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Speaker 3: Here's a Morgan Stanley up six point seven percent right now,
Speaker 3: best day in just about four years. Also at a
Speaker 3: record right now, Morgan Stanley traders and bankers joining the
Speaker 3: rest of their Wall Street rivals in posting better than
Speaker 3: expected revenue. It fueled a thirty two percent profit surge
Speaker 3: for the third quarter, cent shares up the most in
Speaker 3: close to four years. Here's Morgan Stanley's CEO, Ted Pic
Speaker 3: earlier today in an interview on Bloomberg to TV speaking
Speaker 3: to Shanoli Basek about his view of the economy and
Speaker 3: the consumer.
Speaker 4: We don't know what the policy reaction function is actually
Speaker 4: going to be off of what has been said, and
Speaker 4: for that reason, I think you have a number of
Speaker 4: investors that are actually just sort of continuing to plow
Speaker 4: forward on the view that the economy is in pretty
Speaker 4: good shape and the consumers and corporates are in great shape,
Speaker 4: so that when there is an election outcome, once there's
Speaker 4: a sense for whether new policy will actually get affected,
Speaker 4: then they can have a reaction.
Speaker 3: I couldn't help, but notice he said when there is
Speaker 3: an election outcome, a lot of folks saying it won't
Speaker 3: necessarily happen. The day after three weeks from yesterday, we
Speaker 3: got with us Alison Williams Bloomberg Intelligence, a senior at
Speaker 3: Global Banks analyst. She joins us here in the Bloomberg
Speaker 3: Business Week studio. Alison quite a few highlights from this report.
Speaker 3: Revenue from the trading business rising thirteen percent, the wealth
Speaker 3: unit also standing out higher than analyst expectations. What worked
Speaker 3: so well for more than Stanley this quarter.
Speaker 5: I think it was the rebound in well flows that
Speaker 5: investors are excited about. But to be clear, the business
Speaker 5: is hitting on all cylinders, so there was a broadbeat
Speaker 5: across the bank. The institution was the biggest of the
Speaker 5: beat this quarter. Equity trading very strong. They're tilted more
Speaker 5: towards the business. It was strong for everybody, but they
Speaker 5: also had a little bit better growth there. Debt fees
Speaker 5: also sort of leading the way on the feat side
Speaker 5: of things. But the wealth business really is the core
Speaker 5: of their business. They've shifted more towards the wealth and
Speaker 5: asset management over the years, especially under Gorman. And they
Speaker 5: had sort of a little bit of a short blow
Speaker 5: and flows last quarter, and so I think really seeing
Speaker 5: the strength of the rebound is giving investors some confidence
Speaker 5: in those shares.
Speaker 6: Let's talk about the shares though, because Morgan Stanley shares
Speaker 6: up about six point seven percent at the moment. At
Speaker 6: one point they were up by more than eight percent currently,
Speaker 6: the biggest rally since December twenty twenty three, when it
Speaker 6: was up by eight percent. That was the biggest rally
Speaker 6: since November twenty twenty, which was quite a time in markets,
Speaker 6: to say the least.
Speaker 3: Yeah, that vaccine, right.
Speaker 6: Yes, exactly, that was COVID. That was well. I think
Speaker 6: it was on Monday too. Yeah, me too. You were here,
Speaker 6: you'd been here for like a month. Yeah, anyway, Allison,
Speaker 6: like you said.
Speaker 5: And hitting new highs. Yeah, I think, you know, in general,
Speaker 5: this earning season, you know, the stock reactions have been
Speaker 5: very strong. I think investors are getting excited about the
Speaker 5: capital market story. I think trading we had so many
Speaker 5: years where it was underwhelming, the pandemic huge surge, and
Speaker 5: since then we've really seen trading proved to be resilient
Speaker 5: this year. It's equities that's outperforming, but we're within a
Speaker 5: historically high range. And then on the investment banking fee side,
Speaker 5: that super strong year twenty twenty one, all kinds of
Speaker 5: records a week since, but now starting to see some
Speaker 5: signs of life, and so investors are getting excited about
Speaker 5: both of those things.
Speaker 6: I hear what you're saying, but is it that good.
Speaker 6: I hear what you're saying that they beat across the board,
Speaker 6: firing on all cylinders. Is it worth a six point
Speaker 6: seven percent reaction in the shares?
Speaker 5: So again, we don't comment, We don't recommend stocks. I
Speaker 5: just have to be careful about yes.
Speaker 6: I mean not asking for recommendation, but I mean.
Speaker 5: If if I was an investor, I guess the way
Speaker 5: I would think about it is it's a super strong market.
Speaker 5: I think about both Morgan, Stanle and Goldman as riding
Speaker 5: a strong tailwind. So they have strengths, they're leveraging those strengths,
Speaker 5: but there is a very strong tail win from the market.
Speaker 5: And the view going forward is do you think that
Speaker 5: momentum continues? We see momentum in the near term, but
Speaker 5: I think you have to think about sort of the
Speaker 5: weeks and months ahead. Morgan Stanley again has some pretty
Speaker 5: aggressive targets out there for AUM growth set out by Gorman.
Speaker 5: The wealth management pretext margin. When markets are up, revenue
Speaker 5: is up, margins are good. But they you know Ted
Speaker 5: Pick had lowered that a little bit in the near term.
Speaker 5: You know, will he raise that back up towards the
Speaker 5: higher thirty percent goal and will Morgan Stanley marched towards
Speaker 5: that overtime? I think that's the long term question for
Speaker 5: Morgan Stanley.
Speaker 3: Can you help me and our listeners and viewers understand
Speaker 3: the asset management business, the wealth management business, because we
Speaker 3: hear over and over again in the long term it's
Speaker 3: difficult to be just investing in indices. I know it's,
Speaker 3: you know, kind of sacrilegious to actually say that, but
Speaker 3: if you look at the research.
Speaker 6: You're tilling a dangerous pass it points.
Speaker 3: You know, you see that time and time again, Alison.
Speaker 3: Yet you still have these banks attracting very smart money
Speaker 3: for a product that charges a fee. What what are
Speaker 3: investor what do clients get and what are investors getting
Speaker 3: out of that?
Speaker 5: So so I'll say a few things. So Morgan Stanley's
Speaker 5: investment management business I know pretty well since I used
Speaker 5: to work there. The strength there is alternatives and fixed income,
Speaker 5: where you definitely do see good returns. Their equities business
Speaker 5: is actually very focused on active you know, having a
Speaker 5: very strong active share and concentrated bit so it can
Speaker 5: be more volatile. So I think within you know, the
Speaker 5: argument about you know, all when you look across and
Speaker 5: the you know, all managers aren't going to be beat
Speaker 5: the index, right, But I think if you are buying
Speaker 5: an active fund, you do want to buy something that
Speaker 5: is making bets right, not just hugging the benchmark, as
Speaker 5: you say. And so I think that's what we've seen
Speaker 5: in the industry over the last you know, decade or so,
Speaker 5: you know, perhaps longer, but accelerating is Look, I can
Speaker 5: pay for I can get beta cheap, I can get
Speaker 5: you know, get those cheap funds, those index funds, but
Speaker 5: for alpha, right, you are seeing flows and you see
Speaker 5: it also on the hedge fund side as well. The
Speaker 5: hedge funds that can deliver consistently better returns are the
Speaker 5: ones that are getting assets and and you know, turning
Speaker 5: to the wealth side, of things. I would also say
Speaker 5: that business has really evolved over time, and so you know,
Speaker 5: years ago, you know, maybe at the turn of the century,
Speaker 5: if you will, it was about fund of the month,
Speaker 5: or this will make you this stock will make you
Speaker 5: the most money, this fund will make you the most money.
Speaker 5: But the industry, I think is really focusing on client needs,
Speaker 5: client investments, and so that's really been a shift.
Speaker 3: Thirty seconds now that the big banks are wrapped up,
Speaker 3: we heard Ted Pick say that consumers and corporates are
Speaker 3: in great shape. How would you characterize, Alison, sort of
Speaker 3: the holistic view that we got from the big banks
Speaker 3: over the last week or so in terms of commentary
Speaker 3: on the consumer good place.
Speaker 5: I think it's very good. And I think that's another
Speaker 5: reason why you're seeing some strong reactions because things, you know,
Speaker 5: healthy credit came in healthy, right, that's what people are
Speaker 5: concerned about. And if rates are coming down and we
Speaker 5: are tilting more towards our software ending scenario, that's very
Speaker 5: good for the banks.
Speaker 3: Alison Williams, Bloomberg Intelligence Senior Global Banks Analysts, joining us
Speaker 3: here in the Bloomberg Business Week Studio.
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Speaker 3: The Katie Graidbelt. Think back to recent history of presidential campaigns.
Speaker 3: Barack Obama two thousand and eight.
Speaker 6: I remember him.
Speaker 3: You think you were in high school?
Speaker 5: Yeah, this point I was.
Speaker 3: He was pitching back then, a complete overhaul of the
Speaker 3: US health insurance system. Now we have Obamacare. Four years later,
Speaker 3: Mitt Romney, he had the elaborate set of proposals for
Speaker 3: reigniting economic growth after the Great Recession. Hillary Clinton in
Speaker 3: twenty sixteen. She had the position papers on everything from
Speaker 3: raising the federal minimum wage to establishing paid family leave.
Speaker 3: This all from a recent column by Bloomberg Business Week
Speaker 3: editor Brad Stone, who writes that this presidential cycle has
Speaker 3: been largely devoid of such ideological ambition. He argues that
Speaker 3: it seems like we've lost our appetite for big ideas.
Speaker 3: In many respects, it's been the ozembic election. Brad not
Speaker 3: just the editor of Bloomberg Business He's also the author
Speaker 3: of four books, including New York Times bestseller Amazon un Bound.
Speaker 3: Jeff Bezos and the invention of a global empire. He
Speaker 3: joins us here in the Bloomberg BusinessWeek studio, Brad, what
Speaker 3: are we getting from the presidential campaigns this time around?
Speaker 3: If we're not getting the big ideas?
Speaker 7: Yeah, thanks, Tim. Look, I don't want to minimize it.
Speaker 7: I mean, Kamala Harris. You know, the campaign's gotten off
Speaker 7: to a late start. We've gotten targeted proposals aimed at
Speaker 7: helping parents, renters, first time home buyers. You know, I
Speaker 7: don't want to minimize former President Donald Trump's proposals. You know,
Speaker 7: those tariffs would be a significant change to our economy.
Speaker 7: But when you look back at the kinds of sweeping
Speaker 7: economic proposals that Barack Obama was making, or you know,
Speaker 7: Bill Clinton or the first George Bush, you know, really
Speaker 7: big ideas, and you wonder why it's not happening this cycle.
Speaker 7: And I think there are two reasons.
Speaker 2: You know.
Speaker 7: The first is tactical. I mean, this is it may
Speaker 7: not be as much of an ideological battle, but it
Speaker 7: is certainly a battle between parties, personalities, kinds of sides
Speaker 7: of the American divide, and both sides see the other
Speaker 7: success as an existential threat and are determined to win,
Speaker 7: and winning right now involves cobbling together a coalition. It's
Speaker 7: why Trump is talking to all women today on Fox
Speaker 7: News and the vice presidents doing a town hall with
Speaker 7: Fox News. This is all about seven states and swing voters.
Speaker 7: And then the second question is really what can you
Speaker 7: get Can you get anything sweeping done today in a
Speaker 7: bitterly divided Congress that is devoted to the politics of
Speaker 7: opposition right.
Speaker 6: Recent history would suggest no to that last question, and
Speaker 6: you hedged yourself nicely said you don't want to minimize this,
Speaker 6: And my pushback would be something that you touch on
Speaker 6: in the piece. You have Donald Trump proposing nineteenth century
Speaker 6: style tariffs? Is that not a big idea?
Speaker 7: No, it's I think in its way, you know, it
Speaker 7: is a big idea. It's certainly dramatic. I mean, there
Speaker 7: are real open questions about how kind of serious he
Speaker 7: is about it and how much he can get done.
Speaker 7: You know. But in terms of like identifying the gaps
Speaker 7: in the in the American safety net, the you know,
Speaker 7: the institutional challenges we have, the existential threats to the country,
Speaker 7: to the world, like climate change, like solving the ballooning deficit.
Speaker 7: You know, neither candidate has really addressed the kind of
Speaker 7: you know, sweeping problems that we have, in part because
Speaker 7: those problems often involve big dose or reality and a
Speaker 7: heavy dose of bad news, and they're both trying to,
Speaker 7: as I said, cobble together a winning coalition and prevent
Speaker 7: the other side from taking power.
Speaker 3: I wonder if this changes after the election, and if somehow,
Speaker 3: whoever wins the election is given a dose of reality
Speaker 3: by maybe some sort of crisis or bond vigilantes.
Speaker 7: What's more than that? I mean, in the old I'm
Speaker 7: old enough to remember where winning presidents had a honeymoon
Speaker 7: period where you could talk about the first hundred days,
Speaker 7: where even if you didn't have both branches of Congress,
Speaker 7: you came out of an electoral victory smelling like a winner,
Speaker 7: and the other party kind of fell into line and
Speaker 7: let you pass an element of your agenda. I don't
Speaker 7: think that's going to happen. I think the dose of
Speaker 7: reality is coming from you know, we go back to
Speaker 7: what Mitch McConnell said in two thousand and eight when
Speaker 7: Barack Obama won, and he said our mission is to
Speaker 7: make him a one term president, and that those are
Speaker 7: the politics that we have right now and until we
Speaker 7: move beyond the politics of opposition, I think we're and
Speaker 7: this is the point of the piece, that our presidential candidates,
Speaker 7: our national leaders are going to have to be a
Speaker 7: little limited in their ambition so that they don't end
Speaker 7: up overpromising and under delivering.
Speaker 6: Well also write that it's a vicious circle. And I mean,
Speaker 6: I was going to do you think that it's realistic
Speaker 6: that we do get to that place where we do
Speaker 6: move beyond this cycle or whatever you want to call
Speaker 6: or do you think that it's actually built into the
Speaker 6: way that we elect presidents for this dynamic to unfold.
Speaker 7: This is where Katie, I'm trying Matt to come off
Speaker 7: as like the cynical old guy. I mean, I think,
Speaker 7: you know, we need to maybe flush some of the
Speaker 7: current politics out of our system. Maybe that's through decisive
Speaker 7: defeats of one side or the other. I think the
Speaker 7: parties have to come to a kind of reckoning about
Speaker 7: putting country before party, and I think it's going to
Speaker 7: require superlative leader who can get beyond the politics of
Speaker 7: opposition and the feeling that the other side success is
Speaker 7: in existential danger. And whether either one of those two
Speaker 7: candidates are that superlative leader who can grow beyond you know,
Speaker 7: our current situation, our current paralysis. I think it remains
Speaker 7: to be seen.
Speaker 3: Help me be not cynical about this, because I'm thinking
Speaker 3: to myself, Okay, I don't see this improving in a
Speaker 3: world where, uh, you know, California has two senators and
Speaker 3: Wyoming has two senators. So essentially the representation that somebody
Speaker 3: in Wyoming has in the Senate is essentially much greater
Speaker 3: than somebody in you know, your state of California, given
Speaker 3: the population differences, but the structure of the government and
Speaker 3: the fact that it only matters in seven states when
Speaker 3: it comes to the presidential election. It's it's pretty tough.
Speaker 2: Out there, it is.
Speaker 7: And I think it also a major problem is that
Speaker 7: some of our institutions, you know that used to unify
Speaker 7: this country, local media, local parties, where parties you know,
Speaker 7: by county by state would differ from the national party.
Speaker 7: Those intermediating institutions are also on the decline, and trust
Speaker 7: in them has never been as low. So, you know,
Speaker 7: I agree, I agree with you. It's hard not to
Speaker 7: It's hard to find reasons for optimism, you know it
Speaker 7: with the current state of affairs the kind of institutional
Speaker 7: change that I am talking about a little bit in
Speaker 7: the piece, getting rid of the filibuster, getting rid of
Speaker 7: the electoral college. Frankly, those it's very difficult to see
Speaker 7: how we achieve those. Those are such I.
Speaker 3: Can see one group wanting to get rid of it.
Speaker 7: Yeah, they seem a little third rail right now in
Speaker 7: our current politics.
Speaker 6: Well, talk about I mean, we were talking about Congress
Speaker 6: earlier and how it's hard to get anything done. We
Speaker 6: did get certain things done. You think about the Inflation
Speaker 6: Reduction Act for example. I mean I speak to a
Speaker 6: lot of executives and a lot of them have cited
Speaker 6: to me that that has been a big help for them.
Speaker 6: And then I mean, we could get into the Chips Act,
Speaker 6: but with what's going on with Intel, that's a different conversation.
Speaker 6: But in any case, I mean, talk to us about
Speaker 6: how that can still happen even with this gridlock exactly.
Speaker 7: And the President has used the budget reconciliation process, and
Speaker 7: there are some strict rules on what you can get
Speaker 7: done through that process and then with a simple majority,
Speaker 7: and you know, recently the vice president has cast the
Speaker 7: deciding vote. But they do have to be budget related
Speaker 7: items and so you know, when you talk about things
Speaker 7: like raising the minimum wage, I mean, it's it's almost
Speaker 7: ridiculous that in decades it hasn't been accomplished, or you know,
Speaker 7: universal childcare or parental leave, the things where this country
Speaker 7: now badly lags most of the developing world. You can't
Speaker 7: get it done because it would require a filibuster proof
Speaker 7: majority in the Senate. So there is this tiny little
Speaker 7: loophole to kind of get things done. And the Biden
Speaker 7: administer and executive orders are another way. And obviously when
Speaker 7: Donald Trump was in office he took full advantage of
Speaker 7: that as as President Biden. But you know those are
Speaker 7: like the mechanisms that are left at the disposal of
Speaker 7: the current and soon the new president, and you know
Speaker 7: those are weak institutional levers.
Speaker 3: One thing I wanted to get your thoughts on as
Speaker 3: the way that the candidates are are leaning into media
Speaker 3: in these last two and a half close to three weeks. Yesterday,
Speaker 3: Donald Trump sat down with John mcklelthwaite, editor in chief
Speaker 3: at Bloomberg News, at the Economic Club of Chicago. Here's
Speaker 3: what he had to say about the Federal Reserve.
Speaker 8: I think it's the greatest job in government. You show
Speaker 8: up to the office once a month and you say,
Speaker 8: let's say flip a Cole, and everybody talks about you
Speaker 8: like your god, Oh, what will we do? I think
Speaker 8: that if you are a very good president with good sense,
Speaker 8: you should be able to at least talk to him.
Speaker 8: I don't say make the decision at all.
Speaker 3: There you have Donald Trump yesterday with John Nickolthwaite, the
Speaker 3: editor in chief of Bloomberg News, out there at the
Speaker 3: Economic Club of Chicago. Brad, I want to get your
Speaker 3: thoughts on this because we heard a lot from Donald
Speaker 3: Trump yesterday. You sat down with him over the summer
Speaker 3: for Bloomberg BusinessWeek cover story. Who was the Donald Trump
Speaker 3: that you saw yesterday in that interview.
Speaker 7: Well, first of all, it sounds like Donald Trump wants
Speaker 7: to be the Fed chief. He treats him so well.
Speaker 2: Look, we spoke to.
Speaker 7: Donald Trump three long months ago, before two assassination attempts,
Speaker 7: when he was still running against President Biden. He was
Speaker 7: feeling pretty good. He was more disciplined than he usually is.
Speaker 2: Back then.
Speaker 7: He was in a lot of ways introducing his economic plan.
Speaker 7: You know, some parts of that plan remain unchanged. He
Speaker 7: does differ on the details the extent of his corporate
Speaker 7: tax cut, the extent of tariffs on China and the
Speaker 7: rest of the world. A lot of the elements remain
Speaker 7: the same. You know what's different now is, in his
Speaker 7: own unique way, he's trying to expand his coalition. You know,
Speaker 7: he's there in Chicago, he was in Detroit speaking to
Speaker 7: the Economic Club there, you know, trying to, yeah, expand
Speaker 7: his support in the Midwest, where which he sees is
Speaker 7: crucial to his victory. But you know, certain things he
Speaker 7: can't change, right. He actually was very civil back in July.
Speaker 7: He really did, in a very strange way, you know,
Speaker 7: lash out to this interview or our boss yesterday. It's
Speaker 7: you know, I think again, like destabilizing or diminishing those
Speaker 7: intermediating institutions, diminishing people's trust in them, as a way
Speaker 7: to raise himself up.
Speaker 3: Brad, We're gonna have to leave it there. Bradstone the
Speaker 3: editor of Bloomberg Business Week. If you never want to
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Speaker 2: Now you're listening to Bloomberg BusinessWeek with Carol Messer and
Speaker 2: Tim Steneveek on Bloomberg Radio and Television.
Speaker 3: It is a Bloomberg Business Week. That's Katie Greifeld in
Speaker 3: for Carol Masser on this Wednesday afternoon. I asked her
Speaker 3: before we went to break if she'd started her holiday
Speaker 3: shopping season. She said, the answer is no, Katie, it's
Speaker 3: not too early.
Speaker 9: You know.
Speaker 6: What you do, Tim, is actually you buy a gift
Speaker 6: on Amazon, like the day before you see your family.
Speaker 6: Then you print out what you bought them on Amazon,
Speaker 6: and then you give them the piece of papers. It's
Speaker 6: sort of like an IOU.
Speaker 3: It's the thought that counts, and that's a nice thought.
Speaker 6: Yeah.
Speaker 3: Absolutely, Hey, the management consulting from PwC of a couple
Speaker 3: weeks ago, they crunch the numbers. They found that even
Speaker 3: though holiday spending is projected to surge to a record high,
Speaker 3: the increase this year is less than the increase over
Speaker 3: the previous two years. So yes, it's still growing, but
Speaker 3: not growing as much as it did in recent years,
Speaker 3: according to forecasts from PwC. Let's see what Tom McGee
Speaker 3: has to say about all this. He's president and CEO
Speaker 3: of ICSC. It's formerly known as the International Council of
Speaker 3: Shopping Centers. It's the trade association. They represent retail real estate,
Speaker 3: so think shopping centers, malls and the like. Tom joins
Speaker 3: us once again from New York. Tom, good to have
Speaker 3: you with us. You are in a really interesting position
Speaker 3: because you represent the folks who have the real estate
Speaker 3: when it comes to these bricks and mortar retailers. What
Speaker 3: are you finding in the sense of how are they
Speaker 3: thinking about the upcoming holiday shopping season.
Speaker 10: Well, first of all, good afternoon, it's good to be
Speaker 10: with you again. I think we're looking at a solid
Speaker 10: holiday season. You know, our expectation is three to three
Speaker 10: and a half percent growth. I caught your observation around
Speaker 10: PWC's prediction, you know ours last year we predicted three
Speaker 10: and a half to four percent. It ended up a
Speaker 10: fightly glow four percent. So we're a little less than
Speaker 10: last year, but still very solid. The consumer con continues
Speaker 10: to be resilient, certainly concerned around inflation, but seventy percent
Speaker 10: feel their financial situations better this year than last year
Speaker 10: at this time, so you know, we two hundred and
Speaker 10: forty one million people expect to shop this year, six
Speaker 10: million more than last year. But clearly still concerns around inflation,
Speaker 10: still concerns around the economy. But the employment market is
Speaker 10: strong and the consumer continues to be resilient, and so
Speaker 10: we expect this to be a solid holiday season.
Speaker 6: And let's talk about how people are spending their money
Speaker 6: and how they're shopping. You have some really interesting stats,
Speaker 6: and turns out I think I'm in the minority here
Speaker 6: because you found that ninety two percent of shoppers will
Speaker 6: actually spend time in a physical store, just eight percent
Speaker 6: will buy only online. Tom, I had to admit I
Speaker 6: found that surprising.
Speaker 10: I think most you know. The name of the game
Speaker 10: and retail today is omni channel. I mean, we've coined
Speaker 10: this year the Year of the Store. And the reason
Speaker 10: we've caught it the Year the Store is not because
Speaker 10: people are only shopping in stores. We recognize people are
Speaker 10: shopping online and increasingly shopping online, but the store has
Speaker 10: become kind of the central point, the focal point for
Speaker 10: the consumer experience. So even though people will shop online,
Speaker 10: a lot of those a lot of those orders will
Speaker 10: be fulfilled out of store. The store has become kind
Speaker 10: of a mini perfillments center in addition to being a
Speaker 10: product of the traditional shopping experience. So really it's about
Speaker 10: both people will shop and channels. There are clearly some
Speaker 10: folks that only shop online, but I bet you, Katie,
Speaker 10: you'll find yourself in a store at least one time
Speaker 10: this season. So that's the perfect segue, because I know
Speaker 10: this is not all about Katie, but I do want
Speaker 10: to ask specifically about her.
Speaker 3: How do you get how do you get Katie Greifeld
Speaker 3: not to spend those dollars online at a place like
Speaker 3: Amazon and instead think about this ahead of time and
Speaker 3: push her into a retail store to get the shopping done.
Speaker 3: I mean, in a sense, it's it is better for
Speaker 3: last minute shoppers like herself, right.
Speaker 10: Certainly a store, obviously for last minute fulfillment is going
Speaker 10: to be the most effective, And retailers really do want
Speaker 10: people like Katie and and all consumers to shop both
Speaker 10: in both channels. Quite frankly, I mean most retailers are
Speaker 10: somewhat agnostic in regards to where you initiate that transaction.
Speaker 10: They would prefer for that transaction to be fulfilled out
Speaker 10: of a store, and fulfillment can be accomplished in multiple ways.
Speaker 10: They can ship it out of the store, and increasingly
Speaker 10: many retailers are fulfilling orders out of the store shipping
Speaker 10: from the store, and that's why those retailers that have
Speaker 10: a lot of scale and have a lot of large
Speaker 10: store footprint do tend to do well online. But they
Speaker 10: also like consumers to come and pick it up in
Speaker 10: the store on curbs I, pick up, click and collect,
Speaker 10: et cetera, because that saves the shipping costs and it
Speaker 10: also gives them another opportunity to engage with you. The
Speaker 10: name of the game in retail really is to be
Speaker 10: effective in both channels. There are some retailers, Amazon being
Speaker 10: one that isn't strictly online but is predominantly online. There
Speaker 10: are some retailers that are not strictly physical but are
Speaker 10: predominantly physical. But most retailers are trying to be effective
Speaker 10: in both channels. And that's really really important because people
Speaker 10: have just come to expect that, They come to expect
Speaker 10: a consistent experience. And you know, one of the one
Speaker 10: of the untold stories in physical retail right now, across
Speaker 10: all sectors, but particularly in open air retail, is that
Speaker 10: there's really a lack of supply to meet the demand.
Speaker 10: Many many retailers, including many large national retailers, including the
Speaker 10: Walmarts of the world, have announced that they want to
Speaker 10: open up more stores, and there's there's not enough supply
Speaker 10: to meet that demand right now. So the competition for
Speaker 10: suburban open air retail in particular is exceptionally strong, and
Speaker 10: the competition, the competition for that supply is very fierce
Speaker 10: right now.
Speaker 3: Tom gonna have to leave it there. Always love it
Speaker 3: when you join us. Thanks so much for swinging by
Speaker 3: Bloomberg Business Week. Join us once again before the end
Speaker 3: of the holiday shopping season. That's Tom McGee, president and
Speaker 3: CEO of ic SC. They represent the real estate when
Speaker 3: it comes to those retail.
Speaker 2: Folks the journal Let me drive, no money, please, I
Speaker 2: want to drive.
Speaker 1: It's a good question.
Speaker 2: This is the drive to the clothes on Bloomberg Radio Kadian.
Speaker 3: Yeah, look at the clock.
Speaker 6: I know we are rapidly approaching the market clothes on
Speaker 6: this Wednesday. I just figured out it's Wednesday.
Speaker 3: What's it like. You open the markets on Open Interest,
Speaker 3: you close the markets on Bloomberg Business I certainly do.
Speaker 6: It's exhausting. As we were saying with Abigail I mean,
Speaker 6: this market has been so weird. I'm standing there, you know,
Speaker 6: at nine point thirty nothing is happening, and then by
Speaker 6: the end of the day, I mean, whatever the move
Speaker 6: was at the open, it's not the move at the close.
Speaker 3: Let's see what Nancy Tangler has to say about this.
Speaker 3: She's CEO and chief investment officer over at Lafer Tanglar Investment.
Speaker 3: She's also the author of the Women's Guide to Successful Investing.
Speaker 3: When it's not cold in New York, she comes and
Speaker 3: visits us.
Speaker 1: With great shoes.
Speaker 6: She has great shoes.
Speaker 3: But you know, days like today, where are you like
Speaker 3: wait up and you're like, okay, this is fall. We're
Speaker 3: kind of getting to winter. Nancy finds herself in Arizona.
Speaker 3: How are things in Arizona? Nancy, I'm melting. Air conditioning
Speaker 3: is still on there, so hot.
Speaker 1: It's still hot.
Speaker 6: Yeah, does it never come off? I've never really been
Speaker 6: to Arizona.
Speaker 1: Help me out, Yeah, it does. It's the winter's pretty
Speaker 1: pretty awesome.
Speaker 9: But actually, as a native San Franciscan, guys, I love
Speaker 9: coming to New York when it's cold and bundle up
Speaker 9: and walk around.
Speaker 3: So I'll see you soon, Okay, good come visit us soon. Yeah,
Speaker 3: what do you make of these markets? Are they weird
Speaker 3: like Katie described them?
Speaker 9: Yes, and it is exhausting this the last couple of
Speaker 9: days have just been befuddling. But I think what we're
Speaker 9: going into is the crazy season. And you know, we
Speaker 9: were waiting for the October surprise. The election is getting closer,
Speaker 9: and we're an earning season. But so far, so good
Speaker 9: on earnings. I mean, through yesterday seven, almost three quarters
Speaker 9: of the company's beat on earnings, and almost sixty percent
Speaker 9: have beaten on revenues. So fifth consecutive quarter of five
Speaker 9: percent revenue growth. That's impressive in a declining inflationary environment.
Speaker 9: So I'm really encouraged about earnings going into the.
Speaker 1: End of the year.
Speaker 6: Well, let's talk about the end of the year, because
Speaker 6: even if you have, of course that that peace with earnings,
Speaker 6: the corporate fundamentals are good, I mean, is that going
Speaker 6: to overwhelm potentially worse snooze on the macroeconomic side coming
Speaker 6: from the Fed, because there's a lot of question marks
Speaker 6: over whether or not that rate cutting cycle that markets
Speaker 6: had priced in is actually going to be as robust
Speaker 6: as expected.
Speaker 9: Once again, the bond market got ahead of itself unsurprisingly.
Speaker 1: Yeah, I think a couple things, Katie.
Speaker 9: I mean, if you go back and look, there have
Speaker 9: been nine easing cycles since nineteen seventy four. Four of
Speaker 9: those were without a recession, and the median return twelve
Speaker 9: months out was eighteen percent. So I don't know if
Speaker 9: we get another cut, and in November, I'm guessing this
Speaker 9: FED seems to want to cut, So I'm guessing we will,
Speaker 9: and it'll be twenty five basis points. But I don't
Speaker 9: think it's necessary because we really have a strong economy.
Speaker 9: I mean, GDP now for Q three is coming in
Speaker 9: at three point two percent according to the Atlanta Fed.
Speaker 9: And you know, we're seeing a decent job market, not layoff.
Speaker 9: You know, hiring has certainly slowed down, but layoffs have
Speaker 9: not necessarily picked up.
Speaker 1: Wages have grown dramatically for union workers.
Speaker 9: So I think, well enough, just leave well enough alone
Speaker 9: and let the companies do the work, let them deliver
Speaker 9: the earnings in margin expansion.
Speaker 6: Well, when it comes to leaving well enough alone, it's
Speaker 6: something we were also talking about with ababail Do a
Speaker 6: little a little bit earlier. The fact that we've had
Speaker 6: such a strong start to the year at least yesterday
Speaker 6: when I checked this stat yesterday before the market opened,
Speaker 6: that this is the best start to a year for
Speaker 6: the S and P five hundred since nineteen ninety seven.
Speaker 6: I mean, it has been a fantastic year so far, Nancy.
Speaker 6: And with all the different, you know, cross currents that
Speaker 6: we're talking about, I mean, how tempting is it to
Speaker 6: just sort of say, Okay, I'm just going to ride
Speaker 6: out through the rest of the year. I don't need
Speaker 6: to make any big, bold bets right now.
Speaker 1: I think that is the right strategy.
Speaker 9: We were broadening out about a year ago, and I've
Speaker 9: talked about on your air a lot about how we
Speaker 9: have really been talking about this for two years, that
Speaker 9: this market, in this economy is analogous to the nineteen
Speaker 9: nineties because productivity improvements are driving margins and are driving
Speaker 9: earnings growth, and so when you have that, you really
Speaker 9: should just let the companies continue to invest deliver productivity.
Speaker 9: Unit labor costs are down to zero point three percent
Speaker 9: last quarter. That's pretty impressive, and yet productivity was almost
Speaker 9: three percent. So I think we are in the early
Speaker 9: stages of this AI fueled productivity driven growth, and we
Speaker 9: ought to just let the companies do their work and
Speaker 9: own the best ones, and not try to figure out
Speaker 9: which sectors to outperform in a Harris administration over a
Speaker 9: Trump administration, because I wrote in my notes when Trump
Speaker 9: got elected, the conventional wisdom was that technology would suffer
Speaker 9: and financials and energy would outperform, and in fact the
Speaker 9: exact opposite was true.
Speaker 3: Nancy, speaking of the election, if we were talking three
Speaker 3: weeks from now, the Wednesday after election day, what's the
Speaker 3: conversation we're going to be having. Yeah, I don't know
Speaker 3: us we're going to Well, she's got a crystal ball.
Speaker 3: I'm just asking her to look into it and share
Speaker 3: what she sees.
Speaker 1: Let me let me consult it.
Speaker 9: I think we're going to be talking about tax policy,
Speaker 9: the TCJA. I think that is really the critical issue
Speaker 9: no matter who is elected, will it be allowed to sunset?
Speaker 9: You know that one hundred percent expensing has been declining,
Speaker 9: expected to get down to twenty percent and twenty twenty six,
Speaker 9: I think. But there's the foreign tax, and then there's
Speaker 9: just the corporate tax rate. And what's interesting, Tim is
Speaker 9: that if you look at corporate tax receipts since the TCJA,
Speaker 9: with all the repatriation of earnings. They've doubled from two
Speaker 9: hundred billion to four hundred billion, so kind of interesting.
Speaker 9: I was on the fed's website, you know, in my
Speaker 9: spare time, and that instead of the gambling sites Katie
Speaker 9: and that that really caught my attention.
Speaker 6: That is really interesting. I am curious. I mean, Tim
Speaker 6: and I were talking about a little bit earlier. Part
Speaker 6: of the reason I love talking to you is because
Speaker 6: you're really into high conviction sort of trades, these relatively
Speaker 6: concentrated portfolio. I mean, where would you say, at what
Speaker 6: is it, October sixteenth, after this fantastic year to date
Speaker 6: run that we've had so far, what's your highest conviction
Speaker 6: right now?
Speaker 1: Would you say, Nancy, I think industrials.
Speaker 9: So we added uber to a number of months ago
Speaker 9: to our twelve Best Ideas portfolio. They were the big
Speaker 9: winner at the Tesla event which I attended.
Speaker 1: We robot that was the stock that rallied after that event.
Speaker 9: But we also like, yeah, we also like names like
Speaker 9: power PWR, which is Quanta Services, Schneider Electric. These are
Speaker 9: the companies that are building the infrastructure for the data centers.
Speaker 9: I bought an electric utility for the first time in
Speaker 9: thirty five years under the power demand and we're looking,
Speaker 9: you know, like everyone else's, for interesting ways to play
Speaker 9: the increasing demand. But those names I mentioned, plus Carrier,
Speaker 9: which is cooling, the data centers, those are the kind
Speaker 9: of names we want to own. We also added t
Speaker 9: Tech and we own Xylum, so these are companies that
Speaker 9: do water treatment.
Speaker 1: And I think all of this is going to become critical.
Speaker 3: We started our conversation talking about air conditioning in Arizona.
Speaker 3: We're ending our conversation talking about cooling, data centers, and Carrier.
Speaker 3: We're coming full circle. Nancy Tangler thanks so much for
Speaker 3: joining us. She's CEO and Chief and vestment Officer at
Speaker 3: Laffertangler Investments, joining us from Scott seller Zone and Nancy
Speaker 3: also the author of the Women's Guide to Successful Investing.
Speaker 2: This is the Bloomberg Business Week podcast, available on Apple, Spotify,
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