WEBVTT - 9am-10am ET: Davidowitz, Giddis & Arment 0:00:03.360 --> 0:00:08.840 This is Bloomberg Surveillance. If anybody needs capable management teams 0:00:08.880 --> 0:00:11.200 for the future, it's the commercial banks, right, They're not 0:00:11.240 --> 0:00:13.600 going to go away. The business isn't going to go away. 0:00:13.680 --> 0:00:18.000 It's not assigned that the economy if not prosperous. The 0:00:18.040 --> 0:00:20.120 fact that in place there's only one passet, I don't 0:00:20.160 --> 0:00:21.639 get it. The fourth coarter was bad in terms of 0:00:21.720 --> 0:00:23.639 g d P, it wasn't bad in terms of jobs. 0:00:23.640 --> 0:00:25.920 In fact, it was fantastic in terms of job growth. 0:00:25.960 --> 0:00:29.880 And that's what's the most important. Bloomberg Surveillance your link 0:00:29.960 --> 0:00:34.400 to the world of economics, finance, and investment. On Bloomberg Radio. 0:00:34.520 --> 0:00:38.519 Good morning everyone, Bloomberg Surveillance. Scarlet Foo in for Michael McKeon. 0:00:38.600 --> 0:00:41.120 This's Friday morning. I'm Tom keen. We welcome all of you. 0:00:41.280 --> 0:00:46.640 Bloomberg twelve Boston, Bloomberg FM, Washington, Bloomberg eleven three on 0:00:46.640 --> 0:00:49.440 New York. Good early morning out in San Francisco, the 0:00:49.440 --> 0:00:53.560 Bay Area, Bloomberg nine sixty. We say good morning as well. 0:00:53.600 --> 0:00:56.360 A retail focused in this our honor to bring you 0:00:57.480 --> 0:01:01.360 Howard David Evans, who has really been really, really, really 0:01:01.480 --> 0:01:04.920 quite good on the challenges of retail boy did he 0:01:04.959 --> 0:01:08.240 get out front of the challenges of Macy's and Coles 0:01:08.240 --> 0:01:10.080 and others. And we'll talk to him. Get an update 0:01:10.440 --> 0:01:15.440 on the pulse of retail America. First, so we look 0:01:15.480 --> 0:01:18.600 quickly at foreign exchange. UH. The four X brief this 0:01:18.680 --> 0:01:21.640 morning brought you my Interactive Brokers winner of f f 0:01:21.840 --> 0:01:25.560 X Weeks two thousand fifteen award for the best Retail 0:01:25.640 --> 0:01:29.200 for X trading platform visit ib at ib kr dot 0:01:29.200 --> 0:01:33.759 com Slash four x yen one thirteen thirty nine weeker 0:01:33.800 --> 0:01:37.080 yen three days in a row, Euro under one, nine 0:01:37.160 --> 0:01:42.280 seventy four euro a weakness, dollar strength off g DP movement, 0:01:42.360 --> 0:01:45.640 a little better g d P number than expected. I 0:01:45.680 --> 0:01:47.280 think we'll leave it there this morning. I mean in 0:01:47.400 --> 0:01:52.400 sterling on doing better and as well, David. I don't 0:01:52.400 --> 0:01:56.000 want to rip up your script, but um GAP needs 0:01:56.040 --> 0:01:58.760 a miracle, right I mean? I mean, I mean, if 0:01:58.760 --> 0:02:01.920 we're gonna have a Howard on on retail, can you 0:02:01.960 --> 0:02:04.760 start with gafferd Is there something more important than gas? 0:02:04.880 --> 0:02:07.600 We can start there? Why not? They mean they need something? 0:02:07.640 --> 0:02:10.640 No question. GAP shares down about two percent in early trading. 0:02:11.160 --> 0:02:14.840 The largest US focused the pool retailer that's GAPS claim 0:02:14.919 --> 0:02:17.560 to fame. They expect earnings for the current fiscal year 0:02:17.600 --> 0:02:19.320 to be two dollars twenty five cents to share it 0:02:19.400 --> 0:02:22.760 best the high end of gaps forecast range trailed analysts 0:02:22.760 --> 0:02:26.200 averagessetment in the Bloomberg survey by nineteen cents. And then 0:02:26.240 --> 0:02:28.720 you have J. C. Penny, which is up more than 0:02:28.800 --> 0:02:32.720 fourteen percent in early trading. The department store chains fourth 0:02:32.800 --> 0:02:35.800 quarter profit and sales topped analysts estimates at least the 0:02:35.800 --> 0:02:38.600 ones we surveyed here at Bloomberg UH and the results 0:02:38.600 --> 0:02:41.440 showed Penny chief executive Marvin Allison is making progress and 0:02:41.520 --> 0:02:45.240 turning around the company. Looking beyond retail, You've got Kraft 0:02:45.320 --> 0:02:48.560 Hinds up five and a half percent, The food makers 0:02:48.560 --> 0:02:51.080 fourth quarter earnings and sales beat estimates. Craft Hunts, of 0:02:51.080 --> 0:02:53.480 course formed last year, and a deal orchestrated by private 0:02:53.480 --> 0:02:56.840 equity firm three G Capital and Warren Buffetsbergshire Hathaway, so 0:02:56.840 --> 0:02:59.840 they're among the winners. In response to those results, Monster 0:03:00.000 --> 0:03:03.360 evers O down five percent. The energy drake maker's profit 0:03:03.400 --> 0:03:05.800 and revenue trail the average estates for the third time 0:03:05.840 --> 0:03:09.440 in the past four quarters. UH. Some more well received 0:03:09.520 --> 0:03:13.080 earnings reports you've got the networking software maker Palo Alto 0:03:13.280 --> 0:03:16.880 Networks up seven and a half percent, the data analysis 0:03:16.880 --> 0:03:21.679 software makers Splunk of six months splunk as p lk 0:03:21.960 --> 0:03:24.320 is the ticker of sixty and a half percent, and 0:03:24.440 --> 0:03:27.680 stamps dot Com of twenty four and a half percent, 0:03:27.720 --> 0:03:30.880 all in response to well receive from Southwestern Energy, though 0:03:30.960 --> 0:03:33.440 down eleven and a half percent, the shale producer with 0:03:33.480 --> 0:03:35.880 a fourth quarter loss as revenue trail estimates. And then 0:03:35.920 --> 0:03:38.920 you have son Edison a lot of pieces to this story, 0:03:39.000 --> 0:03:42.760 stocks a thirty percent in early trading. Hatchment manager David 0:03:42.760 --> 0:03:45.800 Temper's attempt to block the company's proposed purchase of Vivin 0:03:45.880 --> 0:03:48.760 Solar was turned away by a Delaware judge who all 0:03:48.800 --> 0:03:53.320 the Tempers Appolution management couldn't prove the deal hurts investors, 0:03:53.320 --> 0:03:57.560 and son Edison's Terraform power unit now Vivin Solar up 0:03:57.640 --> 0:04:01.040 thirty seven and a half percent in early rating. Apple 0:04:01.080 --> 0:04:03.480 Loosa has a nine and a half percent stake in 0:04:03.680 --> 0:04:06.120 terror Form, and that stock is down eight and a 0:04:06.200 --> 0:04:10.600 half percent. Weight Watchers International down twenty eight percent. The 0:04:10.640 --> 0:04:14.960 weight loss company that partnered with Oprah Winfrey lad reported 0:04:15.000 --> 0:04:17.720 an unexpected fourth quarteter loss, the number of act of 0:04:17.800 --> 0:04:22.560 subscribers dropped four point eight percent, and finally, Republic Airways 0:04:22.600 --> 0:04:26.039 Holdings not stock down eighty two percent sixty two cents 0:04:26.040 --> 0:04:30.000 to share the regional jet owner file for bankruptcy Republic 0:04:30.040 --> 0:04:32.080 side and in fact of a lack of pilots during 0:04:32.120 --> 0:04:35.560 a contract dispute last year. David Wilson, thank you so much, 0:04:35.600 --> 0:04:37.520 appreciate that. And now we're bring in a hard did 0:04:37.680 --> 0:04:42.039 its associates who has given us just terrific perspective and 0:04:42.160 --> 0:04:45.440 way out front Gap stores. Just as one example, folks, 0:04:45.440 --> 0:04:48.240 I'll put the chart out on Bloomberg Radio Plus. Basically 0:04:48.240 --> 0:04:51.560 it's made up eighty percent of the success coming out 0:04:51.560 --> 0:04:54.680 of four five years ago. How how bad is it 0:04:54.839 --> 0:04:57.760 out there? I want you to give me a reasoned 0:04:58.640 --> 0:05:03.279 analysis of the state of retail getting out of the 0:05:03.440 --> 0:05:06.640 ugly spring. They get to summer and they've got a 0:05:06.680 --> 0:05:11.320 regroup for back to school. What's the strategy. Well, for Gap, 0:05:11.440 --> 0:05:14.719 they're in a segment that is almost all bad. American 0:05:14.800 --> 0:05:20.080 Eagle outfit is gas. Yeah, I mean every in the 0:05:20.160 --> 0:05:24.960 apparel chain business at Abercrombie, you're gonna find very few 0:05:25.120 --> 0:05:28.560 arrow posts that you're gonna find very few winners and 0:05:28.640 --> 0:05:32.200 almost all loses. Jay Crewe a disaster, So they're in 0:05:32.279 --> 0:05:37.279 a business where everybody is in collapse, including them. The 0:05:37.320 --> 0:05:40.080 good news about the Gap is they're richer than everyone else. 0:05:40.560 --> 0:05:43.119 They're balance sheet is a monster, sitting with a billion 0:05:43.200 --> 0:05:46.800 in cash, no debt. So this is a powerhouse company 0:05:46.880 --> 0:05:50.200 that is not going away. They're still making money, they 0:05:50.279 --> 0:05:53.080 have positive cash flow, they got lots of money. They 0:05:53.200 --> 0:05:57.720 just keep closing stores and the future is uncertain. That's 0:05:57.760 --> 0:06:00.320 the problem with the Gap. A little headline coming out 0:06:00.400 --> 0:06:02.839 love more on this Honeywell offers a hundred eight dollars 0:06:02.920 --> 0:06:07.320 per share to quote re engage with U t X. 0:06:07.400 --> 0:06:09.880 That's away from how to Vid of its expertise, but 0:06:10.080 --> 0:06:14.359 certainly important. U t X uh surging from eight seven 0:06:14.520 --> 0:06:18.239 up to nine and the new wagers up another ten dollars. 0:06:18.240 --> 0:06:20.920 Scarlett quickly, No. I wanted to get to Howard in 0:06:21.120 --> 0:06:24.280 terms of what we see across the retailers. Is this 0:06:24.440 --> 0:06:28.240 idea that these companies are big on promotions. When do 0:06:28.400 --> 0:06:31.400 we or do we ever start to see margin expansion? Well, 0:06:31.440 --> 0:06:35.599 we would never as long as you've got poverty doubling 0:06:35.680 --> 0:06:37.920 in the last seven years, which of course has been 0:06:38.720 --> 0:06:40.840 what we had one out of twelve in poverty, we 0:06:40.920 --> 0:06:43.240 now born out of six and poverty seven years later. 0:06:43.560 --> 0:06:47.840 As long as you've got that scarlet across America, as 0:06:47.920 --> 0:06:51.240 long as Macy's is now building discount stores, as long 0:06:51.320 --> 0:06:54.400 as norths from fastest growth this discount stores, as long 0:06:54.480 --> 0:06:57.440 as Sacks fastest growth a discount stores, as long as 0:06:57.520 --> 0:07:00.160 d J d J Max is the most power full 0:07:00.200 --> 0:07:04.160 apparel retailer in the United States by far, and as 0:07:04.240 --> 0:07:07.600 long as traditional walls are closing, then as long as 0:07:07.640 --> 0:07:11.960 the middle class is decimated, Uh, you've got a smaller 0:07:12.040 --> 0:07:15.440 and smaller piece of America with money and the aspirational 0:07:15.560 --> 0:07:18.560 middle class is killed forever because of on that and 0:07:18.640 --> 0:07:22.080 everything else, it's not going to change. So retailing has 0:07:22.240 --> 0:07:26.920 changed forever, and price it will be more important forever. 0:07:27.520 --> 0:07:30.560 Bed Bathroom Beyond. Can you imagine a thinking of giving 0:07:30.640 --> 0:07:36.600 up coupons because this sacrilege and sound, it's unbelievable sacrilege. Well, 0:07:36.640 --> 0:07:39.320 speaking of bed Bathroom Beyond, one of its rivals, certainly 0:07:39.360 --> 0:07:42.480 on a higher end, would be restoration hardware. One thing 0:07:42.520 --> 0:07:45.640 I found very interesting is the commentary from the CEO, 0:07:46.400 --> 0:07:50.520 Gary Freedman. He talked about how a bear market wouldn't 0:07:50.560 --> 0:07:53.640 be all bad news for the company because it could 0:07:53.680 --> 0:07:56.440 bring lower real estate prices, which would help the change. 0:07:56.560 --> 0:07:59.320 Is that I think that's one of the craziest comments 0:07:59.360 --> 0:08:03.600 I have. But look, Gary Friedman is a brilliant, brilliant guy. 0:08:04.320 --> 0:08:07.720 He is a groundbreaking guy. He's done the most exciting 0:08:07.800 --> 0:08:10.960 thing in furniture in fifty years. There is no there's 0:08:11.000 --> 0:08:14.760 no one like him right now. If you take that 0:08:14.920 --> 0:08:18.160 explanation and the real estate, that's a little looney, Uh 0:08:18.640 --> 0:08:20.520 what they don't think he is to change the real 0:08:20.640 --> 0:08:25.360 estate bright, but he gave fifty reasons. He is the 0:08:25.440 --> 0:08:28.000 real One of the key reasons that happened to him. 0:08:28.600 --> 0:08:31.920 He's in a business that's out on the fashion edge. 0:08:32.080 --> 0:08:35.000 That's what made him so great. Now, when you go 0:08:35.200 --> 0:08:39.959 out on the fashion edge and the slightest ripple happens, 0:08:40.280 --> 0:08:44.199 you're screwed. And that he he's in that kind of 0:08:44.240 --> 0:08:47.280 a business. Did he expand too quickly? You've seen this 0:08:47.400 --> 0:08:50.640 a million times. He did. This is Gary Friedman. This 0:08:50.800 --> 0:08:55.280 guy is going wild. He's opening up giant he's doing Okay, 0:08:55.559 --> 0:08:58.320 are there elements here of an Abercarbie and Fitch were 0:08:58.360 --> 0:09:02.920 a dominant that Neddick CEO gets out in front of 0:09:03.080 --> 0:09:08.559 trends or his p and L. Yes. Possibly, But but 0:09:08.800 --> 0:09:12.240 this guy has done so much good stuff, all right, 0:09:14.040 --> 0:09:18.959 I'm hesitant to say that yet because he's created America. 0:09:19.000 --> 0:09:23.160 I mean, he's chased his entire into Since Home Depot, 0:09:23.240 --> 0:09:26.880 we've never had anything like this the invention of home 0:09:26.960 --> 0:09:31.319 Depot at Home Depot fifteen years ago. Try and threw 0:09:31.360 --> 0:09:34.920 away five million dollars in liquid Howard, how we're gonna 0:09:34.920 --> 0:09:38.319 go to break in and and move forward very quickly? Howard. 0:09:38.440 --> 0:09:42.040 We saw Home Depot and Lowe's with solid same store sales. 0:09:42.360 --> 0:09:48.160 Can your world of retail pull over the Home Depot excellence? Yeah? 0:09:48.200 --> 0:09:51.199 I look the home sector, they're the kings of the 0:09:51.240 --> 0:09:54.480 home sector. Now if you look at some other people 0:09:54.520 --> 0:09:58.280 in the home sector, they're not so fantastic. But clearly 0:09:58.400 --> 0:10:01.000 Home Depot and Lowe's have a formula. And here is 0:10:01.040 --> 0:10:05.760 the difference between restorational lordwearing Home Depot. Home Depot cells. 0:10:05.800 --> 0:10:08.880 What you have to have as hard whistling great, they 0:10:08.960 --> 0:10:11.400 sell what you have. Now low cells what you have 0:10:11.600 --> 0:10:17.280 to have you don't have to have anything in restoration hardware. 0:10:17.320 --> 0:10:21.160 You don't have to have it. So he's when the 0:10:21.320 --> 0:10:27.280 market gets volable anything restoration hardware. Okay, how this is phenomenal, 0:10:27.360 --> 0:10:29.560 stay with us, hard to us with this. You heard 0:10:29.600 --> 0:10:33.720 his support Mr Freeman over restoration hardware, which has been 0:10:33.760 --> 0:10:36.679 a modest implosion, to say the least, future to the 0:10:36.760 --> 0:10:39.400 last time restoration. I have not been in the store, 0:10:39.440 --> 0:10:42.440 but I do do things off their website. I think 0:10:42.520 --> 0:10:45.640 they're they're just I don't know what they do. The 0:10:45.760 --> 0:10:47.720 furniture is too big. I know I've seen the ceiling 0:10:47.760 --> 0:10:54.480 fan picture on your website. On your All right, let's 0:10:54.520 --> 0:10:56.760 check in with John Tucker for the news headlines. Shot 0:10:57.040 --> 0:11:00.720 find Scarlett. Donald Trump spent eight months launching a parade 0:11:00.720 --> 0:11:05.080 of insults over any on all detractors of Marco Rubio's 0:11:05.080 --> 0:11:07.719 survived by staying mostly in the sidelines. Rubio subtlely and 0:11:07.840 --> 0:11:10.800 urgently emerged from the shadows last night to hammer the 0:11:11.080 --> 0:11:13.960 front runner. The House considering a bill that would reverse 0:11:14.080 --> 0:11:17.280 the man on the sail or import of ivory products 0:11:17.679 --> 0:11:20.800 on doing US fish and wildlife rules that were intended 0:11:20.840 --> 0:11:24.839 to halt the decline in wild elephant populations, and the 0:11:24.920 --> 0:11:28.400 conventional wisdom was that California, especially the southern part of 0:11:28.559 --> 0:11:31.400 the state would be awash this winter with rain and 0:11:31.480 --> 0:11:34.400 the valleys and deep snow in the mountains. Alnina was 0:11:34.480 --> 0:11:36.439 on the way to save the day. Well, a California 0:11:36.559 --> 0:11:39.920 hydrologist now says the water supply forecast for the spring 0:11:40.040 --> 0:11:44.400 period is falling like a stone. Global News twenty four 0:11:44.480 --> 0:11:47.120 hours a day, powered by our two journalists in more 0:11:47.160 --> 0:11:49.880 than one d fifty news videaus around the world. I'm 0:11:49.960 --> 0:11:52.760 John Tuckers Scarlet and to John, thank you so much. 0:11:52.760 --> 0:11:57.559 Futures Futures up one oh for Tom Keene and Scarlet 0:11:57.640 --> 0:12:05.960 Foo on your Friday edition. Bloomberg Surveillance Worldwide Market Driver 0:12:06.120 --> 0:12:08.400 is brought to you by your Mercedes Benz Tri State dealer. 0:12:08.480 --> 0:12:10.480 When it comes to winter elements, put your best four 0:12:10.520 --> 0:12:14.000 wheels forward with Mercedes Benz Formatic all wheel Drive. Visit 0:12:14.040 --> 0:12:17.320 your Mercedes Benz Tri State dealer for test drive today. 0:12:17.440 --> 0:12:24.240 This is Bloomberg Surveillance Global Business News twenty four hours 0:12:24.280 --> 0:12:27.400 a day at Bloomberg dot Com, the Radio plus Mobile 0:12:27.440 --> 0:12:30.760 Act and on your radio. This is a Bloomberg Business 0:12:30.840 --> 0:12:33.760 Flash and I'm Para in Moscow. This updates brought to 0:12:33.840 --> 0:12:36.640 you by Interactive Brokers and CME Group. If you're looking 0:12:36.679 --> 0:12:39.959 for global futures contracts with low trading costs, look no further. 0:12:40.320 --> 0:12:43.360 Interactive Brokers is the industry leader. Learn more at Interactive 0:12:43.360 --> 0:12:47.280 Brokers dot com, slash c m E Group. Honeywell International 0:12:47.400 --> 0:12:49.959 saying is seeking to re engage with United Technologies on 0:12:50.040 --> 0:12:52.559 a merger, offering to pay a hundred eight dollars a share. 0:12:53.040 --> 0:12:56.720 US DOCK Index futures, meanwhile, are moving higher amid corporate 0:12:56.760 --> 0:12:59.240 earnings and signals from China's Central Bank that it will 0:12:59.280 --> 0:13:02.040 act to bolster its economy. We check the markets every 0:13:02.080 --> 0:13:05.560 fifteen minutes throughout the trading day. On Bloomberg SNP EMUNI 0:13:05.600 --> 0:13:08.280 futures have eleven points. Dowie EMUNI futures have a hundred 0:13:08.400 --> 0:13:11.120 ten nas. Documuny futures up thirty one, and the decks 0:13:11.160 --> 0:13:14.240 in Germany's up to percent ten. Your treasury down fourteen 0:13:14.280 --> 0:13:17.400 thirty seconds see yield one point seven six percent nine 0:13:17.480 --> 0:13:19.439 Execred Oil a four and a half percent or a 0:13:19.520 --> 0:13:22.440 dollar fifty to thirty four fifty eight of arrol Comas 0:13:22.480 --> 0:13:24.880 Gold is down one point one percent or thirteen dollars 0:13:24.960 --> 0:13:28.360 to twelve nine announced. The Euro a dollar oh nine 0:13:28.440 --> 0:13:31.560 six three and the en one thirteen point five four, 0:13:31.960 --> 0:13:35.720 and that's a Bloomberg business flash. Tom and Scarlett, Karen, 0:13:35.800 --> 0:13:39.719 I think so much. The combined employees of Honeywell ut X, 0:13:39.840 --> 0:13:42.360 if it was to come about to show you, the 0:13:42.520 --> 0:13:46.839 scale would be three six thousand roughly revenue. I do 0:13:46.960 --> 0:13:49.480 want to point out Honeywell has lower revenue than U 0:13:49.559 --> 0:13:54.720 t X, even though they are the acquirer. In this attempt, 0:13:54.760 --> 0:13:57.880 the key headline there is Karen Musk mentioning Honeywell six 0:13:58.000 --> 0:14:03.000 to re engage with you nighted Uh Technologies. We re 0:14:03.120 --> 0:14:08.439 engage with Howard d Vinovitz on retail. Howard, I I 0:14:08.600 --> 0:14:12.480 look at Amazon. Is the elephant in the room. Is 0:14:12.679 --> 0:14:15.560 I'm the channel working? Every time you hear that word, 0:14:15.640 --> 0:14:19.000 it makes me cringe. It's like synergy. Is I'm the 0:14:19.160 --> 0:14:23.720 channel working. Here's what's going on. If you call any retailer, 0:14:23.840 --> 0:14:28.800 call Mazie's, call anybody going on Strom, Here's what they're 0:14:28.840 --> 0:14:32.600 gonna tell you. What is the fastest growing party of business? 0:14:32.920 --> 0:14:37.080 Every one of them We'll say online without by including 0:14:37.120 --> 0:14:42.400 the gap anybody. That means from an allocation of asset 0:14:42.560 --> 0:14:44.960 point of view, that's where they're putting the money. And 0:14:45.120 --> 0:14:49.520 that makes sense. That's why all that's why all of 0:14:49.520 --> 0:14:51.960 the ma shrinking stores, and that's why all of them 0:14:52.040 --> 0:14:55.280 putting money into technology. And they're right, Scarlett, I know, 0:14:55.360 --> 0:14:57.840 wants to jump in here. Terry Londron has been through 0:14:57.960 --> 0:15:02.880 four to twelve cycles. Are the retailers being fast enough 0:15:03.040 --> 0:15:06.600 this time around? I think they're doing what they can. 0:15:06.800 --> 0:15:11.680 But there is a permanent change in America that that 0:15:12.880 --> 0:15:15.480 Terry LongRun is now in the department store segment he 0:15:15.520 --> 0:15:19.000 always has been. That means he's the high cost player 0:15:19.360 --> 0:15:21.960 where we've got double the number of people in poverty 0:15:22.080 --> 0:15:27.400 looking for deals. Hello, that is a gigantic problem. It 0:15:27.560 --> 0:15:29.920 is a problem. But does it matter if the targets 0:15:30.000 --> 0:15:32.480 to home depots, the Gafts of the world continue to 0:15:32.560 --> 0:15:35.400 invest in their omnick channel infrastructure. As long as Amazon 0:15:35.520 --> 0:15:39.480 keeps expanding its product line, it's it's offerings. What it 0:15:39.640 --> 0:15:43.200 means is they're gonna shrink forever. What it means is 0:15:43.320 --> 0:15:47.840 Macy's has got to keep drinking. Right now, they're trying 0:15:47.880 --> 0:15:51.360 to monetize their real estate, shrinking those big, down down stores. 0:15:51.800 --> 0:15:54.880 They're doing what they gotta do aid to stay alive 0:15:54.960 --> 0:15:58.040 and raise capital and keep their stock price up and 0:15:58.280 --> 0:16:00.960 be to get enough money to keep investing in what 0:16:01.080 --> 0:16:04.000 they've got to do. That's what they're doing, and that's smart. 0:16:04.280 --> 0:16:06.680 All right. We've named checked Terry Longren, We've talked about 0:16:06.760 --> 0:16:11.720 Gary Freeman of Restoration Hardware. Who among the retail CEOs 0:16:11.840 --> 0:16:15.160 gets this, who's doing it right? Well? The best retailer 0:16:15.240 --> 0:16:19.880 is out there are I would say Costco In my opinion, 0:16:19.960 --> 0:16:23.880 Costco is the best because Costco has a formula that 0:16:24.000 --> 0:16:27.400 when you cut the role the BS, they really give 0:16:27.480 --> 0:16:31.400 the customer the best deal. And guess what, everybody knows 0:16:31.480 --> 0:16:36.360 that Aldi Food really gives the customer the best deal, 0:16:36.720 --> 0:16:39.640 not BS like Walmar that I'm in down and dude, 0:16:40.080 --> 0:16:43.880 they really not like what Bathom beyond. Here's a good bond. 0:16:43.960 --> 0:16:47.920 But yet the other guy. These are not specific to CEOs, right, 0:16:48.000 --> 0:16:50.560 This is a philosophy. This is a corporate philosophy of 0:16:50.640 --> 0:16:55.960 corporate strategy. So the CEOs. Look, when Senegal ran Costco, 0:16:56.040 --> 0:17:00.600 at least he was Sam Walten. I mean, I think 0:17:00.680 --> 0:17:03.520 these companies that are winning, I think Amazon has got 0:17:03.600 --> 0:17:08.159 the best CEO out there right now. I mean, I 0:17:08.359 --> 0:17:12.480 think this guy is a game changer, guy who's on 0:17:12.680 --> 0:17:15.760 a mission. He's all all he's done has changed the 0:17:16.160 --> 0:17:21.680 entire retailing at seventy economy. This guy's amazing mis bays 0:17:21.760 --> 0:17:26.960 those that's my opinion. Well, Tom, we were discussing earlier 0:17:27.040 --> 0:17:29.159 how you and I don't actually go into stores anymore. 0:17:29.200 --> 0:17:31.719 We just go and buy her online. Howard House luxury 0:17:31.800 --> 0:17:33.440 before we let you go off. They had a good season. 0:17:33.760 --> 0:17:36.840 A luxury is mixed, and that's because of what's going 0:17:36.880 --> 0:17:40.880 on with China and Russia when they've got an also 0:17:41.280 --> 0:17:45.640 vulnerability in the stock market tremendously affects them. Howard, thank 0:17:45.680 --> 0:17:47.639 you so much, greatly appreciate hard to it. And we 0:17:47.720 --> 0:17:50.400 need to shout out right now to Rebecca Minkoff who 0:17:50.520 --> 0:17:52.840 darkened the Door fashion Week. It was great to see her. 0:17:53.119 --> 0:17:56.440 She got up wicked early and was like heading out 0:17:56.480 --> 0:17:59.159 to like forty seven hours of runway stuff with her 0:17:59.200 --> 0:18:01.840 brother Jury, and you know, it's just like that American 0:18:01.920 --> 0:18:03.880 spirit of okay, what do we do now? Granted that's 0:18:03.880 --> 0:18:06.840 in luxury and Howard's looking at Scarlett. I thought it 0:18:06.960 --> 0:18:10.760 was fascinating on restoration hardware, and I said to somebody 0:18:10.760 --> 0:18:14.879 that you guy said, restoration hardware is so polarizing. People 0:18:14.920 --> 0:18:18.000 either addicted to it, hate it, or at least they 0:18:18.040 --> 0:18:20.240 know where it is. I mean just the catalog. Have 0:18:20.400 --> 0:18:22.760 you ever gotten at home the catalog? Well, yeah, I 0:18:22.800 --> 0:18:25.240 almost broke the mailbox and broke the mailbox and broke 0:18:25.280 --> 0:18:26.639 your wrist or one of them. And it's just a 0:18:26.720 --> 0:18:33.359 complete yeah it was, you know, and they're doing how 0:18:33.400 --> 0:18:35.600 are we going? A huge response from Mr Davidovitz is 0:18:35.640 --> 0:18:38.000 on and of course he uh I heard their real 0:18:38.119 --> 0:18:41.600 support for Mr Friedman U in uh coming to grips 0:18:41.640 --> 0:18:44.760 at Restoration Hardware with a path af Ford. We're looking 0:18:44.840 --> 0:18:46.720 at all sorts of things. We're gonna focus in the 0:18:46.840 --> 0:18:50.520 next half hour on U t X Honeywell. This has 0:18:50.560 --> 0:18:53.760 been tangential. I would say it's been like, yeah, they're big, 0:18:53.920 --> 0:18:56.960 and there's regulatory overlays and all that. But with this 0:18:57.200 --> 0:19:01.800 new headline, let's go to it right now. On the Bloomberg, 0:19:02.640 --> 0:19:06.720 the basic idea of Honeywell h seeking to quote re 0:19:06.960 --> 0:19:10.560 engage with ut X and a hundred eight dollars per share. 0:19:10.760 --> 0:19:13.520 That's because they have hell talks in the past kind 0:19:13.560 --> 0:19:16.120 of got in the way, and then there's some concerns 0:19:16.160 --> 0:19:19.000 from regulators as well, which kind of sty me the 0:19:19.040 --> 0:19:21.800 whole deal. In the end, yeah, and and we're gonna 0:19:21.840 --> 0:19:24.120 have some chat on this for you, some good conversation. 0:19:24.520 --> 0:19:27.840 Just to put it in perspective, I'm trying to do this. 0:19:28.480 --> 0:19:33.040 If you take a hundred and eight dollar valuation right 0:19:33.200 --> 0:19:37.240 now U t x uh over the last ten years 0:19:38.359 --> 0:19:41.159 is about a nine percent return. Eight point eight percent 0:19:41.280 --> 0:19:43.960 is where I would put that modeling in a hundred 0:19:44.000 --> 0:19:48.040 eight dollars per share. Uh. There it is UM a 0:19:48.080 --> 0:19:51.639 little more on this headline out as well, Standard Charter, 0:19:51.840 --> 0:19:54.879 the Challenge Emerging Market Bank their units. They may be 0:19:55.000 --> 0:19:59.080 cut by Standard and Pores. On this Friday, Scarlet Fou 0:19:59.520 --> 0:20:02.680 tom Key, Henrik Lunchrist is not with us. It's about 0:20:02.680 --> 0:20:07.119 Bloomberg Surveillance. The Bloomberg Ski Report is brought to you 0:20:07.200 --> 0:20:09.080 by land Rover. If it's in your nature to cast 0:20:09.119 --> 0:20:11.480 off the every day and seek adventure, the Discovery Sport 0:20:11.560 --> 0:20:14.040 was built to help your search. Visit land Rover trica 0:20:14.119 --> 0:20:16.400 dot com for special offers during the Owned the Adventure 0:20:16.440 --> 0:20:24.480 Sales event. Land Rover Above and Beyond broadcasting live to 0:20:24.640 --> 0:20:28.520 New York Cloomberg eleventh, LEO to Washington, d C Bloomberg 0:20:28.600 --> 0:20:32.560 ninety nine one to Boston Bloomberg twelve wonders to San Francisco, 0:20:32.720 --> 0:20:36.879 Bloomberg nine to the country, Serious XM Channel one ninety 0:20:37.080 --> 0:20:40.560 and around the globe the Bloomberg Radio plus Apend Bloomberg 0:20:40.600 --> 0:20:44.840 dot com. This is Bloomberg Surveillance. Good morning, Young Karen 0:20:44.920 --> 0:20:47.560 Moscow along with Tom Keen and Scarlet Foo and the 0:20:47.640 --> 0:20:50.639 opening bill brought to you by SEI Imagine. When asset 0:20:50.760 --> 0:20:55.240 management servicing is unconstrained by infrastructure, c s CIS Global 0:20:55.320 --> 0:20:58.399 Operating Platform can be your catalyst for a business expansion 0:20:58.680 --> 0:21:02.160 at se i c dot com slash imagine songs higher 0:21:02.200 --> 0:21:04.040 at the open the s and P five hundred up 0:21:04.080 --> 0:21:06.960 three ten percent or six points in nineteen fifty seven 0:21:07.280 --> 0:21:10.280 downtowns industrial average of three ten percent or forty three 0:21:10.320 --> 0:21:13.280 points to sixteen thousand, seven hundred fifty five and then 0:21:13.359 --> 0:21:15.879 as Deck up seven tenths percent or thirty two points 0:21:16.119 --> 0:21:19.960 to forty six fourteen tenure Treasury down fourteen thirty seconds, 0:21:20.040 --> 0:21:22.359 the yield one point seven six percent, the yield on 0:21:22.440 --> 0:21:25.080 a two year point seven six percent no i X 0:21:25.080 --> 0:21:27.200 screwed oil have three point nine percent or a dollar 0:21:27.240 --> 0:21:29.800 twenty nine to thirty four thirty six of barrel and 0:21:29.920 --> 0:21:32.240 comex s gold is down nine tenths percent or eleven 0:21:32.280 --> 0:21:35.600 dollars forty cents to twelve twenty seven thirty ounce the 0:21:35.680 --> 0:21:38.040 euro a dollar oh nine six eight and again one 0:21:38.160 --> 0:21:41.480 thirteen point five nine, Tom and Scarlett Karen, thanks so much, 0:21:41.600 --> 0:21:44.159 Peter Armant of stern Age. You will join us here 0:21:44.200 --> 0:21:47.920 in about ten minutes, fifteen minutes on Honeywell U t X, 0:21:48.040 --> 0:21:51.800 U t X up two points hundred point zero three 0:21:52.600 --> 0:21:54.920 on U t X and we've got a lot to 0:21:54.960 --> 0:21:57.239 say about that coming up on our next block. Right now. 0:21:57.640 --> 0:22:00.800 I love talking to Kevin get us. He's with UM 0:22:01.640 --> 0:22:04.760 with Morgan Keegan uh and and and a part of 0:22:04.920 --> 0:22:08.159 Raymond James. And it's about fixed income. And what I 0:22:08.200 --> 0:22:10.520 love Kevin, as you're in the trenches. What is the 0:22:10.640 --> 0:22:14.320 backstory right now to all of our audience that needs 0:22:14.400 --> 0:22:17.200 to find yield? What's the dumb thing you see going 0:22:17.280 --> 0:22:19.879 on right now? You know we are being is the 0:22:20.040 --> 0:22:22.479 rare that the bond marked the Bondarre likes to think 0:22:22.480 --> 0:22:25.280 of itself as a leader uh and uh and in 0:22:25.400 --> 0:22:29.280 both movement and prices, and and right now it is following. 0:22:29.400 --> 0:22:32.960 It's following oil prices like every other markets following oil prices. 0:22:33.040 --> 0:22:34.800 So we so we're kind of getting our cues from 0:22:34.840 --> 0:22:37.760 what happens overnight on oil prices to see how the 0:22:37.840 --> 0:22:41.280 equity market goes, because that's gonna determine where interest rates 0:22:41.320 --> 0:22:43.320 are headed. So where the interest rates go off, oil 0:22:43.400 --> 0:22:46.840 breaks down further lower. It's a it's a it's a 0:22:46.880 --> 0:22:49.760 pretty clean trade right now. We're seeing we're seeing interest 0:22:49.880 --> 0:22:52.760 rates go up when oil goes up overnight, and equity 0:22:52.840 --> 0:22:55.600 markets have good openings, a good beginnings, and as the 0:22:55.680 --> 0:22:59.960 day goes on, we're pretty reactionary to that. But the auctions, 0:23:00.000 --> 0:23:02.840 if you look at the auctions over the last five auctions, tremendous, 0:23:02.920 --> 0:23:06.760 tremendous interests globally interest uh in the treasury auctions because 0:23:06.840 --> 0:23:09.399 of a lack of inflation of FED that's now sitting 0:23:09.440 --> 0:23:13.080 on its hands and um and yields that on comparables 0:23:13.080 --> 0:23:17.439 against German bonds, against Japanese bonds, tremendous yield pick up 0:23:17.520 --> 0:23:19.800 and and that's where the money's flowing in. Kevin connect 0:23:19.840 --> 0:23:21.800 the dots for us for why oil is the leading 0:23:21.840 --> 0:23:24.879