WEBVTT - US Retail Sales, TSMC Earnings 0:00:02.440 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.240 --> 0:00:12.160 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:00:12.240 --> 0:00:15.320 weekdays at ten am Eastern on Affo, Cardplay and Android 0:00:15.320 --> 0:00:18.440 Auto with the Bloomberg Business App. Listen on demand wherever 0:00:18.480 --> 0:00:22.080 you get your podcasts, or watch us live on YouTube. 0:00:22.840 --> 0:00:23.920 Get back to the markets here. 0:00:24.120 --> 0:00:28.120 The big economic news of the day was the retail sales, 0:00:28.120 --> 0:00:30.400 and they generally came out I think across the board 0:00:30.760 --> 0:00:34.000 stronger than expected. The headline zero point four percent, consensus 0:00:34.040 --> 0:00:37.239 was zero point three for growth and zero point one 0:00:37.240 --> 0:00:39.519 percent last period, so big pick up there. When you 0:00:39.520 --> 0:00:44.240 look at the control group, perhaps even more impressive zero 0:00:44.240 --> 0:00:48.200 point seven percent gain versus zero point three percent forecast 0:00:48.520 --> 0:00:50.760 and last month was zero point three percent, So again 0:00:50.760 --> 0:00:53.000 pretty strong across the board. Let's see what it means 0:00:53.240 --> 0:00:55.040 to some of the folks who really follow the retail 0:00:55.040 --> 0:00:58.320 business closely, as does our next guest, Mary Shore, Senior 0:00:58.360 --> 0:01:02.120 Equity anams A Columbia thread Needle, joining us from Boston 0:01:02.280 --> 0:01:05.080 via Zoom. So, Mary, just to my untrained eye, these 0:01:05.080 --> 0:01:07.840 retail sales numbers look pretty good. What do you think 0:01:08.040 --> 0:01:10.319 and what are you seeing in the retail space these days? 0:01:11.520 --> 0:01:11.720 Yes? 0:01:11.840 --> 0:01:14.040 Thanks, for having me back. I think you're right. 0:01:14.200 --> 0:01:18.959 The strong September retail sales print confirms that the consumer 0:01:19.160 --> 0:01:22.959 is in good shape amidst a relatively strong jobs and 0:01:23.080 --> 0:01:26.360 income backdrop. To your point, there may have been some 0:01:26.520 --> 0:01:30.679 benefit this month from pre hurricane stock up behavior, but 0:01:30.880 --> 0:01:35.000 overall the growth remains very healthy, as we've been talking 0:01:35.000 --> 0:01:36.640 about for some time now. 0:01:37.000 --> 0:01:37.959 However, when you. 0:01:37.920 --> 0:01:42.600 Dig deeper, you continue to see pockets of strength and weakness. 0:01:42.680 --> 0:01:44.840 So areas of strength. 0:01:44.440 --> 0:01:48.200 That I would highlight would be food, health and wellness, 0:01:48.480 --> 0:01:53.360 clothing and value, which I think is really incorporated in 0:01:53.440 --> 0:01:57.480 that general merchandise category. And then some areas of weakness 0:01:57.480 --> 0:01:59.600 to call out would be autos and some of the 0:01:59.600 --> 0:02:03.280 bigger ticket categories that we're strong during the pandemic, like 0:02:03.480 --> 0:02:07.400 furniture and electronics. So when I look at the data, 0:02:07.520 --> 0:02:10.160 I think it shows the consumers in good shape, and 0:02:10.480 --> 0:02:12.640 it really is a continuation of a lot of the 0:02:12.680 --> 0:02:16.280 trends that we've discussed in prior episodes. 0:02:17.120 --> 0:02:19.840 It's interesting. I mean, obviously this data does show that 0:02:19.880 --> 0:02:22.160 the consumer is in a good spot, but of course 0:02:22.200 --> 0:02:27.400 people are still complaining of this intensely high inflation. How 0:02:27.440 --> 0:02:29.280 do you think that this really fits into the broader 0:02:29.320 --> 0:02:33.400 economy and as we think about things moving forward, well, 0:02:33.800 --> 0:02:34.320 I think. 0:02:34.160 --> 0:02:36.600 It's exactly what we're seeing in the data. We're very 0:02:36.680 --> 0:02:40.640 high level, we see low single digit growth, But then again, 0:02:40.639 --> 0:02:43.560 when you dig a little deeper, you see services growing 0:02:43.680 --> 0:02:48.080 faster than goods, and within goods, you see needs growing 0:02:48.160 --> 0:02:51.959 faster than once. And so to your point, the inflation 0:02:52.120 --> 0:02:55.960 that we've seen in food and housing in particular really 0:02:56.040 --> 0:03:01.320 continues to weigh on consumer discretionary spend on goods, and 0:03:01.360 --> 0:03:03.840 I think that is a real key reason for some 0:03:03.919 --> 0:03:06.959 of the continued weakness in some of those bigger ticket 0:03:07.000 --> 0:03:09.400 categories that I just highlighted. 0:03:10.160 --> 0:03:11.760 Mary, what are the retailers that you cover? 0:03:11.840 --> 0:03:14.959 What are they saying about the holiday Christmas season coming 0:03:15.040 --> 0:03:17.520 up such a big part of their annual sales? 0:03:21.040 --> 0:03:25.600 Yes, I think you know, as always they're cautiously optimistic. 0:03:25.639 --> 0:03:29.120 You know, they're optimistic by nature, but given the macro backdrop, 0:03:29.200 --> 0:03:35.200 I think everyone is planning their business very conservatively. They 0:03:35.240 --> 0:03:40.440 were being disciplined on inventory. I expect promotions to be 0:03:40.680 --> 0:03:44.440 very well controlled for that reason. But overall, I do 0:03:44.480 --> 0:03:46.640 think it will be a strong holiday. What we've seen 0:03:46.680 --> 0:03:50.440 this year is that during key events, the consumer does 0:03:50.520 --> 0:03:53.000 come out and shop, so I think, you know, we 0:03:53.080 --> 0:03:55.920 will see real strength over Black Friday and the week 0:03:55.960 --> 0:03:59.560 before Christmas, and probably a lull in between those two 0:03:59.560 --> 0:04:04.040 shopping periods as we've seen in the past. So overall, 0:04:04.080 --> 0:04:06.960 I would expect a strong season, but still a little 0:04:07.040 --> 0:04:09.280 lumpy when you're looking week by week. 0:04:10.480 --> 0:04:14.080 So Mary, talk to me about the sentiment as we're 0:04:14.080 --> 0:04:16.440 thinking about things heading into this election. Of course, we're 0:04:16.520 --> 0:04:19.680 less than a month away. How are consumers thinking about 0:04:19.720 --> 0:04:22.720 this and businesses as well? 0:04:22.800 --> 0:04:25.880 Right well, I think whether it's the election or the 0:04:25.880 --> 0:04:29.600 direction of gas prices, what most of the companies that 0:04:29.720 --> 0:04:33.520 I talk to say is it's really the uncertainty which 0:04:33.560 --> 0:04:38.320 is more paralyzing for the consumer. So I would definitely 0:04:38.400 --> 0:04:42.159 expect some noise, you know, right heading into the election. 0:04:42.800 --> 0:04:45.560 But either way, I think that the results of the 0:04:45.640 --> 0:04:50.000 election will provide that certainty to the consumer and probably 0:04:50.080 --> 0:04:53.839 boost consumer sentiment going forward. I think what it means 0:04:53.839 --> 0:04:58.200 for the companies could be more mixed, Like if Trump 0:04:58.360 --> 0:05:03.320 does continue talking about his tariff policy, then you know, 0:05:03.400 --> 0:05:06.200 that could be an overhang on some of the retailers 0:05:06.200 --> 0:05:08.320 that import from overseas. 0:05:09.560 --> 0:05:12.799 But I think overall, just the results of the election. 0:05:13.000 --> 0:05:17.400 In gaining that uncertainty will be a positive thing for 0:05:17.480 --> 0:05:19.200 consumer sentiment going forward. 0:05:19.760 --> 0:05:22.839 All right, this Christmas shopping season, how promotional will the 0:05:22.880 --> 0:05:26.880 retailers be? I know that goes right to their profit margin, 0:05:26.960 --> 0:05:28.480 but how do you think that's going to shake out? 0:05:29.360 --> 0:05:32.920 Yeah, you know, we talk a lot about promotions versus markdowns. 0:05:32.960 --> 0:05:35.680 You know, the retailers know they have to be promotional 0:05:36.040 --> 0:05:39.480 to drive traffic, and so I think you should expect 0:05:39.480 --> 0:05:43.839 to see controlled promotions. So what I mean by that is, 0:05:43.880 --> 0:05:47.359 you know, promotions more in say the thirty percent range, 0:05:47.520 --> 0:05:50.279 and given that inventory is well controlled, I think the 0:05:50.320 --> 0:05:53.000 retailers will try to stick to that plan for as 0:05:53.080 --> 0:05:57.440 long as possible. I would not expect to see promotions 0:05:57.560 --> 0:06:02.240 in like the seventy percent range and markdowns, and that's 0:06:02.320 --> 0:06:05.440 typically what you see when the sales are a lot 0:06:05.480 --> 0:06:08.600 weaker than planned or the inventory is a lot heavier 0:06:08.640 --> 0:06:11.760 than planned. And I don't really expect either of those 0:06:11.800 --> 0:06:16.560 things this holiday. So you'll still see those headline promotions, 0:06:16.800 --> 0:06:19.400 but you have to remember that the retailers have planned 0:06:19.440 --> 0:06:22.760 for those they bought into them, and so there's really 0:06:23.000 --> 0:06:27.279 no negative margin implication from some of those headlines. 0:06:28.040 --> 0:06:30.480 Well, we think historically and then moving into this year, 0:06:30.640 --> 0:06:33.440 how do consumers really think about the holidays when we're 0:06:33.480 --> 0:06:35.680 thinking in this season, is it everyone's just going to 0:06:35.760 --> 0:06:38.320 throw everything on their credit card because we have the 0:06:38.320 --> 0:06:40.880 holiday cheer? Or do you think they're really going to 0:06:40.880 --> 0:06:43.640 be targeting those companies that are those stores that are 0:06:43.640 --> 0:06:45.080 offering promotions specifically. 0:06:46.760 --> 0:06:47.599 It's a great question. 0:06:47.720 --> 0:06:50.520 I mean, I think we do see the consumer come 0:06:50.520 --> 0:06:54.440 out and spend around key events, and you know, especially 0:06:54.480 --> 0:06:56.800 in a year that could be tough, you're feeling the 0:06:56.960 --> 0:07:00.000 pinch of inflation, every consumer wants to bring a little 0:07:00.279 --> 0:07:04.320 cheer around the holidays. So I do expect that they 0:07:04.360 --> 0:07:07.520 will be out in the market. Having said that, I 0:07:07.560 --> 0:07:11.160 think they're still going to be very discerning, very focused 0:07:11.240 --> 0:07:13.760 on value, and I would expect a lot of the 0:07:13.880 --> 0:07:17.880 value players, as I mentioned in that general merchandise category 0:07:18.120 --> 0:07:19.920 to be the key beneficiary. 0:07:20.240 --> 0:07:21.840 All Right, Mari, thank you so much for joining us. 0:07:21.880 --> 0:07:25.320 Mary Sure Senior ecuadanams a Columbia Thread Needle Investments up 0:07:25.320 --> 0:07:29.000 in Boston, always helping us out talking about retail sales. 0:07:29.240 --> 0:07:33.119 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:07:33.200 --> 0:07:36.720 weekdays at ten am Eastern on Applecar Play and Android 0:07:36.760 --> 0:07:39.920 Otto with the Bloomberg Business. You can also listen live 0:07:40.000 --> 0:07:43.160 on Amazon Alexa from our flagship New York station. Just 0:07:43.240 --> 0:07:45.880 say Alexa play Bloomberg eleven thirty. 0:07:47.440 --> 0:07:48.160 Let's switch gears. 0:07:48.240 --> 0:07:51.160 Let's get back to the markets here technology in the 0:07:51.200 --> 0:07:54.480 play here yesterday, I think it was me who said 0:07:54.560 --> 0:07:56.520 I think I've seen the top of AI. 0:07:56.720 --> 0:07:58.120 I think some of these chip. 0:07:58.040 --> 0:08:01.320 Companies are going to roll over and blah blah blah blah. 0:08:01.400 --> 0:08:05.080 Well then Taiwan Semiconductor comes out with a better than 0:08:05.200 --> 0:08:09.080 forecasted outlook. So once again I was proven wrong, particularly 0:08:09.080 --> 0:08:10.080 it relates to technology. 0:08:10.080 --> 0:08:10.800 I don't know what's going on. 0:08:10.800 --> 0:08:12.400 How do you feel about that? How do I feel 0:08:12.440 --> 0:08:14.880 about that? It lasted all of like twenty four hours? 0:08:14.920 --> 0:08:17.840 My great call there, Man Deep Sing he's the extra, 0:08:17.960 --> 0:08:20.120 He's the one we go to. Man Deep Sying, he's 0:08:20.160 --> 0:08:23.520 the tech ANAMST for Bloomberg Intelligence. So Mandy talks about 0:08:23.840 --> 0:08:25.600 Taiwan Semi Contector. A lot of our listeners, a lot 0:08:25.600 --> 0:08:27.440 of reviewers not really familiar with it. Tell us about 0:08:27.440 --> 0:08:30.080 what this company does and kind of what they announced recently. 0:08:30.640 --> 0:08:34.960 I mean, basically, they are the manufacturing factory for all 0:08:35.040 --> 0:08:38.640 your AI chips, all the chips that go into smartphones, 0:08:38.679 --> 0:08:42.640 and basically they are at the leading edge of manufacturing. 0:08:42.679 --> 0:08:46.320 When people talk about you know chips, the most powerful 0:08:46.400 --> 0:08:49.680 AI chips with the most transistors, they are the ones 0:08:49.720 --> 0:08:53.319 who are manufacturing it. And look, I think it was 0:08:53.440 --> 0:08:57.840 quite a contrast between the ASML print and the TSMC print, 0:08:58.360 --> 0:09:02.640 and what it shows you is the AI side continues 0:09:02.679 --> 0:09:05.520 to be strong. In fact, they called out smartphones being 0:09:05.559 --> 0:09:08.760 as strong in market as well uh in the print. 0:09:08.840 --> 0:09:12.560 So clearly the top two segments for them are working 0:09:12.640 --> 0:09:17.040 quite well and they have more demand than they can manufacture. 0:09:17.080 --> 0:09:21.360 These chips for Nvidia and Apple, those are their you know, 0:09:21.480 --> 0:09:25.160 top customers, and they're raising their capex guide. So one 0:09:25.160 --> 0:09:29.520 of the concerns was will TSMC raise their capex guide 0:09:29.520 --> 0:09:31.760 given what we heard from a SML, Well, guess what, 0:09:31.920 --> 0:09:35.360 they are raising their capex guide. So a SML's woes 0:09:35.400 --> 0:09:39.600 were really driven by Intel pairing back and Samsung pairing back. 0:09:39.640 --> 0:09:42.720 But when it comes to TSMC, they continue to be strong, 0:09:42.760 --> 0:09:43.000 all right. 0:09:43.040 --> 0:09:45.840 So Taimewan Semiconductor does a trade in US or eighty 0:09:45.960 --> 0:09:46.640 rs in US. 0:09:46.679 --> 0:09:48.480 The ADRs are the ADRs trade in. 0:09:48.480 --> 0:09:51.160 US t SM as your tickle put InChI. Bloomberg Terminal 0:09:52.000 --> 0:09:55.520 stock is up eleven percent today, up one hundred percent 0:09:55.600 --> 0:09:58.520 year to date. This isn't a penny stock. This has 0:09:58.559 --> 0:10:02.959 a market cap of over one trillion dollars. My ignorance 0:10:03.040 --> 0:10:05.000 level on this is out of control. I mean, I 0:10:05.040 --> 0:10:06.120 just didn't know they were that big. 0:10:06.240 --> 0:10:07.880 I know, when we're compute, the number's two big. 0:10:07.920 --> 0:10:08.400 No, it's too big. 0:10:08.440 --> 0:10:10.480 That's why we need man deep sink. So anyway, big 0:10:10.480 --> 0:10:13.559 company folks. Giving a positive outlook on the chip business 0:10:13.600 --> 0:10:16.120 really important for overall tech discussion about AI. 0:10:16.400 --> 0:10:18.560 So talk to us about the outlook right now? What 0:10:18.600 --> 0:10:21.319 are expectations when we think about the tech sector more broadly? 0:10:21.360 --> 0:10:24.320 I know earnings people have a pretty low bar, so 0:10:24.800 --> 0:10:27.440 if companies are doing well, it'll be a really great, 0:10:27.559 --> 0:10:29.240 you know, great news coming out of that. How is 0:10:29.280 --> 0:10:32.200 the tech sector when we're looking at AI specifically, what 0:10:32.240 --> 0:10:34.240 are expectations right now? I know the bar tends to 0:10:34.280 --> 0:10:35.320 be relatively high. 0:10:35.360 --> 0:10:37.360 I mean, I don't know if the bar is low 0:10:37.440 --> 0:10:40.479 at this point, given what we saw with THEML ASML 0:10:40.760 --> 0:10:43.880 was the case of expectations being too high and they 0:10:43.960 --> 0:10:46.280 guide it to that. And now they come out, you know, 0:10:46.520 --> 0:10:49.480 this quarter and say we are taking down bookings by 0:10:49.520 --> 0:10:53.040 fifty percent. So clearly expectations were high. It was the 0:10:53.160 --> 0:10:56.120 management who said it, and now they took back their guide. 0:10:56.400 --> 0:10:58.560 In the case of if I think in Video or 0:10:58.600 --> 0:11:02.640 some of the other bellveather for AI, look, we've been 0:11:02.720 --> 0:11:05.440 hearing that the demand for their latest chip continues to 0:11:05.480 --> 0:11:09.600 be strong. The TSMC print is another validation that you know, 0:11:09.760 --> 0:11:13.640 they are ramping up the AI side. It's almost mid 0:11:13.679 --> 0:11:17.240 teens of their revenue. This was almost a zero billion, 0:11:17.320 --> 0:11:21.200 a zero a dollar revenue for TSMC a few quarters back. 0:11:21.280 --> 0:11:24.800 So in just the span of three four quarters, it's 0:11:24.840 --> 0:11:27.320 mid teens of their revenue. That just goes to show 0:11:27.480 --> 0:11:30.520 along with the margin expansion, the gross margin growing to 0:11:30.960 --> 0:11:34.280 fifty eight percent. I mean, all this is positive for 0:11:34.480 --> 0:11:39.200 AI and you know for bell Weathers like Nvidia at 0:11:39.200 --> 0:11:43.040 the same time, this will drive up the expectations even further. 0:11:43.640 --> 0:11:46.240 So you know, the bar keeps getting higher, and at 0:11:46.280 --> 0:11:49.800 some point I think you will have missus like what 0:11:49.840 --> 0:11:53.360 we saw with the SML, but probably not that soon 0:11:53.480 --> 0:11:54.800 for the likes of Invidia. 0:11:55.440 --> 0:11:59.040 So thirty secondsleft, who are the top two or three 0:11:59.120 --> 0:12:03.080 or four buyers of these chips. Is it the Microsoft's 0:12:03.120 --> 0:12:05.360 and the Googles of the world. 0:12:05.480 --> 0:12:07.800 I mean, in the case of TSMC, the top buyer 0:12:07.880 --> 0:12:11.640 is still Apple. Okay, so that validates that smartphone to 0:12:11.640 --> 0:12:14.400 refresh that everyone is waiting for that segment. Did well. 0:12:14.440 --> 0:12:17.400 The inventory is building up, and then Nvidia and and 0:12:17.559 --> 0:12:21.400 Nvidia continues to become a bigger buyer of tsmcs. And 0:12:21.480 --> 0:12:24.559 then you have got AMD and some others. But pretty 0:12:24.640 --> 0:12:29.040 much every fabulous design company, whether it's AMD, Qualcomm and VideA, 0:12:29.520 --> 0:12:33.280 goes to TSMC for you know, manufacturing their chips because 0:12:33.320 --> 0:12:36.680 they have a leading node monopoly. I mean, everyone else 0:12:36.800 --> 0:12:38.319 is way behind when it comes to. 0:12:38.600 --> 0:12:41.240 Son Go to Taiwan and see Taiwan and see them 0:12:41.240 --> 0:12:41.840 make chips. 0:12:42.160 --> 0:12:45.360 Yeah, you should visit one of their factories, the one 0:12:45.400 --> 0:12:46.320 in Arizona though. 0:12:46.400 --> 0:12:49.079 Yeah, they're gonna do one in Arizona. Yeah, okay, that's 0:12:49.120 --> 0:12:51.439 cool too. All right, Mandy, thank you very much again. 0:12:51.520 --> 0:12:54.320 As always, he is our absolute goat to persons for 0:12:54.360 --> 0:12:57.280 all things technology. Senior Technology aannels. He runs all of 0:12:57.280 --> 0:13:01.120 our tech practice at Bloomberg Intelligence, and we appreciate getting 0:13:01.160 --> 0:13:02.800 his time because he's only a floor away. 0:13:02.840 --> 0:13:04.280 It's not like a big ass. We love that, and 0:13:04.400 --> 0:13:04.880 you walk. 0:13:04.760 --> 0:13:07.040 Up the stairs and talk to us on Bloomberg Radio, 0:13:07.240 --> 0:13:07.840 man Deep singing. 0:13:07.880 --> 0:13:12.920 There, you're listening to the Bloomberg Intelligence Podcast. Catch us 0:13:12.960 --> 0:13:15.920 live weekdays at ten am Eastern on Apple car Playing 0:13:16.000 --> 0:13:18.600 and broud Otto with the Bloomberg Business app. Listen on 0:13:18.679 --> 0:13:21.959 demand wherever you get your podcasts, or watch us live 0:13:22.040 --> 0:13:23.400 on YouTube. 0:13:23.880 --> 0:13:26.800 I don't know, did retail sales today nor better than expected? 0:13:26.920 --> 0:13:30.280 Maybe maybe the FED doesn't have to cut in November. 0:13:30.320 --> 0:13:32.840 And if they don't, is that okay? I don't know 0:13:32.840 --> 0:13:34.800 the markets are creating car here. It looks like it's 0:13:34.880 --> 0:13:37.559 kind of okay. Let's talk to somebody who's actually has 0:13:37.600 --> 0:13:38.920 a professional here on this whole thing. 0:13:39.000 --> 0:13:42.440 David Kodluck. He's a founder, he's a chief executive officer. 0:13:42.760 --> 0:13:44.920 And he's a chief investment strategist. I think that means 0:13:44.920 --> 0:13:45.480 he's the boss. 0:13:45.720 --> 0:13:46.360 It sounds like it. 0:13:46.440 --> 0:13:50.040 That's right, mainstay a capital management from one of my 0:13:50.120 --> 0:13:52.880 favorite little towns out there in the Midwest, Troy, Michigan. 0:13:52.920 --> 0:13:56.400 I've been to Troy, Michigan. Cool little town, David. 0:13:56.640 --> 0:13:58.920 So you get a retail sales number today that's better 0:13:58.960 --> 0:14:01.920 and expected, you get some still a pretty strong labor market. 0:14:03.200 --> 0:14:04.920 Is this a FED that has to cut and if 0:14:04.960 --> 0:14:07.079 they don't have to cut in November. 0:14:06.720 --> 0:14:07.240 Is that okay? 0:14:08.520 --> 0:14:11.800 Good morning, Paul and Nora. I think it's a FED 0:14:11.840 --> 0:14:16.000 that will continue to cut. They'll continue to ease because 0:14:16.240 --> 0:14:19.440 monetary policy is more restrictive than it needs to be. 0:14:19.960 --> 0:14:21.640 Inflation has come down there. 0:14:21.720 --> 0:14:24.000 I know there's fears that we could see a resurgence 0:14:24.120 --> 0:14:28.080 of inflation here yet this year into next year, but 0:14:28.120 --> 0:14:31.520 inflation has come down and is drifting towards target. Certainly 0:14:31.560 --> 0:14:35.480 it is in Europe the ECB cut last night. The 0:14:36.440 --> 0:14:38.880 key here is that when we look at the economy 0:14:38.880 --> 0:14:41.440 and say, I think it's you know, what's interesting is 0:14:42.560 --> 0:14:44.880 do they need to cut for a recession? No, those 0:14:44.920 --> 0:14:47.400 that have been calling for a recession for the last 0:14:47.480 --> 0:14:49.080 two years have been dead. 0:14:49.120 --> 0:14:49.560 We're wrong. 0:14:50.720 --> 0:14:53.440 We've kind of mocked this by my phrase the recession 0:14:53.560 --> 0:14:56.120 is always six months away. That have actually been saying 0:14:56.160 --> 0:14:58.360 for two and a half years now. And yeah, retail 0:14:58.440 --> 0:15:01.680 sales came in above expectations, four tenths a month over 0:15:01.720 --> 0:15:02.840 month versus three tenths. 0:15:02.880 --> 0:15:04.280 We've got strong. 0:15:04.040 --> 0:15:08.680 GDP Atlanta gb GDP now forecast above three percent, uh, 0:15:09.000 --> 0:15:13.280 labors hanging in there, and so we've I always I 0:15:13.320 --> 0:15:16.720 always am careful to use the word goldilocks economy, but 0:15:16.840 --> 0:15:19.240 we sure, you know, if there's if there's such a 0:15:19.240 --> 0:15:22.040 thing as a Goldilocks economy, we're sure close to it 0:15:22.120 --> 0:15:25.080 right now. And the Fed does have the ability to 0:15:25.160 --> 0:15:30.640 continue to ease as other central banks are around the world, 0:15:30.720 --> 0:15:34.760 just because you know, we we don't uh, we're in 0:15:34.800 --> 0:15:37.440 that sweet spot where they can make monetary policy a 0:15:37.480 --> 0:15:38.440 little less restrictive. 0:15:39.400 --> 0:15:42.880 So tell me, David, which economic data is most paramount 0:15:42.960 --> 0:15:45.240 right now. I know we've always had our eyes on inflation, 0:15:45.360 --> 0:15:47.880 but it seems as though attention is really shifting toward 0:15:48.200 --> 0:15:51.440 employment data as being more important right now. What's your 0:15:51.560 --> 0:15:53.160 look your out look on that? 0:15:53.320 --> 0:15:55.040 Yeah, that, Nora and I agree. 0:15:55.040 --> 0:16:00.960 It's really it's this, when we look at employment or 0:16:01.080 --> 0:16:05.760 labor versus inflation. You know, where are we and we 0:16:05.800 --> 0:16:08.720 see inflation drifting down? We think that's becoming a more 0:16:08.880 --> 0:16:12.680 non existent problem. We keep getting mixed data on labor. 0:16:12.880 --> 0:16:15.520 You know, there was some screwy numbers in the back 0:16:15.600 --> 0:16:19.280 months that had to be revised. But you know, if 0:16:19.280 --> 0:16:21.560 we if we we want to keep an eye on labor. 0:16:22.560 --> 0:16:25.600 We want to keep an eye on the consumer being 0:16:25.680 --> 0:16:28.520 two thirds of our economy, so we need labor to 0:16:28.560 --> 0:16:33.280 stay strong enough but not too strong and not get 0:16:33.320 --> 0:16:36.160 weak enough that they're cutting, you know, for the reasons 0:16:36.200 --> 0:16:38.520 we don't want, which is the fear of a recession. 0:16:38.600 --> 0:16:40.960 And we think the you know that the fears of 0:16:41.000 --> 0:16:44.920 a recession, you know, they're just there's anecdotal data there. 0:16:45.160 --> 0:16:50.720 You know, what's happening with car loan delinquencies, personal debt, 0:16:50.960 --> 0:16:51.800 credit card debt. 0:16:51.880 --> 0:16:53.480 There's that anecdotal data. 0:16:53.560 --> 0:16:55.840 But when we look at GDP, we look at labor, 0:16:55.880 --> 0:16:58.800 we look at inflation, we look at retail salesman. You know, 0:16:58.880 --> 0:17:01.240 we've we've got when we look at the macro numbers, 0:17:01.280 --> 0:17:05.520 we've got an economy that keeps chugging along, and correspondingly, 0:17:05.920 --> 0:17:08.080 a stock market that keeps chugging along. 0:17:08.160 --> 0:17:08.400 Again. 0:17:08.480 --> 0:17:11.320 The people that have called for a bear market anytime 0:17:11.359 --> 0:17:13.680 over the last two years, they weren't early. They were 0:17:13.720 --> 0:17:16.920 just wrong, dead wrong. And you know, we're still constructive 0:17:16.960 --> 0:17:19.520 on stocks. It always looks prudent, right, It always looks 0:17:19.800 --> 0:17:22.760 prudent or smart to say a recession is right around 0:17:22.800 --> 0:17:25.320 the corner, or bear markets right around the corner. But 0:17:25.359 --> 0:17:26.960 it's key to these people that have been saying this 0:17:27.080 --> 0:17:30.200 for so long they're dead just been wrong. 0:17:30.960 --> 0:17:33.959 So David, how are you advising your clients now versus 0:17:34.000 --> 0:17:35.359 maybe this time last year? 0:17:37.920 --> 0:17:41.359 We're you know, all that said, we're always concerned about 0:17:41.400 --> 0:17:43.639 when when the next shoe will drop or you know, 0:17:43.720 --> 0:17:45.600 when when the first shoe will drop or the next 0:17:45.640 --> 0:17:46.359 shoe will drop. 0:17:46.600 --> 0:17:47.800 We are concerned about that. 0:17:47.960 --> 0:17:50.000 So that's why we're keeping an eye on the data 0:17:50.320 --> 0:17:54.400 that were talking about here on does it is inflation 0:17:54.720 --> 0:17:56.360 on a glide path down to the. 0:17:56.320 --> 0:17:58.399 Fence target we believe it is. 0:17:58.400 --> 0:18:02.040 Is you know, uh, do we still have though a 0:18:02.160 --> 0:18:04.160 robust economy or we headed towards recession? 0:18:04.320 --> 0:18:06.600 We don't think so. So Uh. 0:18:06.680 --> 0:18:10.040 We continue to be very constructive on the markets. We're 0:18:10.160 --> 0:18:14.520 over overweight equities. We've changed our term structure on our 0:18:14.520 --> 0:18:18.760 bond holding somewhat. We were last year in the first 0:18:18.760 --> 0:18:21.240 part of this year on the shortest end of the curve, 0:18:21.359 --> 0:18:25.560 just capturing yield, uh, rather than any kind of interest 0:18:25.640 --> 0:18:28.520 rate player anything else. Because duration has worked against you, uh, 0:18:28.640 --> 0:18:31.000 we think there's an opportunity over the next year that 0:18:31.119 --> 0:18:34.040 duration will help you. You can get that capital appreciation 0:18:34.800 --> 0:18:38.800 combined with the yield on your stocks, clip the coupon 0:18:38.920 --> 0:18:42.639 and enjoy some capital appreciation. But I think my strongest 0:18:42.720 --> 0:18:47.640 recommendation is, uh, you know, these all the naysayers, all 0:18:47.640 --> 0:18:52.680 the doomsayers, the pundits that are you know, collapses eminet. Look, 0:18:52.840 --> 0:18:56.600 they've been wrong, and so we're very constructive on the markets. 0:18:56.680 --> 0:18:59.200 We're bullish on the market's near term. We have an 0:18:59.200 --> 0:19:01.840 election coming that we'll get out of the way, so 0:19:01.920 --> 0:19:04.880 that removes some uncertainty. And we're heading into the seasonal 0:19:04.960 --> 0:19:08.760 period that's strong for stocks from November through April. So 0:19:09.280 --> 0:19:14.040 you know, there's a lot of economic seasonality and other 0:19:14.359 --> 0:19:17.520 factors that are good tailwinds for equities right now. 0:19:18.040 --> 0:19:21.160 David, you mentioned the election nineteen days I think coming 0:19:21.240 --> 0:19:22.880 up or very close here. 0:19:23.160 --> 0:19:24.720 What do you tell your clients about it? 0:19:24.760 --> 0:19:27.159 I mean, is there any way to election proof of 0:19:27.280 --> 0:19:29.199 portfolio or don't worry about it? 0:19:30.400 --> 0:19:34.280 Well, unfortunately, and not our clients, because we educate our 0:19:34.280 --> 0:19:39.080 clients about this a lot every election cycle. Don't election 0:19:39.200 --> 0:19:42.280 proof it by going to cash. That's the worst mistake 0:19:42.359 --> 0:19:45.840 that investors make because look at this, look at this 0:19:45.960 --> 0:19:51.840 election like others, how polarizing, you know, between the two candidates. 0:19:51.880 --> 0:19:55.000 You know, if so and so gets elected, we're going 0:19:55.040 --> 0:19:58.040 to heck in a handbasket in the same thing for 0:19:58.119 --> 0:19:58.880 the other candidate. 0:19:59.160 --> 0:19:59.840 And there's all this. 0:20:00.280 --> 0:20:03.359 The reality of it is is the biggest factor for 0:20:03.400 --> 0:20:07.199 the market is uncertainty. Markets had uncertainty that will be 0:20:07.200 --> 0:20:10.080 determined here in three weeks. So the key is don't 0:20:10.119 --> 0:20:13.080 go to cash, stay invested in the market and as 0:20:13.160 --> 0:20:16.600 we see who it looks like will be what administration 0:20:16.760 --> 0:20:19.400 will be in office here in a few months, that's 0:20:19.520 --> 0:20:23.320 where that's where we want to be tactically moving our 0:20:23.320 --> 0:20:26.120 portfolios to worst mistake is to go to cash. And look, 0:20:26.160 --> 0:20:29.080 this year is a perfect example. We have the best 0:20:29.119 --> 0:20:33.760 election year through today for the markets that we've had 0:20:33.760 --> 0:20:36.639 since the nineteen thirties. That's how good this year is. 0:20:36.960 --> 0:20:39.040 It is not the time to be to go to cash, 0:20:39.320 --> 0:20:41.639 to wait on the sidelines until you see how it 0:20:41.680 --> 0:20:44.560 comes out. Right, So it's looking at where what do 0:20:44.600 --> 0:20:48.160 you expect with the candidate that will win, tactically allocating 0:20:48.200 --> 0:20:49.320