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 --> 00:00:20,959 Speaker 1: at Bloomberg dot com. You know, one of the industry 8 00:00:21,000 --> 00:00:22,920 Speaker 1: sectors that just seems to be more and more in 9 00:00:22,960 --> 00:00:26,000 Speaker 1: the news. Maybe this year more than ever has been cannabis. 10 00:00:26,239 --> 00:00:29,360 Speaker 1: We'd we're talking um. Maybe that's because it's been, you know, 11 00:00:29,360 --> 00:00:31,360 Speaker 1: a pretty big business in Canada. We've got more and 12 00:00:31,360 --> 00:00:35,280 Speaker 1: more US states legalizing uh cannabis. To get the latest 13 00:00:35,440 --> 00:00:38,080 Speaker 1: on that end, on kind of all things in Canada, 14 00:00:38,120 --> 00:00:41,559 Speaker 1: we welcome Dave Dan Devio, President and CEO of Canachord 15 00:00:41,600 --> 00:00:44,640 Speaker 1: Genuity Group based in Toronto, Cannaba, joining us here in 16 00:00:44,640 --> 00:00:47,040 Speaker 1: our Bloomberg Interactive Broker Studio. Dan, thanks so much for 17 00:00:47,040 --> 00:00:49,760 Speaker 1: coming down with us so talk to us about the 18 00:00:49,840 --> 00:00:53,279 Speaker 1: state of the cannabis business, because we've certainly heard more 19 00:00:53,280 --> 00:00:55,520 Speaker 1: and more about it as we've gone through the year. Yeah. No, 20 00:00:55,600 --> 00:00:58,120 Speaker 1: it's been. It's first of all, thanks for very much 21 00:00:58,120 --> 00:01:00,760 Speaker 1: for having me. And secondly, it's been it's been a 22 00:01:00,880 --> 00:01:04,360 Speaker 1: very active segment um. You know, throughout the last two 23 00:01:04,440 --> 00:01:07,440 Speaker 1: or three years, we've seen in an incredible time where 24 00:01:07,440 --> 00:01:09,760 Speaker 1: there was a massive rush to the market by you know, 25 00:01:09,760 --> 00:01:13,400 Speaker 1: probably over a hundred companies that went public, raising four 26 00:01:13,440 --> 00:01:16,960 Speaker 1: to five billion dollars, and you know, there was exuberance 27 00:01:16,959 --> 00:01:18,560 Speaker 1: in the market. It's a new market, no one really 28 00:01:18,640 --> 00:01:20,440 Speaker 1: knew how big it was going to be, and a 29 00:01:20,520 --> 00:01:22,320 Speaker 1: lot of companies raise money. You know, it's taken a 30 00:01:22,400 --> 00:01:25,640 Speaker 1: little bit longer for people to realize on their strategic plans. 31 00:01:25,920 --> 00:01:28,360 Speaker 1: Part of its access to capital, part of its government 32 00:01:28,400 --> 00:01:31,160 Speaker 1: regulations taking a little bit longer. So we've seen some 33 00:01:31,240 --> 00:01:33,880 Speaker 1: volatility in the market. We've seen some people lose money 34 00:01:33,880 --> 00:01:36,120 Speaker 1: as a result, but people made a lot of money 35 00:01:36,160 --> 00:01:38,400 Speaker 1: there for a while. Like I can I can remember 36 00:01:38,959 --> 00:01:41,760 Speaker 1: this market three years ago where you couldn't convince somebody 37 00:01:41,800 --> 00:01:44,120 Speaker 1: to invest in the cannabis stock and the guys that 38 00:01:44,160 --> 00:01:47,320 Speaker 1: we took out, you know, we we ended up having 39 00:01:47,360 --> 00:01:49,520 Speaker 1: to pass the hat, you know, around the firm just 40 00:01:49,560 --> 00:01:52,000 Speaker 1: to fill out deals. At the beginning, did you actually 41 00:01:52,320 --> 00:01:58,240 Speaker 1: ask your employees to the senior people really felt strongly 42 00:01:58,280 --> 00:02:00,559 Speaker 1: about the industry at the beginning, and it wasn't about 43 00:02:00,600 --> 00:02:04,120 Speaker 1: asking and it was you know, they decided to do it. 44 00:02:04,200 --> 00:02:06,520 Speaker 1: But certainly, Yeah, some of our employees at the beginning 45 00:02:06,560 --> 00:02:09,120 Speaker 1: invested in it and and did well. The ones who 46 00:02:09,120 --> 00:02:11,160 Speaker 1: invested lately didn't do so well. We've seen the big 47 00:02:11,160 --> 00:02:14,440 Speaker 1: banks come into the market lately, um and unfortunately that 48 00:02:14,480 --> 00:02:16,600 Speaker 1: hasn't worked out as well. A little late to the sector, 49 00:02:16,720 --> 00:02:19,560 Speaker 1: and some of the broadening of the distribution hasn't worked 50 00:02:19,560 --> 00:02:21,760 Speaker 1: out well. Some of those deals haven't performed as well. Well. 51 00:02:21,800 --> 00:02:23,640 Speaker 1: I love the idea of passing a hat around the 52 00:02:23,680 --> 00:02:25,919 Speaker 1: office to say, like, what what are we putting mine 53 00:02:25,960 --> 00:02:29,000 Speaker 1: in for? Hot? Exactly? We call that in a business 54 00:02:29,080 --> 00:02:32,240 Speaker 1: co investing. Yeah, exactly. Well, I will say this, it's 55 00:02:32,240 --> 00:02:33,960 Speaker 1: interesting that you say that the big banks have tried 56 00:02:33,960 --> 00:02:35,720 Speaker 1: to get in lately and it hasn't worked out. Is 57 00:02:35,720 --> 00:02:38,359 Speaker 1: that good for you because that would have potentially been 58 00:02:38,440 --> 00:02:43,000 Speaker 1: competition for you. Yeah. We have dominant market share. When 59 00:02:43,000 --> 00:02:46,520 Speaker 1: I mean dominant, I mean we raise the majority of 60 00:02:46,560 --> 00:02:49,000 Speaker 1: the money in the market and probably represent most of 61 00:02:49,040 --> 00:02:51,920 Speaker 1: the M and A trade, So it's clearly competition you'd 62 00:02:51,919 --> 00:02:54,680 Speaker 1: think would be bad, but but you know, the broadening 63 00:02:54,680 --> 00:02:56,120 Speaker 1: out of the market would be a good thing. That 64 00:02:56,160 --> 00:02:58,919 Speaker 1: market would be five times larger, so our market share 65 00:02:58,919 --> 00:03:01,919 Speaker 1: would go from the right to clee a hundred. We'd 66 00:03:01,919 --> 00:03:04,160 Speaker 1: still do very well as an institution because the market 67 00:03:04,160 --> 00:03:05,960 Speaker 1: would be that much larger. We'll talk to us in 68 00:03:05,960 --> 00:03:08,799 Speaker 1: the US and so Canada, is it federally legalized? Is 69 00:03:08,880 --> 00:03:12,120 Speaker 1: that correct? Okay? And so and that's good? Um, And 70 00:03:12,200 --> 00:03:15,000 Speaker 1: in the US we just have a limited number of states. 71 00:03:15,040 --> 00:03:19,480 Speaker 1: What's the understanding about at a possible federal legalization in 72 00:03:19,520 --> 00:03:23,040 Speaker 1: the United States? Yeah, Well, there's the industry is not 73 00:03:24,040 --> 00:03:26,680 Speaker 1: doesn't have the stigma that it used to have, clearly. 74 00:03:26,720 --> 00:03:29,400 Speaker 1: So there's three pieces of federal legislation working their way 75 00:03:29,400 --> 00:03:32,040 Speaker 1: through the government. There's a Safe Act, States Act, and 76 00:03:32,120 --> 00:03:34,680 Speaker 1: More Act, all three of them. And who knows exactly 77 00:03:34,680 --> 00:03:37,400 Speaker 1: what we'll get past and when the point is, eventually 78 00:03:37,600 --> 00:03:40,440 Speaker 1: it's coming. Eventually we're gonna see it. So we don't 79 00:03:40,480 --> 00:03:42,480 Speaker 1: I like to make either a prediction or give a 80 00:03:42,480 --> 00:03:44,800 Speaker 1: time frame. I don't like to do both. But eventually 81 00:03:44,840 --> 00:03:47,520 Speaker 1: we're going to see federal legislation in the industry, and 82 00:03:47,560 --> 00:03:49,480 Speaker 1: that's going to help from a state level, there's a 83 00:03:49,560 --> 00:03:52,320 Speaker 1: number of state votes happening every year. This year there's 84 00:03:52,360 --> 00:03:56,240 Speaker 1: four states voting on adult legal use recreational use. So 85 00:03:56,320 --> 00:03:58,080 Speaker 1: that's going to continue to play out. We're going to 86 00:03:58,160 --> 00:04:01,440 Speaker 1: continue to see states uh um, you know, legalize it 87 00:04:01,800 --> 00:04:04,640 Speaker 1: at that level. But until we have federal lead legislation, 88 00:04:04,920 --> 00:04:07,880 Speaker 1: you're not going to see uh companies be able to 89 00:04:07,920 --> 00:04:10,400 Speaker 1: list on the NASDAC or New York Stock Exchange, and 90 00:04:10,440 --> 00:04:13,000 Speaker 1: you're not going to see the big big mutual funds 91 00:04:13,000 --> 00:04:15,360 Speaker 1: and big big money invest in the sector. All right, 92 00:04:15,400 --> 00:04:17,240 Speaker 1: let's just gears a little bit. Uh. I know that 93 00:04:17,320 --> 00:04:19,520 Speaker 1: Ken Accord focuses a lot and a whole host of 94 00:04:19,520 --> 00:04:22,080 Speaker 1: different functions within the financial services, whether it's the wealth 95 00:04:22,120 --> 00:04:26,680 Speaker 1: management business or whether it is facilitating mergers and acquisitions. 96 00:04:26,720 --> 00:04:30,600 Speaker 1: What are you expecting in in terms of corporate health 97 00:04:30,680 --> 00:04:33,800 Speaker 1: and their willingness to complete transactions given how high valuations 98 00:04:33,839 --> 00:04:36,800 Speaker 1: are right now? Yeah, I think high valuations does does 99 00:04:36,960 --> 00:04:38,760 Speaker 1: does a lot of things. I mean, certainly, companies are 100 00:04:38,760 --> 00:04:40,719 Speaker 1: prepared to raise money when their values are high, and 101 00:04:40,800 --> 00:04:43,760 Speaker 1: companies are prepared to buy and sell each other when 102 00:04:43,800 --> 00:04:47,479 Speaker 1: their values are high, and there's pretty good access to capital. 103 00:04:47,520 --> 00:04:50,920 Speaker 1: Still both equity capital, but more importantly credit capital. All 104 00:04:51,000 --> 00:04:54,640 Speaker 1: those things direct you towards a pretty active market, both 105 00:04:54,640 --> 00:04:57,480 Speaker 1: from a new issue perspective and an M and A perspective, 106 00:04:57,760 --> 00:05:00,000 Speaker 1: So we see both markets continue to be active. We're 107 00:05:00,040 --> 00:05:02,560 Speaker 1: busy in technology. It's a huge area of US. We 108 00:05:02,640 --> 00:05:06,039 Speaker 1: bought a firm here called Petski Prunier last year, and 109 00:05:06,120 --> 00:05:07,960 Speaker 1: are you know the share of our M and A 110 00:05:08,000 --> 00:05:10,120 Speaker 1: business has gone up substantially. I think we're number three 111 00:05:10,120 --> 00:05:13,680 Speaker 1: in that mid market TMT area and we continue to 112 00:05:13,720 --> 00:05:15,920 Speaker 1: see that being very active in the US. We've got 113 00:05:15,920 --> 00:05:19,960 Speaker 1: a great healthcare presence, both biotech and healthcare services, and 114 00:05:20,000 --> 00:05:22,880 Speaker 1: that's been very active for us. So broadly speaking, we 115 00:05:22,960 --> 00:05:26,000 Speaker 1: continue to be pretty optimistic. Tony Dwyer, our main market 116 00:05:26,000 --> 00:05:29,000 Speaker 1: strategists continues to see a very strong market over the 117 00:05:29,000 --> 00:05:32,039 Speaker 1: next year. So well, you know, we're pretty bullish on 118 00:05:32,080 --> 00:05:34,640 Speaker 1: that industry. Your stocks down, Third Team cent you today, 119 00:05:34,680 --> 00:05:37,440 Speaker 1: what's what's the story? What's going on? Not in more 120 00:05:37,560 --> 00:05:43,560 Speaker 1: more more sellers than buyers? No, thank you, No, I 121 00:05:43,600 --> 00:05:45,920 Speaker 1: mean it's it's unfortunate that our stock is down because 122 00:05:45,920 --> 00:05:48,240 Speaker 1: our earnings has been Our earnings have been incredibly strong. 123 00:05:48,279 --> 00:05:51,000 Speaker 1: We've been increasingly profitable every year. Last year we did 124 00:05:51,040 --> 00:05:53,200 Speaker 1: about eighty cents of share and earnings. This year today 125 00:05:53,240 --> 00:05:55,800 Speaker 1: we've done forty one census share and earnings. You know, 126 00:05:55,839 --> 00:05:58,679 Speaker 1: we trade at six to seven times earnings, and given 127 00:05:58,680 --> 00:06:01,200 Speaker 1: that most of our earnings come from our wealth business, 128 00:06:01,200 --> 00:06:04,040 Speaker 1: I think people see as as a relatively volatile capital 129 00:06:04,040 --> 00:06:07,159 Speaker 1: markets type stock. But but the truth is seventy of 130 00:06:07,160 --> 00:06:09,720 Speaker 1: our earnings last quarter came from our wealth business and 131 00:06:09,720 --> 00:06:12,240 Speaker 1: that's been a growing area of profitability. We've been able 132 00:06:12,240 --> 00:06:15,520 Speaker 1: to attract a remarkable number of new advisory teams in 133 00:06:15,520 --> 00:06:18,440 Speaker 1: our Canadian wealth business and in our UK wealth business, 134 00:06:18,440 --> 00:06:21,200 Speaker 1: which is forty five billion Canadian dollars. It's a big business. 135 00:06:21,640 --> 00:06:23,840 Speaker 1: We've we've bought a lot of firms and integrated them 136 00:06:23,839 --> 00:06:26,080 Speaker 1: in and our margins keep on going up, our profitability 137 00:06:26,120 --> 00:06:28,960 Speaker 1: goes up. We've also been buying back our stock because 138 00:06:28,960 --> 00:06:31,560 Speaker 1: we see it's relatively cheap. We bought forty million dollars 139 00:06:31,560 --> 00:06:35,280 Speaker 1: Canadian stock last year and we're going to continue that activity. Dan, 140 00:06:35,320 --> 00:06:37,080 Speaker 1: thank you so much for being with us today. Thanks 141 00:06:37,080 --> 00:06:39,480 Speaker 1: so much for having me. Dan Davio. He is president, 142 00:06:39,600 --> 00:06:44,160 Speaker 1: chief executive officer of Kenda cord Enuity Group corporation with 143 00:06:44,200 --> 00:06:47,640 Speaker 1: forty four billion dollars of assets under management, based in Toronto, Canada, 144 00:06:47,680 --> 00:06:50,359 Speaker 1: but he joins us here in our interactive broker studios 145 00:06:50,360 --> 00:06:53,080 Speaker 1: in New York City, where it is just about the 146 00:06:53,120 --> 00:06:55,239 Speaker 1: same type of weather as they normally see in Canada, 147 00:06:55,240 --> 00:06:58,880 Speaker 1: which is absolutely freezing. But really interesting to talk about 148 00:06:59,040 --> 00:07:02,279 Speaker 1: the outlook for cannabis given how much optimism there's been 149 00:07:02,640 --> 00:07:05,760 Speaker 1: around that sector, although of late has been rather beaten up. 150 00:07:20,080 --> 00:07:22,800 Speaker 1: Let's talk about emerging markets. This is another consensus call 151 00:07:22,920 --> 00:07:27,080 Speaker 1: heading into is that emerging markets will outperform on the 152 00:07:27,120 --> 00:07:30,160 Speaker 1: heels in part of a weaker dollar. Joining us now 153 00:07:30,200 --> 00:07:33,040 Speaker 1: to talk about this, Vincent Ward. He is a global 154 00:07:33,080 --> 00:07:35,680 Speaker 1: macro strategist at I N T l F C Stone, 155 00:07:36,240 --> 00:07:38,800 Speaker 1: based in San Francisco. Vincent, thank you so much for 156 00:07:38,840 --> 00:07:42,040 Speaker 1: being with us people saying that there are opportunities here. 157 00:07:42,320 --> 00:07:45,600 Speaker 1: You're going a step further and calling currencies in developing 158 00:07:45,600 --> 00:07:51,320 Speaker 1: markets dirt cheap. Please explain absolutely, um, and I mean 159 00:07:51,320 --> 00:07:55,000 Speaker 1: he's been going on for a wide but uh, last 160 00:07:55,040 --> 00:07:58,400 Speaker 1: year we added to the case, especially if you'll get 161 00:07:58,480 --> 00:08:01,640 Speaker 1: Latin American currencies where in a way declines of like 162 00:08:03,040 --> 00:08:07,559 Speaker 1: in in some of the spaceless currencies like literally and beso. Um, 163 00:08:07,680 --> 00:08:10,600 Speaker 1: if you're going to look at Asia, it strikes me 164 00:08:10,640 --> 00:08:14,200 Speaker 1: as um just in saying that basically the core in 165 00:08:14,280 --> 00:08:17,320 Speaker 1: one or the Thai bath are basically where they were 166 00:08:17,320 --> 00:08:21,080 Speaker 1: in two thousands, just after the station crisis, the Internet 167 00:08:21,080 --> 00:08:23,360 Speaker 1: bubble in the US, and if you look how far 168 00:08:23,440 --> 00:08:26,920 Speaker 1: these countries have come since that time, it seems odd 169 00:08:26,960 --> 00:08:30,080 Speaker 1: that on a real effective basis the currencies have not 170 00:08:30,200 --> 00:08:33,400 Speaker 1: appreciated in the past twenty years. So Vincent, in your 171 00:08:33,400 --> 00:08:35,840 Speaker 1: most recent research note you do a maya culpa here. 172 00:08:35,880 --> 00:08:39,360 Speaker 1: You had a call of overweight em and that's uh 173 00:08:39,600 --> 00:08:41,680 Speaker 1: not been the right cause that e M is once 174 00:08:41,720 --> 00:08:45,240 Speaker 1: again trailed kind of the SMP and broader markets. Why 175 00:08:45,240 --> 00:08:49,120 Speaker 1: do you think emerging markets are in fact not getting 176 00:08:49,160 --> 00:08:54,360 Speaker 1: rewarded Maybe just from evaluation perspective of nothing else right? Um, Well, 177 00:08:54,440 --> 00:08:58,040 Speaker 1: I think last year it really came down to two 178 00:08:58,200 --> 00:09:02,240 Speaker 1: macro developments that the mark get had not anticipated. One 179 00:09:02,480 --> 00:09:04,960 Speaker 1: was the escaation of the trade wars in the summer. 180 00:09:05,000 --> 00:09:06,559 Speaker 1: I mean, if you look at the beginning of the year, 181 00:09:06,679 --> 00:09:08,840 Speaker 1: he looked like the e M trade was going to work, 182 00:09:09,320 --> 00:09:11,920 Speaker 1: and then as soon as we had the new round 183 00:09:12,000 --> 00:09:15,080 Speaker 1: of summer terrists and everything kind of broke down. And 184 00:09:15,080 --> 00:09:19,240 Speaker 1: then the second element was the wave of protests that 185 00:09:19,320 --> 00:09:22,560 Speaker 1: we saw from you know, Santiago to Peru to Baghdad 186 00:09:22,600 --> 00:09:26,200 Speaker 1: to Cairo. UM. So that's what we took down, the 187 00:09:26,200 --> 00:09:30,880 Speaker 1: the m trade down. UM. As far as the valuation gap, 188 00:09:31,000 --> 00:09:33,680 Speaker 1: I mean, it's been there for close to ten years now, 189 00:09:33,720 --> 00:09:37,160 Speaker 1: but it's it's getting too ridiculous proportions. I mean, one 190 00:09:37,600 --> 00:09:39,760 Speaker 1: one way to look at it that I like is 191 00:09:39,800 --> 00:09:43,320 Speaker 1: to compare the growth the valuation of the nastag emerging markets, 192 00:09:43,320 --> 00:09:47,360 Speaker 1: because I feel, you know, we have two big growth narratives. 193 00:09:47,400 --> 00:09:49,760 Speaker 1: For the past twenty years. It's been either you know, 194 00:09:49,840 --> 00:09:52,200 Speaker 1: internet software is going to eat the world or the 195 00:09:52,320 --> 00:09:56,600 Speaker 1: rising emerging market middle class. And right now that gap 196 00:09:56,679 --> 00:09:58,839 Speaker 1: is about forty percent bigger than it was at the 197 00:09:58,880 --> 00:10:01,440 Speaker 1: height of the Internet bubble. So I know people have 198 00:10:01,480 --> 00:10:03,800 Speaker 1: said before, but at some point there will be some 199 00:10:03,840 --> 00:10:08,560 Speaker 1: min reversion that ratio. How much of this hinges entirely 200 00:10:08,679 --> 00:10:11,400 Speaker 1: on the dollar, and I say this because people are 201 00:10:11,440 --> 00:10:14,680 Speaker 1: expecting the dollar to weaken a bit next year. The 202 00:10:14,720 --> 00:10:17,640 Speaker 1: dollar has been the hardest call to get right, uh, 203 00:10:17,679 --> 00:10:19,560 Speaker 1: and it really has driven a lot of what we've 204 00:10:19,559 --> 00:10:24,120 Speaker 1: seen in developing markets. Now, absolutely, I mean this is 205 00:10:24,200 --> 00:10:27,720 Speaker 1: this is indeed the crucial question it comes to. Yeah, 206 00:10:27,800 --> 00:10:30,679 Speaker 1: I mean the emerging market trade is a synthetic short 207 00:10:30,800 --> 00:10:33,920 Speaker 1: data trade. Uh. And the reason is, I mean, part 208 00:10:33,920 --> 00:10:36,240 Speaker 1: of it for commodity explorers. Obviously you have a very 209 00:10:36,280 --> 00:10:38,400 Speaker 1: clear relation. You know, the week of the daughter, the 210 00:10:38,440 --> 00:10:42,800 Speaker 1: more the more to get. But also really what what 211 00:10:42,920 --> 00:10:45,400 Speaker 1: makes makes it special recycle is the amount of data 212 00:10:45,480 --> 00:10:48,800 Speaker 1: debts that these emerging markets have contracted three point six 213 00:10:48,880 --> 00:10:52,800 Speaker 1: trillion UM as of the latest b I S data. UH. 214 00:10:52,960 --> 00:10:55,080 Speaker 1: And really, by the way, that is the one common 215 00:10:55,120 --> 00:10:58,120 Speaker 1: team about emerging markets. I mean, emerging market has been 216 00:10:58,120 --> 00:11:01,480 Speaker 1: a misnomer for you know, twenty years now. The only 217 00:11:01,559 --> 00:11:05,079 Speaker 1: one thing in your monkey is like China, Malaysia, Turkey 218 00:11:05,160 --> 00:11:08,720 Speaker 1: or Argentina having common is that they all borrowing dollars 219 00:11:08,760 --> 00:11:12,240 Speaker 1: and they can print it um. So when the daughter weekends, 220 00:11:12,440 --> 00:11:15,880 Speaker 1: they're you know, servicing plants get easier, they can eat 221 00:11:15,920 --> 00:11:18,400 Speaker 1: morning if we policy at home, and you see both 222 00:11:18,440 --> 00:11:21,160 Speaker 1: when the daughters strengthens, as it has in much of 223 00:11:21,200 --> 00:11:24,240 Speaker 1: the past five years, you have balance of fame and 224 00:11:24,320 --> 00:11:26,360 Speaker 1: critis all over the board. So it is indeed a 225 00:11:26,400 --> 00:11:31,360 Speaker 1: daughter's short call, So Vincent, the trade deal between China 226 00:11:31,360 --> 00:11:34,200 Speaker 1: and the US. It appears that we're making some progress 227 00:11:34,240 --> 00:11:36,560 Speaker 1: on a phase one deal. We might even actually see 228 00:11:36,600 --> 00:11:41,520 Speaker 1: something on paper one day. How critical is the trade deal, 229 00:11:41,920 --> 00:11:44,360 Speaker 1: even if it's just a phase one or a light 230 00:11:44,679 --> 00:11:47,640 Speaker 1: trade deal. How important is that for the psyche of 231 00:11:47,720 --> 00:11:51,520 Speaker 1: emerging market investors? I think psyche is the is the 232 00:11:51,640 --> 00:11:54,320 Speaker 1: right word again. I mean, we we've been, you know, 233 00:11:54,520 --> 00:11:56,959 Speaker 1: very close to a trade deal. Four year, talks are 234 00:11:57,000 --> 00:11:59,079 Speaker 1: going away. You get these tweets every day for four 235 00:11:59,160 --> 00:12:02,360 Speaker 1: year now. Um, I have no instad as to what 236 00:12:02,600 --> 00:12:04,720 Speaker 1: there is in that trade deal or you know, even 237 00:12:04,760 --> 00:12:06,360 Speaker 1: if the trade deal is going to be the same 238 00:12:06,600 --> 00:12:08,679 Speaker 1: in the from the perspective of China as it will 239 00:12:08,720 --> 00:12:11,400 Speaker 1: be from the US. But all that matters, I think 240 00:12:11,520 --> 00:12:14,600 Speaker 1: is is just no more insanity, as long as we 241 00:12:14,679 --> 00:12:17,560 Speaker 1: don't have you know, we had, uh, you know, out 242 00:12:17,559 --> 00:12:19,640 Speaker 1: of the blue, we say I'm going to hike Carris 243 00:12:19,640 --> 00:12:22,800 Speaker 1: some you know, this country or whatever next year, which 244 00:12:22,840 --> 00:12:25,640 Speaker 1: I think is unlikely because that's of the electoral cycle, 245 00:12:26,440 --> 00:12:28,600 Speaker 1: just the promise of stability. I mean, we don't need 246 00:12:28,679 --> 00:12:31,680 Speaker 1: to solve I t there's probably no solution there anyway 247 00:12:31,840 --> 00:12:35,600 Speaker 1: or states on enterprise. Just no more insanity and there's 248 00:12:35,600 --> 00:12:37,920 Speaker 1: some really The other thing to you know, think about 249 00:12:38,160 --> 00:12:40,720 Speaker 1: is it's not just about the trade deal. I mean 250 00:12:40,720 --> 00:12:43,400 Speaker 1: if you look at the auto cycle in China or 251 00:12:43,440 --> 00:12:46,960 Speaker 1: you know, even even cell phones, these things are bottoming 252 00:12:47,040 --> 00:12:49,920 Speaker 1: on their own. So as long as we don't kind 253 00:12:49,920 --> 00:12:53,679 Speaker 1: of you know, run the market with with unpredicted policies, 254 00:12:54,040 --> 00:12:56,679 Speaker 1: things should get better. I love it. Our headline for 255 00:12:56,679 --> 00:13:00,959 Speaker 1: this segment is going to be, uh emerging market global 256 00:13:01,000 --> 00:13:04,439 Speaker 1: macro strategist says, no more insanity, Just stop the insanity 257 00:13:04,520 --> 00:13:07,680 Speaker 1: and emerging markets can rally. I'm wondering, are there any 258 00:13:07,760 --> 00:13:10,640 Speaker 1: developing market currencies that you do not like that you 259 00:13:10,640 --> 00:13:19,000 Speaker 1: think are going to underperform? Sorry developing market currencies? Yeah, okay, 260 00:13:19,120 --> 00:13:23,560 Speaker 1: I mean you still have the the generally the most 261 00:13:23,640 --> 00:13:25,640 Speaker 1: vulnerable ones, right, I mean I don't ones to have 262 00:13:25,679 --> 00:13:27,480 Speaker 1: that you know a lot of either other death current 263 00:13:27,520 --> 00:13:32,120 Speaker 1: account deficits. Uh so. But again so that would be 264 00:13:32,160 --> 00:13:36,960 Speaker 1: the Argentine pezo, the South African rand to something ex 265 00:13:37,200 --> 00:13:41,000 Speaker 1: maybe the Indonesian rupiah. But all these currencies have been 266 00:13:41,200 --> 00:13:44,719 Speaker 1: so massacreed, uh you know in the past two to 267 00:13:44,840 --> 00:13:48,600 Speaker 1: three years that you've gotta wonder if despite the vulnerabrilities, 268 00:13:48,840 --> 00:13:51,640 Speaker 1: they could actually be kind of the the best on 269 00:13:52,120 --> 00:13:56,080 Speaker 1: on on the bottoming on the bottoming process. Um, it's 270 00:13:56,080 --> 00:13:58,080 Speaker 1: the same suffering up all the Chilean peso you know 271 00:13:58,160 --> 00:14:02,840 Speaker 1: got down. I'm sure people would you know that that's 272 00:14:02,840 --> 00:14:04,800 Speaker 1: one of the ones that will come come come top 273 00:14:04,800 --> 00:14:07,240 Speaker 1: of mind. But again there's so much damage that have 274 00:14:07,360 --> 00:14:09,840 Speaker 1: been done that even a week emerging market currencies may 275 00:14:09,840 --> 00:14:12,959 Speaker 1: actually do well next year. Vincent Ward, thank you so 276 00:14:13,040 --> 00:14:15,520 Speaker 1: much for joining us Vincent as global macro strategist for 277 00:14:15,679 --> 00:14:19,160 Speaker 1: I N T l f C Stone, based in San Francisco. 278 00:14:19,200 --> 00:14:22,440 Speaker 1: I like his note basically saying, all right, we were 279 00:14:22,560 --> 00:14:25,160 Speaker 1: really wrong in twenty nineteen with our overweight call on 280 00:14:25,200 --> 00:14:27,880 Speaker 1: emerging markets, but we're sticking with it. And here are 281 00:14:27,920 --> 00:14:48,680 Speaker 1: the reasons why that takes um some gumption. Certainly right now, 282 00:14:48,720 --> 00:14:51,480 Speaker 1: we want to focus on everything else going on in Washington, 283 00:14:51,600 --> 00:14:55,360 Speaker 1: d C. Other than impeachment, which brings us to healthcare 284 00:14:55,400 --> 00:14:59,080 Speaker 1: backstas and joining us now in our interactive broker studio 285 00:14:59,200 --> 00:15:00,960 Speaker 1: is and the reason why we wanted to have you here, 286 00:15:01,320 --> 00:15:03,480 Speaker 1: uh is because we always love having you on. You 287 00:15:03,600 --> 00:15:07,040 Speaker 1: cover biotech and Pharma and healthcare over at Bloomberg opinion. 288 00:15:07,040 --> 00:15:09,840 Speaker 1: But it's because there was a court decision having to 289 00:15:09,880 --> 00:15:14,640 Speaker 1: do with Obamacare that seemed to be potentially detrimental to 290 00:15:14,800 --> 00:15:16,640 Speaker 1: the healthcare program. Can you talk a little bit about 291 00:15:16,680 --> 00:15:20,120 Speaker 1: what the decision was. Yeah, absolutely, So. This is a 292 00:15:20,200 --> 00:15:22,200 Speaker 1: long running case that that made its way to the 293 00:15:22,280 --> 00:15:26,240 Speaker 1: Fifth Circuit, And what they essentially decided was that the 294 00:15:26,240 --> 00:15:30,400 Speaker 1: individual mandate, which is you know from a prior core case. 295 00:15:30,520 --> 00:15:34,080 Speaker 1: You know, this is a decade of legal back and forth, 296 00:15:34,440 --> 00:15:37,440 Speaker 1: was deemed at tax. Then Congress zeroed out the tax. 297 00:15:38,720 --> 00:15:40,720 Speaker 1: So because it's zeroed out, it can no longer be 298 00:15:40,760 --> 00:15:45,680 Speaker 1: seen as attacks. Therefore it's once again unconstitutional. But they 299 00:15:45,840 --> 00:15:49,080 Speaker 1: punted essentially on the more important part the case. Because 300 00:15:49,200 --> 00:15:52,560 Speaker 1: the individual mandate is zeroed out, it doesn't really matter 301 00:15:53,000 --> 00:15:56,840 Speaker 1: that it's unconstitutional. What matters is whether that means that 302 00:15:56,880 --> 00:15:59,040 Speaker 1: the rest of the law or parts of the rest 303 00:15:59,080 --> 00:16:01,480 Speaker 1: of the law have to go with did And instead 304 00:16:01,480 --> 00:16:04,040 Speaker 1: of making some kind of decision on that, they kicked 305 00:16:04,080 --> 00:16:07,800 Speaker 1: it back down to the lower court judge you already 306 00:16:07,880 --> 00:16:10,400 Speaker 1: ruled that he thought the whole law was unconstitutional. They 307 00:16:10,480 --> 00:16:13,360 Speaker 1: just thought he wasn't careful enough or didn't look at 308 00:16:13,360 --> 00:16:16,520 Speaker 1: the details enough to make that decision, although he probably 309 00:16:16,560 --> 00:16:18,760 Speaker 1: will end up making the same decision. He's a he's 310 00:16:18,760 --> 00:16:22,200 Speaker 1: a pretty conservative guy. So what our next steps here? 311 00:16:22,240 --> 00:16:25,160 Speaker 1: Because I'm just thinking about the election coming up, and boy, 312 00:16:25,160 --> 00:16:27,320 Speaker 1: it's once again healthcare is going to be a you know, 313 00:16:27,400 --> 00:16:30,680 Speaker 1: a hot button issue for the candidates. How's the timing 314 00:16:30,720 --> 00:16:33,000 Speaker 1: of this gonna play into what do youthink? Yeah, so 315 00:16:33,080 --> 00:16:36,800 Speaker 1: it mostly depends on what the Supreme Court decides to do. 316 00:16:37,320 --> 00:16:42,360 Speaker 1: They could wait until we get another decision from from 317 00:16:42,400 --> 00:16:45,320 Speaker 1: that lower court judge and then um, you know that 318 00:16:45,400 --> 00:16:47,840 Speaker 1: it might be appealed up to them. I believe that 319 00:16:47,920 --> 00:16:50,080 Speaker 1: Democrats are going to try and take it directly to 320 00:16:50,160 --> 00:16:52,920 Speaker 1: the Supreme Court, um, you know, in the hope of 321 00:16:52,960 --> 00:16:56,120 Speaker 1: a faster resolution and putting this front and center in 322 00:16:56,200 --> 00:16:59,920 Speaker 1: the election, because it is probably not a court case 323 00:17:00,400 --> 00:17:03,440 Speaker 1: that at this point is is of benefits of the 324 00:17:03,440 --> 00:17:07,040 Speaker 1: Trump administration, even though it's his Justice Department that continues 325 00:17:07,080 --> 00:17:11,200 Speaker 1: to push it because we saw in in the midterm elections, uh, 326 00:17:11,280 --> 00:17:13,400 Speaker 1: portions of the law that that could be struck down 327 00:17:13,440 --> 00:17:16,879 Speaker 1: by this case. Protections for people with prehisting conditions, staying 328 00:17:16,880 --> 00:17:19,720 Speaker 1: on your parents and surrow stuff like that could go 329 00:17:19,800 --> 00:17:23,080 Speaker 1: with it, and that's become wildly popular. So if this 330 00:17:23,440 --> 00:17:26,359 Speaker 1: lawsuit does strike the law down in its entirety, it 331 00:17:26,400 --> 00:17:28,800 Speaker 1: would create a big mess for the election and the 332 00:17:28,800 --> 00:17:31,560 Speaker 1: healthcare system at large. I'm wondering, we we've been talking 333 00:17:31,680 --> 00:17:36,520 Speaker 1: for years now about uncertainty around Obamacare. What's the practical 334 00:17:36,560 --> 00:17:40,720 Speaker 1: implication of having a sort of overhang of a cloud 335 00:17:41,600 --> 00:17:45,560 Speaker 1: on the healthcare program given the fact that insurance companies 336 00:17:45,680 --> 00:17:48,600 Speaker 1: and healthcare providers have to have you know, two year, 337 00:17:48,720 --> 00:17:52,600 Speaker 1: three year or four year outlooks for their financial plans. Yeah, 338 00:17:52,640 --> 00:17:55,240 Speaker 1: I mean it's created uh, you know, there's been a 339 00:17:55,280 --> 00:17:58,280 Speaker 1: whole series of messes um. You know, if you go 340 00:17:58,359 --> 00:18:00,919 Speaker 1: back all the way, so the earliers of law, the 341 00:18:00,920 --> 00:18:05,159 Speaker 1: fact that the Medicaid expansion wouldn't be universally implemented, throwing 342 00:18:05,240 --> 00:18:08,760 Speaker 1: out certain categories of subsidies for insurers all along, and 343 00:18:09,040 --> 00:18:11,800 Speaker 1: then losing the individual mandate all along. This is sort 344 00:18:11,800 --> 00:18:15,520 Speaker 1: of made it harder to price plans to to profitably 345 00:18:15,560 --> 00:18:18,320 Speaker 1: participate in the market UM. And and and that's created a 346 00:18:18,320 --> 00:18:22,000 Speaker 1: lot of disruption and made insurance UM on the individual 347 00:18:22,040 --> 00:18:26,439 Speaker 1: market pretty unaffordable for people that don't qualify for for subsidies, 348 00:18:26,600 --> 00:18:29,159 Speaker 1: the fact that their income linked subsidies. That's kept the 349 00:18:29,200 --> 00:18:33,000 Speaker 1: market stable enough to survive. But um, you know, enrollment 350 00:18:33,119 --> 00:18:36,960 Speaker 1: is way down from what was initially initially forecasted, and 351 00:18:36,960 --> 00:18:39,960 Speaker 1: and it you know, it's down again this year. It persists, 352 00:18:40,000 --> 00:18:42,480 Speaker 1: but not in the form that the people who are 353 00:18:42,600 --> 00:18:44,400 Speaker 1: the law would have voped. Yeah, that's kind of where 354 00:18:44,400 --> 00:18:46,280 Speaker 1: I wanted to go. It just seems like at Leasta mentioned, 355 00:18:46,480 --> 00:18:48,880 Speaker 1: you know, it's since Obamacare has been passed, it's been 356 00:18:49,000 --> 00:18:51,320 Speaker 1: it seems like it's the opposition forces and now the 357 00:18:51,560 --> 00:18:54,000 Speaker 1: Republicans over the last three years have been chipping away, 358 00:18:54,080 --> 00:18:57,200 Speaker 1: chipping away, chipping away at the Affordable Care Act. Is 359 00:18:57,240 --> 00:18:59,200 Speaker 1: there a sense of like how much has even left 360 00:18:59,280 --> 00:19:03,679 Speaker 1: of the original plan? Yeah, you know it it it 361 00:19:03,840 --> 00:19:07,280 Speaker 1: is not what was originally envisioned. There are still you know, 362 00:19:07,320 --> 00:19:10,639 Speaker 1: more than twenty million people that's still that are covered 363 00:19:10,720 --> 00:19:12,359 Speaker 1: for the first time, that have insurance that might not 364 00:19:12,400 --> 00:19:15,840 Speaker 1: otherwise not because of the individual market and because of 365 00:19:15,840 --> 00:19:18,800 Speaker 1: the Medicaid expansion and then a variety of other you know, 366 00:19:18,880 --> 00:19:23,760 Speaker 1: changes throughout the U system. Still enormously impactful and beneficial, uh, 367 00:19:23,920 --> 00:19:26,359 Speaker 1: you know, but at the same time, it's it's not 368 00:19:26,440 --> 00:19:28,439 Speaker 1: what it might have been. Or on the other you know, 369 00:19:28,480 --> 00:19:30,640 Speaker 1: you might say it's not what it could be with 370 00:19:30,680 --> 00:19:34,440 Speaker 1: a few tweaks to to some some loopholes and errors 371 00:19:34,440 --> 00:19:36,600 Speaker 1: that that I'm sure the drafters would like to get back. 372 00:19:37,000 --> 00:19:38,720 Speaker 1: Or if you, you know, you boost this up to 373 00:19:38,800 --> 00:19:41,280 Speaker 1: these a little bit, you could get that coverage number 374 00:19:41,359 --> 00:19:44,360 Speaker 1: a lot higher and make that coverage a lot more useful. 375 00:19:45,000 --> 00:19:47,480 Speaker 1: But that will take a very different Congress than the 376 00:19:47,480 --> 00:19:50,359 Speaker 1: one we have right now. So just real, quoc, twenty 377 00:19:50,359 --> 00:19:53,040 Speaker 1: million people covered that wouldn't be covered. What's the bad 378 00:19:53,080 --> 00:19:56,160 Speaker 1: part of that? I mean, what's the opposition saying about 379 00:19:56,160 --> 00:19:59,960 Speaker 1: that it's just too expensive? Um? Well, the the argument 380 00:20:00,040 --> 00:20:05,280 Speaker 1: in is that by forcing insurance to cover, you know, 381 00:20:05,640 --> 00:20:09,840 Speaker 1: make women, making sure have give the same place to 382 00:20:09,920 --> 00:20:16,040 Speaker 1: women as men um, that's basically cuts it freedom and 383 00:20:16,160 --> 00:20:19,399 Speaker 1: kills the market. You know, I'm I'm I'm articulating for 384 00:20:19,520 --> 00:20:21,600 Speaker 1: a certain angle because I think the arguments are bad. 385 00:20:22,200 --> 00:20:24,879 Speaker 1: But but more or less, it's okay, they've made the 386 00:20:24,920 --> 00:20:30,400 Speaker 1: market um less functional by adding these regulations. Yeah. Max Neeson, Biotech, 387 00:20:30,480 --> 00:20:33,240 Speaker 1: Farm and Healthcare Commus for Bloomberg Opinion. Every time you 388 00:20:33,240 --> 00:20:34,920 Speaker 1: walk in here, I think I'm gonna get smarter, but 389 00:20:34,960 --> 00:20:37,320 Speaker 1: I just it just reminds me this healthcare thing is 390 00:20:37,440 --> 00:20:40,840 Speaker 1: brutally complex. Max. Thanks so much for joining us. We 391 00:20:40,880 --> 00:20:43,440 Speaker 1: appreciate it. It's something that you constantly have to pay 392 00:20:43,440 --> 00:20:58,959 Speaker 1: attention to it because it is constantly changing. We are 393 00:20:59,080 --> 00:21:02,160 Speaker 1: right smack in the middle of the holiday shopping season 394 00:21:02,200 --> 00:21:04,120 Speaker 1: to get an update on what's going on out there 395 00:21:04,160 --> 00:21:06,280 Speaker 1: in the world of retail. We welcome back our good 396 00:21:06,320 --> 00:21:09,440 Speaker 1: friends Sema Shaw. She is director of Consumer and Retail 397 00:21:09,480 --> 00:21:13,000 Speaker 1: Trends at Credit Intel, formerly a Bloomberg Intelligence. She joins 398 00:21:13,040 --> 00:21:16,120 Speaker 1: us here in our Bloomberg Interactive Broker studios. Sama, thanks 399 00:21:16,160 --> 00:21:18,040 Speaker 1: so much for joining us again. We always love having 400 00:21:18,040 --> 00:21:23,359 Speaker 1: you talking retail. How is the holiday selling season going. 401 00:21:23,400 --> 00:21:25,600 Speaker 1: It seems like the consumers in pretty good shape, so 402 00:21:25,640 --> 00:21:29,040 Speaker 1: our retail sales kind of following suit. No, they're not so. 403 00:21:29,160 --> 00:21:31,680 Speaker 1: I don't know if you saw November retail sales missed 404 00:21:31,720 --> 00:21:35,320 Speaker 1: by thirty basis points. There was even though that included Thanksgiving, 405 00:21:35,400 --> 00:21:38,840 Speaker 1: Black Friday and sup what Small Business Saturday, and they 406 00:21:38,840 --> 00:21:41,320 Speaker 1: were still missed. I know a lot of holiday is 407 00:21:41,400 --> 00:21:44,200 Speaker 1: very compressed this year. It's only twenty six days versus 408 00:21:44,240 --> 00:21:47,280 Speaker 1: thirty two last year, so it's Christmas is literally in 409 00:21:47,359 --> 00:21:50,800 Speaker 1: five ft six days from now. And with the fact 410 00:21:50,800 --> 00:21:52,720 Speaker 1: that you had Prime Day in the summer and you 411 00:21:52,760 --> 00:21:55,920 Speaker 1: basically have promotions all year round, there's a lot less urgency, 412 00:21:56,080 --> 00:21:58,880 Speaker 1: so you know, and there's still that shift to online, 413 00:21:58,960 --> 00:22:00,919 Speaker 1: so the consumer is still spending where they want to, 414 00:22:01,000 --> 00:22:04,520 Speaker 1: but they want to deal and you know, they it's 415 00:22:04,520 --> 00:22:06,439 Speaker 1: a little cramped though for them in terms of spending. 416 00:22:06,600 --> 00:22:09,600 Speaker 1: One thing that's hard to gauge given the dynamic right 417 00:22:09,640 --> 00:22:11,879 Speaker 1: now in retail is how much of the weakness that 418 00:22:11,920 --> 00:22:15,399 Speaker 1: we're seeing in select retailers is their lack of adapting 419 00:22:15,480 --> 00:22:17,919 Speaker 1: to the modern era and how much is due to 420 00:22:18,760 --> 00:22:21,240 Speaker 1: a consumer that just really isn't capable or willing to 421 00:22:21,240 --> 00:22:23,159 Speaker 1: spend the way that they used to. So don't you 422 00:22:23,200 --> 00:22:25,040 Speaker 1: have a sense of what it is? So I think 423 00:22:25,080 --> 00:22:26,960 Speaker 1: part of a lot of it from sort of some 424 00:22:27,000 --> 00:22:29,119 Speaker 1: of the players it is that that they were slow 425 00:22:29,200 --> 00:22:31,840 Speaker 1: to change. You know, they sort of got taken over 426 00:22:31,880 --> 00:22:34,280 Speaker 1: by maths who expanded to that category. So you see 427 00:22:34,280 --> 00:22:36,400 Speaker 1: the department stores, you see someone like a bed bath, 428 00:22:36,880 --> 00:22:38,760 Speaker 1: but now you see it like for bed Bath, for example, 429 00:22:38,760 --> 00:22:41,560 Speaker 1: they have a new CEO. He's basically cleaned House is 430 00:22:41,600 --> 00:22:43,639 Speaker 1: going to add a new management team. He's known. He 431 00:22:43,680 --> 00:22:47,600 Speaker 1: came from Target, from adding private label and omni channel. 432 00:22:47,640 --> 00:22:49,800 Speaker 1: So I think if you see somebody doing that, or 433 00:22:49,840 --> 00:22:52,040 Speaker 1: you see like the return of a retailer like best Buy, 434 00:22:52,080 --> 00:22:54,200 Speaker 1: it's possible. But if you're too slow and you don't 435 00:22:54,240 --> 00:22:56,800 Speaker 1: do it, that's when you miss the opportunity. So I 436 00:22:56,840 --> 00:22:59,359 Speaker 1: think a lot of it is that, But I also 437 00:22:59,480 --> 00:23:01,960 Speaker 1: think that people just really want to deal and when 438 00:23:02,000 --> 00:23:04,320 Speaker 1: you have things like tariffs, even if there's a threat 439 00:23:04,320 --> 00:23:07,439 Speaker 1: of tariffs or rising costs or wages, that puts pressure 440 00:23:07,440 --> 00:23:09,680 Speaker 1: on the retailer because people are like, I'm not gonna 441 00:23:09,720 --> 00:23:13,040 Speaker 1: buy it. T like Socima. I know the folks are 442 00:23:13,080 --> 00:23:16,160 Speaker 1: Credit Intel. You guys look at kind of the financial 443 00:23:16,160 --> 00:23:20,959 Speaker 1: health that credit health across the retail ecosystem. We know 444 00:23:21,160 --> 00:23:24,359 Speaker 1: the retailers, particularly some of them. I guess department stores 445 00:23:24,480 --> 00:23:27,119 Speaker 1: continue to struggle. Is there any light at the end 446 00:23:27,160 --> 00:23:29,840 Speaker 1: of the tunnel. What are you kind of telling your clients? Um, 447 00:23:29,880 --> 00:23:32,920 Speaker 1: it really depends on a sector by sector basis. We 448 00:23:33,040 --> 00:23:36,359 Speaker 1: just mentioned best by doing very very well, had a 449 00:23:36,359 --> 00:23:38,840 Speaker 1: great quarter, Probably you're going to have a good holiday, 450 00:23:39,080 --> 00:23:41,760 Speaker 1: But then you also have somebody like an L Brands 451 00:23:41,880 --> 00:23:45,439 Speaker 1: who Victoria's Secrets is really struggling. They're almost all in 452 00:23:45,440 --> 00:23:47,879 Speaker 1: the mall. They're losing share to airy, so how do 453 00:23:47,960 --> 00:23:51,280 Speaker 1: they revive that business without losing the momentum they have 454 00:23:51,320 --> 00:23:55,479 Speaker 1: in bath and body work? So it's definitely uh hit 455 00:23:55,560 --> 00:23:57,679 Speaker 1: or miss there, definitely, But you know, like home Furnishings 456 00:23:57,680 --> 00:24:00,760 Speaker 1: for example, at Home is someone I'd keep an eye 457 00:24:00,760 --> 00:24:04,840 Speaker 1: out from a risk perspective, right, they slowed their store growth, 458 00:24:05,240 --> 00:24:06,960 Speaker 1: they have to suadly invest in an omni channel, so 459 00:24:06,960 --> 00:24:09,119 Speaker 1: I don't see any margin improvement in the near future. 460 00:24:09,160 --> 00:24:10,800 Speaker 1: So these are things that we sort of look at 461 00:24:11,080 --> 00:24:13,400 Speaker 1: and see, like what's the prospect for them in terms 462 00:24:13,400 --> 00:24:15,640 Speaker 1: of cash flow? And given the fact that you are 463 00:24:15,680 --> 00:24:19,360 Speaker 1: focused on the dead side perhaps more than just EPs 464 00:24:19,480 --> 00:24:23,399 Speaker 1: or other sort of top line growth areas, I'm wondering, 465 00:24:23,400 --> 00:24:25,600 Speaker 1: what do you think the prospects are of an ongoing 466 00:24:25,680 --> 00:24:29,240 Speaker 1: retail apocalypse or ongoing kind of wash out that we've seen. 467 00:24:29,280 --> 00:24:30,639 Speaker 1: I mean, are we going to continue to see that 468 00:24:30,720 --> 00:24:32,879 Speaker 1: or is this pretty much terms of store closures. I 469 00:24:32,920 --> 00:24:34,560 Speaker 1: don't know that you'll see as much as you do, 470 00:24:34,600 --> 00:24:37,040 Speaker 1: but it will continue to probably be people optimizing their 471 00:24:37,040 --> 00:24:39,800 Speaker 1: fleet as lisas come up or move to better locations, 472 00:24:40,400 --> 00:24:42,040 Speaker 1: or trying to figure out how they can improve the 473 00:24:42,080 --> 00:24:45,040 Speaker 1: productivity of the box. Because retail still in the store, 474 00:24:45,119 --> 00:24:47,520 Speaker 1: it's still important, but you have to make it appealing. 475 00:24:47,600 --> 00:24:49,359 Speaker 1: It has to be a nice experience. And if you 476 00:24:49,400 --> 00:24:51,359 Speaker 1: want to do things like by online pickup in store, 477 00:24:51,359 --> 00:24:53,800 Speaker 1: which helps the retailer's margin and people like that service, 478 00:24:54,040 --> 00:24:56,080 Speaker 1: you have to be prepared and have the associates trained 479 00:24:56,119 --> 00:24:57,840 Speaker 1: to do so. If you go in there and nobody 480 00:24:57,880 --> 00:24:59,480 Speaker 1: knows what you're talking about, you're not going to do 481 00:24:59,480 --> 00:25:01,399 Speaker 1: it again. So these are things I think people have 482 00:25:01,480 --> 00:25:04,120 Speaker 1: to do. So I think it passed conversations we've talked 483 00:25:04,119 --> 00:25:07,159 Speaker 1: about the number of stores in American Home America is 484 00:25:07,200 --> 00:25:11,000 Speaker 1: still overstored. What are you guys saying to your clients 485 00:25:11,000 --> 00:25:12,600 Speaker 1: now or what are you hearing from some of your 486 00:25:12,640 --> 00:25:15,679 Speaker 1: clients about how much more do we have to go 487 00:25:15,800 --> 00:25:20,040 Speaker 1: in terms of kind of reducing the footprint of retail America. UM. 488 00:25:20,080 --> 00:25:22,399 Speaker 1: I think some of the legacy retailers that were closing 489 00:25:22,440 --> 00:25:25,119 Speaker 1: stores the sears of the world J C. Penny had closer, 490 00:25:25,400 --> 00:25:28,600 Speaker 1: some of those locations were not optimal as people changed 491 00:25:28,640 --> 00:25:30,520 Speaker 1: and have its change, But I think a lot of 492 00:25:31,480 --> 00:25:34,159 Speaker 1: retail it's just a matter if some people overexpanded, but 493 00:25:34,240 --> 00:25:37,119 Speaker 1: that box might be good for let's say a smaller, 494 00:25:37,280 --> 00:25:40,480 Speaker 1: maybe non public retailer. So I think, you know, there's 495 00:25:40,480 --> 00:25:42,480 Speaker 1: still lots of room for stores. It just has to 496 00:25:42,480 --> 00:25:45,320 Speaker 1: be in the right location. And part of our analysis 497 00:25:45,320 --> 00:25:48,240 Speaker 1: to show like how close you already your competitors. Is 498 00:25:48,240 --> 00:25:49,600 Speaker 1: it going to be worth your while to open a 499 00:25:49,600 --> 00:25:50,760 Speaker 1: store here? And I think a lot of it was 500 00:25:50,800 --> 00:25:53,800 Speaker 1: just opening stores without really thinking about it strategically. So 501 00:25:53,880 --> 00:25:56,680 Speaker 1: everyone wants a deal, So why don't these stores just 502 00:25:57,040 --> 00:26:00,359 Speaker 1: mark things up twice as much and then it's going 503 00:26:00,400 --> 00:26:03,640 Speaker 1: to be sixty off. In order for all of them 504 00:26:03,680 --> 00:26:05,520 Speaker 1: to do that, I guess they would have to collude, 505 00:26:05,560 --> 00:26:10,320 Speaker 1: which is illegal. But but I mean, in all seriousness, Uh, 506 00:26:10,359 --> 00:26:14,560 Speaker 1: you know our stores trying to get away from sort 507 00:26:14,600 --> 00:26:18,600 Speaker 1: of training consumed brands are Yeah, as many as possible 508 00:26:18,640 --> 00:26:20,880 Speaker 1: they are. They're trying to pull back, but the immediate 509 00:26:20,880 --> 00:26:23,880 Speaker 1: effect is that you see a negative impact with example 510 00:26:24,040 --> 00:26:26,639 Speaker 1: GAP for example. But and that's also the ones that 511 00:26:26,680 --> 00:26:30,040 Speaker 1: are in the middle tier r H completely pulled back. 512 00:26:30,119 --> 00:26:33,080 Speaker 1: But they're high in luxury so they can pass through 513 00:26:33,080 --> 00:26:35,320 Speaker 1: the price and you really like, it doesn't really matter. 514 00:26:35,720 --> 00:26:37,320 Speaker 1: But for the middle tier where you're and if you 515 00:26:37,359 --> 00:26:39,879 Speaker 1: don't have a unique product and you can do like 516 00:26:40,000 --> 00:26:42,000 Speaker 1: for like comparison, then it's very hard to do that. 517 00:26:42,160 --> 00:26:44,199 Speaker 1: And that's where you see the problem. So, Sam, I'm 518 00:26:44,200 --> 00:26:46,760 Speaker 1: just looking at one of the recent reports from your firm, 519 00:26:46,840 --> 00:26:50,359 Speaker 1: and you know, looking at the Thanksgiving period Black Friday 520 00:26:50,520 --> 00:26:53,480 Speaker 1: online sales, some people putting up some good numbers. It's 521 00:26:53,480 --> 00:26:56,240 Speaker 1: not just Amazon, I mean Walmart up fifty percent north 522 00:26:57,520 --> 00:27:00,760 Speaker 1: is it? Can we say that the tradition retailers have 523 00:27:00,920 --> 00:27:03,879 Speaker 1: finally figured out how to compete against Amazon. The larger 524 00:27:03,920 --> 00:27:05,399 Speaker 1: ones have and I think that the mass is the 525 00:27:05,440 --> 00:27:08,800 Speaker 1: probably the best example, uh even I mean a specialty 526 00:27:08,880 --> 00:27:12,440 Speaker 1: maybe best by Williams Sonomas Over, but they have really 527 00:27:12,480 --> 00:27:14,959 Speaker 1: figured out how to appeal to the customer wherever they 528 00:27:15,000 --> 00:27:17,040 Speaker 1: want to shop, make it easy for them to fulfill 529 00:27:17,080 --> 00:27:19,480 Speaker 1: their goods, you know, in the store on the way home, 530 00:27:19,520 --> 00:27:21,239 Speaker 1: will sell you know, whatever you want to do. They 531 00:27:21,280 --> 00:27:23,240 Speaker 1: make it as easy as possible. But they also have 532 00:27:23,320 --> 00:27:25,280 Speaker 1: the scale to do that, and a lot of the 533 00:27:25,320 --> 00:27:27,240 Speaker 1: smaller retailers don't have a lot of a lot of 534 00:27:27,280 --> 00:27:30,600 Speaker 1: capital to invest in this logistics and so I think 535 00:27:31,080 --> 00:27:32,680 Speaker 1: there are ways to do it, and there are ways 536 00:27:32,720 --> 00:27:34,560 Speaker 1: to be competitive, but you really have to step up 537 00:27:34,600 --> 00:27:38,359 Speaker 1: that investment. Have you finished your holiday shopping? I have 538 00:27:38,520 --> 00:27:41,240 Speaker 1: for the most Yeah, I can. I can imagine that 539 00:27:41,240 --> 00:27:44,600 Speaker 1: most people probably who are organized like I know you are, 540 00:27:44,800 --> 00:27:48,280 Speaker 1: I know personally, just how organized we still have six days? 541 00:27:48,320 --> 00:27:53,240 Speaker 1: What's the problem? Pickup and store? Our same day delivery? 542 00:27:53,359 --> 00:27:55,119 Speaker 1: You know, these are all things that they're doing to 543 00:27:55,160 --> 00:27:57,320 Speaker 1: make the consumer. Hey, like you have basically up until 544 00:27:57,400 --> 00:28:00,399 Speaker 1: Christmas Eve, right, except they can get it, except that 545 00:28:00,400 --> 00:28:03,320 Speaker 1: you're you're organized enough to Thank you so much. Thank you. 546 00:28:03,359 --> 00:28:06,359 Speaker 1: It's nice to be bas director of Consumer and Retail 547 00:28:06,400 --> 00:28:10,760 Speaker 1: Trends at Credit Intel based in New York. Talking about 548 00:28:10,800 --> 00:28:14,080 Speaker 1: the retail landscape. It's kind of an interesting shift that 549 00:28:14,080 --> 00:28:17,040 Speaker 1: we've seen going on. People talk about the retail apocalypse, 550 00:28:17,040 --> 00:28:20,399 Speaker 1: but it's more like the retail kind of uh, I 551 00:28:20,440 --> 00:28:23,760 Speaker 1: don't know, morphologists or something. I mean, it's just changing. 552 00:28:23,920 --> 00:28:26,879 Speaker 1: I mean, it's a what what what Semens talked about is, 553 00:28:27,080 --> 00:28:30,399 Speaker 1: you know then the omni channel experience. I mean, if 554 00:28:30,440 --> 00:28:32,040 Speaker 1: you're if you can get that right like some of 555 00:28:32,040 --> 00:28:35,080 Speaker 1: the big mass merchants mass merchants, then you can compete, 556 00:28:35,080 --> 00:28:37,080 Speaker 1: but if you're not, maybe some of these small companies 557 00:28:37,119 --> 00:28:39,800 Speaker 1: you can invest in the technology needed. That could be 558 00:28:39,880 --> 00:28:43,480 Speaker 1: the big challenge. Thanks for listening to the Bloomberg Penl podcast. 559 00:28:43,640 --> 00:28:46,240 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts 560 00:28:46,320 --> 00:28:49,440 Speaker 1: or whatever podcast platform you prefer. Paul Sweeney, I'm on 561 00:28:49,440 --> 00:28:52,120 Speaker 1: Twitter at pt Sweeney. I'm Lisa abram Woyds. I'm on 562 00:28:52,120 --> 00:28:55,000 Speaker 1: Twitter at Lisa A. Bramwood's one before the podcast. You 563 00:28:55,040 --> 00:28:57,560 Speaker 1: can always catch us worldwide on Bloomberg Radio