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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller. Every business day, we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. Let's round table this

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Speaker 1: thing because I don't know where these markets are going.

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Speaker 1: I don't know where the economy is going. I don't

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Speaker 1: know where the Fund of Reserve is going. So I

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Speaker 1: need some smart people to kind of kind of bring

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Speaker 1: it together. Vince Signarella, global macro strategist at Bloomberg News,

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Speaker 1: joins us uh and Jennifer Lee, senior economist the managing

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Speaker 1: director at BEMO Capital Markets, joins us as well. Jennifer,

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Speaker 1: I'm gonna start with you here. Um, I guess Mike

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Speaker 1: have many questions. One of my questions is, all right,

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Speaker 1: I get it where you are either in or we're

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Speaker 1: going into recession. Like a lot of people, just tell

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Speaker 1: me how long it's going to be, how deep it's

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Speaker 1: gonna be. Is there any way to kind of gauge

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Speaker 1: that at this point? Oh, good morning. You know what, UM,

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Speaker 1: I think that's still the million. The other question, UM,

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Speaker 1: we continue to stand by our mild recession call. UM

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Speaker 1: for now. Of course we're going to take it, and

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Speaker 1: I'll quote all the different central bankers out there, especially

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Speaker 1: GUARD on a day to day meeting by meeting basis. UM.

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Speaker 1: But we're still looking for, you know, the downturn to

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Speaker 1: hit in the first half of UM and then a

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Speaker 1: mild rebound in the second half, averaging zero point zero

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Speaker 1: percent growth for all. This is for the US and

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Speaker 1: for Canada as well. UM. I've been pretty surprised actually

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Speaker 1: that after like what three and fifty basis points or

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Speaker 1: whatever of remix, the US economy is still moving forward. UM.

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Speaker 1: And it shows how resilience everything is. And it looks

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Speaker 1: like they're gonna keep hiking. I mean, they keep telling

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Speaker 1: us they're not going to pause, they're not going to pivot. Vince,

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Speaker 1: what do you think about the latest UM, you know

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Speaker 1: Bowlard charts showing that we need to be between five

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Speaker 1: and seven percent for a restrictive economy, sorry, restrictive rates.

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Speaker 1: I just don't doubt it. To be honest with you,

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Speaker 1: I remember many years ago, I I was speaking with silly,

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Speaker 1: said President Closter, And I asked, I was starting to

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Speaker 1: ask him a question about whether or not he goes

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Speaker 1: into a supermarket, and he abruptly interrupted and said, I do.

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Speaker 1: When I've seen the price of cereal. I wonder if

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Speaker 1: that's the case with Bullard, because we're seeing in commodity prices. Well,

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Speaker 1: he famously, um, you know, ordered a bicycle that he

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Speaker 1: then couldn't get because the supply chain issues, and when

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Speaker 1: it was finally delivered, he was given a two up charge. Um,

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Speaker 1: So he's worried about that. Maybe maybe that's paint at

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Speaker 1: his point of view, because when I look at energy prices, uh,

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Speaker 1: in particular, they're telling me, uh that exactly what Jennifer

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Speaker 1: said that in a procession is coming U probably for

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Speaker 1: the first quarter at least, perhaps the first two quarters

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Speaker 1: of next year. But dude, when you look at c P,

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Speaker 1: I what in the hell like you got to do

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Speaker 1: something right? Seven point seven or cent. Yeah, but it

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Speaker 1: takes time for inflation to come down, and inflation expectations

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Speaker 1: are starting to drop if you if you look at

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Speaker 1: what crew futures versus inflation expectations for one year out

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Speaker 1: in the University of Michigan. They're tied at the hip.

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Speaker 1: And when with these crew futures coming down, I'm going

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Speaker 1: to suggest to you that when we see the next

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Speaker 1: few mission one year inflation expectations, they're gonna come down. Also,

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Speaker 1: we're going into a holiday driving season and guess only

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Speaker 1: in futures dropping, we're going into the winter and all

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Speaker 1: the entire energy complex is dropping precipitously. At w t

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Speaker 1: I down four percent this morning. That doesn't strike me

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Speaker 1: as there's real strong demand out there for the consumer.

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Speaker 1: Monket And and Jennifer, you know, we were just kind

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Speaker 1: of getting through the bulk of the earnings releases from

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Speaker 1: a lot of the big retailers, and again my takeaway,

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Speaker 1: it seems like maybe with the exception of Target, pretty

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Speaker 1: strong out there, the consumer seems in pretty decent position.

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Speaker 1: How do you think about the consumer um? It's you're right,

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Speaker 1: And I was actually a little bit heartened by something

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Speaker 1: that that James Bullard said earlier this week that who

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Speaker 1: is mentioning the bullish factors for the economy, And he

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Speaker 1: said he started like state flush, state government savings and

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Speaker 1: he's still constituent continued to sit excess household savings and

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Speaker 1: still high household wealth, and that's I think this is

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Speaker 1: where it's all coming from. And you know, you're still

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Speaker 1: seeing wage increases that we're trying to avoid that whole

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Speaker 1: wage price spiral thing. But I think that's the plus side,

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Speaker 1: even though yes, that's insulationary. But on the plus side,

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Speaker 1: you know, at least consumers are making money, at least

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Speaker 1: they have a job and they're making a city income

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Speaker 1: and be you know a hundred times where resibu is

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Speaker 1: going the other way. But so, why do we see

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Speaker 1: crude prices coming down? Is the concern that consumers are

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Speaker 1: gonna stop spending on oil next year? Is it more

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Speaker 1: of a global story? Obviously it's a fungible commodity and

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Speaker 1: it trades around the world. I mean, I don't think

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Speaker 1: we're doing any less driving. I think I've heard people

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Speaker 1: say this is gonna be a very busy Thanksgiving season.

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Speaker 1: I'm taking my brand new Chevy Silverado z R two

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Speaker 1: back to Ohio with a six point two leader V eight.

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Speaker 1: It's naturally aspirated. I get thirteen point four miles a gallon,

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Speaker 1: and I'm excited for that trip. So, so why is energy?

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Speaker 1: Why are oil prices dropping? I think it's still looking forward,

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Speaker 1: I mean because yours are still spending, um obviously, but

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Speaker 1: just looking at the data, but obviously the pace has

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Speaker 1: slowed and they're not going to continue spending at this

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Speaker 1: current rate. And hence this is why you know we're

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Speaker 1: looking for that downtren in the first half. UM. And

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Speaker 1: with all prices. I mean that's this morning. But you

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Speaker 1: know we've seen this week that it can be extremely

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Speaker 1: volatile and you can't just scout Russia obviously ever from

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Speaker 1: the mix, so they can just say one thing and

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Speaker 1: boom you can see what oil prices heading higher again. UM.

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Speaker 1: So I think it's more you know, looking ahead, UM,

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Speaker 1: the coming slow down and things have started to slow,

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Speaker 1: but they're gonna slow more meaningfully in the new year. UM.

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Speaker 1: Just given that we've seen such high prices, still high inflation,

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Speaker 1: not even though it's coming off the peak, still too

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Speaker 1: high for any for anyone's liking. And that's what's going

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Speaker 1: to that's what's prompting. I think energy prices, the weaker

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Speaker 1: weight on energy prices even thirty seconds have we seen

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Speaker 1: peak US dollar? I think? So, I think when you

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Speaker 1: see a bit in risk in the spud correlating UM

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Speaker 1: within inverse. Uh. Dollar. I like stocks higher going into

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Speaker 1: next year and into the end of this year. Uh

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Speaker 1: and I think that will that'll see the dollar all

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Speaker 1: over all. Right, Vin's good stuff. We appreciated Vin Signarella,

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Speaker 1: macro strategist for Bloomberg News, and Jennifer Lee, senior economist

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Speaker 1: and managing director BEMO. That's Bank of Montreal all for

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Speaker 1: the folks. I've been in this game a while BMO

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Speaker 1: Capital Markets. We appreciate that good stuff. Here and again, Matt,

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Speaker 1: here's my gasoline chart. You know, it's my Paul Sweeney

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Speaker 1: Personal Inflation gauge daily national average gasoline prices for regular

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Speaker 1: unleaded three dollars and seventy cents. We're getting down to

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Speaker 1: almost the low that we touched, you know, back in September.

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Speaker 1: So gasoline rolling over. You called out the w t

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Speaker 1: I crude. We've got a seven handle in their seventy

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Speaker 1: eight dollars fifty five cents. Uh. So that's your energy

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Speaker 1: complex prices coming into the mortgage markets, interest rates, you know,

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Speaker 1: coming down, and I'm looking at that, you know, the

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Speaker 1: ten year you know Treasury it's three point seven nine percent.

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Speaker 1: We were well over four percent, four and a half percent.

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Speaker 1: So what does it mean for the mortgage markets? Am

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Speaker 1: I gonna get a better deal in the mortgage biz

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Speaker 1: Erica Heidelberg. She's a mortgage backed security see strategist for

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Speaker 1: Bloomberg Intelligence and she joins us live here on the

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Speaker 1: Bloomberg in Active Broker Studio. So Erica just talked to

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Speaker 1: us about the state of the mortgage market today. Well,

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Speaker 1: in terms of mortgage rates. Uh, last Thursday, after the

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Speaker 1: CPI print, we saw the biggest one day fall in

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Speaker 1: secondary mortgage market rates in history, fifty four basis points.

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Speaker 1: About half of that was because rates fell, about half

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Speaker 1: of that was because spreads tightened, both of them kind

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Speaker 1: of a relief rally, you know, thinking that the Fed

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Speaker 1: probably will slow down their rate of increases. So, um,

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Speaker 1: you know, good news for homeowners. Uh, you know, still

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Speaker 1: at six sixty according to the Friday Max survey rate

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Speaker 1: this week. So it's not like buyer if you're already

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Speaker 1: locked in, right, home own buyers specifically, yeah, or if

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Speaker 1: you want to sell us, good news right, because a

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Speaker 1: lot of people have been having difficulty selling since the

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Speaker 1: buyers can't get good rates locked in. Yeah, I mean

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Speaker 1: that the point that I'm kind of trying to make

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Speaker 1: It's definitely good for you know, the housing market some degree,

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Speaker 1: but we're so far above where you know, homeowners, home buyers,

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Speaker 1: anybody's used to having to take out a mortgage that

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Speaker 1: I don't think it's at this point going to move

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Speaker 1: the needle at all for very many people. Um, even

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Speaker 1: that huge drop, even that huge drop. At some point,

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Speaker 1: people get used to these rates, right. All of our parents,

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Speaker 1: I'm sure have told us I used to pay for

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Speaker 1: a mortgage right, um, which seems unbelievable now, but there

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Speaker 1: was a generation of people that locked in those rates. Yeah.

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Speaker 1: For for those who are able to afford to take

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Speaker 1: out mortgages at these levels, it's probably not even that

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Speaker 1: big a deal because they can actually refinance of rates

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Speaker 1: do fall, and you know, who knows where we's are going.

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Speaker 1: But I think a lot of people don't necessarily expect

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Speaker 1: us to stay quite this high. But for other homeowners

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Speaker 1: or home buyers, sorry getting that confused. For other home buyers,

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Speaker 1: they can no longer afford the type of house they

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Speaker 1: were looking for at all, especially first time home buyers.

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Speaker 1: So one of the interests you right off, by the way,

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Speaker 1: because you can deduct your interest payments, right, but only

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Speaker 1: up to a certain amount. Right, It's limited at this point. Um, yeah,

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Speaker 1: that the salt tax you're trying to No, not the salt.

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Speaker 1: We're still praying every night. I kneel down next to

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Speaker 1: my bed praying for the salt deduction. But that's a

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Speaker 1: different You can still deduct, and I can even deduct

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Speaker 1: my mortgage interest. But I think there is a limit. Um,

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Speaker 1: you can only deduct mortgage interest. I believe up to

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Speaker 1: seven yeah, seven on a loan of yeah, and I

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Speaker 1: think even there it's capped. I know, you know, personally,

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Speaker 1: I think at this point we're limited to the standard

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Speaker 1: deduction between the but the salt tax, you know, getting

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Speaker 1: taken away, and you know we don't owe that much

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Speaker 1: interest left on the mortgage. Is the Federal Reserve buy mortgages,

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Speaker 1: selling mortgages? Doing nothing? What are they doing in a

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Speaker 1: mortgage market? Right? So the Federal Reserve almost exactly a

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Speaker 1: year ago declared that they were going to taper their

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Speaker 1: buying of mortgage backed securities. They then we invested paydowns

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Speaker 1: uh through June, um and even some through the summer,

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Speaker 1: even though they technically were letting the portfolio start to

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Speaker 1: run off. Ironically, even though they announced that they were

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Speaker 1: going to start withdrawing from the mortgage market a year ago,

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Speaker 1: their portfolio is the exact same size it was a

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Speaker 1: year ago, because they grew it again through you know,

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Speaker 1: June basically, and then it began to shrink from then.

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Speaker 1: So what's interesting though, is without even having to have

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Speaker 1: changed the size of their portfolio, rates or of course,

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Speaker 1: you know, tire, even with last week's sell off, I'm sorry,

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Speaker 1: last week's rally and mortgage spreads are significantly wider, and

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Speaker 1: the housing market is an entirely different place right now.

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Speaker 1: We had existing home sales out this morning. Ninth straight

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Speaker 1: month of decline in home sales, fourth straight month of

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Speaker 1: decline in median home prices from the existing home sales,

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Speaker 1: although part of that seasonals, but it's still um you know,

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Speaker 1: we've gone from a twenty percent year of year change,

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Speaker 1: we're now down to about a six percent year of

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Speaker 1: year change. So obviously a lot of softening and again

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Speaker 1: fourth straight month actually you know, a decrease in price

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Speaker 1: in that in that index. What's building like right now

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Speaker 1: in terms of putting up new uh UM stock, Well,

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Speaker 1: home builders are pretty depressed at this point. Uh you know,

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Speaker 1: I forget what the last number of I think it

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Speaker 1: was like thirty three or something like that, where it's

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Speaker 1: a diffusion index, and that means that two thirds of

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Speaker 1: the home builders I got that right, whatever, more than

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Speaker 1: more than half of the home builders are pessimistic about

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Speaker 1: future building. That optimistic housing starts have been coming down

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Speaker 1: consistently in single family housing. But the interesting counter trend

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Speaker 1: there is that multi family housing starts are increasing. So

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Speaker 1: I think that's a recognition that a lot of um

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Speaker 1: potential home buyers are actally gonna have to go into

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Speaker 1: the rental market, right because those people we were talking

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Speaker 1: about who are going to have difficulties swinging and mortgage

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Speaker 1: payments with rates at these levels, are gonna have to

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Speaker 1: rent instead. And that's why I heard a read guy

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Speaker 1: telling me the other day they're they're still building big

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Speaker 1: multi family housing and and to your point to there

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Speaker 1: are still a lot of homes under construction and a

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Speaker 1: lot of new homes coming online which should help also

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Speaker 1: at the supply. Didn't mad dynamic normalization? All right? Erica,

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Speaker 1: thank you so much. We appreciate it as always. Erica Heidelberg,

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Speaker 1: NBAS strategist, Bloomberg intelligent, just joining us live here in

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Speaker 1: our Bloomberg Interactive Broker studio, two days away from the

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Speaker 1: World Cup beginning in Doha. And they pulled and they

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Speaker 1: from undreag pulled the beer rug right out from under

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Speaker 1: all the folks that want to enjoy a cold one. Uh.

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Speaker 1: We want to break this down. This is the World Cup,

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Speaker 1: this is huge. We all know this is a global

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Speaker 1: sporting event. We have some great assets to talk to here,

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Speaker 1: some people that really know what's going on. Simone Foxman,

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Speaker 1: she's a reporter for Bloomberg Television and News and she

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Speaker 1: is based in Cutter. That's how I pronounce it, um

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Speaker 1: and I know you do. And we have Ira Jersey,

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Speaker 1: he's Bloomberg Interstrate strategist. Why do we have him on

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Speaker 1: because he actually owns a soccer team. He's actually into

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Speaker 1: this whole thing of soccer. I don't get it, but

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Speaker 1: he's all in. Simone, Let's start with you here. I

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Speaker 1: guess the news on the last twenty four hours coming

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Speaker 1: out of Cutter is no Budweiser beer in the stadiums.

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Speaker 1: How's that playing over there? Especially since they promised it

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Speaker 1: for so long people who bought tickets planned on drinking

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Speaker 1: at the game, right, Yeah, well they were are always

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Speaker 1: going to be curtailed, and if I may, it's technically

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Speaker 1: cut um. But I know most folks can't. Uh it's

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Speaker 1: hard to say for most English speakers. But yeah, so

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Speaker 1: so we have these rules in place. They were announced

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Speaker 1: in September. You can drink within the stadium perimeter, not

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Speaker 1: the stance themselves. You can drink within the stadium perim

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Speaker 1: or for three hours ahead of the game. Uh, then

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Speaker 1: you go to the game, then you come back and

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Speaker 1: you can drink for another hour and you'd only be

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Speaker 1: able to drink buzz light. But yeah, this is a

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Speaker 1: bit of uh well at the very last minute decision,

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Speaker 1: certainly to ban alcohol entirely. I mean, alcohol is a

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Speaker 1: flashpoint issue here. It is something that you know, taboo

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Speaker 1: under in the conservative Muslim culture. I've caught the people

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Speaker 1: do drink, but it's in limited spaces. Only certain people

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Speaker 1: can actually um buy alcohol and and at specific places.

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Speaker 1: So it's not surprising that this is an issue. What

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Speaker 1: I think is surprising is the fact that this is

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Speaker 1: forty eight hours ahead of the World Cup and we're

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Speaker 1: still making these you and can I just jump in here, Um, Yeah,

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Speaker 1: so you know, I was last month when I was

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Speaker 1: on a trip to London to visit some of my

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Speaker 1: team there. I did go to a Premier League game

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Speaker 1: and I thought it was interesting that, Um, at Premier

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Speaker 1: League venues you're not allowed to drink in the stands either. Um,

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Speaker 1: so it's not completely on process because nobody trusts British

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Speaker 1: people with alcohol. Well no, no, there was plenty of

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Speaker 1: drinking going on before the game in the hallways outside.

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Speaker 1: Don't get me wrong. I'm just saying, like in the

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Speaker 1: stands they weren't allowed to have alcohol. So so I

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Speaker 1: don't know, if you know. Part of that I think

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Speaker 1: is just the the you know, over indulgence number one

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Speaker 1: and number two, just you know, things like like maybe

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Speaker 1: making a mess. So so I think for some Europeans

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Speaker 1: it won't be particularly unusual to have to imbibe prior

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Speaker 1: to the matches and then go into the stands. You know, UM,

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Speaker 1: feeling pretty good? Can you smoke? Simone? Can you smoking?

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Speaker 1: It says no, I don't think so. But you know,

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Speaker 1: honestly I have I don't know the answer to that, Hey, Simone,

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Speaker 1: you and your colleague ad faith Nayer. If I get

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Speaker 1: there right, wrote a fantastic story today on the Bloomberg

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Speaker 1: terminal about what guitar built for the most expensive World

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Speaker 1: Cup ever. Just about some of the huge numbers associated

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Speaker 1: with this. Well, the big number here, according to Bloomberg

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Speaker 1: get Intelligence, is three hundred billion dollars. That's the amount

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Speaker 1: of money that the government has spent, not just on stadiums.

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Speaker 1: Actually stadiums are a pretty small piece of this overall, um,

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Speaker 1: but spent on infrastructure in preparation for the World Cup.

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Speaker 1: So things like a brand new metro system, an entire

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Speaker 1: new metro system in the last twelve years at brand

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Speaker 1: new city called Blue Sale that was underway a little bit,

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Speaker 1: but it's something that's been continue to be built. UM.

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Speaker 1: And newport and expansion of the airport. All of these things,

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Speaker 1: um were things that Cutter wanted to do anyway, but

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Speaker 1: the timeline was really sped up as preparation for the

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Speaker 1: World Cup. Stadiums again small piece of that, about ten

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Speaker 1: billion of that overall three billion dollar figure. Huge, huge,

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Speaker 1: But how much money does the World Cup pull in?

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Speaker 1: Do you? Do you have any of the figures here?

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Speaker 1: I know you're too quickly just following the rates market, UM,

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Speaker 1: but it's big business. Right. Obviously, um, if Qatar was

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Speaker 1: willing to bribe FIFA with I don't know how much

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Speaker 1: it costs them to to get to get the World Cup,

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Speaker 1: but it must have been pretty pretty expensive. How much

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Speaker 1: does the whole thing generate? Yeah, so I mean it's

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Speaker 1: similar to something like the Olympics, where you're going to

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Speaker 1: be driving significant amount of tourism revenue and um you know,

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Speaker 1: things like like rental. And it's also an opportunity you

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Speaker 1: go to think about a place like Brazil when they

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Speaker 1: hosted a few years ago, a couple of tournaments ago. UM,

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Speaker 1: it's an opportunity for you to highlight what you have

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Speaker 1: in terms of tourism and it and it gives usually

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Speaker 1: good vibes for UH for a particular countries. So so

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Speaker 1: that's where this whole idea of sports washing comes in,

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Speaker 1: where you know, countries host these big events that maybe

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Speaker 1: don't have the um you know, don't necessarily have what

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Speaker 1: what you know, Westerners would consider you know, good civil

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Speaker 1: rights or or um UH or governments that are free

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Speaker 1: and democratic, but it allows you to highlight what you

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Speaker 1: do have in terms of tourism, infrastructure. You know, whether

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Speaker 1: or not you know cutter is going to be one

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Speaker 1: of the great places that's going to benefit from from

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Speaker 1: that from having the World Cup. I'm not sure a

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Speaker 1: lot of people that I've talked to about this, we're

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Speaker 1: you know, pretty disappointed. It was going to be in

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Speaker 1: the winter, right, This isn't a normal time. Usually it's

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Speaker 1: a summer event, um somewhere, we're you know, May through

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Speaker 1: um late May through through July event as opposed to

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Speaker 1: you know, now in the middle of what is in

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Speaker 1: most most countries, this is the middle of their soccer

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Speaker 1: seasons for their their club sports. So um, so this

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Speaker 1: is really not a particularly good time to be having this.

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Speaker 1: From a it's not a particularly good place obviously, right,

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Speaker 1: I mean, who would have chosen Qatar for the World

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Speaker 1: Cup had it not been for massive injections of liquidity

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Speaker 1: into his bank account? Someone? Are they playing? Just let

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Speaker 1: me take a little bit of issue with that though.

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Speaker 1: I mean, this is a development story for this country

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Speaker 1: for sure, and from a FISA's perspective, and in corruption

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Speaker 1: allegations aside. You know, their desire is to expand football

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Speaker 1: into new parts of the world. That's why we're going

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Speaker 1: to see a mainly US focused the World Cup come six.

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Speaker 1: But also you know where else and Mina is actually

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Speaker 1: going to be able to cobble together that kind of funds,

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Speaker 1: the kind of infrastructure that you need in order to

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Speaker 1: be able to host a World Cup. You're really looking

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Speaker 1: at the Gulf. Yes, the Gulf has its own ambitions,

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Speaker 1: but here the ambition is to build a non oil economy,

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Speaker 1: to move away um from hydro carbon. And so for them,

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Speaker 1: that's why this three billion dollars, this makes a lot

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Speaker 1: of sense. So are they going to host the Winter

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Speaker 1: Olympics next? Saudi Arabia is actually gonna host the Asian

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Speaker 1: Winter Games. I've I've forgotten the year here. I believe

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Speaker 1: it's tight, but someone's gonna call me and tell me

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Speaker 1: I'm wrong. But believe it or not, Yes, I believe

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Speaker 1: it Saudi Arabia. Believe it all right some And thank

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Speaker 1: you so much for joining us. Really appreciate getting uh

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Speaker 1: your time here. Simone Foxman, she's in Doha. She covers

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Speaker 1: that part of the world for Bloomberg News and Bloomberg Television,

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Speaker 1: so it's great to get her on feats on the

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Speaker 1: ground type of reporting there. And we got our Jersey.

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Speaker 1: He's Bloomberg Interest Rate strategist but he is our expert

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Speaker 1: for all things football slash soccer, and uh, please take

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Speaker 1: a look at Simone's article on the Bloomberg trompins from

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Speaker 1: shirts on Bloomberg dot com. It gives you anything if

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Speaker 1: you have a terminal in front of you and I

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Speaker 1: big take, and I big take. It's good stuff and

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Speaker 1: great reporting. So check it out on Bloomberg dot com

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Speaker 1: slash A big take. All right, let's check in and

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Speaker 1: get a real, real overview what's going on in the

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Speaker 1: retail space. We've had a lot of retailers report earnings

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Speaker 1: over the last several days. We want to bring in

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Speaker 1: Punham Goyle. She's a senior analyst at Bloomberg Intelligence that

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Speaker 1: covers all things retail. So, Punham, what are some of

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Speaker 1: your takeaways? And look like some decent numbers out of

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Speaker 1: you know, the likes of the Gap and foot locker

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Speaker 1: and raw stores. Consumers pretty good? Uh, consumer is not

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Speaker 1: pretty good. I think they're okay. I think I think

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Speaker 1: our expectations had been muted, so compared to muted expectations

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Speaker 1: of results are definitely better. Um. I think it comes

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Speaker 1: back to inventory really here, when I look at the

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Speaker 1: earnings that I've been out over the last week. UM,

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Speaker 1: you are seeing inventory getting better aligned with demand, which

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Speaker 1: I think is the plus point here, especially heading into

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Speaker 1: holiday when you know you want to kind of control

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Speaker 1: the markdowns even though we know it will be very promotional.

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Speaker 1: That was probably most promising to me through a lot

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Speaker 1: of these earnings. We had raw stores last night, and

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Speaker 1: there it was about inventory control. They were able to,

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Speaker 1: you know, cut back on their inventories drastically. They were

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Speaker 1: up I believe about over fifty at the end of

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Speaker 1: second quarter and now down now just up less than

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Speaker 1: ten percent. So really big inventory improvements is overseeing. So

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Speaker 1: a lot of retailers are at least positively surprising the

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Speaker 1: markets UM from Walmart UM to Ross stores. And we

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Speaker 1: also have a lot of like Athletic and at leisure

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Speaker 1: brands doing well. But Target has done the opposite. What's

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Speaker 1: wrong with them versus the rest versus everyone else? You know,

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Speaker 1: it's given what we've seen out of everyone else, and

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Speaker 1: when I look at Target, it's it's a bit surprising

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Speaker 1: to what's happening there, But I think it may have

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Speaker 1: to It goes back to inventory because compared to Walmart,

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Speaker 1: you can argue that, you know, Target is more discretionary,

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Speaker 1: which it is because half of Walmart fills do come

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Speaker 1: from consumables. But then when you see gaps doing okay,

427
00:22:30,119 --> 00:22:33,600
Speaker 1: you see Macy's doing okay, Ross, t j X are

428
00:22:33,640 --> 00:22:37,440
Speaker 1: all doing okay. But I think the expectations for Exami

429
00:22:37,560 --> 00:22:39,720
Speaker 1: were much lower than they weren't than they were for

430
00:22:39,720 --> 00:22:43,320
Speaker 1: a Target. So I do think Target UM just needs

431
00:22:43,320 --> 00:22:46,000
Speaker 1: to work through its inventory position and then you know,

432
00:22:46,040 --> 00:22:48,920
Speaker 1: people still love Tarj. It's still it's still a favorite brand.

433
00:22:49,520 --> 00:22:53,480
Speaker 1: Hey put them Black Friday, Cyber Monday. I know they're

434
00:22:53,480 --> 00:22:55,919
Speaker 1: not as big as they once were for retailers, but

435
00:22:56,000 --> 00:22:58,480
Speaker 1: still it's a big deal. It's a big data point.

436
00:22:58,880 --> 00:23:01,840
Speaker 1: What are you expecting? Lots of discounts, So if you

437
00:23:01,960 --> 00:23:05,520
Speaker 1: have shopping lists, shop on Black Friday. UM retailers have

438
00:23:05,560 --> 00:23:07,960
Speaker 1: way too mench inventory on hand. There will be promotions.

439
00:23:08,000 --> 00:23:11,000
Speaker 1: Everyone's in a bid to gain market share, and consumers

440
00:23:11,040 --> 00:23:14,480
Speaker 1: are looking to spend as they're crunched for cash. This

441
00:23:14,520 --> 00:23:17,480
Speaker 1: holiday season. They will be spending more over the five

442
00:23:17,600 --> 00:23:21,840
Speaker 1: day holiday weekend than they did last year. UM. We

443
00:23:21,960 --> 00:23:25,720
Speaker 1: think overall online sales will be good, but they will

444
00:23:25,760 --> 00:23:29,480
Speaker 1: be focused largely on Cyber Monday and overall holiday The

445
00:23:29,520 --> 00:23:32,800
Speaker 1: online sales gains will moderate to single digit levels versus

446
00:23:33,040 --> 00:23:36,040
Speaker 1: double digits in the past multiple years that I've watched it.

447
00:23:36,880 --> 00:23:41,000
Speaker 1: How how how close attention do you pay to pump

448
00:23:41,040 --> 00:23:43,720
Speaker 1: prices because for a lot of these big box stores,

449
00:23:44,440 --> 00:23:48,920
Speaker 1: gasoline sales are also um, you know in play. Yeah. Absolutely.

450
00:23:48,960 --> 00:23:51,120
Speaker 1: I mean lower fuel prices as a plus going into

451
00:23:51,160 --> 00:23:53,960
Speaker 1: the holiday season as people can fill up their tank

452
00:23:54,000 --> 00:23:56,080
Speaker 1: and now worry about having to drive out a little

453
00:23:56,160 --> 00:23:59,760
Speaker 1: to get their shopping needs. Matt Um. So lower fuel

454
00:23:59,760 --> 00:24:02,360
Speaker 1: price you talked about earlier, I think is a positive

455
00:24:02,480 --> 00:24:05,800
Speaker 1: right now for consumer spending. So on Black Friday, put

456
00:24:05,880 --> 00:24:08,400
Speaker 1: them where are you going to be? I Am going

457
00:24:08,440 --> 00:24:11,480
Speaker 1: to be at the Freehold mall and stores nearby, checking

458
00:24:11,560 --> 00:24:14,119
Speaker 1: out to all the deals as always so I used to.

459
00:24:14,160 --> 00:24:16,359
Speaker 1: I mean, I'll drive by the I'll drive by, not

460
00:24:16,400 --> 00:24:20,800
Speaker 1: going the Short Hills mall. I'm just expecting, fully expecting it.

461
00:24:21,560 --> 00:24:23,320
Speaker 1: The parking lots to be packed. Am I going to

462
00:24:23,400 --> 00:24:26,280
Speaker 1: see that? I think you will, because remember people haven't

463
00:24:26,320 --> 00:24:28,440
Speaker 1: been out to stores for a long time, right because

464
00:24:28,440 --> 00:24:31,119
Speaker 1: of the pandemic, So it's just that urge. We're seeing

465
00:24:31,200 --> 00:24:33,919
Speaker 1: the revival of stories this year, and I think that

466
00:24:33,960 --> 00:24:37,679
Speaker 1: trend will continue. And also they're looking for deals, so

467
00:24:37,800 --> 00:24:40,720
Speaker 1: they'll if there's only store specific deals this year, which

468
00:24:40,720 --> 00:24:43,600
Speaker 1: we haven't seen the full deal calendar yet, then that

469
00:24:43,680 --> 00:24:47,280
Speaker 1: will draw people to stories. All right, good stuff. As always,

470
00:24:47,320 --> 00:24:49,879
Speaker 1: this is Punham's time of year, the big shopping season.

471
00:24:49,960 --> 00:24:52,199
Speaker 1: She's got it all covered for us. UH put them

472
00:24:52,240 --> 00:24:56,439
Speaker 1: Boyle Bloomberg Intelligence. She covers all things retail for b I.

473
00:24:56,520 --> 00:24:58,360
Speaker 1: She's been doing it for decades. We poached her from

474
00:24:58,359 --> 00:25:00,959
Speaker 1: Goldman Sachs way back in the when we were building

475
00:25:01,600 --> 00:25:04,080
Speaker 1: UH Bloomberg Intelligence, so she's been here since the beginning.

476
00:25:04,080 --> 00:25:06,840
Speaker 1: We always appreciate getting her perspective. And literally the Black Friday,

477
00:25:07,040 --> 00:25:09,080
Speaker 1: she along with all a lot of other Wall Street

478
00:25:09,119 --> 00:25:11,879
Speaker 1: retail animals, they literally go to the stores that just

479
00:25:11,960 --> 00:25:14,280
Speaker 1: kind of see what's you know, how many people are there,

480
00:25:14,600 --> 00:25:17,080
Speaker 1: what kind of products are moving, what kind of promotions

481
00:25:17,119 --> 00:25:19,879
Speaker 1: are being offered. Uh, that's kind of feeds on the

482
00:25:19,960 --> 00:25:22,880
Speaker 1: ground kind of research. So that's good stuff, and we'll

483
00:25:22,880 --> 00:25:29,080
Speaker 1: look forward to reading Plutom's research well. COP twenty seven.

484
00:25:29,119 --> 00:25:32,600
Speaker 1: The United Nations Environmental Conference in Egypt wrapping up today

485
00:25:32,640 --> 00:25:36,160
Speaker 1: after a two weeks get together, so always a good

486
00:25:36,160 --> 00:25:38,840
Speaker 1: time to talk about the environment and kind of what

487
00:25:39,000 --> 00:25:42,720
Speaker 1: businesses are and what they're doing to deal with environmental issues.

488
00:25:42,760 --> 00:25:45,560
Speaker 1: So we thought we'd check in with a VJ. Mathri Pragata.

489
00:25:45,640 --> 00:25:49,280
Speaker 1: He's a president CEO of Montrose Environmental Group. That's a

490
00:25:49,640 --> 00:25:51,760
Speaker 1: New York Stock Exchange list a company m e G

491
00:25:52,280 --> 00:25:54,359
Speaker 1: is the symbol we can put into your Bloomberg terminal.

492
00:25:54,840 --> 00:25:59,400
Speaker 1: But most notably he is a graduate of the Duke University,

493
00:25:59,480 --> 00:26:01,920
Speaker 1: so good for him. I guess he couldn't get into

494
00:26:01,920 --> 00:26:03,480
Speaker 1: the Duke Business School, so we went to some place

495
00:26:03,720 --> 00:26:06,959
Speaker 1: called work for the NBA. So pretty good stuff there.

496
00:26:07,000 --> 00:26:10,240
Speaker 1: Hey v Jus what you guys at Montrose are doing

497
00:26:10,280 --> 00:26:14,040
Speaker 1: these days? Hey Matt, Hey Paul, it's wonderful to talk

498
00:26:14,080 --> 00:26:18,200
Speaker 1: to you guys. UM uh and uh in another Duke

499
00:26:18,280 --> 00:26:22,080
Speaker 1: grad it's uh, it's wonderful to hear that. UM. We are,

500
00:26:22,600 --> 00:26:26,200
Speaker 1: you know, we're an environmental company. We we create environmental solutions,

501
00:26:26,200 --> 00:26:29,560
Speaker 1: and so we are right in the throes of UM

502
00:26:29,560 --> 00:26:34,040
Speaker 1: working on issues related to greenhouse gas measurement mitigation for

503
00:26:34,080 --> 00:26:36,440
Speaker 1: our clients, which you know you started with talking about

504
00:26:36,480 --> 00:26:40,160
Speaker 1: cop um. We're helping treat water to get it back

505
00:26:40,160 --> 00:26:43,600
Speaker 1: to communities. UM, it's it's an incredible time to be

506
00:26:43,600 --> 00:26:46,600
Speaker 1: in this space. It's really exciting. So what exactly do

507
00:26:46,680 --> 00:26:50,480
Speaker 1: you do, because that's a very broad environmental company, could

508
00:26:50,480 --> 00:26:53,320
Speaker 1: mean so many different things. Um, what's the day to

509
00:26:53,400 --> 00:26:55,920
Speaker 1: day business? Yes, I'll give you. I'll give you a

510
00:26:55,960 --> 00:27:00,600
Speaker 1: couple of examples. We um. We were one of the pioneers,

511
00:27:00,960 --> 00:27:03,720
Speaker 1: early adopters of optical gas imaging, which is a way

512
00:27:04,240 --> 00:27:08,080
Speaker 1: to use cameras to see methane methane emissions right, which

513
00:27:08,080 --> 00:27:11,240
Speaker 1: is an odorless and colorless gas. So our teams go

514
00:27:11,320 --> 00:27:14,520
Speaker 1: out and help our clients understand what's being emitted. It's

515
00:27:14,560 --> 00:27:17,399
Speaker 1: a better, cheaper, fastor way of doing it that we

516
00:27:17,440 --> 00:27:19,840
Speaker 1: then report out on that for them, which helps them

517
00:27:20,480 --> 00:27:24,199
Speaker 1: reduce their emissions footprint, which is obviously very topical. And

518
00:27:24,240 --> 00:27:28,160
Speaker 1: the recent methane rule that came out last Friday has

519
00:27:28,200 --> 00:27:31,080
Speaker 1: now adopted that as the best system of emissions reduction.

520
00:27:31,320 --> 00:27:34,080
Speaker 1: So that's an example of something we've been doing for

521
00:27:34,200 --> 00:27:38,520
Speaker 1: years that has material implications for broader climate objectives. V

522
00:27:38,680 --> 00:27:40,960
Speaker 1: J talked to us about kind of your clients and

523
00:27:41,040 --> 00:27:45,000
Speaker 1: how they view their impact on the environment. Has it

524
00:27:45,160 --> 00:27:48,399
Speaker 1: changed are they is it becoming more front and center

525
00:27:48,440 --> 00:27:51,000
Speaker 1: for them? Is it something their board is pushing for.

526
00:27:51,359 --> 00:27:54,200
Speaker 1: How is that. I would point out to our listeners

527
00:27:54,200 --> 00:27:57,200
Speaker 1: that you have a lot of clients who were probably

528
00:27:57,359 --> 00:28:03,359
Speaker 1: previously big environmental sinners and you help them, um, you know,

529
00:28:03,440 --> 00:28:08,920
Speaker 1: recover oil and chemical companies, utilities, etcetera. Yeah, it's great,

530
00:28:08,920 --> 00:28:10,520
Speaker 1: that's a great point. I mean we worked, we worked

531
00:28:10,760 --> 00:28:14,239
Speaker 1: a lot with industry, and you know, our philosophy has

532
00:28:14,240 --> 00:28:18,160
Speaker 1: always been that the environment's an interconnected organism and we're

533
00:28:18,160 --> 00:28:21,520
Speaker 1: all participants in this right when we uh drive to work,

534
00:28:21,560 --> 00:28:24,840
Speaker 1: when we go visit family, we interact with all the

535
00:28:24,880 --> 00:28:28,080
Speaker 1: products that these companies produce. UM. And so it's an

536
00:28:28,080 --> 00:28:30,640
Speaker 1: interconnected whole. And so yes, we are working with them

537
00:28:31,359 --> 00:28:33,840
Speaker 1: to become better stewards of the environment, and they've been

538
00:28:33,840 --> 00:28:37,480
Speaker 1: deeply engaged. It's been really interesting to watch. Just Montrose

539
00:28:37,600 --> 00:28:40,840
Speaker 1: is a you know, a ten tennis year old company.

540
00:28:40,880 --> 00:28:43,760
Speaker 1: Even over the courts of the last decade. Uh, the

541
00:28:43,840 --> 00:28:47,160
Speaker 1: environmental agenda has just become front and center in ways

542
00:28:47,200 --> 00:28:50,920
Speaker 1: I never expected. Um, it is front and center for

543
00:28:51,040 --> 00:28:54,560
Speaker 1: boards and C suites, investors and the markets have really

544
00:28:54,600 --> 00:28:57,800
Speaker 1: pushed on this. Uh. There's E s G commitments, and

545
00:28:57,840 --> 00:29:01,680
Speaker 1: then obviously the regulatory landscape has been evolving really rapidly

546
00:29:02,240 --> 00:29:07,040
Speaker 1: UM across multiple administrations and political UM parties across the world.

547
00:29:07,360 --> 00:29:11,120
Speaker 1: So it's it feels like a very dynamic and attractive

548
00:29:11,120 --> 00:29:13,040
Speaker 1: spot for us to be in as a business. So

549
00:29:13,400 --> 00:29:15,400
Speaker 1: where are you guys investing in your capital? Where do

550
00:29:15,480 --> 00:29:20,040
Speaker 1: you guys see the growth going forward? Yeah, so we've

551
00:29:20,520 --> 00:29:24,040
Speaker 1: we are long on the broader greenhouse gas measurement and

552
00:29:24,120 --> 00:29:27,840
Speaker 1: mitigation space. I mentioned we were kind of early adopters

553
00:29:27,880 --> 00:29:32,160
Speaker 1: of optical gas imaging. We're working with partners to develop

554
00:29:32,240 --> 00:29:35,960
Speaker 1: methane sensors to plug into our software programs so people

555
00:29:36,000 --> 00:29:39,280
Speaker 1: can see in real time what they're emitting. UM. We

556
00:29:39,360 --> 00:29:44,760
Speaker 1: are forward leaning on helping manage UH and mitigate emissions

557
00:29:44,800 --> 00:29:48,760
Speaker 1: from abandoned wells. UM. We've recently filed for some intellectual

558
00:29:48,760 --> 00:29:53,160
Speaker 1: property on carbon capture technology. We've been one of the

559
00:29:53,240 --> 00:29:57,040
Speaker 1: leaders in UM the treatment of the forever chemicals, removing

560
00:29:57,040 --> 00:29:59,560
Speaker 1: that from water and getting that back to communities made

561
00:29:59,560 --> 00:30:02,760
Speaker 1: some doable progress. It's a large part of why the

562
00:30:02,800 --> 00:30:07,360
Speaker 1: business is really growing as rapidly as it is right now. UM.

563
00:30:07,440 --> 00:30:11,400
Speaker 1: We take agricultural waste, we make negative carbon intensity energy

564
00:30:11,400 --> 00:30:13,760
Speaker 1: out of it. UM. The list goes on and on.

565
00:30:13,880 --> 00:30:16,960
Speaker 1: But we are. We're kind of having a great time

566
00:30:17,000 --> 00:30:19,000
Speaker 1: working on what I would consider some of the world's

567
00:30:19,040 --> 00:30:23,280
Speaker 1: most pressing issues. What uh you're you're not a nonprofit?

568
00:30:23,320 --> 00:30:26,280
Speaker 1: I mean you're out there to make money, right, Um, Well,

569
00:30:26,360 --> 00:30:28,760
Speaker 1: if listeners could think, oh, but this must be a nonprofit,

570
00:30:28,800 --> 00:30:32,000
Speaker 1: but you're you know, you're trading on the New York

571
00:30:32,000 --> 00:30:34,360
Speaker 1: Stock Exchange right now about forty five dollars share a

572
00:30:34,400 --> 00:30:37,120
Speaker 1: little bit more, um, And like most companies, you know,

573
00:30:37,160 --> 00:30:39,760
Speaker 1: you had peaked at the end of one have come

574
00:30:39,800 --> 00:30:41,480
Speaker 1: down with the rest of the market, but you've you've

575
00:30:41,520 --> 00:30:45,120
Speaker 1: climbed considerably double or triple what you were at the

576
00:30:45,160 --> 00:30:48,600
Speaker 1: beginning of UM. Tell us about the financial side of

577
00:30:48,640 --> 00:30:54,120
Speaker 1: the company we are. Um, gosh, where do you want

578
00:30:54,120 --> 00:30:56,080
Speaker 1: me to start? I mean the yes, we went public

579
00:30:56,120 --> 00:31:01,880
Speaker 1: in July. How did you get that done? Uh? We

580
00:31:02,480 --> 00:31:04,880
Speaker 1: we I don't know. It's a good question. It's it's

581
00:31:04,920 --> 00:31:08,280
Speaker 1: a blur. Um. That was obviously a really challenging time man, Paul,

582
00:31:08,440 --> 00:31:11,560
Speaker 1: with the pandemic, but for what fifteen dollars a share

583
00:31:11,560 --> 00:31:14,640
Speaker 1: and now you're trading at three x that? Yeah, Yeah,

584
00:31:14,680 --> 00:31:16,960
Speaker 1: it's been it's been a crazy ride. Um. But most

585
00:31:17,000 --> 00:31:19,320
Speaker 1: people seem to focus more on the fact that we

586
00:31:19,320 --> 00:31:20,720
Speaker 1: were kind of at seventy five at the end of

587
00:31:20,760 --> 00:31:24,480
Speaker 1: last year, UM, and now we're down to investors. Are

588
00:31:24,560 --> 00:31:27,280
Speaker 1: investors have been great, We've got all the big institutionals

589
00:31:27,800 --> 00:31:30,440
Speaker 1: who have been really supportive. But yeah, the business. You know, look,

590
00:31:30,480 --> 00:31:34,640
Speaker 1: we UM we were UH an entirely US based company

591
00:31:34,920 --> 00:31:37,959
Speaker 1: five six years ago. We're now in Northern Europe, Canada,

592
00:31:38,080 --> 00:31:42,800
Speaker 1: United States, Australia. You know, we're we went from people

593
00:31:42,800 --> 00:31:45,640
Speaker 1: to now approaching three thousand. The business has more than

594
00:31:45,680 --> 00:31:49,200
Speaker 1: doubled UM since we went public. UM. We're very cash

595
00:31:49,320 --> 00:31:52,120
Speaker 1: generative UM, which has allowed us to kind of put

596
00:31:52,200 --> 00:31:54,600
Speaker 1: capital into research and development, which is where a lot

597
00:31:54,640 --> 00:31:58,120
Speaker 1: of the things I mentioned earlier have come up. UM.

598
00:31:58,200 --> 00:32:01,440
Speaker 1: So it's been it's been a it's been a challenging ride, uh,

599
00:32:01,640 --> 00:32:05,120
Speaker 1: not to say the least, especially with this macroeconomic backdrop

600
00:32:05,160 --> 00:32:08,200
Speaker 1: and some of the geopolitical stuff going on. UM. But

601
00:32:08,560 --> 00:32:11,240
Speaker 1: you know, candidly, perhaps we're luckier than we are smart.

602
00:32:11,280 --> 00:32:13,920
Speaker 1: We're in the right place at the right time. I

603
00:32:13,960 --> 00:32:17,720
Speaker 1: don't see the broader desire to solve these environmental problems

604
00:32:17,760 --> 00:32:20,000
Speaker 1: go anytime soon, and that's a large part of what

605
00:32:20,160 --> 00:32:22,800
Speaker 1: gets me excited every day, all right, VJ. Good stuff.

606
00:32:22,800 --> 00:32:25,840
Speaker 1: Really appreciate getting some of your time now. You guys

607
00:32:25,840 --> 00:32:28,600
Speaker 1: are busy over there in a growing company. VJ. MA

608
00:32:28,720 --> 00:32:32,800
Speaker 1: three Pragada. He's a president CEO of Montrose Environmental Group

609
00:32:33,040 --> 00:32:37,640
Speaker 1: there in New York's exchange traded company. And MS Mary E. G.

610
00:32:40,000 --> 00:32:43,080
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can

611
00:32:43,120 --> 00:32:46,920
Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever

612
00:32:47,000 --> 00:32:50,640
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

613
00:32:50,920 --> 00:32:54,920
Speaker 1: at Matt Miller. On ball Sweeney, I'm on Twitter at

614
00:32:54,960 --> 00:32:57,800
Speaker 1: pt Sweeney Before the podcast. You can always catch us

615
00:32:57,840 --> 00:32:59,240
Speaker 1: worldwide at Bloomberg Radio