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

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Speaker 1: with my co host of Bonnie Quinn. Every business day

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

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

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

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Speaker 1: and on Bloomberg dot com. Well, markets continue to sell

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Speaker 1: off even more quantity if you like. Now the s

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Speaker 1: is down two and oil is downward than three. Four

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Speaker 1: barrel of w T I the perfect time to have

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Speaker 1: on John killed off of again Capital John. Why is

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Speaker 1: oil selling off so much today? One to punch here today, Lonnie,

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Speaker 1: we have a sudden increase, if not full restoration looming

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Speaker 1: for Libyan's Libya's oil production. They're going to be going

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Speaker 1: up to his high as a million barrels a day,

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Speaker 1: probably by the beginning of next month, if not sooner.

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Speaker 1: They're already at around six And this all this news

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Speaker 1: about the coronavirus outbreaks um, particularly in Europe where there

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Speaker 1: were rumors in the market overnight of France, Italy and

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Speaker 1: Spain going back to full lockdown, UH, just really crushed

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Speaker 1: the sentiment in the oil market. Because with with that

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Speaker 1: kind of news, with those kind of developments, you know,

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Speaker 1: we're just not going to see the kind of rebound

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Speaker 1: in passenger travel in cars and planes anytime soon. John,

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Speaker 1: I know, Um and chatting with you in the past,

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Speaker 1: it's all about supply and demand here. Everybody's got their

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Speaker 1: supply models, everyone has their demand models here. Do you

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Speaker 1: have a sense of kind of what's really driving the

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Speaker 1: narrative here? Is it more then I constrained outlook on

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Speaker 1: demand that's keeping oil where it is right here? Or

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Speaker 1: do you think there's an equally important supply discussion. Well,

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Speaker 1: you know, we've we've been stalemated obviously around the forty

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Speaker 1: dollar barrel mark for a good six months. So I

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Speaker 1: mean that the arguments on both sides, I've been kind

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Speaker 1: of fears and like I said, you know, you know,

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Speaker 1: pushed to a stalemate. I think there were it was

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Speaker 1: a growing sent of hopefulness in the oil market, even

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Speaker 1: as recently as a week or so ago, when we

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Speaker 1: finally got a good gasoline demand number here in the

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Speaker 1: US first, when that was near normal unfortunately nine million

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Speaker 1: barrels a day. Unfortunately, we've fallen back again precipitously and

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Speaker 1: now with this raised coronavirus situation, Um, the sort of

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Speaker 1: hopefulness has been snuffed out, and um now we're gonna

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Speaker 1: sort of have to hunker down again. We thought, look,

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Speaker 1: the Northern Hemisphere winter is the peak demand season on

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Speaker 1: a global basis, all the heating fuels that you need

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Speaker 1: to get through that. We I think there was a

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Speaker 1: lot of sense in the market, a lot of hope

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Speaker 1: in the market that that would help stabilize things and

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Speaker 1: get us get the market a bit higher. It's given

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Speaker 1: what we're seeing with the coronavirus, it's going to remove

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Speaker 1: any of the additional demand that goes along with that.

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Speaker 1: Now we've got to keep our fingers cross and hope

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Speaker 1: things get back to normal by next summer so that

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Speaker 1: we can have a really strong driving season. If you

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Speaker 1: if you're looking for the industry outlook to improve. How

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Speaker 1: was it all messing with OPEC's fans, John, I mean,

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Speaker 1: you know, I don't typically have feelings towards the cartels,

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Speaker 1: but honestly, if there was any time to have a

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Speaker 1: little bit of sympathy for the OPEC members, that would

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Speaker 1: be Now I'm with you on that view, Vunny. I'm

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Speaker 1: never really rooting for them myself. But uh, and I've

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Speaker 1: never rooting for higher prices either. It's just that there

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Speaker 1: there's such a cob sort of feeling. But you know,

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Speaker 1: this this oil industry, who I have a lot of

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Speaker 1: friends and know and and you know, do you like

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Speaker 1: very much? I mean it's been left for dead, um,

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Speaker 1: But this is this is this is a terrific struggle

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Speaker 1: for them. Um. You know, they've they've cut back, you know,

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Speaker 1: really as much as they can stand to, especially a

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Speaker 1: lot of the countries that are struggling like a rack,

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Speaker 1: who are dying to put more oil on the market,

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Speaker 1: Russia to a lesser degree. And you know, they were

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Speaker 1: kind of counting their blessings as you know, rough as

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Speaker 1: this might be to say that that Libya was offline

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Speaker 1: due to the civil war there. Now this sudden influx

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Speaker 1: of another million barrels from Libya just really upbends their calculus.

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Speaker 1: And it's going to be a tough slog, particularly that

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Speaker 1: oil sticks, because that's very valuable oil, very much desired

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Speaker 1: in in central in Western Europe um, and it gets

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Speaker 1: heavily marketed. So they're going to displace a lot of

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Speaker 1: the other barrels that are that are in this market. So, John,

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Speaker 1: give us an update on the US shell patch. How

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Speaker 1: tough our conditions down there out there. I have one

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Speaker 1: major oil CEO telling me this is the darkest period

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Speaker 1: in the industry you know. Ever, Um, you know they're

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Speaker 1: they're struggling, and um, well you're seeing right now though,

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Speaker 1: is sort of the seeds being sown to sort of

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Speaker 1: rectifier or re constitute what's happening there. And you've seen

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Speaker 1: several big mergers over the past two weeks now, Um,

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Speaker 1: and you know you've seen a slew of bankruptcies. So

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Speaker 1: at some point here the production you know, is gonna

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Speaker 1: has it has already stabilized from A from A and

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Speaker 1: down from a much higher level, and that's going to

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Speaker 1: feed into higher prices down the road here once things

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Speaker 1: do recover, John, If you're trying to trade this whole

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Speaker 1: era in some way, is there a commodity that you

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Speaker 1: buy or that you'd short if in the complex if

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Speaker 1: you want to energy, the brightest star on the board

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Speaker 1: right now is natural gas. Uh, there's a lot going

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Speaker 1: for it there. L n G exports for example, have

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Speaker 1: really ramped up again to pre pandemic levels. That's helping,

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Speaker 1: as has exports to Mexico and UM again here too,

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Speaker 1: we've seen that decline in production is going to be

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Speaker 1: more and more constrained supply, particularly if I think if

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Speaker 1: we get a Biden administration, a lot of the associated

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Speaker 1: gas that gets flared or what have you is going

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Speaker 1: to be curtailed, so that that's the brightest commodity on

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Speaker 1: the board right now. Beyond that, I think you have

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Speaker 1: to sort of take a look at diesel fuel of

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Speaker 1: a heating oil contract here, because one thing that has

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Speaker 1: helped held up at demand wise is the over the

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Speaker 1: road truck traffic. The jet fuel, know, but over the

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Speaker 1: road truck traffic, uh, you know is probably the closest

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Speaker 1: to normal we have of the several major categories, that

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Speaker 1: being gasoline, jet fuel, and diesel fuel. John, you mentioned

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Speaker 1: potential Biden uh presidency. What are the folks that you

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Speaker 1: talked to? How did they think that would play out?

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Speaker 1: If that work to occur, what would that mean for

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Speaker 1: the industry? Uh? The senses he won't be a complete

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Speaker 1: disaster for the drilling industry or the fracktors for that matter.

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Speaker 1: You know, it's it's become too big of a deal

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Speaker 1: for the US. I mean, one of the things but

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Speaker 1: like to point out is that it was the Obama

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Speaker 1: administration that approved or and permitted the export of US

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Speaker 1: crude oil, which has climbed to let around three million

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Speaker 1: barrels a day on average these days, which has been

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Speaker 1: a huge right spot for the industry and really UH

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Speaker 1: is propping a lot of the producers up. It's been

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Speaker 1: really helpful, and China has stepped up. We are now

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Speaker 1: China's number four supplier of foreign crude oil, so that's

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Speaker 1: have been a big development. The problem is going to

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Speaker 1: be um for what I just talked about in terms

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Speaker 1: of natural gas, the flaring um and the and the

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Speaker 1: methane associated with fracking some of those wells, but also

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Speaker 1: to what the Obama administration really went after where the

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Speaker 1: refiners um and and the emissions there and obviously the

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Speaker 1: Cafe car fuel standards. So it's sort of that end

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Speaker 1: of the operation more downstream that will probably be pinched.

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Speaker 1: But you know, we are oversupplied in terms of refineries

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Speaker 1: right now anyway, so um they won't be missed. Wow,

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Speaker 1: it's an amazing state of affairs, isn't it, John, Tom,

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Speaker 1: Thank you. Always fascinating to speak with John killed off

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Speaker 1: right Paul. Yeah, it's it's interesting, really tough times for

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Speaker 1: those American ship producers. It is a great pleasure now

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Speaker 1: to welcome back to the program the CFO of Impossible Foods,

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Speaker 1: David Lee joins us after another quarter of considerable effort

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Speaker 1: and work. So, David talk to us about why you

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Speaker 1: guys are doubling the size of your R and D

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Speaker 1: team over the next twelve Well, simply put, our investment

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Speaker 1: in research and development is our highest returning investment. It's

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Speaker 1: the source of the innovation behind the impossible burger. You

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Speaker 1: saw us launch one point oh and then two point

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Speaker 1: oh impossible Sausage, and now you're seeing us roll out

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Speaker 1: in retail in Asia. Really, innovation and technology is impossible

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Speaker 1: food source for growth, and that's why we're doubling down

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Speaker 1: on it. So David talked to us about how your

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Speaker 1: business has been faring over this last seven eight months

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Speaker 1: during the pandemic, How it's uh, how you guys have

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Speaker 1: had to adapt. Well, we certainly, like everyone else, has

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Speaker 1: been watching headlines rollout seemingly every day about this global pandemic,

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Speaker 1: and we certainly don't have a crystal ball. But one

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Speaker 1: thing that's clear is we're following where the meat eater

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Speaker 1: is going to buy meat. You know, of our consumers

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Speaker 1: are hardcore meat eaters. The vast majority of our sales

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Speaker 1: are being sourced people who want meat, and as a result,

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Speaker 1: we've had to adjust to where they're going, which is

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Speaker 1: increasingly you know, shipped direct to their home, which is

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Speaker 1: why we launched our direct to consumer business as well

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Speaker 1: as frankly in the grocery store. You know, our grocery

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Speaker 1: business is now up on x since the beginning of

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Speaker 1: the year, where at fifteen thousands grocery locations across the

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Speaker 1: United States and Asia, and we're still growing that business.

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Speaker 1: So we've really tried to meet the meat eater where

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Speaker 1: they where they're buying cool. Well, talk to us about

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Speaker 1: the fact that you're not looking for meat eaters and

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Speaker 1: you're also competing with many companies that are trying to

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Speaker 1: do the same thing now, including plant based companies. Well,

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Speaker 1: you know, it's interesting about Impossible Food is that our

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Speaker 1: core customer is the meat eater. Our mission is only

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Speaker 1: achieved if meat eaters, like me and many others shoes

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Speaker 1: and Impossible Burger made entirely from plants versus the thing

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Speaker 1: from an animal. Um So As a result, our competition

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Speaker 1: is kind of defined by our cust him or set.

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Speaker 1: Our customers are meat eaters, and so our primary competition

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Speaker 1: is meet from an animal, which is a one point

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Speaker 1: seven plus trillion dollar global business. There's plenty of room

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Speaker 1: for great brands who are offering better products to compete.

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Speaker 1: So so we don't really worry about a lot of

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Speaker 1: those other plant based companies because it's a rising tide

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Speaker 1: as long as the source of sales, for example, for

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Speaker 1: US is from the meat eater. So, David, are you

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Speaker 1: finding similar consumer trends outside of the US? I know

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Speaker 1: you're in Canada groceries. Uh, you expanded into Hong Kong

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Speaker 1: and Singapore. Are you finding similar trends or any differences?

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Speaker 1: You Know what's amazing about meat eaters is they love

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Speaker 1: meet wherever they are. They make it bespoke and totally

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Speaker 1: relevant for their cuisine and their culture, whether they're in Singapore,

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Speaker 1: Hong Kong, Macaw, Canada, or the US. Um And so

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Speaker 1: what we're seeing is because our products impossible beef meat

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Speaker 1: from plants in Asia, for example, really appeal to the

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Speaker 1: meat eater, we're seeing the same phenomenal growth there as

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Speaker 1: we see here. In North America. You know, our business

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Speaker 1: in Hong Kong, for example, is up a hundred and fifty.

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Speaker 1: It's up in Singapore and uh, and we're just getting going.

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Speaker 1: So that's the thing about meat. It's nearly ubiquitous, and

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Speaker 1: it transforms in the hands of one chef into a

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Speaker 1: very different cuisine than in the hands of another. And

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Speaker 1: I think we're the only plant based company and Impossible

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Speaker 1: Foods that has a product that actually transforms the impossible

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Speaker 1: burger transforms in the hands of the chef, make it

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Speaker 1: rare or well done, or a bowler or a dumpling,

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Speaker 1: or about which is why we're excited about our global growth.

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Speaker 1: What are your margins, David Well? One of the benefits

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Speaker 1: of remaining private is I'm not yet in the business

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Speaker 1: of disclosing quarterly results. Can you tell us if you're profitable?

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Speaker 1: I can tell you that it's a strategic choice to

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Speaker 1: invest in the business. We make money on every unit

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Speaker 1: that we make uh. And it's because we use a

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Speaker 1: fraction of the resources of the incumbent industry. We just

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Speaker 1: need scale to be out or below the cost of

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Speaker 1: commodity ground beef and and people are willing to pay

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Speaker 1: a bit more for our product because it has no cholesterol,

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Speaker 1: less calories, you less fat, but all the protein and

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Speaker 1: the impact you want on the world. Um. So for now,

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Speaker 1: I can just tell you that we were designed to

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Speaker 1: be cost competitive in addition to tasting great. And we'll

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Speaker 1: have to wait on specific figures until later when you

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Speaker 1: expect to go public. Well, we have not made any

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Speaker 1: announcement to be public through auspact despect which seems to

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Speaker 1: be very fashionable these days, or through the direct listing

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Speaker 1: right po. Um. But you know, we race one point

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Speaker 1: five billion dollars of equity and our investors, including CO

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Speaker 1: two and CO slid horizons. These investors are sophisticated. They

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Speaker 1: expect us to be operating as if we're public anyway. UM.

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Speaker 1: So it's a strategic choice. It's one that we're not

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Speaker 1: choosing to make today, but it remains an option for

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Speaker 1: the company. So curious as to why you brought up

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Speaker 1: the words back is, did somebody approach you? Oh? No, no,

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Speaker 1: I I read the headlines that you guys felt right,

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Speaker 1: and it's very clear we are all living in a

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Speaker 1: spack bowl market. Uh and uh. As a result, as

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Speaker 1: a as any as any financial professional, wed I'm keeping

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Speaker 1: abreast of the changing times. It's remarkable how many announcements

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Speaker 1: seemed to be coming up every day about a new

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Speaker 1: spac raged or a new spact. These fact consummated. Hey, David,

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Speaker 1: thanks so much for joining us. We appreciate it. Always

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Speaker 1: love to get an update on your fast growing business.

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Speaker 1: David Lee, CFO of Impossible Foods. It's interesting, Vonnie, the

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Speaker 1: growth that they're seeing as a target meat lovers. Um.

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Speaker 1: I thought they would target, you know, folks that don't

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Speaker 1: care for me. But let's go to that big, big market.

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Speaker 1: I would like to see the research on that pole,

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Speaker 1: to be quite honest, I would I see where they're

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Speaker 1: where they're targeting meat lovers and why and who told

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Speaker 1: them to and what's the evidence that that's a better

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Speaker 1: frame of reference than than plant based lovers. Yeah, exactly

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Speaker 1: so uh but interesting growth story. There will be an

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Speaker 1: inching I p O when it does come. Well, a

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Speaker 1: rough start to the week for financial markets here again,

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Speaker 1: no visible movement on fiscal stimulus, and the numbers on

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Speaker 1: the pandemic around the world going in the wrong direction.

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Speaker 1: Investors trying to discount those new bit new items in

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Speaker 1: the market. Let's get a sense of what's going on

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Speaker 1: across markets. We can do that with Sarah pon Check

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Speaker 1: Bloomberg Cross Asset reporter. Sarah, thanks so much for joining

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Speaker 1: us here. Kind of what's the feel this morning here? Um,

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Speaker 1: as we start the week's trading, it seems obviously a

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Speaker 1: risk off feel what you see in across markets, right,

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Speaker 1: glad to be here, certainly a risk off field though

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Speaker 1: you look across the major ravages. We have the SMP

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Speaker 1: five hundred down nine tenths of a percent, the down

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Speaker 1: down more than one percent. The NASDAC, though, is your

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Speaker 1: outperformer flat on the morning, and as you mentioned, investors

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Speaker 1: are concerned with the resurgence of the virus. US reported

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Speaker 1: a record new cases for a second day, adding more

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Speaker 1: than eighty five thousand. We continue to see the rest

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Speaker 1: surgeons in Europe with record cases in France and Italy.

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Speaker 1: With that, we see the stay at home trade re

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Speaker 1: emerging and that really asserting itself in the NAZAC out

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Speaker 1: performance today. I'll highlight a few stocks if I look

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Speaker 1: at the best performers in the Nasdaq as we speak,

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Speaker 1: Zoom up three point nine percent, a m D higher, Amazon,

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Speaker 1: Docu sign Take two Interactive. These are some of your

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Speaker 1: names that really have come to be known as your

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Speaker 1: stay at home plays that stand to benefit in a

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Speaker 1: quarantine lockdown restricted economy. At the same time, you look

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Speaker 1: at your worst performance today in the s and P

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Speaker 1: five hundred, many of your cruise lines, for example Carnival

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Speaker 1: in Norwegian Royal Caribbean all down more than seven percent

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Speaker 1: at the moment. So this trade is clearly filtering through

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Speaker 1: the market as COVID nineteen just remains the number one story.

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Speaker 1: What really strikes me is oiled back well below barrows.

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Speaker 1: So we have cl one which is you know w

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Speaker 1: t I here in New York at right, So w

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Speaker 1: t I crude oil has really been lodged around that

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Speaker 1: forty dollar a barrel mark. And when you think about

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Speaker 1: oil prices this year, obviously the demand side of the

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Speaker 1: equation is so significant, especially when we think about I

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Speaker 1: mean I just mentioned cruise lines, but airlines too if

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Speaker 1: they are not resuming activity, the effect that that has

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Speaker 1: on oil demand. At the same time, there have been

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Speaker 1: some supply concerns to but certainly a daylight today when

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Speaker 1: COVID nineteen is really affecting markets, when investors are once

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Speaker 1: again considering the fact that this is a true risk.

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Speaker 1: It has certainly not gone away. There are possibilities that

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Speaker 1: we may see further economic restrictions ahead. What does that

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Speaker 1: mean for oil demand and taking a hit? We see

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Speaker 1: w T I crude oil right now down two point

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Speaker 1: nine percent and Brent down two point eight percent. Two

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Speaker 1: Despite this risk off, feel Jack Moss plowing ahead with

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Speaker 1: his biggest I p O ever just extraordinary. It is

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Speaker 1: pretty unbelievable. And Group is set raise about thirty four

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Speaker 1: and a half billion dollars through its I p O

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Speaker 1: s both in Shanghai and in Hong Kong. So it's unbelievable,

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Speaker 1: going to outpace even Saudio Rampco. When you think about

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Speaker 1: the value that this company is going to have, as

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Speaker 1: Bloomberg highlights, once it goes public, it's expected to have

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Speaker 1: a market value of three hundred and fifteen billion, So

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Speaker 1: that is about the same valuation as JP Morgan in

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Speaker 1: four times larger than Goldman Sachs. Imagine that. But consider

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Speaker 1: the environment that we have seen. Sure, I'm going to

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Speaker 1: bring it back to the United States, and we are

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Speaker 1: not seeing an I p O in the US for

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Speaker 1: and Group. But if you look at the I p

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Speaker 1: O E t F this year, so it's sicker I

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Speaker 1: p O it is up seventy five percent in twenty

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Speaker 1: a year that has been dominated by COVID nineteen restrictions,

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Speaker 1: a recession. Uh, we have an election. There are many

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Speaker 1: risks and uncertainties. The fact that you have newly public

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Speaker 1: companies just soaring is really a sight to see and

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Speaker 1: to put that sevent in perspective for you that since

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Speaker 1: the I p O e TF has existed since is

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Speaker 1: would be the largest yearly gain. And those are your

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Speaker 1: two other very strong years only gains and I say

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Speaker 1: only a little bit sarcastically gains in the thirty percent range.

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Speaker 1: So this will be more than double that. We're also

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Speaker 1: saying other places where the virus is resurgent, lower slodacs

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Speaker 1: in Germany down two point eight percent, they can forty

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Speaker 1: down one point one percent, and you're not so much

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Speaker 1: London then just three tenths of percent. Right now, we

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Speaker 1: really like, really weighing on German markets right now is

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Speaker 1: s a p so that German software giant SAP down

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Speaker 1: more than tw at the moment. And this isn't just

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Speaker 1: a euro a German story. This really affects the outlook

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Speaker 1: for equities around the globe, and I would argue that

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Speaker 1: this is playing into the weakness that we're seeing today

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Speaker 1: in the U S as well. What happened was they

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Speaker 1: cut their full year revenue estimates and they also said

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Speaker 1: that a fresh wave of lockdowns would hurt demand through

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Speaker 1: the first half of one. Now, think about what we

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Speaker 1: are expected to see for the earnings picture for companies

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Speaker 1: in one We're supposed to see a pickup again. We

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Speaker 1: are supposed to see companies almost resume a sense of

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Speaker 1: normalcy or at least be able to deal with the

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Speaker 1: virus and get back on track. Well s a p

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Speaker 1: is saying that's not the case. They think that lockdowns

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Speaker 1: are going to restrain demand and and their business prospects

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Speaker 1: into next year. And that makes you really think, well,

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Speaker 1: does that mean the E in the pe ratio doesn't

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Speaker 1: mean earnings need to come down? For one, just as

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Speaker 1: analysts are have started to really grow more optimistic. Essentially,

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Speaker 1: we're gonna get a lot of tech earnings this week too, sir, Oh,

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Speaker 1: yes we are. It's it's this is the busiest week

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Speaker 1: of earning season. So we're entering the third week fifteen

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Speaker 1: trillion dollars worth of SMP market cap report this week,

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Speaker 1: and I'll give you a bit of the rundown. Tomorrow

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Speaker 1: we'll have Microsoft, A m D. We'll also hear from Fiser, Eli,

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Speaker 1: Lily mark E. Then Wednesday we have MasterCard and Visa

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Speaker 1: very large companies as well. But Thursday is going to

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Speaker 1: be quite the day after the bell, Facebook, Amazon, Apple,

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Speaker 1: and Google all the same time. Wow, Sarah, you're gonna

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Speaker 1: be busy and we're going to see you back here

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Speaker 1: again tomorrow. Sarah pons act there cross us a reporter

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Speaker 1: at Bloomberg News, covering everything from earnings to Chinese I

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Speaker 1: P O, S, T E, t F S too oil.

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Speaker 1: She can just do it all. As we approach seasons

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Speaker 1: where you typically spend a little bit more money Black Friday, Halloween, Christmas,

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Speaker 1: New Year's, let's get the retail take from somebody who

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Speaker 1: knows a little bit about what's going on. And Craig Johnson,

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Speaker 1: CEO of Customer Growth Partners. So, Craig, you know, every

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Speaker 1: day we're reading about more and more retailers that are

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Speaker 1: shutting down, going at bankruptcy, disappointing their creditors and so on.

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Speaker 1: What is the story out there with with with with

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Speaker 1: just retail in general, I suppose, Well, you have to

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Speaker 1: realize that UM retail has always been a UM a

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Speaker 1: secor with ups and downs. And what happens when you're

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Speaker 1: in a down mode like we are right now UM

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Speaker 1: or a challenging mode. Uh, the weaker players are going

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Speaker 1: to get washed out. And that's what we're seeing. So

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Speaker 1: the problem for many retailers is that over the past

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Speaker 1: couple or three years they fail to uh right size.

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Speaker 1: UH their store fleets with the demand. But now for

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Speaker 1: many weaker retailers financially, UH, this has been a forced

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Speaker 1: right sizing, which actually will leave the industry healthier. And

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Speaker 1: for holidays, we're actually predicting that sales are going to

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Speaker 1: be up five. Really jumped out of me. I'm thinking

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Speaker 1: just in a you know, the consumer here, we're still

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Speaker 1: up ten percent unemployment, we are the pandemic numbers going

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Speaker 1: the wrong way in most of the country. Here, what's

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Speaker 1: underpinning your I guess I would say surprisingly strong five

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Speaker 1: increase ever year. Well, the difference now is is that

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Speaker 1: the growth is not based on uh tapping into home

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Speaker 1: equity or charging up your credit cards the way it

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Speaker 1: was some years ago, when whenever we saw a strong

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Speaker 1: retail growth. We're having very strong consumer fundamentals, and that's

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Speaker 1: of robust five point four percent growth and disposal. Personal

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Speaker 1: income UM wages are up UM eleven and a half

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Speaker 1: new jobs have been created since the April nater of

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Speaker 1: the of the COVID recession. UH and household balance sheet

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Speaker 1: so the healthiest some decades. The FEDS household debt service

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Speaker 1: ratio is its record low ever eight point seven percent

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Speaker 1: versus a few years ago, and personal savings rates about

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Speaker 1: so consumers have a lot of money. Basically, it's like

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Speaker 1: dry powder cash available for spending. Last, but not least,

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Speaker 1: is that you look at the most recent UH retail

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Speaker 1: sales period, which was the back to school period, which

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Speaker 1: ended up a few a few weeks ago into September.

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Speaker 1: We had forecast back to school sales We're going to

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Speaker 1: be up seven excuse me, I'm going to be at

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Speaker 1: three point seven and they ended up being up seven

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Speaker 1: point five percent. Double are already optimistic forecast. The numbers

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Speaker 1: seem to be turning good. Where are you getting the

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Speaker 1: data for households and for for personal spending and personal

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Speaker 1: income and so on. It seems to me that you know,

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Speaker 1: I'm sure there are plenty of households that have cash

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Speaker 1: on hand out there, but is it a certain demographic

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Speaker 1: that that you're primarily looking at. Well, this comes out

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Speaker 1: of the Promer Commerce, the Bureau of Economic Analysis and

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Speaker 1: UH personal income data and just DPI data, um, and

430
00:23:42,119 --> 00:23:45,080
Speaker 1: so those are the personal income in September was down

431
00:23:45,119 --> 00:23:49,200
Speaker 1: two points present and we're looking in August I should

432
00:23:49,200 --> 00:23:53,360
Speaker 1: say was down to that is sequential. What we look

433
00:23:53,440 --> 00:23:55,560
Speaker 1: at is the year of a year, year of a

434
00:23:55,640 --> 00:23:57,600
Speaker 1: year number is what what what? What gives it? Because

435
00:23:57,760 --> 00:24:01,160
Speaker 1: retail works on the year of year bays Uh, it's

436
00:24:01,200 --> 00:24:05,040
Speaker 1: measured that way. Camps sales are not compersus the month

437
00:24:05,119 --> 00:24:08,040
Speaker 1: prior to the card accomplished a year ago. So that

438
00:24:08,480 --> 00:24:12,600
Speaker 1: is the relevant numbers UH for that and the FEDS

439
00:24:12,600 --> 00:24:15,040
Speaker 1: Household Service Day. I see that's from that's from the

440
00:24:15,040 --> 00:24:20,560
Speaker 1: Federal Reserve. So um uh. So constant households have money

441
00:24:20,600 --> 00:24:24,359
Speaker 1: to spend. Now, there is clearly a bifurcation between the

442
00:24:24,440 --> 00:24:27,720
Speaker 1: hundred and fifty million people with jobs versus the eleven

443
00:24:27,760 --> 00:24:31,520
Speaker 1: million people that don't have jobs. Uh. The filters will

444
00:24:31,560 --> 00:24:35,439
Speaker 1: folks without jobs are spending only on needs, whereas the

445
00:24:35,480 --> 00:24:38,720
Speaker 1: people that have jobs are spending on both needs and wants.

446
00:24:39,280 --> 00:24:42,640
Speaker 1: And you know, obviously those those those folks are that

447
00:24:42,640 --> 00:24:45,879
Speaker 1: that segment, that large sector of the economy of the

448
00:24:45,920 --> 00:24:49,840
Speaker 1: consumer condo, what's driving the higher higher forecast Greig. How

449
00:24:49,880 --> 00:24:52,000
Speaker 1: concerned are you do you think or how concerned you

450
00:24:52,040 --> 00:24:54,680
Speaker 1: think retailers are that it does not appear that we're

451
00:24:54,680 --> 00:24:59,400
Speaker 1: going to get this additional round of fiscal stimulus. Um. Well,

452
00:24:59,440 --> 00:25:03,960
Speaker 1: our our our forecast assumed that there would be the

453
00:25:04,280 --> 00:25:10,600
Speaker 1: skinny package at some point before before holiday. And now

454
00:25:11,000 --> 00:25:14,159
Speaker 1: whether that occurs or not, you know, we're not certain.

455
00:25:14,240 --> 00:25:17,840
Speaker 1: But that's why we are base case forecast of five

456
00:25:17,880 --> 00:25:21,920
Speaker 1: percent growth. We always bracket it with you know, scenario analysis.

457
00:25:22,440 --> 00:25:24,920
Speaker 1: Uh that the high case scenario or six point nine

458
00:25:24,960 --> 00:25:27,120
Speaker 1: percent growth in a low case is three point five.

459
00:25:27,359 --> 00:25:33,000
Speaker 1: So if there's absolutely no uh incoming a thing before

460
00:25:33,000 --> 00:25:35,280
Speaker 1: the incoming federal ad before the end of the year,

461
00:25:35,520 --> 00:25:39,320
Speaker 1: beyond normal unemployment, um uh, you'll have growth at the

462
00:25:39,359 --> 00:25:45,400
Speaker 1: three point five percent that lower forecast scenario. Graig. Five

463
00:25:47,040 --> 00:25:49,600
Speaker 1: all of that, who who are you anticipating we'll go

464
00:25:49,640 --> 00:25:52,760
Speaker 1: out of business between now and the end of the year. Um.

465
00:25:52,840 --> 00:25:56,120
Speaker 1: We're not certain there's going to be any new bankruptcies

466
00:25:56,160 --> 00:25:58,879
Speaker 1: We don't like to speculate on on bankruptcies as a

467
00:25:58,960 --> 00:26:04,720
Speaker 1: number of UH retailers that are that are challenged, you know,

468
00:26:04,720 --> 00:26:07,640
Speaker 1: in the department store sector, New and Marcus is still

469
00:26:07,840 --> 00:26:11,719
Speaker 1: going through its situation, um uh, and in in apparel.

470
00:26:12,400 --> 00:26:16,160
Speaker 1: Apparel and department stores are both still quite weak. UH sales.

471
00:26:16,359 --> 00:26:19,680
Speaker 1: We've predicted down in the ballpark of ten eleven percent

472
00:26:19,800 --> 00:26:22,600
Speaker 1: year of a year. But I'm not convinced anybody else

473
00:26:22,640 --> 00:26:25,119
Speaker 1: will go out, you know, with with holiday sales starting

474
00:26:25,160 --> 00:26:28,400
Speaker 1: now actually they started last month, UM, that people will

475
00:26:28,440 --> 00:26:31,280
Speaker 1: will extra right this point. Hey, correct, Thanks so much

476
00:26:31,320 --> 00:26:34,240
Speaker 1: for join us. As always, we appreciate your insights into

477
00:26:34,280 --> 00:26:38,200
Speaker 1: all things retail. Craig Johnson, President Customer Growth Partners. He

478
00:26:38,280 --> 00:26:41,119
Speaker 1: joins us on the phone from New Canaan, Connecticut. Again,

479
00:26:41,560 --> 00:26:43,960
Speaker 1: they are looking for a five point five percent year

480
00:26:43,960 --> 00:26:47,520
Speaker 1: of a year increase in retail sales this year based

481
00:26:47,600 --> 00:26:53,000
Speaker 1: upon a liquid consumer Thanks for listening to Boomberg Markets podcast.

482
00:26:53,160 --> 00:26:56,520
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts

483
00:26:56,640 --> 00:27:00,240
Speaker 1: or whatever podcast platform you prefer. I'm Monnie Quinn. I'm

484
00:27:00,240 --> 00:27:02,679
Speaker 1: on Twitter at on e Quinny, and I'm Paul Sweeney.

485
00:27:02,680 --> 00:27:05,359
Speaker 1: I'm on Twitter at pt Sweeney before the podcast. You

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00:27:05,359 --> 00:27:07,800
Speaker 1: can always catch us worldwide at Bloomberg Radio