Speaker 1: Yea. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Why
Speaker 1: don't you bring in Stephen Whiting, he of the great
Speaker 1: linkage of economics into the decisions to invest, joining us
Speaker 1: from City Group, the global chief investment strategist. Good morning
Speaker 1: to stay. Great to have me with what a rapid
Speaker 1: move we've had, incruded, a huge move from north to
Speaker 1: seventy five dollars to fifty two in a matter of weeks,
Speaker 1: not months. Steve, Tom and I was saying that when
Speaker 1: things move this quick, other things break. What breaks, No,
Speaker 1: I think you can see that's indeed the fact that
Speaker 1: cross market volatility, there's an impact here asset classes. Correlation
Speaker 1: between volatile moves, you know, tends to be a bit contagious. UM,
Speaker 1: you can see it with a bit of credit. As
Speaker 1: you mentioned earlier, Um, the high yield sector in the
Speaker 1: United States is fi UM energy related. At this point,
Speaker 1: that's still you know, a much higher share than in
Speaker 1: the equity market. But broadly speaking, when you take a
Speaker 1: look at um rising credit spreads, it's going to have
Speaker 1: some impact on how much of a hurdle you think
Speaker 1: about the great hurdle will need to be in terms
Speaker 1: of equities. UM. So there's just a lot of this
Speaker 1: kind of rapid movement again by itself creates a bit
Speaker 1: of concern in markets. UM. Ultimately, you know the question,
Speaker 1: as you just said earlier, is any of its fundamental?
Speaker 1: I think a good deal of it is is politics
Speaker 1: and policy. Uh. But when you move away from all
Speaker 1: of that, you'll settle down eventually. So how do you
Speaker 1: position for two thousand nineteen? I mean, take a blended
Speaker 1: city group of proach, you get to bias leftan equities
Speaker 1: at more on oil, your other great cheen Catherine Man
Speaker 1: and others. I mean, how do you position and set
Speaker 1: up for two thousand? Well, for US, UM, it'll have
Speaker 1: a lot to do with I think Barbels uh and
Speaker 1: the sense that for our private bank client portfolios, you know,
Speaker 1: we still have a one percent underweight and global fixed income,
Speaker 1: but we have a very large overweight and US short
Speaker 1: term fixed income high quality benchmark to essentially the short
Speaker 1: end that is controlled by the FED, which has moved
Speaker 1: up a great deal, the flattening of the yield curve.
Speaker 1: Higher quality products, some lower quality products, but bear very much.
Speaker 1: The front end of the yield curve is a large overweight.
Speaker 1: Now there's still portfolio room when you have, you know,
Speaker 1: incredibly low yields across most of the developed world. There
Speaker 1: is some room to take some risk uh in many
Speaker 1: international equities. But we have moved up in quality. For example,
Speaker 1: we've taken down small cap US to to an underweight
Speaker 1: for the first time in this cycle, and we still
Speaker 1: think that we will have before this is all over,
Speaker 1: a recovery on growth expectations. We don't think two thousand
Speaker 1: nineteen marks a down year for the US or the
Speaker 1: rest of the world, but it's one where we're going
Speaker 1: to play it a bit more cautious. This laid into
Speaker 1: a fit tightening cycle. Well, let's pick out Germany as
Speaker 1: one country, one country that's actually posted quarterly contraction for
Speaker 1: the economy. Steve, do you see that as temporary, something
Speaker 1: is short term and something we bounced back at off
Speaker 1: I do very much. And look, I think a particular
Speaker 1: quarterly down move in one ear a zone country does
Speaker 1: not tell me that we're back into the soup again. Um.
Speaker 1: I think that there are other larger issues, uh, the death,
Speaker 1: sustainability in Italy, how Brexit will work out between the
Speaker 1: continent and uh the UK, these sorts of issues, you know,
Speaker 1: But a bit of a production weakness uh in Germany
Speaker 1: over one quarterly period is not going to sort of
Speaker 1: revise our our whole view of the region. Steve, the
Speaker 1: market smelling something in Europe and it doesn't smell good.
Speaker 1: You're a dollar you're really soft once again today. Buttons
Speaker 1: receiving a bit through much of this year. I mean
Speaker 1: the gentleman Tenia yeld is going to finish south of
Speaker 1: where it started the year. That's not a market that
Speaker 1: smells a rebound, is it. Well, it's one where the
Speaker 1: ECB again is further along to not helping where it's
Speaker 1: been a huge assist along the way. We came into
Speaker 1: the year with forecasts for years on growth, talking about boom,
Speaker 1: and it's been a terrible, terrible adjustment right uh to
Speaker 1: get us to where we are now, which is growth
Speaker 1: in the region as a whole um is right around
Speaker 1: trend and that's where I think the exaggerations comm into play.
Speaker 1: That there are particular policy concerns that you have to
Speaker 1: be worried about with the region, But that's not a
Speaker 1: reason for us to say we want to take a
Speaker 1: look at the highest quality European companies and say, well,
Speaker 1: let's throw them out. Steve, how do you respond to
Speaker 1: consensus which is a single digit consensus wrapped around some
Speaker 1: level of gloom, some level of doom? I mean, does
Speaker 1: that set us up once again for double digit returns
Speaker 1: surpri eyes in November of two thousand nineteen. Well, look,
Speaker 1: I do think that it is very interesting that the
Speaker 1: possibilities like we have seen right in early two thousand seventeen,
Speaker 1: you know, we're going to be in deep, deep trouble.
Speaker 1: The dollar is going to go through the roof, and
Speaker 1: then suddenly you find things go the other way. We
Speaker 1: have been building up a good deal of pessimism. Evaluation
Speaker 1: across world equity markets is down about fifteen percent this year.
Speaker 1: That's rising earnings and pessimism. Um. Yet, I don't want
Speaker 1: to at this point in the cycle when we're talking
Speaker 1: about you know, rate hike nine coming up, and I
Speaker 1: don't care if you know some news stops the FED
Speaker 1: from hiking as much as people think, you know, we
Speaker 1: still have to deal with that news that when we're
Speaker 1: this deep into a tightening cycle, we still want higher
Speaker 1: quality portfolios. But I think that the performance of markets again,
Speaker 1: we could be setting up very much for a contrarian rebound. Well,
Speaker 1: Steve Whiting, thank you so much for setting us up,
Speaker 1: and again we'll get a lot more into this with
Speaker 1: a view forward in two thousand nine. Team after what
Speaker 1: appears to be a single digital for Lucky two thousand eighteen,
Speaker 1: John Levy with this here very quickly here as we
Speaker 1: look at Amazon h Q two and he is the
Speaker 1: one to speak to John Leving out of Richmond and
Speaker 1: with a real nod of commercial real estate, John, I
Speaker 1: want to go over tech zone benefits or you know,
Speaker 1: just a simple taxation of these transaction a grizzled pro
Speaker 1: like you. Does that pay off for the city, Does
Speaker 1: it pay off for the company, or does it payoff
Speaker 1: for both? Well, it certainly pays off of the company,
Speaker 1: because they're getting huge benefits depending on where they're located. Interestingly,
Speaker 1: Tommy and Long Island City, they're getting paid approximately sixties
Speaker 1: some thousand dollars per job in the Crystal City or
Speaker 1: the Virginia location, it's a third of that, only twenty
Speaker 1: two thousand. And if you're in Nashville, you're virtually not
Speaker 1: paying at all. It's less than five thousand. So tremendous
Speaker 1: number of jobs coming twenty five thousand to Long Island, Virginia,
Speaker 1: in another five thousand to Nashville. Um. So it certainly
Speaker 1: pays off for for the company. UM and I think,
Speaker 1: go ahead, let's it do it a commercial real estate
Speaker 1: just in the time we have today. I want you
Speaker 1: to speak to commercial real estate developers in Brooklyn or
Speaker 1: Crystal City. Do they win? Yeah, they do, especially in
Speaker 1: Crystal City. Crystal City has been a desert. There's really
Speaker 1: been nothing going on for ten or fifteen years, and
Speaker 1: now all of a sudden that just the flurry of activity, apartments,
Speaker 1: offices people that want to be close to Amazon. Interestingly,
Speaker 1: in Long Island City, Uh, there the facility is located
Speaker 1: in what's called a qualified opportunity zone. So there are
Speaker 1: a lot of tax incentives for people that want to
Speaker 1: put money in the area and defer taxes. So so um. Interestingly,
Speaker 1: not in not in Virginia and not in Nashville. But
Speaker 1: there are a lot of federal tax benefits for people
Speaker 1: that invest in their backyard. John, My kitchen yesterday was
Speaker 1: a qualified opportunity zone. It was silarette. I witnessed that
Speaker 1: down in flame. I got some stuffing for sale. By
Speaker 1: the way, time, I too remember Durgin Park and the
Speaker 1: road beef that came off on both sides of the plate.
Speaker 1: It was so big, that's true, it was Did they
Speaker 1: swear at your mother too? I don't remember that part,
Speaker 1: but I do remember it being exactly as you described,
Speaker 1: kind of a scruffy area, to say the least at
Speaker 1: that time. How do I follow this? Do you know what?
Speaker 1: I love blind Bug Radio so much because we never
Speaker 1: have these moments on Blinmbug TV. Well we should. I
Speaker 1: think that we should do that, you know what. I
Speaker 1: remember Duck and Pop too, and I think it was
Speaker 1: France season. You know, I can't remember what it was,
Speaker 1: but you know, we get one more from John, one
Speaker 1: more from me. John, have seen the store closures, if
Speaker 1: we've seen the kitchen things from some of these retailers,
Speaker 1: because I don't think we have no. I don't think
Speaker 1: it's over at all yet, John, But but what we're
Speaker 1: transitioning to, and I think this is pretty clear, We're
Speaker 1: going from shopping that's a necessity to shopping that's an experience.
Speaker 1: And you know in the old days, you went out
Speaker 1: because you wanted, you needed to buy something. Uh. Now
Speaker 1: you don't do that at least I don't. You know,
Speaker 1: you order on Amazon, you ordered through any number of
Speaker 1: other channels. And so landlords and and retailers are having
Speaker 1: to come up with more experiences. For example, in your backyard, um,
Speaker 1: there was the Rose Mansion, which was a pop up
Speaker 1: and it allowed you to drink and talk about rose.
Speaker 1: Now you have something called candy Topia again, an interactive
Speaker 1: exhibition that talks about a variety of candies. So I
Speaker 1: think landlords are trying to be more creative. Uh, retailers
Speaker 1: are trying to be more creative. If and it's not
Speaker 1: just let's go out, it's let's go out and do
Speaker 1: something different. Let's go out to an experience. One of
Speaker 1: the big places that we've heard about is a bar
Speaker 1: where they have a hatchet throwing. I mean, who knew,
Speaker 1: but this is this is hot. People want to do
Speaker 1: something different. Are we do that at surveillance every morning,
Speaker 1: That's what we do with our three men. We have
Speaker 1: hatchet throwing no better time to speak to Diane Swanky
Speaker 1: can be on the fed it and be in the
Speaker 1: American economy, or Diana can be on the gifts that
Speaker 1: keeps on giving, which I think is lower oil prices.
Speaker 1: Is that right? It is certainly do in the holiday season.
Speaker 1: It's one of the things we think will give an
Speaker 1: extra boost to consumer spending during this holiday season, and
Speaker 1: it also is giving an extra boots to discussionary spending
Speaker 1: as well. Consumers are finally going back and buying clothing again.
Speaker 1: That's really strange. They've been living in gym clothes for
Speaker 1: a long time, but men and women are buying clothing,
Speaker 1: but also spending at restaurants, although it's weakened on a
Speaker 1: month a month basis in recent months, it's almost eight
Speaker 1: percent from a year ago at full service restaurants, double digit.
Speaker 1: We've never seen these kinds of games. Then, how does
Speaker 1: Grant Thornton process the fact where energy independent were energy dominant?
Speaker 1: It cuts differently than it did in the seventies or eighties. Folks,
Speaker 1: this with fifty one zero one on oil. I mean,
Speaker 1: there is a part of America that needs a higher
Speaker 1: oil price, right absolutely, And one of the things we've
Speaker 1: seen already is whenever oil prices softened a bit, and
Speaker 1: they softened a lot, as you've already noted, they've plummeted.
Speaker 1: That really takes away the only investment we've really seen
Speaker 1: in the US economy. We've seen very little investment in
Speaker 1: US economy except in the oil sector, in the innovations
Speaker 1: in the oil sector. The investment we've seen the oil sector,
Speaker 1: it's been one of the backbones of the U s
Speaker 1: economy in recent years. It was absent in the third quarter,
Speaker 1: and now you're going to see a lot less of
Speaker 1: it in the fourth quarter as well. And it's one
Speaker 1: of the things we saw a reset in oil investment
Speaker 1: in early as well. Twenty years ago, there was only
Speaker 1: one answer to the following question. Twenty years later, there's
Speaker 1: a much bigger debate. Is lower crude good or bad
Speaker 1: for the American economy. You're absolutely right, Jonathan, and a
Speaker 1: net um it still is good. Lower true crisis because
Speaker 1: we employ some few people in the oil industry, but
Speaker 1: it shows up in our GDP numbers and it shows
Speaker 1: up much more mixed, and the spillover effects of oil
Speaker 1: production go beyond the people who work directly in the
Speaker 1: oil industry. So it is a much more difficult thing.
Speaker 1: But at the end of the day, we're still a
Speaker 1: consumer driven economy and so it still mets us out
Speaker 1: to the benefit. But boy do they feel it in Dallas.
Speaker 1: And so your point down whether big capex spend has
Speaker 1: been has been in this industry, and this administration wants
Speaker 1: this country, this economy to get a lot more capex,
Speaker 1: a lot more investment. It's got to be this industry
Speaker 1: that drives it ran exactly, and that's one that we'd
Speaker 1: like to see it much more broad based. We haven't
Speaker 1: seen it as broad based. The other big complaint I'm
Speaker 1: getting from a lot of clients in the oil patch tariffs.
Speaker 1: The tariffs hit the steel that they import because they
Speaker 1: only have suppliers they imported mostly from Canada. A tax. Now, Diane,
Speaker 1: what is your working number for g d P. Let's
Speaker 1: go twelve months, two thousand nineteen for two thousand nineteen,
Speaker 1: about two and a quarter percent. Much depends on whether
Speaker 1: or not we get in a full blown trade war.
Speaker 1: I am worried about the next recession. As you know,
Speaker 1: timing it is really difficult to do of never forecaft
Speaker 1: a recession, and I am Now this came up over
Speaker 1: cocktails last night because Diane, I failed, it's stuffing. I'm
Speaker 1: so it's stuffing today. But we we washed it down
Speaker 1: with some cocktails and the failure of and what you
Speaker 1: got that right, thank you, Drysack. And what came up
Speaker 1: Diane was you don't see a recession coming. I mean,
Speaker 1: that's the historical study, right, you don't see it, but
Speaker 1: you can see the ingredients of a recession. And what
Speaker 1: do I worry about when I look for the ingredients
Speaker 1: of a recession The risk of a policy miss step.
Speaker 1: That's gone up a lot on a multiple fronts. One,
Speaker 1: the Fed could raise rates too rapidly or too high
Speaker 1: at some point in time. By the end of this year,
Speaker 1: we'll see in one year's time a doubling of short
Speaker 1: term interest rates by the Federal Reserve. They're still at
Speaker 1: low levels, but that's a major shift in interest expense
Speaker 1: on a lot of short term corporate debt. The debt
Speaker 1: record highs. That's going to reprice over the next year.
Speaker 1: So that's one thing we watched. Another thing is trade.
Speaker 1: You could have a major missed up on trade that
Speaker 1: not the triffs alone cause a recession, but the collateral
Speaker 1: damage to the second largest economy in the world, China,
Speaker 1: not like Japan. It's got tentacles in every other economy
Speaker 1: out there. So we got to data check. I mean,
Speaker 1: we're correlated in here. We got oil flat out, plunging
Speaker 1: ten year yield coming in finally in two solid basis points,
Speaker 1: we're gonna get a three or three handle in a moment.
Speaker 1: We're getting a little bit of Friday correlation, aren't we? Yeah,
Speaker 1: we are. And Bright Evans of Rhode ivers wild and
Speaker 1: does it make sense? And inflation expectations a hit when
Speaker 1: spot crude rolls over, when crude futures roll out of
Speaker 1: the way they have done. It is really amazing, is
Speaker 1: how correlated inflation expectations are to oil. It always has been,
Speaker 1: it always will be. What really matters is over the
Speaker 1: longer haul, what happens to core inflection, because that's what
Speaker 1: we converge to now, Dane, So thank you so much.
Speaker 1: This is great. We've got oil, and we've got a
Speaker 1: wonderful guest with us right now. Christian Mayleek is out
Speaker 1: of the hugely prestigious Imperial College Chemical engineering program, and
Speaker 1: it knows the visceral nature of the oil market like
Speaker 1: I few do. He joins us now of course with
Speaker 1: JP Morgan Kazanov in London right now, Christian, I know,
Speaker 1: I know you look at Brent crude as a global
Speaker 1: oil price. Here in New York, we're focused on the
Speaker 1: dynamics of West Texas intermediate fifty one fifty handle earlier.
Speaker 1: Is there is there a symbolism to West Texas going
Speaker 1: through fifty dollars with a forty nine for barrel print?
Speaker 1: Does that matter? Tom? A great question, very kind words.
Speaker 1: I think to sort of to say, to say from
Speaker 1: from the outstep, you know, as a house Japreen Morgan
Speaker 1: has been bearish for the best by of the eighteen months.
Speaker 1: So we've been calling for fifty to sixty barrel for
Speaker 1: some time now, and we sort of stuck to our guns.
Speaker 1: And the main reasons of answering your question, Tom is
Speaker 1: we've looked at the cost curtain a lot of depths,
Speaker 1: and every time you look at the marginal cost to
Speaker 1: produce oil is somewhere between forty and sixty dollars about Brent.
Speaker 1: In fact, every time you talk to a major or
Speaker 1: you look at the premium, they're getting more efficient to
Speaker 1: produce oil and Therefore, when you think about the risk premium,
Speaker 1: the question I think some of us were asking is
Speaker 1: should have ever been a eighty five? When? When? When?
Speaker 1: When the cost of the cost to produce oil is
Speaker 1: somewhere around fifty, your cost curve shows a Russia challenge.
Speaker 1: We've heard earlier, Penmen. I heard earlier that Mr Putin,
Speaker 1: maybe we'll meet with the Crown Prince or other worthies
Speaker 1: of G twenty, maybe even before that. How does rush
Speaker 1: to fit into the supplied calculus right now? Well, it's
Speaker 1: a good question, and when we look at what we
Speaker 1: we we did this work called the break Even Championship
Speaker 1: as a global study looking at break evens not just
Speaker 1: on the costcar but also country break even, open bake
Speaker 1: and fiscal um. And so it was almost like sort of,
Speaker 1: let's let's think about this massive costcar with everybody on it,
Speaker 1: not just the projects and Russians. Study were very interesting Russia,
Speaker 1: Russia's break even summer between forty and fifteen. In fact,
Speaker 1: what was quite controversial when we published this back in
Speaker 1: March because we said that the Saudi fiscal break even
Speaker 1: and Saudi open fiscal break even is now somewhere between
Speaker 1: fifteen seventy. So when you triangulate the Saudi fiscal break
Speaker 1: even alongside the Russia break even, what's really interesting is
Speaker 1: that you know, for Russia, at least their pain thresholds
Speaker 1: far higher. They can cope with all with with a
Speaker 1: five handle. I don't think they're loving it, but they
Speaker 1: can absolutely cope with that, which then sort of puts
Speaker 1: the ball back in Saudi's court and opec as to
Speaker 1: whether they can actually manage that kind of break even. Yes,
Speaker 1: And when we think about the epic meeting in June,
Speaker 1: I think what what we sort of people missed in
Speaker 1: terms of the production hike was that they were feelings
Speaker 1: far more comfortable with oil in the sty seventy range
Speaker 1: or in fifty sixty range because they've managed to fix
Speaker 1: their economies take those break evens down a lot more
Speaker 1: than when they cut in twenty six. Did you remember
Speaker 1: their break evens are north of ninety across the border,
Speaker 1: our investors prepared for new oil and new energy coming
Speaker 1: on market, And I'm thinking about the recent find and
Speaker 1: discovery in the Gulf of Mexico about two hundred miles
Speaker 1: south of New Orleans by Chevron that is scheduled to
Speaker 1: come online. Plus, you've had recent comments from the head
Speaker 1: of Petro Brass saying that the firm is going to
Speaker 1: focus on exploration and production. Yeah, it's absolutely right. I
Speaker 1: mean it's interesting that, you know, when when you think
Speaker 1: about the concerns around a supply crunch, I mean, one
Speaker 1: of the things that we kept our doing for why
Speaker 1: all would be capped around fifty six dollars is that
Speaker 1: it's you know, the short term mirage with limited supplies
Speaker 1: has once again be pushed out the picture. And you
Speaker 1: mean you make you know, the fact that we have
Speaker 1: big oil now sort of moving in so to speak,
Speaker 1: into shale is something which, as you point out, is
Speaker 1: going to massively accelerate production in the TERMUN the questions
Speaker 1: for how long. I mean, a lot of people are
Speaker 1: arguing for a rollover in share production at some point
Speaker 1: in the mid twenties, and I think there is a
Speaker 1: risk around that. But in the short medium term you
Speaker 1: have a scaling up of the termun and when you
Speaker 1: have the big oil or the super majors moving in,
Speaker 1: they've got the infrastructure, the balance sheet, the scale and
Speaker 1: the technology to really scale this. The outlook meaningfully higher. Yeah,
Speaker 1: is there is there sweat at Vienna December six. I mean,
Speaker 1: is it just another you know, photo opportunity for a
Speaker 1: bunch of oil ministers or can something actually get down
Speaker 1: around the tensions of this price. Yeah, no, it's absolutely right.
Speaker 1: And I think I think what the market is doing
Speaker 1: is putting OPEC feed on the fire. Um. And when
Speaker 1: we've discussed OPEC and we we we published a known
Speaker 1: a few weeks ago arguing that OPEC would kick the
Speaker 1: can down the road. And I think with this moving oil,
Speaker 1: it's sort of a bit circular. Right when all moves low,
Speaker 1: you start to think OPEC has to act. I think
Speaker 1: that the base cases that OPEC will cut We disagree.
Speaker 1: In fact, our call is that OPEC will um sign
Speaker 1: a deal that's a weak deal. Um. If there is
Speaker 1: some sort of paper restriction on production for next year,
Speaker 1: it's likely to be with several caveats. So if close
Speaker 1: expecting OPEC to do a sort of massive you turn
Speaker 1: on the summer where they did a U turn in itself,
Speaker 1: it's unlikely. I think they like the newfound mark is share,
Speaker 1: They've recognized permius here to stay. I don't think we'll
Speaker 1: quite give up. You know, it's not likely we get
Speaker 1: a sort of November fourteen repeat, but it's going to
Speaker 1: be one of the weakest deal see signed into wonderful briefing.
Speaker 1: Thank you so much, Christian Mayor. Like with JP Morgan
Speaker 1: Kazanov out of London on E M E. A Oil Now,
Speaker 1: as we had Joe Felban earlier, his colleague in crime,
Speaker 1: Dana Telsey, joins as Telsey Advisory Group Dana open question.
Speaker 1: You walk into Macy's on a day like this, what
Speaker 1: is a grizzled pro like? You look at? What do
Speaker 1: you observe or what do you study when you go
Speaker 1: into a Macy's on a Black Friday. When I go
Speaker 1: into Macy's and I was there last night for a
Speaker 1: couple of hours after they open, I'm looking at what's
Speaker 1: the traffic like, what is the rate of the promotions like?
Speaker 1: And where are the crowds? And I could tell you
Speaker 1: where the crowds were last night. It's called out in
Speaker 1: New York. It was all about boots. Those ug boots
Speaker 1: are basically what people were buying. And it was about
Speaker 1: sweaters and it was about gloves. That's what the key
Speaker 1: with where the traffic was Can they change price on
Speaker 1: those items? Is there an elasticity where they can adapt
Speaker 1: to the weather too. Of sustained profit, I think there
Speaker 1: is to degree. But keep in mind a lot of
Speaker 1: these promotions have been planned months in advance for this day,
Speaker 1: and you're not just looking at the single retailer, but
Speaker 1: you're looking at the competitive environment around you. It's how
Speaker 1: you how you coordinated with the brands in order to
Speaker 1: move product given such a given such an important day. Dana,
Speaker 1: can you speak to the issue of inventory? Are stores
Speaker 1: lean with their inventory this season? Stores are in a
Speaker 1: good inventory position. I would say, don't forget. Some of
Speaker 1: them brought in goods a little bit early in advance
Speaker 1: of what could be some expected tariffs coming up. But
Speaker 1: they are definitely in a good position. They're not over inventoried.
Speaker 1: Their priced for goods to move, and if they run out,
Speaker 1: then they have demand to in other items or other
Speaker 1: brands that could fill that demand. Doesn't seem like there's
Speaker 1: any excess inventory in any big ways, and having the
Speaker 1: cold weather helps the other categories toys given Toys or
Speaker 1: US is no longer here, and Toys or US sales
Speaker 1: occurred in the fourth order. Everyone is out there looking
Speaker 1: to grab market share, and toys who's gonna win and
Speaker 1: who's gonna lose. Who's the store or the retailer that
Speaker 1: has the most at stake this season. I mean, when
Speaker 1: you think about the retailers overall we have, the discounter
Speaker 1: should certainly get a good share the private labels that
Speaker 1: Target has invested in, the omni channel initiatives that Walmart has,
Speaker 1: And frankly, the strength that's been nice to see is
Speaker 1: the momentum that Coles has. Coles is really whether it
Speaker 1: is any active categories and toys, they really reinvented themselves. Dana,
Speaker 1: We've had fun today with the geography of Boston. We
Speaker 1: say good morning one or six ONEFM Boston on the
Speaker 1: names of another time and place. And as I've said
Speaker 1: many times before, Miss Telsey lived this at Bergdorf Goodman.
Speaker 1: But Jordan marsh phileens PIM was mentioning a number of
Speaker 1: the investing company, Michael Barr Crowley's of Detroit, and on
Speaker 1: and on, Dana, are we ready for another consolidation in
Speaker 1: bricks and mortar? You till I think we are. I
Speaker 1: think overall, it certainly takes time to close stores this year.
Speaker 1: You obviously have fears and you're gonna have toys r us.
Speaker 1: I think we're going to continue to see companies, whether
Speaker 1: it's Gap or whether it's l brands with Victoria's Secret,
Speaker 1: who basically each articulated that they're relooking at their physical
Speaker 1: store space, at the Gap brand and at Victoria's Secret,
Speaker 1: reloking at everything. I think we're gonna see companies reinvent themselves.
Speaker 1: Department stores may have been a little bit ahead of
Speaker 1: the curve in embracing omni channel, and now you're seeing
Speaker 1: specialty come next. You see tom It's not all bad,
Speaker 1: it's just transformation. What does omni channel. It means that
Speaker 1: you can have money pulled out of your pocket in
Speaker 1: any way shape you definitely stopping everywhere any time that
Speaker 1: there's never the word closed is never an option. Okay,
Speaker 1: I'll go. It's different than the old Jordan Marsh where
Speaker 1: they actually had, you know, store hours. David Mike Mike
Speaker 1: Allen over the ext Yours has a statistic of the
Speaker 1: day which is thirty seven percent of shopping is done
Speaker 1: on smartphones. Really, it's a huge numbers. Smartphones and mobile
Speaker 1: are definitely growing in the transaction on mobile and frankly,
Speaker 1: having screens that can have that are bigger with its
Speaker 1: visibility helps and I think you are seeing definitely more
Speaker 1: shopping on smart phones done and more conversion being done.
Speaker 1: What does that mean for bricks and water? I mean,
Speaker 1: I'm in Barney's on Madison and i want something in
Speaker 1: some other place and I'm on my I'm literally on
Speaker 1: my smartphone and Barney's buying it, you know, named the store, right.
Speaker 1: I think overall what it means is the fact that
Speaker 1: now you can even have digital orders fulfilled in stores.
Speaker 1: You may buy it online and pick it up in
Speaker 1: the store. And look at some of the retailers out there.
Speaker 1: Coles gave the numbers that they're going to fill fill
Speaker 1: five million units in November that are picked up in
Speaker 1: store and five million in December. When companies have when
Speaker 1: retailers have consumers come in the store to pick something up,
Speaker 1: guess what they're doing. They're buying something else. Also, that
Speaker 1: can attach around to the average transaction. Well, when Tom
Speaker 1: goes shopping in a store right now, is he going
Speaker 1: to be paying full price? Today? You're gonna be paying
Speaker 1: a discount. Today is the day when almost every brand,
Speaker 1: in every company, there's something you can get a deal on.
Speaker 1: And you know what, You're gonna buy the two words
Speaker 1: of the season to remember the gifts of the season.
Speaker 1: It's about smart and it's about cozy. It's about smart
Speaker 1: because whether it's smart speakers, smart home devices, wireless earbuds.
Speaker 1: And it's about cozy because pajamas, bluffy, fluffy blankets. So
Speaker 1: at Burgdorf to Charlotte. Charlotte simone pollypop, two tone, first
Speaker 1: slip through scarf which looks like something out of the fifties,
Speaker 1: and two dollars. That's cozy. That's what they call cozy.
Speaker 1: As long as it keeps too warm. It's about being cozy. Okay,
Speaker 1: Dana Telsey, you have a cozy state, stay warm. Dana
Speaker 1: tells you you go from store to store. Dana Telsey
Speaker 1: iconic with the tell Us the advisory Crup Holiday you too, Dama,
Speaker 1: Thank you so much as well. Thanks for listening to
Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on
Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm
Speaker 1: on Twitter at Tom Keene before the podcast. You can
Speaker 1: always catch us worldwide. I'm Bloomberg Radio