WEBVTT - P&L: Trump Tends to Aim High, Then Fall Back

0:00:04.760 --> 0:00:08.080
<v Speaker 1>Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.

0:00:08.119 --> 0:00:11.159
<v Speaker 1>Along with my co host Lisa Abramowitz. Each day we

0:00:11.280 --> 0:00:14.480
<v Speaker 1>bring you the most important, noteworthy, and useful interviews for

0:00:14.520 --> 0:00:16.880
<v Speaker 1>you and your money, whether at the grocery store or

0:00:16.920 --> 0:00:20.680
<v Speaker 1>the trading floor. Find the Bloomberg P L Podcast on iTunes,

0:00:20.840 --> 0:00:32.760
<v Speaker 1>SoundCloud and at Bloomberg dot com. Peter koit us economy

0:00:32.800 --> 0:00:36.600
<v Speaker 1>team covering all the indicators. He's our economic editor for

0:00:36.600 --> 0:00:39.400
<v Speaker 1>Bloomberg Business Week, and he can be followed on Twitter

0:00:39.479 --> 0:00:43.800
<v Speaker 1>at Peter Koi CEO. Y all right, Mr ki Uh,

0:00:44.080 --> 0:00:46.959
<v Speaker 1>tell us a little bit about the economy and the

0:00:47.040 --> 0:00:53.080
<v Speaker 1>challenges that a Trump administration faces. Well, Donald Trump is

0:00:53.440 --> 0:00:57.440
<v Speaker 1>uh is a regieved changer. He's he's not your average

0:00:57.880 --> 0:01:02.960
<v Speaker 1>new president coming into office. He's got incredibly ambitious goals.

0:01:03.040 --> 0:01:05.520
<v Speaker 1>He wants to really change things a lot, and he

0:01:05.600 --> 0:01:09.960
<v Speaker 1>has vanquished his political opponents. But can he as easily

0:01:10.040 --> 0:01:14.400
<v Speaker 1>vanquish his economic challenges? And that's the question I have.

0:01:14.480 --> 0:01:17.199
<v Speaker 1>I mean, well, yeah, specifically, I mean, he's vowed to

0:01:17.240 --> 0:01:20.880
<v Speaker 1>cut taxes, but he's also planning to increase spending quite substantially.

0:01:21.000 --> 0:01:23.600
<v Speaker 1>And the question that I have is, I mean aren't

0:01:23.600 --> 0:01:26.200
<v Speaker 1>there going to be some Republicans who don't want to

0:01:26.240 --> 0:01:29.240
<v Speaker 1>see the deficit expanded dramatically? And how is this going

0:01:29.280 --> 0:01:34.399
<v Speaker 1>to work? Exactly? So, the compare of nonprofits in Washington,

0:01:34.560 --> 0:01:38.680
<v Speaker 1>the Committee for Responsible Federal Budget and the Urbans Brookings

0:01:38.680 --> 0:01:44.080
<v Speaker 1>Tax Policy Center did a joint report looking at Trump's

0:01:44.080 --> 0:01:47.720
<v Speaker 1>sort of the handcuffs on him, the economic handcuffs, and

0:01:47.840 --> 0:01:51.200
<v Speaker 1>saying that if you look at Trump's plan, as you said,

0:01:51.200 --> 0:01:54.040
<v Speaker 1>he wants to cut tracks is dramatically, but he wants

0:01:54.080 --> 0:01:57.280
<v Speaker 1>to preserve the big cost centers of the federal budget,

0:01:57.280 --> 0:02:00.280
<v Speaker 1>which your Social Security and Medicare, and he must keep

0:02:00.320 --> 0:02:04.120
<v Speaker 1>defense spending on track or raise it. He said, the

0:02:04.200 --> 0:02:07.040
<v Speaker 1>new spending over the next decade will be ten times

0:02:07.120 --> 0:02:10.680
<v Speaker 1>larger than the new revenue. And as you say, there's

0:02:10.720 --> 0:02:13.320
<v Speaker 1>a political constraint there in the economic constraint. The political

0:02:13.360 --> 0:02:15.800
<v Speaker 1>constraint is people in his own party might not want

0:02:15.840 --> 0:02:18.040
<v Speaker 1>to go along with that. The economic constraint is that

0:02:18.080 --> 0:02:20.919
<v Speaker 1>the bond market vigilantes might not want to go along

0:02:20.960 --> 0:02:24.360
<v Speaker 1>with it. So we focus a lot on politics because

0:02:24.400 --> 0:02:26.280
<v Speaker 1>it's been an election, but I think we need to

0:02:26.280 --> 0:02:29.400
<v Speaker 1>look at finance and economics as well. I want to

0:02:29.400 --> 0:02:31.960
<v Speaker 1>look at the bond yield the tenure, Peter, because I

0:02:31.960 --> 0:02:34.000
<v Speaker 1>know you were interested in that as well. Right, two

0:02:34.040 --> 0:02:38.840
<v Speaker 1>point eight percent right now for the tenure. What does

0:02:38.960 --> 0:02:42.760
<v Speaker 1>that that sell off in the bond market tell you, Well,

0:02:42.840 --> 0:02:44.200
<v Speaker 1>you can need to look at the level and you

0:02:44.240 --> 0:02:47.200
<v Speaker 1>can look at the change. The level is still pretty moderate.

0:02:47.280 --> 0:02:50.399
<v Speaker 1>We're not talking about a high bond yield historically, it's

0:02:50.440 --> 0:02:53.880
<v Speaker 1>the change that matters. And it shot up the day

0:02:53.880 --> 0:02:57.280
<v Speaker 1>after the election. Yield shot up. The yield shot up noticeably.

0:02:57.360 --> 0:03:00.360
<v Speaker 1>No one wanted to own these ten years, right, and

0:03:00.440 --> 0:03:04.480
<v Speaker 1>so again you know, the Federal Reserve has been sort

0:03:04.520 --> 0:03:08.000
<v Speaker 1>of wanting to see inflation higher, and you know what

0:03:08.000 --> 0:03:12.440
<v Speaker 1>we're probably seeing here is higher inflation expectations being embedded

0:03:12.440 --> 0:03:16.320
<v Speaker 1>in the bond yield. So it's not a terrible thing.

0:03:17.520 --> 0:03:20.480
<v Speaker 1>It could be that people are betting that the tax

0:03:20.520 --> 0:03:23.960
<v Speaker 1>cuts will be stimulative towards the economy and raise inflation

0:03:24.000 --> 0:03:26.480
<v Speaker 1>a little bit. It could be an infrastructure spending which

0:03:26.480 --> 0:03:30.480
<v Speaker 1>would also be stimulative. So, uh, what we're seeing is

0:03:30.480 --> 0:03:32.840
<v Speaker 1>the bond market seeing, hey, this is a new game.

0:03:33.280 --> 0:03:38.160
<v Speaker 1>You know, one thing that you quoted from Donald Trump's book,

0:03:38.200 --> 0:03:40.160
<v Speaker 1>The Art of the Deal, is him saying I never

0:03:40.200 --> 0:03:43.600
<v Speaker 1>get too attached to one deal or one approach. I mean,

0:03:43.640 --> 0:03:45.960
<v Speaker 1>how much do we actually know about what he wants

0:03:46.000 --> 0:03:48.840
<v Speaker 1>to do? Um And is it matter more who he's

0:03:48.920 --> 0:03:53.360
<v Speaker 1>listening to with respect to getting economic advice? Yeah, I

0:03:54.080 --> 0:03:57.760
<v Speaker 1>think that he aside from making America great again, which

0:03:57.760 --> 0:04:00.040
<v Speaker 1>he's definitely committed to, I think a lot of the

0:04:00.080 --> 0:04:03.480
<v Speaker 1>details are ones that he'll play it by ear he'll

0:04:03.520 --> 0:04:07.160
<v Speaker 1>see what he can get through. Another quote from the

0:04:07.240 --> 0:04:09.840
<v Speaker 1>Art of the Deal is that he he tends to

0:04:10.240 --> 0:04:13.880
<v Speaker 1>aim high and then fight and then fall back. That's

0:04:13.920 --> 0:04:17.599
<v Speaker 1>the typical uh people some people do in real estate, right,

0:04:17.680 --> 0:04:20.440
<v Speaker 1>They asked for a lot, and they don't always get

0:04:20.480 --> 0:04:23.680
<v Speaker 1>what they want. So when he asked for this enormous

0:04:23.760 --> 0:04:26.680
<v Speaker 1>tax cut, he may fully intend to pull back and

0:04:26.720 --> 0:04:30.520
<v Speaker 1>accept a smaller tax cut. The dollar and the U. S.

0:04:30.560 --> 0:04:38.480
<v Speaker 1>Treasuries opposite directions is the greatest correlation since December. What

0:04:38.560 --> 0:04:40.120
<v Speaker 1>do you make of the fact that you've got this

0:04:40.320 --> 0:04:43.320
<v Speaker 1>major difference between people wanting to own the dollar and

0:04:43.360 --> 0:04:45.839
<v Speaker 1>people wanting to own US treasuries? Well, think about it.

0:04:46.120 --> 0:04:49.800
<v Speaker 1>Higher yields actually attract money into the the U. S.

0:04:49.800 --> 0:04:51.440
<v Speaker 1>A that's I think that might be what's going on

0:04:51.480 --> 0:04:55.000
<v Speaker 1>in the currency. Well, there's also the flip side of that,

0:04:55.040 --> 0:04:57.960
<v Speaker 1>which is the depreciation of some currencies that might be

0:04:58.360 --> 0:05:00.680
<v Speaker 1>of nations that might be negatively effect to dry a

0:05:00.720 --> 0:05:03.960
<v Speaker 1>newly h new new trade deals from the US. So

0:05:04.160 --> 0:05:05.920
<v Speaker 1>you've got a Mexican pay so moving quite a bit,

0:05:05.960 --> 0:05:08.279
<v Speaker 1>and you've got to you know, Europe with its own issues.

0:05:08.320 --> 0:05:11.440
<v Speaker 1>There's a lot of dynamic action behind there, and there

0:05:11.440 --> 0:05:13.120
<v Speaker 1>are a lot of people who are stepping back entirely

0:05:13.160 --> 0:05:15.000
<v Speaker 1>at this point in trying to wait and see how

0:05:15.040 --> 0:05:19.120
<v Speaker 1>that takes out. Peter koy Uh, us economy editor at Bloomberg,

0:05:19.160 --> 0:05:20.560
<v Speaker 1>thank you so much for being with us. It's really

0:05:20.600 --> 0:05:24.680
<v Speaker 1>fascinating to see the negotiations going forward and how this

0:05:24.720 --> 0:05:27.120
<v Speaker 1>will work um when you actually have to get to

0:05:27.160 --> 0:05:38.520
<v Speaker 1>the bottom line. One other place that is seeing some

0:05:38.680 --> 0:05:42.680
<v Speaker 1>big money and potentially even bigger money is the marijuana industry.

0:05:42.680 --> 0:05:45.240
<v Speaker 1>I want to bring in Rickford, CEO and executive chairman

0:05:45.279 --> 0:05:49.360
<v Speaker 1>of Pure Agro, which is a company that applies goods

0:05:49.400 --> 0:05:52.640
<v Speaker 1>to help with the growth of marijuana plans. This was

0:05:52.680 --> 0:05:55.080
<v Speaker 1>a big This was a big election for you, wasn't it.

0:05:55.080 --> 0:05:57.200
<v Speaker 1>It sure was. I want to clarify we're kind of

0:05:57.640 --> 0:06:00.479
<v Speaker 1>a picks and shovels play for what we're calling the rush.

0:06:00.640 --> 0:06:02.840
<v Speaker 1>So just like the Gold Rush, picks and Shovels were

0:06:02.839 --> 0:06:05.520
<v Speaker 1>the companies that made it, we feel we're picks and shovels.

0:06:05.560 --> 0:06:11.240
<v Speaker 1>We we just supply the equipment, nutrients, and typical farming products. So, um,

0:06:11.320 --> 0:06:15.080
<v Speaker 1>let's let's go over what happened on Tuesday. California voters

0:06:15.320 --> 0:06:19.120
<v Speaker 1>uh and those in Massachusetts, Nevada, and Florida North Dakota

0:06:19.480 --> 0:06:22.800
<v Speaker 1>all past some measures, whether it was medical marijuana or

0:06:23.040 --> 0:06:27.640
<v Speaker 1>also recreational marijuana, making it legal. How concerned are you

0:06:27.960 --> 0:06:33.680
<v Speaker 1>that this could get reversed with an anti drug Republican administration.

0:06:34.120 --> 0:06:37.680
<v Speaker 1>I think the Republicans have had a conservative platform on

0:06:37.760 --> 0:06:40.120
<v Speaker 1>states rights, and I think as long as they stick

0:06:40.160 --> 0:06:43.400
<v Speaker 1>to that platform and let the states do what they want,

0:06:43.560 --> 0:06:46.320
<v Speaker 1>which has historically been their platform, I think we're in

0:06:46.320 --> 0:06:50.680
<v Speaker 1>a good position. Now. You have been credited with creating

0:06:50.839 --> 0:06:55.080
<v Speaker 1>the first, uh, well the first in the country custom

0:06:55.120 --> 0:07:00.400
<v Speaker 1>platinum certified home when it comes to energy efficiency. Yeah.

0:07:00.480 --> 0:07:04.000
<v Speaker 1>My my background is environmental construction, so I built the

0:07:04.040 --> 0:07:07.640
<v Speaker 1>first Lead platinum home and helped the Lead rating system

0:07:07.680 --> 0:07:10.360
<v Speaker 1>in their progress into the residential market. All right. And

0:07:10.360 --> 0:07:12.239
<v Speaker 1>the reason I bring that up is because I'm curious

0:07:12.240 --> 0:07:14.200
<v Speaker 1>if you can give us an estimate for how much

0:07:14.400 --> 0:07:16.880
<v Speaker 1>energy And as you said, picks and shovels, it's not

0:07:16.960 --> 0:07:19.840
<v Speaker 1>just picks and shovels. It's all of the farming equipment,

0:07:19.840 --> 0:07:21.880
<v Speaker 1>but it's the energy also that it is taking off

0:07:21.920 --> 0:07:25.200
<v Speaker 1>the grid. If you, uh, let's say, just set aside

0:07:25.200 --> 0:07:29.480
<v Speaker 1>the legal issues of the marijuana industry, what kind of

0:07:29.880 --> 0:07:33.080
<v Speaker 1>energy consumption is are we talking about? You know, it's

0:07:33.080 --> 0:07:35.920
<v Speaker 1>hard to put a dollar amount or a percentage because

0:07:35.920 --> 0:07:38.040
<v Speaker 1>I don't have the data from the growers, but I'll

0:07:38.080 --> 0:07:39.960
<v Speaker 1>tell you it's a big line item for them. And

0:07:40.400 --> 0:07:43.360
<v Speaker 1>actually the marijuana industry is what's fueling the R and

0:07:43.440 --> 0:07:47.640
<v Speaker 1>D for these lighting manufacturers and such to bring down

0:07:47.680 --> 0:07:49.760
<v Speaker 1>the cost of it. And as we see in Colorado,

0:07:50.200 --> 0:07:53.040
<v Speaker 1>the price of cannabis has been dropping due to the

0:07:53.080 --> 0:07:57.680
<v Speaker 1>recreational that's forcing these guys to look at their P

0:07:57.880 --> 0:08:01.160
<v Speaker 1>and l's and actually pull up. Are there specific companies

0:08:01.280 --> 0:08:05.760
<v Speaker 1>or technologies that you can point to that are being developed. Yeah,

0:08:05.800 --> 0:08:07.640
<v Speaker 1>there's a lot of technology, and I think we're seeing

0:08:07.640 --> 0:08:09.480
<v Speaker 1>in L e D. L E D really hasn't been

0:08:09.520 --> 0:08:12.880
<v Speaker 1>able to break into the cannabis market yet, but what

0:08:13.000 --> 0:08:15.000
<v Speaker 1>I see on the horizon, I think it will be

0:08:15.320 --> 0:08:18.920
<v Speaker 1>so one thing that pure predicts is that the legal

0:08:18.960 --> 0:08:22.640
<v Speaker 1>marijuana industry will grow to be a fifty billion dollar industry.

0:08:22.680 --> 0:08:25.880
<v Speaker 1>By what has to happen for that to happen? Right now?

0:08:26.080 --> 0:08:28.960
<v Speaker 1>You askedimate that is about a six billion dollars. Yeah,

0:08:29.040 --> 0:08:31.040
<v Speaker 1>I really think that we're seeing it happen with what

0:08:31.360 --> 0:08:33.920
<v Speaker 1>you just said about these votes. I mean, Florida going

0:08:34.000 --> 0:08:37.480
<v Speaker 1>medical is just huge. That once again, that's a Florida

0:08:37.559 --> 0:08:42.520
<v Speaker 1>passing the bill legalizing medical marijuana exactly, and then California

0:08:42.559 --> 0:08:47.160
<v Speaker 1>going recreational. So California, by a couple of estimates, represents

0:08:47.160 --> 0:08:49.920
<v Speaker 1>either sixty two or eighty two percent of the totals

0:08:49.960 --> 0:08:52.840
<v Speaker 1>country country's cannabis markets. So when you look at it

0:08:52.880 --> 0:08:56.640
<v Speaker 1>like that, just California alone could throw a big chunk

0:08:57.640 --> 0:08:59.680
<v Speaker 1>of the number you just quoted. Yeah, I love him.

0:08:59.800 --> 0:09:03.080
<v Speaker 1>I love that every industry has their uh lingo and

0:09:03.120 --> 0:09:07.199
<v Speaker 1>that this is going medical or going or going recreational.

0:09:07.240 --> 0:09:10.600
<v Speaker 1>I love it the different expressions that come up. Um,

0:09:10.760 --> 0:09:14.120
<v Speaker 1>how about going just to run down some of the initiatives, right,

0:09:14.120 --> 0:09:19.839
<v Speaker 1>because Massachusetts approved voted for recreational marijuana. Also extending a

0:09:19.920 --> 0:09:23.679
<v Speaker 1>legal marijuana that makes it a coast to coast situation,

0:09:23.720 --> 0:09:27.439
<v Speaker 1>doesn't it? It It sure does. So there are still those

0:09:27.559 --> 0:09:30.160
<v Speaker 1>that oppose this or that are sort of trying to

0:09:30.200 --> 0:09:33.920
<v Speaker 1>get court orders to halt some of the bills from

0:09:33.920 --> 0:09:38.760
<v Speaker 1>getting implemented or for allowing people to exercise their new rights. Um,

0:09:38.760 --> 0:09:41.480
<v Speaker 1>basically before there's a social study to look at whether

0:09:41.520 --> 0:09:46.560
<v Speaker 1>this does have a bad effect on social fabric. Um,

0:09:46.800 --> 0:09:49.600
<v Speaker 1>How concerned are you about that kind of activity? Well,

0:09:49.640 --> 0:09:53.199
<v Speaker 1>since you know, my company owns the largest player in Colorado,

0:09:53.240 --> 0:09:55.960
<v Speaker 1>and Colorado was really the social experiment. So what we're

0:09:55.960 --> 0:09:59.480
<v Speaker 1>seeing with Colorado is that they love the tax revenue.

0:09:59.760 --> 0:10:04.599
<v Speaker 1>There is no other consumption of other drugs, that gateway

0:10:04.720 --> 0:10:07.720
<v Speaker 1>drugs sort of mentality. I think that's been put to rest.

0:10:08.360 --> 0:10:12.480
<v Speaker 1>And um, I feel that Colorado, since they've already done it,

0:10:12.520 --> 0:10:15.120
<v Speaker 1>we'll see the same thing happened in California. We'll see

0:10:15.120 --> 0:10:19.920
<v Speaker 1>public opinion be very high after the recreational passes real quick.

0:10:19.920 --> 0:10:23.679
<v Speaker 1>Which state do you think is next to legalize marijuana? Wow? Um,

0:10:23.720 --> 0:10:27.200
<v Speaker 1>I'd like to see New York. Is that where you're from?

0:10:28.000 --> 0:10:30.640
<v Speaker 1>I'm bi coastal Ah, thank you so much for being

0:10:30.640 --> 0:10:33.840
<v Speaker 1>with us, Rick Bird a fascinating time for the marijuana industry. Rickbird,

0:10:34.000 --> 0:10:37.600
<v Speaker 1>CEO and executive chairman chairman of Pure Agro. On the

0:10:37.720 --> 0:10:41.920
<v Speaker 1>marijuana business, thank you grow to be fifty billion dollars

0:10:42.040 --> 0:10:45.200
<v Speaker 1>in the next ten years. Definitely a big industry, Definitely

0:10:45.280 --> 0:10:48.120
<v Speaker 1>something to watch, and I know anecdotally speaking too many

0:10:48.120 --> 0:10:50.320
<v Speaker 1>traders out there, that it is something that they're watching

0:10:50.360 --> 0:10:53.880
<v Speaker 1>as a potential profit boon and something to to bet on.

0:10:53.920 --> 0:10:56.240
<v Speaker 1>So it'll be interesting to see how they do that

0:10:56.280 --> 0:10:58.560
<v Speaker 1>with the picks and Shovel's type of play or not.

0:10:58.800 --> 0:11:11.400
<v Speaker 1>This is Bloomer all right, Let's solve the issue of

0:11:11.679 --> 0:11:16.160
<v Speaker 1>retail sales with an expert our own Punam Goyle, senior

0:11:16.320 --> 0:11:20.559
<v Speaker 1>US retail analyst for Bloomberg Intelligence. Put them, where do

0:11:20.600 --> 0:11:22.520
<v Speaker 1>you want to start? You want to start with Macy's

0:11:22.520 --> 0:11:24.480
<v Speaker 1>and Coals and then I know we get Nordstrom's after

0:11:24.520 --> 0:11:27.160
<v Speaker 1>the close today. Yeah, sure, we can start with Macy's.

0:11:27.160 --> 0:11:29.840
<v Speaker 1>I guess that's the largest department store, so let's start there.

0:11:30.200 --> 0:11:32.400
<v Speaker 1>I think you know, overall in the department store channel,

0:11:32.440 --> 0:11:34.520
<v Speaker 1>you're seeing the stocks rise the last I checked high

0:11:34.520 --> 0:11:37.920
<v Speaker 1>single digits, and that strength is coming from the sales

0:11:37.960 --> 0:11:40.800
<v Speaker 1>warrant that bad. I mean, that's really it. They were

0:11:40.800 --> 0:11:44.000
<v Speaker 1>still but they weren't that bad, so I think the

0:11:44.040 --> 0:11:47.679
<v Speaker 1>optimism really comes from their coals. Was a big surprise. Um,

0:11:47.720 --> 0:11:50.640
<v Speaker 1>they actually beat by ten cents UM, which is a

0:11:50.679 --> 0:11:53.960
<v Speaker 1>big number. Sales they missed a little. The beat was

0:11:54.360 --> 0:11:58.360
<v Speaker 1>entirely on better expense management. So very good numbers out

0:11:58.360 --> 0:12:01.040
<v Speaker 1>of colds. On Macy's, the numbers were weaker, but the

0:12:01.120 --> 0:12:04.720
<v Speaker 1>guidance was better. Um. They expect same stert sales to

0:12:04.800 --> 0:12:08.439
<v Speaker 1>be less negative UM for the year, which is good

0:12:08.480 --> 0:12:12.160
<v Speaker 1>for the fourth quarter. So what's behind the less negative outlook,

0:12:12.160 --> 0:12:14.240
<v Speaker 1>which is, by the way, so encouraging. I mean, it

0:12:14.280 --> 0:12:16.000
<v Speaker 1>makes it makes me just want to run out and

0:12:16.040 --> 0:12:19.880
<v Speaker 1>buy something. Uh, what's behind it? It's all about inventory.

0:12:19.960 --> 0:12:24.040
<v Speaker 1>It's all about inventory management. Retailers have been really in

0:12:24.120 --> 0:12:27.480
<v Speaker 1>the spiral of you know, too much inventory, have to

0:12:27.559 --> 0:12:31.000
<v Speaker 1>discount um reduce the sales. And at the end of

0:12:31.000 --> 0:12:33.840
<v Speaker 1>the second quarter they were lean on inventory. They maintained

0:12:33.920 --> 0:12:37.480
<v Speaker 1>that inventory discipline. They're continuing to pull back orders from

0:12:37.520 --> 0:12:41.040
<v Speaker 1>wholesale and that's helping their margins and it's allowing them

0:12:41.080 --> 0:12:45.680
<v Speaker 1>to discount less. So that's really the magic behind why

0:12:45.760 --> 0:12:49.319
<v Speaker 1>things are less bad. Traffic is still down, so that

0:12:49.320 --> 0:12:51.120
<v Speaker 1>that continues to be the case. Do you think that

0:12:51.160 --> 0:12:52.840
<v Speaker 1>this is worth it? I mean, I'm looking at Macy's

0:12:52.880 --> 0:12:57.520
<v Speaker 1>shares and they're up eight percent. Well, I just I'm just,

0:12:57.679 --> 0:12:59.560
<v Speaker 1>you know, like I got to hear, I mean put

0:12:59.559 --> 0:13:02.360
<v Speaker 1>I was saying, well, here, they're basically less bad. Let

0:13:02.360 --> 0:13:04.200
<v Speaker 1>me let me add to this. Let me let me

0:13:04.240 --> 0:13:06.560
<v Speaker 1>add to this. This is the seventh consecutive quarter in

0:13:06.600 --> 0:13:11.000
<v Speaker 1>which sales and profits have both declined. Correct, Um, Macy's

0:13:11.120 --> 0:13:15.439
<v Speaker 1>made I love this zero point two cents for every

0:13:15.520 --> 0:13:19.240
<v Speaker 1>dollar it took in in revenue, adding to the math.

0:13:19.240 --> 0:13:21.920
<v Speaker 1>But I assume you're right, right, Okay, but you can't

0:13:21.920 --> 0:13:24.320
<v Speaker 1>do that for very long, can you? No? You know,

0:13:24.640 --> 0:13:27.760
<v Speaker 1>I think that's the problem for retail though. Right in general,

0:13:27.800 --> 0:13:32.400
<v Speaker 1>we're in this position where consumers are not going to stores,

0:13:32.559 --> 0:13:35.160
<v Speaker 1>and if they are, they're choosing one and how and

0:13:35.200 --> 0:13:38.599
<v Speaker 1>where they shop. They're shopping more online. So these retailers,

0:13:38.640 --> 0:13:42.079
<v Speaker 1>by nature have to evolve. And Macy's today said something

0:13:42.120 --> 0:13:46.240
<v Speaker 1>about that they hired m Brookfield Brookfield Asset Management because

0:13:46.280 --> 0:13:48.480
<v Speaker 1>that they got a big base of real estate, right,

0:13:48.520 --> 0:13:51.040
<v Speaker 1>I mean, they got that Union Square store in San Francisco,

0:13:51.080 --> 0:13:54.560
<v Speaker 1>for example, two and fifty million dollars. Yeah, but you know,

0:13:54.600 --> 0:13:56.320
<v Speaker 1>Hall Square is still on the table, and that's what

0:13:56.360 --> 0:13:59.280
<v Speaker 1>everyone's dying for. So I think they're taking baby steps

0:13:59.280 --> 0:14:01.600
<v Speaker 1>on their real estate. Eight. But when the Herald Square

0:14:01.679 --> 0:14:04.120
<v Speaker 1>deal strikes, what it is, um, you know, what do

0:14:04.160 --> 0:14:05.439
<v Speaker 1>you think that's going to look like? Can you give

0:14:05.480 --> 0:14:08.000
<v Speaker 1>us some idea of the shape? So I think it's

0:14:08.000 --> 0:14:10.000
<v Speaker 1>going to be the last one that they do, because

0:14:10.040 --> 0:14:12.120
<v Speaker 1>it is the largest and the most complex. This is

0:14:12.160 --> 0:14:14.400
<v Speaker 1>for the New York City flaship, for the New York

0:14:14.440 --> 0:14:19.560
<v Speaker 1>City Harald Square, the you know, the iconic Macy store. Um.

0:14:19.600 --> 0:14:22.640
<v Speaker 1>It's valued at four billion dollars from Starboard. That's what

0:14:22.680 --> 0:14:25.640
<v Speaker 1>it was valued at in January. So that's the big deal.

0:14:26.120 --> 0:14:29.480
<v Speaker 1>And when that happens, who knows, But I think it'll

0:14:29.520 --> 0:14:31.920
<v Speaker 1>be the last. They're kind of just scratching the surface

0:14:31.960 --> 0:14:36.200
<v Speaker 1>pleasing investors by making these baby sales. Um. But that's

0:14:36.200 --> 0:14:39.040
<v Speaker 1>what everyone's waiting for for Macy's. I'm looking at Nordstrom

0:14:39.080 --> 0:14:41.920
<v Speaker 1>shares at Nordstrom Reports after the bell today and they're

0:14:42.000 --> 0:14:45.680
<v Speaker 1>up about almost the exact same amount is macy shares

0:14:45.680 --> 0:14:49.480
<v Speaker 1>More than eight percent UM. Why I mean, I think

0:14:49.480 --> 0:14:52.760
<v Speaker 1>everyone's just expecting less negative news, but probably more positive

0:14:52.760 --> 0:14:56.720
<v Speaker 1>from Nordstrom. So Nordstrom wasn't really supposed to follow the

0:14:56.760 --> 0:14:59.640
<v Speaker 1>weakness that we had expected originally from Macy's and Coals

0:14:59.680 --> 0:15:02.480
<v Speaker 1>because had an anniversary sales shift. So if you recall

0:15:02.520 --> 0:15:05.360
<v Speaker 1>their anniversary sale that they have every year, a week

0:15:05.400 --> 0:15:08.240
<v Speaker 1>of that moved from the second quarter into the third quarter,

0:15:08.720 --> 0:15:11.080
<v Speaker 1>and that was supposed to help nord Storms results. We

0:15:11.120 --> 0:15:13.880
<v Speaker 1>expected to help nord Storms results. But just by seeing

0:15:14.160 --> 0:15:16.280
<v Speaker 1>UM better numbers out of Macy's and Cold, I think

0:15:16.320 --> 0:15:18.880
<v Speaker 1>the market in general is more positive on the department

0:15:18.920 --> 0:15:22.160
<v Speaker 1>stores could have. Could the better better than expected numbers

0:15:22.200 --> 0:15:24.960
<v Speaker 1>have anything to do with a stronger economy than many

0:15:25.200 --> 0:15:27.840
<v Speaker 1>UH analysts were expecting, You know, I don't think there's

0:15:27.960 --> 0:15:30.040
<v Speaker 1>much that has changed and the economy. If you look

0:15:30.080 --> 0:15:33.160
<v Speaker 1>at the third quarter, macy cited very good back to

0:15:33.240 --> 0:15:36.400
<v Speaker 1>school and so did Colds, so I think that's encouraging.

0:15:36.520 --> 0:15:38.960
<v Speaker 1>But things ZiT soften in September and then we're kind

0:15:38.960 --> 0:15:42.480
<v Speaker 1>of flatish in October. So I'd say less to do

0:15:42.560 --> 0:15:45.400
<v Speaker 1>the economy, more to do with maybe tourism for Macy's,

0:15:45.760 --> 0:15:48.200
<v Speaker 1>UM they had a hundred two hundred and fifty basis

0:15:48.200 --> 0:15:52.440
<v Speaker 1>point impact from tourism and most of the last eighteen months,

0:15:52.520 --> 0:15:56.080
<v Speaker 1>and now tourism sales are just in line with their comps.

0:15:56.120 --> 0:15:59.760
<v Speaker 1>So that's helping Macy's too. J C. Penny, they will

0:15:59.800 --> 0:16:03.080
<v Speaker 1>be reporting of results tomorrow and the stock is up

0:16:03.120 --> 0:16:05.360
<v Speaker 1>more than eight and a half percent today. What's the

0:16:05.440 --> 0:16:08.360
<v Speaker 1>j C. Penny turnaround story looking like it's you know,

0:16:08.400 --> 0:16:10.600
<v Speaker 1>it's on its way to a turnaround. It's proven it um.

0:16:10.720 --> 0:16:13.400
<v Speaker 1>We expect no different tomorrow results where it's going to

0:16:13.440 --> 0:16:15.880
<v Speaker 1>be better than Macy's and Coals And now it just

0:16:16.000 --> 0:16:18.160
<v Speaker 1>reinforces if they didn't do that bad, they probably did

0:16:18.280 --> 0:16:23.440
<v Speaker 1>even better. Appliances focused on home, private label Sephora. I mean,

0:16:23.480 --> 0:16:26.880
<v Speaker 1>those are all positives for the company. The company probably

0:16:27.400 --> 0:16:29.760
<v Speaker 1>will not or will take a long time to go

0:16:29.840 --> 0:16:32.400
<v Speaker 1>back to seventeen billion dollars in sales. It's right now

0:16:32.400 --> 0:16:36.720
<v Speaker 1>at under thirteen billion UM. But it's growing and its

0:16:36.760 --> 0:16:40.960
<v Speaker 1>stores look better. It's digital platform is improving. They're making

0:16:41.000 --> 0:16:44.680
<v Speaker 1>all the right steps to differentiate. Marvin Allison is really

0:16:44.680 --> 0:16:47.000
<v Speaker 1>pulling this one out. He is. He's doing a good job.

0:16:47.040 --> 0:16:50.520
<v Speaker 1>He's differentiating the department store. Well, you know, you talked

0:16:51.800 --> 0:16:55.200
<v Speaker 1>just general about the online presence. I mean, how much

0:16:55.360 --> 0:17:00.160
<v Speaker 1>you learning given Coals and UH and Macy's earnings today,

0:17:00.200 --> 0:17:02.160
<v Speaker 1>how much have you learned about the progress they've made

0:17:02.160 --> 0:17:04.399
<v Speaker 1>on that front. I think they've all made a lot

0:17:04.480 --> 0:17:08.240
<v Speaker 1>of progress. But online still isn't the bulk of their sales.

0:17:08.640 --> 0:17:11.199
<v Speaker 1>Does it need to be? It probably will have to

0:17:11.240 --> 0:17:13.399
<v Speaker 1>be at some point as a closed store. So you know,

0:17:13.440 --> 0:17:16.080
<v Speaker 1>we've been calling that stores need to close. Macy's announced

0:17:16.080 --> 0:17:18.399
<v Speaker 1>a hundred for next year, but a hundred out of

0:17:18.400 --> 0:17:21.480
<v Speaker 1>seven hundred some odd store macy stores is still too

0:17:21.520 --> 0:17:24.280
<v Speaker 1>many stores. There's about four hundred to six hundred a

0:17:24.400 --> 0:17:26.119
<v Speaker 1>b malls, the malls that you want to be in,

0:17:26.600 --> 0:17:29.000
<v Speaker 1>and UM, do they need to be in more than that?

0:17:29.000 --> 0:17:32.480
<v Speaker 1>That's the question. So will online grow to be more

0:17:32.520 --> 0:17:35.560
<v Speaker 1>than just ten percent of retail sales? Absolutely, At some

0:17:35.600 --> 0:17:40.840
<v Speaker 1>specialty apparel retailers anywhere from UM department stores I think

0:17:40.840 --> 0:17:43.680
<v Speaker 1>are still scratching in the low double digits. So there

0:17:43.840 --> 0:17:47.240
<v Speaker 1>is more opportunity there. Buy online, pickup in store has

0:17:47.280 --> 0:17:50.520
<v Speaker 1>great attachment rates. That's helping them. That's a plus for

0:17:50.600 --> 0:17:54.000
<v Speaker 1>them when they compete against Amazon. That doesn't have those locations,

0:17:54.480 --> 0:17:57.199
<v Speaker 1>but we should see fewer stories down the line, if

0:17:57.240 --> 0:18:00.119
<v Speaker 1>not few or at least smaller stores. Smaller store for

0:18:00.200 --> 0:18:02.800
<v Speaker 1>Macy's indeed. And we're also going to be getting Walmart

0:18:02.840 --> 0:18:07.440
<v Speaker 1>results next a week actually from today right Walmart, this

0:18:07.520 --> 0:18:14.919
<v Speaker 1>stock is up so far this year. Thanks for listening

0:18:14.920 --> 0:18:18.000
<v Speaker 1>to the Bloomberg pien L podcast. You can subscribe and

0:18:18.080 --> 0:18:23.080
<v Speaker 1>listen to interviews at iTunes, SoundCloud, or whatever podcast platform

0:18:23.240 --> 0:18:25.960
<v Speaker 1>you prefer. I'm pim Fox. I'm out there on Twitter

0:18:26.080 --> 0:18:29.760
<v Speaker 1>at pim Fox. I'm out there on Twitter at Lisa Abramo.

0:18:29.880 --> 0:18:32.479
<v Speaker 1>It's one before the podcast. You can always catch us

0:18:32.600 --> 0:18:34.160
<v Speaker 1>worldwide on Bloomberg Radio