December 26, 2024 • 33 mins
On a special holiday week Bloomberg TV and Radio simulcast, hosts Sonali Basak and Vonnie Quinn break down a sleepy day of trading on Wall Street after the closing bell with Bloomberg's Natalia Kniazhevich, Bloomberg's Alexandra Semenova and Erin Gibbs, chief investment officer and senior partner at Main Street Asset Management, discuss the latest as the Biden administration mulls whether to stop Nippon Steel from acquiring US Steel with Bloomberg's John Harney, the future of social media under Donald Trump with Syracuse University assistant professor of communications Jennifer Grygiel and the launch of men's apparel brand True Classic at Target stores with the company's CEO Ben Yahalom.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:08):
Welcome to Bloomberg Market. It's a special holiday edition. It
is a holiday shortened week. I'm Vonne Quinn along with
Shanale Masak, and we are just seconds away from those
closing bells that you could hear ring at the exchanges.
And it's another up date at least for the Dow,
but we just flipped negative shenale for the other major indusices,
including then I was like one hundred.
Speaker 3 (00:28):
Absolutely fascinating day because you did see that drop off
in the ten year yield, but you did still see
the S and P five hundred, let lower, the Dow
Jones just in the green, the Nasdaq lower, where you
saw little lover was outside of those major indexes. You
saw the Russell two thousand with that lower yield story
up almost one percent, about nine tenths of one percent body.
(00:50):
So there was green in the screen somewhere in the market,
just not at those major indexes.
Speaker 2 (00:55):
There were people nibbling today and maybe at the codes
they were just taking profits because they're didn't have a
long weekend before the beginning of a new year. But
joining us now to breakdown today's market moves. Is Bloomberg's
Alexandra Semenova and Natalia Kenietievich. So Alex talk to us
a little bit about some of the gainers that we saw,
because we did see some very very very happy companies today.
Speaker 4 (01:14):
Yeah, Vanni.
Speaker 1 (01:15):
Even with the Nasdaq one hundred down today, there is
a tech a technology sector that has been a big
winner in this session. Quantum computing stocks broadly up across
the board, a sector that has become an area of
intense interest on Wall Street and certainly one to watch
in twenty twenty five. DWave Quantum up more than twenty percent,
Rerigetti Computing up more than thirty percent, in Quantum Computing
(01:36):
up more than ten percent. All these stocks have seen
very pronounced moves here to date, up one thousand percent,
two thousand percent on some of these names, and again
though it's not on fundamentals here, but on the transformative
potential of the technology. Take QBTS, for example, a DWave Quantum.
This is a company with a two point two billion
dollar market cap and just nine million dollars in revenue.
(01:57):
Another name, speaking of tech that I'm looking at today
is it's up about three tenths of a percent. This
is after its price target was raised to a street
high of three hundred and twenty five dollars by Wedbush
Security Securities by none other, of course, than Dan Ives.
He says that the company is heading into a multi
year AI driven upgrade cycle. This upgrade cycle, he says,
(02:19):
is being underestimated by Wall Street. He has an outperform
rating on the stock, of course, and even though the
move today was pretty modest on this upgrade, it is
up more than thirty percent this year. And finally I'm
taking a look also at game Stop. Shares rose as
much as ten percent today, up about six percent into
the close. And this is of course, after a post
(02:39):
on x from Keith Gill, also known as Roaring Kitty.
You guys remember him from the game stock saga back
in twenty twenty one. This post was an image of
a gift on Twitter without any text, so no real
reason that the stock is moving higher, and trading volume
today was almost five times the twenty day average for
this time of day, according to data compiled by Bloomberg.
(03:00):
The stock also rose for a fifth straight session for
its longest winning streak since November first, and game Stop
shares are up about eighty six percent this year.
Speaker 3 (03:09):
Guys appreciate it so much, Natalia. Let's take a look
at the decliners on the day. We bring in Italian
Nazevich for that, right.
Speaker 5 (03:16):
So, I'm looking at energy producers guys, specifically companies that
are related to natural gas industry. We see stocks like Targa,
it's one of the worst performance in the s and
P five hundred AQT is also lower, and the main
reason for that is natural gas futures. We see that
natural gas posted almost a seven percent decline on Thursday,
(03:36):
and that was driven by forecasts. Now, forecasters expect a
little bit warmer than expected weather in the last couple
days of twenty twenty four. As a result, it always
built concerns about some oversupply, and futures of natural gas
move lower. As a result. We see that natural gas
companies are moving lower as well. And another stock that
(03:59):
I'm keeping an eye on is of course, micro Strategy.
We watch closely what's been happening with bitcoin. It's not
moving lower. Micro Strategy shares are down by four percent,
almost five percent. Investors are also reacting to companies news
to issue additional shares to fund further Bitcoin purchases. Just
(04:21):
a reminder, micro Strategy is seeking a permission to increase
a number of authorized shares of Class A common stock
and preferred stock. That's according to December twenty twenty three filing.
And of course Bitcoin will be still volatile tomorrow as
well because we see a huge option expiration tomorrow. As
(04:44):
a result, we will keep an eye on all cryptorelated stocks.
Speaker 2 (04:47):
Yes, there's going to be a lot of vilesilcy between
now and the end of the year. It looks like Natalia. Also,
the VIX index itself not shoining too much fear. Today
the VIX was down to under fifteen. Of course, we
know that that can move pretty quickly. So in general,
we had a sort of a mixed day, about two
hundred stocks lower and nearly three hundred stocks higher, but
not hugely higher. But that's still pretty good breath.
Speaker 5 (05:09):
Right, still pretty good breath. Yes, and again we are
still looking at final trading days of this year if
we will see more potential upside move driven by the
so called Santa Claus rally. And now, as you mentioned,
volatility is also on traders radar. What I heard from
sources I spoke with next year will be a little
(05:32):
bit different. This year was volatile. We saw huge moves
in the Vigsy index. But they say that next year
volatility will be a little bit more predictable because they
it will be driven by Donald Trump's It will be
driven by Donald Trump's policies, and as soon as traders
know what exactly he will implement, it will cause of
(05:52):
course volatility. But you can play volatility in a little
bit different way and potentially again more because this year,
for example, when we looked at those role control funds,
those funds typically follow the market direction, they were lagging
because it was so hard to predict volatility moves in
twenty twenty four. So lots of expectations that next year
(06:15):
will be a little bit different.
Speaker 3 (06:17):
Ladies, thank you so much for joining us today. Of course,
hard at work into the end of the year. We're
all just kind of wiping off our calendars and playbooks
to prepare for twenty twenty five and the end of
the trade.
Speaker 4 (06:29):
This year has certainly been strong.
Speaker 3 (06:30):
We're going to now be joined by Aaron Gibbs, she's
chief investment officer at main Street Asset Management, to talk
about that playbook. So you think about the gains that
we've seen this year how much the S and P
has been driven by those megacap tech names, and a
lot of people are scouring the market for other opportunities.
(06:51):
How do you see those other opportunities playing out, especially
when you see how sensitive some of the small cap
names have been to the interest rate movements today, the
Russell two thousand was your relative gainer exactly.
Speaker 6 (07:05):
I think now that we have a better sense of
where the FED is heading, we're seeing obviously a more
stable inflationary environment of slow and steady, and we're also
looking at reduction of fiscal stimulus.
Speaker 7 (07:20):
Where we're really going to see.
Speaker 6 (07:21):
Productivity are obviously potentially from AI gains, But where we
might see company profitability would more likely be within some
of your small caps, as some of the larger caps
are starting to face some headwinds, And from an investor standpoint,
not only MA I'm looking at where companies might grow,
where that profitability might come from, but also just where
(07:45):
the value is because as we have had such big
run ups from these high expectations of increased productivity within
these megacaps, there really is a lot of money on
the table from some of the small our companies. Some
of the lesser known companies even within the s and
P five hundred, where if they even if they just
(08:07):
meet let's say, fifteen percent growth, they don't have to
be twenty twenty five percent growth, but they're undervalued by
twenty five percent compared to historical gains. Those are the
companies that could do really well if we finally see
some expansion of market breath.
Speaker 3 (08:24):
You really started to see Marcus largely shake off many
of the risks we've seen out there.
Speaker 4 (08:29):
That was interest rate.
Speaker 3 (08:30):
Risk, it was geopolitical risk. Yet we're sitting here at
an SMP five hundred at your end, well above six thousand. Still,
what are the risks you're looking at next year that
could particularly throw investors off this more bullish course.
Speaker 7 (08:45):
So two of two big issues I see.
Speaker 6 (08:48):
One is just a slowing global economy. We're seeing some
major economies really facing some headwinds, so China, South Korea, Europe,
and so those larger cap company is particularly multinational where
they do have to worry about revenue risks, they do
have to worry about dollar the dollar currencies. Those of
(09:08):
the companies that might face more headwinds than some of
the more domestic focused smaller companies.
Speaker 7 (09:14):
Another issue is just the reduction of fiscal stimulus.
Speaker 6 (09:19):
Is this really looks like from an economic standpoint, we're
starting to hit that peak of the cycle and that
the economy might slow down. So you need companies that
are able to operate efficiently, that aren't so focused on
the fiscal stimulus and can really drive from other organic
revenue sources and more perhaps more domestically.
Speaker 7 (09:41):
So those are the two big.
Speaker 6 (09:43):
Headwind headwinds for those or lack of slowing fiscal stimulus
and then slowing global external trade that might really potentially
debrail some of the larger CAB companies next year.
Speaker 2 (09:56):
Yeah, Aaron, you say earnings may start to disappoint, does
that up? And already in Q one of next year?
After all, Jack Morgan is out January fifteenth, it's only
a couple of weeks away.
Speaker 6 (10:06):
Yes, Well, we did have a rather a low beat
rate for Q three already, and we know that analysts
are obviously lowering some.
Speaker 7 (10:15):
Of their expectations for Q four. Right now, Earning's expectations
for next year are pretty darn optimistic.
Speaker 6 (10:23):
We're looking at fourteen percent growth for the S and
P five hundred and twenty percent growth for the SMP
small cap.
Speaker 7 (10:30):
For earnings profit, those are some high numbers.
Speaker 6 (10:33):
Whenever we're looking at mid teens to even twenties, they
have often.
Speaker 7 (10:39):
Been revised down. So we'll see. Obviously we have a
lot to.
Speaker 6 (10:45):
Be able to deal with next year, even though at
least the FED part of that story seems to be
more stable. But certainly I think people should be prepared
for disappointment and when the stock market really is price
per perfection, as we're seeing in many of the sectors
right now, particularly within.
Speaker 7 (11:01):
The large caps, not within the small caps, investors.
Speaker 6 (11:05):
Should be very weary if we do see some weakening
or some deterioration within the economy and within some of
these industries.
Speaker 2 (11:13):
Where do you anticipate any weakening in the economy? Erin,
we haven't seen any really at all this year.
Speaker 6 (11:20):
No, we've been very fortunate, and I, like I said,
a lot of it has been through physical stimulus through
dollar trade. I think if some of the tariffs come
through that Trunk has promised, that could be a huge
negative impact, particularly on materials, industrials, consumers, just a host
of industries. And so that's something that I think investor
(11:43):
should be very wary of and just remain up to
date and be ready to switch if that changes, because
that type of policy could have a significant impact on
company's profitability for next year.
Speaker 3 (11:56):
What do you think your favorite trades are to set
up for the new dynamic under a new president.
Speaker 6 (12:03):
Yes, so one I would like to say again small apps,
they're a little more insulated from tariffs. They might be
again more domestically focused, less exposure to dollar and burrency trades.
Speaker 7 (12:20):
So that's one of my favorites.
Speaker 6 (12:21):
And again there's such a low value that just have
less downside risk. On the other side, I do like
some of the stable industrial sort of the growth at
a reasonable price means like Honeywell, Caterpillar, nice stable earnings quality.
Speaker 7 (12:38):
They can weather the storm, that can weather a.
Speaker 6 (12:40):
Few quarters of potential volatility and still beat expectations.
Speaker 2 (12:46):
All right, erin thank you so much for joining us
on this holiday week. That is Aaron Gibbs, chief investment
officer at Main Street as a management joining us there.
All right, that's move on now to another sticking point
in Washington. One of President Biden's final acts in office
will be deciding the fate of Nippon Steele's proposed acquisition
(13:09):
of US Steel. A government panel.
Speaker 4 (13:11):
Deadlocked on the deal earlier this week.
Speaker 2 (13:13):
Well, this morning Nippon Steele delayed the closing date of
the deal into twenty twenty five, joining us from Washington, DC.
Now is John Harney, John, will Biden get this done
and decided in the next you know, twenty thirty days?
Does it have to be done or might it actually
bleed into the next administration.
Speaker 8 (13:31):
Well, he has fifteen days from Monday to say whether
or not the deal should go forward. He is not
you know, he has not said flatly he's going to
kill it, but he has made plenty of indications that
that will be his decision. The announcement today that the
(13:53):
closing has been put off simply faces reality. They Nippon
Steele has put off the closing before this as this
huge twelve plus billion acquisition has become further ensnared in
American politics in the election. It remains unlikely at this
(14:18):
point that Donald Trump will have a say on killing
the deal or not. But both companies say that if
President Biden says no, they will go to court and
then who knows where it will end.
Speaker 3 (14:35):
To that end what happens from here, because this, of
course is a very politically sensitive deal has a lot
to do in terms of how steel workers in America
feel about foreign ownership, and a lot to do with
how the Committee on Foreign Investment CIPIUS operates in relation
to how they seek to block deals moving forward.
Speaker 4 (14:56):
What does it say about areas.
Speaker 3 (14:58):
That are sensitive to the American to me as it
comes to foreign for foreign investment.
Speaker 8 (15:04):
Well, all those realms, if you will, are important. Certainly, SITHIUS,
by the way, deadlocked over whether or not the acquisition
should go forward, leaving it, you know, leaving it to
the White House, and that was a step that had
to be taken. But also there's a there's an international
there's also international relations. Japan is not an adversary like
(15:28):
say China, but a very close ally Prime minister issue
of Japan today urged President Biden to approve the deal. Now,
whether or not he'll do that or not, you know, that's.
Speaker 9 (15:43):
We'll see what happens.
Speaker 8 (15:44):
But but you're right in that this became a very
political issue, as as as many other parts of American
American business and culture have you know, many steel workers
have this you know, you know, and other Americans have
a strong you know, there's a strong history behind US
(16:08):
Steel's an iconic American company, you know, but Upon Steel
and US Steel say, there are many good reasons for
this acquisition to go forward, apart from politics, apart from
for lack of a better word, in nostalgia.
Speaker 3 (16:24):
John, we have to leave it there. We thank you
so much for joining us today. That is John Harney
of Bloomberg New Jennifer Gregel, she's associated their associate professor
of Communications in Syracuse University. For more on Musk, Trump
and the future of social media under the new administration.
Speaker 4 (16:44):
So we're looking at what the president elect might do
moving forward. We're trying to read the tea leaves.
Speaker 3 (16:51):
How do you think social media is going to play
a role in the upcoming in the upcoming world, I mean,
how do you think they are going to really use
Musk platforms relative to some of the other more established
ones you've seen out there.
Speaker 10 (17:05):
Yeah, I love, Well, maybe a little context because I know,
over the last four years, you know, I've kind of
been sitting back a little bit more and watching this
all play out, and I know Musk is the person
of the moment, and we're throwing around these like sophisticated
terms like retail investors, you know, but like it's really
about the public. Sometimes the market's trying to make sense
(17:28):
of what's going on. And for me, the one piece
that I've seen lacking in the media over the last
four years and especially this past year, is any critique
of really the Biden administration and how they've handled not
just like their leverage over social media, but even this
upcoming potential TikTok.
Speaker 11 (17:46):
Band that's looming and now it's going to.
Speaker 10 (17:48):
The Supreme Court, and I know you're just talking about
meme stocks and also bitcoin, like you know, like it
or not. President Trump is coming to power next year,
and he has an incredible amount of leverage ability to
cut deals, not just with TikTok, but any of those competitors. So,
you know, again circling back to Facebook, you know, it's
(18:10):
no surprise that you know, kind of late in the
last election you saw like Mark Zuckerberg, you know, kind
of maybe you know, kind of posing up a little
bit more. And I think it's because we were missing
that context. I know, for me, it was really difficult
to cut through at times and to provide that critique.
But I'm not sure the markets or the public have
(18:31):
really heard enough critique going into this. It's it's been
really focused on Musk and obviously he has the president's ear,
you know again, I know there's jokes about him being
the unelected president. Of course he's incredibly rich and he
has Twitter, but he has again he has made that
work for him. So for me, I think we just
(18:52):
need a little bit more history and looking into you know,
those who were in power. They I think they they
had a lot of confidence going into this that Biden
would continue and then they pass laws like that too.
So I think it's going to be actually unsettling to
some of those those larger social media companies. I'm not sure,
you know again their future is so sure and that
(19:14):
we should only be talking about TikTok for example.
Speaker 2 (19:17):
Yeah, Jennifer, I mean, what would Donald Trump like to do?
Because on the one hand, he needs leverage with the
country like China, especially if he's going to be imposing
extra tariffs and so on, and this seems sort of
like a you know, easy pickings if you.
Speaker 10 (19:30):
Like, it's exactly, and he's got easy pickings with bitcoin,
you know, do you make a.
Speaker 11 (19:37):
Reserve or don't you?
Speaker 8 (19:38):
Right?
Speaker 10 (19:38):
So he man, he has so many levers going into
this next term, right, So I think when we think
about you know, it's taking some notes looking at the
last section, this is not a moment of clarity, like
we do not have confidence, we don't have certainty, and
(19:59):
I think I think the markets are reacting to that
more than.
Speaker 11 (20:03):
Just this fed you know, announcement.
Speaker 10 (20:05):
Obviously we saw a major market moment there, but I
see uncertainty coming into the end of the year, not
just because it's the end of the year, but because
we really.
Speaker 11 (20:15):
Don't know how President Trump is going to play his cards.
We just know that he has a lot in his hand.
Speaker 2 (20:20):
And Jennifer, all these tech executives that are visiting mar
Alago and you know, digging deep for their million dollars
or whatever it's costing them. Well, in these US executives,
I mean, in particular, what will that buy them?
Speaker 10 (20:32):
Yeah, Well, that was what was interesting about the TikTok
case was that they went to extraordinary lengths to legislate
the carve out TikTok. Otherwise it would have looked just
like every other platform, you know, Facebook would have been
in the same situation.
Speaker 11 (20:49):
And that was kind of what I think.
Speaker 10 (20:51):
Gave TikTok comfort for a while. I think going into
this legislative path was incredibly risky. It is a huge
threat to freedom of information, freedom of expression. Unfortunately, you
know again that even the expiration day, it was.
Speaker 11 (21:10):
Right in front of the next term.
Speaker 10 (21:12):
It was I believe it just an incredibly dangerous piece
of legislation to target.
Speaker 11 (21:20):
One platform like that. It doesn't matter.
Speaker 10 (21:22):
If it was an external kind of foreign actor or
whatever the reasoning was. It's it was very, very targeted.
And the timing, you know, would have given the Biden
administration some leverage not only with TikTok, but with maybe
the sitting platforms going into.
Speaker 11 (21:39):
The last election. They could have maybe you know again.
Speaker 10 (21:42):
Struck as some type of sweetheart deal with Facebook. So
it's it's really, you know, again, we have to look
at the timing of all that that was passed in
April last year, March. You know, we knew in March
Trump was taking the helm at the RNC.
Speaker 11 (21:57):
Again, I just I.
Speaker 10 (21:58):
Don't like it. I don't like it.
Speaker 3 (22:01):
You know, you look at how TikTok has been treated
by lawmakers, and you've seen both parties really voice their concerns.
At the end of the day, do you think that
whether or not there is a full on band that
is pursued in the early days of Trump administration, or
a wholesale sale of the platform, does that pressure really
go away?
Speaker 11 (22:22):
Well, and great point.
Speaker 10 (22:23):
Again, I'm just trying to sneak into a tiny piece
of critique on Biden here because we really haven't seen it.
Speaker 11 (22:29):
I mean, that's just.
Speaker 10 (22:29):
That's that's been my experience in the last four years.
I haven't seen much in the media. But as you
point out, it was like bipartisan to get that through.
But that again is something that is telling. I think
that on both sides of the aisle that President Trump
was a threat, you know, and that it wasn't just
Biden per se, but it was all of the incumbent
(22:52):
And we saw this actually way back and this reminds me,
honestly in twenty twelve when we saw under the Obama
runner they instituted the modernization of what was called the
Smithmont Act. And you know, again, Trump was starting to
make waves at that time, starting to maybe put his
hat in the presidential rank, and the incumbents were bipartisans.
Speaker 11 (23:13):
It's again, it's a little bit of.
Speaker 10 (23:15):
A gatekeeping action from those who are currently in Congress
in the White House saying hey, we don't want this
out outsider maybe coming in.
Speaker 8 (23:23):
You know.
Speaker 10 (23:24):
So it spoke to maybe the political climate of those
who were sitting in power to that maybe maybe they
were trying to gate keep a little bit. But I
just believe that it gave an incredible amount of leverage
to any incumbent at that time.
Speaker 2 (23:39):
Jennifer much That is Jennifer Greegel. They are associate professor
at Syracuse University. Once again, Jennifer Gregel joining us there.
Speaker 3 (23:50):
And you asked, retail sales this holiday season rose three
point eight percent compared to last year. That's according to
data from MasterCards spending polls, showing that consumers were more
willing to spend in store and online if promotions were there.
And it's exactly the type of momentum that brands like
(24:11):
True Classic are hoping to bank on. The men's wear
brand is expanding its business across the United States. It's
partnering with Target. Joining us now is the CEO of
True Classic.
Speaker 4 (24:22):
Ben Yeah, Yahalom.
Speaker 3 (24:23):
And you know, Funnie and I were talking about this
men'sware where do people like to traditionally buy. It's interesting
that you've partnered with Target more recently. But are they
going into the store, They're going online.
Speaker 4 (24:36):
To do it.
Speaker 9 (24:38):
I would say very similar.
Speaker 12 (24:39):
Tobou Oliver shared that the decompenetration is being rising over
the past few years, but only in It's still very
much the case that the majority of clothing is being
purchased in a physical retlocation, namely over sixty percent.
Speaker 2 (24:52):
How did you get to five hundred million in revenue
in just four and a half years a new brand?
You know, I mean nothing in its background to prove itself.
So how did it happen?
Speaker 9 (25:03):
It's a fascinating story.
Speaker 12 (25:05):
We pride ourselves on focusing on people and we want
to make sure that they.
Speaker 2 (25:08):
Look Yeah, but you know when everybody says that, they
all say it's always about the people, and the people
are special on Our customers deserve the best, But how
do you actually prove that? How what are you giving
to the people that they were asking for and weren't.
Speaker 12 (25:20):
Getting great product, great service, great price point, great marketing product.
We really nailed it with a perfectly fitted shirt that
feels great, offered it a good price point, They love
wearing it. They vote with their dollars From a marketing standpoint,
we do amazing ads that truly engage with our customers,
tell them why they should care about us, how it's
going to make them feel, feel a sense of confidence,
(25:43):
feel a sense of self esteem, and they love that.
And from a price standpoint, we offer them a premium
clothing option for a fraction of the price of alternatives
out there. And everybody loves a good value and we
like delivering that consumer surplus. From a distribution standpoint, we've
done everything online on the main first few years and
now we're moving on to retail. So early days it's
(26:06):
been very much direct to consumer and now we're on
this path towards an omni channel global brand.
Speaker 2 (26:12):
So who is your customer, what agency? How much does
he make and how tall is he?
Speaker 9 (26:18):
Okay, variety of customers.
Speaker 12 (26:20):
I would say the core one is a thirty four
to fifty four years old man. HHI over one hundred
million dollars one hundred thousand dollars a year across the
United States, majority in California and Texas and New York.
But now we have expanded internationally, so we have customers
across different heights. We do have a decent number of
(26:41):
customers in the United States, over twenty seven percent were
pretty tall north of six feet two inches and all
in it's not just him, but also her who buys
for him, and she buys for her dad, she buys
for her husband, she buys for her son, and she
is a very important customer to us as well.
Speaker 3 (26:57):
When you look at your website right now, the few
things that are on at the top of the site
number one most like Staple six pack T shirt. It
was almost one hundred eighty dollars for the pack, but
you can buy it now for under one hundred. Same
for the classic three pack. It's marked down from ninety
bucks for the three pack to less than sixty dollars.
(27:19):
Are these really just holiday promotional draw downs or are
you finding a consumer that is quite concerning?
Speaker 4 (27:27):
Do you need to keep discounting into the new year?
Speaker 9 (27:30):
Yeah, those are our pack discounts.
Speaker 12 (27:32):
So if you were to buy those items individually, those
would actually retail for twenty nine ninety nine a shirt.
But when you buy them in a pack, we benefit
from stronger unit economics and we're happily providing those benefits
over to the customer. So those are meant to incentivize
consumers who are willing to buy in bulk to do so,
and therefore benefit from a steeper promotion and a steeper discount.
Speaker 3 (27:53):
How often are you finding people take advantage of those
discounts right now? Because you mentioned pricing was one of
your competitive advantages.
Speaker 4 (28:01):
Is it because you're able to.
Speaker 3 (28:03):
Benefit from those unit economics or are you finding that
there's an optimal price for a T shirt right now?
Speaker 12 (28:09):
I don't know if there is an optimal price for
a T shirt, but I would say that the American consumer,
and I would say probably globally as well, are tired
of overpaying for premium goods and they are looking for
options that don't compromise quality but offer that to them
at a reasonable price point.
Speaker 9 (28:25):
And that's exactly the area we play in.
Speaker 2 (28:28):
So talk to us about margins. Where you make most
of your clothing specifically, I don't mean where you put
the tag on, I mean where the actual product gets
mostly made, And how concerned are you for next year?
In Taros.
Speaker 12 (28:41):
We have been already prepared for that for quite some
time with the tension between the US and China, and
we used to be primarily sourcing our products from China,
but we've diversified away and in this point, we're pretty
well diversified. We manufacture in Cambodia and Vietnam, in Egypt
and Turkey and Mexico, and we have the ability to
(29:02):
shift our supply chains to different vendors, different manufacturers worldwide
to ensure that we are not in any particular pickle
with tariffs, duties or even importation issues like we just
had last week with a pretty big gift from the
Mexican government to overnight just decided that we're not allowed
to import more goods over there, which is significantly impacting
(29:23):
many eCOM brands like ourselves, but we have good options
to mitigate against that.
Speaker 2 (29:28):
So, Ben, what is the secret? Because you've been also
at Meta and you've helped the hyper growth of other
companies your four years at Meta, and you know you
know how to leverage Facebook and Instagram marketing strategy, and
it seems that those are the strategies that work best
these days. You know, consumers, whether it's women or men,
seem to be getting targeted more on those platforms. Is
(29:52):
that the success to True Classics so far is that
you've been able to do that? And if so, what
advice would you give other brands? Yeah?
Speaker 12 (30:01):
I would say that those platforms are definitely the main
ones Meta, Google, et cetera. To get the brand off
the ground these days, with relatively limited resources for us,
we were able to bootrap this company to your point,
no X factors, no celebrities, no big VC money, and
grow it north of nine figures in two short years
(30:22):
and do so profitably on the back of digital advertising.
So yes, highly recommend for any brand who is trying
to get off the ground to invest in really understanding
how to leverage those platforms to their advantage.
Speaker 9 (30:32):
But it's not magic.
Speaker 12 (30:34):
You have to have a great product, you have to
have a great service, and you have to ultimately find
that product market fit with that advertising model baked into
your business model. And when we did that, and we
are not just advertising the product, we're telling great stories.
We're connecting with humans on an emotional level. We explain
to them what is the benefit of our products, how
(30:55):
they're going to fill in our product, not just what
is the product, and that makes a huge difference. So
for us, creative content, storytelling, excellent customer service, exceptional quality
in our products are all pillars of ultimately finding that
product market fit and fast growth.
Speaker 3 (31:11):
So when you think about all of those social media platforms,
and by the way, I'm a total sucker for buying
on those platforms.
Speaker 4 (31:18):
So I know what you mean, but we all are.
Speaker 3 (31:20):
How do you kind of kick through the noise, because
of course there are a lot of people selling on
Instagram and on TikTok, So how do you get your
story through without As you were talking about those celebrity names,
for example, attaching to the brand.
Speaker 12 (31:35):
I think it all goes back to storytelling and if
you really zoom out and look at that, what gets
you is someone who's able to hit the nail on
the head, whether it's a motivator or a barrier to
start a journey with a new company or buy a
particular product. So for us, it's always been, for example,
like really illustrating very well the fit and the feel
and how that shirt is going to look on you
(31:56):
when you try it on, and do so in an
authentic way with influencers and customers who tell those stories.
Speaker 9 (32:03):
Better than we can.
Speaker 12 (32:04):
And with that, people actually pay attention and they want
to give it a try. And when they come to
our site and they see over two hundred thousand and
five star reviews, when they see that growing community of
almost five million people worldwide, and how much they rave
about it they want to try it, especially when the
price tag is not particularly high. So you have got
to kind of figure out a way to your point
(32:24):
like stand out and differentiate yourself. And I would say
on the media side, it's absolutely about storytelling and then
from a product and offer standpoint, that's where your website
has to shine.
Speaker 3 (32:32):
How much does philanthropy matter because you donate T shirts
to homeless veterans shelter schools each month? Is that a
big part of the story for you and what people
are attaching.
Speaker 9 (32:43):
To incredibly important.
Speaker 12 (32:45):
But what I would say for us in particular is
that we're actually not if you will, like advertising and
particularly forefront about that. We do that because we want
to empower people to look good and feel good, and
we genuinely want to do so, not just with the
clothing we sell, but also in ways where we can
do great clothing to people in need. And most recently
around the holidays, we donated almost ten million dollars worth
(33:05):
of retail value of inventory to many people around LA
who needed those clothes for the holiday season. So I
would say it's important for us as humans, because we
believe in showing up to humans and in giving back.
But I wouldn't say it's a core pillar of the
story of the brand and how we've been showing up.
I would say that still to this date, probably many
(33:26):
people amongst our customers don't even understand or know the
extent to which our film tropic efforts have gone, and
that's something we should probably do a better job articulating
to them. But I would say it's important to us
as humans.
Speaker 2 (33:38):
Ben, thank you so much for joining at all the
very best your partnership with Target Expanding, and that has
been yahalo on. They're true classic CEO
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:08):
Welcome to Bloomberg Market. It's a special holiday edition. It
is a holiday shortened week. I'm Vonne Quinn along with
Shanale Masak, and we are just seconds away from those
closing bells that you could hear ring at the exchanges.
And it's another up date at least for the Dow,
but we just flipped negative shenale for the other major indusices,
including then I was like one hundred.
Speaker 3 (00:28):
Absolutely fascinating day because you did see that drop off
in the ten year yield, but you did still see
the S and P five hundred, let lower, the Dow
Jones just in the green, the Nasdaq lower, where you
saw little lover was outside of those major indexes. You
saw the Russell two thousand with that lower yield story
up almost one percent, about nine tenths of one percent body.
(00:50):
So there was green in the screen somewhere in the market,
just not at those major indexes.
Speaker 2 (00:55):
There were people nibbling today and maybe at the codes
they were just taking profits because they're didn't have a
long weekend before the beginning of a new year. But
joining us now to breakdown today's market moves. Is Bloomberg's
Alexandra Semenova and Natalia Kenietievich. So Alex talk to us
a little bit about some of the gainers that we saw,
because we did see some very very very happy companies today.
Speaker 4 (01:14):
Yeah, Vanni.
Speaker 1 (01:15):
Even with the Nasdaq one hundred down today, there is
a tech a technology sector that has been a big
winner in this session. Quantum computing stocks broadly up across
the board, a sector that has become an area of
intense interest on Wall Street and certainly one to watch
in twenty twenty five. DWave Quantum up more than twenty percent,
Rerigetti Computing up more than thirty percent, in Quantum Computing
(01:36):
up more than ten percent. All these stocks have seen
very pronounced moves here to date, up one thousand percent,
two thousand percent on some of these names, and again
though it's not on fundamentals here, but on the transformative
potential of the technology. Take QBTS, for example, a DWave Quantum.
This is a company with a two point two billion
dollar market cap and just nine million dollars in revenue.
(01:57):
Another name, speaking of tech that I'm looking at today
is it's up about three tenths of a percent. This
is after its price target was raised to a street
high of three hundred and twenty five dollars by Wedbush
Security Securities by none other, of course, than Dan Ives.
He says that the company is heading into a multi
year AI driven upgrade cycle. This upgrade cycle, he says,
(02:19):
is being underestimated by Wall Street. He has an outperform
rating on the stock, of course, and even though the
move today was pretty modest on this upgrade, it is
up more than thirty percent this year. And finally I'm
taking a look also at game Stop. Shares rose as
much as ten percent today, up about six percent into
the close. And this is of course, after a post
(02:39):
on x from Keith Gill, also known as Roaring Kitty.
You guys remember him from the game stock saga back
in twenty twenty one. This post was an image of
a gift on Twitter without any text, so no real
reason that the stock is moving higher, and trading volume
today was almost five times the twenty day average for
this time of day, according to data compiled by Bloomberg.
(03:00):
The stock also rose for a fifth straight session for
its longest winning streak since November first, and game Stop
shares are up about eighty six percent this year.
Speaker 3 (03:09):
Guys appreciate it so much, Natalia. Let's take a look
at the decliners on the day. We bring in Italian
Nazevich for that, right.
Speaker 5 (03:16):
So, I'm looking at energy producers guys, specifically companies that
are related to natural gas industry. We see stocks like Targa,
it's one of the worst performance in the s and
P five hundred AQT is also lower, and the main
reason for that is natural gas futures. We see that
natural gas posted almost a seven percent decline on Thursday,
(03:36):
and that was driven by forecasts. Now, forecasters expect a
little bit warmer than expected weather in the last couple
days of twenty twenty four. As a result, it always
built concerns about some oversupply, and futures of natural gas
move lower. As a result. We see that natural gas
companies are moving lower as well. And another stock that
(03:59):
I'm keeping an eye on is of course, micro Strategy.
We watch closely what's been happening with bitcoin. It's not
moving lower. Micro Strategy shares are down by four percent,
almost five percent. Investors are also reacting to companies news
to issue additional shares to fund further Bitcoin purchases. Just
(04:21):
a reminder, micro Strategy is seeking a permission to increase
a number of authorized shares of Class A common stock
and preferred stock. That's according to December twenty twenty three filing.
And of course Bitcoin will be still volatile tomorrow as
well because we see a huge option expiration tomorrow. As
(04:44):
a result, we will keep an eye on all cryptorelated stocks.
Speaker 2 (04:47):
Yes, there's going to be a lot of vilesilcy between
now and the end of the year. It looks like Natalia. Also,
the VIX index itself not shoining too much fear. Today
the VIX was down to under fifteen. Of course, we
know that that can move pretty quickly. So in general,
we had a sort of a mixed day, about two
hundred stocks lower and nearly three hundred stocks higher, but
not hugely higher. But that's still pretty good breath.
Speaker 5 (05:09):
Right, still pretty good breath. Yes, and again we are
still looking at final trading days of this year if
we will see more potential upside move driven by the
so called Santa Claus rally. And now, as you mentioned,
volatility is also on traders radar. What I heard from
sources I spoke with next year will be a little
(05:32):
bit different. This year was volatile. We saw huge moves
in the Vigsy index. But they say that next year
volatility will be a little bit more predictable because they
it will be driven by Donald Trump's It will be
driven by Donald Trump's policies, and as soon as traders
know what exactly he will implement, it will cause of
(05:52):
course volatility. But you can play volatility in a little
bit different way and potentially again more because this year,
for example, when we looked at those role control funds,
those funds typically follow the market direction, they were lagging
because it was so hard to predict volatility moves in
twenty twenty four. So lots of expectations that next year
(06:15):
will be a little bit different.
Speaker 3 (06:17):
Ladies, thank you so much for joining us today. Of course,
hard at work into the end of the year. We're
all just kind of wiping off our calendars and playbooks
to prepare for twenty twenty five and the end of
the trade.
Speaker 4 (06:29):
This year has certainly been strong.
Speaker 3 (06:30):
We're going to now be joined by Aaron Gibbs, she's
chief investment officer at main Street Asset Management, to talk
about that playbook. So you think about the gains that
we've seen this year how much the S and P
has been driven by those megacap tech names, and a
lot of people are scouring the market for other opportunities.
(06:51):
How do you see those other opportunities playing out, especially
when you see how sensitive some of the small cap
names have been to the interest rate movements today, the
Russell two thousand was your relative gainer exactly.
Speaker 6 (07:05):
I think now that we have a better sense of
where the FED is heading, we're seeing obviously a more
stable inflationary environment of slow and steady, and we're also
looking at reduction of fiscal stimulus.
Speaker 7 (07:20):
Where we're really going to see.
Speaker 6 (07:21):
Productivity are obviously potentially from AI gains, But where we
might see company profitability would more likely be within some
of your small caps, as some of the larger caps
are starting to face some headwinds, And from an investor standpoint,
not only MA I'm looking at where companies might grow,
where that profitability might come from, but also just where
(07:45):
the value is because as we have had such big
run ups from these high expectations of increased productivity within
these megacaps, there really is a lot of money on
the table from some of the small our companies. Some
of the lesser known companies even within the s and
P five hundred, where if they even if they just
(08:07):
meet let's say, fifteen percent growth, they don't have to
be twenty twenty five percent growth, but they're undervalued by
twenty five percent compared to historical gains. Those are the
companies that could do really well if we finally see
some expansion of market breath.
Speaker 3 (08:24):
You really started to see Marcus largely shake off many
of the risks we've seen out there.
Speaker 4 (08:29):
That was interest rate.
Speaker 3 (08:30):
Risk, it was geopolitical risk. Yet we're sitting here at
an SMP five hundred at your end, well above six thousand. Still,
what are the risks you're looking at next year that
could particularly throw investors off this more bullish course.
Speaker 7 (08:45):
So two of two big issues I see.
Speaker 6 (08:48):
One is just a slowing global economy. We're seeing some
major economies really facing some headwinds, so China, South Korea, Europe,
and so those larger cap company is particularly multinational where
they do have to worry about revenue risks, they do
have to worry about dollar the dollar currencies. Those of
(09:08):
the companies that might face more headwinds than some of
the more domestic focused smaller companies.
Speaker 7 (09:14):
Another issue is just the reduction of fiscal stimulus.
Speaker 6 (09:19):
Is this really looks like from an economic standpoint, we're
starting to hit that peak of the cycle and that
the economy might slow down. So you need companies that
are able to operate efficiently, that aren't so focused on
the fiscal stimulus and can really drive from other organic
revenue sources and more perhaps more domestically.
Speaker 7 (09:41):
So those are the two big.
Speaker 6 (09:43):
Headwind headwinds for those or lack of slowing fiscal stimulus
and then slowing global external trade that might really potentially
debrail some of the larger CAB companies next year.
Speaker 2 (09:56):
Yeah, Aaron, you say earnings may start to disappoint, does
that up? And already in Q one of next year?
After all, Jack Morgan is out January fifteenth, it's only
a couple of weeks away.
Speaker 6 (10:06):
Yes, Well, we did have a rather a low beat
rate for Q three already, and we know that analysts
are obviously lowering some.
Speaker 7 (10:15):
Of their expectations for Q four. Right now, Earning's expectations
for next year are pretty darn optimistic.
Speaker 6 (10:23):
We're looking at fourteen percent growth for the S and
P five hundred and twenty percent growth for the SMP
small cap.
Speaker 7 (10:30):
For earnings profit, those are some high numbers.
Speaker 6 (10:33):
Whenever we're looking at mid teens to even twenties, they
have often.
Speaker 7 (10:39):
Been revised down. So we'll see. Obviously we have a
lot to.
Speaker 6 (10:45):
Be able to deal with next year, even though at
least the FED part of that story seems to be
more stable. But certainly I think people should be prepared
for disappointment and when the stock market really is price
per perfection, as we're seeing in many of the sectors
right now, particularly within.
Speaker 7 (11:01):
The large caps, not within the small caps, investors.
Speaker 6 (11:05):
Should be very weary if we do see some weakening
or some deterioration within the economy and within some of
these industries.
Speaker 2 (11:13):
Where do you anticipate any weakening in the economy? Erin,
we haven't seen any really at all this year.
Speaker 6 (11:20):
No, we've been very fortunate, and I, like I said,
a lot of it has been through physical stimulus through
dollar trade. I think if some of the tariffs come
through that Trunk has promised, that could be a huge
negative impact, particularly on materials, industrials, consumers, just a host
of industries. And so that's something that I think investor
(11:43):
should be very wary of and just remain up to
date and be ready to switch if that changes, because
that type of policy could have a significant impact on
company's profitability for next year.
Speaker 3 (11:56):
What do you think your favorite trades are to set
up for the new dynamic under a new president.
Speaker 6 (12:03):
Yes, so one I would like to say again small apps,
they're a little more insulated from tariffs. They might be
again more domestically focused, less exposure to dollar and burrency trades.
Speaker 7 (12:20):
So that's one of my favorites.
Speaker 6 (12:21):
And again there's such a low value that just have
less downside risk. On the other side, I do like
some of the stable industrial sort of the growth at
a reasonable price means like Honeywell, Caterpillar, nice stable earnings quality.
Speaker 7 (12:38):
They can weather the storm, that can weather a.
Speaker 6 (12:40):
Few quarters of potential volatility and still beat expectations.
Speaker 2 (12:46):
All right, erin thank you so much for joining us
on this holiday week. That is Aaron Gibbs, chief investment
officer at Main Street as a management joining us there.
All right, that's move on now to another sticking point
in Washington. One of President Biden's final acts in office
will be deciding the fate of Nippon Steele's proposed acquisition
(13:09):
of US Steel. A government panel.
Speaker 4 (13:11):
Deadlocked on the deal earlier this week.
Speaker 2 (13:13):
Well, this morning Nippon Steele delayed the closing date of
the deal into twenty twenty five, joining us from Washington, DC.
Now is John Harney, John, will Biden get this done
and decided in the next you know, twenty thirty days?
Does it have to be done or might it actually
bleed into the next administration.
Speaker 8 (13:31):
Well, he has fifteen days from Monday to say whether
or not the deal should go forward. He is not
you know, he has not said flatly he's going to
kill it, but he has made plenty of indications that
that will be his decision. The announcement today that the
(13:53):
closing has been put off simply faces reality. They Nippon
Steele has put off the closing before this as this
huge twelve plus billion acquisition has become further ensnared in
American politics in the election. It remains unlikely at this
(14:18):
point that Donald Trump will have a say on killing
the deal or not. But both companies say that if
President Biden says no, they will go to court and
then who knows where it will end.
Speaker 3 (14:35):
To that end what happens from here, because this, of
course is a very politically sensitive deal has a lot
to do in terms of how steel workers in America
feel about foreign ownership, and a lot to do with
how the Committee on Foreign Investment CIPIUS operates in relation
to how they seek to block deals moving forward.
Speaker 4 (14:56):
What does it say about areas.
Speaker 3 (14:58):
That are sensitive to the American to me as it
comes to foreign for foreign investment.
Speaker 8 (15:04):
Well, all those realms, if you will, are important. Certainly, SITHIUS,
by the way, deadlocked over whether or not the acquisition
should go forward, leaving it, you know, leaving it to
the White House, and that was a step that had
to be taken. But also there's a there's an international
there's also international relations. Japan is not an adversary like
(15:28):
say China, but a very close ally Prime minister issue
of Japan today urged President Biden to approve the deal. Now,
whether or not he'll do that or not, you know, that's.
Speaker 9 (15:43):
We'll see what happens.
Speaker 8 (15:44):
But but you're right in that this became a very
political issue, as as as many other parts of American
American business and culture have you know, many steel workers
have this you know, you know, and other Americans have
a strong you know, there's a strong history behind US
(16:08):
Steel's an iconic American company, you know, but Upon Steel
and US Steel say, there are many good reasons for
this acquisition to go forward, apart from politics, apart from
for lack of a better word, in nostalgia.
Speaker 3 (16:24):
John, we have to leave it there. We thank you
so much for joining us today. That is John Harney
of Bloomberg New Jennifer Gregel, she's associated their associate professor
of Communications in Syracuse University. For more on Musk, Trump
and the future of social media under the new administration.
Speaker 4 (16:44):
So we're looking at what the president elect might do
moving forward. We're trying to read the tea leaves.
Speaker 3 (16:51):
How do you think social media is going to play
a role in the upcoming in the upcoming world, I mean,
how do you think they are going to really use
Musk platforms relative to some of the other more established
ones you've seen out there.
Speaker 10 (17:05):
Yeah, I love, Well, maybe a little context because I know,
over the last four years, you know, I've kind of
been sitting back a little bit more and watching this
all play out, and I know Musk is the person
of the moment, and we're throwing around these like sophisticated
terms like retail investors, you know, but like it's really
about the public. Sometimes the market's trying to make sense
(17:28):
of what's going on. And for me, the one piece
that I've seen lacking in the media over the last
four years and especially this past year, is any critique
of really the Biden administration and how they've handled not
just like their leverage over social media, but even this
upcoming potential TikTok.
Speaker 11 (17:46):
Band that's looming and now it's going to.
Speaker 10 (17:48):
The Supreme Court, and I know you're just talking about
meme stocks and also bitcoin, like you know, like it
or not. President Trump is coming to power next year,
and he has an incredible amount of leverage ability to
cut deals, not just with TikTok, but any of those competitors. So,
you know, again circling back to Facebook, you know, it's
(18:10):
no surprise that you know, kind of late in the
last election you saw like Mark Zuckerberg, you know, kind
of maybe you know, kind of posing up a little
bit more. And I think it's because we were missing
that context. I know, for me, it was really difficult
to cut through at times and to provide that critique.
But I'm not sure the markets or the public have
(18:31):
really heard enough critique going into this. It's it's been
really focused on Musk and obviously he has the president's ear,
you know again, I know there's jokes about him being
the unelected president. Of course he's incredibly rich and he
has Twitter, but he has again he has made that
work for him. So for me, I think we just
(18:52):
need a little bit more history and looking into you know,
those who were in power. They I think they they
had a lot of confidence going into this that Biden
would continue and then they pass laws like that too.
So I think it's going to be actually unsettling to
some of those those larger social media companies. I'm not sure,
you know again their future is so sure and that
(19:14):
we should only be talking about TikTok for example.
Speaker 2 (19:17):
Yeah, Jennifer, I mean, what would Donald Trump like to do?
Because on the one hand, he needs leverage with the
country like China, especially if he's going to be imposing
extra tariffs and so on, and this seems sort of
like a you know, easy pickings if you.
Speaker 10 (19:30):
Like, it's exactly, and he's got easy pickings with bitcoin,
you know, do you make a.
Speaker 11 (19:37):
Reserve or don't you?
Speaker 8 (19:38):
Right?
Speaker 10 (19:38):
So he man, he has so many levers going into
this next term, right, So I think when we think
about you know, it's taking some notes looking at the
last section, this is not a moment of clarity, like
we do not have confidence, we don't have certainty, and
(19:59):
I think I think the markets are reacting to that
more than.
Speaker 11 (20:03):
Just this fed you know, announcement.
Speaker 10 (20:05):
Obviously we saw a major market moment there, but I
see uncertainty coming into the end of the year, not
just because it's the end of the year, but because
we really.
Speaker 11 (20:15):
Don't know how President Trump is going to play his cards.
We just know that he has a lot in his hand.
Speaker 2 (20:20):
And Jennifer, all these tech executives that are visiting mar
Alago and you know, digging deep for their million dollars
or whatever it's costing them. Well, in these US executives,
I mean, in particular, what will that buy them?
Speaker 10 (20:32):
Yeah, Well, that was what was interesting about the TikTok
case was that they went to extraordinary lengths to legislate
the carve out TikTok. Otherwise it would have looked just
like every other platform, you know, Facebook would have been
in the same situation.
Speaker 11 (20:49):
And that was kind of what I think.
Speaker 10 (20:51):
Gave TikTok comfort for a while. I think going into
this legislative path was incredibly risky. It is a huge
threat to freedom of information, freedom of expression. Unfortunately, you
know again that even the expiration day, it was.
Speaker 11 (21:10):
Right in front of the next term.
Speaker 10 (21:12):
It was I believe it just an incredibly dangerous piece
of legislation to target.
Speaker 11 (21:20):
One platform like that. It doesn't matter.
Speaker 10 (21:22):
If it was an external kind of foreign actor or
whatever the reasoning was. It's it was very, very targeted.
And the timing, you know, would have given the Biden
administration some leverage not only with TikTok, but with maybe
the sitting platforms going into.
Speaker 11 (21:39):
The last election. They could have maybe you know again.
Speaker 10 (21:42):
Struck as some type of sweetheart deal with Facebook. So
it's it's really, you know, again, we have to look
at the timing of all that that was passed in
April last year, March. You know, we knew in March
Trump was taking the helm at the RNC.
Speaker 11 (21:57):
Again, I just I.
Speaker 10 (21:58):
Don't like it. I don't like it.
Speaker 3 (22:01):
You know, you look at how TikTok has been treated
by lawmakers, and you've seen both parties really voice their concerns.
At the end of the day, do you think that
whether or not there is a full on band that
is pursued in the early days of Trump administration, or
a wholesale sale of the platform, does that pressure really
go away?
Speaker 11 (22:22):
Well, and great point.
Speaker 10 (22:23):
Again, I'm just trying to sneak into a tiny piece
of critique on Biden here because we really haven't seen it.
Speaker 11 (22:29):
I mean, that's just.
Speaker 10 (22:29):
That's that's been my experience in the last four years.
I haven't seen much in the media. But as you
point out, it was like bipartisan to get that through.
But that again is something that is telling. I think
that on both sides of the aisle that President Trump
was a threat, you know, and that it wasn't just
Biden per se, but it was all of the incumbent
(22:52):
And we saw this actually way back and this reminds me,
honestly in twenty twelve when we saw under the Obama
runner they instituted the modernization of what was called the
Smithmont Act. And you know, again, Trump was starting to
make waves at that time, starting to maybe put his
hat in the presidential rank, and the incumbents were bipartisans.
Speaker 11 (23:13):
It's again, it's a little bit of.
Speaker 10 (23:15):
A gatekeeping action from those who are currently in Congress
in the White House saying hey, we don't want this
out outsider maybe coming in.
Speaker 8 (23:23):
You know.
Speaker 10 (23:24):
So it spoke to maybe the political climate of those
who were sitting in power to that maybe maybe they
were trying to gate keep a little bit. But I
just believe that it gave an incredible amount of leverage
to any incumbent at that time.
Speaker 2 (23:39):
Jennifer much That is Jennifer Greegel. They are associate professor
at Syracuse University. Once again, Jennifer Gregel joining us there.
Speaker 3 (23:50):
And you asked, retail sales this holiday season rose three
point eight percent compared to last year. That's according to
data from MasterCards spending polls, showing that consumers were more
willing to spend in store and online if promotions were there.
And it's exactly the type of momentum that brands like
(24:11):
True Classic are hoping to bank on. The men's wear
brand is expanding its business across the United States. It's
partnering with Target. Joining us now is the CEO of
True Classic.
Speaker 4 (24:22):
Ben Yeah, Yahalom.
Speaker 3 (24:23):
And you know, Funnie and I were talking about this
men'sware where do people like to traditionally buy. It's interesting
that you've partnered with Target more recently. But are they
going into the store, They're going online.
Speaker 4 (24:36):
To do it.
Speaker 9 (24:38):
I would say very similar.
Speaker 12 (24:39):
Tobou Oliver shared that the decompenetration is being rising over
the past few years, but only in It's still very
much the case that the majority of clothing is being
purchased in a physical retlocation, namely over sixty percent.
Speaker 2 (24:52):
How did you get to five hundred million in revenue
in just four and a half years a new brand?
You know, I mean nothing in its background to prove itself.
So how did it happen?
Speaker 9 (25:03):
It's a fascinating story.
Speaker 12 (25:05):
We pride ourselves on focusing on people and we want
to make sure that they.
Speaker 2 (25:08):
Look Yeah, but you know when everybody says that, they
all say it's always about the people, and the people
are special on Our customers deserve the best, But how
do you actually prove that? How what are you giving
to the people that they were asking for and weren't.
Speaker 12 (25:20):
Getting great product, great service, great price point, great marketing product.
We really nailed it with a perfectly fitted shirt that
feels great, offered it a good price point, They love
wearing it. They vote with their dollars From a marketing standpoint,
we do amazing ads that truly engage with our customers,
tell them why they should care about us, how it's
going to make them feel, feel a sense of confidence,
(25:43):
feel a sense of self esteem, and they love that.
And from a price standpoint, we offer them a premium
clothing option for a fraction of the price of alternatives
out there. And everybody loves a good value and we
like delivering that consumer surplus. From a distribution standpoint, we've
done everything online on the main first few years and
now we're moving on to retail. So early days it's
(26:06):
been very much direct to consumer and now we're on
this path towards an omni channel global brand.
Speaker 2 (26:12):
So who is your customer, what agency? How much does
he make and how tall is he?
Speaker 9 (26:18):
Okay, variety of customers.
Speaker 12 (26:20):
I would say the core one is a thirty four
to fifty four years old man. HHI over one hundred
million dollars one hundred thousand dollars a year across the
United States, majority in California and Texas and New York.
But now we have expanded internationally, so we have customers
across different heights. We do have a decent number of
(26:41):
customers in the United States, over twenty seven percent were
pretty tall north of six feet two inches and all
in it's not just him, but also her who buys
for him, and she buys for her dad, she buys
for her husband, she buys for her son, and she
is a very important customer to us as well.
Speaker 3 (26:57):
When you look at your website right now, the few
things that are on at the top of the site
number one most like Staple six pack T shirt. It
was almost one hundred eighty dollars for the pack, but
you can buy it now for under one hundred. Same
for the classic three pack. It's marked down from ninety
bucks for the three pack to less than sixty dollars.
(27:19):
Are these really just holiday promotional draw downs or are
you finding a consumer that is quite concerning?
Speaker 4 (27:27):
Do you need to keep discounting into the new year?
Speaker 9 (27:30):
Yeah, those are our pack discounts.
Speaker 12 (27:32):
So if you were to buy those items individually, those
would actually retail for twenty nine ninety nine a shirt.
But when you buy them in a pack, we benefit
from stronger unit economics and we're happily providing those benefits
over to the customer. So those are meant to incentivize
consumers who are willing to buy in bulk to do so,
and therefore benefit from a steeper promotion and a steeper discount.
Speaker 3 (27:53):
How often are you finding people take advantage of those
discounts right now? Because you mentioned pricing was one of
your competitive advantages.
Speaker 4 (28:01):
Is it because you're able to.
Speaker 3 (28:03):
Benefit from those unit economics or are you finding that
there's an optimal price for a T shirt right now?
Speaker 12 (28:09):
I don't know if there is an optimal price for
a T shirt, but I would say that the American consumer,
and I would say probably globally as well, are tired
of overpaying for premium goods and they are looking for
options that don't compromise quality but offer that to them
at a reasonable price point.
Speaker 9 (28:25):
And that's exactly the area we play in.
Speaker 2 (28:28):
So talk to us about margins. Where you make most
of your clothing specifically, I don't mean where you put
the tag on, I mean where the actual product gets
mostly made, And how concerned are you for next year?
In Taros.
Speaker 12 (28:41):
We have been already prepared for that for quite some
time with the tension between the US and China, and
we used to be primarily sourcing our products from China,
but we've diversified away and in this point, we're pretty
well diversified. We manufacture in Cambodia and Vietnam, in Egypt
and Turkey and Mexico, and we have the ability to
(29:02):
shift our supply chains to different vendors, different manufacturers worldwide
to ensure that we are not in any particular pickle
with tariffs, duties or even importation issues like we just
had last week with a pretty big gift from the
Mexican government to overnight just decided that we're not allowed
to import more goods over there, which is significantly impacting
(29:23):
many eCOM brands like ourselves, but we have good options
to mitigate against that.
Speaker 2 (29:28):
So, Ben, what is the secret? Because you've been also
at Meta and you've helped the hyper growth of other
companies your four years at Meta, and you know you
know how to leverage Facebook and Instagram marketing strategy, and
it seems that those are the strategies that work best
these days. You know, consumers, whether it's women or men,
seem to be getting targeted more on those platforms. Is
(29:52):
that the success to True Classics so far is that
you've been able to do that? And if so, what
advice would you give other brands? Yeah?
Speaker 12 (30:01):
I would say that those platforms are definitely the main
ones Meta, Google, et cetera. To get the brand off
the ground these days, with relatively limited resources for us,
we were able to bootrap this company to your point,
no X factors, no celebrities, no big VC money, and
grow it north of nine figures in two short years
(30:22):
and do so profitably on the back of digital advertising.
So yes, highly recommend for any brand who is trying
to get off the ground to invest in really understanding
how to leverage those platforms to their advantage.
Speaker 9 (30:32):
But it's not magic.
Speaker 12 (30:34):
You have to have a great product, you have to
have a great service, and you have to ultimately find
that product market fit with that advertising model baked into
your business model. And when we did that, and we
are not just advertising the product, we're telling great stories.
We're connecting with humans on an emotional level. We explain
to them what is the benefit of our products, how
(30:55):
they're going to fill in our product, not just what
is the product, and that makes a huge difference. So
for us, creative content, storytelling, excellent customer service, exceptional quality
in our products are all pillars of ultimately finding that
product market fit and fast growth.
Speaker 3 (31:11):
So when you think about all of those social media platforms,
and by the way, I'm a total sucker for buying
on those platforms.
Speaker 4 (31:18):
So I know what you mean, but we all are.
Speaker 3 (31:20):
How do you kind of kick through the noise, because
of course there are a lot of people selling on
Instagram and on TikTok, So how do you get your
story through without As you were talking about those celebrity names,
for example, attaching to the brand.
Speaker 12 (31:35):
I think it all goes back to storytelling and if
you really zoom out and look at that, what gets
you is someone who's able to hit the nail on
the head, whether it's a motivator or a barrier to
start a journey with a new company or buy a
particular product. So for us, it's always been, for example,
like really illustrating very well the fit and the feel
and how that shirt is going to look on you
(31:56):
when you try it on, and do so in an
authentic way with influencers and customers who tell those stories.
Speaker 9 (32:03):
Better than we can.
Speaker 12 (32:04):
And with that, people actually pay attention and they want
to give it a try. And when they come to
our site and they see over two hundred thousand and
five star reviews, when they see that growing community of
almost five million people worldwide, and how much they rave
about it they want to try it, especially when the
price tag is not particularly high. So you have got
to kind of figure out a way to your point
(32:24):
like stand out and differentiate yourself. And I would say
on the media side, it's absolutely about storytelling and then
from a product and offer standpoint, that's where your website
has to shine.
Speaker 3 (32:32):
How much does philanthropy matter because you donate T shirts
to homeless veterans shelter schools each month? Is that a
big part of the story for you and what people
are attaching.
Speaker 9 (32:43):
To incredibly important.
Speaker 12 (32:45):
But what I would say for us in particular is
that we're actually not if you will, like advertising and
particularly forefront about that. We do that because we want
to empower people to look good and feel good, and
we genuinely want to do so, not just with the
clothing we sell, but also in ways where we can
do great clothing to people in need. And most recently
around the holidays, we donated almost ten million dollars worth
(33:05):
of retail value of inventory to many people around LA
who needed those clothes for the holiday season. So I
would say it's important for us as humans, because we
believe in showing up to humans and in giving back.
But I wouldn't say it's a core pillar of the
story of the brand and how we've been showing up.
I would say that still to this date, probably many
(33:26):
people amongst our customers don't even understand or know the
extent to which our film tropic efforts have gone, and
that's something we should probably do a better job articulating
to them. But I would say it's important to us
as humans.
Speaker 2 (33:38):
Ben, thank you so much for joining at all the
very best your partnership with Target Expanding, and that has
been yahalo on. They're true classic CEO
Hosts And Creators
Tim Stenovec
Carol Massar
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