Bloomberg Audio Studios, podcasts, radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Affo card playing Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

Bloomberg Audio Studios, podcasts, radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Affo card playing Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

Let's go to put them Boyle.

Let's go to put them Boyle.

She's a Bloomberg Intelligence senior US retail analyst. She covers all this stuff. Put what's going on at Nike? That's still my brand? I mean, aren't Aren't they still the dominant player here? What's going on?

She's a Bloomberg Intelligence senior US retail analyst. She covers all this stuff. Put what's going on at Nike? That's still my brand? I mean, aren't Aren't they still the dominant player here? What's going on?

I'm going to say, you're not the target audience.

I'm going to say, you're not the target audience.

Some think I'm the target. I mean, just catch the target demo for like anybody anymore? All right? Put them? What's going on in Nike?

Some think I'm the target. I mean, just catch the target demo for like anybody anymore? All right? Put them? What's going on in Nike?

So so, Paul. Nike definitely is still the largest death leisure brand in the world, with over fifty billion dollars in sales, but in the last few years it has lost a share to Hoka, to On and even to Adita's, if you want to say. And part of that is because it pulled out a wholesale it pulled out of where people shop, and also it focused a little too much on the digital space. Giving product really little focus, and that's why we're seeing a change today. We need someone who can come back, go back to the Nike DNA, and really focus on product performance to deliver what Nike has delivered for the last thirty plus years.

So so, Paul. Nike definitely is still the largest death leisure brand in the world, with over fifty billion dollars in sales, but in the last few years it has lost a share to Hoka, to On and even to Adita's, if you want to say. And part of that is because it pulled out a wholesale it pulled out of where people shop, and also it focused a little too much on the digital space. Giving product really little focus, and that's why we're seeing a change today. We need someone who can come back, go back to the Nike DNA, and really focus on product performance to deliver what Nike has delivered for the last thirty plus years.

When you said they pulled out of retail, what do you mean they tried to sell it themselves online and their website.

When you said they pulled out of retail, what do you mean they tried to sell it themselves online and their website.

Well, it's not that they pulled out of all retail, but they definitely curbed their exposure into retail, whether it was through foot locker, Macy's, etc. They had materially pulled back what they were selling into those stores and now they're back in. So they did come back. But what happened is if you went to a foot locker prior to twenty twenty, twenty, nineteen, twenty eighteen, you'd see a lot of Nike there. Right, Nike was the predominant brand, And had you walked in yesterday, even what you'll see is Nike, you'll see Adidas, the Hoka you'll see on So now people are being exposed to more brands and that's part of the reason. But also those brands are good brands, right. They have performance Hoka for running on for running for lifestyle, they've really gained traction, and that's because Nike let them.

Well, it's not that they pulled out of all retail, but they definitely curbed their exposure into retail, whether it was through foot locker, Macy's, etc. They had materially pulled back what they were selling into those stores and now they're back in. So they did come back. But what happened is if you went to a foot locker prior to twenty twenty, twenty, nineteen, twenty eighteen, you'd see a lot of Nike there. Right, Nike was the predominant brand, And had you walked in yesterday, even what you'll see is Nike, you'll see Adidas, the Hoka you'll see on So now people are being exposed to more brands and that's part of the reason. But also those brands are good brands, right. They have performance Hoka for running on for running for lifestyle, they've really gained traction, and that's because Nike let them.

I guess it was a week or so ago we had Derek Jeter in here with the founder of Untucket, Chris Riccobano, and they were talking about their introducing a new brand of performance athletic leisure, and I heard their story, I heard their pitch, but I'm like, what in the hill? There's so much competition in there? How competitive is that market? At leisure? Nobody's wearing the suits anymore, Plum, that thing's gone, So I guess everybody is kind of into ath leisure. How competitive is that part?

I guess it was a week or so ago we had Derek Jeter in here with the founder of Untucket, Chris Riccobano, and they were talking about their introducing a new brand of performance athletic leisure, and I heard their story, I heard their pitch, but I'm like, what in the hill? There's so much competition in there? How competitive is that market? At leisure? Nobody's wearing the suits anymore, Plum, that thing's gone, So I guess everybody is kind of into ath leisure. How competitive is that part?

That's very competitive, But Nike's still the dominant player at fifty billion dollars plus in sales. It is definitely winning in the shoe category. In apparel, I'd say the gap is much narrower to other players, including Adidas and others. But it's also a space that's growing, right, So as we hear more competition encroaching on the space, it's because more people want more at leisure in their wardrobe. So I'd say it's a category where it's not necessary that one has to lose for another to win the category itself. Is growing globally.

That's very competitive, But Nike's still the dominant player at fifty billion dollars plus in sales. It is definitely winning in the shoe category. In apparel, I'd say the gap is much narrower to other players, including Adidas and others. But it's also a space that's growing, right, So as we hear more competition encroaching on the space, it's because more people want more at leisure in their wardrobe. So I'd say it's a category where it's not necessary that one has to lose for another to win the category itself. Is growing globally.

How long does it take to bring a new product, sneaker, whatever to market?

How long does it take to bring a new product, sneaker, whatever to market?

It takes more than six months, depending on whether it's just another color wave or depending on if it's a new performance based product. But the pipeline is long. And remember most of these sneakers are made in Vietnam. Vietnam is a sneaker hub for manufacturing sneakers. Therefore, there is a transit time involved as well. Now you can argue that AI is going to cut some of that because the design can happen faster and you can pre secure fabrics, etc. But still it's still a long window.

It takes more than six months, depending on whether it's just another color wave or depending on if it's a new performance based product. But the pipeline is long. And remember most of these sneakers are made in Vietnam. Vietnam is a sneaker hub for manufacturing sneakers. Therefore, there is a transit time involved as well. Now you can argue that AI is going to cut some of that because the design can happen faster and you can pre secure fabrics, etc. But still it's still a long window.

The CEO who's getting canned, I don't know who's outgoing? Was Was he a bean counter? I mean, what was the problem with this guy?

The CEO who's getting canned, I don't know who's outgoing? Was Was he a bean counter? I mean, what was the problem with this guy?

It's not that there was a problem. He was not a merchant. So John Donaho came in with DTC exposure. So he is the one who led the digital first strategy, wanting to lean more into digital, and well, that's great, it is great to lean forward into digital, but at the end of the day, retail is about product, especially when it comes to a brand. Nike is not a marketplace. It's not Amazon, so product matters most and he just didn't have that product expertise behind him.

It's not that there was a problem. He was not a merchant. So John Donaho came in with DTC exposure. So he is the one who led the digital first strategy, wanting to lean more into digital, and well, that's great, it is great to lean forward into digital, but at the end of the day, retail is about product, especially when it comes to a brand. Nike is not a marketplace. It's not Amazon, so product matters most and he just didn't have that product expertise behind him.

John, You and I know the fellow who runs this place. But if I were running this place here, here's how we go. No shorts in the workplace and no sandals.

John, You and I know the fellow who runs this place. But if I were running this place here, here's how we go. No shorts in the workplace and no sandals.

That is a just did you know Puonhum that Paul is the fashion police here at Bloomberg World headquarters and he's driving.

That is a just did you know Puonhum that Paul is the fashion police here at Bloomberg World headquarters and he's driving.

Every He's always in Shortthills malls for us right checking out the story.

Every He's always in Shortthills malls for us right checking out the story.

I am, I do, I do some product as some channel checks for Punham in the Short Hills mall. All right, put him, thanks so much for joining us, appreciate it. Put them Gil. She covers all the retail stuff for Bloomberg Intelligence. She was Bloomerg Intelligence just celebrated his fifteenth year anniversary. She was my first hire here and I've hired one thirty analysts and she was number one, So that was a good one for us.

I am, I do, I do some product as some channel checks for Punham in the Short Hills mall. All right, put him, thanks so much for joining us, appreciate it. Put them Gil. She covers all the retail stuff for Bloomberg Intelligence. She was Bloomerg Intelligence just celebrated his fifteenth year anniversary. She was my first hire here and I've hired one thirty analysts and she was number one, So that was a good one for us.

You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on applecard Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa Play Bloomberg eleven thirty.

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All right, what do you do here? The Fed cuts rates? You're a financial advisor? What do you do with your clients? What do you tell your clients in world work? Finally rates are coming down. Let's check in with somebody who does that stuff for a living. Sarah Ponzek, financial advisor for UBS Private Wealth Management.

All right, what do you do here? The Fed cuts rates? You're a financial advisor? What do you do with your clients? What do you tell your clients in world work? Finally rates are coming down. Let's check in with somebody who does that stuff for a living. Sarah Ponzek, financial advisor for UBS Private Wealth Management.

Full disclosure.

Full disclosure.

I am a client of UBS Private Wealth Management here in New York. They take care of me. She's done a Boca raton Florida. That's not a bad place to be. Sarah, Thanks so much for joining us. Here are the FED cuts rates. What kind of phone calls were you feeling from your clients after that news, which was for some people's surprise.

I am a client of UBS Private Wealth Management here in New York. They take care of me. She's done a Boca raton Florida. That's not a bad place to be. Sarah, Thanks so much for joining us. Here are the FED cuts rates. What kind of phone calls were you feeling from your clients after that news, which was for some people's surprise.

Yeah, it's great to be with you, Paul and John. It didn't really come as a surprise. I would say, we've all been talking about this since last year, it feels, but finally the first rate cut since twenty twenty, and the Fed came out swinging with a fifty basis point rate cut. So the conversations that we've been having with clients, even though it should not have come as a surprise.

Yeah, it's great to be with you, Paul and John. It didn't really come as a surprise. I would say, we've all been talking about this since last year, it feels, but finally the first rate cut since twenty twenty, and the Fed came out swinging with a fifty basis point rate cut. So the conversations that we've been having with clients, even though it should not have come as a surprise.

You know, we've been talking all year long.

You know, we've been talking all year long.

About locking in interest rates, extending out duration, slowly moving out of high savings accounts and money markets with cash that you do have.

About locking in interest rates, extending out duration, slowly moving out of high savings accounts and money markets with cash that you do have.

You know, it's been difficult for some people to do that.

You know, it's been difficult for some people to do that.

So finally this week, now that we actually saw the fifty basis point cut, the question is okay, am I too late? If I still have a lot of money in cash, what do I do with that cash? So those are the conversations, the types of conversations that we've been having this week.

So finally this week, now that we actually saw the fifty basis point cut, the question is okay, am I too late? If I still have a lot of money in cash, what do I do with that cash? So those are the conversations, the types of conversations that we've been having this week.

Ball So, Sarah, what do I do with my cash? Sarah?

Ball So, Sarah, what do I do with my cash? Sarah?

Great question, John.

Great question, John.

So you know what's interesting is, yes, we're continually and repeatedly saying, all right, if you haven't already locked in yields through fixed income and extended duration, now's the time to do so. And what's interesting is sometimes we do get pushedback. There's this this gap or this misunderstanding where someone might say, well, well, why would I lock in you know, a three, a five, a ten year bond that's yielding four or five percent when my money market is still yielding you know, four point eight or five percent. You know, there's this trade off that some people feel as though they're making in the short term and what you really need to be aware of is the fact that, yes, your money market might still be paying you, you know, close to five percent today, but if you look at the expectations of where you know, short term interest rates are going to be a year from now, at the end of twenty twenty five, we're looking at short term yields being close to three percent most likely. So if you can lock in a four percent Treasury bill, you know, years out into the future, yeah, you know, you might have a trade off for the next couple of months, but you're going to set yourself up for success over a longer period of time, which is really the name of the game. So that's on the fixed income side, extending out duration, we're talking about you know, maybe three to seven years in maturity, looking at that intermediate duration in the curve, and also staying up in quality, so looking at treasuries, also looking at investment grade corporates. Now, on the equity side, we still believe that the risk reward for equities is pretty strong here. And yes, we've seen a twenty percent return in the S and P five hundred this year. Stocks are trading at records. That's great, but we're seeing this broadening out. You know, if you look at an equal weighted version of the S and P five hundred, it also traded out a record high yesterday. If you look at the sector breakdown of the S and P five hundred, all but two sectors are trading at fifty two week highs. So we've seen this broadening in the stock market and that's really encouraging as an investor.

So you know what's interesting is, yes, we're continually and repeatedly saying, all right, if you haven't already locked in yields through fixed income and extended duration, now's the time to do so. And what's interesting is sometimes we do get pushedback. There's this this gap or this misunderstanding where someone might say, well, well, why would I lock in you know, a three, a five, a ten year bond that's yielding four or five percent when my money market is still yielding you know, four point eight or five percent. You know, there's this trade off that some people feel as though they're making in the short term and what you really need to be aware of is the fact that, yes, your money market might still be paying you, you know, close to five percent today, but if you look at the expectations of where you know, short term interest rates are going to be a year from now, at the end of twenty twenty five, we're looking at short term yields being close to three percent most likely. So if you can lock in a four percent Treasury bill, you know, years out into the future, yeah, you know, you might have a trade off for the next couple of months, but you're going to set yourself up for success over a longer period of time, which is really the name of the game. So that's on the fixed income side, extending out duration, we're talking about you know, maybe three to seven years in maturity, looking at that intermediate duration in the curve, and also staying up in quality, so looking at treasuries, also looking at investment grade corporates. Now, on the equity side, we still believe that the risk reward for equities is pretty strong here. And yes, we've seen a twenty percent return in the S and P five hundred this year. Stocks are trading at records. That's great, but we're seeing this broadening out. You know, if you look at an equal weighted version of the S and P five hundred, it also traded out a record high yesterday. If you look at the sector breakdown of the S and P five hundred, all but two sectors are trading at fifty two week highs. So we've seen this broadening in the stock market and that's really encouraging as an investor.

Sir, ETFs, how do you position them for your clients? How much incoming calls do you get from your clients about ETFs?

Sir, ETFs, how do you position them for your clients? How much incoming calls do you get from your clients about ETFs?

Great question, Paul.

Great question, Paul.

You know, obviously we can talk about investing and where to invest, but then there's a question of structure and how you invest. You know, how do you what products do you use to invest your money? So I would say, you know, we use we do use ETFs and portfolios, but we use this them and more so in a supplementary way. When we think about the core portion of our client's equity portfolios. A lot of what we do is actually what's called direct indexing, which we would describe as being a step above ets. It's like, as an investor, you have your own index that's catered to you.

You know, obviously we can talk about investing and where to invest, but then there's a question of structure and how you invest. You know, how do you what products do you use to invest your money? So I would say, you know, we use we do use ETFs and portfolios, but we use this them and more so in a supplementary way. When we think about the core portion of our client's equity portfolios. A lot of what we do is actually what's called direct indexing, which we would describe as being a step above ets. It's like, as an investor, you have your own index that's catered to you.

And why is that important?

And why is that important?

You know, there's a couple of things that you can do with the direct index that you cannot do with an ETF. You know, when you have an ETF, let's say an S and P five hundred ETF, that's one line item in your portfolio. So if the market's up, your ETF's up in value, there's not much tax planning you can do there. You really can't do tax loss harvesting, which, especially as we're getting towards the end of the year, this is the time of year that we're gonna start seeing tax planning really come to the forefront of portfolios. So within a direct index, you actually own a couple hundred positions within the portfolio. We all know that even in a year in which the broader stock market is up, there's a lot of individual stocks that trade at losses and pretty hefty losses throughout the year. So what that allows you to do is continue to get market performance in your portfolio, but do plenty of tax planning on the bottom side. And really, what a lot of research has shown is that can add you know, an extra two percentage of performance per year on an after tax basis.

You know, there's a couple of things that you can do with the direct index that you cannot do with an ETF. You know, when you have an ETF, let's say an S and P five hundred ETF, that's one line item in your portfolio. So if the market's up, your ETF's up in value, there's not much tax planning you can do there. You really can't do tax loss harvesting, which, especially as we're getting towards the end of the year, this is the time of year that we're gonna start seeing tax planning really come to the forefront of portfolios. So within a direct index, you actually own a couple hundred positions within the portfolio. We all know that even in a year in which the broader stock market is up, there's a lot of individual stocks that trade at losses and pretty hefty losses throughout the year. So what that allows you to do is continue to get market performance in your portfolio, but do plenty of tax planning on the bottom side. And really, what a lot of research has shown is that can add you know, an extra two percentage of performance per year on an after tax basis.

So usually for US large cap stocks.

So usually for US large cap stocks.

We're pretty big believers and passive indexing there, we'll use direct indexing and then we'll use eat is to supplement that. So that's where we you know, right now, for example, small caps might perform pretty well with the expectation of interest rates coming down, So adding to small caps, adding to size exposure there, diversifying internationally there, maybe adding a little bit of international exposure.

We're pretty big believers and passive indexing there, we'll use direct indexing and then we'll use eat is to supplement that. So that's where we you know, right now, for example, small caps might perform pretty well with the expectation of interest rates coming down, So adding to small caps, adding to size exposure there, diversifying internationally there, maybe adding a little bit of international exposure.

And then also playing industries and sector tilts.

And then also playing industries and sector tilts.

You know, we've had some exposure to some etss that really more so focused on artificial intelligence and cybersecurity this year, for example, So using ETS as a supplementary play to say your large cap core indexed portfolio.

You know, we've had some exposure to some etss that really more so focused on artificial intelligence and cybersecurity this year, for example, So using ETS as a supplementary play to say your large cap core indexed portfolio.

Okay, so if with risk assets, Sarah, it's as easy as just finding stocks that do well in a lower rate environment, i e. Tech.

Okay, so if with risk assets, Sarah, it's as easy as just finding stocks that do well in a lower rate environment, i e. Tech.

So yes, look, I think there's a couple of reasons that we're still there.

So yes, look, I think there's a couple of reasons that we're still there.

I'm not saying your job as in hard, Sarah.

I'm not saying your job as in hard, Sarah.

It's very U I would say it's pretty difficult, and you're dealing with a lot of interesting personalities sometimes who you know who.

It's very U I would say it's pretty difficult, and you're dealing with a lot of interesting personalities sometimes who you know who.

Are and you're in BOCO, which all the retirees.

Are and you're in BOCO, which all the retirees.

Right, lower retirees.

Right, lower retirees.

But it's been raining a lot here, so I honestly, envy you up in New York right now, but we're about to get to.

But it's been raining a lot here, so I honestly, envy you up in New York right now, but we're about to get to.

The nice time to be to be in Florida.

The nice time to be to be in Florida.

But no, I think what's interesting about tech is it's not just an interest story play. Look, tech has been the leading sector in the leading industry for the past couple of years when interest rates were high.

But no, I think what's interesting about tech is it's not just an interest story play. Look, tech has been the leading sector in the leading industry for the past couple of years when interest rates were high.

You know, nowadays tech is quality. Tech is also you know, megacap.

You know, nowadays tech is quality. Tech is also you know, megacap.

Tech is a play on the artificial intelligence trade and growth that we.

Tech is a play on the artificial intelligence trade and growth that we.

Expect to see.

Expect to see.

And yes, you know growth is an area of the market that's interest rate sensitive because essentially, at the end of the day, when you look at tech, you know, we have to think about the net present value of future earnings, and the lower interest rates are, the more attractive that future stream of earnings looks. So yes, we've been optimistic on tech in the past, and that wasn't an interest rate reason, and now I would say interest rates are coming down is even more so a reason to be a com optimistic on tech. With that said, though you don't want tech to make up your whole portfolio, yes, we do think it makes up a very significant portion of a portfolio. But I mentioned earlier on we're seeing a broadening out in the market. We're seeing some cyclical sectors of the market, you know, start to play catch up, so you want to make sure that you're well diversified. But absolutely tech has you know, been a predominant role player in portfolios for the past few years, and we really don't see that changing.

And yes, you know growth is an area of the market that's interest rate sensitive because essentially, at the end of the day, when you look at tech, you know, we have to think about the net present value of future earnings, and the lower interest rates are, the more attractive that future stream of earnings looks. So yes, we've been optimistic on tech in the past, and that wasn't an interest rate reason, and now I would say interest rates are coming down is even more so a reason to be a com optimistic on tech. With that said, though you don't want tech to make up your whole portfolio, yes, we do think it makes up a very significant portion of a portfolio. But I mentioned earlier on we're seeing a broadening out in the market. We're seeing some cyclical sectors of the market, you know, start to play catch up, so you want to make sure that you're well diversified. But absolutely tech has you know, been a predominant role player in portfolios for the past few years, and we really don't see that changing.

Sar to what extent to your clients ask you about getting exposure to alternative investments, whether it's hedge funds or private equity, private credit, how does that play.

Sar to what extent to your clients ask you about getting exposure to alternative investments, whether it's hedge funds or private equity, private credit, how does that play.

So it's becoming more of a common theme. I would say it's still a conversation that we're bringing up rather than a lot of clients coming to us and asking about it. Because alternatives are so important when we think about the universe of public companies, you know, think about the universe of companies nowadays that go through an IPO to list on a public stock exchange. I mean, it's a very different world than it was, you know, ten years ago, twenty years ago. Few were companies are going public nowadays, and many of the largest companies in our global economy, especially in the US economy, are actually still private companies.

So it's becoming more of a common theme. I would say it's still a conversation that we're bringing up rather than a lot of clients coming to us and asking about it. Because alternatives are so important when we think about the universe of public companies, you know, think about the universe of companies nowadays that go through an IPO to list on a public stock exchange. I mean, it's a very different world than it was, you know, ten years ago, twenty years ago. Few were companies are going public nowadays, and many of the largest companies in our global economy, especially in the US economy, are actually still private companies.

They haven't gone public.

They haven't gone public.

So now more than ever, it's important to get exposure to private markets, because it's a whole area, a whole universe of the economy that you just don't have exposure to you in your portfolio if you don't have exposure to private markets. So where within private markets, you know, do we look? We do still like private credit. You know, private credit has been paying an annualized distribution yield of around ten percent. Yes, a lot of these loans are floating right, so we are going to start to see that come down, but we still see that as an attractive place to be, especially as.

So now more than ever, it's important to get exposure to private markets, because it's a whole area, a whole universe of the economy that you just don't have exposure to you in your portfolio if you don't have exposure to private markets. So where within private markets, you know, do we look? We do still like private credit. You know, private credit has been paying an annualized distribution yield of around ten percent. Yes, a lot of these loans are floating right, so we are going to start to see that come down, but we still see that as an attractive place to be, especially as.

An alternative to just traditional fixed income. Also, private equity.

An alternative to just traditional fixed income. Also, private equity.

Private equity is you know, we see as a very important piece of portfolios.

Private equity is you know, we see as a very important piece of portfolios.

Talk about lowering volatility.

Talk about lowering volatility.

You don't have the day to day swings of what you see on public stock exchanges, but still getting those strong double digit returns in private equity. And what's also been really interesting in the private equity space is we've seen more, you know, investor friendly structures where you're not locked up for seven to ten years, you're not dealing with capital calls. There's these evergreen structures that have been produced where you can actually get out on a quarterly basis.

You don't have the day to day swings of what you see on public stock exchanges, but still getting those strong double digit returns in private equity. And what's also been really interesting in the private equity space is we've seen more, you know, investor friendly structures where you're not locked up for seven to ten years, you're not dealing with capital calls. There's these evergreen structures that have been produced where you can actually get out on a quarterly basis.

You have more liquidity.

You have more liquidity.

So the environment for private privates, I would say, has become much more investor friendly over the past year or two years.

So the environment for private privates, I would say, has become much more investor friendly over the past year or two years.

Even speaking of volatility, have you seen the volumes today? Triple witching day? Oh real quick, Sarah, just a minute. Can you use how do you use volatility to your advantage as an investor for your quer Absolutely so.

Even speaking of volatility, have you seen the volumes today? Triple witching day? Oh real quick, Sarah, just a minute. Can you use how do you use volatility to your advantage as an investor for your quer Absolutely so.

Especially Look, we've seen some volatility over the past couple of months in a year in which volatility really hasn't existed. So look on the equity side, if you're someone who sells a business, if you are sitting on a hoard of cash, no, you have emotional ties to the money. You don't want to invest at all at once, So use volatility to your advantage. Yes, have a set plan. You want a slowly dollar cost average into the market. But if you have a week or a day in which you see more volatility, may be speed that dollar costs averaging up. Maybe you pull your investments forwards and you use those doundies to slowly get yourself invested, because at the end of the day, you know, the longer you're sitting on the sidelines, the longer it is to get in.

Especially Look, we've seen some volatility over the past couple of months in a year in which volatility really hasn't existed. So look on the equity side, if you're someone who sells a business, if you are sitting on a hoard of cash, no, you have emotional ties to the money. You don't want to invest at all at once, So use volatility to your advantage. Yes, have a set plan. You want a slowly dollar cost average into the market. But if you have a week or a day in which you see more volatility, may be speed that dollar costs averaging up. Maybe you pull your investments forwards and you use those doundies to slowly get yourself invested, because at the end of the day, you know, the longer you're sitting on the sidelines, the longer it is to get in.

All right, Sarah, Thank you so much. We always appreciate getting a few minutes of your time from South Florida. Sarah Ponsek, Financial Advisor, UBS Private Wealth Management. Here again, investing in a world where, for the first time in a little bit more than four years, we actually have rates coming down for a lot of folks. That's kind of a new environment to invest in.

All right, Sarah, Thank you so much. We always appreciate getting a few minutes of your time from South Florida. Sarah Ponsek, Financial Advisor, UBS Private Wealth Management. Here again, investing in a world where, for the first time in a little bit more than four years, we actually have rates coming down for a lot of folks. That's kind of a new environment to invest in.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Affo Car Playing Androud Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

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How about this ready mixed drink? Things you see like vodkn iced, you see the little banish.

How about this ready mixed drink? Things you see like vodkn iced, you see the little banish.

I have my favorite what is it is a my tie and it's just like out of this world at Curison, uh top shelf liquor. I can't remember who makes it, but it is out of this world and you can only have one because more than that, you're like you're in a coma.

I have my favorite what is it is a my tie and it's just like out of this world at Curison, uh top shelf liquor. I can't remember who makes it, but it is out of this world and you can only have one because more than that, you're like you're in a coma.

Really, I mean, that's what the kids are doing these days.

Really, I mean, that's what the kids are doing these days.

I don't know what's going on out there, not that I'm a kid, but I'll.

I don't know what's going on out there, not that I'm a kid, but I'll.

Tell you someone who knows this stuff. He knows his booze. He knows his weed. That is Ken senior consumer products analysts hopefully is.

Tell you someone who knows this stuff. He knows his booze. He knows his weed. That is Ken senior consumer products analysts hopefully is.

And he's sitting upright.

And he's sitting upright.

He's sitting upright. But he's been covering all these beverage companies and he's seen every fad come and go. Can what's the latest kind of strategy there for you know, the Coca Colas of the world. The pepsis, where do they see growth these days in new products?

He's sitting upright. But he's been covering all these beverage companies and he's seen every fad come and go. Can what's the latest kind of strategy there for you know, the Coca Colas of the world. The pepsis, where do they see growth these days in new products?

YEAHI guys. So for Coca Cola, you know, they feel themselves as a total beverage company. That's their aspiration. They want to beat all beverages. Having said that, it's also a company that is very image and reputational conscious, so it's moving at a very measured pace to get into the two trillion dollars global alcoholic beverage space. So they're doing so by partnerships and alliances. Uh so, you just heard the other day they've entered into a partnership with Bacarty, the big drum company, to make bricardy and coke a product. And we all kind of know, and so it's a ready to drink It saves people time, you know, that kind of thing. They've entered similar kind of arrangements with Brown Foreman, with Jack and Coke. You know, Jack Daniels and Coke.

YEAHI guys. So for Coca Cola, you know, they feel themselves as a total beverage company. That's their aspiration. They want to beat all beverages. Having said that, it's also a company that is very image and reputational conscious, so it's moving at a very measured pace to get into the two trillion dollars global alcoholic beverage space. So they're doing so by partnerships and alliances. Uh so, you just heard the other day they've entered into a partnership with Bacarty, the big drum company, to make bricardy and coke a product. And we all kind of know, and so it's a ready to drink It saves people time, you know, that kind of thing. They've entered similar kind of arrangements with Brown Foreman, with Jack and Coke. You know, Jack Daniels and Coke.

With how lazy did he have to be to not be able to figure out you can pour one and pour the other.

With how lazy did he have to be to not be able to figure out you can pour one and pour the other.

Well, you know you have a point. You have a point there, John. But think about it. If you want to go to the beach, right if if if you want to if you want to go somewhere to have a picnic, you don't want to carry all these bottles around and work about ice and you know whatever. Uh So it's just it's a convenience and consumers are willing to pay for that convenient It's all right, explain.

Well, you know you have a point. You have a point there, John. But think about it. If you want to go to the beach, right if if if you want to if you want to go somewhere to have a picnic, you don't want to carry all these bottles around and work about ice and you know whatever. Uh So it's just it's a convenience and consumers are willing to pay for that convenient It's all right, explain.

To me, Ken, because this is not John Tucker's demo White Claw? What is this stuff? Why are all the kids drinking it down the Jersey Shore?

To me, Ken, because this is not John Tucker's demo White Claw? What is this stuff? Why are all the kids drinking it down the Jersey Shore?

Well, you know White Claw that's produced by E. J. Gallow. They know the wine market really well, they know their demographics. Well. Uh, they sense that there was an opportunity for a arguably arguably a better tasting, more modern version of a low alcohol refresher. And they've really hit a home run with that product. I think it was really a game changer in the whole heart Seltzer area, and it's still a very strong, uh you know entrant that said and that they go off topic too much. But the trend now is to have vodka based drinks, So high New and vodka and tequila tequila base and vodka based High News are all the rage right now.

Well, you know White Claw that's produced by E. J. Gallow. They know the wine market really well, they know their demographics. Well. Uh, they sense that there was an opportunity for a arguably arguably a better tasting, more modern version of a low alcohol refresher. And they've really hit a home run with that product. I think it was really a game changer in the whole heart Seltzer area, and it's still a very strong, uh you know entrant that said and that they go off topic too much. But the trend now is to have vodka based drinks, So high New and vodka and tequila tequila base and vodka based High News are all the rage right now.

What about from PepsiCo.

What about from PepsiCo.

That's not being quite as well, But you know, there's a there's there's a niche market for these types of products. I mean, you know, this is five or six percent alcohol by volume, you know, so you see a hard product. Most of these are malt based, about the same alcohol level as beer, but it's for someone who maybe tiring of beer the beer you know, taste is giving way to things that are a little more flavorful. I think are some of our data from our surveys bear ound that consumers are looking for something new and exciting and you know, looking for new flavor experiences beyond beer, and so there's an itch here for that.

That's not being quite as well, But you know, there's a there's there's a niche market for these types of products. I mean, you know, this is five or six percent alcohol by volume, you know, so you see a hard product. Most of these are malt based, about the same alcohol level as beer, but it's for someone who maybe tiring of beer the beer you know, taste is giving way to things that are a little more flavorful. I think are some of our data from our surveys bear ound that consumers are looking for something new and exciting and you know, looking for new flavor experiences beyond beer, and so there's an itch here for that.

Brings me back to my college trip with my buddies to Paris. We're in the hotel room. All we had were little vodka bottles. I was like, well, we're not going to drink vodka straight? What can we get. So we went down to the soda machine. It was about midnight, and what they had was Fanta orange soda. You can mix those two. There's my idea.

Brings me back to my college trip with my buddies to Paris. We're in the hotel room. All we had were little vodka bottles. I was like, well, we're not going to drink vodka straight? What can we get. So we went down to the soda machine. It was about midnight, and what they had was Fanta orange soda. You can mix those two. There's my idea.

Thank you.

Thank you.

All all you need for me is a glass ice in Tito's and we're good to go. All right, So let's switch gears. Let's let's go to the weed business. That can give us the update on just kind of the development of that business here in the US.

All all you need for me is a glass ice in Tito's and we're good to go. All right, So let's switch gears. Let's let's go to the weed business. That can give us the update on just kind of the development of that business here in the US.

Well, in the US, as you know, it's still federally illegal prohibited, So the revenue growth for cannabis in the US is really state by state. And so all eyes right now are on November fifth, Florida. The referendum to legalize is on the ballot. You need sixty percent of the vote. All the goals that I've seen strongly imply it's going to pass. Think about Florida. Yeah, the third largest state in the country, one hundred million visitors annually could be open for business for legal marijuana. So all eyes are on that market right now.

Well, in the US, as you know, it's still federally illegal prohibited, So the revenue growth for cannabis in the US is really state by state. And so all eyes right now are on November fifth, Florida. The referendum to legalize is on the ballot. You need sixty percent of the vote. All the goals that I've seen strongly imply it's going to pass. Think about Florida. Yeah, the third largest state in the country, one hundred million visitors annually could be open for business for legal marijuana. So all eyes are on that market right now.

Here's my experience with it. And I buy a shop for a friend, not for me. Is the dispensary in Neptune, New Jersey is quite a nice expertperience. By the way, there's and I tell you the the weed bartenders are the friendliest, most knowledgeable people I've.

Here's my experience with it. And I buy a shop for a friend, not for me. Is the dispensary in Neptune, New Jersey is quite a nice expertperience. By the way, there's and I tell you the the weed bartenders are the friendliest, most knowledgeable people I've.

Ever dealt with because they're all high.

Ever dealt with because they're all high.

I guess, but I mean it's it's actually a good exp So what's it been like in New Jersey? Ken, the cannabis business.

I guess, but I mean it's it's actually a good exp So what's it been like in New Jersey? Ken, the cannabis business.

It's booming, absolutely, it's absolutely booming. More and more cropping up across the state. And it's been a big success so far. And I'll tell you, ah, no, I was gonna say, but, but it's also inviting competition. New York legalized shortly thereafter. Now Pennsylvania is looking to do so, so you know other states are watching closely.

It's booming, absolutely, it's absolutely booming. More and more cropping up across the state. And it's been a big success so far. And I'll tell you, ah, no, I was gonna say, but, but it's also inviting competition. New York legalized shortly thereafter. Now Pennsylvania is looking to do so, so you know other states are watching closely.

Also, I can tell you in New York City they used to have all these random kind of they cracked out big time. They are all gone, literally in a snap, in a blinkban eye. And now there's only just a handful of ones.

Also, I can tell you in New York City they used to have all these random kind of they cracked out big time. They are all gone, literally in a snap, in a blinkban eye. And now there's only just a handful of ones.

That are approved.

That are approved.

And there's one like on my walk to pen station, I see it there, but there's not many. It was out of hand there for a while, but they cracked down, all right. Ken Shay, he is our guy all things booze and weed. He's a senior consumer Products onals. He covers everything, folks, from cocoa cola to the cannabis business to everything. And it is a huge, huge business, huge companies, huge free cash flow, nice dividend yields too for folks looking for dividend neils. Those consumer products companies have always been a place to hide and kind a little bit of recession proof, by and large for those names.

And there's one like on my walk to pen station, I see it there, but there's not many. It was out of hand there for a while, but they cracked down, all right. Ken Shay, he is our guy all things booze and weed. He's a senior consumer Products onals. He covers everything, folks, from cocoa cola to the cannabis business to everything. And it is a huge, huge business, huge companies, huge free cash flow, nice dividend yields too for folks looking for dividend neils. Those consumer products companies have always been a place to hide and kind a little bit of recession proof, by and large for those names.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecard Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecard Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.

All right, we've got a FED that's cutting it straight. So we just came out of a really pretty strong second quarter earning season. Expectations are for some pretty decent earnings coming up this quarter. That seems pretty constructive to me. Let's check in with somebody who gets paid to do this stuff. James about toay. He's managing director and chief investment officer at Center Asset Management in New York City. James, thanks so much for joining us here. Did we see did the FED move yesterday, did that change or Wednesday? Did that change your outlook at all?

All right, we've got a FED that's cutting it straight. So we just came out of a really pretty strong second quarter earning season. Expectations are for some pretty decent earnings coming up this quarter. That seems pretty constructive to me. Let's check in with somebody who gets paid to do this stuff. James about toay. He's managing director and chief investment officer at Center Asset Management in New York City. James, thanks so much for joining us here. Did we see did the FED move yesterday, did that change or Wednesday? Did that change your outlook at all?

Here?

Here?

It's too early to tell, you know. Really, if you look at what the Fed did yesterday, and frankly, if you read the headlines about yesterday's stock market reaction, you know, the FED talking about the fact that they're taking out an insurance policy so as not to risk a recession. It's almost, you know, verbatim to what the newspaper headlines and the commentary read, you know, back way back on, you know, January of two thousand and one, when the Fed you know, similarly surprised with a fifty basis point cut in the FED funds rate. Obviously, you know, no parallel is exactly the same, you know, even if it rhymes. But you know, clearly there's this very big dichotomy at this stage between economic data which the FED is relying upon, you know, versus what we're seeing in terms of expectations for corporate profits.

It's too early to tell, you know. Really, if you look at what the Fed did yesterday, and frankly, if you read the headlines about yesterday's stock market reaction, you know, the FED talking about the fact that they're taking out an insurance policy so as not to risk a recession. It's almost, you know, verbatim to what the newspaper headlines and the commentary read, you know, back way back on, you know, January of two thousand and one, when the Fed you know, similarly surprised with a fifty basis point cut in the FED funds rate. Obviously, you know, no parallel is exactly the same, you know, even if it rhymes. But you know, clearly there's this very big dichotomy at this stage between economic data which the FED is relying upon, you know, versus what we're seeing in terms of expectations for corporate profits.

Okay, the Fed, as you put it, is taking out the insurance policies. Should I be investing in some sort of insurance in a portfolio as an investor?

Okay, the Fed, as you put it, is taking out the insurance policies. Should I be investing in some sort of insurance in a portfolio as an investor?

Yes, you should, absolutely, I think you know, from our take, you know, we think global economic growth stays like in this low gear. We're not in a technical recession, but we're very much vulnerable to a demand shock in the United States, you know, much like the economy was I hate to say it back in two thousand and one, prior to nine to eleven. So you know, from our perspective, you know, the winners are going to be, you know, treasuries, defensive growth stocks, infrastructure, utility stocks. You know, the key for US is going to be if companies can somehow, you know, maintain they're very lofty earnings expectations that are embedded in stock prices today and not disappoint like Federal Express did today. And if the Fed can somehow, you know, move policy rates towards what two year note is that is, you know, down toward about four percent, which would equate to about a two percent real yield two percent inflation. You know, I'll be the first person to vote that. They renamed the Equities Building down in d C for Chairman Powell.

Yes, you should, absolutely, I think you know, from our take, you know, we think global economic growth stays like in this low gear. We're not in a technical recession, but we're very much vulnerable to a demand shock in the United States, you know, much like the economy was I hate to say it back in two thousand and one, prior to nine to eleven. So you know, from our perspective, you know, the winners are going to be, you know, treasuries, defensive growth stocks, infrastructure, utility stocks. You know, the key for US is going to be if companies can somehow, you know, maintain they're very lofty earnings expectations that are embedded in stock prices today and not disappoint like Federal Express did today. And if the Fed can somehow, you know, move policy rates towards what two year note is that is, you know, down toward about four percent, which would equate to about a two percent real yield two percent inflation. You know, I'll be the first person to vote that. They renamed the Equities Building down in d C for Chairman Powell.

So, James, what are some of the sectors I guess that screen well for you, And how do you select equities generally speaking? In what's looking good these days?

So, James, what are some of the sectors I guess that screen well for you, And how do you select equities generally speaking? In what's looking good these days?

Yeah, that's the thing I mean, we're pure bottom up investors, and we always try to reconcile what's going on bottoms up to the top down information. And you know, the story that I talk about today is, you know, if Rip fan Winkle was asleep right and he woke up and you only showed him bottom up, I mean, excuse me. You know, top down economic data. You know, you look at you six unemployment, you know, moving sharply higher, trucking, construction, steel production, softening, ism, manufacturing and contraction, inverted yield curves, collapse in global commodity prices except gold China, European economic stress getting worse, and you saw, you know, anecdotally new car registrations in Europe down eighteen percent year of a year in August, disastrous profit warning from Mercedes Benz Auto, and credit card delinquency spiking higher. You know, Rip and Winkle would say, we're already in a recession, if not, you know, getting into moving into a shallow one. But you know, if you look at if you showed Rip, you know, price charts of the S and P five hundred concerning consensus earnings expectations, it'd see a pe of twenty two margins. You know, at all time highs and you know, standard deviation above twenty year averages and sell side expectations of six percent top line growth in twenty five excuse me, fifteen percent earnings growth for twenty twenty five. So RIP would say that we're on the cusp of a boom in profit growth without having ever entered a recession. You know, we're more leaning from a bottoms up perspective towards what the economic data saying, which is back to the point of defensive equities, the fact that treasuries will probably outperform credit and maybe even equities at this point in time, and a cautious stance towards profits. And I think this earning season coming up is probably going to be the most important season that will dictate the future direction of what stock prices will do for the next six months to twelve months, more so than what the Fed does, more so than what the presidential election results are.

Yeah, that's the thing I mean, we're pure bottom up investors, and we always try to reconcile what's going on bottoms up to the top down information. And you know, the story that I talk about today is, you know, if Rip fan Winkle was asleep right and he woke up and you only showed him bottom up, I mean, excuse me. You know, top down economic data. You know, you look at you six unemployment, you know, moving sharply higher, trucking, construction, steel production, softening, ism, manufacturing and contraction, inverted yield curves, collapse in global commodity prices except gold China, European economic stress getting worse, and you saw, you know, anecdotally new car registrations in Europe down eighteen percent year of a year in August, disastrous profit warning from Mercedes Benz Auto, and credit card delinquency spiking higher. You know, Rip and Winkle would say, we're already in a recession, if not, you know, getting into moving into a shallow one. But you know, if you look at if you showed Rip, you know, price charts of the S and P five hundred concerning consensus earnings expectations, it'd see a pe of twenty two margins. You know, at all time highs and you know, standard deviation above twenty year averages and sell side expectations of six percent top line growth in twenty five excuse me, fifteen percent earnings growth for twenty twenty five. So RIP would say that we're on the cusp of a boom in profit growth without having ever entered a recession. You know, we're more leaning from a bottoms up perspective towards what the economic data saying, which is back to the point of defensive equities, the fact that treasuries will probably outperform credit and maybe even equities at this point in time, and a cautious stance towards profits. And I think this earning season coming up is probably going to be the most important season that will dictate the future direction of what stock prices will do for the next six months to twelve months, more so than what the Fed does, more so than what the presidential election results are.

Broadly, what's your allocation right now? In a percentage break it down that way.

Broadly, what's your allocation right now? In a percentage break it down that way.

Well, if you look at you know, we run one dedicated infrastructure fund, which is actually having a spectacular year because we're recognizing that you know, utilities have gone from being bond proxies to an essence growth proxies with the power generation needs of AI and other things. But in an our American Select equity strategy, we've introduced long duration treasury bonds. That's the first time I've done that in inequity portfolio since early two thousand. So maybe that tells you something when you look at our sector overweights within our American Select, our biggest overweights are in consumer staples, healthcare, and we're dramatically underweight all cyclicals. But we do have some exposure within the Magnificent seven because you continue to see those stocks being very driven by the fundamental momentum towards this AI craze and we're not sure when that is actually going to end, and these companies are demonstrating some degree of excellence.

Well, if you look at you know, we run one dedicated infrastructure fund, which is actually having a spectacular year because we're recognizing that you know, utilities have gone from being bond proxies to an essence growth proxies with the power generation needs of AI and other things. But in an our American Select equity strategy, we've introduced long duration treasury bonds. That's the first time I've done that in inequity portfolio since early two thousand. So maybe that tells you something when you look at our sector overweights within our American Select, our biggest overweights are in consumer staples, healthcare, and we're dramatically underweight all cyclicals. But we do have some exposure within the Magnificent seven because you continue to see those stocks being very driven by the fundamental momentum towards this AI craze and we're not sure when that is actually going to end, and these companies are demonstrating some degree of excellence.

All right, James, thanks so much for joining us. Always appreciate getting a few minutes of your time. James Abatte. He's a managing director the chief investment officer at Center Asset Management, located in Lower Manhattan.

All right, James, thanks so much for joining us. Always appreciate getting a few minutes of your time. James Abatte. He's a managing director the chief investment officer at Center Asset Management, located in Lower Manhattan.

Here.

Here.

This is the Bloomberg Intelligence Podcast, available on ap those, POTP and anywhere else you get your podcasts. Listen live each weekday ten am to noon Eastern on Bloomberg dot com, the iHeartRadio app tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal

This is the Bloomberg Intelligence Podcast, available on ap those, POTP and anywhere else you get your podcasts. Listen live each weekday ten am to noon Eastern on Bloomberg dot com, the iHeartRadio app tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal