Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day, we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. Let's round table this
Speaker 1: thing because I don't know where these markets are going.
Speaker 1: I don't know where the economy is going. I don't
Speaker 1: know where the Fund of Reserve is going. So I
Speaker 1: need some smart people to kind of kind of bring
Speaker 1: it together. Vince Signarella, global macro strategist at Bloomberg News,
Speaker 1: joins us uh and Jennifer Lee, senior economist the managing
Speaker 1: director at BEMO Capital Markets, joins us as well. Jennifer,
Speaker 1: I'm gonna start with you here. Um, I guess Mike
Speaker 1: have many questions. One of my questions is, all right,
Speaker 1: I get it where you are either in or we're
Speaker 1: going into recession. Like a lot of people, just tell
Speaker 1: me how long it's going to be, how deep it's
Speaker 1: gonna be. Is there any way to kind of gauge
Speaker 1: that at this point? Oh, good morning. You know what, UM,
Speaker 1: I think that's still the million. The other question, UM,
Speaker 1: we continue to stand by our mild recession call. UM
Speaker 1: for now. Of course we're going to take it, and
Speaker 1: I'll quote all the different central bankers out there, especially
Speaker 1: GUARD on a day to day meeting by meeting basis. UM.
Speaker 1: But we're still looking for, you know, the downturn to
Speaker 1: hit in the first half of UM and then a
Speaker 1: mild rebound in the second half, averaging zero point zero
Speaker 1: percent growth for all. This is for the US and
Speaker 1: for Canada as well. UM. I've been pretty surprised actually
Speaker 1: that after like what three and fifty basis points or
Speaker 1: whatever of remix, the US economy is still moving forward. UM.
Speaker 1: And it shows how resilience everything is. And it looks
Speaker 1: like they're gonna keep hiking. I mean, they keep telling
Speaker 1: us they're not going to pause, they're not going to pivot. Vince,
Speaker 1: what do you think about the latest UM, you know
Speaker 1: Bowlard charts showing that we need to be between five
Speaker 1: and seven percent for a restrictive economy, sorry, restrictive rates.
Speaker 1: I just don't doubt it. To be honest with you,
Speaker 1: I remember many years ago, I I was speaking with silly,
Speaker 1: said President Closter, And I asked, I was starting to
Speaker 1: ask him a question about whether or not he goes
Speaker 1: into a supermarket, and he abruptly interrupted and said, I do.
Speaker 1: When I've seen the price of cereal. I wonder if
Speaker 1: that's the case with Bullard, because we're seeing in commodity prices. Well,
Speaker 1: he famously, um, you know, ordered a bicycle that he
Speaker 1: then couldn't get because the supply chain issues, and when
Speaker 1: it was finally delivered, he was given a two up charge. Um,
Speaker 1: So he's worried about that. Maybe maybe that's paint at
Speaker 1: his point of view, because when I look at energy prices, uh,
Speaker 1: in particular, they're telling me, uh that exactly what Jennifer
Speaker 1: said that in a procession is coming U probably for
Speaker 1: the first quarter at least, perhaps the first two quarters
Speaker 1: of next year. But dude, when you look at c P,
Speaker 1: I what in the hell like you got to do
Speaker 1: something right? Seven point seven or cent. Yeah, but it
Speaker 1: takes time for inflation to come down, and inflation expectations
Speaker 1: are starting to drop if you if you look at
Speaker 1: what crew futures versus inflation expectations for one year out
Speaker 1: in the University of Michigan. They're tied at the hip.
Speaker 1: And when with these crew futures coming down, I'm going
Speaker 1: to suggest to you that when we see the next
Speaker 1: few mission one year inflation expectations, they're gonna come down. Also,
Speaker 1: we're going into a holiday driving season and guess only
Speaker 1: in futures dropping, we're going into the winter and all
Speaker 1: the entire energy complex is dropping precipitously. At w t
Speaker 1: I down four percent this morning. That doesn't strike me
Speaker 1: as there's real strong demand out there for the consumer.
Speaker 1: Monket And and Jennifer, you know, we were just kind
Speaker 1: of getting through the bulk of the earnings releases from
Speaker 1: a lot of the big retailers, and again my takeaway,
Speaker 1: it seems like maybe with the exception of Target, pretty
Speaker 1: strong out there, the consumer seems in pretty decent position.
Speaker 1: How do you think about the consumer um? It's you're right,
Speaker 1: And I was actually a little bit heartened by something
Speaker 1: that that James Bullard said earlier this week that who
Speaker 1: is mentioning the bullish factors for the economy, And he
Speaker 1: said he started like state flush, state government savings and
Speaker 1: he's still constituent continued to sit excess household savings and
Speaker 1: still high household wealth, and that's I think this is
Speaker 1: where it's all coming from. And you know, you're still
Speaker 1: seeing wage increases that we're trying to avoid that whole
Speaker 1: wage price spiral thing. But I think that's the plus side,
Speaker 1: even though yes, that's insulationary. But on the plus side,
Speaker 1: you know, at least consumers are making money, at least
Speaker 1: they have a job and they're making a city income
Speaker 1: and be you know a hundred times where resibu is
Speaker 1: going the other way. But so, why do we see
Speaker 1: crude prices coming down? Is the concern that consumers are
Speaker 1: gonna stop spending on oil next year? Is it more
Speaker 1: of a global story? Obviously it's a fungible commodity and
Speaker 1: it trades around the world. I mean, I don't think
Speaker 1: we're doing any less driving. I think I've heard people
Speaker 1: say this is gonna be a very busy Thanksgiving season.
Speaker 1: I'm taking my brand new Chevy Silverado z R two
Speaker 1: back to Ohio with a six point two leader V eight.
Speaker 1: It's naturally aspirated. I get thirteen point four miles a gallon,
Speaker 1: and I'm excited for that trip. So, so why is energy?
Speaker 1: Why are oil prices dropping? I think it's still looking forward,
Speaker 1: I mean because yours are still spending, um obviously, but
Speaker 1: just looking at the data, but obviously the pace has
Speaker 1: slowed and they're not going to continue spending at this
Speaker 1: current rate. And hence this is why you know we're
Speaker 1: looking for that downtren in the first half. UM. And
Speaker 1: with all prices. I mean that's this morning. But you
Speaker 1: know we've seen this week that it can be extremely
Speaker 1: volatile and you can't just scout Russia obviously ever from
Speaker 1: the mix, so they can just say one thing and
Speaker 1: boom you can see what oil prices heading higher again. UM.
Speaker 1: So I think it's more you know, looking ahead, UM,
Speaker 1: the coming slow down and things have started to slow,
Speaker 1: but they're gonna slow more meaningfully in the new year. UM.
Speaker 1: Just given that we've seen such high prices, still high inflation,
Speaker 1: not even though it's coming off the peak, still too
Speaker 1: high for any for anyone's liking. And that's what's going
Speaker 1: to that's what's prompting. I think energy prices, the weaker
Speaker 1: weight on energy prices even thirty seconds have we seen
Speaker 1: peak US dollar? I think? So, I think when you
Speaker 1: see a bit in risk in the spud correlating UM
Speaker 1: within inverse. Uh. Dollar. I like stocks higher going into
Speaker 1: next year and into the end of this year. Uh
Speaker 1: and I think that will that'll see the dollar all
Speaker 1: over all. Right, Vin's good stuff. We appreciated Vin Signarella,
Speaker 1: macro strategist for Bloomberg News, and Jennifer Lee, senior economist
Speaker 1: and managing director BEMO. That's Bank of Montreal all for
Speaker 1: the folks. I've been in this game a while BMO
Speaker 1: Capital Markets. We appreciate that good stuff. Here and again, Matt,
Speaker 1: here's my gasoline chart. You know, it's my Paul Sweeney
Speaker 1: Personal Inflation gauge daily national average gasoline prices for regular
Speaker 1: unleaded three dollars and seventy cents. We're getting down to
Speaker 1: almost the low that we touched, you know, back in September.
Speaker 1: So gasoline rolling over. You called out the w t
Speaker 1: I crude. We've got a seven handle in their seventy
Speaker 1: eight dollars fifty five cents. Uh. So that's your energy
Speaker 1: complex prices coming into the mortgage markets, interest rates, you know,
Speaker 1: coming down, and I'm looking at that, you know, the
Speaker 1: ten year you know Treasury it's three point seven nine percent.
Speaker 1: We were well over four percent, four and a half percent.
Speaker 1: So what does it mean for the mortgage markets? Am
Speaker 1: I gonna get a better deal in the mortgage biz
Speaker 1: Erica Heidelberg. She's a mortgage backed security see strategist for
Speaker 1: Bloomberg Intelligence and she joins us live here on the
Speaker 1: Bloomberg in Active Broker Studio. So Erica just talked to
Speaker 1: us about the state of the mortgage market today. Well,
Speaker 1: in terms of mortgage rates. Uh, last Thursday, after the
Speaker 1: CPI print, we saw the biggest one day fall in
Speaker 1: secondary mortgage market rates in history, fifty four basis points.
Speaker 1: About half of that was because rates fell, about half
Speaker 1: of that was because spreads tightened, both of them kind
Speaker 1: of a relief rally, you know, thinking that the Fed
Speaker 1: probably will slow down their rate of increases. So, um,
Speaker 1: you know, good news for homeowners. Uh, you know, still
Speaker 1: at six sixty according to the Friday Max survey rate
Speaker 1: this week. So it's not like buyer if you're already
Speaker 1: locked in, right, home own buyers specifically, yeah, or if
Speaker 1: you want to sell us, good news right, because a
Speaker 1: lot of people have been having difficulty selling since the
Speaker 1: buyers can't get good rates locked in. Yeah, I mean
Speaker 1: that the point that I'm kind of trying to make
Speaker 1: It's definitely good for you know, the housing market some degree,
Speaker 1: but we're so far above where you know, homeowners, home buyers,
Speaker 1: anybody's used to having to take out a mortgage that
Speaker 1: I don't think it's at this point going to move
Speaker 1: the needle at all for very many people. Um, even
Speaker 1: that huge drop, even that huge drop. At some point,
Speaker 1: people get used to these rates, right. All of our parents,
Speaker 1: I'm sure have told us I used to pay for
Speaker 1: a mortgage right, um, which seems unbelievable now, but there
Speaker 1: was a generation of people that locked in those rates. Yeah.
Speaker 1: For for those who are able to afford to take
Speaker 1: out mortgages at these levels, it's probably not even that
Speaker 1: big a deal because they can actually refinance of rates
Speaker 1: do fall, and you know, who knows where we's are going.
Speaker 1: But I think a lot of people don't necessarily expect
Speaker 1: us to stay quite this high. But for other homeowners
Speaker 1: or home buyers, sorry getting that confused. For other home buyers,
Speaker 1: they can no longer afford the type of house they
Speaker 1: were looking for at all, especially first time home buyers.
Speaker 1: So one of the interests you right off, by the way,
Speaker 1: because you can deduct your interest payments, right, but only
Speaker 1: up to a certain amount. Right, It's limited at this point. Um, yeah,
Speaker 1: that the salt tax you're trying to No, not the salt.
Speaker 1: We're still praying every night. I kneel down next to
Speaker 1: my bed praying for the salt deduction. But that's a
Speaker 1: different You can still deduct, and I can even deduct
Speaker 1: my mortgage interest. But I think there is a limit. Um,
Speaker 1: you can only deduct mortgage interest. I believe up to
Speaker 1: seven yeah, seven on a loan of yeah, and I
Speaker 1: think even there it's capped. I know, you know, personally,
Speaker 1: I think at this point we're limited to the standard
Speaker 1: deduction between the but the salt tax, you know, getting
Speaker 1: taken away, and you know we don't owe that much
Speaker 1: interest left on the mortgage. Is the Federal Reserve buy mortgages,
Speaker 1: selling mortgages? Doing nothing? What are they doing in a
Speaker 1: mortgage market? Right? So the Federal Reserve almost exactly a
Speaker 1: year ago declared that they were going to taper their
Speaker 1: buying of mortgage backed securities. They then we invested paydowns
Speaker 1: uh through June, um and even some through the summer,
Speaker 1: even though they technically were letting the portfolio start to
Speaker 1: run off. Ironically, even though they announced that they were
Speaker 1: going to start withdrawing from the mortgage market a year ago,
Speaker 1: their portfolio is the exact same size it was a
Speaker 1: year ago, because they grew it again through you know,
Speaker 1: June basically, and then it began to shrink from then.
Speaker 1: So what's interesting though, is without even having to have
Speaker 1: changed the size of their portfolio, rates or of course,
Speaker 1: you know, tire, even with last week's sell off, I'm sorry,
Speaker 1: last week's rally and mortgage spreads are significantly wider, and
Speaker 1: the housing market is an entirely different place right now.
Speaker 1: We had existing home sales out this morning. Ninth straight
Speaker 1: month of decline in home sales, fourth straight month of
Speaker 1: decline in median home prices from the existing home sales,
Speaker 1: although part of that seasonals, but it's still um you know,
Speaker 1: we've gone from a twenty percent year of year change,
Speaker 1: we're now down to about a six percent year of
Speaker 1: year change. So obviously a lot of softening and again
Speaker 1: fourth straight month actually you know, a decrease in price
Speaker 1: in that in that index. What's building like right now
Speaker 1: in terms of putting up new uh UM stock, Well,
Speaker 1: home builders are pretty depressed at this point. Uh you know,
Speaker 1: I forget what the last number of I think it
Speaker 1: was like thirty three or something like that, where it's
Speaker 1: a diffusion index, and that means that two thirds of
Speaker 1: the home builders I got that right, whatever, more than
Speaker 1: more than half of the home builders are pessimistic about
Speaker 1: future building. That optimistic housing starts have been coming down
Speaker 1: consistently in single family housing. But the interesting counter trend
Speaker 1: there is that multi family housing starts are increasing. So
Speaker 1: I think that's a recognition that a lot of um
Speaker 1: potential home buyers are actally gonna have to go into
Speaker 1: the rental market, right because those people we were talking
Speaker 1: about who are going to have difficulties swinging and mortgage
Speaker 1: payments with rates at these levels, are gonna have to
Speaker 1: rent instead. And that's why I heard a read guy
Speaker 1: telling me the other day they're they're still building big
Speaker 1: multi family housing and and to your point to there
Speaker 1: are still a lot of homes under construction and a
Speaker 1: lot of new homes coming online which should help also
Speaker 1: at the supply. Didn't mad dynamic normalization? All right? Erica,
Speaker 1: thank you so much. We appreciate it as always. Erica Heidelberg,
Speaker 1: NBAS strategist, Bloomberg intelligent, just joining us live here in
Speaker 1: our Bloomberg Interactive Broker studio, two days away from the
Speaker 1: World Cup beginning in Doha. And they pulled and they
Speaker 1: from undreag pulled the beer rug right out from under
Speaker 1: all the folks that want to enjoy a cold one. Uh.
Speaker 1: We want to break this down. This is the World Cup,
Speaker 1: this is huge. We all know this is a global
Speaker 1: sporting event. We have some great assets to talk to here,
Speaker 1: some people that really know what's going on. Simone Foxman,
Speaker 1: she's a reporter for Bloomberg Television and News and she
Speaker 1: is based in Cutter. That's how I pronounce it, um
Speaker 1: and I know you do. And we have Ira Jersey,
Speaker 1: he's Bloomberg Interstrate strategist. Why do we have him on
Speaker 1: because he actually owns a soccer team. He's actually into
Speaker 1: this whole thing of soccer. I don't get it, but
Speaker 1: he's all in. Simone, Let's start with you here. I
Speaker 1: guess the news on the last twenty four hours coming
Speaker 1: out of Cutter is no Budweiser beer in the stadiums.
Speaker 1: How's that playing over there? Especially since they promised it
Speaker 1: for so long people who bought tickets planned on drinking
Speaker 1: at the game, right, Yeah, well they were are always
Speaker 1: going to be curtailed, and if I may, it's technically
Speaker 1: cut um. But I know most folks can't. Uh it's
Speaker 1: hard to say for most English speakers. But yeah, so
Speaker 1: so we have these rules in place. They were announced
Speaker 1: in September. You can drink within the stadium perimeter, not
Speaker 1: the stance themselves. You can drink within the stadium perim
Speaker 1: or for three hours ahead of the game. Uh, then
Speaker 1: you go to the game, then you come back and
Speaker 1: you can drink for another hour and you'd only be
Speaker 1: able to drink buzz light. But yeah, this is a
Speaker 1: bit of uh well at the very last minute decision,
Speaker 1: certainly to ban alcohol entirely. I mean, alcohol is a
Speaker 1: flashpoint issue here. It is something that you know, taboo
Speaker 1: under in the conservative Muslim culture. I've caught the people
Speaker 1: do drink, but it's in limited spaces. Only certain people
Speaker 1: can actually um buy alcohol and and at specific places.
Speaker 1: So it's not surprising that this is an issue. What
Speaker 1: I think is surprising is the fact that this is
Speaker 1: forty eight hours ahead of the World Cup and we're
Speaker 1: still making these you and can I just jump in here, Um, Yeah,
Speaker 1: so you know, I was last month when I was
Speaker 1: on a trip to London to visit some of my
Speaker 1: team there. I did go to a Premier League game
Speaker 1: and I thought it was interesting that, Um, at Premier
Speaker 1: League venues you're not allowed to drink in the stands either. Um,
Speaker 1: so it's not completely on process because nobody trusts British
Speaker 1: people with alcohol. Well no, no, there was plenty of
Speaker 1: drinking going on before the game in the hallways outside.
Speaker 1: Don't get me wrong. I'm just saying, like in the
Speaker 1: stands they weren't allowed to have alcohol. So so I
Speaker 1: don't know, if you know. Part of that I think
Speaker 1: is just the the you know, over indulgence number one
Speaker 1: and number two, just you know, things like like maybe
Speaker 1: making a mess. So so I think for some Europeans
Speaker 1: it won't be particularly unusual to have to imbibe prior
Speaker 1: to the matches and then go into the stands. You know, UM,
Speaker 1: feeling pretty good? Can you smoke? Simone? Can you smoking?
Speaker 1: It says no, I don't think so. But you know,
Speaker 1: honestly I have I don't know the answer to that, Hey, Simone,
Speaker 1: you and your colleague ad faith Nayer. If I get
Speaker 1: there right, wrote a fantastic story today on the Bloomberg
Speaker 1: terminal about what guitar built for the most expensive World
Speaker 1: Cup ever. Just about some of the huge numbers associated
Speaker 1: with this. Well, the big number here, according to Bloomberg
Speaker 1: get Intelligence, is three hundred billion dollars. That's the amount
Speaker 1: of money that the government has spent, not just on stadiums.
Speaker 1: Actually stadiums are a pretty small piece of this overall, um,
Speaker 1: but spent on infrastructure in preparation for the World Cup.
Speaker 1: So things like a brand new metro system, an entire
Speaker 1: new metro system in the last twelve years at brand
Speaker 1: new city called Blue Sale that was underway a little bit,
Speaker 1: but it's something that's been continue to be built. UM.
Speaker 1: And newport and expansion of the airport. All of these things,
Speaker 1: um were things that Cutter wanted to do anyway, but
Speaker 1: the timeline was really sped up as preparation for the
Speaker 1: World Cup. Stadiums again small piece of that, about ten
Speaker 1: billion of that overall three billion dollar figure. Huge, huge,
Speaker 1: But how much money does the World Cup pull in?
Speaker 1: Do you? Do you have any of the figures here?
Speaker 1: I know you're too quickly just following the rates market, UM,
Speaker 1: but it's big business. Right. Obviously, um, if Qatar was
Speaker 1: willing to bribe FIFA with I don't know how much
Speaker 1: it costs them to to get to get the World Cup,
Speaker 1: but it must have been pretty pretty expensive. How much
Speaker 1: does the whole thing generate? Yeah, so I mean it's
Speaker 1: similar to something like the Olympics, where you're going to
Speaker 1: be driving significant amount of tourism revenue and um you know,
Speaker 1: things like like rental. And it's also an opportunity you
Speaker 1: go to think about a place like Brazil when they
Speaker 1: hosted a few years ago, a couple of tournaments ago. UM,
Speaker 1: it's an opportunity for you to highlight what you have
Speaker 1: in terms of tourism and it and it gives usually
Speaker 1: good vibes for UH for a particular countries. So so
Speaker 1: that's where this whole idea of sports washing comes in,
Speaker 1: where you know, countries host these big events that maybe
Speaker 1: don't have the um you know, don't necessarily have what
Speaker 1: what you know, Westerners would consider you know, good civil
Speaker 1: rights or or um UH or governments that are free
Speaker 1: and democratic, but it allows you to highlight what you
Speaker 1: do have in terms of tourism, infrastructure. You know, whether
Speaker 1: or not you know cutter is going to be one
Speaker 1: of the great places that's going to benefit from from
Speaker 1: that from having the World Cup. I'm not sure a
Speaker 1: lot of people that I've talked to about this, we're
Speaker 1: you know, pretty disappointed. It was going to be in
Speaker 1: the winter, right, This isn't a normal time. Usually it's
Speaker 1: a summer event, um somewhere, we're you know, May through
Speaker 1: um late May through through July event as opposed to
Speaker 1: you know, now in the middle of what is in
Speaker 1: most most countries, this is the middle of their soccer
Speaker 1: seasons for their their club sports. So um, so this
Speaker 1: is really not a particularly good time to be having this.
Speaker 1: From a it's not a particularly good place obviously, right,
Speaker 1: I mean, who would have chosen Qatar for the World
Speaker 1: Cup had it not been for massive injections of liquidity
Speaker 1: into his bank account? Someone? Are they playing? Just let
Speaker 1: me take a little bit of issue with that though.
Speaker 1: I mean, this is a development story for this country
Speaker 1: for sure, and from a FISA's perspective, and in corruption
Speaker 1: allegations aside. You know, their desire is to expand football
Speaker 1: into new parts of the world. That's why we're going
Speaker 1: to see a mainly US focused the World Cup come six.
Speaker 1: But also you know where else and Mina is actually
Speaker 1: going to be able to cobble together that kind of funds,
Speaker 1: the kind of infrastructure that you need in order to
Speaker 1: be able to host a World Cup. You're really looking
Speaker 1: at the Gulf. Yes, the Gulf has its own ambitions,
Speaker 1: but here the ambition is to build a non oil economy,
Speaker 1: to move away um from hydro carbon. And so for them,
Speaker 1: that's why this three billion dollars, this makes a lot
Speaker 1: of sense. So are they going to host the Winter
Speaker 1: Olympics next? Saudi Arabia is actually gonna host the Asian
Speaker 1: Winter Games. I've I've forgotten the year here. I believe
Speaker 1: it's tight, but someone's gonna call me and tell me
Speaker 1: I'm wrong. But believe it or not, Yes, I believe
Speaker 1: it Saudi Arabia. Believe it all right some And thank
Speaker 1: you so much for joining us. Really appreciate getting uh
Speaker 1: your time here. Simone Foxman, she's in Doha. She covers
Speaker 1: that part of the world for Bloomberg News and Bloomberg Television,
Speaker 1: so it's great to get her on feats on the
Speaker 1: ground type of reporting there. And we got our Jersey.
Speaker 1: He's Bloomberg Interest Rate strategist but he is our expert
Speaker 1: for all things football slash soccer, and uh, please take
Speaker 1: a look at Simone's article on the Bloomberg trompins from
Speaker 1: shirts on Bloomberg dot com. It gives you anything if
Speaker 1: you have a terminal in front of you and I
Speaker 1: big take, and I big take. It's good stuff and
Speaker 1: great reporting. So check it out on Bloomberg dot com
Speaker 1: slash A big take. All right, let's check in and
Speaker 1: get a real, real overview what's going on in the
Speaker 1: retail space. We've had a lot of retailers report earnings
Speaker 1: over the last several days. We want to bring in
Speaker 1: Punham Goyle. She's a senior analyst at Bloomberg Intelligence that
Speaker 1: covers all things retail. So, Punham, what are some of
Speaker 1: your takeaways? And look like some decent numbers out of
Speaker 1: you know, the likes of the Gap and foot locker
Speaker 1: and raw stores. Consumers pretty good? Uh, consumer is not
Speaker 1: pretty good. I think they're okay. I think I think
Speaker 1: our expectations had been muted, so compared to muted expectations
Speaker 1: of results are definitely better. Um. I think it comes
Speaker 1: back to inventory really here, when I look at the
Speaker 1: earnings that I've been out over the last week. UM,
Speaker 1: you are seeing inventory getting better aligned with demand, which
Speaker 1: I think is the plus point here, especially heading into
Speaker 1: holiday when you know you want to kind of control
Speaker 1: the markdowns even though we know it will be very promotional.
Speaker 1: That was probably most promising to me through a lot
Speaker 1: of these earnings. We had raw stores last night, and
Speaker 1: there it was about inventory control. They were able to,
Speaker 1: you know, cut back on their inventories drastically. They were
Speaker 1: up I believe about over fifty at the end of
Speaker 1: second quarter and now down now just up less than
Speaker 1: ten percent. So really big inventory improvements is overseeing. So
Speaker 1: a lot of retailers are at least positively surprising the
Speaker 1: markets UM from Walmart UM to Ross stores. And we
Speaker 1: also have a lot of like Athletic and at leisure
Speaker 1: brands doing well. But Target has done the opposite. What's
Speaker 1: wrong with them versus the rest versus everyone else? You know,
Speaker 1: it's given what we've seen out of everyone else, and
Speaker 1: when I look at Target, it's it's a bit surprising
Speaker 1: to what's happening there, But I think it may have
Speaker 1: to It goes back to inventory because compared to Walmart,
Speaker 1: you can argue that, you know, Target is more discretionary,
Speaker 1: which it is because half of Walmart fills do come
Speaker 1: from consumables. But then when you see gaps doing okay,
Speaker 1: you see Macy's doing okay, Ross, t j X are
Speaker 1: all doing okay. But I think the expectations for Exami
Speaker 1: were much lower than they weren't than they were for
Speaker 1: a Target. So I do think Target UM just needs
Speaker 1: to work through its inventory position and then you know,
Speaker 1: people still love Tarj. It's still it's still a favorite brand.
Speaker 1: Hey put them Black Friday, Cyber Monday. I know they're
Speaker 1: not as big as they once were for retailers, but
Speaker 1: still it's a big deal. It's a big data point.
Speaker 1: What are you expecting? Lots of discounts, So if you
Speaker 1: have shopping lists, shop on Black Friday. UM retailers have
Speaker 1: way too mench inventory on hand. There will be promotions.
Speaker 1: Everyone's in a bid to gain market share, and consumers
Speaker 1: are looking to spend as they're crunched for cash. This
Speaker 1: holiday season. They will be spending more over the five
Speaker 1: day holiday weekend than they did last year. UM. We
Speaker 1: think overall online sales will be good, but they will
Speaker 1: be focused largely on Cyber Monday and overall holiday The
Speaker 1: online sales gains will moderate to single digit levels versus
Speaker 1: double digits in the past multiple years that I've watched it.
Speaker 1: How how how close attention do you pay to pump
Speaker 1: prices because for a lot of these big box stores,
Speaker 1: gasoline sales are also um, you know in play. Yeah. Absolutely.
Speaker 1: I mean lower fuel prices as a plus going into
Speaker 1: the holiday season as people can fill up their tank
Speaker 1: and now worry about having to drive out a little
Speaker 1: to get their shopping needs. Matt Um. So lower fuel
Speaker 1: price you talked about earlier, I think is a positive
Speaker 1: right now for consumer spending. So on Black Friday, put
Speaker 1: them where are you going to be? I Am going
Speaker 1: to be at the Freehold mall and stores nearby, checking
Speaker 1: out to all the deals as always so I used to.
Speaker 1: I mean, I'll drive by the I'll drive by, not
Speaker 1: going the Short Hills mall. I'm just expecting, fully expecting it.
Speaker 1: The parking lots to be packed. Am I going to
Speaker 1: see that? I think you will, because remember people haven't
Speaker 1: been out to stores for a long time, right because
Speaker 1: of the pandemic, So it's just that urge. We're seeing
Speaker 1: the revival of stories this year, and I think that
Speaker 1: trend will continue. And also they're looking for deals, so
Speaker 1: they'll if there's only store specific deals this year, which
Speaker 1: we haven't seen the full deal calendar yet, then that
Speaker 1: will draw people to stories. All right, good stuff. As always,
Speaker 1: this is Punham's time of year, the big shopping season.
Speaker 1: She's got it all covered for us. UH put them
Speaker 1: Boyle Bloomberg Intelligence. She covers all things retail for b I.
Speaker 1: She's been doing it for decades. We poached her from
Speaker 1: Goldman Sachs way back in the when we were building
Speaker 1: UH Bloomberg Intelligence, so she's been here since the beginning.
Speaker 1: We always appreciate getting her perspective. And literally the Black Friday,
Speaker 1: she along with all a lot of other Wall Street
Speaker 1: retail animals, they literally go to the stores that just
Speaker 1: kind of see what's you know, how many people are there,
Speaker 1: what kind of products are moving, what kind of promotions
Speaker 1: are being offered. Uh, that's kind of feeds on the
Speaker 1: ground kind of research. So that's good stuff, and we'll
Speaker 1: look forward to reading Plutom's research well. COP twenty seven.
Speaker 1: The United Nations Environmental Conference in Egypt wrapping up today
Speaker 1: after a two weeks get together, so always a good
Speaker 1: time to talk about the environment and kind of what
Speaker 1: businesses are and what they're doing to deal with environmental issues.
Speaker 1: So we thought we'd check in with a VJ. Mathri Pragata.
Speaker 1: He's a president CEO of Montrose Environmental Group. That's a
Speaker 1: New York Stock Exchange list a company m e G
Speaker 1: is the symbol we can put into your Bloomberg terminal.
Speaker 1: But most notably he is a graduate of the Duke University,
Speaker 1: so good for him. I guess he couldn't get into
Speaker 1: the Duke Business School, so we went to some place
Speaker 1: called work for the NBA. So pretty good stuff there.
Speaker 1: Hey v Jus what you guys at Montrose are doing
Speaker 1: these days? Hey Matt, Hey Paul, it's wonderful to talk
Speaker 1: to you guys. UM uh and uh in another Duke
Speaker 1: grad it's uh, it's wonderful to hear that. UM. We are,
Speaker 1: you know, we're an environmental company. We we create environmental solutions,
Speaker 1: and so we are right in the throes of UM
Speaker 1: working on issues related to greenhouse gas measurement mitigation for
Speaker 1: our clients, which you know you started with talking about
Speaker 1: cop um. We're helping treat water to get it back
Speaker 1: to communities. UM, it's it's an incredible time to be
Speaker 1: in this space. It's really exciting. So what exactly do
Speaker 1: you do, because that's a very broad environmental company, could
Speaker 1: mean so many different things. Um, what's the day to
Speaker 1: day business? Yes, I'll give you. I'll give you a
Speaker 1: couple of examples. We um. We were one of the pioneers,
Speaker 1: early adopters of optical gas imaging, which is a way
Speaker 1: to use cameras to see methane methane emissions right, which
Speaker 1: is an odorless and colorless gas. So our teams go
Speaker 1: out and help our clients understand what's being emitted. It's
Speaker 1: a better, cheaper, fastor way of doing it that we
Speaker 1: then report out on that for them, which helps them
Speaker 1: reduce their emissions footprint, which is obviously very topical. And
Speaker 1: the recent methane rule that came out last Friday has
Speaker 1: now adopted that as the best system of emissions reduction.
Speaker 1: So that's an example of something we've been doing for
Speaker 1: years that has material implications for broader climate objectives. V
Speaker 1: J talked to us about kind of your clients and
Speaker 1: how they view their impact on the environment. Has it
Speaker 1: changed are they is it becoming more front and center
Speaker 1: for them? Is it something their board is pushing for.
Speaker 1: How is that. I would point out to our listeners
Speaker 1: that you have a lot of clients who were probably
Speaker 1: previously big environmental sinners and you help them, um, you know,
Speaker 1: recover oil and chemical companies, utilities, etcetera. Yeah, it's great,
Speaker 1: that's a great point. I mean we worked, we worked
Speaker 1: a lot with industry, and you know, our philosophy has
Speaker 1: always been that the environment's an interconnected organism and we're
Speaker 1: all participants in this right when we uh drive to work,
Speaker 1: when we go visit family, we interact with all the
Speaker 1: products that these companies produce. UM. And so it's an
Speaker 1: interconnected whole. And so yes, we are working with them
Speaker 1: to become better stewards of the environment, and they've been
Speaker 1: deeply engaged. It's been really interesting to watch. Just Montrose
Speaker 1: is a you know, a ten tennis year old company.
Speaker 1: Even over the courts of the last decade. Uh, the
Speaker 1: environmental agenda has just become front and center in ways
Speaker 1: I never expected. Um, it is front and center for
Speaker 1: boards and C suites, investors and the markets have really
Speaker 1: pushed on this. Uh. There's E s G commitments, and
Speaker 1: then obviously the regulatory landscape has been evolving really rapidly
Speaker 1: UM across multiple administrations and political UM parties across the world.
Speaker 1: So it's it feels like a very dynamic and attractive
Speaker 1: spot for us to be in as a business. So
Speaker 1: where are you guys investing in your capital? Where do
Speaker 1: you guys see the growth going forward? Yeah, so we've
Speaker 1: we are long on the broader greenhouse gas measurement and
Speaker 1: mitigation space. I mentioned we were kind of early adopters
Speaker 1: of optical gas imaging. We're working with partners to develop
Speaker 1: methane sensors to plug into our software programs so people
Speaker 1: can see in real time what they're emitting. UM. We
Speaker 1: are forward leaning on helping manage UH and mitigate emissions
Speaker 1: from abandoned wells. UM. We've recently filed for some intellectual
Speaker 1: property on carbon capture technology. We've been one of the
Speaker 1: leaders in UM the treatment of the forever chemicals, removing
Speaker 1: that from water and getting that back to communities made
Speaker 1: some doable progress. It's a large part of why the
Speaker 1: business is really growing as rapidly as it is right now. UM.
Speaker 1: We take agricultural waste, we make negative carbon intensity energy
Speaker 1: out of it. UM. The list goes on and on.
Speaker 1: But we are. We're kind of having a great time
Speaker 1: working on what I would consider some of the world's
Speaker 1: most pressing issues. What uh you're you're not a nonprofit?
Speaker 1: I mean you're out there to make money, right, Um, Well,
Speaker 1: if listeners could think, oh, but this must be a nonprofit,
Speaker 1: but you're you know, you're trading on the New York
Speaker 1: Stock Exchange right now about forty five dollars share a
Speaker 1: little bit more, um, And like most companies, you know,
Speaker 1: you had peaked at the end of one have come
Speaker 1: down with the rest of the market, but you've you've
Speaker 1: climbed considerably double or triple what you were at the
Speaker 1: beginning of UM. Tell us about the financial side of
Speaker 1: the company we are. Um, gosh, where do you want
Speaker 1: me to start? I mean the yes, we went public
Speaker 1: in July. How did you get that done? Uh? We
Speaker 1: we I don't know. It's a good question. It's it's
Speaker 1: a blur. Um. That was obviously a really challenging time man, Paul,
Speaker 1: with the pandemic, but for what fifteen dollars a share
Speaker 1: and now you're trading at three x that? Yeah, Yeah,
Speaker 1: it's been it's been a crazy ride. Um. But most
Speaker 1: people seem to focus more on the fact that we
Speaker 1: were kind of at seventy five at the end of
Speaker 1: last year, UM, and now we're down to investors. Are
Speaker 1: investors have been great, We've got all the big institutionals
Speaker 1: who have been really supportive. But yeah, the business. You know, look,
Speaker 1: we UM we were UH an entirely US based company
Speaker 1: five six years ago. We're now in Northern Europe, Canada,
Speaker 1: United States, Australia. You know, we're we went from people
Speaker 1: to now approaching three thousand. The business has more than
Speaker 1: doubled UM since we went public. UM. We're very cash
Speaker 1: generative UM, which has allowed us to kind of put
Speaker 1: capital into research and development, which is where a lot
Speaker 1: of the things I mentioned earlier have come up. UM.
Speaker 1: So it's been it's been a it's been a challenging ride, uh,
Speaker 1: not to say the least, especially with this macroeconomic backdrop
Speaker 1: and some of the geopolitical stuff going on. UM. But
Speaker 1: you know, candidly, perhaps we're luckier than we are smart.
Speaker 1: We're in the right place at the right time. I
Speaker 1: don't see the broader desire to solve these environmental problems
Speaker 1: go anytime soon, and that's a large part of what
Speaker 1: gets me excited every day, all right, VJ. Good stuff.
Speaker 1: Really appreciate getting some of your time now. You guys
Speaker 1: are busy over there in a growing company. VJ. MA
Speaker 1: three Pragada. He's a president CEO of Montrose Environmental Group
Speaker 1: there in New York's exchange traded company. And MS Mary E. G.
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
Speaker 1: at Matt Miller. On ball Sweeney, I'm on Twitter at
Speaker 1: pt Sweeney Before the podcast. You can always catch us
Speaker 1: worldwide at Bloomberg Radio