1 00:00:03,360 --> 00:00:08,879 Speaker 1: This is Bloomberg Surveillance. If anybody needs capable management teams 2 00:00:08,880 --> 00:00:11,200 Speaker 1: for the future, it's the commercial banks, right, They're not 3 00:00:11,240 --> 00:00:13,600 Speaker 1: going to go away. The business isn't going to go away. 4 00:00:13,720 --> 00:00:17,520 Speaker 1: It's not as sign that the economy if not prosper 5 00:00:17,600 --> 00:00:19,959 Speaker 1: if the fact that in places only one passet, I 6 00:00:19,960 --> 00:00:21,560 Speaker 1: don't get it. The fourth Courter was bad in terms 7 00:00:21,600 --> 00:00:23,239 Speaker 1: of g d P, it was a bad in terms 8 00:00:23,280 --> 00:00:25,279 Speaker 1: of jobs. In fact, it was fantastic in terms of 9 00:00:25,360 --> 00:00:29,160 Speaker 1: jock growth. And that's what's the most important. Bloomberg Surveillance 10 00:00:29,440 --> 00:00:32,960 Speaker 1: your link to the world of economics, finance, and investment. 11 00:00:33,240 --> 00:00:37,360 Speaker 1: On Bloomberg Radio, Good morning everyone, Bloomberg Surveillance. Scarlet Foo 12 00:00:37,440 --> 00:00:40,280 Speaker 1: in for Michael mckeh on this Friday morning. I'm Tom Keene. 13 00:00:40,320 --> 00:00:45,640 Speaker 1: We welcome all of you. Bloomberg twelve Boston, Bloomberg FM, Washington, 14 00:00:45,640 --> 00:00:48,480 Speaker 1: Bloomberg eleven three on New York. Good early morning out 15 00:00:48,479 --> 00:00:51,080 Speaker 1: in San Francisco, the Bay Area, Bloomberg nine sixty. We 16 00:00:51,159 --> 00:00:55,080 Speaker 1: say good morning as well. A retail focus in this 17 00:00:55,240 --> 00:00:59,000 Speaker 1: our honor to bring you Howard di Vin Evans, who 18 00:00:59,000 --> 00:01:02,840 Speaker 1: has really been really, really, really quite good on the 19 00:01:02,960 --> 00:01:06,200 Speaker 1: challenges of retail. Boy did he get out front of 20 00:01:06,240 --> 00:01:08,920 Speaker 1: the challenges of Macy's and Coles and others, and we'll 21 00:01:08,959 --> 00:01:11,760 Speaker 1: talk to him. Get an update on the pulse of 22 00:01:12,080 --> 00:01:17,560 Speaker 1: retail America first, so we look quickly at foreign exchange. UH. 23 00:01:17,800 --> 00:01:20,360 Speaker 1: The four X Briefest morning brought you my Interactive Brokers 24 00:01:20,400 --> 00:01:23,639 Speaker 1: winner of f FX Weeks two thousand and fifteen award 25 00:01:23,720 --> 00:01:27,400 Speaker 1: for the best Retail for X trading platform visit ib 26 00:01:27,520 --> 00:01:32,080 Speaker 1: at ib kr dot com slash four x yen one 27 00:01:32,160 --> 00:01:34,960 Speaker 1: thirteen thirty nine week er yen three days in a row, 28 00:01:35,520 --> 00:01:38,880 Speaker 1: Euro under one one nine seventy four euro a weakness, 29 00:01:38,959 --> 00:01:43,400 Speaker 1: dollar strength off g DP movement, a little better GDP 30 00:01:43,560 --> 00:01:46,959 Speaker 1: number than expected. I think we'll leave it there this morning. 31 00:01:47,000 --> 00:01:52,120 Speaker 1: I mean, the Sterling doing better and as well, David. 32 00:01:52,120 --> 00:01:55,200 Speaker 1: I don't want to rip up your script, but um 33 00:01:55,360 --> 00:01:58,640 Speaker 1: Gap needs a miracle, right I mean? I mean, I mean, 34 00:01:58,640 --> 00:02:01,800 Speaker 1: if we're gonna have a Howard on on retail, can 35 00:02:01,840 --> 00:02:04,400 Speaker 1: you start with Gaffer? Is there something more important than 36 00:02:05,240 --> 00:02:07,600 Speaker 1: we can start there? Why not? They mean they need something, 37 00:02:07,640 --> 00:02:10,640 Speaker 1: no question. GAP shares down about two percent in early trading. 38 00:02:11,160 --> 00:02:14,919 Speaker 1: The largest US focused the pail retailer that's Gaps claimed 39 00:02:14,919 --> 00:02:17,560 Speaker 1: the fame they expect earnings for the current fiscal year 40 00:02:17,600 --> 00:02:19,320 Speaker 1: to be two dollars twenty five cents to share. It 41 00:02:19,400 --> 00:02:22,680 Speaker 1: best the high end of gaps forecast range, trailed analyst 42 00:02:22,760 --> 00:02:26,200 Speaker 1: averagessetment in the Bloomberg survey by nineteen cents. And then 43 00:02:26,240 --> 00:02:28,720 Speaker 1: you have J. C. Penny, which is up more than 44 00:02:28,800 --> 00:02:32,720 Speaker 1: fourteen percent in early trading. The department store chains fourth 45 00:02:32,800 --> 00:02:35,800 Speaker 1: quarter profit and sales topped analysts estimates, at least the 46 00:02:35,800 --> 00:02:38,600 Speaker 1: ones we surveyed here at Bloomberg UH, and the results 47 00:02:38,639 --> 00:02:41,440 Speaker 1: showed Penny chief executive Marvin Allison is making progress and 48 00:02:41,520 --> 00:02:45,240 Speaker 1: turning around the company looking beyond retail. You've got Kraft 49 00:02:45,320 --> 00:02:48,560 Speaker 1: Hinds up five and a half percent. The food makers 50 00:02:48,560 --> 00:02:51,080 Speaker 1: fourth quarter earnings and sales beat estimates. Craft Huns, of 51 00:02:51,080 --> 00:02:53,480 Speaker 1: course formed last year in a deal orchestrated by private 52 00:02:53,480 --> 00:02:56,840 Speaker 1: equity firm three G Capital and Warren Buffettsbergshire Hathaway, so 53 00:02:56,840 --> 00:02:59,840 Speaker 1: they're among the winners. In response to those results, Monster 54 00:03:00,000 --> 00:03:03,360 Speaker 1: evers O down five percent. The energy drake maker's profit 55 00:03:03,400 --> 00:03:05,800 Speaker 1: and revenue trail the average estates for the third time 56 00:03:05,840 --> 00:03:09,480 Speaker 1: in the past four quarters. UH some more well received 57 00:03:09,520 --> 00:03:13,120 Speaker 1: earnings reports. You've got the networking software maker Palo Alto 58 00:03:13,280 --> 00:03:16,880 Speaker 1: Networks up seven and a half percent. The data analysis 59 00:03:16,880 --> 00:03:22,079 Speaker 1: software makers Splunk of six months Splunk splk is the 60 00:03:22,120 --> 00:03:25,079 Speaker 1: ticker of sixty and a half percent, and Stamps dot 61 00:03:25,160 --> 00:03:28,000 Speaker 1: Com of twenty four and a half percent, all in 62 00:03:28,080 --> 00:03:30,880 Speaker 1: response to well receive so in South Andwestern Energy though 63 00:03:30,960 --> 00:03:33,440 Speaker 1: down eleven and a half percent, the shale producer with 64 00:03:33,480 --> 00:03:35,880 Speaker 1: a fourth quarter loss as revenue trail estimates, and then 65 00:03:35,920 --> 00:03:38,920 Speaker 1: you have son Edison a lot of pieces to this story. 66 00:03:39,000 --> 00:03:42,760 Speaker 1: Stocks up thirty percent in early trading. Hatchman manager David 67 00:03:42,760 --> 00:03:45,800 Speaker 1: Temper's attempt to block the company's proposed purchase of Vivian 68 00:03:45,880 --> 00:03:48,760 Speaker 1: Solar was turned away by a Delaware judge who well 69 00:03:48,800 --> 00:03:53,320 Speaker 1: the tempers Apolution management couldn't prove the deal hurts investors, 70 00:03:53,320 --> 00:03:57,560 Speaker 1: and son Edison's Terraform power unit now Vivin Solar, up 71 00:03:57,640 --> 00:04:01,040 Speaker 1: thirty seven and a half percent in early rating. Apple 72 00:04:01,080 --> 00:04:03,440 Speaker 1: Loosa has a nine and a half percent stake in 73 00:04:03,680 --> 00:04:06,120 Speaker 1: terror Form, and that stock is down eight and a 74 00:04:06,200 --> 00:04:10,800 Speaker 1: half percent. Weight Watchers International down twenty percent. The weight 75 00:04:10,880 --> 00:04:15,120 Speaker 1: loss company that partnered with Oprah Winfrey Land reported an 76 00:04:15,160 --> 00:04:17,720 Speaker 1: unexpected fourth quarter of loss. The number of act of 77 00:04:17,800 --> 00:04:22,560 Speaker 1: subscribers dropped four point eight percent, and finally, Republic Airways 78 00:04:22,600 --> 00:04:26,080 Speaker 1: Holdings not stock down eighty two percent, sixty two cents 79 00:04:26,080 --> 00:04:29,960 Speaker 1: to share the regional jet owner file for bankruptcy Republic 80 00:04:30,040 --> 00:04:32,200 Speaker 1: Side and effect of a lack of pilots during a 81 00:04:32,279 --> 00:04:35,560 Speaker 1: contract dispute last year. David Wilson, thank you so much. 82 00:04:35,600 --> 00:04:37,520 Speaker 1: Appreciate that. And now we're bring in a hard did 83 00:04:37,640 --> 00:04:42,039 Speaker 1: its associates who has given us just terrific perspective and 84 00:04:42,160 --> 00:04:45,440 Speaker 1: way out front Gap stores. Just as one example, folks, 85 00:04:45,440 --> 00:04:48,240 Speaker 1: I'll put the chart out on Bloomberg Radio Plus. Basically 86 00:04:48,240 --> 00:04:51,560 Speaker 1: it's made up eighty percent of the success coming out 87 00:04:51,560 --> 00:04:54,680 Speaker 1: of four five years ago. How how bad is it 88 00:04:54,839 --> 00:04:57,760 Speaker 1: out there? I want you to give me a reasoned 89 00:04:58,640 --> 00:05:03,279 Speaker 1: analysis of the state of retail getting out of the 90 00:05:03,440 --> 00:05:06,640 Speaker 1: ugly spring. They get to summer and they've got a 91 00:05:06,680 --> 00:05:11,320 Speaker 1: regroup for back to school. What's the strategy. Well, for Gap, 92 00:05:11,440 --> 00:05:14,719 Speaker 1: they're in a segment that is almost all bad American 93 00:05:14,800 --> 00:05:20,080 Speaker 1: eagloued Fit is gas. Yeah, I mean every in the 94 00:05:20,160 --> 00:05:25,000 Speaker 1: apparel chain business at Apochromie, you're gonna find very few 95 00:05:25,120 --> 00:05:28,560 Speaker 1: arrow posts that you're gonna find very few winners and 96 00:05:28,640 --> 00:05:32,200 Speaker 1: almost all loses Jay Crew a disaster, So they're in 97 00:05:32,279 --> 00:05:37,279 Speaker 1: a business where everybody is in collapse, including them. The 98 00:05:37,320 --> 00:05:40,119 Speaker 1: good news about the Gap is they're richer than everyone else. 99 00:05:40,560 --> 00:05:43,160 Speaker 1: They're balance sheet is a monster, sitting with a billion 100 00:05:43,200 --> 00:05:46,839 Speaker 1: in cash, no debt. So this is a powerhouse company 101 00:05:46,880 --> 00:05:50,240 Speaker 1: that is not going away. They're still making money, they 102 00:05:50,279 --> 00:05:53,120 Speaker 1: have positive cash flow, they got lots of money. They 103 00:05:53,200 --> 00:05:57,720 Speaker 1: just keep closing stores and the future is uncertain. That's 104 00:05:57,760 --> 00:06:00,320 Speaker 1: the problem with the Gap. A little headline coming out 105 00:06:00,360 --> 00:06:02,920 Speaker 1: love more on this Honeywell offers a hundred eight dollars 106 00:06:02,920 --> 00:06:07,359 Speaker 1: per share to quote re engage with U t X. 107 00:06:07,400 --> 00:06:09,919 Speaker 1: That's away from how our divid of its expertise, but 108 00:06:10,080 --> 00:06:14,440 Speaker 1: certainly important. U t X uh surging from eight seven 109 00:06:14,520 --> 00:06:18,239 Speaker 1: up to nine and the new wagers up another ten dollars. 110 00:06:18,279 --> 00:06:21,040 Speaker 1: Scarlett quickly, No. I wanted to get to Howard in 111 00:06:21,120 --> 00:06:24,360 Speaker 1: terms of what we see across the retailers. Is this 112 00:06:24,440 --> 00:06:28,279 Speaker 1: idea that these companies are big on promotions. When do 113 00:06:28,400 --> 00:06:31,440 Speaker 1: we or do we ever start to see margin expansion? Well, 114 00:06:31,440 --> 00:06:35,640 Speaker 1: we would never as long as you've got poverty doubling 115 00:06:35,680 --> 00:06:38,279 Speaker 1: in the last seven years, which of course has been 116 00:06:38,720 --> 00:06:40,840 Speaker 1: what we had one out of twelve in poverty. We 117 00:06:40,920 --> 00:06:43,359 Speaker 1: now have worn out of six and poverty seven years later. 118 00:06:43,560 --> 00:06:47,840 Speaker 1: As long as you've got that scarlet across America, as 119 00:06:47,920 --> 00:06:51,280 Speaker 1: long as Macy's is now building discount stores, as long 120 00:06:51,320 --> 00:06:54,440 Speaker 1: as North from fastest growth A discount stores, as long 121 00:06:54,480 --> 00:06:57,440 Speaker 1: as Sacks fastest growth a discount stores, as long as 122 00:06:57,520 --> 00:07:00,200 Speaker 1: d J d J Max is the most power full 123 00:07:00,200 --> 00:07:03,919 Speaker 1: of parel retailer in the United States by far, and 124 00:07:04,040 --> 00:07:07,480 Speaker 1: as long as traditional walls are closing, then as long 125 00:07:07,520 --> 00:07:11,440 Speaker 1: as the middle class is decimated, Uh, you've got a 126 00:07:11,520 --> 00:07:14,600 Speaker 1: smaller and smaller piece of America with money and the 127 00:07:14,640 --> 00:07:18,400 Speaker 1: aspirational middle class is killed forever because of on that 128 00:07:18,520 --> 00:07:21,800 Speaker 1: and everything else, it's not going to change. So retailing 129 00:07:21,880 --> 00:07:26,960 Speaker 1: has changed forever, and price it will be more important forever. 130 00:07:27,520 --> 00:07:30,560 Speaker 1: Bed Bathroom Beyond. Can you imagine a thinking of giving 131 00:07:30,640 --> 00:07:36,640 Speaker 1: up coupons because this sacrilege sound It is unbelievable sacrilege. Well, 132 00:07:36,680 --> 00:07:39,360 Speaker 1: speaking of bed bathroom Beyond, one of its rivals, certainly 133 00:07:39,360 --> 00:07:42,520 Speaker 1: on a higher end, would be restoration hardware. One thing 134 00:07:42,560 --> 00:07:45,680 Speaker 1: I found very interesting is the commentary from the CEO 135 00:07:46,400 --> 00:07:50,520 Speaker 1: Gary Freeman. He talked about how a bear market wouldn't 136 00:07:50,560 --> 00:07:53,680 Speaker 1: be all bad news for the company because it could 137 00:07:53,680 --> 00:07:56,520 Speaker 1: bring lower real estate prices, which would help the change. 138 00:07:56,560 --> 00:07:59,360 Speaker 1: Is that the I think that's one of the craziest comments. 139 00:07:59,400 --> 00:08:04,200 Speaker 1: I but look, Gary Friedman is a brilliant, brilliant guy. 140 00:08:04,320 --> 00:08:07,760 Speaker 1: He is a groundbreaking guy. He's done the most exciting 141 00:08:07,800 --> 00:08:10,960 Speaker 1: thing in furniture in fifty years. There is no there's 142 00:08:11,000 --> 00:08:14,840 Speaker 1: no one like them right now. If you take that 143 00:08:14,960 --> 00:08:18,320 Speaker 1: explanation and the real estate, that's a little looney, uh 144 00:08:18,640 --> 00:08:20,800 Speaker 1: what they don't think he is to change the real estate, 145 00:08:21,640 --> 00:08:26,240 Speaker 1: but he gave fifty reasons. He is the real One 146 00:08:26,240 --> 00:08:29,040 Speaker 1: of the key reasons that happened to him. He's in 147 00:08:29,080 --> 00:08:32,400 Speaker 1: a business that's out on the fashion edge. That's what 148 00:08:32,520 --> 00:08:35,600 Speaker 1: made him so great. Now, when you go out on 149 00:08:35,679 --> 00:08:40,920 Speaker 1: the fashion edge and the slightest ripple happens, you're screwed. 150 00:08:41,360 --> 00:08:44,800 Speaker 1: And that he he's in that kind of a business. 151 00:08:44,840 --> 00:08:48,280 Speaker 1: Did he expand too quickly? You've seen this a million times. 152 00:08:49,120 --> 00:08:52,600 Speaker 1: This is Gary Friedman. This guy is going wild. He's 153 00:08:52,920 --> 00:08:56,720 Speaker 1: opening up giant he's doing Okay, are there elements here 154 00:08:56,720 --> 00:09:01,560 Speaker 1: of an abercarbiean Fitch were a dominant met Neddick CEO 155 00:09:01,760 --> 00:09:06,520 Speaker 1: gets out in front of trends or his p and l. Yes. Possibly, 156 00:09:08,120 --> 00:09:11,840 Speaker 1: but but this guy has done so much good stuff, 157 00:09:11,880 --> 00:09:18,000 Speaker 1: all right, I'm hesitant to say that yet because he's 158 00:09:18,080 --> 00:09:22,440 Speaker 1: created America. I mean, he's chased his entire into Since 159 00:09:22,480 --> 00:09:26,520 Speaker 1: home Depot, we've never had anything like this the invention 160 00:09:26,559 --> 00:09:31,040 Speaker 1: of home depot actual depot fifteen years ago. Try and 161 00:09:31,160 --> 00:09:34,640 Speaker 1: threw away five million dollars in liquid. How how we're 162 00:09:34,679 --> 00:09:38,360 Speaker 1: gonna go to break in and and move forward very quickly? Howard, 163 00:09:38,440 --> 00:09:42,080 Speaker 1: we saw home Depot and lows with solid things store sales. 164 00:09:42,360 --> 00:09:48,160 Speaker 1: Can your world of retail pull over the home Depot excellence? Yeah? 165 00:09:48,200 --> 00:09:51,199 Speaker 1: I look the home sector. They're the kings of the 166 00:09:51,240 --> 00:09:54,520 Speaker 1: home sector. Now if you look at some other people 167 00:09:54,520 --> 00:09:58,320 Speaker 1: in the home sector, they're not so fantastic. But clearly 168 00:09:58,400 --> 00:10:01,000 Speaker 1: Home Depot and Lowe's have a formula. And here is 169 00:10:01,040 --> 00:10:05,760 Speaker 1: the difference between restorational lordwearing, Home Depot Home deep cells 170 00:10:05,800 --> 00:10:08,880 Speaker 1: what you have to have as hard whistling great, they 171 00:10:08,960 --> 00:10:11,440 Speaker 1: sell what you have. Now low cells what you have 172 00:10:11,600 --> 00:10:17,280 Speaker 1: to have you don't have to have anything in restoration hardware, 173 00:10:17,360 --> 00:10:21,200 Speaker 1: you don't have to have it. So he's when the 174 00:10:21,320 --> 00:10:27,319 Speaker 1: market gets volable, anything Restoration Hardware. Okay, Howard, this is phenomenal. 175 00:10:27,400 --> 00:10:29,560 Speaker 1: Stay with us. Hard to us with this. You heard 176 00:10:29,600 --> 00:10:33,720 Speaker 1: his support Mr Freeman over Restoration Hardware, which has been 177 00:10:33,760 --> 00:10:38,439 Speaker 1: a modest implosion, to say the least, futures the last restoration. 178 00:10:38,440 --> 00:10:40,280 Speaker 1: I've not been in the store, but I do do 179 00:10:40,400 --> 00:10:43,760 Speaker 1: things off their website. I think they're They're just I 180 00:10:43,760 --> 00:10:46,679 Speaker 1: don't know what they do. The furniture is too big. 181 00:10:46,800 --> 00:10:49,320 Speaker 1: I know I've seen the ceiling fan picture on your website. 182 00:10:49,360 --> 00:10:55,560 Speaker 1: On your all right, let's check in with John Tucker 183 00:10:55,679 --> 00:10:59,240 Speaker 1: for the news headlines. John find Scarlett. Donald Trump spent 184 00:10:59,440 --> 00:11:02,920 Speaker 1: eight months launching at parative insults over any on all. 185 00:11:03,000 --> 00:11:06,840 Speaker 1: Detractors of Marco Rubio's survived by staying mostly in the sidelines. 186 00:11:06,920 --> 00:11:09,839 Speaker 1: Rubio suddenly and urgently emerged from the shadows last night 187 00:11:10,120 --> 00:11:13,199 Speaker 1: to hammer the front runner. The House considering a bill 188 00:11:13,240 --> 00:11:15,880 Speaker 1: that would reverse the man on the sail or import 189 00:11:15,960 --> 00:11:19,760 Speaker 1: of ivory products on doing US fish and Wildlife rules 190 00:11:19,800 --> 00:11:24,000 Speaker 1: that were intended to halt the decline in wild elephant populations, 191 00:11:24,600 --> 00:11:28,000 Speaker 1: and the conventional wisdom was that California, especially the southern 192 00:11:28,040 --> 00:11:30,920 Speaker 1: part of the state, would be awash this winter with 193 00:11:31,080 --> 00:11:33,480 Speaker 1: rain and the valleys and deep snow in the mountains. 194 00:11:33,760 --> 00:11:35,760 Speaker 1: Almina was on the way to save the day. Well, 195 00:11:35,760 --> 00:11:39,560 Speaker 1: a California hydrologist now says the water supply forecast for 196 00:11:39,559 --> 00:11:43,800 Speaker 1: the spring period is falling like a stone. Global News 197 00:11:43,880 --> 00:11:46,880 Speaker 1: twenty four hours a day, powered by our twenty journalists 198 00:11:46,920 --> 00:11:49,480 Speaker 1: in more than one hundred fifty news videos around the world. 199 00:11:49,720 --> 00:11:52,760 Speaker 1: I'm John Tuckers Scarlet and to John, thank you so much. 200 00:11:52,760 --> 00:11:57,640 Speaker 1: Future futures up one oh for Tom Keene and Scarlet 201 00:11:57,640 --> 00:12:05,960 Speaker 1: Foo on your Friday edition. Bloomberg Surveillance Worldwide Market Driver 202 00:12:06,120 --> 00:12:08,439 Speaker 1: is brought to you by your Mercedes Benz Tri State dealer. 203 00:12:08,480 --> 00:12:10,520 Speaker 1: When it comes to winter elements, put your best four 204 00:12:10,520 --> 00:12:14,040 Speaker 1: wheels forward with Mercedes Benz Formatic all wheel Drive. Visit 205 00:12:14,080 --> 00:12:17,360 Speaker 1: your Mercedes Benz Tri State dealer for a test drive today. 206 00:12:17,440 --> 00:12:18,840 Speaker 1: This is Bloomberg Surveillance