1 00:00:02,920 --> 00:00:05,040 Speaker 1: Thank you so much for joining us on this special 2 00:00:05,160 --> 00:00:08,879 Speaker 1: Labor Day edition of Bloomberg Daybreak. US markets are closed 3 00:00:08,920 --> 00:00:12,120 Speaker 1: for the holiday. I'm Nathan Hager coming up this hour 4 00:00:12,240 --> 00:00:15,040 Speaker 1: with summer all but in the rear view mirror, what's 5 00:00:15,080 --> 00:00:17,440 Speaker 1: the outlook for stocks at the end of a volatile 6 00:00:17,560 --> 00:00:20,640 Speaker 1: year for equities? We have a special roundtable with Lori 7 00:00:20,760 --> 00:00:25,000 Speaker 1: Calvacina of RBC Capital Markets and Invesco Global market strategist 8 00:00:25,000 --> 00:00:28,120 Speaker 1: Brian Levitt. Plus we look at how retailers are faring 9 00:00:28,160 --> 00:00:31,280 Speaker 1: with school back in session, when we'll speak with Bert Flickinger, 10 00:00:31,640 --> 00:00:35,960 Speaker 1: Managing director at Strategic Resource Group. But first we focus 11 00:00:36,000 --> 00:00:39,440 Speaker 1: on the economy because September will be a very busy month. 12 00:00:39,680 --> 00:00:42,000 Speaker 1: On Friday, we get the jobs report for the month 13 00:00:42,000 --> 00:00:44,160 Speaker 1: of August and that will be followed by a FED 14 00:00:44,280 --> 00:00:48,280 Speaker 1: rate decision September seventeenth. Let's get a preview with two 15 00:00:48,280 --> 00:00:51,960 Speaker 1: of our favorites. Wells Fargo Senior economist Sarah House is 16 00:00:51,960 --> 00:00:55,480 Speaker 1: with us along with Jennifer Lee, senior economist at BMO 17 00:00:55,680 --> 00:00:58,560 Speaker 1: Capital Markets. What better day than Labor Day to talk 18 00:00:58,600 --> 00:01:00,920 Speaker 1: about the labor market. Thanks so much for being with us, 19 00:01:00,920 --> 00:01:02,760 Speaker 1: and of course we are just a little more than 20 00:01:02,760 --> 00:01:06,600 Speaker 1: a week out from j Powell's comments at Jackson Hole 21 00:01:06,680 --> 00:01:10,360 Speaker 1: with his view on labor. Here's what the Chairman had 22 00:01:10,360 --> 00:01:10,720 Speaker 1: to say. 23 00:01:10,880 --> 00:01:13,520 Speaker 2: Overall, while the labor market appears to be in balance, 24 00:01:13,760 --> 00:01:16,240 Speaker 2: it is a curious kind of balance that results from 25 00:01:16,240 --> 00:01:19,440 Speaker 2: a marked slowing in both the supply of and demand 26 00:01:19,480 --> 00:01:24,480 Speaker 2: for workers. This unusual situation suggests that downside risks to 27 00:01:24,520 --> 00:01:25,680 Speaker 2: employment are rising. 28 00:01:26,000 --> 00:01:28,760 Speaker 1: So, Sarah, I'll start with you, how should we be 29 00:01:28,840 --> 00:01:30,360 Speaker 1: looking at the labor market right now? 30 00:01:30,520 --> 00:01:30,679 Speaker 3: Right? 31 00:01:30,720 --> 00:01:33,679 Speaker 4: So, I agree with Chairpwel that right now it's in balance, 32 00:01:33,720 --> 00:01:36,759 Speaker 4: but it is a very fragile balance, and we continue 33 00:01:36,760 --> 00:01:40,480 Speaker 4: to see I think demand for workers remain pretty tepid, 34 00:01:40,640 --> 00:01:43,720 Speaker 4: and so that leave supply is really the big question 35 00:01:43,840 --> 00:01:47,760 Speaker 4: mark in terms of whether we can maintain this balance 36 00:01:48,040 --> 00:01:51,480 Speaker 4: or whether we're going to see the jobs market soften 37 00:01:51,560 --> 00:01:53,680 Speaker 4: in a way that becomes more concerning. 38 00:01:54,440 --> 00:01:57,880 Speaker 1: So, Jennifer, is that your view as well, is supply 39 00:01:58,080 --> 00:02:01,080 Speaker 1: the issue when it comes to where things stand in 40 00:02:01,120 --> 00:02:01,840 Speaker 1: the labor market. 41 00:02:02,160 --> 00:02:04,600 Speaker 5: It's sort of both. You know, I hate to sound weak, 42 00:02:04,880 --> 00:02:06,480 Speaker 5: you know, like a wishuld watching when I'm saying that, 43 00:02:06,520 --> 00:02:09,680 Speaker 5: But I'm also very curious about demand. Just given that 44 00:02:09,720 --> 00:02:12,440 Speaker 5: we know that businesses have been very hesitant to make 45 00:02:12,480 --> 00:02:17,000 Speaker 5: any real hiring firing decisions on the labor front, just 46 00:02:17,120 --> 00:02:20,639 Speaker 5: until a lot of this uncertainty over trade and over 47 00:02:20,720 --> 00:02:22,840 Speaker 5: inflation passes through. And we see that from all the 48 00:02:22,840 --> 00:02:25,040 Speaker 5: different surveys that are out there. And this is why 49 00:02:25,040 --> 00:02:27,440 Speaker 5: I think it's also super important to you know, sort 50 00:02:27,480 --> 00:02:28,760 Speaker 5: of look at this with a bit of a more 51 00:02:28,760 --> 00:02:31,480 Speaker 5: of a skeptical live than usual, just given all the 52 00:02:31,520 --> 00:02:34,160 Speaker 5: hoopla over the report over the last month, but look 53 00:02:34,200 --> 00:02:35,760 Speaker 5: at all the different surveys that are coming out in 54 00:02:35,800 --> 00:02:39,280 Speaker 5: terms including job openings, of the different isms, just to 55 00:02:39,320 --> 00:02:42,200 Speaker 5: see what the preaching managers are saying about hiring. So 56 00:02:43,040 --> 00:02:45,320 Speaker 5: I think it's I'm kind of leaning toward demand as well. 57 00:02:46,160 --> 00:02:49,919 Speaker 1: Interesting that you bring up the hoopla around last month's report. 58 00:02:49,960 --> 00:02:52,640 Speaker 1: Of course, this is going to be the first non 59 00:02:52,680 --> 00:02:55,760 Speaker 1: farm payrolls report since the firing of the head of 60 00:02:55,800 --> 00:02:59,200 Speaker 1: the Bureau of Labor Statistics. It does raise the questions, Sarah, 61 00:02:59,280 --> 00:03:02,840 Speaker 1: about whether there is going to be some trust issue 62 00:03:02,919 --> 00:03:05,840 Speaker 1: with this report coming out later on this week. 63 00:03:06,680 --> 00:03:09,280 Speaker 4: I think there could certainly could be, and I think 64 00:03:09,320 --> 00:03:12,079 Speaker 4: this could challenge the response rates even further. So the 65 00:03:12,560 --> 00:03:16,320 Speaker 4: declining trend in at least the first response to the 66 00:03:16,360 --> 00:03:20,839 Speaker 4: CEO survey has been behind. What's why we're getting such 67 00:03:21,000 --> 00:03:23,280 Speaker 4: large monthly revisions. If you look at the by the 68 00:03:23,280 --> 00:03:25,720 Speaker 4: third release, it's getting back up to a little over 69 00:03:25,800 --> 00:03:29,160 Speaker 4: ninety percent where it has been. But if you have 70 00:03:29,480 --> 00:03:33,280 Speaker 4: public authority saying that this data can't be trusted, that 71 00:03:33,360 --> 00:03:36,040 Speaker 4: just decreases the incentive for businesses to respond. And so 72 00:03:36,080 --> 00:03:38,960 Speaker 4: I think it could actually amplify some of the volatility 73 00:03:39,040 --> 00:03:41,120 Speaker 4: and scope of revisions that we see. 74 00:03:41,320 --> 00:03:43,360 Speaker 1: What's your trust level in the data right now? 75 00:03:43,440 --> 00:03:43,680 Speaker 6: Jen? 76 00:03:44,440 --> 00:03:47,480 Speaker 5: Ever since COVID, you know, we know that the responsiblites 77 00:03:47,520 --> 00:03:52,760 Speaker 5: have been lower than usual, but revisions in general are 78 00:03:52,800 --> 00:03:56,000 Speaker 5: not new. And I'm going to refer to the latest 79 00:03:56,000 --> 00:03:59,840 Speaker 5: GDP report for the second quarter. The headline wasn't changed 80 00:03:59,880 --> 00:04:02,400 Speaker 5: to much, but the details, you know, it's very interesting 81 00:04:02,520 --> 00:04:04,800 Speaker 5: to see all the details and all the revisions to 82 00:04:04,880 --> 00:04:08,080 Speaker 5: business investment. So you know that was is going to 83 00:04:08,120 --> 00:04:10,240 Speaker 5: raise some questions about the quality of the data, but 84 00:04:10,320 --> 00:04:12,040 Speaker 5: I think it's just has to do with you know, 85 00:04:12,040 --> 00:04:15,240 Speaker 5: how many people we have on staff to calculate and 86 00:04:15,280 --> 00:04:19,840 Speaker 5: collect and all these surveys responses and put and put 87 00:04:19,839 --> 00:04:22,960 Speaker 5: them through and of course, again having the survey responders 88 00:04:24,160 --> 00:04:26,400 Speaker 5: taking a little bit longer to respond, you know, just 89 00:04:26,440 --> 00:04:28,919 Speaker 5: sort of puts a lot of questions into the data. 90 00:04:28,960 --> 00:04:30,479 Speaker 5: So this is why, again we have to look at 91 00:04:30,520 --> 00:04:33,280 Speaker 5: all the data around jobs, all the data around the 92 00:04:33,320 --> 00:04:36,119 Speaker 5: economy to make you know some you know some better 93 00:04:36,560 --> 00:04:38,360 Speaker 5: I guess calls on where we see growth. 94 00:04:38,520 --> 00:04:40,920 Speaker 1: Well, let's talk about some of that data that you 95 00:04:41,000 --> 00:04:44,600 Speaker 1: all are looking at. Sarah, what's going into your forecast 96 00:04:44,640 --> 00:04:46,719 Speaker 1: when it comes to how you see the labor market 97 00:04:46,800 --> 00:04:47,200 Speaker 1: right now? 98 00:04:47,880 --> 00:04:50,200 Speaker 4: Yes, so I'm looking at a lot of the demand indicators, 99 00:04:50,279 --> 00:04:53,160 Speaker 4: like some of the pmis that Jen mentioned, so the ISM, 100 00:04:53,240 --> 00:04:54,920 Speaker 4: but I also like to look at the regional said 101 00:04:55,360 --> 00:04:58,679 Speaker 4: survey pmis, and what they were showing over the past 102 00:04:58,680 --> 00:05:02,200 Speaker 4: couple of months is that the degree of hiring remains 103 00:05:02,279 --> 00:05:06,080 Speaker 4: very weak. They're kind of hovering around contraction territory, just 104 00:05:06,720 --> 00:05:09,720 Speaker 4: right between positive and negative, but they haven't really gotten worse. 105 00:05:09,760 --> 00:05:12,240 Speaker 4: Same thing if you look at the NFIB small business 106 00:05:12,320 --> 00:05:14,719 Speaker 4: hiring plans in next they've actually picked up a little 107 00:05:14,720 --> 00:05:18,520 Speaker 4: bit since the spring, kind of right around the Liberation Day. 108 00:05:18,800 --> 00:05:21,320 Speaker 4: And so I think when you look at that, the 109 00:05:21,360 --> 00:05:24,400 Speaker 4: fact that layoffs remain very low if you're looking at 110 00:05:24,400 --> 00:05:28,039 Speaker 4: initial claims that there actually seems to be maybe some 111 00:05:28,160 --> 00:05:30,599 Speaker 4: hints of stability over the past the month or two 112 00:05:30,720 --> 00:05:35,400 Speaker 4: in terms of hiring backdrop, and so I think, well, again, 113 00:05:35,480 --> 00:05:38,760 Speaker 4: you know, lower supply remains a challenge for payroll growth, 114 00:05:38,800 --> 00:05:40,520 Speaker 4: at least on the demand side, it doesn't look like 115 00:05:40,560 --> 00:05:43,520 Speaker 4: conditions have gotten materially worse over the past month or two. 116 00:05:43,880 --> 00:05:45,960 Speaker 1: And in terms of your outlook, Jen, what are you 117 00:05:46,000 --> 00:05:52,880 Speaker 1: looking at. Are we starting to see signs that policy changes, immigration, trade, 118 00:05:53,440 --> 00:05:57,880 Speaker 1: artificial intelligence are starting to have an impact on the 119 00:05:56,640 --> 00:05:58,640 Speaker 1: labor market. 120 00:06:00,120 --> 00:06:01,440 Speaker 5: I think I think they are. And by the way, 121 00:06:01,480 --> 00:06:03,640 Speaker 5: I just want to add to to Sarah's list the 122 00:06:03,680 --> 00:06:06,120 Speaker 5: Conference Sports survey. You know, I used to get, you know, 123 00:06:06,160 --> 00:06:08,520 Speaker 5: super excited when I would be you know, looking at 124 00:06:08,640 --> 00:06:10,720 Speaker 5: the number of people that were raising their hands when 125 00:06:10,760 --> 00:06:12,360 Speaker 5: they're at being asked you know, our job's hard to 126 00:06:12,400 --> 00:06:15,360 Speaker 5: get or our jobs plentiful, And we've sort of noticed 127 00:06:15,600 --> 00:06:17,679 Speaker 5: a little bit more of a deterioration on that front. 128 00:06:17,760 --> 00:06:20,880 Speaker 5: So again, sort of you know, to what Sarah was saying, 129 00:06:21,120 --> 00:06:23,119 Speaker 5: it hasn't changed too much, but we're starting to see 130 00:06:23,160 --> 00:06:26,839 Speaker 5: some softness building up. And certainly I think all these 131 00:06:26,880 --> 00:06:30,760 Speaker 5: policies are having an impact, certainly on the deportation front, 132 00:06:30,800 --> 00:06:34,320 Speaker 5: when we have, you know, the largest largest deportation effort ever, 133 00:06:34,760 --> 00:06:37,160 Speaker 5: and you look at the sectors that are super reliant 134 00:06:37,240 --> 00:06:41,960 Speaker 5: on on these workers. You know, on agriculture is the 135 00:06:42,000 --> 00:06:44,760 Speaker 5: biggest one, but fifty percent of the workers being undocumented 136 00:06:44,800 --> 00:06:48,880 Speaker 5: in constructions like twenty percent, leisure and hospitality about ten percent. 137 00:06:48,960 --> 00:06:52,400 Speaker 5: So I think it's having a big impact on those 138 00:06:52,440 --> 00:06:56,800 Speaker 5: particular sectors and class consequently, we should be although we 139 00:06:56,880 --> 00:06:59,320 Speaker 5: haven't seen too much of an impact on inflation. 140 00:07:00,080 --> 00:07:03,600 Speaker 1: We're speaking with Jennifer Lee, senior economist at Demo Capital Markets, 141 00:07:03,600 --> 00:07:07,680 Speaker 1: as well as WELLS Fargo senior economist Sarah House as 142 00:07:07,680 --> 00:07:10,400 Speaker 1: we look ahead to the jobs report coming out later 143 00:07:10,440 --> 00:07:14,440 Speaker 1: this week, of course a FED decision later on this month. Sarah, 144 00:07:14,480 --> 00:07:17,600 Speaker 1: how important is this Job's report going to be when 145 00:07:17,600 --> 00:07:20,000 Speaker 1: it comes to that FED decision? 146 00:07:21,000 --> 00:07:23,480 Speaker 4: I think even more than inflation. This is the key 147 00:07:23,600 --> 00:07:27,440 Speaker 4: report for whether the Committee decides to walk through the 148 00:07:27,480 --> 00:07:30,360 Speaker 4: door for a September rate cut that Palell opened in 149 00:07:30,440 --> 00:07:34,080 Speaker 4: his Jackson Hole speech. So I think the Committee broadly 150 00:07:34,120 --> 00:07:37,200 Speaker 4: expects some increase in inflation around tariffs. I think the 151 00:07:37,200 --> 00:07:39,560 Speaker 4: base case is still that it doesn't still over into 152 00:07:39,560 --> 00:07:45,280 Speaker 4: services inflation expectations remain anchored. Even in those they're aware 153 00:07:45,320 --> 00:07:47,280 Speaker 4: of the risk that might not happen. So really it 154 00:07:47,320 --> 00:07:50,760 Speaker 4: comes down to is the jobs market hanging in there 155 00:07:51,240 --> 00:07:53,920 Speaker 4: or is there enough weakening where the Fed does need 156 00:07:53,960 --> 00:07:57,600 Speaker 4: to move a little bit more towards neutral posture. So 157 00:07:57,960 --> 00:08:00,400 Speaker 4: the Committee still thinks that a policy is at least 158 00:08:00,400 --> 00:08:03,520 Speaker 4: modestly restrictive, to varying degrees depending on what FED official. 159 00:08:03,640 --> 00:08:06,080 Speaker 4: But I think it really comes down to are we 160 00:08:06,120 --> 00:08:09,040 Speaker 4: seeing signs of the labor market weakening to the point 161 00:08:09,120 --> 00:08:11,800 Speaker 4: where where the FED really needs to step in and 162 00:08:11,840 --> 00:08:15,480 Speaker 4: help cushion cushion the maximum employment side of the mandate. 163 00:08:15,840 --> 00:08:18,080 Speaker 1: You have to wonder, Jen, when we did see that 164 00:08:18,400 --> 00:08:22,200 Speaker 1: second quarter GDP number revised a little bit higher, whether 165 00:08:22,560 --> 00:08:28,080 Speaker 1: policy is as restrictive as some FED voters have said 166 00:08:28,120 --> 00:08:29,600 Speaker 1: it is. What's your view on that? 167 00:08:31,080 --> 00:08:33,440 Speaker 5: So it's interesting when I first saw the second quarter 168 00:08:33,520 --> 00:08:35,480 Speaker 5: GDP report and then, you know, I thought, and some 169 00:08:35,520 --> 00:08:38,320 Speaker 5: of the details, especially in the business investment front, you know, 170 00:08:38,440 --> 00:08:40,440 Speaker 5: sort of tongue in cheek. My first comment was, and 171 00:08:40,440 --> 00:08:43,839 Speaker 5: we're cutting because you know, because it's still is that 172 00:08:43,960 --> 00:08:46,280 Speaker 5: the you know, the the US economy is still resilient, 173 00:08:46,400 --> 00:08:50,320 Speaker 5: is still holding up, And again, as as Sarah pointed out, 174 00:08:50,320 --> 00:08:52,800 Speaker 5: it's all going to come down to this jobs report 175 00:08:52,840 --> 00:08:55,720 Speaker 5: because as vecher Peal said, you know that the downside 176 00:08:55,800 --> 00:08:57,440 Speaker 5: risk is coming from a job So there's going to 177 00:08:57,440 --> 00:09:00,920 Speaker 5: be so much attention paid on that people report. And 178 00:09:00,960 --> 00:09:03,360 Speaker 5: by the way, also I'm very curious to see how 179 00:09:03,520 --> 00:09:06,920 Speaker 5: revisions were going to go, very very curious. 180 00:09:08,120 --> 00:09:10,560 Speaker 1: It was all about the revisions last time around. Is 181 00:09:10,559 --> 00:09:13,400 Speaker 1: that still an issue for you, Sarah. Whether we do 182 00:09:14,160 --> 00:09:18,960 Speaker 1: continue to see these numbers sort of get revised downward 183 00:09:19,000 --> 00:09:22,600 Speaker 1: another surprise once again, potentially, I. 184 00:09:22,520 --> 00:09:26,360 Speaker 4: Think increasingly we're looking at what is the three month 185 00:09:26,400 --> 00:09:29,480 Speaker 4: average rate of employment and really looking at the jobs 186 00:09:29,520 --> 00:09:34,160 Speaker 4: report inclusive of the net revisions, just given that bias 187 00:09:34,200 --> 00:09:38,400 Speaker 4: we've had towards downward revisions over the past couple of years, 188 00:09:38,480 --> 00:09:42,080 Speaker 4: where it's just not as much about the most recent 189 00:09:42,080 --> 00:09:45,280 Speaker 4: print anymore, just given that low initial response rate. But again, 190 00:09:45,400 --> 00:09:47,720 Speaker 4: just the credibility of the data seems to be holding 191 00:09:47,800 --> 00:09:50,360 Speaker 4: up once just if you allow businesses a little bit 192 00:09:50,400 --> 00:09:53,800 Speaker 4: more time to get in. So we'll certainly be paying 193 00:09:53,840 --> 00:09:57,760 Speaker 4: heavily a lot of attention to the net revisions, as 194 00:09:57,920 --> 00:09:59,640 Speaker 4: I think a lot of market participants will be. 195 00:10:00,200 --> 00:10:02,600 Speaker 1: And of course it goes without saying that the Federal 196 00:10:02,640 --> 00:10:05,920 Speaker 1: Reserve is under a lot of pressure to cut interest rates. 197 00:10:05,960 --> 00:10:09,240 Speaker 1: It seems like every other day President Trump is calling 198 00:10:09,360 --> 00:10:13,120 Speaker 1: for that. Jen, how much does that weigh on what 199 00:10:13,120 --> 00:10:14,480 Speaker 1: we could get later this month. 200 00:10:14,720 --> 00:10:17,760 Speaker 5: That's a tough question and tough thing for me to answer. 201 00:10:18,679 --> 00:10:21,560 Speaker 5: You know, I think everyone on the Fed is you know, 202 00:10:21,840 --> 00:10:23,840 Speaker 5: you know, everyone's humans, so I'm sure that this is 203 00:10:24,280 --> 00:10:25,880 Speaker 5: sort of weighing in the back of their heads. But 204 00:10:26,040 --> 00:10:28,559 Speaker 5: you know, everyone is a professional, and everyone knows that 205 00:10:28,559 --> 00:10:30,960 Speaker 5: they're supposed to do that they are going to do 206 00:10:31,040 --> 00:10:34,400 Speaker 5: what they feel is best for the economy. And some 207 00:10:34,920 --> 00:10:37,800 Speaker 5: feel that lower rates are definitely the way to go, 208 00:10:37,840 --> 00:10:40,000 Speaker 5: and they should have been, you know, been cutting earlier. 209 00:10:40,480 --> 00:10:43,480 Speaker 5: And I'm thinking of a couple of you know, voters 210 00:10:43,480 --> 00:10:46,560 Speaker 5: in particular, but not everybody's on board, you know. I 211 00:10:46,600 --> 00:10:49,040 Speaker 5: believe it was Boston's Collins who said that wasn't a 212 00:10:49,080 --> 00:10:51,959 Speaker 5: done deal just yet. So again, it's all going to 213 00:10:52,000 --> 00:10:55,319 Speaker 5: come back down to jobs and what happens with the headline, 214 00:10:55,400 --> 00:10:59,080 Speaker 5: with the jobless rates, with the averages with revisions. Also, 215 00:10:59,480 --> 00:11:02,480 Speaker 5: I also know that that's the average duration of unemployment 216 00:11:02,480 --> 00:11:05,400 Speaker 5: in terms of weeks picked up, has been picking up 217 00:11:05,480 --> 00:11:07,120 Speaker 5: the last couple of months as well, and now they're 218 00:11:07,120 --> 00:11:10,800 Speaker 5: at the highest since twenty twenty two. So you know, 219 00:11:10,920 --> 00:11:14,520 Speaker 5: again it's going to be all about the headline numbers, 220 00:11:14,520 --> 00:11:18,000 Speaker 5: but as well the data, the revisions and the details 221 00:11:18,000 --> 00:11:18,640 Speaker 5: behind the data. 222 00:11:19,440 --> 00:11:21,680 Speaker 1: How much pressure do you think the feed is under 223 00:11:21,679 --> 00:11:24,800 Speaker 1: when it comes to politics. 224 00:11:24,280 --> 00:11:28,720 Speaker 4: Sarah and I think certainly more than we've seen in decades. 225 00:11:28,760 --> 00:11:31,560 Speaker 4: I think just the public nature of it is pretty 226 00:11:31,559 --> 00:11:35,000 Speaker 4: obvious here, and I think what that means for the 227 00:11:35,040 --> 00:11:37,600 Speaker 4: path of rates ahead is I think it's going to 228 00:11:38,240 --> 00:11:41,360 Speaker 4: I think put some questions over the cutting that we 229 00:11:41,400 --> 00:11:43,959 Speaker 4: are likely to see. So if you think of tariffs 230 00:11:44,160 --> 00:11:45,959 Speaker 4: in the classic sense, if it's okay, it's a one 231 00:11:46,000 --> 00:11:49,440 Speaker 4: time increase in prices, it shouldn't lead to persistent inflation. 232 00:11:49,720 --> 00:11:52,840 Speaker 4: Policy is still above estimates of neutral, I think that 233 00:11:52,840 --> 00:11:55,160 Speaker 4: that does support cutting, but I think there's going to 234 00:11:56,880 --> 00:11:59,960 Speaker 4: understand we'd be some questions over what is the committee 235 00:12:00,120 --> 00:12:02,920 Speaker 4: motivation to the extent that we do see cuts later. 236 00:12:03,000 --> 00:12:05,319 Speaker 4: So it's a close yeah, and. 237 00:12:05,240 --> 00:12:06,760 Speaker 1: I think it's safe to say it's probably gonna be 238 00:12:06,800 --> 00:12:09,960 Speaker 1: one of the closest watched of FED decisions coming up 239 00:12:10,040 --> 00:12:12,400 Speaker 1: later this month, as probably all of them are going 240 00:12:12,400 --> 00:12:14,440 Speaker 1: to be for quite some time. Thanks to both of 241 00:12:14,480 --> 00:12:17,480 Speaker 1: you for joining us on this Labor Day. That was 242 00:12:17,760 --> 00:12:22,040 Speaker 1: Sarah House, senior economist at Wells Fargo and BEMO Capital 243 00:12:22,080 --> 00:12:25,679 Speaker 1: Market senior economist Jennifer Lee. And coming up next, we'll 244 00:12:25,679 --> 00:12:28,160 Speaker 1: turn from the economy to the stock market with Lori 245 00:12:28,280 --> 00:12:32,640 Speaker 1: Calvacina of RBC Capital Markets and Brian Levitt at Invesco. 246 00:12:32,720 --> 00:12:36,959 Speaker 1: That says, this special Labor Day edition of Bloomberg Daybreak continues. 247 00:12:37,280 --> 00:12:40,320 Speaker 1: It's twenty minutes past the hour. I'm Nathan Hager, and 248 00:12:40,480 --> 00:12:54,480 Speaker 1: this is Bloomber Thank you so much for joining us 249 00:12:54,520 --> 00:12:57,480 Speaker 1: for this special edition of Bloomberg Daybreak. US markets are 250 00:12:57,520 --> 00:13:00,600 Speaker 1: closed for Labor Day. I'm Nathan Hager, and mature now 251 00:13:00,840 --> 00:13:02,920 Speaker 1: from the future of the economy to the outlook for 252 00:13:02,960 --> 00:13:04,880 Speaker 1: the stock market for the rest of the year. And 253 00:13:04,960 --> 00:13:08,480 Speaker 1: what a year this has been. Stock sorted a record 254 00:13:08,600 --> 00:13:11,360 Speaker 1: highs in August, but it certainly wasn't a smooth ride 255 00:13:11,360 --> 00:13:13,480 Speaker 1: for investors. Of course, we remember the sell off in 256 00:13:13,559 --> 00:13:17,200 Speaker 1: April on the tariff concerns. So to look at what's ahead. 257 00:13:17,280 --> 00:13:19,480 Speaker 1: As we round out this year, we have another special 258 00:13:19,559 --> 00:13:22,920 Speaker 1: roundtable for you joining us now Lori Calvacina, head of 259 00:13:23,000 --> 00:13:27,559 Speaker 1: US Equity strategy at RBC Capital Markets, and Investco Global 260 00:13:27,600 --> 00:13:30,559 Speaker 1: market strategist Brian Levitt. It is great to have both 261 00:13:30,559 --> 00:13:33,719 Speaker 1: of you with us today, and Laurie, I'll start with you. 262 00:13:34,440 --> 00:13:36,559 Speaker 1: Have you seen a year like this before? 263 00:13:37,240 --> 00:13:39,439 Speaker 7: It's a great question, Nathan, thanks for having me, by 264 00:13:39,440 --> 00:13:42,680 Speaker 7: the way, and look, I've been an equity strategy in 265 00:13:42,720 --> 00:13:46,080 Speaker 7: some capacity or another for more than twenty five years now. 266 00:13:46,120 --> 00:13:48,959 Speaker 7: I've never seen a year like this, And to be honest, 267 00:13:48,960 --> 00:13:51,280 Speaker 7: that's something we sort of addressed in our year head Outlook. 268 00:13:51,320 --> 00:13:54,560 Speaker 7: You know, way back last November was that it was 269 00:13:54,880 --> 00:13:58,240 Speaker 7: you know, we thought forecasting was going to be a 270 00:13:58,280 --> 00:14:00,520 Speaker 7: little bit more difficult than usual. This year, there's been 271 00:14:00,520 --> 00:14:02,720 Speaker 7: a lot of twists and turns. I think our approach 272 00:14:02,760 --> 00:14:04,560 Speaker 7: has just been to stay focused on the data and 273 00:14:04,600 --> 00:14:05,520 Speaker 7: call it like we see it. 274 00:14:06,679 --> 00:14:10,719 Speaker 1: Brian, how do you map out a rest of the 275 00:14:10,800 --> 00:14:14,079 Speaker 1: year after all that we've seen in the last eight months. 276 00:14:14,720 --> 00:14:16,920 Speaker 6: The first thing I would say is I don't think 277 00:14:16,960 --> 00:14:19,960 Speaker 6: that it's been so out of the ordinary, simply from 278 00:14:20,040 --> 00:14:23,160 Speaker 6: the perspective of you know, the market had been up 279 00:14:23,240 --> 00:14:26,640 Speaker 6: quite a bit. What tends to derail that this policy uncertainty, 280 00:14:26,680 --> 00:14:30,440 Speaker 6: and so we got that. As we move towards more 281 00:14:30,600 --> 00:14:34,920 Speaker 6: clarity both on trade policy and with the expectation of 282 00:14:34,920 --> 00:14:38,880 Speaker 6: what the Federal Reserve is going to do, the markets recovered, 283 00:14:38,920 --> 00:14:42,240 Speaker 6: and they recovered pretty quickly, so it's not entirely out 284 00:14:42,280 --> 00:14:45,400 Speaker 6: of the ordinary. All the while, growth slowing in the 285 00:14:45,560 --> 00:14:50,480 Speaker 6: US but still resilient, Inflation expectations up a bit, but 286 00:14:50,640 --> 00:14:56,200 Speaker 6: still generally stable enough. So oh, that's a good backdrop 287 00:14:56,320 --> 00:14:59,760 Speaker 6: for markets. I would expect that the markets and the 288 00:15:00,160 --> 00:15:04,000 Speaker 6: or higher on a couple of things. One is going 289 00:15:04,080 --> 00:15:09,360 Speaker 6: to be more fed easing, and there you know, a 290 00:15:09,360 --> 00:15:13,480 Speaker 6: continuation of this easing cycle. What should support broader parts 291 00:15:13,480 --> 00:15:17,120 Speaker 6: of the market. And already you're seeing a broadening of 292 00:15:17,160 --> 00:15:19,960 Speaker 6: the US equity market, certainly from where we were in 293 00:15:20,000 --> 00:15:20,880 Speaker 6: twenty twenty four. 294 00:15:21,320 --> 00:15:23,800 Speaker 1: I have a feeling I might be hearing a bit 295 00:15:23,840 --> 00:15:27,160 Speaker 1: of a contrasting view from you, Laurie, after looking at 296 00:15:27,160 --> 00:15:29,240 Speaker 1: some of your latest notes. I know you've got a 297 00:15:29,360 --> 00:15:32,400 Speaker 1: year end price target on the SMP five hundred a 298 00:15:32,440 --> 00:15:36,240 Speaker 1: little bit below where things sit right now at sixty 299 00:15:36,280 --> 00:15:39,320 Speaker 1: two point fifty. Where's your conviction right now? 300 00:15:39,600 --> 00:15:41,440 Speaker 7: Yeah, you know, and I think where I'm a bit 301 00:15:41,520 --> 00:15:44,840 Speaker 7: differentiated right now. To be honest, Nathan is we feel 302 00:15:44,880 --> 00:15:47,000 Speaker 7: pretty neutral heading into the balance of the year. 303 00:15:47,040 --> 00:15:47,160 Speaker 1: Now. 304 00:15:47,200 --> 00:15:49,600 Speaker 7: We do tend to view our price target as a compass, 305 00:15:49,640 --> 00:15:51,760 Speaker 7: not a GPS, So we always tell people don't get 306 00:15:51,800 --> 00:15:54,920 Speaker 7: overly precise. This is a signaling mechanism for how we 307 00:15:54,960 --> 00:15:56,960 Speaker 7: feel about the path of stocks from here. And I 308 00:15:57,000 --> 00:15:59,400 Speaker 7: would tell you that kind of post labor Day, we 309 00:15:59,480 --> 00:16:01,320 Speaker 7: have been concerned that we could be set up for 310 00:16:01,320 --> 00:16:02,880 Speaker 7: a little bit of a period of chop and there 311 00:16:02,920 --> 00:16:06,200 Speaker 7: are a few reasons for that. One is that seasonally, 312 00:16:06,320 --> 00:16:08,680 Speaker 7: if you go back and you look at September and 313 00:16:08,760 --> 00:16:12,320 Speaker 7: October during the past five years, September has been down 314 00:16:12,400 --> 00:16:14,240 Speaker 7: four out of five and I think October has been 315 00:16:14,280 --> 00:16:16,320 Speaker 7: down three out of five. So you know it, it 316 00:16:16,720 --> 00:16:19,160 Speaker 7: hasn't been one hundred percent, but this is a period 317 00:16:19,480 --> 00:16:22,880 Speaker 7: of the year when we tend to experience some choppiness. Secondly, 318 00:16:23,040 --> 00:16:25,680 Speaker 7: if you look at valuation levels, whether you're looking at 319 00:16:25,720 --> 00:16:28,560 Speaker 7: S and P market cap weighted, whether you're looking at 320 00:16:28,680 --> 00:16:31,200 Speaker 7: the Nasdaq one hundred, which has been you know, kind 321 00:16:31,200 --> 00:16:34,000 Speaker 7: of everybody's favorite growth trade, or if you look at 322 00:16:34,120 --> 00:16:36,240 Speaker 7: even the top ten market cap names in the S 323 00:16:36,320 --> 00:16:38,240 Speaker 7: and P five hundred, which is a really good proxy 324 00:16:38,280 --> 00:16:41,680 Speaker 7: for the AI engine. We've been trading close to levels, 325 00:16:41,920 --> 00:16:44,000 Speaker 7: you know, that have essentially been in line with where 326 00:16:44,000 --> 00:16:46,800 Speaker 7: we peaked out most recently, and the market has been 327 00:16:46,840 --> 00:16:48,720 Speaker 7: you know, we've been kind of creeping up to these 328 00:16:48,720 --> 00:16:51,400 Speaker 7: news highs in August, but have really had a difficult 329 00:16:51,400 --> 00:16:54,480 Speaker 7: time punching through them with any certainty. So, you know, 330 00:16:54,680 --> 00:16:57,200 Speaker 7: I think that we are seeing some valuation pressure start 331 00:16:57,240 --> 00:16:59,880 Speaker 7: to seep in. And frankly, you know, I don't dis 332 00:16:59,880 --> 00:17:02,080 Speaker 7: agree with with Brian on the idea that the FED 333 00:17:02,400 --> 00:17:04,399 Speaker 7: cuts provide a tail end, but I've been getting an 334 00:17:04,400 --> 00:17:07,000 Speaker 7: airfull from clients about this for the past three months, 335 00:17:07,240 --> 00:17:09,360 Speaker 7: so we do think that to some extent, a lot 336 00:17:09,359 --> 00:17:11,240 Speaker 7: of this has already been pre baked into stocks. 337 00:17:11,840 --> 00:17:15,199 Speaker 1: I'm glad you mentioned valuations because you know, whenever we 338 00:17:15,240 --> 00:17:18,480 Speaker 1: see these lofty levels, you record after record broken over 339 00:17:18,520 --> 00:17:22,000 Speaker 1: the last several months, there has been the question about 340 00:17:22,359 --> 00:17:25,960 Speaker 1: whether this market is heading into an asset bubble. So 341 00:17:26,040 --> 00:17:28,639 Speaker 1: I put that question to you, Brian, where do you 342 00:17:29,000 --> 00:17:31,800 Speaker 1: sit when it comes to where this market is valued? 343 00:17:31,880 --> 00:17:32,040 Speaker 3: Right? 344 00:17:32,080 --> 00:17:35,720 Speaker 6: Now the market, the S and P five hundred index 345 00:17:36,280 --> 00:17:40,480 Speaker 6: is overvalued compared to certainly it's long term history, but 346 00:17:40,520 --> 00:17:44,080 Speaker 6: even it's more intermediate term history, which probably makes more 347 00:17:44,160 --> 00:17:46,280 Speaker 6: sense to look at given how the economy and the 348 00:17:46,320 --> 00:17:49,640 Speaker 6: markets have evolved. So, yes, you are trading at an 349 00:17:49,640 --> 00:17:54,280 Speaker 6: elevated valuation. Reality, as everyone knows, is that valuations are 350 00:17:54,280 --> 00:17:57,840 Speaker 6: not timing tools. You'd need to have some catalyst one 351 00:17:57,920 --> 00:18:02,119 Speaker 6: way or the other to to either see valuations improve 352 00:18:02,240 --> 00:18:07,040 Speaker 6: or valuations correct. What's more interesting, perhaps is if you 353 00:18:07,119 --> 00:18:10,080 Speaker 6: look beyond the S and P five hundred, which of 354 00:18:10,080 --> 00:18:13,280 Speaker 6: course is just one way of gaining exposure to the market, 355 00:18:13,640 --> 00:18:17,240 Speaker 6: the valuations are not all that excessive. I tend to 356 00:18:17,280 --> 00:18:20,200 Speaker 6: focus on the median stock in that index, or even 357 00:18:20,240 --> 00:18:25,240 Speaker 6: an equal weight index, where valuations are certainly not that excessive, 358 00:18:25,280 --> 00:18:31,480 Speaker 6: So it is concentrated, to Lori's point, in the top names. Also, 359 00:18:31,520 --> 00:18:34,080 Speaker 6: if you look MidCap, if you look Europe, if you 360 00:18:34,119 --> 00:18:39,000 Speaker 6: look emerging markets, you're also dealing with pretty reasonable valuations. 361 00:18:39,000 --> 00:18:39,440 Speaker 3: So it is. 362 00:18:39,440 --> 00:18:43,040 Speaker 6: Primarily an SMP or a Nasdaq story, and that's a 363 00:18:43,160 --> 00:18:47,040 Speaker 6: call on the AI trade rather than the broader market. 364 00:18:47,280 --> 00:18:51,280 Speaker 6: As far as market's hitting new highs, that's fairly common. 365 00:18:51,320 --> 00:18:54,200 Speaker 6: If you go back to nineteen fifty seven, the stock 366 00:18:54,240 --> 00:18:56,720 Speaker 6: market has hit a new high once every two weeks, 367 00:18:57,200 --> 00:19:02,320 Speaker 6: and actually you've been better off in investing historically on 368 00:19:02,480 --> 00:19:04,520 Speaker 6: days when the market hit a new high than on 369 00:19:04,640 --> 00:19:09,280 Speaker 6: just any random days. So I'd advise investors not to 370 00:19:09,440 --> 00:19:14,120 Speaker 6: be concerned or very simply because markets that are at 371 00:19:14,160 --> 00:19:17,399 Speaker 6: all time highs. You want to think about how market 372 00:19:17,680 --> 00:19:22,520 Speaker 6: cycles and market cycles typically end with a lot of 373 00:19:22,600 --> 00:19:28,920 Speaker 6: leverage policy tightening, bankers tightening lending standards, credit spreads blowing out. 374 00:19:29,119 --> 00:19:30,880 Speaker 6: None of that is happening right now. 375 00:19:31,240 --> 00:19:34,320 Speaker 1: We're speaking with Brian Levitt. He is a global market 376 00:19:34,440 --> 00:19:38,240 Speaker 1: strategist at Invesco, along with Lori Calvacina, the head of 377 00:19:38,359 --> 00:19:43,480 Speaker 1: US Equity strategy at RBC Capital Markets Glad. Brian brought 378 00:19:43,560 --> 00:19:46,640 Speaker 1: up the idea of, you know, small to mid cap 379 00:19:46,760 --> 00:19:48,880 Speaker 1: stocks as well, because of course there is a lot 380 00:19:48,880 --> 00:19:51,280 Speaker 1: of attention, a lot of focus on the S and 381 00:19:51,320 --> 00:19:54,280 Speaker 1: P five hundred. How are you viewing some of those 382 00:19:54,680 --> 00:19:57,879 Speaker 1: broader names in the stock market right now, Laurie. 383 00:19:57,720 --> 00:19:59,920 Speaker 7: So, look, you know, I'm in a former small cap strat, 384 00:20:00,640 --> 00:20:03,240 Speaker 7: so I always enjoy talking about this space and I 385 00:20:03,320 --> 00:20:05,359 Speaker 7: have seen you know, if I look across the street, 386 00:20:05,440 --> 00:20:07,760 Speaker 7: sort of a general impulse to get long the small 387 00:20:07,760 --> 00:20:10,040 Speaker 7: caps or to go overweight. And I want to say, 388 00:20:10,040 --> 00:20:12,960 Speaker 7: you know, we're certainly not bearish here, but we think 389 00:20:13,000 --> 00:20:15,720 Speaker 7: for longer term investors, we like more of a neutral 390 00:20:15,760 --> 00:20:18,320 Speaker 7: stance as opposed to you know, kind of recommending and 391 00:20:18,440 --> 00:20:21,200 Speaker 7: overweight at this point in time. And I think that 392 00:20:21,320 --> 00:20:23,160 Speaker 7: you know, what I feel like I can really see 393 00:20:23,160 --> 00:20:27,520 Speaker 7: pretty clearly in my client conversations, is that the excitement 394 00:20:27,560 --> 00:20:30,520 Speaker 7: over the FED is something that I think is generating 395 00:20:30,600 --> 00:20:32,840 Speaker 7: a lot of interest in the small cap space. And 396 00:20:32,920 --> 00:20:35,880 Speaker 7: you know, as Brian mentioned certain areas like small cap, 397 00:20:35,920 --> 00:20:37,240 Speaker 7: you know, if you kind of get away from those 398 00:20:37,280 --> 00:20:39,480 Speaker 7: biggest market cap names in the S and P five hundred, 399 00:20:39,520 --> 00:20:43,720 Speaker 7: you've got much more reasonable valuations. So as I look at, 400 00:20:43,760 --> 00:20:46,359 Speaker 7: you know, kind of the onset of cuts coming, you 401 00:20:46,359 --> 00:20:48,960 Speaker 7: know exactly when I suppose it's still up for some 402 00:20:49,000 --> 00:20:52,520 Speaker 7: debate at least, but we we do understand the impulse 403 00:20:52,560 --> 00:20:54,800 Speaker 7: for a trade there, right, And we did see in 404 00:20:54,960 --> 00:20:58,600 Speaker 7: August small caps finally broke out of their range that 405 00:20:58,640 --> 00:21:00,359 Speaker 7: they had sort of been pinned in. When you look 406 00:21:00,359 --> 00:21:02,080 Speaker 7: at the Russell relative to the S and P. So 407 00:21:02,119 --> 00:21:03,640 Speaker 7: we did have a you know, kind of a big 408 00:21:03,680 --> 00:21:06,240 Speaker 7: breakout after Jackson Hole, and I think you want to 409 00:21:06,280 --> 00:21:08,560 Speaker 7: respect that momentum and the interest in the rates trade. 410 00:21:08,720 --> 00:21:10,719 Speaker 7: The problem is that if I look since the end 411 00:21:10,760 --> 00:21:14,360 Speaker 7: of twenty twenty three, whenever the market dials up FED dubbishness, 412 00:21:14,359 --> 00:21:16,760 Speaker 7: we see the hedge fund community kind of pile into 413 00:21:16,760 --> 00:21:20,199 Speaker 7: small caps in a very short term oriented way, and 414 00:21:20,200 --> 00:21:22,960 Speaker 7: then that trade tends to fizzle out. So you know, 415 00:21:23,040 --> 00:21:25,000 Speaker 7: when I'm talking to my small cap PM clients or 416 00:21:25,040 --> 00:21:27,520 Speaker 7: longer term investors, I really want to understand the risk 417 00:21:27,560 --> 00:21:29,440 Speaker 7: of it fizzling out again. And I think the reason 418 00:21:29,480 --> 00:21:33,000 Speaker 7: it keeps fizzling out is that the economic backdrop is 419 00:21:33,119 --> 00:21:36,400 Speaker 7: just not strong enough to sustain a longer term out 420 00:21:36,400 --> 00:21:38,840 Speaker 7: performance trade. I don't think the FED alone is enough. 421 00:21:39,240 --> 00:21:41,800 Speaker 7: What we typically see, you know, when the FED you know, 422 00:21:41,920 --> 00:21:44,840 Speaker 7: is cutting, it's around a recession, and that's when you 423 00:21:44,880 --> 00:21:47,040 Speaker 7: get the big long term small cap out performance cycles. 424 00:21:47,040 --> 00:21:49,880 Speaker 7: If you look to the mid nineties adjustments cuts that happened, 425 00:21:50,080 --> 00:21:53,520 Speaker 7: you only got short term small cap out performance. What 426 00:21:53,560 --> 00:21:55,680 Speaker 7: do we see in that economic backdrop right now? Well, 427 00:21:55,680 --> 00:21:58,240 Speaker 7: my economists are looking for one point three percent GDP 428 00:21:58,400 --> 00:22:00,920 Speaker 7: this year in real terms one point six percent next year, 429 00:22:01,119 --> 00:22:04,040 Speaker 7: and consensus has been very similar, maybe a touch higher, 430 00:22:04,040 --> 00:22:06,400 Speaker 7: but it's still stuck in that one to two percent range. 431 00:22:06,720 --> 00:22:09,159 Speaker 7: Average GDP is around two and a half percent, and 432 00:22:09,200 --> 00:22:11,679 Speaker 7: we tend to see small caps really only sustain out 433 00:22:11,680 --> 00:22:13,680 Speaker 7: performance trades when you're above that two and a half 434 00:22:13,760 --> 00:22:17,440 Speaker 7: percent mark. Other indicators you could look at economically would 435 00:22:17,440 --> 00:22:20,640 Speaker 7: be nonfarm payrolls. If you're in an accelerating job growth environment, 436 00:22:20,680 --> 00:22:23,800 Speaker 7: that's good for small relative to large, but stagnant job 437 00:22:23,800 --> 00:22:27,200 Speaker 7: growth or accelerating job growth typically is not. And another 438 00:22:27,200 --> 00:22:30,000 Speaker 7: good barometer is zism manufacturing. It's been stuck in a 439 00:22:30,080 --> 00:22:32,159 Speaker 7: rut for a while now. You really want to focus 440 00:22:32,160 --> 00:22:34,280 Speaker 7: on the direction of travel there when that tends to 441 00:22:34,320 --> 00:22:37,440 Speaker 7: move up. Small caps have an outperformance cycle relative to 442 00:22:37,520 --> 00:22:39,840 Speaker 7: large that can be sustained, but that one has just 443 00:22:40,080 --> 00:22:42,000 Speaker 7: you know, we watch it every month hoping it's going 444 00:22:42,040 --> 00:22:43,840 Speaker 7: to break out, and it just it's just stuck in 445 00:22:43,880 --> 00:22:46,800 Speaker 7: a rut, which I think is a testament to some 446 00:22:46,840 --> 00:22:48,560 Speaker 7: of the kind of mixed vibes that are still out 447 00:22:48,560 --> 00:22:49,200 Speaker 7: there right now. 448 00:22:49,280 --> 00:22:51,199 Speaker 1: Well, I guess there's still a debate about, you know, 449 00:22:51,240 --> 00:22:54,320 Speaker 1: whether the economy is headed into a slow down. We've got, 450 00:22:54,600 --> 00:22:57,280 Speaker 1: you know, GDP indicators showing that we're still above three 451 00:22:57,320 --> 00:23:00,280 Speaker 1: percent at least as far as the second quarter goes. So, Brian, 452 00:23:00,560 --> 00:23:03,440 Speaker 1: what are you thinking as far as whether the economy 453 00:23:03,480 --> 00:23:06,280 Speaker 1: is headed into a slowdown and whether this is all 454 00:23:06,320 --> 00:23:09,119 Speaker 1: about the market expecting that we're going to see rate 455 00:23:09,200 --> 00:23:11,200 Speaker 1: cuts that can continue to keep this rally going. 456 00:23:11,920 --> 00:23:14,359 Speaker 6: I think it's pretty clear that we're heading into a slowdown. 457 00:23:14,359 --> 00:23:17,680 Speaker 6: If you look at leading indicators of the US economy. 458 00:23:17,720 --> 00:23:21,439 Speaker 6: To Lori's point, they're not doing much. They're not doing 459 00:23:21,720 --> 00:23:25,560 Speaker 6: enough to suggest that you're going to see a significant 460 00:23:25,560 --> 00:23:29,400 Speaker 6: breakout in US economic activity. And part of that has 461 00:23:29,440 --> 00:23:33,280 Speaker 6: to do with the tariffs, where we know that that's 462 00:23:33,280 --> 00:23:35,520 Speaker 6: going to slow some activity. We know that's going to 463 00:23:35,560 --> 00:23:39,200 Speaker 6: slow some consumerism, and it's an essence why the Federal 464 00:23:39,240 --> 00:23:42,160 Speaker 6: Reserve is looking to lower rates. The risk to that 465 00:23:42,359 --> 00:23:46,080 Speaker 6: call is, of course, if inflation expectations begin to break 466 00:23:46,119 --> 00:23:48,239 Speaker 6: out and the Fed has to back off of it. 467 00:23:48,359 --> 00:23:50,840 Speaker 6: So I don't think that's going to be the case. 468 00:23:50,920 --> 00:23:55,200 Speaker 6: My expectation is the economy will slow. That slow down 469 00:23:55,320 --> 00:23:58,679 Speaker 6: in the economy will be viewed favorably by the market 470 00:23:58,760 --> 00:24:02,080 Speaker 6: because a little of the bad news is good news mentality, 471 00:24:02,080 --> 00:24:05,320 Speaker 6: where the Federal Reserve will be able to cut rates. 472 00:24:05,680 --> 00:24:10,919 Speaker 6: I agree with Lori's point that in order for these 473 00:24:11,040 --> 00:24:15,439 Speaker 6: other more reasonably valued parts of the market to help perform, 474 00:24:15,440 --> 00:24:19,360 Speaker 6: you're going to need a catalyst. And right now, looking globally, 475 00:24:19,480 --> 00:24:24,000 Speaker 6: there's just not a lot of pickup in activity and 476 00:24:24,040 --> 00:24:26,840 Speaker 6: in essence, when there's not a lot of leading indicators 477 00:24:26,840 --> 00:24:29,840 Speaker 6: pointing higher, you need a policy response. So hopefully we 478 00:24:29,920 --> 00:24:32,080 Speaker 6: start to see we see more of that out of China, 479 00:24:32,359 --> 00:24:34,760 Speaker 6: more of that out of the United States, and the 480 00:24:35,480 --> 00:24:38,440 Speaker 6: expectations the hope is that you start to see leading 481 00:24:38,480 --> 00:24:42,200 Speaker 6: indicators recover as you move out into twenty twenty six. 482 00:24:42,280 --> 00:24:46,439 Speaker 6: For now, it is leading indicators that are pointing to 483 00:24:46,600 --> 00:24:50,840 Speaker 6: below trend growth then maybe even accelerating a little bit. 484 00:24:50,920 --> 00:24:53,240 Speaker 6: And you know it almost hate to say it, but 485 00:24:53,280 --> 00:24:56,080 Speaker 6: in that environment, that still tends to favor higher quality, 486 00:24:56,160 --> 00:25:00,720 Speaker 6: megacap growthier type businesses, and that's what's been out performing recently. 487 00:25:01,280 --> 00:25:04,439 Speaker 1: Yeah, certainly has, if not for the last few months. 488 00:25:05,280 --> 00:25:07,399 Speaker 1: Thank you for this, both of you for joining us 489 00:25:07,440 --> 00:25:10,840 Speaker 1: on this special Labor Day Bloomberg Daybreak that is Brian 490 00:25:10,920 --> 00:25:15,240 Speaker 1: Levitt Global Market strategist at Invesco, along with Lori Calvacina, 491 00:25:15,600 --> 00:25:19,320 Speaker 1: head of US equity strategy at RBC Capital Markets. And 492 00:25:19,359 --> 00:25:22,000 Speaker 1: coming up next, we're going to focus in on retail 493 00:25:22,119 --> 00:25:25,240 Speaker 1: now that school's back in session. Bert Flickinger joins us 494 00:25:25,280 --> 00:25:28,520 Speaker 1: from Strategic Resource Group. That says, this special Labor Day 495 00:25:28,640 --> 00:25:33,240 Speaker 1: edition of Bloomberg Daybreak continues. It's thirty eight minutes past 496 00:25:33,320 --> 00:25:47,920 Speaker 1: the hour. I'm Nathan Hager, and this is Bloomberg. Thank 497 00:25:47,960 --> 00:25:50,240 Speaker 1: you so much for joining us on this special edition 498 00:25:50,280 --> 00:25:53,320 Speaker 1: of Bloomberg Daybreak. US markets are closed for the Labor 499 00:25:53,400 --> 00:25:57,040 Speaker 1: Day holiday. I'm Nathan Hager. School's back in session, and 500 00:25:57,080 --> 00:26:00,879 Speaker 1: with tariffs impacting profits, we thought we'd wrap up this 501 00:26:01,000 --> 00:26:05,040 Speaker 1: Daybreak special with a focus on retailers. And who better 502 00:26:05,119 --> 00:26:09,120 Speaker 1: to do that with then Bert Flickinger, Managing director at 503 00:26:09,240 --> 00:26:12,480 Speaker 1: Strategic Resource Group. Great to have you with us on 504 00:26:12,480 --> 00:26:16,119 Speaker 1: this holiday edition. Bert, and you know, if the holidays, 505 00:26:16,160 --> 00:26:19,480 Speaker 1: you know, Christmas, New Year's of the super Bowl for retail, 506 00:26:19,560 --> 00:26:21,960 Speaker 1: back to school season's got to be the all star game. 507 00:26:22,080 --> 00:26:23,639 Speaker 1: So how's it looking. 508 00:26:24,359 --> 00:26:27,879 Speaker 3: It's looking, Nathan that Labor Day is going to be 509 00:26:27,880 --> 00:26:31,399 Speaker 3: the turning point for the entire year for calendar twenty 510 00:26:31,480 --> 00:26:35,439 Speaker 3: twenty five, Labor Day through New Year's Day, holidays, and 511 00:26:35,480 --> 00:26:38,400 Speaker 3: then into calendar year twenty six. Why is that important? 512 00:26:38,440 --> 00:26:42,160 Speaker 3: The reason is seventy percent of Americans in living paycheck 513 00:26:42,200 --> 00:26:46,080 Speaker 3: to paycheck and Nathan, for the first time in US history, 514 00:26:46,160 --> 00:26:50,360 Speaker 3: you look on the Bloomberg terminal, all twelve monthly expenditure 515 00:26:50,400 --> 00:26:54,440 Speaker 3: areas are up, and that's the first time that's ever happened. 516 00:26:54,480 --> 00:26:59,560 Speaker 3: So healthcare, food, utilities, phone tax is, housing, insurance, close 517 00:26:59,600 --> 00:27:05,480 Speaker 3: and shoe debt, transportation, education, entertainment. So America is really 518 00:27:06,600 --> 00:27:10,200 Speaker 3: cash squeezed. But at the same time, there's a lot 519 00:27:10,240 --> 00:27:13,520 Speaker 3: of retail doing well. It's reported on Bloomberg terminal and 520 00:27:13,840 --> 00:27:18,280 Speaker 3: Bloomberg around the clock between Bloomberg Europe, Asia and America. 521 00:27:18,400 --> 00:27:22,160 Speaker 3: So there's good news and a lot of bright spots 522 00:27:22,160 --> 00:27:27,119 Speaker 3: in retail despite some cloud cover coming around the corner 523 00:27:27,200 --> 00:27:27,960 Speaker 3: on the horizon. 524 00:27:28,280 --> 00:27:30,960 Speaker 1: Well, let's talk about some of that good news. I'm 525 00:27:31,000 --> 00:27:33,280 Speaker 1: guessing based on what you're saying, that we're seeing a 526 00:27:33,280 --> 00:27:35,879 Speaker 1: lot of that good news in sort of the lower 527 00:27:36,000 --> 00:27:38,080 Speaker 1: end retail space. Is that what I'm hearing? 528 00:27:39,119 --> 00:27:45,360 Speaker 3: Definitely lower end price impact to find this costco all 529 00:27:45,520 --> 00:27:50,720 Speaker 3: the wind COO legal Trader Joe's doing exceptionally well, putting 530 00:27:50,760 --> 00:27:54,800 Speaker 3: up record numbers. The irony, Nathan is Amazon is not 531 00:27:54,920 --> 00:27:58,560 Speaker 3: making money from Whole Foods and Amazon Fresh and bricks 532 00:27:58,560 --> 00:28:03,639 Speaker 3: and mortar retail. Amazon's the powerhouse and number one retailer worldwide, 533 00:28:03,680 --> 00:28:08,200 Speaker 3: and Amazon Online and Amazon overall's doing better than ever before. 534 00:28:08,280 --> 00:28:13,400 Speaker 3: But retail's real killy heeal department stores. As you've reported 535 00:28:13,440 --> 00:28:17,040 Speaker 3: well for a long time, department stores are struggling. Yet 536 00:28:17,040 --> 00:28:21,399 Speaker 3: there's a big bright spot in Dillard's capitalizing on Penny Macy's, 537 00:28:21,440 --> 00:28:29,000 Speaker 3: Belk and others, and especially Cole's, which is really struggling. Target, 538 00:28:29,119 --> 00:28:32,440 Speaker 3: which is the big surprise. Last year you reported this 539 00:28:32,520 --> 00:28:35,119 Speaker 3: stock price of targeted at over two hundred and thirty. 540 00:28:35,160 --> 00:28:39,800 Speaker 3: It's struggling to stay above one hundred now, and Targets 541 00:28:40,240 --> 00:28:45,400 Speaker 3: keeping the people who caused the problems to solve the problems. 542 00:28:45,440 --> 00:28:49,240 Speaker 3: Where I think, Nathan, you're in. My big, big concern 543 00:28:49,360 --> 00:28:53,239 Speaker 3: is Target's been going for sixty five years. Eighty to 544 00:28:53,360 --> 00:28:56,400 Speaker 3: ninety percent of all Target purchase decisions are made or 545 00:28:56,440 --> 00:29:00,040 Speaker 3: influenced by women, and Target has yet to have a 546 00:29:00,080 --> 00:29:03,160 Speaker 3: women CEO. And Target has the best women executives in 547 00:29:03,200 --> 00:29:06,560 Speaker 3: the business. So that's a decratic question we have to ask, 548 00:29:06,680 --> 00:29:10,120 Speaker 3: especially when you consider the best in the brightest women 549 00:29:10,640 --> 00:29:15,800 Speaker 3: Carol Myerwitz a TJX to your point, spectacular results. Beth 550 00:29:15,920 --> 00:29:20,120 Speaker 3: Ford turned around Land of Lakes co Op, great results, 551 00:29:20,120 --> 00:29:25,200 Speaker 3: Peggy Davies turning around the Private Label Manufacturers Association, great results. 552 00:29:25,440 --> 00:29:28,200 Speaker 3: So the women are out performing the men. But women 553 00:29:28,240 --> 00:29:31,720 Speaker 3: are only fifteen percent of the CEOs. And you get 554 00:29:31,720 --> 00:29:35,800 Speaker 3: more women CEOs, especially in the department and specialty stores, 555 00:29:37,040 --> 00:29:39,720 Speaker 3: you'll have a real retail renaissance and requiem. 556 00:29:40,240 --> 00:29:42,280 Speaker 1: You know, you could talk about so many factors that 557 00:29:42,360 --> 00:29:44,280 Speaker 1: go into the challenges that we've seen from some of 558 00:29:44,320 --> 00:29:47,160 Speaker 1: those names you just mentioned, like Target, like Cohle's, they've 559 00:29:47,200 --> 00:29:50,200 Speaker 1: had the CEO issues as well, along with you know, 560 00:29:50,280 --> 00:29:53,800 Speaker 1: potential impact of tariffs politics as well. I mean, what 561 00:29:53,880 --> 00:29:56,600 Speaker 1: are some of the biggest issues that are holding back 562 00:29:56,760 --> 00:30:00,680 Speaker 1: some of these companies that used to dominate for so long. 563 00:30:01,800 --> 00:30:05,360 Speaker 3: Nathan, Our biggest concerned strategic resource group, when you see 564 00:30:05,360 --> 00:30:08,520 Speaker 3: it on the Bloomberg terminal every day, is everything from 565 00:30:08,600 --> 00:30:13,080 Speaker 3: screw worms to tariffs. So screwworms can impair and impede 566 00:30:13,120 --> 00:30:21,640 Speaker 3: the livestock and affect humans pets, cattle, and only twenty 567 00:30:21,680 --> 00:30:26,840 Speaker 3: percent of the sterile flies to combat the disease are produced, 568 00:30:27,320 --> 00:30:30,520 Speaker 3: so this has been a catastrophe in Maico, Central America, 569 00:30:30,600 --> 00:30:34,800 Speaker 3: South America. Now moving towards the Texas border, meat prices 570 00:30:34,840 --> 00:30:38,120 Speaker 3: are limited high every day in the Chicago commodity markets, 571 00:30:38,200 --> 00:30:42,320 Speaker 3: is reported by Bloomberg. Farmers are getting the lowest crop 572 00:30:42,400 --> 00:30:47,240 Speaker 3: prices on a cash for bushel basis in fifteen years, 573 00:30:47,520 --> 00:30:50,200 Speaker 3: so we should have the lowest meat prices in history. 574 00:30:50,520 --> 00:30:53,520 Speaker 3: Yet because of the screw worm, the African swine flu 575 00:30:53,680 --> 00:30:59,960 Speaker 3: in Asia, and the Avian high pathogen bird flu, protein 576 00:31:00,600 --> 00:31:03,840 Speaker 3: is the highest price in history and the farmers are 577 00:31:03,840 --> 00:31:08,240 Speaker 3: going out of business at record levels. So for the administration, 578 00:31:09,440 --> 00:31:13,920 Speaker 3: last administration in this administration hasn't been prepared enough in 579 00:31:14,000 --> 00:31:17,880 Speaker 3: my professional informed opinion on the school and the tariffs. 580 00:31:17,880 --> 00:31:21,680 Speaker 3: To your point, Nathan, that's an artificial inflation. So we 581 00:31:21,800 --> 00:31:25,320 Speaker 3: not only have the highest prices in history going into 582 00:31:25,400 --> 00:31:28,920 Speaker 3: Labor Day weekend, we're going to have higher prices for holidays, 583 00:31:28,920 --> 00:31:33,880 Speaker 3: So toys will be the highest prices in history for Christmas, Sonica, Kwanza, 584 00:31:34,880 --> 00:31:39,600 Speaker 3: as well candy and confection and Bloomberg reported earlier that 585 00:31:39,680 --> 00:31:42,320 Speaker 3: because of the fifty percent tariffs coming out of Brazil, 586 00:31:43,320 --> 00:31:45,520 Speaker 3: coffee and weed and cattle are going to be at 587 00:31:45,560 --> 00:31:47,880 Speaker 3: all time highs coming out of those countries too. 588 00:31:48,480 --> 00:31:51,160 Speaker 1: We're speaking with Bert Flickinger. He is the managing director 589 00:31:51,280 --> 00:31:55,720 Speaker 1: of Strategic Resource Group. Given all those factors, Bert, I mean, 590 00:31:55,720 --> 00:31:59,440 Speaker 1: we've seen over the last few months that despite things 591 00:31:59,600 --> 00:32:03,880 Speaker 1: like tariffs, like some of these exogenous factors, the consumer 592 00:32:03,920 --> 00:32:06,760 Speaker 1: has managed to hold up. How much longer do you 593 00:32:06,880 --> 00:32:09,560 Speaker 1: think the consumer can still hold up against all. 594 00:32:09,400 --> 00:32:14,000 Speaker 3: Those consumers holding up, Nathan, And interestingly, because the consumers 595 00:32:14,040 --> 00:32:17,720 Speaker 3: are outsmarting the stores, We're writing a book the explosive 596 00:32:17,880 --> 00:32:21,160 Speaker 3: growth of private labels eclipsing national brands for the first 597 00:32:21,160 --> 00:32:25,400 Speaker 3: time on Peggy Davies' leadership at the Private Label Manufacturers Association. 598 00:32:26,080 --> 00:32:29,719 Speaker 3: People can save five thousand dollars a year just on 599 00:32:29,800 --> 00:32:36,840 Speaker 3: food and beverages, buying higher quality, better produced, fresher private 600 00:32:36,880 --> 00:32:40,320 Speaker 3: label product than they can the national brands. Because the 601 00:32:40,400 --> 00:32:44,280 Speaker 3: national brands, Nathan, have one page in their playbook, including 602 00:32:44,320 --> 00:32:47,280 Speaker 3: my Alma Mater, Procter and Gamma is race prices, race 603 00:32:47,360 --> 00:32:50,200 Speaker 3: prices some more. Bloomberg got reported on the Terminal that 604 00:32:50,360 --> 00:32:53,880 Speaker 3: Smuckers is raising coffee prices for the third time in 605 00:32:53,920 --> 00:32:57,000 Speaker 3: this calendar year. I mean, come on, give shoppers a break. 606 00:32:57,480 --> 00:33:01,000 Speaker 3: So consumers are migrating to private label. So with all 607 00:33:01,120 --> 00:33:04,760 Speaker 3: the high twelve monthly expenditure costs, if a family of 608 00:33:04,880 --> 00:33:07,840 Speaker 3: five can save five thousand dollars a year switching for 609 00:33:08,000 --> 00:33:12,440 Speaker 3: branded product or private label which is higher quality Trader Joe's, 610 00:33:12,480 --> 00:33:17,600 Speaker 3: all the costs go Kirkland, Kroger, et cetera, they're going 611 00:33:17,680 --> 00:33:19,880 Speaker 3: to be able to balance out their bills and keep 612 00:33:19,960 --> 00:33:25,680 Speaker 3: spending for gifts and the holidays, and for maybe a 613 00:33:25,680 --> 00:33:30,560 Speaker 3: few affordable luxuries for the parents and people who were 614 00:33:30,840 --> 00:33:34,680 Speaker 3: heads of household. So it's not all grim because private 615 00:33:34,720 --> 00:33:39,520 Speaker 3: labels revolutionizing the world and raising shoppers standards of living. 616 00:33:39,880 --> 00:33:42,920 Speaker 3: And despite all the price gouging, despite all the tariffs, 617 00:33:42,920 --> 00:33:47,560 Speaker 3: despite all the livestock diseases, private labels saving the day 618 00:33:47,720 --> 00:33:50,560 Speaker 3: for across America and across the world. 619 00:33:50,920 --> 00:33:52,480 Speaker 1: Oh, it's got to be said, there aren't a whole 620 00:33:52,520 --> 00:33:55,120 Speaker 1: lot of private labels when it comes to some of 621 00:33:55,160 --> 00:33:58,400 Speaker 1: those gifts that people might be thinking about for their 622 00:33:58,480 --> 00:34:01,200 Speaker 1: kids and their families heading into the holiday season. What 623 00:34:01,240 --> 00:34:05,160 Speaker 1: could this mean when it comes to holiday shopping later 624 00:34:05,240 --> 00:34:06,600 Speaker 1: on into the rest of this. 625 00:34:06,640 --> 00:34:10,920 Speaker 3: Year, look at Saratoga Springs as an example. Nathan for 626 00:34:11,040 --> 00:34:15,680 Speaker 3: Bloomberg is the vintage stores which are ubiquitous across the country, 627 00:34:15,719 --> 00:34:20,200 Speaker 3: whether they're spiritually based stores, Goodwill, Salvation Army, et cetera. 628 00:34:20,719 --> 00:34:27,520 Speaker 3: Savers people are buying pre owned clothes, well tailored one 629 00:34:27,640 --> 00:34:30,560 Speaker 3: to five dollars a garment for the cost of a 630 00:34:30,680 --> 00:34:33,640 Speaker 3: nickel or a penny of what they'd pay on a 631 00:34:33,640 --> 00:34:39,680 Speaker 3: percent basis at a department store. So saving on private 632 00:34:39,760 --> 00:34:43,719 Speaker 3: labels one piece, saving on clothing and apparel and pre 633 00:34:43,800 --> 00:34:46,360 Speaker 3: owned product and all the way to pre owned cars 634 00:34:46,480 --> 00:34:48,839 Speaker 3: is a big way to save. And that's the way 635 00:34:48,840 --> 00:34:53,239 Speaker 3: the shoppers saving itself until food prices come down. As 636 00:34:53,280 --> 00:34:56,279 Speaker 3: we get through these livestock diseases at the end of 637 00:34:56,360 --> 00:35:01,440 Speaker 3: crop here twenty twenty six, and is we get through, 638 00:35:02,400 --> 00:35:07,280 Speaker 3: hopefully the crisis created by the administration again of lowering 639 00:35:07,320 --> 00:35:13,160 Speaker 3: the value of food stamps or SNAP Supplemental Nutrition Assistance 640 00:35:13,200 --> 00:35:17,280 Speaker 3: Program Women and Infants and Children's Program, which seems absurd 641 00:35:18,440 --> 00:35:21,680 Speaker 3: at the highest food prices in history, to lower the 642 00:35:21,719 --> 00:35:25,080 Speaker 3: funding for the people most in need for food and 643 00:35:25,120 --> 00:35:30,960 Speaker 3: beverage to feed families, especially breakfast which many American consumers 644 00:35:31,000 --> 00:35:35,200 Speaker 3: are skipping because the high cost of cereal, milk and banana, 645 00:35:35,520 --> 00:35:38,920 Speaker 3: and it's so important for people's performance at work, especially 646 00:35:39,120 --> 00:35:42,759 Speaker 3: even more important for kids' performance in school. So the 647 00:35:42,800 --> 00:35:47,640 Speaker 3: government really needs to reevaluate the food stamp cuts and 648 00:35:47,719 --> 00:35:52,000 Speaker 3: the wick cuts and reinstate them so people can afford 649 00:35:52,040 --> 00:35:55,040 Speaker 3: to eat and afford to pay their rents and not 650 00:35:55,120 --> 00:35:58,280 Speaker 3: get evicted from their homes and not lose the leases 651 00:35:58,360 --> 00:35:59,120 Speaker 3: on their cars. 652 00:36:00,120 --> 00:36:01,880 Speaker 1: Can in private labels, though, Bert, what can all this 653 00:36:02,000 --> 00:36:05,200 Speaker 1: mean when it comes to the returns for some of 654 00:36:05,239 --> 00:36:08,880 Speaker 1: these companies that in the past have relied on you know, 655 00:36:09,040 --> 00:36:12,520 Speaker 1: name brand items to boost their profits into the rest 656 00:36:12,560 --> 00:36:12,960 Speaker 1: of the year. 657 00:36:14,480 --> 00:36:18,760 Speaker 3: You're you're asking an important point, Nathan. On the Bloomberg terminal, 658 00:36:18,760 --> 00:36:23,880 Speaker 3: They're they're two key metrics. One is that the big 659 00:36:24,200 --> 00:36:29,920 Speaker 3: top twenty five brand manufacturers Craft, Kellogg, Coke, Pepsi productor Smuckers, 660 00:36:29,960 --> 00:36:34,680 Speaker 3: et cetera, they're selling less hecta leaders or less less 661 00:36:34,719 --> 00:36:40,160 Speaker 3: per hundredweight product. Uh So in terms in terms of that, 662 00:36:40,200 --> 00:36:44,439 Speaker 3: people are being able to afford to eat less and 663 00:36:44,840 --> 00:36:48,600 Speaker 3: uh can't afford to buy branded product. With private label, 664 00:36:48,680 --> 00:36:53,359 Speaker 3: they can afford to feed their families, whether it's shoes, clothes, UH, 665 00:36:53,800 --> 00:36:58,600 Speaker 3: consumable food and beverage product, and the taste profile whether 666 00:36:58,640 --> 00:37:01,600 Speaker 3: it's Wegmans or Western Laws, mob Law or Tops Markets 667 00:37:01,600 --> 00:37:06,520 Speaker 3: in Buffalo, or Safeway or Kroger or Costco, which is 668 00:37:06,560 --> 00:37:09,640 Speaker 3: a particularly strong all the legal wind coach Trader Joe's. 669 00:37:10,120 --> 00:37:14,239 Speaker 3: The examples are very numerous on the Bloomberg that the 670 00:37:14,280 --> 00:37:17,919 Speaker 3: private label companies and the price impact companies are dominating. 671 00:37:18,440 --> 00:37:23,360 Speaker 3: And at Cornell College of Agriculture and Life Sciences, where 672 00:37:23,360 --> 00:37:27,279 Speaker 3: I teach us an adjunct executive lecture, they proved through 673 00:37:27,320 --> 00:37:31,000 Speaker 3: their clinical labs that the private label product is as 674 00:37:31,040 --> 00:37:34,200 Speaker 3: good or better than the national brands because since Warren 675 00:37:34,239 --> 00:37:38,439 Speaker 3: Buffett took over the control of Craft, there's no rule 676 00:37:38,520 --> 00:37:43,879 Speaker 3: of food days and cheese and craft singles. It's all 677 00:37:43,960 --> 00:37:46,640 Speaker 3: kinds of cheese food where if you buy Land of 678 00:37:46,719 --> 00:37:48,799 Speaker 3: Lakes you get one hundred percent cheese, or if you 679 00:37:48,800 --> 00:37:52,360 Speaker 3: buy private label cheese from Crystal Farms, it's one hundred 680 00:37:52,360 --> 00:37:56,720 Speaker 3: percent cheese. So people live better, live healthier, live longer, 681 00:37:57,239 --> 00:38:02,480 Speaker 3: and have more productive days at school and a work 682 00:38:03,000 --> 00:38:05,920 Speaker 3: with private label brands than they will with national brands 683 00:38:06,200 --> 00:38:09,560 Speaker 3: which have been diluted with a lot of mulsifiers, fillers 684 00:38:09,600 --> 00:38:13,640 Speaker 3: from candy and confection all the way to cheese and 685 00:38:13,840 --> 00:38:20,239 Speaker 3: ice cream and other top ten power categories for consumers 686 00:38:20,280 --> 00:38:21,239 Speaker 3: across America. 687 00:38:21,640 --> 00:38:24,040 Speaker 1: All right, lots to consider in the retail space as 688 00:38:24,080 --> 00:38:26,480 Speaker 1: we head into the rest of this year. Thank you 689 00:38:26,520 --> 00:38:28,440 Speaker 1: for this, Bert, really great having you on with us. 690 00:38:28,480 --> 00:38:32,880 Speaker 1: That was Bert Flickinger, Managing director at Strategic Resource Group. 691 00:38:33,200 --> 00:38:36,759 Speaker 1: Thanks as well to RBC Capital Markets, Lori Calvacina, in 692 00:38:36,880 --> 00:38:40,920 Speaker 1: Vesco's Brian Levitt, Wells Fargo, Sarah House and DEMO Capital 693 00:38:41,000 --> 00:38:43,959 Speaker 1: Markets Jennifer Lee. Thanks of course to you as well 694 00:38:44,000 --> 00:38:47,719 Speaker 1: for listening. I'm Nathan Hager. Stay with us. Today's top 695 00:38:47,800 --> 00:38:51,440 Speaker 1: stories and global business headlines are coming up right now.