December 5, 2024 • 35 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg News Managing Editor for Crypto stacy-marie ishmael and Bloomberg News Financial Investigations Reporter Zeke Faux on discuss Bitcoin soaring past $100,000 on Trump’s pro-crypto pick for SEC Head. Lynlee Brown, Partner in Global Trade at Ernst & Young, talks about the role of taxes in the posed Trump tariffs. Julie Smolyansky, CEO of Lifeway Foods, discusses the kefir products company’s future after rejecting Danone’s takeover offer. And we Drive to the Close with Eric Clark, Portfolio Manager at Rational Dynamic Brands Fund.
Hosts: Tim Stenovec and Jess Menton. Producer: Paul Brennan.
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
This is Bloomberg business Week 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 Stenebek from Bloomberg Radio.
Speaker 3 (00:27):
The Price of Bitcoin.
Speaker 4 (00:28):
We're always watching that President elect Donald Trump's pick up
a crypto proponent to be the next head of the
SEC lifted bitcoin to one hundred thousand dollars for the
first time as traders warmed to the prospect of relaxed regulations.
We got with us Stacy Marie Ishmel, Managing editor for
Crypto at Bloomberg News. Stacey Marie joins us here in
the Bloomberg Interactive Brokers studio. Zeke Fox is a Bloomberg
(00:48):
News financial investigation reporter. He's also the author of Number
Go Up Inside at Crypto's Wild Rise and Staggering Fall.
Zeke joins us from New York as well. Stacey Marie.
There this moment when it comes to news events that
are kind of indelible in people's minds. You know, you
talk to people when they heard about the assassination of
JFK or like, you know, more recently in our lifetimes, covid.
(01:11):
You know, where were you when you heard Tom Hanks
had COVID and the NBA was shutting down the season Austin,
Texas is.
Speaker 3 (01:17):
Exactly you know? Is bitcoin? You were? Were you there
for south by Southwest?
Speaker 5 (01:20):
No?
Speaker 3 (01:20):
Is there for work? Okay? You're there for work? Okay?
Are you?
Speaker 4 (01:25):
Is this one of those moments where like it's that
significant when it comes to the history of cryptocurrency?
Speaker 3 (01:30):
Where were you when bitcoin hit one hundred k?
Speaker 1 (01:32):
I will say that was very much the vibe of
folks in and around bitcoin and crypto yesterday, particularly on
social media, whether it was LinkedIn or x or blue Sky,
you know, the you know, folks who are CEOs, folks
who are developers, folks who are just retail traders were like,
it's here, We've made it. Our time is now.
Speaker 5 (01:53):
Zeke. I wanted to bring you into the conversation because
something I've been asking a lot of people about is
sort of the frothiness, because once you get two one
hundred thousand, a lot of people want to start talking
about technicals about resistance. But I mean, where do you
find resistance from there. And what I'm wondering too, is
when you have people like the Hawk to a Girl
Haley Welch that are kind of jumping in and trying
to launch these type of mean coins. Are we actually
at the phase here where things are looking a little
(02:15):
too froppy for the crypto space.
Speaker 6 (02:18):
Well, what the bitcoin proponents would say is that all
the attention that bitcoin is getting around the price hitting
this milestone, like the coverage US talking about it right now,
is part of the momentum that's going to drive it
even higher. And this crypto executive, Dan held I once
heard him explain it in a pretty interesting way. He
(02:40):
called it number go up technology, and he said it's
very powerful piece of technology. It's the price. As the
price goes higher, more people become aware of it and
buy it in anticipation of the price continuing to climb. Now,
I don't think that that is a sustainable state of affairs,
but that's what it's been driving Bitcoin higher. Now it's
(03:02):
up fivefold since it's lows after FTX collapsed back in
November twenty twenty two. It's pretty wild to see how
far it's come.
Speaker 4 (03:13):
It is wild, Stacey Marie, I want to bring you
back in here. The reason I asked about where you
were because my phone blew ups. I think everybody else
has did with notifications about this. I was talking to
somebody who works in real estate development, who has an MBA,
who understands cash flows and is extremely skeptical about why
bitcoin is worth one hundred thousand dollars. There are still
(03:35):
many of those skeptics out there.
Speaker 1 (03:37):
There are, absolutely there are. I think there are more
people who don't know and don't care than there are skeptics,
and then there are the true believers. That's sort of
the segmentation. What I would say is, in addition to
the very common market dynamic that Zeke just described about
people being attracted to large numbers and especially numbers, it
seems to be on a positive trajectory. There is the
reality that there is something of an institutional price floor
(03:59):
in the market now for bitcoin, and that is the
participation of the enormous asset manages, the black Rocks of
the world who are getting more involved in things like ETFs,
the people who want to put bitcoin into people's four
oh one case and have that kind of institutionalization of
how retail investors are getting access to this asset, and
(04:21):
that is driving some amounts of the enthusiasm. But the
other is the possibility that the US federal government might
itself become a large holder of bitcoin.
Speaker 4 (04:30):
Well, well, let's dig into that a little bit. Why
you're talking about a potential strategic bitcoin reserve or maybe
other methods of the US buying this during the next administration.
What's the justification for that, Like, how do you get
that past tax payers?
Speaker 1 (04:46):
How you get a past task players is a question
for political scientists. But the justification that's being offered by
the administration is that bitcoin the US should be the
world capital of financial innovation, and bitcoin and blockchain technology
are key elements of that. Right, that's the claim, And
Zeke was there in Nashville when President elect Trump was
kind of making these claims to a large gathering of
(05:08):
people who are absolutely primed to believe it. The problem
for I think the average taxpayer, to your point, is
joining the dots between This is a virtual currency, a
digital currency. It's not something that you can hold. It's
not like a vaccine or wheat or petroleum that in
a time of crisis, you have exactly a clear sense
of how this will be used but for folks who
(05:29):
believe in bitcoin and folks who believe in blockchain, they're like,
just getting that assurance from the US government is enough.
Speaker 5 (05:35):
Zeke, I want to bring you back into this conversation
so you can talk more about when you have a
new administration coming in here and then sort of the
lack of regulation when it comes to the crypto space.
How do you view and your sources view kind of
the direction of a bitcoin and other cryptocurrencies with the
Trump administration coming in again.
Speaker 6 (05:50):
Well, it's kind of funny that bitcoiners are so concerned
with regulation. I mean, in most ways, bitcoin was already
legal and wasn't fit facing huge threats from whatever administration
was going to come. I think the bitcoiners are really
excited to have the president talking about bitcoin and talking
about the possibility of this strategic reserve, even if it
(06:14):
is kind of far fetched. Trump Truth today on truth
Social congratulations, Bitcoiners, You're welcome. And what he's saying is that,
I mean, he flew to Nashville, he gave a speech
at the Bitcoin Conference where he laid out how he
was going to do things to help promote bitcoin. He
(06:35):
said that you know, the usf Bitcoin's going to the moon.
The US is going to lead the way. And now
without even doing anything, just with his election, with what
he's been saying, he's gotten kind of the bitcoin mania
going to like new heights. And it should be said
that bitcoin executives came together to give Trump twenty five
(06:58):
million dollars in campaign to nations, which helped smooth the
way for him to flip from calling bitcoin a scam,
which is what he said during his first administration.
Speaker 5 (07:08):
So, Sat Marie, how do you view sort of the
flip flopping there, Because when you think of even saying
Elon Musk with ev makers and things like that, they
definitely benefited in his company benefited more so under a
Biden administration. But we were thinking about the crypto side
of things and maybe the AI side of things. How
is this sort of shift coming in your kind of view?
Speaker 1 (07:26):
I mean, I think one of the big things you know, Zeke,
is entirely correct. Bitcoin itself wasn't targeted by the US
Securities and Exchange Commission in any real way, but pretty
much every other part of the market was.
Speaker 3 (07:36):
Right.
Speaker 1 (07:36):
If you were somebody who was doing transactions in Ether
on the ethereum blockchain, if you were somebody who was
doing crypto lending. If you were somebody who was lending
to somebody who was doing crypto lending, the SEC probably
found a way to sue you, or at least to
tell you to stop to stop doing that thing. And
the widespread expectation, especially among the folks who were celebrating
on social media yesterday, is that it'll be a totally
(07:57):
different ballgame under the new regulatory.
Speaker 4 (08:00):
Okay, so that's exactly where I want to go right now.
And I brought this up in a live Q and
A that we did on the Bloomberg terminal and for
Bloomberg subscribers a little earlier today about bitcoin here at
one hundred thousand, Zeke, I want to send this on
over to you first and then have Stacy Marie way in.
And it's just the whole idea behind regulations. We live
in a world with regulations and with laws, and those
(08:20):
laws and regulations a lot of people would argue are
there for a reason. I'm wondering to what extent you
think the guardrails will be off an industry like cryptocurrency
during the Trump administration, and if at all we could
see negative repercussions for that I mean, we're just two
years out from the collapse of FTX, and a lot
of folks who lost quite a lot of money. Some
(08:42):
of it has been recovered at this point with different projects,
but there were folks who were hurting for quite quite
a bit of time in the wake of that.
Speaker 6 (08:49):
Yeah, I mean, I was just watching an old interview
with Paul Atkins, who's tabbed to be the next SEC commissioner,
and he was saying that he felt some of the
huge frauds that occurred during the last crypto boom like FTX,
where the result of the SEC not creating a set
(09:11):
of cryptospecific regulations that would bring the industry inside them
and instead, since it was difficult to comply, people were
just sort of running wild. I'm not sure how true
that is. And we mentioned Poctua coin today. Yeah, this
is a you know, they've actually been a huge number
(09:33):
of these meme coins where basically somebody with some degree
of notoriety starts promoting some made up coin. People jump
in hoping that the price will pomp in that they'll
get out while the getting is good, and then inevitably
it's like a zero sum game. Are actually worse Most
of the people who do it are going to lose money.
Now where that fits in like a pro crypto regulatory regime,
(09:56):
I'm not sure, but it doesn't seem like the kind
of economic activity we should be encouraging.
Speaker 4 (10:03):
Stacey Marie, I want to give you the last word
here thirty seconds on this thinking about a regulatory environment
where guardrails could be off.
Speaker 1 (10:10):
I think one of the most important things to that
point you're making, Zee, and what you said in the
conversation earlier, is what does this mean for a person
who buys something that they think is real from somebody
they think is reliable it turns out to be a scam,
a fraud, misrepresented, missold. What is the recourse that they have?
And a lot of the industry's focus has been on
the regulation of a kind of the companies, the exchanges,
(10:32):
the technology itself, and there's a large gap, particularly in
the US, for consumer protections as it relates to that,
and I am personally very interested in seeing whether we'll
get any movement there.
Speaker 4 (10:42):
We'll definitely appreciate you both of us joining us. Stacey
Marie Ishmail, managing editor for Crypto at Bloomberg News. Also
Zeke Fox Bloomberg News Financial Investigations reporter, also the author
of Number Go Up, Inside Crypto's wild Rise and Staggering Fall.
Speaker 2 (10:57):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
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Bloomberg Business act or watch us live on YouTube.
Speaker 4 (11:10):
We've got all our eyes, all eyes on what's going
on when it comes to tariffs and the potential threat
of tariffs from the incoming administration or Bloomberg Intelligence team
actually that with a new note this morning about the
risks of tariffs specifically on US automakers. US automakers could
see more than three hundred and thirty five hundred dollars
in added labor cost per vehicle if President elect Donald
(11:30):
Trump's proposed tariffs are imposed on imports from Canada and Mexico,
and the figure may also arise if auto parts are reshored.
This is according to a Bloomberg Intelligence analysis. Ford GM
and Stilantis might bear the biggest brunt given their production
in Mexico, but Tesla could be least affected. We got
with us Linley Brown, partnering Global Trade at Ernst and Young.
(11:51):
She joins us from San Francisco this afternoon. Linley, First
of all, how are you out in California right now?
Speaker 2 (12:00):
Good?
Speaker 7 (12:01):
It's hard to complain, you know, December and California.
Speaker 4 (12:04):
Okay, Good, just wanted to check there. Hey, I do
want to get an idea from you. First of all,
how you think about the relationship between tax and tariffs,
because this is the intersection of your specialty at Ey
and specifically the conversations that you're having right now with
leaders at companies all around the country as they prepare
(12:24):
for the incoming administration.
Speaker 7 (12:26):
Yeah, that's a great question. It's been very busy and
this is certainly the topic to jure. You know, with
the current threat of widespread tariffs, companies are really examining
multiple avenues of mitigation and one of those, one of
those levers, one of those super powerful mitigating factors is
customs valuation. Pertinent to customs valuation is tax, particularly where
(12:51):
you have buyers and sellers in these global transactions who
are related, namely, you know the automakers, the companies that
you named and kind of the intro so this is them, right,
This is that valuation of products that is all tax.
Speaker 5 (13:05):
And Tim was actually just mentioning a really interesting stat
from Bloomberg Intelligence where they were compiling data about how
Detroit automakers face a thirty five hundred dollars a car
hike on Trump tariffs, potentially an added labor cost per vehicle.
What I'm wondering when you have a situation on this,
what are the potential here of this getting passed down
to consumers and shoppers of these types of vehicles.
Speaker 7 (13:28):
That's a great question. You know, the importer of record
will bear that duty cost one hundred percent of the time.
Right then to your point, right, the question is will
that product from a price elasticity perspective, will they be
able to pass that on to consumers or not? Right,
if you are the only seller of a very particular product,
(13:48):
you can charge whatever you want to. If you're not,
and there's you know a lot of competition, those companies
are probably going to absorb those costs. And that's when
comes in these mitigating activities. Right, how do you mitigate
the extent of those tariffs so that it doesn't because
those go right into cost of goods sold. But the
ability to pass those costs onto consumers will totally depend
on the availability of you know, in the competitiveness in
(14:11):
this market.
Speaker 3 (14:12):
What do you mean by that?
Speaker 4 (14:12):
Do you mean geographic competitiveness and companies that might not
necessarily be important?
Speaker 3 (14:17):
Like, how does that work?
Speaker 4 (14:19):
Because you would imagine that every company is sort of
dealing with the same thing, at least if they're manufacturing
products in those areas.
Speaker 7 (14:27):
Yeah, so it's we've certainly seen a shift, right, So
from twenty eighteen, with like the first Trump administration until now,
companies have certainly diversified their supply chain. They moved out
of China, they moved you know, near shoring, right, they
moved to Mexico. Certain other companies you know, moved other places.
From a you know, from a supply and demand perspective.
The impact of the tariffs is on those automakers that
(14:50):
sort of went all in from a Mexico perspective, They're
they're in that bullseye right now. It's totally geographical. It
depends on you know, near shoring, far shoring, whatever you
made to diversify your manufacturing base. That will certainly impact
what options you have available to mitigate the tariffs and
just how impacted you are.
Speaker 5 (15:10):
So walk us through how exactly tax and custom departments
will end up having to work together on this.
Speaker 7 (15:18):
Yeah, it is really it's interesting because you know, with
an EY, I sit in the tax group, right, I'm
an indirect tax. That's kind of an EY construct within
most companies, and certainly it will vary based on sector
and based on product customers could sit in supply chain,
it could sit in legal, it could sit in tax
Automotive for example, historics tell us it sits in tax, technology,
(15:40):
sits in tax where that doesn't happen.
Speaker 8 (15:42):
Right.
Speaker 7 (15:43):
What these companies are going to need to do and
have already started doing, is connecting those thoughts to say,
if I really want to decrease my duties on imported products,
most duties are advalrum. They are a percentage of customs value.
To the extent you decrease your customs value, you pay
less duties. The only way you're really decreasing that value
(16:05):
is to team with tax, particularly in these areas of
related party pricing, So where you are purchasing from a
related party, you have a lot more ability and kind
of you know, you have the ability to kind of
change where is the profit in that value chain That
is a tax discussion with a customs valuation lens. Those
rules are different OECD transfer pricing wto customs valuation rules,
(16:29):
but they have the same goal right arms length pricing.
So to those two groups will undoubtedly work together. They
have been largely since twenty eighteen, and for any of
those linkages that were broken, they will certainly pick that
right back up. And that is the way that both
customs and tax kind of team together to create the
most strategic value to enterprises when they're in this immediate
(16:53):
kind of blizzard of tariff discussions.
Speaker 4 (16:56):
Linley really appreciate you joining us. Linley Brown, partner in
Global Trade at Ernst and Young, joining us this afternoon.
I'm the latest when it comes to how executives, how
boardrooms are thinking about the added labor costs or the
added costs associated with Trump's tariffs. Again, we don't know
what's going to happen on January twentieth. We only know
(17:18):
what the President elect has said thus far.
Speaker 2 (17:20):
Jess, you're listening to the Bloomberg Business Week podcast. Listen
live each weekday starting at two pm Eastern on applecar
Play and Android Auto with the Bloomberg Business Ad. You
can also listen live on Amazon Alexa from our flagship
New York station, just say Alexa playing Bloomberg eleven thirty.
Speaker 4 (17:41):
Well, you can find our next guest products in the
dairy section of your local supermarket. LifeWay known for its
kaffir it's that yogurt like drink. Can also find it
in my cousin's fridge. I found out over the weekend.
I opened the fridge and there was some LifeWay in there.
It's a public traded company about three hundred and sixty
million dollar market cap. We got back with us Julie Smolanski.
She's second generation of her family to run the company
(18:01):
after her father started it and took it public on
the Nasdaq. There's a pretty cool story behind that. Julie
Simolanski is Chairman, president and CEO over at LifeWay, joining
us from Los Angeles.
Speaker 3 (18:12):
Julie, great to have you back with us.
Speaker 8 (18:14):
Actilli in Miami, right, Oh Miami?
Speaker 3 (18:16):
Oh look at that? Okay? Well, trade one warm climate
for another warm climate?
Speaker 5 (18:22):
Were more than here for sure.
Speaker 3 (18:23):
Love it.
Speaker 2 (18:24):
Hey.
Speaker 4 (18:25):
So, since we last spoke in October, LifeWay rejected that
unsolicited takeover offer bides to Known North America twenty seven
dollars per share.
Speaker 3 (18:33):
Because according to you guys, that.
Speaker 4 (18:34):
Quote substantially undervalues the company. Though you also said that
the board is not opposed to the sale of the
company at any price.
Speaker 9 (18:44):
What's the price, Well, that's for others to decide, But
what I can tell you is that, you know, I'm
not surprised that there is this interest and a lot
of eyes on us.
Speaker 8 (18:56):
We have achieved twenty quarters of year ROHD over year growth.
Speaker 9 (19:00):
The last five quarters were historic record breaking quarters. Our
growth profit has gone up almost one hundred percent in
the last five years. Our shareholder return we've delivered a
twelve hundred percent return in the last five years. So
there is a lot going on at LifeWay, and we're
really excited about all the opportunities that are available.
Speaker 8 (19:21):
So you know, we still have we have a long
runway to go, and we have.
Speaker 9 (19:24):
A playbook on how to do it with an incredible
management team and really on trend.
Speaker 8 (19:32):
Products that are really hitting the tipping point.
Speaker 9 (19:34):
Like we haven't even scratched the surface of all the
opportunities around gut health, microbiome friendly live bacteria that is
beneficial to the body that science is now finally just
touching up to what my ancestors have been saying for
two thousand years, which is the keeper and lifewaykeeper is
beneficial to the body, and so so we're really excited
(19:56):
about all of that.
Speaker 4 (19:57):
Julie, would it be do you want to actually sell
the company? Because you grew up with this company, you
took over at the age of twenty seven. It's a
really it's a it's a really interesting story. It's also
a tragic story about why you ended up taking it over.
But I imagine there's a lot of emotions with this.
Speaker 3 (20:17):
I mean, do you do you want to sell it?
Speaker 9 (20:21):
I mean, you know, there's a board, there's an advisor.
Evercore has been brought into be the the financial advisor,
mesment banker. We have a very acclaimed legal team, so
you know, you know what I want is that necessarily
really relevant? But what I can tell you is that
(20:43):
LifeWay and Kaper is in my DNA, and like you said,
my father started a company. It originated from the Caucasus
mountains where my family's from. And uh, you know there's
there there is certainly a long leg see and authenticity
that is priceless, and.
Speaker 8 (21:07):
You know that will never disappear.
Speaker 9 (21:10):
You know, our legacy, our history, what we've brought to
the food industry, to the dairy case. You know, we
really my father brought Keeper to the America, to America
and created the category, commercialized it. So you know, what
I would say is that there's probably no one else
that knows Peper better than I do.
Speaker 8 (21:31):
I was eleven years old when my dad gave me
the very very.
Speaker 9 (21:34):
First batch of Keeper that he made in our basement
outside of Chicago in Sochie, Illinois. And I was eleven
years old when I went to the first trade show
and grew up on a trade show floor. Eleven years
old when I you know, took part in my very
first in store demo teaching Americans.
Speaker 8 (21:53):
What Keefer is all about.
Speaker 9 (21:55):
So you know that That's what I can tell you
is that it's in my DNA. So I'm very passionate
about it and that will never change.
Speaker 5 (22:03):
Well, I want to follow up on that, because why
do you think it's not relevant if you're cheerman and
CEO of the company.
Speaker 9 (22:09):
Well, there's a board and there's you know a lot
of other factors that go into play, so you know
that's really there's corporate governance and we're a publicly traded
company and the board is going to do what's in
the best interests.
Speaker 8 (22:23):
Of all shareholders and all stakeholders. So that's what's really.
Speaker 9 (22:27):
Important to us to make sure that we follow a
great process and bring the best value to shareholders. But
we're committed to bringing shareholders the best value for their investment,
and that's what we'll keep doing.
Speaker 4 (22:40):
What message do you have for shareholders right now who
want to make sure you're not distracted with these takeover
offers and the work that goes into these versus making
sure you're staying focused on delivering products and also working
on that pipeline of products for sure.
Speaker 9 (22:58):
Well, we just announced a series of new innovations that
we've been working on. We just launched ten new exciting
lactose free Keefer flavors and really exciting trend setting flavors
like pink pink passion fruit, pink dragon fruit that you know,
was inspired by the Starbucks success of their pink drink,
(23:22):
pistachio rose vanilla, inspired by the viral hit of Dubai
chocolate bars, so a whole bunch of really hot flavors
tarot Ubay. So those are hitting the streets. It's really
exciting to see them out in the wild. We just
announced another new innovation, a collagen Keeper smoothie.
Speaker 8 (23:40):
There is a huge, huge demand for skin healthy foods,
foods that make us.
Speaker 9 (23:48):
Glow from the inside out and bring beauty to everyone
inside out. We really believe the beauty comes from within
and it starts with the gut. And there's incredible science
and research that shows that the microbiome is just starting
to become you know, all the good things about it
is just starting to become known to lay people, and
so we're you know, focused on sharing that message with
(24:10):
as many people as possible. I'm right now at art
Fuzzle doing the Art of business at a Founder Made summit,
talking with other entrepreneurs about all the great work that
we're doing, incorporating AI into our business, how it expedites
our product launches, et cetera.
Speaker 8 (24:27):
So, you know, I'm definitely very focused on all the
great things that we have.
Speaker 9 (24:33):
We are excited to announce new our children's product, pro Bugs,
which is the first keeper in a pouch, first product
in a pouch. We really disrupted the baby food space
by bringing pouches to the market and disrupting that whole space.
But our Probugs are for the first time we're scaling
into mass market. They've always been available at Whole Foods
(24:54):
nationwide exclusively, but now we're taking the math market based
on some research that show that this is a you know,
a continuing demand for parents and kids, and you know,
we're so we're making sure that all of our consumers
from cradle to grave are being served in one way
or another. Will be announcing new expansion of our Farmer's Cheese,
(25:17):
which has become really a huge success. It's been a
legacy product for us for the last thirty eight years,
but Farmer's Cheese is really taking off because of the
viral nature of cottage cheese because of TikTok and social media.
Cottage cheese really took off last year and our Farmer's
cheese is already basically like a better version of blended
(25:39):
cottage cheese. So we have like a recipe hack there.
So you know, Farmer's Cheese is going into a math
market for the first time, into fourteen hundred stores in January.
Speaker 8 (25:48):
So we have a lot of great.
Speaker 9 (25:49):
Things that are that we've been working on and are
hitting the streets, and you know, that's what we're dedicated
and focused to, and.
Speaker 8 (25:57):
The board will singdle the other stuff in the boardroom.
Speaker 5 (26:01):
And we're talking about sort of the farmers cheese, a
cottage cheese and things like that. Who do you consider
to be your prime competitors.
Speaker 9 (26:10):
Well, it's hard to say, because you know, Lifewaight is
really the ninety five percent category leader and Keeper for example,
So we're the global category leader. We have ninety five
percent market share in the United States. We're the number
one category leader in Mexico, where.
Speaker 8 (26:24):
We launch an export two.
Speaker 9 (26:27):
We're in South Africa, now, we're throughout the Caribbean. We
just announced a new distribution deal to UAE and Dubai
that'll be shipping in the next couple of days or weeks,
and so it's it's hard to say who's our competitor.
We're the number one in Keeper, We're the number one
in Farmer's cheese. I would say, you know, the next
thing would be other kinds of categories that compete with us,
(26:50):
but not specifically anything within our category.
Speaker 8 (26:54):
We're the number one in both of those with no
competition behind us.
Speaker 4 (26:58):
Julie, We're gonna have to leave it, but it's always
great when you join us, whether you're in Miami for
our basel or you're in la Julie Simlanski, chairman, president
and CEO over at Life Why LifeWay joining us this afternoon.
Speaker 8 (27:14):
I'm brother Mac the journal about you.
Speaker 2 (27:20):
Let me drive?
Speaker 3 (27:21):
Oh no, no, no, no, who's going to drive?
Speaker 2 (27:24):
Alright?
Speaker 3 (27:24):
Please, I'll do the gravels. Let's wait, I want to drive.
Speaker 1 (27:30):
It's a good question.
Speaker 3 (27:35):
This is the drive to the clothes dot me.
Speaker 2 (27:38):
I think we'll buy around.
Speaker 5 (27:40):
On Bloomberg Radio with less than twenty minutes to go
before the closing bell, the S and P five hundred
is just marginally lowered down about one tenth of a percent, Tim,
but still on track to snap four consecutive sessions of gains.
Of course Tim was putting out earlier. How the S
and P five hundred has hit fifty six records so
far this year through yesterday, so one of the best
year we've seen so far this century. Now it's time
(28:02):
for driving the clothes.
Speaker 3 (28:03):
With century, I mean the way through the century.
Speaker 5 (28:08):
I mean that's right, we're going into twenty twenty five. Yeah,
if you put into historical context, twenty twenty one saw
I think it was around seventy all time high. So
that was that year where we saw a lot of
the meme craze and dog craze as well, and markets
had peaked out later that year in the Nazek one hundred,
but one of the best years, nineteen ninety five also
had more than seventy records, but still none the least
(28:29):
fifty six is good here. But we want to bring
in Eric Clark, portfolio manager at Rational Dynamic Brands Funds
from San Diego, who is going to break down the
outlook for markets in twenty twenty five. It's great having
you join with us, Eric, and I want you to
discuss as we're kind of the calendar flipping going into
twenty twenty five. I mean, we still have a little
under a month to go here, So what is your
(28:50):
kind of take as far as positioning going into year
in and what does the positioning say as far as
how investors are moving things around and shifting things in
their portfolio is going into twenty twenty five.
Speaker 10 (29:01):
Yeah, I happy holidays almost. You know, it feels a
little like like November of twenty twenty one right now
with the speculation, you know, and that's what happens when
people are nervous and there's a lot of uncertainty with
the election and the results, and you know, the Fed's
(29:21):
been gating off the economy for two and a half years.
So when that all changes, you know, some some you know,
animal spirits get unleashed, and I think that that's where
we are right now. So that always makes me a
little bit nervous short term, but I think, you know,
heading into twenty twenty five, we should have a good,
stable economy with an administration that's clearly more pro business
(29:44):
and less regulation hopefully maybe even working on the government,
and they're operating efficiency, so you know, we see lots
of positive things. And you know, the consumer is still
strong and spending, albeit not broad, but that that isn't
a new phenomenon. The consumer has been very value oriented
and trade down oriented for the last you know, two
(30:07):
or three years because of inflation. So we don't really
see that changing too much. We just worry a little
bit that the speculative part of the market is getting
a little too excited for people, and so you know,
we don't tend to play in that world anyway.
Speaker 5 (30:20):
We like bitcoin.
Speaker 10 (30:21):
Speculative I would say bitcoin, I would say lower quality stocks,
smaller cap stocks without profits, you know, those things have
lagged for the last year, and so they're playing a
little bit of catchup and some of the big cap
high quality names are slowing down a little bit, which
is fine. They were, you know, doing all the heavy
(30:42):
lifting for most of the year.
Speaker 4 (30:43):
So well, okay, so let's talk a little bit about
what you're going to do and how you might make
some changes with the fund hsut X, the Rational Dynamic
Brands Fund year to date up more than thirty one percent.
It puts it in the eighty seventh percentile of its peers,
so certainly some significant outperformance there over the last month,
(31:04):
up close to ten percent. Amazon, Apollo, KKR, LVMH, Netflix,
Chipotle among the top holdings in there. How does that change?
How are you changing the portfolio or are you sticking
to what you have in there right now?
Speaker 10 (31:19):
Well, we were sticking to some of the things, like
you know, Amazon's been the biggest holding for a couple
of years now, and we got a chance to really
make it much bigger in twenty two when the stock
was down sixty percent or so, which we thought was
really silly. So we got a chance to buy a
bunch of names when the market just didn't care about
fundamentals in twenty twenty two, what I would say is
(31:42):
we're introducing a little bit of defensiveness to the portfolio
through things like you know, Clorox. We already have Walmart,
which tends to be a pretty good defensive, even though
they're playing offense pretty good these days too. In retail,
while we've added you know, next Era Energy, which is
a utility renewables. And then we have some contrarian ideas
(32:03):
for twenty twenty five with you know, we've added Disney,
We've added Nike back. We haven't had that one in
a while. We've added Starbucks back, we haven't had that.
Speaker 3 (32:11):
One in a while.
Speaker 10 (32:13):
But we still love you know, the private equity guys.
Even though you know, maybe those stocks might be a
little bit ahead of fundamentals long term, they're still going
to all throw their assets, you know, by double over
the next five years. So the stock prices certainly will
catch up to the fundamentals soon enough. So generally speaking,
keeping with the same themes of consumer spending and the
(32:33):
big trends that are happening, but always looking for some
catch up opportunities that haven't moved, that aren't so expensive
that people don't really, you know, don't really love or
that maybe you know, real turnaround stories. And we're seeing
more and more in the retail sector for.
Speaker 5 (32:50):
Sure, So you like Apple, Netflix, Amazon, What about when
you come to chip stocks like Nvidia and maybe some
of the other smaller ones.
Speaker 10 (32:58):
You know, we we obviously sold in Nvidia way too early,
and we had some good gains on it. But to me,
if I were going to play in the semiconductor world,
Taiwan Semi still looks more interesting to us, much more
reasonably valued. Has to be a part of every conversation
within semiconductors and manufacturing. But you know, as a consumer
(33:21):
dedicated investor with the technology that we own, tends to
be more consumer tech rather than you know, semiconductors in general,
so that that tends not to be a place that
we play. We love salesforce. Clearly, they are going to
enable lots of consumer companies to you know, implement AI initiatives,
streamline operations, get some operational efficiencies. That's going to be
(33:44):
a major theme across corporate America for the next three years.
And you know, my view is that once you implement
those things, your stock might not look as expensive as
it does. If you can reset margins hire and profits
hire because you're just doing things much better and delighting
customers and allowed to raise your prices like metadid, you know,
(34:05):
with their ads. So AI is definitely a very important thing.
It's not just semiconductors. It's going to ripple through the
entire you know, all of corporate America.
Speaker 4 (34:16):
In the last thirty seconds that we have with you,
what are you staying away from apart from me, apart
from like, you know, the speculative stuff.
Speaker 10 (34:24):
Sorry, sure, I mean I think it's I think it's
if you are high valuations, super high expectations, and you know,
going into the year where your business is probably about
as good as it gets, then those are areas that
I would like to stay away from because I'm much
(34:44):
more focused on where are estimate revisions, where have they bottomed,
and where are the beats? Probably more likely rather than
in the most heated part of the market that everybody wants.
I tend to be a I use the phrase looking
for diamonds in a dumpster, and that's what we're doing
in retail right now.
Speaker 4 (35:02):
Hey, Eric, Always good to check in with you from
Sunny San Diego. Eric Clark Portfolio manager over at the
Rational Dynamic Brands Fund, joining us this afternoon.
Speaker 2 (35:11):
This is the Bloomberg Business Week Podcast of a Little
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Listen live weekday afternoons from two to five pm Eastern
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Speaker 2 (00:08):
This is Bloomberg business Week 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 Stenebek from Bloomberg Radio.
Speaker 3 (00:27):
The Price of Bitcoin.
Speaker 4 (00:28):
We're always watching that President elect Donald Trump's pick up
a crypto proponent to be the next head of the
SEC lifted bitcoin to one hundred thousand dollars for the
first time as traders warmed to the prospect of relaxed regulations.
We got with us Stacy Marie Ishmel, Managing editor for
Crypto at Bloomberg News. Stacey Marie joins us here in
the Bloomberg Interactive Brokers studio. Zeke Fox is a Bloomberg
(00:48):
News financial investigation reporter. He's also the author of Number
Go Up Inside at Crypto's Wild Rise and Staggering Fall.
Zeke joins us from New York as well. Stacey Marie.
There this moment when it comes to news events that
are kind of indelible in people's minds. You know, you
talk to people when they heard about the assassination of
JFK or like, you know, more recently in our lifetimes, covid.
(01:11):
You know, where were you when you heard Tom Hanks
had COVID and the NBA was shutting down the season Austin,
Texas is.
Speaker 3 (01:17):
Exactly you know? Is bitcoin? You were? Were you there
for south by Southwest?
Speaker 5 (01:20):
No?
Speaker 3 (01:20):
Is there for work? Okay? You're there for work? Okay?
Are you?
Speaker 4 (01:25):
Is this one of those moments where like it's that
significant when it comes to the history of cryptocurrency?
Speaker 3 (01:30):
Where were you when bitcoin hit one hundred k?
Speaker 1 (01:32):
I will say that was very much the vibe of
folks in and around bitcoin and crypto yesterday, particularly on
social media, whether it was LinkedIn or x or blue Sky,
you know, the you know, folks who are CEOs, folks
who are developers, folks who are just retail traders were like,
it's here, We've made it. Our time is now.
Speaker 5 (01:53):
Zeke. I wanted to bring you into the conversation because
something I've been asking a lot of people about is
sort of the frothiness, because once you get two one
hundred thousand, a lot of people want to start talking
about technicals about resistance. But I mean, where do you
find resistance from there. And what I'm wondering too, is
when you have people like the Hawk to a Girl
Haley Welch that are kind of jumping in and trying
to launch these type of mean coins. Are we actually
at the phase here where things are looking a little
(02:15):
too froppy for the crypto space.
Speaker 6 (02:18):
Well, what the bitcoin proponents would say is that all
the attention that bitcoin is getting around the price hitting
this milestone, like the coverage US talking about it right now,
is part of the momentum that's going to drive it
even higher. And this crypto executive, Dan held I once
heard him explain it in a pretty interesting way. He
(02:40):
called it number go up technology, and he said it's
very powerful piece of technology. It's the price. As the
price goes higher, more people become aware of it and
buy it in anticipation of the price continuing to climb. Now,
I don't think that that is a sustainable state of affairs,
but that's what it's been driving Bitcoin higher. Now it's
(03:02):
up fivefold since it's lows after FTX collapsed back in
November twenty twenty two. It's pretty wild to see how
far it's come.
Speaker 4 (03:13):
It is wild, Stacey Marie, I want to bring you
back in here. The reason I asked about where you
were because my phone blew ups. I think everybody else
has did with notifications about this. I was talking to
somebody who works in real estate development, who has an MBA,
who understands cash flows and is extremely skeptical about why
bitcoin is worth one hundred thousand dollars. There are still
(03:35):
many of those skeptics out there.
Speaker 1 (03:37):
There are, absolutely there are. I think there are more
people who don't know and don't care than there are skeptics,
and then there are the true believers. That's sort of
the segmentation. What I would say is, in addition to
the very common market dynamic that Zeke just described about
people being attracted to large numbers and especially numbers, it
seems to be on a positive trajectory. There is the
reality that there is something of an institutional price floor
(03:59):
in the market now for bitcoin, and that is the
participation of the enormous asset manages, the black Rocks of
the world who are getting more involved in things like ETFs,
the people who want to put bitcoin into people's four
oh one case and have that kind of institutionalization of
how retail investors are getting access to this asset, and
(04:21):
that is driving some amounts of the enthusiasm. But the
other is the possibility that the US federal government might
itself become a large holder of bitcoin.
Speaker 4 (04:30):
Well, well, let's dig into that a little bit. Why
you're talking about a potential strategic bitcoin reserve or maybe
other methods of the US buying this during the next administration.
What's the justification for that, Like, how do you get
that past tax payers?
Speaker 1 (04:46):
How you get a past task players is a question
for political scientists. But the justification that's being offered by
the administration is that bitcoin the US should be the
world capital of financial innovation, and bitcoin and blockchain technology
are key elements of that. Right, that's the claim, And
Zeke was there in Nashville when President elect Trump was
kind of making these claims to a large gathering of
(05:08):
people who are absolutely primed to believe it. The problem
for I think the average taxpayer, to your point, is
joining the dots between This is a virtual currency, a
digital currency. It's not something that you can hold. It's
not like a vaccine or wheat or petroleum that in
a time of crisis, you have exactly a clear sense
of how this will be used but for folks who
(05:29):
believe in bitcoin and folks who believe in blockchain, they're like,
just getting that assurance from the US government is enough.
Speaker 5 (05:35):
Zeke, I want to bring you back into this conversation
so you can talk more about when you have a
new administration coming in here and then sort of the
lack of regulation when it comes to the crypto space.
How do you view and your sources view kind of
the direction of a bitcoin and other cryptocurrencies with the
Trump administration coming in again.
Speaker 6 (05:50):
Well, it's kind of funny that bitcoiners are so concerned
with regulation. I mean, in most ways, bitcoin was already
legal and wasn't fit facing huge threats from whatever administration
was going to come. I think the bitcoiners are really
excited to have the president talking about bitcoin and talking
about the possibility of this strategic reserve, even if it
(06:14):
is kind of far fetched. Trump Truth today on truth
Social congratulations, Bitcoiners, You're welcome. And what he's saying is that,
I mean, he flew to Nashville, he gave a speech
at the Bitcoin Conference where he laid out how he
was going to do things to help promote bitcoin. He
(06:35):
said that you know, the usf Bitcoin's going to the moon.
The US is going to lead the way. And now
without even doing anything, just with his election, with what
he's been saying, he's gotten kind of the bitcoin mania
going to like new heights. And it should be said
that bitcoin executives came together to give Trump twenty five
(06:58):
million dollars in campaign to nations, which helped smooth the
way for him to flip from calling bitcoin a scam,
which is what he said during his first administration.
Speaker 5 (07:08):
So, Sat Marie, how do you view sort of the
flip flopping there, Because when you think of even saying
Elon Musk with ev makers and things like that, they
definitely benefited in his company benefited more so under a
Biden administration. But we were thinking about the crypto side
of things and maybe the AI side of things. How
is this sort of shift coming in your kind of view?
Speaker 1 (07:26):
I mean, I think one of the big things you know, Zeke,
is entirely correct. Bitcoin itself wasn't targeted by the US
Securities and Exchange Commission in any real way, but pretty
much every other part of the market was.
Speaker 3 (07:36):
Right.
Speaker 1 (07:36):
If you were somebody who was doing transactions in Ether
on the ethereum blockchain, if you were somebody who was
doing crypto lending. If you were somebody who was lending
to somebody who was doing crypto lending, the SEC probably
found a way to sue you, or at least to
tell you to stop to stop doing that thing. And
the widespread expectation, especially among the folks who were celebrating
on social media yesterday, is that it'll be a totally
(07:57):
different ballgame under the new regulatory.
Speaker 4 (08:00):
Okay, so that's exactly where I want to go right now.
And I brought this up in a live Q and
A that we did on the Bloomberg terminal and for
Bloomberg subscribers a little earlier today about bitcoin here at
one hundred thousand, Zeke, I want to send this on
over to you first and then have Stacy Marie way in.
And it's just the whole idea behind regulations. We live
in a world with regulations and with laws, and those
(08:20):
laws and regulations a lot of people would argue are
there for a reason. I'm wondering to what extent you
think the guardrails will be off an industry like cryptocurrency
during the Trump administration, and if at all we could
see negative repercussions for that I mean, we're just two
years out from the collapse of FTX, and a lot
of folks who lost quite a lot of money. Some
(08:42):
of it has been recovered at this point with different projects,
but there were folks who were hurting for quite quite
a bit of time in the wake of that.
Speaker 6 (08:49):
Yeah, I mean, I was just watching an old interview
with Paul Atkins, who's tabbed to be the next SEC commissioner,
and he was saying that he felt some of the
huge frauds that occurred during the last crypto boom like FTX,
where the result of the SEC not creating a set
(09:11):
of cryptospecific regulations that would bring the industry inside them
and instead, since it was difficult to comply, people were
just sort of running wild. I'm not sure how true
that is. And we mentioned Poctua coin today. Yeah, this
is a you know, they've actually been a huge number
(09:33):
of these meme coins where basically somebody with some degree
of notoriety starts promoting some made up coin. People jump
in hoping that the price will pomp in that they'll
get out while the getting is good, and then inevitably
it's like a zero sum game. Are actually worse Most
of the people who do it are going to lose money.
Now where that fits in like a pro crypto regulatory regime,
(09:56):
I'm not sure, but it doesn't seem like the kind
of economic activity we should be encouraging.
Speaker 4 (10:03):
Stacey Marie, I want to give you the last word
here thirty seconds on this thinking about a regulatory environment
where guardrails could be off.
Speaker 1 (10:10):
I think one of the most important things to that
point you're making, Zee, and what you said in the
conversation earlier, is what does this mean for a person
who buys something that they think is real from somebody
they think is reliable it turns out to be a scam,
a fraud, misrepresented, missold. What is the recourse that they have?
And a lot of the industry's focus has been on
the regulation of a kind of the companies, the exchanges,
(10:32):
the technology itself, and there's a large gap, particularly in
the US, for consumer protections as it relates to that,
and I am personally very interested in seeing whether we'll
get any movement there.
Speaker 4 (10:42):
We'll definitely appreciate you both of us joining us. Stacey
Marie Ishmail, managing editor for Crypto at Bloomberg News. Also
Zeke Fox Bloomberg News Financial Investigations reporter, also the author
of Number Go Up, Inside Crypto's wild Rise and Staggering Fall.
Speaker 2 (10:57):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Apple car Play and then brout Auto with a
Bloomberg Business act or watch us live on YouTube.
Speaker 4 (11:10):
We've got all our eyes, all eyes on what's going
on when it comes to tariffs and the potential threat
of tariffs from the incoming administration or Bloomberg Intelligence team
actually that with a new note this morning about the
risks of tariffs specifically on US automakers. US automakers could
see more than three hundred and thirty five hundred dollars
in added labor cost per vehicle if President elect Donald
(11:30):
Trump's proposed tariffs are imposed on imports from Canada and Mexico,
and the figure may also arise if auto parts are reshored.
This is according to a Bloomberg Intelligence analysis. Ford GM
and Stilantis might bear the biggest brunt given their production
in Mexico, but Tesla could be least affected. We got
with us Linley Brown, partnering Global Trade at Ernst and Young.
(11:51):
She joins us from San Francisco this afternoon. Linley, First
of all, how are you out in California right now?
Speaker 2 (12:00):
Good?
Speaker 7 (12:01):
It's hard to complain, you know, December and California.
Speaker 4 (12:04):
Okay, Good, just wanted to check there. Hey, I do
want to get an idea from you. First of all,
how you think about the relationship between tax and tariffs,
because this is the intersection of your specialty at Ey
and specifically the conversations that you're having right now with
leaders at companies all around the country as they prepare
(12:24):
for the incoming administration.
Speaker 7 (12:26):
Yeah, that's a great question. It's been very busy and
this is certainly the topic to jure. You know, with
the current threat of widespread tariffs, companies are really examining
multiple avenues of mitigation and one of those, one of
those levers, one of those super powerful mitigating factors is
customs valuation. Pertinent to customs valuation is tax, particularly where
(12:51):
you have buyers and sellers in these global transactions who
are related, namely, you know the automakers, the companies that
you named and kind of the intro so this is them, right,
This is that valuation of products that is all tax.
Speaker 5 (13:05):
And Tim was actually just mentioning a really interesting stat
from Bloomberg Intelligence where they were compiling data about how
Detroit automakers face a thirty five hundred dollars a car
hike on Trump tariffs, potentially an added labor cost per vehicle.
What I'm wondering when you have a situation on this,
what are the potential here of this getting passed down
to consumers and shoppers of these types of vehicles.
Speaker 7 (13:28):
That's a great question. You know, the importer of record
will bear that duty cost one hundred percent of the time.
Right then to your point, right, the question is will
that product from a price elasticity perspective, will they be
able to pass that on to consumers or not? Right,
if you are the only seller of a very particular product,
(13:48):
you can charge whatever you want to. If you're not,
and there's you know a lot of competition, those companies
are probably going to absorb those costs. And that's when
comes in these mitigating activities. Right, how do you mitigate
the extent of those tariffs so that it doesn't because
those go right into cost of goods sold. But the
ability to pass those costs onto consumers will totally depend
on the availability of you know, in the competitiveness in
(14:11):
this market.
Speaker 3 (14:12):
What do you mean by that?
Speaker 4 (14:12):
Do you mean geographic competitiveness and companies that might not
necessarily be important?
Speaker 3 (14:17):
Like, how does that work?
Speaker 4 (14:19):
Because you would imagine that every company is sort of
dealing with the same thing, at least if they're manufacturing
products in those areas.
Speaker 7 (14:27):
Yeah, so it's we've certainly seen a shift, right, So
from twenty eighteen, with like the first Trump administration until now,
companies have certainly diversified their supply chain. They moved out
of China, they moved you know, near shoring, right, they
moved to Mexico. Certain other companies you know, moved other places.
From a you know, from a supply and demand perspective.
The impact of the tariffs is on those automakers that
(14:50):
sort of went all in from a Mexico perspective, They're
they're in that bullseye right now. It's totally geographical. It
depends on you know, near shoring, far shoring, whatever you
made to diversify your manufacturing base. That will certainly impact
what options you have available to mitigate the tariffs and
just how impacted you are.
Speaker 5 (15:10):
So walk us through how exactly tax and custom departments
will end up having to work together on this.
Speaker 7 (15:18):
Yeah, it is really it's interesting because you know, with
an EY, I sit in the tax group, right, I'm
an indirect tax. That's kind of an EY construct within
most companies, and certainly it will vary based on sector
and based on product customers could sit in supply chain,
it could sit in legal, it could sit in tax
Automotive for example, historics tell us it sits in tax, technology,
(15:40):
sits in tax where that doesn't happen.
Speaker 8 (15:42):
Right.
Speaker 7 (15:43):
What these companies are going to need to do and
have already started doing, is connecting those thoughts to say,
if I really want to decrease my duties on imported products,
most duties are advalrum. They are a percentage of customs value.
To the extent you decrease your customs value, you pay
less duties. The only way you're really decreasing that value
(16:05):
is to team with tax, particularly in these areas of
related party pricing, So where you are purchasing from a
related party, you have a lot more ability and kind
of you know, you have the ability to kind of
change where is the profit in that value chain That
is a tax discussion with a customs valuation lens. Those
rules are different OECD transfer pricing wto customs valuation rules,
(16:29):
but they have the same goal right arms length pricing.
So to those two groups will undoubtedly work together. They
have been largely since twenty eighteen, and for any of
those linkages that were broken, they will certainly pick that
right back up. And that is the way that both
customs and tax kind of team together to create the
most strategic value to enterprises when they're in this immediate
(16:53):
kind of blizzard of tariff discussions.
Speaker 4 (16:56):
Linley really appreciate you joining us. Linley Brown, partner in
Global Trade at Ernst and Young, joining us this afternoon.
I'm the latest when it comes to how executives, how
boardrooms are thinking about the added labor costs or the
added costs associated with Trump's tariffs. Again, we don't know
what's going to happen on January twentieth. We only know
(17:18):
what the President elect has said thus far.
Speaker 2 (17:20):
Jess, you're listening to the Bloomberg Business Week podcast. Listen
live each weekday starting at two pm Eastern on applecar
Play and Android Auto with the Bloomberg Business Ad. You
can also listen live on Amazon Alexa from our flagship
New York station, just say Alexa playing Bloomberg eleven thirty.
Speaker 4 (17:41):
Well, you can find our next guest products in the
dairy section of your local supermarket. LifeWay known for its
kaffir it's that yogurt like drink. Can also find it
in my cousin's fridge. I found out over the weekend.
I opened the fridge and there was some LifeWay in there.
It's a public traded company about three hundred and sixty
million dollar market cap. We got back with us Julie Smolanski.
She's second generation of her family to run the company
(18:01):
after her father started it and took it public on
the Nasdaq. There's a pretty cool story behind that. Julie
Simolanski is Chairman, president and CEO over at LifeWay, joining
us from Los Angeles.
Speaker 3 (18:12):
Julie, great to have you back with us.
Speaker 8 (18:14):
Actilli in Miami, right, Oh Miami?
Speaker 3 (18:16):
Oh look at that? Okay? Well, trade one warm climate
for another warm climate?
Speaker 5 (18:22):
Were more than here for sure.
Speaker 3 (18:23):
Love it.
Speaker 2 (18:24):
Hey.
Speaker 4 (18:25):
So, since we last spoke in October, LifeWay rejected that
unsolicited takeover offer bides to Known North America twenty seven
dollars per share.
Speaker 3 (18:33):
Because according to you guys, that.
Speaker 4 (18:34):
Quote substantially undervalues the company. Though you also said that
the board is not opposed to the sale of the
company at any price.
Speaker 9 (18:44):
What's the price, Well, that's for others to decide, But
what I can tell you is that, you know, I'm
not surprised that there is this interest and a lot
of eyes on us.
Speaker 8 (18:56):
We have achieved twenty quarters of year ROHD over year growth.
Speaker 9 (19:00):
The last five quarters were historic record breaking quarters. Our
growth profit has gone up almost one hundred percent in
the last five years. Our shareholder return we've delivered a
twelve hundred percent return in the last five years. So
there is a lot going on at LifeWay, and we're
really excited about all the opportunities that are available.
Speaker 8 (19:21):
So you know, we still have we have a long
runway to go, and we have.
Speaker 9 (19:24):
A playbook on how to do it with an incredible
management team and really on trend.
Speaker 8 (19:32):
Products that are really hitting the tipping point.
Speaker 9 (19:34):
Like we haven't even scratched the surface of all the
opportunities around gut health, microbiome friendly live bacteria that is
beneficial to the body that science is now finally just
touching up to what my ancestors have been saying for
two thousand years, which is the keeper and lifewaykeeper is
beneficial to the body, and so so we're really excited
(19:56):
about all of that.
Speaker 4 (19:57):
Julie, would it be do you want to actually sell
the company? Because you grew up with this company, you
took over at the age of twenty seven. It's a
really it's a it's a really interesting story. It's also
a tragic story about why you ended up taking it over.
But I imagine there's a lot of emotions with this.
Speaker 3 (20:17):
I mean, do you do you want to sell it?
Speaker 9 (20:21):
I mean, you know, there's a board, there's an advisor.
Evercore has been brought into be the the financial advisor,
mesment banker. We have a very acclaimed legal team, so
you know, you know what I want is that necessarily
really relevant? But what I can tell you is that
(20:43):
LifeWay and Kaper is in my DNA, and like you said,
my father started a company. It originated from the Caucasus
mountains where my family's from. And uh, you know there's
there there is certainly a long leg see and authenticity
that is priceless, and.
Speaker 8 (21:07):
You know that will never disappear.
Speaker 9 (21:10):
You know, our legacy, our history, what we've brought to
the food industry, to the dairy case. You know, we
really my father brought Keeper to the America, to America
and created the category, commercialized it. So you know, what
I would say is that there's probably no one else
that knows Peper better than I do.
Speaker 8 (21:31):
I was eleven years old when my dad gave me
the very very.
Speaker 9 (21:34):
First batch of Keeper that he made in our basement
outside of Chicago in Sochie, Illinois. And I was eleven
years old when I went to the first trade show
and grew up on a trade show floor. Eleven years
old when I you know, took part in my very
first in store demo teaching Americans.
Speaker 8 (21:53):
What Keefer is all about.
Speaker 9 (21:55):
So you know that That's what I can tell you
is that it's in my DNA. So I'm very passionate
about it and that will never change.
Speaker 5 (22:03):
Well, I want to follow up on that, because why
do you think it's not relevant if you're cheerman and
CEO of the company.
Speaker 9 (22:09):
Well, there's a board and there's you know a lot
of other factors that go into play, so you know
that's really there's corporate governance and we're a publicly traded
company and the board is going to do what's in
the best interests.
Speaker 8 (22:23):
Of all shareholders and all stakeholders. So that's what's really.
Speaker 9 (22:27):
Important to us to make sure that we follow a
great process and bring the best value to shareholders. But
we're committed to bringing shareholders the best value for their investment,
and that's what we'll keep doing.
Speaker 4 (22:40):
What message do you have for shareholders right now who
want to make sure you're not distracted with these takeover
offers and the work that goes into these versus making
sure you're staying focused on delivering products and also working
on that pipeline of products for sure.
Speaker 9 (22:58):
Well, we just announced a series of new innovations that
we've been working on. We just launched ten new exciting
lactose free Keefer flavors and really exciting trend setting flavors
like pink pink passion fruit, pink dragon fruit that you know,
was inspired by the Starbucks success of their pink drink,
(23:22):
pistachio rose vanilla, inspired by the viral hit of Dubai
chocolate bars, so a whole bunch of really hot flavors
tarot Ubay. So those are hitting the streets. It's really
exciting to see them out in the wild. We just
announced another new innovation, a collagen Keeper smoothie.
Speaker 8 (23:40):
There is a huge, huge demand for skin healthy foods,
foods that make us.
Speaker 9 (23:48):
Glow from the inside out and bring beauty to everyone
inside out. We really believe the beauty comes from within
and it starts with the gut. And there's incredible science
and research that shows that the microbiome is just starting
to become you know, all the good things about it
is just starting to become known to lay people, and
so we're you know, focused on sharing that message with
(24:10):
as many people as possible. I'm right now at art
Fuzzle doing the Art of business at a Founder Made summit,
talking with other entrepreneurs about all the great work that
we're doing, incorporating AI into our business, how it expedites
our product launches, et cetera.
Speaker 8 (24:27):
So, you know, I'm definitely very focused on all the
great things that we have.
Speaker 9 (24:33):
We are excited to announce new our children's product, pro Bugs,
which is the first keeper in a pouch, first product
in a pouch. We really disrupted the baby food space
by bringing pouches to the market and disrupting that whole space.
But our Probugs are for the first time we're scaling
into mass market. They've always been available at Whole Foods
(24:54):
nationwide exclusively, but now we're taking the math market based
on some research that show that this is a you know,
a continuing demand for parents and kids, and you know,
we're so we're making sure that all of our consumers
from cradle to grave are being served in one way
or another. Will be announcing new expansion of our Farmer's Cheese,
(25:17):
which has become really a huge success. It's been a
legacy product for us for the last thirty eight years,
but Farmer's Cheese is really taking off because of the
viral nature of cottage cheese because of TikTok and social media.
Cottage cheese really took off last year and our Farmer's
cheese is already basically like a better version of blended
(25:39):
cottage cheese. So we have like a recipe hack there.
So you know, Farmer's Cheese is going into a math
market for the first time, into fourteen hundred stores in January.
Speaker 8 (25:48):
So we have a lot of great.
Speaker 9 (25:49):
Things that are that we've been working on and are
hitting the streets, and you know, that's what we're dedicated
and focused to, and.
Speaker 8 (25:57):
The board will singdle the other stuff in the boardroom.
Speaker 5 (26:01):
And we're talking about sort of the farmers cheese, a
cottage cheese and things like that. Who do you consider
to be your prime competitors.
Speaker 9 (26:10):
Well, it's hard to say, because you know, Lifewaight is
really the ninety five percent category leader and Keeper for example,
So we're the global category leader. We have ninety five
percent market share in the United States. We're the number
one category leader in Mexico, where.
Speaker 8 (26:24):
We launch an export two.
Speaker 9 (26:27):
We're in South Africa, now, we're throughout the Caribbean. We
just announced a new distribution deal to UAE and Dubai
that'll be shipping in the next couple of days or weeks,
and so it's it's hard to say who's our competitor.
We're the number one in Keeper, We're the number one
in Farmer's cheese. I would say, you know, the next
thing would be other kinds of categories that compete with us,
(26:50):
but not specifically anything within our category.
Speaker 8 (26:54):
We're the number one in both of those with no
competition behind us.
Speaker 4 (26:58):
Julie, We're gonna have to leave it, but it's always
great when you join us, whether you're in Miami for
our basel or you're in la Julie Simlanski, chairman, president
and CEO over at Life Why LifeWay joining us this afternoon.
Speaker 8 (27:14):
I'm brother Mac the journal about you.
Speaker 2 (27:20):
Let me drive?
Speaker 3 (27:21):
Oh no, no, no, no, who's going to drive?
Speaker 2 (27:24):
Alright?
Speaker 3 (27:24):
Please, I'll do the gravels. Let's wait, I want to drive.
Speaker 1 (27:30):
It's a good question.
Speaker 3 (27:35):
This is the drive to the clothes dot me.
Speaker 2 (27:38):
I think we'll buy around.
Speaker 5 (27:40):
On Bloomberg Radio with less than twenty minutes to go
before the closing bell, the S and P five hundred
is just marginally lowered down about one tenth of a percent, Tim,
but still on track to snap four consecutive sessions of gains.
Of course Tim was putting out earlier. How the S
and P five hundred has hit fifty six records so
far this year through yesterday, so one of the best
year we've seen so far this century. Now it's time
(28:02):
for driving the clothes.
Speaker 3 (28:03):
With century, I mean the way through the century.
Speaker 5 (28:08):
I mean that's right, we're going into twenty twenty five. Yeah,
if you put into historical context, twenty twenty one saw
I think it was around seventy all time high. So
that was that year where we saw a lot of
the meme craze and dog craze as well, and markets
had peaked out later that year in the Nazek one hundred,
but one of the best years, nineteen ninety five also
had more than seventy records, but still none the least
(28:29):
fifty six is good here. But we want to bring
in Eric Clark, portfolio manager at Rational Dynamic Brands Funds
from San Diego, who is going to break down the
outlook for markets in twenty twenty five. It's great having
you join with us, Eric, and I want you to
discuss as we're kind of the calendar flipping going into
twenty twenty five. I mean, we still have a little
under a month to go here, So what is your
(28:50):
kind of take as far as positioning going into year
in and what does the positioning say as far as
how investors are moving things around and shifting things in
their portfolio is going into twenty twenty five.
Speaker 10 (29:01):
Yeah, I happy holidays almost. You know, it feels a
little like like November of twenty twenty one right now
with the speculation, you know, and that's what happens when
people are nervous and there's a lot of uncertainty with
the election and the results, and you know, the Fed's
(29:21):
been gating off the economy for two and a half years.
So when that all changes, you know, some some you know,
animal spirits get unleashed, and I think that that's where
we are right now. So that always makes me a
little bit nervous short term, but I think, you know,
heading into twenty twenty five, we should have a good,
stable economy with an administration that's clearly more pro business
(29:44):
and less regulation hopefully maybe even working on the government,
and they're operating efficiency, so you know, we see lots
of positive things. And you know, the consumer is still
strong and spending, albeit not broad, but that that isn't
a new phenomenon. The consumer has been very value oriented
and trade down oriented for the last you know, two
(30:07):
or three years because of inflation. So we don't really
see that changing too much. We just worry a little
bit that the speculative part of the market is getting
a little too excited for people, and so you know,
we don't tend to play in that world anyway.
Speaker 5 (30:20):
We like bitcoin.
Speaker 10 (30:21):
Speculative I would say bitcoin, I would say lower quality stocks,
smaller cap stocks without profits, you know, those things have
lagged for the last year, and so they're playing a
little bit of catchup and some of the big cap
high quality names are slowing down a little bit, which
is fine. They were, you know, doing all the heavy
(30:42):
lifting for most of the year.
Speaker 4 (30:43):
So well, okay, so let's talk a little bit about
what you're going to do and how you might make
some changes with the fund hsut X, the Rational Dynamic
Brands Fund year to date up more than thirty one percent.
It puts it in the eighty seventh percentile of its peers,
so certainly some significant outperformance there over the last month,
(31:04):
up close to ten percent. Amazon, Apollo, KKR, LVMH, Netflix,
Chipotle among the top holdings in there. How does that change?
How are you changing the portfolio or are you sticking
to what you have in there right now?
Speaker 10 (31:19):
Well, we were sticking to some of the things, like
you know, Amazon's been the biggest holding for a couple
of years now, and we got a chance to really
make it much bigger in twenty two when the stock
was down sixty percent or so, which we thought was
really silly. So we got a chance to buy a
bunch of names when the market just didn't care about
fundamentals in twenty twenty two, what I would say is
(31:42):
we're introducing a little bit of defensiveness to the portfolio
through things like you know, Clorox. We already have Walmart,
which tends to be a pretty good defensive, even though
they're playing offense pretty good these days too. In retail,
while we've added you know, next Era Energy, which is
a utility renewables. And then we have some contrarian ideas
(32:03):
for twenty twenty five with you know, we've added Disney,
We've added Nike back. We haven't had that one in
a while. We've added Starbucks back, we haven't had that.
Speaker 3 (32:11):
One in a while.
Speaker 10 (32:13):
But we still love you know, the private equity guys.
Even though you know, maybe those stocks might be a
little bit ahead of fundamentals long term, they're still going
to all throw their assets, you know, by double over
the next five years. So the stock prices certainly will
catch up to the fundamentals soon enough. So generally speaking,
keeping with the same themes of consumer spending and the
(32:33):
big trends that are happening, but always looking for some
catch up opportunities that haven't moved, that aren't so expensive
that people don't really, you know, don't really love or
that maybe you know, real turnaround stories. And we're seeing
more and more in the retail sector for.
Speaker 5 (32:50):
Sure, So you like Apple, Netflix, Amazon, What about when
you come to chip stocks like Nvidia and maybe some
of the other smaller ones.
Speaker 10 (32:58):
You know, we we obviously sold in Nvidia way too early,
and we had some good gains on it. But to me,
if I were going to play in the semiconductor world,
Taiwan Semi still looks more interesting to us, much more
reasonably valued. Has to be a part of every conversation
within semiconductors and manufacturing. But you know, as a consumer
(33:21):
dedicated investor with the technology that we own, tends to
be more consumer tech rather than you know, semiconductors in general,
so that that tends not to be a place that
we play. We love salesforce. Clearly, they are going to
enable lots of consumer companies to you know, implement AI initiatives,
streamline operations, get some operational efficiencies. That's going to be
(33:44):
a major theme across corporate America for the next three years.
And you know, my view is that once you implement
those things, your stock might not look as expensive as
it does. If you can reset margins hire and profits
hire because you're just doing things much better and delighting
customers and allowed to raise your prices like metadid, you know,
(34:05):
with their ads. So AI is definitely a very important thing.
It's not just semiconductors. It's going to ripple through the
entire you know, all of corporate America.
Speaker 4 (34:16):
In the last thirty seconds that we have with you,
what are you staying away from apart from me, apart
from like, you know, the speculative stuff.
Speaker 10 (34:24):
Sorry, sure, I mean I think it's I think it's
if you are high valuations, super high expectations, and you know,
going into the year where your business is probably about
as good as it gets, then those are areas that
I would like to stay away from because I'm much
(34:44):
more focused on where are estimate revisions, where have they bottomed,
and where are the beats? Probably more likely rather than
in the most heated part of the market that everybody wants.
I tend to be a I use the phrase looking
for diamonds in a dumpster, and that's what we're doing
in retail right now.
Speaker 4 (35:02):
Hey, Eric, Always good to check in with you from
Sunny San Diego. Eric Clark Portfolio manager over at the
Rational Dynamic Brands Fund, joining us this afternoon.
Speaker 2 (35:11):
This is the Bloomberg Business Week Podcast of a Little
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Carol Massar
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