Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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Speaker 2: Caroline Hid and Paul Sweeney, we are live here in
Speaker 2: our Bloomberg Radio studio here in New York City, Bloomberg
Speaker 2: HQ special edition of Bloomberg Markets here on this Black Friday.
Speaker 2: Renowned economist Nouriel Rabini is warning that Donald Trump's agenda
Speaker 2: of tax cuts and tariffs is shaping up as a
Speaker 2: double edge sword for the United States. The CEO of
Speaker 2: Rbini Macro Associates told us more about the potential impacts
Speaker 2: of Trump's plans on inflation and growth.
Speaker 3: The economic policies of Trump may lead to high economic growth,
Speaker 3: to being for business, keeping tax or it's a low
Speaker 3: dilate economy, but unfortunately many of the other policies are
Speaker 3: going to have an implication of hiring, inflation and lower
Speaker 3: economic growth. The first thing he has already announced is
Speaker 3: going to be tariff against Mexico, Canada and China. And
Speaker 3: that's only the beginning, he said, we might have up
Speaker 3: to twenty percent tarif on all our trade partners, up
Speaker 3: to sixty percent against China. He wants to have massive
Speaker 3: deportation of people. In the last few years, the increase
Speaker 3: in migration has kept the lead on wage growth, has
Speaker 3: increased the labor supply has increased economic growth. So definitely
Speaker 3: mass deportation is t inflationary. He wants not only to
Speaker 3: make all those tax cuts permanent, but you made other
Speaker 3: promises and no taxes on tips, on overtime and so
Speaker 3: security on income earn abroad, and so on and so on.
Speaker 3: This estimate that these things we add to the deficit
Speaker 3: by eight thrillion dollars. Too much demand inflationary. You might
Speaker 3: want to weekend a dollar that's going to be inflationary.
Speaker 3: You may interfere with the independence of the FED. Getting
Speaker 3: out of the Paris Accord is going to make climate
Speaker 3: change much worse, in create a food price and things
Speaker 3: of that sort.
Speaker 4: It's interesting, Nouriel, a lot of things you just said,
Speaker 4: or what a bitcoiner would say as to why you
Speaker 4: should buy bitcoin. There's now the Bitcoin etf there over
Speaker 4: one hundred billion dollars. Clearly a big hit there's talk
Speaker 4: that it could be a strategic reserve. You have gold
Speaker 4: in the portfolio. Is there anything that could move you
Speaker 4: to add bitcoin to your ETF to help accomplish some
Speaker 4: of these goals.
Speaker 3: You know, the bitcoin is highly volatile. It can go
Speaker 3: up by ten percent one day and down ten to
Speaker 3: fifteen percent another day. If you want to a stable
Speaker 3: store of value, you will not put bitcoin into your portfolio.
Speaker 3: The kind of acids we're actually thinking about are all
Speaker 3: acid that do well when you have over growth and
Speaker 3: you have higher inflation, whether it's tapes, shortened treasuries. Gold
Speaker 3: is a hedge against inflation. The basement did Alara shown geopolitics,
Speaker 3: financial crises, some exposure to a commodities, they're going to
Speaker 3: do well in a world of inflation, amid change, and
Speaker 3: environmentally sustainable rids. So it's a diversified pulfolio of acids
Speaker 3: that historical have done well in these types of tail risks.
Speaker 3: I'm skeptical for a lot of reasons about cryptocurrency is
Speaker 3: a bitcoin because they're not currencies. They're not the unit
Speaker 3: of account, they're not the scale of means of payment,
Speaker 3: they're not the stable store of value. And if you
Speaker 3: want well preservation rather than high relativity. You want to
Speaker 3: stay away from those types of assets.
Speaker 5: That was Noria Rubini speaking with Blue Bag Intelligence analyst
Speaker 5: Eric Beltunus. Meanwhile, we want to delve in a little
Speaker 5: bit more to just these markets and the SP five hundred,
Speaker 5: of course on a tear one of the best years
Speaker 5: in history. Tho those investors have just been methodically shrugging
Speaker 5: off geopolitical risk, of the geopolitical risk of central bank
Speaker 5: temper concern and inflation perhaps running a little bit warmer
Speaker 5: than had been anticipated. We've got to sort of try
Speaker 5: and analyze therefore and market it's been for the money
Speaker 5: makers out there, the banks in particular, it's not been pleasant.
Speaker 5: If you've been trying to make these markets in flour
Speaker 5: X and rates, they've not been having a great year
Speaker 5: for traders there the hit by title margins by challenging
Speaker 5: macroeconomic backdrops. We want to get to it with jess Menton,
Speaker 5: who's been going through what is a great story of
Speaker 5: how difficult it has been to trade the macro of late,
Speaker 5: because there's been these shock moves that go against everyone.
Speaker 6: It really is, and especially because Paul and I have
Speaker 6: spoken so much over the last couple of years about
Speaker 6: especially going into not even just this past year, but
Speaker 6: in twenty twenty three, after we saw the loan, the
Speaker 6: S and P five hundred and October of twenty twenty two.
Speaker 6: There's still so much gloom and doom, and a lot
Speaker 6: of it has been especially when you're coming out of
Speaker 6: COVID and what the disruptions from the pandemic did, because
Speaker 6: a lot of people were trading off of playbooks that
Speaker 6: would have worked maybe prior to the pandemic, but when
Speaker 6: you have a once in a century pandemic like that
Speaker 6: and it up ends business activity, it made a lot
Speaker 6: of the trades tougher to call because there are certain
Speaker 6: strategies where you would use for instance, if this happened,
Speaker 6: you'd buy this or only you know there would be
Speaker 6: one hundred percent track records for certain thresholds where you
Speaker 6: know you wouldn't see the S and P five hundred
Speaker 6: hit another low. But there are a lot of things
Speaker 6: that they had to like throw that playbook out, And
Speaker 6: I'm sure paul In like your career with a lot
Speaker 6: of things you saw, especially if you thought about like
Speaker 6: the housing crisis or I know you were on the
Speaker 6: floor a couple of weeks before the eighty seven crash,
Speaker 6: things were very different when you think about pre COVID
Speaker 6: versus now. So especially on the macro side, if you're
Speaker 6: looking at the City Economic Surprise Index, particularly for the US,
Speaker 6: I mean, that's continuing to outpace those expectations. And even
Speaker 6: if you're looking at fourth quarter GDP growth for the
Speaker 6: Atlanta Fed GDP now model, I mean, that's above two
Speaker 6: and a half percent. So still you're continuing to see
Speaker 6: strong consumer but also on the corporate side of things,
Speaker 6: for particularly the stock market, that's continued to power things higher.
Speaker 6: And Gina Martin Adams always talks about that too, So
Speaker 6: those have been some communicators Caroline, why a lot of
Speaker 6: these things just haven't panned out for some of these banks.
Speaker 2: I mean, and some of that it used to be.
Speaker 2: I'm not gonna used to but some of the biggest
Speaker 2: profit geners were from the macro traders. They were at
Speaker 2: the south side firms and then the hedge funds. Particularly
Speaker 2: you're a macro trader, that just meant you were smarter
Speaker 2: than everybody else.
Speaker 7: I didn't think that equities or pods.
Speaker 2: I think about the macro picture everything and those are
Speaker 2: the guys and gals that made huge amounts of money.
Speaker 7: But I've heard that again the performance has not been there.
Speaker 8: No, they haven't.
Speaker 2: I have the funds are pulling out, I mean in
Speaker 2: the fun flows out of that, out of those strategies.
Speaker 6: So that's a key thing too, because even the S
Speaker 6: and P five hundred right now, I mean, it's on
Speaker 6: pace for over twenty percent gain this year. I mean,
Speaker 6: that's the first time you'd see back to back gains
Speaker 6: of that type of magnitude since the late nineteen nineties,
Speaker 6: and we saw that happen twice during the dot com bubble,
Speaker 6: but continuing to see even going into next year. It
Speaker 6: seems like every year when the calendar turns, there wants
Speaker 6: to be this kind of doom and gloom. I know
Speaker 6: a lot of people are pointing at valuations, say like
Speaker 6: the S and P five hundred right now trading around
Speaker 6: twenty two times forward earnings on a blended basis if
Speaker 6: you're looking in the terminal, if you look at the
Speaker 6: average over the last decade, es around eighteen. But even
Speaker 6: if you strip out the Magnificent seven, it's still around twenty.
Speaker 6: But a lot of traders I speak with, they'll point
Speaker 6: to how valuations if you look over the last ten years,
Speaker 6: or even if you want to look at sentiment, that
Speaker 6: stuff can stay kind of frothy and grow on for
Speaker 6: weeks once even potentially years there. So they tend to
Speaker 6: not like to use that for trading strategies right now.
Speaker 5: What's interesting, I mean, I think it's Coolish and Greenwich,
Speaker 5: which has been putting together a lot of these stata
Speaker 5: around the moon music for rates traders and for four
Speaker 5: X a little bit more optimism if you're trading foreign exchange.
Speaker 5: But rates is painful in large part because of electronification
Speaker 5: here as well. I mean, things look very different twenty
Speaker 5: years ago because there were a few at market makers
Speaker 5: and most people are still picking up a phone.
Speaker 6: That's a good point, and it's just a different dynamic
Speaker 6: of how interconnected the global economy is as well as technology,
Speaker 6: and when you're trying to make some of these trades too,
Speaker 6: and so when you're looking at kind of the four
Speaker 6: X market versus the rates markets too, I mean, especially
Speaker 6: because the conundrum of when you're seeing yields rise, whether
Speaker 6: that's okay, was that on a strengthening economy or is
Speaker 6: that trying to tell you something about federal reserve policy.
Speaker 8: It's make it a lot.
Speaker 6: More of a conundrum coming out COVID too, Caroline, So.
Speaker 2: What's the smart trade for twenty twenty five is or
Speaker 2: such a thing?
Speaker 6: I might just buy a Nvidia, right, I know, because
Speaker 6: especially with that, I mean Nvidia the third quarter I
Speaker 6: didn't do as well as it had in prior quarters,
Speaker 6: but still the best stock in the S and P
Speaker 6: five hundred, not over even just the last year, but
Speaker 6: the last two years. But something that people are watching.
Speaker 6: If you look at the ETF that tracks semiconductor companies
Speaker 6: and chip makers smh, that's important because there's a level
Speaker 6: around two forty. It's trading around to forty two right now,
Speaker 6: but the two forty is kind of more of a
Speaker 6: broad support measure that they're looking at. So you kind
Speaker 6: of want to look at that as a gauge, not
Speaker 6: even just for semi conductor companies, but also kind of
Speaker 6: more broadly for the stock market to see what that
Speaker 6: could mean because not surprisingly, the big waiting that chip makers.
Speaker 8: Have good software.
Speaker 6: Yeah, exactly why there's going to be the need, right,
Speaker 6: And so that's a big thing too, because it's beyond
Speaker 6: even just some of the big AI type players there
Speaker 6: and what. But when I'm speaking with a lot of
Speaker 6: portfolio managers, that actually is a space like Marion Bartel's.
Speaker 6: She's on Bloomberg a lot too, but software companies is
Speaker 6: one of the ones that she continues to plow money into.
Speaker 2: All right, Jess ESPN dot Com Texas five and a
Speaker 2: half point favorite little action down there.
Speaker 6: I mean, you know, I was not able to get
Speaker 6: a ticket. Unfortunately, we're talking about how expensive there is.
Speaker 6: I think at the average purchase price was over one
Speaker 6: thousand bucks.
Speaker 8: This experiential, right.
Speaker 2: That's what the kids are doing Texas at Texas A
Speaker 2: and M College Station Texas.
Speaker 8: It's going to be great.
Speaker 6: But just watch it here.
Speaker 7: Exactly, jess Man, thank you so much. We appreciate it.
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Speaker 7: Christmas Trees yougo Hill, No, of course not.
Speaker 2: I buy my Christmas tree honor about my birthday, which
Speaker 2: is early one yes, but we've gone. I've gone both
Speaker 2: ways over the years. Because my kids were younger, they
Speaker 2: had some allergies. We would go for several years we
Speaker 2: went to fake tree. I'm kind of indifferent.
Speaker 8: Yeah, we got a bit of both.
Speaker 5: Do We got like we get one real one for
Speaker 5: the smell and one fake one for the downstairs.
Speaker 7: Right five, So let's how you do it, all right,
Speaker 7: It all works out. People have their their play there.
Speaker 2: Chris Butler Joints is National Tree Company CEO joining us here,
Speaker 2: I believe from Cranford, New Jersey, which is a cool
Speaker 2: little town there. So Chris talk to us about kind
Speaker 2: of Christmas decorations.
Speaker 7: What are people doing these days?
Speaker 2: What's different today versus I don't know, ten years fifteen
Speaker 2: years ago. It seems like people are going nuts for
Speaker 2: Christmas decorations.
Speaker 9: They are going nuts. Yeah, And I like what both
Speaker 9: of you guys said. You switch between the artificial the reel.
Speaker 9: Were big fans of real as well as artificial. Obviously,
Speaker 9: eighty percent of US consumers by artificial trees, and so
Speaker 9: the reel is definitely the minor. But again, obviously we're
Speaker 9: big fans of trees in general. But you know, it's
Speaker 9: the pre lit now, so trees come pre lit. Obviously,
Speaker 9: there's no mess, they're a lot cheaper, the materials are
Speaker 9: a lot better. There's a lot of functionality with the
Speaker 9: lights that you can get today, and so that's really
Speaker 9: what we're seeing. And there's a lot of extra wreaths
Speaker 9: and garlands and things being brought as well. And I
Speaker 9: think with the Instagram generation, the show me generation, people
Speaker 9: are really now decorating to kind of show their friends
Speaker 9: and show their followers just how beautiful our homes can be.
Speaker 9: And so you know, as you said, Carolyn, they have
Speaker 9: a lot of trees in a lot of different rooms
Speaker 9: and so you know, maybe the kids have a tree now,
Speaker 9: the kitchen has a small tree putting the mantlepiece with
Speaker 9: garlands and small trees. So you know, we're seeing a
Speaker 9: lot of incremental decorating with a lot of different items
Speaker 9: and in terms of getting back to that swell thing.
Speaker 9: So you're right, the main reason people buy a real
Speaker 9: tree is for that real Christmas smell. We bought a
Speaker 9: company called Sensicles a few years ago and they are
Speaker 9: scented ornament which smells just like Christmas. So if you
Speaker 9: hang your centered ornament on an artificial tree, you get
Speaker 9: that real tree, that real tree smell as well, and
Speaker 9: no allergies.
Speaker 5: Assume I'm looking at god onto your website. First thing,
Speaker 5: holiday magic begins. Enter a week, win a gift card,
Speaker 5: Blackout Friday blowout deals up to eighty percent off. How
Speaker 5: much are you having to think about discounting? How much
Speaker 5: amid perhaps fear of some that where you're getting your
Speaker 5: supplies from the cost might have to go up in
Speaker 5: the future.
Speaker 9: Yeah, that's a great question. So look, Black Friday through
Speaker 9: Cyber Monday this year obviously is one week later, so
Speaker 9: the holiday season is a week later. So I think
Speaker 9: every retail as ourselves included, are really discounting to make
Speaker 9: sure that we can take it kind of capture those
Speaker 9: sales that we might have missed otherwise given given the
Speaker 9: week's delay. In terms of the tariffs, Look, you know,
Speaker 9: we've been on a diversification kind of trend over the
Speaker 9: last few years now any way, trying to diversify ourselves
Speaker 9: out of just one source of manufacturing, which which would
Speaker 9: be China. You know, I think if the tariffs go through,
Speaker 9: who knows what the tariffs will be or when they
Speaker 9: will go into effect, but you know, from our standpoint, obviously,
Speaker 9: it's it's impactful, and so we're trying to diversify a
Speaker 9: manufacturing base between now and you know, now in kind
Speaker 9: of twenty twenty six. You know, the promotional things we're
Speaker 9: doing right now really aren't in answer to that. It's
Speaker 9: really more just to kind of capture those sales for
Speaker 9: this season. But if you are a consumer and you're
Speaker 9: looking for a tree and you're thinking of buying a
Speaker 9: tree or other holiday de corps, this year is a
Speaker 9: great time to buy it because if those tariffs go
Speaker 9: into effect, prices will definitely go up in the next
Speaker 9: year or so.
Speaker 5: Can you give us a breakdown of sort of how
Speaker 5: much of your supply chain is dependent on China?
Speaker 9: Yeah, it's very large today, so I can't give you
Speaker 9: the exact numbers, but it's very large. But we are
Speaker 9: diversifying out. We've been on this diversification journey for a
Speaker 9: few years now, and so you know, probably by the
Speaker 9: end of twenty twenty six we could be completely out
Speaker 9: of China, which you know is a significant change.
Speaker 2: So anything particularly the hot cellar this year, Chris.
Speaker 9: Yeah, you know, so it's funny. So my wife loves
Speaker 9: the sparkly trees, the snowy trees, and many consumers love
Speaker 9: those things. But you know what we see year after
Speaker 9: year after year is that green triangle, you know, the
Speaker 9: kind of the staid, good drink green triangle, solid materials,
Speaker 9: great lights, multi multi function lights. So you know, it's
Speaker 9: not a trend driven it's not a trend driven industry.
Speaker 9: I will say this year, disco is back. So who
Speaker 9: doesn't love a bit of disco with their Christmas trees?
Speaker 9: So disco is back. So we've definitely seen some sales
Speaker 9: on some of our kind of disco themed items. But
Speaker 9: again it is you know, people still do prefer that
Speaker 9: traditional green tree with either the white lights, clear lights,
Speaker 9: the multicolor or again we have the dual color functionality.
Speaker 9: So that's that's what we every year.
Speaker 2: Are you white lights, Caroline? Are you a different colored I.
Speaker 5: Think one of ours has multicolored, but I think in
Speaker 5: general I'm a boring person. I like a white light
Speaker 5: with only red and gold vibes going on. And then
Speaker 5: our thing is we collect Christmas decorations from.
Speaker 8: Any city that we go.
Speaker 5: So and then you have to remind yourself where the
Speaker 5: hell you've got some of these random items. But I'm
Speaker 5: really interested in not just about the idea of what
Speaker 5: color lights or what you're whether you're doing sparkle or disco,
Speaker 5: but you must be talking, Chris, to people in your
Speaker 5: industry that are doing the real tree situation too. How
Speaker 5: much you're going to have help this year by the
Speaker 5: fact that we're here in the Northeast, we've had terrible
Speaker 5: lack of water, We've had droughts, and the local Christmas
Speaker 5: fruit tree farms next to me have been struggling.
Speaker 9: Yeah, you know, it's a great question. Eighty percent of
Speaker 9: like I said, eighty percent of consumers already buy artificial
Speaker 9: trees versus twenty percent of consumers buying the real trees.
Speaker 9: So it's a small market already. And yeah, I'm unfortunate
Speaker 9: with you know, with some climate change or with some
Speaker 9: just whether in general is definitely hurting. Look, Oregon a
Speaker 9: few years ago got hit. You know, there's some fungus
Speaker 9: issues in the Carolinas. So it's it's a tough business
Speaker 9: to be in making the kind of doing those real trees.
Speaker 9: And look, we're here to pick up the pieces when
Speaker 9: when you know they falter with some of their supply chain.
Speaker 7: Chris is there any regionality in your business.
Speaker 2: Do people in the South, I don't know, spend more
Speaker 2: on their decorations per capita than the Midwest or anything
Speaker 2: like that as a pretty standard across the.
Speaker 10: Board, it's pretty standard.
Speaker 9: You know, we do see the coastal towns going more
Speaker 9: for kind of Christmas by the Sea type themes. But typically,
Speaker 9: you know, our sales are driven by population centers, so,
Speaker 9: you know, very good sales in the Northeast, obviously California, Texas, Florida.
Speaker 9: It's really population driven. We don't necessarily see big regional
Speaker 9: differences in our sales. Anyway. We sell, you know, most
Speaker 9: of our sales are online, so we sell through Amazon, wafair,
Speaker 9: home depot based, et cetera. And so we really see
Speaker 9: sales driven by, you know, by where people live.
Speaker 7: Hey, Chris, thanks so much for joining us.
Speaker 2: Really appreciate it. Chris Butler, National Tree Company CEO, Carolyn,
Speaker 2: If you noticed differences the way people decorate their houses
Speaker 2: here in the US versus growing up in England, that's
Speaker 2: a great question.
Speaker 8: More is always less here?
Speaker 5: We're more, right, Yeah, you are more. You are more
Speaker 5: here in the United States. And I love that there's
Speaker 5: like a tree for every room, a tree for every
Speaker 5: person in the family, every animal that you might have.
Speaker 8: So I'm all in on that.
Speaker 5: I feel in the UK we were a bit more
Speaker 5: dependent on real trees right, just as a general I
Speaker 5: mean we're a smaller country and easier access to them.
Speaker 2: But is there something that you guys do in England
Speaker 2: that we don't do here decoration.
Speaker 8: Wise, so Advent calendars.
Speaker 5: Advent isn't deemed like a religious taking part in the
Speaker 5: UK obviously, you know the Queen of England and King
Speaker 5: of England. I mean generally there is a little bit
Speaker 5: more focus on on Church of England within the country.
Speaker 5: But actually the countdown and a twenty four day opening
Speaker 5: of a calendar, whether there's a suite, candy and active
Speaker 5: kindness in it, that was something.
Speaker 8: That I grew up with. I found it much harder
Speaker 8: to get here and Crackers is my other one. Now
Speaker 8: suddenly we've getting them everywhere.
Speaker 5: I'm seeing my local storehouse Crackers has Advent calendars.
Speaker 8: I'm thankful you're.
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Speaker 7: Black Friday. It's important for retailers. This is it, folks.
Speaker 7: Do you know why it's called Black Friday?
Speaker 2: Because you're running the red all year and then Black
Speaker 2: Friday Friday comes into a big advertising year, I mean
Speaker 2: big sales year, and you kind of go into the black.
Speaker 2: You become profitable Black Friday. Dana Tellsley knows that better
Speaker 2: than anybody. Dana Tellsey tells the Advisory Group CEO and
Speaker 2: Chief re church Officer, the go to voice on Wall
Speaker 2: Street for all things retail for I'm going to say
Speaker 2: twenty five years and I'll.
Speaker 7: Leave it there.
Speaker 2: Dana, It's been a wild four or five six years
Speaker 2: for folks trying to figure out how they spend their money,
Speaker 2: where they go, did they spend it on goods, services, experiences?
Speaker 2: Give us a lay of the land of retail here
Speaker 2: on a Black Friday, twenty twenty four.
Speaker 11: First of all, you're exactly right, and thank you for
Speaker 11: having me. It is the super Bowl of retail always
Speaker 11: on Black Friday. Retailer is prepared for months in order
Speaker 11: to get it right. So what do you do? What
Speaker 11: is happening right now with retail I think the consumer's resilient.
Speaker 11: I think a bit it's about product newness that's driving
Speaker 11: sell through in conversion. Look what you have with companies
Speaker 11: like a Birkenstock or Ralph Lauren Deckers and on. And
Speaker 11: then it's also about value because that lower income consumer,
Speaker 11: they are being very watchful about their dollars given what
Speaker 11: they're seeing out there, the continued pressure of elevated prices.
Speaker 11: Inflation might not be going up, but it couldn't come
Speaker 11: down fast enough for them. And that's why you saw
Speaker 11: Walmart talk about the fact that most of their share
Speaker 11: gains came from the higher income consumer. And given that
Speaker 11: sixty to sixty five percent of their sales come from grocery,
Speaker 11: you look at Target, which has more coming from discretionary
Speaker 11: nearly half. That was the headwinds. And then you look
Speaker 11: at what's happening with gift giving. Who would have thought
Speaker 11: that the off price was like TJX. They're getting in
Speaker 11: the throes of gift giving and they're gaining more traffic.
Speaker 11: But what every retailer is doing this holiday season increasing
Speaker 11: the marketing. You have a very social consumer who basically
Speaker 11: is enticed, whether it's by their phone, whether it's by
Speaker 11: emails or in store. And yes, what we saw this
Speaker 11: morning so far, because I was at Macy's two already
Speaker 11: as the mornings come on, you've seen traffic increase, and
Speaker 11: I think that social engagement with the physical store is helping.
Speaker 11: We also have a compressed holiday season. Don't discount that
Speaker 11: Thanksgiving on the twenty eighth last year, it was on
Speaker 11: the twenty third. The pull forward to promotions led to
Speaker 11: more conversion earlier in the season, but consumers are still
Speaker 11: going to spend a lot of them are procrastinators.
Speaker 7: Am I going to get deals?
Speaker 6: Dan?
Speaker 2: And what's the promotional environment like ethic? Cause that impacts
Speaker 2: the margins for your companies.
Speaker 10: It does.
Speaker 11: Average promotion these days seems like around thirty percent. When
Speaker 11: I did my walkthroughs yesterday, I even found a store
Speaker 11: that's open because you know me, I have to be
Speaker 11: in a store every day. Ritzia in Soho was open,
Speaker 11: just open on Tuesday, brand new store, absolutely beautiful. But
Speaker 11: overall it's around thirty percent. That's the discounts. Some of
Speaker 11: them may be higher, some may be a little bit lower.
Speaker 11: Luxury goods is having a tough time, but you never
Speaker 11: see discounts at luxury goods. What you need to see
Speaker 11: on fifty seventh Street is those Louis Vuitton trunks.
Speaker 8: But overall, yes, beautiful.
Speaker 11: I think it'll be a resilient holiday of three to
Speaker 11: three and a half percent increase on the margin side,
Speaker 11: Increased marketing is planned, the promotional levels are planned. I
Speaker 11: think there's more stability in the margins, more uncertainty what
Speaker 11: the top line looks.
Speaker 8: Like, more uncertainy.
Speaker 5: If you're starting to think the costs are going to
Speaker 5: go up because of tariffs, I'll consume is even considering that,
Speaker 5: because I'm pretty sure the reten is.
Speaker 11: All the retailers are considering a big time, and the
Speaker 11: diversification from China is playing at every single retailer. Look
Speaker 11: what you had this week when even a Abercrombie and
Speaker 11: Fitch talked about less than ten percent their goods coming
Speaker 11: from China. Look what you had with Gap talking the
Speaker 11: same thing on apparel with those who have significant exposure,
Speaker 11: and a lot of it is footwear companies, they're working
Speaker 11: to diversify fast because if anything, look at the NRF
Speaker 11: study where nearly eighty percent of consumer spend dollars would
Speaker 11: be impacted by tariffs requiring nearly a double digit price increase.
Speaker 11: Consumers don't want that.
Speaker 8: They definitely don't.
Speaker 5: Do they want to be shopping via influencers or do
Speaker 5: they want to be shopping via their own viewpoint and
Speaker 5: long term love affair with certain companies and brands.
Speaker 11: I think influencers create the viewpoints. I think influencers help
Speaker 11: the consumers overall see what's working for them. The brands
Speaker 11: also advocate for influencers too, because they want that awareness
Speaker 11: given to expand their demographics. Because influencers today, it could
Speaker 11: be for millennials, it could be for baby boomers. What
Speaker 11: you know is consumers are watching pictures. Pictures are on Instagram,
Speaker 11: they're on social media, and I think that's going to
Speaker 11: be one of the bigger themes as we move through
Speaker 11: twenty twenty five.
Speaker 7: Dana e commerce versus bricks and mortar.
Speaker 2: I know the pandemic brought a lot of e commerce
Speaker 2: market share forward.
Speaker 7: How's that dynamic? These days?
Speaker 11: Overall, you need both. You can't have one or the other.
Speaker 11: It's got to be both. And what you're seeing is
Speaker 11: the store fills a broader function. They do buy online,
Speaker 11: pickup and store. They do ship from store, and you
Speaker 11: know what they do back to that word again, social.
Speaker 11: They create social engagement. So I think overall, you're continuing
Speaker 11: to see bigger gains in the holiday season from online
Speaker 11: should be high single digits this year, but you need
Speaker 11: that bricks and mortar in order to drive awareness, and
Speaker 11: you're seeing more retailers invest in their stores. You have
Speaker 11: more stores being opened in terms of retailers and net openers,
Speaker 11: but of a smaller sized box than in the past.
Speaker 11: Go physical is what I'm about. Go physical.
Speaker 5: I mean even on Thanksgiving, you mind to go and
Speaker 5: find a store that's open. I mean, I feel that
Speaker 5: Black Friday deals have been thrown at me for the
Speaker 5: past week, if not longer. I mean we were reporting
Speaker 5: on of course eleven and eleven and what happened with
Speaker 5: the Chinese discounts that just were never.
Speaker 8: Ending in terms of length that we had for Singles Day?
Speaker 8: Is this just the new world order? Do we feel
Speaker 8: like there evident isn't.
Speaker 11: A discount on I think one of the things that
Speaker 11: happened this year, it just started earlier the minute Amazon
Speaker 11: had their their Prime Day, and then you had the
Speaker 11: Target Circle week in Walmart in October. It was game
Speaker 11: on for the holiday season because every wanted one, wanted
Speaker 11: to capture as much as they could of that consumer
Speaker 11: spending dollar because it's back to school in the fall
Speaker 11: and it's holiday. That are your two key shopping time periods.
Speaker 7: Anything the go to gift or item this season.
Speaker 11: I mean, you're gonna look for Birkenstock closed toe shoes.
Speaker 11: Told you ag that's going to be a go to
Speaker 11: that people.
Speaker 2: Want Birkenstock closed toe shoe as opposed to Birkenstock sandal.
Speaker 8: Yes, but you know you gotta have both, okay.
Speaker 11: So and then you know what, look at the Brooklyn
Speaker 11: bag coach that's been super popular lately on running in
Speaker 11: their foot that's been working very well too. So we've
Speaker 11: got and you know what, even some of the private
Speaker 11: companies with intimate apparel like Skims, you got to watch
Speaker 11: what they're doing.
Speaker 8: They have some cool marketing campaigns as well. Daniels is
Speaker 8: great to have you. Thank you for me, Thank you
Speaker 8: for pas.
Speaker 5: Stop up to Bloomingdale's next door, a Dantel going there
Speaker 5: next and CEO and chief revenue officer and a Telsey
Speaker 5: advisory group.
Speaker 8: Always a joy to have.
Speaker 1: A you're listening to the Bloomberg Intelligence podcast. Catch us
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Speaker 7: I haven't seen Gladiator two.
Speaker 2: I haven't seen Wicked, but I got to do that
Speaker 2: maybe over the weekend. But that's been some positive story
Speaker 2: here for the US box office. Daniel Laurier joins US
Speaker 2: editorial director at The Box Office Company. Dan, you'll talk
Speaker 2: to us about kind of the of North American box office.
Speaker 7: Here are people going to the movies.
Speaker 12: Oh, it's a hot streak, Paul. We've seen great recovery
Speaker 12: so far this year. Remember we entered the year expecting
Speaker 12: down season year over year twenty four to twenty three.
Speaker 12: But really since June it's been a hot streak. We're
Speaker 12: expecting to finish the year close to even to twenty
Speaker 12: three after beginning of the year expecting a ten percent slide.
Speaker 12: So it's been a really, really big recovery thanks to
Speaker 12: films like this.
Speaker 5: I mean, Disney just knocking it out the park at
Speaker 5: the moment they've had winning Formula after winning Formula, how
Speaker 5: big a deal is Mana Are you going to be?
Speaker 10: I think it's going to be huge.
Speaker 12: We just posted the largest Thanksgiving Day ever for a title,
Speaker 12: Maana Tuo did that yesterday, over eighty million dollars in
Speaker 12: box office for the first two days in release.
Speaker 10: For Mawana Too, we're.
Speaker 12: Expecting maybe two hundred million dollars plus from that title
Speaker 12: this weekend. To give you an idea, guys, this might
Speaker 12: be the highest earning Thanksgiving weekend of fall time.
Speaker 5: And is that because they've got the formula right of
Speaker 5: this something for everyone as well. When one of my
Speaker 5: producers she was off to go and see or not
Speaker 5: to typecast, but she was going to go and see
Speaker 5: Wicked while her husband was going to go and see
Speaker 5: Gladiator Too.
Speaker 8: Everyone there's something for everyone. And then there's the family
Speaker 8: formula with Mahana two. So we're all satiated.
Speaker 10: Caroline. I think you nailed it right there.
Speaker 12: We have something there for every type of audience at
Speaker 12: the movies this weekend. The Gladiator to opening weekend's opening
Speaker 12: weekend audience was sixty one percent male, for Wicked seventy
Speaker 12: two percent female, and obviously, family audiences are coming out
Speaker 12: to support Moana to on mass. This weekend, those three
Speaker 12: movies occupy seventy five percent of all showtimes in North
Speaker 12: America according to our data at the Box Office Company.
Speaker 12: That's a massive response from theaters to the overwhelming demand
Speaker 12: from audience is to watch these movies in theaters.
Speaker 2: So Daniel give us a sense of maybe how the
Speaker 2: Hollywood movie make he moguls out in LA. How are
Speaker 2: they thinking about the theater release window versus the streaming
Speaker 2: and all that kind of stuff today versus pandemic? Is
Speaker 2: it still what it used to be or is it
Speaker 2: a different world?
Speaker 10: It's different from twenty nineteen. But which industry isn't right?
Speaker 12: The big lesson I think that the entire industry in
Speaker 12: Hollywood has learned is the overwhelming role that a theatrical
Speaker 12: release has in promoting your title downstream. So streaming is
Speaker 12: still very important, but that theatrical performance is crucial. Let's
Speaker 12: take Mona two for example, a year ago today, that
Speaker 12: was supposed to be a Disney Plus animated series just
Speaker 12: for streaming. Today this is a billion dollar plus global
Speaker 12: box office hit for Disney. Disney now with two huge
Speaker 12: animated movies, one earlier this year, inside Out two, this
Speaker 12: one Moana two, and then you have other titles like
Speaker 12: Deadpool and Wolverine from over the summer and in December,
Speaker 12: I fas had that Lion King prequel. You have a
Speaker 12: lot of energy from Disney to go big on theatrical
Speaker 12: and we see the box office numbers to back that up.
Speaker 2: Hey, Dan, I'd listened to some of the conference calls
Speaker 2: from some of the big media companies that Disney's, the
Speaker 2: Warner Brothers, they're kind of pointing us to twenty twenty
Speaker 2: five is a really big theatrical release year, you know,
Speaker 2: do in large part to some of the writers and
Speaker 2: actor strikes that push some production out.
Speaker 7: Talk to us about next.
Speaker 10: Year, Paul, I think you're absolutely right on that.
Speaker 12: If we look at the at the last four years
Speaker 12: in production, Hollywood hasn't had an uninterrupted year in their
Speaker 12: production capabilities since twenty nineteen. You had the pandemic in
Speaker 12: twenty and the strikes last year. Twenty twenty four is
Speaker 12: the first full year of production in Hollywood.
Speaker 10: Since twenty nineteen.
Speaker 12: So twenty five is going to be a huge bounce
Speaker 12: back for the theatrical industry. We're right now forecasting between
Speaker 12: nine point five and ten billion dollars in box office
Speaker 12: in twenty five and in twenty six we have a
Speaker 12: ceiling of eleven billion dollars. That benchmark that this industry
Speaker 12: hit in the latter half of the twenty tens.
Speaker 8: What is spending like when you're actually going to the theater?
Speaker 10: I'm sorry, what is suspending like?
Speaker 5: Yeah, people like embracing it wholeheartedly. How much of margin
Speaker 5: is accrued to those that are running them movies as
Speaker 5: well as making them.
Speaker 12: I think you're seeing a lot more embrace from movie
Speaker 12: theaters right now in reinvesting back in their theaters to
Speaker 12: make sure that that experience is as perfect as possible
Speaker 12: for the audiences. Let's face it, the technology we have
Speaker 12: at home is great, so the theatrical experience has really
Speaker 12: invested a lot in making that experience, either inside of
Speaker 12: the auditorium in advancements inside and sound, or in the
Speaker 12: lobbies with alcoholic beverages or expanded menus, in making that
Speaker 12: more of that experience, and I think audiences are responding
Speaker 12: to that. You listen to some of those conference calls
Speaker 12: that Paul was saying a second ago. On the movie
Speaker 12: theater side, you're seeing huge margins on the spending side,
Speaker 12: on food and beverage that's been a big, big uptick
Speaker 12: since the pandemic, and formats like premium format that means
Speaker 12: our friend over at Imax or at a Dolby or
Speaker 12: other of those companies with a higher ticket price. Consumers
Speaker 12: are looking for that to have the best possible experience
Speaker 12: at the movies.
Speaker 5: The thing is for a Gladiator two or for a Wicked.
Speaker 5: These movies in particular cost a lot to make, and
Speaker 5: I'm interested as to the marketing spend that's gone with
Speaker 5: Wicked or the shit technology effort that was needed with
Speaker 5: a Gladiator two. Are they making that money back? And
Speaker 5: then some how much are they managing to crack the
Speaker 5: code that the movie that they spend a lot on
Speaker 5: is the one that they bring in a lot of
Speaker 5: money on.
Speaker 12: Carolyn, What you just said right now, I think is
Speaker 12: a big reason why these studios are highlighting and emphasizing
Speaker 12: a theatrical release. The more release windows you have in
Speaker 12: different formats, the more of a possibility you have to
Speaker 12: break even and make more money over the lifetime of
Speaker 12: a film. If you go to streaming too early, or
Speaker 12: if you only did streaming, you only.
Speaker 10: Have one revenue cycle.
Speaker 12: There one small window to get there with the theatrical release,
Speaker 12: you could have three months of success at the box
Speaker 12: office and from there have that amplify your marketing when
Speaker 12: it goes into streaming to have that second dip in
Speaker 12: the revenues. So having a long life cycle for films
Speaker 12: is crucial, and that's why I think a lot of
Speaker 12: movies and a lot of studios have gone back to
Speaker 12: this windowing a theatrical first and streaming second to make
Speaker 12: sure they can hit the numbers they need for their shareholders.
Speaker 7: Dane talk to us about China.
Speaker 2: Before the pandemic, China was rivaling North American terms of
Speaker 2: total box office.
Speaker 7: It was really a gold mine for Hollywood. Is that
Speaker 7: still the case.
Speaker 12: You know, I don't think it has as much of
Speaker 12: a role as it did in the pre pandemic era. Obviously,
Speaker 12: the pandemic raised a lot of question marks on who
Speaker 12: was going to be the box office king. But really
Speaker 12: from the studios, what we've seen is less of an
Speaker 12: emphasis to make sure that they lock down that Chinese release.
Speaker 12: It's just such a gamble, Paul. You don't know what
Speaker 12: you're going to get from a release in that market.
Speaker 12: If you get it, it's great. A movie like the
Speaker 12: third installment of the Venom series is doing fantastically in
Speaker 12: China right now, but it's far from a guarantee. I
Speaker 12: think studios agree that having a strong domestic release and
Speaker 12: the reliable turnout from overseas audiences and markets in Europe,
Speaker 12: Latin America and in other markets in Asia, that's still
Speaker 12: the winning formula for most movies.
Speaker 8: What about AI and whether it will be a doctor next.
Speaker 12: Year huge talking point, right I think that's still up
Speaker 12: in the air. There's a lot of things that we
Speaker 12: need to figure out, and what that means for actors,
Speaker 12: what that means in labor relations, a big part of
Speaker 12: the strikes last year. We're around these questions. Like in
Speaker 12: many industries, AI has a lot of potential. I'm not
Speaker 12: sure it's a reality just yet.
Speaker 5: I have so much more to debate on all of that.
Speaker 5: We thank you so much for joining us. Daniel Laurier,
Speaker 5: Senior Vice president of Content Strategy and editorial director at
Speaker 5: The Box Office Company, making us all want to go
Speaker 5: out and watch some movies.
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