WEBVTT - Smead's Scherrer on Amazon: Won't Be the Death of Retail(Audio)

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<v Speaker 1>Global business news twenty four hours a day, if Bloomberg

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<v Speaker 1>dot Com, the radio, plus Globo Labs and on your radio.

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<v Speaker 1>This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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<v Speaker 1>Charlie Pellet. We are well off our session lows, with

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<v Speaker 1>the Dow Jones Industrial Average now down two hundred fifty

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<v Speaker 1>points as the selling continues. The Dow is down one

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<v Speaker 1>point four percent at seventeen thousand, one hundred fifty after

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<v Speaker 1>shocks of the UK's vote to leave the European Union

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<v Speaker 1>continued to reverberate. SMP five hundred index down thirty five

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<v Speaker 1>to two thousand one to drop there of one point

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<v Speaker 1>eight percent and has stacked down one hundred eleven points

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<v Speaker 1>the decline of two point four percent. The tenure up

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<v Speaker 1>thirty one thirty seconds yield one point four or five percent,

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<v Speaker 1>Gold up seven forty ounce the thirteen twenty nine, a

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<v Speaker 1>gain of six tenths of one percent, and crude oil

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<v Speaker 1>down a dollar forty six sixty five a barrel and

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<v Speaker 1>dropped there of two point one percent. I'm Charlie Pellett.

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<v Speaker 1>That's a Bloomberg Business flie. Thank you. You're listening to

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<v Speaker 1>Taking Stock with Kathleen Hayes and Pim Fox on Bloomberg Radio.

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<v Speaker 1>We're gonna take a look at the stock marker shortly.

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<v Speaker 1>First though, we want to take a look at our

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<v Speaker 1>e t F report, brought to you by National Realty

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<v Speaker 1>Providers of one Satisfaction Guaranteed New York City Realty Investments.

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<v Speaker 1>See them at n r i a dot net and

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<v Speaker 1>with our e t F report our own Katherine Cowdery.

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<v Speaker 1>The gold rushes on after the UK voted to withdraw

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<v Speaker 1>from the European Union, gold rally the most since the

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<v Speaker 1>height of the two thousand and eight global financial crisis,

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<v Speaker 1>and that rally was reflected in the e t F

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<v Speaker 1>industry g l D the spider gold shares advance and

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<v Speaker 1>more than three billion dollars worth of shares were traded

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<v Speaker 1>on Friday, about four times a daily average. Bloomberg Intelligence

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<v Speaker 1>analist Eric Beltuna says it's been a good year for

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<v Speaker 1>g l D. G l D is now up to

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<v Speaker 1>about eleven billion influence. That's double any other e t

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<v Speaker 1>F on the year. It's just the gold kind of

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<v Speaker 1>year it has been from day one, and I at

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<v Speaker 1>the volume today and the performance, I think we see

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<v Speaker 1>another two billion into gold in the next week given

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<v Speaker 1>the trading volume today, so we're talking about thirteen billion flows.

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<v Speaker 1>That's about increase in the size of g l D.

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<v Speaker 1>In addition to g l D, other e t F throws,

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<v Speaker 1>including the iPath s MP five under VIC short term

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<v Speaker 1>futures e t N or v x x IT jump

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<v Speaker 1>and the I shares twenty plus year Treasury bond e

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<v Speaker 1>t F taker t LT also rose up two point seven.

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<v Speaker 1>That's your Bloomberg ETF report. I'm Catherine Cawdery, Catherine Cawderie.

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<v Speaker 1>Thank you so very much. So the stock market continues

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<v Speaker 1>its sell off break. Brexit inks, to put it, mildly

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<v Speaker 1>weighing on sentiment. A second days of losses, which the

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<v Speaker 1>pride many people who thought that maybe coming in for

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<v Speaker 1>a big sell off on Friday, we would get a

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<v Speaker 1>little more um of a plateauing in here, perhaps finding

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<v Speaker 1>a bottom, but not yet. Joinius Sells twenty sure huge

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<v Speaker 1>director of research and co portfolio manager at Snead Capital

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<v Speaker 1>Manage in about two and a half billion dollars of

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<v Speaker 1>assets under management, joining us from Seattle, Washington, Tony. Welcome back,

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<v Speaker 1>Thank you, thanks for having me. Kathleen. Are you feeling

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<v Speaker 1>the reverberations in in Seattle on futures down today. I

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<v Speaker 1>don't know who is out there that's not stealing some

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<v Speaker 1>of the reverberations from all of this. That's Uh, we're

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<v Speaker 1>reminded that you want to buy when there's blood in

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<v Speaker 1>the streets, and we've got some of that going on

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<v Speaker 1>right now. Well, uh, you think people are already buying,

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<v Speaker 1>don't you mean you've got the blood in the streets.

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<v Speaker 1>I got that part of the sentence wrong. So, but

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<v Speaker 1>just step back for a minute. What for you? And again,

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<v Speaker 1>you guys always have these longer term very interesting plays.

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<v Speaker 1>Yet it's not just about the latest news or twist

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<v Speaker 1>and terms in the economy. It's about longer term forces.

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<v Speaker 1>But when you look at the market action, do you

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<v Speaker 1>get a sense, particularly for the US, that this is overdone,

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<v Speaker 1>should be ready for a bounce back or could this

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<v Speaker 1>continue for a while? Tony? Yeah, you know, we do.

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<v Speaker 1>We do look at the longer term when we own

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<v Speaker 1>a stock or buy. It's we're looking for, truly what

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<v Speaker 1>it's going to look like in the you know, longest

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<v Speaker 1>to five to seven year type time frame, not the

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<v Speaker 1>nearer term stuff. Um so, so you know, really what

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<v Speaker 1>people should be doing once a more rational kind of

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<v Speaker 1>existence comes along. Is is looking at what the Wayne

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<v Speaker 1>machine is going to play out to be. And we

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<v Speaker 1>think there are some very good companies that are kind of,

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<v Speaker 1>you know, being thrown out. And we certainly understand the

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<v Speaker 1>the first reaction, which is the Knegric reaction, which is

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<v Speaker 1>to just get out and kind of sell everything. We

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<v Speaker 1>understand that setiment. But that's exactly what you want to

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<v Speaker 1>play into to to take positions in your longer term names.

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<v Speaker 1>How about banks? It's just ironic, isn't it that on Thursday,

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<v Speaker 1>around five o'clock Wall Street time on the East Coast,

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<v Speaker 1>we get the results of the bank stress test in

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<v Speaker 1>the Federal Serve all thirty three banks in the US

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<v Speaker 1>that are on that list. Past Morgan Stanley has some

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<v Speaker 1>question marks over it, said, nevertheless, it passes to and

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<v Speaker 1>then Brexit. Yes, we're gonna leave the Euse, says the UK.

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<v Speaker 1>And wow, it's not just Italian banks and European banks

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<v Speaker 1>getting hammered, so are the U S banks? Does that

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<v Speaker 1>make any sense? Is that something you'd look at buying

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<v Speaker 1>because it's beaten up? Well, you know, we own some

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<v Speaker 1>of the banks. We we like owning some of the banks,

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<v Speaker 1>and the banks that we do own are very domestically focused. Um,

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<v Speaker 1>I think there's a little bit of guilt by association

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<v Speaker 1>going on. When you have the European banks being down

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<v Speaker 1>again today, you know, ten to fifteen plus percent, it's

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<v Speaker 1>not really all that shocking for again that kneegric reaction

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<v Speaker 1>to have even the US domestically oriented banks down, you know,

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<v Speaker 1>five or so. There's gonna be more news this week.

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<v Speaker 1>It comes on the capital ratio levels, and we think

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<v Speaker 1>it's going to be good news. That you mentioned that

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<v Speaker 1>the news was good from last week. They definitely passed

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<v Speaker 1>pretty much with flying colors, and um, we think they're

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<v Speaker 1>gonna be a major beneficiary of what's going to go

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<v Speaker 1>on here in the US, which is gonna be a

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<v Speaker 1>far stronger economy in our opinion than what we think

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<v Speaker 1>the assumptions it is looking like right now today. Can

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<v Speaker 1>you tell us a couple that at the top of

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<v Speaker 1>your list or a couple of you own what we

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<v Speaker 1>owned Bank of America, We owned JP Morgan, and we

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<v Speaker 1>owned Wells Fargo. All of those are very again domestically

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<v Speaker 1>oriented banks. That you take Bank of America for example,

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<v Speaker 1>and they have one of the cheapest depository bases. Uh

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<v Speaker 1>here in the US. They have twelve percent of the

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<v Speaker 1>depository base in the United States of America, and we

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<v Speaker 1>think a well position to be lending towards the home

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<v Speaker 1>bind that's going to happen in the next decade as

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<v Speaker 1>millennials kind of get their sea legs underneath them. You

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<v Speaker 1>are also making the case for consumer discretionary companies and

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<v Speaker 1>more specifically retail. Uh, they have been under some cloud.

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<v Speaker 1>I mean, we have last earning season, so many disappointments.

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<v Speaker 1>Why would you buy retail? Now, let's start there. Well,

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<v Speaker 1>the market hates ambiguity. They hate when it's not clear

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<v Speaker 1>and they don't know what things look like. And right

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<v Speaker 1>now in retail land you've got a lot of that.

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<v Speaker 1>Both in terms of the cyclical stuff going on. Everyone

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<v Speaker 1>is pretty well discounted the fact that the weather accounted

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<v Speaker 1>for weaker than expected retail sales, sales in the in

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<v Speaker 1>the Christmas period and kind of the spring. Um. Then

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<v Speaker 1>you have some secular issues going on as well, the

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<v Speaker 1>question about how big and how large and how much

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<v Speaker 1>of a disruptive factor Amazon is going to be for example. UM,

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<v Speaker 1>So there's a lot going on right now we and

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<v Speaker 1>we think some of it's misunderstood. Ultimately, we think that

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<v Speaker 1>it is a primal thing, a human thing, to go shopping.

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<v Speaker 1>You know, we came across a quote that Kate Spade.

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<v Speaker 1>We don't own the stock, but Kate Spade said that

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<v Speaker 1>you start playing dress up at age five and you

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<v Speaker 1>never stop. Okay, And when you when you see someone

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<v Speaker 1>walk into a department store, there their next their heads

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<v Speaker 1>become like swivel heads, right, They're looking around to see

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<v Speaker 1>what they need that they didn't know that they needed.

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<v Speaker 1>They want to be led towards something new. They want

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<v Speaker 1>to be led towards fashion. And we've been in this

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<v Speaker 1>fashion dead zone and I think that's a little bit underappreciated.

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<v Speaker 1>How much of an effect that's had on on on

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<v Speaker 1>the shopping experience, which is why I think you have

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<v Speaker 1>mull traffic down maybe more than what would normal. That

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<v Speaker 1>that the secular trends. You mean, we need to offer

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<v Speaker 1>women more than another pair of spandex to wear as

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<v Speaker 1>fashion to get them in the stores, don't you think? Yeah, yeah,

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<v Speaker 1>it's one of my pet peeves. But what about Amazon

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<v Speaker 1>addressed that? Because I'm with you, I'm that shopper. I

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<v Speaker 1>don't go looking for a particular thing. I go just

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<v Speaker 1>seeing what's there, what might be on sale, what catches

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<v Speaker 1>my eye. I'm more in the moment. Is that opportunistic

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<v Speaker 1>shopping as opposed to mission base and that's why often

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<v Speaker 1>the online stuff I often would much rather go in

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<v Speaker 1>the store. So great example, So do you want to

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<v Speaker 1>find that next fashion or that next new thing by

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<v Speaker 1>buying ten dresses as it were, and returning nine of them,

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<v Speaker 1>which is a total pain to shut to put them

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<v Speaker 1>in the packaging tape and FedEx them off and everything else.

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<v Speaker 1>Or would you rather go to a department store and

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<v Speaker 1>look around and maybe get some expertise and see what's

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<v Speaker 1>in fashion. So no, we think that that is overdone.

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<v Speaker 1>You might go to Amazon, you and you get the

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<v Speaker 1>white T shirt that you need, and maybe it's it's

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<v Speaker 1>certainly going to be beyond that, but we don't think

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<v Speaker 1>it's going to take over all of retailing, which I

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<v Speaker 1>think has become almost this monomaniacal idea, and we think

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<v Speaker 1>that that's gone too far. Okay, as you said at

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<v Speaker 1>Speed Capital Management out in Seattle, Uh, you if you're

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<v Speaker 1>going to buy a stock, it has to be a

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<v Speaker 1>company that meets an economic need, etcetera. Who are who

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<v Speaker 1>give us a couple of your picks in the retail world. Well,

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<v Speaker 1>we do own Norstrooms. We we own, we own it,

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<v Speaker 1>it's in the portfolio. We think that all of consumer

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<v Speaker 1>discretionary is not a is not an absolute need, right,

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<v Speaker 1>I mean it's a That's why it's called consumer discretionary.

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<v Speaker 1>But we want to find and we think we own

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<v Speaker 1>companies that are they have cult followings. We own home

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<v Speaker 1>Depot that's not going away, that's going to become very important,

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<v Speaker 1>even more important in the next you know, housing boom,

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<v Speaker 1>which we think is in it's very early innings mentioned Northstrooms.

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<v Speaker 1>We own Comcast, they have totally addicted customers. Um. We

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<v Speaker 1>own some of the old world media and those are

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<v Speaker 1>considered consumer discretionary as well. But we think it's actually

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<v Speaker 1>a pretty staple like thing to turn on the news

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<v Speaker 1>and actually watch you know TV, and of America gets

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<v Speaker 1>that our news still by old world kind of news TV, uh,

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<v Speaker 1>through through the through the television. So we think the

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<v Speaker 1>advertising dollars are going to persist there um and we

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<v Speaker 1>think those are we like those stocks as well. Just

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<v Speaker 1>a little bit of time left here old world media.

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<v Speaker 1>Who do you like in particular, we owned Tegna. We

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<v Speaker 1>like Tegna. They own forty six broadcast stations. They cover,

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<v Speaker 1>you know, about a third of the United States of America.

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<v Speaker 1>Number one NBC and ABCF or at CBS affiliate. We

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<v Speaker 1>think they have a lot of um draw if you're

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<v Speaker 1>going to want to advertise nationally, So we own them.

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<v Speaker 1>We own Cannet as well, which is a very contrarian play.

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<v Speaker 1>They're they're a news of course USA today. They're a

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<v Speaker 1>newspaper company, and they're a consolidator in the business. Alright,

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<v Speaker 1>Tony Sheer, thank you so much. Dr Researchers made capital Management.

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<v Speaker 1>They own and still likes of the big banks like

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<v Speaker 1>Bank of America, JP, Morgan, and Wells Fargo. And he

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<v Speaker 1>likes retailers despite Amazon. Norstrom's is one of his top

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<v Speaker 1>picks on Kathleen Hayes and this is taking stock on

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<v Speaker 1>Bloomberg Radio.