WEBVTT - AMC Seizes on Meme Stock Mania, US Core CPI Cools 0:00:00.600 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:09.960 --> 0:00:13.840 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:00:13.920 --> 0:00:17.000 weekdays at ten am Eastern on Apple Cardplay and Android 0:00:17.000 --> 0:00:20.120 Auto with the Bloomberg Business App. Listen on demand wherever 0:00:20.160 --> 0:00:23.360 you get your podcasts, or watch us live on YouTube. 0:00:24.920 --> 0:00:28.560 Fry Alex Deel alongside Paul Sweeney. This is Bloomberg Intelligence Radio. 0:00:28.640 --> 0:00:30.280 We bring you all the top news with our Bloomberg 0:00:30.320 --> 0:00:32.920 Intelligence analysts all around the world. They cover two thousand 0:00:32.920 --> 0:00:35.600 companies at one hundred and thirty industries. And we also 0:00:35.640 --> 0:00:38.000 tap our amazing Bloomberg News team who are deep in 0:00:38.040 --> 0:00:39.879 the weeds of everything you need to know in all 0:00:39.920 --> 0:00:42.080 the market action. And one of them is Bailey Lipschualtz. 0:00:42.360 --> 0:00:45.040 He's been very busy. He had to actually cancel radio 0:00:45.159 --> 0:00:46.040 hosting yesterday. 0:00:46.159 --> 0:00:49.320 I left Carol hanging the memes stock. 0:00:49.200 --> 0:00:51.800 Crazy, give a day job. It's cool, it's cool. 0:00:52.560 --> 0:00:55.080 So we know the memestocks did some stuff for three 0:00:55.160 --> 0:00:56.640 days and they rally and they're given back to a 0:00:56.640 --> 0:00:59.960 little bit today. Did any of them issue shares or 0:01:00.120 --> 0:01:01.360 anything and take advantage of this? 0:01:01.600 --> 0:01:04.720 So AMC had what we call an at the market 0:01:04.760 --> 0:01:08.160 offering that was approved back in March that enabled them 0:01:08.200 --> 0:01:10.440 to sell shares at the market. Have their bankers just 0:01:10.520 --> 0:01:12.600 keep pumping and creating shares to raise up to two 0:01:12.640 --> 0:01:15.319 hundred and fifty million dollars as fast as slow as 0:01:15.360 --> 0:01:15.880 they would want. 0:01:15.920 --> 0:01:16.959 They did about. 0:01:16.680 --> 0:01:19.760 Half of that prior to the mania, and announced on 0:01:19.880 --> 0:01:22.600 Monday that they completed that, so raised another one hundred 0:01:22.640 --> 0:01:25.200 and twenty five million dollars on the back of Monday's 0:01:25.560 --> 0:01:27.720 what turned into was seventy eight percent pop. 0:01:27.560 --> 0:01:28.039 For the shares. 0:01:28.400 --> 0:01:32.600 Then today they announced plans to do a debtorate equity swap. 0:01:32.959 --> 0:01:36.640 So swap out some debt. Your debt debt holders now 0:01:36.680 --> 0:01:40.240 become equity holders. You create more of those shares, all 0:01:40.360 --> 0:01:42.480 to try to address the fact that they have a 0:01:42.520 --> 0:01:45.759 few billion dollars on their debt load. Most of that 0:01:46.040 --> 0:01:48.040 do in twenty twenty six, So the company has said 0:01:48.040 --> 0:01:51.640 they're actively talking to lenders to try to work on 0:01:51.680 --> 0:01:52.720 addressing those issues. 0:01:53.400 --> 0:01:56.400 AMC Entertainment All right, it's down twenty percent today, but 0:01:57.040 --> 0:02:01.000 just about a billion dollars of stock has traded to day. 0:02:01.120 --> 0:02:04.240 I mean, this isn't pennies, this is real and money. 0:02:04.360 --> 0:02:07.279 When it goes back to my thing, like who's trade 0:02:07.280 --> 0:02:09.320 in this stuff, and that's what we wrote. 0:02:09.320 --> 0:02:11.880 It in my view, a good story because obviously I 0:02:11.880 --> 0:02:16.119 wrote it, But we wrote a story yesterday that kind 0:02:16.160 --> 0:02:18.920 of dove into the fact that when I talk to 0:02:19.040 --> 0:02:23.400 people who advise hedge funds, these momentum quants have gotten 0:02:24.360 --> 0:02:26.840 more sophisticated, caught onto the playbook from twenty twenty one, 0:02:27.040 --> 0:02:29.320 and are buying and selling and trading these shares, so 0:02:29.680 --> 0:02:32.240 helping create that big rally we saw Monday and Tuesday 0:02:32.320 --> 0:02:34.920 and likely getting out of the stock whether they're in 0:02:34.960 --> 0:02:37.640 the trade for two minutes or three days. They buy 0:02:37.720 --> 0:02:40.359 when stocks are going up, and then they quickly sell 0:02:40.400 --> 0:02:43.560 and the whole goal is to as we wrote basically. 0:02:43.280 --> 0:02:45.800 In a way front run retail. Whoa, WHOA. I'm looking 0:02:45.800 --> 0:02:48.400 at the is this right, AMC Entertainment's got nine billion 0:02:48.440 --> 0:02:51.960 of debt that includes their leases lease, so call it 0:02:51.960 --> 0:02:53.359 four and a half four and a four four and 0:02:53.400 --> 0:02:54.160 a still they have. 0:02:54.360 --> 0:02:56.040 It's sizable relative to their cases. 0:02:56.600 --> 0:02:59.919 Yeah, and I'm looking at Ebithal. Let's just take twenty 0:03:00.000 --> 0:03:04.600 twenty five's estimates five hundred million, so still ten times levered. 0:03:04.840 --> 0:03:08.360 Again having bank these guys in the past four times, 0:03:08.480 --> 0:03:10.679 is the multiple is the leverage I would put on 0:03:10.720 --> 0:03:14.760 this thing. Maybe if the sub sub guys want to 0:03:14.760 --> 0:03:18.040 go above it, that's their business. But crazy, but Lisa 0:03:18.040 --> 0:03:18.760 AMC's trying it. 0:03:18.840 --> 0:03:19.960 Yeah, I was gonna say if we don't, we like 0:03:20.000 --> 0:03:22.480 the fact the CFO is like, guys, let's do this, right, 0:03:22.520 --> 0:03:23.000 that's a good thing. 0:03:23.080 --> 0:03:24.480 That's good and that was part of it. 0:03:24.600 --> 0:03:24.760 Right. 0:03:24.840 --> 0:03:27.600 So a few years ago they created these eight preferred 0:03:27.639 --> 0:03:30.840 shares because they couldn't get approval from investors to sell 0:03:30.880 --> 0:03:33.239 more shares, because you have to get approval to create 0:03:33.280 --> 0:03:35.160 more shares to expand the number of fears you can 0:03:35.240 --> 0:03:39.600 have outstanding. Right now, according to b Riley's Eric World, 0:03:39.880 --> 0:03:41.960 he estimates the company still has one hundred and ninety 0:03:42.000 --> 0:03:45.640 one million common shares authorized but not yet issued, so 0:03:45.920 --> 0:03:48.360 they can hit another ATM, or they can continue to 0:03:48.400 --> 0:03:51.320 do some of these debt swap deals to try to 0:03:51.360 --> 0:03:53.720 address again the fact that they have a lot of debt, 0:03:53.720 --> 0:03:55.720 and they have a lot of near term debt, and Paul, 0:03:55.760 --> 0:03:59.480 as you mentioned, the underlying business is not really doing 0:03:59.480 --> 0:03:59.960 a whole lot. 0:04:00.200 --> 0:04:01.840 Yeah, you know, you think about the theater business, it 0:04:01.880 --> 0:04:04.760 goes to the fundamentals of post pandemic. What's the demand 0:04:04.800 --> 0:04:08.560 for movies in theaters, and it is less, but it 0:04:08.640 --> 0:04:11.400 is still there. That probably the bigger issue, if you 0:04:11.400 --> 0:04:13.160 ask the theater owners today is it's just not a 0:04:13.200 --> 0:04:15.720 lot of movies. And that was in large part because 0:04:15.760 --> 0:04:18.799 of the writer's strike and the and the actors strike 0:04:18.880 --> 0:04:22.520 pushed it just about everything back about a year. And 0:04:22.560 --> 0:04:24.840 then you've had some decisions by Disney to saying, you 0:04:24.920 --> 0:04:28.040 know what, we probably are overplaying our Marvel stuff, our 0:04:28.080 --> 0:04:30.920 Star Wars stuff, putting too close together. Let's spread that out. 0:04:30.960 --> 0:04:32.560 So stuff that was gonna be in twenty four is 0:04:32.600 --> 0:04:34.000 in twenty five, twenty five, it's going to be in 0:04:34.000 --> 0:04:36.480 twenty six. So you put all that together, and if 0:04:36.480 --> 0:04:38.200 you're a theater owner, you're like, I ain't got that 0:04:38.279 --> 0:04:39.040 much it put in my theater. 0:04:39.080 --> 0:04:41.320 When's the last time you saw a movie in the theaters. 0:04:42.440 --> 0:04:43.719 In the last few months? Last few months? 0:04:43.760 --> 0:04:45.800 Yeah, a couple of weeks ago. I saw Doing two Oo. 0:04:46.520 --> 0:04:49.200 Well, I like going to the Nighthawk in Brooklyn where 0:04:49.200 --> 0:04:51.960 they have like drinks and scene they bring to your seat. 0:04:51.960 --> 0:04:53.320 Like I like the whole experience. 0:04:53.400 --> 0:04:55.200 Like I don't go to a straight up AMC and 0:04:55.279 --> 0:04:56.479 just eat regular popcorn. 0:04:56.880 --> 0:04:58.360 Wow anymore? So I do the whole. 0:04:58.400 --> 0:05:00.600 It's cheaper than going out to dinner. You can spend 0:05:00.600 --> 0:05:02.159 like one hundred and twenty bucks. You see movies, You 0:05:02.160 --> 0:05:04.440 have dinner, you got drinks, you got dessert, versus going 0:05:04.480 --> 0:05:07.320 and spending three hundred dollars at like getting pasta and 0:05:07.360 --> 0:05:08.520 that's been though. 0:05:09.080 --> 0:05:10.160 You can get a prosco at though. 0:05:10.320 --> 0:05:10.520 Yeah. 0:05:11.920 --> 0:05:14.240 See they want to raise elevor they want to elevate it. 0:05:14.279 --> 0:05:16.560 So they're making more margin, more money in terms of 0:05:16.600 --> 0:05:17.919 margins expanded on people. 0:05:18.120 --> 0:05:20.880 Isn't like distracting though, you know everybody's chewing and eating 0:05:21.279 --> 0:05:22.000 a baunch of movie. 0:05:22.120 --> 0:05:24.320 No, they're doing it anyway, I after eating popcorn and stuff. No, 0:05:24.360 --> 0:05:26.239 it's you get used to. It's totally fine. 0:05:26.400 --> 0:05:27.400 The seats are awesome. 0:05:27.440 --> 0:05:31.520 I saw a movie on Friday, I think, and the 0:05:31.600 --> 0:05:32.320 lay back seats. 0:05:32.320 --> 0:05:34.960 I'd never been to a love shore a movie theater. 0:05:34.839 --> 0:05:38.320 And you're like, wow, I'm laying completely horizontal watching a movie. 0:05:38.320 --> 0:05:39.800 This is awesome. And the thing is, you know, if 0:05:39.839 --> 0:05:42.000 you're a movie theater economics of the move movie theaters, 0:05:42.040 --> 0:05:45.000 you don't make really anything on the ticket sales or 0:05:45.040 --> 0:05:47.360 as much because you have to give half to uh, 0:05:47.800 --> 0:05:50.039 the studio where you make it is in the popcorn 0:05:50.040 --> 0:05:52.679 in this that that's all your margin right for the perpection. 0:05:53.160 --> 0:05:55.200 You can, yes, Brownie Sunday exactly so. 0:05:55.720 --> 0:05:57.600 And you know they've been giving you crap for a 0:05:57.680 --> 0:06:00.880 hundred years. You know at some they're just finally waking 0:06:00.960 --> 0:06:02.239 up that if I ever want to get that person 0:06:02.279 --> 0:06:04.960 off the couch in front of their eighty inch TV 0:06:05.120 --> 0:06:07.120 in the surround sun, I got to up my game 0:06:07.120 --> 0:06:07.520 a little bit. 0:06:07.680 --> 0:06:11.480 Truffle salt butter popcorn dropped that right there. 0:06:11.680 --> 0:06:13.080 It's just beautiful. 0:06:13.880 --> 0:06:17.040 Okay, before we let you go, what is the downside? 0:06:17.080 --> 0:06:18.960 You think you can we unwind all of the last 0:06:18.960 --> 0:06:20.360 three days or what do you think? 0:06:21.480 --> 0:06:22.000 Probably? 0:06:22.160 --> 0:06:24.479 I mean, if you look at fund like why not, well, 0:06:25.800 --> 0:06:30.320 what has changed fundamentally today versus a week ago, realistically 0:06:30.440 --> 0:06:31.720 versus three months ago? 0:06:32.040 --> 0:06:32.360 Nothing? 0:06:32.920 --> 0:06:35.760 Really, And that's been the whole argument. When we saw 0:06:35.800 --> 0:06:38.039 the big rally both stocks up more than seventy percent 0:06:38.040 --> 0:06:40.479 on Monday, all on the back of the Roaring Kitty 0:06:40.880 --> 0:06:43.919 post on Sunday evening, is that that really was just 0:06:43.960 --> 0:06:46.400 kind of like the match to get people back out 0:06:46.480 --> 0:06:49.840 and trading this. It didn't actually change things. And one 0:06:49.839 --> 0:06:52.520 of the things that I think is worth pointing out 0:06:52.560 --> 0:06:54.520 is the difference between now in twenty twenty one is 0:06:54.720 --> 0:06:56.520 people were buying stocks for the first time. In twenty 0:06:56.560 --> 0:06:59.159 twenty one, the stock had already jumped, you know, five 0:06:59.240 --> 0:07:03.200 hundred percent for a lot of retail investors downloaded Robinhood 0:07:03.200 --> 0:07:05.280 found out how to fund it and buy call options. 0:07:05.480 --> 0:07:07.880 People who have been holding these stocks for a long 0:07:07.920 --> 0:07:10.200 time and are sitting on massive losses that if you 0:07:10.240 --> 0:07:12.800 see it go from sixteen to fifty and I got 0:07:12.800 --> 0:07:14.560 in at forty five, I might as well at least 0:07:14.640 --> 0:07:17.320 have some kind of gain as opposed to waiting around forever. 0:07:17.560 --> 0:07:19.480 Right, good stuff, Billy, look the Schultz equity support of 0:07:19.480 --> 0:07:22.000 Bloomberg new joining us here on a Bloomberg interactive broker's studio, 0:07:22.680 --> 0:07:25.440 you mentioned what kind of pop salt do you like? 0:07:25.480 --> 0:07:25.640 Oh? 0:07:25.720 --> 0:07:26.160 Truffle? 0:07:26.280 --> 0:07:27.520 Have you ever gone truffle hunting? 0:07:28.440 --> 0:07:28.760 No? 0:07:29.120 --> 0:07:31.480 I have gone truffle hunting in the South of. 0:07:31.480 --> 0:07:35.000 France with a How do you with a pig or 0:07:35.040 --> 0:07:35.440 a dog? 0:07:36.080 --> 0:07:38.720 They usually do pigs, but the smart ones use dogs 0:07:38.720 --> 0:07:41.320 because the pigs will sometimes eat the truffle. The dogs, 0:07:41.320 --> 0:07:42.680 you can train them not to eat the truffle, so 0:07:42.680 --> 0:07:45.200 they sniff them around underground, they start digging. You pull 0:07:45.240 --> 0:07:46.640 the dog away and then you dig think them out 0:07:46.680 --> 0:07:50.480 the right under the surface. Thank you to Keith Grossman, 0:07:50.680 --> 0:07:52.880 our former head of ad sales at Bloomberg, who had 0:07:53.000 --> 0:07:56.400 arranged these lovely outings two summers in a row, complete 0:07:57.600 --> 0:07:59.600 crazy Bacanelli in south of France. It was great. 0:07:59.640 --> 0:08:01.440 And then and then and then do you like take 0:08:01.480 --> 0:08:01.840 the trouble? 0:08:01.880 --> 0:08:04.280 You can't Coemple's home like to the US, like I 0:08:04.640 --> 0:08:05.080 had trouble. 0:08:05.400 --> 0:08:07.640 I'm not so so everything they have troubles. Yeah. Then 0:08:07.680 --> 0:08:09.880 they have this little store in this little farm. I'm 0:08:09.880 --> 0:08:13.920 still on the mailing list. And the French couple, young couple, 0:08:14.120 --> 0:08:17.000 and they have a little French truffle thing going on. 0:08:17.040 --> 0:08:17.680 I love this. 0:08:17.760 --> 0:08:22.080 For another trip with at in. 0:08:22.120 --> 0:08:25.480 This you know in may Or so that's next on 0:08:25.560 --> 0:08:25.920 the dockt. 0:08:26.120 --> 0:08:28.320 I love all of this. I'm going to ruminate on this. 0:08:30.160 --> 0:08:34.000 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:08:34.120 --> 0:08:35.960 weekdays at ten am Eastern. 0:08:35.800 --> 0:08:39.120 On Apple car Play and Android Otto with the Bloomberg Business. 0:08:39.520 --> 0:08:42.360 You can also listen live on Amazon Alexa from our 0:08:42.400 --> 0:08:47.040 flagship New York station, Just Say Alexa, playing Bloomberg eleven thirty. 0:08:48.559 --> 0:08:51.320 Let's get to some of that economic data here today. 0:08:51.880 --> 0:08:55.120 Lydia user Joints and she's a senior economist at Ernst 0:08:55.160 --> 0:08:57.480 and Young. She joins us from New York City via 0:08:57.600 --> 0:09:01.800 that zoom thing. So, Lydia looks like like that inflation 0:09:02.040 --> 0:09:04.040 scare that we had maybe the first three four months 0:09:04.080 --> 0:09:07.199 of this year is maybe moderating a little bit. Is 0:09:07.240 --> 0:09:09.440 that the takeaway from the CPI data that you looked 0:09:09.480 --> 0:09:09.880 at today? 0:09:11.840 --> 0:09:14.040 Yeah? Sure, I mean, I think the key takeaway is 0:09:14.160 --> 0:09:17.400 really that inflation continues to move in the right direction 0:09:17.600 --> 0:09:21.360 and that this inflation trend remains in place despite the 0:09:21.440 --> 0:09:24.640 bumping as that we had in the first quarter. I 0:09:24.720 --> 0:09:27.360 think the details of the report this morning were encouraging. 0:09:27.720 --> 0:09:30.760 Both on the goods and services side. We saw that 0:09:31.000 --> 0:09:35.840 cooling and core inflation call goods prices decline in April, 0:09:36.000 --> 0:09:40.320 and that really indicates that this more favorable and normalized 0:09:40.440 --> 0:09:44.760 supply chain environment continues to be conductive of deflation in 0:09:44.840 --> 0:09:48.000 the goods sector. And on the services side, we also 0:09:48.120 --> 0:09:51.800 saw aneasing in the pace of inflation, with many of 0:09:51.880 --> 0:09:55.360 the categories also showing some cooling. So overall, that's the 0:09:55.480 --> 0:09:58.960 report that suggests that we're still moving in the right direction. 0:09:59.240 --> 0:10:02.520 Something I'm still great happling with is why the event 0:10:02.600 --> 0:10:06.760 has such conditions, has such conviction that financial conditions are 0:10:06.920 --> 0:10:09.560 tight when you take a look at MEME stocks, when 0:10:09.600 --> 0:10:12.000 you take a look at the actual financial conditions index, 0:10:12.520 --> 0:10:16.000 do these numbers justify that confidence or no? 0:10:18.000 --> 0:10:20.439 When we look at the economy overall and the package 0:10:20.480 --> 0:10:23.040 of economy data that we got this morning. You mentioned 0:10:23.080 --> 0:10:24.640 retail sales early. 0:10:24.520 --> 0:10:24.960 On the show. 0:10:25.559 --> 0:10:28.439 Retail sales work quite soft, and they do suggest that 0:10:28.679 --> 0:10:32.560 consumers are increasingly cautious with your spending. We have an 0:10:32.600 --> 0:10:37.040 economic environment that's cooling, the label market is rebalancing, wages 0:10:37.160 --> 0:10:40.439 are moderating, and at the same time, we have you know, 0:10:40.559 --> 0:10:44.240 today's some evidence that we remain and we continue to 0:10:44.320 --> 0:10:48.760 see that these inflation happening, especially on the core side. 0:10:49.160 --> 0:10:51.920 So the progress has been slower, but overall, the economy 0:10:52.000 --> 0:10:55.679 continues to cool and inflation is likely to continue to 0:10:55.840 --> 0:10:59.679 gradually ease, you know, throughout the twenty twenty four and 0:11:00.080 --> 0:11:03.679 towards twenty twenty five. I think what will be important 0:11:03.960 --> 0:11:06.360 and important what's important to keep in mind is that 0:11:06.640 --> 0:11:09.600 we may hit the plateau when it comes to inflation. 0:11:09.840 --> 0:11:13.160 CPI inflation in the coming months. But overall, I think 0:11:13.200 --> 0:11:16.640 the report today has helped rebuild a bit of confidence 0:11:16.720 --> 0:11:19.240 that the FED had lost in the first quarter of 0:11:19.280 --> 0:11:19.559 the year. 0:11:20.840 --> 0:11:23.640 Liddy, We also yesterday had a little bit higher than 0:11:23.679 --> 0:11:27.360 expected PPI print. How do you kind of put that 0:11:27.600 --> 0:11:29.160 in the CPI data we got today? How do you 0:11:29.200 --> 0:11:30.959 put that Together's what's the narrative there? 0:11:32.400 --> 0:11:35.000 Yeah, I mean, looking at the PPI data, I think 0:11:35.080 --> 0:11:38.200 some of the details were more encouraging, especially looking at 0:11:38.280 --> 0:11:41.400 some of the key categories that we feed into the 0:11:41.520 --> 0:11:45.920 PC data, so looking at some of the underlying components 0:11:46.160 --> 0:11:49.480 of PPI. But overall, I think, you know, when we 0:11:49.559 --> 0:11:52.600 look at the overall trend in inflation and what that means. 0:11:52.640 --> 0:11:57.439 Also looking at these two reports for PC inflation, I 0:11:57.520 --> 0:12:00.560 think that we're likely to get, you know, a fairly 0:12:00.679 --> 0:12:04.320 encouraging print on the core PC data, and that overall 0:12:04.600 --> 0:12:09.559 core PC inflation should continue to gradually ease in the 0:12:09.679 --> 0:12:12.160 coming months. I think, you know, we're coming we're coming 0:12:12.200 --> 0:12:15.240 off of that first quarter where inflation has surprise on 0:12:15.320 --> 0:12:18.559 the obside, you know, for several months, and what we 0:12:18.679 --> 0:12:22.160 need to see going forward is really softer inflation print 0:12:22.600 --> 0:12:26.320 a string of softer inflation print that will help THEE 0:12:26.520 --> 0:12:29.319 the FED feel more confident that you know, they're in 0:12:29.400 --> 0:12:31.679 a good spot and can start you know, that is 0:12:31.760 --> 0:12:32.240 in cycle. 0:12:33.280 --> 0:12:36.480 Do you think the using cycle will be two cuts 0:12:36.520 --> 0:12:36.880 this year? 0:12:37.559 --> 0:12:39.040 One and then what. 0:12:40.640 --> 0:12:44.160 Yeah, so we have our view is that we're gonna 0:12:44.200 --> 0:12:46.800 get two cuts in the second half of this year. 0:12:47.520 --> 0:12:50.079 We do think that, you know, as I said, the 0:12:50.160 --> 0:12:54.800 economic environment will you know, will be you know, and 0:12:55.080 --> 0:12:57.720 will be favorable for those two great cuts. And when 0:12:57.760 --> 0:13:00.679 you think back at what Fetcher Powell said at the 0:13:00.720 --> 0:13:03.679 press conference, he really laid out three paths when it 0:13:03.840 --> 0:13:07.040 comes to a monetary policy going forward, and there are 0:13:07.200 --> 0:13:09.839 two of these paths that are leading. 0:13:09.640 --> 0:13:10.480 To rate cuts. 0:13:10.760 --> 0:13:13.160 You know, if you see a deteriration in label market 0:13:13.200 --> 0:13:17.080 conditions or if you see inflation moving sustainably towards two percent, 0:13:17.640 --> 0:13:20.319 our view is that, you know, the economy is going 0:13:20.400 --> 0:13:23.319 to continue to cool and that conditions are in place 0:13:23.480 --> 0:13:26.120 to continue to see that this inflation. We have an 0:13:26.160 --> 0:13:29.880 economy that's cooling and consumers that are growing increasingly cautious. 0:13:30.320 --> 0:13:33.079 We have a label market that's rebalancing and wages that 0:13:33.160 --> 0:13:37.400 are easing. We also have signs that companies are exercising 0:13:37.480 --> 0:13:40.480 less price in power, and we're likely to see more 0:13:40.520 --> 0:13:43.959 downward pressure on profit margins as well. And lastly, we 0:13:44.080 --> 0:13:46.599 also have more rent these inflation in the pipeline and 0:13:46.679 --> 0:13:50.120 the numbers this morning, we're also encouraging in that front 0:13:50.200 --> 0:13:52.880 where you know, we continue to see that downtrend in 0:13:53.000 --> 0:13:56.319 rent inflation. So overall, I do think that you know, 0:13:56.640 --> 0:13:59.760 this backdrop is going to lead the FED to start 0:13:59.800 --> 0:14:02.440 that is in cycle media and we see two rate 0:14:02.520 --> 0:14:06.839 cuts happening, so more of a recalibration that an aggressive, 0:14:07.080 --> 0:14:08.480 you know, rated cycle. 0:14:09.400 --> 0:14:11.599 So we also had the retail sales came in a 0:14:11.640 --> 0:14:14.600 little bit weaker than expected. What's your read across. 0:14:14.320 --> 0:14:19.240 There, Yeah, so the retail sales report weaker than expected. 0:14:19.320 --> 0:14:21.600 Looking at some of the details, it was quite mixed. 0:14:22.360 --> 0:14:25.200 I think there was some categories where we saw some payback. 0:14:25.280 --> 0:14:28.520 Looking at online sales for example, they were very strong 0:14:29.040 --> 0:14:33.640 in March, so they declined in April. And you know, overall, 0:14:33.680 --> 0:14:37.200 I think what these suggest is that a consumer spending 0:14:37.280 --> 0:14:39.800 momentum at the start of Q two is going to 0:14:39.880 --> 0:14:43.760 be you know, looking software, we came out of March 0:14:43.880 --> 0:14:47.400 with significant momentum when it comes to consumer spending and 0:14:47.520 --> 0:14:52.320 you have that robust carry over that's supporting positive consumer spending. 0:14:52.760 --> 0:14:54.720 But what it does suggest is that on the months 0:14:54.720 --> 0:14:58.520 of amounth basis, we've seen somewhat of a down shift, 0:14:58.920 --> 0:15:00.800 and we think that this is a trend that will 0:15:00.840 --> 0:15:04.520 continue because consumers are feeling you know, the impact of 0:15:04.640 --> 0:15:08.480 elevated prices, are your borrowing costs and just you know, 0:15:08.560 --> 0:15:12.360 a more challenging environment, especially for lower income hussles. 0:15:12.680 --> 0:15:15.000 All right, Lydia, thanks so much. We really appreciate your 0:15:15.040 --> 0:15:18.440 time today. Thank you so much, Lydio bassour Ey pantheon 0:15:18.520 --> 0:15:21.200 A senior economists, We very much thank you for your time. 0:15:21.640 --> 0:15:24.240 Speaking of retail, I was really struck by those Burgery numbers. 0:15:24.720 --> 0:15:27.400 Now luxury has been burbery, Yeah, like luxury has been 0:15:27.560 --> 0:15:30.080 certain areas of luxury have been struggling, and Burbery kind 0:15:30.120 --> 0:15:30.960 of doubled down on that. 0:15:31.640 --> 0:15:32.920 They had sort of weaker. 0:15:32.720 --> 0:15:34.920 Sales and their outlook wasn't that great for the first 0:15:35.000 --> 0:15:38.560 half either. So even the high high end continues to 0:15:38.680 --> 0:15:41.000 kind of get dragged down a little bit, which also 0:15:41.080 --> 0:15:43.240 you find to be a bit confusing. 0:15:43.400 --> 0:15:46.040 Well, whenever I think of retail and luxury retail, I 0:15:46.080 --> 0:15:48.640 think of the Chinese consumer is kind of the swing factor. 0:15:48.800 --> 0:15:51.400 I wonder what they're saying about the Chinese consumer. 0:15:51.520 --> 0:15:54.640 It's always about China, but also pockets of weakness in 0:15:54.680 --> 0:15:57.400 the US as well, So it's not just a China 0:15:58.000 --> 0:16:00.080 situation when it comes to retail. 0:15:59.800 --> 0:16:03.200 And a podcast about five percent here today. 0:16:02.960 --> 0:16:04.480 Ye weak demand China, n US. 0:16:04.640 --> 0:16:08.000 Yeah. So I mean it's it's you know, it's out there. 0:16:08.040 --> 0:16:10.600 It's concerning. But I mean, I guess the overall economic 0:16:10.720 --> 0:16:14.920 data is still generally pretty solid. I guess, you know. 0:16:15.040 --> 0:16:17.200 And it's is it solid enough for the FED to 0:16:17.760 --> 0:16:20.240 start pulling back on rates and if so, when so 0:16:20.320 --> 0:16:20.920 that'll be interesting. 0:16:21.120 --> 0:16:22.840 It's still what I find so interesting is still the 0:16:22.920 --> 0:16:25.640 hard and soft data. The soft data, I appreciate the 0:16:25.680 --> 0:16:28.240 NFIB was a bit better yesterday, but the feelings are 0:16:28.320 --> 0:16:30.360 negative even if the hard data is a little bit 0:16:30.640 --> 0:16:33.520 positive or at least stable. Particularly, we take a look 0:16:33.560 --> 0:16:35.880 at how many people are benefiting from the equity rally, 0:16:36.280 --> 0:16:38.360 and there was a great uh in John Author's piece. 0:16:38.400 --> 0:16:40.240 You really helped break it down. Oh no, it was 0:16:40.280 --> 0:16:42.200 a lu Wang had a piece where she broke it 0:16:42.280 --> 0:16:44.960 down and said, just x amount of people have money 0:16:45.000 --> 0:16:47.040 in the stock market that are benefiting and guess what, 0:16:47.440 --> 0:16:50.240 they're mostly older white people and everything else is a 0:16:50.280 --> 0:16:51.800 bit is a bit, dice Yer. It's a great piece. 0:16:51.840 --> 0:16:52.840 You's definitely check it out. 0:16:54.280 --> 0:16:58.120 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:16:58.240 --> 0:17:01.600 weekdays at ten am Eastern APO card playing Android Otto 0:17:01.680 --> 0:17:04.560 with the Bloomberg Business App. Listen on demand wherever you 0:17:04.680 --> 0:17:07.640 get your podcasts, or watch us live on YouTube. 0:17:09.600 --> 0:17:12.640 Alex Steel alongside Paul Sweeny. This is Bloomberg Intelligence Radio. 0:17:12.720 --> 0:17:14.800 We cover all the tap news in business and economics 0:17:15.359 --> 0:17:17.840 through our lens of our Bloomberg Intelligence analysts. They cover 0:17:17.880 --> 0:17:21.200 about two thousand companies and one hundred and thirty industries worldwide. 0:17:21.240 --> 0:17:24.400 We also sometimes take you outside the Bloomberg Intelligence world 0:17:24.760 --> 0:17:26.520 to those that work on the street. And for that 0:17:26.560 --> 0:17:30.320 we're gonna go to Marie Shore. She covers senior equity 0:17:30.359 --> 0:17:33.879 analyst over at Columbia thread Needle Investments. They have a 0:17:34.000 --> 0:17:35.920 great team over there. We love talking to these guys. 0:17:36.000 --> 0:17:39.199 Let's get breakdown after retail sales. Thanks for joining us, Mari, 0:17:39.320 --> 0:17:39.960 It's great to see you. 0:17:40.119 --> 0:17:41.879 Thank you so much for having me so. 0:17:43.600 --> 0:17:47.720 Breakdown two things. One where in the retail world makes 0:17:47.760 --> 0:17:50.680 sense and two do equities a record highs make sense. 0:17:51.520 --> 0:17:53.280 Yes, it's a great question. 0:17:53.600 --> 0:17:54.000 I think. 0:17:54.160 --> 0:17:56.920 You know, when we look at the retail sales print today, 0:17:57.000 --> 0:17:59.679 I think we see more of what we've been discussing, 0:18:00.200 --> 0:18:04.399 which is still a choiceful consumer still spending more on 0:18:04.640 --> 0:18:09.080 services over goods and needs over wants. So overall, my 0:18:09.160 --> 0:18:13.720 outlook for spend on more discretionary goods is more cautious. 0:18:14.160 --> 0:18:17.760 We still see things like home and electronics really weak 0:18:18.880 --> 0:18:24.040 versus strength in certain channels like e commerce and value retail, 0:18:24.560 --> 0:18:27.680 and in certain categories, like I thought today in the 0:18:27.760 --> 0:18:32.120 retail sales print, the improvement we saw in apparel was interesting, 0:18:32.200 --> 0:18:35.760 and we've seen some new trends in apparel, and it 0:18:35.880 --> 0:18:40.040 seems that some of the traditional apparel companies are taking 0:18:40.200 --> 0:18:44.320 share back, maybe from some of the athletic apparel companies. 0:18:45.040 --> 0:18:48.080 So that's I think an interesting trend to watch In 0:18:48.280 --> 0:18:52.480 terms of the valuations on some of these names. It 0:18:52.640 --> 0:18:56.720 definitely seemed like the group was a little over extended 0:18:57.640 --> 0:19:00.840