1
00:00:05,120 --> 00:00:09,200
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

2
00:00:09,200 --> 00:00:13,200
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you

3
00:00:13,280 --> 00:00:18,600
Speaker 1: insight from the best and economics, finance, investment, and international relations.

4
00:00:18,960 --> 00:00:23,799
Speaker 1: Find Bloomberg Surveillance on Apple, podcast, SoundCloud, Bloomberg dot Com,

5
00:00:23,920 --> 00:00:31,680
Speaker 1: and of course, on the Bloomberg Terminal. Christian Mollery Glissman Banishing,

6
00:00:31,680 --> 00:00:35,600
Speaker 1: director of Poor Poor Portfolio Strategy at Goldman Sachs, and

7
00:00:35,680 --> 00:00:39,000
Speaker 1: Christian I want to start in Damien's specialty in the

8
00:00:39,040 --> 00:00:42,640
Speaker 1: developing world because overnight the lockdowns in Beijing, the first

9
00:00:42,720 --> 00:00:46,080
Speaker 1: lockdown in the capital of China, to me, is a

10
00:00:46,120 --> 00:00:50,120
Speaker 1: really significant story that changes potentially the narrative for next year.

11
00:00:50,400 --> 00:00:53,000
Speaker 1: How do you view that that story in light of

12
00:00:53,080 --> 00:00:57,279
Speaker 1: some of the optimism around China's reopening. Oh, you make

13
00:00:57,280 --> 00:00:59,040
Speaker 1: a great point. I think if you if you think

14
00:00:59,080 --> 00:01:02,840
Speaker 1: about like outlook for next year, um, like China was

15
00:01:02,880 --> 00:01:06,520
Speaker 1: one of those bright spots because there's a symmetry. The

16
00:01:06,560 --> 00:01:10,920
Speaker 1: economy is in its knees for clear reasons like asset

17
00:01:10,959 --> 00:01:14,840
Speaker 1: prices and in in in very bearish kind of territory.

18
00:01:14,920 --> 00:01:17,960
Speaker 1: So it felt like there is a story that's emerging

19
00:01:18,000 --> 00:01:20,640
Speaker 1: that can to some extent support next year and and

20
00:01:20,720 --> 00:01:24,760
Speaker 1: drive growth acceleration, drive that trough and economic activity. But

21
00:01:24,840 --> 00:01:26,679
Speaker 1: I think what we're learning, and I think what our

22
00:01:26,720 --> 00:01:29,000
Speaker 1: economists have been saying as well, it's going to be

23
00:01:29,040 --> 00:01:33,800
Speaker 1: incredibly bumpy. I think the end game is that China

24
00:01:33,880 --> 00:01:38,120
Speaker 1: will probably by second half of next year accelerate with

25
00:01:38,160 --> 00:01:41,080
Speaker 1: regards to growth, help by the reopening, but the path

26
00:01:41,200 --> 00:01:44,520
Speaker 1: to that could be incredibly bumpy. And the real reopening

27
00:01:44,560 --> 00:01:47,680
Speaker 1: we always thought what would occur kind of around Q two,

28
00:01:48,080 --> 00:01:50,480
Speaker 1: And as you see those cases go up, you could

29
00:01:50,520 --> 00:01:53,200
Speaker 1: say that, um, yeah, the risk is definitely that it's

30
00:01:53,200 --> 00:01:56,000
Speaker 1: being pushed further out. But Christian, how does this affect,

31
00:01:56,080 --> 00:01:58,840
Speaker 1: right the different parameters if it reopens, if it doesn't,

32
00:01:58,840 --> 00:02:02,320
Speaker 1: the bumpy nous that you see, is it bullish if

33
00:02:02,320 --> 00:02:05,920
Speaker 1: they reopen, if that means incredible demand suddenly coming online

34
00:02:06,120 --> 00:02:08,640
Speaker 1: for energy to their in for commodities generally at a

35
00:02:08,680 --> 00:02:11,160
Speaker 1: time when that's one of the main drivers of disinflation

36
00:02:11,280 --> 00:02:14,320
Speaker 1: right now, Yeah, and you you highlight one of the

37
00:02:14,320 --> 00:02:17,000
Speaker 1: big discon answers, like one of the big kind of

38
00:02:17,480 --> 00:02:20,320
Speaker 1: negative cycles there. I think right now, as you know,

39
00:02:20,360 --> 00:02:24,040
Speaker 1: oil prices have kind of come down significantly like curves

40
00:02:24,080 --> 00:02:26,560
Speaker 1: are in the front and a bit in contangle. So

41
00:02:26,600 --> 00:02:28,760
Speaker 1: I think you're dealing currently with the setup where there's

42
00:02:28,800 --> 00:02:31,320
Speaker 1: a bit of a buffer. But you're absolutely right there

43
00:02:31,400 --> 00:02:35,720
Speaker 1: is definitely a chance of a replay of headline inflation

44
00:02:36,280 --> 00:02:40,040
Speaker 1: volatility next year, which then feeds a bit into rates

45
00:02:40,360 --> 00:02:43,760
Speaker 1: and and and and to some extent kind of can

46
00:02:43,880 --> 00:02:47,120
Speaker 1: drive also spill over us too risky assets. But I

47
00:02:47,160 --> 00:02:50,280
Speaker 1: think at this juncture, this full reopening, as I mentioned,

48
00:02:50,360 --> 00:02:52,960
Speaker 1: is to us more of an Age two story. I

49
00:02:53,000 --> 00:02:55,360
Speaker 1: think in the near term it seems to be more

50
00:02:55,360 --> 00:02:58,000
Speaker 1: of a dragon oil than anything, but it does highlight

51
00:02:58,080 --> 00:03:01,760
Speaker 1: something which you mentioned. I think to me, risk premium

52
00:03:02,200 --> 00:03:05,560
Speaker 1: um in the last month have significantly come down across

53
00:03:05,600 --> 00:03:09,880
Speaker 1: the board on China assets, but also on global cyclic classets,

54
00:03:09,919 --> 00:03:14,120
Speaker 1: on China exposed companies in Europe, and it just feels

55
00:03:14,160 --> 00:03:17,520
Speaker 1: like there's not that many good growth stories to go on.

56
00:03:17,760 --> 00:03:21,160
Speaker 1: The market has embraced it very quickly. Partially that has

57
00:03:21,200 --> 00:03:24,040
Speaker 1: contributed to a bit of a false start in in

58
00:03:24,160 --> 00:03:27,080
Speaker 1: kind of relief on on the growth side, and it

59
00:03:27,120 --> 00:03:30,320
Speaker 1: could very quickly reverse to some extent if if if

60
00:03:30,320 --> 00:03:32,520
Speaker 1: that doesn't prove to be the case, well, let's just

61
00:03:32,560 --> 00:03:34,400
Speaker 1: crystallize that. I mean a bit of relief. I mean

62
00:03:34,400 --> 00:03:38,000
Speaker 1: we saw increase in the HANK saying China Enterprises Index

63
00:03:38,040 --> 00:03:41,840
Speaker 1: in October, but we're still down year today. Talked to me,

64
00:03:42,160 --> 00:03:44,600
Speaker 1: I think investors are realizing myself included that you just

65
00:03:44,640 --> 00:03:48,120
Speaker 1: can't have zero exposure to emerging markets in China. Right,

66
00:03:48,160 --> 00:03:51,400
Speaker 1: So my question for you is, you know, what is

67
00:03:51,400 --> 00:03:53,160
Speaker 1: the best way to get that China exposure? What is

68
00:03:53,200 --> 00:03:57,120
Speaker 1: the best way to play the reopening narrative in China.

69
00:03:57,600 --> 00:04:00,280
Speaker 1: You make a great point because it's it's been really

70
00:04:00,320 --> 00:04:04,640
Speaker 1: difficult for international investors from a strategic point of view

71
00:04:05,120 --> 00:04:07,960
Speaker 1: um to to to get excited about China. And and

72
00:04:08,000 --> 00:04:13,080
Speaker 1: there's a concern with regards to how investors will benefit

73
00:04:13,240 --> 00:04:16,400
Speaker 1: from from China economic growth in the coming years. There's

74
00:04:16,440 --> 00:04:20,600
Speaker 1: been a concern with regards to obviously zero covid um

75
00:04:20,720 --> 00:04:23,560
Speaker 1: and and at the same time you have this reopening story.

76
00:04:23,839 --> 00:04:27,480
Speaker 1: The reopening story, if you follow the kind of template

77
00:04:27,480 --> 00:04:31,839
Speaker 1: from developed markets, should be very good for domestic consumer ciglicals,

78
00:04:31,839 --> 00:04:35,599
Speaker 1: services sectors, and and it's not easy to get exposure

79
00:04:35,640 --> 00:04:39,839
Speaker 1: to that via the headline indices. Our team generally have

80
00:04:40,080 --> 00:04:43,800
Speaker 1: become quite a bit more constructive the whole North Asia complex,

81
00:04:44,080 --> 00:04:46,800
Speaker 1: which they think will be pulled along. So you can

82
00:04:46,839 --> 00:04:51,080
Speaker 1: diversify to some extent just being in China with maybe

83
00:04:51,120 --> 00:04:53,960
Speaker 1: being a bit more in Korea, being a bit more

84
00:04:54,000 --> 00:04:56,680
Speaker 1: on Taiwan. Um. But but in the end, if you

85
00:04:56,760 --> 00:05:01,400
Speaker 1: really wanna kind of go directly exposed to the reopening,

86
00:05:01,400 --> 00:05:04,400
Speaker 1: you need to go potentially much more on specific sector

87
00:05:04,560 --> 00:05:07,760
Speaker 1: specific stocks, and it becomes much more of an alpha theme.

88
00:05:07,800 --> 00:05:10,640
Speaker 1: So all strategy team they've created a basket for that,

89
00:05:11,040 --> 00:05:13,440
Speaker 1: which clearly for a lot of the acid allocates. I

90
00:05:13,440 --> 00:05:17,640
Speaker 1: speak to um that that becomes too specific Christian AKA

91
00:05:17,680 --> 00:05:19,560
Speaker 1: talk South Korean Taiwan with you all day. But let's

92
00:05:19,600 --> 00:05:21,680
Speaker 1: shift back to the US here for a minute. I mean, look,

93
00:05:21,720 --> 00:05:24,120
Speaker 1: there's been a lot of talk no recession, shallow recession.

94
00:05:24,120 --> 00:05:26,000
Speaker 1: I think markets are pretty much coming to terms of

95
00:05:26,000 --> 00:05:28,200
Speaker 1: the fact that growth will indeed be slower next year

96
00:05:28,240 --> 00:05:30,960
Speaker 1: in the US. Meanwhile, you know, inflation, while it is

97
00:05:31,000 --> 00:05:33,800
Speaker 1: expected to come off, it's going to be above pre

98
00:05:33,880 --> 00:05:36,159
Speaker 1: COVID levels I think for some time. So in a

99
00:05:36,160 --> 00:05:38,680
Speaker 1: world of slower growth and inflation, you know kind of

100
00:05:38,720 --> 00:05:41,560
Speaker 1: remaining elevated, you know what fixed in commassive classes, our

101
00:05:41,560 --> 00:05:45,680
Speaker 1: best position outperform. Yeah. I mean, especially after what I

102
00:05:45,760 --> 00:05:49,000
Speaker 1: mentioned this, this risk premium contraction, I mean, you've seen

103
00:05:49,000 --> 00:05:54,840
Speaker 1: a remarkable tightening and credit spreads even down in quality. UM,

104
00:05:54,880 --> 00:05:56,600
Speaker 1: it just tells me that you need to be up

105
00:05:56,600 --> 00:05:59,280
Speaker 1: in quality into next year. I think generally we feel

106
00:05:59,320 --> 00:06:02,440
Speaker 1: that next year you you know you you you spoke

107
00:06:02,440 --> 00:06:04,640
Speaker 1: about this earlier. This year, a lot of the fear

108
00:06:04,800 --> 00:06:08,359
Speaker 1: was about peak hawcusionness and very high rates volatility. And

109
00:06:08,400 --> 00:06:10,760
Speaker 1: I think next year will be more about growth volatility.

110
00:06:10,880 --> 00:06:14,280
Speaker 1: I think rates volatility will will will normalize just by

111
00:06:14,320 --> 00:06:18,840
Speaker 1: extension of central banks slowing the pace of hiking and

112
00:06:18,839 --> 00:06:21,560
Speaker 1: and and that just means that UM, you're shifting a

113
00:06:21,600 --> 00:06:24,840
Speaker 1: bit towards solvency risk, and you're shifting towards strength of

114
00:06:24,920 --> 00:06:28,200
Speaker 1: balance sheet UM. And this year, as you know, UM,

115
00:06:28,520 --> 00:06:30,480
Speaker 1: you have had very little cash flow risk, very little

116
00:06:30,480 --> 00:06:33,080
Speaker 1: cash flow shops and and next year you would probably

117
00:06:33,080 --> 00:06:35,520
Speaker 1: see more of those which needs. At this juncture with

118
00:06:35,560 --> 00:06:38,280
Speaker 1: the type of risk premier, you're getting to move up

119
00:06:38,320 --> 00:06:41,360
Speaker 1: the risk curve. We feel up in quality investment create

120
00:06:41,440 --> 00:06:43,920
Speaker 1: credit is where we would be UM, and and there's

121
00:06:43,960 --> 00:06:47,040
Speaker 1: opportunities there to to kind of harvest more attractive year

122
00:06:47,080 --> 00:06:50,800
Speaker 1: to volatility ratios. So, for example, mortgage backed securities that

123
00:06:50,920 --> 00:06:54,360
Speaker 1: benefit a lot from a decline in rates volatility is

124
00:06:54,400 --> 00:06:57,039
Speaker 1: a relatively low risk asset. So we'd rather be in

125
00:06:57,080 --> 00:07:00,480
Speaker 1: these places until we get a bit more read in

126
00:07:00,560 --> 00:07:02,680
Speaker 1: risk premium, which we expect could be in the Q

127
00:07:02,839 --> 00:07:06,120
Speaker 1: one next year rebuild in risk premium. It's such a

128
00:07:06,200 --> 00:07:08,760
Speaker 1: nice way of say saying, hi, old bonds selling off.

129
00:07:08,800 --> 00:07:11,280
Speaker 1: Christian Maller, Glisbon and Gilman Sachs, thank you so much

130
00:07:11,480 --> 00:07:23,600
Speaker 1: for being with us. Joining us now is somebody who

131
00:07:23,600 --> 00:07:24,920
Speaker 1: thought that it was going to be a great day,

132
00:07:25,560 --> 00:07:27,600
Speaker 1: you know, I might as well join them because it's

133
00:07:27,600 --> 00:07:30,040
Speaker 1: going to be so great here, And instead he's se

134
00:07:30,120 --> 00:07:32,960
Speaker 1: question in a corner because it's so bright in his rooms.

135
00:07:33,080 --> 00:07:35,440
Speaker 1: Chief effect strategists to see at a general thank you

136
00:07:35,480 --> 00:07:37,559
Speaker 1: so much for being with us. Kid, you talk about

137
00:07:37,840 --> 00:07:39,480
Speaker 1: that it's not a black Friday so much as a

138
00:07:39,520 --> 00:07:44,560
Speaker 1: gray one, not perhaps in your room, but generally how so, well,

139
00:07:44,600 --> 00:07:46,480
Speaker 1: it's a day when you know, I'm not sure there's

140
00:07:46,480 --> 00:07:48,720
Speaker 1: that much optimism around in the global economy this morning,

141
00:07:48,760 --> 00:07:51,160
Speaker 1: and I'm not sure that there's um, you know, much

142
00:07:51,160 --> 00:07:53,920
Speaker 1: going on, but but it is this sense of, you know,

143
00:07:53,960 --> 00:07:57,000
Speaker 1: even in the US, slowing economy across Europe, and it's

144
00:07:57,400 --> 00:07:58,920
Speaker 1: you know, how do you go running out on all

145
00:07:58,920 --> 00:08:01,920
Speaker 1: these cheap crisis to buy things when you're worried about

146
00:08:02,040 --> 00:08:05,680
Speaker 1: energy costs, worried about mortgage payments and so on. So

147
00:08:06,080 --> 00:08:09,200
Speaker 1: you know, the global economy is clearly slowing. And that's

148
00:08:09,240 --> 00:08:12,240
Speaker 1: the backdrop that the shocker. You mentioned it, but it's

149
00:08:12,280 --> 00:08:16,800
Speaker 1: how much yields have fallen, how much the market is

150
00:08:16,840 --> 00:08:21,119
Speaker 1: priced back FED expectations since j. Powell gave that press

151
00:08:21,160 --> 00:08:23,400
Speaker 1: conference and told us that rates had to be higher

152
00:08:23,440 --> 00:08:26,400
Speaker 1: for longer than the market was pricing just then, you know,

153
00:08:26,560 --> 00:08:30,080
Speaker 1: so we are we are just definitely giving the birth

154
00:08:30,120 --> 00:08:33,040
Speaker 1: to a central bank collectively because we didn't global economy

155
00:08:33,120 --> 00:08:36,440
Speaker 1: sign well. But this is really confusing, especially because in

156
00:08:36,480 --> 00:08:40,520
Speaker 1: those meeting minutes, essentially FED officials said that they expect

157
00:08:40,600 --> 00:08:43,839
Speaker 1: recession as almost as likely as their base case. This

158
00:08:43,880 --> 00:08:47,520
Speaker 1: is as close to capitulation from a central bank that yes,

159
00:08:47,600 --> 00:08:49,640
Speaker 1: there is going to be a downturn, and yes we

160
00:08:49,679 --> 00:08:52,920
Speaker 1: are going to keep rates high in order to curtail inflation,

161
00:08:52,960 --> 00:08:55,200
Speaker 1: even if that does become the base case. Do you

162
00:08:55,200 --> 00:08:58,800
Speaker 1: think that hasn't got enough attention. Um, I think it

163
00:08:58,800 --> 00:09:01,160
Speaker 1: gets attention. I think he's the difficulty with this cycle,

164
00:09:01,200 --> 00:09:04,280
Speaker 1: and it's probably true pretty much everywhere, is that in

165
00:09:04,640 --> 00:09:09,000
Speaker 1: most major economies were going into a downturn at full employment,

166
00:09:09,360 --> 00:09:11,800
Speaker 1: and um, you know, I if the last, if the

167
00:09:11,880 --> 00:09:14,400
Speaker 1: last big recession was, this time is different. This is

168
00:09:14,480 --> 00:09:18,439
Speaker 1: different all over again. Differently, I can't remember a time

169
00:09:18,720 --> 00:09:22,680
Speaker 1: when you have full employment into slowdowns and probably through

170
00:09:22,760 --> 00:09:25,880
Speaker 1: quite a long time, so that the battle is between

171
00:09:25,920 --> 00:09:29,560
Speaker 1: central bankers and how much they think they need to

172
00:09:29,679 --> 00:09:33,760
Speaker 1: tighten and for how long to cool labor market at

173
00:09:33,800 --> 00:09:37,640
Speaker 1: the same time as they can see economies weakening significantly.

174
00:09:37,840 --> 00:09:39,920
Speaker 1: Different sides of the Atlantic you have a slightly different

175
00:09:39,960 --> 00:09:41,400
Speaker 1: take on it. But I think I think that's the

176
00:09:41,640 --> 00:09:44,199
Speaker 1: that's the piece. The central bankers are looking at slower

177
00:09:44,240 --> 00:09:45,920
Speaker 1: at slower data and things, but they're looking at the

178
00:09:45,960 --> 00:09:49,160
Speaker 1: labor market and thinking, how do I really get to

179
00:09:49,240 --> 00:09:54,480
Speaker 1: grips with inflation without getting a higher unemployment rate. You know,

180
00:09:54,520 --> 00:09:57,000
Speaker 1: it's a sleepy Friday here in November, and for me,

181
00:09:57,360 --> 00:09:58,760
Speaker 1: you know, it's not always been that way. If you

182
00:09:58,760 --> 00:10:01,360
Speaker 1: think about the year intern if thinking about cross currency

183
00:10:01,400 --> 00:10:04,920
Speaker 1: basis swamp spreads. They've really behaved rather well given all

184
00:10:04,960 --> 00:10:06,839
Speaker 1: of the tightening and the liquidity pressure we would have

185
00:10:06,880 --> 00:10:09,000
Speaker 1: expected to see into your end. Are you surprised by

186
00:10:09,000 --> 00:10:12,040
Speaker 1: any of this? Um, Well, they were behaving so badly

187
00:10:12,120 --> 00:10:15,600
Speaker 1: six weeks ago that everyone got themselves into a into

188
00:10:15,600 --> 00:10:17,760
Speaker 1: a state about them. And I think and I think

189
00:10:17,760 --> 00:10:20,280
Speaker 1: people started dealing with it very early, so we had

190
00:10:20,280 --> 00:10:22,520
Speaker 1: a we had a longer lead through. I still worry

191
00:10:22,520 --> 00:10:24,640
Speaker 1: that they'll come back in the last week of December

192
00:10:24,679 --> 00:10:27,240
Speaker 1: and ruin my life. But that's just that's what we're

193
00:10:27,240 --> 00:10:28,840
Speaker 1: paid to do, is to worry about things like that.

194
00:10:28,880 --> 00:10:30,800
Speaker 1: But you know, I think that what we make that

195
00:10:30,840 --> 00:10:33,400
Speaker 1: there's a possibility that I mean, particularly in the foreign

196
00:10:33,440 --> 00:10:36,160
Speaker 1: exchange market that you know, from the war in the Ukraine,

197
00:10:36,160 --> 00:10:39,160
Speaker 1: the FED hiking first, the energy crisis, the fact that

198
00:10:39,200 --> 00:10:42,160
Speaker 1: the US benefits from terms of trade as the world's

199
00:10:42,160 --> 00:10:45,080
Speaker 1: second biggest energy producer, never had that before and in

200
00:10:45,120 --> 00:10:49,079
Speaker 1: an energy crisis in modern times. That that all all

201
00:10:49,160 --> 00:10:51,880
Speaker 1: my clients of of you know, written the dollar rally

202
00:10:51,960 --> 00:10:55,400
Speaker 1: for months and months and by and large that they

203
00:10:55,440 --> 00:10:58,240
Speaker 1: you know, let's close up the turn, let's shut everything down,

204
00:10:58,360 --> 00:11:02,320
Speaker 1: let's quieten down, and um and start getting ready for Christmas. Okay,

205
00:11:02,360 --> 00:11:05,719
Speaker 1: we're also seeing tentative signs of investors re engaging with

206
00:11:05,920 --> 00:11:08,440
Speaker 1: non dollar asset classes here as we approach your end.

207
00:11:08,440 --> 00:11:10,640
Speaker 1: So I'm just gonna ask the elephant in the room,

208
00:11:10,640 --> 00:11:14,079
Speaker 1: has the dollar peaked? It's ppeaking? I think it's for

209
00:11:14,320 --> 00:11:16,240
Speaker 1: one of the description it's not a matter Horn peak,

210
00:11:16,280 --> 00:11:18,640
Speaker 1: but a Dolomite speak if that works for Americans. But

211
00:11:18,720 --> 00:11:20,920
Speaker 1: it's it's going to be a series of jagged peaks

212
00:11:20,960 --> 00:11:24,200
Speaker 1: because you know, the other elephants in the room, the

213
00:11:24,240 --> 00:11:27,160
Speaker 1: crisis in Ukraine. Can you know we're all down playing

214
00:11:27,440 --> 00:11:29,760
Speaker 1: the tail risk from that. It can come back in

215
00:11:29,800 --> 00:11:32,480
Speaker 1: a flash, you know. So we we've got we've got

216
00:11:32,480 --> 00:11:34,720
Speaker 1: things we can get concerned about. Clearly, if things are escalating,

217
00:11:34,720 --> 00:11:36,440
Speaker 1: you know, things things get worse in China, that can

218
00:11:36,480 --> 00:11:39,360
Speaker 1: make us worried. But but yes, I look, the dollar

219
00:11:39,520 --> 00:11:42,600
Speaker 1: is going to be significantly weaker by the end of

220
00:11:42,679 --> 00:11:45,240
Speaker 1: next year. We may see I think there's a real

221
00:11:45,320 --> 00:11:47,199
Speaker 1: chance that we may see the dollar quite a lot

222
00:11:47,240 --> 00:11:49,840
Speaker 1: weaker by the end of this year and then stronger

223
00:11:49,880 --> 00:11:53,600
Speaker 1: in January. Just to blow up every outlook piece of anybody, right,

224
00:11:54,840 --> 00:11:58,000
Speaker 1: just because positions come off Kit I'm glad that you

225
00:11:58,040 --> 00:12:00,679
Speaker 1: talked about positioning. And I've to say, when I was

226
00:12:00,720 --> 00:12:03,040
Speaker 1: reading your note, I felt like it was pretty gloomy,

227
00:12:03,080 --> 00:12:05,000
Speaker 1: and I thought, you know, okay, I wonder what your

228
00:12:05,000 --> 00:12:07,600
Speaker 1: pushback is. I get accused of being gloomy all the time.

229
00:12:08,000 --> 00:12:10,760
Speaker 1: How much do you buy into this argument that there's

230
00:12:10,760 --> 00:12:13,640
Speaker 1: already so much gloom that there's no room to be gloomier,

231
00:12:13,800 --> 00:12:15,880
Speaker 1: that stocks have to rally, that the dollar has to

232
00:12:15,920 --> 00:12:18,840
Speaker 1: weaken just because people have already baked in all of

233
00:12:18,880 --> 00:12:23,040
Speaker 1: the bare cases that could potentially happen. I hear that

234
00:12:23,160 --> 00:12:26,400
Speaker 1: from from our equity people and our credit people, And

235
00:12:26,520 --> 00:12:30,480
Speaker 1: for example, you know, in the season of outlooks, if

236
00:12:30,679 --> 00:12:32,760
Speaker 1: the first one I saw from anybody said, you know,

237
00:12:33,000 --> 00:12:35,440
Speaker 1: the next year is the year of yield, which sounds

238
00:12:35,440 --> 00:12:37,240
Speaker 1: pretty gloomy. If before you're supposed to do is to

239
00:12:37,280 --> 00:12:39,480
Speaker 1: buy bonds um the next you know that the view

240
00:12:39,480 --> 00:12:42,000
Speaker 1: that we would have is is that credit spreads look

241
00:12:42,040 --> 00:12:45,599
Speaker 1: as if that that better able to cope with the

242
00:12:45,679 --> 00:12:48,280
Speaker 1: kind of downturn we will get them than equities in

243
00:12:48,320 --> 00:12:50,920
Speaker 1: some ways, but that the equity problem is maybe more

244
00:12:50,920 --> 00:12:54,040
Speaker 1: in small companies than big ones, which small ones which

245
00:12:54,080 --> 00:12:56,640
Speaker 1: can't cope with the volatility we've had in sort of

246
00:12:56,679 --> 00:12:59,240
Speaker 1: events that affect them. But yeah, I think there's a

247
00:12:59,240 --> 00:13:01,920
Speaker 1: lot of there's a lot of negativity for for the

248
00:13:01,960 --> 00:13:04,360
Speaker 1: way that this will let play up priced in. I

249
00:13:04,400 --> 00:13:07,040
Speaker 1: think in the foreign exchange market. Part of it is

250
00:13:07,320 --> 00:13:09,240
Speaker 1: that I have you it slightly differently when when people

251
00:13:09,280 --> 00:13:11,440
Speaker 1: start looking at a soft landing and they say, you know,

252
00:13:11,440 --> 00:13:13,600
Speaker 1: growth's gonna slow, We're going to manage soft landings, that

253
00:13:13,640 --> 00:13:16,199
Speaker 1: seems likely the Fed's done soon they sell the dollar

254
00:13:16,320 --> 00:13:18,880
Speaker 1: because we get to the the the ideal point of

255
00:13:18,920 --> 00:13:22,200
Speaker 1: the smile, where ECB still raising rates, the Feds, the

256
00:13:22,240 --> 00:13:24,199
Speaker 1: Fed stop, where it's all priced in and so on.

257
00:13:24,720 --> 00:13:27,199
Speaker 1: I I still worry that the bigger problem could be

258
00:13:27,280 --> 00:13:29,360
Speaker 1: later now we we don't think we're really going to

259
00:13:29,360 --> 00:13:32,720
Speaker 1: get a recession in the United States. Four. The danger

260
00:13:32,840 --> 00:13:36,560
Speaker 1: with this labor market and with the Fed hiking the

261
00:13:36,600 --> 00:13:39,319
Speaker 1: way they've been is is that if the labor market

262
00:13:39,360 --> 00:13:41,880
Speaker 1: is so tight and going into a recession, that the

263
00:13:42,000 --> 00:13:44,960
Speaker 1: hammer that you need to break them nup of inflation

264
00:13:45,360 --> 00:13:48,480
Speaker 1: might have to be hit really hard. Um and you

265
00:13:48,559 --> 00:13:52,480
Speaker 1: may get later harder landings rather than earlier softer ones.

266
00:13:52,760 --> 00:13:56,120
Speaker 1: But kind of so it may well be that you

267
00:13:56,160 --> 00:13:57,920
Speaker 1: get you know, equities do reasonably well in the first

268
00:13:57,920 --> 00:13:59,720
Speaker 1: half of next year, and then we have to rethink it.

269
00:13:59,800 --> 00:14:04,120
Speaker 1: But uh yeah, for now that everybody, everybody is believing

270
00:14:04,200 --> 00:14:07,600
Speaker 1: that you can soft land the global economy despite this

271
00:14:08,120 --> 00:14:12,640
Speaker 1: unique combination of zero unemployment. At the beginning of our session,

272
00:14:14,080 --> 00:14:16,839
Speaker 1: Cecia General, thank you so much for joining us, kid.

273
00:14:16,840 --> 00:14:19,640
Speaker 1: I hope you enjoy the beautiful sunshine outside despite the

274
00:14:19,800 --> 00:14:26,600
Speaker 1: gloom of what we're talking about. Claudia Sam, founder of

275
00:14:26,600 --> 00:14:29,120
Speaker 1: Some consulting and former Fetterers or of Economist Claudia, thank

276
00:14:29,160 --> 00:14:30,840
Speaker 1: you so much for being with us on this post

277
00:14:30,920 --> 00:14:34,280
Speaker 1: Thanksgiving Friday. How much are you looking to this holiday

278
00:14:34,320 --> 00:14:39,560
Speaker 1: shopping season as a gauge of consumer spending. I'm really optimistic.

279
00:14:39,840 --> 00:14:43,000
Speaker 1: Consumers have delivered this year. We have had a very

280
00:14:43,040 --> 00:14:46,840
Speaker 1: steady pace in terms of overall spending, and the labor

281
00:14:46,880 --> 00:14:49,880
Speaker 1: market is great. I worked at the FED over a

282
00:14:49,920 --> 00:14:54,880
Speaker 1: decade focusing on consumer spending, our forecast, our analysis. People

283
00:14:54,920 --> 00:14:59,640
Speaker 1: when they have income, they spend it. Americans have income

284
00:14:59,800 --> 00:15:02,440
Speaker 1: these jobs. It's true some of the spending now is

285
00:15:02,480 --> 00:15:04,400
Speaker 1: going to be at the higher end, but you know what,

286
00:15:04,560 --> 00:15:07,080
Speaker 1: those people that work at Macy's. They need to keep

287
00:15:07,120 --> 00:15:10,320
Speaker 1: their paychecks, They need people to come in and spend.

288
00:15:10,920 --> 00:15:15,760
Speaker 1: I we have everything for another good holiday season, even

289
00:15:15,880 --> 00:15:19,440
Speaker 1: after inflation adjusted. So I I see a really good

290
00:15:19,480 --> 00:15:22,280
Speaker 1: path forward. And honestly, I'm not too worried about some

291
00:15:22,400 --> 00:15:25,640
Speaker 1: of these businesses, the big businesses taking a little bit

292
00:15:25,720 --> 00:15:28,400
Speaker 1: less in profit. I've been doing pretty well. But you've

293
00:15:28,400 --> 00:15:31,080
Speaker 1: got a little big picture here. But Claudia, on the

294
00:15:31,080 --> 00:15:33,880
Speaker 1: flip side, you could say that that resilience that's spending

295
00:15:34,080 --> 00:15:36,640
Speaker 1: is exactly what's causing a problem for the Federal Reserve,

296
00:15:36,760 --> 00:15:39,320
Speaker 1: because it's the reason there's still momentum, the reason that

297
00:15:39,360 --> 00:15:42,880
Speaker 1: inflation can last longer than many of the lower income

298
00:15:42,920 --> 00:15:45,640
Speaker 1: families can stand it. How does this really cohere with

299
00:15:45,680 --> 00:15:48,560
Speaker 1: this idea that the Fed should be somewhat careful rather

300
00:15:48,600 --> 00:15:51,800
Speaker 1: than just keep going with a sledgehammer. The Fed needs

301
00:15:51,800 --> 00:15:54,720
Speaker 1: to back off. It is absolutely clear, and it's become

302
00:15:54,800 --> 00:15:58,000
Speaker 1: clear over time. A lot of that inflation is coming

303
00:15:58,000 --> 00:16:03,640
Speaker 1: from disruptions on the supply side, disruptions from COVID, disruptions

304
00:16:03,640 --> 00:16:06,400
Speaker 1: from the war in Ukraine. We have seen a lot

305
00:16:06,480 --> 00:16:10,040
Speaker 1: of encouraging signs even in the last consumer price index

306
00:16:10,440 --> 00:16:13,520
Speaker 1: numbers that things are turning over. We're seeing things work

307
00:16:13,600 --> 00:16:16,840
Speaker 1: themselves out. Yeah, it's gonna take time to show up

308
00:16:16,840 --> 00:16:20,840
Speaker 1: in consumer prices. For whatever reason, the Fed has decided

309
00:16:20,880 --> 00:16:22,920
Speaker 1: they've got to see it there, even though we see

310
00:16:22,920 --> 00:16:27,480
Speaker 1: it in producer prices, import prices, rents are turning over

311
00:16:27,680 --> 00:16:30,240
Speaker 1: like we have all the signs that relief is coming

312
00:16:30,600 --> 00:16:33,400
Speaker 1: to consumers, and as the ft does too much, they're

313
00:16:33,400 --> 00:16:37,840
Speaker 1: gonna undo that relief and and overdo it. Claudia, the

314
00:16:37,880 --> 00:16:41,080
Speaker 1: sumerule has been It's why they regarded indicator of recession.

315
00:16:41,120 --> 00:16:43,400
Speaker 1: You know that you created it. Um On. My colleagues

316
00:16:43,440 --> 00:16:47,560
Speaker 1: at Bloomberg Intelligence are calling for probability of a recession

317
00:16:47,600 --> 00:16:49,400
Speaker 1: in the US over the next twelve months. What are

318
00:16:49,400 --> 00:16:54,000
Speaker 1: your thoughts on that? So respectfully, I disagree with them,

319
00:16:54,480 --> 00:16:57,200
Speaker 1: and and frankly, as the data are coming in, particularly

320
00:16:57,240 --> 00:17:00,560
Speaker 1: on the inflation side, I am more and more courage

321
00:17:01,000 --> 00:17:05,600
Speaker 1: that we could skirt the re session. I think if

322
00:17:05,640 --> 00:17:08,320
Speaker 1: we see one, it's almost absolutely going to be of

323
00:17:08,400 --> 00:17:11,720
Speaker 1: a mild variety. At he's given what we know right now,

324
00:17:11,920 --> 00:17:14,040
Speaker 1: right know, they're bad things could happen, and that forecast

325
00:17:14,080 --> 00:17:16,800
Speaker 1: could change. But we have again, there's a lot of

326
00:17:16,920 --> 00:17:20,800
Speaker 1: encouraging signs the labor market is good. You don't. The

327
00:17:20,840 --> 00:17:24,159
Speaker 1: sound role is based on the unemployment rate rising, and

328
00:17:24,760 --> 00:17:28,560
Speaker 1: it's really not. Things look really good in the labor market.

329
00:17:29,359 --> 00:17:32,520
Speaker 1: You know, we're getting back to a more normal, sustainable pace.

330
00:17:33,640 --> 00:17:36,000
Speaker 1: So I don't. I don't see it, and less and

331
00:17:36,080 --> 00:17:38,680
Speaker 1: less I'm seeing it. But you know, I have been

332
00:17:38,720 --> 00:17:42,680
Speaker 1: wrong multiple times, as economy is upside down and backwards,

333
00:17:42,720 --> 00:17:44,919
Speaker 1: and we keep having really bad luck in terms of

334
00:17:44,960 --> 00:17:47,239
Speaker 1: bad things happening in the world. You know, Claudie, you've

335
00:17:47,240 --> 00:17:50,480
Speaker 1: also written extensively on FED activity during periods of wartime,

336
00:17:50,720 --> 00:17:52,840
Speaker 1: right and historically what we've seen, like in World War Two,

337
00:17:52,880 --> 00:17:55,360
Speaker 1: for example, you saw you know, um, you know, basically

338
00:17:55,400 --> 00:17:57,919
Speaker 1: the FED not you know, hiking rates, as aggressively providing

339
00:17:57,920 --> 00:17:59,960
Speaker 1: income support and the like. You know, we just saw,

340
00:18:00,200 --> 00:18:02,960
Speaker 1: you know, roughly seventy the parity key have knocked out

341
00:18:02,960 --> 00:18:05,760
Speaker 1: in Ukraine yesterday. We know the difficulties that are going

342
00:18:05,800 --> 00:18:07,840
Speaker 1: on on the ground there. What should the FED be doing,

343
00:18:07,880 --> 00:18:09,879
Speaker 1: Should they be paying attention and how how should they

344
00:18:09,920 --> 00:18:14,479
Speaker 1: be handling that? Congress should be stepping in and the

345
00:18:14,480 --> 00:18:17,119
Speaker 1: funder Reserve is following their mandate, that's what they have

346
00:18:17,240 --> 00:18:19,560
Speaker 1: to do. They're going to follow the letter of the

347
00:18:19,640 --> 00:18:22,520
Speaker 1: law here in wartime. You can look back to World

348
00:18:22,560 --> 00:18:26,320
Speaker 1: War Two. That was a time when the FED worked

349
00:18:26,560 --> 00:18:30,560
Speaker 1: closely with the Congress and Treasury told them, you are

350
00:18:30,680 --> 00:18:33,920
Speaker 1: going to keep interest rates load, so financing the war

351
00:18:34,119 --> 00:18:37,199
Speaker 1: doesn't cost American taxpayers even more than it has to.

352
00:18:38,440 --> 00:18:41,159
Speaker 1: The independence of the FED is not God given, it

353
00:18:41,280 --> 00:18:44,119
Speaker 1: is Congress given. Now that's a big step forward. And

354
00:18:44,160 --> 00:18:46,479
Speaker 1: I know, even talking about it is like wow. If

355
00:18:46,480 --> 00:18:50,399
Speaker 1: Fed economists is talking about, you know, putting independence temporarily

356
00:18:50,400 --> 00:18:53,560
Speaker 1: on the side, I just I don't get it. I

357
00:18:53,840 --> 00:18:56,120
Speaker 1: don't get why the Federal Reserve is pushing so hard,

358
00:18:56,160 --> 00:18:59,000
Speaker 1: and I certainly don't understand European Central Bank and the

359
00:18:59,040 --> 00:19:01,640
Speaker 1: Bank of England. But this is making a very bad

360
00:19:01,680 --> 00:19:05,320
Speaker 1: situation in Europe worse. Claudia Sam, thank you so much

361
00:19:05,359 --> 00:19:07,919
Speaker 1: for being with us. Claudia Sam of some consulting and

362
00:19:07,960 --> 00:19:21,520
Speaker 1: former Federaliser of Economists. Well, let's see what's going on.

363
00:19:21,560 --> 00:19:24,440
Speaker 1: As we tried to go on the ground and Joe

364
00:19:24,480 --> 00:19:27,600
Speaker 1: Feldman in his car going from store to store, senior

365
00:19:27,600 --> 00:19:31,280
Speaker 1: research analysts and assistant director of research over at Telsey, Joe,

366
00:19:31,640 --> 00:19:33,240
Speaker 1: where are you right now? What are you seeing on

367
00:19:33,280 --> 00:19:37,120
Speaker 1: the ground. Yeah, so I'm in West justestern New York,

368
00:19:37,160 --> 00:19:39,879
Speaker 1: up in the near White Plains, uh and was just

369
00:19:40,240 --> 00:19:43,440
Speaker 1: going through a Best Buy And so far this morning,

370
00:19:43,440 --> 00:19:45,600
Speaker 1: it's really quiet out there. I don't think there's this

371
00:19:45,680 --> 00:19:49,320
Speaker 1: massive rush to get in the store to grab a Doorbuster. Well,

372
00:19:49,359 --> 00:19:51,280
Speaker 1: how much is this? How much is this? Joe? That

373
00:19:51,320 --> 00:19:54,159
Speaker 1: we're just basically seeing the end of this. You know,

374
00:19:54,200 --> 00:19:56,360
Speaker 1: you get in at four am and you get the goods,

375
00:19:56,440 --> 00:19:58,560
Speaker 1: and that's you know, see people line up. That that's

376
00:19:58,720 --> 00:20:01,080
Speaker 1: over because of the online and channels, because of the

377
00:20:01,119 --> 00:20:05,320
Speaker 1: other areas of distribution. Yeah, I think that's absolutely rightly

378
00:20:05,400 --> 00:20:08,320
Speaker 1: so that you you are seeing maybe the end of

379
00:20:08,359 --> 00:20:10,560
Speaker 1: that early morning rush that need to get in for

380
00:20:10,600 --> 00:20:13,280
Speaker 1: a Doorbuster. You know, just talking to some associates in

381
00:20:13,320 --> 00:20:15,640
Speaker 1: one of the stores that I visited, and they were saying, yeah,

382
00:20:15,680 --> 00:20:18,320
Speaker 1: there was no major rush. The prices are basically the

383
00:20:18,320 --> 00:20:20,440
Speaker 1: same that you could have had all all this past

384
00:20:20,480 --> 00:20:24,880
Speaker 1: week online or even walking into the store earlier this week.

385
00:20:24,920 --> 00:20:28,920
Speaker 1: So I think that impetus that that push to get

386
00:20:28,960 --> 00:20:31,639
Speaker 1: you in has maybe waned. But I'm very curious to

387
00:20:31,640 --> 00:20:34,160
Speaker 1: see how traffic is this afternoon, because I do think

388
00:20:34,160 --> 00:20:36,920
Speaker 1: that that people will come out, they want to get social,

389
00:20:37,320 --> 00:20:40,000
Speaker 1: and we haven't had a real true Black Friday in

390
00:20:40,040 --> 00:20:42,560
Speaker 1: a couple of years. Joe, you're fifteen minutes from my

391
00:20:42,600 --> 00:20:44,360
Speaker 1: home in roy Brook, New York there on Central Lab

392
00:20:44,400 --> 00:20:48,639
Speaker 1: and White Plains. How indicative? How representative is that best

393
00:20:48,640 --> 00:20:51,199
Speaker 1: Buy on Central Lab of you know, what's going on

394
00:20:51,200 --> 00:20:55,920
Speaker 1: across the nation. I actually think it's fairly representative. I mean, look,

395
00:20:55,920 --> 00:20:59,120
Speaker 1: it's a nice you know, um, you know, solid community,

396
00:20:59,520 --> 00:21:02,959
Speaker 1: middle through the middle class community around here, people that

397
00:21:03,240 --> 00:21:05,560
Speaker 1: are looking to buy, and and there's a it's a

398
00:21:05,640 --> 00:21:08,960
Speaker 1: very good retail area here in Westchester. And I do

399
00:21:09,200 --> 00:21:12,000
Speaker 1: find that it has been fairly indicative. You know, when

400
00:21:12,000 --> 00:21:14,000
Speaker 1: I speak to the people on my team who live

401
00:21:14,000 --> 00:21:16,320
Speaker 1: all around the Tri state area, we have some around

402
00:21:16,359 --> 00:21:21,399
Speaker 1: the country in other cities, and we we email this morning,

403
00:21:21,400 --> 00:21:23,600
Speaker 1: and everybody's kind of saying the same thing. It's fairly

404
00:21:23,680 --> 00:21:26,639
Speaker 1: quiet so far. So John, it's gonna be um, I

405
00:21:26,680 --> 00:21:29,880
Speaker 1: mean it's gonna be you know, electronics, is it gonna be? Um?

406
00:21:30,000 --> 00:21:31,760
Speaker 1: Is it gonna be big goods? Is it gonna be

407
00:21:31,800 --> 00:21:33,320
Speaker 1: you know, durable? As I mean, where do we see

408
00:21:33,320 --> 00:21:34,560
Speaker 1: a lot of the sales? Where do we see a

409
00:21:34,560 --> 00:21:35,920
Speaker 1: lot of deals. Where do we see a lot of

410
00:21:36,000 --> 00:21:39,440
Speaker 1: promotions taking place here? Yeah, I think we're going to

411
00:21:39,480 --> 00:21:42,280
Speaker 1: see a lot of promotions. Certainly in electronics, we are

412
00:21:42,320 --> 00:21:47,840
Speaker 1: seeing that TVs, headphones, and other giftable items. I think

413
00:21:47,840 --> 00:21:51,520
Speaker 1: we're gonna see special occasion where has been hot lately,

414
00:21:51,640 --> 00:21:55,199
Speaker 1: and I think that that will continue. We've seen beauty,

415
00:21:55,600 --> 00:21:57,920
Speaker 1: even jewelry has been been decent. You know, I think

416
00:21:57,960 --> 00:22:01,159
Speaker 1: people want to feel good and buy some things for themselves. Uh,

417
00:22:01,359 --> 00:22:04,040
Speaker 1: that area is where we may see some interest. Toys

418
00:22:04,040 --> 00:22:06,879
Speaker 1: are always a big, big driver for the holiday season,

419
00:22:06,920 --> 00:22:10,200
Speaker 1: but um, I think it's going to be much more

420
00:22:10,280 --> 00:22:13,640
Speaker 1: focused on on value and that the value you can

421
00:22:13,640 --> 00:22:17,240
Speaker 1: get to in a in a gift for for members

422
00:22:17,240 --> 00:22:20,239
Speaker 1: of your family or some friends. Value means it's discounted, right, Joe,

423
00:22:20,280 --> 00:22:22,399
Speaker 1: I mean this is basically we're looking at a pretty

424
00:22:22,400 --> 00:22:25,639
Speaker 1: steep discounts at a time when there are huge inventories

425
00:22:25,680 --> 00:22:29,160
Speaker 1: at a number of stores, particularly uh, those that overstocked.

426
00:22:29,160 --> 00:22:31,359
Speaker 1: I'm thinking of Target, I'm thinking of a host of others,

427
00:22:31,359 --> 00:22:34,919
Speaker 1: not necessarily Walmart, not necessarily Macy's. How much are you

428
00:22:35,000 --> 00:22:38,359
Speaker 1: seeing the optimism in stock market? Perhaps in the stock

429
00:22:38,400 --> 00:22:41,800
Speaker 1: market outweigh what you're seeing on the ground with all

430
00:22:41,840 --> 00:22:44,760
Speaker 1: of the discounts that that that that retailers are having

431
00:22:44,800 --> 00:22:47,520
Speaker 1: to offer, plus the fact that they're trying to remain

432
00:22:47,600 --> 00:22:50,639
Speaker 1: fully staffed and not lose people that they might not

433
00:22:50,680 --> 00:22:55,400
Speaker 1: be able to rehire later. Yeah, I think there there's

434
00:22:55,440 --> 00:22:58,120
Speaker 1: a lot going on in the retail market right now.

435
00:22:58,240 --> 00:23:01,400
Speaker 1: There is heavy inventory, there's an eats a discount. What

436
00:23:01,440 --> 00:23:05,240
Speaker 1: we've noticed is that the discounts are not that steep

437
00:23:05,400 --> 00:23:09,640
Speaker 1: in the sense that is fairly common this time of year.

438
00:23:10,000 --> 00:23:12,159
Speaker 1: And that's what we're seeing. You know, we're not seeing

439
00:23:12,640 --> 00:23:17,359
Speaker 1: these very broad, deep, you know, forty to sixty, fifty

440
00:23:17,400 --> 00:23:21,720
Speaker 1: to six discounts. Uh. You know, the retailers are definitely

441
00:23:21,760 --> 00:23:24,920
Speaker 1: face facing cost pressures and they're spending what they need

442
00:23:24,960 --> 00:23:28,160
Speaker 1: to to keep the labor force satisfied. And I think

443
00:23:28,200 --> 00:23:30,040
Speaker 1: that we're going to continue to see that. We continue

444
00:23:30,040 --> 00:23:32,000
Speaker 1: to hear that from a lot of others. The big

445
00:23:32,080 --> 00:23:35,440
Speaker 1: question everybody has is really heading into next year, how

446
00:23:35,520 --> 00:23:38,480
Speaker 1: much pressure we're going to see on the consumer? Uh,

447
00:23:38,520 --> 00:23:40,879
Speaker 1: it will we tip into a mild recession or a

448
00:23:40,960 --> 00:23:44,679
Speaker 1: recession at all? And as long as the labor market

449
00:23:44,720 --> 00:23:46,480
Speaker 1: is in pretty good shape, which it is right now.

450
00:23:46,960 --> 00:23:49,440
Speaker 1: We're hopeful that things won't be so bad next year

451
00:23:49,480 --> 00:23:51,640
Speaker 1: and that will hold up some spending levels. And then

452
00:23:51,960 --> 00:23:54,359
Speaker 1: you know, there is some room for optimism, certainly as

453
00:23:54,359 --> 00:23:58,240
Speaker 1: you get deeper into three when you face easier comparisons.

454
00:23:58,560 --> 00:24:02,000
Speaker 1: So you're talking about overall general numbers, how much you

455
00:24:02,040 --> 00:24:04,920
Speaker 1: started to see a bifurcation of stores that cater to

456
00:24:04,960 --> 00:24:07,720
Speaker 1: the lower ends to worse and those that still cater

457
00:24:07,840 --> 00:24:13,000
Speaker 1: to the luxury end still going strong. Yeah, the bifurcation

458
00:24:13,119 --> 00:24:15,800
Speaker 1: is very clear out here right now, where you are seeing,

459
00:24:16,040 --> 00:24:20,040
Speaker 1: you know, the more affluent UH consumer continuing to spend

460
00:24:20,440 --> 00:24:23,840
Speaker 1: and those stores are that cater to them are doing

461
00:24:23,880 --> 00:24:27,320
Speaker 1: fairly well. UM. At the other end of it, there's

462
00:24:27,359 --> 00:24:29,560
Speaker 1: a lot of focus on value. There's a lot of

463
00:24:29,560 --> 00:24:32,880
Speaker 1: focus on food and consumables and basics, which is why

464
00:24:33,160 --> 00:24:36,560
Speaker 1: companies like Walmart and the Dollars stores and even Target

465
00:24:36,600 --> 00:24:38,960
Speaker 1: you know, are doing very well on the basic side

466
00:24:38,960 --> 00:24:42,040
Speaker 1: of things. It's really the discretionary side at the low

467
00:24:42,160 --> 00:24:45,080
Speaker 1: end has been the big pressure point, UH, and that's

468
00:24:45,080 --> 00:24:47,600
Speaker 1: where you could see some some continued pressure this holiday

469
00:24:47,640 --> 00:24:50,600
Speaker 1: season and into next year. Joe Fieldman of Telsey, thank

470
00:24:50,640 --> 00:24:52,639
Speaker 1: you so much. Joe Feldman, you'll be joining us throughout

471
00:24:52,640 --> 00:24:55,399
Speaker 1: the morning. How be driving around to check it all out? Damian.

472
00:24:55,440 --> 00:24:58,560
Speaker 1: I do wonder how much real estate falls into this.

473
00:24:58,560 --> 00:25:01,720
Speaker 1: This is the Bloomberg Surveillance of podcast. Thanks for listening.

474
00:25:02,119 --> 00:25:05,440
Speaker 1: Join us live weekdays from seven to ten am Eastern

475
00:25:05,680 --> 00:25:09,760
Speaker 1: on Bloomberg Radio and on Bloomberg Television each day from

476
00:25:09,800 --> 00:25:15,040
Speaker 1: six to nine am for insight from the best in economics, finance, investment,

477
00:25:15,200 --> 00:25:20,199
Speaker 1: and international relations. And subscribe to the Surveillance podcast on

478
00:25:20,320 --> 00:25:24,119
Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on

479
00:25:24,240 --> 00:25:28,359
Speaker 1: the terminal. I'm Tom Keene, and this is Bloomberg