Stocks at Record; Consumer Confidence Drops to Four-Month Low

markets are positioned for. Neila Richardson, investment strategists at Edward Jones. Neila, thanks so much for joining us. What is it? What are you looking for tomorrow? Out of the FED tai fall. I'm looking for a return to the hard data. I really want to see what their projection for the is for the economy going forward. We we have a really mixed picture right now. It's still a resilient consumer, but

there's some praying around the edges. In terms of the jobs market producing the same number of jobs that we saw last year. We've seen a flight uptick and delinquencies in terms of credit cards and automobile, And so I want to know, with inflation firming another different factor since the Fed um in June and and really started us on this rate cutting cycle, I want to know, has their outlook for the economy changed? So are you expecting

them to actually answer that question? Well, they've they've been pretty consistent about the economy. Uh, They've said that the economy is in good shape. And is that still their

operating outlook? Is the economy still in good shape? And if so, is this next move by the Fed, whether it's a pause or a cut, is this consistent with the economy that we see before us or are they still looking around the corner at rising risks like a trade which again we've gotten some improving more positive rhetoric, or or other risks you're seeing abroad in terms of slowing cora. So, Nila, we've you know, we're expecting, as you suggested, you know, a rate cut tomorrow. It continued

moderately dubbish. Uh, Fed, We've got maybe some good news coming on some of the geopolitical fronts as relates to trade and you know, gosh, maybe even Brexit. The markets certainly discounted that this year. Do you sense that from evaluation perspective, this market is is kind of stretched. We think that the pricing is reasonable because we're still seeing good economic fundamentals. We still see an economy that's growing but at a slow rate. That's been very positive for equities.

Very low interest rates have been positive, Monetary stimulus has been positive, and so we think it's a reason it's not a cheap market, but it is a reasonably priced rue given what we know to be solid fundamentals. And I think what we're seeing on the earning s front is validating that view. So coming up're gonna be talking about consumer confidence, and we just got some readings showing

that consumer confidence felt to the lowest since June. We also seem to linquencies pick up, if for particularly auto loans and credit card loans. How does that sort of square with this idea of the strong US consumer and a strong US economy. Well, it goes back to my initial point that the consumer has been resilient. It's been carrying the water for this economy for ten years. Are we starting to see a fray? And that's what we're

very watchful of. H if you care that with U corporate sectors, that's healthy, but really hasn't contributed on the growth front in terms of capex spending, our investment, what you or on the fiscal side. We never got that infrastructure bill We've all been waiting for a week after a week, and so it's really the consumer. And while these uh praying of the consumer might be okay if you had other players in this game, when you only have one, you're really concerned about the health of that one.

Naylor Richardson, thank you so much as always for joining us. Neil Regardson as an investment stargis at Edward Jones. Let's look at the consumer here, and the consumer has become you know, it is the US economy, and with the manufacturing sector in the US showing signs of weakness, the pressure is on the consumer even more to keep this economy going forward. To get a sense the latest read

on how the consumers doing, we welcome Lynn Franco. Lynn is a senior Director of Economic Indicators and Surveys at the Conference Board. So Lynn, give us the latest data that you guys have at the Conference Board on the consumer confidence. We had a marginal decrease. Confidence is now

nine versus one point three last month. UM but holding steady, and we think it's going to continue to prop up the economy, prop up growth, and um, you know, we're we're sort of in I think, a good place right here, as consumers have sort of you know, shrugged off all the trade rhetoric. Um, there's no signs here that the impeachment inquiry is having any impact on competence overall. So I think we're in pretty good shape heading into the

holiday season. I guess some people appoint to the unexpected decline as being somewhat worrisome. What would you tell them? We're still at a relatively strong level. You know, we've been seeing sort of this same seasaw momentum for much of this year, and there's really been no sort of downward trend visible. So I think we're in a we're

in a pretty good place here. I mean, one point nine is a relatively strong reading, and it's it's interesting, Lynn, I mean, when you think about the consumer, so much of it is do I have a job? Am I getting raises in my job? And I, you know, more or less content with where I am? In terms of employment, We're pretty pretty good spot right now with unemployment at you know, you know, fifty year lows. What what's your survey talking about the employment situation. Um, you know, current

employment situation is very good. We saw a bit of an uptick in the people telling us that, you know, jobs are plentiful, a slight uptick, and those telling us jobs are hard to get but historically very strong levels. They did express some mild concerns going forward. Um, but

I think we're still in a relatively good place. I mean, we're anticipating somewhat slower employment growth going forward, but no red flags coming out of there that you know, suddenly we're going to have a spike in layoffs or or freezes. So I think it should be enough to support confidence. So we've actually seen a softening in the trade rhetoric. We know that trade tensions have weighed on consumer sentiment. What was it that was responsible for the unexpected decline

this time around? It's relatively um, you know, kind of moving sideways again. It was a little bit of apprehensiveness

about where business conditions and employment are headed. On the flip side of that, though, they're more positive about their income prospects and that should bode well for spending both in the holiday season season in a little bit longer term as well, Lynn, is your work take into account um kind of home ownership because it seems like with interest rates so low here, uh, you know, people who want homes have the homes that they can trade up

if if if they if they want. Um, how do you guys try to capture the whole home ownership thing as it waits to consumers. Well, we're trying to capture in two ways. So for instance, we ask a question about interest rate expectations of the last three months, more than a quarter of consumers are telling us that they expect to cut so that sort of baked into confidence and it's a large increase from what we had seen

in prior months. And in terms of home purchasing intentions, we saw a little bit of a pick up there, and I think, you know, the decline that we're seeing an interest draw in mortgage rate is filtering into that and major appliance purchases, you know, the big ticket items there is pretty flat and holding it at a high level. So I think, um, you know, both housing interest rates, job growth, and wage growth should continue to support confidence for the remainder of the year. Thank you so much,

Lynn Franco. We always appreciate your insights. Lind Anco, a senior director of Economic Indicators and Surveys at the conference board, Well, was supposed to be the year of the Unicorn I p O. Everybody was gonna make moneys, the bankers, certainly, investors, maybe even the private equity folks themselves. Lots of IPOs on tap, but they have been quite disappointing to date.

The questions what does that mean for the tech community and I p O s and valuations to get some answers to those questions, and welcome Ted Smith Ted as a co founder and president of Union Square Advisors. So Ted,

thanks so much for joining us. Just wonder if you could give us your thoughts and kind of what we saw with Uber, with Lift, with Smile Direct, and then of course with we work in terms of employed the evaluation seems to be a big gap between the private market is valuing these companies and where the public market evaluations are hipaul and highly soa thanks for having me on.

Really appreciate it. Yes, we've certainly seen a very interesting year uh in the I p O markets at this point, but I also think it's important to point out there have been a number of notable successes, and there's a little bit of a the haves and the have nots this year, and I think there's obviously been a lot of focus on the tech unicorns and a number of the folks that you are, the companies that you just mentioned,

particularly We Work, have kind of dominated the headlines. So but despite that, I think we have an I p O market that's open and accepting um by investors for business models that are actually making money or have the opportunity to make money in the near term, so a

path to profitability that's well defined. What I think the market has risen up and said decidedly at this point is that ever widening losses or a lack of even a vision of how to get to profitability clearly is not going to be acceptable for new I p O opportunities. And therefore we've seen things like the we Work situation crop up where simply there's just no way to get

that come any public in the near term. By the way, talking about we Work, just across the Bloomberg Week are we Companies is has been quietly building an electronic gaming business. How that fits with everything else, we shall see how I see that anyway, I'd love to get your sense tad of where you expect to see a lot of consolidation going forward, other particular sectors that you expect to

be particularly active in the next couple of months. UM. We certainly continue to see a lot of activity around enterprise software. Generally, it's been one of the arenas that has been most successful. It's certainly been one of the areas where we've seen successful I p O s this year, with a number uh a number of really great companies

coming public. It also appears to be the place where the largest tech acquirers, and that's everybody from Microsoft, Salesforce, Adobe, et cetera, are continuing to focus their attention their energies and sort of next generation enterprise software UM. It's it's certainly a sector that's fairly highly valued, making those act editions UM somewhat expensive, at least on a historically relative basis.

But it's also UM the arena where we think the global market opportunities are the largest, and therefore we think where both corporate acquires like some of those that I mentioned, as well as the large private equity firms that focus on that arena are likely to continue to be very focused on acquiring interesting businesses. So t I know you folks that you need square really focused on the technology sector.

And we've seen i would say a little bit of a C change maybe over the last year two whereby the U S regulators, US Congress are really taken a look at the technology sector from a regulatory perspective. That's kind of new. Are you sensing that that's kind of impacting the tech business, whether it's startups or even some

of the bigger, more established companies. Well, it's certainly causing the bigger, more established companies to try to figure out how to deal with this C change, right this is the first to your point, this is kind of the first time in several years that the largest tech companies have kind of been in the crosshairs of the regulators and Congress and presidential candidates kind of all at the

same time. Uh. This is a This is a pretty interesting topic for a lot of folks right now, and it's one that that sort of continually seems to rise rise above the fold. So what we're seeing from the largest companies is is um some ongoing thoughtfulness if you will, about can M and A be pursued in certain arenas UH and not put them even further into those crosshairs.

But I think they're they're firmly there now. UM. I was at an interview last week with the chief of the DJ Enforcement issue where he basically said that all options are on the table with respect to the largest tech companies UM and how we may think about dealing with the bad behavior that has come to light over the course of the last two to two to three years.

So I think they're clearly on notice with respect to the their activities in a number of ways, how they handle personal data, how they deal with the freedom of speech issues, how they deal with putting their thumb on the scale with respect to very as business activities. I think, to the point that I made, everything is on the table, and so I think those largest tech companies are taking that into consideration. What does that mean for startups? What

does that mean for newer companies? Well, it may mean opportunity for them UH as they're able to go into markets that might have been otherwise dominated by these these larger players. But I also think there's the question of what does it mean for innovation UH and if we somehow put the regulatory shackles on these largest tech companies doesn't in fact crimp their ability uh to uh really significantly innovate from here, which is very important for for

this country and for the tech sector generally. Ted Smith, thank you so much for being with us. Ted Smith, co founder and president of Union Square Advisors, definitely has been an active year, uh for I P O S and for M and A. The question is going forward, how much that can continue in light of some sort of rocky or receptions that we've gotten. Thanks for listening to the Bloomberg pl podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer.

UM Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa abram Woods. I'm on Twitter at Lisa abram Woods. One before the podcast, you can always catch us worldwide on Bloomberg Radio