Ridding CPG Industry Of Plastic

not sure you know this is plastic free July. People being urged to really think about and limit their use of plastics, not just for the month of July, but going forward. And that's a big, big issue globally. Uh, certainly here in the United States in terms of limiting pollution. Stuart Landisburg, co founder and CEO of Grove Collaborative. He joins us, Stewart, thanks so much for joining us here. Talk to us about this plastic crisis if you will, in terms of you know, our landfills. Just give us

some numbers to kind of frame it out for us. Sure, thanks so much for having me. Uh. The plastic is an environmental crisis at the same level as some of the impacts of animal agriculture and the carbon dependent dependent energy account. The prevalence of plastic throughout our society is incredible because our ability to dispose of the enormous amount

of plastic to be created is so limited. We make worldwide almost a trillion with a t pounds of plastic every year, almost fifty percent of that single use plastic packaging alone. So single use plastic packaging about four hundred billion pounds produced annually, And no matter how much plastic we put into our recycling bins, only about nine gets recycled.

So you have this incredibly massive machine shirting out forever garbage, and that garbage is going into landfills, it's getting incinerated, and it's ending up in our ocean and ultimately ending up in our water and our food in the form of microplastics. So a huge problem, which I ahs, um, all right, well, we're gonna try and get him back there. But here's here's the thing that he just said that really jumped out of me. Only nine plastics are recycled.

I mean, it seems like we take so much time and effort, certainly here at Poburg, but they do it a great job. But just in general recycling plastics, I don't know where the rest of it goes. I mean, I think nine sounds high. I don't know if people

really buy into that recycling myth is it? How was it there versus they're being I mean, everybody in Germany separates so much stuff, and you know, you spend so much time separating your your waste, and then we all know at the end of the day most of these waste management companies just put it into landfills or throw it out in the ocean. I mean, it's no one

believes that we're really recycling all this stuff. And my question for Stewart, if we haven't back, he's back, why you know, who are the biggest offenders in terms of for example, the SMP five or Stoxis Hunter companies that that we invest in. Which of them are making so much single use plastic that they know is going to end up just polluting the planet. It's a great question.

So I'm not sure if you've heard me say before of the trillion towns of plastics we create each year, which right you you create this plastic bottle that can last thousands and thousands of years for use in ten minutes. And so the biggest companies from a plastic solution standpoint. The biggest contributors are the big consumer products companies who rely on this to get their product out there and

distribute it. And I really think this is this is one of the reasons I'm actually but let's name them, Stewart, I mean, are we talking about Coca Cola here? Are we talking about Procter and gamble Um? Are you talking about Nestley? Who are who are the who are the companies doing this? You've named a couple of them, and look, there are a bunch of NGOs who come out with with more accusatory folks. The toad I like to take is really one of Hey, how do we as an

industry and grow? The company that I run is a CpG business, and we look for alternative materials to package our products, materials like aluminum that are infinitely recyclable. Materials like paper you can use over and over again, unlike plastic. Rank you said, well, plastic recycling is a bit of a myth. Plastic has to be down cycled, so it can only be recycled two or three times at most,

whereas aluminum is infinitely recyclable with energy savings. So I think that companies like Grow can change the industry by looking for alternative materials that have a different sustainability profile. When I gets the huge opportunity that hopefully many of these companies that you named and others will gravitate towards what's the cost differential, I'm guessing that's kind of the gating issue for a lot of these companies and a

lot of these industries. The cost differential in sort of in terms of the whole product is actually nominal because the cost of packaging is fairly small, and we're able to build business models where the product is just as high quality, it's affordable for consumers, and it's much more sustainable.

I think bigger issue is the traditional innovator's dilemma, whereas UH diluted product in big plastic bottle is so wildly profitable for large companies, and there's billions, tens of billions of dollars in infrastructure supply chain built out to support

that profit pool. The cost of disrupting yourself if you're a large, successful organization is really big, and that's why brands like ours that speak with an authentic mission and we're created from the beginning with a supply chain that's cleaner and delivering a higher quality products of consumers are able to see even in the face of big competition. Is there one big you know, uh dam that has to break? Is there one big piece of the solution

we need to see, like government interaction. I would love to see government regulation on the classic front, but in general, I'm more of a free market person, and I think the thing that we are seeing now is that consumers are getting more and more educated. The plastic waste was a problem we could mostly ignore for the last fifty years, but for the next fifty years, we're not going to

be able to ignore it. And I think that's going to change consumer sentiment, and ultimately that changing consumer sentiment will drive companies to change their behavior. Gotta vote with your dollar. Stuart Landisburg, co founder and CEO of Grove Collaborative. This is Bloomberg. Let's get over right now to daniel De Martino Bouch. She's CEO and director of Intelligence at

Quill Intelligence. She used to be an advisor the Dallas FED and she also is Bloomberg still a Bloomberg opinion contributor. Danielle or I am. I I have not written anything in a very very long time. Get to work. Um, we published seven days a week at Quill, But I'll get to work. No, no, I no, I know you're working hard, and we'd love to have you on radio and television with us. I have been. You know, we've seen yields come down, down, down, ever since the Fed.

UM took a more hawkish pivot, at least on the dot plot got a little more hawkish. Um admitted, now they're starting to talk taper, and now they are really talking taper. Um, why if the if the economy looks strong enough for the Fed to start talking taper, why are we seeing yields come down? Well, you know, if you look at first of all, let's let's dispense with

the technicals argument. I get that the short trade and treasuries was enormous, but you could have said the same thing, you know, nine months ago at the dollar trade and how crouded that was. And we haven't seen this massive boom or in short squeeze effect in the dollars. So technicals played a role. But I think if you looked at it's the history of que tapering that you see that that the yield curve latin and that long maturity bond fields come in during times of paper because financial

markets don't like to have their passy taken away. And that's what you're talking about. You're talking about the dissipation of liquidity. We forget that global que in two thousand seventeen was running north of quete sillion a month, and that the threat of global que coming off in two thousand eighteen was what set off of all mcgeddon and J. Pali's first day in office when the Dow closed more

than a thousand points down. The markets don't like even a hint that the liquidity is going to be tempered. All right, Daniel, given that backdrop, how do you expect this feeder reserve to in fact temper paper however you want to phrase it. Well, So here's the issue, and this is what prior, this is what Powel three predecessors did not have to deal with. They were always worried about deflation, deflation, deflation, that was the bookman. But what

we're seeing right now is stagflationary risks rising. You look at single family rentals, for example, Morgan Stanley has a prietary model that shows that the year of the years through the second quarter, those rents are running north that's eleven Class A and B properties. Those rents are running

north of nine percent. These are sticky sources of inflation, and the greatest risk is that we're seeing peak growth at the same time, we're seeing inputs to inflation that are not going to be transitory, as we've seen in food commodities rolling over today, in lumber rolling over, in other uh in some of the metals complex rolling over those might those may prove to be transitory. We'ven seeing trucking rates the United States come down. Those can all

prove to be transitory. But the biggest input to inflation is housing. And we've seen the FEDS quantity of using in mortgage backed securities go on so long, too long did it feeding through two very rapid rental price games, and that is going to be problematic for J. Powell. Danielle, thanks so much for joining us. Too short of a time, Danielle di Martino Booth will have you back on soon, we hope. Daniel Did Martino Booths CEO and Director of

Intelligence for Quill Intelligence. She's also a former advisor at the Dallas FEDS, though she knows a thing or two about the FED. Well, we've been talking a lot over the past. It's called a couple of years of perhaps a growing overhang for these big tech names, um big social media company names from a regulatory standpoint in the US, not just the European Union but in the US. But at the end of the day, nobody seems to be

that concerned. But it's still out there, and in fact, Google parent Alphabet has been sued by thirty six states over alleged play store abuses. I look at Google stock here, it's all about one point four percent in line with the market, so not that big a deal. But let's again into it a little bit and talk about some of these big tech names. Man Deep Sing senior tech analysts for Bloomberg Intelligence. He joins us live, I say, live Matt Miller in our Bloomberg Interactive Broker studio. So

it's good to have a good analyst in here. Men Deep, talk to us about let's just start with these states suits here. Anything to worry about from Google and what are the state's alleging. Well, so in this case the focus is on their app store, and what Google and Apple have done is already lured their commissions. I think what the states are religion is especially when it comes to certain companies like gaming sector. Gaming sector relies heavily

on app store for generating all their revenue. If Google and Apple are taking a cut, that's a lot and given the payments have to be processed through the app store, that's what they're alluding to. So I think the endgame here is this suit obviously goes in tandem with the Fortnight suit against Apple, and you know these companies will have to change their commission structure. You can't charge that's

too much. It's if you own the store. You started the business right and now you own the store, and it's not necessary for life. You don't need to be able to play Fortnite, although it is loads of fun. Well, so look at Netflix. Netflix, you can sign up outside the app store and you can still use it as an app on the app store. So in case of gaming companies, the problem is you can't play you know, that game on Roku or the dot com so and

you are relying on that app store. And the case that these companies are making is why can't consumers pay outside the app store and why do we have to pay a thirty percent cut? And I think that's where they will have to change that. Com I wonder if people are going to start bringing suits against Walmart, why do I have to pay them at the checkout that you might play Walmart somewhere else. That's kind of my

way of thinking. I'm if I were if I were Facebook or alphabet In or Apple, my response will be, why do you have to pay me a thirty percent? Because I delivered a couple of billion people to you? Um, that's huge value. Offer your app on roku, you know so, so they will have to make modifications. Right now, any of these apps can't even show an ad saying you can sign up for our app outside the app store. At least allow them the option, the consumer the option

to pay for it outside the app store. You can't do that right now. And that is what this to suit religious that you know, they need to change their practices. So what would be the remedy, Like, what would Apple store or the Google store? What is it simply as simple as allowing you to access Yeah, why are they Why are consumers forced to pay through the app store? Why can't they sign up on the dot com or through you know, some other way. It's like, you know,

if you have if you're paying through credit card. You can pay through any of these four credit cards. You know how max Visa discovered, So it's the same. They have the to give users the option to sign up for the services and probably open the app store. If if these companies want to maintain their own app store, maybe that's also an option. But that's a far fetched option, and it just seems like Google should be able to

do whatever they want within their own business. You know, I mean they started this, they invested the money, they grew it. Um, you know the same. I feel it is true with Apple. Now. The argument is that you need some of these services to live a lot of people have to use certain apps to access work for example, um,

but you don't can't. So they are providing value. The app store value is that they are vetting all the apps, making sure all the apps are good, there is no malware, and you know, they are doing all the basic background x that you know, you don't end up paying ransomware to somebody because the app is bad. So there is value and that's why they need to charge a commission for you know, these businesses that are operating on the

app Store. The question is are they giving users enough options to pay for it in different ways, and that is I think the point of contention is that is that is this argument the stags pursuing similar to what the FTC, the Federal Trade Commission is looking at as well well. So I think there is the monopoly, the ad monopoly side of it, where you know, Google has a monopoly or a perceived monopoly in search, and then this one is more aimed at just the you know,

the app store commissions that Google is charging. I'm surprised why Apple wasn't included in this because you know, they have a very similar structure and going by what's going on with the Fortnite case, but apparently the Apple wasn't part of this may just twenty seconds here. Should investors

be worried about the Trump suit? No? I think again, think of these businesses as you know, I mean, they have established franchises and nothing changes, you know with this headline news got it man Deep Singh is a senior tech industry analyst for US at Bloomberg Intelligence, and he joined Paul Live out of the Bloomberg Interactive Broker studio. We're getting workers back there doing their job at seven

thirty one Lexington Avenue, the mothership. This is Bloomberg. Now I want to bring in Mark Doubting is the chief investment officer at Blue Bay Asset Management. And do I start off by congratulating you, Mark? Are you? I hope? So? Yeah? It was, um, I think a pretty decisive when yesterday Denmark seemed so tired by sixty seventy minutes, they clearly weren't going to do much. Um. Although I can't, I can't, I can't really buy into their guilt in the in

the penalty, it seemed like a really bad call. Did well we we we deserved our luck. I think on this occasion exactly you last night and I've I've always lost my voice. I was screaming that hard. It's the first final for England in over fifty years, so it's quite a moment and it's been some time coming. But certainly there was plenty to him about. It was great to watch hopefully it's coming home. At the energy I thought was amazing. Of the England players, Harry Kane was

was amazing, but Raheem Sterling was on fire. The guy still had so much energy after a hundred twenty minutes. Let's get to the stock market. It has no more energy today, but it's um, you know, won a championship recently, so no big deal to me. The bond market is the more interesting thing here, Mark. Why are we seeing yields at one seven um when the economy, when the

future looks so bright? Yeah, so I think you you hit on a great point, and I think that there's been plenty of head scratching around sort of bond desks over the course of the past week. I think the one thing that you are starting to see here is almost a bit of a sense where some are bailing on the whole reflation trade and thinking that maybe the growth has peaked and we're moving towards back towards this narrative of secular stagnation. But I really struggled to to

actually take that on board. I mean, certainly from my perspective, it continues to look as if the US economy is running hot. We think that US CPI next week is going to be really pretty slong, and actually some of the moves in prices may be going to prove less transitory than some are thinking. So we remain in the group that's pretty upbeat on on on growth, and so we we sense that in a world where the FED isn't giving any leadership. Effectively, you're prone to these wings

in sentiment. And at the moment the growth bears the secular stagnationists are in the ascendency. But we don't think that that will necessarily be something that holds too much longer over the course of the summer. Well, market does seem like central bankers around the world. We heard from the ECB and and of course the FED over the past couple of weeks, it's lower for longer. We're no rush to do anything here were you know, the FED,

we may consider tapering at some point. But I guess from the central banks perspective, they feel like their playbook is working. I would guess, yeah, I think it's easy, does it. I would emphasize that a lot of the global central banks a world behind the situation in the

US that we see today. Obviously, in the US we've already surpassed where g d P was before we actually entered into the pandemic, and yet we continue to see very aggressive bombuying by the FED, a lot of policy stimulus in the fiscal and also in the montary channel. So we would naturally think that the US would probably be leading the charge in terms of actually starting to

roll back on some of the balance sheet expansion. And you know what, I think, if we're right on economic data, and if economic data are as strong as we think they're going to be, we still think that we could well see the fit actually moved to taper is balance sheet purchases as early as September. After having a bit of a chat about this at the Jackson Hole meeting in August, do you think, mad I think I need to be at this Jackson Hole meeting. What do you think?

Definitely definitely need need to be there? Um? What do you think about stocks right now? I mean fair enough? They hit another all time high yesterday, rowing every day for a couple of weeks. But um, is everything already priced in? I noticed the Bloomberg Surprise Index is back down to zero after a year or two of being

in positive territory. Are we fair really valued? Well? I think the sense that I would sort of conveying in both stocks and in credit markets is that, you, I mean, valuations just aren't particularly compelling to to jump into the trade. I think there's probably more sense that investors would rather buy on a dip that necessarily chase prices all the

time higher here. But the other thing that you need to sort of keep in mind all the while is that although even if we're correct and we do ultimately end up seeing the FED drawing back and bond yields moving higher, in an economy which is growing at sort of nine percent real percent on inflation on the top in fourteen percent sort of nominal GDP growth is going to mean super strong earnings. And so that sort of strong earnings growth is going to be very supportive even

if yields do go up. And if you would say as long as they can't are, you've got to believe that stocks should end up being pretty well supported. So I can't see a dip going to say fall. All right, Hey, Mark, thanks so much for joining us. We appreciate it. Marked Oubting, chief investment Officer for Blue Bay Asset Management, and good luck to that England side in their big match against Italy.

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