WEBVTT - Bloomberg Surveillance TV: November 25, 2024

0:00:00.120 --> 0:00:06.800
<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

0:00:11.640 --> 0:00:15.440
<v Speaker 2>This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

0:00:15.480 --> 0:00:18.680
<v Speaker 2>with Lisa Bromwitz and Amrie Hordern. Join us each day

0:00:18.720 --> 0:00:22.280
<v Speaker 2>for insight from the best in markets, economics, and geopolitics

0:00:22.400 --> 0:00:24.920
<v Speaker 2>from our global headquarters in New York City. We are

0:00:24.920 --> 0:00:27.680
<v Speaker 2>live on Bloomberg Television weekday mornings from six to nine

0:00:27.720 --> 0:00:31.280
<v Speaker 2>am Eastern. Subscribe to the podcast on Apple, Spotify or

0:00:31.320 --> 0:00:33.960
<v Speaker 2>anywhere else you listen, and as always on the Bloomberg

0:00:34.040 --> 0:00:37.880
<v Speaker 2>Terminal and the Bloomberg Business App. David Bianco of DWS

0:00:38.000 --> 0:00:40.680
<v Speaker 2>looking ahead to next year and writing this line, while

0:00:40.680 --> 0:00:44.080
<v Speaker 2>a recession is not the base case, risks of overheating

0:00:44.520 --> 0:00:48.440
<v Speaker 2>and macroeconomic concertainty remain. David joins us now for more. David,

0:00:48.479 --> 0:00:51.360
<v Speaker 2>good morning, Good morning. Let's talk about that risk of overheating.

0:00:51.400 --> 0:00:53.600
<v Speaker 2>How very real is that risk for next year?

0:00:53.960 --> 0:00:56.120
<v Speaker 3>Well, the economy like this STI is strong. I don't

0:00:56.120 --> 0:00:58.240
<v Speaker 3>think it accelerates because things have been good in the

0:00:58.280 --> 0:01:01.160
<v Speaker 3>Probably stas not about two and a half sent GDP growth.

0:01:02.960 --> 0:01:07.680
<v Speaker 3>It's inflation being sticky, particularly because of services. That's a risk.

0:01:08.000 --> 0:01:10.280
<v Speaker 3>So that's perhaps an overheating risk. The other thing is

0:01:10.600 --> 0:01:15.120
<v Speaker 3>excessive fiscal spending. Now that's why with best in markets

0:01:15.120 --> 0:01:17.160
<v Speaker 3>not just markets. You know, the equity side has been

0:01:17.240 --> 0:01:20.360
<v Speaker 3>very excited about Trump ever since the win. But this

0:01:20.440 --> 0:01:22.920
<v Speaker 3>is good news for the bottom market. The Secretary Treasury

0:01:23.640 --> 0:01:26.680
<v Speaker 3>to come is concerned about the deficits. That's welcome news.

0:01:26.880 --> 0:01:29.759
<v Speaker 3>And the message of three three three, that's that's good

0:01:29.760 --> 0:01:30.600
<v Speaker 3>messaging so far.

0:01:30.720 --> 0:01:33.199
<v Speaker 2>So let's get to the three three three three percent growth,

0:01:33.440 --> 0:01:36.080
<v Speaker 2>three percent deficit. And I think also it's three million

0:01:36.120 --> 0:01:39.160
<v Speaker 2>bounds a day of all equivalents, not just oil aill equivalents,

0:01:39.160 --> 0:01:40.840
<v Speaker 2>And I think that's a really important point. Do you

0:01:40.880 --> 0:01:42.800
<v Speaker 2>think that could be met? You think that can be achieved?

0:01:42.920 --> 0:01:43.080
<v Speaker 4>Right?

0:01:43.120 --> 0:01:46.480
<v Speaker 3>So three percent real GDP growth is within reach for

0:01:46.560 --> 0:01:49.880
<v Speaker 3>the US economy with the right balance of things like

0:01:49.960 --> 0:01:55.120
<v Speaker 3>tariff's versusy regulation and lower taxes. Three million barrels over

0:01:55.200 --> 0:01:58.000
<v Speaker 3>a few years time, additional to the about fourteen million

0:01:58.360 --> 0:02:01.280
<v Speaker 3>that's I would argue that's well within but that would

0:02:01.360 --> 0:02:05.360
<v Speaker 3>hurt profits. But it's within reach. Now the three percent deficit,

0:02:06.240 --> 0:02:10.400
<v Speaker 3>that's out of reach. But I'm glad he's reaching forward

0:02:10.520 --> 0:02:12.560
<v Speaker 3>and pointing to it. And I think the bomb market's

0:02:12.560 --> 0:02:16.000
<v Speaker 3>excited to hear Secretary Treasury being concerned about these deficits.

0:02:16.160 --> 0:02:19.200
<v Speaker 1>How do you translate ideas and a muddied set of

0:02:19.320 --> 0:02:21.760
<v Speaker 1>signals from some of the cabinet members who have gotten

0:02:21.760 --> 0:02:25.160
<v Speaker 1>selected Scott Best catering to the market friendly crowd, others

0:02:25.160 --> 0:02:29.040
<v Speaker 1>catering to the vaccine skeptic crowd, others possibly talking about

0:02:29.120 --> 0:02:31.520
<v Speaker 1>ripping up the Justice Department. How do you put this

0:02:31.600 --> 0:02:34.440
<v Speaker 1>together to understand whether you need to change your forecast

0:02:34.480 --> 0:02:36.720
<v Speaker 1>for next year, whether Washington is just going to basically

0:02:36.760 --> 0:02:39.200
<v Speaker 1>tamp down any extremes and keep things the way they are.

0:02:39.280 --> 0:02:40.160
<v Speaker 4>Well, it's still early on.

0:02:40.200 --> 0:02:42.960
<v Speaker 3>We're still learning so much about these policies. But I'm

0:02:43.000 --> 0:02:46.280
<v Speaker 3>a markets guy, best in some markets person, so we're

0:02:46.280 --> 0:02:50.720
<v Speaker 3>feeling good today. But this is an environment where who's

0:02:50.800 --> 0:02:53.080
<v Speaker 3>to say where these policies are going to go and

0:02:53.120 --> 0:02:55.720
<v Speaker 3>the right mix and balance of them, and how other

0:02:56.280 --> 0:02:59.320
<v Speaker 3>countries in the world respond to our policies, particular things

0:02:59.360 --> 0:03:02.600
<v Speaker 3>like tariffs. Is still a risky geopolitical world. So on

0:03:02.600 --> 0:03:06.160
<v Speaker 3>one hand, oil prices might go down because of domestic supply,

0:03:06.320 --> 0:03:09.440
<v Speaker 3>but that's still under geopolitical threat. So are forecasting to

0:03:09.440 --> 0:03:12.160
<v Speaker 3>be flexible and markets are likely going to be voluid

0:03:12.280 --> 0:03:14.480
<v Speaker 3>over the coming year, but probably still upward.

0:03:14.840 --> 0:03:18.040
<v Speaker 1>Is this Treasury secretary pick though, really crucial when it

0:03:18.040 --> 0:03:20.880
<v Speaker 1>comes to pinning the treasury market in particular, sort of

0:03:20.919 --> 0:03:23.560
<v Speaker 1>pinning bond yields with somebody at the helm who is

0:03:23.639 --> 0:03:26.600
<v Speaker 1>going to be very trained on what exactly the markets say.

0:03:27.040 --> 0:03:29.760
<v Speaker 3>Well, well, the candidates were all good candidates, so you

0:03:29.800 --> 0:03:31.680
<v Speaker 3>know this is there. I don't think there's alarm in

0:03:31.720 --> 0:03:34.560
<v Speaker 3>this area, but I do think that this is a

0:03:34.600 --> 0:03:38.120
<v Speaker 3>selection that people like myself say, this makes sense. This

0:03:38.240 --> 0:03:42.520
<v Speaker 3>is a thoughtful person and experience with markets. And one

0:03:42.560 --> 0:03:44.440
<v Speaker 3>of the things that you know Secretary Treasury does is

0:03:44.480 --> 0:03:48.760
<v Speaker 3>help deal with problems, particularly problems and markets for problems

0:03:48.760 --> 0:03:53.280
<v Speaker 3>with funding. Keeping confidence in the in the US bomb

0:03:53.320 --> 0:03:56.920
<v Speaker 3>market is an important thing. So right person for the job.

0:03:57.000 --> 0:03:59.760
<v Speaker 5>He's been very critical of Secretary Yallen in terms of

0:03:59.760 --> 0:04:02.400
<v Speaker 5>when comes to the front end and these bond auctions,

0:04:02.440 --> 0:04:04.400
<v Speaker 5>do you think he will push that out to longer

0:04:04.480 --> 0:04:05.040
<v Speaker 5>day to debt?

0:04:05.840 --> 0:04:07.440
<v Speaker 3>If you go back a couple of years ago, a

0:04:07.480 --> 0:04:10.040
<v Speaker 3>few years ago, one ten year treasury years were where

0:04:10.040 --> 0:04:13.240
<v Speaker 3>they were one percent, you know, everybody has to wonder

0:04:13.280 --> 0:04:15.280
<v Speaker 3>why didn't you take more advantage of that, why didn't

0:04:15.280 --> 0:04:19.080
<v Speaker 3>you do it? Mortgage borrowers did, But that's hindsight, and

0:04:19.880 --> 0:04:22.719
<v Speaker 3>from here, I think the key is making sure that

0:04:23.160 --> 0:04:25.360
<v Speaker 3>efforts are made to bring the deficit down or probably

0:04:25.400 --> 0:04:27.880
<v Speaker 3>be seven to eight percent next year, but bring it down.

0:04:28.320 --> 0:04:30.760
<v Speaker 3>I think the deficit is almost like a very high

0:04:30.800 --> 0:04:33.800
<v Speaker 3>pe multiple on a stock, and the only way to

0:04:33.880 --> 0:04:37.120
<v Speaker 3>keep markets calm about that is deliver growth. So that's

0:04:37.160 --> 0:04:39.599
<v Speaker 3>why I think delivering growth and that three percent on

0:04:39.680 --> 0:04:41.599
<v Speaker 3>real GDP growth is also an important part of that

0:04:41.640 --> 0:04:42.599
<v Speaker 3>three point strategy.

0:04:42.720 --> 0:04:45.000
<v Speaker 5>That three point strategy though, and you said that the

0:04:45.040 --> 0:04:46.480
<v Speaker 5>one thing you don't think he's going to be able

0:04:46.520 --> 0:04:48.960
<v Speaker 5>to accomplish is cutting the deficit by three percent, but

0:04:49.000 --> 0:04:51.919
<v Speaker 5>he says by twenty three percent. Yeah, by twenty twenty eight. Though,

0:04:52.240 --> 0:04:54.120
<v Speaker 5>if you were to get a deficit reduction by two

0:04:54.160 --> 0:04:56.239
<v Speaker 5>to three percent, how long do you think it would take.

0:04:57.040 --> 0:04:58.480
<v Speaker 3>To get the deficit all the way down to three

0:04:58.520 --> 0:05:02.719
<v Speaker 3>percent under the entitlements we have. It's very unlikely. Lot's ever,

0:05:03.320 --> 0:05:07.000
<v Speaker 3>it's unlikely in my view if it's achieved over a

0:05:07.040 --> 0:05:10.799
<v Speaker 3>handful of years or within the next four years. DeBie,

0:05:10.839 --> 0:05:13.279
<v Speaker 3>Weston and Hamilton will go down in history has great

0:05:13.320 --> 0:05:14.120
<v Speaker 3>Secretary Jursdays.

0:05:14.160 --> 0:05:17.280
<v Speaker 2>Administrations running seven percent deficits at a time when unemployment's

0:05:17.279 --> 0:05:20.400
<v Speaker 2>close to four and GDP is really robust. The idea

0:05:20.440 --> 0:05:22.160
<v Speaker 2>that we can get down to three anytime soon? Is

0:05:22.160 --> 0:05:22.599
<v Speaker 2>it worthy?

0:05:22.640 --> 0:05:22.760
<v Speaker 1>Go?

0:05:23.400 --> 0:05:24.040
<v Speaker 2>Is it achievable?

0:05:24.120 --> 0:05:26.000
<v Speaker 1>Yeah? Well, this is the reason why people are skeptical

0:05:26.040 --> 0:05:28.240
<v Speaker 1>of it. Whether someone can actually try to achieve it

0:05:28.279 --> 0:05:31.159
<v Speaker 1>is also another question. What is your most contrarian call

0:05:31.360 --> 0:05:33.440
<v Speaker 1>going into next year given that a lot of the

0:05:33.600 --> 0:05:36.400
<v Speaker 1>goals to reduce the deficit and also to keep growth

0:05:36.440 --> 0:05:38.160
<v Speaker 1>of three percent seem unattainable.

0:05:38.839 --> 0:05:41.720
<v Speaker 3>Yeah, being contrarian or even being skeptical has not been

0:05:41.839 --> 0:05:44.680
<v Speaker 3>very useful the past few years. So what I look

0:05:44.760 --> 0:05:49.359
<v Speaker 3>for are we're are good fundamentals still at a price

0:05:49.400 --> 0:05:52.719
<v Speaker 3>that I won't bicker with, and I would say for

0:05:52.760 --> 0:05:56.000
<v Speaker 3>the coming year that that's still financials. I wouldn't bicker

0:05:56.080 --> 0:06:00.560
<v Speaker 3>with those valuations quickly for big banks. Healthcare as an

0:06:00.560 --> 0:06:02.640
<v Speaker 3>area that I think has still been overlooked for a

0:06:02.680 --> 0:06:05.440
<v Speaker 3>long time because it's so much excitement and technology and digital,

0:06:05.680 --> 0:06:09.360
<v Speaker 3>but very good earnings growth there, great long term prospects

0:06:09.800 --> 0:06:14.000
<v Speaker 3>in tangible assets, innovation, very on demanding valuation. So healthcare,

0:06:14.080 --> 0:06:17.760
<v Speaker 3>financials and capital goods companies. That's what I like. So

0:06:17.800 --> 0:06:20.520
<v Speaker 3>one of the things is that more oil perhaps lower

0:06:20.520 --> 0:06:23.720
<v Speaker 3>oil prices, but it's good for everything combustion, whether it's

0:06:23.760 --> 0:06:28.440
<v Speaker 3>oil services, refiners, but also diesel engines, natural gas turbines

0:06:28.440 --> 0:06:30.000
<v Speaker 3>and jet engines, things like that.

0:06:30.080 --> 0:06:32.839
<v Speaker 1>Healthcare stocks have actually been down since the election because

0:06:32.839 --> 0:06:35.040
<v Speaker 1>of some of the picks and some of the questions

0:06:35.080 --> 0:06:38.080
<v Speaker 1>around how these departments are going to be overhauled. Do

0:06:38.120 --> 0:06:39.760
<v Speaker 1>you lean into that at all or do you basically

0:06:39.800 --> 0:06:40.920
<v Speaker 1>see it as an opportunity.

0:06:41.160 --> 0:06:43.240
<v Speaker 3>We see it as an opportunity. I mean, the healthcare

0:06:43.279 --> 0:06:47.240
<v Speaker 3>sector has generated really good earnings growth through bigger challenges

0:06:47.279 --> 0:06:51.080
<v Speaker 3>than this, including already the negotiated drug prices.

0:06:51.120 --> 0:06:51.960
<v Speaker 5>Now we know that with.

0:06:51.960 --> 0:06:54.840
<v Speaker 3>A Republican sweep they'll probably make some changes to some

0:06:54.880 --> 0:06:58.280
<v Speaker 3>of these policies. But healthcare spending is going up and

0:06:58.320 --> 0:07:01.359
<v Speaker 3>the innovation that we see at most medicine makers and

0:07:01.400 --> 0:07:04.360
<v Speaker 3>even medical device makers, we're encouraged with that, and the

0:07:04.440 --> 0:07:05.640
<v Speaker 3>valuations are undermanding.

0:07:05.680 --> 0:07:07.120
<v Speaker 2>Hey David, it's good to see you and see you

0:07:07.120 --> 0:07:17.160
<v Speaker 2>in person as well. Thank you. Defin Bianco there of DWS,

0:07:20.120 --> 0:07:23.160
<v Speaker 2>Adrian Ye of Barclay's writing this gamp is our top

0:07:23.280 --> 0:07:26.160
<v Speaker 2>retail idea for a cyclical recovery into twenty twenty five

0:07:26.400 --> 0:07:30.000
<v Speaker 2>as it shifts from solidifying operations to growth mode. Adrian

0:07:30.080 --> 0:07:32.360
<v Speaker 2>joins us now for more. Welcome to the program. Let's

0:07:32.360 --> 0:07:34.440
<v Speaker 2>start with GAB. Can you tell us what you think

0:07:34.480 --> 0:07:36.760
<v Speaker 2>they're getting right at the moment what's leading to this

0:07:36.800 --> 0:07:37.600
<v Speaker 2>big share game.

0:07:38.960 --> 0:07:43.160
<v Speaker 4>So what they're getting right is the value equation for

0:07:43.280 --> 0:07:45.720
<v Speaker 4>the consumer. So if you look at the retailers that

0:07:45.760 --> 0:07:48.360
<v Speaker 4>are sort of winning in this environment, it's those who

0:07:48.360 --> 0:07:52.320
<v Speaker 4>are like Walmart, TJX, the off pricers told me in

0:07:52.320 --> 0:07:55.440
<v Speaker 4>this particular case, and they truly are kind of giving

0:07:55.480 --> 0:07:59.200
<v Speaker 4>back real value to the consumer. With regard to the

0:07:59.280 --> 0:08:03.640
<v Speaker 4>Gap brand. Within the Gap organization, they're also finally starting

0:08:03.680 --> 0:08:07.080
<v Speaker 4>to hit their stride on connecting with the consumer. So

0:08:07.440 --> 0:08:10.400
<v Speaker 4>it's been at least a couple of decades probably. You know,

0:08:10.480 --> 0:08:12.600
<v Speaker 4>last time that we saw them do positive comps at

0:08:12.640 --> 0:08:15.600
<v Speaker 4>the Gap brand was twenty eleven and twelve when it

0:08:15.640 --> 0:08:18.200
<v Speaker 4>was kind of a skinny leg craze. And I think

0:08:18.280 --> 0:08:21.520
<v Speaker 4>part of it is that really focused on the fundamentals.

0:08:21.560 --> 0:08:25.280
<v Speaker 4>They've got the sub they've solidified their store based the

0:08:25.360 --> 0:08:29.600
<v Speaker 4>cost basis, and we also for lack of you know,

0:08:30.000 --> 0:08:32.600
<v Speaker 4>other things. They also have a silhouette shift that is

0:08:32.720 --> 0:08:34.800
<v Speaker 4>a debt and base one and it's in their favor.

0:08:35.960 --> 0:08:38.720
<v Speaker 1>So you talk about creating value, and I think about

0:08:38.800 --> 0:08:42.120
<v Speaker 1>the sort of pairing that idea the lowest prices with

0:08:42.320 --> 0:08:46.760
<v Speaker 1>style and getting influencers to get wide legged genes that

0:08:46.960 --> 0:08:49.800
<v Speaker 1>look like they are in vogue and get them out

0:08:49.840 --> 0:08:54.160
<v Speaker 1>to the masses. What does value mean? Who isn't creating value?

0:08:55.280 --> 0:08:58.640
<v Speaker 4>Yeah, that's a great question. And we like to separate

0:08:59.040 --> 0:09:03.720
<v Speaker 4>value versus cheap. So value is price paid for quality receives.

0:09:04.040 --> 0:09:05.760
<v Speaker 4>So when you go to an off pricer or even

0:09:05.880 --> 0:09:07.920
<v Speaker 4>if you go to Old Navy, you know, you think

0:09:07.960 --> 0:09:11.160
<v Speaker 4>that you're getting, you know, you're paying something, and you

0:09:11.160 --> 0:09:13.920
<v Speaker 4>don't mind paying fifty dollars for something that you think

0:09:14.000 --> 0:09:16.560
<v Speaker 4>is probably worth more than that seventy five or one

0:09:16.600 --> 0:09:19.200
<v Speaker 4>hundred dollars even in off price. But what you do

0:09:19.320 --> 0:09:22.760
<v Speaker 4>care about is paying, you know, cheap prices for something

0:09:22.800 --> 0:09:25.000
<v Speaker 4>that you think is worth exactly.

0:09:24.600 --> 0:09:25.480
<v Speaker 1>That or less.

0:09:25.880 --> 0:09:29.120
<v Speaker 4>Right, And that's the huge differentiator here in this especially

0:09:29.120 --> 0:09:33.199
<v Speaker 4>in this environment where CPI inflation across all these different

0:09:33.200 --> 0:09:36.400
<v Speaker 4>products is eating away at that wallet. The consumers really

0:09:36.480 --> 0:09:39.120
<v Speaker 4>looking for somebody who's going to provide them the ability

0:09:39.160 --> 0:09:40.920
<v Speaker 4>to stretch their dollar and stretch.

0:09:40.640 --> 0:09:43.000
<v Speaker 1>Their wallet, Adrian, something that we woke up to this

0:09:43.080 --> 0:09:46.160
<v Speaker 1>morning with suddenly in renewed focus on shipping costs and

0:09:46.200 --> 0:09:47.800
<v Speaker 1>how that can come back to bite and for an

0:09:47.840 --> 0:09:52.160
<v Speaker 1>e commerce type of organization, which a lot of these

0:09:53.040 --> 0:09:58.880
<v Speaker 1>retailers seem to be coming. How important is minimizing shipping costs?

0:09:58.880 --> 0:10:01.600
<v Speaker 1>How much is that becoming an increasing drag on some

0:10:01.640 --> 0:10:02.760
<v Speaker 1>of the companies you cover.

0:10:04.080 --> 0:10:07.480
<v Speaker 4>So the e commerce piece of it exactly that last

0:10:07.520 --> 0:10:10.280
<v Speaker 4>mile delivery what you're talking about, we should think about

0:10:10.320 --> 0:10:15.280
<v Speaker 4>those like wages, they just perpetually go up. Remember the

0:10:16.000 --> 0:10:17.880
<v Speaker 4>essence of kind of that shipping is going to be

0:10:17.920 --> 0:10:20.640
<v Speaker 4>an employee base where their wages are going up, whether

0:10:20.679 --> 0:10:24.080
<v Speaker 4>it's ups or FedEx, et cetera, any of these delivery companies.

0:10:24.280 --> 0:10:26.160
<v Speaker 4>So you can kind of think about that as a

0:10:26.200 --> 0:10:30.480
<v Speaker 4>permanent inflator. And the way to combat that, frankly, because

0:10:30.520 --> 0:10:33.720
<v Speaker 4>it's very much a variable expense is to get ever

0:10:33.840 --> 0:10:37.160
<v Speaker 4>smarter and ever better about your inventory management, trying to

0:10:37.160 --> 0:10:39.720
<v Speaker 4>buy and see what demand is and sell at full price.

0:10:39.920 --> 0:10:41.840
<v Speaker 4>So it's a really really tough you know, you know,

0:10:41.880 --> 0:10:45.080
<v Speaker 4>equation there, But just as on their store side, the

0:10:45.120 --> 0:10:48.960
<v Speaker 4>store payroll will permanently go up. It's just about operating

0:10:49.160 --> 0:10:52.679
<v Speaker 4>your entire omni channel business much more efficiently.

0:10:52.960 --> 0:10:54.719
<v Speaker 2>Drian just wanted to finish on this. I know it's

0:10:54.720 --> 0:10:56.559
<v Speaker 2>not a company under your converage, so I won't name

0:10:56.640 --> 0:10:58.600
<v Speaker 2>it by name. We'll just talk about the story in

0:10:58.640 --> 0:11:02.320
<v Speaker 2>general terms. There's a company this morning where a single

0:11:02.360 --> 0:11:06.840
<v Speaker 2>employee was responsible for small package delivery expense accounting intentionally

0:11:06.880 --> 0:11:10.720
<v Speaker 2>made these massive, erroneous entries to hide about one hundred

0:11:10.720 --> 0:11:14.400
<v Speaker 2>and fifty million dollars worth of expenses. How unusual is

0:11:14.440 --> 0:11:16.640
<v Speaker 2>it for something like that to happen in a company

0:11:16.720 --> 0:11:16.920
<v Speaker 2>like this?

0:11:18.280 --> 0:11:23.040
<v Speaker 4>It is, you know, it's a breakdown of the disciplines.

0:11:23.440 --> 0:11:27.400
<v Speaker 4>It is pretty unusual, frankly typically. I mean, let's put

0:11:27.400 --> 0:11:30.200
<v Speaker 4>it into perspective that one hundred and fifty million is

0:11:30.240 --> 0:11:32.760
<v Speaker 4>on about four point three billion dollars worth of total

0:11:32.760 --> 0:11:36.400
<v Speaker 4>delivery expenses. So it's a number, it's a real number

0:11:36.440 --> 0:11:39.120
<v Speaker 4>since twenty twenty one, but it's about three percent of

0:11:39.160 --> 0:11:41.840
<v Speaker 4>their delivery expenses. Not a great look for you know,

0:11:41.920 --> 0:11:45.640
<v Speaker 4>said company. But what I will say that there's a

0:11:45.720 --> 0:11:47.600
<v Speaker 4>lot that goes on. You know, I've been in the

0:11:47.600 --> 0:11:50.840
<v Speaker 4>retail industry that P and L has thousands of lines

0:11:50.880 --> 0:11:53.760
<v Speaker 4>in it and thousands of employees that you have to

0:11:53.880 --> 0:11:57.240
<v Speaker 4>assume are doing the right thing. And I think that

0:11:57.400 --> 0:11:59.680
<v Speaker 4>there is a there was a breakdown in this particular

0:11:59.679 --> 0:12:02.640
<v Speaker 4>instant of the oversight in that department, for sure.

0:12:02.960 --> 0:12:05.200
<v Speaker 2>Dan, appreciate your views on that story as well. Thanks

0:12:05.240 --> 0:12:18.400
<v Speaker 2>for being with us. Drin Gident Fankles No, John will No,

0:12:18.480 --> 0:12:19.200
<v Speaker 2>it's good to see you.

0:12:19.200 --> 0:12:19.719
<v Speaker 6>Good to see you.

0:12:19.800 --> 0:12:21.560
<v Speaker 2>Do you think that's the scenario we will be facing

0:12:21.720 --> 0:12:22.440
<v Speaker 2>in twenty five?

0:12:22.679 --> 0:12:25.640
<v Speaker 6>I think so. I think so. I think there's you know,

0:12:25.679 --> 0:12:29.679
<v Speaker 6>some euphoria obviously, Uh, we got the red wave. Everyone's

0:12:29.720 --> 0:12:33.199
<v Speaker 6>looking to the to the pro uh positive parts of

0:12:33.559 --> 0:12:36.600
<v Speaker 6>the policy. But we're going to get into a situation where,

0:12:36.679 --> 0:12:40.280
<v Speaker 6>like I said, you know, the FED is easing into strength. Uh,

0:12:40.360 --> 0:12:43.719
<v Speaker 6>you know, you have these fiscal issues, uh, tariffs, I

0:12:43.760 --> 0:12:46.120
<v Speaker 6>think will be a big risk event. So I think

0:12:46.120 --> 0:12:48.680
<v Speaker 6>those concerns come up in the first half of next year.

0:12:48.800 --> 0:12:50.880
<v Speaker 2>So what are you advocating full into next year?

0:12:51.080 --> 0:12:53.440
<v Speaker 6>Yeah, so I think I would probably take some risk

0:12:53.520 --> 0:12:57.080
<v Speaker 6>off the table coming into next year. I also think

0:12:57.080 --> 0:13:00.439
<v Speaker 6>the dollar will continue to grind higher. I think that

0:13:00.520 --> 0:13:02.719
<v Speaker 6>it's sort of the the US will continue to be

0:13:02.840 --> 0:13:07.120
<v Speaker 6>the cleanest dirty shirt, and I think we'll have probably

0:13:07.200 --> 0:13:10.920
<v Speaker 6>lower global growth if we do get that tariff policy implemented.

0:13:11.400 --> 0:13:13.880
<v Speaker 1>This might be a dumb question, what is risk? What

0:13:14.000 --> 0:13:16.280
<v Speaker 1>counts is that because some people are talking about risk

0:13:16.720 --> 0:13:19.400
<v Speaker 1>in stocks, other people are saying risk is in duration

0:13:19.679 --> 0:13:22.520
<v Speaker 1>and the chance that maybe there isn't necessarily any kind

0:13:22.520 --> 0:13:24.520
<v Speaker 1>of controlling force and the deficit, and that you do

0:13:24.640 --> 0:13:27.800
<v Speaker 1>end up, like Francis Donald said, with even rate hikes

0:13:27.840 --> 0:13:28.880
<v Speaker 1>by the end of next year.

0:13:29.200 --> 0:13:31.480
<v Speaker 6>Yeah, so I think the biggest risk is in the

0:13:31.520 --> 0:13:36.120
<v Speaker 6>long end of the curve. I think duration is you know,

0:13:36.240 --> 0:13:38.520
<v Speaker 6>that's what you want to focus on taking off. I

0:13:38.520 --> 0:13:42.240
<v Speaker 6>think equities, you know, they had a big rally right now.

0:13:42.280 --> 0:13:44.480
<v Speaker 6>Like I mentioned before, it's it's sort of what's not

0:13:44.640 --> 0:13:48.000
<v Speaker 6>to like? But you know, when we get into next year,

0:13:48.040 --> 0:13:51.040
<v Speaker 6>it's going to say, what is there too like? Because

0:13:51.040 --> 0:13:54.040
<v Speaker 6>you're going to have overvalued equities, You're going to have

0:13:54.120 --> 0:13:57.040
<v Speaker 6>this fiscal concern moving into next year, and then you're

0:13:57.080 --> 0:13:58.680
<v Speaker 6>going to have a FED that's going to be forced

0:13:58.720 --> 0:14:00.000
<v Speaker 6>to pause its policy.

0:14:00.320 --> 0:14:01.760
<v Speaker 1>So you're not buying the best in bump.

0:14:02.440 --> 0:14:04.880
<v Speaker 6>I'm not I'm not, you know, I think again, I

0:14:04.920 --> 0:14:07.280
<v Speaker 6>don't want to go against it In the short run.

0:14:07.320 --> 0:14:10.000
<v Speaker 6>I think you kind of ride the wave, maybe you

0:14:10.040 --> 0:14:12.880
<v Speaker 6>get a Santa Claus rally, But once we get a

0:14:12.880 --> 0:14:15.959
<v Speaker 6>little doser reality into twenty twenty five, I think that's

0:14:16.000 --> 0:14:17.680
<v Speaker 6>when you want to start to take some risk off.

0:14:17.760 --> 0:14:20.000
<v Speaker 5>You say tariffs are the biggest risk. Do you view

0:14:20.080 --> 0:14:22.320
<v Speaker 5>terrors so? Do you think this administration will view terras

0:14:22.320 --> 0:14:25.440
<v Speaker 5>as a negotiating tool to reset the playing field when

0:14:25.440 --> 0:14:27.240
<v Speaker 5>it comes to free trade or do you actually think

0:14:27.240 --> 0:14:29.720
<v Speaker 5>they're going to use them as pay force for their

0:14:29.760 --> 0:14:32.160
<v Speaker 5>tax cuts, which would then mean that the sequencing has

0:14:32.160 --> 0:14:33.040
<v Speaker 5>to be in parallel.

0:14:33.320 --> 0:14:35.600
<v Speaker 6>I think it's the latter. I think that, you know,

0:14:35.640 --> 0:14:40.200
<v Speaker 6>the administration perceives teriffs as a way to pay for

0:14:40.320 --> 0:14:42.840
<v Speaker 6>some of the tax cuts that are going to come through.

0:14:43.640 --> 0:14:46.040
<v Speaker 6>But I think what they forget is that, you know,

0:14:46.160 --> 0:14:48.000
<v Speaker 6>tariffs are going to go one way. It's either going

0:14:48.040 --> 0:14:51.040
<v Speaker 6>to impact the consumer, so companies will pass the cost on,

0:14:51.440 --> 0:14:55.440
<v Speaker 6>or it will put some pressure on corporate margins. So

0:14:55.560 --> 0:14:59.040
<v Speaker 6>I think that probably is a misguided sort of focused

0:14:59.360 --> 0:15:02.080
<v Speaker 6>But I do think their perception is that it'll pay

0:15:02.120 --> 0:15:03.360
<v Speaker 6>for some of the tax cuts.

0:15:03.440 --> 0:15:05.720
<v Speaker 5>So if you if this is your base case, what

0:15:05.760 --> 0:15:08.280
<v Speaker 5>does someone like Scott beston't at the Treasury mean for

0:15:08.440 --> 0:15:11.080
<v Speaker 5>that impulse that some other members of the administration might

0:15:11.120 --> 0:15:12.600
<v Speaker 5>have when it comes to terror. Yeah.

0:15:12.600 --> 0:15:14.880
<v Speaker 6>So, I think the initial reaction is that he's more

0:15:14.920 --> 0:15:18.920
<v Speaker 6>of a pragmatist. But we have to realize that Trump

0:15:18.960 --> 0:15:22.360
<v Speaker 6>won the popular vote. So I believe from his perspective,

0:15:22.200 --> 0:15:25.200
<v Speaker 6>he thinks he has a mandate and he, as he

0:15:25.240 --> 0:15:28.720
<v Speaker 6>said before, his favorite word is tariff. So I think,

0:15:29.120 --> 0:15:32.240
<v Speaker 6>you know, bessint, you know, his perspective is he would

0:15:32.280 --> 0:15:35.600
<v Speaker 6>like to ease things in. But I feel like Trump

0:15:35.640 --> 0:15:37.480
<v Speaker 6>is going to want to implement that policy at.

0:15:37.440 --> 0:15:38.960
<v Speaker 2>These towns a bigger problem for the rest of the

0:15:39.000 --> 0:15:40.760
<v Speaker 2>world than they on the United States.

0:15:41.480 --> 0:15:43.600
<v Speaker 6>I don't think so. I think it's a problem for

0:15:43.640 --> 0:15:47.200
<v Speaker 6>everyone because I think naturally you're going to get retaliatory

0:15:47.920 --> 0:15:52.440
<v Speaker 6>reaction from other countries. I think when we look at

0:15:52.600 --> 0:15:58.480
<v Speaker 6>the first administration, it actually the retaliatory tariffs actually impacted

0:15:59.040 --> 0:16:02.960
<v Speaker 6>the US export disproportionately to the importers.

0:16:03.120 --> 0:16:06.520
<v Speaker 2>These are some of the fombing producing states agricultural commodities.

0:16:06.520 --> 0:16:08.360
<v Speaker 2>They were the big focus. Then should we be focused

0:16:08.360 --> 0:16:09.080
<v Speaker 2>on anything else?

0:16:09.560 --> 0:16:12.720
<v Speaker 6>I think because tariffs are across the board, I think

0:16:12.800 --> 0:16:15.560
<v Speaker 6>everything should be a focus. I think it's going to be,

0:16:15.720 --> 0:16:18.880
<v Speaker 6>you know, a real different sort of scenario. We're at

0:16:18.880 --> 0:16:20.280
<v Speaker 6>a very different started.

0:16:20.120 --> 0:16:23.160
<v Speaker 2>Expecting those blanket tariffs that have impromised on a campaign trip.

0:16:23.200 --> 0:16:24.520
<v Speaker 2>Do you think they could become reality?

0:16:24.680 --> 0:16:28.120
<v Speaker 6>I think so. He promised it. He won the popular vote.

0:16:28.280 --> 0:16:30.480
<v Speaker 6>I believe you know, that's what he campaigned on. That's

0:16:30.520 --> 0:16:32.600
<v Speaker 6>what what kind of drove him into the White House,

0:16:32.840 --> 0:16:35.040
<v Speaker 6>and I think he's going to continue to focus on

0:16:35.080 --> 0:16:35.560
<v Speaker 6>that path.

0:16:35.720 --> 0:16:37.160
<v Speaker 1>So just to sort of put a bow on it

0:16:37.240 --> 0:16:39.400
<v Speaker 1>or underscore what you're saying, is that the dose of

0:16:39.440 --> 0:16:42.360
<v Speaker 1>reality that you think will really curtail what could be

0:16:42.360 --> 0:16:44.080
<v Speaker 1>a Santa Claus rally in this melt up?

0:16:44.400 --> 0:16:47.160
<v Speaker 6>I think so. I think you know, markets are sort

0:16:47.200 --> 0:16:50.280
<v Speaker 6>of waiting for the clarity on that. I would augment that.

0:16:50.400 --> 0:16:55.600
<v Speaker 6>Obviously with just the fiscal spending, we already have structural deficits.

0:16:55.880 --> 0:16:58.040
<v Speaker 6>So all of that combined, that's something the Fed's going

0:16:58.120 --> 0:16:59.960
<v Speaker 6>to have to focus on. And when they have to

0:17:00.080 --> 0:17:02.520
<v Speaker 6>pause for that reason, they could cause some risk off.

0:17:02.640 --> 0:17:05.080
<v Speaker 5>Who's the biggest loser in a trade war?

0:17:05.840 --> 0:17:09.600
<v Speaker 6>I think the biggest loser probably I would say China

0:17:10.040 --> 0:17:14.800
<v Speaker 6>initially because their economy is already pretty weak. You know,

0:17:14.880 --> 0:17:18.600
<v Speaker 6>they've you know, planned for it. I'm assuming, but you know,

0:17:18.640 --> 0:17:23.120
<v Speaker 6>they still are in a very vulnerable position. I would

0:17:23.160 --> 0:17:26.600
<v Speaker 6>say outside of that, I think Europe is very vulnerable

0:17:26.640 --> 0:17:27.080
<v Speaker 6>as well.

0:17:27.359 --> 0:17:30.000
<v Speaker 2>No, I appreciate your time. Thank you, sir. No dexon there,

0:17:30.040 --> 0:17:34.320
<v Speaker 2>stay Street. This is the Bloomberg Surveillants podcast, bringing you

0:17:34.560 --> 0:17:37.960
<v Speaker 2>the best in markets, economics, angiet politics. You can watch

0:17:37.960 --> 0:17:40.720
<v Speaker 2>the show live on Bloomberg TV weekday mornings from six

0:17:40.800 --> 0:17:44.359
<v Speaker 2>am to nine am Eastern. Subscribe to the podcast on Apple,

0:17:44.640 --> 0:17:47.480
<v Speaker 2>Spotify or anywhere else you listen, and as always on

0:17:47.480 --> 0:17:54.440
<v Speaker 2>the Bloomberg Terminal and the Bloomberg Business Am