WEBVTT - Retail Sales and Previewing the Fed Decision 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:26.960 us live on YouTube. 0:00:27.080 --> 0:00:29.360 Our Conversation of the Day in the equity market with 0:00:29.400 --> 0:00:33.559 Alisia Levine of BNY Prodigious Math Skills, and we're going 0:00:33.600 --> 0:00:36.559 to go to that right now for Global at Wall Street. 0:00:36.680 --> 0:00:40.720 I have never seen a market like this. What happened 0:00:40.760 --> 0:00:43.760 to Oracle last week? I know you don't do individual stocks. 0:00:44.960 --> 0:00:49.040 Never have I seen the jump condition we saw an Oracle. 0:00:49.120 --> 0:00:52.040 We are at Peter roorzag at Wizard is great about 0:00:52.120 --> 0:00:55.520 glide Pass. They all seem to be thrown out the window. 0:00:56.000 --> 0:00:59.760 How do we invest in a two part SMP five hundred. 0:01:00.080 --> 0:01:02.880 Look at what happened last week was extraordinary and it 0:01:03.040 --> 0:01:08.280 reignited never the excitement over the AI trade. And also 0:01:08.360 --> 0:01:11.200 that it's broadening. It's not just for the same time. 0:01:11.319 --> 0:01:12.360 You see it's broadening. 0:01:12.440 --> 0:01:13.080 I see it broaden. 0:01:13.160 --> 0:01:14.679 You and Jeff you agree on this. 0:01:14.920 --> 0:01:17.319 Yes, I see it broadening, and the market the market 0:01:17.360 --> 0:01:18.400 actually is broadening. 0:01:18.400 --> 0:01:19.080 I mean, that's the. 0:01:19.080 --> 0:01:24.280 Talk about small caps, and it's definitely indication the equally 0:01:24.319 --> 0:01:26.679 weighted SMP is at all time highs as well. 0:01:26.760 --> 0:01:29.600 I did not know that. Yes, let's the Alicia Levine magic. 0:01:29.880 --> 0:01:32.840 So there is a broadening here. But yes, the move 0:01:32.920 --> 0:01:36.000 last week was extraordinary. And you have seen a market 0:01:36.040 --> 0:01:38.880 like this, and it was in the late nineties, and 0:01:39.000 --> 0:01:40.920 the question is are we in ninety five or we 0:01:40.959 --> 0:01:42.120 in ninety Ok, let's go. 0:01:42.120 --> 0:01:44.440 There, let's rip it up. We're going to fundamental analysis 0:01:44.520 --> 0:01:45.640 right now. I'm sorry. 0:01:46.040 --> 0:01:49.960 It's radically different than the late nineties because of free 0:01:50.040 --> 0:01:54.200 cash flow general directions, they're actually am I right, there's 0:01:54.240 --> 0:01:57.279 not going to be twenty twenty seven. Oh they actually 0:01:57.360 --> 0:01:59.520 weren't making profits in twenty twenties. 0:02:00.040 --> 0:02:02.720 Okay, So on a relative basis, the tech stocks are 0:02:02.800 --> 0:02:06.040 cheaper than they were twenty five years ago. On a 0:02:06.160 --> 0:02:09.520 cash flow basis, they are just batting it out of 0:02:09.560 --> 0:02:12.600 the park on free cash flow margins. And on the 0:02:12.639 --> 0:02:13.560 operator you can. 0:02:13.520 --> 0:02:15.720 Say, Aaron Judge, you won't insulveank. 0:02:16.480 --> 0:02:19.240 So, I mean, these are different companies, but you know, 0:02:19.440 --> 0:02:21.600 keep the main point, the main point, which is that 0:02:21.639 --> 0:02:26.280 the FED is cutting into an increased earnings cycle. Okay, 0:02:26.520 --> 0:02:29.040 S and B earnings estimates are moving higher. The FED 0:02:29.120 --> 0:02:32.400 is cutting into it. Banks that are at are at 0:02:32.480 --> 0:02:33.799 all time highs. 0:02:34.200 --> 0:02:36.680 Hence the melt up is about lead with us here. 0:02:36.680 --> 0:02:38.960 There's interesting you say that the rally is brought in 0:02:38.960 --> 0:02:42.040 because we have critics saying and criticizing the fact that 0:02:42.320 --> 0:02:44.400 the top five stocks are driving twelve percent of the 0:02:44.440 --> 0:02:46.520 games this year. But given that we have Back of 0:02:46.560 --> 0:02:50.000 America releasing their fund manager survey, they said that equity 0:02:50.000 --> 0:02:52.480 allocation is at a seven month high. There's just a 0:02:52.480 --> 0:02:54.959 big jump in global growth optimism. But at the same 0:02:55.000 --> 0:02:57.640 time there's a record fifty eight percent saying that stocks 0:02:57.680 --> 0:02:58.520 are overvalued. 0:02:58.760 --> 0:02:59.880 How do you square those two? 0:03:00.120 --> 0:03:02.040 Well, because you have to be in the game. 0:03:02.200 --> 0:03:04.720 I mean, when you manage a live portfolio and you're 0:03:04.840 --> 0:03:07.560 under allocated and you're waiting for that S and P 0:03:07.720 --> 0:03:10.720 target of whatever, fifty eight hundred and it's not happening, 0:03:10.919 --> 0:03:12.040 you've got to get invested in. 0:03:12.200 --> 0:03:13.280 So far behind her. 0:03:13.160 --> 0:03:15.760 Active managers right now to Isabelle's great questions. 0:03:15.800 --> 0:03:18.520 So, I think in the US less they think they're 0:03:18.600 --> 0:03:21.160 less under allocated, but I think global managers are under 0:03:21.200 --> 0:03:25.880 allocated because the flee America conversation was everywhere. I actually 0:03:25.919 --> 0:03:29.079 wrote a piece about how ridiculous the Flea America trade is, 0:03:29.120 --> 0:03:31.320 because where where else are you going for innovation and 0:03:31.360 --> 0:03:34.040 global and growth and margins and earnings? 0:03:34.080 --> 0:03:36.840 Power is about Lee Actually read your piece, so you 0:03:37.360 --> 0:03:39.240 know is about lead with this folks, and for Paul 0:03:39.400 --> 0:03:42.760 Sweety today, I see your nefarious deed here you are 0:03:42.880 --> 0:03:47.240 asking questions of the equity giant Alicia Levine for your 0:03:47.280 --> 0:03:48.640 print stories today. 0:03:50.520 --> 0:03:51.880 I see what you're doing here. 0:03:52.720 --> 0:03:54.000 I always watch Alicia. 0:03:54.160 --> 0:03:56.480 She's such a smart talking head and she's also a 0:03:56.560 --> 0:03:59.120 fantastic female. We were just talking about shopping in France. 0:03:59.160 --> 0:04:00.280 But back to market. 0:04:01.400 --> 0:04:04.960 It's luxury back. Oh, it's a sector back. 0:04:05.200 --> 0:04:08.360 Luxury is back. Luxury is back. Look what's happened to 0:04:08.480 --> 0:04:11.720 household net worth? Okay, household net worth is up about 0:04:11.760 --> 0:04:14.920 seventy trillion dollars since the beginning of twenty twenty. That 0:04:15.000 --> 0:04:19.800 means households with financial assets housing and equities and socks 0:04:19.839 --> 0:04:21.880 and bonds and private equity are doing quite well. 0:04:21.960 --> 0:04:23.880 We have the case. We do have the K shaped 0:04:23.920 --> 0:04:25.880 consumer here, but we've had it. 0:04:25.920 --> 0:04:26.840 This is not new. 0:04:27.120 --> 0:04:31.240 What's happening is that the top three Quinn tiles are 0:04:31.320 --> 0:04:35.400 seeing their net worth growing, supporting consumption even in the 0:04:35.440 --> 0:04:37.159 face of a weaker labor market. 0:04:37.400 --> 0:04:39.360 Did you see that that, Tom, we have the most 0:04:39.440 --> 0:04:41.640 number of millionaires in New York than ever before, or 0:04:41.720 --> 0:04:45.520 something like that. I just know I'm working towards being 0:04:45.520 --> 0:04:47.839 one of them. But going back to luxury, how do 0:04:47.880 --> 0:04:50.640 you assess the health of American consumer? Do you look 0:04:50.680 --> 0:04:53.880 at luxury or mid tier or value? What is your 0:04:53.920 --> 0:04:55.200 favorite tier to look at? 0:04:55.400 --> 0:04:55.960 Well? 0:04:56.520 --> 0:05:00.560 Who luxury is everybody's favorite tier, let's just say that, 0:05:00.600 --> 0:05:02.360 but you really have to look at the mid range 0:05:02.400 --> 0:05:05.440 as well. We're going to get retail sales today, so 0:05:05.640 --> 0:05:08.400 we'll see where it's happening. I imagine there's some slow down. 0:05:08.400 --> 0:05:10.599 I think there is some anxiety in the labor market, 0:05:10.640 --> 0:05:13.400 particularly for the younger cohort and that's why the FED 0:05:13.480 --> 0:05:16.760 is cutting. But I'd say that, you know, for the 0:05:16.800 --> 0:05:18.719 most part, it's better than feared. 0:05:19.080 --> 0:05:22.120 Right, And the conversations had gotten so negative. 0:05:22.200 --> 0:05:24.320 I mean, we sat around this table, you know, the 0:05:24.360 --> 0:05:27.640 apocalypse in April, and you just invest right. 0:05:27.560 --> 0:05:29.520 Through the number one negative folks. 0:05:29.680 --> 0:05:32.480 Dana Telsea with this at eight twenty five, Alicia, if 0:05:32.520 --> 0:05:33.640 you want to stay around. 0:05:33.480 --> 0:05:35.760 For forty minutes in the green room. You can come 0:05:35.760 --> 0:05:36.800 in and do Dana Telsis. 0:05:36.839 --> 0:05:39.520 I love Data Telsa on luxury. 0:05:39.240 --> 0:05:42.880 But to speak of the gloom China flat on their back. 0:05:43.160 --> 0:05:45.760 And I believe we've got an equity lift in China 0:05:46.360 --> 0:05:49.880 and of course to Dana Telsea's luxury sector, that will 0:05:49.880 --> 0:05:52.159 bring a recovery there as a theory. 0:05:51.960 --> 0:05:54.279 Right right, and because there'll be more stimulus as well, 0:05:54.560 --> 0:05:57.080 they'll be more stimulus from the Chinese government. 0:05:57.600 --> 0:06:00.800 Let's get back to the bigger picture. What do people do? 0:06:00.839 --> 0:06:04.239 You go into a meeting for BNY and I can't 0:06:04.279 --> 0:06:07.760 imagine the percentage of the people that have missed this 0:06:08.480 --> 0:06:12.600 greater Christmas Eve twenty eighteen bull market. 0:06:12.560 --> 0:06:14.520 That's right, how do you catch up? 0:06:15.839 --> 0:06:19.880 So we always say it's time in the market and 0:06:19.920 --> 0:06:23.640 not timing the market. So if you're completely under allocated 0:06:23.800 --> 0:06:27.520 and you come to us with cash, we'd say do 0:06:27.640 --> 0:06:31.000 a full portfolio allocation over the next three to four months, 0:06:31.040 --> 0:06:33.600 so you know, one third, one third, one third or 0:06:33.640 --> 0:06:35.880 twenty five percent, twenty five percent and do a full 0:06:35.880 --> 0:06:40.280 portfolio allocation. Whatever your risk tolerance, whatever your growth uh, 0:06:40.640 --> 0:06:43.560 you know, goals are. That's what we would say, it's 0:06:43.560 --> 0:06:47.000 impossible to time the market. You know, strategy committees and 0:06:47.040 --> 0:06:50.479 investment committees everywhere. We're waiting for that equity pullback to 0:06:50.520 --> 0:06:52.880 bring on more risk, and it never happened. 0:06:52.880 --> 0:06:53.440 And what do we have. 0:06:53.600 --> 0:06:57.479 We had spreads at historic tights. We have equity markets 0:06:57.520 --> 0:07:01.000 making new highs every day and very hard to get in. 0:07:01.360 --> 0:07:04.680 So where are we today. We're broaching the sixty seven 0:07:04.839 --> 0:07:07.240 hundred price target on the SMP that was actually my 0:07:07.279 --> 0:07:08.520 price target for year end. 0:07:09.040 --> 0:07:09.520 We're there. 0:07:09.960 --> 0:07:12.280 I think the good news is in, can there be 0:07:12.320 --> 0:07:14.360 a selloff on the news on the Fed? Like the 0:07:14.400 --> 0:07:16.840 FED cuts are already in the market, so it's hard 0:07:16.840 --> 0:07:19.440 to play future FED cuts like it's there. That's why 0:07:19.440 --> 0:07:22.239 you've had this voracious rally in the last four weeks, 0:07:22.280 --> 0:07:25.800 really since August first, since that first terrible jobs report and. 0:07:25.760 --> 0:07:28.000 The revisions good one market. 0:07:28.040 --> 0:07:31.520 It's actually incredible how the price targets are being revised 0:07:31.560 --> 0:07:33.680 higher and higher. I want to talk about one concern 0:07:33.720 --> 0:07:35.840 you have in your note. You said it's the monetization 0:07:35.920 --> 0:07:37.480 of capex and hyperscalers. 0:07:37.960 --> 0:07:40.160 That seems so specific to me. Why is that your 0:07:40.200 --> 0:07:40.920 biggest concern? 0:07:41.040 --> 0:07:44.080 So, because it goes back to the concentration of what's 0:07:44.120 --> 0:07:46.400 happening in the S and P, the margins on the 0:07:46.440 --> 0:07:48.120 S and P and the pre cash flow margins and 0:07:48.160 --> 0:07:49.640 being driven by the hyperscalers. 0:07:49.720 --> 0:07:52.280 Right, So the large cab. 0:07:52.200 --> 0:07:55.960 Tech operating profit is twenty seven percent, that's double the 0:07:55.960 --> 0:07:58.680 rest of the SMP. If they keep on spending on 0:07:58.720 --> 0:08:01.080 the capex and at some point don't bring that to 0:08:01.200 --> 0:08:04.560 earnings or bring that to a revenue line, then you 0:08:04.720 --> 0:08:08.640 have to question whether this is going anywhere. 0:08:08.720 --> 0:08:09.680 We're not there yet. 0:08:09.840 --> 0:08:13.120 You're getting paid to wait, but you have to see 0:08:13.160 --> 0:08:16.520 the monetization of all that CAPEC spent. So you're starting 0:08:16.560 --> 0:08:18.840 to see it with Oracle right like it's starting to 0:08:18.880 --> 0:08:22.200 happen in other companies as well. The market will soon 0:08:22.360 --> 0:08:26.320 choose winners from the AI race. Don't know when that'll 0:08:26.360 --> 0:08:30.800 be a dislocation of sources. But overall, the main thing 0:08:30.880 --> 0:08:33.920 is the main thing. Growth is inflecting upwards, not downwards. 0:08:33.920 --> 0:08:36.720 For twenty twenty six, consumer stimulus is coming from the 0:08:36.800 --> 0:08:39.360 tax bill. The first quarter of twenty twenty six, the 0:08:39.360 --> 0:08:41.120 Fed is cutting and here. 0:08:40.960 --> 0:08:43.240 We are, Alicia, thank you so much. I'm serious. 0:08:43.240 --> 0:08:45.360 If you want to stay around for Dana Kelsey, please 0:08:45.640 --> 0:08:47.240 you know it'd be great. I mean, we can spend 0:08:47.240 --> 0:08:49.400 the whole show just on Dior. If you know there's 0:08:49.440 --> 0:08:52.679 two front doors to Dior on fifty seventh Street. 0:08:52.480 --> 0:08:53.160 I did not know that. 0:08:53.240 --> 0:08:55.079 One is where you go through with the visit of 0:08:55.160 --> 0:08:58.080 Hayford All and the others are Missus King goes through 0:08:58.440 --> 0:08:59.400 to be greeted back. 0:08:59.440 --> 0:09:01.800 We love well. I'll join Dana at your. 0:09:02.040 --> 0:09:04.640 Yeah Data at your Alicia Luvin. Thank you so much. 0:09:04.960 --> 0:09:05.680 Stay with us. 0:09:05.880 --> 0:09:09.160 More from Bloomberg Surveillance coming up after this. 0:09:16.360 --> 0:09:19.960 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:09:20.040 --> 0:09:23.160 weekday afternoons from seven to ten am Eastern. Listen on 0:09:23.280 --> 0:09:26.920 Applecarplay and Android Atto with the Bloomberg Business app, or 0:09:27.080 --> 0:09:28.800 watch us live on YouTube now. 0:09:28.920 --> 0:09:31.920 Two hour conversation in the eight minutes, plus retail sales 0:09:31.960 --> 0:09:34.720 at eight thirty with Dana Telsea. It is an annual 0:09:34.840 --> 0:09:38.800 visit in celebration of how thick Bazarre Magazine is. For 0:09:38.880 --> 0:09:43.320 this September issue, how did Giorgio Armani change the corner 0:09:43.360 --> 0:09:47.160 of fifty seventh and fifth Avenue incredible? 0:09:47.200 --> 0:09:50.200 I mean, frankly, thank you for having me. Georgia Amani 0:09:50.320 --> 0:09:52.440 is to me is the one who brought luxury into 0:09:52.440 --> 0:09:54.640 the US on a European framework. 0:09:54.720 --> 0:09:57.600 He brought Europe to America day. Thank you, Richard gear 0:09:57.720 --> 0:09:59.120 I mean that's basically what happened. 0:09:59.200 --> 0:10:02.760 Yes, look at what he's developed, whether it is with stores, 0:10:03.040 --> 0:10:05.520 whether it's his whole be in terms of what it is, 0:10:05.960 --> 0:10:08.320 and yes, I think the later years were tougher than 0:10:08.360 --> 0:10:11.440 the beginning years, but there's always a place for ARMANI 0:10:11.559 --> 0:10:12.959 are you long luxury now? 0:10:13.000 --> 0:10:16.280 As China finally tanked, and so the luxury that's tanked 0:10:16.320 --> 0:10:18.000 is going to be a buying opportunity. 0:10:18.320 --> 0:10:20.760 I think it will be a buying opportunity over time. 0:10:20.920 --> 0:10:23.920 I don't think we're totally there yet. I still think 0:10:23.960 --> 0:10:27.080 you're having pressure points there. I think what you've seen 0:10:27.200 --> 0:10:31.680 is where anything's new and anything's innovative, consumers will purchase 0:10:32.120 --> 0:10:33.240 same old, same old. 0:10:33.559 --> 0:10:34.800 Doesn't happen these days. 0:10:36.240 --> 0:10:38.640 So Tom kept on talking about Dior and I really 0:10:38.679 --> 0:10:40.280 need to go in there, But for now, let's go 0:10:40.320 --> 0:10:42.720 to Tapestry. They had their investor a day last week. 0:10:43.280 --> 0:10:45.120 What were to takeaways that you got? How are the 0:10:45.160 --> 0:10:48.440 health of the American consumers through the lens of Tapestry. 0:10:48.080 --> 0:10:50.480 Through the lens of Tapestry. It was a very productive 0:10:50.480 --> 0:10:53.800 investor day. The outlook is solid for the next few years. 0:10:54.200 --> 0:10:56.480 I would say that the core Coach brand and the 0:10:56.520 --> 0:10:59.520 way that they've been able to put in different items 0:10:59.520 --> 0:11:03.200 of collections like Tabby and Brooklyn have made it appealing. 0:11:03.559 --> 0:11:07.920 Plus they're capturing the younger customer. Every brand today needs 0:11:07.960 --> 0:11:11.840 to always be able to market to capture new customers, 0:11:12.200 --> 0:11:14.080 keep the old, expand with the new. 0:11:14.280 --> 0:11:16.559 So Tapestry, there's Coach, there's Kate Spade, and it's the 0:11:16.559 --> 0:11:19.480 word Whitesman. I think there's gone with They're. 0:11:19.600 --> 0:11:22.320 Sold Strut Whitesman that was sold to Kolaris a couple 0:11:22.360 --> 0:11:22.960 of months ago. 0:11:23.480 --> 0:11:25.040 It's Coach and Kate Spade. 0:11:25.240 --> 0:11:27.440 The playbook of Coach is going to be applied to 0:11:27.480 --> 0:11:30.160 Kate Spade and let's see what happens going forward. 0:11:30.320 --> 0:11:32.640 What about Ralph Lauren they're having to investor day today. 0:11:32.679 --> 0:11:35.400 I feel like they say they're seeing revenue growth similar 0:11:35.440 --> 0:11:37.040 to reason rates over the next three years. 0:11:37.200 --> 0:11:38.959 So is that good or bad? How do you read? 0:11:39.040 --> 0:11:40.920 I think overall, when you think about Ralph Lauren and 0:11:40.920 --> 0:11:44.160 I'll be at their investor today, this day, today, this morning, I. 0:11:44.160 --> 0:11:44.760 Think it's good. 0:11:45.120 --> 0:11:49.120 I think how would you not want to go to? 0:11:49.160 --> 0:11:52.640 Both brand legacy and brand history hard to find, but 0:11:52.800 --> 0:11:57.520 Ralph Lauren, solid average unit retail price growth, You've got 0:11:57.640 --> 0:12:01.920 solid expansion of categories, whether it's women's, whether it's out ofwear, 0:12:02.000 --> 0:12:06.280 whether it's accessories. You've got global reach because frankly, in 0:12:06.440 --> 0:12:08.280 Asia they'll looked upon as. 0:12:08.240 --> 0:12:12.000 Higher end still in that body, Yes they are Asia, 0:12:12.040 --> 0:12:13.600 and they've expanded their customer base. 0:12:13.760 --> 0:12:15.880 Dana Telsea with a Telsey Advisor, a group. 0:12:15.960 --> 0:12:18.400 I can't say enough about what she's done for securities 0:12:18.400 --> 0:12:21.840 analysis in New York City. It is an annual kickoff 0:12:21.920 --> 0:12:26.520 visit for September economic data. Here in two minutes, Okay, 0:12:26.559 --> 0:12:29.319 I look at the entire thing and at gunpoint missus 0:12:29.400 --> 0:12:33.200 Keane made me watch the Anderson launch it Dior the 0:12:33.240 --> 0:12:36.319 other night, a video and it's all the beautiful people. 0:12:36.360 --> 0:12:38.720 I was looking for you in the third, second, third 0:12:38.880 --> 0:12:41.600 row there, Dana Telsea with you. I don't even know 0:12:41.600 --> 0:12:46.160 who the half the actors are that were there. Everybody's churning. 0:12:46.240 --> 0:12:48.280 Mister Arnault's there and you can see he's in a 0:12:48.280 --> 0:12:51.679 complete panic about the LVMH experiment. 0:12:52.240 --> 0:12:54.360 Is are they going to sell off the brands? That 0:12:54.440 --> 0:12:56.079 aren't working. Is that the new. 0:12:55.920 --> 0:12:58.719 New from that's I don't know if that's the new 0:12:58.760 --> 0:13:01.319 new for luxury and maybe for some of the accessible 0:13:01.400 --> 0:13:02.120 luxury brands. 0:13:02.320 --> 0:13:04.160 Look what you had just announced. 0:13:03.760 --> 0:13:08.040 Yesterday, v F Corps sold Dickie's workware, not a luxury brand. 0:13:08.040 --> 0:13:11.160 But you're seeing portfolio enhancement. You want to call a 0:13:11.200 --> 0:13:15.680 portfolio optimization. How do we get more from existing brands? 0:13:15.679 --> 0:13:19.200 All the control room is Dickie's luxury ware? Is that 0:13:19.280 --> 0:13:22.520 a luxury stock? I think Dickie's is a luxury stock, 0:13:22.640 --> 0:13:25.719 isn't it. Yeah they're saying, yeah, yeah it is. So 0:13:26.400 --> 0:13:31.520 there's a restructuring in fashion. Is it still aspirational where 0:13:31.600 --> 0:13:33.680 people want the stuff? 0:13:33.920 --> 0:13:35.880 Yes, it definitely is still abspirational. 0:13:35.920 --> 0:13:39.560 And you know what's changed these days when you have TikTok, 0:13:39.600 --> 0:13:43.280 when you have Instagram, seeing it on real people makes 0:13:43.320 --> 0:13:44.440 it accessible to all. 0:13:44.840 --> 0:13:46.600 And you're the one who told me that even if 0:13:46.600 --> 0:13:48.600 you can't afford the bags, you can afford the lipstick 0:13:48.679 --> 0:13:50.920 or the perfume, and that makes it fast exactly. 0:13:51.000 --> 0:13:53.520 Well, you heard about lvmah, the Louis Vuitton lipstick one 0:13:53.600 --> 0:13:54.480 hundred and sixty dollars. 0:13:54.559 --> 0:13:58.800 Let's come back and talk about the LVMH lipstick in 0:13:58.920 --> 0:14:04.440 one hundred and sixty dollars. We're a Dana Telsea this 0:14:04.520 --> 0:14:08.160 morning on Retail America, and you've got a revision where 0:14:08.240 --> 0:14:11.640 retail sales were revised higher. In the previous month. The 0:14:11.679 --> 0:14:15.240 control group was a zero point four statistic and it 0:14:15.320 --> 0:14:18.679 came in at a buoyant zero point seven. Some equity 0:14:18.760 --> 0:14:22.800 lift to the market and yields higher. Is well, where 0:14:22.880 --> 0:14:25.600 is it coming in retail? Is it big box retail? 0:14:25.640 --> 0:14:28.920 Walmart's just killing it? Is it a lost middle area 0:14:29.360 --> 0:14:31.880 or is it in the luxury area? Where's the retail 0:14:32.120 --> 0:14:33.240 pop that I see on the. 0:14:33.200 --> 0:14:35.800 Bloomberg st I think the retail prop is in value. 0:14:35.920 --> 0:14:39.360 The retail pop is with Walmart, it's with Costco, it's 0:14:39.400 --> 0:14:42.240 with the off pricers. You've seen a trading down of 0:14:42.400 --> 0:14:45.440 even higher end consumers and they're going to some of 0:14:45.480 --> 0:14:48.920 these value stores. And you saw it in second quarter earnings. 0:14:49.200 --> 0:14:52.000 Second quarter earnings which were reported the end of August 0:14:52.400 --> 0:14:55.480 essentially showed that even so far in the current quarter, 0:14:55.880 --> 0:14:59.040 sales are better than expected. Show them something new and 0:14:59.080 --> 0:14:59.720 they will buy. 0:15:00.600 --> 0:15:02.560 So then how do you assess the health of the 0:15:02.560 --> 0:15:05.080 consumer when it comes to big box retail is like 0:15:05.120 --> 0:15:08.600 Walmart or Target. We've seen a divergence quite recently, right, 0:15:08.640 --> 0:15:10.880 and that was surprising to me because I usually clump 0:15:10.920 --> 0:15:11.880 them in one yep. 0:15:12.000 --> 0:15:16.120 One of the differences there's basically micro relative to the company. 0:15:16.440 --> 0:15:19.640 Target has worked to do to improve their assortment, to 0:15:19.760 --> 0:15:23.480 improve their operations. There's a lot of store standards that 0:15:23.560 --> 0:15:26.760 need to be adjusted. Walmart is hitting on all cylinders 0:15:26.880 --> 0:15:27.840 and is taking share. 0:15:28.400 --> 0:15:31.160 Well, they have a forty multiple. How does Joe Feldman, 0:15:31.280 --> 0:15:37.000 your colleague, respond to a single digit revenue growth? Making 0:15:37.240 --> 0:15:42.720 solid but you know, normal retail profits trading it a 0:15:42.760 --> 0:15:46.119 pe of forty. That's not in my textbook. 0:15:46.360 --> 0:15:47.560 It's not in the textbook. 0:15:47.600 --> 0:15:50.320 But the consistency of it, the market share gains that 0:15:50.360 --> 0:15:53.720 they have, the pricing that they offer, the value that 0:15:53.760 --> 0:15:54.280 they offer. 0:15:54.760 --> 0:15:56.560 They unique in the world of retail. 0:15:57.040 --> 0:16:00.280 Which companies are best positioned to absorb higher cast when 0:16:00.320 --> 0:16:02.560 it comes to this entire tire regime, and I suspect 0:16:02.600 --> 0:16:04.680 there might be a lot the top of mind, Can 0:16:04.720 --> 0:16:05.600 you name maybe two? 0:16:05.920 --> 0:16:09.000 Well, I think of companies that can absorb pricing, pricing. 0:16:09.440 --> 0:16:12.680 The off pricers can absorb pricing because they're the umbrella 0:16:12.720 --> 0:16:16.600 for everyone else, So TJX, the Ross of Burlington, and 0:16:16.680 --> 0:16:17.359 of course. 0:16:17.120 --> 0:16:20.320 Walmart Burlington socks. I always that was the socks they 0:16:20.320 --> 0:16:21.200 were when I was little. 0:16:21.280 --> 0:16:25.240 Are they passing? Are they passing on tariff? Say at 0:16:25.240 --> 0:16:27.120 TJ Max. 0:16:27.440 --> 0:16:29.600 You're beginning to see teriffs be passed on. 0:16:29.720 --> 0:16:32.520 But it all starts from if the full price retailer 0:16:32.560 --> 0:16:36.000 passes on, then it goes to others. Also, it's expected 0:16:36.040 --> 0:16:39.200 that price increases, for the most part, will come fully 0:16:39.240 --> 0:16:40.880 into play in the fourth quarter. 0:16:41.000 --> 0:16:43.400 One final question I got to ask, and I guess 0:16:43.400 --> 0:16:44.760 it's you know, I got to go to the New 0:16:44.840 --> 0:16:48.360 York City Angle a couple of years on. Is Tiffany 0:16:48.520 --> 0:16:50.280 worked out for mister Arnault. 0:16:50.880 --> 0:16:52.000 I think it is working out. 0:16:52.040 --> 0:16:55.560 They're getting more traffic, they're getting new designs. The new 0:16:55.640 --> 0:16:58.000 stores that they've remodeled have given a lift that they 0:16:58.040 --> 0:16:58.880 want't have seen before. 0:16:58.880 --> 0:17:01.040 Are they still popping? In Japan? And I stood outside 0:17:01.040 --> 0:17:02.360 the Tiffany's store there in. 0:17:02.320 --> 0:17:04.280 The Did you see the news store on the on 0:17:04.400 --> 0:17:06.439 the Ginza that has the blue outside? 0:17:06.359 --> 0:17:06.520 Yeah? 0:17:06.880 --> 0:17:07.880 Pretty yeah. 0:17:07.920 --> 0:17:09.960 We supposed to fly over and look at it. And 0:17:10.000 --> 0:17:13.040 I'm like, no, I don't think so okay. And finally 0:17:13.160 --> 0:17:18.600 Isabelle was talking about this earlier. The Deer's Store is spectacular. 0:17:18.800 --> 0:17:22.480 Is that going to be the future of European investment 0:17:22.600 --> 0:17:24.640 in the island of Manhattan. 0:17:24.359 --> 0:17:26.679 Is to do a door part of it? 0:17:26.760 --> 0:17:29.760 Yes, I think for the ultra luxury companies, and that 0:17:29.800 --> 0:17:32.040 do your Store is going to be replicated in Beverly 0:17:32.119 --> 0:17:34.480 Hills because that one's opening in just a couple. 0:17:34.359 --> 0:17:36.639 Of weeks after Lucas show. Will want to know about that. 0:17:36.760 --> 0:17:40.399 Danny Telsey brilliant always in September important. She's with a 0:17:40.440 --> 0:17:44.320 Telsea advisory group with Joe Feldman on Big Box Stay 0:17:44.359 --> 0:17:55.320 with us. More from Bloomberg Surveillance coming up after this. 0:17:55.320 --> 0:17:59.199 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:17:59.240 --> 0:18:02.760 starting at seven on Apple, Cocklay and Android Otto with 0:18:02.840 --> 0:18:05.840 the Bloomberg Business App. You can also listen live on 0:18:05.920 --> 0:18:09.560 Amazon Alexa from our flagship New York station. Just say 0:18:09.720 --> 0:18:11.800 Alexa play Bloomberg eleven thirty. 0:18:11.960 --> 0:18:13.720 This is a joy as you get the markets open 0:18:13.760 --> 0:18:16.600 here at today. We usually talked to her by batphone. 0:18:16.720 --> 0:18:19.240 You know about the zoom out to Hollywood and Los Angeles. 0:18:19.240 --> 0:18:22.880 Lisa Crawford is how to securitized research at TCW. 0:18:23.119 --> 0:18:24.399 I got to ask you one question. 0:18:24.440 --> 0:18:27.160 There's double majors in America, and I give Warden great 0:18:27.160 --> 0:18:30.359 credit for really to me doing the first double major. 0:18:30.840 --> 0:18:34.320 But Yale around Jonathan Spence and China's Studies and all 0:18:34.400 --> 0:18:40.080 that piece together a double major years ago called Political 0:18:40.160 --> 0:18:44.080 Science and International Studies, which is just phenomenal. 0:18:44.160 --> 0:18:47.640 What was it like doing a double barreled thing at Yale? 0:18:47.760 --> 0:18:48.359 Absolutely? 0:18:48.760 --> 0:18:51.359 So, I chose international studies because I was raised to 0:18:51.359 --> 0:18:53.080 be a citizen of the world by my dad's We 0:18:53.160 --> 0:18:55.480 moved around a decent amount that was important to me 0:18:55.680 --> 0:18:58.240 that was only offered as a second major. So I 0:18:58.280 --> 0:19:00.520 originally had econ for my primary Maidie Sure. Then I 0:19:00.560 --> 0:19:02.400 looked up and I had a four point zero and POLYCI, 0:19:02.600 --> 0:19:04.879 So I decided I'd be POLYCI for my first major. 0:19:05.040 --> 0:19:08.800