WEBVTT - Ukraine Fires UK Cruise Missiles, Target Earnings 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.240 --> 0:00:12.119 You're listening to the Bloomberg Intelligence Podcast. Catch us Live 0:00:12.200 --> 0:00:14.920 weekdays at ten am Eastern on Apple card Playing and 0:00:15.040 --> 0:00:17.919 Broid Auto with the Bloomberg Business App. Listen on demand 0:00:17.960 --> 0:00:22.040 wherever you get your podcasts, or watch us live on YouTube. 0:00:22.880 --> 0:00:24.919 All right, let's get to some geopolitical headlines that have 0:00:25.000 --> 0:00:29.360 definitely been moving the equity market. Ukraine firing UK Stormshadow 0:00:29.400 --> 0:00:32.480 missiles into Russia. That's according to an official Hesblah also 0:00:32.520 --> 0:00:34.240 saying that they are going to stay on the battlefield 0:00:34.280 --> 0:00:36.800 no matter what. And we do see the Nasdaq around 0:00:36.840 --> 0:00:38.960 down by one percent. We're now around the loads of 0:00:38.960 --> 0:00:41.360 the session when it comes to the equity market. Roz Mathison, 0:00:41.360 --> 0:00:45.560 Bloomberg News director for Your Middle East and Africa, joins us. Now, Roz, 0:00:45.600 --> 0:00:49.400 this doesn't tell me or push me towards some kind 0:00:49.440 --> 0:00:52.879 of negotiating table that we're all expecting to happen in 0:00:52.880 --> 0:00:54.080 the first quarter of next year. 0:00:55.880 --> 0:00:59.600 Well, in a way, I think escalating between Russia and Ukraine. 0:01:00.120 --> 0:01:03.840 Got the news that they use UK made storm Shadow missiles. 0:01:03.880 --> 0:01:07.920 It seems to strike just over the border inside Russia. 0:01:07.959 --> 0:01:11.000 That's after the use of the US attacking missiles to 0:01:11.000 --> 0:01:14.640 strike just over the border into Russia, so in the 0:01:14.640 --> 0:01:17.240 conflict zone in a way, a couple of one hundred 0:01:17.280 --> 0:01:20.679 miles at most across the border. But this all is 0:01:20.720 --> 0:01:22.919 in the realm of the idea of them both positioning. 0:01:23.280 --> 0:01:26.800 Russia trying to advance as much as possible inside Ukraine, 0:01:26.959 --> 0:01:30.680 Ukraine trying to hold on to as much land inside 0:01:30.760 --> 0:01:34.200 Russia that it's got as a negotiating tool, because we are, 0:01:34.560 --> 0:01:38.640 it seems, heading towards some kind of negotiating negotiating at 0:01:38.680 --> 0:01:42.440 some point early potentially in the next year. The incoming 0:01:43.040 --> 0:01:45.520 US President Donald Trump has made it clear that he 0:01:45.640 --> 0:01:47.640 wants this war to come to an end or he 0:01:47.680 --> 0:01:51.360 wants some kind of ceasefire to be negotiated, and he 0:01:51.400 --> 0:01:54.360 doesn't want to continue to send military and financial aid 0:01:54.840 --> 0:01:57.120 to Ukraine's there's a front running of a lot of 0:01:57.200 --> 0:02:00.080 aid to Ukraine that we're seeing at the moment, and 0:02:00.120 --> 0:02:03.040 again both Ukraine and Russia trying to position themselves the 0:02:03.040 --> 0:02:06.000 best they can for getting to the table. 0:02:06.600 --> 0:02:08.880 Ros We had a guest on earlier this morning who 0:02:08.960 --> 0:02:11.560 characterized the war in Ukraine is one in which Ukraine 0:02:11.840 --> 0:02:15.520 is losing slowly every single day, is that of you 0:02:15.639 --> 0:02:19.880 held by folks, you know, in the business of really 0:02:19.919 --> 0:02:20.919 thinking about these things. 0:02:22.160 --> 0:02:24.280 Well, it's definitely a concern. You can hear it in 0:02:24.320 --> 0:02:27.840 some of Ukraine's strongest allies that what they're were saying 0:02:27.880 --> 0:02:31.960 privately to themselves and each other, they're now saying more publicly, 0:02:32.160 --> 0:02:35.120 which is that, you know, the grinding war that's been 0:02:35.160 --> 0:02:38.360 going on for years now, and it's not just about 0:02:38.520 --> 0:02:41.320 you know, whether they've got access to long range missiles 0:02:41.720 --> 0:02:43.760 and sort of high tech kit, but it's also the 0:02:43.800 --> 0:02:47.160 reality that Ukraine is suffering very badly from a shortage 0:02:47.200 --> 0:02:49.600 of manpower. I mean, Russia has lost a lot of 0:02:49.960 --> 0:02:52.639 soldiers on the battlefield, but so is Ukraine, and with 0:02:52.880 --> 0:02:56.800 fewer met with less manpower to hand, and so a 0:02:56.840 --> 0:03:01.079 real concern is that Ukraine is slowly, slowly losing the 0:03:01.080 --> 0:03:05.359 fight and Russia is slowly, slowly increasing its hold on territory. 0:03:05.520 --> 0:03:08.639 And so, you know, bit by bit is Ukraine weakening 0:03:08.680 --> 0:03:11.640 its position to negotiate again. That's why there seems to 0:03:11.639 --> 0:03:14.240 be this push suddenly to get it into a stronger 0:03:14.280 --> 0:03:15.240 position to do so. 0:03:15.840 --> 0:03:18.720 I was reading a Bloomberg opinion piece by James Ravitas 0:03:18.919 --> 0:03:21.480 earlier today. He's an opinion columnist, but also retired you 0:03:21.520 --> 0:03:25.200 as maybe admiral and former Supreme Allied Commander of NIDO. 0:03:25.280 --> 0:03:27.919 And he's like, look, the solution is you just drop 0:03:27.919 --> 0:03:30.840 where you are right now and create a demilitarized zone 0:03:30.880 --> 0:03:33.040 like North Korea and South Korea have and that you 0:03:33.120 --> 0:03:35.200 just have what you have, and then there's this area 0:03:35.520 --> 0:03:38.800 that's going to be neutral. Is that something that could 0:03:38.840 --> 0:03:41.680 be palatable on negotiating table. 0:03:43.040 --> 0:03:44.920 Well, in a way, it's an extension of what we've 0:03:44.960 --> 0:03:48.200 got already or had already in Ukraine, because of course 0:03:48.240 --> 0:03:51.840 we have this area in Danesque in so the south 0:03:51.880 --> 0:03:54.880 and east of Ukraine. That's been a version of a 0:03:54.920 --> 0:03:58.840 line of control between Russia and Ukraine since twenty fourteen, 0:03:58.880 --> 0:04:02.040 and certainly with the addexation of Crimea as part of that, 0:04:02.160 --> 0:04:05.480 and it's been a low level conflict for years since 0:04:05.480 --> 0:04:10.080 twenty fourteen, and obviously a full blown invasion since twenty 0:04:10.120 --> 0:04:12.760 twenty two. And so do we revert to a version 0:04:12.800 --> 0:04:15.760 of that, but with Russia controlling more territory And it's 0:04:15.840 --> 0:04:19.000 clear that in any settlement Russia would want to control 0:04:19.080 --> 0:04:23.520 a lot more territory than it already did. Essentially inside Ukraine, 0:04:23.760 --> 0:04:26.719 and so really how much of that is palatable for 0:04:26.839 --> 0:04:29.320 Ukraine or how much choice does Ukraine end up having 0:04:29.920 --> 0:04:31.920 in that? And so you freeze the conflict. You don't 0:04:32.000 --> 0:04:33.760 end it, but you freeze it. And so obviously the 0:04:33.800 --> 0:04:36.479 question is just Russia then go back, regroup, re and 0:04:36.520 --> 0:04:39.200 come back again for something more exactly. 0:04:39.240 --> 0:04:40.719 All right, Ros, thank you so much for joining us. 0:04:40.760 --> 0:04:43.520 Russ Mathison news director for you in the Middle East 0:04:43.520 --> 0:04:46.200 and Africa for Bloomberg News. She is based in London, 0:04:46.240 --> 0:04:49.360 joining us vias IM getting the latest on the conflict 0:04:49.680 --> 0:04:50.440 in Ukraine. 0:04:51.880 --> 0:04:55.760 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:04:55.880 --> 0:04:59.360 weekdays at ten am Eastern on applecar Play and right 0:04:59.400 --> 0:05:02.560 Otto with Bloomberg Business Act. You can also listen live 0:05:02.680 --> 0:05:05.839 on Amazon Alexa from our flagship New York station Just 0:05:05.920 --> 0:05:08.560 Say Alexa playing Bloomberg eleven thirty. 0:05:09.400 --> 0:05:11.120 Well, Alex, you al alongside pause. We need this a 0:05:11.160 --> 0:05:14.200 Boomberg Intelligence Radio. We're broadcasting to live from our Inductor 0:05:14.240 --> 0:05:18.000 Broker studio right here in Midtown Manhattan. Also check us 0:05:18.040 --> 0:05:21.599 out on YouTube. So the big event today obviously is 0:05:21.640 --> 0:05:24.320 going to be in Vidia reporting after the Bell for twenty. 0:05:24.440 --> 0:05:25.800 It's going to be a moment and as that one 0:05:25.880 --> 0:05:28.640 hundred dropping over one percent ahead of that. But what's 0:05:28.680 --> 0:05:31.200 making a lot of headlines is the option implied move, 0:05:31.760 --> 0:05:34.040 particularly if you look at potentially an eight percent move 0:05:34.080 --> 0:05:36.480 to the upper the downside, which we've been reporting can 0:05:36.520 --> 0:05:38.960 translate into three hundred billion dollars worth of market cap 0:05:39.000 --> 0:05:41.840 to the upper downside. That's pretty tremendous. So let's get 0:05:41.839 --> 0:05:44.839 some take here with Shelby McFadden investment analyst and Motley 0:05:44.839 --> 0:05:48.039 Fool asset Management. So, Shelby, how do you play in video, 0:05:48.120 --> 0:05:50.280 whether that's in Vidia specifically or is it going to 0:05:50.360 --> 0:05:52.280 be an offshoot? How do you play the next twenty 0:05:52.279 --> 0:05:52.880 four hours? 0:05:54.640 --> 0:05:57.000 Well, when we think about the long term and active management, 0:05:57.000 --> 0:05:59.320 the way we play it is we kind of sit tight, 0:05:59.360 --> 0:06:01.200 We wait for things to roll out, and then we 0:06:01.200 --> 0:06:02.880 go ahead and adjust based off of what we get 0:06:02.880 --> 0:06:05.320 from there, because really we're not in the business of 0:06:05.400 --> 0:06:07.719 trading per se. We're really in this sort of long 0:06:07.800 --> 0:06:09.839 term investing, So you have to sort of wait and 0:06:09.880 --> 0:06:12.080 see not just how the performance was for the last quarter, 0:06:12.320 --> 0:06:14.400 but get a read on the outlook. I think that's 0:06:14.440 --> 0:06:16.320 going to be what a lot of investors are looking for, 0:06:16.520 --> 0:06:18.479 and then we sort of take that back to the models, 0:06:18.480 --> 0:06:20.680 we take that back to the allocation meetings, and we 0:06:20.760 --> 0:06:24.000 decide what effect, if any, it has on our current 0:06:24.000 --> 0:06:26.680 allocations and how we're thinking about the macro environment. So 0:06:26.920 --> 0:06:30.480 I think it's unfortunately that non answer of there's really 0:06:30.520 --> 0:06:33.120 not a way to play it that's not speculation. 0:06:33.920 --> 0:06:37.159 So where do you have high conviction areas? And or 0:06:37.160 --> 0:06:40.880 what are sectors that where you have high conviction areas today? 0:06:42.760 --> 0:06:44.799 Yeah, you know, we sort of being a bottom up team, 0:06:45.040 --> 0:06:49.320 we don't necessarily pick anyone sector or vertical. But something 0:06:49.360 --> 0:06:51.880 that's surprisingly been more exciting and doing a little bit 0:06:51.920 --> 0:06:55.839 well is advertising and advertising related type of companies, despite 0:06:55.920 --> 0:06:59.080 how related they are to the consumer space. So that's 0:06:59.080 --> 0:07:01.840 something that's been thriving in the portfolio, as well as 0:07:01.880 --> 0:07:04.839 payment networks. And then we're actually sort of reinvigorating some 0:07:04.920 --> 0:07:08.760 interest in medtech and biotech, not just because of the election, 0:07:08.960 --> 0:07:12.000 but because small cap med and biotech has been something 0:07:12.000 --> 0:07:14.000 that's been pretty interesting to a lot of our pms, 0:07:14.000 --> 0:07:16.400 and we've had some decent success across the portfolio there. 0:07:16.480 --> 0:07:17.400 What do you do with retail? 0:07:17.480 --> 0:07:17.600 Right? 0:07:17.640 --> 0:07:20.560 You got Walmart yesterday, Target just getting wiped out today 0:07:20.600 --> 0:07:23.080 and then you have Williams Sonoma up like twenty five percent. 0:07:24.800 --> 0:07:26.600 Yeah, retail is an interesting story, and I think it 0:07:26.680 --> 0:07:29.480 actually makes a pitch for active management because that example 0:07:29.520 --> 0:07:31.280 that you just made is how are all three of 0:07:31.320 --> 0:07:34.040 these so different. You've got three very different stores, but 0:07:34.080 --> 0:07:36.120 at the same time, you've got Target almost sitting in 0:07:36.160 --> 0:07:37.960 the middle of the two of them. So you've got 0:07:38.000 --> 0:07:40.320 Williams Sonoma where it's this place where you get a 0:07:40.320 --> 0:07:43.800 premium customer and they tend to face a lot less 0:07:43.800 --> 0:07:47.040 income elasticity, so they're a little bit sticky. Then you've 0:07:47.080 --> 0:07:50.040 got Walmart that is capturing not only their main customer base, 0:07:50.080 --> 0:07:52.280 but some of those Williams and Nooma customers who might 0:07:52.320 --> 0:07:55.000 be purchasing their actual bake weares from one place and 0:07:55.040 --> 0:07:59.560 getting ingredients other small things from Walmart. And then you've 0:07:59.600 --> 0:08:01.240 got Target kind of sitting in the middle where they're 0:08:01.240 --> 0:08:03.720 trying to figure out their value proposition. And so the 0:08:03.800 --> 0:08:07.360 bottom up process helps us figure out who's going to 0:08:07.360 --> 0:08:10.680 be able to serve whom and over what parts of 0:08:10.680 --> 0:08:12.200 the cycle they're going to be able to do it. 0:08:12.480 --> 0:08:15.640 So you play retail by finding the value proposition that's 0:08:15.680 --> 0:08:18.080 really going to suit not just customers, but the shareholders 0:08:18.080 --> 0:08:18.440 as well. 0:08:19.040 --> 0:08:21.520 United Parcel Service talk to us about that name. 0:08:23.160 --> 0:08:23.360 Yeah. 0:08:23.600 --> 0:08:26.000 Ups has been really interesting. So when they had the 0:08:26.200 --> 0:08:29.520 Team Starves negotiation, the stock got absolutely whacked, but we 0:08:29.640 --> 0:08:32.200 stayed put. We really trusted Carol Tomey and her team, 0:08:32.640 --> 0:08:34.640 and they've shown us the value of going ahead and 0:08:34.679 --> 0:08:37.920 sticking with quality over volume, and they have been able 0:08:37.960 --> 0:08:40.760 to claw back allow of the lost volume from the 0:08:40.800 --> 0:08:43.800 concerns about that contract. They are now lapping their greatest 0:08:43.800 --> 0:08:47.400 costs in those negotiations, and they are still feeling pretty 0:08:47.400 --> 0:08:50.120 good about Peaks. So that's another great story of sort 0:08:50.160 --> 0:08:53.319 of riding through, playing the long game, adding up when 0:08:53.360 --> 0:08:56.640 the market is over punishing something and realizing that the 0:08:56.760 --> 0:09:00.560 greater macro environment does not necessarily determine exactly how well 0:09:00.600 --> 0:09:03.719 someone is going to do, and they can outperform their 0:09:03.840 --> 0:09:05.640 peers if they're better prepared. 0:09:05.520 --> 0:09:07.280 Right, And that's why you're a bottom up investor. Like 0:09:07.320 --> 0:09:09.680 that makes sense. But when we have something that feels 0:09:09.679 --> 0:09:14.199 somewhat binary in terms of taxes and tariffs incoming Trump administration, 0:09:14.679 --> 0:09:17.000 how do you layer that onto your bottom up models? 0:09:18.679 --> 0:09:21.080 I think what we do is we don't change our universe. 0:09:21.280 --> 0:09:24.160 So we continue to search for companies that are going 0:09:24.160 --> 0:09:27.679 to meet our thresholds for quality. Where that sort of 0:09:27.760 --> 0:09:30.760 macro comes in is when we're doing our allocations. So 0:09:30.800 --> 0:09:33.280 we will definitely consider the environment in the same way 0:09:33.280 --> 0:09:36.360 that we've considered this extended high rate environment and say, 0:09:36.400 --> 0:09:38.320 you know what, this is something that we want to 0:09:38.600 --> 0:09:41.360 have at a lower allocation in the portfolio. It's a 0:09:41.440 --> 0:09:44.120 very high quality company, it's likely to beat out its peers, 0:09:44.280 --> 0:09:46.240 but we need to kind of change these allocations because 0:09:46.240 --> 0:09:48.640 of who's going to get affected. So it's the same 0:09:48.679 --> 0:09:51.080 thing where if we were to actually see some tariffs 0:09:51.080 --> 0:09:54.439 come through, especially thinking for example Walmart with a lot 0:09:54.480 --> 0:09:57.680 of Chinese import exposure, that's something that we would consider, 0:09:57.760 --> 0:10:00.280 probably not completely getting rid of it because we also 0:10:00.320 --> 0:10:04.000 have it for the purpose of dividend yielding, but absolutely 0:10:04.040 --> 0:10:07.400 considering those allocations and also looking at our discount rates 0:10:07.400 --> 0:10:08.760 in our models and making those changes. 0:10:09.600 --> 0:10:12.800 How do you typically view dividends? How important are they 0:10:12.920 --> 0:10:14.120 in your stock selection? 0:10:16.000 --> 0:10:16.480 Overall? 0:10:16.600 --> 0:10:19.000 It's not something that we necessarily consider when we're looking 0:10:19.000 --> 0:10:22.600 at our large cap dividend product. It's something that is 0:10:22.600 --> 0:10:24.360 at the top of the list. So when we have 0:10:24.440 --> 0:10:28.560 companies that are three plus percent positions. We're definitely looking 0:10:29.080 --> 0:10:31.319 core over quarter or at least on a half year basis, 0:10:32.120 --> 0:10:35.320 how safe that dividend is. Looking we're looking at the 0:10:35.559 --> 0:10:38.200 yield in and of itself, and not just the dividend yield, 0:10:38.200 --> 0:10:40.800 but the total shareholder return there. So they tend to 0:10:40.800 --> 0:10:42.640 also be the companies that are kicking back a lot 0:10:42.679 --> 0:10:46.559 more capital to cash to shareholders. So it's very important 0:10:46.559 --> 0:10:48.480 in that regard when we start to get into our 0:10:48.520 --> 0:10:52.080 more aggressive growth products, traditional growth, especially when we're looking 0:10:52.080 --> 0:10:54.440 at small that's not really something we consider. If we 0:10:54.480 --> 0:10:57.080 do see a small company that is cash generative, they're 0:10:57.679 --> 0:11:00.240 positive earnings and they're cranking out a dividend, and that's 0:11:00.240 --> 0:11:03.240 definitely going to boost their economics score, But overall, the 0:11:03.240 --> 0:11:06.240 dividend is not something that we consider top of the 0:11:06.280 --> 0:11:08.000 list for our entire universe. 0:11:08.960 --> 0:11:09.680 What else do you like? 0:11:09.720 --> 0:11:13.240 You mentioned like biotech and medical space. What kind of 0:11:13.240 --> 0:11:14.240 stocks you guys like there? 0:11:15.679 --> 0:11:18.240 Well, unfortunately, for compliance reasons, there's a couple of small 0:11:18.280 --> 0:11:20.760 names that are a little bit too low market cap 0:11:20.800 --> 0:11:23.960 to discuss. But we have looked at a couple of 0:11:24.040 --> 0:11:28.480 names that have some specific heart surgical sort of medical 0:11:28.840 --> 0:11:31.280 devices that we've looked at in the past. 0:11:31.400 --> 0:11:32.439 We did own and this. 0:11:32.400 --> 0:11:33.760 Is I think more of a small mid We had 0:11:33.760 --> 0:11:36.040 some shockwave and so that was really exciting to see 0:11:36.640 --> 0:11:39.080 that get acquired. So that's sort of one of the 0:11:39.120 --> 0:11:41.480 success stories. We tend to be in that sort of 0:11:41.559 --> 0:11:44.080 niche space where you do have to sit and wait 0:11:44.160 --> 0:11:47.400 through those Phase one, phase two, phase three, those FDA approvals, 0:11:48.200 --> 0:11:50.160 but we have had some success in that space, and 0:11:50.200 --> 0:11:53.840 it really just tends to be in those products where 0:11:53.880 --> 0:11:57.320 they actually are innovating for professionals, and yes it may 0:11:57.360 --> 0:12:00.000 be expensive, but if it is solving one particular issue 0:12:00.040 --> 0:12:01.839 and they're the first to do it, that's where we've 0:12:01.840 --> 0:12:02.960 found most success. 0:12:03.440 --> 0:12:03.800 Shelby. 0:12:03.840 --> 0:12:06.560 Two weeks ago today, the world woke up to a 0:12:06.640 --> 0:12:12.480 new US president elect and a Republican controlled both houses 0:12:12.880 --> 0:12:16.959 of Congress. That changed the way you guys think about 0:12:17.080 --> 0:12:19.440 asset allocation investing themes. 0:12:21.880 --> 0:12:24.000 Yeah, we actually we call the portfolio meeting right away, 0:12:24.520 --> 0:12:26.839 and it's something that right now we're sort of in 0:12:26.920 --> 0:12:30.079 the waiting period, right it's the lane duck. So it's 0:12:30.080 --> 0:12:31.840 the same for us where we're sitting here and we 0:12:31.880 --> 0:12:36.719 are waiting for the administration to actually come in for 0:12:36.760 --> 0:12:39.360 a lot of these different positions to be filled and 0:12:39.480 --> 0:12:42.360 confirmed and then to start to see the policy rolling out. 0:12:42.440 --> 0:12:44.520 So something that we think about when it comes to, 0:12:44.960 --> 0:12:49.800 for example, the potential extension of the tax plan where 0:12:49.800 --> 0:12:53.280 there's the lower corporate taxes, the immediate expensing of R 0:12:53.360 --> 0:12:55.360 and D. We do know that that's something that can 0:12:55.400 --> 0:12:59.040 benefit the bottom line. However, we also have tried to 0:12:59.080 --> 0:13:01.520 make sure we're not choosing companies that are holding out 0:13:01.640 --> 0:13:05.360 on reinvesting in their business just for you know, how 0:13:05.400 --> 0:13:08.320 the earnings look. We want to find operators that are 0:13:08.360 --> 0:13:11.200 able to do that profitably. So we think that there'll 0:13:11.240 --> 0:13:13.560 be a little bit of a boost in that regard 0:13:13.600 --> 0:13:17.640 from R and D, but not necessarily saying let's absolutely 0:13:17.679 --> 0:13:21.200 pile into smalls or let's absolutely pile into these not 0:13:21.320 --> 0:13:25.000 so profitable businesses because regulation and taxes are going down. 0:13:25.200 --> 0:13:27.120 But it is something that we're aware of in terms 0:13:27.120 --> 0:13:29.840 of how it's going to affect performance, and any businesses 0:13:29.880 --> 0:13:32.400 that are very R and D heavy, we you know, 0:13:32.440 --> 0:13:33.439 we might increase. 0:13:33.120 --> 0:13:33.920 Our allocation a bit. 0:13:33.960 --> 0:13:35.560 All right, Shelby, thank you so much for joining us. 0:13:35.559 --> 0:13:38.360 As always, Shelby McFadden investment analyst A Motley full asset 0:13:38.360 --> 0:13:41.080 management down there in Alexandria, Virginia. 0:13:41.400 --> 0:13:45.240 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:13:45.360 --> 0:13:48.440 weekdays at ten am Eastern on Apple Cardplay and Android 0:13:48.440 --> 0:13:51.560 Auto with the Bloomberg Business App, Listen on demand wherever 0:13:51.600 --> 0:13:54.800 you get your podcasts, or watch us live on YouTube. 0:13:56.800 --> 0:13:59.640 This is Bloomberg Intelligence Radio. We are broadcasting to live 0:13:59.679 --> 0:14:03.319 from our interactive Brokers studio right here in midtown at Manhattan, 0:14:03.600 --> 0:14:06.040 and we want to know what would you like to 0:14:06.080 --> 0:14:08.760 hear about on Bloomberg Radio. This helps make shows like 0:14:08.760 --> 0:14:11.880 ours even better. By taking our Bloomberg Audience survey, visit 0:14:11.920 --> 0:14:14.720 YouTube dot com slash Bloomberg podcast and click the link 0:14:14.720 --> 0:14:17.199 in our profile or community section to take the survey, 0:14:17.360 --> 0:14:20.080 which is hosted by our partners Material Fill it out 0:14:20.080 --> 0:14:23.200 now at YouTube dot com slash Bloomberg Podcasts. 0:14:23.280 --> 0:14:23.520 All R. 0:14:23.560 --> 0:14:25.120 Let's get back to the market here. So we may 0:14:25.120 --> 0:14:28.520 have some geopolitical risk shaking in the market, but if 0:14:28.560 --> 0:14:30.160 you take a look at some of the equities like 0:14:30.160 --> 0:14:33.200 a Walmart still holding up fairly well. That' stock now 0:14:33.240 --> 0:14:35.560 are on the highs of the session up almost five percent. 0:14:36.040 --> 0:14:38.280 Joining us how to discuss as Emily Cohne and Bloomberg 0:14:38.280 --> 0:14:40.960 Consumer team leader. I mean she heads all the stuff 0:14:41.000 --> 0:14:43.640 of consumer stocks. She joins us now in studio, Emily, 0:14:43.680 --> 0:14:44.600 wonderful to see. 0:14:44.400 --> 0:14:45.400 You, Thanks AlCH. 0:14:46.280 --> 0:14:49.320 What do we make about the reaction to Walmart stock? 0:14:49.320 --> 0:14:52.600 Because consensus was already high, the stock had already moved 0:14:52.640 --> 0:14:54.120 like we kind of knew it was going to be good. 0:14:55.040 --> 0:14:57.920 So when you think about Walmart, Walmart is a bellweather 0:14:57.960 --> 0:15:00.320 of the American economy, of the American con sumer. 0:15:00.440 --> 0:15:02.680 What does Walmart earnings tell us about that? 0:15:03.760 --> 0:15:08.640 Walmart beat expectations today sent a really strong signal that 0:15:08.680 --> 0:15:12.200 the holiday season is off to a solid start, and 0:15:12.240 --> 0:15:13.760 the market was excited about that. 0:15:14.880 --> 0:15:15.720 The growth in the. 0:15:15.760 --> 0:15:20.120 Number of transactions or checkouts slowed, the growth rate slowed 0:15:20.160 --> 0:15:24.320 a little bit ticket the average ticket, the amount people 0:15:24.360 --> 0:15:28.480 were paying in each checkout, was up, and a lot 0:15:28.520 --> 0:15:32.040 of that growth was coming from higher income shoppers, people 0:15:32.040 --> 0:15:34.920 in households making more than one hundred thousand dollars a year. 0:15:35.240 --> 0:15:38.280 That cohort made up roughly seventy five percent of the 0:15:38.400 --> 0:15:39.120 share gains. 0:15:40.440 --> 0:15:41.280 So this was good. 0:15:41.360 --> 0:15:45.800 It was a solid start to the holiday season, and 0:15:46.720 --> 0:15:48.440 the stock is up a lot. 0:15:48.560 --> 0:15:50.080 Four and a half percent is up a lot for 0:15:50.240 --> 0:15:51.000 a company that. 0:15:51.040 --> 0:15:54.680 Big stopstocks at all time high of sixty seven percent 0:15:54.720 --> 0:15:58.400 year today, which I had no idea their e commerce business. 0:15:58.400 --> 0:16:00.400 Talk to us about their e commerce business. I know 0:16:00.440 --> 0:16:03.960 it's big, but Amazon's pretty big too, So how did 0:16:03.960 --> 0:16:05.760 they talk about their e commerce business? 0:16:05.760 --> 0:16:07.640 When they talk about e commerce, they just talk about 0:16:07.640 --> 0:16:11.080 the potential to grow. It is big, but there is 0:16:11.120 --> 0:16:14.840 still so much room to grow. So just in the 0:16:14.880 --> 0:16:17.480 last couple of months, we saw them branching into categories 0:16:17.520 --> 0:16:21.680 that you wouldn't find in a typical Walmart store. Pre 0:16:21.760 --> 0:16:26.360 owned watches, collectible sneakers, stuff you would typically go to 0:16:26.400 --> 0:16:31.440 another retailer for, but now you can buy at Walmart online. Also, 0:16:31.480 --> 0:16:34.160 they're adding benefits to their services, like Walmart Plus. 0:16:34.200 --> 0:16:36.680 You can now get discounts of Burger King if you're a. 0:16:36.600 --> 0:16:40.480 Walmart Plus member. So they're really expanding their offering there. 0:16:41.080 --> 0:16:46.880 Deliveries can get faster, and they see just endless potential there. 0:16:47.120 --> 0:16:48.200 It's always growing. 0:16:48.480 --> 0:16:50.960 My question I had before the break was those people 0:16:50.960 --> 0:16:54.040 that make over one hundred thousand dollars or more, are 0:16:54.040 --> 0:16:57.960 they sticky as in once the economy save recovers or 0:16:58.000 --> 0:17:00.400 once they feel better about inflation or et cetera. Do 0:17:00.440 --> 0:17:02.720 they flee then to go to Target or somewhere else, 0:17:02.840 --> 0:17:04.240 or go to the fancy drug store, or. 0:17:04.280 --> 0:17:05.200 Do they stay at Walmart. 0:17:05.359 --> 0:17:07.280 I think that's a really good question and something we're 0:17:07.320 --> 0:17:11.719 definitely watching for. You know, spending across the board at 0:17:11.760 --> 0:17:15.119 Walmart was consistent. The growth, as you said, was coming 0:17:15.119 --> 0:17:18.159 from these wealthier households. Maybe it's a shopper who typically 0:17:18.200 --> 0:17:21.560 shops at Whole Foods but is feeling particularly pinched right 0:17:21.600 --> 0:17:23.880 now and is going to Walmart for value. Do those 0:17:23.920 --> 0:17:26.160 people stick around when they get a raise in their 0:17:26.200 --> 0:17:28.520 next paycheck or their paycheck. 0:17:28.160 --> 0:17:29.360 In the next couple of quarters. 0:17:29.880 --> 0:17:32.840 That's something we're definitely watching for. I think it does 0:17:32.880 --> 0:17:34.080 have limits. 0:17:34.880 --> 0:17:38.639 So are they still opening stores? Isn't there a Walmart 0:17:38.680 --> 0:17:40.720 pretty much in every town USA these days? 0:17:41.040 --> 0:17:42.560 It's a good question. I think. 0:17:42.640 --> 0:17:44.760 Like when they talk about growth now, they're talking about 0:17:44.760 --> 0:17:47.960 e commerce growth. I think that's where they see the 0:17:48.400 --> 0:17:53.359 highest potential for growth and they needed to get profitable. 0:17:53.560 --> 0:17:56.600 That's something we heard the CEO talk about today. Not 0:17:56.680 --> 0:17:58.480 that they're racing to it, but it's a long term 0:17:58.520 --> 0:18:00.320 game they want their e commerce division into. 0:18:02.119 --> 0:18:05.680 So they feel pretty okay about a holiday shopping season because. 0:18:05.600 --> 0:18:10.080 Yeah holiday, right, Yeah, holiday shopping is off to a 0:18:10.119 --> 0:18:12.639 strong start. So the interesting thing about the holiday season 0:18:12.720 --> 0:18:16.600 this year is that it's shorter than in most years. 0:18:16.640 --> 0:18:21.080 Thanksgiving is following later in the month of November, So 0:18:21.160 --> 0:18:24.600 the answer to that is that they triggered the deals 0:18:24.640 --> 0:18:26.639 even earlier than than the usual. 0:18:27.920 --> 0:18:29.760 Coming in to Paul knows that I I shop on 0:18:29.800 --> 0:18:32.480 the sales, Let's go to Low's because that is interesting 0:18:32.480 --> 0:18:34.600 as well. That stock is off the loads of the session, 0:18:34.600 --> 0:18:37.280 but still down over three percent. What did low say? 0:18:38.119 --> 0:18:38.320 So? 0:18:38.640 --> 0:18:41.840 Lowe's years fell before the bell and quarterly comps were 0:18:41.960 --> 0:18:43.560 better than expected. 0:18:43.560 --> 0:18:46.080 But still declining. 0:18:46.880 --> 0:18:51.160 So high interest rates and a week housing market means 0:18:51.200 --> 0:18:54.120 people are moving less than they were before. It means 0:18:54.119 --> 0:18:59.480 they're spending less on big ticket home renovations. But despite 0:18:59.480 --> 0:19:04.040 blooming gloomy sales, Lowe's actually raised its forecast for the year, 0:19:04.359 --> 0:19:08.440 seeing positive growth in its professional business so selling goods 0:19:08.480 --> 0:19:14.440 to contractors and builders, also in e commerce, and spending 0:19:14.440 --> 0:19:18.359 on smaller ticket outdoor projects. Last week we saw Home 0:19:18.440 --> 0:19:23.480 Depot similarly say that the weather was actually a bright 0:19:23.520 --> 0:19:27.119 spot for its sales. So hurricane led to higher sales 0:19:27.119 --> 0:19:30.879 for home depot. Warm weather meant that people were spending 0:19:31.440 --> 0:19:34.800 more on grills because the Great Grilling Season was getting longer. 0:19:35.800 --> 0:19:39.320 So in general, for these Los home depot. 0:19:40.680 --> 0:19:43.040 Sales are down, but the outlook got a little bit 0:19:43.040 --> 0:19:43.760 better this quarter. 0:19:44.520 --> 0:19:47.920 Where do we see the weakness in the consumers like 0:19:48.000 --> 0:19:50.119