WEBVTT - A Look At Retail, Markets, And Supply Chain Struggles 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.400 at Bloomberg dot com slash podcast. We have a perfect 0:00:22.440 --> 0:00:26.680 segue there. Talking about retail sales, Greg Jarrett, we have 0:00:26.840 --> 0:00:33.080 Angie Solanki joining US, National director of Retail for US Colliers. Uh, Angelie, 0:00:33.080 --> 0:00:34.760 thanks so much for joining us. Here is Greg was 0:00:34.800 --> 0:00:39.360 just mentioning really strong retail sales coming out this morning. 0:00:40.000 --> 0:00:41.720 You know, what do you make of it, because again 0:00:41.760 --> 0:00:44.440 across the board the West, some concerned about the consumer, 0:00:44.479 --> 0:00:48.560 but some really strong numbers this morning. Yeah, we're actually 0:00:48.640 --> 0:00:52.519 quite surprised and also excited. I mean, we're forecasting for 0:00:52.920 --> 0:00:57.680 year and somewhere around six percent increase in holiday sales, 0:00:58.200 --> 0:01:00.880 and we just feel that people are still looking to 0:01:01.080 --> 0:01:04.319 get back into the stores. The traffic is back. We 0:01:04.400 --> 0:01:09.520 saw about eighty three to increase in foot traffic, whether 0:01:09.560 --> 0:01:13.039 it was department stores, apparel stores, or beauty So people 0:01:13.040 --> 0:01:16.200 are getting ready for the holidays. Is there going to 0:01:16.240 --> 0:01:18.920 be enough stuff for them to buy? I mean, I'm 0:01:19.000 --> 0:01:22.640 I'm already having visions of walking into the Toys r 0:01:22.760 --> 0:01:25.600 Us and seeing the shelves empty, although I don't know 0:01:25.760 --> 0:01:27.560 they'll be walking into a Toys are Why aren't you 0:01:27.560 --> 0:01:32.840 walking into a Toys r Us for Steve there? Yeah, 0:01:33.200 --> 0:01:35.679 find a different store. But yeah, there aren't any more 0:01:35.720 --> 0:01:39.320 or less in terms of physical stores. However, we do 0:01:39.400 --> 0:01:42.400 still have the same concerns. So, you know, holidays shopping, 0:01:42.440 --> 0:01:45.720 although it is starting early, we definitely think the reason 0:01:45.760 --> 0:01:48.640 why is because shoppers are a bit worried about the 0:01:48.640 --> 0:01:52.520 supply chain, may feel Holidays away from them, so they're 0:01:52.560 --> 0:01:55.480 going to be potentially less merchandise well just may not 0:01:55.640 --> 0:01:58.840 arrive on time. So there is you know, those concerns 0:01:58.840 --> 0:02:02.279 still do exist. Um, so we'll probably see an early 0:02:02.360 --> 0:02:05.680 shopping spree and that's going to actually, I think help, 0:02:05.880 --> 0:02:10.359 although um retailers hopefully are well prepared for this. Yeah, 0:02:10.360 --> 0:02:11.720 that's kind of where I wanted to go, because we 0:02:11.720 --> 0:02:13.880 don't hear from the retail companies in terms of earnings 0:02:13.880 --> 0:02:16.520 for a couple more weeks here. I mean, what are 0:02:16.560 --> 0:02:20.200 the retailers saying about their inventories are about their ability 0:02:20.680 --> 0:02:23.480 to get product when it's needed, because boy, we're hearing 0:02:23.480 --> 0:02:26.760 it from so many others that there wrote backups at 0:02:26.800 --> 0:02:29.560 the ports. For example, there's lacks of lack of truck drivers, 0:02:30.000 --> 0:02:32.280 trains are backed up, the containers and everywhere you look. 0:02:32.280 --> 0:02:36.960 It seems to really be a big issue. Yeah, it's 0:02:36.960 --> 0:02:39.320 a bit of a mis uh mismatch. And what I 0:02:39.360 --> 0:02:42.400 mean by that is possibly what is occurring right now. 0:02:42.440 --> 0:02:46.480 Some retailers are receiving shipments that were prior season, so 0:02:46.600 --> 0:02:49.200 that now they're conflicted with hold on a second, I 0:02:49.240 --> 0:02:51.560 don't even have my holiday shipment. Now I have my 0:02:51.880 --> 0:02:54.800 prior season merchandise. How am I going to put that 0:02:54.800 --> 0:02:57.000 into the store? Do I need to discount that? So 0:02:57.120 --> 0:03:01.400 the pressure that is being pushed onto retailers is just 0:03:01.840 --> 0:03:04.600 it's just all over the map. And I feel for 0:03:04.639 --> 0:03:07.320 them because it's a big struggle. Um, not only are 0:03:07.360 --> 0:03:10.040 they struggling with you know, the merchandise coming in on 0:03:10.120 --> 0:03:14.000 time or over a merchandise meaning that they probably have 0:03:14.080 --> 0:03:17.360 either received multiple orders two or three times what they 0:03:18.360 --> 0:03:21.079 planned for, So now they may have too much merchandise 0:03:21.160 --> 0:03:25.480 during the holiday season, and will that extend their holiday 0:03:25.520 --> 0:03:30.600 potential sales into January February. By the way, do you 0:03:30.639 --> 0:03:34.160 think we saw savings rates jump during the pandemic and 0:03:34.200 --> 0:03:37.920 they've come back down stabilized a couple of percentage points 0:03:37.920 --> 0:03:43.320 above the historical average. Do consumers spend down back to 0:03:44.000 --> 0:03:48.280 you know, the norm? I know we're actually going to 0:03:48.320 --> 0:03:51.840 see an increase in spend based on some surveys we've 0:03:51.840 --> 0:03:55.040 been reading, we actually see that consumers are going to 0:03:55.080 --> 0:03:59.680 spend either a little bit more compared to prior year UM, 0:03:59.720 --> 0:04:03.520 but probably roughly around you know, about six to seven 0:04:03.600 --> 0:04:07.120 hundred dollars on the average spend for gifts during this 0:04:07.200 --> 0:04:10.160 holiday season. I think if people are still really in 0:04:10.200 --> 0:04:14.080 the mood to celebrate, you know, the mass mandates are 0:04:14.160 --> 0:04:19.200 relaxing quite a bit, especially in our more dense urban cities, 0:04:19.760 --> 0:04:22.960 So we will definitely see a bit more spend occurred 0:04:23.000 --> 0:04:25.360 this year, and then we'll start to see hopefully and 0:04:25.440 --> 0:04:28.160 softening UM and next year with the with the savings 0:04:28.200 --> 0:04:31.200 and so forth. And you talked to us about real estate, 0:04:31.279 --> 0:04:34.400 retail real estate. I'm here on Lexington Avenue between fifty 0:04:34.440 --> 0:04:38.400 eight and fifty nine Street, UM. All of the retail 0:04:38.640 --> 0:04:41.760 space with the exception of one very small Swiss chocolate 0:04:41.920 --> 0:04:46.839 store remain empty. Are what are we thinking about? What 0:04:46.880 --> 0:04:50.520 are the retailers saying about, you know, getting back into 0:04:50.520 --> 0:04:55.240 the physical stores now? They're definitely retailers are very excited. 0:04:55.279 --> 0:04:57.719 It's actually been a very busy year. I have to 0:04:57.720 --> 0:05:00.599 stay within our organization at Colliers. We've just and the 0:05:00.640 --> 0:05:03.359 transactions are speeding up. I think what we're seeing is 0:05:03.360 --> 0:05:06.520 the falling right now. Fifty fine million square feet of 0:05:06.640 --> 0:05:09.920 retail has been absorbed across the US year to date, 0:05:10.279 --> 0:05:14.040 and there's another fifty million square feed about that is 0:05:14.120 --> 0:05:18.600 under construction. So we are seeing momentum. There's movement from 0:05:18.600 --> 0:05:22.360 other markets, global markets where retailers are coming into our 0:05:22.480 --> 0:05:24.800 into the US. But what we're seeing is a very 0:05:24.800 --> 0:05:28.599 strategic approach. So they're really taking the time to say, Okay, 0:05:28.600 --> 0:05:32.239 if we're going to expand, where should we expand first. 0:05:32.360 --> 0:05:34.200 So what I mean by about is, of course, a 0:05:34.279 --> 0:05:36.880 lot of people left the city and so when they left, 0:05:37.279 --> 0:05:39.920 um retailers follow. And so the retailers are saying, let's 0:05:39.920 --> 0:05:42.400 go into some of these suburban markets where we're seeing 0:05:42.720 --> 0:05:46.960 you know, year over year sales increases from our competitors. Uh, 0:05:47.000 --> 0:05:49.640 and there's some great locations. Let's try to get in 0:05:50.080 --> 0:05:52.960 now and then we'll start to look at or relook 0:05:53.240 --> 0:05:55.400 at some of our urban markets. But it's not going 0:05:55.440 --> 0:05:59.080 to you know, there's still it's still you know, viable space. Please. 0:05:59.200 --> 0:06:02.039 You know, remb umber that rechire not going away, and 0:06:02.080 --> 0:06:05.520 the physical footprint is definitely not going away. I wonder 0:06:05.520 --> 0:06:10.880 if anybody wants to move back to Midtown. Our stores 0:06:10.920 --> 0:06:13.520 are empty, right, Paul? Is it still pretty empty around 0:06:13.560 --> 0:06:17.320 the Bloomberg office. Yeah, but the tourists are slowly coming back. 0:06:17.360 --> 0:06:18.640 I was again, I was out in the city having 0:06:18.640 --> 0:06:21.520 dinner last night, and I noticed that the tourists are 0:06:21.560 --> 0:06:23.479 starting to come back. So it's the worst of both 0:06:23.520 --> 0:06:29.800 worlds exactly. They're always welcome, of course. Of course, Hey, Angie, 0:06:29.880 --> 0:06:33.280 thanks so much for joining us. Angie Solanki, their national 0:06:33.320 --> 0:06:36.640 director of retail for the US. Over at call, you're 0:06:36.760 --> 0:06:39.320 talking to us about what do you expect this holiday 0:06:39.360 --> 0:06:42.080 season after we had some real bang up numbers on 0:06:42.440 --> 0:06:48.480 the US economy. Let's bring in a j Odin right now. 0:06:48.480 --> 0:06:53.480 He's an investment strategist at b n y Melon Investor Solutions, 0:06:53.760 --> 0:06:58.440 and um, we're looking at another rally today after yesterday 0:06:58.520 --> 0:07:01.760 we had the biggest games. I believes in March. What's 0:07:01.839 --> 0:07:06.760 driving us higher in the face of inflation concerns, supply 0:07:06.960 --> 0:07:13.080 chain issues, labor shortages. Thanks for having it, That's a 0:07:13.080 --> 0:07:15.520 great question, and I think a lot of it has 0:07:15.560 --> 0:07:18.520 to do with we're chipping away slowly at that wall 0:07:18.560 --> 0:07:21.040 of worry that we saw in September. September were sort 0:07:21.080 --> 0:07:23.760 of everything sort of came together in this perfect storm, 0:07:23.800 --> 0:07:26.119 and we saw the death ceiling issues sort of added 0:07:26.160 --> 0:07:29.720 to that persistent inflation question, and then the news that's 0:07:29.720 --> 0:07:33.560 trying to about the potential for real estate um position 0:07:33.640 --> 0:07:36.280 more contagion issue, but obviously became more contained. And so 0:07:36.320 --> 0:07:38.400 all of that created a lot of volatility in October 0:07:38.680 --> 0:07:41.119 and now obviously I mean in September, but obviously now 0:07:41.440 --> 0:07:43.480 we chipped away a little bit. The death citing issue 0:07:43.520 --> 0:07:47.920 pushed off until December, and although supply chain issues haven't 0:07:48.840 --> 0:07:51.720 been resolved, the labor market numbers that we're getting being 0:07:51.720 --> 0:07:54.520 a little bit stronger, moving from five down to four 0:07:54.600 --> 0:07:57.520 point eight were we I think the market is digesting 0:07:57.520 --> 0:08:00.320 the fact that although we're still going to have some 0:08:00.400 --> 0:08:02.920 persistent inflation, supply chains are gonna take a little bit 0:08:03.000 --> 0:08:06.280 time to normalize that the markets are still supportive of 0:08:06.440 --> 0:08:09.880 rich assets and inflations. Clearly here that's why you're seeing 0:08:09.880 --> 0:08:13.280 fixed incomes fell off, But where investors are going is 0:08:13.320 --> 0:08:15.760 to where they can get some sense of inflation protection. 0:08:15.760 --> 0:08:18.360 That's I guess, while you're also seeing movement in the 0:08:18.400 --> 0:08:22.040 crypto market as well. So clearly the quality names, the 0:08:22.360 --> 0:08:24.480 ones that have pricing power, are going to have staying 0:08:24.480 --> 0:08:27.240 power and the age and ability to ride out some 0:08:27.320 --> 0:08:29.200 of this inflationary turbulence that we're gonna see for the 0:08:29.240 --> 0:08:30.960 next few months. And I think that's why you're seeing 0:08:30.960 --> 0:08:33.480 the doubt out performing the rest of the major industry. 0:08:33.840 --> 0:08:36.120 So a J do I Do I stick with that 0:08:36.720 --> 0:08:39.720 rotational trade? You know, a lot of folks made back 0:08:40.240 --> 0:08:43.720 boys September of last year really arguably into the more 0:08:43.760 --> 0:08:46.240 cyclical names, maybe the banks, the energy names. Do I 0:08:46.240 --> 0:08:49.840 stick with that? Order? I try to again take a 0:08:49.840 --> 0:08:52.280 look at the quality top line growth stories, whether it's 0:08:52.280 --> 0:08:55.400 tech or healthcare. How do I think about that? I 0:08:55.640 --> 0:08:56.959 think it's gonna be a little bit of both. You 0:08:57.000 --> 0:08:59.600 want some income, right, you want diving in um yield 0:08:59.679 --> 0:09:02.520 as well, all as you want those quality names. UM 0:09:02.600 --> 0:09:05.920 We're gonna see turbulence overall, But it seems like this 0:09:05.960 --> 0:09:08.080 is reopened three point oh in a sense. Right, we 0:09:08.160 --> 0:09:12.480 keep coming back to to you know, it's reopening the economy. 0:09:12.520 --> 0:09:14.320 Then there seems like we pull back a bit. But 0:09:14.440 --> 0:09:17.839 even seeing the news about international travel restriction being lifted 0:09:17.840 --> 0:09:22.319 for vaccinated UM consumers, that's that's that's all positive news. 0:09:22.320 --> 0:09:24.959 And and it seems like this time hopefully that we're 0:09:24.960 --> 0:09:27.840 gonna we're gonna be staying in that reopen trend. So 0:09:28.080 --> 0:09:29.520 to your point, I think it's gonna be a little 0:09:29.520 --> 0:09:33.079 bit of both. It's gonna be income quality with those 0:09:33.080 --> 0:09:36.520 with pricing power, but also reefs as well. We like those, um, 0:09:36.520 --> 0:09:42.280 going going forward as we we we navigate this inflationary pressure. Um. 0:09:42.440 --> 0:09:46.520 What about property here? I wonder you like reads, Um, 0:09:46.600 --> 0:09:51.240 do you buy real estate even even in this inflated market? 0:09:53.000 --> 0:09:54.880 Do you think you're so you're saying about the actual 0:09:55.040 --> 0:09:58.360 individual housing? Um? Yeah, you know, I think I think 0:09:58.400 --> 0:10:02.240 prices prices are a bit high, um. And so from 0:10:02.240 --> 0:10:04.920 from individual perspective, I mean, if I think about myself, 0:10:04.960 --> 0:10:08.080 I would probably probably hold tight a bit um. And 0:10:08.320 --> 0:10:11.160 but I mean from a reef financing perspective, it seems 0:10:11.160 --> 0:10:12.640 like that's what a lot of consumers are doing, and 0:10:12.720 --> 0:10:15.240 it doesn't make sense while rates are low, um, even 0:10:15.240 --> 0:10:17.600 though they are creeping up, creeping up a bit um, 0:10:17.679 --> 0:10:20.640 you do you do get the value. I mean, you know, 0:10:21.000 --> 0:10:24.400 housing prices, Hopefully you'll hold the value. I mean it 0:10:24.559 --> 0:10:27.280 in a sense that that real act, that the ability 0:10:27.360 --> 0:10:30.199 to just sort of in a sensive access as an 0:10:30.200 --> 0:10:37.040 equity in and keeping keeping too inflation trends, so I 0:10:37.040 --> 0:10:40.000 I would caution it just because of prices and hopefully 0:10:40.280 --> 0:10:43.439 you know when when things normalize a bit, maybe prices 0:10:43.480 --> 0:10:46.280 come back when it comes to individual housing. But from 0:10:46.320 --> 0:10:51.000 the res perspective, we do like the income um and 0:10:50.800 --> 0:10:54.360 and instability to sort of deal with the tapering and 0:10:54.360 --> 0:10:56.480 the potential for area likes that are coming into Paul 0:10:56.520 --> 0:10:58.640 Paul is not the best time to buy an individual, 0:10:59.320 --> 0:11:03.240 but converse league a great time to sell a j 0:11:03.440 --> 0:11:06.680 We've we had some good financials. Have earnings results in 0:11:06.679 --> 0:11:09.720 the financials UH this week capped off here by Goldman 0:11:09.760 --> 0:11:12.520 Sax today. What are you looking for UH in this 0:11:12.600 --> 0:11:15.280 earning period as we kind of get into the meat 0:11:15.360 --> 0:11:18.640 of over the next couple of weeks. I mean, it's 0:11:18.600 --> 0:11:21.080 super spinning is so important, right, I mean, we have 0:11:21.160 --> 0:11:23.760 to think about with this pandemic, everything sort of came 0:11:23.800 --> 0:11:26.760 to a stand cell and we've been looking for organic 0:11:26.760 --> 0:11:29.680 growth to take over, and it's to be it's that 0:11:29.880 --> 0:11:33.960 handoff for that bridge between fiscal and monetary policy to 0:11:34.000 --> 0:11:37.880 come over into really just from the economy itself sort 0:11:37.880 --> 0:11:40.400 of standing on its own. And so continuing to see 0:11:40.400 --> 0:11:42.760 strong earning numbers is important for us because we need 0:11:42.800 --> 0:11:44.959 to know that that baton handoffs can happen, and that 0:11:45.080 --> 0:11:47.480 as we see capering and potential for rate hikes down 0:11:47.520 --> 0:11:50.040 the future, that we won't see any sort of pullback 0:11:50.040 --> 0:11:52.560 in the economy. So I think to continue to see 0:11:52.960 --> 0:11:56.880 stronger earning numbers is going to be important overall. And 0:11:56.960 --> 0:11:59.320 the earnings that we've seen so far, you're impressed, I 0:11:59.320 --> 0:12:01.920 mean you're be with the for example, the financials we've seen. 0:12:04.320 --> 0:12:07.120 I think it's showed divertification from the banks. I mean, 0:12:07.480 --> 0:12:10.120 when we think about the banks, can we think about uh, 0:12:10.200 --> 0:12:11.559 it's usually it's a lot of it has to do 0:12:11.600 --> 0:12:13.400 with the yield curve, but their ability to do so 0:12:13.559 --> 0:12:16.400 in a low interest rate environment and still produced is 0:12:16.440 --> 0:12:20.920 a positive for the market. So I think that strong financials. Uh. Overall, 0:12:21.040 --> 0:12:23.480 it's definitely a positive seeing as that we're still at 0:12:23.559 --> 0:12:27.319 you know, a zero percent fund. Ray All right, A 0:12:27.440 --> 0:12:29.199 j thank you so much for joining us. We really 0:12:29.240 --> 0:12:32.679 appreciate getting your thoughts here. A j Oden investment strategist 0:12:32.720 --> 0:12:36.880 for b n Y Melan Investors Solution. So, Matt, not 0:12:37.000 --> 0:12:38.599 a good time to be a buyer real estate. I 0:12:38.640 --> 0:12:46.559 think that's terribly unfortunate in my case. Um, I'm if 0:12:46.559 --> 0:12:48.800 it's your if it's your primary residence, I think there's 0:12:48.800 --> 0:12:51.360 not much you can do. And yeah, but you're just 0:12:51.400 --> 0:12:54.160 not going to be headed home pretty soon. I feel 0:12:54.160 --> 0:12:56.320 like if I if I rent a place, I'm just 0:12:56.360 --> 0:12:58.760 gonna be I feel like I'm just giving money away hurt. Yeah, 0:12:58.800 --> 0:13:01.400 but you gotta think that the market's not gonna be 0:13:01.440 --> 0:13:05.080 this crazy for this long. But who knows. Um so, 0:13:05.120 --> 0:13:07.400 but it's even a rental markets in the city, it's 0:13:07.440 --> 0:13:10.560 gotten very tight, very quickly. But maybe on the burbs 0:13:10.600 --> 0:13:15.120 it's a little bit better. Well, they buy the dippers 0:13:15.160 --> 0:13:19.120 seemed to have won the day again today. Let's get 0:13:19.120 --> 0:13:21.320 a sense of maybe where we go from here. As 0:13:21.360 --> 0:13:24.199 we get into the meat of this third quarter earning season, 0:13:24.240 --> 0:13:28.880 we bring in a grizzled voice from the investment community. 0:13:28.960 --> 0:13:33.559 Christine Hooper, chief Global market strategist for Investment, Well, I 0:13:33.600 --> 0:13:36.400 say grizzle because listen to this. They have one point 0:13:36.440 --> 0:13:41.280 five trillion dollars in assets under management. So when Christina speaks, 0:13:41.320 --> 0:13:44.440 people listen, and we are so approached to having Christina 0:13:44.480 --> 0:13:48.080 on our show over time. Christina again. It feels like, 0:13:48.679 --> 0:13:50.920 just when people were starting to get a little worried, 0:13:50.960 --> 0:13:53.240 a little bit spooked about this market, the wall of 0:13:53.320 --> 0:13:55.679 worry and all those things that are out there, the 0:13:55.720 --> 0:13:57.280 past couple of days, I kind of erased that a 0:13:57.320 --> 0:14:01.120 little bit. Well, certainly, but I wouldn't say we're out 0:14:01.200 --> 0:14:04.560 of the woods yet. I would expect continued volatility. What 0:14:04.640 --> 0:14:06.560 we learned from the f O m C minutes is 0:14:06.600 --> 0:14:09.840 that the FED is full speed ahead and likely to 0:14:09.880 --> 0:14:13.360 announce and begin tapering in November. I think that will 0:14:13.360 --> 0:14:17.840 contribute to volatility, as will the continuation of earning season. 0:14:18.360 --> 0:14:22.160 Not so much. I think for any negative surprises, I 0:14:22.320 --> 0:14:24.400 certainly will get a few of those, but I think 0:14:24.400 --> 0:14:26.760 it's more about the guidance for the future and issues 0:14:26.840 --> 0:14:32.360 like supply chain disruptions. So what about um inflation? Is 0:14:32.400 --> 0:14:34.200 the FED moving you think quick enough to keep this 0:14:34.280 --> 0:14:39.040 under control. Well, um, hopefully it is. I think so, 0:14:39.240 --> 0:14:42.920 just because I'm of the camp that that most of 0:14:42.960 --> 0:14:46.760 the inflation we're seeing is relatively transitory. Now keep in 0:14:46.800 --> 0:14:49.240 mind that transitory doesn't mean that it goes away in 0:14:49.240 --> 0:14:51.880 a month or two um. In fact, there's some some 0:14:51.960 --> 0:14:55.120 dictionaries that would define transitory is not permanent. But I 0:14:55.160 --> 0:14:59.520 do think we're likely to see elevated prices, higher inflation 0:15:00.040 --> 0:15:03.080 war of the coming months, and that it may not 0:15:03.800 --> 0:15:07.560 uh may not moderate until the middle of next year. 0:15:07.640 --> 0:15:11.360 So we have to to buckle our seatbelts and expect 0:15:11.440 --> 0:15:13.880 that to be problematic, and that some of the headlines 0:15:13.920 --> 0:15:18.840 could be scary, but this really shouldn't impact long term investors. So, Christina, 0:15:18.880 --> 0:15:21.520 we had a lot of the big bank's report results 0:15:22.000 --> 0:15:24.360 this week, have to buy some just some eye popping 0:15:24.440 --> 0:15:26.320 numbers out of Goldman Sacks today. What did you take 0:15:26.360 --> 0:15:29.360 from the financials and what we saw this week? Well, 0:15:29.360 --> 0:15:33.320 I certainly expected financials to be a highlight of earnings. 0:15:33.440 --> 0:15:37.200 Right that there are certainly far more tail winds than 0:15:37.320 --> 0:15:41.720 headwinds for the financial space, So this isn't surprising. I 0:15:41.800 --> 0:15:44.160 just don't want us to be lulled into a false 0:15:44.200 --> 0:15:50.240 sense of security because some some sectors, some industries are 0:15:50.320 --> 0:15:52.400 not going to fare as well in this environment as 0:15:52.440 --> 0:15:58.560 financials have. So which ones are are you most concerned about? Well, 0:15:58.600 --> 0:16:05.920 I think certainly the ower marchin industries um UM, transportation, 0:16:06.480 --> 0:16:11.600 general retail, um, autos um, those that are certainly being 0:16:11.880 --> 0:16:16.480 um impacted by supply chain disruptions. I think that's where 0:16:16.480 --> 0:16:19.360 we're going to see some of the pain uh this 0:16:19.360 --> 0:16:21.480 this earning season. And again though I don't think it 0:16:21.480 --> 0:16:23.640 should deter investors. I think we just need to be 0:16:23.640 --> 0:16:27.160 prepared for this. Yeah, I'm looking at my map go 0:16:27.400 --> 0:16:29.920 function on the Bloomberg terminal and I like to look at, 0:16:30.040 --> 0:16:32.880 you know, the the number of ships cargo ships that 0:16:32.880 --> 0:16:35.800 are outside Los Angeles or Savannah, New York and some 0:16:35.840 --> 0:16:38.160 of the big U s ports. It ain't get any 0:16:38.200 --> 0:16:41.080 better out there. And I'm kind of concerned over the 0:16:41.080 --> 0:16:43.600 next couple of weeks when we hear from consumer products companies, 0:16:44.000 --> 0:16:47.120 technology companies, industrial companies that we're going to hear a 0:16:47.200 --> 0:16:51.360 lot about supply chain issues. It just feels like it's 0:16:51.400 --> 0:16:54.920 going to be a longer term issue that perhaps the 0:16:55.000 --> 0:16:58.200 market is not fully discounting how do you think about that? Well, 0:16:58.240 --> 0:17:02.040 I think the market is certainly store in to discount it. Um. 0:17:02.080 --> 0:17:05.240 This is very understandable. We're coming out of this incredible 0:17:05.320 --> 0:17:10.080 economic disruption in the pandemic. UM. So it makes sense 0:17:10.119 --> 0:17:15.040 that we're experiencing all these issues and it makes sense 0:17:15.080 --> 0:17:17.119 that it will take some time for them to be 0:17:17.160 --> 0:17:21.320 worked out. Um. Having so, having said all that, I 0:17:22.240 --> 0:17:27.199 would expect, especially not only companies UH in those areas, 0:17:27.200 --> 0:17:30.879 to talk about difficulties thus far, but to give guidance 0:17:30.920 --> 0:17:34.320 for the fourth quarter. I'm quite frankly this situation has 0:17:34.359 --> 0:17:36.360 gotten worse in the last couple of weeks, so it's 0:17:36.400 --> 0:17:39.600 it's more going to be about UH next quarters earnings 0:17:39.640 --> 0:17:44.000 and the impact there. So I think guidance is absolutely critical. 0:17:44.240 --> 0:17:46.920 UH to the extent that companies have visibility, I was 0:17:46.960 --> 0:17:51.639 going to say, don't you think visibility is lacking right now? Um, 0:17:52.000 --> 0:17:55.600 Certainly some have greater visibility than others. I think as 0:17:55.680 --> 0:17:59.400 think companies have. Some companies at least have a better sense, 0:17:59.440 --> 0:18:05.439 for example, of semiconductor supplies and how that situation is 0:18:05.760 --> 0:18:09.760 of versus what we're seeing in in in other areas 0:18:09.800 --> 0:18:13.320 in terms of supply chain disruptions. But yes, UM. In general, 0:18:13.480 --> 0:18:15.960 visibility is going to be a challenge. Do you think 0:18:16.080 --> 0:18:19.800 earnings have come down enough to reflect some of these 0:18:19.840 --> 0:18:22.080 margin pressures that we might see in Christina or do 0:18:22.119 --> 0:18:25.080 you think there's maybe some risk to this market from 0:18:25.119 --> 0:18:30.880 from earnings. Well, I certainly think that that earnings UM 0:18:31.440 --> 0:18:36.080 are are going to be negatively impacted. And I think 0:18:36.119 --> 0:18:40.760 it doesn't mean that we're going to see anything terrible UM, 0:18:40.840 --> 0:18:45.160 but certainly for those companies with the narrow margins, it's 0:18:45.200 --> 0:18:48.600 going to have a significant impact. But again, it's a 0:18:48.640 --> 0:18:51.720 relatively short term problem in the grand scheme of things. 0:18:51.800 --> 0:18:53.760 It seems like a long term problem right now because 0:18:53.800 --> 0:18:56.840 it could last several quarters UM, but UM for those 0:18:56.840 --> 0:18:59.600 with a long time horizon, these are kinds of issues 0:18:59.800 --> 0:19:04.560 that could present buying opportunities if they're reflected in stock prices. 0:19:05.119 --> 0:19:06.960 I just want to quickly get your take on rates. 0:19:07.160 --> 0:19:09.840 We've seen the ten year climb back up to one 0:19:09.880 --> 0:19:17.240 sixty basically right now. One where do you see rates going? So? 0:19:17.800 --> 0:19:20.879 I think that that the movement is going to be higher, 0:19:20.920 --> 0:19:23.119 but I don't think that it's going to be a 0:19:23.200 --> 0:19:27.480 smooth move and they're certainly going to be headlines events, 0:19:28.480 --> 0:19:33.200 data releases that can send the yell lower temporarily, UM. 0:19:33.240 --> 0:19:35.480 But in my mind, we're going to be closer to 0:19:36.480 --> 0:19:39.040 two than one percent when we finished this year, and 0:19:39.080 --> 0:19:40.399 I think we're going to be higher than where we 0:19:40.440 --> 0:19:44.119 are today. So and again, just following up on that, 0:19:44.240 --> 0:19:48.280 Christine UM, just wondering about the FED, UM, do you 0:19:48.320 --> 0:19:53.040 expect this tapering, in this eventual rate increase policy that 0:19:53.080 --> 0:19:55.040 we're likely to see over the next six and twelve months. 0:19:55.280 --> 0:19:58.600 Do you expect this to be I guess well received 0:19:58.640 --> 0:20:02.119 by the market or rational received by the market. I 0:20:02.160 --> 0:20:04.639 think it will. Let's keep in mind that the stock 0:20:04.680 --> 0:20:09.840 market has become so incredibly dependent upon accommodative monetary policy, 0:20:10.080 --> 0:20:14.119 and so this is a situation in which UM, the 0:20:14.760 --> 0:20:18.720 market is going to welcome, UM a a very slow 0:20:19.240 --> 0:20:24.240 normalization process. And so I think in particular, things like 0:20:24.359 --> 0:20:27.040 when J. Powell says that there has been a very 0:20:27.119 --> 0:20:31.680 conscious un coupling of tapering from rate hikes, I think 0:20:31.720 --> 0:20:34.439 that's a very well received because right now markets have 0:20:34.520 --> 0:20:36.640 come to accept the fact that we're going to see 0:20:36.640 --> 0:20:40.080 tapering start soon. UM, They're more wary about rate hikes 0:20:40.080 --> 0:20:42.640 and where that might take us. So I think that 0:20:42.800 --> 0:20:47.480 this this approach is and will be well received by markets. 0:20:48.680 --> 0:20:51.119 All right, thanks so much for joining us, Christina. Always 0:20:51.160 --> 0:20:54.800 great to get your insight. Christine and Hooper their chief 0:20:54.800 --> 0:20:58.480 global market strategists over at Investco. As Paul said, they 0:20:58.520 --> 0:21:01.240 have about one and a half trill billion dollars of 0:21:01.320 --> 0:21:06.240 assets under management out of Atlanta. That does it for 0:21:06.320 --> 0:21:14.200 this Friday. This is Bloomberg. Now let's get to Mark Noble. 0:21:14.280 --> 0:21:18.800 He's the executive VP of E T F Strategy at 0:21:18.880 --> 0:21:22.919 Horizons E T S and we want to talk about 0:21:23.040 --> 0:21:28.879 the supply chain issues the semiconductor industry, how that's reshaping 0:21:29.119 --> 0:21:33.600 supply chains. Um, Mark, what do you think about where 0:21:33.640 --> 0:21:35.320 we stand right now? Is there any light at the 0:21:35.359 --> 0:21:39.520 end of the tunnel here? I? I don't think so. Um. 0:21:39.560 --> 0:21:42.720 I actually think that you know right now the semiconductor 0:21:42.840 --> 0:21:46.679 issue with supply chains and the fact that semiconductors have 0:21:46.760 --> 0:21:50.640 become probably the most highly politicized industry globally, means we're 0:21:50.640 --> 0:21:55.000 probably looking at three for us to get some sort 0:21:55.000 --> 0:21:57.399 of supply chain movement where these can get to market. 0:21:57.680 --> 0:22:01.240 UM very much viewing what's happening with a semiconductor's market 0:22:01.680 --> 0:22:03.320 to be similar to what we saw in the seventi 0:22:03.359 --> 0:22:06.520 three oil shock, where the pandemic has really shown the 0:22:06.520 --> 0:22:09.919 fragility of the supply chain where we've been so heavily 0:22:09.920 --> 0:22:14.520 reliant on Asian manufacturing. The vast majority of semi connector 0:22:14.560 --> 0:22:17.720 components are manufactured in Asia, the majority of i P 0:22:18.400 --> 0:22:21.800 is in North America but not manufactured there. And it's 0:22:21.800 --> 0:22:24.600 resulted in a situation where you know, the United States 0:22:24.600 --> 0:22:27.600 and China are very much at odds to get control 0:22:28.280 --> 0:22:31.560 of the semiconductor, which has really come to the four 0:22:31.640 --> 0:22:35.320 as the key technology used for all consumer electronics, from 0:22:35.320 --> 0:22:38.200 everything from you know, smart TVs and artificial intelligence to 0:22:38.280 --> 0:22:40.639 of course what we've seen with automobiles. So it is 0:22:40.680 --> 0:22:43.600 almost at a crisis situation, and you know, no amount 0:22:43.600 --> 0:22:45.760 of money being thrown at it is probably going to 0:22:45.800 --> 0:22:49.920 allow us to have reassoring of this commodity. And I'm 0:22:49.960 --> 0:22:52.959 very much unu as a commodity until there's you know, 0:22:53.359 --> 0:22:56.280 more excess manufacturing capacity, which will take a couple of 0:22:56.320 --> 0:22:59.720 years to built. Mark, I don't even know how we 0:23:00.000 --> 0:23:03.560