WEBVTT - Walmart Profit Forecast Falls Short on Slowing Growth 0:00:02.720 --> 0:00:10.560 Bloomberg Audio Studios, Podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.520 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.560 --> 0:00:18.479 Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 0:00:18.600 --> 0:00:21.799 Listen on demand wherever you get your podcasts, or watch 0:00:21.920 --> 0:00:23.040 us live on YouTube. 0:00:23.560 --> 0:00:26.520 It's been Walmart here. The company came out with numbers 0:00:26.880 --> 0:00:28.840 kind of in line. I thought they were pretty good numbers, 0:00:28.840 --> 0:00:31.680 but the guide that's definitely disappointed the stream. We've got 0:00:31.680 --> 0:00:34.879 the stock off six point four percent here today, but 0:00:35.400 --> 0:00:38.000 still about about sixty six percent year to day. To remember, 0:00:38.000 --> 0:00:39.640 this has got a market cap of seven hundred and 0:00:39.680 --> 0:00:42.320 eighty one billion dollars, does Walmart. So let's check in 0:00:42.360 --> 0:00:45.200 on this story. Emily Cone joins us Bloomberg Consumer Team 0:00:45.360 --> 0:00:48.880 Leader joints us here and at Bloomberg Get Interactive Brokers Studio. Emily, 0:00:48.920 --> 0:00:50.800 what kind of jumped out of you for this earnings 0:00:50.800 --> 0:00:51.800 report from Walmart? 0:00:52.000 --> 0:00:55.480 Thanks, Paul. Yeah, I'm definitely the the lower than expected 0:00:55.640 --> 0:00:59.040 profit forecast for the full year. I think you know, 0:00:59.160 --> 0:01:06.720 these were consistent estimates. This was a consistent guidance in 0:01:06.760 --> 0:01:09.240 line with what they laid out last year for the 0:01:09.280 --> 0:01:14.039 full year as well. But it definitely signaled that the 0:01:14.200 --> 0:01:17.520 you know the world's largest retailer, Walmart, isn't immune to 0:01:17.600 --> 0:01:24.240 the risks that are out there for the broader economic environment. Granted, 0:01:24.400 --> 0:01:28.880 Walmart has historically given conservative outlook to start the year off, 0:01:30.600 --> 0:01:34.199 but this definitely showed, you know, and they they used 0:01:34.280 --> 0:01:37.520 the word uncertain. I haven't checked, but a number of 0:01:37.640 --> 0:01:41.360 times on their analysts call. That was sort of like 0:01:41.400 --> 0:01:42.600 the theme of the call. 0:01:43.120 --> 0:01:46.319 What else did they say for this, I guess we 0:01:46.400 --> 0:01:50.840 could call it conservative or negative outlook? Did they mention 0:01:51.280 --> 0:01:55.120 it's because consumers are pulling back, people are looking for bargains. 0:01:55.200 --> 0:01:58.080 I guess, like, what did we learn about the consumer 0:01:58.320 --> 0:01:59.120 in this report? 0:01:59.520 --> 0:02:02.760 Yeah, it was it wasn't negative. It was it was 0:02:03.240 --> 0:02:05.160 in line with what they offered last year, three to 0:02:05.200 --> 0:02:10.400 four percent growth. But I think, you know, and I 0:02:10.400 --> 0:02:14.160 think that's taking into account near term investments. So they 0:02:14.240 --> 0:02:19.560 mentioned things like consumer trends and near term investments like 0:02:19.600 --> 0:02:22.560 the cost of the acquisition of the smart TV maker Visio. 0:02:23.160 --> 0:02:26.040 We're still seeing those costs take a hit on the 0:02:26.040 --> 0:02:30.440 bottom line. But yeah, they said they haven't incorporated yet 0:02:30.440 --> 0:02:33.840 the risk of tariffs into their guidance. We also saw 0:02:34.040 --> 0:02:37.560 US retail sales dip in January and core inflation pick up. 0:02:38.560 --> 0:02:40.800 So I think those are those are all things that 0:02:40.880 --> 0:02:46.760 are weighing on on retailers, and Walmart certainly isn't immune. 0:02:46.960 --> 0:02:50.440 How about on the tariff front. I mean, they am 0:02:50.760 --> 0:02:54.320 looking at your Bloombergers right up here, talk about tariffs. 0:02:54.960 --> 0:02:58.320 Walmart imports food from Mexico and general merchandise products like 0:02:58.400 --> 0:03:01.960 microwaves in China. What are they saying about tariffs? Is 0:03:01.960 --> 0:03:03.280 that incorporating their guidance? 0:03:03.800 --> 0:03:07.080 They said they have not incorporated tariffs into their guidance before. 0:03:08.160 --> 0:03:11.280 Tariffs aren't new for a company like Walmart. Obviously we 0:03:11.360 --> 0:03:17.120 saw import tariffs, you know, during the last Trump administration. 0:03:18.000 --> 0:03:21.160 But they're doing what we've seen most companies do so 0:03:21.360 --> 0:03:24.840 far this year, which is say it's uncertain, we're not 0:03:24.880 --> 0:03:28.320 sure what's going to happen, and we're not incorporating tariffs 0:03:28.320 --> 0:03:35.280 into our guidance yet. But yeah, I mean, food prices 0:03:35.280 --> 0:03:39.920 were up for them, General merchandising prices I think came 0:03:39.960 --> 0:03:40.720 down a little bit. 0:03:41.680 --> 0:03:44.880 I actually learned something new about Walmart today, and that's 0:03:44.920 --> 0:03:49.360 that you can buy a pre owned Chanel bag through 0:03:49.680 --> 0:03:54.040 their website. So I guess they're getting into online sales. 0:03:54.040 --> 0:03:57.400 They're beefing up their digital operation to include items like 0:03:57.440 --> 0:04:01.160 collectibles and pre owned Chanel bags. Wow, think about that, 0:04:01.240 --> 0:04:04.240 I mean luxury items at like a discount retailer. 0:04:04.400 --> 0:04:08.240 Yeah. So Walmart is still small compared to Amazon, but 0:04:08.760 --> 0:04:12.080 in terms of e commerce, but that's an area where 0:04:12.080 --> 0:04:15.400 they're just continuing to see huge growth in e commerce 0:04:15.440 --> 0:04:20.400 in their their marketplace. So that that is something that 0:04:20.480 --> 0:04:22.680 you'll continue to hear them talk a lot about and 0:04:22.720 --> 0:04:27.440 there's a ton of upside there. Pharmacy delivery was another 0:04:27.480 --> 0:04:30.400 one that they shouted out today. That's a new business 0:04:30.400 --> 0:04:34.400 for them. So these newer businesses continue to grow a 0:04:34.440 --> 0:04:37.400 lot for Walmart, and they would say there's still a 0:04:37.760 --> 0:04:40.880 big runway there when it comes to competing with Amazon. 0:04:41.080 --> 0:04:45.440 It's interesting comparable sales excluding fuel rose four point six 0:04:45.480 --> 0:04:48.280 percent at US Walmart Star Wars open at least a 0:04:48.320 --> 0:04:49.960 year for the quarter end of January thirty first. That's 0:04:50.000 --> 0:04:53.000 higher than Wall Street had been anticipating. So it doesn't 0:04:53.000 --> 0:04:56.240 seem like the consumer per se, at least in this 0:04:56.400 --> 0:04:58.840 quarter was a problem. Consumer was still spending. 0:04:59.120 --> 0:05:01.919 So an interesting thing about the growth this quarter and 0:05:01.960 --> 0:05:05.280 actually last quarter as well, was that growth was mostly 0:05:05.320 --> 0:05:08.400 coming from higher income households, So households that are earning 0:05:08.720 --> 0:05:11.080 more than one hundred thousand dollars a year. Not the 0:05:11.080 --> 0:05:15.000 person you typically think of as your average Walmart shopper. 0:05:15.080 --> 0:05:18.360 These are like wealthier people who are looking for deals, 0:05:18.440 --> 0:05:21.320 looking for value. Maybe they're coming to Walmart for groceries 0:05:21.360 --> 0:05:24.920 as opposed to whole foods this quarter because prices on 0:05:25.000 --> 0:05:28.240 food are so high. So that's really where the growth 0:05:28.400 --> 0:05:31.280 is still coming from, are wealthier shoppers. 0:05:32.360 --> 0:05:35.560 So that does that tell you then that the consumer 0:05:35.640 --> 0:05:39.160 is maybe weaker if these high income people are having 0:05:39.200 --> 0:05:41.159 to move down the spectrum. 0:05:41.480 --> 0:05:42.240 It's possible. 0:05:42.320 --> 0:05:44.640 And I think, you know, we are looking forward to 0:05:45.040 --> 0:05:48.279 the rest of the big pox results coming this quarter. 0:05:48.400 --> 0:05:51.240 We're looking at Home Depot, We're looking at Target. I 0:05:51.240 --> 0:05:54.120 think they will tell us a bigger picture view of 0:05:54.160 --> 0:05:57.640 how the US consumer is doing. But yes, I have 0:05:57.720 --> 0:06:00.200 the same question, where are those shoppers coming from? Who's 0:06:00.279 --> 0:06:00.880 losing here? 0:06:01.400 --> 0:06:03.400 Emily Cohen, thank you so much for joining us. Emily Cohen, 0:06:03.400 --> 0:06:05.480 she's a consumer team leader for Bloomberg News, joining us 0:06:05.480 --> 0:06:08.160 live here in our Bloomberg Interactive Brookers studio talking about 0:06:08.320 --> 0:06:09.719 breaking down those Walmont Earnings. 0:06:11.400 --> 0:06:15.080 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:06:15.200 --> 0:06:18.279 weekdays at ten am Eastern on Apple, Cocklay and Android 0:06:18.279 --> 0:06:21.599 Auto with the Bloomberg Business App. Listen on demand wherever 0:06:21.640 --> 0:06:24.760 you get your podcasts, or watch us live on YouTube. 0:06:25.240 --> 0:06:27.720 Let's switch gears here talk about this Federal Reserve. We 0:06:27.800 --> 0:06:30.400 had the FED minutes yesterday. I did not read them. 0:06:30.480 --> 0:06:32.279 I never read them. That's why we have people like 0:06:32.320 --> 0:06:35.480 Mike McLoone, I mean Mike McKee. We've got Danielle di 0:06:35.600 --> 0:06:39.320 Martino Booth joining us here in studio. She's the CEO 0:06:39.360 --> 0:06:43.000 and chief strategist for QI Research. What's our FED doing here? 0:06:43.480 --> 0:06:45.640 Our Fed can do? Is it safe to say they 0:06:45.680 --> 0:06:47.880 could do nothing all year? And that would be okay? 0:06:49.640 --> 0:06:52.440 I really don't think markets are priced for that. 0:06:52.760 --> 0:06:53.080 Okay. 0:06:53.160 --> 0:06:55.200 In fact, in the last week, if there's anything that 0:06:55.240 --> 0:06:58.240 we've seen, it's the second it's the second rate kind 0:06:58.240 --> 0:07:01.400 of the year begin to be really priced in. So 0:07:01.440 --> 0:07:03.479 I wouldn't be surprised if we were to see something 0:07:04.160 --> 0:07:05.320 around June. 0:07:05.560 --> 0:07:08.520 And I think what's going to force their hand is 0:07:08.760 --> 0:07:09.480 the job market. 0:07:10.840 --> 0:07:13.080 What did you learn from the minutes? 0:07:14.360 --> 0:07:18.280 Not too terribly much and It's not that they didn't 0:07:18.480 --> 0:07:23.760 try and present a unified front in the minutes, But 0:07:24.120 --> 0:07:26.960 when the chair of the FMC gets up at the 0:07:26.960 --> 0:07:32.720 podium and swats away the verbiage of the statement, you know, 0:07:33.000 --> 0:07:36.480 without even reading a single line of the minutes that 0:07:36.520 --> 0:07:43.520 there was a lot of controversy, dissent, disagreement in that room. 0:07:43.760 --> 0:07:45.520 So you're going to see very little when it comes 0:07:45.520 --> 0:07:47.160 to the minutes. Remember in two thousand and eight, Janet 0:07:47.240 --> 0:07:50.840 Yellen said we can use the minutes as another tool 0:07:50.960 --> 0:07:55.720 in the toolbox to continue to shape the thinking of markets, 0:07:55.800 --> 0:07:59.600 even though they're theoretically timestamped, but they're not. 0:08:00.560 --> 0:08:03.320 You mentioned the labor market earlier. What what is your 0:08:03.320 --> 0:08:05.400 read of the labor market these days? We had I 0:08:05.440 --> 0:08:08.680 guess we had the initial job as claims came in 0:08:08.760 --> 0:08:11.840 just a little bit higher than expected today, but I 0:08:11.840 --> 0:08:15.000 do know any number with it, two ten, fifteen, two 0:08:15.000 --> 0:08:17.200 twenty seems like the norm. How do you view the 0:08:17.240 --> 0:08:17.800 labor market? 0:08:18.640 --> 0:08:21.360 So I think right now what we have is a 0:08:21.400 --> 0:08:25.840 pig and a python, and we've had a very constant 0:08:25.840 --> 0:08:28.880 stream of layoffs in the private sector. I mean, I 0:08:29.800 --> 0:08:31.400 need to meet and shake the hand of the person 0:08:31.440 --> 0:08:34.839 who runs bcygo because I don't think they sleep because 0:08:34.840 --> 0:08:38.400 the bankruptcy cycle has as even though it hit a 0:08:38.400 --> 0:08:41.800 fourteen year high in twenty twenty four, it's only accelerated. 0:08:41.840 --> 0:08:44.800 My gosh, we've had almost four thousand store closings announced 0:08:45.200 --> 0:08:48.360 and it's just February twentieth so far this year. 0:08:48.360 --> 0:08:49.800 To give you context, co Star. 0:08:49.640 --> 0:08:52.560 Reported that there were seventy three hundred closed for all 0:08:52.600 --> 0:08:53.600 of twenty twenty five. 0:08:54.080 --> 0:08:57.640 So we know that there is a there's. 0:08:57.280 --> 0:09:02.040 A bulge of layoffs moving like a pig through a python, 0:09:02.760 --> 0:09:06.719 plus plus public sector job cuts, and that's the. 0:09:06.679 --> 0:09:09.280 Big that's the big change agent. 0:09:10.559 --> 0:09:10.800 You know. 0:09:10.880 --> 0:09:13.640 It was interesting to see that the survey week end 0:09:13.679 --> 0:09:17.080 at February the fifteenth, that was what was coincided with 0:09:17.120 --> 0:09:20.520 what was reported this morning, and yet we saw continuing 0:09:20.720 --> 0:09:25.600 jobless claims pushing three million, not not seasonally adjusted. 0:09:26.160 --> 0:09:27.720 The high for the for the cycle. 0:09:27.760 --> 0:09:29.439 If you lose your job, if you have a job, 0:09:29.480 --> 0:09:32.080 don't lose it, That's what Powell said at the podium. 0:09:32.200 --> 0:09:35.400 But when you figure that there been one hundred thousand 0:09:35.440 --> 0:09:39.160 jobs cuts announced in the private sector this thus far 0:09:39.240 --> 0:09:42.800 in February alone, and then you tack on what seventy 0:09:42.800 --> 0:09:45.520 five thousand who took the buyout, and the fact that 0:09:45.559 --> 0:09:49.439 they waited until today to start laying off six thousand 0:09:49.440 --> 0:09:53.720 people at the IRS seven thousand Department of Defense. It's 0:09:53.880 --> 0:09:59.040 going to snowball, and it's gonna snowball before the FED meets. 0:09:59.840 --> 0:10:02.800 Not maybe not in March, because today coincided with the 0:10:02.840 --> 0:10:06.160 survey week for non farm payrolls and obviously a fairly 0:10:06.360 --> 0:10:08.800 low number. But if we don't see it in the 0:10:08.800 --> 0:10:11.920 February jobs report, we're going to see it in the 0:10:11.960 --> 0:10:14.800 March jobs report, and then the Fed will meet again. 0:10:14.880 --> 0:10:17.000 So I think that that's why markets have begun to 0:10:17.000 --> 0:10:19.880 sniff this out. Seventy percent of jobs created in the 0:10:19.880 --> 0:10:23.120 month of January were either government jobs or related to 0:10:23.160 --> 0:10:26.920 the government healthcare. So when you begin to take that 0:10:27.800 --> 0:10:33.560 job creation machine offline, it's been such a massive support. 0:10:34.040 --> 0:10:35.520 In addition to the fact that we haven't had any 0:10:35.520 --> 0:10:38.240 private job creation net net for two and a half years, 0:10:38.920 --> 0:10:39.800 something's going to give. 0:10:40.400 --> 0:10:43.960 So when we see then that the minutes, the officials 0:10:43.960 --> 0:10:46.199 are saying in the minutes that you know they want 0:10:46.240 --> 0:10:49.600 to keep rates steady, we look at what markets are pricing. 0:10:49.679 --> 0:10:53.960 Maybe only one more rate cut is the FED not 0:10:54.280 --> 0:10:58.440 aware of this snowballing effect that you see coming in 0:10:58.480 --> 0:10:59.240 the labor market. 0:10:59.800 --> 0:11:03.840 Oh, I think FED officials are more than aware. They 0:11:03.880 --> 0:11:07.280 do have a narrative to uphold. They're not allowed to 0:11:07.280 --> 0:11:09.480 say that that. You know, they're not allowed to screen 0:11:09.520 --> 0:11:12.680 fire in a crowdit theater. But we know that FED 0:11:12.679 --> 0:11:18.120 officials know because Chair Powell, because Governor Christopher Waller, you know, 0:11:18.320 --> 0:11:22.120 the closest thing to him speaking himself, his closest confidant 0:11:22.720 --> 0:11:23.400 on the Federal. 0:11:23.280 --> 0:11:24.160 Ban Market Committee. 0:11:24.240 --> 0:11:28.080 They've recognized that new rents are the way to gauge inflation. 0:11:28.400 --> 0:11:30.400 They've talked about it on multiple occasions. 0:11:30.720 --> 0:11:34.160 Apartment List yesterday was out with the highest vacancy rate 0:11:34.200 --> 0:11:36.080 six point eight five percent, which check out the July 0:11:36.120 --> 0:11:40.000 twenty twenty high. We've got seven hundred and thirty five 0:11:40.080 --> 0:11:44.040 thousand apartments that are still coming out of the construction pipeline, 0:11:44.960 --> 0:11:47.800 and one apartment read after another saying rents are falling. 0:11:48.600 --> 0:11:49.440 I'm going in all. 0:11:49.280 --> 0:11:53.400 These details because if it's rents that Powell and Waller 0:11:53.520 --> 0:11:57.319 are falling to gauge inflation, and that's exactly what we're 0:11:57.320 --> 0:12:01.160 seeing in trueflation, tru bond Traders introduced me to that metric. 0:12:01.240 --> 0:12:02.960 It's real time, if you will. 0:12:02.960 --> 0:12:04.840 It's come from three come down from three point one 0:12:04.840 --> 0:12:08.800 percent two point three percent this year true inflation. We 0:12:08.880 --> 0:12:13.079 can see what's happening in real time with inflation. And 0:12:13.120 --> 0:12:16.280 then there's the dot dot dot what happens with tariffs 0:12:16.280 --> 0:12:18.440 and who on Earth knows, but we do know that 0:12:18.480 --> 0:12:21.960 in twenty eighteen with the first Trump tweet about tariffs, 0:12:22.280 --> 0:12:24.680 by the end of twenty nineteen, the CPI was actually 0:12:24.960 --> 0:12:28.000 lower because it's because tariff's slowed growth. 0:12:28.320 --> 0:12:28.520 Yep. 0:12:28.640 --> 0:12:31.000 Absolutely, daniel Dee Martina Bouth, thank you so much for 0:12:31.080 --> 0:12:34.080 joining us. Danielle Di Martina Booth, She's a CEO and 0:12:34.160 --> 0:12:37.040 chief strategist QI Research. Joining us live here in our 0:12:37.040 --> 0:12:39.640 Bloomberg and DIRECTI Brokeer studio, one of our absolute go 0:12:39.800 --> 0:12:42.400 to voices when it comes to the Federal Reserve and 0:12:42.440 --> 0:12:45.480 what those folks are doing there. 0:12:46.200 --> 0:12:49.880 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:12:49.960 --> 0:12:53.360 weekdays at ten am Eastern on Applecarplay and Android Auto 0:12:53.480 --> 0:12:56.520 with the Bloomberg Business App. Listen on demand wherever you 0:12:56.559 --> 0:12:59.560 get your podcasts, or watch us live on YouTube. 0:13:00.160 --> 0:13:03.040 Sorry, demil gurfail sitting in for Alex Steele Paul Sweeney 0:13:03.080 --> 0:13:05.200 were live here in a Bloomberg Interactive Broker studio and 0:13:05.240 --> 0:13:08.160 we are streaming live on YouTube as well. In the 0:13:08.200 --> 0:13:10.720 Greater New York City area. One of the biggest stories 0:13:10.720 --> 0:13:12.880 over the past couple days is congestion pricing. I went 0:13:12.920 --> 0:13:17.360 into effect earlier in January. It seems to be working. 0:13:17.400 --> 0:13:21.160 I mean, congestions down. My travel time into the city 0:13:21.200 --> 0:13:25.480 when I come in is less, you know, revenues up. 0:13:25.520 --> 0:13:27.560 I don't know. But the federal government, Donald Trump put 0:13:28.040 --> 0:13:30.360 a stop to that, a temporary stop perhaps, and we've 0:13:30.400 --> 0:13:33.920 got some litigation stemming from Governor Holkl here to maybe 0:13:34.320 --> 0:13:37.000 keep the congestion pricing going. But it is a big, 0:13:37.040 --> 0:13:39.400 big deal, certainly here in New York City, but also 0:13:39.440 --> 0:13:41.160 for some other regions around the country that also have 0:13:41.240 --> 0:13:44.240 some types of congestion pricing. So everybody's kind of watching 0:13:44.240 --> 0:13:46.000 to see how this will play out. So we want 0:13:46.040 --> 0:13:48.319 to get a smart voice on this. Sarah Lynn joins this, 0:13:48.440 --> 0:13:51.440 co executive director of Open Plans. It joins us from 0:13:51.440 --> 0:13:54.240 New York City via zoom. Sarah, kind of where are 0:13:54.280 --> 0:13:56.520 we today with this congestion pricing? 0:13:57.040 --> 0:13:57.360 Is it on? 0:13:57.559 --> 0:13:58.040 Is it off? 0:13:58.080 --> 0:14:01.360 Where are we I think The first really important thing 0:14:01.360 --> 0:14:03.959 to say is that congestion pricing works and it's good 0:14:03.960 --> 0:14:06.520 for business, you know, and you have groups like the 0:14:06.559 --> 0:14:10.120 Partnership for New York and Redney supporting congestion pricing. They're 0:14:10.160 --> 0:14:12.080 doing it because they know it's good for business within 0:14:12.120 --> 0:14:14.920 the zone and in the regional economy as a whole. 0:14:16.200 --> 0:14:16.840 It's still on. 0:14:17.760 --> 0:14:21.400 Governor Hokel was very clear yesterday the cameras are still on. 0:14:22.520 --> 0:14:26.160 The NCAA has already filed suit against the administration's action, 0:14:27.320 --> 0:14:29.120 and I expect the cameras will be on while that 0:14:29.160 --> 0:14:30.160 all plays out in court. 0:14:31.280 --> 0:14:36.480 What do we know about the presidential administration's rationale for 0:14:36.640 --> 0:14:41.160 wanting to halt this? And then I guess what kind 0:14:41.200 --> 0:14:43.600 of power they have to actually put this through. 0:14:45.360 --> 0:14:47.600 I think rationale is a strong word with many things 0:14:47.600 --> 0:14:54.320 this administration is doing. This feels very personal. Frankly, again, 0:14:54.760 --> 0:14:58.280 there's not a good business rationale. There's not a good 0:14:58.720 --> 0:15:01.760 rationale in terms of this is reducing congestion. This is 0:15:01.760 --> 0:15:04.280 speeding up bus times. That's good for working New Yorkers. 0:15:04.520 --> 0:15:07.920 This is already reducing traffic crashes in the zone. It's 0:15:07.960 --> 0:15:12.600 reducing air pollution. So from every perspective that matters, congestion 0:15:12.640 --> 0:15:16.880 pricing is working the administration. Sean Duffy has made arguments 0:15:16.920 --> 0:15:19.960 that congestion pricing is bad for working New Yorkers. That's 0:15:20.040 --> 0:15:24.600 just patently false. Only four percent of working New Yorkers, 0:15:25.080 --> 0:15:28.240 low income New Yorkers drive into the zone. All of 0:15:28.280 --> 0:15:30.640 the rest of them rely on public transportation that has 0:15:30.680 --> 0:15:33.120 gotten better already with only a month and a half 0:15:33.200 --> 0:15:35.520 of congestion pricing, and we'll continue to get better. So 0:15:35.840 --> 0:15:42.120 that rationale is just false. I think that they think 0:15:42.120 --> 0:15:45.560 they have the authority, but we really believe they don't. Again, 0:15:45.640 --> 0:15:48.760 lawsuits will bear this out over the next few months, 0:15:49.080 --> 0:15:51.680 but federal approval has already been given. The program is 0:15:51.680 --> 0:15:52.480 already in place. 0:15:53.200 --> 0:15:55.920 So folks on the other side of that argument would say, 0:15:56.040 --> 0:15:59.200 then I live in the grade state of New Jersey. 0:16:00.080 --> 0:16:00.760 Defend that one. 0:16:01.680 --> 0:16:02.280 It's a tax. 0:16:02.400 --> 0:16:06.120 It's just another tax on Metro New York people, and boy, 0:16:06.160 --> 0:16:09.120 aren't we taxed enough. What's a response to that. 0:16:10.640 --> 0:16:12.840 Well, it's a toll and there are toll roads all 0:16:12.880 --> 0:16:15.840 over New Jersey, for example. And you know this is 0:16:15.840 --> 0:16:20.000 a common this is a common technique that states and 0:16:20.240 --> 0:16:24.840 municipalities use to raise money both for you know, highways 0:16:24.880 --> 0:16:25.720 and for other. 0:16:27.120 --> 0:16:27.560 Funding. 0:16:27.600 --> 0:16:29.400 You know, this is going to the MTA and funding 0:16:29.440 --> 0:16:33.560 our public transportation system. But Governor Murphy, you know, has 0:16:33.600 --> 0:16:35.720 been very critical of this. We'd love to see him 0:16:35.760 --> 0:16:37.600 get rid of all the tolls on the New Jersey 0:16:37.640 --> 0:16:39.760 roads if that's his argument. 0:16:40.400 --> 0:16:43.680 Okay, And so where are we on the process of 0:16:44.200 --> 0:16:49.000 how New York is trying to fight back. Just walk 0:16:49.040 --> 0:16:51.480 us through kind of like what the timeline looks like here. 0:16:52.240 --> 0:16:55.280 Yeah, So the MTA immediately filed suit. We knew this 0:16:55.400 --> 0:16:57.840 was coming. Trump has been talking about this, you know, 0:16:57.920 --> 0:17:02.200 since the campaign. So the mt immediately filed suit. I 0:17:02.280 --> 0:17:06.200 expect that there will be a countersuit from the administration 0:17:06.480 --> 0:17:09.400 to turn off the cameras, seeking an injunction. I don't 0:17:09.440 --> 0:17:12.520 know that, but just that would be my assumption. And 0:17:12.920 --> 0:17:15.719 so then obviously the MTA and Hopel will fight that. 0:17:16.840 --> 0:17:19.520 My opinion is that an injunctions not warranted here because 0:17:19.520 --> 0:17:22.800 that would be clear and present damage to the state 0:17:22.840 --> 0:17:25.520 and the mpta's budget. We should be allowed to continue 0:17:26.000 --> 0:17:28.520 receiving this funding. Well, the lawsuit, the main lawsuit, plays 0:17:28.560 --> 0:17:31.040 out in court, and that can take you know, that 0:17:31.040 --> 0:17:34.639 can take a long time. Lawsuits famously are not the 0:17:34.680 --> 0:17:35.360 fastest thing. 0:17:36.040 --> 0:17:38.880 So just thirty seconds left, Sarah in the interim, giving 0:17:38.920 --> 0:17:42.080 them now into the legal realm here and the delays. 0:17:42.760 --> 0:17:45.600 The cameras are on. Are they still recording everybody? Is 0:17:45.600 --> 0:17:47.400 it still like functional? 0:17:48.240 --> 0:17:50.919 Yep, the cameras are on. They're still issuing tolls. That 0:17:50.960 --> 0:17:54.320 will continue until we are told otherwise by a court, 0:17:54.720 --> 0:17:57.600 and we'll continue to receive all the benefits. And the 0:17:57.640 --> 0:17:59.800 program has been getting more and more popular over time. 0:18:00.160 --> 0:18:03.800 Every program in the world that is put in place does, 0:18:03.880 --> 0:18:05.520 and I think New Yorkers are continuing to see the 0:18:05.560 --> 0:18:06.239 benefits of this. 0:18:06.640 --> 0:18:08.600 All right, Seralyn, thank you so much. We appreciate that. 0:18:08.640 --> 0:18:12.160 Serlyn co Executive director, open plans again. Congestion pricing folks 0:18:12.160 --> 0:18:14.520 here in New York is a big, big issue affecting 0:18:14.560 --> 0:18:18.399 a lot of folks here. Our offices are Lexington Avenue, 0:18:18.440 --> 0:18:22.280 the Bloomberg offices Lexington Avenue at fifty ninth Street, so 0:18:22.320 --> 0:18:24.879 we are just one block inside this zone here, and 0:18:24.960 --> 0:18:28.560 so for people like John Tucker, Bloomberg News, Michael Barr 0:18:28.600 --> 0:18:32.600 Bloomberg News who drive into the city from New Jersey 0:18:33.119 --> 0:18:35.159 very early in the morning two three, four, o'clock in 0:18:35.160 --> 0:18:37.960 the morning. It's an issue just for them to their 0:18:38.040 --> 0:18:40.240 daily commits. It's issue for a lot of people, and 0:18:40.280 --> 0:18:41.480 there's arguments. 0:18:41.040 --> 0:18:42.640 For both sides here. 0:18:42.760 --> 0:18:44.679 So but now it's in the courts. 0:18:44.760 --> 0:18:48.920 Yeah, the Bloomberg headquarters actually have they have cameras, and 0:18:49.000 --> 0:18:52.200 so we had Bloomberg News actually has a unique perspective 0:18:52.280 --> 0:18:54.000 and a unique way to report on this because we 0:18:54.040 --> 0:18:57.200 can actually see exactly, you know, which. 0:18:57.960 --> 0:19:01.320 Our building on the street right outside the bloom the 0:19:01.320 --> 0:19:04.720 Bloomingdale's across the street from the Bloomberg headquarters of blooming Gills. 0:19:04.840 --> 0:19:07.320 That's where the cameras are and they're right over Lexington 0:19:07.359 --> 0:19:10.800 Avenue and they've been there for almost a year. So 0:19:10.800 --> 0:19:11.480 we'll stay on. 0:19:11.480 --> 0:19:11.879 Top of that. 0:19:13.480 --> 0:19:17.200 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:19:17.280 --> 0:19:20.640 weekdays at ten am Eastern on Applecarcklay and Android Auto 0:19:20.760 --> 0:19:23.840 with the Bloomberg Business app, Listen on demand wherever you 0:19:23.880 --> 0:19:27.040 get your podcasts, or watch us live on YouTube. 0:19:27.280 --> 0:19:29.800 Emily Grafe was sitting in for Alex Steel and Paul Sweeney. 0:19:30.280 --> 0:19:32.439 We are live here in the Bloomberg Interactive Broker Studio. 0:19:32.440 --> 0:19:34.720 We're streaming live on YouTube to theay can actually see 0:19:34.760 --> 0:19:37.119 us for better or worse. I go over to YouTube 0:19:37.119 --> 0:19:40.240 dot com search Bloomberg Podcast Live. That's where you'll find 0:19:40.280 --> 0:19:43.200 us here. Earnings coming in we have been about eighty 0:19:43.200 --> 0:19:45.080 percent of the S and P five hundred companies have 0:19:45.160 --> 0:19:48.560 reported already double digit increases in earnings for share, a 0:19:48.560 --> 0:19:51.040 little bit better and expected. Gina Martin Adams and Bloomberg 0:19:51.040 --> 0:19:53.399 Intelligence was just saying how the narers are coming on 0:19:53.440 --> 0:19:55.680 a little bit better than she had been looking for. 0:19:55.960 --> 0:19:58.040 The question is is that enough for this market? Because 0:19:58.080 --> 0:19:59.440 I don't think the FED is going to be doing 0:19:59.480 --> 0:20:01.760 a lot for us this year. That let's you know, 0:20:01.800 --> 0:20:03.919 kind of what the market's telling us. Phil Orlando joins us. 0:20:03.920 --> 0:20:06.000 He does this stuff for a living. He's a chief 0:20:06.000 --> 0:20:09.280 equity market strategist and head of client portfolio management at 0:20:09.320 --> 0:20:11.520 federatedt Hermeis. We was appreciate getting a few minutes of 0:20:11.520 --> 0:20:14.320 Phil's time. So, Phil, how did you kind of set 0:20:14.760 --> 0:20:17.800 the expectations for twenty twenty five with your clients after 0:20:17.880 --> 0:20:21.240 the really good performance the SMP has had really for 0:20:21.280 --> 0:20:22.400 the last couple of years. 0:20:23.160 --> 0:20:27.359 I absolutely right Paul that in twenty three and twenty 0:20:27.359 --> 0:20:29.560 four the S and P was up between twenty and 0:20:29.560 --> 0:20:34.600 twenty five percent total return. And then where we got 0:20:34.680 --> 0:20:38.080 really aggressive on stocks was what we thought was that 0:20:38.200 --> 0:20:41.560 over sold bottom. In October of twenty three, the SMP 0:20:41.800 --> 0:20:45.200 was down around forty one hundred, and then our year 0:20:45.320 --> 0:20:47.600 end target for the S and P last year was 0:20:47.640 --> 0:20:50.960 sixty two hundred. That was, you know, roughly a forty 0:20:51.000 --> 0:20:55.080 eight percent rally in stocks over like a fifteen to 0:20:55.080 --> 0:20:58.879 sixteen month period. That's phenomenal, and it's not replicable. I mean, 0:20:58.920 --> 0:21:01.000 we're not going to do that this year next year. 0:21:01.200 --> 0:21:07.440 But what we have been telling clients is in light 0:21:07.680 --> 0:21:11.159 of the fiscal policy initiatives that we think are going 0:21:11.200 --> 0:21:13.440 to put in place over the course of the next 0:21:13.440 --> 0:21:18.520 fifteen months or so, in light of a gradual decline 0:21:18.560 --> 0:21:21.720