1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg PENL podcast. I'm Paul swing you. 2 00:00:05,360 --> 00:00:07,680 Speaker 1: Along with my co host Lisa Brahma wits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money, whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: Podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:22,080 Speaker 1: at Bloomberg dot com. Well General Electric continues to focus 8 00:00:22,160 --> 00:00:25,640 Speaker 1: on reducing its debt heavy balance sheet, today announcing that 9 00:00:25,680 --> 00:00:28,000 Speaker 1: the company is going to freeze pension benefits from more 10 00:00:28,040 --> 00:00:30,600 Speaker 1: than twenty thou US employees. To get a sense of 11 00:00:30,600 --> 00:00:33,320 Speaker 1: what this means for the company and for its balance sheet, 12 00:00:33,320 --> 00:00:36,320 Speaker 1: we welcome Joel Levington, Senior credit analyst for Bloomberg Intelligence. 13 00:00:36,400 --> 00:00:39,320 Speaker 1: Joel joins us here in our Bloomberg and Reactor Broker studio. Joel, 14 00:00:39,320 --> 00:00:42,400 Speaker 1: thanks so much for joining us. So freezing penchion benefits 15 00:00:42,440 --> 00:00:45,320 Speaker 1: for twenty thou employees, How's that going to help the 16 00:00:45,360 --> 00:00:48,839 Speaker 1: balance sheet? Sure? Well? The rating agencies usually look at 17 00:00:48,880 --> 00:00:53,159 Speaker 1: adjusted leverage, which includes underfunded pension liabilities. Gee has the 18 00:00:53,240 --> 00:00:56,280 Speaker 1: largest underfunded pension plan in the SMP five hundred, and 19 00:00:56,320 --> 00:00:58,920 Speaker 1: it was going to go up about seven billion dollars 20 00:00:58,920 --> 00:01:02,880 Speaker 1: this year. So the and that they're taking will alleviate that, uh, 21 00:01:03,040 --> 00:01:05,840 Speaker 1: the incremental edition that they were going to have this year. 22 00:01:07,040 --> 00:01:10,199 Speaker 1: So it says UH in a story looking at this 23 00:01:10,319 --> 00:01:14,160 Speaker 1: issue that GE could potentially reduce the pension short five 24 00:01:14,280 --> 00:01:16,880 Speaker 1: fall by as much as eight billion dollars. I'm just 25 00:01:16,920 --> 00:01:20,760 Speaker 1: trying to understand whether this was basically expected or whether 26 00:01:20,800 --> 00:01:23,959 Speaker 1: this is a surprise. I view it as a surprise 27 00:01:24,000 --> 00:01:26,440 Speaker 1: and a pleasant surprise. If I look at a bigger 28 00:01:26,440 --> 00:01:29,000 Speaker 1: picture for GE in terms of their debt, they need 29 00:01:29,040 --> 00:01:32,520 Speaker 1: to reduce their debt liabilities by about thirty billion dollars 30 00:01:32,520 --> 00:01:35,280 Speaker 1: this year to hit their leverage target. They have about 31 00:01:35,280 --> 00:01:38,600 Speaker 1: thirty billion dollars worth of asset sales happening this year. 32 00:01:38,680 --> 00:01:41,200 Speaker 1: So this is the first slug to help attack the 33 00:01:41,240 --> 00:01:46,000 Speaker 1: liabilities that they need to reduce. So gees CEO Larry Cope, 34 00:01:46,000 --> 00:01:47,680 Speaker 1: I think he's been in the job, you know, a 35 00:01:47,720 --> 00:01:50,760 Speaker 1: little more than a year. So what's the reading after 36 00:01:50,800 --> 00:01:53,280 Speaker 1: a year on his tenure? Because I know one of 37 00:01:53,280 --> 00:01:55,080 Speaker 1: the big issues he said was I'm going to get 38 00:01:55,080 --> 00:01:57,120 Speaker 1: the balance sheet under controlled. Is he Is he doing 39 00:01:57,160 --> 00:01:59,559 Speaker 1: a good job? You think? Yeah? No, that's a great question, Paul. 40 00:01:59,560 --> 00:02:01,560 Speaker 1: And you know I was on a year ago, a 41 00:02:01,600 --> 00:02:03,920 Speaker 1: little over a year ago on the on the TV 42 00:02:04,120 --> 00:02:06,240 Speaker 1: saying that I think he's the best person for the spot, 43 00:02:06,280 --> 00:02:08,960 Speaker 1: and I still do a year later. He is addressing 44 00:02:09,000 --> 00:02:11,560 Speaker 1: the issues, and there's two main issues. One is really 45 00:02:11,840 --> 00:02:14,680 Speaker 1: attacking the liability structure, which is happening through the asset 46 00:02:14,720 --> 00:02:17,960 Speaker 1: sales that they've announced. Uh. The second is really cost 47 00:02:17,960 --> 00:02:21,280 Speaker 1: cutting and restructuring the power business and making that a 48 00:02:21,360 --> 00:02:24,280 Speaker 1: business which had generated over seven billion dollars of operating 49 00:02:24,280 --> 00:02:27,919 Speaker 1: profit in is now losing money. Uh, you know, four years, 50 00:02:28,040 --> 00:02:31,120 Speaker 1: three years later. So really making it less worse will 51 00:02:31,160 --> 00:02:34,600 Speaker 1: be the other driver of of getting their credit back together. 52 00:02:35,400 --> 00:02:37,600 Speaker 1: So if this is a positive surprise, why are the 53 00:02:37,600 --> 00:02:41,720 Speaker 1: shares down well? Because for a shareholder, you're seeing capital 54 00:02:41,760 --> 00:02:44,240 Speaker 1: go towards a risk management of it. It's not a 55 00:02:44,280 --> 00:02:47,880 Speaker 1: share buy back, it's not an acquisition, it's not improving 56 00:02:47,880 --> 00:02:50,840 Speaker 1: the business, but it is reducing risk. So you have 57 00:02:50,919 --> 00:02:53,520 Speaker 1: seen the bonds tighten on the news although the stock 58 00:02:53,600 --> 00:02:55,880 Speaker 1: is off. So basically just to give you a sense 59 00:02:55,919 --> 00:02:59,239 Speaker 1: of what the issue here for the stock is, it's 60 00:02:59,320 --> 00:03:02,040 Speaker 1: the pre fund daying Also of the pensions as part 61 00:03:02,080 --> 00:03:05,600 Speaker 1: of this deal, right, I mean they're putting some money aside, uh, 62 00:03:05,840 --> 00:03:08,920 Speaker 1: in addition to see seeing some of the payments. Right. Oh, 63 00:03:08,960 --> 00:03:11,560 Speaker 1: you're totally rightly say. And I think our equity analysts 64 00:03:11,560 --> 00:03:15,160 Speaker 1: that Karen O Wilhart will tell you that the multi industrials, 65 00:03:15,200 --> 00:03:17,360 Speaker 1: they are looked at in terms of free cash flow, 66 00:03:17,800 --> 00:03:20,239 Speaker 1: and so for this there's no positive or negative free 67 00:03:20,240 --> 00:03:23,120 Speaker 1: cash flow implication implications for this year. But as we 68 00:03:23,120 --> 00:03:25,519 Speaker 1: think about next year and gees hope that it will 69 00:03:25,520 --> 00:03:29,160 Speaker 1: be free cash flow positive, this will help alleviate that 70 00:03:29,200 --> 00:03:32,760 Speaker 1: issue because they won't have additional pension funding to to pursue. 71 00:03:32,919 --> 00:03:35,200 Speaker 1: All right, So from the credit perspective, this is good news. 72 00:03:35,440 --> 00:03:37,680 Speaker 1: The CEO is doing a good job in terms of 73 00:03:37,680 --> 00:03:41,000 Speaker 1: dealing with the pension cutting costs. At some point, though, 74 00:03:41,200 --> 00:03:44,440 Speaker 1: this company really has to get back on a growth track. 75 00:03:44,640 --> 00:03:46,800 Speaker 1: Is that something that making money things? Yes, that whole 76 00:03:46,840 --> 00:03:50,480 Speaker 1: making money thing is there? What is your outlook as 77 00:03:50,520 --> 00:03:54,080 Speaker 1: to kind of the core operating businesses here? Do they 78 00:03:54,120 --> 00:03:56,800 Speaker 1: have the capital structure that can support that the growth 79 00:03:56,800 --> 00:03:58,800 Speaker 1: in the turnaround of those businesses. Yeah, no, that's a 80 00:03:58,800 --> 00:04:02,560 Speaker 1: great question. And underneath their businesses they have two real 81 00:04:02,760 --> 00:04:06,880 Speaker 1: franchises with which is aerospace and healthcare. What you really 82 00:04:06,920 --> 00:04:09,760 Speaker 1: have a problem with is your power and renewables businesses. 83 00:04:10,040 --> 00:04:13,080 Speaker 1: Those are struggling, those will continue to struggle one because 84 00:04:13,120 --> 00:04:15,680 Speaker 1: the fundamentals are so weak. But what they can do 85 00:04:15,880 --> 00:04:18,080 Speaker 1: is really reshape the cost structure there where they were 86 00:04:18,080 --> 00:04:20,520 Speaker 1: built for almost a fifty bigger market than what they 87 00:04:20,560 --> 00:04:22,599 Speaker 1: have today. And so that's why I say that it 88 00:04:22,600 --> 00:04:24,200 Speaker 1: will be less worse. But I think it's going to 89 00:04:24,279 --> 00:04:27,200 Speaker 1: be a very gradual, multi year process before they make 90 00:04:27,240 --> 00:04:29,400 Speaker 1: money in the power business. How much more upste is 91 00:04:29,400 --> 00:04:31,480 Speaker 1: there and the G bonds, I know you can't make 92 00:04:31,520 --> 00:04:35,520 Speaker 1: a call, but make a call, I mean, like theoretically, 93 00:04:35,600 --> 00:04:39,120 Speaker 1: given the fact that they're taking more aggressive steps earlier 94 00:04:39,160 --> 00:04:41,680 Speaker 1: in the process, is that currently being baked into the 95 00:04:41,680 --> 00:04:44,560 Speaker 1: bond prices. Well, I think what the Opportunity said is 96 00:04:44,600 --> 00:04:46,480 Speaker 1: something like this. Their their bonds are rated in the 97 00:04:46,520 --> 00:04:48,680 Speaker 1: triple B tire. If I look at a mid triple 98 00:04:48,760 --> 00:04:52,080 Speaker 1: B industrial there they trade about sixty basis points wider 99 00:04:52,120 --> 00:04:54,240 Speaker 1: the G E bonds. So if they could get if 100 00:04:54,240 --> 00:04:56,920 Speaker 1: they could right size themselves, there's at least sixty points 101 00:04:56,920 --> 00:05:00,000 Speaker 1: of upside. Should uh, you know, like should they get 102 00:05:00,000 --> 00:05:02,200 Speaker 1: their profile to look more akin to what a triple 103 00:05:02,279 --> 00:05:04,240 Speaker 1: be should look like. I don't think that will happen 104 00:05:04,320 --> 00:05:08,400 Speaker 1: until maybe twenty two at the earliest. So are our 105 00:05:08,440 --> 00:05:10,960 Speaker 1: asset sales are we kind of have you seen all 106 00:05:11,000 --> 00:05:12,359 Speaker 1: that you need to see or do we still have 107 00:05:12,400 --> 00:05:14,680 Speaker 1: some more news coming in terms of assets sales? Well? Well, 108 00:05:14,680 --> 00:05:17,800 Speaker 1: I think there's still more potential opportunities in here, and 109 00:05:17,839 --> 00:05:20,000 Speaker 1: in particular, I think it's very interesting that they set 110 00:05:20,080 --> 00:05:23,560 Speaker 1: up a health care analyst day in December. Uh. If 111 00:05:23,600 --> 00:05:25,840 Speaker 1: you recall about a year ago, they were looking to 112 00:05:26,080 --> 00:05:29,400 Speaker 1: I p O that business, and our analysis tells us 113 00:05:29,440 --> 00:05:31,000 Speaker 1: that if they did an i p O akin to 114 00:05:31,040 --> 00:05:35,080 Speaker 1: what Siemens did their peer with their healthcare excuse me, 115 00:05:35,080 --> 00:05:36,880 Speaker 1: with their health care business, that would be worth somewhere 116 00:05:36,920 --> 00:05:40,360 Speaker 1: between ten and twelve billion dollars for GE, which would 117 00:05:40,360 --> 00:05:44,480 Speaker 1: be another lever to attack their liabilities. Joel Lovington, thank 118 00:05:44,520 --> 00:05:46,600 Speaker 1: you so much for being here. General Electric is such 119 00:05:46,640 --> 00:05:49,560 Speaker 1: an interesting story and frankly has been a boon over 120 00:05:49,600 --> 00:05:51,760 Speaker 1: the past few months for the bond investors and anyone 121 00:05:51,800 --> 00:05:55,039 Speaker 1: who got in early. So definitely an interesting place to 122 00:05:55,200 --> 00:05:58,280 Speaker 1: continue to watch. Joel Lovingtons, your credit analyst for Bloomberg 123 00:05:58,320 --> 00:06:16,560 Speaker 1: Intelligence joining us here in our Berg Interactive Broker Studios. Well, 124 00:06:16,560 --> 00:06:19,919 Speaker 1: the economic data we've seen recently sending I think financial 125 00:06:19,960 --> 00:06:23,320 Speaker 1: markets mixed messages at best. Are we heading to a recession? 126 00:06:23,920 --> 00:06:26,520 Speaker 1: If so, when, If not, is it just lower growth 127 00:06:26,560 --> 00:06:29,000 Speaker 1: for longer? And what does that mean for financial markets? 128 00:06:29,080 --> 00:06:31,280 Speaker 1: Our next guests can help us kind of dig through that. 129 00:06:31,360 --> 00:06:34,880 Speaker 1: Hugh Johnson's chairman and chief investment officer of Hugh Johnson Advisers, 130 00:06:34,880 --> 00:06:37,160 Speaker 1: based in Albany, New York. Hugh, thanks so much for 131 00:06:37,360 --> 00:06:39,880 Speaker 1: joining us. I know, investors really over the last week 132 00:06:39,960 --> 00:06:42,280 Speaker 1: or so, I've had a lot of data to digest, 133 00:06:42,720 --> 00:06:47,320 Speaker 1: whether it's manufacturing, I s M data, UH, consumer confidence, jobs. 134 00:06:47,560 --> 00:06:50,320 Speaker 1: What is your view of kind of the current economic 135 00:06:50,360 --> 00:06:53,200 Speaker 1: outlook and what that means for financial markets. It's a 136 00:06:53,240 --> 00:06:55,919 Speaker 1: great question, and the problem is that we don't have 137 00:06:56,040 --> 00:06:59,120 Speaker 1: any easy answers. And you see that the markets have 138 00:06:59,279 --> 00:07:03,680 Speaker 1: become ex sdreamely news sensitive show we say so, we 139 00:07:03,800 --> 00:07:07,520 Speaker 1: had very sharp declines, Paul, and as a result of 140 00:07:07,520 --> 00:07:11,240 Speaker 1: the AI s M manufacturing reports, suggesting that the manufacturing 141 00:07:11,280 --> 00:07:15,440 Speaker 1: sector the economy is contracting and protect perhaps can contracting 142 00:07:15,480 --> 00:07:18,040 Speaker 1: quite a bit, as well as the services sector, which 143 00:07:18,080 --> 00:07:21,520 Speaker 1: looked like the manufacturing sector was beginning to let's say, 144 00:07:21,560 --> 00:07:25,559 Speaker 1: contaminate the services sector. At the same time, UH one 145 00:07:25,720 --> 00:07:28,240 Speaker 1: or two days later, we get an employment report, which 146 00:07:28,240 --> 00:07:31,720 Speaker 1: in my judgment was very encouraging, and the markets reflected 147 00:07:31,800 --> 00:07:35,320 Speaker 1: that by going up. So the markets have become extremely 148 00:07:35,680 --> 00:07:38,960 Speaker 1: new sensitive. If you were to ask me whether it's 149 00:07:39,000 --> 00:07:41,920 Speaker 1: going to be a recession or hard landing, or whether 150 00:07:41,960 --> 00:07:43,760 Speaker 1: it's going to be a soft landing when we get 151 00:07:43,760 --> 00:07:46,320 Speaker 1: to two thousand twenty, I'd say, first of all, it's 152 00:07:46,360 --> 00:07:49,880 Speaker 1: important to recognize it's a very close call. Um, we 153 00:07:49,920 --> 00:07:51,960 Speaker 1: can make a good case for a hard landing, we 154 00:07:51,960 --> 00:07:54,800 Speaker 1: can make a really good case, I think for soft landing. 155 00:07:54,800 --> 00:07:56,960 Speaker 1: And if I were to make a guess, and that's 156 00:07:57,000 --> 00:07:58,720 Speaker 1: probably all it could be, I'd say it's going to 157 00:07:58,800 --> 00:08:00,320 Speaker 1: be a soft landing or the econ him. He is 158 00:08:00,320 --> 00:08:03,160 Speaker 1: going to continue to expand through two thousand twenty, but 159 00:08:03,240 --> 00:08:06,400 Speaker 1: at a very very slow pace, a slower pace than 160 00:08:06,520 --> 00:08:09,560 Speaker 1: two thousand nineteen. You and I when I talked to 161 00:08:09,600 --> 00:08:13,760 Speaker 1: investors not on radio, they often tell me, here's our thinking. 162 00:08:13,880 --> 00:08:17,680 Speaker 1: Things will be fine. Heading into elections. President Trump will 163 00:08:17,720 --> 00:08:20,720 Speaker 1: try to make the economy look really good. If Elizabeth 164 00:08:20,760 --> 00:08:24,200 Speaker 1: Warren wins. If she wins the Democratic nomination and then 165 00:08:24,240 --> 00:08:26,880 Speaker 1: she wins the presidency, all bets are off. The market's 166 00:08:26,920 --> 00:08:29,720 Speaker 1: going to tank. This morning, OURBC coming out with a 167 00:08:29,960 --> 00:08:33,200 Speaker 1: research note saying, maybe it's not so bad. Are you 168 00:08:33,600 --> 00:08:37,080 Speaker 1: even looking at this at that At this point, I'm 169 00:08:37,120 --> 00:08:39,320 Speaker 1: not looking at it every day, And I said, of 170 00:08:39,360 --> 00:08:42,320 Speaker 1: a hard, hard basis, but it's certainly in the back 171 00:08:42,360 --> 00:08:44,960 Speaker 1: of my mind, and it's certainly I think with every 172 00:08:44,960 --> 00:08:48,000 Speaker 1: old strategist, economists are thinking about it. What's it going 173 00:08:48,040 --> 00:08:51,400 Speaker 1: to represent or mean? So if Elizabeth Warren, who now 174 00:08:51,480 --> 00:08:54,400 Speaker 1: looks like she's heading into the a little bit into 175 00:08:54,400 --> 00:08:58,280 Speaker 1: the lead, and what's it gonna mean, especially because there's 176 00:08:58,720 --> 00:09:01,400 Speaker 1: the concern about the show to the left, concern about 177 00:09:01,600 --> 00:09:06,560 Speaker 1: obviously more regulation, concerned about higher taxes, what's that going 178 00:09:06,600 --> 00:09:09,000 Speaker 1: to mean for the markets, the economy, in the markets. 179 00:09:09,440 --> 00:09:12,720 Speaker 1: I think the common sense approach might be that it's 180 00:09:12,720 --> 00:09:14,840 Speaker 1: probably not going to be very good news when we 181 00:09:14,880 --> 00:09:17,400 Speaker 1: have that shift to the left for the economy and 182 00:09:17,440 --> 00:09:19,720 Speaker 1: the markets. But believe me, there's a case that could 183 00:09:19,720 --> 00:09:22,480 Speaker 1: be made that it might be very good for the market. 184 00:09:22,559 --> 00:09:25,160 Speaker 1: So it's like it's one that I don't focus on 185 00:09:25,160 --> 00:09:27,520 Speaker 1: on a day to day basis, but it's certainly in 186 00:09:27,520 --> 00:09:29,360 Speaker 1: the back of my mind. And as we get closer 187 00:09:29,360 --> 00:09:32,520 Speaker 1: to two thousand, the election in two thousand twenty, we're 188 00:09:32,480 --> 00:09:35,600 Speaker 1: gonna be thinking a lot about it. Right now, it's 189 00:09:35,640 --> 00:09:38,640 Speaker 1: not the number one issue. Well, I'm guessing, Hugh. One 190 00:09:38,679 --> 00:09:40,600 Speaker 1: of the issues that is top of mind for you 191 00:09:40,800 --> 00:09:43,240 Speaker 1: is the Federal Reserve and to what extent the FED 192 00:09:43,320 --> 00:09:47,240 Speaker 1: can help, you know, support this economy which appears to 193 00:09:47,280 --> 00:09:50,040 Speaker 1: be slowing. So what do you expect from the Fed 194 00:09:50,120 --> 00:09:52,319 Speaker 1: and how effective do you think the Fed will be? Well, 195 00:09:52,360 --> 00:09:54,560 Speaker 1: I take my queue from the markets, and I looked 196 00:09:54,600 --> 00:09:56,480 Speaker 1: at the markets last week, and I look at the 197 00:09:56,480 --> 00:09:59,760 Speaker 1: markets today, and I asked myself the simple question, what 198 00:09:59,880 --> 00:10:02,360 Speaker 1: the the financial markets, the yield on a ten year 199 00:10:02,440 --> 00:10:05,720 Speaker 1: treasury as well as the level of stock prices tell 200 00:10:05,840 --> 00:10:08,960 Speaker 1: us statistically as to what the Federal Reserve is gonna do. 201 00:10:09,520 --> 00:10:13,160 Speaker 1: And the answer to that question is, statistically, the markets 202 00:10:13,200 --> 00:10:15,720 Speaker 1: are telling us that the Fed has one more rate cut. 203 00:10:15,760 --> 00:10:17,640 Speaker 1: I don't know if it's this month, I doubt it, 204 00:10:18,880 --> 00:10:21,240 Speaker 1: or December, but I think there's one more rate cut 205 00:10:21,360 --> 00:10:24,760 Speaker 1: and possibly another rate cut in the near future. And 206 00:10:24,840 --> 00:10:27,600 Speaker 1: that to me is important. And the reason it's important 207 00:10:28,040 --> 00:10:30,840 Speaker 1: is because if we're talking one more rate cut, let's 208 00:10:30,840 --> 00:10:33,920 Speaker 1: call it December, maybe even as late as as March, 209 00:10:34,240 --> 00:10:37,600 Speaker 1: but also December, that's consistent with the view that we'll 210 00:10:37,640 --> 00:10:39,920 Speaker 1: have a soft landing. If we're gonna have a hard landing, 211 00:10:40,320 --> 00:10:43,839 Speaker 1: you'd have the markets telling you or discounting more rate 212 00:10:43,880 --> 00:10:46,880 Speaker 1: cuts than just one cut from one eight seven to 213 00:10:46,960 --> 00:10:50,360 Speaker 1: one point six two. So one theme of the year 214 00:10:50,440 --> 00:10:53,960 Speaker 1: has really been a rotation within the equity space away 215 00:10:54,040 --> 00:10:57,280 Speaker 1: from some of the typical growth and momentum stocks into 216 00:10:57,840 --> 00:11:00,640 Speaker 1: the havens, utilities, the reads. Do you think that that 217 00:11:00,960 --> 00:11:04,280 Speaker 1: trade has been overplayed at this point, Yeah, that's a 218 00:11:04,400 --> 00:11:08,600 Speaker 1: great question. Obviously, you have to worry about valuation, Lisa. 219 00:11:08,760 --> 00:11:13,160 Speaker 1: It's it's valuation of the sort of traditional safe havens, 220 00:11:13,200 --> 00:11:16,000 Speaker 1: the safe havens of course of the consumer staples and 221 00:11:16,120 --> 00:11:18,400 Speaker 1: utilities which have had a big move to the upside. 222 00:11:18,760 --> 00:11:21,000 Speaker 1: I don't think it's over I think you should have 223 00:11:21,120 --> 00:11:24,760 Speaker 1: some of that so called defense in your portfolio. You 224 00:11:24,760 --> 00:11:27,480 Speaker 1: should also, and I don't think this is overplayed, make 225 00:11:27,520 --> 00:11:31,240 Speaker 1: sure you have value stocks in your portfolio. Value stocks 226 00:11:31,280 --> 00:11:34,240 Speaker 1: play a pay a higher dividend than than growth stocks, 227 00:11:34,240 --> 00:11:36,800 Speaker 1: so that that's helpful if indeed we do go to 228 00:11:37,320 --> 00:11:40,560 Speaker 1: hard landing in a recession. And let's not forget they're 229 00:11:40,600 --> 00:11:43,600 Speaker 1: out there. There's some managers and and there are many 230 00:11:43,679 --> 00:11:47,240 Speaker 1: of them that have dividends strategies and strategies which offer 231 00:11:47,320 --> 00:11:50,560 Speaker 1: dividends yields in the equity component of a portfolio of 232 00:11:50,600 --> 00:11:53,840 Speaker 1: two percent to three percent and a rising dividend yield. 233 00:11:54,240 --> 00:11:57,120 Speaker 1: That's really a good idea in this current market environment. 234 00:11:57,120 --> 00:12:00,600 Speaker 1: What I'm simply saying is every invest they're given the 235 00:12:00,640 --> 00:12:03,640 Speaker 1: close call that I'm talking about, should build a little 236 00:12:03,640 --> 00:12:06,880 Speaker 1: bit of defense into their portfolios. That's a really sensible 237 00:12:06,920 --> 00:12:10,240 Speaker 1: thing to do. So here we have we can't forget 238 00:12:10,280 --> 00:12:12,360 Speaker 1: about trade. That continues to be a big driver of 239 00:12:12,360 --> 00:12:15,600 Speaker 1: the market. And we have the Chinese delegation arriving in Washington, 240 00:12:15,679 --> 00:12:19,240 Speaker 1: d C. This week for negotiations. What is your view 241 00:12:19,320 --> 00:12:22,520 Speaker 1: on how trade is gonna, has impacted and will impact 242 00:12:22,600 --> 00:12:25,280 Speaker 1: the market going forward. It's a it's a big issue, 243 00:12:25,320 --> 00:12:28,920 Speaker 1: and it's a big issue affecting the manufacturing sector economy. Now. 244 00:12:29,040 --> 00:12:32,760 Speaker 1: Quite frankly, the trade numbers, the export numbers have suggested 245 00:12:32,840 --> 00:12:36,360 Speaker 1: that indeed trade is not affecting the manufacturing sector as yet, 246 00:12:36,600 --> 00:12:39,240 Speaker 1: but it's an important issue. I've said all along, and 247 00:12:39,240 --> 00:12:41,760 Speaker 1: I've said for a long number that the Chinese are 248 00:12:41,840 --> 00:12:45,440 Speaker 1: really in the driver's seat because they know how important 249 00:12:45,480 --> 00:12:47,640 Speaker 1: it is for for for Trump to do a deal, 250 00:12:47,960 --> 00:12:50,400 Speaker 1: and to do a deal that's gonna in revive shall 251 00:12:50,440 --> 00:12:53,480 Speaker 1: we say, agricultural exports because he needs the farm vote. 252 00:12:53,760 --> 00:12:56,360 Speaker 1: He's gonna that will get put on the hold of 253 00:12:56,360 --> 00:12:59,720 Speaker 1: of of the automobile tariffs that are coming out of China, 254 00:13:00,000 --> 00:13:02,800 Speaker 1: as he needs that Midwest vote. And they know that, 255 00:13:03,000 --> 00:13:05,720 Speaker 1: and that's why they're limiting what they're talking about when 256 00:13:05,720 --> 00:13:09,040 Speaker 1: they come to Washington this week. There's not much room here, 257 00:13:09,080 --> 00:13:11,960 Speaker 1: but boy, they know they're in the driver's seat, and 258 00:13:12,120 --> 00:13:15,120 Speaker 1: they know Trump needs a deal, and they're very aware 259 00:13:15,160 --> 00:13:17,880 Speaker 1: of that, and they're gonna drive extremely hard. Pucket. It's 260 00:13:17,880 --> 00:13:20,319 Speaker 1: gonna I think we'll reach a deal and it will 261 00:13:20,360 --> 00:13:23,160 Speaker 1: look like a reasonably good deal, but I don't think 262 00:13:23,200 --> 00:13:26,000 Speaker 1: it's going to be all that the Trump administration and Lightheiser, 263 00:13:26,040 --> 00:13:29,960 Speaker 1: who's a really good negotiator, really want. Hugh Johnson, thank 264 00:13:29,960 --> 00:13:32,559 Speaker 1: you so much for joining us today. Hugh Johnson, Chairman 265 00:13:32,559 --> 00:13:35,920 Speaker 1: and Chief Investment Officer, and Hugh Johnson adviser is coming 266 00:13:35,920 --> 00:13:55,559 Speaker 1: to us from Albany, New York. Well, it has been 267 00:13:55,600 --> 00:13:58,439 Speaker 1: a very busy morning for President Donald Trump and his 268 00:13:58,559 --> 00:14:01,200 Speaker 1: legal team as they can continue to fight to keep 269 00:14:01,240 --> 00:14:04,440 Speaker 1: his tax returns private. Lots of rulings from various courts 270 00:14:04,480 --> 00:14:07,000 Speaker 1: this morning. To get the latest and to help us 271 00:14:07,040 --> 00:14:09,880 Speaker 1: clear all this up, is Bob Van Voors, legal reporter 272 00:14:09,960 --> 00:14:12,920 Speaker 1: for Bloomberg, joining us on the phone from New York. Bob, 273 00:14:12,920 --> 00:14:14,560 Speaker 1: thanks so much for joining us again. We've had a 274 00:14:14,559 --> 00:14:17,280 Speaker 1: couple of rulings this morning. Just give us a summary 275 00:14:17,400 --> 00:14:21,320 Speaker 1: of what happened. Well, early this morning, federal judge here 276 00:14:21,360 --> 00:14:25,160 Speaker 1: in Manhattan ruled that President Trump can't stop his accountants 277 00:14:25,560 --> 00:14:28,360 Speaker 1: from turning over eight years of taxes and other financial 278 00:14:28,440 --> 00:14:33,960 Speaker 1: documents to Manhattan District Attorney Cyrus Vans Jr. Vance's office 279 00:14:34,240 --> 00:14:39,640 Speaker 1: is investigating whether the Trump organization falsified business records UH 280 00:14:39,800 --> 00:14:42,840 Speaker 1: tied to the hush money payments that were allegedly made 281 00:14:42,840 --> 00:14:47,040 Speaker 1: to Storey Daniels and Karen McDougall. As I'm sure you remember, 282 00:14:47,080 --> 00:14:49,320 Speaker 1: those are two women who claimed they had affairs with 283 00:14:49,400 --> 00:14:55,840 Speaker 1: Trump before he became president. Um last year, Trump's personal lawyer, 284 00:14:55,960 --> 00:15:01,720 Speaker 1: Michael Cohen pleaded guilty to, among other things, facilitating these 285 00:15:01,720 --> 00:15:07,640 Speaker 1: payments uh, and fled guilty to a campaign finance UH violation. 286 00:15:08,120 --> 00:15:14,520 Speaker 1: So within minutes this morning, Trump's side appealed the ruling. 287 00:15:15,200 --> 00:15:18,840 Speaker 1: Um and Uh, an appeals court has granted a temporary 288 00:15:18,920 --> 00:15:22,200 Speaker 1: stay that puts off what would have been at one 289 00:15:22,240 --> 00:15:28,200 Speaker 1: o'clock PM deadline for his accountants to turn over his 290 00:15:28,320 --> 00:15:33,760 Speaker 1: taxes and all of these other records to to vance. Okay, 291 00:15:33,920 --> 00:15:39,280 Speaker 1: so he won this, Uh, this sort of emergency stay. 292 00:15:39,320 --> 00:15:43,400 Speaker 1: What sort of the main event that everyone's waiting for 293 00:15:43,560 --> 00:15:47,080 Speaker 1: to determine whether he will have to turn over the 294 00:15:47,120 --> 00:15:49,400 Speaker 1: documents or not? At this point, Well, here's what's going 295 00:15:49,440 --> 00:15:53,240 Speaker 1: to happen. Trump lost the ruling this morning. Uh. The 296 00:15:53,320 --> 00:15:57,720 Speaker 1: appeals court just granted the state to delay things very 297 00:15:57,720 --> 00:16:00,320 Speaker 1: for a very short time while it gives X diet 298 00:16:00,320 --> 00:16:04,640 Speaker 1: of consideration. So, uh, the focus of attention shifts to 299 00:16:04,680 --> 00:16:08,120 Speaker 1: the appeals court to decide whether the judge who made 300 00:16:08,120 --> 00:16:11,280 Speaker 1: the ruling this morning, his name is Victor Marrero, whether 301 00:16:11,360 --> 00:16:15,200 Speaker 1: Marrero's ruling was correct or not. Barrero said this case 302 00:16:15,240 --> 00:16:17,720 Speaker 1: shouldn't have been in federal court at all. This is 303 00:16:17,760 --> 00:16:20,200 Speaker 1: something that the state courts should have tried to figure out, 304 00:16:20,720 --> 00:16:24,920 Speaker 1: and he also said that the president's broad claims that 305 00:16:25,000 --> 00:16:28,880 Speaker 1: he can't be investigated at all, that his associates can't 306 00:16:28,880 --> 00:16:32,160 Speaker 1: be investigated, and that his businesses can't be investigated. He 307 00:16:32,240 --> 00:16:36,520 Speaker 1: called it quote repugnant to the nation's governmental structure and 308 00:16:36,640 --> 00:16:41,320 Speaker 1: continent constitutional values. Um, so we're going to be waiting 309 00:16:41,400 --> 00:16:45,240 Speaker 1: to hear from the appeals court on an expedited basis, 310 00:16:45,280 --> 00:16:48,600 Speaker 1: will probably know by the end of today exactly when 311 00:16:48,640 --> 00:16:52,080 Speaker 1: they're going to hear this case. Okay, So let's assume 312 00:16:52,720 --> 00:16:55,080 Speaker 1: they hear the case. Give us a sense of kind 313 00:16:55,120 --> 00:16:59,480 Speaker 1: of what we can expect next and over what time frame. Um, well, 314 00:16:59,520 --> 00:17:03,800 Speaker 1: we can very shortly to find out exactly what the 315 00:17:03,800 --> 00:17:06,120 Speaker 1: timeframe is going to be. But then the court will 316 00:17:06,800 --> 00:17:10,639 Speaker 1: uh set up a schedule for the for both sides 317 00:17:10,680 --> 00:17:14,840 Speaker 1: to submit briefs to come in and argue. Trump's side 318 00:17:14,880 --> 00:17:19,120 Speaker 1: claims that, uh, that it's a constitutional violation, that it's 319 00:17:19,200 --> 00:17:23,679 Speaker 1: that violates separation of powers and federal supremacy over the 320 00:17:23,720 --> 00:17:27,919 Speaker 1: state for a state official to be looking into his 321 00:17:28,000 --> 00:17:32,879 Speaker 1: affairs and getting his documents. Vance's side says, this is 322 00:17:32,960 --> 00:17:37,080 Speaker 1: just a normal investigation. This is a normal uh, subpoena 323 00:17:37,240 --> 00:17:40,480 Speaker 1: for somebody to turn over records. UH, and that's the 324 00:17:40,560 --> 00:17:43,320 Speaker 1: argument they're going to make. We can expect them to 325 00:17:43,440 --> 00:17:47,800 Speaker 1: do this as quickly as possible, UM, because the president 326 00:17:47,920 --> 00:17:51,679 Speaker 1: is involved in because of the constitutional weight of these issues, 327 00:17:52,640 --> 00:17:55,359 Speaker 1: which financial records are these just to get a sense 328 00:17:55,400 --> 00:18:00,520 Speaker 1: of the scope that perhaps us will we'll get access 329 00:18:00,600 --> 00:18:04,760 Speaker 1: to should President Trump lose the ultimate appeal, Well, we 330 00:18:04,800 --> 00:18:08,679 Speaker 1: know they're asking for eight years of taxes. We know 331 00:18:08,760 --> 00:18:14,120 Speaker 1: that they're also asking for records that are um connected 332 00:18:14,760 --> 00:18:17,320 Speaker 1: to these payments. We don't know exactly what it is 333 00:18:17,400 --> 00:18:20,240 Speaker 1: that UH is sitting in the files that the Trump 334 00:18:20,320 --> 00:18:23,440 Speaker 1: organization that they are going to have to turn over, 335 00:18:23,480 --> 00:18:27,080 Speaker 1: but it does have to do with the you know, 336 00:18:27,160 --> 00:18:31,960 Speaker 1: whether the Trump organization tried to hide the payments by 337 00:18:32,160 --> 00:18:37,359 Speaker 1: characterizing them as something that they that they weren't. So, Bob, 338 00:18:37,400 --> 00:18:39,880 Speaker 1: just is there a consensus within the legal community how 339 00:18:39,880 --> 00:18:44,000 Speaker 1: this will play at will Trump have to discloses handover statements? Well, 340 00:18:44,040 --> 00:18:47,199 Speaker 1: I don't know that there's a consensus. But the judge 341 00:18:47,320 --> 00:18:51,960 Speaker 1: who ruled today had a very strong ruling, had very 342 00:18:52,040 --> 00:18:58,080 Speaker 1: strongly criticized UM the very very broad immunity that the 343 00:18:58,119 --> 00:19:02,760 Speaker 1: president was arguing for um. So you know, if the 344 00:19:02,960 --> 00:19:06,640 Speaker 1: appeals court takes a similar view, Uh, then the president 345 00:19:06,680 --> 00:19:10,200 Speaker 1: will have to try to appeal to the Supreme Court. Uh. 346 00:19:10,200 --> 00:19:12,639 Speaker 1: And if that fails, then he's going to be turning 347 00:19:12,640 --> 00:19:15,880 Speaker 1: over those documents. But Van Voris, thank you so much 348 00:19:16,160 --> 00:19:19,840 Speaker 1: for being with us today. Bloom Legal reporter discussing what 349 00:19:19,880 --> 00:19:24,199 Speaker 1: we're seeing that's coming out of the trial. Uh. Sara's 350 00:19:24,240 --> 00:19:27,920 Speaker 1: Fans Junior, the District attorney in the United for Uniteds 351 00:19:27,960 --> 00:19:31,040 Speaker 1: in the state of New York, going after President Trump's 352 00:19:31,080 --> 00:19:41,280 Speaker 1: financial records, winning around President Trump winning an emergency stay 353 00:19:50,960 --> 00:19:53,560 Speaker 1: right now, let's shift our focus to the retail sector. 354 00:19:53,560 --> 00:19:57,040 Speaker 1: A lot of questions swirling over exactly how tariffs could 355 00:19:57,119 --> 00:20:01,920 Speaker 1: potentially affect this sector harder than others heading into the 356 00:20:02,000 --> 00:20:04,119 Speaker 1: holiday season. We are so pleased to say we have 357 00:20:04,200 --> 00:20:07,680 Speaker 1: with us Kenna Tory, president of the not Tory Company, 358 00:20:07,720 --> 00:20:13,160 Speaker 1: also a Bloomberg Media alum, a reporter, also broadcaster. Uh 359 00:20:13,520 --> 00:20:15,800 Speaker 1: A while ago, A long time ago, A long time ago. 360 00:20:16,560 --> 00:20:18,280 Speaker 1: I miss it here great, I always love coming back. 361 00:20:18,440 --> 00:20:21,640 Speaker 1: Well here you are, you're back, So welcome back here 362 00:20:21,640 --> 00:20:24,600 Speaker 1: in our blog Gonna Active broker studio. So um Ken, 363 00:20:24,720 --> 00:20:26,960 Speaker 1: can you just tell us a little bit about the company. 364 00:20:27,000 --> 00:20:29,120 Speaker 1: First of all, sure, so we're a forty two year 365 00:20:29,160 --> 00:20:33,600 Speaker 1: old family business women's fashion brand. We've mostly been known 366 00:20:33,640 --> 00:20:36,320 Speaker 1: for high end women sleepwear and Broasen underwear, So you know, 367 00:20:36,400 --> 00:20:39,400 Speaker 1: traditionally we've sold to the high end department stores Bergdorf, 368 00:20:39,440 --> 00:20:43,240 Speaker 1: Neiman Marcus, Saxon, Nordstrom. I'd say over the last decade 369 00:20:43,480 --> 00:20:46,440 Speaker 1: we have really transformed the company. So those department stores 370 00:20:46,440 --> 00:20:48,760 Speaker 1: are still very key to our strategy, but we know, 371 00:20:49,000 --> 00:20:51,720 Speaker 1: you know, everybody knows traffic foot traffic to those stores 372 00:20:51,800 --> 00:20:55,440 Speaker 1: is declining, so we've really pivoted our strategy. They continue 373 00:20:55,440 --> 00:20:57,919 Speaker 1: to be important clients, but we've invested heavily in our 374 00:20:57,960 --> 00:21:00,560 Speaker 1: dot com, which we started early. We're in twelfth year 375 00:21:00,560 --> 00:21:03,640 Speaker 1: of Notori dot com. We've expanded our brands so now 376 00:21:03,680 --> 00:21:05,679 Speaker 1: instead of just being high end, we have some moderate 377 00:21:05,720 --> 00:21:09,000 Speaker 1: brands that have helped with with distribution as well. And 378 00:21:09,000 --> 00:21:11,320 Speaker 1: then we've also become we've really tried to become more 379 00:21:11,440 --> 00:21:14,399 Speaker 1: of a lifestyle brand, so instead of just those core categories, 380 00:21:14,720 --> 00:21:19,280 Speaker 1: we've developed clothing, betting, towels, legware, and here Today because 381 00:21:19,280 --> 00:21:21,480 Speaker 1: we're announcing a new partnership as well in the fine 382 00:21:21,560 --> 00:21:24,679 Speaker 1: jewelry space. So talk to us about your brand. You 383 00:21:24,720 --> 00:21:29,240 Speaker 1: mentioned how do you you know, develop enhanced promote your brand. 384 00:21:29,760 --> 00:21:32,000 Speaker 1: How's that changed over the years with you know, social 385 00:21:32,000 --> 00:21:34,480 Speaker 1: media and all those influencers and things things like that, 386 00:21:34,840 --> 00:21:36,960 Speaker 1: It has changed a lot. So, you know, I left 387 00:21:37,040 --> 00:21:39,439 Speaker 1: Wall Street twelve years ago to join the company, and 388 00:21:39,480 --> 00:21:42,200 Speaker 1: at that time, the business is really simple. We basically 389 00:21:42,920 --> 00:21:45,280 Speaker 1: invested in making product and the product kind of speaks 390 00:21:45,280 --> 00:21:47,600 Speaker 1: for itself, and we sold that product to that small 391 00:21:47,680 --> 00:21:50,240 Speaker 1: number of high end retailers and they sort of pushed 392 00:21:50,240 --> 00:21:54,240 Speaker 1: and had that conversation with the end user, with the customer. Now, 393 00:21:54,520 --> 00:21:56,720 Speaker 1: you know, it's not just about making products. If all 394 00:21:56,760 --> 00:21:58,479 Speaker 1: you do is if any as any brand, If all 395 00:21:58,560 --> 00:22:01,240 Speaker 1: you do is focus on product, that's not enough. You know, 396 00:22:01,359 --> 00:22:04,760 Speaker 1: whether it's our social media, whether it's our website, whether 397 00:22:04,800 --> 00:22:07,000 Speaker 1: it's creating a connection between the product and the people 398 00:22:07,000 --> 00:22:08,359 Speaker 1: behind it. You know, I feel like we talk a 399 00:22:08,359 --> 00:22:11,040 Speaker 1: lot about storytelling. Who are these people that are making 400 00:22:11,040 --> 00:22:13,359 Speaker 1: the product? Where is it made? So really it's you know, 401 00:22:13,520 --> 00:22:16,280 Speaker 1: while product really is still the most important thing we do, 402 00:22:16,520 --> 00:22:19,240 Speaker 1: it's it's not nearly you know, all incumbentsing. There's so 403 00:22:19,280 --> 00:22:21,320 Speaker 1: many different things we have to hit on to succeed today. 404 00:22:21,400 --> 00:22:23,440 Speaker 1: So when I think about bras and underpants, I think 405 00:22:23,440 --> 00:22:25,800 Speaker 1: that the story is changing, right, And I think that 406 00:22:25,920 --> 00:22:29,880 Speaker 1: nothing really exemplifies that more than what we've seen with 407 00:22:30,000 --> 00:22:32,080 Speaker 1: l brands and kind of struggling to understand what the 408 00:22:32,160 --> 00:22:36,080 Speaker 1: identity of Victoria's Secret ought to be. What is uh 409 00:22:36,160 --> 00:22:39,679 Speaker 1: the story for the modern woman when it comes to 410 00:22:39,720 --> 00:22:42,359 Speaker 1: bra and under bras and underpants, right, So I think, 411 00:22:42,400 --> 00:22:44,520 Speaker 1: you know, this story has definitely gotten a lot of 412 00:22:44,520 --> 00:22:46,600 Speaker 1: focus over the last year, but really the story has 413 00:22:46,600 --> 00:22:50,560 Speaker 1: been because it always got time Mariam exactly. But really, 414 00:22:50,720 --> 00:22:53,760 Speaker 1: you know, over the last fifteen years, everybody in this space, 415 00:22:53,800 --> 00:22:57,160 Speaker 1: we all knew, you know, Victoria's Secret just had incredible share. 416 00:22:57,160 --> 00:22:58,840 Speaker 1: Like if you look at their market share compared to 417 00:22:59,200 --> 00:23:01,520 Speaker 1: any other the big retailers in any other sector, like 418 00:23:01,560 --> 00:23:04,320 Speaker 1: it didn't make sense. Brands like US have really gone 419 00:23:04,359 --> 00:23:07,200 Speaker 1: after them aggressively over the last fifteen years. And I think, 420 00:23:07,359 --> 00:23:10,560 Speaker 1: you know, other you know, startups, so old school brands 421 00:23:10,560 --> 00:23:12,720 Speaker 1: have gone after Victoria's Secret, and now we've really seen 422 00:23:12,760 --> 00:23:15,880 Speaker 1: a lot of directed consumer startups go after them as well. 423 00:23:15,920 --> 00:23:17,959 Speaker 1: And clearly, you know, some of that market share had 424 00:23:17,960 --> 00:23:20,000 Speaker 1: to go away. Some of that's natural, and then obviously 425 00:23:20,040 --> 00:23:22,840 Speaker 1: there's been some other missteps um as well on on 426 00:23:22,880 --> 00:23:25,120 Speaker 1: their part that's probably led to some success for other 427 00:23:25,200 --> 00:23:28,280 Speaker 1: brands as well. So I think, you know, with all 428 00:23:28,320 --> 00:23:29,879 Speaker 1: of these things, some of it's just sort of a 429 00:23:30,000 --> 00:23:34,720 Speaker 1: natural degradation of market share. But also you know that customer, 430 00:23:35,000 --> 00:23:38,200 Speaker 1: especially the millennial customer, trying to get through to her 431 00:23:38,560 --> 00:23:40,600 Speaker 1: and what he or she wants in terms of her 432 00:23:40,640 --> 00:23:43,760 Speaker 1: broas and underwear and sleepwear. It's a very evasive message. 433 00:23:43,800 --> 00:23:46,520 Speaker 1: You know, our customer, to be honest, is um a 434 00:23:46,520 --> 00:23:49,040 Speaker 1: little bit traditionally more on the older side or on 435 00:23:49,080 --> 00:23:50,879 Speaker 1: the middle aged to older side, and we continue to 436 00:23:50,920 --> 00:23:53,720 Speaker 1: market to that customer. In terms of that millennial, we 437 00:23:53,760 --> 00:23:57,480 Speaker 1: have definitely gone more aggressively after it. But whether it's us, 438 00:23:57,480 --> 00:24:00,000 Speaker 1: whether it's any of the directed consumer companies going after 439 00:24:00,000 --> 00:24:02,480 Speaker 1: to it, uh, it's not. It's never an easy formula 440 00:24:02,560 --> 00:24:05,520 Speaker 1: for for anybody in the space, the fickle millennial when 441 00:24:05,520 --> 00:24:08,199 Speaker 1: it comes to even understands you've never heard of that 442 00:24:08,240 --> 00:24:11,440 Speaker 1: before here or there, So just give us a sense, um, 443 00:24:11,480 --> 00:24:13,240 Speaker 1: you know, we we think about we we we talk 444 00:24:13,280 --> 00:24:15,120 Speaker 1: a lot on the show and on Bloomberg Media about 445 00:24:15,119 --> 00:24:16,760 Speaker 1: the tariffs and what it means for the economy and 446 00:24:16,760 --> 00:24:18,959 Speaker 1: so on and so forth. So for your business, how 447 00:24:19,040 --> 00:24:21,679 Speaker 1: has it impacted your business? So we're fortunate, you know, 448 00:24:21,720 --> 00:24:23,480 Speaker 1: like I said, we're a family owned business and for 449 00:24:23,560 --> 00:24:26,760 Speaker 1: the sleepware, loungeware and ready to wear that we do ourselves. 450 00:24:27,000 --> 00:24:29,960 Speaker 1: We have our own factory in the Philippines, UM company owned. 451 00:24:29,960 --> 00:24:31,840 Speaker 1: That's where my mother is from. It's been a very 452 00:24:31,960 --> 00:24:34,600 Speaker 1: key part of our business. So for us, it's only 453 00:24:34,640 --> 00:24:38,280 Speaker 1: about of what we do that's uh, that's in China 454 00:24:38,359 --> 00:24:41,000 Speaker 1: and elsewhere. So in that sense, it hasn't been so bad. 455 00:24:41,040 --> 00:24:43,600 Speaker 1: But I think for the people listening, what's really important 456 00:24:43,640 --> 00:24:45,560 Speaker 1: to note is that it is um. You know, it 457 00:24:45,600 --> 00:24:48,080 Speaker 1: still hurts that twenty to where we're paying the tariffs 458 00:24:48,160 --> 00:24:50,760 Speaker 1: or negotiating to split the tariffs with our Chinese partners. 459 00:24:51,080 --> 00:24:53,600 Speaker 1: It hurts. It really does hurt. I mean that's directly 460 00:24:53,640 --> 00:24:55,840 Speaker 1: off your bottom line. But more so for brands in 461 00:24:55,840 --> 00:24:58,119 Speaker 1: our space, it is so competitive out there, there is 462 00:24:58,240 --> 00:25:01,159 Speaker 1: zero ability at least from where I sit, to pass 463 00:25:01,600 --> 00:25:04,080 Speaker 1: that terror, to pass that increase on to the department 464 00:25:04,119 --> 00:25:06,359 Speaker 1: stores that we sell to, Like they really don't want 465 00:25:06,359 --> 00:25:07,879 Speaker 1: to hear about it, So it's not like you know, 466 00:25:07,920 --> 00:25:09,200 Speaker 1: there's a lot of talk about it. It's going to 467 00:25:09,320 --> 00:25:11,480 Speaker 1: affect the customer at the end of the day. For us, 468 00:25:11,520 --> 00:25:14,960 Speaker 1: it's really just impacting us because our department stores really 469 00:25:15,040 --> 00:25:16,680 Speaker 1: you know, there's there's no ability for us to pass 470 00:25:16,680 --> 00:25:19,320 Speaker 1: those increased costs onto them. Is there any sort of 471 00:25:19,800 --> 00:25:24,119 Speaker 1: read through message about the end client here in terms 472 00:25:24,200 --> 00:25:26,680 Speaker 1: of how the consumer is doing right now and their 473 00:25:26,720 --> 00:25:30,320 Speaker 1: confidence or is this just sort of the tough world 474 00:25:30,400 --> 00:25:32,120 Speaker 1: right now of retail. I think it's a tough world 475 00:25:32,200 --> 00:25:33,679 Speaker 1: right now. The question is I think we all in 476 00:25:33,680 --> 00:25:36,160 Speaker 1: our head think this is going to go away relatively soon, 477 00:25:36,240 --> 00:25:38,160 Speaker 1: we hope, but if not, at some point the conversation 478 00:25:38,280 --> 00:25:39,679 Speaker 1: is going to be have to gonna have to be 479 00:25:39,720 --> 00:25:41,480 Speaker 1: had and we're going to have to pass that I'm 480 00:25:41,480 --> 00:25:43,840 Speaker 1: gonna have to pass that on. So um. So we'll see, 481 00:25:43,880 --> 00:25:46,080 Speaker 1: and we're all hoping that something gets resolved soon. But 482 00:25:46,560 --> 00:25:48,399 Speaker 1: I don't know. You guys know more than I do, 483 00:25:48,480 --> 00:25:52,760 Speaker 1: So no, actually, just roll quickly. Just give us a 484 00:25:52,800 --> 00:25:57,240 Speaker 1: sense of Amazon. How big it have they disrupted your business? Uh? 485 00:25:57,280 --> 00:25:59,600 Speaker 1: You know, we were early adopters with them, so I 486 00:25:59,640 --> 00:26:01,359 Speaker 1: think when they started to come on and tried to 487 00:26:01,359 --> 00:26:04,560 Speaker 1: get into fashion. Years ago, we had said a lot 488 00:26:04,560 --> 00:26:05,879 Speaker 1: of brand said we don't want to deal with it. 489 00:26:06,040 --> 00:26:07,399 Speaker 1: I think we kind of knew that they were going 490 00:26:07,400 --> 00:26:09,120 Speaker 1: to be big players, so we wanted to figure out 491 00:26:09,200 --> 00:26:11,040 Speaker 1: how to how to partner with them. So we've sold 492 00:26:11,080 --> 00:26:13,640 Speaker 1: direct to them for nine years. We have a third 493 00:26:13,640 --> 00:26:16,359 Speaker 1: party strategy to get some other products on their site 494 00:26:16,359 --> 00:26:18,320 Speaker 1: as well. And you know, clearly like if you're any 495 00:26:18,400 --> 00:26:21,679 Speaker 1: kind of brand that doesn't have a uh, you're not 496 00:26:21,720 --> 00:26:24,760 Speaker 1: incorporating Amazon in your future strategy. It's really difficult because 497 00:26:24,760 --> 00:26:26,439 Speaker 1: you know, a lot of the other channels there aren't 498 00:26:26,440 --> 00:26:29,639 Speaker 1: necessarily growing. Kenna Tory thanks very much for joining us 499 00:26:29,680 --> 00:26:31,639 Speaker 1: to really appreciate it. Ken is the president of the 500 00:26:31,680 --> 00:26:33,720 Speaker 1: not Tory company, joining us live here in our Bloomberg 501 00:26:33,760 --> 00:26:36,920 Speaker 1: Interactive Broker studio. Ken is a radio and TV alam 502 00:26:36,920 --> 00:26:39,920 Speaker 1: of Bloomberg from a few years back. We welcome him 503 00:26:39,920 --> 00:26:42,440 Speaker 1: to back to Bloomberg. Really giving us a sense of 504 00:26:42,520 --> 00:26:45,920 Speaker 1: kind of the the business of the women's lingerie business, 505 00:26:45,920 --> 00:26:49,960 Speaker 1: the consumer tariffs, a lot of aspects of the business. 506 00:26:49,960 --> 00:26:52,399 Speaker 1: Interesting to get these a lot of these smaller family 507 00:26:52,400 --> 00:26:54,560 Speaker 1: owned companies in to discuss their businesses and kind of 508 00:26:54,560 --> 00:26:56,800 Speaker 1: how the conditions are out in the marketplace, so we 509 00:26:56,840 --> 00:26:59,679 Speaker 1: appreciate his comments. Thanks for listening to the Bloomberg P 510 00:26:59,720 --> 00:27:02,320 Speaker 1: and L podcast. You can subscribe and listen to interviews 511 00:27:02,320 --> 00:27:06,119 Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney, 512 00:27:06,200 --> 00:27:08,959 Speaker 1: I'm on Twitter at pt Sweeney. I'm Lisa abram Woyit's 513 00:27:08,960 --> 00:27:12,000 Speaker 1: I'm on Twitter at Lisa abram Woits one before the podcast. 514 00:27:12,000 --> 00:27:14,600 Speaker 1: You can always catch us worldwide on Bloomberg Radio.