1 00:00:01,400 --> 00:00:04,120 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 2 00:00:04,120 --> 00:00:06,200 Speaker 1: with my co host of Bonnie Quinn. Every business day 3 00:00:06,240 --> 00:00:10,360 Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts, 4 00:00:10,400 --> 00:00:13,600 Speaker 1: along with essential market moving news. Kind the Bloomberg Markets 5 00:00:13,600 --> 00:00:17,000 Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts, 6 00:00:17,000 --> 00:00:21,000 Speaker 1: and on Bloomberg dot com. We'll just in the last minute, 7 00:00:21,000 --> 00:00:22,680 Speaker 1: I'm looking at something that I haven't seen in a 8 00:00:22,680 --> 00:00:25,680 Speaker 1: long time, and that is all three major industries lower 9 00:00:25,720 --> 00:00:27,760 Speaker 1: than ASDAK has just turned lower now and is down 10 00:00:27,760 --> 00:00:29,440 Speaker 1: a tenth represent of course, the S and P down 11 00:00:29,440 --> 00:00:31,880 Speaker 1: a quarter represent and the DOAO has been down about 12 00:00:31,960 --> 00:00:35,400 Speaker 1: half a percent. But still we're talking very very small down. 13 00:00:36,159 --> 00:00:38,440 Speaker 1: Let's bring in somebody who knows a lot about records 14 00:00:38,479 --> 00:00:41,680 Speaker 1: and stock market action. Matt Melee is managing director in 15 00:00:41,720 --> 00:00:44,000 Speaker 1: chief markets strologist add milleran tay Back, and he joins 16 00:00:44,080 --> 00:00:47,839 Speaker 1: us from Newton, Massachusetts. Today. Matt, we're down today, but 17 00:00:47,880 --> 00:00:50,520 Speaker 1: we're down very very small. Do we hold onto these 18 00:00:50,560 --> 00:00:56,040 Speaker 1: records even as we wait for another stimulus round? You know? 19 00:00:56,160 --> 00:00:59,760 Speaker 1: It's it's it's funny because this rally has been seems 20 00:00:59,800 --> 00:01:02,240 Speaker 1: to be waning a little bit in the last a 21 00:01:02,280 --> 00:01:04,640 Speaker 1: couple of days. Even though you know, each day we 22 00:01:04,680 --> 00:01:06,800 Speaker 1: seem to try to test the all time high in 23 00:01:06,800 --> 00:01:09,040 Speaker 1: the SMP and toil. This morning we got above the 24 00:01:09,080 --> 00:01:12,000 Speaker 1: inter day all time high. But even when we reached 25 00:01:12,000 --> 00:01:14,280 Speaker 1: that inter day all time high and uh forty five 26 00:01:14,280 --> 00:01:17,560 Speaker 1: minutes ago, the the breath the advances versus decliners were 27 00:01:17,560 --> 00:01:21,520 Speaker 1: actually negative. And we've seen that kind of that breath uh, 28 00:01:22,240 --> 00:01:25,440 Speaker 1: you know, pulling back recently, volume has dropped off considerably, 29 00:01:25,720 --> 00:01:27,399 Speaker 1: and so people, I think, are a little bit nervous 30 00:01:27,440 --> 00:01:28,960 Speaker 1: as we're making this new high. It's kind of a 31 00:01:29,840 --> 00:01:32,280 Speaker 1: point where people can step back and say, geez, you know, 32 00:01:32,360 --> 00:01:35,039 Speaker 1: we're up fifty percent in just five months. We have, 33 00:01:35,480 --> 00:01:38,160 Speaker 1: you know, evaluations, even though that's a lousy timing tool, 34 00:01:38,400 --> 00:01:42,000 Speaker 1: valuations above twenty times earnings. Uh, it's it gives people 35 00:01:42,040 --> 00:01:43,760 Speaker 1: a little bit of a reason to pause, and to 36 00:01:43,800 --> 00:01:45,880 Speaker 1: be honest with you, if we did pull back from here, 37 00:01:45,920 --> 00:01:47,880 Speaker 1: it wouldn't be the worst thing in the world. I mean, pauses, 38 00:01:48,120 --> 00:01:50,560 Speaker 1: pull backs are and even corrections are normal and healthy 39 00:01:50,560 --> 00:01:53,640 Speaker 1: in any market. So, Matt, one of the the uh, 40 00:01:54,200 --> 00:01:56,840 Speaker 1: the characteristics of this rally off the bottom is it's 41 00:01:57,200 --> 00:01:59,760 Speaker 1: total lack of breath. It's been driven by you know 42 00:02:00,160 --> 00:02:02,040 Speaker 1: or seven names, and if you pull those names out, 43 00:02:02,560 --> 00:02:05,480 Speaker 1: we're actually down four percent year of her year. How 44 00:02:05,520 --> 00:02:08,320 Speaker 1: concerned are you about that lack of breath? Um just 45 00:02:08,360 --> 00:02:10,840 Speaker 1: from a market you know, maybe just the stability a 46 00:02:10,919 --> 00:02:14,160 Speaker 1: technical perspective, Yeah, there's no question. I mean a lot 47 00:02:14,200 --> 00:02:16,680 Speaker 1: of people are you know, each people are saying, well, 48 00:02:16,760 --> 00:02:19,519 Speaker 1: jeezy stocks deserve to be moving higher, and and that's 49 00:02:19,560 --> 00:02:22,200 Speaker 1: true to a certain degree, but it also tells us 50 00:02:22,200 --> 00:02:25,600 Speaker 1: that the overall economy, the breadth of the economy is 51 00:02:25,639 --> 00:02:28,320 Speaker 1: not as strong as as some people would like to think. 52 00:02:28,720 --> 00:02:31,320 Speaker 1: And therefore it's I guess my point is every time 53 00:02:31,360 --> 00:02:33,760 Speaker 1: we get a narrow rally, people come up with excuses 54 00:02:33,800 --> 00:02:36,680 Speaker 1: why it's it's it's actually nothing to worry about. But 55 00:02:36,840 --> 00:02:38,760 Speaker 1: each time it seems to be something that people should 56 00:02:38,800 --> 00:02:41,360 Speaker 1: have worried about, and we do see a pullback of 57 00:02:41,400 --> 00:02:46,640 Speaker 1: some sort of substance. So not a lot of people 58 00:02:46,639 --> 00:02:49,359 Speaker 1: have been talking about cynicals and you know, a rotation 59 00:02:49,520 --> 00:02:51,799 Speaker 1: into cyclicals, But are we really going to see a 60 00:02:51,960 --> 00:02:54,640 Speaker 1: rotation in this market action we talk about, you know, 61 00:02:54,680 --> 00:02:59,680 Speaker 1: the five stocks being the biggest part of the composition 62 00:02:59,720 --> 00:03:03,200 Speaker 1: of a the s and it seems to me that 63 00:03:03,240 --> 00:03:04,840 Speaker 1: even if we do have a rotation, it's going to 64 00:03:04,880 --> 00:03:08,200 Speaker 1: be so small that it's going to be barely noticeable. Yeah, 65 00:03:08,280 --> 00:03:10,320 Speaker 1: I I agree, And of course one of the things 66 00:03:10,320 --> 00:03:13,120 Speaker 1: that that I worry about. Uh and again it's it's 67 00:03:13,120 --> 00:03:15,520 Speaker 1: funny because I've I've actually become more constructive on the 68 00:03:15,520 --> 00:03:17,960 Speaker 1: market on a longer term basis, but near term we 69 00:03:18,040 --> 00:03:20,280 Speaker 1: definitely look like we're getting right for a pull back. 70 00:03:20,320 --> 00:03:23,720 Speaker 1: And one of those reasons goes to what you just mentioned, Vonn, 71 00:03:23,880 --> 00:03:26,120 Speaker 1: is that we talk about how well can some of 72 00:03:26,160 --> 00:03:29,919 Speaker 1: these um and you know, cyclicals do if we get 73 00:03:29,960 --> 00:03:33,880 Speaker 1: another round of another wave in the coronavirus. I mean, 74 00:03:33,880 --> 00:03:35,960 Speaker 1: we've seen these kind of whether it's a second wave 75 00:03:36,040 --> 00:03:39,480 Speaker 1: or a second half of the first wave. The weather 76 00:03:39,520 --> 00:03:41,920 Speaker 1: hasn't gotten cold yet, and what we've seen from Australia 77 00:03:41,920 --> 00:03:44,200 Speaker 1: and New Zealand and other places in the southern Hemisphere 78 00:03:44,360 --> 00:03:46,760 Speaker 1: as the weather got colder, they did see a new wave. 79 00:03:46,800 --> 00:03:48,720 Speaker 1: In fact, in Australia it was worse than the first one. 80 00:03:49,120 --> 00:03:51,360 Speaker 1: So if we get that kind of thing and and 81 00:03:51,600 --> 00:03:53,400 Speaker 1: we get some sort of a lockdown, I don't think 82 00:03:53,400 --> 00:03:55,160 Speaker 1: it'll be anywhere near as severe as the last one. 83 00:03:55,280 --> 00:03:57,600 Speaker 1: But if we get some kind of a semi lockdown, 84 00:03:57,840 --> 00:03:59,840 Speaker 1: we're already seeing that with the school, with some of 85 00:03:59,840 --> 00:04:02,160 Speaker 1: the College is h that's going to make it tough 86 00:04:02,200 --> 00:04:03,760 Speaker 1: for some of these cyclical stocks to rally in the 87 00:04:03,800 --> 00:04:05,600 Speaker 1: way that some people think they will. All right, so 88 00:04:05,640 --> 00:04:07,880 Speaker 1: we still have the pandemic risk out there. Give us 89 00:04:07,880 --> 00:04:11,040 Speaker 1: a sense of the political risk, big, big, big election 90 00:04:11,120 --> 00:04:14,520 Speaker 1: coming up in November. How are you factoring that in? Well, 91 00:04:14,560 --> 00:04:16,200 Speaker 1: the in the market is not factoring it at all 92 00:04:16,480 --> 00:04:18,000 Speaker 1: right right now. And one of the things I mean 93 00:04:18,200 --> 00:04:20,800 Speaker 1: on two things. Number one, you know, long term uh 94 00:04:21,400 --> 00:04:23,520 Speaker 1: is a lot of people will point out that the 95 00:04:23,600 --> 00:04:26,080 Speaker 1: Democrats have actually been better for for the stock market 96 00:04:26,200 --> 00:04:29,880 Speaker 1: or uh more more more more often than not, although 97 00:04:29,880 --> 00:04:33,320 Speaker 1: certainly President Trump has been uh as a GOP president 98 00:04:33,360 --> 00:04:35,600 Speaker 1: has been very positive for the stock market. But but 99 00:04:35,680 --> 00:04:37,440 Speaker 1: on a on a near term basis, you look at it, 100 00:04:37,440 --> 00:04:39,680 Speaker 1: where what's the starting point? The starting point right now 101 00:04:39,880 --> 00:04:42,120 Speaker 1: as we're moving towards the election, as we get past 102 00:04:42,200 --> 00:04:45,120 Speaker 1: these conventions and really move into the election season, the 103 00:04:45,160 --> 00:04:47,640 Speaker 1: market is an all time high. It's overbought on a 104 00:04:47,680 --> 00:04:51,240 Speaker 1: tentacle basis, it's expensive on a fundamental basis. So if 105 00:04:51,279 --> 00:04:54,640 Speaker 1: we start to see that the that the President Biden, 106 00:04:55,080 --> 00:04:57,839 Speaker 1: especially if we talk about you think about Elizabeth Warren 107 00:04:57,880 --> 00:05:00,640 Speaker 1: maybe being you know, in charge of the tragury Department 108 00:05:00,720 --> 00:05:02,800 Speaker 1: or in charge of even the Justice Department, that will 109 00:05:02,839 --> 00:05:05,359 Speaker 1: have a negative impact on certain aspects of the marketplace. 110 00:05:05,440 --> 00:05:08,000 Speaker 1: So uh, and especially if it looks like the Democrats 111 00:05:08,000 --> 00:05:09,920 Speaker 1: are going to have a full sweep. I think that 112 00:05:10,360 --> 00:05:12,000 Speaker 1: a longer term it may not be the worst thing 113 00:05:12,000 --> 00:05:13,920 Speaker 1: in the world, but near term, with the market the 114 00:05:13,960 --> 00:05:16,039 Speaker 1: way it is, people are gonna have to start to 115 00:05:16,040 --> 00:05:17,800 Speaker 1: factor that in. And that's another reason why I'm more 116 00:05:17,800 --> 00:05:20,240 Speaker 1: cautious on the near term prospects for the market. But 117 00:05:20,400 --> 00:05:22,720 Speaker 1: what would you do about banks right now? You've always 118 00:05:22,760 --> 00:05:25,400 Speaker 1: had such strong thoughts on the banks, but they're really 119 00:05:25,440 --> 00:05:29,240 Speaker 1: in the duldrums. Yeah, it's really a concern. And when 120 00:05:29,240 --> 00:05:32,680 Speaker 1: you get somebody like Warren Buffett, who obviously he's been 121 00:05:32,720 --> 00:05:34,240 Speaker 1: you know, we we've heard all the news about him 122 00:05:34,279 --> 00:05:37,039 Speaker 1: upping his position in Bank America, but then we find 123 00:05:37,040 --> 00:05:38,560 Speaker 1: out he's he's pulling him back in a lot of 124 00:05:38,600 --> 00:05:41,080 Speaker 1: other areas. It's still a concern for me. And now, 125 00:05:41,080 --> 00:05:43,360 Speaker 1: even though interest rates have moved up a little bit 126 00:05:43,760 --> 00:05:46,040 Speaker 1: in the last week or so. Uh, they're not going 127 00:05:46,080 --> 00:05:47,880 Speaker 1: to go up a lot higher even if they even 128 00:05:47,880 --> 00:05:50,320 Speaker 1: if they stabilize up this this kind of slightly higher level. 129 00:05:50,800 --> 00:05:52,760 Speaker 1: But the other thing that really concerns me is I 130 00:05:52,800 --> 00:05:55,400 Speaker 1: continue to watch these European banks. You look at the 131 00:05:55,400 --> 00:05:58,440 Speaker 1: European Bank Index, it's rolling back over again from a 132 00:05:58,560 --> 00:06:00,840 Speaker 1: pretty low level already, and they've been in a performing 133 00:06:00,839 --> 00:06:03,560 Speaker 1: for quite some time now. It just shows that there's 134 00:06:03,560 --> 00:06:05,760 Speaker 1: some stress on the overall banking system, and I think 135 00:06:05,760 --> 00:06:08,280 Speaker 1: it shows, you know, concerns about you know, whether we're 136 00:06:08,320 --> 00:06:12,200 Speaker 1: going to have the situation with bankruptcies while they pick 137 00:06:12,279 --> 00:06:17,360 Speaker 1: up and get past the political questions. Matt Mally, thank 138 00:06:17,360 --> 00:06:20,039 Speaker 1: you so much for joining us. We appreciate they appreciate that. 139 00:06:20,080 --> 00:06:23,800 Speaker 1: Matt Mally, managing director in chief market strategist for Miller Tabek, 140 00:06:23,880 --> 00:06:27,080 Speaker 1: joining us on the phone from Massachusetts. Uh, yeah, Vonnie's 141 00:06:27,240 --> 00:06:29,040 Speaker 1: I'm glad you brought up the banks because they just 142 00:06:29,080 --> 00:06:31,000 Speaker 1: can't seem to get out of their way here, and 143 00:06:31,120 --> 00:06:33,400 Speaker 1: yet they have a whole myriad of issues you have 144 00:06:33,440 --> 00:06:35,320 Speaker 1: to deal with. As Matt suggested, those low rates and 145 00:06:35,360 --> 00:06:38,159 Speaker 1: the potential right offs. It's amazing because they're one of 146 00:06:38,160 --> 00:06:41,840 Speaker 1: the areas that didn't rally ever, even when people were saying, look, 147 00:06:41,880 --> 00:06:45,680 Speaker 1: they're they're way under valued here. Yeah, exactly, so the 148 00:06:45,920 --> 00:06:47,560 Speaker 1: whole host of issues that they have to deal with. 149 00:06:47,760 --> 00:06:50,080 Speaker 1: So we'll look forward to those earnings the next quarter. 150 00:06:52,480 --> 00:06:55,400 Speaker 1: It is time for Bloomberg Opinion. We're joined today by 151 00:06:55,680 --> 00:06:59,960 Speaker 1: Bloomberg Opinion calumnist Sarah Haws actually covers retail for Bloomer. 152 00:07:00,040 --> 00:07:02,760 Speaker 1: She's based in Washington, d C. Sarah, A busy day 153 00:07:02,880 --> 00:07:06,320 Speaker 1: today for you, Thanks for joining us. We had Walmart, 154 00:07:06,400 --> 00:07:10,280 Speaker 1: Home Depot, Coals all reporting earnings today. It seems like 155 00:07:10,840 --> 00:07:14,000 Speaker 1: Walmart Home Depot they're kind of seeing some benefit here 156 00:07:14,160 --> 00:07:17,240 Speaker 1: from changing buying habits, but Coals not so much. What 157 00:07:17,560 --> 00:07:21,120 Speaker 1: are your key takeaways? Yeah, I think that's exactly right. 158 00:07:21,440 --> 00:07:23,320 Speaker 1: All of us are spending so much more time in 159 00:07:23,400 --> 00:07:25,840 Speaker 1: our homes, and that clearly has been a benefit to 160 00:07:26,080 --> 00:07:29,920 Speaker 1: Home Depot. People have taken on renovation projects they wouldn't 161 00:07:29,960 --> 00:07:31,880 Speaker 1: have otherwise if they didn't suddenly have to have a 162 00:07:31,920 --> 00:07:35,520 Speaker 1: home office, for example, or they're pulling forward renovation projects 163 00:07:35,520 --> 00:07:37,080 Speaker 1: that maybe they were planning to do a year or 164 00:07:37,080 --> 00:07:39,600 Speaker 1: two down the road, and so comparable sales growth. They're 165 00:07:39,640 --> 00:07:43,760 Speaker 1: a booming twenty UM and Walmart also benefited from all 166 00:07:43,800 --> 00:07:46,720 Speaker 1: these traumatic changes to our lifestyle. Not only are people 167 00:07:46,760 --> 00:07:50,160 Speaker 1: cooking more at home, but again trying to trick out 168 00:07:50,160 --> 00:07:52,760 Speaker 1: their backyards to make spending climate at home more valuable 169 00:07:53,200 --> 00:07:56,400 Speaker 1: UM and enjoyable sporting goods, that kind of thing. And 170 00:07:56,480 --> 00:07:59,640 Speaker 1: so those two held up fairly well in the quarter. 171 00:07:59,680 --> 00:08:02,400 Speaker 1: But old, you know, consistent with what we saw in 172 00:08:02,600 --> 00:08:06,440 Speaker 1: the commerce department retail sales numbers last week, clothing just 173 00:08:06,520 --> 00:08:09,680 Speaker 1: continues to be a real weak spot. People are just 174 00:08:09,800 --> 00:08:12,560 Speaker 1: not spending money in that product category, and that showed 175 00:08:12,640 --> 00:08:14,440 Speaker 1: up in the weak results for coals in the quarter. 176 00:08:15,080 --> 00:08:18,680 Speaker 1: Now that's something that you might anticipate because there are 177 00:08:18,720 --> 00:08:21,520 Speaker 1: no events to go to, this very little entertaining at 178 00:08:21,520 --> 00:08:24,480 Speaker 1: home and so on. So clothes you can understand. But 179 00:08:24,640 --> 00:08:29,320 Speaker 1: can Walmart UM Home Depot keep up these figures even 180 00:08:29,360 --> 00:08:32,839 Speaker 1: as stimulus recedes, because you know, there was that check 181 00:08:32,880 --> 00:08:36,080 Speaker 1: and then there were extra unemployment insurance payments, But they've 182 00:08:36,080 --> 00:08:39,440 Speaker 1: gone away for the moment, Yes, And I think that's 183 00:08:39,440 --> 00:08:41,360 Speaker 1: a real risk, and I think that's why you're not 184 00:08:41,520 --> 00:08:44,640 Speaker 1: seeing their stocks really pop on these results this morning, 185 00:08:44,720 --> 00:08:48,840 Speaker 1: even though they beat expectations. Walmart cited repeatedly in its 186 00:08:48,880 --> 00:08:52,080 Speaker 1: earnings materials that the government stimulus was a real boon 187 00:08:52,240 --> 00:08:55,120 Speaker 1: for it in the quarter, that when you saw those 188 00:08:55,200 --> 00:08:58,240 Speaker 1: checks in early May and June, that that was clearly 189 00:08:58,280 --> 00:09:01,240 Speaker 1: propping up spending in general merchant NAE categories, And as 190 00:09:01,240 --> 00:09:05,520 Speaker 1: we got deeper into July, they said, spending basically normalized, 191 00:09:05,600 --> 00:09:09,040 Speaker 1: sales normalized. And so I think UH investors are looking 192 00:09:09,040 --> 00:09:10,679 Speaker 1: at these results and seeing a real risk that the 193 00:09:10,760 --> 00:09:15,000 Speaker 1: Congress doesn't do more to support consumers, that this strength 194 00:09:15,080 --> 00:09:17,719 Speaker 1: is simply not going to be replicated. And Sarah, you 195 00:09:17,760 --> 00:09:21,840 Speaker 1: wrote a fantastic column today just on this issue that 196 00:09:23,400 --> 00:09:27,000 Speaker 1: you really hope that the folks in Congress are taking 197 00:09:27,000 --> 00:09:28,679 Speaker 1: a look at some of these numbers that are being 198 00:09:28,720 --> 00:09:31,680 Speaker 1: released it and more importantly, listen to some of the 199 00:09:31,679 --> 00:09:33,880 Speaker 1: commentary by the c e O s about what they're 200 00:09:33,880 --> 00:09:36,960 Speaker 1: seeing in terms of future demand. It would suggest that 201 00:09:37,200 --> 00:09:41,439 Speaker 1: maybe they better get moving. Yes, exactly. I think if 202 00:09:41,440 --> 00:09:44,680 Speaker 1: we don't see uh, you know, any progress out of 203 00:09:44,679 --> 00:09:47,160 Speaker 1: Washington soon, it could be really destructive. You had some 204 00:09:47,240 --> 00:09:50,080 Speaker 1: of them executives offering color about how the back to 205 00:09:50,120 --> 00:09:52,600 Speaker 1: school shopping season is going so so far, and it's 206 00:09:52,640 --> 00:09:55,520 Speaker 1: not going great. I think choppy was the word used 207 00:09:55,520 --> 00:09:58,400 Speaker 1: on the Walmart call, uh, and understandably so. Right, So 208 00:09:58,440 --> 00:10:00,280 Speaker 1: many parents don't even know if they're trying all that's 209 00:10:00,280 --> 00:10:03,160 Speaker 1: going to be going back to school in person or virtually, 210 00:10:03,440 --> 00:10:05,880 Speaker 1: and don't even know exactly what supplies to buy, you know, 211 00:10:05,960 --> 00:10:08,240 Speaker 1: do you need a laptop or do you need a backpack? Um? 212 00:10:08,760 --> 00:10:10,840 Speaker 1: All of those spending decisions are kind of on ice 213 00:10:10,960 --> 00:10:14,680 Speaker 1: right now. Um. And so against that backdrop, and with 214 00:10:14,760 --> 00:10:17,360 Speaker 1: the unemployment rate as high as it is, Uh, it's 215 00:10:17,400 --> 00:10:19,840 Speaker 1: just really hard to see how the back to school 216 00:10:19,880 --> 00:10:22,600 Speaker 1: season and the really crucial holiday season set up well 217 00:10:22,640 --> 00:10:25,439 Speaker 1: for these retailers. If Congress doesn't take some action, are 218 00:10:25,480 --> 00:10:28,480 Speaker 1: retailer is changing the mix of what's available in their stores. So, 219 00:10:28,559 --> 00:10:31,319 Speaker 1: for example, is Walmarts, you know, getting rid of the 220 00:10:31,320 --> 00:10:34,360 Speaker 1: backpacks just in case there won't be as much demand. 221 00:10:34,559 --> 00:10:38,360 Speaker 1: Is it putting in more leisure where Yeah, Cole talked 222 00:10:38,400 --> 00:10:40,840 Speaker 1: about this a bit on its earnings call this morning 223 00:10:40,880 --> 00:10:43,480 Speaker 1: that it definitely is going to shift its assortment to 224 00:10:43,520 --> 00:10:47,400 Speaker 1: focus more on comfy clothes, on home products because people 225 00:10:47,400 --> 00:10:49,720 Speaker 1: are still spending a lot on pitching appliances and that 226 00:10:49,840 --> 00:10:52,600 Speaker 1: kind of thing um really shifting its assortment to those 227 00:10:52,600 --> 00:10:57,240 Speaker 1: product categories where people are still spending money. Cools also 228 00:10:57,280 --> 00:11:01,160 Speaker 1: talked about cutting the total number of items that it offers, 229 00:11:01,160 --> 00:11:03,800 Speaker 1: so it said by the holiday season, it expects that 230 00:11:04,120 --> 00:11:06,679 Speaker 1: skew count or the number of individual items that itself 231 00:11:06,880 --> 00:11:10,280 Speaker 1: to be on um and instead to really focus on 232 00:11:11,000 --> 00:11:13,480 Speaker 1: a few key items that it thinks can sell really 233 00:11:13,520 --> 00:11:16,920 Speaker 1: well and buying really deep into those particular items. So 234 00:11:16,960 --> 00:11:18,800 Speaker 1: I think that's a change you can expect to see 235 00:11:19,200 --> 00:11:23,360 Speaker 1: when you're in stores in fall and winter. Sarah, do 236 00:11:23,400 --> 00:11:26,120 Speaker 1: you have the sense that retailers in general, whether it's 237 00:11:26,120 --> 00:11:30,680 Speaker 1: a coals or home depot um, can continue to invest 238 00:11:30,720 --> 00:11:33,360 Speaker 1: in their digital businesses, Because it just seems like the 239 00:11:33,480 --> 00:11:38,840 Speaker 1: money that Amazon continues to invest in its e commerce business, 240 00:11:38,840 --> 00:11:42,199 Speaker 1: whether it's fulfillment and distribution centers or just tech technology 241 00:11:42,200 --> 00:11:45,920 Speaker 1: in general, is just just outstanding and it's almost hard 242 00:11:45,960 --> 00:11:48,240 Speaker 1: to replicate. How about these other retailers, what are they 243 00:11:48,240 --> 00:11:51,520 Speaker 1: doing in terms of investing in in their e commerce businesses? 244 00:11:52,800 --> 00:11:55,120 Speaker 1: So well, all three of these retailers are trying to 245 00:11:55,200 --> 00:11:58,400 Speaker 1: do is leverage their store footprint, kind of turn it 246 00:11:58,480 --> 00:12:01,360 Speaker 1: into not an Alba trouss, but a help in this 247 00:12:01,440 --> 00:12:04,959 Speaker 1: digital era, and one key approach to doing that is 248 00:12:05,000 --> 00:12:08,800 Speaker 1: to invest in curbside pick up um. Particularly since the pandemic, 249 00:12:08,840 --> 00:12:12,000 Speaker 1: this has become a really popular format, especially in the 250 00:12:12,040 --> 00:12:14,400 Speaker 1: suburbs where these stores tend to have, you know, big 251 00:12:14,440 --> 00:12:17,360 Speaker 1: sprawling parking lots and it's easy to kind of pull 252 00:12:17,440 --> 00:12:19,680 Speaker 1: up in your car and never get out, have someone 253 00:12:19,760 --> 00:12:22,600 Speaker 1: drop your items in your trunk or your back feet. Um. 254 00:12:22,720 --> 00:12:26,000 Speaker 1: So they're really investing in making those services work well. 255 00:12:26,160 --> 00:12:28,439 Speaker 1: And that's more complicated than you might think, because they 256 00:12:28,440 --> 00:12:31,079 Speaker 1: have to think about how to allocate in store labor 257 00:12:31,160 --> 00:12:33,520 Speaker 1: just pick those orders for you quickly, and they have 258 00:12:33,559 --> 00:12:36,520 Speaker 1: to think about the technological experience of how you can 259 00:12:36,559 --> 00:12:39,120 Speaker 1: safely let them know, hey, I'm outside and I want 260 00:12:39,120 --> 00:12:41,640 Speaker 1: you to bring those items to my car now. And 261 00:12:41,640 --> 00:12:43,000 Speaker 1: so I think that's where you're going to see a 262 00:12:43,040 --> 00:12:45,640 Speaker 1: lot of investment from all of these retailers. Pick Up 263 00:12:46,160 --> 00:12:48,400 Speaker 1: for home depot has always view to be quite a 264 00:12:48,480 --> 00:12:52,240 Speaker 1: large percentage of their digital sales overall, and so I 265 00:12:52,240 --> 00:12:54,280 Speaker 1: think you'll continue to see all of them lean into 266 00:12:54,320 --> 00:12:56,920 Speaker 1: making that a good experience in a way to differentiate 267 00:12:56,960 --> 00:12:59,800 Speaker 1: themselves from Amazon, which simply doesn't have a lot of 268 00:13:00,000 --> 00:13:03,200 Speaker 1: can order outposts from which to do that. So, Sarah, 269 00:13:03,240 --> 00:13:06,679 Speaker 1: how do the peers of those retailers that have been 270 00:13:06,679 --> 00:13:10,880 Speaker 1: successful differentiate themselves to also be successful? So, for example, Lows, 271 00:13:10,920 --> 00:13:14,800 Speaker 1: how does Lows get some market share from Home Depot? 272 00:13:15,280 --> 00:13:18,480 Speaker 1: And when it comes to Walmart, obviously this this Well, 273 00:13:18,520 --> 00:13:20,439 Speaker 1: there's there's no one like Walmart, but there's a petrea 274 00:13:20,559 --> 00:13:24,960 Speaker 1: of dollar generals and so on. Sure, I think Walmart, 275 00:13:25,160 --> 00:13:28,839 Speaker 1: you know, its advantage is always that everyday low price focus. Um, 276 00:13:28,840 --> 00:13:31,840 Speaker 1: you know, Target is clearly a close competitor, and I 277 00:13:31,840 --> 00:13:35,280 Speaker 1: think Walmart needs to focus on leveraging its muscle with 278 00:13:35,760 --> 00:13:39,360 Speaker 1: UH suppliers and vendors right now to keep making sure 279 00:13:39,640 --> 00:13:42,160 Speaker 1: it offers the lowest prices and that it continues to 280 00:13:42,200 --> 00:13:45,719 Speaker 1: win on that metric. Particularly as we are heading or 281 00:13:45,800 --> 00:13:47,680 Speaker 1: as we're in a recession that doesn't look to be 282 00:13:47,720 --> 00:13:50,400 Speaker 1: letting up any time soon, shoppers will become more value 283 00:13:50,400 --> 00:13:54,520 Speaker 1: focus and so price will be an important point of differentiation. 284 00:13:54,880 --> 00:13:58,360 Speaker 1: I think Loads the focus in winning relative to Home Depot. 285 00:13:58,400 --> 00:14:02,960 Speaker 1: There It's interesting, typically Lows UH store footprint is thought 286 00:14:02,960 --> 00:14:07,000 Speaker 1: of as a disadvantage because it's not Its stores tend 287 00:14:07,040 --> 00:14:09,760 Speaker 1: to be located in more suburban and rural areas as 288 00:14:09,760 --> 00:14:13,040 Speaker 1: opposed to in dense urban areas where home depot tends 289 00:14:13,080 --> 00:14:15,560 Speaker 1: to be more concentrated. UM, But that might not be 290 00:14:15,640 --> 00:14:19,080 Speaker 1: such a disadvantage right now if folks in uh, those 291 00:14:19,240 --> 00:14:21,800 Speaker 1: in rural and suburban areas are more willing to visit 292 00:14:21,800 --> 00:14:25,000 Speaker 1: a physical store compared to those in urban areas, so 293 00:14:25,240 --> 00:14:28,040 Speaker 1: kind of leveraging that could be a lover for lowest 294 00:14:28,080 --> 00:14:29,880 Speaker 1: of pole and I expect we'll kind of see that 295 00:14:30,000 --> 00:14:32,000 Speaker 1: in its results. It's two key results when they come 296 00:14:32,040 --> 00:14:35,440 Speaker 1: out tomorrow. Sarah Holzac with all of the answer is 297 00:14:35,680 --> 00:14:38,200 Speaker 1: no one. If she's in Washington, d C. I hope 298 00:14:38,240 --> 00:14:40,440 Speaker 1: they listened to her down there. So Holza is columnist 299 00:14:40,480 --> 00:14:44,760 Speaker 1: with Bloomberg opinion on retail primarily, but it turns her 300 00:14:44,800 --> 00:14:50,760 Speaker 1: home to a lot of topics. Well, the housing market 301 00:14:50,840 --> 00:14:53,640 Speaker 1: is the one area of this economy that continues to 302 00:14:53,720 --> 00:14:57,920 Speaker 1: show real strength across the board. Just last month, home 303 00:14:57,960 --> 00:15:02,240 Speaker 1: sales jump erect UH. So obviously low interest, low mortgage 304 00:15:02,280 --> 00:15:04,080 Speaker 1: rates are key driver. Let's see what else it's driving 305 00:15:04,120 --> 00:15:07,160 Speaker 1: this market. We welcome Sherry Chris, president and CEO of 306 00:15:07,200 --> 00:15:10,800 Speaker 1: Realology Expansion, brand's portfolio that includes better Homes and Gardens, 307 00:15:10,880 --> 00:15:15,560 Speaker 1: Real Estate and e r A based in Madison, New Jersey. Sherry, 308 00:15:15,560 --> 00:15:18,200 Speaker 1: thanks so much for joining us here. So again, the 309 00:15:18,280 --> 00:15:22,600 Speaker 1: residential housing market very very strong. What are the key 310 00:15:22,680 --> 00:15:27,400 Speaker 1: drivers that you think are pushing that market, Well, Paul's 311 00:15:27,520 --> 00:15:30,200 Speaker 1: it's interesting because, first of all, there's a pent up 312 00:15:30,240 --> 00:15:35,160 Speaker 1: demand from April and May due to COVID, and people 313 00:15:35,280 --> 00:15:38,280 Speaker 1: that would normally be moving couldn't move during that time 314 00:15:38,400 --> 00:15:41,680 Speaker 1: or couldn't look during that time, so that two months 315 00:15:41,720 --> 00:15:45,920 Speaker 1: of inactivity has has caused a demand. But there are 316 00:15:45,960 --> 00:15:49,480 Speaker 1: other things as well. There's a lot of migration patterns 317 00:15:49,520 --> 00:15:53,080 Speaker 1: that are happening across the country where people are consumers 318 00:15:53,080 --> 00:15:58,480 Speaker 1: are exiting large cities for outlying areas, um consumers want 319 00:15:58,520 --> 00:16:02,160 Speaker 1: to buy a different type of home, things like that. 320 00:16:02,360 --> 00:16:06,160 Speaker 1: So it's not really driven by people having to move, 321 00:16:06,720 --> 00:16:10,200 Speaker 1: which is typical of the past. It's more people want 322 00:16:10,240 --> 00:16:14,040 Speaker 1: to move now. So I am absolutely fascinated by this data. 323 00:16:14,120 --> 00:16:18,600 Speaker 1: The chows that suburban areas are seeing, you know, anything 324 00:16:18,640 --> 00:16:21,200 Speaker 1: that comes to markets snapped up. Do people really have 325 00:16:21,440 --> 00:16:25,440 Speaker 1: that much savings set aside, you know too, to put 326 00:16:25,480 --> 00:16:28,680 Speaker 1: together a mortgage? Are they getting what they thought they 327 00:16:28,680 --> 00:16:32,440 Speaker 1: would get for their houses or their condos or their apartments. 328 00:16:32,480 --> 00:16:37,880 Speaker 1: In the city's sherry Well, Bonnie, some people are buying 329 00:16:37,920 --> 00:16:42,200 Speaker 1: without selling their existing home. They're renting out their property. 330 00:16:42,560 --> 00:16:45,480 Speaker 1: And when we think about the mortgage rates being at 331 00:16:45,560 --> 00:16:49,120 Speaker 1: such a low, historical low, and the fact that you know, 332 00:16:49,160 --> 00:16:52,880 Speaker 1: with the average sale price hovering around three hundred thousand, now, 333 00:16:53,240 --> 00:16:57,160 Speaker 1: it doesn't take much for people to you know, put 334 00:16:57,160 --> 00:17:01,760 Speaker 1: that down or less and by a home. So we're 335 00:17:01,800 --> 00:17:06,240 Speaker 1: not talking millions of dollars. And uh, you know, I 336 00:17:06,280 --> 00:17:08,879 Speaker 1: don't know this for a fact, and you may know better, 337 00:17:09,000 --> 00:17:13,480 Speaker 1: but I think at the beginning of COVID, people started 338 00:17:13,520 --> 00:17:17,359 Speaker 1: liquidating certain assets. Cash was something that they wanted to have, 339 00:17:17,520 --> 00:17:20,360 Speaker 1: and now they're looking for a home and the housing 340 00:17:20,440 --> 00:17:23,760 Speaker 1: market has, you know, it's really exploded over the last 341 00:17:23,800 --> 00:17:28,200 Speaker 1: couple of months. So is this how much of this 342 00:17:28,240 --> 00:17:31,359 Speaker 1: is being driven? Do you think by the exodus from 343 00:17:31,400 --> 00:17:36,639 Speaker 1: maybe more densely populated areas like like Manhattan for example, Um, 344 00:17:36,680 --> 00:17:39,600 Speaker 1: and people really do just looking to get out of 345 00:17:39,640 --> 00:17:44,040 Speaker 1: a city type environment gets a more suburban area. Part 346 00:17:44,040 --> 00:17:46,560 Speaker 1: of it is, but not not all of it. I mean, 347 00:17:46,560 --> 00:17:49,440 Speaker 1: if we think about the two cities that are h 348 00:17:49,560 --> 00:17:52,680 Speaker 1: you know, having that problem right now. Manhattan obviously one 349 00:17:52,760 --> 00:17:55,800 Speaker 1: in San Francisco is another one where there are a 350 00:17:55,880 --> 00:18:00,240 Speaker 1: lot of very popular outlying areas that people could move too. 351 00:18:00,240 --> 00:18:04,720 Speaker 1: And now that many of the large companies, including ours, 352 00:18:05,440 --> 00:18:08,320 Speaker 1: you know, we're not opening our headquarters anytime soon. But 353 00:18:08,320 --> 00:18:13,240 Speaker 1: if you look at the West Coast with Facebook, Google, Twitter, 354 00:18:13,680 --> 00:18:16,800 Speaker 1: et cetera, and all of those employees are working from home, 355 00:18:17,080 --> 00:18:19,360 Speaker 1: they don't need to live in the Bay Area anymore. 356 00:18:19,640 --> 00:18:24,000 Speaker 1: And the same is true with Manhattan, yeah, exactly. And Sherry, 357 00:18:24,200 --> 00:18:26,240 Speaker 1: the fact that housing starts throughout twenty two points per 358 00:18:26,440 --> 00:18:29,240 Speaker 1: month over a month, and obviously they were up seventeen 359 00:18:29,240 --> 00:18:31,440 Speaker 1: and a half percent the month previously. I know that's 360 00:18:31,480 --> 00:18:34,720 Speaker 1: partially because everything got shut down so much back in 361 00:18:34,920 --> 00:18:39,080 Speaker 1: March or April. But where are these starts? Are builders 362 00:18:39,119 --> 00:18:41,840 Speaker 1: now sort of changing their ideas on what to build, 363 00:18:42,040 --> 00:18:45,000 Speaker 1: where to build and what's the bare minimum necessary? Like 364 00:18:45,040 --> 00:18:47,879 Speaker 1: are people demanding, for example, at least a bit of 365 00:18:47,880 --> 00:18:52,080 Speaker 1: a garden. Well, people are demanding and through better homes 366 00:18:52,080 --> 00:18:56,520 Speaker 1: and gardens. The magazine, which were affiliated with we did 367 00:18:56,560 --> 00:19:00,280 Speaker 1: a number of consumer surveys during COVID and one of 368 00:19:00,320 --> 00:19:02,960 Speaker 1: the things that came out loud and clear that people 369 00:19:02,960 --> 00:19:06,600 Speaker 1: are looking for properties that have, you know, the possibility 370 00:19:06,640 --> 00:19:10,840 Speaker 1: even extended outdoor space, UM, a front porch, a different 371 00:19:10,880 --> 00:19:14,479 Speaker 1: type of living area, places where their children can study, 372 00:19:15,160 --> 00:19:18,840 Speaker 1: where you know, both spouses can work in offices, and 373 00:19:18,880 --> 00:19:21,920 Speaker 1: so the configuration is different. But when you think about 374 00:19:21,920 --> 00:19:24,240 Speaker 1: the builders, I think the builders are taking more of 375 00:19:24,280 --> 00:19:27,760 Speaker 1: a calculated risk right now because they're seeing, you know, 376 00:19:27,800 --> 00:19:30,960 Speaker 1: what definitely is a pent up demand in the housing industry, 377 00:19:31,359 --> 00:19:34,639 Speaker 1: and they are they're moving forward. We only have a 378 00:19:34,680 --> 00:19:39,199 Speaker 1: four month supply of listings, so that's causing a backlog 379 00:19:39,359 --> 00:19:42,280 Speaker 1: right now where people who would like to move and 380 00:19:42,320 --> 00:19:44,920 Speaker 1: buy a new home are hesitant to put their existing 381 00:19:44,960 --> 00:19:48,480 Speaker 1: home in the market because there's nothing to buy. Sherry, 382 00:19:49,000 --> 00:19:51,959 Speaker 1: just an indulgence for me, given that you're affiliated with 383 00:19:52,040 --> 00:19:56,320 Speaker 1: that magazine that Homes and Gardens real estate. Obviously, what 384 00:19:56,760 --> 00:19:58,639 Speaker 1: is the one thing that people are most buying? Is 385 00:19:58,680 --> 00:20:01,119 Speaker 1: it flowers? Is a part your furniture? And if it is, 386 00:20:01,160 --> 00:20:06,639 Speaker 1: what kind of party of furniture. Oh, that's a great question, Bonnie. Um. 387 00:20:06,680 --> 00:20:10,199 Speaker 1: What people want to do is extend their living area 388 00:20:10,320 --> 00:20:16,000 Speaker 1: into an outdoor space. So it's patio furniture to dine outside. Um, 389 00:20:16,040 --> 00:20:19,159 Speaker 1: it's outdoor kitchens are very popular, and so if you 390 00:20:19,200 --> 00:20:23,239 Speaker 1: think about moving your kitchen and dining room outdoors, UM, 391 00:20:23,640 --> 00:20:28,320 Speaker 1: it just extends your space. Particularly as we're continuing to 392 00:20:28,440 --> 00:20:33,159 Speaker 1: somewhat isolate at home, you want to enjoy where you're living. 393 00:20:33,280 --> 00:20:36,879 Speaker 1: And one of the things that we found anecdotally, UM, 394 00:20:36,920 --> 00:20:39,400 Speaker 1: in talking to you know, our many brokers and agency 395 00:20:39,400 --> 00:20:43,040 Speaker 1: and consumers across the country is that when people were 396 00:20:43,080 --> 00:20:46,040 Speaker 1: inside for an extended period of time, you know, you 397 00:20:46,080 --> 00:20:49,440 Speaker 1: start looking at the faults of your home and that 398 00:20:49,520 --> 00:20:53,359 Speaker 1: causes you to want to either make changes or get outside. Sherry, 399 00:20:53,480 --> 00:20:55,560 Speaker 1: thank you so much for joining us today. Sherry Chris 400 00:20:55,640 --> 00:20:58,960 Speaker 1: as president and CEO of Real g Expansion brand's portfolio, 401 00:20:58,960 --> 00:21:03,920 Speaker 1: which includes Better Homes and Gardens real estate. Josh joins 402 00:21:03,960 --> 00:21:09,280 Speaker 1: us the senior portfolio manager at Aberdeen Standard Investments. And Josh, 403 00:21:09,320 --> 00:21:11,120 Speaker 1: we've been talking about the market and how we're at, 404 00:21:11,240 --> 00:21:14,720 Speaker 1: you know, all time highs, which really boggles the mind, 405 00:21:14,840 --> 00:21:17,359 Speaker 1: giving that people are just suffering out there except for 406 00:21:17,680 --> 00:21:19,040 Speaker 1: you know, the top of the top one per cent. 407 00:21:19,680 --> 00:21:22,000 Speaker 1: What do you make of it? Why is the market 408 00:21:22,040 --> 00:21:27,040 Speaker 1: fundamentally making highs? I think the real reason for that 409 00:21:27,200 --> 00:21:29,439 Speaker 1: is because there's no other place really to invest when 410 00:21:29,480 --> 00:21:31,520 Speaker 1: you look at interest rates and how low they are, 411 00:21:31,680 --> 00:21:35,200 Speaker 1: nteniare you get left in one percent for investment there? 412 00:21:35,520 --> 00:21:37,359 Speaker 1: So I think people are viewing this as the only 413 00:21:37,400 --> 00:21:42,199 Speaker 1: alternatives right now. In addition, we've just seem massive stimulus 414 00:21:42,200 --> 00:21:45,440 Speaker 1: by government on the US and in Europe and then 415 00:21:45,880 --> 00:21:49,160 Speaker 1: said in ECB s so much money at this problem. 416 00:21:49,240 --> 00:21:52,439 Speaker 1: So um, there's so much liquidity in the system and 417 00:21:52,440 --> 00:21:55,080 Speaker 1: it's I believe it's been driving up the stock market. 418 00:21:55,800 --> 00:21:58,960 Speaker 1: So Josh, talk to us about the infrastructure space. Here 419 00:21:59,000 --> 00:22:02,680 Speaker 1: are give us the sense of what the pandemic has 420 00:22:02,720 --> 00:22:05,160 Speaker 1: meant to infrastructure investing, and people just kind of pulled 421 00:22:05,160 --> 00:22:07,080 Speaker 1: back the reins, pulled back the money to see what 422 00:22:07,119 --> 00:22:10,560 Speaker 1: happens or is it still moving forward? So it depends 423 00:22:10,800 --> 00:22:15,040 Speaker 1: on which subsector with an infrastructure and certainly governments and 424 00:22:15,080 --> 00:22:19,119 Speaker 1: local governments of space and budget deficits and issues. But 425 00:22:19,200 --> 00:22:22,119 Speaker 1: we actually believe there's a lot of opportunities within the 426 00:22:22,200 --> 00:22:25,879 Speaker 1: infrastructure space, both on the public and private side, and 427 00:22:25,960 --> 00:22:30,520 Speaker 1: part of that is from stimulus packages um for because 428 00:22:30,560 --> 00:22:32,919 Speaker 1: of COVID. In addition to the fact that you just 429 00:22:33,119 --> 00:22:36,199 Speaker 1: see certain sectors a prime for growth. And I'll give 430 00:22:36,240 --> 00:22:39,360 Speaker 1: you one example, to start on the communications sector, right, 431 00:22:39,400 --> 00:22:42,199 Speaker 1: we all know because of the pandemic, how important it 432 00:22:42,280 --> 00:22:46,560 Speaker 1: is to have that broadband connection to it um because 433 00:22:46,600 --> 00:22:48,760 Speaker 1: people are working from home, kids are in zoom school 434 00:22:48,800 --> 00:22:51,720 Speaker 1: from home, and that's just spotlights how important it is. 435 00:22:51,720 --> 00:22:54,960 Speaker 1: It's basically the come as essentially utility to that. So 436 00:22:55,000 --> 00:22:58,639 Speaker 1: we were excited about the communication sector prior to because 437 00:22:58,680 --> 00:23:01,520 Speaker 1: of the transition to five G, and now COVID has 438 00:23:01,560 --> 00:23:03,600 Speaker 1: just put a stoplight on it. You know, you think 439 00:23:03,600 --> 00:23:05,800 Speaker 1: about what's happened over the past twenty years, how we've 440 00:23:06,280 --> 00:23:09,840 Speaker 1: all transitions from landlines to cell phones to smartphones and 441 00:23:09,840 --> 00:23:12,600 Speaker 1: the next wave of technology it's five G and we 442 00:23:12,680 --> 00:23:16,200 Speaker 1: believe that invested in cellular tavere or so those are 443 00:23:16,200 --> 00:23:19,080 Speaker 1: those large steel structures that least based on the steel, 444 00:23:19,119 --> 00:23:24,199 Speaker 1: powers and essential component infrastructure component that will allow the 445 00:23:24,280 --> 00:23:27,600 Speaker 1: five G to actually happen and grow. Huh. So that's 446 00:23:27,720 --> 00:23:30,480 Speaker 1: one area. And then there's also of course, you know 447 00:23:30,840 --> 00:23:33,560 Speaker 1: energy and green energy. Well, how much time do you 448 00:23:33,600 --> 00:23:37,480 Speaker 1: spend wondering what will happen if President Trump wins for 449 00:23:37,520 --> 00:23:41,320 Speaker 1: a second term, given particularly that we saw yesterday for example, 450 00:23:41,359 --> 00:23:44,159 Speaker 1: that he's going to allow Arctic drilling going go ahead. 451 00:23:45,320 --> 00:23:47,400 Speaker 1: So he's been president for about three and a half 452 00:23:47,480 --> 00:23:50,919 Speaker 1: years now and we still see a tremendous growth in 453 00:23:50,920 --> 00:23:54,080 Speaker 1: the renewable sector. And that's not only happening in the US, 454 00:23:54,000 --> 00:23:57,720 Speaker 1: is happening throughout the globe. You know, the EU passed 455 00:23:57,800 --> 00:24:02,120 Speaker 1: the largest stimulus package into Martiall Plan with the focus 456 00:24:02,240 --> 00:24:06,280 Speaker 1: on climate change. So there are great opportunities to invest 457 00:24:06,359 --> 00:24:09,320 Speaker 1: in renewables and that's going to continue to happen because 458 00:24:09,359 --> 00:24:11,640 Speaker 1: not only it's good for the environment, but it now 459 00:24:11,680 --> 00:24:14,840 Speaker 1: also makes economics sense as the cost of solar and 460 00:24:14,920 --> 00:24:19,320 Speaker 1: wind on part with carbon emitting alternatives and some geography, 461 00:24:19,359 --> 00:24:23,280 Speaker 1: So we believe it's gonna The next catalyst for renewable 462 00:24:23,359 --> 00:24:26,560 Speaker 1: energy is storage, and storage costs have come down about 463 00:24:27,400 --> 00:24:31,280 Speaker 1: over the last decade. It's expected to come down over 464 00:24:31,320 --> 00:24:33,480 Speaker 1: the next five years. But if you think about how 465 00:24:33,520 --> 00:24:35,879 Speaker 1: important that is if you have a solar farm and 466 00:24:35,960 --> 00:24:37,800 Speaker 1: the sun is shining during the day and now you 467 00:24:37,800 --> 00:24:40,320 Speaker 1: could store that energy and use it at night and 468 00:24:40,359 --> 00:24:43,680 Speaker 1: make that infrastructure as that even more valuable. So we believe, 469 00:24:43,680 --> 00:24:46,840 Speaker 1: regardless of who wins the election, renewables are a great 470 00:24:46,840 --> 00:24:49,280 Speaker 1: place to invest over the next ten years or so. 471 00:24:50,119 --> 00:24:52,679 Speaker 1: How about if President Trump is successful in opening up 472 00:24:52,680 --> 00:24:54,560 Speaker 1: the Arctic, would you be investing in some of those 473 00:24:54,600 --> 00:25:00,480 Speaker 1: projects up there? Um, we probably would not be invested generally, 474 00:25:00,560 --> 00:25:03,760 Speaker 1: don't for an infrastructure investment. We're not looking to take 475 00:25:03,800 --> 00:25:08,879 Speaker 1: specultive views on commodity prices or the e MP side 476 00:25:08,920 --> 00:25:11,040 Speaker 1: of it, So we're really looking for the more stable, 477 00:25:11,119 --> 00:25:15,920 Speaker 1: predictable cash flows in our infrastructure investments. Do you look 478 00:25:15,960 --> 00:25:18,720 Speaker 1: outside the US as well, Josh? I mean Europe is 479 00:25:18,960 --> 00:25:22,160 Speaker 1: pretty much ahead of us in many ways, particularly when 480 00:25:22,160 --> 00:25:24,879 Speaker 1: it comes to broadband and five G and towers and 481 00:25:24,920 --> 00:25:28,600 Speaker 1: so on. Well, so it's interesting. I wouldn't. Um, we 482 00:25:28,680 --> 00:25:31,800 Speaker 1: do invest globally, and Europe's important part of it. In 483 00:25:31,840 --> 00:25:33,920 Speaker 1: some ways, we're actually ahead of them. So if you 484 00:25:33,960 --> 00:25:38,480 Speaker 1: think about the tower sector in the United States, of 485 00:25:38,560 --> 00:25:41,560 Speaker 1: the towers are owned by independent tower companies. In Europe 486 00:25:41,600 --> 00:25:45,320 Speaker 1: it's only about twenty, so there are great opportunities. We 487 00:25:45,520 --> 00:25:48,520 Speaker 1: like a company called seal Next, which is consolidated that 488 00:25:48,720 --> 00:25:51,280 Speaker 1: right now, so you'll get there or get natural organic 489 00:25:51,320 --> 00:25:54,600 Speaker 1: growth as data is growing thirty UM, as we're all 490 00:25:54,720 --> 00:25:58,480 Speaker 1: using more than with intensive applications on the phones. Plus 491 00:25:58,480 --> 00:26:01,439 Speaker 1: you'll get the inorganic growth as a cell phone companies 492 00:26:01,480 --> 00:26:04,280 Speaker 1: are going to sell off their tower assets, as we've 493 00:26:04,280 --> 00:26:06,240 Speaker 1: seen here in the United States, and that's beginning to 494 00:26:06,320 --> 00:26:10,320 Speaker 1: happen in Europe. So here in the States it seems 495 00:26:10,320 --> 00:26:16,240 Speaker 1: like infrastructure spending is fairly bipartisan. What do you expect 496 00:26:16,240 --> 00:26:19,880 Speaker 1: to see out of Washington, no matter who's which administration 497 00:26:19,920 --> 00:26:22,280 Speaker 1: is in the White House over the next couple of years. 498 00:26:22,320 --> 00:26:24,760 Speaker 1: As you know, we try to get this economy on 499 00:26:24,800 --> 00:26:26,399 Speaker 1: the other side of this pandemic, try to get this 500 00:26:26,440 --> 00:26:31,320 Speaker 1: economy development growing again. And I think that's an important 501 00:26:31,320 --> 00:26:33,679 Speaker 1: point you make. I believe that's the only issue that 502 00:26:33,760 --> 00:26:36,800 Speaker 1: both the Democrats and Republicans agree on that we need 503 00:26:36,880 --> 00:26:40,159 Speaker 1: to spend more on infrastructure. So I think regardless of 504 00:26:40,200 --> 00:26:44,040 Speaker 1: who wins, we could see infrastructure spending. But what I 505 00:26:44,080 --> 00:26:47,800 Speaker 1: will say is when we look to invest at Aberdeen specifically, 506 00:26:47,880 --> 00:26:50,800 Speaker 1: we're looking for currently right now, with the opportunities and 507 00:26:50,920 --> 00:26:54,320 Speaker 1: once and if there is an excellent infrastructure stimulus package, 508 00:26:54,440 --> 00:26:58,240 Speaker 1: to me, that's a free call option for our investments. 509 00:26:58,560 --> 00:27:02,080 Speaker 1: So we believe in that when and if that will happen, 510 00:27:02,240 --> 00:27:05,359 Speaker 1: it will just enhance the value of investments will currently 511 00:27:05,400 --> 00:27:08,040 Speaker 1: make it. So Josh never did get the infrastructure week, 512 00:27:08,119 --> 00:27:10,639 Speaker 1: So what makes you so convinced that there will be 513 00:27:10,720 --> 00:27:13,119 Speaker 1: something like that next time around, no matter who the 514 00:27:13,160 --> 00:27:15,760 Speaker 1: president is, and that there will be money left Because 515 00:27:16,200 --> 00:27:18,680 Speaker 1: the Treasury is issuing so much right now just to 516 00:27:18,760 --> 00:27:23,800 Speaker 1: keep the economy from going too far underwater, why would 517 00:27:24,080 --> 00:27:27,800 Speaker 1: they issue more money for an infrastructure sort of spend. 518 00:27:28,920 --> 00:27:30,880 Speaker 1: Totally agree, and that's a great point, and that's why 519 00:27:30,880 --> 00:27:33,639 Speaker 1: I said initially, any investment we make is based on 520 00:27:33,960 --> 00:27:36,600 Speaker 1: the environment we see right now, and if something does 521 00:27:36,680 --> 00:27:39,440 Speaker 1: happen to free call options. But the point you make 522 00:27:39,520 --> 00:27:41,800 Speaker 1: is that the governments don't have enough money, the local 523 00:27:42,080 --> 00:27:45,280 Speaker 1: and federal government to spend on infrastructure, so we believe 524 00:27:45,280 --> 00:27:49,040 Speaker 1: they will use more private capital to invest on infrastructure. 525 00:27:49,080 --> 00:27:52,320 Speaker 1: We saw that in Europe during the last financial crisis, 526 00:27:52,359 --> 00:27:54,760 Speaker 1: and we believe that could happen in the United States. 527 00:27:54,840 --> 00:27:58,719 Speaker 1: And we have seen some more privatezations PPP public private 528 00:27:58,760 --> 00:28:01,600 Speaker 1: partnership and actually to increase about ten x over the 529 00:28:01,680 --> 00:28:04,800 Speaker 1: last decade. So we think there's a great opportunity if 530 00:28:04,800 --> 00:28:09,920 Speaker 1: you're investing in both public and private infrastructure. Josh Deats, 531 00:28:09,920 --> 00:28:12,560 Speaker 1: thanks so much for joining us. We certainly appreciated Josh 532 00:28:12,640 --> 00:28:16,360 Speaker 1: Deet's Senior portfolio manager Aberdeen Asset Management. They have six 533 00:28:16,440 --> 00:28:21,080 Speaker 1: hundred forty five billion dollars in assets under management. Vannie, 534 00:28:21,119 --> 00:28:23,640 Speaker 1: you may not know this, but the real infrastructure play, 535 00:28:23,680 --> 00:28:26,000 Speaker 1: the only one I'm focused on, is this gateway project 536 00:28:26,000 --> 00:28:30,760 Speaker 1: that kind of upgrade the Northeast Transit UH railroad so 537 00:28:30,800 --> 00:28:32,400 Speaker 1: we can get more trains in and out of the city. 538 00:28:32,400 --> 00:28:34,959 Speaker 1: That was a crucial thing before the pandemic, but maybe 539 00:28:35,600 --> 00:28:37,480 Speaker 1: not so much after it. Fair boys working from home, 540 00:28:39,000 --> 00:28:42,440 Speaker 1: Thanks for listening to Bloomberg Markets podcast. You can subscribe 541 00:28:42,480 --> 00:28:46,000 Speaker 1: and listen to interviews at Apple Podcasts or whatever podcast 542 00:28:46,040 --> 00:28:49,280 Speaker 1: platform you prefer. I'm Bonnie Quinn. I'm on Twitter at 543 00:28:49,280 --> 00:28:51,600 Speaker 1: Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter at 544 00:28:51,680 --> 00:28:54,520 Speaker 1: pt Sweeney. Before the podcast, you can always catch us 545 00:28:54,560 --> 00:29:01,120 Speaker 1: worldwide at Bloomberg Radio m