April 10, 2025 • 21 mins
Watch Alix and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Alix Steel
Today’s Podcast Features are:
Dana D'Auria, Co-Chief Investment Officer, at Envestnet, discusses her outlook for the markets. Fear engulfed Wall Street again as US-China trade tensions escalate, sparking a plunge in stocks, the dollar and oil, while bond havens misfire anew in the latest sign of disorder in the financial system.
Michael McKee, Bloomberg International Economics and Policy Correspondent, discusses today’s U.S CPI data. U.S inflation cooled broadly in March, indicating some relief for consumers prior to widespread tariffs that risk contributing to price pressures.
Deborah Aitken, Bloomberg Intelligence Luxury Goods Analyst, discusses Prada agreeing to buy Verace for $1.3 billlion. The Milan-based company, controlled by billionaire designer Miuccia Prada and her husband Patrizio Bertelli, is buying Versace from Capri Holdings Ltd., which paid €1.8 billion ($2 billion) for the brand in 2018.
Lara Castleton, US Head of Portfolio Construction and Strategy at Janus Henderson Investors, discusses tariffs and her market outlook. A day after the biggest stock-buying wave in five years, assets tied to the economic cycle are sinking again. Traders are rushing to game out how the effective freezing of Chinese trade will impact corporate earnings, economic growth and new hiring.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Apple, Cocklay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:23):
Let's get to Dana Diorio, a co chief investment officer
at Investment, joining us from Hartford, Connecticut.
Speaker 3 (00:30):
Okay, so what do you do?
Speaker 2 (00:31):
It's been a crazy twenty four hours within the market.
Speaker 3 (00:35):
How do you position?
Speaker 4 (00:38):
Yeah, that's that's the big question.
Speaker 5 (00:39):
It's so funny because so actually I met our conference
in Las Vegas, our Investment Elevate conference, and I was
just on stage yesterday literally as the pause was happening
telling everyone to stay the course. It was the timing was,
you know, madness and kind of showing what had happened
on Monday when we had you know, this false report
of a reprieve and stop, you know, skyrocket and only
(01:01):
to come back down. And when you're a financial advisor
trying to trade on this, it's absolutely impossible, of course,
and so you know, the messaging then and now is
you know, kind of you've got to stay put I mean,
certainly if you have clients who are not diversified and
they're super concentrated, or you know, a lot of people
let their equity positions get a little bit big in
this hopes of a pro growth, pro you know, corporate
(01:25):
corporate uh type of policy from the administration. That's obviously
all you know, kind of been obliterated and now we're
looking at a picture that's very different. And so you
had people who are high in equities, if you're if
you're too high inequities, you know, take them off the
table for sure. But you know, you really these are
the times that you that you need to ultimately stay
(01:46):
the course and wait it out, or you turn the
paper losses into a real loss.
Speaker 6 (01:52):
Conference in Vegas. Nobody is conferences in like Sheboygan. They're
always in Vegas or Miami, Scottsdale, Danis.
Speaker 3 (01:58):
I mean, they know what they're doing data. So what
about earnings here?
Speaker 6 (02:01):
I think, you know, I have not seen earning assesstments
really come down that much. But I've got companies left
and right pulling their guidance and all that kind of stuff.
How much earnings how much earnings risk is out there?
Speaker 3 (02:12):
Do you think?
Speaker 5 (02:13):
Yeah, I mean, your last speaker said it, right. I mean,
what's going to be crazy right now is you're going
to have the first quarter earnings come out, You're going
to have you know, March economic reports come out, and
of course all of these are going to paint this
incredibly rosy picture that's not reality anymore.
Speaker 7 (02:28):
Right.
Speaker 3 (02:28):
In fact, they'll.
Speaker 5 (02:29):
Probably be rosier even than they normally would have because
you have folks, you know, pulling forward consumption, pulling forward demand,
and so things will look great and you'll have this
series of reports and earn and this earning season is
going to be part of that, and so paying attention
to that, of course, it gives you no information.
Speaker 4 (02:46):
It's really what is the guidance?
Speaker 5 (02:48):
And if you're a corporate planner, I'm not sure you
can give great guidance, right, I mean the volatility of
you know, just what you have to potentially plan for
in the short run. And then you know, if you're
you know, the idea. Some of the idea here, of course,
is hey, look let's bring you know, some of the
manufacturing back to the States. Let's let's you know, kind
of encourage people to have capex here. But how do
(03:11):
you do a long term plan. I mean, it takes years,
right to bring this stuff here?
Speaker 4 (03:16):
Yeah, how do you?
Speaker 5 (03:18):
How do you plan around that? So I think Guidance
is going to be probably overly I'll almost say might
likely be overly pessimistic, because nobody really knows what they're
dealing with.
Speaker 2 (03:29):
Which to that point, Delta yesterday with Drew Guidance, stock
pop Today CarMax does something similar, I mean, and pulled
back its financial goals because of the volatility. But same thing,
and that stacks down twenty percent. So where are we
in valuations?
Speaker 5 (03:42):
Yeah, well, I mean, obviously we started the year very high.
We've shaved a good piece of that, you know, but
that was part of the problem, right. We came into
the air with that expectation of a goal market with
high valuations as a start, not not everywhere, but certainly
as an index, right, market cap weighted basis, valuations were high,
and so you know, when you come in with high valuations,
(04:06):
really everything has to go well. And if you have
this exogenous shock, you know, and everybody knew tariffs are coming,
it's not as though you know, this was entirely unexpected,
and that's why you have that pull forward of consumption
but the magnitude, right, the breadth of it, how quickly
it all was was intended to come to pass, that
(04:26):
did catch everybody off card and you know, kind of
wiped out that picture that rationalized those higher valuations that
we were sitting with.
Speaker 6 (04:33):
Dana, Thank you so much for joining us. Always appreciate
getting a few minutes of your time.
Speaker 3 (04:37):
Dany de Aoria.
Speaker 6 (04:37):
She is co chief investment officer at invest Net, joining
us from Hartford, Connecticut.
Speaker 3 (04:43):
Via that zoom thing here Vegas, remember, oh Vegas, that's right?
Speaker 4 (04:46):
Time? Is Ava for you?
Speaker 3 (04:47):
Exactly? Oh a Vegas. There we go.
Speaker 1 (04:52):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Work Business Up. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (05:06):
Michael McKee, Bloomberg International Economics and Policy Correspondent, joins us. Now, So, Mike,
it was interesting with the CPI. Bloomberg Economics had a
note out that said this wasn't about falling prices necessarily,
but it was more about falling demand in travel, leisure
and apparel and furniture sales and stuff like that.
Speaker 3 (05:22):
Walk me through the details.
Speaker 8 (05:24):
Well, the biggest drop was in gasoline prices, which is
sort of a combination of anticipated falling demand by the
gasoline producers and refiners, etc.
Speaker 3 (05:36):
Given the impending tariffs.
Speaker 8 (05:39):
And then we also saw some declines as you mentioned,
in travel prices, and that was definitely terriff related, But
the rest of it was sort of mixed news. Food
prices were up by food at home, grocery store prices
were up by half a percent of fairly large gain
than two months in a row where food prices are up,
(06:01):
and we saw apparel prices rise, but is that just
a natural move or was that also an anticipation of tariffs.
Furniture prices we get Furnit love furniture from China, those
were also up.
Speaker 9 (06:15):
So the.
Speaker 8 (06:17):
Report is kind of a mixed news thing, except that
the overall good news as it went down. And if
you were not going to have tariffs, if none of
this had happened, it would be exactly what the Fed
would love to see.
Speaker 6 (06:30):
Right, So, when do we expect to see any inflation
impact in these CPI numbers and the other the pc deflator.
When do we expect if there's going to be any
inflation impact. When do we expect to see that.
Speaker 3 (06:43):
It's a little hard to say.
Speaker 8 (06:44):
Probably probably maybe could be hedged enough here next month,
this month's data when it comes out next month, because
it could reflect tariffs that the President has already put on,
But it's probably going to take a couple of months.
Speaker 3 (07:02):
Maybe we get something in the May numbers.
Speaker 8 (07:05):
First of all, companies have to figure out whether their
products are tarra affed or not.
Speaker 3 (07:10):
That seems to be bouncing around.
Speaker 8 (07:12):
And then it's a question of how many how much
stuff people have an inventory they can sell that they
bought at the lower prices, how soon inventory actually docks
at a port, and is the tariffs are applied. So
it's kind of hard to say exactly when we're going
to see this, but it would be coming. And given
(07:32):
the fact that we still have ten percent tariffs on
everybody and now these huge shafts in China, you will
see it.
Speaker 2 (07:40):
When is the biggest what are you looking at next
in terms of the biggest indicator? Is it going to
be inflation expectations? Like is that going to be the
thing that's going to sort of give us that kind
of insight?
Speaker 3 (07:51):
Yeah, because that's tomorrow.
Speaker 8 (07:52):
So I'm pitching ahead to all the appearances I will
do with you guys tomorrow.
Speaker 2 (07:57):
Well, John Ticker's in charge tomorrow, sol you on the show,
but University of Michigan tomorrow.
Speaker 8 (08:04):
The FED has sort of downplayed the long term inflation
expectations number is suggesting that it doesn't quite reflect reality
in the history of the Michigan numbers. But they do
worry about the short term and that has gone up significantly,
and they have said, and Jay Pole said that we
(08:25):
are obligated to keep prices down and we are very
worried about the short term inflation expectations should they become unanchored.
So that'll be somewhat big news tomorrow.
Speaker 3 (08:36):
But I think.
Speaker 8 (08:39):
We're redefining what big news in economic data brings here
because everybody's once we get to the point that you
asked about, when does this hit. Once we get to
that point, then markets are going to react to every
little data bit. But anything that is up to this point,
people are gonna say old news PPI tomorrow.
Speaker 6 (08:58):
How do we interpet PPI versus well, PBI is.
Speaker 8 (09:02):
The easy difference to know is that CPI is what
you pay to buy things and PPI is what companies
charge to sell things. And we may see some of
the China impact in the PPI because we saw those
big inventory builds in terms of industrial supplies and things
like that in the past couple of months.
Speaker 3 (09:24):
And so if you were a Chinese company.
Speaker 8 (09:27):
Or from anywhere else in the world selling to the
United States and there was this rapid rise in demand,
you might raise prices.
Speaker 3 (09:34):
So we could look for some of that tomorrow.
Speaker 8 (09:38):
But so far producer prices have been much better behaved
than consumer prices. So overall, it hopefully is a continuation
of the good news that no longer matters.
Speaker 7 (09:48):
Can you clear something up for me? This is the
stupid question for me from the peanut gallery. A guy
picking up stuff at the port. That's the person who's
going to pay for the town. It's not the exporter
often whatever it's trying to the exporter. This is a
guy in Newport Elizabeth, Ork, New Jersey.
Speaker 8 (10:07):
This is the silly thing that the administration keeps pushing
that what they're talking about is that not that the
exporter is going to pay anything, but that currencies, the
dollars should rise and that makes their currency cheaper, and
so they you know, there's an impact on them in
that case. And sure, but it's the person, it's the
(10:29):
company that is bought the stuff.
Speaker 3 (10:31):
So this is the whole story for me.
Speaker 2 (10:32):
Yesterday there was like a back channel one thing that
he wanted to buy some guy at blooms Oh yeah yeah,
go back and listen.
Speaker 3 (10:40):
Yeah yeah, it don't even go into the whole different thing.
Speaker 2 (10:42):
Mike.
Speaker 4 (10:42):
Thanks a lot, Mike.
Speaker 2 (10:42):
M keep moving to National Economics and Policy corresponding.
Speaker 1 (10:45):
Joining us now, you're listening to the Bloomberg Intelligence podcast.
Catch us live weekdays at ten am Eastern on Apple,
Cocklay and Android Auto with the Bloomberg Business app. Listen
on demand wherever you get your podcasts, or watch us
I've on YouTube.
Speaker 2 (11:01):
All right, we're debating in the last hour, like if
John Tucker is Versace and Michael McKee is Prada, now
they're going to be uniting. So it's like Mike Tucker
Prada Versaci thing, all right, track and Boomberg Intelligence luxury
goods analyst joined us.
Speaker 5 (11:17):
Now.
Speaker 2 (11:17):
It's funny because neither of them are those things. So
Prada is going to buy Versus a chip for about
one point three eight billion dollars. Walk us through the
intricacies of this deal.
Speaker 4 (11:26):
Hi.
Speaker 9 (11:27):
Yeah, So it's been talked about for quite a while
and we already last night heard maybe that the acquisition
price would be done by a couple of hundred million.
The big thing here has been that under Capri, Fasachi
is not hard enough investment in it over the last year,
(11:49):
particularly in the field of the Tapestry bid for Capri
which didn't go ahead and which took a lot of
the headlines last year and where all brand under the
Capri banner suffered. We've had chairman John Idel come back
into the business as CEO for Capri, and with the
(12:11):
focus really on Michael Corese, which is seventy percent of
the sales and after a difficult year last year one
hundred percent of the profitability of the company leading into
this this year. So it's all about turning around Michael
cause which has seventy percent of its business in Americas,
(12:31):
is at accessible price point and where actually we think
that they'll be much more pressure given the tariff situation
and the cost of living on all consumers. And also
in the US if we turn over to the Versace
acquisition and what's going on there with Prada. Prada has
(12:52):
been one of the top performing companies. It's really done
ever so well with Proud of the last few years
and gone to normalized single digit growth. And then it
has a brand Meo Meu within its portfolio doing ever
so well. It's number one on the list index for
luxury brands in terms of brand equity brand heat, with
(13:13):
Praderate number three, and during the December quarter Versaci dropped
three places to number fourteen. So we think it shifts
Forsaci into the right hands into Italian luxury owners who
can really work well to try to reinvigorate this brand
and the brand equity behind Fasaci.
Speaker 6 (13:31):
Hey, dab, I'm really interested in evaluation here, being a
former banker myself. They're selling this thing for one point
three eight billion US dollars in twenty eighteen, they paid
two billion dollars for this, so a lot of value destruction.
Is that a Versace specific issue or does that reflect
lower valuations in luxury Generally.
Speaker 9 (13:52):
I would say it's both, but it's mostly Versaci specific
because if we look at the Asarchi then to now
the fact that it's given double digit declines in organic
sales growth through the couple of years, where actually the
market was growing five percent or so, and that one
point seven, to put it into perspective on an EV,
(14:15):
would have been against traditionally a market for a very
solid brand for Sarti with a lot of heritage, running
from anywhere from three to five times, probably three times
for Versargi, given it isn't particularly big. Under the what
was Michael Cause and then became the Capri Group. The
(14:35):
expectation was that they would run it from one billion
in sales toward two billion, and that just didn't happen. Yeah,
So that's partly why. I think also because of the
state of the market. We started twenty twenty five with
the luxury market focusing for low to mid single digit growth.
With everything that's going on, we pull that back towards neutral.
Speaker 6 (14:56):
Hey, deb, thanks for joining us. Aways appreciate getting your
thoughts there. Deb eight the lead voice on all things luxury.
She gets luxury goods analysts for Bloomberg Intelligence. She's based
in London.
Speaker 1 (15:05):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts or watch us live on YouTube.
Speaker 3 (15:19):
All right, here's my Janice story.
Speaker 6 (15:22):
The first time I ever went to a Starbucks, like
twenty years ago, was waiting to go into a meeting
of Janis out in Denver, Colorado. I'm not a coffee guy,
so I had no idea what to order, So I
just ordered what the person in front of me ordered.
There you go, that's my Janis story. Lara Castleton joins
us US head of Portfolio Construction and Strategy Janis Henderson,
based in Denver.
Speaker 3 (15:41):
Laura, you sit.
Speaker 6 (15:42):
Back and you think about portfolio.
Speaker 3 (15:45):
Construction and strategy.
Speaker 6 (15:47):
How do you do that with this volatility that we're
dealing with this year?
Speaker 4 (15:53):
Well, thank you for having me.
Speaker 10 (15:54):
There's a couple more Starbucks that have popped up over
she said, sure, you were here. Yeah, there's a little
bit of volatility going on the market, making our conversations
a lot more in demand. You should say very clearly,
planning long term is what we need to be focused
on for our clients. Near term volatility is very extremely difficult.
Heading into the tariff announcement a couple of weeks ago,
(16:17):
we were talking to clients about really staying the course,
not panicking, but being more diversified than what we had
maybe been in the past.
Speaker 4 (16:24):
What does diversified mean?
Speaker 2 (16:26):
And I know that's a stupid question, but I say that,
and you.
Speaker 3 (16:28):
Know the thirty year.
Speaker 2 (16:29):
If I on the thirty year for diversification, I just
got burned.
Speaker 4 (16:33):
Correct.
Speaker 10 (16:33):
So on diversification, what we're talking about in our client consultations,
it's diversification of that typical sixty forty portfolio, absolutely, but
then it's also diversification within the sixty and within the
forty and when we actually survey, so we work with
We've worked with over twenty five thousand model portfolios over
sixty five hundred clients globally, and recently came out with
(16:55):
a piece just kind of isolating the average moderate portfolio
that we come across. One of the biggest topics of
conversation we're talking about right now today is actually the
diversification within the US equity allocation because that concentrations reached
north of eighty percent of investor portfolios. So it's not
just across assets, but it's also within Hey.
Speaker 6 (17:16):
Laura, how about international markets? You know in the first quarter,
the rest of the world's markets really outperformed the US.
The S and P five hundred and that doesn't happen
very often. Is that kind of a short term blip
or is that something that we need to, you know,
think about longer term.
Speaker 4 (17:32):
That's a very good question.
Speaker 10 (17:34):
It was very interesting to me to actually get some
incoming calls from clients asking about international because to your point,
that has never happened before. I do believe with the
tariff policy that's come in, Obviously we don't know what's
going to happen long term, but it is signaling a
structural shift in what we're trying to accomplish longer term.
Speaker 4 (17:52):
With our budget deficits.
Speaker 10 (17:53):
To me, that does warrant potentially diversifying away from only
the US dollar. And so while international market have been
strong this year, there's a shift in how they're spending abroad,
they're stimulating their economies, and that warrants having some diversification
only outside of just only that heavy concentration of the
US dollar.
Speaker 2 (18:11):
What do you expect in terms of this volatility? Like, clearly,
diversification is good for all, I mean, the idea is
that it should be good for all investing climates.
Speaker 4 (18:20):
However, the longer the.
Speaker 2 (18:21):
Volatility goes on, the harder it is for investors to.
Speaker 4 (18:23):
Stomach that absolutely.
Speaker 10 (18:26):
So that's exactly what we're coaching our clients through.
Speaker 4 (18:29):
Is very clearly, even.
Speaker 10 (18:31):
In the past week, if you wanted to make some
pretty big bets on going into certain areas of the market,
let's talk even fixed income markets, you could easily get
whipsod the next day, the next week. And so when
you're talking about diversification, you need to be spread across
the yield curve, across sectors within fixed income, across regions,
within equities, and you should start to see some bounces
(18:53):
from some of these other areas while other ports of your.
Speaker 4 (18:55):
Portfolio are kind of dipping.
Speaker 10 (18:57):
So we're really talking about staying to it's that long
term goal. And luckily a lot of the clients that
we work with are managing money for clients I have
a long term financial plan. So while they're getting headlines
every day about the volatility, for the most part, they're
being able to coach their clients that volatility happens, this
is not outside of the norm, but on a long
term basis that you're still well within your reach of
(19:18):
your goals.
Speaker 6 (19:20):
Laura, are the folks that Jenna Senderson are you guys?
You know is there a base case of recession or
maybe we can skirt past it.
Speaker 10 (19:27):
So base case is not recession that obviously has been
coming up into conversations quite a bit. More so, it's
not out of the picture this year. And remember before
the tariff announcements, growth was already slowing. There was already
that lack of confidence within the economy that could bleed
into slower growth leading to a recession this year.
Speaker 4 (19:45):
So it's not without the.
Speaker 10 (19:46):
Realm of possibilities, but it's not a base case, and
it's also not necessarily a doomsday scenario for portfolios. Recessions happen,
it doesn't necessarily mean it will be the exact recession
we experienced the past two times, which were quite severe,
and there are ways to plan around that, namely, be
high quality within your names, focus on the fundamentals within
your company balance.
Speaker 4 (20:06):
Sheets and within fixed income.
Speaker 10 (20:08):
Really shore up the quality in your fixed income portfolios
as well.
Speaker 3 (20:12):
Before we let you go.
Speaker 2 (20:13):
Corporate credit spreads have blown out, they're continuing to blow out,
particularly in high yield.
Speaker 4 (20:17):
Does corporate credit play a role.
Speaker 10 (20:18):
Here, Yeah, that was one of our biggest overweights we
saw in a lot of client portfolios leading into these
events was the heavy allocation to corporate credit, and really
one direction spreads could go was wide. We've started to
see that, although they've maybe started to trickle back in
a little bit, that is still an ongoing risk and
easily avoidable in our minds to be diversified across yield curve.
(20:39):
So on the shorter end of the corporate credit spread curve,
you do get a little bit more insulation from spreads widening.
And then within the securitized area of the market, spreads
were already a little bit wider.
Speaker 4 (20:48):
We weren't able.
Speaker 10 (20:50):
To insulate ourselves from that area by hiding into securitize.
But corporate credits are typically that canarying the coal mine,
and it's something to watch for that recession indicator going forward.
Speaker 3 (21:00):
All Right, Laura, thank you so much for joining us.
Speaker 6 (21:02):
Laura Castleton, US head of Portfolio Construction and Strategy. Janie
Henderson Investors out there in Denver, Colorado, great offices out there,
A great firm actually was when I was on the
south side. It was the biggest account in Denver. You
had to get the vote from Janie, and I did.
Speaker 1 (21:20):
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or watch us live on YouTube.
Speaker 2 (00:23):
Let's get to Dana Diorio, a co chief investment officer
at Investment, joining us from Hartford, Connecticut.
Speaker 3 (00:30):
Okay, so what do you do?
Speaker 2 (00:31):
It's been a crazy twenty four hours within the market.
Speaker 3 (00:35):
How do you position?
Speaker 4 (00:38):
Yeah, that's that's the big question.
Speaker 5 (00:39):
It's so funny because so actually I met our conference
in Las Vegas, our Investment Elevate conference, and I was
just on stage yesterday literally as the pause was happening
telling everyone to stay the course. It was the timing was,
you know, madness and kind of showing what had happened
on Monday when we had you know, this false report
of a reprieve and stop, you know, skyrocket and only
(01:01):
to come back down. And when you're a financial advisor
trying to trade on this, it's absolutely impossible, of course,
and so you know, the messaging then and now is
you know, kind of you've got to stay put I mean,
certainly if you have clients who are not diversified and
they're super concentrated, or you know, a lot of people
let their equity positions get a little bit big in
this hopes of a pro growth, pro you know, corporate
(01:25):
corporate uh type of policy from the administration. That's obviously
all you know, kind of been obliterated and now we're
looking at a picture that's very different. And so you
had people who are high in equities, if you're if
you're too high inequities, you know, take them off the
table for sure. But you know, you really these are
the times that you that you need to ultimately stay
(01:46):
the course and wait it out, or you turn the
paper losses into a real loss.
Speaker 6 (01:52):
Conference in Vegas. Nobody is conferences in like Sheboygan. They're
always in Vegas or Miami, Scottsdale, Danis.
Speaker 3 (01:58):
I mean, they know what they're doing data. So what
about earnings here?
Speaker 6 (02:01):
I think, you know, I have not seen earning assesstments
really come down that much. But I've got companies left
and right pulling their guidance and all that kind of stuff.
How much earnings how much earnings risk is out there?
Speaker 3 (02:12):
Do you think?
Speaker 5 (02:13):
Yeah, I mean, your last speaker said it, right. I mean,
what's going to be crazy right now is you're going
to have the first quarter earnings come out, You're going
to have you know, March economic reports come out, and
of course all of these are going to paint this
incredibly rosy picture that's not reality anymore.
Speaker 7 (02:28):
Right.
Speaker 3 (02:28):
In fact, they'll.
Speaker 5 (02:29):
Probably be rosier even than they normally would have because
you have folks, you know, pulling forward consumption, pulling forward demand,
and so things will look great and you'll have this
series of reports and earn and this earning season is
going to be part of that, and so paying attention
to that, of course, it gives you no information.
Speaker 4 (02:46):
It's really what is the guidance?
Speaker 5 (02:48):
And if you're a corporate planner, I'm not sure you
can give great guidance, right, I mean the volatility of
you know, just what you have to potentially plan for
in the short run. And then you know, if you're
you know, the idea. Some of the idea here, of course,
is hey, look let's bring you know, some of the
manufacturing back to the States. Let's let's you know, kind
of encourage people to have capex here. But how do
(03:11):
you do a long term plan. I mean, it takes years,
right to bring this stuff here?
Speaker 4 (03:16):
Yeah, how do you?
Speaker 5 (03:18):
How do you plan around that? So I think Guidance
is going to be probably overly I'll almost say might
likely be overly pessimistic, because nobody really knows what they're
dealing with.
Speaker 2 (03:29):
Which to that point, Delta yesterday with Drew Guidance, stock
pop Today CarMax does something similar, I mean, and pulled
back its financial goals because of the volatility. But same thing,
and that stacks down twenty percent. So where are we
in valuations?
Speaker 5 (03:42):
Yeah, well, I mean, obviously we started the year very high.
We've shaved a good piece of that, you know, but
that was part of the problem, right. We came into
the air with that expectation of a goal market with
high valuations as a start, not not everywhere, but certainly
as an index, right, market cap weighted basis, valuations were high,
and so you know, when you come in with high valuations,
(04:06):
really everything has to go well. And if you have
this exogenous shock, you know, and everybody knew tariffs are coming,
it's not as though you know, this was entirely unexpected,
and that's why you have that pull forward of consumption
but the magnitude, right, the breadth of it, how quickly
it all was was intended to come to pass, that
(04:26):
did catch everybody off card and you know, kind of
wiped out that picture that rationalized those higher valuations that
we were sitting with.
Speaker 6 (04:33):
Dana, Thank you so much for joining us. Always appreciate
getting a few minutes of your time.
Speaker 3 (04:37):
Dany de Aoria.
Speaker 6 (04:37):
She is co chief investment officer at invest Net, joining
us from Hartford, Connecticut.
Speaker 3 (04:43):
Via that zoom thing here Vegas, remember, oh Vegas, that's right?
Speaker 4 (04:46):
Time? Is Ava for you?
Speaker 3 (04:47):
Exactly? Oh a Vegas. There we go.
Speaker 1 (04:52):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Work Business Up. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (05:06):
Michael McKee, Bloomberg International Economics and Policy Correspondent, joins us. Now, So, Mike,
it was interesting with the CPI. Bloomberg Economics had a
note out that said this wasn't about falling prices necessarily,
but it was more about falling demand in travel, leisure
and apparel and furniture sales and stuff like that.
Speaker 3 (05:22):
Walk me through the details.
Speaker 8 (05:24):
Well, the biggest drop was in gasoline prices, which is
sort of a combination of anticipated falling demand by the
gasoline producers and refiners, etc.
Speaker 3 (05:36):
Given the impending tariffs.
Speaker 8 (05:39):
And then we also saw some declines as you mentioned,
in travel prices, and that was definitely terriff related, But
the rest of it was sort of mixed news. Food
prices were up by food at home, grocery store prices
were up by half a percent of fairly large gain
than two months in a row where food prices are up,
(06:01):
and we saw apparel prices rise, but is that just
a natural move or was that also an anticipation of tariffs.
Furniture prices we get Furnit love furniture from China, those
were also up.
Speaker 9 (06:15):
So the.
Speaker 8 (06:17):
Report is kind of a mixed news thing, except that
the overall good news as it went down. And if
you were not going to have tariffs, if none of
this had happened, it would be exactly what the Fed
would love to see.
Speaker 6 (06:30):
Right, So, when do we expect to see any inflation
impact in these CPI numbers and the other the pc deflator.
When do we expect if there's going to be any
inflation impact. When do we expect to see that.
Speaker 3 (06:43):
It's a little hard to say.
Speaker 8 (06:44):
Probably probably maybe could be hedged enough here next month,
this month's data when it comes out next month, because
it could reflect tariffs that the President has already put on,
But it's probably going to take a couple of months.
Speaker 3 (07:02):
Maybe we get something in the May numbers.
Speaker 8 (07:05):
First of all, companies have to figure out whether their
products are tarra affed or not.
Speaker 3 (07:10):
That seems to be bouncing around.
Speaker 8 (07:12):
And then it's a question of how many how much
stuff people have an inventory they can sell that they
bought at the lower prices, how soon inventory actually docks
at a port, and is the tariffs are applied. So
it's kind of hard to say exactly when we're going
to see this, but it would be coming. And given
(07:32):
the fact that we still have ten percent tariffs on
everybody and now these huge shafts in China, you will
see it.
Speaker 2 (07:40):
When is the biggest what are you looking at next
in terms of the biggest indicator? Is it going to
be inflation expectations? Like is that going to be the
thing that's going to sort of give us that kind
of insight?
Speaker 3 (07:51):
Yeah, because that's tomorrow.
Speaker 8 (07:52):
So I'm pitching ahead to all the appearances I will
do with you guys tomorrow.
Speaker 2 (07:57):
Well, John Ticker's in charge tomorrow, sol you on the show,
but University of Michigan tomorrow.
Speaker 8 (08:04):
The FED has sort of downplayed the long term inflation
expectations number is suggesting that it doesn't quite reflect reality
in the history of the Michigan numbers. But they do
worry about the short term and that has gone up significantly,
and they have said, and Jay Pole said that we
(08:25):
are obligated to keep prices down and we are very
worried about the short term inflation expectations should they become unanchored.
So that'll be somewhat big news tomorrow.
Speaker 3 (08:36):
But I think.
Speaker 8 (08:39):
We're redefining what big news in economic data brings here
because everybody's once we get to the point that you
asked about, when does this hit. Once we get to
that point, then markets are going to react to every
little data bit. But anything that is up to this point,
people are gonna say old news PPI tomorrow.
Speaker 6 (08:58):
How do we interpet PPI versus well, PBI is.
Speaker 8 (09:02):
The easy difference to know is that CPI is what
you pay to buy things and PPI is what companies
charge to sell things. And we may see some of
the China impact in the PPI because we saw those
big inventory builds in terms of industrial supplies and things
like that in the past couple of months.
Speaker 3 (09:24):
And so if you were a Chinese company.
Speaker 8 (09:27):
Or from anywhere else in the world selling to the
United States and there was this rapid rise in demand,
you might raise prices.
Speaker 3 (09:34):
So we could look for some of that tomorrow.
Speaker 8 (09:38):
But so far producer prices have been much better behaved
than consumer prices. So overall, it hopefully is a continuation
of the good news that no longer matters.
Speaker 7 (09:48):
Can you clear something up for me? This is the
stupid question for me from the peanut gallery. A guy
picking up stuff at the port. That's the person who's
going to pay for the town. It's not the exporter
often whatever it's trying to the exporter. This is a
guy in Newport Elizabeth, Ork, New Jersey.
Speaker 8 (10:07):
This is the silly thing that the administration keeps pushing
that what they're talking about is that not that the
exporter is going to pay anything, but that currencies, the
dollars should rise and that makes their currency cheaper, and
so they you know, there's an impact on them in
that case. And sure, but it's the person, it's the
(10:29):
company that is bought the stuff.
Speaker 3 (10:31):
So this is the whole story for me.
Speaker 2 (10:32):
Yesterday there was like a back channel one thing that
he wanted to buy some guy at blooms Oh yeah yeah,
go back and listen.
Speaker 3 (10:40):
Yeah yeah, it don't even go into the whole different thing.
Speaker 2 (10:42):
Mike.
Speaker 4 (10:42):
Thanks a lot, Mike.
Speaker 2 (10:42):
M keep moving to National Economics and Policy corresponding.
Speaker 1 (10:45):
Joining us now, you're listening to the Bloomberg Intelligence podcast.
Catch us live weekdays at ten am Eastern on Apple,
Cocklay and Android Auto with the Bloomberg Business app. Listen
on demand wherever you get your podcasts, or watch us
I've on YouTube.
Speaker 2 (11:01):
All right, we're debating in the last hour, like if
John Tucker is Versace and Michael McKee is Prada, now
they're going to be uniting. So it's like Mike Tucker
Prada Versaci thing, all right, track and Boomberg Intelligence luxury
goods analyst joined us.
Speaker 5 (11:17):
Now.
Speaker 2 (11:17):
It's funny because neither of them are those things. So
Prada is going to buy Versus a chip for about
one point three eight billion dollars. Walk us through the
intricacies of this deal.
Speaker 4 (11:26):
Hi.
Speaker 9 (11:27):
Yeah, So it's been talked about for quite a while
and we already last night heard maybe that the acquisition
price would be done by a couple of hundred million.
The big thing here has been that under Capri, Fasachi
is not hard enough investment in it over the last year,
(11:49):
particularly in the field of the Tapestry bid for Capri
which didn't go ahead and which took a lot of
the headlines last year and where all brand under the
Capri banner suffered. We've had chairman John Idel come back
into the business as CEO for Capri, and with the
(12:11):
focus really on Michael Corese, which is seventy percent of
the sales and after a difficult year last year one
hundred percent of the profitability of the company leading into
this this year. So it's all about turning around Michael
cause which has seventy percent of its business in Americas,
(12:31):
is at accessible price point and where actually we think
that they'll be much more pressure given the tariff situation
and the cost of living on all consumers. And also
in the US if we turn over to the Versace
acquisition and what's going on there with Prada. Prada has
(12:52):
been one of the top performing companies. It's really done
ever so well with Proud of the last few years
and gone to normalized single digit growth. And then it
has a brand Meo Meu within its portfolio doing ever
so well. It's number one on the list index for
luxury brands in terms of brand equity brand heat, with
(13:13):
Praderate number three, and during the December quarter Versaci dropped
three places to number fourteen. So we think it shifts
Forsaci into the right hands into Italian luxury owners who
can really work well to try to reinvigorate this brand
and the brand equity behind Fasaci.
Speaker 6 (13:31):
Hey, dab, I'm really interested in evaluation here, being a
former banker myself. They're selling this thing for one point
three eight billion US dollars in twenty eighteen, they paid
two billion dollars for this, so a lot of value destruction.
Is that a Versace specific issue or does that reflect
lower valuations in luxury Generally.
Speaker 9 (13:52):
I would say it's both, but it's mostly Versaci specific
because if we look at the Asarchi then to now
the fact that it's given double digit declines in organic
sales growth through the couple of years, where actually the
market was growing five percent or so, and that one
point seven, to put it into perspective on an EV,
(14:15):
would have been against traditionally a market for a very
solid brand for Sarti with a lot of heritage, running
from anywhere from three to five times, probably three times
for Versargi, given it isn't particularly big. Under the what
was Michael Cause and then became the Capri Group. The
(14:35):
expectation was that they would run it from one billion
in sales toward two billion, and that just didn't happen. Yeah,
So that's partly why. I think also because of the
state of the market. We started twenty twenty five with
the luxury market focusing for low to mid single digit growth.
With everything that's going on, we pull that back towards neutral.
Speaker 6 (14:56):
Hey, deb, thanks for joining us. Aways appreciate getting your
thoughts there. Deb eight the lead voice on all things luxury.
She gets luxury goods analysts for Bloomberg Intelligence. She's based
in London.
Speaker 1 (15:05):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts or watch us live on YouTube.
Speaker 3 (15:19):
All right, here's my Janice story.
Speaker 6 (15:22):
The first time I ever went to a Starbucks, like
twenty years ago, was waiting to go into a meeting
of Janis out in Denver, Colorado. I'm not a coffee guy,
so I had no idea what to order, So I
just ordered what the person in front of me ordered.
There you go, that's my Janis story. Lara Castleton joins
us US head of Portfolio Construction and Strategy Janis Henderson,
based in Denver.
Speaker 3 (15:41):
Laura, you sit.
Speaker 6 (15:42):
Back and you think about portfolio.
Speaker 3 (15:45):
Construction and strategy.
Speaker 6 (15:47):
How do you do that with this volatility that we're
dealing with this year?
Speaker 4 (15:53):
Well, thank you for having me.
Speaker 10 (15:54):
There's a couple more Starbucks that have popped up over
she said, sure, you were here. Yeah, there's a little
bit of volatility going on the market, making our conversations
a lot more in demand. You should say very clearly,
planning long term is what we need to be focused
on for our clients. Near term volatility is very extremely difficult.
Heading into the tariff announcement a couple of weeks ago,
(16:17):
we were talking to clients about really staying the course,
not panicking, but being more diversified than what we had
maybe been in the past.
Speaker 4 (16:24):
What does diversified mean?
Speaker 2 (16:26):
And I know that's a stupid question, but I say that,
and you.
Speaker 3 (16:28):
Know the thirty year.
Speaker 2 (16:29):
If I on the thirty year for diversification, I just
got burned.
Speaker 4 (16:33):
Correct.
Speaker 10 (16:33):
So on diversification, what we're talking about in our client consultations,
it's diversification of that typical sixty forty portfolio, absolutely, but
then it's also diversification within the sixty and within the
forty and when we actually survey, so we work with
We've worked with over twenty five thousand model portfolios over
sixty five hundred clients globally, and recently came out with
(16:55):
a piece just kind of isolating the average moderate portfolio
that we come across. One of the biggest topics of
conversation we're talking about right now today is actually the
diversification within the US equity allocation because that concentrations reached
north of eighty percent of investor portfolios. So it's not
just across assets, but it's also within Hey.
Speaker 6 (17:16):
Laura, how about international markets? You know in the first quarter,
the rest of the world's markets really outperformed the US.
The S and P five hundred and that doesn't happen
very often. Is that kind of a short term blip
or is that something that we need to, you know,
think about longer term.
Speaker 4 (17:32):
That's a very good question.
Speaker 10 (17:34):
It was very interesting to me to actually get some
incoming calls from clients asking about international because to your point,
that has never happened before. I do believe with the
tariff policy that's come in, Obviously we don't know what's
going to happen long term, but it is signaling a
structural shift in what we're trying to accomplish longer term.
Speaker 4 (17:52):
With our budget deficits.
Speaker 10 (17:53):
To me, that does warrant potentially diversifying away from only
the US dollar. And so while international market have been
strong this year, there's a shift in how they're spending abroad,
they're stimulating their economies, and that warrants having some diversification
only outside of just only that heavy concentration of the
US dollar.
Speaker 2 (18:11):
What do you expect in terms of this volatility? Like, clearly,
diversification is good for all, I mean, the idea is
that it should be good for all investing climates.
Speaker 4 (18:20):
However, the longer the.
Speaker 2 (18:21):
Volatility goes on, the harder it is for investors to.
Speaker 4 (18:23):
Stomach that absolutely.
Speaker 10 (18:26):
So that's exactly what we're coaching our clients through.
Speaker 4 (18:29):
Is very clearly, even.
Speaker 10 (18:31):
In the past week, if you wanted to make some
pretty big bets on going into certain areas of the market,
let's talk even fixed income markets, you could easily get
whipsod the next day, the next week. And so when
you're talking about diversification, you need to be spread across
the yield curve, across sectors within fixed income, across regions,
within equities, and you should start to see some bounces
(18:53):
from some of these other areas while other ports of your.
Speaker 4 (18:55):
Portfolio are kind of dipping.
Speaker 10 (18:57):
So we're really talking about staying to it's that long
term goal. And luckily a lot of the clients that
we work with are managing money for clients I have
a long term financial plan. So while they're getting headlines
every day about the volatility, for the most part, they're
being able to coach their clients that volatility happens, this
is not outside of the norm, but on a long
term basis that you're still well within your reach of
(19:18):
your goals.
Speaker 6 (19:20):
Laura, are the folks that Jenna Senderson are you guys?
You know is there a base case of recession or
maybe we can skirt past it.
Speaker 10 (19:27):
So base case is not recession that obviously has been
coming up into conversations quite a bit. More so, it's
not out of the picture this year. And remember before
the tariff announcements, growth was already slowing. There was already
that lack of confidence within the economy that could bleed
into slower growth leading to a recession this year.
Speaker 4 (19:45):
So it's not without the.
Speaker 10 (19:46):
Realm of possibilities, but it's not a base case, and
it's also not necessarily a doomsday scenario for portfolios. Recessions happen,
it doesn't necessarily mean it will be the exact recession
we experienced the past two times, which were quite severe,
and there are ways to plan around that, namely, be
high quality within your names, focus on the fundamentals within
your company balance.
Speaker 4 (20:06):
Sheets and within fixed income.
Speaker 10 (20:08):
Really shore up the quality in your fixed income portfolios
as well.
Speaker 3 (20:12):
Before we let you go.
Speaker 2 (20:13):
Corporate credit spreads have blown out, they're continuing to blow out,
particularly in high yield.
Speaker 4 (20:17):
Does corporate credit play a role.
Speaker 10 (20:18):
Here, Yeah, that was one of our biggest overweights we
saw in a lot of client portfolios leading into these
events was the heavy allocation to corporate credit, and really
one direction spreads could go was wide. We've started to
see that, although they've maybe started to trickle back in
a little bit, that is still an ongoing risk and
easily avoidable in our minds to be diversified across yield curve.
(20:39):
So on the shorter end of the corporate credit spread curve,
you do get a little bit more insulation from spreads widening.
And then within the securitized area of the market, spreads
were already a little bit wider.
Speaker 4 (20:48):
We weren't able.
Speaker 10 (20:50):
To insulate ourselves from that area by hiding into securitize.
But corporate credits are typically that canarying the coal mine,
and it's something to watch for that recession indicator going forward.
Speaker 3 (21:00):
All Right, Laura, thank you so much for joining us.
Speaker 6 (21:02):
Laura Castleton, US head of Portfolio Construction and Strategy. Janie
Henderson Investors out there in Denver, Colorado, great offices out there,
A great firm actually was when I was on the
south side. It was the biggest account in Denver. You
had to get the vote from Janie, and I did.
Speaker 1 (21:20):
This is the Bloomberg Intelligence podcast available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
ten am to noon Eastern on Bloomberg dot Com, the
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