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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. In

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Speaker 1: the face of slub of growth, then in China and

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Speaker 1: turmol in emerging markets over the last several weeks, the

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Speaker 1: regional preference of investors is becoming very clear. In the

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Speaker 1: latest Bank America Mery Lynch Fund Manager survey, investors are

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Speaker 1: the most bullish the United States since twenty fifteen. Chris

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Speaker 1: Rupki joining US now m u f G Union Bank

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Speaker 1: chief Financial Economists and he joins us alongside us here

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Speaker 1: in New York and Monitor Chris. Let's talk about the

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Speaker 1: optimism here in America, the small busines. This optimism survey

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Speaker 1: came out in the last hour, just short of a

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Speaker 1: record high. Things are looking good here. Yeah, what's wrong

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Speaker 1: with people? Aren't they watching what's going on in Turkey? Uh? Italy.

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Speaker 1: We're having some situation with Italy as well, um potentially

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Speaker 1: and you just can't frighten the American public, either businesses

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Speaker 1: or consumers. I think their pockets maybe stuffed with massive

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Speaker 1: tax cuts cash here, and people seem to be blinded.

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Speaker 1: I mean, you know, a currency crisis to really get

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Speaker 1: full blown like we had twenty years ago in the

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Speaker 1: late nineties, I mean, world stock markets have to crater

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Speaker 1: at the same time. But here you had last night

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Speaker 1: at the close, S and P five hundreds up five

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Speaker 1: and a half percent year to date after like n

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Speaker 1: last year. You have to wonder what what's going on?

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Speaker 1: What's going to frighten the investor public in the US? Uh,

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Speaker 1: we just haven't seen it yet. Maybe the currency crisis

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Speaker 1: in Turkey it's not over yet. If it did fall further,

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Speaker 1: it would start to get people's attention. But so far

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Speaker 1: people are optimistic, as you say, well, let's discuss what

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Speaker 1: kind of crisis we do have on our hands. Um.

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Speaker 1: There was a great FT piece recently that said this

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Speaker 1: has echoes more perhaps than it did in the late

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Speaker 1: nineties and emerging market crisis. Is that how you would

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Speaker 1: frame this as well? Thinking that this is a little

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Speaker 1: bit of a tape attemptrum and various symptoms popping up

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Speaker 1: around the world of the Federal Reserve stepping back from

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Speaker 1: the era of easy money. Well, the danger I guess

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Speaker 1: for Turkey is can the entities that borrowed in dollars

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Speaker 1: ever pay it back. So at the moment, if the

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Speaker 1: currency six and a half, uh lear to the dollar,

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Speaker 1: it's not great, they're down on the year, But what

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Speaker 1: if it really melts down. I went back and looked

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Speaker 1: at the before the global financial markets crisis and part

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Speaker 1: of the re and for that especially the FED thought

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Speaker 1: part of the reason for it was Russians currency plummeted,

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Speaker 1: so it went from like quickly, like from six to

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Speaker 1: the dollar to twenty to the dollar. So that's like

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Speaker 1: a wipeout. You know, you don't have to pay back

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Speaker 1: six hundred thousand dollars, you have to pay back two

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Speaker 1: million now. So I mean we haven't gone far enough yet.

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Speaker 1: We're about six and a half to the dollar on

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Speaker 1: the lyra right now. I mean, God forbid, I don't

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Speaker 1: want to speculate, but I mean if there was a

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Speaker 1: total wipeout, melted down to twenty to the dollar, that

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Speaker 1: would be a serious situation that would uh you know,

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Speaker 1: affect other emerging markets. I think within this and I

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Speaker 1: want to go focus a featured at this morning, Amber

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Speaker 1: seventh Pritchard in the Telegraph, I thought wrote a beautiful

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Speaker 1: memory of Janet Yellen, frankly capitulating to international markets review

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Speaker 1: that with us. What did chair yelling do and why

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Speaker 1: we may we see this again from Chairman Powell? Yeah, well,

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Speaker 1: I guess the situation back then is, I mean, we

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Speaker 1: can always the market can always become afraid of world

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Speaker 1: the world economic growth outlook. But we just got an

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Speaker 1: update on the world growth outlook from the i m

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Speaker 1: F and they're maintaining no world growth is going to

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Speaker 1: continue at three point nine the next couple of years,

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Speaker 1: so there's no problem yet. Back then, I guess it

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Speaker 1: was in two thousand and sixteen, early two thousand and sixteen,

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Speaker 1: after the China devaluation the prior summer, the concern was

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Speaker 1: really a lot what happened to world economic growth? What's

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Speaker 1: going on in China? And now we're just in the

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Speaker 1: early discovery phase there. I mean, look at China's currency

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Speaker 1: the way it's gone recently. Maybe we're just three four

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Speaker 1: months away from the world trembling at you know, their

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Speaker 1: fears over the world economic outlook at the moment. Nobody

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Speaker 1: is afraid of the world economic outlook, but especially for

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Speaker 1: the Federal Reserve. I mean, first and foremost, there was

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Speaker 1: a real question being ust of chair you know at

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Speaker 1: the time as to whether she was the chairwoman of

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Speaker 1: the Federal Reserve or the chair of the Global Central

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Speaker 1: Bank FED chair. J Pal has been pretty clear and

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Speaker 1: a speech back in May and Zurich he said that

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Speaker 1: he thinks basically that people overstate the Federal reserves impact

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Speaker 1: on global financial conditions. He's made it pretty clear where

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Speaker 1: he stands. That was only several months ago. Do you

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Speaker 1: agree with that? John just said? There? Because John, that's

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Speaker 1: the heart of the matter, It's an absolute heart. Maybe

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Speaker 1: he can't say that we're affecting the world economic outlook

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Speaker 1: or finance. I mean, what if he what if he

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Speaker 1: did agree? You know, that might set off I understand

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Speaker 1: it can't message it. But the John's good point walk

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Speaker 1: us through this. I mean, if the US sets a

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Speaker 1: higher interest rate and you have to factor in a

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Speaker 1: real rate for what John Colombia, I have very little

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Speaker 1: sympathy with emerging markets right now. This has been telegraphed

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Speaker 1: so much by I would also say the big difference

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Speaker 1: between now and say early sixteen, the downside risk to

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Speaker 1: inflation was greater for the Federal Reserve and for the

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Speaker 1: ECB much more so for the European Central Bank. Right now,

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Speaker 1: the Federal reserve capacity to pull back from tightening when

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Speaker 1: you now have real upside risks to the inflation target,

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Speaker 1: I'd say we're in a completely different world, don't we, Chris.

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Speaker 1: I think they kind of. Yeah. I mean, just the

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Speaker 1: way you talk about tightening and the world thinks to say,

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Speaker 1: not every rate hike should be considered it tightening. I

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Speaker 1: think the Fed kind of lost the ball in terms

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Speaker 1: of trying to describe what they're doing here. All's they're

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Speaker 1: doing is removing the stimulus that they had. They should

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Speaker 1: emphasize that we're taking our foot off the gas, We're

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Speaker 1: not putting on the break. I mean, there there's a

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Speaker 1: real problem the you know, world currency markets think the

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Speaker 1: Feds putting on the brakes here with higher rates, But

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Speaker 1: what they're really doing is just we're moving rates up

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Speaker 1: to normal. It shouldn't be that rates are only two.

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Speaker 1: That makes the question, Chris, if we haven't even gone

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Speaker 1: through neutral yet, if the Fed funds rate is barely

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Speaker 1: in real right territory, then what on earth does it

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Speaker 1: mean when it is? I know, I mean people are panicking. Now,

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Speaker 1: what's going to happen when rates go to even uh

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Speaker 1: Chicago Chicago Fed President Evans, although he said in two

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Speaker 1: thousand and twenty, we might move rates up above neutral levels,

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Speaker 1: which might be I don't know, three and a quarter

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Speaker 1: percent in his view, but that that's a different story.

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Speaker 1: That's about a year away from now. But yeah, I

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Speaker 1: am a little concerned that the markets already, that the

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Speaker 1: world's already trembling, that the Fed's gonna pull the rug

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Speaker 1: out from under him and and raise rates. I mean,

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Speaker 1: it's only two again, Chris. One final question, if we

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Speaker 1: could have been wonderful to be with this today. You

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Speaker 1: mentioned earlier we're not going back to the terminal values

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Speaker 1: of higher interest rate? What is your one year tenure call?

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Speaker 1: I mean, if it's higher yields, I don't have a

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Speaker 1: handle on what higher is higher? Yeah, I don't want

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Speaker 1: to the caution shown on many of the FED members

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Speaker 1: and and FED share Powell himself. I I don't feel

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Speaker 1: comfortable in forecasting a tenure year going out that far

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Speaker 1: beyond where we think the FED funds rate is going

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Speaker 1: to end up. So I'm a little you know, they're

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Speaker 1: probably gonna push rates to what are they saying three

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Speaker 1: and a half percent now in two thousand and twenty,

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Speaker 1: they'll tell us where it's going to be in two

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Speaker 1: thousand and twenty one on September six. I don't feel

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Speaker 1: like forecasting a tenure yield higher than where the Fed

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Speaker 1: thinks that are going to push the FED funds right.

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Speaker 1: I don't even trust the Fed to push the funds

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Speaker 1: right to three and a half. Don't forget what Powell

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Speaker 1: said a few months ago. He said, oh, that dot

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Speaker 1: weighed out way out there in two thousand and twenty

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Speaker 1: three and a half percent. Forget about it. We can't

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Speaker 1: see that far in the future. Well, he's not an economist,

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Speaker 1: but if they can't see that fund, that's why they

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Speaker 1: can't see it. Begs the question one earth is in

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Speaker 1: the summary of economic projections? Anyway, Chris Rockie is right

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Speaker 1: to can't you u m U f G Union Bank

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Speaker 1: chief financial economist. There's news dissemination John, and then there

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Speaker 1: you and I were at nine zero zero one or whatever,

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Speaker 1: like it was twelve seconds after the hour? Whoever heard

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Speaker 1: of a blog release? Is that explain? Because I was

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Speaker 1: confused at radio? What explained? Did they do. Did mr

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Speaker 1: must do a blog release? Yeah? I don't know why

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Speaker 1: you're asking me to explain, because, to be honest with you, Arm,

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Speaker 1: there is no explanation for what is going on with

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Speaker 1: this company over the last couple of months. I thought

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Speaker 1: the one quote that stood out for me in the

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Speaker 1: blog post was the following about what he meant by

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Speaker 1: funding secured and how much money test that would need

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Speaker 1: to go private. I want to read out the following

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Speaker 1: to you. Quote. Therefore, reports that more than seventy billion

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Speaker 1: dollars would be needed to take Tesla private dramatically over

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Speaker 1: state the actual capital race needed. The four twenty buyout

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Speaker 1: price would only be used for test the shareholders who

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Speaker 1: did not remain with our company if it is private.

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Speaker 1: My best estimate right now is that approximately two thirds

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Speaker 1: of shares owned by all current investors would roll over

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Speaker 1: into a private Tesla. Okay, let's bring in let's let's

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Speaker 1: let's let's bring in possibly one of the most bearish

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Speaker 1: down lists on the street, Gordon Johnson Vertical Group and less.

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Speaker 1: And he joins us on the phone, Golden, It's always

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Speaker 1: great to get your insight on this company. What does

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Speaker 1: that quote mean? I don't know. Exactly what that quote means.

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Speaker 1: But what we're seeing here is unprecedented. Last night, we

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Speaker 1: got a tweet or was I don't know if there

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Speaker 1: was a tweeter or a blog post from Elon Musk

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Speaker 1: that they're, um, they've engaged Silver League in Goldman Sachs.

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Speaker 1: Immediately last night following that tweeter blog post, Silver League

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Speaker 1: came out and denied that they're advising them in official

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Speaker 1: capacity And if Goldman Sacks had been engaged, their research

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Speaker 1: department would have to have dropped coverage and they haven't

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Speaker 1: done that. Um, so this is becoming quite uh quite odd. Um,

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Speaker 1: I don't know the other word to use to describe it.

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Speaker 1: So Golden, how much daylight right now? Is there between

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Speaker 1: what the board is saying and what Elon Must, the

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Speaker 1: CEO is saying. You know, I don't know, because let

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Speaker 1: me take you to a history. Right So, when they

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Speaker 1: not launched the Gigga factory a few years back, Elon

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Speaker 1: Must predicted that power all demand um was quote off

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Speaker 1: the hook and they'd have a billion and said they

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Speaker 1: had a billion and sells his ability as of power

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Speaker 1: walls all but non existent. When they acquired Solar City, um,

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Speaker 1: they said that the company was strong and they had

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Speaker 1: to acquire them. We believe we covered Solar City. The

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Speaker 1: company was insolvent and is currently in liquidation. The twenty

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Speaker 1: six capital raised, I don't They said autopilot death wouldn't

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Speaker 1: harm them. At the time tessel knew about an autopilot

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Speaker 1: death seventeen offering, they said ten thousand marble threes per week.

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Speaker 1: By December seventeen, you have eleven insiders testifying that must knew,

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Speaker 1: uh five thousand was an absolute limit, and and and

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Speaker 1: and that that goes on and on. We have the

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Speaker 1: silver Lake um and and other things. Right, they said

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Speaker 1: they didn't need a capitalise capital raise. The fli A

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Speaker 1: confirmed that there's two ongoing quote enforcement proceedings. So it

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Speaker 1: seems like increases in the things that he's saying are

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Speaker 1: just you can't really believable. Okay, you know, I know

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Speaker 1: you're you've had a cautious feelure what we've got such

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Speaker 1: respect for Vertical Group, and you know what you've done

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Speaker 1: with General Electrically and the and the others. Do you

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Speaker 1: trust their goodwill or bad will on their balance sheet?

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Speaker 1: Uh No, I mean I don't. Um, you know, the

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Speaker 1: balance sheet is definitely an area of concern for US.

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Speaker 1: I mean, they had they had around two thirty million

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Speaker 1: available to draw in their credit facility at the end

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Speaker 1: of QUO two, um uh, and they ended with two

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Speaker 1: point two billion and understricted cash. But that's off set

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Speaker 1: by and customer deposits and you know, the balance. She

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Speaker 1: is really the area of major concerns. Thank you. Yeah.

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Speaker 1: And with respect to the and and I think that's

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Speaker 1: a great question because I think a lot of the

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Speaker 1: bulls are focused purely on this. We believe in Musk,

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Speaker 1: and as long as the stock doesn't fall, we continue

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Speaker 1: to believe in Musk. And that's just not what analysts do.

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Speaker 1: We're supposed to look at numbers and do analysis, and

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Speaker 1: it seems like nobody's doing that. And um you know,

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Speaker 1: this reminds me of when Lehman was close to going

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Speaker 1: under and they talked about going private. Um. And also

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Speaker 1: consider when um uh, there was an auto go private.

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Speaker 1: I think it was I forget the name, but a

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Speaker 1: private equity fund took an auto maker private at seven

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Speaker 1: point four billions and they lost like six billion on

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Speaker 1: that go private. Um. So it's just this is very

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Speaker 1: odd and it's it's shocking to us that you haven't

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Speaker 1: seen any sec action. You know, I don't know who's

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Speaker 1: involved with Silver like anywhere. I can't keep track of

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Speaker 1: the players, but I would suggest Mr mcnami or Mr

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Speaker 1: Hutchins have a wandering understanding of accounting and accounting veracity.

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Speaker 1: Are we heading for the point where somebody sits Mr

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Speaker 1: Musk down and says, this is the way we really

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Speaker 1: do things. I mean, we almost a point where there's

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Speaker 1: good to be a new Tesla. Whatever happens, we we

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Speaker 1: think so. I mean, they have nine hundred and twenty

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Speaker 1: million of converts at mature in March of I'm sorry,

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Speaker 1: they have forty eight million and interest payments do this

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Speaker 1: week and eighty two point five million of debt. Well,

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Speaker 1: they can make that payment. Come on, you can take

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Speaker 1: that on a petty cash. You can delay the space

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Speaker 1: X launch. I won went. I mean you can say that,

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Speaker 1: but I mean they effectively drew down, They nearly fully

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Speaker 1: drew down their credit facility. Um. You know in Q two,

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Speaker 1: no one's talking than it was. It was. It was

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Speaker 1: still a big cash burn, seven hundred and forty million

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Speaker 1: of free cash flow burn. Despite the fact that they

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Speaker 1: fired a bunch of people and have significantly cut back

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Speaker 1: capex and investment UM, and demand literally looks like it's

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Speaker 1: collapsing for the Model three. I mean, if you look

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Speaker 1: at Europe Norway, which is their biggest European market, and

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Speaker 1: July had the weakest CELLS ever UM since the beginning

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Speaker 1: UM and sells in pretty much every single europe And

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Speaker 1: market outside of UH one other is is falling, and

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Speaker 1: I think that's due to competition. So I think they're

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Speaker 1: facing real problems. It writes the question, why is the

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Speaker 1: stock at three fifty six? I mean, we opened last

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Speaker 1: Tuesday when we got that sweet we opened up that

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Speaker 1: morning at three three four. We're north of that in

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Speaker 1: the face of all of this, Why think about it?

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Speaker 1: Elon Lusk, I was in Italy and you have me

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Speaker 1: on your show and I appreciate a couple of times. Yeah,

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Speaker 1: think about this. I mean the guy said last week

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Speaker 1: funding secured and then went on to say all we

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Speaker 1: need is a shareholder vote, which implies that the board

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Speaker 1: has improved everything, paperwork has been signed, lawyers have been hired.

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Speaker 1: We find out that was completely false and nothing happens. Look,

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Speaker 1: I think the issue is you have a caught like

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Speaker 1: following for this stock and they believe anything must says

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Speaker 1: even if he's lying, um, And I shouldn't say lying,

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Speaker 1: Maybe I should say mis troops um. And I think

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Speaker 1: that's why the stocks were at at But I think

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Speaker 1: the reason why the shorts were made emboldened and so

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Speaker 1: do we is because at some point they run out

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Speaker 1: of money and real competition is coming, and we're gonna

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Speaker 1: put out real analysis and continue to do real work

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Speaker 1: to show you guys, what's happening in Europe, what's happening

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Speaker 1: in the US. Why it looks like demand in the

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Speaker 1: US also has has collapsed. The pictures of the drones

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Speaker 1: that are flying over, the facilities that have are storing

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Speaker 1: it looks like hundreds or thousands of Tesla cars, despite

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Speaker 1: the fact that they say they have this huge backlog.

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Speaker 1: All of these things, you know, suggests that things are

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Speaker 1: quite bad for that. What's your timeline to reality? No,

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Speaker 1: that's that's a good question, but it's a hard one

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Speaker 1: to answer. I think the timeline to reality is the

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Speaker 1: cars that are hitting the European market and causing first

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Speaker 1: half eighteen Tesla cells to fall year over year, hit

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Speaker 1: the US next year. I think my fourth quarter or

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Speaker 1: first fourth quarter of eighteen or first quarter of nineteen.

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Speaker 1: I think reality hits a lot of the longholders. And

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Speaker 1: I think that what Musk is trying to do is

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Speaker 1: go private before that happens. I don't think that's possible.

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Speaker 1: And you know we'll show analysis why um, but I

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Speaker 1: think reality hits great priving. Gordon Johnson, thank you so much.

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Speaker 1: Vertical Group. Cautious to say the least as you could hear.

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Speaker 1: That's cautious is the way I'm trying to, you know,

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Speaker 1: be cautious in my caution. Jim Walker is an act

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Speaker 1: of God in Asia. He has provided economic analysis across

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Speaker 1: all of Asia for years. He was legendary at c

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Speaker 1: s l A and now runs Asianomics. And with him

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Speaker 1: is Sharmila Whalen, who is quite acute on the linkage

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Speaker 1: of data into the back and forth between nations. And

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Speaker 1: we're thrilled the Shomila can join us right now. Sharmila,

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Speaker 1: You've got a beautiful couple of pages on something we ignore,

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Speaker 1: which is Japan China relationships. Has that changed his? Whuch

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Speaker 1: is US China relations It hasn't changed as much as

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Speaker 1: uh China US relations obviously, I mean, you know the

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Speaker 1: trade war is right in our face in the news

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Speaker 1: every day. But the Japan China relationship is changing, and

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Speaker 1: it's it's changing on at the margin. But a couple

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Speaker 1: of interesting things. First is, if you look at Japanese

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Speaker 1: exports for the last eighteen months, especially the last twelve months,

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Speaker 1: Japanese exports to the US have been slowing, and Japanese

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Speaker 1: exports to China are surging, right and given you know,

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Speaker 1: you know in the past that the Chinese, you know,

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Speaker 1: the boycotting of Japanese goods, etcetera. But Japanese exports to

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Speaker 1: China surging. The other interesting thing is I think in

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Speaker 1: you know, in August, the two foreign ministers of the

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Speaker 1: two countries meeting in Singapore and the silence of the

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Speaker 1: ARCon summit and both of them agreeing to cooperate, and

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Speaker 1: the Chinese being very keen to bring in Japanese companies

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Speaker 1: into One Belt, one Road, and you know, if the

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Speaker 1: Nikki is to be believed, there China China senior leadership

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Speaker 1: right now is putting together a document that will redefine

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Speaker 1: diplomatic relationships between China and Japan. But I think it's

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Speaker 1: you know, my view is and it's a there's a

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Speaker 1: conference of vested interests here, well exactly, It's right where

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Speaker 1: I wanted to go. Within that vested interests is the

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Speaker 1: idea of a collegial mercantilism. Are they both comfortable with

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Speaker 1: President Trump's neo mercantilist view. I don't think either of

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Speaker 1: them are comfortable at all. I mean, I think China

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Speaker 1: was kind of expecting it, you know that, you know,

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Speaker 1: the view in the US that the China R and

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Speaker 1: B is manipulated, that the trade deficit wis of each

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Speaker 1: China is too big. You know, that's been an ongoing

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Speaker 1: thing for years. I think what where China has been

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Speaker 1: taken by surprise is how aggressively President Trump has got

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Speaker 1: ahead with imposing you know, tariffs on China imports. And

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Speaker 1: there's no stopping there either. Um, you know, it's not

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Speaker 1: it doesn't look like just purely a negotiating tool, I think.

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Speaker 1: But the bigger surprise, I think is for Japan. You know, uh,

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Speaker 1: you know, I think Japan, like Korea, is finding out

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Speaker 1: unfortunately that the US isn't quite the reliable trade trading

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Speaker 1: partner or allied that it has been historically. Show thank

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Speaker 1: you so much. I'm breaking news we've got to run.

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Speaker 1: But showing away and then with this with jam Mark's

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Speaker 1: Asianamics and thrill that she could join us. Joe Filman

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Speaker 1: with us? What tells the advisory? We're thrilled he's with us. Joe,

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Speaker 1: you a polished this morning? Can you make some news

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Speaker 1: on Bloomberg? Raylinson suggest will you raise your target prices

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Speaker 1: and outperform or do we need to wait for a

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Speaker 1: Telsea sign off on that? We need to wait for

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Speaker 1: Telsea sign off on that, but I will say that

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Speaker 1: my current price target is two d and seventeen dollars,

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Speaker 1: which is nicely above where the stock is currently trading.

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Speaker 1: So and it looks like it's going to open up

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Speaker 1: today a little bit, a couple of percent. Very good results.

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Speaker 1: What is the distinguishing feature within the press release this morning?

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Speaker 1: I think the transactions count being up three that it

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Speaker 1: was negative last quarter for the first time in years,

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Speaker 1: and so to rebound back and see that positive transaction

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Speaker 1: number is very good because that's really what driving the business.

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Speaker 1: What he's just done there is why is Joe fel

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Speaker 1: Feldman away works with Dana Telsey. Revenue PIM is a

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Speaker 1: partial differential of units and price, and everybody in the

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Speaker 1: media is priced specific, and there's Joe Feldman looking at

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Speaker 1: the units moving the actual the actual units. Joe, is

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Speaker 1: there a split that is worth noting when it comes

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Speaker 1: to the home depot between the wholesale the professional customer,

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Speaker 1: and the home sort of do it yourself customer. Well,

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Speaker 1: the pro customer has been running driving better sales growth

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Speaker 1: for home depot for quite some time now, and I

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Speaker 1: would expect when we hear the conference call that they're

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Speaker 1: going to say the same. Uh, it was likely a

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Speaker 1: driver of ticket because the pro customer does spend a

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Speaker 1: little more. Home depot sales come from pro customers, so

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Speaker 1: that's a big driver of this business. Are they also

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Speaker 1: seeing the increase in the cost of wood and wood

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Speaker 1: products and other products that are imported into the United States.

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Speaker 1: I suspect we will hear a little bit about some

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Speaker 1: of the inflation that's happening right now and maybe how

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Speaker 1: the tariffs are hitting them. But they made it very

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Speaker 1: clear to me in the past that they directly import

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Speaker 1: six percent of their goods and only around of their

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Speaker 1: broader based goods come from China, where the tariffs would

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Speaker 1: have an impact. But clearly there has been some pressure

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Speaker 1: and lumber ice is coming in from from Canada and

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Speaker 1: we may hear a little bit of inflation on those

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Speaker 1: those categories. Do you think that home Depot is doing

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Speaker 1: enough online to thwart any potential competition from Amazon? You know,

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Speaker 1: I will tell you that Home Deepot has done a

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Speaker 1: very good job online and they have been out in

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Speaker 1: the forefront of this and understanding that they need to

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Speaker 1: be able to have fast fulfillment for the customer, whether

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Speaker 1: it's for the pro customer or there's the d I

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Speaker 1: Y customer UH and leveraging their stores for you know,

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Speaker 1: pick up at store, ship from store. So they've actually

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Speaker 1: been ahead of a lot of other retailers and I

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Speaker 1: think that they are very well aware of that. And

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Speaker 1: you know, e commerce makes up made to high single

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Speaker 1: digit percent of sales. Now I'm glad you're bringing that up.

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Speaker 1: Is what what is there? Am? I mean, everybody's got

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Speaker 1: an Amazon strategy, even Joe Felban. What is home Depot's

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Speaker 1: Amazon strategy? I think They're Amazon strategy is the fact

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Speaker 1: that the average the customer that they have when they're

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Speaker 1: working on a project, they want to go into the

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Speaker 1: store and touch and field the goods and for those

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Speaker 1: that don't need to do that, they're going to be

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Speaker 1: as fast as as delivery as Amazon will. We're better.

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Speaker 1: They have a broader assortment of this category. A lot

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Speaker 1: of the materials that they sell are things that Amazon

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Speaker 1: has a tough time shipping, So there's some differentiation there

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Speaker 1: for sure. Do you know, Pim that Kent lan Gone

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Speaker 1: was all wound up about shovels when it was with us.

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Speaker 1: We had a shovel and he got bruised hands. They

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Speaker 1: have five hundred seven shovels. When you search at home depot,

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Speaker 1: you don't need five shovels, but but in case you do. Hey, Joe,

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Speaker 1: if this is if this has been such a good story,

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Speaker 1: why is the stock up only two two and a

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Speaker 1: half percent so far this year? Why didn't people get this?

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Speaker 1: You know, I think this stock has been a champ

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Speaker 1: for the past five six years, and I think there's

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Speaker 1: everybody on the investment side is trying to figure out

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Speaker 1: when is the end of the story, and we haven't

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00:25:06,320 --> 00:25:09,320
Speaker 1: seen it yet. I think there's always this concern that

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Speaker 1: the housing market is going to slow and therefore home

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Speaker 1: improvement sales at home deep on lows will slow we've

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Speaker 1: not seen it yet. We don't think it's around the corner,

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Speaker 1: just jet, which is why we see the stock continuing

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Speaker 1: to work from here. Do you believe that home Depot

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Speaker 1: is a proxy for the health of the housing market

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Speaker 1: in the United States. I think it's a proxy for

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Speaker 1: the health of the consumer in the United States. To

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Speaker 1: the extent that you know, two thirds of all homes

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Speaker 1: are owned in the US, UH tends to be that

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Speaker 1: that homeowners are the ones that can spend a little

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Speaker 1: bit more, just broadly speaking, and I think it is

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Speaker 1: reflective of that the vast majority of sales at home

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Speaker 1: improvement are done by people in their homes as opposed

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Speaker 1: to ones buying and selling home. Joe with me, I

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Speaker 1: can't found emils. This is called home disimprovement at the Keen. Also,

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Speaker 1: we gotta keep your eyes open when you hit the name.

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Speaker 1: Can we say thank you Mr Feldon? Thank you This

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Speaker 1: Sun Television and Radio today. Really brilliant, really smart. Thanks

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00:26:13,640 --> 00:26:17,879
Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen

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Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform

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Speaker 1: you prefer. I'm on Twitter at Tom Keene. Before the podcast,

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Speaker 1: you can always catch us worldwide. I'm Bloomberg Radio