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Speaker 1: Broadcasting live to New York, Bloomberg eleventh Rio to Washington,

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Speaker 1: d C, Bloomberg to Boston, Bloomberg twelve hundreds to San Francisco,

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Speaker 1: Bloomberg n to the Country six Channel one nine and

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Speaker 1: around the globe the Bloomberg Radio plus Bloomberg dot Com.

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Speaker 1: This is Bloomberg Surveillance. Good morning, It is a thirty

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Speaker 1: on Wall Street. I Michael McKay along with Tom Keane.

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Speaker 1: He can have a indicators spot you by Commonwealth Financial Network.

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Speaker 1: When it's time to change the conversation talk with a

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Speaker 1: broker dealer r I A that's ready to listen to

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Speaker 1: college six for six two three eight or is it

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Speaker 1: Commonwealth dot com to learn more? No major an iomic

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Speaker 1: indicators today at ten o'clock. The labor market conditions in

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Speaker 1: next Jennet Ellen's various things she looks at market still

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Speaker 1: pay a whole lot of attention to that supposed to

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Speaker 1: improve a little bit. We did have Charlie Evans of

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Speaker 1: the Chicago Fed speaking on the economy earlier today on

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Speaker 1: a panel with our friends. Seen Lacroix out in jolly London,

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Speaker 1: jolly old England. He suggested that he's not ruling out

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Speaker 1: June either, that seems to be the question what will

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Speaker 1: the numbers say by then? Big number of the week

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Speaker 1: for US TOM is retail sales. On Friday, we get

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Speaker 1: the report on whether or not Americans are spending and

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Speaker 1: the forecast is for a rather large increase eight tenths

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Speaker 1: of a percent and the control group of three tents

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Speaker 1: of eight percent. And that would be taken certainly as

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Speaker 1: good news by the markets, and uh, good news perhaps

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Speaker 1: for those who think the Fed may actually go Will

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Speaker 1: we get that? Well, let's ask Oliver chen He is

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Speaker 1: a senior equity analyst for Research at Cowen and Company.

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Speaker 1: Following the retailers, Oliver, the consumer has been the one

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Speaker 1: keeping the economy afloat lately. Is that continuing here into

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Speaker 1: the second quarter. The chain store sales numbers weren't all

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Speaker 1: that impressive last week, But overall, what's it look like?

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Speaker 1: We are we are cautiously optimistic, I would say, Um,

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Speaker 1: what we do like is the middle to lower income consumer.

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Speaker 1: We think they're benefiting from lower unemployment as low as

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Speaker 1: well as gas lower gas prices. Who were more cautious

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Speaker 1: on the the higher end consumer just because of the

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Speaker 1: stronger dollar, the negative effect from the wealth effect and

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Speaker 1: the S and P volatility. I would also speak to

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Speaker 1: subsectors were concerned about apparel, the continuation of the rise

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Speaker 1: of fast fashion as well as primark. UH continues to

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Speaker 1: weigh on apparel as well as lack of fashion trends.

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Speaker 1: So I think you have to think about where the

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Speaker 1: consumer fits in in terms of middle income and lower

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Speaker 1: income being stronger, and then also speaking to categories. Categories

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Speaker 1: matter as well. So that's interesting. The middle and lower income.

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Speaker 1: I mean, they're the angry people who aren't getting a

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Speaker 1: hit in life, according to certain presidential candidates, but now

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Speaker 1: they're spending more money. Where's the money coming from? Is

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Speaker 1: it the gasoline price dividend? Or are they finally getting

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Speaker 1: raises a little bit of both. I mean, we've seen

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Speaker 1: a lot of employers raise their wages as well, UM,

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Speaker 1: so that indicates to us that there's an environment there

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Speaker 1: where there there's a competition for labor at the at

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Speaker 1: the lower end. So I think you have, UM, you know,

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Speaker 1: the signs of this happening as well as the situation

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Speaker 1: with lower gas with a few extra dollars in the pocket, UM,

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Speaker 1: which enables is spending to happen. I would caution this

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Speaker 1: a little bit because the offset is the savings rates. Uh,

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Speaker 1: savings rates have you know gone up in terms of

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Speaker 1: these consumers also saving. And then also there's a shift

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Speaker 1: in terms of Millennials and Generation Z and the newest

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Speaker 1: generations thinking a lot about experiences, spending on experiences rather

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Speaker 1: than material row items. So it's not um fun and

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Speaker 1: games for retailers. And the rise of Amazon is another

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Speaker 1: factor to um as online traffic growth so substantially. So

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Speaker 1: I know Tom wants to jump in and he definitely

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Speaker 1: wants to ask about Amazon, But I was just curious

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Speaker 1: when you said the younger generations, you know, they're they're

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Speaker 1: spending more on experiences. I'm wondering if they're still buying

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Speaker 1: as much stuff because they like stuff. They like clothing too,

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Speaker 1: but they're buying it at this disposable fashion places like

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Speaker 1: H and M, so they're not spending as much on clothing,

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Speaker 1: leaving them more room to spend on experiences. Yeah, we've

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Speaker 1: seen a really competitive discounting driven environment and apparel. If

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Speaker 1: you think about you know, what you see in stores,

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Speaker 1: the friends and family sales, you know, fifty percent off

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Speaker 1: is the new off. Just the circular reference here with

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Speaker 1: with discounts. So that's happening, and the apparel category has

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Speaker 1: been deflationary in light of this circumclances up. But what's

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Speaker 1: the level of panic and well, I can't get my

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Speaker 1: handle on within fifty off is a level of sweat

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Speaker 1: and panic and an overstocked, over inventoried retail. What's the

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Speaker 1: level of sweat, Oliver Jen, We'll sweat's a big deal

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Speaker 1: because fitness is a big deal. Hell, I don't mean that,

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Speaker 1: I mean the level of panic for CFOs. Well, there's

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Speaker 1: a little bit of panic here because there's price matching. Furthermore,

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Speaker 1: of traffic is on mobile, so you know you'll you'll

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Speaker 1: do this too. You'll walk into a store and you'll

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Speaker 1: see a sweater and I'll google it on my phone

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Speaker 1: to look for the best deal possible. So the added transparency, UH,

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Speaker 1: speed and other factors are adding a lot of stress

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Speaker 1: in the system. So what do they do. I went

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Speaker 1: into you know when you interviewed the CEO of a

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Speaker 1: data so I thought of going and buy. I went

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Speaker 1: with a fashion forward selection, Oliver Jen. I bought the

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Speaker 1: original stand smith sneaker. I mean John Tucker. It's the

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Speaker 1: one year in I wore I put it on the

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Speaker 1: run g gory keeper of the Amex expense account. We'll

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Speaker 1: see that the next month's listening. But Oliver Chen, seriously here,

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Speaker 1: how does it Didas or Nike or anybody else adapt

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Speaker 1: to my cell phone? Well, it is about brands. It's

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Speaker 1: about powerful brands and kind of segmenting the brand across

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Speaker 1: different channels so that matters. And then experiences matter too.

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Speaker 1: They really got to drive you in the store and

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Speaker 1: it has to make sense to you. And it's about curation.

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Speaker 1: It's also about what is curation. What is curation the

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Speaker 1: cf A curricula. Curation has a lot to do with

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Speaker 1: making sure that you're getting a point of view. So

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Speaker 1: you want to walk into a store and be wild.

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Speaker 1: You want to look at those stand smiths which you

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Speaker 1: should wear with the bow ties and it's uh, it's

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Speaker 1: the next that really changes your life because the bar

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Speaker 1: is higher. Instagram, Snapchat a d D around the consumer.

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Speaker 1: We're gonna come back, Oliver Chen with us a very

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Speaker 1: important counting companies, brilliant on Amazon. We'll come Michael Barr

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Speaker 1: had suggestions for you. He did, I mean, I mean,

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Speaker 1: do we curate when we go into the grocery store

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Speaker 1: and you have to get a quart of milk. Sadly, yes, yes,

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Speaker 1: we when we go get a quart of milk. Futures

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Speaker 1: up to town, futures up one. Let's check it out

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Speaker 1: with Michael Barr and get the latest World of national

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Speaker 1: headlines by time, Thank you very much. Fire officials in

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Speaker 1: the Canadian province of Alberta say the forecast for the

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Speaker 1: next few days means they can really get in and

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Speaker 1: get a handle on a wildfire that has scorched almost

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Speaker 1: four hundred thousand acres. Chad Morrison of Alberta Wildfire says

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Speaker 1: the next few days are calling for cooler temperatures and

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Speaker 1: light rain. The wildfire has sent tens of thousands of

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Speaker 1: residents fleeing the oil sands down of Fort McMurray. British

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Speaker 1: Prime Minister David Cameron says Britain will be permanently poorer

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Speaker 1: if the country leaves the EU. Cameron, in a speech

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Speaker 1: today in central London, says asked for the leave campaign,

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Speaker 1: they are asking us to take massive risk with the

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Speaker 1: future of the economy and the future of our country.

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Speaker 1: And yet they called even also the most basic questions.

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Speaker 1: What would Britain's relationship be with the EU. If we

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Speaker 1: were to leave, will we have a free trade agreement

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Speaker 1: or will we fall back on well trade organization rules.

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Speaker 1: Iran semi official news agencies says the country has test

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Speaker 1: fired another ballistic missile. The agency quoted the Deputy Chief

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Speaker 1: of Armed Forces saying the test firing was carried out

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Speaker 1: two weeks ago. Global News twenty four hours a day,

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Speaker 1: powered by our twenty four hundred journalists more than a

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Speaker 1: hundred fifty news bureaus from around the world. Michael bar Night,

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Speaker 1: Tom All Right, time now for the land Rover Precipity

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Speaker 1: Bloomberg NBC Sports Update. Here's John Stesshon. Thanks Mike Under

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Speaker 1: scoring eight runs Saturday, the Yankee Bats returned to their

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Speaker 1: quiet ways last not only three hits off Red Sox

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Speaker 1: knuckleballer Stephen Wright shut out into the Brett Gardner home

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Speaker 1: run of the night. Then Boston hit four home runs

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Speaker 1: and won five to one to those homers by David Ortiz,

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Speaker 1: having a big season at age forty and any of

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Speaker 1: the retirement five homers in six games versus the Yanks.

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Speaker 1: He's hid fifty two in his career against them. Big

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Speaker 1: Poppy now second on the All time red Sox home

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Speaker 1: unless he moved past Carlistremsky trails only Ted Williams Mets

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Speaker 1: one four three. In San Diego, Matt Harvey got the win.

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Speaker 1: He didn't Homer like bar Tolo Cologne did Saturday, but

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Speaker 1: he didn't have two hits of the plate. Cubs again

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Speaker 1: being Washington thirteenings, they sweep the series. The Cubs are

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Speaker 1: twenty four and six Sanley Cup Playoffs. Tampa Bay all

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Speaker 1: over the Islanders for nothing to win the series in

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Speaker 1: five games. The Islander captain John Tavaris described in the

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Speaker 1: emotion in the room after the season ended, like this

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Speaker 1: church believe it's Ober. Obviously you put a lot into it,

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Speaker 1: so you know, we didn't accomplish what we settled to do.

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Speaker 1: And uh lightning in the East Finals Lebron James NBA

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Speaker 1: East Finals for the sixth right year Cleveland with the

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Speaker 1: sweep winning in Atlanta one d Oklahoma City over San

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Speaker 1: Antonio last at one eleven nineties seven. That series is

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Speaker 1: tied into We're at the Bloomberg NBC Sports Unday. I'm

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Speaker 1: John's DeCamp. John, thank you so much, greatly appreciate that. Sports.

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Speaker 1: Michael McKee, it's getting I mean, for those of you globally,

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Speaker 1: Mike and I are having fun with Washington Capitals Pittsburgh Penguins.

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Speaker 1: We agree to disagree, even though we both know it's

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Speaker 1: great hockey. Yeah, a little fabulous hockey. At any given time.

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Speaker 1: Capitals come back on Saturday night, now, Tuesday, tomorrow night

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Speaker 1: tonight and they're still done three too, So I gotta

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Speaker 1: go to Pittsburgh and win, otherwise people will be saying,

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Speaker 1: you know, it's the old Washington cursor. For those of

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Speaker 1: you listening in England, it's it's I'm sure there's a

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Speaker 1: soccer equivalent of where you have three bankable superstars, iconic

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Speaker 1: superstars sometimes on the ice at the same time. You know, uh,

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Speaker 1: Capitals and Penguins are a little bit like Manchester City

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Speaker 1: Manchester United. Yeah, okay, I'll go with that. That's our

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Speaker 1: hockey talk for today. Bloomberg Savannahs. The Sports Report was

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Speaker 1: Bloomberg dot Com, the Radio plus Mobil and on your radio.

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Speaker 1: This is a Bloomberg Business flash and I'm Karen Moscow.

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Speaker 1: This updates brought to you by National Realty Returns on

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Speaker 1: be acquired by j a V Holding subsidiary in a

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Speaker 1: one point three five billion dollar deal. Shares are up

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Speaker 1: more than twenty three percent this morning. Lendon Club is

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Speaker 1: down twenty four percent. Founder and chief executive Officer Renauld

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Speaker 1: Laplanche resigned after an internal review of loan sales to

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Speaker 1: a single investor, and President Scott Sanborn was named acting CEO.

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Speaker 1: Valion Pharmaceuticals Inner National, reiterating its revenue and earnings forecast

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Speaker 1: for the first quarter, saying it expects to file it's

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Speaker 1: ten que by June tenth, ahead of a July thirty

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Speaker 1: one deadline, and it's a dead agreement. Stocks rallying, with

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Speaker 1: European equities rising from a one month low as they

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Speaker 1: shook off a drag from Chinese trade data that weight

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Speaker 1: on industrial medals. We checked the markets every fifteen minutes

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Speaker 1: throughout the trading day. On Bloomberg SNP E Mini Future

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Speaker 1: is higher of one and a half points now e

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Speaker 1: mini futures up fifteen, Nasadaki mini futures up eight The

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Speaker 1: dacts in Germany's up one and a half percent. Ten

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Speaker 1: year treasury up four thirty seconds, the yield one point

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Speaker 1: seven six percent. Yield on the two year points seven

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Speaker 1: one percent. Nine Max Screwede oil up two ten percent

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Speaker 1: or eight cents to forty four seventy three of arrol

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Speaker 1: comex gold down one and a half percent or nineteen

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Speaker 1: dollars fifty cents to twelve seventy four sixty announced the

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Speaker 1: euro and dollar fourteen oh five. The end one oh

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Speaker 1: eight point to two. That's a Bloomberg business flash. Tom

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Speaker 1: and Mike Karen, thanks so much. This Monday morning. It

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Speaker 1: is Wall Street. The following is from Bloomberg View, opinions

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Speaker 1: and commentary from Bloomberg columnists. I'm Mark Whitehouse, an editor

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Speaker 1: at Bloomberg View. Why are so many people unhappy about

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Speaker 1: a US economy that has generated more than twelve million

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Speaker 1: jobs over the past five years. One explanation a lot

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Speaker 1: of those jobs don't pay very well. The April jobs

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Speaker 1: report illustrates a persistent disconnect. Employers have created enough jobs

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Speaker 1: to keep the unemployment rate at five percent or lower

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Speaker 1: for seven months straight. Yet this ample demand for workers

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Speaker 1: hasn't generated the wage growth needed to drive consumer spending

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Speaker 1: and the broader economy. What gives one issue is the

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Speaker 1: quality of jobs being created. To see this, let's split

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Speaker 1: private sector jobs into three wage categories. Low, middle, and high.

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Speaker 1: Low wage jobs have accounted for the most growth by

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Speaker 1: far since the recession that began in two thousand eight,

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Speaker 1: exceeding the prerecession peak by more than four million. High

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Speaker 1: wage jobs have recovered two but not as much. The

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Speaker 1: middle is by far the worst off, still two hundred

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Speaker 1: and fifty thousand jobs short of its pre recession peak.

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Speaker 1: So while millions of people have gotten back to work,

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Speaker 1: it's not surprising that a lot of them aren't too

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Speaker 1: pleased about it. I'm Mark white House. For more of you,

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Speaker 1: please go to Bloomberg View dot com or view go

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Speaker 1: on the Bloomberg terminal. This has been Bloomberg View and

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Speaker 1: Bloomberg View Commentary is can be heard hourly weekdays on

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Speaker 1: Bloomberg Radio. Mike. This just in from Montreal. Thirty miles

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Speaker 1: north of Montreal, police arrest second man suspected of stealing

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Speaker 1: five million bees in Quebec let's go to the details. Victoriaville, Quebec,

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Speaker 1: Land of the hockey stick, the Victoriaville five lie, the

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Speaker 1: old McKenny curve. Yes, I had dozens of those. Yes. Anyways,

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Speaker 1: they have arrested a second of two brothers for stealing

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Speaker 1: a hundred eighty Gary shilling like bee hives, each worth

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Speaker 1: two hundred thousand dollars or total value. Here's the key sentence.

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Speaker 1: The bees have yet to be found. Oh my goodness

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Speaker 1: for questioning, I don't know. That's the bees have not

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Speaker 1: yet been found. If you can't find the bees, that

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Speaker 1: how are you going to charge the game? Exactly? That's

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Speaker 1: what I was thinking. Is all of Gary showing on

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Speaker 1: in the coming days and weeks to discuss be theft,

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Speaker 1: be theft in Canada as well? Right now on the

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Speaker 1: theft of retail. Oliver Chen of cow and Oliver give

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Speaker 1: us an update on Amazon. The sainted one went into

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Speaker 1: Adidas yesterday and she had to try on the shoes

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Speaker 1: before we ordered them off the internet. How does the

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Speaker 1: Amazon win within that model? Yeah, I think what we

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Speaker 1: see at Amazon is a really powerful Amazon Prime customer base,

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Speaker 1: and that's forty to fifty million customers part of the

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Speaker 1: Amazon prime ecosystem. And then Amazon's a lot about reducing

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Speaker 1: friction to the customers. So they had film and centers,

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Speaker 1: twenty six sortation centers, so really fulfillment as well as prime.

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Speaker 1: And then you think about their focus. They're focused on

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Speaker 1: being the number one apparel. We think at Kalen will

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Speaker 1: be the number one apparel seller by two thousand seventeen

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Speaker 1: and the number two consumables by two eighteen. So how

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Speaker 1: do stores compete? Again, it's about brands, private labels. It's

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Speaker 1: about leveraging stores as assets to deliver a convenience factor

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Speaker 1: to customers. And then it's about touch, look and feel

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Speaker 1: of products. So t J x Roth's Treasure Hunt shop

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Speaker 1: being experience and off price beauty adult. You really have

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Speaker 1: to experience beauty and it's experiential, and then you can't

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Speaker 1: really Amazon a six packs. So Planet Fitness is a

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Speaker 1: stock that we like as well, limited brands emotional in

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Speaker 1: terms of Victoria's Secret. That all matters. But Tom, what

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Speaker 1: you're saying about price comparisons is really a challenge that

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Speaker 1: isn't easily solvable. Well, is uh? Has Jeff Bezos created

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Speaker 1: Fortress Bezos? Can anybody else build an Amazon or is

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Speaker 1: it gonna be Amazon and a whole bunch of individual

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Speaker 1: stores trying to you know, do enough business on their websites.

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Speaker 1: I think that's what we're seeing with the scale here

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Speaker 1: in Amazon. UM. John black Linch is our lead analysts

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Speaker 1: on Amazon. But what they have here is Amazon Web Services,

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Speaker 1: which is subsidizing what what is realistically a lower margin business.

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Speaker 1: They have this fulfillment scale which is really unmatched, and

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Speaker 1: they have, you know, fifty million prime members. So you

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Speaker 1: look at the porter's five forces analysis and what can

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Speaker 1: happen here and the objective which scale UM, and you

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Speaker 1: really have a lot of combination of fixed and variable

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Speaker 1: cost in terms of managing retails. So we'll see more consolidation.

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Speaker 1: You know, Guilt Group was bought by Hudson's Bay. UM

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Speaker 1: thinking about some of these pure plays and you know,

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Speaker 1: it's really the merging of bricks and clicks, and you

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Speaker 1: really need to see scale to compete. Well, how if

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Speaker 1: you're an individual retailer, how do you think about life

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Speaker 1: sting forward? I think life going forward means your store

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Speaker 1: really has to offer something special to the consumer because

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Speaker 1: the value, the bar for value is that much higher UM,

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Speaker 1: and you also have to be very very customer focused.

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Speaker 1: So you think about the greatest companies, they are they're

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Speaker 1: all in Seattle, Costco, Amazon, Nordstrom customer focus, which means, um,

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Speaker 1: you can't be selfish. It means you're thinking hard about

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Speaker 1: how to pleasure the consumer in many ways and it

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Speaker 1: really solve problems for their lives. Is there too much stuff?

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Speaker 1: I mean, when I talked to Oliver Jen Oliver, it

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Speaker 1: feels like an airline conversation of eight, nine, ten years ago.

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Speaker 1: Is there an adult nous across all the price points

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Speaker 1: to do fewer products to possibly drive operating income, stability

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Speaker 1: and even growth. I do think that that is something

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Speaker 1: companies are trying to figure out in terms of rationalizing

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Speaker 1: the number of SKA used. Also, Tom, what you're saying

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Speaker 1: is true with respect to the country generally being overmolved.

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Speaker 1: So most of our retailers have hit, um uh, somewhat

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Speaker 1: of a store saturation point. So it's a lot about

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Speaker 1: grooming and refining and the rise of online. The rise

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Speaker 1: of mobile happen faster than people expect it. So as

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Speaker 1: this happens, um the physical stores become less important. Are

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Speaker 1: just become part of an ecosystem. But keep in mind

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Speaker 1: stores still matter. They're convenient and you know when you

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Speaker 1: when you hop into a Walmart and Target, you're getting

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Speaker 1: a lot done quickly. You want to touch some clothes,

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Speaker 1: So there's a there's there is a purpose for stores,

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Speaker 1: but it's a lot of challenges and rethinking the assortment

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Speaker 1: in the square footage space and maximizing productivity across all channels.

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Speaker 1: So thirty of holiday sales at at Coles and others

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Speaker 1: were fulfilled using store so binline pickup and store ship

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Speaker 1: from store distributed order management. They're all factors that matter

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Speaker 1: for the incumbent retailers to really play hard here does

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Speaker 1: store experience matter in terms of how beautiful you know,

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Speaker 1: how it's late, how or is it really about I

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Speaker 1: can try it on in the price is low? You

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Speaker 1: know when we survey people globally around the world, price

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Speaker 1: definitely matters, and everyday low prices is a huge factor.

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Speaker 1: But when we think about some of the amazing concepts

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Speaker 1: in retail, like like a Lululemon Um, like like aspects

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Speaker 1: of north from experience matters because and you also want

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Speaker 1: to talk to people, So people matter in terms of

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Speaker 1: service and really helping you get what you want done

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Speaker 1: and also, um, if you're going to pay extra for

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Speaker 1: the for the yoga bottom or for for the dance,

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Speaker 1: and you really need to be have an emotional component

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Speaker 1: that proves to you that, Um, there's a lifestyle linkage

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Speaker 1: here that gets you excited about the about the product

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Speaker 1: you're about to put on, whether it be a bra

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Speaker 1: or maker board or Yeah, I was worried about that

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Speaker 1: this weekend, Oliver chen quickly your single best buy? What

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Speaker 1: is it? We like Signette as well, and we like

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Speaker 1: Target and we like Coach, but Signette tick r s

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Speaker 1: I G. Every kiss begins with K. We think they

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Speaker 1: have a great business um, which is bridal focused. You

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Speaker 1: can't Amazon away diamond ring and we think he has

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Speaker 1: supply chain is very good too. May I quote you

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Speaker 1: on that Amazon? And does that mean Tiffany's has got it? Mate?

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Speaker 1: We like what Tiffany is doing, but we have a

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Speaker 1: market perform in that stock. But it's an iconic brand

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Speaker 1: and they have a lot of good vertical integration. We

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Speaker 1: like what they're doing with the new t collection in Atlas.

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Speaker 1: I love them that you're too much, Oliver En, never

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Speaker 1: enough time. We beg you to darken our door here

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Speaker 1: at our world headquarters as you go over to Bloomingdale's

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Speaker 1: and look at their newly crafted first floor. Look amen,

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Speaker 1: we'll get a minute. Oliver Chenna Cowen, thank you so much,

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Speaker 1: greatly appreciate it this morning. He's always interesting. Yeah, I'm

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Speaker 1: waiting for eighty percent off. Um, well you you haven't

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Speaker 1: stocked up on spring fashions yet. Where we