So I heard about it all week long after you have to CEO. Tell us about supply chains. Where are we. So two main takeaways I think
from this earnings season. I've also been speaking to a lot of CEOs. The first is that it is very clear that unit growth has
been constrained by supply chain issues. So we'll talk a lot about tech. But let me talk about something very different from
tech. Let's talk about pools. We love pools. We've liked them for a while. They've been big pandemic beneficiaries are pool
CEOs the ones building the pools and the supply. That's the one supplying the pools believed that unit growth could have been 50
percent higher without the supply chain issues there. They're facing the supply itself and materials and also the labor
because we're facing a great resignation in this country. And we currently have the lowest labor force participation rate since
World War 2. That's a big problem. So that all goes under. Unit growth is constrained. And then the second issue. The second
thing that I would highlight is something that Mary said I think is really really important. What she said is that when I heard
her say is that over the longer term they're going to address this issue because they need to be positioned for growth. And I
think what she means by that is that they're going to have to reassure some of this capacity and focus on supply chain
resilience. And it is it is my view that actually Wall Street has probably put too much pressure on companies to optimize
their supply chain. And we're going to get a very a much better balance going forward between that supply chain optimization and
the resilience that become very obvious that we need. So there are a couple of issues there I think. One is where do you get
the materials from. Yeah we relied upon some countries perhaps too much. We have to diversify. Yeah. The other is how much
inventory we maintain. Justin time was very popular for a long time. Yeah. Very efficient for a lot of companies. Yeah. Is this
going to affect margins going forward. If we make those adjustments as supply chains cost more money. It will and it
will impact margins. Most likely. And we're gonna have to kind of get used to that. But of course we need the top line to come
through too. And if people want to sell product they need to have inventory. So again it's going to come back to the balance
of these two things. I do think there is an incredible investment opportunity and our team believes there's an
incredible investment opportunity in investing in the companies that are going to help reassure some of the manufacturing
capacity of the United States of America. And so there I would point to you hurt all those people are dependent on chips. Chips
feel the world's they're fueling the technological advancement that we're seeing across all sectors. And so we can't be
dependent on not just from another corner of the world. We're gonna have to take some of that manufacturing capacity here. So
we love chip manufacturing equipment. So back when I was running a budget cap cities Disney you know one of the questions I ask
every quarter we were down is is this a timing issue. We probably lost this revenue for some. Let me ask a question about
supply chains. When you see it down because the units as you said is that demand waiting for when the supply is there. Or
could we lose some of the demand. Yeah. So in other words are people still going to buy pools and iPhones. Exactly. And I
believe they will. And they're just going to wait a little bit longer. Now of course that requires us to have a reasonable
economic backdrop so that with that caveat. But they will. And then the iPhone space if you had to wait longer you're not going
to switch to another provider. You will go out and buy that iPhone. So in some ways we know that that demand has been kicked
into to next year. But again these companies still have to position themselves for the long term runway of growth and they
will invest in the restoring of their supply chains. Katy with just about every CEO I talked to the supply chain discussion
came right up with cost increases. Yeah. And inflation around the question. Okay. Is this last well into 2022 which seems
clearly will some people say even to the late 20s. What possible effect might that have on inflation. Because a lot of the CEOs
we've talked to said we raised prices. Yeah absolutely. And so of course you want to be with the companies that have the
pricing power to pass that through. I'd say three quick things. I am we are in the camp that these supply chain issues last
throughout 2022. There's not there's not an easy fix for them. And there's an investment opportunity on the back of that which
we which we talked about. The second thing I would say is that the inflation in the labor space is real. We've talked you and
I've talked a little bit about this before but we have failed to pass minimum wage in this country for many decades. We've now
actually jumped over minimum wage because we've had to bid people back into the labor market. Now the question that we have
to really think about is is that then a one time reset in wages. Are we going to get upward continued upward pressure and time
will what time will tell on that. But both of those suggest a higher cost structure. And I wonder whether our wage increases
actually are lagging because if you look at the consumer price index it is going up faster than the wages are wages going up
but not as fast. Does that mean we have to catch up at some point going to have even more wage increases. Well that's how
you get inflation right. But it's very it's very determinant on on get that upward sticky upward pressure of wages going up
which will put you know how that cycle works going forward. But it does benefit which companies you want invested since it's so
sensitive to that that wage inflation than others are. Yeah. So I would say right now we see a very healthy consumer. They're
benefiting from higher wages and we're seeing that. In the data if you look at credit card data just to show you the health of
the consumer why we like the consumer. We have American Express published spending trends. Spending is up 36 percent vs. 2019.
So we've had a big big jump in spending. The other thing I just want to say about consumer in terms of where we're focused. It's
the millennial and Genzyme consumer that are driving a lot of that increase because they like experiences over things. And
it's safe now to go out and have experiences. And they also have a higher risk tolerance around experiences than baby boomers.
Baby boomers spending according to American Express date is actually down 6 percent relative to 2019. So we see health in
the consumer that's repair. Their balance sheet has firepower and we're very much leaning into those consumer companies that
have pricing power and can benefit from a healthier consumer. So unless you we push it too far. Now let's take you to the
metaverse because if you're talking about millennials and and experienced
rather. Yes that sounds to me a little bit like the metaverse. Yes. So I love that you brought up the metaverse. Obviously we
have one of the largest companies in the US decided to rename themselves this week to Metta which is Facebook. Not everybody
knows what the metaverse is. Very simply put it's the idea of looking at going from looking at the Internet to kind of living
on the Internet. And for those of you at home who have young children you probably know the road blocks company that allows
you to build these virtual communities. And yes this is driving consumption online in new ways. And that consumption is going to
be maybe funded by cryptocurrency. So it is very much a brave new world. The one thing I will tell you Facebook is excited
about it. They've renamed themselves obviously and they're a plant. They spent 10 billion dollars this year against that
goal. And that spending is going to go up year after year. They've told everyone that publicly. But if you're worried about
living online all the time I still think it's a long way out until we get to the full metaverse. For now we're still in real
life. And if I had to pick invest in something right now it would be the great outdoors over the metaverse. Over the next
couple of years the universe rather than metaphor. Really. Universe. Exactly. Oh it's very retro of you by the way. For
those of us who are small children we hope that is going to take a while. That's true. It looks a little scary. It is a little
scary.