WEBVTT - Stocks Hit Highs as ‘Santa Rally’ Countdown Begins 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.880 Business App. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.040 or watch us live on YouTube. 0:00:27.440 --> 0:00:30.320 David Sherman, chief investment Officer, Crossing Bridge Advices, joins us 0:00:30.320 --> 0:00:32.040 here in Studio Wine Studio. 0:00:32.080 --> 0:00:32.920 I have no idea. 0:00:33.159 --> 0:00:36.720 Maybe he's returning some gifts here, David Boy And you 0:00:36.720 --> 0:00:39.720 look at the equity markets in twenty twenty five, fifteen 0:00:39.760 --> 0:00:41.720 percent gains in ES and p five hundred and twenty 0:00:41.840 --> 0:00:45.360 percent gains in Nasdaq fixed income pretty much high single 0:00:45.560 --> 0:00:48.080 digit returns across fixing them across the board in twenty 0:00:48.080 --> 0:00:50.279 twenty five, What are we doing twenty six. 0:00:51.000 --> 0:00:58.040 Ray No look. Valuations are high, spreads are tight, multiples 0:00:58.040 --> 0:01:03.720 are high, commodities are high. Geopolitical risk tensions are high. 0:01:03.920 --> 0:01:06.679 Uncertainty is high. I think that people are not praising 0:01:06.720 --> 0:01:11.640 in enough liquidity or premium to tail risk. That being said, 0:01:11.959 --> 0:01:13.920 the economy of the US, at least and in the world, 0:01:13.959 --> 0:01:16.280 has done a lot better than people expected, especially after 0:01:16.920 --> 0:01:23.000 being liberated. So therefore, you know it's sort of an 0:01:23.040 --> 0:01:27.360 interesting act between two very different outcomes that could occur. 0:01:27.840 --> 0:01:30.240 You've seen that, by the way, in portfolio managers, right, 0:01:30.240 --> 0:01:32.399 You've had some equity perform managers have had standing years 0:01:32.400 --> 0:01:35.119 and some they've had just mediocre years where they've actually 0:01:35.160 --> 0:01:37.760 underperformed fixed income. And I think that just sort of 0:01:37.800 --> 0:01:41.600 goes to show the joke about the recession the economy 0:01:41.600 --> 0:01:45.000 being a K economy. I think our financial professionals are 0:01:45.000 --> 0:01:45.520 a bit of a K. 0:01:46.280 --> 0:01:48.360 Yeah, that's a good way to describe it. But I 0:01:48.440 --> 0:01:50.400 think if I had one word for twenty twenty five, 0:01:50.440 --> 0:01:54.160 it might be resilience, Right, I mean from the consumer 0:01:54.760 --> 0:01:57.840 to corporations, because you see it in their earnings. Whatever 0:01:57.880 --> 0:01:59.560 you threw with us, right, I mean, we just kept 0:01:59.560 --> 0:02:02.960 coming back. Can talk about Liberation Day even despite the terroorffs. 0:02:03.000 --> 0:02:05.200 I mean, this is an economy that continues to grow 0:02:05.280 --> 0:02:07.600 at a pretty good clip. We'll see what happens in 0:02:07.680 --> 0:02:11.200 Q one. But what about opportunities outside the US? 0:02:11.639 --> 0:02:15.240 So we're primarily credit oriented fixed income and what's great 0:02:15.320 --> 0:02:17.760 is we've actually found a lot of opportunities outside the US, 0:02:17.919 --> 0:02:20.600 which is one of the few times in my I 0:02:20.680 --> 0:02:23.640 hate to say a forty year career now. But one 0:02:23.680 --> 0:02:25.200 of the things that happened was, for my first time 0:02:25.200 --> 0:02:28.440 in my entire career, we invested in a debtorin possession 0:02:28.480 --> 0:02:32.040 syndicated financing bond by Deutsche Bank. So this is something 0:02:32.080 --> 0:02:35.800 anyone can buy that's a professional. Debtor in possession is 0:02:35.800 --> 0:02:38.160 the death they lend to companies when they're in bankruptcy. 0:02:38.520 --> 0:02:42.560 I was an autoparts company. Auto OEM manufacturer called it Morelli, 0:02:43.080 --> 0:02:45.480 but you're getting sofur plus eight hundred. It's coming out 0:02:45.520 --> 0:02:48.640 sometime in twenty six a one h two takeout price, 0:02:48.800 --> 0:02:52.760 cash required. And what's interesting is as Japan's insurance are 0:02:52.760 --> 0:02:55.000 going up, we're going to see more of this because 0:02:55.040 --> 0:02:59.120 the government of Japan has been encouraging companies to no 0:02:59.240 --> 0:03:03.280 longer hoard and to be more focused on improving outcomes 0:03:03.320 --> 0:03:06.799 for shareholders, and there's been activism. So this was an 0:03:06.880 --> 0:03:12.120 LVO again autoparts. It's on my first step. And in Japan, 0:03:12.600 --> 0:03:17.360 the reason it happened is Japanese institution's view bankruptcy is failure, 0:03:17.960 --> 0:03:21.679 so they're not willing to participate to create this and 0:03:21.720 --> 0:03:24.040 this is what creates the opportunity and then so that's 0:03:24.040 --> 0:03:26.120 a great opportunity. We think the Nordic high yield market 0:03:26.160 --> 0:03:28.880 still represents the most interesting high yield market in the 0:03:28.919 --> 0:03:32.360 world today, So we think those two things are very interesting. 0:03:32.360 --> 0:03:34.680 And then obviously with the commodity places, that's changing the 0:03:34.680 --> 0:03:37.800 whole dynamics of how people think about places like Latin 0:03:37.800 --> 0:03:39.200 America and Africa. 0:03:39.320 --> 0:03:43.360 Where do you see fixed income opportunities in your part 0:03:43.480 --> 0:03:46.080 of the curve? These you know, you did a debtor 0:03:46.400 --> 0:03:48.000 in possession of financing and that's high. 0:03:47.960 --> 0:03:51.320 Risk, actually very low risk, low risk to you. Okay, Now, 0:03:51.400 --> 0:03:53.280 I think it's actually very low risk. So for instance, 0:03:53.280 --> 0:03:56.520 when Pacific Gas and Electric went into bankruptcy, they usued 0:03:56.520 --> 0:03:59.480 debtor in possession financing. It was actually rated triple B, 0:04:00.080 --> 0:04:02.120 so it was rated in investment grade. And the reason 0:04:02.160 --> 0:04:05.920 I think it's less risk is, yes, the company's in bankruptcy, 0:04:05.960 --> 0:04:08.760 but you're the first person to get paid other including 0:04:08.800 --> 0:04:12.000 the tax authorities, and you're usually secured. So unless the 0:04:12.040 --> 0:04:17.159 company is administratively insolvent or is ill liquid and just 0:04:18.000 --> 0:04:21.440 vaporizes like First Brands, you're perfectly fine. Now, obviously in 0:04:21.480 --> 0:04:23.919 First Brands case, they're the debtor in possession financing was 0:04:24.440 --> 0:04:25.719 looks like fools money. 0:04:26.000 --> 0:04:28.680 Yep, So why are you getting paid eight hundred basis 0:04:28.760 --> 0:04:29.360 points of spread? 0:04:29.360 --> 0:04:35.040 Then if you're you know, it's interesting. One it's automotive, 0:04:35.160 --> 0:04:38.120 so it's OEM. Two it's Japan's first step. Three they 0:04:38.120 --> 0:04:42.520 had to syndicate a Japanese company into the Europe and 0:04:42.640 --> 0:04:47.560 US market. Three dips pay a big spread because it's 0:04:47.880 --> 0:04:51.040 a lot of work and very few people can participate, 0:04:51.920 --> 0:04:53.159 similar to other assets. 0:04:53.240 --> 0:04:53.320 Ye. 0:04:54.080 --> 0:04:57.479 So if Japan views bankruptcy as failure, what is the 0:04:57.560 --> 0:05:01.320 US view bankruptcy? I'm just curious, mind, Yeah. 0:05:01.240 --> 0:05:03.040 That's a good question. I don't know. In fact, I 0:05:03.080 --> 0:05:05.479 don't think the bankruptcy process is working very well in 0:05:05.480 --> 0:05:08.359 the United States. So back in the seventies there was 0:05:08.400 --> 0:05:11.640 no restructuring process. Then they've created the bankruptcy laws, and 0:05:11.680 --> 0:05:16.440 now with all the securitized products like CLO's assetbacks, you 0:05:16.520 --> 0:05:19.240 have different groups with very very different agendas, which is 0:05:19.240 --> 0:05:22.560 why we have the creditor on credit or warfare. I 0:05:22.600 --> 0:05:25.040 think it's very difficult, and you know, bankruptcy shouldn't cost 0:05:25.040 --> 0:05:27.720 twenty thirty million dollars as a starting point to get 0:05:27.760 --> 0:05:29.240 out of bankruptcy. 0:05:29.480 --> 0:05:32.000 Twenty twenty six, where do you guys from a credit perspective, 0:05:32.080 --> 0:05:34.320 see opportunities going forward. 0:05:34.600 --> 0:05:37.919 I guess it's again a k theme. We're going to 0:05:37.960 --> 0:05:40.600 be on really high quality, relatively liquid stuff and part 0:05:40.600 --> 0:05:43.240 of the portfolio, and then we hope to be opportunistic 0:05:43.320 --> 0:05:46.120 on the bottom half. And where we see the opportunistic 0:05:46.160 --> 0:05:48.919 part is really outside of the United States. There'll be 0:05:49.040 --> 0:05:52.279 opportunities the United States, but between the structural issues with 0:05:52.320 --> 0:05:55.120 again the credits on creditor and the clos unless you're 0:05:55.160 --> 0:05:57.040 in the club or in the room where happens from 0:05:57.080 --> 0:06:01.159 online from Hamilton, it's a big problem. So where we 0:06:01.200 --> 0:06:03.680 find the more interesting opportunities is overseas, and we think 0:06:03.680 --> 0:06:05.839 the Nordic market, which is I've talked about on the 0:06:05.839 --> 0:06:09.240 show before, has more yield. Be are quality securities, but 0:06:09.240 --> 0:06:11.160 they also went through a big boom. When you go 0:06:11.160 --> 0:06:15.120 through big boom, bad underwriting happens and they'll be underwriting problems. 0:06:15.160 --> 0:06:18.000 And we think that fundamentally those companies are good companies 0:06:18.200 --> 0:06:20.760 with bad balance sheets, which is not necessarily the case, 0:06:20.800 --> 0:06:22.640 and that i'd say tomorrow, a lot of the US 0:06:22.760 --> 0:06:24.880 companies that are bankrupts are just kicking the can down 0:06:24.880 --> 0:06:27.680 the road, and we think that that'll be a very 0:06:27.720 --> 0:06:30.360 good opportunity. We're involved in one. Now we're super excited. 0:06:30.800 --> 0:06:32.680 Oh good for you. Nice way to head into the 0:06:32.680 --> 0:06:34.960 new year. But real quick, before we let you go, 0:06:35.279 --> 0:06:37.920 the FED, what your expectations for rate cuts next year? 0:06:38.360 --> 0:06:42.920 So I am a bottom up practitioner with value bent, 0:06:43.520 --> 0:06:46.240 so people should discount a lot. But it's pretty clear 0:06:46.240 --> 0:06:49.800 to me that the administration wants rates lower. They're going 0:06:49.880 --> 0:06:52.000 to get short term rates lower, whether people like it 0:06:52.120 --> 0:06:54.400 or not. The real question will be we have a 0:06:54.400 --> 0:06:57.839 housing problem, meaning people don't find it affordable, and the 0:06:57.920 --> 0:07:00.479 question is what can the government do about making that 0:07:00.520 --> 0:07:03.760 more affordable. And one of the outliers I have is 0:07:03.760 --> 0:07:05.960 that somehow the treasuring in the FED couarda and buying 0:07:06.000 --> 0:07:09.560 mortgages or create policy to protect the rates. 0:07:10.200 --> 0:07:12.600 Dave, thanks so much for joining us. Appreciate it. David Sherman, 0:07:12.640 --> 0:07:16.400 he's a chief investment officer Crossing Bridge Advisors. Talk to 0:07:16.480 --> 0:07:18.320 us a little bit about the credit side and where 0:07:18.320 --> 0:07:20.440 there might be some opportunities in twenty twenty six. 0:07:22.560 --> 0:07:23.160 Stay with us. 0:07:23.240 --> 0:07:25.680 More from Bloomberg Surveillance coming up after this. 0:07:31.920 --> 0:07:35.520 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:07:35.560 --> 0:07:38.720 weekday afternoons from seven to ten am Eastern Listen on 0:07:38.840 --> 0:07:42.239 Apple Karplay and Android Atto with the Bloomberg Business app, 0:07:42.400 --> 0:07:44.320 or watch us live on YouTube. 0:07:44.840 --> 0:07:47.240 We know that consumers have been in it to win, 0:07:47.280 --> 0:07:50.760 it powering the strongest US economic growth in two years 0:07:50.800 --> 0:07:53.280 in the third quarter, when GDP grew at an annual 0:07:53.360 --> 0:07:55.800 rate of four point three percent. Can it continue? What's 0:07:55.800 --> 0:07:57.560 the fourth quarter going to show? What's next year going 0:07:57.640 --> 0:08:01.080 to show? Bill Adams, chief economist of America Bank, joins 0:08:01.120 --> 0:08:04.360 us to give us some insights. So Bill, a bit 0:08:04.400 --> 0:08:07.800 of a hard act to follow after that the number 0:08:07.840 --> 0:08:10.600 we got for Q three, But what's your expectation for 0:08:10.680 --> 0:08:13.480 what Q four might look like? But more importantly, looking ahead, 0:08:13.960 --> 0:08:14.720 what about Q one? 0:08:16.160 --> 0:08:18.480 Q four, I think you have to remember was the 0:08:18.560 --> 0:08:21.000 quarter of the government shutdown, and so that was a 0:08:21.040 --> 0:08:24.880 substantial headwind, and we're likely to see a much softer 0:08:25.040 --> 0:08:28.560 number for Q four GDP. I have annualized real GDP 0:08:28.800 --> 0:08:30.679 in Q four of under one percent. 0:08:31.200 --> 0:08:34.079 With that said, I think twenty twenty six is likely. 0:08:33.920 --> 0:08:37.600 To be a year of solid economic growth and broadening 0:08:37.679 --> 0:08:41.160 economic growth, where lower interest rates from the Fed and 0:08:41.200 --> 0:08:43.720 we're expecting raycus to likely continue in the new year 0:08:44.160 --> 0:08:47.480 are going to support some recovery of existing home sales 0:08:47.520 --> 0:08:52.080 and industries related to the housing market as well. 0:08:52.240 --> 0:08:53.160 Bill talk to us. 0:08:53.120 --> 0:08:55.960 About you know this Fed of reserves, look at that inflation, 0:08:56.200 --> 0:08:58.080 looking at the labor market. 0:08:58.720 --> 0:09:01.040 Let's start with the labor market here. What's your view 0:09:01.080 --> 0:09:02.200 of the US labor market. 0:09:02.240 --> 0:09:03.920 I mean, if you just look at the headline inflation 0:09:04.000 --> 0:09:06.480 rate or okay, everything's okay, don't worry. 0:09:08.000 --> 0:09:11.040 There's been a big disconnect in the past year between 0:09:11.520 --> 0:09:14.199 pretty good real GDP growth on the one hand, and 0:09:14.400 --> 0:09:17.160 a softening labor market on the other. I have been 0:09:17.160 --> 0:09:20.520 following very closely measures of the labor market that tend 0:09:20.520 --> 0:09:24.400 to be more cyclical during economic slowdowns. If you look 0:09:24.400 --> 0:09:27.439 at the unemployment rate for black or African American workers, 0:09:27.480 --> 0:09:29.840 that's up to eight point four percent in the November 0:09:29.920 --> 0:09:32.360 jobs report. It's up more than two and a quarter 0:09:32.440 --> 0:09:35.120 percentage points since the middle of this year. That's a 0:09:35.280 --> 0:09:40.080 very large increase, and so that points to a substantial 0:09:40.120 --> 0:09:43.600 softening of labor demand in the last three to six months. 0:09:44.559 --> 0:09:49.720 We have seen the payrolls numbers holding up being positive 0:09:49.760 --> 0:09:50.800 for most of this year. 0:09:51.160 --> 0:09:52.480 We'll see whether those get. 0:09:52.320 --> 0:09:56.240 Revised in early twenty twenty six, There is a lot 0:09:56.280 --> 0:10:00.800 of guesswork. I guess you could say the d has 0:10:01.120 --> 0:10:04.920 an estimate of jobs added at newly forming companies and 0:10:05.000 --> 0:10:07.440 jobs lost at companies that are going out of business, 0:10:07.840 --> 0:10:09.680 and that model creates a. 0:10:09.679 --> 0:10:12.360 Lot of uncertainty in the payrolls numbers months to month. 0:10:12.679 --> 0:10:15.280 My sense is that that's likely to be revised down, 0:10:15.360 --> 0:10:17.920 given that the unemployment rate has been moving higher and 0:10:17.960 --> 0:10:20.560 that we've been seeing these measures like the Black unemployment 0:10:20.640 --> 0:10:24.520 rate softening. Even more so, I think the Fed they 0:10:24.520 --> 0:10:26.520 have a mandate for maximum employment. 0:10:26.520 --> 0:10:28.679 They don't have a mandate for maximum GDP growth. It's 0:10:28.720 --> 0:10:31.120 maximum employment and stable prices. 0:10:31.040 --> 0:10:34.520 And the unemployment rate taking higher as well as these 0:10:34.880 --> 0:10:38.600 forward looking measures of labor demand also softening, I think 0:10:38.920 --> 0:10:41.719 points to a need for more support for the economy 0:10:41.720 --> 0:10:42.520 into the new year. 0:10:43.400 --> 0:10:46.400 Well, Bill, you certainly don't have to search far to 0:10:46.520 --> 0:10:50.000 find wild cards possible wild cards in next year, everything 0:10:50.000 --> 0:10:52.320 from AI to we've got the transition happening at the 0:10:52.320 --> 0:10:54.640 Federal Reserve. But I'm going to throw this out there 0:10:54.640 --> 0:10:57.439 and say, I think the biggest wildcard next year might 0:10:57.520 --> 0:11:00.520 just be the consumer. And a lot of of course 0:11:00.640 --> 0:11:02.840 is contingent upon what happens in the job market. What's 0:11:02.880 --> 0:11:04.920 the biggest wildcard to your mind. 0:11:06.960 --> 0:11:09.200 I think the end of Chuir Powell's term in May 0:11:09.400 --> 0:11:13.120 is going to be a potential source of volatility for 0:11:13.280 --> 0:11:14.199 the economy and. 0:11:14.160 --> 0:11:15.400 For financial markets. 0:11:15.720 --> 0:11:18.120 We'll have to see who the new appointee at the 0:11:18.160 --> 0:11:19.120 FED is going to be. 0:11:19.160 --> 0:11:22.200 But I think the President. 0:11:21.800 --> 0:11:24.800 Has been open throated and calling for someone who will 0:11:24.800 --> 0:11:29.000 support the economy with lower interest rates, and I think 0:11:29.080 --> 0:11:36.440 that has financial markets nervous about politicization of US monetary policy. Now, 0:11:36.640 --> 0:11:40.040 I will say, over the last couple of months, the case, 0:11:40.280 --> 0:11:43.000 to my mind, of for lower interest rates has become 0:11:43.480 --> 0:11:46.360 a little more plausible. 0:11:45.880 --> 0:11:47.160 Based on economic data. 0:11:47.360 --> 0:11:51.440 We already talked about the softening of the labor data if. 0:11:51.360 --> 0:11:52.720 You look at the inflation data. 0:11:53.240 --> 0:11:55.440 Now, I don't know how much credence to put into 0:11:55.679 --> 0:11:59.080 the November CPI report given the data gaps that we've 0:11:59.160 --> 0:12:03.360 had recently. But oil prices are down, the housing market 0:12:03.360 --> 0:12:04.320 continues to soften. 0:12:04.400 --> 0:12:06.640 That's going to reduce shelter price inflation. 0:12:06.800 --> 0:12:12.600 Rents are also rising slower nationally, with the largest decrease 0:12:12.640 --> 0:12:15.920 in rent inflation in the parts of the economy. The 0:12:15.960 --> 0:12:17.840 parts of the nation where we've added the most housing 0:12:17.880 --> 0:12:21.960 supply recently the sun Bell so that is going to 0:12:22.040 --> 0:12:25.880 keep inflation moving on a lower trajectory into twenty twenty six, 0:12:27.200 --> 0:12:29.640 with the exception of terror price increases. 0:12:29.679 --> 0:12:31.560 I think the US is set up. 0:12:31.480 --> 0:12:37.200 For a cooler labor market, cooler inflation backdrop, and services 0:12:37.520 --> 0:12:40.880 which to my mind supports lower interest rates. Might make 0:12:40.960 --> 0:12:44.800 this FED leadership transition less fraut over time. 0:12:44.840 --> 0:12:48.320 But I think as that announcement of the next FED. 0:12:48.240 --> 0:12:52.840 Chair is being made, and as markets are trying to 0:12:52.880 --> 0:12:56.200 anticipate what that change in leadership could mean, I see 0:12:56.240 --> 0:12:58.040 that as a potential source of volatility. 0:12:58.640 --> 0:13:02.240 Bill we all know about the K shaped economy out there, 0:13:02.240 --> 0:13:04.800 and with that just kind of as a backdrop, how 0:13:04.840 --> 0:13:08.000 do you view the US consumer here? Because boy, it 0:13:08.160 --> 0:13:11.960 just it feels like you never count out the US consumer. 0:13:13.440 --> 0:13:15.840 I will say I was concerned about the consumer going 0:13:15.880 --> 0:13:19.320 into the holidays shopping season. The initial data that we've 0:13:19.360 --> 0:13:23.600 seen for Black Friday spending going into early December, it 0:13:23.600 --> 0:13:27.320 looks pretty good. I think the consumer has again held 0:13:27.400 --> 0:13:31.360 up the economy this holiday season. Probably helped that the 0:13:31.440 --> 0:13:37.040 government shutdown ended and then there was a reasonable gap 0:13:37.120 --> 0:13:39.520 between the end of the government shutdown and people getting 0:13:39.559 --> 0:13:43.440 their salaries again, and then the holiday shopping season really 0:13:43.520 --> 0:13:47.360 kicking off in late November. I think the consumer we 0:13:47.440 --> 0:13:50.839 still continue to have this as you say, k shaped economy. 0:13:51.200 --> 0:13:53.880 Low and moderate income consumers are definitely under pressure from 0:13:53.880 --> 0:13:57.440 the cost of living, but I think the overall consumer 0:13:57.480 --> 0:14:01.760 is supported by the acid price increases, especially the robust 0:14:01.800 --> 0:14:04.280 increase in the stock market in the last year, and 0:14:04.360 --> 0:14:07.120 a lot of American consumers. An increasing number of American 0:14:07.160 --> 0:14:11.560 consumers are retirees, and so for retiree households, it's the 0:14:11.640 --> 0:14:15.600 cost of living and then also asset price returns and 0:14:16.480 --> 0:14:20.200 their income from pensions and from social security that are 0:14:20.280 --> 0:14:25.680 driving consumer spending. And retiree households have been under pressure 0:14:26.160 --> 0:14:30.640 from inflation, yes, but also benefiting from the stock market 0:14:30.680 --> 0:14:32.960 and from other asset price returns. So I think that 0:14:33.560 --> 0:14:37.200 part of the consumer market is really holding up the 0:14:37.240 --> 0:14:42.640 economy and is insulated from concerns about the job market 0:14:42.800 --> 0:14:45.080 and job availability. 0:14:44.320 --> 0:14:45.920 In twenty twenty six, which you see. 0:14:45.760 --> 0:14:49.440 Weighing on a lot of conventional measures of consumer confidence 0:14:49.560 --> 0:14:52.760 like the Conference Sports Consumer Confidence. 0:14:52.280 --> 0:14:57.360 Index bill are seen your bio that you're fluent in Mandarin, Chinese, 0:14:57.400 --> 0:14:58.480 what is that about? 0:14:58.560 --> 0:14:59.640 Where do you pick that up? 0:14:59.720 --> 0:15:00.000 Dude? 0:15:00.800 --> 0:15:03.040 I bombed the Spanish placement test on my first week 0:15:03.080 --> 0:15:06.200 of college and I needed to pass a foreign language. 0:15:06.960 --> 0:15:12.240 So long story short, I found myself learning Chinese, and 0:15:12.880 --> 0:15:15.640 I actually kicked off my career as an economist as 0:15:15.720 --> 0:15:19.240 the Conference Board's China Economists from two thousand and nine 0:15:19.280 --> 0:15:20.280 to twenty eleven. 0:15:20.560 --> 0:15:22.880 All right, all right, see when you read people's bios, 0:15:22.960 --> 0:15:24.640 I love it. I love that kind of stuff. 0:15:24.680 --> 0:15:27.080 My son, twenty one year old son, he's all into 0:15:27.160 --> 0:15:30.560 Japanese and I'm like, dude, just take French Spanish like 0:15:30.960 --> 0:15:34.040 regular people. No, he's doing Japanese and he's doing a 0:15:34.120 --> 0:15:37.720 semester in Japan and he's got lined up a summer 0:15:37.720 --> 0:15:38.720 internship in Tokyo. 0:15:38.840 --> 0:15:39.480 So I don't know. 0:15:39.480 --> 0:15:40.200 We'll see how that goes. 0:15:40.200 --> 0:15:42.960 Fine, So when i'm mee see people like Bill fluent 0:15:43.040 --> 0:15:44.560 and Chinese? Who does that? 0:15:44.760 --> 0:15:46.800 All right, Bill, thanks so much for journey. Appreciate it. 0:15:47.240 --> 0:15:49.320 Bill Adams, he's a chief economist of co America Bank. 0:15:49.360 --> 0:15:51.160 You appreciate getting a few minutes of his time. 0:15:53.480 --> 0:15:56.640 Stay with us. More from Bloomberg Surveillance coming up after this. 0:16:02.840 --> 0:16:06.440 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:16:06.480 --> 0:16:09.680 weekday afternoons from seven to ten am Eastern Listen on 0:16:09.720 --> 0:16:13.120 applecar Play and Android Otto with the Bloomberg Business app, 0:16:13.320 --> 0:16:15.160 or watch us live on YouTube. 0:16:15.400 --> 0:16:18.360 Holiday shopping I think it was I don't know. It 0:16:19.000 --> 0:16:20.800 seemed pretty busy out there to me out there in 0:16:20.800 --> 0:16:23.120 the marketplace. I know people were clicking away on the 0:16:23.120 --> 0:16:23.800 e commerce side. 0:16:23.800 --> 0:16:24.880 I know I was clicking away. 0:16:25.320 --> 0:16:25.560 Yep. 0:16:25.600 --> 0:16:27.280 So a lot of that might have been happening behind 0:16:27.280 --> 0:16:28.280 closed doors, as they. 0:16:28.160 --> 0:16:29.800 Say, and as you do the returns. 0:16:29.840 --> 0:16:32.800 You know, some companies are charging you for returns for 0:16:32.920 --> 0:16:34.720 the what is it re talking fee? 0:16:34.800 --> 0:16:38.560 I guess that's back it's a thing again, yep, all right, Yeah, 0:16:38.560 --> 0:16:38.920 I don't know. 0:16:39.080 --> 0:16:40.560 There are a lot of gifts under the tree, That's 0:16:40.600 --> 0:16:40.920 all I know. 0:16:40.960 --> 0:16:42.200 And that I was like, I don't want anything. 0:16:42.240 --> 0:16:42.920 I don't want anything. 0:16:43.080 --> 0:16:50.800 Julia Wilson, Principal Advisory Strategies KPMG, based in Atlanta, Georgia. Juliet, 0:16:51.040 --> 0:16:53.200 from your perspective, what are your clients telling you about 0:16:53.320 --> 0:16:57.840 kind of the holiday season, the retail space out there? 0:16:57.840 --> 0:16:58.920 Are people spending money? 0:17:00.320 --> 0:17:02.400 I think they were, But I think over all your 0:17:02.520 --> 0:17:06.240 kind of view of a holiday might have been the 0:17:06.520 --> 0:17:10.240 word of the day. So so holiday was stronger than expected. 0:17:10.280 --> 0:17:14.280 We saw consumer spend the results coming out higher than 0:17:14.440 --> 0:17:17.400 analysts had predicted. But I would say it was kind 0:17:17.400 --> 0:17:19.800 of a you know, at least in my house, what 0:17:19.840 --> 0:17:21.760 we called it was the year of the sweater So 0:17:21.800 --> 0:17:26.640 it was a very practical holiday spending, you know, withheld 0:17:26.760 --> 0:17:30.280 all of the headwinds, but it didn't give anybody a. 0:17:30.240 --> 0:17:31.080 Ton of surprises. 0:17:31.720 --> 0:17:34.760 You know, things were very practical that the smart consumer 0:17:34.880 --> 0:17:36.359 kind of played out well. 0:17:36.760 --> 0:17:38.440 Ours was socks socks. 0:17:38.520 --> 0:17:42.160 Yeah, well, you know what, the SNL had a great skit. 0:17:42.200 --> 0:17:43.920 They always do it. It was it's an old skit, 0:17:44.000 --> 0:17:46.280 but they did it where the mom gets a robe 0:17:46.600 --> 0:17:49.000 every year, but everybody else in the family gets like 0:17:49.040 --> 0:17:51.600 really cool gifts and she's like, okay, I have another robe. 0:17:51.760 --> 0:17:54.120 So I feel you on the sweater robe sock thing. 0:17:54.160 --> 0:17:56.159 But what about gift cards? You remember when they were 0:17:56.200 --> 0:17:57.840 sort of all the rage, people were going out and 0:17:57.840 --> 0:18:00.560 buying gift cards because they didn't know what else to do. 0:18:00.000 --> 0:18:03.120 Do you think that was as it crept up on them? 0:18:03.240 --> 0:18:05.640 Yeah, absolutely so, I think gift cards and we'll really 0:18:05.720 --> 0:18:08.199 see where the consumer plays out in terms of the 0:18:08.280 --> 0:18:11.679 categories because of the gift card trend, I think a 0:18:11.680 --> 0:18:15.000 lot of people the sentiment, you know, And actually we 0:18:15.080 --> 0:18:19.400 had fewer days between Black Friday and Christmas Day this year, 0:18:19.400 --> 0:18:21.640 so a lot of people it caught them by surprise. 0:18:21.680 --> 0:18:25.000 And so gift card as the gift of choice is 0:18:25.000 --> 0:18:28.480 definitely something that we predicted with our consumer Pulse survey. 0:18:28.560 --> 0:18:29.960 And then I'll actually played out. 0:18:30.000 --> 0:18:32.480 So I think you'll see a lot of spend over 0:18:32.560 --> 0:18:35.440 this weekend to see if you know, if electronics kind 0:18:35.440 --> 0:18:38.280 of nudge ahead, or if people are still using the 0:18:38.320 --> 0:18:40.359 gift card to get the things that they kind of 0:18:40.400 --> 0:18:43.359 were holding out on just as they were, you know, 0:18:43.359 --> 0:18:46.760 a bit spind thrift over the period. 0:18:47.400 --> 0:18:50.160 Alexis, you know that Julia is a big time consoling 0:18:50.200 --> 0:18:53.560 because right behind her is a white board, and whenever 0:18:53.880 --> 0:18:55.760 a white board is brought out in a meeting, I'm in, 0:18:55.880 --> 0:18:57.720 I get up and I leave, thank you very much. 0:18:57.920 --> 0:18:58.720 I'm transition. 0:18:58.800 --> 0:19:02.040 It's actually a painting, but yeah, I can get the whiteboards. 0:19:02.040 --> 0:19:03.960 On the other side of the room, there is a 0:19:04.119 --> 0:19:06.480 whiteboard and lots of business books. 0:19:06.840 --> 0:19:07.560 That's how they do it. 0:19:07.560 --> 0:19:09.480 That's how the consultants think they're big time out of 0:19:09.480 --> 0:19:14.520 the box, Juia. How do retailers reach their consumers these days? 0:19:14.560 --> 0:19:17.000 I mean, I mean, you know, how do you reach 0:19:17.040 --> 0:19:19.680 a John Tucker who's not at the beck and Call 0:19:19.720 --> 0:19:21.800 of influencers on social media? 0:19:23.520 --> 0:19:27.560 So, you know, the new retail strategy is definitely being 0:19:27.600 --> 0:19:30.840 where the consumer is, so omnichannel demand is kind of 0:19:30.880 --> 0:19:34.320 the thing and finding them whether you're you do like 0:19:34.400 --> 0:19:36.879 to see it in your feed. So the traditional social 0:19:36.880 --> 0:19:42.040 media outlets of Facebook, Instagram, et cetera are not gone, Chat, GPT, 0:19:42.320 --> 0:19:45.920 Jim and I everything. Making sure that you're searchable there 0:19:45.960 --> 0:19:48.720 and that it's easy to click through is kind of 0:19:48.720 --> 0:19:50.640 the second area. I would say this is the first 0:19:50.680 --> 0:19:54.879 year that we really saw AI take off from a 0:19:54.920 --> 0:19:58.840 consumer perspective. And then the traditional ad it's not gone. 0:19:58.920 --> 0:20:00.639 You know, there's some of us that are still in. 0:20:01.160 --> 0:20:04.919 You know, we watch TV, we watch it, you know, 0:20:05.000 --> 0:20:07.800 we do things on YouTube, et cetera, and so finding 0:20:07.840 --> 0:20:10.800 that that perfect mix is complex, but we have a 0:20:10.840 --> 0:20:13.120 lot more tools today to get in front of the consumer. 0:20:13.400 --> 0:20:16.280 All Right, who here is doing dry January? Try January 0:20:16.359 --> 0:20:18.720 being that you don't drink for the month of January. 0:20:21.800 --> 0:20:25.960 I've heard, you know, sprinkle January is another thing. Our 0:20:25.960 --> 0:20:29.800