1 00:00:00,120 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,439 Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each 4 00:00:18,520 --> 00:00:21,400 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,440 --> 00:00:24,720 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,800 --> 00:00:27,440 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,520 --> 00:00:31,040 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 8 00:00:31,200 --> 00:00:33,479 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,520 --> 00:00:37,000 Speaker 2: Bloomberg Terminal and the Bloomberg Business app. Ana Stagia joins 10 00:00:37,080 --> 00:00:39,319 Speaker 2: us now for more, Anna Stagia, Can we start by 11 00:00:39,320 --> 00:00:41,440 Speaker 2: talking about the setup going into next week with some 12 00:00:41,479 --> 00:00:44,760 Speaker 2: big data points on deck, including CPI and retail sales. 13 00:00:44,800 --> 00:00:45,680 Speaker 2: Can you walk us through that? 14 00:00:47,040 --> 00:00:47,320 Speaker 1: Sure? 15 00:00:47,440 --> 00:00:49,319 Speaker 3: Well, good morning, John, and first of all, I want 16 00:00:49,320 --> 00:00:53,440 Speaker 3: to comment on those bad news conversation going into next week. 17 00:00:53,520 --> 00:00:56,160 Speaker 3: I don't actually think we have much in terms of 18 00:00:56,200 --> 00:00:58,840 Speaker 3: bad news. You know, we had slightly weaker G to 19 00:00:58,880 --> 00:01:01,040 Speaker 3: Pree report, but if you look underneath the hood, we 20 00:01:01,120 --> 00:01:05,000 Speaker 3: actually have a very strong core demand in the economy. 21 00:01:05,280 --> 00:01:07,800 Speaker 3: When you look at the real time consumer data, it's 22 00:01:07,800 --> 00:01:11,000 Speaker 3: actually improving from earlier in the year, and then if 23 00:01:11,000 --> 00:01:13,760 Speaker 3: you look at the manufacturing SURVEYCE, maybe they disappoint a 24 00:01:13,840 --> 00:01:16,319 Speaker 3: little bit on a one month basis, but I still 25 00:01:16,360 --> 00:01:18,559 Speaker 3: look at the inventory levels and I think they're low 26 00:01:18,720 --> 00:01:21,959 Speaker 3: enough to start to jump start a restocking cycle. So 27 00:01:22,000 --> 00:01:24,360 Speaker 3: I think the setup going into next week, the CPI 28 00:01:24,480 --> 00:01:27,160 Speaker 3: report next week, and then Nvidia the week after, I 29 00:01:27,160 --> 00:01:30,120 Speaker 3: think the setup is fairly strong from the growth perspective. 30 00:01:30,600 --> 00:01:33,720 Speaker 3: And you know, in terms of inflation, you know, we 31 00:01:33,720 --> 00:01:36,600 Speaker 3: were waiting for the last mile of inflation. Guess what 32 00:01:36,800 --> 00:01:39,920 Speaker 3: it's here, it's upon us. We've managed to go from 33 00:01:40,000 --> 00:01:43,160 Speaker 3: five point eight percent CPI a year ago to now 34 00:01:43,160 --> 00:01:46,080 Speaker 3: hopefully three point eight percent or below this year, So 35 00:01:46,120 --> 00:01:49,160 Speaker 3: that's almost two percent points of improvement. And you know, 36 00:01:49,200 --> 00:01:51,440 Speaker 3: if you look at the core PC metric, it's two 37 00:01:51,440 --> 00:01:54,720 Speaker 3: point eight percent, so that's a two handle. So I 38 00:01:54,800 --> 00:01:57,520 Speaker 3: think we are in that last mile and that's actually 39 00:01:57,600 --> 00:01:59,120 Speaker 3: positive development and a sage. 40 00:01:59,200 --> 00:02:01,360 Speaker 4: You sound like someone who would be very comfortable being 41 00:02:01,400 --> 00:02:03,320 Speaker 4: a bull in this equity market right now we're past 42 00:02:03,360 --> 00:02:04,960 Speaker 4: fifty two hundred. Can you keep buying? 43 00:02:06,520 --> 00:02:06,840 Speaker 2: Yes? 44 00:02:07,240 --> 00:02:10,280 Speaker 3: I can't. And obviously the risk reward was better when 45 00:02:10,320 --> 00:02:13,160 Speaker 3: we were closer to five thousand, and that's why we 46 00:02:13,160 --> 00:02:16,240 Speaker 3: were saying that we should be adding to allocations if 47 00:02:16,280 --> 00:02:18,680 Speaker 3: you're underweight relative strategic ones. 48 00:02:18,880 --> 00:02:19,760 Speaker 5: But still, if. 49 00:02:19,720 --> 00:02:22,120 Speaker 3: I look ahead, and if I look at the current multiple, 50 00:02:22,200 --> 00:02:24,880 Speaker 3: which I think can be sustained as long as this 51 00:02:24,919 --> 00:02:27,880 Speaker 3: economic environment is sustained, and if I apply that to 52 00:02:27,960 --> 00:02:30,360 Speaker 3: two hundred and seventy eight dollars in SMP five hundred 53 00:02:30,400 --> 00:02:33,880 Speaker 3: earnings for next year, that gets me to an imply 54 00:02:33,960 --> 00:02:36,840 Speaker 3: price target of fifty four hundred on the SMP. I 55 00:02:36,840 --> 00:02:39,519 Speaker 3: think that's the base case scenario, and so I do 56 00:02:39,600 --> 00:02:42,440 Speaker 3: think stocks are worth being in and we're staying for 57 00:02:43,080 --> 00:02:45,280 Speaker 3: and you know, maybe the upside to fifty four hundred 58 00:02:45,400 --> 00:02:47,959 Speaker 3: is not all that great, but that's for the SMP. 59 00:02:48,120 --> 00:02:51,040 Speaker 3: And I think you can find pockets of opportunity within 60 00:02:51,080 --> 00:02:54,680 Speaker 3: the market that should be able to outperform and stage. 61 00:02:54,680 --> 00:02:55,400 Speaker 6: It's Jim Bianco. 62 00:02:55,400 --> 00:02:57,160 Speaker 5: I want to ask you about the bond market. We 63 00:02:57,240 --> 00:02:59,440 Speaker 5: started the year at the tenure yield at around three 64 00:02:59,480 --> 00:03:02,120 Speaker 5: point nine percent. We got as high as four point 65 00:03:02,160 --> 00:03:04,320 Speaker 5: seven percent a couple of weeks ago. We're around four 66 00:03:04,320 --> 00:03:07,360 Speaker 5: and a half now. Set uptrend going to continue. Do 67 00:03:07,440 --> 00:03:09,440 Speaker 5: you think or do you think we're kind of finding 68 00:03:09,480 --> 00:03:10,640 Speaker 5: a high yield. 69 00:03:10,400 --> 00:03:10,880 Speaker 1: For the year. 70 00:03:12,240 --> 00:03:14,000 Speaker 3: Yeah, I think thanks for the question, Jim, and I 71 00:03:14,040 --> 00:03:18,040 Speaker 3: think for now we have sufficiently priced in the new reality, 72 00:03:18,400 --> 00:03:22,480 Speaker 3: which is growth that is remaining pretty robust, which is 73 00:03:22,520 --> 00:03:25,600 Speaker 3: inflation expectations that have picked up, and of course the 74 00:03:25,600 --> 00:03:29,000 Speaker 3: central bank policy which apparently may not have much in 75 00:03:29,080 --> 00:03:31,280 Speaker 3: terms of rate cuts this year. So I think Jim 76 00:03:31,360 --> 00:03:35,040 Speaker 3: Thatapp moved to four point seven that sufficiently reflected that. 77 00:03:35,280 --> 00:03:37,840 Speaker 3: And when we look at the imply fair value in 78 00:03:37,920 --> 00:03:41,000 Speaker 3: a ten year based on some of the models out there, 79 00:03:41,080 --> 00:03:43,720 Speaker 3: relative to where the ten year is today, it is 80 00:03:43,800 --> 00:03:47,000 Speaker 3: trading above some of those fair value models. So I 81 00:03:47,080 --> 00:03:51,520 Speaker 3: do actually think that that's what gives me more optimism 82 00:03:51,720 --> 00:03:54,920 Speaker 3: on the equity market, is if the tenure can pause 83 00:03:54,960 --> 00:03:59,360 Speaker 3: around these current levels, then that's less drag on valuations 84 00:03:59,360 --> 00:04:00,160 Speaker 3: for equities. 85 00:04:00,400 --> 00:04:02,480 Speaker 5: Do you think that the FED is going to move 86 00:04:02,560 --> 00:04:05,320 Speaker 5: this year and would that change your outlook a lot 87 00:04:05,400 --> 00:04:06,280 Speaker 5: if they were to move. 88 00:04:07,920 --> 00:04:11,680 Speaker 3: Look, I do think the FED will likely move once, 89 00:04:11,880 --> 00:04:14,560 Speaker 3: maybe twice this year, and obviously that has to be 90 00:04:14,680 --> 00:04:18,360 Speaker 3: later in the year. Look, the FED, I think realizes 91 00:04:18,480 --> 00:04:22,200 Speaker 3: that they solve what they could solve, which is slowing 92 00:04:22,240 --> 00:04:25,479 Speaker 3: down demand in the interest rates sensitive parts of the economy. 93 00:04:25,720 --> 00:04:29,120 Speaker 3: What the FED cannot solve is the supply of labor 94 00:04:29,480 --> 00:04:31,800 Speaker 3: and the supply of housing. And when you look at 95 00:04:31,839 --> 00:04:35,279 Speaker 3: inflation today, what's really making it sticky. It's the fact 96 00:04:35,320 --> 00:04:37,760 Speaker 3: that wages are still rising and the fact that there's 97 00:04:37,800 --> 00:04:41,479 Speaker 3: a shortage of workers. And I'm in Miami this week 98 00:04:41,600 --> 00:04:44,039 Speaker 3: and apparently the unemployment rate in Miami is one point 99 00:04:44,160 --> 00:04:47,640 Speaker 3: nine percent. So talk about a lot of demand and 100 00:04:47,800 --> 00:04:51,320 Speaker 3: lack of lack of labor. The FED can't really solve that. 101 00:04:51,720 --> 00:04:54,400 Speaker 3: You know, the FED can't also solve the shortage of 102 00:04:54,480 --> 00:04:57,480 Speaker 3: housing and the underbuilding that we've had in the economy 103 00:04:57,720 --> 00:05:00,440 Speaker 3: of housing over the last ten years. They could slowed 104 00:05:00,480 --> 00:05:02,719 Speaker 3: the demand, and they have done that, but they can't 105 00:05:02,800 --> 00:05:06,400 Speaker 3: quickly turn on the supply spicket. So I think having 106 00:05:06,440 --> 00:05:10,799 Speaker 3: this realization is the reason why the FED will likely 107 00:05:10,880 --> 00:05:14,080 Speaker 3: cut interest rates, because they've done a lot and certain 108 00:05:14,120 --> 00:05:17,680 Speaker 3: parts of the economy, certain pockets are certainly feeling the strain, 109 00:05:17,960 --> 00:05:21,120 Speaker 3: which is commercial real estate, especially in office and of 110 00:05:21,160 --> 00:05:23,680 Speaker 3: course that relates to the regional banks as well. So 111 00:05:23,839 --> 00:05:26,760 Speaker 3: I do think, you know, if inflation continues to be 112 00:05:27,400 --> 00:05:30,240 Speaker 3: somewhere in the two to three percent range, as we 113 00:05:30,320 --> 00:05:32,040 Speaker 3: move through the year, they should cut rates. 114 00:05:32,120 --> 00:05:34,359 Speaker 2: Anastacia, you've been constructive for a while. You've had a 115 00:05:34,400 --> 00:05:36,360 Speaker 2: bus to buy. I remember you called the pull back 116 00:05:36,400 --> 00:05:38,960 Speaker 2: in April a better entry point. Clearly, based on the 117 00:05:39,040 --> 00:05:41,200 Speaker 2: last few weeks, you've been right. Could you tell us 118 00:05:41,240 --> 00:05:44,279 Speaker 2: how independent your market call is from your FED code. 119 00:05:46,279 --> 00:05:50,200 Speaker 3: It's fairly independent, Jonathan. When we wrote the outlook for 120 00:05:50,279 --> 00:05:54,839 Speaker 3: this year, we did expect rate cuts, but at the 121 00:05:54,880 --> 00:05:57,080 Speaker 3: same time, we said, what if the FED doesn't cut 122 00:05:57,120 --> 00:06:00,040 Speaker 3: interest rates? And the conclusion was, it is still the 123 00:06:00,279 --> 00:06:03,360 Speaker 3: equity market that's worth staying in and worth being in. 124 00:06:03,839 --> 00:06:06,400 Speaker 3: And the reason we said that was because of the 125 00:06:06,400 --> 00:06:09,720 Speaker 3: growth resilience that we were expecting. You know, there's this 126 00:06:09,880 --> 00:06:14,640 Speaker 3: notion of the US exceptionalism, of the US economic exceptionalism, 127 00:06:14,960 --> 00:06:18,200 Speaker 3: and it is so true because this economy is not 128 00:06:18,240 --> 00:06:21,320 Speaker 3: all that it interest rates sensitive. And in fact, when 129 00:06:21,360 --> 00:06:24,960 Speaker 3: you look at the consumer, what we pay in terms 130 00:06:24,960 --> 00:06:28,360 Speaker 3: of mortgage has not actually reset higher because only five 131 00:06:28,400 --> 00:06:31,640 Speaker 3: percent of mortgages are a floating rate, and yet the 132 00:06:31,680 --> 00:06:34,479 Speaker 3: amount of income that we earn by parking the cash 133 00:06:34,480 --> 00:06:37,800 Speaker 3: that we had in a money market account is quite significant. 134 00:06:37,839 --> 00:06:41,560 Speaker 3: It's a significant pickup. So this is why, you know, 135 00:06:42,360 --> 00:06:46,480 Speaker 3: we thought that the consumer can handle five percent interest 136 00:06:46,560 --> 00:06:49,840 Speaker 3: rates as they have supporting the economy. And that's why, 137 00:06:49,880 --> 00:06:53,000 Speaker 3: even if the FAT doesn't cut rates, the economic backdrop 138 00:06:53,000 --> 00:06:57,600 Speaker 3: should support equity valuations and equity earnings, of course. 139 00:06:57,440 --> 00:06:59,520 Speaker 2: And so far it has. Anaesthice, you've been Great's got 140 00:06:59,560 --> 00:07:11,800 Speaker 2: to catch up and a station there please to say 141 00:07:11,800 --> 00:07:14,840 Speaker 2: that joining us now is nil data of renmac neil. 142 00:07:14,840 --> 00:07:16,480 Speaker 2: I've been looking forward to. This was written a note 143 00:07:16,520 --> 00:07:19,640 Speaker 2: of yours earlier this week. The labor market rebalancing has 144 00:07:19,720 --> 00:07:22,600 Speaker 2: been achieved. Can you walk us through just how we've 145 00:07:22,600 --> 00:07:22,920 Speaker 2: done that? 146 00:07:25,040 --> 00:07:29,320 Speaker 7: Well, we've you know, job openings have come down, job openings, 147 00:07:29,320 --> 00:07:33,880 Speaker 7: remember our measure of excess labor demand with very little 148 00:07:34,280 --> 00:07:37,000 Speaker 7: upward movement in the unemployment. Right now, the unemployment rate 149 00:07:37,040 --> 00:07:41,160 Speaker 7: has gone up, but you know it does look for 150 00:07:41,280 --> 00:07:43,760 Speaker 7: the time being that the FED was kind of able 151 00:07:43,800 --> 00:07:50,200 Speaker 7: to successfully, you know, trim excess labor demand without driving. 152 00:07:50,000 --> 00:07:55,320 Speaker 6: Up unemployment all that much. And I think what's. 153 00:07:55,160 --> 00:07:58,040 Speaker 7: Important now, John, is that, yes, the e CI which 154 00:07:58,080 --> 00:08:01,400 Speaker 7: you mentioned earlier did pop in the first port. But 155 00:08:01,560 --> 00:08:04,080 Speaker 7: the underlying you know, sort of drivers of that data 156 00:08:04,720 --> 00:08:08,120 Speaker 7: are the average hourly earnings for non supervisory workers, and 157 00:08:08,160 --> 00:08:10,480 Speaker 7: we saw in April that that's cooling. Over the last 158 00:08:10,560 --> 00:08:14,480 Speaker 7: three months, average hourly earnings growth for non supervisory workers 159 00:08:14,480 --> 00:08:17,560 Speaker 7: are barely up three percent at an annual rate. And 160 00:08:17,680 --> 00:08:20,760 Speaker 7: given the growth and productivity that we've seen, even if 161 00:08:20,760 --> 00:08:23,680 Speaker 7: you assume it's like half that, so let's say one 162 00:08:23,760 --> 00:08:27,440 Speaker 7: to one and a half percent productivity, you're talking about 163 00:08:28,360 --> 00:08:31,240 Speaker 7: wage growth that is broadly consistent with the feds underlying 164 00:08:31,240 --> 00:08:33,880 Speaker 7: inflation objectives, which is why unit labor costs I think 165 00:08:34,040 --> 00:08:34,800 Speaker 7: have been cooling. 166 00:08:35,200 --> 00:08:36,800 Speaker 6: So where's the inflation coming from? 167 00:08:36,880 --> 00:08:39,960 Speaker 7: I mean that to me is the big story here 168 00:08:40,040 --> 00:08:42,920 Speaker 7: is if you ask someone why did inflation perk up 169 00:08:42,960 --> 00:08:45,240 Speaker 7: in the first quarter, they can't really point to a 170 00:08:45,280 --> 00:08:46,560 Speaker 7: fundamental reason for that. 171 00:08:47,360 --> 00:08:49,480 Speaker 6: Is it because expectations are perking back up? 172 00:08:49,520 --> 00:08:49,600 Speaker 1: No? 173 00:08:49,840 --> 00:08:52,080 Speaker 6: Is it because the labor markets are reheating. 174 00:08:52,200 --> 00:08:52,280 Speaker 1: No? 175 00:08:52,559 --> 00:08:56,280 Speaker 7: Is it because the dollars weakening, driving up, you know, 176 00:08:56,600 --> 00:08:59,040 Speaker 7: pushing up the prices for imported consumer goods. No, the 177 00:08:59,080 --> 00:09:02,280 Speaker 7: dollars generally stronger all year. So you can point to 178 00:09:02,360 --> 00:09:05,440 Speaker 7: things like, well, look, financial services inflation picked up, and 179 00:09:05,480 --> 00:09:08,000 Speaker 7: healthcare services and all motor vehicle insurance. Sort of the 180 00:09:08,040 --> 00:09:11,439 Speaker 7: idiosyncratic factors I think it's important for people to kind 181 00:09:11,480 --> 00:09:14,520 Speaker 7: of go to first principles here, and you know, this 182 00:09:14,640 --> 00:09:18,120 Speaker 7: is why I think the case for weaker inflation is 183 00:09:18,160 --> 00:09:19,080 Speaker 7: still quite strong. 184 00:09:19,400 --> 00:09:21,079 Speaker 2: Well, two things to impact their First of you on 185 00:09:21,120 --> 00:09:22,719 Speaker 2: the labor market. Let's just build on that for a 186 00:09:22,720 --> 00:09:24,520 Speaker 2: little bit if we can kneil. So this is the 187 00:09:24,559 --> 00:09:26,920 Speaker 2: line from City and Andrew Hanhorst and the team. They 188 00:09:26,920 --> 00:09:29,360 Speaker 2: say evidence is building that the labor market is poised 189 00:09:29,640 --> 00:09:33,080 Speaker 2: for sharp weakening. You use the word cooling. Can you 190 00:09:33,120 --> 00:09:36,400 Speaker 2: help us understand the difference between a welcome calling in 191 00:09:36,440 --> 00:09:39,599 Speaker 2: the labor market and a prospect of an unwelcome deterioration. 192 00:09:41,920 --> 00:09:44,280 Speaker 7: Well, what you want to do is look for discontinuities 193 00:09:44,320 --> 00:09:46,959 Speaker 7: in the data. That's that Alan Greenspan sort of line. 194 00:09:47,040 --> 00:09:48,760 Speaker 7: Right when you have a bunch of two hundred thousand 195 00:09:48,840 --> 00:09:50,320 Speaker 7: job numbers and then all of a sudden you have 196 00:09:50,360 --> 00:09:52,199 Speaker 7: a fifty, then he should be worried. But if you're 197 00:09:52,240 --> 00:09:54,000 Speaker 7: talking about where we are right now, I mean I 198 00:09:54,000 --> 00:09:57,240 Speaker 7: don't really see much evidence for that. You know, you 199 00:09:57,280 --> 00:10:01,160 Speaker 7: mentioned jobless claims, even if if you assume that number 200 00:10:01,200 --> 00:10:03,920 Speaker 7: is legit, which it's not because it was mostly driven 201 00:10:03,960 --> 00:10:07,240 Speaker 7: by one state, New York the break even level was 202 00:10:07,280 --> 00:10:09,040 Speaker 7: still around two hundred and sixty thousand. 203 00:10:09,040 --> 00:10:09,720 Speaker 6: If you look at the. 204 00:10:11,520 --> 00:10:14,160 Speaker 7: Separations and hires data from Jolts, you can kind of 205 00:10:14,200 --> 00:10:17,800 Speaker 7: back out what break even initial claims are. So you're 206 00:10:17,840 --> 00:10:20,520 Speaker 7: still talking about continued jobs growth, you know, in a 207 00:10:20,520 --> 00:10:22,560 Speaker 7: reign of one hundred and seventy five to two hundred thousand. 208 00:10:22,679 --> 00:10:25,080 Speaker 7: So if you see one hundred and seventy five to 209 00:10:25,080 --> 00:10:28,559 Speaker 7: two hundred thousand jobs and you know, slowing wage growth 210 00:10:28,600 --> 00:10:30,480 Speaker 7: towards you know, let's say three and a half percent, 211 00:10:30,960 --> 00:10:34,800 Speaker 7: that would be cooling. If you see significantly worse than that, 212 00:10:35,600 --> 00:10:39,199 Speaker 7: then you'd be worried. But jobs are something that come 213 00:10:39,280 --> 00:10:42,559 Speaker 7: out of growth, right, Jobs don't necessarily go into growth, 214 00:10:42,640 --> 00:10:45,920 Speaker 7: and if the economy is growing, employment will follow. And 215 00:10:45,960 --> 00:10:48,760 Speaker 7: we know that the economy is growing. You know, if 216 00:10:48,800 --> 00:10:51,000 Speaker 7: you look at underlying domestic demand, I mean, it looks 217 00:10:51,040 --> 00:10:53,040 Speaker 7: like it's close to three percent in the first half 218 00:10:53,040 --> 00:10:55,280 Speaker 7: of the year, So I think that's that doesn't leave 219 00:10:55,320 --> 00:10:59,160 Speaker 7: me that concerned about sort of discontinuities in a labor market. 220 00:10:59,200 --> 00:11:01,439 Speaker 4: Well, neil to that point, and you know, earnings of 221 00:11:01,480 --> 00:11:04,199 Speaker 4: backed up everything you've said. We've seen huge capex coming 222 00:11:04,200 --> 00:11:07,520 Speaker 4: from companies to what could possibly drive a cooling? 223 00:11:07,559 --> 00:11:12,960 Speaker 7: Then well, what could drive a cooling in the labor market? Well, 224 00:11:13,000 --> 00:11:15,520 Speaker 7: I just think it's that turnovers is coming down. I mean, 225 00:11:15,559 --> 00:11:19,360 Speaker 7: that's that's really what it is. You know, there's there's 226 00:11:19,400 --> 00:11:22,320 Speaker 7: been a pick up in labor supply and there's been 227 00:11:22,360 --> 00:11:24,880 Speaker 7: less turnover in the job market, and so I think 228 00:11:24,960 --> 00:11:26,960 Speaker 7: those things basically. 229 00:11:26,440 --> 00:11:29,760 Speaker 6: Tell you and come combined for you know, a moderation. 230 00:11:29,960 --> 00:11:30,480 Speaker 6: I mean, we're. 231 00:11:30,360 --> 00:11:33,520 Speaker 7: Basically hitting equilibrium now in the labor market, and I 232 00:11:33,520 --> 00:11:35,480 Speaker 7: think that's that's the bigger story. 233 00:11:35,559 --> 00:11:38,720 Speaker 6: And at the same time, I mean, the economy isn't 234 00:11:38,559 --> 00:11:41,800 Speaker 6: getting away from the FED. Yes, you mentioned capex. 235 00:11:41,840 --> 00:11:43,959 Speaker 7: Capex could be a big driver of growth this year, 236 00:11:44,000 --> 00:11:45,800 Speaker 7: but there are other areas that will probably cool. 237 00:11:45,880 --> 00:11:47,800 Speaker 6: I mean, for example, residential investment. 238 00:11:47,840 --> 00:11:50,360 Speaker 7: I mean, that was a very strong area in Q one, 239 00:11:50,440 --> 00:11:52,400 Speaker 7: but given the backup in rates that we've seen, it's 240 00:11:52,440 --> 00:11:55,040 Speaker 7: unlikely that that repeats over the next couple of quarters. 241 00:11:55,640 --> 00:11:58,600 Speaker 7: And you should see some rebalancing and consumer spending, right 242 00:11:58,640 --> 00:12:02,160 Speaker 7: because a lot of the up movement in consumption and 243 00:12:02,200 --> 00:12:04,480 Speaker 7: we have retail sales next week, a lot of that 244 00:12:04,520 --> 00:12:06,040 Speaker 7: in the last two months has been driven by a 245 00:12:06,080 --> 00:12:09,040 Speaker 7: decline of the savings rate, It's hard to see that lasting. 246 00:12:09,160 --> 00:12:11,960 Speaker 7: So I'd expect a better sort of more balanced mix 247 00:12:12,040 --> 00:12:14,400 Speaker 7: to growth going forward. So you know, I don't think 248 00:12:14,400 --> 00:12:16,680 Speaker 7: growth is getting away from us. But you know, again, 249 00:12:16,840 --> 00:12:20,800 Speaker 7: it's not something I'm lighting my hair on fire for. 250 00:12:21,040 --> 00:12:23,040 Speaker 7: I mean, it's sort of you're talking about two and 251 00:12:23,080 --> 00:12:25,719 Speaker 7: a half percent growth, steady job of growth, and an 252 00:12:25,720 --> 00:12:30,400 Speaker 7: ongoing sort of disinflation trend given the improvement and supply conditions. 253 00:12:30,440 --> 00:12:30,600 Speaker 6: Yeah. 254 00:12:30,679 --> 00:12:34,720 Speaker 4: Right, But again, your words that you're using neil normalized, 255 00:12:35,040 --> 00:12:38,600 Speaker 4: more balance, getting back to averages. Is that a good 256 00:12:38,679 --> 00:12:40,000 Speaker 4: enough reason for the Fed to cut? 257 00:12:42,280 --> 00:12:46,120 Speaker 7: Absolutely, because ultimately they believe that they control inflation. 258 00:12:46,280 --> 00:12:47,760 Speaker 6: So if inflation slows more. 259 00:12:47,720 --> 00:12:50,920 Speaker 7: Quickly than they think over the next several months, then 260 00:12:50,960 --> 00:12:53,160 Speaker 7: they should be cutting because they wouldn't want to tolerate 261 00:12:53,240 --> 00:12:58,480 Speaker 7: an even higher rate of real rates. So you have 262 00:12:58,520 --> 00:13:00,439 Speaker 7: to kind of recalibrate policy just to. 263 00:13:00,400 --> 00:13:03,000 Speaker 2: Stay even should So his will what do you think 264 00:13:03,000 --> 00:13:03,480 Speaker 2: they will do? 265 00:13:04,760 --> 00:13:07,200 Speaker 6: I think they will cut. They will cut. 266 00:13:07,960 --> 00:13:09,880 Speaker 7: At the end of the year, we will still be 267 00:13:09,960 --> 00:13:12,960 Speaker 7: talking about how much is the economy growing and how 268 00:13:12,960 --> 00:13:14,640 Speaker 7: many times has the Fed been cutting. 269 00:13:16,520 --> 00:13:18,840 Speaker 6: I think the case for cuts is still quite strong. 270 00:13:19,360 --> 00:13:21,120 Speaker 6: I think. I put it to you this way. I 271 00:13:21,160 --> 00:13:22,480 Speaker 6: think they go at least once. 272 00:13:23,000 --> 00:13:25,120 Speaker 7: I think two is a good baseline, and I think 273 00:13:25,120 --> 00:13:27,640 Speaker 7: there's an option for three if we're right about how 274 00:13:27,720 --> 00:13:29,920 Speaker 7: quickly inflation slows over the next two quarters. 275 00:13:29,920 --> 00:13:31,880 Speaker 2: I think there's an argument that that's basically what we're 276 00:13:31,880 --> 00:13:34,120 Speaker 2: hearing from Fed officials as well. Neil, Now, can you 277 00:13:34,120 --> 00:13:36,120 Speaker 2: help me with something I'm wrestling with? And that's this 278 00:13:36,200 --> 00:13:39,600 Speaker 2: supply side story in the labor market. Tons has been said, 279 00:13:39,880 --> 00:13:42,319 Speaker 2: tons have been said about the amount of immigration that's 280 00:13:42,360 --> 00:13:44,720 Speaker 2: coming across the southern border. How that's allowed us to 281 00:13:44,760 --> 00:13:48,480 Speaker 2: have this really strong payrolls growth without the corresponding pickup 282 00:13:48,720 --> 00:13:51,920 Speaker 2: in wages. Noil, based on basic communication we've had over 283 00:13:51,960 --> 00:13:55,000 Speaker 2: the last week or so, apparently border encounters have dropped 284 00:13:55,160 --> 00:13:57,719 Speaker 2: and dropped by quite a bit. How can we sort 285 00:13:57,720 --> 00:13:59,600 Speaker 2: of anticipate the data in the months to come based 286 00:13:59,640 --> 00:13:59,920 Speaker 2: on that? 287 00:14:00,120 --> 00:14:03,360 Speaker 6: If it's so, I mean, I don't think that. 288 00:14:03,480 --> 00:14:06,199 Speaker 7: I think that that's sort of the immigration story is 289 00:14:06,280 --> 00:14:07,640 Speaker 7: kind of a rationale. 290 00:14:07,160 --> 00:14:08,480 Speaker 6: That people are working back to. 291 00:14:08,640 --> 00:14:11,400 Speaker 7: It's like, oh, why why has the labor market slopes 292 00:14:11,720 --> 00:14:13,560 Speaker 7: cooled off a bit? Well, you know, here's this big 293 00:14:13,600 --> 00:14:16,319 Speaker 7: pick up in labor force growth. I'm not so sure 294 00:14:16,360 --> 00:14:17,520 Speaker 7: that's the case. 295 00:14:17,559 --> 00:14:19,400 Speaker 6: I mean, I think, you know, unit. 296 00:14:19,280 --> 00:14:22,080 Speaker 7: Labor costs have moderated because you know, people are getting 297 00:14:22,080 --> 00:14:23,960 Speaker 7: a little bit more productive in the jobs that they're 298 00:14:24,120 --> 00:14:26,920 Speaker 7: they're in. So we've seen a picking up of labor 299 00:14:27,000 --> 00:14:30,200 Speaker 7: of labor productivity. So I think that's a that's a 300 00:14:30,200 --> 00:14:32,800 Speaker 7: more important driver. And to your point, I mean, I'm 301 00:14:32,800 --> 00:14:35,360 Speaker 7: not entirely convinced yet that this is like a big, 302 00:14:36,440 --> 00:14:38,440 Speaker 7: you know, secular increase in immigration. 303 00:14:38,520 --> 00:14:40,200 Speaker 6: I mean, it could just be so sort of one 304 00:14:40,240 --> 00:14:42,120 Speaker 6: off dynamics related to the. 305 00:14:43,560 --> 00:14:45,560 Speaker 7: You know, to the opening up of the visa approval 306 00:14:45,600 --> 00:14:47,640 Speaker 7: process following the pandemic, right, so you had a lot 307 00:14:47,680 --> 00:14:49,480 Speaker 7: of people that were kind of on the sidelines, then 308 00:14:49,480 --> 00:14:53,560 Speaker 7: they got their visas finally approved as things reopened and 309 00:14:53,560 --> 00:14:57,000 Speaker 7: and that, and that may well slow down. So again, 310 00:14:57,080 --> 00:15:01,400 Speaker 7: I mean it's something closer to equilibrium. But I think 311 00:15:01,480 --> 00:15:04,640 Speaker 7: that people are getting more productive in their roles, right, 312 00:15:04,720 --> 00:15:07,240 Speaker 7: And I think that's what's important. You aren't seeing quits 313 00:15:07,280 --> 00:15:11,080 Speaker 7: go up as much, and that means that people are 314 00:15:11,080 --> 00:15:14,000 Speaker 7: staying in their jobs longer. And if they're staying in 315 00:15:14,040 --> 00:15:17,680 Speaker 7: their jobs longer, presumably they'll get more productive in those roles. 316 00:15:18,080 --> 00:15:20,400 Speaker 4: No one of the things that people use that that 317 00:15:20,480 --> 00:15:22,840 Speaker 4: immigration piece to say this is an argument that calm 318 00:15:22,880 --> 00:15:25,520 Speaker 4: pickering uses basically to say that we are in for 319 00:15:25,520 --> 00:15:27,960 Speaker 4: an inflation spike next year if we get Trump in 320 00:15:28,000 --> 00:15:30,400 Speaker 4: the White House, because you get more curtailed flow of immigrants. 321 00:15:30,440 --> 00:15:32,840 Speaker 4: Given what you're saying, given again this idea of what 322 00:15:32,840 --> 00:15:34,760 Speaker 4: we're seeing as normalization, it was from some of the 323 00:15:34,840 --> 00:15:38,600 Speaker 4: visa processes opening up. Is that not as relevant of 324 00:15:38,640 --> 00:15:39,240 Speaker 4: a fear. 325 00:15:40,800 --> 00:15:44,000 Speaker 7: Well, Shuretz, I mean, I think worrying about inflation if 326 00:15:44,000 --> 00:15:46,000 Speaker 7: you have I mean, if you know with respect to 327 00:15:46,040 --> 00:15:48,040 Speaker 7: the election, I think you know who knows what the 328 00:15:48,080 --> 00:15:48,720 Speaker 7: outcome is. 329 00:15:48,680 --> 00:15:49,120 Speaker 6: Going to be. 330 00:15:49,960 --> 00:15:52,520 Speaker 7: But I do think it's fair to say that if 331 00:15:53,480 --> 00:15:56,840 Speaker 7: Trump were to win, former President Trump or to win, 332 00:15:57,480 --> 00:16:00,000 Speaker 7: then there's a probably there's a higher. 333 00:15:59,760 --> 00:16:02,000 Speaker 6: Likely good then that you have a unified government. 334 00:16:02,240 --> 00:16:04,640 Speaker 7: And we know that whenever you have a new unified 335 00:16:04,680 --> 00:16:07,480 Speaker 7: government coming out of the elections, they're always going to 336 00:16:07,480 --> 00:16:08,000 Speaker 7: do something. 337 00:16:08,040 --> 00:16:09,720 Speaker 6: It's not like they're going to get into office and. 338 00:16:09,680 --> 00:16:12,800 Speaker 7: Say, hey, everyone, we're going to raise the retirement age 339 00:16:13,000 --> 00:16:16,520 Speaker 7: and cut spending. They're going to want to do something 340 00:16:16,520 --> 00:16:20,600 Speaker 7: that makes people feel good and whether that's uh, you know, 341 00:16:20,680 --> 00:16:23,200 Speaker 7: I think they'll probably lead with something like that tax 342 00:16:23,280 --> 00:16:27,320 Speaker 7: cut spending that'll be inflationary, so you know, to the 343 00:16:27,400 --> 00:16:32,840 Speaker 7: extent that there's a restrictive immigration policy that comes about it, 344 00:16:33,320 --> 00:16:34,040 Speaker 7: it'll add. 345 00:16:33,800 --> 00:16:36,960 Speaker 2: To that even more interested. Neil enjoyed this. Thank you, sir. 346 00:16:37,000 --> 00:16:38,520 Speaker 2: I know you've got thoughts on Gucci. Will do that 347 00:16:38,520 --> 00:16:51,360 Speaker 2: another time. No, DA's a Renmac No, thank you. Oliver 348 00:16:51,480 --> 00:16:54,440 Speaker 2: Shannon TV Cowen joined us. Now for more, Oliver, Let's 349 00:16:54,480 --> 00:16:55,760 Speaker 2: get into that and then we can get to what 350 00:16:55,800 --> 00:16:58,080 Speaker 2: you love, which is luxury sert. Don't worry, we will 351 00:16:58,120 --> 00:17:00,000 Speaker 2: get to that topic in just a moment. Let's look 352 00:17:00,080 --> 00:17:02,320 Speaker 2: add to home Depot and Walmart. What you and the 353 00:17:02,320 --> 00:17:03,760 Speaker 2: team looking for next week. 354 00:17:04,560 --> 00:17:08,080 Speaker 8: We're excited about Walmart, that's our pick. We're more cautious 355 00:17:08,119 --> 00:17:12,680 Speaker 8: and optimistic on target. Walmart is a needs retailer, being 356 00:17:12,880 --> 00:17:15,800 Speaker 8: sixty percent grocery, very helpful in terms of traffic. 357 00:17:16,080 --> 00:17:17,560 Speaker 1: They're also managing. 358 00:17:17,160 --> 00:17:19,840 Speaker 8: Well through this tough time where the consumer really is 359 00:17:19,920 --> 00:17:22,840 Speaker 8: looking for value, very sensitive to price. 360 00:17:23,359 --> 00:17:24,880 Speaker 1: So we're excited about Walmart. 361 00:17:24,920 --> 00:17:28,679 Speaker 8: In addition, Walmart as a technology company, don't forget about 362 00:17:28,880 --> 00:17:32,520 Speaker 8: digital advertising in the marketplace model, and Walmart's getting a 363 00:17:32,600 --> 00:17:36,679 Speaker 8: higher household income customer. For example, you can buy Apple 364 00:17:36,760 --> 00:17:40,119 Speaker 8: Macintosh on the marketplace on the website, as well as 365 00:17:40,320 --> 00:17:42,240 Speaker 8: fragrances like Burberry Goddess. 366 00:17:42,440 --> 00:17:44,280 Speaker 1: So the whole flywheel is working. 367 00:17:44,680 --> 00:17:47,080 Speaker 2: Let's sit on Walmart and let's talk about price and 368 00:17:47,119 --> 00:17:49,840 Speaker 2: pricing power. We've heard from various executives over the last 369 00:17:49,840 --> 00:17:52,199 Speaker 2: few months and maybe they're losing some and that we're 370 00:17:52,240 --> 00:17:56,000 Speaker 2: starting to see some disinflation perhaps even deflation in certain places. 371 00:17:56,160 --> 00:17:57,639 Speaker 2: What do you make of that? What would you expect 372 00:17:57,640 --> 00:17:58,760 Speaker 2: to hear next week? 373 00:18:00,080 --> 00:18:01,280 Speaker 1: That is definitely happening. 374 00:18:01,320 --> 00:18:03,400 Speaker 8: What we have with this new consumer is a consumer 375 00:18:03,440 --> 00:18:07,439 Speaker 8: who's not necessarily very loyal and doesn't want to overpay 376 00:18:07,560 --> 00:18:11,520 Speaker 8: for national brands. What consumers are doing is what we 377 00:18:11,640 --> 00:18:16,920 Speaker 8: call customized moderation value hacking, creating down to private label 378 00:18:17,040 --> 00:18:19,560 Speaker 8: when they want to or need to, and trading up 379 00:18:19,640 --> 00:18:22,879 Speaker 8: very selectively. So that will continue to be a big issue. 380 00:18:22,880 --> 00:18:26,240 Speaker 8: The bottom line is Walmart wants every day low prices. 381 00:18:26,520 --> 00:18:29,760 Speaker 8: They want suppliers to offer low prices too, so that 382 00:18:29,840 --> 00:18:32,680 Speaker 8: the consumer has more money to spend on non food 383 00:18:32,760 --> 00:18:36,080 Speaker 8: and discretionary items. That's still a work in progress in 384 00:18:36,160 --> 00:18:39,040 Speaker 8: terms of the consumer. What's good about the consumer is 385 00:18:39,080 --> 00:18:42,800 Speaker 8: that there's low unemployment and they're still spending power given 386 00:18:42,840 --> 00:18:45,920 Speaker 8: six hundred and seventy billion on the sidelines. What's bad 387 00:18:45,960 --> 00:18:49,520 Speaker 8: about the consumer is that it's still bifurcated with pressure 388 00:18:49,640 --> 00:18:52,560 Speaker 8: at the middle and lower end, in part due to inflation. 389 00:18:53,280 --> 00:18:57,439 Speaker 8: As we look, fundamentally, inflation is getting less bad. However, 390 00:18:57,560 --> 00:19:01,840 Speaker 8: consumer confidence and what the consumer feels is still fairly volatile, 391 00:19:02,200 --> 00:19:04,919 Speaker 8: So mixed signals here. But racing is a hot topic 392 00:19:04,960 --> 00:19:07,879 Speaker 8: because everybody wants low prices oliver. 393 00:19:07,960 --> 00:19:10,680 Speaker 4: Then do you expect, with some of those headwinds you're 394 00:19:10,720 --> 00:19:13,120 Speaker 4: talking about, for it no longer to have the case 395 00:19:13,160 --> 00:19:16,800 Speaker 4: shape that at some point, maybe not the upper echelons 396 00:19:16,800 --> 00:19:18,919 Speaker 4: who will always continue to spend, but for it not 397 00:19:19,040 --> 00:19:22,000 Speaker 4: to just be the lowest end consumer that starts to 398 00:19:22,000 --> 00:19:23,120 Speaker 4: get more price conscious. 399 00:19:24,600 --> 00:19:27,800 Speaker 8: Yeah, I think everybody's getting somewhat priced conscious. We see 400 00:19:27,960 --> 00:19:31,439 Speaker 8: this value hacking consumer, this do it yourself consumer, So 401 00:19:31,560 --> 00:19:34,800 Speaker 8: consumers are looking for newness. Also, what we're seeing in 402 00:19:34,800 --> 00:19:37,760 Speaker 8: our studies is that there's so much receptivity to private 403 00:19:37,840 --> 00:19:41,679 Speaker 8: brands and private labels such as Kirklin at Costco and 404 00:19:41,760 --> 00:19:44,800 Speaker 8: others so that trend should continue. 405 00:19:45,160 --> 00:19:46,919 Speaker 1: What we do see at the higher. 406 00:19:46,800 --> 00:19:50,800 Speaker 8: End is the wealth effect, some confidence, and some pockets 407 00:19:50,800 --> 00:19:53,760 Speaker 8: of strength in the US in particular kind of something 408 00:19:53,800 --> 00:19:56,040 Speaker 8: we're watching that's been very volatile as well. 409 00:19:56,840 --> 00:19:58,920 Speaker 2: Can we talk about luxury then, I know you love it, 410 00:19:58,960 --> 00:20:00,959 Speaker 2: and I promise we talk about that's it. There are 411 00:20:01,000 --> 00:20:04,240 Speaker 2: some luxury brands that aren't seeing that stability. They're struggling. 412 00:20:04,320 --> 00:20:07,240 Speaker 2: I'm thinking more specifically about Gucci all but who's getting 413 00:20:07,280 --> 00:20:08,720 Speaker 2: it right and who's getting it wrong? 414 00:20:09,920 --> 00:20:13,399 Speaker 8: Yeah, we're most excited about Louis Baton, given powerhouse brands 415 00:20:13,440 --> 00:20:15,879 Speaker 8: such as Louis Baton as well as d Or. They 416 00:20:15,920 --> 00:20:19,560 Speaker 8: also own Sephora, which is a wonderful beauty concept that's 417 00:20:19,600 --> 00:20:24,040 Speaker 8: global caring. We downgraded the stock that the owner of Gucci. 418 00:20:24,440 --> 00:20:27,240 Speaker 8: Gucci's a work in progress. They really have to reset 419 00:20:27,280 --> 00:20:30,000 Speaker 8: this brand. So some of these issues are somewhat specific 420 00:20:30,040 --> 00:20:33,119 Speaker 8: to the Gucci brand, which needs to return to classic 421 00:20:33,200 --> 00:20:36,600 Speaker 8: and timelessness, but also needs to be more elevated. So 422 00:20:36,960 --> 00:20:40,080 Speaker 8: in this process it's been quite painful and the numbers 423 00:20:40,080 --> 00:20:43,040 Speaker 8: have been quite sharp. What's been happening in luxury goods 424 00:20:43,160 --> 00:20:47,080 Speaker 8: is share shifts as well, so big players like Louis 425 00:20:47,119 --> 00:20:50,680 Speaker 8: Vuitton offer a full range of more quiet, more loud 426 00:20:50,920 --> 00:20:53,840 Speaker 8: luxury all kinds as well as hard luxury, and that's 427 00:20:53,880 --> 00:20:56,160 Speaker 8: been working better in terms of their execution. 428 00:20:56,359 --> 00:20:57,760 Speaker 1: Gucci is something we're watching. 429 00:20:57,760 --> 00:21:00,400 Speaker 8: I do love the brand personally, but it's going through 430 00:21:00,640 --> 00:21:02,840 Speaker 8: a lot of change and part of that will be 431 00:21:03,240 --> 00:21:05,760 Speaker 8: de leveraged or losing some customers as well. 432 00:21:05,880 --> 00:21:06,000 Speaker 7: Well. 433 00:21:06,000 --> 00:21:08,200 Speaker 2: Whose customers are they trying to attract? Can we talk 434 00:21:08,200 --> 00:21:10,040 Speaker 2: about that a little bit more? When we talk about 435 00:21:10,040 --> 00:21:13,399 Speaker 2: the high end we're talking about the high end luxury player. 436 00:21:13,440 --> 00:21:17,639 Speaker 2: We're not necessarily talking about the upper income consumer, because 437 00:21:17,640 --> 00:21:19,479 Speaker 2: I don't believe the last few years with Gucci has 438 00:21:19,480 --> 00:21:22,040 Speaker 2: been about the upper ring income consumer. I think it's 439 00:21:22,040 --> 00:21:26,320 Speaker 2: been across the board, getting access to its aspirational luxury names, 440 00:21:26,320 --> 00:21:27,640 Speaker 2: all of it, and I'm trying to work out who 441 00:21:27,640 --> 00:21:29,879 Speaker 2: the target audience is going to be for that brand. 442 00:21:31,240 --> 00:21:33,199 Speaker 8: Yeah, it's a bit of a reset, and you're one 443 00:21:33,240 --> 00:21:36,280 Speaker 8: hundred percent right. What's happened with the Gucci brand, which 444 00:21:36,320 --> 00:21:40,040 Speaker 8: had very massive growth, is really broaden the aperture of 445 00:21:40,080 --> 00:21:44,720 Speaker 8: what luxury means. It was rethinking technology and gender and 446 00:21:45,160 --> 00:21:48,040 Speaker 8: very very exciting. But on the other side, of this, 447 00:21:48,040 --> 00:21:53,000 Speaker 8: this aspirational customer has been more under pressure, so that's 448 00:21:53,000 --> 00:21:55,399 Speaker 8: something the whole industry is facing as well as Gucci, 449 00:21:55,400 --> 00:21:58,280 Speaker 8: and Gucci has a new designer as well, so. 450 00:21:58,680 --> 00:22:01,680 Speaker 1: In rethinking the brand, luxury. 451 00:22:01,240 --> 00:22:04,600 Speaker 8: Is always about elevation, that's a big focus, and then 452 00:22:04,640 --> 00:22:08,760 Speaker 8: timelessness and taking you back to classic items and hearkening 453 00:22:08,800 --> 00:22:09,240 Speaker 8: back to. 454 00:22:09,200 --> 00:22:11,000 Speaker 1: A lot of the heritage of Gucci too. 455 00:22:11,400 --> 00:22:14,560 Speaker 8: Somewhat specific to Gucci, but they're definitely losing share to 456 00:22:14,600 --> 00:22:18,359 Speaker 8: players like er Mez, like Louis Baton and others which 457 00:22:18,400 --> 00:22:21,840 Speaker 8: have a real anchor on time timelessness as well. 458 00:22:22,080 --> 00:22:22,439 Speaker 1: Well. 459 00:22:22,480 --> 00:22:26,120 Speaker 4: With all that tension of the aspirational buyer, Oliver, it's 460 00:22:26,119 --> 00:22:29,119 Speaker 4: even more remarkable that someone like Sephora, all those beauty 461 00:22:29,160 --> 00:22:32,440 Speaker 4: brands continue to do well because you could say people 462 00:22:32,480 --> 00:22:35,520 Speaker 4: are going to trade down, go to just a convenience store, 463 00:22:35,520 --> 00:22:38,119 Speaker 4: a drug store, get their makeup there. But why is 464 00:22:38,160 --> 00:22:40,800 Speaker 4: that story so enduring? Is it just you know, the 465 00:22:40,840 --> 00:22:44,240 Speaker 4: thirteen year olds on TikTok looking at influencers then deciding 466 00:22:44,280 --> 00:22:45,840 Speaker 4: to go to Sephora to buy something. 467 00:22:47,040 --> 00:22:49,320 Speaker 8: Yeah, it's all happening. I mean ten year olds too 468 00:22:49,359 --> 00:22:53,800 Speaker 8: with skincare regimes. What I love about beauty is that 469 00:22:53,840 --> 00:22:56,639 Speaker 8: it's an essential good. It also gets a bit blurred 470 00:22:56,720 --> 00:23:01,080 Speaker 8: with health and wellness, but lots of abundant innovation and cosmetics, 471 00:23:01,119 --> 00:23:04,920 Speaker 8: hair care, skincare. As we think about fragrances, our favorite 472 00:23:04,920 --> 00:23:08,160 Speaker 8: idea is Cody. We also like Alta, which in many 473 00:23:08,200 --> 00:23:10,560 Speaker 8: ways is like home depot for women in terms of 474 00:23:10,600 --> 00:23:11,480 Speaker 8: that routine. 475 00:23:11,840 --> 00:23:13,480 Speaker 1: There's a ton of innovation as well. 476 00:23:13,320 --> 00:23:18,120 Speaker 8: As social media that fuels new processes for cosmetics, skincare 477 00:23:18,440 --> 00:23:21,119 Speaker 8: is taking care of yourself and self care. It's been 478 00:23:21,160 --> 00:23:23,880 Speaker 8: a very resilient industry because a lot of the habits 479 00:23:23,880 --> 00:23:26,760 Speaker 8: that were picked up during pandemic really stuck in beauty, 480 00:23:26,800 --> 00:23:29,400 Speaker 8: and beauty is a profitable, growing business globally. 481 00:23:29,840 --> 00:23:31,200 Speaker 1: We also see. 482 00:23:31,000 --> 00:23:33,359 Speaker 2: You're going to get us in trouble Home deepot for women. 483 00:23:33,640 --> 00:23:35,320 Speaker 2: Do you want to elaborate on that a little bit more? 484 00:23:36,080 --> 00:23:40,600 Speaker 8: Well, The whole Alta experience is really comprehensive in terms 485 00:23:40,600 --> 00:23:43,960 Speaker 8: of mass plus prestige. You definitely find stuff you didn't 486 00:23:44,000 --> 00:23:47,040 Speaker 8: know you needed, but you also think about replenishment and 487 00:23:47,119 --> 00:23:50,520 Speaker 8: really investing in your face and body and skin. And 488 00:23:50,560 --> 00:23:54,639 Speaker 8: that's a principle that men and women love. But women 489 00:23:54,680 --> 00:23:57,640 Speaker 8: can be very loyal to certain categories such as hair 490 00:23:57,680 --> 00:24:00,920 Speaker 8: care and skincare, and then the cosmetics. There's a lot 491 00:24:00,960 --> 00:24:05,600 Speaker 8: of newness and innovation, so we're excited about alter, especially 492 00:24:05,600 --> 00:24:07,560 Speaker 8: on the pullback and the evaluation level. 493 00:24:07,560 --> 00:24:08,800 Speaker 1: Here, I'll be at the. 494 00:24:08,800 --> 00:24:12,520 Speaker 8: Women's Word Daily Beauty CEO summer talking about the official 495 00:24:12,560 --> 00:24:13,920 Speaker 8: intelligence means beauty. 496 00:24:14,160 --> 00:24:15,680 Speaker 1: That's a very vibrant industry. 497 00:24:16,080 --> 00:24:17,920 Speaker 2: We're looking forward to catching up with you again soon. 498 00:24:18,000 --> 00:24:22,320 Speaker 2: Olivi chen FTD Cowen. This is the Bloomberg Surveillance podcast, 499 00:24:22,440 --> 00:24:26,479 Speaker 2: bringing you the best in markets, economics, angiopolitics. You can 500 00:24:26,520 --> 00:24:29,320 Speaker 2: watch the show live on Bloomberg TV weekday mornings from 501 00:24:29,320 --> 00:24:32,600 Speaker 2: six am to nine am Eastern. Subscribe to the podcast 502 00:24:32,640 --> 00:24:36,199 Speaker 2: on Apple, Spotify, or anywhere else you listen, and as always, 503 00:24:36,200 --> 00:24:38,760 Speaker 2: on the Bloomberg Terminal and the Bloomberg Business app.