WEBVTT - Bitcoin Craze Stems From Institutional Buying, Quaranta Says 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:32.560 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Bitcoin 0:00:32.880 --> 0:00:36.680 is up more than one hundred and fifty percent year 0:00:36.760 --> 0:00:39.239 to date. That is a stunning number. And it's not 0:00:39.360 --> 0:00:42.720 just Bitcoin. Cryptocurrencies of all types have been on fire, 0:00:42.760 --> 0:00:45.760 from ethereum to light coin to z cash. All of 0:00:45.800 --> 0:00:49.800 these cryptocurrencies has to have soared over more than ninety 0:00:49.840 --> 0:00:52.640 billion dollars market cap in the past just the past 0:00:52.680 --> 0:00:56.320 seven days. To understand what this is? Is Is this a bubble? 0:00:56.720 --> 0:00:59.040 I am very happy to bring in Ron Quaranta. He 0:00:59.320 --> 0:01:02.520 is the founder and chairman of the Wall Street Blockchain Alliance, 0:01:02.560 --> 0:01:04.360 and he joins me here in the Bloomberg eleven three 0:01:04.400 --> 0:01:07.559 oh studios in New York City. Run what is going 0:01:07.640 --> 0:01:10.959 on here? Are we experiencing a mass bubble that will 0:01:11.080 --> 0:01:14.120 end in tears? Good morning, Good to be here again. UM, 0:01:14.360 --> 0:01:17.240 I would suggest we're actually looking at the emergence and 0:01:17.440 --> 0:01:19.000 we have this conversation with a lot of our members. 0:01:19.560 --> 0:01:22.679 Potentially a new class of asset, a new way to 0:01:23.360 --> 0:01:26.120 gian Alpha. So there's certainly a bit of the hype cycle. 0:01:26.160 --> 0:01:30.160 I mean last evening Bitcoin of course, Mark, And by 0:01:30.160 --> 0:01:33.600 way of context, if you purchased around this time in bitcoin, 0:01:33.640 --> 0:01:36.280 you would have spent eight cents. The total market cap, 0:01:36.319 --> 0:01:39.240 as you mentioned, is approaching over you know. Okay, So 0:01:39.400 --> 0:01:41.160 if you think about a currency, right, there's a lot 0:01:41.200 --> 0:01:44.600 of controversy over is Bitcoin a currency? Are some of 0:01:44.640 --> 0:01:47.600 these other cryptocurrencies truly currencies? And typically for something to 0:01:47.600 --> 0:01:50.400 be considered a currency, it needs to have some level 0:01:50.440 --> 0:01:53.400 of stability. It needs to be backed by at least 0:01:53.400 --> 0:01:55.840 the full faith in a nation and a sovereignty to 0:01:56.000 --> 0:01:58.680 uphold a certain kind of trade agreement or something underneath it. 0:01:59.200 --> 0:02:01.040 And when you see this d of volatility, doesn't that 0:02:01.160 --> 0:02:04.240 challenge the concept of bitcoin as a currency. Yeah, it 0:02:04.280 --> 0:02:08.200 certainly challenges the concept of um the type of investment 0:02:08.280 --> 0:02:10.320 that it might represent. But what I can tell you 0:02:10.360 --> 0:02:12.119 is that again in the conversations with our with our 0:02:12.160 --> 0:02:15.040 members and the market, Bitcoin and ether and all of 0:02:15.080 --> 0:02:20.280 these cryptocurrencies are really representing a different type of investment, 0:02:20.280 --> 0:02:22.679 a different type of asset class. So how industry is 0:02:22.720 --> 0:02:25.200 looking at it, how investment manages. Some of our fastest 0:02:25.200 --> 0:02:29.080 growing demographic are asset managers looking at this different type 0:02:29.120 --> 0:02:32.720 of tradeable commodity. But but okay, so understood. So in 0:02:32.760 --> 0:02:34.880 other words, you're saying, it's institutions that are coming in, 0:02:35.440 --> 0:02:38.040 uh to invest it in it as an asset class. 0:02:38.080 --> 0:02:41.200 Of course, it's a little confusing to me because currency 0:02:41.200 --> 0:02:43.800 typically the reason why people will invest in it is 0:02:43.800 --> 0:02:46.640 a sort of a wager on the health of a country. 0:02:47.360 --> 0:02:49.360 But it just sort of in its own right, what 0:02:49.639 --> 0:02:51.240 is it? If it's not going to be adopted on 0:02:51.280 --> 0:02:54.639 more platforms, then it's it's really a useless kind of asset. Well, 0:02:54.680 --> 0:02:56.440 I think what you're looking at is the the wager 0:02:56.440 --> 0:02:59.480 on the adoption of blockchain, the underlying blockchain technology across 0:02:59.520 --> 0:03:03.080 different indie street segments. That is really where the value 0:03:03.080 --> 0:03:05.600 is being derived with a perceived value over time, the 0:03:05.639 --> 0:03:09.520 digital currencies, the digital assets, these tokens represent what we 0:03:09.600 --> 0:03:13.440 often say is the the seeping of blockchain technology across 0:03:13.440 --> 0:03:16.400 the canvas of financial markets. So it's very interesting. Abby 0:03:16.520 --> 0:03:19.640 Abigail Johnson, CEO of Fidelity this week, can Mountains not 0:03:19.720 --> 0:03:23.720 only expressed her deep interest in underlying blockchain technology, but 0:03:23.760 --> 0:03:26.160 the fact that Fidelity dot com customers will be able 0:03:26.200 --> 0:03:29.839 to see digital currency information on Fidelity dot Com coming 0:03:29.919 --> 0:03:33.160 up soon. So, in other words, as blockchain is adopted, 0:03:33.240 --> 0:03:37.800 these cryptocurrencies will more easily be adaptable to the big 0:03:37.840 --> 0:03:40.520 institutions as far as a transfer of money, and will 0:03:40.560 --> 0:03:44.600 therefore be more useful. One thing that people have speculated 0:03:44.800 --> 0:03:48.160 is that bitcoin in particular has been an instrument for 0:03:48.400 --> 0:03:52.839 Chinese wealthy individuals who want to get their money out 0:03:52.840 --> 0:03:55.640 of the country without having to be slammed down by 0:03:55.640 --> 0:03:58.200 some of these capital control rules. Do you think that 0:03:58.200 --> 0:04:01.040 that's what's going on here? I I don't think it is, 0:04:01.160 --> 0:04:03.240 and I think there's some of that potentially happening, and 0:04:03.320 --> 0:04:04.760 I can tell you in the conversations that we have 0:04:04.840 --> 0:04:06.880 within the w s b A. I don't think that's 0:04:06.920 --> 0:04:09.680 the main driver of the price appreciation that you're seeing 0:04:09.680 --> 0:04:12.680 for bitcoin and other digital currencies, even increase just in 0:04:12.720 --> 0:04:15.680 this past week. Yeah, I really, I truly believe that 0:04:15.680 --> 0:04:19.560 that's representative of global financial markets interest. Um So by 0:04:19.560 --> 0:04:22.080 way of example, again, um recently, the SEC had an 0:04:22.120 --> 0:04:24.159 opportunity to review an e t F based on bitcoin, 0:04:24.640 --> 0:04:27.840 which they rejected, but UM did take the opportunity to 0:04:27.920 --> 0:04:31.560 review that rejection. So there is the possibility in the 0:04:31.720 --> 0:04:34.560 not too distant future for a bitcoin based et okay. 0:04:34.600 --> 0:04:38.720 But why now? So? I think the market really is 0:04:38.839 --> 0:04:41.839 looking for something that is unique and differentiating, and digital 0:04:41.839 --> 0:04:45.400 currencies digital assets represent that differentiation. So we can talk 0:04:45.440 --> 0:04:48.880 about blockchain, the underlying technology that's reinventing how Wall Street 0:04:48.880 --> 0:04:51.280 and financial markets do what they do. You can look 0:04:51.320 --> 0:04:53.560 at digital currencies and digital assets as a as a 0:04:53.600 --> 0:04:57.280 different type of exposure to that different asset class. You 0:04:57.320 --> 0:05:00.680 can look at really beginning to understand that cutting edge 0:05:00.680 --> 0:05:03.799 of financial market investment. So when you look at digital tokens, 0:05:03.800 --> 0:05:07.800 for example, you're looking at a re evaluation of how 0:05:07.839 --> 0:05:10.760 investment decisions are made, how asset allocation will happen, how 0:05:10.800 --> 0:05:15.080 alpha is UH pursued, for example. So in other words, 0:05:15.279 --> 0:05:19.720 people are investing in cryptocurrencies is a proxy for investing 0:05:19.800 --> 0:05:24.680 in blockchain technology more broadly, and its adoption across financial 0:05:24.680 --> 0:05:27.680 industries correct and some in some deep measure. It's a 0:05:27.720 --> 0:05:30.800 reflection of that wage of will blockchain reinvent how financial 0:05:30.800 --> 0:05:33.360 services work? Doesn't really serve as a proxy though, because 0:05:33.360 --> 0:05:35.320 if you think about it, not all these cryptocurrencies are 0:05:35.320 --> 0:05:37.680 going to survive. That's absolutely true. When you look at 0:05:37.720 --> 0:05:41.080 the the universe of digital currencies, there's well over seven 0:05:41.120 --> 0:05:43.760 hundred of them. Most of them is not going to stay. 0:05:43.920 --> 0:05:46.080 That will not say that will not sustain. But those 0:05:46.160 --> 0:05:51.279 that have the deepest liquidity, the greatest access to multiple 0:05:51.360 --> 0:05:54.359 market places, those that are representative of the best and 0:05:54.400 --> 0:05:56.600 deepest innovation. So when you look at ether, for example, 0:05:56.600 --> 0:06:00.960 ethereum um. Recently there was an Enterprise are Enterprise alliance 0:06:01.000 --> 0:06:05.359 where global corporate organizations are getting together and we participated 0:06:05.360 --> 0:06:08.880 in that alliance to understand how Ethereum rewrites how certain 0:06:08.880 --> 0:06:12.400 processes across global financial markets operate. Those will be the 0:06:12.440 --> 0:06:16.160 ones that succeed over time. So going forward, what are 0:06:16.160 --> 0:06:18.080 you looking for to make sure that this is not 0:06:18.200 --> 0:06:21.880 a bubble and then it can be sustainable coming out 0:06:21.880 --> 0:06:24.200 of financial services for for many years, when you see 0:06:24.279 --> 0:06:27.000 double digit increases on a day by day basis, you 0:06:27.360 --> 0:06:30.440 begin to be concerned. Um, So there is some and 0:06:30.720 --> 0:06:32.800 I would I don't think anyone certainly within a W 0:06:32.960 --> 0:06:35.560 S B A would deny there's some level of hype 0:06:36.400 --> 0:06:39.800 in in some measure UM. But this this does seem 0:06:39.839 --> 0:06:42.880 to be a sustainable rise UM. So we'll see some 0:06:42.960 --> 0:06:45.480 of the froth come out of the bubble of some 0:06:45.560 --> 0:06:49.279 of this UM. But the conversations we have asset managers 0:06:49.279 --> 0:06:52.839 hedge funds deeply interested in the long term viability of 0:06:52.880 --> 0:06:55.760 digital currency as part of the portfolio fascinating. Thank you 0:06:55.880 --> 0:06:58.279 so much for joining us. It's definitely a hot topic 0:06:58.400 --> 0:07:00.440 and one that we will be talking more about. Run 0:07:00.520 --> 0:07:03.800 quaranta founder and chairman of the Wall Street Blockchain Alliance, 0:07:03.800 --> 0:07:05.479 which is based in New York City, and he joins 0:07:05.560 --> 0:07:08.120 us here in our Bloomberg eleven at three oh Studios 0:07:08.120 --> 0:07:22.640 in New York City. The indusseries have brought into cries 0:07:22.680 --> 0:07:25.800 are crawling to a new record highs. Dave Wilson is 0:07:25.840 --> 0:07:27.680 here in the Bloomberg eleven three oh studios with me 0:07:27.760 --> 0:07:32.000 right now. He is the stocks editor, columnist and blogger 0:07:32.080 --> 0:07:35.080 for m Live Go on the Bloomberg that we all 0:07:35.160 --> 0:07:39.320 love to hear from every day. Dave, what is driving 0:07:39.360 --> 0:07:44.600 this melt up? Oh? Really, it's a pretty broad based advance. 0:07:44.680 --> 0:07:47.120 But if you had to point to one area in particular, 0:07:47.240 --> 0:07:50.000 you look at the retailers. Mean, John Tucker just mentioned 0:07:50.000 --> 0:07:52.120 what's going on with Best Buy, with that stock up 0:07:52.120 --> 0:07:56.000 almost fIF but certainly not the only company that we're 0:07:56.040 --> 0:08:00.560 seeing rising in response to earnings. Uh. You think about 0:08:00.640 --> 0:08:03.240 p v H, which is Calvin Klein and Tommy Hilfiger. 0:08:03.560 --> 0:08:06.320 Their numbers are out and that stocks up four point 0:08:06.400 --> 0:08:11.840 eight percent. Uh. You see Alter Beauty, which is everything 0:08:11.960 --> 0:08:15.040 from beauty supplies to a salon to you name it, 0:08:15.120 --> 0:08:19.440 one stop shopping, and those shares are higher by three 0:08:19.480 --> 0:08:22.680 and a half percent. So you know, perhaps some of 0:08:22.720 --> 0:08:25.880 the latest numbers at least, you know, for that area, 0:08:25.960 --> 0:08:29.800 I mean, providing some relief. I mean one interesting example 0:08:29.840 --> 0:08:32.920 of Signet Jeweler's Uh you know, the stock took a 0:08:33.000 --> 0:08:36.480 hit yesterday in response to results from Tiffany. Its numbers 0:08:36.520 --> 0:08:40.120 come out and they're not good. Uh, and the stock 0:08:40.200 --> 0:08:43.480 takes a hit before the opening bell, and it's made 0:08:43.480 --> 0:08:46.360 back that loss and moved higher by nine tenths of 0:08:46.440 --> 0:08:48.840 a per cent. So you know, it goes to show 0:08:48.840 --> 0:08:51.080 you that even for some of these companies that have 0:08:51.160 --> 0:08:53.760 been taking a bit of a beating lately, uh, there 0:08:53.960 --> 0:08:59.280 is at least some uh sense of recovery. So you know, 0:08:59.520 --> 0:09:02.200 you kind of with things in that perspective, and you 0:09:02.280 --> 0:09:05.000 see why you're you're seeing some strength in the market here, 0:09:05.160 --> 0:09:07.720 you know. And before we dig into retailers, I just 0:09:07.760 --> 0:09:10.880 want to note you have bond yields in the US 0:09:11.080 --> 0:09:14.880 headed a touch lower. You had yesterday's meeting minutes which 0:09:14.920 --> 0:09:18.679 were actually really interesting for the first time in a while, 0:09:18.760 --> 0:09:20.840 and actually told us something that we did not know, 0:09:20.920 --> 0:09:24.680 which was details about the fed's plan to unwind its 0:09:24.720 --> 0:09:26.880 balance sheet, and it showed that, frankly, it was not 0:09:26.880 --> 0:09:28.319 going to be done at any kind of pace that 0:09:28.320 --> 0:09:30.559 would cause any disruption to the markets. So it's sort 0:09:30.559 --> 0:09:33.760 of this odd goldilocks scenario that's definitely I'm sure helping 0:09:33.800 --> 0:09:37.920 prop up stocks as well as suppress bond heields and 0:09:38.200 --> 0:09:40.720 boost bond prices. Were still back in this sort of 0:09:40.960 --> 0:09:43.679 you know market that's a wash in central bank cash. 0:09:43.720 --> 0:09:46.440 It's not going away, No, it's not. And let's face 0:09:46.520 --> 0:09:49.280 it to mean the central bankers are doing everything they 0:09:49.360 --> 0:09:53.080 can not to surprise the market because they don't want 0:09:53.120 --> 0:09:55.800 any real sort of shocks. I mean, we certainly had 0:09:55.840 --> 0:09:58.240 a shock, you know, in a sense a week ago 0:09:58.720 --> 0:10:01.760 we saw shares take a it and since then, I mean, 0:10:01.800 --> 0:10:04.080 you're talking about an S and P five hundred that's 0:10:04.080 --> 0:10:07.520 headed for six straight games. What's been up every day 0:10:07.600 --> 0:10:10.720 since that recovery? So it's almost like the by the 0:10:10.880 --> 0:10:14.080 dip behavior that we've seen emerge in the last couple 0:10:14.080 --> 0:10:16.840 of years of stocks and rallied is really kind of 0:10:16.920 --> 0:10:19.520 carrying forth as we go on here. All right, so 0:10:19.600 --> 0:10:21.920 let's dig a little bit more into best Buy and 0:10:21.960 --> 0:10:26.040 some of the retailer results that are propping up some stocks. 0:10:26.120 --> 0:10:29.880 Best Buy in particular up more than fifteen percent so 0:10:29.920 --> 0:10:32.839 far today. I want to bring in Joseph Feldman. He's 0:10:32.840 --> 0:10:36.400 senior managing director and retail analyst at telse Group who 0:10:36.440 --> 0:10:39.760 covers best Buy. And you know, is this just a 0:10:39.920 --> 0:10:46.480 case of a Nintendo console that is boosting everything or 0:10:46.840 --> 0:10:50.559 is Best by actually doing something different to get customers 0:10:50.640 --> 0:10:54.480 into the brick and mortar that distinguishes it from some 0:10:54.559 --> 0:10:58.079 of the online retailers. I think Best by doing something 0:10:58.120 --> 0:11:01.480 different and has been doing something different for a while now. Um, 0:11:01.520 --> 0:11:03.880 you know, they several years ago they embarked on this 0:11:03.960 --> 0:11:07.880 transformation where they re level set their business model and 0:11:08.120 --> 0:11:10.840 you know, brought prices down, They figured out how to 0:11:10.960 --> 0:11:14.360 compete more directly online. They're very good at in terms 0:11:14.360 --> 0:11:18.040 of um, you know, ship from store, pick up at store, 0:11:19.040 --> 0:11:22.240 leveraging all sorts of you know, omni channel or multi 0:11:22.320 --> 0:11:25.760 channel retail, uh, combining digital and physical. And I think 0:11:25.800 --> 0:11:28.240 that's been a big difference for them. Uh, you know, 0:11:28.280 --> 0:11:30.320 they are they go to source at this point. They 0:11:30.320 --> 0:11:33.400 are the last man standing of sorts and they're making 0:11:33.440 --> 0:11:35.520 the most of it. They're a very efficient operator. So 0:11:35.559 --> 0:11:37.200 we can we talk a little bit about how they're 0:11:37.240 --> 0:11:39.320 combining the brick and mortar in the digital in a 0:11:39.320 --> 0:11:42.280 way to give them an edge. Sure, So as an example, 0:11:42.679 --> 0:11:46.880 you know, I think it's over online orders are actually 0:11:46.920 --> 0:11:49.959 picked up at the store. You know. Now one would think, well, oh, 0:11:50.040 --> 0:11:52.240 everybody wants to just buy a TV online and have 0:11:52.280 --> 0:11:54.040 a trip to their house, but you know what, a 0:11:54.040 --> 0:11:55.679 lot of people like to go into the store. They 0:11:55.679 --> 0:11:58.000 may pick up the accessories, they may confirm the order 0:11:58.000 --> 0:12:00.120 that they bought. They may be sitting at their US 0:12:00.240 --> 0:12:02.440 right now at the office and and saying, you know what, 0:12:02.520 --> 0:12:04.200 I need to pick something up on the way home, 0:12:04.760 --> 0:12:08.040 and they'll purchase it and one it the same day. 0:12:08.120 --> 0:12:10.719 So you get the immediate gratification of that. That's one 0:12:10.760 --> 0:12:14.920 thing another thing is again leveraging their inventory to ship 0:12:14.960 --> 0:12:17.959 from the store directly. Um. You know they can do that, 0:12:18.559 --> 0:12:21.760 and they can they so they're combining the best of 0:12:21.800 --> 0:12:24.880 both worlds, you know. And when a few years ago 0:12:25.000 --> 0:12:27.600 when they lowered prices on all their products to be 0:12:27.760 --> 0:12:31.360 everyday same price with Amazon and Walmart and others, it 0:12:31.440 --> 0:12:33.880 took away that showrooming aspect, because if you're in the 0:12:33.920 --> 0:12:36.080 store anyway, you may as well buy it and walk out. 0:12:37.240 --> 0:12:38.920 You know. It's it's fascinating to me. I'm looking at 0:12:38.960 --> 0:12:42.400 best Buy shares up more than thirty seven percent now 0:12:42.520 --> 0:12:45.719 on the year, a massive increase for a retailer that's 0:12:45.720 --> 0:12:48.280 supposed to be on its deathbed because it's a retailer 0:12:48.280 --> 0:12:51.040 and it's got breaking border shops. You know, I have 0:12:51.120 --> 0:12:53.079 to wonder. I do want to ask you. When Dave 0:12:53.080 --> 0:12:55.000 and I were were here yesterday talking with Sema Shop 0:12:55.040 --> 0:12:57.440 Bloomberg Intelligence, we were talking about Signet and some of 0:12:57.480 --> 0:13:02.800 the other retailers lows which reported disappointing earnings yesterday. UM, 0:13:02.840 --> 0:13:06.520 and she was talking about how one potential headwind is 0:13:06.640 --> 0:13:11.440 a deterior deteriorating consumer credit worthiness that we've seen in 0:13:11.440 --> 0:13:16.600 increasing card charge offs and increasing too linquencies. I'm wondering 0:13:16.640 --> 0:13:20.360 at a place like best Buy, does that matter? No, 0:13:20.480 --> 0:13:22.520 it absolutely doesn't matter. I mean, you know to the 0:13:22.559 --> 0:13:25.360 extent that the consumer you know, has too much debt 0:13:25.400 --> 0:13:28.400 already and then you know, can't maybe get more access 0:13:28.880 --> 0:13:31.400 because you know, with large ticket items like a TV 0:13:31.679 --> 0:13:34.880 or computer or other things, the consumer often is using 0:13:34.920 --> 0:13:37.840 credit to to make that purchase. Uh. And and I 0:13:37.880 --> 0:13:41.480 know that we've seen credit levels have been on the rise, 0:13:41.679 --> 0:13:43.760 you know, more of it's been driven by home and 0:13:43.840 --> 0:13:48.000 car uh than than actual you know, instore retail purchases. 0:13:48.080 --> 0:13:51.120 But we are seeing that. But that also may be 0:13:51.200 --> 0:13:53.000 a sign that the the economy is a little bit 0:13:53.080 --> 0:13:56.760 better employments, better consumers feeling a little bit you know, 0:13:57.040 --> 0:13:59.760 more more secure in their position. Well, does this mean 0:13:59.800 --> 0:14:02.120 she you, the fact that best Buy delivered these results, 0:14:02.160 --> 0:14:05.520 does this mean to you that retail has turned the 0:14:05.520 --> 0:14:10.440 corner and that there is a balancing out between the 0:14:10.559 --> 0:14:13.480 online and the brick and mortar, and the sweet spot 0:14:13.559 --> 0:14:16.559 lies somewhere that some of these retailers can still compete. 0:14:17.600 --> 0:14:22.280 I I I agree with your statements, with the exception 0:14:22.320 --> 0:14:25.280 of I'm not sure that best buys Best Buys emblematic 0:14:25.320 --> 0:14:29.680 of where retail should be or maybe headed um in 0:14:29.800 --> 0:14:33.200 terms of, you know, combining the best of physical and 0:14:33.360 --> 0:14:38.960 digital and leveraging service and and customer you know, information 0:14:39.040 --> 0:14:42.120 within the stores. But at the same time, you know, 0:14:42.200 --> 0:14:43.680 I don't. I think it's hard to say. I mean, 0:14:43.880 --> 0:14:47.800 the department stores have been under a lot of pressure lately. Um, 0:14:47.880 --> 0:14:49.960 you know, some of the apparel retailers have been under 0:14:49.960 --> 0:14:52.880 some pressure. You know, not everybody is Best Buy just 0:14:52.920 --> 0:14:57.760 further along in in resetting that operating format for themselves, 0:14:58.320 --> 0:15:01.080 and it may not translate to every other sector. And 0:15:01.120 --> 0:15:03.520 it's still early days for for a lot of people, 0:15:03.520 --> 0:15:05.560 and it's still really for best By even Well, you know, 0:15:05.640 --> 0:15:08.120 one other story that we're watching today one of the 0:15:08.880 --> 0:15:12.240 retailer Sears. A lot of people have been writing Sears 0:15:12.240 --> 0:15:14.360 obituary for a long time, right, I mean, it's like 0:15:14.440 --> 0:15:17.000 the company that's that just refusing to die but aw 0:15:17.080 --> 0:15:19.920 to right, and then today it reported earnings that were 0:15:20.120 --> 0:15:22.560 way better than people expected, and it shares her up 0:15:22.600 --> 0:15:24.520 more than twenty percent. I mean, I did not think 0:15:24.520 --> 0:15:27.240 I would be saying that about Sears Holding Corporation. I mean, 0:15:27.280 --> 0:15:30.280 this is the retailer that Eddie Lampard has basically been 0:15:30.680 --> 0:15:33.080 pumping with his own personal cash to sort of keep 0:15:33.080 --> 0:15:35.440 it hoppling along. And yet here we are, it's pushing 0:15:35.440 --> 0:15:39.040 out its debt maturities and it's delivering uh sales gains 0:15:39.040 --> 0:15:41.800 that that are better than than people had ever expected. 0:15:41.840 --> 0:15:43.800 How is this possible? I mean again, does this sort 0:15:43.800 --> 0:15:46.560 of speak to that narrative of you know, perhaps not 0:15:46.600 --> 0:15:49.240 all retailers, as you were saying before, not all retailers 0:15:49.240 --> 0:15:51.640 are turning the corner and finding that balance, but there 0:15:51.680 --> 0:15:55.000 are some out there that are finding some edge in 0:15:55.040 --> 0:15:57.440 there to sort of compete with Amazon and get on 0:15:57.480 --> 0:16:01.240 their get on their their feet. Yeah. I think I 0:16:01.280 --> 0:16:04.120 think that the series issue is more one of an 0:16:04.120 --> 0:16:09.400 expectations game where the expectations were so low and so bad, 0:16:09.440 --> 0:16:12.400 and in to your point, yesterday they got a lifeline 0:16:12.400 --> 0:16:16.280 by extending the debt out to January, with even an 0:16:16.320 --> 0:16:20.040 option to extend it to July of next year. So effectively, 0:16:20.480 --> 0:16:23.000 there was a lot of negative sentiment around the name, 0:16:23.240 --> 0:16:25.320 or the assumption that that Sears was going to have 0:16:25.360 --> 0:16:28.880 to file for bankruptcy sometimes this year, and now that 0:16:28.960 --> 0:16:31.160 does not seem to be the case. And then you 0:16:31.200 --> 0:16:34.720 compare the expectations for the performance and in terms of 0:16:34.760 --> 0:16:37.880 their first quarter operating performance, and it did certainly better. 0:16:38.120 --> 0:16:40.640 But let's not let's mistake the fact that I think 0:16:40.640 --> 0:16:44.040 the Seares comp was down twelve and Tamart was down 0:16:44.440 --> 0:16:46.560 ten or eleven percent, you know, like it was not 0:16:47.280 --> 0:16:52.040 uh strong numbers to say the least, with both businesses down. 0:16:52.280 --> 0:16:54.200 You know, this is interesting to me because the fact 0:16:54.280 --> 0:16:57.120 that people are then piling back in suggests to me 0:16:57.200 --> 0:17:00.520 that that traders are desperate to get a deal right, 0:17:00.600 --> 0:17:03.560 and people have been sort of circling the retail industry 0:17:03.560 --> 0:17:05.520 which has been so beaten up, and they're saying, look, 0:17:05.720 --> 0:17:08.040 when can we pump our money in here and get 0:17:08.160 --> 0:17:09.480 in on the bottom right. I mean, I know that 0:17:09.480 --> 0:17:11.800 I've talked to many distress debt investors and people talk 0:17:11.840 --> 0:17:14.440 about that. I mean, uh, dave I want to bring 0:17:14.480 --> 0:17:16.439 in here? I mean, do you get the sense that 0:17:16.480 --> 0:17:19.560 there is some sort of bottom fishing and you know 0:17:19.600 --> 0:17:23.439 the fact that any less disappointing results is going to 0:17:23.600 --> 0:17:25.960 result in some massive pop because people are just desperate 0:17:25.960 --> 0:17:29.520 to find a cheap stock. If I put it that way, 0:17:29.640 --> 0:17:32.399 I mean, the bottom fishing is one of those phrases 0:17:32.440 --> 0:17:34.320 that you kind of fall back on when you lack 0:17:34.359 --> 0:17:39.600 a better idea. Here's another one shortcovering the idea buying 0:17:39.720 --> 0:17:43.359 back shares that you previously sold. Figure the stocks going down, 0:17:43.600 --> 0:17:45.960 and you bring that up in the case of Sears 0:17:46.000 --> 0:17:51.080 because something like six almost of the shares available for 0:17:51.200 --> 0:17:54.240 trading have been sold short. So there's a lot of 0:17:54.280 --> 0:17:58.919 speculation that you know, sears Is future is kind of 0:17:58.960 --> 0:18:03.199 going the way of its past several years. So you know, 0:18:03.320 --> 0:18:07.439 in that context, you get any piece of positive uh news. 0:18:07.800 --> 0:18:09.800 And let's face it that I mean, they did sell 0:18:09.840 --> 0:18:12.720 their Craftsman tool brand to Stanley back Black and Decker 0:18:12.800 --> 0:18:16.120 in the quarter. That figured into the numbers, and so 0:18:16.600 --> 0:18:20.040 that may be explain why the comparisons were off. Nonetheless, 0:18:20.680 --> 0:18:23.040 you've got all these people betting against the company, and 0:18:23.119 --> 0:18:25.720 sometimes that gets a little painful, and you see these 0:18:25.800 --> 0:18:32.560 kinds of reversals and Joe, yeah, alright, fine bottom fishing 0:18:32.600 --> 0:18:35.920 perhaps wasn't the best uh description of it, but Joe, 0:18:35.920 --> 0:18:37.399 I wanted to get your take. I mean, we're getting 0:18:37.440 --> 0:18:39.960 to the end here of the earning season, and a 0:18:39.960 --> 0:18:42.600 lot of these companies that that you cover from lows 0:18:42.640 --> 0:18:44.719 two of Walmart's to home depot of staples. I mean, 0:18:44.840 --> 0:18:47.040 it's sort of a motley crew as far as the 0:18:47.160 --> 0:18:50.000 results go. I mean, is there any theme, any new 0:18:50.119 --> 0:18:53.240 theme that's sort of emerging from this earning season for 0:18:53.440 --> 0:18:56.560 retailers that you think people will take uh going forward 0:18:56.680 --> 0:19:00.879 to influence their investing decisions. I think what you saw 0:19:01.119 --> 0:19:06.160 is that whether delays and tax refunds, there were definitely 0:19:06.240 --> 0:19:10.400 some exogenous factors so to speak, that that really did 0:19:10.440 --> 0:19:13.560 have an impact on retail sales. And I do think that, 0:19:14.040 --> 0:19:16.919 you know, the the relative to expectations that trends have 0:19:17.080 --> 0:19:20.560 been a little bit better. Trends have gotten better in April. 0:19:20.640 --> 0:19:23.199 It seems like they've continued to be better in May. 0:19:23.600 --> 0:19:26.159 And you know, you can't ignore the fact that the 0:19:26.200 --> 0:19:30.560 consumers in relatively healthy position. I mean, obviously there's a 0:19:30.560 --> 0:19:33.000 lot of pressures. There's healthcare costs, and there's you know, 0:19:33.040 --> 0:19:36.280 gas prices going up a little bit, but you know, 0:19:36.320 --> 0:19:38.880 for the most part, you know, employment were at seemingly 0:19:38.920 --> 0:19:42.199 full employment, and interest rates are still relatively low, and 0:19:42.320 --> 0:19:45.840 home prices are going up, so the consumer is armed 0:19:46.200 --> 0:19:48.879 with the ability to spend. And I think that another 0:19:48.960 --> 0:19:51.760 theme that we've seen is I do believe, you know, 0:19:51.840 --> 0:19:54.919 more retail specific You're actually going to start seeing a 0:19:54.920 --> 0:19:58.399 little more investment in the stores again, because the store 0:19:58.440 --> 0:20:01.679 experience is still crucial, even you have to combine it 0:20:01.680 --> 0:20:04.680 with digital. And I think that retailers were so focused 0:20:04.720 --> 0:20:07.239 on technology for the past few years and fixing up 0:20:07.320 --> 0:20:09.359 that side of the business that they're now going to 0:20:09.440 --> 0:20:11.439 be kind of shifting back a little towards the stores. 0:20:11.480 --> 0:20:13.240 But this is interesting. This is interesting to me. In 0:20:13.280 --> 0:20:15.920 other words, you're saying that retailers are going to start 0:20:16.119 --> 0:20:20.280 putting more money into their physical locations and trying to 0:20:20.400 --> 0:20:24.080 combine the digital with those. I'm trying to imagine what 0:20:24.160 --> 0:20:27.520 that would look like. Which company, which retailer would you call? 0:20:28.119 --> 0:20:33.520 You wander over to Columbus Circle today where Amazon has 0:20:33.600 --> 0:20:38.000 started its first New York bookstore now open. So you 0:20:38.080 --> 0:20:41.160 know that's part of it, no doubt. Uh. And when 0:20:41.200 --> 0:20:43.920 you figure that, you know Amazon is going in that direct. 0:20:43.960 --> 0:20:45.679 They have a few of the bookstores they're looking to 0:20:45.720 --> 0:20:48.159 open at least one more in the city here, and 0:20:48.760 --> 0:20:52.040 so it's understandable what have you got as a retailer 0:20:52.080 --> 0:20:56.480 that Amazon doesn't have, at least before these openings. And 0:20:56.600 --> 0:20:59.400 it's a storefront, it's a way for people to get 0:20:59.440 --> 0:21:01.960 to you. But but isn't this more than that, Because 0:21:02.000 --> 0:21:04.800 an investment in a store could mean making it more 0:21:04.840 --> 0:21:08.080 of an experience. It could be making making it into 0:21:08.760 --> 0:21:11.240 an event space in a way where people can even 0:21:11.359 --> 0:21:14.080 order the merchandise and pick it up there. But it 0:21:14.080 --> 0:21:16.800 doesn't necessarily have to be uh, the classic brick and 0:21:16.840 --> 0:21:19.280 mortar experience. Joe, Yeah, I think you're right, And I 0:21:19.280 --> 0:21:22.840 think that's what retails are trying to get at and 0:21:22.840 --> 0:21:25.920 and and to your point, I mean the Amazon there, 0:21:25.960 --> 0:21:28.600 they understand that there's their need to be close to 0:21:28.720 --> 0:21:32.159