Xi to San Francisco | Bloomberg Markets: The Close 11/13/2023

Xi to San Francisco | Bloomberg Markets: The Close 11/13/2023

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And countdown to the CPI here on the Countdown to the Close. Live from Studio two here at Bloomberg headquarters in New York, I'm Romaine Bostick and I'm Katie Greifeld, taking you all to closing bell here in the US. And it's a pretty quiet day again as we await those inflation figures that remain. Just talk about you take a look at the S&P 500 right now, pretty much unchanged on the day. It's the same thing if you look at the big tech index, the Nasdaq 100 lower by about 2/10 of a percent. Nothing too major.

You take a look at what's going on in the bond space. It's also pretty quiet relative to the past couple of few months that we've had the ten year yield down about two basis points. At the moment, you are seeing more action when it comes to the energy market. You take a look at crude oil remain up

by 1.6%. That's after OPEC came out and basically argued against excessively negative sentiment. Yeah, it's going to be a big week for oil. A lot of other data scheduled to come out on Tuesday, Wednesday and Thursday. But of course, there's also going to be a big week as we learn about the health of the U.S. consumer.

We're watching from earnings report from names this week, including Wal-Mart, Target, TJX, Williams-Sonoma, Macy's and Ross Stores, just to name a few. The major concern, of course, for investors is that persistent shift from spending on discretionary consumer goods to discretionary consumer services. That official government report on October retail sales also projected to hit this week and projected to reflect that trend with its first headline contraction after six straight months of growth. Now, remember, this is not only critical for the markets, but it's critical for economists and politicians alike who are now confronting that strange brew of still strong economic data but deteriorating consumer sentiment. Betsey Stevenson, a former Labor Department economist who now teaches at the University of Michigan. She wrote in a Bloomberg Opinion column

today about that disconnect, saying Maybe it's the prices, stupid. Economists focus on inflation. We know that. But consumers, they focus on the actual prices themselves. And those prices, while not growing nearly as fast as they were a year ago, they're still elevated across the board relative to two or three years ago. And that, of course, is the backdrop for the big event this week.

Katie, the latest batch of official inflation data from the US government starting Tuesday morning with the Consumer Price Index. And as we drumbeat to those figures, let's take a look at where we stand right now. You have core inflation in blue, you have headline in white. So you're expected to see core basically hold steady at 4.1%. Again, going into the report tomorrow,

you can see that headline. It was 3.7% at the latest reading, expected to drop down to 3.3%. But again, core expected to hold steady. So we'll see what that means for the Federal Reserve. But when you think about what it means for the bond market, we know that this chart that we've been seeing, the trajectory of inflation, it has translated into a lot of bond volatility in white.

Here you had the move index, it's basically the VIX, but for bonds, then you have the traditional VIX in blue there and you see this big divergence that has opened up, of course, amid those Fed rate hikes. You can see that they spiked in tandem during the pandemic. And then the gap has basically grown. There's a lot of daylight between these

two readings. And Romania's is going to be really important, really interesting to see what inflation readings tomorrow mean for that gap. Well, let's pose that question to our first guest as we kick you off to the close, Gina Bold and joining us, she's the president of Both and Wealth Management.

And Gina, I think Katie put it pretty succinctly here. All everyone's still watching those inflation numbers. I thought the trend line was down. Why are we still scared? Well, this is just a really big week for the market. And I think the CPI could be a catalyst if it comes out hotter than we're expecting. We are expecting 3.3 down from 3.7.

And the market is all about inflation right now and what the Fed's going to do. When you look at, I guess, what the Fed is going to do or at least what the market thinks the Fed is going to do, there's really been no indication that they're about to move rates in any direction really. I mean, I know they sort of keep that one rate hike on the table, but I think most people in the market believe that at a bare minimum, they're not going to go any further than where they've gone right now. Do you buy that?

I do buy it. And I think that that Segways into this week and retail and what we're going to see from Home Depot, Target, Walmart, TJX, because this is going to give us insight into the consumer. And we are seeing that the consumer is slowing down. We also saw the University of Michigan consumer sentiment survey that's showing that consumers, you know, they're pretty cranky, but yet they're still spending.

And let's talk about how they're all in important holiday sales. What are we going to see this week and how is this going to affect the bottom line at some of these stores? And, you know, when you put it all together into a view on the markets, again, you have that dynamic which has been in. For a while. The fact that consumers are miserable by most measures, but they're still spending. And of course, that's propping up this economy along with the labor market. How does that translate into how you

should be positioned and risk assets and beyond? You know what? I'm still bullish. And one of the reasons I'm bullish is because of the labor market. We are starting to see it soften, but it still remains relatively tight. Consumers have jobs and, you know, you still have that YOLO consumer left over from YOLO. You only live once left over from the pandemic and they're still spending money.

They have jobs. I think that's going to continue. We've just come out of earnings season and look at all of the headwinds the consumer and businesses have had to deal with for 2023 coming into the year. We didn't expect as many rate hikes as we had. We had a full blown banking crisis. There was a lot going on and still

businesses did well. The consumer continued to spend and I think that resilience will continue. Well, YOLO is certainly the mantra by which I live my life. Apparently some of these consumers and stock investors as well. But you mentioned earnings season and of course, we're pretty much at the tail end of earnings season. It seems like it's a mixed bag. But from where you're sitting, what

grade would you give to this earnings season? And when it comes to your bullishness, did it add to it or was it just necessarily maybe not bad enough to detract from it? You know, it was good enough and I would give it a C, I would give it a C plus. We've seen overall growth. Overall growth increased by about 7%, although estimates are being lowered. But it was pretty good. I think it had a high bar, especially with technology to get over and I think it did good enough. But I do think this is an important week. When you look, though, I guess, at some

of the commentary that we've gotten out of companies so far during this earnings season. Gina, a lot of folks, a lot of those executives seem to be concerned about, I guess, just how much gas is left in the consumer tank. And we've heard this time and time again with a lot of nuance around it, of course. But there is a sense here that sort of the boom times for us spending that that might be behind us, you know, and that very well could be.

But that leads us into are we going to have a recession? Is the consumer going to slow enough to have a recession? And is the Fed going to continue to hike rates or are they going to cut rates? The market's pricing in a 25% chance of a rate cut for March. And I think that, you know, everyone's talking about higher for longer, but I think that it's also an election year and they may have to cut rates and keep the economy from avoiding a recession. And I do think we're going to get that soft landing. All right. Great to talk to you. Gina Bolden there, president of Bolden Wealth Management, helping us kick you off to the close here on this Monday afternoon. As we started the show, some breaking

news crossing the wire on the highest court in the United States at the Supreme Court, we're now learning is adopting a binding code of conduct for the first time responding to a stream of ethics controversies. Of course, this is a court, I think, established back in the 1790s and throughout that entire history, never has had a formal code of conduct or a formal ethics guidelines here. But of course, some of the reporting around that man you see on the screen, Justice Clarence Thomas, as well as Samuel Alito and a few other members of Congress and their relationships that they have with some very powerful political donors has raised a lot of questions here about their impartiality. Right now, the U.S. Supreme Court is now adopting a binding code of conduct. We're learning that that code of conduct goes into effect today. A lot more coming up here on the big program, including a focus on the APEC summit taking place out in San Francisco this week, where President Biden is set to meet face to face with China President Xi Jinping.

We're going to get a preview on what both sides are hoping to accomplish. Plus, why the U.S. still faces a risk of a government shutdown at the end of this week. That's despite a new compromise plan by

Speaker Mike Johnson. We'll bring you the latest. And we're going to talk about dating apps and why some investors are falling out of love with the dating apps this year. That conversation and so much more coming up here on the close. This is Bloomberg. I'm.

Well, it's a tale of two Fed outlooks, Morgan Stanley versus Goldman Sachs. Goldman in one corner expecting fewer cuts in a later start. On the other hand, you have Morgan Stanley anticipating deeper rate cuts over the next two years, ending in the low 2% range in the fourth quarter of 2025. Morgan Stanley's Alan Zentner writing, quote, We maintain our view that the Fed will achieve a soft landing, but weakening growth will keep recession fears alive. Bloomberg's Mike McCarthy joins us now to help break it down. When you think about the deep cuts that the Morgan Stanley camp is anticipating, it's not necessarily a recession call, but what would lead the Fed to actually deliver those kinds of deep cuts, a recession? Yeah, here's the good news about this exercise. Here is, as John authors put it, this is

the time of year when every analyst on Wall Street's writing their 2024 look ahead and they're always wrong. And it's a good exercise for them to think about things as they go forward. I say this is basically about the same as political polls a year out from an election. They don't add any value, but it's something to talk about and here's why. You take a look at what the forecasts were for the US economy in October of 2022 and compare them to what they are now in October of 2023, and they're completely different for the same quarters.

So everything changes and you really don't know what it's going to be like. So it's hard to say that there's a whole lot in here that you could do much with. Yeah, I certainly agree with you. And I mean, of course, a lot of hair will be made about how wrong they are. But I will say in their defense, there does seem to be with some of the some of the reports, at least an underlying narrative that they also weave together. So even though the numbers themselves might be proven to be a little bit off, sometimes that underlying narrative is still true. And you saw that with some of the

projections on economic conditions that started to come out late last year and earlier this year. Well, if you look at their sort of underlying work here, both of them are saying essentially the same thing. It's a matter of degree how much they're anticipating they will cut. And for that, you can go look at the dot plot. And I if we have it here, I took the dot plot and I put Goldman Sachs and Morgan Stanley into it. Okay. And basically what you end up seeing is they're as divided as the Fed.

Yeah. For 2025, the Fed has no idea. Yeah, they think they're going to be cutting. You can see all those lower dots, but they don't think they don't have any idea where they're going to be heading to. And so that's the problem here, that 2025 dispersion is is astonishing.

Yeah, but I guess I mean, I guess maybe it's not given that it's a year year away. Well, so this is 2023. That's 20, 25. Two years ago when we were at 2021, we were coming out of the pandemic and we had no idea so many lives we have lived since 2021. So point taken that, you know, everything will change and maybe we'll make fun of these in a year from now. But it seems like we can all agree across Wall Street that the consensus is that the Fed is going to start cutting next year.

And the consensus, the informal consensus at the Fed is that they're going to start cutting this year. They said that in their dot plot, and they've said that in their outlook, economic outlooks, they just don't know when and by how much they're going to keep rates unchanged until they feel that inflation is coming down to 2%. Exactly what that means, maybe two and a half, something like that. But until they get there, they don't have any plans to cut rates. So it's hard to put timing on that because we don't know how inflation will react then. It just depends on how far inflation falls.

All right. A lot of uncertainties out there, but not stopping folks and making predictions. Michael McKee our international economics and policy correspondent helping us walk through it and speaking to some of those uncertainties that are a little bit hard to forecast. Well, there's a lot going on right now about another U.S. government shutdown just four days away before a self-imposed deadline of November 17th.

The House scheduled to vote on a compromise plan from Speaker Mike Johnson as soon as tomorrow. But conservatives already saying that they plan to block it. And even if the measure passes, the president said he might actually veto it. Let's get some insights out of Gregory Cordy, our Bloomberg politics editor down in Washington. And first, let's start off with whatever

this plan is. It's on the table because I was a little confused by it, Gregory. I mean, it was this basically a stopgap measure that would just basically give them more time to come up with a longer term measure. I thought this is kind of sort of the same issue that led to the whole speaker uproar, uprooting a few a few weeks ago to begin with. Yeah, absolutely. I mean, it's deja vu. You remember six weeks ago, this was the

issue that brought down former House Speaker Kevin McCarthy when he made a deal with Democrats to try to get a short term spending bill through the House and then all of a sudden found an insurrection on his right flank who deposed him as speaker. Now, after a chaotic three week search for a new speaker, we have. Speaker Mike Johnson, trying to pull the same maneuver. And the math hasn't changed. The one thing he has tried to change here is he's divided up this clean continuing resolution, this stopgap spending measure. He's divided into two different bills that expire on different dates in January, February of next year. And he's hoping that that will give some

of his hard liners a little bit of a little bit of breathing room, because one of the demands of conservatives in the House is that let's not do all this spending in one package. Let's divide it up so we can we can talk about spending on the merits as opposed to just continuing everything at the same rate. He's hoping that will win over some conservative votes, but it doesn't seem to be working quite yet. Well, Greg, that's kind of the question I have when you think about the math and to your point that the math hasn't changed as he has a better shot at winning over those hard line conservatives or trying to appeal to maybe some Democrats here. Well, I mean, he's certainly banking on a reservoir of goodwill, this honeymoon that he has as speaker.

And there are a certain number of conservatives who will say, look, I don't like this deal, but I want to give this new speaker a chance. Then you have Democrats who what we saw in the speaker fight is they weren't going to lend votes to help bailout Republicans as they were flailing around looking for a new speaker. This is a little bit different dynamic. So all eyes tonight, this afternoon are on President Joe Biden. If he issues a veto threat, that will make it a lot harder for Speaker Johnson to get those Democratic votes that he might need to get this over the finish line. Remember, he only can afford to lose three Republican votes if all the Democrats are united against this and get something passed. So he's going to more than likely need at least some Democratic votes. All right, Greg, it's going to be a

hectic couple of days to say the least. Really appreciate your time and your reporting. Our thanks to greg courtney, bloomberg, white house and politics reporter. Ramon, razor thin margin feels like we've been here before. Yeah, like we've been here before. And it kind of makes you wonder what my johnson has been doing. I mean, he took off on a flight to go overseas to for some far right wing conference. Meanwhile, his caucus back here is just

still in disarray. I don't know what he can offer them because, I mean, again, it gets to this idea that the compromises that would be on the table were, I would think, some of the same compromises that failed. MCCARTHY So it's kind of like how do you thread that needle? They are appeasing to your base, but at the same time putting something on the table that the Democrats, at least enough Democrats, but would be willing to splinter off and vote for. Well, an incredibly tricky needle to

thread and not a lot of time to do it. Of course, we'll be following that all week. But of course, coming up, we're also following President Biden's set to meet face to face with China's president, Xi Jinping, in San Francisco this week. We'll get a preview of what both sides are hoping to accomplish. This is the close on Bloomberg

and. A summit of the Asia Pacific Economic Council set to take place in San Francisco this week. But the real event is the potential meet up between President Joe Biden and Chinese President Xi Jinping, set to meet face to face for the first time in more than a year here. With lots of discussions here about economic cooperation and more importantly, some thaw in the diplomacy that we've seen try to take place over the last few days and weeks. Ian Marleau joining us right now, who covers diplomacy for us here at Bloomberg. And Ian, let's start off here just with the symbolism of just these two men meeting face to face. Presumably, we're going to hear

something from them publicly, whether it actually results in anything concrete in the short term. Is there anything that investors, I guess, can find any solace, I guess they can find in the fact that the meeting itself takes place? Yeah, I think that's one of the things we've been looking for from the beginning, from the time the US started this kind of renewed push with diplomacy, with Secretary Blinken's trip to China back in June, I think a lot of people have just been looking at a sort of more stable US-China relationship as something that could be beneficial for the global economy when it comes to specific concrete things out of this particular meeting that they could look for other than the you know, there's been reports that China may unfreeze some Boeing sales. Other than that, some of the other things are more on the political side. The US has been pushing China to crack down on precursor chemicals used in fentanyl. So the US is hoping for some progress there. And there also maybe some agreement, you know, not to weaponize AI technologies between the US and China, but you know, whether that would have any commercial ramifications is probably pretty doubtful, at least in the at least in the short term.

Well, Ian, as you just laid out, there is plenty to talk about here. A lot of issues that are theoretically going to be addressed. When you think about where the US, where China is on these various issues, where is the Gulf the biggest? Yeah, I mean, I think the Gulf is probably the biggest on military to military communications. That's something that the US has pushed for with China just to make sure the two militaries are in touch. I mean, you've probably seen in the news

over the past little bit these these intercepts between us and Chinese vessels and aircraft, you know, over international waters in Asia. And that's something the US is really, really worried about. But it's also something that a lot of people doubt China will make significant progress on. Even if there is some sort of agreement. There's a chance that if there is a hotline, for instance, that China doesn't pick up the phone, you know, when push comes to shove out there.

And that's something the US is really nervous about in terms of avoiding an actual inadvertent conflict with with China. One thing I guess elephant in the room here, if you will. Yeah, forgive the pun, is the idea of continuity in U.S. policy towards China. And we know that in the past that has sort of rattled some of the Chinese negotiators, obviously, during the Trump administration and then the uncertainty as to what the transition would be like to the Biden administration. There is certainly a real possibility that in a year or so time we'll have a different president.

Is there any sort of assurance that the US that the current administration can give the Chinese that if something does change in the next year and a half or so, that they can expect at least some modicum of continuity in the promises made today? I don't think there is, and I think that's probably one of the things that's keeping Chinese negotiators on their toes here. As you've said, I mean, the previous administrations attempt threw China off balance a little bit, and I think they were maybe surprised that this administration kept a lot of those policies in place. And we still see them sort of narrowing the focus to some degree on high technology, semiconductors and other things like that, which have had an impact for investors. But it's not clear whether it's on Iran or on China that any US administration can make any sort of assurances. And I think in this case, they probably maybe wouldn't even want to because it does give them a little bit of an advantage in terms of some of this stuff. But at least when it comes to the diplomatic re-engagement with this administration, there's been a lot of face time over the past little bit, and that's been a big change from the months preceding at least Blinken's visit back in back in June. Yeah, absolutely.

So definitely the optics a little definitely a little bit better than what we saw maybe a year or so ago. Ian Marlowe, Bloomberg, senior reporter, covering diplomacy ahead of that APEC summit now taking place out there in San Francisco. And of course, the headliners, Katie Greifeld. On Wednesday, we're expected to see Jinping and Joe Biden meet for the first time. I think something that would actually help, I think, just in the court of public opinion is if Xi Jinping agreed to get those pandas back to, you know, I was really upset by my attitude towards China completely. Don't you think about acts of goodwill? Yeah, certainly be a bit.

Yeah. So we'll see. I would imagine they'll talk about it. Yeah, I think it's big news here. A lot more coming up here on the close. This is Bloomberg.

This is the countdown to the close. Taking a look at markets right now, equities still a mixed bag. So two hour treasuries, but a little bit more activity right now in the commodities space with crude oil up for a third straight day. Abigail Doolittle standing by right now with our commodities close, and it's that rally in crude oil that's really driving the commodities space for me, because we do have the Bloomberg Commodity index up more than 1%. Yes, the dollar is down, but just modestly. So really, why divide with stocks the difference between these two segments of risk assets within that overall silo? So crude oil breaking a three week down streak, a little bit of a reprieve here, as Romaine mentioned, up three days in a row.

Natural gas up 5.5%. This as colder weather forecast take hold. Copper up 2.3%. And we have a lot of the metals rallying ahead of CPI, ahead of retail sales, ahead of pie, including copper and then soybeans up 2.8% up for a second day in a row. And some of this has to do with some

activity out of China. Remain absolutely here. Let's keep an eye here on what's going on further in the commodities space and a closer look at lithium. ExxonMobil is making its first major foray outside of fossil fuels in decades. The oil giant is working to become one of the biggest suppliers of lithium for electric vehicles. Big oil reporter Kevin Crowley joining

us with the story from Houston here. And Kevin, let's start off here with this idea of just how much how far is Exxon willing to go into this space? Is this just going to be some sort of side gig or is this going to become a core component of his business? Well, certainly to begin with, it starts off as a bit of a sidekick. I mean, this is this is there's still oil and gas is still core core to their business model. But they are they are going hard into lithium and they're doing it in a particularly new way called directly lithium extraction, which is quite a different way that lithium is produced currently.

But Exxon Exxon has big plans. They see they see scaling up to 100,000 tons per year by 2030 or so, which would likely put it into the top ten lithium producers globally. So they they certainly have big aspirations. They will be the pace will be determined by the by the market. But they see lithium demand quadrupling

by 2013. So they seem to have plenty of space to grow here. Kevin, I love this story because I learned a lot. So the lithium, it's going to be

extracted from underground salt reservoirs in the smack over formation in southern Arkansas. Like you said, big plans to about 100,000 tons a year. What is that going to cost Exxon to scale up to that point? So they haven't given any numbers yet.

Experts say it will start up in the hundreds of millions of dollars. And by 2030, they expect to be spending billions of dollars in in this in this area. Now, that's that's you know, Exxon is used to spending billions and billions of dollars on on large mega megaprojects around the world. So this is this is not something that's completely outside outside of their wheelhouse. And yeah, the process is is pretty interesting indeed. Most lithium at the moment is mined to either hardrock mining or through drying ponds which you just showed there on the on the screen.

But Exxon wants to do their storage direct lithium extraction which is which is like you said, it's pumping brine water from reservoirs in southern Arkansas and then processing them to take the lithium out. Well, I'm curious about one thing here. I mean, this isn't exactly. Yeah, know, there's a lot of players in this space.

Let's just say there are a lot of folks that are already doing this. So I'm not sure what exactly makes Exxon special in this space. Also, the whole idea of lithium being relatively widely available, it's more just about the environmental impact and how you sort of mind this in a way that doesn't run afoul of some of the regulations out there. What is the secret sauce that Exxon's going to have to say? Their competitors, like Albemarle or Lithium Americas, won't have? Yeah. So they said they think this direct

lithium extraction process, which which is not commonly used at the moment, is is both cheaper and has a lower environmental footprint. And that believes they believe that can give them the edge because of course lots of that buyers of these metals are making electric cars and they want they want metals produced in the in the least environmentally impactful way possible. So Exxon believes that they can they can they can offer them this plus as well. It's domestically produced metal as opposed to bringing in from overseas. So they see that there's a an advantage there, too. All right, Kevin, got to leave it there. Really appreciate your time.

Our thanks to Bloomberg's Kevin Crowley. Now still ahead, a disappointing earnings season for dating apps is leaving matchmaking services on rocky ground with investors. More on that next. This is the close on Bloomberg and. All right. Let's get a view from the sell side with our top calls. Big movers on the back of analysts

recommendations. And we start off with PepsiCo. Jefferies restarting coverage of Pepsi and other consumer staples and beverage companies. The analyst viewing Pepsi as the most durable business among the group and says the stock could very well top Coca-Cola's market value in the next two years. He attributes that to a large part to Frito-Lay snack business that Pepsi has, saying that Coca-Cola is exclusively a beverage company which gives Pepsi the upper hand, though, shares up 8/10 of a percent. Next, let's take a look at CrowdStrike getting raised, a buy from hold over its Stifel in the price target boosted all the way to 225 from 153 bucks a share. The analyst says CrowdStrike remains the leader in the cybersecurity space and says he expects the company to benefit from a platform consolidation that's going to play out across the broader cybersecurity industry shares higher by 2% on the day. And finally, let's take a look at being

upgraded to buy from neutral over at Citi. But the analyst confident that demand for personal computers will pick up, especially as artificial intelligence tools are added to some of those newer models. Expect this to drive revenue growth and free cash flow generation, so says the analyst, shares higher by 6/10 of a percent on the day. And those are some of our top calls. We're going to shift gears just a little bit to the world of online dating. Both users and investors are curious about pricing plans on platforms like Bumble and apps run by Match Group. Joining us now for more on the cost and

value of dating apps is Shweta Khajuria. She's a research analyst over at Evercore ISI. And she rates Bumble and match group an outperform. So let's start off here with the performance, though, of these stocks. We know they're both down this year. I believe they were both down last year as well. Why is it that investors seem to have soured on some of these names? Well, first of all, thanks for having me.

In terms of the investor sentiment on dating apps, there are few things that have the category as a whole have seen several headwinds. So let's take match matches the category beta. It is the category really with a huge market share. And the biggest problem that Match is facing today is Tinder. Gender is over 50% of their direct revenue. It's the highest margin asset and what recently over the past several quarters now call it five quarters, what Tinder has experienced is their fare growth has been deteriorating in the sense that net adds net additions, sequential growth affairs has been negative for the past five sequential quarters when the biggest asset in the category beta is turning negative. That is a question mark among investors

and that is why we've seen the stock move the way it has moved. Yeah, the same thing. Similarly with Bumble Bumble, the fundamentals are healthy, but because it's got a very clear number to the valuation, it's somewhat correlated with how match does.

And so it is very much linked in terms of the multiple it gets. There's a broader question out there right now about how these platforms are, I guess, are taking the approach that they're taking to pricing and whether that has had an effect on engagement on the apps. I mean, dating is never going away. There's always going to be a large pool of people looking to, you know, meet up or hookup with other people here. So I'm wondering that if the actual growth isn't there in terms of number of people coming to the platforms, what are the platforms themselves doing that might be contributing to that? Well, so the category as a whole is expected to grow. Call it high single digit percentage. There is the online dating penetration. If we just look at it on a high level in

the developed markets, it's somewhat known that it is about 50 to 50% plus penetrated in the US and in Western Europe. The opportunity is in developed markets such as LatAm, in Asia, etc., where the penetration rates are still in the high teens. So there's much more room to grow in those markets.

And that's where we are seeing injured bumble really accelerate growth rate in international markets. Now, what can these apps do in the developed markets? One thing that matches that is clearly increased prices at Tinder, and we've seen that come at the cost of peers. Peers have taken a hit because of the price increase. But going forward in a normalized environment, what can they do? These are product based apps. So if the product is not improved fundamentally, whether it is increasing match rates or increasing the number of connections that you get established on these apps, the value proposition that users get, then users are going to move on to something else and these apps will lose its value proposition. So the number one thing that both

management teams that match at Tinder, at Hinge and at Bumble are focused on is driving greater value proposition through their product, through product improvement. They can do that. Then their conversion can ultimately go up. Well, just to meditate on the pricing a little bit more, situate this conversation and what we're seeing in the economic backdrop. Of course, we know inflation has been an issue.

We've seen maybe consumers start to cut back. When you think about raising prices at match, potentially at Bumble. As well. And you think about the consumer that

they're serving, How much of a risk is that when they cut back, they'll choose to cut back on these dating apps? Well, it is highly debatable if the price increase at Tinder was the right timing. I mean, there are bulls on the on the stock who think that it was the right thing to do with the new management team coming in. Then there are those who believe that it was the wrong timing given the macro concerns, even though in their prices historically have been well below low gen BUMBLE'S. They were just right sizing the pricing with the price increase, but they saw that with a bigger hit.

Now, on a go forward basis was match management team called out as a part of the exposure to student loan repayment beginning in the fourth quarter? They called it out as a 1 to 2 point headwind to the growth and predominantly coming from the Gen Z work because that's the board that has the most exposure to the student loan repayment. If macro going forward beyond the student loan repayment gets worse. I would imagine that that would be a greater headwind, although mostly from Olive Garden followed by subscription.

All right. What a great to catch up with you and really great insights here. A closer look. Bumble match and the rest of the dating apps out there.

Shweta Khajuria, she's a research analyst over at Evercore ISI. A closer look there at our top calls. And Katie, this gets to an issue, though, too. And I mean, just and this is obviously anecdotal, it's hard to pin down, but I have friends who are still in the dating scene and a lot of them have complained. They're saying that the types of fees and add ons that these sites are adding, it's kind of discouraging them from actually participating on the app. And a lot of them have actually said that it's now easier just to go out and the old fashioned way and meet people, you know, and gyms and bars and restaurants.

I guess it depends on how you see it. I mean, when you think about these dating apps, is that a staple or is that a discretionary item, your own personal budget? And I guess that's a personal decision. It just depends on how needy you are. That's true.

All right. Well, you saw the share prices, too. I was actually surprised with that analogy, significantly down like 20, 30% on a year to date basis. But they were down pretty significantly last year to the lows, I believe, for both Match and Bumble.

So it's been it's been rough out there. All right. Well, maybe the only way to go now is up. That's true. All right.

Coming up here, we're going to focus in on what's been going on in America's universities and colleges. Drew Gilpin Faust, she's a former president over at Harvard University. She's stopping by to discuss her memoir, Necessary Trouble growing up at midcentury and will bring us through the similarities and differences of some of the conflicts that we're seeing today and what she saw back in the 1960s. This is the close on Bloomberg. Welcome back to the close. It's time now for our Wall Street Week Daily segment. Those on Wall Street with David Westin joins us as he does every day around this time.

And David, I'm sure, as you know, and there's been a lot of protests on college campuses across this country in the wake of the Israel-Hamas war here. And let's just say there's a big debate going on right now about free speech and about how these universities are dealing with people wanting to voice their opinion. That's certainly true, by the way, having been in college in the seventies, we had in the seventies a very different context. And we're seeing it once again now. We're bringing in somebody who really has a perspective on this is Drew Gilpin Faust. She's the she was the first female

president of Harvard and she's the author of Necessary Trouble Growing Up in Mid-century. So, Dr. Phelps, thank you so much for being with us. At the very beginning, the foreword of your book, you say history is about choice. You, of course, are an historian. It's about choices. And a lot of your book is about choices.

You observed and participated in in the middle of last century. I wonder if, as an historian, you could compare and contrast what we saw in the middle of last century, largely having to do with civil rights, with what we're seeing on college campuses today in the context of the Israeli-Hamas conflict. Well, I can try to make some comparisons. I always think it's dangerous to try to connect to directly between the past in an effort to somehow predict the present. But let me say a few things about what I feel the distinctive characteristics of those demonstrations were in my college era. I'm struck by, first of all, the impact of social media on demonstrations today and on the ability of people to organize, but also the ability of people to target not just groups, but individuals and call them out and put their names up for others to attack. And of course, none of that was

available to us in the 1960s. And I should say I was an activist both in civil rights demonstrations, but also in the anti-war movement. I graduated from college in 1968, and my book really traces those years and traces my life from 1947 to when I turned 21 in 1968 and ends with a consideration of what those demonstrations were like.

We could not communicate as rapidly. We could not identify people as rapidly. We could not target people as rapidly or as effectively. And so I think that has led to a very quick escalation and a dramatic escalation in in the ability to express oneself, but also to disrupt the lives of others and to disrupt the lives of those around us in the present day. So I'd say that's one distinctive difference. Another thing that strikes me as notable is my generation of college students felt it wanted to distance itself from its parents and from adults. We felt we knew more. We were smarter.

We saw a new world dawning that those older than us did not. The attack on regulations in colleges, particularly for women varietals, they were called rules, other kinds of controls. These were the what we wanted to oppose. And when we expressed ourselves politically, I think we would have been astonished by the idea of trying to get statements from our own universities about their views on the issues at hand. That has obviously been a huge focus of college students and campuses today because I believe that students are now much closer to their parents, to an older generation, to those who have come before and to the institutions in which they find themselves. And so they want kind of the endorsement and approval of those institutions, and they want those institutions to take a stand. That was quite different from my IRA.

For example, we might ask an institution not to give the federal government the record of male students grades because the draft operated in Vietnam at one point on the basis of how well you were doing in college. If you weren't doing well, you were subject to the draft. If you were doing well, you would have a lower likelihood of being drafted. So we would demand things from the institutions of that sort, like do not send in the record of grades. But there wasn't that same sense of

endorse us that that is now very much a part of the conflicts that are currently underway. I am curious, though, I mean, as an administrator, I mean I mean and you know, this I mean, just from your time in college and I think we all know this, that, you know, kids of a certain age, I mean, we say and do things we're passionate about things here. And universities are kind of supposed to be that space that allows folks to have that discourse, obviously in a constructive way, but nevertheless, to have that discourse here. So given all the sort of things that you

mentioned there, the sort of the modernization of a lot of the issues that have now made it more complicated to have that discourse, how do university presidents and other administrations, I guess, address that without just basically shutting down discourse altogether? You know, I'm not going to answer that question because I'm not a university president. I have a successor who is undertaking this and I no way want to position her by coming up with what I think she ought to be doing. I'm not in the middle of all the pressures on not saying what she's saying.

My day at running Harvard is over and has been over since 2018. So I believe that it's important to let those who are responsible and charged with these with these responsibilities to carry them out independent of of my holding forth about what I might would have, might, might have done had I still been in office. I will say that when I was president, the first number of years I became president, 27, and students were pretty quiet for a while. And then with Occupy Wall Street and rising intense feelings about climate change and divestment, then the student body became much more active and much more engaged.

And so we've seen, I believe, a kind of escalation of student activism, but also student concern about the world. And and that characterizes the moment we find ourselves in now and is both a challenge to universities, but also represents on the part of students passions that that are worth considering as the hallmark of an individual who cares about the world in which they find themselves. Dr. Post I certainly respect you don't want to second guess what's going on in any college campus today. But let me ask a related but somewhat different question then is how is the job of being a university president changed as you've watched it develop? Because it looks like there are a lot of stakeholders you have to be worried about right now, from the students to the faculty to the administration to yes, donors and alums. You've got a great word there, stakeholder there.

A lot of people who consider themselves constituents of any university. And for the president, that is obviously a source of of great satisfaction that so many people care about universities. But it also means that there are competing voices coming at you all the time with often very different agendas and different perspectives. Those enrich your ability to do your

job, but they can also be extremely challenging to reconcile when they're coming from different and sometimes conflicting points of view and and conflicting interests. Dr. Fox, thank you so very much for being here. Really appreciate it. Drew Gilpin Faust, former president of Harvard University. And on Fridays Wall Street Week, we're

going to be joined by Tony James. You know, I'm Tony James of Jefferson River, originally from KKR. We're going to talk to you about the history of private equity and how it developed over the years. As you know, it's gotten a lot bigger.

Yeah, And it's interesting, the divergence actually among the big private equity firms. Yeah. And they're kind of at another inflection point. He's great to talk to because you think about where he was at the sort of the the dawn of this new industry. And now the idea that everyone seems to think that it's set up for a big shakeup sometime soon.

Yeah, exactly. And he's getting a lot of pressure, as you know, because of interest rates and other things. Yeah, we're going be talking to him on Wall Street week at 6 p.m. Eastern Time on Friday. And of course, you can also catch David

every day around, this time here for his daily Wall Street Week segment right here on the close as we round out into the final hour of trading here on this Monday afternoon, the price action somewhat tepid and the volume somewhat low, as most investors right now really waiting to see some of those official government reports. CPI tomorrow morning, 8:30 a.m. Washington time. That's going to be followed later this week by some big retail sales data as well as other other data points here on consumer spending. This is the close on Bloomberg. And.

Almost 3 p.m. here in New York. This is the countdown to the close. Let's get a view from the top. I'm Romaine Bostick and I'm Katie Greifeld.

And we do have some breaking news to bring you. This coming out of Starbucks. Basically, the Starbucks union is planning for its largest ever strike on November 16th. Apparently, this would hit thousands of of employees at hundreds of sites planned for November 16th that is actually pegged to the company's Red Cup day. It's a very popular day romance. I don't know if you've ever been there, but they basically give out holiday themed reusable cups. This is coming after Starbucks, according to the union said that is refusing to fairly negotiate at these cafes. So you'll see three days.

We'll see if anything changes between now and then, eventually see if there's any real impact. I haven't set foot in a Starbucks in years. I don't really drink coffee, but I do wonder about that. So, you know, there's a lot that you

don't know about me. Katie Greifeld But what I will say is that when we talk about all the labor issues with these stores and we see all those individual stores and some of the pushback against Starbucks here and we know those efforts weren't as successful. So you do wonder if this is kind of a re-up of that and whether we're just going to see the same sort of process play out where nothing ends up really happening? Yeah, it'll be interesting to see how this plays out. You think about labor intensive jobs and

a Starbucks barista is right up there. Starbucks shares are currently off about 7/10 of a percent. Not too much of a reaction. Yeah, not too much of a reaction. And they were already down. As far as the broader market here, it's been a mixed bag here.

We should point out the volume is incredibly light. We're I think we're about 20 to 25% below where we would normally be around this time. And I think that's because, Katie, a lot of folks are really waiting to find out what happens tomorrow with that CPI report which comes out in the morning here. You take a look at your ten year yield at four, six and nine x crude, up for a third straight day here. A flip of the board, though, because I just want to point out something real quick to you, Katie, before we go through some of the individual movers, gainers and decliners here on the day. And that's really the idea that a lot of those short positions, at least on the broader market, have been completely unwound, at least if you believe what we're seeing in the CFTC data. Yeah, it's pretty neutral when you think

about positioning right now, at least according to that slice of what the CFTC covers. But like you said, let's go through some movers right now. There's really only one I want to talk about. What's a three on the board?

I want to talk about Tyson. Oh, chicken is saying, yeah, it's the biggest US meat producer. Basically, sales are going to remain flat in the fiscal year that started in October. Operating income expected to fall short. But let's talk about beef. They wrote down the value of their investments in beef.

There's less cattle, cattle available for slaughter and also buying fattened animals. Apparently, it's on its track for its third straight annual increase. So there's a lot of drama when it comes to us cattle right now. Yeah, the beef story is actually really interesting too, because in one hand you would think some of the dynamics going on would actually benefit the actual producers themselves. But we've heard from a couple others basically saying the same thing as Tyson. All right.

Let's also talk about VF Corp. Yeah, it's a band. Exactly. One of the North face today. Don't have a good reason why. And really quickly, Henry Sheehan sales

this summer has gone slower than expected, reversed, though adjusted EPS came in about as expected. I love it. No real reason why, but we're going to mention it anyway. Stick with us. We are less than an hour away from those closing bells. Our cross-platform coverage, it starts right now. Come down to the close.

Bloomberg's comprehensive cross platform coverage ahead of the U.S. market Close starts right now. This is the countdown to the close Romaine Bostick alongside Katie greifeld.

We're joined right now by our colleagues Carol Massar and tim stanwick. Happy monday to our bloomberg audiences across all of our platforms, television, radio originals, and our partnership with YouTube. Welcome back here. Carol Massar. On a day in the markets that I guess is kind of more of a holding pattern, right? I feel like everyone's just kind of waiting for the economic data because of course, that's the feed through as to what the Fed might do next. Absolutely. It's why that CPI print tomorrow is so important. Having said that, the most read story on the Bloomberg shows the division among the big Wall Street firms about kind of what comes next when it comes to said monetary policy. If you're looking at UBS and Morgan

Stanley, they think the Fed is going to be a lot more aggressive when it comes to interest rate cuts next year as they see inflation cooling flip to Goldman Sachs and they think it's going to be fewer reductions when it comes to interest rate cuts and maybe a later start. So to me, you guys, it says nobody really knows what happens. Now. What if both are wrong? Then I guess what if the Fed what if the Fed is the one who's right? Right. The federal funds rate. You know, the Fed says, okay, it's going to be 3.9%. Let's talk a little more detail, though, about what these companies are saying.

But these strategists are saying UBS strategists see rates falling to between 2.5 and 2.75% by the end of the year. That's next year with the terminal rate plunging to 1.25% by early 2025. Yeah, we should point out, too, we were talking with Michael McKean, our economics correspondent, a little bit earlier. He also kind of pointed out the. D of some of these projections, given how far out they're trying to look. And obviously that's the job of these strategists.

But so much can change over the next weeks and months. And he even pointed out, look, you go back a year ago and you look at some of the economic projections that we got out of the same folks, some of the projections about the Fed rates. And of course, we know the vast majority of those folks who are wrong are calling for a recession. Where is it? Where is it? I don't know. And you think about what could actually deliver the kind of cuts that Morgan Stanley is anticipating.

And, you know, where is it? Where is it? That is exactly what I said about Carol Massar last week, where I didn't know where she was. I don't know. It was like, Where's Waldo? She was only gone for a couple of days. And you just missed Carroll so much. But can we talk about the marvels? Apparently, no one I think anyone is talking about this is a pretty amazing stat. It only generated $47 million in the U.S. and Canadian theater ticket sales this weekend. That is the lowest opening ever for this

superhero franchise. I was not among the people who saw this movie. Well, yeah, not too many people saw it. And there's been a lot of, I guess, hay made about their idea of whether they've just sort of run out of creative ideas and whether that kept people away or whether this was more a reflection of the fact that the actors couldn't actually promote the movie. I mean, there are a lot of people saying, hey, I didn't even know this movie was coming out. I think that's fair to say, you know, because of the because of the actors strike, because the writers strike before that, they were certainly limited in what they could do. Do you know that there have been 33 of these films? No.

Isn't that wild? Wow. Okay. So there was a great story. There's a I've not seen them all. No, not even close.

I tried to watch them during the pandemic. We made it to, like, two or three of them. Well, great article in Bloomberg Businessweek ISE about how long it would take if you watched. SAT down to watch all of the Marvel content that Disney has created since 2008. How long you ready for this? Yes.

31 days. 50 minutes. Let's do it. Okay. Actually, let's go live like fire a month. Okay. That's pretty nonstop what you say to the point that, you know, the actors and the companies really haven't been able to promote these movies. I don't know if you guys watched SNL

this past weekend, but Timothee Chalamet may want to guess. And he mentioned Wonka a lot. So there you go. You got to get creative. You can now promote. Have you seen the trailer for that movie? I don't think it's ready, but I do like Timothée Chalamet. Okay. Well, maybe you'll be the only one that goes sees that movie too, as well. It gets to the broader issue, though,

too, is this is there a broader question about moviegoing in general? I mean, I know we've had a couple of hits this year with Barbie, but I think most people assume that that was kind of a one off in terms of actual going to the theater to see these things and that you really just need something to really just be in the zone. It was often Vladimir was pretty big concern. Movies did well to the concern, but again, that was in the zeitgeist. And I mean, it was like, I know Marvel is like I look at my guess is Marvel will end up making like a couple hundred million dollars because that's just what it does, right? It'll be a slow burn and maybe recoup some of that once it gets to the streaming services. But to get people to go out to a theater on the opening weekends here, look, you got to be Taylor Swift or you got to be, you know, you know, Barty Barbie, Greta Gerwig and all those folks and and have something really sizzling to get people out there.

Yeah. I think what what I don't know strikes me is that is this a sort of a one off of in terms of Disney and Marvel or is this part of something bigger? Well, as I said, if they sell something, it's a 33rd one and the best. But I mean, that's review I saw previous ones did so well. The best review I saw was in the New York Times, where the headline literally said, You've seen this movie 32 times before. It does get to start to be I don't know. Brie Larson, though, in lessons and chemistry, unbelievable on Apple TV.

So let's go to the Marvel movie. I have to put that on my radar. That's not a marvel movie. Yeah, not a marvel movie. Did you watch that this weekend? Which. Yeah, I've been watching it. Yeah. Yeah. I saw this great thing on Netflix this week about Mr. Chow is a great documentary on Max

excuse me HBO Max about that. Mr. Child runs across the restaurants, but also talks about his career as an actor. And I guess artists and everything else are really good.

I guess I would argue, since we're getting movie recommend, there's a lot of good stuff out on streaming right now. There's a lot of stuff that keeps coming out. So yeah, I've been paid for that already.

What about you, Tim? You've got a lot of free time now. I like reading books. No Barney or Wiggles or something. Just blew it non-stop. That's what we do. All right, guys, that's a wrap. We're going to come back, though, in less than an hour's time. Our cross-platform coverage on the

markets on this Monday, radio, TV, YouTube and, of course, Bloomberg Originals. Join us at 4 p.m. Wall Street. Time for Beyond the Bell. We continue our coverage here on the close. Countdown to those Bells. Just about 50 minutes ago, go.

And Melissa Brown is joining us, managing director of applied research over a Acciona. And Melissa,

2023-11-18 23:00

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