Markets, Hiring, And Retail Spending

for two inflation, FED tapering. Dave, thank you for joining us. When we think about how are you positioning yourself? Well, thank you for having to me. Glad to be on again today. UM, I think you want to be positioned for choppy and more volt markets ahead. We've got a lot with the FED. Everybody's talked about their combination going away and what's going to have. We also have Congress actively involved, COVID nineteens, you have political events. I think

it's a lot more choppy in the next year. Yield hire, I think it's positive, but just not as big of a return over the whole year as one would expect. There's going to be periods though we're it's up a lot and down a lot. I think we're gonna have some choppy trading. So what do I do there? Do I stick with maybe the big top line growth stories tech, for example, healthcare, or do I go a little bit more cyclical and try to play what should be some

type of reopening or continued reopening next year. I think that's a really good question, Paul. I think one of the things this creates is a higher awareness for the desire for risk management. And the more you, as an investor understand your risk management that's inside your portfolio, it's essential. The better you understand it, the better your portfolio perform as you hope. So I think the biggest thing you

need to do is understand the risks within your protfolio. Now, saying that, I do think you want to have a more value tilt, and probably a bigger company tilt over over overall, but small companies will probably in my estimation, outperform large companies as a whole. But I think the core of your portfolio needs to be in some of these companies you really really trust. Um so companies that I've been talking about more more recently, and I know it's up over a hundred percent year today. Is Ford.

Um Ford I think is a really really good company. It's a great play. They have a ton of momentum in the number of buys that they have and sells companies selling cars um and and a great opportunity with electric vehicles. They haven't even gotten started yet, just the f one fifty. Their Mustang is really not even the Mustang, so they I think they have a lot of opportunity to grow there. Less eccentric than Elon, but really good management and forward So that's one of the core holdings

I would look. So you mentioned this small cap idea. We're going to speak to Liz Young later. She loves them to How does inflation, though, throw a wrench in the ability for smaller companies to navigate a choppy environment

next year? It's going to be difficult, and so you want to look I think if you're going into small cap, you want to look for company needs that have the opportunity either to combat inflation with their growth, so that's really really important, or they have some type of unique technology that I think or a position in their um peer group that really makes a difference. So the other thing that I think that's really important is I don't think you want to have all the risk on the table.

And in other words, if you looked at the beta of your small cap portfolio to the Russell to or the S and P six, your beta I think needs to be a little bit smaller. Our small cap beta is about point eight right now. It's about fi year to day versus the Russell to about ten. So I think you can do a lot better with um less volatile companies, but stay in that small cap space. David, how do you think about valuation here? There's a lot

of folks that are concerned about evaluation. But on the other hand, people saye g. But that given where interest rates are, don't worry. Earnings have been very good over the past several quarters, but likely to slow. How do you think about evaluation in this market? Now? Well, there's no doubt it's high. Right you look at any type of chart you want to look at across the market, valuation is extremely high. It's a very narrow market, and

so that is concerning. The problem is is I think, well, not the problem, but the opportunity is is that valuations never really created a burst of the bubble so I don't think you worry about valuation. You more worry about what are the downside risks with my individual names in

my portfolio and what causes the bubble to burst. So I would set valuation aside a little bit and look at the FED, look at the COVID, which I think you know we've talked about a million times over, and look at what events are going on with Congress and how that's going to affect the downside risk of my nature. Is there a paradigm shift, a move away from chasing yield into protecting your capital? I think there there There has to be for at least a portion of everyone's portfolio,

so yields are higher. Um, you can't just chasing yield is not going to give you the actually I think that you need, and so you need to look at how does your portfolio fit together and what is the potential risk to your portfolio losing money? And if you do it that way and you start talking about risk, I think your profolio is going to perform as you want um throughout the year. All right, David, thank you so much for joining us. Really appreciate getting your thoughts

and perspective. David Harden, founder, president of Summit Global Investments. One of the interesting economic fallouts from this pandemic has been a large number of people have simply left the workforce, maybe four to five million of them here in the US. And of course we see the help on it signs in just about every restaurant and retail establishment, but it's also impacting larger companies like Micron Technology has a hundred billion dollar market capp chip company. April Arnston joins us.

She's a chief people officer at Micron Technology. April talked to us about the labor market for again, a big tech company like Micron Technologies, what are you guys dealing with? Hi, good morning, Thanks for having me. Yeah. So, while the labor shortage is real, you know, we also believe it presents opportunities that can create retention challenges for sure, but we've also found that it has created hiring opportunities and it it really hasn't stalled our efforts, that hasn't stalled

our innovation efforts, that hasn't stalled our diversity efforts. In fact, we believe that our focus on things like the ei UM, things like our company success and our innovation, it's given us a competitive advantage in the talent marketplace. People are rethinking where they want to work. They want fulfilling work, they want flexibility, and they want companies to share their values.

So now is the time for companies to really double down on those efforts and UM make sure that they are seeing keen about what they offer to employees, both in terms of the work and the environment that they create, so that people can find a purpose in the work and they feel valued and they feel like they're contributing to success. You know, I'm curious about the most compelling ways,

the most compelling examples of how the workplace is really changing. Yeah, you know, at Micron, I think there's a few things that, you know, we are looking at to make sure that we provide a modern work experience. I think number one I just mentioned people want a place where they feel fulfilled, UM that they are doing work that impacts UM, impacts

greater society, and impacts their community. They want flexibility. They want to work UM the way they want to work and the way that they best work, whether that's working from home or or whether that's you know, leveraging technology to be engaged in different ways. They also want you know, they want to be socially connected, so when they come to work, you know, we're finding that people still want to connect and when they come to work, they want

a unique experience. They want to still be able to connect with our colleagues UM and and work in an environment where you know, they feel like they're they're making a difference and and they want to feel respected and valued. And this is why Micron's d I efforts are so incredibly important UM to make sure that we're providing a culture of inclusion where people feel like they can thrive. We believe it's the right thing to do, and talent is demanding it. April, how do how are you guys

what thinking about this? You know work from home phenomena that's really just gained so much momentum during this pandemic and many employees saying I'm just not coming back. What's your policy right now and how do you think it might evolve? Yeah, So from Micron, we UM we're your manufacturer, so we design, develop, and manufacture memory and storage products. So as you can imagine, we have a pretty diverse workforce. We do have a population that has to be working

at a physical Micron location to manufacture our products. Uh. We have a population of technical folks, research and development team members who have to occasionally access the site. They have to be in labs, they have to be testing the product. They can do some of their work remotely, but by and large they need to be on site. And then we have a third population at Micron where a lot of their work can be done flexibly. So we've devised the strategy that really addresses all three populations

and allows the most flexibility for those different populations. You do have to base it on the role on the work, UM, and that's exactly what we've done. And and as I've mentioned, you know, certainly there is a population, although I would say it's a smaller population that wants to work fully remote UM and and not come to a site. What we're finding, UM is that people do want to be connected. They just want flexibility and how they do it and

when they do it and where they do it. But we are finding people still crave those social connections and coming to work for part of the time in some sort of hybrid arrangement for the roles that allow for that is seeming to be the recipe for success. I'm wondering if the skills are changing that are needed for this workforce of the future. When you look at the candidates in front of you for jobs, which are bound to be the most successful. Yeah, I would to answer

your question directly to skills are absolutely changing. Uh, as you know, as we look at candidates, the ones that will be successful are the ones. Of course, you know, technical capability is important, but what's even more important is the ability to learn. Because we're not even able to predict what skills someone might need, and three and five years down the road, we know that the skills required

are changing so rapidly. We need to have the ability to learn our our team members, our workforce has to be able to pivot and be agile and adapt so we can capitalize on market opportunities as they emerge. So the ability to learn, the ability to collaborate and connect with people so critically important. And this is again where diversity,

equality and exclusion UM. Making sure that your team members are working together, collaboratively, respecting each other, leveraging each other's strength UM to really innovate in in an incredible way. It's really really important and why it's the foundation for Micron. So I would say learning UM continuous learning critically important,

ability to communicate, collaborate very very important. And then of course at MICROME, we need a strong pipeline of STEM talent and we need students in the pipeline ready to take on these tough challenges. So we have invested quite a bit in that STEM pipeline. At micron UM, we're committed to growing the pipeline of underrepresented talent and making

STEM education investments around the world. In fact, in f y twenty one, Micron Foundation distributed more than seven million dollars and grants targeting equitable access to STEM education and basic human needs. So those types of investments to prepare the workforce of the future are incredibly important. April, thank

you so much for joining us. Really fascinating stuff. There is a corporate American global economies deal with some labor shortages and certainly some skilled labor shortages across the board as well for some of those tech companies. April Arts and Chief People Officer Micron Technology. It's a Simil Trades on the NAZAC MU. It's got about a hundred billion dollar market cap. I'm wondering, you know, you gotta wonder, Paul, how much the retail bidder is going to be the

marginal buyer in this market. Yeah, exactly, And it seems like that, you know, we've seen in this pandemic and with the meme stocks in particular, retailers with a lot of these zero fee apps really jumping into the market absolutely spend money on clothes or spend money on the stock market. We're gonna talk now to David Luke's he's the Site Center's president at CEO. He's going to talk about holiday spending, retail supply, chain, bottlenecks. David, thank you

for joining us. Once we get past this holiday shopping season. Is the buyer going to be there for these retailers. It sure looks like it. I mean, they've showed up quite a bit in the past couple of months. But I guess you know, as you're saying, it's always nice to look at the foot traffic and the holiday season, but that that doesn't really tell you what happens to the next ten years. I think what we're really seeing is that the way people are shopping is a lot

different than it used to be. Uh and a lot of retailers are making bets on what that future looks like, all right, so David, that's kind of where I wanted to go. As we've talked to, you know, retailers over the years, there's been this obviously, this argument that the United States is overstored, need to take out a lot of stores out of the inventory. And and you at site centers, you're a reat that focuses on these properties.

What's your view, Well, if you look at the data and what's what's so nice about the sectors Now, we've got very good mobile phone data that goes back five or six years, and what you're seeing coming out of the pandemic is that customer visits are up. In other words, people are going to shopping centers more times per week. But what's really interesting is they're spending less time there. And so if you kind of stay back and say, well, how how is that possible or why is that happening?

And I think the reasons are pretty clear. There's more people in the suburbs, they have more money, and because of this ongoing hybrid work, they're just around shopping the centers more frequently. So they're using convenience trips to drive a lot of sales. And the retailers are banking on this. I mean, the the amount of leasing right now is

so much higher than it's been in twenty years. Retailers are banking on the fact that these suburbs are going to have people that are more approximate to properties long term, and it's generate sales. Incredible. I grew up in Paramus, New Jersey, which is, you know, the mall center of America, and yeah, you know, I wonder here, how is this changing? How are the suburbs really changing across the country. Which

areas are seeing the most traffic. Well, I think remember in retail from a landlord perspective, there's two food groups. There's fashion malls and then there's convenience properties. And the fashion malls are more destination trips. Right. You go there and you're looking for luxury goods and you might have it might be a social event. It's not a social event to go to a Walgreens or a grocery store. Um,

but that's what's generating a lot of the sales. Are these big box chains, these national chains where you know, seventy of the property is parking. So the convenience aspect has become really really important. And I think in the suburbs. You're seeing so much demand for housing. Um it's very difficult to entitle and get land permits to build new shopping centers, and so there's a very little construction for

the last ten years. And all of a sudden, the retailers are saying, wait a minute, the customers are in the suburbs three four, five days a week. They're making trips throughout every weekday, which we can see. I mean the new business lunch is that five guys in the suburbs. It's not, as you know, a steakhouse in the city. So um so. So you're seeing a lot of this demand that just didn't exist a couple of years ago. The same thing with dentists and doctors right there leaving

the cities. They're moving to the suburbs, and that's that's sponsoring a lot of leasing demand. Hey David, real quick, thirty seconds, just a question from one of our listeners. M and a activity in a strip center space picked up this year. You're expected to continue next year? Yeah? Did there? You know there there were two companies that merge, so we lost two reads in our sector, and then there were two companies that I p owed. Um so

there were two new entrants. The reality is the private market values on assets are higher than the public market pricing. And whenever that happens, you know, you do have to wonder if if either further m and A or take private start to occur. So, if I had to bet, I would say there's probably fewer publicly traded reads in the next couple of years than there are now, just because there's so much private capital looking for real estate. All Right, David, thank you so much for joining us.

Really appreciate you taking the time. David Luke's chief investment Officer and president of Site Centers ny SC listed stock s I t C is the ticker there. Let's talk retail sales. We only got a few more days shopping days until Christmas, but I'm gonna talk about how you actually pay for the stuff you buy. It used to be cash, then credit debit cards. Now I just use my phone. It's really changing. Um let's talk to video. Peter's CEO of mar Ghetta Video. Thanks so much for

joining us here. Tell us what your company does, how you fit into that supply chain of global retail. Thanks for having me. Marcatta is the first modern card issuing platform, we enable any disruptive company to build a payments card of their choice. And so the specific example that you

shared is in the Buying Out pay leaders space. Many of the leaders in the Buying Now paid leader space use Marcatta to instantly issue a virtual card for their customers while they're in the shopping checkout experience to pay for their purchase over time. But you can think about this card experience being used in non demand delivery by crypto providers so that they can monetize their crypto holding. It's used in digital banking, it's using industries across the world.

But very excited to talk to you a little bit more about how it's impacting shopping this season for our consumers. I'm glad you went there. I am so interested in this by now pay later theme. You know, you do have some companies that let you buy now, pay later with your credit card, And I'm wondering if there are any concerns here about customers really adding up their debtloads

here into the holiday season. You know, I think consumers should always be very mindful about managing their cash flow, about managing all of the financial obligations that they are taking on across channels. That said, I think that by Now pay Later is experiencing the same frenzy that we saw on the credit card market a few decades ago when people ask the question of gosh, is this discally responsible for consumers to be buying on credit? And what

we're seeing decades later is that absolutely. It gives consumers the flexibility and the optionality to pay on their own time, using all of the options at their disposal. And what by now pay Later does is give consumer is the option to pay in installments over time, while the merchant pays for that benefit to the buy now, pay later providers because they now are able to attract a broader swap of customers and to make that checkout experience as

seamless as possible. It's it's just another payment option. It acts very differently from debit and credit, and consumers are demanding it more now than ever. So how payment trends? How are they trending these days? Video are people using primarily credit cards, cash, buy now, pay later, crypto? How the how are the trends right now? This is a very rapidly changing space, and I think the COVID pandemic

has been probably the biggest accelerant in payments transformation. So what we are seeing is that the use of cash has dropped off dramatically, as you'd expect. It's a question of safety and hygiene, but also just convenience that people just don't want to deal with grubby cash. We are seeing digital payment skyrocket and we are particularly seeing the

use of buying out paid leader grow by triple digits. Now, a lot of experts thought this was a one time phenomenon, it was a novelty of payments that would quickly fade. And while we saw buy now pay Leader grow by two hundred and fifty eight percent on Black Friday last year, it continued to grow at triple digits this year too. So this year on Black Friday, we saw buying our pay leader volume and grow by a hundred and five percent, and so it continues to be a huge way with

how consumers are demanding to pay. I'm wondering what other changes you are seeing in terms of where people are shopping, how they're paying for it. You work with so many companies in the space that you probably have the cutting edge here. So there are a few things that we're seeing. Um One is that while Black Friday continues to be a top shopping day. Another trend that we are seeing is that Cyber Mondays started to drop off in its significance.

So usually what we saw was that Cyber Monday had a pop of about seventy two when compared to Black Friday about two years ago. That has dropped down by about twenty points to roughly fifty five percent this year, telling us that consumers are now spreading out their purchases, not limiting it just to Cyber Monday. And also companies are probably giving their promotions also the holiday season rather

than saving it just for Cyber Monday. The other trend that we're seeing is that people are demanding for shopping to be very seamless and a digital experience, and so one of the customers that we have, Klarna, has built a wonderful shopping app which allows you to shop hundreds of merchants through their app, so you get customized rewards all the while while you know by now and paying later. Another phenomenon that work yeah sorry, go oh no, go

and continue please. Another phenomenon that we are seeing is at the use of crypto obviously has been skyrocketing and people aren't just investing in crypto for the sake of the novelty, but they actually wanted to use it in their day to day in lives. And so when you look at company bl coin Base, they are building cards on marketas platforms so that their customers can with the swipe of their card, monetize their crypto holdings and pay for a coffee at Strawbucks. So crypto is very much

entering mainstream life and not just being a novelty investment product. Interesting. I guess that they had to come and here it is video Peter's chief operating officer for Marquetta. Again, it's a nastack listed company. Credit card issuing company under the symbol m QUE became public this year. Dollars to share now trade just about the eighteen dollars to share, So take a look for that digital payments, retail. It's all changing.

Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews of Apple podcasts or whatever podcast platform you prefer. I'm Matt Miller, I'm on Twitter at Matt Miller V three and I'm false Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.