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Speaker 2: I take a four week moving average, try to smooth
Speaker 2: it out a little bit, but the other fraud thing
Speaker 2: hangs over it. Just more data of what is somewhat
Speaker 2: a fully employed America. Writing about that has been William Dudley,
Speaker 2: former New York Fed President, Bloomberg Opinion columnists.
Speaker 1: He has been.
Speaker 2: Absolutely one hundred percent on of a central bank looking
Speaker 2: for higher interest rates. Bill Dudley, thank you for joining
Speaker 2: us off your essay with Bloomberg Opinion. You quote the
Speaker 2: Clashy channel back to London calling guess what the echoes
Speaker 2: building is. Do they have to wait for the data
Speaker 2: or can they get out front?
Speaker 3: Oh, they're going to take a pause because they believe
Speaker 3: that their long and verbal legs and manitary policy and
Speaker 3: so they want to see the effects of prior actions,
Speaker 3: but they've characterized it as a skip because they think
Speaker 3: that they'll probably have to do a little bit more,
Speaker 3: and we'll probably see that in the summary of economic projections,
Speaker 3: we'll probably see a couple one or two additional rate
Speaker 3: hikes PET penciled in for twenty twenty three. The economy
Speaker 3: really hasn't slowed much at all. If you look at
Speaker 3: the Atlanta Fed to GDP now forecasts for the second quarter,
Speaker 3: it's one point nine percent. And as we were just
Speaker 3: talking about, the leader market still still very long, but
Speaker 3: hasn't played accomplished much yet.
Speaker 2: Bullet of Saint Louis and Indiana University uses his economics
Speaker 2: to say, we can do this exercise and avoid some
Speaker 2: form of NBR recession.
Speaker 1: Do you agree.
Speaker 3: I think it's made very hard to avoid a recession
Speaker 3: if you believe that the FED has to push the
Speaker 3: unemployer rate up by a meaningful amount. If you look
Speaker 3: at the FED Zone forecast, they think the unemployer rate's
Speaker 3: going to have to rise by at least one percentage point.
Speaker 3: Every time it's risen by one percentage point. Since World
Speaker 3: War Two, we've had a recession twelve out of twelve,
Speaker 3: So I'm betting against a soft lining this time as well.
Speaker 4: Build the implication here that the FED hasn't really accomplished
Speaker 4: much and that they should go further with respect to
Speaker 4: hiking rates, that perhaps a pause or skipping or whatever
Speaker 4: you want to call it is perhaps not the right approach.
Speaker 5: What's the consequence to that?
Speaker 4: Do you expect this to actually accelerate inflation or keep
Speaker 4: it higher for longer in a way that people aren't
Speaker 4: really expecting.
Speaker 3: It doesn't really matter if they hike in June versus July,
Speaker 3: as long as they keep financial conditions from easing significantly.
Speaker 3: And I think that's why they're using the language of
Speaker 3: skip rather than pause. They don't want the markets to
Speaker 3: think that they're finished, because they don't want this stock
Speaker 3: market to rally a lot Banias to fault. If that
Speaker 3: were to happen, that would make Madria policy, of the
Speaker 3: impulse of launtra policy more stimulative and would be kind
Speaker 3: of productive to what they're trying to accomplish, which is
Speaker 3: to cool off the labor market.
Speaker 5: The data has been really confusing.
Speaker 4: We've been talking about that all day, whether it's earnings
Speaker 4: or whether it's just the macroeconomic inputs that we normally
Speaker 4: have used. What are you looking at to really highlight
Speaker 4: that there's still a lot of strength that frankly, the
Speaker 4: lag effects are not going to take.
Speaker 3: Care of well. I think the layer market is the
Speaker 3: key thing to focus on. What's happening to payroll and
Speaker 3: ployment growth, what's happening to the tightness of the labor market.
Speaker 3: As for example, the Joeltry port yesterday showed an increase
Speaker 3: in the number of unfilled jobs relative to unemployed workers.
Speaker 3: We're back to one point eight unfilled jobs for every
Speaker 3: unemployed worker. Chair Pol in the past is said we
Speaker 3: need that rach to be down in round one to one.
Speaker 3: And also what's having to Wagesoul in this last press
Speaker 3: conference with very clearity thinks wage inflation needs to be
Speaker 3: three percent, not forward to six percent to be consistent
Speaker 3: with two percent inflation. So the layer market and wages
Speaker 3: I think are going to be the key drivers of
Speaker 3: the FED feeling more comfortable that the attracted two percent inflation.
Speaker 4: So people will say, well, we are seeing disinflation and
Speaker 4: it actually will happen much more rapidly heading into your
Speaker 4: end from your vantage point. The longer that it takes.
Speaker 4: Does that create a stickiness that people are underappreciating or
Speaker 4: do you think that this is just simply they need
Speaker 4: to get back down to their goal. They want to
Speaker 4: get there sooner than later, just simply to remove that
Speaker 4: tax from lower and individuals in particular.
Speaker 3: They think it's going to be a pretty drawn out process.
Speaker 3: We really don't get back to two percent inflation for
Speaker 3: a couple of years on the FED Zone forecast. I
Speaker 3: think they're not concerned about how long it takes, as
Speaker 3: long as inslation expectations stay well anchored. The risk, of course,
Speaker 3: if inflation stays higher for longer, inflation expectations could become
Speaker 3: unanchored and that will make the FED job more difficult.
Speaker 3: So they want to keep a close eye on infulation
Speaker 3: expected bill.
Speaker 2: We're not thinking too hard today. I don't need it
Speaker 2: to two or three decimal points. But I'm fascinated what
Speaker 2: your math is on a slower China and their machinations
Speaker 2: exporting disinflation or outright deflation. You and I have seen
Speaker 2: this over thirty forty years as a theme. Are they
Speaker 2: going to adjust our lives because they're exporting price decline?
Speaker 3: I think what's going to happen in China is we're
Speaker 3: going to see more stimulus the end of the day
Speaker 3: that they're going to want to have growth because growth
Speaker 3: generates jobs, and jobs generate political stability in China. So
Speaker 3: I think what we'll see is more stimulus out of China.
Speaker 3: I do not expect the Chinese impulse back to the
Speaker 3: US to be significant. We already are having goods disinflation.
Speaker 3: The problem in the US is really in the services sector.
Speaker 3: China might add a little bit to that good disinflation,
Speaker 3: but I don't think it's meaningful in terms of changing
Speaker 3: the inflation outlook.
Speaker 2: Do you have any kind of vector of disinflation with
Speaker 2: services at this time or do you just simply need
Speaker 2: more data points.
Speaker 3: Well, the one thing that we know is coming is
Speaker 3: we're going to start to see declines in shelter prices,
Speaker 3: is measured by in the personal consumption expension deflator. We
Speaker 3: know that that was going to happen with a lag,
Speaker 3: and that lag is about to arrive. The problem is,
Speaker 3: sure Paul is indicated, is services inflation excluding shelter that's
Speaker 3: still very very high. And as we've seen in the
Speaker 3: core PC of interflators that we've gotten over the last
Speaker 3: six months, we're stuck in this channel between four point
Speaker 3: six percent and four year overs. It's not falling, it's
Speaker 3: it's basically been flat.
Speaker 1: I think that's called sticky, John.
Speaker 2: I think doctor Dudley there identified the range bound necessariness
Speaker 2: of the word sticky.
Speaker 6: I've got some good news for some people. I'm not
Speaker 6: sure what your positioning is like at home, but for
Speaker 6: those of you long European vacations, the euro another break
Speaker 6: of one oh seven.
Speaker 1: You're looking at that to five diods, yes, aren't you.
Speaker 6: Yeah, for many reasons, the dollars stronger, the euro weaker.
Speaker 6: Off the mack of this pretty robust data in America,
Speaker 6: you will tire by let's call it three basis points
Speaker 6: at the front end, four forty four equit easily. So
Speaker 6: just rolling over, just briefly now, unchanged on the session.
Speaker 4: Which might come partly on the ADP report that nobody
Speaker 4: trades until they do, and this idea that if you
Speaker 4: have a stronger than a expected employment reaction, that that
Speaker 4: will actually create more pressure for the Fed bill.
Speaker 5: I want to just finish up with you on that point.
Speaker 4: Do you think that it is a foregone conclusion that
Speaker 4: regardless of what the data is, regardless of the jobs
Speaker 4: for what we get tomorrow, they are not going to
Speaker 4: high grates this month. They're going to try to signal
Speaker 4: It doesn't mean that they're done, but basically they are
Speaker 4: not data dependent for this particular meeting.
Speaker 3: I think the data would have to be very, very
Speaker 3: strong to convince them to move at the June meeting.
Speaker 3: They basically are concerned about the long legs of madrate
Speaker 3: policy and should that belief should not be influenced by
Speaker 3: the strength of the data. So I'd be very surprised
Speaker 3: at this point, especially given Philip Jefferson's remarks yesterday, that
Speaker 3: they would actually go ahead and tighten at the Dream meetings.
Speaker 3: But July seems almost likely at this point.
Speaker 6: That found like a ralliant cry yesterday, didn't it from
Speaker 6: the presumed Fed yest. Yeah, it really did, Bill, Thank
Speaker 6: you both, Dudley, their former New York Fed president. Bloomberg
Speaker 6: opinion columnist.
Speaker 2: Heidi Crabo red occurs with a senior fellow, Consolin Foreign Relations,
Speaker 2: really writing as much as you can on what we're
Speaker 2: talking about yesterday and continue today with Rika Rinmanbi, and
Speaker 2: that is China.
Speaker 1: Heidi, thank you so much. For joining, is it China
Speaker 1: slowdown for real?
Speaker 7: So I think, you know, you have a lag in
Speaker 7: data and some revisions, and I don't know if we
Speaker 7: really understand if the data coming out of China is accurate,
Speaker 7: in part because they're coming out of a very you know,
Speaker 7: significant COVID lockdown. So just think back to when we
Speaker 7: were publishing our data and revising it after after COVID.
Speaker 7: It's just I think it's it's it's too hard to
Speaker 7: focus on just one number. I actually focus more on
Speaker 7: the youth unemployment number as being a serious concern for me.
Speaker 1: Yeah, we'll go to that.
Speaker 2: You have a great trans atlantic and frankly trans world
Speaker 2: I'd almost call it linkage between Europe and China.
Speaker 1: And you say evs to the rescue for China and
Speaker 1: that a.
Speaker 2: Lot of the doubt about China will be solved by
Speaker 2: electric vehicles in their growth, discuss that export might were
Speaker 2: not factoring in.
Speaker 7: So I just got back from from Europe, and you know,
Speaker 7: China was a key part of all the conversations because
Speaker 7: of the US EU Trading Technology Council. We had, you know, UH,
Speaker 7: we had Secretaries Blincoln and uh and Ramundo. There US
Speaker 7: t R Taie. We we saw kind of a focus
Speaker 7: just on the main bonus contention, which is that the
Speaker 7: subsidies for EV's in the US are are are you know,
Speaker 7: not not offered to EU auto makers because of the
Speaker 7: China the China components to the vehicles. But I think
Speaker 7: that you have this muscle memory of trade negotiators of
Speaker 7: going after you know, what's happening between the US and
Speaker 7: the EU. And at the same time you have China
Speaker 7: exporting more electric vehicles, more autos or Chinese autos. Right,
Speaker 7: just a striking, striking uptick in particularly eviase, Lisa.
Speaker 2: There's the analysis, and the further analysis is whoever's out
Speaker 2: on Twitter trying to figure out when mister Musk's airplane
Speaker 2: leave Shanghai?
Speaker 5: Well, yeah, that's for us exactly.
Speaker 4: I just want to I know that we want to
Speaker 4: move on from the debt ceiling, but I kind of
Speaker 4: can't yet, and I have to set a pay into
Speaker 4: the conversation that I'm sure Heidi you are having over
Speaker 4: in Europe, which is what are these subsidies going to
Speaker 4: look like? Particularly when it comes to the recent tech
Speaker 4: driven investments in the US were promising to make.
Speaker 5: Did anything really change?
Speaker 4: Was any of the heft of some of those programs
Speaker 4: removed from this agreement that we got from the debt
Speaker 4: ceiling or was it basically the adjustments that kind of
Speaker 4: came in after the fact and made sure it.
Speaker 5: Was all okay.
Speaker 7: So, you know, one of the great things about being
Speaker 7: overseas is that you really didn't have a lot of
Speaker 7: focus on the debt ceiling as opposed to like living
Speaker 7: at twenty four seven. Here, the focus on US politics
Speaker 7: was much more driven by Trump and looking at the
Speaker 7: numbers and the upcoming election and whatever deals are being
Speaker 7: struck right now between the US and the EU, are
Speaker 7: they up for grabs if Trump were to win the
Speaker 7: presidency in the next go around. So I think, you know,
Speaker 7: that's Trump. Trump played a prominent role and concerns in
Speaker 7: whether or not there was a need for Europe to
Speaker 7: hedge in its negotiations, not for all countries, but for
Speaker 7: some countries. I think that's why we didn't see consensus,
Speaker 7: the same kind of consensus that we saw at the
Speaker 7: G seven and the Quad meetings in the past two weeks.
Speaker 5: When we uh with our you know, with our negotiators
Speaker 5: in Europe this week.
Speaker 4: What does that mean with respect to US European alliance
Speaker 4: with respect to China, with respect to some of these
Speaker 4: bigger issues, if there is sort of a pretty tepid
Speaker 4: receival of the United States with sort of ambiguous leadership.
Speaker 7: So I think the US seems to be very much
Speaker 7: in line in the Biden administrations, in line with the
Speaker 7: EU Commission. It's just that there are twenty seven different
Speaker 7: member countries and all of them are sort of playing
Speaker 7: out how they want to how they perceive weakness versus
Speaker 7: strength and need to hedge. And because you have to
Speaker 7: have unanimity, it was in full display and particularly around
Speaker 7: China this week that you just don't.
Speaker 3: Have it in the EU.
Speaker 7: Where you do, I think really in Asia to a
Speaker 7: larger extent visa of EA China, I'll.
Speaker 6: Be less diplomatic. You have the Commission and then you
Speaker 6: have Macron. And that's why things are confuseding in Europe
Speaker 6: right now. And let's said, that's been the story in
Speaker 6: it for the last couple of months.
Speaker 4: Well, yes, and Amanu Macron is like, hey, we're gonna
Speaker 4: so I could deal with you go China.
Speaker 5: Yeah, Hey, let's go to Beijing and the rest of Europe.
Speaker 5: It's like, what are you doing.
Speaker 4: At the same time, I wonder how much reticence there
Speaker 4: is to really partner with the US in light of
Speaker 4: some of.
Speaker 5: The subsidies, in light of some of the potential holatility.
Speaker 5: You think this is just a Macron issue?
Speaker 6: Are the reports I hear about how well liked Macron
Speaker 6: is at the G seven. It's just kind of you know, well, yeah,
Speaker 6: I was about to say less like he's liked. I
Speaker 6: imagine that's let's me trying to be diplomatic, Heidi, thank you,
Speaker 6: wonderful as always to hear from you, Haidi Kreeber Redeka
Speaker 6: of the Council on Foreign Relations.
Speaker 8: It is our.
Speaker 2: Immense pleasure to speak with Alan Ruskin, chief International strategist
Speaker 2: at Deutsche Bank. His notes are absolutely fabulous. You can
Speaker 2: get them, of course through Deutsche Bank. Alan Ruskin, you
Speaker 2: have an absolutely brilliant paragraph on M two dynamics and
Speaker 2: nominal GDP.
Speaker 1: Is the surprise of the next twelve.
Speaker 2: Months forward that we have sustained nominal GDP because of
Speaker 2: sticky inflation.
Speaker 3: It's a little bit like that, Tom.
Speaker 9: I think we're going to see, for example, data today
Speaker 9: which shows that productivity was extremely weak in Q one,
Speaker 9: but not just Q one on a trend basis, it seems,
Speaker 9: and that weakness in productivity translates to high unit labor costs,
Speaker 9: which is sort of stagflationary, and output we know is
Speaker 9: relatively weak relative to employment.
Speaker 3: That's part of the weak productivity story.
Speaker 9: So it all adds up to nominal GDP doing an
Speaker 9: awful lot better than real GDP at this point. Some
Speaker 9: of this, I think is just this natural overhang from
Speaker 9: the M two growth it had, you know, something like
Speaker 9: thirty percent M two growth above trend a year ago.
Speaker 9: That's down to about twenty percent overhang thanks to weaker
Speaker 9: M two growth that you see more recently. But still
Speaker 9: I think that's really propping up the nominal numbers. But money,
Speaker 9: monetary policy and money supply is avail. It doesn't ultimately
Speaker 9: pay you to print money. It doesn't generate real GDP growth.
Speaker 2: The real GDP growth is the recession game. Your colleagues
Speaker 2: have been brilliant on this. Matt Lozzertti has arguably the
Speaker 2: single best recession delay call of the last eighteen months.
Speaker 1: Reframe that.
Speaker 8: Now.
Speaker 2: I'm not saying agree with young Lozertti, but at least
Speaker 2: frame out the Ruskin recession to come.
Speaker 3: Yeah.
Speaker 9: You know, I've always been of opinion that given the
Speaker 9: overshoot on inflation, even if we have a mild recession,
Speaker 9: I would still cast that as potentially a soft landing
Speaker 9: sort of scenario. I know that's semantics in a sense,
Speaker 9: but I think we're still pretty much on track. But
Speaker 9: we do need to see some weakening in the labor market,
Speaker 9: and of course, everything we saw from the openings data
Speaker 9: yesterday suggests that employment will remain relatively resilient. So you've
Speaker 9: got this weird dynamic again whereby employment is relatively strong
Speaker 9: compared to output, and particularly I think we're seeing weakness
Speaker 9: in the Manu factoring sect of worldwide, so there's a
Speaker 9: you know, there's.
Speaker 3: Another story there as well.
Speaker 9: But I would say that we're still on track for
Speaker 9: something which skirts recession slash shallow recession. But it's not
Speaker 9: looking like a deep recession unless we get some sort
Speaker 9: of nonlinear event like the banking sector crisis sort of
Speaker 9: really taking hold in a proper credit crunch, which you
Speaker 9: have not actually seen as yet.
Speaker 6: You mentioned manufacturing GWN, and that distinction I think is
Speaker 6: so important. Manufacturing pmis worldwide, Europe, China Satha fifty contractionary
Speaker 6: throw in the United States pretty ugly there. It screams
Speaker 6: rate cuts in some places. Then you look at services
Speaker 6: and which make up the bulk of some of these economies,
Speaker 6: still pretty robust, and in the surprise of the last
Speaker 6: month or so has just been the breakdown in another
Speaker 6: consensus trade dollar weakness to dollar strength. And as you
Speaker 6: look at things right now, have we broken that trend?
Speaker 6: Is this something new? And if it isn't, where does
Speaker 6: that new engine of dollar weakness come from.
Speaker 9: I think it's deferred dollar weakness. You know, the whole
Speaker 9: idea of a divergence trade that worked against the dollar,
Speaker 9: whereby you know, Europe, if not outperforming, at least the
Speaker 9: ECB was hiking whilst the FED was on hold, and
Speaker 9: China was obviously you know, sort of reopening and strength
Speaker 9: that we would expect there, or we did expect there.
Speaker 9: You know, a lot of that just hasn't materialized. In fact,
Speaker 9: if anything, the US has been more resilient than anticipated.
Speaker 9: And you know, consequently, I think what you're seeing on
Speaker 9: the exchange rate is very much reflective what you've seen
Speaker 9: on interest rates spreads. So the interest rates spread story
Speaker 9: is just taking its que from this relative growth story.
Speaker 9: I think right now it depends on where the FED goes.
Speaker 9: For example, you know, if they hike in June, it
Speaker 9: seems less likely after yesterday's FED comments. But if they're
Speaker 9: hiked in June, I think we'd be down at one
Speaker 9: oh five on you're a dollar. If they don't hike
Speaker 9: in June, we can trade here in the sort of
Speaker 9: one oh seven sort of their area for.
Speaker 3: The time being. As far as you were a dollars concerned.
Speaker 4: Alan, you had this really interesting point in your latest
Speaker 4: note where you basically were saying, there's a little risk
Speaker 4: of overtightening. It does not seem to be the theme
Speaker 4: that we're hearing in the fedspeak that's been coming.
Speaker 5: Out every day, day after day. Can you explain that
Speaker 5: what that means as to.
Speaker 4: Where policies should be, where it will likely be, and
Speaker 4: what that means for longer term inflation?
Speaker 9: Yeah, I mean, I think just look at your financial
Speaker 9: you know, conditions indicators. We all have our own numbers,
Speaker 9: but if you look at the Bloomberg numbers, for example,
Speaker 9: you look at say six month financial conditions, twelve month
Speaker 9: financial conditions, if anything, they've eased rather than Titan, which
Speaker 9: is truly extraordinary. So the tightening needs to come from
Speaker 9: something like the credit side. You're not seeing it in
Speaker 9: terms of credit prices particularly maybe you know issues markets
Speaker 9: are tightened and closing up, but in general, you're not
Speaker 9: seeing a the It's kind of nonlinear event that I
Speaker 9: think would have tightened financial conditions sufficiency to rarely risk
Speaker 9: over tightening. Now maybe the Federal Reserve, which has you know,
Speaker 9: some distinct advantages in the sphere and knows a little
Speaker 9: bit more. On the banking sector side, it's clear that
Speaker 9: you do need additional consolidation over the longer term, but
Speaker 9: I think that holds the key as to whether financial
Speaker 9: conditions tighten materially.
Speaker 3: It looked like they were tightening sharply, you know, a
Speaker 3: couple of months ago, and now much less so.
Speaker 6: Alan wonderful to get your view, as always an I'm
Speaker 6: rusking there of Deutsche Bank. Thank you, sir.
Speaker 2: Chuck Graham, senior retail analyst at Gordon Hauskuld love having
Speaker 2: him on. And it is about this posing here of
Speaker 2: a hold to a buy Chuck, real simple, this deserve
Speaker 2: to a set of headlines and Macy's you nailed it
Speaker 2: with a tep at hold does Macy's become a cell.
Speaker 10: I think Macy's is still doing a really good job
Speaker 10: on a lot of fronts, and I think that's exemplified
Speaker 10: on the balance sheet, where inventory levels are still really lean.
Speaker 10: You know, Macy's is a victim of the circumstance right now,
Speaker 10: and you alluded to it. People are preferring travel, and
Speaker 10: with inflationary pressures out there, budgets are constrained. So I
Speaker 10: don't personally think Macy's is a cell. We downgraded the
Speaker 10: stock back in late March at eighteen dollars to a hold.
Speaker 10: We sensed that the guide for the year, that the
Speaker 10: outline was too optimistic, and today we're seeing that to
Speaker 10: a degree. But Macy's is still doing a lot of
Speaker 10: good things.
Speaker 2: Okay, they're doing a lot of good things, but the
Speaker 2: fact is it's been a train wreck for ten years,
Speaker 2: and then in the pandemic it sort of came around,
Speaker 2: and I get that's come off the bottom a little bit.
Speaker 2: Do you have enough faith in management and their strategy
Speaker 2: to say I got a three or five year vector
Speaker 2: higher in Macy's, even if it's not back to sixty
Speaker 2: or seventy.
Speaker 10: I think that's all going to depend on the consumer
Speaker 10: and what happens over the next couple of years. In
Speaker 10: the near term, we definitely think the stock is going
Speaker 10: to stay under pressure. They did lower guidance by twenty
Speaker 10: five percent this morning, which.
Speaker 8: Is a really big, big cut.
Speaker 10: Clearly, the stock had been under some pressure and this
Speaker 10: was discounted to a degree. However, when you really unpack
Speaker 10: the guide, the fourth quarter, which is the holiday quarter
Speaker 10: for them, still does look aggressive. So another said differentely,
Speaker 10: this might not be the last cut on guidance right now.
Speaker 10: We're just going to have to continue to monitor the
Speaker 10: data points across retail.
Speaker 6: Chuck, you were brilliant last time we spoke. You said
Speaker 6: this was the discretionary recession. And Chuck, I think what
Speaker 6: we're all trying to work out around the table is
Speaker 6: what is this about Macy's and what is it about
Speaker 6: the economy? Which one is which is this a Macy's
Speaker 6: story or a story about the economy.
Speaker 10: Yeah, well, what's interesting is this morning you have two
Speaker 10: companies guiding down, both both Macy's and Dollar General. And
Speaker 10: if you think about the general customer, it's at the
Speaker 10: low end. Macy's is clearly at the high end. So
Speaker 10: you're seeing weakness across the board, whether it be low end,
Speaker 10: high end, discretionary. And we talked about that a couple
Speaker 10: of weeks ago when I was on post home Depot.
Speaker 10: It's really just people preferring needs versus wants at this
Speaker 10: point in time.
Speaker 4: Chuck, you said that macy Use caters to high end,
Speaker 4: and yet the luxury players are all seeing gains. Is
Speaker 4: that really the case or is it really a question
Speaker 4: of identity, whether they actually are high end, whether they're
Speaker 4: low end, whether basically they're the middle income kinds of
Speaker 4: shoppers that are probably going to be the most squeezed
Speaker 4: right now.
Speaker 10: Well, I look at Macy's more high end, but clearly
Speaker 10: if you were to look at Nordstrom, where even the
Speaker 10: Bloomingdale's banner within Macy's, that would be high tiered. But
Speaker 10: you look at a company like Restoration Hardware, which is
Speaker 10: really the most premier upper end company we cover, and
Speaker 10: you're seeing weakness there.
Speaker 8: So consumers just getting strapped right now?
Speaker 4: Do you think that this is a temporary phenomenon as
Speaker 4: people sort of get the Yolow experience out of their
Speaker 4: belts and basically just keep flying around. Do they run
Speaker 4: out of money and they'll go back to buying stuff again.
Speaker 8: I do actually, I do think that there'll be a time.
Speaker 10: And I'm not an expert in travel and leisure spend,
Speaker 10: but clearly people are over splurging right now, given that
Speaker 10: you weren't able to do that for a couple of
Speaker 10: year period.
Speaker 8: So I do think at some point you'll see some
Speaker 8: balancing here across the board.
Speaker 4: Could you talk about the difficulty of ordering the correct
Speaker 4: mix of clothing at a time that still is the
Speaker 4: pandemic economy, as we've been talking about pretty much over
Speaker 4: the past couple of months, how difficult it is to
Speaker 4: know whether people are going to want stuff to go
Speaker 4: back to the office, stuff to go work out in,
Speaker 4: stuff to go out on the town, or the casual back.
Speaker 4: I mean, how do you sort of parse out this
Speaker 4: quickly moving trend cycle.
Speaker 8: It's not easy, and I'm glad that's not my job.
Speaker 10: But I do think that that Macy's has done a
Speaker 10: pretty good job over the past couple of years knowing
Speaker 10: where the trend's going to be. But that's one of
Speaker 10: the reasons why people like off price, because the the
Speaker 10: lead times on off price are just so much shorter
Speaker 10: in duration. You know, you're talking about buying stuff today
Speaker 10: for the next couple of months as opposed to buying
Speaker 10: stuff today for next spring. You know, knowing what's going
Speaker 10: to be hot and what's not, you know, eight to
Speaker 10: nine months out is really really difficult, and that's part
Speaker 10: of the reason why, you know, these department stores have
Speaker 10: just struggled over the past decade and have really get
Speaker 10: up given up a lot of share to off price.
Speaker 1: Our department stores dead.
Speaker 8: I don't think they're dead.
Speaker 10: I think certain models are better than others, and I think,
Speaker 10: you know, again, I'm not here to be super negative
Speaker 10: on Mace's this morning, because I do think that the
Speaker 10: team and particularly their CFO Adrian, has done a really
Speaker 10: good job managing inventory levels. Others I think, you know,
Speaker 10: companies like Kohl's have struggles and getting getting foot traffic
Speaker 10: into that into those stores has been elusive for a
Speaker 10: really long time, and frankly, I don't know, I don't
Speaker 10: know how they fix it.
Speaker 2: I just find this absolutely important and on a revenue
Speaker 2: and unit basis, this is just a lack of traffic
Speaker 2: into the stores. So what is the what's your single
Speaker 2: best buy within retailing now? Is it a combined department store?
Speaker 2: Feel or is it a specialty stock.
Speaker 10: I think the best two names to own right now
Speaker 10: in retail are Walmart and Costco. And you'll tell me
Speaker 10: that's super defensive and potentially super boring, but sometimes boring
Speaker 10: can be good.
Speaker 8: Costco is the best retailer I've ever covered. It checks
Speaker 8: all the boxes.
Speaker 10: And to me, Walmart, there's no better time to own
Speaker 10: Walmart than right now, both from a from a sector
Speaker 10: perspective and given how difficult everything is out there, and
Speaker 10: also from a company specific perspective. They're doing a really
Speaker 10: a lot of really good things they and I think
Speaker 10: the key theme for both both companies is the lead
Speaker 10: with price. They're the lowest price guys out there, and
Speaker 10: what consumer out there doesn't want lower prices right now?
Speaker 6: If you believe we're in a discretion recession, quite clearly,
Speaker 6: that's the place to be. Chuck, Thank you, sir, Chuck
Speaker 6: crom There of Gordon Haskett on the latest with some
Speaker 6: of the retail as.
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