Chipotle CEO on Earnings, Inflation and Crypto

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. Well, well, mena maybe having a tough time in the aftermarket. Chipotle Mexican Mexican Grill. Let's try it again. Chipotle Mexican Grill in the aftermarket yesterday was soaring, and it's soared in today's session, up more than six at its highs. And this is after the company reported second quarter earnings at top analyst projections.

The chain adding new locations consumers show that they were willing to show up and pay more. The company also provided an upbeat sales outlook. So great to have back with us. We got with us and Nicol. He is the CEO of chip Pole. It's good to have you with us, Brian. How are you. I'm great, Yeah, thanks for having me guys. Yeah, thanks so much for joining us on this. Hey, Carol went through some of these.

We also want to mention the same store sales growing in the mid to high single digits in the third quarter. That's the outlook that you gave. Um. What worked so well this past quarter, as we're sort of getting a tail of two different earnings reports at this point, what

worked was so well for you guys? Well, unfortunately for us. Uh. You know, our customer mix definitely over indexes with higher income and we saw that group actually increase their purchase frequency with us, and uh, their spend was also a little bit of So what we concluded is we we've seen some trade down and you know, people are switching some occasions in digitotle, so we feel like we're gaining

market share um for our company. Uh. And then at the same token, we did see a slight slow down with the lower income consumer from a purchase frequency standpoint,

but not in their absolute spend. And you know, the thing that was really powerful for us throughout the quarter is our restaurants were staffed, um, you know, and our team members did a great job of servicing both our digital business, which is rough, and our frontline business, which is really accelerating as people kind of come back to normal routines. And uh, that was really the thing that I think carried us to order. And then obviously our

brain has tremendous value. Uh, and as a result, we were able to pass through some pricing to offset a lot of the inflationary pressures we've been dealing with. Brod, I gotta ask you, I mean, when you saw these results coming in are leading up to this earnings report, Um,

were you just kind of blown away? I mean, even restaurant margin, which we all watch so closely because it's key in terms of measuring profitability in the quarter, compared with an estimate of I mean, as the numbers were coming in, and you know, were you just kind of blown away by the performance considering the declines we've seen

in consumer sentiment and so much recessionary talk. Yeah, Look, I really think it goes back to the strength of both our teams that are executing in our restaurants, because you know, they're the ones that turn the top line into the bottom line based on how they perform in

the restaurant. And then I think the I would say the strength of brand, which is, you know, it's really based on great culinary, great ingredients, you know, customization and convenience, and I think we did a great job of executing against all those markers and as a result, um, you know, we were rewarded with people's business that then our teams did a great job of executing so that it flowed to the bottom line. But yeah, I'm really proud of

the results. You know, to achieve a ten percent pump and also be able to you know, deliver the margins at the restaurant in this environment, I think it speaks of testament to just the value proposition, the strength of the brand in the strength of the people working in

our restaurants. And while analysts in the investment community were pretty happy about what they had heard, you know, in terms of your comp sales, I just want to mention another headline crossing about another company, best Buy, talking about their second quarter comp sales, and they're talking about them declining about so a different company, but this stock is now down about five percent and the after hours. Hey, Brian,

back to Chipotle. Let's talk about wages because I know that we heard from you guys last night that labor cross for the quarter were increased about thirty basis points from last year twenty four eight percent. You did that, you know wage rays last year. That's sort of widespread wage increase. Are you gonna have to do that again? You know, we are continuing to see pockets of you know,

needs to do still movement on our wages. The good news for us is we took a really big move about a year ago, which you manage, and then really what we've been doing is just monitoring kind of at the local level what's happening with wages and opportunity at our company, so that we need to attract retain the right people. And we still are dealing with I like to say, pockets of challenges on that front. Where are

those geographical pockets? Yeah, and it's almost look it's like store by store, Um, you know, it's not contained one region over another region. It really depends on what I would call kind of the market area. And you know there's a lot of dynamics that go into it. You know, is there big box retail nearby? What are the other alternatives for um kind of the the employee pool that

we compete with. So while you raised wages pretty much across the board last year, by not necessarily you will have to do the same thing this year or your you might might have to. We're look, we're still moving forward with MERITA increases, and we did a little bit bigger merit increase than usual given the inflationary environment, because we don't want to fall behind on wages either, given you know, the environment we're dealing with, So that's really

important to us. So I should probably caveat. We're trying to run our wage program on more of a you know system basis, where it happens every six months we re evaluate wages, you know, we pass along merit increases, and also we provide promotions for folks. And you know, before we were having to come in between those because you know, you just the competition to get labor to

work had really increased dramatically because there were fewer people applying. Luckily, that seems to have gone um to more of a normal pace where applicant flow as well as our ability to then retain people as as starting to get more I would say, to a normal approach for us UM or normal run rate. I gotta ask you only because it's been another story that we've been following for the last few months about unionization that we're seeing certainly among

you know, restaurants. Are you how do you guys feel about that or is that part of your move to make sure you stay ahead of when it comes to higher wage is because would you prefer that your restaurants don't become unionized or are you okay about it? Yeah? Look, I really don't see the need for union at chipotlech Um. You know, I believe our jobs and the culture and the opportunities are best done within our restaurants and within our company. We don't need a third party to be

a part of that conversation. And the reason why I say that is we've got great wages. Um, okay, they're great jobs. Were a growth company. You have the ability to join our company with you know, a high school degree or some equivalent. Um. And also if you talk to any like new immigrants or refugees, I mean this, this company delivers jobs and deliver the American dream. And I can share many stories where you know, I was just with somebody that was a refugee from the Congo.

He's now one of our highest level general managers, making six figures, leading a multimillion dollar restaurant, a team of thirty plus people. And the guy is electric and you know what he's gonna be able to continue to grow with. Yeah, there's a young woman should be immigrated from Chihuahua, Mexico, single female, didn't know English, learns English. You know, nine years later, she's our top restaurant general manager in the

entire coping. So yeah, there's just tremendous opportunity for people to go from a crew position, work their way up to being a general manager, becoming what we call a restaurant tour which is our top general managers, becoming a multi unit leader. And when you're when you're building restaurants a year, there is so much suction for people to get promotered and moved up. I I think last year we promoted you know, like nineteen people. Um, so, just

tremendous opportunity. And you know, I'm very proud of our company and I'm very proud of the jobs that we provide to our people. Hey, Brian, a lot those still out of your control, especially when it comes to costs. And this is something that we heard fed J. J. Powell talking about the rising costs across the board, especially for food. We did learn last night in your earnings report that you mentioned avocados, dairy tortillas, some packaging. Um,

those prices are still going up. You did those say that other parts of the business you've seen prices plateau. What is that? Where? Where has where has inflation been transitory in your business? Well? Yeah, don't mistake that for transitory because it hasn't gone back right, So you're not ready to call peak inflation. Not ready to call peak inflation yet. I wish, I wish I could, and I'm not ready to say that because we haven't seen anything

really go backwards yet. Um. The good because is we finally had like I don't know if you can call this a trend, but we have like a month or two where we didn't see everything going up. Um. But as you mentioned, we had some major inputs going up still uh and in a meaningful way. And that's why you know, Unfortunately we've got to take another price increase in August. Um, as much as I hate to do it, we're fortunate that our brand has the pricing power to

do it. Uh, and we can maintain the integrity of our value. Was it what ingredients? What ingredients are you referring to? Was a chicken was at steak? What was it? That plateau? Or continue? Yeah? That that that plateau? It was it was more in the proteins, so like pork, beef in some produce items. Unfortunately packaging aluminum, Uh, dairy tortillas, avocados, chicken um continue to have a lot of pressure. One

thing I want to ask you about, Brian. I mean, you're continue to grow in terms of the number of restaurants and especially the pickup windows. You know, where is the real growth and momentum that you guys continue to see. I've been out to visit It's really pretty cool to see the different lines that you guys are able to tap into, and certainly the digital world of people just either ordering online and just zipping by and picking up.

So where is it that you really continue to see growth in terms of the types of restaurants you want

to be opening up? Yeah, look the restaurant the Chipotle lane format um is you know, a traditional Chipole with a pickup window where you don't have to get out of your car and those restaurants and we now have four hundred and thirty of them, and I think the last time we spoke or maybe the first time we spoke about this, I think when we were talking about it, we had like Tan in the back in like two thousand nineteen. So it just shows the power of our development. Uh,

but they continue to really perform. You know, our digital business is about big uh in in that execution, and then the total business is also opens at a higher volume as well. So uh, that's what we're building. Um. We just opened our first one up in Canada to a really successful opening, and then just recently we opened one and kind of a smaller town outside California. It's like a new record opening for us. So it's got

a lot of momentum. Will continue to build the inline um Chipotle's as well where we can't get the chipotlenk. But it's clear consumers like the additional access point of not having to get another car, and it really it's the fastest drive the experience you can have because you ordered ahead, you've already paid for it. If you order a fountain drink, that's the thing that you gotta wait on otherwise you pull up, say your name, and you

know you got a burrito and you're ready to go. Hey, Brian, about a year ago we were interviewing you and I asked you about Chipotle accepting crypto, and I gotta be honest, you kind of laughed it off, and and here we are a year later, and you know, June of this year you announced that you now accept crypto at US locations his partnership with Flexa. So essentially, people load up this app with with their crypto and then you accept that app at the restaurants. What how's that going right now?

What percentage of sales is in crypto at this point? It's uh, you know, look, it's a really neat tool that Flexa provides so that people can monetize their crypto. Um, but you know they carry all the risk and uh, it's a very very small percentage of sales. Um. Arguably it's almost negligible. But um, you know, for those that have it and want to monetize it, we found I

think a pretty clever solution. All right, but you are doing and then buy the dip game, right and if you win, you can get it, but you could get you gotta could get about crypt We got a lot of creative people in our own marketing department. I'll tell you that much. Well, but why do promotion in time? Even dose coin is in there like so no, no, no, but but it is interesting. Is it just kind of its appeals to your audience and you know what is it?

You know, Look, we have a commitment to stay relevant both in culture, food, culture, you know, music. You know, I guess tech falls all the way to this idea of crypto and uh, I think the team does a fabulous job of staying on the front end of where young people want to be, uh, and then also being very relevant. You know, I never want our brand to be out of sync with the conversation and uh. You know, look, the reality is the things that drive culture, right, It's food,

it's fashion, its sports, it's music. I think it's tech. So we want to be president in those things. Well. I love that you said tech because we had a great conversation with your chief technology officer last week, Kirk Corner, and we talked about the Cultivate Next venture fund. You guys are investing in companies like hyphen and we were actually kind of blown away. We were online Tim and I looking at at this make line of where you've got teams in the restaurants servicing customer is and then

yet below all the digital orders are being filled. I mean, when you think about the investments you want to be making in other companies, how do you think about it? What's the strategy there? Well? Yeah, look, I am I'm super excited about this hyphen possibility for exactly what you just described. Right, We've got think of it this way, right,

our business is on that digital makeline. If we could automate that aspect of our business where you know, you only need a person or two to manage it, uh, it makes the job a lot easier in way for our employees because now you're not having really balanced deployment between digital orders and frontline orders. And uh, at the same token, you know, in the event it goes down, you still can serve off the top of the line.

So that hyphen technology, automation, robotics, whatever term you want to give it, is I think a big, big opportunity for us. I'm super excited about our investment. I've met the guys that are working on it, or should save a team that's working on it up in San Jose, smart group of people. I never thought I could say I would have a bunch of rocket sciences. I got a bunch of rocket sciences working by which is pretty amazing. This technology and every walk of our life, that's for sure. Hey,

Brian Fund to spend some time with you. Brian Nicol, of course, the chairman and CEO Chipotle, joining us via Zoom from the company's headquarters in Newport Beach, California. Brian, Bwell, thank you. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So we know during the pandemic that a broader clientele was boarding private jets, especially as business travel came to

a hall. And we've got a great guest to give us kind of an update is how the projjet industry continues to evolve as we increasingly come out of the pandemic. But we're not done yet. We stare certainly not done. A good reminder that we are still in it right. The President just testing negative today. Andrew Collins is a president and CEO of Centian a Jet. He's with us right now in the Bloomberg interactive at Broker Studio. Andrew, it's been a while since we've seen you. It's good

to have you back with us. How are you. I'm doing great and it's great to be back here in the student Thanks for having me. Hey, give us you know, I want to talk about sustainability and what you guys are doing there, because there's some really cool stuff. But first I want to get an idea of what you're seeing as you look across the landscape right now. And to Carroll's point, we saw private jet travel demand really

shoot higher during the pandemic. Is people you know thought that this was a good way to keep them safe. Are you seeing that demand remains strong right now? We are so. Um. We we saw the addressable market expand per se right. A lot of hidden people, hidden customers that you know, really took a pandemic to bring them out.

They might have been a little fiscally conservative, or they might have thought about the sustainability issue, but at the end of the day, they came out and products like ours. We invented the jet cards, so you pre buy twenty five hours at a time. When you utilize a service like that, you tend to get used to it. And so I don't think all the new entrants that came in and the expanded you know, amount of and the velocity by which you know, the volume came I don't

know that that will remain exactly as it stands. But a good portion of it is we're very busy this summer. Despite you know, raising rates and fuel surcharges and everything else, there is a voracious appetite for flying and traveling. Right now, are you back to pre pandemic levels? We are well passed pre pandemic levels really, And is most of it leisure or is it a combination of leisure? A little tricky, A little tricky because it feels like leisure what they

call it? Now? What is that? I think? I think it's a lot like that. Yeah. I go on a busits trip and I bring my Yeah, yeah, I think that. You know, it used to be I can tell you was sixty corporate, it was leisure, etcetera. Now it's very much hard to track because it's a lot of individuals, a lot of individual flying. Uh, they might be just expensing it. You have no idea. In some cases, you'd have to look at kind of time of day and

what don't know. I mean, a corporate credit card goes through, right, doesn't it um Well, because when with our card, you actually deposit money and then we just dub it it down, so we'll never really know if you're using it for business or not unless you did set it up as a business account. Okay, but somebody pays, someone does pay for it, yeah, and it's a lot of times it's

a primary customer and it's in their name. So at the end of the day, though, you can tell, like you can tell certain routes and you can see things come back. Titter Borrow's come back a lot, Westchester's come back, you know, Van Nye's come back. So there's a lot of business travel out there that's almost sneaky, but it's

definitely happening. It's interesting we're seeing this reversion to the mean with a lot of these pandemic plays out there in the public markets, whether it's Shopify laying off ten percent a thousand people earlier this week, Peloton coming back from sky high valuations. Do you anticipate a reversion to the mean as we do ease out of the pandemic and we and you get back to pre pandemic levels which were significantly lower than they are now. People become

more comfortable on commercial travel. Well, I think that commercial has got a long way to go, and that's you know, without disrespect to my commercial brethren, but we've had to do a bunch of disrespect. Yeah, it's been pretty it's been about it's tough, right they You know, the reaction up front was to shrink a lot of routes and shut a lot of things down. To bring that back is really tough. So they're in the process of trying

to figure that out. But there's a lot of people that left the airline industry and they're not coming back, or pilots and crews retired, so there's a lot of challenges there. Over in Europe, it's even worse. So right now you're seeing private jetscent year over your growth, uh due to the fact that it's just very difficult to travel throughout Europe. And uh, now, I don't I don't know that I see a lot of return yet. It

just doesn't feel like that. It feels like in the fallen in the winter, especially this peak period, we're gearing up for a very big peak period during the winter. Do you have all the workers that you need or that you want and or and or Yes, but you're gonna have to you're paying up for them big time. You have to be very aggressive. So we've done a lot of aggressive work. We've done a lot of recruiting. We've hired a lot of aggressive We're paying them more,

and we're talking to a lot more people. You know, it takes a lot more to fill oncelot, so we're doing a lot. We're also doing that. Everybody can be a pilot, no, not every It can be a pilot, and so there's a lot of work that goes around being a pilot. But to get crews, for instance, yeah, you have to you have to pay more, no question. Hey, ed,

you want to talk on a touch on the sustainability efforts. Sure, you mentioned people who have been previously concerned about the environmental impact of perhaps traveling private might not have the same concerns now. It does emit a lot of c R two. I mean we're talking tons and tons per

single plane per hour literal tons um. What are you doing to to offset that and to to to kind of um, you know, make customers feel better about their environmental impact so that you have a lot of different choices. You can do nothing and people will still pay and come on and fly. You can do a simple carbon offset or you know, a lot of people will offer access to a carbon offset service or something like that. We actually don't charge our customers and we do three

off setting. So we invest millions of dollars in the background to do emissions offsetting. So we go a little bit further. We go into the water vapors, the aerosols and nitrous ox sides, the things that actually make the difference. UM. I would argue that we probably are doing one of the largest sustainability efforts in private aviation, and so we do it with a partner. But UM it's not an additional cost to our customer, and every flight is offset three.

So in the first half of the year, we probably did the equivalent. If I was to compare it to things, UM, it's the equivalent of planting five million trees or providing energy to your average you know, town in America for a full year. UM it's it's a lot, and we're just getting used to it, and we're just learning it, and we're just experimenting with things. But we're trying to push our industry to do a lot more. I agree,

push push, push away. UM, I love carbon offsetting. What about carbon negative efforts where we're actually reducing the carbon in the atmosphere, which many would argue that that's what we need to do to save this planet. I think that you've got to look at a lot of things.

You've got to look at sustainable aviation fuel. I think you've got to look at a lot of ways to you know, one of the offshoots of the pandemic that's great is that it's virtual, so you're not doing a lot around the office as much and things like that. So we're looking at a lot of different ways to handle sustainability. I would tell you though, the biggest push that can happen is in electric and what they're calling

V talls. And you know, as a company, we have two tolls on order for both you know, Europe and North America. When you get those, um, I hope knock on wood in four to five years. What's the company that you ordered. But is it eventually your whole fleet just got about? I don't know. It could be. It's definitely a mass transit play, but it's definitely on the horizon. But you're feeling the pressure to do that too, right, No, I think we're ahead of the curve, to be honest

with you, love it, love it. I'm so glad you went through and so glad you're working on that. Um. You're too great to have you in in studio. Great to be here. Thank you. Andrew Collins's president and CEO of Sentient Jet, joining us here in our interactive broker studio journal. Yeah but you let me drive? No, No, all right, I want to drive. It's a good question. Drive ride to the clothes from Dawn on Bluebird Radio. All right, we've got just about just under to leven eleven,

twelve minutes in the trading day. It's been big day. It's a FED day, you hear Charlie break it down. We've got stocks just hovering off their best levels of the session. So we've seen quite a rally. It looks like investors reading what we got from the FED is kind of dubbish signals. We'll see if whether or not the analysis is truly that. We did see yields back down a bit, and we'll see what happens tomorrow. And you know, Friday, the day after is often very much

data later. This week. It's a good point. Let's get into it with Randy Watts, whose chief investment strategist at O'Neil Global Advisors. Randy joining us on the phone from Miami. Randy, how are you? Hey? It's great to hear both your voices, and I hope you're well, and I hope we can do this in person at some point this fall. Fingers crossed. Hey, let's go to Miami, Carol, you will come to your way. It sounds pretty good, especially when it's actually your cool

up here. Hey, Randy, give us your immediate reaction to what we just heard from FED chair J. Powell. I know you watched the technicals here, but but give us your read on on what he had to say. I think I think what happened today was exactly down the middle of the fairway. It was very anticipated. You got the rate increase with the market expected. Marketing expected a seventy four chance of a seventy five basis point increase

today you got that. And if anything, I would say the press conference was slightly more dovish in that Powell made it very clear that FED is going to be data dependent going forward, but he also sort of re emphasized the three point four percent rate for FED funds for the end of the year. So I would say, exactly as the market expected, no surprises, slightly more dovish press conference, and that's one of the reasons equities have reacted so strongly. And I would note bonds have rallied

as well. The curve has flattened somewhat with with the tenure coming down towards the towards the sort of with the two year uh come and come down a bit. So I really as expect. Yeah, and I think also Carol, it seems like that investors are pretty happy that investors or that J. Powell said that we're not currently in a recession right now. I mean, reporters tried really hard

to get that question out of him. Neil Irwin over to Axios finally did and we saw stocks move higher after that, and he reminded everybody, hey, wait, that's not what that's not my responsibility. It's all about my dual mandate. It seems like there's a single mandate right now, and that's inflation. Well exactly, I have to say, Randy, when he said that, wait a minute, we could also, you know, start to think about slowing in terms of our rate moves.

I thought to me that that's very significant. But I think you were spot on, Bill Dudley, formerly of the New York Fed, the same thing. You know. J Powell reminded us several times to that press conference. He came back to that June dot pot plot excuse me, dot plot, which shows you know, a commitment by the FED to continuing on its tightening path. And I think that needs to be something that investors kind of just remember that he said that if I, if I could add one

more store. Other sort of important points are he did see, did say that he's seeing slowing demanding Q two. They did say that they're going to try to stick to the balance sheet draw downlet they're currently on UH and that they were aiming for a soft landing but that's very hard to achieve, and that they think it's necessary to slow growth. So, I mean, the FED is definitely still on a tightening cycle, but again at the margin, slightly more dubbish than than I think, what the what

what people most feared from that press conference? All right? So as investors then like help me out here, because you know, I'm kind of tired of all of the speculation we've hit bottom. We've not hit bottom. I mean, if you are investing in this market, you've got to figure out how to put money to work. Should you be putting money in the equity universe, should you be playing it safer in fixed income? How do you see it? Okay,

let me say two things. First, I think the minute the stock market can identify or see we don't have to be there, but can see the end of the FED tighten cycle. I think stocks are headed up a lot higher. Now, it's unclear we're there yet, but as soon as the market star, it's the sense that I think equities are going to really take off. In terms of where we are right now, a typical bear market rally is up about twelve percent. That's kind of where we are right now, and so what happens going forward

is going to be very interesting. We really want to see the SMP hold above it's fifty day moving average. Right now, it's about three percent above that. It's about eight percent away from the two D day. If it can stay above that fifty day, we're pretty optimistic. However, if it was to pull back and break that fifty day, you would then't expect a technical retest down to those June lows around thirty six six. I think what's been most surprising so far for investors is that earning season

has been better than expected. It's been better than people's worst fears. We've had about thirty six percent of the SMP reports so far have beaten, so that is, I think, better than what people were worried about. I will note, though, that forward estimates for twenty two and three are coming down, so the out your numbers are being reduced, but they're

still showing growth. And I think when you look at the reaction on stocks like Microsoft and Google today, you can see the relief that earnings are not really collapsing. Totally agree. We get two big readings on both Apple and Amazon tomorrow and a speaking of Apple, Apple uh just crossing the Bloomberg terminal terminal. Apple has enlisted one of Lamborghini's top car development managers and a sign that it is stepping up work on a self driving electric vehicle.

This is according to people with knowledge of the situation, uh Luigi terra Borelli. He's a twenty year veteran of the Italian car maker, so he's going to help lead the design of Apple's future vehicle, according to those in the know. So, folks, if you didn't know it, the ev race it is on. Yeah, I don't expect to hear anything on tomorrow's earnings call about this. Uh, they've

Apple has certainly kept it under wraps. Hey, Randy, I want to get back to the FED and and what happens if if we don't see inflation come down, because we got two months. We got two months until the next bad meeting. We're off in August and you know, they go to Jackson Hall and we'll hear a bit, but at the same time, we're not going to get a policy decision for two months. That's true. Obviously, inflation

is still running very hot. The cp I was, you know, nine point one in June year to year, and Powell made a point of calling out pc as the feds most watch measure. You know, that was six point three pc in June, the largest and forty years. So I do think we have to start seeing these inflation numbers move in the right direction. They don't have to go immediately to where the FED wants them, but they've got to stop going up and maybe start to go down. A little bit at the margin. I am hopeful that

last month was the peak inflation month. We have seen a little bit of a decline in both food commodities and an energy prices recently. That should translate to a less hot number in July and hopefully August. But you're right, and he was very clear in the press conference. If the numbers coming hot in July and August, you could be looking at another sevent basis points in September. Market

would not like that. That could That's what could set up a move back towards that thirty six thirty six low. But I'm optimistic that that's not going to happen. We're gonna see a little bit of an improvement and the market can keep grinding its way higher as long as

there's no surprise. Yeah, there's inflationary pressures. It's something we're going to be putting to the Tchipotle CEO Brian Nicol whether or not, like I'm trying to get an idea, we do hear some easy and some of those inflationary pressures. But what he is seeing because they have certainly seen wages go up at that company, and whether or not they continue to see it Um, So, Randy, where don't you want to be in this market right now? I

think that's a tricky question. I think where I want to be is really looking to pick up secular growth stocks where I feel very good about their prospects long term, and I'm not trying to really play a strong economy scenario. I do think the economy is weakening. I would say one thing we should focus on is housing. Obviously, depending home sales numbers were very bad. New home sales are bad. Housing is about of the U S economy, so it's

got a big impact lost the whole spectrum. So I don't think I want to be playing for a strong economy right now. What I really want to do is just pick up growth stocks that have pulled back dramatically, because when this tightening cycle ends, we're going to get an expansion on those names, and I think you're gonna be very happy you own them. In interesting So you mean like an Apple and Amazon? Is that what you're talking about? A Microsoft? Is that what you mean? I mean?

I do think you know, a stock like Google, for example, has a little bit of an easier story right now than Amazon, where they're slowing consumer spending with regards to Apple, I think a lot of that has to do with China. They get a lot of their sales in China, and I think this question of how those sales been given

the lockdowns we've seen some of the major cities over there. Obviously, longer term we really like it, but I would probably try to be looking for companies where the story was a little bit easier, a little bit less controversial, or maybe the numbers have come down slightly, but it's been more of evaluation pullback. Obviously evaluations were stretched. But when you look at the market right now, it's trading about

fifteen times three estimate of two sixty four. So I think this is a good time for long term investors to start to accumulate stocks again. Once we get to the end of this rate rate cycle, I think equities are going a lot higher. Yeah, alright, great stuff, And it's interesting what you said about housing. Diane Swak earlier on TV. She's over at KPMG, she's the chief economist. She said housing is the canary in the coal mine. It's not singing anymore. Randy Watts, so great, chief investment

strategist at O'Neil Global Advisors. 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 YouTube. Sarah to Bloomberg Global News