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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business app. We begin with the

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Speaker 2: big issue. Good news is good news, stocksenting Kira as

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Speaker 2: data shows the economy is in seemingly good shape, but

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Speaker 2: Eric Friedman of US Banks staying cautious writing solid consumer

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Speaker 2: spending and labor market dynamics continue bolstering economic growth and

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Speaker 2: corporate earnings, but of both desalrated somewhat slightly constructive market

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Speaker 2: signals and near neutral macro signals continue to warrant a

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Speaker 2: cautiously optimist bias towards equities. Eric s Withers from More Eric,

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Speaker 2: welcome back to the show. It's good to see us, sir.

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Speaker 2: As always, you manage client money institutional money totaling I

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Speaker 2: think something like five hundred billion. Can you share with

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Speaker 2: us how much of that has been in cash, just

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Speaker 2: sort of lazy money getting rewarded in money market funds,

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Speaker 2: and how much of that has started to be deployed

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Speaker 2: over the last month or so.

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Speaker 3: Yeah, Jonathan, In a way, it's almost been like this

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Speaker 3: nostalgic push from both institutional and wealth clients, just viewing

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Speaker 3: that hey, look I can actually get something from the

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Speaker 3: shorter end of the curve, so I'm going to stay there.

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Speaker 3: And I think that you know, we saw balances go

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Speaker 3: up as high as ten ten and a half percent

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Speaker 3: in cash, and that's really worked its way down to

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Speaker 3: about four and a half or five percent across our

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Speaker 3: broad book of business. So that says to us that, look,

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Speaker 3: investors are getting this idea of a repricing across the curve.

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Speaker 3: And I think that that effective pivot in Jacksonville last

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Speaker 3: week was all of the you know, just the consensus

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Speaker 3: view that hey, look, we're not just going to have

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Speaker 3: that nostalgic view in perpetuity. So we are seeing more

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Speaker 3: of a gradual, let's call filtering into other parts of

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Speaker 3: the of the marketplace. I thought least that a really

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Speaker 3: nice tweet or ex whatever you call it. These days

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Speaker 3: regarding flows into into bond funds, we're seeing that. We're

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Speaker 3: also seeing though an extension in other parts of the

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Speaker 3: of the broader global macro trade.

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Speaker 4: So that's been a positive. We think that probably continues

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Speaker 4: for the next couple of months.

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Speaker 2: I think we just go with POST. I think just

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Speaker 2: post just works. But whatever, Eric, when that cash position

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Speaker 2: comes down from say ten to four and a half, five,

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Speaker 2: how sticky is that four and a half, Because certainly

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Speaker 2: people are lining up on this program, Tanning us that

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Speaker 2: money is going to be deployed. If it's going to

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Speaker 2: cut interest rates. Curve normalizes, you'll see that curve go

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Speaker 2: out the curve and into equities nowsewhere beyond fixed income.

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Speaker 2: How stick is that four and a half from your perspective, Yeah,

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Speaker 2: we think.

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Speaker 4: It's pretty sticky.

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Speaker 3: I think that the thing that would probably shift views

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Speaker 3: out of that, Hey, let's get back into the broader

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Speaker 3: macro ecosphere if you would probably be the idea of

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Speaker 3: the back end of the curve really ripping high r

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Speaker 3: That's something that your team has done a really nice

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Speaker 3: job thinking about, like what are the factors would actually

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Speaker 3: cause interest rates to go higher on the back end.

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Speaker 3: We don't think there's necessarily an immediate catalyst. There's so

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Speaker 3: much focus on when does the FED start cutting how

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Speaker 3: deep will that be for the next couple of quarters.

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Speaker 3: But we do think that what's on the horizon as

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Speaker 3: we get hopefully more specific on policy is the risk

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Speaker 3: of inflation actually picks back up again. That's not something

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Speaker 3: that I think is really being discounted in commodities. It's

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Speaker 3: being something that we think is probably worth talking about.

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Speaker 3: As we get deeper into the third quarter and early

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Speaker 3: early fourth quarter, probably September tenth, when we have the

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Speaker 3: first and maybe the only presidential debates, there will hopefully

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Speaker 3: be a little more specificity about tax planning and also

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Speaker 3: about spending planning. That could be the catalyst sets up

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Speaker 3: some of the noise away from FED and the immediacy

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Speaker 3: of rate cuts and into more of the let's call

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Speaker 3: it the inflationary considerations of policy, which we think is

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Speaker 3: an it's an undiscounted risk right now.

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Speaker 1: So just to put a bow on this, Eric and

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Speaker 1: I think this there are all really interesting points to

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Speaker 1: kind of challenge the idea that there's six trillion dollars

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Speaker 1: of assets and money market funds just waiting for the

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Speaker 1: FED to cut rates and then that's all going to

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Speaker 1: be unleashed into longer duration bonds as well as into stocks.

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Speaker 1: It sounds like you're kind of challenging that, and you're

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Speaker 1: saying a lot of this is very sticky. Actually saw

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Speaker 1: the biggest month of inflows into cash f like funds

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Speaker 1: over the past a week, going back throughout the entirety

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Speaker 1: of this year. You're saying that unless long had yields

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Speaker 1: go higher, that's going to probably stay, and that any

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Speaker 1: kind of optimism you have has to come from elsewhere.

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Speaker 1: Is that Is that a correct characterization?

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Speaker 3: Yeah, it's very, very succinct and much more eloquent than

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Speaker 3: I put At least I think if you look at

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Speaker 3: at fair value, we think for the ten years, probably

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Speaker 3: closer like four percent.

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Speaker 4: We'd three eighty five right now.

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Speaker 3: So in a way, it's almost like duration is too

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Speaker 3: expensive to buy more of, but it's not too expensive

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Speaker 3: to sell.

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Speaker 4: We're kind of in that middle.

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Speaker 3: Ground, if you will, where tens, twenties, thirties, probably not

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Speaker 3: a lot of issuance. Again, you did a good job

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Speaker 3: of covering the auction yesterday if you look at the

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Speaker 3: net participation of buyers across most auctions, it has not

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Speaker 3: been foreign buyers. So who's going to be the marginal

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Speaker 3: buyer of longer term paper. Probably not the usual suspects,

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Speaker 3: if you will. So again, with a ten year at

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Speaker 3: three eighty five, we think very valigant is closer to

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Speaker 3: about four. We're in this position where without a lot

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Speaker 3: of definite policy genders from either party, we're in a

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Speaker 3: bit of a no man's land, if you will, with

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Speaker 3: that trade. So duration we think is probably a little pricey.

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Speaker 3: We think that the unwind of cash probably goes elsewhere,

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Speaker 3: and that will probably be more of a trickling type

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Speaker 3: of phenomenon over the next couple of weeks and months.

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Speaker 1: To take this a step further, Michael hartnett Over at

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Speaker 1: Bank of America is talking about swapping out commodities in

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Speaker 1: place of bonds and the sixty four sixty forty portfolio

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Speaker 1: because of some of the concerns that you're talking about.

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Speaker 1: I don't know that you're going to say, you know,

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Speaker 1: sixty should be all commodities or whatever it would have you.

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Speaker 1: But there's a question of whether you start to on

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Speaker 1: the margins shift more into inflation hedges in lieu of

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Speaker 1: some of the bond holdings.

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Speaker 4: Yeah, at least I think it's a great point.

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Speaker 3: I mean, if you look at at the considerations on

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Speaker 3: commodities when you're in an environment like this, again, we

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Speaker 3: run relative performance money, and so you're giving up about

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Speaker 3: thirty five or forty basis points a month if you're

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Speaker 3: invested in commodities versus bonds. That's a pretty big hurdle

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Speaker 3: for an investoral like us to think about.

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Speaker 4: Now. One of the things that has really not.

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Speaker 3: Worked, in fact, one of the few dislocations and markets

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Speaker 3: right now is the petrochemical cycle. If you look at

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Speaker 3: what's happening with with things like natural gas, which is

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Speaker 3: effectively known as the widow maker for investors because it's

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Speaker 3: so hard to trade, and also things like oil and

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Speaker 3: other other components of petrochemicals, you know you're in an

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Speaker 3: environment where the caring cost of being wrong is extremely high.

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Speaker 3: So we don't think that now is the time to

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Speaker 3: necessarily be really bold and take a huge amount of

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Speaker 3: capital in the commodities. But you can piece into it. Again,

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Speaker 3: Golds really work, silvers really work, but industrial metals petro

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Speaker 3: chemicals have not worked. So well, that could be interesting. Again,

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Speaker 3: we'd be very incremental here, especially as you look for

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Speaker 3: optionality on policy risk coming out later this year. But

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Speaker 3: again you have to be mindful that carrying costs which

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Speaker 3: is quite.

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Speaker 1: High, and that's the reason why some of maybe the

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Speaker 1: forty percent of fixed income would go toward that, but

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Speaker 1: not the whole thing when it comes to the sixty

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Speaker 1: percent or maybe even higher. If you are bullish on stocks,

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Speaker 1: I am wondering how you are cautious at a time

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Speaker 1: where the risks are bifurcated in nature. What does that

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Speaker 1: mean in terms of how you're approaching allocations right now?

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Speaker 3: There, Yeah, this is a space for you know, we

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Speaker 3: are actually modestly overweight domestic equities and overweight equities overall.

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Speaker 3: On our Portflois, we expressed that since late April in

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Speaker 3: equal weight to S ANDP we were early, which means

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Speaker 3: we were wrong. In the last couple of months we've

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Speaker 3: been right, which is really again been a benefit. But

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Speaker 3: we think this is an environment least when there's just

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Speaker 3: not that much dislocation. Again, since you had the low

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Speaker 3: print in the S and P at nine thirty one

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Speaker 3: am on August fifth, which just spoke to how aggressive

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Speaker 3: the position squaring it had to be. There just has

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Speaker 3: been such a quick reflectionive move upward across all assets

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Speaker 3: that this is about relative value. So again, we like

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Speaker 3: stocks over bonds, we like equal weight over ag we

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Speaker 3: like equal weight over munis. But you know, you have

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Speaker 3: to we think kind of pair off as opposed to

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Speaker 3: looking at at large, deep dislocations that just aren't there

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Speaker 3: in the marketplace.

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Speaker 4: So we're cautious about taking really bold moves.

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Speaker 3: We do think that collecting income is an interesting thing

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Speaker 3: to do for investors, so things like municipal high yield,

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Speaker 3: things like non agency mortgages, even things like reinsurance and

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Speaker 3: closed and funds. That's a good way to pick up

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Speaker 3: carry and kind of wait for more specificity without taking

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Speaker 3: a ton of directional risk, because there really isn't a

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Speaker 3: lot out there from a market dislocation standpoint to pick through.

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Speaker 4: Besides, again commodities which just haven't done very well.

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Speaker 2: Equal Way has certainly been working just to put a

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Speaker 2: bow on it all, Eric, we've been asking this question

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Speaker 2: a week just to set us out for payros Friday

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Speaker 2: this time next week, always just as vulnerable going into

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Speaker 2: sept ten to sixth as we work against a walk

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Speaker 2: a second or things changed.

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Speaker 3: You know, I think things had changed, Jonathan, in the

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Speaker 3: sense of again that that the taps on the shoulders

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Speaker 3: with the end carried trade positioning, those have already happened.

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Speaker 3: Now again, investors have very short memories, and so we're

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Speaker 3: not you know, naive enough to think that there isn't

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Speaker 3: some potential for being off sides. But again to your point,

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Speaker 3: if we saw something beyond consensus, which I think is

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Speaker 3: like for a one sixty one sixty five print, if

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Speaker 3: you'd have to see something like sub one ten one hundred,

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Speaker 3: we think with also a pretty not sharp rise, well

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Speaker 3: it's called a headline unemployment rate of north of four

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Speaker 3: and a half or you know, four point four or

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Speaker 3: four point five percent, that would signal a little more

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Speaker 3: weakness than perhaps is priced in. We don't think that's

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Speaker 3: our base case. Our economics team is a little more

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Speaker 3: bullish on what the print may look like. But you know,

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Speaker 3: I think that with positions squaring a little bit tighter

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Speaker 3: than where it was back in the August print, you know,

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Speaker 3: we're not as vulnerable, but it would take we think,

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Speaker 3: a pretty pretty significant downside surprise.

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Speaker 4: The drive markets much lower.

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Speaker 2: That would be bad news, and that would be bad news.

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Speaker 4: Eric.

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Speaker 2: Thank you, sir Eric Friedman of US Bank. Have a

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Speaker 2: good long weekend. Here's the latest, A little under two

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Speaker 2: hours away from a fresh read on the US economy

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Speaker 2: with core PCE and personal income and spending data due

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Speaker 2: at eight thirty Eastern time. Claudia Salm of New Century

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Speaker 2: Advisors writing, none of our output metrics point to a

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Speaker 2: growth scare, and none argue against the FED rate cut either.

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Speaker 2: With the expansion of the labor supply and higher productivity growth,

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Speaker 2: recent growth has not shown signs of an overheating economy.

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Speaker 2: The soft landing remains the base case. A good friend

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Speaker 2: of this program, good friend of us, Claudia joined us

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Speaker 2: now for more. Claudia, welcome back to the program. We

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Speaker 2: started this morning in this hour with this quote, and

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Speaker 2: I wanted to share it with you. It came from

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Speaker 2: the Dollar General CEO on low income sharpers inflations continue

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Speaker 2: to negatively impact these households, with more than sixty percent

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Speaker 2: claiming they've had to sacrifice some purchasing basic necessities. It's

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Speaker 2: difficult to really get a complete read of what's happening

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Speaker 2: with the consumer right now. Claudia, if you'll rask and

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Speaker 2: I'll ask you, how would you characterize the overall situation

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Speaker 2: for consumption and the consumer in America?

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Speaker 5: So I think this is what is always difficult with

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Speaker 5: us consumers. We have a population that has very different,

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Speaker 5: very different income and wealth and needs. And it absolutely

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Speaker 5: makes sense that right now we are years into inflation

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Speaker 5: that has been higher than normal, and it's going to

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Speaker 5: hit people at the bottom hardest. So that's why it's

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Speaker 5: so important in particular to keep the expansion going, to

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Speaker 5: get the labor market, have the hiring rates, the jobs there.

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Speaker 5: These are the consumers that absolutely depend on their paychecks

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Speaker 5: to make things work. So overall the picture is good,

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Speaker 5: but that does not mean that it's good enough, and

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Speaker 5: it doesn't mean that it stays that way, particularly for

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Speaker 5: certain groups that are under stress like that.

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Speaker 2: I know. That's why one of the reasons why you

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Speaker 2: happy with the shift from cham and Pale in the

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Speaker 2: speech just last week. A question we've explored through this

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Speaker 2: week is how much daylight that might be between him

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Speaker 2: and other members of the committee. Do you see this

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Speaker 2: whole committee moving in the same direction, or you're starting

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Speaker 2: to see some division, some split, some cracks.

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Speaker 5: It's important for there to be differences of opinion and

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Speaker 5: a robust and a bit among the committee. We should

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Speaker 5: be most worried when they're all singing in the same song, right, Like,

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Speaker 5: this is a really complicated question. Are we moving in

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Speaker 5: the direction the chair Powell laid out? Absolutely? And I

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Speaker 5: think you can even see that in the minutes from

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Speaker 5: the last meeting before we started, before we got the

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Speaker 5: July employment data that was so disconcerting. So I think

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Speaker 5: that's where we're headed. I expect we'll continue to get

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Speaker 5: good news on inflation.

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Speaker 1: That's important.

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Speaker 5: That's why interest rates are high is to help get

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Speaker 5: inflation down. We're making a lot of progress there, which

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Speaker 5: means that can really pay attention to the slowing in

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Speaker 5: the labor market and with maximum employment, what you want

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Speaker 5: is the most employment possible without creating inflation. If we

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Speaker 5: are making progress on the inflation check, they can ease

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Speaker 5: up some on the interest rates, and they should ease

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Speaker 5: up some on the interest rates so that the labor

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Speaker 5: market can kind of get its footing back and bring

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Speaker 5: some more of these workers back back online.

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Speaker 1: Claudia said, get its footing back. Where do we have

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Speaker 1: a sense that the labor market is losing its footing.

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Speaker 5: At this point when you see the job games have slowed.

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Speaker 5: Most worrisome is the fact that the hiring rate so

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Speaker 5: for people who are coming into the labor force, whether

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Speaker 5: it's coming out of schooling in their first job or

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Speaker 5: or you know that we have a larger immigrant workforce,

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Speaker 5: at this point, it is harder for them to find jobs.

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Speaker 5: And there's a real disconnect between you know, what the

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Speaker 5: hiring rates look like, which are much lower than just

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Speaker 5: you know, a couple of years ago, and frankly go

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Speaker 5: back to kind of twenty fourteen, twenty fifteen, that wasn't

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Speaker 5: a great labor market. So we need people coming in

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Speaker 5: to bring their talents. And it's not just about the fact, yes,

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Speaker 5: layoff rates or at all time lows that is that

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Speaker 5: is excellent. Let's get hiring rates up to all time

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Speaker 5: highs again. So that's I think we've got some disconnect

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Speaker 5: in terms of who is really getting hit in terms

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Speaker 5: of you know, opportunities, and we just you know, kind

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Speaker 5: of even it out. We're still coming out of an

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Speaker 5: adjustment and there's no reason for further cooling in the

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Speaker 5: labor market. We don't need it to get inflation down

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Speaker 5: and it's a real loss in terms of our you know,

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Speaker 5: what we can do as an economy if we have

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Speaker 5: people on the sidelines.

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Speaker 1: Claudia, you created the rule that so many people have

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Speaker 1: been citing over the past few months from the Fed

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Speaker 1: and Beyond the sum rule, which talks about zero point

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Speaker 1: five percentage point increase in the unemployment rate over a

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Speaker 1: six month period of time. We have seen that. What

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Speaker 1: would give you much more pause in this upcoming report

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Speaker 1: that we get next Friday, that maybe this is really

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Speaker 1: truly a much more quickly deteriorating labor market than we

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Speaker 1: otherwise had thought.

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Speaker 5: Is true. You one's got to take big picture view.

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Speaker 5: A lot of the information we've gotten outside of the

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Speaker 5: labor market looks pretty solid, right, So there's no one

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Speaker 5: report that's going to be game changing in terms of

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Speaker 5: how we think. Clearly, we're looking for the unemployment rate

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Speaker 5: to maybe come back a little bit. Some of that

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Speaker 5: was a temporary layoffs that you know, a blip in it.

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Speaker 5: We want to see the payroll numbers stabilize things that

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Speaker 5: look worse or we don't unwind some mutually is going

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Speaker 5: to give pause, but really it's watching this. We're looking

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Speaker 5: at trends we're looking at contours. There's no magic number

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Speaker 5: here with this Sam rule to try to get a

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Speaker 5: sense of it really is about the direction, and we

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Speaker 5: should expect to see over the next several months, probably

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Speaker 5: still some more softening in the labor market. Just because

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Speaker 5: Chair Pale or the Fed gets going doesn't mean everything

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Speaker 5: changes on a dime, right, Like we really do have

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Speaker 5: to see policy change, and then you know understand by

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Speaker 5: how things are evolving in the labor market, and you

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Speaker 5: know the confidence of businesses to hire is an important

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Speaker 5: piece of it as well.

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Speaker 2: Claudia, were always lucky to catch up with you. Thanks

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Speaker 2: for your time this morning. Clodia Sam of New Century

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Speaker 2: Advisors on the labor market, on the consumer and a

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Speaker 2: housing Tausei Advisory Group, maintaining and outperform rating following learnings,

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Speaker 2: noting solid results and saying a reduced outlook comes there's

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Speaker 2: no surprise against moderated expectations. Dan and joins us now

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Speaker 2: for more. Good morning to you, Good morning, Thank you

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Speaker 2: for busy. How many companies under your coverage you've reported

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Speaker 2: this week?

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Speaker 6: We had twenty two companies this week. Don't tell me

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Speaker 6: about a slow week this week. It was anything but slow.

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Speaker 6: Because we now have the pulse of the consumer.

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Speaker 2: Let's pick up on that word slow. How slow are

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Speaker 2: things things have slowed down.

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Speaker 6: You want to call it discerning, you want to call

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Speaker 6: it more cautious, whatever it may be. July was a

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Speaker 6: week month. August is definitely a little bit better. But

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Speaker 6: the planning for the back half of the year has

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Speaker 6: taken tick down. And you look at the fourth quarter

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Speaker 6: where you have five fewer days between Thanksgiving and Christmas.

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Speaker 6: Retailers have to plan cautiously. Some have called out, is

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Speaker 6: that a three percent hit to sales in the fourth

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Speaker 6: quarter because of those fewer days? It easily could be.

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Speaker 1: So this is the confusion that I'm having. You had

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Speaker 1: personal consumption that was revised up in the second quarter.

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Speaker 1: You have certain companies that are doing just fine. You

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Speaker 1: see travel that still is going pretty strong. Where are

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Speaker 1: we seeing.

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Speaker 6: The bulk of this weakness in a couple places? Look

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Speaker 6: what you've seen with luxury spending. Luxury spending is slowed.

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Speaker 6: You're not getting the international tourists come over. You're looking

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Speaker 6: at discretionary spending in the department stores. Look at some

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Speaker 6: of the Macy's numbers, the Dillard's numbers. They're weaker than expected.

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Speaker 6: Look at urban outfitters. You have consumers that are intentionally

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Speaker 6: spending and innovation is driving demand. It's not everyone. Look

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Speaker 6: at Birkenstock, they had very good results, double digit increases.

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Speaker 6: Take a look at Abercrombie. The Hollister accelerated. You're still

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Speaker 6: seeing strong double gains at the Abercrombie brand. Look at

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Speaker 6: footwear deckers on running. You've had innovation and newness drive demand.

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Speaker 6: But look what you've also had. The off pricers outperformed

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Speaker 6: four percent comps at TJX and ross five percent comps

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Speaker 6: at Burlington. Look at Walmart and target the consumers searching

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Speaker 6: for value because they don't have the stimulus dollars they

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Speaker 6: had a couple of years ago.

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Speaker 1: This might be a bridge too far, but is this

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Speaker 1: a lot of people who are higher income searching for

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Speaker 1: more value but the lower income families still actually really struggling.

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Speaker 2: In other words, are.

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Speaker 1: We getting a signal from the fact that off price

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Speaker 1: places are doing well, but the dollar generals of the

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Speaker 1: world are flat out of bax and can't get a break.

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Speaker 6: And it's a little bit of everyone. I mean, you

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Speaker 6: take a look at the dollar generals, but look who's

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Speaker 6: taking share. The Walmart's, the Targets, the Ross, the TJ's,

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Speaker 6: the Burlington, they all did well. Some of the dollar

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Speaker 6: stores they're cutting back on their raid and new store

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Speaker 6: openings five below being one of them, so it's more competitive.

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Speaker 6: You take a look yesterday Old Navy and that's search

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Speaker 6: for value. It definitely feels what you mentioned. Every income

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Speaker 6: level has turned the needle up a little bit un

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Speaker 6: searching for more value.

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Speaker 2: Let's get alulu, why is it up in the pre market?

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Speaker 2: Why is it running?

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Speaker 6: The reason why because when you take a look at

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Speaker 6: the reset guidance, the stock's already been weak. It's taken

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Speaker 6: into account this already, and frankly, the guidance they gave

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Speaker 6: wasn't worse than some of the whisper numbers out there.

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Speaker 2: So it's beatable, which is what we've heard from other

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Speaker 2: analysts as well. Let's talk about problems. Where are they

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Speaker 2: having problems? Composition, execution? What is it?

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Speaker 6: It's the women's business. It is definitely a little bit

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Speaker 6: of the execution of it. The newness in the product

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Speaker 6: that's come out, and you can call newness in terms

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Speaker 6: of colors, it's colors, prints, patterns. They need more of

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Speaker 6: that it's going to come in slowly. They redid the

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Speaker 6: merchandising structure, and it sounds like they'll be able to

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Speaker 6: react faster and drive more newness into the assortment.

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Speaker 1: How low has the barrier to entry gotten? I mean

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Speaker 1: we talk about competitors, we talk about Aloe or a

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Speaker 1: Low or however you want to pronounce it. You've got

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Speaker 1: beyond Yoga, You've got Vori, You've got some of these

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Speaker 1: other brands that have more of the air of cool,

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Speaker 1: and Lululemma no longer does. It's very sort of characterized

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Speaker 1: in social society. Is like what it is, It's tight,

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Speaker 1: it's a certain person, et cetera. Is this getting easier

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Speaker 1: in terms of disruption that we're seeing more broadly.

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Speaker 6: I think there's always been competition. I think that all

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Speaker 6: the competitors, everyone has their own personality, so to speak.

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Speaker 6: I think of Alo as fashionable, I think of Lulu

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Speaker 6: as technical functionality. I think as Sweaty Betty as affordable.

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Speaker 6: So each of them has their own pulse, and you

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Speaker 6: have to be able to cater to who stay in

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Speaker 6: your lane and cater to it. The fact that Lulu

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Speaker 6: didn't have that newness in women's impacted their ability to

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Speaker 6: drive conversion.

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Speaker 1: There's is also a question going forward of how much

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Speaker 1: is the weakness something that's just beginning at a time

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Speaker 1: when we just got a note from Andrew Hollenhorst, a

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Speaker 1: Vergity group talking about how he expects the savings rate

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Speaker 1: to fall to an all time low. That essentially people

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Speaker 1: are spending what they've got left. They've already spent up

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Speaker 1: the pandemic savings. How much do you expect this to

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Speaker 1: be the last gass rather than the weakest spot.

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Speaker 6: I don't think it's necessarily the last gasp. I think

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00:21:10,920 --> 00:21:13,800
Speaker 6: that their customer has money, it's where they're going to

437
00:21:13,800 --> 00:21:17,080
Speaker 6: spend that money. Look at the experience versus goods element

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00:21:17,160 --> 00:21:19,480
Speaker 6: that's out there, the other thing that you have changing

439
00:21:19,520 --> 00:21:22,400
Speaker 6: out there. Look at other categories that have underperformed. Look

440
00:21:22,400 --> 00:21:25,560
Speaker 6: at jewelry. Jewelry has been a weak performer. So they'll

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00:21:25,560 --> 00:21:27,760
Speaker 6: go there. But they have to see something they don't

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00:21:27,760 --> 00:21:28,760
Speaker 6: have in the closet already.

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00:21:28,840 --> 00:21:30,520
Speaker 2: You know, I think of when I think of Lulu

444
00:21:30,760 --> 00:21:34,280
Speaker 2: Midtown uniform, I don't think a technical performance at all.

445
00:21:34,440 --> 00:21:36,440
Speaker 2: I feel like that dined in the pandemic, didn't it.

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00:21:37,359 --> 00:21:39,760
Speaker 6: No, I think that people are basically still wearing technical

447
00:21:39,840 --> 00:21:43,040
Speaker 6: and functional. I think that some of Lulu's merchandise, particularly

448
00:21:43,040 --> 00:21:46,200
Speaker 6: for men that ABC panned, that's showing up to work

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00:21:46,240 --> 00:21:46,680
Speaker 6: every day.

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00:21:47,359 --> 00:21:48,320
Speaker 1: That was my point.

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00:21:48,440 --> 00:21:49,320
Speaker 2: That was exactly it.

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00:21:49,400 --> 00:21:53,359
Speaker 1: You picture the midtown uniform, you picture f leisure during

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00:21:53,400 --> 00:21:57,360
Speaker 1: the pandemic. You don't picture you know, incredibly, you don't

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00:21:57,359 --> 00:21:58,240
Speaker 1: picture Alvarez.

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Speaker 2: I sense you disagreed with it, but I just feel

456
00:22:00,119 --> 00:22:02,080
Speaker 2: like there's been a real brand hit over the last

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00:22:02,320 --> 00:22:05,520
Speaker 2: few years that aspirational glosses sort of is off.

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00:22:05,640 --> 00:22:08,960
Speaker 6: There's been more competition, They've gotten to a bigger base,

459
00:22:09,240 --> 00:22:10,800
Speaker 6: so it requires more to.

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00:22:10,800 --> 00:22:13,159
Speaker 2: Beat the bigger base. Got it, Danni, it's going to

461
00:22:13,160 --> 00:22:14,359
Speaker 2: see you. Thank good to see you too, one of

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00:22:14,400 --> 00:22:16,040
Speaker 2: the best I know. Just incredibly busy week for you,

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00:22:16,119 --> 00:22:18,560
Speaker 2: so thank you. Thanks for dropping by any of TAOSI

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Speaker 2: Advisory Group. This is the Bloomberg Surveillance Podcast, bringing you

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00:22:23,240 --> 00:22:26,640
Speaker 2: the best in markets, economics, angio politics. You can watch

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