WEBVTT - BOJ, Ukraine, Markets, and AI (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 --> 0:00:22.439 at Bloomberg dot com slash podcast. Abigail Doolittle, thank you 0:00:22.440 --> 0:00:25.520 so much for joining us. Markets correspondent for Bloomberg televisis 0:00:25.560 --> 0:00:28.560 joining us here and our Bloomberg Interactor Broker studio. All right, 0:00:28.600 --> 0:00:32.080 let's stop currencies here. I'm looking at my Bloomberg Dollar Index. 0:00:32.280 --> 0:00:35.760 It's up slightly today. Um, you know, the yen has 0:00:35.800 --> 0:00:37.720 been the story. It's off a little bit today, but 0:00:37.760 --> 0:00:39.880 the yen has been the story over the last couple 0:00:39.880 --> 0:00:42.120 of days, with the Bank of Japan saying all right, 0:00:42.440 --> 0:00:44.879 maybe we'll let interest rates go higher. We'll fight this 0:00:44.920 --> 0:00:47.480 inflation thing. We'll be like everybody else around the world. 0:00:47.520 --> 0:00:51.360 Audrey Child Freeman, she's a chief FX strategist. She focuses 0:00:51.360 --> 0:00:54.480 on the G ten country. She does that with Bloomberg Intelligence. 0:00:54.600 --> 0:00:58.640 She's based in London. She's actually in our London studios. 0:00:58.680 --> 0:01:01.640 So you get a virtual gold star for me, Audrey 0:01:02.040 --> 0:01:05.160 for being in the office. We appreciate that. UD give 0:01:05.200 --> 0:01:08.160 us your sense of what you know. Your takeaway is 0:01:08.160 --> 0:01:09.759 from what we saw from the Bank of Japan over 0:01:09.800 --> 0:01:13.280 the past couple of days. Hi, good morning everyone. So 0:01:13.520 --> 0:01:17.360 I think it is the game changer, even though we 0:01:17.480 --> 0:01:19.760 kind of we all saw it coming, but there was 0:01:19.840 --> 0:01:24.160 this element of surprising in terms of the timing, and 0:01:24.160 --> 0:01:28.000 and that element of surprise probably exacerbated the price action. 0:01:28.160 --> 0:01:33.080 But the b o J action is basically a first 0:01:33.160 --> 0:01:37.360 step towards right normalization, and that means that we are 0:01:37.440 --> 0:01:41.480 moving away from the you know, the era of negative 0:01:41.600 --> 0:01:46.320 rates for for for Japan, and it is the game 0:01:46.400 --> 0:01:50.480 changer for the currency. I mean, um, the YenS cubtainly 0:01:50.640 --> 0:01:56.200 reacted uh with a massive move yesterday, and I think 0:01:56.440 --> 0:01:59.320 it's just the beginning. I think we will see more 0:01:59.360 --> 0:02:02.520 strength and of the end in the weeks to come, 0:02:02.600 --> 0:02:05.559 and that will most likely be a theme that dominates 0:02:06.360 --> 0:02:10.480 early early in twenty twenty three at least. Well, speaking 0:02:10.639 --> 0:02:15.400 of some of the currency fluctuations, I'm curious about currency intervention. 0:02:15.720 --> 0:02:18.000 One of the issues that the b J, it feels like, 0:02:18.080 --> 0:02:20.919 has had as they've been exercising the reserves for far 0:02:20.960 --> 0:02:24.400 too long. And if they don't use this um kind 0:02:24.400 --> 0:02:26.600 of yield curve control and whide in the bands even 0:02:26.639 --> 0:02:29.560 further in the face of inflation, to what extent are 0:02:29.560 --> 0:02:34.200 they going to be forced to entertain the idea of intervention. Well, 0:02:34.400 --> 0:02:37.560 I think when it comes to intervention, the message on 0:02:37.600 --> 0:02:41.520 the currency front is very clear. Uh, and it's not 0:02:41.639 --> 0:02:43.800 just the b O G it's the G seven view 0:02:43.919 --> 0:02:47.720 that excessive moves in the front exchange market are not welcome. 0:02:48.080 --> 0:02:51.640 So you could argue that, you know, yesterday's move where excessive, 0:02:51.760 --> 0:02:55.320 but uh, let's let's see what happens, you know, in 0:02:55.360 --> 0:02:58.320 the days and weeks to come. But certainly in the 0:02:58.360 --> 0:03:01.240 current macro context, you know, we are now in a 0:03:01.280 --> 0:03:05.800 position where a stronger year it's actually kind of welcome 0:03:05.960 --> 0:03:09.480 for for the Japanese economy. We have moved away from 0:03:09.520 --> 0:03:13.280 the deflationary world that that we were, that would be 0:03:13.480 --> 0:03:17.000 used to for so many years, and we have now 0:03:17.080 --> 0:03:19.799 a pick up in inflation. And and that's why the 0:03:20.080 --> 0:03:24.880 bo J had very little option but moving away from 0:03:24.960 --> 0:03:27.840 the monetary policy environment that had been in place for 0:03:27.919 --> 0:03:32.520 so long, and that may have been justified, and that's 0:03:32.560 --> 0:03:36.000 debatable by the way over the past few years, but 0:03:36.200 --> 0:03:40.240 certainly not justified in twenty twenty two and going into 0:03:40.320 --> 0:03:45.680 twenty twenty three. UM So I think effects intervention unless 0:03:45.800 --> 0:03:48.760 you know, the magnitude of the move continued in the 0:03:48.840 --> 0:03:51.040 kind of place that we've seen in the past few days, 0:03:51.040 --> 0:03:54.920 and I don't think they will. I think it's not 0:03:55.120 --> 0:03:58.160 likely for for now, it's not the subject for for 0:03:58.280 --> 0:04:02.200 next year. We speaking about Audrey Child Freeman effect strategist 0:04:02.200 --> 0:04:06.840 for Bloomberg Intelligence, and Bloomberg Intelligence, in my opinion, is 0:04:07.600 --> 0:04:11.240 among the best and certainly most comprehensive investment research on 0:04:11.440 --> 0:04:13.880 Wall Street bar none. And if you want to argue 0:04:13.880 --> 0:04:16.000 with that, you know where to find me. Audrey. You've 0:04:16.000 --> 0:04:18.440 got a research report out saying dollar agen may fall 0:04:18.600 --> 0:04:22.120 one five boy, and that's a that's a big move. 0:04:22.160 --> 0:04:25.000 We've got the the end here one thirty two spot one. 0:04:25.279 --> 0:04:29.960 What will drive it down? So, I mean you said 0:04:30.000 --> 0:04:32.440 it's it's a bit cool, but you know some people 0:04:32.520 --> 0:04:35.279 may go even more aggressive. I'm saying one twenty five 0:04:35.400 --> 0:04:38.599 by the first half of next year. So just think 0:04:38.640 --> 0:04:41.400 about the numbers. I think when you you know, when 0:04:41.400 --> 0:04:43.680 you make some calls. It's always relevant to just look 0:04:43.720 --> 0:04:46.440 back at what happens and where we are and how 0:04:46.520 --> 0:04:49.599 much of the movie we've seen. So Dolligan is now 0:04:49.760 --> 0:04:53.800 down about twelve percent from the high that we had 0:04:54.680 --> 0:04:57.920 by late October. Remember we're trading near one fifty, so 0:04:58.760 --> 0:05:03.320 twelve percent in just six or seven weeks. But Dolan 0:05:03.440 --> 0:05:08.240 is still about above the ten year moving average, which 0:05:08.320 --> 0:05:12.880 is around one ten dollar. Yan is also about seventy 0:05:12.920 --> 0:05:17.400 above the pre abnomics level of eighty. And we have 0:05:17.480 --> 0:05:22.360 our own model an intelligence are be our model valuation model, 0:05:22.520 --> 0:05:25.440 which you know I like to refer to on occasions. 0:05:25.880 --> 0:05:29.120 Uh And and that's that's telling us that fair value 0:05:29.120 --> 0:05:33.360 on Dolloyan is at around one eleven UM. So what 0:05:33.400 --> 0:05:36.560 I'm trying to say here is that yeah, miss miss 0:05:36.640 --> 0:05:40.160 and punchy, but it isn't in the wake of the 0:05:40.240 --> 0:05:43.080 move that we've seen on Dollyan this year, and where 0:05:43.120 --> 0:05:48.640 where we are on on on valuation and on historical levels, 0:05:48.760 --> 0:05:51.680 and and beyond the bo j story, there's also a 0:05:51.760 --> 0:05:54.960 wide range of other reasons why you could argue for 0:05:55.000 --> 0:05:57.599 a week a dollar yen. And actually, even before the 0:05:57.640 --> 0:06:02.560 bog action yesterday, that was my strongest conviction for for 0:06:02.680 --> 0:06:05.920 the year for early next year. It's just coming early. 0:06:06.000 --> 0:06:08.839 So let's see what I can. All right, if it 0:06:08.880 --> 0:06:11.360 gets there, I'm giving you all the credit. Audrey Child, Freeman, 0:06:11.760 --> 0:06:15.880 Chief G ten strategist currencies for Bloomberg Intelligence and again, 0:06:16.120 --> 0:06:19.159 Bloomberg Terminal users can find all of the world class 0:06:19.200 --> 0:06:23.320 investment research of Bloomberg Intelligence at b I go on 0:06:23.480 --> 0:06:30.120 the terminal. Historic day in Washington, DC today is Ukrainian 0:06:30.160 --> 0:06:35.120 President Vladimir Zelenski arrives in Washington, d C. To meet 0:06:35.160 --> 0:06:39.679 with President Biden UH Joint Session of Congress UH and 0:06:39.880 --> 0:06:42.880 you know, really making the case for the war in 0:06:43.000 --> 0:06:45.800 Ukraine if a continued support. So our next guest is 0:06:45.839 --> 0:06:50.240 absolutely critical to that discussion. Tamila to Shiva. She is 0:06:50.279 --> 0:06:54.039 the permanent representative of the President of Ukraine for the 0:06:54.080 --> 0:06:57.200 Autonomous Republic of Crimea. Tamila, thank you so much for 0:06:57.279 --> 0:06:59.280 joining us. We really appreciate you taking the time, which 0:06:59.320 --> 0:07:02.039 I know which is just a critical period of time 0:07:02.560 --> 0:07:05.920 in Kiev and in Ukraine. I'd love to get your 0:07:06.000 --> 0:07:08.320 sense of kind of way you think the objectives the 0:07:08.360 --> 0:07:11.800 aims are of your President Zelensky as it comes to Washington, 0:07:11.920 --> 0:07:18.440 d C. Hello, everyone many thanks for inviting me. Actually 0:07:19.000 --> 0:07:23.600 it's not my mandate to committigate a visit of our president, 0:07:23.720 --> 0:07:27.360 but it's really very important for Ukraine because it's a 0:07:27.440 --> 0:07:31.280 first visit of our president and of course the United States, 0:07:31.360 --> 0:07:37.560 it's our strategic partner, and all our Ukrainian citizens really 0:07:38.680 --> 0:07:45.080 UH enjoy and really happy for this UH visit of 0:07:45.200 --> 0:07:50.840 our president, and of course we're waiting for all statements 0:07:50.920 --> 0:07:55.320 of our president and this meeting with President Biden and 0:07:55.680 --> 0:08:03.680 with State Congress. Of course, for Ukraine is really very 0:08:03.720 --> 0:08:11.080 support to have more support on military sphere especially and 0:08:11.200 --> 0:08:15.400 financial support from US government. UH to me like, could 0:08:15.400 --> 0:08:18.080 you you're in Kiev, could you give us a sense 0:08:18.120 --> 0:08:21.920 of how things are today on the ground, uh in 0:08:21.920 --> 0:08:29.200 in Kieva. Uh. Today we have the two alarums in Kiev. 0:08:29.760 --> 0:08:35.040 But during the last a few months sexually Russian Federation 0:08:36.000 --> 0:08:44.240 unfortunately destroyed our energetic infrastructure, electricity and to we have 0:08:44.960 --> 0:08:49.880 huge problems with water supply CELSO in Kiev and it's 0:08:49.920 --> 0:08:55.280 our daily based unfortunately problems in all cities, not only 0:08:55.400 --> 0:09:00.240 in the Kiev, but in Reef also region internalbly Jian 0:09:00.760 --> 0:09:04.520 in her In Harkief and Herson Region which is elaborated. 0:09:04.559 --> 0:09:10.280 Now you're the representative. In further, President of Ukraine in 0:09:10.559 --> 0:09:12.880 the Autonomous Republic of Crimea talked U a little bit 0:09:12.880 --> 0:09:19.560 about the conditions there. Yes, unfortunately, we always say that 0:09:20.200 --> 0:09:26.400 war is not starting this Fabruary, yes, two, but eight 0:09:26.520 --> 0:09:32.120 years ago and in half years ago and now situation 0:09:32.280 --> 0:09:38.400 in Crimea also dramatically change. But because Russia used Crimia 0:09:38.559 --> 0:09:43.680 as a military base, huge military base, they used this UH, 0:09:44.200 --> 0:09:51.000 this territory Crimea to launch sale attacks. During this ten 0:09:51.080 --> 0:09:57.880 months of a huge war, big war, Russia attacked from 0:09:58.200 --> 0:10:02.720 Black Sea region and from Crimea territory and NIA eight 0:10:03.160 --> 0:10:09.520 hundred missiles against Ukraine on the territory of Ukraine. UH. 0:10:09.679 --> 0:10:15.760 They stole our grain from territory of mainland of Ukraine 0:10:15.800 --> 0:10:21.360 in Herson region and the Parisia, and they used Crimea 0:10:21.800 --> 0:10:27.199 for stalling this grain. They use our people in a 0:10:27.640 --> 0:10:34.840 temporary occupied Crimea for UH for this battlefield. Because they 0:10:35.320 --> 0:10:41.400 mobilized our Ukrainian citizens to this war against their own 0:10:41.480 --> 0:10:45.640 country and their own people, and of course we understand 0:10:45.720 --> 0:10:50.560 it's a war. Crimes. They prosecute our people. According to 0:10:51.280 --> 0:10:58.000 testimonies of Crimeans Nia UH two hundred and fifty cases 0:10:58.160 --> 0:11:02.800 of criminal or administ rates of persecutions of Cramians and 0:11:03.000 --> 0:11:06.560 to our activists, it's a lot of cases. We have 0:11:06.760 --> 0:11:11.480 one hundred and fifty five criminal persecutions, it's a political 0:11:11.520 --> 0:11:16.200 prisoners and one hundred and nine from them. UH, it's 0:11:16.240 --> 0:11:20.560 a crimean data. They persecute crimean dators. It's a huge 0:11:20.600 --> 0:11:26.760 and massive persecutions and human rights abuses in Cramia Tamila. 0:11:27.280 --> 0:11:31.280 From the US perspective, we are reading headlines and news 0:11:31.280 --> 0:11:33.720 stories about the amount of assistance that is going to 0:11:33.840 --> 0:11:36.640 Ukraine right now as President Joe Biden due to unveil 0:11:36.679 --> 0:11:40.600 nearly two billion dollars in assistance and UH further moves 0:11:40.600 --> 0:11:43.839 to deliver things like missiles and weapons in addition to 0:11:43.920 --> 0:11:45.679 more funding. But at the same time, we do have 0:11:45.760 --> 0:11:49.600 sanctions that are underway globally against Russia. Do you feel 0:11:49.600 --> 0:11:53.880 like on the ground those things are making an impact. Yes, 0:11:53.960 --> 0:11:59.040 of course, even for human rights defenders. UH, these sunctions 0:11:59.200 --> 0:12:04.800 is really work on the level of economical and economic 0:12:04.960 --> 0:12:11.079 but also for ordinary people. For example, when we proposed 0:12:11.280 --> 0:12:16.240 the sanctions for our partners from US government or for 0:12:16.440 --> 0:12:22.280 European our partners, and they do these sanctions against for example, 0:12:23.280 --> 0:12:32.600 those persecutors of Crimeans. They stopped some persecutions in prison 0:12:33.559 --> 0:12:38.480 in Cramian prisons against Crimans who now in prison or 0:12:38.600 --> 0:12:44.200 in predicential centers, and they really understand it. And for Cremia, 0:12:44.200 --> 0:12:49.520 of course itself so very important because according to sanction 0:12:49.640 --> 0:12:57.439 regime UH, Crimea lens UH now easilated. And for Russia 0:12:57.679 --> 0:13:03.800 it's very hard to get some investments, for example to Crabia. 0:13:04.320 --> 0:13:11.400 And they really understand that Crania it's not really part 0:13:11.480 --> 0:13:16.080 of Russia according to yes, no, it's just and and 0:13:16.120 --> 0:13:18.320 t mel I just want to before we have to 0:13:18.360 --> 0:13:19.680 let you go, which want to get a sense of 0:13:20.640 --> 0:13:23.480 how is the morale of the Ukrainian people, the people 0:13:23.520 --> 0:13:26.600 in Crimea that have been dealing with us for so long. Um, 0:13:26.640 --> 0:13:29.240 the fighting has been so brave by the Ukrainians against 0:13:29.360 --> 0:13:32.360 seemingly insurmountable odds. What's the morale on the ground of 0:13:32.400 --> 0:13:39.040 the average Ukrainian, all Ukrainians. We really understand that now 0:13:39.120 --> 0:13:44.839 we fight in UH for our values, for our freedom, 0:13:44.880 --> 0:13:50.520 and we fighting not only for territories but for people. 0:13:50.640 --> 0:13:55.520 Elsa and our people in Crania is really understand it, 0:13:56.240 --> 0:14:00.640 and they say that we waiting. Our Ukrainians are forces 0:14:00.679 --> 0:14:07.000 also in Crimia. And according to Russian view, they say 0:14:07.240 --> 0:14:12.120 that Cremia is always Russia, but it's not true. And 0:14:12.559 --> 0:14:16.640 yes it's a Ukrainian lens, it's a Crimean lands. And 0:14:16.720 --> 0:14:20.960 now our president also always say ye, all right, Tamila, 0:14:21.000 --> 0:14:22.800 thank you so much for joining us to really appreciated 0:14:22.840 --> 0:14:25.000 Tamila to Shave a permanent representative of the President of 0:14:25.080 --> 0:14:29.920 Ukraine for the Autonomous Republic of Crimea. Please stay safe 0:14:30.040 --> 0:14:36.440 in Kiev. We've got some good earnings today. We had 0:14:36.480 --> 0:14:40.920 FedEx put up some good numbers. Um, we had who 0:14:40.960 --> 0:14:44.160 was it, Ni Nike put up some some really good numbers. 0:14:44.160 --> 0:14:46.960 And that's not really responding. So we're gonna break that down. 0:14:47.240 --> 0:14:51.680 Let's start with FedEx and Lee Glasgow. He's the analyst 0:14:51.720 --> 0:14:57.840 at Bloomberg Intelligence. He fills FedEx railroads, trucks, shipping companies, logistics, 0:14:57.920 --> 0:15:01.240 air freight, all that stuff, all those companies that moved 0:15:01.240 --> 0:15:05.040 stuff around. One of the best beats. Yeah, and I 0:15:05.120 --> 0:15:07.240 that was my beat back in the day, you know, 0:15:07.280 --> 0:15:11.520 starting in seven covered a little bit of everything I have, 0:15:11.720 --> 0:15:14.320 and I have I've made money every step along the way. 0:15:14.360 --> 0:15:18.000 I'll mention um, you know, humble brig there Hayley, you're 0:15:18.040 --> 0:15:20.640 the expert here FedEx. I mean, I don't know. I 0:15:20.680 --> 0:15:23.560 was sitting in front of the Starbucks and Summit yesterday. 0:15:23.600 --> 0:15:26.920 To the right of me is ups. To the left 0:15:26.920 --> 0:15:30.320 of me was the FedEx door. Both places headlines out 0:15:30.400 --> 0:15:35.120 the door, people you know jump, you know, juggling boxes. 0:15:35.760 --> 0:15:39.440 What did FedEx have to say today, Well, hey, Paul, 0:15:39.440 --> 0:15:40.720 thanks for having me, and I hope you helped those 0:15:40.720 --> 0:15:43.760 people with all those boxes. FedEx had really a mixed 0:15:43.760 --> 0:15:46.200 message last night. You know, there was some good news. 0:15:46.280 --> 0:15:48.840 They did beat expectations, which is fantastic. You know, they 0:15:48.880 --> 0:15:51.080 beat it by about thirty eight cents, which is which 0:15:51.120 --> 0:15:55.280 is great. They also announced another billion dollars in savings. 0:15:55.320 --> 0:15:58.520 But what they also did is reset earnings expectations for 0:15:58.560 --> 0:16:02.560 the second half lower about fourteen to fift at the 0:16:02.640 --> 0:16:05.560 high end of the range um. And the reason is 0:16:05.560 --> 0:16:09.160 is that volume for them is slowing more considerably. There's 0:16:09.160 --> 0:16:12.920 two things going on. Uh there's the obviously we're we're 0:16:12.960 --> 0:16:15.680 going you know, we kind of like the pendulum swung 0:16:15.840 --> 0:16:18.680 really far during the pandemic where everyone was ordering stuff, 0:16:18.840 --> 0:16:23.080 and now the pendulum is coming back uh to you know, 0:16:23.480 --> 0:16:26.680 uh to to be for when we're talking about e commerce, 0:16:26.680 --> 0:16:29.640 e commerence demands going to be above pre pandemic level, 0:16:30.000 --> 0:16:32.440 but not at the peaks that we saw during the pandemic. 0:16:32.560 --> 0:16:35.520 So the volume from there is going away. And then 0:16:35.560 --> 0:16:39.120 you have, you know, global economic issues, whether if we're 0:16:39.120 --> 0:16:42.600 talking about in the United States, obviously we're having our 0:16:42.880 --> 0:16:46.800 economic growth is moderating, humor, competence is waning, Inflation is 0:16:47.120 --> 0:16:50.120 impacting how much stuff people are buying. Europe you have 0:16:50.120 --> 0:16:54.360 a much weaker economic backdrop. And then China, China, you know, 0:16:54.400 --> 0:16:57.040 there's some headlines out there that they're opening up their economy, 0:16:57.120 --> 0:17:00.920 but the reality is it's it's really a slow opening 0:17:01.040 --> 0:17:03.400 and uh, there's a lot of issues there. And so 0:17:03.400 --> 0:17:06.399 what FedEx is doing is their parking planes. They're you know, 0:17:06.520 --> 0:17:10.280 kind of putting off some some projects maybe into later 0:17:10.320 --> 0:17:13.639 into next year to see where the economy is heading. 0:17:14.200 --> 0:17:16.520 And and part of also the good news, you know, 0:17:16.560 --> 0:17:19.520 in addition to the beats that they've been doing on 0:17:19.560 --> 0:17:21.640 the earning side, was that they were able to raise 0:17:21.720 --> 0:17:25.160 rates that you know, they still have pricing power, which 0:17:25.200 --> 0:17:27.600 is which is which is a good sign, especially you 0:17:27.600 --> 0:17:30.960 know when when volumes are are coming in and so 0:17:31.080 --> 0:17:33.960 you know, they announced a billion dollars more in in 0:17:34.080 --> 0:17:37.520 cost savings. I think those cost savings are more reactive 0:17:37.560 --> 0:17:40.680 to the volumes, uh, and so they're probably more flexible, 0:17:40.960 --> 0:17:43.520 meaning that when volumes come back on, they're going to 0:17:43.600 --> 0:17:45.960 probably bring on some of those costs. But they're also 0:17:46.040 --> 0:17:48.760 looking at about four billion dollars in structural costs that 0:17:48.800 --> 0:17:53.640 they're looking to uh totally get out of their system. 0:17:53.800 --> 0:17:56.440 Good stuff from FedEx. We also and presumably some of 0:17:56.440 --> 0:18:01.640 those FedEx boxes were carrying Nike shoes and apparel. Put 0:18:01.680 --> 0:18:04.600 them Coil. She covers all the retail stuff for Bloomberg Intelligence. 0:18:05.400 --> 0:18:08.520 A teammate of Lee classgow there and Bloomberg Intelligence put 0:18:08.560 --> 0:18:11.560 them talk to us about Nike. Some pretty good numbers there. 0:18:11.640 --> 0:18:15.040 The markets seem to like what we heard from Nike. Yeah, 0:18:15.119 --> 0:18:19.000 they continue to execute and their innovation remains a key driver. 0:18:19.600 --> 0:18:22.680 Told better sale that fool price, even after passing on 0:18:22.720 --> 0:18:26.400 price increases earlier this year. UM, it was really encouraging 0:18:26.480 --> 0:18:29.440 to see the constant currency sales games of about twenty 0:18:29.480 --> 0:18:32.439 seven fix consis quarter, and they raised guidance for the 0:18:32.440 --> 0:18:35.680 full year from low double digits to low team. So 0:18:35.720 --> 0:18:38.400 I think overall, they just continue to show that they 0:18:38.400 --> 0:18:41.159 can execute. It's a team that can use innovation and 0:18:41.240 --> 0:18:45.640 execution at their advantage to really deliver in me customer demand. 0:18:46.720 --> 0:18:48.600 Well put them let me ask you about that and 0:18:48.600 --> 0:18:51.240 then like ly to to hop into this as well. 0:18:51.240 --> 0:18:53.880 But when we talk about things like price increases for example, 0:18:54.040 --> 0:18:58.000 or and um for for for Nike, but also I 0:18:58.000 --> 0:19:01.240 mean you cover up I mean other retailers as well. 0:19:01.359 --> 0:19:04.600 We talk about price increases and the future of whether 0:19:04.680 --> 0:19:06.760 or not those price increases are gonna stay sticky. It's 0:19:06.800 --> 0:19:09.080 not like when inflation comes down all of a sudden, 0:19:09.119 --> 0:19:11.560 a lot of these retailers or even shipping companies like 0:19:11.600 --> 0:19:15.000 FedEx are going to decrease their prices. So if that's 0:19:14.800 --> 0:19:18.359 the view, then shouldn't the stop just go up and 0:19:18.440 --> 0:19:21.479 up and up from here? I mean, yes, they can 0:19:21.520 --> 0:19:24.560 hold the price increases, especially for NIKEE for the innovation 0:19:24.680 --> 0:19:28.400 that they have, the new products, especially their strong footwear franchises. 0:19:28.840 --> 0:19:32.639 But um, there is margin concern right They have actiss inventory. 0:19:32.680 --> 0:19:34.879 Their inventory was up north to forty percent at the 0:19:34.960 --> 0:19:37.720 end of the quarter. It was down three percent from 0:19:37.800 --> 0:19:40.480 last quarter and night signal digits on a unit basis, 0:19:40.640 --> 0:19:43.199 which is a sign that they're making products, but a 0:19:43.240 --> 0:19:46.000 lot more work still needs to be done. We will 0:19:46.040 --> 0:19:49.959 see more discounting, not against those products that are just 0:19:50.080 --> 0:19:52.719 being introduced, but you know some of the age inventory 0:19:52.760 --> 0:19:54.960 people like to call it that. Um, there will be 0:19:55.000 --> 0:19:57.720 more promotions. They're gonna be selling more into all price 0:19:57.800 --> 0:20:00.520 to clear that inventory. And that's kind to what I'm 0:20:00.520 --> 0:20:05.040 watching for, because that's all we the catch two when 0:20:05.560 --> 0:20:07.959 you have to be careful how you sell an all 0:20:08.119 --> 0:20:11.639 strife under Armour went through this and too much inventory 0:20:11.720 --> 0:20:15.040 there isn't good for brand Heat in the long term. 0:20:15.080 --> 0:20:16.879 You know, it's great to have put them goil and 0:20:16.960 --> 0:20:18.480 in class go on at the same time because we 0:20:18.520 --> 0:20:22.520 can really you know, circulate and talk about the consumer here. 0:20:22.560 --> 0:20:25.359 We had the conference board released some data this morning. 0:20:25.400 --> 0:20:27.800 Consumer competence data came in much better than expected for 0:20:27.840 --> 0:20:30.240 the month of December and the expectations Stata point was 0:20:30.280 --> 0:20:34.119 also a big improvement from last month. So UM consumers 0:20:34.119 --> 0:20:36.239 still seem to be in decent shape. So leaves. As 0:20:36.280 --> 0:20:39.560 you listen to the Fedexes of the world, how do 0:20:39.640 --> 0:20:42.760 they view the consumer as they look out to next year? 0:20:43.840 --> 0:20:47.080 I mean I think they they they they from their outlook, 0:20:47.119 --> 0:20:52.280 I mean they're looking for, you know, global economic moderating growth, 0:20:52.400 --> 0:20:55.240 and so you know that is obviously being driven for 0:20:55.440 --> 0:20:59.600 their businesses by the consumer. UM. And I think that 0:20:59.680 --> 0:21:03.000 you know, they're kind of outlooked for decreasing costs. Even 0:21:03.040 --> 0:21:06.080 more is based on that outlook that volumes are probably 0:21:06.080 --> 0:21:08.199 going to be pretty weak in the first half of 0:21:08.200 --> 0:21:11.640 the year, with you know, fingers cross a better outlook 0:21:11.640 --> 0:21:14.479 for the second half of the year. Um, because you know, 0:21:14.560 --> 0:21:16.679 with all the moves that the Fed is making, it 0:21:16.920 --> 0:21:19.560 is pretty clear that you know, is gonna tamp down 0:21:19.720 --> 0:21:24.440 the brakes on the economy eventually and put them again 0:21:24.440 --> 0:21:26.439 just from the consumer, just give us a sense of 0:21:26.480 --> 0:21:30.160 how do you think this this holiday season will be about. Seconds. Sure, 0:21:30.240 --> 0:21:33.000 so far the holiday season looks good. There will be promotion, 0:21:33.080 --> 0:21:35.719 but the consumer they're spending. Um. Not everyone will win 0:21:35.800 --> 0:21:38.520 the season. There will be mixed results, but we think 0:21:38.560 --> 0:21:41.160 the strong brand will continue to show out performance over 0:21:41.160 --> 0:21:43.480 the weekend. One all right, good stuff. I have no 0:21:43.520 --> 0:21:46.280 intention of shopping, but that's just me put them Goyle. 0:21:46.400 --> 0:21:49.040 She's on a T day and folks here in Bloomberg speak, 0:21:49.080 --> 0:21:51.520 that means she's on vacation today. But she still talked 0:21:51.520 --> 0:21:53.080 the time to come check in with us and give 0:21:53.160 --> 0:21:55.639 us a sense of what's going on there with the 0:21:55.680 --> 0:21:58.440 retailers and Nike in particular, put them Goyle. She covers 0:21:58.480 --> 0:22:01.200 retail for Bloomberg Intelligence, and Class Cow covers all the 0:22:01.240 --> 0:22:05.040 transportation and logistics stuff for Bloomberg Intelligence again for world 0:22:05.160 --> 0:22:13.800 class investment research. B I go r J. Gellow. He 0:22:13.960 --> 0:22:17.520 is with Federated Hermes. He's been doing this for a while. 0:22:17.560 --> 0:22:21.280 He's the senior portfolio manager there. R J. I. I'm 0:22:21.280 --> 0:22:22.960 gonna take just a second here and we'll look back 0:22:23.000 --> 0:22:24.639 and then we're gonna move forward. But looking back on 0:22:26.160 --> 0:22:28.520 I bet even in your esteemed career, you haven't seen 0:22:28.680 --> 0:22:30.919 a year in fixed income like we did in two 0:22:31.359 --> 0:22:35.440 How do you kind of put that in context? Well, 0:22:35.960 --> 0:22:41.840 pretty much nobody has the the the Bloomberg you know index, 0:22:41.880 --> 0:22:45.520 the Bloomberg Ags so to speak. Uh, currently is down 0:22:45.600 --> 0:22:47.399 on a year today basis because we've had a bit 0:22:47.440 --> 0:22:49.720 of a recovery lately, but it's still down a whopping twelve. 0:22:51.320 --> 0:22:53.720 That's the worst performance in the history of the index. 0:22:53.760 --> 0:22:56.920 The index only goes back to. As a result, there 0:22:56.920 --> 0:22:59.840 has been some academic takes on you know, how bad 0:23:00.000 --> 0:23:02.600 of bond return has been and I've seen a couple 0:23:02.680 --> 0:23:05.760 of different stories from different sources basically saying that since 0:23:05.800 --> 0:23:10.200 basically the Washington administration, like George Washington administration, we haven't 0:23:10.240 --> 0:23:13.200 seen treasuries perform as badly as they just did. Treasuries 0:23:13.200 --> 0:23:16.280 are down eleven point six five until the return this year. 0:23:16.840 --> 0:23:20.680 So this has been an astounding experience. And it's all 0:23:21.119 --> 0:23:25.879 directly linked to the surgeon inflation to over forty year highs, 0:23:25.880 --> 0:23:28.560 and the Central Bank, the FED and others efforts to 0:23:28.600 --> 0:23:30.840 counter what has it essentially been a global inflation shock 0:23:30.920 --> 0:23:36.080 as the pandemic eased and the world surged, often spurred 0:23:36.080 --> 0:23:38.320 by monetary and fiscal policy. All right, not only do 0:23:38.440 --> 0:23:40.960 we have r. J. Gallo from Federate Hermes here, but 0:23:41.000 --> 0:23:44.119 we also have Katarina Semonetti, Senior VP at Morgan Stanley 0:23:44.119 --> 0:23:46.760 Private Wealth Management joining us here and Katarina, you know, 0:23:46.800 --> 0:23:50.359 as we just heard from r J. Brutal, brutal as 0:23:50.400 --> 0:23:52.359 it relates to fixed income, Marco, what are you telling 0:23:52.359 --> 0:23:58.000 your clients here looking forward to Well, it certainly has 0:23:58.040 --> 0:24:01.840 been challenging year. You know, it's is getting seemingly close 0:24:01.880 --> 0:24:04.119 to the end of the tightening cycle. We probably are 0:24:04.160 --> 0:24:07.399 going to get another rate high Confebruary first, you know, 0:24:07.440 --> 0:24:09.360 but that might be it. And when you think about 0:24:09.400 --> 0:24:12.639 you know, the twenty two twenty two was defined by 0:24:12.800 --> 0:24:15.440 the FED and inflation and interest rates, and we think 0:24:15.480 --> 0:24:17.920 that it's going to be a different story in twenty three. 0:24:18.160 --> 0:24:20.640 We think that there are two major stories to watch 0:24:20.680 --> 0:24:23.800 in twenty three, and one, of course, this recession, whether 0:24:23.880 --> 0:24:26.399 we're going to get a recession and what kind of 0:24:26.440 --> 0:24:29.480 recession is going to be and hopefully short and shallow, 0:24:29.560 --> 0:24:31.440 but you know, of course that means to be seen. 0:24:31.720 --> 0:24:33.880 And the second one, you know, I would even say 0:24:33.920 --> 0:24:37.879 a bigger story would be earnings revisions and this could 0:24:37.920 --> 0:24:41.479 result in significant downside before we can comfortably call the 0:24:41.600 --> 0:24:44.760 end of this bear market and might catch some investors 0:24:44.760 --> 0:24:47.480 by surprise. So we're telling our clients to be ready 0:24:47.520 --> 0:24:49.920 for it, to be ready for a continued volatility before 0:24:49.960 --> 0:24:53.959 things get better. But what does continued volatility even look like? 0:24:54.040 --> 0:24:56.159 It kind of makes me think that if things have 0:24:56.200 --> 0:24:59.600 been so volatile in two, is the tolerance for volatility 0:24:59.600 --> 0:25:02.880 in twenty twenty three that much higher? So for example, 0:25:02.920 --> 0:25:06.160 a VIX of twenty for example two years ago, um 0:25:06.280 --> 0:25:08.360