WEBVTT - Stocks Slip from Records; U.S. Consumer Comfort Climbs 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel podcast. I'm Paul swing you, 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma wits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money, whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:21.640 at Bloomberg dot com. Has some economic data today, existing 0:00:21.640 --> 0:00:25.319 home sales, initial jobs claims each came into I would 0:00:25.320 --> 0:00:27.840 say slightly weaker than I expecting. Nothing major, but again 0:00:27.840 --> 0:00:29.560 on the margin, a little bit weaker. To kind of 0:00:29.760 --> 0:00:31.800 break down what we're seeing on the economic front, we 0:00:31.840 --> 0:00:34.320 welcome a good friend, Danielle di Martino Booth. She's a 0:00:34.400 --> 0:00:37.880 chief executive officer and chief strategist at Quill Intelligence. She 0:00:37.960 --> 0:00:40.960 joins us here in our Bloomberg Inactor Brooker Studios. So, Danielle, 0:00:41.000 --> 0:00:45.360 on the margin, what's some of the recent data telling you, well, 0:00:45.400 --> 0:00:47.560 there's there's good and there's bad. Uh. You know, the 0:00:47.600 --> 0:00:52.040 power printing press is powerful, and I think that it 0:00:52.159 --> 0:00:55.120 is It is the FEDS, not Queie, that is a 0:00:55.400 --> 0:01:00.080 much greater force in propelling the nascent recovery that were 0:01:00.120 --> 0:01:03.800 seeing on the industrial side Empire State Philly fed this morning, 0:01:03.960 --> 0:01:07.080 we're seeing future inventories rise appreciably. That tends to be 0:01:07.120 --> 0:01:10.360 a precursor to I s M new orders increasing. That's 0:01:10.400 --> 0:01:12.959 going to be very well received by markets because they're 0:01:12.959 --> 0:01:16.560 gonna say, okay, we've escaped the third industrial recession of 0:01:16.600 --> 0:01:19.320 the current longest expansion in US history. You know, the 0:01:19.319 --> 0:01:21.200 flip side or some of the things that we're seeing 0:01:21.280 --> 0:01:25.200 coming out of initial jobless claims. Continuing jobless claims were 0:01:25.240 --> 0:01:29.800 falling very closely, because if continuing jobless claims stop falling, 0:01:29.920 --> 0:01:32.840 the improvement in the labor market has been exhausted. So 0:01:32.880 --> 0:01:37.080 we've seen seven straight weeks of of that stagnation. Continuing 0:01:37.160 --> 0:01:40.720 jobless claims are up zero point seven percent, so pretty 0:01:40.760 --> 0:01:43.520 hard to see on a graph, but nevertheless they're They're 0:01:43.560 --> 0:01:45.840 up for the first time since December of two thousand 0:01:46.080 --> 0:01:49.160 and nine. And for example, in this morning's existing home 0:01:49.160 --> 0:01:52.680 sales report, we saw homes priced under two dollar. We 0:01:52.720 --> 0:01:55.360 saw those sales fall. That's not what J. Powell wants. J. 0:01:55.480 --> 0:01:58.160 Pale wants for his transmission mechanism of lower interest rates 0:01:58.200 --> 0:01:59.920 to work for the people who need to buy home 0:02:00.560 --> 0:02:03.840 So this doesn't all sound absolutely dreadful when it comes 0:02:03.880 --> 0:02:06.600 to the consumer, because we still are near historic lows 0:02:06.640 --> 0:02:11.520 and very full employment. What is the practical takeaway from 0:02:11.800 --> 0:02:14.679 the bottoming out or sort of the hitting of a 0:02:14.760 --> 0:02:17.760 sort of peak perhaps in the consumer? Yeah, I think 0:02:18.080 --> 0:02:21.120 I think what the message is. And again initial jobless 0:02:21.120 --> 0:02:23.680 claims have surprised the upside now two weeks runing two 0:02:24.280 --> 0:02:26.720 seven and twenty seven UM. These are the highest levels 0:02:26.720 --> 0:02:30.040 we've seen since early uh this year. But I think 0:02:30.120 --> 0:02:32.680 that the takeaway is that we have had the most 0:02:32.720 --> 0:02:36.160 extraordinary expansion in US labor market history. I mean, it 0:02:36.200 --> 0:02:39.840 blows away prior cycles by a mile, and a lot 0:02:39.919 --> 0:02:41.800 of that has had to do with the skills mismatch 0:02:42.160 --> 0:02:46.320 and how very valuable any employee has been two companies, 0:02:46.320 --> 0:02:50.080 and how how hard they've held onto them through these 0:02:50.200 --> 0:02:53.520 ups and downs in the economy. So for us to 0:02:53.639 --> 0:02:58.960 see companies finally relenting and pushing through the beginnings of 0:02:59.120 --> 0:03:02.920 layoffs I think is concerning because companies have been so 0:03:03.000 --> 0:03:06.080 remissed to let go of their employees. So just looking 0:03:06.120 --> 0:03:09.280 at the FED funds futures rate UM after the FED 0:03:09.320 --> 0:03:12.360 minutes were released yesterday, looks like the markets discounting a 0:03:12.560 --> 0:03:17.920 rate cut maybe sometime mid to third quarter next year, September, right, 0:03:17.919 --> 0:03:20.160 Do you think the FED can wait that long based 0:03:20.240 --> 0:03:22.760 upon maybe some of the rolling over a little bit? 0:03:23.160 --> 0:03:25.520 You know, I think that, uh, we have to bear 0:03:25.560 --> 0:03:27.920 in mind. John Williams is the Vice chair of the 0:03:27.960 --> 0:03:30.960 Federal Open Market Committee, so he's technically second in command, 0:03:31.040 --> 0:03:34.079 not Rich Claradat, who's vice chair of the board UM 0:03:34.120 --> 0:03:36.160 and his comments I've felt a few days ago were 0:03:36.240 --> 0:03:40.320 very devish in nature, and I think that the market 0:03:40.440 --> 0:03:44.280 may be over discounting how data dependent that the FED 0:03:44.480 --> 0:03:46.920 is going to be and whether or not they will 0:03:46.960 --> 0:03:49.640 be forced. And we have no idea what December is 0:03:49.680 --> 0:03:51.400 going to bring in terms of the repo market and 0:03:51.440 --> 0:03:54.760 liquidity issues and year end window dressing at banks. We 0:03:54.800 --> 0:03:58.520 don't know how much disruption there might be going into 0:03:58.560 --> 0:04:01.120 the new new year, and how whether or not that 0:04:01.160 --> 0:04:05.080 September realistic. So you know, when you came in here, 0:04:05.160 --> 0:04:07.360 we were talking about this bottoming out, some of the 0:04:07.440 --> 0:04:10.360 data having to do with the consumer, some signs of 0:04:10.440 --> 0:04:13.320 brightness in the industrial sector, and you said that you 0:04:13.440 --> 0:04:16.200 see a shift coming or the consumer, which has powered 0:04:16.200 --> 0:04:20.000 the economic expansion, is going to start deteriorating in terms 0:04:20.040 --> 0:04:22.479 of its economic condition, and we're going to see a 0:04:22.520 --> 0:04:26.160 resurgence in industrials. Can you explain a little bit further 0:04:26.480 --> 0:04:29.599 And I'm you know, I'm not I'm not certain how 0:04:29.640 --> 0:04:32.919 strong it's going to be. If you look, for example, 0:04:33.000 --> 0:04:37.480 at Manufacturing Powerhouse Germany, it did not slip into recession. 0:04:37.520 --> 0:04:39.680 And I think Germany Germany is a great barometer for 0:04:39.800 --> 0:04:43.239 our industrial sector because we've been lagging. We've been following 0:04:43.240 --> 0:04:46.120 what happens in Germany, and what we're anticipating right now 0:04:46.279 --> 0:04:51.359 is stagnation overseas, not a major rebound, so you know, 0:04:51.400 --> 0:04:54.320 we might rebuild stockpiles in the coming months. That's going 0:04:54.360 --> 0:04:57.960 to be again seeing very very favorably. The market's favorite 0:04:58.040 --> 0:05:01.120 leading indicator is I s M new orders and one 0:05:01.120 --> 0:05:03.640 of the reasons market's got a little shaky was because 0:05:03.640 --> 0:05:07.120 we had three months in a row of negative prints 0:05:07.120 --> 0:05:10.119 on I s M new orders. That popping back above 0:05:10.160 --> 0:05:14.400 that fifty line between expansion and contraction I think would 0:05:14.400 --> 0:05:16.800 be seen as favorable. I want to see how much 0:05:16.839 --> 0:05:19.719 momentum it's going to have going into the year, whether 0:05:19.760 --> 0:05:22.440 there's going to be followed through because we're not seeing 0:05:22.520 --> 0:05:24.960 coming out of Detroit. What we would prefer with the 0:05:25.360 --> 0:05:28.120 with the U S automakers, that's going to count next year. 0:05:28.480 --> 0:05:31.480 Danielle de Martino Booth, thank you, thank you, really smart, 0:05:31.760 --> 0:05:35.640 chief executive officer and chief strategistic Quill Intelligence, also a 0:05:35.680 --> 0:05:53.520 former FED researcher and employee over in Dallas. There is 0:05:53.560 --> 0:05:57.360 a consensus of sorts heading into twenty that it will 0:05:57.400 --> 0:06:00.279 be a pretty good year, potentially if in double it's 0:06:00.400 --> 0:06:04.080 yet again with respect returns on US equity industries, although 0:06:04.080 --> 0:06:08.839 perhaps Europe may outperform. But how contingent is this on 0:06:08.880 --> 0:06:11.920 a trade deal on a lot of things that are 0:06:12.040 --> 0:06:15.160 all but certain joining US now? Katerina Seminetti, she is 0:06:15.240 --> 0:06:18.919 UBS Financial Services private wealth advisor. Katerina, how much do 0:06:18.960 --> 0:06:22.080 you buy into this consensus? I think it's primarily because 0:06:22.120 --> 0:06:24.720 phase one. To me at least, it's a sure thing 0:06:25.160 --> 0:06:27.119 because when you look at the components that go into 0:06:27.120 --> 0:06:30.800 phase one, right, it's all the pieces that both parties 0:06:30.839 --> 0:06:33.680 basically agree on and they I will even say more 0:06:33.760 --> 0:06:37.000 so the pieces that they need. So China agreed that 0:06:37.160 --> 0:06:41.960 to buying UM to buying US agricultural goods, that's a 0:06:42.000 --> 0:06:44.360 done deal, right, you know, in our case we would 0:06:44.400 --> 0:06:47.520 like to see more UM currency transparency, We would like 0:06:47.560 --> 0:06:50.520 to have their markets open to our financial institutions. So, 0:06:50.600 --> 0:06:52.559 despite of the news of the last couple of days, 0:06:53.080 --> 0:06:55.839 I believe that Phase one is going through and also 0:06:55.880 --> 0:06:58.520 think that market is almost taking it for granted. It's 0:06:58.520 --> 0:07:01.880 almost like it's it's bought in and you know already 0:07:01.920 --> 0:07:04.560 built into the consensus that it's going to happen. And 0:07:04.600 --> 0:07:06.599 I think when this happens, we're going to have a 0:07:06.600 --> 0:07:10.280 pretty positive reaction. My concern is not Phase one, it's 0:07:10.320 --> 0:07:13.080 Phase two, because I think the components of Phase two 0:07:13.080 --> 0:07:16.440 are significantly more important and also is something that we 0:07:16.560 --> 0:07:19.040 don't quite have an agreement on. So as one of 0:07:19.040 --> 0:07:21.240 the other things obviously moving the markets, Number one is 0:07:21.320 --> 0:07:24.000 Lisa raised, is the trade deal that seems to be 0:07:24.040 --> 0:07:27.160 such really driving kind of market sentiment and market performance. 0:07:27.520 --> 0:07:29.800 Number two might be the Federal Reserve, which has been 0:07:29.880 --> 0:07:34.119 very accommodative through the market, seems to be discounting maybe 0:07:34.120 --> 0:07:36.600 one more rate cut next year. Is that kind of 0:07:36.720 --> 0:07:39.480 your view and the view of UBS So we had 0:07:39.520 --> 0:07:43.400 a you that Fed is going to cut continue cutting grades. 0:07:43.440 --> 0:07:45.840 As a matter of fact, our view even just from 0:07:45.920 --> 0:07:48.640 quite recently was that they're going to cut another seventy 0:07:48.680 --> 0:07:51.480 five basis points going into the next year. But we 0:07:51.560 --> 0:07:54.240 are holding back on that view now because we think 0:07:54.320 --> 0:07:56.920 that the benefit of what's happening right now is we 0:07:57.040 --> 0:08:00.400 had fed that is extremely data driven. An economic data 0:08:00.440 --> 0:08:03.280 that is coming in is not negative, you know, it's mixed, 0:08:03.320 --> 0:08:05.560 but it is still quite positive. So I think that 0:08:05.600 --> 0:08:09.200 FAD's reaction is going to be very much linked to 0:08:09.320 --> 0:08:12.240 the results of the trade negotiations. So if we have 0:08:12.280 --> 0:08:16.040 a positive outcome, if Phase two starts off, well, they 0:08:16.120 --> 0:08:18.720 might not cut, they might hold off because it is 0:08:18.720 --> 0:08:21.680 such a powerful tool in their arsenal, those rate cuts. 0:08:21.800 --> 0:08:24.080 I think they're going to be reactive to, you know, 0:08:24.120 --> 0:08:26.040 what they see, all right, So if you buy into 0:08:26.120 --> 0:08:28.800 the census idea that things are going to be pretty 0:08:28.800 --> 0:08:32.600 good next year, how do you square that with surveys 0:08:32.679 --> 0:08:35.800 out of ubs showing that wealthy individuals are getting increasingly perished. 0:08:36.640 --> 0:08:39.360 That is very true. So I think that we have 0:08:39.520 --> 0:08:41.680 to look at the time frames. I believe there is 0:08:41.679 --> 0:08:44.600 going to be a very positive reaction to phase one. 0:08:44.920 --> 0:08:48.280 Once we get to phase two. It's an uncharted territory. 0:08:48.520 --> 0:08:51.440 It's quite frankly, you know, like the the you know, 0:08:51.520 --> 0:08:53.960 the the season two of Succession that I know so 0:08:53.960 --> 0:08:56.120 so many of the radio hosts here seem to love. 0:08:56.360 --> 0:08:59.440 And it's a great show because it isn't charted territory. 0:08:59.520 --> 0:09:02.480 And we've leave that there might be a sell off. Now, 0:09:03.080 --> 0:09:04.480 we think that there might be a cell off, but 0:09:04.520 --> 0:09:06.600 we think the severity of the sell off will not 0:09:06.760 --> 0:09:10.560 be quite as extreme as markets anticipated. And as a 0:09:10.559 --> 0:09:12.800 matter of fact, you know, we think the likelihood of 0:09:12.800 --> 0:09:16.400 actual recession is very low. We think it might happen again, 0:09:16.679 --> 0:09:18.840 It all depends on the trade. But we think sell 0:09:18.880 --> 0:09:21.440 off is likely. And that's what we're getting from our clients. 0:09:21.559 --> 0:09:24.640 When clients call us and they're concerned, they are concerned 0:09:24.679 --> 0:09:26.679 about the cell off, they are concerned about the makeup 0:09:26.720 --> 0:09:29.240 of their portfolios, and they're asking us, you know, quite frankly, 0:09:29.280 --> 0:09:31.800 what to do in repositioning. So what are you telling 0:09:31.840 --> 0:09:34.840 them now about positioning? Because we you know that the 0:09:34.880 --> 0:09:38.000 fourth quarter last year, particularly December, was such a shock 0:09:38.080 --> 0:09:41.680 to the marketplace, to the decline in the equity markets. Um, 0:09:41.720 --> 0:09:43.160 and I'm sure as we get, you know, come up 0:09:43.160 --> 0:09:45.080 to that anniversary again this year, some of your clients 0:09:45.080 --> 0:09:46.560 are gonna be calling and asking what do you how 0:09:46.559 --> 0:09:48.800 do you telling them to position themselves? So we tell 0:09:48.840 --> 0:09:51.679 them to broader the time frame, And to your point, 0:09:51.720 --> 0:09:54.720 I think that the fourth quarter of last year was 0:09:54.800 --> 0:09:57.080 a really good practice. You know, it's almost like a 0:09:57.080 --> 0:09:59.439 really good test for all of us for what's to come. 0:09:59.640 --> 0:10:02.000 And there are several pieces in the portfolio design that 0:10:02.080 --> 0:10:04.480 come into playing here. First of all, liquidity, so we 0:10:04.520 --> 0:10:07.679 tell clients number one, going into turbulent markets, going into 0:10:07.760 --> 0:10:11.880 volatile markets, have enough liquidity on hand, because then you know, 0:10:12.000 --> 0:10:14.960 if we go into the prolonged period of volatility of 0:10:14.960 --> 0:10:18.240 negative markets, we will not have to liquidate their portfolios. 0:10:18.840 --> 0:10:21.160 The second side is of course focused on yield, focused 0:10:21.200 --> 0:10:24.560 on the counter cyclical asset classes like real estate. UM 0:10:25.480 --> 0:10:29.679 really really changing around and rebalancing and repositioning of fixed 0:10:29.720 --> 0:10:33.079 income portfolios because when people think, um that we need 0:10:33.120 --> 0:10:36.440 to pursue recession prove their portfolios, they focus on equity, 0:10:36.640 --> 0:10:38.800 but but fixed income quite frankly, it is just as 0:10:38.840 --> 0:10:44.840 important going forward. What's your biggest concern. My biggest concern 0:10:45.160 --> 0:10:49.960 is that investors who are not prepared are going into 0:10:50.000 --> 0:10:53.480 this market with too much of a bullish outlook, and 0:10:53.520 --> 0:10:56.079 that concern goes back to you know, my days when 0:10:56.120 --> 0:10:59.400 I started as a new financial advisor in and if 0:10:59.400 --> 0:11:02.280 you remember, the timeframe was very similar when the talks 0:11:02.320 --> 0:11:06.800 were about upcoming uh possible upcoming recession. But yet that 0:11:06.920 --> 0:11:09.560 was the best performing here and people almost got a 0:11:09.559 --> 0:11:12.240 little cavalier, you know, a little too brave and you know, 0:11:12.320 --> 0:11:14.720 overweight and equities Karatism and any Thank you so much 0:11:14.760 --> 0:11:17.800 for joining us, Katarina uh sim in any ubs Financial Services, 0:11:17.800 --> 0:11:37.080 Private Wealth Management. Let's continue our discussion of economics. The 0:11:37.200 --> 0:11:40.680 Conference Board this morning released its leading economic indicator. To 0:11:40.679 --> 0:11:44.080 walk us through the details, Bart van Ar, chief economist 0:11:44.160 --> 0:11:46.200 at the conference aboard Bar, thanks so much for joining 0:11:46.240 --> 0:11:47.959 us here on our Bloomberg in our Actor Broker studio. 0:11:48.240 --> 0:11:50.600 What did the data tell you today, Well, the data 0:11:50.640 --> 0:11:53.360 shows for the third month that we have a moderate decline. 0:11:53.400 --> 0:11:55.360 But perhaps what's a little more important is that on 0:11:55.360 --> 0:11:57.720 a six month basis, it's averaging it out a little bit. 0:11:57.720 --> 0:11:59.679 We now see your very modest decline. It's only a 0:11:59.800 --> 0:12:02.880 point one percent points, so it's nothing to really hugely 0:12:02.920 --> 0:12:06.600 panic about. What's interesting are some of the underlying changes 0:12:06.640 --> 0:12:11.680 that we're seeing in the index. So just carry on. Well, 0:12:11.720 --> 0:12:14.160 what is most important is that in the previous months, 0:12:14.160 --> 0:12:16.080 which was to a large extent driven by the decline 0:12:16.120 --> 0:12:19.400 in manufacturing. Uh and that actually is still a little 0:12:19.440 --> 0:12:22.400 bit of that. They're certainly obviously you know, new orders 0:12:22.400 --> 0:12:25.600 have still is still quite negative. But um, what we 0:12:25.720 --> 0:12:28.160 see now in this month, actually the labor market shows 0:12:28.160 --> 0:12:30.800 a little bit of weakening. So one of our underlying 0:12:30.840 --> 0:12:33.800 indexes is the average work week. One of the underlying 0:12:33.840 --> 0:12:36.679 indexes initial claims. Both of them are now adding negatively 0:12:36.720 --> 0:12:39.520 to the index. Now that sounds like bad news, but 0:12:39.600 --> 0:12:42.480 let's not forget that the labor market has been extraordinary, 0:12:42.480 --> 0:12:45.160 extraordinary strong, so at some point we would expect this, 0:12:45.559 --> 0:12:47.959 So on balance, we actually think this is actually not 0:12:48.040 --> 0:12:50.040 a terrible result. We really need to see how that's 0:12:50.040 --> 0:12:51.679 going to evolve over the next few months. Is your 0:12:51.760 --> 0:12:55.360 leading economic indicator weighted similarly to the US economy, which 0:12:55.400 --> 0:12:59.880 is you know, two thirds seventy the consumer well leading 0:12:59.880 --> 0:13:01.440 a con get next to always put a little bit 0:13:01.440 --> 0:13:04.080 more emphasis on production and manufacturing, and a lot of 0:13:04.080 --> 0:13:05.640 that is to that's where you have a lot more 0:13:05.640 --> 0:13:08.000 of the volatility, and a lot of that is playing 0:13:08.040 --> 0:13:10.160 through in the rest of the economy. Services tend to 0:13:10.160 --> 0:13:13.080 be much more stable. The consumer tends to be very strong, 0:13:13.120 --> 0:13:16.839 but it are exactly those elements actually services and consumers 0:13:16.880 --> 0:13:18.679 that sort of keep us again a little bit more 0:13:18.720 --> 0:13:22.199 moderate on making sure the huge implications from this negative 0:13:22.280 --> 0:13:25.320 number today. It is interesting though that the trend is 0:13:25.640 --> 0:13:29.000 shifting away from the steady improvement that we had been seeing, 0:13:29.280 --> 0:13:32.400 particularly with the consumer, and we saw that again today 0:13:32.400 --> 0:13:34.920 with the jobless claims just taking up a touch and 0:13:34.960 --> 0:13:37.760 really just a fraction and from very very very low rate. 0:13:38.040 --> 0:13:40.400 But at what point do you have to start paying 0:13:40.400 --> 0:13:44.320 more attention to this is a sign of a weakening consumer, Well, 0:13:44.360 --> 0:13:46.160 you first have to see it from multiple months. You 0:13:46.200 --> 0:13:49.840 have to see considerably more layoffs happening over time, and 0:13:49.840 --> 0:13:51.800 again there's nothing of that in the works. We get 0:13:51.800 --> 0:13:54.360 a holiday season coming up. It looks actually pretty strong 0:13:54.400 --> 0:13:57.040 as far as the numbers are are giving us projections 0:13:57.120 --> 0:13:59.439 right now, But is that a leading indicator or a 0:13:59.520 --> 0:14:01.560 lagging indicator By the time that it gets to the 0:14:01.600 --> 0:14:04.520 point where where where companies are like consumers, it's a 0:14:04.520 --> 0:14:07.320 good point. Consumers and labor markets to a large extent 0:14:07.400 --> 0:14:10.360 are a coincident indicators. So there are actually an assessment 0:14:10.360 --> 0:14:12.400 of the current situation, and again when we look at 0:14:12.400 --> 0:14:15.160 the coincident part of this index, so assessment of what's 0:14:15.160 --> 0:14:17.720 happening now, it's actually even stronger than it was in 0:14:17.760 --> 0:14:20.040 previous months. So from the Federal Reserve, they seem to 0:14:20.080 --> 0:14:22.200 be suggesting if you look at the FED fund futures, right, 0:14:22.320 --> 0:14:26.640 you know, maybe one more cut in September. This zer 0:14:26.840 --> 0:14:30.520 leading economic indicator kind of kind of makes sense given 0:14:30.600 --> 0:14:33.000 kind of how the Fed's thinking about it right now. Absolutely, 0:14:33.080 --> 0:14:35.000 I think, you know we have to cut. We just 0:14:35.040 --> 0:14:38.040 had this past month. We do you really think that 0:14:38.320 --> 0:14:39.960 the Father is not going to wait and see how 0:14:39.960 --> 0:14:42.760 these numbers are going to evolve. And again, you know, 0:14:42.960 --> 0:14:45.560 this sort of slightly negative number was to be expected 0:14:45.600 --> 0:14:47.360 this This market has been so strong for such a 0:14:47.360 --> 0:14:50.400 long time, this economy, that we would expect this leveling off. 0:14:50.480 --> 0:14:52.320 So yeah, it's going to be a pause for the 0:14:52.320 --> 0:14:54.600 time being. Earlier the show, we were speaking with Danielle T. 0:14:54.720 --> 0:14:56.640 Martino Booth and she was talking about a bit of 0:14:56.680 --> 0:15:00.400 a resurgence that we're seeing on some industrial measures and 0:15:00.400 --> 0:15:03.360 that she expects some sort of gains to be had 0:15:03.680 --> 0:15:07.680 in that sector next year. What are you saying, well, actually, 0:15:07.680 --> 0:15:10.800 this morning, the Philadelphia fat manufacturing surface showed up a 0:15:10.840 --> 0:15:12.680 little bit, So there are some numbers that are pointing 0:15:12.680 --> 0:15:14.840 in the direction. But look, let's that's not full ourselves. 0:15:14.840 --> 0:15:17.640 Manufacturing production is in deep trouble and it's still thinking. 0:15:18.200 --> 0:15:21.120 But I do think that there might be something happening here. 0:15:21.120 --> 0:15:23.800 We're particularly looking at China because a lot of this 0:15:23.920 --> 0:15:27.320 decline in manufacturing production really or sort of originated in 0:15:27.400 --> 0:15:30.360 China about two years ago. There we actually see a 0:15:30.400 --> 0:15:32.680 little bit of a silver lining, A lot of overcapacity 0:15:32.800 --> 0:15:35.280 is gone. China actually begin to stimulate the economy a 0:15:35.320 --> 0:15:37.800 little bit in order to avoid a further slowdown, and 0:15:37.840 --> 0:15:40.400 that will spill itself through into the global economy. So yeah, 0:15:40.440 --> 0:15:42.640 we would tie onto this idea that that we might 0:15:42.680 --> 0:15:44.840 see in an easy or perhaps even the bottoming out 0:15:44.840 --> 0:15:46.800 of many production off there, you have a recession in 0:15:46.840 --> 0:15:50.200 your model at any point, Well, yeah, at some point, 0:15:50.200 --> 0:15:52.400 at some point, the recession is going to happen. But 0:15:52.560 --> 0:15:55.000 you know, these indexes are looking sort of six months out. 0:15:55.240 --> 0:15:56.960 I would go as far as say, you know, I 0:15:57.360 --> 0:15:59.120 dare to say something about the next nine months. I 0:15:59.120 --> 0:16:02.000 think until the sun rock next year, I'd be surprised 0:16:02.080 --> 0:16:04.800 if the US economy would run into huge trouble with 0:16:04.840 --> 0:16:08.280 the big R word, the big word. There you go, 0:16:09.200 --> 0:16:12.080 all right, So what did you think in terms of 0:16:12.280 --> 0:16:15.360 the response from CEO is with respect to trade, we 0:16:15.440 --> 0:16:18.640 are getting headlines every day that give us a different story. 0:16:19.000 --> 0:16:22.880 How much is that imperative for their modeling forms. There's 0:16:22.920 --> 0:16:26.400 something unusual, of course, at a moment about this situation 0:16:26.480 --> 0:16:29.720 where the consumers are still very confident. Our consumer confidence 0:16:29.760 --> 0:16:32.320 in the confidence world keeps you at a record levels, 0:16:32.320 --> 0:16:35.200 a little bit more volatile the last few months, whereas 0:16:35.200 --> 0:16:37.640 this business confidence index, which is the other thing we do, 0:16:38.240 --> 0:16:40.640 has actually been declining over and over again. We know 0:16:40.760 --> 0:16:43.040 that a lot of that is tied to the trade disputes. 0:16:43.080 --> 0:16:45.400 We've asked CEO, is this We see it in our 0:16:45.440 --> 0:16:47.880 service that they do tie these kind of things. So 0:16:47.960 --> 0:16:49.440 there was a little bit of a feel in the 0:16:49.520 --> 0:16:51.800 last two three weeks that we will be getting somewhere. 0:16:51.880 --> 0:16:55.400 But you know, has the spread ever been further apart 0:16:55.520 --> 0:16:58.640 in terms of the business confidence versus consumer confidence? Not 0:16:58.720 --> 0:17:00.840 in the past two decades. Would say this is this 0:17:00.880 --> 0:17:04.000 is pretty unusual. But again it's also, of course, this 0:17:04.040 --> 0:17:06.480 whole trade dispute is pretty unusual, so it's perhaps not 0:17:06.560 --> 0:17:09.240 surprising that CEOs are reacting so much strongly to this. 0:17:09.480 --> 0:17:11.959 Do you see that in your is it shopping your 0:17:12.040 --> 0:17:15.640 data anywhere? Maybe business investments something like that. Yes, we 0:17:15.640 --> 0:17:19.480 we do have manufactures new orders in there, and again 0:17:19.520 --> 0:17:21.919 that actually picked up a little bit this month. But 0:17:21.960 --> 0:17:24.240 you know these numbers are very val volatile, so we 0:17:24.240 --> 0:17:26.600 we never take too many implications of a month of 0:17:26.640 --> 0:17:29.400 a month. It's the six months average that is important 0:17:29.440 --> 0:17:31.440 for it. And there again I would say maybe easy 0:17:31.560 --> 0:17:33.720 at this point in time, but you're right. I mean 0:17:33.760 --> 0:17:36.560 linking it back to business confidence, the key driver of 0:17:36.600 --> 0:17:39.719 business investment will be that confidence number going back up. 0:17:39.800 --> 0:17:41.840 So a deal with China, even if it is a 0:17:41.880 --> 0:17:44.440 small deal, will be enough in our view to actually 0:17:44.480 --> 0:17:47.199 get business confidence in its right. Bart Vynark, thank you 0:17:47.200 --> 0:17:49.520 so much for being with us. Bart vyan Ark is 0:17:49.840 --> 0:17:52.720 the chief economist at the conference board talking about the 0:17:52.840 --> 0:17:58.240 slight decline that we saw in the leading consumer confidence figures. 0:18:13.359 --> 0:18:15.320 Let's switch gears here and get take a look at 0:18:15.359 --> 0:18:19.479 the business of pets. Ron Coglin is the CEO of Petco. 0:18:19.600 --> 0:18:23.520 Petco was taken private I believe back in CBC Capital 0:18:23.560 --> 0:18:26.439 Partners and some others. H Ron, thanks so much for 0:18:26.760 --> 0:18:29.800 joining us. Love to just get an update on pet 0:18:29.800 --> 0:18:32.280 Co and kind of where the market is right now 0:18:32.320 --> 0:18:36.080 for you guys. Absolutely well, thanks for thanks for having me. 0:18:36.520 --> 0:18:40.200 A year ago I joined you and uh we were 0:18:40.640 --> 0:18:43.160 talking about taking a hundred million dollar bet on our 0:18:43.200 --> 0:18:47.600 business by ticking out all products in our official ingredients. 0:18:48.280 --> 0:18:50.919 And today I'm proud to say that not only have 0:18:51.040 --> 0:18:54.160 we moved one point five million pounds of food with 0:18:54.760 --> 0:18:58.240 artificial ingredients, but our business is gone from declining three 0:18:58.240 --> 0:19:01.680 to four to up three to four percent. So we've 0:19:01.720 --> 0:19:04.080 had this contention and what's good for the pet is 0:19:04.119 --> 0:19:07.720 good for Petco and it's proven true. Ron are we 0:19:07.760 --> 0:19:10.679 reaching peak pet where people are buying health food for 0:19:10.720 --> 0:19:15.160 their dogs. One of the wonderful things about the pet 0:19:15.160 --> 0:19:17.840 market is it's a growth market, so I would say 0:19:17.880 --> 0:19:21.560 it's not peaking. Um more and more, there's an adage 0:19:21.720 --> 0:19:24.439 pets used to be in the outdoors, then they were 0:19:24.440 --> 0:19:26.160 in the backyard, and then they were in the house, 0:19:26.200 --> 0:19:28.520 and now there in our bed. So more and more 0:19:28.640 --> 0:19:30.639 folks are wanting to take care of the pets the 0:19:30.680 --> 0:19:33.320 way they take care of themselves, and that includes avoiding 0:19:33.359 --> 0:19:37.400 artificial ingredients. So interesting here, so give us a sense 0:19:37.400 --> 0:19:40.520 of kind of the growth dynamic of kind of the 0:19:40.600 --> 0:19:44.040 global pet food industry or the US pet food industry. Yeah, 0:19:44.119 --> 0:19:46.919 so it's a six percent growth business. Um, you have 0:19:47.119 --> 0:19:50.960 lastly one percent growth in the number of pets. But 0:19:51.280 --> 0:19:53.879 in terms of how folks are taking care of their pets, 0:19:53.880 --> 0:19:56.240 that type of food that they're serving pets, you know, 0:19:56.320 --> 0:19:59.520 they're more and more they want to move away from, 0:19:59.560 --> 0:20:02.920 you know, the old roys of the world and towards 0:20:02.960 --> 0:20:05.760 the better for you foods. And a perfect example is 0:20:06.280 --> 0:20:08.840 my my dog Yummy. He's a yellow lab he goes. 0:20:08.960 --> 0:20:11.840 He's going on eleven years old, and before I joined 0:20:11.840 --> 0:20:14.200 pet Go, I was feeding him the middle of the 0:20:14.280 --> 0:20:17.439 road food and shame on me. And I switched him 0:20:17.520 --> 0:20:19.639 to a productal just Food for Dogs, which is a 0:20:19.720 --> 0:20:23.399 human grade food, um, fresh fish and sweet potatoes. He 0:20:23.600 --> 0:20:26.040 medi lost fifteen towns and he's back to acting like 0:20:26.080 --> 0:20:27.960 a puppy. I feel like this is a p s A. 0:20:29.000 --> 0:20:32.000 You know, this is the reason why. Yeah, but I 0:20:32.040 --> 0:20:34.160 wanted to talk about, you know, the growth market. There 0:20:34.160 --> 0:20:37.119 has been a shift people having fewer kids having more dogs, 0:20:37.119 --> 0:20:39.479 and I'm wondering, you know, how far along in an 0:20:39.520 --> 0:20:42.280 evolution are way. Wasn't it something like people adopted more 0:20:43.119 --> 0:20:47.280 pets than than had kids last year or something. I've 0:20:47.280 --> 0:20:50.240 heard that statistic. I I know more about pet when 0:20:50.240 --> 0:20:52.280