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Speaker 1: Broadcasting live to New York, Bloomberg eleven Brio 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 to the country Suis Exam Channel one, and around

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Speaker 1: the globe the Bloomberg Radio, FLAXAP and Bloomberg dot Com.

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Speaker 1: This is taking stock. I'm capping Hayes along with kim

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Speaker 1: Fox a difficult retail environment. In indeed, target share price

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Speaker 1: is down six percent today after it cut its annual

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Speaker 1: forecast on slumping sales last quarter lows losing ground to

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Speaker 1: home depot. It also missed its two quarter comparative sales estimate. Pam,

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Speaker 1: We're going to take a look at continuer, look at

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Speaker 1: retail actually with two of the nation's leading examples. Yes,

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Speaker 1: that's all coming up at right now. Let's go to

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Speaker 1: Charlie Pellet and the Bloomberg News from Fort Bloomberg Business Flath.

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Speaker 1: I thank you very much, pim Fox to down smp

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Speaker 1: are higher, Nez daks Lore twenty nine minutes to go

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Speaker 1: ahead of the clothes on this fed minutes Wednesday. We're

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Speaker 1: brought to you by National Realty Providers of one hundred

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Speaker 1: percent satisfaction guaranteed. New York City realty investments see them

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Speaker 1: at n r i A dot net stocks are fluctuating,

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Speaker 1: utilities rallying to offset declines in retailers. More on retailing

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Speaker 1: coming up in just a moment right here on taking stock.

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Speaker 1: Federal Reserve meeting minutes quelling speculation that borrowing costs could

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Speaker 1: rise us soon as next month. Those minutes showed officials

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Speaker 1: were divided in July over the urgency to raise rates again,

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Speaker 1: some preferring to wait because inflation remained benign, others wanted

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Speaker 1: to go as soon as the labor market nearest full employment.

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Speaker 1: Chris Lowe is chief economist at FtM Financial. He was

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Speaker 1: our guest today right here on taking stock. The new

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Speaker 1: emphasis is what we heard from Bill Dudley yesterday, which is, look,

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Speaker 1: we may not be as folks stunt typing as we

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Speaker 1: were before, but we still need to snug ray higher

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Speaker 1: Target shares slumping six percent after cutting its annual forecast.

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Speaker 1: The retail chains slump last quarter, hit by what CEO

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Speaker 1: Brian Cornell describes as a quote difficult retail environment. Shares

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Speaker 1: of urban Outfitters and Children's Place both higher after the

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Speaker 1: companies gave an optimistic view of the beleaguered US apparel industry.

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Speaker 1: Urban outfitters surging fifteen point nine percent, Children's Place up

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Speaker 1: eight tenths of one percent, SMP up two points to

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Speaker 1: a gain of one tenth of one percent, Gold down

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Speaker 1: seven ninety the ounce a drop of six tenths of

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Speaker 1: one percent two on Wall Street. Now, let's take a

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Speaker 1: look at other stories making news. Thank you, Charlie from

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Speaker 1: the Bloomberg newsroom. I'm Jill Snyder. This news update is

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Speaker 1: brought to you by the Jeep Grand Cherokee, the most

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Speaker 1: poll finds Donald Trump is losing stock with investors. Bloomberg's

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Speaker 1: Michael Barr explains a new Bloomberg pole shows US voters

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Speaker 1: with investments and stocks and mutual funds have lost confidence

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Speaker 1: with Donald Trump when it comes to their portfolios. The

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Speaker 1: poll shows Trump at with Hillary Clinton at forty percent.

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Speaker 1: In June, Trump was at fifty to Clinton at The

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Speaker 1: poll also shows those with more than fifty thou dollars

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Speaker 1: invested are more likely to view Clinton has better for

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Speaker 1: their portfolios. Investors with smaller accounts are more likely to

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Speaker 1: see Trump as better for their assets. Michael Barr Bloomberg Radio.

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Speaker 1: Residents in Louisiana are starting the process of cleaning up

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Speaker 1: after deadly flooding left entire communities underwater. More than nine

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Speaker 1: of the homes in Denham Springs were destroyed. This resident

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Speaker 1: says he lost everything. The head of Ireland's national Olympic body,

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Speaker 1: who is also a high ranking member of the International

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Speaker 1: Olympic Committee, has been arrested in Rio de Janeiro. Patrick

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Speaker 1: Higgy is accused of scalping tickets to the two thousand

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Speaker 1: sixteen Games. Authorities are investigating the cause of a fire

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Speaker 1: that damaged multiple boats at a Long Island Marina. One

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Speaker 1: firefighter was hospitalized for possible carbon monoxide poisoning while battling

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Speaker 1: the blaze in East Patchak Global News twenty four hours

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Speaker 1: a day, powered by more than twenty journalists and analysts

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Speaker 1: in more than one twenty countries. I'm Jill Snyder, this

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Speaker 1: is Bloomberg, Charlie, and we thank you and again twenty

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Speaker 1: five minutes to go ahead. Of the close SMP five

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Speaker 1: hundred index and the dal higher nestack is lower. The

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Speaker 1: tenure up six thirty seconds, the yield one point five percent,

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Speaker 1: SMP up two points to a gain of point one percent.

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Speaker 1: I'm Charlie Pellett. That's a Bloomberg business flash. This is

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Speaker 1: taking stock with Kathleen Hayes and Pim Fox on Bloomberg Radio.

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Speaker 1: The shares of Target. They are down more than six

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Speaker 1: percent right now after reporting second a quarter earnings that

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Speaker 1: fell nearly ten percent. They also lowered their sales estimate

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Speaker 1: for the remainder of the year, citing a difficult retail environment.

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Speaker 1: Here to tell us more, Scott Mushkin, Managing director and

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Speaker 1: senior Staples retail analyst at Wolf Research. Scott, thanks very

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Speaker 1: much for being with us tell us about what's going

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Speaker 1: on at Target. Is this going to be a turnaround

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Speaker 1: story or is this just going to be a slow

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Speaker 1: drip of bad news? Well, Pim and and and Kentheen,

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Speaker 1: thanks for having me back. I mean, I think the

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Speaker 1: challenge here through all of Staples retailing um is that

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Speaker 1: it's a mess. Uh. We've got a lot of price

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Speaker 1: competition coming in our pricing surveys we go into markets

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Speaker 1: and do pricing surveys and falling off a cliff. The

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Speaker 1: government's CPI food is now down one point five some

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Speaker 1: of the biggest moves down we've seen in a growing economy.

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Speaker 1: And targets, you know, they're they're struggling. They're struggling to

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Speaker 1: turn around that food business. Um, and they're struggling to

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Speaker 1: get traffic into the stores. You layer on top of,

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Speaker 1: on top of that, the impact of Amazon. We put

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Speaker 1: out a report a few months ago called the Amazon

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Speaker 1: Generation and in that report, it looked at the categories

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Speaker 1: women wanted to purchase more online and it was kind

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Speaker 1: of like the who's who of targets, signature categories, what

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Speaker 1: they call the signature categories. So unfortunately, even though the

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Speaker 1: strategy Brian Cornell is is laid out here is good, Um,

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Speaker 1: they're facing an awful lot of headwinds, Just an awful

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Speaker 1: lot of headwinds. So how much is it uh a

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Speaker 1: macro headwinds story forces that they can't control, they just

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Speaker 1: have to deal with, like, uh, consumers just not spending

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Speaker 1: as much this summer. How much is it a target

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Speaker 1: specific problem? I mean, some of its targets specific, but

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Speaker 1: certainly I think you're right. I mean, I think if

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Speaker 1: you look at the backdrop, it's not set up well. Um.

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Speaker 1: Part of what we talked about that Amazon Generation report

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Speaker 1: is the demographics. The thirty five to fifty four year

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Speaker 1: old demographic is negative. That is a main shopper in Target.

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Speaker 1: If you look at the millennials and having babies. If

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Speaker 1: you looked at the birth rate that came out a

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Speaker 1: couple of weeks ago from the Census Bureau, it's low.

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Speaker 1: Target feeds off of young moms. They're very popular. Target

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Speaker 1: is very popular as young moms. Um. If you look

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Speaker 1: at the building that's gone on in in retail, Um,

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Speaker 1: we're just we have too many assets chasing too few

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Speaker 1: sales at this stage. So there's definitely some macro problems. Um.

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Speaker 1: But you know, some of it's also Target, where before

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Speaker 1: Brian got there, they had kind of underinvested in the business.

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Speaker 1: They were up in Canada, so they lost a lot

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Speaker 1: of their momentum, a lot of their tarj uh and

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Speaker 1: it's taking the company longer to turn this around, particularly

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Speaker 1: in the food area. Hey Scott, if you are a

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Speaker 1: holder of Target, do you want to get out now?

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Speaker 1: You know it's it's cheap. So that's that's the struggle, right.

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Speaker 1: The company's trading, you know, kind of a little below

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Speaker 1: it's five year average on a P basis UM. So

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Speaker 1: our current ray is is pure perform, which is kind

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Speaker 1: of a hold. UM. But the entire sector, both the

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Speaker 1: broad line sector and the food sector, we we rate

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Speaker 1: that underweight. So we don't like the sector. So you've

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Speaker 1: got to kind of see it in that that that

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Speaker 1: that vein so we think there's other places too short

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Speaker 1: and get out. Kroger we downgraded to underperform, which is

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Speaker 1: a company we've had to buy on for a long time.

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Speaker 1: We did that a few about a month or two ago. UM.

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Speaker 1: So that's our rating. But it's a tough, tough sector UM,

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Speaker 1: and I think you've got to be really leery of

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Speaker 1: owning anything in it at this stage. Well, let's have

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Speaker 1: a look at Lows then, because they also lower their

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Speaker 1: second quarter just at orneys for share dollar thirty seven.

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Speaker 1: They asked me was dollar forty two. So there was

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Speaker 1: a pretty big miss there, you point out in a note,

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Speaker 1: and so does our Bloomberg story that they're losing ground

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Speaker 1: to Home Depot. Yesterday, we had the chief economist of

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Speaker 1: Home Advisor on and it seems this is a bad

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Speaker 1: thing for lows because he was talking about the number

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Speaker 1: of people who are spending money on home improvement now

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Speaker 1: paying more money to buy bigger ticket purchases at Centa.

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Speaker 1: What's going on with lows? You know? So in the

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Speaker 1: home depot numbers came out yesterday, right, and so this

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Speaker 1: has been one of the sectors that seems to be

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Speaker 1: doing well. We call it a zombie economy. We've got

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Speaker 1: kind of slow growth rise and cost, not a lot

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Speaker 1: of demand. But on the home side, things have been

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Speaker 1: a lot better um and both home depot and Lows

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Speaker 1: have been exceeding expectations pretty handily over the last a

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Speaker 1: couple of years. Now. Even home Depot Home Depose report

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Speaker 1: was very good yesterday, but it wasn't outstanding if you

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Speaker 1: look at the sales forecast. We've actually we this morning

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Speaker 1: we lowered kind of our outlook on sales now still

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Speaker 1: some of the best in retail. I mean there's a

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Speaker 1: five cops for the third quarters what we think, and

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Speaker 1: that's really good, but just down a little bit. So

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Speaker 1: then transitioning into lows kind of the same thing. Like

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Speaker 1: the home business is much much better than a lot

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Speaker 1: of retail, but it too seems to be slowing a

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Speaker 1: little bit um and it's a concern. I mean, one

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Speaker 1: of the things when I was listening to coming on,

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Speaker 1: listening to you guys talk about the Fed in the

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Speaker 1: Fed Minutes, I mean, I've been trying kind of saying that,

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Speaker 1: you know, maybe Janet Yellen's the modern day Marie Antoinette,

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Speaker 1: that she's instead of let the meat kick, let them

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Speaker 1: meat money. Like we just you know, we're just not

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Speaker 1: moving this economy. It's a zombie economy, and it's even

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Speaker 1: spilling a little bit into some better sectors. And I

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Speaker 1: think that's the story of lows really well. Scott, thank

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Speaker 1: you so very much for joining us. So when you

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Speaker 1: see the consumers slowing down and it uh in the

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Speaker 1: first quarter, of course, A contributed to most of the

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Speaker 1: growth we saw. It's a where some sign but so

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Speaker 1: far it doesn't bother the stock market. And we'll see

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Speaker 1: if the Fed can let the consumers eat money for long.

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Speaker 1: It's Scott much gonna senior Retail at Staples Analysts at

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Speaker 1: wolf Or Research. I'm Kathleen Hayes along with pim Fox,

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Speaker 1: and this is Bloomberg coming up on taking stock, What

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Speaker 1: to do with your money. The SMP five hundred is

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Speaker 1: up more than six and a half percent so far

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Speaker 1: this year. Should you buy stocks or is it time

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Speaker 1: to sell. We'll find out