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Let's get more on the jobs out of here. Jonny Biley is chief workforced Analyst over at employ Bridge. Employbridge is the largest industrial staffing firm in the United States. It's great to see you Joinny. We love having you every job day to get the perspective. What was your take on the numbers?
Well, certainly a lot stronger than I expected to see, as many of us were surprised by the big number. But you know, overall, I think, just as your last guest, Vince was saying, you know, there is a little bit of a disconnect between the establishment survey and the household survey, you know, so overall, looking at the job growth, you know, again we've talked about.
This in the past.
We're seeing some strong growth, certainly coming from the healthcare sector, the government sector, leisure and hospitality. But in this report, we really did see that the establishment survey had many sectors across the board adding jobs, and I was very happy to see that the professional and business service sector kind of.
Bounced back because that had been very weak.
So we're seeing more of those white collar professional jobs come back, specifically in the in the technical and scientific area.
Hey, Jonny Cute, I'd love to get your thoughts on just kind of the impact that immigration, both legal and more importantly illegal immigration, because that's where the numbers are. How about the immigrants are impacting the labor market?
Well, you know, certainly we're seeing immigration over you know, if you look at even you know, the past ten to fifteen years, we're seeing an increasing percentage of our overall labor force, you know, from foreign born workers, and that is projected to certainly continue and it's actually helping the overall job market. So that of course is specific
to the documented workers. You know, if we look at illegal immigration, you know, the government is certainly trying to work with the different states to get people documented so they can get to work. What we are seeing, you know, I know, in particular in New York, you know, there's a tremendous amount of processing for these workers to get them documented and then to get them to work.
But they most of them will be looking.
For those lower leveled, lower level jobs that don't really require as much much you know, skills and experience, and unfortunately, there's not a ton of those jobs out there, so so that could have a big impact on unemployment in the future.
So I guess if we were to read between all of the lines, and if you're an economist looking at the data, what is your read like, are we as strong as a number say some survey datas? Uh say data say something different? What do you what do you believe like? What's your read on the ground.
So, you know, I don't know if many people would like my answer, but I actually think that this headline number is a bit misleading. I don't believe the job market is as strong as the Establishment survey is saying. I actually think the numbers in the household survey are a bit more accurate. You know, we are seeing unemployment pick up for the first time.
We saw four in front of the number. We also saw that, you.
Know, not only are we seeing unemployment go up, but but people are leaving the labor force and opting out of the labor force. We saw some big, you know, big numbers there and I'm just not you know.
On the front lines, I have to tell you.
And you know employ Bridge, as you mentioned, you know, we focus on supply chain. We are certainly seeing more people looking for work and unfortunately there are less jobs to place them in. So I'm not saying it's a terrible job market. I mean, there are still jobs out there, but it certainly is a challenging and tough job market.
How about for recent college graduates. I mean, so that's how a year when you ask me for a friend, No, yes, exactly asking for a friend. So how about what's that environment look like.
Yeah, I worry about recent college graduate. There's less opportunities for them. We're seeing that. If you look at the overall jolts, you know, job data, we're seeing a decline. We're down to eight million you know jobs, job openings out there, So less opportunities for them this year even then last year. I will say, though, if they're going into healthcare, there's a tremendous amount of job opportunities in the healthcare sector, all different fields, all different types of positions.
That is one of the strongest areas. So scientific healthcare continues to remain strong. But you know, We're seeing a lot, a lot less in the financial sector. Consulting, even software has declined. You know that used to be such a hot skill. It still is a hot skill, but less jobs available today than last year or the year prior.
So based on that, what are the wages like than in the healthcare sector, Is that need for talent or just humans reflected in wages also, or we still look at like eight dollars people to get paid to take care of you in your home, which like is not a nice proposition for anybody.
Wages have gone up significantly and almost doubled from the number of tites that you've quoted. So yeah, we've seen you know, certainly since the pandemic, we've seen a lot of movement in wages across the board, all sectors, you know, logistics, manufacturing, but particular in healthcare.
They were some of the strongest.
Wage gains in twenty one and twenty two and twenty three. But I would say right now we're seeing a little bit more of stabilization. I'm not expecting big wage gains moving forward. I think you'll see it just kind of stabilize. But the wages have improved a lot over the last few years.
Jenny, what are your clients or corporate clients saying about kind of their policies for work from home, hybrid all that kind of stuff where we kind of settled out on that whole thing.
Yeah, you know, that is such a hot topic. It's a it's a great question.
Certainly.
There are many jobs that it's it's not an option, right, like the logistics manufacturing.
Oh, we know, we know, don't you know.
You know, for you have to be there.
So there's many jobs that really require you to be in the office or be on site. But employers that you know, have kind of taken the strategy of offering more flexibility where they can because they know that workers
want that workers want flexibility in their schedules. They don't mind going into the office, but maybe having like a hybrid schedule is like the best, you know, where they still get to collaborate with their you know, co workers and then still have some flexibility maybe to work from home for a few days. So that's where I see kind of the trend as these hybrid schedules. But you know, for many people's that's not an option and you kind of have to come back to the office.
All right, Jenny. We really appreciate you. It's such great insight. Jenny Bailey, chief workforce Analysts at employee Bridge. Again, they hire a lot of industrial employees, so they really have a pulse on what's happening within the US. Thank you so much for joining us.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business. You can also listen live on Amazon Alexa from our flagship New York station Just say Alexa playing Bloomberg eleven thirty.
I'm Alex ste alongside at Paul Sweeney. This at Bloomberg Intelligence Radio. We bring you all the top news and finance and business through a lens of our Bloomberg Intelligence folks. They cover two thousand companies and one hundred and thirty industries around the world. We want to take you outside Bloomberg Intelligence to get the read on the market and investment and what do you do when you have a day like today. David Deet's a senior investment strategist at
Pepack Private and he joins us now. So clearly we're looking at a market reaction from the jobs that now we're looking at flat equities despite the bond sell off. What do you think about this market right now?
Sure? So absolutely.
We saw basically a divergent jobs report, and I think as we're looking at the market right now, is really better for the US worker, better for stocks, and it is for fixed income. On the positive side, of course, more jobs are created than expected, and ultimately, as we know, you know, seventy percent of that economy is a consumer. Not only are more jobs being created, but we saw a nice tickof in terms of wage growth in the
last month. Indeed, a positive science in terms of real wage growth, and so that's all good for spending, that's good for corporate profits. Therefore, that's better than you would think for stocks. I think that's why stocks are shaking off some initial weakness there.
Having said that from fixed income.
Point of view, is not a positive because, of course, it continues the narrative that inflation is sticky. Remember, wages are such an important part of the overall inflation picture. This four point one percent year over year, our target is two. So that's unacceptable if you're a fixed income creator. That's not acceptable for the FED. And so that's why we're seeing bond sell off, stocks get back on their feet.
David, if there's some that are suggesting that this job's report maybe even pushes out a rate cut till next year, If that's in fact the case, can stocks work in that environment?
Well, so, you know, at the end of the day, as long as interest rates or the FED doesn't hike, I think we're all right with stocks. I mean, at the end of the day, you're buying stocks for earnings, and we just saw great earnings report in Q one. At the end of the quarter, the reports came in almost doubled in what had been expected, and we see that trend continuing for the rest of the year. So right now, Fed Fund Future's quite frankly saying, is a
coin toss for what we see in September. The real debate is now we're going to get one or we're going to.
Get two rate cuts.
You know, from an investor's point of view, we urge our clients not to overreact to just one metric. I mean, jobs are great, but you know, we're talking about what happened last month in stocks, and stock investors should be focused on what's the outlook for the next six to twelve months, and of course when it comes time to the FED making decisions September, we're going to have several more months of data under our belt. From a stock investor,
the worst situation is a recession. And of course there was really no evidence in the jobs report today to suggest that the overall economy was weakening.
So what's your top sector pick then? Based on all that for the six to twelves.
You know, we like everything other than those top three stocks which we're urging our clients to lighten up on, which would be Nvidia, Microsoft, and Apple.
And is that just evaluation call though?
Absolutely so.
Small caps of course, if you strip out two small caps in the Wrestle two thousand, that are very much pushed forward because the AI height Wrestle two thousand is down for the year. Historically, if you look long term, small stocks have outperformed large caps. Is more room to grow. We think they're very much out of favor. We would just go with like an ETF that takes an index approach to the Wrestle two thousand.
We think that might be the way to go. The only reason where all.
Bets feet off if you see a very hard landing in the economy but you know, the fact of the matter is we.
Have still a FED foot underneath us.
So if we still weakening, if we do see further weakening in the economy, that Fed will rush to the rescue. So we think that the actually the small caps might be an area to take some of your winnings from those mag seven put them into the smaller fraud.
Hey, David, a lot of folks are suggesting, if you want to get some value, that perhaps international is a way to go, less tech waiting in some of the European indexes, for example, how do you think that internationale.
We think that makes a whole lot of sense.
The dividend yields, for example, over in the continent are almost double what they are here, valuations are much lower. Yet their interest rates are even lower than they are here, and so the difference between what you get and fixed income and what you can get in terms of earning yields and dividends on stocks much greater. We think that's
a nice opportunity. Of course, Japan has come back to where it was in the nineteen eighties, and of course the real sleeper could be China, which is, you know, at close to a four to five year low here, but we just saw a big tick up in exports coming from in China. Remember, China's doing almost the exact opposite of what our fed's doing here. We have restrictive
policies at least on the monetary side. When China they're trying to press the accelerator down to lift the economy out of their kind of pandemic and post pandemic meles and so I think that could be a real tail when they're they could have some of the best technology in the world, but their tech companies are trading at about half the valuation of what US tech companies are training have.
What's interesting too, You like real estate, and Moody's said at least six US regional banks have a substantial exposure to commercial real estate loans, and they're at risk of having their debt ratings downgraded. What do you like in real estate? What do you not like? And how do you kind of avoid this kind of headline?
Yeah, absolutely so.
In terms of real estate, what we're looking at is what has now already reflected the concerns there. So let me give you an example by virtue of Bunstock. We like Boston properties there they have the commercial exposure, but they're limiting themselves to the sixth cities in America where people still.
Want to go there.
You're in New York's Bosses, Washington's the high end, and then they have the high end properties there. The stock is down by two thirds of where it was, so obviously it's reflected a lot of damage there. But because their free cash flow has stayed strong, they have never cut that dividend. Now you've got a six point two percent dividend, so you know, at the end of the day, I don't think it's everyone loves commercial real estate. No, we'll ever go back to the office. It's going to
be somewhere in between. So we're looking at those high quality landlords that are publicly traded where the prices have not reflected some bad news.
And sometimes you do.
Well by buying when things aren't rosy and then writing and then waiting for the situation to turn around.
David, how about financials? People are still I think a little leery about some of the banks in particular.
Yes, certainly that's what we heard from Moody's. I'm not sure new news that some of their debt is on credit watch for weakness in terms of commercial properties. A lot of that, of course, has been reflected in the stock prices.
You know.
At the end of the day, I do think that there is a strong policy coming from watching to make sure that this banking system stays strong. Remember, that's the lifeline for a lot of smaller businesses in main street USA. They can't tap publicly treated markets directly, and so I think if we want to you know, grow this economy and keep main street employed, we're going to have to make sure that those smaller banks get the lifelines they need.
So that's going to be one reason why, of course the FED is going to be probably more devish than the inflation statistics might otherwise warnt.
And just to wrap up, you also like three M. I'm kind of obsessed with three M. There's still a big conglomerate. They're changing CEOs and they've really just like stuck stuck in and said, like we're not spinning stuff off. Like, yes, they make the beck of posts as sticky stuff, but that sticky stuff goes everywhere in the world. Why do you like three M.
Yeah, so this echoes general electric where you have an industrial conglomerate which is way out of favor. They have many different divisions. They were perhaps undermanaged, and of course they had all sorts of litigation woes.
Now they've got.
A new man in there, mister Brown, they've already spun off one of their divisions, Selventum. The stock is trading at a big discount to the market and way off where it was. We think that if the US dollar softens a little bit, because there's such a big international trader, that will benefit them.
Of Course, you know, people talk about innovation.
Six cents of every dollar that they generate goes back into research and development. They're coming up with all sorts of patents. So we think that, you know, here is a situation just like what happened in ge New management, rationalized things, perhaps do some corporate restructuring, and you could see a stock rice that could outpace the S and P five hundred going forward, and of course the dividend is still much higher than the S and P five hundred.
All right, David, thank you so much for joining us. Always appreciate getting a few minutes of your time. David Deets, managing principle at pe PEC Private.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple car Playing and Broun Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
You know, folks, how much we love these big take stories coming out of Bloomberg newsaser super in depth reported source stories at really some key key issues out there today. Is know a different headline Wall Street's cr the commercial real estate COLO machine is wiping out apartment investors. I thought that was the safe part of the real estate market. I thought we're all just worried about office but apartments
also seeing some damage as well. One of the reporters on that story choices here in a bloom getteract to Broker Studio, Sam Scott's Carpenter Bond market reporter for Bloomberg News, Scott talk to us about what's going on in the apartment real estate market.
Hi, good to be here, Thanks very much. So here's what's happening. You have retail investors, ordinary people with with the little they're you know, pretty wealthy people say you've got around one million dollars of net worth, you can take that money, you can invest in apartments. But this
is this is risky. People don't realize how risky this is because when you put money into apartments in the way that they're doing, you're actually getting leveraged behind the scenes from Wall Street in the form of loans that are packaged into ceries, clos or collateralized loan obligations for a long time, for years, Actually this works really well. Retail investors will make you a lot of money. But that was because mainly apartment values were consistently climbing and
interest rates were going down. This is very good for commercial real estate. Then that when the Fed started raising interest rates, it started to go badly. The loan all the leverage meant that the retail investors were exposed to really big losses. So we talked to a retail investor who lives in Yakima, Washington. She invested two hundred thousand dollars and most of that is now gone.
So what is the problem? I mean, is it specifically rent controlled apartments, is its luxury apartments, is its mid apartments? Where is the issue in that?
This is we're talking here about multifamily apartments. It is not you know, maybe some of it could be recontrolled. Mostly it's just plain old apartment complexes full of renters, and largely in the Sun Belt as well. The issue is that the valuations of these properties are very sensitive to interest rates, and when interest rates started going up,
the property values started going down. And a lot of the companies that had bought this bought these things and into which the retail investors had contributed money, suddenly they couldn't afford their interest payments, and in some cases they had to sell the properties, and when they sold them,
they sold them at a really big loss. I mean, we know that apartment values have gone down about thirty percent since their peak, and so when they had to sell, they were selling out these huge losses and passing those
losses onto the retail investors. A lot of what made these investments possible in many cases is because they were borrowing money, taking out large loans from from mainly non bank specialists on a Wall Street, and that provided the leverage, and that is what exposed them to these big losses.
What are the I guess the apartment owners. What did they do? I guess when when they have some I guess when they're in their inability to pay interest or pay principle, they just sell these apartments to try and kind of rate raise cash.
Sometimes they get in a cash crunch. Yeah, they have to pay interest and they but they don't have the cash. So what can you do. You can go to your lender, you can try to get an extension perhaps, or you can sell to somebody that is willing to buy it, even if it's at a big discount. In a couple of the cases that where we talked to the retail investor, the property and these are properties in Texas and Arizona
had to be sold at a very big discount. It gave the owner cash, but it was not enough cash to repay the money that the retail investors put in. It wasn't enough cash. It was enough cash to repay the debt from Wallstreet. And that's the thing. The debt has to get repaid first. So when you sell it a discount in this way, it's enough money to repay the debt, it's not enough money to repay the retail investors.
So how many retail investors are getting affected by this, and what are some of the total losses that we're looking at, and is there any recourse for them.
It's really hard to know exactly how many people are exposed to this. But we do know that the altogether series clos is about an eighty billion dollar universe, So I think it's fair to say that there's dozens of billions of dollars of weeks. You know, I'm speculating a little bit there. We don't have great data and exactly how many retail investors are in this thing, but it's a lot and is there recourse Well, a lot of
retail investors are waiting right now. So in this case, the retail investor we talked to, she was exposed to losses because the owners sold. But there's a lot of other retail investors out there right now who are just waiting. They're not getting cash distributions from the investments they've made. They know that they could face losses down the road when the owner has to sell. That moment has not
arrived yet. It could arrive later. Also, owners could perhaps somehow recover, Apartment values could go back up again, interest rates could go back down. It could give them an off ramp down the road. But there's a lot of retail investors out there right now who are just waiting and they don't know what's going to happen to their money.
You know, the Apartment Reached that I know are very savvy investors. They know how to value things, they know how to put a proper capital structure on things so they don't get in those cash crunches. But that's not what's necessarily happening here. Noted from your reporting here firms known as real estate syndicators. It sounds a little dicey to me.
Yeah, it's a real state.
Syndications syndicator, not a bad word in financial syndicator.
And when we say syndicator in the way that we use it in the story, we're talking about typically mid size firms that are relatively young, they weren't around before the Great Financial Crisis. They rely heavily on social media. They have their own podcast shows to get the word out about their investments. They talk about how good generally multi family investing is. They play up the stories of investors who've made a lot of money doing this. Uh, that's how they get the word out. And they're on
there on YouTube. You know, they're out there and they're they're saying invested with us. And part of what makes it possible for them to do this is there was a change in the Jobs Act during the Obama administration that made it more possible to market these investments in a more public way.
All right, so that seems like a good way. We're gonna have this stop it there due to time, but that people read the story, the Big Take story, Yeah, story, because you learn a lot about kind of some of the pitfalls out there in real estate and believe or not. Just reading this story, I was like, boy, We've seen this time and time again in different asset classes.
Just not with social media exactly.
Scott Carpenter, thanks for joining. Scott Carpenter is a bond up market reporter for Bloomberg News. Check out the Big Take story Bloomberg dot com slash Big Take, or you can go on the terminal n I space Big Take to get the stories.
Now on Bloomberg Intelligence. You needs in Focus with Joe Maisak.
All Right, folks, Today's Munies in Focus in Munis is brought to you by Build American Mutual. Build American Mutual ensures US municipal bonds that finance essential American infrastructure and provides guaranteed income to improve any portfolio. Be part of Building America invest in BAM BAM insured bonds.
I was late on them.
Sorry little later on that. Yeah right, sorry, we'll get more time. I mean, I thought this guy was retiring, but we can't get rid of him. He's still here. He's still here. He's still doing all this municipal bond stuff. I think he did the first municipal bond way back in the Revolutionary War. He was back there. Covernet, Joe, you're almost done this whole minicipal bond thing. But thank you for not leaving before we had this whole mess
with the congestion pricing. I mean, I'm sending you down a city hall and you can just fix it.
I mean, so what is madness?
So talks about how the I guess the pause of congestion pricing im implementation, how that's impacting the missipal bond market.
No, what a disaster. What this is just ridiculous. You know you were supposed to this was supposed to be gained in a couple of weeks, and you know you would have been able to bond off of this and help the MTA out. But Governor Hokel all of a sudden, uh just plays politics and what a disaster, and they're you know, the legislature now is scrambling to come up with some sort of revenue, you know, extra revenue for the MTA, A billion dollars which is not easy to
find in your budget. So crazy crazy, this is nuts.
Let me let me ask the question. So, how would you have sort of packaged the bonds from the congestion pricing? Can you just connect those dots for me?
Oh? Sure, well, you know, you get the money comes in fifteen dollars a car, and you see how that's operating, and you see the revenue stream come in. And the old axiom is you show me a revenue stream, and I'll show you a bond isshoet.
Okay, and then the bonds will be backed down the revenue stream.
And yes, the bonds are backed by the revenue stream. And you could you know, get a multiple of that. So that would have been very helpful the MTA.
And you know, this is really.
Most people think a short term thing, more of like an temporary embarrassment, if you will. And in November, after the elections, we might we might see it return. Liam Denning had a nice interesting column today NYC balked, but it can still lead on congestion fee and he said there was a decent chance the suspension gets lifted once the elections are out of the way, and Governor Hochal herself doesn't face voters until twenty twenty six.
So here's how the math works. As Alex was mentioning, the MTA was planning to borrow against the one billion dollars in yearly congestion pricing revenue to help raise fifteen billion to upgrade subway signals and tracks and all that kind of stuff. So that's kind of the leverage there in terms of you know.
Oh yeah, because you know it's over time. You know, you're not going to sell over fifteen billion in one year obviously. But speaking of billion dollar issues, thank you for bringing that up. We have so far this year. You know, in the communi market, billion dollar issues are
very unusual. Okay, they're rare, And so far this year we've had twenty five twenty five mega deals of a billion dollars or more and the record set in twenty twenty is twenty six for the year, so we're going to far surpass that.
So what do you make of that, Like, what's your read on it?
Well, you know, the analysts have been saying, you know, inflation has driven up costs of projects, so places have to borrow more and for in two weeks. JFK, for the Terminal one has a one point five billion dollar issue planned, so we might be able to make that. We might be able to say that the record is by the time I retire.
Okay, very good. I love the minor league stadium business out there because munismal bond market plays a role there. Right.
Oh man, we saw two minor league stadium deals in one week. I think you know, we probably saw two minor league stadium deals in the last year, but we had, you know, both in one week, and the the most recent one was for the Spartan Burgers Spartan Burgers, and yeah, I think you know, I had kind of an interesting little deal and it was federally taxable, so you had over six percent coupons on that one or six percent coupon.
Well, actually, that just me circle back for a second to the billion dollar bonds that we've seen. You said twenty five really go at JFK one and a half, Like, what's the takedown for that? But what's the takedown for that? Is there a strong demand for that stuff?
Oh? We have seen blowout demand on deals this year, demand for tax exemption. So far we have let's see, I think it's about two hundred and five billion dollars have been sold so far this year and not even you know, we're not even done with the first half. So we could very well see in the communi market. Again, four hundred billion dollar deals are unusual, so we're certainly
going to see an excess to that. I would imagine I wouldn't be surprised if we saw four hundred and fifty billion, But of course I won't be able to defend that. Blamed for that prediction ou.
To lower mean en right by the offices that used to be for kid or Peabody on Hanover Square, Power Power part of Lower Manhattan. Back in the day, there is a is a classic bar Wall Street trader banker bar Harry's on Hanover Square.
Oh I know Harry, Yeah, yeah, I used to work down on Wall Street big time.
Joe.
What's Harry's a hand to square?
Me to you?
Oh Man? So you know a lot of I remember getting a lot of stories in Harry's, believe it or not, because it was primarily a Muni bond hangout. Which seemed to me didn't know that.
Uh, and that like mean that all the MUNI people who like it and talk about it go and chill there.
Yeah, they would, they would go there. And of course now it's it's it's a sort of reconfigured. But there was this big rectangular bar in the middle of the room and uh, be surrounded like four and five deep smoking because you know smoking was allowed. Then you know, you just be listening to people bark about trades they
made that day. I remember I went to an especially long lunch and I needed a I needed to get a preliminary official statement for a as a matter of fact, it was a billion dollar deal for a very small Texas community, and of course the bonds were going to be locked away in some investment vehicle and you know, never really used and the irs not like that idea. But I did get that document out of such a launch at Harry's. It hand over square.
So it's important you need that stuff. But it has a place in the MUNI bond market too, right, like not just hanging out and chatting like is there a bigger MUNI.
Well, we had the we used to have two mutifact screens there as a matter of fact, and yeah, just it's one of those places where everyone used to go and then just chat about how you know, what's going on?
I love that.
When's the last day, June twenty eighth.
We're getting there.
So how many years Joe's retiring? So how many years total in covering this municipal bond space?
Forty three?
Forty three years covering the municipal bond industry.
I'm not sure who's going to challenge that.
I don't know who's going to challenge it? And how many years doing that at.
Bloomberg twenty five?
Wow?
Okay, So what's the biggest change in meuni bond market from when you started? Well, and it's never going anywhere, yo, No.
You know, when I started, a fifty billion dollar year was kind of the average, and now it's you know, nearing four hundred billion a year, and that took quite a while to get there. It's always been a you know, a retail oriented market, but now you have a growth of the separately managed accounts, you know, which is individuals,
but it's very professionals. You know, a lot of professional involvement. Boy, and gosh, the earliest things we're covering were pay to play at the municipal bond market, and the MSRB prohibited pay to place. Underwriters can no longer give money to issuers from whom they're soliciting a business. I think the treasurers were very angry about that.
Yep.
I'm sure they were, all right, Joe, guess what.
That's it.
That's it. That's it this week. It's not it because we got till June twenty eighth with you, so we will get you on again, no doubt about that. Mark Maker. Note of that, Joe Myisek. He is the editor of Bloomberg Brief to cover all the minisional bonds markets, as he's been doing it for forty three years. Yes, forty three years. Holy cow.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Otto with the Bloomberg Business Act. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
It's Bloomberg and Intelligence Radio. We bring you all the top news and finance and economics and business through our lens of Bloomberg Intelligence analysts. They cover two thousand companies in one hundred and thirty industries worldwide, and for the month of June, Bloomberg Radio is committed to bringing you segments and guests that are focused on the topic of equality. And today we're speaking with Laura Maudi. She's CEO and co founder of Bobby. Laura, thank you so much for
joining us. We appreciate you being on this first segment for us this month. What is Bobby.
Bobby is an organic pasture raised infant formula company and we are raising the bar and quality of infant formula here in the country.
So we talked to you during what we had a shortage of infant baby formula. Can you remind us how that all developed and how that came about and maybe how that impacted your business?
Well, I think we can all remember. It happened overnight. No one saw it coming. As a country, we weren't prepared. Bobby itself, being a small company at the time, also wasn't prepared. One company that was feeding over fifty percent of babies born in the country had a contamination and they had to close their doors, and when they did,
they weren't able to meet the supply needs. Of feeding American babies, and overnight we saw out of stock rates climb to around seventy percent, which essentially meant that American families were driving town to town and in some situations, state to state where there was only a third chance of being able to find food to feed their baby.
So, what is the problem with infant formula that you're trying to fix.
It's pretty simple. We need to be more resilient. Let me give you a little bit of a mother's opinion on this as well. I think the infant formula shortage, a moment where we were not resilient enough to be able to feed our next generation, was actually a bit more symbolic in many ways of what's really broken in the country. One might argue that our entire democracy is only as strong is our ability to be able to feed our babies, and we were not resilient in any way.
One facility went down and the entire industry fell to its knees. What we need to see is more manufacturers, more manufacturers in the heartland of America where we can ensure that there's always enough supply to be able to feed babies. Yeah, I think the way we do that is incentivize more domestic manufacturing.
But aside from that, Laura, with Bobby, what is the problem that you're trying to fix with the formula that's so entrenched in our society today.
We need to be able to look at this essential good as not just a necessary, but a necessary that's extremely important in the development of our next generation. The quality of what goes into that baby bottle, the nutrition that we're giving again our babies and the next generation is fundamental for their growth and development, and I think we've ignored it for far too long. For the last
few decades. The same infant formula that you yourself was drinking as a child is probably the same infant formula that you're now buying for your own baby. Science as a ball a very long time ago, and in every other industry we've seen an evolution, and I think this might be the last remaining industry we've seen this so.
Talked about, Laurie. We need more manufacturing and more diversified manufacturing sourcing here in the US. What are you guys doing on that front?
Well, not only did we go out and we made a commitment that we were going to invest one hundred million dollars into domestic manufacturing. We bought and we have reinvested in a facility in the heartland in Ohio, and that facility now has the ability to be able to feed up to fifteen percent of babies born in the country. But on top of that, we also worked very closely with legislators to introduce the Infant Formula Made in America
Act this last month with Congress. And what did is said mely allows is incentivizing more players like Bobby to be able to break into the industry. It takes a lot of capital and a lot of time, and we need a lot of support from government officials to make this happen. So hopefully if this bill gets past, which is what I believe is a very bipartisan solution to being able to not be in another shortage again.
And how did you come up with this idea?
Like what?
Like, yeah, did you come from Wall Street? Had you always been an advocate of this? Like where did this all come from?
Great question? Do not come from all? Forred, I didn't even come from CpG infant formula at all. My background is in tech before this, at Google and at Airbnb.
I had my first daughter while I was an executive at Airbnb, and I experienced all the ups and downs of parenthood, and one of many being the disappointment that I wasn't able to exclusively breastfeed her, and when I turned to infant formula, I felt I felt a feeling I had never experienced before, that shame and guilt that I wasn't able to give her what I thought was so natural. And then, as you know, a business woman, I was staring at the back of the can, going
we can do better. And that set me on a crazy research journey to study what was best for my baby and I I'm here now, eight years later, and many more children. By the way, I just said, my fourth kid, who is happily guzzling some Bobby.
Congratulations, Lauren, Laura. What's the risk that we have another type of you know, supply shock here to supply to disruption? Are we any better off today than we were before?
I get sad even trying to answer that, because I don't believe. So. It's very easy to get complacent in these moments when shelves are stocked, But when you look at the reason that we got here, Have we introduced many more manufacturs?
No?
Have we been incentivizing new players to break in and break up the concentration. No, so I believe we're still one bacteria away from this potentially happening again. And my big call to action is that we just don't allow complacency seeing shelves get stocked as a way to ignore the real solution, which is, let's get this bill passed and more manufacturers up and running.
What is this aside from money and funding, What is the next step after we try and get this bill passed that you're sort of looking at right now.
You know, I think it's culture change and so taking a hard pivot from domestic manufacturing. We need to have the level of respect that infant formula deserves, and not just infant formula. I mentioned it was symbolic to so many different things. What's broken in our society is that the same government who says that you should be exclusively breastfeeding is also telling mothers that they need to get back to work immediately. We need to pass paid we need to fix childcare. We need to be able to
support parents being parents in America. And if Bobby can have any role in changing the culture by which it means to have a baby in this country, then we're doing our job.
How are you doing that? Just these kind of conversations. Is it advertising, Like, how do you do that?
Yeah? I mean it's a lot. It's a lot of activism, and I think I think it's a word that sometimes gets overly used, but it's it's activism and the underlying meaning of that is action. And we're taking a lot of action by reaching out to our customers and the public and saying sign sign this petition to be able to get this bill pass, raise awareness on the black maternal mortality crisis by putting our own brand dollars behind
raising awareness on this. We've recently won a few awards for again not just marketing infant formula, but marketing the issues around it. And I think if more companies again can lean into fixing the systemic issues for why they fundamentally exist and you get to change culture.
Hey, Laura, we gotta leave it there. I really enjoyed talking to you. I wish Bobby was around when I had my daughter almost ten years ago. Laura Mody Maudy, CEO and co founder of Bobby, We're going to bring you some of these great stories over the month of June. That was just an fascinating conversation.
Yeah, well we first, at least I was introduced to it during the shortage experience.
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