Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg News International Economics & Policy Correspondent Michael McKee and Bloomberg Intelligence Chief US Interest Rate Strategist Ira Jersey break down the latest jobs data and what the mixed forecast could mean for the Federal Reserve’s rate outlook. Amy Glaser, Senior Vice President at Adecco talks about the latest employment trends, including how employers are adapting to a new generation of employees. Bloomberg News Chief Technology Correspondent Mark Gurman previews what Apple’s planning for this year’s Worldwide Developers Conference. Rory Riggs, CEO of Cibus, joins to talk about how his company is reshaping the world of plant breeding. And we Drive to the Close with Lance Cannon, Portfolio Manager at Hood River Capital Management.
Producer: Paul Brennan, with assistance from Justin Milliner.
Hosts: Tim Stenovec and Emily Graffeo
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Jobs, Jobs, Jobs, That is what everybody's talking about. The quote unquote FED unfriendly payrolls report heard around the street. Non farm payrolls advancing two hundred and seventy two thousand last month, beating all projections in a Bloomberg survey economists. That is up ahead, stocks higher, but the bond market getting hammered after that hotter than expected jobs report. We've got a great roundtable on the rates reset, what it means for the FED meeting next week, and what it means for the equity trade and.
The view of the jobs market when it comes to one of the world's largest temporary staffing agencies. Check in with a senior vice president over at a Deco.
Okay, everybody's talking about this on Twitter, so we got to hit it a little bit. Game stop shares. They are tumbling further today during the highly anticipated return of Keith Gill aka Roaring Kitty. He went back to YouTube. There's also some fundamental news driving the stock lower, though, and we're going.
To discuss that and one more thing we'll tell you about the best thing to do in the Hamptons this summer.
All that more over the next hour on Bloomberg Business Week. First up, though, a check on the day's trade and top business stories. Here's Charlie Fella.
I thank you very much jobs Friday. We love it here at Bloomberg. The now the SMP nets stack very much in the green right now, seven point advance on the s and P fifty three sixty up right now VI one tenth of one percent. We got the Dow up forty two now up one tenth of one percent. News stack little changed up right now by just about two points. We are on track for a winning week for the S and P five hundred index tenure yield four point four to two percent with a two year yielding four point eight seven percent spot. Gold hit hard today, down two point nine five percent, tumbling sixty nine dollars announced to twenty three oh six and West Texas ENEMITYA crewed up one tenth of one percent. Seventy five sixty four right now for a barrel of WTI bottom line here Stock's hire after that solid jobs report helped quell fears about an economic slowdown that could hurt corporate America, even if that means a potential delay in federal reserve rate cuts. Are Michael McKee's gonna have a whole lot more on the jobs report and the Fed coming up in just a moment. Cannot ignore Game Stop Roaring Kitty is back, but the stock is tumbling. Game Stop now lower by forty percent. Also the video game retailer unexpectedly releasing earnings and a plan to sell up to seventy five million additional shares. Earlier in the day, AMC Entertainment, by the way, now lower by fourteen point three percent, recapping NASDAK just turning negative, down four points s and p up six again there of one tenth of warm percent. I'm Charlie Peloton, Dad is a Bloomberg business flash.
Thank you so much for that update, Charlie Pellett. The certainly do appreciate it well. Again, back to our top story on the day today, that payrolls report that pretty much closes the door on a July rate cut from the Federal Reserve, non front payrolls advancing two hundred and seventy two one thousand last month, beating all projections. In a Bloomberg survey of economists, average hourly earnings climbing four tenths of one percent from April and four point one percent from a year ago, both picking up from the prior report. Acting Labor Secretary Julie Sus spoke to Bloomberg's Joe Matthew on Friday after the report came out.
Growth we're talking about is not just single industry, right, it has been for the entire time, but certainly this last month is no different, very very broad based. We saw growth in leisure and hospitality, We saw it in construction, we saw it in professional services, we saw it in healthcare, and so you know, there's really the numbers don't lie. It's really, you know, a broad based, solid continued growth. And I think that coveted soft landing that so many people bet against.
The numbers don't lie, and the market reaction certainly doesn't lie. We've got a great roundtable on the economic data, what it means for the FED, what it means for rates, Treasuries, as I mentioned, getting hammered following that data release. So let's get to the interview. Michael McKee is Bloomberg News International Economics and Policy correspondent. He's here in our studio and from our Bloomberg Intelligence headquarters in Princeton, New Jersey, IRA Jersey Chief US Interest Rates Strategist, Mike. I want to start with you because I heard you covering this live on Bloomberg Surveillance. I believe the phrase you used was we got a little bit more than we expected in the most recent report. How did everyone get this wrong? Why such an upside surprise, especially given the softer data that we saw earlier this week.
Well, it's a combination of things. I think the softer data is part of it, especially the ism numbers came in week in the employment numbers, but we'd also seen some weakness in retail sales and spending, and the narrative developed that the economy was slowing and it still maybe, but that fed into forecasts and we saw one hundred and seventy five thousand last month in the initial print. People said, it's not going to be a whole lot different from that, because everything else is telling us, it's about the same and we were all wrong.
Can you help us understand this higher unemployment rate to four percent? How do you square that within the hotter than expected jobs report payroll number.
Well, you can, because the labor force grew significantly over two hundred thousand. But the real question is within that the number of people who were reported unemployed are rather employed in the household survey fell by four hundred and eighty thousand, and that confuses people because it's a difference between them and the establishment survey, and people really don't know why that is. The establishment surveys has a lot more participants than the household survey. The household survey does not include, or at least as far as we know, likely does not include, all these immigrants coming into the country. If they're there illegally, they don't want to admit that they're working, and companies just report whoever's on the payroll. They don't report their nationality or background, and so there are a number of different possibilities for what's going on. At some point the numbers will kind of reconcile, but right.
Now we don't know.
But the general view of economists is, look at the establishment number, not the household number.
Okay, I Rad Jersey, come on in here. Because the reaction in rates was certainly swift, with yields up across the curve. How much of a reset is this for the bond market.
It's I mean, it's not a crazy reset because you're talking about going back to levels where we were and about a week and a half ago, So it's basically returning to where we were before we got that soft ism manufacturing number and some of the other week data that we've received over the last week. I think for the long end of the yield curve, so you're talking about the ten year bond, thirty year bond, I think yields are probably going to range here and probably will stay in range until there's a very clear shift either upwards or downwards. And economic momentum. A lot of the data you saw, even though this was an upside surprise today, a lot of the data that you see is kind of just chopping around. It's okay, economic news, and I think for that just means that that the back end of the curve will just kind of chop around the front end of the curve. So you're talking about you know, two year notes and shorter term instruments that have something to do with the FED. Those can move around quite a lot, because we're going to be pricing in and pricing out FED cuts here and there every time we get these numbers. And basically if you look at if you look at what we're pricing now for twenty twenty five, we priced out almost an entire cut today for the cycle because of the strong data. So I think that that's you know, the market doesn't necessarily want to be short, but at the same time, it's hard to be long when you start to get this very very interesting data that seems to suggest we're not going to go into a recession anytime soon.
Yeah, I wanted to talk a little bit more about that and just the sheer amount of volatility that we're still seeing in the bond market. This seemed like this was supposed to be the year of the bond, the time that portfolio managers are kind of using treasuries as almost a safe haven bet. How much of that has been upended and how much are of that are we, you know, seeing in the market today and in the last few weeks, Well, well.
I think a little bit.
We haven't seen the massive differentiated flows out of risk assets and into treasuries. If you did, you'd probably see treasury yields a little bit lower. Right, People buying treasuries just as a as a you know, as a safe haven, like you said, especially given frothy valuations and some risk assets, even corporate credit for example, with credit spreads as tight as they are. The equity market, you know, add or approaching their all time highs. Again, I think the thing with the bond market that people always forget is you go out and buy a ten year and if you're looking at that for in a one year return or six month or two t horizon, it can.
Be very volatile.
But if you hold, if you buy something that's easier to hold to maturity, like a two year note or three year note, at this point you know the risk reward is more like owning a money market and locking in yields for longer than you can. If you say, go out and buy a treasury money market that has an average weighted maturity of around sixty days, You go and buy a two year note, and you lock in four point eighty five percent for the next two years. So there, you know, you might give up a little bit of return in the near term, but you also have some certainty and not only that if interest rates would have to go to ten percent for you to start losing money if you buy a.
Two year note today.
So the risk reward I think kind of favors, you know, shorter term debt because you know that ten year goes up twenty basis points, you're going to start to see your dollar price go down faster than the interest income that you get.
Hey, Mike, we heard IRA talk about rate cut expectations even into next year being changed after this report. But minutes after the data were released, City changed its first FED rate cut from July to September. Later we saw JP Morgan changed its view from July to November. The big question what does this mean for the FED and for cuts, especially head of next week's meeting.
Well, I'm not going to do anything in next week's meeting.
And they weren't. Nobody thought they were going.
They weren't going to do anything.
This leaves the question of what happens with the dot plot. How many dots do we get? We were three at the March meeting. Now the question is is it going to be two or is it going to be one, and that's a very interesting open question that might be slightly influenced by the CPI report, But at this point. J. Powell has in the past essentially stayed fairly dubbish talking about how inflation is going to come down and they're going to get there and their base cases they can cut rates without putting a number on it.
So maybe he influences two.
But I think what we have all learned is that have a number doesn't mean it's going to happen. The Fed doesn't know what it's going to do. They'll put out a nineteen different forecasts and then we'll pick a median and say that's what they're going to do, and that's kind of crazy. But you know, trader's got to trade.
So what are you watching for, CPI, Mike CPI?
We're watching real estate.
Housing.
That's the big issue, because if you take real estate out of it, and you measure US inflation the same way they do in Europe, then we have roughly two percent inflation.
We're sort of there.
So the Fed needs to see real estate coming down is one big thing. One interesting note, just crossing the wire here, we have breaking news for you guys. I bring you breaking news. The BLS has just announced it's going to cut the size of the household survey, which we were just talking about, may not be accurate starting in twenty twenty five because they don't have enough money to do the same size survey as they had. So this is not going to be a.
Good thing, So the results may be less representative Mike of what the economy looks like as a result.
Just raises the possibility that the survey will be off. They also well, according to the BLS commissioner, she said today, there's a real risk of a decline in quality, especially as response rates have also declined substantially.
Okay, one to watch, certainly, Ira, before we let you go, give us your catalyst for the next move that we could see in the rates market.
Yeah, well, it's got to be CPI and or the FED, right, that's the next obvious one. I think after that it's going to be probably more like retail sales, because if you think about the long term growth prospects of the US, it's a propensity for the consumer to continue to spend money, right, And that's what reason why today's payroll report was important, not only because it created a lot of jobs, but you saw the wage data was very good and you mentioned that at the top of the segment. So so I think the retail sales data is going to be interesting, and I think tenure yields, you know, if that's really good, can end up seeing four and a half to four point six percent pretty quickly.
A big thank you to both of you for joining us. Michael McKee, Bloomberg News International Economics and Policy correspondent. Also Ira Jersey, Chief US Interest rates strategist, Ira joining us from Princeton. Michael McKee here in the Bloomberg Studio.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Apple card Play and then Broud Auto with a Bloomberg Business app, or watch us Live on YouTube.
Well, we continue with our top story, the May payrolls report coming in way above estimates, beating all projections in that Bloomberg survey of economists pushing back bets for FED rate cuts as well for the demand side of labor and the supply side as well. We bring an Amy Glazer, a senior vice president at the Global Staffing for Medeco. It's one of the largest human resources providers in the world. Amy joining us from Jacksonville, Florida this afternoon. Amy, did this catch you by surprise the way it caught so many economists by surprise? Today?
Hi, Tim, Thanks for having me, and not really. It reflects and mirrors what we're seeing. Jobs are still available and candidates are still seeking. So the positive news I think is reflected. The last time we spoke, you commented on my optimism and I still remain glass half full.
And what exactly is driving your optimism and the strength in the labor market right now, I.
Think a couple different things.
We still continue and will continue to see increases in healthcare. You know, we have the peak sixty five phenomenon, twelve thousand people retiring every day, the aging demographic. Healthcare is going to continue to be robust this time of year. We're seeing seasonal hiring as it relates to hospitality, as travels at all time highs, and we're starting to see students enter the market. One of the interesting trends we're seeing regarding students right now is we're seeing normally they take the lifeguard or fast food jobs. Fisher we're seeing them take an interest in some more skilled positions, so looking at technician roles and even manufacturing, and that's something we haven't seen in the past.
Why do you think that's happening? Is that because there's such shortage of those folks who are in the trades right now, such demand for those.
Couples of things. There's huge demand.
Hay is great in those areas, and stability is something that everyone's looking for today. So flexibility and stability are the two great winners.
Do you sorry? I just want to do you think that's a permanent shift that we're going to see.
The stability piece I think will be around for the rest of this year. Flexibility will continue to become more and more important. The gig workforce is going to outprepace the full time workforce by twenty twenty seven. So the employers that were embracing flexibility are the ones getting it right today.
That's really interesting.
I'm wondering kind of in a different vein when you look at class of twenty twenty four college students, where are those people looking in the labor force for employment.
Tech sectors? Hot They're still looking in the retail sector.
You still see interest in hospitality, those things that they know are going to be sustainable for the upcoming years. But healthcare is really where it's at right now, and we're seeing lower barriers to entry. So we talk about the class of twenty twenty four, but you've also got to think there are jobs in the healthcare industry that don't.
Require a four year degree.
So you can get a two year tech certification, for example, or a one year certification and still enter that industry that's going to be booming, and it's often an entry path into a greater career.
You know.
Amy, one of your notes caught my eye. You said that many workers are staying with their employers longer. What explains that. That's kind of interesting.
We talked about the great resignation two years ago, and now we're talking about the great stay. It's really that quest for stability, and I think COVID forced employers to really think about their employees' well being, and lots of employers have embraced that and given better benefits and made it more flexible and a greater opportunity for their workers. They're also upskilling and reskilling to ensure they can retain that talent and not have to start.
Fresh, Amy, where in your data are you not seeing strength? You mentioned strength and healthcare and other sectors as well, but were you not seeing strength?
Almost all industries are upright now, so it's not necessarily in the industry. It's more in where we're seeing it. From a geographic perspective. You kind of have to look geographic, by geography, geographically as well as by industry vertical. The hot ones we're all talking about the other's warehouse, transportation, manufacturing, even technology. We're starting to see some slight trends upward. They're just not as gangbusters as healthcare and education.
I want to take a maybe thirty thousand foot view here with you, Amy. We saw with the number this morning that economists were a little bit more pessimistic on the labor force, and it feels like the consensus feels that way as well. What would you tell, you know, those economists traders who say that the labor market is not as strong as maybe the numbers appear.
Yeah, I think you know, we've talked about since COVID that the recovery post COVID wasn't going to be linear, that it would be bumpy.
There's some noise.
I think There was definitely noise in the April jobs report. Weather has some impacts on it. But as somebody who's talking in front of clients and dealing with open orders all day, I can tell you the market is still resilient and strong.
So when we got that Joeltz data earlier this week, that many extrapolated to say, okay, well, the labor market is weaker than expected. Did you think to yourself, that's not at all what we're seeing. We disagree with that.
I wasn't expecting quite the surge we had this morning, but I knew we'd have a positive report today.
Do you think that this positivity will continue for the remainder of the year.
Absolutely, I do.
There will probably be some noise towards the end of the year.
It is an election year, so we'll you know.
Employers may be a little hesitant waiting on that outcome. But come January first, I think we'll still be in a strong, robust market.
What does that mean in terms of numbers like two hundred thousand and above each month.
I'd say over the next couple of months.
Yeah, wow.
I want to go back to the gen Z class of twenty twenty four. Intern season because that's fun. What should employers be expecting with these you know, new workers gen z they're just entering the workforce.
People say that that generation is a little bit different.
What have you learned in your work about what bosses can expect.
So we actually just started six new managers in training at a DECO in my Atlanta office fresh out of college this week. And they are eager, they're hungry, they have brilliant ideas, they have a different perspective on things. So you're going to need to be able to embrace that sign of creativity and allow it to flow. And they really want a seat at the table and a voice in the room. So making sure you're prepping the other generations in your workforce on how how to navigate through that will be important.
And looking at their soft skills.
Well, it's just funny to think about preparing your employers to deal with a new generation.
Like what is that inteli?
What is that intel amy? Like what do other folks who've been working in the newsroom or in offices for a while need to understand about this generation?
Yeah, they want flexibility, they want their voice to be heard, they want to work on their time, and they're more about the output of their work versus the hours. So gen X baby boomers were used to a nine to five and the harder we work in, the.
More hours we put in really proves our value.
And the gen Z mentality is the product of their output of work is what's going to show their value. So if they can get this job done in four hours they're happy with.
They can go home or work from home. I'm guessing and that's where I want to go with flexibility. When you say flexibility, do you mean to say that employers who do offer flexible working conditions, are you working from home a few days a week, they are at an advantage significantly over those who make people come into work five days a week.
What we've seen with this workforce is that hybrid is the best way to go. They make connections faster, they get that sense of community, but they still have the flexibility to go to the beach in the.
Morning or whatever it is they want to do.
To the What are we talking about.
That's a common theme.
This is on tim This is so foreign to me, the idea on a weekday of going to the beach in the morning and then getting some work done. But I don't know, Emily, if that's working for the new generation, it's working well.
You know, if they don't start until nine and you live near the beach and you can work out at six am, I could see a path perhaps in Jacksonville. Maybe let's switch to the older generation. Because Amy, you also write that more Americans than ever will turn sixty five.
How will that impact the workforce this year?
So it's impacting it quite significantly, especially in the skilled trades manufacturing, where a lot of legacy knowledge and skill and talent are choosing to retire. So we're seeing skills gaps, which will continue to see over the upcoming years. One of the big trends we're seeing though, is the embracement of the return of the retirement. So right now, one in every eight person that's retired is looking to return back into work, and this is giving some relief for companies that have really experienced that loss that COVID accelerated.
But there's the flip side of that is those retirees feel like they need to get back to work. That's troubling now.
A couple of different reasons.
So some of them are motivated to get back for money, but oftentimes we see they're motivated to get back to providing that sense of purpose and community. My mom's a baby boomer and and she volunteers because she won't miss that sense of community. So some are for economical reasons, obviously with inflation being what it's been, but oftentimes it's just about community and giving back.
Amy, before we let you go, did you already go to the beach today on this Friday Jobs Day?
Or not yet?
Okay, not yet, but maybe maybe on the.
Agenda on your weekend.
On the weekend. That's you know, in the field fashioned waves doing that.
That's what a gen exlly is exactly.
Amy Glazer, Senior vice president and at Deco. Joining us from Jacksonville, Florida.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Apple car Play and Android Auto with the Bloomberg Business ad. You can also listen live on Amazon Alexa from our flagship New York's Date Just say Alexa play Bloomberg eleven.
For Apple, it's the company's biggest sales pitch in years. We're talking about WWDC, the Worldwide Developers Conference, and this year it's all about AI. Nearly two years after the jen AI frenzy started, Apple finally preparing to lay out its vision for the tech Bloomberg and the News chief technology correspondent Mark German joins us from LA with more. Mark, you start your piece on next week's WWDC by writing that Apple isn't the first to introduce new tech. They weren't the first to do an MP three player, a smartphone or a tablet, but many people argue that they did come out with the best products. Are they taking the same approach with AI.
Well, they're going to try to write in terms of if it's the best product or the best technology.
They're going to.
Fall fall, fall, fall, far from that. Right, generative AI. It's been the heart of the conversation about artificial intelligence and the whole tech industry over the last several months. Open AIS at the forefront. You have Anthropic, you have Meta is in there too. Microsoft has been there. Apple's utilities are going to be quite a bit different, at least this year. Right, this is going to be a beta, an initial launch. This is going to be more about notifications, synthesizing information, providing proactive details. But there's also going to be an integration with open ai to fill the generative AI gap. So this is Apple just really getting started here. They've fallen so behind it's going to be hard to catch up this year. It's going to take a couple more years.
Mark give us a sense of what is at stake here. I'm a markets reporter. I'm looking at Apple. It's only up two percent year to date. You compare that to the chip names in Nvidia up over one hundred percent year to date. How much is this event really a show me moment for Apple to prove its bid into AI?
I think the markets are controlled by words and algorithms, and traders love AI and generated AI and open AI, and so I think if Apple says AI fifty to seventy five times on Monday during their keynote, investors will be quite pleased, whether or not the integrations they're going to show are particularly innovative or not. Right, So, I think from a market standpoint, the deed is, you know, it's already, it's already done, so to speak, this is over Apple's getting into AI. Investors are going to be happy. But me, I'm more of a technologist, and I can tell you that the technology they're going to be showing it's not as impressive as what their peers are doing, and it's going to take them a couple of years to catch up or even surpass the competition. What they will be doing is they'll be coming in with a different tact focused on deep integration with applications focused on proactive intelligence, focused on things that people can use in their day to day lives. Transcriptions and voice memos, email classification, so many different bells and whistles across the operating system iosaighteen, iPad O S eighteen fifteen. They're going to make the daily usage and experience of an iPhone far better, very different than the approach that OpenAI has taken. If you want to see something similar to what Apple's doing, watch the announcement from earlier this year when Samsung introduced S twenty four line with a bunch of AI integration with Google Gemini. That's the Apple Playbook plus the OpenAI chatbot, all integrated together in a very privacy and security focused manner.
Do you think Mark, that people will use these features that Apple is planning to unveil.
Oh yeah, I think they'll be hugely popular. AI emojis is another one that would be a cool one. You type something, it'll turn your phrase into a custom emoji just for you.
There's also some other.
New non AI features right Like, here's a hugely requested one people have been asking for for a while. The ability to schedule an I message to be sent later.
That's going to be cool.
The ability to customize your home screen and place your icons anywhere. Be able to themify your home screen and introduce different color patterns to your icons, new blood pressure management features inside of the health app. There's a new passwords management app to compete with one password. There's an upgraded control center, There's a revamped settings interface. So a lot of different changes that are going to cause quite a stir and really excite people, both on the AI side and on the non AI front.
We have twenty seconds left mark which one do you think is going to make the biggest splash.
The biggest splash will be Apple Intelligence, the new set of AI features, But I think gen z will really like the new home screen. People are going to go wild over that, as well as the new AI emoji's feature.
I'm excited about the imoj is also excited about a password manager and passwords just there's such a mess with different apps, and sometimes Safari wants to take it over, Chrome wants to take it over. So if that's a problem that Apple can solve, I'll probably end up giving them more money. Bloomberg News Chief Technology correspondent Mark German joining us from a Los Angeles.
You're listening to the Bloomberg Business Week podcast. Catch us five weekday afternoons from two to five pm Eastern Listen on Apple car Play and then Broun Auto with a Bloomberg Business act or want us live on YouTube.
So feeding the world that is no easy feat, especially at a time when extreme weather is on the rise, and at least in the US, fewer young people are getting into farming. That's why we're talking to Rory Riggs. He's chief executive officer at Cebus, a publicly traded agricultural genetics company which has its headquarters, labs and greenhouses.
In San Diego.
But he joins us here in the Interactive Brokers studio.
I don't know why you would ever leave San Diego if you live in San Diego, but we are lucky to have Rory in the Interactive Brokers studio here. So Rory, we were talking about this as we were preparing for the segment, trying to understand exactly where sebus fits in when you think about the agricultural life cycle, the agricultural supply chain. So tell us exactly what you do with this seeds from larger companies.
Cool I can give you a little bit quick framework so you understand.
Where we fit into. You can do whatever you want.
Yeah. I always look at the iPhone, The iPhone filled with software and chips, right they end license for other people, and so you got to think of seed as an iPhone, and seed is opposed to software and chips. It has a genome that doesn't have any hearts or lungs or bones. It just has a genome. And so what farmers do is try to make the genome more efficient. And so what a genetic company does is try to make it more efficient. And you do it one of two ways. You try to make the germ plasm, which is what you call the thing, yield more or you try to handle traits, which you try to deal with problems the farmers have, like insects and weeds and too much fertilizer. And so we try to build We focused on that and so what we do is a we won the Fast Company one or one hundred Best Innovations this year. We did it because they call it the analog to digital moment. We have a factory so a customer can send us their elite germ plasm. We take a single cell from it, we can make the edits in their cell, in their seed, and twelve to eighteen months send it back to them. And so if we have a thing for weeds, it's something that would help them with weeds. And so that's the nature of our business. And they pay us just like iPhone pays there in licensers. It's an in licensing business in an agriculture business.
So we talked about extreme weather as one of the problems that's plaguing farmers right now.
But you mentioned insects.
Give us a few more, I guess, examples of the problems that farmers are facing that you're solving.
Oh perfect, So a couple of big main areas. Monsanto kind of created this world, but gemotechnology has got stopped. And so the whole point now was we're able to restart it because the traits we do are indistinguishable for nature. That's why on a regulatory basis. Everybody's regular us like regular reading, so it's pretty well defined. You want to fix weeds, you want to fix disease, you want to fix insects, you want to fix fertilizer, and you want to be able to help them a just to weather. You know, the weather's just changing so much that I talk about the fact the disease, not just the temperature. The diseases and Alabama are now up in Saskatchewan. Need to be able to change to adopt that. I think one of the areas we're really focused on is disease. Disease plagues just kills these plants. So we're gonna we'll relieve on the precipice having the first d straight.
Sorry, no, no, that's fine. So I'm looking at the supply chain function on the Bloomberg terminal and according to our analysis, customers of yours include Cisco, Bayer, Purdue Farms, s and w C Company and more. I'm wondering about the idea of genetically modified foods and genetically modified ingredients. And here's why. I'm of the age where you know, have a mom who didn't want to feed us those things, and you go and buy a box of name the cereal and it will tell you whether or not it contains genetically modified ingredients. Yes, should we be worried about it?
So? I think even the GMO world is pretty well tested. The cool for us is we're dealing with the five major crops, so that all goes into your cereals, right, And even the Greens have said, if these guys can make changes in plants that are indistinguisable from nature, we should not worry about it.
When you say indistinguishable from nature, what do you mean.
That when we send it to a customer, we prove to them that all we did was change exactly what they wanted and nothing else happened. And also that the changes we made were changed that you could prove could have been made by nature. And this is a pretty cool quality control mechicals.
Is there evidence or at least do you need to go through a rigorous testing process to make sure that it's not going to have adverse effects on humans?
I think the idea is that if it's the same as nature, that's the most of the regulatory people are hanging their hat on. The breeding could have the same thing as long as you're making changes the body naturally makes and that's what we do. We hijack the body's own repair mechanism and that's how it works. That I think all the regulatory people have had a lot of it. They just approved us a big thing, and they put a big safety study out, so there's a really they spent years making sure. When they went out and improved it, here's what their proof was. So I think for the Europeans, after banning GMOs to come out and say you should feel that this is safe, you think is a pretty big.
So you wouldn't. This is not considered GMOs.
This is not considered GMO. Now you won't see us labeled except for maybe Cebus power to prove to you that we did it without GMOs. Okay, we are we are not. That's exactly what you said is said, and we have something called oligo nuclear type directed muta genesis.
But what you're up said is for you to say.
What you're up said is our headline was that this is safe because it's the same as nature.
So you work with corn, wheat, canola, rice and soy what about those crops that makes it easy for you to work with those? And is there an expansion in the field.
There totally will be an expansion. But the first was those are a billion acres. This is the main industry, right so you you know soybean and just Brazil and the United States is two hundred million acres, so you want to deal with these big grades. That's where most of the soybean thing. But we have peanut. Our next target is no allergenic peanuts. There's no question we're going to be able to do.
Don no question. Yes, how do you do this? This is amazing and.
You should know my scientists are probably rolling over in your grave. They said, no questions, apologize, but no, it's just we know it changed to change, and well you know it changed to change. And for angelic peanuts, there's so much language out there, research and where things are. They just never had technology like I was to be able to make the changes, and so you you you know exactly and peanuts is is more complicated than making it out to me. But we've been doing it for so long we're pretty confident of the changes you'd have to make.
So would that mean that somebody who has a child with a peanut allergy would go and buy a special type of peanut butter that is made with your modifications, and then that person will not suffer the risks associated with the peanut allergy.
Yes, but we think of it bigger than that. We think of it that everybody's going to switch to our peanut and so when you go to the store, every peanut will be a peanut that tastes the same, that is non allergenic.
Everyone will get the chance to have a recess my buttercup.
My son can't take peanuts a school. Yeah, and so to change that would be a big thing. That's why you don't use thing. You want it to be a center of part of the food supply.
So you talked about the regulation in Europe in the US, is it helping or hurting you right now?
The US was one of the first to adopt this. They came up with something called am I regulated and you can go online and we have like eighteen products approof of them as being we're not going to be regulated, and nobody else has more like three. So we've been doing this for so long. So the US actually has adopted and so it is Latin America. The big challenge was, we call it like a twenty five year activist program to get Europe to adopt equivalent to nature traits as nature and we won that pedal.
We're Bloomberg. So we got to talk about the stock. Stock market performance. Last year was a really good year for you guys, up one hundred and sixty six percent. So far this year down forty five percent. What in your opinion our investor is not seeing.
I think for all of us, we got attacked by different people at different points. I think that making people more understand exactly what it is it is a new industry and the potential from it, and then that's really been our challenge and that's where we're working on.
What's your addressable market?
In your opinion, my addressable market is five hundred million acres that are grown in the developing world, and then something like soybean it's two hundred million acres controlled by four people.
How much have you penetrated with that?
Well, we're just they're just becoming our customers. So the big seed companies have all adopted our technology, so we're not selling any trade jet.
If there are only four companies that do this, what's the risk of a company coming in and buying you? So then your technology doesn't get doesn't go to those other three companies.
That's always a risk, but I think I think in general they've adopted the idea that that there's so many things that can be done that we should be doing the things, and we really haven't had that kind of challenge.
Rory, thanks for joining us. Really appreciate it.
Oh, thank you for having me. It was really a treat.
Well, next time, let's do this in San Diego, because is that where you're based. Are you based in Minnesota?
No?
Actually, I'm in New York and we have Minnesota and we have San Diego, so we will coverage. It's easy for me.
Guys, come on, or we'll do something from San Diego at some point, because.
I hope it addressed a lot of your questions. Look forward for me to do you background.
It absolutely did, and I'm never going to think of eating a box of cereal the same way, So do appreciate that.
Cool.
Sure.
Anyways, I can't do what you're saying.
Roy Riggs is the CEO over at cebiss. Cb US is the ticker joining us here in the Bloomberg Interactive Brokers studio.
Muckle a journal I bet you let me drive.
Oh no, no, no, no.
Who's going to drive?
Alright, please, I'll do the travel.
I want to drive. It's good question.
This is the drive to the clothes well Yold on Bloomberg Radio.
We'll look at that. Eighteen minutes to go on this close of equity trading on this Friday job s Day, June seventh, twenty twenty four, it's time for our drive to the close. We're joined by Lance Cannon, portfolio manager over at hood at River Capital Management. Lance joins us from Palm Beach at Gardens, Florida. Lance, how are you?
I'm doing well, Thank you. How about yourself?
Yeah, we're doing pretty well. Trying to make sense of this payrolls report, given that there were a lot of indications moving into it that we've seen. We had seen some weakening in the labor market, and that's certainly not what we saw today. What was your view?
Confusion like everyone else at this juncture, right, Yeah, I think there's a lot of things that are going to play at this juncture from a perspective of the market. You know, I think we'd all like some direction, but that's not what we're here to beginnings where we kind of expect more volatility as we continue to move forward, You're going to see a lot of different I think variations and signals that are going to be out there. It's just going to result in just this choppers that we see, which then means that you want to be involved with companies and and firms that are looking at high quality businesses that then are going to be able to whether this stom better than others.
You know, I write about ETFs and I'm looking at ETF flows, and there was a fund from Blackrock, the I shares S and P five hundred growth ETF. It took in almost three billion dollars in one go. We're thinking that might be from a model portfolio. But talk about that, you know, bid that seems to exist in the market right now of investors continuing to buy these growth stocks S and.
P five hundred.
Obviously everyone's talking about Nvidia. Is that where you're telling clients.
To go as well?
Yeah, great question. We're definitely fans of growth. I'm portfolio manager of international growth funds, so I'm definitely all for going and looking for growth tap companies. And you think about over the long term kind of what's going to happen, you want to be involved with the companies are going to grow, they're looking to expand their market share. They're part of exciting and new adventures. They're going to drive profitability and efficiencies within the overall economy. And if you can identify those type of companies that are out there that are going to be able to grow not only through good and bad times, it's going to allow you to be able to weather these type of storms a lot better relative than if you were, you know, in a more more mature state and when we were losing market share to some of these like up and coming type companies.
Let's talk about some of your picks that you write.
Bb B Foods, I've never heard of that.
Yeah. BBB Foods is a store similar to like a Walmart if you go down in Mexico. They recently came to market here in the US, so it's a US listed company, but it's Mexican driven. All their stores are in Mexico. They're seeing, you know, they've got great opportunities out there, the opportunity to expand both their regional box spaces, and then also they're seeing great uplift in terms of customers coming to the brand and identifying and relating to the value driven store that they're bringing to the marketplace. And so what we what we believe we're seeing right now is that you got fourteen percent plus kind of same store of sales growth, and you marry that to fifteen percent box growth on a yeary year basis, you're getting close to, if not into the thirties in terms of top line revenue growth. And at the same juncture, as you have that type of leverage within the within the model, you have the opportunity see expanding margins and overall earnings growth, which then is driving you a share price that should be moving higher. Yet the same time, of Roseuel I, we like this thing is because vyos is important to us here at hood River. The company trades is if it's a more mature company with you know, mid to high single digit growth, yet you're seeing almost three times that, and so we really like this type of stories. We're going to have this type of growth. It seems to be sustainable over the long term.
This is interesting international small cap growth. To be honest, I don't speak to a lot of sources that specialize in this area. Why does that trade make sense given the macro environment that we're in right now? Where we have the FED still likely staying hawkish, perhaps other countries around the world beginning to ease, but that dollar is still being really strong and the rates market, at least in the US still still pretty high.
That's a great question and one that we encounter quite frequently. If you look at large cap as a whole, you alluded to the kind of S and P five hundred ets earlier. Those type of funds are trading at a premium relative to small cap, and particularly in international small cap of training at a premium as well. Historically speaking, small cap growth is traded at a premium relative to S and P five hundred or the large cap teche names internationally, and right now that's inverse, and so we think that's a great opportunity. Because we're seeing great positive earnings revisions in a small cap world, you've got the opportunity to see outside growth going forward as well. And then if you layer on top of that all that together, just the opportunity that you have for inefficiencies in small cap relative to large cap. We feel that there's phenomenal inefficiencies in the marketplace in small cap relative to large cap, which then allows to identify the best companies to generate alpha for our clients and really drive home a great product value for our customers.
Another pick that you have sent along our way that I know you're eager to talk about is ticker DESP. It's the online travel platform. It's out of Argentina, but it's US listed on the nasdack Desk Bigar.
Yeah, Desk Bigar is a like you said, it's an online travel platform. When we go through and look at kind of what's been happening, I know there's a lot of talk to our conversation earlier about the consumer and what's happening there and how you know, we're getting conflicting data points. One thing that we are hearing a lot, and we talked to them just individuals that you may know, is that the one thing they're still doing without a doubt is travel. You've got plenty of data points that are showing that you can go to an airport anytime in the last month or even time in the next month. You're probably going to feel like everyone else in the world is traveling with you. And Desk Regard is one of those companies that we feel is going to be able to take advantage of that they've got an AI component to it on their platform as well. It helps people plan their travels. They're integrating into the ability to say, if I'm going to go to you know, this place in Argentina, for example, then also going to list to you, hey, here's the here's the recommendations we give to you for hotels. We're going to give you some ideas the things you can do, so so it helps you kind of plan through the whole trip, all you know, seeing a click of a button. And we've seen that they're certing to gain steam that they're they're growing at a you know called mid teens percentage on the top line. We feel like there's some levers they have to pull that's going to allow them to grow them faster going forward. They've got an expanding even down margin line, and they're trading at a discount read to their peers who are growing at you know, a third or even a fourth of what they're growing and not seeing eva down margins expand. And so we feel like, again, this is none one of those pieces of the type of snaaris we look for where they got these great companies that are gaining market share, that are expanding their margins and driving value back to the shareholders.
Lance, we only have thirty seconds left, but give us one more pick that is on your radar, that should be on the redar our listeners and viewers.
Uh.
Yeah. So one of the names that I think is pretty interesting right now is a company of the UK called Just Group Pickers Just. It's a company in the financial sector. Again similar to these theme that you heard me with the other two names. It's the name that we believe is going to be growing faster than their peers, has the opportunity to expand margins. They're in the pension and risk management side of things. For the financial companies that are over there, there's a lot of financial opportunities that are over there too. Just kind of give them the nature of how they go about their retirement platforms and at the end of the day, like this is a coming we think is going to expand their EPs. Okay, you can see faster EPs growth and most to the top line and should be a great opportunity for people in the long run as well.
Lance, good to talk to you and great to get those names on that we don't talk about each and every day here on the show. That's Lance Cannon, portfolio manager at hood River Capital Management, joining us from Florida.
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