their way through rather quickly through the
financial markets, whether it's material weaknesses or some concerns about
accounting. You start you see investors react right
away whether or
not that they should.
But I also believe this kind of goes right back to Powell, because no doubt
he's going to be getting questions about New York Community Bank and some of the
controls there and how it was kind of lauded as a savior for some a signature.
His assets, but now there's a material problem.
So I would say that that definitely would come up.
I don't know where to go. I just don't know where to go.
Do you know that right now we don't have to stay home for five days anymore after
Cov
id? Yes.
With anyone doing that. I was one of me.
I'm always out. I'm not for like, weeks with Covid
states. December.
I was home for five days. I wasn't allowed back.
All right, that's a wrap, guys. I don't know where to go with this.
We're all thinking about Fed Chair Jay Powell next week.
Love you all. All right.
That's good. That's a wrap for our cross-platform
coverage, radio, TV, YouTube and Bloomberg Originals.
We will see you again. Same time, same place on Monday.
We continue our covera
ge right here on Bloomberg Television.
Don't go anywhere. A lot more coverage coming up here,
including a conversation with Marc Morial, the former New Orleans mayor,
now the president and CEO of the National Urban League.
That's coming up in just a second here on the close on Bloomberg. Welcome back to the clothes.
I'm Scarlet Fu with Romaine Bostick. We saw a rally in both stocks and bonds
to end the week. In fact, we have record highs for the
S&P 500, the NASDAQ 100, the Nasdaq composite, not
the Dow just yet.
And of course, big tech leading the way as well.
It's actually green across the screen. You can see treasuries moving higher as
well. The two year yield coming down to 4.5%.
Lots of Fed speak and of course, a weaker than expected I manufacturing
increasing bets a little bit that perhaps the Fed might start cutting
rates in June. New York crude did get above $80 a
barrel as well. Let's move on to individual names.
I mentioned tech certainly as a leader, NetApp gaining almost 18
% or more than
18% as a data storage company had a beat and a raise.
Earnings report even as corporate customers continue to aggressively
monitor their spending. Spirit aerosystems up by 15% on a report
that its former parent and biggest customer, Boeing, may look to acquire
it. Your community bank down another 26% on
the day after saying it found material weakness in how it tracks loan risks.
And Dominion is the worst performer in the S&P 500, losing more than 6% after
it gave an investor prese
ntation, which included a period without dividend
growth, which of course is concerning for utilities, which are very attractive
for their dividend growth. Now, big picture one reason why stocks
and bonds ended the week with a bit of a lift is because of that soothing Fed
speech. New York Fed President John Williams
says he is expecting the central bank to cut rates this year.
Eventually, I do expect us to cut interest rates later this year.
I think that makes sense. With inflation coming down a
nd the
economy being the better balance. We're going to move interest rates back
to more normal levels. But really, right now, I don't there's
not a sense of urgency to do that. And that seems to be the narrative that
we've heard from other Fed members as well.
The question isn't if they cut, but how much they actually cut.
We did actually hear a little bit earlier from Apollo's chief economist,
Torsten Slok, who says, guess what? They may not cut at all.
He cites a re accelerating U.S. economy
coupled with a rise in
underlying inflation that will actually prevent any such move by the Fed in
2024. Our next guest actually says that that
is going to be the dominant conversation right now and probably for the rest of
the year. Vanessa McMichael joining us, head of
Corporate and Public Entity Strategy Fixed and Fixed Income Strategy at Wells
Fargo. Vanessa, great to have you back here on
the program. And let's get right to it here.
I mean, this is the parlor game right now on Wall Street a
nd everywhere in
between. Does the Fed cut?
And if they do cut, how many times are you in the camp right now, at least
based on what the market's pricing in that?
We're still going to get 3 to 4 cuts this year.
Well, thank you for having me back from Maine.
So my colleagues on economics team here at Wells Fargo think that the Fed is
going to cut their policy rate by 125 basis points this year starting in May.
If it doesn't happen in May, then then June looks to be the next opportunity
there. So
we're in the camp that the Fed does
actually cut its target rate this year, although most of that cut, most of the
easing will be towards the back half of this year.
I am curious as to just the general investment thesis for the fixed income
space, because this has changed a lot pretty quickly.
I mean, we went from a market just a few weeks ago that was eyeing 5 to 6 cuts.
And even if the Fed was trying to push back on that, they at least seemed to be
dangling the possibility of 3 to 4 cuts this
year.
But based on commentary from other Fed members, it's not so much that they
won't cut, but I don't know if we're going to get that.
So do you change your and that vestment thesis with regards to duration and more
importantly, with regards to broader fixed income exposure?
That's quite a question remains though. In my IT my work, I interface with
corporate investors and this conversation is obviously been a
dominant conversation in markets, but it's been and it's been a conversation
with cli
ents. But it's more dominant this year in in
the in the sense that it's causing kind of a divergence in conversations.
I'm seeing two camps with my corporate investors in one camp because the Fed is
saying, hey, we will remain higher for longer.
We do plan to cut at some point this year, maybe not towards the second half
of this year, but higher for longer is really sticking with clients.
And so those corporate investors who are parking a lot of their cash, both core
cash and strategic or excess
cash in money market funds are comfortable
staying there. They're very comfortable with rates
still above 5%. They're expecting rates to remain at
those levels for at least most of this year.
And then in the other camp, I have clients who I think are waking up to the
fact that we are heading into this easing cycle.
And maybe we do need to take some of that cash out of money market funds and
place it elsewhere, because we saw at the end of December and throughout
January of this year how fast ra
tes can fall.
And so we don't want to miss that opportunity.
Yeah, so it's time for them to make a decision, kind of a call on the bigger
picture overall. But I'm wondering for your corporate
clients who are holding their money in bank deposits, has all the issues at
your community bank changed your behavior in any way?
Has it raised alarm bells for them? So I wouldn't say this particular
instance. I would tell you that one of the reasons
why I think many corporate clients are still going to err
on the side of
holding probably more cash in money market funds, government money market
funds than they would historically are is because of the regional bank stress
that happened just about 12 months ago. So that impacted some of my corporate
clients and those that were not directly impacted.
It was close enough for them to pay attention to wanting to make sure that
they're making sure that they diversify their liquidity options.
And so that's one of the reasons why I think this year, you kno
w, despite what
we're telling clients to begin to think about moving some of that cash out of
money market funds, some are going to hold, hold, hold that cash there because
it seems like a safer option. All right.
And that's going to have to leave it there.
Always great to talk to you. Vanessa McMichael over at Wells Fargo.
Need to get to some breaking news crossing the wires.
Carlo was just mentioning that Boeing story that Bloomberg broke earlier.
People familiar with the situation saying that
they are in talks to acquire
spirit aerosystems. A press release now out by boeing
confirming just that it is short. It is terse, 113 words, basically saying
that they have been working closely with spirit aerosystems and they think that
in the interests of strengthening aviation safety and improving quality,
they're recombining spirit aerosystems into Boeing would serve the interests of
customers, employees and shareholders. We're going to try to get you some more
details on that in just a bit
. Yeah, it raises the question of why they
split up to begin with, and I think that's a conversation worth having here
as they talk about how this would strengthen safety.
All right. Let's get to what's coming up on the
close, how companies and American government policies are addressing
diversity and inclusion. We've got a conversation next with the
president and CEO of the National Urban League.
This is the close on Bloomberg. A broad swath of corporate America is
tweaking the language used fo
r regulatory filings to appear both
politically and socially neutral. Companies including Bank of America,
Delta and Uber are dropping terms like anti-racism, allyship and verbiage
linked to diversity and inclusion. Simone Foxman is the co-author of
Bloomberg's story on this. And I guess it's kind of an effort to
avoid controversy, isn't it? Yeah, that's right.
Both avoid controversy and avoid potential litigation, because what's
happened ever since, especially the Supreme Court decision on affi
rmative
action, is that we have seen conservative political activist groups
going out and suing companies for what they believe are stepping across the
line and doing things that are or could be illegal based under the legal
precedents. So what we've seen companies doing is
essentially making their language a whole lot more vague and how they
describe their diversity and inclusion efforts.
They're changing things like recruiting, like hiring to recruitment.
So it's okay to maybe try and draw a b
road swath of people, but not so much
to say. We specifically want to hire a lot of
people of color or women or of other marginalized groups.
So is this so are they change just changing the window dressing and but
they're still doing this or are they really pulling back actually on these
initiatives altogether? So we went out to a lot of companies.
There are about 20 on our list. Yeah, most of them that responded to us
said we are still committed to diversity.
There are changes at the margin, fo
r example, citizens not having mandatory
diversity training anymore. Those are just resources available.
Yeah, but for the most part they say they're continuing to go forward with
these diversity and inclusion initiatives.
You know, the question mark is, though, if you start talking differently about
this priority, how much does this change your actual behavior?
All right, Simone Foxman. A closer look here at some of the DEI
initiatives out there. And while it may be the lack of
initiative that'
s now seeping through corporate America.
Our next guest, who runs the National Urban League and the National Urban
League, has been keeping track of these type of trends now for decades.
Marc Morial is the president and CEO of the National Urban League, out with a
report here on the state of black America.
And before we get to the details of that report, Marc, I do want to get your
thoughts here on the news that Bloomberg is reporting and other media outlets
here that that big groundswell and in
terest that we saw after the George
Floyd murder is really just kind of at least publicly seem to have waned just a
little bit here. I'm not pleased by it, to be quite
honest, because it represents a step back or retrenchment
from a commitment that's consistent with American values.
Diversity, equity and inclusion is about equal economic opportunity.
And on this, the 60th anniversary. Of the Civil Rights Act of 1964.
Let's take note that neither you nor Samantha would be at Bloomberg before
the
Civil Rights Act of 1964. It has made a difference in America, and
it's consistent with American values. Notwithstanding that, what we want to
encourage companies to do is to maintain the substance of their commitment to
equal access to the American Dream and to not be intimidated by those who, for
some reason want to turn the hands of time backward.
So we stand ready, as many of us are, to work openly with American business in
furtherance of this goal. And that's a laudable goal.
But as you kno
w, this has now gone from just trying to convince people this is a
right thing. You have legal cases.
You mentioned the Civil Rights Act, which to a certain extent really kind of
got punched in the gut by the Supreme Court last year with that
reinterpretation of Title seven. So where do we go here when we have a
Supreme Court that's looking at this very act that you cite as our progress?
And they're basically tell telling us that that's somehow unfair to everyone
else? Well, the point is, is tha
t many of
those advocates, those conservative advocates, are conflating, distorting
and mis interpreting the Supreme Court decision, which was about two
universities, higher education programs. How many admissions programs do
universities, admissions programs they are trying to distort, intimidate and
bully? Look, they can bring lawsuits.
We can bring lawsuits, Right. It just has going to become a battle, a
litigation. But what I think everyone should do is
reaffirm their commitment to the princ
iple.
And let's talk about the best way to achieve it.
This is what the discussion should be all about.
So, Mark and I'm troubled. Yeah, go ahead.
I'm sorry to interrupt, but I just want to get some context for what you're
saying in terms of where things stand right now, because I know the National
Urban League has just published a 2020 for equality index.
Can you give us the state of play of where things stand?
Yes. So our quality index shows
African-Americans indexing at 76% of where whites ar
e when
it comes to important social and economic statistics.
And I'll give you an interesting example.
500 CEOs of the Fortune 500. Only six are African American.
Now, there was zero in 1964, but the highest paid the best jobs in American
corporate America are the CEO jobs. We've made some progress, but have we
made enough? I'm paying to believe that the fact they
are six constitutes some sort of quota or discrimination against any other race
or any other people. So we've got to keep this in con
text.
We've made progress, but we've not made enough.
And we're going to be in a fight for the soul of the country.
We're going to be a fight to ensure that, you know, ultimately we achieve
parity. So at the pace we're going, yeah, we
would achieve parity 180 years. So 60 years later, we've made progress
and we made enough know that we need to do more.
Yes. So in that path to trying to create
progress, we know that almost four years ago, companies went on a hiring spree
looking for chief diversi
ty officers. That has started to back off, as Romain
had mentioned, you know, as companies shift away.
But did that period where we had chief diversity officers, did that create any
measurable change from where you sit? Very quickly here.
I think that it demonstrated a commitment to diversity.
It represented the fact that you had somebody who was going to work on
strategy. It's like a chief technology officer.
Can you have technology without a chief technology officer?
Yes. What do you need the
leadership Do you
need the expertise to design the programs, to follow through, to hold
everyone accountable? Yes, you do.
Which is why chief diversity officers and companies which deep diversity
officers and companies with diversity plans and to be the most profitable
American companies. All right, Mark, we're going to have to
leave it there. Great to talk to you.
Marc Morial, president and CEO of the National Urban League.
All right. When we come back after the break, we're
going to take a loo
k back at this day at history and a Titanic weekend at the
Hollywood box office. And we leave you with the question
before we go to the break. What was what has been the highest
grossing movie domestically here in 2024?
This is Bloomberg. All right.
Let's sail back to 1998, where on this day in history.
Titanic extended its run atop the box office for an 11th straight week, and it
became the first film ever to gross billion in ticket sales.
The love story turned disaster film would go on to gros
s more than $2
billion, a record that stood for more than a decade before being surpassed by,
well, another James Cameron film, Avatar, which to date has raked in
almost $3 billion worldwide since its release in 2009.
But Hollywood has fallen far from those halcyon days of tentpole movies that
really did nurture entire economic ecosystems for theaters, merchandisers,
even television alike. There are about 53 Hollywood releases
that have gone on to GROSS worldwide more than billion on a non infla
tion
adjusted basis. And all but six of those were released
before the pandemic, and five of those six were either sequels or extensions of
existing film franchises. The actor and writer strikes have shut
down Hollywood production for months. Last year didn't help matters.
To start off 2020 for the domestic box office has tallied just under $900
million so far, around 20% lower than the same period last year and 40% below
2019. And to answer our question of the day,
the highest grossing movie of
the year so far, well, that belongs to Timothée
Timothee Chalamet Wonka the Musical. Yes, Scarlett, the musical reimagining
of Charlie and the Chocolate Factory, grossing more than $80 million
domestically since its release in mid-December.
And it is still the only film since the dual release in July of Barbie
Oppenheimer to surpass $200 million. And that raises the question, what, if
anything, will be 2024? Barb and Heimer, several potential
blockbusters have had their release dates pushed bac
k to 2025 because of the
strike. That includes Paramount's Mission
Impossible, Pixar's Leo and Marvel's Captain America.
One potential salvo does come today with the wide release of Dune Part two, Part
one released by Warner Brothers two years ago amid the pandemic, grossed
more than $400 million worldwide. Strong early reviews for part two, along
with an aggressive marketing campaign, has box office pro estimating the sequel
could open with around $80 million in sales.
Well, that would be the b
iggest domestic box office opening since Taylor Swift's
era's concert film back in October. But at $80 million, it wouldn't even
rank in the top 100 of the biggest opening weekends of all time.
In fact, it wouldn't even rank in the top 100 of the biggest opening,
weakening weekends of the past 24 years. Yeah, I think those records from the
past 24 years are going to stand, given how fragmented the whole media landscape
has become. All right.
I want to move on now to next up, where we highlight t
he entrepreneurs and
founders moving the needle for our economy, markets and technology.
Venture Valley is a simulation game that captivates the hearts and minds of
entrepreneurs in the making. It's popular among middle high school
and college students, and it's a free to play game that helps users hone in on
business skills and financial decisions. I'm pleased to say joining us now is
Shelly Miles. She is CEO of the Singleton Foundation
for Financial Literacy and Entrepreneurship, which produce
s the
game. Shelly, so good to speak with you.
I know that the goal is to address one of the most pervasive problems out
there, which is financial incompetence, and your game tries to build on those
skills. What would you say is the single most
specific, single, most important financial skill that your game focuses
on teaching? Well, what what people?
Scarlett, thank you so much. What people really get playing Venture
Valley is they get to make the financial decisions in the businesses they're
r
unning. Whether it's a simple business like pet
walking or something more sophisticated, like a robotics factory.
So they learn about the interaction between price and costs.
What you do with competition and how to make real life decisions that are
impacting your businesses and seeing how it all works.
And can you give us a sense of who's partnering with you on this?
Because this is a nonprofit firm from where you stand, it's a free to play
game. How are you funding all of this?
So we've been ve
ry, very fortunate. The founders of the foundation Will and
Kerry Singleton, this is their foundation and they've been very
generous with us. But we also work with a lot of partners
like we've worked with Discovery Education,
we work with the Department of Defense, among others.
And so it gives us an opportunity to reach a lot of people where we start in
a year, like when we talk about the age of the kids that get exposed to this.
How young, Shelly, are we talking about? Well, it's really kids t
hat are old
enough to have to read well, and so are some of our youngest players are 12 and
ten and middle school. And it goes all the way up through
college business students. So, you know, games aren't like some
other products. It's more genres of games you play.
Not so much age. Yeah, exactly.
I am curious though, about how much this tied with both your product but also
competing products. How much do they get integrated into
actual formal schooling curriculums? Because there's been a lot of
talk about
how a lot of school curriculums don't actually teach anything really related
to finance or I guess what in the old days we would call it home economics.
It's just kind of leave these kids out there to to hang until they, you know,
go out into the real world and basically have to figure it out on their own.
Well, we're seeing a lot of it. So when it through our partnership with
Discovery Education, we were able to reach around 800,000 students in
classrooms with a curriculum that wrapp
ed around it.
And we're starting to see adoption by some of the universities with Venture
Valley. So most recently Seton Hall, what with
the classrooms and I'm not the college, but below that.
Are we talking about public schools? Are we doing are these private schools,
charter schools? What?
It's it's all across the board. Okay.
Can you give us a sense of the take up of the game?
What kind of numbers are you seeing? So right now, I think we have about
250,000 players and we're well on our way to
getting to a million.
Well, on your way to getting towards a million.
You talk about how it really lays the foundation for people learning how to
run a business and how to budget for it and how to think through some of the
steps. What about investing?
Is that something where you see a need to educate the youth?
Yeah, and there's there's many programs that do that.
So that's not the focus of this game, but it's this really important skills.
That's part of the financial competence side of our mis
sion, which is both
promoting entrepreneurship and financial competence.
Mm hmm. How are you tracking, I guess, the
longer term success? Meaning is there a way to sort of look
at the kids that are using these tools and using these curriculums here and how
they perform once they do become adults? I mean, do you get any feedback that
gives us a sense here as to whether they really are prepared?
You know, it's interesting. We just did some research with do a bit
research and we and we hit two of ou
r goals with the game, which was we wanted
young people to be able to imagine themselves as successful entrepreneurs.
And we found that of the college students that we
surveyed that over 80% of them said that they could imagine themselves as
entrepreneurs in a similar number said they really learned the cause and effect
of business. But the game hasn't been out that long,
so it's hard to tell the long term effects.
We had one student who followed our college tournaments around the country
and he
just got funding for his own business and he said that the game
really helped him understand quick decision making and pivoting in the
things that you have to do in the real world reacting to market forces.
But we'll have to wait and see what the really long term effects are.
Well, Shelly, Miles, when you do get that data, we'd love to hear about it.
Thank you so much for joining us. Shelly is CEO of the Singleton
Foundation for Financial Literacy and Entrepreneurship.
Remain. I feel like a fol
low up game here could
be something on teaching kids about these budding entrepreneurs about
government regulation and taxes, because that's the next step.
Oh, gosh, I don't know. I mean, along with that curriculum have
to be. But but you are right.
And and I do think about I mean, I was fortunate to go to a relatively good
primary school and secondary school where they did teach and stuff.
But so many kids, yeah, they just we had a whole generation that's never got
this. Yeah, absolutely.
And o
f course with, you know, everything turning.
To technology and relying on technology. A lot of it you don't have to think
through anymore. Right.
It just kind of appears for you. Yeah, absolutely.
Yeah. All right.
Let's take a look at how markets closed on the day.
Speaking of, you know, literacy and financial literacy, you had record highs
here for the S&P, the NASDAQ composite, the NASDAQ 100 index, big tech certainly
helping to lead the charge, although Apple was not a participant there.
And
also buying across the Treasury curve as well.
Right. We didn't get any real new economic
data, but a little bit of more levity when it comes to the outlook for rate
cuts. Yeah, it'll be interesting to like, you
know, when we kind of get into this phase where there's a little bit less
news flow and how investors interpret that.
I think the bottom of your screen, though, is interesting to me as well,
because we've actually seen commodities really perk up.
At one point, WTI crude did reach 80 buck
s and we had gold closing at a
record high, both the futures and on a spot basis and even the Buy.com index as
a whole. I think it was like something like the
second best week since like October or something.
So I don't know what that says. But I do think it's interesting to see
that what was a dormant area, the market now seems to be waking up.
So you could call a broadening of the rally where you could call it something
that perhaps might lead to more inflation.
We'll find out. This is the clo
se on Bloomberg. All right.
An optimist Guide to the Planet. That's the hit new Bloomberg original
show that you really need in your life. The latest episode is out and it focuses
on farming and how one group of friends took an abandoned area in Cleveland,
Ohio, and transformed it into a positive force for the community.
Cleveland, Ohio, was the number one epicenter in the country for the
foreclosure crisis. It was anticipated that 10,000 homes
will be demolished, turned out to be 18,000 homes t
hat were demolished.
Wow. I beg the question, what are we going to
do with all this vacant land? Because this is not representative of my
Cleveland. I don't want to see this in my town.
Wouldn't it be nice to repurpose some of it for things like urban farms so that
people can have jobs? You could bring life back to
neighborhoods, huh? So my two childhood friends got excited,
and so we sort of super friends unite, kind of came together and said, Let's
see what we can do. Keema and myself grew up
with a third
co-partner, Damien Forte, who suddenly passed away in 2018 from a heart attack.
We had the street named in his honor. East 80 seconds.
See, it's Damian Forte way. How big is it?
How big is. We started Nicola with 1.3 acres.
Just a space that you see behind him. We have now expanded to all the space
behind us. A total of 18 acres.
Wow. So it took us 12 years to get to this
point. You did say you had to clean this whole
place up. It was contaminated.
How bad was it? Well, we did have
the soil tested when
we first got here. And it had high levels of lead and
arsenic and all sorts of other really nasty things.
Wow. We have to show that these places matter
and that we can do something dramatic to change the the community in a positive
way. And you were just listening there to
Nikolai Costa Waller, the host of the Bloomberg's Optimist Guide to the Planet
here, and Randy McShepard, the co-founder of Read All Green
Partnership. He joins us right now to talk about this
initiative.
And Randy, I mean, you know, community
gardens aren't necessarily new, but 15 acre community gardens on a site like
the one that you guys broke ground on that had been a huge project.
And I am curious as to how much help, if any, that you got from the city or the
state. Well, thank you for having me.
First of all, excited to be here. We didn't get much help early on from
the city other than identifying the lot that we ultimately started the urban
farm on. We were looking for 1 to 2 contiguous
ac
res, and the city told us that there really weren't any spaces outside of
this one particular area that was known as the Forgotten Triangle, and it had
many acres that were contiguous, but it also had burned out cars, refrigerators,
you know, thousands of tires and other types of trash.
And they sort of said, you can have it if you're willing to invest, and we'll
be required to turn it around in the way that you all are hoping to do.
So once we got started, we started to get a bit more support f
rom the city.
But by and large, this has been an entrepreneurial endeavor where we have
written personal checks, we have raised money from foundations, corporations and
even some of our own social enterprises. So the things that you're growing there,
Randy, is there sort of income from that or is this just all sort of being given
to the community? No, We certainly,
by design, want to grow produce that we can actually earn income from.
We we from the very beginning made the decision that the only
way we would
sustain the Rural Greening partnership was to find ways to generate revenue.
So we grow 3500 to £4000 of produce each year that we actually sell at a farmer's
market that we purchased about a year ago.
We sell some of that produce at our location.
We have a restaurant at our location that we sometimes, you know, source for
not only restaurant activities but catering activity.
So it all goes back into the coffers, if you will.
And yeah, it's been quite successful. It sounds like a v
irtuous cycle, which
is kind of what you want to encourage. I'm curious in terms of what kind of
unexpected benefits have come out of this partnership.
What have you noticed that surprises surprises you?
Yeah, that's a great question. There are so many wonderful things that
have come from this. First of all, people being excited about
the possibility, the potential of the urban poor, of distressed neighborhoods
that people thought could never come back.
This area was called the Forgotten triangl
e.
No one ever went there. It was a notorious illegal dumping site.
We've had five weddings take place since we've turned this place around.
We have a big event every year called Fest Festival, where last September, on
one day we had 9000 people come for food, live entertainment vendors, you
know, fellowship, those kinds of things. The excitement that schoolchildren
actually experience when they come. We have about 3500 students from various
public, private and parochial schools come for tours.
A lot of the teachers look at us and say, we never thought that we'd be
bringing kids to this neighborhood for this kind of an upward learning
opportunity. So all of those things are big surprises
to us. The fact that we've been able to sustain
for 13 years and continue to grow. Yeah, to the original question, even
generate enough revenue to kind of keep the organization vibrant.
All of that has been a surprise to us. So I want to go back to the question
that remained for a statue, which was the
kind of government support you got,
at least it wasn't there initially. What does it look like now and what kind
of outreach have you gotten from mayors of other cities?
We've had just a handful of mayors from other cities visit over the years.
Certainly our current mayor, Justin Biggar, has been very supportive.
He's been down at our farm on some occasions just to go and have six
months. He's very focused on climate and
sustainability and those kinds of things.
So he sees us as, you know, part
ners in the work that he's trying to do.
We have not received much from the state, with the exception of the Isle
Farm Bureau, has been supportive. They like to send people to us for
training and we do have we're currently working with three other cities for what
they call a conservation innovation grant, which is a USDA grant where we're
actually trying new farming practices that can improve the field as a whole.
But outside of that, it's been primarily corporate funders, philanthropic
organiza
tions or individuals and earn revenue.
And so and you have you have other folks reached out to you, meaning like other
folks who want to start something similar to read all basically looking at
what you did and maybe potentially using it as a template.
Yes, we have had probably since inception, we started doing our five
month commercial urban agriculture training about 11 years ago, and we
probably had 7 to 800 people go through that training, many of them from other
states outside of Ohio or ot
her parts of Ohio.
We do get occasional random requests for people to go through and then want to
maybe see our business model. And then locally, we have actually a
contract with our county government where we're helping neighborhood folks
identify vacant land and learn how to acquire the land.
And then we get sort of give them a jumpstart with getting things like soil
and getting the land cleaned up and, you know, building a house and things like
that. So we really want to promote the whole
con
cept of urban agriculture. We think it's a viable business
opportunity and can really help urban core communities that are distressed.
Yeah. All right.
Well, Randy, a lot of eyes on you right now.
A lot of eyes on Cleveland, a great city that's seen better days.
But obviously they got some great people still there, really helping to build it
back. Randy Shepherd Riddell Green partnership
co-founder, you can find him in the latest episode of An Optimist Guide to
the Planet. You can catch that on
the Bloomberg app
Bloomberg.com and right here on Bloomberg Television.
All right. A lot of potential market moving events
coming up over the next week. We're going to set you up for what to
watch. Stick with us.
This is Bloomberg. And. And a lot of potential market moving
events over the next week. And a lot of those potential market
moving events could come out of Washington.
Voters from 15 states and one U.S. territory heading to the polls for the
Super Tuesday presidential primaries. And the
current president, Joe Biden,
set to deliver his State of the Union address on Thursday.
Bloomberg's Tyler Kendal joining us right now, not from Washington, but here
in Studio two. Great to have you here in New York.
I do want to start off with that State of the Union address, a critical one in
an election year. What's the message that Biden is going
to deliver? Yeah, definitely remain.
A White House official tells Bloomberg News that we should expect President
Biden to really focus on the econ
omy in the speech.
That's likely going to look like touting some past accomplishments like
legislation, like the CHIPS and Science Act or the bipartisan infrastructure
bill. But that official also told us that we
should expect some tangible plans when it comes to hiking taxes on the wealthy
and also corporations. Now, they didn't give us too many
details, but we do know, for example, President Biden's been on the campaign
trail saying that he would like to see a hike to the corporate tax rate fr
om 21%
to 28%. So that's something that we're
definitely going to be looking out for. There could also be some bipartisan
proposals here, such as lowering prices for prescription drugs.
That's something that the White House has been really trying to tout.
And they know and our polling is showing us that this is something the White
House is having a hard time breaking through on when it comes to voters.
Our most recent Bloomberg News morning console poll, for example, shows that
he's really trail
ing former President Trump when it comes to voter confidence
and handling the economy. Okay.
So that's a wish list when it comes to the State of the Union.
Voters are going to head to the polls for primaries on Tuesday.
Nikki Haley is actually still in the race, which is kind of hard to believe
given how much she's fallen behind the former president.
Definitely. And so Super Tuesday, like you said,
there's going to be 15 states in about a third of the delegates needed for the
Republican nominati
on are going to be up for grabs.
We've been crunching the numbers and that magic number is going to be 1215.
That's how much you need to secure this nomination.
And while former President Trump won't have enough after Super Tuesday, our
numbers are projecting that he could be very close to getting to that number.
Of course, like you mentioned, Nikki Haley still in the race today.
She announced a 2 million campaign fundraising.
All right, Tyler Kendall there with the nice preview of what to expec
t.
And be sure to tune in here for Bloomberg.
We're going to have full coverage here of Super Tuesday.
Meanwhile, we push ahead to some of the other big market moving events that are
going to occur over the next week here. And a big one here is going to involve
Jay Powell on Capitol Hill. He's going to be speaking to Congress.
I'm almost certain he's going to be asked questions about New York community
banks and what that means with regard to the concerns about regional banks and
how safe they a
re. Yeah, of course, we also are going to
get that State of the Union address, which we were just talking about.
But really, I think we have to jump forward to Friday, Scarlett, because you
get a big economic data point that is going to really maybe shape not only
this man's future in the White House, but of course, also Jay Powell and what
he has to do. Right.
And of course, all the headlines from a lot of the tech companies over the
earnings season has been job cuts. So we're going to see how
that actually
shakes out, how that plays out in the official numbers.
Yeah, of course, that jobs monthly jobs report coming on Friday, 8:30 a.m.
on Washington time. And we still got a quite a few earnings
to sift through, including some tech that actually have some material impact
on the market. Yeah, certainly Target's going to be
something that everyone watches for. It's an alternative to Wal-Mart.
But, you know, Abercrombie Fitch got my attention because Dana Telsey was
telling us that shoppi
ng there now, too. I thought this was like a teen retailer.
Now it's just all middle aged women shopping there.
They've grown up with their customers. I mean.
Oh, you mentioned it. All right.
Well, don't worry. We'll be back next week with full
coverage of all those earnings, full coverage of Jay Powell and full coverage
of everything going on in Washington. Stick around.
A lot more coverage of what's going on in Washington.
Up next, on balance of power, this has been.
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