WEBVTT - Rates, Earnings, Goldman, and Crypto (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.239 at Bloomberg dot com slash podcast. Matt and I are 0:00:22.280 --> 0:00:24.840 calling a trend here. We had some good CPI data 0:00:24.920 --> 0:00:27.880 last week, we had some good PPI data. This week 0:00:28.080 --> 0:00:32.080 we're calling out a trend. This FED can cool its jets. 0:00:32.320 --> 0:00:35.159 What's the market telling you? Yeah, well, the market is 0:00:35.159 --> 0:00:38.000 certainly thinking that. You know, we're fully priced now for 0:00:38.200 --> 0:00:41.640 only fifty basis points without much chance of a of 0:00:41.640 --> 0:00:44.840 a seventy five at all at four December, and then 0:00:44.960 --> 0:00:48.680 you know one or two basis point hikes after that, 0:00:48.760 --> 0:00:50.920 and and and you know this idea that whether or 0:00:50.920 --> 0:00:53.199 not this is a trend, if you look at the 0:00:53.240 --> 0:00:56.200 month over month numbers for both CPI and pp I, 0:00:56.280 --> 0:00:58.400 this is now four months in a row that we've 0:00:58.440 --> 0:01:01.480 been at significant a lower month of month prince than 0:01:01.520 --> 0:01:04.400 the previous eight months. So so if if we think 0:01:04.440 --> 0:01:06.600 about this from just from a time perspective, if we 0:01:06.680 --> 0:01:09.679 stay at this kind of level, UM, inflation will come 0:01:09.680 --> 0:01:13.120 down to almost where where inflation break evens are currently pricing, 0:01:13.200 --> 0:01:17.840 So where one year inflation swaps are pricing UM basically 0:01:17.920 --> 0:01:20.440 in the year in the next eight months. So so 0:01:20.440 --> 0:01:22.559 so it makes perfect sense, you know. I I think 0:01:22.720 --> 0:01:25.320 you know the idea that inflation has peaked. People were 0:01:25.319 --> 0:01:27.760 looking for confirmation of that. Now that again, now that 0:01:27.800 --> 0:01:30.880 we have four months of uh, you know prints that 0:01:30.920 --> 0:01:34.120 are are pretty reasonable for both CPI and pp I, 0:01:34.200 --> 0:01:36.120 it seems that, you know, we have turned a corner here. 0:01:37.080 --> 0:01:39.520 So what are you expecting now in terms of a 0:01:39.600 --> 0:01:44.600 terminal rate? I mean, um, when I was on sabbatical 0:01:45.280 --> 0:01:49.040 UM in the Maldives or wherever you were, seemed like 0:01:49.120 --> 0:01:51.840 I was in raja Ampat in Indonesia, but I was 0:01:51.880 --> 0:01:54.320 reading the news from Afar and I saw that, you know, 0:01:54.400 --> 0:01:58.080 expectations were climbing over six percent. Are they had they 0:01:58.080 --> 0:02:01.120 come back down? Oh yeah, yeah, there's come way back down. UM. 0:02:01.320 --> 0:02:03.440 So you know, when we when we look at what 0:02:03.920 --> 0:02:07.680 um uh, what FED funds futures are now pricing, we're 0:02:07.760 --> 0:02:10.760 we're talking more about a five percent top end terminal 0:02:10.840 --> 0:02:14.400 rate is what's currently being priced. I think that that's reasonable. Maybe, 0:02:14.600 --> 0:02:16.480 you know, if if we do get more prints like 0:02:16.560 --> 0:02:18.960 this on inflation over the next couple of months, maybe 0:02:19.000 --> 0:02:22.120 the Fed doesn't hike in um uh in in March. 0:02:22.160 --> 0:02:24.120 And if they don't, then you might even have a 0:02:24.160 --> 0:02:27.240 slightly lower terminal rate, which was more what our expectations 0:02:27.240 --> 0:02:29.280 were for for quite a long time, of of a 0:02:29.320 --> 0:02:31.440 top end of four point seven five percent. But you know, 0:02:31.480 --> 0:02:33.880 we're we're playing semantics here. We we're talking about one 0:02:33.960 --> 0:02:37.000 hike more, one hike less. We're certainly not going to 0:02:37.040 --> 0:02:39.560 six percent, and we're probably not only going to four 0:02:39.600 --> 0:02:41.480 and a half percent. We're going to go somewhere in 0:02:41.520 --> 0:02:43.880 between there. So you're talking about um you know, at 0:02:43.919 --> 0:02:46.200 at the upper bound at four and three quarters or 0:02:46.200 --> 0:02:49.040 five percent. I think either way, the Fed has obviously 0:02:49.080 --> 0:02:51.520 taken a lot of liquidity out of the market, still 0:02:51.560 --> 0:02:54.600 doing quantitative tightening, so they're shrinking the size of their 0:02:54.600 --> 0:02:57.080 balance sheet overall, and all of those things are having 0:02:57.120 --> 0:02:59.480 an effect on financial conditions. And and you know, you 0:02:59.480 --> 0:03:02.160 you heard a lot of Fed speakers, you know, Lyle 0:03:02.200 --> 0:03:05.560 brainerd On on Bloomberg Television and Radio yesterday mentioned the 0:03:05.600 --> 0:03:09.240 same thing Um, you know about financial conditions being much tighter. 0:03:09.400 --> 0:03:12.600 But these things don't don't These things work with a leg, right, 0:03:12.639 --> 0:03:16.240 And it's not it doesn't happen immediately, right. So housing 0:03:16.280 --> 0:03:18.960 we know has fallen, right, Housing activity has fallen, So 0:03:19.280 --> 0:03:21.600 that has knock on effects that don't take a month 0:03:21.680 --> 0:03:24.440 or two or three. It takes six months, nine months 0:03:24.440 --> 0:03:27.560 too for that the filter through the economy. So so 0:03:27.760 --> 0:03:29.560 so I think we are going to see a slowing 0:03:29.639 --> 0:03:32.120 not a not only of inflation, but also of just 0:03:32.200 --> 0:03:35.040 economic activity in general. And that's gonna be quite frankly 0:03:35.080 --> 0:03:36.440 for the market that I look at. That's gonna be 0:03:36.440 --> 0:03:38.600 good for treasuries and and I think we've seen a 0:03:38.600 --> 0:03:43.920 peak and treasury yields well, I mean for investors. Timing 0:03:44.000 --> 0:03:46.440 is so key, right, These things work with a lag. 0:03:46.440 --> 0:03:48.280 It kind of reminds me of shooting skee. You gotta 0:03:48.560 --> 0:03:52.080 you're not gonna shoot where what You're not gonna shoot 0:03:52.080 --> 0:03:53.760 where the pigeon is. Now you're gonna shoot what you 0:03:53.800 --> 0:03:56.880 gotta shoot where the pigeon is gonna be When you're um, 0:03:57.040 --> 0:04:01.480 when you're uh, babies get there. So I saw a 0:04:01.520 --> 0:04:04.920 note yesterday from Matthew miss at Ubs. He says Um 0:04:06.000 --> 0:04:07.800 in his Global Credit out, Like he says, once in 0:04:07.840 --> 0:04:12.920 a decade opportunity. Nice. But timing is everything. So what 0:04:12.960 --> 0:04:15.240 do you think are we looking at? For example, on 0:04:15.240 --> 0:04:17.400 the long end, you know, we're seeing Mom and pop 0:04:17.440 --> 0:04:21.520 in e t s start to go after um uh 0:04:21.800 --> 0:04:24.000 long duration debt right now because they think they're locking 0:04:24.000 --> 0:04:27.080 in peak rates. Yeah. I don't disagree with that. I 0:04:27.080 --> 0:04:29.400 mean I I put out a note two weeks ago 0:04:29.440 --> 0:04:32.920 saying that that we were at peak rates and and uh, 0:04:33.080 --> 0:04:34.360 you know that was a little bit pre s and 0:04:34.400 --> 0:04:37.520 on my on my part, but it's, you know, we're 0:04:38.200 --> 0:04:40.160 I think the idea that you get a bigger sell off, 0:04:40.240 --> 0:04:42.320 what you would need in order for the bond market 0:04:42.400 --> 0:04:45.280 to sell off significantly more than it already has is 0:04:45.440 --> 0:04:48.960 really for another uptick in inflation and better economic activity. 0:04:49.000 --> 0:04:52.240 And it's hard to see how things get better from here, 0:04:52.360 --> 0:04:54.720 right It's you know, things might stay the same, which 0:04:54.760 --> 0:04:57.560 would be the great scenario and the soft landing scenario 0:04:57.680 --> 0:05:00.680 for for the Federal Reserve, but it's hard to see 0:05:00.680 --> 0:05:04.360 how they improve significantly with financial conditions right enough on 0:05:04.400 --> 0:05:07.280 the rates side, enough on the rates. Sunday, the World 0:05:07.360 --> 0:05:11.680 Cup starts ira As you know, I have Holland as 0:05:11.760 --> 0:05:15.440 my sleeper pick. Where else should I be looking for value? 0:05:15.480 --> 0:05:18.080 I don't want to go Spain or Germany or France 0:05:18.160 --> 0:05:20.400 or any of that kind of stuff. Okay, sleeper pick. 0:05:20.560 --> 0:05:22.760 So I am gonna so I said Germany when you 0:05:22.800 --> 0:05:25.240 asked me this question last week. Well, I am going 0:05:25.279 --> 0:05:27.919 to go with Taylor Rockwell sleeper pick from the Total 0:05:27.920 --> 0:05:30.039 Soccer Show. Give him a shout out from from the 0:05:30.080 --> 0:05:33.000 podcast that I listened to. He thinks Japan is going 0:05:33.040 --> 0:05:35.440 to get out of a group that includes Germany and Spain, 0:05:36.040 --> 0:05:38.280 and if Japan does get through there, then they can 0:05:38.279 --> 0:05:39.560 make a bit of a run. I don't know. I 0:05:39.600 --> 0:05:41.280 don't think that they could win the whole thing, but 0:05:41.360 --> 0:05:43.120 you know, could they make a run to the semifinals 0:05:43.120 --> 0:05:45.760 for the first time. Maybe? You know, they have a 0:05:45.760 --> 0:05:48.440 really good they played really well against the US last month, 0:05:48.880 --> 0:05:52.279 and they're you know, they have some really talented players. 0:05:52.680 --> 0:05:57.560 So so maybe Japan. Let me ask, in a day 0:05:57.560 --> 0:05:59.479 and age where a lot of the players on a 0:05:59.520 --> 0:06:03.080 team don't really come from that country, doesn't matter as much. Well, 0:06:03.120 --> 0:06:05.880 I think, well, Japan. They're almost all were born in 0:06:05.960 --> 0:06:07.880 Japan for sure, and now they play in the Premier 0:06:07.960 --> 0:06:10.279 League and the bundes League in Spain. Right, but they're 0:06:10.600 --> 0:06:12.920 they're mostly Japanese crash, all right, Next time we talked 0:06:12.920 --> 0:06:15.240 to you, it's all soccer, all the time, and we're 0:06:15.279 --> 0:06:17.480 going to ignore that Federal Reserve because the World Cup 0:06:17.560 --> 0:06:19.479 is coming up, folks, that's our jersey. He does it 0:06:19.480 --> 0:06:26.280 off the Bloomberg Intelligence So we got one of those 0:06:26.320 --> 0:06:28.559 creamy things. Street not a rogy, and he's a senior 0:06:28.560 --> 0:06:31.680 reporter of Bloomberg News. Joins us here, uh at you 0:06:31.839 --> 0:06:33.920 and your partner crime Max table. So you guys have 0:06:33.960 --> 0:06:36.000 a story out there on a Bloomberg trmina about Goldman Sachs. 0:06:36.279 --> 0:06:39.920 What do you guys find, Well, something that's allowing on 0:06:40.000 --> 0:06:42.360 two levels. Very rarely do you have someone who has 0:06:42.480 --> 0:06:44.960 risen to the level of a Goldman partner airing their 0:06:45.040 --> 0:06:48.320 ugliest experiences, even if it is in an internal complaint 0:06:48.320 --> 0:06:51.760 at the film. And then when you look at how 0:06:51.800 --> 0:06:54.680 the process went and the fact that Goldman Sachs settled 0:06:54.720 --> 0:06:58.400 with the complaining to a tune of more than well 0:06:58.480 --> 0:07:01.599 more than two million dollars an eight figure payout, tells 0:07:01.640 --> 0:07:04.839 you that a what was in the complaint wasn't the 0:07:04.880 --> 0:07:07.960 most pleasing reading and the price they were willing to 0:07:08.040 --> 0:07:13.040 pay to avoid embarrassment. And that's why this is important. Correct, Correct, 0:07:13.080 --> 0:07:16.040 this is a former government partner around two years ago 0:07:16.080 --> 0:07:19.240 settled with the bank after finding what was what we 0:07:19.320 --> 0:07:22.480 understand to be able Aluminous complained that detailed a sexist 0:07:22.480 --> 0:07:26.560 culture at the bank, including senior managing making crude and 0:07:26.640 --> 0:07:31.200 dismissive remarks, paid disparities, the lack of promotions for women. 0:07:31.240 --> 0:07:33.760 Some of these issues have been things that Goldman and 0:07:33.880 --> 0:07:36.080 everyone else on Wall Street have been dealing with and 0:07:36.160 --> 0:07:39.600 have been trying to get past and make real progress. 0:07:39.720 --> 0:07:41.880 But the fact that this happened, in the fact that 0:07:41.920 --> 0:07:44.520 most of the issues an incidents described in the complaint 0:07:44.560 --> 0:07:47.000 were from twenty eighteen and nineteen tell you that this 0:07:47.040 --> 0:07:49.880 is not from a Wall Street long, long, long ago. 0:07:50.000 --> 0:07:52.400 This is very much the now in present. So are 0:07:52.400 --> 0:07:55.280 we talking about the kind of paid disparities that we 0:07:55.320 --> 0:07:59.080 don't see elsewhere or are these kind of paid disparities 0:07:59.560 --> 0:08:02.840 common across Wall Street? Unclear? Right, it's it's it's it's 0:08:02.920 --> 0:08:05.000 very I mean, I'm assuming the complaining in this case 0:08:05.000 --> 0:08:07.720 would only have had access to internal compensation figure and 0:08:07.720 --> 0:08:10.520 an understanding of what pay was like at Goldman Sex 0:08:11.200 --> 0:08:13.640 would would would we be right in saying that Goldman 0:08:13.720 --> 0:08:15.960 Sachs for somehow is an outlier and the rest of 0:08:15.960 --> 0:08:19.160 the Wall Streets can be absolved of some of these sins, 0:08:19.200 --> 0:08:21.760 perhaps not in fact most definitely. No, this is this 0:08:21.800 --> 0:08:23.840 is a threat that runs across Wall Street and across 0:08:24.200 --> 0:08:29.880 many other industries, and Wall Street in particular has maybe 0:08:29.920 --> 0:08:33.079 just because you know, their high profile company names, their 0:08:33.120 --> 0:08:36.200 high profile people, they make a lot of money, they're 0:08:36.200 --> 0:08:38.480 they're always a target of you know, a lot of activists. 0:08:38.520 --> 0:08:41.520 But Wall Street has been an industry that's tried to 0:08:41.559 --> 0:08:45.559 put this front and center and tried to, at least 0:08:46.320 --> 0:08:50.719 from external perspectives, deal with this issue aggressively. Yet it's 0:08:50.720 --> 0:08:53.480 another setback here, you know, your story suggesting that they 0:08:53.559 --> 0:08:55.000 got a lot of work to do as an industry. 0:08:55.160 --> 0:08:57.040 That's a very interesting point because when you think of 0:08:57.080 --> 0:09:00.360 the post me to reckoning, we've seen a lot of 0:09:00.360 --> 0:09:04.199 troubling things emerged from many other industry, not so much 0:09:04.240 --> 0:09:06.880 from the highest ranks of Wall Street. One theory has 0:09:06.920 --> 0:09:09.520 been that Wall Street's go go days, or perhaps in 0:09:09.559 --> 0:09:14.800 the seventies and eighties, and I was well darn good time. 0:09:14.920 --> 0:09:17.000 I I will still stick to the fact that I 0:09:17.040 --> 0:09:19.280 just mentioned Wall Streets go Go days, or perhaps in 0:09:19.360 --> 0:09:23.720 the seventies and eighties and uh raunchy remarks, lude behavior 0:09:23.960 --> 0:09:26.439 wasn't all that uncommon. So maybe there's one theory is 0:09:26.480 --> 0:09:29.160 Wald Street has cleaned up a little bit and has 0:09:29.200 --> 0:09:31.079 managed to get past that. But at the same time, 0:09:31.120 --> 0:09:33.640 you also remember these are firms with very deep pockets. 0:09:34.040 --> 0:09:36.240 These are firms that have a process in their employment 0:09:36.240 --> 0:09:38.320 contracts where a lot of the claims are handled in 0:09:38.400 --> 0:09:41.480 secretive arbitration. In fact, for the longest time, even sexual 0:09:41.520 --> 0:09:44.640 harassment complaints had to go through the forced arbitration process. 0:09:45.440 --> 0:09:48.560 So there is some validity to the theory that some 0:09:48.640 --> 0:09:51.840 of the worst things never got aired because they were 0:09:51.960 --> 0:09:54.880 able to dip into their wallets and pay a big 0:09:54.920 --> 0:09:57.640 time to score some of these settlements and keep these 0:09:57.640 --> 0:10:00.880 things private and secret well. And also it's seems from 0:10:00.880 --> 0:10:07.640 your reporting that some of the alleged bad behavior wasn't typical, right, 0:10:07.800 --> 0:10:10.960 And you describe a situation where David Solomon made a 0:10:11.000 --> 0:10:14.720 comment and then you say that his colleagues were surprised 0:10:14.720 --> 0:10:17.480 because it was so out of character. So it's as 0:10:17.480 --> 0:10:22.559 if he let something slip and now and now he's 0:10:22.559 --> 0:10:25.199 paying like twenty million dollars to cover it up. I mean, 0:10:25.320 --> 0:10:27.280 let's be very clear all the understanding we have that 0:10:27.720 --> 0:10:30.800 CEO of Goldman Sectavis Solomon, wasn't central to the complaint. Yes, 0:10:30.840 --> 0:10:34.480 there is an incident described that looks to quote something 0:10:34.520 --> 0:10:36.640 that David Solomon did say to a gathering of male 0:10:36.679 --> 0:10:41.520 colleagues that was scrude, to put it mildly, But there 0:10:41.559 --> 0:10:45.120 were many other managers that were sort of allegedly implicated here, 0:10:45.200 --> 0:10:47.120 many other managers who were quoted. And that's one of 0:10:47.120 --> 0:10:48.920 the things that rattled the top rungs of the bank 0:10:49.360 --> 0:10:52.880 is the broad institutional issue that this problem tried to 0:10:52.920 --> 0:10:55.880 sketch out, the scope for public embarrassment because of that 0:10:56.080 --> 0:10:57.920 and the need for them to try and make it 0:10:57.920 --> 0:11:01.480 go away. Alright, three good stuff. We appreciate it. Shrieta Rogen, 0:11:01.679 --> 0:11:04.720 senior reporter with Bloomberg News, joinings here in our Bloomberg 0:11:05.200 --> 0:11:11.000 Interactive Brokers studio. Hey, when you want to get a 0:11:11.040 --> 0:11:14.120 handle on how the retailers doing out there, how the 0:11:14.120 --> 0:11:17.080 consumers doing out there, you really can look at some 0:11:17.120 --> 0:11:18.640 of the results from the big retailers, and we got 0:11:18.679 --> 0:11:21.160 a couple of big ones. Today Walmart reported numbers some 0:11:21.240 --> 0:11:24.200 good numbs home depot. I thought the numbers were good. 0:11:24.240 --> 0:11:26.360 They have some inventory issues. We're gonna get to the 0:11:26.440 --> 0:11:27.920 latest there, but we're gonna break it on down. We're 0:11:27.920 --> 0:11:30.520 gonna roundtable this stuff we do with Jen Bartashes. She 0:11:30.559 --> 0:11:34.439 covers all things retail for Bloomberg Intelligence. He's based in Princeton. Uh. 0:11:34.440 --> 0:11:37.400 And Drew Reading, he covers the home builders for Bloomberg Intelligence. 0:11:37.880 --> 0:11:40.600 We got both of those folks on the line here. Um, Jen, 0:11:40.760 --> 0:11:43.960 let's talk with you. Start with you, Uh, Walmart. I 0:11:43.960 --> 0:11:47.839 mean people are still spending money, aren't they? They are, Um, 0:11:47.880 --> 0:11:50.320 and I think that's actually you know, the bright spot 0:11:50.360 --> 0:11:54.040 here is that the consumer is holding up relatively well. Um. 0:11:54.080 --> 0:11:56.920 They are shifting where they're spending and what they're spending on, 0:11:57.240 --> 0:12:00.000 but they are still spending money. And that is very important. 0:12:00.000 --> 0:12:02.959 And as we're looking at the economic environment and heading 0:12:03.000 --> 0:12:07.800 into that very important holiday season. So the holiday season important, 0:12:08.000 --> 0:12:12.120 But I mean, how is it going to roll out? Um? 0:12:12.160 --> 0:12:17.080 This year, We've gotten so much bad news from shippers. 0:12:17.400 --> 0:12:20.560 You know, if that Exit just said they're gonna furlough workers, Um, 0:12:20.600 --> 0:12:24.800 we're gonna get DHL tomorrow Thursday. I believe I'm looking 0:12:24.840 --> 0:12:27.000 forward to that. It's German, but it's a very big, 0:12:27.280 --> 0:12:30.520 you know, global shipper. And then Amazon cutting jobs going 0:12:30.520 --> 0:12:35.400 into holiday season. I was shocked, Yeah, what is up 0:12:35.440 --> 0:12:38.600 with that? Jen? Well, you know, when you're you're looking 0:12:38.600 --> 0:12:40.559 at cutting jobs, a lot of the jobs are more 0:12:40.640 --> 0:12:43.040 corporate type jobs as opposed to jobs that are in 0:12:43.080 --> 0:12:47.199 distribution centers. UM. And we started off with people going 0:12:47.240 --> 0:12:49.839 into the holiday planning to hire fewer people this year 0:12:49.880 --> 0:12:53.120 than they have in prior years. And I think we're 0:12:53.120 --> 0:12:55.760 seeing that come through, and then we're seeing this additional 0:12:56.160 --> 0:12:58.920 round of layoffs that are more in the in the 0:12:58.960 --> 0:13:02.360 product development, in the corporate side. UM. But it does 0:13:02.679 --> 0:13:05.320 it does indicate that that could be a really big 0:13:05.360 --> 0:13:09.960 boon for retailers like Target and Walmart that have store bases, 0:13:10.400 --> 0:13:12.880 because if there are delays in shipping and you're worried 0:13:12.920 --> 0:13:14.880 that your gifts aren't going to get there, they have 0:13:15.040 --> 0:13:17.560 great alternatives in terms of people either going to the 0:13:17.600 --> 0:13:19.440 store or being able to pick things up at the 0:13:19.480 --> 0:13:21.760 store to make sure that they have those gifts. So 0:13:21.840 --> 0:13:24.439 it could actually be a positive for these retailers. Drew 0:13:24.520 --> 0:13:26.719 right and let me bring you in. What's the differentiation 0:13:26.800 --> 0:13:31.520 differentiation here? I mean, um, I feel like Lowe's and 0:13:31.640 --> 0:13:34.400 Home Depot is going to be a very different story 0:13:34.559 --> 0:13:41.360 than necessarily um, well even Amazon, right, yeah, I mean, 0:13:41.600 --> 0:13:44.200 it was certainly certally a good quarter for Home Depot, 0:13:44.240 --> 0:13:46.640 and you're right, they do have a different customer base 0:13:46.760 --> 0:13:50.120 than than much of, um, the rest of the retail environment, 0:13:50.600 --> 0:13:52.960 and I think it speaks to the resiliency of the 0:13:53.000 --> 0:13:55.720 market despite you know what we're seeing in housing with 0:13:55.800 --> 0:14:01.560 transactions down at maybe down another ten next year. I 0:14:01.559 --> 0:14:04.000 do think it's important to point out though that growth 0:14:04.120 --> 0:14:06.240 this quarter really for the last several quarters, has been 0:14:06.360 --> 0:14:10.120 driven exclusively by higher average tickets. So a lot of 0:14:10.120 --> 0:14:13.560 that is the result of product inflation. Um You've got 0:14:13.600 --> 0:14:17.440 some commodity inflation from from earlier in the quarter. And 0:14:17.440 --> 0:14:21.360 then you know, particularly for Home Depot, there's there's relative 0:14:21.480 --> 0:14:25.520 strength due to their exposure to professional customers, which tend 0:14:25.560 --> 0:14:27.920 to be a little bit higher spending. Uh. You know. 0:14:27.960 --> 0:14:32.840 On the flip side, though, customer transactions UM have declined 0:14:32.920 --> 0:14:35.640 for for several quarters now. We think that's gonna probably 0:14:35.680 --> 0:14:37.800 remain a head wind, you know, as we go to 0:14:37.880 --> 0:14:41.240 next year. Just given our expectations for housing for many weeks. 0:14:42.200 --> 0:14:46.000 Hey drew talking about the home depot, the inventory number 0:14:46.440 --> 0:14:50.200 grew kind of really jumped out of me. It seems 0:14:50.200 --> 0:14:53.120 like the retail industry has had plenty of quarters to 0:14:53.200 --> 0:14:55.640 deal with the inventory issues, and a lot of them 0:14:55.640 --> 0:14:59.680 have kind of done it very well. What's what's different 0:14:59.680 --> 0:15:03.600 a depot. Yeah, so it's it's actually down a little 0:15:03.600 --> 0:15:06.600 bit from last quarter, but inventories relative to last year 0:15:06.720 --> 0:15:10.480 higher because you've got a lot of product inflation due 0:15:10.520 --> 0:15:13.920 to costs. There's also something interesting they pointed out, is 0:15:14.080 --> 0:15:18.320 a mix up in a mixshift higher to high value 0:15:18.320 --> 0:15:20.720 products and what they're selling there hasn't been a trade 0:15:20.720 --> 0:15:23.520 down among consumers. Um. They've also made a lot of 0:15:23.560 --> 0:15:27.080 investments in inventory for the holidays. They pointed out that 0:15:27.640 --> 0:15:31.520 they had the best UM year for Halloween sales on records, 0:15:31.520 --> 0:15:34.400 so we think there's probably some investments being made ahead 0:15:34.400 --> 0:15:37.240 of the Christmas season. And then they also pointed out 0:15:37.280 --> 0:15:40.080 that the higher inventories are result of some of the 0:15:40.120 --> 0:15:43.680 supply chain challenges that we've seen over the last year. So, 0:15:44.360 --> 0:15:46.600 I mean, part of that's probably the fact that they 0:15:46.640 --> 0:15:49.720 were ordering ahead of anticipated challenges and now you're starting 0:15:49.760 --> 0:15:52.080 to see demand slow a little bit relative to when 0:15:52.080 --> 0:15:55.600 they made these purchases. True, just gets since we got 0:15:55.600 --> 0:16:00.880 you here, the home market here, the builders, I mean, 0:16:00.920 --> 0:16:02.720 are they gonna build stuff here? I mean, you've got 0:16:02.760 --> 0:16:05.160 an interesting more more mortgage rates is seven percent here? 0:16:05.160 --> 0:16:07.320 I mean, are they gonna build houses over the next year? 0:16:09.120 --> 0:16:11.400 So it's it's a good question. We think there's probably 0:16:11.400 --> 0:16:14.360 gonna be a pretty severe poolback and housing starts. We've 0:16:14.360 --> 0:16:17.840 already started to see it. Um. You know, we're thinking 0:16:17.880 --> 0:16:20.720 that from you know, the peak of last year to 0:16:20.880 --> 0:16:24.920 where we eventually trot could be somewhere around the percent declient, 0:16:25.480 --> 0:16:28.400 just based on what we've seen in prior housing downturns. 0:16:28.920 --> 0:16:31.400 So builders have certainly taken their their foot off the 0:16:31.440 --> 0:16:33.920 gas pedal. They're not spending as much on land, and 0:16:33.920 --> 0:16:37.440 they're taking a degree of caution. You know. That being said, 0:16:37.440 --> 0:16:39.360 I think I think the group as a whole is 0:16:39.360 --> 0:16:43.000 in a much better position relative to the last downturn, 0:16:43.040 --> 0:16:46.320 which is, you know where everybody tends tends to look. Jen, 0:16:46.680 --> 0:16:50.120 how does inflation play into a factor into this holiday season, 0:16:50.160 --> 0:16:53.320 Because at the same time as we're looking at you know, 0:16:53.360 --> 0:16:56.840 seven point seven pc CP I prints. UM. We're also 0:16:56.880 --> 0:17:00.000 telling consumers that these big box stores have to cut 0:17:00.120 --> 0:17:02.760 prices because they have too much inventory. So as the 0:17:02.800 --> 0:17:05.919 consumer reacting, well, it's it's a delicate balance for the 0:17:05.960 --> 0:17:09.000 retailers because they want to have a compelling value proposition 0:17:09.119 --> 0:17:11.800 and consumers are seeking that that you know, low price, 0:17:12.400 --> 0:17:14.560 but they also need to not completely blow up their 0:17:14.600 --> 0:17:16.960 margins UM. And so as you know, as we look 0:17:17.000 --> 0:17:19.879 forward through the holiday season, we're expecting to see a 0:17:20.000 --> 0:17:23.719 much higher rate of promotions UM because it is going 0:17:23.760 --> 0:17:26.760 to be competitive for the dollars that people are willing 0:17:26.800 --> 0:17:30.240 to spend UM, So the promotion rate will be up there. UM. 0:17:30.280 --> 0:17:33.280 But we we are expecting that as inflation comes down, 0:17:33.560 --> 0:17:36.000 these are the retailers that pivot very quickly and try 0:17:36.040 --> 0:17:38.600 to bring prices down as quickly as they can UM. 0:17:38.600 --> 0:17:40.760 And Walmart alluded to that on their call today, and 0:17:40.800 --> 0:17:44.000 so UM it'll be it'll be an interesting challenge to 0:17:44.040 --> 0:17:47.520 see how they manage through the inventory without needing and 0:17:47.560 --> 0:17:50.280 still can meet that value proposition. Have some discounts, but 0:17:50.320 --> 0:17:53.840 they may not be UM crazy huge discounts in order 0:17:53.880 --> 0:17:55.760 to preserve a little bit of margin. It it will 0:17:55.760 --> 0:17:58.920 help to see how the the season unfolds, and if 0:17:58.920 --> 0:18:01.600 sales are slow, the council go up. Hey, Jen, just 0:18:01.600 --> 0:18:04.000 about twenty seconds if I go into a Walmart and 0:18:04.400 --> 0:18:06.359 shop from my g I Joe with the Kung Fu grip, 0:18:06.880 --> 0:18:08.880 is it gonna be on the shelves house of supply chain? 0:18:09.480 --> 0:18:12.159 Supply chain is much better. Um So, they've worked very 0:18:12.240 --> 0:18:14.720 hard at inventory being you know, and having in stocks. 0:18:15.160 --> 0:18:18.040 Um So this year they brought they brought product in earlier. 0:18:18.160 --> 0:18:20.480 There seems to be at this point plenty of product 0:18:20.520 --> 0:18:23.080 on the shelves. Um And we'll see how long that 0:18:23.160 --> 0:18:25.239 last to the holiday season. But right now it's at 0:18:25.240 --> 0:18:29.280 a healthy level. All right, Jen, Great stuff, appreciated Jen Bartashes. 0:18:29.359 --> 0:18:32.000 She covers all things retail for Bloomberg Intelligence and drew 0:18:32.000 --> 0:18:35.120 reading our housing analysts. We got the round table. That's 0:18:35.160 --> 0:18:37.240 great stuff. You can bring these real smart people together 0:18:37.560 --> 0:18:40.639 get perspectives on the retails. We've got another roundtable coming up, 0:18:40.720 --> 0:18:42.840 do we Oh, we've got this guy Eli Manning coming up. 0:18:42.840 --> 0:18:44.080 All right, we'll talk to him in a couple minutes. 0:18:44.119 --> 0:18:45.960 Were We love talking to the b I folks. They're 0:18:46.320 --> 0:18:50.399 wicked smart as well as the best quarterbacks and some 0:18:50.440 --> 0:18:53.760 of the best analysts on Wall Street, Walmart, home depot 0:18:53.760 --> 0:18:56.320 reporting numbers and retailers put up some good numbs here. 0:18:56.680 --> 0:19:03.120 Does that bode well for the holiday shopping season? Let's 0:19:03.119 --> 0:19:06.000 talk private equity here, Private equity and a sports biz? 0:19:06.160 --> 0:19:08.800 How can that go wrong? Former New York Giant quarterback 0:19:08.800 --> 0:19:12.120 and partner with the investment firm Brand Velocity, Eli Manning 0:19:12.200 --> 0:19:14.560 joined us here in our Bloomberg Interactive Broker studio along 0:19:14.600 --> 0:19:20.680 with Brand Velocity founding and managing partner Steve Liebowitz. Um. Eli, Steve, 0:19:20.680 --> 0:19:22.240 thanks so much for joining us here in our Bloomberg 0:19:22.280 --> 0:19:25.960 Interactive broker. So let's talk about sports first. I'm a 0:19:26.040 --> 0:19:27.800 I'm a Wall Street guy. For last, I'm a Wall 0:19:27.800 --> 0:19:29.520 Street guy. All these aheads, I want to talk sports. 0:19:29.520 --> 0:19:32.600 I want to talk to Wall Street. So, Eli, private equity. 0:19:33.200 --> 0:19:35.639 You've now step back from football a few years. You 0:19:35.720 --> 0:19:37.639 and your brother are doing all kinds of crazy TV 0:19:37.720 --> 0:19:41.760 stuff Manning cast, which is very fun. Um, but talk 0:19:41.800 --> 0:19:43.560 just about kind of what you're thinking about in the 0:19:43.600 --> 0:19:46.320 private equity space. Well, I'm excited. I've excited to join 0:19:46.480 --> 0:19:49.000 with the Brand Velocity group. We've been with them about 0:19:49.040 --> 0:19:50.720 a year and just really have had a kind of 0:19:50.720 --> 0:19:53.760 a private equity one on one uh and learning about 0:19:53.760 --> 0:19:56.199 the business and UH. Just I've been a part of 0:19:56.200 --> 0:19:58.600 one acquisition and it was in the sports world. It 0:19:58.680 --> 0:20:02.800 was Score Sports, which is a designer, manufacturer seller of 0:20:02.920 --> 0:20:06.760 youth sports uniforms, which uh, I'm passionate about. I have 0:20:06.840 --> 0:20:09.480 four kids and they're playing every sport. I think that's 0:20:09.520 --> 0:20:13.760 one I think business and area that so many people 0:20:13.760 --> 0:20:16.760 are familiar with. They love they love their kids playing sports. 0:20:16.760 --> 0:20:20.080 But it's also in a in a part of this 0:20:20.119 --> 0:20:23.240 where it is the cost of reasonable you know, you 0:20:23.240 --> 0:20:25.879 can get your jersey and your kid for eighteen to 0:20:25.920 --> 0:20:29.200 twenty dollars, and so for me, it's promoting families to 0:20:29.320 --> 0:20:31.800 get your kids outside, get them playing sports, get them 0:20:31.800 --> 0:20:34.199