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Speaker 1: Sonia Martin joins us. She's head of FX and Monetary
Speaker 1: policy at DZ Bank, and she joins us here. Sonya,
Speaker 1: thank you so much for joining us here.
Speaker 3: Is there a.
Speaker 1: Bearish call for this US dollar anywhere in sight?
Speaker 4: Oh?
Speaker 5: Really, to be honest, I think it's a bit of
Speaker 5: a one way straight for the time being. I'm hoping
Speaker 5: we're going to get a bit of a breather over
Speaker 5: the holidays season. So we're lucky markets are now and
Speaker 5: I sort of wait and see stands. You know, there's
Speaker 5: been a lot of news to digest from the Trump election,
Speaker 5: but now it's kind of time to see what's going
Speaker 5: to have once he actually moves into the Oval office again.
Speaker 5: So maybe we're going to get able to breather. I
Speaker 5: don't really think that euro dollar it has a chance
Speaker 5: to really rise here. It's too much positive news for
Speaker 5: the US dollar in the pipeline and really frankly speaking,
Speaker 5: also too many bad news for the euro in the pipeline,
Speaker 5: So I still think we're heading down in euro dollar.
Speaker 4: So when you're looking specifically at the Bloomberg Dollar Spot Index,
Speaker 4: I mean, it's fall on the levels roughly around two
Speaker 4: weeks ago, but we still seen dollar strength in the
Speaker 4: last couple of weeks too. So when you're talking about
Speaker 4: especially the Trump administration coming in, particularly if they end
Speaker 4: up going harder faster on tariffs, what are the scenarios
Speaker 4: for the US dollar.
Speaker 5: Well, I think looking at the first three, maybe six
Speaker 5: months of the new presidency, we're probably going to look
Speaker 5: at a stronger dollar because what's going to happen is
Speaker 5: Trump is going to start talking about terrors, and what
Speaker 5: that means is more inflation. I mean, I know that
Speaker 5: a lot of the Trump voters don't understand that they're
Speaker 5: the ones who are going to end up paying for
Speaker 5: those terrorists, but they will end up paying for them.
Speaker 5: And if Trump comes true and is promised to levy
Speaker 5: twenty five percent of importan goods from Mexico, the Americans
Speaker 5: will be paying a lot of money for their cars.
Speaker 5: So this is inflationary and that means that the window
Speaker 5: for the FED to cut rates will be closing soon,
Speaker 5: and this is all done a positive and of course
Speaker 5: then we also have a strong growth boost from tax cuts.
Speaker 5: All that combines to make a strong doll I think
Speaker 5: further down the line there are risks, but they're not
Speaker 5: going to matter so much in the first half of
Speaker 5: next year.
Speaker 1: Sonia, What are the currency markets telling you about Federal
Speaker 1: reserve policy decisions?
Speaker 6: Here?
Speaker 1: Does the currency markets that they're pricing in more FED
Speaker 1: rate cuts?
Speaker 5: It's less. I mean it has sort of been become
Speaker 5: less since the Trump of election victory, because you know
Speaker 5: there is that window of opportunity that's going to be closing.
Speaker 5: Right now. We're having a debate in the market about
Speaker 5: whether they should be cutting in December at all, which
Speaker 5: I think they should because their window is still open.
Speaker 5: This is the time to do it, because that window
Speaker 5: will closed, so they will be cutting, and I think
Speaker 5: the market is sort of adjusting to having them cut
Speaker 5: less for less long. So we're looking at the spring
Speaker 5: of twenty twenty five and that'll probably be it. And
Speaker 5: so this is interesting because a lot of other central
Speaker 5: banks will still be in the middle of their raid
Speaker 5: cut cycle. So it's going to open up a bit
Speaker 5: of a divergence when you look at MONTO policy next year.
Speaker 4: It's interesting too, because, like you were saying, you have
Speaker 4: other central banks in the middle of cutting cycles. But
Speaker 4: then when you think about the Bank of Japan completely
Speaker 4: on a different course just given their economy and just
Speaker 4: looking at the end, I mean, that was breaching the
Speaker 4: one fifty level earlier, especially when you're thinking about what
Speaker 4: that means with the latest inflation data in Japan as well,
Speaker 4: and especially boosting some of the likelihood that the Bank
Speaker 4: of Japan will continue to raise reads, especially when it
Speaker 4: comes to that meeting in December. So give us kind
Speaker 4: of the dynamics between when you're looking at the dollar
Speaker 4: versus say, what's happening with the end, because we've seen
Speaker 4: that really track closely with S and P five hundred futures.
Speaker 5: Well, I think the n is probably one of the
Speaker 5: few currencies that has an opportunity here to beat the
Speaker 5: dollar next year, and that is simply because the boj
Speaker 5: has really changed its course. I mean, the raid hikes
Speaker 5: will cut, for the rate taps will come. But in
Speaker 5: the grand scheme of things, what really matters is that
Speaker 5: the Bank of Japan is you know, proceeding with its
Speaker 5: quantitative tightening, they're reducing their balance sheet. It's a big
Speaker 5: balance sheet. It's a lot of reducing to be done,
Speaker 5: and that is really going to make the difference, I
Speaker 5: think for the currency market. So we're looking at doll
Speaker 5: a en to fall, maybe less aggressively than it might
Speaker 5: have had Harris on the election, but it will fall.
Speaker 5: So yen will rise against you just look at the
Speaker 5: doll yen against the two year yield spread on the
Speaker 5: tenny years. But you can see there as well, there's
Speaker 5: a closed correlation and that's definitely pointing for dollien to fall.
Speaker 1: The European Central Bank has been cutting rates. The expectations
Speaker 1: they will continue to cut rates. To what degree do
Speaker 1: you think the ECB will be dubbishyer going forward and
Speaker 1: what does that mean for currencies?
Speaker 5: Well, I think the c to be has every reason
Speaker 5: to be quite dubbish. I mean there's currently speculation whether
Speaker 5: they might cut rates by fifty basis points at the
Speaker 5: next meeting. Again, I'm not a big fan of that speculation.
Speaker 5: The use to be has reasons to cut they can
Speaker 5: send it up message and basically tell the market we
Speaker 5: will be continuing will continue to cut twenty five basis
Speaker 5: points at every meeting. I don't really see the need
Speaker 5: to do fifty simply because there are still inflationary concerns
Speaker 5: lingering in the background, and you know, doing twenty five
Speaker 5: and sending a dover signal seems to me a safer
Speaker 5: course of action. I think the interesting thing with the
Speaker 5: ECB will be that once the Fed stops cutting in
Speaker 5: late spring, the ECB will continue and I think that'll
Speaker 5: probably end up cutting rates at least throughout the summer
Speaker 5: into the autumn of twenty twenty five, and that's negative
Speaker 5: for your dollar as well.
Speaker 4: Which currency is do you think will be most affected
Speaker 4: and most vulnerable to trade tensions with the US depending
Speaker 4: on what happens with tariffs.
Speaker 5: Well, I mean the euro is obviously one big candidate.
Speaker 5: But the problem is there are currencies that are affected,
Speaker 5: you know, on various levels. So you look at for
Speaker 5: the Eastern European currencies, right, I mean, for them, the
Speaker 5: growth showdown in Germany is going to be a big problem.
Speaker 5: We have central banks that are cutting rates quite aggressively
Speaker 5: as well. A Mexican Paesel obviously is a candidate for
Speaker 5: losses and despite its current surprising. I think resilience, but
Speaker 5: you know Trump isn't an office yet, so there's more
Speaker 5: to come on that front. Then you have countries where
Speaker 5: you can get the double wharemy impact of you know,
Speaker 5: slower growth in the in Europe, maybe also slow growth
Speaker 5: in China, so you know, so it's it's I think
Speaker 5: for many currency is going to be a very challenging year.
Speaker 5: There will be a number of currencies that will you know,
Speaker 5: actually underperform and already weak euro.
Speaker 1: So Sonya. It's just kind of given that economic backdrop,
Speaker 1: where do you see the best value out there in
Speaker 1: the currency markets?
Speaker 5: Well, I think again, very few that are really interesting.
Speaker 5: I think again Japan. A bit of a bit of
Speaker 5: a timing issue with Japan. Obviously, we've seen last year
Speaker 5: that it can go horribly wrong. When the boj did
Speaker 5: it's turn around, the market kind of didn't react very much,
Speaker 5: and then we had this speculative attack on the end.
Speaker 5: But I like the end. I like Australia and New Zealand.
Speaker 5: The Aussies are not in any rush to cut rates.
Speaker 5: They will be cutting rates next year, but in a
Speaker 5: much you know, much later than anyone else. I quite
Speaker 5: like New Zealand. The economy's going to look quite strong
Speaker 5: the second half the year, but to be honest, after
Speaker 5: that the ground gets pretty fit.
Speaker 1: Excellent, Sonia, thank you so much. We appreciate that, Sonya Martin.
Speaker 1: She is the head of FX and Monetary Policy at
Speaker 1: DZ Bank over there in Germany.
Speaker 2: You're listening to the Bloomberg Surveillance Podcast. Catch us live
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Speaker 1: Nannika gup That joins us. She's a director of macro
Speaker 1: economic Research, Equities and Commodities at Wisdom Try. She is
Speaker 1: based in London. Anita, thanks so much for joining us here.
Speaker 1: Can we step back and can you give us a
Speaker 1: sense of just how the European economy is playing out
Speaker 1: these days?
Speaker 7: Yes, Paul, you know, i'd light you mentioned the story
Speaker 7: here in Europe is very different to what we've been
Speaker 7: witnessing in the US. Just this week we've had you know,
Speaker 7: much weaker release of PMI data. What surprised me was
Speaker 7: man normally manufacturing was weak, which has been you know,
Speaker 7: a theme over this past year, but we've also seen
Speaker 7: weakness and the services PMI data now for Europe, which
Speaker 7: is again very different to the US. The European consumer
Speaker 7: has actually been a big saver. So while you know,
Speaker 7: US consumers have been eroding their savings, European consumers have
Speaker 7: been hoarding their savings and that remains a key question
Speaker 7: mark of you know, could we reach a point where
Speaker 7: the European consumers starts to spend and that could be
Speaker 7: the new catalyst. However, what we're also seeing is, you know,
Speaker 7: consumer confidence numbers across European consumers remain very weak, and
Speaker 7: so that catalyst is unlikely to be triggered or you know,
Speaker 7: yield any tailwinds for the European economy because the confidence
Speaker 7: just isn't there. So unlike the US, where you continue
Speaker 7: see very strong spending by the consumer and that's supporting
Speaker 7: the economy, it's a very different picture here and it's
Speaker 7: unlikely to change until we see you know, some stability
Speaker 7: in the economic as well as the political front.
Speaker 4: And when you're talking about the economic front too, just
Speaker 4: the latest data on the Eurozone seeing inflation accelerating beyond
Speaker 4: when you're thinking about the ECB's two percent targets similar
Speaker 4: to obviously the federal reserves goal as well. What does
Speaker 4: that mean for ECB cuts, because looking at the swaps market,
Speaker 4: they're still anticipating that there's going to be more cuts
Speaker 4: at their next meeting next month.
Speaker 7: That's right, you know, the the inflation numbers, uh, you know,
Speaker 7: give out this impression that inflation is actually much higher.
Speaker 7: But beneath the surface, you are seeing weakness continue to
Speaker 7: creep in and that that will tell out, that will
Speaker 7: show that, you know, in the following quarters we will
Speaker 7: see inflation coming down further and that continues to feed
Speaker 7: into the narrative the ECB is likely to remain extremely dubbish.
Speaker 7: We've had very strongly opposing views. Just this week. We've
Speaker 7: had it's about Schnabel tilt very hawkish, while we've had
Speaker 7: you know, a Gallao, you know, tilt on the extreme
Speaker 7: dubbish narrative saying that you know, we could go as
Speaker 7: aggressive as fifty, whereas Schnabel's saying, you know, we must
Speaker 7: take a much more cootious path. The market still believes
Speaker 7: that with such a backdrop of anemic growth alongside inflation
Speaker 7: that is cooling, you know, it just paves the way
Speaker 7: for the ECB to go ahead with further interest rate cards.
Speaker 7: So we're likely to achieve one point seventy five for
Speaker 7: the ECB policy rate by the summer of twenty twenty five.
Speaker 1: Anika. Earlier this month, we Americans we elected ourselves a
Speaker 1: new president. We've got a new Republican Congress about to
Speaker 1: take office in January. How did that change maybe your
Speaker 1: outlook for just your economic forecasts across Europe?
Speaker 7: If at all, it has a very big impath, and
Speaker 7: I think that has been the key driver of sentiment
Speaker 7: across the Eurozone economy. You know, first and foremost, we
Speaker 7: are likely to see an escalation of tariffs you know,
Speaker 7: being placed on the Eurozone economy, and that just raises
Speaker 7: further uncertainty, you know, for how trade is likely to
Speaker 7: be impacted going to the impact of tariffs. One saving
Speaker 7: factor has been the Europe, which continues to remain weak
Speaker 7: and obviously, with the easy be doing much of the
Speaker 7: heavy lifting, the euro is likely to remain even weaker,
Speaker 7: which will provide a bit of a catalyst for the exporters,
Speaker 7: but not enough to outweigh you know, weaker demand alongside
Speaker 7: the impact of higher tariffs.
Speaker 4: And when we talk about an escalation potentially when it
Speaker 4: comes to those tariff threats. What products in particularly, or
Speaker 4: if you're thinking about more across industries could be most
Speaker 4: impacted in Europe and then end up being more expensive
Speaker 4: for consumers.
Speaker 7: Absolutely, it's you know a lot of the consumer discrustion
Speaker 7: names the well known uh you know, companies that are
Speaker 7: exporting in the luxury sector. They're likely to be impacted.
Speaker 7: The auto industry, which remains key for Germany, uh, you know,
Speaker 7: as well as France. These companies are also likely to
Speaker 7: be to come under a severe threat and that remains
Speaker 7: the overarching concern for the Euro's in economy. It's so
Speaker 7: dependent on exports, even more in comparison to Japan, and
Speaker 7: you know, a weaker Euro is not enough to offset uh,
Speaker 7: you know, the weakening demand backdrop alongside this this impact
Speaker 7: of higher tariffs.
Speaker 1: Gold. What do you think about gold here? Anika?
Speaker 7: We still like gold, you know, I know that we've
Speaker 7: had an immense cooling and crisis, but you have to
Speaker 7: keep in mind we've had a very sharp, strong rally
Speaker 7: in gold. Geopolitical risks, if anything, have not gone away.
Speaker 7: I know that President Electroump has claimed that he will
Speaker 7: end the war. But if you you know, the observations
Speaker 7: that I'm noticing are, if anything, we've had a ramp
Speaker 7: up of the war between Russia and Ukraine, and we're
Speaker 7: also seeing tensions in the Middle East escalate. There is
Speaker 7: you know, a cease five being called, but they are
Speaker 7: contingent on a number of conditions which if you know,
Speaker 7: any of the two parties violate, it will result in
Speaker 7: extreme escalation of of those tensions. So that remains a
Speaker 7: key support factor for gold. The second big one will
Speaker 7: be physical buying by the central banks that remains you know,
Speaker 7: front and center. ETF buying in gold or oriented EDCs
Speaker 7: has resumed, remains very strong in China as well as Europe,
Speaker 7: and I think those will be the structural drivers for
Speaker 7: gold going forward.
Speaker 4: What about when it comes to the ten year treasury yield?
Speaker 4: The low in September was around three six right now
Speaker 4: it's around four to two, and of course the high
Speaker 4: this year is around four to seven. And what do
Speaker 4: you think is most important for traders in those levels
Speaker 4: as far as those thresholds mean for resistance as well support.
Speaker 7: Yeah, I mean, it really all boils down to the
Speaker 7: US elections and the results of the US elections. I mean,
Speaker 7: you know, since we've seen Trump coming in taking power,
Speaker 7: you know, most of his mandate is extremely inflationary, and
Speaker 7: that just tells us that yields are likely to remain
Speaker 7: higher for longer. You know, the expansion of fiscal policy
Speaker 7: again points in the direction of yields remaining higher for longer,
Speaker 7: and that just tells us that, you know, the expectation
Speaker 7: of federiate cuts have now declined, and at the same time,
Speaker 7: we're likely to have treasure yields remaining high, and that
Speaker 7: could pressure equities going into twenty twenty five.
Speaker 1: Nika, thank you so much. We appreciate that. Anika Gupta,
Speaker 1: she's the director of macro Economic Research, Equities and Commodities
Speaker 1: Group over there at Wisdom treat She is based in London.
Speaker 1: We appreciate getting a few minutes of her time.
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 1: You know the economic data Jesse the macroeconomic data that
Speaker 1: we see on Eco go that we use all the time.
Speaker 1: I mean, GDPs pretty darn solid, inflation coming down, maybe
Speaker 1: not where the Fed exactly wants to be coming down.
Speaker 1: The retail sales numbers can seem so strong, pretty darn strong,
Speaker 1: but you still get that sense that that K shaped
Speaker 1: economy still out there, not everyone is participating in it
Speaker 1: kind of begs a question, how are the small businesses
Speaker 1: doing out there in the US economy. Gene Marx can
Speaker 1: help us out on that. Gene Marxy is the founder
Speaker 1: of the Marx Group. Hey, Gene, talk to us about
Speaker 1: kind of your clients, your small business owners. How are
Speaker 1: they doing out there?
Speaker 6: First of well, good morning, And I can tell you
Speaker 6: that small businesses themselves, when you try to talk about
Speaker 6: their you know, how they're generally doing, it's a little
Speaker 6: tough to generalize, only because there's thirty three million small businesses,
Speaker 6: you know, guys.
Speaker 3: I mean there's you know, all across the country.
Speaker 6: The businesses themselves make up half of our GDP, half
Speaker 6: of our employees. When I you know, serving my clients
Speaker 6: and my readers and my community kind of depends on
Speaker 6: the industry that they're in or It depends on the
Speaker 6: region that they're in.
Speaker 3: I mean, some some are stronger than others.
Speaker 6: But if you want to do like just a general take,
Speaker 6: I would say that twenty twenty four has been a
Speaker 6: challenging year for most small businesses.
Speaker 3: You know. I just did a piece for the Philadelphia.
Speaker 6: Inquiry and I interviewed about a dozen small businesses in
Speaker 6: the Philadelphia area, retailers, distributors, whatnot, how they were preparing
Speaker 6: for the holiday season and how twenty twenty four has
Speaker 6: been very non you know, very anecdotal, and every single
Speaker 6: one of them across the board had said that they
Speaker 6: were hoping that the holidays were going to be saving
Speaker 6: them this year, because they've been, you know, they have
Speaker 6: been struggling. So again, tough to generalize because again some
Speaker 6: businesses have done better than others. But if you were
Speaker 6: to do that for the thirty plus million small businesses,
Speaker 6: you know, I would sum up twenty twenty four as
Speaker 6: as a challenging year. Also, one final thing, you know,
Speaker 6: I wrote a piece for The Hill where I summed
Speaker 6: up a bunch of surveys that were taken by Bank
Speaker 6: of America and Verizon and you know other places for
Speaker 6: the National Federation of Independent Businesses, those surveys also found
Speaker 6: the same, you know, the same thing. You know, Revenues
Speaker 6: themselves were flat or even a little bit down, and
Speaker 6: profits themselves were also flat among those surveys.
Speaker 3: And this is through September thirtieth of twenty twenty four.
Speaker 3: So I hope that.
Speaker 6: Gives you some indication as to you know, where their
Speaker 6: heads are at right now.
Speaker 4: To your point, Jim, when it comes to those small businesses,
Speaker 4: they're typically highly indebtitive and also really sensitive to higher
Speaker 4: interest rates. So especially over the past few years, as
Speaker 4: the FED was really aggressive with raising borrowing costs, they
Speaker 4: were obviously more reliant on kind of cheap labor as well.
Speaker 4: In addition to what's happening, when you think about rate
Speaker 4: cuts potentially relieving them, but also we might not see
Speaker 4: as aggressive rate cuts next year, but also the other
Speaker 4: caveat too, when you have smaller companies that are more
Speaker 4: dependent on cheaper labor. How will mass deportations from the
Speaker 4: Trump administration end up affecting small businesses to.
Speaker 6: That end, that's a great question, Jess and I get
Speaker 6: asked that question a lot about mass deportation. So you know,
Speaker 6: my understanding is and you guys correct me if you
Speaker 6: think this is wrong. But the idea between the Trump
Speaker 6: administration's mass deportation is to deport illegal or undocumented immigrants.
Speaker 3: So when you look at.
Speaker 6: It face value, that should have no impact on small
Speaker 6: businesses because why would small businesses be hiring illegal or
Speaker 6: undocumented people? Right, So, you know, on the one hand,
Speaker 6: you have, you know, some small.
Speaker 3: Businesses that are you know, you're making sure they're doing
Speaker 3: what they need.
Speaker 6: To do among the law, and they are not hiring
Speaker 6: undocumented immigrants, and most of my clients are that way.
Speaker 6: But then you do have some small businesses that are
Speaker 6: practicing that I'm.
Speaker 3: Not quite sure, you know, what the impact will be
Speaker 3: on them.
Speaker 6: And I'm not quite sure that most of us who
Speaker 6: are complying with the law care what the impact would
Speaker 6: be on those businesses, because if they are hiring undocumented
Speaker 6: or illegal people that tend to be deported, again, they
Speaker 6: were breaking the law from the very beginning, and they're
Speaker 6: going to have to start getting legal if they want
Speaker 6: to compete fairly. So you know, that's the impact that
Speaker 6: I see for those clients of mine that are complying
Speaker 6: with the law and making sure that their employees have
Speaker 6: the right documentation, they're not going to see any impact from.
Speaker 3: This type of thing.
Speaker 6: But for those companies that have not been complying with
Speaker 6: the law, yeah they'll be impacted by it. But then again,
Speaker 6: maybe they should be impacted by it if they're hiring
Speaker 6: people that don't have the right documentation.
Speaker 1: Another aspect of the incoming Trump administration, at least at
Speaker 1: this point in terms of speculation, is potentially lower taxes.
Speaker 1: Give us a sense of what I I think that's
Speaker 1: going to be good for the small business owner. How
Speaker 1: big of an issue is it?
Speaker 3: Massive?
Speaker 6: So I've been reading if you haven't figured it out
Speaker 6: in front of you guys watching me on YouTube, I'm
Speaker 6: actually a certified public accountant, so that should come as
Speaker 6: no surprise to anybody when you look at this face.
Speaker 6: So taxes has been a big issue for us this year,
Speaker 6: and next year is going to be a tax arm again.
Speaker 6: I mean there's going to be such a huge change
Speaker 6: in taxes that impacts small businesses and all of us individually.
Speaker 3: For the small business owner.
Speaker 6: There is one giant well there are a few, but
Speaker 6: there's one giant tax deduction that is hopefully going to
Speaker 6: be preserved it's the qualified Business income tax deduction. That's
Speaker 6: where if you want to pass through business. Most businesses
Speaker 6: are passed through, which means they're anes corporation or a partnership.
Speaker 6: So whatever money you make at the business level passes
Speaker 6: through to your individual tax return. Well, right now, because
Speaker 6: of the twenty seventeen Tax Cuts and Jobs Act, we
Speaker 6: get to deduct twenty percent of that income.
Speaker 3: Before it hits our personal return.
Speaker 6: So if I make a thousand bucks this year, only
Speaker 6: eight hundred bucks gets taxed at the personal the individual level.
Speaker 6: That provision is expected to expire at the end of
Speaker 6: twenty twenty five.
Speaker 3: You're going to have a huge impact on the small.
Speaker 6: Businesses that have enjoyed that deduction since twenty seventeen. Now,
Speaker 6: with the President Electron coming into office and hopefully with
Speaker 6: the Congressional Bank Akee backing, he'll have the ability to
Speaker 6: even either extend or make that deduction permanent. That will
Speaker 6: have a huge impact on many small businesses. Other deductions
Speaker 6: for research and development and also for the purchase of
Speaker 6: capital equipment using bonus appreciation. Those deductions have either expired
Speaker 6: already or they've been going away. They're expected to be
Speaker 6: restored one hundred percent under the Trump administration and a
Speaker 6: GOP Congress, and that also will be a huge tax
Speaker 6: benefit to businesses. So you know, I have to say,
Speaker 6: you know, during the election, when I was looking at
Speaker 6: my personal tax bills as a business owner, it would
Speaker 6: have gone up significantly, if you know, if Vice President
Speaker 6: Harris had elected. But now you know the way the
Speaker 6: election turned out, I think myself and a lot of
Speaker 6: small business owners will continue to see lower taxes. And
Speaker 6: obviously it's a huge expense for us, so the lower
Speaker 6: we can keep it.
Speaker 3: The better.
Speaker 1: All Right, We'll see you pays for it. Gene Marx,
Speaker 1: thank you so much. We appreciate it. Gene Mark's, founder
Speaker 1: of the Marx Group. There.
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 2: starting at seven am Eastern on applecar Play and Android
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Speaker 2: Bloomberg terminal.
Speaker 1: Let's check in with Angie Solanki. She is a national
Speaker 1: director of Retail Services for the US for Colliers. Angie,
Speaker 1: thanks so much for joining us here on this Black Friday.
Speaker 3: Just stepping back.
Speaker 1: Do you think the consumers in a position to spend
Speaker 1: here this holiday season.
Speaker 8: Well, I'm here actually in southern California, at a shopping
Speaker 8: center in a suburban market. So I was actually quite surprised.
Speaker 8: This is not something I do on a routine basis.
Speaker 8: I think the last time I actually came to a
Speaker 8: Black Friday at five in the morning was about twenty
Speaker 8: years ago. I think that was Kymart, I don't remember.
Speaker 8: But nonetheless, here I am. I'm actually quite surprised. This
Speaker 8: is a line in front of Target. I think you
Speaker 8: had just mentioned it's not that long. But when I
Speaker 8: got here, Cole's was actually opened an hour before, so
Speaker 8: Target hasn't opened yet. It opens at six. I went
Speaker 8: into Cole's and I was pleasantly greeted or surprised because
Speaker 8: I got a five dollars cash Cole's cash card and
Speaker 8: walked in and they said, you know, I was pretty
Speaker 8: impressed with the sales. Fifty percent off on toys, fenty beauty,
Speaker 8: and Sephora was thirty percent off. So there are some
Speaker 8: really great deals right now, and consumers are leaning into
Speaker 8: this all right.
Speaker 1: And Angie is reporting from East Vale, California, that is
Speaker 1: east of Los Angeles, really east of Anaheim, California, so
Speaker 1: right there and showing some lines there. That's pretty cool.
Speaker 4: Yeah, No, it definitely is, and especially because since you're
Speaker 4: on the other side of the coast from US, obviously
Speaker 4: it's still pretty early there, right before six am. So
Speaker 4: it's interesting too when you're talking about some of the
Speaker 4: different sales that you're seeing. How aggressive do you think
Speaker 4: some of the promotions are going to be?
Speaker 8: Oh, I think they're going to be pretty spot on
Speaker 8: in terms of, you know, the deep discounts. So what
Speaker 8: we're seeing is leading up to Black Friday it was
Speaker 8: twenty to thirty percent. As of today this morning, I'm
Speaker 8: seeing forty and up to seventy percent. So we have
Speaker 8: a really short period of time this year, as we
Speaker 8: all know, and it's really condensed. But you know, the
Speaker 8: consumer today is really targeted in what they're doing, So
Speaker 8: they're going out there and they are finding some of
Speaker 8: these deep discounts to really benefit because they are, you know,
Speaker 8: budget conscious right now.
Speaker 1: So that's kind of where I wanted to go to, Angie.
Speaker 1: What's your view of the consumer here? The retail sales
Speaker 1: numbers we see are are pretty solid inflations coming down.
Speaker 1: Employment is you know, four point one percent. Very low
Speaker 1: wage gains seem pretty solid, but we know that there's
Speaker 1: this k shape economy out there where a lot of
Speaker 1: folks struggling. Quite frankly, what are you seeing in the numbers?
Speaker 8: Yeah, no, I would agree with you. But you know
Speaker 8: what I'm really interested in monitoring right now is these
Speaker 8: deep discounts. So what consumers are doing is they're cautious,
Speaker 8: but they're very strategic in how they're buying, where they're buying,
Speaker 8: what they're buying. So they may not be buying as
Speaker 8: much as they have in prior years, but what they
Speaker 8: are doing is they're buying fewer items, but that are
Speaker 8: very thoughtful that they're providing to either their families or
Speaker 8: their loved ones. So I think it's much more strategic
Speaker 8: in terms of how they're going about this shopping season.
Speaker 8: The other thing I'd say is there's a lot of
Speaker 8: fomo out there. I am really surprised the shopping bags
Speaker 8: are still all around. I was earlier this week. I
Speaker 8: went to Disney Downtown Disney and it was just packed
Speaker 8: with shoppers buying, you know, all the pre block Friday
Speaker 8: sale items. So if people are still out there buying.
Speaker 4: What specific products. Do you think when you're thinking more
Speaker 4: about electronics versus apparel, where do you see people spitting
Speaker 4: the most?
Speaker 8: Yeah, definitely. I think you know, you're not going to
Speaker 8: see on the high end, high price point electronics, but
Speaker 8: like the AirPods, things of that nature. Look, I just
Speaker 8: bought these. These are my first and only metaglasses that
Speaker 8: I wanted to test out, and they were on sale.
Speaker 8: You know, it was like, hey, if I'm going to
Speaker 8: get thirty percent off, might as well try it. But
Speaker 8: my point is that I think you're going to start
Speaker 8: seeing you know, more of the kind of the lower
Speaker 8: price point items on the electronics side, more on beauty.
Speaker 8: I would say, I think people are a bit you know,
Speaker 8: flushed out on apparel, so not as much. I think
Speaker 8: shoes are definitely going to be on the higher end,
Speaker 8: so you're going to see a lot of people buying
Speaker 8: more on the shoe side, Jess.
Speaker 1: We had Dana Tellsley from Tellsy Advisor in earlier this
Speaker 1: week and she said, the go to item is the
Speaker 1: Birkenstock closed hoe shoe, which I meet they thought of
Speaker 1: John Tucker, right.
Speaker 8: I mean.
Speaker 4: The top of his list along with that hammer exactly.
Speaker 1: Yes. Yeah, So Angie. So, you know, we saw when
Speaker 1: Walmart reported that they said they had they saw a
Speaker 1: lot of strength coming from some of their customers with
Speaker 1: incomes north of one hundred thousand dollars. That surprised a
Speaker 1: lot of people. So it seems like people are looking
Speaker 1: for just a lot of folks are just looking for
Speaker 1: value out there.
Speaker 8: It's all about the value game right now. It's you know,
Speaker 8: I would say, you know, mid middle income and below,
Speaker 8: they're all out there looking for that that I think
Speaker 8: is the name of the game because you have to
Speaker 8: stop and think about it. You know, for those that
Speaker 8: are you know, in one hundred thousand dollars range in
Speaker 8: one hundred thousand annual income and above, really their spend
Speaker 8: is allocated very differently. So they're going to be traveling,
Speaker 8: it's services, they're going to be looking at, you know,
Speaker 8: actual product purchase. So you know, their spend is just
Speaker 8: allocated differently from from others.
Speaker 4: What about when it comes to shipping in potential product
Speaker 4: delays this year, because you're just mentioning how there's a
Speaker 4: few shorter days ahead of the Christmas holiday.
Speaker 8: Yeah, you know what's really interesting to me is just
Speaker 8: talking about shipping in delays. We've become so accustomed to
Speaker 8: getting everything immediately the minute we hit the buy button.
Speaker 8: So I think we're going to see a surge and
Speaker 8: in store. So that's our prediction, is that we're going
Speaker 8: to definitely see much more of a surge in terms
Speaker 8: of people going into stores and shopping, and hopefully for
Speaker 8: our retailers that's a great gain because maybe they can
Speaker 8: see an upside in a second purchase.
Speaker 1: All right, Anjie, thanks so much for joining us.
Speaker 8: A J.
Speaker 1: Slank joining us there. She is at Colliers covering the
Speaker 1: retail space. She's right now reporting outside a retail store
Speaker 1: to talk about the retail of business. She's in Eastville, California,
Speaker 1: in front of a Target and Dick's Sporting store Target
Speaker 1: that has palm trees.
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