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We learned today as well, alex let US consumer confidence dropped to a five month low in December, driven by concerns over the economy and potential Trump policies. In a survey by the Conference Board, forty six percent of respondents expected tariffs to raise their cost of living. Joining us now to discuss is the researcher behind the report, Dana Peterson, chief economist at the Conference Board. So, Dana, I mentioned
those numbers. Present situation was fine, came in at one forty point two, just a little bit down from one forty point nine the previous month, but expectations were down almost eleven points, down from ninety two point three to eighty one point one. How concern should we be?
Well, certainly, the present situation, as you said, was only a tick downward, but the expectations really fell backward after several months of improvement and it was across all three components of that, that's business conditions on what they think about employment six months ahead and also incomes.
Was that shown on party lines at all? I'm just wondering because a lot of it was led by the tariff increase expectation.
Right, Well, we did ask a special question about what consumers are thinking about in terms of policy for next year, and certainly many of them are concerned about tariffs and whether or not tariffs are going to be inflationary or not. And indeed, in the write ends where we ask consumers, what's the most important thing that you think will impact the economy good or bad, certainly prices leapt up, inflation to the top, but also not long out, not far
after that, we're certainly elections residents. And also the word tariff actually searched from zero to something notably positive. So consumers are paying attention to what's going on in politics, and they're starting at least they're curious to know what that's going to mean for their bottom lines.
Yeah, I mean, it's more fodder for the Federal Reserve right to continue to focus on inflation, or to refocus on inflation again as opposed to the unemployment part of the manday, which it looked like they had been at least swerving towards.
Well.
It seems like it is something that FOMC participants, at least some of them, according to Chair Powell, are looking at and did fold in their expectations of what policy might look like next year and the impacts on the consumers. Certainly, we have the debt ceiling rolling around, we have the tax cliff of twenty twenty six that's going to need to be dealt with, and certainly there are the threats
of renewed or at least intensified trading wars. Trade wars because certainly the TARISA put in place years ago or never lifted, we could see more that again will impact consumers because companies that have to pay those tariffs here in the US are just going to pass on those costs to the consumer.
That's sort of also My question on that is that this data was very different from the rest of the surveys that we've gotten on the consumer, and I'm wondering why you think that's different and why the feeling then that maybe the teriffs will get passed on to the consumers. I'm thinking about you mish for example, there was some stockpiling and sort of buying now and not later because of tariffs. But what did you make of the negativity in your report versus other surveys.
Well, I mean, again, just looking at the headline, it's made up of five different indicators. Two are about business, two are about the employment situation now in the future, and the other ones about income. So when you put all those things together, as I mentioned, business, employment and income were down. But the index itself does not reflect anything
about politics. So we're understanding the thoughts that consumers are interested or and some of them are concerned from our special question that we asked and also from the right ins which we usually do report on. So you know, all the writings were pretty mixed. Some said that they were excited about what's going to happen next year, others weren't.
But certainly, I think consumers who've just experienced a lot of inflation and prices are certainly much higher now than they were before the pandemic, are focused on inflation, and certainly the risks around that come from things that are already putting up pressure on inflation, including insurance, labor costs from labor shortages. Also, housing costs aren't following as fast
as we want. But there's also potential for some things that might be inflationary in twenty twenty five, and they're all focused on that right now.
Just briefly, Danna, what did you make of the rest of the data out today?
We had new home sales for November, not as good as anticipated, but still higher.
Yeah.
So, actually, when we ask consumers about whether or not they're going to purchase homes, we've seen a little bit of an improvement over the last six months, but.
It's still pretty low.
But the good news is that despite the fact that consumers are concerned or worried or thinking about the next year, they still plan to buy. They're still planning on buying cars, especially use cars, but also new cars. They're planning on going on vacation a little bit less, but if they go on vacation, they're looking to go on international vacations. And when it comes to services, they're still looking at experiential services like going to the movies or streaming, or
going to hotels and restaurants and that sort of thing. So, despite whatever they're worried about, consumers still think that right now it's easy to find a job, and as long as they are working, we think that they're going to continue to spend, and potentially that spending will lean against some of the downside risks that we see for next year.
Yes, all right, Dana, thanks a lot, really appreciate Dana Peterson, Chief Economists at the Conference Board.
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Well, let's continue the conversation now with Andrew Graham, who is managing partner at Jackson Square Capital. Andrew, we've been talking about targets on the S and B five hundred and how really, except for maybe Stiefel and maybe one or two other houses, they're pretty much all higher from here for next year. What are you looking for out of this SMP, which, let me just remind everybody is up like fifty percent over the last two years.
Yeah, and fully valued, you know, sort of a multiple basis forward multiple. Now we're going on twenty six numbers and you're still at twenty times forward estimates in twenty twenty six. So what we're trying to do is just apply you know, sort of a conservative earnings growth figure above nine percent, which is conservative, it's it's less than consensus, which is in the low whatever, eleven and twelve percent.
So put nine percent on top of that, maybe sixty five hundred is a conservative target for US at least for at least US anywhere I am.
Well, yeah, and then considering that, you know, we have sixty seven hundred, there's some seven thousand dollars calls, so I could argue that that would be conservative. What's going to be the biggest mover do you think for that sixty five hundred call? Is it going to be policy from DC? Is it going to be fed or is it going to be bottoms up?
I expect it to be policy from DC.
You know, generally speaking, I think we're going to go with the US economic resilience Beme. Still, there's no reason to doubt that we see that, you know, happening in a higher for longer rate environment, you know, reinforced by supportive domestic policy, more expansion of the business cycle, solid labor market, still in a broadening AI cycle, which I think is really important I think for for viewers and listeners to.
Pay attention to.
So the pro business policies also may be lower energy prices, stronger capital markets, more deal activity. But the path I think to the policy change gonna be bumpier than most people expect, and the markets are vulnerable because a lot of that good news is priced in.
You know, Andrew, many of our guests today talked about AI again being a theme next year, and you know, to look at the market today, there was no reason to suspect that it won't be a theme next year and a positive theme for the market. At the same time, you have to wonder if something else won't come along and oust it out of its prime position. I think you maybe quantum computing. We saw a little taste of that today.
Yeah.
I'm trying not to get distracted by the quantum computing thing because I think it's probably further out. But getting back to the yeah, betting back to the AI cycle, which I think everybody's looking for monetization in places other than semiconductors and you know, equipment that.
Goes into data centers.
There's been a lot of emphasis I think in the media on AI scaling laws, breaking down.
I think that's wrong. I wouldn't buy into that at all.
And I see these agentic models getting faster and they're being signs of monetization all over the place. There were certainly signs in service Now recent earnings report, and I expect to see the same thing prop crop up in sales in CRM Salesforce when they report earnings, maybe.
In the summer.
So we see this growing and not slowing down, and we expect software to be the primary beneficiary. What kind of names do you like, Well, we would mention service Now, Salesforce, and then maybe as honorable mentions HubSpot and Workday at some point going forward those that are among the bigger names. Cybersecurity is also going to be a consistent theme, and we see cyber arc as a beneficiary with their Ventify acquisition kind of getting into a positive agendic solution cycle.
They have machine access access management at the core of their business, and we see that as a potential winner going forward. So we're trying to emphasize software over semking. We own a lot of semiconductors. We think that sort of you know phase one of the of the AI cycle. Phase two goes into software and We saw that show up, like I said, in service now, and we see that happening more and more in the coming year.
Presumably, if you did all that work, you also looked at energy and energy to power AI and all of that, and obviously you came away with the notion that perhaps there wasn't any value to be had there.
No, absolutely.
I mean, that's an area that we're invested in Vistra as a stock that we own, independent power producer, but also vertive in you know, sort of the leader in data center cooling, a leader I think in liquid cooling. They have an opportunity to double their offerings in twenty twenty five, and that's a stock that we like a lot,
So we're there. We just think that the dispersion or the difference between the performance between semiconductors and software is so wide right now, and we think the cycle trends that way, and so we're trying to get more exposure into software specifically.
What dends this on a macro level? What makes you worried for these kind of calls?
You know, I think you know the big change at the margin last week was the FED meeting. It was the updated median twenty twenty five dot. I thought consensus, you know, I was looking for two or three rate cuts suggested by the dots, and it was an unambiguous two rate cuts, you know, sort of the dot. The pattern was centered right there in the middle. And I think that was the thing that markets were most disappointed with,
and maybe a hawkish tilt. And so if the FED is maybe less inclined to cut rates, and I think they'll pause in January, they might again unless there's some disinflation progress, they'll pause again in March. On the next right rate cut on paper here is June. But that would that sets you up for some some growth disappointments.
So if if growth data disappoints or something along those lines, I expect markets to be more sensitive thinking to the FED, you know, is not maybe as eager to cut interest rates. I don't want to take away from the fact that FED put is clearly in place. You know, from our opinion, it's in place. But I don't think it's a tailwind. I think it's more of a floor.
Got it all right, Andrew, thanks a lot, Really appreciate good stuff. Andrew Graham, managing partner at Jackson Square Capital, joining us on the markets.
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Certain logistics and shipping companies are going to have a really good view into what that actually winds up looking like. So we wanted to get the take on that with the CEO of rx SO, Drew Wilkerson. He joins us now. So there's a lot going on with you, Drew. You guys have been really busy lately. In September, you finally absorbed Coyote Logistics, so that was quite a hurdle. You also are looking forward to twenty twenty five in terms
of demand growth and tariff questions. You're start those down from late November by like twenty five percent. What's going on with you guys? What are some of the highlights?
As you mentioned, we closed the acquisition of Coyote. We actually closed it fairly fast when you look at it from time of announcement to when we close. We close it within just a couple of months, and this is a transformational acquisition for US. It more than doubles our truck brokerage, making us the third largest truck brokerage in North America.
Sets us up.
Really good for growth because when we were doing due diligence, one of the things we looked at was the customer overlap, and there was not a lot of customer overlap. And we're going to get more exposure into some verticals that we weren't as strong as in like food and beverage from the acquisition. So really excited. We're in the early days, but so far as far out seeding, far exceeding our expectations.
So you look at the likes of these Amazon on strikes very closely, I'm sure, And what do you see for the future of labor calls and the potential for any disruptions like that down the pike?
Yeah, and transportation, anytime that there's a disruption or volatility, it actually creates a good thing on the transportation industry as you start to see tender rejections rise, and from that standpoint, you set yourself up in a position to be able to get spot loads and projects as others are falling off of it, so as things like that and cause disruption in the market. For us, that's actually the volatility is a good thing for our business.
Volatility may be good, but questions and visibility on tariffs may not be. How are you guys preparing for next year?
We're watching it extremely closely on what's going to happen from a teariff perspective, and overall long term, you know what it will do is it will drive more domestic transportation, and for us that's a good thing. We're the majority of our business, over ninety percent of our business is done entra US, So for us, the more that you see on souring into the US, it creates more transportation opportunities for us to be able to capitalize on.
What are your margins like and how can you expand them?
We saw obviously, you know, FedEx and the likes of USPS and so on trying to do the very same. I'm just curious that you know, particularly to the design when you're trying to make acquisitions, are there ways that you can cut costs?
Yeah, And when you look at one of the things that we've been doing, we've been an early adopter in technology and the transportation industry, and if you go back and you look over the last decade, our margins have been some of the strongest in the industry. It's because we've invested so much into these pricing algorithms that allow us to have optimal pricing to both the customer and to the carrier. So we're going to continue to focus on technology and use it as ways to expand our
margins but also increase our employee productivity. If you look over the last twelve months, our employee productivity is up fifteen percent. And so for us, if we're able to be able to do it, and we're able to increase our loads per person per day, then ultimately that will increase our overall margins.
But when you look at, say the tariff situation, and you add that into your goals, like who pays for those tariffs? I mean, do you guys do it? Does the end consumer do it? And it's the end consumer, I would think that hurts demand. If it's you guys, I would think that hurts your margins.
Yeah, I think that that's still unknown. Ultimately, I think it would be hard for it not to be passed down to the end consumer. If there was a rise in price that ultimately that would go back to the end consumer. But again something that we're watching very closely.
Yeah, but you do have presidents, right, there were twists put on last time around, and some of those terriffs didn't come off during the Biden administration.
So how has it impacted your business already?
Yeah, so if you go back to the last Trump administration, it was actually a robust transportation cycle for US, and you know, there were there were highs and lows throughout the four years, but overall it was it was a strong transportation market. And some of the tariffs that you saw put on with China led to more domestic and more US Mexico trade. So our Mexico business has been up roughly thirty percent whenever we saw businesses shift from China into Mexico.
So, but are you worried if we get tariffs on Mexico that's going to mess you guys up.
We're watching it very closely.
But again, you know, if there's more domestic loads and more domestic volume that goes out there, that's a good thing for US overall. But obviously if we're hurt for our trade partners to the north or to the south, is something that could have an impact on that volume and shift it to more domestic volume.
You're the broker, right, but I'm sure gas prices impact you and how much your services are needed. So how important is it for the likes of r so that gas prices stay low.
We watch fuel prices very very closely, but ultimately, for US, fuel prices are more of a pass through from the customer to the carrier.
As a broker, can we talk about your stock for a second? And I appreciate your the CEO, so you're going to be like, I don't know why the stock is down twenty five percent in the last month. We're fantastic, I get that, but why is your stock down twenty five percent in last month?
I think overall, if you go back and you listen to our earnings call, we said that this was going to be a muted peak season, and we were one of the first to say that this was going to be a muted peak season, and I think people are
starting to see that play out now. The way that we've measured the stock is what it does over the long term, and if you look over the last twenty four months, it's up over twenty percent, and you know, for a cyclical market that's at the bottom of the cycle and been there for over two and a half years, we've got happy investors with how we've performed throughout the market, and we're not watching the stock price on a day
to day basis. We're really watching to see what it's able to do on a one, two, three year basis.
You know, we've been through a year where we've seen continuing wars, we've seen any number of elections, we've seen huge geopolitical turmoil and changes and so on. And you compete with the global companies, you compete with Chinese companies, you compete with Middle Eastern shippers, and so on. I'm sure, how does the prospects of maybe a commer twenty twenty five help your business as a tailwind?
Well, first, I would say, remember, we're largely a North American based company, So what we're doing is transportation that is largely driven by truckload and LTL across North America. So a lot of the companies that you're referencing aren't necessarily who we're competing with on a day to day basis.
But when you look at What it does is it would bring stability to overall forecasting and it will allow us to be able to forecast because if you go over the last three years, forecasting has been off when you look at where people have projected volumes to come in for the industry overall.
Drews, thank you so much.
A fascinating conversation, and do please keep a touch because I imagine it to be quite the quite the year guys next year and for a freight brokerages and shippers in general as well. Drew Wilkerson, CEO of RXO, thank you so much.
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Well, no holiday season would be complete without the iconic Elf on the Shelf. The company behind the timeless brand's been working all year round to produce new products and entertainment value. Now, remember this is how the story on the Elf on the Shelf goes. Every night, the Santa's scout elves fly to the North Pole to report to Santa every day in December of children's have been behaving or misbehaving, and then every morning they wind up in a different spot to sort of see the real deal
and check out what kids are actually doing well. Joining us now for more on this. The co founders and co CEOs of the Loomistella Company, Krista Pitts and as Shanda Bell. Shanda's also the chief marketing officer. Guys, Happy Christmas. This is always such a fun tradition for elp on the Shelf, particularly if you have kids. Krista, let's just start with you. How are things going this year? It's busy.
I mean we liken our world to actually loading the sleigh on Christmas Eve, so up until the very last moment, we are working hard to make sure children feel all of the love and all of the joy on Christmas Morning that every parent dreams for their family.
Christ I mean it's kind of genius.
You know, you took Christmas and you know made it something that you basically own.
What's next for Lumistella.
Well, next year, we're very excited to announce that we are launching our very first ever chapter book. You know, children all over the world write us and say, what do the elves eat? You know, give us all the scoop on how Santa became magical and how did the elves get their magic? And so, because we have become the source of that information and we are owning the world of Santa Claus, the chapter book is going to answer a lot of those questions for kids. And we're
really excited about that partnership with HarperCollins. So that drops in September.
What do they eat? That's a brilliant I love that. Hey, Shanda, as a chief marketing officer, do you feel like Elf on the Shelf markets itself at this point or how much more work do you need to do to be like, no, we need to have more penetration here for Elf on the Shelf.
That's a great question. It's a little bit of both, right. So, certainly social media has taken on its own, you know, Vibrato, but it's really our job as a company to listen to our consumers and the best way to do that is.
Through social media. So that's how we continue to serve out new products.
We certainly want to listen, but we also have a lot of questions that people want answered directly from the brand, So it can be anything from to Christa's point, you know, backstory type questions about the Santa Verse and the lore of all the other characters that we have to offer from Elf Babies this year and frost Pit.
Or we have Little grunt Our new Little Yetti. Elf Pets are super popular.
What's an else we hang one?
Oh my gosh, alf Pets are amazing, so they each have their own animated special on Netflix. And elf Pets really teach children about faith, hope and love. So we use characters that kids love and imbue values that parents love, and so they have their own jobs for Santa Claus and help him make his journey on Christmas Eve using the values of faith, hope and love.
Explain to me how you know, is there a part of the sort of coming up with all of these ideas at which point you have to pay somebody for the ip I mean, can you can you just tack yourselves onto the Santa mythology for example, and owners without actually paying anybody, or how does that all work?
That's a great question too.
So this year we launched the Santa Verse to consumers and really it's the entire enchanted world of Santa Claus.
So it's every friend.
It's every foe, it's an entire world of storytelling. And really every elf has its own story to tell. Santa Missus Clause, all the elf pets, they all have their own stories and each one is unique to every family that adopts it.
So that's original to you. But then do you have to is there anybody out there.
That owns any of this or is it in sort of the public domain if you know what I mean? Is there any copyright or is there any I don't know, a state of Santa Claus anywhere I don't know.
Yeah, So we certainly have copyright and trade warn't protection on all the things that we can that we work with Santa Claus to produce and to come up with.
You know, but it's an amazing mythology.
It's the greatest mythology of our time that no one's really taken the time to explain, and nobody's in a better position to do that than us. So I have this amazing hero brand that's in you know, twenty eight million homes all around the world, and people do look to us for the answers. They want to know the mythology of Santa Claus in this entire world, this entire
fantastical universe. And so it's our job as a company with one hundred and twenty employees that all work for Santa to answer those questions.
So we're Bloomberg, So we got to ask the business questions along with all the fun stuff. If we get any kind of tariff increase, how does that affect Christa? What you guys do? Are you all manufactured in house in the US? Walk us through that?
Yes, you know.
I had the pleasure of being on Bloomberg a little earlier this year with Vonnie, and I explained that while we fully support our government's efforts to secure feared trade agreements as balance trade is great for everyone, it's important to note that in our case, as a small to medium sized business, tariffs can significantly impact a business like ours. Small businesses consumers are going to bear the brunt of those costs, and for us, it's also because we can
only bear so much. So, just like in the supply chain crisis, we were able to hold our our own and to really stabilize our prices, but at some point it's going to have to pass on to the consumer. So absolutely, as a company that sources and manufactures our own goods and ultimately is in charge of our own
supply chain, tariffs can hurt small businesses. And the additional thing to that to think about is that when you're looking at these tariffs and in this particular situation, the companies that are going to benefit the most, or the companies that are out in the world of counterfeit, they're the world of imposter. They're the world of dupes because they aren't following any of the same laws or rules
that we are. Their goods come in usually small parcel package overnight and then that's how they are going out into the market. And so with companies like ours and other companies, these tariffs, if they happen, and there's still a lot to be seen, could be very impactful.
How do you contract those dupes?
I'm curious because you know, it's not even for sure that even big, huge website like Amazon for example, can really get rid of all of them.
Yeah, you know, it's a struggle for Amazon. You know, we have an entire team of people internally that work tirelessly to get cease and desists letters out and to ensure that our ip is protected and that truly the real brands that we've spent our life building are the ones you see when you search on their platform, and they've struggled with this for years. It's definitely something we spend hours and hours focused on.
You know, we've struggled.
With people landing on our ad words, buying them up, and then you can't even find the actual products.
It's something the industry is going to.
Have to tackle.
We're going to have to tackle it head on because imposters and dupes, they're dangerous. Many of them are not safety tested. Many of them are getting into the hands and the homes and families, and it's absolutely bad for all of us when that becomes the case.
I think Bonnie just really wants to know, like who owns santam?
I we do?
I think like before that, I think this is like her quest now, like who owns a Santa?
For this?
Hey, Shanda, if we take a look at your partners, we just had a nice piece out that showed you know, Netflix one of your partners, et cetera. How do you guys work with them throughout the year. What are those partnerships? How valuable are they to you?
Yeah, our partners are certainly a big, huge part of
what we do right. We want to offer the best in consumer products, entertainment and experiences for our fans, and so relying on these partners, especially Kellogg's McDonald's for example, they might offer an experience for families like we offer joyful family moments and so getting that toy in a happy meal for example in Australia and in the UK where that program is live, as well as you know, getting your fun little you know Elf on the shelf cereal.
The kids love that it makes fun Elf ideas.
So we help families create joyful family moments through these partnerships. For example they do scavenger hunts in the mall and things like that.
So these are vital partnerships.
Clearly, entertainment for any type of property like our own, is invaluable. So we have an Elf story as well as all three Elf pets that we actually produced in house, all streaming on Netflix. So these partnerships are really valuable to us. You can't have a global intellectual property and not have entertainment for.
Children to answer all the questions that they ask.
But it definitely keeps us busy, but we're honored to have in this part.
So I think the elves and the reindeer and Santa take off from Finland somewhere tonight around you know, after two in the morning, I think, and then we can track them, right, And I'm curious then what happens once once once Santa is on his way for you guys, what's the very next thing that you do after you wake up?
Well, we're hopefully asleep. We're much like the elves.
We're much like the elves where we're really really tired, and we have worked really hard, three hundred and sixty five days a year to pull off, you know, the Christmas season for our fans.
So we are exhausted. Our company, our employees are exhausted. They have worked full time, just like the elves do for Santa Claus. So hopefully everybody get a little bit of a break, and then early January we're back at it again.
Did the Elves think alcohol?
Yeah?
I do right here.
So it's Belvedere, So it's going to be a big old corporate party then with the l's and yourselves after on Christmas Day when we're all I.
Mean, if you've ever managed a child during Christmas, you definitely have cocktails. Thanks a lot, really appreciate. Happy Holidays to you. Krista Pits and Shanda Bell, co founders and co CEOs of the Loomisteleic Company.
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