CEO Brian Niccol Says Chipotle Navigating Covid Headwinds

You can also listen to our radio show at two pm Eastern Time on the Bloomberg Radio or watch us on YouTube search Bloomberg Global News. Fights are saying the Coven nineteen shot it's developed with bion Tech was that ninety point seven percent effective against symptomatic cases and kids ages five to eleven. Seven day moving average of DU cases has dropped fift in the past week. That's good news,

very good news. That's very good news. In Europe, Germany recorded its steepest one day increase though in new coronavirus cases in more than five months. Meanwhile, a majority of Swiss are seen backing a law allowing the government to issue COVID nineteen certificates for entry into theaters and restaurants ahead of a national vote. All right, so let's get to it. Let's get our weekly check with Dr Ian Lesbata, clinical professor of medicine at n y U Lango's Medical Center.

He joins us now on the phone from New York City, Dr Lesbador, Happy Friday. It's good to have you back with us. The CDC backing boosters from J and J and MODERNA. Uh. We're also learning that people can choose a shot that's different from their original one. Caroline, I have been talking look full disclosure. We're emailing each other about like, Okay, what newser we're gonna get, How are we gonna do this? Help give us some guidance here hopefully.

Good Happy Friday, guys. Definitely, Uh, lots of news on all the fronts. Not safe to go to a party, it seems, without without potential risk. That's a good point. So be course. Delta, you know, has arrived and mutated in the original Alpha VIC scenes, although pretty effective, over time, have sort of waned. Obviously, there's been this whole debate and studies, but finally the CDC has come out with recommendations. So certainly for the people who received the Fightser and

maderna two shot regimen. Uh. If it's been six months after those, uh, the second shot, you're eligible for a booster. Those are people sixty five and older. Uh. Those are people eighteen and older who have either underlying medical conditions or live or work in a high risk setting like healthcare. You may consider your office a high risk setting possibly, but officially we're talking you know, first responders, healthcare providers,

teachers in school, prison settings, manufacturing. There's really a very wide list and there's a bit of a wide list of the underlying medical conditions. So basically, de facto, most people, if you're above eighteen, would be eligible after six months for a booster, and J and J somewhat similar. That's a two month window. Uh. That's eighteen and older. Uh, that's about fifteen million people who are eligible because they received the first shot, so uh, and the second shots.

Really that the third shots can be mixed and match. You know, the data is having two different kinds of vaccines seems to really increase antibodies. So at this point it's certainly reasonable to take a third vaccine of whatever the first two you've had. UM, although if that's not available, or for a variety of reasons you want to switch to another one. It's probably perfectly fine to do that. Well, let's talk about that, should we. Some are saying that

there might be benefits to mixing and matching. Tell us what's your take or what is the advice that you guys are following so far? When it comes to that, it sounds like they want to do mix and match so that you don't feel like if if you've had fiser and all, you can get access to as Maderna as a booster to not walk away from it. Um. But but what should we understand about mix and matches? It a good thing to do or it doesn't really matter.

It probably is actually a good thing to do. It exposes your immune system to a slightly different UH in a sort of variant or vehicle. Certainly, the people who J and J, it does seem that getting a messenger or an a vaccine really boost their immunity more vigorously. So you if you had J and J and you want another J and J, you could certainly do that.

But if you take any of the m R n A s you certainly get a bigger boost out of that, uh, and that also looks like for the fiser and Maderna that if you do kind of switch those, it looks like you may get a bit of a boost to What we don't really have is long term data, right, so we do know these uh improvements in protection certainly go out about the study length, which is about fifteen to twenty nine days, So certainly for a while you're

very protected, much decreased infection and transmissibility. We don't really know six months from now what that will be. We think it's going to be effective and there's probably some T cell and memory cell boost. Hopefully COVID will be winding down in the United States after the next six months, so it will give you some protection along the way, but also important to stay healthy, lose weight, control the diabetes, control your blood pressure. You know, take supplements like vitamin

D if you're low. So there are other approaches, but in general it would make sense to switch if you can, but there's no harm in taking the third of what you've already taken. Okay, some some very helpful information there. Hey, Dr Lesbia, you said hopefully COVID will wind down over the next six months. What do you think it will look like it goes as it goes from pandemic to endemic. You're exactly right, endemic. I think we'll be having cases

UM sporadically. We do have some data about vaccines for kids five to eleven as well. Again, those are small studies, two thousand studies. You know whether or not that will make a big difference in in the endemic nature, we don't know, But I think hopefully we'll have either some treatments UM and hopefully as resistant builds. From a herd immunity point of view, there may be cases of COVID and obviously if we have home test kits that would be great. If you think you're sick and it turns

out positive, please don't go to work. So I think we'll be able to live with this, and hopefully it will be even less damaging than the flu, which does have a mortality of about fifty per year. Yeah, all right, I'm gonna leave it on that note. Hey, Ian, have a great week. Dr Ian los pad Or, a clinical professor of medicine at and Why you land on medical center on the phone from New York City? So what would you do then? In a booster would you flip. Yeah,

I think I'd flip. You'd flip, Yeah, I mean I got fier and modern is all the rage now with the Delph Brake Maderna is all the brage. I'm gonna get T shirts printed up. All right, you're listening to Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovich from Bloomberg Radio. Once we start talking about this story, you're gonna understand why it is

the most right story on the Bloomberg Today. And if you're looking for access to West Point General's confidential support groups and private getaways, Tim, We've got the place for you. Yeah, you probably should be a billionaire, pretty close to a billionaire. Well maybe not that might. It's not a guarantee. It's not a guarantee. I won't not guaranteed. To get in to give us all the details, is Suzanne Willie, personal finance reporter at Bloomberg New She's with us in the

Bloomberg Interactive Broker Studio. It's called our three sixty. What is it. It's a very exclusive new membership organization for people who have at least a hundred million in net worth, although the average of the forty eight members right now is about two hundred million UM. And it's this sort of mish mush of things. It's a it's like a pure to pair learning network, but it's also an investment network, and it's it's sort of a taking more holistic view

of your wealth. And you go on this three year journey quote air quotes, journey that costs hundred and eighty thousand dollars for you and your family. You know, that doesn't seem that expensive considering if you're a million How much? Yeah, because if you think about it from the perspective, Okay,

well how much your expensive? Okay, Tim, Well, well, I mean how much I meet My mind when I was reading this this morning, my mind to media started wise right right, Yeah, And that's like you know their country clubs that cost that much? Yeah, well, you do pay more for if you want to go on, you know, the private trip to Richard Branson's Necker Island or which happened?

Which happened? Tennis played some talis with Branson. Tell us about the individual who who created this, what was the idea of thinking, and how maybe it's kind of representative of our times perhaps it's interesting UM. A man named Charles Garcia started it UM. He's an entrepreneur and has been in a lot of different networks UM, including Tiger

twenty one, which is a very well known network. And he was at the Harvard Advanced Leadership Initiative where you go for ten months and you sort of create a project and develop it with a lot of the professors there, and he came up with this idea for our three sixty as a way to sort of get together a lot of like minded people with a lot of wealth who can learn from each other because you know, the rich do have different problems than you and me. But

it's interesting too because it's isn't just professional problems? Is it personal problems? Are they? It's three six it's everything it is. You know, they talk about having like six areas of capital that you're going to focus on over that three year journey. So you have it spells fishes.

It's financial, intellectual, spiritual, human, emotional authority, and social um fishes and so you sort of, UM, you're trying to gain mastery over all these six areas, and you're doing that in workshops, would say, like meetings of fifteen of your like minded peers, none from the same company or you know, industry, so that you can be very um open. But it is it's talking about you. I mean, it could be work, it could be a lot of the talk is about children people who have come into wealth.

A lot of these people are entrepreneurs who sort of suddenly became wealthy, and they don't want their children to be corrupted. One interesting thing about this was how this is set up as an entity, a limited partnership with partners contributing three thousand dollars each. But the idea is that it'll never be sold. And as you report, they want this to be around a century or two from now. Right. They have very grand visions of what they hope to

do with this group. Um it's forty eight members and they own I guess about six of the of our three sixty and um it's sort of unique and being member owned like that, and the members themselves are creating the programming. Although they're also creating programming wing with a lot of elite universities, you know, Harvard, Stanford, m I, t UM, special programs made just for their members. UM. But it's um, yeah, it's it's a unique it's a unique structure. Well, and I'm curious about, okay, if it

is truly representative of our times. I mean, we we've talked about how much wealth creation, but I think about diversity inclusion, like, are they approaching I mean, if you really want to get smarter thought, most people would say you have to have diverse thought and inclusive thought. That's true. I mean, I think it is indicative of our of our times, just because there's so much wealth and the gaps between like the merely wealthy and the super wealthy

are growing. Um. And they do have a special focus they say on women. Um, women will get a massive wealth transfer um in years from now. Um. So they have there's a Women's committee, there's a Rising Generation Committee of young you know leaders. Um. I think they have a diversity of thought, but they're you know, they're all very, very, very wealthy. Yeah, there's still a comic commonality. What about when it comes to access to deals or deal flow

and actually having opportunities to get in on something. Yeah, that's a big part of it. It's a big part of any network, you know, Tiger twenty one, there's a lot of that there. And these are people who see a lot of deals, you know, So what they're doing is there. You know, people can present deals, but they want to be very disciplined about it, so they put

it through a very rigorous checklist. They are the members form an investment committee and they go through a checklist of supposally a hundred different things, and then they send it out to an outside due diligence firm to look at sort of operationally as you know, up to snuff and financially, and then the member can propose a phone call and any member who wants to can call in.

But they have, like many places, they have a really an emphasis on non solicitation because people just hate being I mean, you know, we'd love to get into some of these deals, right, but you know, if you're very wealthy, you're bombarded with deals all the time. Well, I also like to you talked I think a little bit about generational wealth, right, and you can actually make was it a film or a book about that? To me is interesting.

I think it's kind of cool. Yeah, you could. They have a document they have a full time filmmaker on staff, and you get a documentary made. And the point is, you know, you want influence to be a good sort of capital there. They say, you want to influence generations that are to come that our benefits, that will benefit from your wealth. But they will never know you, and they will never know where the money came from and the work that it took and how many people were involved.

So it's partly, you know, a document to create your legacy, and then you'll work on it over this three year journey, and at the end of the journey, presumably you will have a clear sense of your purpose in life and the good you want to do in the world, and you'll finish them. Perhaps somebody's listening right now, they're saying, I got a few hundred million dollars. I'm interested in the fishes idea. How do I get in? Sorry, you can't get in because we're done, because well no they're not.

You can get in, okay, but but it's invitation only. So the fifty members that are there now they can each invite two people. They only want to get fifty people a year. No offense forgive me. But so right now it's just um, you know when you did, We've just got about twenty five seconds left. Suzanne. When you when you started working in the story what is it

that you really wanted to know about it? Guy just wanted to know what they were going to learn from each other, you know, and what was the real demand. And it was interesting to hear a lot of it just being about children, which isn't really surprising, but a lot about as if to protect your children from sort of being I don't know, corrupted by my wealth. Yeah, right, we've seen it. There's certainly been lots of real life stories of it. Um great read most right story on

the Bloomberg sits Annualie, thank you so much. She's personal finance reporter here at Bloomberg News in our interactive broker's studio. I'll do it. It's just saying you're listening to Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, I mentioned to Potle, Mexican

grill stocks down about three point two percent today. Company reported earnings after the close last night's sales last quarter, topping Alice estimates to Potle benefited from price increases and digital ordering, along with vaccination efforts that really help bring customers back into the stores. Let's get to it. Stuck by the way up about so far in one great to have back with us the chairman CEO of Chipotle,

Brian nicol. He is joining us from Newport Beach, California. Brian, you know what we all want to know is did you just have a smoke brisket sandwich because they seem to be so in demand. Well, actually, I just had a smoke brisket case. We knew it, and we're jealous. We're gonna talk. We're gonna talk about this. Listen. What I love about talking to you is you have been in the consumer space, the restaurant space for a while.

You are at Procton Gamble for ten years. You uh moved up the channel at Taco Bell, eventually becoming president CEO. You really repositioned that company. You understand this space. What's it like to be a CEO in this space when you're still dealing with the pandemic, You're dealing with labor inflation, wage inflation, and commodity inflation. How tough is it and

how tough is this environment? Well? Look, you know one thing that's I've learned early in my career and still stands today is you've got to have a strong brand that stands for something in the consumer's mind to navigate all those headwinds that you just mentioned. And we're pretty fortunate.

You know, Chipotle has always stood for food with integrity, and then when you peel that back, you know, we provide great culinary, tremendous customization really you know, I think world class access, and then you know, you roll that all together and we've got a really strong value proposition. So our brand has stayed really strong throughout all this, and we're really fortunate that, you know, we've got a brand that really resonates with consumers and resonates with our employees.

But if I had to ask you to characterize the environment what we're what we'd would you use? Brian? Is it tough? Yeah, it's tough. You know, it's definitely tough. You you've got to make sure that you know, you've got clear strategies. You have to make sure that everybody's executing on all cylinders. And I'm really proud of our team. You know, I think our results speak for our strategies and our execute and the caliber of the people that we have across our organization. Um, it's and I don't

think it's gonna get any easier here going forward. Well, Brian, you mentioned the power of the Chipotle brand when it comes to how consumers think about it. How much pricing power do you have to actually pass along higher costs that your experience, whether they're labor costs or commodity costs

onto consumers. Yeah, you know, we we look at that both in the past, right, We have had to take some price recently, um, and we were fortunate to have such a strong value proposition that we didn't really see any resistance from consumers. We continue to attract closely what our value proposition looks like, and we continue have a really strong value uh score with consumers. And you know, a lot of people ask me, what does that really mean?

You know, the way I bring it to light, a chicken burrito or a chicken bowl, which is the number one thing we sell, it's still less than eight dollars. And so when you stop and think about the you know, the culinary, the quality you of those ingredients, the customization of the meal for less than eight dollars, you're hard pressed to find that anywhere else. And that is what we mean by hey, we get we've got a tremendous value proposition, and we still have lots of pricing power

moving forward. So you know, as I've said many times before, it's really the last thing we like to pull. We prefer you get the growth, find ways to cut costs to really be efficient. But if we need to use the pricing lever, we do it. We've done it in

the past. We're pretty judicious with it, uh and fortunately we've navigated it really well well given the challenging environment that you describe to us, when realistically could you see yourself raising prices again, you know, it's something that we're looking at right now. We traditionally always evaluate near the end of the year what do we think inflation is gonna look like for you know, wages and a lot of our other input costs, So we always look at that.

And then obviously in this environment right now, there's a lot of things that have been unexpected. Right Freight is really high. We believe that's going to be temporary. Versus wages, I think are going to continue to have some additional upward movement. Um, so we've got to figure out how

to balance that. But you know, we're trying to figure out what is the priceing we want to take to cover things that are permanent versus the things that are temporary, and then balance that with you know, we have tremendous growth in front of us, so we want to make sure we're leveraging the growth to offset some of these costs to UM, because at the end of it comes back to I want people feeling great about the chicken

burrito that they buy from us. You know, I want them all we're saying, well, I got a lot more for my money than any place else when it comes to picking a great meal. Hey, if we may just when we're question on prices, Brian, I mean, I think you guys raise prices menu prices by as much as four percent earlier in the year. So if we think about what you might raise prices by, do you have a number that's kind of being talked about at the at the company that you guys are just bouncing around.

You know, I think we've been pretty consistent. We we usually take about two to three percent UM, and you know, we take a look at as I mentioned, all those other variables to help us inform what that should look like. UM. You know, whether or not it's gonna be necessary to go beyond that that's what we're waiting to try and understand. So, you know, the good news is we've got the strength of you know, a really powerful brand with I think

excellent results. That gives us the flexibility on the timing of how we phase in pricing if we need to go beyond the two or three percent that we've taken historically. One of the challenges that many companies like yours are facing right now is labor. We talked about it so much at Bloomberg and our audience is really familiar with the challenges that companies are facing. How is staffing right now? What percent are you staffed? If you think about open

positions that you have at restaurants throughout the country. Yeah, we're we're pretty fortunate. Um, you know, back in I guess it was like March April earlier this year, staffing was really challenging. Uh, you know, it kind of was one of those scenarios where as our dining rooms reopened, consumers became much more mobile, our demand just took off, and you know, we were caught behind staffing our restaurants and it took us a while to get caught up.

You know, we still have you know, a couple of hundred restaurants where you know, we're challenged with the staffing. The good news is though it's much more across the country. Uh, you know, it's a couple of restaurants in the region here or there, and we're being very you know, surgical on how do we ensure that restaurant gets the staffing necessary to be successful. But it's a tough environment, make no mistake, And I kind of come back to where

we started earlier. It's like the way we recruit is we talked about the strength of the brand, we talked about the growth opportunities, and then obviously this is what the proposition looks like when you get started with us, you know, from wages to benefits to you know, being a part of the great team. So, um, it's a tough environment, no doubt. Are you at all worried, Brian

about workers trying to unionize in this environment? I mean it does feel like as they get you know, hourly gains, there feels like the workers feeling empowered at this point. Is that at all on your mind? You know, Look what I what I want to make sure is we're giving our employees a great experience. And my belief is Chipotle is a place that gives employees tremendous personal growth

as well as, you know, business growth. And there aren't many places where you can join an organization as a crew member and in a couple of years find yourself running a multimillion dollar restaurant with a team of thirty to thirty five employees. But I think what also gets people excited is and then there's a path to being a leader of multiple units, right where you get above the store and now you're overseeing seven eight restaurants, and you know the next levels our team director where you're

overseeing restaurants. The fact that we're gonna go build three thousand or more restaurants, the growth for you professionally, it's just tremendous. And then we want to make sure we're providing everything we can so that personally you're growing. Um. You know, we have tuition reimbursement, that free degrees, mental health benefits. But you know it's I think when you give people a great experience at the job, they're delighting

to be a part of it. And that's our mission is I want people feeling great about working at your pole, so that you know frankly, when they tell people where they were, they do it with a lot of pride. Yeah, and you can definitely feel it, and I've seen it first time, where you guys work with people to to to move them through and up the chain in terms of responsibility. Hey, one thing we've got to ask you.

I know we've talked about this before you and I were together, just as everything was shutting down, you know, thinking about protocols and what it all meant. How do you plan to handle that vaccine mandate that we're starting to see for large employers UM for your restaurant, especially since you don't franchise. How do you do that? What's the plan? Yeah, well, obviously we're still waiting for all the details to come from OSHA on what that looks like.

But yeah, you touched on we have Clostal a hundred thousand employees UM and you know this is going to be a logistical challenge. But nonetheless, we've got a great team that leads are UH well being and health program and UH they've done a phenomenal job to COVID. I'm confident we'll figure out how to navigate, you know, meeting or complying with this new uh ocean requirement around you know, vaccinations are getting a COVID test, a negative COVID test

order work. Um. You know, I'm hopeful that you know, the feedback has gotten back to the folks that are making the policy on this so that it is something that's executable. Um, because you know, I'd rather have a program that we can comply and actually make progress versus a program that sends us backwards. You're not doing testing. You're not doing testing yet, are you? No? Okay, okay, we're curious about that. We should talk about digital because

you know that's a big thing. Yeah, we saw some growth year over year when it comes to digital ordering. I'm wondering when you think that what you think it was going to happen when it comes to the goals that you have for digital ordering, Like, what do you want to see in terms of digital versus in store? Yeah, you know, look, this was a really exciting quarter for us because you know, it was record sales when it

comes to digital. But our dining rooms did over one point one billion dollars in sales, So you know, our two billion dollar quarter was really you know called eight or nine million digital and over a billion dollars of being in the dining room. And you know, we've always thought these businesses are unique occasions, and um, I think we're demonstrating that. So you know, right now we're settling

in kind of of the business. Um. But you know, the absolute dollars is really what we're focused on because we want to continue to grow that digital business while we grow our dining rooms. And it will be part of the puzzle for how we get our averaging booms to go above three million is continue to drive those two businesses, which today definitely appear to be different occasions and therefore very complimentary. All Right, So we know smoke

brisket is a limited run. We're here, it's going to even end even sooner Brian, because it's been so popular. So what's the next thing? Guys are experimenting with plant based items, what's the next thing that we can maybe look forward to? Yeah, well, the the uh, the next exciting menu item is this plant based toreriso. Um. You know, we we've added in test in a couple of markets. I you know, had the ability to go out and visit a few of these markets and I'll tell you

what it just tastes amazing. I'll give you a pro tip right now, like plant based triso with some white rice and caeso and a taco. Uh, it's tough to be so um. You know it makes you feel really good about eating plant based that that much, I can tell you. Um. So yeah, we're excited about that. We've got a great culinary team. They're working on a lot

of other ideas down the road. Uh. The idea is we always want to be listening to what consumers are asking us to provide and then also leading consumers palates. And I think we did a pretty good job this year demonstrating that right Like we did cauliflower rice, which was leading consumer palets the case Todia digitally was listening to consumer's request. And then the smoke brisk it I think was just a kind of a culinary plus up.

So uh, you know, the sauce of those guys created around our brisk it is just fabuless um and you know, the meats terrific. So I'm I'm loving kind of the cadence that we've got. Our culinary team does a fabulous job, and uh, our operators do a great job of executing all I'm gonna say is I'm really hungry and with the Theresa. You forgot the margharita. That's the only thing that you left out. Hey, listen, Brian, you know we'll work on that. Hey, be well, you know, it was

always good to check in with you. We really appreciate it. Brian Nicol of course, chairman and CEO to Polo Mexican Grill joining us there from Newport, Newport Peach. Excuse me, California. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic from Bloomberg Radio in our weekly Crypto segment, putting the spotlight back on the documentary The

Bitcoin Dilemma having its world premier as we speak. Technology futurist, documentarian and author Ian Khan is the individual behind it. He's back with us here on Bloomberg Business Week, and Tim, he's interact. He is Ian. It's so great to have you back on the show with us. First, give us an update on on on why you're interacting. What you're doing there. So, Iraq is an emergent market for me. I'm just consulting here and you know, helping the government

figure out the future trends. So just a bit of work and uh yeah, a day a day office. Well, how how is the government thinking about this technology? And how should governments be thinking about this technology? In your opinion, I think governments have the biggest responsibility of looking at future trends and things that shape tomorrow. I mean, look at crypto. It is such an important thing that plays a big part in governance. Whether you're a government in

North America, Latin America, maybe East it doesn't matter. Governments have to take uh, cryptocurrency perviously as an example. You have to take ouraging technology is very seriously and know what can shape the futures onto your country. What are

the questions that they're having over cryptocurrencies? And I think it's a it's an interesting week to to be having, at least here for the United States, because we saw I feel like crypto take a big step forward as a result of a Bitcoin futures et F having its debut this week. It does feel like the regulatory front is slowly increasingly jumping on board, certainly here in the US. What are the questions, the smart questions that bankers are

having central bankers, So so you've been surprised to hear that. Uh. And you mentioned that the documentary launched in in the meding, So it launched in Goodbai, having the event with a hundred thousand people attending, and uh, it's that's that's groundbreaking. And a huge part of that conference was cryptocurrency blocking technology and all of the related items you know, E f T S and uh sorry, n f T S,

uh and and so on, even the Metah. The biggest question right now is what is happening in terms of regulations, what is regulated, what is not regulated? Where is stability? But there's definitely not not I didn't say too much hype, but there's a lot of interest notes from the private sector as well as the government sector in anything related to block to in cryptocurrency, UM, n F T and so on. Sorry, I want to make sure I got this number right. How many people did you say attended?

A hundred thousand, one hundred thousand people. A hundred thousand people attended the screening of this What does that tell you know, attended attended the event which my documentary screen Okay, but one hundred thousand people did not attend my document screening. Great it still does that would be great. It still does. It still does speak though to the appeal that cryptocurrency

and is having right now around the world. Hey, I'm wondering because you consult with governments all over and because you look at this so closely, give us an example of a tree that's just doing this really well. You look at the government of um, well, different governments, and I know El Salvador has been in the new quite a bit with their bitcoin adoption, and I feel, um they still have a long way to go before you can truly call it an amazing Jain's case and a

big success. Uh sorry, I'm starting off on the on the on the on the on the a little bit of a down the right. So if there's any government today, there isn't a use case where they're fully adopted crypto or they're moving fast towards it. Government is divide definitely has a blockchain um side to it. They have a blockchain initiative. The United Arab Emirates, where I was just now a couple of days ago, they have a federal blockchain strategy, which is hard to come by in some

other places. The Netherlands has a has a Dutch blockchain coalition. Singapore has something similar, So many governments across the world are focusing on blocked in definitely because it's much more than just cryptocurrencies. Would you would have created essentially only blocked. I wish there were the use case that that has solved it all that there isn't yet. Well, you know, when you talk about hype, what is the hype? I mean we are all still trying to figure out what

it is. And you know, if there are futures, what is it, what is the underlying asset that you're actually buying. I mean, there's so many questions out there. What do you see if you have to whittle it down to what is really the hype in your view or or and and certainly from the experts that you talk to for your for your documentary, that's a great question. The hype essentially is over expecting from any new technology, in my opinion, So if it's blocking, then blocked and will

solve every problem that we have. So let's take the piece of technology and find a problem, which is a long way of solve problems. Another hype is cryptocurrencies are the future. Let's all investing cryptore cities right now and bitcom because the prices all is going to go up and it's going to be beautiful tomorrow. All those are hyped up statements. I think there's a realism that we

need to deal with. Cryptocurrencies are unrea regulated, the stability they afford, the needs a lot of things before we can say, a this asset class is stable, and yet it's the real, something real that's coming in. That's all a little bit of that has happened just now with the new um he has created. I think hype is just over blown indistications, not necessarily distrusting something that is something good, but thinking that this is the best thing ever.

Are you concerned in about volatility in the prices of cryptocurrencies pushing people away from from interest people saying, wait a second, if this thing moves so quickly and so much, then I don't want to touch it, and I'm kind of scared of it. I'm actually concerned with people who are not listening to that, and they're still invested in cryptocurrencies thinking they're going to triple in quadruple their money. There's many people who are doing that right now, and

those are the people I'm concerned for. I'm very confident that eventually, you know, a few years from now, a decade from now could differently what have you In that entire ecosystem will be stable and all be good, But I think we have to tread carefully and not dumb all or for one case, and there's not put all of us investments into it, but there is a volatility. Is okay for large institutional investors because they can play around with it, but not for people who who are

just tested this out right a lot of caution. Hey, and just got about thirty thirty five seconds left here. Can you look into your crystal ball and say, okay, bitcoin is going to replace X in the future, or or you know something that we count on today but

it will replace it. Is there something in your mind that makes sense as a as a come out as as an asset class that we invest in and it's being good good valuation back, I think bitcoin may not place anything, but the definitely do that because apply also and if keys are going to rise, I think they're going to be very big in the next stuff. So these two things that will be got now, Okay, we're

gonna leave it there. Yeah, so many questions. Uh, as you say, you see a lot of hype, but a lot of it is covered in that new documentary The Bitcoin to Lemma in con is behind It technology futurist documentary and author joining us on this Friday on the phone from Iraq. This is Bloomberg. I'm ro yeah, but you let me drive. Oh no, no, no no, this is not a toy. All right please, I'll do the riding gravels. I want to drive. It's a good question. Drive this good drive to the clothes well up on

Bluebird Radio. Yes, and we're gonna cunt you down to the clothes. But as we do, we just want to to the headline crossing the Bloomberg terminal. And I do see Bristol Myers Squib expressing interest in acquiring rival biopharmaceutical com Arenia Pharmaceuticals. This is according to people and the no quick check on Arenia Pharmaceuticals as the target and it is definitely Spika. It is now up ten point

six percent, so uh straight up on that news. No surprise there h New York based company recently approached a Reinia about a deal. So the people who has not to be identified because the matter is in public, no final decision has been made in Bristol Myers could op against any potential deal. They said, Yeah, another big scoop by Art Deals reporter at Hammond. Check it out at the Bloomberg terminal. M and A continues, It's going to be a record year, folks for M and A. We're

on track for that. All right, let's get into it and let's see what our next guest has to say about the market environment. What is uh, what what's on the mind of investors? I should say Rebecca Corbin, founder and chief executive officer at Corbin Advisors. She joins us back with us on the phone from Farmington, Connecticut. Hey, Rebecca, good to have you here. When I see M and A deals to me, it says, uh, there's optimism in the market and companies have money to put to work.

I should point out Arenia too, by the way, folks, is halted because of the volatility in that big move up, so triggering some trading stops there. Um, you guys, you check what's on the minds of investors? What are you hearing? Well, Good afternoon, Carolyn, tim Happy Friday. Thank you for having me back. You know, M and A is a very interesting topic right now. Like you said, it's been a record year um, lots of records being said. I don't know if that gives anybody cause feels a little peaky

to me. Okay, yeah, Well I just want to stop you there, because that's something I think about a lot. What What's that's sort of what these superlatives mean about the economic cycle and where you think we are. Well, I'm not sure that we are in any economic cycle. I think we're in a supercycle that is an orbit around COVID And you know, going back to the vacuum that happened in April when like a tsunami, the water just receded and the beach was exposed, that was a

lack of demand to that prophecy. Coming to fruition in the second quarter of twenty everybody actually sign a sigh of relief because it was better than expected, even though companies were down. To Fast forward to you know, over the summer and into this year with the massive amount of capex that's been plowed into the world globally, and now we're starting to see that massive demand and clearly

the supply chain can't handle it. Coupled with other issues such as weather and UH and and port congestion, etcetera. So you know, I'm not going to say that we're

in a normal economic cycle. We're in the cycle of what is going on with COVID and that still has to play out, UM, but I will tell you that there is a confluence of events that are happening where there is now a shift after several quarters of building optimism and really strong results where a number of companies were beating and raising precedentedly raising guidance in Q one, unprecedentedly raising guidance in Q two, to where we are today.

This is the first quarter that we are seeing supply chain disruption and cost inflation, which I will remind you we've been identifying as an issue since fourth quarter twenty coming home to roost and having material impact on results. A lot of carcass is going to be on the

road this quarter and next. Well, I see what you're saying, But is it maybe difficult for another quarter but ultimately manageable as as supply chains right themselves, Because it does seem like you know J. Powell making some comments, he said, the global supply chain will resume functioning over time. It's a very uneven recovery. UM risk still too clearly to battle nicks and higher inflation. But they do feel like their policy is in a good, good place. I mean,

we still see some dislocations, no doubt about it. Just to look at look at the labor market. We just talked to the Chipotle CEO. But nonetheless, you know, people are buying lots of stuff and we are still me

being a lot of demand. The supply chain, I believe, based on channel checks is under appreciated in terms of the impact that we will see what companies in terms of um not truly understanding the second, third, fourth derivative of supply chain dislocation and how globally interconnected we are. And while there is very very strong demand, that is, you know, earnings calls for the fact the past three quarters, including this quarter, have talked about strong demand, strong growth,

record record levels. That's that's true, and they're seeing that. However, these issues are very significant, and some of these are not transitory. You know, labor inflation is not transitory. It is very difficult when you have wages up in some cases to actually walk that back down. What has to happen for wages to reset at pre pandemic levels, if you will, or levels that are not inflated at this at this rate, we have to go through a layoff

period um. And so you know as and I'm not suggesting we will go through that, but clearly labor inflation is not transitory and you cannot take that away. And right now the employee is in the command seat because of the labor shortage and because of the demand, and companies are paying these levels. Um. But when demands starts to decelerate, and it will have to do that, um,

we will see you know, that scenario play out. So I just you know, the supply chance scenario is one, but that is setting kind of a fuse for other things to happen in order for you know, the environment that we're in too right itself, because the pendulum just swung, you know, one way too far and the other way too far, and we're trying to get back to center. Okay, So how do you play an environment like this, the one that you describe Where are you putting where are

you putting money? Well, I can tell you where investors are putting money. Um, They're putting money in pure plays because they're very easy to understand. Um, They're putting money in North America out of all of the regions. North America is the biggest bet um and interestingly, they're putting money in small caps. So you know, those are three. The other which I think is very interesting, and again I love to read the tea leaves of our research.

And you know, this quarter we saw a tremendous shift in sentiment. The top three UM investment thematic is cost cutting initiatives. When we start to see companies announcing cost cutting initiatives, that's a sign that is a sign of UM strain on the organization. And because companies have been spending handover foot with regard to reinvesting in their business,

which is why we're in this type of environment. Companies were sitting on boatloads of free cash flow in the second quarter and third quarter of twenty what did they do. They've loud it all into the market, and so they created this demand for services and goods. Consumers felt great about it as well, because there was this exuberance around you know, summertime and getting through COVID, etcetera. And you know, so we're watching to see what happens with reinvestment strategies.

And you talked about M n A and M and A is at as at a record pace, UM, you know, and and investors. What was shocking to to me quite frankly, having tracked investor sentiment for the past twenty years UM, after seeing reinvestment at such high levels quarter over quarter for three consecutive quarters, this quarter was the first time that debt paid down came into focus as the number one preference in our inside the Buy Side Earnings primer

starting which we published last week. And not only that, but the level of UM comfort with debt levels went down, so we saw a big sharp increase in net debt to even at around one time. All right, just a very very conservative yeah, that is that certainly does speak to a conservative action. Hey Rebecca, we've got a run. Rebecca Corbyn, founder and CEO Corby Advisors, with us on the phone from Farmington, Connecticut. Thanks for listening to Bloomberg

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