1 00:00:02,720 --> 00:00:10,560 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the 2 00:00:10,560 --> 00:00:14,520 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,560 --> 00:00:18,479 Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 4 00:00:18,600 --> 00:00:21,799 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:21,920 --> 00:00:23,040 Speaker 1: us live on YouTube. 6 00:00:23,560 --> 00:00:26,520 Speaker 2: It's been Walmart here. The company came out with numbers 7 00:00:26,880 --> 00:00:28,840 Speaker 2: kind of in line. I thought they were pretty good numbers, 8 00:00:28,840 --> 00:00:31,680 Speaker 2: but the guide that's definitely disappointed the stream. We've got 9 00:00:31,680 --> 00:00:34,879 Speaker 2: the stock off six point four percent here today, but 10 00:00:35,400 --> 00:00:38,000 Speaker 2: still about about sixty six percent year to day. To remember, 11 00:00:38,000 --> 00:00:39,640 Speaker 2: this has got a market cap of seven hundred and 12 00:00:39,680 --> 00:00:42,320 Speaker 2: eighty one billion dollars, does Walmart. So let's check in 13 00:00:42,360 --> 00:00:45,200 Speaker 2: on this story. Emily Cone joins us Bloomberg Consumer Team 14 00:00:45,360 --> 00:00:48,880 Speaker 2: Leader joints us here and at Bloomberg Get Interactive Brokers Studio. Emily, 15 00:00:48,920 --> 00:00:50,800 Speaker 2: what kind of jumped out of you for this earnings 16 00:00:50,800 --> 00:00:51,800 Speaker 2: report from Walmart? 17 00:00:52,000 --> 00:00:55,480 Speaker 3: Thanks, Paul. Yeah, I'm definitely the the lower than expected 18 00:00:55,640 --> 00:00:59,040 Speaker 3: profit forecast for the full year. I think you know, 19 00:00:59,160 --> 00:01:06,720 Speaker 3: these were consistent estimates. This was a consistent guidance in 20 00:01:06,760 --> 00:01:09,240 Speaker 3: line with what they laid out last year for the 21 00:01:09,280 --> 00:01:14,039 Speaker 3: full year as well. But it definitely signaled that the 22 00:01:14,200 --> 00:01:17,520 Speaker 3: you know the world's largest retailer, Walmart, isn't immune to 23 00:01:17,600 --> 00:01:24,240 Speaker 3: the risks that are out there for the broader economic environment. Granted, 24 00:01:24,400 --> 00:01:28,880 Speaker 3: Walmart has historically given conservative outlook to start the year off, 25 00:01:30,600 --> 00:01:34,199 Speaker 3: but this definitely showed, you know, and they they used 26 00:01:34,280 --> 00:01:37,520 Speaker 3: the word uncertain. I haven't checked, but a number of 27 00:01:37,640 --> 00:01:41,360 Speaker 3: times on their analysts call. That was sort of like 28 00:01:41,400 --> 00:01:42,600 Speaker 3: the theme of the call. 29 00:01:43,120 --> 00:01:46,319 Speaker 4: What else did they say for this, I guess we 30 00:01:46,400 --> 00:01:50,840 Speaker 4: could call it conservative or negative outlook? Did they mention 31 00:01:51,280 --> 00:01:55,120 Speaker 4: it's because consumers are pulling back, people are looking for bargains. 32 00:01:55,200 --> 00:01:58,080 Speaker 4: I guess, like, what did we learn about the consumer 33 00:01:58,320 --> 00:01:59,120 Speaker 4: in this report? 34 00:01:59,520 --> 00:02:02,760 Speaker 3: Yeah, it was it wasn't negative. It was it was 35 00:02:03,240 --> 00:02:05,160 Speaker 3: in line with what they offered last year, three to 36 00:02:05,200 --> 00:02:10,400 Speaker 3: four percent growth. But I think, you know, and I 37 00:02:10,400 --> 00:02:14,160 Speaker 3: think that's taking into account near term investments. So they 38 00:02:14,240 --> 00:02:19,560 Speaker 3: mentioned things like consumer trends and near term investments like 39 00:02:19,600 --> 00:02:22,560 Speaker 3: the cost of the acquisition of the smart TV maker Visio. 40 00:02:23,160 --> 00:02:26,040 Speaker 3: We're still seeing those costs take a hit on the 41 00:02:26,040 --> 00:02:30,440 Speaker 3: bottom line. But yeah, they said they haven't incorporated yet 42 00:02:30,440 --> 00:02:33,840 Speaker 3: the risk of tariffs into their guidance. We also saw 43 00:02:34,040 --> 00:02:37,560 Speaker 3: US retail sales dip in January and core inflation pick up. 44 00:02:38,560 --> 00:02:40,800 Speaker 3: So I think those are those are all things that 45 00:02:40,880 --> 00:02:46,760 Speaker 3: are weighing on on retailers, and Walmart certainly isn't immune. 46 00:02:46,960 --> 00:02:50,440 Speaker 2: How about on the tariff front. I mean, they am 47 00:02:50,760 --> 00:02:54,320 Speaker 2: looking at your Bloombergers right up here, talk about tariffs. 48 00:02:54,960 --> 00:02:58,320 Speaker 2: Walmart imports food from Mexico and general merchandise products like 49 00:02:58,400 --> 00:03:01,960 Speaker 2: microwaves in China. What are they saying about tariffs? Is 50 00:03:01,960 --> 00:03:03,280 Speaker 2: that incorporating their guidance? 51 00:03:03,800 --> 00:03:07,080 Speaker 3: They said they have not incorporated tariffs into their guidance before. 52 00:03:08,160 --> 00:03:11,280 Speaker 3: Tariffs aren't new for a company like Walmart. Obviously we 53 00:03:11,360 --> 00:03:17,120 Speaker 3: saw import tariffs, you know, during the last Trump administration. 54 00:03:18,000 --> 00:03:21,160 Speaker 3: But they're doing what we've seen most companies do so 55 00:03:21,360 --> 00:03:24,840 Speaker 3: far this year, which is say it's uncertain, we're not 56 00:03:24,880 --> 00:03:28,320 Speaker 3: sure what's going to happen, and we're not incorporating tariffs 57 00:03:28,320 --> 00:03:35,280 Speaker 3: into our guidance yet. But yeah, I mean, food prices 58 00:03:35,280 --> 00:03:39,920 Speaker 3: were up for them, General merchandising prices I think came 59 00:03:39,960 --> 00:03:40,720 Speaker 3: down a little bit. 60 00:03:41,680 --> 00:03:44,880 Speaker 4: I actually learned something new about Walmart today, and that's 61 00:03:44,920 --> 00:03:49,360 Speaker 4: that you can buy a pre owned Chanel bag through 62 00:03:49,680 --> 00:03:54,040 Speaker 4: their website. So I guess they're getting into online sales. 63 00:03:54,040 --> 00:03:57,400 Speaker 4: They're beefing up their digital operation to include items like 64 00:03:57,440 --> 00:04:01,160 Speaker 4: collectibles and pre owned Chanel bags. Wow, think about that, 65 00:04:01,240 --> 00:04:04,240 Speaker 4: I mean luxury items at like a discount retailer. 66 00:04:04,400 --> 00:04:08,240 Speaker 3: Yeah. So Walmart is still small compared to Amazon, but 67 00:04:08,760 --> 00:04:12,080 Speaker 3: in terms of e commerce, but that's an area where 68 00:04:12,080 --> 00:04:15,400 Speaker 3: they're just continuing to see huge growth in e commerce 69 00:04:15,440 --> 00:04:20,400 Speaker 3: in their their marketplace. So that that is something that 70 00:04:20,480 --> 00:04:22,680 Speaker 3: you'll continue to hear them talk a lot about and 71 00:04:22,720 --> 00:04:27,440 Speaker 3: there's a ton of upside there. Pharmacy delivery was another 72 00:04:27,480 --> 00:04:30,400 Speaker 3: one that they shouted out today. That's a new business 73 00:04:30,400 --> 00:04:34,400 Speaker 3: for them. So these newer businesses continue to grow a 74 00:04:34,440 --> 00:04:37,400 Speaker 3: lot for Walmart, and they would say there's still a 75 00:04:37,760 --> 00:04:40,880 Speaker 3: big runway there when it comes to competing with Amazon. 76 00:04:41,080 --> 00:04:45,440 Speaker 2: It's interesting comparable sales excluding fuel rose four point six 77 00:04:45,480 --> 00:04:48,280 Speaker 2: percent at US Walmart Star Wars open at least a 78 00:04:48,320 --> 00:04:49,960 Speaker 2: year for the quarter end of January thirty first. That's 79 00:04:50,000 --> 00:04:53,000 Speaker 2: higher than Wall Street had been anticipating. So it doesn't 80 00:04:53,000 --> 00:04:56,240 Speaker 2: seem like the consumer per se, at least in this 81 00:04:56,400 --> 00:04:58,840 Speaker 2: quarter was a problem. Consumer was still spending. 82 00:04:59,120 --> 00:05:01,919 Speaker 3: So an interesting thing about the growth this quarter and 83 00:05:01,960 --> 00:05:05,280 Speaker 3: actually last quarter as well, was that growth was mostly 84 00:05:05,320 --> 00:05:08,400 Speaker 3: coming from higher income households, So households that are earning 85 00:05:08,720 --> 00:05:11,080 Speaker 3: more than one hundred thousand dollars a year. Not the 86 00:05:11,080 --> 00:05:15,000 Speaker 3: person you typically think of as your average Walmart shopper. 87 00:05:15,080 --> 00:05:18,360 Speaker 3: These are like wealthier people who are looking for deals, 88 00:05:18,440 --> 00:05:21,320 Speaker 3: looking for value. Maybe they're coming to Walmart for groceries 89 00:05:21,360 --> 00:05:24,920 Speaker 3: as opposed to whole foods this quarter because prices on 90 00:05:25,000 --> 00:05:28,240 Speaker 3: food are so high. So that's really where the growth 91 00:05:28,400 --> 00:05:31,280 Speaker 3: is still coming from, are wealthier shoppers. 92 00:05:32,360 --> 00:05:35,560 Speaker 4: So that does that tell you then that the consumer 93 00:05:35,640 --> 00:05:39,160 Speaker 4: is maybe weaker if these high income people are having 94 00:05:39,200 --> 00:05:41,159 Speaker 4: to move down the spectrum. 95 00:05:41,480 --> 00:05:42,240 Speaker 5: It's possible. 96 00:05:42,320 --> 00:05:44,640 Speaker 3: And I think, you know, we are looking forward to 97 00:05:45,040 --> 00:05:48,279 Speaker 3: the rest of the big pox results coming this quarter. 98 00:05:48,400 --> 00:05:51,240 Speaker 3: We're looking at Home Depot, We're looking at Target. I 99 00:05:51,240 --> 00:05:54,120 Speaker 3: think they will tell us a bigger picture view of 100 00:05:54,160 --> 00:05:57,640 Speaker 3: how the US consumer is doing. But yes, I have 101 00:05:57,720 --> 00:06:00,200 Speaker 3: the same question, where are those shoppers coming from? Who's 102 00:06:00,279 --> 00:06:00,880 Speaker 3: losing here? 103 00:06:01,400 --> 00:06:03,400 Speaker 2: Emily Cohen, thank you so much for joining us. Emily Cohen, 104 00:06:03,400 --> 00:06:05,480 Speaker 2: she's a consumer team leader for Bloomberg News, joining us 105 00:06:05,480 --> 00:06:08,160 Speaker 2: live here in our Bloomberg Interactive Brookers studio talking about 106 00:06:08,320 --> 00:06:09,719 Speaker 2: breaking down those Walmont Earnings. 107 00:06:11,400 --> 00:06:15,080 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 108 00:06:15,200 --> 00:06:18,279 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 109 00:06:18,279 --> 00:06:21,599 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 110 00:06:21,640 --> 00:06:24,760 Speaker 1: you get your podcasts, or watch us live on YouTube. 111 00:06:25,240 --> 00:06:27,720 Speaker 2: Let's switch gears here talk about this Federal Reserve. We 112 00:06:27,800 --> 00:06:30,400 Speaker 2: had the FED minutes yesterday. I did not read them. 113 00:06:30,480 --> 00:06:32,279 Speaker 2: I never read them. That's why we have people like 114 00:06:32,320 --> 00:06:35,480 Speaker 2: Mike McLoone, I mean Mike McKee. We've got Danielle di 115 00:06:35,600 --> 00:06:39,320 Speaker 2: Martino Booth joining us here in studio. She's the CEO 116 00:06:39,360 --> 00:06:43,000 Speaker 2: and chief strategist for QI Research. What's our FED doing here? 117 00:06:43,480 --> 00:06:45,640 Speaker 2: Our Fed can do? Is it safe to say they 118 00:06:45,680 --> 00:06:47,880 Speaker 2: could do nothing all year? And that would be okay? 119 00:06:49,640 --> 00:06:52,440 Speaker 5: I really don't think markets are priced for that. 120 00:06:52,760 --> 00:06:53,080 Speaker 6: Okay. 121 00:06:53,160 --> 00:06:55,200 Speaker 7: In fact, in the last week, if there's anything that 122 00:06:55,240 --> 00:06:58,240 Speaker 7: we've seen, it's the second it's the second rate kind 123 00:06:58,240 --> 00:07:01,400 Speaker 7: of the year begin to be really priced in. So 124 00:07:01,440 --> 00:07:03,479 Speaker 7: I wouldn't be surprised if we were to see something 125 00:07:04,160 --> 00:07:05,320 Speaker 7: around June. 126 00:07:05,560 --> 00:07:08,520 Speaker 5: And I think what's going to force their hand is 127 00:07:08,760 --> 00:07:09,480 Speaker 5: the job market. 128 00:07:10,840 --> 00:07:13,080 Speaker 4: What did you learn from the minutes? 129 00:07:14,360 --> 00:07:18,280 Speaker 7: Not too terribly much and It's not that they didn't 130 00:07:18,480 --> 00:07:23,760 Speaker 7: try and present a unified front in the minutes, But 131 00:07:24,120 --> 00:07:26,960 Speaker 7: when the chair of the FMC gets up at the 132 00:07:26,960 --> 00:07:32,720 Speaker 7: podium and swats away the verbiage of the statement, you know, 133 00:07:33,000 --> 00:07:36,480 Speaker 7: without even reading a single line of the minutes that 134 00:07:36,520 --> 00:07:43,520 Speaker 7: there was a lot of controversy, dissent, disagreement in that room. 135 00:07:43,760 --> 00:07:45,520 Speaker 7: So you're going to see very little when it comes 136 00:07:45,520 --> 00:07:47,160 Speaker 7: to the minutes. Remember in two thousand and eight, Janet 137 00:07:47,240 --> 00:07:50,840 Speaker 7: Yellen said we can use the minutes as another tool 138 00:07:50,960 --> 00:07:55,720 Speaker 7: in the toolbox to continue to shape the thinking of markets, 139 00:07:55,800 --> 00:07:59,600 Speaker 7: even though they're theoretically timestamped, but they're not. 140 00:08:00,560 --> 00:08:03,320 Speaker 2: You mentioned the labor market earlier. What what is your 141 00:08:03,320 --> 00:08:05,400 Speaker 2: read of the labor market these days? We had I 142 00:08:05,440 --> 00:08:08,680 Speaker 2: guess we had the initial job as claims came in 143 00:08:08,760 --> 00:08:11,840 Speaker 2: just a little bit higher than expected today, but I 144 00:08:11,840 --> 00:08:15,000 Speaker 2: do know any number with it, two ten, fifteen, two 145 00:08:15,000 --> 00:08:17,200 Speaker 2: twenty seems like the norm. How do you view the 146 00:08:17,240 --> 00:08:17,800 Speaker 2: labor market? 147 00:08:18,640 --> 00:08:21,360 Speaker 7: So I think right now what we have is a 148 00:08:21,400 --> 00:08:25,840 Speaker 7: pig and a python, and we've had a very constant 149 00:08:25,840 --> 00:08:28,880 Speaker 7: stream of layoffs in the private sector. I mean, I 150 00:08:29,800 --> 00:08:31,400 Speaker 7: need to meet and shake the hand of the person 151 00:08:31,440 --> 00:08:34,839 Speaker 7: who runs bcygo because I don't think they sleep because 152 00:08:34,840 --> 00:08:38,400 Speaker 7: the bankruptcy cycle has as even though it hit a 153 00:08:38,400 --> 00:08:41,800 Speaker 7: fourteen year high in twenty twenty four, it's only accelerated. 154 00:08:41,840 --> 00:08:44,800 Speaker 7: My gosh, we've had almost four thousand store closings announced 155 00:08:45,200 --> 00:08:48,360 Speaker 7: and it's just February twentieth so far this year. 156 00:08:48,360 --> 00:08:49,800 Speaker 5: To give you context, co Star. 157 00:08:49,640 --> 00:08:52,560 Speaker 7: Reported that there were seventy three hundred closed for all 158 00:08:52,600 --> 00:08:53,600 Speaker 7: of twenty twenty five. 159 00:08:54,080 --> 00:08:57,640 Speaker 5: So we know that there is a there's. 160 00:08:57,280 --> 00:09:02,040 Speaker 7: A bulge of layoffs moving like a pig through a python, 161 00:09:02,760 --> 00:09:06,719 Speaker 7: plus plus public sector job cuts, and that's the. 162 00:09:06,679 --> 00:09:09,280 Speaker 5: Big that's the big change agent. 163 00:09:10,559 --> 00:09:10,800 Speaker 3: You know. 164 00:09:10,880 --> 00:09:13,640 Speaker 7: It was interesting to see that the survey week end 165 00:09:13,679 --> 00:09:17,080 Speaker 7: at February the fifteenth, that was what was coincided with 166 00:09:17,120 --> 00:09:20,520 Speaker 7: what was reported this morning, and yet we saw continuing 167 00:09:20,720 --> 00:09:25,600 Speaker 7: jobless claims pushing three million, not not seasonally adjusted. 168 00:09:26,160 --> 00:09:27,720 Speaker 5: The high for the for the cycle. 169 00:09:27,760 --> 00:09:29,439 Speaker 7: If you lose your job, if you have a job, 170 00:09:29,480 --> 00:09:32,080 Speaker 7: don't lose it, That's what Powell said at the podium. 171 00:09:32,200 --> 00:09:35,400 Speaker 7: But when you figure that there been one hundred thousand 172 00:09:35,440 --> 00:09:39,160 Speaker 7: jobs cuts announced in the private sector this thus far 173 00:09:39,240 --> 00:09:42,800 Speaker 7: in February alone, and then you tack on what seventy 174 00:09:42,800 --> 00:09:45,520 Speaker 7: five thousand who took the buyout, and the fact that 175 00:09:45,559 --> 00:09:49,439 Speaker 7: they waited until today to start laying off six thousand 176 00:09:49,440 --> 00:09:53,720 Speaker 7: people at the IRS seven thousand Department of Defense. It's 177 00:09:53,880 --> 00:09:59,040 Speaker 7: going to snowball, and it's gonna snowball before the FED meets. 178 00:09:59,840 --> 00:10:02,800 Speaker 7: Not maybe not in March, because today coincided with the 179 00:10:02,840 --> 00:10:06,160 Speaker 7: survey week for non farm payrolls and obviously a fairly 180 00:10:06,360 --> 00:10:08,800 Speaker 7: low number. But if we don't see it in the 181 00:10:08,800 --> 00:10:11,920 Speaker 7: February jobs report, we're going to see it in the 182 00:10:11,960 --> 00:10:14,800 Speaker 7: March jobs report, and then the Fed will meet again. 183 00:10:14,880 --> 00:10:17,000 Speaker 7: So I think that that's why markets have begun to 184 00:10:17,000 --> 00:10:19,880 Speaker 7: sniff this out. Seventy percent of jobs created in the 185 00:10:19,880 --> 00:10:23,120 Speaker 7: month of January were either government jobs or related to 186 00:10:23,160 --> 00:10:26,920 Speaker 7: the government healthcare. So when you begin to take that 187 00:10:27,800 --> 00:10:33,560 Speaker 7: job creation machine offline, it's been such a massive support. 188 00:10:34,040 --> 00:10:35,520 Speaker 7: In addition to the fact that we haven't had any 189 00:10:35,520 --> 00:10:38,240 Speaker 7: private job creation net net for two and a half years, 190 00:10:38,920 --> 00:10:39,800 Speaker 7: something's going to give. 191 00:10:40,400 --> 00:10:43,960 Speaker 4: So when we see then that the minutes, the officials 192 00:10:43,960 --> 00:10:46,199 Speaker 4: are saying in the minutes that you know they want 193 00:10:46,240 --> 00:10:49,600 Speaker 4: to keep rates steady, we look at what markets are pricing. 194 00:10:49,679 --> 00:10:53,960 Speaker 4: Maybe only one more rate cut is the FED not 195 00:10:54,280 --> 00:10:58,440 Speaker 4: aware of this snowballing effect that you see coming in 196 00:10:58,480 --> 00:10:59,240 Speaker 4: the labor market. 197 00:10:59,800 --> 00:11:03,840 Speaker 7: Oh, I think FED officials are more than aware. They 198 00:11:03,880 --> 00:11:07,280 Speaker 7: do have a narrative to uphold. They're not allowed to 199 00:11:07,280 --> 00:11:09,480 Speaker 7: say that that. You know, they're not allowed to screen 200 00:11:09,520 --> 00:11:12,680 Speaker 7: fire in a crowdit theater. But we know that FED 201 00:11:12,679 --> 00:11:18,120 Speaker 7: officials know because Chair Powell, because Governor Christopher Waller, you know, 202 00:11:18,320 --> 00:11:22,120 Speaker 7: the closest thing to him speaking himself, his closest confidant 203 00:11:22,720 --> 00:11:23,400 Speaker 7: on the Federal. 204 00:11:23,280 --> 00:11:24,160 Speaker 5: Ban Market Committee. 205 00:11:24,240 --> 00:11:28,080 Speaker 7: They've recognized that new rents are the way to gauge inflation. 206 00:11:28,400 --> 00:11:30,400 Speaker 5: They've talked about it on multiple occasions. 207 00:11:30,720 --> 00:11:34,160 Speaker 7: Apartment List yesterday was out with the highest vacancy rate 208 00:11:34,200 --> 00:11:36,080 Speaker 7: six point eight five percent, which check out the July 209 00:11:36,120 --> 00:11:40,000 Speaker 7: twenty twenty high. We've got seven hundred and thirty five 210 00:11:40,080 --> 00:11:44,040 Speaker 7: thousand apartments that are still coming out of the construction pipeline, 211 00:11:44,960 --> 00:11:47,800 Speaker 7: and one apartment read after another saying rents are falling. 212 00:11:48,600 --> 00:11:49,440 Speaker 5: I'm going in all. 213 00:11:49,280 --> 00:11:53,400 Speaker 7: These details because if it's rents that Powell and Waller 214 00:11:53,520 --> 00:11:57,319 Speaker 7: are falling to gauge inflation, and that's exactly what we're 215 00:11:57,320 --> 00:12:01,160 Speaker 7: seeing in trueflation, tru bond Traders introduced me to that metric. 216 00:12:01,240 --> 00:12:02,960 Speaker 5: It's real time, if you will. 217 00:12:02,960 --> 00:12:04,840 Speaker 7: It's come from three come down from three point one 218 00:12:04,840 --> 00:12:08,800 Speaker 7: percent two point three percent this year true inflation. We 219 00:12:08,880 --> 00:12:13,079 Speaker 7: can see what's happening in real time with inflation. And 220 00:12:13,120 --> 00:12:16,280 Speaker 7: then there's the dot dot dot what happens with tariffs 221 00:12:16,280 --> 00:12:18,440 Speaker 7: and who on Earth knows, but we do know that 222 00:12:18,480 --> 00:12:21,960 Speaker 7: in twenty eighteen with the first Trump tweet about tariffs, 223 00:12:22,280 --> 00:12:24,680 Speaker 7: by the end of twenty nineteen, the CPI was actually 224 00:12:24,960 --> 00:12:28,000 Speaker 7: lower because it's because tariff's slowed growth. 225 00:12:28,320 --> 00:12:28,520 Speaker 6: Yep. 226 00:12:28,640 --> 00:12:31,000 Speaker 2: Absolutely, daniel Dee Martina Bouth, thank you so much for 227 00:12:31,080 --> 00:12:34,080 Speaker 2: joining us. Danielle Di Martina Booth, She's a CEO and 228 00:12:34,160 --> 00:12:37,040 Speaker 2: chief strategist QI Research. Joining us live here in our 229 00:12:37,040 --> 00:12:39,640 Speaker 2: Bloomberg and DIRECTI Brokeer studio, one of our absolute go 230 00:12:39,800 --> 00:12:42,400 Speaker 2: to voices when it comes to the Federal Reserve and 231 00:12:42,440 --> 00:12:45,480 Speaker 2: what those folks are doing there. 232 00:12:46,200 --> 00:12:49,880 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 233 00:12:49,960 --> 00:12:53,360 Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto 234 00:12:53,480 --> 00:12:56,520 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 235 00:12:56,559 --> 00:12:59,560 Speaker 1: get your podcasts, or watch us live on YouTube. 236 00:13:00,160 --> 00:13:03,040 Speaker 2: Sorry, demil gurfail sitting in for Alex Steele Paul Sweeney 237 00:13:03,080 --> 00:13:05,200 Speaker 2: were live here in a Bloomberg Interactive Broker studio and 238 00:13:05,240 --> 00:13:08,160 Speaker 2: we are streaming live on YouTube as well. In the 239 00:13:08,200 --> 00:13:10,720 Speaker 2: Greater New York City area. One of the biggest stories 240 00:13:10,720 --> 00:13:12,880 Speaker 2: over the past couple days is congestion pricing. I went 241 00:13:12,920 --> 00:13:17,360 Speaker 2: into effect earlier in January. It seems to be working. 242 00:13:17,400 --> 00:13:21,160 Speaker 2: I mean, congestions down. My travel time into the city 243 00:13:21,200 --> 00:13:25,480 Speaker 2: when I come in is less, you know, revenues up. 244 00:13:25,520 --> 00:13:27,560 Speaker 2: I don't know. But the federal government, Donald Trump put 245 00:13:28,040 --> 00:13:30,360 Speaker 2: a stop to that, a temporary stop perhaps, and we've 246 00:13:30,400 --> 00:13:33,920 Speaker 2: got some litigation stemming from Governor Holkl here to maybe 247 00:13:34,320 --> 00:13:37,000 Speaker 2: keep the congestion pricing going. But it is a big, 248 00:13:37,040 --> 00:13:39,400 Speaker 2: big deal, certainly here in New York City, but also 249 00:13:39,440 --> 00:13:41,160 Speaker 2: for some other regions around the country that also have 250 00:13:41,240 --> 00:13:44,240 Speaker 2: some types of congestion pricing. So everybody's kind of watching 251 00:13:44,240 --> 00:13:46,000 Speaker 2: to see how this will play out. So we want 252 00:13:46,040 --> 00:13:48,319 Speaker 2: to get a smart voice on this. Sarah Lynn joins this, 253 00:13:48,440 --> 00:13:51,440 Speaker 2: co executive director of Open Plans. It joins us from 254 00:13:51,440 --> 00:13:54,240 Speaker 2: New York City via zoom. Sarah, kind of where are 255 00:13:54,280 --> 00:13:56,520 Speaker 2: we today with this congestion pricing? 256 00:13:57,040 --> 00:13:57,360 Speaker 1: Is it on? 257 00:13:57,559 --> 00:13:58,040 Speaker 5: Is it off? 258 00:13:58,080 --> 00:14:01,360 Speaker 6: Where are we I think The first really important thing 259 00:14:01,360 --> 00:14:03,959 Speaker 6: to say is that congestion pricing works and it's good 260 00:14:03,960 --> 00:14:06,520 Speaker 6: for business, you know, and you have groups like the 261 00:14:06,559 --> 00:14:10,120 Speaker 6: Partnership for New York and Redney supporting congestion pricing. They're 262 00:14:10,160 --> 00:14:12,080 Speaker 6: doing it because they know it's good for business within 263 00:14:12,120 --> 00:14:14,920 Speaker 6: the zone and in the regional economy as a whole. 264 00:14:16,200 --> 00:14:16,840 Speaker 5: It's still on. 265 00:14:17,760 --> 00:14:21,400 Speaker 6: Governor Hokel was very clear yesterday the cameras are still on. 266 00:14:22,520 --> 00:14:26,160 Speaker 6: The NCAA has already filed suit against the administration's action, 267 00:14:27,320 --> 00:14:29,120 Speaker 6: and I expect the cameras will be on while that 268 00:14:29,160 --> 00:14:30,160 Speaker 6: all plays out in court. 269 00:14:31,280 --> 00:14:36,480 Speaker 4: What do we know about the presidential administration's rationale for 270 00:14:36,640 --> 00:14:41,160 Speaker 4: wanting to halt this? And then I guess what kind 271 00:14:41,200 --> 00:14:43,600 Speaker 4: of power they have to actually put this through. 272 00:14:45,360 --> 00:14:47,600 Speaker 6: I think rationale is a strong word with many things 273 00:14:47,600 --> 00:14:54,320 Speaker 6: this administration is doing. This feels very personal. Frankly, again, 274 00:14:54,760 --> 00:14:58,280 Speaker 6: there's not a good business rationale. There's not a good 275 00:14:58,720 --> 00:15:01,760 Speaker 6: rationale in terms of this is reducing congestion. This is 276 00:15:01,760 --> 00:15:04,280 Speaker 6: speeding up bus times. That's good for working New Yorkers. 277 00:15:04,520 --> 00:15:07,920 Speaker 6: This is already reducing traffic crashes in the zone. It's 278 00:15:07,960 --> 00:15:12,600 Speaker 6: reducing air pollution. So from every perspective that matters, congestion 279 00:15:12,640 --> 00:15:16,880 Speaker 6: pricing is working the administration. Sean Duffy has made arguments 280 00:15:16,920 --> 00:15:19,960 Speaker 6: that congestion pricing is bad for working New Yorkers. That's 281 00:15:20,040 --> 00:15:24,600 Speaker 6: just patently false. Only four percent of working New Yorkers, 282 00:15:25,080 --> 00:15:28,240 Speaker 6: low income New Yorkers drive into the zone. All of 283 00:15:28,280 --> 00:15:30,640 Speaker 6: the rest of them rely on public transportation that has 284 00:15:30,680 --> 00:15:33,120 Speaker 6: gotten better already with only a month and a half 285 00:15:33,200 --> 00:15:35,520 Speaker 6: of congestion pricing, and we'll continue to get better. So 286 00:15:35,840 --> 00:15:42,120 Speaker 6: that rationale is just false. I think that they think 287 00:15:42,120 --> 00:15:45,560 Speaker 6: they have the authority, but we really believe they don't. Again, 288 00:15:45,640 --> 00:15:48,760 Speaker 6: lawsuits will bear this out over the next few months, 289 00:15:49,080 --> 00:15:51,680 Speaker 6: but federal approval has already been given. The program is 290 00:15:51,680 --> 00:15:52,480 Speaker 6: already in place. 291 00:15:53,200 --> 00:15:55,920 Speaker 2: So folks on the other side of that argument would say, 292 00:15:56,040 --> 00:15:59,200 Speaker 2: then I live in the grade state of New Jersey. 293 00:16:00,080 --> 00:16:00,760 Speaker 2: Defend that one. 294 00:16:01,680 --> 00:16:02,280 Speaker 5: It's a tax. 295 00:16:02,400 --> 00:16:06,120 Speaker 2: It's just another tax on Metro New York people, and boy, 296 00:16:06,160 --> 00:16:09,120 Speaker 2: aren't we taxed enough. What's a response to that. 297 00:16:10,640 --> 00:16:12,840 Speaker 6: Well, it's a toll and there are toll roads all 298 00:16:12,880 --> 00:16:15,840 Speaker 6: over New Jersey, for example. And you know this is 299 00:16:15,840 --> 00:16:20,000 Speaker 6: a common this is a common technique that states and 300 00:16:20,240 --> 00:16:24,840 Speaker 6: municipalities use to raise money both for you know, highways 301 00:16:24,880 --> 00:16:25,720 Speaker 6: and for other. 302 00:16:27,120 --> 00:16:27,560 Speaker 5: Funding. 303 00:16:27,600 --> 00:16:29,400 Speaker 6: You know, this is going to the MTA and funding 304 00:16:29,440 --> 00:16:33,560 Speaker 6: our public transportation system. But Governor Murphy, you know, has 305 00:16:33,600 --> 00:16:35,720 Speaker 6: been very critical of this. We'd love to see him 306 00:16:35,760 --> 00:16:37,600 Speaker 6: get rid of all the tolls on the New Jersey 307 00:16:37,640 --> 00:16:39,760 Speaker 6: roads if that's his argument. 308 00:16:40,400 --> 00:16:43,680 Speaker 4: Okay, And so where are we on the process of 309 00:16:44,200 --> 00:16:49,000 Speaker 4: how New York is trying to fight back. Just walk 310 00:16:49,040 --> 00:16:51,480 Speaker 4: us through kind of like what the timeline looks like here. 311 00:16:52,240 --> 00:16:55,280 Speaker 6: Yeah, So the MTA immediately filed suit. We knew this 312 00:16:55,400 --> 00:16:57,840 Speaker 6: was coming. Trump has been talking about this, you know, 313 00:16:57,920 --> 00:17:02,200 Speaker 6: since the campaign. So the mt immediately filed suit. I 314 00:17:02,280 --> 00:17:06,200 Speaker 6: expect that there will be a countersuit from the administration 315 00:17:06,480 --> 00:17:09,400 Speaker 6: to turn off the cameras, seeking an injunction. I don't 316 00:17:09,440 --> 00:17:12,520 Speaker 6: know that, but just that would be my assumption. And 317 00:17:12,920 --> 00:17:15,719 Speaker 6: so then obviously the MTA and Hopel will fight that. 318 00:17:16,840 --> 00:17:19,520 Speaker 6: My opinion is that an injunctions not warranted here because 319 00:17:19,520 --> 00:17:22,800 Speaker 6: that would be clear and present damage to the state 320 00:17:22,840 --> 00:17:25,520 Speaker 6: and the mpta's budget. We should be allowed to continue 321 00:17:26,000 --> 00:17:28,520 Speaker 6: receiving this funding. Well, the lawsuit, the main lawsuit, plays 322 00:17:28,560 --> 00:17:31,040 Speaker 6: out in court, and that can take you know, that 323 00:17:31,040 --> 00:17:34,639 Speaker 6: can take a long time. Lawsuits famously are not the 324 00:17:34,680 --> 00:17:35,360 Speaker 6: fastest thing. 325 00:17:36,040 --> 00:17:38,880 Speaker 2: So just thirty seconds left, Sarah in the interim, giving 326 00:17:38,920 --> 00:17:42,080 Speaker 2: them now into the legal realm here and the delays. 327 00:17:42,760 --> 00:17:45,600 Speaker 2: The cameras are on. Are they still recording everybody? Is 328 00:17:45,600 --> 00:17:47,400 Speaker 2: it still like functional? 329 00:17:48,240 --> 00:17:50,919 Speaker 6: Yep, the cameras are on. They're still issuing tolls. That 330 00:17:50,960 --> 00:17:54,320 Speaker 6: will continue until we are told otherwise by a court, 331 00:17:54,720 --> 00:17:57,600 Speaker 6: and we'll continue to receive all the benefits. And the 332 00:17:57,640 --> 00:17:59,800 Speaker 6: program has been getting more and more popular over time. 333 00:18:00,160 --> 00:18:03,800 Speaker 6: Every program in the world that is put in place does, 334 00:18:03,880 --> 00:18:05,520 Speaker 6: and I think New Yorkers are continuing to see the 335 00:18:05,560 --> 00:18:06,239 Speaker 6: benefits of this. 336 00:18:06,640 --> 00:18:08,600 Speaker 2: All right, Seralyn, thank you so much. We appreciate that. 337 00:18:08,640 --> 00:18:12,160 Speaker 2: Serlyn co Executive director, open plans again. Congestion pricing folks 338 00:18:12,160 --> 00:18:14,520 Speaker 2: here in New York is a big, big issue affecting 339 00:18:14,560 --> 00:18:18,399 Speaker 2: a lot of folks here. Our offices are Lexington Avenue, 340 00:18:18,440 --> 00:18:22,280 Speaker 2: the Bloomberg offices Lexington Avenue at fifty ninth Street, so 341 00:18:22,320 --> 00:18:24,879 Speaker 2: we are just one block inside this zone here, and 342 00:18:24,960 --> 00:18:28,560 Speaker 2: so for people like John Tucker, Bloomberg News, Michael Barr 343 00:18:28,600 --> 00:18:32,600 Speaker 2: Bloomberg News who drive into the city from New Jersey 344 00:18:33,119 --> 00:18:35,159 Speaker 2: very early in the morning two three, four, o'clock in 345 00:18:35,160 --> 00:18:37,960 Speaker 2: the morning. It's an issue just for them to their 346 00:18:38,040 --> 00:18:40,240 Speaker 2: daily commits. It's issue for a lot of people, and 347 00:18:40,280 --> 00:18:41,480 Speaker 2: there's arguments. 348 00:18:41,040 --> 00:18:42,640 Speaker 5: For both sides here. 349 00:18:42,760 --> 00:18:44,679 Speaker 2: So but now it's in the courts. 350 00:18:44,760 --> 00:18:48,920 Speaker 4: Yeah, the Bloomberg headquarters actually have they have cameras, and 351 00:18:49,000 --> 00:18:52,200 Speaker 4: so we had Bloomberg News actually has a unique perspective 352 00:18:52,280 --> 00:18:54,000 Speaker 4: and a unique way to report on this because we 353 00:18:54,040 --> 00:18:57,200 Speaker 4: can actually see exactly, you know, which. 354 00:18:57,960 --> 00:19:01,320 Speaker 2: Our building on the street right outside the bloom the 355 00:19:01,320 --> 00:19:04,720 Speaker 2: Bloomingdale's across the street from the Bloomberg headquarters of blooming Gills. 356 00:19:04,840 --> 00:19:07,320 Speaker 2: That's where the cameras are and they're right over Lexington 357 00:19:07,359 --> 00:19:10,800 Speaker 2: Avenue and they've been there for almost a year. So 358 00:19:10,800 --> 00:19:11,480 Speaker 2: we'll stay on. 359 00:19:11,480 --> 00:19:11,879 Speaker 8: Top of that. 360 00:19:13,480 --> 00:19:17,200 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 361 00:19:17,280 --> 00:19:20,640 Speaker 1: weekdays at ten am Eastern on Applecarcklay and Android Auto 362 00:19:20,760 --> 00:19:23,840 Speaker 1: with the Bloomberg Business app, Listen on demand wherever you 363 00:19:23,880 --> 00:19:27,040 Speaker 1: get your podcasts, or watch us live on YouTube. 364 00:19:27,280 --> 00:19:29,800 Speaker 2: Emily Grafe was sitting in for Alex Steel and Paul Sweeney. 365 00:19:30,280 --> 00:19:32,439 Speaker 2: We are live here in the Bloomberg Interactive Broker Studio. 366 00:19:32,440 --> 00:19:34,720 Speaker 2: We're streaming live on YouTube to theay can actually see 367 00:19:34,760 --> 00:19:37,119 Speaker 2: us for better or worse. I go over to YouTube 368 00:19:37,119 --> 00:19:40,240 Speaker 2: dot com search Bloomberg Podcast Live. That's where you'll find 369 00:19:40,280 --> 00:19:43,200 Speaker 2: us here. Earnings coming in we have been about eighty 370 00:19:43,200 --> 00:19:45,080 Speaker 2: percent of the S and P five hundred companies have 371 00:19:45,160 --> 00:19:48,560 Speaker 2: reported already double digit increases in earnings for share, a 372 00:19:48,560 --> 00:19:51,040 Speaker 2: little bit better and expected. Gina Martin Adams and Bloomberg 373 00:19:51,040 --> 00:19:53,399 Speaker 2: Intelligence was just saying how the narers are coming on 374 00:19:53,440 --> 00:19:55,680 Speaker 2: a little bit better than she had been looking for. 375 00:19:55,960 --> 00:19:58,040 Speaker 2: The question is is that enough for this market? Because 376 00:19:58,080 --> 00:19:59,440 Speaker 2: I don't think the FED is going to be doing 377 00:19:59,480 --> 00:20:01,760 Speaker 2: a lot for us this year. That let's you know, 378 00:20:01,800 --> 00:20:03,919 Speaker 2: kind of what the market's telling us. Phil Orlando joins us. 379 00:20:03,920 --> 00:20:06,000 Speaker 2: He does this stuff for a living. He's a chief 380 00:20:06,000 --> 00:20:09,280 Speaker 2: equity market strategist and head of client portfolio management at 381 00:20:09,320 --> 00:20:11,520 Speaker 2: federatedt Hermeis. We was appreciate getting a few minutes of 382 00:20:11,520 --> 00:20:14,320 Speaker 2: Phil's time. So, Phil, how did you kind of set 383 00:20:14,760 --> 00:20:17,800 Speaker 2: the expectations for twenty twenty five with your clients after 384 00:20:17,880 --> 00:20:21,240 Speaker 2: the really good performance the SMP has had really for 385 00:20:21,280 --> 00:20:22,400 Speaker 2: the last couple of years. 386 00:20:23,160 --> 00:20:27,359 Speaker 8: I absolutely right Paul that in twenty three and twenty 387 00:20:27,359 --> 00:20:29,560 Speaker 8: four the S and P was up between twenty and 388 00:20:29,560 --> 00:20:34,600 Speaker 8: twenty five percent total return. And then where we got 389 00:20:34,680 --> 00:20:38,080 Speaker 8: really aggressive on stocks was what we thought was that 390 00:20:38,200 --> 00:20:41,560 Speaker 8: over sold bottom. In October of twenty three, the SMP 391 00:20:41,800 --> 00:20:45,200 Speaker 8: was down around forty one hundred, and then our year 392 00:20:45,320 --> 00:20:47,600 Speaker 8: end target for the S and P last year was 393 00:20:47,640 --> 00:20:50,960 Speaker 8: sixty two hundred. That was, you know, roughly a forty 394 00:20:51,000 --> 00:20:55,080 Speaker 8: eight percent rally in stocks over like a fifteen to 395 00:20:55,080 --> 00:20:58,879 Speaker 8: sixteen month period. That's phenomenal, and it's not replicable. I mean, 396 00:20:58,920 --> 00:21:01,000 Speaker 8: we're not going to do that this year next year. 397 00:21:01,200 --> 00:21:07,440 Speaker 8: But what we have been telling clients is in light 398 00:21:07,680 --> 00:21:11,159 Speaker 8: of the fiscal policy initiatives that we think are going 399 00:21:11,200 --> 00:21:13,440 Speaker 8: to put in place over the course of the next 400 00:21:13,440 --> 00:21:18,520 Speaker 8: fifteen months or so, in light of a gradual decline 401 00:21:18,560 --> 00:21:21,720 Speaker 8: in interest rates that we expect to see out of 402 00:21:21,720 --> 00:21:23,919 Speaker 8: the FED over the next year or two, we can 403 00:21:24,000 --> 00:21:28,240 Speaker 8: still see stocks grind up, you know, mid to upper teens, 404 00:21:28,960 --> 00:21:31,439 Speaker 8: but not you know, twenty or twenty five percent. So 405 00:21:31,520 --> 00:21:34,440 Speaker 8: still a constructive environment, but not as phenomenal a it's 406 00:21:34,480 --> 00:21:36,760 Speaker 8: been the last couple of years, Phil. 407 00:21:36,760 --> 00:21:40,359 Speaker 4: What would have to change at least for the FED 408 00:21:40,920 --> 00:21:44,840 Speaker 4: environment to kind of dent that view. We were talking 409 00:21:44,920 --> 00:21:49,720 Speaker 4: earlier about how potentially we might only see one rate 410 00:21:49,800 --> 00:21:53,560 Speaker 4: cut this year. What if we don't see any at all? 411 00:21:53,760 --> 00:21:56,080 Speaker 4: How much would that affect your stock outlook. 412 00:21:57,000 --> 00:21:59,720 Speaker 8: So we are in the one or two rate cut 413 00:21:59,800 --> 00:22:02,600 Speaker 8: camp right now in the back end of the year. 414 00:22:03,760 --> 00:22:06,320 Speaker 8: We're thinking the first cut might be September or so, 415 00:22:06,560 --> 00:22:09,239 Speaker 8: second one if there is one, December or so, and 416 00:22:09,240 --> 00:22:12,520 Speaker 8: that's largely a function of the data. Now remember, Emily 417 00:22:12,560 --> 00:22:15,040 Speaker 8: that the Federal Reserve has a dual mandate, so they're 418 00:22:15,080 --> 00:22:18,720 Speaker 8: looking at the trajectory with that Phillips curve trade off. 419 00:22:18,720 --> 00:22:20,760 Speaker 8: What's going on with the labor market, what's going on 420 00:22:20,800 --> 00:22:24,200 Speaker 8: with inflation? And right now, the labor market's pretty strong, 421 00:22:25,200 --> 00:22:30,919 Speaker 8: and inflation has actually been reaccelerating over the course of 422 00:22:30,960 --> 00:22:33,840 Speaker 8: the last you know, six to eight months, based upon 423 00:22:34,080 --> 00:22:38,240 Speaker 8: whatever metric you want to look at. So given that environment, 424 00:22:38,960 --> 00:22:42,080 Speaker 8: you know, the market a year ago thought the Fed 425 00:22:42,200 --> 00:22:45,320 Speaker 8: was going to be cutting interest rates seven times last year. 426 00:22:45,440 --> 00:22:49,800 Speaker 8: That obviously didn't happen, and there's a school of thought 427 00:22:49,880 --> 00:22:53,159 Speaker 8: that the Fed is going to slow down materially, you know, 428 00:22:53,200 --> 00:22:56,040 Speaker 8: from this year. Remember they cut their their SEP target 429 00:22:56,119 --> 00:22:59,560 Speaker 8: down to two cuts for this year, and the market's thinking, well, 430 00:22:59,600 --> 00:23:02,600 Speaker 8: maybe it's one, maybe it's none, and and I guess 431 00:23:02,600 --> 00:23:04,760 Speaker 8: the bears are thinking, well, maybe the Fed's going to 432 00:23:04,800 --> 00:23:07,359 Speaker 8: turn around and start hiking interest rates at some point. 433 00:23:07,560 --> 00:23:11,280 Speaker 8: So there's a lot of confusion about, you know, what 434 00:23:11,440 --> 00:23:13,720 Speaker 8: monetary policy is going to look like, and to some 435 00:23:13,880 --> 00:23:16,960 Speaker 8: degree that's going to be driven by what What does 436 00:23:17,000 --> 00:23:20,520 Speaker 8: fiscal policy look like? What what is the incoming Trump 437 00:23:20,600 --> 00:23:24,560 Speaker 8: administration able to get done in terms of extending and 438 00:23:24,600 --> 00:23:27,840 Speaker 8: making permanent the tax cuts, What are they doing with tariffs, 439 00:23:27,840 --> 00:23:30,760 Speaker 8: what are they doing with regulations and and and how 440 00:23:30,880 --> 00:23:34,440 Speaker 8: is all of that going to impact economic growth and inflation. 441 00:23:34,720 --> 00:23:37,560 Speaker 8: I think there's a giant question mark mark on all 442 00:23:37,600 --> 00:23:40,280 Speaker 8: of that. Yet, yet stocks have been just powering through. 443 00:23:40,640 --> 00:23:43,440 Speaker 8: We hit you know, another all time record high yesterday, 444 00:23:43,760 --> 00:23:46,520 Speaker 8: So there's a little bit of a disconnect there in 445 00:23:46,640 --> 00:23:50,520 Speaker 8: terms of the uncertainty in the marketplace. Yet, uh, the 446 00:23:50,880 --> 00:23:53,000 Speaker 8: you know, very strong performers of the equity mark. 447 00:23:53,880 --> 00:23:57,760 Speaker 2: Pill What is the January Barometer portfolio indicator? What is 448 00:23:57,800 --> 00:24:00,000 Speaker 2: it and what's it telling you? 449 00:23:59,720 --> 00:24:04,480 Speaker 8: The January Barometer Portfolio indicator is telling us that the 450 00:24:04,520 --> 00:24:07,920 Speaker 8: sectors of the market, the eleven s and p five 451 00:24:08,000 --> 00:24:13,960 Speaker 8: hundred sectors in the month of January. Historically, the market 452 00:24:14,040 --> 00:24:16,919 Speaker 8: sort of tips their hand, and the sectors that do 453 00:24:17,040 --> 00:24:20,040 Speaker 8: well or do poorly in January tend to continue in 454 00:24:20,040 --> 00:24:22,719 Speaker 8: that direction through the balance of the year. What we 455 00:24:22,800 --> 00:24:26,360 Speaker 8: saw on January this year is that a lot of 456 00:24:26,400 --> 00:24:30,600 Speaker 8: the growth and technology mag seven kind of names took 457 00:24:30,640 --> 00:24:33,719 Speaker 8: it on the chin. In the month of January, investors 458 00:24:33,760 --> 00:24:37,399 Speaker 8: began to lock in some profits. Yet the sectors of 459 00:24:37,400 --> 00:24:39,760 Speaker 8: the market that we felt had been left for dead 460 00:24:40,119 --> 00:24:45,720 Speaker 8: the last year or two, financials, healthcare, industrials, utilities, they 461 00:24:45,800 --> 00:24:48,439 Speaker 8: had a pretty good month, all better than the S 462 00:24:48,480 --> 00:24:52,320 Speaker 8: and P five hundred performance. So what we've been talking 463 00:24:52,359 --> 00:24:55,679 Speaker 8: about since the middle of last year is that we 464 00:24:55,800 --> 00:24:58,080 Speaker 8: felt that there would be a reversion to the mean, 465 00:24:58,240 --> 00:25:01,679 Speaker 8: that the dramatic ou foremant of the meg seven names 466 00:25:02,720 --> 00:25:06,240 Speaker 8: would ease to some degree, that there'd be some profit 467 00:25:06,280 --> 00:25:10,200 Speaker 8: taking and a rotation of some of those profits into 468 00:25:10,240 --> 00:25:14,320 Speaker 8: the forgotten four ninety three that had dramatically underperformed. And 469 00:25:14,960 --> 00:25:17,400 Speaker 8: we thought that there was, you know, a significant catch 470 00:25:17,480 --> 00:25:20,040 Speaker 8: up trade in the offing, and for the better part 471 00:25:20,080 --> 00:25:22,719 Speaker 8: of the last couple of quarters, that trade has started 472 00:25:22,720 --> 00:25:24,600 Speaker 8: to work, and we think it's got legs. 473 00:25:25,800 --> 00:25:27,639 Speaker 4: Phil, We don't have a ton of time left, but 474 00:25:27,680 --> 00:25:30,840 Speaker 4: I want to get your thoughts on the data that 475 00:25:30,880 --> 00:25:32,480 Speaker 4: we saw showing a slump. 476 00:25:32,359 --> 00:25:33,760 Speaker 5: In retail sales. 477 00:25:33,880 --> 00:25:36,719 Speaker 4: What does that mean for the equity market. 478 00:25:37,760 --> 00:25:40,640 Speaker 8: I wrote a piece beginning of the week that hit 479 00:25:40,680 --> 00:25:45,640 Speaker 8: the Federated website. Yesterday we talked about the consumer slowing down. 480 00:25:45,760 --> 00:25:48,080 Speaker 8: We had a pretty good Christmas, all right, and we 481 00:25:48,240 --> 00:25:52,760 Speaker 8: defined Christmas as October through January. Christmas sales were up 482 00:25:52,840 --> 00:25:56,359 Speaker 8: three point nine percent year on year this year versus 483 00:25:56,359 --> 00:25:58,480 Speaker 8: two point eight percent last year. So it was a 484 00:25:58,480 --> 00:26:03,240 Speaker 8: pretty good Christmas. But October, November, December were pretty good. 485 00:26:03,720 --> 00:26:07,919 Speaker 8: January sort of fell off a cliff. January was not good. 486 00:26:08,600 --> 00:26:11,000 Speaker 8: And you look at a number of the issues that 487 00:26:11,119 --> 00:26:15,159 Speaker 8: are that are happening. We talked about inflation starting to 488 00:26:15,160 --> 00:26:18,960 Speaker 8: re accelerate, consumer confidence has started to roll over, personal 489 00:26:19,040 --> 00:26:22,240 Speaker 8: savings rate had come down with two year low. Low 490 00:26:22,320 --> 00:26:26,480 Speaker 8: end consumers are struggling. Our view is that the strength 491 00:26:26,560 --> 00:26:29,000 Speaker 8: we saw in the fourth quarter of last year is 492 00:26:29,080 --> 00:26:32,399 Speaker 8: going to decidedly slow here in the first quarter. And 493 00:26:32,440 --> 00:26:35,800 Speaker 8: I guess, depending upon what happens with the Fed and Washington, 494 00:26:36,680 --> 00:26:41,160 Speaker 8: that trend, you know, may stabilize in March or April. 495 00:26:41,280 --> 00:26:43,480 Speaker 8: Or it may continued a week and we'll just have 496 00:26:43,600 --> 00:26:44,120 Speaker 8: to say. 497 00:26:44,760 --> 00:26:47,080 Speaker 2: Phil, thanks so much for joining us. Always appreciate getting 498 00:26:47,080 --> 00:26:49,439 Speaker 2: a few minutes of your time. Philler Lando, chief equity 499 00:26:49,440 --> 00:26:52,760 Speaker 2: market strategists and head of client portfolio Management and federated 500 00:26:52,760 --> 00:26:56,119 Speaker 2: at Hearmeyes joining us via zoom Appreciate getting his thoughts. 501 00:26:56,119 --> 00:26:59,560 Speaker 2: He's been really clear on his market calls over the 502 00:26:59,640 --> 00:27:03,200 Speaker 2: last four five, six years, and more than not he 503 00:27:03,280 --> 00:27:05,320 Speaker 2: has been spot on. So it's a good voice with 504 00:27:05,480 --> 00:27:07,360 Speaker 2: like check it in with pill Orlando. 505 00:27:08,040 --> 00:27:12,760 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 506 00:27:12,920 --> 00:27:16,400 Speaker 1: and anywhere else you get your podcasts. Listen live each 507 00:27:16,440 --> 00:27:20,160 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com, 508 00:27:20,320 --> 00:27:23,840 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 509 00:27:24,280 --> 00:27:27,200 Speaker 1: You can also watch us live every weekday on YouTube 510 00:27:27,600 --> 00:27:29,840 Speaker 1: and always on the Bloomberg terminal.