WEBVTT - Credit Suisse, Inflation, and the latest on SVB 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.720 at Bloomberg dot com Slash podcast. Again, a lot of 0:00:21.760 --> 0:00:25.639 weight to this tape all throughout the day. One of 0:00:25.680 --> 0:00:28.479 the reasons is some concern about the banking sector, and 0:00:28.520 --> 0:00:32.080 the news today was our good friends over in Zurich, 0:00:32.200 --> 0:00:35.559 Credit Swiss, the story that just keeps giving and not 0:00:35.680 --> 0:00:36.880 in a good way. So we want to get the 0:00:36.920 --> 0:00:39.680 latest on what's happening at Credit Swiss. How concerned should 0:00:39.680 --> 0:00:42.199 we be about the European banking sector in general, and 0:00:42.240 --> 0:00:44.559 what is the spill of our effect, if any, for 0:00:44.640 --> 0:00:47.320 some of the larger US global banks. To do that, 0:00:47.360 --> 0:00:50.280 we welcome Alison Williams. She's a senior banks analyst for 0:00:50.320 --> 0:00:55.520 Bloomberg Intelligence. She is also a leader of the Bloomberg 0:00:55.520 --> 0:00:58.160 Intelligence business in the US, So we appreciate getting some 0:00:58.240 --> 0:01:02.400 time here, Alison. You know, give us the latest on 0:01:02.520 --> 0:01:05.320 Credit Swiss. I guess the latest news is their big 0:01:06.319 --> 0:01:09.119 Arab Investor Inc. Coming back for more? Is that kind 0:01:09.160 --> 0:01:13.319 of the story? So I think, you know, the issue 0:01:13.319 --> 0:01:16.640 with credit tweets that I think has in common with 0:01:16.680 --> 0:01:21.000 the SF The situation is just it's it's sort of 0:01:21.040 --> 0:01:25.960 a market sentiment and it's hard to make fundamental arguments 0:01:26.000 --> 0:01:29.840 against market sentiment, especially when we saw in four q 0:01:30.280 --> 0:01:32.840 that investors got so concerned they pulled over one hundred 0:01:32.880 --> 0:01:37.440 billion from the bank and you know, they said on 0:01:37.480 --> 0:01:41.520 Monday they've seen inflows. Um. You know that provided sort 0:01:41.560 --> 0:01:44.360 of a moment of confidence. But I think what's difficult 0:01:44.440 --> 0:01:48.240 now is investors are trying to get a sense of, um, 0:01:48.880 --> 0:01:52.440 you know what can turn this around. Because we had 0:01:52.760 --> 0:01:56.920 their their newest biggest shareholder saying that that that they're 0:01:56.960 --> 0:01:59.880 not going to increase their positions, partly because of regulatory 0:02:00.040 --> 0:02:05.080 statutory reasons, but then they cited also other reasons, which um, 0:02:05.120 --> 0:02:08.120 they were vague about. And you know that they have 0:02:08.160 --> 0:02:12.760 another long time shareholder, um having sold off their position 0:02:13.160 --> 0:02:17.000 in the past couple of quarters. So it does seem 0:02:17.080 --> 0:02:21.600 like we need to hear from thisis regulators. Um, there's 0:02:21.600 --> 0:02:24.520 a story that just uh that came out a little 0:02:24.560 --> 0:02:28.120 bit ago. UM. Again, I have no idea the validia 0:02:28.160 --> 0:02:31.560 of the story. But saying that, UM, they are asking 0:02:31.600 --> 0:02:34.800 for a public show of report from the regulators, Alison, 0:02:34.800 --> 0:02:38.359 what does their balance sheet look like? So that the 0:02:38.639 --> 0:02:43.320 the their balance sheet is very different from uh, you 0:02:43.360 --> 0:02:46.720 know the two banks that we saw UM fail in 0:02:46.760 --> 0:02:51.079 the US in the sense that they do not have 0:02:51.120 --> 0:02:55.000 the issue of you know, this this huge bond portfolio 0:02:55.080 --> 0:02:58.960 with unrealized losses. UM. You know that that was sort 0:02:58.960 --> 0:03:01.200 of a thing that was out there that when deposits 0:03:01.200 --> 0:03:06.799 outflow from those banks, UM, you know, they couldn't UM. 0:03:06.840 --> 0:03:11.600 You know, that really caused illiquidity and those issues. So UM, 0:03:11.639 --> 0:03:14.600 you know, for credit suites, they do have a fair 0:03:14.600 --> 0:03:17.000 amount of deposits, they do have some wholesale funding, they 0:03:17.080 --> 0:03:20.360 just raised capital, They have a fourteen point one percent 0:03:20.480 --> 0:03:24.960 CET one ratio, They had tons of excess liquidity at 0:03:25.040 --> 0:03:27.400 least at the end of the fourth quarter. You know 0:03:27.440 --> 0:03:30.480 that The concern is just that you know, that can 0:03:30.560 --> 0:03:33.600 shift very quickly UM. And so I think that's why 0:03:33.680 --> 0:03:37.760 investors are looking for, UM, you know, some sign of 0:03:37.760 --> 0:03:42.480 stability or some disclosure to provide some comfort. Unfortunately, when 0:03:42.520 --> 0:03:45.240 when when people reference their CET one ratio as I 0:03:45.360 --> 0:03:47.520 just did, or banks come out and say they don't 0:03:47.560 --> 0:03:49.600 need to raise capital. There's obviously a little bit of 0:03:50.320 --> 0:03:53.040 skepticism because of things that we saw in the past. 0:03:53.240 --> 0:03:55.920 But but I will I will chime into you know, 0:03:55.960 --> 0:03:59.080 Paul saying earlier that this feels very different than two 0:03:59.080 --> 0:04:01.400 thousand and eight. And I think, you know, one key 0:04:01.480 --> 0:04:04.839 difference is in two thousand and eight, we did have 0:04:05.000 --> 0:04:08.360 a lot of you know, we had broad issues in 0:04:08.440 --> 0:04:12.880 the system, broad issues, and in this case, we have 0:04:13.040 --> 0:04:16.880 some mismanagement at a few banks that some names that 0:04:16.920 --> 0:04:22.240 people are worried about. The deposit the deposit mismatch and 0:04:22.279 --> 0:04:25.760 the and the bond investments are brought across the US banks, 0:04:25.800 --> 0:04:29.039 but but certainly not to the you know, the couple 0:04:29.080 --> 0:04:34.920 of banks had had very unique um their their deposit 0:04:35.000 --> 0:04:37.159 bases were very weak, if you will, and so that 0:04:37.160 --> 0:04:39.240 that was what was sort of unique about them. And 0:04:39.800 --> 0:04:41.599 some are with credit sweets, and I think that's what 0:04:41.680 --> 0:04:44.760 we saw with credit speees over the last couple of years, 0:04:44.839 --> 0:04:47.360 is that a lot of their business has gone away 0:04:47.360 --> 0:04:49.680 to some of the stronger repetitors. That's that's what's led 0:04:49.680 --> 0:04:51.599 to the pressure. And and I'll just say, I'll just 0:04:51.600 --> 0:04:54.360 say one thing that I know Paul remembers. But you know, 0:04:54.839 --> 0:04:58.719 when Lehman failed, there was a significant period of time 0:04:58.720 --> 0:05:01.960 between bear Stearns and Lehman, and I think where banks 0:05:02.000 --> 0:05:05.800 were reducing risk, managing their counterparty risk, and so you know, 0:05:05.839 --> 0:05:08.760 when we had that moment with Lehman, it was a 0:05:08.760 --> 0:05:12.080 big money market fund. It was something that people didn't anticipate. 0:05:13.560 --> 0:05:16.359 But again with Credit Suis, this is not an overnight 0:05:16.400 --> 0:05:20.920 situation like it was with Silicon Valley bank shares. This 0:05:21.000 --> 0:05:23.800 is something that's been happening over a couple of years. 0:05:24.120 --> 0:05:26.800 They don't have the prime broberge business anymore, and so 0:05:26.839 --> 0:05:29.960 I think there's a lot of the systemic risk that 0:05:30.000 --> 0:05:32.679 we would normally worry about have been reduced. So, Alice, 0:05:32.680 --> 0:05:34.000 that's kind of where I wanted to go. I think 0:05:34.000 --> 0:05:36.680 one of the things I learned as a newbie to 0:05:36.760 --> 0:05:38.440 the kind of the bank, you know, the bank and 0:05:38.480 --> 0:05:42.400 bank accounting and how it all works is void confidence 0:05:42.480 --> 0:05:44.600 is so key, and when you lose the confidence of 0:05:44.640 --> 0:05:48.920 your counterparties, basically it's game over. And that's kind of 0:05:48.960 --> 0:05:50.880 what we saw for during two thousand and eight for 0:05:50.920 --> 0:05:54.440 a number of players. Does Credit Swiss have that risks 0:05:54.600 --> 0:05:59.679 today credit suis. It is a crisis of confidence happening 0:05:59.800 --> 0:06:02.039 right out and they do need and I think that 0:06:02.160 --> 0:06:04.360 is why they're asking regulators to come out and show 0:06:04.440 --> 0:06:07.159 some kind of support. There needs to be there needs 0:06:07.200 --> 0:06:10.760 to be something that provides a floor under the market 0:06:10.800 --> 0:06:14.359 and gives some kind of confidence. Um. And again, you know, 0:06:14.839 --> 0:06:16.800 over the last year or so, they did have a 0:06:16.839 --> 0:06:20.120 one big shareholder that was sticking by them, Um, they 0:06:20.200 --> 0:06:22.480 raised a capital Those were both kind of signs that 0:06:22.560 --> 0:06:26.160 things were studying. They said that flows had sort of studied. 0:06:26.360 --> 0:06:29.479 And then you know there's now some questions around those 0:06:29.520 --> 0:06:33.000 disclosures and how accurate they were, and so that that 0:06:33.080 --> 0:06:35.159 makes it tough for the bank to come out and 0:06:35.160 --> 0:06:36.800 make comments. And I think that's why they do need 0:06:36.839 --> 0:06:40.640 a third party to um, you know, come in and 0:06:40.839 --> 0:06:44.039 stab wise things and give some confidence. That's that's what 0:06:44.080 --> 0:06:46.480 the FED did when with the banks, right, so they 0:06:46.920 --> 0:06:49.680 not only did they take over the banks, they said 0:06:49.720 --> 0:06:52.800 that the deposits are going to be insured, and they 0:06:52.839 --> 0:06:56.560 provided a facility to you know, cut the worries across 0:06:56.560 --> 0:07:00.159 a broader banking system and so UM, I think that's 0:07:00.360 --> 0:07:02.200 that's sort of what we need at this moment from 0:07:02.279 --> 0:07:04.760 from the good place. Could somebody buy them take over 0:07:04.839 --> 0:07:09.080 what's happening on that front of anything, So that you know, 0:07:09.320 --> 0:07:12.400 and I think we've talked about before. You know, people 0:07:12.440 --> 0:07:14.600 have long speculated about m and A with kret suite. 0:07:14.640 --> 0:07:17.280 See in the past, didn't think that was a possibility 0:07:17.360 --> 0:07:21.360 because they are are globally systemic important bank with a 0:07:21.480 --> 0:07:25.320 very complex balance sheet um and you know, there's all 0:07:25.360 --> 0:07:29.440 the regulatory aspects, especially if you're considering cross border. However, 0:07:29.720 --> 0:07:32.560 if you look at their operations today, having sold off 0:07:32.600 --> 0:07:34.760 a lot of their trading, they're not in prime brokerage, 0:07:35.160 --> 0:07:37.400 they're cutting a lot of risk assets. They're really going 0:07:37.440 --> 0:07:40.680 to a more focused wealth manager. It does seem like 0:07:40.800 --> 0:07:43.520 that that could be more of a possibility. There's you know, 0:07:43.560 --> 0:07:48.000 there's still a systemically important bank based on you know, 0:07:48.360 --> 0:07:50.880 some of the historical metrics, but you know, the way 0:07:50.920 --> 0:07:54.520 that the business looks going forward, is there an opportunity? 0:07:54.760 --> 0:07:56.800 You know that. But then the other side of that 0:07:57.000 --> 0:08:02.720 is UBS has been gaining massive flows while kred Swiss 0:08:02.760 --> 0:08:05.240 has been having outflows, and neither one is going to 0:08:05.320 --> 0:08:09.080 point to or confirm or deny what's happening on the 0:08:09.080 --> 0:08:12.080 competitive front, but it seems pretty clear. But the flows 0:08:12.120 --> 0:08:15.080 are going to UBS anyway, So that the question is, 0:08:15.800 --> 0:08:17.760 you know, is someone going to step in and buy 0:08:18.680 --> 0:08:21.320 buy this bank or will they just try to continue 0:08:21.360 --> 0:08:26.800 to win share in other ways Swiss National Bank, Allison, 0:08:27.280 --> 0:08:30.240 are you surprised that the Swiss National Swiss National Bank 0:08:30.280 --> 0:08:35.080 hasn't either made a forceful statement of support or maybe 0:08:35.120 --> 0:08:37.760 even done something more like take some actions amount But 0:08:37.800 --> 0:08:39.440 you know, I don't know what that action would be. 0:08:39.480 --> 0:08:42.320 But are you surprised we haven't seen that yet from them? 0:08:42.360 --> 0:08:44.840 I think that, you know, we in the US find 0:08:44.880 --> 0:08:48.280 it surprising. I think because it is a very different 0:08:49.200 --> 0:08:52.240 regulator right than the FED. And I think that, um, 0:08:52.960 --> 0:08:55.520 you know, from everything that we know and hear about it, 0:08:55.840 --> 0:09:00.280 they just tend to operate a little bit differently, um 0:09:00.720 --> 0:09:04.480 Whereas I think the FED is much more known for 0:09:04.520 --> 0:09:06.680 coming out and having a voice in the market and 0:09:06.840 --> 0:09:10.600 addressing things on so um. And there is a difference between, 0:09:11.040 --> 0:09:13.360 you know, if you look at sort of the universe, 0:09:14.120 --> 0:09:18.000 UM that that they're overseeing the issue with the credit 0:09:18.000 --> 0:09:20.040 suite and UBS. I think versus some of the US 0:09:20.120 --> 0:09:24.319 banks is that if you look at historically their assets 0:09:24.320 --> 0:09:27.600 and their businesses as a multiple of the SPIS economy, 0:09:27.600 --> 0:09:31.200 they're much more important to the Spis economy just these 0:09:31.240 --> 0:09:36.040 two banks. Um, so one would one would think that 0:09:36.920 --> 0:09:39.960 something would be coming again, since no one really knows 0:09:40.000 --> 0:09:43.040 what that might be, and you know, we we don't 0:09:43.080 --> 0:09:45.280 know what's going on between behind the scenes and the 0:09:45.320 --> 0:09:50.480 conversations and um, you know, if there's if if they're 0:09:50.480 --> 0:09:53.160 you know, what the conversations are between them and the 0:09:53.200 --> 0:09:57.359 credit suite and anything else. Yeah, because when I think Switzerland, 0:09:57.400 --> 0:10:01.680 I think cheese. I think I mean, yeah, yeah, chocolate 0:10:01.720 --> 0:10:03.640 and banking. So I don't know where the Swiss National 0:10:03.640 --> 0:10:05.800 Bank is, all right, Alison, thanks so much for joining us. 0:10:05.800 --> 0:10:09.280 Alison Williams, Senior Global Banks analyst at Bloomberg Intelligence. Just 0:10:09.320 --> 0:10:11.040 trying to get the latest on this credit Swiss thing. 0:10:11.120 --> 0:10:13.080 I mean, I used to work there. Man. When I 0:10:13.120 --> 0:10:16.840 was there, we were killing it, you know. But the 0:10:16.880 --> 0:10:21.480 institution before my time and since has always always had 0:10:21.720 --> 0:10:26.520 just a real blind spot for controls, you know, and 0:10:27.280 --> 0:10:30.200 bad things happen more so more frequently there than in 0:10:30.240 --> 0:10:34.559 other places. It seems. We want to break down how 0:10:34.720 --> 0:10:37.760 can those retail sales numbers looked? And how the consumers 0:10:37.800 --> 0:10:40.240 looking and how just retailers in general are looking. And 0:10:40.320 --> 0:10:43.360 when you want to do that, there's only one place 0:10:43.400 --> 0:10:45.719 to go, and that's Dana Telsea, chief Research Officer and 0:10:45.880 --> 0:10:49.719 CEO of Telsey Advisory Group. Dana, let's start with those 0:10:49.720 --> 0:10:54.720 retail sales numbers this morning. What were your takeaways I 0:10:54.800 --> 0:10:57.040 think overall? And first of all, thank you for having me. 0:10:57.280 --> 0:11:00.480 I think the takeaways overall for retail sales been mind 0:11:00.520 --> 0:11:03.839 you had January revised upward, and most of the retailers 0:11:03.880 --> 0:11:07.240 I'm talking about talking to talked about the surprise and 0:11:07.280 --> 0:11:11.640 the strength in January as frankly, goods and markdown cleared 0:11:11.679 --> 0:11:14.680 out the beginning of February. I mean, definitely a little 0:11:14.720 --> 0:11:18.600 bit wishywashy, so not totally surprised. February is not a 0:11:18.679 --> 0:11:21.400 very significant month. You had a lot of strengths in 0:11:21.520 --> 0:11:24.720 department stores in the month of January, part of that 0:11:24.840 --> 0:11:28.520 coming from the increase in social Security payments that the 0:11:28.600 --> 0:11:31.320 baby boomers were seeing to like the shop at some 0:11:31.440 --> 0:11:34.720 of the department stores. And my takeaway is that we 0:11:34.760 --> 0:11:38.120 are seeing consumers slowed down in goods. We had been 0:11:38.160 --> 0:11:40.880 seeing it. We're going to continue to see it inventory 0:11:41.080 --> 0:11:44.720 levels have gotten clean, and the uncertainty in the environment 0:11:45.160 --> 0:11:49.080 feeds through to overall consumer spending. Dana, when we talk 0:11:49.120 --> 0:11:51.560 about what twenty twenty three was supposed to kind of hail. 0:11:51.840 --> 0:11:54.440 I think it was still a couple of months of 0:11:54.480 --> 0:11:57.760 markdowns and clearances, and we weren't quite done with that era. 0:11:58.520 --> 0:12:01.360 Now that we perhaps are looking at the macroeconomic environment 0:12:01.520 --> 0:12:04.480 where easing is on the table, is that still the case. 0:12:07.440 --> 0:12:09.760 I think overall we're still going to see a challenge 0:12:09.800 --> 0:12:13.480 first u first quarter, and second quarter maybe like that too. 0:12:13.920 --> 0:12:17.200 I think overall, whether it's the level of traffic, whether 0:12:17.200 --> 0:12:21.880 it's product returns, even the normalization of increases that luxury 0:12:21.920 --> 0:12:25.760 goods is occurring right now. So overall, the guidance for 0:12:26.080 --> 0:12:30.200 particularly the first quarter is coming in below consensus. But 0:12:30.280 --> 0:12:34.080 you know what, I think whatever that consensus was, I 0:12:34.160 --> 0:12:37.520 think the whisper expectations out there was for it to 0:12:37.520 --> 0:12:41.520 be lower. If you can manage your expenses, keep your 0:12:41.559 --> 0:12:46.079 inventories levels lean in order to take advantage of whenever 0:12:46.160 --> 0:12:48.960 the consumer feels a little bit more certain that some 0:12:49.200 --> 0:12:51.880 leverage to the bottom line is the focus, and we're 0:12:51.920 --> 0:12:55.200 definitely seeing it. Cosmetics is one of the areas that 0:12:55.200 --> 0:12:58.680 that's working. It seems like there's a pickup and experiential 0:12:58.720 --> 0:13:03.480 with restaurants. The apparel part is a bit more challenge. Now, Dana, 0:13:03.760 --> 0:13:08.360 what are you the companies telling you about China reopening 0:13:08.480 --> 0:13:10.719 reopening faster than people thought. I believe the US is 0:13:10.760 --> 0:13:14.560 going to loosen pretty significantly the visa restrictions, the vaccine 0:13:14.559 --> 0:13:18.920 restrictions for Chinese travelers. On the luxury side, that's going 0:13:19.000 --> 0:13:23.839 to be a big, big plus. It is. And how 0:13:23.880 --> 0:13:25.520 did you know that? We just came out with a 0:13:25.640 --> 0:13:29.360 report on Monday all about the China reopening and who 0:13:29.440 --> 0:13:35.880 particularly benefits. So your timing, frankly, couldn't be more perfect, 0:13:36.160 --> 0:13:39.240 because you're exactly right. It does benefit luxury And if 0:13:39.280 --> 0:13:41.719 you think of what we've been seeing now, we've been 0:13:41.760 --> 0:13:45.360 seeing certainly some improvement levels, whether it was companies like 0:13:45.559 --> 0:13:49.600 Tapestry or LVMH. Who's talking about the rebound and the 0:13:49.600 --> 0:13:52.960 reopening of China? That who we're hearing about it. Who 0:13:53.040 --> 0:13:58.240 benefits It's LVMH given the diversification their portfolio, It's Urmez, 0:13:58.400 --> 0:14:01.959 It's Richmond given the penetration and luxury goods that they 0:14:02.000 --> 0:14:05.720 have right now. So I'm excited about how China reopens 0:14:05.760 --> 0:14:08.640 to the world, But there's two other elements just to 0:14:08.720 --> 0:14:11.880 note about this China reopening. Let's talk about what the 0:14:11.920 --> 0:14:15.720 travels look like. In twenty nineteen, China had over one 0:14:15.800 --> 0:14:19.640 hundred and fifty million outbound travelers who spent two hundred 0:14:19.680 --> 0:14:23.480 and fifty five billion dollars to two nineteen. The savings 0:14:23.480 --> 0:14:27.440 of Chinese consumers rose two point six trillion dollars in 0:14:27.520 --> 0:14:31.480 twenty twenty two. So exactly like you said, if they 0:14:31.600 --> 0:14:34.040 begin to travel, even in the second half of the year, 0:14:34.400 --> 0:14:38.320 they will be a big benefit to retail sales. Tina. 0:14:38.480 --> 0:14:40.240 When we're talking about the China story, I feel like 0:14:40.280 --> 0:14:42.200 we also have talked about other regions of the world 0:14:42.400 --> 0:14:45.480 to what extent. Is the Middle East becoming a more 0:14:45.560 --> 0:14:48.680 and more important region for some of those luxury names. 0:14:51.160 --> 0:14:53.800 So when you think about the Middle East overall, it 0:14:53.920 --> 0:14:57.000 is becoming more important. But when you think about where 0:14:57.120 --> 0:15:01.760 sales are coming from, where there's companies like LVMH just 0:15:01.920 --> 0:15:04.440 that smallest part of the world, the Middle East and 0:15:04.520 --> 0:15:07.760 some other areas, it's still only seven percent of sales, 0:15:08.080 --> 0:15:11.080 so it's certainly not as significant when you look at 0:15:11.080 --> 0:15:14.160 the carryings of the world to who owned Gucci, it's 0:15:14.240 --> 0:15:18.320 still a relatively small piece of the pious seven percent. Also, 0:15:18.760 --> 0:15:24.000 there's a ways to go. Europe, Asia, North America are 0:15:24.040 --> 0:15:28.080 the areas where is the most beneficial impact. So we 0:15:28.400 --> 0:15:30.560 touched on luxury. How about on the other end of 0:15:30.720 --> 0:15:32.720 the retail spectrum. I'm thinking like the you know, the 0:15:32.840 --> 0:15:36.440 dollar stores and Dollar General and maybe maybe even you 0:15:36.440 --> 0:15:39.720 know Walmart and Targe. If I'm an investor, do I 0:15:39.840 --> 0:15:43.120 feel like, if times get tough, if there's a recession, 0:15:43.360 --> 0:15:47.040 if inflation persists, are we seeing people trading down to 0:15:47.120 --> 0:15:53.440 those types of stores. It's interesting many of the companies 0:15:53.520 --> 0:15:56.600 overall have not said that they've fully seen the trade 0:15:56.640 --> 0:15:59.680 down yet. But yet when you talk to the off pricers, 0:16:00.080 --> 0:16:03.040 the tjxes of the world, whose recent camps were up 0:16:03.120 --> 0:16:06.760 seven percent and we talked about an uptick in apparel 0:16:06.800 --> 0:16:10.080 and the pickup in traffic, Well they're getting they're getting 0:16:10.120 --> 0:16:13.760 that share. I think, like Walmart, Target is definitely planning 0:16:13.760 --> 0:16:17.080 cautiously for twenty twenty three. You'll look at their camp 0:16:17.200 --> 0:16:22.240 guidance of download single digits to upload single digits. Yet 0:16:22.320 --> 0:16:27.360 the margin recovery given Target expects operating income to grow 0:16:27.480 --> 0:16:31.600 double digits in twenty twenty three. That's encouraging. So yes, 0:16:31.640 --> 0:16:33.720 I do think you see the benefits of the trade 0:16:33.760 --> 0:16:36.480 down that way, and you see it in merchandise with 0:16:36.560 --> 0:16:40.080 the newness. You'll look at beauty ALTA, you have ALTA 0:16:40.160 --> 0:16:43.120 and target that should be a benefit. You look at loyalty, 0:16:43.400 --> 0:16:45.880 You look at that target circle. Loyalty member base of 0:16:45.880 --> 0:16:50.200 one hundred million plus today. There's opportunities for improvement and 0:16:50.280 --> 0:16:55.760 continued improvement in conversion at discounters. Dana thirty seconds here 0:16:56.280 --> 0:16:58.240 talks us a little bit about card spend. Are people 0:16:58.320 --> 0:17:01.320 still willing to spend on their credit cards or are 0:17:01.400 --> 0:17:04.520 we kind of looking at people buying from their savings 0:17:07.160 --> 0:17:09.200 a little bit buying from their savings at the lowered 0:17:09.200 --> 0:17:12.840 to middle income level. Credit card data has become a 0:17:12.920 --> 0:17:15.960 little bit more cautious lightly, and we're seeing a little 0:17:15.960 --> 0:17:18.440 bit of an uptick in some of those dead dats. 0:17:19.080 --> 0:17:20.679 All right, Danny, thank you so much for joining us. 0:17:20.680 --> 0:17:24.960 We really appreciate getting your perspective on all things retail. 0:17:25.240 --> 0:17:29.400 Danta Telsey, chief Research Officer and CEO of Telsey Advisory Group. 0:17:29.400 --> 0:17:31.560 Before that, she was a senior managing director at bear 0:17:31.640 --> 0:17:34.920 Stearns and chief was a former analyst at a firm 0:17:34.960 --> 0:17:37.520 called c J. Lawrence. And if you're of a certain generation, 0:17:38.240 --> 0:17:43.080 you know c J. Lawrence. You want to get right 0:17:43.119 --> 0:17:45.120 over to those regional banks and get back to see 0:17:45.480 --> 0:17:47.520 what has really been a big, big issue for this 0:17:47.560 --> 0:17:50.240 market over the last week or so with some of 0:17:50.280 --> 0:17:53.520 these failures of some of these small regional banks. Herman Chan, 0:17:53.680 --> 0:17:57.800 senior analyst US Regional Banks with Bloomberg Intelligence, joins a program. Also, 0:17:57.800 --> 0:18:00.280 we have Arnold Kakuta. He is credit analysts and we're 0:18:00.320 --> 0:18:04.159 intelligence focusing on the banks. Arnold, want to start with 0:18:04.200 --> 0:18:06.240 you because we were just talking to Katie Greifeld and 0:18:06.280 --> 0:18:09.239 she was talking with the source Anastasia Amarosso over at 0:18:09.240 --> 0:18:12.760 I Capital, and Anastasia was saying, hey, you gotta take 0:18:12.760 --> 0:18:14.560 a look at some of these bank bonds. There's some 0:18:14.600 --> 0:18:17.480 real quality out there and they're trading it very effective 0:18:17.600 --> 0:18:20.919 or very attractive yields it there. What are you seeing 0:18:21.040 --> 0:18:23.480 on the credit side of some of the regional banks 0:18:23.480 --> 0:18:27.520 out there, Arnold, Yeah, I mean definitely yeah. If if 0:18:27.800 --> 0:18:29.960 the storm passes and then you know, we got another 0:18:30.000 --> 0:18:33.359 curveball today with creditsis you know, having some issues and 0:18:33.520 --> 0:18:36.840 kind of bringing some you know, counterparty risk issues, you know, 0:18:36.880 --> 0:18:39.399 to to the bigger banks here. But uh, yeah, I 0:18:39.400 --> 0:18:41.800 think it's still not over though, right, Um you had, 0:18:41.920 --> 0:18:44.760 um what is it? I think Moody's h SMP coming 0:18:44.800 --> 0:18:48.479 in with a downgrade to um FRC you know, uh 0:18:48.680 --> 0:18:52.440 doubt from AAA minus to junk rating. Right, So, um, 0:18:52.480 --> 0:18:55.440 you know there's still definitely concerns on the deposit flow 0:18:55.520 --> 0:18:59.800 out risks, UM, the deposit out outflow risk and uh yeah, 0:19:00.080 --> 0:19:02.119 you know we might get an update, you know, one 0:19:02.119 --> 0:19:04.600 of these guys report quarterly earnings and saying, you know, 0:19:04.800 --> 0:19:07.360 do they have to tap this new you know, bank 0:19:07.400 --> 0:19:09.920 funding facility and whatnot. So I think, you know, there's 0:19:09.920 --> 0:19:12.200 still some risk out there, but you know, if you 0:19:12.280 --> 0:19:14.879 believe that things may stabilize and some of the bigger 0:19:14.880 --> 0:19:18.040 players may benefit. I you know, we got the news 0:19:18.040 --> 0:19:20.680 that b of A got fifteen billion of depolsits. You 0:19:20.680 --> 0:19:23.320 know probably you know, if that's the case, then JP 0:19:23.440 --> 0:19:26.160 Morgan probably got a lot more right, But there's still 0:19:26.160 --> 0:19:27.880 things out there that might be kind of a little 0:19:27.880 --> 0:19:31.399 bit dicey. Herman hop on into this conversation because in 0:19:31.440 --> 0:19:34.199 addition to all of this kind of craziness happening in 0:19:34.200 --> 0:19:35.680 the bond market, and of course some of these bank 0:19:35.720 --> 0:19:39.159 bonds spread. First Republic, one of the regional banks we 0:19:39.160 --> 0:19:44.159 were following getting downgraded today. Why there's a lot of 0:19:44.200 --> 0:19:48.000 asserts a new with their positive base. Management had an 0:19:48.040 --> 0:19:54.119 opportunity to discuss that when they've been on media reports 0:19:54.280 --> 0:19:59.639 and have been a bit avoiding the matter. So until 0:19:59.680 --> 0:20:03.240 we some more clarity on where deposits stand, there's going 0:20:03.320 --> 0:20:07.040 to be some uncertainty with the name. I do think 0:20:07.119 --> 0:20:12.520 that the liquidity facility that arnoldists articulated does shield them 0:20:12.560 --> 0:20:16.159 from some issues in terms of managing the balance sheets. 0:20:16.200 --> 0:20:20.880 But longer term is what happens with deposits and when 0:20:20.960 --> 0:20:25.480 can they stabilize and move on? So that's the underlying 0:20:25.520 --> 0:20:29.640 big question that the industry is trying to figure out 0:20:29.720 --> 0:20:33.280 right now. So Herman, I'm looking at the SP five 0:20:33.359 --> 0:20:37.600 hundred regional index here, stock index down thirty two percent 0:20:37.800 --> 0:20:40.919 year to date, down forty eight percent on a trailing 0:20:40.960 --> 0:20:44.080 twelve month basis. That's telling me that the market thinks 0:20:44.600 --> 0:20:47.520 this is more than just a blip. There's something fundamental 0:20:47.560 --> 0:20:51.280 out there. I know yesterday you did not think it 0:20:51.440 --> 0:20:54.480 was systemic per se. Right, has anything changed in twenty 0:20:54.480 --> 0:20:57.480 four hours. There's just a lot of them start to 0:20:57.520 --> 0:21:03.600 need in the marketplace, things tend to appear without notice. 0:21:04.160 --> 0:21:08.480 You've Arnold mentioned the court squee situation. That doesn't help confidence, 0:21:09.720 --> 0:21:15.240 and the there's a lot of uncertainty with where deposits 0:21:15.240 --> 0:21:20.320 are going, what happens with bank balance sheets, and where 0:21:20.359 --> 0:21:25.520 interest rates are going, and the economic repercussions of the 0:21:25.560 --> 0:21:29.720 bank fallouts, because if banks aren't going to lend because 0:21:29.760 --> 0:21:31.560 the posits are flowing out of the system, that has 0:21:31.760 --> 0:21:35.080 very strong implications for the future growth of the economy 0:21:35.160 --> 0:21:38.760 because banks are are scared at this point, so there 0:21:39.080 --> 0:21:43.000 will be some you know, domino effect of what's going on. 0:21:43.080 --> 0:21:46.080 So that's that's something that that is adding to the uncertainty. 0:21:46.200 --> 0:21:49.360 Well Herman, in addition to just some of the uncertaty 0:21:49.400 --> 0:21:51.320 that you're seeing. I thought it was interesting that Ken 0:21:51.400 --> 0:21:55.480 Griffin of Citadel bought a steak Western Alliance Bank coort 0:21:55.600 --> 0:21:58.720 w AL. The stock is down then, even though it 0:21:58.760 --> 0:22:00.480 was higher, I want to say, by like eight or 0:22:00.560 --> 0:22:04.200 nine percent in the pre market. Why that specific bank, 0:22:04.400 --> 0:22:08.000 Why are they not facing the same scrutiny or same 0:22:08.080 --> 0:22:12.760 downgrades as First Republic Yeah, I think Western Alliance is 0:22:12.760 --> 0:22:16.080 a bank that has historically been pretty well managed, low 0:22:16.119 --> 0:22:21.680 credit risk. It operates in the California, Arizona, Nevada market, 0:22:21.800 --> 0:22:25.360 so it's sort of tangential to what SPB does. They 0:22:25.400 --> 0:22:29.240 did buy a bank that does very much the same 0:22:29.280 --> 0:22:31.919 focus ass would be with startups in venture capital. So 0:22:32.280 --> 0:22:35.480 that's why they were initially lumped in. But the manager 0:22:35.560 --> 0:22:38.240 team has been very strong and they've they've come out 0:22:38.280 --> 0:22:42.919 with pretty good updates in terms of where they stand 0:22:43.840 --> 0:22:47.119 from a liquidity standpoint. So i'd point to that, Hey, Arnold, 0:22:47.560 --> 0:22:50.880 as a credit analyst, Um, what are you really looking 0:22:50.920 --> 0:22:55.920 at when you analyze a bank security? There? I mean, 0:22:56.000 --> 0:22:58.000 is it give us a sense of what you're looking 0:22:58.000 --> 0:23:02.320 at and how is it kind of look today? Yeah, 0:23:02.359 --> 0:23:05.399 So you know, traditionally we look at, you know, the 0:23:05.480 --> 0:23:09.439 loan book, how safe are the loans and you know, um, 0:23:09.640 --> 0:23:12.320 in terms of from that standpoint, right, the traditional bank 0:23:12.440 --> 0:23:17.280