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Speaker 1: This is the Bloomberg Surveillance Podcast.

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Speaker 2: I'm Tom Keane, along with Jonathan Farrow and Lisa Abramowitz.

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Speaker 2: Join us each day for insight from the best an economics, geopolitics,

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Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple,

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Speaker 2: Spotify and anywhere you get your podcasts, and always on

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Speaker 2: Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App.

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Speaker 2: I take a four week moving average, try to smooth

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Speaker 2: it out a little bit, but the other fraud thing

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Speaker 2: hangs over it. Just more data of what is somewhat

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Speaker 2: a fully employed America. Writing about that has been William Dudley,

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Speaker 2: former New York Fed President, Bloomberg Opinion columnists.

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Speaker 1: He has been.

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Speaker 2: Absolutely one hundred percent on of a central bank looking

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Speaker 2: for higher interest rates. Bill Dudley, thank you for joining

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Speaker 2: us off your essay with Bloomberg Opinion. You quote the

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Speaker 2: Clashy channel back to London calling guess what the echoes

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Speaker 2: building is. Do they have to wait for the data

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Speaker 2: or can they get out front?

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Speaker 3: Oh, they're going to take a pause because they believe

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Speaker 3: that their long and verbal legs and manitary policy and

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Speaker 3: so they want to see the effects of prior actions,

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Speaker 3: but they've characterized it as a skip because they think

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Speaker 3: that they'll probably have to do a little bit more,

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Speaker 3: and we'll probably see that in the summary of economic projections,

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Speaker 3: we'll probably see a couple one or two additional rate

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Speaker 3: hikes PET penciled in for twenty twenty three. The economy

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Speaker 3: really hasn't slowed much at all. If you look at

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Speaker 3: the Atlanta Fed to GDP now forecasts for the second quarter,

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Speaker 3: it's one point nine percent. And as we were just

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Speaker 3: talking about, the leader market still still very long, but

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Speaker 3: hasn't played accomplished much yet.

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Speaker 2: Bullet of Saint Louis and Indiana University uses his economics

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Speaker 2: to say, we can do this exercise and avoid some

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Speaker 2: form of NBR recession.

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Speaker 1: Do you agree.

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Speaker 3: I think it's made very hard to avoid a recession

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Speaker 3: if you believe that the FED has to push the

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Speaker 3: unemployer rate up by a meaningful amount. If you look

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Speaker 3: at the FED Zone forecast, they think the unemployer rate's

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Speaker 3: going to have to rise by at least one percentage point.

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Speaker 3: Every time it's risen by one percentage point. Since World

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Speaker 3: War Two, we've had a recession twelve out of twelve,

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Speaker 3: So I'm betting against a soft lining this time as well.

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Speaker 4: Build the implication here that the FED hasn't really accomplished

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Speaker 4: much and that they should go further with respect to

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Speaker 4: hiking rates, that perhaps a pause or skipping or whatever

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Speaker 4: you want to call it is perhaps not the right approach.

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Speaker 5: What's the consequence to that?

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Speaker 4: Do you expect this to actually accelerate inflation or keep

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Speaker 4: it higher for longer in a way that people aren't

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Speaker 4: really expecting.

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Speaker 3: It doesn't really matter if they hike in June versus July,

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Speaker 3: as long as they keep financial conditions from easing significantly.

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Speaker 3: And I think that's why they're using the language of

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Speaker 3: skip rather than pause. They don't want the markets to

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Speaker 3: think that they're finished, because they don't want this stock

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Speaker 3: market to rally a lot Banias to fault. If that

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Speaker 3: were to happen, that would make Madria policy, of the

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Speaker 3: impulse of launtra policy more stimulative and would be kind

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Speaker 3: of productive to what they're trying to accomplish, which is

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Speaker 3: to cool off the labor market.

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Speaker 5: The data has been really confusing.

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Speaker 4: We've been talking about that all day, whether it's earnings

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Speaker 4: or whether it's just the macroeconomic inputs that we normally

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Speaker 4: have used. What are you looking at to really highlight

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Speaker 4: that there's still a lot of strength that frankly, the

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Speaker 4: lag effects are not going to take.

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Speaker 3: Care of well. I think the layer market is the

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Speaker 3: key thing to focus on. What's happening to payroll and

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Speaker 3: ployment growth, what's happening to the tightness of the labor market.

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Speaker 3: As for example, the Joeltry port yesterday showed an increase

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Speaker 3: in the number of unfilled jobs relative to unemployed workers.

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Speaker 3: We're back to one point eight unfilled jobs for every

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Speaker 3: unemployed worker. Chair Pol in the past is said we

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Speaker 3: need that rach to be down in round one to one.

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Speaker 3: And also what's having to Wagesoul in this last press

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Speaker 3: conference with very clearity thinks wage inflation needs to be

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Speaker 3: three percent, not forward to six percent to be consistent

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Speaker 3: with two percent inflation. So the layer market and wages

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Speaker 3: I think are going to be the key drivers of

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Speaker 3: the FED feeling more comfortable that the attracted two percent inflation.

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Speaker 4: So people will say, well, we are seeing disinflation and

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Speaker 4: it actually will happen much more rapidly heading into your

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Speaker 4: end from your vantage point. The longer that it takes.

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Speaker 4: Does that create a stickiness that people are underappreciating or

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Speaker 4: do you think that this is just simply they need

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Speaker 4: to get back down to their goal. They want to

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Speaker 4: get there sooner than later, just simply to remove that

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Speaker 4: tax from lower and individuals in particular.

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Speaker 3: They think it's going to be a pretty drawn out process.

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Speaker 3: We really don't get back to two percent inflation for

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Speaker 3: a couple of years on the FED Zone forecast. I

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Speaker 3: think they're not concerned about how long it takes, as

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Speaker 3: long as inslation expectations stay well anchored. The risk, of course,

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Speaker 3: if inflation stays higher for longer, inflation expectations could become

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Speaker 3: unanchored and that will make the FED job more difficult.

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Speaker 3: So they want to keep a close eye on infulation

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Speaker 3: expected bill.

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Speaker 2: We're not thinking too hard today. I don't need it

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Speaker 2: to two or three decimal points. But I'm fascinated what

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Speaker 2: your math is on a slower China and their machinations

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Speaker 2: exporting disinflation or outright deflation. You and I have seen

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Speaker 2: this over thirty forty years as a theme. Are they

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Speaker 2: going to adjust our lives because they're exporting price decline?

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Speaker 3: I think what's going to happen in China is we're

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Speaker 3: going to see more stimulus the end of the day

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Speaker 3: that they're going to want to have growth because growth

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Speaker 3: generates jobs, and jobs generate political stability in China. So

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Speaker 3: I think what we'll see is more stimulus out of China.

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Speaker 3: I do not expect the Chinese impulse back to the

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Speaker 3: US to be significant. We already are having goods disinflation.

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Speaker 3: The problem in the US is really in the services sector.

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Speaker 3: China might add a little bit to that good disinflation,

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Speaker 3: but I don't think it's meaningful in terms of changing

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Speaker 3: the inflation outlook.

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Speaker 2: Do you have any kind of vector of disinflation with

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Speaker 2: services at this time or do you just simply need

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Speaker 2: more data points.

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Speaker 3: Well, the one thing that we know is coming is

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Speaker 3: we're going to start to see declines in shelter prices,

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Speaker 3: is measured by in the personal consumption expension deflator. We

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Speaker 3: know that that was going to happen with a lag,

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Speaker 3: and that lag is about to arrive. The problem is,

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Speaker 3: sure Paul is indicated, is services inflation excluding shelter that's

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Speaker 3: still very very high. And as we've seen in the

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Speaker 3: core PC of interflators that we've gotten over the last

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Speaker 3: six months, we're stuck in this channel between four point

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Speaker 3: six percent and four year overs. It's not falling, it's

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Speaker 3: it's basically been flat.

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Speaker 1: I think that's called sticky, John.

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Speaker 2: I think doctor Dudley there identified the range bound necessariness

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Speaker 2: of the word sticky.

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Speaker 6: I've got some good news for some people. I'm not

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Speaker 6: sure what your positioning is like at home, but for

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Speaker 6: those of you long European vacations, the euro another break

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Speaker 6: of one oh seven.

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Speaker 1: You're looking at that to five diods, yes, aren't you.

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Speaker 6: Yeah, for many reasons, the dollars stronger, the euro weaker.

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Speaker 6: Off the mack of this pretty robust data in America,

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Speaker 6: you will tire by let's call it three basis points

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Speaker 6: at the front end, four forty four equit easily. So

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Speaker 6: just rolling over, just briefly now, unchanged on the session.

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Speaker 4: Which might come partly on the ADP report that nobody

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Speaker 4: trades until they do, and this idea that if you

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Speaker 4: have a stronger than a expected employment reaction, that that

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Speaker 4: will actually create more pressure for the Fed bill.

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Speaker 5: I want to just finish up with you on that point.

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Speaker 4: Do you think that it is a foregone conclusion that

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Speaker 4: regardless of what the data is, regardless of the jobs

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Speaker 4: for what we get tomorrow, they are not going to

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Speaker 4: high grates this month. They're going to try to signal

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Speaker 4: It doesn't mean that they're done, but basically they are

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Speaker 4: not data dependent for this particular meeting.

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Speaker 3: I think the data would have to be very, very

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Speaker 3: strong to convince them to move at the June meeting.

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Speaker 3: They basically are concerned about the long legs of madrate

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Speaker 3: policy and should that belief should not be influenced by

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Speaker 3: the strength of the data. So I'd be very surprised

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Speaker 3: at this point, especially given Philip Jefferson's remarks yesterday, that

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Speaker 3: they would actually go ahead and tighten at the Dream meetings.

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Speaker 3: But July seems almost likely at this point.

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Speaker 6: That found like a ralliant cry yesterday, didn't it from

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Speaker 6: the presumed Fed yest. Yeah, it really did, Bill, Thank

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Speaker 6: you both, Dudley, their former New York Fed president. Bloomberg

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Speaker 6: opinion columnist.

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Speaker 2: Heidi Crabo red occurs with a senior fellow, Consolin Foreign Relations,

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Speaker 2: really writing as much as you can on what we're

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Speaker 2: talking about yesterday and continue today with Rika Rinmanbi, and

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Speaker 2: that is China.

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Speaker 1: Heidi, thank you so much. For joining, is it China

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Speaker 1: slowdown for real?

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Speaker 7: So I think, you know, you have a lag in

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Speaker 7: data and some revisions, and I don't know if we

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Speaker 7: really understand if the data coming out of China is accurate,

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Speaker 7: in part because they're coming out of a very you know,

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Speaker 7: significant COVID lockdown. So just think back to when we

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Speaker 7: were publishing our data and revising it after after COVID.

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Speaker 7: It's just I think it's it's it's too hard to

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Speaker 7: focus on just one number. I actually focus more on

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Speaker 7: the youth unemployment number as being a serious concern for me.

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Speaker 1: Yeah, we'll go to that.

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Speaker 2: You have a great trans atlantic and frankly trans world

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Speaker 2: I'd almost call it linkage between Europe and China.

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Speaker 1: And you say evs to the rescue for China and

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Speaker 1: that a.

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Speaker 2: Lot of the doubt about China will be solved by

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Speaker 2: electric vehicles in their growth, discuss that export might were

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Speaker 2: not factoring in.

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Speaker 7: So I just got back from from Europe, and you know,

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Speaker 7: China was a key part of all the conversations because

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Speaker 7: of the US EU Trading Technology Council. We had, you know, UH,

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Speaker 7: we had Secretaries Blincoln and uh and Ramundo. There US

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Speaker 7: t R Taie. We we saw kind of a focus

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Speaker 7: just on the main bonus contention, which is that the

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Speaker 7: subsidies for EV's in the US are are are you know,

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Speaker 7: not not offered to EU auto makers because of the

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Speaker 7: China the China components to the vehicles. But I think

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Speaker 7: that you have this muscle memory of trade negotiators of

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Speaker 7: going after you know, what's happening between the US and

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Speaker 7: the EU. And at the same time you have China

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Speaker 7: exporting more electric vehicles, more autos or Chinese autos. Right,

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Speaker 7: just a striking, striking uptick in particularly eviase, Lisa.

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Speaker 2: There's the analysis, and the further analysis is whoever's out

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Speaker 2: on Twitter trying to figure out when mister Musk's airplane

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Speaker 2: leave Shanghai?

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Speaker 5: Well, yeah, that's for us exactly.

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Speaker 4: I just want to I know that we want to

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Speaker 4: move on from the debt ceiling, but I kind of

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Speaker 4: can't yet, and I have to set a pay into

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Speaker 4: the conversation that I'm sure Heidi you are having over

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Speaker 4: in Europe, which is what are these subsidies going to

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Speaker 4: look like? Particularly when it comes to the recent tech

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Speaker 4: driven investments in the US were promising to make.

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Speaker 5: Did anything really change?

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Speaker 4: Was any of the heft of some of those programs

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Speaker 4: removed from this agreement that we got from the debt

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Speaker 4: ceiling or was it basically the adjustments that kind of

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Speaker 4: came in after the fact and made sure it.

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Speaker 5: Was all okay.

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Speaker 7: So, you know, one of the great things about being

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Speaker 7: overseas is that you really didn't have a lot of

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Speaker 7: focus on the debt ceiling as opposed to like living

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Speaker 7: at twenty four seven. Here, the focus on US politics

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Speaker 7: was much more driven by Trump and looking at the

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Speaker 7: numbers and the upcoming election and whatever deals are being

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Speaker 7: struck right now between the US and the EU, are

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Speaker 7: they up for grabs if Trump were to win the

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Speaker 7: presidency in the next go around. So I think, you know,

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Speaker 7: that's Trump. Trump played a prominent role and concerns in

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Speaker 7: whether or not there was a need for Europe to

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Speaker 7: hedge in its negotiations, not for all countries, but for

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Speaker 7: some countries. I think that's why we didn't see consensus,

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Speaker 7: the same kind of consensus that we saw at the

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Speaker 7: G seven and the Quad meetings in the past two weeks.

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Speaker 5: When we uh with our you know, with our negotiators

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Speaker 5: in Europe this week.

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Speaker 4: What does that mean with respect to US European alliance

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Speaker 4: with respect to China, with respect to some of these

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Speaker 4: bigger issues, if there is sort of a pretty tepid

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Speaker 4: receival of the United States with sort of ambiguous leadership.

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Speaker 7: So I think the US seems to be very much

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Speaker 7: in line in the Biden administrations, in line with the

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Speaker 7: EU Commission. It's just that there are twenty seven different

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Speaker 7: member countries and all of them are sort of playing

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Speaker 7: out how they want to how they perceive weakness versus

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Speaker 7: strength and need to hedge. And because you have to

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Speaker 7: have unanimity, it was in full display and particularly around

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Speaker 7: China this week that you just don't.

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Speaker 3: Have it in the EU.

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Speaker 7: Where you do, I think really in Asia to a

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Speaker 7: larger extent visa of EA China, I'll.

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Speaker 6: Be less diplomatic. You have the Commission and then you

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Speaker 6: have Macron. And that's why things are confuseding in Europe

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Speaker 6: right now. And let's said, that's been the story in

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Speaker 6: it for the last couple of months.

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Speaker 4: Well, yes, and Amanu Macron is like, hey, we're gonna

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Speaker 4: so I could deal with you go China.

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Speaker 5: Yeah, Hey, let's go to Beijing and the rest of Europe.

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Speaker 5: It's like, what are you doing.

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Speaker 4: At the same time, I wonder how much reticence there

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Speaker 4: is to really partner with the US in light of

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Speaker 4: some of.

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Speaker 5: The subsidies, in light of some of the potential holatility.

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Speaker 5: You think this is just a Macron issue?

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Speaker 6: Are the reports I hear about how well liked Macron

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Speaker 6: is at the G seven. It's just kind of you know, well, yeah,

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Speaker 6: I was about to say less like he's liked. I

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Speaker 6: imagine that's let's me trying to be diplomatic, Heidi, thank you,

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Speaker 6: wonderful as always to hear from you, Haidi Kreeber Redeka

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Speaker 6: of the Council on Foreign Relations.

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Speaker 8: It is our.

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Speaker 2: Immense pleasure to speak with Alan Ruskin, chief International strategist

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Speaker 2: at Deutsche Bank. His notes are absolutely fabulous. You can

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Speaker 2: get them, of course through Deutsche Bank. Alan Ruskin, you

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Speaker 2: have an absolutely brilliant paragraph on M two dynamics and

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Speaker 2: nominal GDP.

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Speaker 1: Is the surprise of the next twelve.

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Speaker 2: Months forward that we have sustained nominal GDP because of

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Speaker 2: sticky inflation.

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Speaker 3: It's a little bit like that, Tom.

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Speaker 9: I think we're going to see, for example, data today

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Speaker 9: which shows that productivity was extremely weak in Q one,

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Speaker 9: but not just Q one on a trend basis, it seems,

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Speaker 9: and that weakness in productivity translates to high unit labor costs,

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Speaker 9: which is sort of stagflationary, and output we know is

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Speaker 9: relatively weak relative to employment.

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Speaker 3: That's part of the weak productivity story.

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Speaker 9: So it all adds up to nominal GDP doing an

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Speaker 9: awful lot better than real GDP at this point. Some

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Speaker 9: of this, I think is just this natural overhang from

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Speaker 9: the M two growth it had, you know, something like

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Speaker 9: thirty percent M two growth above trend a year ago.

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Speaker 9: That's down to about twenty percent overhang thanks to weaker

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Speaker 9: M two growth that you see more recently. But still

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Speaker 9: I think that's really propping up the nominal numbers. But money,

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Speaker 9: monetary policy and money supply is avail. It doesn't ultimately

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Speaker 9: pay you to print money. It doesn't generate real GDP growth.

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Speaker 2: The real GDP growth is the recession game. Your colleagues

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Speaker 2: have been brilliant on this. Matt Lozzertti has arguably the

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Speaker 2: single best recession delay call of the last eighteen months.

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Speaker 1: Reframe that.

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Speaker 8: Now.

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Speaker 2: I'm not saying agree with young Lozertti, but at least

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Speaker 2: frame out the Ruskin recession to come.

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Speaker 3: Yeah.

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Speaker 9: You know, I've always been of opinion that given the

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Speaker 9: overshoot on inflation, even if we have a mild recession,

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Speaker 9: I would still cast that as potentially a soft landing

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Speaker 9: sort of scenario. I know that's semantics in a sense,

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Speaker 9: but I think we're still pretty much on track. But

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Speaker 9: we do need to see some weakening in the labor market,

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Speaker 9: and of course, everything we saw from the openings data

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Speaker 9: yesterday suggests that employment will remain relatively resilient. So you've

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Speaker 9: got this weird dynamic again whereby employment is relatively strong

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Speaker 9: compared to output, and particularly I think we're seeing weakness

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Speaker 9: in the Manu factoring sect of worldwide, so there's a

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Speaker 9: you know, there's.

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Speaker 3: Another story there as well.

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Speaker 9: But I would say that we're still on track for

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Speaker 9: something which skirts recession slash shallow recession. But it's not

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Speaker 9: looking like a deep recession unless we get some sort

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Speaker 9: of nonlinear event like the banking sector crisis sort of

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Speaker 9: really taking hold in a proper credit crunch, which you

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Speaker 9: have not actually seen as yet.

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Speaker 6: You mentioned manufacturing GWN, and that distinction I think is

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Speaker 6: so important. Manufacturing pmis worldwide, Europe, China Satha fifty contractionary

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Speaker 6: throw in the United States pretty ugly there. It screams

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Speaker 6: rate cuts in some places. Then you look at services

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Speaker 6: and which make up the bulk of some of these economies,

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Speaker 6: still pretty robust, and in the surprise of the last

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Speaker 6: month or so has just been the breakdown in another

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Speaker 6: consensus trade dollar weakness to dollar strength. And as you

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Speaker 6: look at things right now, have we broken that trend?

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Speaker 6: Is this something new? And if it isn't, where does

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Speaker 6: that new engine of dollar weakness come from.

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Speaker 9: I think it's deferred dollar weakness. You know, the whole

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Speaker 9: idea of a divergence trade that worked against the dollar,

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Speaker 9: whereby you know, Europe, if not outperforming, at least the

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Speaker 9: ECB was hiking whilst the FED was on hold, and

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Speaker 9: China was obviously you know, sort of reopening and strength

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Speaker 9: that we would expect there, or we did expect there.

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Speaker 9: You know, a lot of that just hasn't materialized. In fact,

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Speaker 9: if anything, the US has been more resilient than anticipated.

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Speaker 9: And you know, consequently, I think what you're seeing on

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Speaker 9: the exchange rate is very much reflective what you've seen

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Speaker 9: on interest rates spreads. So the interest rates spread story

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Speaker 9: is just taking its que from this relative growth story.

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Speaker 9: I think right now it depends on where the FED goes.

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Speaker 9: For example, you know, if they hike in June, it

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Speaker 9: seems less likely after yesterday's FED comments. But if they're

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Speaker 9: hiked in June, I think we'd be down at one

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Speaker 9: oh five on you're a dollar. If they don't hike

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Speaker 9: in June, we can trade here in the sort of

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Speaker 9: one oh seven sort of their area for.

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Speaker 3: The time being. As far as you were a dollars concerned.

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Speaker 4: Alan, you had this really interesting point in your latest

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Speaker 4: note where you basically were saying, there's a little risk

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Speaker 4: of overtightening. It does not seem to be the theme

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Speaker 4: that we're hearing in the fedspeak that's been coming.

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Speaker 5: Out every day, day after day. Can you explain that

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Speaker 5: what that means as to.

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Speaker 4: Where policies should be, where it will likely be, and

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Speaker 4: what that means for longer term inflation?

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Speaker 9: Yeah, I mean, I think just look at your financial

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Speaker 9: you know, conditions indicators. We all have our own numbers,

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Speaker 9: but if you look at the Bloomberg numbers, for example,

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Speaker 9: you look at say six month financial conditions, twelve month

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Speaker 9: financial conditions, if anything, they've eased rather than Titan, which

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Speaker 9: is truly extraordinary. So the tightening needs to come from

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Speaker 9: something like the credit side. You're not seeing it in

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Speaker 9: terms of credit prices particularly maybe you know issues markets

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Speaker 9: are tightened and closing up, but in general, you're not

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Speaker 9: seeing a the It's kind of nonlinear event that I

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Speaker 9: think would have tightened financial conditions sufficiency to rarely risk

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Speaker 9: over tightening. Now maybe the Federal Reserve, which has you know,

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Speaker 9: some distinct advantages in the sphere and knows a little

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Speaker 9: bit more. On the banking sector side, it's clear that

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Speaker 9: you do need additional consolidation over the longer term, but

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Speaker 9: I think that holds the key as to whether financial

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Speaker 9: conditions tighten materially.

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Speaker 3: It looked like they were tightening sharply, you know, a

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Speaker 3: couple of months ago, and now much less so.

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Speaker 6: Alan wonderful to get your view, as always an I'm

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Speaker 6: rusking there of Deutsche Bank. Thank you, sir.

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Speaker 2: Chuck Graham, senior retail analyst at Gordon Hauskuld love having

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Speaker 2: him on. And it is about this posing here of

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Speaker 2: a hold to a buy Chuck, real simple, this deserve

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Speaker 2: to a set of headlines and Macy's you nailed it

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Speaker 2: with a tep at hold does Macy's become a cell.

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Speaker 10: I think Macy's is still doing a really good job

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Speaker 10: on a lot of fronts, and I think that's exemplified

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Speaker 10: on the balance sheet, where inventory levels are still really lean.

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Speaker 10: You know, Macy's is a victim of the circumstance right now,

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Speaker 10: and you alluded to it. People are preferring travel, and

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Speaker 10: with inflationary pressures out there, budgets are constrained. So I

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Speaker 10: don't personally think Macy's is a cell. We downgraded the

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Speaker 10: stock back in late March at eighteen dollars to a hold.

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Speaker 10: We sensed that the guide for the year, that the

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Speaker 10: outline was too optimistic, and today we're seeing that to

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Speaker 10: a degree. But Macy's is still doing a lot of

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Speaker 10: good things.

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Speaker 2: Okay, they're doing a lot of good things, but the

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Speaker 2: fact is it's been a train wreck for ten years,

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Speaker 2: and then in the pandemic it sort of came around,

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Speaker 2: and I get that's come off the bottom a little bit.

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Speaker 2: Do you have enough faith in management and their strategy

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Speaker 2: to say I got a three or five year vector

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Speaker 2: higher in Macy's, even if it's not back to sixty

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Speaker 2: or seventy.

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Speaker 10: I think that's all going to depend on the consumer

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Speaker 10: and what happens over the next couple of years. In

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Speaker 10: the near term, we definitely think the stock is going

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Speaker 10: to stay under pressure. They did lower guidance by twenty

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Speaker 10: five percent this morning, which.

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Speaker 8: Is a really big, big cut.

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Speaker 10: Clearly, the stock had been under some pressure and this

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Speaker 10: was discounted to a degree. However, when you really unpack

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Speaker 10: the guide, the fourth quarter, which is the holiday quarter

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Speaker 10: for them, still does look aggressive. So another said differentely,

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Speaker 10: this might not be the last cut on guidance right now.

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Speaker 10: We're just going to have to continue to monitor the

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Speaker 10: data points across retail.

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Speaker 6: Chuck, you were brilliant last time we spoke. You said

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Speaker 6: this was the discretionary recession. And Chuck, I think what

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Speaker 6: we're all trying to work out around the table is

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Speaker 6: what is this about Macy's and what is it about

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Speaker 6: the economy? Which one is which is this a Macy's

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Speaker 6: story or a story about the economy.

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Speaker 10: Yeah, well, what's interesting is this morning you have two

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Speaker 10: companies guiding down, both both Macy's and Dollar General. And

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Speaker 10: if you think about the general customer, it's at the

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Speaker 10: low end. Macy's is clearly at the high end. So

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Speaker 10: you're seeing weakness across the board, whether it be low end,

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Speaker 10: high end, discretionary. And we talked about that a couple

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Speaker 10: of weeks ago when I was on post home Depot.

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Speaker 10: It's really just people preferring needs versus wants at this

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Speaker 10: point in time.

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Speaker 4: Chuck, you said that macy Use caters to high end,

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Speaker 4: and yet the luxury players are all seeing gains. Is

440
00:22:23,560 --> 00:22:25,440
Speaker 4: that really the case or is it really a question

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00:22:25,520 --> 00:22:28,320
Speaker 4: of identity, whether they actually are high end, whether they're

442
00:22:28,359 --> 00:22:31,280
Speaker 4: low end, whether basically they're the middle income kinds of

443
00:22:31,320 --> 00:22:33,240
Speaker 4: shoppers that are probably going to be the most squeezed

444
00:22:33,320 --> 00:22:33,560
Speaker 4: right now.

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00:22:34,320 --> 00:22:36,600
Speaker 10: Well, I look at Macy's more high end, but clearly

446
00:22:36,720 --> 00:22:38,200
Speaker 10: if you were to look at Nordstrom, where even the

447
00:22:38,240 --> 00:22:41,680
Speaker 10: Bloomingdale's banner within Macy's, that would be high tiered. But

448
00:22:41,800 --> 00:22:44,399
Speaker 10: you look at a company like Restoration Hardware, which is

449
00:22:44,520 --> 00:22:48,520
Speaker 10: really the most premier upper end company we cover, and

450
00:22:48,600 --> 00:22:49,760
Speaker 10: you're seeing weakness there.

451
00:22:49,960 --> 00:22:52,040
Speaker 8: So consumers just getting strapped right now?

452
00:22:52,320 --> 00:22:54,439
Speaker 4: Do you think that this is a temporary phenomenon as

453
00:22:54,520 --> 00:22:57,120
Speaker 4: people sort of get the Yolow experience out of their

454
00:22:57,160 --> 00:22:59,199
Speaker 4: belts and basically just keep flying around. Do they run

455
00:22:59,240 --> 00:23:01,359
Speaker 4: out of money and they'll go back to buying stuff again.

456
00:23:02,520 --> 00:23:04,880
Speaker 8: I do actually, I do think that there'll be a time.

457
00:23:04,920 --> 00:23:07,920
Speaker 10: And I'm not an expert in travel and leisure spend,

458
00:23:08,040 --> 00:23:10,600
Speaker 10: but clearly people are over splurging right now, given that

459
00:23:10,720 --> 00:23:12,359
Speaker 10: you weren't able to do that for a couple of

460
00:23:12,400 --> 00:23:12,879
Speaker 10: year period.

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00:23:13,119 --> 00:23:14,879
Speaker 8: So I do think at some point you'll see some

462
00:23:15,000 --> 00:23:16,440
Speaker 8: balancing here across the board.

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00:23:16,680 --> 00:23:18,920
Speaker 4: Could you talk about the difficulty of ordering the correct

464
00:23:19,040 --> 00:23:21,080
Speaker 4: mix of clothing at a time that still is the

465
00:23:21,160 --> 00:23:23,800
Speaker 4: pandemic economy, as we've been talking about pretty much over

466
00:23:23,840 --> 00:23:26,200
Speaker 4: the past couple of months, how difficult it is to

467
00:23:26,280 --> 00:23:27,680
Speaker 4: know whether people are going to want stuff to go

468
00:23:27,720 --> 00:23:29,720
Speaker 4: back to the office, stuff to go work out in,

469
00:23:29,960 --> 00:23:32,560
Speaker 4: stuff to go out on the town, or the casual back.

470
00:23:32,600 --> 00:23:34,520
Speaker 4: I mean, how do you sort of parse out this

471
00:23:34,720 --> 00:23:36,399
Speaker 4: quickly moving trend cycle.

472
00:23:37,560 --> 00:23:39,440
Speaker 8: It's not easy, and I'm glad that's not my job.

473
00:23:40,920 --> 00:23:43,480
Speaker 10: But I do think that that Macy's has done a

474
00:23:43,520 --> 00:23:45,840
Speaker 10: pretty good job over the past couple of years knowing

475
00:23:45,920 --> 00:23:48,040
Speaker 10: where the trend's going to be. But that's one of

476
00:23:48,080 --> 00:23:50,639
Speaker 10: the reasons why people like off price, because the the

477
00:23:50,760 --> 00:23:53,119
Speaker 10: lead times on off price are just so much shorter

478
00:23:53,240 --> 00:23:55,800
Speaker 10: in duration. You know, you're talking about buying stuff today

479
00:23:55,880 --> 00:23:58,160
Speaker 10: for the next couple of months as opposed to buying

480
00:23:58,200 --> 00:24:01,239
Speaker 10: stuff today for next spring. You know, knowing what's going

481
00:24:01,320 --> 00:24:03,359
Speaker 10: to be hot and what's not, you know, eight to

482
00:24:03,480 --> 00:24:06,320
Speaker 10: nine months out is really really difficult, and that's part

483
00:24:06,359 --> 00:24:08,440
Speaker 10: of the reason why, you know, these department stores have

484
00:24:08,640 --> 00:24:12,119
Speaker 10: just struggled over the past decade and have really get

485
00:24:12,240 --> 00:24:14,520
Speaker 10: up given up a lot of share to off price.

486
00:24:14,920 --> 00:24:16,440
Speaker 1: Our department stores dead.

487
00:24:18,840 --> 00:24:20,160
Speaker 8: I don't think they're dead.

488
00:24:20,200 --> 00:24:22,480
Speaker 10: I think certain models are better than others, and I think,

489
00:24:22,640 --> 00:24:25,119
Speaker 10: you know, again, I'm not here to be super negative

490
00:24:25,160 --> 00:24:27,480
Speaker 10: on Mace's this morning, because I do think that the

491
00:24:27,640 --> 00:24:30,720
Speaker 10: team and particularly their CFO Adrian, has done a really

492
00:24:30,760 --> 00:24:34,200
Speaker 10: good job managing inventory levels. Others I think, you know,

493
00:24:34,240 --> 00:24:38,600
Speaker 10: companies like Kohl's have struggles and getting getting foot traffic

494
00:24:38,680 --> 00:24:42,159
Speaker 10: into that into those stores has been elusive for a

495
00:24:42,240 --> 00:24:44,800
Speaker 10: really long time, and frankly, I don't know, I don't

496
00:24:44,800 --> 00:24:45,520
Speaker 10: know how they fix it.

497
00:24:46,520 --> 00:24:50,040
Speaker 2: I just find this absolutely important and on a revenue

498
00:24:50,080 --> 00:24:53,400
Speaker 2: and unit basis, this is just a lack of traffic

499
00:24:53,600 --> 00:24:57,000
Speaker 2: into the stores. So what is the what's your single

500
00:24:57,080 --> 00:25:03,119
Speaker 2: best buy within retailing now? Is it a combined department store?

501
00:25:03,320 --> 00:25:05,560
Speaker 2: Feel or is it a specialty stock.

502
00:25:06,920 --> 00:25:09,159
Speaker 10: I think the best two names to own right now

503
00:25:09,280 --> 00:25:13,080
Speaker 10: in retail are Walmart and Costco. And you'll tell me

504
00:25:13,160 --> 00:25:16,840
Speaker 10: that's super defensive and potentially super boring, but sometimes boring

505
00:25:16,920 --> 00:25:17,400
Speaker 10: can be good.

506
00:25:18,560 --> 00:25:21,760
Speaker 8: Costco is the best retailer I've ever covered. It checks

507
00:25:21,800 --> 00:25:22,520
Speaker 8: all the boxes.

508
00:25:23,240 --> 00:25:26,000
Speaker 10: And to me, Walmart, there's no better time to own

509
00:25:26,040 --> 00:25:29,040
Speaker 10: Walmart than right now, both from a from a sector

510
00:25:29,080 --> 00:25:32,159
Speaker 10: perspective and given how difficult everything is out there, and

511
00:25:32,240 --> 00:25:35,160
Speaker 10: also from a company specific perspective. They're doing a really

512
00:25:35,280 --> 00:25:37,920
Speaker 10: a lot of really good things they and I think

513
00:25:37,960 --> 00:25:40,320
Speaker 10: the key theme for both both companies is the lead

514
00:25:40,400 --> 00:25:43,119
Speaker 10: with price. They're the lowest price guys out there, and

515
00:25:43,280 --> 00:25:46,080
Speaker 10: what consumer out there doesn't want lower prices right now?

516
00:25:46,359 --> 00:25:48,800
Speaker 6: If you believe we're in a discretion recession, quite clearly,

517
00:25:49,160 --> 00:25:51,360
Speaker 6: that's the place to be. Chuck, Thank you, sir, Chuck

518
00:25:51,400 --> 00:25:54,119
Speaker 6: crom There of Gordon Haskett on the latest with some

519
00:25:54,200 --> 00:25:54,840
Speaker 6: of the retail as.

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00:25:54,880 --> 00:25:58,720
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521
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522
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00:26:06,960 --> 00:26:11,040
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524
00:26:11,560 --> 00:26:15,200
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525
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526
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Speaker 1: Thanks for listening. I'm Tom Keen, and this is Bloomberg