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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.

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Speaker 1: Along with my co host Lisa Bramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg p m L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. It

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Speaker 1: feels like something has shifted pretty significantly in the US

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Speaker 1: treasury market. Here to talk about that with us is

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Speaker 1: Jim Vogel, an interestrate strategist at FTN Financial based in Memphis, Tennessee. Jim,

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Speaker 1: thank you so much for joining us. You've absolutely nailed

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Speaker 1: this market again and again. So right now we are

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Speaker 1: looking at ten year treasury yields that are two point

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Speaker 1: eight five creeping up from the highs of last week. Um,

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Speaker 1: how much more do we have to go? Here? We're

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Speaker 1: looking at the highest ten year treasury yields since January

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Speaker 1: two tho. We've compressed about into three weeks what many

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Speaker 1: people thought the market would do in terms of um

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Speaker 1: increasing rates by say the third quarter. So where we

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Speaker 1: continue to go, it's it's easy to see that the

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Speaker 1: ten year could head towards to nine or so before

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Speaker 1: it begins to even catch a breath. We see um

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Speaker 1: really about the next two to three weeks people redoing

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Speaker 1: their strategies and thinking through where do they want to

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Speaker 1: be buying tens and thirties in particular, So, Jim, why

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Speaker 1: are people going to be reassessing their strategies strategies? Now?

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Speaker 1: What changed? There's so many things changed about the yield curve.

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Speaker 1: It had been flattening very hard. The thirty year was

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Speaker 1: a star last year and you returned nine in a

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Speaker 1: thirty year government. Now everything is turning in the opposite

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Speaker 1: direction without any bond aim to come in at these

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Speaker 1: new higher levels. Yet, So in that kind of perspective,

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Speaker 1: you've got to sit back and look at your strategy

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Speaker 1: not only in treasuries but also in corporates. Well, Jim,

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Speaker 1: what would just suggest given what you know about people's positioning,

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Speaker 1: And I'm just curious if you can also add in

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Speaker 1: the supply and demand of treasuries absolutely right now, in particular,

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Speaker 1: what the seven year part of the curve has been

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Speaker 1: hurt because they've just been trading almost one for one

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Speaker 1: with tens, but nobody really trades the seven years a

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Speaker 1: hot item. It just follows so for in particular retail

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Speaker 1: investors intermediate bond funds, if they want to take advantage

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Speaker 1: of this move, that's a great place to try. In

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Speaker 1: terms of supply and demand, we've got the next three

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Speaker 1: months is going to see are going to see progressively

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Speaker 1: hired treasury supply and then the treasury where we ass

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Speaker 1: asked probably with at least one more um significant increase

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Speaker 1: when they announced the May refunding in three months. So, Jim,

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Speaker 1: you said that people should reassess their strategies, not only

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Speaker 1: for US government pown markets, but also for corporates. Uh,

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Speaker 1: if you look at spreads, the extra yield that investors

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Speaker 1: earn over the benchmark rate, you could see that it

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Speaker 1: really has not increased for investment grade corporate bonds, but

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Speaker 1: it has increased for high yield bonds. Do you think

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Speaker 1: that that actually makes sense and that you should expect

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Speaker 1: the sell off to continue there with both the spreads

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Speaker 1: rising in tandem with rising benchmark rates. So far, the

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Speaker 1: sell off and high yield is taking back a lot

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Speaker 1: of the profits that were generated just last month. So

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Speaker 1: we won't know until we get a little bit higher.

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Speaker 1: In terms of the high yield spreads before we know

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Speaker 1: whether that's a trend or just a bounce. Sorry, beg

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Speaker 1: your pardon? Go ahead? No please, no, no, go ahead?

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Speaker 1: Finished your thought? I've now lost the question. I beg

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Speaker 1: go ahead, It's save me. Well, no, Jim, you know,

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Speaker 1: I'm just thinking, what is sort of the threshold yield

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Speaker 1: for ten year treasuries that you would recommend people start buying.

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Speaker 1: There isn't one yet, and and that's exactly what we've

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Speaker 1: learned the last couple of weeks. Until you begin to

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Speaker 1: see any sign that people are not have stopped moving

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Speaker 1: and racing ahead in terms of their inflation expectations, there

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Speaker 1: is no place to necessarily immediately stepping in by the tenure. Instead,

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Speaker 1: we have it's much easier to see fair value relative

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Speaker 1: to what the said might do and say the five

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Speaker 1: year or the three year. So we've got to wait

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Speaker 1: for We've got to wait a week two weeks just

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Speaker 1: before people really can start doing that strategy on tens

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Speaker 1: and thirties. All right, So if people really can't do

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Speaker 1: that strategy yet and they aren't necessarily going to come

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Speaker 1: in and buy, what does that mean for equity markets?

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Speaker 1: Because we've seen a whole host of analyzes them out

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Speaker 1: over the weekend talking about just what the rise in

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Speaker 1: treasury yields means for stock markets, right because a lot

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Speaker 1: of people were talking about the FED model, A lot

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Speaker 1: of people were talking about how, uh, the dividend yields

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Speaker 1: were paying more at one point than you could get

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Speaker 1: on benchmark treasuries. So if that equation changes, are you

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Speaker 1: really going to see selling continue in the U S

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Speaker 1: stock indices despite the fact that earnings have actually come

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Speaker 1: in pretty pretty good. It depends. If the equity market

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Speaker 1: slows down in terms of volatility um you will not

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Speaker 1: see people really you will not see the bond market

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Speaker 1: herd stocks. So as soon as we can pause in

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Speaker 1: stocks and people can catch their breath there as well, Uh,

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Speaker 1: the stock market remains largely unrelated to rates for the moment.

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Speaker 1: Think about last year, UM income grew four point one percent,

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Speaker 1: spending grew four point seven That was cond evidence in

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Speaker 1: all sorts of different things, including the stock market, that

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Speaker 1: confidence is not going to leak out that quickly in

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Speaker 1: terms of the drivers of the economy until stocks really

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Speaker 1: begin to disappoint for perhaps several weeks in a row.

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Speaker 1: Jim at the three percent level at least for the tenure.

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Speaker 1: We're now at two point eight five. At that point,

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Speaker 1: aren't you going to see big demand from pension funds,

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Speaker 1: life companies, other firms. I mean, because don't they have

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Speaker 1: to immunize themselves against liabilities. Uh? They do, But I

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Speaker 1: don't think there's necessarily one particular level where they will

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Speaker 1: begin to come in with enough strength to overcome the

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Speaker 1: selling At some points. Last week, you know, particularly right

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Speaker 1: after don farm payroll reports on Friday, the selling volume

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Speaker 1: was two times the busiest that we've seen over the

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Speaker 1: past couple of years when we had a surprising payroll number.

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Speaker 1: So there's one group of people that are selling bonds

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Speaker 1: extraordinarily fast. The buyers that will be coming in or

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Speaker 1: want to pick up um bonds at a higher interest rate,

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Speaker 1: they're going to move much more slowly. I want to

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Speaker 1: thank you very much for joining us. Jim Vogel is

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Speaker 1: interest rate strategist of FT and Financial. They're based in Memphis.

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Speaker 1: What if money fell from the heavens, what would be

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Speaker 1: the effect on growth and inflation? Well, here to help

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Speaker 1: us answer this question is Joel Stern. He is the

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Speaker 1: chairman and the chief executive of Stern Value Management, and

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Speaker 1: he joins us here in our eleven three oh studios,

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Speaker 1: Joel Stern, thank you very much for being here. So, indeed,

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Speaker 1: if money were to drop from the sky, what would

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Speaker 1: happen to growth and inflation? People would in the initial

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Speaker 1: expectation strong profits, strong growth. It looks like paradise. But

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Speaker 1: I have to admit to you, Pam. My teacher Milton

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Speaker 1: Friedman asked us that question on the first day of class.

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Speaker 1: He said, if money reigned down from the heavens, what

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Speaker 1: would happen? And of course he got the right answer,

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Speaker 1: the rest of us did not, because he said companies

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Speaker 1: would compete against each other with this additional moneys and

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Speaker 1: they would lower prices to the consumer in order to

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Speaker 1: try to gain market share. And I believe that's going

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Speaker 1: to happen here too. Don't get me wrong. The size

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Speaker 1: of it is so huge, there's enough to go around

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Speaker 1: for everybody. Uh So my answer to you is that

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Speaker 1: I don't think we would have inflation from it. I

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Speaker 1: think what we would do is we would have lower

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Speaker 1: prices to the consumer. So can you connect this, Joel,

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Speaker 1: to markets, to to to sort of how you invest.

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Speaker 1: Because I was struck by a statistic that of S

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Speaker 1: and P five hundred companies that have reported so far,

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Speaker 1: eighty percent have beaten Wall Street expectations for revenues, which

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Speaker 1: is the biggest beat going back in data to at

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Speaker 1: least two thousand and eight. So is that already baked in?

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Speaker 1: For sure? The price today is the present value of tomorrow.

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Speaker 1: What's actually happened. What's interesting about the the the economy

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Speaker 1: right now is the economy is poised to grow at

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Speaker 1: at least three. I believe it's going to be a

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Speaker 1: lot higher than that. I think it will be close

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Speaker 1: to four. And when people say, oh that we don't

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Speaker 1: have enough people coming into the workforce, remember they talk

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Speaker 1: about productivity and population growth. Do me a favor. Relax

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Speaker 1: would your place? You'll be really fine? What's what's the

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Speaker 1: answer to this? So many people left the workforce during

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Speaker 1: the last ten, twelve, fifteen years. Right now, the participation

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Speaker 1: rate is only around six. Think about it. I believe

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Speaker 1: it's going to move up over and that will be

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Speaker 1: the equivalent of immigrants coming into the country and journing

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Speaker 1: the workforce. So what I'm hearing from you is dampened

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Speaker 1: inflation expectations. Frankly, because even with all this money you're

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Speaker 1: going to have more competition on both sides, both with

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Speaker 1: employees coming into the workforce as well as companies that

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Speaker 1: are competing with each other. This does not our scream

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Speaker 1: of of runaway inflation out. It occurred to me that

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Speaker 1: maybe when you said all of this, I should have said,

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Speaker 1: very nice, Lisa, I think we should go on to

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Speaker 1: the next topic. But we cannot do it. And what's

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Speaker 1: the reason. The reason is that the gold price is

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Speaker 1: still sitting at thirty four dollars or thereabouts as interest

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Speaker 1: rates rise. If the interest rates that are rising are

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Speaker 1: because of higher real rates, not inflation, that's good for

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Speaker 1: the economy because that's a signal to the rest of

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Speaker 1: the world. Hey, come onto the United States. High rates

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Speaker 1: of return are available here. That's what you would expect

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Speaker 1: to have happened. But you see, what's happened is that

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Speaker 1: with the rates rising, by this time, the gold price

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Speaker 1: should be down around twelve fifty. How do I know

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Speaker 1: it happened before? When Trump won, interest rates rose dramatically,

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Speaker 1: and I had the pleasure of talking to him, not

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Speaker 1: to you, unfortunately at that time. But he asked me

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Speaker 1: this question, and I said, I got news. Take a

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Speaker 1: look at what's happening to the gold price? As the

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Speaker 1: rates went up, the gold price went down. That meant

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Speaker 1: inflation was tame. We wouldn't have to worry. But if

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Speaker 1: interest rates rise and the gold price does not fall,

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Speaker 1: it must mean that there is some inflation in there

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Speaker 1: that we're going to see at the end of this year.

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Speaker 1: Can we just assume for a moment that there is

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Speaker 1: going to be an acceleration and inflation just kind of

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Speaker 1: to be the devil's advocation? But what is a good investment?

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Speaker 1: Is it gold? Yes, it would be it would be

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Speaker 1: gold would be a good investment. But real estate is

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Speaker 1: always a good investment unless it has already reflected all

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Speaker 1: of this and so it's already in the price. But

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Speaker 1: I believe that real estate it is just a fantastic

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Speaker 1: investment if you think the inflation rate is coming back.

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Speaker 1: I'm surprised to hear that, given the fact that Janet

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Speaker 1: Yellen over the weekends pinpointed commercial real estate values in

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Speaker 1: particular as being a particularly frogthy or hetty invaluation. It's

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Speaker 1: a good thing she's going back to academia. Huh, you

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Speaker 1: can pontificate a little bit. She is a lovely, lovely

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Speaker 1: human being. Her position, though, on how markets work, is

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Speaker 1: not the same as my own. I am a true

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Speaker 1: blue Chicago boy. I'm a I was bred by Milton

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Speaker 1: Friedman and Merton Miller, and I believe that markets actually

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Speaker 1: do work. What we have to do is develop models

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Speaker 1: that replicate what the markets are doing so we can

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Speaker 1: see it clearly before it actually happens, instead of waiting

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Speaker 1: for it to happen and then everybody else is telling

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Speaker 1: the same story. Talk if you can about regulations and

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Speaker 1: how regulations or the lack of regulations can spur economic growth.

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Speaker 1: I spoke of people in the current administration before they

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Speaker 1: were the current administration, way back two years ago, this

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Speaker 1: coming July. I was teaching in Brazil at that time,

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Speaker 1: and I had questions coming in from people who now

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Speaker 1: have very authoritative positions in the administration, and I said,

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Speaker 1: you gotta do three things. Just three. Number one, slash

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Speaker 1: the regulations. Why because regulations not only lower the rate

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Speaker 1: of return on investment, they increase the risk of investment.

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Speaker 1: Because today's regulation becomes tame compared to what they'll do

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Speaker 1: to us tomorrow. In other words, when when when Hillary

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Speaker 1: Clinton was running, she said, you think the regulations under

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Speaker 1: the Obama administrations. Only wait to like, get in there.

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Speaker 1: I'm gonna really wet Okay, set number two, slash the

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Speaker 1: marginal tax rate. Our trait twenty six major trading partners

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Speaker 1: had an average tax rate of only two when hours

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Speaker 1: was in the high thirties. If you include city and state,

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Speaker 1: you can compete that way. By the way, I have

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Speaker 1: three firms that I'm involved, okay, and one of our

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Speaker 1: firms is headquartered in Singapore. The tax right there is

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Speaker 1: around what should I do bring the money back to

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Speaker 1: the United States and get hit a second time? So

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Speaker 1: real quick, I want to get your take on Wells Fargo,

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Speaker 1: because we have this feeling that regulation is moving in

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Speaker 1: the opposite direction. Then what the Fed seems to have

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Speaker 1: done with Wells Fargo. Do you think that this is

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Speaker 1: sort of the opening salvo or sort of the I

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Speaker 1: am so disgusted. I don't know what to say to you, Lisa. Look,

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Speaker 1: when people do things that are what shall we call

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Speaker 1: them fraudulent, they should be banished from the industry. Remember

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Speaker 1: when Michael Milken was told his infraction was minor. These

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Speaker 1: people created things that didn't exist, and they seem to

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Speaker 1: have gotten away with it. I was. The thing that

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Speaker 1: I was unhappy about with Janet Yellen is that she

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Speaker 1: should have acted on this as soon as he found

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Speaker 1: it out, as soon as they verified it, and using

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Speaker 1: my vocabulary, they should have been speked. All right, Jill

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Speaker 1: Stern from your words, from your lips to perhaps the

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Speaker 1: new fed chairs ears Joelster, chairman and chief executive officer

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Speaker 1: of Stern Value Management. Always a pleasure speaking with you. Uh,

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Speaker 1: this is Bloomberg market Time is money, especially if you

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Speaker 1: have airtime during the Super Bowl. And here to talk

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Speaker 1: to us a little bit about the advertisements that you

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Speaker 1: saw last night during the fifty second Super Bowl is

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Speaker 1: John Swallen, chief Research officer of Cantor Media, which is

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Speaker 1: based in New York. John, I want to start with

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Speaker 1: the price tag for thirty seconds more than five million dollars?

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Speaker 1: Was how much companies paid for that time? Is it

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Speaker 1: worth it for many companies? It is yes, UM companies

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Speaker 1: are not just paying for the prety seconds of at time,

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Speaker 1: They're actually rolled up in that in the value of

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Speaker 1: that five million dollar investment. UM is are some other

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Speaker 1: things that I think brands considering that helped justify UM

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Speaker 1: for what I'm sorry, just give us some some figures

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Speaker 1: if you can just in terms of the actual total

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Speaker 1: amount that's been spent. Sure, UM, So the total we

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Speaker 1: asked me that the total amount of money spent on

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Speaker 1: the game last night was approximately four fifteen million dollars

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Speaker 1: for the commercials that aired between kickoff and the final whistle,

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Speaker 1: which would make it the second highest Super Bowl of

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Speaker 1: all time after two thousand and seventeen. Is that considered

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Speaker 1: to be a win for NBC? UM, Yes, it is. UM.

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Speaker 1: It's a win every year for whichever network gets to

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Speaker 1: carry the game. UM. And NBC also was able to

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Speaker 1: use that as a platform to promote their upcoming Olympics telecasts,

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Speaker 1: which will also be a financial windfall for them, So

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Speaker 1: they had a nice synergistic effect there. John one thing

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Speaker 1: that I noticed. I was looking over some of the

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Speaker 1: notes that you put out just sort of some conclusions

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Speaker 1: from the Super Bowl and the advertisements, and there was

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Speaker 1: a pretty notable drop off in the number of companies

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Speaker 1: that were advertising during the Super Bowl for the first time. UH.

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Speaker 1: The percent of first time parent companies dropped just eleven

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Speaker 1: percent this year from last year. What happened why so

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Speaker 1: many fewer entrants to this field? UM? I think parlates

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Speaker 1: the price tag UM five million dollars for a thirty

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Speaker 1: second spot, plus the additional costs for creating a commercial,

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Speaker 1: promoting it on social media and so forth, is a

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Speaker 1: big hit for many of the small companies that make

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Speaker 1: up those first time advertisers. UM. So I think this

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Speaker 1: year there was perhaps a little bit more price sensitivity.

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Speaker 1: UM that can you know that that can happen. It's

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Speaker 1: a it's a big investment for small companies. Who do

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Speaker 1: you think was the most successful at their advertising? UM?

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Speaker 1: I think everybody has a different metric. UM. If you

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Speaker 1: take a look at the consumer popularity polls, I'm sure

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Speaker 1: that the Amazon Alexa ad and the NFL AD with

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Speaker 1: Eli Manny and O'Dell Beckham doing their version of dirty Dancing,

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Speaker 1: I'm sure those will end up on the you know

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Speaker 1: its probably the top two in terms of consumer popularity.

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Speaker 1: But in terms of long term payout UM and brand effectiveness. UM.

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Speaker 1: I actually think that a brand like UM tied um

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Speaker 1: had a very interesting media strategy running one commercial in

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Speaker 1: each of the four quarters, and they weren't obvious commercials

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Speaker 1: when they started out to heay this is a commercial

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Speaker 1: for Tide, it wasn't until sort of the end of

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Speaker 1: the commercial that it all came together and tied together. UM.

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Speaker 1: I think that was a very effective strategy for PNG. John.

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Speaker 1: There was a lot of talk leading up to this

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Speaker 1: Super Bowl about the politicization of football and how viewership

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Speaker 1: had actually gone down as people view the sport is

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Speaker 1: becoming increasingly political. Do we have any preliminary assessments of

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Speaker 1: what viewership was like last night or whether some advertisers

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Speaker 1: shied away from, uh, perhaps participating this time around because

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Speaker 1: of all that drama. Um, the viewership figures won't be

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Speaker 1: enough until won't be out until later today. UM. So

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Speaker 1: I can't tell you how many people watch the game.

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Speaker 1: In terms of the advertisers and their approach. UM, there

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Speaker 1: certainly was less advertising of a political or social issue

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Speaker 1: nature this year as compared to last year. UM. And

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Speaker 1: I think that reflects the fact that in our increasingly

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Speaker 1: polarized environment, UM, taking any kind of of a stand

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Speaker 1: pro or con and any sort of an issue, UM,

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Speaker 1: it's just a landline that marketers don't want to get

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Speaker 1: involved with, particularly on a stage as public as the

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Speaker 1: as the Super Bowl, and so the big corporate ads,

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Speaker 1: the you know, the the as it weren't plugging brands

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Speaker 1: per se um like the bud Wiser at promoting their

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Speaker 1: water relief efforts, were taking things of a more humanitarian approach, UM,

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Speaker 1: kind of a safe issue that nobody can object to. UM.

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Speaker 1: So I think that was the strategic to this year. John,

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Speaker 1: I have to wonder whether you're seeing an increasing number

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Speaker 1: of ads direct viewers to their websites to watch longer

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Speaker 1: saga as I saw that. It was certainly a part

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Speaker 1: of some of the strategies, but is that an increasing one. Um,

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Speaker 1: It's not increasing only because it's been a very common

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Speaker 1: tactic for you know, for the last ten years or so. UM.

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Speaker 1: You know, many companies are putting their commercials out online

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Speaker 1: uh up to a week in advance of the Super Bowl,

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Speaker 1: promoting them through YouTube, promoting them through social media, UM,

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Speaker 1: and leaving them there after the game so people can

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Speaker 1: go back and watch them the second time. UM. So

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Speaker 1: the social media wrap around UM is very well integrated

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Speaker 1: into brand strategy for Super Bowl advertising. Thank you very

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Speaker 1: much for joining us. John Swallen is the chief research

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Speaker 1: officer for Kantar Media. He joins us from New York,

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Speaker 1: giving us his perspective on Super Bowl Advertising. Well, a

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Speaker 1: lot has changed in the retail world since nine and

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Speaker 1: here to tell us more. As Lindsay Rupper, specialty retail

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Speaker 1: reporter for Bloomberg News. Lindsay can be followed on Twitter

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Speaker 1: at l c Rupp and you can listen to her podcast,

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Speaker 1: Lindsay's Material World Podcast. It is at Bloomberg dot com

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Speaker 1: Slash podcast Material Slash rather Underscore World. All right, Lindsay,

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Speaker 1: thanks for being being here. Um, I just want to

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Speaker 1: start off with a little news about Bontage stores because

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Speaker 1: I was looking today bankruptcy doesn't look like anyone's gonna

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Speaker 1: come and really throw them a lifeline. And they if

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Speaker 1: you go to their website up to seventy percent off,

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Speaker 1: what happens when they get to a cent off? Does

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Speaker 1: that mean they start to sell things? You know? I

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Speaker 1: don't know what it's going to take for them to

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Speaker 1: sell things. The problem is for all these retailers, they're

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Speaker 1: just too many stores, and people have more options than

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Speaker 1: ever for places to shop. And so if it's not

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Speaker 1: a great experience, or it's not on trend, or it's

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Speaker 1: not the right product, you have other options. You're not

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Speaker 1: loyal anymore. So, Lindsay, you wrote a piece, and I

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Speaker 1: found it fascinating about how this sort of death of

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Speaker 1: retail has been a long time coming. Can you explain, Yeah, absolutely, so.

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Speaker 1: Apparel retail specifically is plagued by a myriad of issues,

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Speaker 1: and it's you know, it's really easy to say, oh,

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Speaker 1: it's Amazon, Amazon's killing these apparel retailers and companies like Bontan,

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Speaker 1: but it really is so much more than that. You know, it's, Uh,

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Speaker 1: it's that these apparel retailers got really slow in terms

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Speaker 1: of it takes a long time for them to get

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Speaker 1: product to market, and then you've got H and M

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Speaker 1: and Zara who can get on trend styles to you

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Speaker 1: in weeks. Or uh, it's the fact that people have

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Speaker 1: more options of places to shop. Or it's the fact

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Speaker 1: that prices have been driven down by discounters and by

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Speaker 1: fast fashion companies, and so you don't want to pay

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Speaker 1: full price for a white T shirt because you can

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Speaker 1: get it almost anywhere for less. Um it's it's just

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Speaker 1: so many different factors that are really hurting the apparel

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Speaker 1: industry and they've been really slow to transform. And I

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Speaker 1: think we're starting to see and will continue to see

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Speaker 1: the fallout from that. Well, Lindsay. You mentioned that there

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Speaker 1: are a variety of things that are contributing to this.

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Speaker 1: No one needs to buy a separate wardrobe for their

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Speaker 1: workplace anymore. You also mentioned that things such as neckties

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Speaker 1: seemed to be disappearing from at least the most heavily

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Speaker 1: purchased of items, as well as the introduction of sort

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Speaker 1: of new trend setters who are not celebrities. They're all

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Speaker 1: over social media, right, I mean, the societal and cultural

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Speaker 1: shifts in the way that we think about fashion, uh,

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Speaker 1: is a huge problem for the apparel industry. So it

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Speaker 1: used to be that you'd spend money on your wardrobe

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Speaker 1: because you know, the fashion industry was telling you these

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Speaker 1: things are on trend, you need to have them. You know,

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Speaker 1: you wanted to look yeah, exactly, you wanted to look

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Speaker 1: good in your workplace, but then you had a different

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Speaker 1: look for the weekend. None of that's really true anymore.

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Speaker 1: I mean, people really can kind of wear what they

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Speaker 1: wear to work out. Casual Friday is not just Friday anymore,

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Speaker 1: So you don't need to buy two different wardrobes, and

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Speaker 1: you can look online to celebrities or people who you

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Speaker 1: find interesting and see what they're wearing. You don't have

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Speaker 1: to look to the magazine. So if you look at

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Speaker 1: from a market's perspective, this has been going on for

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Speaker 1: a while, and this has sort of been a slow

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Speaker 1: moving destructive train. How can retailers assess what a right

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Speaker 1: sized retailer looks like now and when we've moved past

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Speaker 1: the sort of carnage stage into one where you can

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Speaker 1: rebuild for a modern era. I think that's the question

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Speaker 1: everyone's trying to answer right now. And it's expensive to

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Speaker 1: close stores if you have a lot of stores. But

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Speaker 1: you know, we've also seen these e commerce only retailers

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Speaker 1: pop up and well, well to some extent, right, they

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Speaker 1: reach a certain size and then they kind of stopped

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Speaker 1: growing and so they need to get to that next

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Speaker 1: level of growth and they open some stores. But you know,

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Speaker 1: but Albost sold to Walmart for for less than the

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Speaker 1: money they raised. Guess the the key question is what's

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Speaker 1: the model now? Who who's doing it right? Uh? You

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Speaker 1: know a lot of people think that CSAR is doing

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Speaker 1: it right. They're you know, owned by a Spanish company

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Speaker 1: into texts, and they're expanding really quickly all over the world.

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Speaker 1: They can get product to market really quickly, and it's

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00:25:18,920 --> 00:25:23,479
Speaker 1: on trend and it's uh really cheap frankly, um, and

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00:25:23,520 --> 00:25:25,560
Speaker 1: that seems to be working really well for them. But

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00:25:25,760 --> 00:25:27,679
Speaker 1: you know, H and M was of that same model.

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00:25:28,040 --> 00:25:29,959
Speaker 1: H and M just announced that it's going to have

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00:25:30,119 --> 00:25:33,560
Speaker 1: the slowest store opening rate in two decades. Um. People

436
00:25:33,560 --> 00:25:36,240
Speaker 1: really weren't thrilled to hear that, you know. They they're like, oh,

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00:25:36,280 --> 00:25:38,160
Speaker 1: the H and M model, it might be stumbling. So

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00:25:38,440 --> 00:25:40,439
Speaker 1: I don't think that there's anyone you can look to

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00:25:40,480 --> 00:25:42,119
Speaker 1: and say they're doing it right. I mean, there are

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00:25:42,119 --> 00:25:44,560
Speaker 1: a lot of people who are doing pieces of it right.

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00:25:44,600 --> 00:25:46,679
Speaker 1: There are a lot of niche brands who you know,

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00:25:46,920 --> 00:25:49,199
Speaker 1: own one piece of your wardrobe and they're doing that

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00:25:49,320 --> 00:25:52,120
Speaker 1: really well. But I think gone are the days of

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00:25:52,160 --> 00:25:55,359
Speaker 1: the giant retail behemoths of the past. You know, I

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00:25:55,560 --> 00:25:57,520
Speaker 1: don't know that we're going to see another gap, another

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00:25:57,640 --> 00:26:00,679
Speaker 1: ubiquitous company that's going to clothe you from top to

447
00:26:00,680 --> 00:26:03,479
Speaker 1: bottom anymore. Having said all this, and maybe you can

448
00:26:03,520 --> 00:26:05,320
Speaker 1: just help me because of course here in the Northeast,

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00:26:05,320 --> 00:26:07,680
Speaker 1: who have been going through winter weather and no really

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00:26:07,720 --> 00:26:10,960
Speaker 1: across the country in some areas you have inclement weather.

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00:26:11,880 --> 00:26:17,160
Speaker 1: All I see your Canada Goose down jackets and Montclair

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00:26:17,680 --> 00:26:21,000
Speaker 1: down jackets, And I think to myself, who needs to

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00:26:21,040 --> 00:26:26,919
Speaker 1: spend a thousand dollars on Parka right or five on

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00:26:27,000 --> 00:26:31,000
Speaker 1: a three year old outfit to stay warm? And yet

455
00:26:31,080 --> 00:26:34,040
Speaker 1: you seem to see them everywhere? Is that just anecdotal? No?

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00:26:34,200 --> 00:26:36,200
Speaker 1: I think that that's that's very true. And there are

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00:26:36,359 --> 00:26:39,199
Speaker 1: some trends that are that are definitely sticking out, so

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00:26:39,280 --> 00:26:42,240
Speaker 1: like people will spend up for that jacket with that

459
00:26:42,320 --> 00:26:45,639
Speaker 1: brand name, or they'll buy the Lulu Lemon pants, but

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00:26:45,720 --> 00:26:48,679
Speaker 1: they're they're mixing those with lower end things, you know,

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00:26:48,800 --> 00:26:50,920
Speaker 1: so they're they're also going to t J max and

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00:26:50,920 --> 00:26:54,240
Speaker 1: and buying cheaper, you know, jeans or it's it's sort

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Speaker 1: of like a high low you you decide where you

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Speaker 1: want to signal. Yeah, Lindsay Rob, thank you so much

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Speaker 1: for joining us, because truly it was a fascinating story.

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Speaker 1: I definitely recommend reading. And it's on Bloomberg dot com

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00:27:05,680 --> 00:27:09,280
Speaker 1: or on the Bloomberg Lindsay Rupp is a specialty retail

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Speaker 1: reporter for Bloomberg News. Thanks for listening to the Bloomberg

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00:27:16,359 --> 00:27:19,040
Speaker 1: P and L podcast. You can subscribe and listen to

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00:27:19,040 --> 00:27:23,600
Speaker 1: interviews at Apple podcasts, SoundCloud, or whatever podcast platform you prefer.

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00:27:24,000 --> 00:27:27,560
Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm

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00:27:27,600 --> 00:27:30,879
Speaker 1: on Twitter at Lisa Abramo. It's One before the podcast.

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Speaker 1: You can always catch us worldwide on Bloomberg Radio