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Speaker 1: This is Bloomberg Surveillance. The volatility is a result of

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Speaker 1: a build up over many, many years, fed sponsored of

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Speaker 1: carry trades. We need our banking sector to be able

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Speaker 1: to make mistakes because they're all human, without bringing down

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Speaker 1: the whole economy or requiring a bailout. The pressures that

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Speaker 1: most companies feel are not translating into the kind of

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Speaker 1: investment that I think we need to drive economic growth

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Speaker 1: in America or anywhere else. Bloomberg Surveillance your link to

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Speaker 1: the world of economics, finance, and investment on Bloomberg Radio.

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Speaker 1: Good running everyone, Michael McKay and Tom King Bloomberg Surveillance.

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Speaker 1: We welcome all of you worldwide, Bloomberg Radio Plus across

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Speaker 1: this nation, Bloomberg twe Boston, Bloomberg elevens Rio in springlike

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Speaker 1: New York, FM Washington, and of course out in the

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Speaker 1: Bay Area Waking Up. We welcome all of San Francisco

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Speaker 1: in the Bay Area, Bloomberg nine sixty, importantly nationwide and

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Speaker 1: across Canada's series SEXEM Channel one nineteen. Good day, have

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Speaker 1: you with us? It has been an odd and I've

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Speaker 1: used the word clumsy or indeterminate week. We're just sort

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Speaker 1: of trying to get our bearings and perspective in the

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Speaker 1: weekend uh reading. I mean it has been all in

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Speaker 1: all a challenge to say the least will do that

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Speaker 1: with not endless data checks, but we'll keep you abreast

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Speaker 1: to one. Equities, bonds, currencies and commodities are doing Bloomerg

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Speaker 1: surveillance much by cone Resnick Accounting tax advisory to sees

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Speaker 1: opportunities in commercial real estate. Your business needs market focused

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Speaker 1: guidance from the industry leading experts at cone Resnick. Find

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Speaker 1: out how at cone Resneck dot com. Am I reading

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Speaker 1: this weekend starts with a new Foreign Affairs magazine. Congratulations

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Speaker 1: to Gieon and all Richard Hassan all over at SEAFI

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Speaker 1: and Foreign Affairs for a must read thick edition. Lord

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Speaker 1: Summers leads it off. I will read Tyler Cowen, George Mason,

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Speaker 1: I will read Robert Decapolardy Star have you started? And

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Speaker 1: I've read um Larry Summers headline just crossing here. The

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Speaker 1: Yahoo board has formed an indimend independent committee to explore

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Speaker 1: options for sales. Sign seems to have been hung out

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Speaker 1: on the door. Painful Painful. One of the short reads

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Speaker 1: of the weekend. Michael McKee signaled. Uh. It's good to

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Speaker 1: look at market notes that are short, sharp focused eight pages,

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Speaker 1: nine pages, and within them is important perspective in this case.

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Speaker 1: Michael the Vix Nicholas another great market note. He takes

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Speaker 1: apart statistics like nobody. He's a chief market strategist at

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Speaker 1: converge x uh, and he's noting that for all the

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Speaker 1: volatility that we have had this year, your favorite measure, Tom,

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Speaker 1: the VIX has not gone anywhere near the heights it

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Speaker 1: reached back in August during the volatility. Then. Uh, it

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Speaker 1: reached forty uh in those days, and we're only in

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Speaker 1: the mid twenties obviously falling back this week to the

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Speaker 1: low twenties. Uh. So Uh, the Nick's taken apart the

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Speaker 1: numbers and why this might be. We we hear so

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Speaker 1: much nick about how terrified everybody is, and yet they're

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Speaker 1: not putting their money where their fear is. Yep, that's

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Speaker 1: absolutely right. It's really been puzzling that the VIX just

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Speaker 1: did not spike back to those levels that we saw

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Speaker 1: back in August. And I really wondered why, and so

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Speaker 1: I pulled apart the individual implied volatilities for all the

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Speaker 1: sectors of the SMP, and it turns out two are

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Speaker 1: doing their job and really getting volatile, and eight are not.

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Speaker 1: The two that are energy and financials. No surprise there. Yeah,

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Speaker 1: obviously people have been concerned about what's going on, especially

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Speaker 1: in Europe and financials and then oil. Uh so that

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Speaker 1: makes sense. But Uh, in August, technology was was way up. Yes,

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Speaker 1: exactly right. Technology is obviously the the biggest sector in

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Speaker 1: the SMP waiting right now. It's an important sector to

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Speaker 1: see get more volatile. If you think volatility is going

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Speaker 1: to increase. It did that in August. It hasn't done

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Speaker 1: that this year. I think perhaps because uh, investors are

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Speaker 1: looking at technology as being somewhat insulated from the European

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Speaker 1: financial situation, the situation with oil, and even the situation

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Speaker 1: in China. So it's temporarily formed this little moat around

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Speaker 1: itself and then we'll see how long that last. Well

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Speaker 1: is that is this telling us that what we're dealing

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Speaker 1: with is sort of overseas concerns outside of the oil

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Speaker 1: patch in the US, because there's, as we just mentioned,

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Speaker 1: been a lot of concerned about what happens to Yahoo.

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Speaker 1: Apple was everybody's favorite pinata for a while, and yet

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Speaker 1: it doesn't seem to be reflected in these fear gages. Yeah,

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Speaker 1: that's exactly right. I went and actually looked at the

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Speaker 1: four biggest names in technology, the Microsoft, the Apple, Googles

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Speaker 1: and so forth, and it's really a mixed ba. Some

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Speaker 1: are showing volatotily like they did in August, some are not.

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Speaker 1: So your point's well taken. For the moment, it seems

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Speaker 1: to be technologies a story by story situation versus a

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Speaker 1: macro call like oil or financials. What was your experience?

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Speaker 1: And actually using the VIX, I find that borders on,

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Speaker 1: you know, medieval alchemy the way to me, it's wildly asymmetric.

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Speaker 1: It has value highly extended towards fear and anks and

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Speaker 1: other than that, I have trouble using VIX were you.

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Speaker 1: I use just the basic numbers to guide me. So,

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Speaker 1: for example, the the average of the VIX since its

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Speaker 1: founding in twenty and a standards deviation is eight. So

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Speaker 1: within a very broad band literally down to its hen

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Speaker 1: or up to thirty six, you're not really getting a

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Speaker 1: lot of signal. That's why I look at forty on

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Speaker 1: the VIX is where we start to get interested, because

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Speaker 1: then statistically it is too standard deviations away from the

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Speaker 1: mean and we can start to pay attention. It got

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Speaker 1: there in August, it didn't get there this yere I.

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Speaker 1: I look, you know the elevations and obviously we're damping

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Speaker 1: down now. Is the VIX market now, nick so sophisticated,

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Speaker 1: it's derivative use of forward markets. That the VIX now

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Speaker 1: is not the same VIX we knew and loved ten

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Speaker 1: years ago. I think it's a very good point, you know,

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Speaker 1: for no other reason, and that we have all these

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Speaker 1: VIX related et F products, which, by the way, I've

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Speaker 1: had about half a billion dollars of redemptions here to date,

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Speaker 1: so there's actually less need to hedge those products, and

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Speaker 1: there was in the fourth quarter of last year. So

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Speaker 1: there's a lot of counter currents. That's why you got

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Speaker 1: to stick to these big outlier numbers. And otherwise it

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Speaker 1: does tend to be a little noisier than history would indicate. Um.

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Speaker 1: Is that a good thing or bad thing that we

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Speaker 1: have all of these et F products? Is the VIX

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Speaker 1: are reliable enough? Um? I guess it's you know, the

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Speaker 1: number is what it is. But is it dangerous for

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Speaker 1: people who in destiny ts which who leves you know

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Speaker 1: significantly retail. Yeah, it's a great point. You know, there's

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Speaker 1: no such thing. There shouldn't be any such thing as

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Speaker 1: an investor in those volatility products. There should be traders,

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Speaker 1: there should be folks who hedge out for a day

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Speaker 1: or two, you know, But look at the long term

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Speaker 1: charts on any of those products and you realize they're

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Speaker 1: not for long term holds. They are purely trading products,

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Speaker 1: and you've got to use them as that way and

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Speaker 1: no other. How do you use them? I have used them. Yes,

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Speaker 1: we tend to have thirty day whole periods of brokerage

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Speaker 1: firms here in the States, so it's hard to use

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Speaker 1: them for any consistent period of time because I don't

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Speaker 1: want to hold them for thirty days. What do you

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Speaker 1: look at when you're when you're looking at a VIX

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Speaker 1: index to buy into, I look for basically, I look

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Speaker 1: at the long term price chart to see how well

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Speaker 1: it actually correlates to the VIX. A lot of these

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Speaker 1: products reset every day, and so you have to be

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Speaker 1: very careful on these any daily reset products that you're

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Speaker 1: buying it for the appropriate period of time and that

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Speaker 1: it does actually try what it purports to track. Because

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Speaker 1: those daily resets can kill you when volatility is high.

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Speaker 1: What a hydrocarbons tell you right now? We ask Kate

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Speaker 1: more of this JP Morgan Private Bank this morning, and

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Speaker 1: she was remarkably cautious about the mystery of what hydrocarbon

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Speaker 1: shares do. What do you think they're gonna do? Yeah,

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Speaker 1: it's a great point, and that's well put. The bottom

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Speaker 1: line is that energy stocks act okay here, I'm actually

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Speaker 1: a fan. I understand where the commodity markets taking us,

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Speaker 1: but I think equities should be all right. They've actually

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Speaker 1: been in line with the SMP so far a year

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Speaker 1: to date, and a lot of the bigger names aren't

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Speaker 1: even better. So I think that we're pretty washed out.

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Speaker 1: We see that in the money flows on the E

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Speaker 1: t F side, and we see that in the price action.

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Speaker 1: So I like them for here. You also like gold.

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Speaker 1: I do like gold, and that's that's a hard one

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Speaker 1: to like, because it's been unlovable for the last four

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Speaker 1: years since those two thousand eleven peaks. But they trade

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Speaker 1: extremely well, and I do think even if you're not

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Speaker 1: pre uh destined to like gold philosophically, it's a really

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Speaker 1: important market. Tell are you a technical or a fundamental

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Speaker 1: on gold. James Steele has given us such good perspective

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Speaker 1: from HSBC, but he's completely fundamental on good demand dynamics.

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Speaker 1: I would say I'm fifty fifty. I totally respect that

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Speaker 1: many many folks would need to look at technicals to

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Speaker 1: trade gold because it doesn't have those classic fundamental outputs

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Speaker 1: like cash flow to analyze. But I'm also bullish and

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Speaker 1: demand picture, and I think it is one of those

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Speaker 1: rare risk hedges that people will flock to if things

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Speaker 1: get more bottle Nick final question, pictures and catchers, they

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Speaker 1: all return. What will you glean this weekend from pictures

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Speaker 1: and catchers? It's spring training. It's all about chemistry between

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Speaker 1: pictures and catchers. You know, it is the most important

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Speaker 1: relationship in baseball. They've got to get along. Yeah, just

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Speaker 1: like smartest that's the smartest thing we've heard this week.

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Speaker 1: Nicholas with converge x with a really smart note about

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Speaker 1: breaking up the vix and looking at the subparts. And

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Speaker 1: UH sees a pretty good market away from energy and financials.

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Speaker 1: Futures at negative six down, futures negative forty six yields

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Speaker 1: were in and there's been a really nice reversal. I

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Speaker 1: don't want to make too much of it on a

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Speaker 1: churning Friday, but nevertheless, the tape ugly two hours ago,

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Speaker 1: and we've had a nice little lift up here. Dollar

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Speaker 1: weakness fractionally yen one was much stronger earlier. We pulled

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Speaker 1: away from that. Uh the German two year as my

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Speaker 1: full attention, we had a full negative point five four

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Speaker 1: print to three digits down negative point five three four

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Speaker 1: on the German two year yield, West Texas thirty dollars

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Speaker 1: cents the barrel. Let's take it with Michael Barr and

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Speaker 1: get the latest world in national headlines. Michael, Mike, Tom,

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Speaker 1: thank you very much. Livia was the scene today and

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Speaker 1: the fight against the Islamic State group. American warplanes struck

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Speaker 1: multiple targets, including and a parent Islamic State training camp

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Speaker 1: and a senior extremist leader. The US official, who did

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Speaker 1: not want to be identified, did not go into details

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Speaker 1: about the leader or the area in Libya where the

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Speaker 1: air strikes were conducted. The casket of Supreme Court Justice

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Speaker 1: Anton and Scalia will be on public view today in

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Speaker 1: the Great Hall of the Supreme Court building. The justice's

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Speaker 1: former law clerks will take turn standing vigil throughout the

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Speaker 1: day and night. It is NASA's version of a trash incinerator.

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Speaker 1: A pair of astronauts aboard the International Space Station released

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Speaker 1: a capsule loaded with one point five tons of trash.

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Speaker 1: The capsule should re enter the atmosphere and burn up

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Speaker 1: harmlessly over the Pacific. Tomorrow. Global News twenty four hours

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Speaker 1: a day, powered by our journalists and more than one

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Speaker 1: fifty news bureaus from around the world. I'm Michael Barr,

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Speaker 1: Mike Time. We brought Matt Damon back from Mars. We

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Speaker 1: can figure out what to do with trash over the Pacific.

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Speaker 1: Stay with US Worldwide Bloomberg Surveillance. The news update brought

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Speaker 1: Index Future is a lower following a decline in oil.

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Speaker 1: Let's go to the first Word Breaking News desk for

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Speaker 1: today's morning call, and here's Bill Maloney. Good morning Bill,

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Speaker 1: Good morning Karen. That's right. US features are under pressure today.

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Speaker 1: Dofure is currently lower by fifty two points, says to

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Speaker 1: be futures drop six and NASSAK futures fall by thirteen.

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Speaker 1: The US ten uel at one point seven four and

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Speaker 1: in Europe Spain is lower by one point five percent.

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Speaker 1: Italy drops one point one percent. On the US economic

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Speaker 1: Frontay thirty cp I and after the bellas night, Applied

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Speaker 1: Materials beat and Nordstrom seventeen adjusted EPs views trailed estimates

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Speaker 1: regarding earnings This morning, d r Q and EPs eighty cents,

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Speaker 1: beat estimates of seventy one, but cut its forecast. Finally,

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Speaker 1: some of your wall sheet upgrades and downgrades at Bank

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Speaker 1: of America, Reliance Steele cut to neutral, steal their and

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Speaker 1: Crown Holdings raised to buy, Boise, Cascade raised out perform

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Speaker 1: at BMO, Best Buy, cut to neutral at Goldman Sachs,

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Speaker 1: Applied Materials raised to buy it, need Um Spirit Our

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Speaker 1: Systems cut to neutral at UBS, and finally Sentel cut

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Speaker 1: to market perform over at Wells Fargo. Live from the

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Speaker 1: First Breaking News desk. Go Bill Maloney, Karen alright, thanks

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Speaker 1: bail to hear live breaking news over your Bloomberg type

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Speaker 1: squawk and go on your terminal. Let's sku you a

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Speaker 1: w K go. That's a Bloomberg business flash. Tom and

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Speaker 1: Mike Karn thanks so much Bloomberg surveillance this morning. But

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Speaker 1: by Investco, investing isn't about meeting benchmark. It's about achieving goals.

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00:14:02,240 --> 00:14:06,880
Speaker 1: Find out how investcos high conviction approach can help. Visit

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00:14:06,920 --> 00:14:11,520
Speaker 1: investco dot com slash high conviction and on a Friday,

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00:14:11,559 --> 00:14:15,280
Speaker 1: we think Investco for their support. We spoke to him

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Speaker 1: a few days ago. We drive the discussion forward and

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Speaker 1: we're gonna do this today, particularly for American UM listeners

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Speaker 1: on Brexit. It was this phrase. It came up. But yeah, yeah,

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Speaker 1: back and forth and everybody in the United Kingdom wound up.

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Speaker 1: Thomas Raines is at Chatham House, where they do international

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Speaker 1: relations at the highest level. He joins us UH for

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Speaker 1: the second time this week. Thomas, wonderful to speak to

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Speaker 1: you again. What is the significance that David Cameron's soare

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Speaker 1: in Brussels is extended? Comman is trying, He's locked in

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Speaker 1: negotiations at the moment, we've we were sort of awaiting

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Speaker 1: white smoke to come from the and nothing's come through

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Speaker 1: so far. Basically, I think the the deal has been harder.

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Speaker 1: It's been harder to get people to give way. There

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Speaker 1: are a few particular sticking points on the issues that

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Speaker 1: he's trying to address. One is around the access for

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Speaker 1: EU migrants in Britain to the UK welfare system, particularly

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Speaker 1: around child benefits, and then another around the relationship between

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Speaker 1: countries which use the Euro, the single currency and much

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Speaker 1: of the EU and those current than those countries like

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Speaker 1: the UK which still have their own currency. You nail

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Speaker 1: the white We've got the whole pulpe Trump backstory here,

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Speaker 1: the white smoke in Russell's except there's no pulp That's

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Speaker 1: the fundamental issue. There's no pope. There is a man

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Speaker 1: named Donald Tusk. He is the President of the EU

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Speaker 1: Council and he's working very hard at the moment to

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Speaker 1: try and broke a solution. He's from a Prime Minister

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Speaker 1: of Poland. He's trying to pressure all sides. He is

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Speaker 1: by all accounts, keeping keeping everyone locked in negotiations and

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Speaker 1: saying we're not all getting background the same table until

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Speaker 1: I have a nod from everyone who's taking part that

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Speaker 1: we've got a deal. So at the moment there's a

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Speaker 1: lot of there's a lot of back and force bilaterals.

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Speaker 1: It comes down to particular words in the texts, And

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Speaker 1: there are some rumors apparently that the complicate issues with

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Speaker 1: with the Greek Prime Minister at alexis sit press trying

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Speaker 1: to link the two main issues being discussed at the summit. One,

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Speaker 1: of course, is is Brexit and Britain leaving the EU.

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Speaker 1: The other is the issue of migration, which is obviously

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Speaker 1: a huge issue for for a number of European countries

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Speaker 1: and in many ways more important than than what happens

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Speaker 1: to to Britain and more immediate. And there are rumors

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Speaker 1: at the moment that the Greek Prime Minister is trying

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Speaker 1: to get guarantees about the UK keeping the EU rather

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Speaker 1: keeping its open borders, and that he will veto a

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Speaker 1: deal on on Brexit unless he can he can secure that.

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Speaker 1: So slightly dangerous and delicate moment in the negotiations make

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Speaker 1: my head spinning, You imagined, David Cameron, what's leaving aside

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Speaker 1: Prime Minister shippers, what's the other side those who are

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Speaker 1: not giving in to Cameron's demands. What's their argument. So

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Speaker 1: they have some particular concerns. If you take the countries

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Speaker 1: in Central and Eastern Europe Poland in particular, they have

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Speaker 1: a lot of citizens who are living in the UK

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Speaker 1: and they don't want their citizens who live in the

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Speaker 1: UK to be treated differently under UK law than British citizens.

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Speaker 1: So this all comes down to this issue around discrimination

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Speaker 1: and whether if the UK changes the way that people

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Speaker 1: can access benefits, whether that counts as discrimination if it's

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Speaker 1: done on the basis of nationality. So their argument is

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Speaker 1: that if a Polish person works in Britain and pays

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Speaker 1: their taxes and they should be able to access the

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Speaker 1: same benefits that British people are. But if it gets

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Speaker 1: it gets very complicated and a bit tricky around particular

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Speaker 1: issues like child benefit for migrants whose children still live

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Speaker 1: back in Poland. So at the moment, the situation is

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Speaker 1: that they can get benefits for children who are still

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Speaker 1: live back in Poland and in the UK that's seen

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Speaker 1: as as seen as unfair. So it's an issue of

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Speaker 1: fairness for both sides. So that's one of the reasons

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Speaker 1: it's so difficult to resolve. One of the reasons we

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Speaker 1: care obviously here is the financial industry to be significantly affective.

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Speaker 1: There's something called a passport that is at the heart

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Speaker 1: of whether the British are going to be able to

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Speaker 1: whether banks are going to continue to headquarter in London

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Speaker 1: if breaksit were to happen. Yeah, I mean that's a

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Speaker 1: there's a huge issue, and one of the items on

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Speaker 1: the negotiation agenda is about seeking to sort of get

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Speaker 1: some special protections for the large financial industry that's that's

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Speaker 1: based in London and the UK. The real, the real

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Speaker 1: uncertainty around this is that if the UK were to

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Speaker 1: vote to leave, we don't know what the relationship would

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Speaker 1: look like afterwards. No country has ever left the EU.

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Speaker 1: There are some countries which have a relationship that allows

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Speaker 1: for the trade in financial services, but that would involve

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Speaker 1: other trade offs that the UK might be not willing

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Speaker 1: to make. So this uncertain is obviously not business. In

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Speaker 1: thirty seconds, what's your unexpected out of this? What's the

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Speaker 1: thing that nobody's looking for in London? I would say, what? What?

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Speaker 1: What I just mentioned earlier, which is that the the

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Speaker 1: issues around Britain's membership the EU get dragged into this.

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Speaker 1: This massive complicated issues around migration, and I think that

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Speaker 1: would if the two get bound up together, that will

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Speaker 1: make the problem letty to to solve rather than easier.

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Speaker 1: Don't be a stranger. Thomas Rains helping us out this

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Speaker 1: week with respective he is with Chatham House. I urge

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Speaker 1: their website upon you, like many of their brethren and

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Speaker 1: international relations, very smart reading and weekend reading to make

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Speaker 1: you more informed about uh these events. Um yeah, I

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Speaker 1: gotta give a major shout out Michael Key to Francine

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Speaker 1: local Qua. There was way out front on the urgency

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Speaker 1: of breakxfast. Francine provided terrific leadership here to the surveillance

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Speaker 1: team futures at negative six. Next we look at the

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Speaker 1: economy Bloomberg surveillance coming up that with all due respect,

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00:20:07,640 --> 00:20:09,280
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Speaker 1: broadcasting live to New York, Croomberg, even to Washington, d C,

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Speaker 1: Bloomberg to Boston. Bloomberg twelve hundreds to San Francisco, Bloomberg

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00:20:34,359 --> 00:20:38,119
Speaker 1: to the Country six Channel one nineteen and around the

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00:20:38,160 --> 00:20:41,800
Speaker 1: globe the Bloomberg Radio Plus Happen Bloomberg dot com. This

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00:20:42,040 --> 00:20:46,800
Speaker 1: is Bloomberg Surveillance mars A thirty on Wall Street Economic Indicator,

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00:20:47,000 --> 00:20:49,480
Speaker 1: brought to you by Commonwealth Financial Network. When it's time

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00:20:49,520 --> 00:20:51,680
Speaker 1: to change the conversation, talk with the broker dealer r

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Speaker 1: I A that's ready to listen, call six six four

358
00:20:54,400 --> 00:20:58,280
Speaker 1: six two three eight or visit Commonwealth dot com to

359
00:20:58,800 --> 00:21:02,720
Speaker 1: learn more. You heard Tom giving his approval to the

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Speaker 1: numbers vide Dell Judais. What is the c p I, Tom, Oh, yes, right,

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Speaker 1: it's unchanged. In January, economists had been anticipating at the

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Speaker 1: client a Consumer Price Index January unchanged. That follows at

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Speaker 1: the client the prior month, the core excluding food and

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Speaker 1: energy hotter than forecast, up point three percent. Economists have

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Speaker 1: been looking for point two percent game revisions earlier in

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Speaker 1: a week, putting the c p I core for the

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Speaker 1: prior month also up point two percent. Let's look at

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Speaker 1: a year over year, the CPI up one point four percent,

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Speaker 1: corey year over year up two point two percent. Lots

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Speaker 1: of numbers the headline one more time. Consumer Price Index

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Speaker 1: unchanged January at the Bloomberg First Forecast Confidy deal. Judas,

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Speaker 1: let's go back to New York and just put the

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Speaker 1: two year yield out. Why don't you step in here

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Speaker 1: with your prospective please, yields higher, futures churn a little bit,

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Speaker 1: oil lower three a barrel on West Texas. This is

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Speaker 1: a little bit what the Fed was expecting. Well, it's

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00:22:03,520 --> 00:22:06,320
Speaker 1: it's hard to know exactly because one month, et cetera.

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Speaker 1: But mathematically, the big declines of last year falling out

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Speaker 1: of the index is the big declines of this year

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Speaker 1: only now just starting to get incorporated into them. So

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Speaker 1: this could be a one off bounce that will reverse

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Speaker 1: as oil prices are factored into it. Uh, It's it's

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Speaker 1: hard to know without taking it apart, and I haven't

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Speaker 1: had enough time to go deep into the details. Monthly

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Speaker 1: CPI revision higher, the jump in course cp I, excuse me,

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Speaker 1: the jump in regular CPI year over year over sixty days,

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Speaker 1: as Mike says, don't write home about it is a

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Speaker 1: double zero point seven to one point four. The vector

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Speaker 1: is in you know, the Janet Yellen's great credit in

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00:22:53,520 --> 00:23:01,080
Speaker 1: the inflation, not fearmongers, but the inflation optibus is is remarkable.

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Speaker 1: And you see it with a two year yield which

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Speaker 1: is point six nine literally a Bloomberg cup of coffee

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Speaker 1: ago point seven three one three, it's a been four

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Speaker 1: basis points at heartbeat. Well, it's so funny is everybody

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Speaker 1: looks at the w I r P function on the

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00:23:15,800 --> 00:23:18,960
Speaker 1: Bloombergin's as well markets of price something out and now

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Speaker 1: you you watch things change as the data come in. People. Uh,

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Speaker 1: look again, food prices which were down in the prior month,

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Speaker 1: we're flat this month. It's one of the reasons we

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Speaker 1: saw prices go up again. I'm starting to look at

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Speaker 1: the at the numbers here, so uh, food and energy

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Speaker 1: obviously the big contributors. Energy down two point which is

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Speaker 1: the same as in December. So um, maybe it's not

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00:23:44,640 --> 00:23:49,080
Speaker 1: all that uh and I'll keep looking through, but it

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Speaker 1: do seem to be a lot of things going up

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Speaker 1: in price. Uh. One comment before we get to a

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Speaker 1: good guest Cleveland CPI, which I much prefer I think

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Speaker 1: it's way smart mathematics two point four three per cent

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Speaker 1: is where we ended the year. Well, they would hive off, certainly,

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Speaker 1: Energy prices from that because they they trimm it take

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Speaker 1: out the outliers. Dana freedmen with us. She is with Fidelity,

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Speaker 1: which barely describes her responsibilities in what they invented. Fidelity

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Speaker 1: literally invented sector investing and select portfolio investing. And she

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Speaker 1: speaks with today about the strength of the American Consumerdina,

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Speaker 1: I find it the oddest, oddest of American sectors retailing.

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Speaker 1: How hard has it been for you to manage money recently? UM? Well,

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Speaker 1: first off, good morning to everybody UM joining us. UM,

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Speaker 1: I'm very excited to be on the call today. UM.

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Speaker 1: You know, I've been UM covering the retail space for

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Speaker 1: almost thirteen years, ten years of Fidelity and then a

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Speaker 1: number of years on the south Side. UM. What I've

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Speaker 1: always found is that there's always a way to generate

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Speaker 1: alpha in terms of consumer discrattion scenary. UM. You know,

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Speaker 1: I spend a lot of time thinking about where the

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Speaker 1: consumer is going, really going right now? We don't know

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Speaker 1: a good question. So UM, a couple of things that

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Speaker 1: I'm looking at. UM. I'm focused on a lot of

428
00:25:13,080 --> 00:25:16,080
Speaker 1: big megatrends. UM. The first megatrend that we're seeing out there,

429
00:25:16,440 --> 00:25:18,280
Speaker 1: and just to step back for a second. I use

430
00:25:18,320 --> 00:25:23,520
Speaker 1: the word megatrend intentionally because UM, I see these as

431
00:25:23,600 --> 00:25:26,719
Speaker 1: long term secular trends, not just a trend impacting one

432
00:25:26,800 --> 00:25:30,040
Speaker 1: or two years, but really a long term trend. So, UM,

433
00:25:30,080 --> 00:25:33,280
Speaker 1: one big megatrend out there is the whole gravitation to

434
00:25:33,800 --> 00:25:38,959
Speaker 1: transacting online. Um. Transacting online is certainly more convenient. So

435
00:25:39,000 --> 00:25:41,399
Speaker 1: what do you have two stocks in your portfolio? Google

436
00:25:41,400 --> 00:25:43,399
Speaker 1: and Amazon? I mean, what do you do if we're

437
00:25:43,440 --> 00:25:46,320
Speaker 1: transacting online? What do you do with in a portfolio?

438
00:25:46,840 --> 00:25:50,200
Speaker 1: If you want to do the online bet? Sure? Sure so. UM.

439
00:25:50,240 --> 00:25:52,680
Speaker 1: If you look at my top ten holdings which are

440
00:25:52,760 --> 00:25:56,040
Speaker 1: published on fidelity dot com as of December thirty one,

441
00:25:56,280 --> 00:25:59,080
Speaker 1: you see a name like Amazon as one of my

442
00:25:59,119 --> 00:26:02,359
Speaker 1: top holdings. UM. I view Amazon as a big picture

443
00:26:02,440 --> 00:26:07,320
Speaker 1: certainly benefitting from this whole shift to online um commerce,

444
00:26:07,520 --> 00:26:11,520
Speaker 1: and overall I see it as a key disrupter. Well sure,

445
00:26:12,640 --> 00:26:14,960
Speaker 1: but what about the rest of the retail space. It

446
00:26:15,040 --> 00:26:17,239
Speaker 1: seemed to be Amazon food. I mean, you look at

447
00:26:17,280 --> 00:26:22,639
Speaker 1: what happened to Walmart. Uh this past quarter? Is there

448
00:26:22,640 --> 00:26:27,240
Speaker 1: any anybody to own on an internet e commerce basis

449
00:26:27,320 --> 00:26:31,680
Speaker 1: besides Amazon? So I spent a lot of time looking

450
00:26:31,800 --> 00:26:34,040
Speaker 1: at the companies that I own and making sure that

451
00:26:34,080 --> 00:26:39,960
Speaker 1: they have brand appropriate online strategies. For some companies it

452
00:26:40,000 --> 00:26:43,040
Speaker 1: will be more important. For other company is less important.

453
00:26:43,320 --> 00:26:47,440
Speaker 1: You know, some some categories are inherently more conducive to

454
00:26:47,520 --> 00:26:51,120
Speaker 1: selling online, something like footwear because if you know your size,

455
00:26:51,520 --> 00:26:54,080
Speaker 1: you don't necessarily have to take that risk. You know

456
00:26:54,160 --> 00:26:57,240
Speaker 1: that something won't fit you. Um. However, if you're dealing

457
00:26:57,320 --> 00:27:01,960
Speaker 1: with something like chemicals or auto parts, that is something

458
00:27:02,000 --> 00:27:04,960
Speaker 1: that is not as conducive to selling online. You can't

459
00:27:05,160 --> 00:27:07,480
Speaker 1: ship you know, a lot of chemical products. Do you know?

460
00:27:07,520 --> 00:27:09,639
Speaker 1: What we do is come back to you and I

461
00:27:09,680 --> 00:27:11,200
Speaker 1: want to dive into where we are in the state

462
00:27:11,240 --> 00:27:14,440
Speaker 1: of the consumer, particularly with the state of New York City.

463
00:27:14,440 --> 00:27:17,520
Speaker 1: We're just finishing Fashion Week, hearing were the trendier other

464
00:27:17,560 --> 00:27:20,000
Speaker 1: than a lot of those stacks of rolling over half

465
00:27:20,040 --> 00:27:24,639
Speaker 1: for Dina Freeman is with Fidelity with their select retail portfolio.

466
00:27:24,680 --> 00:27:26,959
Speaker 1: That's a very cool thing. I remember when those were

467
00:27:27,000 --> 00:27:31,000
Speaker 1: literally invented out of the blue and were instantly hugely

468
00:27:31,119 --> 00:27:38,040
Speaker 1: game changing on Wall Street Futures at negative six. This

469
00:27:38,160 --> 00:27:40,439
Speaker 1: Hour of Surveillance brought to you by Westchester suber ou

470
00:27:40,680 --> 00:27:43,800
Speaker 1: Visit Westchester Subaru dot com. Here's Michael bar with headlines

471
00:27:43,960 --> 00:27:46,000
Speaker 1: my toime, thank you very much. The casket with the

472
00:27:46,040 --> 00:27:48,800
Speaker 1: body of Justice Anton and Scalia will lie in repose

473
00:27:48,880 --> 00:27:52,200
Speaker 1: today at the Great Hall of the Supreme Court. Among

474
00:27:52,240 --> 00:27:55,280
Speaker 1: the mourners will pay their respects today are President Obama

475
00:27:55,320 --> 00:27:58,760
Speaker 1: at first Lady Michelle Obama. Scalia died last weekend at

476
00:27:58,840 --> 00:28:02,639
Speaker 1: age seventy nine. US warplanes have struck and Islamic state

477
00:28:02,640 --> 00:28:05,760
Speaker 1: camp in Libya today, according to the Pentagon, as senior

478
00:28:05,800 --> 00:28:09,960
Speaker 1: Tunisian operative linked to two major terrorist attacks in Tunisia

479
00:28:10,040 --> 00:28:12,800
Speaker 1: last year was most likely killed in the years trimp.

480
00:28:13,200 --> 00:28:17,040
Speaker 1: Republican presidential candidate Donald Trump is standing by his claim

481
00:28:17,119 --> 00:28:21,679
Speaker 1: that Pope Francis does not understand the U S immigration situation.

482
00:28:22,080 --> 00:28:24,879
Speaker 1: The Pope suggested anyone who wants to build a wall

483
00:28:24,920 --> 00:28:28,120
Speaker 1: on the Mexican border is not Christian. Trump, who at

484
00:28:28,160 --> 00:28:31,360
Speaker 1: first called the Pope's comments disgraceful, toned it down when

485
00:28:31,359 --> 00:28:33,840
Speaker 1: he spoke to ABC News this morning. I think it

486
00:28:33,880 --> 00:28:35,840
Speaker 1: was a little bit lighter to mention that the press

487
00:28:35,880 --> 00:28:39,560
Speaker 1: sort of portrayed after I read a transcript. But you know,

488
00:28:39,600 --> 00:28:42,040
Speaker 1: it's about illegal immigration. You have to have a border,

489
00:28:42,120 --> 00:28:44,840
Speaker 1: or we just don't have a country. Trump also tweeted

490
00:28:44,840 --> 00:28:47,920
Speaker 1: out a photo of Vatican City which shows its surrounded

491
00:28:47,920 --> 00:28:50,600
Speaker 1: by a lot of walls. Global News twenty four hours

492
00:28:50,600 --> 00:28:53,520
Speaker 1: a day, powered by our twenty four journalists and more

493
00:28:53,520 --> 00:28:55,560
Speaker 1: than a hundred fifty news bureaus from around the world.

494
00:28:55,840 --> 00:29:00,000
Speaker 1: Michael bar Blank, Tom, thank you, Michael. The Racontina Auto

495
00:29:00,000 --> 00:29:04,840
Speaker 1: Bloomberg NBC Sports Update with Rob Busk, Morty, Mike and

496
00:29:04,880 --> 00:29:07,560
Speaker 1: Tom Nixed emotions on the ice on Thursdays. The Rangers

497
00:29:07,600 --> 00:29:09,760
Speaker 1: did what they're supposed to, which is hanging around late

498
00:29:09,840 --> 00:29:19,080
Speaker 1: on the road and give yourself a chance's tour. One

499
00:29:19,400 --> 00:29:23,720
Speaker 1: point nine seconds to go the Rangers that put it away.

500
00:29:23,880 --> 00:29:26,880
Speaker 1: That's msgu on the call. Derek Bursar nets a pair

501
00:29:26,920 --> 00:29:29,160
Speaker 1: of goals. New York doubls up Toronto four to two.

502
00:29:29,400 --> 00:29:31,760
Speaker 1: Rangers have won seven of ten their third in the

503
00:29:31,760 --> 00:29:34,560
Speaker 1: East Islanders. They hosted the hottest team on ice, the

504
00:29:34,600 --> 00:29:37,960
Speaker 1: Washington Capitals and the leading scorer Alex Ovechkin, who added

505
00:29:37,960 --> 00:29:40,120
Speaker 1: a pair to his already season best now he has

506
00:29:40,160 --> 00:29:43,600
Speaker 1: thirty seven. Justin Williams blasted a game winner, though in overtime,

507
00:29:43,600 --> 00:29:46,080
Speaker 1: as the Caps took down New York three to two.

508
00:29:46,280 --> 00:29:48,600
Speaker 1: Islanders are fifth in the East. The Devil's are a

509
00:29:48,680 --> 00:29:51,400
Speaker 1: point out in eighth place. There they have the night

510
00:29:51,520 --> 00:29:54,360
Speaker 1: off NBA Nicks and Nets they were off. They'll square

511
00:29:54,400 --> 00:29:56,240
Speaker 1: off tonight thought at the Barkley Center at seven thirty

512
00:29:56,240 --> 00:29:58,000
Speaker 1: and prior to the game, the Nets will introduce their

513
00:29:58,040 --> 00:30:01,080
Speaker 1: new GM Shawn Marks and interest and catchers guys have

514
00:30:01,160 --> 00:30:03,840
Speaker 1: finally reported to Florida and Arizona from Major League Baseball

515
00:30:03,840 --> 00:30:07,880
Speaker 1: spring training. Optimism for yank skipper Joe Girardi newly acquired

516
00:30:07,920 --> 00:30:10,280
Speaker 1: closer Well this Chapman's in camp, but he could be

517
00:30:10,320 --> 00:30:12,600
Speaker 1: in for a legal battle to and face suspension regarding

518
00:30:12,600 --> 00:30:15,880
Speaker 1: domestic violence. Well. Mets manager Terry Collins says his club

519
00:30:15,960 --> 00:30:18,600
Speaker 1: is centered around one of the best rotations in baseball,

520
00:30:18,600 --> 00:30:21,280
Speaker 1: and especially that he's ever seen. So Marke your calendar, guys,

521
00:30:21,320 --> 00:30:23,680
Speaker 1: March first, Grapefruit League opens up play and that's your

522
00:30:23,760 --> 00:30:27,280
Speaker 1: NBC Bloomberg Sports update. Mike Tom thanks so much, greatly,

523
00:30:27,320 --> 00:30:29,920
Speaker 1: appreciate that features and to five it doesn't describe the

524
00:30:30,040 --> 00:30:32,080
Speaker 1: churn of the market, and I really got to go

525
00:30:32,120 --> 00:30:34,560
Speaker 1: to what we saw with cp I with a little

526
00:30:34,560 --> 00:30:37,800
Speaker 1: more inflation across the set of data. Two year yield

527
00:30:37,880 --> 00:30:40,680
Speaker 1: is radically different from where it was three hours ago.

528
00:30:40,720 --> 00:30:43,959
Speaker 1: We can from point six nine out to point seven five. Mike,

529
00:30:44,040 --> 00:30:45,680
Speaker 1: what you got over there? Well, I got some headlines

530
00:30:45,720 --> 00:30:49,040
Speaker 1: from Lauretta Mester to Cleveland FED President, and she says,

531
00:30:49,160 --> 00:30:52,760
Speaker 1: suggesting she backs a gradual approach to FED tightening. The

532
00:30:52,840 --> 00:30:57,640
Speaker 1: US economy is doing okay. Uh, Inflation is gonna stay

533
00:30:57,640 --> 00:31:00,480
Speaker 1: lower for longer, she says, but it will return into

534
00:31:00,760 --> 00:31:03,600
Speaker 1: two percent, and she says it's too early to alter

535
00:31:03,800 --> 00:31:07,720
Speaker 1: the economic out FED highlines from the Bloomberg ID also

536
00:31:07,800 --> 00:31:10,600
Speaker 1: point out oil. But the thirty of barrel twenty nine

537
00:31:11,280 --> 00:31:15,160
Speaker 1: n eighty four cents on West Texas Intermediate Michael McKee

538
00:31:15,160 --> 00:31:21,400
Speaker 1: and Tom Keane. Next the Economy, Bloomberg Surveillance, The sports

539
00:31:21,440 --> 00:31:23,560
Speaker 1: report brought to you by a Ray Katina Auto Group.

540
00:31:23,560 --> 00:31:26,160
Speaker 1: Adventures beginning Landrover for special offers, Hurried to the only

541
00:31:26,200 --> 00:31:28,560
Speaker 1: adventure sales event going on now at Landover Edison, a

542
00:31:28,760 --> 00:31:36,400
Speaker 1: Ray Cotina Dealership on Route one in Edison, New Jersey.

543
00:31:37,560 --> 00:31:40,920
Speaker 1: Global Business News twenty four hours a day, if Bloomberg

544
00:31:41,000 --> 00:31:44,080
Speaker 1: dot Com, the Radio plus Mobile Act and on your radio,

545
00:31:44,360 --> 00:31:48,320
Speaker 1: this is a Bloomberg Business flash and I'm camerin Moscow.

546
00:31:48,360 --> 00:31:51,840
Speaker 1: This updates brought to you by American Arbitration Association. Business

547
00:31:51,880 --> 00:31:55,800
Speaker 1: disputes are inevitable, resolve faster with the American Arbitration Association,

548
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Speaker 1: the global leader in alternative dispute resolution for over eighty

549
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Speaker 1: five years. Learn more at a dr dot org. Yahoo

550
00:32:02,800 --> 00:32:04,800
Speaker 1: up two and a half percent this morning. It hired

551
00:32:04,840 --> 00:32:08,160
Speaker 1: financial advisors and formed a committee of independent board members

552
00:32:08,400 --> 00:32:11,560
Speaker 1: to explore its strategic options. The cost of living in

553
00:32:11,560 --> 00:32:14,920
Speaker 1: the US excluding food and fuel increasing in January by

554
00:32:14,920 --> 00:32:17,160
Speaker 1: the most and more than four years, the so called

555
00:32:17,200 --> 00:32:20,520
Speaker 1: core consumer price measure climbing three tenths percent, more than

556
00:32:20,600 --> 00:32:23,680
Speaker 1: forecast and the most since August twenty eleven, after a

557
00:32:23,680 --> 00:32:27,000
Speaker 1: two tenth percent gain the month before. US DOT Index

558
00:32:27,040 --> 00:32:30,520
Speaker 1: futures lower, mirroring a slide in oil prices. SNP E

559
00:32:30,560 --> 00:32:34,160
Speaker 1: Many futures down nine points downie Many futures down seventy

560
00:32:34,160 --> 00:32:36,840
Speaker 1: and nas doc E many futures down eighteen dacks in

561
00:32:36,880 --> 00:32:39,719
Speaker 1: Germany's down eight tenths percent. Ten year treasury down eight

562
00:32:39,760 --> 00:32:43,280
Speaker 1: thirty seconds, the yield one point seven six percent yield

563
00:32:43,280 --> 00:32:46,200
Speaker 1: on the two year point seven four percent NIMAX screwed

564
00:32:46,240 --> 00:32:48,360
Speaker 1: oil down three point three percent or a dollar two

565
00:32:48,400 --> 00:32:51,360
Speaker 1: to twenty seventy five, A barrel comes gold up two

566
00:32:51,400 --> 00:32:53,600
Speaker 1: tenths per cent, or two dollars to twelve twenty eight

567
00:32:53,640 --> 00:32:56,520
Speaker 1: twenty announced the euro and dollar ten eighty four. The

568
00:32:56,680 --> 00:32:59,480
Speaker 1: end one thirteen point oh one. And that's a Bloomberg

569
00:32:59,520 --> 00:33:04,040
Speaker 1: business Lash, Tom and Mike. Thank you, Karen. It is

570
00:33:05,320 --> 00:33:10,000
Speaker 1: on Wall Street. The following is from Bloomberg View. Opinions

571
00:33:10,000 --> 00:33:13,880
Speaker 1: and commentary from Bloomberg columnists. I'm Anchepreneuru, a columnist for

572
00:33:13,920 --> 00:33:17,000
Speaker 1: Bloomberg View. In a press conference this week, President Barack

573
00:33:17,040 --> 00:33:21,040
Speaker 1: Obama said that Republican senators have a constitutional obligation to

574
00:33:21,120 --> 00:33:23,600
Speaker 1: take up any Supreme Court nomination that he sends them.

575
00:33:23,680 --> 00:33:27,640
Speaker 1: He's mistaken. The Framers considered requiring senators to take action

576
00:33:27,680 --> 00:33:30,600
Speaker 1: if they wanted to block a nominee. They rejected that idea,

577
00:33:30,800 --> 00:33:34,320
Speaker 1: writing a constitution that made confirmation depend on affirmative steps

578
00:33:34,360 --> 00:33:37,000
Speaker 1: by the Senate. So under our constitution, the Senate can

579
00:33:37,080 --> 00:33:40,800
Speaker 1: kill a nomination passively by doing nothing. That's why Obama

580
00:33:40,920 --> 00:33:43,880
Speaker 1: was within his constitutional rights when as a Senator he

581
00:33:44,080 --> 00:33:46,640
Speaker 1: tried to block an upper down vote on Samuel Alito's

582
00:33:46,720 --> 00:33:50,480
Speaker 1: nomination to the Supreme Court. Senate Republicans, moreover, are justified

583
00:33:50,600 --> 00:33:53,640
Speaker 1: in trying to deny Obama chance to appoint another justice.

584
00:33:53,840 --> 00:33:56,960
Speaker 1: The modern Supreme Court plays a much larger policymaking role

585
00:33:57,000 --> 00:33:59,640
Speaker 1: than it did for much of our history. Modern liberalism

586
00:33:59,720 --> 00:34:01,800
Speaker 1: is a restive in its use of judicial power to

587
00:34:01,880 --> 00:34:04,840
Speaker 1: impose its policies, whether or not the text or original

588
00:34:04,920 --> 00:34:08,719
Speaker 1: understanding of the Constitution warrants it. The Constitution gives Republicans

589
00:34:08,760 --> 00:34:11,080
Speaker 1: the ability to call at least a temporary halt to

590
00:34:11,120 --> 00:34:14,360
Speaker 1: this project their right to exercise it. I'm a entrepreneuri.

591
00:34:14,640 --> 00:34:16,879
Speaker 1: For more view, please go to Bloomberg View dot com

592
00:34:17,120 --> 00:34:20,080
Speaker 1: or view go on the Bloomberg terminal. This has been

593
00:34:20,120 --> 00:34:25,400
Speaker 1: Bloomberg View. Bloomberg commentaries can be heard hourly weekdays on

594
00:34:25,480 --> 00:34:27,600
Speaker 1: Bloomberg Radio. Oh, there's a lot of fun, folks. We're

595
00:34:27,600 --> 00:34:30,200
Speaker 1: talking to retail Dita Friedman with us with a fidelity

596
00:34:30,600 --> 00:34:34,520
Speaker 1: and their select retail portfolio data. What do you see

597
00:34:34,680 --> 00:34:37,920
Speaker 1: within closed consumption? One of the dangerous things that just

598
00:34:38,000 --> 00:34:41,000
Speaker 1: occurred to the surveillance team is the three copies of

599
00:34:41,080 --> 00:34:44,440
Speaker 1: Harper's Bazaar just wandered in the door and for the spring.

600
00:34:44,520 --> 00:34:46,560
Speaker 1: I mean it's the size of the Manhattan phone book.

601
00:34:46,920 --> 00:34:50,960
Speaker 1: I get that, But is there any zest in luxury

602
00:34:51,120 --> 00:34:55,800
Speaker 1: and mid market retail clothing right now? Um? You know

603
00:34:55,840 --> 00:34:58,120
Speaker 1: it's interesting you asked that. I actually returned from the

604
00:34:58,200 --> 00:35:02,320
Speaker 1: fashion trade show in Las Vegas, and UM, you know,

605
00:35:02,360 --> 00:35:06,160
Speaker 1: there are certainly pockets of opportunity, and UM, I spent

606
00:35:06,239 --> 00:35:08,120
Speaker 1: a lot of time, you know, in thinking where to

607
00:35:08,160 --> 00:35:12,600
Speaker 1: position the fun where you know certain categories will succeed. Um.

608
00:35:12,840 --> 00:35:16,120
Speaker 1: One area that continues to be strong is, um, this

609
00:35:16,239 --> 00:35:21,160
Speaker 1: whole comfort trend, um, this whole active look. Um, I

610
00:35:21,239 --> 00:35:23,640
Speaker 1: see it really as part of a bigger trend of

611
00:35:23,760 --> 00:35:27,359
Speaker 1: healthy living. Healthy living is influencing our activity. But when

612
00:35:27,880 --> 00:35:30,080
Speaker 1: that other than Lulu Lemon, Come on, Mike and I

613
00:35:30,200 --> 00:35:33,400
Speaker 1: were Lulu a lot other than Lulu Lemon. How do

614
00:35:33,480 --> 00:35:36,040
Speaker 1: you play that within the market or is it within

615
00:35:36,080 --> 00:35:39,600
Speaker 1: a more diversified company like Nike or or under Armor?

616
00:35:39,640 --> 00:35:43,719
Speaker 1: In that absolutely through the vendors. Um, you mentioned Nike

617
00:35:43,920 --> 00:35:52,960
Speaker 1: and under Armour as examples. Well, I think we're what

618
00:35:54,000 --> 00:35:56,520
Speaker 1: what is good about each of them? I mean Nike

619
00:35:56,760 --> 00:35:58,800
Speaker 1: is again sort of like an Amazon. It's sort of

620
00:35:58,840 --> 00:36:03,440
Speaker 1: the obvious. Sure, so you know, just bigger picture, you know,

621
00:36:03,560 --> 00:36:06,680
Speaker 1: looking at a lot of these athletic companies UM, you know,

622
00:36:06,800 --> 00:36:09,719
Speaker 1: and it really goes back to my overall process. I'm

623
00:36:09,760 --> 00:36:13,080
Speaker 1: looking for companies with strong content, you know, being exposed

624
00:36:13,080 --> 00:36:16,040
Speaker 1: to a strong category or having a strong brand. UM

625
00:36:16,160 --> 00:36:19,040
Speaker 1: companies a lot of innovation. When I'm meeting with these companies,

626
00:36:19,360 --> 00:36:21,840
Speaker 1: I'm wanting to find out about what kind of innovation

627
00:36:21,920 --> 00:36:25,040
Speaker 1: you have. If you have strong innovation, it starts off

628
00:36:25,400 --> 00:36:30,560
Speaker 1: a virtuous cycle. It drives strong sales, It drives pricing power,

629
00:36:30,719 --> 00:36:33,879
Speaker 1: which drives gross margin and profitability as well as cash

630
00:36:33,920 --> 00:36:37,359
Speaker 1: flow generation. We've seen a lot of stucks roll over

631
00:36:37,520 --> 00:36:39,480
Speaker 1: and we don't need to name any you know, specific

632
00:36:39,600 --> 00:36:42,280
Speaker 1: ones here, but it's been challenging to say the least

633
00:36:42,440 --> 00:36:45,520
Speaker 1: is retail avail you now? I mean, Michael core is

634
00:36:45,520 --> 00:36:48,000
Speaker 1: a hundred forty if you will. I mean this stunning

635
00:36:48,080 --> 00:36:52,080
Speaker 1: movements is retail avail you know? Or is it a

636
00:36:52,160 --> 00:36:55,799
Speaker 1: vailue trap? Well, you know, it's very important to UM

637
00:36:56,440 --> 00:37:00,239
Speaker 1: get to know your company's really well. Ascidility. We have

638
00:37:00,520 --> 00:37:03,319
Speaker 1: the luxury of getting to know our companies very well.

639
00:37:03,880 --> 00:37:06,440
Speaker 1: Anyone that knows me would tell you that I'm always

640
00:37:06,480 --> 00:37:09,080
Speaker 1: thinking about my fund and the companies that I cover.

641
00:37:09,480 --> 00:37:12,880
Speaker 1: Really twenty four seven, so UM you need to get

642
00:37:12,920 --> 00:37:15,560
Speaker 1: to know the company's very well to determine whether or

643
00:37:15,600 --> 00:37:19,279
Speaker 1: not it's a valued trap. But it's seriously within the

644
00:37:19,360 --> 00:37:22,400
Speaker 1: long term perspect that Peter Lynch and Ned Johnson and

645
00:37:22,400 --> 00:37:26,879
Speaker 1: the others invented. I get that is retail position now

646
00:37:27,640 --> 00:37:30,920
Speaker 1: is a vailue to acquire or is it a textbook

647
00:37:31,040 --> 00:37:35,960
Speaker 1: value trap based on lousy nominal gdp UM. You know,

648
00:37:36,080 --> 00:37:38,920
Speaker 1: you need to really pick your spots um. You know,

649
00:37:39,080 --> 00:37:41,160
Speaker 1: if if you know, certainly the US is in a

650
00:37:41,239 --> 00:37:44,680
Speaker 1: very slow growth environment. So what I'm looking for our

651
00:37:44,719 --> 00:37:48,680
Speaker 1: companies that have an opportunity to expand internationally, companies that

652
00:37:48,760 --> 00:37:52,800
Speaker 1: are exploiting the online opportunity, and companies that are anchored

653
00:37:52,840 --> 00:37:57,160
Speaker 1: by strong content. So um. When thinking about what types

654
00:37:57,200 --> 00:37:59,759
Speaker 1: of stocks to put in the portfolio, I'm looking at

655
00:37:59,800 --> 00:38:02,360
Speaker 1: them one by one because I want to avoid the

656
00:38:02,440 --> 00:38:05,560
Speaker 1: value traps. I see my role as a fund manager

657
00:38:05,640 --> 00:38:09,480
Speaker 1: of select retail to help my investors make money and

658
00:38:09,560 --> 00:38:12,880
Speaker 1: help them avoid the losers out there. I have to

659
00:38:12,920 --> 00:38:14,640
Speaker 1: ask from a micro point of view, you were talking

660
00:38:14,640 --> 00:38:19,319
Speaker 1: about hold costs down and increased margins. Are people able

661
00:38:19,360 --> 00:38:22,160
Speaker 1: to do that? This is such a low cost world

662
00:38:22,280 --> 00:38:24,680
Speaker 1: at this point, what kind of margins can you get

663
00:38:25,200 --> 00:38:29,880
Speaker 1: if if the price pressure is just constant um. A

664
00:38:29,960 --> 00:38:32,440
Speaker 1: lot of it depends on the type of innovation you

665
00:38:32,520 --> 00:38:35,960
Speaker 1: have going on. If you're putting out the same basic

666
00:38:36,120 --> 00:38:39,600
Speaker 1: items year after year, it's really difficult to get a

667
00:38:39,680 --> 00:38:42,960
Speaker 1: lot of pricing power. And that's really true as a

668
00:38:43,000 --> 00:38:45,960
Speaker 1: lot of these low cost fast fashion players are coming

669
00:38:46,040 --> 00:38:49,160
Speaker 1: onto the scene, especially in the US. Gina, thanks so much.

670
00:38:49,200 --> 00:38:53,600
Speaker 1: Greatly appreciate it, with fidelity select retail, uh this uh

671
00:38:54,320 --> 00:38:57,680
Speaker 1: this morning, greatly appreciate that. With thoughts so Amazon, I mean, well, Mike,

672
00:38:57,719 --> 00:39:00,080
Speaker 1: it's a general statement to say Amazon is gonna in,

673
00:39:00,480 --> 00:39:03,000
Speaker 1: But I just wonder where that observation is five years

674
00:39:03,040 --> 00:39:06,560
Speaker 1: from now, because I look outside my door. I mean,

675
00:39:06,600 --> 00:39:09,080
Speaker 1: I don't even know half the boxes coming in out. Well,

676
00:39:09,120 --> 00:39:11,120
Speaker 1: what's interesting is that somebody you know it the other

677
00:39:11,200 --> 00:39:15,960
Speaker 1: day that there's an environmental aspect to Amazon. I was

678
00:39:16,000 --> 00:39:19,520
Speaker 1: gonna goes and you know, how do they all get recycled?

679
00:39:19,520 --> 00:39:21,000
Speaker 1: We should do it. We should do a whole segment.

680
00:39:21,320 --> 00:39:23,080
Speaker 1: Why you if you can't figure out how to do

681
00:39:23,200 --> 00:39:27,080
Speaker 1: cardboard and Amazon and and and get it in the

682
00:39:27,160 --> 00:39:31,960
Speaker 1: next twenty four hours, send it to us. Um, We're

683
00:39:31,960 --> 00:39:35,000
Speaker 1: gonna talk coming up in a few minutes. Also, UM,

684
00:39:35,920 --> 00:39:40,520
Speaker 1: we should note with Scott Galloway because um of Yahoo,

685
00:39:40,880 --> 00:39:43,120
Speaker 1: the man who has been calling for Yahoo to be

686
00:39:43,600 --> 00:39:46,640
Speaker 1: euthanized for some time. They have hung the for sale

687
00:39:46,680 --> 00:39:52,360
Speaker 1: sign out the board voting independently. Not clear what ms

688
00:39:53,000 --> 00:39:57,480
Speaker 1: Myers had to do with this to uh seek alternatives

689
00:39:57,800 --> 00:40:00,680
Speaker 1: and they say that the separating out from Ali Baba

690
00:40:00,880 --> 00:40:04,800
Speaker 1: is key to value. And the problem is that you

691
00:40:04,880 --> 00:40:07,080
Speaker 1: know she called it off because of the tax implications.

692
00:40:07,120 --> 00:40:09,280
Speaker 1: There's one headline your own and need to be careful

693
00:40:09,320 --> 00:40:12,080
Speaker 1: in this. But Yahoo hires Goldman, JP Morgan and p

694
00:40:12,239 --> 00:40:14,680
Speaker 1: J T. I think they know anything about this stuff,

695
00:40:14,800 --> 00:40:18,160
Speaker 1: don't you know? Jin Chow reporting for Bloomberg News on

696
00:40:18,239 --> 00:40:22,520
Speaker 1: it has been a struggle. We say this with respect, folks.

697
00:40:22,560 --> 00:40:24,800
Speaker 1: We don't like to take shots at people here, but

698
00:40:24,880 --> 00:40:28,000
Speaker 1: it has been a struggle, to say the least. Mike,

699
00:40:28,080 --> 00:40:30,040
Speaker 1: let's go over the inflation data today. I saw a

700
00:40:30,120 --> 00:40:32,879
Speaker 1: sea change in the market. We went from point six

701
00:40:33,080 --> 00:40:36,120
Speaker 1: nine to a Janet yell and friendly point seven five

702
00:40:36,600 --> 00:40:39,200
Speaker 1: off the inflation date. Again, it's been a clumsy week,

703
00:40:39,600 --> 00:40:45,520
Speaker 1: but nevertheless, just some interesting stuff. Oil moving lower down

704
00:40:45,600 --> 00:40:51,200
Speaker 1: a dollar seven seventy on West Texas. That bear sort

705
00:40:51,239 --> 00:40:55,160
Speaker 1: of Friday closing watching. If you're on your cell phone

706
00:40:55,200 --> 00:40:58,759
Speaker 1: with your Bloomberg terminal log on, uh, that that's you know,

707
00:40:58,920 --> 00:41:01,000
Speaker 1: something to watch. And if you interested to her right now,

708
00:41:01,480 --> 00:41:03,960
Speaker 1: it's uh, it's Friday. So I don't want to do

709
00:41:04,040 --> 00:41:07,120
Speaker 1: too much. I don't want to stress stress everybody out.

710
00:41:07,200 --> 00:41:09,120
Speaker 1: But you got to realize that when you're looking at this,

711
00:41:09,239 --> 00:41:11,840
Speaker 1: when you're considering the c p I, it's a percentage

712
00:41:11,960 --> 00:41:16,239
Speaker 1: change month to month that counts. Uh. And if gasoline

713
00:41:16,280 --> 00:41:19,640
Speaker 1: and oil prices don't continue to go down, and really

714
00:41:19,719 --> 00:41:22,440
Speaker 1: they haven't gone down, I mean they're they're volatile within

715
00:41:22,680 --> 00:41:26,359
Speaker 1: range here, then we're not going to see them way

716
00:41:26,760 --> 00:41:30,399
Speaker 1: on consumer prices in the same way, and that would

717
00:41:30,480 --> 00:41:33,400
Speaker 1: help push prices up. I have some good news for you.

718
00:41:34,719 --> 00:41:41,360
Speaker 1: You uh recently bought your bride jewelry. Uh that was

719
00:41:41,400 --> 00:41:45,720
Speaker 1: in December and uh November. If you bought it in November,

720
00:41:45,760 --> 00:41:48,839
Speaker 1: prices had gone down one point three percent for jewelry. Uh.

721
00:41:49,600 --> 00:41:52,360
Speaker 1: You you didn't want to do it in January. Fortunately

722
00:41:52,400 --> 00:41:54,319
Speaker 1: you got ahead of the curve. Jewelry prices shot up

723
00:41:54,400 --> 00:41:57,359
Speaker 1: four point one percent. So it's one of the contributors

724
00:41:57,480 --> 00:42:04,319
Speaker 1: to inflation. Is the price of jewelry going up, Well,

725
00:42:04,360 --> 00:42:07,400
Speaker 1: that's disappointing for the weekend. There we are, we have

726
00:42:07,440 --> 00:42:10,680
Speaker 1: an inflation And seriously, for what Mike's doing, there's really important.

727
00:42:10,760 --> 00:42:13,080
Speaker 1: As I say, you've heard me say the phrase many times,

728
00:42:13,120 --> 00:42:16,080
Speaker 1: we go beneath the headline numbers. Okay, a job to day,

729
00:42:16,160 --> 00:42:18,759
Speaker 1: that's a big deal. But Mike, I would suggest what

730
00:42:18,920 --> 00:42:22,600
Speaker 1: you do with the GDP statistics and with retail sales

731
00:42:23,080 --> 00:42:26,080
Speaker 1: and with inflation is just as important because there's a

732
00:42:26,120 --> 00:42:29,560
Speaker 1: whole story in there beneath me or Vinnie Joel Dudai,

733
00:42:30,280 --> 00:42:33,960
Speaker 1: Vinnie Del Judas blathering about the headline numbers. For you,

734
00:42:34,239 --> 00:42:37,680
Speaker 1: alcoholic beverages away from home only up a tenth of

735
00:42:37,680 --> 00:42:43,919
Speaker 1: a percentage shaken not stirred, futures negative, futures negative seventy nine.

736
00:42:44,280 --> 00:42:47,160
Speaker 1: One more hour of a stirred Bloomberg surveillance