WEBVTT - Bessent: US Ready for Ramp-Up or Wind-Down of Russia Sanctions 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.640 --> 0:00:12.640 This is Bloomberg Business Week, Insight from the reporters and 0:00:12.800 --> 0:00:17.120 editors that bring you America's most trusted business magazine, plus. 0:00:17.000 --> 0:00:19.280 Global business, finance and tech news. 0:00:19.440 --> 0:00:23.360 The Bloomberg Business Week Podcast with Carol Masser and Tim 0:00:23.400 --> 0:00:25.760 Stenovek on Bloomberg Radio. 0:00:26.840 --> 0:00:30.200 The European capitals reactive as shock to President Trump's abrupt 0:00:30.240 --> 0:00:35.360 turn against Ukrainian President Voldimir Zelenski, seeking simultaneously to reassure 0:00:35.440 --> 0:00:38.559 Kiev that it has the continents backing while trying to 0:00:38.760 --> 0:00:43.000 appeal to Washington now, President Trump yesterday embraced the Kremlins narrative, 0:00:43.040 --> 0:00:46.640 denouncing Zelenski as a dictator his word. Trump warned in 0:00:46.680 --> 0:00:49.080 a social media post that the Ukrainian leader had better 0:00:49.120 --> 0:00:51.280 move fast to reach a deal with Russia or he's 0:00:51.320 --> 0:00:54.080 not going to have a country left. Meantime, one more 0:00:54.320 --> 0:00:56.600 thing to layer on top of this, the US signal 0:00:56.640 --> 0:00:58.720 that sanctions really for Russia could be on the table 0:00:58.760 --> 0:01:01.960 and talks over the world in Ukraine. Earlier today on Bloomberg, 0:01:02.080 --> 0:01:04.959 US Treasury Secretary Scott Besson said that the US is 0:01:05.000 --> 0:01:08.080 prepared to either ramp up or take down penalties based 0:01:08.080 --> 0:01:10.640 on the Kremlin's willingness to negotiate. 0:01:10.680 --> 0:01:12.039 He also talked about what the. 0:01:12.000 --> 0:01:15.840 Administration seems to say is a misstep by the Ukrainian president. 0:01:16.480 --> 0:01:22.240 I think President Vilensky unfortunately escalated and has put some 0:01:22.400 --> 0:01:27.480 daylight between the escalator that a lot of his remarks 0:01:27.520 --> 0:01:32.600 in Munich I thought were inappropriate. President Zelensky, when I 0:01:33.000 --> 0:01:36.600 met with him, assured me that he'd be the signing 0:01:36.640 --> 0:01:38.240 the minerals deal in Munich. 0:01:38.640 --> 0:01:39.240 He has not. 0:01:40.760 --> 0:01:44.119 And look the real purpose here, and I think it's 0:01:44.600 --> 0:01:49.400 turned into this media circus that President Trump had a 0:01:49.560 --> 0:01:53.920 very elegant plan, and it was bring the Ukrainians closer 0:01:53.960 --> 0:01:57.800 to the US. Let's do this economic deal. And the 0:01:58.120 --> 0:02:01.480 even Karl Rove in the Wall Street Journal this morning 0:02:01.560 --> 0:02:06.800 approves of it that the US, with greater economic interest 0:02:06.880 --> 0:02:11.360 in Ukraine, provides a security shield. So the sequencing of 0:02:11.440 --> 0:02:15.519 what was going to happen was bring the Ukrainians closer 0:02:15.560 --> 0:02:19.480 to the US through economic ties, convince the American people 0:02:19.480 --> 0:02:24.400 and the American public, get them onside, and then tell 0:02:24.560 --> 0:02:28.600 the Russians go to the negotiating table with a very 0:02:28.760 --> 0:02:33.160 fulsome message that if we need to, we will take sanctions. 0:02:32.760 --> 0:02:36.480 Up, Well, what about tapping the Russian frozen assets and 0:02:36.520 --> 0:02:39.600 three hundred billion dollars? Would you force your European counterparts 0:02:39.600 --> 0:02:42.360 to not just have them frozen, but actually tap them. 0:02:42.520 --> 0:02:46.040 Trump talks about repaying the American taxpayer. Shouldn't Russia be 0:02:46.080 --> 0:02:46.520 a part of that? 0:02:46.919 --> 0:02:50.320 Well, what's happening now is they are being tapped. So 0:02:50.680 --> 0:02:56.919 the returns from interest, the returns from the freezed asset pile, 0:02:57.880 --> 0:03:00.880 is going to pay the Europeans. What's very important to 0:03:00.960 --> 0:03:04.600 understand here is everything the US has done to date, 0:03:05.400 --> 0:03:09.880 the American people, the American taxpayer is grant Europeans roughly 0:03:09.960 --> 0:03:14.720 half of what they've done are loans, and the runoff 0:03:14.960 --> 0:03:19.000 from the frozen assets is being used to repay European loans. 0:03:19.960 --> 0:03:22.639 Have you communicated that to the Europeans? The europe sent 0:03:22.680 --> 0:03:23.280 with them? 0:03:23.840 --> 0:03:24.200 What's that? 0:03:24.440 --> 0:03:26.760 Have you communicate to the Europeans that you're absent with them? 0:03:27.320 --> 0:03:29.320 I think Vice President vents that are a pretty good 0:03:29.400 --> 0:03:30.040 job in Unich. 0:03:30.400 --> 0:03:32.639 Do you think they understand that the United States is 0:03:32.720 --> 0:03:34.960 running a deficit of north of six percent, close to 0:03:34.960 --> 0:03:38.400 seven percent, and that the budget for defense is north 0:03:38.440 --> 0:03:40.200 of eight hundred billion dollars. Do they think do you 0:03:40.240 --> 0:03:42.520 think they understand the gravity of the moment in the 0:03:42.600 --> 0:03:44.840 United States the US perspective. 0:03:44.680 --> 0:03:50.520 Look, I think that they understand that President Trump during 0:03:50.520 --> 0:03:56.280 his first term this term, Vice President Vance and the 0:03:56.480 --> 0:04:00.560 entire security apparatus had told them that many of the 0:04:00.600 --> 0:04:05.240 countries are deficient in their NATO spending and they need to. 0:04:05.200 --> 0:04:07.520 Come up all right. 0:04:07.520 --> 0:04:10.040 That, of course, was US Treasury Secretary Scott Besson earlier 0:04:10.040 --> 0:04:13.160 on Bloomberg Surveillance on Bloomberg Radio and TV along with 0:04:13.280 --> 0:04:16.240 Jonathan Faraoh, Ann Marie Hordern and Lisa Bramo as the 0:04:16.279 --> 0:04:20.120 co hosts of Bloomberg Surveillance will monitoring all of this 0:04:20.279 --> 0:04:22.680 continue to report on the Russia Ukraine war and what 0:04:22.760 --> 0:04:26.080 an end might look like is Bloomberg News International Affairs 0:04:26.080 --> 0:04:28.240 communist Mark Champion he joins us now from London. 0:04:28.600 --> 0:04:30.160 Mark, good to have you here with us. 0:04:30.880 --> 0:04:33.200 The US Treasury Secretary said, the President is committed to 0:04:33.240 --> 0:04:36.040 ending this conflict very quickly. It's now three years old 0:04:36.120 --> 0:04:39.000 and still going. There are two players in that war, 0:04:39.040 --> 0:04:41.479 and yet Ukraine seems to increasingly be cut out. Is 0:04:41.520 --> 0:04:42.839 that a fair assessment? 0:04:44.960 --> 0:04:45.640 Absolutely? 0:04:45.720 --> 0:04:46.880 I mean, you can. 0:04:48.279 --> 0:04:52.080 Ending wars is easy if one side surrenders, it capitulates 0:04:52.480 --> 0:04:55.640 and the other side gets what they want. And the 0:04:55.720 --> 0:04:58.920 reason that this war hasn't come to a settlement yet 0:04:59.040 --> 0:05:02.680 is it the two sides remain really far apart, with 0:05:03.120 --> 0:05:09.680 President Putin still making demands. Reportedly, for example, in Riad, 0:05:10.640 --> 0:05:15.359 the demand Russian demand was repeated that NATO should go 0:05:15.600 --> 0:05:19.520 back to its nineteen ninety seven borders, So that mean 0:05:19.560 --> 0:05:22.960 Poland et cetera would have to leave NATO. So these 0:05:22.960 --> 0:05:26.680 are still very sort of extensive demands on NATO let 0:05:26.680 --> 0:05:30.680 alone Ukraine, and the Ukrainians obviously have been fighting a 0:05:30.720 --> 0:05:33.200 war to prevent that because they understand that it would 0:05:34.080 --> 0:05:36.559 mean that they no longer had a state, an independent state, 0:05:37.400 --> 0:05:40.000 and the Russians have been clear that that is their intent. 0:05:40.480 --> 0:05:44.320 So it is it's very difficult unless one side capitulates. 0:05:44.400 --> 0:05:48.279 And I think what President Trump has basically done is 0:05:48.320 --> 0:05:51.039 to identify that he has a lot of leverage with 0:05:51.120 --> 0:05:55.960 one side because it's very dependent on American support and 0:05:56.120 --> 0:05:59.920 financing and weapons, and very much less leverage with the other. 0:06:00.960 --> 0:06:03.280 Is also I think identified that there's a lot more 0:06:03.320 --> 0:06:07.039 to be gained, you know, by cutting a deal with 0:06:07.080 --> 0:06:10.240 the Russians, they have more more to offer larger economy, 0:06:10.320 --> 0:06:13.520 all that sort of thing. And you know, he did 0:06:14.240 --> 0:06:17.320 make this proposal to the Ukrainians. It was, in fact, 0:06:17.400 --> 0:06:25.840 originally Zelensky's idea. What the Treasury Sectorary omitted to say 0:06:25.880 --> 0:06:30.080 in his interview was that the actual when he Zelensky 0:06:30.160 --> 0:06:33.200 got the actual details of the US proposal, what it 0:06:33.279 --> 0:06:38.840 says is that the Ukraine should hand over fifty of 0:06:38.880 --> 0:06:45.400 all its natural resources, infrastructure, ports, et cetera, fifty revenues 0:06:45.440 --> 0:06:49.240 to the US in perpetuity. And there was nothing in 0:06:49.279 --> 0:06:53.159 the deal about security guarantees, and that the kinds of 0:06:53.200 --> 0:06:57.839 things that Zelensky was trying to get. So it's you know, 0:06:57.920 --> 0:07:01.960 it was a deal that was clearly designed to be rejected. 0:07:02.480 --> 0:07:02.680 Mark. 0:07:02.720 --> 0:07:05.200 One thing that I think is notable about this entire 0:07:05.240 --> 0:07:09.280 conversation is the role of a Treasury secretary being part 0:07:09.320 --> 0:07:11.880 of this negotiation. How should we think about that? 0:07:13.440 --> 0:07:17.720 Well, I mean, actually, American Treasury secretaries are unique in 0:07:17.760 --> 0:07:20.400 the world in the sense that one of the most 0:07:20.400 --> 0:07:25.360 powerful foreign policy tools and weapons of coercion that the 0:07:25.440 --> 0:07:30.240 United States has is the Treasury and its sanctions apparatus. 0:07:31.160 --> 0:07:34.120 And they are extremely powerful, and it makes a lot 0:07:34.160 --> 0:07:39.320 of sense that they should be involved you know, the 0:07:39.320 --> 0:07:44.040 Secretary talked about lifting sanctions. Of course, both the EU 0:07:44.320 --> 0:07:48.880 and the US have imposed sanctions on Russia. But essentially 0:07:48.920 --> 0:07:51.960 if the US were to lift sanctions, that would be 0:07:52.000 --> 0:07:55.040 the end of it, because the EU simply doesn't have 0:07:56.000 --> 0:08:00.400 the kinds of you know, depth of enforcement personnel and 0:08:01.160 --> 0:08:04.000 expertise that the US has. It doesn't have the US 0:08:04.160 --> 0:08:08.520 dollar as a point of leverage, and it has no 0:08:08.640 --> 0:08:11.640 experience whatsoever with enforcing secondary sanctions. 0:08:12.320 --> 0:08:14.400 So you know, it doesn't surprise me at all that 0:08:14.440 --> 0:08:15.120 he's involved. 0:08:16.120 --> 0:08:20.040 I think what's also fascinating and intriguing about your column 0:08:20.840 --> 0:08:23.120 is that this isn't about an end of the war, 0:08:23.200 --> 0:08:26.360 but about the United States and President Trump negotiating a 0:08:26.400 --> 0:08:30.720 reset with Russia. Again your view, But is it because 0:08:31.600 --> 0:08:33.280 explain that, I guess I want to ask you. And 0:08:33.320 --> 0:08:36.720 then is it because there is so much more potentially 0:08:36.720 --> 0:08:40.800 that the US has to gain? Is it business interests? 0:08:40.960 --> 0:08:45.000 Is it geopolitically? Is it in terms of maybe keeping 0:08:45.120 --> 0:08:46.280 nuclear war at bay? 0:08:47.000 --> 0:08:49.760 Is that it? And if so, is that such a 0:08:49.800 --> 0:08:50.280 bad thing? 0:08:52.040 --> 0:08:56.400 Well so, the Secretary of State Marco Rubio, after the 0:08:56.440 --> 0:09:00.880 re meeting said very clearly that you know, there was 0:09:01.400 --> 0:09:06.360 enormous opportunities to be had both geopolitical and economic for 0:09:06.400 --> 0:09:11.640 the United States in securing this deal. And what I 0:09:11.679 --> 0:09:14.000 was trying to say is that if you look at this, 0:09:14.280 --> 0:09:18.560 you know, the Trump administration's approach in terms of them 0:09:18.640 --> 0:09:22.679 trying to get what the Europeans want and the Ukrainians want, 0:09:22.760 --> 0:09:26.920 which is the best possible deal to you know, retain 0:09:27.800 --> 0:09:30.840 Ukraine's status as a sovereign state, retain as much land 0:09:30.880 --> 0:09:34.679 as it can, etc. If that is the goal, then 0:09:34.800 --> 0:09:37.960 nothing that President Trump has done makes sense because he 0:09:38.400 --> 0:09:41.679 handed over some of the most important demands that the 0:09:42.800 --> 0:09:47.040 Russians have made before talks have even begun, and in fact, 0:09:47.080 --> 0:09:52.080 in read setting up teams to begin talks on a 0:09:52.120 --> 0:09:55.760 ceasefire was just one of the outcomes and not the 0:09:55.800 --> 0:09:57.880 one that was first listed. You know. The first one 0:09:57.880 --> 0:10:00.760 that was listed was to restore diplomatic relation and economic 0:10:00.800 --> 0:10:04.880 relations between Russia and the US. That's also why Ukraine 0:10:04.880 --> 0:10:07.559 and europe were not at the table, because it wasn't 0:10:07.600 --> 0:10:11.360 a deal that was primarily about them. The difficulty for 0:10:11.520 --> 0:10:15.040 Ukraine and for the Europeans is that, you know, once 0:10:15.080 --> 0:10:21.600 that once that's understood, then Ukraine and its ceasefire they 0:10:21.720 --> 0:10:27.439 become just a lesser tool in a wider deal, and 0:10:28.000 --> 0:10:31.080 they are both you know, something that the US you know, 0:10:31.200 --> 0:10:34.840 has some leverage with over Russia because Russia wants, you know, 0:10:34.960 --> 0:10:40.040 control over Ukraine. But it's also if Ukraine stands in 0:10:40.080 --> 0:10:42.760 a way and won't give the you know, won't agree 0:10:42.760 --> 0:10:45.920 to a deal and to the terms that are being imposed, 0:10:46.000 --> 0:10:50.440 then it becomes the obstacle to the wider agreement that 0:10:50.600 --> 0:10:54.559 President Trump is looking for. So it just makes a 0:10:54.600 --> 0:10:56.600 lot more sense to me if you look at it 0:10:56.640 --> 0:10:57.480 in those terms. 0:10:58.040 --> 0:10:59.960 Mark, just about a minute left, what was this say? 0:11:00.040 --> 0:11:02.240 Ignore that you think it's sent to the world and 0:11:02.520 --> 0:11:06.760 sent to the US that the president yesterday called Zelensky 0:11:06.800 --> 0:11:08.120 a quote dictator. 0:11:10.200 --> 0:11:13.440 Very much. You know, again, in terms of that framing, 0:11:14.400 --> 0:11:17.920 what he has identified is that Zilynsky and Ukraine are 0:11:18.000 --> 0:11:20.440 the problem at this point as far as he's concerned. 0:11:20.640 --> 0:11:25.200 So he is adopting the sort of Kremlin narrative in 0:11:25.360 --> 0:11:29.480 order to try and undermine Zilensky and weaken him and uh, 0:11:29.800 --> 0:11:32.840 you know, make make him understand that he has to 0:11:32.840 --> 0:11:35.240 play ball or things will only get worse. 0:11:36.880 --> 0:11:37.520 Unbelievable. 0:11:37.640 --> 0:11:40.520 Yeah, just interesting, Mark, Thank you so much. Glad we 0:11:40.559 --> 0:11:43.319 could chat with you about your column Today. Mark Champion, 0:11:43.360 --> 0:11:47.280 his international affairs columnist for our Bloomberg Opinion team, joining 0:11:47.320 --> 0:11:48.240 us from London again. 0:11:48.280 --> 0:11:49.960 You can check out his column. 0:11:50.000 --> 0:11:51.760 You can find it on the Bloomberg Terminal and at 0:11:51.760 --> 0:11:53.840 Bloomberg dot com Slash Opinions. 0:11:54.720 --> 0:11:58.080 You were listening to the Bloomberg Business Week podcast. Catch 0:11:58.160 --> 0:12:01.400 us live weekday afternoons from two to five pm Eastern. 0:12:01.520 --> 0:12:05.400 Listen on Applecarplay and Android Auto with the Bloomberg Business app, 0:12:05.559 --> 0:12:07.319 or watch us live on YouTube. 0:12:08.480 --> 0:12:10.800 Not an update either for sales or the giant retailer. 0:12:10.840 --> 0:12:13.679 Walmart shares down around eight percent at one point earlier 0:12:13.720 --> 0:12:15.200 in the session, the most in more than a year, 0:12:15.240 --> 0:12:18.439 after it forecasts lower than expected profit for the full year, 0:12:18.520 --> 0:12:21.080 signaling that even the world's largest retailer is not immune 0:12:21.080 --> 0:12:23.199 to risks in the broader economic environment. 0:12:23.240 --> 0:12:28.160 That's right, Walmart's CFO acknowledging quote uncertainties related to consumer behavior, 0:12:28.280 --> 0:12:30.320 something we were just kind of talking about with our 0:12:30.320 --> 0:12:33.440 own Jody Laurie. Uncertainty is related to consumer behavior and 0:12:33.480 --> 0:12:37.000 global economic and geopolitical conditions. That from the Walmart CFO. 0:12:37.320 --> 0:12:39.880 Keep in mind this comes just days after retail sales 0:12:39.920 --> 0:12:43.480 signaled and abrupt pullback by consumers. So let's get to 0:12:43.559 --> 0:12:45.920 it with more on Walmart's business what it may say 0:12:45.920 --> 0:12:49.440 about the US consumer spending environment. With us is at 0:12:49.480 --> 0:12:52.160 Emily Cohen. She's Bloomberg News Consumer team leader right here 0:12:52.200 --> 0:12:52.720 in studio. 0:12:52.800 --> 0:12:54.040 So Emily walk us. 0:12:53.920 --> 0:12:56.800 Through this latest update on Walmart and wy investors are 0:12:56.800 --> 0:12:57.520 so concerned. 0:12:58.320 --> 0:13:01.839 Yeah, so it wasn't all together a bad report. Fourth 0:13:01.880 --> 0:13:06.839 quarter sales were actually strong. Stock is down though on 0:13:06.880 --> 0:13:10.520 a lower than expected profit guidance for the full year, 0:13:11.320 --> 0:13:13.120 and you nailed it. The theme of the call with 0:13:13.160 --> 0:13:16.079 analysts today was uncertainty. We just heard that word over 0:13:16.200 --> 0:13:20.000 and over and over again, and that's a consumer sentiment. 0:13:20.360 --> 0:13:23.880 That's tariffs, that's everything we're reading about in the news, 0:13:24.520 --> 0:13:27.000 just making it really hard for these companies to project 0:13:27.120 --> 0:13:28.280 what's going to happen. 0:13:28.720 --> 0:13:30.960 Is that the issue though, it's that it's difficult to project. 0:13:31.000 --> 0:13:34.080 They don't know what's going to happen. But because of that, 0:13:34.120 --> 0:13:36.320 they're just setting out the worst case scenario here. 0:13:37.040 --> 0:13:40.079 Yeah, I mean, this wasn't worst case for by any means. 0:13:40.120 --> 0:13:43.959 Like Walmart has historically given conservative outlook to start the year. 0:13:44.040 --> 0:13:46.600 Last year, they actually offered the same exact outlook three 0:13:46.640 --> 0:13:50.720 to four percent, so it's it's definitely in line. It's conservative. 0:13:51.480 --> 0:13:54.960 We read analysts Bobby Griffin say they're taking a conservative 0:13:55.000 --> 0:13:57.960 approach on near term investments. We saw the cost of 0:13:57.960 --> 0:14:00.760 the acquisition of Visio up here. That's still hitting the 0:14:00.760 --> 0:14:06.040 bottom line for Walmart this year. So what typically happens 0:14:06.040 --> 0:14:09.920 with Walmart as they raise their guidance early on in 0:14:09.960 --> 0:14:13.040 the year. So it's not worst case scenario. 0:14:12.920 --> 0:14:15.120 Because when they start the year with a cautious outlook, right, 0:14:15.160 --> 0:14:16.559 and then raise as we go along. 0:14:16.320 --> 0:14:20.640 It's sort of like in line with expectations. But expectations 0:14:20.680 --> 0:14:23.960 are really high for Walmart. Their last year was their 0:14:24.000 --> 0:14:27.800 strongest stock performance since nineteen ninety eight. The stock is 0:14:27.880 --> 0:14:30.720 up seventy seven percent, although that will be lower over 0:14:30.720 --> 0:14:34.840 the last twelve months after close today, So expectations are 0:14:34.840 --> 0:14:35.320 really high. 0:14:35.440 --> 0:14:37.320 And well, I think what's also interesting is, I remember 0:14:37.440 --> 0:14:39.120 was it I feel like in the last quarter of 0:14:39.200 --> 0:14:42.720 last year we were increasingly talking about and Walmart pointed 0:14:42.720 --> 0:14:45.640 out that their consumer is also a higher end consumer. 0:14:45.800 --> 0:14:49.320 So when we are trying to get if their higher 0:14:49.400 --> 0:14:53.160 end consumer is even maybe pulling back or they're concerned 0:14:53.200 --> 0:14:55.920 about that, you know, that does make you wonder about 0:14:56.160 --> 0:15:00.600 consumer spending overall. They're having potentially a tougher time, then 0:15:00.720 --> 0:15:03.480 you can assume everybody's having a tougher time for sure. 0:15:03.640 --> 0:15:06.280 So I mean one of the areas that the biggest 0:15:06.320 --> 0:15:08.080 area of growth for them right now in those last 0:15:08.120 --> 0:15:12.240 quarter was those people from those higher income households, households 0:15:12.240 --> 0:15:14.640 that are making one hundred thousand dollars or more. So 0:15:14.720 --> 0:15:17.360 that makes me wonder where are they gaining that market 0:15:17.360 --> 0:15:21.760 share from who's losing those those customers? And that's what 0:15:21.800 --> 0:15:24.440 we'll be looking for. This is the start of big 0:15:24.480 --> 0:15:28.320 box earning seasons. We have Target coming up, Costco Home Depot. 0:15:28.640 --> 0:15:31.200 We'll be trying to decipher that a little bit more. 0:15:31.760 --> 0:15:34.840 Do we know how Target, or rather how Walmart would 0:15:34.840 --> 0:15:38.080 be affected by tariffs? They get certainly some food from Mexico. 0:15:38.360 --> 0:15:40.080 I mean, you walk into a Walmart, it's going to 0:15:40.120 --> 0:15:42.280 be hard to find something in there that's not from China. 0:15:42.560 --> 0:15:45.080 Yeahs the what's the way that they're. 0:15:44.880 --> 0:15:47.960 Impacting Yeah, Yeah, A lot of produces coming from Mexico. 0:15:48.080 --> 0:15:51.640 A lot of general merchandise is coming from China. And 0:15:51.680 --> 0:15:54.360 this isn't new to them either. I mean China tariffs 0:15:55.080 --> 0:15:59.280 last time around with Trump hit them as well. But yeah, 0:15:59.280 --> 0:16:02.880 they are definitely exposed to China, as are a lot 0:16:02.920 --> 0:16:03.840 of their competitors. 0:16:04.120 --> 0:16:06.320 Emily, I always think about you know, Walmart, They're just 0:16:06.520 --> 0:16:10.680 they're massive, right, the world's largest, And you know there's 0:16:10.800 --> 0:16:14.360 certain retailers that when something comes out of them, even 0:16:14.400 --> 0:16:16.680 if historically they're cautious at the beginning, it does make 0:16:16.720 --> 0:16:17.360 a stop and think. 0:16:17.400 --> 0:16:19.160 But as you said, it's just the beginning of the 0:16:19.160 --> 0:16:19.680 big box. 0:16:19.760 --> 0:16:22.640 Is there something Target might say or who is it 0:16:22.680 --> 0:16:23.840 that might say something that. 0:16:23.800 --> 0:16:24.920 Says all right? 0:16:25.760 --> 0:16:28.160 So maybe this is just the Walmart the way they operate, 0:16:28.200 --> 0:16:29.080 and we'll get things better. 0:16:29.120 --> 0:16:29.280 You know. 0:16:29.360 --> 0:16:31.480 Is there someone that can help shape the narrative here 0:16:31.480 --> 0:16:32.200 around retail? 0:16:32.520 --> 0:16:36.400 Yeah, I think it'll be Target. Okay, last year, last quarter, rather, 0:16:36.480 --> 0:16:40.400 we saw a pretty positive reaction from Wall Street after 0:16:40.440 --> 0:16:43.280 Walmart earnings and then the complete opposite reaction. 0:16:43.320 --> 0:16:45.000 Targets down almost two percent today. 0:16:45.080 --> 0:16:48.360 Yeah, Target and Costco shares both fell immediately after Walmart 0:16:48.400 --> 0:16:52.320 reported this morning, So we'll be looking to see that. 0:16:52.440 --> 0:16:55.840 I mean, Target relies a lot on like discretionary spending. 0:16:55.880 --> 0:16:57.720 You come into Target for one thing, and then you 0:16:57.720 --> 0:16:59.720 see a lot of other cute things and you grab 0:16:59.760 --> 0:17:02.360 them and and those are the kinds of things that 0:17:02.360 --> 0:17:04.320 people are pulling back on right now. And if that 0:17:04.400 --> 0:17:07.359 chopper is not even going to Walmart because they're sorry, 0:17:07.359 --> 0:17:09.199 if they're not even going to Target because they're going 0:17:09.240 --> 0:17:12.400 to Walmart instead, that's bad news for Target. 0:17:12.600 --> 0:17:15.720 Does a report such as this apart from Target, a 0:17:15.760 --> 0:17:18.720 report such as this from Walmart make you rethink expectations 0:17:18.720 --> 0:17:20.639 for the entire sector for the current quarter? 0:17:21.080 --> 0:17:24.760 For sure? Walmart is the bell weather of consumer spending. 0:17:24.880 --> 0:17:26.359 What's the one we should be watching next? 0:17:26.800 --> 0:17:27.800 I'm watching Target? 0:17:28.920 --> 0:17:31.119 Yeah, a home depot. What is that going to tell us? 0:17:32.320 --> 0:17:34.879 You know, home depot has a lot of other factors too, 0:17:35.119 --> 0:17:38.960 whether other types of spending. 0:17:39.080 --> 0:17:40.760 I mean, I'm also thinking about just like yeah, I'm 0:17:40.760 --> 0:17:43.440 also thinking about the housing market. Yeah, to what extent, 0:17:43.720 --> 0:17:46.199 you know, A dreary sort of outlook there, Yeah, for 0:17:46.240 --> 0:17:47.640 sure affects that company. 0:17:48.200 --> 0:17:50.159 Yeah, you buy a new house, you're moving into a 0:17:50.200 --> 0:17:53.240 new house, you go to Walmart, Target, Costco or to 0:17:53.320 --> 0:17:55.520 fill up on things. And if you're not buying a 0:17:55.520 --> 0:17:57.119 new house, you're not buying those things. 0:17:57.359 --> 0:17:58.520 Yeah, and we have seen pressure. 0:17:58.520 --> 0:18:00.920 I'm just gonna I mean homes today are up about 0:18:00.960 --> 0:18:02.960 nine tens of a percent just looking at what they're doing. 0:18:03.440 --> 0:18:05.440 Sofa here in twenty twenty five, down about four percent. 0:18:05.480 --> 0:18:07.280 But again we keep yesterday we got hit because of 0:18:07.280 --> 0:18:10.040 Toll Brothers exactly exactly. But we do hear like the 0:18:10.080 --> 0:18:12.960 conversation that if mortgage rates continue to stay hi. You know, 0:18:13.000 --> 0:18:15.240 sometimes it makes people say, Okay, here's where we're settling. 0:18:15.280 --> 0:18:17.120 I'll get off the fence and do something and buy 0:18:17.119 --> 0:18:19.200 a home and then fill it with stuff. Others say, 0:18:19.280 --> 0:18:21.800 I'm still going to wait till maybe things go down. Emily, 0:18:21.840 --> 0:18:25.240 thank you, appreciate, thank you. The rundown on Walmart Emily Cone, 0:18:25.280 --> 0:18:27.720 she's Consumer team leader here at Bloomberg News, joining us 0:18:28.000 --> 0:18:31.080 right here in our studio. As we mentioned Walmart shares, 0:18:31.119 --> 0:18:34.160 they are definitely under pressure. Stock down now about six 0:18:34.200 --> 0:18:37.040 and a half percent, so just shy of. 0:18:37.240 --> 0:18:38.720 Its worst levels of the day. 0:18:38.760 --> 0:18:40.359 If we take a look at the trade here in 0:18:40.400 --> 0:18:43.600 twenty twenty five for Walmart just up about seven point 0:18:43.680 --> 0:18:44.240 six percent. 0:18:46.720 --> 0:18:50.520 This is the Bloomberg Business Week Podcast. Listen live each 0:18:50.520 --> 0:18:53.520 weekday starting at two pm Eastern up on applecar Play 0:18:53.640 --> 0:18:56.280 and the Android Auto with the Bloomberg Business app. You 0:18:56.280 --> 0:18:59.440 can also listen live on Amazon Alexa from our flagship 0:18:59.480 --> 0:19:03.320 New York State. Just Say Alexa played Bloomberg eleven thirty. 0:19:04.560 --> 0:19:06.240 So this popped up on our radar today. 0:19:06.240 --> 0:19:10.119 Bloomberg Opinion commas Tyler Cowen a professor of economics at 0:19:10.119 --> 0:19:10.920 George Mason. 0:19:10.960 --> 0:19:13.480 He's also a host of the Marginal Revolution blog. 0:19:13.520 --> 0:19:16.360 He writes a column today that the US economy may 0:19:16.359 --> 0:19:19.119 be heading towards stagflation. You know what that is a 0:19:19.119 --> 0:19:22.879 combination of high inflation high unemployment, which last occurred in 0:19:22.880 --> 0:19:24.960 the mid nineteen seventy, so it's been a while. He 0:19:25.119 --> 0:19:27.760 notes that current inflation rates are three percent and may 0:19:27.800 --> 0:19:31.160 increase due to factors such as rising rent rents, wage growth, 0:19:31.200 --> 0:19:34.680 and also President Trump's trade policy, which could lead ultimately 0:19:34.680 --> 0:19:36.560 to higher prices and tim Our next guest believes the 0:19:36.640 --> 0:19:39.919 US economy can function perfectly well with inflation closer to 0:19:39.960 --> 0:19:42.000 three percent. We'll see if he has any caveats to that. 0:19:42.240 --> 0:19:45.719 We've got with us. Dan Genter, CEO of Genter Capital Management. 0:19:45.760 --> 0:19:47.800 He joins us here in the Bloomberg a BusinessWeek studio, 0:19:47.800 --> 0:19:50.520 they've got about seven and a quarter billion dollars in 0:19:50.560 --> 0:19:54.720 assets under management. Dan good to see you three percent inflation. 0:19:55.119 --> 0:19:57.760 We always talk about the FEDS target of two percent. 0:19:58.440 --> 0:20:00.600 It's a long story about why that target it exists. 0:20:00.680 --> 0:20:03.240 But three percent, why do you think it's manageable? 0:20:03.720 --> 0:20:05.600 Well, look, it's been manageable for a very long period 0:20:05.640 --> 0:20:08.119 of time. And three percent pretty well goes along with 0:20:08.160 --> 0:20:11.040 long term population growth. Frankly, so it kind of runs 0:20:11.200 --> 0:20:13.480 hand in hand that as you have that population growth, 0:20:13.520 --> 0:20:17.280 you're consuming mort goods and services, and those prices tend 0:20:17.280 --> 0:20:18.800 to go up in line with that. That's not even 0:20:18.840 --> 0:20:21.119 taking into consideration if you have a one percent increase 0:20:21.160 --> 0:20:23.480 in productivity, which is normal, kind of throws you back 0:20:23.480 --> 0:20:25.399 into that two percent range when you're really looking at 0:20:25.480 --> 0:20:30.320 effective prices from disposal income. So long term, that's, in 0:20:30.359 --> 0:20:33.480 my opinion, a very very manageable number. I mean, the 0:20:34.000 --> 0:20:37.800 significance of the number really becomes more of the Fed policy, 0:20:38.200 --> 0:20:40.880 their outlook and the effect on interest rates, all right, 0:20:40.880 --> 0:20:44.399 because you know, in a very simplified format, look, interest 0:20:44.480 --> 0:20:48.119 rates basically determine the cost of everything. It determines your 0:20:48.119 --> 0:20:50.439 cost of production, it determines your cost of financing, It 0:20:50.440 --> 0:20:53.159 determines your cost for the two biggest items for almost 0:20:53.160 --> 0:20:56.639 every American which is their mortgage and their car loans. 0:20:57.080 --> 0:20:58.240 And so that's. 0:20:58.160 --> 0:21:01.240 Really going to be the key with regards to how 0:21:01.280 --> 0:21:03.280 fast do we go or how fast do we slow? 0:21:04.480 --> 0:21:08.439 So interesting does it matter in terms of population growth? 0:21:09.400 --> 0:21:10.840 The aging uh? 0:21:11.000 --> 0:21:14.480 You know is it if it's population growth where I 0:21:14.480 --> 0:21:17.600 don't know, with an aging population, does that kind of 0:21:17.680 --> 0:21:20.119 change the outcome of things? 0:21:20.400 --> 0:21:20.919 Just curious? 0:21:22.000 --> 0:21:26.359 Yeah, Carol, radically changes the consumption patterns, right because you know, 0:21:26.440 --> 0:21:30.840