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Speaker 1: Yea. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Why

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Speaker 1: don't you bring in Stephen Whiting, he of the great

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Speaker 1: linkage of economics into the decisions to invest, joining us

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Speaker 1: from City Group, the global chief investment strategist. Good morning

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Speaker 1: to stay. Great to have me with what a rapid

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Speaker 1: move we've had, incruded, a huge move from north to

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Speaker 1: seventy five dollars to fifty two in a matter of weeks,

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Speaker 1: not months. Steve, Tom and I was saying that when

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Speaker 1: things move this quick, other things break. What breaks, No,

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Speaker 1: I think you can see that's indeed the fact that

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Speaker 1: cross market volatility, there's an impact here asset classes. Correlation

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Speaker 1: between volatile moves, you know, tends to be a bit contagious. UM,

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Speaker 1: you can see it with a bit of credit. As

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Speaker 1: you mentioned earlier, Um, the high yield sector in the

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Speaker 1: United States is fi UM energy related. At this point,

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Speaker 1: that's still you know, a much higher share than in

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Speaker 1: the equity market. But broadly speaking, when you take a

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Speaker 1: look at um rising credit spreads, it's going to have

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Speaker 1: some impact on how much of a hurdle you think

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Speaker 1: about the great hurdle will need to be in terms

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Speaker 1: of equities. UM. So there's just a lot of this

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Speaker 1: kind of rapid movement again by itself creates a bit

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Speaker 1: of concern in markets. UM. Ultimately, you know the question,

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Speaker 1: as you just said earlier, is any of its fundamental?

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Speaker 1: I think a good deal of it is is politics

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Speaker 1: and policy. Uh. But when you move away from all

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Speaker 1: of that, you'll settle down eventually. So how do you

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Speaker 1: position for two thousand nineteen? I mean, take a blended

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Speaker 1: city group of proach, you get to bias leftan equities

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Speaker 1: at more on oil, your other great cheen Catherine Man

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Speaker 1: and others. I mean, how do you position and set

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Speaker 1: up for two thousand? Well, for US, UM, it'll have

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Speaker 1: a lot to do with I think Barbels uh and

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Speaker 1: the sense that for our private bank client portfolios, you know,

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Speaker 1: we still have a one percent underweight and global fixed income,

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Speaker 1: but we have a very large overweight and US short

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Speaker 1: term fixed income high quality benchmark to essentially the short

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Speaker 1: end that is controlled by the FED, which has moved

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Speaker 1: up a great deal, the flattening of the yield curve.

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Speaker 1: Higher quality products, some lower quality products, but bear very much.

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Speaker 1: The front end of the yield curve is a large overweight.

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Speaker 1: Now there's still portfolio room when you have, you know,

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Speaker 1: incredibly low yields across most of the developed world. There

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Speaker 1: is some room to take some risk uh in many

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Speaker 1: international equities. But we have moved up in quality. For example,

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Speaker 1: we've taken down small cap US to to an underweight

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Speaker 1: for the first time in this cycle, and we still

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Speaker 1: think that we will have before this is all over,

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Speaker 1: a recovery on growth expectations. We don't think two thousand

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Speaker 1: nineteen marks a down year for the US or the

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Speaker 1: rest of the world, but it's one where we're going

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Speaker 1: to play it a bit more cautious. This laid into

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Speaker 1: a fit tightening cycle. Well, let's pick out Germany as

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Speaker 1: one country, one country that's actually posted quarterly contraction for

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Speaker 1: the economy. Steve, do you see that as temporary, something

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Speaker 1: is short term and something we bounced back at off

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Speaker 1: I do very much. And look, I think a particular

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Speaker 1: quarterly down move in one ear a zone country does

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Speaker 1: not tell me that we're back into the soup again. Um.

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Speaker 1: I think that there are other larger issues, uh, the death,

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Speaker 1: sustainability in Italy, how Brexit will work out between the

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Speaker 1: continent and uh the UK, these sorts of issues, you know,

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Speaker 1: But a bit of a production weakness uh in Germany

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Speaker 1: over one quarterly period is not going to sort of

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Speaker 1: revise our our whole view of the region. Steve, the

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Speaker 1: market smelling something in Europe and it doesn't smell good.

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Speaker 1: You're a dollar you're really soft once again today. Buttons

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Speaker 1: receiving a bit through much of this year. I mean

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Speaker 1: the gentleman Tenia yeld is going to finish south of

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Speaker 1: where it started the year. That's not a market that

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Speaker 1: smells a rebound, is it. Well, it's one where the

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Speaker 1: ECB again is further along to not helping where it's

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Speaker 1: been a huge assist along the way. We came into

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Speaker 1: the year with forecasts for years on growth, talking about boom,

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Speaker 1: and it's been a terrible, terrible adjustment right uh to

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Speaker 1: get us to where we are now, which is growth

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Speaker 1: in the region as a whole um is right around

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Speaker 1: trend and that's where I think the exaggerations comm into play.

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Speaker 1: That there are particular policy concerns that you have to

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Speaker 1: be worried about with the region, But that's not a

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Speaker 1: reason for us to say we want to take a

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Speaker 1: look at the highest quality European companies and say, well,

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Speaker 1: let's throw them out. Steve, how do you respond to

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Speaker 1: consensus which is a single digit consensus wrapped around some

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Speaker 1: level of gloom, some level of doom? I mean, does

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Speaker 1: that set us up once again for double digit returns

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Speaker 1: surpri eyes in November of two thousand nineteen. Well, look,

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Speaker 1: I do think that it is very interesting that the

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Speaker 1: possibilities like we have seen right in early two thousand seventeen,

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Speaker 1: you know, we're going to be in deep, deep trouble.

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Speaker 1: The dollar is going to go through the roof, and

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Speaker 1: then suddenly you find things go the other way. We

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Speaker 1: have been building up a good deal of pessimism. Evaluation

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Speaker 1: across world equity markets is down about fifteen percent this year.

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Speaker 1: That's rising earnings and pessimism. Um. Yet, I don't want

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Speaker 1: to at this point in the cycle when we're talking

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Speaker 1: about you know, rate hike nine coming up, and I

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Speaker 1: don't care if you know some news stops the FED

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Speaker 1: from hiking as much as people think, you know, we

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Speaker 1: still have to deal with that news that when we're

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Speaker 1: this deep into a tightening cycle, we still want higher

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Speaker 1: quality portfolios. But I think that the performance of markets again,

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Speaker 1: we could be setting up very much for a contrarian rebound. Well,

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Speaker 1: Steve Whiting, thank you so much for setting us up,

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Speaker 1: and again we'll get a lot more into this with

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Speaker 1: a view forward in two thousand nine. Team after what

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Speaker 1: appears to be a single digital for Lucky two thousand eighteen,

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Speaker 1: John Levy with this here very quickly here as we

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Speaker 1: look at Amazon h Q two and he is the

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Speaker 1: one to speak to John Leving out of Richmond and

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Speaker 1: with a real nod of commercial real estate, John, I

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Speaker 1: want to go over tech zone benefits or you know,

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Speaker 1: just a simple taxation of these transaction a grizzled pro

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Speaker 1: like you. Does that pay off for the city, Does

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Speaker 1: it pay off for the company, or does it payoff

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Speaker 1: for both? Well, it certainly pays off of the company,

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Speaker 1: because they're getting huge benefits depending on where they're located. Interestingly,

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Speaker 1: Tommy and Long Island City, they're getting paid approximately sixties

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Speaker 1: some thousand dollars per job in the Crystal City or

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Speaker 1: the Virginia location, it's a third of that, only twenty

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Speaker 1: two thousand. And if you're in Nashville, you're virtually not

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Speaker 1: paying at all. It's less than five thousand. So tremendous

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Speaker 1: number of jobs coming twenty five thousand to Long Island, Virginia,

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Speaker 1: in another five thousand to Nashville. Um. So it certainly

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Speaker 1: pays off for for the company. UM and I think,

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Speaker 1: go ahead, let's it do it a commercial real estate

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Speaker 1: just in the time we have today. I want you

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Speaker 1: to speak to commercial real estate developers in Brooklyn or

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Speaker 1: Crystal City. Do they win? Yeah, they do, especially in

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Speaker 1: Crystal City. Crystal City has been a desert. There's really

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Speaker 1: been nothing going on for ten or fifteen years, and

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Speaker 1: now all of a sudden that just the flurry of activity, apartments,

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Speaker 1: offices people that want to be close to Amazon. Interestingly,

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Speaker 1: in Long Island City, Uh, there the facility is located

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Speaker 1: in what's called a qualified opportunity zone. So there are

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Speaker 1: a lot of tax incentives for people that want to

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Speaker 1: put money in the area and defer taxes. So so um. Interestingly,

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Speaker 1: not in not in Virginia and not in Nashville. But

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Speaker 1: there are a lot of federal tax benefits for people

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Speaker 1: that invest in their backyard. John, My kitchen yesterday was

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Speaker 1: a qualified opportunity zone. It was silarette. I witnessed that

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Speaker 1: down in flame. I got some stuffing for sale. By

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Speaker 1: the way, time, I too remember Durgin Park and the

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Speaker 1: road beef that came off on both sides of the plate.

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Speaker 1: It was so big, that's true, it was Did they

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Speaker 1: swear at your mother too? I don't remember that part,

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Speaker 1: but I do remember it being exactly as you described,

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Speaker 1: kind of a scruffy area, to say the least at

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Speaker 1: that time. How do I follow this? Do you know what?

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Speaker 1: I love blind Bug Radio so much because we never

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Speaker 1: have these moments on Blinmbug TV. Well we should. I

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Speaker 1: think that we should do that, you know what. I

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Speaker 1: remember Duck and Pop too, and I think it was

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Speaker 1: France season. You know, I can't remember what it was,

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Speaker 1: but you know, we get one more from John, one

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Speaker 1: more from me. John, have seen the store closures, if

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Speaker 1: we've seen the kitchen things from some of these retailers,

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Speaker 1: because I don't think we have no. I don't think

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Speaker 1: it's over at all yet, John, But but what we're

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Speaker 1: transitioning to, and I think this is pretty clear, We're

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Speaker 1: going from shopping that's a necessity to shopping that's an experience.

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Speaker 1: And you know in the old days, you went out

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Speaker 1: because you wanted, you needed to buy something. Uh. Now

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Speaker 1: you don't do that at least I don't. You know,

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Speaker 1: you order on Amazon, you ordered through any number of

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Speaker 1: other channels. And so landlords and and retailers are having

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Speaker 1: to come up with more experiences. For example, in your backyard, um,

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Speaker 1: there was the Rose Mansion, which was a pop up

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Speaker 1: and it allowed you to drink and talk about rose.

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Speaker 1: Now you have something called candy Topia again, an interactive

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Speaker 1: exhibition that talks about a variety of candies. So I

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Speaker 1: think landlords are trying to be more creative. Uh, retailers

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Speaker 1: are trying to be more creative. If and it's not

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Speaker 1: just let's go out, it's let's go out and do

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Speaker 1: something different. Let's go out to an experience. One of

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Speaker 1: the big places that we've heard about is a bar

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Speaker 1: where they have a hatchet throwing. I mean, who knew,

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Speaker 1: but this is this is hot. People want to do

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Speaker 1: something different. Are we do that at surveillance every morning,

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Speaker 1: That's what we do with our three men. We have

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Speaker 1: hatchet throwing no better time to speak to Diane Swanky

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Speaker 1: can be on the fed it and be in the

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Speaker 1: American economy, or Diana can be on the gifts that

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Speaker 1: keeps on giving, which I think is lower oil prices.

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Speaker 1: Is that right? It is certainly do in the holiday season.

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Speaker 1: It's one of the things we think will give an

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Speaker 1: extra boost to consumer spending during this holiday season, and

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Speaker 1: it also is giving an extra boots to discussionary spending

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Speaker 1: as well. Consumers are finally going back and buying clothing again.

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Speaker 1: That's really strange. They've been living in gym clothes for

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Speaker 1: a long time, but men and women are buying clothing,

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Speaker 1: but also spending at restaurants, although it's weakened on a

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Speaker 1: month a month basis in recent months, it's almost eight

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Speaker 1: percent from a year ago at full service restaurants, double digit.

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Speaker 1: We've never seen these kinds of games. Then, how does

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Speaker 1: Grant Thornton process the fact where energy independent were energy dominant?

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Speaker 1: It cuts differently than it did in the seventies or eighties. Folks,

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Speaker 1: this with fifty one zero one on oil. I mean,

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Speaker 1: there is a part of America that needs a higher

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Speaker 1: oil price, right absolutely, And one of the things we've

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Speaker 1: seen already is whenever oil prices softened a bit, and

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Speaker 1: they softened a lot, as you've already noted, they've plummeted.

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Speaker 1: That really takes away the only investment we've really seen

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Speaker 1: in the US economy. We've seen very little investment in

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Speaker 1: US economy except in the oil sector, in the innovations

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Speaker 1: in the oil sector. The investment we've seen the oil sector,

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Speaker 1: it's been one of the backbones of the U s

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Speaker 1: economy in recent years. It was absent in the third quarter,

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Speaker 1: and now you're going to see a lot less of

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Speaker 1: it in the fourth quarter as well. And it's one

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Speaker 1: of the things we saw a reset in oil investment

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Speaker 1: in early as well. Twenty years ago, there was only

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Speaker 1: one answer to the following question. Twenty years later, there's

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Speaker 1: a much bigger debate. Is lower crude good or bad

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Speaker 1: for the American economy. You're absolutely right, Jonathan, and a

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Speaker 1: net um it still is good. Lower true crisis because

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Speaker 1: we employ some few people in the oil industry, but

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Speaker 1: it shows up in our GDP numbers and it shows

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Speaker 1: up much more mixed, and the spillover effects of oil

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Speaker 1: production go beyond the people who work directly in the

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Speaker 1: oil industry. So it is a much more difficult thing.

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Speaker 1: But at the end of the day, we're still a

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Speaker 1: consumer driven economy and so it still mets us out

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Speaker 1: to the benefit. But boy do they feel it in Dallas.

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Speaker 1: And so your point down whether big capex spend has

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Speaker 1: been has been in this industry, and this administration wants

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Speaker 1: this country, this economy to get a lot more capex,

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Speaker 1: a lot more investment. It's got to be this industry

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Speaker 1: that drives it ran exactly, and that's one that we'd

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Speaker 1: like to see it much more broad based. We haven't

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Speaker 1: seen it as broad based. The other big complaint I'm

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Speaker 1: getting from a lot of clients in the oil patch tariffs.

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Speaker 1: The tariffs hit the steel that they import because they

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Speaker 1: only have suppliers they imported mostly from Canada. A tax. Now, Diane,

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Speaker 1: what is your working number for g d P. Let's

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Speaker 1: go twelve months, two thousand nineteen for two thousand nineteen,

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Speaker 1: about two and a quarter percent. Much depends on whether

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Speaker 1: or not we get in a full blown trade war.

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Speaker 1: I am worried about the next recession. As you know,

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Speaker 1: timing it is really difficult to do of never forecaft

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Speaker 1: a recession, and I am Now this came up over

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Speaker 1: cocktails last night because Diane, I failed, it's stuffing. I'm

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Speaker 1: so it's stuffing today. But we we washed it down

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Speaker 1: with some cocktails and the failure of and what you

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Speaker 1: got that right, thank you, Drysack. And what came up

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Speaker 1: Diane was you don't see a recession coming. I mean,

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Speaker 1: that's the historical study, right, you don't see it, but

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Speaker 1: you can see the ingredients of a recession. And what

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Speaker 1: do I worry about when I look for the ingredients

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Speaker 1: of a recession The risk of a policy miss step.

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Speaker 1: That's gone up a lot on a multiple fronts. One,

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Speaker 1: the Fed could raise rates too rapidly or too high

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Speaker 1: at some point in time. By the end of this year,

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Speaker 1: we'll see in one year's time a doubling of short

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Speaker 1: term interest rates by the Federal Reserve. They're still at

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Speaker 1: low levels, but that's a major shift in interest expense

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Speaker 1: on a lot of short term corporate debt. The debt

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Speaker 1: record highs. That's going to reprice over the next year.

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Speaker 1: So that's one thing we watched. Another thing is trade.

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Speaker 1: You could have a major missed up on trade that

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Speaker 1: not the triffs alone cause a recession, but the collateral

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Speaker 1: damage to the second largest economy in the world, China,

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Speaker 1: not like Japan. It's got tentacles in every other economy

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Speaker 1: out there. So we got to data check. I mean,

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Speaker 1: we're correlated in here. We got oil flat out, plunging

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Speaker 1: ten year yield coming in finally in two solid basis points,

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Speaker 1: we're gonna get a three or three handle in a moment.

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Speaker 1: We're getting a little bit of Friday correlation, aren't we? Yeah,

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Speaker 1: we are. And Bright Evans of Rhode ivers wild and

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Speaker 1: does it make sense? And inflation expectations a hit when

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Speaker 1: spot crude rolls over, when crude futures roll out of

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Speaker 1: the way they have done. It is really amazing, is

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Speaker 1: how correlated inflation expectations are to oil. It always has been,

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Speaker 1: it always will be. What really matters is over the

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Speaker 1: longer haul, what happens to core inflection, because that's what

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Speaker 1: we converge to now, Dane, So thank you so much.

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Speaker 1: This is great. We've got oil, and we've got a

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Speaker 1: wonderful guest with us right now. Christian Mayleek is out

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Speaker 1: of the hugely prestigious Imperial College Chemical engineering program, and

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Speaker 1: it knows the visceral nature of the oil market like

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Speaker 1: I few do. He joins us now of course with

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Speaker 1: JP Morgan Kazanov in London right now, Christian, I know,

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Speaker 1: I know you look at Brent crude as a global

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Speaker 1: oil price. Here in New York, we're focused on the

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Speaker 1: dynamics of West Texas intermediate fifty one fifty handle earlier.

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Speaker 1: Is there is there a symbolism to West Texas going

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Speaker 1: through fifty dollars with a forty nine for barrel print?

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Speaker 1: Does that matter? Tom? A great question, very kind words.

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Speaker 1: I think to sort of to say, to say from

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Speaker 1: from the outstep, you know, as a house Japreen Morgan

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Speaker 1: has been bearish for the best by of the eighteen months.

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Speaker 1: So we've been calling for fifty to sixty barrel for

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Speaker 1: some time now, and we sort of stuck to our guns.

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Speaker 1: And the main reasons of answering your question, Tom is

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Speaker 1: we've looked at the cost curtain a lot of depths,

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Speaker 1: and every time you look at the marginal cost to

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Speaker 1: produce oil is somewhere between forty and sixty dollars about Brent.

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Speaker 1: In fact, every time you talk to a major or

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Speaker 1: you look at the premium, they're getting more efficient to

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Speaker 1: produce oil and Therefore, when you think about the risk premium,

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Speaker 1: the question I think some of us were asking is

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Speaker 1: should have ever been a eighty five? When? When? When?

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Speaker 1: When the cost of the cost to produce oil is

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Speaker 1: somewhere around fifty, your cost curve shows a Russia challenge.

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Speaker 1: We've heard earlier, Penmen. I heard earlier that Mr Putin,

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Speaker 1: maybe we'll meet with the Crown Prince or other worthies

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Speaker 1: of G twenty, maybe even before that. How does rush

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Speaker 1: to fit into the supplied calculus right now? Well, it's

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Speaker 1: a good question, and when we look at what we

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Speaker 1: we we did this work called the break Even Championship

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Speaker 1: as a global study looking at break evens not just

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Speaker 1: on the costcar but also country break even, open bake

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Speaker 1: and fiscal um. And so it was almost like sort of,

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Speaker 1: let's let's think about this massive costcar with everybody on it,

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Speaker 1: not just the projects and Russians. Study were very interesting Russia,

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Speaker 1: Russia's break even summer between forty and fifteen. In fact,

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Speaker 1: what was quite controversial when we published this back in

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Speaker 1: March because we said that the Saudi fiscal break even

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Speaker 1: and Saudi open fiscal break even is now somewhere between

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Speaker 1: fifteen seventy. So when you triangulate the Saudi fiscal break

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Speaker 1: even alongside the Russia break even, what's really interesting is

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Speaker 1: that you know, for Russia, at least their pain thresholds

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Speaker 1: far higher. They can cope with all with with a

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Speaker 1: five handle. I don't think they're loving it, but they

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Speaker 1: can absolutely cope with that, which then sort of puts

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Speaker 1: the ball back in Saudi's court and opec as to

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Speaker 1: whether they can actually manage that kind of break even. Yes,

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Speaker 1: And when we think about the epic meeting in June,

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Speaker 1: I think what what we sort of people missed in

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Speaker 1: terms of the production hike was that they were feelings

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Speaker 1: far more comfortable with oil in the sty seventy range

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Speaker 1: or in fifty sixty range because they've managed to fix

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Speaker 1: their economies take those break evens down a lot more

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Speaker 1: than when they cut in twenty six. Did you remember

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Speaker 1: their break evens are north of ninety across the border,

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Speaker 1: our investors prepared for new oil and new energy coming

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Speaker 1: on market, And I'm thinking about the recent find and

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Speaker 1: discovery in the Gulf of Mexico about two hundred miles

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Speaker 1: south of New Orleans by Chevron that is scheduled to

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Speaker 1: come online. Plus, you've had recent comments from the head

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Speaker 1: of Petro Brass saying that the firm is going to

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Speaker 1: focus on exploration and production. Yeah, it's absolutely right. I

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Speaker 1: mean it's interesting that, you know, when when you think

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Speaker 1: about the concerns around a supply crunch, I mean, one

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Speaker 1: of the things that we kept our doing for why

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Speaker 1: all would be capped around fifty six dollars is that

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Speaker 1: it's you know, the short term mirage with limited supplies

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Speaker 1: has once again be pushed out the picture. And you

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Speaker 1: mean you make you know, the fact that we have

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Speaker 1: big oil now sort of moving in so to speak,

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Speaker 1: into shale is something which, as you point out, is

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Speaker 1: going to massively accelerate production in the TERMUN the questions

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Speaker 1: for how long. I mean, a lot of people are

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Speaker 1: arguing for a rollover in share production at some point

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Speaker 1: in the mid twenties, and I think there is a

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Speaker 1: risk around that. But in the short medium term you

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Speaker 1: have a scaling up of the termun and when you

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Speaker 1: have the big oil or the super majors moving in,

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Speaker 1: they've got the infrastructure, the balance sheet, the scale and

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Speaker 1: the technology to really scale this. The outlook meaningfully higher. Yeah,

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Speaker 1: is there is there sweat at Vienna December six. I mean,

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Speaker 1: is it just another you know, photo opportunity for a

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Speaker 1: bunch of oil ministers or can something actually get down

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Speaker 1: around the tensions of this price. Yeah, no, it's absolutely right.

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Speaker 1: And I think I think what the market is doing

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Speaker 1: is putting OPEC feed on the fire. Um. And when

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Speaker 1: we've discussed OPEC and we we we published a known

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Speaker 1: a few weeks ago arguing that OPEC would kick the

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Speaker 1: can down the road. And I think with this moving oil,

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Speaker 1: it's sort of a bit circular. Right when all moves low,

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Speaker 1: you start to think OPEC has to act. I think

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Speaker 1: that the base cases that OPEC will cut We disagree.

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Speaker 1: In fact, our call is that OPEC will um sign

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Speaker 1: a deal that's a weak deal. Um. If there is

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Speaker 1: some sort of paper restriction on production for next year,

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Speaker 1: it's likely to be with several caveats. So if close

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Speaker 1: expecting OPEC to do a sort of massive you turn

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Speaker 1: on the summer where they did a U turn in itself,

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Speaker 1: it's unlikely. I think they like the newfound mark is share,

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Speaker 1: They've recognized permius here to stay. I don't think we'll

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Speaker 1: quite give up. You know, it's not likely we get

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Speaker 1: a sort of November fourteen repeat, but it's going to

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Speaker 1: be one of the weakest deal see signed into wonderful briefing.

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Speaker 1: Thank you so much, Christian Mayor. Like with JP Morgan

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Speaker 1: Kazanov out of London on E M E. A Oil Now,

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Speaker 1: as we had Joe Felban earlier, his colleague in crime,

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Speaker 1: Dana Telsey, joins as Telsey Advisory Group Dana open question.

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Speaker 1: You walk into Macy's on a day like this, what

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Speaker 1: is a grizzled pro like? You look at? What do

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Speaker 1: you observe or what do you study when you go

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Speaker 1: into a Macy's on a Black Friday. When I go

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Speaker 1: into Macy's and I was there last night for a

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Speaker 1: couple of hours after they open, I'm looking at what's

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Speaker 1: the traffic like, what is the rate of the promotions like?

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Speaker 1: And where are the crowds? And I could tell you

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Speaker 1: where the crowds were last night. It's called out in

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Speaker 1: New York. It was all about boots. Those ug boots

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Speaker 1: are basically what people were buying. And it was about

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Speaker 1: sweaters and it was about gloves. That's what the key

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Speaker 1: with where the traffic was Can they change price on

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Speaker 1: those items? Is there an elasticity where they can adapt

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Speaker 1: to the weather too. Of sustained profit, I think there

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Speaker 1: is to degree. But keep in mind a lot of

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Speaker 1: these promotions have been planned months in advance for this day,

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Speaker 1: and you're not just looking at the single retailer, but

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Speaker 1: you're looking at the competitive environment around you. It's how

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Speaker 1: you how you coordinated with the brands in order to

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Speaker 1: move product given such a given such an important day. Dana,

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Speaker 1: can you speak to the issue of inventory? Are stores

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Speaker 1: lean with their inventory this season? Stores are in a

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Speaker 1: good inventory position. I would say, don't forget. Some of

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Speaker 1: them brought in goods a little bit early in advance

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Speaker 1: of what could be some expected tariffs coming up. But

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Speaker 1: they are definitely in a good position. They're not over inventoried.

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Speaker 1: Their priced for goods to move, and if they run out,

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Speaker 1: then they have demand to in other items or other

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Speaker 1: brands that could fill that demand. Doesn't seem like there's

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Speaker 1: any excess inventory in any big ways, and having the

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Speaker 1: cold weather helps the other categories toys given Toys or

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Speaker 1: US is no longer here, and Toys or US sales

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Speaker 1: occurred in the fourth order. Everyone is out there looking

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Speaker 1: to grab market share, and toys who's gonna win and

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Speaker 1: who's gonna lose. Who's the store or the retailer that

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Speaker 1: has the most at stake this season. I mean, when

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Speaker 1: you think about the retailers overall we have, the discounter

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Speaker 1: should certainly get a good share the private labels that

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Speaker 1: Target has invested in, the omni channel initiatives that Walmart has,

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Speaker 1: And frankly, the strength that's been nice to see is

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Speaker 1: the momentum that Coles has. Coles is really whether it

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Speaker 1: is any active categories and toys, they really reinvented themselves. Dana,

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Speaker 1: We've had fun today with the geography of Boston. We

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Speaker 1: say good morning one or six ONEFM Boston on the

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Speaker 1: names of another time and place. And as I've said

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Speaker 1: many times before, Miss Telsey lived this at Bergdorf Goodman.

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Speaker 1: But Jordan marsh phileens PIM was mentioning a number of

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Speaker 1: the investing company, Michael Barr Crowley's of Detroit, and on

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Speaker 1: and on, Dana, are we ready for another consolidation in

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Speaker 1: bricks and mortar? You till I think we are. I

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Speaker 1: think overall, it certainly takes time to close stores this year.

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Speaker 1: You obviously have fears and you're gonna have toys r us.

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Speaker 1: I think we're going to continue to see companies, whether

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Speaker 1: it's Gap or whether it's l brands with Victoria's Secret,

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Speaker 1: who basically each articulated that they're relooking at their physical

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Speaker 1: store space, at the Gap brand and at Victoria's Secret,

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Speaker 1: reloking at everything. I think we're gonna see companies reinvent themselves.

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Speaker 1: Department stores may have been a little bit ahead of

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Speaker 1: the curve in embracing omni channel, and now you're seeing

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Speaker 1: specialty come next. You see tom It's not all bad,

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Speaker 1: it's just transformation. What does omni channel. It means that

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Speaker 1: you can have money pulled out of your pocket in

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Speaker 1: any way shape you definitely stopping everywhere any time that

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Speaker 1: there's never the word closed is never an option. Okay,

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Speaker 1: I'll go. It's different than the old Jordan Marsh where

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Speaker 1: they actually had, you know, store hours. David Mike Mike

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Speaker 1: Allen over the ext Yours has a statistic of the

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Speaker 1: day which is thirty seven percent of shopping is done

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Speaker 1: on smartphones. Really, it's a huge numbers. Smartphones and mobile

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Speaker 1: are definitely growing in the transaction on mobile and frankly,

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Speaker 1: having screens that can have that are bigger with its

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Speaker 1: visibility helps and I think you are seeing definitely more

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Speaker 1: shopping on smart phones done and more conversion being done.

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Speaker 1: What does that mean for bricks and water? I mean,

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Speaker 1: I'm in Barney's on Madison and i want something in

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Speaker 1: some other place and I'm on my I'm literally on

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Speaker 1: my smartphone and Barney's buying it, you know, named the store, right.

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Speaker 1: I think overall what it means is the fact that

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Speaker 1: now you can even have digital orders fulfilled in stores.

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Speaker 1: You may buy it online and pick it up in

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Speaker 1: the store. And look at some of the retailers out there.

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Speaker 1: Coles gave the numbers that they're going to fill fill

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Speaker 1: five million units in November that are picked up in

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Speaker 1: store and five million in December. When companies have when

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Speaker 1: retailers have consumers come in the store to pick something up,

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Speaker 1: guess what they're doing. They're buying something else. Also, that

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Speaker 1: can attach around to the average transaction. Well, when Tom

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Speaker 1: goes shopping in a store right now, is he going

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Speaker 1: to be paying full price? Today? You're gonna be paying

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Speaker 1: a discount. Today is the day when almost every brand,

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Speaker 1: in every company, there's something you can get a deal on.

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Speaker 1: And you know what, You're gonna buy the two words

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Speaker 1: of the season to remember the gifts of the season.

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Speaker 1: It's about smart and it's about cozy. It's about smart

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Speaker 1: because whether it's smart speakers, smart home devices, wireless earbuds.

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Speaker 1: And it's about cozy because pajamas, bluffy, fluffy blankets. So

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Speaker 1: at Burgdorf to Charlotte. Charlotte simone pollypop, two tone, first

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Speaker 1: slip through scarf which looks like something out of the fifties,

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Speaker 1: and two dollars. That's cozy. That's what they call cozy.

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Speaker 1: As long as it keeps too warm. It's about being cozy. Okay,

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Speaker 1: Dana Telsey, you have a cozy state, stay warm. Dana

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Speaker 1: tells you you go from store to store. Dana Telsey

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Speaker 1: iconic with the tell Us the advisory Crup Holiday you too, Dama,

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Speaker 1: Thank you so much as well. Thanks for listening to

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Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on

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Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm

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Speaker 1: on Twitter at Tom Keene before the podcast. You can

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Speaker 1: always catch us worldwide. I'm Bloomberg Radio