1 00:00:00,080 --> 00:00:13,040 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane 2 00:00:13,480 --> 00:00:17,560 Speaker 1: jay Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:34,360 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg And 5 00:00:34,440 --> 00:00:37,320 Speaker 1: now to give us a little bit of perspective. When 6 00:00:37,320 --> 00:00:40,440 Speaker 1: we see that the SMP five hundred is down twelve 7 00:00:40,479 --> 00:00:43,440 Speaker 1: percent for the year, the nasdack down ten percent, the 8 00:00:43,560 --> 00:00:46,680 Speaker 1: Dow Jones industrial leverage posting a decline of eleven and 9 00:00:46,720 --> 00:00:50,120 Speaker 1: a half percent, we went looking under the tree for 10 00:00:50,159 --> 00:00:53,080 Speaker 1: someone who is optimistic, and luckily we didn't have to 11 00:00:53,080 --> 00:00:55,960 Speaker 1: go very far. Edward Stringham joins us now here in 12 00:00:56,040 --> 00:00:59,440 Speaker 1: our studios. He's the president of the American Institute for 13 00:00:59,520 --> 00:01:04,520 Speaker 1: econom Research. Edward Stringham, Merry post Christmas and Happy Boxing 14 00:01:04,600 --> 00:01:08,280 Speaker 1: Day to you. I'm so glad that you're here because 15 00:01:08,920 --> 00:01:14,080 Speaker 1: you are optimistic about the global economy in twenty nineteen. 16 00:01:14,440 --> 00:01:17,800 Speaker 1: Give us some reasons why we should put the humbug aside. 17 00:01:18,640 --> 00:01:23,720 Speaker 1: So I would say, uh, potentially, potentially we got it 18 00:01:23,800 --> 00:01:26,160 Speaker 1: with a little hope. There's the there's a joke in 19 00:01:26,240 --> 00:01:30,120 Speaker 1: the Soviet Union of the optimists and the pessimists. That 20 00:01:30,360 --> 00:01:33,760 Speaker 1: the pessimist says, oh, things are so bad, they can't 21 00:01:33,760 --> 00:01:36,840 Speaker 1: get any worse. The optimist says, no, don't be so pessimistic. 22 00:01:36,920 --> 00:01:41,440 Speaker 1: Things can get a lot worse. So I hope that's 23 00:01:41,480 --> 00:01:43,880 Speaker 1: in the past. So I I would say that there's 24 00:01:44,160 --> 00:01:46,840 Speaker 1: a lot of things that could go wrong in two 25 00:01:46,920 --> 00:01:50,040 Speaker 1: thousand nineteen, but there's just so much that could go well. 26 00:01:50,080 --> 00:01:54,440 Speaker 1: So we're at right now record low unemployment rates, the 27 00:01:54,480 --> 00:01:57,960 Speaker 1: lowest we've seen in the past fifty years. We've seen 28 00:01:58,000 --> 00:02:02,160 Speaker 1: a lot of increase in UH certain sectors of the economy, 29 00:02:02,200 --> 00:02:04,680 Speaker 1: like the financial sector due to I would say de 30 00:02:04,880 --> 00:02:08,200 Speaker 1: regulation of the economy or the past couple of years, 31 00:02:08,560 --> 00:02:11,640 Speaker 1: we've seen a lot of strength in our business due 32 00:02:11,639 --> 00:02:17,960 Speaker 1: to lowering taxes and increasing corporate opportunity. On the other hand, 33 00:02:18,560 --> 00:02:23,200 Speaker 1: there's a lot that is actually interfering, getting people upset. 34 00:02:23,320 --> 00:02:26,800 Speaker 1: I would say things like the trade wars are scaring people. 35 00:02:27,240 --> 00:02:30,240 Speaker 1: They're hammering markets in China. If you look at the 36 00:02:30,320 --> 00:02:33,880 Speaker 1: stock indexes for for the Chinese stock markets, I feel 37 00:02:34,000 --> 00:02:37,000 Speaker 1: very bad for them. So you know, there's a lot 38 00:02:37,040 --> 00:02:40,960 Speaker 1: more than the Hank Sang is down more than this 39 00:02:41,040 --> 00:02:45,880 Speaker 1: year it's just unbelievable. So that's what we would predict. However, 40 00:02:45,960 --> 00:02:49,520 Speaker 1: when we see that people can gain from trade and 41 00:02:49,560 --> 00:02:51,920 Speaker 1: then we see that that could be taken away from this, 42 00:02:52,480 --> 00:02:56,200 Speaker 1: that's exactly what we would predict, is decreases in our 43 00:02:56,240 --> 00:02:58,679 Speaker 1: major trading partners stock markets. All Right, I'm going to 44 00:02:58,760 --> 00:03:01,920 Speaker 1: play the optimist for you here because I'm wondering whether 45 00:03:02,320 --> 00:03:08,280 Speaker 1: the sort of imagination of investors has run away with 46 00:03:08,360 --> 00:03:12,680 Speaker 1: them when they think about the repercussions from the trade 47 00:03:12,760 --> 00:03:15,880 Speaker 1: confrontation between the United States and China, between the United 48 00:03:15,880 --> 00:03:19,160 Speaker 1: States and the European Union, because it seems to be 49 00:03:19,200 --> 00:03:21,760 Speaker 1: at least let's go down the list, be a little specific. 50 00:03:22,320 --> 00:03:25,359 Speaker 1: The issue of intellectual property is one that no one, 51 00:03:25,400 --> 00:03:28,400 Speaker 1: at least in the United States, Republican or Democrats, seems 52 00:03:28,440 --> 00:03:32,040 Speaker 1: to have an issue with. Everybody sees the perspective that 53 00:03:32,200 --> 00:03:38,920 Speaker 1: China has been stealing or at least misappropriating intellectual property 54 00:03:39,120 --> 00:03:41,360 Speaker 1: not only from the United States but from other countries. 55 00:03:42,520 --> 00:03:46,640 Speaker 1: It's I think a very interesting issue that has come 56 00:03:46,760 --> 00:03:49,920 Speaker 1: up in light of these discussions about tariffs, and a 57 00:03:49,960 --> 00:03:52,600 Speaker 1: lot of people say, oh, it's really not about restrictions 58 00:03:52,600 --> 00:03:55,840 Speaker 1: on trade, it's these other things. But when the president 59 00:03:55,920 --> 00:03:57,640 Speaker 1: came out a few weeks ago, I say, I am 60 00:03:57,680 --> 00:04:01,280 Speaker 1: a tariff man. I think that that really shows deep 61 00:04:01,360 --> 00:04:05,120 Speaker 1: down that he might be actually a tariff man, and 62 00:04:05,160 --> 00:04:07,640 Speaker 1: that to me does worry me. So there's a lot 63 00:04:07,680 --> 00:04:09,840 Speaker 1: of these I would say, I don't think it's just 64 00:04:10,160 --> 00:04:14,280 Speaker 1: a political stand. I wanted to get Chinese to change 65 00:04:14,320 --> 00:04:16,159 Speaker 1: the way they do business. I I don't know. A 66 00:04:16,160 --> 00:04:19,560 Speaker 1: lot of my friends actually argue that that's what he's doing. 67 00:04:19,640 --> 00:04:22,160 Speaker 1: It's part of his art of the deal, and he's 68 00:04:22,200 --> 00:04:25,240 Speaker 1: really just bargaining. And if that ends up being the 69 00:04:25,279 --> 00:04:27,800 Speaker 1: case and we end up with lower tariffs all around, 70 00:04:28,240 --> 00:04:32,080 Speaker 1: then I will be thrilled and say yes two thousand nineteen, 71 00:04:32,480 --> 00:04:35,239 Speaker 1: I think if they were to actually take their foot 72 00:04:35,360 --> 00:04:39,000 Speaker 1: off of the throat of international trade, the government or 73 00:04:39,040 --> 00:04:41,200 Speaker 1: take its foot off the throat of international trade, we 74 00:04:41,240 --> 00:04:44,320 Speaker 1: would have a huge increase in markets, and that also 75 00:04:44,400 --> 00:04:48,960 Speaker 1: could be potentially part of his strategy to actually open 76 00:04:49,080 --> 00:04:51,640 Speaker 1: up unleash markets at a later date. What do you 77 00:04:51,680 --> 00:04:56,240 Speaker 1: make of the argument that the reason we've seen this 78 00:04:56,480 --> 00:05:00,560 Speaker 1: steady sell off in stocks is directly related to the 79 00:05:00,680 --> 00:05:05,320 Speaker 1: US Federal Reserve, the increase in interest rates, and the 80 00:05:05,360 --> 00:05:08,480 Speaker 1: wind down the ongoing wind down of the Federal Reserve's 81 00:05:08,520 --> 00:05:12,479 Speaker 1: balance sheet. That's another very interesting and complicated issue. We've 82 00:05:12,520 --> 00:05:16,440 Speaker 1: got a system where the Federal Reserve controls so much 83 00:05:16,839 --> 00:05:20,279 Speaker 1: of the important parts of our economy, specifically the interest rate. 84 00:05:20,600 --> 00:05:23,880 Speaker 1: We had a series of very loose monetary policy for 85 00:05:24,360 --> 00:05:27,120 Speaker 1: over ten years, and people saying we've got to move 86 00:05:27,160 --> 00:05:29,240 Speaker 1: away from that. We've had what I would say are 87 00:05:29,480 --> 00:05:33,800 Speaker 1: very artificially low UH interest rates for so long, and 88 00:05:33,880 --> 00:05:37,960 Speaker 1: the Federal Reserve said, basically, we can't continue this, and 89 00:05:38,040 --> 00:05:40,480 Speaker 1: they've been easing off of this what I would call 90 00:05:40,520 --> 00:05:44,320 Speaker 1: this overly loose monetary policy. So I think it had 91 00:05:44,360 --> 00:05:48,600 Speaker 1: to happen at one point. We're going into this direction. 92 00:05:49,240 --> 00:05:52,000 Speaker 1: And then the question is is this going to be 93 00:05:52,839 --> 00:05:57,200 Speaker 1: distabling or destabilizing of the economy or not. You believe 94 00:05:57,240 --> 00:06:00,440 Speaker 1: it will be destabilizing. I mean, it's really is this 95 00:06:00,640 --> 00:06:02,640 Speaker 1: level of interest rates. I mean, you take a look 96 00:06:03,040 --> 00:06:06,200 Speaker 1: at you know, three percent for the thirty year and 97 00:06:06,520 --> 00:06:08,240 Speaker 1: all right, to take a look at the two year 98 00:06:08,320 --> 00:06:13,360 Speaker 1: at two point five, that doesn't seem like an outsized 99 00:06:13,960 --> 00:06:17,040 Speaker 1: increase in interest at all. I totally agree with you 100 00:06:17,120 --> 00:06:20,159 Speaker 1: that we're we're talking about, you know, a quarter percent 101 00:06:20,400 --> 00:06:23,799 Speaker 1: increase last week, and it's like, oh, the sky is falling. 102 00:06:24,279 --> 00:06:28,919 Speaker 1: I just don't think that that is that the excuse 103 00:06:29,000 --> 00:06:31,640 Speaker 1: for why people sell, but they don't have any other 104 00:06:31,680 --> 00:06:35,640 Speaker 1: President said just the other day he said he said 105 00:06:35,640 --> 00:06:38,840 Speaker 1: the only bad thing going on in the economy is 106 00:06:38,880 --> 00:06:41,120 Speaker 1: a federal reserve. And I think that's trying to put 107 00:06:41,640 --> 00:06:44,720 Speaker 1: point the finger too much at the federals. I'm not 108 00:06:45,279 --> 00:06:47,920 Speaker 1: saying the federal reserve is great, but to say that 109 00:06:47,960 --> 00:06:51,640 Speaker 1: they're responsible for all woes and the economy, I just 110 00:06:51,720 --> 00:06:53,919 Speaker 1: don't buy it. Well, they can't rack up a trillion 111 00:06:53,960 --> 00:06:56,760 Speaker 1: dollar deficit all by themselves, right, I mean, they need 112 00:06:56,800 --> 00:07:00,200 Speaker 1: help from side, from the government. Do you believe that 113 00:07:00,279 --> 00:07:03,560 Speaker 1: the increase in the debt and the deficits that the 114 00:07:03,600 --> 00:07:06,080 Speaker 1: government is the U S Government is running, you think 115 00:07:06,120 --> 00:07:10,800 Speaker 1: that this is going to really hurt the economy? In so, 116 00:07:10,880 --> 00:07:13,840 Speaker 1: this is I would call a long term problem. We've 117 00:07:13,880 --> 00:07:18,720 Speaker 1: got unsustainable deficits, unsustainably growing debt, and I think the 118 00:07:18,800 --> 00:07:21,920 Speaker 1: longer this last, the more we're gonna have to be 119 00:07:22,000 --> 00:07:25,840 Speaker 1: paying on interest servicing debt. But I do think that 120 00:07:25,920 --> 00:07:28,600 Speaker 1: this is going to come in gradually and it's going 121 00:07:28,680 --> 00:07:32,160 Speaker 1: to be more and more problematic. But I don't I 122 00:07:32,200 --> 00:07:34,480 Speaker 1: can't predict that this is what everybody who is listening 123 00:07:34,520 --> 00:07:37,800 Speaker 1: has already retired, and the children and grandnill do. Right. 124 00:07:37,880 --> 00:07:40,880 Speaker 1: So I don't think tonight there's going to be this 125 00:07:41,040 --> 00:07:45,000 Speaker 1: massive crisis. But but over time, certainly, as we go 126 00:07:45,560 --> 00:07:47,840 Speaker 1: more and more into the realm of higher and higher debt, 127 00:07:47,880 --> 00:07:50,200 Speaker 1: that isn't going to be increasingly a problem. Okay, so 128 00:07:50,400 --> 00:07:54,320 Speaker 1: you've talked about the labor picture, which means more people working. 129 00:07:54,400 --> 00:07:57,240 Speaker 1: You see help wanted signs, it's difficult to hire workers 130 00:07:57,280 --> 00:08:00,480 Speaker 1: for certain jobs. Do you believe that that will help 131 00:08:00,480 --> 00:08:03,800 Speaker 1: the economy in because if you're working, you're paying taxes, 132 00:08:03,840 --> 00:08:06,040 Speaker 1: and that money also goes into the economy because you've 133 00:08:06,040 --> 00:08:09,080 Speaker 1: got to spend it. Sure. Yeah, there's a very good 134 00:08:09,160 --> 00:08:14,360 Speaker 1: labor market right now. There's increases in wages, and by 135 00:08:14,400 --> 00:08:17,920 Speaker 1: all accounts, that's actually very positive. The more people we 136 00:08:18,000 --> 00:08:21,360 Speaker 1: have hired, the more, as you said, the people are working, 137 00:08:21,360 --> 00:08:24,680 Speaker 1: the more they're producing, the more everybody has. So so 138 00:08:24,840 --> 00:08:28,960 Speaker 1: to what do you really ascribe the gloom that seems 139 00:08:29,000 --> 00:08:37,280 Speaker 1: to have settled on financial markets, whether it's the debt market, treasuries, leverage, loans, equities, yeah, 140 00:08:37,320 --> 00:08:40,640 Speaker 1: I I don't. I don't consider things like leverage loans 141 00:08:40,720 --> 00:08:44,040 Speaker 1: to be the problem. I consider the problem to be policy. 142 00:08:44,280 --> 00:08:50,199 Speaker 1: Uncertainty of bad government policy can really throw a wrench 143 00:08:50,280 --> 00:08:54,440 Speaker 1: into things. It can interfere with businesses plans if all 144 00:08:54,440 --> 00:08:59,360 Speaker 1: of a sudden the inputs of their products are more expensive. 145 00:08:59,400 --> 00:09:05,000 Speaker 1: American corporations are now put at a competitive disadvantage worldwide. 146 00:09:05,360 --> 00:09:09,200 Speaker 1: Consumers themselves are going to be buying fewer goods when 147 00:09:09,240 --> 00:09:13,120 Speaker 1: they have to pay higher tariffs. So I certainly hope 148 00:09:13,400 --> 00:09:18,680 Speaker 1: that this trade ward doesn't balloon and explode, But it's 149 00:09:18,679 --> 00:09:21,920 Speaker 1: something that can cause a lot of alarm to to anybody. 150 00:09:21,920 --> 00:09:24,040 Speaker 1: All right, So I'm just gonna before we let you go, 151 00:09:24,120 --> 00:09:26,079 Speaker 1: I just got to assume that you came here either 152 00:09:26,160 --> 00:09:28,880 Speaker 1: in some vehicle or you've taken a plane. In the 153 00:09:28,960 --> 00:09:32,400 Speaker 1: last couple of days. We've got oil right now at 154 00:09:32,520 --> 00:09:35,960 Speaker 1: forty three dollars of barrel trading on the nimax. It's 155 00:09:36,040 --> 00:09:38,439 Speaker 1: up two percent today, but that's the minimus because it's 156 00:09:38,760 --> 00:09:42,679 Speaker 1: six cents higher. If oil stays at forty three, is 157 00:09:42,760 --> 00:09:44,880 Speaker 1: that going to be good for consumers and good for 158 00:09:44,920 --> 00:09:47,160 Speaker 1: the economy, and good for the airlines and so on? 159 00:09:48,160 --> 00:09:51,640 Speaker 1: That's a really difficult question. We've got so many prices 160 00:09:51,800 --> 00:09:57,120 Speaker 1: in the world, and stock markets prices are determined by 161 00:09:57,240 --> 00:10:02,040 Speaker 1: all factors, including current input crisis. So I think that, 162 00:10:02,280 --> 00:10:07,319 Speaker 1: um uh, the oil. Oil is an important factor in 163 00:10:07,360 --> 00:10:10,840 Speaker 1: the economy, but I think there's so many other, bigger, 164 00:10:10,960 --> 00:10:14,440 Speaker 1: more important things that are in our control. The oil 165 00:10:14,480 --> 00:10:18,080 Speaker 1: markets is kind of outside of our control in the 166 00:10:18,160 --> 00:10:22,320 Speaker 1: short run at least. But what isn't our control is policy. 167 00:10:22,400 --> 00:10:27,240 Speaker 1: Economic policy matters. All right, Well done, thanks very much. 168 00:10:27,600 --> 00:10:30,960 Speaker 1: Edward Stringham is the president of the American Institute for 169 00:10:31,080 --> 00:10:48,240 Speaker 1: Economic for Research. I'vean fine set. Tigers Financial Chief investment 170 00:10:48,360 --> 00:10:52,680 Speaker 1: officer and director of Research joins us. Now, Ivan, it 171 00:10:52,760 --> 00:10:55,480 Speaker 1: looks like a good open today, but what about a 172 00:10:55,640 --> 00:10:58,040 Speaker 1: close for the year. Do you think that we're going 173 00:10:58,080 --> 00:11:03,160 Speaker 1: to be able to rebound from these pretty steep sell 174 00:11:03,200 --> 00:11:07,560 Speaker 1: offs and all the indexes? Well, I think now it 175 00:11:07,679 --> 00:11:10,400 Speaker 1: is the time to take advantage of the after Christmas 176 00:11:10,400 --> 00:11:13,240 Speaker 1: sale on Wall Street. I mean, there are some incredible 177 00:11:13,320 --> 00:11:16,719 Speaker 1: values here. There's been, unfortunately, there's been a huge disconnect 178 00:11:16,760 --> 00:11:19,280 Speaker 1: between how well the economy is doing and now how 179 00:11:19,320 --> 00:11:21,800 Speaker 1: badly the stock market is doing. And there's been some 180 00:11:21,840 --> 00:11:25,240 Speaker 1: near term issues I mean, the concern over the trade 181 00:11:25,240 --> 00:11:32,679 Speaker 1: situation with China. Now the um uh government shutdown, and um, 182 00:11:32,840 --> 00:11:36,840 Speaker 1: some concerning tweets from President Trump about the lack of 183 00:11:36,880 --> 00:11:40,720 Speaker 1: confidence in the FED and uh, you know, and wanting 184 00:11:40,760 --> 00:11:47,160 Speaker 1: to potentially remove Jerome Powell as the head of the FED. Yes, 185 00:11:47,280 --> 00:11:50,320 Speaker 1: and his statement of the fact that the FED doesn't 186 00:11:50,400 --> 00:11:53,760 Speaker 1: understand financial markets is is a little odd. That's like 187 00:11:53,840 --> 00:11:56,280 Speaker 1: saying the doctor who's about to operate on you doesn't 188 00:11:56,320 --> 00:12:00,400 Speaker 1: understand medicine. So, um, some of these near term things 189 00:12:00,400 --> 00:12:03,480 Speaker 1: have been disappointing. And uh, two of the things that 190 00:12:03,559 --> 00:12:05,960 Speaker 1: President Trump had going for him was the strength of 191 00:12:05,960 --> 00:12:08,720 Speaker 1: the economy. Everybody liked the Trump economy and the Trump 192 00:12:08,760 --> 00:12:12,680 Speaker 1: stock market, and unfortunately the Trump rally has faded. However, 193 00:12:12,720 --> 00:12:15,400 Speaker 1: I still believe that the underlying economic strength in the 194 00:12:15,480 --> 00:12:19,400 Speaker 1: US is still strong, and you know, just look at 195 00:12:19,440 --> 00:12:22,880 Speaker 1: the strong holiday season that we had. And uh, for 196 00:12:22,960 --> 00:12:25,240 Speaker 1: the most part, stocks are cheaper than they were a 197 00:12:25,320 --> 00:12:27,960 Speaker 1: year ago at this time. Surely, But but I gotta 198 00:12:27,960 --> 00:12:30,080 Speaker 1: pressed you, ivan, I mean, did you see this sell 199 00:12:30,120 --> 00:12:34,440 Speaker 1: off coming? No, not not to this extreme point. Okay, 200 00:12:34,480 --> 00:12:37,960 Speaker 1: So if you didn't see this, okay, So my point is, 201 00:12:38,000 --> 00:12:41,520 Speaker 1: if you didn't see it coming. Many people didn't see 202 00:12:41,520 --> 00:12:44,120 Speaker 1: it come. You've got a lot of company. Is it 203 00:12:44,200 --> 00:12:48,320 Speaker 1: possible that the stock market and investors, like you know, 204 00:12:48,520 --> 00:12:55,199 Speaker 1: the bookmakers, are telling the public something that they didn't 205 00:12:55,280 --> 00:12:58,800 Speaker 1: know before, that they really are concerned about something in 206 00:12:58,840 --> 00:13:02,840 Speaker 1: the future, and that it is a future looking machine 207 00:13:03,280 --> 00:13:07,839 Speaker 1: that sometimes gets it right. Well, there is a lot 208 00:13:07,880 --> 00:13:11,880 Speaker 1: of concern amongst investors about the decline in stocks, but 209 00:13:12,000 --> 00:13:15,160 Speaker 1: they are more upset that the market is down, and 210 00:13:15,200 --> 00:13:17,600 Speaker 1: not more upset that that not upset that they believe 211 00:13:17,640 --> 00:13:20,520 Speaker 1: the economy is slowing. You know, everybody says the economy 212 00:13:20,559 --> 00:13:24,880 Speaker 1: still looks good from various people's advantage point of you know, 213 00:13:24,960 --> 00:13:27,199 Speaker 1: the companies they run, or the jobs they have, or 214 00:13:27,240 --> 00:13:29,760 Speaker 1: the situations that they're in. They still say the economy 215 00:13:29,840 --> 00:13:32,520 Speaker 1: is good. But this sell off in the stock market 216 00:13:32,600 --> 00:13:36,040 Speaker 1: has been somewhat technical. I think we've seen a lot 217 00:13:36,080 --> 00:13:40,760 Speaker 1: of margins selling recently, and a lot of UH forced 218 00:13:40,760 --> 00:13:44,760 Speaker 1: selling by over leveraged hedge funds, and a lot of 219 00:13:44,800 --> 00:13:47,320 Speaker 1: funds are in net redemption now, which has caused a 220 00:13:47,320 --> 00:13:49,720 Speaker 1: lot of forced selling, and there's a lot of panic 221 00:13:49,760 --> 00:13:52,760 Speaker 1: out there. Explain in a second, I've explained how that 222 00:13:53,040 --> 00:13:57,640 Speaker 1: forced redemptions work because if you invest in an alternative 223 00:13:57,800 --> 00:14:00,880 Speaker 1: such as a hedge fund, it's like you can just 224 00:14:01,000 --> 00:14:03,160 Speaker 1: call them up on the phone or send them an 225 00:14:03,160 --> 00:14:05,400 Speaker 1: email whatever it is, and say I want to get out, 226 00:14:05,480 --> 00:14:09,079 Speaker 1: send me my check. It takes a while, doesn't it. Well. 227 00:14:09,200 --> 00:14:12,319 Speaker 1: Usually some have, you know, minimum of thirty day notice 228 00:14:12,360 --> 00:14:15,720 Speaker 1: to redeem. Others have a periodic redemptions that you have 229 00:14:15,840 --> 00:14:20,120 Speaker 1: to get in line for. But I think with the 230 00:14:20,160 --> 00:14:23,680 Speaker 1: poor performance and hedge funds that we've seen, um, they 231 00:14:23,840 --> 00:14:26,520 Speaker 1: in theory underperform on the way up because their heads, 232 00:14:26,560 --> 00:14:28,400 Speaker 1: but they're supposed to protect you on the way down, 233 00:14:28,400 --> 00:14:31,320 Speaker 1: and many haven't and they are getting a lot of 234 00:14:31,360 --> 00:14:34,480 Speaker 1: redemptions uh for the end of the year and have 235 00:14:34,600 --> 00:14:37,000 Speaker 1: been forced to sell. Also, a lot of hedge funds 236 00:14:37,440 --> 00:14:43,040 Speaker 1: use leverage and they have been in a significant deleveraging process. 237 00:14:44,200 --> 00:14:46,760 Speaker 1: What do you make of the argument that the reason 238 00:14:46,960 --> 00:14:52,000 Speaker 1: that stock prices have fallen is directly correlated to the 239 00:14:52,080 --> 00:14:58,800 Speaker 1: Federal Reserve with drawing liquidity and buying power in the marketplace. 240 00:15:00,520 --> 00:15:04,400 Speaker 1: They've raised rates and they have been contracting their balance sheet. 241 00:15:04,480 --> 00:15:06,760 Speaker 1: But I don't really believe it has been a huge 242 00:15:06,800 --> 00:15:11,360 Speaker 1: reduction in liquidity I think the point that Treasury Secretary 243 00:15:11,440 --> 00:15:14,960 Speaker 1: Minution was making on Sunday night with his calls to 244 00:15:15,080 --> 00:15:18,120 Speaker 1: the heads of all the big banks was that there 245 00:15:18,240 --> 00:15:21,680 Speaker 1: is plenty of liquidity out there, so we really there's 246 00:15:21,680 --> 00:15:23,520 Speaker 1: not really a liquidity issue. I think we've seen a 247 00:15:23,600 --> 00:15:27,000 Speaker 1: buyer strike. People have just pulled back from buying, and 248 00:15:27,040 --> 00:15:28,800 Speaker 1: when you have a lot of shares being dumped on 249 00:15:28,800 --> 00:15:34,160 Speaker 1: the market, prices moved downward quickly. But I don't think 250 00:15:34,240 --> 00:15:37,040 Speaker 1: that there's a lack of liquidity in any of the 251 00:15:37,080 --> 00:15:40,680 Speaker 1: financial markets. So where do you believe this on the skyline? Okay? 252 00:15:40,720 --> 00:15:42,880 Speaker 1: So where do you believe the new money will come 253 00:15:43,000 --> 00:15:46,880 Speaker 1: from in order to boost stock prices because the only 254 00:15:46,920 --> 00:15:49,160 Speaker 1: reason they go up is someone else is willing to 255 00:15:49,200 --> 00:15:53,000 Speaker 1: pay more for the same share. Well, that's a good question. 256 00:15:53,280 --> 00:15:56,840 Speaker 1: The first flow of money will begin on the middle 257 00:15:56,880 --> 00:15:59,840 Speaker 1: of January when people start to get paid again and 258 00:16:00,440 --> 00:16:03,480 Speaker 1: uh start to contribute into their four o one case 259 00:16:04,120 --> 00:16:07,000 Speaker 1: because um, you know, during the course of a year 260 00:16:07,040 --> 00:16:09,760 Speaker 1: you may reach the limit, and that for some people 261 00:16:09,840 --> 00:16:12,600 Speaker 1: can be anywhere from the middle of the year toward 262 00:16:13,080 --> 00:16:15,040 Speaker 1: you know, later on in the year. So we still 263 00:16:15,280 --> 00:16:17,680 Speaker 1: maxing out your four oh one contribution you think that 264 00:16:17,720 --> 00:16:20,760 Speaker 1: has an effect. That's number one, yes, yes, So you 265 00:16:20,800 --> 00:16:24,640 Speaker 1: will see UM money flow back into four one case, 266 00:16:24,680 --> 00:16:26,800 Speaker 1: which goes back into the stock market on a periodic 267 00:16:26,840 --> 00:16:30,520 Speaker 1: basis one of the best ways to invest. The second 268 00:16:30,840 --> 00:16:35,120 Speaker 1: catalyst for the upside I believe will be Q four earnings, 269 00:16:35,120 --> 00:16:38,120 Speaker 1: which we start to get in towards the end of January, 270 00:16:38,520 --> 00:16:41,680 Speaker 1: and the and the and two thousand nineteen outlooks, and 271 00:16:41,720 --> 00:16:44,640 Speaker 1: we have not seen a huge reduction in corporate outlooks, 272 00:16:44,680 --> 00:16:49,280 Speaker 1: and in fact, most CEOs are still very optimistic for 273 00:16:49,360 --> 00:16:53,280 Speaker 1: two thousand nineteen. They haven't cut their outlook back. So 274 00:16:53,320 --> 00:16:55,960 Speaker 1: you're looking at earnings being a boost when we receive 275 00:16:56,080 --> 00:16:59,880 Speaker 1: those fourth quarter results. I think there's you know, two 276 00:17:00,040 --> 00:17:02,680 Speaker 1: a catalysts. The flow of money that always begins in 277 00:17:02,800 --> 00:17:05,320 Speaker 1: January into pensions in four O one case is always 278 00:17:05,320 --> 00:17:09,760 Speaker 1: positive for the market. Second is uh, I think that 279 00:17:09,840 --> 00:17:13,080 Speaker 1: earnings will be a positive catalyst. The third is I 280 00:17:13,119 --> 00:17:17,320 Speaker 1: think we will get some type of UM trade deal 281 00:17:17,400 --> 00:17:20,399 Speaker 1: with China. I've said for a long time President Trump 282 00:17:20,400 --> 00:17:23,040 Speaker 1: had the upper hand for a while, as the Chinese 283 00:17:23,080 --> 00:17:27,280 Speaker 1: stock market has declined significantly since the trade battle began 284 00:17:27,840 --> 00:17:31,920 Speaker 1: in February, and now the decline in our market, which 285 00:17:32,040 --> 00:17:36,840 Speaker 1: is partially caused by the uncertainty over trade with China. 286 00:17:37,240 --> 00:17:40,840 Speaker 1: I think President Trump maybe a little bit more flexible 287 00:17:40,840 --> 00:17:44,360 Speaker 1: in his negotiations. Uh, and he's probably as stubborn as 288 00:17:44,560 --> 00:17:47,160 Speaker 1: President sigen Ping is too. So you have two sub 289 00:17:47,280 --> 00:17:50,240 Speaker 1: negotiators that you know are being forced to the table 290 00:17:50,280 --> 00:17:54,080 Speaker 1: because of current economic and market situations in their own countries. 291 00:17:54,560 --> 00:17:58,200 Speaker 1: Speaking with Ivan fine Set, he is Tigris Financial's chief 292 00:17:58,240 --> 00:18:03,240 Speaker 1: investment officer and director of Research, Ivan, are you surprised 293 00:18:03,560 --> 00:18:07,919 Speaker 1: that there are not more bullish calls for equity, particularly 294 00:18:08,080 --> 00:18:11,679 Speaker 1: when you see the price of fossil fuel of crude 295 00:18:11,680 --> 00:18:16,840 Speaker 1: oil at forty two dollars a barrel. The one thing 296 00:18:16,880 --> 00:18:19,560 Speaker 1: I have been right on and recently has been I've 297 00:18:19,760 --> 00:18:21,520 Speaker 1: said oil was going to drop, and I believe the 298 00:18:21,560 --> 00:18:24,080 Speaker 1: oil will go closer to forty dollars than many people 299 00:18:24,119 --> 00:18:27,679 Speaker 1: calling for sixty dollars and lower oil prices is another 300 00:18:27,800 --> 00:18:31,800 Speaker 1: positive thing for consumer discretionary spending, so that also is 301 00:18:31,800 --> 00:18:34,199 Speaker 1: helpful the economy. Why do you think oil prices are 302 00:18:34,200 --> 00:18:38,679 Speaker 1: gonna hit forty because they will not be able to 303 00:18:39,480 --> 00:18:43,520 Speaker 1: support prices meaning OPEC with the recently announced UM production 304 00:18:43,560 --> 00:18:48,000 Speaker 1: cuts and Uh, the US is now a wash and oil, 305 00:18:48,040 --> 00:18:50,280 Speaker 1: and we are the world's biggest producer of oil now 306 00:18:50,320 --> 00:18:53,280 Speaker 1: and the shale oil that keeps coming online is also 307 00:18:53,760 --> 00:18:57,320 Speaker 1: helping keep prices lower. Russia, while they are not an 308 00:18:57,320 --> 00:19:01,760 Speaker 1: OPEC member, they meet with OLPEC and try to have 309 00:19:01,840 --> 00:19:04,440 Speaker 1: a consensus on production because obviously we have an interest 310 00:19:04,480 --> 00:19:06,439 Speaker 1: in the price of oil. But they will pump what 311 00:19:06,480 --> 00:19:09,960 Speaker 1: they want and when they want, and we just have 312 00:19:10,040 --> 00:19:13,479 Speaker 1: a lot of supply. Also, company countries like Venezuela is 313 00:19:13,600 --> 00:19:17,040 Speaker 1: in desperty to cash though they want to pump as 314 00:19:17,119 --> 00:19:20,080 Speaker 1: much as they can. So um, the world is a 315 00:19:20,080 --> 00:19:22,880 Speaker 1: wash and oil. It's supply and demand and right now 316 00:19:22,880 --> 00:19:25,919 Speaker 1: we have an oversupply which should take prices for you 317 00:19:25,920 --> 00:19:29,320 Speaker 1: know lower. Well, it just to give you thirty seconds, 318 00:19:29,359 --> 00:19:31,480 Speaker 1: and I'd like you to spend some more time with us, 319 00:19:32,040 --> 00:19:35,040 Speaker 1: and because I want to get your sort of specific 320 00:19:35,119 --> 00:19:38,440 Speaker 1: views on the market which sectors. But is it possible 321 00:19:38,480 --> 00:19:41,160 Speaker 1: that the decline in oil prices is linked to slowing 322 00:19:41,240 --> 00:19:46,520 Speaker 1: demand and that's weaker economic output outside the United States? Well, 323 00:19:46,560 --> 00:19:49,760 Speaker 1: there has been some concern that the decline in oil 324 00:19:50,119 --> 00:19:54,600 Speaker 1: would be an indication of economic weakness. My guest is 325 00:19:54,640 --> 00:19:57,199 Speaker 1: Ivan Fined set He is the chief investment officer and 326 00:19:57,240 --> 00:20:01,440 Speaker 1: director of Research for Tigress Financial Show Ivan. It has 327 00:20:01,480 --> 00:20:05,480 Speaker 1: been a brutal fourth quarter for stock investors. We know 328 00:20:05,560 --> 00:20:08,920 Speaker 1: that we are approaching a decline in the S and 329 00:20:09,000 --> 00:20:13,000 Speaker 1: P five currently at one. We'll wait to see what 330 00:20:13,080 --> 00:20:16,320 Speaker 1: the open brings us. You have mentioned that you are 331 00:20:16,359 --> 00:20:20,160 Speaker 1: bullish and you believe that there is a buying opportunity. 332 00:20:20,560 --> 00:20:23,560 Speaker 1: So if you are an investor who has money to invest, 333 00:20:24,040 --> 00:20:27,160 Speaker 1: where would you specifically be looking to put it to work? 334 00:20:28,320 --> 00:20:30,840 Speaker 1: The first sector would be the tech sector. It's still 335 00:20:30,880 --> 00:20:34,600 Speaker 1: the engine of growth for our economy and pretty much 336 00:20:34,760 --> 00:20:37,560 Speaker 1: most global economies. And the sell off there has been 337 00:20:37,600 --> 00:20:42,119 Speaker 1: the most dramatic companies like Amazon and Apple and UM, 338 00:20:42,400 --> 00:20:46,320 Speaker 1: Intel and Microsoft and Nvidiah and along with many of 339 00:20:46,320 --> 00:20:50,919 Speaker 1: the other chip stocks like Skyworks, Corbo and Quilcom. I 340 00:20:50,960 --> 00:20:57,360 Speaker 1: think there are huge bargains there. And then retail Costco UH, 341 00:20:57,560 --> 00:21:03,000 Speaker 1: Best Buy, UM, Target, UH, Nordstrooms and Macy's. And then 342 00:21:03,000 --> 00:21:09,639 Speaker 1: in the industrials Caterpillar, Boeing, ALCOA, UM. There's just a 343 00:21:09,720 --> 00:21:16,480 Speaker 1: tremendous number of companies that have good growth, pay good dividends, 344 00:21:17,040 --> 00:21:19,440 Speaker 1: and have a huge amount of opportunity ahead of them. 345 00:21:19,520 --> 00:21:21,440 Speaker 1: All right, let's take each one of these if we 346 00:21:21,520 --> 00:21:24,560 Speaker 1: can just a little bit more detail. You mentioned technology. 347 00:21:24,640 --> 00:21:29,040 Speaker 1: You spoke about Amazon dot Com, of course retail plus technology. 348 00:21:29,080 --> 00:21:32,720 Speaker 1: Also you mentioned chip stocks and Apple. I didn't hear 349 00:21:32,800 --> 00:21:37,080 Speaker 1: Facebook in there. Oh yes, I forgot face Facebook. You'd 350 00:21:37,080 --> 00:21:41,800 Speaker 1: be buying Facebook at these levels. Absolutely. You don't believe 351 00:21:41,840 --> 00:21:48,680 Speaker 1: that there's any concern about government regulation. Um not. I'm 352 00:21:48,680 --> 00:21:52,160 Speaker 1: not overly concerned about it. I think that they are 353 00:21:52,240 --> 00:21:56,520 Speaker 1: doing a lot to The two key issues are fake 354 00:21:56,560 --> 00:22:01,080 Speaker 1: accounts and um pretty much false news, and they have 355 00:22:01,440 --> 00:22:07,600 Speaker 1: hired about twenty people to oversee compliance and are heavily 356 00:22:07,720 --> 00:22:11,960 Speaker 1: using artificial intelligence to ferret out a lot of the issues. 357 00:22:12,359 --> 00:22:16,119 Speaker 1: But the most important driver is they have two point 358 00:22:16,200 --> 00:22:21,160 Speaker 1: six billion monthly active users, and advertisers want to go 359 00:22:21,400 --> 00:22:27,480 Speaker 1: to where the customers are, and the digital advertising continues 360 00:22:27,520 --> 00:22:31,640 Speaker 1: to grow because you can use technology and target and 361 00:22:31,720 --> 00:22:36,959 Speaker 1: measure your return on advertising invested dollar. And Facebook offers 362 00:22:37,400 --> 00:22:40,439 Speaker 1: the best value and opportunity to the advertisers and that 363 00:22:40,640 --> 00:22:43,199 Speaker 1: is the key. Al Right, So at a hundred and 364 00:22:44,200 --> 00:22:49,200 Speaker 1: do a share, you're a buyer of Facebook. Absolutely. In 365 00:22:49,280 --> 00:22:52,679 Speaker 1: Facebook is now at the cheapest level since the history 366 00:22:52,880 --> 00:22:55,160 Speaker 1: of it being a public company. All right, so you're 367 00:22:55,200 --> 00:22:59,840 Speaker 1: positive on Facebook. Make the case for Apple. When we 368 00:23:00,160 --> 00:23:05,000 Speaker 1: heard from many analysts that the transition from hardware sales 369 00:23:05,240 --> 00:23:10,879 Speaker 1: of iPhones to service revenue and software is going to 370 00:23:10,920 --> 00:23:14,679 Speaker 1: be a challenge, Well, I don't know if it's going 371 00:23:14,720 --> 00:23:19,160 Speaker 1: to be a challenge. It continues to happen. iPhone sales 372 00:23:19,320 --> 00:23:25,960 Speaker 1: are slowing slightly, but they sold million phones in the 373 00:23:26,040 --> 00:23:31,320 Speaker 1: last quarter. They have a active iPhone user base of 374 00:23:31,720 --> 00:23:36,200 Speaker 1: seven and fifty million that they can sell additional services to. 375 00:23:36,400 --> 00:23:39,920 Speaker 1: They could go to a subscription model for the sale 376 00:23:39,960 --> 00:23:43,399 Speaker 1: of the phones, where uh, most people do buy their 377 00:23:43,440 --> 00:23:46,280 Speaker 1: phones on a monthly basis as part of the contract 378 00:23:46,280 --> 00:23:50,479 Speaker 1: with their service. They can go to a Amazon Pride 379 00:23:50,480 --> 00:23:56,760 Speaker 1: type of membership for streaming media for iTunes um. They 380 00:23:56,760 --> 00:24:00,560 Speaker 1: can also include the Apple Care warranty on a for 381 00:24:00,600 --> 00:24:02,879 Speaker 1: a monthly fee as part of the purchase of the phone. 382 00:24:03,200 --> 00:24:05,879 Speaker 1: There's a lot they can do to monetize this huge 383 00:24:07,000 --> 00:24:11,280 Speaker 1: Apple customer base, and they continue to sell product. They 384 00:24:11,320 --> 00:24:14,720 Speaker 1: continue to go through the ongoing upgrade cycle of the phones. 385 00:24:14,800 --> 00:24:19,080 Speaker 1: They still sell max, they still sell iPads um. The 386 00:24:19,080 --> 00:24:22,360 Speaker 1: demand for their products is strong, alright, So bullish on Facebook, 387 00:24:22,400 --> 00:24:25,760 Speaker 1: bullish on Apple. Turn your attention to industrial as you 388 00:24:25,760 --> 00:24:28,280 Speaker 1: mentioned them. Just give us one industrial stock to give 389 00:24:28,280 --> 00:24:31,479 Speaker 1: you about the thirty seconds. What industrial company would you 390 00:24:31,520 --> 00:24:36,840 Speaker 1: most like to own? They just raised their dividend. Is 391 00:24:36,880 --> 00:24:40,159 Speaker 1: that part of the story. Yes, they just increased their dividend. 392 00:24:40,960 --> 00:24:43,440 Speaker 1: They just increased their buy back by two billion dollars 393 00:24:43,480 --> 00:24:47,480 Speaker 1: from eighteen billion billion. Plane that they have a backlog 394 00:24:47,520 --> 00:24:51,480 Speaker 1: of plane demand for the next twenty years. Few companies 395 00:24:51,520 --> 00:24:54,640 Speaker 1: have that kind of visibility. Uh. They just got a 396 00:24:54,720 --> 00:25:00,280 Speaker 1: huge A fifty plane order from a subsidiary of Saudi 397 00:25:00,400 --> 00:25:06,200 Speaker 1: Arabia Airlines worth almost six billion dollars. Uh. The UH 398 00:25:06,200 --> 00:25:10,200 Speaker 1: seven thirty seven Max remains their best selling phone. Excuse me, 399 00:25:10,280 --> 00:25:14,280 Speaker 1: past selling plane. They've had no loss of letters since 400 00:25:14,520 --> 00:25:18,280 Speaker 1: the unfortunate Lion Air issue, which is now coming out. 401 00:25:18,320 --> 00:25:20,639 Speaker 1: It was all right, he's got a trifecta. We've got 402 00:25:20,720 --> 00:25:23,720 Speaker 1: to leave it there. Ivan find set the Chief investment Officer, 403 00:25:23,800 --> 00:25:29,919 Speaker 1: Director of Research Tigers Financial, Bullish on Boeing, Apple and Facebook. 404 00:25:40,000 --> 00:25:41,960 Speaker 1: If you happen to go through the lobby of just 405 00:25:42,040 --> 00:25:47,119 Speaker 1: about any casino, perhaps the Tropicana in Atlantic City, what 406 00:25:47,240 --> 00:25:51,560 Speaker 1: will you find signs that direct you to place your 407 00:25:51,600 --> 00:25:54,359 Speaker 1: bets for sports. And here to tell us all about 408 00:25:54,400 --> 00:25:58,520 Speaker 1: the industry is none other than our own expert, Brian Egger. 409 00:25:58,600 --> 00:26:02,800 Speaker 1: Here's our Bloomberg Intelligence senior gaming analysts, and you can 410 00:26:02,880 --> 00:26:06,600 Speaker 1: follow him on Twitter as we all do at Eggerantonomics. 411 00:26:07,040 --> 00:26:11,480 Speaker 1: Alright at Egernomics, give us the lowdown on where you 412 00:26:11,560 --> 00:26:16,199 Speaker 1: can legally bet on sports. Yeah, there's been this remarkable 413 00:26:16,200 --> 00:26:19,360 Speaker 1: proliferation of where you could actually bet on sports. So 414 00:26:19,840 --> 00:26:22,879 Speaker 1: in the last year, actually since May when the Supreme 415 00:26:22,960 --> 00:26:25,800 Speaker 1: Court repealed the federal ban on sports betting. It now 416 00:26:25,840 --> 00:26:31,920 Speaker 1: exists in Delaware, New Jersey, West Virginia, Mississippi, Rhode Island, Pennsylvania, 417 00:26:32,119 --> 00:26:34,560 Speaker 1: and also one track in New Mexico. So it's seven 418 00:26:34,560 --> 00:26:37,960 Speaker 1: other states other than Nevada. All right, So those seven 419 00:26:38,040 --> 00:26:41,320 Speaker 1: other states, does the amount of money that is bet 420 00:26:41,320 --> 00:26:43,840 Speaker 1: in those seven other states come close to what is 421 00:26:43,880 --> 00:26:46,120 Speaker 1: bet in Vegas? So it's starting to and you really 422 00:26:46,119 --> 00:26:50,320 Speaker 1: have to distinguish between the amount bet in Vegas uh 423 00:26:50,600 --> 00:26:53,560 Speaker 1: as opposed to the amount that actually is retained as revenue, 424 00:26:53,840 --> 00:26:57,000 Speaker 1: And that amount in Vegas actual annually is about two 425 00:26:57,440 --> 00:27:00,320 Speaker 1: fifty million dollars as revenue, about five or center the 426 00:27:00,320 --> 00:27:02,840 Speaker 1: amount wagered and so far in New Jersey, if you 427 00:27:02,920 --> 00:27:05,879 Speaker 1: extrapolate the last few months for the brick and mortar 428 00:27:06,000 --> 00:27:10,120 Speaker 1: sports books there, it's been a similar piece of revenue 429 00:27:10,200 --> 00:27:13,719 Speaker 1: so far. All right, now, I'm looking at the sign 430 00:27:13,800 --> 00:27:17,639 Speaker 1: that exists at the Tropicana in Atlantic City. It's a 431 00:27:17,720 --> 00:27:25,399 Speaker 1: William Hill sign there the sports book You've got basketball, soccer, tennis, golf, baseball. 432 00:27:25,720 --> 00:27:28,520 Speaker 1: But the biggest, the one that's most out front is football. 433 00:27:28,600 --> 00:27:31,560 Speaker 1: Tell us about betting on football? Football is really the 434 00:27:31,720 --> 00:27:34,120 Speaker 1: major sport. If you look at Nevada, the most well 435 00:27:34,160 --> 00:27:38,439 Speaker 1: developed and long standing market, football accounts for about thirty 436 00:27:38,560 --> 00:27:42,879 Speaker 1: six percent of annual sports betting revenue, and then basketball 437 00:27:42,920 --> 00:27:45,399 Speaker 1: comes next at about a third of the total. So 438 00:27:45,480 --> 00:27:48,040 Speaker 1: football is really, uh the big one, which is why 439 00:27:48,119 --> 00:27:50,840 Speaker 1: these books wanted to get up and running if possible 440 00:27:51,080 --> 00:27:54,760 Speaker 1: before the advent of the football season. Is there a 441 00:27:54,920 --> 00:27:59,359 Speaker 1: dichotomy between the market for sports betting when it comes 442 00:27:59,400 --> 00:28:02,360 Speaker 1: to physic all betting I mean going to a casino 443 00:28:02,440 --> 00:28:06,520 Speaker 1: and placing the bet versus online betting using your smartphone? 444 00:28:07,000 --> 00:28:09,679 Speaker 1: There is now The online betting markets vary in size 445 00:28:09,760 --> 00:28:11,280 Speaker 1: by state. A lot of these states are new. But 446 00:28:11,320 --> 00:28:14,320 Speaker 1: if you look at New Jersey, UH, the month of November, 447 00:28:14,320 --> 00:28:17,160 Speaker 1: the most recent data we've got. It's kind of interesting 448 00:28:17,160 --> 00:28:22,200 Speaker 1: because there are seven brick and mortar, seven casino affiliated 449 00:28:22,359 --> 00:28:26,240 Speaker 1: sports books, and only two racetracks. Yet those two racetracks, 450 00:28:26,400 --> 00:28:32,800 Speaker 1: Meadowlands and Monmouth Park, account fort of the total sports 451 00:28:32,840 --> 00:28:36,400 Speaker 1: betting revenue so so far, um, the on the racetracks 452 00:28:36,440 --> 00:28:40,160 Speaker 1: are winning this proportionally, and UH the online portion is 453 00:28:40,200 --> 00:28:43,680 Speaker 1: also about so the big winners so far are the 454 00:28:43,800 --> 00:28:46,760 Speaker 1: race tracks and the online betting sites, which are about 455 00:28:47,040 --> 00:28:51,960 Speaker 1: about the total. Now, as someone that has been following 456 00:28:51,960 --> 00:28:54,760 Speaker 1: this industry for a long time, do you believe that 457 00:28:54,840 --> 00:29:01,400 Speaker 1: the actual physical betting locations, the casinos, the companies that 458 00:29:01,520 --> 00:29:04,520 Speaker 1: provide the infrastructure to do it, are they really going 459 00:29:04,560 --> 00:29:07,160 Speaker 1: to benefit or is it possible that we just have 460 00:29:07,240 --> 00:29:09,920 Speaker 1: an online explosion like we've had in the retail world. 461 00:29:10,160 --> 00:29:13,280 Speaker 1: So it's it's a really interesting question because sports betting 462 00:29:13,320 --> 00:29:17,000 Speaker 1: historically has only accounted for about two percent of the 463 00:29:17,040 --> 00:29:20,680 Speaker 1: total gaming revenue, UH coming out of Nevada. The rest 464 00:29:20,760 --> 00:29:24,240 Speaker 1: comes from slot machines and table games. Likewise, in New Jersey, 465 00:29:24,280 --> 00:29:25,800 Speaker 1: it's been kind of in the order of kind of 466 00:29:25,840 --> 00:29:30,480 Speaker 1: three four percent, So as a revenue generator because the 467 00:29:30,520 --> 00:29:33,479 Speaker 1: casino has only retained five percent of dollars wagered as 468 00:29:33,520 --> 00:29:37,360 Speaker 1: when it's comparatively small compared to the slop machines and 469 00:29:37,360 --> 00:29:40,400 Speaker 1: the table games. But it's really important as an ancillary 470 00:29:40,440 --> 00:29:44,400 Speaker 1: traffic driver during those big UH sports betting weekends, football 471 00:29:44,400 --> 00:29:48,840 Speaker 1: weekends and t double A basketball semifinals, World Series, etcetera. 472 00:29:49,000 --> 00:29:53,040 Speaker 1: There's a lot of traffic flowing through from the sports 473 00:29:53,080 --> 00:29:55,720 Speaker 1: books into the casino. So it's I think it's actually 474 00:29:55,800 --> 00:29:59,520 Speaker 1: more important as a traffic driver of casino activity. There's 475 00:29:59,560 --> 00:30:02,320 Speaker 1: an actual revenue source per se. Now I know that 476 00:30:02,400 --> 00:30:06,320 Speaker 1: you spend some time at the Tropicana in Atlantic City recently. 477 00:30:06,520 --> 00:30:08,760 Speaker 1: What did you see? Okay? And I should say I 478 00:30:08,760 --> 00:30:10,840 Speaker 1: spend most of my time at my desk doing analysis. 479 00:30:10,960 --> 00:30:13,160 Speaker 1: Of course you do, of course, But what I saw 480 00:30:13,280 --> 00:30:14,720 Speaker 1: was we were there and that's why you have that 481 00:30:14,920 --> 00:30:19,280 Speaker 1: the one armed bands exact screen exactly. UM. So what 482 00:30:19,520 --> 00:30:21,880 Speaker 1: I saw there was, although it wasn't a very busy time, 483 00:30:21,880 --> 00:30:23,760 Speaker 1: you saw a lot of sports books. It's interesting that 484 00:30:23,800 --> 00:30:29,040 Speaker 1: William Hill, the UK bookmaker UM has so far three 485 00:30:29,080 --> 00:30:32,160 Speaker 1: sports books in New Jersey, three physical ones UH. The 486 00:30:32,200 --> 00:30:35,400 Speaker 1: Ocean Resort in Tropicana, Atlantic City and in Mommouth Park 487 00:30:35,440 --> 00:30:37,520 Speaker 1: the race tracks. So a lot of the way these 488 00:30:37,520 --> 00:30:40,440 Speaker 1: sports books have kind of emerged is through these allignances 489 00:30:40,520 --> 00:30:44,920 Speaker 1: between race tracks and casinos and commercial gaming markets and 490 00:30:45,080 --> 00:30:47,720 Speaker 1: some of the big betting houses like William Hill and 491 00:30:47,760 --> 00:30:51,160 Speaker 1: of course the daily fantasy sports companies really involved. Also, 492 00:30:51,680 --> 00:30:53,280 Speaker 1: I want to go back to something you said about 493 00:30:53,280 --> 00:30:56,560 Speaker 1: the five percent take that the casinos have when it 494 00:30:56,600 --> 00:30:58,800 Speaker 1: comes to the revenue, right that they get about five 495 00:31:00,400 --> 00:31:04,440 Speaker 1: is that materially different than the table stakes as well 496 00:31:04,480 --> 00:31:07,959 Speaker 1: as the slot machine business. So it's probably similar to 497 00:31:08,000 --> 00:31:10,880 Speaker 1: the whole rate if you will, on slaw machines. The 498 00:31:10,920 --> 00:31:13,960 Speaker 1: table game hold rates are are a little higher, you know, 499 00:31:14,000 --> 00:31:17,600 Speaker 1: but that kind of activity is determined by UH competition. 500 00:31:17,680 --> 00:31:21,200 Speaker 1: Nevada is a fairly competitive and developed sports market. But 501 00:31:21,240 --> 00:31:23,040 Speaker 1: the reason, you know, we kind of point this out 502 00:31:23,080 --> 00:31:25,080 Speaker 1: is if you were to look at the theoretical size 503 00:31:25,720 --> 00:31:28,040 Speaker 1: of sports betting, UH, look at the amount of a 504 00:31:28,120 --> 00:31:30,360 Speaker 1: legal betting that has taken place in this country, and 505 00:31:30,400 --> 00:31:33,200 Speaker 1: assigned that five percent rate to it, you know, theoretically 506 00:31:33,200 --> 00:31:36,280 Speaker 1: there's seven to eight billion dollars of revenue flowing to 507 00:31:36,360 --> 00:31:39,040 Speaker 1: these legal sports books. But that's only if people give 508 00:31:39,080 --> 00:31:41,760 Speaker 1: up their legal bookies. And of all these states legalized 509 00:31:41,760 --> 00:31:47,240 Speaker 1: sports betting, is there a potential for more states to 510 00:31:47,440 --> 00:31:50,960 Speaker 1: offer this kind of legal sports betting? Yeah, there is. 511 00:31:51,000 --> 00:31:53,400 Speaker 1: I think we're only in the early innings of the 512 00:31:53,520 --> 00:31:57,840 Speaker 1: legalization UH process to use a sports betting metaphor. So 513 00:31:57,840 --> 00:32:00,600 Speaker 1: so far, we've had, recently within the last week, Washington, 514 00:32:00,720 --> 00:32:03,080 Speaker 1: d c. Getting ready to roll it out next year, 515 00:32:03,160 --> 00:32:06,120 Speaker 1: New York State likely to next year as his Massachusetts 516 00:32:06,160 --> 00:32:09,640 Speaker 1: likely to consider it UH and Michigan had a kind 517 00:32:09,680 --> 00:32:12,720 Speaker 1: of way development with an introduction of a sportsmaning bill 518 00:32:13,000 --> 00:32:17,680 Speaker 1: that might gain traction during the twenty nineteen legislative session. Brian, 519 00:32:17,720 --> 00:32:19,680 Speaker 1: if I were to say to you ten years ago 520 00:32:19,800 --> 00:32:23,720 Speaker 1: that there would be legal sports betting in the United States, 521 00:32:23,760 --> 00:32:27,040 Speaker 1: not just in Vegas but throughout the country, and you 522 00:32:27,160 --> 00:32:31,840 Speaker 1: twin that with the legal cannabis market in the United States, 523 00:32:32,200 --> 00:32:35,320 Speaker 1: would you have said I was crazy? Uh. I wouldn't 524 00:32:35,320 --> 00:32:37,880 Speaker 1: have said you're crazy. But you have, with that great foresight, 525 00:32:37,920 --> 00:32:40,320 Speaker 1: if you thought that was strong. Yes, far in mind 526 00:32:40,360 --> 00:32:42,160 Speaker 1: that the you know, the various states have kind of 527 00:32:42,160 --> 00:32:46,320 Speaker 1: taken upon themselves to legalize recreational cannabis, whereas this is 528 00:32:46,320 --> 00:32:48,960 Speaker 1: actually a supreme Court case that a floodgates. You know, 529 00:32:49,040 --> 00:32:53,240 Speaker 1: this is it may reflect changing social opinion and permissiveness, 530 00:32:53,280 --> 00:32:55,080 Speaker 1: but this is something that New Jersey has been trying 531 00:32:55,080 --> 00:32:57,640 Speaker 1: to get through since their early nineties to overturn the 532 00:32:57,680 --> 00:33:01,080 Speaker 1: band that really restricted UM sports betting in a large 533 00:33:01,080 --> 00:33:03,840 Speaker 1: part to Nevada. So it's really the Supreme Court that 534 00:33:03,880 --> 00:33:07,120 Speaker 1: kind of came to the rescue of the commercial gaming industry. 535 00:33:07,120 --> 00:33:09,400 Speaker 1: All right. The reason I bring this up is because 536 00:33:09,440 --> 00:33:13,640 Speaker 1: of the revenue from the taxes that both of these 537 00:33:13,680 --> 00:33:18,640 Speaker 1: activities would bring to the state's treasuries. Is that having 538 00:33:18,640 --> 00:33:22,000 Speaker 1: an effect? You know, it's it's it's potentially significant over time. 539 00:33:22,000 --> 00:33:24,360 Speaker 1: And the tax rates vary by state, as they do 540 00:33:24,440 --> 00:33:26,800 Speaker 1: for the casino industry. It's about a percent in New Jersey. 541 00:33:26,840 --> 00:33:30,120 Speaker 1: It's as high as thirty four percent of sports betting 542 00:33:30,160 --> 00:33:33,480 Speaker 1: revenue in Pennsylvania. Uh And obviously from the perspective of 543 00:33:33,480 --> 00:33:35,640 Speaker 1: the sports books, the lower the lower the tax rate, 544 00:33:35,680 --> 00:33:37,320 Speaker 1: the better. But it is going to be an incremental 545 00:33:37,360 --> 00:33:40,960 Speaker 1: source of gaming revenues. Bear mind again, for markets like Nevada, 546 00:33:41,120 --> 00:33:45,280 Speaker 1: nine percent of that gaming revenue pie is coming from 547 00:33:45,760 --> 00:33:50,440 Speaker 1: slab machines, table games, all the traditional stuff. Okay, we are, 548 00:33:50,480 --> 00:33:53,640 Speaker 1: of course getting to that point in the season when 549 00:33:53,800 --> 00:33:57,200 Speaker 1: people are looking towards the super Bowl and the estimates 550 00:33:57,240 --> 00:34:00,520 Speaker 1: to how much money is going to be better this 551 00:34:00,600 --> 00:34:03,040 Speaker 1: year on the super Bowl. I don't have an estimate 552 00:34:03,320 --> 00:34:05,720 Speaker 1: and the n C Double A. Actually it's interest in 553 00:34:05,720 --> 00:34:08,200 Speaker 1: American Gaming Association comes out with an estimate every year 554 00:34:08,239 --> 00:34:10,680 Speaker 1: about how much money will we bet on the n 555 00:34:10,680 --> 00:34:14,680 Speaker 1: C Double A basketball men's regional semifinals. That the super 556 00:34:14,680 --> 00:34:18,239 Speaker 1: Bowl is certainly really big seasonal events. Sports betting is 557 00:34:18,280 --> 00:34:22,080 Speaker 1: by its nature very seasonal, so I don't have an estimate. 558 00:34:22,160 --> 00:34:26,239 Speaker 1: But what's unusual about this? First this next super Bowl 559 00:34:26,719 --> 00:34:29,080 Speaker 1: and n C Double A tournament in twenty nineteen, it 560 00:34:29,160 --> 00:34:31,960 Speaker 1: will be the first time these events have taken place 561 00:34:32,080 --> 00:34:37,719 Speaker 1: amid the widespread proliferation of legalized sports betting. This means 562 00:34:37,719 --> 00:34:41,000 Speaker 1: you're just going to be a lot busier this year. Finally, 563 00:34:41,120 --> 00:34:44,960 Speaker 1: you mentioned William Hill, UK company that has a partnership 564 00:34:45,000 --> 00:34:49,360 Speaker 1: with the Tropicana and many other casinos. Are there US 565 00:34:49,480 --> 00:34:52,759 Speaker 1: companies that are good at doing this, so U S 566 00:34:52,760 --> 00:34:56,959 Speaker 1: companies UM are are involved. There There are entities out 567 00:34:56,960 --> 00:35:02,799 Speaker 1: there like UM Scientific Games ST Interactive, UH. There are 568 00:35:02,800 --> 00:35:07,040 Speaker 1: the sports betting UM Sports daily fantasy sports companies. There's 569 00:35:07,239 --> 00:35:10,120 Speaker 1: sp Tech in conjunction with Scientific Games. There's a number 570 00:35:10,160 --> 00:35:12,520 Speaker 1: out there that involved but William Hill kind of really 571 00:35:12,560 --> 00:35:15,839 Speaker 1: important um as ore and I mentioned one other thing too, 572 00:35:16,200 --> 00:35:20,279 Speaker 1: you talk about US versus International patty power. Betfair now 573 00:35:20,320 --> 00:35:24,080 Speaker 1: has a controlling steak uh In Fandel, So we're really 574 00:35:24,120 --> 00:35:29,080 Speaker 1: seeing this convergence of the traditional UK European betting houses 575 00:35:29,160 --> 00:35:33,120 Speaker 1: with the DELA fantasy sports companies working alongside the casinos. 576 00:35:33,360 --> 00:35:37,040 Speaker 1: Thank you very much, Brian Edgar as always fascinating, interesting 577 00:35:37,040 --> 00:35:52,080 Speaker 1: and worthwhile Bloomberg Intelligence senior gaming analysts. Well, if you're 578 00:35:52,200 --> 00:35:56,680 Speaker 1: an American consumer, chances are your email inboxes filling up 579 00:35:57,000 --> 00:36:01,720 Speaker 1: with what it's called boxing day sales or post Christmas sales. 580 00:36:02,080 --> 00:36:04,239 Speaker 1: Flyers here to tell us about the state of the 581 00:36:04,280 --> 00:36:08,839 Speaker 1: retail industry, Dana Telsey tells the Advisory Group chief executive 582 00:36:08,880 --> 00:36:13,400 Speaker 1: and chief research Officer, Dana the sales are already starting, 583 00:36:13,400 --> 00:36:17,200 Speaker 1: aren't they. They are. The sales are definitely beginning today 584 00:36:17,320 --> 00:36:20,600 Speaker 1: as your As you mentioned, everyone's email boxes are filling up. 585 00:36:20,960 --> 00:36:24,719 Speaker 1: But the early lead on holiday season sales from MasterCards 586 00:36:24,760 --> 00:36:29,680 Speaker 1: from November thirty five one percent. Who's right in line 587 00:36:29,680 --> 00:36:33,440 Speaker 1: with our forecast of five so it seems like we 588 00:36:33,560 --> 00:36:35,359 Speaker 1: have a good season and now we want to see 589 00:36:35,360 --> 00:36:39,080 Speaker 1: inventory levels cleared and what the margins look like. Okay, 590 00:36:39,080 --> 00:36:43,160 Speaker 1: but that five percent, I understand comes with a little 591 00:36:43,160 --> 00:36:46,680 Speaker 1: bit of a footnote for department stores, because the department 592 00:36:46,760 --> 00:36:51,040 Speaker 1: store take actually fell more than one percent. It was 593 00:36:51,080 --> 00:36:54,600 Speaker 1: down one preecent to department stores. And keep in mind 594 00:36:54,640 --> 00:36:56,360 Speaker 1: you had a lot of closures, whether it was the 595 00:36:56,400 --> 00:37:01,160 Speaker 1: Bontans closures, some of the Macy's closure closures, or J. C. Penny. 596 00:37:01,239 --> 00:37:03,480 Speaker 1: I think that when you look at the Perl stores, 597 00:37:03,520 --> 00:37:05,960 Speaker 1: they were up seven point nine percent, which is one 598 00:37:05,960 --> 00:37:08,440 Speaker 1: of the best we've seen out there all of all, 599 00:37:08,640 --> 00:37:11,160 Speaker 1: whether it was the slight decline and department stores, the 600 00:37:11,200 --> 00:37:15,000 Speaker 1: increase in apparel stores, the consumer had more dollars to spend, 601 00:37:15,280 --> 00:37:18,320 Speaker 1: the products were innovative, and we pulled out a good season. 602 00:37:18,680 --> 00:37:22,120 Speaker 1: This doesn't mean that two thousand nineteen we're entering with 603 00:37:23,120 --> 00:37:25,719 Speaker 1: an easy glide past. It's going to be more challenging 604 00:37:25,840 --> 00:37:28,520 Speaker 1: in two thousand nineteen than it was an eighteen. All Right, 605 00:37:28,520 --> 00:37:30,880 Speaker 1: we're going to get the two thousand nineteen in just 606 00:37:31,040 --> 00:37:33,000 Speaker 1: a second. But I want to find out from you, 607 00:37:33,120 --> 00:37:37,680 Speaker 1: what do you believe was the hottest offering in retail where? 608 00:37:37,760 --> 00:37:41,080 Speaker 1: What was the trend? I think the trend you definitely 609 00:37:41,080 --> 00:37:44,239 Speaker 1: had some of the electronics items like the Alexas out there. 610 00:37:44,640 --> 00:37:48,800 Speaker 1: Drones are also quite popular. Dad sneakers were very popular, 611 00:37:49,280 --> 00:37:53,240 Speaker 1: and also denim jeans continue to be strong. We're fortunate 612 00:37:53,280 --> 00:37:55,319 Speaker 1: that we had a cooler season this year than in 613 00:37:55,440 --> 00:37:59,760 Speaker 1: year's past. Out where, whether it was Canada, Goose, whether 614 00:37:59,800 --> 00:38:03,520 Speaker 1: it was North Bace, we definitely saw strength and outwhere. 615 00:38:03,680 --> 00:38:07,520 Speaker 1: And let's not forget thugs that goes along with that. Okay, 616 00:38:07,560 --> 00:38:10,640 Speaker 1: so that seems to be something that is correlated a 617 00:38:10,640 --> 00:38:14,360 Speaker 1: little bit to the weather. How about the online world, 618 00:38:14,400 --> 00:38:17,520 Speaker 1: that was an increase at least from the Master Cards survey, 619 00:38:17,640 --> 00:38:20,600 Speaker 1: the Spending Pulse survey, that was an increase of more 620 00:38:20,640 --> 00:38:25,399 Speaker 1: than n for online sales. Yes, and that was better, 621 00:38:25,520 --> 00:38:28,239 Speaker 1: it will touch better than the Adobe forecast also of 622 00:38:28,360 --> 00:38:32,479 Speaker 1: eighteen percent. So it was a solid online selling season two. 623 00:38:32,800 --> 00:38:35,960 Speaker 1: And I think the thing to take away is online 624 00:38:36,120 --> 00:38:39,560 Speaker 1: and bricks and mortar go together, and you're seeing brands 625 00:38:39,600 --> 00:38:43,160 Speaker 1: overall and retailers. The combination of the two is what 626 00:38:43,520 --> 00:38:46,880 Speaker 1: was powerful. We saw buy online, pick up in store, 627 00:38:47,400 --> 00:38:50,719 Speaker 1: drive more traffic and drive more sales. I think that's 628 00:38:50,760 --> 00:38:52,960 Speaker 1: going to be one of the takeaways on the Holiday 629 00:38:52,960 --> 00:38:57,120 Speaker 1: two eighteen season. If you are a new retailer or 630 00:38:57,239 --> 00:39:00,600 Speaker 1: looking to establish a retail brand, what do you take 631 00:39:00,640 --> 00:39:05,239 Speaker 1: away from the results of this season That you have 632 00:39:05,280 --> 00:39:08,560 Speaker 1: a customer who's interested, if it's innovati the new, if 633 00:39:08,560 --> 00:39:11,760 Speaker 1: you have a loyalty program and participate in social media 634 00:39:12,040 --> 00:39:15,000 Speaker 1: to drive awareness, there's dollars out there for you to 635 00:39:15,080 --> 00:39:19,160 Speaker 1: capture if you can create interest. Okay, now let's talk 636 00:39:19,200 --> 00:39:23,239 Speaker 1: about the potential for interest in retail in twenty nineteen. 637 00:39:24,000 --> 00:39:27,640 Speaker 1: What are going to be the big themes? The themes 638 00:39:27,680 --> 00:39:29,840 Speaker 1: of retail. I think there's three words to capture the 639 00:39:29,920 --> 00:39:33,080 Speaker 1: themes of retail. Where's the margin? I think we have 640 00:39:33,120 --> 00:39:35,920 Speaker 1: a little bit more headwinds to face than tail winds. 641 00:39:35,960 --> 00:39:39,279 Speaker 1: The headwinds whether it's tariffs, the uncertainty of tariffs, the 642 00:39:39,360 --> 00:39:45,440 Speaker 1: potential for category extensions in tariffs. You have expense pressures 643 00:39:45,440 --> 00:39:48,360 Speaker 1: from freight and labor, and you have camping. The camp 644 00:39:48,640 --> 00:39:52,240 Speaker 1: comparisons are more challenging in Choose thousand, nineteen th eighteen. 645 00:39:52,800 --> 00:39:55,160 Speaker 1: On the tail one side, I've got a full employment 646 00:39:55,200 --> 00:39:59,080 Speaker 1: economy with a consumer as money to spend whereby withholding 647 00:39:59,080 --> 00:40:01,440 Speaker 1: should be a benefit, particularly in the first half of 648 00:40:01,520 --> 00:40:04,800 Speaker 1: two thousand nineteen. And I still have some moiler taxes, 649 00:40:05,200 --> 00:40:08,320 Speaker 1: but there are more challenges and in two thousand nineteen 650 00:40:08,640 --> 00:40:11,280 Speaker 1: you may not get the same rate of earnings growth 651 00:40:11,480 --> 00:40:14,040 Speaker 1: that you had in two thousand eighteen. All right, now, 652 00:40:14,080 --> 00:40:17,800 Speaker 1: to go back to your point about where are the margins? 653 00:40:17,880 --> 00:40:22,000 Speaker 1: Are there specific companies that you track that are doing 654 00:40:22,080 --> 00:40:27,479 Speaker 1: a better job of keeping those margins or expanding them. 655 00:40:27,480 --> 00:40:30,560 Speaker 1: When you think about margins and where they're growing, we're 656 00:40:30,560 --> 00:40:34,440 Speaker 1: seeing companies like lul Lemon continue to show nice margin 657 00:40:34,520 --> 00:40:37,919 Speaker 1: increases and that's the real benefit for them. I think 658 00:40:37,960 --> 00:40:40,840 Speaker 1: what you're seeing, particularly in the top line and some 659 00:40:40,920 --> 00:40:44,640 Speaker 1: of the off prices, is certainly encouraging. What we're hearing 660 00:40:44,680 --> 00:40:49,360 Speaker 1: about from some of the companies where there's catalysts, I 661 00:40:49,400 --> 00:40:53,200 Speaker 1: mean the catalysts are potentially closing stores at gap and 662 00:40:53,280 --> 00:40:57,120 Speaker 1: for example, leading to less losses, could help the margins 663 00:40:57,160 --> 00:41:01,520 Speaker 1: over time. Dana Telsey is they're a case to be 664 00:41:01,640 --> 00:41:07,480 Speaker 1: made for direct mail catalogs twinned with online offerings and 665 00:41:07,680 --> 00:41:14,080 Speaker 1: in store pick up this three legged retail strategy. I 666 00:41:14,160 --> 00:41:16,759 Speaker 1: think catalogs are tough to go by. I think that 667 00:41:17,080 --> 00:41:20,880 Speaker 1: the world of paper these days is consolidating into online 668 00:41:21,360 --> 00:41:25,280 Speaker 1: and we're seeing whether it's from magazines, whether it's from catalogs. 669 00:41:25,320 --> 00:41:27,920 Speaker 1: The first thing consumers look at in the morning is 670 00:41:27,920 --> 00:41:30,600 Speaker 1: their phones. The last thing they look at night is 671 00:41:30,640 --> 00:41:34,040 Speaker 1: their phones. Capture the consumer where they are on their 672 00:41:34,040 --> 00:41:38,840 Speaker 1: phones and in physical stores with experiences. I'd like to 673 00:41:38,880 --> 00:41:43,359 Speaker 1: get your views on home furnishings companies such as Wayfair, 674 00:41:43,680 --> 00:41:47,080 Speaker 1: and then perhaps at the other end, restoration Hardware or 675 00:41:47,239 --> 00:41:50,120 Speaker 1: it used to be restoration Hardware now just our H. 676 00:41:51,280 --> 00:41:53,719 Speaker 1: When you think about what r H is doing, they're 677 00:41:53,760 --> 00:41:58,120 Speaker 1: really creating the experience the restaurants combined with the selling 678 00:41:58,120 --> 00:42:01,279 Speaker 1: of furniture where they have at effects for designers to 679 00:42:01,360 --> 00:42:04,279 Speaker 1: come in and have their offices there to bring clientele 680 00:42:04,440 --> 00:42:08,200 Speaker 1: is compelling and I think that they're really creating a 681 00:42:08,320 --> 00:42:12,160 Speaker 1: destination Wayfair and it'll be interesting to see does Wayfair 682 00:42:12,560 --> 00:42:16,520 Speaker 1: ever get combined with a physical retailer. That combination to 683 00:42:16,600 --> 00:42:20,919 Speaker 1: be powerful and probably one of the most powerful home 684 00:42:21,000 --> 00:42:24,480 Speaker 1: retailers lately over the past few years that's taken share 685 00:42:24,840 --> 00:42:27,319 Speaker 1: is home goods. What t j X has done with 686 00:42:27,400 --> 00:42:31,839 Speaker 1: home goods and home sense is exciting, it's profitable, and 687 00:42:31,880 --> 00:42:35,759 Speaker 1: it's driving inventory turns and more brands are selling in 688 00:42:35,800 --> 00:42:38,960 Speaker 1: their stores. Do you see any big changes to the 689 00:42:38,960 --> 00:42:42,719 Speaker 1: world of fast retail for apparel companies such as H 690 00:42:42,840 --> 00:42:47,120 Speaker 1: and M and Zara. I do see changes there. I 691 00:42:47,160 --> 00:42:50,279 Speaker 1: think it's become more competitive in that landscape. I think 692 00:42:50,280 --> 00:42:52,200 Speaker 1: we're going to see H and M become a more 693 00:42:52,280 --> 00:42:55,880 Speaker 1: fine tune machine given the fact that their inventory levels 694 00:42:55,880 --> 00:42:58,439 Speaker 1: have been too high. I think that you have other 695 00:42:58,520 --> 00:43:02,759 Speaker 1: companies competing on price and also quality stepped up a bit, 696 00:43:02,960 --> 00:43:06,080 Speaker 1: so there's more competition. The old navies of the world 697 00:43:06,160 --> 00:43:09,240 Speaker 1: are doing quite a good job, and you're also seeing 698 00:43:09,440 --> 00:43:13,319 Speaker 1: when companies have targeted sales, it's taken some share from 699 00:43:13,320 --> 00:43:16,279 Speaker 1: some of the fast fashion retailers. I think they have 700 00:43:16,320 --> 00:43:19,520 Speaker 1: an evolution ahead of them in order to become more competitive. 701 00:43:19,920 --> 00:43:22,200 Speaker 1: Thank you very much for spending time with us. As always, 702 00:43:22,239 --> 00:43:27,400 Speaker 1: Dana's Telsey Telsey Advisory Group Chief executive and chief Research 703 00:43:27,480 --> 00:43:36,360 Speaker 1: officer speaking about the world of retail and shopping. Thanks 704 00:43:36,360 --> 00:43:40,640 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 705 00:43:40,840 --> 00:43:46,200 Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform 706 00:43:46,280 --> 00:43:50,600 Speaker 1: you prefer I'm on Twitter at Tom Keane before the podcast. 707 00:43:50,640 --> 00:43:54,160 Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio