An Athleisure Brand That's Defying the Odds

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio, or watch us on YouTube search Bloomberg Global News. Just about one year ago, the Southern California inspired active where brand Vori got a four hundred million dollar investment from soft Bank, giving the company at that time a four billion dollar valuation. That brand founded in by Joe Couldla. We got Joe Kudla joining us now, founder and CEO of Vori joining us on the phone from New York City, trading one coast

for the other coast. Joe, good to have you this with us this afternoon. How are you. I'm doing great, Thank you so much. Great to be here in New York. Hey, Well,

thanks so much for joining us on this UM. So I want to talk about the company, but before we get to the company, I want to talk a little bit about the macroeconomic environment and get an understanding from you about how the consumer is faring around the world right now, because you guys are an expansion mode, which is definitely not the same thing as other companies that are out there right now that are pulling back a little bit. Absolutely, UM. You know, it's an interesting time.

There is, without question we are you're we're dealing with complicated macro economic issues on a global scale, UM. But we do feel there's a bifurcation between you know, best in class brands that are leaders in their categories, that are innovating UM, and folks that are maybe called the middle of the pack, more legacy mass market brands UM, that are seeing you know, growth really slow as a

result of this inflationary environment that we're in. You know, we feel very fortunate to be UM, you know, experiencing dynamic growth this year. I feel our our customer, are relationship with our customer has never been stronger. We're excited about Q four and holiday. When we look towards we are being optimistic but cautiously optimistic. We are planning for another year of dynamic growth. We are going to continue to expend our fleet of retail stores, but we're not

trying to swing for the fences. We want to lock in a number that we're that we're really content with, not overinvest in the business, UM, and be be responsible with our growth because there are some macro factors that we're watching very closely, and UM, we just don't know how things will go. No, And you know it's interesting too. I think at the time about a year ago of that soft bank investment, which was just about a year ago, UM, it was reported that you plan to open more than

a hundred stores in the US over five years. So as you look at those macro concerned, has that number been reduced or that plan that forecast been changed? You know it hasn't. Actually, you know, the performance of our stores today and has never been stronger. UM. We're still

very bullish on our vertical retail expansion. UM. You know, four wall contribution payback still best in class, and you know, we're in the unique position because you know, relative to the size of the market, theory is still very much early stage. You know, we're in our seventh year of selling in market UM, and there's a lot of opportunity to gain market share UM as we grow into the

years to come. So while we might be in a more challenged macro environment, I think that will be counterpunts by the growth and taking market share from some of the other more established players. So talk to us about growth metrics where Bloomberg we're nerdy, We leve all these numbers, so talked about top and bottom line growth. Give us an idea same store sales growth. What have you guys

been seeing? Yeah, I mean this year where we're seeing, you know, the business is going to grow north of between seventy and upline UM at at a pretty sizeable scale. It's a number that we're very proud of. UM. You know, our same store sales are still comping very strong over prior years, demonstrating you know that you know, it's still

very much early in our awareness curve. People are experiencing the brand, we're converting them into loyalists, they're shopping with us for years to come while acquiring more new customers. So we see really great year over year growth in our existing fleet UM. And then you know, as we expand the network across the country. You know, we're leveraging e commerce data so we can be really intelligent about where we go. UM and we tend to open strong.

And I think that that trend is really accelerating as the brand builds more and more awareness. Joe, how are you doing with inventory right now? We saw inventory challenges of course from Nike just in the last couple of weeks, not to mention, you know, companies that we can't necessarily compare you to, like Target for examp ample, How are you managing inventory? Yeah, it's a great question. You know,

we have definitely seen impacts from this complicated supply chain environment. UM, although we are seeing it begin to normalize, especially on the logistics side of the supply chain, you know, getting your product in containers, getting it on boats and delivering on time. That has become much more normalized. The cost of a container, you know, from Asia to the West coast of the United States. You know, pre pandemic was you know, called three thousand dollars. It went up as

high as eighteen thousand dollars. Now back to pre pandemic levels or materially close to pre pandemic level. So the logistics aspects of supply chain have normalized, where we're still seeing a lot of challenges in the ability to source raw materials um and get them delivered to your factory partners on time. So what happened to the larger marketplaces?

You know, your spring deliveries delivered late. That created promotion as we transition and from spring and summer into fall, and then you saw the same thing happen, you know, and it was it was a double whammy with the deliveries of fall being material delayed for a lot of our peers, and that's putting a lot of pressure on inventory levels. That's why a lot of folks anticipate highly

promotional holiday coming up. Viewer. While we're not immune to these challenges, we've stayed very close to our supply chain. We've dealt with delays, but nothing that's been catastrophic, and we've been able to maintain our full price business, which has been a goal of ours since we launched in the spring of two thousand and fifteen. And we don't

anticipate in overly promotional holiday. So you probably you probably know better than anybody else the competition that's out there, whether it's you know, those giant brands, including Nike, You've got Lulu Lemon, You've got under Armour. I mean, it's a super competitive market that could be on track for some slowing growth because you know, what we're seeing is people are going back to the office. I've stopped wearing

my yoga pants during work. You know, I'm back wearing you know what I would call grown up clothes um in a big way. So tell us, you know how, what's the competitive advantage that gives you the optimism that you can continue on your growth trajectory. Yeah, I think those Yeah, it's a great point, you know. And it's it's interesting. When we launched the brand, we were facing

this competition and we saw nothing but open space. And I think it's due to our product positioning, our brand positioning, the ethos of the brand, which is built to move in style for life. And it all comes down to building product that will support you in a workout, but it will transition and work across multiple aspects of your life. And so we prioritize fabrications that are have performance at

their core, but they're incredibly soft. We design all of our products with a more modern athletics fit that works across multiple aspects of your life, and we design our product with an aesthetic, color story um that is sophisticated, that doesn't identify you as somebody going to the gym, are going to compete in a sport, but it just

again works across multiple aspects of your life. That was always the premise of the brand, and we applied it first and foremost to activewear product that you would move

and sweat in. But the brand has really evolved and when you look at our assortment and where we're growing, it's evolved from core fitness into outdoor, which is rooted in outerwear, and the fastest growing segment of our brand is travel commute, which is taking the lessons those technical fabrications and constructions that we applied to activewear and applying it to everyday sports where and that's one of the

fastest growing segments of our collection. And those are the products that you're wearing to the office, you're wearing to travel, you're wearing on the golf course. And so I think our vision to build a more well rounded collection that speaks to multiple aspects of your life is really benefiting us. As you see the preferences of the consumer change. So there are a couple of different directions that it seems like the company could go at this point in terms

of trajectory. One of them is the Lulu Lemon route where you go public. Another one and forgive me, but this has happened before. I think of a company like Outdoor Voices, which you know, five years ago was the talk of the town of the town and has gone through several CEO transitions and a New York Times profile that essentially said that it imploded after raising about fifty million dollars in funding. How do you avoid the fate

of a company like Outdoor Voices. It all comes down to your people, incredible leadership, alignment of your people, but higher talent to people that are much better than yourself. That's been our ethos from day one is building an incredible, incredible team that can see around those corners, you know, and prioritizing making incredible products. You know, we are maniacal about our products, our level of service. You know, the the NPS scores in our stores are off the charts,

and I think that's the most important thing. You know, it's hard comparison. You look at a brand like Outdoor Voice is in theory. You know, I wasn't great at raising capital in the early days. Admittedly um I didn't have a background building an apparel business, and so the little capital that I did get, I had to make

it stretch a long way. And so we prioritized, you know, the basics of business, the fundamentals of you know, acquiring customers profitably from day one, and we built a business that was profitable from early stage and we never had to sacrifice that profitability for growth over the years. And

I think that's why theory received. You know, one of the highest private market apparel valuations ever is because we've been able to demonstrate a commitment to growth, doing it profitably and also responsibly with our commitment to E s G and making decisions that prioritize the planet UM as we're as we're building, which is an important part. Increasingly for consumers, we know that they look at what a

company stands for their impact on the environment. Hey, Joe, just before we wrap up, So what's the endgame here? Is it ultimately to go public at some point? I think that could be a viable outcome. Right now, we're very heads down building the business. We're having a lot of fun. I'm a young man. I've got a lot of energy for the business. We've got big plans for growth both here in the in the US as well as abroad, and so today that's what we're focused on.

But you know, we want to optimize the business and provide the best return for our shareholders. A public offering could be a viable option down the road. All right, We're going to leave it on that note. Great stuff, Joe, and stay in touch so that we can, uh, you know, here more as you guys continue to grow the business here in the US and certainly outside. They're based in Encinitas, California, which is like the best place in the world. Okay,

somebody from southern California like Encinitas is great. I know you're kind of talking your book there, Tim Stinovic. All right, Joe could thank you so much. Founder and c F Vori joining us on the phone in New York City. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Well, we mentioned earlier you know what's past is prologue, which gets us to a story in the upcoming issue of Bloomberg Business Week.

It'll be a new double issue out later this week. It's a story about Paul Woker's inflation fight and how it hints at what lies ahead for the current Fed chief J. Powell. Yeah, the Fed had to inflict a lot of pain in the eighties to convince markets. It was serious. We've got just a fantastic guest with us this afternoon. Christine Harper is Executive editor of Finance and Investing at Bloomberg Editorial. She joins us live in the

Bloomberg Interactive Broker Studio. She's also, along with Paul Woker, the co author of Keeping at It, The Quest for Sound Money and Good Government. It's paul workers memoir. So, Christine, you spent a lot of time, um with the late former Chairman of the Federal Reserve. I just want to start with with that as some context here, give us an idea of you know how he would in your interpretation, Um,

look at the inflation fight that's J Powell is doing today. Well, I can tell you when he was writing his memoir back in eighteen No, but he was playing attention to inflation. In fact, if they were at all, it was in an effort to get more inflation right, So he was quite concerned that people were underestimating the risks, and so part of the mission of the book was to remind people of how important the central bank's role is in in in keeping inflation down and maintaining that credibility that

he fought so hard to maintain. I mean, he had been involved in getting the dollar off the gold standard, and after that the dollar was not it was not connected to any actual value, and so when inflation took root, he had to drive interest rates up to unprecedented levels, caused all kinds of pain for people, for financial institutions and and um. The result was there was more credibility

in the dollar. It some people talked about it when on the Vulcar standard from the gold standard, but you know, that's something you can't squander because he fought so hard. So it's kind of like having gone to war to fight a fight, you know, to win a battle, and then discover that your future, you know, commanders are allowing you to give up the territory again. So he he would have been very upset that inflation was allowed to

get to where it was. We're talking like Christine Harper and as we mentioned this is in the upcoming new double issue of Bloomberg Business Week out later this week. Also with us is the editor of Bloomberg Business Week, Joel Webber. Christine, thank you for this remarks. Uh also just wanted to ask, you know, and you might have to extrapolate here a little bit, but I mean you

you got to know Mr Vocal very well. I'm curious what you think, if anything, Powell might have learned from from him, and if not him directly, then the book. Oh yeah, well, I mean, you know, as you and I have discussed. I mean, one of the things that's so interesting is how often FED Chairman Powell invokes not only you know, Volker himself, who he says he's a great admirer of, but but the book. I mean, he

talks about everybody should read it. And he he has used this phrase keep at it, which people see as an echo of the title keeping at it um let one more time keeping at it um And you know, uh, the thing that I think Powell sees, and I mean one thing that Vulgar made clear was when I was speaking to him, was how how much he's he supported Powell as FED chairman because he liked the fact that Powell had this similar to Vulcar had this experience of

having worked in the finance in a private financial institution. In Vulcar's case it was Chase, in Powell's case it's Carlisle and other places, and also working at the Treasury Department. So understanding markets, understanding the government is really important to being practical in the job, and not just being an

academic theorist. So I think um Powell shares that sort of recognition that you have to win credibility from the markets, from the government, all these sides, and be practical in your approach and not just you know, not just trust all the economists around Christie. How tough was it for Vulcar two hike rates? Like what were some of the conversations that you all had about that, which was going against what everybody wanted, But it was necessary in order

to write the situation well to that point. I mean, he he said that when he came into the role, it was clear. I mean the reason he he was brought in really was to do something about inflation that his predecessors hadn't really succeeded in bringing down. Even so at that point the economist had to FED were forecasting recession, so he had to sort of ignore that and just

say we're gonna raise rates. There was a split on the on the Federal Reserve Board on the second time they voted, and so the markets didn't believe there would be any stronger action. They thought the FED was going to lose their spine, and so he turned to this monitorist approach of just targeting the money supply, and that essentially told people, we're tying our hands and we're gonna let interest rates go where they have to go. And

they went up to like, what do you present? You know, there's a name in here that I did not expect to see that I wanted to ask about Larry Cutlow. He was quoted by the Associated Press at the time, um and he was at bear Sterns. Then what what

did Mr Kudlow have to say? Well, I mean, it was funny looking back at the clips because when Paul Vulker was telling me about this fourth ree vote and nobody believed it, and he didn't see under understand really why nobody believed it, because he knew that people were supporting him would keep supporting him, but the markets didn't so, and you know, I did some research and found these comments that were made in the press at the time,

including from then FED bear Sterns economist Larry Cudlow, saying that essentially the fact that the vote had split on the f O m C showed that there would be very timid approach going forward. The markets just didn't see the FED being able to stick to their guns. Okay, So I gotta ask a question because this this book almost had a different title. Oh yes, and we got to talk about that, because it's just this little easter egg. Can you talk to us about the sharett Sure, of course.

Um So. As I mentioned earlier, when we started working on the book, you know, nobody was really paying a time into some of the central parts of Paul Walker's legacy, including inflation, and so he was feeling a little I think overlooked. And uh so he opened the book with this very funny joke about a parrot, a wise parrot who's known as the Chairman. And I encouraged people to look at the book because it's a very funny little story.

But um but he went so far as saying he wanted to title the book The Wise Old Parrot speaks Now. The marketing Department and I all agree that was not a great title for this book. So we spent weeks trying to offer him other ideas, all of which he rejected. He hated all the pompous, kind of you know, pretentious titles that a lot of other economists and people use on their their books. So we were really going back

and forth. It was very It was one of the most difficult things of working with him because he was so stubborn on this. And so finally one day I was going through this long list of titles i'd come up with, you know, I found a phrase from the Fed Minutes at that time, sustained commitment. And he looked and he stopped and he said, keeping at it. And it was great because that really was him, you know, he believed in speaking plainly, and you know, so he

took the kind of jargoning, jargony phrase and translated it. Um. But I do think it would be funny if Powell was having to deal with the wise old parrot. Everyone just goes to show everyone needs a really good editor. That's what it comes down exactly. Hey, Christine, I just want to talk a little bit, a little bit about his legacy from a market's perspective and from an investing perspective as well. Given what we know about the nineteen eighties and what markets did and what inflation did after

he raised rates so significantly, what's in store this time around? Well, I mean, I think everybody is seeing that interest rates are going to go up. UM. The you know, policymakers are making it very clear they're not going to back down on this UM if they show any signs of, you know, weakness. I think people understand what will happen is kind of what happened to Paul Wolker's predecessor. So I think that is an example of where Powell sees

he has to be steadfast. But Um, as you would see reading the book, UM, the chapters that follow the inflation fight are a series of financial crises that UM Paul Wolkers Fed had to deal with in the wake of the interest rate increases. And so you know, when you hear these experts come on Bloomberg radio and television talking about something might break, I think, you know, what we saw back in the eighties was a lot of

things broke, a lot of things weren't. We're sort of a lot of risks were built up, everything from the Hunt Brothers speculation on silver to Continental Illinois Savings and loans, all these different banks that when when belly up and so the ultimate one was the Latin American debt crisis, and uh that was so bad that in a D two, I think that was really what caused Volker to say, Okay, we've got it, back off and and and stop the inflation fights. So ultimately it is often let something breaks

that there's a financial crisis. I think it's interesting on a day when the I m F has revised its estimates and the concern is about global central banks not doing enough, it fits right in to your story and certainly um your book. Christine. Thank you so much, Christine Harper. Check out our story in the new issue of Bloomberg Business Week, and of course our thanks to Joel Weber, the editor of the magazine. Christine is editor of Bloomberg

Markets Magazine. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes, Tim Stinovic on Bloomberg Radio, Uber and Lift Tumbling. Today, after the Biden administration issue that proposal for a federal rule that would change the way it to approaches workers employment standards. It's a move that could up end the right hailing companies business models, since, as you know, they rely on millions of gig workers. I mean, it's pretty incredible to see the way that

these shares the companies are moving. Were worth repeating these numbers. Uber down more than we got left down more than twelve percent, Door dashes down as well. Lift is my decliner, That's what I chose. But door dash and and Uber are down just the same. Um. Jackie Davalos this technology reporter for Bloomberg News. She joins us on the phone from Washington, d C. Jackie, why did this news catch investors so off guard? You know, I think that it

was a long time coming. Even companies themselves said they were expecting this proposal to come out from the administration's first day in power. And so I think investors are really starting to grapple with what a gig worker friendly administration will really mean in practice, and this proposal is kind of the first start of that. Even though it was on companies, radars, labor activists radars um, it doesn't substantially change the way companies operate in the immediate term.

But just the risk that it poses for for their business models is still very much lingering, which is why you're seeing shares fall so much today. You know, it's so funny. I keep going back to this comment that David Einhorn of green Light said that, you know, we really don't know what anything is worth, and he was really putting that against you know, investments, against kind of the big macro stories that are out there. But you take it something like lift in uber or anybody else's

part of this gig economy. What does a gig right? You take a gig and you do other things. That's what it's all about. But you do have to think that if these workers are classified as regular workers with all the benefits that come along with it, that's increased costs for the company, and it's going to change how they are valued. It will have to. It has to.

And you know, the argument that UM companies and labor activists have actually made is that, you know, the way we classify employees are it is rooted in a law that just doesn't account for the rise of digital work. These laws were made, uh, you know, in a post World War two era, not when you know you're ordering food and hailing a ride just from your phone, and

so the landscape has totally changed. Or absolutely right, Caroline, that everyone in some capacity has a connection to gig work, whether or you're the one ordering or you're the one, um actually delivering something to someone's doore steps. So UM, this rule I think is the first step in which

the administration is really looking to broaden that definition. UM. There's not a whole ton of guidance that we have on you know, will companies eventually have to fully reclassify um, but you know Uber has a little bit of experience and that you know, they had to do something similar in London a Supreme Court ruling basically said that their drivers were full time employees and and had to be given certain benefits and way to protections. The company didn't tumble.

You know, it's still it's still alive. And so what a lot of um uh legal experts are saying now is that you know, this is really gonna be hashed out more so in the courts where this rule is now going to be the interpretation, uh, in the basis which you know that labor law is then applied. What I find so incredible about that Uber and Lift story is they entered these markets as disruptors and in many places, including New York City, just decimated the incumbents the taxi industry.

Now we're at a place and I think anyone who's tried to take an uber or lift from the airport recognizes this. Where you're getting into one of these cars to get back from the airport. It's costing so much more than it ended up costing a yellow cab if you were to take a yellow cab. But you can't get a yellow cab these days because you know, those

drivers aren't necessarily around. Yeah, Jack, you talk a little bit about the way the landscape has changed and what ends up happening here, because it does seem like at the end of the day, the way the companies are able to pay for this is through higher fares. Absolutely, and that's exactly what um. You know, the industry groups who don't want to change, well, we'll tell you that, you know, we should keep things the way they are because then it means that consumers will will bear the cost.

And um, you know, while that might be kind of the extreme version, it's certainly going to be you know, part of the reality. Um, when you think about uh, you know, the protections that in the benefits that any employee has, whether it's you know, a sick day or workers compensation. A lot of these drivers have to put themselves, um sometimes in harm's way without you know, knowing that that's what they're signing up for. And and that's kind of this um this debate. Now it's not going to

be one or the other. It's going to be some kind of hybrid, and investors are kind of pricing that in companies as well. I think Uber has kind of come out at the forefront of this now that they've had to contend with us in Europe that you know, they're open to what they call an independent contractor plus model. So we may not you know, have you be uh full time employees, but hey we'll throw some benefits your way. Yeah. This is like innovation disruption, pupping up against kind of

the established models. We'll see how it plays out. Jackie Devolos Technology, Ploomberg News, the Journal. Now that you let me drive, Oh no, no, no no, no, please, I'll do. I want to drive. It's a good question. D This is the drive to the Clobe. Don on Bloomberg Radio. All right, everybody just about under ten minutes left in today's trading session and another volatile day bouncing around. We're

certainly off our highs and loads of the session. Those Bank of England Governor comments Mr Bailey, that certainly has put some pressure on the trade today and we saw market reaction. We've got a great guest actually in studio. It has been a long time since we've had him in studio. I can't believe this is the first time I've gotten to meet him in person, and two years doing this. Doug Ramsey is chief investment officer at the Louthold Group. He joins us right now in the Bloomberg

Interactive Broker studios. Doug, good to have you with us. Is this your first time back to the city. It is the pandemics here end of February, just as things were starting to erupt. Welcome back, it's going to have to be back in the city. Great vibe here in the blue Berg building as well, not a grade vibe in the markets. No, no, Well, spend on your perspective. I mean opportunities are being creative for created here for flexible managers. Well what does that mean? So I agree?

Right like when everybody's running for the exits. That's when you find opportunities much smarter investors than we have said that, and you know you're saying it too. So are you saying that we're nearer bottom when it comes to the equity dropout or No? But even the selling so far provides some great opportunities. No, I think there's a ways to go. But I mean the valuations are far better than they were coming into this year. That's especially true

for for mid and small company stocks. Um. You know, we tracked evaluations across the landscape and globally, but mid caps and small caps are now uh somewhat below their long term valuation averages and we haven't been able to say that for quite a while, so that that's encouraging. So I think there's a buying opportunity that is developing. It's not yet there. I mean, if we are going to get one invaluation terms on large caps, we've still

got some distance to go. And that's normally the way things unfold in a bear market is large caps have better liquidity, they tend to be more defensive in nature. They are really the last to fall in a cyclical bear market. And I still think we have that that phase ahead of us. But I am encouraged by some of the valuations I see in pockets of the market for a later buying opportunity. What about when it comes to the large caps, When do you think we'll get

to a buying opportunity for those? Uh? I don't like to get too focused in and really either on time horizon or price levels. I mean, I do think what's gonna evolve over the next several months is we'll have the best buying opportunity we've had in the stock market for over a decade. I mean, not back to two thousand nine levels, but I think it will be a

very good buying opportunity. But just in terms of numbers, And again I mean it's well known that valuations are not a timing tool, but just for some perspective, Um, if we were to put in a bear market low that matched the valuations we saw in March of which was by far the most expensive bear market low in terms of valuations, uh, we'd still have to sink the spire. And again I don't want to get two locked into price levels here because the sps about seventeen or about

seventeen point five, so still high. Well, we look at I mean, we certainly look at at four p s, but the number was really referring to like the average of multiple different valuation statistics. And we do something akin to what Robert Schuller does with the ten year pe. We've been doing it for decades using five year normalized earnings. I'm just adjusting for the fact that earnings dramatically can overshoot as they did in one and then they get

crushed during recessions. Let's just try to see through that by smoothing out earnings for the cylicality of that earnings can have. So on that basis, yeah, we'd have to drop our multiple on the basis of normalized earnings is still around twenty three. That's a pretty big drop from here. Yeah, well you'd have to go from twenty three to eighteen to match again what will be the highest valuation we've ever seen, and then we supplement that with work on

you know, the price to sales ratio, price to cash flow. Um, is there anything different about this market environment other than we're coming out of a pandemic that none of us have lived through before, Like, is there something you know the old adage, you know, it's different this time around, it's not different this time around. Is there something different about this market environment? Though? Well, I mean the abrupt change and not just monetary policy, but also in fiscal

I mean just the delta versus a year ago. I mean, we blew out the the trailing twelve month federal deficit to as high as eighteen of GDP. Now it's about four. And you know, we all talk about q T and the rate hikes, but the degree of swing and fiscal stimulus has been every bit as great, So Doug in terms of the way we're thinking about this moving forward into the federal reserves role here, Um, how are you

looking at the terminal rate? How are you thinking about what the Fed is doing when it comes to tightening in the context of the investment decisions that you're making. We don't necessarily have a forecast I guess for where that funds rate might peak. I mean we are assuming they've already overdone it. And it's the emphasis. They are data dependent. The question is are they the right data points?

I mean they are coincident to lagging data points. I mean our work would say that inflation has probably peaked out the leading inflation indicators is why you say Powell doesn't need to be vulcar Uh. There are a number of reasons well along those lines, and this is maybe trying to take some good notes here. This is some good stuff, Carrol. That's what they say in the biz.

This is some good stuff. You know. Even though we're cautious on the stock market in the economy, we do think that inflation is peaked and it's going to come down significantly. One reason is the stock market itself. It's the negative wealth effect, and Bill Dudley in the spring came very close to like mentioning that term exactly. It's the fact that you know, we've had a stock market decline. The issue is, don't think about it just in terms

of the percentage decline in the index. Think about how large the stock market was in relation to GDP at its peak coming into this year. It was more than GDP. So this relatively moderate decline is a big deal in terms of the wealth destructure. We never have enough time with you, and I hope you got your notes there, Tom twenty second, So what do you will say we're near bottom? I know you don't really to serve a number,

but what kind of field we have? You have to be quick, uh lower evaluations, a big relative crack in the blue chips where small caps and mid caps they probably still go to new lows, but maybe show some relative strength, so giving and maybe a give up. And we've seen it in the utilities. But when you start to see the defensive crack, that's a sign that people are selling what they can and we may be near um a complete capitulation, which I think is still ahead.

Get your notes, you'll you'll hear in a couple of minutes what I have to say. We love talking with you, so come back anytime on phone in persons even better, but m safe trips back. Doug Ramsey, chief investment Officer at the Luthholl Group. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on you to search Bloomberg Global News m R m HM