WEBVTT - Market Is Ripe For A Near-Term Pullback: Miller Tabak's Maley 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Kind the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple podcast or wherever you listen to podcasts, 0:00:17.000 --> 0:00:21.000 and on Bloomberg dot com. We'll just in the last minute, 0:00:21.000 --> 0:00:22.680 I'm looking at something that I haven't seen in a 0:00:22.680 --> 0:00:25.680 long time, and that is all three major industries lower 0:00:25.720 --> 0:00:27.760 than ASDAK has just turned lower now and is down 0:00:27.760 --> 0:00:29.440 a tenth represent of course, the S and P down 0:00:29.440 --> 0:00:31.880 a quarter represent and the DOAO has been down about 0:00:31.960 --> 0:00:35.400 half a percent. But still we're talking very very small down. 0:00:36.159 --> 0:00:38.440 Let's bring in somebody who knows a lot about records 0:00:38.479 --> 0:00:41.680 and stock market action. Matt Melee is managing director in 0:00:41.720 --> 0:00:44.000 chief markets strologist add milleran tay Back, and he joins 0:00:44.080 --> 0:00:47.839 us from Newton, Massachusetts. Today. Matt, we're down today, but 0:00:47.880 --> 0:00:50.520 we're down very very small. Do we hold onto these 0:00:50.560 --> 0:00:56.040 records even as we wait for another stimulus round? You know? 0:00:56.160 --> 0:00:59.760 It's it's it's funny because this rally has been seems 0:00:59.800 --> 0:01:02.240 to be waning a little bit in the last a 0:01:02.280 --> 0:01:04.640 couple of days. Even though you know, each day we 0:01:04.680 --> 0:01:06.800 seem to try to test the all time high in 0:01:06.800 --> 0:01:09.040 the SMP and toil. This morning we got above the 0:01:09.080 --> 0:01:12.000 inter day all time high. But even when we reached 0:01:12.000 --> 0:01:14.280 that inter day all time high and uh forty five 0:01:14.280 --> 0:01:17.560 minutes ago, the the breath the advances versus decliners were 0:01:17.560 --> 0:01:21.520 actually negative. And we've seen that kind of that breath uh, 0:01:22.240 --> 0:01:25.440 you know, pulling back recently, volume has dropped off considerably, 0:01:25.720 --> 0:01:27.399 and so people, I think, are a little bit nervous 0:01:27.440 --> 0:01:28.960 as we're making this new high. It's kind of a 0:01:29.840 --> 0:01:32.280 point where people can step back and say, geez, you know, 0:01:32.360 --> 0:01:35.039 we're up fifty percent in just five months. We have, 0:01:35.480 --> 0:01:38.160 you know, evaluations, even though that's a lousy timing tool, 0:01:38.400 --> 0:01:42.000 valuations above twenty times earnings. Uh, it's it gives people 0:01:42.040 --> 0:01:43.760 a little bit of a reason to pause, and to 0:01:43.800 --> 0:01:45.880 be honest with you, if we did pull back from here, 0:01:45.920 --> 0:01:47.880 it wouldn't be the worst thing in the world. I mean, pauses, 0:01:48.120 --> 0:01:50.560 pull backs are and even corrections are normal and healthy 0:01:50.560 --> 0:01:53.640 in any market. So, Matt, one of the the uh, 0:01:54.200 --> 0:01:56.840 the characteristics of this rally off the bottom is it's 0:01:57.200 --> 0:01:59.760 total lack of breath. It's been driven by you know 0:02:00.160 --> 0:02:02.040 or seven names, and if you pull those names out, 0:02:02.560 --> 0:02:05.480 we're actually down four percent year of her year. How 0:02:05.520 --> 0:02:08.320 concerned are you about that lack of breath? Um just 0:02:08.360 --> 0:02:10.840 from a market you know, maybe just the stability a 0:02:10.919 --> 0:02:14.160 technical perspective, Yeah, there's no question. I mean a lot 0:02:14.200 --> 0:02:16.680 of people are you know, each people are saying, well, 0:02:16.760 --> 0:02:19.519 jeezy stocks deserve to be moving higher, and and that's 0:02:19.560 --> 0:02:22.200 true to a certain degree, but it also tells us 0:02:22.200 --> 0:02:25.600 that the overall economy, the breadth of the economy is 0:02:25.639 --> 0:02:28.320 not as strong as as some people would like to think. 0:02:28.720 --> 0:02:31.320 And therefore it's I guess my point is every time 0:02:31.360 --> 0:02:33.760 we get a narrow rally, people come up with excuses 0:02:33.800 --> 0:02:36.680 why it's it's it's actually nothing to worry about. But 0:02:36.840 --> 0:02:38.760 each time it seems to be something that people should 0:02:38.800 --> 0:02:41.360 have worried about, and we do see a pullback of 0:02:41.400 --> 0:02:46.640 some sort of substance. So not a lot of people 0:02:46.639 --> 0:02:49.359 have been talking about cynicals and you know, a rotation 0:02:49.520 --> 0:02:51.799 into cyclicals, But are we really going to see a 0:02:51.960 --> 0:02:54.640 rotation in this market action we talk about, you know, 0:02:54.680 --> 0:02:59.680 the five stocks being the biggest part of the composition 0:02:59.720 --> 0:03:03.200 of a the s and it seems to me that 0:03:03.240 --> 0:03:04.840 even if we do have a rotation, it's going to 0:03:04.880 --> 0:03:08.200 be so small that it's going to be barely noticeable. Yeah, 0:03:08.280 --> 0:03:10.320 I I agree, And of course one of the things 0:03:10.320 --> 0:03:13.120 that that I worry about. Uh and again it's it's 0:03:13.120 --> 0:03:15.520 funny because I've I've actually become more constructive on the 0:03:15.520 --> 0:03:17.960 market on a longer term basis, but near term we 0:03:18.040 --> 0:03:20.280 definitely look like we're getting right for a pull back. 0:03:20.320 --> 0:03:23.720 And one of those reasons goes to what you just mentioned, Vonn, 0:03:23.880 --> 0:03:26.120 is that we talk about how well can some of 0:03:26.160 --> 0:03:29.919 these um and you know, cyclicals do if we get 0:03:29.960 --> 0:03:33.880 another round of another wave in the coronavirus. I mean, 0:03:33.880 --> 0:03:35.960 we've seen these kind of whether it's a second wave 0:03:36.040 --> 0:03:39.480 or a second half of the first wave. The weather 0:03:39.520 --> 0:03:41.920 hasn't gotten cold yet, and what we've seen from Australia 0:03:41.920 --> 0:03:44.200 and New Zealand and other places in the southern Hemisphere 0:03:44.360 --> 0:03:46.760 as the weather got colder, they did see a new wave. 0:03:46.800 --> 0:03:48.720 In fact, in Australia it was worse than the first one. 0:03:49.120 --> 0:03:51.360 So if we get that kind of thing and and 0:03:51.600 --> 0:03:53.400 we get some sort of a lockdown, I don't think 0:03:53.400 --> 0:03:55.160 it'll be anywhere near as severe as the last one. 0:03:55.280 --> 0:03:57.600 But if we get some kind of a semi lockdown, 0:03:57.840 --> 0:03:59.840 we're already seeing that with the school, with some of 0:03:59.840 --> 0:04:02.160 the College is h that's going to make it tough 0:04:02.200 --> 0:04:03.760 for some of these cyclical stocks to rally in the 0:04:03.800 --> 0:04:05.600 way that some people think they will. All right, so 0:04:05.640 --> 0:04:07.880 we still have the pandemic risk out there. Give us 0:04:07.880 --> 0:04:11.040 a sense of the political risk, big, big, big election 0:04:11.120 --> 0:04:14.520 coming up in November. How are you factoring that in? Well, 0:04:14.560 --> 0:04:16.200 the in the market is not factoring it at all 0:04:16.480 --> 0:04:18.000 right right now. And one of the things I mean 0:04:18.200 --> 0:04:20.800 on two things. Number one, you know, long term uh 0:04:21.400 --> 0:04:23.520 is a lot of people will point out that the 0:04:23.600 --> 0:04:26.080 Democrats have actually been better for for the stock market 0:04:26.200 --> 0:04:29.880 or uh more more more more often than not, although 0:04:29.880 --> 0:04:33.320 certainly President Trump has been uh as a GOP president 0:04:33.360 --> 0:04:35.600 has been very positive for the stock market. But but 0:04:35.680 --> 0:04:37.440 on a on a near term basis, you look at it, 0:04:37.440 --> 0:04:39.680 where what's the starting point? The starting point right now 0:04:39.880 --> 0:04:42.120 as we're moving towards the election, as we get past 0:04:42.200 --> 0:04:45.120 these conventions and really move into the election season, the 0:04:45.160 --> 0:04:47.640 market is an all time high. It's overbought on a 0:04:47.680 --> 0:04:51.240 tentacle basis, it's expensive on a fundamental basis. So if 0:04:51.279 --> 0:04:54.640 we start to see that the that the President Biden, 0:04:55.080 --> 0:04:57.839 especially if we talk about you think about Elizabeth Warren 0:04:57.880 --> 0:05:00.640 maybe being you know, in charge of the tragury Department 0:05:00.720 --> 0:05:02.800 or in charge of even the Justice Department, that will 0:05:02.839 --> 0:05:05.359 have a negative impact on certain aspects of the marketplace. 0:05:05.440 --> 0:05:08.000 So uh, and especially if it looks like the Democrats 0:05:08.000 --> 0:05:09.920 are going to have a full sweep. I think that 0:05:10.360 --> 0:05:12.000 a longer term it may not be the worst thing 0:05:12.000 --> 0:05:13.920 in the world, but near term, with the market the 0:05:13.960 --> 0:05:16.039 way it is, people are gonna have to start to 0:05:16.040 --> 0:05:17.800 factor that in. And that's another reason why I'm more 0:05:17.800 --> 0:05:20.240 cautious on the near term prospects for the market. But 0:05:20.400 --> 0:05:22.720 what would you do about banks right now? You've always 0:05:22.760 --> 0:05:25.400 had such strong thoughts on the banks, but they're really 0:05:25.440 --> 0:05:29.240 in the duldrums. Yeah, it's really a concern. And when 0:05:29.240 --> 0:05:32.680 you get somebody like Warren Buffett, who obviously he's been 0:05:32.720 --> 0:05:34.240 you know, we we've heard all the news about him 0:05:34.279 --> 0:05:37.039 upping his position in Bank America, but then we find 0:05:37.040 --> 0:05:38.560 out he's he's pulling him back in a lot of 0:05:38.600 --> 0:05:41.080 other areas. It's still a concern for me. And now, 0:05:41.080 --> 0:05:43.360 even though interest rates have moved up a little bit 0:05:43.760 --> 0:05:46.040 in the last week or so. Uh, they're not going 0:05:46.080 --> 0:05:47.880 to go up a lot higher even if they even 0:05:47.880 --> 0:05:50.320 if they stabilize up this this kind of slightly higher level. 0:05:50.800 --> 0:05:52.760 But the other thing that really concerns me is I 0:05:52.800 --> 0:05:55.400 continue to watch these European banks. You look at the 0:05:55.400 --> 0:05:58.440 European Bank Index, it's rolling back over again from a 0:05:58.560 --> 0:06:00.840 pretty low level already, and they've been in a performing 0:06:00.839 --> 0:06:03.560 for quite some time now. It just shows that there's 0:06:03.560 --> 0:06:05.760 some stress on the overall banking system, and I think 0:06:05.760 --> 0:06:08.280 it shows, you know, concerns about you know, whether we're 0:06:08.320 --> 0:06:12.200 going to have the situation with bankruptcies while they pick 0:06:12.279 --> 0:06:17.360 up and get past the political questions. Matt Mally, thank 0:06:17.360 --> 0:06:20.039 you so much for joining us. We appreciate they appreciate that. 0:06:20.080 --> 0:06:23.800 Matt Mally, managing director in chief market strategist for Miller Tabek, 0:06:23.880 --> 0:06:27.080 joining us on the phone from Massachusetts. Uh, yeah, Vonnie's 0:06:27.240 --> 0:06:29.040 I'm glad you brought up the banks because they just 0:06:29.080 --> 0:06:31.000 can't seem to get out of their way here, and 0:06:31.120 --> 0:06:33.400 yet they have a whole myriad of issues you have 0:06:33.440 --> 0:06:35.320 to deal with. As Matt suggested, those low rates and 0:06:35.360 --> 0:06:38.159 the potential right offs. It's amazing because they're one of 0:06:38.160 --> 0:06:41.840 the areas that didn't rally ever, even when people were saying, look, 0:06:41.880 --> 0:06:45.680 they're they're way under valued here. Yeah, exactly, so the 0:06:45.920 --> 0:06:47.560 whole host of issues that they have to deal with. 0:06:47.760 --> 0:06:50.080 So we'll look forward to those earnings the next quarter. 0:06:52.480 --> 0:06:55.400 It is time for Bloomberg Opinion. We're joined today by 0:06:55.680 --> 0:06:59.960 Bloomberg Opinion calumnist Sarah Haws actually covers retail for Bloomer. 0:07:00.040 --> 0:07:02.760 She's based in Washington, d C. Sarah, A busy day 0:07:02.880 --> 0:07:06.320 today for you, Thanks for joining us. We had Walmart, 0:07:06.400 --> 0:07:10.280 Home Depot, Coals all reporting earnings today. It seems like 0:07:10.840 --> 0:07:14.000 Walmart Home Depot they're kind of seeing some benefit here 0:07:14.160 --> 0:07:17.240 from changing buying habits, but Coals not so much. What 0:07:17.560 --> 0:07:21.120 are your key takeaways? Yeah, I think that's exactly right. 0:07:21.440 --> 0:07:23.320 All of us are spending so much more time in 0:07:23.400 --> 0:07:25.840 our homes, and that clearly has been a benefit to 0:07:26.080 --> 0:07:29.920 Home Depot. People have taken on renovation projects they wouldn't 0:07:29.960 --> 0:07:31.880 have otherwise if they didn't suddenly have to have a 0:07:31.920 --> 0:07:35.520 home office, for example, or they're pulling forward renovation projects 0:07:35.520 --> 0:07:37.080 that maybe they were planning to do a year or 0:07:37.080 --> 0:07:39.600 two down the road, and so comparable sales growth. They're 0:07:39.640 --> 0:07:43.760 a booming twenty UM and Walmart also benefited from all 0:07:43.800 --> 0:07:46.720 these traumatic changes to our lifestyle. Not only are people 0:07:46.760 --> 0:07:50.160 cooking more at home, but again trying to trick out 0:07:50.160 --> 0:07:52.760 their backyards to make spending climate at home more valuable 0:07:53.200 --> 0:07:56.400 UM and enjoyable sporting goods, that kind of thing. And 0:07:56.480 --> 0:07:59.640 so those two held up fairly well in the quarter. 0:07:59.680 --> 0:08:02.400 But old, you know, consistent with what we saw in 0:08:02.600 --> 0:08:06.440 the commerce department retail sales numbers last week, clothing just 0:08:06.520 --> 0:08:09.680 continues to be a real weak spot. People are just 0:08:09.800 --> 0:08:12.560 not spending money in that product category, and that showed 0:08:12.640 --> 0:08:14.440 up in the weak results for coals in the quarter. 0:08:15.080 --> 0:08:18.680 Now that's something that you might anticipate because there are 0:08:18.720 --> 0:08:21.520 no events to go to, this very little entertaining at 0:08:21.520 --> 0:08:24.480 home and so on. So clothes you can understand. But 0:08:24.640 --> 0:08:29.320 can Walmart UM Home Depot keep up these figures even 0:08:29.360 --> 0:08:32.839 as stimulus recedes, because you know, there was that check 0:08:32.880 --> 0:08:36.080 and then there were extra unemployment insurance payments, But they've 0:08:36.080 --> 0:08:39.440 gone away for the moment, Yes, And I think that's 0:08:39.440 --> 0:08:41.360 a real risk, and I think that's why you're not 0:08:41.520 --> 0:08:44.640 seeing their stocks really pop on these results this morning, 0:08:44.720 --> 0:08:48.840 even though they beat expectations. Walmart cited repeatedly in its 0:08:48.880 --> 0:08:52.080 earnings materials that the government stimulus was a real boon 0:08:52.240 --> 0:08:55.120 for it in the quarter, that when you saw those 0:08:55.200 --> 0:08:58.240 checks in early May and June, that that was clearly 0:08:58.280 --> 0:09:01.240 propping up spending in general merchant NAE categories, And as 0:09:01.240 --> 0:09:05.520 we got deeper into July, they said, spending basically normalized, 0:09:05.600 --> 0:09:09.040 sales normalized. And so I think UH investors are looking 0:09:09.040 --> 0:09:10.679 at these results and seeing a real risk that the 0:09:10.760 --> 0:09:15.000 Congress doesn't do more to support consumers, that this strength 0:09:15.080 --> 0:09:17.719 is simply not going to be replicated. And Sarah, you 0:09:17.760 --> 0:09:21.840 wrote a fantastic column today just on this issue that 0:09:23.400 --> 0:09:27.000 you really hope that the folks in Congress are taking 0:09:27.000 --> 0:09:28.679 a look at some of these numbers that are being 0:09:28.720 --> 0:09:31.680 released it and more importantly, listen to some of the 0:09:31.679 --> 0:09:33.880 commentary by the c e O s about what they're 0:09:33.880 --> 0:09:36.960 seeing in terms of future demand. It would suggest that 0:09:37.200 --> 0:09:41.439 maybe they better get moving. Yes, exactly. I think if 0:09:41.440 --> 0:09:44.680 we don't see uh, you know, any progress out of 0:09:44.679 --> 0:09:47.160 Washington soon, it could be really destructive. You had some 0:09:47.240 --> 0:09:50.080 of them executives offering color about how the back to 0:09:50.120 --> 0:09:52.600 school shopping season is going so so far, and it's 0:09:52.640 --> 0:09:55.520 not going great. I think choppy was the word used 0:09:55.520 --> 0:09:58.400 on the Walmart call, uh, and understandably so. Right, So 0:09:58.440 --> 0:10:00.280 many parents don't even know if they're trying all that's 0:10:00.280 --> 0:10:03.160 going to be going back to school in person or virtually, 0:10:03.440 --> 0:10:05.880 and don't even know exactly what supplies to buy, you know, 0:10:05.960 --> 0:10:08.240 do you need a laptop or do you need a backpack? Um? 0:10:08.760 --> 0:10:10.840 All of those spending decisions are kind of on ice 0:10:10.960 --> 0:10:14.680 right now. Um. And so against that backdrop, and with 0:10:14.760 --> 0:10:17.360 the unemployment rate as high as it is, Uh, it's 0:10:17.400 --> 0:10:19.840 just really hard to see how the back to school 0:10:19.880 --> 0:10:22.600 season and the really crucial holiday season set up well 0:10:22.640 --> 0:10:25.439 for these retailers. If Congress doesn't take some action, are 0:10:25.480 --> 0:10:28.480 retailer is changing the mix of what's available in their stores. So, 0:10:28.559 --> 0:10:31.319 for example, is Walmarts, you know, getting rid of the 0:10:31.320 --> 0:10:34.360 backpacks just in case there won't be as much demand. 0:10:34.559 --> 0:10:38.360 Is it putting in more leisure where Yeah, Cole talked 0:10:38.400 --> 0:10:40.840 about this a bit on its earnings call this morning 0:10:40.880 --> 0:10:43.480 that it definitely is going to shift its assortment to 0:10:43.520 --> 0:10:47.400 focus more on comfy clothes, on home products because people 0:10:47.400 --> 0:10:49.720 are still spending a lot on pitching appliances and that 0:10:49.840 --> 0:10:52.600 kind of thing um really shifting its assortment to those 0:10:52.600 --> 0:10:57.240 product categories where people are still spending money. Cools also 0:10:57.280 --> 0:11:01.160 talked about cutting the total number of items that it offers, 0:11:01.160 --> 0:11:03.800 so it said by the holiday season, it expects that 0:11:04.120 --> 0:11:06.679 skew count or the number of individual items that itself 0:11:06.880 --> 0:11:10.280 to be on um and instead to really focus on 0:11:11.000 --> 0:11:13.480 a few key items that it thinks can sell really 0:11:13.520 --> 0:11:16.920 well and buying really deep into those particular items. So 0:11:16.960 --> 0:11:18.800 I think that's a change you can expect to see 0:11:19.200 --> 0:11:23.360 when you're in stores in fall and winter. Sarah, do 0:11:23.400 --> 0:11:26.120 you have the sense that retailers in general, whether it's 0:11:26.120 --> 0:11:30.680 a coals or home depot um, can continue to invest 0:11:30.720 --> 0:11:33.360 in their digital businesses, Because it just seems like the 0:11:33.480 --> 0:11:38.840 money that Amazon continues to invest in its e commerce business, 0:11:38.840 --> 0:11:42.199 whether it's fulfillment and distribution centers or just tech technology 0:11:42.200 --> 0:11:45.920 in general, is just just outstanding and it's almost hard 0:11:45.960 --> 0:11:48.240 to replicate. How about these other retailers, what are they 0:11:48.240 --> 0:11:51.520 doing in terms of investing in in their e commerce businesses? 0:11:52.800 --> 0:11:55.120 So well, all three of these retailers are trying to 0:11:55.200 --> 0:11:58.400 do is leverage their store footprint, kind of turn it 0:11:58.480 --> 0:12:01.360 into not an Alba trouss, but a help in this 0:12:01.440 --> 0:12:04.959 digital era, and one key approach to doing that is 0:12:05.000 --> 0:12:08.800 to invest in curbside pick up um. Particularly since the pandemic, 0:12:08.840 --> 0:12:12.000 this has become a really popular format, especially in the 0:12:12.040 --> 0:12:14.400 suburbs where these stores tend to have, you know, big 0:12:14.440 --> 0:12:17.360 sprawling parking lots and it's easy to kind of pull 0:12:17.440 --> 0:12:19.680 up in your car and never get out, have someone 0:12:19.760 --> 0:12:22.600 drop your items in your trunk or your back feet. Um. 0:12:22.720 --> 0:12:26.000 So they're really investing in making those services work well. 0:12:26.160 --> 0:12:28.439 And that's more complicated than you might think, because they 0:12:28.440 --> 0:12:31.079 have to think about how to allocate in store labor 0:12:31.160 --> 0:12:33.520 just pick those orders for you quickly, and they have 0:12:33.559 --> 0:12:36.520 to think about the technological experience of how you can 0:12:36.559 --> 0:12:39.120 safely let them know, hey, I'm outside and I want 0:12:39.120 --> 0:12:41.640 you to bring those items to my car now. And 0:12:41.640 --> 0:12:43.000 so I think that's where you're going to see a 0:12:43.040 --> 0:12:45.640 lot of investment from all of these retailers. Pick Up 0:12:46.160 --> 0:12:48.400 for home depot has always view to be quite a 0:12:48.480 --> 0:12:52.240 large percentage of their digital sales overall, and so I 0:12:52.240 --> 0:12:54.280 think you'll continue to see all of them lean into 0:12:54.320 --> 0:12:56.920 making that a good experience in a way to differentiate 0:12:56.960 --> 0:12:59.800 themselves from Amazon, which simply doesn't have a lot of 0:13:00.000 --> 0:13:03.200 can order outposts from which to do that. So, Sarah, 0:13:03.240 --> 0:13:06.679 how do the peers of those retailers that have been 0:13:06.679 --> 0:13:10.880 successful differentiate themselves to also be successful? So, for example, Lows, 0:13:10.920 --> 0:13:14.800 how does Lows get some market share from Home Depot? 0:13:15.280 --> 0:13:18.480 And when it comes to Walmart, obviously this this Well, 0:13:18.520 --> 0:13:20.439 there's there's no one like Walmart, but there's a petrea 0:13:20.559 --> 0:13:24.960 of dollar generals and so on. Sure, I think Walmart, 0:13:25.160 --> 0:13:28.839 you know, its advantage is always that everyday low price focus. Um, 0:13:28.840 --> 0:13:31.840 you know, Target is clearly a close competitor, and I 0:13:31.840 --> 0:13:35.280 think Walmart needs to focus on leveraging its muscle with 0:13:35.760 --> 0:13:39.360 UH suppliers and vendors right now to keep making sure 0:13:39.640 --> 0:13:42.160 it offers the lowest prices and that it continues to 0:13:42.200 --> 0:13:45.719 win on that metric. Particularly as we are heading or 0:13:45.800 --> 0:13:47.680 as we're in a recession that doesn't look to be 0:13:47.720 --> 0:13:50.400 letting up any time soon, shoppers will become more value 0:13:50.400 --> 0:13:54.520 focus and so price will be an important point of differentiation. 0:13:54.880 --> 0:13:58.360 I think Loads the focus in winning relative to Home Depot. 0:13:58.400 --> 0:14:02.960 There It's interesting, typically Lows UH store footprint is thought 0:14:02.960 --> 0:14:07.000 of as a disadvantage because it's not Its stores tend 0:14:07.040 --> 0:14:09.760 to be located in more suburban and rural areas as 0:14:09.760 --> 0:14:13.040 opposed to in dense urban areas where home depot tends 0:14:13.080 --> 0:14:15.560 to be more concentrated. UM, But that might not be 0:14:15.640 --> 0:14:19.080 such a disadvantage right now if folks in uh, those 0:14:19.240 --> 0:14:21.800 in rural and suburban areas are more willing to visit 0:14:21.800 --> 0:14:25.000 a physical store compared to those in urban areas, so 0:14:25.240 --> 0:14:28.040 kind of leveraging that could be a lover for lowest 0:14:28.080 --> 0:14:29.880 of pole and I expect we'll kind of see that 0:14:30.000 --> 0:14:32.000 in its results. It's two key results when they come 0:14:32.040 --> 0:14:35.440 out tomorrow. Sarah Holzac with all of the answer is 0:14:35.680 --> 0:14:38.200 no one. If she's in Washington, d C. I hope 0:14:38.240 --> 0:14:40.440 they listened to her down there. So Holza is columnist 0:14:40.480 --> 0:14:44.760 with Bloomberg opinion on retail primarily, but it turns her 0:14:44.800 --> 0:14:50.760 home to a lot of topics. Well, the housing market 0:14:50.840 --> 0:14:53.640 is the one area of this economy that continues to 0:14:53.720 --> 0:14:57.920 show real strength across the board. Just last month, home 0:14:57.960 --> 0:15:02.240 sales jump erect UH. So obviously low interest, low mortgage 0:15:02.280 --> 0:15:04.080 rates are key driver. Let's see what else it's driving 0:15:04.120 --> 0:15:07.160 this market. We welcome Sherry Chris, president and CEO of 0:15:07.200 --> 0:15:10.800 Realology Expansion, brand's portfolio that includes better Homes and Gardens, 0:15:10.880 --> 0:15:15.560 Real Estate and e r A based in Madison, New Jersey. Sherry, 0:15:15.560 --> 0:15:18.200 thanks so much for joining us here. So again, the 0:15:18.280 --> 0:15:22.600 residential housing market very very strong. What are the key 0:15:22.680 --> 0:15:27.400 drivers that you think are pushing that market, Well, Paul's 0:15:27.520 --> 0:15:30.200 it's interesting because, first of all, there's a pent up 0:15:30.240 --> 0:15:35.160 demand from April and May due to COVID, and people 0:15:35.280 --> 0:15:38.280 that would normally be moving couldn't move during that time 0:15:38.400 --> 0:15:41.680 or couldn't look during that time, so that two months 0:15:41.720 --> 0:15:45.920 of inactivity has has caused a demand. But there are 0:15:45.960 --> 0:15:49.480 other things as well. There's a lot of migration patterns 0:15:49.520 --> 0:15:53.080 that are happening across the country where people are consumers 0:15:53.080 --> 0:15:58.480 are exiting large cities for outlying areas, um consumers want 0:15:58.520 --> 0:16:02.160 to buy a different type of home, things like that. 0:16:02.360 --> 0:16:06.160 So it's not really driven by people having to move, 0:16:06.720 --> 0:16:10.200 which is typical of the past. It's more people want 0:16:10.240 --> 0:16:14.040 to move now. So I am absolutely fascinated by this data. 0:16:14.120 --> 0:16:18.600 The chows that suburban areas are seeing, you know, anything 0:16:18.640 --> 0:16:21.200 that comes to markets snapped up. Do people really have 0:16:21.440 --> 0:16:25.440 that much savings set aside, you know too, to put 0:16:25.480 --> 0:16:28.680 together a mortgage? Are they getting what they thought they 0:16:28.680 --> 0:16:32.440 would get for their houses or their condos or their apartments. 0:16:32.480 --> 0:16:37.880 In the city's sherry Well, Bonnie, some people are buying 0:16:37.920 --> 0:16:42.200 without selling their existing home. They're renting out their property. 0:16:42.560 --> 0:16:45.480 And when we think about the mortgage rates being at 0:16:45.560 --> 0:16:49.120 such a low, historical low, and the fact that you know, 0:16:49.160 --> 0:16:52.880 with the average sale price hovering around three hundred thousand, now, 0:16:53.240 --> 0:16:57.160 it doesn't take much for people to you know, put 0:16:57.160 --> 0:17:01.760 that down or less and by a home. So we're 0:17:01.800 --> 0:17:06.240 not talking millions of dollars. And uh, you know, I 0:17:06.280 --> 0:17:08.879 don't know this for a fact, and you may know better, 0:17:09.000 --> 0:17:13.480 but I think at the beginning of COVID, people started 0:17:13.520 --> 0:17:17.359 liquidating certain assets. Cash was something that they wanted to have, 0:17:17.520 --> 0:17:20.360 and now they're looking for a home and the housing 0:17:20.440 --> 0:17:23.760 market has, you know, it's really exploded over the last 0:17:23.800 --> 0:17:28.200 couple of months. So is this how much of this 0:17:28.240 --> 0:17:31.359 is being driven? Do you think by the exodus from 0:17:31.400 --> 0:17:36.639 maybe more densely populated areas like like Manhattan for example, Um, 0:17:36.680 --> 0:17:39.600 and people really do just looking to get out of 0:17:39.640 --> 0:17:44.040 a city type environment gets a more suburban area. Part 0:17:44.040 --> 0:17:46.560 of it is, but not not all of it. I mean, 0:17:46.560 --> 0:17:49.440 if we think about the two cities that are h 0:17:49.560 --> 0:17:52.680 you know, having that problem right now. Manhattan obviously one 0:17:52.760 --> 0:17:55.800 in San Francisco is another one where there are a 0:17:55.880 --> 0:18:00.240 lot of very popular outlying areas that people could move too. 0:18:00.240 --> 0:18:04.720 And now that many of the large companies, including ours, 0:18:05.440 --> 0:18:08.320 you know, we're not opening our headquarters anytime soon. But 0:18:08.320 --> 0:18:13.240 if you look at the West Coast with Facebook, Google, Twitter, 0:18:13.680 --> 0:18:16.800 et cetera, and all of those employees are working from home, 0:18:17.080 --> 0:18:19.360 they don't need to live in the Bay Area anymore. 0:18:19.640 --> 0:18:24.000 And the same is true with Manhattan, yeah, exactly. And Sherry, 0:18:24.200 --> 0:18:26.240 the fact that housing starts throughout twenty two points per 0:18:26.440 --> 0:18:29.240 month over a month, and obviously they were up seventeen 0:18:29.240 --> 0:18:31.440 and a half percent the month previously. I know that's 0:18:31.480 --> 0:18:34.720 partially because everything got shut down so much back in 0:18:34.920 --> 0:18:39.080 March or April. But where are these starts? Are builders 0:18:39.119 --> 0:18:41.840 now sort of changing their ideas on what to build, 0:18:42.040 --> 0:18:45.000 where to build and what's the bare minimum necessary? Like 0:18:45.040 --> 0:18:47.879 are people demanding, for example, at least a bit of 0:18:47.880 --> 0:18:52.080 a garden. Well, people are demanding and through better homes 0:18:52.080 --> 0:18:56.520 and gardens. The magazine, which were affiliated with we did 0:18:56.560 --> 0:19:00.280 a number of consumer surveys during COVID and one of 0:19:00.320 --> 0:19:02.960 the things that came out loud and clear that people 0:19:02.960 --> 0:19:06.600 are looking for properties that have, you know, the possibility 0:19:06.640 --> 0:19:10.840 even extended outdoor space, UM, a front porch, a different 0:19:10.880 --> 0:19:14.479 type of living area, places where their children can study, 0:19:15.160 --> 0:19:18.840 where you know, both spouses can work in offices, and 0:19:18.880 --> 0:19:21.920 so the configuration is different. But when you think about 0:19:21.920 --> 0:19:24.240 the builders, I think the builders are taking more of 0:19:24.280 --> 0:19:27.760 a calculated risk right now because they're seeing, you know, 0:19:27.800 --> 0:19:30.960 what definitely is a pent up demand in the housing industry, 0:19:31.359 --> 0:19:34.639 and they are they're moving forward. We only have a 0:19:34.680 --> 0:19:39.199 four month supply of listings, so that's causing a backlog 0:19:39.359 --> 0:19:42.280 right now where people who would like to move and 0:19:42.320 --> 0:19:44.920 buy a new home are hesitant to put their existing 0:19:44.960 --> 0:19:48.480 home in the market because there's nothing to buy. Sherry, 0:19:49.000 --> 0:19:51.959 just an indulgence for me, given that you're affiliated with 0:19:52.040 --> 0:19:56.320 that magazine that Homes and Gardens real estate. Obviously, what 0:19:56.760 --> 0:19:58.639 is the one thing that people are most buying? Is 0:19:58.680 --> 0:20:01.119 it flowers? Is a part your furniture? And if it is, 0:20:01.160 --> 0:20:06.639 what kind of party of furniture. Oh, that's a great question, Bonnie. Um. 0:20:06.680 --> 0:20:10.199 What people want to do is extend their living area 0:20:10.320 --> 0:20:16.000 into an outdoor space. So it's patio furniture to dine outside. Um, 0:20:16.040 --> 0:20:19.159 it's outdoor kitchens are very popular, and so if you 0:20:19.200 --> 0:20:23.239 think about moving your kitchen and dining room outdoors, UM, 0:20:23.640 --> 0:20:28.320 it just extends your space. Particularly as we're continuing to 0:20:28.440 --> 0:20:33.159 somewhat isolate at home, you want to enjoy where you're living. 0:20:33.280 --> 0:20:36.879 And one of the things that we found anecdotally, UM, 0:20:36.920 --> 0:20:39.400 in talking to you know, our many brokers and agency 0:20:39.400 --> 0:20:43.040 and consumers across the country is that when people were 0:20:43.080 --> 0:20:46.040 inside for an extended period of time, you know, you 0:20:46.080 --> 0:20:49.440 start looking at the faults of your home and that 0:20:49.520 --> 0:20:53.359 causes you to want to either make changes or get outside. Sherry, 0:20:53.480 --> 0:20:55.560 thank you so much for joining us today. Sherry Chris 0:20:55.640 --> 0:20:58.960 as president and CEO of Real g Expansion brand's portfolio, 0:20:58.960 --> 0:21:03.920