1 00:00:04,080 --> 00:00:08,400 Speaker 1: Broadcasting live to New York, Bloomberg eleventh, Rio to Washington, 2 00:00:08,480 --> 00:00:13,480 Speaker 1: d C, Bloomberg to Boston, Bloomberg twelve to San Francisco, 3 00:00:13,640 --> 00:00:17,840 Speaker 1: Bloomberg nine to the Country series Exam General one nineteen 4 00:00:17,960 --> 00:00:21,440 Speaker 1: and around the globe the Bloomberg Radio plus Dappen, Bloomberg 5 00:00:21,520 --> 00:00:27,040 Speaker 1: dot Com. This is taking stock consumers spending on everything 6 00:00:27,280 --> 00:00:32,520 Speaker 1: from cars to a an airline ticket a service up 7 00:00:32,560 --> 00:00:35,920 Speaker 1: about zero point four percent last month, on top of 8 00:00:35,960 --> 00:00:38,600 Speaker 1: a gain of one point one percent the month before. 9 00:00:39,400 --> 00:00:41,800 Speaker 1: Some have even revised up their forecast for second quarter 10 00:00:41,840 --> 00:00:45,000 Speaker 1: GDP because they say the consumer is strong. My next guest, though, 11 00:00:45,040 --> 00:00:48,120 Speaker 1: Craig Johnson, president of Customer Growth Partners, said, when you 12 00:00:48,159 --> 00:00:51,240 Speaker 1: look inside the report, it's not so good for retailers 13 00:00:51,240 --> 00:00:53,040 Speaker 1: and they have a lot on their plate to spend 14 00:00:53,040 --> 00:00:54,800 Speaker 1: on and we're gonna find out why. He says that. 15 00:00:54,880 --> 00:00:56,880 Speaker 1: By the way, I'm Kathleen Hayes Pin Fox, my co 16 00:00:56,960 --> 00:00:59,920 Speaker 1: host on vacation. Now we go to Katherine Cowgary. She 17 00:01:00,080 --> 00:01:02,960 Speaker 1: the Bloomberg newsroom with a business flash. Thank you, Kathleen, 18 00:01:03,040 --> 00:01:05,840 Speaker 1: with a stock market is extending yesterday's games as global 19 00:01:05,880 --> 00:01:09,120 Speaker 1: markets continue to recover following Britain's vote to make a 20 00:01:09,160 --> 00:01:13,080 Speaker 1: break with the European Union. There's speculation that policymakers will 21 00:01:13,080 --> 00:01:15,800 Speaker 1: continue to counter the effects of the withdrawal. In the 22 00:01:15,840 --> 00:01:17,880 Speaker 1: wake of the vote, traders have pushed back bets on 23 00:01:17,959 --> 00:01:21,800 Speaker 1: Federal reserve interest rate increases, indicating higher borrowing costs are 24 00:01:21,920 --> 00:01:27,039 Speaker 1: unlikely before eighteen On taking Stock this afternoon at Marianna Cata, Lakota, 25 00:01:27,200 --> 00:01:30,640 Speaker 1: former Minneapolis Fed president and a Bloomberg View columnists, was 26 00:01:30,640 --> 00:01:34,120 Speaker 1: asked about a possible rate cut next month, that I 27 00:01:34,600 --> 00:01:37,320 Speaker 1: don't anticipate that to be too likely on the FEDS 28 00:01:37,440 --> 00:01:39,880 Speaker 1: genda and July. That is, I don't anticipate that there 29 00:01:39,880 --> 00:01:42,919 Speaker 1: would be cutting rates in July. We check the markets 30 00:01:42,920 --> 00:01:45,679 Speaker 1: every fifteen minutes on Bloomberg Radio, down Industrial average is 31 00:01:45,800 --> 00:01:48,760 Speaker 1: up two hundred ninety points one point seven percent at 32 00:01:48,800 --> 00:01:51,520 Speaker 1: seventeen thousand, six hundred nine eight s and d F 33 00:01:51,600 --> 00:01:54,520 Speaker 1: founded up thirty six points one percent to two thousand 34 00:01:54,560 --> 00:01:57,480 Speaker 1: seventy one. The NAZDAC is up ninety one points I 35 00:01:57,560 --> 00:02:01,160 Speaker 1: gain of two percent. Trading at forty three West Texas 36 00:02:01,240 --> 00:02:03,640 Speaker 1: Intermediate crude oil of a dollar fifty nine and barrel 37 00:02:03,680 --> 00:02:07,240 Speaker 1: free point three percent to forty four. Spickled up six 38 00:02:07,240 --> 00:02:11,680 Speaker 1: dollars nine agounce at ten year treasury down nine thirty 39 00:02:11,720 --> 00:02:14,200 Speaker 1: seconds with the yield of one point four nine percent. 40 00:02:14,800 --> 00:02:17,680 Speaker 1: Among today's South business stories, UBS Group has announced a 41 00:02:17,680 --> 00:02:20,960 Speaker 1: sweeping overhaul of the leadership in its investment banking unit. 42 00:02:21,360 --> 00:02:24,880 Speaker 1: Three senior executives in the division are leaving. Roger Naylor Co. 43 00:02:25,000 --> 00:02:27,840 Speaker 1: Had of Equities, Chris Murphy Co. Had a Fixed Income, 44 00:02:27,960 --> 00:02:30,800 Speaker 1: Rates and Currency and Matt Hemming, head of Corporate Client 45 00:02:30,880 --> 00:02:34,120 Speaker 1: Solutions in the Asia Pacific region, will all step down. 46 00:02:34,720 --> 00:02:37,720 Speaker 1: One measure of home sales cooled and may. That's according 47 00:02:37,800 --> 00:02:41,200 Speaker 1: to the National Association of Realtors. And now look at 48 00:02:41,240 --> 00:02:43,760 Speaker 1: some of the other stories were following today on Bloomberg Radio. 49 00:02:45,040 --> 00:02:48,200 Speaker 1: Thank you Catherine from the Bloomberg Newsroom. I'm Jill Schneider. 50 00:02:48,200 --> 00:02:50,240 Speaker 1: This news update is brought to you by the Jeep 51 00:02:50,240 --> 00:02:54,160 Speaker 1: Grand Cherokee, the most awarded suv ever. The Grand Cherokee 52 00:02:54,160 --> 00:02:57,320 Speaker 1: continues to raise the bar with its luxurious interior and 53 00:02:57,440 --> 00:03:00,600 Speaker 1: legendary four by four capability. Drive on at your local 54 00:03:00,680 --> 00:03:04,440 Speaker 1: Jeep dealer today. Although no group has taken responsibility for 55 00:03:04,520 --> 00:03:07,519 Speaker 1: the attack on an Istanbul airport, Turkey is pointing the 56 00:03:07,560 --> 00:03:10,880 Speaker 1: finger at Islamic state. Speaking at the North Alliance Leader's 57 00:03:10,919 --> 00:03:14,200 Speaker 1: summit in Ottawa today, President Obama said the US is 58 00:03:14,200 --> 00:03:20,680 Speaker 1: committed to quote dismantling these networks of hate. They are 59 00:03:21,200 --> 00:03:26,480 Speaker 1: continually losing ground, unable to govern those areas with me 60 00:03:27,200 --> 00:03:31,000 Speaker 1: taken over, that they're going to be defeated. In Syria, 61 00:03:31,000 --> 00:03:34,600 Speaker 1: they're going to be defeated. British Prime Minister David Cameron 62 00:03:34,639 --> 00:03:36,560 Speaker 1: doesn't think he's the only one who should lose his 63 00:03:36,640 --> 00:03:39,720 Speaker 1: job after the Brexit vote. Cameron called today on Labor 64 00:03:39,760 --> 00:03:42,800 Speaker 1: Party leader Jeremy Corbyn to step down. I have to say, 65 00:03:42,880 --> 00:03:45,920 Speaker 1: the honorable gentleman, he talks about job insecurity and my 66 00:03:46,080 --> 00:03:48,880 Speaker 1: two months ago it might be in my party's interest 67 00:03:48,920 --> 00:03:51,360 Speaker 1: for him to sit there. It's not in the national address, 68 00:03:51,360 --> 00:03:56,480 Speaker 1: and I was saying, for Heaven's sake, man go. Corbyn 69 00:03:56,520 --> 00:03:58,720 Speaker 1: has said he won't quit, even though his colleagues gave 70 00:03:58,800 --> 00:04:01,720 Speaker 1: him a vote of no confide. It's all. Three suspected 71 00:04:01,760 --> 00:04:04,880 Speaker 1: gunmen in the gang related Brooklyn shootout that killed innocent 72 00:04:04,960 --> 00:04:08,960 Speaker 1: bystander Carrie good Bay are in custody and facing murder charges. 73 00:04:09,240 --> 00:04:12,120 Speaker 1: The popular aide to Governor Andrew Cuomo, was shot in 74 00:04:12,160 --> 00:04:14,800 Speaker 1: the head during a pre dawn celebration before the West 75 00:04:14,840 --> 00:04:18,359 Speaker 1: Indian American Day Parade in September of two thousand fifteen. 76 00:04:18,680 --> 00:04:21,280 Speaker 1: Global News twenty four hours a day, powered by more 77 00:04:21,320 --> 00:04:24,480 Speaker 1: than twenty six hundred journalists and analysts in more than 78 00:04:24,520 --> 00:04:28,080 Speaker 1: one hundred twenty countries from the Bloomberg Newsroom. I'm Jill Schneider, 79 00:04:28,200 --> 00:04:33,080 Speaker 1: and this is Bloomberg Katherine, thank you, and among today's 80 00:04:33,080 --> 00:04:37,159 Speaker 1: sit top let's get let's get an update of those benchmarks. 81 00:04:37,160 --> 00:04:39,520 Speaker 1: The down industrial laverage is currently up two hundred eighty 82 00:04:39,520 --> 00:04:43,360 Speaker 1: one point, trading at seventeen thousand, six nine. Smp F 83 00:04:43,360 --> 00:04:45,760 Speaker 1: founded up thirty five points of two thousand seventy one 84 00:04:45,839 --> 00:04:48,440 Speaker 1: nastack higher by ninety points. It's trading at forty seven 85 00:04:48,520 --> 00:04:54,240 Speaker 1: eighty two. And that's a Bloomberg business flash. This is 86 00:04:54,279 --> 00:04:58,279 Speaker 1: taking stock with Kathleen Hayes and Pim Fox on Bloomberg Radio. 87 00:04:58,880 --> 00:05:02,120 Speaker 1: The consumer fili spin of the US economy over the 88 00:05:02,160 --> 00:05:05,640 Speaker 1: last two months has spent at a strong enough rate 89 00:05:05,640 --> 00:05:07,800 Speaker 1: for the Photowers or Bank of Atlanta to say it 90 00:05:07,839 --> 00:05:10,120 Speaker 1: looks more than ever like. The U s economy is 91 00:05:10,160 --> 00:05:13,120 Speaker 1: on track for growth of over two and a half 92 00:05:13,160 --> 00:05:15,600 Speaker 1: percent in the second quarter, and that's the growth of 93 00:05:15,640 --> 00:05:18,000 Speaker 1: just over one percent in the first What does this 94 00:05:18,040 --> 00:05:20,479 Speaker 1: mean for US retailers? Though a lot of things dry 95 00:05:20,560 --> 00:05:23,760 Speaker 1: that broad, broad, broad measure of consumer spending. My next 96 00:05:23,760 --> 00:05:26,560 Speaker 1: guest says, for retailers, there's all kinds of signs that 97 00:05:26,839 --> 00:05:30,640 Speaker 1: the retail economy is sputtering. Craig Johnson is president of 98 00:05:30,680 --> 00:05:33,760 Speaker 1: Customer Growth Partners. He's located in Connecticut, joining me who 99 00:05:33,760 --> 00:05:35,800 Speaker 1: over in our New York studio today. Craig, welcome, It's 100 00:05:35,800 --> 00:05:38,000 Speaker 1: always great to have you here. Great to be here, Kathleen. 101 00:05:38,120 --> 00:05:40,200 Speaker 1: So when you look at that report and people a 102 00:05:40,200 --> 00:05:43,400 Speaker 1: lot of economy is saying, oh strong GDP consumer spending 103 00:05:43,400 --> 00:05:46,760 Speaker 1: looks good. What is your response, Well, our responses we 104 00:05:46,880 --> 00:05:49,600 Speaker 1: look at we we were very forward looking. We're out 105 00:05:49,600 --> 00:05:52,200 Speaker 1: in the stores every week, a team of people across 106 00:05:52,200 --> 00:05:55,960 Speaker 1: the country. So the consumer does account for about sixty 107 00:05:56,640 --> 00:05:59,760 Speaker 1: of the retail economy of the entire economy of the 108 00:05:59,800 --> 00:06:03,400 Speaker 1: g DP, but sixty percent of that sixty percent is 109 00:06:03,440 --> 00:06:07,000 Speaker 1: in services versus goods. Of course, retail is deal primarily 110 00:06:07,040 --> 00:06:10,280 Speaker 1: in goods, and that is is being crowded out now 111 00:06:10,320 --> 00:06:15,400 Speaker 1: by demands, nondiscretionary demands, whether healthcare whether insurance, whether housing, 112 00:06:15,640 --> 00:06:20,160 Speaker 1: whether student debt payments. That that nondiscretionary set of demands 113 00:06:20,520 --> 00:06:23,760 Speaker 1: is basically crowding out any kind of significant growth in retails. 114 00:06:23,800 --> 00:06:26,640 Speaker 1: So right now we're looking at a flattish read not zero, 115 00:06:26,680 --> 00:06:31,000 Speaker 1: but flattish kind of load to three plus percent in 116 00:06:31,080 --> 00:06:34,080 Speaker 1: terms of retail sales growth. Now. In order to make 117 00:06:34,080 --> 00:06:36,320 Speaker 1: people spend their money, particularly when they have choices and 118 00:06:36,320 --> 00:06:38,360 Speaker 1: they really don't want to let it go easily, you've 119 00:06:38,360 --> 00:06:40,320 Speaker 1: got to get them something hot. You've got to give 120 00:06:40,360 --> 00:06:43,680 Speaker 1: them a new fashion or something that is so enticing 121 00:06:44,000 --> 00:06:46,720 Speaker 1: they'll they'll eke it out even by the less expression 122 00:06:47,200 --> 00:06:49,520 Speaker 1: expensive version of That is partly the fault of retailers 123 00:06:49,520 --> 00:06:53,080 Speaker 1: that their merchandise just isn't dazzling enough. Well, right now, 124 00:06:53,160 --> 00:06:56,839 Speaker 1: there are no giant crazes or fats. There's nothing really 125 00:06:56,839 --> 00:06:59,000 Speaker 1: really hot. There are a couple of smaller things that 126 00:06:59,040 --> 00:07:03,120 Speaker 1: are hot. Footwear, the sandal side is very Sandals are 127 00:07:03,120 --> 00:07:05,040 Speaker 1: having its best season this year. This is where it's 128 00:07:05,080 --> 00:07:09,800 Speaker 1: healed sandals, strappy sandals, et cetera. Um and rompers of 129 00:07:09,840 --> 00:07:12,800 Speaker 1: all things are having to come back for the younger set. 130 00:07:12,880 --> 00:07:15,240 Speaker 1: The younger female said, I should, I should say, but 131 00:07:15,320 --> 00:07:18,640 Speaker 1: these are not giant category movers. And then the other 132 00:07:18,680 --> 00:07:20,960 Speaker 1: problem that we're having is is that two of the 133 00:07:20,960 --> 00:07:23,760 Speaker 1: things that have been hot, performance wear is peeking out 134 00:07:24,320 --> 00:07:27,760 Speaker 1: and fast fashion is fading fast. And these have been 135 00:07:27,800 --> 00:07:30,680 Speaker 1: two huge drivers in retail, and we're seeing both of 136 00:07:30,680 --> 00:07:33,280 Speaker 1: these begin to peek out a little bit. Fast fashion 137 00:07:33,400 --> 00:07:35,600 Speaker 1: fading fast. Well, that's a great one, isn't it. Let's 138 00:07:35,640 --> 00:07:39,760 Speaker 1: let's say that again. Uh, why where do you see it? 139 00:07:40,240 --> 00:07:43,280 Speaker 1: And uh will it pick up when more people It's 140 00:07:43,320 --> 00:07:46,800 Speaker 1: only late June when people are more seriously saying, let's 141 00:07:46,800 --> 00:07:49,200 Speaker 1: go to the mall, let's go downtown and buy some 142 00:07:49,320 --> 00:07:52,480 Speaker 1: back to school close. Well, the lower traffic at the 143 00:07:52,520 --> 00:07:55,200 Speaker 1: mall is part of the issue. But the problem in 144 00:07:55,280 --> 00:07:58,440 Speaker 1: fast fashion per se is has been such an explosion 145 00:07:58,520 --> 00:08:01,880 Speaker 1: of capacity of square foot its capacity over the last 146 00:08:02,040 --> 00:08:05,280 Speaker 1: half decade or decade. This is from twenty one from 147 00:08:05,440 --> 00:08:08,880 Speaker 1: H and M, from Zara and Unicuo, and these companies 148 00:08:08,880 --> 00:08:12,400 Speaker 1: have all collectively overshot the runway, and so we're left 149 00:08:12,440 --> 00:08:16,840 Speaker 1: with too many retails square feet in in fast fashion 150 00:08:17,160 --> 00:08:20,720 Speaker 1: chasing too few customer feet. And that's why a unicorne 151 00:08:20,760 --> 00:08:24,800 Speaker 1: has begun to show uh closed stores uh fever twenty one, 152 00:08:24,800 --> 00:08:29,240 Speaker 1: which has been the giant, is seeing double digit negative comps. Uh. 153 00:08:29,280 --> 00:08:33,200 Speaker 1: Even even H and M, which is remains of powerhouse internationally, 154 00:08:33,559 --> 00:08:37,600 Speaker 1: is a little soft in the US well, speaking of retailers, 155 00:08:37,720 --> 00:08:41,280 Speaker 1: UM and not sandals, but you know athletic footwear. Nike 156 00:08:41,760 --> 00:08:44,760 Speaker 1: uh having some was under pressure. It's bounced back today, 157 00:08:45,600 --> 00:08:47,840 Speaker 1: but yesterday reported that it's it's it's what they call 158 00:08:47,920 --> 00:08:52,040 Speaker 1: their futures. Orders were up eleven percent. Analysts had projected 159 00:08:53,679 --> 00:08:57,000 Speaker 1: what's gone with Nike? Are you worried about in Niko? Well, 160 00:08:57,080 --> 00:08:59,120 Speaker 1: there's a couple of issues. That one is the performance 161 00:08:59,120 --> 00:09:01,240 Speaker 1: where issue wanting this on the on the apparel side, 162 00:09:01,240 --> 00:09:03,760 Speaker 1: the apparel is is a growing part of their business, 163 00:09:03,800 --> 00:09:07,600 Speaker 1: but they're getting increasingly competition from from the vertical chains 164 00:09:07,640 --> 00:09:10,120 Speaker 1: such as Lulu into one hand, and an under armour, 165 00:09:10,200 --> 00:09:13,960 Speaker 1: which remains a powerhouse on the other hand. Uh, And 166 00:09:14,040 --> 00:09:16,760 Speaker 1: so that's part of that, that's that's part of the issue. Now. 167 00:09:16,760 --> 00:09:20,120 Speaker 1: They also claim in their commentary that there was some 168 00:09:20,240 --> 00:09:23,160 Speaker 1: issue a year ago with the poor congestion delays which 169 00:09:23,240 --> 00:09:25,960 Speaker 1: hyped up last year's work hard. Well, that's a little 170 00:09:26,000 --> 00:09:28,120 Speaker 1: bit of excuse, but we think it's more the market 171 00:09:28,200 --> 00:09:30,840 Speaker 1: is changing number one and under armour and the other 172 00:09:31,080 --> 00:09:34,319 Speaker 1: performance where our specialties have been playing a bigger role. Brexit. 173 00:09:34,360 --> 00:09:36,760 Speaker 1: That's not gonna have much influence on US retailers, is it, 174 00:09:36,840 --> 00:09:40,160 Speaker 1: except that maybe people whose currency has fallen in value, 175 00:09:40,200 --> 00:09:42,160 Speaker 1: like people who live in the UK, won't be coming 176 00:09:42,200 --> 00:09:43,840 Speaker 1: over here as much as shot well on on the 177 00:09:43,840 --> 00:09:46,400 Speaker 1: Brexit side. Yeah. What what we're seeing, I guess is 178 00:09:46,440 --> 00:09:47,840 Speaker 1: a couple of things. One is not going to be 179 00:09:47,880 --> 00:09:51,280 Speaker 1: a giant impact. First of all, international tourism has already 180 00:09:51,320 --> 00:09:55,360 Speaker 1: been slow here. This is whether it's from a Britain, UH, Europe, 181 00:09:55,559 --> 00:09:59,360 Speaker 1: South America, China, Asia, It's already been a week, so 182 00:09:59,559 --> 00:10:02,160 Speaker 1: it isn't gonna get dramatically weaker. There are a couple 183 00:10:02,200 --> 00:10:07,000 Speaker 1: of US vitos that have exposure in in in UH 184 00:10:07,320 --> 00:10:12,640 Speaker 1: the UK, for instance, Abercrombie and Fitch, Walmart osdy unit 185 00:10:12,679 --> 00:10:14,840 Speaker 1: and Costco. Costco is doing fine. A and f as 186 00:10:14,880 --> 00:10:18,360 Speaker 1: weaken in over there, and then Walmart and Walmart's OZZ 187 00:10:18,400 --> 00:10:22,720 Speaker 1: is weak. Costco is doing great. Walmart, how are they doing? 188 00:10:22,920 --> 00:10:26,200 Speaker 1: Got ten seconds left? Uh? The Ozda unit right now 189 00:10:26,320 --> 00:10:28,440 Speaker 1: is not faring well at all well in the UK. 190 00:10:28,600 --> 00:10:31,600 Speaker 1: That that's their their their primarily grocery in some general 191 00:10:31,640 --> 00:10:34,880 Speaker 1: e MERCHANCT that's a little weak. Otherwise, Walmart is doing 192 00:10:34,880 --> 00:10:37,080 Speaker 1: a little bit better domestical in the US and some 193 00:10:37,160 --> 00:10:41,160 Speaker 1: foreign geographies. All right, well, thanks so much to Craig Johnson, 194 00:10:41,240 --> 00:10:45,000 Speaker 1: president of Customer Growth Partners. He says reef Tail is 195 00:10:45,040 --> 00:10:48,880 Speaker 1: being hurt because families have too many things like education 196 00:10:48,920 --> 00:10:51,120 Speaker 1: and healthcare to spend on and they can't buy as 197 00:10:51,160 --> 00:10:54,360 Speaker 1: many closed shoes. In Athletic where I'm Kathleen Haze and 198 00:10:54,360 --> 00:11:01,880 Speaker 1: this is taking stock on Bloomberg Radio, the consumer doesn't 199 00:11:01,920 --> 00:11:03,960 Speaker 1: just buy clothes and shoes, you know, they go to 200 00:11:04,000 --> 00:11:06,400 Speaker 1: the food and buy a lot of store. Coming up, 201 00:11:06,559 --> 00:11:10,240 Speaker 1: Scott Rothbort from Lakeview Asset Management. He's been buying some 202 00:11:10,280 --> 00:11:13,920 Speaker 1: whole foods and it is in partly lined with Brexit