Speaker 1: Broadcasting live to New York, Bloomberg eleventh Rio to Washington,
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Speaker 1: This is Bloomberg Surveillance. Good morning, It is a thirty
Speaker 1: on Wall Street. I Michael McKay along with Tom Keane.
Speaker 1: He can have a indicators spot you by Commonwealth Financial Network.
Speaker 1: When it's time to change the conversation talk with a
Speaker 1: broker dealer r I A that's ready to listen to
Speaker 1: college six for six two three eight or is it
Speaker 1: Commonwealth dot com to learn more? No major an iomic
Speaker 1: indicators today at ten o'clock. The labor market conditions in
Speaker 1: next Jennet Ellen's various things she looks at market still
Speaker 1: pay a whole lot of attention to that supposed to
Speaker 1: improve a little bit. We did have Charlie Evans of
Speaker 1: the Chicago Fed speaking on the economy earlier today on
Speaker 1: a panel with our friends. Seen Lacroix out in jolly London,
Speaker 1: jolly old England. He suggested that he's not ruling out
Speaker 1: June either, that seems to be the question what will
Speaker 1: the numbers say by then? Big number of the week
Speaker 1: for US TOM is retail sales. On Friday, we get
Speaker 1: the report on whether or not Americans are spending and
Speaker 1: the forecast is for a rather large increase eight tenths
Speaker 1: of a percent and the control group of three tents
Speaker 1: of eight percent. And that would be taken certainly as
Speaker 1: good news by the markets, and uh, good news perhaps
Speaker 1: for those who think the Fed may actually go Will
Speaker 1: we get that? Well, let's ask Oliver chen He is
Speaker 1: a senior equity analyst for Research at Cowen and Company.
Speaker 1: Following the retailers, Oliver, the consumer has been the one
Speaker 1: keeping the economy afloat lately. Is that continuing here into
Speaker 1: the second quarter. The chain store sales numbers weren't all
Speaker 1: that impressive last week, But overall, what's it look like?
Speaker 1: We are we are cautiously optimistic, I would say, Um,
Speaker 1: what we do like is the middle to lower income consumer.
Speaker 1: We think they're benefiting from lower unemployment as low as
Speaker 1: well as gas lower gas prices. Who were more cautious
Speaker 1: on the the higher end consumer just because of the
Speaker 1: stronger dollar, the negative effect from the wealth effect and
Speaker 1: the S and P volatility. I would also speak to
Speaker 1: subsectors were concerned about apparel, the continuation of the rise
Speaker 1: of fast fashion as well as primark. UH continues to
Speaker 1: weigh on apparel as well as lack of fashion trends.
Speaker 1: So I think you have to think about where the
Speaker 1: consumer fits in in terms of middle income and lower
Speaker 1: income being stronger, and then also speaking to categories. Categories
Speaker 1: matter as well. So that's interesting. The middle and lower income.
Speaker 1: I mean, they're the angry people who aren't getting a
Speaker 1: hit in life, according to certain presidential candidates, but now
Speaker 1: they're spending more money. Where's the money coming from? Is
Speaker 1: it the gasoline price dividend? Or are they finally getting
Speaker 1: raises a little bit of both. I mean, we've seen
Speaker 1: a lot of employers raise their wages as well, UM,
Speaker 1: so that indicates to us that there's an environment there
Speaker 1: where there there's a competition for labor at the at
Speaker 1: the lower end. So I think you have, UM, you know,
Speaker 1: the signs of this happening as well as the situation
Speaker 1: with lower gas with a few extra dollars in the pocket, UM,
Speaker 1: which enables is spending to happen. I would caution this
Speaker 1: a little bit because the offset is the savings rates. Uh,
Speaker 1: savings rates have you know gone up in terms of
Speaker 1: these consumers also saving. And then also there's a shift
Speaker 1: in terms of Millennials and Generation Z and the newest
Speaker 1: generations thinking a lot about experiences, spending on experiences rather
Speaker 1: than material row items. So it's not um fun and
Speaker 1: games for retailers. And the rise of Amazon is another
Speaker 1: factor to um as online traffic growth so substantially. So
Speaker 1: I know Tom wants to jump in and he definitely
Speaker 1: wants to ask about Amazon, But I was just curious
Speaker 1: when you said the younger generations, you know, they're they're
Speaker 1: spending more on experiences. I'm wondering if they're still buying
Speaker 1: as much stuff because they like stuff. They like clothing too,
Speaker 1: but they're buying it at this disposable fashion places like
Speaker 1: H and M, so they're not spending as much on clothing,
Speaker 1: leaving them more room to spend on experiences. Yeah, we've
Speaker 1: seen a really competitive discounting driven environment and apparel. If
Speaker 1: you think about you know, what you see in stores,
Speaker 1: the friends and family sales, you know, fifty percent off
Speaker 1: is the new off. Just the circular reference here with
Speaker 1: with discounts. So that's happening, and the apparel category has
Speaker 1: been deflationary in light of this circumclances up. But what's
Speaker 1: the level of panic and well, I can't get my
Speaker 1: handle on within fifty off is a level of sweat
Speaker 1: and panic and an overstocked, over inventoried retail. What's the
Speaker 1: level of sweat, Oliver Jen, We'll sweat's a big deal
Speaker 1: because fitness is a big deal. Hell, I don't mean that,
Speaker 1: I mean the level of panic for CFOs. Well, there's
Speaker 1: a little bit of panic here because there's price matching. Furthermore,
Speaker 1: of traffic is on mobile, so you know you'll you'll
Speaker 1: do this too. You'll walk into a store and you'll
Speaker 1: see a sweater and I'll google it on my phone
Speaker 1: to look for the best deal possible. So the added transparency, UH,
Speaker 1: speed and other factors are adding a lot of stress
Speaker 1: in the system. So what do they do. I went
Speaker 1: into you know when you interviewed the CEO of a
Speaker 1: data so I thought of going and buy. I went
Speaker 1: with a fashion forward selection, Oliver Jen. I bought the
Speaker 1: original stand smith sneaker. I mean John Tucker. It's the
Speaker 1: one year in I wore I put it on the
Speaker 1: run g gory keeper of the Amex expense account. We'll
Speaker 1: see that the next month's listening. But Oliver Chen, seriously here,
Speaker 1: how does it Didas or Nike or anybody else adapt
Speaker 1: to my cell phone? Well, it is about brands. It's
Speaker 1: about powerful brands and kind of segmenting the brand across
Speaker 1: different channels so that matters. And then experiences matter too.
Speaker 1: They really got to drive you in the store and
Speaker 1: it has to make sense to you. And it's about curation.
Speaker 1: It's also about what is curation. What is curation the
Speaker 1: cf A curricula. Curation has a lot to do with
Speaker 1: making sure that you're getting a point of view. So
Speaker 1: you want to walk into a store and be wild.
Speaker 1: You want to look at those stand smiths which you
Speaker 1: should wear with the bow ties and it's uh, it's
Speaker 1: the next that really changes your life because the bar
Speaker 1: is higher. Instagram, Snapchat a d D around the consumer.
Speaker 1: We're gonna come back, Oliver Chen with us a very
Speaker 1: important counting companies, brilliant on Amazon. We'll come Michael Barr
Speaker 1: had suggestions for you. He did, I mean, I mean,
Speaker 1: do we curate when we go into the grocery store
Speaker 1: and you have to get a quart of milk. Sadly, yes, yes,
Speaker 1: we when we go get a quart of milk. Futures
Speaker 1: up to town, futures up one. Let's check it out
Speaker 1: with Michael Barr and get the latest World of national
Speaker 1: headlines by time, Thank you very much. Fire officials in
Speaker 1: the Canadian province of Alberta say the forecast for the
Speaker 1: next few days means they can really get in and
Speaker 1: get a handle on a wildfire that has scorched almost
Speaker 1: four hundred thousand acres. Chad Morrison of Alberta Wildfire says
Speaker 1: the next few days are calling for cooler temperatures and
Speaker 1: light rain. The wildfire has sent tens of thousands of
Speaker 1: residents fleeing the oil sands down of Fort McMurray. British
Speaker 1: Prime Minister David Cameron says Britain will be permanently poorer
Speaker 1: if the country leaves the EU. Cameron, in a speech
Speaker 1: today in central London, says asked for the leave campaign,
Speaker 1: they are asking us to take massive risk with the
Speaker 1: future of the economy and the future of our country.
Speaker 1: And yet they called even also the most basic questions.
Speaker 1: What would Britain's relationship be with the EU. If we
Speaker 1: were to leave, will we have a free trade agreement
Speaker 1: or will we fall back on well trade organization rules.
Speaker 1: Iran semi official news agencies says the country has test
Speaker 1: fired another ballistic missile. The agency quoted the Deputy Chief
Speaker 1: of Armed Forces saying the test firing was carried out
Speaker 1: two weeks ago. Global News twenty four hours a day,
Speaker 1: powered by our twenty four hundred journalists more than a
Speaker 1: hundred fifty news bureaus from around the world. Michael bar Night,
Speaker 1: Tom All Right, time now for the land Rover Precipity
Speaker 1: Bloomberg NBC Sports Update. Here's John Stesshon. Thanks Mike Under
Speaker 1: scoring eight runs Saturday, the Yankee Bats returned to their
Speaker 1: quiet ways last not only three hits off Red Sox
Speaker 1: knuckleballer Stephen Wright shut out into the Brett Gardner home
Speaker 1: run of the night. Then Boston hit four home runs
Speaker 1: and won five to one to those homers by David Ortiz,
Speaker 1: having a big season at age forty and any of
Speaker 1: the retirement five homers in six games versus the Yanks.
Speaker 1: He's hid fifty two in his career against them. Big
Speaker 1: Poppy now second on the All time red Sox home
Speaker 1: unless he moved past Carlistremsky trails only Ted Williams Mets
Speaker 1: one four three. In San Diego, Matt Harvey got the win.
Speaker 1: He didn't Homer like bar Tolo Cologne did Saturday, but
Speaker 1: he didn't have two hits of the plate. Cubs again
Speaker 1: being Washington thirteenings, they sweep the series. The Cubs are
Speaker 1: twenty four and six Sanley Cup Playoffs. Tampa Bay all
Speaker 1: over the Islanders for nothing to win the series in
Speaker 1: five games. The Islander captain John Tavaris described in the
Speaker 1: emotion in the room after the season ended, like this
Speaker 1: church believe it's Ober. Obviously you put a lot into it,
Speaker 1: so you know, we didn't accomplish what we settled to do.
Speaker 1: And uh lightning in the East Finals Lebron James NBA
Speaker 1: East Finals for the sixth right year Cleveland with the
Speaker 1: sweep winning in Atlanta one d Oklahoma City over San
Speaker 1: Antonio last at one eleven nineties seven. That series is
Speaker 1: tied into We're at the Bloomberg NBC Sports Unday. I'm
Speaker 1: John's DeCamp. John, thank you so much, greatly appreciate that. Sports.
Speaker 1: Michael McKee, it's getting I mean, for those of you globally,
Speaker 1: Mike and I are having fun with Washington Capitals Pittsburgh Penguins.
Speaker 1: We agree to disagree, even though we both know it's
Speaker 1: great hockey. Yeah, a little fabulous hockey. At any given time.
Speaker 1: Capitals come back on Saturday night, now, Tuesday, tomorrow night
Speaker 1: tonight and they're still done three too, So I gotta
Speaker 1: go to Pittsburgh and win, otherwise people will be saying,
Speaker 1: you know, it's the old Washington cursor. For those of
Speaker 1: you listening in England, it's it's I'm sure there's a
Speaker 1: soccer equivalent of where you have three bankable superstars, iconic
Speaker 1: superstars sometimes on the ice at the same time. You know, uh,
Speaker 1: Capitals and Penguins are a little bit like Manchester City
Speaker 1: Manchester United. Yeah, okay, I'll go with that. That's our
Speaker 1: hockey talk for today. Bloomberg Savannahs. The Sports Report was
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Speaker 1: This is a Bloomberg Business flash and I'm Karen Moscow.
Speaker 1: This updates brought to you by National Realty Returns on
Speaker 1: cash and rented real estate. Find them at n r
Speaker 1: i a dot net. Krispy Kreme Doughnuts are great to
Speaker 1: be acquired by j a V Holding subsidiary in a
Speaker 1: one point three five billion dollar deal. Shares are up
Speaker 1: more than twenty three percent this morning. Lendon Club is
Speaker 1: down twenty four percent. Founder and chief executive Officer Renauld
Speaker 1: Laplanche resigned after an internal review of loan sales to
Speaker 1: a single investor, and President Scott Sanborn was named acting CEO.
Speaker 1: Valion Pharmaceuticals Inner National, reiterating its revenue and earnings forecast
Speaker 1: for the first quarter, saying it expects to file it's
Speaker 1: ten que by June tenth, ahead of a July thirty
Speaker 1: one deadline, and it's a dead agreement. Stocks rallying, with
Speaker 1: European equities rising from a one month low as they
Speaker 1: shook off a drag from Chinese trade data that weight
Speaker 1: on industrial medals. We checked the markets every fifteen minutes
Speaker 1: throughout the trading day. On Bloomberg SNP E Mini Future
Speaker 1: is higher of one and a half points now e
Speaker 1: mini futures up fifteen, Nasadaki mini futures up eight The
Speaker 1: dacts in Germany's up one and a half percent. Ten
Speaker 1: year treasury up four thirty seconds, the yield one point
Speaker 1: seven six percent. Yield on the two year points seven
Speaker 1: one percent. Nine Max Screwede oil up two ten percent
Speaker 1: or eight cents to forty four seventy three of arrol
Speaker 1: comex gold down one and a half percent or nineteen
Speaker 1: dollars fifty cents to twelve seventy four sixty announced the
Speaker 1: euro and dollar fourteen oh five. The end one oh
Speaker 1: eight point to two. That's a Bloomberg business flash. Tom
Speaker 1: and Mike Karen, thanks so much. This Monday morning. It
Speaker 1: is Wall Street. The following is from Bloomberg View, opinions
Speaker 1: and commentary from Bloomberg columnists. I'm Mark Whitehouse, an editor
Speaker 1: at Bloomberg View. Why are so many people unhappy about
Speaker 1: a US economy that has generated more than twelve million
Speaker 1: jobs over the past five years. One explanation a lot
Speaker 1: of those jobs don't pay very well. The April jobs
Speaker 1: report illustrates a persistent disconnect. Employers have created enough jobs
Speaker 1: to keep the unemployment rate at five percent or lower
Speaker 1: for seven months straight. Yet this ample demand for workers
Speaker 1: hasn't generated the wage growth needed to drive consumer spending
Speaker 1: and the broader economy. What gives one issue is the
Speaker 1: quality of jobs being created. To see this, let's split
Speaker 1: private sector jobs into three wage categories. Low, middle, and high.
Speaker 1: Low wage jobs have accounted for the most growth by
Speaker 1: far since the recession that began in two thousand eight,
Speaker 1: exceeding the prerecession peak by more than four million. High
Speaker 1: wage jobs have recovered two but not as much. The
Speaker 1: middle is by far the worst off, still two hundred
Speaker 1: and fifty thousand jobs short of its pre recession peak.
Speaker 1: So while millions of people have gotten back to work,
Speaker 1: it's not surprising that a lot of them aren't too
Speaker 1: pleased about it. I'm Mark white House. For more of you,
Speaker 1: please go to Bloomberg View dot com or view go
Speaker 1: on the Bloomberg terminal. This has been Bloomberg View and
Speaker 1: Bloomberg View Commentary is can be heard hourly weekdays on
Speaker 1: Bloomberg Radio. Mike. This just in from Montreal. Thirty miles
Speaker 1: north of Montreal, police arrest second man suspected of stealing
Speaker 1: five million bees in Quebec let's go to the details. Victoriaville, Quebec,
Speaker 1: Land of the hockey stick, the Victoriaville five lie, the
Speaker 1: old McKenny curve. Yes, I had dozens of those. Yes. Anyways,
Speaker 1: they have arrested a second of two brothers for stealing
Speaker 1: a hundred eighty Gary shilling like bee hives, each worth
Speaker 1: two hundred thousand dollars or total value. Here's the key sentence.
Speaker 1: The bees have yet to be found. Oh my goodness
Speaker 1: for questioning, I don't know. That's the bees have not
Speaker 1: yet been found. If you can't find the bees, that
Speaker 1: how are you going to charge the game? Exactly? That's
Speaker 1: what I was thinking. Is all of Gary showing on
Speaker 1: in the coming days and weeks to discuss be theft,
Speaker 1: be theft in Canada as well? Right now on the
Speaker 1: theft of retail. Oliver Chen of cow and Oliver give
Speaker 1: us an update on Amazon. The sainted one went into
Speaker 1: Adidas yesterday and she had to try on the shoes
Speaker 1: before we ordered them off the internet. How does the
Speaker 1: Amazon win within that model? Yeah, I think what we
Speaker 1: see at Amazon is a really powerful Amazon Prime customer base,
Speaker 1: and that's forty to fifty million customers part of the
Speaker 1: Amazon prime ecosystem. And then Amazon's a lot about reducing
Speaker 1: friction to the customers. So they had film and centers,
Speaker 1: twenty six sortation centers, so really fulfillment as well as prime.
Speaker 1: And then you think about their focus. They're focused on
Speaker 1: being the number one apparel. We think at Kalen will
Speaker 1: be the number one apparel seller by two thousand seventeen
Speaker 1: and the number two consumables by two eighteen. So how
Speaker 1: do stores compete? Again, it's about brands, private labels. It's
Speaker 1: about leveraging stores as assets to deliver a convenience factor
Speaker 1: to customers. And then it's about touch, look and feel
Speaker 1: of products. So t J x Roth's Treasure Hunt shop
Speaker 1: being experience and off price beauty adult. You really have
Speaker 1: to experience beauty and it's experiential, and then you can't
Speaker 1: really Amazon a six packs. So Planet Fitness is a
Speaker 1: stock that we like as well, limited brands emotional in
Speaker 1: terms of Victoria's Secret. That all matters. But Tom, what
Speaker 1: you're saying about price comparisons is really a challenge that
Speaker 1: isn't easily solvable. Well, is uh? Has Jeff Bezos created
Speaker 1: Fortress Bezos? Can anybody else build an Amazon or is
Speaker 1: it gonna be Amazon and a whole bunch of individual
Speaker 1: stores trying to you know, do enough business on their websites.
Speaker 1: I think that's what we're seeing with the scale here
Speaker 1: in Amazon. UM. John black Linch is our lead analysts
Speaker 1: on Amazon. But what they have here is Amazon Web Services,
Speaker 1: which is subsidizing what what is realistically a lower margin business.
Speaker 1: They have this fulfillment scale which is really unmatched, and
Speaker 1: they have, you know, fifty million prime members. So you
Speaker 1: look at the porter's five forces analysis and what can
Speaker 1: happen here and the objective which scale UM, and you
Speaker 1: really have a lot of combination of fixed and variable
Speaker 1: cost in terms of managing retails. So we'll see more consolidation.
Speaker 1: You know, Guilt Group was bought by Hudson's Bay. UM
Speaker 1: thinking about some of these pure plays and you know,
Speaker 1: it's really the merging of bricks and clicks, and you
Speaker 1: really need to see scale to compete. Well, how if
Speaker 1: you're an individual retailer, how do you think about life
Speaker 1: sting forward? I think life going forward means your store
Speaker 1: really has to offer something special to the consumer because
Speaker 1: the value, the bar for value is that much higher UM,
Speaker 1: and you also have to be very very customer focused.
Speaker 1: So you think about the greatest companies, they are they're
Speaker 1: all in Seattle, Costco, Amazon, Nordstrom customer focus, which means, um,
Speaker 1: you can't be selfish. It means you're thinking hard about
Speaker 1: how to pleasure the consumer in many ways and it
Speaker 1: really solve problems for their lives. Is there too much stuff?
Speaker 1: I mean, when I talked to Oliver Jen Oliver, it
Speaker 1: feels like an airline conversation of eight, nine, ten years ago.
Speaker 1: Is there an adult nous across all the price points
Speaker 1: to do fewer products to possibly drive operating income, stability
Speaker 1: and even growth. I do think that that is something
Speaker 1: companies are trying to figure out in terms of rationalizing
Speaker 1: the number of SKA used. Also, Tom, what you're saying
Speaker 1: is true with respect to the country generally being overmolved.
Speaker 1: So most of our retailers have hit, um uh, somewhat
Speaker 1: of a store saturation point. So it's a lot about
Speaker 1: grooming and refining and the rise of online. The rise
Speaker 1: of mobile happen faster than people expect it. So as
Speaker 1: this happens, um the physical stores become less important. Are
Speaker 1: just become part of an ecosystem. But keep in mind
Speaker 1: stores still matter. They're convenient and you know when you
Speaker 1: when you hop into a Walmart and Target, you're getting
Speaker 1: a lot done quickly. You want to touch some clothes,
Speaker 1: So there's a there's there is a purpose for stores,
Speaker 1: but it's a lot of challenges and rethinking the assortment
Speaker 1: in the square footage space and maximizing productivity across all channels.
Speaker 1: So thirty of holiday sales at at Coles and others
Speaker 1: were fulfilled using store so binline pickup and store ship
Speaker 1: from store distributed order management. They're all factors that matter
Speaker 1: for the incumbent retailers to really play hard here does
Speaker 1: store experience matter in terms of how beautiful you know,
Speaker 1: how it's late, how or is it really about I
Speaker 1: can try it on in the price is low? You
Speaker 1: know when we survey people globally around the world, price
Speaker 1: definitely matters, and everyday low prices is a huge factor.
Speaker 1: But when we think about some of the amazing concepts
Speaker 1: in retail, like like a Lululemon Um, like like aspects
Speaker 1: of north from experience matters because and you also want
Speaker 1: to talk to people, So people matter in terms of
Speaker 1: service and really helping you get what you want done
Speaker 1: and also, um, if you're going to pay extra for
Speaker 1: the for the yoga bottom or for for the dance,
Speaker 1: and you really need to be have an emotional component
Speaker 1: that proves to you that, Um, there's a lifestyle linkage
Speaker 1: here that gets you excited about the about the product
Speaker 1: you're about to put on, whether it be a bra
Speaker 1: or maker board or Yeah, I was worried about that
Speaker 1: this weekend, Oliver chen quickly your single best buy? What
Speaker 1: is it? We like Signette as well, and we like
Speaker 1: Target and we like Coach, but Signette tick r s
Speaker 1: I G. Every kiss begins with K. We think they
Speaker 1: have a great business um, which is bridal focused. You
Speaker 1: can't Amazon away diamond ring and we think he has
Speaker 1: supply chain is very good too. May I quote you
Speaker 1: on that Amazon? And does that mean Tiffany's has got it? Mate?
Speaker 1: We like what Tiffany is doing, but we have a
Speaker 1: market perform in that stock. But it's an iconic brand
Speaker 1: and they have a lot of good vertical integration. We
Speaker 1: like what they're doing with the new t collection in Atlas.
Speaker 1: I love them that you're too much, Oliver En, never
Speaker 1: enough time. We beg you to darken our door here
Speaker 1: at our world headquarters as you go over to Bloomingdale's
Speaker 1: and look at their newly crafted first floor. Look amen,
Speaker 1: we'll get a minute. Oliver Chenna Cowen, thank you so much,
Speaker 1: greatly appreciate it this morning. He's always interesting. Yeah, I'm
Speaker 1: waiting for eighty percent off. Um, well you you haven't
Speaker 1: stocked up on spring fashions yet. Where we